3 April 2018

Market snapshot

Equities - India

Close

Chg .%

Sensex

33,255

0.9

Nifty-50

10,212

1.0

Nifty-M 100

19,097

1.8

Equities-Global

Close

Chg .%

S&P 500

2,582

-1.2

Nasdaq

6,870

-2.0

FTSE 100

7,045

0.6

DAX

11,941

-0.3

Hang Seng

12,001

-2.4

Nikkei 225

21,389

1.7

Commodities

Close

Chg .%

Brent (US$/Bbl)

67

-2.5

Gold ($/OZ)

1,341

1.2

Cu (US$/MT)

6,634

0.4

Almn (US$/MT)

2,008

-0.5

Currency

Close

Chg .%

USD/INR

65.2

0.0

USD/EUR

1.2

0.0

USD/JPY

105.9

-0.9

YIELD (%)

Close

1MChg

10 Yrs G-Sec

7.4

0.07

10 Yrs AAA Corp

8.0

-0.16

Flows (USD b)

2-Apr

MTD

FIIs

-0.1

2.0

DIIs

0.1

1.1

Volumes (INRb)

2-Apr

MTD*

Cash

294

294

F&O

3,791

3,791

Note: YTD is calendar year, *Avg

YTD.%

-2.4

-3.0

-9.6

YTD.%

-3.4

-0.5

-8.4

-7.6

2.5

-6.0

YTD.%

0.5

2.9

-8.0

-11.0

YTD.%

2.0

2.5

-6.0

YTDchg

0.1

0.1

YTD

2.2

3.9

YTD*

387

8,176

Today’s top research idea

Tata Chemicals (Initiating Coverage): Flight of rebirth

Transforming into a growth company; re-rating imminent



TTCH is using its cash cows – soda ash and sodium bicarbonate – to build

growth businesses such as consumer and specialty products. In the consumer

business, it enjoys leadership in the domestic table salts market and is fortifying

its pulses and spices portfolios. In the specialty products business, it is

developing nanomaterial and nutritional solutions.



Massive cash generation of INR39.7b via divestment of the urea and phosphatic

fertilizers business and sale of investments coupled with steady accruals from

the soda ash business would help TTCH repay debt. Its interest outgo is likely to

decline from INR4.1b in FY17 to INR2.1b in FY20.



As TTCH scales up its growth businesses and deleverages its balance sheet, we

expect its consolidated RoCE to improve considerably, in turn driving a stock re-

rating. We believe it would be fair to assign ~30% premium to its five-year

average EV/EBITDA of 7.5x. Our SOTP-based target price of INR940 (implied

EV/EBITDA of 9.7x FY20E) implies 36% upside. We initiate coverage with

Buy.

Research covered

Cos/Sector

Tata Chemicals

Motherson Sumi

Financials

Telecom

Economy

Shilpa Medicare

Auto Volumes

Key Highlights

(Initiating Coverage): Flight of rebirth

SMRPBV to acquire Reydel Auto for USD201m (2x EBITDA)

RBI allows spreading of MTM losses, mandates creation of IFR

Competitive intensity to persist in FY19; ARPU recovery merely

delayed

2Q 2018: India’s Quarterly Economic Outlook; Growth forecasts

revised up

Stake sale to mark end of JV with ICE

MAR-18 Volumes (1. Mahindra & Mahindra; 2. Bajaj Auto; 3. Hero

MotoCorp; 4. Eicher Motors; 5. Ashok Leyland; 6. TVS Motor)

Chart of the Day:

Tata Chemicals (Initiating Coverage): Flight of rebirth

Contribution of specialty & consumer business to increase to

33% in FY20

Debt reduction to lower interest expense

Source: Company, MOSL

Source: Company, MOSL

Research Team (Gautam.Duggad@MotilalOswal.com)

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

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

In the news today

Kindly click on textbox for the detailed news link

1

RBI lets banks spread out

provisioning for bond market

losses over 4 quarters

The Reserve Bank of India (RBI) on

Monday allowed banks to spread

out the provisioning to cover

losses on their government bond

portfolio across four quarters, in a

relief for lenders who would have

otherwise faced an immediate hit

to their bond portfolio due to …

2

ReNew Power acquires Ostro Energy to become country's largest

RE company

ReNew Power became the largest renewable energy company in India

after it acquired Ostro Energy on Monday. The deal size is estimated to be

$1.55 billion (Rs 100 billion), the biggest deal in the renewable energy

sector. The deal is funded in a 60:40 equity-debt ratio with the company

open to debt refinancing later, according to persons close to the

development. Canada Pension Plan Investment Board (CPPIB) had pumped

in $247 million to assist ReNew in finalising the deal, the company said.

3

Govt rules out excise duty cut to

cushion petrol prices

The government today ruled out

any immediate reduction in excise

duty to cushion relentless rise in

international oil prices that have

sent retail diesel rates in India to

record high and petrol to four-

year high. The BJP-led government

had raised excise duty nine times

between November 2014 and

January 2016 to shore up finances

as global oil prices fell, but...

4

Direct tax mop up at Rs 9.95

lakh crore in FY18, misses

revised estimates

The income tax collections during

the 2017-18 fiscal has exceeded

the Budget target at Rs 9.95 lakh

crore, helped by addition of one

crore new assesses who have

started filing income tax returns.

However, the government has

missed its ambitious target of Rs

10.05 lakh crore as per the revised

estimates set in the Budget ...

5

In top gear, automakers post

highest-ever sales in FY18

Most auto manufacturers,

including some passenger car

makers, have registered double-

digit growth in March. Fiscal

2017-18 also saw some players

register their highest-ever sales.

In the passenger vehicle

segment, market leader Maruti

Suzuki India grew 15 per cent

year-on-year (YoY) in March,

with sales of 1.47 lakh units

(1.27 lakh units). For the fiscal,

the company recorded 14 per

cent volume growth, selling

more than 16.53 lakh units

(14.44 lakh units).

6

Low prices the way forward

for Future Group

Future Group, the country’s

biggest retailer, is changing its

discount pricing strategy to ‘Har

Din Low Prices’, mimicking

Walmart’s global everyday low

pricing business model, putting

pressure on its rivals to drop

grocery prices. The Kishore

Biyani-owned retail chain

claimed that prices of about

1,500 stock keeping units at its …

3 April 2018

7

Highway construction hits

record 10,000 km in FY18

Construction of national

highways in India hit a record

10,000 km in the year ended

March 31 after the government

stepped up the pace of

implementation and awarding

contracts. On average, 27.5 km

of highways were constructed

every day in FY18, while

contracts were awarded for an

average 46 km per day, a top…

2

Initiating Coverage | Sector: Chemicals

Tata Chemicals

BSE Sensex

33,255

S&P CNX

10,212

CMP: INR692

TP: INR940 (+36% )

Buy

Tata Chemicals (TTCH) is a 78-year-old commodities company, reinventing itself as a

specialty and consumer products company. It has a diversified portfolio of businesses:

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 (%)

(a) soda ash and sodium bicarbonate, where it enjoys global leadership, (b) fertilizers,

TTCH IN

254.8

781 / 558

1/3/3

176.1

2.7

565.0

69.2

FY20E

126.3

27.2

12.8

50.3

14.3

423.2

12.3

9.9

13.8

1.6

which it is exiting from, (c) agricultural inputs, through subsidiary, Rallis India, (d)

consumer products such as branded iodized salt, pulses and spices, and (e) a fledging

specialty products business – materials such as highly dispersible silica (HDS) and

nanomaterial, and nutritional products like oligosaccharides and polyols. It also has

sizable financial investments that it can liquidate to fund its growth.

Financial Snapshot (INR b)

Y/E Mar

FY18E FY19E

Net Sales

105.8

115.5

EBITDA

22.6

24.7

PAT

8.6

11.2

EPS (INR)

33.7

44.0

Gr. (%)

0.0

30.5

BV/Sh (INR)

368.7

394.1

RoE (%)

11.3

11.5

RoCE (%)

7.8

9.1

P/E (x)

20.5

15.7

P/BV (x)

1.9

1.8

Flight of rebirth

Transforming into a growth company; re-rating imminent







Shareholding pattern (%)

As On

Dec-17 Sep-17 Dec-16

Promoter

30.8

30.8

30.8

DII

31.5

27.9

29.7

FII

11.5

15.1

18.6

Others

26.2

26.1

21.0

FII Includes depository receipts

TTCH is using its cash cows – soda ash and sodium bicarbonate – to build growth

businesses such as consumer and specialty products. In the consumer business, it

enjoys leadership in the domestic table salts market and is fortifying its pulses and

spices portfolios. In the specialty products business, it is developing nanomaterial

and nutritional solutions.

Massive cash generation of INR39.7b via divestment of the urea and phosphatic

fertilizers business and sale of investments coupled with steady accruals from the

soda ash business would help TTCH repay debt. Its interest outgo is likely to

decline from INR4.1b in FY17 to INR2.1b in FY20.

As TTCH scales up its growth businesses and deleverages its balance sheet, we

expect its consolidated RoCE to improve considerably, in turn driving a stock re-

rating. We believe it would be fair to assign ~30% premium to its five-year

average EV/EBITDA of 7.5x. Our SOTP-based target price of INR940 (implied

EV/EBITDA of 9.7x FY20E) implies 36% upside. We initiate coverage with Buy.

Using cash cows to invest in growth businesses

TTCH is the global leader in soda ash and sodium bicarbonate. These are

mature, commodity businesses, growing at 3-4% per year and yielding

consistent cash flows. TTCH is using these cash cows to build growth businesses

such as consumer and specialty products. The company should be able to

enhance focus on these businesses following its exit from the regulated fertilizer

business. We expect the contribution of specialty and consumer products to

increase from 27% in FY17 to 33% by FY20, based on the progress in its existing

portfolio, though the company’s internal target is to reach 50% via the launch of

new products. TTCH enjoys leadership in the domestic table salts market and

will continue focusing on growing its other specialty and consumer products,

including nutraceuticals and silica. We expect specialty and consumer products

revenue to grow at a CAGR of ~14%, outpacing the overall growth of 9% over

FY18-20.

