16 November 2017

Market snapshot

Equities - India

Close

Chg .%

Sensex

32,760

-0.6

Nifty-50

10,118

-0.7

Nifty-M 100

19,230

-1.1

Equities-Global

Close

Chg .%

S&P 500

2,565

-0.6

Nasdaq

6,706

-0.5

FTSE 100

7,373

-0.6

DAX

12,976

-0.4

Hang Seng

11,413

-1.6

Nikkei 225

22,028

-1.6

Commodities

Close

Chg .%

Brent (US$/Bbl)

62

0.9

Gold ($/OZ)

1,278

-0.2

Cu (US$/MT)

6,736

0.2

Almn (US$/MT)

2,087

1.2

Currency

Close

Chg .%

USD/INR

65.2

-0.3

USD/EUR

1.2

0.1

USD/JPY

113.1

-0.3

YIELD (%)

Close

1MChg

10 Yrs G-Sec

7.0

0.0

10 Yrs AAA Corp

7.8

0.0

Flows (USD b)

15-Nov

MTD

FIIs

-0.1

1.8

DIIs

0.1

0.5

Volumes (INRb)

15-Nov

MTD*

Cash

345

415

F&O

6,966

6,689

Note: YTD is calendar year, *Avg

YTD.%

23.0

23.6

34.0

YTD.%

14.6

24.6

3.2

13.0

21.5

15.2

YTD.%

11.1

10.9

22.0

22.4

YTD.%

-4.0

12.2

-3.3

YTDchg

0.5

0.2

YTD

7.3

11.9

YTD*

304

5,591

Today’s top research idea

Britannia Industries: Best-of-breed earnings growth visibility

commands premium multiples

v

BRIT reported 7.4% YoY consolidated sales growth in 2QFY18. Standalone sales

too were up by 7.8% YoY.

v

We are enthused with the consistent healthy performance in a difficult

operating environment. Rapidly expanding distribution, continuing investment

in R&D and significant expansion of its own manufacturing indicate

management’s optimism about the growth prospects. Opportunity beyond

biscuits is also substantially high. Continuing premiumization, significant

incremental cost savings and a favorable commodity cost outlook mean that

15% EBITDA margin is now achievable.

v

We maintain Buy with a target price of INR5,845 (46x December 2019E EPS,

20% premium to three-year average due to improving visibility on both volume

recovery and margin growth).

Research covered

Cos/Sector

Fund Folio

Britannia Inds

Fortis Health.

CEAT

Manpasand Beverages

Repco Home Fin

KNR Construction

Prime Focus

Indo Count Inds

Key Highlights

Oct 17: Indian Mutual Fund Tracker — Equity AUM witnesses quickest

INR1t jump

Best-of-breed earnings growth visibility commands premium multiples

RHT assets buyback to be value-accretive

Stability in performance on the horizon; Maintain Buy

Riding on the back of distribution network expansion

Strong operating performance; GNPL declines sequentially

Above-estimated performance driven by better-than-expected margin

Creative services to drive earnings

Muted quarter; falling cotton prices to ease pressure

Piping hot news

Decks cleared for first mega CEZ; 45 companies may invest Rs 15k-crore in phase-I

v

The government has given the go-ahead for setting up India’s first mega

coastal economic zone (CEZ) at the Jawaharlal Nehru Port in Maharashtra as

part of a plan to develop 14 such industrial clusters to spur manufacturing and

generate jobs…

Chart of the Day: Sector allocation of domestic MFs in October 2017

PSU Banks, Oil & Gas, Telecom, Consumer, Infra increased, while Private Financials, Technology and Metals showed

signs of moderation

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 textbox for the detailed news link

1

Debt held by stressed firms

hits record high in India

Fears that Reliance

Communications Ltd may have

defaulted on bond payments

seem to have sunk the firm’s

dollar bonds on Tuesday. But the

company is not alone in facing

troubles relating to repayment of

debt …

2

Venezuela’s state-owned PDVSA has offered to supply crude oil to India’s

government-run petroleum refineries towards $449-million dividend it

owes to ONGC Videsh (OVL). “ONGC Videsh has been assured that PDVSA

is committed to these agreements (with OVL) and payments will be made

through the existing offtake channels or through new (crude supply)

agreements with the government-owned refineries in India and

investment of ONGC in Venezuela will be protected,” OVL said in an email

reply to FE’s queries…

To pay back ONGC Videsh, Venezuela’s PDUSA offers oil in lieu of

cash

3

Difficult to have BS-VI vehicles

for Delhi by 2018: Auto

industry

Auto industry today said the

government's move to advance

introduction of BS VI fuels in the

Capital is a step in the right

direction to fight pollution but it is

not in a position to launch vehicles

complying with the strict emission

norm before April 2020…

4

In what comes as another boost

for India’s electric vehicle

programme, state-owned Energy

Efficiency Services Ltd (EESL) has

said it will float another tender of

around 10,000 electric vehicles

during March-April, much before

it expects to complete the current

bidding process in June …

EESL to float tender for 10,000

additional electric vehicles

5

The government is planning to ask

more public sector banks to enter

into an agreement with it if they

want more capital, provided banks

improve their performance. This

was communicated by finance

ministry officials to the bankers in

the two-day meeting that

concluded on November 12.

Earlier, the government had

entered into an agreement with

11 banks, and had asked them to

submit a turnaround plan and had

linked capital infusion with the

pace of turnaround …

More banks may sign MoUs

with govt

6

A bitter harvest: low prices

leave farmers seething

The Narendra Modi government is

finding it hard to live up to its

promise of doubling farm incomes

by 2022 given the challenge it

faces in addressing the

unremunerative prices of farm

produce. The kharif harvest began

a little over a month ago, and

already the prices of a majority of

the crops have slipped below the

minimum support price (MSP)…

16 November 2017

7

ONGC may shelve shale gas

exploration programme due to

‘limited success’

State-run Oil and Natural Gas

Corporation (ONGC) may shelve

its shale gas exploration plans,

two executives from the company

said, citing the firm’s “limited

success” in the exploration

programme.

“We have drilled around 22-23

wells as part of our shale gas

exploration programme…

2

Fund Folio

Reliance Industries

Indian Mutual Fund Tracker

Equity AUM witnesses quickest INR1t jump

n

n

Database Periodical | 15 November2017

14 October 2017

Q2FY18 Results Update | Sector: Oil & Gas

n

n

Domestic MFs maintained their positive momentum in October, with equity AUM touching a new high of

INR7.1t (+7.4% MoM) in the month – also marking the quickest INR1t jump.

The increase in equity AUM was led by a rise in market indices (Nifty up 5.6% MoM). While gross inflows

declined 13% MoM to INR299b, redemptions fell 10% MoM to INR139b. Consequently, net inflows decreased

from INR189b in September to INR160b in October.

Total AUM of the MF industry rose 5% MoM in October to touch a new high of INR21.4t. This rise was

primarily led by an increase in AUM of equity funds (INR488b), income funds (INR458b) and balanced funds

(INR126b).

Equity AUM, as a percentage of total AUM, rose 80bp MoM to 33.1% in October. Equity AUM accounts for

4.9% of India’s market capitalization.

The month saw a notable change in sector and stock allocation of funds. On an MoM basis, the weight of PSU

Banks, Oil & Gas, Telecom, Consumer, Infrastructure and Real Estate increased, while that of Private

Financials, Technology and Metals showed signs of moderation.

Global Cyclicals’ weight rose 20bp MoM to 10.6%, as the weight of Oil & Gas increased from 6.7% in

September to 7% in October, while that of Metals moderated for the second consecutive month in October.

Defensives’ weight remained stable at 23.9%.

In the last 12 months, the weight of Technology has decreased sharply by 120bp to 6.3% in October. As a

result, Technology has fallen to the ninth position in sector allocation of mutual funds – it was at the fifth

position 12 months ago.

Of the top 10 stocks in terms of value increase MoM, four were from Banks.

SBI saw a value increase of INR32.8b in October, as the stock was up 20.5%. Notably, the stock saw net selling

by 14 funds out of the top 20 funds.

HDFC Bank was also one of the preferred stocks among MFs in October, with net buying by 14 funds. Value

increased by INR11.9b, despite the stock remaining flat during the month.

Coal India, one of the least preferred stocks among MFs in October, saw net selling by 13 funds. Value

decreased by INR3.4b, despite the stock gaining 5.8% in the month.

Exhibit 2:

Total AUM touched a new high, the quickest

Some interesting facts

n

n

n

n

n

n

n

Exhibit 1: Equity AUM touched a new high of INR7.1t; quickest

INR1t jump

Equity AUM Incl. ELSS (INR t)

INR1t jump since Feb-15

Total AUM (INR t)

5.20

4.03

7.08

6.29

11.8

12.0

13.2

14.2 15.2

16.3

17.4

19.3 20.6

21.4

Flows: Net inflows decline 15% MoM to INR160b in October

n

Mutual funds’ gross inflows remained lower at INR299b (-13% MoM) in October; also redemptions fell 10%

MoM to INR139b. Consequently, net inflows fell 15% MoM to INR160b in the month.

