Conference 2013-Cover-contents Inside & Back Cover...

Re-shaping IndiaRe-shaping India

9th Annual Global Investor Conference

A C C ................................................................................... 24

Aditya Birla Nuvo ............................................................ 172

Ambuja Cements ............................................................... 26

Au Financier .................................................................... 184

Axis Bank ........................................................................... 28

Bajaj Finance .................................................................... 30

Bajaj Finserv ................................................................... 173

Bank of Baroda .................................................................. 32

B P C L ................................................................................. 34

Bharti Airtel ....................................................................... 36

Bharti Infratel ................................................................... 38

Biocon ................................................................................ 40

C E S C ................................................................................. 42

Chola Investment ............................................................ 174

City Union Bank ............................................................... 175

Coal India .......................................................................... 44

Container Corporation ...................................................... 46

D B Corp ............................................................................. 48

Dabur India ....................................................................... 50

Dr Reddy's Laboratories ................................................... 52

Eicher Motors .................................................................... 54

Emami .............................................................................. 176

Future Group ................................................................... 177

Glenmark Pharmaceuticals .............................................. 56

Godrej Consumer Products ............................................... 58

Grasim Industries ............................................................. 60

Hathway Cable .................................................................. 62

Havells India ..................................................................... 64

HCL Technologies ............................................................... 66

HDFC .................................................................................. 68

HDFC Bank ......................................................................... 70

Hero MotoCorp .................................................................. 72

Hindalco ............................................................................ 74

Hindustan Unilever ........................................................... 76

ICICI Bank .......................................................................... 78

I D F C ................................................................................. 80

Indiabulls Housing Finance ........................................... 178

Indusind Bank ................................................................... 82

Info Edge (India) ................................................................ 84

Infosys ............................................................................... 86

ING Vysya Bank ................................................................. 88

IPCA Laboratories ............................................................. 90

I T C .................................................................................... 92

Jaiprakash Associates ...................................................... 94

Janlakshmi Microfinance ............................................... 184

Participating Companies

Jindal Steel & Power ......................................................... 96

JSW Steel ........................................................................... 98

Just Dial ........................................................................... 100

Kotak Mahindra Bank ..................................................... 102

Larsen & Toubro .............................................................. 104

LIC Housing Finance ....................................................... 106

Lupin ................................................................................ 108

Mahindra & Mahindra ................................................... 110

Mahindra & Mahindra Financial Services .................... 112

Marico ............................................................................. 114

Maruti Suzuki .................................................................. 116

McLeod Russel ................................................................ 179

MCX .................................................................................. 118

Motherson Sumi Systems ................................................ 120

Motilal Oswal Financial Services Ltd ............................ 180

Mrs Bector Food .............................................................. 185

N T P C .............................................................................. 122

O N G C ............................................................................. 124

Oil India .......................................................................... 126

Parag Food Speciality ..................................................... 185

Power Grid Corp of India ................................................ 128

Prestige Estates Projects ................................................ 130

Radico Khaitan ................................................................ 132

Ranbaxy Laboratories ..................................................... 134

Reliance Communications .............................................. 136

Reliance Industries ......................................................... 138

Shoppers Stop ................................................................. 140

Shriram Transport Finance Company ............................ 142

Sobha Developers ........................................................... 144

State Bank of India .......................................................... 146

Sun Pharmaceuticals Industries .................................... 148

Sun TV Network ................................................................ 150

Tribhovandas Bhimji Zaveri ........................................... 181

Tata Motors ..................................................................... 152

Tata Steel ......................................................................... 154

Tech Mahindra ................................................................ 156

Titan Industries ............................................................... 158

TTK Prestige ..................................................................... 182

UltraTech Cement ............................................................ 160

Union Bank of India ........................................................ 162

United Breweries ............................................................. 183

Wipro ............................................................................... 164

Wockardt ......................................................................... 166

Yes Bank ........................................................................... 168

Zee Entertainment ........................................................... 170

Company Page Company Page

1September 2 - 6, 2013


Dear Guest,

We at Motilal Oswal are pleased to welcome you to the 9th Annual Global Investor Conference

from September 2-5, 2013 in Mumbai.

The last 12 months have been challenging for the Indian economy, to say the least! Growth

parameters are hitting new lows and current account deficit new highs. The rupee is hurtling

down, and domestic demand has been slowing down. On corporate earnings, June 2013 quarter

PAT in fact de-grew 2% YoY, causing ~3% downgrade in Sensex EPS estimates (FY14 Sensex EPS to

grow only 7%). Combine this with tapering QE2, and you have the perfect recipe for Indian

markets going nowhere (BSE Sensex flat over the last 12 months, having tested the 20,000 level

at least thrice in the interim).

All eyes of the nation are currently on politics. This is because over the next 10 months, there

will be polls in at least 9 states, and there is also the big one – Lok Sabha polls around March

2014. The outcome of these polls and the policies adopted by the succeeding government hold

the key for re-shaping India Inc’s performance and profitability in FY15 and beyond.

Hence the theme of our Conference — Re-shaping India — is highly significant. Over the next 3

days, 100 leading Indian companies will share with you how they intend to see through the

current re-shaping.

Our conference key highlight, CEO Track, will have 15 top-notch CEOs explain how they see

opportunity even in the current adversity.

Eminent experts will make thematic presentations covering a range of issues — from

judiciary to corporate strategy to economics … even spirituality!

We also have two intriguing luncheon sessions: (1) Panel discussion on the new era in

Indian financial sector, and (2) Unique case study of homegrown Six Sigma among Mumbai

dabbawalas (lunch carriers).

Notwithstanding business and market conditions, we at Motilal Oswal believe our 9th Annual

Global Investor Conference is a great occasion to celebrate and connect. We have a set up

unique evening on Monday, September 2: (1) Super Theater, featuring a Bollywood-based

potpourri of comedy, dance and drama, and (2) Super Supper, an opportunity to network over

cocktails and dinner.

We hope this Conference leaves you with several incisive insights, winning themes, and high

conviction on sectors and companies which will successfully tide over the current downturn. In

the final analysis, weak markets and attractive valuations mark “a bear market for speculators

but a bull market for investors” (Motilal Oswal Joint MD Raamdeo Agrawal in a recent print

article).

We welcome you once again, and hope you have a very productive and enjoyable week.

Navin Agarwal Rajat Rajgarhia

CEO – Institutional Equities Managing Director – Institutional Equities

Investors are advised to refer through disclosures made at the end of the Research Report.

Welcome to the Conference!



CEO Track (Monday, September 2)

Time Session and Speaker(s)

09:30-09:40 Introduction and Welcome Address

Mr Raamdeo Agrawal, Joint MD, Motilal Oswal Financial Services

09:45-10:25 CEO Track: ICICI Bank

Ms Chanda Kochhar, Managing Director & CEO

10:45-11:25 Thematic Presentation

India: The rising role of judiciary & the way forwardDr Subramanian Swamy, Eminent Lawyer, Politician, Academician

11:30-12:10 CEO Track: Lupin

Dr Kamal Sharma, Vice Chairman

12:15-12:55 CEO Track: Zee Entertainment Enterprises

Mr Punit Goenka, Managing Director & CEO

13:00-13:55 Luncheon Panel Discussion

India Banking: Beginning of a new era Mr Romesh Sobti, Managing Director & CEO, IndusInd Bank

Mr Ramesh Ramanathan, Founder Chairman, Janalakshmi Microfinance

Mr Vikram Limaye, CEO, IDFC

Mr Ramesh Iyer, Managing Director & CEO, M&M Financial Services

Mr Tamal Bandopadhyay, Deputy Editor MINT, Author

14:00-14:40 CEO Track: NTPC

Dr Arup Roy Choudhury, Chairman and Managing Director


Indian Education: Taking the train less travelledProf. Sandeep Desai, The Grass root Educationalist

15:45-16:25 CEO Track: ONGC

Mr Sudhir Vasudeva, Chairman & Managing Director


Looking beyond the gloom & doomMr Deepak Parekh, Chairman, HDFC

17:15 onwards Super Theater: A unique play combining Bollywood, comedy, dance … and more !

Super Supper: Network with top business leaders and investors over cocktails and dinner



CEO Track (Tuesday, September 3)

Time Session and Speaker(s)

09:45-10:25 CEO Track: Infosys

Mr N R Narayana Murthy, Chairman

10:45-11:25 CEO Track: Godrej Group

Mr Adi Godrej, Chairman


Unleashing human spirit – most & moreMahatria Ra, Spiritual Guru

12:15-12:55 CEO Track: Bharti Airtel

Mr Gopal Vittal, Joint Managing Director and CEO (India)

13:00-13:55 Luncheon Presentation

The Great India Management of DabbawalaDr Pawan Agarwal, Management & Motivation Guru

14:00-14:40 CEO Track: Ambuja Cements

Mr Onne Van Der Weijde, Managing Director

14:45-15:25 CEO Track: Dr Reddy’s Laboratories

Mr Satish Reddy, Vice Chairman and Managing Director


Art of doing business in India – Conquering the chaosMr Ravi Venkatesan, Ex-Chairman, Microsoft (I), Cummins (I)

16:30-17:15 CEO Track: Aditya Birla Group

Mr Kumarmangalam Birla, Chairman

17:15-18:00 CEO Track: State Bank of India

Ms Arundhati Bhattacharya, Managing Director

18:00-18:10 Vote of Thanks

Mr Navin Agarwal, CEO - Institutional Equities, Motilal Oswal Financial Services



CEO Track Speaker ProfilesIndia's top CEOs and Experts

CEO Track



ThematicPresentation


Ms Chanda Kochhar

Managing Director & CEO

ICICI Bank

Date: Monday, September 2

Time: 09:45 - 10:25

CEO Track Speakers (in order of appearance)

Ms Chanda Kochhar is the MD and CEO of ICICI Bank, India’s largest private sector bank and

overall second largest bank in the country. She is recognized for her role in shaping retail

banking in India, leadership in the ICICI Group and contributions to various forums in India and

globally. Ms Kochhar began her career with the erstwhile ICICI Ltd in 1984 and was instrumental

in establishing ICICI Bank during the 1990s. She has held various significant positions in the

group and assumed the current role in 2009.

Under Ms Kochhar’s leadership, ICICI Bank was conferred with the “Best Retail Bank in India”

award in 2001, 2003, 2004 and 2005 and “Excellence in Retail Banking Award” in 2002 by The

Asian Banker.

She was conferred with the Padma Bhushan award in 2011. In 2013, Ms Kochhar has been

named as the most powerful business women in India in the Forbes list of “The World’s 100 Most

Powerful Women 2013”. She is the only Indian to be featured in the Dow Jones list of “Most

Influential Female Executives in the World” of the last decade and is ranked 12th in the global

list.

CEO Track

Dr Subramanian Swamy

Eminent Lawyer, Politician, Academician

"India: The rising role of judiciary &

the way forward"


Time: 10:45 - 11:25

Dr Subramanian Swamy is an academician, politician, activist and economist. He was president

of the Janata Party which merged with BJP in August 2013. Dr Swamy has previously served as a

member of the Planning Commission of India and cabinet minister of India and has written

extensively on foreign affairs of India dealing largely with China, Pakistan and Israel. He is

also a published author. He had earned a doctorate in Economics from Harvard University in

1964. Dr Swamy had also worked as a team with Nobel Laureate economists and has served as

a professor of Economics in Harvard University and IIT, New Delhi.

He is responsible for creating the blueprint that opened India’s economy to the world in 1991

and also simplified trade procedures and formulated a new export strategy, which became the

forerunner of trade reforms adopted subsequently. In 1994, he was appointed as Chairman of

the Commission on Labour Standards and International Trade. This was perhaps for the first

time that an opposition party member was given a cabinet rank post by the ruling party.

Dr Swamy has been elected five times to Parliament. Currently, he represents the Madurai

constituency in the Lok Sabha.



Dr Kamal Sharma

Vice Chairman

Lupin


Time: 11:30 - 12:10

Mr Punit Goenka

Managing Director & CEO

Zee Entertainment Enterprises


Time: 12:15 - 12:55

Mr Punit Goenka is MD and CEO of Zee Entertainment Enterprises (ZEE). His strong work ethics

and hands-on approach have helped steer the ZEE empire to new frontiers of success. Under his

leadership, Zee TV has emerged a leader among general entertainment channels in India. He is

now working on strengthening ZEE’s reach internationally.

Mr Goenka has grown up the ranks, handling various responsibilities across the Essel

conglomerate for over 15 years. He began his career with Zee TV in 1995 as Head of the Music

division and went on to shoulder additional responsibilities across group companies. In 2004,

he took charge as the Business Head of Zee TV and soon was promoted to Network Operating

Officer in 2005 and was made responsible for the programming, operations, administration

and HR functions of all of ZEE’s entertainment channels. He assumed the current role in July

2008.

CEO Track

CEO Track

Dr Kamal Sharma is MD of Lupin Ltd. In a career spanning more than three decades, Dr Sharma

has held a range of senior management positions managing projects, corporate development

and general management in the pharmaceuticals and chemicals industries. He has been

associated with the Lupin Group since 1979. Dr Sharma serves as the Chairman of Kyowa

Pharmaceutical Industry Co Ltd. He also serves as Deputy Chairman and Non-executive Director

at Generic Health Pty Ltd. He has a PhD in Economics from IIT, Mumbai and has completed an

Advanced Management Programme at Harvard Business School, Boston.

Dr Sharma took over as MD of Lupin in 2003, when the company had limited global presence.

Under his leadership, Lupin today has become the 5th largest company by generic prescription

share in the largest pharma market, USA. He is also responsible for steering the company into

Japan, the 3rd largest pharma market, where no other Indian player has been able to establish

a strong enough foothold. Dr Sharma is also instrumental in shaping Lupin's transformation

from an anti-TB company in India to a company dominant in the fast growing chronic space.






Prof. Sandeep Desai

"Indian Education: Taking the train

less travelled"


Time: 14:45 - 15:25

Prof. Sandeep Desai pursued marine engineering (DMET) and MBA in his academic period. He has

worked with a leading shipping company and has extensive experience in a marketing profile

at MNCs. He subsequently shifted focus to academics and social causes. He was a professor at

S P Jain Institute of Management & Research and a visiting faculty at several B-schools across

India. Prof. Desai has devoted his entire life to improving the lives of those around him and

people who reach out to him.

Shloka Missionaries is a public charitable trust managed by professionals dedicated to 'Seva-

Bhaav' way of living. The trust has been committed to reforms in education from its inception

and the trustees believe that 'vidya' is the true wealth of a nation and its people. Pursuing this

mission, the trust has been involved with creating new pools of learning, where none existed,

and bettering existing pools of knowledge.

Dr Arup Roy Choudhury

Chairman and Managing Director

NTPC


Time: 14:00 - 14:40 CEO Track

Dr Arup Roy Choudhury is the Chairman and MD of NTPC Ltd. Dr Choudhury’s rich and varied

contribution of over 32 years has been recognized by prestigious professional, academic and

government institutions, both national and international.

He has the distinction of becoming the youngest CEO of a central public sector enterprise (CPSE)

at the age of 44 when he joined as Chairman and MD of National Buildings Construction

Corporation Ltd (NBCC) in 2001 and also transformed NBCC from a sick status to a blue chip

enterprise, having Schedule “A” and “Miniratna” status conferred by the Government of India.

Dr Choudhury was conferred Doctorate in ‘Performance Assessment of Infrastructure

Development Projects’ from IIT Delhi on 18.04.2013. He has been ranked at No. 40 in “The

Economic Times” list of India Inc’s top 100 CEOs 2013 and is No. 2 among the CEOs of Public

Sector Enterprises (PSEs). He was honored with the ‘Asian CEO of the Year’ Award in April, 2012

by Terrapinn, a Singapore-based business media company doing significant work in Energy

dialogue.





Mr Sudhir Vasudeva

Chairman & Managing Director

ONGC


Time: 15:45 - 16:25

Mr Sudhir Vasudeva is the Chairman and MD of Oil & Natural Gas Corporation Ltd (ONGC),

India’s most valuable Maharatna public sector unit (PSU). He is also the Chairman of ONGC

Videsh Ltd (OVL), Mangalore Refinery and Petrochemicals Ltd (MRPL) and five other ONGC Group

companies — ONGC Petroadditions, ONGC Mangalore Petrochemicals, Mangalore SEZ, ONGC

Tripura Power Company and ONGC Mittal Energy.

Mr Vasudeva is a gold medalist Chemical Engineer with Advanced Diploma in Management.

Under his leadership, ONGC registered the highest-ever profit, became the highest-ever dividend

paying company in India and often retains the numero uno position in terms of market

capitalization. Mr Vasudeva has received accolades for outstanding achievement in Exploration

& Production (E&P) award by Chemtech Foundation in 2012. He has also been conferred with

NDTV Profit Business Leadership Awards 2012 in Oil & Gas Sector in April 2013.

CEO Track

Mr Deepak Parekh is the Chairman of HDFC, India’s leading housing finance company. Mr

Parekh’s business acumen and farsightedness has not only made HDFC the leader in mortgages,

but has transformed it into India’s leading financial services conglomerate, with presence in

banking, asset management, insurance, real estate venture fund and education finance company.

Besides HDFC Group companies, Mr Parekh is on the board of several leading companies

across diverse sectors. He is often referred to as the government’s unofficial crisis consultant.

Be it his role as Special Director on the Satyam Board in 2009 to revive the company or the

crucial role played during the Unit Trust of India fiasco in the late ’90s, he has shared his ideas

to formulate reform policies across sectors. He is an active member of various high powered

economic groups, government-appointed committees and task forces.

Mr Parekh was the first recipient of the Qimpro Platinum Award for Quality for his contributions

to the services sector, and the youngest recipient of prestigious Corporate Award for Lifetime

Achievement by the Economic Times. A recipient of Padma Bhushan in 2006, he also received

several awards, including “The Institute of Chartered Accountants in England and Wales”

Outstanding Achievement Award for his contribution over many years to the finance and

accountancy profession in 2010, for which he was the first international recipient.

Mr Deepak Parekh

Chairman

HDFC

"Looking beyond the gloom & doom"


Time: 16:30 - 17:15



Mr N R Narayana Murthy

Chairman

Infosys

Date: Tuesday, September 3

Time: 09:45 - 10:25

Mr N R Narayana Murthy is the Executive Chairman of Infosys Ltd. He co-founded Infosys in

1981, served as the CEO during 1981-2002, as the Chairman and Chief Mentor during 1981-

2011 and as the Chairman Emeritus during August 2011-May 2013. Under his leadership, Infosys

was listed on Nasdaq in 1999.

He articulated, designed and implemented the Global Delivery Model which has become the

foundation for huge success in IT services outsourcing from India. He has also led key corporate

governance initiatives in India and is an IT advisor to several Asian countries.

Mr Murthy was listed as one among the “12 greatest entrepreneurs of our time” by the Fortune

magazine in 2012. He has been conferred with several awards and honors, including the Padma

Vibhushan and Padma Shri, the Legion d’honneur by the Government of France and the CBE by

the British government. He is the first Indian winner of Ernst and Young’s World Entrepreneur of

the year award and the Max Schmidheiny Liberty prize. He has around 25 honorary doctorates

from universities in India and abroad.

CEO Track


Mr Adi Godrej

Chairman

Godrej Group


Time: 10:45 - 11:25

Mr Adi Godrej is the Chairman of the Godrej Group and several entities that are part of one of

India’s leading conglomerates. Over the last five decades, Mr Godrej has played an important

role in the development of a variety of industries by leading key organizations of trade and

commerce as the former Chairman and President of the Indian Soap & Toiletries Makers’

Association, the Central Organisation for Oil Industry and Trade, the Solvent Extractors’

Association of India, the Compound Livestock Feeds Manufacturers’ Association, the Indo-

American Society and as member of the Governing Board of the National Council of the

Confederation of Indian Industry. Under his leadership, the group is involved in philanthropic

activities too and is a great supporter of the World Wildlife Fund of India (WWFI).

For his contribution to Indian industry, Mr Godrej has been the recipient of several awards and

recognitions, including the Rajiv Gandhi Award 2002, Padma Bhushan in 2013. He was also

awarded the Entrepreneur of the Year Award at The Asian Awards in April 2013 and Ernst &

Young Entrepreneur of the Year India Award in February 2013.

CEO Track

10September 2 - 6, 2013


Mr Gopal Vittal

Joint Managing Director & CEO (India)

Bharti Airtel


Time: 12:15 - 12:55

Mr Gopal Vittal is the Joint MD and CEO (India) at Bharti Airtel. He also served as an Executive

Director of Home & Personal Care of Hindustan Unilever since September 2008 to January 2012.

He has more than 16 years of rich experience across various aspects of marketing and sales. Mr

Vittal started his career with Unilever India, working across geographies in India and Asia. He

has led several branding forays for Unilever and was responsible for conceptualizing, leading,

piloting and rolling out Project Bharat, Unilever’s largest rural marketing initiative in India.

Mr Vittal has also been recognized as one of India’s Hottest Young Executives by Business Today

in 2006. He has 18 years experience in Marketing & Sales in FMCG market, including skin care,

soaps and laundry. He has worked both in India and Asia for Unilever for over 16 years, following

which he served as the Marketing Director at Bharti Airtel for a period of two years, leading the

marketing and distribution strategy for the group. He serves as a Member of the Board of

Governors at the Advertising Standards Council of India.

CEO Track

Mahatria Ra a.k.a. T T Rangarajan is considered a spiritual leader and living master by his

students and is the founder of Alma Mater – an organization dedicated to self-mastery and

holistic personality development. Alma Mater is one of the leading organizations in India that

is spearheading the spiritual renaissance raging across the world. It is a non-political and non-

religious organization that does not promote any particular ideology but with a mission to

work for the betterment of the individual, society and the world. It conducts transformational

courses in the cities of Chennai, Pune, Bangalore and Hyderabad in India.

He conducts Higher Deeper Beyond (HDB) — an annual spiritual retreat during which thousands

of students have undergone deep spiritual transformations and emerged as better citizens of

the world. Mahatria is also the Editor of Infinithoughts (formerly Frozen Thoughts), a growth

oriented magazine published monthly by Alma Mater.

Mahatria, who is affectionately referred to as the “Voice of Love”, is a spiritualist, endowed with

a deep connectivity to existence. He guides people in their quest for self–realization and has

brought meditation to the common man, and in his presence, thousands have experienced the

depths of silence. He, for one, believes that the messenger should be the message.



Mahatria Ra

Spiritual Guru

"Unleashing human spirit – most & more"


Time: 11:30 - 12:10

11September 2 - 6, 2013




Dr Pawan Agarwal

Management & Motivational Guru

"The Great India Management

of Dabbawala"


Time: 13:00 - 13:55

Dr Pawan Agarwal is the CEO of renowned Mumbai Dabbawalas (couriers for lunch boxes to

offices) and is also a well-known management guru. He is a proficient professional involved in

conducting research and contributing to the design and delivery of courses for the entire

educational fraternity and has received several awards for his work as a teacher, including the

“Utkrusht Shikshak Sanmam” from the Mumbai National Congress in 2010 and the Rajiv Gandhi

Puraskar in 2007.

In 2001, while he was pursuing a doctorate for the topic “A Study & Logistics & Supply Chain

Management of Dabbawala in Mumbai”, he had approached the dabbawalas (Mr Raghunath

and Mr Gangaram).

Mr Agarwal has been involved in the world of dabbawalas ever since and works on an honorary

basis to make presentations. He has been authorized by the dabbawalas to present their work

for audiences in English. Outside India, he has been invited to unleash the magic of dabbawalas

to organizations such as Young President Organisations (YPO) members in Kenya, YPO members

in Nigeria, British Telecommunication and Global Services in London and First Source Solutions

Ltd in London.

He has been associated with the Dabbawala Association for the last 10 years, and their loyal

customer base continues with over two lakh office goers served by 5,000 plus dabbawalas.

Mr Onne Van Der Weijde

Managing Director

Ambuja Cements


Time: 14:00 - 14:40

Mr Onne Van Der Weijde is MD of Ambuja Cements Ltd. He is a Dutch national with over 15 years

of experience in cement industry, including seven years in the Indian cement industry. Mr Weijde

was CFO at Holcim Indonesia from 2001 to 2005. In 2005, he was appointed General Manager

of Holcim India Ltd and in 2006 he also assumed the CFO function at ACC Ltd until October 2008.

From November 2009, he was the CEO of Ambuja Cements Ltd. He assumed the current role of MD

in 2010.

Recently Holcim has given him additional responsibility by appointing him as Area Manager

and a member of its Senior Management Team. Mr Weijde holds a Bachelor's degree in Business

Administration in Economics & Accounting from Rotterdam, Netherlands and a Masters degree

in Business Administration from the University of Bradford, UK.

CEO Track

12September 2 - 6, 2013


Mr Satish Reddy

Vice Chairman & Managing Director

Dr Reddy’s Laboratories





Mr Ravi Venkatesan

Ex-Chairman, Microsoft (I), Cummins (I)

"Art of doing business in India –

Conquering the chaos"


Time: 15:45 - 16:25

Mr Ravi Venkatesan is a Director on the boards of Infosys and AB Volvo and a Fellow of the Center

for Higher Ambition Leadership, Boston. He is an advisor to several family run business houses

and entrepreneurial ventures. He is also a member of the Advisory Board of Bunge Ltd, the

Global Alumni Board of Harvard Business School and of Marico Innovation Foundation. Mr

Venkatesan is a founding partner and Chairman of Social Venture Partners, India, a network of

engaged philanthropists attempting to address complex social issues through venture

philanthropy.

Between 2004 and 2011, Mr Venkatesan was the Chairman of Microsoft India, which under his

leadership became the company’s second largest and one of its fastest growing geographies.

He was instrumental in helping Microsoft India create “Shiksha”, a large computer literacy

program that helped train over 35 million students from weak backgrounds. Prior to Microsoft,

he spent 16 years with Cummins Inc as Chairman.

Mr Venkatesan was voted the most influential MNC CEO for 2011 by the Economic Times, the

Distinguished Engineering Alumnus award in 2011 by Purdue University and the Distinguished

Alumnus award by the Indian Institute of Technology. He is currently completing his book,

“Conquering the Chaos: Win in India, Win Everywhere”.

Mr Satish Reddy is the Vice Chairman and MD of Dr Reddy’s Laboratories Ltd. He steers two of the

company’s core businesses: Pharmaceutical Services & Active Ingredients (PSAI) and Global

Generics businesses. He joined Dr. Reddy’s in 1993 as Executive Director and in 1997 went on to

become the Managing Director of the company.

Mr Reddy serves as a National Council member of CII, Chairman of CII National Committee on

Drugs and Pharmaceuticals and as an executive council member of the Indian Pharmaceutical

Alliance (IPA). Earlier, he was also a member of the Drugs Technical Association Board (DTAB) of

India, the highest policy making body under the Drugs & Cosmetics Act in India between 2005-11.

He received the 2009 Distinguished Alumnus Award from the School of Pharmacy and

Pharmaceutical Sciences, Purdue University, U.S.A. He was identified as a “Young Global Leader

for 2007” by the World Economic Forum and was awarded the “IBLA - India Corporate Citizen of

the Year” by CNBC in 2005 for his efforts in the area of corporate social responsibility. At present,

he is also a trustee of Dr. Reddy’s Foundation (DRF), a not-for-profit organization that focuses on

creating sustainable livelihood and providing education to under-privileged youth.

13September 2 - 6, 2013


Mr Kumarmangalam Birla is the Chairman of Aditya Birla Group. Mr Birla chairs the major group

companies in India and globally. He took over as Chairman of the group in 1995 and under his

leadership the group has expanded to telecom, software, BPO and other areas. He has

restructured the business and made 26 acquisitions in 17 years in India and globally, the

highest by an Indian multinational in India.

He has held and continues to hold several key positions on various regulatory and professional

boards, including Chairmanship of the Advisory Committee constituted by the Ministry of

Company Affairs in 2006 and 2007, membership of The Prime Minister of India’s Advisory

Council on Trade and Industry. He also serves as the Chairman of Sebi Committee on Corporate

Governance and is a member of CII.

Mr Birla has received many awards and honors, including Forbes India Leadership Award –

“Entrepreneur of the Year, 2012”, ranked 3rd most powerful CEO as per the survey of Economic

Times in 2012 and Nasscom “Global Business Leader Award” in 2012.


Mr Kumarmangalam Birla

Chairman

Aditya Birla Group



Ms Arundhati Bhattacharya

Managing Director

State Bank of India


Time: 17:15 - 18:00

Ms Arundhati Bhattacharya is the Managing Director of State Bank of India since August 2013.

She also served as the Corporate Development Officer and Deputy MD at State Bank of India. She

joined the bank as a Direct Recruit Officer in 1977 and served as its Chief General Manager of

Bangalore Circle. Ms Bhattacharya also had a stint in the bank’s New York office where she was

in charge of monitoring branch performance, overseeing external audit and correspondent

relations. She has served as the Chief General Manager of New Businesses for Corporate Centre

at SBI and as its General Manager of Network-II, Lucknow and as Chief Development Officer.

In her extensive service with the bank, Ms Bhattacharya had the opportunity of working in

metro, urban and rural areas, thus crisscrossing the length and breadth of the country. She has

handled large corporate credit and initiatives like financial inclusion and financing of self help

groups. Ms Bhattacharya was also involved in setting up several new companies/initiatives of

the bank, including SBI General Insurance, SBI Macquarie Infrastructure Fund, SBI SG Securities

Ltd and the launch of new IT platforms such as mobile banking and financial planning in the

bank.

CEO Track

14September 2 - 6, 2013


PANEL DISCUSSION: India Banking – Beginning of a New Era

Mr Ramesh IyerMD & CEOM&M Financial Services

Mr Ramesh RamanathanFounder, Chairman,JanalakshmiMicrofinance

Mr Romesh SobtiMD & CEOIndusInd Bank

Mr Vikram LimayeCEOIDFC

Mr Tamal BandopadhyayDeputy Editor MINTAuthor

MODERATOR

A unique evening on Sep 2: “Entertainment! Entertainment! Entertainment!”

Super Theater: A unique play combining Bollywood, comedy, dance … and more !

Super Supper: Network with top business leaders and investors over cocktails and dinner

15September 2 - 6, 2013


From the 8th to the ...

... 9th Annual Global Investor Conference

India At A GlanceMacroeconomy, corporate earnings, markets

India at a glance

16September 2 - 6, 2013


6.3

8.67.5

11.29.7

8.9 9.310.1

7.56.5

6.05.1 5.4 5.2 4.7 4.8

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

FY10 FY11 FY12 FY13

India at a glance: Macro

The macro backdrop remains challenging with heightened macroeconomic risks

and weak and sometimes misdirected policy response accentuating slowdown in

GDP growth.

The GDP growth is likely to record below 5% in FY14 in third successive years of

slowdown. Industrial degrowth has deepened and monsoon remains the only

silverlining for agri revival.

While current account deficit is set to improve in FY14 its funding risk has increased

with large FIIs outflow. INR however, has corrected well beyond its long term

REER value.

Measures taken by RBI so far hasn't revived the INR. On the other hand it has led

to further tightening of liquidity situation and a spike in short and longer term

interest rates along with inversion of yield curve.

While inflation risks subsided somewhat pressure points in food and fuel inflation

persists further accentuated by the INR fall.

Government has reiterated its commitment to keep the fiscal deficit within

budgeted target of 4.8% of GDP. Falling revenue however, is pushing the fiscal

story similar to FY13 with a forced cutback on plan expenditure.

GDP growth - third consecutive year of slowdown GDP growth - settling below 5%

Industry - now degrowing Silver lining: Monsoon so far 11% higher than normal

External sector - widening gap

5.3

1.4

5.4 5.7 6.4 7.3 8.

04

.36

.7 7.6

4.3 5.

54.

08.

17.

09

.5 9.6

9.3

6.7 8.

6 9.3

6.2

5.0

4.6

FY9

1F

Y92

FY9

3F

Y94

FY9

5F

Y96

FY9

7F

Y98

FY9

9F

Y00

FY0

1F

Y02

FY0

3F

Y04

FY0

5F

Y06

FY0

7F

Y08

FY0

9F

Y10

FY1

1F

Y12

FY1

3F

Y14

7.0

3.2

1.2 0.8 0.4

2.3 2.2

-0.3 -1.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q

FY12 FY13 FY14

98 10

1

96 100 98

93 95 99

93

102

95 98

98

93

79

102

87

99 99 105

98

77

102

101

92

111

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

YT

D

IMD's Fo recast (% of LPA) Actua l Rain fal l (% of LPA)

17September 2 - 6, 2013


8.0

3.6

8.97.4

5.5

9.1

12.4

10.5

8.2

10.3

8.09.6

FY09 FY10 FY11 FY12 FY13 FY14E

WPI CPI-IW

-1.3

-2.3-2.8 -2.6

-4.2

-4.8

-3.5

FY08 FY09 FY10 FY11 FY12 FY13 FY14E

CAD - the slide expected to correct in FY14 INR - significantly undervalued at 64/USDBanking indicators

India at a glance: Macro

RBI measures - strained liquidity & hardened rates Interest rates: hardened while yield curve stands inverted

Prices - WPI and CPI likely to moderate in FY14 Prices - WPI higher than 5%; CPI falling from double digit

Fiscal - Govt. reassures of meeting fiscal targets Fiscal - correction possible only by cutting plan exp again

50

54

58

62

66

70

Ap

r-12

Jun

-12

Au

g-1

2

Oct

-12

De

c-1

2

Feb-

13

Ap

r-13

Jun

-13

Au

g-1

3

80

86

92

98

104

110

INR REER (R HS)

-2500

-1500

-500

500

1500

10-

Jun

14-

Jun

20-

Jun

26-

Jun

3-J

ul

9-J

ul

15-J

ul

19-J

ul

25-J

ul

31-J

ul

6-A

ug

13-A

ug

-6

-1

4

9

14

Rep o Revers e Re poMSF SLFCa l l rate (RHS)

7

8

10

11

123-

Jun-

13

10-

Jun-

13

17-

Jun-

13

24-

Jun-

13

1-Ju

l-1

3

8-Ju

l-1

3

15-

Jul-

13

22-

Jul-

13

29-

Jul-

13

5-A

ug-1

3

13-A

ug-1

3

21-A

ug-1

3

10 Yea r G-Sec (%)In dia Treas ury Bi l l Yield 3 Month

7.3

4.65.8

10.99.6

Ap

r-12

Jun-

12

Aug

-12

Oct

-12

Dec

-12

Feb-

13

Ap

r-13

Jun-

13

W PI CPI-RU

2.5

6.0 6.5

4.95.7

4.9 4.84.1

7.48.0

7.1 6.9

8.59.6


Ce ntre Centre + s tates

0.2 0.10.2

4.84.8

-0.70.2

3.0

4.3

5.5

6.8

Fisc

al d

efi

cit

FY1

3BE

Ne

t ta

x

reve

nue

Non

-tax

reve

nue

Dis

inve

stm

ent

Non

-pla

n

expe

ndit

ure

Pla

n

expe

ndit

ure

Fisc

al d

efi

cit

FY1

3RE

18September 2 - 6, 2013


29.2

4.6

10.9

20.6

11.8

5.46.8


36.6

18.1

7.9

23.2 22.5

11.09.2


MOSL Universe Ex RMS Sales Growth (%) MOSL Universe Ex RMS PAT Growth (%)

Corporate India is facing slowdown driven by both domestic and global headwinds.

While investment demand had collapsed in FY13 itself, we are seeing slowdown

in consumption too in FY14. Higher interest rates and a very weak currency is also

further impacting the pricing, margins for Corporate India.

MOSL Universe Ex RMs has seen a revenue growth of 11% and 5% PAT growth for

FY13. However we estimate the same for FY14 at 9% and 7% respectively.

MOSL Universe Mar-13 PAT at INR824bn is at its all time high. However the same

moderarted to INR754bn for June-13 quarter.

Oil & Gas and Financials contribute 44% to the total earnings (v/s 38% in FY08).

Metals has seen a drop in contribution from 16% to 10% in same period.

Sensex EPS grew at 6% in FY13 to INR 1191. We expect FY14 Sensex EPS to grow

7.5% to INR 1,280.

As a pointer to the importance of the interest rates for the corporate sector,

interest/ sales for BSE 500 companies Excl Financials and RMS went upto 3.7% as

against which is at all time high.

Profitability as reflected by PAT margin declined to 6.9% as against 7.0% registered

in Mar-13 quarter.

India at a glance: Corporate earnings

22

62

51

24

72

81

30

23

47

39

14

10

43

24

63

48

25

13

54

95

62

44

04

51

46

95

04

54

3 63

35

99

62

4 67

46

96

67

06

94

70

5 81

87

66

74

97

33 8

24

75

4 92

28

33

76

3

Jun

-05

Sep

-05

Dec

-05

Ma

r-06

Jun

-06

Sep

-06

Dec

-06

Ma

r-07

Jun

e-0

7S

ep-

07D

ec-0

7M

ar-

08Ju

ne-

08

Sep

- 08

Dec

-08

Ma

r-09

Jun

e-0

9S

ep-0

9D

ec-0

9M

ar-

10Ju

ne-

10

Sep

-10

Dec

-10

Ma

r-11

Jun

e-1

1S

ep-1

1D

ec-1

1M

ar-

12Ju

ne-

12

Sep

-12

Dec

-12

Ma

r-13

Jun

e-1

3Se

p-1

3ED

ec-

13E

Ma

r-

Quarterly PAT (MOSL Universe Ex RMs, INR b)

Ma

r-1

4E

19September 2 - 6, 2013


Sensex EPS (INR)

MOSL Universe contribution to PAT (%)Sector FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E

Domestic Plays 49 53 55 59 53 54 55 54

Banking 16 17 21 22 22 24 26 24

Pvt 4 4 5 5 6 7 8 9

PSU 10 10 13 13 12 12 12 10

NBFC 3 3 3 4 4 4 5 6

Domestic Consumer 11 12 13 14 11 9 9 11

Auto Ex Tata Motors 3 3 2 4 4 3 3 4

Teleco m 5 6 7 6 3 2 1 2

Consumer 4 3 4 4 4 4 5 5

Domestic Non - Consumer 22 23 21 23 20 21 20 19

Uti l i t ies 9 8 9 11 9 11 11 11

Capital Goods 4 3 4 5 4 4 4 3

Cement 5 5 4 4 3 3 3 3

Real Estate 2 6 3 2 2 1 1 1

Others 1 1 1 1 1 1 1 1

Global Plays 51 47 45 41 47 46 45 46

Cyclical 41 38 35 30 36 34 31 30

Oil & Gas ex RMs 21 20 19 18 19 20 18 18

Metals 18 16 16 11 14 11 10 9

Tata Motors 1 1 -1 1 3 4 3 3

Non-Cyclical 11 10 10 11 11 12 14 15

Technology 8 7 8 9 8 9 11 12

Healthcare 3 3 2 2 3 3 3 4

MOSL Universe ex RMs 100 100 100 100 100 100 100 100

India at a glance: Corporate earnings

BSE 500 Companies Excluding F inancials & RMS

820 834

81 129 181250 266 291 278 280 216 236 272

348450

523718

833

1,0241,123 1,191

1,280

FY9

3

FY9

4

FY9

5

FY9

6

FY9

7

FY9

8

FY9

9

FY0

0

FY0

1

FY0

2

FY0

3

FY0

4

FY0

5

FY0

6

FY0

7

FY0

8

FY0

9

FY1

0

FY1

1

FY1

2

FY1

3

FY14

E

FY93-96: 45% CAGR FY96-03: 1% CAGR

FY03-08: 25% CAGR

FY08-14: 7% CAGRFY93-13: 14% CAGR

2.0

2.3

2.7

2.6

2.5 2.

6

2.1

2.0

2.5

2.3 2.4

2.2

2.5

2.9

2.8

2.9

3.4

3.2

3.5

3.3

3.7

Jun-

08

Sep-

08

Dec

-08

Ma

r-09

Jun-

09

Sep-

09

Dec

-09

Ma

r-10

Jun-

10

Sep-

10

Dec

-10

Ma

r-11

Jun-

11

Sep-

11

Dec

-11

Ma

r-12

Jun-

12

Sep-

12

Dec

-12

Ma

r-13

Jun-

13

Interest / Sales (%)

12.1

10.3

7.4 8.

2

11.

0

10.1

12.4

9.9

7.9

7.3

8.8

7.9

7.3

6.87.0

8.4

10.9

10.7

10.610.

79

.9

Jun

-08

Sep

-08

Dec

-08

Ma

r-09

Jun

-09

Sep

-09

Dec

-09

Ma

r-10

Jun

-10

Sep

-10

Dec

-10

Ma

r-11

Jun

-11

Sep

-11

Dec

-11

Ma

r-12

Jun

-12

Sep

-12

Dec

-12

Ma

r-13

Jun

-13

PAT Ma rgin (%)

20September 2 - 6, 2013


73 13 42 47 47 -52 81 17 -25 26 -582 19 37 49 65 -61 89 22 -37 22 -22

0

6,000

12,000

18,000

24,000

CY03 CY04 CY05 CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13

YTD

-65

-25

15

55

95

Trend in Sensex - LHS YoYin INR (%) - RHS YoY in USD (%) - RHS

Annu al Re turn in INR Annu al Re turn in USD

Post a positive return of 26% in CY12, markets are down 6% (in INR) and 20% (in

USD) in CY13 YTD. Over the last 10 years, Sensex delivered a return CAGR of 16%;

among the best performing global markets.

Compared to CY12 net FII inflow of USD24.5b, the YTD CY13 FII has net inflow of

USD11.8. This is post the selling flows since June 2013.

Selling intensity of DIIs have been rising with a net outflow of USD7.1b, post an

outflow of USD10.9b in CY12.

Indian Market Cap to GDP has fallen from 64% in FY13 to 52% currently at FY14E

GDP.

Valuations remain below historical average (rolling 12-month forward PE of 13.4x

v/s 10-year average of 15.3x). However, RoEs are also below the averages.

India at a glance: Indian equities

Indian Markets Annual Return (%)

India Vs Global 10 Year CAGR (%)

16.1

13.

4

12.2

11.

6

9.5

5.3

4.3

3.3

2.7

15.8

11.

2

9.5 9.8

5.3

4.2 4.7

4.5

9.4

11.

7

12.

