31 January 2017

Market snapshot

Equities - India

Close

Chg .%

Sensex

27,850

-0.1

Nifty-50

8,633

-0.1

Nifty-M 100

15,639

0.0

Equities-Global

Close

Chg .%

S&P 500

2,281

-0.6

Nasdaq

9,448

0.3

FTSE 100

7,118

-0.9

DAX

11,682

-1.1

Hang Seng

9,804

-0.5

Nikkei 225

19,369

-0.5

Commodities

Close

Chg .%

Brent (US$/Bbl)

54

-0.7

Gold ($/OZ)

1,196

0.4

Cu (US$/MT)

5,811

-1.2

Almn (US$/MT)

1,797

-1.0

Currency

Close

Chg .%

USD/INR

67.9

-0.1

USD/EUR

1.1

0.0

USD/JPY

113.8

-1.2

YIELD (%)

Close 1MChg

10 Yrs G-Sec

6.4

0.0

10 Yrs AAA Corp

7.6

0.0

Flows (USD b)

30-Jan

MTD

FIIs

0.1

-0.1

DIIs

0.0

0.6

Volumes (INRb) 30-Jan MTD*

Cash

226

219

F&O

2,080

4,001

Note: YTD is calendar year, *Avg

YTD.%

4.6

5.5

9.0

YTD.%

1.9

2.1

-0.3

1.7

4.4

1.3

YTD.%

-1.7

3.8

5.2

5.4

YTD.%

0.0

1.7

-2.7

YTDchg

-0.1

0.0

CY16

2.9

5.3

CY16*

220

3,447

Today’s top research ideas

v

Vodafone and Idea Cellular issued a press release on 30 January 2017 highlighting

that they are in a preliminary discussion to explore merger opportunities. This deal

is likely to have large-scale ramifications in the telecom industry, as the merged

company may emerge as a leader with ~42% revenue market share and a strong

broadband network.

v

It would also help reduce their annual capex by ~20-25% and improve EBITDA

margin by ~500bp. Assuming both Vodafone and Idea have an equal stake, the

combined entity should be valued at ~7x EV/EBITDA, reducing leverage by 10-15%,

albeit with a low post-tax RoCE of 5%. We believe Idea’s stock is not a play on

valuation, but on the likely improvement in its market standing post the merger,

which should address the key concern around its earnings visibility.

Idea: Vodafone-Idea merger; Telecom behemoth in the making

Research covered

Cos/Sector

Idea Cellular

HDFC 3QFY17

Bajaj Fin. 3QFY17

Shree Cement 3QFY17

Godrej Cons. 3QFY17

Tech Mah. 3QFY17

Grasim Ind. 3QFY17

Emami 3QFY17

Info Edge 3QFY17

Dish TV 3QFY17

Just Dial 3QFY17

Granules 3QFY17

Results Flash

Results Expectation

Key Highlights

Vodafone-Idea merger: Telecom behemoth in the making

Pick-up in corporate business leads strong core PBT beat

Profit beat led by strong AUM growth

Steady performance in challenging environment

Domestic branded volume growth down 3%; healthy margin performance

Continuum of recovery in Telecom and margins

VSF continues to shine; Chemical under pressure

Robust domestic performance; margin expansion continues

Slump in Recruitment drives significant miss

Demonetization impacts recharges and subscriber additions

Focus on core business; advertisement campaign launch soon

Continued margin improvement; multiple levers ahead

GE T&D | V-Guard | Monsanto | Kitex Garments

BJAUT | CDH | DABUR | IOCL | ICICIBC | INDIGO | JSTL | KSCL | MPHL |

ONGC | OINL | SHOP | SHTF | TTKPT

Quote of the day

A business that makes nothing but

money is a poor business

Piping hot news

Vodafone confirms Idea merger talks, could create India’s biggest telecom firm

v

Consolidation in India’s $27 billion telecom industry received a massive boost

with Vodafone Group Plc. confirming that it is in talks for a merger of its

Indian unit with Aditya Birla Group’s Idea Cellular Ltd.

Chart of the Day: Bajaj Finance - Profit beat led by strong AUM growth

Cost/income ratio on a downward

trajectory

Trend in RoE and RoA

Nos. of loan disb. grew at healthy 35%

YoY

Research Team (Gautam.Duggad@MotilalOswal.com)

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Investors are advised to refer through important disclosures made at the last page of the Research Report.

In the news today

Kindly click on numbers for the detailed news link

1

US President Donald Trump is

expected to sign a new executive

order aimed at strangulating

work-visa programmes, including

the H1B and L1 visas used by

Indian IT professionals, as part of

a larger immigration reform

effort, a top White House …

2

Rs 7,400 cr debt: SBI looks to SC to recover loans from Jindal Steel

and Power

In another attempt to recover its outstanding dues of Rs 7,400 crore, a

consortium of eight banks, led by State Bank of India (SBI) has urged the

Supreme Court to implead it as a party in the mining case related to Jindal

Steel and Power (JSPL), saying any direction to refuse permission to the

firm to lift and transport iron ore lying at its long time supplier Sarda

Mines Private Ltd (SMPL) plant in the Keonjhar district of Orissa will bleak

its chances of recovery…

Donald Trump’s new executive

order to clamp down on H1B

visas

3

Tata Steel Ltd is now looking to

ramp up the contribution of direct

sales to consumers from 20% of

revenue to 30%. Such sales, which

Narendran refers to as B2C or

business-to-consumer, are more

profitable for Tata Steel. In 5-8

years, he expects its contribution

to go up to 30% of revenue…

4

Tata Motors reshuffles senior

management for a leaner

structure

Tata Motors Ltd is reshuffling the

roles of its top executives as part

of a restructuring exercise it

initiated a few months ago to

make the firm more efficient, said

three people aware of the

developments. All of them

declined to be identified…

Tata Steel will seek board nod

to raise Kalinganagar plant

capacity to 8 mt

5

ATM cash withdrawal limit

eased further

Facing criticism from the Election

Commission (EC) for not allowing

candidates contesting the coming

Assembly polls to withdraw cash

up to their legal limit, the Reserve

Bank of India (RBI) on Monday

removed withdrawal restrictions

on current, cash credit and

overdraft accounts with

immediate effect. ATM

withdrawal restrictions will also

be eased from Wednesday, RBI

said. A savings account holder

may now withdraw up to Rs

24,000 at one go from ATMs…

6

Telenor joins M&A rush, seeks

Aircel-Reliance

Communication tieup

Norway’s Telenor has approached

Aircel and Reliance

Communication to explore a

merger possibility through share

swap as consolidation grips the

Indian telecom industry, said

three executives aware of the

matter...

7

Piramal to acquire specialty

products of UK's Mallinckrodt

for $170 million

Ajay Piramal, the billionaire who

had sold his drug formulation

company to Abbott Pharma for Rs

17,000 crore about seven years

ago, on Monday said his critical

care company in the UK will

acquire specialty products of US

drug maker Mallinkrodt for $170

…

31 January 2017

2

Idea Cellular

BSE SENSEX

27,850

S&P CNX

8,633

30 January 2017

Update

| Sector:

Telecom

CMP: INR98

Under review

Vodafone-Idea merger: Telecom behemoth in the making

The merger to address key concern around Idea’s earnings visibility

Stock Info

Bloomberg

Equity Shares (m)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

M.Cap. (INR b)

M.Cap. (USD b)

Avg Val, INRm

Free float (%)

Financials Snapshot (INR b)

Y/E Mar

2016

2017E

2018E

IDEA IN

3,601

128 / 66

28/-5/-17

352.7

5.2

860

57.6

Vodafone and Idea Cellular issued a press release on 30 January 2017 highlighting that

they are in a preliminary discussion to explore merger opportunities. This deal is likely to

have large-scale ramifications in the telecom industry, as the merged company may

emerge as a leader with ~42% revenue market share and a strong broadband network. It

would also help reduce their annual capex by ~20-25% and improve EBITDA margin by

~500bp. Assuming both Vodafone and Idea have an equal stake, the combined entity

should be valued at ~7x EV/EBITDA, reducing leverage by 10-15%, albeit with a low post-

tax RoCE of 5%. We believe Idea’s stock is not a play on valuation, but on the likely

improvement in its market standing post the merger, which should address the key

concern around its earnings visibility.

Large-scale ramifications on competitive landscape



Net Sales

EBITDA

NP

EPS (INR)

EPS Gr. (%)

BV/Sh. (INR)

RoE (%)

RoCE (%)

P/E (x)

P/BV (x)

359.8 355.5 358.9

130.3 101.5

96.4

30.8 -22.6 -46.4

8.6

-6.3 -12.9

56.5 -170.7 -250.7

71.6

65.3

52.4

12.6

-9.2 -21.9

7.1

2.7

0.3

11.5 -15.6

-7.6

1.4

1.5

1.9



Shareholding pattern (%)

As On

Dec-16 Sep-16 Dec-15

Promoter

42.5

42.2

42.2

DII

6.9

6.6

5.4

FII

24.3

25.1

24.1

Others

26.3

26.1

28.3

FII Includes depository receipts

Stock Performance (1-year)

Idea Cellular

Sensex - Rebased

140

120

100

80

60



Challenges: Spectrum and revenue caps remain the key hurdles



Vodafone and Idea currently are the second and third largest telecom

operators, respectively, in the Indian telecom industry. We thus believe that

the merged entity could emerge as an industry leader, with combined revenue

and subscriber market share of 42% and 36%, respectively, and blended ARPU

of INR178.

Bharti and RJio currently hold the highest spectrum (20% of market) and cell

sites. They are also the most aggressive players in the industry, given their

deep network and low capacity utilization. However, the merged company

could pose a major challenge with combined spectrum share of ~23% and

broadband cell sites of over 1,60,000 (close to Bharti’s 1,70,000 sites and

~40,000 lesser for RJio).