16 November 2017

3

Exhibit 3: Monthly trend of sales, redemptions and net amount raised by mutual funds (toward equity)

400

300

200

100

0

-100

-200

-300

Inflows in Equity Incl. ELSS (INR b)

Redemptions in Equity Incl. ELSS (INR b)

299

160

-139

Exhibit 4: Yearly trend of net inflows by mutual funds (toward

equity)

Net Inflow/Outflow in Equity Incl. ELSS (INR b)

Exhibit 5: Yearly trend of sales and redemptions by mutual

funds (toward equity)

Sale in Equity Incl. ELSS (INR b)

1,7281,866

1,206

1,159

906

549

2,636

266 311

14

-158

495

77

-156 -104

1,082

720 494 690 574 414 447

-816

-409 -481 -848 -498 -571 -551 -712

-822-1,317

CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17

YTD

CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17

YTD

-1,477

Sectoral allocation of funds: Capital Goods, Cement, Healthcare over-owned

n

n

Top sectors where ownership of mutual funds vis-à-vis BSE-200 is at least 1% higher:

Capital Goods (17 funds

over-owned), Cement (13 funds over-owned), Healthcare (9 funds over-owned), Autos (9 funds over-owned) and

Metals (5 funds over-owned).

Top sectors where ownership of mutual funds vis-à-vis BSE-200 is at least 1% lower:

Consumer (17 funds

under-owned), Oil & Gas (17 funds under-owned), Technology (17 funds under-owned), NBFCs (13 funds under-

owned) and Telecom (13 funds under-owned).

-

MoM Chg (pp)

16.7

9.7

-

-

-

-

-

Exhibit 6: MFs weight in Nifty (%)

-

-

0.3

Oct Weight (%)

8.3

8.0

0.1

0.4

0.1

0.2

0.1

0.1

7.0

6.5

6.4

6.3

4.6

3.6

3.6

3.3

3.1

1.4

1.3

1.1

1.0

1.0

0.5

16 November 2017

4

Britannia Industries

BSE SENSEX

32,760

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

10,118

BRIT IN

120.0

568.7/8.9

4926/2776

3/26/38

576

49.3

15 November 2017

2QFY18 Results Update | Sector: Consumer

CMP: INR4,741

n

TP: INR5,845(+23%)

Buy

Best-of-breed earnings growth visibility commands premium multiples

Financials & Valuations (INR b)

2017 2018E

Y/E Mar

89.6

99.0

Net Sales

11.9

14.1

EBITDA

8.8

10.1

PAT

73.7

84.5

EPS (INR)

7.3

14.7

Gr. (%)

224.7 271.9

BV/Sh (INR)

36.9

34.0

RoE (%)

31.1

29.0

RoCE (%)

64.3

56.1

P/E (x)

47.5

39.7

EV/EBITDA (x)

2019E

118.6

17.8

12.8

106.9

26.4

335.3

35.2

30.4

44.4

31.1

n

n

n

Estimate change

TP change

Rating change

BRIT reported 7.4% YoY consolidated sales growth

in 2QFY18. Standalone

sales too were up by 7.8% YoY. This implies that subsidiary sales grew decently

by 1.8% YoY, despite a difficult operating environment in the Middle East. Base

business volume growth is expected to be ~5% (press release states mid-single-

digit volume growth), as against our estimate of 6% growth. Management

stated that trade channels have normalized post GST and that they are seeing

improving consumer offtake.

Consolidated gross margin expanded 70bp YoY

(est. flat) to 37.6%.

Management mentioned that prices of key raw materials were stable in

2QFY18. EBITDA margin expanded 130bp YoY to 14.5% (est. of 15.3%).

Concall highlights:

(1)

Cost-efficiency programs will generate savings of

INR2.5b in FY18 (FY17: INR1.5b); 40% of the yearly target achieved in 1HFY18.

Focus will be on distance reduction, which is currently at 400km and expected

to reduce further by 25% over 2-3 years. Wastage reduction is another area of

cost saving. Network optimization will be done under the GST regime over next

2-3 years. Also, it is negotiating with vendors that have got low rates of GST.

(2)

Gained 170bp market share in weak states in central India. Market shares are

still in early teens in these states.

(3)

Direct reach is 1.8m outlets.

Valuation view:

We are enthused with the consistent healthy performance in a

difficult operating environment. Rapidly expanding distribution, continuing

investment in R&D and significant expansion of its own manufacturing indicate

management’s optimism about the growth prospects. Opportunity beyond

biscuits is also substantially high. Continuing premiumization, significant

incremental cost savings and a favorable commodity cost outlook mean that

15% EBITDA margin is now achievable. We maintain

Buy

with a target price of

INR5,845 (46x December 2019E EPS, 20% premium to three-year average due

to improving visibility on both volume recovery and margin growth).

16 November 2017

5

Fortis Healthcare

BSE SENSEX

32,760

S&P CNX

10,118

15 November 2017

Update | Sector: Healthcare

CMP: INR140

n

n

TP: INR185 (+32%)

Buy

RHT assets buyback to be value-accretive

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 (%)

FORH IN

463.1

231/126

-8/-36/-38

65.0

1.0

838.0

65.7

n

n

n

Fortis (FORH) plans to acquire all the assets of RHT for INR46.5b. Net outflow for the

company will be ~INR36b, as it owns ~30% stake in RHT (worth ~INR10-10.5b).

RHT asset acquisition is expected to be value-accretive to the tune of ~INR30-

40/share.

We maintain our Buy rating on FORH, with an SOTP-based TP of INR185/share.

The court case between promoters and Daichi remains a key overhang on the stock.

Financials Snapshot (INR b)

2017 2018E 2019E

Y/E Mar

Net Sales

45.7

51.2

57.4

EBITDA

3.5

5.4

7.1

PAT

4.8

0.9

2.3

EPS (INR)

10.3

1.9

4.9

Gr. (%)

-638.2 -81.8 160.8

BV/Sh (INR)

111.1 125.0 129.9

RoE (%)

10.0

1.6

3.9

RoCE (%)

3.4

3.2

4.5

P/E (x)

13.6

74.6

28.6

P/BV (x)

1.3

1.1

1.1

Shareholding pattern (%)

As On

Sep-17 Jun-17 Sep-16

Promoter

34.3

43.0

70.3

DII

9.0

6.0

3.3

FII

33.8

32.7

15.2

Others

22.9

18.4

11.2

FII Includes depository receipts

Stock Performance (1-year)

Fortis Health.

Sensex - Rebased

240

210

180

150

120

n

n

n

n

FORH has announced that it plans to acquire the entire portfolio of assets of

Religare Health Trust (RHT), listed in Singapore, at an enterprise value of

INR46.5b (including debt of INR11.52b). FORH and RHT have entered into an

exclusivity period of 60 days to execute a definitive agreement for the

proposed transaction. RHT owns 12 clinical establishments, 4 greenfield clinical

establishments and 2 operating hospitals.

FORH owns a 29.76% stake in RHT. Thus, net outflow for the company would

be ~INR36b (will receive ~INR10b as dividend from RHT). The company

currently pays service fees of ~INR2.7b to RHT, which it will save post this

transaction.

RHT asset acquisition to be value-accretive:

The deal valuation is ~13x FY18E

EV/EBITDA, assuming net outflow of INR36b and service fee savings of

~INR2.7b. Besides this, FORH will save INR300m as minority interest for its 49%

stake in FHTL and net interest cost of INR410m (FORH was paying ~INR750m of

interest cost to RHT and was receiving ~INR340m of interest income from RHT).

Given that we have valued the hospital assets at ~18x EV/EBITDA, the

acquisition of RHT will increase EV of FORH by ~INR6.5b, in our view. Even after

assuming dilution through fresh equity (share count increasing from 523m to

623m), our TP for FORH will increase from ~INR180 currently to INR215.

Funding of the transaction:

FORH needs funding of ~INR36b to close this

transaction. We have assumed that the company will take ~INR20b of debt and

~INR16b of equity to fund this transaction. The deal is expected to be cash-flow

neutral in the first year. However, as operating profits increase, we expect this

deal to be cash-flow positive.

Trading at a significant discount to fair value:

Although RHT buyback could act

as a significant catalyst (will increase TP by INR35), regardless of this event, we

argue for a multiple re-rating in the stock on the back of strong growth

potential in the hospital business, asset light expansion strategy and operating

leverage impact on the SRL business. Having said that, the court case between

promoters and Daichi is a key overhang on the stock (even though FORH has no

direct bearing). We have valued the hospital business at 18x FY19E EV/EBITDA

and the diagnostics business at 20x FY19E EV/EBITDA. We cut our hospital

business target multiple by 10% due to the uncertain regulatory outlook. Our

SOTP-based TP is INR185/share (v/s INR220 earlier). We have cut our FY18/19E

EBITDA by 14%/12% as we factor in slower margin improvement.