2

India -

Se nse x

B razi l Rus sia

MICEX

Chin a MSCI EM So uth

Ko rea

S&P 500 UK Taiwan Japa n

In Local Currency In USD

21September 2 - 6, 2013


23.6

20.1

16.3

15.0

17.5

20.0

22.5

25.0

Aug

-03

Aug

-04

Aug

-05

Aug

-06

Aug

-07

Aug

-08

Aug

-09

Aug

-10

Aug

-11

Aug

-12

Aug

-13

2.2

4.2

2.2

1.2

2.1

3.0

3.9

4.8

Aug

-03

Aug

-04

Aug

-05

Aug

-06

Aug

-07

Aug

-08

Aug

-09

Aug

-10

Aug

-11

Aug

-12

Aug

-13

13.4

24.6

13.2

7

12

17

22

27

Aug

-03

Aug

-04

Aug

-05

Aug

-06

Aug

-07

Aug

-08

Aug

-09

Aug

-10

Aug

-11

Aug

-12

Aug

-13

6.7 8.610.8 11.8

24.5

-0.5

29.3

17.6

-12.2

17.8

8.1


YTD

Trend in FII Equity Flows (USD b) Trend in FII Debt Flows (USD b)

India at a glance: Indian equities

Trend in DII Equity Flows (USD b) Market Cap to GDP (%)

Sensex PE (x) Sensex P/BV (x)

Sensex RoE (%) Sensex earnings yield v/s bond yield (%)

1.0 0.7 0.9

2.71.1

10.18.4

6.9

-4.6

2.3

-1.2


YTD

3.75.3

-7.1-10.9

5.9

-4.7

16.9

5.4

CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13

YTD

2 3

42

82 83

103

55

95

6 964

525 2

8 8F

Y03

FY0

4

FY0

5

FY0

6

FY0

7

FY0

8

FY0

9

FY1

0

FY1

1

FY1

2

FY1

3

FY1

4E

Ave rage of 69% for the

period

10 Year Avg:

15.3x

10 Year Avg:

2.7x

10 Year Avg:

19.5%

0.9

1.6

0.4

0.8

1.2

1.6

2.0

Aug

-03

Aug

-04

Aug

-05

Aug

-06

Aug

-07

Aug

-08

Aug

-09

Aug

-10

Aug

-11

Aug

-12

Aug

-13

10 Year Avg:

094x

22September 2 - 6, 2013


Participating CompaniesIndia's leading 90 listed and unlisted companies

23September 2 - 6, 2013


Alphabetical index

A C C ................................................................................... 24

Aditya Birla Nuvo ............................................................ 172

Ambuja Cements ............................................................... 26

Au F inancier .................................................................... 184

Axis Bank ........................................................................... 28

Bajaj F inance .................................................................... 30

Bajaj F inserv ................................................................... 173

Bank of Baroda.................................................................. 32

B P C L ................................................................................. 34

Bharti Airtel ....................................................................... 36

Bharti Infratel ................................................................... 38

Biocon................................................................................ 40

C E S C ................................................................................. 42

Chola Investment ............................................................ 174

City Union Bank ............................................................... 175

Coal India .......................................................................... 44

Container Corporation...................................................... 46

D B Corp ............................................................................. 48

Dabur India ....................................................................... 50

Dr Reddy's Laboratories ................................................... 52

Eicher Motors .................................................................... 54

Emami .............................................................................. 176

Future Group ................................................................... 177

Glenmark Pharmaceuticals .............................................. 56

Godrej Consumer Products ............................................... 58

Grasim Industries ............................................................. 60

Hathway Cable .................................................................. 62

Havells India ..................................................................... 64

HCL Technologies ............................................................... 66

HDFC .................................................................................. 68

HDFC Bank ......................................................................... 70

Hero MotoCorp.................................................................. 72

Hindalco ............................................................................ 74

Hindustan Unilever ........................................................... 76

ICICI Bank .......................................................................... 78

I D F C ................................................................................. 80

Indiabulls Housing F inance ........................................... 178

Indusind Bank ................................................................... 82

Info Edge (India) ................................................................ 84

Infosys ............................................................................... 86

ING Vysya Bank ................................................................. 88

IPCA Laboratories ............................................................. 90

I T C .................................................................................... 92

Jaiprakash Associates ...................................................... 94

Janlakshmi Microfinance ............................................... 184

Jindal Steel & Power ......................................................... 96

JSW Steel ........................................................................... 98

Just Dial ........................................................................... 100

Kotak Mahindra Bank ..................................................... 102

Larsen & Toubro .............................................................. 104

LIC Housing F inance ....................................................... 106

Lupin ................................................................................ 108

Mahindra & Mahindra ................................................... 110

Mahindra & Mahindra Financial Services .................... 112

Marico ............................................................................. 114

Maruti Suzuki .................................................................. 116

McLeod Russel ................................................................ 179

MCX.................................................................................. 118

Motherson Sumi Systems................................................ 120

Motilal Oswal F inancial Services Ltd ............................ 180

Mrs Bector Food .............................................................. 185

N T P C .............................................................................. 122

O N G C............................................................................. 124

Oil India .......................................................................... 126

Parag Food Speciality ..................................................... 185

Power Grid Corp of India ................................................ 128

Prestige Estates Projects ................................................ 130

Radico Khaitan................................................................ 132

Ranbaxy Laboratories ..................................................... 134

Reliance Communications .............................................. 136

Reliance Industries ......................................................... 138

Shoppers Stop ................................................................. 140

Shriram Transport Finance Company ............................ 142

Sobha Developers ........................................................... 144

State Bank of India .......................................................... 146

Sun Pharmaceuticals Industries .................................... 148

Sun TV Network................................................................ 150

Tribhovandas Bhimji Zaveri ........................................... 181

Tata Motors ..................................................................... 152

Tata Steel ......................................................................... 154

Tech Mahindra ................................................................ 156

Titan Industries ............................................................... 158

TTK Prestige ..................................................................... 182

UltraTech Cement ............................................................ 160

Union Bank of India ........................................................ 162

United Breweries ............................................................. 183

Wipro............................................................................... 164

Wockardt ......................................................................... 166

Yes Bank ........................................................................... 168

Zee Entertainment ........................................................... 170

Company Page Company Page

September 2 - 6, 2013 24


Company descriptionACC, part of the Holcim group, is the third largest

cement company in India with a total capacity of 30.7mt.

It has pan India presence with 16 plants. It is the oldest

player in the Indian cement industry, with ~10% market

share.

Key investment positives & long-term prospects Market leader with strong national presence and

overall market share of ~10%. A truly pan India

player, without concentration in any particular

region. Hence, it is best proxy on the Indian cement

industry. Strong brand and focus on trade segment

(~75%) drives premium pricing.

Focused on reducing power cost by setting up captive

power plants and increasing usage of alternate

fuels.

High sensitivity to cement prices as every INR1/bag

change in cement price would change CY13E EPS by

3.9%.

ACC has planned an expansion of 8.1mt, with Jamul

(3.6mt) likely to start operations by CY15.

Management expects the merger with Ambuja

Cement's (ACEM) to result in synergistic benefits

through supply chain optimization and fixed cost

reduction of ~INR4-4.5b (for ACC).

Key challenges & near-term concerns Very limited scope to increase production through

blending as 85% of cement sold is blended.

Shareholding pattern (%)

Jun-13 Mar-13 Jun-12

Promoter 50.5 50.5 50.5

Domestic Inst 11.5 10.5 12.1

Foreign 19.9 20.6 18.9

Others 18.1 18.5 18.6

ACC

Stock info

Bloomberg Code ACC IN

Equity Shares (m) 187.7

Share Price (INR) 999

Mcap (INR b) 187.5

Mcap (USD b) 2.9

52-Wk Range (INR) 1,515/983

1, 6, 12 Rel Perf (%) -10/-18/-29

Quarterly Performance (INR Million)

Y/E December Jun-12 Sep-12 Dec-12 Mar-12 Jun-13 CY12 CY13E

Operating Income 27,576 24,310 30,989 29,111 27,952 111,305 111,003

Change (%) 14.8 13.1 24.0 2.4 1.4 18.0 -0.3

EBITDA 6,306 4,215 3,172 4,468 4,335 19,681 15,074

Change (%) 14.6 91.2 -17.7 -25.4 -31.3 16.4 -23.4

EBITDA Margin (%) 22.9 17.3 10.2 15.3 15.5 17.7 13.6

Reported PAT 4,179 2,487 2,392 4,377 2,591 10,612 11,335

Adjusted PAT 4,179 2,487 2,392 3,124 2,591 12,918 10,118

Change (%) 24.2 48.4 -15.2 -19.1 -38.0 11.9 -21.7

PAT Margin (%) 15.2 10.2 7.7 10.7 9.3 11.6 9.1

Key Operating metrics

Volume (mt) 6.05 5.40 5.94 6.42 6.12 24.1 24.5

Realizations(INR/t) 4,558 4,502 4,166 4,269 4,298 4,358 4,244

EBITDA (INR/T) 1,042 781 534 696 708 816 616

E: MOSL Estimates

ACC has one of the highest dependence on

domestic coal, thus necessitating a shift towards

open market/imported coal, as availability of

domestic linkage coal reduces.

Acquisition of ACC by ACEM would reduce the

economic interest of Holcim in ACC from ~50.3% to

~30%, which may have an impact on future growth

plans; dividend payout is a key question on which

we seek clarity.

Key news flows / triggers to watch Holcim has announced a major restructuring of India

operations which would make ACEM the holding

company of ACC. Post merger, Holcim will hold

61.39% in ACEM and ACEM will hold 50.01% in ACC.

Ambuja intends to further increase its economic

ownership in ACC by up to 10% over a period of 24

months following the transaction completion.

1QFY14 highlights; outlook for FY14, FY15 Volumes grew 1.2% YoY (-5% QoQ) to 6.12mt (v/s

est. of 6.2mt), while grey cement realization

improved by 0.7% QoQ (-5.7% YoY) to INR4,298/ton.

Costs were lower than estimates due to savings on

energy cost, translating into cement EBITDA/ton of

INR701 (INR14/ton QoQ, down ~INR341/ton YoY).

We estimate (-INR5.5)/+INR15 per bag change in

realizations, along with 1.5%/8% YoY volume growth

in CY13E/14E, leading to EBITDA/ton of INR616/

INR809.

25September 2 - 6, 2013


ACC: Financials and valuation

Income Statement (INR Million)

Y/E December CY11 CY12 CY13E CY14E

Net Sales 94,296 111,305 111,003 128,946

Change (%) 22.2 18.0 -0.3 16.2

Total Expenditure 77,396 91,624 95,928 107,565

EBITDA 16,901 19,681 15,074 21,380

Change (%) 8.8 16.4 -23.4 41.8

Margin (%) 17.9 17.7 13.6 16.6

Depreciation -4,753 -5,589 -5,668 -6,074

Int. and Fin. Charges -969 -1,147 -550 -450

Other Income - Rec. 4,226 4,923 5,100 5,250

PBT Before EO Item 15,404 17,869 13,956 20,106

EO Income/(Expense) 2,280 -3,354 1,678 0

PBT After EO Item 17,684 14,515 15,634 20,106

Tax 4,431 3,903 4,299 5,831

Tax Rate (%) 25.1 26.9 27.5 29.0

Reported PAT 13,253 10,612 11,335 14,276

Adjusted PAT 11,544 12,918 10,118 14,276

Change (%) 13.9 11.9 -21.7 41.1

Margin (%) 12.2 11.6 9.1 11.1

Balance Sheet (INR Million)


Share Capital 1,879 1,880 1,880 1,880

Reserves 70,043 71,949 76,137 82,767

Net Worth 71,923 73,828 78,016 84,647

Loans 5,061 850 850 850

Deferred Tax Liability 5,184 5,169 5,404 5,705

Capital Employed 82,167 79,848 84,271 91,202

Gross Block 95,757 98,719 103,719 105,719

Less: Accum. Depn. 34,378 39,967 45,635 51,709

Net Fixed Assets 61,378 58,752 58,083 54,010

Capital WIP 4,353 3,000 9,000 21,000

Investments 16,250 25,536 17,780 16,881

Curr. Assets, Loans&Adv. 37,912 31,975 42,744 49,653

Inventory 10,995 11,336 12,925 15,014

Account Receivables 1,877 3,035 3,041 3,533

Cash and Bank Balance 16,526 6,784 19,007 22,080

Others 8,513 10,821 7,770 9,026

Curr. Liab. and Prov. 37,726 39,415 43,337 50,342

Account Payables 22,273 21,763 24,329 28,262

Other Liabilities 3,723 3,811 5,322 6,182

Provisions 11,730 13,841 13,685 15,897

Net Current Assets 186 -7,440 -593 -689

Application of Funds 82,167 79,848 84,271 91,202

Key assumptions/operating metrics


Capacity 30.7 30.7 30.7 30.7

Dispatches (MT) 23.7 24.1 24.5 26.4

Realization (INR/ton) 3,974 4,358 4,244 4,550

Op Cost (INR/ton) 3262 3541 3633 3750

EBITDA (INR/ton) 712 816 610 799

EBITDA Margins (%) 17.9 17.7 13.6 16.6

Net Debt -27,714 -31,469 -35,937 -38,111

Ratios


Basic (INR)

EPS 61.4 68.7 53.8 76.0

Consolidated EPS 60.2 68.7 53.7 76.0

Cash EPS 86.7 98.5 84.0 108.3

BV/Share 382.7 392.9 415.2 450.4

DPS 28.0 30.0 32.5 35.0

Payout (%) 46.0 61.8 63.0 53.6

Valuation (x)

P/E 16.3 14.5 18.5 13.1

Cash P/E 11.5 10.1 11.9 9.2

EV/Sales 1.7 1.4 1.3 1.0

EV/EBITDA 9.2 7.8 9.5 6.0

P/BV 2.6 2.5 2.4 2.2

Dividend Yield 2.8 3.0 3.3 3.5

EV/ton (USD-Cap) 83 82 76 69

Return Ratios (%)

RoE 16.9 17.7 13.3 17.6

RoCE 15.6 17.4 11.5 17.4

Working Capital Ratios

Debtor (Days) 7 10 10 10

Asset Turnover (x) 0.9 0.7 0.8 0.7

Leverage Ratio

Debt/Equity (x) 0.1 0.0 0.0 0.0

* EPS numbers are annualized.

Cash Flow Statement (INR Million)


OP/(Loss) before Tax 16,901 19,681 15,074 21,380

Interest/Dividends Recd. 4,226 4,923 5,100 5,250

Direct Taxes Paid -2,863 -3,917 -4,065 -5,529

(Inc)/Dec in WC -4,391 -2,116 5,377 3,168

CF from Operations 13,872 18,570 21,486 24,269

EO Income/(Expense) -2,280 3,354 -1,678 0

CF from Op. incl EO Exp. 16,152 15,217 23,165 24,269

(inc)/dec in FA -4,032 -1,609 -11,000 -14,000

(Pur)/Sale of Investments 777 -9,286 7,755 899

CF from Investments -3,255 -10,895 -3,245 -13,101

Issue of Shares 70 -2,153 0 0

(Inc)/Dec in Debt -177 -4,211 0 0

Interest Paid -969 -1,147 -550 -450

Dividend Paid -6,095 -6,553 -7,146 -7,645

CF from Fin. Activity -7,171 -14,064 -7,696 -8,095

Inc/Dec of Cash 5,725 -9,742 12,224 3,072

Add: Beginning Balance 10,800 16,526 6,784 19,007

Closing Balance 16,526 6,784 19,007 22,080

September 2 - 6, 2013 26


Ambuja Cements

Company descriptionAmbuja Cements (ACEM), a part of the Holcim group, is

India's fourth-largest cement company, with total

capacity of 27.5m tons under its control. It is one of the

lowest cost producers of cement, focusing on the

structurally sound markets of the North, West and East.

Key investment positives & long-term prospects Focused on the structurally sound markets of West,

North and East India, ACEM is number-1 in the North

and number-2 in the West.

Focused segment mix (on retail/trade); well

diversified fuel and transport mix.

Lower sensitivity of earnings to cement prices; every

INR1/bag change in cement price results in ~2.5%

change in CY13E EPS.

Post completion of restructuring of Holcim's India

operations, Holcim's stake in ACEM will increase to

61.39% (from 50.3%).

The management expects the merger with ACEM

operations to result in meaningful synergistic

benefits through supply chain optimization and

fixed cost reduction of INR4b-4.5b.

Key challenges & near-term concerns Weakening of balance sheet strength on INR35b

cash outgo to acquire 24% stake in Holcim India.

Holding company discount for stake in ACC.



Promoter 50.6 50.6 50.2

Dom. Inst. 10.2 8.6 12.4

Foreign 32.0 33.5 29.9

Others 7.3 7.4 7.5

Stock info

Bloomberg Code ACEM IN

Equity Shares (m) 1,543.8


Mcap (INR b) 243.8

Mcap (USD b) 3.8

52-Wk Range (INR) 221/150

1, 6, 12 Rel Perf (%) -11/-15/-21




Change (%) 17.9 19.8 -0.7 -3.3 -8.6 13.8 -2.6

EBITDA 7,223 5,673 4,282 5,118 4,920 24,675 18,449

Change (%) 23.4 95.7 -0.6 -31.5 -31.9 13.8 -25.2

EBITDA Margin (%) 28.2 26.2 18.5 20.1 21.0 25.5 19.6

Reported PAT 4,689 3,040 2,120 4,879 3,242 12,971 13,835

Adjusted PAT 4,689 3,371 2,300 3,641 3,242 15,435 12,598

Change (%) 34.9 96.6 -28.8 -28.3 -30.9 23.0 -18.4

PAT Margin (%) 18.27 15.58 9.94 14.31 13.82 15.95 13.37


Volume (mt) 5.63 4.79 5.39 5.96 5.46 21.99 22.21

Realizations (INR/t)4,556 4,521 4,293 4,271 4,297 4,385 4,243

EBITDA (INR/T) 1,283 1,185 795 859 901 1,119 831

E: MOSL Estimates

Given limited capacity addition, any strong

recovery in volume growth would result in capacity

constraint for ACEM in CY14/CY15.

Key news flows / triggers to watch Holcim has announced major restructuring of India

operations, which includes (a) merger of 100%

subsidiary, Holcim India with ACEM, and (b) transfer

of Holcim India's 50.01% stake in ACC to ACEM,

making ACEM the holding company of ACC. Post

merger, Holcim will hold 61.39% in ACEM and ACEM

will hold 50.01% in ACC.

The board approved setting up of 2.17mt of

Greenfield clinkerization projects at Nagaur

(Rajasthan) and three grinding units of 1.5mt each

at Dadri (UP), Marwar Mundwa (Rajasthan), and

Osara (MP), with total estimated capex of INR35b.

1QFY14 highlights; outlook for FY14, FY15 1QFY14 realization surprised positively, with 0.6%

QoQ increase (5.7% YoY decline) to INR4,297/ton.

Volumes declined 3.1% YoY (8% QoQ) to 5.46mt.

Cost was lower than estimate due to higher pet

coke utilization, resulting in energy cost savings.

This translates into margin expansion of 0.9pp QoQ

to 21% and improvement in EBITDA/ton by ~INR42

QoQ (decline of INR382 YoY) to INR901.

We estimate (-INR7)/+INR15 per bag change in

realizations, and 1%/8% YoY volume growth in CY13/

14, leading to EBITDA/ton of INR831/INR1,003.

27September 2 - 6, 2013


Ambuja Cements Financials and valuation



Net Sales 85,043 96,749 94,241 108,976

Change (%) 15.1 13.8 -2.6 15.6


% of Sales 77.2 74.5 80.4 77.9

EBITDA 19,387 24,675 18,449 24,066

Change (%) 6.3 27.3 -25.2 30.4

Margin (%) 22.8 25.5 19.6 22.1

Depreciation 4,452 5,373 5,068 5,510

EBIT 14,935 19,302 13,381 18,556

Int. and Finance Charges 526 757 537 525

Other Income - Rec. 2,978 4,042 4,900 5,350

PBT before EO Exp. 17,387 22,588 17,744 23,381

EO Expense/(Income) 358 3,570 -1,741 0

PBT after EO Exp. 17,029 19,018 19,485 23,381

Current Tax 3,613 6,048 5,207 6,313

Deferred Tax 1,127 0 444 468

Tax Rate (%) 27.8 31.8 29.0 29.0

Reported PAT 12,289 12,971 13,835 16,600

PAT Adj for EO Items 12,547 15,435 12,598 16,600

Change (%) 0.9 23.0 -18.4 31.8



Equity Share Capital 3,069 3,084 3,084 3,084

Total Reserves 77,626 84,966 90,267 98,789

Net Worth 80,694 88,051 93,351 101,873

Deferred Liabilities 6,436 5,483 5,926 6,394

Total Loans 466 395 500 500


Gross Block 97,023 101,836 111,538 118,038

Less: Accum. Deprn. 35,158 43,213 48,280 53,790

Net Fixed Assets 61,865 58,624 63,257 64,247

Capital WIP 4,868 5,201 12,500 16,000

Investments 8,643 16,558 8,599 10,201

Curr. Assets 40,043 43,864 42,602 49,263

Inventory 9,250 9,839 10,328 11,943



Others 7,694 9,353 9,037 10,450

Curr. Liability & Prov. 27,822 30,318 27,181 30,945


Provisions 11,913 14,414 13,684 15,824

Net Current Assets 12,221 13,545 15,421 18,318

Appl. of Funds 87,597 93,929 99,777 108,767


Parameters CY11 CY12 CY13E CY14E

Capacity - Consolidated 27.5 28.0 28.8 29.6

Dispatches - Consolidated 21.4 22.0 22.2 24.0

Realization (INR/ton) 3,965 4,385 4,243 4,543

Cost/ton 3,061 3,278 3,413 3,540

EBITDA/ton 904 1,108 831 1,003

Ratios


Basic (INR)

EPS 8.2 10.0 8.2 10.8

Cash EPS 11.1 13.5 11.5 14.3

BV/Share 52.4 56.9 60.4 65.9

DPS 3.2 3.5 4.0 5.0

Payout (%) 46.7 49.8 51.9 48.7

Valuation (x)

P/E 23.4 19.1 23.4 17.7

Cash P/E 17.2 14.2 16.7 13.3

P/BV 3.6 3.4 3.2 2.9

EV/Sales 3.0 2.6 2.7 2.2

EV/EBITDA 13.4 10.2 13.7 10.2

EV/Ton (Cap) - US$ 159 152 149 140

Dividend Yield (%) 1.7 1.8 2.1 2.6

Return Ratios (%)

RoE 16.3 18.3 13.9 17.0

RoCE 23.2 27.6 20.1 24.4




Wkg Capital Turnover (Days) 52 51 60 61

Leverage Ratio (x)

Current Ratio 1.4 1.4 1.6 1.6

Debt/Equity 0.0 0.0 0.0 0.0



Op. Profit/(Loss) before Tax20,260 25,393 18,449 24,066



(Inc)/Dec in WC -203 -417 -3,757 332


EO Income 0 0 1,741 0

CF from Op. incl EO Exp 16,890 20,917 15,683 22,967

(inc)/dec in FA -6,233 -6,870 -17,000 -10,000

(Pur)/Sale of Investments 196 601 7,959 -1,602


Issue of Shares 462 831 -1,354 0

(Inc)/Dec in Debt 738 -636 548 468

Interest Paid -251 -275 -537 -525

Dividend Paid -5,697 -4,964 -7,181 -8,078


Inc/Dec of Cash 6,105 9,604 -1,882 3,230


Closing Balance 22,586 30,295 20,655 23,885

September 2 - 6, 2013 28


Company descriptionAxis Bank (AXSB) is a private sector bank, with balance

sheet size of INR3.3t (as at June 2012) and national

presence through 2,000+ branches and 11,480+ ATMs.

With assets, SA and PAT growing at a CAGR of 33%, 46%

and 39%, respectively over the past 10 years, AXSB has

emerged as one of India's best run banks.

Key investment positives & long-term prospects Loan portfolio becoming granular: Share of retail

loans has improved from less than 20% in FY11 to

~29% of loans in 1QFY14 i.e. 52%+ of the incremental

loans over the same period, which is relatively less

risky and increases comfort from incremental

balance sheet mix perspective.

Core PPP growth to be driven by margins: Healthy

NII (NIM: 3.5%+) and fee income growth (17% CAGR

over FY13-15; to be driven by strong CAGR of 24% in

retail fees) coupled with cost control would help

AXSB to maintain core PPP of 2.7/2.8% of average

assets v/s 2.6% over FY09-12.

Asset quality managed well but challenges persist:

While asset quality hiccups emerged, AXSB

effectively used higher share of non-core revenues

to maintain profitability and high PCR of ~80%. We

will be closely monitoring the threats arising out of

the macroeconomic environment on AXSB's

exposure. However, even after factoring higher

delinquency (1.5/1.6% over FY14/15 v/s 1.2% in FY13)

and credit cost (0.9% over FY14/15 v/s 0.7% in FY13),

earnings CAGR is expected to be 16%+ over FY14-15.

Axis Bank

Key challenges & near-term concerns Exposure to Infrastructure (including Power)

segment is 12.7%. With challenges in this segment,

risk stress on balance sheet could rise.

Over the last two years, AXSB has increased its share

of retail term deposits (27% v/s 17% in FY11).

However, bulk deposits still remain at 31% (41% in

FY11). Recent liquidity tightening, elevated rates

and incremental growth in secured retail loans

could impact NIM adversely.

Key news flows / triggers to watch Resolution of key issues in Infrastructure could alter

asset quality and growth outlook.

Recently, the RBI has disallowed further purchase

of shares in FII window, as the 49% limit has been

hit. However, in our interactions, the management

has indicated that clarification is being sought on

whether ADR/GDRs are included or not.

1QFY14 highlights; outlook for FY14, FY15 1QFY14 PAT grew 22% YoY to INR14.1b (in-line). NIM

improvement (+16bp QoQ) and higher average daily

CASA ratio of 39% v/s 36% in 4QFY13 were the key

positives.

Strong trading gains of INR4.4b compensated for

the higher provisions of INR7.1b (v/s our estimate

of INR5.2b).

Stress on balance sheet increased, with gross stress

addition of INR13.7b.

Guidance for FY14: (1) Loan growth of 1.2-1.25x

industry growth, (2) Gross stress addition to be

contained within INR50b.



Promoter 33.9 33.9 37.3

Dom. Inst. 8.8 8.5 13.9

Foreign 49.0 49.3 36.1

Others 8.3 8.3 12.8

Stock info

Bloomberg Code AXSB IN



Mcap (INR b) 454.7

Mcap (USD b) 7.0

52-Wk Range (INR) 1549/927

1, 6, 12 Rel Perf (%) -10/-26/-15


Y/E March Jun-12 Sep-13 Dec-13 Mar-13 Jun-13 FY13 FY14E

NII 21,799 23,269 24,948 26,647 28,652 96,663 113,121

Change (%) 26.4 15.9 16.6 24.2 31.4 20.6 17.0

Operating Profit 19,637 21,783 23,615 27,997 28,436 93,031 108,353

Change (%) 26.0 22.7 14.7 37.4 44.8 25.2 16.5

PAT 11,535 11,235 13,472 15,552 14,089 51,794 58,254

Change (%) 22.4 22.1 22.2 21.8 22.1 22.1 12.5

NIM (Calc, %) 3.3 3.5 3.6 3.5 3.7 3.3 3.3

Loan Growth (YoY, %) 29.8 22.9 20.7 16.0 15.8 16.0 16.0

GNPA (%) 1.1 1.1 1.1 1.1 1.1 1.1 1.3

NNPA (%) 0.3 0.3 0.3 0.3 0.4 0.4 0.5

E: MOSL Estimates

29September 2 - 6, 2013


Axis Bank: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Interest Income 219,946 271,826 303,329 337,830

Interest Expense 139,769 175,163 190,208 203,668

Net Interest Income 80,177 96,663 113,121 134,162

Change (%) 22.2 20.6 17.0 18.6

Non Interest Income 54,202 65,511 75,317 87,942

Net Income 134,380 162,174 188,438 222,104

Change (%) 20.0 20.7 16.2 17.9

Operating Expenses 60,071 69,142 80,086 94,356

Pre Provision Profits 74,309 93,031 108,353 127,748

Change (%) 15.8 25.2 16.5 17.9

Provisions (excl tax) 11,430 17,504 21,406 24,059

PBT 62,878 75,527 86,947 103,689

Tax 20,456 23,733 28,692 34,217

Tax Rate (%) 32.5 31.4 33.0 33.0

PAT 42,422 51,794 58,254 69,472

Change (%) 25.2 22.1 12.5 19.3

Equity Dividend (Incl tax) 7,701 9,872 11,198 13,354

Core PPP* 70,662 84,483 98,804 117,700

Change (%) 23.4 19.6 17.0 19.1

*Core PPP is (NII+Fee income-Opex)

Balance Sheet

Y/E March 2012 2013 2014E 2015E


Reserves & Surplus 223,953 326,399 375,042 433,050

Net Worth 228,085 331,079 379,721 437,730

Deposits 2,201,043 2,526,136 2,879,795 3,340,562

Change (%) 16.3 14.8 14.0 16.0

of which CASA Dep 914,220 1,120,998 1,321,037 1,557,459

Change (%) 17.6 22.6 17.8 17.9

Borrowings 340,717 439,511 500,340 572,085

Other Liabilities & Prov. 86,433 108,881 127,509 147,751

Total Liabilities 2,856,278 3,405,607 3,887,365 4,498,128

Current Assets 139,339 204,350 249,918 284,401

Investments 931,921 1,137,375 1,251,113 1,407,502

Change (%) 29.4 22.0 10.0 12.5

Loans 1,697,595 1,969,660 2,284,805 2,696,070

Change (%) 19.2 16.0 16.0 18.0

Fixed Assets 22,593 23,556 23,797 24,650

Other Assets 64,829 70,666 77,732 85,505

Total Assets 2,856,278 3,405,607 3,887,365 4,498,128

Asset Quality (%)

GNPA (INR m) 18,063 23,934 33,779 47,682

NNPA (INR m) 4,726 7,041 10,261 14,270

GNPA Ratio 1.06 1.21 1.46 1.75

NNPA Ratio 0.28 0.36 0.45 0.53

PCR (Excl Tech. write off) 73.8 70.6 69.6 70.1

PCR (Incl Tech. Write off) 80.9 79.0 81.6 82.7

E: MOSL Estimates

Ratios (Standalone)

Y/E March 2012 2013 2014E 2015E

Spreads Analysis (%)

Avg. Yield-Earning Assets 9.0 9.3 9.0 8.7

Avg. Yield on loans 9.9 10.5 10.1 9.6

Avg. Yield on Investments 7.7 7.5 7.1 7.1

Avg. Cost-Int. Bear. Liab. 6.0 6.4 6.0 5.6

Avg. Cost of Deposits 6.0 6.4 5.9 5.4

Interest Spread 3.1 3.0 3.0 3.1

Net Interest Margin 3.3 3.3 3.3 3.4

Profitability Ratios (%)

RoE 20.3 18.5 16.4 17.0

RoA 1.6 1.7 1.6 1.7

Int. Expense/Int.Income 63.5 64.4 62.7 60.3

Fee Income/Net Income 28.2 29.1 29.4 28.7

Non Int. Inc./Net Income 40.3 40.4 40.0 39.6

Efficiency Ratios (%)

Cost/Income* 45.9 45.0 44.8 42.5

Empl. Cost/Op. Exps. 34.6 34.4 33.4 33.4

Busi. per Empl. (INR m) 124.0 120.5 118.4 119.3

NP per Empl. (INR lac) 1.5 1.5 1.4 1.5

* ex treasury and Recoveries from written off accounts

Asset-Liability Profile (%)

Loans/Deposit Ratio 77.1 78.0 79.3 80.7

CASA Ratio 41.5 44.4 45.9 46.6

Investment/Deposit Ratio 42.3 45.0 43.4 42.1

G-Sec/Investment Ratio 62.7 63.5 62.1 61.7

CAR 13.7 17.0 16.4 15.8

Tier 1 9.5 12.2 12.2 12.1

Valuation

Book Value (INR) 547.4 699.9 803.9 927.8

Change (%) 18.2 27.8 14.9 15.4

Price-BV (x) 1.8 1.4 1.2 1.0

Adjusted BV (INR) 540.0 690.1 789.6 908.0

Price-ABV (x) 1.8 1.4 1.2 1.1

EPS (INR) 102.7 110.7 124.5 148.5

Change (%) 24.4 7.8 12.5 19.3

Price-Earnings (x) 9.4 8.8 7.8 6.5

Dividend Per Share (INR) 16.0 18.0 20.5 24.5

Dividend Yield (%) 1.6 1.9 2.1 2.5

September 2 - 6, 2013 30


Company descriptionBajaj Finance (BAF) is a 61% subsidiary of Bajaj Finserv.

It has transformed from a captive two-wheeler financier

for Bajaj Auto to a diversified retail loan provider. It has

a bouquet of 10 products across consumer, SME and

commercial segments. BAF is now India's largest

financier of consumer durables and two-wheelers. As

at June 2013, BAF had AUM of INR192b.

Key investment positives BAF has transformed from a captive two-wheeler

financier to a full-fledged consumer finance

company. It has also entered into small business

loans, CE and infrastructure financing, which helps

the company to grow steadily.

It is shifting its target customer segment from the

mass segment to the affluent/mass affluent. With

tighter controls and risk management processes in

place, BAF has witnessed sharp improvement in

asset quality. Moreover, substantial AUMs in the

retail/consumer segment (~40%) have helped to

improve/maintain healthy asset quality.

As at June 2013, GNPA/NNPA were at historic lows

of 1.14%/0.25%, with 78% PCR, giving adequate

cushion to absorb any asset quality shock.

Key challenges & near-term concerns Moderation in economic activity leading to (1)

slowdown in consumer spending, and (2) slower

Bajaj Finance

ramp-up in new business verticals such as CE and

infrastructure financing could pose a threat to BAF's

growth and asset quality.

The SME segment constitutes ~45% of BAF's total

portfolio, which in the current environment could

lead to higher stress on the balance sheet.

Key news flows / triggers to watch Growth trends; seasonally, 1Q and 3Q are strong

quarters, led by the festive season.

Asset quality trends of retail focused businesses

like two-wheeler financing.

If Bajaj Finserv gets the banking license that it has

applied for, BAF will be converted to a bank.

1QFY14 highlights; guidance for FY14, FY15 In 1QFY14, BAF's PAT grew 27% YoY on the back of

strong 30% YoY growth in its AUMs.

Incremental growth came from the newly-launched

digital financing, including tie-ups with Apple,

Samsung, Acer, Dell and Toshiba.

For FY14, the management has guided AUM growth

of 25-30%.

We estimate sustainable RoA at ~3% and RoE at 18-

20%.

The recent capital raising of~INR7.5b will take care

of growth requirements for the next three years.



Promoter 62.1 62.1 61.1

Dom. Inst. 9.7 11.2 12.1

Foreign 9.7 7.6 10.1

Others 18.6 19.1 16.7

Stock info

Bloomberg Code BAF IN


Share Price (INR) 1,092

Mcap (INR b) 54.3

Mcap (USD b) 0.8

52-Wk Range (INR) 1,591/991

1, 6, 12 Rel Perf (%) -10/-8/1



NII 4,377 4,408 5,041 5,058 5,969 17,191 22,474

Change(%) 41.6 35.9 26.6 31.4 36.4 37.5 30.7

Operating profit 2,384 2,437 2,882 2,834 3,307 10,534 13,794

Change(%) 41.2 40.9 35.1 40.6 38.8 39.2 30.9

PAT 1,387 1,287 1,608 1,638 1,757 5,913 7,471

Change(%) 52.8 47.3 34.0 51.3 26.7 45.5 26.4

AUM growth 60.5 52.6 41.3 35.4 32.8 35.4 30.0

RoA 3.6 4.4 3.6 4.0 4.0 3.8 3.7

GNPA 0.0 1.1 1.0 1.1 1.1 1.1 1.3

E: MOSL Estimates

31September 2 - 6, 2013


Bajaj Finance: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Interest Income 19,963 29,248 36,932 46,197

Interest Expended 7,462 12,057 14,458 18,243


Change (%) 36.9 37.5 30.7 24.4

Other Operating Income 1,668 1,689 1,864 2,050

Other Income 89 177 101 121

Net Income 14,257 19,057 24,439 30,126

Change (%) 37.7 33.7 28.2 23.3


Operating Income 7,566 10,534 13,794 17,352

Change (%) 31.7 39.2 30.9 25.8

Provisions and W/Offs 1,544 1,818 2,725 3,999

PBT 6,022 8,716 11,069 13,353

Tax 1,958 2,803 3,597 4,340

Tax Rate (%) 32.5 32.2 32.5 32.5

PAT 4,064 5,913 7,471 9,013

Change (%) 64.6 45.5 26.4 20.6

Proposed Dividend 496 747 1,121 1,352


Y/E March 2012 2013 2014E 2015E

Capital 413 498 498 498


Net Worth 20,336 33,670 39,830 47,262

PreferenceCapital

Borrowings 102,264 133,490 174,138 231,255

Change (%) 52.4 30.5 30.4 32.8

Other liabilities & provisions 6,667 11,051 12,156 13,372

Total Liabilities 129,267 178,211 226,124 291,888

Investments 55 53 58 64

Change (%) -2.3 -4.0 10.0 10.0

Advances 122,831 167,440 217,672 278,620

Change (%) 68.9 36.3 30.0 28.0

Net Fixed Assets 1,388 1,762 1,772 1,782

Other assets 4,993 8,957 6,622 11,422

Total Assets 129,267 178,211 226,124 291,888

Assumptions (%)

Deposit Growth 52.4 30.5 30.4 32.8

Advances Growth 68.9 36.3 30.0 28.0

Investments Growth -2.3 -4.0 10.0 10.0

Dividend 13.9 17.5 26.3 31.8

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E


Yield on Advances 20.4 20.2 19.5 19.0

Cost of borrowings 8.8 10.2 10.0 9.3




RoE 24.0 21.9 20.3 20.7

RoA 3.8 3.8 3.7 3.5

Int. Expended/Int.Earned 37.4 41.2 39.1 39.5

Secur. Inc./Net Income 11.7 8.9 7.6 6.8


Op. Exps./Net Income 46.9 44.7 43.6 42.4

Empl. Cost/Op. Exps. 28.4 28.8 27.6 27.6


Loans/Borrowings Ratio 120.1 125.4 125.0 120.5

CAR 17.5 22.0 21.0 20.0

Tier 1 15.0 18.7 18.0 17.0

Valuation (x)

Book Value (INR) 487 676 800 949

Price-BV (x) 2.2 1.6 1.4 1.2

Adjusted BV (INR) 487.0 676.4 800 949

Price-ABV (x) 2.2 1.6 1.4 1.2

EPS (INR) 98.4 118.8 150.1 181.1

EPS Growth (%) 45.9 20.8 26.4 20.6


OPS (INR) 183.1 211.6 277.1 348.6

OPS Growth (%) 16.8 15.6 31.0 25.8

Price-OP (x) 6.0 5.2 3.9 3.1

Dividend per Share (INR) 12.0 15.0 22.5 27.2

Dividend Yield (%) 1.1 1.4 2.1 2.5

September 2 - 6, 2013 32


Company descriptionBank of Baroda (BOB) is the second largest state-owned

bank, with balance sheet size of INR5.5t, 4,289 domestic

branches and customer base of 54m+. Its overseas

branch network extends to over 25 countries and it has

100 overseas branches/offices, which contribute 31%+

of its overall business.

Key investment positives & long-term prospects Liquidity on balance sheet: BOB is one of the few

banks where domestic deposit growth (16.7% YoY)

has been much stronger than loan growth (10% YoY),

creating excess liquidity in balance sheet (domestic

CD ratio of 66%). Redeployment of funds and easing

of stress could help NIM. We expect NIM to be

stable/improve from 1QFY14 levels of 2.4%.

Challenging environment but management

confident of containing stress addition: Like its

peers, BOB faced asset quality issues. Its net stress

loans (ex SEBs and AI) were at 6.7% v/s PNB's 10.7%,

CBK's 6.6% and UNBK's 6%. The economic

environment remains challenging, but BOB is

confident of improving asset quality in 2HFY14.

Strong capitalization, with core tier-I ratio of ~9%.

BOB has also utilized higher trading gains to create

(a) INR920m full-year requirement of additional

provisions of 75bp on restructured loans, and (b)

higher provisions for expected changes in AS-15

assumptions, which could provide cushion to

earnings, going forward.

Bank of Baroda

Key challenges & near-term concerns 30% of overall loans are from overseas portfolio.

Increased volatility in forex rates and RBI concerns

over un-hedged forex exposures could impact asset

quality/ earnings.

BOB's exposure to Metals (14.5% of domestic loans)

and Power ex-SEBs (10.5% of domestic loans)

remains high. These segments are currently facing

severe challenges and could throw negative

surprises, going forward.

Key news flows / triggers to watch Relatively lower AFS portfolio of 21% (v/s 40-50%

for some peers), with higher cut-off yield of 8.1%,

would help BOB contain MTM losses in an adverse

environment.

1QFY14 highlights; outlook for FY14, FY15 BOB's 1QFY14 PAT increased 3% YoY (14% QoQ) to

INR11.7b (15% above estimate). Stress addition

remained high at INR44.7b (1.4% of loans) - fresh

restructuring of INR23b and gross slippages of

INR21.7b.

Guidance for FY14: (1) Loan and deposit growth to

be 2-3% higher than the industry average, (2)

Domestic NIM of 3% and overseas NIM of 1.5%

(1.32% in 1QFY14) by 4QFY14, (3) Slippages to be

contained at the current levels for the next quarter

and to improve, thereafter.



Promoter 55.4 55.4 54.3

Dom. Inst. 19.0 17.8 19.7

Foreign 15.8 17.2 14.3

Others 9.8 9.6 11.6

Stock info

Bloomberg Code BOB IN



Mcap (INR b) 193.9

Mcap (USD b) 3.0


1, 6, 12 Rel Perf (%) -12/-33/-31



NII 27,981 28,623 28,409 28,140 28,891 113,153 122,157

Change (%) 21.8 11.5 7.0 0.6 3.3 9.7 8.0


Change (%) 23.2 11.4 -13.6 5.1 8.7 4.9 3.3

PAT 11,389 13,014 10,116 10,289 11,679 44,807 41,213

Change (%) 10.3 11.6 -21.6 -32.2 2.5 -10.5 -8.0

NIM (Calc, %) 2.6 2.6 2.5 2.3 2.2 2.4 2.2

Loan Growth YoY (%) 23.0 22.2 14.8 14.2 12.4 14.2 13.0

GNPA (%) 1.8 2.0 2.4 2.4 3.0 2.4 3.3

NNPA (%) 0.7 0.8 1.1 1.3 1.7 1.3 2.2

OSRL (%) 6.3 6.7 6.8 6.1 6.4 6.1

E: MOSL Estimates

33September 2 - 6, 2013


Bank of Baroda: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Interest Income 296,737 351,967 394,480 435,013



Change (%) 17.2 9.7 8.0 18.9


Net Income 137,393 149,459 163,859 192,108

Change (%) 18.3 8.8 9.6 17.2



Change (%) 22.9 4.9 3.3 21.3


PBT 60,258 48,312 50,880 61,560

Tax 10,188 3,505 9,667 11,696

Tax Rate (%) 16.9 7.3 19.0 19.0

PAT 50,070 44,807 41,213 49,864

Change (%) 18.0 -10.5 -8.0 21.0


Core PPP* 69,588 72,278 71,739 89,446

Change (%) 21.0 3.9 -0.7 24.7



Y/E March 2012 2013 2014E 2015E



Net Worth 274,769 319,694 351,305 389,550

Deposits 3,848,711 4,738,833 5,307,493 6,103,617

Change (%) 26.0 23.1 12.0 15.0

of which CASA Dep 1,035,239 1,199,809 1,340,866 1,512,888

Change (%) 18.2 15.9 11.8 12.8

Borrowings 235,731 265,793 306,607 354,131



Current Assets 641,685 853,989 955,424 1,091,690

Investments 832,094 1,213,937 1,335,331 1,535,631

Change (%) 16.5 45.9 10.0 15.0

Loans 2,873,773 3,281,858 3,708,499 4,264,774

Change (%) 25.7 14.2 13.0 15.0

Fixed Assets 23,415 24,531 25,725 26,618

Other Assets 102,247 97,039 106,743 117,418

Total Assets 4,473,215 5,471,354 6,131,722 7,036,131

Asset Quality (%)

GNPA (INR m) 44,648 79,826 122,839 156,365

NNPA (INR m) 15,436 41,920 80,288 100,512

GNPA Ratio 1.54 2.40 3.31 3.67

NNPA Ratio 0.54 1.28 2.16 2.36



E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E










RoE 22.1 16.1 13.1 14.2

RoA 1.2 0.9 0.7 0.8





Cost/Income* 40.3 42.5 46.8 43.1

Empl. Cost/Op. Exps. 57.9 58.0 59.3 58.2

Busi. per Empl. (Rs m) 143.0 171.0 183.5 192.6

NP per Empl. (Rs lac) 1.2 1.0 0.9 1.0

* ex treasury and RWO



CASA Ratio 26.9 25.3 25.3 24.8



CAR 14.7 13.3 12.6 11.6

Tier 1 10.8 10.1 9.7 9.1

Valuation (x)

Book Value (INR) 620.9 707.3 783.7 875.9

Change (%) 23.8 13.9 10.8 11.8

Price-BV (x) 0.7 0.7 0.6 0.5

Adjusted BV (INR) 596.6 642.8 660.2 721.3

Price-ABV (x) 0.8 0.7 0.7 0.6

EPS (INR) 121.4 106.0 97.5 118.0

Change (%) 12.4 -12.7 -8.0 21.0



Dividend Yield (%) 3.7 4.7 4.2 5.1

E: MOSL Estimates

September 2 - 6, 2013 34


Bharat Petroleum Corporation

Company descriptionA Fortune 500 company, Bharat Petroleum Corp Ltd

(BPCL) has interests in oil refining and marketing of

petroleum products. It is the third largest refining

company in India with a capacity of 12mmtpa at its

Mumbai facility and 9.5mmtpa at Kochi. BPCL has

majority stake (63%) in Numaligarh Refinery, a 3mmtpa

refinery in the north-east India. It also operates a

6mmtpa refinery at Bina in JV with Oman Oil Co. BPCL

has investments in IGL (22.5%) and Petronet LNG

(12.5%). BPCL is a state-owned firm in which the

government of India holds 54.93%.

Key investment positives & long-term prospects Diesel reforms to lead to significant cut in under-

recovery: The recently-announced diesel reforms

(a) increasing diesel prices by INR0.45/lt every

month and (b) market pricing for bulk buyers would

lead to a significant cut in under-recovery (~40%

reduction in under-recovery in FY15E over FY13).

BPCL's profitability continues to be determined by

the quantum of under-recovery and sharing

mechanism, rather than fundamentals.

Expect earnings from the INR114b 6mmt Bina

refinery (BPCL stake 49%) to get a boost post the

planned debottlenecking in the coming years.

BPCL's E&P portfolio likely to add substantial value

as it completes the appraisal program and gives the

resource/reserve numbers.

Key challenges & near-term concerns Continued high debt due to delays in subsidy

compensation by the Government.

Diesel deregulation delay and ad-hoc subsidy

sharing a medium term concern. Outlook on

marketing margin and market share in a likely

scenario of diesel deregulation.

Improved GRM performance (planned INR150b,

6mmt expansion/upgradation project at Kochi).