Post-merger, the three strong operators – the merged company, Bharti and

RJio – could be equipped with equal armory to compete in the market. This

scenario could support our expectation of an improving competitive landscape

and industry ARPU accretion in 2HFY18.

In our view, the deal could face two key challenges: India’s telecom M&A rules

do not allow revenue and subscriber market shares above 50%. Similarly,

spectrum holding in each band is not allowed above 50%. The merger

company’s revenue/subscriber caps and spectrum caps may get triggered in 7

and 6 circles, respectively. However, the merged company’s

revenue/subscriber share is more than 60% in only one circle – Kerala. In the

rest of the circles, it is between 50% and 60%. This may get resolved once RJio

starts charging subscribers and taking revenue market share.

Based on the current 50% band-wise spectrum cap, the merged company has

~33 MHz of excess spectrum, of which ~15 MHz is 900 MHz paired spectrum.

Based on latest spectrum valuation (pro-rata for the remaining license term),

the merged company may be able to generate over INR75b from the excess

spectrum. This should support the merged company’s cash outflow toward

liberalizing the administered spectrum, which is ~20% of the merged

company’s spectrum.



31 January 2017

3

How would the combined entity look







The merged company should have revenue of INR745b (1HFY17 annualized),

assuming 20% lower revenue due to the weak outlook and revenue market

share shrinkage. We expect the merged company to garner healthy EBITDA

margin of 35%, at ~500bp discount to Bharti India wireless’ FY17E EBITDA

margin. This implies about 500bp margin improvement, which could potentially

come from network synergies, employee costs and SG&A.

Improving combined EBITDA could improve Idea’s leverage, albeit by a

moderate 10-15%. Current net debt to EBITDA of 5x could reduce to ~4x. This

would still remain high for the merged company.

Assuming about 20% synergy on total assets as well as EBITDA synergies, the

merged company’s post-tax RoCE could improve to 5%, from 3-4% for Idea and

Vodafone.

Valuation: Assuming 50% Vodafone stake, the merged company could trade

at about 7x EV/EBITDA





Assuming Vodafone is an equal shareholder, the combined entity should be

valued at about 7x EV/EBITDA, factoring in 500bp EBITDA margin improvement.

Vodafone should fetch EV of INR917b and equity value of INR360b.

We have not changed our estimates for Idea on the back of limited clarity on the

deal. We put the stock under review until we gather more clarity on the

likelihood of the deal and the potential impact of the same on valuations and

earnings. We believe Idea is no more a play on valuation at potentially ~7x

EV/EBITDA for the merged company. If the deal goes through, the merged

company’s wherewithal to stand in the highly competitive market will be a key

monitorable. Given the merged company’s superior spectrum/network position,

higher revenue market share and ~20-25% lower capex requirement, the high

FCF could be used to strengthen its market position.

The merger should impact Bharti Infratel’s tenancies



We expect Bharti Infratel to grow tenancies and rental revenues at ~7% and 9%,

respectively, over FY16-19E. We believe if this deal goes through, it will impact

Bharti Infratel’s tenancies given that ~85% of the tenancies are derived from the

top three operators. As the merged company may pair down unwanted network

overlaps between the two entities, we suspect a one-time ~10% tenancy

reduction. Also, as the merged company may have higher geographical

coverage, we expect it to offer potentially 30-40% reduction in annual tenancy.

31 January 2017

4

Exhibit 1:

Proforma vs Synergies (INR m)

1H FY17Annualised

Revenue

EBITDA

EBITDA margin

EBIT

EBIT Margin

Net Debt

Market Cap

EV

Total Assets

EV/EBITDA (x)

Net Debt to EBITDA (x)

ROCE (post tax)

Share price

No of shares (m)

Idea

Vodafone Idea + Vodafone

413,665

125,417

30.3%

36,414

9%

1,116,070

720,161

1836,231

1,583,922

7.3

4.4

3%

100

7,202

Idea + Vodafone +

Synergy (annualized)

744,596

260,609

35%

82,602

11%

1,116,070

720,161

1,836,231

1,267,137

7.0

4.3

5%

100

7,202

Assuming 30% tax

CMP

Assuming Vodafone to get equal

shareholding in overall entity

Source: Company, MOSL

Assuming -10% net current asset for

Vodafone and 20% synergy on combined assets

500bp discount to Bharti India Wireless margin

Comments

20% lower on 1HFY17 numbers factoring

competitive intensity

187,869 225,796

59,143

31%

20,409

11%

66,273

29%

16,005

7%

5592,77 556,793

360,080 360,080

919,358 916,873

735,625 848,297

7.8

4.7

4%

100

3,601

6.9

4.2

3%

100

3,601

Exhibit 2:

Potential Pre and Post Shareholding

Particulars

Promoter holding

Axiata

Public

Total

Pre Merger

Post Merger

% holdings No. of shares (m)

Particulars

% holdings No. of shares (m)

42.45%

1,529

Vodafone

50%

3,601

19.77%

712

Idea promoters

21%

1,529

37.8%

1,360

Axiata

10%

712

Public

19%

1,360

100.0%

3,601

Total

100%

7,202

Source: Company, MOSL

Exhibit 3:

Vodafone Valuation (Annualized FY17 figures)

Particulars

EBITDA (NR m)

Market Cap (NR m)

Debt (NR m)

EV (NR m)

EV/EBITDA (x)

132547

360,080

556,793

916,873

6.92

Source: Company, MOSL

31 January 2017

5

30 January 2017

3QFY17 Results Update | Sector:

Financials

HDFC

BSE SENSEX

27,850

Bloomberg

Equity Shares (m)

M.Cap. (INR b) / (USD b)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

Free float (%)

S&P CNX

8,633

HDFC IN

1,574.7

2,155.8/31.7

1,463/1,012

4/2/4

3,609

100.0

2018E

106.5

81.7

38.4

6.2

288.2

237.1

2.3

17.1

43.5

19.9

4.7

3.2

1.4

CMP: INR1,369



TP: INR1,580 (+16%)

Buy

Pick-up in corporate business leads strong core PBT beat

Financials & Valuation (INR Billion)

Y/E MAR

2016

2017E

NII

87.0

99.6

PAT

70.9

74.0

Adj. EPS (INR)

32.6

36.1

EPS Gr. (%)

2.7

10.9

BV/Sh. (INR)

239.6

262.5

ABV/Sh. (INR)

188.4

211.4

RoAA (%)

2.6

2.4

Core RoE (%)

18.9

18.1

Payout (%)

43.9

43.5

Valuation

AP/E (x)

30.2

23.6

P/BV (x)

5.7

5.2

AP/ABV (x)

5.2

4.0

Div. Yield (%)

1.2

1.3

3QFY17 core PBT beat our estimate by 8%. However, a tax rate of 32%,

higher than our estimate of 30%, led to just 3% PAT beat. Key highlights:

a) Spreads improvement of 6bp to 2.34% (9M v/s 1H). b) Strong AUM

growth of 17% YoY (+4% QoQ), best in last 12 quarters. c) Individual

disbursement growth of 14% YoY in 9MFY17; growth slowed to 3% YoY

in 3QFY17 due to demonetization. d) GNPA % increase of 10bp YoY to

0.8%.



After 15 quarters, corporate loans grew more than 15% YoY to 17%.

Corporate loans grew 7% QoQ, driving ~45% of incremental growth for

3Q. Large part of this growth was driven by lease rental discounting,

which is relatively a safe product. Share of corporate loans in overall

AUM was up 30bp QoQ to 27.3%. However, we expect marginal

moderation in 4Q growth due to high base.



Retail AUM grew 17% YoY, in line with the trend over past several

quarters. We believe that this is commendable in the competitive

environment and that HDFC should be able to sustain this growth (led

by benefit on cost of funds) as its loans are priced in line with large

banks.



Other highlights

a) Share of off-balance sheet AUM in overall AUM up

110bp QoQ to 12.5%. d) Sold loans worth INR33.55b v/s INR19.4b the

previous quarter to HDFC Bank. e) Tier-I capital at 13.4%.

Valuation view:

HDFC’s retail loan growth is impressive, despite intense

competition. Over past three quarters, corporate loan growth has also

picked up smartly – this remains a key for overall spreads, considering

individual spreads are under pressure. We largely maintain our FY17

estimates, but cut FY18E/19E by 4% to factor in high competitive intensity in

the retail segment. We expect AUM CAGR of ~14% with core PBT CAGR ~9%.

We have considered DTL on special reserve as a part of networth.

31 January 2017

6

30 January 2017

3QFY17 Results Update | Sector:

Financials

Bajaj Finance

Buy

BSE SENSEX

27,850

Bloomberg

Equity Shares (m)

M.Cap.(INR b)/(USD b)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val, (INR m)

Free float (%)

S&P CNX

8,633

BAF IN

Profit beat led by strong AUM growth; Maintain Buy

535.5



Bajaj Finance’s (BAF) 3QFY17 PAT increased 36% YoY to INR5.6b (26%

564.4/8.3

above estimate), led by robust AUM growth of 33% YoY (est. of +27%)

1180 / 560

and better-than-expected margins performance. Marginal improvement

21/-3/66

in costs and asset quality also offered support.