16 November 2017

6

15 November 2017

2QFY18 Results Update | Sector: Automobiles

CEAT

Buy

BSE SENSEX

32,942

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

10,187

CEAT IN

Stability in performance on the horizon; Maintain Buy

40

n

Results below estimates:

CEAT’s 2QFY18 revenue declined 4.6% YoY to

69.4 / 1.1

INR15,230m (est. of INR17,515m). EBITDA stood at INR1,747m (est. of

1948 / 1060

0/-13/17

INR1,839m; 2QFY17: INR1,854m), with the margin coming in flat at 11.5%

1378

(est. of 10.5%), as overall revenue in the quarter was netted off against

49.2

CMP: INR1,746

TP: INR2,116 (+21%)

Financials & Valuations (INR b)

2017 2018E

Y/E Mar

Net Sales

64.4

66.6

EBITDA

6.6

6.7

PAT

3.8

3.3

EPS (INR)

93.3

82.5

Gr. (%)

-16.9

-11.6

BV/Sh (INR)

597.0

668.6

RoE (%)

16.9

13.0

RoCE (%)

13.5

11.1

P/E (x)

18.7

21.2

P/BV (x)

2.9

2.6

2019E

n

72.9

8.6

4.8

117.6

42.5

770.6

16.3

14.1

14.9

2.3

n

Estimate change

TP change

Rating change

n

excise. Exceptional item of INR80m was on account of VRS to employees.

Consequently, adj. PAT fell 26.8% YoY to INR779m (est. of INR921m).

Stage set for robust H2:

Raw material prices declined 520bp QoQ on a

comparable basis (post excise net-off) in 2QFY18, after increasing by 260bp

QoQ in 1QFY18. Exports also suffered in H1 on account of an appreciating

INR, foreign currency unavailability in Egypt, and political unrest in countries

like Kenya and Indonesia. However, with raw material prices and currency

gaining stability and restocking picking up pace from the month of

September, CEAT is set to recover the lost growth of 1H in 2HFY18.

Moreover, the company undertook strict control over discretionary

expenses, reducing other expenses by 300bp QoQ in 2QFY18.

Ramping up capacities for aggressive market share gain:

CEAT holds ~30%

and ~10% market share in 2W and passenger car replacement, respectively.

With a capex of INR28b until FY20 to ramp-up facilities at Halol, Nagpur and

Ambernath (40 tonnes/day), and improved engagement with OEMs, the

company is set to bolster its market share.

Valuation view:

CEAT is expected to see a strong recovery post a muted

1HFY18 as the macro factors align well. We expect revenue/PAT CAGR of

6%/12% over FY17-19E. We value the company at a P/E of 18x FY19E EPS,

and maintain

Buy

with a target price of INR2,116 (21% upside).

16 November 2017

7

Manpasand Beverages

BSE SENSEX

32,942

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val, INRm

Free float (%)

Financials & Valuations (INR b)

2017 2018E

Y/E Mar

Net Sales

7.2

9.9

EBITDA

1.4

1.9

PAT

0.7

1.1

EPS (INR)

6.3

9.9

Gr. (%)

43.8

56.4

BV/Sh (INR)

100.8

108.3

RoE (%)

7.3

8.4

RoCE (%)

8.4

9.5

P/E (x)

66.2

42.3

P/BV (x)

4.2

3.9

S&P CNX

10,187

MANB IN

114

49.2 / 0.8

512 / 253

-7/-2/1

85

55.9

15 November 2017

2QFY18 Results Update | Sector: Consumer

CMP: INR420

TP: INR492 (+17%)

Buy

Riding on the back of distribution network expansion

n

Revenue in-line; EBITDA misses, but PAT beats estimates:

Overall revenue

rose 22.8% YoY to INR1,258m (est. of INR1,281m) in 2QFY18. EBITDA margin

shrunk 460bp YoY to 17.1% (est. of 20.9%) on account of a significant

increase of 480bp in other expenses to 16.5% of net sales (est. of 11.9%).

EBITDA declined 3% YoY to INR215m (est. of INR268m). Accordingly, adj. PAT

grew 65.3% YoY to INR89m (est. of INR62m) in 2QFY18, led by higher-than-

expected other income (INR64m v/s est. of INR21m).

n

Commencement of distribution via Parle network:

2QFY18 witnessed

commencement of product supply through Parle’s distribution network in

West Bengal. The company expects to expand distribution gradually to the

entire eastern zone in FY18 owing to the traction seen in the pilot phase.

Continuous expansion of the distribution network across 4.5m Parle outlets

is expected to ensure strong presence of Mango Sip across the country. We

expect utilization to inch higher to ~56% by FY19, despite significant capacity

addition of 200,000 cases per day, led by the expanded reach of Mango Sip

aided by new non-seasonal products.

n

Continuous focus on new product launches to reduce seasonality:

MANB

has been active in the introduction of new products, as witnessed by the

launch of Coco Sip and Jeera Sip. The company most recently has developed

a new product

Siznal,

a sugarfree mix of fruit and vegetables, which as of

now is in test market phase and should be launched commercially in FY18.

n

Valuation and view:

We largely maintain our estimates, and expect sales

and PAT CAGR of 43% and 56%, respectively, over FY17-19E. We believe that

the company will benefit from its expanding distribution network, which

would lead to better capacity utilization. We value the stock at a P/E of 32x

FY19E EPS, with a TP of INR492 (17% upside) and maintain our

Buy

rating.

2019E

14.7

2.9

1.8

15.4

54.8

119.9

13.5

15.3

27.3

3.5

Estimate change

TP change

Rating change

16 November 2017

8

Repco Home Finance

BSE SENSEX

32,760

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

10,118

REPCO IN

Strong operating performance; GNPL declines sequentially

62.6

n

Repco Home Finance (REPCO) reported 2QFY18 PAT of INR559m (+22% YoY),

38.5/0.6

driven by an improvement in margins and contained opex growth.

923 / 500

n

Disbursements picked up after three slow quarters post demonetization. At

-5/-26/-10

INR7.5b this quarter, it is just 15% below the levels of 2QFY17 (before

134

demonetization). This drove sequential loan growth of 3.6%, the highest since

62.9

15 November 2017

2QFY18 Results Update | Sector: Financials - NBFC

CMP: INR615

TP: INR800 (+30%)

Buy

Financials & Valuations (INR b)

Y/E March

2018E 2019E 2020E

NII

4.5

5.1

6.1

PPP

4.1

4.7

5.6

PAT

2.3

2.6

3.1

EPS (INR)

36.0

41.9

50.0

BV/Sh. (INR)

217.8 259.7 309.7

RoAA (%)

2.3

2.3

2.3

RoE (%)

18.0

17.6

17.6

Payout (%)

8.0

8.0

8.0

Valuation

P/E (x)

17.1

14.7

12.3

P/BV (x)

2.8

2.4

2.0

Div. Yield (%)

0.4

0.4

0.5

n

n

n

n

n

demonetization. With a pick-up in disbursements, coupled with a favorable

base, we expect loan growth for FY18 to be in mid-teens.

Repayment rate in the quarter was 20.4%, in line with the past trends

(excluding 1QFY18). We are encouraged by the fact that the company has been

able to keep the repayment rate stable.

Another key highlight this quarter was the strong yield on loans, which

increased 40bp sequentially to 11.9% due to NPL recoveries and re-pricing in

LAP portfolio. As a result, spreads/margin were up 50bp YoY to 3.4%/4.8%.

The company witnessed a decline in absolute GNPLs (-INR377m QoQ to

INR3.2b) after six quarters. GNPL ratio declined from 4% to 3.4% sequentially,

driven by a 120bp fall in LAP NPLs to 5.2%.

The company tweaked its provisioning policy, resulting in INR194m lower

provisions made during the quarter. This boosted PAT by INR127m. Going by

the old provisioning policy, PCR would have been 50% and PAT would have

declined 5% YoY to INR432m.

Valuation view:

REPCO recorded loan book CAGR of 26% and earnings CAGR of

24% over the past five years. Presence in the underserved markets, reasonable

pricing power on asset side, declining cost of funds and expanding reach should

support its earnings over the longer term. However, in the recent past, the

company has been plagued with several issues predominantly on the growth

front. We believe these issues should get resolved over the next few quarters.

We increase our FY18/19E EPS by 7%/9% to factor in better margins and lower

opex.

Buy

with a target price of INR800 (2.8x Sept-19 book).