Key news flows / triggers to watch E&P Business: (a) reserve certification and final

investment decision at Mozambique and (b) clarity

on reserves in Brazil (spent USD1.1b till date in E&P,

to spend annual USD300m in FY14/FY15).

1QFY14 highlights; guidance for FY14, FY15 While upstream companies compensated BPCL by

INR36.7b in 1QFY14, the Government provided

INR19.2b, implying a net under-recovery of INR5.4b

for the company.

1QFY14 reported GRM stood at USD4.1/bbl,

compared to USD2.6/bbl in 1QFY13 and USD6/bbl in

4QFY13, against reported GRM of USD2.6/bbl by HPCL

and USD1.7/bbl by IOC.

BPCL expects 100% utilization for its JV refinery, Bina.

Interest cost is likely to decline in the coming years

due to ongoing diesel reforms.



Promoter 55.8 55.8 55.8

Dom. Inst. 16.1 16.6 18.1

Foreign 10.3 10.4 9.0

Others 17.9 17.2 17.0

Stock info

Bloomberg Code BPCL IN



Mcap (INR b) 214.0

Mcap (USD b) 3.3


1, 6, 12 Rel Perf (%) -5/-19/-18

Quarterly Performance (INR Billion)


Operating Income 545 569 623 663 587 2,400 2,355

Change (%) 18.2 34.5 6.0 2.5 7.7 13.3 -1.9

EBITDA -82 42 23 66 9 48 56

Change (%) nm nm -38.8 29.6 nm 26 15

EBITDA Margin (%)-15.0 7.4 3.6 9.9 1.5 2.0 2.4

Reported PAT -88 50 16 48 2 26 19

Adjusted PAT -88 50 16 48 2 26 19

Change (%) nm nm -47.5 21.1 nm -15.2 -15.2

PAT Margin (%) nm nm nm nm nm 1.1 0.8

Key operating Metrics

GRM (USD/bbl) 2.6 6.4 4.8 6.0 4.1 5.0 4.5

Gross under recovery 116 90 94 90 61 390 293

Upstream sharing 37 36 36 60 37 168 144

Oil Bonds 0 72 60 87 19 219 149

Net Under/(Over) rec. 80 -18 -2 -57 5 2 0

As a % of Gross 68.5 -20.3 -2.3 -63.2 8.9 0.6 0.0

E: MOSL Estimates; nm - Not Meaningful

35September 2 - 6, 2013


Bharat Petroleum Corporation: Financials and valuation

Income Statement (Consolidated) (INR Million)

Y/E March 2012 2013 2014E 2015E

Net Sales 2,121,396 2,421,810 2,485,241 2,575,474

Change (%) 38.1 14.2 2.6 3.6

Finished Gds Purchase 918,786 1,023,115 1,101,568 1,197,137

RM & Other exp 1,030,487 1,191,085 1,235,484 1,219,764

Other oper. expenses 123,996 140,888 77,550 87,787

EBITDA 48,127 66,722 70,640 70,786

% of Net Sales 2.3 2.8 2.8 2.7

Depreciation 24,108 24,627 27,326 28,964

Interest 22,591 25,183 21,712 16,954

Other Income 14,567 15,290 11,420 13,255

PBT 15,994 32,202 33,021 38,123

Tax 7,482 12,841 10,395 11,767

Rate (%) 46.8 39.9 31.5 30.9

Minority Interest 705 553 451 446

PAT 7,808 18,808 22,175 25,910

Adj. PAT 7,808 18,808 22,175 25,910

Change (%) -52.2 140.9 17.9 16.8


Y/E March 2012 2013 2014E 2015E

Share Capital 7,231 7,231 7,231 7,231

Reserves 151,568 161,070 176,309 193,928

Net Worth 158,799 168,301 183,540 201,159

Minority interest 10,351 10,905 11,355 11,801

Loans 301,531 260,230 231,967 197,127

Deferred Tax 16,778 16,778 16,625 16,474


Gross Fixed Assets 416,676 448,221 475,188 499,731

Less: Depreciation 174,350 198,977 226,304 255,267

Net Fixed Assets 242,326 249,244 248,884 244,464

Capital WIP 45,342 43,872 25,342 25,342

Investments 78,906 87,032 125,112 140,112

Intangibles 7,556 7,556 7,556 7,556

Inventory 210,971 206,981 200,987 204,891

Debtors 52,010 33,898 32,826 34,650

Cash & Bank Balance 13,263 4,531 13,992 27,456

Loans & advances 29,471 29,488 29,488 29,488

Other Current Assets 98,290 98,290 65,758 25,758

Liabi l i t ies 271,434 286,542 290,499 297,000

Provisions 19,243 18,137 15,959 16,157



E: MOSL Estimates


FY12 FY13 FY14E FY15E

Exchange rate 47.9 54.5 57.5 57.0

Marketing sales (mmt) 31.1 33.3 34.6 36.0

Refinery throughput (mmt) 22.9 23.2 23.2 23.2

GRM (USD/bbl) 3.2 5.0 4.5 5.6

Singapore GRM (USD/bbl) 8.2 7.7 7.5 7.5

Prem/(disc) -5.1 -2.7 -3.0 -1.9

Ratios

Y/E March 2011 2012 2013E 2014E

Basic (INR)

EPS 10.8 26.0 30.7 35.8

Cash EPS 44.1 60.1 68.5 75.9

Book Value 219.6 232.8 253.8 278.2

Dividend 5.5 11.0 8.2 9.8

Payout (incl. Div. Tax.)* 35.5 35.2 35.3 35.3

Valuation (x)

P/E 26.7 11.1 9.4 8.0

Cash P/E 6.5 4.8 4.2 3.8

EV / EBITDA 10.7 7.2 6.3 5.6

EV / Sales 0.2 0.2 0.2 0.2

Price / Book Value 1.3 1.2 1.1 1.0

Dividend Yield (%) 1.9 3.8 2.8 3.4


RoE 5.0 11.5 12.6 13.5

RoCE 5.2 8.9 9.6 9.6

Turnover Ratios

Debtors (No. of Days) 7 6 5 5


Leverage Ratio

Debt / Equity (x) 1.9 1.5 1.3 1.0

*Based on standalone


Y/E March 2012 2013 2014E 2015E


Depreciation 24,108 24,627 27,326 28,964

Interest Paid 22,280 25,183 21,712 16,954


Other operating items 3,946 0 0 0

(Inc)/Dec in Wkg. Cap. -40,380 36,088 41,377 40,971

CF from Op. Activity 19,067 105,259 112,888 113,093

(Inc)/Dec in FA & CWIP -42,175 -30,075 -26,966 -24,544

(Pur)/Sale of Invest. 19,417 -8,126 -19,550 -15,000

CF from Inv. Activity -22,759 -38,201 -46,516 -39,544

Net Inc / (Dec) in Debt -14,852 -41,301 -28,263 -34,840

Interest paid -21,940 -25,183 -21,712 -16,954

Dividends Paid -6,502 -9,306 -6,937 -8,290

Other Fi. Activities -493 0 0 0


Inc / ( Dec) in Cash -47,479 -8,732 9,461 13,465

Net Cash/(Debt) adj.for ST borrowing 60,747 13,263 4,531 13,992

Closing Balance 13,269 4,531 13,992 27,456

September 2 - 6, 2013 36


Company descriptionBharti Airtel (BHARTI) is an integrated telecom operator,

with presence in wireless, fixed line and broadband,

long distance, enterprise, and passive infrastructure

across India, Sri Lanka, Bangladesh and Africa. BHARTI

is the largest Indian wireless operator, with revenue

market share of ~30% and population coverage of 86%.

Post the acquisition of Zain’s Africa business, BHARTI is

currently the fourth largest wireless company globally

by subscribers.

Key investment positives & long-term prospects Ongoing sector consolidation is driving RPM/margin

improvement. BHARTI is well placed to benefit,

given its relatively stronger balance sheet and FCF

generation. We expect 14% consolidated EBITDA

CAGR and 57% PAT CAGR over FY13-16, driven by

7%/4% CAGR in mobile traffic/RPM.

BHARTI is the market leader in the Indian wireless

industry, with a revenue market share of ~30% and

subscriber market share of ~20%.

BHARTI is well positioned to capture rural growth

by leveraging its deep coverage and favorable

frequency allocation.

Data traffic and revenues have gained significant

momentum in the last 4-5 quarters. While BHARTI’s

Indian wireless data revenue contribution has

improved by 4.3% to 7.4% in the past one year, data

contribution remains significantly below

international benchmarks.

Bharti Airtel

Key challenges & near-term concerns Depreciation of the INR v/s the USD remains a

challenge, given BHARTI’s ~USD10b USD-denominated

liabilities. Every INR1 change in INR/USD impacts

BHARTI’s net debt by INR10b (INR2.5/share).

Every 5% appreciation in USD (assuming other things

remained constant) would have impacted FY13 PBT

by INR6.9b (1.4%).

In the last six months, BHARTI and other

incumbents’ monthly net subscriber additions have

been sluggish while those for the challengers have

been improving. Given the recent RPM increases

(4-6% QoQ), we would watch for the net adds trend

to ascertain whether this is driven by opening up

of any pricing advantage.

Key news flows / triggers to watch TRAI recommendations on reserve price and other

modalities of the upcoming spectrum auction.

RPM expansion, post the seasonally weak 2QFY14.

1QFY14 highlights; outlook for FY14, FY15 EBITDA growth of 19% YoY and 8% QoQ in 1QFY14 to

INR37.6b, led by second consecutive quarter of

strong performance in the Indian wireless business.

RPM expansion of 4% QoQ; traffic growth of 2%.

Consolidated EBITDA CAGR of 16% during FY13-15.

The stock trades at EV/EBITDA of 7.3x FY14E and 5.9x

FY15E. Buy with a target price of INR450, based on

9x FY15E EV/EBITDA for India (ex-tower), 6x FY15E

EV/EBITDA for Africa, 15% discount to fair value for

BHIN and INR188b (INR47/share) for potential

spectrum liability.



Promoter 43.6 45.8 45.7

Dom. Inst. 8.2 8.6 8.4

Foreign 43.1 40.3 39.9

Others 5.2 5.4 6.0

Stock info

Bloomberg Code BHARTI IN



Mcap (INR b) 1253.0

Mcap (USD b) 19.3


1, 6, 12 Rel Perf (%) 3/11/23



Revenue 185,601 193,999 193,624 195,821 202,639 769,045 844,251

YoY Change(%) 9.3 12.3 4.8 4.6 9.2 7.6 9.8

EBITDA 54,856 59,369 57,749 60,605 65,449 232,579 271,500

YoY Change(%) -3.9 2.1 -3.1 -2.8 19.3 -1.9 16.7

EBITDA Margin (%) 29.6 30.6 29.8 30.9 32.3 30.2 32.2

Adjusted PAT 7,622 7,212 2,836 5,086 6,889 22,757 32,628

YoY Change(%) -37.3 -29.8 -72.0 -49.4 -9.6 -46.6 43.4

India

Mobile Traffic (B Min)239 234 241 253 258 968 1,042

Mobile RPM(INR/min)42.66 42.59 42.55 42.36 44.02 42.43 44.54

Africa

ARPU (USD/month) 6.5 6.4 6.2 5.9 5.5 6.3 5

EBITDA margin (%) 25.8 27.1 26.5 25.4 26.7 26.2 27.0

E: MOSL Estimates

37September 2 - 6, 2013


Bharti Airtel: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Revenues 714,507 769,045 844,251 916,627

Change (%) 20.2 7.6 9.8 8.6

Total Expenses 477,385 536,466 572,750 606,192

EBITDA 237,122 232,579 271,500 310,435

% of Gross Sales 33.2 30.2 32.2 33.9

Depn. & Amortization 133,680 148,148 161,584 170,268

EBIT 103,442 84,431 109,917 140,167

Net finance cost 38,185 40,085 39,506 36,195

Other Income -73 3,506 3,633 4,236

PBT 65,184 47,852 74,043 108,208

Tax 22,602 25,183 35,754 47,284

Rate (%) 34.7 52.6 48.3 43.7

Minority Interest -13 -88 2,029 2,401

Adjusted PAT 42,595 22,757 36,260 58,523

Balance Sheet

Y/E March 2012 2013 2014E 2015E

Share Capital 18,988 18,988 19,987 19,987

Add. Paid up Capital 56,499 56,499 123,455 123,455

Reserves 430,626 427,729 453,164 504,935

Net Worth 506,113 503,216 596,606 648,377

Loans 690,232 667,363 733,800 747,484

Minority Interest 27,695 40,886 44,927 47,327



Capital Employed 1,274,821 1,269,932 1,441,617 1,511,338

Gross Block 1,776,560 1,898,675 2,011,423 2,134,968

Less : Depreciation 440,740 612,011 625,761 792,834

Net Block 1,335,820 1,286,663 1,385,662 1,342,134

Other Non-Cur. Assets 86,711 108,685 159,198 162,873

Curr. Assets 148,084 196,906 264,481 399,758

Inventories 1,308 1,109 1,605 1,743

Debtors 63,735 67,824 61,562 66,374


Short-term investments 18,934 65,546 116,379 161,379


Curr. Liab. & Prov. 295,795 322,321 367,724 393,427

Creditors 243,461 273,147 312,598 338,047

Other Current Liabilities 52,334 49,174 55,126 55,380

Net Curr. Assets -147,710 -125,416 -103,243 6,331

Appl. of Funds 1,274,821 1,269,932 1,441,617 1,511,338

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 11.2 6.0 9.2 14.7

Cash EPS 46.5 45.0 50.1 57.3

Book Value 140.7 143.4 162.3 174.2

DPS 1.1 0.6 0.9 1.5

Payout %(Incl.Div.Taxes) 10.0 10.0 10.0 10.0

Valuation (x)

P/E 28.3 53.0 34.7 21.7

Cash P/E 6.8 7.1 6.4 5.6

EV/EBITDA 8.0 7.9 7.3 5.9

EV/Sales 2.6 2.3 2.2 1.9

Price/Book Value 2.3 2.2 2.0 1.8

Dividend Yield (%) 0.4 0.2 0.3 0.5


RoE 8.1 4.2 6.1 8.8

RoCE 6.2 4.3 5.3 6.5

Turnover Ratios

Debtors (Days) 33 32 27 26

Asset Turnover (x) 0.65 0.71 0.79 0.86

Leverage Ratio

Net Debt/Equity (x) 1.2 1.1 0.9 0.7


Y/E March 2012 2013 2014E 2015E

Op.P/L bef Tax 237,122 232,579 271,500 310,435

Other Income -73 3,506 3,633 4,236

Interest Paid -38,185 -40,085 -39,506 -36,195


(Inc)/Dec in Wkg. Cap. -18,280 21,448 50,635 14,462

CF from Op.Activity 154,854 186,018 247,015 245,654

(inc)/Dec in FA + CWIP -180,757 -98,991 -260,582 -126,739

(Pur)/Sale of Inv. -11,990 -58,141 -96,033 -45,000

CF from Inv.Activity -192,748 -157,132 -356,615 -171,739

Issue of Shares -19,791 -21,242 64,572 94

Inc/(Dec) in Debt 73,524 -22,869 66,437 13,684

Other Financing Act. -5,113 11,005 -1,614 -5,853

CF from Fin.Activity 48,620 -33,106 129,395 7,925

Inc/(Dec) in Cash 10,725 -4,222 19,796 81,840

Add: Opening Balance 9,575 20,300 16,078 35,874

Closing Balance 20,300 16,078 35,874 117,713

September 2 - 6, 2013 38


Company descriptionBharti Infratel (BHIN) is Bharti Airtel’s passive

infrastructure subsidiary. It holds 42% stake in Indus

Towers, a JV between the top-3 GSM incumbents –

Bharti (42%), Vodafone (42%) and Idea (16%). On a

consolidated basis, it has a portfolio of 82,000 towers.

BHIN and Indus Towers together account for ~38% of

the Indian wireless tower base.

Key investment positives & long-term prospects With a tower base of ~82,000 (including Indus

Towers’ 42% share), BHIN has ~21% share in the

Indian tower industry.

3G/4G rollout is likely to provide stimulus to tower

demand in India.

Robust business model, with good revenue visibility

due to long-term contracts (5-15 years).

Marquee clients, including the top-3 GSM

incumbents in India.

We expect average sharing factor to improve from

1.9x in FY13 to 1.97x in FY16 on a consolidated basis.

While standalone sharing factor is likely to improve

from 1.81x to 1.86x, sharing factor for Indus is

expected to increase from 1.97x in FY13 to 2.07x in

FY16.

Bharti Infratel

Key challenges & near-term concerns Consolidation in the Telecom industry is a potential

headwind, as it reduces tower demand.

Sharing revenue per operator has remained largely

flat at ~INR35k/month despite 3G sites increasing

from ~9% to ~19% of 2G base for Bharti/Idea over

the past eight quarters.

Key news flows / triggers to watch Given its unleveraged balance sheet (net cash of

INR32b), BHIN might be looking for M&A

opportunities, both domestic and international.

1QFY14 highlights; outlook for FY14, FY15 Consolidated EBITDA grew ~3.1% QoQ (like-to-like

basis) to INR10.55b. EBITDA margin was 40.2%. PAT

grew ~12% QoQ (like-to-like) to INR3.58b.

Adjusted for one-offs, consolidated revenue grew

0.8% QoQ to INR26.22b, led by 1.1% increase in

rental revenue to INR16.08b.

Expect 9%/11%/17% CAGR in consolidated revenue/

EBITDA/EPS over FY13-15, driven by 4%/6% CAGR in

towers/co-locations.

The stock trades at P/E of 21.5x/18.2x FY14/15E and

EV/EBITDA of 5.9x/5.2x FY14/15E. We have a Neutral

rating, with a target price of INR156.



Promoter 79.4 79.4 N.A.

Dom. Inst. 2.4 2.1 N.A.

Foreign 9.5 9.4 N.A.

Others 8.8 9.1 N.A.

Stock info

Bloomberg Code BHIN IN



Mcap (INR b) 264.3

Mcap (USD b) 4.1


1, 6, 12 Rel Perf (%) 1 / -23 / -



Revenue 24,165 25,555 26,264 26,736 26,220 102,720 112,097

QoQ Change(%) 0.6 5.8 2.8 1.8 -1.9 8.7 9.1

EBITDA 8,859 9,578 9,816 10,049 10,550 38,302 42,417

QoQ Change(%) -2.8 8.1 2.5 2.4 5.0 8.2 10.7

EBITDA Margin(%) 36.7 37.5 37.4 37.6 40.2 37.3 37.8

Adjusted PAT 2,134 2,477 2,541 2,873 3,576 10,003 12,200

QoQ Change(%) -0.3 16.1 2.6 13.1 24.5 33.2 22.0

PAT Margin(%) 8.8 9.7 9.7 10.7 13.6 9.7 10.9

Key operating metrics

Total Towers 79,452 80,656 81,389 82,083 82,321 82,083 85,843

Avg sharingfactor (x) 1.90 1.91 1.92 1.91 1.91 1.90 1.93

Sharing revenue

per tenanacy (INR)33,622 34,711 35,022 34,956 34,079 34,717 35,046

E: MOSL Estimates

39September 2 - 6, 2013


Bharti Infratel: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Revenues 94,521 102,720 112,097 122,098

Change (%) 11.1 8.7 9.1 8.9

Total Expenses 59,130 64,418 69,679 75,302

EBITDA 35,391 38,302 42,417 46,796

% of Gross Sales 37.4 37.3 37.8 38.3

Change (%) 13.1 8.2 10.7 10.3


EBIT 13,929 16,103 17,511 19,699

Net finance cost 4,072 3,945 4,151 4,151

Other Income 1,450 3,127 5,208 6,350

PBT 11,307 15,285 18,567 21,897

Tax 3,799 5,282 6,368 7,454

Rate (%) 33.6 34.6 34.3 34.0

Adjusted PAT 7,507 10,003 12,200 14,443

Change (%) 36.1 33.2 22.0 18.4

Balance Sheet

Y/E March 2012 2013 2014E 2015E

Share Capital 5,808 18,887 18,887 18,887


Reserves 91,849 76,206 80,553 85,686

Net Worth 145,242 171,925 176,272 181,405

Loans 31,593 32,296 32,296 32,296




Gross Block 248,571 270,041 294,333 318,702


CWIP 1,856 1,856 1,856 1,856

Fixed Assets 169,132 164,962 164,348 161,619

Other Non-Curr. Assets 23,469 25,919 28,584 31,427

Curr. Assets 42,140 86,049 94,845 106,795

Debtors 6,826 8,554 9,322 10,066

Cash & Bank Balance 481 1,267 3,802 6,754

Short-term investments 3,363 38,911 40,512 44,616


Curr. Liab. & Prov. 26,900 40,723 45,340 50,268

Creditors 4,017 7,106 8,291 9,565

Other Curr. Liabilities 22,884 33,617 37,049 40,702

Net Curr. Assets 15,240 45,326 49,505 56,528

Appl. of Funds 207,841 236,207 242,436 249,573

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 4.3 5.6 6.5 7.6

Cash EPS 16.6 18.0 19.6 22.0

Book Value 83.4 91.0 93.3 96.0

DPS 0.0 4.8 4.2 4.9


Valuation (x)

P/E 25.1 21.7 18.3

Cash P/E 7.8 7.1 6.4

EV/EBITDA 6.7 6.0 5.2

EV/Sales 2.5 2.3 2.0

Price/Book Value 1.5 1.5 1.5

Dividend Yield (%) 3.5 3.0 3.5


RoE 5.3 6.3 7.0 8.1

RoCE 4.8 5.6 6.2 7.0

Turnover Ratios


Asset Turnover (x) 0.59 0.68 0.77 0.86

Leverage Ratio

Net Debt/Equity (x) 0.2 0.2 0.2 0.1

Cash Flow Statement

Y/E March 2012 2013 2014E 2015E

Op.P/L bef Tax 35,391 38,302 42,417 46,796

Other Income 1,450 3,127 5,208 6,350

Interest Paid -4,072 -3,945 -4,151 -4,151


(Inc)/Dec in Wkg. Cap. -4,799 4,515 -1,112 -1,113


(inc)/Dec in FA + CWIP -11,046 -18,029 -24,292 -24,369

(Pur)/Sale of Invest. -908 -35,548 -1,601 -4,104

Other invest. activity/adj -2,214 -16,992 0 0

CF from Inv.Activity -14,168 -70,569 -25,893 -28,473

Issue of Shares 0 42,326 0 0

Inc/(Dec) in Debt -11,046 704 0 0

Dividend paid 0 -8,654 -7,853 -9,309

CF from Fin.Activity -11,046 34,375 -7,853 -9,309

Inc/(Dec) in Cash 344 786 2,535 2,952

Add: Opening Balance 137 481 1,267 3,802

Closing Balance 481 1,267 3,802 6,754

September 2 - 6, 2013 40


Company descriptionBiocon (BIOS) is an integrated biotechnology company

encompassing all the three critical stages of drug

development - discovery, development and

manufacturing, and commercialization of

biopharmaceuticals. With over 25 years of expertise in

fermentation technology, company has built a strong

presence in lucrative high-growth segments like statins,

immuno-suppressants and anti-diabetes.

Key investment positives & long-term prospects BIOS is well placed to take advantage of emerging

opportunities in the biopharmaceutical space

backed by established capabilities along the drug

value chain.

Biogenerics in emerging markets followed by

regulated markets and contract research will be a

key growth driver for the company in the short-to

medium term.

Biogenerics supplies to regulated markets through

partners will be the key long term growth driver.

Potential out-licensing of oral insulin NCE and

listing of Syngene offer option value.

Key challenges & near-term concerns Significant capex and investments to fund future

initiatives may temper down earnings growth in the

short term.

Biocon

Higher R&D costs and higher expenses linked to

scale-up of domestic formulations business will

continue to temper down earnings growth.

Genericization of Atorvastatin in the US market

could impact offtake of Simvastatin in the long

term, as the former is supposedly a better therapy

for cholesterol control. This is likely to negatively

impact BIOS as it continues to hold a significant

market share in the Simvastatin API market.

Key news flows / triggers to watch Update on registration for its Rh-insulin with EU

regulatory authorities. We note that Rh-insulin is

the closest to launch in a regulated market, among

company's other insulin programs, and will mark

an important milestone for it.

Launch of Atorvastatin by its partners in the US

generic market.

1QFY14 highlights; outlook for FY14, FY15 Though BIOS does not give specific guidance on an

annual basis, it has charted a growth plan to achieve

USD700m/USD1b by FY15/FY18 to be driven by

Insulins and MAbs.

We have factored 15.5% revenue CAGR, 16.5%

EBITDA CAGR and 14% EPS CAGR over FY13-15E.



Promoter 61.0 61.0 60.9

Dom. Inst. 8.0 9.0 11.1

Foreign 10.6 8.8 4.0

Others 20.4 21.3 24.0

Stock info

Bloomberg Code BIOS IN



Mcap (INR b) 67.8

Mcap (USD b) 1.0


1, 6, 12 Rel Perf (%) 19/27/37




Change (%) 30.6 16.5 22.6 2.3 20.5 19.1 19.1

EBITDA 1,227 1,165 1,417 1,045 1,462 5,430 6,266

Change (%) 2.0 -12.7 11.2 -32.4 19.2 4.9 15.4

EBITDA Margin (%) 21.3 19.7 22.3 16.7 21.0 21.8 21.2

Reported PAT 788 896 917 1,911 935 5,088 3,770

Adjusted PAT 788 896 917 1,911 935 5,088 3,770

Change (%) 12.5 4.6 26.4 73.7 18.7 50.3 -25.9

PAT Margin (%) 13.7 15.1 14.5 30.6 13.5 20.5 12.7


Bio-Phar. SalesGr. (%)29.5 22.2 29.2 2.4 20.9 22.0 17.7

Licens. Inc. (INR m) 139.0 0.0 88.0 19.0 76.0 246.0 862.5

Gross Margins (%) 51.6 50.8 51.6 112.3 50.6 48.6 50.3

E: MOSL Estimates

41September 2 - 6, 2013


Biocon: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 16,764 19,281 22,582 25,704

Contract Research 4,101 5,572 7,021 8,284

Net Income 20,865 24,853 29,603 33,988

Change (%) -24.7 19.1 19.1 14.8


EBITDA 5,174 5,430 6,266 7,363

Change (%) -11.8 4.9 15.4 17.5

Margin (%) 24.8 21.8 21.2 21.7

Depreciation 1,744 1,793 2,058 2,614

EBIT 3,430 3,637 4,208 4,749

Int. & Finance Charges 122 81 100 162

Other Income - Rec. 618 2,546 926 1,062

PBT 3,926 6,101 5,034 5,648

Tax 541 975 1,158 1,299

Tax Rate (%) 13.8 16.0 23.0 23.0

Minority Interest 0.0 38.3 106.2 125.5

Adjusted PAT 3,384 3,271 3,770 4,224

PAT 3,384 5,088 3,770 4,224

Change (%) -7.6 50.3 -25.9 12.0

Margin (%) 16.2 20.5 12.7 12.4


Y/E March 2012 2013 2014E 2015E


Revaluation Reserves 9 9 9 9

Other Reserves 21,715 25,937 28,384 31,125

Net Worth 22,724 26,946 29,393 32,134

Loans 2,571 2,488 3,988 6,488


Deferred liabilities 5754 4689 3827 2972


Gross Block 20,590 24,961 29,911 37,111

Less: Accum. Deprn. 7,852 9,672 11,730 14,344

Net Fixed Assets 12,738 15,289 18,181 22,767

Capital WIP 2,863 2,054 2,054 2,054

Investments 5,563 5,866 4,851 3,293

Intangibles 1,235 1,290 1,419 1,561

Curr. Assets 16,973 19,662 22,303 25,142

Inventory 3,783 3,984 4,461 5,122



Loans & Advances 3,040 3,852 4,866 5,587



Provisions 2,115 2,465 2,839 3,259


Appl. of Funds 31,087 34,776 37,860 42,246

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 16.9 16.4 18.8 21.1

Cash EPS 25.6 34.4 29.1 34.2

BV/Share 113.6 134.7 146.9 160.6

DPS 5.0 7.5 5.7 6.3

Payout (%) 34.3 34.5 35.1 35.1

Valuation (x)

P/E 20.0 20.7 18.0 16.1

Cash P/E 13.2 9.9 11.6 9.9

P/BV 3.0 2.5 2.3 2.1

EV/Sales 2.9 2.3 2.0 1.9

EV/EBITDA 11.5 10.6 9.6 8.6

Dividend Yield (%) 1.5 2.2 1.7 1.9

Return Ratios (%)

RoE 14.9 12.1 12.8 13.1

RoCE 13.0 17.8 13.6 13.8


Fixed Asset Turnover (x) 1.7 1.8 1.8 1.7


Inventory (Days) 66 59 55 55

Working Capital (Days) 60 52 55 55

Leverage Ratio

Current ratio 2.0 2.1 2.0 2.0

Debt/Equity 0.1 0.1 0.1 0.2


Y/E March 2012 2013 2014E 2015E

Op. Profit/(Loss) bef Tax 5,174 5,430 6,266 7,363

Interest/Dividends Recd. 618 2,546 926 1,062

Direct Taxes Paid 4,716 -2,040 -2,020 -2,154

(Inc)/Dec in WC -3,836 -1,910 -913 -661


(Incr)/Dec in FA -3,781 -3,535 -4,950 -7,200

(Pur)/Sale of Investments 149 -358 886 1,417

CF from investments -3,632 -3,893 -4,064 -5,783

Change in Net Worth 174 2,706 0 0

(Inc)/Dec in Debt -1,111 494 1,394 2,374

Interest Paid -122 -81 -100 -162

Dividend Paid -1,162 -1,755 -1,323 -1,482

CF from Fin. Activity -2,221 1,364 -30 730

Inc/Dec of Cash 819 1,496 165 556


Closing Balance 5,233 6,729 6,894 7,449

E: MOSL Estimates

September 2 - 6, 2013 42


CESC

Company descriptionCESC, an RP Sanjiv Goenka Group company, is one of

the oldest integrated power utilities in India with

presence in generation, distribution and mining.

Installed generation capacity stands at 1.2GW and

distribution network encompasses 2.5m consumers in

Kolkata and Howrah region. 1.2GW of generation

projects are under-construction and additional 5.9GW

of projects are in the pipeline. CESC has a presence in

retail business, with ~1msf area under operations under

"Spencers".

Key investment positives & long-term prospect Assured return from existing generation/

distribution business provides steady cash flows at

INR6b+ pa. In addition, management has guided for

capex of INR12b+ during FY14/15 (~INR6b each year).

CESC has spent INR11.9b for under-construction

projects of 1.2GW and has initiated development

activity for generation projects of 5.9GW.

Restructuring at Spencers led to an improvement in

gross margins and reduction in EBITDA losses to

INR872m in FY13, v/s INR1.5b in FY12. Store level

EBITDA further improved to INR61/sft/mth in

1QFY14 v/s INR43/sft/mth in 1QFY13. Further

reduction in losses/value unlocking opportunity

would be a key positive.

Firstsource Solutions (FSL) reported a profit of

INR1.5b in FY13; recent INR depreciation would be

a positive for FSL.

Key challenges & near-term concerns Continued losses at Spencer retail and funding

through standalone cash flows of CESC. Economic

slowdown could have a bearing on revival of

Spencer.

Fuel availability and visibility on PPA for balance

(0.8GW) open capacity of the 1.2GW of projects

under construction.

Key news flows / triggers to watch 51% FDI in multi-brand retail is approved, any

further development would be a positive.

Improvement in cash losses at Spencer and

improvement in store level EBITDA.

Improved visibility on return for 1.2GW of project

based on PPA (currently has not tied up for PPA in

Chandrapur (600MW) and Haldia (150MW).

Any inorganic growth opportunity, visibility in

Ranchi circle.

1QFY14 highlights; outlook for FY14, FY15 CESC's 1QFY14 PAT stood below estimate. Store

revenue growth and higher store EBITDA were key

positives.

Tariff revision for FY14 is expected is 2Q/3QFY14E.

Spencer opened two new hyper stores during the

quarter.

FSL reported a profit of INR217m during the quarter

v/s INR141m in 1QFY13.

Commercialization/profitability of Chandrapur

project.



Promoter 52.5 52.5 52.5

Dom. Inst. 17.0 17.6 16.0

Foreign 20.8 18.7 18.4

Others 9.7 11.2 13.1

Stock info

Bloomberg Code CESC IN



Mcap (INR b) 35.6

Mcap (USD b) 0.5


1, 6, 12 Rel Perf (%) -7/1/-13




Change (%) 20.0 8.3 0.8 9.7 1.1 14.1 11.6

EBITDA 2,900 3,110 2,660 4,570 3,210 13,240 14,540

Change (%) 8.6 19.6 24.9 5.8 10.7 14.4 9.8

EBITDA margin (%) 20.4 23.1 25.6 30.2 22.4 25.3 24.9

Reported PAT 1,250 1,360 1,010 2,560 1,310 6,180 6,680

Adjusted PAT 1,250 1,360 1,010 2,560 1,310 6,180 6,680

Change (%) 12.5 19.3 36.5 2.0 4.8 12.4 8.1

PAT margin (%) 8.8 10.1 9.7 16.9 9.1 11.8 11.4

Key Operating metrices

Plant PLF 90.6 90.4 77.0 66.8 89.6 81.2 82.7

Spencer area (msf) 0.98 0.96 0.91 0.88 0.96 0.88 n a

*EBITDA (INR/sft/mth) 43 57 51 50 61 50 n a

E: MOSL Estimates; * Spencer Store

43September 2 - 6, 2013


CESC: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Total Revenues 46,050 52,418 58,487 64,768

Cost of Energy purchased 6,361 9,452 10,350 12,600

Cost of fuel 17,620 17,968 19,200 20,160

Stores & spares 2,881 2,997 3,296 3,626

Employee Expenses 4,710 5,585 6,144 6,758

SG&A Expenses 3,662 3,925 5,832 7,324

EBITDA 10,817 12,492 13,665 14,300

% of Total Revenues 23.5 23.8 23.4 22.1

Depreciation 2,895 3,062 3,368 3,578

Interest 2,758 3,375 3,544 3,794

Other Income 1,769 1,680 1,700 1,987

PBT 6,933 7,735 8,452 8,914

Tax 1,390 1,550 1,772 1,784

Rate (%) 20.0 20.0 21.0 20.0

Adjusted PAT 5,543 6,185 6,680 7,131

Change (%) 18.7 11.6 8.0 6.7

Excl Spencers; fully diluted


Y/E March 2012 2013 2014E 2015E

Share Capital 1,256 1,256 1,256 1,256

Reserves and Surplus 47,304 51,044 57,008 63,423

Revaluations Reserves 11,558 12,650 12,017 11,416

Share Holder Funds 60,118 64,950 70,282 76,095

LT Borrowings 21,671 26,237 28,857 31,715

Advance against Depn. 5,660 7,142 7,142 7,142

Consumer Security Dep. 10,509 11,391 11,675 11,967

Other LT Liabilities 7,997 9,783 9,783 9,783

LT Provisions 893 1,073 1,180 1,298

Non Current Liabilities 46,730 55,626 58,637 61,906

ST Borrowings 4,328 4,922 4,430 3,987

Trade Payables 2,910 3,437 3,890 4,288


ST Provisions 884 1,200 1,339 1,483

Current Liabilities 20,427 24,726 25,891 27,094

Total Equity & Liab. 127,274 145,301 154,810 165,094

Fixed Assets 80,915 85,681 88,778 91,700

Non Current Investments 10,482 20,929 19,956 20,726

LT Loan and Advances 695 782 782 782

Other Non Current Assets 50 43 43 43

Non Current Assets 92,142 107,435 109,559 113,251

Current Investments 850 850 850 850

Inventories 2,947 3,254 3,264 3,255

Trade Receivables 9,770 12,094 12,884 12,884


ST Loan and Advances 12,215 13,377 14,377 15,377

Other Current Assets 752 577 643 712

Current Assets 35,132 37,866 45,251 51,843

Total Assets 127,274 145,301 154,810 165,094


Y/E March 2012 2013 2014E 2015E

Plant PLF 88 88 90 90

Spencer area (msf) 1.01 0.88 1.03 1.08

Spencer store EBITDA* 32 50

*(INR/sft/mth)

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS * 44.1 49.2 53.2 56.8

CEPS 67.2 73.6 80.0 85.3

Book Value 386.6 416.4 463.9 515.0

DPS 5.0 7.0 7.0 8.0

Payout (incl. Div. Tax.) 11.3 14.2 13.2 14.1

Valuation (x)

P/E 6.5 5.8 5.4 5.1

EV/EBITDA 4.9 4.7 4.1 3.7

EV/Sales 1.1 1.1 0.9 0.8


Dividend Yield (%) 1.7 2.4 2.4 2.8


RoE 12.1 12.3 12.1 11.6

RoCE 10.6 10.9 10.7 10.4

Turnover Ratios




Leverage Ratio

Debt/Equity (x) 0.5 0.6 0.6 0.6


Y/E March 2012 2013 2014E 2015E

PBT before EO Items 6,933 7,735 8,452 8,914

Add: Depreciation 2,895 3,062 3,368 3,578

Interest 2,758 3,375 3,544 3,794

Less : Direct Taxes Paid 1,390 1,550 1,772 1,784

(Inc)/Dec in WC -1,336 -354 -1,055 -914


CF from Op. incl EOI 9,860 12,268 12,539 13,590

(Inc)/dec in FA -3,561 -4,766 -3,098 -2,922

(Pur)/Sale of Investments -1,939 -10,448 974 -770


(Inc)/Dec in Net Worth -690 1,443 0 0

(Inc)/Dec in Debt -1,174 -4,867 -2,620 -2,858

(Inc)/Dec in Cust. Secu. Dep.-1,154 -882 -285 -292

Less: Interest Paid 2,758 3,375 3,544 3,794

Dividend Paid 716 1,002 716 716

CF from Fin. Activity -4,151 2,060 -4,896 -4,367

Inc/Dec of Cash 210 -885 5,519 5,531


Closing Balance 8,598 7,714 13,233 18,764

September 2 - 6, 2013 44


Coal India

Company descriptionCoal India Ltd (CIL) is a leading public sector undertaking

engaged in coal mining in India and is working on

establishing its footprint globally through MoUs/

acquisition route. CIL operates through 9 wholly-owned

subsidiaries, of which one is engaged in exploration

and feasibility study analysis. Company has total

resources of 64.3bt and proved reserves of 52.4bt, of

which extractable reserves stand at 21.7bt.

Key investment positives & long term prospect CIL has access to 64.3bt of resources, the largest in

the world. Of this, 52.4bt are proven, based on Indian

Standard Procedure (ISP) guidelines, representing

~6% share of the global proven reserves. Production

growth target for 12th plan at 615m ton.

Recent INR depreciation could aid e-auction and

beneficiated coal realizations (e-auction/

beneficiated coal realization dipped to INR2,140/

2,117 respectively in 1QFY14).

Washed coal capacity is being ramped up from

39.4mt to over 111mt, with the addition of 20 new

facilities.

Key challenges & near-term concerns The recent decline in international coal prices (at

USD70-75/ton) could impact the market linked

realizations. However, it has been nullified by INR

depreciation.

Large parts of India's coal reserves are located on

the Eastern belt, which has seen significant increase

in civil unrest by certain sections of population.

CIL has been facing headwinds for its planned

expansion, given delays in requisite environment/

forest clearances, land acquisition issues and

evacuation infrastructure.

Key news flows / triggers to watch 78GW of projects have been approved to sign FSAs

commissioned after 2009 (including projects

expected to be commissioned in FY14/15).

Though the coal regulator has been approved by

EGoM, pricing power remains with CIL.

CIL is expected to approach utilities for the coal

import to be done for domestic coal shortages.

1QFY14 highlights; Outlook for FY14, FY15 1QFY14 results were below estimates due to lower

realizations, especially in e-auction and

beneficiated coal realizations.

Company has guided for production/dispatches of

482/492mt during FY14 (CIL produced 135.6mt and

sold 153.5mt till July).



Promoter 90.0 90.0 90.0

Dom. Inst. 2.3 2.0 1.7

Foreign 5.4 5.5 5.6

Others 2.3 2.5 2.7

Stock info

Bloomberg Code COAL IN



Mcap (INR b) 1691.2

Mcap (USD b) 26.0


1, 6, 12 Rel Perf (%) -2/-16/-27




Change (%) 13.8 10.8 12.9 2.5 (0.2) 9.4 6.6

EBITDA 48,146 28,617 42,883 61,191 39,579 180,836 209,099

Change (%) (0.1) 15.5 (5.6) 61.6 (17.8) 15.6 15.6

EBITDA margin (%) 29.2 19.6 24.8 30.7 24.0 26.5 28.7

Reported PAT 44,693 30,761 40,951 53,923 37,310 173,564 192,445

Adjusted PAT 44,796 30,781 46,801 54,139 37,360 176,624 192,495

Change (%) 8.4 37.8 26.8 (10.5) (16.6) 9.9 9.0

PAT margin (%) 27.1 21.1 27.0 27.2 22.7 25.9 26.4


Production (m ton) 102 89 117 143 103 452 482

ACQ Reali.(INR/ton) 1,267 1,281 1,232 1,403 1,296 1,298 1,364

E auct. Real.(INR/ton) 2,562 2,460 2,941 2,308 2,140 2,544 2,172

E: MOSL Estimates

45September 2 - 6, 2013


Coal India: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 624,154 683,027 727,889 775,227

Change (%) 24.3 9.4 6.6 6.5


EBITDA 156,679 180,836 209,099 220,961

% of Net Sales 25.1 26.5 28.7 28.5

EBITDA/ton 359.5 399.9 434.1 430.3

Depreciation 19,692 18,130 19,313 20,876

Interest 540 452 608 571

Other Income 75,369 87,467 96,552 98,752

Extra Ordinary -911 -69 50 0

PBT 212,727 249,790 285,680 298,264

Tax 64,845 76,227 93,235 95,804

Rate (%) 30.5 30.5 32.6 32.1

PAT before Min. Int. 147,883 173,564 192,445 202,460

Reported PAT 147,883 173,564 192,445 202,460

Change (%) 36.1 17.4 10.9 5.2

Adjusted PAT 161,582 176,624 192,495 202,460

Change (%) 47.8 9.3 9.0 5.2

Excl Spencers; fully diluted


Y/E March 2012 2013 2014E 2015E

Share Capital 63,164 63,164 63,164 63,164

Reserves 341,366 421,556 498,401 579,224

Net Worth 404,530 484,720 561,565 642,387


Loans 13,054 10,778 10,131 9,523

Defferd tax Liabiity -11,941 -22,550 -22,550 -22,550




Net Fixed Assets 134,403 134,658 176,089 221,851

Capital Work in Progress 29,034 34,960 35,494 40,343

Investments 19,814 23,950 15,054 16,183

Inventory 60,713 56,178 59,868 63,762

Debtors 56,630 104,802 111,685 118,949


Loans and Advances 144,954 173,701 194,198 202,883

Cash 582,028 622,360 660,190 662,405


Provisions 209,894 124,603 142,069 149,001

Net Curr. Assets 222,928 280,017 323,145 351,619



Y/E March 2012 2013 2014E 2015E

Production (mton) 436 452 482 514

Dispatch (mton) 430 465 492 523

Relization (INR/ton)

Raw Coal 1,235 1,298 1,364 1,367

E-auction 2,599 2,544 2,172 2,195

Beneficated coal 2,228 2,300 2,183 2,206

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 23.4 27.5 30.5 32.1

Adjusted EPS 25.6 28.0 30.5 32.1

Growth (%) 47.8 9.3 9.0 5.2

Cash EPS 28.7 30.8 33.5 35.4

Book Value 64.0 76.7 88.9 101.7

DPS 10.0 14.0 15.3 16.0


Valuation (x)

P/E 10.3 9.4 8.6 8.2

Cash P/E 9.2 8.5 7.8 7.4

EV/EBITDA 7.0 5.8 4.8 4.6

EV/Sales 1.7 1.5 1.4 1.3

EV /m ton of Reserves 50.2 48.3 46.5 46.4


Dividend Yield (%) 3.8 5.3 5.8 6.1


RoE* 31.9 28.4 26.3 24.4

RoCE 57.5 56.9 56.0 50.7

Leverage Ratio

Net Debt/Equity (x) -1.4 -1.3 -1.2 -1.0

*RoE is adj for OB reserves accounts, as applicable under IFRS


Y/E March 2012 2013 2014E 2015E



Interest 540 452 608 571

Less : Direct Taxes Paid -64,845 -76,227 -93,235 -95,804

(Inc)/Dec in WC 76,585 -16,757 -5,298 -26,260


(Inc)/Dec in FA -22,286 -15,068 -50,320 -59,706

(Pur)/Sale of Investments -9,177 -4,136 8,896 -1,129


(Inc)/Dec in Net Worth -1,496 12,741 50 0

(Inc)/Dec in Debt -610 -2,276 -647 -608

(Inc)/Dec in Diff Tax Liab. 0 -10,610 0 0

Less: Interest Paid -540 -452 -608 -571

Dividend Paid -74,999 -106,115 -115,651 -121,638

Others -12,540 -9,210 -10,909 -11,782


Inc/Dec of Cash 123,964 40,332 37,829 2,215


Closing Balance 582,028 622,360 660,189 662,404

September 2 - 6, 2013 46


Container Corporation

Company descriptionContainer Corporation of India (CCRI) is a state-owned

company, having a monopoly in handling the movement

of goods in containers through the Indian Railways. It

handles ~1/3rd of the international container traffic.