1297



Despite demonetization, AUM continued its robust growth trajectory

41.9

CMP: INR1,054

TP: INR1,276 (+21%)

Financials & Valuations (INR b)

Y/E March

2016 2017E 2018E

NII

40.3

53.7

71.2

PPP

25.1

35.1

46.7

PAT

12.8

18.3

23.9

EPS (INR)

23.9

34.1

44.6

EPS Gr. (%)

33.4

42.8

30.9

BV/Sh. (INR)

136.8 165.9 204.0

RoA on AUM (%)

3.2

3.4

3.4

RoE (%)

21.1

22.5

24.1

Payout (%)

2.9

14.0

14.0

Valuations

P/E (x)

44.1

30.9

23.6

P/BV (x)

7.7

6.4

5.2

Div. Yield (%)

0.2

0.2

0.3







(+33% YoY, +10% QoQ) to reach INR576b. Growth continues to be

impressive in consumer durables and personal loan segments.

Surprisingly, 2W/3W loan book also grew 36% YoY, with BAF increasing

its financing penetration within Bajaj Auto sales to 45% from 32% earlier.

Consumer durables loan book grew 5% YoY due to demonetization as

well as intentional scale-back in this segment as mentioned by

management earlier. Mortgage book grew by a sluggish 9% YoY, in line

with management guidance. We, however, expect growth in this segment

to pick up from FY18 as the base effect plays out.

Personal cross-sell loans grew 59% YoY to INR56b. It was the eighth

consecutive quarter of 50%+ AUM growth in this segment. Rural loan

book also grew 100%+ YoY, but on a small base (4% of AUM).

Asset quality remained healthy, with GNPLs at 1.47% v/s 1.58% in 2QFY17

and 1.29% (150dpd) in 3QFY16. The impact of demonetization on the

GNPL ratio, if any, will be seen in 4QFY17.

Valuation and view:

BAF – a dominant player in the consumer durables

financing segment – continues to reap the benefits of healthy consumer

demand, increasing its market share in consumer as well as other

businesses. At the same time, it is proactive in detecting early warning

signals with regard to asset quality. While yields are likely to remain

under pressure due to lower share of CD financing, BAF continues to

diversify its liability mix – bank borrowings account for 37% of total

borrowings. The stock trades at 6.4x/5.2x FY17E/18E BV. We raise FY17E-

19E EPS by 5-7%, and increase TP to INR1,276.

Buy.

(INR Million)

FY17

2Q

3QE

21,802

25,271

1,668

1,749

23,470

39.7

9,562

13,909

41.2

190

14,098

6,144

7,954

40.8

1,691

6,263

2,185

4,078

45.9

37.8

43.4

43.6

34.9

27,020

31.1

9,802

17,218

31.2

271

17,489

7,192

10,297

33.5

1,797

8,500

2,944

5,557

36.0

32.6

30.2

41.1

34.6

FY16

4Q

23,900

1,707

25,607

33.6

10,716

14,891

34.0

394

15,285

6,785

8,500

31.7

1,824

6,676

2,296

4,380

39.0

35.5

34.9

44.4

34.4

69,566

3,477

73,043

35.7

29,269

43,775

39.7

792

44,566

19,492

24,283

42.4

5,429

18,854

6,861

12,785

42.4

38.8

38.7

44.5

34.1

FY17E

92,633

6,329

98,961

35.5

38,913

60,048

37.2

1,001

61,049

25,986

34,063

40.3

7,109

26,954

9,700

18,254

42.8

32.5

34.9

43.3

35.1

Quarterly Performance

Y/E March

Income from operations

Other Operating Income

Operating Income

YoY Growth (%)

Interest expenses

Net Income

YoY Growth (%)

Other income

Total Income

Operating Expenses

Operating Profit

YoY Growth (%)

Provisions and Cont.

Profit before Tax

Tax Provisions

Net Profit

YoY Growth (%)

Loan Growth (%)

Borrowings Growth (%)

Cost to Income Ratio (%)

Tax Rate (%)

E: MOSL Estimates

1Q

15,716

746

16,462

32.4

6,771

9,692

30.3

96

9,788

4,531

5,257

30.3

1,033

4,224

1,468

2,756

30.4

32.0

34.7

46.3

34.8

FY16

2Q

3Q

15,921

19,717

878

897

16,799

36.3

6,947

9,853

43.3

206

10,059

4,411

5,648

49.1

1,368

4,280

1,486

2,794

41.7

35.6

30.0

43.9

34.7

20,614

39.6

7,493

13,121

48.4

83

13,203

5,490

7,714

54.0

1,462

6,252

2,167

4,085

58.1

41.0

37.2

41.6

34.7

4Q

18,212

957

19,168

34.1

8,058

11,110

35.9

406

11,516

5,061

6,455

40.9

1,565

4,890

1,740

3,150

36.4

36.5

38.7

43.9

35.6

1Q

21,659

1,205

22,864

38.9

8,833

14,031

44.8

147

14,178

5,865

8,312

58.1

1,797

6,515

2,275

4,240

53.8

39.5

40.5

41.4

34.9

31 January 2017

7

30 January 2017

3QFY17 Results Update | Sector: Cement

Shree Cement

Buy

BSE SENSEX

27,850

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val, INRm

Free float (%)

S&P CNX

8,633

SRCM IN

Steady performance in challenging environment

35



Strong volume growth and lower realizations:

3QFY17 volumes increased

546.2 / 8.2

~5% YoY (+7% QoQ) to 4.91mt, led by capacity ramp-up in east. Realizations

18519 / 9850

fell 7% QoQ (+7% YoY) due to weak realizations in its focus markets of north

2/-8/38

and east and also led by higher proportion of ex-factory sales.

220



Margin deterioration led by weak realization:

EBITDA of INR4.7b (+2% YoY)

35.2

CMP: INR15,677

TP: INR19,006(+21%)

Financials & Valuations (INR b)

Y/E Mar

2016

2017E

Net Sales

72.5

84.9

EBITDA

17.3

23.9

PAT

8.3

13.5

EPS (INR)

238.5

387.1

Gr. (%)

79.1

62.3

BV/Sh (INR)

1,774.0 2,120.0

RoE (%)

14.5

19.9

RoCE (%)

14.3

19.5

P/E (x)

65.7

40.5

P/BV (x)

8.8

7.4

2018E

99.8

30.5

20.3

582.8

50.5

2,656.2

24.4

23.5

26.9

5.9





Estimate change

TP change

Rating change

missed estimate of INR4.9b, with margins at 25.4% (-7.26pp QoQ, flat YoY)

due to higher-than-expected other expenses. Unitary cost rose 6% YoY (+2%

QoQ), led by higher power/fuel cost and other expenses. Freight cost/t

declined 4% QoQ, despite higher diesel prices QoQ, due to higher proportion

of ex-factory sales which resulted in lower lead distance.

Power incurs EBITDA losses:

Cement EBITDA of INR976/t (+12/-25%

YoY/QoQ) was impacted by weak realizations in north. Power business

incurred EBITDA loss of INR100m because lower realizations led to reduced

off-take in merchant power.

Strong earnings CAGR and return ratio improvement warrant valuation

premium:

Led by profitability improvement and market share gains due to

aggressive capacity addition, we expect EBITDA CAGR of 24% over FY17-

FY19. It is likely to generate operating cash flow of INR108b over FY17-FY19,

with margin improvement and better asset turnover resulting in earnings

CAGR of 37% over FY17-FY19. We thus believe valuations of 13x FY19E

EV/EBITDA are attractive, given superior return ratios and strong earnings

CAGR. We value SRCM at 16x FY19E EV/EBITDA due to its higher exposure

to north markets, which should see highest improvement in realizations. We

derive a target price of INR19,006 (+21% from current levels).

31 January 2017

8

Godrej Consumer

BSE SENSEX

27,850

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val, INRm/ Vol ‘000

Free float (%)

S&P CNX

8,633

GCPL IN

340.6

546.3 / 8.3

1710 / 1138

2/1/19

370

36.7

30 January 2017

3QFY17 Results Update | Sector: Consumer

CMP: INR1,604 TP:INR1,655(3%)



Neutral

Domestic branded volume growth down 3%; healthy margin performance

GCPL’s 3QFY17 consol. net sales grew 8.9% YoY

(est. of +10%) to INR23.9b.

Consol. EBITDA grew 12.0% YoY (est. of +1.7%) to INR5.06b, while adj. PAT rose

5.0% YoY (est. of -1.2%) to INR3.48b. Organic consol. constant currency (CC)

sales grew 2% YoY, while India business sales were flat. Gross margin expanded

100bp YoY to 55.8%, with EBITDA margin expansion of 60bp YoY to 21.2%.

9MFY17 sales, EBITDA and adj. PAT grew 9%/14.9%/8.9% YoY.

Domestic branded business’ volume fell 3% YoY, leading to 0.2% sales

decline.

All three key domestic segments reported YoY sales decline.

Household Insecticides’ sales fell 2% YoY. Revenue declined by 6% YoY in Soaps

and 2% YoY in Hair Color. Soaps volume fell 8% YoY due to withdrawal of

promotions and impact of demonetization. Organic CC sales growth in India

business was flat, with operating margin expansion of 360bp YoY.

International organic CC sales grew 13% YoY

(4% organic sales growth), with

operating margin contracting 110bp YoY to 17.0%. Indonesia EBITDA margin

shrunk by 110bp, Africa (Incl SON) by 160bp and LATAM by 390bp. On the

other hand, Europe EBITDA margin expanded 60bp YoY.

Concall highlights:

(1) Management revealed that domestic sales growth was

positive YoY in December and January. (2) Secondary sales growth in the

domestic market was at 2% in 3QFY17 v/s flat primary sales growth. (3) Price

hike of 2% taken in the domestic soaps business in 3QFY17.

Valuation and view:

There is no material change to our EPS forecast. At 33.4x

Dec-2018 EPS, the stock trades close to its three-year average multiple of

34.5x. With its exposure to various geographies, associated currency risks and

relatively low RoE (mid-20s), the stock does not warrant a higher multiple, in

our view. Maintain

Neutral

with TP of INR1,655 (34.5x Dec-2018 EPS).