Tata Chemicals

Flight of rebirth

Sumant Kumar

+

91 22 3078 4702

Sumant.Kumar@motilaloswal.com

3 April 2018

3

Stock Performance (1-year)

To be net debt-free by FY20; RoCE to improve considerably

Divestment of the fertilizer business and sale of Tata Global Beverages shares should

result in cumulative gross cash inflow of ~INR39.7b in FY18. Internal accruals would

add further to cash flows. TTCH is also focusing on working capital, which has

reduced by INR21b in two years. Strong cash flows will allow part repayment of debt

and also help invest in higher-RoCE businesses like specialty and consumer products.

TTCH is investing in manufacturing facilities for new materials (such as HDS and

nanomaterial) and nutritional solutions (such as oligosaccharides and polyol). At full

potential, these businesses should generate RoCE of 20-25%. We expect the

company to be net debt free by FY20 from net-debt-to-equity of 0.7x in FY17.

Interest outgo should reduce from INR4.1b in FY17 to INR2.1b in FY20, enabling 22%

CAGR in continuing business profitability over FY18-20.

Focus now on consumer…

TTCH has been a pioneer in developing the market for iodized salt in India, and

enjoys a share of 25% in the country’s powdered salt market. It has a distribution

network of 1.7m retail outlets, reaching 143m households across India. Compared to

the other prominent FMCG companies in India that have an average retail reach of

5m-6m outlets, we believe TTCH has ample headroom available for growth.

Leveraging on the network, TTCH has expanded its horizons to include branded

pulses, spices, besan (pulse flour) and water purifiers, where it is yet to realize full

potential.

…and specialty products

TTCH is also entering nutritional solutions. We believe nutraceuticals presents a

huge global opportunity, with an estimated B2B market size of ~USD60b in 2016 and

B2C market size of ~USD182b, which is expected to grow at 9% CAGR till 2021. At

full utilization, we expect the current planned nutraceuticals capacity addition (likely

to be commercialized by 1QFY20) to contribute 4% of consolidated sales and 5% of

consolidated EBITDA. This would increase to 9% of consolidated sales and 10% of

consolidated EBITDA on doubling capacity, and 13% of consolidated sales and 15%

of consolidated EBITDA on tripling capacity, with global B2B market share at just 0.1-

0.3%. Besides, it is foraying into yet another technology-enabled, differentiated

business – highly dispersible silica (HDS). HDS is a substitute for carbon black, which

had a market of INR50b in India in 2016.

Initiating coverage with a Buy rating

TTCH has traded at a one-year forward EV/EBITDA of 7.5x (average) for the last five

years. Our SOTP-based target price is INR940 (implied EV/EBITDA of 9.7x).

Considering the increased focus/business transformation toward higher-RoCE

segments (specialty and consumer products) and the divestment of a regulated

business (fertilizers), we believe it is fair to assign ~30% premium to its five-year

average EV/EBITDA. We expect TTCH to continue its journey to become a larger

specialty and consumer play. As at the end of FY17, net debt stood at INR52b. We

expect the company to become net-debt-free by FY20, with (i) cash generated from

the divestment of the fertilizer business, (ii) sale of investment in Tata Global

Beverages shares, (iii) internal accruals, and (iv) potential sale of investment in

group companies. Average free cash flow yield over FY19-20 is estimated at ~9%.

We initiate coverage with a

Buy

rating and a target price of INR940 –36% upside.

3 April 2018

4

Motherson Sumi

BSE SENSEX

33,255

S&P CNX

10,212

2 April 2018

Update

| Sector:

Automobiles

CMP: INR324

TP: INR437(+35%)

Buy

SMRPBV to acquire Reydel Auto for USD201m (2x EBITDA)

Complements SMP, strengthens presence in plastic parts business

Motherson Sumi’s (MSS) 51% subsidiary SMRPBV has entered into an

arrangement for the acquisition of Europe-based Reydel Automotive. Reydel is

engaged in the plastic parts business, and thus, should help MSS’ Samvardhana

Motherson Peguform (SMP) business to consolidate its position in this segment.

Key highlights:



SMRPBV has proposed to acquire a 100% stake in Reydel Automotive for

USD201m. This acquisition is structured under a Lockbox arrangement with

effect from 1

st

January 2017.



This stake would be bought from Cerberus Capital, a private equity player.

Reydel was carved out from Visteon and acquired by Cerberus in 2014.



Acquisition price of equity valued at USD201m implies EV/EBITDA of 2x CY17.



Reydel is a global supplier of instrument panels, door panels, console modules,

decorative parts and cockpit modules, with presence across the EU, South

America and Asia. It has 20 manufacturing facilities, with presence across 16

countries and ~5,650 employees.



For CY17, Reydel had revenues of USD1b, with an EBITDA margin of 6.5% and

an EBIT margin of 4.6%. It had net cash of ~USD63m as of December 2017.



Key customers are PSA, Renault, RSM, SsangYong/M&M, VW and GM. Post this

acquisition, no customer for MSS would account for more than 15% of

revenues.



This acquisition is highly synergistic with SMP’s business, with complementary

portfolio of products, customers and capabilities. Reydel only does interior

parts, whereas SMP also has a sizeable presence in exterior parts. It adds

manufacturing footprint for MSS in countries like the Philippines, Indonesia,

Croatia and Morocco.



It has carried forward losses (not quantified), which can be utilized by SMRPBV.



Reydel is a cash flow positive company, with capex funded via internal accruals.

It has very low net working capital requirement. It does not have any funded

pension liabilities, whereas unfunded pension liabilities stand at USD9m.



This is the second acquisition after MSS announced its 2020 targets. Both PKC

and Reydel would contribute ~USD2.5b revenues to the inorganic revenue

target of USD5.5-6b by FY20.



Valuation view:

We believe the Reydel acquisition is value accretive and a

good fit for MSS’ SMP/MATE business, as it adds new customers, countries and

capabilities. MSS offers strong visibility of earnings growth, along with

improving capital efficiencies. We await further financial details before

incorporating Reydel into our estimates. For MSS, we currently estimate

consol. revenue/EBITDA/PAT CAGR (FY17-20) of 25%/33%/31%. The stock

trades at 25.9x/18.6x FY19E/20E consol. EPS. Maintain

Buy

with a TP of

INR437, valuing 25x FY20E consol. EPS (in line with historical average).

5

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 (%)

MSS IN

2,105

395 / 247

4/-10/18

682.6

10.5

1084.0

38.3

Financials Snapshot (INR b)

Y/E Mar

FY18E FY19E FY20E

Net Sales

571.2 683.2 825.6

EBITDA

51.7

74.7 100.1

PAT

17.0

26.3

36.8

EPS (INR)

8.1

12.5

17.5

Gr. (%)

5.0

54.7

39.6

BV/Sh (INR)

44.8

53.7

65.7

RoE (%)

19.2

25.4

29.3

RoCE (%)

11.8

17.4

21.5

P/E (x)

40.1

25.9

18.6

P/BV (x)

7.2

6.0

4.9

Shareholding pattern (%)

As On

Dec-17 Sep-17 Dec-16

Promoter

61.7

63.1

63.1

DII

8.4

7.6

6.8

FII

20.1

19.7

19.7

Others

9.7

9.6

10.4

FII Includes depository receipts

Stock Performance (1-year)

Motherson Sumi

Sensex - Rebased

390

340

290

240

3 April 2018

Sector Update | 3 April 2018

Financials

RBI allows spreading of MTM losses, mandates creation of IFR

FY19 IFR provision as percentage

Some relief for PSBs

FY19 PPoP

One



In view of the sharp increase in G-Sec yields since 3QFY18 and the corresponding MTM

third of

provision impact on banks, the Reserve Bank of India (RBI) has allowed banks to

IFR

IFR as a

INRb

at

spread their MTM provisions over a maximum of four quarters, beginning the quarter

% of

2%

FY19E

in which the loss was incurred. The 10-year G-Sec yields rose by 67bp in the December

PPOP

2017 quarter – the steepest quarterly increase in the last four years – leading to

Axis Bank

11

1.71

significant MTM losses for PSU banks, which have a higher proportion of AFS/HFT

State Bank

108

5.22

investments on their books compared to private banks (refer Exhibit 3).

Punjab Nat. Bank

17

3.38



The banks utilizing the option are required to make requisite disclosures (including the

Bank of Baroda

14

3.24

balance provisions to be made) in their notes to accounts.

Canara Bank

9

2.57



The RBI has further guided banks to create an Investment Fluctuation Reserve (IFR)

Union Bank

8

2.80

starting FY19, amounting to at least 2% of their total AFS and HFT portfolio, within

BOI

10

3.19

Indian Bank

7

4.25

three years, i.e., by the end of FY21. The IFR will be eligible for inclusion in tier-2

capital.

Impact of FY19 IFR provision on



Banks will be allowed to withdraw any amount in excess of the mandated 2% from

FY19 EPS (%)

their IFR for credit to the P&L account, but will be required to make disclosures for the

same in the notes to accounts. Drawdown from IFR where the balance is less than 2%

IFR

Impact

of AFS/HFT portfolio is allowed, subject to the following conditions:

INRb

at

on FY

2%

19E EPS



The drawn down amount is used only for meeting the minimum CET1/Tier1 capital

requirements.

Axis Bank

11

3.08



There is no surplus in the P&L carried forward into the next year.

State Bank

108

19.1



The amount drawn down is not more than the difference between MTM losses made

Punjab Nat. Bank

17

310.5

Bank of Baroda

14

12.5

during the year and the net profit on sale of investments during the year.

Canara Bank

9

10.6

Our view: This is a big positive for PSBs, for which AFS/HFT comprises ~35-40% of the

Union Bank

8

20.5

investment portfolio. PSU Banks have incurred huge MTM losses in 3QFY18 due to the

BOI

10

15.0

sharp increase in yields in the December quarter. As seen from our analysis in exhibit 4,

Indian Bank

7

7.7

FY19 provisioning requirement as a % of FY19 PPoP is the highest for SBI and INBK, while

EPS impact is the highest for PNB followed by UNBK and SBI. The RBI’s guideline on

creating IFR at 2% of the AFS and HFT category is a step in the right direction. We maintain

our positive stance on SBIN and BOB.