CCRI has also developed an extensive network of

container depots across the country.

Key investment positives & long-term prospects CCRI is one of the best proxies to play multiple

themes such as (1) infrastructure thrust, especially

investments aimed at correcting the freight

transport modal mix, (2) reforms – GST, FDI in Retail,

and (3) ongoing structural trends –containerization,

shift from road to rail. Successful execution of the

proposed infrastructure capex and key reforms

could boost container rail traffic.

CCRI’s key strength is its ability to provide single

window facility for multimodal logistics services. It

is able to do so through its strategic JVs with its

customers (GDL/Allcargo), port operators (APM/

DPI), road haulers (TCI), air cargo (HALCON/GVK) and

shipping lines (Maersk).

Key challenges & near-term concerns Marginal 2.8% YoY increase in EXIM volumes in

1QFY14.

Anticipated slowdown in domestic cargo

movement, considering consumption slowdown.

Key news flows / triggers to watch Successful execution of retail FDI in India, leading

to increased demand for container logistics.

Commissioning of DFC, leading to increased

availability of rail infrastructure for cargo haulage.

Implementation of GST, which should be in favor

of multi-modal players like CCRI.

Increased mining activity, providing strong impetus

to logistics industry.

1QFY14 highlights; outlook for FY14, FY15 Domestic volumes increased 18% YoY mainly

because of lower base in 1QFY14.

Increased empty running lead distances on EXIM

cargo, leading to higher empty running charges of

INR585m in 1QFY14 v/s INR545m in 1QFY13.

The management has guided capex of INR11b in

FY14, of which INR3b would be for land acquisition.



Promoter 63.1 63.1 63.1

Dom. Inst. 5.4 6.3 7.1

Foreign 28.4 26.7 25.6

Others 3.2 4.0 4.3

Stock info

Bloomberg Code CCRI IN



Mcap (INR b) 137.4

Mcap (USD b) 2.1

52-Wk Range (INR) 1,230/891

1, 6, 12 Rel Perf (%) 3/12/10


Y/E March Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 FY12 FY13


Change (%) 9.3 6.1 3.5 15.0 15.2 5.9 8.5

EBITDA 2,672 2,576 2,632 2,594 2,714 10,237 10,476

Change (%) 2.9 -2.0 -5.1 15.8 1.6 1.9 2.3

EBITDA Margin (%) 25.8 24.4 24.3 21.1 22.7 25.2 23.8

Reported PAT 2,451 2,325 2,368 2,258 2,465 8,779 9,400

Adjusted PAT 2,451 2,325 2,368 2,258 2,465 8,779 9,400

Change (%) 4.7 32.5 -1.8 -0.6 -0.6 0.2 7.1

PAT Margin (%) 23.6 22.0 21.9 18.3 18.3 21.6 21.3


EXIM - Volume 532,539 528,148 522,926 568,421 547,619 2,136,000 2,152,034

Domestic-Vol. 96,346 106,175 113,894 117,237 114,006 468,311 433,652

Avg Rln per TEU 16,489 16,630 17,003 17,959 18,055 15,593 17,041

E: MOSL Estimates; * Spencer Store

47September 2 - 6, 2013


Container Corporation: Financials and valuation


Y/E March 2010 2011 2012 2013

Net Sales 37,306 38,992 41,009 44,450

Change (%) 8.1 4.5 5.2 8.4

EBITDA 9,595 10,156 10,234 10,494

Margin (%) 25.7 26.0 25.0 23.6

Depreciation 1,388 1,489 1,621 1,763

EBIT 8,208 8,667 8,613 8,731

Margin (%) 22.0 22.2 21.0 19.6


Other Income - Rec. 1,812 1,971 3,135 3,326

PBT after EO Exp. 9,980 10,588 11,693 12,026

Current Tax 2,033 1,647 2,885 2,406

Deferred Tax 171 179 152 315

Tax Rate (%) 22.1 17.2 26.0 22.6

Reported PAT 7,776 8,763 8,656 9,306

Change (%) 0.6 12.7 -1.2 7.5

Margin (%) 20.8 22.5 21.1 20.9

Balance Sheet

Y/E March 2010 2011 2012 2013


Total Reserves 41,670 48,088 54,252 60,905

Net Worth 42,970 49,388 55,552 62,205

Deferred Liabilities 2,109 2,288 2,438 2,743

Other Liabilities 0 695 449 408

Total Loans 424 296 234 385


Gross Block 30,703 33,683 35,856 40,780

Less: Accum. Deprn. 8,344 9,722 11,268 12,946

Net Fixed Assets 22,359 23,961 24,588 27,834

Capital WIP 2,064 1,069 1,151 1,884

Total Investments 1,922 1,956 2,447 3,690

Other Assets 1 2,475 3,903 3,821


Inventory 158 125 360 549

Account Receivables 197 296 303 285





Provisions 1,463 1,361 1,540 1,710


Appl. of Funds 45,503 52,667 58,673 65,740

E: MOSL Estimates; * Adjusted for treasury stocks

Ratios

Y/E March 2010 2011 2012 2013

Basic (INR)

Consol EPS 59.8 67.4 66.6 71.6

Cash EPS 70.5 78.9 79.1 85.2

BV/Share 330.6 380.0 427.4 478.6

DPS 16.3 18.0 19.2 23.3

Payout (%) 27.3 26.8 28.8 32.6

Valuation (x) *

P/E 17.4 15.5 15.6 14.6

Cash P/E 14.8 13.2 13.2 12.2

P/BV 3.2 2.7 2.4 2.2

EV/Sales 3.1 2.9 2.6 2.4

EV/EBITDA 12.1 11.1 10.6 10.1

Dividend Yield (%) 1.6 1.7 1.8 2.2

FCF per share 34.9 41.6 58.5 40.9

Return Ratios (%)

EBITDA Margins (%) 25.7 26.0 25.0 23.6

Net Profit Margins (%) 20.8 22.5 21.1 20.9

RoE 19.4 19.0 16.5 15.8

RoCE 24.7 22.9 22.3 20.4




Inventory (Days) 2.2 1.7 4.6 6.4

Debtor (Days) 1.9 2.7 2.7 2.3

Creditor (Days) 69.5 49.4 62.2 56.8

Leverage Ratio (x)


Interest Cover Ratio 210 177 160 287

* Adjusted for treasury stocks

Cash Flow Statement

Y/E March 2010 2011 2012 2013

EBIT 8,208 8,667 8,613 8,731

Depreciation 1,388 1,489 1,621 1,763

Direct Taxes Paid 1,754 1,336 2,259 1,896

(Inc)/Dec in WC -1,564 -2,793 -395 -45


(inc)/dec in FA -3,106 -2,095 -2,331 -5,741

FCF 3,171 3,931 5,248 2,813

Investment Income 1,362 1,482 2,357 2,501

CF from investments -1,985 -648 -465 -4,483

(Inc)/Dec in Debt -63 -128 -62 151

Interest Paid 39 49 54 30

Dividend Paid 2,125 2,345 2,493 3,032


Inc/Dec of Cash 2,237 3,035 4,655 1,843

Add: Beginning Bal 17,689 19,925 22,961 27,616

Closing Balance 19,925 22,960 27,616 29,460

September 2 - 6, 2013 48


Company descriptionDB Corp (DBCL) is a leading print media player, with

presence in 13 states across 4 languages. Its flagship Hindi

newspaper “Dainik Bhaskar” is the second most read in

India and the most read in Urban India. It has a collective

readership of 19.8m. Its established print business is

divided into four circles: (1) Madhya Pradesh and

Chattisgarh (MP&CG), (2) Rajasthan, (3) Gujarat, and (4)

Chandigarh, Punjab, Haryana and Himachal Pradesh

(CPHH), while emerging markets include Jharkhand

(launched in CY10) and Maharashtra (launched in CY11).

DBCL also has presence in the radio segment, with “My

FM” radio station, which is present in 7 states and 17 cities.

Key investment positives & long-term prospects DBCL has the most diversified revenue/EBITDA in

the listed print media space, with no single state

contributing over 35% of revenue/EBITDA.

Regional print companies including DBCL have

witnessed sharp ad recovery over the past three

quarters. We expect DBCL’s ad revenue growth to

improve from 6% in FY13 to 17% in FY14.

International newsprint prices are likely to remain

under pressure due to demand destruction in the

developed economies. This is positive for Indian

print companies like DBCL, as newsprint constitutes

~50% of their total costs.

DBCL delivered healthy RoE of 21% even at the

bottom of the cycle in FY13.

~55% dividend payout, translating into an attractive

dividend yield of 3.3%.

Key challenges & near-term concerns INR depreciation could impact margins on account

of higher newsprint cost.

Potential entry into new markets like Bihar could

lead to higher emerging business losses.

Key news flows / triggers to watch Further new launches after its recent new launch in

Amravati.

International newsprint prices.

Government announcement on phase-III auctions

for its radio business.

1QFY14 highlights; outlook for FY14, FY15 1QFY14 PAT grew 74% YoY to INR761m v/s our

estimate of INR557m, led by strong ad growth of

20% YoY.

EBITDA grew 74% YoY to INR1.33b; margin expanded

930bp YoY to 29.6%, led by cost savings across all

line items.

Raw material expenses increased 7% YoY to

INR1.42b. Newsprint prices increased 1% QoQ to

INR33,200/ton.

We expect 29% earnings CAGR over FY13-15, led by

ad revenue CAGR of 16% and circulation revenue

CAGR of 11%.

The stock trades at 14.3x FY14E and 11.9x FY15E EPS.

We have a Buy rating, with a target price of INR355

(18x FY15E EPS).



Promoter 75.0 75.0 81.5

Dom. Inst. 5.3 5.5 6.3

Foreign 14.8 14.5 8.2

Others 4.9 5.1 4.0

Stock info

Bloomberg Code DBCL IN



Mcap (INR b) 42.8

Mcap (USD b) 0.7


1, 6, 12 Rel Perf (%) -6/4/23

DB Corp



Revenue 3,770 3,784 4,389 3,981 4,494 15,923 18,573

YoY Change(%) 6.6 6.9 11.0 10.4 19.2 8.8 16.6

EBITDA 765 861 1,192 939 1,328 3,760 5,235

YoY Change(%) -23.8 11.6 17.1 24.0 73.7 5.9 39.2

EBITDA Margin(%) 20.3 22.7 27.2 23.6 29.6 23.6 28.2

Adjusted PAT 437 486 706 552 761 2,181 3,007

YoY Change(%) -28.5 20.7 27.6 21.7 74.3 7.9 37.8

PAT Margin (%) 11.6 12.8 16.1 13.9 16.9 13.7 16.2


Ad growth (%) -0.2 1.0 10.9 12.7 20.4 5.6 18.4

Circulation rev. gr. (%)15.5 16.1 15.7 17.9 16.9 16.2 13.4

RM cost (INR b) 1.3 1.3 1.4 1.3 1.4 5.4 6.0

% of revenue 35.3 35.2 33.0 33.6 31.6 34.2 32.1

E: MOSL Estimates

49September 2 - 6, 2013


DB Corp: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 14,638 15,923 18,573 20,798

YoY (%) 15.7 8.8 16.6 12.0

Operating expenses 11,088 12,163 13,338 14,837

EBITDA 3,550 3,760 5,235 5,961

EBITDA margin (%) 24.3 23.6 28.2 28.7

Depreciation 506 581 640 665

Interest 155 80 102 102

Other Income 115 213 214 292

PBT 3,004 3,313 4,707 5,486

Tax 982 1,132 1,700 1,865

Tax rate (%) 32.7 34.2 36.1 34.0

PAT 2,022 2,181 3,007 3,621


Adjusted PAT 2,021 2,181 3,007 3,621

Change (%) -12 8 38 20

Reported PAT 2,021 2,181 3,007 3,621


Y/E March 2012 2013 2014E 2015E

Share Capital 1,862 1,863 1,863 1,863

Share Premium 2,373 2,373 2,373 2,373

Reserves 5,036 6,056 7,388 8,945

Net Worth 9,271 10,291 11,623 13,180

Loans 2,100 1,574 1,574 1,574


Deffered Tax Liability 746 834 834 834




Net Fixed Assets 7,252 7,483 7,242 6,977

Capital WIP 681 900 900 900


Curr. Assets 7,059 7,136 9,311 11,638

Inventory 1,186 1,299 1,423 1,567

Debtors 2,484 3,083 3,816 4,273


Loans & Advances 2,026 1,564 1,824 2,043

Current Liab. & Prov. 3,321 3,617 4,219 4,724

Creditors 2,183 2,345 2,736 3,063

Prov. & other liabilities 1,137 1,272 1,483 1,661



E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

Adjusted EPS 11.0 11.9 16.4 19.7

Growth (%) -12.3 7.9 37.8 20.4

Cash EPS 13.8 15.1 19.9 23.4

Book Value 50.7 56.2 63.4 71.9

DPS 5.0 5.5 7.9 9.7

Payout (incl.Div. Tax.,%) 53 54 56 57

Valuation

P/E 21.3 19.8 14.3 11.9

Cash P/E 17.0 15.6 11.8 10.1

EV/EBITDA 12.3 11.6 8.1 6.9

EV/Sales 3.0 2.7 2.3 2.0


Dividend Yield (%) 2.1 2.3 3.3 4.1


RoE 23.0 22.3 27.4 29.2

RoCE 18.1 18.0 23.0 24.9

Turnover Ratios



Creditors. (Days) 72 70 75 75


Leverage Ratio

Debt/Equity (x) 0.2 0.2 0.1 0.1


Y/E March 2012 2013 2014E 2015E

EBITDA 3,550 3,760 5,235 5,961

Other Income 115 213 214 292

Interest Paid -155 -80 -102 -102

Direct Taxes Paid -931 -1,044 -1,700 -1,865

(Inc)/Dec in Wkg. Cap. -242 56 -516 -314


(inc)/Dec in FA + CWIP -1,080 -1,030 -400 -400

(Pur)/Sale of Investments -297 -347 0 0

CF from Inv.Activity -1,378 -1,378 -400 -400

Issue of Shares 0 1 0 0

Inc/(Dec) in Debt -272 -526 0 0

Dividends Paid -1,065 -1,172 -1,675 -2,064

Other Financing Activities 10 -5 0 0

CF from Fin.Activity -1,327 -1,702 -1,675 -2,064

Inc/(Dec) in Cash -368 -174 1,057 1,508


Closing Balance 1,363 1,190 2,247 3,755

September 2 - 6, 2013 50


Company descriptionDabur India (DABUR) is the second largest FMCG

company in India in terms of product portfolio. It is the

market leader in the Chyawanprash category and is

increasing its presence in other traditional categories

like Hair Care, Oral Care, Household Care and Foods. Its

acquisition of Fem Care has given it a strategic presence

in the high potential Skin Care segment.

Key investment positives & long-term prospects Strong herbal positioning, with little competition

from MNCs in categories like Hair Oil, CHD, Health

Supplements, etc.

Has the second-broadest product portfolio (after

HUVR), with presence in high potential categories

like Skin Care, Hair Care, Oral Care and Health

Supplements.

Improving margin profile in international business.

Consistent mid-teens earnings CAGR.

Key challenges & near-term concerns Higher than anticipated ad spends could impact

profitability adversely.

Rising competitive intensity in key business

segments like (1) Toothpaste (P&G has entered the

category), (2) Hair Oil (aggressive strategy of Marico

and Emami), (3) Shampoo, and (4) Skin Care (rising

focus of MNCs).

Key news flows / triggers to watch Rural spending by government prior to elections.

Raw material price trends.

1QFY14 highlights; outlook for FY14, FY15 9% volume growth with 30bp margin expansion.

15% EBITDA growth and 21% PAT growth.

Foods and Home Care outperformed.

100bp margin expansion guidance.

Good earnings visibility; tailwind benefits of recent

distribution expansion.



Promoter 68.6 68.7 68.7

Dom. Inst. 4.0 4.3 6.7

Foreign 20.7 20.6 18.0

Others 6.7 6.5 6.6

Stock info

Bloomberg Code DABUR IN



Mcap (INR b) 254.5

Mcap (USD b) 3.9


1, 6, 12 Rel Perf (%) -5/17/20

Dabur India



Net Sales 14,620 15,226 16,307 15,311 16,511 61,464 71,776

EBITDA 2,044 2,644 2,693 2,603 2,355 10,001 12,147

Margins (%) 14.0 17.4 16.5 17.0 14.3 16.3 16.9

YoY Growth (%) 14.9 9.3 19.0 16.4 15.2 15.2 4.0

Adjusted PAT 1,541 2,023 2,111 2,020 1,860 7,680 9,421

YoY Change (%) 20.6 16.4 22.2 18.4 20.7 19.3 22.7

Volume Growth (%) 12.0 10.5 9.5 12.0 9.0 10.0 10.0

E: MOSL Estimates

51September 2 - 6, 2013


Dabur India: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 52,832 61,464 71,776 83,734

Change (%) 29.6 16.3 16.8 16.7


EBITDA 8,680 10,001 12,147 14,175

Change (%) 12.2 15.2 21.5 16.7

Margin (%) 16.4 16.3 16.9 16.9

Depreciation 1,032 1,124 1,158 1,203

Int. and Fin. Charges 538 589 500 475

Other Income - Recurring 797 1,242 1,454 1,713

Profit before Taxes 7,906 9,530 11,943 14,211

Change (%) 11.7 20.5 25.3 19.0

Margin (%) 15.0 15.5 16.6 17.0

Tax 1,464 1,826 2,440 2,771

Deferred Tax 0 0 72 85

Tax Rate (%) 18.5 19.2 21.0 20.1

Profit after Taxes 6,442 7,704 9,432 11,354

Change (%) 13.2 19.6 22.4 20.4

Margin (%) 12.2 12.5 13.1 13.6


Adjusted PAT 6,439 7,680 9,421 11,341

Reported PAT 6,439 7,680 9,421 11,341


Y/E March 2012 2013 2014E 2015E

Share Capital 1,742 1,742 1,742 1,742

Reserves 15,473 20,219 24,941 30,626

Net Worth 17,215 21,961 26,684 32,369


Loans 17,810 10,500 9,500 9,500


Gross Block 21,445 23,445 24,445 25,445

Less: Accum. Depn. -5,033 -6,110 -7,188 -8,310

Net Fixed Assets 16,412 17,335 17,257 17,135

Capital WIP 268 350 433 433

Investments 4,825 5,133 7,264 12,186

Curr. Assets, L&A 25,108 23,824 28,652 23,696

Inventory 8,239 7,704 8,963 941



Others 7,768 6,765 8,789 10,039


Current Libilities 9,605 7,933 9,224 2,061

Provisions 1,676 6,043 7,902 9,132


Miscelleneous Expense 0 -80 -160 -240

Deferred Tax Liability -274 -84 -84 -84


E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 3.7 4.4 5.4 6.5

Cash EPS 3.1 3.8 4.7 5.8

BV/Share 9.9 12.6 15.3 18.6

DPS 1.4 1.8 2.3 2.8

Payout % 37.6 40.2 42.7 42.7

Valuation (x)

P/E 47.3 39.7 32.4 26.9

Cash P/E 56.4 46.5 36.9 30.1

EV/Sales 5.9 5.0 4.2 3.5

EV/EBITDA 36.1 30.6 24.9 20.9

P/BV 17.7 13.9 11.4 9.4

Dividend Yield (%) 0.8 1.0 1.3 1.6

Return Ratios (%)

RoE 37.4 35.1 35.3 35.1

RoCE 30.0 38.1 40.7 40.8




Leverage Ratio

Debt/Equity (x) 1.0 0.5 0.4 0.3


Y/E March 2012 2013 2014E 2015E

OP/(loss) before Tax 9,713 11,125 13,304 15,378

Int./Div. Received 797 1,242 1,454 1,713

Depreciation & Amort. -1,032 -1,124 -1,158 -1,203

Interest Paid -538 -589 -500 -475


(Incr)/Decr in WC -1,234 3,747 -975 -152

CF from Oper. 9,168 16,228 14,565 18,032

(Incr)/Decr in FA -2,052 -2,082 -1,083 -1,000

(Pur)/Sale of Invt. -629 -308 -2,131 -4,922

CF from Invest. -2,680 -2,390 -3,214 -5,922


(Incr)/Decr in Debt 1,531 -7,310 -1,000 0

Dividend Paid -2,420 -3,090 -4,021 -4,840

Others -3,919 -3,670 -5,630 -6,447

CF from Fin. Act. -4,808 -14,069 -10,649 -11,285

Incr/Decr of Cash 1,680 -232 703 825

Add: Opening Bal. 2,805 4,484 4,252 4,955

Closing Balance 4,484 4,252 4,955 5,780

September 2 - 6, 2013 52


Company descriptionDr. Reddy's (DRRD) is a vertically integrated company,

with presence across the pharmaceutical value chain

through its core businesses of Global Generics,

Pharmaceutical Services and Active Ingredients (PSAI)

and Proprietary Products. Company is currently

developing bio-generics and NCEs. Key focus markets

include India, the US, Europe and Russia.

Key investment positives & long-term prospects Reiterates strong growth traction over the coming

quarters: Management expects to achieve strong

growth led by the US, PSAI and emerging market

and without any major inorganic growth initiatives.

Company continues to focus on its five key markets

- the US, India, Russia, Germany and the UK.

US market will be a key contributor led by

commercialization of its pipeline of 65 ANDAs

(pending approval) and the contribution from FTF/

low competition opportunities.

Russia, India, PSAI will continue to be the supporting

growth drivers for DRRD.

Key challenges & near-term concerns Delay in key US FDA approvals.

Government mandated price controls could impact

profitability of India formulations business.

Key news flows / triggers to watch Market share movements in some of the key

launches over the last six months.

Product filings and approvals for niche generics.

Regulatory landscape in Russia.

1QFY14 highlights; outlook for FY14, FY15 Net sales were up 12% to INR28.45b. Excluding one-

offs, sales were up 10.3% to INR25.36b mainly

impacted by lower-than-expected sales from

Europe, Russia and Indian formulation markets. PSAI

segment also reported slower-than-expected

growth, while growth in the US was in line, which

we believe is significant.

DRRD continued to gain good market share in key

launches in the US over the last six months.

Outlook for FY14/FY15 continues to remain strong.

We estimate core EPS to witness a CAGR of 19%

over FY13-15E.



Promoter 25.5 25.6 25.6

Dom. Inst. 8.8 11.0 14.4

Foreign 51.2 47.9 44.2

Others 14.4 15.5 15.8

Stock info

Bloomberg Code DRRD IN



Mcap (INR b) 358.9

Mcap (USD b) 5.5

52-Wk Range (INR) 2401/1617

1, 6, 12 Rel Perf (%) 0/21/23

Dr Reddy's Laboratories

Quarterly Performance (Standalone) (INR Million)



Change (%) 28.4 27.0 3.5 25.6 12.0 132.5 91.6

EBITDA 4,996 6,909 5,674 7,183 5,398 25,075 28,378

Change (%) 30.3 44.0 -34.7 12.0 8.0 5.6 13.2

EBITDA Margin (%) 19.7 24.0 19.8 21.5 19.0 21.6 21.4

Reported PAT 3,360 4,074 3,633 5,709 3,609 16,390 17,924

Adjusted PAT 2,483 3,354 3,100 3,541 2,497 13,129 16,812

Change (%) 9.7 24.9 28.9 72.3 0.6 180.6 -318.9

PAT Margin (%) 9.8 11.6 10.8 10.6 8.8 11.3 12.7


US Sales YoY Gr. (%) 37.6 47.4 -16.8 30.7 37.3 39.1 26.2

India Sales YoY Gr.(%)18.6 12.1 11.6 8.7 0.3 12.6 6.4

Gross Margins (%) 56.8 56.4 55.4 53.6 56.7 55.6 54.8

E: MOSL Estimates

53September 2 - 6, 2013


Dr Reddy's Laboratories: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 96,738 116,266 132,576 147,034

Change (%) 29.5 20.2 14.0 10.9

Other Income 1,669 3,634 1,483 1,483


EBITDA 23,742 24,763 28,371 32,054

Change (%) 51.6 4.3 14.6 13.0

Margin (%) 24.5 21.3 21.4 21.8

Depreciation & Amortization6,254 6,237 6,708 7,205

EBIT 17,488 18,526 21,663 24,849

Net Interest Exp 690 118 315 315

Forex (Gains)/Losses 0 365 0 0

PBT after EO Expense 18,467 21,677 22,831 26,016

Tax 4,204 4,900 4,909 5,594

Tax Rate (%) 22.8 22.6 21.5 21.5


Reported PAT 14,263 16,777 17,922 20,423

Adjusted Net Profit 12,109 16,150 17,922 20,423

Change (%) 9.1 33.4 11.0 14.0

Margin (%) 12.5 13.9 13.5 13.9


Y/E March 2012 2013 2014E 2015E

Equity Share Capital 840 840 840 840

Reserves 56,604 72,265 87,452 105,139

Net Worth 57,444 73,105 88,291 105,978

Loans 32,210 36,678 36,678 36,678

Deferred Liabilities/Tax -833 -1,669 -1,669 -1,669


Gross Block 44,064 52,958 62,493 70,960

Less: Accum. Deprn. 18,086 21,213 25,341 29,903

Net Fixed Assets 33,246 37,814 41,086 43,924

Investments 11,558 18,131 18,131 18,131

Goodwill/Intangibles 13,529 14,021 14,021 14,021

Curr. Assets 59,179 68,751 84,100 102,236

Inventory 19,352 21,600 27,865 30,767



Others 7,109 10,043 11,391 12,940





Appl. of Funds 88,821 108,114 123,301 140,987

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 72.1 96.2 106.7 121.6

Cash EPS 109.4 133.3 146.7 164.5

BV/Share 342.1 435.4 525.8 631.2

DPS 13.8 13.9 13.9 13.9

Payout (%) 19.1 16.3 15.3 13.4

Valuation (x)

P/E 30.2 22.7 20.4 17.9

PEG (x) 3.3 0.7 1.9 1.3

Cash P/E 19.9 16.4 14.9 13.3

P/BV 6.4 5.0 4.1 3.5

EV/Sales 3.9 3.3 2.8 2.5

EV/EBITDA 16.0 15.3 13.3 11.5

Dividend Yield (%) 0.6 0.6 0.6 0.6

FCF per Share 45.3 10.8 34.6 56.5

Return Ratios (%)

RoE 21.1 22.1 20.3 19.3

RoCE 20.5 17.2 17.8 17.8



Debtor (Days) 96 100 101 108



Leverage Ratio

Current Ratio (x) 2.1 2.2 2.5 2.7

Debt/Equity (x) 0.6 0.5 0.4 0.3


Y/E March 2012 2013 2014E 2015E


Interest/Dividends Recd. 979 3,151 1,168 1,168


(Inc)/Dec in WC -4,768 -9,903 -8,834 -8,099


(inc)/dec in FA -8,141 -11,297 -9,980 -10,043

(Pur)/Sale of Invest -10,936 -6,573 0 0


Change in networth -90 1,620 0 0

(Inc)/Dec in Debt 8,707 4,468 0 0

Other Items -920 -836 0 0

Dividend Paid -2,719 -2,736 -2,736 -2,736

CF from Fin. Activity 4,978 2,516 -2,736 -2,736

Inc/Dec of Cash 1,650 -2,243 3,080 6,750


Closing Balance 7,379 5,136 8,216 14,966

E: MOSL Estimates

September 2 - 6, 2013 54




Promoter 55.2 55.2 55.2

Dom. Inst. 8.9 11.8 16.3

Foreign 24.4 21.3 16.3

Others 11.6 11.7 12.3

Stock info

Bloomberg Code EIM IN



Mcap (INR b) 83.5

Mcap (USD b) 1.3

52-Wk Range (INR) 3,980/2,049

1, 6, 12 Rel Perf (%) -9/16/36

Eicher Motors

Company descriptionEicher Motors (EIM) produces high end motorcycles

(350cc & above) under the brand, Royal Enfield (RE). To

become a full-fledged CV player, it entered into an

equal JV with AB Volvo, Sweden in July 2008 and formed

Volvo Eicher Commercial Vehicles (VECV). EIM has also

entered into an equal JV with US-based Polaris

Industries to set up a greenfield project in India.

Key investment positives & long-term prospects EIM's motorcycle business will benefit from capacity

expansion (new plant started in Apr-13), new

launches (Café Racer launch in 3QCY13), and

network expansion.

New capacity in RE will enable (a) focus on high

margin export markets, and (b) expansion of

distribution beyond tier-1/2 cities.

Multiple margin improvement levers: (a) new plant

efficiencies, (b) mix improvement (higher share of

500cc models), (c) new platforms / products, (d)

exports, (e) increase in sales of high margin spares

and accessories.

The Indian CV industry is likely to evolve, giving new

players opportunity to challenge incumbents. VECV

is better placed, given the marriage of Volvo's

technological strength with Eicher's local market

expertise.

VECV will benefit from the recent commencement

of the Medium Duty Engine Project (MDEP) and

ramp-up in HCVs.

Key challenges & near-term concerns Sustained weakness in the CV Industry.

Increasing competition in the CV industry could

impact ramp-up of HCV segment.

Key news flows / triggers to watch RE continues to enjoy 4-6 months waiting period

despite sharp increase in supplies.

Plans to launch Café Racer in 3QCY13, its first product

targeted towards international market.

Launch of new generation HCVs (developed with

Volvo inputs) starting from 4QCY13.

1QFY14 highlights; outlook for FY14, FY15 Both divisions reported better than expected

operating performance, with RE delivering its

highest ever margins.

While operating leverage helped RE to report strong

margins, higher bus contribution and better cost

management aided VECV's operating performance.

RE volume guidance at 175k/250k units (CY12 sales:

113k) for CY13/14. Growth would be driven by

dealership expansion, new launches and exports.

Incremental customer bookings continue to exceed

production at RE.

MDEP (engine project) has commenced, with trial

engines exported to Volvo, France.

VECV continues to gain share, especially in buses.

JV with Polaris on track; to launch first product in

CY15.

Quarterly Performance (Consolidated) (INR Million)

Y/E March Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 CY12 CY13E


Change (%) 22.1 2.2 4.7 1.7 5.4 11.6 9.5

EBITDA 1,395 1,114 1,180 1,705 1,662 5,490 6,752

Change (%) 10.6 (26.3) (22.7) (5.4) 19.2 (6.8) 23.0

EBITDA Margin (%) 8.8 7.5 7.1 9.9 10.0 8.6 9.6

Reported PAT 759 660 727 979 923 3,243 3,927

Adjusted PAT 759 660 727 979 923 3,243 3,927

PAT Mar. (bef. MI.,%) 7.1 6.3 6.4 7.7 7.5 7.4 7.4


RE Volumes (units) 27,519 30,046 31,968 34,737 40,040 113,432 180,078

RE EBITDA (%) 15.3 15.1 11.5 17.7 17.8 13.9 17.7

CV Volumes (units) 12,016 10,791 11,735 12,529 11,027 48,888 45,127

CV EBITDA (%) 7.6 5.8 6.2 8.0 7.6 7.6 7.1

E: MOSL Estimates

55September 2 - 6, 2013


Eicher Motors: Financials and valuation


Y/E December 2012 2013E 2014E 2015E

Total Operating Inc. 63,899 69,985 88,437 109,186

EBITDA 5,490 6,752 8,720 12,040

EBITDA Margin (%) 8.6 9.6 9.9 11.0

Depreciation 822 1,269 1,615 1,834

EBIT 4,669 5,484 7,105 10,206

Interest cost 38 37 37 37

Other Income 1,366 1,218 1,058 1,345

PBT 5,997 6,664 8,125 11,513

Tax 1,249 1,519 1,999 3,008

Effective Rate (%) 20.8 22.8 24.6 26.1

PAT 4,749 5,145 6,125 8,506

Change (%) -4.5 8.3 19.1 38.9

Less: Minority Interest 1,505.9 1,218.1 1,263.8 1,967.2

Adj. PAT 3,243 3,927 4,862 6,538

Change (%) 5.0 21.1 23.8 34.5

Balance Sheet (Consolidated) (INR Million)

Y/E December 2012 2013E 2014E 2015E

Share Capital 270 270 270 270

Reserves 16,021 18,822 22,374 27,326

Net Worth 16,291 19,092 22,644 27,596


Deferred Tax 1,232 1,372 1,532 1,772

Loans 539 539 539 539




Net Fixed Assets 14,251 19,335 21,970 23,137

Capital WIP 5,103 2,500 1,250 1,250

Investments 6,440 6,440 6,440 6,440

Curr.Assets, L & Adv. 14,928 20,212 28,151 38,924

Inventory 4,891 5,158 6,505 8,037

Sundry Debtors 3,903 3,667 4,519 5,624

Cash & Bank Balances 1,558 6,642 11,486 18,378

Loans & Advances 4,071 4,217 4,978 6,064

Others 504 529 663 820


Sundry Creditors 9,552 12,564 15,887 19,610


Provisions 1,737 2,026 2,422 2,972



E: MOSL Estimates

Ratios (Consolidated)

Y/E December 2012 2013E 2014E 2015E

Basic (INR)

EPS 120.1 145.5 180.1 242.3

EPS Growth (%) 5.0 21.1 23.8 34.5

Cash EPS 150.6 192.5 240.0 310.2

Book Value per Share 603.6 707.4 839.0 1,022.5

DPS 20.0 24.0 28.0 35.0

Payout (Incl. Div. Tax) % 19.5 19.3 18.1 16.8

Valuation (x)

P/E 25.7 21.3 17.2 12.8

Cash P/E 20.5 16.1 12.9 10.0

EV/EBITDA 21.1 14.3 10.1 6.9

EV/Sales 1.9 1.6 1.2 0.9

Price to Book Value 5.1 4.4 3.7 3.0

Dividend Yield (%) 0.6 0.8 0.9 1.1


RoE 20.8 22.2 23.3 26.0

RoCE 23.0 22.3 23.6 28.4

Turnover Ratios




Leverage Ratio

Debt/Equity (x) 0.0 0.0 0.0 0.0

Cash Flow Statement (Consolidated) (INR Million)

Y/E December 2012 2013E 2014E 2015E

Profit before Tax 5,997 6,664 8,125 11,513

Depreciation & Amort. 822 1,269 1,615 1,834

Direct Taxes Paid -661 -1,378 -1,840 -2,767

(Inc)/Dec in W/Capital -2,767 2,981 1,124 1,086

Interest/Div. Received 1,366 1,218 1,058 1,345

Other Items -970 -756 -890 -1,495

CF from Oper. Activity 3,787 9,997 9,192 11,515

(Inc)/Dec in FA+CWIP -11,003 -3,750 -3,000 -3,000

(Pur)/Sale of Invest. -1,313 0 0 0


Issue of Shares -1,251 -368 -431 -488

Inc/(Dec) in Debt 35 0 0 0

Interest Paid -38 -37 -37 -37

Dividends Paid -632 -758 -878 -1,098


Inc/(Dec) in Cash -10,415 5,084 4,845 6,892


Closing Balance 1,558 6,642 11,486 18,378

September 2 - 6, 2013 56


Glenmark Pharmaceuticals



Promoter 48.3 48.3 48.3

Dom. Inst. 7.1 8.1 5.4

Foreign 34.3 32.9 34.0

Others 10.3 10.7 12.3

Stock info

Bloomberg Code GNP IN



Mcap (INR b) 139.6

Mcap (USD b) 2.1


1, 6, 12 Rel Perf (%) -5/8/25

Company descriptionGlenmark Pharmaceuticals (GNP) is one of the second

tier integrated pharmaceutical companies, which has

differentiated itself through success in NCE research.

Company has a pipeline of five novel drugs in different

phases of clinical studies. It is also one of the leading

Indian generic companies in the US with a focus on niche

generics segments. GNP has a large presence in semi-

regulated markets.

Key investment positives & long-term prospects Company has adopted differentiated generic

strategy for the US business which focuses on niche

segments like hormones, dermatology, controlled

release etc, which has limited competition and

better profitability.

It is the most successful Indian company in novel

drug discovery research and has earned US$205m in

milestone payments so far.

Key challenges & near-term concerns Given the significant contribution of success of

GNP's NCE research (to its market capitalization);

any NCE failures are likely to have significant

adverse impact on investor returns.

Net debt of ~INR24.5b (as on June 30, 2013), implying

net debt/equity of 0.8x, is higher compared to

peers.

Net working capital cycle has improved from 270

days of sales in FY09 to 130 in FY13. This has largely

aided the improvement in valuation over the same

period. While management has guided for a minor

deterioration of 10-15 days in FY14, any further

elongation could dampen investor sentiment.

Key news flows / triggers to watch GNP is likely to report the NCE clinical data for key

NCEs by end-FY14. This will be an important news

flow to track as favorable data can facilitate

potential out-licensing deals.

Obtaining timely ANDA approvals will hold key for

achieving the guided 18-20% growth in the US.

1QFY14 highlights; outlook for FY14, FY15 GNP continues to outpace the domestic industry

growth rate as some peers have reported a dismal

quarter for this segment.

Although US sales growth moderated due to lack of

new launches, management indicated higher

growth in the coming quarters.

Has maintained revenue guidance for key

geographies, with EBITDA guidance of INR12.25b for

FY14.

Expects working capital to deteriorate by 10-15 days

in FY14.




Change (%) 19.8 18.9 34.0 25.3 19.0 24.7 18.4

EBITDA 2,198 2,560 3,158 2,694 2,474 10,610 11,743

Change (%) -25.9 -14.2 54.3 44.5 12.5 7.6 10.7

EBITDA Margin (%) 21.1 20.4 22.9 20.2 20.0 21.2 19.8

Reported PAT 783 1,568 2,129 1,668 1,287 6,147 6,974

Adjusted PAT 506 1,424 1,575 1,486 1,287 4,992 6,811

Change (%) -53.6 91.3 1972.1 565.9 154.1 53.9 36.4

PAT Margin (%) 4.9 11.3 11.4 11.1 10.4 10.0 11.5


US Sales YoY Growth (%) 56.2 43.5 36.8 24.9 13.9 39.1 24.5

India Sales YoY Gr. (%) 24.1 35.5 29.9 32.4 17.4 30.7 17.0

Gross Margins (%) 64.8 64.7 64.9 71.8 67.3 66.7 66.5

E: MOSL Estimates

57September 2 - 6, 2013


Glenmark Pharmaceuticals: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 40,206 50,123 59,332 70,496

Change (%) 36.3 24.7 18.4 18.8

EBITDA 9,860 10,610 11,743 14,210

Margin (%) 24.5 21.2 19.8 20.2

Adjusted EBITDA 7,325 10,117 11,743 14,210

Margin (%) 19.4 20.4 19.8 20.2

Depreciation 979 1,270 1,384 1,660

EBIT 8,882 9,340 10,359 12,551

Interest 1,466 1,600 1,995 1,839

OI & forex gains/losses -1,218 -403 168 202

PBT before EO Expense 6,198 7,337 8,532 10,913

PBT after EO Exp. 4,881 7,337 8,532 10,913

Tax 238 1,107 1,621 2,074

Tax Rate (%) 4.9 15.1 19.0 19.0

Reported PAT 4,643 6,230 6,911 8,840

Adj PAT** 3,244 4,992 6,811 8,740

Margin (%) 8.6 10.1 11.5 12.4

**Excl NCE upsides & incl adjustment for R&D exp capitalization


Y/E March 2012 2013 2014E 2015E


Reserves 23,746 27,359 33,220 40,692

Net Worth 24,016 27,630 33,491 40,963


Loans 23,225 28,500 28,500 26,000

Deferred liabilities -2674 -3803 -3803 -3803


Gross Block 28,384 32,968 36,218 39,218

Less: Accum. Deprn. 4,137 5,286 6,670 8,330

Net Fixed Assets 24,235 26,634 29,548 30,889

Capital WIP 656 1,689 1,689 1,689


Intangibles (net) 11,253 12,136 11,286 10,496

Curr. Assets 29,472 37,493 48,390 55,995

Inventory 7,877 8,435 10,566 12,747



Others 5,958 6,605 8,128 9,657



Provisions 509 1,011 1,200 1,350


Appl. of Funds 44,817 52,571 58,431 63,403

E: MOSL Estimates

Ratio

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS (Fully diluted)* 12.0 18.4 25.1 32.3

Cash EPS 15.6 23.1 30.3 38.4

BV/Share 88.8 102.0 123.7 151.2

DPS 2.0 2.0 3.0 4.0

Payout (%) 13.6 10.2 13.8 14.3

Valuation (x)

P/E (Fully diluted) 28.0 20.5 16.0

PEG (x) 0.0 0.5 0.6 0.6

Cash P/E 33.1 22.3 17.0 13.4

P/BV 5.8 5.1 4.2 3.4

EV/Sales 4.0 3.2 2.7 2.2

EV/EBITDA 16.2 15.3 13.4 10.9

Dividend Yield (%) 0.4 0.4 0.6 0.8

Return Ratios (%)

RoE 13.5 18.1 20.3 21.3

RoCE 11.4 16.1 18.0 20.1



Debtor (Days) 113 119 120 122



Leverage Ratio (x)


Debt/Equity 1.0 1.0 0.9 0.6


Y/E March 2012 2013 2014E 2015E


Interest/Dividends Recd. -1,218 -403 168 202


(Inc)/Dec in WC -3 -1,445 1,192 -3,794


CF frm Op.incl EO Exp. 5,492 6,527 11,482 8,545

(Inc)/Dec in FA -3,746 -4,703 -4,298 -3,000


Change in Networth -366 -1,982 -100 -100

Inc/(Dec) in Debt 1,950 5,268 0 -2,500

Interest Paid -1,466 -1,600 -1,995 -1,839

Dividend Paid -633 -634 -951 -1,268

CF from Fin. Activity -515 1,052 -3,046 -5,707

Inc/Dec of Cash 1,242 2,851 4,138 -162


Closing Balance 3,201 6,052 10,190 10,028

September 2 - 6, 2013 58




Promoter 63.3 63.5 64.0

Dom. Inst. 1.2 1.2 1.0

Foreign 28.3 28.2 27.2

Others 7.2 7.1 7.8

Stock info

Bloomberg Code GCPL IN



Mcap (INR b) 278.3

Mcap (USD b) 4.3


1, 6, 12 Rel Perf (%) -1/13/20

Company descriptionGodrej Consumer Products (GCPL) is the second largest

player in the INR90b Toilet Soaps category, with a

market share of ~10%. It is the leader in the INR10b Hair

Dye/Color segment, with a market share of ~35%. Its

international business now constitutes 40% of

consolidated revenue.

Key investment positives & long-term prospects Market leadership and 20%+ growth in the domestic

Household Insecticides business, with consistent

market share gains, the key growth driver.

Turnaround in the Hair Colors category after many

years of underperformance.

Strong acquisition and execution track record in

international business.

Sustaining strong revenue momentum v/s

moderation witness in other consumer peers.

Key challenges & near-term concerns Volume growth moderation, given the pressure on

discretionary consumption.

Margin volatility in international operations.

Risk of dilutive acquisition.

Key news flows / triggers to watch Integration of Darling business.

Recovery of Africa and Latin America margins.

Sustenance of recovery in Hair Colors segment.

1QFY14 highlights; outlook for FY14, FY15 Strong 24% revenue growth but 150bp operating

margin decline.

11% EBITDA and 7% PAT growth.

Outlook healthy from revenue perspective, but cost

of revenue growth high – ad spends have gone up

45% in FY13 and 54% in 1QFY14.