Financials & Valuation (INR b)

Y/E Mar

2016 2017E 2018E

Net Sales

89.7

93.1 105.1

EBITDA

16.2

18.4

21.0

PAT

11.3

12.5

14.6

EPS (INR)

33.2

36.8

42.8

Gr. (%)

24.4

11.0

16.2

BV/Sh (INR)

152.2 177.1 208.2

RoE (%)

23.4

22.4

22.2

RoCE (%)

16.7

15.3

15.2

P/E (x)

48.4

43.6

37.5

P/BV (x)

10.5

9.1

7.7







Estimate change

TP change

Rating change



31 January 2017

9

30 January 2017

3QFY17 Results Update | Sector: Technology

Tech Mahindra

Buy

BSE SENSEX

27,850

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val, INRm

Free float (%)

S&P CNX

8,633

TECHM IN

Continuum of recovery in Telecom and margins; Strong deal wins

973



RoW and BFSI drive revenue beat:

TECHM’s 3QFY17 revenue growth of

459.0 / 6.8

5.4% QoQ CC beat estimate of +3.1%, led by strong pick-up in BFSI and RoW.

557 / 403

Organic CC revenue growth of ~4% QoQ exceeded our estimate of +2.5%.

-8/-5/-18

1062

Growth included incremental contribution from Target of ~1%, slightly

63.8

CMP: INR472

TP: INR550 (+17%)

Financials & Valuations (INR b)

2016 2017E

Y/E Mar

264.9

293.7

Net Sales

43.4

44.6

EBITDA

31.2

28.9

PAT

35.1

32.5

EPS (INR)

19.7

-7.3

Gr. (%)

165.6

175.1

BV/Sh (INR)

23.4

20.1

RoE (%)

20.1

16.6

RoCE (%)

13.5

14.5

P/E (x)

2.8

2.7

P/BV (x)



2018E

330.9

52.3

32.6

36.6

12.8

198.2

20.0

17.0

12.9

2.4





Estimate change

TP change

Rating change

higher than our expectation (+0.6%).

Encouraging deal wins:

Deal wins in the quarter totaled USD350m, the best

in last six quarters. Strength in wins is reflected in LTM deal wins of USD1.3b,

signifying growth of 16% YoY. The broad-based nature of wins and a couple

of large deals (in BFSI and Telecom) are encouraging signs and lend

confidence to our expectation of sustained steady growth going forward.

Profitability expansion in line:

EBITDA margin expanded 80bp to 15.7% (in-

line). Tailwind from absence of restructuring expenses (100bp) was partly

offset by cross-currency headwinds, furloughs and uptick in fresher hiring.

Revenue beat and higher other income (INR1.55b v/s est. of INR820m) drove

PAT of INR8.6b (+12.8% YoY; est. of INR7.1b).

Valuation and view:

Our thesis of a gradual recovery in Communications

and margins, along with continued traction in Enterprise, was demonstrated

in TECHM’s 3Q performance. ~1.5% 3Q revenue beat does not drive upward

estimates revision on account of some more portfolio pruning anticipated in

LCC. We expect USD revenue/earnings CAGR of 9/13% over FY17-19. Our TP

of INR550 discounts FY19E earnings by 13x (17% upside).

Buy.

Quarterly Performance (Consolidated)

31 January 2017

10

Grasim Industries

BSE SENSEX

27,850

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val, INRm

Free float (%)

S&P CNX

8,633

GRASIM IN

VSF continues to shine; Chemical under pressure

467



Strong realization drives profits:

Standalone 3Q EBITDA rose 19% YoY (-4%

452.9 / 6.7

QoQ) to INR5.1b, translating into margin of 20.5% (-0.8pp QoQ, +1.9pp YoY),

1070 / 648

led by realization improvement. Revenue grew 8% YoY to INR24.9b, while

8/-2/31

599

PAT rose 22% YoY to INR3.3b on lower interest and depreciation expense.

68.7



VSF – margin improvement led by better pricing:

VFS revenue grew 10%

30 January 2017

3QFY17 Results Update | Sector: Cement

CMP: INR970

TP: INR1,067(+10%)

Neutral

Financials & Valuations (INR b)

Y/E Mar

2016 2017E

Net Sales

365.9

373.0

EBITDA

60.2

69.5

PAT

22.6

32.8

EPS (INR)

48.3

70.2

Gr. (%)

26.8

45.2

BV/Sh (INR)

553.4

618.3

RoE (%)

9.2

12.0

RoCE (%)

10.0

12.1

P/E (x)

20.1

13.8

EV/Ton (US$)

148

130

2018E

398.7

81.6

40.4

86.5

23.2

699.8

13.1

13.8

11.2

121





Estimate change

TP change

Rating change



YoY to INR17.6b (est. of INR17.4b) on realization boost of 9% YoY and

modest volume growth of 1% YoY (est. of +2% YoY), translating into margin

of 22.8% (v/s 19.2% in 3QFY16). Realization improvement was driven by

uptrend in global prices (outage of capacity in China due to environmental

issues) and favorable product mix (higher proportion of specialty products).

Chemical segment performance impacted:

Chemical revenues stood at

INR9.2b (+6% YoY). Realizations improved 5% YoY due to firm caustic prices

led by lower supply. However, volumes fell 5% YoY in 3QFY17 due to lower

demand for chlorine. Margins were healthy at 20.2% (flat YoY, -3.0pp QoQ).

Management outlook:

VSF pricing is expected to be stable over longer term

due to slower capacity addition and macro tailwinds. However, prices could

face short-term headwinds with some capacity coming back to the system.

Caustic capacity should increase by 208K by FY18 through 144K brownfield

expansion at Vilayat and 64K tonnes debottlenecking exercise. Margin could

be subdued in 4Q as pulp prices are likely to increase with lag effect.

Valuation and view:

We believe GRASIM post proposed restructuring

exercise with Aditya Birla Nuvo will be the holding company for multiple

diversified lines of business, including cement, finance, chemical and retail.

This is likely to attract higher discount than earlier. We thus value its stake in

Ultratech Cement at 40% discount and VSF business at 5x EV/EBITDA,

arriving at a TP of INR1,067 (upside of 10 %.) Downgrade to

Neutral.

31 January 2017

11

30 January 2017

3QFY17 Results Update | Sector: Consumer

Emami

Buy

BSE SENSEX

27,850

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val, INRm/ Vol m

Free float (%)

S&P CNX

8,633

HMN IN

227.0

230.2 / 3.4

1261 / 901

2/-11/-11

191

27.3

CMP: INR1,014

TP: INR1,260(+24%)

Robust domestic performance; margin expansion continues



Financials & Valuations (INR b)

Y/E Mar

2016 2017E 2018E

Net Sales

23.9

25.4

29.1

EBITDA

6.8

7.6

8.6

PAT

5.7

5.6

6.8

EPS (INR)

25.2

24.5

29.8

Gr. (%)

17.7

-2.9

22.0

BV/Sh (INR)

61.8

82.8

97.8

RoE (%)

43.4

33.8

33.0

RoCE (%)

37.9

31.5

35.0

P/E (x)

40.3

41.5

34.0

P/BV (x)

16.4

12.2

10.4







Estimate change

TP change

Rating change



Emami's (HMN) sales were flat at INR7.3b (+0.2% YoY v/s est. of +5%)

in

3QFY17. EBITDA grew 3.7% YoY (est. of +1.9%), while PAT before amortization

rose 4.8% YoY (est. of -6.8%) to INR2.05b. Domestic sales increased 3% YoY, led

by volume growth of 0.2% YoY. Overall volumes declined 2.6% YoY.

International and CSD business sales declined 16% and 12% YoY, respectively.

Gross margin expansion of 130bp YoY to 67.9%

led to EBITDA margin

improvement of 120bp YoY to 35.6%. Sharp increase in staff costs (+120bp YoY)

was offset by lower A&P spends (-80bp YoY) and other expenses (-30bp YoY).

EBITDA thus grew 3.7% YoY to INR2.58b. Lower-than-expected tax rate

resulted in adj. PAT growth of 4.8% to INR2.05b.

Portfolio performance:

Among winter products, BoroPlus antiseptic cream

sales grew by 13% YoY and moisturizing lotions sales by 10% YoY. Among other

products, Balm sales declined 5% YoY. Kesh King grew only 2% YoY, but

maintained volume market share at 29.8%. Navratna Cool oil sales declined 4%

YoY. Fair and Handsome sales dropped sharply by 18% YoY. Zandu HCD fell 6%

YoY, led by a 15% decline in Pancharishta sales (on a high base).

Concall highlights:

a) Sales were impacted in rural as well as north and south

regions due to demonetization. Expect wholesale sales to be back to normal in

two months. b) Management expects double-digit volume growth for FY18.

Valuation and view:

Changes to the model have resulted in 2%/3% cut in

FY18E/FY19E EPS – management stated that EBITDA margin may not expand

further as HMN will invest potential gross margin gains on brand building. We

continue to like HMN, given its strong medium-term earnings visibility post the

Kesh King acquisition (45% EBITDA margin business turning EPS-accretive in

second year). The stock trades at 29.4x Dec-2018 EPS. We maintain

Buy

target

price of INR1,260 (36.5x Dec-2018 EPS, in line with three year average).