Exhibit 1:

10yr G-sec Yields have increased since Sept

Exhibit 2:

...and similar is the trend for 1yr G-sec Yield

8.0

7.0

6.0

5.0

’17…

8.3

7.5

6.8

6.0

Source: Company, MOSL

Source: Company, MOSL

3 April 2018

6

2 April 2018

Telecom

Active SMS of smaller players

continues to fall (%)

Competitive intensity to persist in FY19

ARPU recovery merely delayed; retain Buy on Bharti and Idea



Since January 2018, telecom service providers have once again turned to market share

gains at the cost of profitability. The sector might continue to see aggressive pricing

for the next 12 months, leading to market share losses for the smaller players (15%

currently) as well as Vodafone-Idea until the merger settles down.



Bharti’s acquisition of TTSL and Telenor should provide INR33.8b EBITDA in FY20, a

much needed buffer to mitigate the impact of ARPU downtrading. Vodafone-Idea’s

INR200b cash infusion should help take care of FY19 capex, but beyond that, net debt

of INR1.2t and net-debt-to-EBITDA of ~11x might necessitate further cash infusion.

4G devices constitute ~20% of

total handsets (m)



Once the three large players – Bharti, Vodafone-Idea and RJio – have similar network

capability and financial wherewithal, focus should shift back to profitability. We now

expect this to happen only in FY20, later than we had believed earlier.

3g

113

4g

150



We cut our FY20 India wireless EBITDA estimates by 12% for Bharti and by 9% for Idea.

We expect consolidated EBITDA to grow 1% for Bharti and -14% for Vodafone-Idea in

FY19, and recover to 18% and 72%, respectively in FY20.



We maintain Buy on both Bharti and Idea, but cut our target prices. Our target price is

now INR581 (v/s INR680 earlier) for Bharti and INR91 (v/s INR120 earlier) for Idea. As

recovery sets in in the next 3-4 quarters, strong FCF growth should re-rate the stocks.

2g

496

Competitive intensity delays our recovery expectation to FY20

Prioritizing market share over profitability, telcos reversed their ARPU accretion

measures in January 2018, delaying market recovery. In the next 12 months, the

large players (Bharti, Vodafone-Idea and RJio) could continue pricing aggressively to

attract marooned subscribers from TTSL, Telenor, RCom and Aircel.

Jiophone impact likely for next 2-3 quarters

We expect RJio’s Jiophone to target at least 10% share of the 500 feature phone

market in the next 6-8 months, implying monthly subscriber additions of 6m-8m.

However, preference for smartphones even at ~50% higher device price should cap

the long-term impact of Jiophone. Further, the recent aggressive plans are priced

25-30% below data subscribers’ ARPU. However, the marginal utility of subscriber

shift due to lower price plans is diminishing, given the perceived short-term

phenomenon of such discounts. This should limit the downtrading to the next 2-3

quarters.

Bharti and Vodafone-Idea retain subscriber market share, though

revenue/EBITDA impacted

While they have cumulatively lost ~30% in revenue since the launch of RJio, Bharti

and Vodafone-Idea's focus has been to arrest subscriber churn and gain market

share. Bharti has gained 470bp active subscriber market share in the last 10 months,

while Vodafone-Idea reversed active subscriber market share loss in October,

gaining 200bp in the last three months.

3 April 2018

7

ARPU recovery delayed, but definite

Over the next 12 months, as the smaller players are edged out and the Vodafone-

Idea network integration is completed, the flux should settle. The industry would be

left with three large players – Bharti, Vodafone-Idea and RJio. Each would have

strong network capabilities and financial wherewithal to match any undercutting

measures by peers. This, we believe, would trigger ARPU accretion instead of price

undercutting.

Bharti – acquisition to cushion impact of high competition

Bharti's completion of TTSL and Telenor acquisition by 1HFY19 should cushion the

impact of recent low ARPU plans. Including the contribution from the merger, our

India wireless EBITDA estimates stand at INR134.7b for FY19 (a 11% decline) and

INR173.5b for FY20 (a 29% growth), contributing 45% and 49%, respectively of

overall EBITDA.

Vodafone-Idea – cash position vulnerable beyond FY19

Vodafone-Idea’s overall fund raising net of INR90b integration cost is ~INR200b,

which includes (a) equity of INR130b, (b) tower sale of INR80b, (c) Indus stake sale.

This should provide at least enough cash to fund heavy capex in FY19. However,

beyond FY19, market recovery holds the key for cash requirement for capex and

fighting competition. This could be a risky proposition in the situation where peers

continue to keep ARPUs depressed to hurt Vodafone-Idea’s cash generation

potential. The key silver lining is the merger synergies, which could drive INR188b

EBITDA in FY20.

Cutting estimates

Our market recovery expectation is delayed to FY20. We cut our FY20 India wireless

revenue/EBITDA estimates by 4%/12% for Bharti and cut our consolidated

revenue/EBITDA estimates by 10%/9% for Idea. We expect Bharti's consolidated

EBITDA to grow 1% in FY19 and 18% in FY20, cushioned by acquisition, Africa

business and non-wireless India business. We expect Vodafone-Idea's combined

EBITDA to decline 14% in FY19, but grow 72% in FY20, driven by market recovery

and synergy gains.

Retain thesis of high FCF play; maintain Buy

Our key investment thesis remains that the Indian telecom sector can be a high FCF

play, as market recovers and capex peaks out. We maintain Buy on both Bharti and

Idea, but cut our target prices. Our target price is now INR581 (v/s INR680 earlier)

for Bharti and INR91 (v/s INR120 earlier) for Idea. As recovery sets in in the next 3-4

quarters, strong FCF growth should re-rate the stocks.

3 April 2018

8

E

CO

S

COPE

2Q 2018: India’s Quarterly Economic Outlook

Growth forecasts revised up, inflation forecast lowered



2 April 2018

The Economy Observer

Taking into consideration the additional data released in the past quarter, we have revised up our real GVA growth

forecast for both FY18 and FY19 by 30bp to 6.4% and 6.7%, respectively. Inflation, however, is expected to average

4.4% in FY19, much lower than 5.1% estimated earlier.



Our macroeconomic forecasts for the Indian economy are based on a) impact of growing trade protectionism on the

US (and global) economic/trade recovery, b) impact of the possible ~25% hike in the minimum support price (MSP) of

Kharif crops as the government looks to fulfill its promise of at least 1.5x cost as MSP (based on A2+FL) and c)

confirmation from state budgets of 2018-19 that the fiscal support to economic activity has peaked in FY17 and is set

to weaken further in FY19. We have discussed these three themes in this note.

What has changed since the

January 2018

Quarterly Economic Update?

Real sector:

Driven by better-than-expected 3QFY18 data and revisions in previous

quarters’ data, we expect real GVA/GDP to grow 6.4%/6.7% in FY18, better than

previously expected. Furthermore, real GDP is expected to grow 6.9%/7.2% in

FY19/FY20, slightly better/worse than 6.8%/7.4% expected previously.

CPI inflation:

With CPI consistently coming in below our expectations, we have

revised down our FY19/FY20 forecast from 5.1%/4.7% to 4.4%/4.5%. We, however,

continue to expect a prolonged pause from the Reserve Bank of India (RBI).

External sector and exchange rate:

India’s trade deficit has been higher than

expected in the recent past, resulting in a higher current account deficit (CAD) in

3QFY18. Consequently, our FY18/FY19 CAD projections are revised up from

1.4%/1.5% of GDP to 1.7%. Consequently, our REER-based model suggests that the

Indian Rupee (INR) could weaken 2.5% in FY19, which is partly based on its recent

weakness against all major currencies. This is higher than the 1.4% depreciation

expected earlier.

Exhibit 1: Forecasts of key macroeconomic variables for the Indian economy

Actual data

Macro indicators

Nominal GDP

MP

Real GDP

MP

Real GVA

BP

Consumer price index (CPI)

Policy repo rate (year-end)

INRUSD (average)

Current account balance

Fiscal balance

Unit

% YoY

% YoY

% YoY

% YoY

% pa

unit

% of GDP

% of GDP

FY16

10.4

8.2

8.1

4.9

6.75

65.5

(1.1)

(3.9)

FY17

10.8

7.1

7.1

4.5

6.25

67.1

(0.7)

(3.5)

Revised Apr’18 forecasts

FY18F

11.3

6.7

6.4

3.6

6.00

64.4

(1.7)

(3.5)

FY19F

11.6

6.9

6.7

4.4

6.00

66.0

(1.7)

(3.3)

FY20F

12.3

7.2

7.0

4.5

6.00

67.7

(1.7)

(3.1)

Previous Jan’18 forecasts

FY18F

10.0

6.3

6.0

3.8

6.00

64.6

(1.4)

(3.5)

FY19F

11.4

6.8

6.4

5.1

6.00

65.5

(1.5)

(3.2)

FY20F

11.9

7.4

7.0

4.7

6.00

65.7

(1.8)

(3.0)

Source: Various national sources, MOSL

3 April 2018

9

Shilpa Medicare

BSE SENSEX

32,969

S&P CNX

10,114

2 April 2018

Update

| Sector:

Healthcare

CMP: INR465

TP: INR686(+47%)

Buy

Stake sale to mark end of JV with ICE

CRAMS business with ICE will also be lowered



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 (%)

SLPA IN

80

749 / 401

7/-22/-38

36.9

0.6

30.0

46.2





Financials Snapshot (INR b)

FY18E FY19E FY20E

Y/E Mar

7.8

9.5

11.6

Net Sales

1.7

2.3

2.9

EBITDA

1.1

1.9

2.5

PAT

13.3 24.3

30.6

EPS (INR)

-5.0 82.4

25.9

Gr. (%)

127.0 152.9 181.9

BV/Sh (INR)

11.0 17.4

18.3

RoE (%)

8.4 13.5

15.2

RoCE (%)

34.9 19.1

15.2

P/E (x)

3.7

3.0

2.6

P/BV (x)

Shareholding pattern (%)

As On

Dec-17 Sep-17 Dec-16

Promoter

53.8

54.7

54.7

DII

13.1

13.2

7.6

FII

18.7

18.9

18.5

Others

14.4

13.2

19.1

FII Includes depository receipts

Stock Performance (1-year)

Shilpa Medicare

Sensex - Rebased

800

700

600

500

400

Shilpa Medicare (SLPA) recently decided to end its joint venture (JV) with ICE S.P.A

Italy (ICE) – a move that would help it garner proceeds of INR1.3b, as against its

investment of INR800m toward the JV. Furthermore, the amount of annual business

with ICE via CRAMS may be reduced by ~INR500m. The decision was premised on the

increasing uncertainty over the profitability of the JV.