Godrej Consumer Products



Net Sales 13,886 15,953 16,913 17,155 17,203 63,908 78,327

YoY Change (%) 39.2 34.5 25.8 29.7 23.9 31.7 22.6

EBITDA 1,988 2,440 2,806 2,752 2,208 9,985 12,547

Margins (%) 14.3 15.3 16.6 16.0 12.8 15.6 16.0

YoY Growth (%) 39.3 18.0 5.8 11.5 11.0 16.0 25.7

Adj PAT 1,225 1,593 1,722 2,052 1,305 6,672 8,408

YoY Change (%) 22.2 24.8 3.1 22.4 6.5 26.7 26.0


Home Insecticide rev. gr 27 20 28 26 24.0 25 22

Soaps revenue gr 42 24 20 17 13.0 26 16

Soaps Volume growth 24 6 2 4 7.0 9 5

Hair Colors revenue gr 5 10 17 27 32.0 15 20

E: MOSL Estimates

59September 2 - 6, 2013


Godrej Consumer Products: Financials and valuation

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 15.5 19.6 24.7 30.5

Cash EPS 17.4 21.9 27.3 33.5

BV/Share 82.7 93.7 106.7 125.5

DPS 4.6 8.0 10.0 10.0

Payout (%) 29.7 40.8 40.5 32.8

Valuation (x)

P/E 55.4 43.7 34.7 28.1

Cash P/E 49.3 39.2 31.3 25.6

EV/Sales 6.3 4.8 3.9 3.3

EV/EBITDA 35.4 30.5 24.2 20.1

P/BV 10.4 9.1 8.0 6.8


Return Ratios (%)

RoE 18.7 20.9 23.2 24.3

RoCE 20.7 24.8 28.4 30.2




Leverage Ratio

Debt/Equity (x) 0.7 0.4 0.3 0.2


Y/E March 2012 2013 2014E 2015E



(Inc)/Dec in WC -8,562 -9,109 -10,279 -13,467

CF from Operations -2,216 -916 -256 -1,462

Extraordinary Items 2,002 1,289 0 0

Inc in FA -1,260 -5,207 -4,225 -4,225

Goodwil l -6,050 0 0 0


Inc in Debt -1,002 -5,500 -1,500 -1,500

Dividend Paid -1,820 -3,185 -3,982 -3,982

Other Income 672 844 926 1,034

Interest Paid -658 -775 -782 -684

Other Item -443 -417 -90 -179


Inc/Dec of Cash -10,776 -13,866 -9,908 -10,998

Add: Beginning Balance 2,269 6,399 558 127

Closing Balance 6,399 558 127 399


Y/E March 2012 2013 2014E 2015E

Net Sales 48,509 63,908 78,327 91,480

Change (%) 32.0 31.7 22.6 16.8

Cost of Goods Sold 23,185 29,511 36,668 42,628

Gross Profit 25,324 34,397 41,660 48,852

Margin (%) 52.2 53.8 53.2 53.4


EBITDA 8,607 9,985 12,547 15,008

Change (%) 35.4 16.0 25.7 19.6

Margin (%) 17.7 15.6 16.0 16.4

Depreciation 644 770 895 1,022


Other Income-rec. 672 844 880 999

forex gain/(loss) 205 328 0 0

PBT 7,771 8,957 11,750 14,301

Change (%) 27.0 15.3 31.2 21.7

Tax 2,261 1,792 2,523 3,003

Deferred Tax 0 0 -84 -102

Tax Rate (%) 29.1 20.0 22.2 21.7

PAT 5,511 7,165 9,142 11,195

Change (%) 16.4 30.0 27.6 22.5

Margin (%) 11.4 11.2 11.7 12.2

Minority interest 245 493 735 831

Group Adjusted PAT 5,266 6,672 8,408 10,364

Non-rec. (Exp.)/Income 2,002 1,289 0 0

Reported PAT 7,267 7,961 9,142 11,195


Y/E March 2012 2013 2014E 2015E


Reserves 27,796 31,543 35,969 42,351

Minority Int 591 1,170 1,905 2,736

Networth 28,136 31,883 36,309 42,692

Loans 19,030 13,530 12,030 10,530

Deferred Liability 111 180 264 367


Gross Block 20,403 25,618 29,843 34,068

Less: Accum. Depn. 4,940 5,734 6,629 7,651

Net Fixed Assets 15,464 19,885 23,214 26,417

Capital WIP 158 150 150 150

Goodwil l 21,454 21,454 21,454 21,454

Currents Assets 22,606 19,083 22,205 27,161

Inventory 7,839 8,304 9,801 12,531


Cash and Bank Balance 6,399 558 127 399



Curr. Liab. & Prov. 11,815 13,808 16,515 18,858



Provisions 428 31 38 45


Net Assets 47,867 46,763 50,508 56,324

September 2 - 6, 2013 60


Company descriptionGrasim Industries is a diversified company, with the core

businesses of Cement and VSF accounting for 65% and

35% of revenues (post restructuring), respectively. Its

other businesses include Chemicals and Textiles. The

acquisition of UltraTech Cement, L&T's cement division,

catapulted it to number-1 position in the Indian Cement

industry, with total capacity under control of 51mt.

Key investment positives & long-term prospects UltraTech, its 60% subsidiary, is a truly pan-India play

without concentration in any particular region,

insulating it from volatility in regional demand and

prices.

Being the largest player, with total capacity of 61.5mt

(by FY15) under control and highest organic growth

visibility, Grasim would be the biggest beneficiary

of any further increase in cement price.

Grasim is the global leader in VSF, with backward

integration in pulp and caustic soda, making it one

of the world's most cost effective producers.

Post completion of existing capex, Grasim's VSF

capacity will increase by ~47% to 0.49mt, giving it

strong headroom to grow its volumes. Further,

Greenfield capacity at Vilayat is focused on non-

woven fiber, which will drive mix improvement.

Grasim Industries



Promoter 25.5 25.5 25.5

Dom. Inst. 15.4 15.4 16.8

Foreign 41.4 41.1 39.0

Others 17.7 18.0 18.7

Stock info

Bloomberg Code GRASIM IN



Mcap (INR b) 211.4

Mcap (USD b) 3.3

52-Wk Range (INR) 3511/2273

1, 6, 12 Rel Perf (%) -9/-18/-27




Change (%) 21.0 9.6 -2.2 -1.1 -7.3 6.3 -0.5

EBITDA 2,953 2,898 2,154 2,141 2,024 10,145 8,903

Change (%) -16.3 -5.3 -24.5 -1.2 -31.5 -12.6 -12.2

EBITDA Margin (%) 23.8 21.7 17.7 15.6 17.6 19.6 17.3

Reported PAT 2,729 3,827 1,980 3,724 2,261 12,260 10,606

Adjusted PAT 2,729 3,827 1,980 2,128 2,261 10,621 10,606

Change (%) -13.1 11.0 -27.9 -12.6 -17.2 -9.8 -0.1

PAT Margin (%) 22.0 28.7 16.3 15.5 19.7 20.5 20.6


VSF Volume (mt) 77,013 85,312 78,579 95,161 77,518 336,065 367,856

Realiz. (INR/t) 128,024 126,656 121,668 119,150 116,501 123,678 116,678

Cem.EBITDA (INR/T) 1,233 1,067 1,016 1,063 1,026 1,096 1,066

E: MOSL Estimates

Key challenges & near-term concerns High operating leverage, especially post

commissioning of new capacities in 1QFY14, could

result in volatile earnings.

Declining competing fiber prices coupled with

increasing costs could impact VSF profitability.

Key news flows / triggers to watch The Board has approved fresh brownfield capacity

addition of 2.9mt at Rajasthan (including two split

grinding units), with INR21b capex. The new

capacity is likely to commission by March 2015,

taking total capacity in India to 61.45mt.

Harihar VSF brownfield expansion Phase-II (18ktpa),

with 20MW power plant, commenced operations

in 1QFY14, taking total VSF capacity to 377,775tpa,

whereas Vilayat greenfield addition of 120,000 units

is track by 3QFY14 (in a phased manner).

1QFY14 highlights; outlook for FY14, FY15 VSF volumes were marginally below estimate, with

0.7% YoY growth to 77,518 tons.

VSF realizations declined 9% YoY/2.2% QoQ to

INR116.5/kg, driving PBITDA margin decline of 690bp

YoY (110bp QoQ increase) to 19.1%.

VSF prices remain under pressure, with further

~INR1/kg decline over 1QFY14.

Planned capex in VSF is INR15.4b, of which ~INR13b

is planned for FY14.

61September 2 - 6, 2013


Grasim Industries: Financials and valuation

VSF business - Key assumptions

2012 2013 2014E 2015E

Cement Capacity (m ton) 49.4 50.0 59.2 62.1

Production (m ton) 41.3 41.2 43.3 47.4

Grey Realization (INR/ton) 3735 4102 4148 4448

EBITDA (INR/ton) 970 1096 1066 1273


Y/E March 2012 2013 2014E 2015E

Net Sales 249,836 276,397 269,833 314,173

Change (%) 17.2 10.6 -2.4 16.4


EBITDA 53,178 56,590 56,853 73,239

Change (%) 11.6 6.4 0.5 28.8

Margin (%) 21.3 20.5 21.1 23.3

Depreciation 11,544 12,521 14,348 16,568

Int. and Finance Charges 3,140 3,241 3,768 3,859

Other Income - Rec. 10,029 8,841 10,906 10,156

PBT before EO items 48,522 49,669 49,642 62,968

PBT after EO items 48,522 51,714 49,642 62,968

Tax 13,208 14,672 10,942 17,028

Tax Rate (%) 27.2 28.4 22.0 27.0

Reported PAT 35,314 37,041 38,700 45,940

PAT Adj for EO items 35,314 35,577 38,700 45,940

Change (%) 22.0 0.7 8.8 18.7

Margin (%) 14.1 12.9 14.3 14.6

Less: Minority Interest 8,840 9,998 9,917 12,247

Consolidated PAT 26,475 25,580 28,783 33,693

Change (%) 16.2 -3.4 12.5 17.1

Consolidated Balance Sheet (INR Million)

Y/E March 2012 2013 2014E 2015E


Reserves 169,769 195,648 221,746 252,506

Net Worth 170,687 196,565 222,664 253,423

Loans 70,358 95,614 80,038 75,038

Deferred liabilities 19,790 23,013 23,186 23,120



Gross Block 248,433 282,174 367,014 412,014

Less: Accum. Deprn. 95,293 107,814 122,162 138,730

Net Fixed Assets 153,140 174,360 244,852 273,284

Capital WIP 22,000 62,000 30,000 15,000

Investments 78,758 80,108 64,733 84,586

Goodwil l 24,964 30,097 30,097 30,097

Curr. Assets 86,483 94,078 89,045 103,677

Inventory 30,711 37,408 33,729 39,272



Others 35,232 32,515 32,380 37,701




Provisions 9,784 13,295 12,142 14,138


Appl. of Funds 313,168 377,402 398,015 435,956

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 288.6 278.7 313.6 367.1

Cash EPS 458.0 469.9 514.3 612.7

BV/Share 1,861 2,142 2,426 2,761

DPS 22.5 22.5 25.0 27.5

Payout (%) 9.0 9.4 9.3 8.7

Valuation (x)

P/E 8.9 9.2 8.2 7.0

Cash P/E 5.6 5.5 5.0 4.2

P/BV 1.4 1.2 1.1 0.9

EV/ EBITDA 5.4 5.9 5.8 4.1

Dividend Yield (%) 0.9 0.9 1.0 1.1

EV/Ton (USD) 89 105 89 71

Return Ratios (%)

RoE 15.5 13.0 12.9 13.3

RoCE 21.4 18.1 17.6 20.3




Leverage Ratio

Debt/Equity (x) 0.4 0.5 0.4 0.3

Consolidated Cash Flow Statement (INR Million)

Y/E March 2012 2013 2014E 2015E




(Inc)/Dec in WC -18,625 2,509 4,261 -3,991


EO Items 0 2,044 0 0

CF frm Op. incl EO 31,548 58,535 61,250 62,311

(inc)/dec in FA -28,790 -73,741 -52,840 -30,000

(Pur)/Sale of Invest. -347 -6,483 15,375 -19,853

CF from Invest. -29,136 -80,224 -37,465 -49,853

Issue of Shares 1,020 2,699 0 0

(Inc)/Dec in Debt 2,531 25,257 -15,576 -5,000

Interest Paid -3,140 -3,241 -3,768 -3,859

Dividend Paid -2,394 -2,400 -2,684 -2,933


Inc/Dec of Cash 428 625 1,756 665


Closing Balance 3,252 3,878 4,047 4,713

September 2 - 6, 2013 62


Company descriptionHathway Cable & Datacom (HATH) is one of the largest

Multi-System Operators (MSOs) and Cable Broadband

Service providers in India. Its cable operations straddle

key Indian geographies and it offers cable TV services

across 140 cities and towns, with an estimated

subscriber base of 10.5m, and high-speed cable

broadband services across 21 cities, with a subscriber

base of 0.4m. HATH has established 20 digital head-ends

in India.

Key investment positives & long-term prospects Digitization is a strong theme for MSOs like HATH

and will significantly alter their business model

from B2B to B2C. Digitization will lead to increased

bargaining power for MSOs v/s Local Cable

Operators (LCOs).

MSO ARPU is expected to increase significantly from

INR10-12/month in the analog regime to ~INR100/

month post digitization, driven by increased

transparency in subscriber declaration.

~70% of HATH's subscriber base lies in phase-I/

phase-II cities, where digitization has already been

implemented.

Hathway Cable & Datacom



Promoter 49.5 49.5 49.6

Dom. Inst. 19.0 16.4 14.6

Foreign 26.1 28.2 30.7

Others 5.5 5.9 5.1

Stock info

Bloomberg Code HATH IN



Mcap (INR b) 37.9

Mcap (USD b) 0.6


1, 6, 12 Rel Perf (%) 2/12/45


Y/E March Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 FY13* FY14#

Revenue 1,363 1,325 1,544 2,312 2,327 11,325 15,294

YoY Change(%) 11.2 3.1 20.9 70.7 70.7 11.9 35.0

EBITDA 238 208 355 885 761 2,738 3,800

YoY Change(%) 24.5 -4.9 54.0 279.5 219.2 63.3 38.8

EBITDA Margin(%) 17.5 15.7 23.0 38.3 32.7 24.2 24.8

Adjusted PAT -153 -53 -47 386 53 190 473

YoY Change(%) NA NA NA NA NA NA 148.4

PAT Margin(%) -11.2 -4.0 -3.1 16.7 2.3 1.7 3.1

* Consolidated; Quarterly numbers are standalone; # Bloomberg consensus estimate

Key challenges & near-term concerns Full potential of digitization is yet to reflect in HATH's

subscription income even post seeding of set top

boxes (STBs) due to lack of addressability.

INR depreciation leading to higher STB cost.

Potential decline in the carriage and placement

revenue post digitization.

Key news flows / triggers to watch Increase in ARPU in phase-I/II markets post shift

from net billing to gross billing and implementation

of channel packages.

Capital raising plans of the company.

1QFY14 highlights; outlook for FY14, FY15 Standalone EBITDA declined 14% QoQ to INR 761m

led by lower activation income. PAT declined to

INR53m (v/s INR283m in 4QFY13).

Standalone revenue remained flat QoQ at

INR2327m; growth in subscription income was

offset by decline in activation income.

Consensus estimates 37% EBITDA CAGR over FY13-

15 to INR5.4b, led by 36% revenue CAGR to INR20.8b.

The stock trades at EV/EBITDA of 12.6x FY14E and

8.8x FY15E (consensus). We do not have coverage

on the stock.

63September 2 - 6, 2013


Hathway Cable & Datacom: Financials and valuation


Y/E March 2010 2011 2012 2013

Net Sales 7,328 8,827 10,121 11,325

YoY (%) 11 20 15 12

Operating expenses 6,070 7,326 8,445 8,587

EBITDA 1,259 1,501 1,676 2,738

EBITDA margin (%) 17.2 17.0 16.6 24.2

Depreciation 1,111 1,276 1,443 1,661

Interest 556 452 520 602


PBT -357 50 -90 662

Tax 156 127 153 179

PAT -754 -313 -492 157


Adjusted PAT -662 -242 -390 406

Extra-ordinary items 149 143 104 79

Reported PAT -754 -313 -492 157


Y/E March 2010 2011 2012 2013

Share Capital 1,429 1,429 1,429 1,432

Share Premium 12,000 12,000 12,000 12,000

Reserves -4,602 -4,910 -5,401 -5,207

Net Worth 8,826 8,518 8,028 8,224

Loans 4,607 2,903 3,051 7,552






Net Fixed Assets 9,497 10,304 11,160 17,556

Capital WIP 274 512 1,005 1,005

Investments 4,183 1,861 158 84

Curr. Assets 4,485 4,675 5,279 7,439

Inventory 25 47 55 275

Debtors 1,955 2,529 2,492 3,702

Cash & Bank Balance 1,004 390 976 545

Loans & Advances 1,500 1,655 1,693 2,598

Other current assets 0 55 62 318


Creditors 3,524 1,225 1,583 1,849

Prov. & other liabilities 119 3,267 3,202 6,297

Net Current Assets 841 182 494 -707

Miscellanous exp 9 160 191 723


E: MOSL Estimates

Ratios

Y/E March 2010 2011 2012 2013

Basic (INR)

Adjusted EPS -0.5 -0.2 -0.3 0.3

Growth (%) NA NA NA NA

Cash EPS 2.5 6.7 6.7 12.7

Book Value 61.6 59.5 56.2 57.4

Valuation

P/E NA NA NA 933.7

Cash P/E 106.1 39.4 39.8 20.9

EV/EBITDA 26.7 23.8 16.4 10.4

EV/Sales 4.5 3.9 4.0 2.9



RoE -3.7 -6.1 1.9 6.5

RoCE 1.8 1.8 6.1 9.2

Turnover Ratios

Debtors (Days) 105 90 121 80



Asset Turnover (x) 49.5 67.8 77.8 59.8

Leverage Ratio

Debt/Equity (x) 0.5 0.3 0.4 0.9


Y/E March 2010 2011 2012 2013

EBITDA 1,259 1,501 1,676 2,738



Direct Taxes Paid 156 127 153 179

(Inc)/Dec in Wkg. Cap. -114 44 274 770


(inc)/Dec in FA + CWIP -1,378 -430 -2,737 -7,934

(Pur)/Sale of Investments-3,608 856 1,738 336

CF from Inv.Activity -4,986 426 -999 -7,598


Inc/(Dec) in Debt -1,668 -2,053 358 4,540

Dividends Paid 0 0 0 0

Other Fin. Activities 4,974 -1,367 -1,563 -1,822

CF from Fin.Activity 3,621 -3,420 -1,204 2,721

Inc/(Dec) in Cash 560 -615 586 -430

Add: Opening Balance 445 1,004 390 976

Closing Balance 1,004 390 976 545

September 2 - 6, 2013 64


Havells India



Promoter 61.6 61.6 61.6

Dom. Inst. 1.0 1.0 0.9

Foreign 31.2 30.9 30.8

Others 6.3 6.5 6.7

Stock info

Bloomberg Code HAVL IN



Mcap (INR b) 77.0

Mcap (USD b) 1.2


1, 6, 12 Rel Perf (%) -10/-1/10




Change (%) 25.4 13.4 17.8 11.7 1.8 16.9 7.6

Adjusted EBITDA 1,281 1,192 1,399 1,460 1,411 5,331 5,775

Change (%) 44.1 9.5 15.2 2.1 10.1 16.1 8.3

EBITDA Margin (%) 12.4 12.4 13.2 12.5 13.4 12.6 12.7

Reported PAT 800 870 947 1,099 947 3,713 4,036

Adjusted PAT 880 789 976 1,075 1,029 3,713 4,036

Change (%) 55.5 6.5 17.6 5.3 16.9 17.8 10.7

PAT Margin (%) 8.5 8.2 9.2 9.2 9.8 8.8 9.1

Key Operating metrics (YoY %)

Switchgear 14.6 15.0 19.3 31.2 14.3 20.3 15.0

Cables & Wires 21.0 5.8 4.6 -3.1 -6.1 6.2 0.0

Consumer Durables 56.6 33.1 51.0 17.8 5.8 38.0 12.0

E: MOSL Estimates

Company descriptionHavells India (HAVL) is one of the largest electrical

company in India and also has a presence in Europe/ Latin

America in lighting business through Sylvania. It owns

some of the prestigious global brands like Crabtree,

Sylvania, Concord, Luminance, Linolite & SLI Lighting.

Key investment positives & long-term prospects HAVL has centered its business model around

dealers, which has enabled it to introduce new

products. Company is also making attempts to

strengthen its connect with electricians and

consumers. Galaxy stores (12% of revenue) and

brand Reo (Tier 3 cities) will further deepen the

penetration.

New product portfolios, including consumer/

kitchen appliances/Reo switches had shown the

potential to be in the INR3-5b+ revenue category.

Possibilities such as exports under the Havells

brand, rejuvenation of strategy in luminaries, launch

of pumps etc over the next one to three years could

possibly show exciting growth potential.

We note Sylvania is planning cautious expansion

into Asia, Asean and African countries. Key factors

to monitor will be: increasing share of fixtures,

particularly in LatAm, as 50% of production from

Neemrana is earmarked for Sylvania. Asia is

expected to contribute 20% of revenue, from 5%

now. Recovery in profitability would be aided by a

shift towards LED (in Europe, 50% of revenue from

fixtures) & fixtures in LatAm (~20% of revenue).

Key challenges & near-term concerns Medium term headwinds build up: domestic

business impacted by i) muted consumption

demand and ii) increased competitive intensity,

particularly in premium categories etc.

Sylvania impacted by demand headwinds and

currency volatility. Management expects flat

revenue in FY14 (largely supported by LatAm) and

EBIDTA margin at 5% (v/s 5.3% in FY13).

Key news flows / triggers to watch For Sylvania, the strategy is being reoriented

towards Asia and the target is to increase revenue

contribution to 20% v/s 5% currently. During FY14,

Sylvania could be launched in India and also China.

Increasing share of fixtures, particularly in LatAm.

The current constrained environment will again be

a test for the price-volume tradeoff and we will

watch the trends.

1QFY14 highlights; outlook for FY14, FY15 FY14 growth guidance has been lowered and

standalone revenue is expected to grow at 9-10%

v/s earlier 14-15%. Revenue growth in consumer

centric business in 1QFY14 was just 7%; aggregate

revenue growth was just 1.8%.

For the period FY13-15E, we model standalone

revenue CAGR of 6%. For Sylvania, revenue is

expected to post 3% CAGR, largely driven by 5%

CAGR in LatAm.

65September 2 - 6, 2013


Havells India: Financials and valuation

Income statement (Consolidated) (INR Million)

Y/E March 2012 2013 2014E 2015E

Net Sales 65,182 72,478 76,570 82,051

Change (%) 16.1 11.2 5.6 7.2

Raw Materials 36,272 41,593 43,970 47,449

Staff Cost 7,904 8,503 9,023 9,101

Other Expenses 14,432 15,694 16,740 17,601

EBITDA 6,573 6,688 6,838 7,900

% of Net Sales 10.1 9.2 8.9 9.6

Depreciation 949 1,097 1,178 1,345

Interest 1,281 1,232 462 313

Other Income 414 334 340 575

PBT 4,757 4,694 5,538 6,816

Tax 1,058 824 1,244 1,836

Rate (%) 22.2 17.5 22.5 26.9

Extra-ordinary Inc.(net) 0 1,944 0 0

Reported PAT 3,699 5,814 4,293 4,980

Change (%) 21.9 57.2 -26.2 16.0

Adjusted PAT 4,252 4,296 4,444 4,980

Change (%) 64.6 1.0 3.4 12.1


Y/E March 2012 2013 2014E 2015E


Reserves 8,932 13,797 16,776 20,296

Net Worth 9,556 14,420 17,400 20,920

Loans 9,795 9,785 6,300 5,600






Net Fixed Assets 10,284 11,307 11,336 11,200

Capital WIP 663 249 261 276

Goodwil l 3,625 3,694 3,695 3,695

Curr. Assets 27,187 29,468 29,886 34,118

Inventory 13,678 13,184 14,041 14,968

Debtors 8,905 8,623 9,067 9,438


Loans & Advances 1,682 2,052 2,202 2,387



Creditors 6,953 9,329 9,831 10,427


Provisions 2,076 1,810 2,091 2,333


Misc. Expenses 5 0 0 0


Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR) 29.6 46.6 34.4 39.9

Adjusted EPS 34.1 34.4 35.6 39.9

Growth (%) 64.6 1.0 3.4 12.1

Cash EPS 37.2 39.8 43.8 50.7

Book Value 76.6 99.2 139.4 167.7

DPS 6.5 7.5 9.0 10.0


Valuation (x)

P/E (consolidated) 18.1 17.9 17.3 15.4

Cash P/E 16.6 15.5 14.1 12.2

EV/EBITDA 8.9 11.9 11.6 9.6

EV/Sales 0.9 1.1 1.0 0.9


Dividend Yield (%) 1.1 1.2 1.5 1.6


RoE 44.5 29.8 25.5 23.8

RoCE 26.4 21.4 19.7 19.2

Turnover Ratios





Leverage Ratio

Debt/Equity (x) 1.0 0.7 0.4 0.3


Y/E March 2012 2013 2014E 2015E


Add : Depreciation 949 1,097 1,178 1,345

Interest 1,281 1,232 462 313

Less : Direct Taxes Paid 1,058 824 1,244 1,836

(Inc)/Dec in WC -431 -1,836 -541 -191


EO Income 0 1,944 0 0

CF from Oper. incl. EO Items 5,498 6,307 5,392 6,447

(Inc)/Dec in FA -1,691 -1,706 -1,219 -1,225


(Inc)/Dec in Net Worth 193 211 -2 -2

(Inc)/Dec in Debt -1,270 -10 -3,485 -700

Less : Interest Paid 1,281 1,232 462 313

Dividend Paid 943 1,095 1,314 1,460


Inc/Dec of Cash 236 2,406 -1,091 2,747


Closing Balance 2,336 4,741 3,647 6,396

September 2 - 6, 2013 66


HCL Technologies



Promoter 61.9 62.0 62.2

Dom. Inst. 6.5 6.6 9.5

Foreign 26.0 26.0 21.7

Others 5.6 5.5 6.6

Stock info

Bloomberg Code HCLT IN



Mcap (INR b) 629.2

Mcap (USD b) 9.7


1, 6, 12 Rel Perf (%) 11/31/61



Operating Inc. 59,191 60,910 62,738 64,246 69,442 257,336 306,080

Change (%) 13.5 2.9 3.0 2.4 8.1 22.4 18.9

EBITDA 12,782 13,288 13,945 14,156 16,147 57,536 67,734

Change (%) 36.5 4.0 4.9 1.5 14.1 46.0 17.7

EBITDA Margin (%) 21.6 21.8 22.2 22.0 23.3 22.4 22.1

Adjusted PAT 8,409 8,642 9,444 10,189 11,975 40,250 49,623

Change (%) 44.5 2.8 9.3 7.9 17.5 63.9 23.3

PAT Margin (%) 14.2 14.2 15.1 15.9 17.2 15.6 16.2


Headcount 84,319 85,335 85,194 84,403 85,505 84,403 95,155

Utilization* 72.4 74.2 75.6 79 80.6 77.1 80.4

Rev. frm offshore (%) 42.8 44.3 44.9 44.6 45.4 44.8 45.7

E: MOSL Estimates; including trainees

Company descriptionHCL Technologies (HCLT) is one of the largest IT services

company in India, employing over 85,000 people and

LTM revenue of USD4.7b. It is a leader in remote

infrastructure management, engineering and R&D

services and has sizeable BPO, Enterprise Solutions and

ADM practices.

Key investment positives & long-term prospects Two quarters of healthy deal signings at HCLT have

helped alleviate our concerns on the recent shuffle

in the top management - naming new CEO Mr Anant

Gupta and exit of Healthcare and Europe business

heads.

While growth continues to be dominated by

Infrastructure Services, at the lower end of the value

chain, we remain confident on the company's

ability to defend its margins, going forward. HCLT

has managed to grow the highly competitive

business through a relatively lower skilled

workforce, helping it sustain and grow margins.

The healthy deal TCV includes a sizeable chunk of

Software Services deals as well (2/3rd of HCLT's total

revenue), thus improving confidence of growth

acceleration in the segment in FY14.

HCLT has been able to identify trends that would

drive growth and has executed its strategy to tap

opportunities impressively. This lends confidence

on management's ability and we remain positive

on the long term prospects.

Key challenges & near-term concerns Any appreciation in currency may impact current

margin profile at the company.

Slower-than-anticipated ramp-up in large deals

lead to moderation in revenue growth.

Key news flows / triggers to watch Ms Roshni Nadar Malhotra joined HCLT's board as

Non-Executive Director.

Company won deals amounting to TCV of USD1b+

in 4QFY13.

HCLT's growth in discretionary segments could

compound the growth in IMS, amid recent signs of

a turnaround.

1QFY14 highlights; outlook for FY14, FY15 USD1b+ worth of deal signings during the quarter

was a key positive surprise, allaying concerns of a

likely deceleration in growth in FY14 (on the back

of deal signings in the two prior quarters).

We expect HCLT to post USD revenue at a CAGR of

12.8% over FY13-15E and EPS at a CAGR of 17.6%

during this period. With deals in the bag, growth

visibility for the company remains strong.

IMS remains strong, Software Services growth is

expected to accelerate and even Enterprise

Application Services could kick in with the

improvement in discretionary spending. Thus, HCLT

may see an all-round growth, if macro in the US

continues its improving trend.

67September 2 - 6, 2013


HCL Technologies: Financials and valuation

Income statement (INR Million)

Y/E June 2012 2013 2014E 2015E

Sales 210,312 257,336 311,381 345,836

Change (%) 32.2 22.4 21.0 11.1


Gross Profit 68,899 91,737 111,644 118,209

% of Net Sales 32.8 35.6 35.9 34.2

Selling & Admin Exp. 29,503 34,201 40,834 43,305

% of Net Sales 14.0 13.3 13.1 12.5

EBITDA 39,396 57,536 70,810 74,904

% of Net Sales 18.7 22.4 22.7 21.7

% Growth 49.7 46.0 23.1 5.8

Depreciation 5,641 6,726 7,383 8,243

EBIT 33,755 50,810 63,426 66,661

% of Net Sales 16.0 19.7 20.4 19.3

Forex Gain -1,876 -198 0 0

Other Income 706 1,768 3,193 5,917

PBT 32,585 52,380 66,619 72,578

Tax 8,032 12,130 14,656 15,967

Rate (%) 24.6 23.2 22.0 22.0

PAT 24,553 40,250 51,963 56,611

Net Profit 24,553 40,250 51,963 56,611

Minority interest -3 0 0 0

Net Income 24,556 40,250 51,963 56,611

% of Net Sales 11.7 15.6 16.7 16.4

Change (%) 52.5 63.9 29.1 8.9


Y/E June 2012 2013 2014E 2015E

Share Capital 1,381 1,388 1,397 1,398

Other Reserves 105,933 141,557 182,880 225,923

Net Worth 107,314 142,945 184,276 227,321

Loans 19,222 6,960 -90 -3,570


Gross Block 57,859 67,093 78,843 92,763


Net Block 24,775 27,283 31,650 37,326

Intangibles 69,453 72,046 75,609 78,712

Investments 19,723 42,991 42,991 42,991

Curr. Assets 75,325 88,159 125,333 168,542

Debtors 53,440 61,767 72,513 80,537


Loans & Advances 15,212 19,071 24,137 27,014

Current Liab. & Prov 62,740 80,574 91,397 103,820


Provisions 13,346 15,151 17,554 19,647



E: MOSL Estimates

Ratios

Y/E June 2012 2013 2014E 2015E

Diluted (INR)

EPS after ESOP chg 35.1 57.0 73.1 79.1

Cash EPS 43.1 66.6 83.5 90.7

Book Value 155.4 205.9 263.9 325.1

DPS 12.0 12.0 13.0 16.6

Payout % 34.2 21.1 17.8 21.0

Valuation (x)

P/E after ESOP chg 25.7 15.8 12.5 11.5

Cash P/E 20.9 13.6 11.0 10.0

EV/EBITDA 15.6 10.1 8.0 7.0

EV/Sales 2.9 2.3 1.8 1.5


Dividend Yield (%) 1.3 1.3 1.4 1.8


RoE 25.6 32.2 35.9 30.6

RoCE 21.2 29.1 31.1 27.8

Turnover Ratios


Asset Turnover (x) 9.0 9.9 10.6 10.0

Leverage Ratio

Debt/Equity (x) 0.2 0.0 0.0 0.0


Y/E June 2012 2013 2014E 2015E


Chg. in Working Capital 49 5,648 -4,990 1,522

Net Operating CF 30,245 52,624 54,357 66,376

Net Purchase of FA -25,434 -11,827 -15,313 -17,023

Net Purchase of Invest. 268 -23,268 0 0

Net Cash from Inv. -25,166 -35,095 -15,313 -17,023

Issue of shares/other adj 8,115 5,134 0 0

Proceeds from LTB/STB -2,018 -12,262 -7,050 -3,480

Dividend Payments -9,701 -9,753 -10,631 -13,565

Net CF from Finan. -3,605 -16,881 -17,681 -17,045

Free Cash Flow 4,811 40,797 39,044 49,353

Net Cash Flow 1,474 648 21,362 32,308

Opening Cash Balance 5,198 6,673 7,321 28,683

Closing CashBalance 6,673 7,321 28,683 60,991

September 2 - 6, 2013 68


HDFC



Promoter 0.0 0.0 0.0

Dom. Inst. 12.7 12.9 15.1

Foreign 74.1 74.2 71.3

Others 13.2 12.9 13.6

Stock info

Bloomberg Code HDFC IN



Mcap (INR b) 1148.8

Mcap (USD b) 17.7


1, 6, 12 Rel Perf (%) -2/-4/-1



NII 13,042 13,859 15,389 19,808 15,208 61,786 73,741

Change(%) 19 11 24 14 17 19 19


Change(%) 19 17 18 15 15 17 17

PAT 10,019 11,511 11,401 15,552 11,728 48,483 56,257

Change(%) 19 19 16 17 17 18 16

Key Operating metrics (%)

NIMs 3.5 3.5 3.8 4.6 3.4 3.7 3.6

AUM growth 19 22 21 20 20 20 21

GNPA 0.8 0.8 0.8 0.7 0.8 0.7 0.7

E: MOSL Estimates

Company descriptionHousing Development Finance Corporation (HDFC) is

India’s largest housing finance company, operating

through a pan India network of 318 outlets. Its AUM

size was INR1.9t as at June 2013, with individual loans

constituting two-thirds of its portfolio. Besides Housing

Finance, HDFC has interests in Banking, Insurance and

Asset Management through group companies.

Key investment positives & long-term prospects Consistent track record: HDFC has demonstrated a

successful track record of healthy growth across the

cycle. Over FY03-13, disbursements and sanctions

grew at ~25% each. The individual loans portfolio

(including sell-downs) grew at ~23%. Despite higher

interest rates and property prices, growth in

sanctions and disbursements remains healthy at

17% and 20%, respectively.

Stable spreads across rate cycles: HDFC has done a

commendable job of managing spreads in the range

of 2.1-2.3% irrespective of the interest rate cycle

and competitive pressure.

Best in class asset quality: HDFC has demonstrated

its superior credit appraisal capabilities by

maintaining healthy asset quality, with gross NPAs

remaining below 1%.

Key challenges & near-term concerns Continued regulatory changes.

Moderation in economic growth and high real

estate prices may impact overall demand.

Recent RBI actions and impact on borrowing costs.

Key news flows / triggers to watch Any announcement by NHB related to capital

requirements.

Listing of Insurance venture.

1QFY14 highlights; outlook for FY14, FY15 For 1QFY14, PAT was INR11.7b. NII was INR15.2b,

with stable spreads of 229bp and loan growth of 4%

QoQ and 20% YoY.

AUM grew 19.8% YoY and 3.9% QoQ to INR1.92t and

AUM mix skewed further in favor of retail loans.

The share of retail loans increased to 69.9% from

68.6% in 4QFY13.

GNPAs on 90-day overdue basis remained flat YoY

at 77bp. GNPAs stood at 61bp (v/s 67bp a year ago)

in the individual segment and at 108bp (v/s 91bp a

quarter ago and 100bp a year ago) in the corporate

segment.

69September 2 - 6, 2013


HDFC: Financials and valuation

Income statement (INR Million)

Y/E March 2012 2013 2014E 2015E

Interest Income 163,689 200,707 229,231 265,269



Change (%) 16.3 18.6 19.3 20.1

Fees and Other Charges 2,684 2,413 2,888 3,408

Net Int. Income (incl fees) 54,805 64,211 76,628 91,961

Change (%) 16.5 17.2 19.3 20.0

Other Operating Income 6,957 8,005 8,232 9,569

Miscellanous Income 213 351 350 500

Net Income 61,975 72,567 85,210 102,030

Change (%) 16.5 17.1 17.4 19.7



Change (%) 16.4 16.9 17.5 20.0

Provisions/write offs 800 1,450 1,865 2,459

Reported PBT 56,656 65,728 77,051 92,211

Tax 15,430 17,245 20,804 25,819

Tax Rate (%) 27.2 26.2 27.0 28.0

Reported PAT 41,226 48,483 56,247 66,392

Change (%) 16.6 17.6 16.0 18.0

PAT adjusted for EO 41,226 48,483 56,247 66,392

Change (%) 16.6 17.6 16.0 18.0

Proposed Dividend 18,868 22,517 26,099 30,806

Balance sheet (INR Million)

Y/E March 2012 2013 2014E 2015E

Capital 2,954 3,093 3,093 3,093


Net Worth 190,176 250,000 279,748 311,335

Borrowings 1,391,275 1,588,280 1,925,624 2,307,086

Change (%) 20.9 14.2 21.2 19.8


Housing Loans 1,408,746 1,700,460 2,059,491 2,467,472

Change (%) 20.3 20.7 21.1 19.8

Investments 122,070 136,135 149,748 164,723

Change (%) 3.2 11.5 10.0 10.0

Net Fixed Assets 2,340 2,379 2,484 2,578

Deferred Tax Assets 6,282 6,314 7,314 8,314

Net Current Assets 42,014 -7,008 -13,664 -24,665

Total Assets 1,581,451 1,838,280 2,205,373 2,618,421

E: MOSL Estimates

Ratios

Y/E March 2011 2012 2013E 2014E


Avg Yield on Housing Loans 11.8 12.2 11.5 11.1

Avg. Yield on Earning Assets11.3 11.8 11.3 10.9





RoE 22.7 22.0 21.2 22.5

Adjusted RoE 27.2 28.4 28.2 28.5

RoA 2.8 2.84 2.78 2.75

Adjusted RoA 2.7 2.7 2.7 2.6



Other Inc./Net Income 15.9 14.8 13.5 13.2


Empl. Cost/Op. Exps. 45.5 45.7 46.9 48.2

Asset Quality (%)

Gross NPAs 10,690 11,903 13,603 15,663

Gross NPAs to Adv. 0.8 0.7 0.7 0.6

Net NPAs 1,604 1,785 2,041 2,349

Net NPAs to Adv. 0.1 0.1 0.1 0.1

CAR 14.6 16.4 16.0 16.0

Valuation

Book Value (INR) 128.8 161.7 180.9 201.3

Price-BV (x) 5.7 4.6 4.1 3.7

Adjusted BV* (INR) 100.5 108.5 127.8 148.2

Adj Price-ABV (x) 5.4 4.8 3.8 3.0

EPS (INR) 27.9 31.4 36.4 42.9

EPS Growth YoY 15.8 12.3 16.0 18.0

Adj Price-Earnings (x) 19.6 16.7 13.3 10.2

Adjusted EPS (INR)# 26.0 29.0 33.4 39.3

Adjusted EPS Growth YoY 15.1 11.6 15.1 17.6

Adj Price-Adj EPS (x) 21.0 18.0 14.5 11.2

Dividend per share (INR) 11.0 12.5 14.5 17.2

Dividend yield (%) 1.5 1.7 2.0 2.3

E: MOSL Estimates; * BV is adj. by deducting investments in keyventures from NW; # Adjusted EPS is adjusting for dividendfrom key ventures

September 2 - 6, 2013 70


HDFC Bank



Promoter 22.8 22.9 23.1

Dom. Inst. 8.6 8.6 10.7

Foreign 52.0 51.7 49.0

Others 16.6 16.9 17.3

Stock info

Bloomberg Code HDFCB IN



Mcap (INR b) 1414.4

Mcap (USD b) 21.8


1, 6, 12 Rel Perf (%) -4/-6/-3



NII 36,524 37,317 39,816 42,953 44,187 158,111 189,765

Change (%) 28.2 26.7 27.8 20.6 21.0 22.7 20.0


Change (%) 31.6 21.0 31.3 17.3 23.6 21.7 27.1

PAT 14,174 15,600 18,591 18,898 18,439 67,257 87,416

Change (%) 30.6 30.1 30.0 30.1 30.1 30.2 30.0

NIM (Calc, %) 4.8 4.7 4.7 4.9 4.8 4.8 4.8

Loan Gr. (YoY, %) 21.5 22.9 24.3 22.7 21.2 22.7 22.0

GNPA (%) 1.0 0.9 1.0 1.0 1.0 1.0 1.4

NNPA (%) 0.2 0.2 0.2 0.2 0.3 0.2 0.4

OSRL %) 0.1 0.1 0.1 0.2 0.2 0.2 -

E: MOSL Estimates

Company descriptionHDFC Bank (HDFCB) is the largest retail bank and second

largest private sector bank in India, with a balance sheet

size of INR4.1t+. Backed by its consistent performance

(enviable track record of 56 quarters of 30%+ earnings

growth) and best of operating parameters, HDFCB is

the bank with the highest market capitalization in India.

Key investment positives & long-term prospects HDFCB is best placed, with (1) CASA ratio of ~45%,

(2) growth outlook of 1.3x the industry, (3) improving

operating efficiency, (4) expected traction in

income due to strong network expansion, and (5)

best in class asset quality.

Strong CASA ratio and a higher share of retail loans

helped HDFCB to post NIM (on total assets) of 4.5%+.

It is likely to retain its funding cost advantage

through strong focus on new customer acquisition

and floats from multiple transaction banking

franchises. In a falling interest rate scenario, higher

proportion of fixed rate loans will also provide

cushion to margins.

A third of HDFCB's branches are less than 24 months

old. A large part of branch expansion happened

outside the top-9 cities, where breakeven period is

24-30 months. Expansion into the hinterland will

not only help customer acquisition and product

penetration, but also to meet priority sector targets.

HDFCB carries floating provisions of INR18.7b which

will be useful in case dynamic provisions is

introduced by RBI.

Key challenges & near-term concerns Moderating NII growth, with lower loan growth in

the system and expected increase in credit cost,

poses a threat to 30% earnings growth. Operating

efficiencies and productivity improvement remains

key.

Regulatory headwinds related to retail fees pose a

threat to earnings.

Intensifying competition in retail loans.

Key news flows / triggers to watch Asset quality in retail loans is at the decadal best.

Increasing stress in this segment could impact

earnings.

Competitive strategy on retail product roll-out;

recently, AXSB, YES, IIB, SBIN and foreign banks have

become very aggressive.

1QFY14 highlights; outlook for FY14, FY15 Guidance for FY14: Loan growth of 3-5% higher than

system, margins in the range of 4.2-4.6%, fall in cost-

to-income ratio every year, with improving

productivity and ageing of new branches and

addition of 250-300 branches every year.

1QFY14 performance highlights: (a) Above industry

loan growth of 8% QoQ and 21% YoY, (b) Stable NIM

QoQ and YoY at 4.6%, (c) Moderation in fee income

growth (12% YoY), (d) SA deposits flat QoQ and up

17% YoY, (e) Gross restructured portfolio at 20bp of

loans.