-17%

4Q

18.0

6,026

2,193

3,833

63.6

1,992

33.1

1,841

30.6

169

136

88

1,623

87

5.4

1,541

727

850

1Q

18.0

6,444

19.9

2,287

4,157

64.5

2,684

41.7

1,473

22.9

49.2

106

125

51

1,292

117

9.1

1,175

18.0

609

596

FY17

2Q

11.0

5,846

10.2

1,929

3,916

67.0

2,164

37.0

1,752

30.0

15.1

111

160

87

1,568

230

14.7

1,336

9.6

680

690

3Q

0.2

7,260

0.2

2,331

4,928

67.9

2,343

32.3

2,585

35.6

3.7

112

127

82

2,428

381

15.7

2,046

4.8

705

1,377

4QE

-4.0

5,898

-2.1

2,174

3,724

63.1

1,937

32.8

1,787

30.3

-2.9

164

104

86

1,605

614

38.2

992

-35.6

606

385

FY16

14.0

23,937

8.0

8,513

15,424

64.4

8,580

35.8

6,844

28.6

26.7

450

543

449

6,301

459

7.3

5,841

20.7

2,100

3,741

FY17E

6.5

25,447

6.3

8,722

16,725

65.7

9,128

35.9

7,597

29.9

11.0

493

516

305

6,894

1,341

19.5

5,552

-4.9

2,600

2,952

(INR Million)

FY17

Var.

3QE

(%)

1.0

7,608

-4.6%

5.0

2,582

-9.7%

5,026

-2.0%

66.1

2,484

-5.7%

32.6

2,543

1.7%

33.4

1.9

111

110

105

2,427

0.1%

607

25.0

1,820

12.4%

-6.8

600

1,220

Quarterly Performance

Y/E MARCH

Domes ti c vol ume Growth (%)

Net Sales

YoY Cha nge (%)

COGS

Gross Profit

Gros s ma rgi n (%)

Other Expendi ture

% to s a l es

EBITDA

Ma rgi ns (%)

YoY Cha nge

Depreci a ti on

Interes t

Other Income

PBT

Ta x

Ra te (%)

PAT

YoY Cha nge (%)

Amorti za ti on

Reported PAT

E: MOSL Estimates

1Q

15.0

5,372

2,114

3,258

60.6

2,271

42.3

987

18.4

88

44

187

1,041

42

4.0

996

137

866

FY16

2Q

3Q

13.5

9.3

5,306

7,249

1,783

3,523

66.4

2,001

37.7

1,523

28.7

92

192

122

1,361

139

10.2

1,219

620

631

2,417

4,831

66.6

2,337

32.2

2,494

34.4

99

172

53

2,276

320

14.0

1,953

617

1,367

31 January 2017

12

30 January 2017

3QFY17 Results Update | Sector: Technology

Info Edge India

Buy

BSE SENSEX

27,850

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val, INRm

Free float (%)

S&P CNX

8,633

INFOE IN

121

104.6 / 1.5



1012 / 690

-9/7/-3

69

57.4



2018E

9.0

2.6

2.3

19.0

12.2

170.8

11.5

11.5

45.4

5.1

CMP: INR863

TP: INR1,075(+25%)

Slump in Recruitment segment drives significant miss

3QFY17 performance significantly below expectations:

INFOE’s standalone

3QFY17 revenue growth decelerated to 7.3% YoY to INR1.86b, sharply below

our estimate of INR2.13b. EBITDA margin was 25.3% (+310bp YoY), well

below our estimate of 29.7%, led by the revenue miss. Adj. PAT was

INR471m (+25% YoY), missing our estimate of INR573m (+52% YoY).

Broad-based demonetization impact:

Revenue miss was broad-based, with

recruitment segment at INR1.4b (+8.5% YoY; est. of INR1.59b), 99acres.com

at INR261m (+0.6% YoY; est. of INR285m) and others at INR196m (est. of

INR254m). This was the first quarter of single-digit YoY growth in standalone

revenues in last four years.

Segmental performance:

INFOE’s policy change in the middle of 1Q in

recruitment segment (of not pushing sales at the end of quarters) also

played a part in weak revenues. This may manifest till 1QFY18. 99acres.com

was hit directly by demonetization. Long-term RERA initiatives hold

potential, while near term remains clouded. Cash burn in Zomato is down to

USD1/month. Whether the launch of UberEats in India changes this remains

to be seen.

Valuation View:

We cut earnings estimate for FY18/19 by 6%/7% owing to

the hawkish outlook on revenue growth, considering the combination of

factors like demonetization and internal policy changes around discounts.

We see Naukri.com (from pick-up in economic growth), 99acres.com

(lowering competitive intensity) and Zomato.com (focus on driving

monetization and profitability) as the key drivers of valuation at INFO. Our

SOTP-based price target of INR1,075 implies 25% upside. Maintain

Buy.

Financials & Valuations (INR b)

2016 2017E

Y/E Mar

7.2

7.9

Net Sales

1.6

2.2

EBITDA

1.6

2.1

PAT

13.0

16.9

EPS (INR)

-5.3

30.5

Gr. (%)

145.3

159.4

BV/Sh (INR)

9.2

11.1

RoE (%)

9.2

11.1

RoCE (%)

66.5

51.0

P/E (x)

5.9

5.4

P/BV (x)



Estimate change

TP change

Rating change



Quarterly Performance (Consolidated)

31 January 2017

13

30 January 2017

Q3FY17 Results Update | Sector: Media

Dish TV India

Buy

BSE SENSEX

27,882

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val, INRm

Free float (%)

S&P CNX

8,641

DITV IN

Demonetization impacts recharges and subscriber additions

1,066

Broader story intact, Maintain TP

94.2 / 1.4

110 / 65



Operational performance disappoints:

Demonetization was expected to

take a toll on DITV’s 3QFY17 operational performance. However, we note

-1/-15/-16

523

that the results missed the already lower expectations. 3QFY17 EBITDA

35.6

declined ~6% QoQ to INR2.49b (8.6% below est. of INR2.73b), primarily led

CMP: INR88

TP: INR115(+30%)

Financials & Valuations (INR b)

Y/E Mar

2016 2017E

Net Sales

30.6

31.0

EBITDA

10.2

10.6

PAT

6.9

1.8

EPS (INR)

6.5

1.7

Gr. (%)

NA -74.0

BV/Sh (INR)

3.6

5.3

RoE (%)

NA

38

RoCE (%)

12.7

11.3

P/E (x)

14

52

P/BV (x)

NA

16.7

2018E

35.3

13.0

3.4

3.2

87.0

8.4

46

13.5

28

10.5





Estimate change

TP change

Rating change





by lower-than-expected subscription revenue and subsequent unfavorable

operating leverage. Subscription revenue declined 5% QoQ to INR6.92b

(6.7% lower than est. of INR7.42b) as demonetization adversely impacted

both DTH recharges and subscriber additions. Management estimates

subscription to be 8% higher (ex-demonetization impact), with 8-10% impact

on subscriber addition due to the

“note ban drive”

Key performance indicators sub-par:

DITV added 204k net subscribers in

3QFY17 (est. of +0.28m). It now seems unlikely that DITV will meet its FY17

guidance of 1.5-1.9m net sub adds. ARPU fell 6.5% QoQ to ~INR152 (est. of

INR162). We largely maintain net subs addition estimate of 1.29m, but

revise down ARPU for FY17E by 2% to INR159 per subscriber per month.

EBITDA margin contracted 55bp QoQ to 33.4% (106bp below est.),

largely

led by lower-than-expected subscription income and consequent

unfavorable operating leverage. Content payout declined 8% QoQ to

INR2.2b (est. of INR2.4b) as the lack of sporting events and subscriber down-

trading of packs kept content costs low. While DITV round of content

renewals in September were deferred given the regulatory uncertainty

around content pricing, management is confident of containing content cost

escalation to 6-8% YoY in FY17 and FY18. We revise our content escalation

assumptions from 12% YoY to 8% YoY for FY17.

3Q net debt remained largely unchanged QoQ at ~INR6b. 9MFY17 capex

stood at INR7.3b.

FCF declined from INR0.79b in 2Q to INR0.49b.

Valuation and view:

We largely maintain FY18E/FY19E EBITDA, and expect

15% EBTDA CAGR over FY16-19E, led by 9% net subs CAGR, 3.6% ARPU CAGR

over FY17-19E and operating leverage-led EBITDA margin expansion. DITV

trades at 7.2x FY18E/5.7x FY19E. Maintain our DCF-based TP of INR115.

Buy.

31 January 2017

14

30 January 2017

3QFY17 Results Update | Sector: Technology

Just Dial

Buy

BSE SENSEX

27,850

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val, INRm

Free float (%)

S&P CNX

8,633

JUST IN

Focus on core business; advertisement campaign launch soon

70



PAT exceeds estimate driven by other income:

JUST’s 3QFY17 revenue grew

26.5 / 0.4

8.5% YoY to INR1,803m (est. of INR1,713m), with paid campaigns growing

903 / 318

19.5% YoY (+3.7% QoQ) to 424,830. EBITDA fell 18% YoY to INR257m (est. of

8/-24/-49

1408

INR274m), with margin contracting 470bp to 14.3% (est. of 16%) due to

66.7

higher employee expenses (+440bp as % of sales). Other income of INR197m

CMP: INR382

TP: INR443(+16%)

Financials & Valuations (INR b)

Y/E Mar

2016 2017E

Net Sales

6.9

7.3

EBITDA

1.7

1.1

PAT

1.4

1.2

EPS (INR)

20.4

17.2

Gr. (%)

3.7

-15.9

BV/Sh (INR)

96.7

111.5

RoE (%)

21.1

16.5

RoCE (%)

21.1

16.5

P/E (x)

18.7

22.2

P/BV (x)

4.0

3.4

2018E

8.4

1.0

1.3

18.5

7.5

127.1

15.5

15.5

20.7

3.0





Estimate change

TP change

Rating change



was higher than our estimate of INR130m. Consequently, PAT grew 6% YoY

to INR274m (est. of INR221m).