FY17

2Q

2,499

1,597

902

22.0

98

1,000

22.0

163

-6.8

837

29.9

127

710

253

457

17.0

22.6

16.3

35.7

FY18

2Q

2,715

1,622

1,093

21.2

95

1,188

18.8

179

9.4

1,009

20.6

166

843

285

559

22.3

8.9

15.0

33.7

FY17

3QE

2,769

1,646

1,123

23.8

70

1,193

22.5

183

12.0

1,010

24.6

168

842

290

551

18.8

11.0

15.3

34.5

4QE

3,013

1,697

1,316

27.9

82

1,398

26.9

194

-3.0

1,204

33.6

156

1,048

359

689

36.2

15.3

13.9

34.3

10,140

6,463

3,677

21.1

319

3,996

19.8

676

5.1

3,320

23.3

519

2,802

979

1,823

21.4

15.6

16.9

35.0

(INR M)

FY18E

11,084

6,593

4,491

22.1

318

4,809

20.4

727

7.5

4,082

23.0

656

3,426

1,175

2,251

23.5

0.0

15.1

34.3

Quarterly performance

Y/E March

Interest Income

Interest Expenses

Net Interest Income

YoY Growth (%)

Other income

Total Income

YoY Growth (%)

Operating Expenses

YoY Growth (%)

Operating Profits

YoY Growth (%)

Provisions

Profit before Tax

Tax Provisions

Profit after tax

YoY Growth (%)

Borrowings growth (%)

Cost to Income Ratio (%)

Tax Rate (%)

1Q

2,390

1,550

840

26.5

80

920

26.0

149

-3.5

771

33.9

179

592

196

395

30.8

25.3

16.2

33.2

3Q

2,589

1,682

907

16.2

67

974

15.5

163

1.9

811

18.7

96

714

250

464

20.4

21.1

16.8

35.0

4Q

2,663

1,635

1,028

20.7

73

1,102

16.8

200

30.7

902

14.1

116

786

280

506

19.8

15.6

18.2

35.6

1Q

2,587

1,628

959

14.2

71

1,030

12.0

171

14.9

859

11.4

167

692

241

452

14.2

11.7

16.6

34.8

16 November 2017

9

KNR Construction

BSE SENSEX

32,760

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg Val, INRm

Free float (%)

Financials & Valuations (INR b)

Y/E MARCH

FY17 FY18E

Net Sales

15.4

18.0

EBITDA

2.3

3.0

NP

1.7

1.9

EPS (INR)

12.0

13.3

EPS Gr. (%)

4.3

11.5

BV/Sh. (INR)

63.7

75.7

RoE (%)

20.7

19.1

RoCE (%)

16.8

16.9

Payout (%)

1.9

1.7

Div. Yield

0.1

0.1

S&P CNX

10,118

KNRC IN

Above-estimated performance driven by better-than-expected margin

140.6

n

Revenue growth muted, but operating profit grows robustly:

Revenue grew

35.0/0.5

by a muted 5.3% YoY, but operating profit increased 47% YoY, led by low

290 / 132

sub-contracting cost (11.5% v/s 31.2% in 2QFY17) and cost reversal done by

22/15/59

the company for projects like Madurai and Thirvananthpuram (where it has

28

achieved 75% project completion). KNR expects margins to sustain in

42.6

15 November 2017

2QFY18 Result Update | Sector: Infrastructure

CMP: INR256

TP: INR295 (+15)

Buy

FY19E

20.2

3.3

2.0

14.1

5.5

89.6

17.0

16.0

1.7

0.1

n

n

n

Estimate change

TP change

Rating change

2HFY18, given that contribution from the low-margin Hubli-Hospet order is

expected to remain low. KNR estimates FY18 operating margin at 16-17%.

PAT of INR591m (+34.5% YoY) was ahead of our estimate of INR375m.

Order inflow at INR5b in 1H; expects INR20b orders to be finalized in 2H:

Order inflow in 1HFY18 was muted at INR5b, given lower order finalizations

from the NHAI. The INR5b order inflow is supported by an INR8.8b irrigation

project in Telangana (KNR share: INR4.5b). Order backlog of INR35.9b

provides revenue visibility of 2.3x its FY17 revenue. Of the total order book,

76% comes from road segment and balance from irrigation segment.

BoT portfolio starts collecting 100% toll:

KNR’s both projects are 100%

complete; toll collection for Kerala BoT stood at INR13.5 lac per day and for

Muzzafarpur Baurani project at INR13.4 lac per day as of 2QFY18 (has now

reached INR16.5lac per-day collection).

Valuation view:

We raise our estimates for FY18/19 by 7/3% to factor in

better-than-expected margins in 1HFY18. We like KNRC for its robust

execution track record, driven by backward integration, strong balance

sheet (net debt-equity of 0.1x) and consistent operating margins (14.5-15%).

We value KNRC on an SOTP basis: INR256 for standalone EPC business (18x

P/E on Sept-19EPS of INR14.2 and 1x P/B on investments of INR37/share –

BOT projects and land parcels). Maintain

Buy

with a TP of INR295.

FY18

2Q

3QE

3,933 4,177

5.3

9.3

3,109 3,610

825

568

21.0

13.6

235

235

43

60

27

76

574

348

574

348

-17

70

-2.9

20.0

591

278

591

278

34.5 -32.9

15.0

6.7

FY17E

4QE

5,088

5.5

4,373

715

14.1

214

90

78

489

489

159

32.5

330

330

-37.1

6.5

FY18E

Quarterly Performance

Y/E March

Net Sales

YoY Change (%)

Total Expenditure

EBITDA

Margins (%)

Depreciation

Interest

Other Income

PBT before EO expense

PBT

Tax

Rate (%)

Reported PAT

Adj PAT

YoY Change (%)

Margins (%)

E: MOSL Estimates

1Q

3,032

77.1

2,595

437

14.4

132

43

59

321

265

19

7.1

246

302

101.6

10.0

FY17

2Q

3QE

4QE

3,735 3,823 4,821

72.2 74.9 63.0

3,175 3,246 4,099

560

577

722

15.0 15.1 15.0

146

166

195

56

66

54

132

102

10

490

447

483

490

338

483

51

32

-41

10.3

9.4

-8.6

439

306

524

439

415

524

-20.6 26.5

-9.5

11.8 10.9 10.9

(INR Million)

MoSL 2Q Var (%)

4,186

-6

12.1

3,610

576

43

13.8

150

65

80

441

30

441

66

15.0

375

57

375

-14.6

9.0

1Q

4,807

58.6

3,962

845

17.6

244

52

123

672

672

-4

-0.6

676

676

123.7

14.1

15,411 18,006

70.7

16.8

13,115 15,053

2,296

2,953

14.9

16.4

639

928

219

244

303

303

1,741

2,083

1,576

2,083

60

208

3.8

10.0

1,516

1,875

1,674

1,875

-17.2

12.0

10.9

10.4

16 November 2017

10

15 November 2017

Q2FY18 Results Update | Sector: Media

Prime Focus

Buy

BSE SENSEX

32,760

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

10,118

PRIF IN

Creative services to drive earnings

299

n

Stupendous growth:

Revenue grew 17% YoY (+6.4% QoQ) to INR5.5b.

29.4 / 0.4

EBITDA (pre-ESOPs) increased 63% YoY (+17% QoQ) to INR1.2b, with the

124 / 63

margin expanding 620bp YoY (+200bp QoQ). PAT (after minority) of

8/-18/14

INR260m turned positive v/s INR-428m in 2QFY17 and INR52m in 1QFY18,

13.0

led by steady growth in EBITDA, partly offset by higher ESOP and forex

65.0

CMP: INR98

TP: INR130 (+32%)

Financials & Valuations (INR b)

Y/E Mar

2017 2018E

Net Sales

21.5

24.7

EBITDA

4.8

5.5

PAT

0.4

0.9

EPS (INR)

1.2

3.1

Gr. (%)

-255.8

151.8

BV/Sh (INR)

18.6

21.7

RoE (%)

7.6

15.3

RoCE (%)

8.3

9.8

P/E (x)

80.4

31.9

P/BV (x)

5.3

4.5

EV/EBITDA (x)

9.1

7.5

n

2019E

28.4

6.5

1.8

6.1

99.5

27.8

24.8

14.5

16.0

3.5

5.8

n

n

Estimate change

TP change

Rating change

charge.

Creative business drives growth:

Segment-wise, Creative remains the key

growth driver, with 26% YoY revenue growth and an 800bp YoY EBITDA

margin improvement. Tech/Tech Enabled services revenue declined 4% YoY,

with a 50bp margin contraction, which is attributed to longer gestation in

the international market. India FMS business remained flat, with 2% YoY

revenue growth and 360bp EBTDA margin contraction.