71September 2 - 6, 2013


HDFC Bank: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Interest Income 278,742 350,649 405,355 479,080



Change (%) 17.2 22.7 20.0 20.9


Net Income 186,682 226,637 271,647 329,221

Change (%) 17.1 21.4 19.9 21.2



Change (%) 15.1 21.7 27.1 26.7


PBT 75,132 97,506 128,553 161,443

Tax 23,461 30,249 41,137 52,469

Tax Rate (%) 31.2 31.0 32.0 32.5

PAT 51,671 67,257 87,416 108,974

Change (%) 31.6 30.2 30.0 24.7


Core PPP* 95,865 112,663 141,184 178,996

Change (%) 16.7 17.5 25.3 26.8



Y/E March 2012 2013 2014E 2015E



Net Worth 299,247 362,141 429,190 512,773

Deposits 2,467,064 2,962,470 3,554,964 4,443,705

Change (%) 18.3 20.1 20.0 25.0

of which CASA Dep 1,194,059 1,405,215 1,660,103 2,013,295

Change (%) 8.6 17.7 18.1 21.3

Borrowings 238,465 330,066 352,925 555,527



Current Assets 209,377 272,802 323,200 403,255

Investments 974,829 1,116,136 1,255,653 1,506,784

Change (%) 37.4 14.5 12.5 20.0

Loans 1,954,200 2,397,206 2,924,592 3,655,740

Change (%) 22.2 22.7 22.0 25.0

Fixed Assets 23,472 27,031 31,275 36,103

Other Assets 217,216 190,144 237,680 285,216

Total Assets 3,379,095 4,003,319 4,772,400 5,887,098

Asset Quality (%)

GNPA (INR m) 19,994 23,346 41,370 61,191

NNPA (INR m) 3,523 4,690 13,078 20,658

GNPA Ratio 1.0 1.0 1.4 1.7

NNPA Ratio 0.2 0.2 0.4 0.6


E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E




Avg. Yield on Invt 7.7 7.5 7.5 7.2






RoE 18.7 20.3 22.1 23.1

RoA 1.7 1.8 2.0 2.0





Cost/Income* 49.2 49.9 47.2 47.1

Empl. Cost/Op. Exps. 36.6 35.3 36.4 37.4



* ex treasury


Loans/Deposit 79.2 80.9 82.3 82.3

CASA Ratio 48.4 47.4 46.7 45.3

Investment/Deposit 39.5 37.7 35.3 33.9

G-Sec/Investment 78.2 76.1 73.6 76.7

CAR 16.5 16.8 15.7 14.3

Tier 1 11.6 11.1 10.8 10.3

Valuation (x)

Book Value (INR) 127.4 152.1 180.3 215.4

Change (%) 16.8 19.4 18.5 19.5

Price-BV (x) 4.6 3.9 3.3 2.7

Adjusted BV (INR) 126.4 150.7 176.4 209.3

Price-ABV (x) 4.7 3.9 3.4 2.8

EPS (INR) 22.0 28.3 36.7 45.8

Change (%) 30.4 28.4 30.0 24.7

Price-Earnings (x) 26.9 20.9 16.1 12.9

Dividend Per Sh (INR) 4.3 5.5 7.3 9.2

Dividend Yield (%) 0.7 0.9 1.2 1.5

E: MOSL Estimates

September 2 - 6, 2013 72


Hero MotorCorp



Promoter 52.2 52.2 52.2


Foreign 30.0 30.7 33.3

Others 8.6 8.6 8.5

Stock info

Bloomberg Code HMCL IN



Mcap (INR b) 379.9

Mcap (USD b) 5.8

52-Wk Range (INR) 2,005/1,434

1, 6, 12 Rel Perf (%) 16/18/-4



Operating Inc. 62,078 51,512 61,513 60,725 61,268 235,827 253,956

Change (%) 10.1 (10.9) 2.8 1.8 (1.3) 0.9 7.7

EBITDA(royaltyadj.) 6,634 4,619 5,323 5,845 6,805 22,388 27,207

Change (%) 10.2 (30.6) (19.7) (9.4) 2.6 (13.1) 21.5

Adj. EBITDA Mar. (%) 10.7 9.0 8.7 9.6 11.1 9.5 10.7

Reported PAT 6,155 4,406 4,879 5,742 5,486 21,182 22,290

Adjusted PAT 6,155 4,406 4,879 5,742 5,486 21,182 22,290

Change (%) 10.3 (27.0) (20.4) (4.9) (10.9) (10.9) 9.1

PAT Margin (%) 9.9 8.6 7.9 9.5 9.0 9.0 8.8


Volume ('000 units) 1,642 1,333 1,573 1,525 1,559 6,074 6,380

Realization* 37,799 38,649 39,102 39,810 39,300 38,828 39,806

E: MOSL Estimates; * (INR/unit)

Company descriptionHero MotoCorp (HMCL), erstwhile JV between Honda

(Japan) and the Munjal family, is the leader in domestic

two-wheeler industry, with ~43% share, benefiting

from a strong product franchise, wide dealership

network and high rural penetration. Post split from

Honda, Hero MotoCorp is free to tap the global two-

wheeler market.

Key investment positives & long-term prospects Strong franchise of Splendor & Passion and wide

distribution and service reach makes it best placed

to tap strong demand growth potential, especially

in rural (~48% of its volumes). Biggest beneficiary

of good monsoon and expected Government

spending in rural markets (being an election year).

Post split with Honda, HMCL is free to explore global

markets; it is targeting exports of 1m units by FY17

(of total 10m units). Entry in multiple new export

markets can improve overall growth by ~3%. We

estimate export volumes of ~0.23m units in FY14E

v/s management guidance of 0.35m units.

Product life cycle turns favorable, with seven to

eight product actions lined up from start of the

festive season (product upgrades/refreshes in

2HFY14 and new launch in 1HFY15). HMCL did not

have any launch since Nov-12, during which Honda

launched around five products.

HMCL plans to invest INR25.75b over FY13-15E to

set up new capacities (2-9m units), a parts

distribution center (Rajasthan) and R&D center.

Key challenges & near-term concerns Maintaining market share in increasing competitive

pressure to test pricing power and margins.

Ensure continuous flow of new/refreshed products.

Scaling up in nascent export business, where it is a

late entrant.

Key news flows / triggers to watch Launch and performance of new product developed

in-house/with the help of technology partners.

Ramp-up in export markets.

Benefits of cost cutting initiatives, which are

expected to start reflecting gradually from 3QFY14.

1QFY14 highlights; outlook for FY14, FY15 HMCL's 1QFY14 operating performance was strong,

with adj. EBITDA margin of 11.1% (est. 10%, +150bp

QoQ).

With good monsoons, company has guided 7-8%

industry growth for FY14, despite weak 1QFY14.

Over 7-8 product actions planned for FY14, starting

in the festive season, to accelerate growth

momentum.

Export volume guidance for HMCL at 350,000 units

for FY14.

Launches margin improvement project that will

yield 400-500bp benefit over 24-30 months. Benefit

to reflect gradually from 3QFY14.

Tax rate to remain high at ~24-27% levels.

Invested USD25m for a 49.2% stake in Erik Buell

Racing (EBR). EBR would be an extended R&D arm

of HMCL and it may consider increasing the stake.

73September 2 - 6, 2013


Hero MotorCorp: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Volumes (‘000) 6,235 6,074 6,380 7,237

Volume Growth (%) 15.4 -2.6 5.0 13.4

Net Sales 233,681 235,827 253,956 293,976

Change (%) 21.4 0.9 7.7 15.8

EBITDA 34,078 30,991 35,207 40,401

EBITDA Margin (%) 14.6 13.1 13.9 13.7

Adj EBITDA Margin (%) 11.0 9.5 10.7 13.1

Depreciation 10,973 11,418 11,383 5,809

EBIT 23,105 19,574 23,824 34,592

Interest cost 213 119 125 125

Other Income 5,756 5,838 6,333 7,152

PBT 28,647 25,292 30,032 41,620

Tax 4,866 4,110 7,741 10,966

Effective Rate (%) 17.0 16.3 25.8 26.3

PAT 23,781 21,182 22,290 30,654

Change (%) 23.4 -10.9 5.2 37.5

% of Net Sales 10.2 9.0 8.8 10.4

Adj. PAT 23,781 21,182 22,290 30,654

Change (%) 18.4 -10.9 5.2 37.5


Y/E March 2012 2013 2014E 2015E


Reserves 42,499 49,663 56,724 71,131

Net Worth 42,898 50,062 57,123 71,530

Deferred Tax 2,083 1,324 1,324 1,324

Loans 17,143 3,022 1,900 0




Net Fixed Assets 37,855 30,710 34,948 41,139

Capital WIP 388 621 1,000 1,000

Investments 39,643 36,238 36,238 36,238

Curr.Assets, L & Adv. 21,003 28,848 32,672 44,619

Inventory 6,756 6,368 6,857 7,938

Sundry Debtors 2,723 6,650 7,161 8,290

Cash & Bank Balances 768 1,810 3,556 10,916

Loans & Advances 10,092 13,336 14,361 16,624

Others 664 683 736 852




Provisions 10,901 14,399 15,640 16,722

Net Current Assets -15,762 -13,161 -11,839 -5,523


Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 119.1 106.1 111.6 153.5

EPS Growth (%) 18.4 -10.9 5.2 37.5

Cash EPS 132.0 120.2 128.6 182.6

Book Value per Share 214.8 250.7 286.0 358.2

DPS 45.0 60.0 65.0 70.0


Valuation (x)

P/E 16.0 17.9 17.0 12.4

Cash P/E 14.4 15.8 14.8 10.4

EV/EBITDA 10.5 11.1 9.7 8.2

EV/Sales 1.5 1.5 1.3 1.1


Dividend Yield (%) 2.4 3.2 3.4 3.7


RoE 65.6 45.6 41.6 47.7

RoCE 49.9 43.6 52.6 62.7

Turnover Ratios



Creditors (Days) 36 29 29 29

Working Capital (Days) -25 -20 -17 -7


Fixed Asset Turnover 5.9 6.9 7.7 7.7

Leverage Ratio

Debt/Equity (x) 0.4 0.1 0.0 0.0


Y/E March 2012 2013 2014E 2015E


Depreciation & Amort. 2,807 3,941 3,383 3,909


(Inc)/Dec in Working Cap. -6,906 -7,872 -698 -857

Interest/Div. Received 698 1,073

Other Items -3,290 -3,800 125 125


(Inc)/Dec in FA+CWIP -5,034 -6,004 -8,000 -10,100

(Pur)/Sale of Invest. 13,430 5,079 0 0

CF from Inv. Activity 8,396 -925 -8,000 -10,100

Interest Paid -213 -119 -125 -125

Dividends Paid -24,369 -10,444 -15,229 -16,247


Inc/(Dec) in Cash -56 1,012 1,746 7,359

Add: Beginning Balance 393 337 1,810 3,556

Closing Balance 337 1,349 3,556 10,916

September 2 - 6, 2013 74


Hindalco Industries



Promoter 32.1 32.1 32.1

Dom. Inst. 15.6 15.5 15.2

Foreign 37.1 35.2 36.5

Others 15.3 17.3 16.2

Stock info

Bloomberg Code HNDL IN



Mcap (INR b) 198.3

Mcap (USD b) 3.1


1, 6, 12 Rel Perf (%) 8/1/-11

Company descriptionHindalco Industries (HNDL) is the largest aluminum

producer in India and has captive bauxite mines from

which it sources ~67% of requirements for its 1.5mtpa

alumina refinery. Company also has a 0.54mtpa smelting

capacity and is the largest maker of flat rolled aluminum

products in India. After turning Novelis around in 2010,

HNDL is focusing on tripling its aluminum production

capacity in India in the next three years through

brownfield and greenfield projects. Its copper smelting

capacity of 500ktpa is the largest in Asia.

Key investment positives & long-term prospects Company's new smelting capacities are coming up

near energy sources and alumina facilities are near

bauxite mines, thus ensuring low cost of production.

We expect Novelis to deliver strong earnings, given

its focus on high margin business, expansions in key

markets and continued efforts to improve operating

efficiencies across locations.

Key challenges & near-term concerns An unexpected fall in aluminum prices, sluggish

growth in developed countries and further delays

in expansion activities could adversely impact

earnings.

Key news flows / triggers to watch Mahan coal block has received stage II forest

clearance. The coal block is critical to drive

profitability of its 359ktpa Mahan smelter.

1QFY14 highlights; outlook for FY14, FY15 Adjusted PAT at INR4.7b (down 2% QoQ) was above

estimate, driven by superior operating

performance of the aluminum segment and higher

other income.

Production has begun at Mahan and Utkal. First

metal has been tapped at Mahan smelter under trial

production. Utkal Alumina too has started

production, while Aditya is at an advanced stage.

We continue to find HNDL attractive despite

headwinds and high debt. Outlook for the

conversion business remains strong. Net debt has

peaked; the USD8b capex will be mostly done in

FY14. Cash flows are likely to improve as various

projects start to generate cash.




Change (%) 0.0 -1.7 3.4 -8.5 -3.2 -2.0 7.6

EBITDA 4,631 5,153 5,821 6,432 4,785 22,037 25,710

Change (%) -46.6 -23.0 -18.6 -25.6 3.3 -29.3 16.7

EBITDA Margin (%) 7.7 8.4 8.5 9.2 8.2 8.5 9.2

Reported PAT 4,248 3,589 4,335 4,820 4,741 16,992 17,556

Adjusted PAT 4,248 3,589 4,335 4,820 4,741 16,992 17,556

Change (%) -34.0 -28.6 -3.8 -24.7 11.6 -24.0 3.3

PAT Margin (%) 7.0 5.8 6.3 6.9 8.1 6.5 6.3


Alumina (Production

ex Utkal, kt) 335 328 326 330 348 1319 1413

Aluminium (sales, kt) 124 127 135 147 130 532 614

Copper (sales, kt) 71 73 82 84 68 310 323

E: MOSL Estimates

75September 2 - 6, 2013


Hindalco Industries: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 808,214 801,928 872,247 949,991

Change (%) 12.1 -0.8 8.8 8.9

Total Expenses 726,316 718,604 778,358 842,160

EBITDA 81,897 83,324 93,890 107,830

% of Net Sales 10.1 10.4 10.8 11.4


EBIT 53,199 54,713 58,519 68,595

Net Interest 17,579 20,791 28,233 31,238

Other income 7,831 10,122 12,202 12,314

PBT before EO 43,450 44,044 42,488 49,671

EO income (exp) -4,956 -2,891

PBT after EO 43,450 39,088 39,597 49,671

Tax 7,862 8,857 9,521 12,181

Rate (%) 18.1 22.7 24.0 24.5

Reported PAT 35,587 30,231 30,076 37,490

Minority interests 2,113 -196 284 284

Share of asso. 496 -158 169 169

Adjusted PAT 33,970 35,225 32,852 37,374

Change (%) -2.9 3.7 -6.7 13.8


Y/E March 2012 2013 2014E 2015E

Share Capital 1,915 1,915 1,915 1,915

Reserves 317,198 351,388 378,542 412,155

Net Worth 319,113 353,302 380,457 414,070


Total Loans 428,406 585,275 592,570 592,570


Capital Employed 800,660 990,847 1,025,493 1,061,514

Gross Block 428,945 447,459 588,654 688,754

Less: Accum. Deprn. 186,608 186,608 221,978 261,213

Net Fixed Assets 242,338 260,852 366,676 427,541

Goodwill on cons. 150,097 160,497 160,497 160,497

Capital WIP 227,981 338,311 305,711 255,111

Investments 17,483 15,962 15,962 15,962

Working capital Assets 354,543 397,702 382,374 418,275

Inventory 132,460 143,317 142,162 153,226



Others (incl. LT) 60,355 59,091 59,091 59,091

Working cap. liability 191,781 182,476 205,727 215,871


Others (incl. LT) 81,259 86,347 86,347 86,347

Net Working Capital 162,762 215,226 176,647 202,404

Appl. of Funds 800,660 990,847 1,025,493 1,061,514

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 17.7 18.4 17.2 19.5

Cash EPS 33.6 30.7 34.2 40.1

BV/Share (adj.) 88.3 100.7 114.9 132.4

DPS 1.5 1.4 1.4 1.4

Payout (%) 9.9 8.9 9.5 8.4

Valuation (x)

P/E 5.8 5.6 6.0 5.3

Cash P/E 3.1 3.4 3.0 2.6

P/BV 1.2 1.0 0.9 0.8

EV/Sales 0.7 0.8 0.8 0.7

EV/EBITDA 6.7 8.1 7.4 6.3

Dividend Yield (%) 1.4 1.4 1.4 1.4

Return Ratios (%)

RoE 20.3 19.5 15.9 15.8

RoCE (pre-tax) 7.3 6.1 5.8 6.6



Debtor (Days) 36.2 40.7 36.3 36.5

Inventory (Days) 59.8 65.2 59.5 58.9

Leverage Ratio (x)


Interest Cover Ratio 3.0 2.6 2.1 2.2

Debt/Equity 2.1 2.5 2.3 1.9


Y/E March 2012 2013 2014E 2015E

EBITDA 81,897 83,324 93,890 107,830

non recur. exp (income) 14,415 -1,330 -2387 -625

tax paid -10,901 -13,478 -9,609 -10,057

Change in wkg. capital -9,322 -38,740 27,152 -9,230


(Inc)/Dec in FA + CWIP -125,119 -118,711 -108,595 -49,500

(Pur)/Sale of Inv. & yield -11,846 10,729 12,371 12,483

Others -619 -357


Equity raised/(repaid) 5,500 128

Debt raised/(repaid) 89,511 143,356 7,295

Interest -28,531 -36,728 -28,233 -31,238

Dividend (incl. tax) -4,110 -3,977 -3,310 -3,136


(Inc)/Dec in Cash 876 24,215 -11,426 16,527


Closing Balance 81,556 105,771 94,345 110,871

September 2 - 6, 2013 76


Hindustan Unilever



Promoter 52.5 52.5 52.5

Dom. Inst. 7.1 8.1 9.9

Foreign 20.6 22.5 20.4

Others 19.8 17.0 17.2

Stock info

Bloomberg Code HUVR IN



Mcap (INR b) 1280.9

Mcap (USD b) 19.7


1, 6, 12 Rel Perf (%) -6/32/15

Company descriptionHindustan Unilever (HUVR) is India’s largest FMCG

company, with market leadership in Soaps, Detergents

and Personal Care. It has a wide distribution network,

with direct reach of over 2m retail outlets. It is a

subsidiary of the Anglo Dutch FMCG giant, Unilever.

Key investment positives & long-term prospects Market leader in most categories; has strong brands.

Wide product range across categories, with presence

across price points.

Decline in raw material prices to result in margin

improvement.

Stronger focus on premiumization to capture rising

consumption in discretionary categories.

Building strong long-term growth drivers –

distribution reach expansion, portfolio

rejuvenation with aggressive innovation, and

developing categories of tomorrow.

Key challenges & near-term concerns Possible slowdown in volume growth.

INR depreciation could wipe out benefits from

softening raw material prices.

Potential media inflation after the recent TRAI

guidelines on advertising on TV.

Valuations at multi-year peak.

Key news flows / triggers to watch Monsoon performance.

Pre-election spending.

Volume growth (quarterly results).

1QFY14 highlights; outlook for FY14, FY15 Volume growth of 4%, with 70bp EBITDA margin

expansion. Weakness in PP division. Modest 3.6%

PAT growth.

Near-term outlook challenging, given the stress on

discretionary spending.

We downgraded our stock rating from Neutral to

Sell post 1QFY14 results on expensive valuations.



Net Sales* 63,788 63,108 66,548 64,658 68,090 258,102 287,293

Change (%) 14.1 12.5 11.7 12.1 6.7 16.7 11.3

EBITDA 9,664 9,767 10,888 9,718 10,856 40,037 45,463

Change (%) 28.1 18.2 12.2 16.6 12.3 21.6 13.6

Margins (%) 15.2 15.5 16.4 15.0 15.9 15.5 15.8

Adjusted PAT 8,546 8,059 8,730 7,808 8,851 33,143 35,432

Change (%) 47.7 22.9 14.5 17.7 3.6 24.6 6.9


Volume Growth (%) 9.0 7.0 5.0 6.0 4.0 8.0 7.0

S&D EBIT Margin (%) 12.2 14.3 12.4 12.0 13.4 12.5 12.5

PP EBIT Margin (%) 25.8 24.2 28.3 25.8 26.8 25.3 25.3

*Incl service inc, E: MOSL Estimates

77September 2 - 6, 2013


Hindustan Unilever: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 217,356 252,064 281,326 320,532

Other Oper. Income 3,808 6,038 5,967 5,970

Total Revenue 221,164 258,102 287,293 326,502

Change (%) 12.1 16.7 11.3 13.6

COGS 117,378 134,888 147,921 166,299

Gross Profit 103,786 123,213 139,372 160,202

Gros Margin (%) 46.9 47.7 48.5 49.1

Operating Exp 70,873 83,176 93,909 107,979

% of sales 32.0 32.2 32.7 33.1

EBIDTA 32,913 40,037 45,463 52,224

Change (%) 22.9 21.6 13.6 14.9

Margin (%) 14.9 15.5 15.8 16.0

Depreciation 2,183 2,360 2,651 2,876


Other Inc. - Recurring 2,783 6,069 5,498 5,994


Change (%) 22.7 29.8 10.7 14.6

Margin (%) 15.4 17.3 17.1 17.2

Tax 7,569 10,352 12,233 15,730


Tax Rate (%) 22.6 23.8 26.4 29.5


Change (%) 23.5 27.8 6.9 9.8

Margin (%) 11.9 13.1 12.6 12.1

Non-rec. (Exp)/Income 989 4,827 0 0

Reported PAT 26,914 37,970 35,432 38,910


Y/E March 2012 2013 2014E 2015E

Share Capital 2,162 2,162 2,162 2,162

Reserves 32,968 44,267 55,674 65,501

Net Worth 35,129 46,428 57,835 67,663


Gross Block 39,435 42,435 45,935 49,936

Less: Accum. Depn. -14,169 -16,502 -19,153 -22,029

Net Fixed Assets 25,266 25,933 26,782 27,907

Capital WIP 2,051 2,500 2,500 2,501

Investments 24,535 40,387 51,312 61,388

Deferred Charges 2,142 2,293 2,453 2,625

Curr. Assets, L&A 50,889 67,249 76,752 85,615

Inventory 25,167 34,576 38,804 44,211



Others 9,172 9,264 9,396 9,230




Provisions 11,009 9,727 10,808 12,969



E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 12.0 15.3 16.4 18.0

Cash EPS 12.9 16.3 17.6 19.3

BV/Share 16.3 21.5 26.8 31.3

DPS 7.5 8.5 9.5 11.5

Payout % 62.5 55.4 58.0 63.9

Valuation (x)

P/E 55.3 43.2 40.4 36.8

Cash P/E 51.4 40.8 37.6 34.3

EV/Sales 6.4 5.5 4.9 4.2

EV/EBITDA 42.5 34.5 30.1 26.0

P/BV 40.8 30.9 24.8 21.2

Dividend Yield (%) 1.1 1.3 1.4 1.7

Return Ratios (%)

RoE 73.8 71.4 61.3 57.5

RoCE 95.4 94.2 83.5 81.8




Leverage Ratio

Debt/Equity (x) 0.0 0.0 0.0 0.0


Y/E March 2012 2013 2014E 2015E


Int./Div. Received 2,783 6,069 5,498 5,994

Interest Paid -12 -251 -150 -150


(Incr)/Decr in WC 3,147 7,106 4,159 3,234

Change in Deff -46 -150 -161 -172


Extraordinary Items 989 4,827 0 0

(Incr)/Decr in FA -1,724 -3,449 -3,500 -4,002

(Pur)/Sale of Investments -3,479 -15,852 -10,925 -10,076

CF from Invest. -4,215 -14,474 -14,425 -14,078

Change in Networth 459 -5,175 0 1

change in equity 2 0 0 0

change in reserves 457 -5,175 0 1

Dividend Paid -18,839 -21,496 -24,025 -29,083

Others -1,645 -27 -496 -552


Incr/Decr of Cash 6,977 1,288 3,631 1,688


Closing Balance 9,760 11,048 14,679 16,367

FY09 Fifteen month ending (March)

September 2 - 6, 2013 78


ICICI Bank




Dom. Inst. 22.9 24.0 27.7

Foreign 68.7 67.5 62.7

Others 8.4 8.5 9.6

Stock info

Bloomberg Code ICICIBC IN



Mcap (INR b) 958.7

Mcap (USD b) 14.8

52-Wk Range (INR) 1,237/790

1, 6, 12 Rel Perf (%) -6/-18/-17

Company descriptionICICI Bank (ICICIBC) is India's largest private sector bank.

It has turned around its operations and RoA has

improved from 1.1% in FY10 to 1.6% in FY13. ICICIBC,

through its subsidiaries, is a leading player in Insurance

and Asset Management.

Key investment positives & long-term prospects Decisive improvement in core operations: ICICIBC's

risk-adjusted margins improved from a low of 1% in

FY10 to 2.4% in FY13, led by a ~90bp fall in credit cost

and 50bp NIM improvement. Despite lower growth

in fees and higher credit cost assumption,

continuous NIM improvement (~25bp over FY14/15)

will help the bank to maintain RoA of ~1.7%.

Strong capitalization: Tier-I ratio is expected to be

11%+ for FY15/16. Further, capital repatriation from

overseas subsidiaries and listing of Insurance

business could help in capitalization and ensure

dilution-free growth.

Asset quality performance remains strong: Despite

the challenging macro environment, ICICIBC has

been able to manage asset quality fairly well and

within the guidance. Stress loans (NNPAs +

restructured loan portfolio) are contained at 2.34%

(1.7% in FY11). While FY14 will be critical to see the

fate of few large exposures, ICICIBC is confident of

tiding over this without any dent on profitability.

We model credit cost of 75/80bp (in line with the

guidance) each for FY14/15 as against 60bp in FY13.

Key challenges & near-term concerns Rapid growth in corporate loans, particularly in the

Infrastructure and Power segments could lead to

higher slippages.

ICICIBC is highly leveraged to growth. Slower than

expected loan growth could impact earnings and

valuations.

Key news flows / triggers to watch Better than expected performance on asset quality

and improvement in fee income.

Life Insurance venture holds significant value.

Increase in FDI limit in Insurance/listing could lead

to value unlocking for the company.

1QFY14 highlights; outlook for FY14, FY15 ICICIBC's 1QFY14 PAT grew 25% YoY to INR22.7b. NII

was in-line at INR38.2b (+20% YoY), driven by NIM

improvement of 26bp YoY (stable QoQ) and loan

growth of 12% YoY (4% QoQ).

Slippages were at INR11.2b v/s INR7.8b in 4QFY13,

and the bank restructured loans of INR8.3b. For

2QFY14, the restructuring pipeline is INR10b-11b

(CDR cases); apart from this, the bank also expects

some bilateral restructuring.

Retail loan growth (excluding buyouts) was strong

at 27% YoY.

Guidance for FY14: (1) 10bp improvement in NIM

(FY13 NIM at 3.1%), (2) Fee income growth to be

10%+ v/s 3% in FY13, (3) C/I ratio to be contained at

~40%, (4) Credit cost of 75bp, (4) Domestic loan

growth to be 2-3% above industry average.



NII 31,929 33,712 34,990 38,032 38,205 138,664 160,361

Change (%) 32.4 34.5 29.0 22.5 19.7 29.2 15.6


Change (%) 32.0 35.7 28.5 15.8 29.3 27.1 15.6

PAT 18,151 19,561 22,502 23,041 22,742 83,255 92,141

Change (%) 36.3 30.1 30.2 21.2 25.3 28.8 10.7

NIM (Calc, %) 2.9 3.0 3.0 3.2 3.1 3.0 3.1

Loan Growth (%) 21.6 17.6 16.5 14.4 12.3 14.4 13.4

GNPA (%) 3.5 3.5 3.3 3.2 3.2 3.2 3.3

NNPA (%) 0.7 0.8 0.8 0.8 0.8 0.8 1.0

OSRL (%) 1.6 1.5 1.6 1.8 2.0 1.8

E: MOSL Estimates

79September 2 - 6, 2013


ICICI Bank: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Interest Income 335,427 400,756 436,934 491,699



Change (%) 19.0 29.2 15.6 18.7

Other Income 75,028 83,457 96,087 112,340

Net Income 182,369 222,121 256,448 302,740

Change (%) 16.4 21.8 15.5 18.1

Operating Exp. 78,504 90,129 103,884 121,002

Operating Profits 103,865 131,992 152,564 181,738

Change (%) 14.8 27.1 15.6 19.1

Provisions & Cont. 15,830 18,025 23,244 30,936

PBT 88,034 113,967 129,320 150,802

Tax 23,382 30,712 37,180 42,979

Tax Rate (%) 26.6 26.9 28.8 28.5

PAT 64,653 83,255 92,141 107,824

Change (%) 25.5 28.8 10.7 17.0

Dividend (Including Tax) 21,228 25,996 30,307 36,067

Core PPP* 103,995 127,042 147,064 174,238

Change (%) 12.3 22.2 15.8 18.5



Y/E March 2012 2013 2014E 2015E

Share Capital 15,028 15,036 15,036 15,036


Preference Capital 3,500 3,500 3,500 3,500


Net Worth 607,552 670,560 735,519 810,995

Of which Equity Net Worth 604,052 667,060 732,019 807,495

Deposits 2,555,000 2,926,136 3,307,541 3,939,259

Change (%) 13.3 14.5 13.0 19.1

Of which CASA Deposits 1,110,194 1,225,763 1,397,414 1,615,286

Change (%) 9.2 10.4 14.0 15.6

Borrowings 1,398,149 1,449,915 1,521,780 1,691,992



Current Assets 362,293 414,175 402,702 468,925

Investments 1,595,600 1,713,936 1,885,330 2,168,129

Change (%) 18.5 7.4 10.0 15.0

Loans 2,537,277 2,902,494 3,292,650 3,866,944

Change (%) 17.3 14.4 13.4 17.4

Net Fixed Assets 46,147 46,471 49,539 55,108

Other Assets 349,371 290,871 349,045 418,854

Total Assets 4,890,688 5,367,947 5,979,266 6,977,960

Asset Quality (%)

GNPA (INR m) 94,753 96,078 110,697 139,410

NNPA (INR m) 18,608 22,306 33,201 49,276

GNPA Ratio 3.6 3.2 3.3 3.5

NNPA Ratio 0.7 0.8 1.0 1.3

PCR (Excl Technical write off)80.4 76.8 70.0 64.7

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E


Avg. Yield - Earning Assets 8.5 8.8 8.6 8.5








RoE 11.3 13.3 13.4 14.3

Adjusted RoE 12.8 14.8 14.1 14.6

RoA 1.4 1.62 1.62 1.66




Op. Exps./Net Income* 43.0 41.5 41.4 41.0

Empl. Cost/Op. Exps. 44.8 43.2 43.1 42.6



* ex treasury


Loan/Deposit Ratio 99.3 99.2 99.5 98.2

CASA Ratio % 43.5 41.9 42.2 41.0

Invest./Deposit Ratio 62.5 58.6 57.0 55.0

G-Sec/Invest. Ratio 54.5 53.9 55.1 53.9

CAR 18.5 18.5 17.9 16.4

Tier 1 12.7 12.8 12.5 11.7

Valuation

Book Value (INR) 516.6 566.2 622.5 688.0

BV Growth (%) 7.9 9.6 9.9 10.5

Price-BV (x) 1.6 1.5 1.3 1.2

ABV (for Subs) (INR) 408.6 459.4 515.8 581.2

ABV Growth (%) 10.2 12.5 12.3 12.7

Price-ABV (x) 1.6 1.4 1.2 1.0

ABV (Subs Invst & NPA) (INR)397.3 445.9 495.6 551.3

Adjusted Price-ABV (x) 1.7 1.4 1.3 1.1

EPS (INR) 56.1 72.2 79.9 93.5

EPS Growth (%) 25.4 28.7 10.7 17.0

Price-Earnings (x) 14.8 11.5 10.4 8.9

Adj. Price-Earnings (x) 11.8 8.9 7.8 6.4


Dividend Yield (%) 2.0 2.4 2.8 3.4

E: MOSL Estimates

September 2 - 6, 2013 80


IDFC




Dom. Inst. 29.9 31.2 35.1

Foreign 53.2 54.2 50.2

Others 16.9 14.6 14.7

Stock info

Bloomberg Code IDFC IN



Mcap (INR b) 154.2

Mcap (USD b) 2.4


1, 6, 12 Rel Perf (%) -9/-29/-31

Company descriptionInfrastructure Development Finance Company (IDFC)

is India’s leading infrastructure finance player,

incorporated in 1997. Besides infrastructure financing,

IDFC has interests in broking, asset management and

investment banking. It has strategic investments in

institutions like NSE and ARCIL. As of June 2013, IDFC’s

loan book was INR556b and total asset base INR683b.

Key investment positives & long-term prospects Considering lumpy nature of business growth can

accelerate at a faster pace if there is any change in

business environment led by GOI actions. Over FY08-

13, IDFC’s loan posted over 20% CAGR.

IDFC maintained spreads at 2.2%+ over the years. In

an uncertain environment and high interest rate

scenario the management does not plan to grow

aggressively, thereby spreads are likely to be

protected at current levels.

Asset quality is healthy with gross NPAs and net

NPAs at 0.3% and 0.2% respectively. IDFC has

negligible exposure to state utilities, which reduces

the threat to asset quality to a great extent in the

current scenario. IDFC has been prudently making

provisions for cushion in case of any asset quality

shocks.

Key challenges & near-term concerns Over 40% of IDFC’s exposure is to the power

segment, which in an uncertain environment poses

a threat to asset quality due to execution risks,

inadequate fuel supply and delays in getting

requisite clearances.

Outlook for the capital market business is

challenging and would act as a drag on earnings.

Key news flows / triggers to watch Government’s address to key issues faced by the

Indian infrastructure sector would be major

catalysts in further improving the growth and

profitability outlook.

1QFY14 highlights; guidance for FY14, FY15 Guidance for FY13: 10-12% loan growth, stable

spreads at 2.2-2.4%, Asset quality no significant

pressure points as of now.

Performance highlights of 1QFY13: Loan growth of

34% YoY and 4% QoQ; TTM basis spreads improved

10bp QoQ to 2.5%; Healthy fee income growth led

by strong sanctions growth, Muted trading gains,

Stable asset quality QoQ; Higher provisions for

Investments and significant control over cost.



NII 6,220 6,430 6,560 6,430 6,860 25,640 27,887

Change(%) 29 29 22 10 10 22 9


Change(%) 10 (21) (8) 27 34 (0) 12

PAT 3,817 4,770 4,549 5,289 5,571 18,425 19,872

Change(%) 19 13 (2) 32 34 62 100

Key Operating Metrics (%)

NIMs 4.3 4.3 4.2 4.1 4.1 3.8 3.7

Loan growth 33.7 35.8 21.7 15.7 8.8 15.7 12

GNPA 0.30 0.28 0.26 0.15 0.32 0.15 0.58

NNPA 0.14 0.13 0.12 0.05 0.20 0.05 0.30

E: MOSL Estimates

81September 2 - 6, 2013


IDFC: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Interest Income* 54,841 72,530 81,335 90,317



Change (%) 24.3 27.1 9.8 11.4

Other Income 9,509 8,954 10,641 11,985

Fees Based income 4,495 5,030 5,174 5,867

Principal Invt (Incl Carry Inc)**3,890 2,020 2,464 2,814

Miscellanous Income 1,124 1,904 3,004 3,304

Net Income 29,788 34,726 38,937 43,496

Change (%) 17.0 16.6 12.1 11.7



Change (%) 22.0 19.8 12.5 12.0

Other Provisions 2,846 3,496 3,881 3,633

PBT 21,727 25,936 29,215 33,426

Tax 6,219 7,511 9,349 10,696

Tax Rate (%) 28.6 29.0 32.0 32.0

PAT 15,508 18,424 19,866 22,730

Change (%) 21.2 18.8 7.8 14.4

(MI)/Associate profit 32.0 -62.3 -100.0 -100.0


Change (%) 21.3 18.2 7.6 14.5


* Includes debt trading gains; ** Excludes debt trading gains


Y/E March 2012 2013 2014E 2015E

Capital 15,124 15,147 15,147 15,147


Net Worth 122,856 136,826 151,526 168,356


Borrowings 472,750 542,270 614,173 707,101

Change (%) 27.3 14.7 13.3 15.1


Investments 84,857 99,871 115,725 134,049

Change (%) 21.9 17.7 15.9 15.8

Loans 481,846 557,360 624,243 717,880

Change (%) 28.0 15.7 12.0 15.0

Goodwil l 9,668 9,568 9,568 9,568

Net Fixed Assets 4,165 4,248 4,333 4,420

Deferred Tax Assets 3,202 3,202 3,202 3,202

Net current Assets 12,047 4,848 8,629 6,339

Total Assets 595,784 679,096 765,700 875,457

Ratios

Y/E March 2012 2013 2014E 2015E


Avg. Yield - Infra. loans 11.2 12.1 11.9 11.5

Avg. Yield - Earning Assets 10.9 11.9 11.7 11.4


Interest Spread on loans 2.7 2.7 2.5 2.5



RoE 13.7 14.1 13.7 14.1

Core RoE 16.2 15.1 15.7 16.0

RoA 2.9 2.9 2.7 2.8


Other Income./Net Income 31.9 25.8 27.3 27.6


Total Assets/Equity(x) 4.8 5.0 5.1 5.2

Debt/Equity (x) 3.8 4.0 4.1 4.2

Fee income/Net Income 15.1 14.5 13.3 13.5


Empl. Cost/Op. Exps. 58.4 55.1 53.3 54.1

Asset Quality and capitalisation (%)

Gross NPAs 1,483 851 3,638 6,759


Net NPAs 714 289 1,876 3,797

Net NPAs to Adv. 0.1 0.1 0.3 0.5

Valuation

Book Value (INR) 81.2 90.3 100.0 111.1

Price-BV (x) 1.3 1.1 1.0 0.9

Adjusted BV (INR)* 72.7 81.3 91.0 102.1

Price-ABV (x) 1.1 1.0 0.9 0.8

EPS (INR) 10.3 12.1 13.0 14.9

EPS Growth (%) 17.1 18.0 7.6 14.5


OPS (INR) 16.2 19.4 21.8 24.5

OPS Growth (%) 17.9 19.6 12.5 12.0

Price-OP (x) 6.3 5.2 4.7 4.2

Dividend per Share (INR) 2.3 2.6 2.9 3.3

Dividend Yield (%) 2.3 2.6 2.8 3.2

E: MOSL Estimates; *Adj. for Inv. in subsidaries, Prices adj. forother ventures

September 2 - 6, 2013 82


Indusind Bank



Promoter 15.3 15.3 19.4

Dom. Inst. 7.0 8.5 8.7

Foreign 55.7 53.9 49.4

Others 22.0 22.3 22.5

Stock info

Bloomberg Code IIB IN



Mcap (INR b) 191.7

Mcap (USD b) 2.9


1, 6, 12 Rel Perf (%) -11/-9/6

Company descriptionIndusInd Bank (IIB) is a new generation bank,

established in 1994. The team, led by Managing Director,

Mr Romesh Sobti, has been instrumental in improving

core operating performance (RoA improved from 0.6%

in FY09 to 1.6% in FY13). In the next phase, the

management intends to achieve scale while

maintaining profitability.

Key investment positives & long-term prospects Well-capitalized; growth rates to remain superior:

IIB has used its niche presence to grow its balance

sheet faster than peers. In fact, it has been selling

down loans to manage margins and improve

profitability. Addition of new products like LAP, gold

loans (at pilot stage), credit cards, etc, will drive

growth higher. Expect loan growth of 25%+ over

FY14/15. With tier-I ratio of 13.8%, IIB is well

capitalized for the next phase of growth.

Asset-light revenues driving up RoA: Fee income to

average assets has increased to 1.9% in FY13 v/s 1.3%

in FY09 - a key RoA driver.

Well managed asset quality; uptick in credit cost to

be compensated by margins: Lower exposure to

riskier segment and close-to-customer business

model of CV financing has helped IIB maintain its

strong asset quality performance despite trying

times. Withe the increasing stress on CV loans, we

expect NPAs to rise but remain manageble.

Key challenges & near-term concerns 50% of IIB's deposits are in the form of wholesale

deposits. Post the sharp increase in interest rates

recently, NIM could be impacted adversely.

Stress in the CV segment has increased and

delinquency levels have increased for some of the

IIB's peers. While IIB has been able to maintain asset

quality fairly well, concerns over the same have

increased.

Key news flows / triggers to watch IIB is highly levered to liquidity conditions. Easing

liquidity could be beneficial for its margins.

Mr Sobti's tenure is expected to end in January 2014.

The bank has sought approvals for a further three-

year extension.

1QFY14 highlights; outlook for FY14, FY15 IIB's 1QFY14 PAT grew 42% YoY and 9% QoQ to

~INR3.3b (5% above estimate). NII growth was in-

line at INR6.8b (up 40% YoY), led by NIM of 3.7% (up

50bp YoY; stable QoQ) and loan growth of 27% YoY

(7% QoQ).

Asset quality remains impeccable, with stressed

loans of just 50bp. Contribution from trading income

was high at INR1b (INR178m in 4QFY13), which IIB

utilized to shore up PCR to 80% v/s 70% in 4QFY13.

Impressive traction in SA deposits (12% QoQ and

54% YoY); SA ratio improved 120bp QoQ to 14.2%.



NII 4,841 5,097 5,778 6,612 6,795 22,329 29,227

Change (%) 24.1 21.6 34.2 42.4 40.4 31.0 30.9


Change (%) 29.6 26.1 35.2 43.4 58.8 34.0 37.3

PAT 2,363 2,503 2,673 3,074 3,348 10,612 13,909

Change (%) 31.1 29.6 29.8 37.6 41.7 32.2 31.1

NIM (%) 3.3 3.3 3.6 3.7 3.7 3.7 3.9

Loan Gr. (YoY, %) 31.2 30.8 30.8 26.4 27.3 26.4 25.0

GNPA (%) 1.0 1.0 1.0 1.0 1.1 1.0 1.4

NNPA (%) 0.3 0.3 0.3 0.3 0.2 0.3 0.3

OSRL (%) 0.2 0.2 0.3 0.3 0.3 0.3

E: MOSL Estimates

83September 2 - 6, 2013


Indusind Bank: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Interest Income 53,592 69,832 81,308 97,052



Change (%) 23.8 31.0 30.9 24.6


Net Income 27,160 35,958 47,851 58,112

Change (%) 29.9 32.4 33.1 21.4



Change (%) 26.9 34.0 37.3 21.9


PBT 11,927 15,764 21,074 25,872

Tax 3,900 5,152 7,165 8,797

Tax Rate (%) 32.7 32.7 34.0 34.0

PAT 8,026 10,612 13,909 17,076

Change (%) 39.0 32.2 31.1 22.8


Core PPP* 12,680 17,325 22,507 28,789

Change (%) 29.9 36.6 29.9 27.9



Y/E March 2012 2013 2014E 2015E



Net Worth 47,417 76,303 87,714 101,740

Deposits 423,615 541,167 660,224 818,678

Change (%) 23.3 27.7 22.0 24.0

of which CASA Dep 115,631 158,674 211,528 280,137

Change (%) 23.9 37.2 33.3 32.4

Borrowings 86,820 94,596 103,993 114,488


Total Liabilities 575,961 733,065 876,263 1,063,112

Current Assets 55,396 68,487 68,598 79,871

Investments 145,719 196,542 226,023 259,926

Change (%) 7.5 34.9 15.0 15.0

Loans 350,640 443,206 554,008 692,510

Change (%) 34.0 26.4 25.0 25.0

Fixed Assets 6,568 7,561 7,775 7,967

Other Assets 17,638 17,269 19,859 22,838

Total Assets 575,961 733,065 876,263 1,063,112

Asset Quality (%)

GNPA (INR m) 3,471 4,578 7,723 12,556

NNPA (INR m) 947 1,368 1,576 2,817

GNPA Ratio 1.0 1.0 1.4 1.8

NNPA Ratio 0.3 0.3 0.3 0.4


E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E










RoE 19.2 17.8 17.4 18.4

RoA 1.6 1.6 1.7 1.8





Cost/Income* 51.3 50.6 50.3 48.9

Empl. Cost/Op. Exps. 36.1 37.7 37.3 37.8



* ex treasury and RWO



CASA Ratio 27.3 29.3 32.0 34.2



CAR 13.9 15.4 14.1 13.0

Tier 1 11.4 13.8 12.8 12.0

Valuation

Book Value (INR) 96.7 141.9 163.8 190.8

Change (%) 17.8 46.7 15.5 16.5

Price-BV (x) 3.8 2.6 2.2 1.9

Adjusted BV (INR) 95.4 140.2 161.9 187.3

Price-ABV (x) 3.8 2.6 2.3 2.0

EPS (INR) 17.2 20.3 26.6 32.7

Change (%) 38.5 18.3 31.1 22.8

Price-Earnings (x) 21.3 18.0 13.8 11.2


Dividend Yield (%) 0.6 0.8 1.1 1.3

September 2 - 6, 2013 84


Info Edge (India)



Promoter 52.2 52.2 53.5

Dom. Inst. 13.1 13.0 10.8

Foreign 27.2 27.8 29.4

Others 7.6 7.0 6.4

Stock info

Bloomberg Code INFOE IN



Mcap (INR b) 32.5

Mcap (USD b) 0.5


1, 6, 12 Rel Perf (%) 3/-9/-18

Company descriptionInfo Edge (INFOE) is among the leading internet

companies in India. It runs four major businesses: (1)

Naukri.com, India’s number-1 job site, (2)

Jeevansathi.com, India’s fastest growing matrimonial

portal, (3) 99acres.com, India’s number-1 real estate

portal, and (4) Shiksha.com, an education portal. It also

owns (a) Quadrangle, an offline executive search firm,

(b) Naukri Gulf, its foray into the Middle East market,

(c) Brijj.com, a professional networking site, and (d)

Allcheckdeals.com, an online real estate brokerage firm

run as a subsidiary company. To tap into the growing

Indian internet market, INFOE also invests in early stage

companies and start-up ventures.

Key investment positives Healthy job market in a growing economy, along

with factors such as IT/ITeS hiring and internet

penetration directly aid the growth of INFOE’s most

important segment, Naukri.

Leadership across key businesses: (1) Naukri is the

clear market leader, with ~60% market share in the

online jobs space, (2) 99acres enjoys the highest

traffic share amongst all the real estate sites, (3)

Jeevansathi ranks third in the highly competitive

online matrimonial space.

Key news flows / triggers to watch The current macro uncertainty has impacted the

recruitment segment, which is visible in Naukri’s

below 20% YoY growth for the last five quarters.

One of the key lead indicators of recruitment

revenue, deferred sales revenue rose 17.9% YoY to

INR13.1b in 1QFY14, which is a positive.