Omni sales on hold; focus on core business:

JD Omni recorded turnover of

INR10m in 3QFY17; sales of this product are put on hold as JUST is reviewing

its distribution strategy. Management will now focus on its core business

(i.e. Search and Search Plus) by expanding its salesforce and rationalizing the

bottom line. Ad campaigns are also ready to be launched, which should aid

growth and help increase the depth and breadth of database.

Employee addition and ad spends to hit margins hard:

For reviving growth

in listing business and growing Search Plus, the company has earmarked

~INR1b (phased out over several quarters) for ad spends, which should

contribute to overall brand building. Also, addition of new employees will

impact EBITDA.

Valuation and view:

We believe EBITDA margin will be under pressure in

FY18 as JUST is in an investment mode (employee addition, increased ad

spends) to revive growth in core business and promote Search Plus. We cut

FY18E EBITDA by 29%; however, its impact on PAT will be offset by lower tax

rate at 16% in FY18 due to benefits from the merger of JD Global. We thus

maintain earnings for FY18E and introduce FY19 estimates. We expect

revenue CAGR of 11.5% and PAT CAGR of 2.7% over FY16-19E. Maintain

Buy

with a TP of INR443 (20x FY19E EPS).

31 January 2017

15

30 January 2017

3QFY17 Results Update | Sector: Healthcare

Granules India

BSE SENSEX

27,850

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val, INRm

Free float (%)

S&P CNX

8,633

GRAN IN

Continued margin improvement; multiple levers ahead

221



After growing in low-to-mid single-digits for four quarters, revenue grew

25.7 / 0.4

11% YoY to INR3.6b (in-line) in 3QFY17. EBITDA margin came in at 21.2%

151 / 91

(+160bp YoY, +80bp QoQ; est. of 20.2%), much higher than ~11% in FY13,

3/-17/-12

172

led by product mix change and capacity expansion. EBITDA rose 17% YoY to

48.1

INR761m, implying a 4% beat. PAT grew 43% YoY to INR391m (in-line).

CMP: INR116

TP: INR160(+38%)

Buy

Financials & Valuations (INR b)

2016

2017E

Y/E Mar

14.3

14.3

Net Sales

2.8

2.9

EBITDA

1.2

1.6

PAT

5.5

7.0

EPS (INR)

22.8

27.8

Gr. (%)

30.7

40.9

BV/Sh (INR)

21.6

19.9

RoE (%)

14.0

11.7

RoCE (%)

21.0

16.5

P/E (x)

3.7

2.8

P/BV (x)



2018E

Finished dosage continues to deliver robust growth:

Finished dosage

16.8

3.5

2.0

8.0

15.2

59.3

16.6

9.9

14.3

1.9





Estimate change

TP change

Rating change

segment’s revenue grew 33% YoY to ~INR1.6b, driven by scale-up in Rx

business. Revenue of PFI segment declined ~7% YoY, while that of API

segment fell 11% YoY to INR1.2b. Capacity constraints, along with captive

consumption of API, led to muted revenue growth. GRAN expects revenues

to bounce back, led by expanded capacity in API and PFI segments.

Concall takeaways:

1) Plans to file six ANDAs by end-FY17 (including two

complex fillings from Virginia facility). 2) Plans to incur INR9b as capex over

FY17 and FY18 (spent ~INR2.65b in 9MFY17). 3) Re-inspection of the

Gagilapur-based CRAMS JV facility to start from tomorrow; the company

expects resolution over next few days. 4) Fixed asset to reach to INR16b post

FY18. The company expects asset turnover to reach ~2x over next few years.

Earnings acceleration to drive valuation upside:

GRAN trades at ~10x

FY19E EPS. We believe the stock has the potential deliver >50% return over

next 12-18 months, led by multiple re-rating (to >15x forward earnings) and

strong EPS CAGR of ~30%. Our TP of INR160 is based on 16x 1HFY19E PER.

FY17

2Q

3,638

3.1

2,896

742

20.4

185

83

39

513

156

30.4

-51

408

408

43.1

11.2

Est.

3QE

3,621

5.0

2,890

732

20.2

189

92

35

486

145

29.9

-50

391

391

43.8

10.8

-0.2%

Y/E March

(Consolidated)

Net Sales

YoY Change (%)

Total Expenditure

EBITDA

Margins (%)

Depreciation

Interest

Other Income

PBT before EO expense

Tax

Rate (%)

Minority Interest & Profit/

Loss of Asso. Cos.

Reported PAT

Adj PAT

YoY Change (%)

Margins (%)

Quarterly Performance (Consolidated)

1Q

3,226

3.7

2,599

627

19.4

139

81

14

420

133

31.6

2

285

285

24.8

8.8

FY16

2Q

3Q

3,529

3,449

14.7

7.9

2,844

2,772

685

677

19.4

19.6

144

167

88

114

10

26

462

422

144

151

31.1

35.7

-4

323

323

46.2

9.1

0

272

272

15.2

7.9

(INR Million)

Var.

vs Est

-0.7%

4Q

3,723

5.0

2,940

783

21.0

174

99

14

525

193

36.7

0

332

332

48.2

8.9

1Q

3,498

8.4

2,813

685

19.6

163

79

30

472

154

32.5

-71

390

390

36.5

11.1

3Q

3,595

4.2

2,832

763

21.2

187

84

43

535

176

32.9

-31

390

390

43.5

10.8

4QE

3,605

-3.2

2,856

749

20.8

188

100

28

489

151

30.9

-67

405

405

49.2

11.2

FY16

14,295

11.2

11,571

2,725

19.1

643

399

77

1,759

617

35.1

2

1,140

1,140

36.9

8.0

FY17E

14,336

0.3

11,397

2,939

20.5

723

346

140

2,010

637

31.7

-220

1,593

1,593

39.7

11.1

4.3%

10.1%

31 January 2017

16

RESULTS

FLASH

30January 2017

Results Flash | Sector: Engineering

GE T&D

Neutral

BSE SENSEX

27850

S&P CNX

8633

CMP: INR312

TP: INR320(+2.5%)

We will revisit our estimates post

earnings call/management

interaction.

Beat at operating level driven by strong execution

But gross margin disappoints



Sales increased 63% YoY to INR11.6b, exceeding our estimate of INR8.5b and

consensus of INR8.7b. Strong execution was likely driven by commissioning of

Phase 1 of the Champa-Kurukshetra HVDC line, which was being executed for

PGCIL.



Gross margin contracted 210bp YoY to 27.4%.



EBITDA stood at INR0.72b. Margin of 6.2% was higher than our estimate of

4.4% and consensus of 5.6%, driven by better operating leverage.



Other income of INR0.52b was above our estimate of INR0.13b.



PAT of INR0.44b too came in higher than our estimate of INR40m and

consensus of INR0.16b.

Valuation and view:

We will revisit our estimates post the earnings call. Outlook on

growth and margin resurrection will be keenly sought. Based on current estimates,

the stock trades at 35/31x FY18E/19E EPS of INR10.2/11.4. Maintain

Neutral.

Conference Call Details

Date:

31 January 2017

Time:

4:00pm

IST

Dial-in details:

+91-22-39600603

st

Financials & Valuations (INR b)

2016

2017E

Y/E Mar

Net Sales

34.1

39.5

EBITDA

2.3

2.4

NP

0.8

1.4

EPS (INR)

3.0

5.5

EPS Gr. (%)

-35.7

82.6

BV/Sh. (INR)

52.1

50.2

RoE (%)

5.9

-7.0

RoCE (%)

10.1

13.1

Payout (%)

59.5

40.0

Div. Yield

0.5

-0.4

2018E

44.8

4.9

2.6

10.2

83.7

55.5

19.2

23.7

40.0

1.2

Quarterly Performance

Y/E March

Sales

Change (%)

EBITDA

Change (%)

As of % Sales

Depreciation

Interest

Other Income

Extra-ordinary Items

PBT

Tax

Effective Tax Rate (%)

Reported PAT

Change (%)

Adj PAT

Change (%)

1Q

7,660

1.2

72

-90.4

0.9

212

117

412

0

155

54

34.7

102

-67.5

102

-64.4

FY16

2Q

3Q

8,729

7,141

1.2

1.2

680

-532

-22.4

NA

7.8

-7.4

215

215

143

168

213

326

0

0

536

-589

174

-205

32.6

NA

361

-384

1.8 -1,582.6

361

-384

1.8

NA

4Q

1Q

9,715

8,546

-28.6

11.6

850

21

-18.5

-70.3

8.7

0.2

216

217

189

226

64

326

0

2,330

509

-2,425

210

-455

41.3

18.8

299

-1,970

-44.8 -2,041.0

299

360

-44.8

254.6

FY17

2Q

3Q

8,340 11,623

-4.4

62.8

339

722

-50.1

-235.7

4.1

6.2

220

221

239

343

435

522

0

0

315

679

109

236

34.6

34.7

206

443

-43.0

-215.4

206

443

-43.0

-215.4

FY16E

4QE

10,977

13.0

1,292

52.0

11.8

233

98

-322

0

640

233

36.4

407

36.2

407

36.2

34,135

-7.8

2,324

-9.0

6.8

873

589

427

0

1,289

508

39.4

781

0.0

781

2.0

FY17E

39,486

15.7

2,374

-9.0

6.0

873

589

427

0

1,339

508

37.9

831

0.0

831

2.0

(INR Million)

MOSL

Var.

3QE Vs Est

8,500

37

14.3

370

95

-2,706

4.4

220

220

130

0

60 1,032

20

33.3

40 1,008

-122.0

40 1,008

-122.0

31 January 2017

17

RESULTS

FLASH

30January 2017

Results Flash | Sector: Telecom

V Guard

Neutral

BSE SENSEX

27,850

S&P CNX

8,633

CMP: INR193



TP: INR179(-7%)

We will revisit our estimates post

earnings call/management

interaction.