Healthy outlook on robust order book:

We expect consolidated

revenue/EBITDA CAGR of 15%/18% over FY17-20E, led by 22% EBITDA CAGR

for the Creative services. With a healthy order book of over USD250m

recognizable over the next 9-12 months and shifting of a high proportion of

operations to low-cost centers, Creative should continue growing at a

healthy pace. Tech/Tech Enabled business has seen revamped on sales and

product offerings, which should drive better growth over the next 1-2 years.

Maintain Buy with a TP of INR130:

The stock is trading at attractive

EV/EBITDA of 7.5x/5.8x on FY18/19E. Our SOTP-based valuation assigns 10x

EV/EBITDA to Creative and Tech/Tech Enabled, while the India FMS business

is valued at 6x, given its low-growth profile. Ex of minority and a 15% holdco

discount, the stock is valued at INR130. Maintain

Buy

with a TP of

INR130/share.

FY17

2Q

4,665

4.0

3,925

740

15.9

701

325

172

53

-96

-264

41

-305

90

-29.3

-34

-361

-308

-3.8

-6.6

3Q

5,072

8.3

3,849

1,223

24.1

653

229

8

113

8

244

0

244

-38

-15.4

55

227

227

-220.1

4.5

4Q

6,537

40.4

4,748

1,790

27.4

502

421

52

84

-336

498

9

489

32

6.5

71

387

395

-122.7

6.0

FY18

1Q

2Q

3QE

5,135 5,473 6,020

-2.4

17.3

18.7

4,102 4,265 4,692

1,033 1,207 1,328

20.1

22.1

22.1

645

708

779

376

362

235

85

65

-17

115

139

123

22

149

50

2

211

225

0

0

0

2

211

225

-28

-8

144

-1,212.4 -3.9

64.1

21

41

13

10

178

68

10

178

68

4.8

LP

-70.2

0.2

3.2

1.1

FY17

4QE

8,035

22.9

6,109

1,926

24.0

779

235

-17

123

50

822

0

822

144

17.5

13

665

665

68.3

8.3

21,536

13.3

16,767

4,769

22.1

2,546

1,279

245

256

-414

519

-968

1,487

90

6.0

123

1,274

365

-116.9

1.7

FY18E

24,662

14.5

19,169

5,493

22.3

2,911

1,208

117

500

270

1,260

0

1,260

252

20.0

89

920

920

152.3

3.7

Quarterly Performance (Consolidated)

Y/E March

Net Sales

YoY Change (%)

Total Expenditure

EBITDA

Margins (%)

Depreciation

Interest

Other Income

ESOP expense

Foreign exchange gain/(loss)

PBT before EO expense

Extra-Ord expense

PBT

Tax

Rate (%)

MI & P/L of Asso. Cos.

Reported PAT

Adj. PAT

YoY Change (%)

Margins (%)

1Q

5,262

1.5

4,246

1,016

19.3

690

303

13

6

10

40

-1,019

1,059

6

0.6

31

1,022

9

-97.1

0.2

16 November 2017

11

Indo Count Industries

BSE SENSEX

32,760

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

Avg. Val, INRm

Free float (%)

Financials & Valuations (INR b)

2017 2018E

Y/E Mar

Net Sales

22.6

21.0

EBITDA

4.3

3.2

PAT

2.6

1.6

EPS (INR)

13.0

8.0

Gr. (%)

-10.7

-38.2

BV/Sh (INR)

42.9

51.9

RoE (%)

34.8

17.0

RoCE (%)

26.5

15.2

P/E (x)

9.2

14.9

P/BV (x)

2.8

2.3

S&P CNX

10,118

ICNT IN

Muted quarter; falling cotton prices to ease pressure

197

n

Results below expectations, margins contract 580bp:

Overall revenue

22.2 / 0.3

declined 14.5% YoY to INR4,928m (est. of INR5,763m) in 2QFY18. EBITDA

210 / 95

margin shrunk 580bp YoY to 14.4% (est. of 17.1%), as the gross margin

8/-46/-41

contracted 260bp YoY to 43.9%. Employee cost also increased 70bp YoY to

214.2

5.6% of net sales. EBITDA declined 39% YoY to INR711m (est. of INR986m).

41.1

15 November 2017

Q2FY18 Results Update | Sector: Textiles

CMP: INR120

TP: INR128(+7%)

Neutral

n

2019E

23.0

3.9

2.1

10.7

32.9

63.9

18.5

17.3

11.2

1.9

n

Estimate change

TP change

Rating change

n

Accordingly, adj. PAT fell 42.8% YoY to INR359m (est. of INR517m).

Easing cotton prices – a silver lining amid policy headwinds:

2QFY18

witnessed increased pressure on margins on account of a rise in raw

material cost by 260bp. Also, the GoI revised the duty drawback rate from

7.5% to 2%, and the ROSL rate from 3.9% to 1.55%, which is expected to

result in margin erosion of ~250bp. However, cotton prices have started to

correct (-10% to INR38,000 per candy) compared to last procurement by the

company, the benefit of which is expected to be visible from 4QFY17.

Value-added product contribution increasing:

The company’s continuous

focus on institutional and fashion bedding has resulted in an increase in its

contribution to 13% of revenues in 1HFY18 v/s ~10% in 1HFY17. Further, the

company plans to invest ~INR3b in weaving in specialized looms in order to

aid growth in fashion bedding. With the planned venture into new product

categories and expansion in relatively untapped geographies, the

contribution of high-margin institutional and fashion bedding is expected to

cross 20% of overall revenue by FY20.

Valuation view:

INCT is expected to witness flattish growth in volumes in

FY18 and higher pressure on margins due to revision in duty drawback and

ROSL rates. We hence cut our earnings for FY18E by 12%. We value the stock

at 12x FY19E EPS and arrive at a TP of INR128. Maintain

Neutral.

16 November 2017

12

In conversation

1. BATA : Target 12-12.5% margin by end of FY18; Rajeev

Gopalakrishnan, President - Asia South

n

n

n

n

Q2 good in terms of profitability. Getting affected in the wholesale business.

Wholesale business contributes 15 percent to company. Retail business was up

by 9-10 percent and wholesale was down by 10-12 percent in H1.

Same-store-sales growth more or less close to 6 percent for H1FY18. Company

posted 4-5 percent same-store-sales growth for this quarter.

Should be touching close to 12-12.5 percent margins by year-end.

Have opened almost 29 stores this quarter and around 67 stores in H1.

2. NMDC: AIM to achieve rs 10,000 cr revenues in FY18; DS

Ahluwalia, Director-Finance

n

n

n

n

n

n

n

n

Will be able to achieve the previous year’s target in terms of sales volume.

Company will achieve revenues of Rs 10,000 crore in FY18. Exports is 10 percent

of total sales.

Export volumes are expected to be around 3 million tonnes in FY18.

International iron ore prices down 20 percent in the last few months. Do not

expect more downside with exception of plus/minus 5 percent.

Iron ore prices are more domestic-driven than international prices.

Cash balance on the book around Rs 5300 crore. With regards to utilization,

have to go with the dividend policy as per government guidelines.

Regarding stake stake in Nagarnar steel plant, company has intimated the

exchanges of their plan but divestment depends on the interest from buyers.

Company has received in-principle nod for the strategic divestment.

Decision of the plant stake sale has nothing to do with completion activity of the

plant.

Karnataka plant is currently doing approximately 12 million tonne steel

production.

3. KAJARIA CERAMICS : Foresee double-digit volume growth

going forward; Ashok Kajaria, CMD

n

n

n

n

Post GST, with 28 percent tax, the ceramic market fell and all companies had a

tough time. Now GST rate at 18 percent will be positive for the ceramics

industry. Have passed the entire benefits and the MRPs have been changed.

Have cut prices by about 9-10 percent with effect from today.

Looking at a double-digit volume growth from here on.

Company spending a lot of money on branding.

4. NBCC : Expect FY18 revenue growth of 30% YOY; Anoop

Kumar Mittal, Chairman

n

n

n

Regarding news that financial institutions have approached the company to

develop defaulters' land, some institutions have approached company and are

in serious discussion with them. Hopefully some of the projects will be matured

very soon.

Topline decline in Q2 is due to goods and services tax (GST) accounting.

Have recently started large projects and revenue will start reflecting from Q3.

16 November 2017

13

n

n

n

For FY18, sure of 30 percent total growth will be there year on year (YoY) and

FY19 onwards it should be minimum 50 percent YoY.

Discussions regarding redevelopment of Dharavi project nearing finalisation.

If Government of Maharashtra and company succeed to get this project, it will

be a construction history to redevelop the largest slum of Asia.

5. PRIME FOCUS : Stick with guidance of reducing rs 200-300 cr

debt by FY18-END; Vikas Rathee, Group CFO

n

n

n

At the beginning of this fiscal year, had guided for 10 percent topline growth

and on track for that. Should exceed the 10 percent mark on the topline. On the

margin front, would continue to improve.

Feeling more bullish about guidance post September.