Pick-up in global IT demand environment could lead

to improvement in performance of recruitment

business.

Key challenges Slowdown in GDP growth could impact the

company’s business.

Increasing threat from competition – Naukri is faced

with Monster’s Trovix platform and Jeevansathi

operates in a crowded space where new entrants

are focusing on specific communities in India.

Greater adoption of social networking sites (such

as LinkedIn and Facebook) as a medium of online

job search.

1QFY14 highlights; guidance for FY13, FY14 1QFY14 revenues grew 13.9% YoY and 4.1% QoQ to

INR1.2b. EBITDA margin was 30.5%, down 480bp YoY.

PAT margin was 24.4%, down 560bp YoY.

The company cited lower economic growth and a

more subdued environment leading to deceleration

in the recruitment market, driving its cautious

outlook for FY14.




Change (%) (1.3) 1.7 (1.3) 9.1 4.1 28.4 15.7

EBITDA 374 370 357 397 369 1,442 1,498

Change (%) -16.9 -1.1 -3.6 11.2 -7.1 47.7 3.9

EBITDA Margin (%) 35.3 34.3 33.5 34.2 30.5 38.3 34.3

Reported PAT 318 333 308 63 294 1,230 1,022

Change (%) -21.1 4.8 -7.6 -79.4 364.3 46.4 -16.9

PAT Margin (%) 30.0 30.9 28.9 5.5 24.4 32.6 23.4


Nos of Resumes (m) 30 31 32 33 34 29 33

Nos of Unique Cust. 25,000 25,000 25,000 26,000 27,000 46,000 48,000

Othr Vert.EBITDA(INRm) -49 -53 -37 -44 -90 -127 -183

E: MOSL Estimates

85September 2 - 6, 2013


Info Edge (India): Financials and valuation

Income Statement (Standalone) (INR Million)

Y/E March 2010 2011 2012 2013

Sales 2,322 2,936 3,771 4,362

Change (%) -5.3 26.4 28.4 15.7


EBITDA 680 977 1,442 1,498

% of Net Sales 29.3 33.3 38.3 34.3


Other Income 267 330 374 440

PBT 887 1,236 1,740 1,844

Tax 317 400 511 528

Rate (%) 35.8 32.4 29.3 28.7

Adjusted PAT 569 836 1,230 1,315

Extraordinary Items 0 0 0 293

Reported PAT 569 836 1,230 1,022

Change (%) -4.6 46.8 47.1 -16.9

Balance Sheet (INR million)

Y/E March 2010 2011 2012 2013

Share Capital 273 546 546 1,092

Reserves 3,547 4,084 5,198 5,563

Net Worth 3,820 4,630 5,744 6,654

Loans 6 7 3 5


Gross Block 571 856 908 1,134

Less : Depreciation 283 318 376 471

Net Block 288 539 531 663

CWIP 69 154 94 343

Investments 1,296 2,982 3,666 4,160

Curr. Assets 3,053 2,248 3,125 1,976

Debtors 60 39 36 45


Loans & Advances 183 131 62 103


Current Liab. & Prov 880 1,121 1,728 1,847

Current Liabilities 792 979 1,496 1,606


Net Current Assets 2,173 1,126 1,398 128


Ratios

Y/E March 2010 2011 2012 2013

Basic (INR)

EPS 5.2 7.7 11.3 12.0

Cash EPS 5.8 8.3 12.0 12.9

Book Value 35.0 42.4 52.6 60.9

DPS 0.2 1.0 1.0 1.0

Payout % (excl.div.taxes) 4.2 15.3 10.4 9.7

Valuation (x)

P/E 57.9 39.5 26.8 25.1

Cash P/E 52.3 36.4 25.2 23.4

EV/EBITDA 42.5 28.6 18.3 18.0

EV/Sales 12.4 9.5 7.0 6.2



RoE 16.1 19.8 23.7 21.2

RoCE 17.5 21.4 26.3 22.6

Turnover Ratios



Cash Flow Statement (INR million)

Y/E March 2010 2011 2012 2013

CF from Operations 424 655 874 964

Cash for Working Capital 53 446 385 39

Net Operating CF 477 1,101 1,259 1,003

Net Purchase of FA -155 -585 -1,103 -2,012

Net Purchase of Invest. -741 -1,232 76 1,272

Net Cash from Invest. -896 -1,817 -1,027 -739

Proceeds from LTB/STB 2 0 0 2

Dividend Payments -24 -24 -48 -127

Cash Flow from Fin. -22 -24 -49 -125

Net Cash Flow -441 -739 184 139

Opening Cash Bal. 3,218 2,778 2,038 2,663

Add: Net Cash -441 -739 624 139

Closing Cash Bal. 2,778 2,038 2,663 2,801

September 2 - 6, 2013 86


Infosys



Promoter 16.0 16.0 16.0

Dom. Inst. 18.3 17.5 18.3

Foreign 53.3 54.1 51.8

Others 12.4 12.3 13.9

Stock info

Bloomberg Code INFO IN



Mcap (INR b) 1,736.1

Mcap (USD b) 26.7

52-Wk Range (INR) 3,098/2,190

1, 6, 12 Rel Perf (%) 14/13/22

Company descriptionInfosys (INFO) is the second-largest IT services company

in India, with revenue of ~USD7.4b (FY13) and

employing over 156,000 people. It has a global footprint

in over 30 countries and development centers in India,

China, Australia, the UK, Canada and Japan. Company's

service offerings span business and technology

consulting, ADM, SI, product engineering, IT

infrastructure services and BPO.

Key investment positives & long-term prospects INFO has changed its strategy and become

increasingly flexible on pricing and also the choice

of deals, in its quest to grow in line with peers, albeit

sacrificing margins in the near term.

It enjoys a healthy operating leverage that primarily

comes from low utilization. Utilization, excluding

trainees, in FY13 was 70.7% (IT Services and

Consulting), which it aspires to increase to 78-80%,

and is a margin lever of ~400bp.

It had healthy order signings in outsourcing in the

last three quarters, which should drive growth in

the bread-n-butter Business IT Services.

Improving climate in discretionary spending and the

US should benefit INFO more than peers, given its

skew towards these segments.

Company's focus to grow revenue from Products |

Platforms | Services (PPS) to 1/3rd (from 5.7% in

FY13) is the right one and positions it well to benefit

from long term demand trends in the industry.

Key challenges & near-term concerns Persistent slowdown in Europe and its potential

contagion effect could drive demand slowdown for

IT Services.

The impending US Immigration Bill may have been

delayed for now, but any developments on the

same, especially on outplacement front, will be a

key business model issue for firms like INFO.

Key news flows / triggers to watch INFO won seven large deals totaling a TCV of

USD600+m in 1QFY14. Over the past three quarters,

it bagged USD1.6b worth of large deals in

outsourcing (BITS).

In June 2013, INFO announced the return of Mr

Narayana Murthy by appointing him on the board

and executive leadership.

Watch for an upgrade in FY14 revenue growth

guidance by end-2QFY14.

1QFY14 highlights; outlook for FY14, FY15 Constant currency revenue growth and healthy

outsourcing deal signings were positive surprises

in 1QFY14, thus driving expectations of double digit

growth despite the management refraining from a

guidance upgrade.

Pricing will be under pressure as it pursues growth

in traditional businesses amid a challenging

environment for discretionary spending.

INFO has significant room to increase utilization

rates and that can cushion the headwinds and drive

revenue growth while maintaining margins.




Change (%) 8.6 2.5 5.7 0.3 7.8 19.6 17.4

EBITDA 29,460 28,720 29,700 27,694 29,830 115,570 124,441

Change (%) 1.9 (2.5) 3.4 (6.8) 7.7 7.8 7.7

EBITDA Margin (%) 30.6 29.1 28.5 26.5 26.5 28.6 26.3

Adjusted PAT 22,890 23,690 23,690 23,940 23,740 94,210 98,079

Change (%) (1.2) 3.5 - 1.1 (0.8) 13.3 4.1

PAT Margin (%) 23.8 24.0 22.7 22.9 21.1 23.3 20.7


Headcount 151,151 153,761 155,269 156,688 157,263 156,688 164,837

Utilization* 67.2 69.6 70.1 70.9 72.4 69.5 72.8

Rev. frm offshore(%) 50.3 49.3 48.6 47.9 46.8 49.0 46.9

E: MOSL Estimates; *including trainees

87September 2 - 6, 2013


Infosys: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Sales 337,340 403,520 479,791 528,688

Change (%) 22.7 19.6 18.9 10.2

Software Develop. Exp. 188,710 241,510 298,644 329,285

Selling and Mktg. Exp. 17,570 20,350 25,297 28,020

Administration Exp. 23,900 26,090 28,796 31,818

EBITDA 107,160 115,570 127,055 139,564

% of Net Sales 31.8 28.6 26.5 26.4

Depreciation 9,370 11,284 12,781 12,752

Other Income 19,040 23,590 21,918 24,915

PBT 116,830 127,876 136,192 151,727

Tax 33,670 33,670 36,172 40,208

Rate (%) 28.8 26.3 26.6 26.5

Adjusted PAT 83,160 94,206 100,020 111,520

Reported PAT 83,160 94,206 100,020 111,520

Change (%) 21.9 13.3 6.2 11.5


Y/E March 2012 2013 2014E 2015E

Share Capital 2,860 2,860 2,860 2,860

Reserves 331,750 395,110 465,055 543,157

Net Worth 334,610 397,970 467,915 546,017


Gross Block 91,740 117,540 131,540 145,540


Net Block 55,530 75,460 76,679 77,928

CWIP 10,340 16,600 16,600 16,600

Investments 3,770 17,390 17,390 17,390

Curr. Assets 313,840 354,060 434,896 521,425

Debtors 77,550 95,180 105,160 115,877


Loans & Advances 27,220 35,530 41,775 48,747




Provisions 18,060 24,240 27,058 31,514



E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 145.5 164.9 175.1 195.2

Cash EPS 161.8 184.4 197.2 217.3

Book Value 585.0 695.8 818.0 954.6

DPS 47.0 42.0 45.0 50.0

Payout % (excl.div.tax) 32.3 25.5 25.7 25.6

Valuation (x)

P/E 20.8 18.3 17.4 15.9

Cash P/E 18.7 16.4 15.4 14.2

EV/EBITDA 14.2 12.9 11.3 10.0

EV/Sales 4.5 3.7 3.0 2.6


Dividend Yield (%) 1.6 1.4 1.5 1.7


RoE 28.0 25.7 23.1 23.7

RoCE 32.9 28.5 26.4 25.0

Turnover Ratios




Y/E March 2012 2013 2014E 2015E


Cash for Working Capital -9,340 -9,270 -4,113 -8,015

Net Operating CF 80,890 94,354 108,688 116,256


Net Purchase of Invest. -2,330 -13,620 0 0

Net Cash from Invest. -19,970 -51,094 -14,000 -14,000

Proceeds from Equity 23,109 -2,777 0 0


Cash Flow from Fin. -5,960 -30,850 -30,075 -33,417

Net Cash Flow 54,960 12,410 64,612 68,839

Opening Cash Bal. 150,950 205,910 218,320 282,932

Add: Net Cash 54,960 12,410 64,612 68,839

Closing Cash Bal. 205,910 218,320 282,932 351,771

September 2 - 6, 2013 88


ING Vysya Bank



Promoter 41.9 42.4 43.7

Dom. Inst. 12.3 12.5 13.9

Foreign 30.6 28.2 26.9

Others 15.2 16.9 15.5

Stock info

Bloomberg Code VYSB IN



Mcap (INR b) 86.4

Mcap (USD b) 1.3


1, 6, 12 Rel Perf (%) -10/-12/18

Company descriptionING Vysya Bank (VYSB) is predominantly a South-based

private sector bank, having a balance sheet size of

INR544b. The bank has a network of 547 branches and

542 ATMs. The new management has been able to turn

around operations rapidly. While the balance sheet has

grown at a CAGR of 16%+, PAT has grown at a CAGR of

31%+ over FY08-13, driving up RoA.

Key investment positives & long-term prospects NIM increased 70bp to 3.5% over FY09-13, driven by

changing loan mix in favor of high yielding SME

segment (incremental contribution of 45% over

FY09-13), though liability profile weakened (CASA

ratio of 30% v/s 34.6% in FY11). Further, asset quality

performance remained superior, driving RoA. We

expect NIM to remain stable over FY14/15 (though

short-term rates have increased; led by benefit of

capital infusion). However, with expected rise in

credit cost, risk-adjusted NIM is likely to moderate

to 2.7% (v/s average of 2.2% over FY05-11).

Cost-to-average-assets ratio is relatively high at 2.5%,

and further RoA improvement would depend on

improving efficiency and loan growth, as there is little

scope for positive surprise on risk-adjusted NIM.

Adequately capitalized, with tier-I at 13.5%+.

Fee income growth has been muted and new

product launches and deepening of existing

customer relationships could help fee income

generation and earnings.

Key challenges & near-term concerns Growth in SA deposits (6% CAGR over last two years)

has been a challenge. With branch expansion being

slower than peers (added 32 branches in last two

years v/s 260+ by YES and 200+ by IIB), VYSB could

lose advantage and liability franchise could weaken

further.

Growth in the SME segment has been strong. Given

the significant macroeconomic challenges,

maintaining asset quality will be a difficult task.

Key news flows / triggers to watch VYSB's asset quality performance has been superior

and it has also created buffer by building high PCR

of 89%. Better than expected performance on asset

quality remains key.

Improvement in liquidity conditions and fall in cost

of funds remain the keys for better margins.

1QFY14 highlights; outlook for FY14, FY15 VYSB's 1QFY14 PAT grew 35% YoY to ~INR1.7b (in-

line). NIM declined 17bp QoQ to 3% and stress

increased, with slippages at INR1.4b (annualized

slippage ratio of 2.2%) v/s INR1.b in FY13. Higher

contribution of non-core income led to in-line PAT.

Loan CAGR of 20%, stable NIM, higher contribution

of fee-based income (CAGR of 15%) and control over

opex (CAGR of 14%), will keep core PPP growth

strong at 19%+ over FY14/15.



NII 3,433 3,688 4,029 4,237 4,254 15,386 18,210

Change (%) 31.0 21.5 24.5 32.7 23.9 27.3 18.4


Change (%) 48.1 20.2 24.6 29.0 50.3 29.3 26.2

PAT 1,301 1,502 1,623 1,703 1,751 6,130 7,016

Change (%) 38.4 30.2 35.8 33.7 34.6 34.3 14.5

NIM (Calc, %) 3.3 3.4 3.6 3.5 3.4 3.4 3.5

Loan Gr. (YoY, %) 22.8 20.8 20.2 10.6 13.0 10.6 18.0

GNPA (%) 2.0 1.9 1.8 1.8 1.8 1.8 2.2

NNPA (%) 0.2 0.1 0.1 0.0 0.2 0.0 0.3

E: MOSL Estimates

89September 2 - 6, 2013


ING Vysya Bank: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Interest Income 38,568 48,616 54,805 61,843



Change (%) 20.1 27.3 18.4 16.2


Net Income 18,781 22,655 26,903 31,141

Change (%) 13.0 20.6 18.8 15.8



Change (%) 20.9 29.3 26.2 17.3

Provisions (excl tax) 1,137 912 2,133 2,774

PBT 6,542 9,014 10,394 11,916

Tax 1,979 2,885 3,378 3,873

Tax Rate (%) 30.2 32.0 32.5 32.5

PAT 4,563 6,130 7,016 8,044

Change (%) 43.2 34.3 14.5 14.6

Equity Dividend 796 990 1,144 1,312

Core PPP* 7,143 9,132 11,353 13,316

Change (%) 42.4 27.9 24.3 17.3



Y/E March 2012 2013 2014E 2015E



Net Worth 39,798 46,268 70,499 77,231

Deposits 351,954 413,340 471,208 565,449

Change (%) 16.6 17.4 14.0 20.0

of which CASA Dep 120,473 134,351 153,945 176,983

Change (%) 15.2 11.5 14.6 15.0

Borrowings 56,965 65,113 71,233 77,866



Current Assets 32,306 28,335 34,439 38,340

Investments 127,155 182,782 210,200 241,730

Change (%) 15.0 43.7 15.0 15.0

Loans 287,367 317,720 374,910 449,892

Change (%) 21.8 10.6 18.0 20.0

Fixed Assets 5,008 4,996 4,948 4,878

Other Assets 18,170 14,531 14,531 14,531

Total Assets 470,005 548,364 639,028 749,370

Asset Quality (%)

GNPA (INR m) 1,495 1,214 2,775 5,359

NNPA (INR m) 525 91 1,247 2,357

GNPA Ratio 0.5 0.4 0.7 1.2

NNPA Ratio 0.2 0.0 0.3 0.5



Ratios

Y/E March 2012 2013 2014E 2015E










RoE 14.3 14.6 12.2 11.0

RoA 1.1 1.2 1.2 1.2





Cost/Income* 60.9 58.2 55.9 55.3

Empl. Cost/Op. Exps. 58.6 59.0 58.7 59.0

Busi. per Empl. (Rs m) 69.1 69.4 76.5 84.0

NP per Empl. (Rs lac) 0.5 0.6 0.7 0.7

* ex treasury



CASA Ratio 34.2 32.5 32.7 31.3



CAR 14.0 13.2 16.3 15.0

Tier 1 11.2 10.5 13.7 12.7

Valuation

Book Value (INR) 258.2 292.1 375.8 412.2

Change (%) 24.0 13.1 28.6 9.7

Price-BV (x) 1.8 1.6 1.2 1.1

Adjusted BV (INR) 255.8 291.7 371.1 403.3

Price-ABV (x) 1.8 1.6 1.2 1.1

EPS (INR) 30.4 39.6 38.0 43.5

Change (%) 15.4 30.2 -4.1 14.6

Price-Earnings (x) 15.2 11.7 12.2 10.6


Dividend Yield (%) 0.9 1.2 1.1 1.3

E: MOSL Estimates

September 2 - 6, 2013 90


IPCA Laboratories



Promoter 45.9 45.9 45.9

Dom. Inst. 13.5 15.8 21.4

Foreign 23.4 21.2 10.9

Others 17.3 17.2 21.9

Stock info

Bloomberg Code IPCA IN



Mcap (INR b) 79.8

Mcap (USD b) 1.2


1, 6, 12 Rel Perf (%) 8/40/55

Company descriptionEstablished in 1949, IPCA Labs (IPCA) is one of India's

fastest growing mid-sized pharma companies. It has

presence in (1) domestic branded formulations, (2)

global branded and generic formulations and (3) global

APIs (active pharmaceutical ingredients). IPCA's core

business strategy is to leverage its strength in

manufacturing API to develop vertically integrated and

highly competitive formulations. Most of the company's

formulations are backed by its own APIs.

Key investment positives & long-term prospects Strong capability in API manufacturing is at the core

of IPCA's business success. Company has attained

global leadership position in select APIs, where it is

the lowest cost producer, which gives it vertical

integration advantage.

IPCA has outperformed the domestic industry

growth over the past five years on the back of its

rising presence in fast-growing chronic therapy

segments, which contribute ~28% of domestic

formulation revenue.

We expect a significant ramp-up in IPCA's

international formulations revenue led by 22%

CAGR for the US business and 26% CAGR for branded

formulations business.

Key challenges & near-term concerns Government mandated price controls for the

domestic formulations business can have an

adverse impact.

A weak malaria season in India can adversely impact

the growth for IPCA's domestic formulations

business.

Delay in US FDA approval for Indore SEZ beyond six

months

Key news flows / triggers to watch Nod from FDA after the re-inspection of recently

set up Indore SEZ facility.

Obtaining approvals for ANDAs filed from the

Indore SEZ.

1QFY14 highlights; outlook for FY14, FY15 Export formulations segment, apart from US, also

continue to report healthy sales growth, leading to

the positive surprise during the quarter.

Management has guided for a 16-18% growth in

domestic formulations sales and 20-25% growth (in

constant currency) for the promotional markets.

Revenue from institutional business is guided at

INR4.6b.

Management retained its guidance for flat EBITDA

margin for the time being, but indicated scope for

further improvement if INR remains depreciated

at current levels.




Change (%) 19.7 23.7 14.0 19.7 27.0 19.3 18.2

EBITDA 1,329 1,788 1,584 1,423 1,710 6,232 7,467

Change (%) 39.7 13.1 4.7 27.4 28.7 21.4 19.8

EBITDA Margin (%) 21.0 23.2 22.6 21.2 21.2 22.2 22.5

Reported PAT 430 1,251 879 754 718 3,243 4,444

Adjusted PAT 430 1,251 879 754 718 3,243 4,444

Change (%) -30.3 60.5 37.5 -1.5 67.0 17.4 37.0

PAT Margin (%) 6.8 16.2 12.5 11.2 8.9 11.5 13.4


Export Formu. Gr. (%) 8.7 30.2 9.5 30.8 47.0 19.9 24.8

India Sales YoY Gr. (%)18.6 14.6 13.4 20.8 11.7 16.6 16.0

Gross Margins (%) 61.0 58.9 60.1 60.8 59.1 60.2 60.5

E: MOSL Estimates

91September 2 - 6, 2013


IPCA Laboratories: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Revenues 23,587 28,131 33,101 39,388

Change (%) 24.3 19.3 17.7 19.0

EBITDA 5,135 6,232 7,446 9,185

Margin (%) 21.8 22.2 22.5 23.3

Depreciation 671 867 1,038 1,218

EBIT 4,464 5,365 6,408 7,967


Other Income - Rec. -408 -488 -225 302

PBT before EO Expense 3,643 4,543 5,827 7,928

EO Expense/(Income) 0 0 0 0

PBT after EO Expense 3,643 4,543 5,827 7,928

Current Tax 754 927 1,282 1,665

Deferred Tax 127 372 117 159

Tax 881 1,299 1,398 1,823

Tax Rate (%) 24.2 28.6 24.0 23.0

Reported PAT 2,762 3,243 4,428 6,105

Adj PAT 2,762 3,243 4,428 6,105


Y/E March 2012 2013 2014E 2015E


Total Reserves 12,288 15,285 18,828 23,712

Net Worth 12,540 15,538 19,080 23,964


Total Loans 5,326 5,234 5,734 4,734


Gross Block 13,386 15,791 19,291 21,791

Less: Accum. Deprn. 3,945 4,748 5,787 7,005

Net Fixed Assets 9,441 11,042 13,504 14,786

Capital WIP 945 1,292 1,292 1,292


Curr. Assets 12,547 14,545 17,515 21,443

Inventory 6,699 7,410 8,937 10,629


Cash and Bank Balance 122 582 356 823

Loans & Advances 2,235 2,374 3,039 3,614



Provisions 377 544 626 744


Appl. of Funds 18,798 22,075 26,234 30,277

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

EPS (INR) 21.9 25.7 35.1 48.4

Cash EPS 27.2 32.6 43.3 58.0

BV/Share 99.4 123.1 151.2 189.9

DPS 3.7 4.7 7.0 9.7

Payout (%) 17.0 18.1 20.0 20.0

Valuation (x)

P/E 28.9 24.6 18.0 13.1

Cash P/E 23.2 19.4 14.6 10.9

P/BV 6.4 5.1 4.2 3.3

EV/Sales 3.6 3.0 2.6 2.1

EV/EBITDA 16.5 13.5 11.4 9.1

Dividend Yield (%) 0.6 0.7 1.1 1.5

FCF per Share 5.5 7.5 4.1 24.0

Return Ratios (%)

RoE 24.0 23.1 25.6 28.4

RoCE 24.1 25.2 27.1 30.9






Leverage Ratio (x)



Debt/Equity 0.4 0.3 0.3 0.2


Y/E March 2012 2013 2014E 2015E

Oper. Profit/(Loss) bef Tax 5,135 6,232 7,446 9,185

Interest/Dividends Recd. -408 -488 -225 302

Direct Taxes Paid -757 -927 -1,282 -1,665

(Inc)/Dec in WC 39 -1,119 -1,924 -2,294


(inc)/dec in FA -3,315 -2,752 -3,500 -2,500

(Pur)/Sale of Investments 68 251 0 0


Issue of shares 1 0 0 0

(Inc)/Dec in Debt 25 -93 500 -1,000

Interest Paid -413 -334 -356 -340

Dividend Paid -468 -589 -886 -1,221

Others 111 279 0 0

CF from Fin. Activity -744 -736 -742 -2,561

Inc/Dec of Cash 18 461 -226 467

Add: Beginning Balance 104 122 582 356

Closing Balance 122 582 356 823

September 2 - 6, 2013 92


ITC




Dom. Inst. 33.8 33.4 34.1

Foreign 51.0 51.1 49.4

Others 15.2 15.5 16.4

Stock info

Bloomberg Code ITC IN



Mcap (INR b) 2433.4

Mcap (USD b) 37.4


1, 6, 12 Rel Perf (%) -7/9/15

Company descriptionITC, an associate of BAT (British American Tobacco),

controls over3/4th of the cigarette market in India. It

has emerged as a diversified conglomerate, with

leading presence in Paperboards, Hotels and Processed

Foods. E-Choupal, its agri/rural initiative, has been

widely appreciated.

Key investment positives & long-term prospects Strong pricing power due to dominant market share

in Cigarettes.

Gaining market share through 64mm foray.

Consistent expansion in Cigarette margins for the

last 10 years.

Best earnings visibility in sector, with no headwinds

from raw material inflation, competitive intensity.

Strong revenue momentum in non-cigaratte FMCG

business with improving profitability.

Key challenges & near-term concerns Taxation-related risks, though excise and VAT hikes

for FY14 are announced.

Lower than expected cigarette volume growth.

Key news flows / triggers to watch Cigarette volume growth.

Performance of 64mm cigarettes; these can provide

good incremental volume growth.

Cigarette margins and Other FMCG business

profitability.

1QFY14 highlights; outlook for FY14, FY15 Cigarette volumes declined ~2%, with EBITDA

margin expanding 230bp. EBITDA and PAT grew 18%

each.

Cigarette EBIT up 18%; margin up 130bp.

Outlook remains robust given the strong earnings

visibility and successful execution of 64mm entry.

We revised our stock rating from Buy to Neutral after

1QFY14 results on account of limited upside post

recent outperformance.



Cigarette Vol Gr (%) 1.5 0.5 1.5 2.5 -2.0 1.5 1.5

Cigarette-net

EBIT Margin (%) 57.5 61.4 61.1 58.3 63.4 59.6 60.3

Non Cigarette

FMCG Loss -388 -303 -240 119 -189 -813 810

Net Sales 67,065 72,266 77,121 82,574 74,107 299,013 341,629

YoY Change (%) 14.6 18.7 22.8 18.8 10.5 18.9 14.3

EBITDA 23,752 26,883 28,578 27,063 27,913 106,275 124,918

Growth (%) 21.3 21.0 20.0 18.9 17.5 20.1 17.5

Margins (%) 35.4 37.2 37.1 32.8 37.7 35.5 36.6

Adj PAT 16,021 18,364 20,519 19,280 18,913 74,184 85,993

YoY Change (%) 20.2 21.3 20.6 19.4 18.1 20.4 15.9

E: MOSL Estimates

93September 2 - 6, 2013


ITC: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 247,984 296,056 337,490 387,921

Operational Income 3,490 2,957 4,139 4,553

Total Revenue 251,475 299,013 341,629 392,474

Change (%) 17.2 18.9 14.3 14.9


EBITDA 88,486 106,275 124,918 142,983

Change (%) 19.4 20.1 17.5 14.5

Margin (%) 35.7 35.9 37.0 36.9

Depreciation 6,985 7,956 8,805 9,591


Other Inc. - Recurring 8,253 9,387 10,923 12,043


Change (%) 22.4 20.1 18.2 14.6

Margin (%) 35.9 36.1 37.4 37.3

Tax 27,352 32,658 40,011 44,114


Tax Rate (%) 30.7 30.6 31.9 30.7


Change (%) 23.6 20.4 15.9 16.6

Margin (%) 24.8 25.1 25.5 25.8

Reported PAT 61,624 74,184 85,993 100,232


Y/E March 2012 2013 2014E 2015E

Share Capital 7,818 7,818 7,818 7,818

Reserves 180,103 197,898 218,493 242,499

Net Worth 187,922 205,716 226,312 250,317

Loans 946 946 946 946

Deferred Liability 8,727 7,828 7,178 6,453


Gross Block 138,033 153,033 168,033 183,033

Less: Accum. Depn. 48,197 56,231 65,036 74,627

Net Fixed Assets 89,837 96,802 102,997 108,406

Capital WIP 22,693 10,000 10,000 10,000

Investments 60,846 84,262 99,036 118,166

Curr. Assets, L&A 107,940 136,418 152,099 170,710

Inventory 56,378 75,054 84,016 95,185



Others 13,512 17,446 19,141 20,912




Provisions 35,184 48,295 55,896 65,152



Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 7.9 9.5 11.0 12.8

Cash EPS 8.8 10.5 12.1 14.0

BV/Share 24.0 26.3 28.9 32.0

DPS 4.5 6.2 7.1 8.3

Payout % 66.7 76.1 76.1 76.1

Valuation (x)

P/E 45.8 37.8 32.6 28.0

Cash P/E 41.1 34.1 29.6 25.5

EV/Sales 10.8 9.0 7.8 6.8

EV/EBITDA 30.4 25.1 21.2 18.3

P/BV 14.9 13.6 12.4 11.2

Dividend Yield (%) 1.3 1.7 2.0 2.3

Return Ratios (%)

RoE 32.8 36.1 38.0 40.0

RoCE 45.4 50.2 54.2 56.4




Leverage Ratio

Debt/Equity (x) 0.0 0.0 0.0 0.0


Y/E March 2012 2013 2014E 2015E


Int./Div. Received 8,253 9,387 10,923 12,043

Depreciation and Amort. 6,985 7,956 8,805 9,591



Incr in WC 985 20,608 10,730 14,549

Diff in dep 2,996 -79 0 0


Extraordinary Items 1 2 3 3

Incr Decr in FA 19,734 2,307 15,000 15,000

Pur of Investments 5,299 23,416 14,774 19,130

CF from Invest. -25,032 -25,722 -29,771 -34,127

Issue of shares 7,650 0 0 0

Incr in Debt -147 0 0 0

Interest Income 8,253 9,387 10,923 12,043


Dividend Paid 34,435 35,183 48,294 55,895

Others -12,899 1,466 -2,983 -1,929


Incr of Cash 5,757 2,014 3,020 3,323


Closing Balance 28,189 30,204 33,224 36,546

September 2 - 6, 2013 94


Jaiprakash Associates



Promoter 45.1 44.7 46.7

Dom. Inst. 12.0 14.0 13.6

Foreign 24.6 23.8 20.6

Others 18.3 17.5 19.1

Stock info

Bloomberg Code JPA IN



Mcap (INR b) 73.9

Mcap (USD b) 1.1


1, 6, 12 Rel Perf (%) -23/-48/-59

Company descriptionJaiprakash Associates (JPA) is a diversified infrastructure

player, with presence in cement, power, roads, real

estate and hospitality. Company is set to become the

third largest cement player with a target capacity of

~36mt, and is among the top 10 private sector power

project developers in terms of projects under

development/pipeline (13GW) and has access to ~3.7bsf

of land bank in and around Noida.

Key investment positives & long-term prospect JPA plans to ramp up cement capacity to ~36mt from

13.5mt in FY09.

Its current operational capacity is of 2.2GW, while

3.2GW is under-construction and expected to be

commissioned in FY14 and FY15 in phases (1.3GW

Nigre and 2GW Bara I are under construction stage).

JPA is an EPC contractor for the real estate project

development at Noida, own power projects (~13GW

under-construction/planned) etc. This provides

good revenue visibility for E&C division.

JPA group has outlined a strategy for consolidation

and deleveraging and plans to lower debt through

project cash flows, stake sale in cement business

and divestment in Jaypee Infratech.

Key challenges JPA's earnings are lumpy in nature, given the

commodity nature of cement earnings and project

nature of EPC and RE division earnings.

Consolidated debt stands at INR554b, entailing DER

of 4.4x as in March 2013.

Slowdown in real estate revenue bookings,

regulatory overhang on cement/power business.

Key news flows / triggers to watch Intent to de-leverage through divestment of

cement and power assets.

Commissioning of Nigrie thermal project and status

on Karcham Wangtoo PPA.

Ramp-up in real estate business, both at standalone

and consolidated levels.

1QFY14 highlights; outlook for FY14, FY15 Operating performance was largely in line with our

estimates.

Adjusted PAT was below estimate led by higher

fixed cost and lower-than-estimated other income.

Cement sales target for FY14 is ~16-17mt.




Change (%) (6.9) (5) 3 (5) 12 - 12

EBITDA 7,713 7,711 7,625 8,507 7,847 31,755 35,467

Change (%) (0.2) 3 (7) (17) 2 - 12

EBITDA margin (%) 26.0 26 22 22 24 24 24

Reported PAT 1,388 1,280 1,109 1,235 3,345 5,013 8,007

Adjusted PAT 1,379 1,280 1,101 1,192 207 4,920 4,869

Change (%) 28.7 (0) (46) (57) (85) - (1)

PAT margin (%) 4.7 4 3 3 1 4 3


Cem. Business EBIT 2,266 1,337 1,179 2,239 1,718 7,021 9,724

EPC EBIT 3,603 4,393 2,896 2,930 3,032 13,821 12,297

RE EBIT 666 951 2,210 2,026 1,535 6,110 8,325

E: MOSL Estimates

95September 2 - 6, 2013


Jaiprakash Associates: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 128,531 133,584 147,293 160,054

Change (%) -1.8 3.9 10.3 8.7

Cons. & Manufact. Exp. 70,454 72,633 79,675 84,463

Staff Cost 6,613 8,080 8,887 9,776

Selling & Dist. Exp. 12,109 13,513 16,216 19,459

Other Expenses 4,959 6,106 7,048 8,024

Total Expenses 94,135 100,332 111,826 121,723

EBITDA 34,397 33,252 35,467 38,331

% of Net Sales 26.8 24.9 24.1 23.9

Depreciation 6,142 7,261 7,848 7,961

Interest 17,817 20,114 23,609 24,312

Other Income 2,706 1,537 4,191 5,457

Adjustments 93 3,952

PBT 13,143 7,508 12,152 11,516

Tax 2,880 2,495 4,146 4,185

Rate (%) 21.9 33.2 34.1 36.3

Reported PAT 10,264 5,013 8,007 7,331

Extra-ord. Inc. (net of exp) 61 93 3,138 0

Adjusted PAT 10,203 4,920 4,869 7,331

Change (%) 37.5 -51.8 -1.0 50.6

Balancesheet (INR Million)

Y/E March 2012 2013 2014E 2015E

Share Capital 4,253 4,438 4,438 4,438

Reserves 118,790 128,885 135,782 141,441

Net Worth 123,043 133,323 140,220 145,879

Loans 161,163 202,167 220,960 207,419

Deffered Tax Liability 12,437 13,727 14,227 14,727




Net Fixed Assets 120,295 131,575 126,227 120,766

Capital WIP 47,024 58,009 46,919 46,966

Investments 66,930 88,913 79,275 82,098

Curr. Assets 173,195 181,436 241,777 245,699

Inventory 29,116 29,777 33,488 35,516

Debtors 40,231 42,669 33,091 35,957


Loans & Advances 43,092 52,995 55,700 58,416



Creditors 34,085 38,812 42,275 46,059


Provisions 2,620 3,525 4,231 5,078



E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

Adjusted EPS 4.8 2.3 2.2 3.3

Growth (%) 37.5 -52.9 -2.9 50.6


Growth (%) -54.2 0.2 2.8 206.3

Cash EPS 7.7 5.5 5.7 6.9

Book Value 57.9 60.1 63.2 65.7

DPS 1.0 0.5 0.4 0.7


Valuation (x)

P/E (standalone) 7.2 15.4 15.8 10.5

P/E (consolidated) 11.6 11.6 11.3 3.7

Cash P/E 4.5 6.3 6.1 5.0

EV/EBITDA 6.5 8.0 6.2 5.5

EV/Sales 1.7 2.0 1.5 1.3


Dividend Yield (%) 2.8 1.3 1.3 1.9


RoE 9.4 3.9 3.6 5.1

RoCE 10.4 8.5 8.8 9.6

Turnover Ratios



Leverage Ratio

Debt/Equity (x) 1.3 1.5 1.6 1.4


Y/E March 2012 2013 2014E 2015E



Interest 17,817 20,114 23,609 24,312

Less: Direct Taxes Paid 2,880 2,495 4,146 4,185

(Inc)/Dec in WC -21,814 -5,520 11,237 1,102


(Inc)/Dec in FA 2,036 -29,527 8,591 -2,548

(Pur)/Sale of Investments -2,093 -21,983 9,637 -2,823

CF from Investments -57 -51,510 18,228 -5,370

(Inc)/Dec in Net Worth 21,629 7,700 500 500

(Inc)/Dec in Debt -28,240 41,004 18,793 -13,541


Dividend Paid 2,326 1,143 1,110 1,671


Inc/Dec of Cash -14,402 2,805 63,503 -3,689


Closing Balance 10,222 13,028 76,530 72,842

September 2 - 6, 2013 96


Jindal Steel & Power



Promoter 59.1 59.1 59.0

Dom. Inst. 6.7 6.8 7.3

Foreign 21.6 22.6 21.9

Others 12.6 11.6 11.8

Stock info

Bloomberg Code JSP IN



Mcap (INR b) 216.4

Mcap (USD b) 3.3


1, 6, 12 Rel Perf (%) 19/-30/-45

Company descriptionJindal Steel and Power (JSP) has 3mt of operational

steel-making capacity at Raigarh. It has one of the best

iron ore and coal resources in India, with assets spread

over various mineral-rich countries. JSP offers the best

insulation from iron ore and coking coal price volatility

among Indian steel producers. Most of its operation

have captive coal block backing. It has rich iron ore and

coal resources overseas, mainly in Mozambique, South

Africa and Indonesia.

Key investment positives & long-term prospects JSP has planned to increase its steel capacity 2x in

FY14 to 7mtpa. It is augmenting capacity by setting

up a 1.6mtpa module at Angul, which would use the

coal gasification route. Utkal B1 coal block associated

with the project has received all major regulatory

clearances while signing of mining lease is awaited.

It is also planning to add 2mtpa at its existing 1.6mtpa

HBI plant in Oman.

Jindal Power plans to double its power capacity from

2,434MW to 4,969MW by FY14 through Tamnar II

expansion. It is putting up a 4x600MW power plant

near its existing Tamnar I 1,000MW power plant. It

has linkages for the first two units of 600MW each.

Key challenges & near-term concerns Regulatory risk to its growth projects has increased

post a FIR filed against the promoter in relation to

coal blocks allocation during 2004-09.

Unlike its operating assets, profitability for new

projects is going to be much lower, due to lack of

captive resource backing.

Key news flows / triggers to watch Utkal B1 captive coal block, which received all major

regulatory approvals, awaits signing of mining

lease.

1QFY14 highlights; outlook for FY14, FY15 Adjusted consolidated PAT declined 27% YoY to

INR6.9b due to (1) lower prices of steel and pellets,

and (2) lower captive power generation. Overseas

subsidiaries made a negative contribution of

INR662m, against a positive contribution of

INR585m in 1QFY13, resulting in sharper fall in

consolidated PAT.

Focus has shifted to complete the existing projects

- 1.6mtpa Angul steel plant, Oman forward

integration and 2,400MW Tamnar-2. JSP will go slow

on all other expansion projects in India and overseas

mining. Capex budget has been cut from INR100b

to INR30b for FY15.




Change (%) 19.2 5.2 10.2 3.0 -3.4 8.8 1.9

EBITDA 15,932 16,964 17,897 16,893 15,051 67,686 60,441

Change (%) -2.0 -6.0 -0.1 -11.8 -5.5 -5.1 -10.7

EBITDA Margin (%) 33.9 36.4 37.3 29.9 33.2 34.2 29.9

Reported PAT 3,855 9,035 8,699 7,527 5,013 29,116 23,752

Adjusted PAT 9,594 8,973 8,673 8,602 6,943 35,842 25,657

Change (%) 4.4 -14.5 -15.1 -26.3 -27.6 -13.8 -28.4

PAT Margin (%) 20.4 19.3 18.1 15.2 15.3 18.1 12.7


Steel (000 tons) 561 639 734 909 665 2,843 2,897

Pellets (000 tons) 395 436 623 658 551 2,112 3,729

Jindal Power(Mkwh)2,015 1,746 1,651 1,999 2,000 7,411 7,984

E: MOSL Estimates

97September 2 - 6, 2013


Jindal Steel & Power: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net sales 182,086 198,068 201,919 269,675

Change (%) 38.9 8.8 1.9 33.6

Total Expenses 114,154 130,381 141,478 186,506

EBITDA 67,932 67,686 60,441 83,169

% of Net Sales 37.3 34.2 29.9 30.8


EBIT 54,067 52,294 42,841 56,836

Net Interest 3,600 8,583 12,235 18,061

Other income 1,419 1,364 3,064 1,648

PBT before EO 51,886 45,076 33,670 40,424

EO income -6,741 -2,000 0

PBT after EO 51,886 38,334 31,670 40,424

Tax 11,863 9,218 7,918 9,471

Rate (%) 22.9 24.0 25.0 23.4

Reported PAT 40,023 29,116 23,752 30,953

Minority interests 574 417 510 565

Share of Associates 200 402 415 200

Adjusted PAT 39,649 35,842 25,657 30,589

Change (%) 5.6 -9.6 -28.4 19.2


Y/E March 2012 2013 2014E 2015E


Reserves 180,176 187,556 212,475 239,566

Net Worth 181,111 188,491 213,410 240,500


Total Loans 170,908 254,455 314,955 338,955



Gross Block 223,301 254,002 318,768 407,660

Less: Accum. Deprn. 58,360 73,983 91,995 118,327

Net Fixed Assets 164,940 180,019 226,773 289,332

Capital WIP 136,520 195,894 221,476 172,828

Good will 918 1,018 1,018 1,018

Investments 3,776 5,001 5,001 5,001

Curr. Assets 143,922 168,460 182,716 230,354

Inventory 35,795 35,880 35,656 42,937



Loans & advances and others93,56797,396 97,396 97,396



Provisions & Others 53,956 54,462 54,462 54,462


Appl. of Funds 367,010 459,645 546,467 599,178


Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 42.4 38.3 27.4 32.7

Cash EPS 57.6 47.6 44.2 61.3

BV/Share 193.7 201.6 228.3 257.3

DPS 1.6 2.0 2.0 2.0

Payout (%) 3.9 5.4 7.5 6.3

Valuation (x)

P/E 5.5 6.0 8.4 7.1

Cash P/E 4.0 4.9 5.2 3.8

P/BV 1.2 1.1 1.0 0.9

EV/Sales 2.1 2.3 2.5 1.8

EV/EBITDA 5.7 6.7 8.3 5.9

Dividend Yield (%) 0.7 0.9 0.9 0.9

Return Ratios (%)

EBITDA Margins (%) 37.3 34.2 29.9 30.8

Net Profit Margins (%) 21.8 18.1 12.7 11.3

RoE 24.6 19.4 12.8 13.5

RoCE (pre-tax) 16.9 13.1 9.2 10.2

RoIC (pre-tax) 26.1 22.5 16.2 17.8




Debtor (Days) 26.2 33.6 32.4 30.5

Leverage Ratio (x)



Debt/Equity 0.9 1.3 1.3 1.1


Y/E March 2012 2013 2014E 2015E

Pre-tax profit 51,886 38,334 31,670 40,424

Depreciation 13,865 15,392 17,600 26,333

(Inc)/Dec in Wkg. Cap. -17,024 -1,392 311 -3,055

Tax paid -9,999 -7,375 -6,335 -8,476

Other operating activities 840 -19,822 3,319 -1,316


(Inc)/Dec in FA + CWIP -73,254 -90,076 -90,348 -40,244

(Pur)/Sale of Investments -797 -1,225 0 0


Equity raised/(repaid) 1 0 0 0

Debt raised/(repaid) 31,180 83,547 60,500 24,000


Other financing activities 1,663

CF from Fin. Activity 31,307 81,627 58,580 22,080

(Inc)/Dec in Cash -3,177 15,465 14,798 35,745


Closing Balance 1,492 16,957 31,755 67,500

September 2 - 6, 2013 98


JSW Steel



Promoter 36.3 38.6 38.6

Dom. Inst. 5.6 4.5 4.7

Foreign 38.3 40.8 41.3

Others 19.8 16.1 15.3

Stock info

Bloomberg Code JSTL IN



Mcap (INR b) 131.9

Mcap (USD b) 2.0


1, 6, 12 Rel Perf (%) 6/-24/-27

Company descriptionJSW Steel (JSTL) demonstrated excellent project

execution skills over the past decade, growing its annual

capacity 6x to 10mt through brownfield expansions at

Vijaynagar. With the acquisition of Ispat Industries and

Salem Steel, it controls annual capacity of 14mt. Its main

production facilities are located in proximity to rich iron

ore reserves in Karnataka. It has investments in iron

ore mining in Karnataka and Chile. JSTL's other overseas

investments include plate and pipe mill operations and

coal mines in the US.