Results beat estimates; measures to counter cash crunch offer support

V Guard’s (VGRD) revenue increased 10.4% to INR4.59b (est. of INR4.16b) in

3QFY17 from INR4.16b in 3QFY16. Management commented that

demonetization took a toll to an extent on some product segments. To counter

this, the company arranged for financing facilities through NBFCs, installed

debit/credit card machines and offered cash discounts to channel partners.

Sales in Tamil Nadu were impacted due to the cyclone Vardah and the

deteriorating socioeconomic situation.



EBITDA grew 11% YoY to INR386m (est. of INR283m) from INR346m in the

year-ago period. EBITDA margin largely remained flat at 8.4%.



Other income grew to INR33m from INR18m in 3QFY16, while finance cost

declined from INR15m to INR5m.



Aided by higher other income and lower finance cost, PAT grew strongly by

30% to INR280m (est. of INR183) from INR215m in 3QFY16.



The board of VGRD recommended a bonus issue of two equity shares of INR1

each for every five shares held.



VGRD announced commencement of commercial production of stabilizers and

electric water heaters from March 2017 with an investment of INR375m.

Key questions for management



Details on revenue growth/margins in each segment, new product launches

and geographical expansion.



Whether the company will continue facing the impact of demonetization in

4QFY17.



Outlook for stabilisers business, considering the upcoming summer season.

Valuation and view:

We will revisit our estimates post the earnings call. Based on

our current estimates, at CMP of INR193, the stock trades at 34x/27x P/E on

FY18E/FY19E EPS. We currently have a

Neutral

rating on the stock.

Conference Call Details

Date:

31st Jan 2017

Time:

3:30pm IST

Dial-in details:

+91-22-3361 3410

Financials & Valuations (INR b)

2016

2017E

Y/E Mar

Sales

18.6

19.5

EBITDA

1.8

2.0

NP

1.1

1.4

Adj EPS (INR)

3.7

4.5

EPS Gr. (%)

57.5

21.6

BV/Sh (INR)

15.6

19.0

RoE (%)

26.3

26.1

RoCE (%)

24.9

25.9

Payout (%)

22.7

26.7

Valuations

P/E (x)

52.0

42.7

P/BV (x)

12.3

10.2

EV/EBITDA (x) 28.9

25.2

Div Yield (%)

0.4

0.5

2018E

22.5

2.5

1.7

5.8

27.7

23.2

27.4

27.4

27.2

33.5

8.3

19.8

0.7

31 January 2017

18

RESULTS

FLASH

Monsanto India

BSE SENSEX

27,850

S&P CNX

8,633

30January 2017

Results Flash | Sector: Telecom

CMP: INR2327

Revenue miss, but EBITDA and PAT beat estimates





Under Review

We will revisit our estimates post

earnings call/management

interaction.

Financials & Valuations (INR b)

2016

2017E

Y/E Mar

Sales

5.4

6.1

EBITDA

1.1

1.3

NP

1.0

1.2

Adj EPS (INR)

60.1

68.4

EPS Gr. (%)

-2.3

13.8

BV/Sh (INR)

239.4

235.6

RoE (%)

26.4

28.8

RoCE (%)

26.5

28.8

Payout (%)

61.6

105.6

Valuations

P/E (x)

38.7

34.0

P/BV (x)

9.7

9.9

EV/EBITDA (x) 37.2

30.1

Div Yield (%)

1.3

2.6

2018E



7.3

1.7

1.5

87.2

27.5

250.6

35.9

35.9

82.8

26.7

9.3

23.7

2.6

MCHM’s revenue increased 6.7% to INR1,639m (est. of INR1,767m) in 3QFY17

from INR1,537m in 3QFY16.

EBITDA grew to INR600m (est. of INR498m) from INR466m in 3QFY16, implying

growth of 29%. Margin expanded to 36.6% (est. of 28.2%) from 30.3% in

3QFY16, driven by employee costs at 6.5% of sales (down 450bp from 3QFY16)

and raw material costs at 32.9% of sales (down 300bp from 3QFY16).

Consequently, adjusted PAT stood at INR599m (est. of INR448m), as against

INR463m in 3QFY16, implying growth of 30% YoY.

Valuation and view:

We will revisit our estimates post our interaction with

management. Based on our current estimates, at CMP of INR2,327, the stock

trades at 34x/27x P/E on FY17E/FY18E EPS. We currently have the stock rating

Under Review.

31 January 2017

19

RESULTS

FLASH

Kitex Garments

BSE SENSEX

27,850

S&P CNX

8,633

30January 2017

Results Flash | Sector: Telecom

CMP: INR422











TP: INR631(+50%)

Buy

We will revisit our estimates post

earnings call/management

interaction.

Revenue in line, but miss on EBITDA margin and PAT

Kitex Garments’ (KTG) revenue increased 20.5% to INR1,424m (est. of

INR1,394m) in 3QFY17 from INR1,181m in 3QFY16.

Revenue of garments segment grew 19% YoY to INR1,253m, while that of

fabrics (net of inter segment sales) grew 31% to INR171m.

EBITDA grew 17% to INR486m (est. of INR506m) from INR417m in 3QFY16,

with margin contracting 120bp to 34.1% (est. of 36.3%) from 35.3%.

Interest cost declined to INR23m from INR42m in 3QFY16.

Consequently, PAT improved 32% YoY to INR318m (est. of INR345m) from

INR241m.

Conference Call Details

Date:

31st Jan 2017

Time:

12:00pm IST

Dial-in details:

+91-22-3938 1079

Financials & Valuations (INR b)

2016

2017E

Y/E Mar

Sales

5.5

6.0

EBITDA

1.9

2.1

NP

1.1

1.4

Adj EPS (INR)

23.6

29.3

EPS Gr. (%)

13.8

24.0

BV/Sh (INR)

77.3

99.6

RoE (%)

35.5

33.1

RoCE (%)

27.4

30.3

Payout (%)

14.9

24.0

Valuations

P/E (x)

17.9

14.4

P/BV (x)

5.5

4.2

EV/EBITDA (x)

9.9

8.4

Div Yield (%)

0.7

1.4

2018E

6.8

Key questions for management

2.4



Impact of additional duty drawback on margins in 3QFY17. EBITDA margin

1.7

excluding the impact.

35.1



Order visibility for garments business (base quarter had impact of

19.8

discontinuance of jockey business).

126.5

31.0



Traction from new clients and in-licensed brand.

30.8

23.4

Valuation and view:

We will revisit our estimates post the earnings call. Based on

12.0

3.3

6.9

1.7

our current estimates, at CMP of INR422, the stock trades at 14x/12x P/E on

FY17E/FY18E EPS. We currently have a

Buy

rating on the stock.

31 January 2017

20

December 2016 Results Preview | Sector: Automobiles

Bajaj Auto

Bloomberg

Equity Shares (m)

M. Cap. (INR b)/(USD b)

52-Week Range (INR)

1,6,12 Rel Perf. (%)

BJAUT IN

289.4

778 / 11

3122 / 2173

-3 / 4 / 4

CMP: INR2,689



TP: INR3,097 (+18%)

Buy

Financial Snapshot (INR b)

Y/E MARCH

2016 2017E 2018E 2019E

Sales

EBITDA

NP

Adj. EPS (INR)

EPS Gr. (%)

BV/Sh. (INR)

RoE (%)

RoCE (%)

Payout (%)

Valuation

P/E (x)

P/BV (x)

EV/EBITDA (x)

Div. Yield (%)

20.4

6.3

14.1

2.0

20.2

5.6

14.1

2.4

16.9

4.9

11.5

2.8

14.4

4.3

9.6

3.6



225.9

47.8

38.1

131.8

25.1

424.8

33.2

32.3

50.2

221.4

45.1

38.5

133.0

0.9

479.7

29.4

28.6

58.7

259.8

53.3

46.0

158.9

19.4

548.4

30.9

30.0

56.7

298.6

61.0

54.0

186.5

17.4

623.0

31.8

30.7

60.0









Overall volume declined 10.5% YoY (-17% QoQ) to 851.6k units due

to a 17.5% YoY fall in exports, while domestic sales volumes

declined 5% YoY due to the impact of demonetization in November

and December. Total 2W sales declined 10% YoY in 3QFY17. 3W

volumes fell sharply by 17% YoY primarily due to a fall in exports as

currency issues in African markets continued along with a decline in

domestic 3Ws.

We expect realization to grow 1% YoY (+1% QoQ) as the launch of

premium products in 2Ws is shadowed by a decline in 3Ws. As a

result, net revenues are expected to decline by 9.3% YoY.

EBITDA margin should contract 160bp YoY (-200bp QoQ) to 19.4%

due to deterioration of product mix as well as negative operating

leverage.

We expect PAT to decline ~5.7% YoY (-24% QoQ) to INR8.4b.

We have lowered our total volume estimates by 4%, resulting in EPS

cut of 5% for FY17E/FY18E.

The stock trades at 16.9x FY18E and 14.4x FY19E EPS; maintain

Buy.

Key issues to watch



Update on demand environment at the retail level, channel inventory;

outlook for FY18 based on impact of demonetization.



Outlook for export demand and pricing, especially the Nigerian market

(sharp currency depreciation); outlook for FY18.