Accordingly, for FY19/FY20, we reduce our (i) sales estimate by 5% to

INR10b/INR12b and (ii) earnings estimate by 8.5% to INR2.1b/INR2.7b.

Consequently, our price target is lowered to INR686 (25x 12M forward earnings).

We, however, remain positive on SLPA and re-iterate our Buy rating, given the

promising outlook for the US formulations business (31 ANDAs pending for approval)

and minimal medium-term regulatory risk.

Rising uncertainty prompts SLPA to sell stake in JV

The Raichem Medicare JV (between SLPA and ICE) has been incurring losses over

the past two years and the outlook, too, remains uncertain. Consequently, SLPA

has decided to sell its stake in Raichem Medicare to ICE for a consideration of

USD20.2m (INR1.3b). The total investment toward the JV till date by SLPA was

~INR800m. The stake sale is expected to conclude by 31

st

October 2018.

Furthermore, the amount of annual business with ICE via CRAMS may be reduced

by ~INR500m .

Change in estimates

For FY19/FY20, we reduce our (i) sales estimates by 5% to INR10b/INR12b and (ii)

earnings estimate by 8.5% to INR2.1b/INR2.7b to factor in the loss of business, and

subsequently, the reduced profitability from both the contract manufacturing

business and the JV. We have also factored in interest income from funds released

post the stake sale. Accordingly, we lower our price target to INR686 (from

INR749), valuing SLPA at 25x 12M forward earnings.

Valuation and view

We remain positive on SLPA on the back of its robust product pipeline for the US

market and stable API business. The company has a healthy oncology portfolio,

with 31 ANDAs pending for approval. In our view, approvals and subsequent

launches would be the key growth drivers for SLPA over the next 2-3 years. We

expect a CAGR (FY17-20) of 14% in sales to INR12b and 30% in PAT to INR2.5b. Re-

iterate

Buy.

3 April 2018

10

Sector Update| 2 April 2018

Automobiles

Mahindra & Mahindra

CMP: INR748

Stock Info

Bloomberg

Equity Shares (m)

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

52-Week Range (INR)

1, 6, 12 Rel.Per (%)

MM IN

592.6

887.6/13.6

803 / 613

4/13/4

TP: INR943(+26%)

Buy

Wholesales of 90.4k units exceed estimate of 81.1k

UV volumes up 9.6% YoY; Tractor volumes up 46.2% YoY















MM’s volumes grew 19.9% YoY to 90.4k units (est. of 81.1k units) in Mar-18.

Tractors sales increased 46.2% YoY to 28.3k units (est. of 22k), led by a 50% increase in

domestic volumes, while exports declined 3% YoY.

UV sales (incl. pick-ups) stood at 53k units (+9.6% YoY), above estimate of 51k units.

Momentum in pick-ups continued with 13% YoY growth, while passenger utility

vehicles reported growth of 3% YoY.

LCV (>3.5t) and M&HCV sales declined by ~3% YoY and ~6% YoY, respectively.

3W volumes increased ~30% YoY to 6.6k units (est. of 5.3k units).

Speaking on the monthly performance, Rajan Wadhera, President, Automotive Sector,

M&M Ltd. said, “We are particularly buoyed by the growth of our truck business,

which has outperformed the industry. With three of our critical new automotive

launches lined up in FY19, we are confident of increasing our market share in the

utility vehicle space.”

The stock trades at 18x/15.9x FY19E/20E. Maintain Buy.

Financials Snapshot(INR b)

Y/E MARCH 2018E 2019E 2020E

Sales

488.9 551.4 611.6

EBITDA

61.7 70.6

79.8

NP*

43.9 49.2

55.9

Adj.EPS(INR)* 37.0 41.5

47.1

EPS Gr. (%)

17.4 12.1

13.5

Cons.EPS(INR) 39.8 46.2

51.0

BV/Sh. (INR)

243

273

307

RoE (%)

15.2 15.1

15.3

RoCE (%)

14.0 14.1

14.4

Valuations

P/E (x)

20.2 18.0

15.9

P/BV (x)

3.1

2.7

2.4

EV/EBITDA (x) 13.9 11.9

9.0

*incl. MVML



Snapshot of volumes for Mar-18

YoY

Company Sales

Mahindra & Mahindra

UV (incl. pick-ups)

LCV

Three-Wheelers

Tractors

Mar-18

90,354

53,032

2,443

6,602

28,277

Mar-17

75,368

48,395

2,574

5,062

19,337

YoY (%)

chg

19.9

9.6

-5.1

30.4

46.2

MoM

MoM (%)

Feb-18

chg

71,610

26.2

44,268

19.8

1,721

42.0

5,138

28.5

20,483

38.1

FY18YTD FY17YTD (%) chg

866,537

477,300

17,229

54,625

317,383

769,915

440,274

14,343

52,306

262,992

12.5

8.4

20.1

4.4

20.7

FY18

estimate

866,537

477,300

17,229

54,625

317,383

FY18 YTD

Monthly

Gr. (%)

Run rate

22.4

72,211

9.1

39,775

20.1

1,436

4.4

4,552

20.7

26,449

3 April 2018

11

Bajaj Auto

Stock Info

Bloomberg

Equity Shares (m)

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

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

CMP: INR2,809

BJAUT IN

289.4

812.7/12.5

3473 / 2695

-5/-17/-12

TP: INR3,550 (+26%)

Buy

Mar-18 dispatches of 334.3k units miss estimate of 348k

Domestic volumes of 204k units below est. of 218k; exports in line





BJAUT’s Mar-18 sales increased 22.8% YoY to 334.3k units, below our estimate of

347.6k units.

Domestic volumes of 203.6k units missed our estimate of 218.4k units, while exports

came in line at 130.7k units. Domestic volumes grew 20.3% YoY, while exports rose

27% YoY.

Overall motorcycle volumes increased 10.5% YoY. Domestic motorcycle dispatches

increased ~5% YoY to 159k units. Motorcycle exports grew ~20% YoY to 111k units.

3W volumes remained strong, with overall growth of 130% YoY. Domestic 3W volumes

maintained the positive momentum, growing 150% YoY to 44.6k units. 3W exports

grew 95% YoY to 19.8k units. This marks highest-ever 3W monthly volume for BJAUT.

For FY18, volumes grew 9.3% to ~4m units.

The stock trades at 16.7x/14.2x FY19E/20E consol. EPS. Maintain Buy.

Financial & Valuation (INR b)

Y/E MARCH

2018E 2019E 2020E

Sales

251

275

310

EBITDA

47.4 53.2 62.9

Consol. NP

42.8 48.6 57.1

ConsEPS(INR)

148

168

197

EPS Gr. (%)

4.8 13.5 17.5

BV/Sh. (INR)

649

717

802

RoE (%)

23.9 24.6 26.0

RoCE (%)

21.6 22.5 33.0

Payout (%)

52.0 51.8 50.7

Valuation

P/E (x)

19.0 16.7 14.2

P/BV (x)

4.3

3.9

3.5

EV/EBITDA (x)

13.9 12.1

9.9

Div. Yield (%)

2.3

2.7

3.0









Snapshot of volumes for Mar-18

YoY

Company Sales

Bajaj Auto

Motorcycles

Three-Wheelers

Domestic

Exports

Mar-18

334,348

269,939

64,409

203,600

130,748

Mar-17

272,197

244,235

27,962

169,279

102,918

MoM

MoM (%)

YoY (%)

Feb-18

chg

chg

22.8

357,883

-6.6

10.5

297,514

-9.3

130.3

60,369

6.7

20.3

214,023

-4.9

27.0

143,860

-9.1

FY18YTD

4,006,791

3,369,334

637,457

2,344,214

1,662,577

FY17YTD (%) chg

3,665,864

3,219,932

445,932

2,254,617

1,411,247

9.3

4.6

42.9

4.0

17.8

FY18

estimate

4,006,791

3,369,334

637,457

2,344,214

1,662,577

FY18 YTD

Monthly

Gr. (%)

Run rate

9.3

333,899

4.6

280,778

42.9

53,121

4

195,351

17.8

138,548

3 April 2018

12

Hero MotoCorp

CMP: INR3,641

Stock Info

Bloomberg

Equity Shares (m)

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

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

HMCL IN

199.7

727.0/11.2

4200 / 3180

4/-10/1

TP: INR4,027(+11%)

Neutral

Volumes up 20% YoY to 730.5k, above estimate of 667.6k

HMCL records highest-ever monthly volumes in Mar-18







HMCL’s Mar-18 volumes grew 20% YoY to 730,473 units, above our estimate of 667.6k.

With this, it recorded highest-ever monthly volumes in Mar-18.

For FY18, volumes grew 13.8% YoY to ~7.58m units.

It has lined up a slew of new launches for FY19, with four new products in the

premium motorcycle and scooter categories – Xtreme 200R and XPulse in motorcycles

and Duet 125 and Maestro Edge 125 in scooters.

HMCL trades at 18.1/16.9x FY19E/20E EPS. Maintain Neutral.