Had guided to reduce debt by end of fiscal year by Rs 200-300 crore and stick

with that.

6. Tata Global Bev : See robust growth for brands biz, no plans to

demerge it yet; Ajoy Misra, MD

n

n

n

n

n

n

n

n

Underlying revenue growth for company was around 6 percent in Q2 excluding

forex impact, which largely came from branded business.

The rise in EBITDA margins did not happen because of any cuts in advertising

and promotions. Company continued to invest in brands and promotions.

Good EBITDA margin performance was on back of overall business efficiencies,

good cost management and management of commodity costs.

Finance costs for the company have also come down which helped

performance. Will continue to focus on that going forward as well.

Tata Gluco+ has been a runaway success for many quarters now. An excellent

product and in a sweet spot in terms of pricing. Packaging, product formulation

are both interesting and set for growth. Has now been extended to other states.

Other water brands like Himalayan Still, Himalaya Sparkling, Tata Water Plus

have also seen good growth.

No comment on merger plans with Tata Chemicals. But whenever synergies

seen within the group, look closely at it.

No plans to demerge the branded business.

Optimistic of future growth. Post demonetisation and GST, India business which

is 45-46 percent of entire branded revenues has come back into robust growth

mode.

16 November 2017

14

From the think tank

1. AADHAAR Needs a privacy law

n

The Supreme Court’s (SC’s) landmark judgement upholding our right to privacy

has intensified the debate on whether and how Aadhaar infringes on this right.

With the upcoming five-judge Constitution bench hearing petitions on Aadhaar,

these debates will soon be settled by the highest court. Meanwhile, the Unique

Identification Authority of India (UIDAI) has unequivocally asserted that Aadhaar

meets the privacy test. But many others, both within the government’s fold and

outside it, have said that Aadhaar can become an instrument to profile

individuals, surveil them, and suppress dissent. The boring but important truth is

that both sides are right—to some degree. Aadhaar, if unregulated, can be a tool

to abrogate our privacy. However, Aadhaar is only a tool.

2. Outbound mergers: Tax laws may play spoilsport

n

In April this year, the ministry of corporate affairs notified relevant provisions of

the Companies Act, permitting the outbound merger of an Indian company with

a foreign company. While the move is certainly a step in the right direction, the

government would need to tweak the income tax laws if this particular reform is

to take flight. Tax laws at present do not specifically cater to outbound mergers,

making it an unattractive proposition from a tax view point. For example, unlike

domestic or inbound mergers there is no specific tax exemption for outbound

mergers.

3. Fortifying the insolvency resolution framework

n

The Indian banking system is struggling with a deluge of bad debt. At the end of the

last financial year, total stressed assets—including non-performing and

restructured assets—were estimated to be at over 12% of advances. In June, the

Reserve Bank of India directed banks to start proceedings under the Insolvency and

Bankruptcy Code (IBC) in 12 large accounts. As reported by this newspaper, the

banking regulator has also asked banks to initiate the insolvency procedure in

another set of at least 28 accounts if they don’t get resolved in the given time

frame. The implementation of the IBC has been one of the most important reforms

in recent years. Banks and other creditors can now take the defaulting company to

the National Company Law Tribunal to initiate insolvency proceedings.

16 November 2017

15

International

4. Democracy beyond the nation-state

n

According to the Harvard economist Dani Rodrik, it is impossible to have full

national sovereignty, democracy, and globalization simultaneously. The concept

of a “political trilemma of the world economy,” which Javier Solana also recently

explored, is useful, but incomplete. Rodrik’s argument, elaborated in his new

book, is that too much globalization erodes the sovereignty of democratic

nation-states, by increasingly subjecting them to economic and financial forces

that may not correspond with the wishes of the domestic majority. By this logic,

an authoritarian state may function better in a globalized world, because it is

unconstrained by, say, electoral concerns. With less globalization, democratic

decision-making within the nation-state would be less constrained by external

forces – particularly financial markets – meaning that its scope would be wider.

16 November 2017

16

Click excel icon

for detailed

valuation guide

Rs

Valuation snapshot

P/E (x)

P/B (x)

ROE (%)

FY17 FY18E FY17 FY18E FY17 FY18E FY19E

29.3

24.9

24.3

52.9

40.6

18.7

49.7

49.9

34.6

24.1

21.7

26.0

44.3

32.7

20.6

59.3

29.4

35.3

25.1

27.3

22.9

31.7

20.6

18.2

33.2

NM

37.7

42.5

12.1

20.6

30.0

29.1

NM

19.7

38.4

13.4

NM

29.0

1,093.3

20.3

121.6

53.6

45.4

27.6

27.1

20.8

60.9

35.3

16.9

35.0

15.1

29.0

25.3

22.1

36.1

41.9

18.5

37.4

42.5

19.3

24.8

20.1

18.9

24.1

28.2

16.6

46.7

24.8

29.5

20.7

79.7

19.9

26.2

23.2

19.7

26.2

18.3

31.6

30.9

16.2

16.9

25.3

9.7

62.1

22.9

9.1

10.7

7.3

21.2

22.3

NM

21.3

37.5

31.5

20.8

21.1

16.4

50.2

32.0

13.9

26.4

14.1

5.4

5.4

5.5

7.8

6.7

2.9

15.5

9.5

3.5

3.4

7.3

3.3

2.7

6.8

2.4

13.7

5.0

2.4

2.6

2.1

2.2

5.4

2.3

1.3

4.6

0.7

4.9

4.5

1.2

3.2

3.5

1.2

0.9

0.8

0.5

1.3

0.3

1.0

1.5

0.5

1.1

10.2

5.4

2.9

4.5

2.4

18.3

6.5

4.1

4.1

2.6

4.7

4.9

4.9

6.8

6.1

2.6

11.7

8.0

3.0

3.1

6.3

3.0

2.5

5.9

2.1

11.2

4.4

2.0

2.1

2.0

1.7

4.7

2.4

1.2

4.1

0.7

4.4

3.2

1.1

2.7

3.0

1.0

0.9

0.8

0.5

1.2

0.3

1.0

1.4

0.6

1.0

6.0

4.4

2.6

3.8

2.2

15.0

5.9

3.6

3.6

2.3

20.3

23.1

25.3

16.2

15.8

16.9

37.1

20.8

10.6

13.9

35.7

14.2

6.4

20.3

9.8

25.6

17.1

6.9

10.8

9.5

9.9

18.3

10.9

7.2

15.3

-27.0

13.8

12.3

9.0

18.9

11.5

4.0

-6.7

4.2

1.4

10.1

-8.4

3.6

-0.2

2.7

0.9

21.6

15.1

12.0

18.0

14.4

32.5

18.9

25.5

12.4

19.1

17.3

20.4

23.3

20.1

15.2

14.8

35.7

20.5

16.8

12.5

33.7

14.5

10.8

20.5

13.4

26.5

17.8

7.3

11.5

2.6

9.6

18.8

8.8

6.3

16.9

4.0

14.8

12.4

6.7

17.3

11.9

6.4

1.5

3.4

5.8

11.6

4.6

4.7

7.0

-4.7

4.7

20.2

15.3

13.2

19.6

14.1

32.8

19.3

27.6

14.9

17.4

18.1

25.2

25.3

23.2

18.1

17.3

35.0

22.8

18.4

13.7

31.1

14.6

11.5

23.0

28.3

35.6

22.7

10.8

11.8

8.2

10.0

20.4

10.5

6.9

19.0

8.0

16.5

13.7

12.6

19.5

13.9

9.4

4.3

6.1

7.3

12.7

5.4

7.1

11.4

2.1

7.8

20.4

19.3

15.4

19.6

15.3

32.8

18.6

30.7

18.9

17.2

Company

Automobiles

Amara Raja

Ashok Ley.

Bajaj Auto

Bharat Forge

Bosch

CEAT

Eicher Mot.

Endurance Tech.

Escorts

Exide Ind

Hero Moto

M&M

Mahindra CIE

Maruti Suzuki

Tata Motors

TVS Motor

Aggregate

Banks - Private

Axis Bank

DCB Bank

Equitas Hold.

Federal Bank

HDFC Bank

ICICI Bank

IDFC Bank

IndusInd

J&K Bank

Kotak Mah. Bk

RBL Bank

South Indian

Yes Bank

Aggregate

Banks - PSU

BOB

BOI

Canara

IDBI Bk

Indian Bk

OBC

PNB

SBI

Union Bk

Aggregate

NBFCs

Bajaj Fin.

Bharat Fin.

Capital First

Cholaman.Inv.&Fn

Dewan Hsg.

GRUH Fin.