Quarterly Performance

Volumes ('000 units)

Growth YoY (%)

Realization (INR/unit)

Growth YoY (%)

Net Sales

Change (%)

RM/Sales %

Staff cost/Sales %

Oth. Exp./Sales %

EBITDA

EBITDA Margins (%)

Other Income

Interest

Depreciation

PBT

Tax

Effective Tax Rate (%)

Adj. PAT

Change (%)

1Q

1,013

2.5

55,273

4.0

55,993

6.6

67.4

4.3

8.0

11,402

20.4

3,063

1

784

13,680

4,106

30.0

9,574

29.4

FY16

2Q

3Q

1,057

951

0.1

-3.4

57,543 58,486

1.9

1.8

60,799 55,649

2.0

-1.6

66.7

66.4

4.0

4.1

7.7

8.5

13,167 11,713

21.7

21.0

2,680

1,997

3

3

780

746

15,063 12,961

4,540

3,947

30.1

30.5

10,524

9,013

26.4

4.7

4Q

872

11.4

61,490

1.5

53,627

13.2

65.9

3.8

8.9

11,534

21.5

2,569

4

761

13,338

3,844

28.8

9,493

52.7

1Q

995

-1.8

57,784

4.5

57,480

2.7

67.2

4.7

7.7

11,763

20.5

2,671

2

775

13,657

3,873

28.4

9,784

2.2

FY17

2Q

3QE

1,032

852

-2.3

-10.5

58,676 59,263

2.0

1.3

60,545 50,471

-0.4

-9.3

67.0

67.5

4.3

5.2

7.4

8.0

12,961

9,788

21.4

19.4

3,420

2,900

7

3

770

800

15,605 11,885

4,378

3,387

28.1

28.5

11,228

8,498

6.7

(5.7)

(INR Million)

FY16E

4QE

848

-2.8

62,455

1.6

52,949

-1.3

66.7

4.8

8.5

10,637

20.1

2,873

-3

817

12,696

3,707

29.2

8,989

(5.3)

3,893

2.2

58,274

2.8

226,876

5.0

66.3

4.0

8.2

48,835

21.5

10,736

11

3,072

56,488

17,328

30.7

39,124

28.4

FY17

3,726

(4.3)

59,432

2.0

221,444

-2.4

66.8

4.7

7.9

45,746

20.7

11,864

9

3,161

54,439

15,345

28.2

38,498

-1.6

31 January 2017

21

December 2016 Results Preview | Sector: Healthcare

Cadila Healthcare

Bloomberg

Equity Shares (m)

M. Cap. (INR b)/(USD b)

52-Week Range (INR)

1,6,12 Rel Perf. (%)

Financial Snapshot (INR Billion)

y/e march

2016 2017E

Sales

EBITDA

NP

EPS (INR)

EPS Gro. (%)

BV/Sh. (INR)

RoE (%)

RoCE (%)

Valuations

P/E (x)

P/BV (x)

EV/EBITDA (x)

Div. Yield(%)

23.5

6.9

16.7

0

26.6

5.9

17.5

0

19.4

4.8

13.0

0

15.8

3.8

10.6

0



CDH IN

1023.7

370 / 5

429 / 296

-10 / 11 / 9

CMP: INR362



TP: INR450 (+24%)

Buy

2018E

120.5

28.9

19.2

18.7

37.5

75.9

27.2

22.8

2019E

141.4

34.6

23.4

22.9

22.2

94.4

26.8

23.7



97.5

23.0

15.8

15.4

37.7

52.3

32.8

23.3

100.3

22.0

13.9

13.6

-11.8

61.5

23.9

18.9





Cadila Healthcare's (CDH) 3QFY17 revenue is likely to grow 6.4%

YoY to INR25.8b, driven by 5% YoY growth in the US formulations

business. Growth in the US formulations business is expected to be

largely driven by the recent launch of authorized generic of Asacol

HD.

Overall export formulations are expected to grow 5.4% YoY to

INR13.7b, while domestic formulation is likely to grow 13.4% YoY to

INR10.1b.

We expect EBITDA to decline 4% YoY to INR5.5b and the margin to

contract 230bp. Adj. PAT is also likely to decline 5.5% YoY to

INR3.7b.

We believe CDH has made investments in the right areas, and will

start accruing benefits over next 2-3 years. We expect sharp ramp-

up in the US business post successful remediation of Moraiya

warning letter. We estimate 10% EPS CAGR for FY16-18E, with

better return ratios over next two years.

The stock trades at 19.3x FY18E EPS. Maintain Buy.

Key issues to watch out



Update on US FDA resolution for Moraiya facility.



Outlook for recovery in domestic formulations.



Progress on improvement in balance sheet.

Quarterly Performance

Y/E March

Net Revenues

YoY Change (%)

EBITDA

Margins (%)

Depreciation

Interest

Other Income

PBQ before EO Income

EO Exp/(Inc)

PBQ after EO Income

Tax

Rate (%)

Min. Int/Adj on Consol

Adj PAT

YoY Change (%)

Margins (%)

E: MOSL Estimates

1Q

23,159

23.7

5,111

22.1

691

119

240

4,541

-506

5,047

577

11.4

-132

4,096

103.2

17.7

FY16

2Q

3Q

23,308

24,284

10.6

10.9

5,907

5,787

25.3

23.8

725

770

130

126

200

255

5,252

5,146

-155

9

5,407

5,137

736

1,149

13.6

22.4

-79

92

4,595

3,903

64.6

38.6

19.7

16.1

4Q

24,491

7

5,814

23.7

783

100

241

5,172

-8

5,180

1,259

24.3

34

3,881

-15.7

15.8

1Q

22,871

-1.2

5,239

22.9

843

140

153

4,409

2

4,407

966

21.9

-121

3,564

-13

15.6

FY17E

2Q

3QE

23,531

25,827

1

6.4

5,160

5,553

21.9

21.5

864

860

187

140

236

215

4,345

4,768

0

0

4,345

4,768

1,068

1,200

24.6

25.2

-99

-120

3,376

3,688

-26.5

-5.5

14.3

14.3

(INR Million)

FY16

FY17E

4QE

28,059

14.6

6,011

21.4

906

99

188

5,194

0

5,194

1,071

20.6

-140

4,263

9.9

15.2

95,242

12.9

20,695

21.7

3,022

463

918

18,128

-660

18,788

4,298

22.9

300

14,350

22.4

15.1

100,288

5.3

21,963

21.9

3,473

566

792

18,716

0

18,716

4,305

23

-480

14,891

3.8

14.8

31 January 2017

22

December 2016 Results Preview | Sector: Consumer

Dabur

Bloomberg

Equity Shares (m)

M. Cap. (INR b)/(USD b)

52-Week Range (INR)

1,6,12 Rel Perf. (%)

DABUR IN

1761.5

487 / 7

320 / 231

-4 / -8 / -4

CMP: INR277







TP: INR300 (+8%)

Neutral

Financial Snapshot (INR b)

Y/E March

Sales

EBITDA

Adj. PAT

Adj. EPS (INR)

EPS Gr. (%)

BV/Sh.(INR)

RoE (%)

RoCE (%)

Payout (%)

Valuations

P/E (x)

P/BV (x)

EV/EBITDA (x)

Div. Yield (%)

38.9

11.7

31.1

0.7

38.6

9.9

31.0

0.9

32.6

8.4

26.0

1.1

27.8

7.1

22.0

1.3

2016 2017E 2018E 2019E

77.6

15.0

12.5

7.1

17.2

23.6

33.3

27.7

28.0

79.9

15.0

12.6

7.2

0.8

27.9

27.8

23.7

35.0

91.0

17.5

14.9

8.5

18.5

32.9

27.9

24.1

35.0

103.7

20.3

17.5

10.0

17.2

38.8

27.8

24.7

35.0



We expect sales to grow 2% YoY to INR19.9b, led by ~5% domestic

organic volume growth.

We expect Dabur’s EBITDA margin to contract 150bp.

Hence, we have modeled EBITDA and PAT decline of 6% and 5%,

respectively, in 3QFY17.

The stock trades at 32.6x FY18E EPS of INR8.5; maintain Neutral.

Key issues to watch for



Domestic volume growth and outlook for rural demand.



Update on project CORE.



Margin performance in international business.



Competitive intensity, especially from Patanjali.

Quarterly Performance (Consolidated, INR m)

49%

Y/E March

Domestic Vol Growth (%)

Net Sales

YoY Change (%)

Total Exp

EBITDA

Margins (%)

YoY Growth (%)

Depreciation

Interest

Other Income

PBT

Tax

Rate (%)

Minority Interest

Adjusted PAT

YoY Change (%)

E: MOSL Estimates

1Q

8.1

19,017

15,861

3,157

16.6

325

118

531

3,244

620

19.1

10

2,615

22%

FY16

2Q

3Q

5.5

-2.5

19,553 19,552

15,551

4,001

20.5

328

125

558

4,106

744

18.1

0

3,362

12%

15,822

3,730

19.1

320

111

655

3,953

783

19.8

3

3,167

4%

0%

4Q

7.0

19,800

15,688

4,112

20.8

358

132

578

4,201

868

20.7

15

3,318

27%

1Q

4.1

19,239

1.2

15,796

3,443

17.9

9.1

343

118

655

3,637

701

19.3

8

2,927

12.0

FY17

2Q

3QE

4.5

5.0

19,757 19,943

1.0

2.0

15,730 16,437

4,028

3,505

20.4

17.6

0.7

-6.0

357

384

166

113

893

753

4,397

3,762

873

752

19.9

20.0

11

3

3,513

3,007

4.5

-5.1

FY16

4QE

3.5

20,919

5.7

16,915

4,004

19.1

-2.6

442

122

522

3,962

793

20.0

4

3,165

-4.6

4.5

77,616

-0.6

62,614

15,002

19.3

15.8

1,332

485

2,352

15,538

2,999

19.3

27

12,512

17.4

FY17

4.3

79,858

2.9

64,878

14,980

18.8

-0.1

1,527

519

2,823

15,757

3,120

19.8

26

12,612

0.8

31 January 2017

23