Financials Snapshot (INR b)

Y/E MARCH

2018E 2019E

Sales

322.1 356.2

EBITDA

53.4 57.3

NP

37.2 40.1

Adj. EPS (INR) 186.1 201.0

EPS Gr. (%)

10.0

8.0

BV/Sh. (INR)

584.0 670.5

RoE (%)

34.1 32.0

RoCE (%)

32.9 31.1

Valuations

P/E (x)

19.6 18.1

P/BV (x)

6.2

5.4

EV/EBITDA (x)

12.1 11.1

Div. Yield (%)

2.5

2.6

2020E

390.1

61.5

43.0

214.9

6.9

757.2

30.1

29.3

16.9

4.8

10.2

2.9



Snapshot of volumes for Mar-18

Company Sales

Hero MotoCorp

Mar-18

730,473

MoM

YoY (%)

MoM (%)

FY18

Mar-17

FY18YTD FY17YTD (%) chg

Feb-18

chg

chg

estimate

609,951

19.8

629,597 16.0 7,582,857 6,663,903 13.8 7,582,856

YoY

FY18 YTD

Monthly

Gr. (%)

Run rate

13.8

631,905

3 April 2018

13

Eicher Motors

CMP: INR28,301

Stock Info

Bloomberg

EIM IN

Equity Shares (m)

27.2

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

770.1/11.5

52-Week Range (INR) 33484/25316

1, 6, 12 Rel.Per (%)

4/-15/-2

Financials Snapshot(INR b)

Y/E MARCH 2018E 2019E 2020E

Net Income

89.3 107.7 129.4

EBITDA

28.4

35.1

43.9

Net Profit

19.8

28.2

35.9

Adj. EPS (INR) 727.9 1,036.8 1,318.3

EPS Gr. (%)

18.0

42.4

27.2

BV/Sh. (INR) 2,512 3,348 4,436

RoE (%)

32.5

35.4

33.9

RoCE (%)

31.5

30.8

30.7

Payout (%)

0.5

0.6

0.7

Valuations

P/E (x)

38.9

27.3

21.5

P/BV (x)

11.3

8.5

6.4

EV/EBITDA (x) 21.3

17.1

13.4

TP: INR34,485 (+22%)

Buy

VECV Mar-18 wholesales of 9.4k units exceed estimate

VECV’s volumes grow 28.4% in Mar-18.











VECV Mar-18 volumes of 9,411 units were above our estimate of 8.1k units.

Domestic LMD and HD segments grew 50.9% YoY and 26.4% YoY, respectively. Buses

volume declined 20% YoY.

VECV exports grew ~87% YoY to 1,265 units (above est. of 1,053 units).

For FY18, VECV’s volumes grew 12.5% to ~65.9k units.

The stock trades at 27.3x/21.5x FY19E/20E consol. EPS. Maintain Buy.

Snapshot of volumes for Mar-18

YoY

Company Sales

VECV

Domestic LMD

Domestic HD

Domestic Buses

VTI

Total Domestic

Exports

Mar-18

9,411

4,447

2,080

1,453

166

8,146

1,265

Mar-17

7,327

2,947

1,646

1,817

239

6,649

678

YoY (%)

chg

28.4

50.9

26.4

-20.0

-30.5

22.5

86.6

MoM

MoM (%)

Feb-18

chg

6,889

36.6

3,594

23.7

1,345

54.6

844

72.2

93

78.5

5,876

38.6

1,013

24.9

FY18YTD FY17YTD (%) chg

65,928

33,006

12,372

10,494

1,055

56,927

9,001

58,604

26,027

11,109

12,270

1,163

50,569

8,035

12.5

26.8

11.4

-14.5

-9.3

12.6

12.0

FY18

estimate

65,928

33,006

12,372

10,494

1,055

56,927

9,001

FY18 YTD

Monthly

Gr. (%)

Run rate

12.5

5,494

26.8

2,751

11.4

1,031

-14.5

875

0.0

88

12.6

4,744

12.0

750

3 April 2018

14

Ashok Leyland

CMP: INR148

Stock Info

Bloomberg

Equity Shares (m)

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

52-Week Range (INR)

1, 6, 12 Rel.Per (%)

AL IN

2,845.9

433.4/6.6

152 / 81

8/16/63

TP: INR179 (+21%)

Buy

Dispatches of 22.5k units above estimate of 21k units

MHCVs grew 11.7% YoY, while LCVs rose 57.6% YoY











AL’s Mar-18 wholesale dispatches grew 20% YoY to 22.5k units, above our estimate of

21k.

M&HCV volumes, which account for 76% of total volumes, grew 11.7% YoY (+24.3%

MoM) to 17.1k units (est. of 16.2k units).

LCVs (Dost) grew 57.6% YoY to 5.4k units (est. of 4.8k units).

For FY18, AL volumes grew 20.5% to ~174.8k units.

The stock trades at 20.5x/16.1x FY19E/20E EPS, and at 11.3x/8.8x EV/EBITDA.

Maintain Buy.

Financials Snapshot(INR b)

Y/E MARCH

2018E 2019E 2020E

Sales

260.4 308.0 360.6

EBITDA

28.4 35.6

42.8

NP

15.9 21.2

26.9

Adj. EPS (INR)

5.4

7.2

9.2

EPS Gr. (%)

28.8 33.1

27.1

BV/Sh. (INR)

23.9 28.5

34.7

RoE (%)

24.3 27.6

29.2

RoCE (%)

20.3 23.3

25.2

Valuations

P/E (x)

27.2 20.5

16.1

P/BV (x)

6.2

5.2

4.3

EV/EBITDA (x)

14.8 11.3

8.8

Div. Yield (%)

1.4

1.5

1.7

Snapshot of volumes for Mar-18

YoY

Company Sales

Ashok Leyland

CV (ex LCV)

LCV

Mar-18

22,453

17,057

5,396

Mar-17

18,701

15,277

3,424

YoY (%)

chg

20.1

11.7

57.6

MoM

MoM (%)

Feb-18

chg

18,181

23.5

13,726

24.3

4,455

21.1

FY18YTD FY17YTD (%) chg

174,831

131,390

43,441

145,084

113,314

31,770

20.5

16.0

37

FY18

estimate

174,831

131,390

43,441

FY18 YTD

Monthly

Gr. (%)

Run rate

20.5

14,569

16.0

10,949

36.7

3,620

3 April 2018

15

TVS Motor

CMP: INR 662

Stock Info

Bloomberg

Equity Shares (m)

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

52-Week Range (INR)

1, 6, 12 Rel.Per (%)

TVSL IN

475.1

314.7/4.8

795 / 430

0/-4/41

TP: INR723 (9%)

Neutral

Mar-18 wholesales up 28.1% YoY to 326.7k units

Domestic sales grew by 22.6% YoY; exports up 60.4% YoY

















Wholesales of 326.7k units (+28.1% YoY) were above our estimate of 310k.

Domestic volumes grew 22.6% YoY, while exports (18% of volumes) rose 60.4% YoY.

Motorcycle volumes grew 42.4% YoY to 134.4k units (est. 121.4k units).

Scooter volumes increased 20% YoY to 101k units (est. of 103k units).

Moped dispatches rose 13% YoY to 80.4k units (est. 75.8k units).

3W volumes increased 103.2% YoY, with growth across domestic and export sales.

For FY18, volumes grew 18.6% to ~3.47m units.

The stock trades at 27.3x/20.1x FY19E/20E EPS. Maintain Neutral.

Financials Snapshot (INR b)

Y/E MARCH

2018E 2019E 2020E

Sales

151.1 188.2 225.9

EBITDA

11.7 19.1

25.0

Adj. PAT

6.7 11.5

15.7

EPS (INR)

14.1 24.3

33.0

EPS Gr. (%)

20.4 71.8

35.8

BV/Sh (INR)

61.2 80.7 107.7

RoE (%)

25.3 34.2

35.0

RoCE (%)

25.6 36.8

41.3

Payout (%)

25.5 19.8

18.2

Valuations

P/E (x)

46.8 27.3

20.1

P/BV (x)

10.8

8.2

6.2

EV/EBITDA (x)

27.7 16.7

12.5

Div. Yield (%)

0.5

0.6

0.8

Snapshot of volumes for Mar-18

Company Sales

TVS Motor

Motorcycles

Scooters

Mopeds

Three-Wheelers

Total Domestic

Total Exports

Mar-18

326,659

134,412

100,972

80,381

10,894

267,031

59,628

MoM

YoY

MoM

Mar-17

Feb-18

(%) chg

(%) chg

255,043

28.1

290,673

12.4

94,373

42.4

113,296

18.6

84,173

20.0

93,573

7.9

71,135

13.0

74,073

8.5

5,362

103.2

9,731

12.0

217,879

22.6

232,109

15.0

37,164

60.4

58,564

1.8

YoY

FY18YTD

FY17YTD (%) chg

18.6

26.0

30.4

-3.4

42.5

15.7

35.5

FY18

estimate

3,466,110

1,355,576

1,134,918

876,932

98,684

2,891,895

574,215

FY18 YTD

Monthly

Gr. (%)

Run rate

18.6

288,843

26.4

112,965

30.3

94,577

-3.7

73,078

42.5

8,224

15.7

240,991

34.9

47,851

3,466,110 2,922,660

1,355,576 1,075,788

1,134,918 870,099

876,932

907,519

98,684

69,254

2,891,895 2,498,999

574,215

423,661

3 April 2018

16

In conversation

1. VIDEOCON GROUP : Have not given Rs 64 Cr to any company or

individual; Venugopal Dhoot, Chairman









Company has not given any Rs 64 crore investment in NuPower Renewables Pvt

Ltd.

Had some Rs 50,000 investment in Supreme Energy - have sold whatever shares

of Supreme Energy were owned. Not involved in Supreme Energy.

Regarding Tuskar being given Rs 660 crore loan by ICICI Bank, this loan was not

given when Chanda Kochhar was Managing Director. Rs 660 crore loan was

given to foreign company in 2006 and it was written back in 2010 with interest

without default. A show-cause notice was issued by Foreign Exchange

Management Act (FEMA) to company and was replied to properly. FEMA said

that there is no violation. This should not be linked to Tuskar matter.

Company has no investment in Deepak Kochhar’s company today.

2. HAL : Government has no intention of infusing funds in

company; T Suvarna Raju, Chairman & MD







No intentions of any infusion of funds into the company because all

developmental programmes are going good.