HDFC

Indiabulls Hsg

L&T Fin Holdings

LIC Hsg Fin

Reco

Buy

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Sell

Buy

Neutral

Buy

Not Rated

Buy

Buy

Neutral

CMP

(INR)

TP

% Upside

EPS (INR)

(INR) Downside FY17 FY18E FY19E

4

18

17

22

4

16

14

14

0

30

4

14

17

41

10

28.0

4.6

132.3

13.1

473.1

93.3

612.7

23.5

20.0

8.1

169.1

54.3

5.4

248.6

19.8

11.7

28.3

34.2

4.5

6.2

145.2 175.0

19.1

26.0

457.8 603.0

94.2 126.8

814.7 1,062.7

27.6

36.7

35.8

45.9

7.9

9.7

183.1 193.9

75.0

85.7

9.9

11.8

288.1 381.0

24.6

64.8

14.9

25.8

820

856

113

134

3,212 3,753

691

844

19,205 19,965

1,746 2,029

30,476 34,722

1,172 1,334

690

688

196

254

3,676 3,819

1,415 1,607

237

-

8,123 9,466

409

575

696

764

Buy

Neutral

Buy

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Buy

Buy

Buy

542

176

138

111

1,799

316

55

1,597

76

1,012

505

30

301

680

197

209

146

2,150

355

56

2,000

100

1,179

665

36

382

25

12

52

32

20

13

2

25

32

16

32

20

27

15.4

7.0

5.0

4.8

56.8

15.3

3.0

48.1

-31.3

26.8

11.9

2.5

14.6

18.4

8.5

1.7

5.5

68.7

13.6

2.8

60.9

4.1

32.1

16.4

1.9

17.8

30.8

10.5

5.7

6.6

84.7

17.0

3.2

78.6

8.7

41.6

23.0

3.8

23.3

Buy

Neutral

Neutral

Neutral

Buy

Neutral

Buy

Buy

Neutral

175

198

370

59

392

124

181

325

164

201

201

386

49

438

150

250

415

175

15

2

4

-16

12

21

38

28

6

6.0

-14.8

18.8

1.5

29.3

-31.6

6.2

0.3

8.1

17.9

3.2

16.1

6.4

36.7

17.1

8.5

14.6

-13.5

22.6

9.2

30.3

8.6

44.0

21.4

13.5

26.8

6.0

Buy

Under Review

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Neutral

1,715

953

681

1,247

617

496

1,652

1,162

183

578

2,300

-

925

1,500

690

500

2,000

1,550

240

680

34

36

20

12

1

21

33

31

18

32.0

21.0

24.6

46.0

29.6

8.1

46.8

68.6

5.2

38.2

45.7

30.3

32.8

59.2

37.6

9.9

51.6

83.6

6.9

41.0

63.7

47.2

43.7

70.4

46.0

12.0

57.1

105.1

10.4

46.5

16 November 2017

17

Company

Reco

Manappuram

Not Rated

M&M Fin.

Buy

Muthoot Fin

Neutral

PNB Housing

Buy

Repco Home

Buy

Shriram City Union Buy

STF

Buy

Aggregate

Capital Goods

ABB

Sell

Bharat Elec.

Buy

BHEL

Sell

Blue Star

Neutral

CG Cons. Elec.

Buy

CG Power & Indu. Neutral

Cummins

Buy

GE T&D

Neutral

Havells

Neutral

K E C Intl

Neutral

L&T

Buy

Pennar Eng.

Not Rated

Siemens

Neutral

Solar Ind

Neutral

Suzlon Energy

Not Rated

Thermax

Neutral

Va Tech Wab.

Buy

Voltas

Neutral

Aggregate

Cement

Ambuja Cem.

Neutral

ACC

Neutral

Birla Corp.

Buy

Dalmia Bharat

Buy

Grasim Inds.

Neutral

India Cem

Neutral

J K Cements

Buy

JK Lakshmi Ce

Buy

Ramco Cem

Buy

Orient Cem

Buy

Prism Cem

Buy

Shree Cem

Buy

Ultratech

Buy

Aggregate

Consumer

Asian Paints

Neutral

Britannia

Buy

Colgate

Buy

Dabur

Buy

Emami

Buy

Godrej Cons.

Neutral

GSK Cons.

Neutral

HUL

Buy

ITC

Neutral

Jyothy Lab

Neutral

Marico

Neutral

CMP

(INR)

95

443

430

1,318

613

1,990

1,220

TP

% Upside

EPS (INR)

(INR) Downside FY17 FY18E FY19E

-

8.6

9.2

9.7

481

9

7.1

14.2

19.1

550

28

29.5 42.6

42.0

1,750

33

31.6 52.5

66.5

800

31

29.1 35.6

43.7

2,650

33

84.3 115.6 145.3

1,415

16

55.6 80.6 106.2

P/E (x)

P/B (x)

ROE (%)