Spend on an average of between 6 and 7 percent of turnover on research and

development (R&D). Trend would be same for the next few years to come.

Revenue growth has been dull in H1FY18. Deliveries will happen of booked sales

in Q3 and Q4. Expect a revenue growth of over 10%.

3. TEJAS NETWORKS : Wins order from BSNL for Bharatnet;

Sanjay Nayak, MD & CEO









This order is for BharatNet project. Part of it will be completing of the additional

stuff on phase-I and part of the order is for the phase-II. Do expect to have lot

more orders during the next fiscal.

This order should get executed in the next one-two quarters because the project

is on fast track because the government wants to get this BharatNet phase-II off

the blocks very quickly.

Continue to see healthy margins on this order.

Phase-2 Bharat Net Orders would be worth 3000-4000 crores. Got orders for

47,000 villages in Bharat Net 1 worth INR 1300-1400 crores. Will compete with

MNCs in Phase 2 of BharatNet.

3 April 2018

17

From the think tank

1. Crediting India’s credit information companies



The perception of India’s banking system is at an all-time low. Glitterati

international fugitives, ponzi schemes built on the back of a creaky international

transfer system, a regulator with self-confessed lack of teeth, newspaper exposes,

rumours and innuendos are all contributing grist to this bleak mill. This dark

picture is the result of misuse and abuse by a cosy coterie of “corpocrats” working

hand-in-glove with pliant bank boards and executives, sometimes with a political

nudge, to create one big bad-loan mess. Households have remained largely

untouched by this not only because India’s household credit penetration is low—

retail loans by scheduled banks make up only 11% of gross domestic product

(GDP)—but also because of a relatively new set of institutions—India’s credit

bureaus—that have functioned behind the scenes to mitigate problems in this

sector. There are four of them today, and over the last few years they have been

making remarkable strides in covering a greater and greater proportion of India’s

households.

2. Execution key for defence manufacturing in India



Defexpo 2018, the biennial defence exhibition, will be held at Chennai from 11-

14 April. It has been nearly four years since the Make in India initiative was

announced by Prime Minister Narendra Modi. Fundamentally, the initiative is

meant to enhance manufacturing, attract investments, create jobs and increase

technical depth. But for defence, there is the added criticality of achieving self-

reliance for security. The intensity and complexity of security challenges is

increasing due to the nexus between China and Pakistan. With infrastructural

improvements in Tibet, belligerence on the Line of Actual Control has increased.

China’s military engagements with South Asian and Indian Ocean region states

have been increasing. There is a continuing endeavour by Pakistan to push the

envelope of proxy war. Faced with such security threats, India cannot afford to

be 60-70% import-dependent for defence. Furthermore, the international

community expects India to be a net provider of security in the Indian Ocean

region.

3. Putting electric vehicles before the policy cart



A WhatsApp message currently being circulated explains in great detail why global

investors prefer to invest in China rather than India. The message does cut close

to the bone despite its questionable provenance or authenticity. Far from social

media, there are many real-life case studies which illustrate, in much sharper

relief, India’s famously unpredictable policy environment. A fitting example is

perhaps the current government’s policy trajectory for electric mobility which has

left the Indian automotive industry more confused and uncertain than earlier. It is

instructive to map its policy arc to understand the mechanics of Indian

policymaking. Formal efforts to introduce electric mobility in India began in 2013

with the National Electric Mobility Mission Plan (NEMMP), which envisaged a

manufacturing focus that could put 6-7 million electric/hybrid vehicles on the road

by 2020.

3 April 2018

18

4. India must be practical in managing its trade policies



Rumblings of trade wars, cyber invasions of countries, and mass expulsions of

diplomats mark the end of the Panglossian, “world is flat”, view of globalization.

Social media is in the dock. The World Trade Organization (WTO) is in the

intensive care unit. Economists bravely defending theoretical benefits of free

trade are on the back foot. The Indian government is hard pressed to create

more jobs and sustainable livelihoods. Chinese products are flowing into the

country, providing good value for consumers no doubt, but also killing Indian

enterprises and jobs they provide. When the going gets tough, the tough must

get going. “Make in India” will remain a slogan if both, the Indian government

and Indian entrepreneurs, don’t step up to their challenges. M.K. Gandhi said

that when he was fighting for India’s political freedom, Jamsetji Tata was

fighting for India’s economic freedom. Tata put up a modern, integrated steel

plant against great resistance from the British government. However, he was

determined that India must have industrial capabilities. He turned to American

consultants for technological guidance, and to Indian citizens for financial

support when the London market turned him away. After India’s independence,

its industrial policy nurtured the growth of capabilities within the country.

Foreign companies were welcomed to partner with Indian enterprises. Phased

manufacturing programmes were mandated, whereby, progressively complex

products were made entirely within the country.

International

5. Should tech companies be more tightly regulated?



In the wake of recent high-profile tech scares, such as a fatality involving an

Uber self-driving car and Facebook’s alleged mishandling of users’ personal

data, stricter regulation of the industry – along the lines of, say, the financial

sector – has become the policy question du jour. Stock-market values for leading

tech companies are down – or perhaps just becoming more volatile – in the light

of such concerns. Obviously, rules regarding motor vehicles need to be

examined carefully. In the United States, this is generally a state-level decision,

though the federal National Transportation Safety Board has a very good

reputation for its investigations and often changes how we think about best

practices. The NTSB is investigating the Uber crash and previously assessed a

fatality involving a Tesla vehicle. As for Facebook, press reports suggest that the

company may have made some egregious mistakes. One hopes we will learn

more about the details of its decision-making on data privacy when its chairman

and CEO, Mark Zuckerberg, testifies before Congress, as he has agreed to do.

3 April 2018

19

Click excel icon

for detailed

valuation guide

CMP

(INR)

811

148

2809

721

18556

1541

28301

1261

883

229

3641

748

215

9009

324

339

662

Valuation snapshot

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

Motherson Sumi

Tata Motors

TVS Motor

Aggregate

Banks - Private

AU Small Finance

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

Indian Bk

PNB

SBI

Union Bk

Aggregate

NBFCs

Aditya Birla Cap

Bajaj Fin.

Capital First

Cholaman.Inv.&Fn

Dewan Hsg.

GRUH Fin.

HDFC

HDFC Stand. Life

Indiabulls Hsg

L&T Fin Holdings

Reco

Buy

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Sell

Buy

Neutral

Buy

Buy

Buy

Buy

Buy

Neutral

% Upside

TP

EPS (INR)

EPS Gr. YoY (%)

P/E (x)

P/B (x)

ROE (%)

(INR)

Downside

FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY18E FY19E FY18E FY19E

1000

158

4031

880

21951

1899

34764

1540

714

286

3986

889

303

10972

437

515

741

23

7

44

22

18

23

23

22

-19

25

9

19

41

22

35

52

12

28.3

5.1

148.6

20.2

459.1

63.1

722.7

27.9

36.6

8.0

184.0

39.1

9.6

275.1

8.1

25.3

14.1

34.0

6.4

174.0

26.8

595.2

84.7

1,036

38.2

45.6

9.9

198.6

45.5

12.0

369.7

12.5

54.6

24.3

40.0

7.9

201.7

35.2

731.7

111.7

1,317

51.0

54.9

12.1

212.3

50.2

14.8

470.9

17.5

54.9

32.9

0.9

20.5

5.3

54.2

-3.0

-32.3

17.2

18.8

90.4

-1.3

8.8

42.9

107.8

10.6

5.0

27.8

19.7

17.2

20.3

26.0

17.1

32.7

29.6

34.1

43.3

37.0

24.3

23.3

7.9

16.3

25.0

34.4

54.7

115.6

72.6

46.3

17.6

23.4

15.9

31.5

22.9

31.9

27.2

33.5

20.6

22.6

6.9

10.2

23.1

27.4

39.6

0.5

35.8

15.4

28.7

29.1

18.9

35.7

40.4

24.4

39.2

45.2

24.1

28.6

19.8

19.1

22.4

32.8

40.1

13.4

47.1

24.8

23.8

23.1

16.1

26.9

31.2

18.2

27.3

33.0

19.4

23.2

18.3

16.4

17.9

24.4

25.9

6.2

27.3

17.0

42.0

16.4

18.4

20.9

13.2

23.6

16.7

14.9

23.2

5.3

26.4

21.9

5.7

12.8

19.4

4.6

6.3

4.3

7.0

5.9

2.4

11.3

8.7

3.6

3.6

6.3

3.1

2.2

6.6

7.2

1.6

10.8

4.3

7.9

1.9

2.0

2.2

1.4

4.1

1.7

1.1

4.6

0.6

4.4

3.1

0.9

2.7

2.7

0.9

0.6

0.6

0.9

0.6

1.1

0.5

0.8

4.0

5.4

3.9

5.8

5.3

2.1

8.5

7.2

3.1

3.2

5.5

2.8

2.0

5.6

6.0

1.3

8.2

3.6

6.6

1.7

1.8

2.0

1.3

3.6

1.6

1.0

4.0

0.6

3.8

2.8

0.8

2.3

2.4

0.8

0.5

0.5

0.8

0.6

1.1

0.4

0.8

17.3

22.9

24.0

21.0

15.2

10.1

32.3

20.8

17.2

12.6

33.8

15.0

10.4

19.7

19.2

13.4

25.1

17.5

14.1

4.9

10.0

1.7

9.5

16.2

6.8

6.8

16.8

9.4

11.3

12.2

6.9

17.6

9.9

18.0

25.2

25.3

23.5

17.9

12.3

35.4

23.8

17.3

14.0

31.8

14.9

11.5

22.8

25.4

23.3

34.2

21.5

17.2

10.9

10.3

10.0

10.3

16.2

9.7

6.9

18.7

11.1

13.5

13.4

13.7

19.4

12.6

Buy

Buy

Neutral

Buy

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Buy

Buy

Buy

641

498

164

147

90

1930

262

48

1806

59

1097

483

23

306

705

710

188

205

149

2400

405

65

2076

100

1220

680

38

410

10

43

14

39

65

24

55

36

15

68

11

41

62

34

10.7

12.2

7.3

1.1

5.5

66.8

10.5

3.0

60.6

9.1

32.7

15.8

1.9

18.5

15.3 21.6 -42.7 43.5 41.1 60.2

30.3 43.7 -20.5 148.0 44.3 40.8

8.9 10.9 4.5 22.2 21.4 22.5

7.0 10.7 -79.9 526.1 51.2 130.8

6.9

8.6 13.8 24.9 25.6 16.4

81.8 102.3 17.6 22.6 25.0 28.9

15.7 20.2 -31.2 49.3 28.4 24.9

3.2

3.9

0.4 7.0 21.9 15.9

77.9 100.1 26.0 28.6 28.5 29.8

11.3 15.3 LP 23.6 35.3 6.5

41.5 54.1 21.9 26.8 30.5 33.5

22.1 29.7 32.8 39.8 34.6 30.6

4.1

5.3 -22.9 115.7 28.9 12.2

23.9 30.7 26.8 29.0 28.9 16.6

8.7 41.0 29.2 27.4

15.8 -46.5 181.9 75.1

11.4 Loss LP 38.9

63.8 -43.1 191.3 104.8

47.7 3.7 37.2 14.5

14.9 PL

LP 2,936

25.7 Loss LP 80.8

17.1 PL

LP 125.6

PL

LP 94.1

NA

42.3

38.9

34.5

26.5

22.1

8.0

5.4

32.8

42.2

45.2

35.4

30.2

18.7

26.8

18.8

14.0

13.9

15.4

47.1

42.4

34.2

27.5

21.5

26.1

23.4

16.3

25.2

22.1

23.2

Buy

Neutral

Neutral

Buy

Buy

Buy

Neutral

142

105

264

302

96

246

95

185

150

415

430

215

375

145

30

44

57

43

123

52

52

3.2

9.0

-14.9 8.2

10.7 31.1

30.3 41.6

-12.5 0.5

-4.2 14.2

-44.6 7.6

44.3 15.7

NM 12.7

24.7 8.5

9.9

7.2

NM 196.5

NM 17.3

NM 12.6

0.0 15.9

41.2

39.9

18.5

23.9

14.0

61.0

42.7

102.0

13.7

21.5

28.4

29.5

14.2

20.1

11.0

51.3

37.5

89.5

11.8

14.6

1.8 5.1

-6.1 3.8

2.0 5.7

9.7 12.3

-6.7 0.3

-2.1 7.0

-18.6 3.5

-2.3 4.8

Buy

Buy

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Buy

152

1818

632

1476

523

606

1838

481

1244

160

225

2330

960

1520

720

540

2260

485

1630

240

48

28

52

3

38

-11

23

1

31

50

3.7

5.3

7.6

45.6 61.7 82.8

34.2 44.6 56.8

61.8 73.3 89.1

37.4 47.5 59.9

9.9 11.8 14.6

43.0 49.0 57.0

4.7

5.4

6.7

91.1 105.1 128.3

7.4 11.0 13.5

4.0 3.1 12.6 12.4

6.4 5.4 20.2 19.8

2.4 2.1 13.7 15.6

4.5 3.7 20.4 20.2

1.9 1.6 14.0 15.8

18.3 15.1 32.9 32.2

5.1 4.4 17.6 16.5

3.2 2.6 21.7 21.1

3.8 3.4 29.9 30.4

3.1 2.7 15.9 19.7

3 April 2018

20

Company

LIC Hsg Fin

MAS Financial

M&M Fin.

Muthoot Fin

PNB Housing

Repco Home

Shriram City Union

Shriram Trans.

Aggregate

Capital Goods

ABB

Bharat Elec.

BHEL

Blue Star

CG Cons. Elec.

CG Power & Indu.

Cummins

Engineers India

GE T&D

Havells

K E C Intl

L&T

Siemens

Solar Ind

Thermax

Va Tech Wab.

Voltas

Aggregate

Cement

Ambuja Cem.

ACC

Birla Corp.

Dalmia Bharat

Grasim Inds.

India Cem

J K Cements

JK Lakshmi Ce

Ramco Cem

Orient Cem

Prism Cem

Sagar Cements

Sanghi Inds.

Shree Cem

Ultratech

Aggregate

Consumer

Asian Paints

Britannia

Colgate

Dabur

Emami

Future Consumer

Godrej Cons.

GSK Cons.

HUL

Reco

Neutral

Buy

Buy

Neutral

Buy

Buy

Buy

Buy

CMP

(INR)

542

611

471

413

1259

570

2196

1468

% Upside

TP

EPS (INR)

(INR)

Downside

FY18E FY19E FY20E

608

12

38.5 44.3 52.6

750

23

18.6 24.2 30.0

575

22

13.9 19.2 23.0

475

15

43.8 44.8 49.3

1750

39

51.4 69.0 92.3

740

30

33.4 39.0 46.0

2500

14

114.2 140.0 166.8

1750

19

78.7 104.8 125.9

EPS Gr. YoY (%)

P/E (x)

FY18E FY19E FY20E FY18E FY19E

0.6 15.2 18.7 14.1 12.2

24.0 29.6 24.1 32.8 25.3

95.8 38.7 19.4 34.0 24.5

48.1 2.3 10.2 9.4

9.2

62.4 34.4 33.7 24.5 18.2

14.6 16.8 18.1 17.1 14.6

35.4 22.6 19.2 19.2 15.7

42.1 33.1 20.2 18.7 14.0

28.2 22.8 22.6 29.0 23.6

42.9

18.6

26.8

31.6

35.9

42.3

23.1

23.4

36.1

37.1

20.9

23.1

36.3

35.8

32.0

14.1

29.9

25.8

28.8

24.1

18.1

36.3

9.1

20.2

17.8

24.0

24.3

25.8

24.2

18.6

13.7

35.5

32.3

23.2

P/B (x)

ROE (%)