FY17 FY18E FY17 FY18E FY17 FY18E FY19E

11.1

10.4

2.4

2.2

24.0 22.3 21.4

62.5

31.3

3.9

3.6

6.4

11.9 14.8

14.6

10.1

2.6

2.2

19.4 23.8 19.9

41.7

25.1

4.0

3.6

13.8 15.0 16.7

21.0

17.2

3.4

2.9

17.4 18.1 18.9

23.6

17.2

2.6

2.3

11.7 14.3 15.9

21.9

15.1

2.5

2.2

11.7 15.1 17.4

30.1

24.2

4.8

4.1

16.0 17.1 17.8

68.7

28.0

65.9

54.2

51.4

19.4

32.2

67.9

52.8

24.8

28.6

14.6

66.5

52.2

21.5

32.3

17.8

37.8

35.9

56.5

49.0

38.7

76.8

17.4

29.7

31.3

62.6

25.7

NM

405.0

47.1

44.9

38.5

56.0

64.3

49.1

46.2

47.2

48.6

38.4

64.4

30.1

29.4

46.3

66.8

24.9

30.1

42.4

46.4

55.2

33.6

41.3

43.8

20.6

24.6

11.4

54.8

41.2

15.5

33.4

15.5

33.3

30.5

39.8

33.9

34.3

49.0

14.4

28.6

22.1

35.9

25.8

24.7

40.3

37.3

42.2

30.9

54.6

55.6

44.6

43.2

47.1

43.4

37.3

55.4

27.8

36.0

44.7

8.7

5.8

1.0

8.8

28.0

1.2

6.3

9.7

9.6

4.8

3.4

1.5

6.2

9.6

-1.2

4.4

2.9

5.8

4.0

2.9

3.8

2.6

5.3

1.8

1.0

4.2

3.7

4.5

3.2

5.8

8.2

4.9

3.6

14.8

21.1

22.3

12.2

16.2

11.8

8.1

42.2

6.8

5.5

16.1

7.7

4.5

1.0

8.3

20.5

1.2

5.9

8.4

8.6

4.0

3.1

1.3

5.4

8.1

-1.4

4.0

2.5

5.2

3.6

2.7

3.7

2.5

4.8

1.6

1.0

3.6

3.4

3.9

2.9

5.2

6.8

4.4

3.3

14.5

17.4

21.2

10.4

13.9

9.2

7.9

42.0

6.7

5.6

14.1

12.7

20.6

1.5

18.0

76.4

6.2

21.2

12.4

18.2

19.2

12.5

10.2

9.3

19.8

NM

14.3

16.9

18.0

11.2

5.1

7.9

7.1

7.2

10.8

3.4

14.4

6.1

19.0

-3.2

1.4

18.4

11.6

9.4

28.5

36.9

50.4

28.4

35.8

24.6

22.2

66.5

23.5

21.1

36.7

11.6

17.9

3.3

20.2

51.0

2.1

18.1

21.8

19.5

19.5

13.1

11.6

9.8

21.3

-8.8

12.6

17.5

16.5

11.9

7.0

11.1

7.3

10.3

11.5

3.5

17.5

9.9

16.0

12.3

13.7

20.0

11.1

10.7

26.9

34.3

48.7

26.0

31.7

23.8

21.4

75.9

24.4

15.5

33.6

14.6

18.1

3.3

27.8

49.6

3.3

22.2

22.6

21.2

20.2

14.0

12.6

13.8

20.6

-11.0

13.2

16.4

16.3

13.0

8.0

14.2

12.0

12.7

14.5

6.0

19.2

13.9

17.9

15.6

21.3

17.4

14.2

12.9

29.4

34.5

56.2

27.3

34.0

22.9

22.6

88.0

25.6

18.3

37.1

1,353

176

88

698

241

80

852

389

505

294

1,208

103

1,186

1,077

14

996

534

584

1,230

210

78

685

260

90

1,150

440

460

350

1,450

-

1,355

950

-

930

745

550

-9

19

-12

-2

8

13

35

13

-9

19

20

14

-12

-7

40

-6

19.7

6.3

1.3

12.9

4.7

4.1

26.5

5.7

9.6

11.9

42.3

7.1

17.8

20.6

0.6

30.8

29.9

15.5

20.2

7.1

2.9

16.5

5.2

1.4

25.3

9.4

11.5

14.3

49.0

9.1

21.7

26.2

0.9

29.9

34.5

17.5

28.7

8.0

3.0

24.4

6.5

2.3

35.0

11.2

14.3

17.6

57.5

11.2

33.4

29.9

1.0

34.4

37.2

19.6

276

314

1,768 1,797

1,104 1,435

2,976 3,517

1,180 1,302

167

188

1,054 1,324

435

512

701

853

155

205

111

128

18,122 21,852

4,315 4,906

14

2

30

18

10

13

26

18

22

32

16

21

14

4.9

6.9

36.1 52.2

28.5 32.2

38.8 60.8

67.8 81.9

5.6

5.8

33.7 47.8

7.0

12.1

27.3 27.1

-1.6

6.3

0.3

2.7

384.4 486.2

96.1 102.2

8.4

70.9

56.7

83.7

116.8

10.5

61.8

19.1

35.1

9.1

5.0

499.3

147.1

1,177

4,741

1,043

335

1,253

918

5,993

1,265

253

331

291

1,280

5,165

1,328

395

1,435

1,015

5,400

1,440

280

365

340

9

9

27

18

15

11

-10

14

11

10

17

21.0 21.6

73.7 85.3

21.2 23.4

7.2

7.7

26.5 26.6

18.9 21.2

156.1 160.8

19.6 22.8

8.4

9.1

11.2

9.2

6.3

6.5

25.8

104.6

28.6

9.3

33.2

24.5

182.3

27.6

10.0

10.9

7.9

16 November 2017

18

Company

Nestle

Page Inds

Parag Milk

Pidilite Ind.

P&G Hygiene

Prabhat Dairy

United Brew

United Spirits

Aggregate

Healthcare

Alembic Phar

Alkem Lab

Ajanta Pharma

Aurobindo

Biocon

Cadila

Cipla

Divis Lab

Dr Reddy’s

Fortis Health

Glenmark

Granules

GSK Pharma

IPCA Labs

Jubilant Life

Lupin

Sanofi India

Shilpa Medicare

Strides Shasun

Sun Pharma

Syngene Intl

Torrent Pharma

Aggregate

Infrastructure

Ashoka Buildcon

IRB Infra

KNR Constructions

Sadbhav

Engineering

Aggregate

Logistics

Allcargo Logistics

Blue Dart

Concor

Gateway

Distriparks

Gati

Transport Corp.

Aggregate

Media

Dish TV

D B Corp

Den Net.

Ent.Network

Hind. Media

Reco

Neutral

Buy

Neutral

Buy

Neutral

Not Rated

Buy

Neutral

CMP

TP

% Upside

(INR) (INR) Downside

7,705 7,750

1

22,917 25,580

12

234

275

18

814

975

20

8,896 9,267

4

145

-

1,086 1,320

22

2,976 2,970

0

FY17

123.7

238.7

3.6

16.7

132.9

3.5

8.7

26.7

EPS (INR)

FY18E FY19E

128.4 149.0

296.6 413.1

8.9

12.4

17.2

20.8

151.5 176.7

3.5

6.4

14.7

18.0

34.9

53.7

P/E (x)

FY17 FY18E

62.3

60.0

96.0

77.3

64.8

26.2

48.6

47.3

66.9

58.7

41.1

41.7

125.1 74.1

111.3 85.2

47.8

43.6

23.8

26.7

21.6

17.7

38.4

30.9

37.3

25.4

31.8

13.6

14.8

16.7

74.2

32.8

16.5

14.5

33.7

44.3

23.7

19.3

39.1

22.7

23.6

NM

11.1

21.4

28.3

20.0

23.7

29.0

23.5

15.6

64.2

25.1

28.1

31.3

38.1

64.3

15.4

15.1

57.7

28.4

13.8

21.9

31.3

34.2

18.3

35.2

31.6

25.0

27.7

111.6

9.9

20.1

21.7

16.8

15.3

30.9

31.2

28.5

7.5

12.7

25.8

75.1

16.6

NM

67.5

9.5

P/B (x)

ROE (%)

FY17 FY18E FY17 FY18E FY19E

24.7 22.3 40.9 39.0 40.9

38.4 30.8 40.0 39.8 44.4

3.0

2.7

6.0

10.8 13.3

12.6 10.4 28.2 24.1 23.9

41.9 34.8 39.3 64.8 62.9

2.1

2.0

5.2

4.9

8.5

12.3 10.8 10.2 15.5 16.5

22.3 15.5 21.3 18.2 20.9

13.2 12.3 27.6 28.3 29.4

5.1

5.3

7.0

4.3

4.9

6.5

3.8

5.0

3.1

1.3

3.7

3.1

10.8

2.7

2.8

2.8

5.8

5.4

2.5

3.3

7.9

4.9

4.0

2.3

1.5

4.0

3.2

2.2

2.3

17.3

3.7

2.7

1.9

2.5

3.8

16.6

4.2

2.0

4.4

1.5

4.4

4.7

5.6

3.4

4.6

5.4

3.4

5.2

3.0

1.1

3.0

2.1

12.7

2.5

2.3

2.5

5.4

4.7

2.2

3.2

6.5

4.3

3.6

2.1

1.3

3.4

2.8

2.0

2.0

13.2

3.5

2.6

1.7

2.1

3.5

13.6

3.5

2.1

4.1

1.3

23.0

21.9

36.7

27.6

12.3

23.0

10.2

22.0

9.7

10.0

24.7

21.1

14.5

8.6

18.0

20.9

17.1

14.4

10.8

18.1

22.2

23.8

16.8

-0.6

14.0

20.7

12.0

11.0

13.7

50.5

10.8

7.3

12.4

16.7

12.3

25.1

24.6

-19.1

6.7

18.2

19.9

17.2

26.4

24.6

7.2

23.4

12.1

16.3

8.2

1.8

19.6

17.7

22.0

9.2

18.4

12.0

17.1

14.7

12.9

9.2

22.5

18.3

13.0

1.9

14.1

18.4

13.8

11.7

14.1

48.6

11.5

9.2

19.4

17.8

13.6

19.9

22.8

-6.4

6.3

15.0

19.8

19.6

25.7

22.3

11.4

26.1

13.6

21.2

14.1

4.4

18.4

18.8

31.4

12.0

19.2

12.5

17.6

20.5

18.0

13.7

20.7

19.9

15.4

7.0

12.9

16.7

12.5

11.6

15.4

46.8

14.1

11.7

25.4

18.6

16.1

35.2

22.2

0.2

10.1

15.3

Neutral

Neutral

Buy

Buy

Neutral

Buy

Neutral

Neutral

Neutral

Buy

Neutral

Buy

Neutral

Neutral

Buy

Buy

Buy

Buy

Buy

Buy

Not Rated

Neutral

513

1,994

1,237

696

392

439

594

1,015

2,307

140

583

121

2,551

526

608

823

4,352

620

764

505

510

1,252

540

1,950

1,606

900

335

555

600

1,100

2,575

220

650

200

2,500

550

861

1,000

5,000

797

1,201

610

-

1,400

5

-2

30

29

-14

26

1

8

12

57

11

65

-2

4

42

22

15

29

57

21

12

21.6 21.6

74.6 68.8

57.3 52.7

39.3 44.6

10.2

6.1

14.2 17.5

15.9 21.1

39.9 32.4

72.6 60.6

10.3

2.2

39.3 37.9

7.2

8.0

34.4 44.2

16.1 18.6

36.9 44.2

56.6 37.6

129.1 139.0

14.0 18.1

32.3 41.7

26.1 14.4

13.0 16.1

55.2 50.0

24.9

90.7

64.1

50.3

10.5

23.7

27.0

43.7

115.2

5.6

42.8

11.0

54.9

26.5

55.0

42.7

156.2

29.9

68.3

22.9

18.0

61.4

Buy

Neutral

Buy

Buy

202

226

256

310

260

240

295

385

29

6

15

24

-0.5

20.3

12.0

11.0

1.8

22.9

12.7

14.3

7.1

23.2

13.6

14.5

Buy

Not Rated

Neutral

Buy

Not Rated

Not Rated

166

4,008

1,333

250

118

267

215

-

1,496

282

-

-

29

12

13

9.8

10.9

102.5 129.9

38.0 42.7

6.8

8.4

16.9

8.8

15.9

21.0

13.3

163.2

55.2

11.6

23.9

25.9

16.9

39.1

35.1

36.8

14.1

15.8

30.8

74.3

18.1

NM

68.3

9.4

Buy

Buy

Neutral

Neutral

Buy

76

361

92

780

243

106

430

90

910

302

39

19

-2

17

24

1.0

20.0

-9.3

11.4

25.8

1.0

21.7

-2.9

11.6

25.6

2.4

25.4

0.1

20.1

30.2

16 November 2017

19