FY18E FY19E FY18E FY19E

2.2 1.9 16.4 16.5

4.6 4.0 20.2 17.0

3.2 2.9 10.9 12.5

2.1 1.8 24.3 21.0

3.4 3.0 14.7 17.4

2.7 2.3 16.9 16.9

2.6 2.2 14.1 15.2

2.6 2.3 14.9 17.5

4.3 3.7 15.0 15.8

7.6 6.6 11.6 15.4

3.7 3.3 17.8 17.6

0.9 0.9 3.6 3.4

9.3 8.6 20.4 28.3

19.9 16.3 50.2 49.9

1.2 1.2 1.7 2.7

5.0 4.6 16.5 20.7

3.7 3.4 13.9 14.1

8.6 7.5 23.5 22.3

8.6 7.6 18.9 20.5

5.3 4.4 21.7 21.1

3.4 3.1 13.0 14.1

5.1 4.7 9.1 12.9

8.1 6.8 20.0 20.6

4.6 4.1 11.9 13.6

2.4 2.1 17.1 15.9

5.6 4.9 16.9 17.6

3.4 3.2 11.0 12.2

2.4

3.2

1.8

4.6

1.6

0.9

3.5

3.5

4.1

2.8

5.5

2.4

2.1

6.5

4.2

3.2

2.2

3.0

1.7

4.1

1.3

0.9

2.9

3.1

3.6

2.5

4.6

2.1

1.8

5.6

3.8

2.9

6.1

10.1

2.1

9.4

5.2

2.2

16.4

7.7

14.4

6.6

11.2

6.5

10.2

15.2

8.4

7.5

26.8

33.9

49.9

25.4

29.0

-1.8

23.6

20.7

76.1

8.0

12.9

9.6

12.0

15.7

4.4

17.8

13.8

15.9

10.3

20.9

12.0

16.1

17.0

12.5

12.4

29.4

35.8

55.5

26.7

33.2

4.9

22.6

21.6

92.0

Sell

Buy

Sell

Neutral

Buy

Neutral

Buy

Buy

Neutral

Buy

Neutral

Buy

Neutral

Neutral

Buy

Buy

Neutral

1293

145

83

777

233

79

716

161

408

508

395

1336

1102

1062

1126

496

638

1240

210

80

780

305

90

1040

200

435

640

385

1670

1285

1100

1350

700

630

-4

45

-3

0

31

14

45

24

7

26

-3

25

17

4

20

41

-1

19.8

7.1

3.2

16.6

5.1

1.1

23.0

6.3

10.3

11.1

16.2

48.6

19.8

24.4

28.0

33.2

18.0

30.1

7.8

3.1

24.6

6.5

1.9

31.0

6.9

11.3

13.7

18.9

57.8

30.4

29.6

35.1

35.1

21.3

35.0 12.1 52.0 16.2 65.2

8.3 12.1 10.0 6.8 20.5

4.0 135.9 -2.4 28.5 26.1

31.2 36.0 48.2 26.9 46.8

7.7

8.9 27.1 18.4 45.7

3.0 -72.2 63.3 58.8 69.2

36.8 -13.2 34.7 18.6 31.1

8.2 48.1 9.2 19.8 25.6

12.9 79.8 9.7 14.2 39.6

17.0 16.5 22.8 24.1 45.6

24.3 36.6 16.7 28.3 24.4

69.6 14.9 18.9 20.4 27.5

34.6 10.9 53.8 13.8 55.8

36.7 18.4 21.5 23.7 43.5

43.5 3.1 25.3 23.9 40.1

38.5 76.0 5.7 9.7 14.9

24.3 16.4 18.4 13.9 35.5

17.8 19.8 19.2 31.0

10.9

72.9

50.6

107.6

145.0

10.4

76.9

25.0

38.8

10.3

6.3

70.6

11.7

668.5

164.5

29.5

31.3

-69.0

41.2

-47.5

-33.4

31.8

34.7

-10.8

LP

713.3

LP

69.3

-6.6

-20.6

-13.1

2.1

14.3

12.9

4.5

-9.6

Loss

10.6

3.1

16.8

38.4

34.5

378.7

41.5

235.5

101.9

27.3

97.2

25.3

66.8

113.1

101.0

82.3

29.1

61.6

83.1

18.2

24.8

17.9

19.2

30.5

LP

15.1

14.1

21.8

30.4

14.2

19.5

39.0

21.4

37.7

36.0

35.2

27.2

88.7

33.4

39.7

31.8

44.2

33.5

29.0

20.2

25.1

19.7

16.2

19.1

276.5

14.2

17.4

18.2

39.9

32.4

86.4

51.4

30.6

40.8

22.7

47.4

30.4

43.0

51.5

37.4

24.9

45.8

52.2

42.5

Neutral

241

Neutral

1537

Buy

765

Buy

2814

Neutral

1090

Neutral

153

Buy

1008

Buy

444

Buy

740

Buy

141

Buy

114

Not Rated 942

Buy

121

Buy

16434

Buy

3983

290

1781

1234

3328

1242

148

1343

470

847

179

159

-

157

18867

5131

20

16

61

18

14

-3

33

6

14

27

39

30

15

29

6.0

47.4

8.9

54.7

35.6

3.7

44.4

9.4

24.3

3.3

2.2

25.2

4.9

359.0

76.3

8.3

63.8

42.4

77.4

119.4

7.6

56.5

18.5

30.5

5.5

4.7

50.6

8.9

463.5

123.3

Neutral

Buy

Buy

Buy

Buy

Buy

Neutral

Neutral

Buy

1149

5104

1057

335

1092

56

1112

5832

1349

1270

5995

1365

415

1505

76

1065

6350

1515

11

17

29

24

38

37

-4

9

12

21.5

84.2

24.0

7.6

24.0

-0.1

20.9

161.0

22.9

25.4

105.1

28.3

9.0

31.3

0.3

24.1

183.8

27.9

30.5

131.5

33.8

10.5

37.3

1.1

27.5

215.7

33.0

53.5 45.3 14.2 12.6

60.6 48.6 18.8 16.2

44.1 37.4 21.4 20.1

44.3 37.1 10.5 9.4

45.5 34.9 12.4 10.9

NM 184.6 9.3 8.9

53.2 46.2 11.2 9.8

36.2 31.7 7.2 6.5

58.8 48.3 44.6 44.3

3 April 2018

21

Company

ITC

Jyothy Lab

Marico

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

Laurus Labs

Lupin

Sanofi India

Shilpa Medicare

Strides Shasun

Sun Pharma

Torrent Pharma

Aggregate

Infrastructure

Ashoka Buildcon

IRB Infra

KNR Constructions

Sadbhav

Engineering

Aggregate

Logistics

Allcargo Logistics

Concor

Gateway Distriparks

Aggregate

Media

Dish TV

D B Corp

Den Net.

Ent.Network

Hathway Cable

Hind. Media

CMP

Reco

(INR)

Neutral

259

Neutral

394

Neutral

328

Neutral

8309

Buy

22203

Neutral

255

Buy

940

Neutral

9360

Not Rated 153

Buy

971

Neutral

3257

% Upside

TP

EPS (INR)

(INR)

Downside

FY18E FY19E FY20E

278

7

9.0 10.2 11.4

380

-4

8.5 10.9 13.6

345

5

6.4

7.6

9.0

7882

-5

140.0 159.1 192.3

27490

24

297.1 415.7 549.8

314

23

8.9 12.4 16.8

1065

13

17.6 20.6 23.7

9303

-1

142.1 171.3 200.8

-

3.5

6.4

9.7

1380

42

14.1 17.4 22.9

3515

8

32.6 56.9 78.5

EPS Gr. YoY (%)

P/E (x)

FY18E FY19E FY20E FY18E FY19E

6.6 13.7 12.4 28.9 25.4

-24.8 29.3 24.0 46.6 36.0

1.2 19.2 18.4 51.7 43.3

13.2 13.6 20.8 59.3 52.2

24.5 39.9 32.2 74.7 53.4

147.7 38.7 35.6 28.5 20.6

5.4 17.0 14.9 53.3 45.6

6.9 20.5 17.3 65.9 54.7

-2.0 83.8 52.1 44.1 24.0

62.0 23.9 31.2 69.0 55.7

22.1 74.3 38.1 99.8 57.3

9.0 18.9 17.6 45.4 38.2

10.8

-10.5

-5.8

13.2

-25.3

18.5

40.9

-17.7

2.4

PL

-22.2

-12.4

42.9

33.2

29.5

7.0

-43.0

9.8

-5.0

-56.2

-48.1

-12.9

-17.4

5.9

33.2

21.9

9.4

43.1

25.0

20.6

33.9

52.2

LP

7.7

25.2

11.9

36.6

30.9

52.7

24.6

14.2

99.2

188.8

61.4

27.6

33.1

19.0

23.5

23.6

10.1

81.5

15.8

22.0

19.7

28.0

164.5

24.7

38.7

11.2

27.7

15.8

22.8

34.6

15.5

26.1

36.7

27.7

28.0

25.1

22.6

28.8

26.0

13.3

78.5

22.9

25.7

33.2

28.7

NM

17.9

16.7

42.6

31.0

17.7

26.7

24.0

36.1

34.9

48.5

37.5

26.3

27.4

21.4

21.7

21.4

12.2

54.9

18.3

21.3

24.8

18.8

46.1

16.6

13.4

38.1

22.7

13.5

17.5

19.3

31.6

17.5

16.8

23.2

20.6

20.6

P/B (x)

ROE (%)

FY18E FY19E FY18E FY19E

6.3 5.8 22.8 23.8

6.8 6.6 14.3 18.5

16.0 15.2 33.0 36.0

25.0 23.4 43.4 46.2

29.8 23.8 39.9 44.6

2.9 2.6 10.8 13.3

12.0 10.4 24.2 24.5

37.0 31.0 61.2 61.8

2.1 2.0 4.9 8.5

9.7 8.4 14.9 16.2

17.2 12.8 17.2 22.3

12.1 11.0 26.6 28.7

4.6 3.9 21.8 19.7

4.5 3.9 16.7 19.3

6.3 5.0 27.0 26.2

2.9 2.4 24.6 21.6

7.0 6.4 8.9 11.6

4.8 4.0 22.7 23.7

3.3 2.9 12.8 13.6

5.2 4.7 16.0 20.0

2.7 2.4 10.0 13.7

1.0 1.0 -0.7 2.2

2.9 2.5 16.4 15.3

1.9 1.8 13.2 13.9

10.2 11.6 23.9 30.5

3.1 2.8 10.5 13.0

3.2 2.6 19.7 21.4

3.5 2.9 14.1 18.3

2.4 2.2 10.4 12.0

5.8 5.3 16.1 16.8

3.7 3.1 11.0 19.0

2.2 1.9 4.6 12.1

3.2 3.0 8.8 13.3

4.4 3.9 17.6 19.9

3.4 3.0 12.6 14.8

2.6

1.3

3.6

3.6

2.1

1.9

3.2

1.9

2.9

2.4

1.2

3.1

3.1

1.9

1.7

3.0

1.8

2.7

2.2 6.9

15.5 13.4

23.6 16.2

13.5 13.7

12.9 12.0

11.7

11.2

6.5

10.6

15.3

12.9

10.7

12.6

Neutral

Buy

Buy

Buy

Neutral

Buy

Neutral

Neutral

Neutral

Buy

Neutral

Buy

Neutral

Buy

Buy

Buy

Buy

Buy

Buy

Buy

Buy

Neutral

541

1926

1406

593

598

385

576

1091

2132

127

546

106

2094

664

846

508

775

5118

465

685

508

1263

555

2500

1840

820

600

500

600

1100

2575

185

550

175

2500

750

1110

613

940

5600

749

989

675

1400

3

30

31

38

0

30

4

1

21

46

1

65

19

13

31

21

21

9

61

44

33

11

23.9

66.8

54.0

44.5

7.6

16.8

22.4

32.9

74.4

-0.8

30.6

6.3

49.1

21.4

47.8

19.0

32.3

141.7

13.3

14.1

13.6

48.0

25.3

88.9

65.8

48.7

10.9

21.0

27.0

44.0

113.2

2.8

32.9

7.9

54.9

29.2

62.6

29.1

40.2

161.8

26.5

40.8

21.9

61.3

30.1

109.9

81.4

53.6

19.8

24.4

33.0

52.7

145.0

7.3

41.1

11.0

61.1

37.3

72.5

35.7

54.1

186.9

33.4

55.7

27.9

78.5

Buy

Neutral

Buy

Buy

255

230

285

389

290

250

375

460

14

9

32

18

2.1

25.4

16.9

13.9

7.0

24.6

14.0

16.0

8.3

21.3

18.2

17.4

LP 238.0 18.1 123.4 36.5

24.8 -3.0 -13.6 9.1

9.4

41.2 -17.3 30.2 16.9 20.4

27.1 14.9

8.6

27.9

16.5

24.3

15.8

11.8

24.2

17.5

21.3

Buy

Neutral

Buy

151

1241

185

223

1330

237

47

7

28

8.9

41.9

6.2

12.9

51.2

10.6

14.9

58.2

13.1

-9.3

10.3

-9.0

5.3

44.2

22.3

71.3

28.5

15.8

13.5

23.4

14.6

109.9

20.1

5,545

75.7

161.9

12.6

17.0

29.6

29.9

27.4

Buy

Buy

Neutral

Buy

Buy

Buy

73

312

105

715

36

224

101

420

90

820

47

305

38

35

-14

15

30

36

-0.5

18.8

-2.9

8.3

-0.2

25.9

1.6

23.0

0.1

16.4

0.8

28.8

3.4

PL

LP

27.6 -7.6 22.0

4.0 Loss LP

28.7 -27.7 98.0

2.0 Loss LP

32.4 0.2 11.3

NM 45.5 18.1 13.0 -11.9 33.2

16.5 13.6 3.1 2.6 20.1 20.9

NM 1,479 2.4 2.4 -6.3 0.2

86.5 43.7 3.8 3.5 4.5 8.4

NM 47.7 2.6 2.4 -1.2 5.2

8.7

7.8

1.2 1.1 15.1 14.6

3 April 2018

22