Key investment positives & long-term prospects JSTL has the lowest conversion cost due to

operational efficiencies. Its strategic location near

the iron ore rich Bellary-Hospet belt helps it to keep

iron ore purchase costs low. However, the ban on

iron ore mining at Bellary and subsequent

unavailability of adequate quantity at lower cost

had derailed volume growth.

Earnings have high sensitivity to steel and raw

material prices due to high financial and operating

leverage.

Key challenges & near-term concerns Dependence on external sources for raw material,

especially iron ore, has been impacting both

profitability and volume growth. Iron ore availability

remains a concern in Karnataka despite partial

restarting of mines in the state.

Key news flows / triggers to watch Improvement in iron ore availability in Karnataka

could result in higher capacity utilization, thereby

boosting sales and margins. Currently, 6mtpa (ex

NMDC) mining capacity is operational in the state.

1QFY14 highlights; outlook for FY14, FY15 Reported consolidated loss after tax of INR4b

included INR8.6b on account of a forex loss.

Standalone EBITDA/ton remained resilient at

USD122/ton due to reduction in operating costs,

despite merger of low margin Dolvi unit and

spinning off of VAPs.

JSTL has been able to sustain margins despite a weak

demand scenario. Iron ore costs have not inched

up much even with the tight supply in Karnataka,

due to the export ban and weak demand from

secondary steel producers. Some cost benefits can

be expected along with the commissioning of pellet

and coke ovens at Dolvi. However, uncertainty

remains over the stability of steel prices and

relative pricing power in the domestic market, due

to weak demand.




Change (%) 27.8 16.2 5.3 -2.7 3.5 10.5 16.6

EBITDA 17,728 15,252 13,136 16,973 17,491 63,088 78,883

Change (%) 25.9 16.4 4.8 2.8 -1.3 12.2 25.0

EBITDA Margin (%) 19.6 17.2 15.8 18.3 18.7 17.8 19.1

Reported PAT 2,690 8,223 1,367 5,732 -2,208 18,012 16,881

Adjusted PAT 6,879 5,115 3,652 4,728 4,682 20,374 23,561

Change (%) 20.4 -14.7 -61.9 -15.4 -31.9 -24.2 15.6

PAT Margin (%) 7.6 5.8 4.4 5.1 5.0 5.7 5.7


Sales (mt) 2.1 2.2 2.2 2.4 2.6 8.9 11.5

Realizat.(INR/ton) 42,853 40,880 38,214 38,234 36,699 39,973 35,938

EBITDA/ton (USD/ton) 155 127 112 129 122 130 119

E: MOSL Estimates

99September 2 - 6, 2013


JSW Steel: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net sales 343,681 382,097 450,188 445,778

Change (%) 42.6 11.2 17.8 -1.0

Total Expenses 282,662 317,057 366,039 358,425

EBITDA 61,019 65,039 84,150 87,353

% of Net Sales 17.8 17.0 18.7 19.6


EBIT 41,687 42,664 53,352 55,071

Net Interest 14,273 19,675 29,103 30,161

Other income 769 697 809 928

PBT before EO 28,183 23,687 25,058 25,839

EO income -15,353 -4,302 -8,617

PBT after EO 12,830 19,385 16,441 25,839

Tax 5,002 8,453 6,382 8,588

Rate (%) 39.0 43.6 38.8 33.2

Reported PAT 7,828 10,933 10,060 17,251

Minority interests 189 -343 -542 -542

Share of Associates -2,262 -1,645 154 154

Preference dividend 279 279 279 279

Adj. PAT (after MI & Asso) 14,844 11,091 14,665 16,584

Change (%) -11.6 -25.3 32.2 13.1


Y/E March 2012 2013 2014E 2015E

Share Capital 2,231 2,231 2,417 2,417

Reserves 162,474 168,416 172,289 185,766

Net Worth 164,705 170,647 174,706 188,183

Minority Interest 2,177 1,972 1,429 887

Total Loans 293,907 310,091 404,011 404,011



Gross Block 426,895 458,676 631,311 691,311

Less: Accum. Deprn. 88,775 111,508 216,700 248,982

Net Fixed Assets 338,121 347,168 414,610 442,329

Capital WIP 35,703 65,972 85,972 65,972

Investments 18,856 16,064 1,626 1,626

Curr. Assets 124,582 120,572 156,261 162,529

Inventory 57,893 54,952 74,004 73,279



Others 18,786 26,588 31,607 31,607





Appl. of Funds 488,039 515,430 594,159 613,964

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 66.5 49.7 60.7 68.6

Cash EPS 121.7 149.3 169.0 204.9

BV/Share 738.2 764.8 722.7 778.5

DPS 7.5 10.0 10.0 10.0

Payout (%) 23.6 20.5 21.2 18.7

Valuation (x)

P/E 8.2 11.0 9.0 8.0

Cash P/E 4.5 3.7 3.2 2.7

P/BV 0.7 0.7 0.8 0.7

EV/Sales 1.1 1.1 1.1 1.1

EV/EBITDA 6.3 6.4 6.0 5.7

Dividend Yield (%) 1.4 1.8 1.8 1.8

Return Ratios (%)

RoE 9.1 6.6 8.2 9.1

RoCE (pre-tax) 8.8 8.4 9.9 9.4




Creditors(Days) 28 29 45 45

Leverage Ratio (x)



Debt/Equity 1.6 1.7 2.1 1.9


Y/E March 2012 2013 2014E 2015E

EBITDA 61,019 65,039 84,150 87,353

Non cash exp. (income) -11,202 -7,379

(Inc)/Dec in Wkg. Cap. -10,622 5,888 -6,871 -4,911

Tax Paid -4,071 -5,105 -1,276 -1,718


(Inc)/Dec in FA + CWIP -40,795 -56,301 -50,000 -40,000

(Pur)/Sale of Investments 808 774

Acquisition in subsidiaries -1,790 539

Int. & Dividend Income 636 533 809 928

Other investing activities -267 -590 -153 -149


Debt raised/(repaid) 21,909 9,546 19,731 -1,061


Interest paid -11,430 -15,186 -29,103 -30,161

CF from Fin. Activity 6,978 -7,909 -12,479 -34,329

(Inc)/Dec in Cash 695 -4,511 14,180 7,175

Add: opening Balance 23,063 32,510 17,969 32,149

Margin Money & deb. bal. 8,753 -10,030

Closing Balance 32,510 17,969 32,149 39,324

September 2 - 6, 2013 100


Just Dial



Promoter 33.1 - -

Dom. Inst. 2.1 - -

Foreign 58.3 - -

Others 6.5 - -

Stock info

Bloomberg Code JUST IN



Mcap (INR b) 46.7

Mcap (USD b) 0.7


1, 6, 12 Rel Perf (%) 7 / - / -

Company descriptionJust Dial Ltd (JUST) is one of the leading local search

engines in India, with a well-known and established

brand on the Internet and its easy to remember phone

numbers (88888 88888 and 6999 9999). JUST has a first-

mover advantage among consumers seeking

information on local businesses backed by 16 years of

experience in this segment. According to alexa.com,

justdial.com is ranked No. 40 among the top websites

in India and the top site in its category.

Key investment positives & long-term prospects JUST has a strong database of 9.1m listings across

2,000 cities, with paid subscribers at 207,500 (2.3%

of total listings) and significantly ahead of

competition. In number of listings, the second

largest player, Askme, is 1/3rd the size of JUST.

Total visits at end-FY13 stood at 364m (Internet at

182.6m, mobile Internet stood at 41.9m, voice at

139.1m). Higher visits from mobile and Internet as a

percentage of total visits to help improve margins.

Introduction of friction-free Evergreen contracts to

help increase the paid subscriber base, improve

realizations and pertinently act as a big entry barrier

for new entrants.

Newer product launches like enabling transactions,

taxi bookings, food ordering, car listings, quick

quotes etc to lead to non-linear revenue growth

model, going forward.

Key challenges & near-term concerns Evolving with technology, the biggest challenge.

Innovation and execution on mobile app format.

Regulatory hurdles.

Key news flows / triggers to watch Addition of paid campaigns should accelerate given

entry into tier 2 and tier 3 cities, complimented by

friction-free Evergreen contracts.

Launch of newer products which will drive non-

linear revenue over the long term.

Increased visits and searches from mobile app and

Internet format to aid margins.

1QFY14 highlights; outlook for FY14, FY15 Management rolled out a friction-free campaign,

within Evergreen contracts, in May 2014, which

helps a business become a paid subscriber without

paying the initial three months advance fee.

Total listings grew by 23% YoY to 9.5m, while paid

campaigns grew 22% YoY to 221,000.

Total visits at end-1QFY14 stood at 115.2m,

compared to 84.6m in 1QFY13, marking a growth of

36.2%. Internet saw a growth of 31.2% (56.4m v/s

43m), mobile Internet grew by 146.8% (19.5m v/s

7.9m), while voice grew by 16.6% (39.3m v/s 33.7m).

Management guided for 200-250bp of margin

expansion over next two years as visits and search

from Internet and mobile Internet increases.

Quarterly Performance (consolidated) (INR Million)

Y/E March Jun-12 Mar-13 Jun-13 FY13 FY14E

Net Sales 817 983 1,046 3,628 4,679

YoY Change (%) 28.0 38.4 29.0

Total Expenditure 567 710 683 2,619 3,286

EBITDA 250 273 363 1,008 1,392

Margins (%) 30.6 27.8 34.7 27.8 29.8

PBT before EO expense 242 295 393 1,000 1,600

Extra-Ord expense 0 0 0 -15 0

PBT 242 295 393 984 1,600

Tax 75 81 113 300 472

Rate (%) 31 27.6 29 30.4 29.5

Reported PAT 166 214 280 685 1,128

Adj PAT 166 214 280 700 1,128

YoY Adj PAT Change (%) 68.5 38.8 61.2

Margins (%) 20.4 21.8 26.8 19.3 24.1

E: MOSL Estimates

101September 2 - 6, 2013


Just Dial: Financials and valuation


Y/E March FY12 FY13 FY14E FY15E

Net Sales 2,621 3,628 4,679 6,004

Change (%) 42.5 38.4 29.0 28.3


EBITDA 672 1,008 1,392 1,926

Margin (%) 25.7 27.8 29.8 32.1


EBIT 582 864 1,230 1,720


Other Income - Rec. 132 135 370 470

PBT bef. EO Exp. 713 1,000 1,600 2,190

EO Expense/(Income) 0 0 0 0

PBT after EO Exp. 713 1,000 1,600 2,190

Current Tax 206 279 472 646


Tax Rate (%) 29.3 29.8 29.5 29.5

Reported PAT 504 702 1,128 1,544

PAT Adj for EO items 504 702 1,128 1,544

Change (%) 70.7 39.2 60.7 36.9

Margin (%) 19.2 19.4 24.1 25.7




Total Reserves 542 3,564 4,249 5,188

Net Worth 1,072 4,259 4,944 5,883


Deferred Liabilities 0 9 9 9

Total Loans 0 0 0 0


Gross Block 600 967 1,267 1,667

Less: Accum. Deprn. 251 359 521 727

Net Fixed Assets 348 608 746 940

Capital WIP 12 16 0 0

Total Investments 1,568 4,858 4,858 4,858

Curr. Assets, Loans&Adv. 540 593 1,367 2,393

Inventory 0 0 0 0


Cash and Bank Balance 237 239 947 1,889

Loans and Advances 303 345 414 496




Net Current Assets -865 -1,213 -650 95

Appl. of Funds 1,072 4,269 4,953 5,893

Ratios


Basic (INR) *

EPS 7.8 10.1 16.2 22.2

Cash EPS 11.2 12.2 18.6 25.2

BV/Share 16.5 61.3 71.1 84.6

DPS 0.0 4.6 7.2 9.8

Payout (%) 0.0 40.2 39.3 39.2

Valuation (x) *

P/E 85.1 65.3 40.7 29.7

Cash P/E 58.9 54.2 35.6 26.2

P/BV 40.0 10.8 9.3 7.8

EV/Sales 13.2 9.5 7.2 5.5

EV/EBITDA 51.4 34.3 24.3 17.1

Dividend Yield (%) 0.0 0.7 1.1 1.5

Return Ratios (%)

RoE 49.8 26.3 24.5 28.5

RoCE 70.4 37.5 34.8 40.5


Fixed Asset Turnover (x) 4 4 4 4



Working cap. Turnover (Days) -154 -146 -125 -109

Leverage Ratio (x)


Debt/Equity 0.0 0.0 0.0 0.0

* Adjusted for treasury stocks



Profit/(Loss) Bef. Tax 713 984 1,600 2,190


Direct Taxes Paid -209 -307 -472 -646

(Inc)/Dec in WC 444 314 145 197


EO Expense -82 -112 0 0

CF from Operating incl EO 957 1,023 1,436 1,947

(inc)/dec in FA -231 -361 -284 -400

(Pur)/Sale of Investments -1,091 -3,188 0 0

Others 112 14 0 0

CF from Investments -1,209 -3,535 -284 -400

Issue of Shares 293 2,513 0 0

(Inc)/Dec in Debt -2 -1 0 0

Dividend Paid 0 0 -443 -605

CF from Fin. Activity 293 2,514 -443 -605

Inc/Dec of Cash 41 2 708 942


Closing Balance 237 239 947 1,889

September 2 - 6, 2013 102


Kotak Mahindra Bank



Promoter 43.8 45.0 45.2

Dom. Inst. 2.2 2.2 4.5

Foreign 39.4 37.8 34.3

Others 14.6 15.0 16.1

Stock info

Bloomberg Code KMB IN



Mcap (INR b) 483.9

Mcap (USD b) 7.4


1, 6, 12 Rel Perf (%) -1/1/4

Company descriptionKotak Mahindra group is one of India's largest financial

conglomerates. Kotak Mahindra Bank (KMB) together

with its subsidiaries has a presence across a spectrum

of financial services - Lending, Broking, Investment

Banking, Life Insurance, Asset Management and

Proprietary Investments. As at June 2013, KMB had 445

branches and consolidated total assets of INR1.2t.

Key investment positives & long-term prospects KMB's dependence on earnings from non-lending

businesses reduced considerably in the last few

years. The share of profits from lending business

has increased from 40-45% in FY07/08 to 80%+

currently, which provides stability to earnings.

KMB has demonstrated superior asset quality

performance in the current credit cycle. Increasing

share of secured products in the overall mix should

augur well for asset quality.

KMB remains one of the most conservative banks in

the system. In the current uncertain environment,

it is likely to grow 15-20% on a lower base.

Strong tier-I ratio of 15%+ provides much needed

cushion in the current macroeconomic backdrop.

Life Insurance business has turned profitable and is

unlikely to require further capital infusion.

However, muted outlook on the Capital Market and

Asset Management business will keep non-lending

business profitability under pressure.

Key challenges & near-term concerns Asset quality remains a key monitorable, given early

warning signs of asset quality deterioration in some

of the key products and continued policy paralysis.

Moderating growth, especially in some of the high

yielding products, expected deterioration in asset

quality, and higher base of FY13 (due to healthy

recoveries and just 37bp credit cost) could put

pressure on lending business profitability.

Key news flows / triggers to watch The RBI has directed KMB to reduce promoter

holding to 20% by March 2018 from ~45%, currently.

KMB's strategy on the same will have to be watched.

Signals of improvement in the outlook for Capital

Market related businesses.

1QFY14 highlights; outlook for FY14, FY15 Guidance for FY14: (a) Loan growth guidance of 15%

v/s 20%+ earlier, (b) Cost-to-income ratio to be in

high 40's, (c) NIM of around 4.5% (4.7% in FY13), (d)

Credit cost expectation for FY14 increased to 60bp

(~40bp earlier).

1QFY14 performance: (a) Consolidated loans grew

20% YoY and 3% QoQ, led by strong growth in

corporate loan book (18% QoQ and 20% YoY), (b)

Quarterly additions to savings accounts remain

healthy at INR7.9b (up 11% QoQ), (c) Share of SA

deposits increased to 15.4% from 10% before

deregulation of SA deposit rates in November 2011.

KMB Group: Earnings Estimates (INR Million)

Business 1QFY14 4QFY13 QoQ Gr. 1QFY13 YoY Gr.

Kotak Mah. Bk (Standalone) Banking Business 4,028 4,362 -8 2,824 43

Kotak Mahindra Prime Auto loans, debt

capital markets 1,170 1,190 -2 940 24

Kotak Mahindra Invest. Primarily LAS 40 50 -20 40 0

Lending Business 5,238 5,602 -6 3,804 38

Kotak Mah. Capital Co. Investment Bkng. 40 40 0 60 -33

Kotak Securities Broking & distrib. 430 130 231 230 87

Capital Market Business 470 170 176 290 62

International subsidiaries Asset Mgt and IB -100 -10 900 -50 100

Kotak Mah. AMC & Trustee Mutual funds Mgmt. 70 20 NA 40 75

Kotak Investment Advisors Alternate Asset Mgmt. 10 80 -88 80 -88

Asset Management Business -20 90 -122 70 -129

Kotak Life Insurance 710 580 22 320 122

Consol. PAT 6,278 6,442 -3 4,484 40

Consolidation Adjust. -3 214 -50

Reported PAT 6,275 6,656 -6 4,435 41

103September 2 - 6, 2013


Kotak Mahindra Bank: Financials and valuation

Income Statement (Standalone) (INR Million)

Y/E March 2012 2013 2014E 2015E

Interest Income 61,802 80,425 91,933 108,399



Change (%) 19.8 27.6 17.7 22.5


Net Income 34,898 43,663 52,724 63,723

Change (%) 21.3 25.1 20.8 20.9



Change (%) 24.9 30.3 23.9 22.4

Provisions (excl tax) 551 1,846 4,538 5,112

PBT 15,999 19,721 22,191 27,602

Tax 5,149 6,113 7,323 9,109

Tax Rate (%) 32.2 31.0 33.0 33.0

Standalone PAT 10,851 13,607 14,868 18,493

Change (%) 32.6 25.4 9.3 24.4


Change (%) 16.9 19.4 11.2 17.7

Equity Dividend (Incl tax) 536 597 712 838

Core PPP (Standlone)* 14,445 19,194 23,657 29,514

Change (%) 30.3 32.9 23.3 24.8


Balance Sheet (Standalone) (INR Million)

Y/E March 2012 2013 2014E 2015E



Net Worth 79,459 94,470 121,586 139,241

Deposits 385,365 510,288 617,448 753,287

Change (%) 31.7 32.4 21.0 22.0

of which CASA Dep 124,024 149,183 187,913 233,589

Change (%) 41.1 20.3 26.0 24.3

Borrowings 165,955 204,106 214,286 241,324



Current Assets 26,346 36,892 50,948 64,428

Investments 215,668 288,734 346,481 415,777

Change (%) 26.0 33.9 20.0 20.0

Loans 390,792 484,690 557,393 657,724

Change (%) 33.2 24.0 15.0 18.0

Fixed Assets 4,500 4,644 4,719 4,694

Other Assets 19,362 21,977 28,570 32,856

Total Assets 656,668 836,937 988,111 1,175,479

Asset Quality (Standalone, Excl. acquired NPA) (%)

GNPA (INR m) 4,778 6,321 9,788 13,167

NNPA (INR m) 2,243 3,036 4,653 6,047

GNPA Ratio 1.21 1.30 1.74 1.98

NNPA Ratio 0.57 0.63 0.83 0.92

PCR (Incl acquired NPA) 61.4 58.9 57.5 57.5

PCR (Excl acquired NPA) 53.0 52.0 52.5 54.1

Ratios (Standalone)

Y/E March 2012 2013 2014E 2015E










Consolidated RoE 15.4 15.5 14.8 15.1

Standalone Core RoE 15.4 16.3 14.3 14.6

Standalone RoA 1.9 1.8 1.6 1.7





Loans/(Deposits+Borrowings) 70.9 67.8 67.0 66.1

CASA Ratio 32.2 29.2 30.4 31.0


Invest/(Deposits+Borrowings) 39.1 40.4 41.7 41.8

CAR 17.5 16.0 17.7 17.1

Tier 1 15.7 14.7 16.3 15.8

Valuation

Book Value (INR) 107.3 126.5 158.6 181.6

BV Growth (%) 16.3 17.9 25.3 14.5

AP/BV (x) 4.6 3.8 2.9 2.5

Consol BV (INR) 174.2 204.3 235.9 273.1

BV Growth (%) 17.1 17.3 15.5 15.8

Price-Consol BV (x) 3.6 3.1 2.7 2.3

Adjusted BV (INR)* 100.9 118.7 149.6 171.5

AP/ABV (x) 4.9 4.1 3.1 2.7

Adjusted Consol BV 172.1 201.4 231.5 267.5

Price-Consol ABV (x) 3.7 3.1 2.7 2.4

Standalone EPS (INR) 14.2 17.7 18.7 23.3

EPS Growth (%) 35.3 25.0 5.8 24.5

Price-Earnings (x) 35.1 27.3 24.7 19.8

Consol EPS (INR) 24.7 29.3 32.6 38.4

Con. EPS Growth (%) 16.3 18.5 11.2 17.7

Price-Concol EPS (x) 25.5 21.5 19.4 16.4


Dividend Yield (%) 0.1 0.1 0.1 0.2

E: MOSL Estimates

September 2 - 6, 2013 104


Company descriptionLarsen and Toubro (LT) is India's largest engineering and

construction company. Apart from core construction

activity, LT has made significant inroads into diverse range

of products and services through its subsidiaries and

manufacturing JVs in power BTG, forging and shipbuilding.

Company is also involved in various developmental

projects in roads, ports, railways and power. Overseas

business contributes ~22-25% of the revenue.

Key investment positives & long-term prospects Over the past cycle, LT has significantly increased

market share in both the domestic market (from

1.2-1.5% of GFCF to 1.8% in FY13) and also Middle

East (from 0.25% to 1.5-2% of project awards). A

meaningful part of the market share gains is due to

entry into new segments and geographies and

provides a strong base to capitalize on the next leg

of investment cycle.

Operating FCF improved in FY13, both standalone

(INR10.8b in FY12 to INR21b in FY13) and

consolidated (from INR8.4b in FY12 to INR37b in

FY13). Consolidated RoE has also improved from 16%

in FY12 to 16.8% in FY13. LT remains near debt-free

(standalone) and on a consolidated basis, DER

stands at 0.8x (excl financial businesses).

Manufacturing business (BTG, ship building,

forgings) is an important long term growth driver.

Attempt to churn portfolio, particularly in

infrastructure development, is also a medium term

trigger. In the interim period, both these businesses

are impacted by macro headwinds.

Larsen & Toubro




Dom. Inst. 36.8 36.3 38.4

Foreign 20.0 21.0 18.2

Others 43.2 42.7 43.4

Stock info

Bloomberg Code LT IN



Mcap (INR b) 670.9

Mcap (USD b) 10.3

52-Wk Range (INR) 1,146/699

1, 6, 12 Rel Perf (%) -10/-18/-28




Change (%) 26.1 17.4 10.3 9.9 5.0 14.5 8.1

Adjusted EBITDA 12,447 14,054 15,870 25,759 11,795 66,071 67,274

Change (%) 10.5 15.5 1.2 -4.2 -5.2 2.0 12.1

EBITDA Margin (%) 10.4 10.7 10.3 12.7 9.4 10.5 10.2

Reported PAT 9,020 8,701 11,218 17,693 7,560 46,631 45,483

Adjusted PAT 10,025 9,151 10,393 17,758 8,316 47,327 45,483

Change (%) 15.7 42.5 13.1 -3.8 -12.5 5.6 -3.1

PAT Margin (%) 34.4 14.6 -7.8 -1.5 -17.0 8.1 6.9

Key Operating metrics (INR b)

Order Inflow 196 210 195 279 252 880 891

Cash Flow from oper. -16 6 3 29 -13 21 32

Net Debt to Equity (x) 0.2 0.2 0.2 0.1 0.1 0.1 0.2

E: MOSL Estimates

Key challenges & near-term concerns Macro headwinds have led to a collapse in the

investment cycle and could impact order intake and

pace of execution. Tight liquidity conditions could

possibly stretch the NWC cycle (currently at 16-17%

of revenue).

Significant part of LT's capital is tied up in

manufacturing JVs and infrastructure concession

projects, which continues to impact the near term

return ratios.

Increased share of overseas business in the order

mix - we remain cautious on the risk profile.

Key news flows / triggers to watch LT is in the process of hiving off the hydrocarbon

business into a separate subsidiary. Internal target

is to increase revenue to USD4b over the next three

years, compared to USD1.7b now.

Company recently won several important projects

in the overseas business, including segments like

hydrocarbons, infrastructure etc. This is an

important attempt to diversify geographical mix.

Asset sale/monetization in the infrastructure

concession business.

1QFY14 highlights; outlook for FY14, FY15 Domestic revenue declined 7.2% in 1QFY14, while

overseas revenue increased 68% YoY (27% of total

revenue). Gross order intake in 1QFY14 stood at

robust INR252b (up 28% YoY).

LT is a strong play on the investment cycle and thus

would be impacted by macro headwinds.

105September 2 - 6, 2013


Larsen & Toubro: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Sales and Services 531,124 608,480 661,398 741,893

Operating other Income 6,254 6,229 3,394 3,599

Total Revenues 537,378 614,709 664,792 745,492

Growth Rate (%) 21.3 14.4 8.1 12.1

Excise Duty 5,673 5,976 6,463 7,247

Net Revenues 531,705 608,733 658,329 738,245

Growth Rate (%) 21.1 14.5 8.1 12.1

Manufacturing Expenses 410,224 479,524 515,663 577,265

Staff Cost 36,661 44,363 48,800 53,679

S G &A Expenses 22,182 20,911 26,592 29,820

EBITDA 62,639 63,934 67,274 77,480

Change (%) 11.3 2.1 5.2 15.2

EBITDA Margin (%) 12.2 10.5 10.2 10.5

Depreciation 6,807 8,049 8,789 9,576

EBIT 55,831 55,885 58,485 67,904

Net Interest 6,661 9,824 11,500 11,000

Other Income 11,748 18,509 14,780 16,599


Tax 18,538 18,005 16,676 19,846

Effective Tax Rate (%) 29.6 27.9 27.0 27.0

Reported Profit 44,015 46,565 45,088 53,658

Adjusted Profit 45,375 47,327 45,844 53,658

Growth (%) 25.2 4.3 -3.1 17.0

Cons. Profit (Adj) 47,730 49,327 44,916 54,743

Growth (%) 12.5 3.3 -8.9 21.9


Y/E March 2012 2013 2014E 2015E

Equity Capital 1,225 1,231 1,231 1,231

Reserves and Surplus 251,005 290,196 320,465 356,777

Net Worth 252,230 291,427 321,696 358,008

Debt 98,958 88,342 120,000 120,000





Add : Capital WIP 7,587 5,968 4,500 4,500

Net Fixed Assets 83,636 89,020 90,230 91,655

Investments 158,719 161,036 176,603 169,920

Inventory 17,768 20,640 23,042 23,993

Sundry Debtors 187,169 226,130 250,165 280,533

Cash & Bank 17,781 14,556 17,428 39,925

Loans & Advances 90,616 91,630 103,083 116,391


Current Assets 433,970 471,686 522,482 605,190



Capital Deployed 352,518 382,211 444,118 480,430

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

Standalone EPS Adj 49.4 51.3 49.7 58.1

Growth (%) 24.4 3.8 45.3 17.0

Consolidated EPS Adj 52.0 53.4 48.7 59.3

Growth (%) 11.9 2.8 36.6 21.9

Cash Earning per Share 57.0 60.1 59.2 68.5

Book Value 274.6 315.7 348.5 387.8

Dividend Per Share 11.0 12.3 13.9 16.3

Div. Payout (Incl. Div Tax ) % 25.0 24.9 32.9 32.3

Valuation (x)

P/E (Consolidated) 18.5 18.3 14.9 12.2

P/E (Consol.) (Fully Diluted) 18.5 18.3 14.9 12.2

Price / CEPS 12.7 12.1 12.3 10.6

EV/EBITDA 14.3 14.4 10.7 9.2

EV/ Sales 1.7 1.5 1.1 1.0



Return Ratio (%)

RoE 18.0 16.2 14.3 15.0

RoCE 14.3 14.4 12.3 12.9

Turnover Ratios

Debtors (Days) 127.1 134.3 137.4 137.4

Inventory (Days) 12.1 12.3 12.7 11.7


Leverage Ratio

Current Ratio (x) 1.3 1.4 1.5 1.6

D/E (x) 0.0 0.1 0.1 0.1


Y/E March 2012 2013 2014E 2015E


Add : Depreciation 7,005 8,194 8,789 9,576

Interest 6,661 9,824 11,500 11,000


(Inc)/Dec in WC -33,268 -26,418 -34,138 -11,453


(Inc)/Dec in FA -16,487 -13,578 -10,000 -11,000

(Pur)/Sale of Investments 4,108 13,026 3,682 22,125

Investment in subs -15,979 -15,340 -18,818 -15,442

Advances to subs -4,703 1,217 -8,138 -7,620


(Inc)/Dec in Net Worth -978 3,425 1 0

(Inc)/Dec in Debt 27,347 -10,616 31,658 0

Less : Interest Paid 6,661 9,824 11,500 11,000

Dividend Paid 9,962 11,119 12,243 14,820

CF from Fin. Activity 9,746 -28,133 7,916 -25,820

Inc/Dec of Cash 1,648 -2,103 5,882 25,023


Closing Balance 18,943 15,678 20,438 42,451

September 2 - 6, 2013 106


LIC Housing Finance



Promoter 40.4 40.4 40.3

Dom. Inst. 13.2 12.3 9.1

Foreign 33.8 34.1 37.5

Others 12.6 13.3 13.1

Stock info

Bloomberg Code LICHF IN



Mcap (INR b) 83.5

Mcap (USD b) 1.3


1, 6, 12 Rel Perf (%) -12/-26/-37

Company descriptionPromoted by Life Insurance Corporation of India, LIC

Housing F inance (LICHF) is India's second largest

housing finance company. It offers individual housing

loans and loans to developers as project finance. LICHF

operates through a network of 210 marketing offices

and a large number of DSAs and home loan agents. It

also has representative offices in Dubai and Kuwait,

and AUM of INR801b as at June 2013.

Key investment positives & long-term prospects Despite moderation in economic growth, structural

growth drivers for the Indian housing finance

industry remain intact. These coupled with LICHF's

strong foothold in tier-II and tier-III cities would help

achieve healthy growth. We model ~23% loan CAGR

over FY14-15.

LICHF had slowed down growth in its developer loan

portfolio, led by uncertain macro environment. The

developer loan portfolio declined from 11% of loans

in FY10 to ~3% in FY13. LICHF wishes to selectively

grow this portfolio, which would help improve its

spreads.

Spreads have bottomed out and should improve,

led by (1) asset re-pricing benefits on teaser rate

loans, and (2) increase in share of developer loans

and loans against property.

Asset quality is likely to remain healthy on the back

of the secured nature of loans and historically lower

default rates in the mortgages business.

Key challenges & near-term concerns Intensifying competition from banks / NBFCs to grab

market share in this secularly growing industry could

lead to rate war.

Inability to grow developer loan portfolio on

expected lines may not allow spreads to expand.

Key news flows / triggers to watch SBI has reduced interest rates on home loans,

offering the lowest rate on the street. If some of

the other major private / state-owned banks follow

suit, competition may intensify in this space.

If LICHF gets the banking license it has applied for,

it will convert itself into a bank.

1QFY14 highlights; guidance for FY14, FY15 LICHF's 1QFY14 PAT grew 36% YoY to INR3.1b. Strong

loan growth of 22% YoY and 3% QoQ led to marginally

strong NII growth of 30% YoY (flat QoQ) to INR4.54b.

NII grew 30% YoY (largely flat QoQ) to INR4.54b, led

by 12bp YoY margin expansion to 2.3%.

For FY14, the management has guided INR240b of

disbursements in the individual segment and

INR20b in the developer segment.

The management is targeting margins of 2.4-2.5%

by March 2014 (v/s 2.3% in 1QFY14) and spreads of

1.6-1.7%.



NII 3,505 3,535 3,697 4,608 4,547 15,345 18,921

Changes (%) -2.9 5.8 13.5 24.3 29.7 10.3 23.3


Changes (%) -8.2 1.2 8.0 19.2 26.8 4.7 22.7

PAT 2,277 2,430 2,362 3,162 3,105 10,232 13,389

Changes (%) -11.2 -3.8 4.6 24.7 36.3 11.9 30.9

Key Operating Metrics (%)

NIMs 2.18 2.10 2.09 2.45 2.30 2.2 2.2

Loan Growth 24.1 23.2 23.8 23.4 22.1 23.4 22.0

GNPA 0.71 0.60 0.74 0.61 0.80 0.60 0.62

E: MOSL Estimates

107September 2 - 6, 2013


LIC Housing Finance: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Interest Income 59,827 74,591 91,945 109,088



Change (%) 1.4 10.3 23.3 22.7

Fee Income 1,322 1,549 1,041 1,264

Income from Investments 804 617 1,250 1,350

Other Income 198 -168 -168 -168

Net Income 16,240 17,343 21,044 25,658

Change (%) -8.3 6.8 21.3 21.9



Change (%) -10.8 4.7 22.7 22.5

Provisions/write offs 1,561 789 -515 1,036

PBT 12,309 13,736 18,341 20,796

Tax 3,167 3,504 4,952 5,615

Tax Rate (%) 25.7 25.5 27.0 27.0

PAT 9,142 10,232 13,389 15,181

Change (%) -6.2 11.9 30.9 13.4

Adjusted PAT 10,011 10,232 12,221 14,947

Change (%) -2.7 2.2 19.4 22.3



Y/E March 2012 2013 2014E 2015E

Capital 1,010 1,010 1,010 1,010


Net Worth 56,822 64,813 75,394 87,392

Borrowings 560,873 687,660 849,671 1,058,695

Change (%) 24.2 22.6 23.6 24.6


Investments 13,750 10,921 12,559 14,443

Change (%) -2.0 -20.6 15.0 15.0

Loans 630,802 778,120 949,353 1,163,401

Change (%) 23.5 23.4 22.0 22.5



Total Assets 617,695 752,473 925,065 1,146,086

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E



Avg. Yield on Earning Assets 10.2 10.3 10.4 10.1


Int. Spread on Hsg. Loans 1.4 1.1 1.1 1.3

Net Int. Margin on Hsg. Loans 2.4 2.2 2.2 2.2


Adj RoAE 20.3 16.8 17.4 18.4

Adj RoAA 1.8 1.5 1.5 1.4


Other Inc./Net Income 1.2 -1.0 -0.8 -0.7


Fees/Operating income 2.1 2.0 1.1 1.1


Empl. Cost/Op. Exps. 30.6 32.1 36.5 36.9



Debt/Equity (x) 9.9 10.6 11.3 12.1

Gross NPAs (Rs m) 2,652 4,712 5,879 7,303


Net NPAs (Rs m) 849 1,953 2,646 3,287

Net NPAs to Adv. 0.1 0.3 0.3 0.3

CAR 13.0 12.5 11.5 10.5

Valuation

Book Value (INR) 112.5 128.3 149.3 173.1

Growth (%) 28.2 14.1 16.3 15.9

Price-BV (x) 1.5 1.3 1.1 1.0

Adjusted BV (INR) 112.1 127.3 147.9 171.3

Price-ABV (x) 1.5 1.3 1.1 1.0

EPS (INR) 18.1 20.3 26.5 30.1

Growth (%) -11.7 11.9 30.9 13.4


Adj. EPS (INR) 19.8 20.3 24.2 29.6

Growth (%) -8.4 2.2 19.4 22.3


Dividend Per Share 3.6 3.8 4.8 5.4

Dividend Yield (%) 2.2 2.3 2.9 3.3

E: MOSL Estimates

September 2 - 6, 2013 108


Lupin



Promoter 46.8 46.8 46.9

Dom. Inst. 12.4 14.3 16.1

Foreign 31.0 29.2 28.2

Others 9.9 9.7 8.9

Stock info

Bloomberg Code LPC IN



Mcap (INR b) 348.4

Mcap (USD b) 5.4


1, 6, 12 Rel Perf (%) -3/36/32

Company descriptionLupin (LPC) is among the larger pharma companies that

is actively targeting the regulated generics markets.

Historically, very strong in the anti-TB segment, it has

over the years built up expertise in fermentation-based

products and segments like cephalosporins, prils and

statins. LPC is now a fully integrated company, with

manufacturing capabilities in APIs and formulations and

a direct marketing presence in the target markets.

Key investment positives & long-term prospects Well positioned to capitalize on the generic

opportunity in key markets like the US, India and

Japan.

Strong product mix in the US, with presence in the

branded and generic business. Strong execution and

product mix resulted in LPC emerging as the fastest

growing company in the US over the last five years.

We expect this pace of growth to continue, with

increasing contribution from niche launches. LPC has

~100 ANDAs awaiting approval, thus the US

pipeline's visibility is very strong.

India growth has been ahead of the industry over

the last five years, driven by a change in product

mix. We expect this trend to continue over the next

two years.

Well placed in Japan to capitalize on the potential

generic penetration in the country.


Incremental competition in Suprax.

Key news flows / triggers to watch Market share movements in some of the key

launches over the last six months.


Competition in Suprax.

1QFY14 highlights; outlook for FY14, FY15 Key geographies delivered muted growth, thus

impacting the overall operating performance. India

recorded a 5% de-growth, Japan de-grew 12% YoY

and ROW and South Africa grew 7% YoY; US generics

growth was 26% YoY. Forex gain of ~INR1b boosted

PAT growth. LPC believes 1Q performance was an

aberration and operational performance is

expected to be stronger over the coming quarters.

Company continued to gain good market share in

key launches in the US over last six months.



over FY13-15E.




Change (%) 43.8 36.1 37.6 34.7 9.1 37.9 16.1

EBITDA 4,230 4,545 5,698 6,102 5,340 20,903 24,380

Change (%) 56.8 64.4 50.6 83.7 26.2 66.3 16.6

EBITDA Margin (%) 19.1 20.3 23.1 24.0 22.1 22.1 22.2

Reported PAT 2,804 2,905 3,352 4,081 4,011 13,142 17,100

Adjusted PAT 2,098 2,779 2,992 3,360 4,011 11,228 15,797

Change (%) -0.1 38.3 19.7 305.6 91.1 39.8 40.7

PAT Margin (%) 9.5 12.4 12.1 13.2 16.6 11.9 14.4


US Sales YoY Gr. (%) 62.7 66.5 43.7 76.9 25.6 77.3 26.6

India Sales YoY Gr. (%) 25.0 18.4 9.8 35.0 -5.1 24.4 9.7

Gross Margins (%) 63.1 60.3 62.1 64.4 63.9 62.5 62.5

109September 2 - 6, 2013


Lupin: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 68,628 94,616 109,894 126,051

Change (%) 20.3 37.9 16.1 14.7

EBITDA 12,566 20,903 24,380 28,609

Margin (%) 18.3 22.1 22.2 22.7

Depreciation 2,275 3,322 2,686 3,300

EBIT 10,291 17,581 21,694 25,309


Other Income - Rec. 1,056 2,075 1,847 1,648

PBT after EO item 10,992 19,246 23,328 26,734

Tax 2,776 5,842 7,232 8,288

Tax Rate (%) 25.3 34.0 31.0 31.0

Reported PAT 9,636 13,404 16,097 18,447

PAT Adj for EO items 8,216 11,491 16,097 18,447

Less: Minority Interest 199 263 300 325

Adj Net Profit 8,018 11,228 15,797 18,122


Y/E March 2012 2013 2014E 2015E


Total Reserves 39,236 51,147 63,801 77,734

Net Worth 40,129 52,042 64,697 78,629


Deferred liabilities 1,442 1,632 1,632 1,632

Total Loans 17,149 12,146 12,146 10,146


Gross Block 36,878 41,769 47,769 53,769

Less: Accum. Deprn. 14,422 16,840 19,527 22,827

Net Fixed Assets 22,457 24,929 28,242 30,942

Capital WIP 4,437 3,107 5,312 5,312


Goodwill & Intangibles 5,040 5,073 5,073 5,073

Curr. Assets 47,393 55,305 66,370 80,014

Inventory 17,327 19,489 24,177 28,992



Others 8,241 9,597 10,989 12,605



Provisions 3,939 4,684 3,970 5,150


Appl. of Funds 59,443 66,415 79,070 91,002

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS (Fully Diluted) 18.0 25.1 35.3 40.5

Cash EPS (Fully Diluted) 23.0 32.5 41.3 47.9

BV/Share 89.8 116.3 144.6 175.7

DPS 3.4 4.0 6.0 8.0

Payout (%) 18.4 15.6 19.5 22.7

Valuation (x)

P/E (Fully Diluted) 43.4 31.0 22.0 19.2

Cash P/E (Fully Diluted) 33.8 23.9 18.8 16.3

P/BV 8.7 6.7 5.4 4.4

EV/Sales 5.3 3.8 3.2 2.8

EV/EBITDA 28.8 17.0 14.5 12.2

Dividend Yield (%) 0.4 0.5 0.8 1.0

Return Ratios (%)

RoE 22.0 24.4 27.1 25.3

RoCE 22.3 32.4 33.4 32.6





Wkg. Capital Turnover (Days) 125 112 115 120

Leverage Ratio



Debt/Equity (x) 0.4 0.2 0.2 0.1


Y/E March 2012 2013 2014E 2015E

Oper. Profit/(Loss) bef. Tax 12,566 20,903 24,380 28,609



(Inc)/Dec in WC -7,208 -5,481 -5,556 -6,996

CF from Op. incl EO Exp. 3,669 11,846 13,439 14,974

(inc)/dec in FA -6,909 -4,497 -8,205 -6,000



Change in Net Worth -333 475 -300 -325

Inc/(Dec) in Debt 5,524 -5,002 0 -2,000

Interest Paid -355 -410 -213 -223

Dividend Paid -1,777 -2,095 -3,142 -4,189


Inc/Dec of Cash -177 324 1,580 2,237


Closing Balance 4,024 4,349 5,929 8,165

September 2 - 6, 2013 110


Mahindra & Mahindra



Promoter 25.4 25.3 25.5

Dom. Inst. 15.3 15.5 19.9

Foreign 44.8 44.1 37.1

Others 14.5 15.2 17.5

Stock info

Bloomberg Code MM IN



Mcap (INR b) 489.8

Mcap (USD b) 7.5

52-Wk Range (INR) 1,026/741

1, 6, 12 Rel Perf (%) -3/-5/-1

Company descriptionMahindra & Mahindra (MM) is the leader in UVs and

tractors, with market share of over 48% and 40%,

respectively. It also has presence in CVs, 3-wheelers

and 2-wheelers. Ssangyong, its subsidiary in South

Korea, is focused on SUVs in global markets. Apart from

the core Auto business, it has subsidiaries/associates

in IT, NBFC, Auto Ancillaries, Hospitality, Infrastructure,

etc.

Key investment positives & long-term prospects Dominant market position in key segments of UVs

and tractors augurs well for MM.

MM would be one of the biggest beneficiaries of a

normal monsoon, given its rural-centric portfolio.

Tractor business is witnessing strong recovery,

driven by low base and good monsoon, enabling

MM to recover lost market share.

While near-term concerns on the UV portfolio exist,

over the medium term, UVs are expected to

outperform cars. This coupled with three new

launches starting FY16 would keep MM's UV growth

healthy over the medium to long term.

Ssangyong is on a turnaround path, with 2QCY13

being the first quarter of positive PAT after 23

quarters, driven by ramp-up in volumes.

MM's investments in its subsidiaries/associates add

substantially to its valuations. Value unlocking

would act as a catalyst for MM's stock.

Key challenges & near-term concerns No new launches are planned in the auto division

till FY16, while competitive intensity is rising.

Increasing diesel prices and recent hike in additional

duty on SUVs is impacting MM.

Continued high losses in 2-wheeler and CV

businesses, with limited visibility of turnaround.

Key news flows / triggers to watch Ramp-up of new launches by competitors (Ford's

EcoSport and Renault's Duster), and impact on MM's

market share and margins.

MM proposes to demerge the truck and bus

business from its 100% subsidiary, Mahindra Truck

& Bus (erstwhile Mahindra Navistar Automotive)

and merge it with itself. This would give tax benefit

of INR2.4b in FY14 on accumulated losses.

1QFY14 highlights; outlook for FY14, FY15 1QFY14 operating performance (including MVML)

was below expectations, led by lower than

estimated realizations. EBITDA margin was 14.4%

(+50bp YoY, flat QoQ).

Revised tractor guidance to 10-12% growth from 6-

8% earlier on good monsoon, but near-term UV

demand to remain weak on high channel inventory,

weak consumer sentiment and higher competition,

coupled with no new launches.

Capex (including investments of INR250b) guidance

maintained at ~INR100b over FY13-15.

Quarterly Performance (incl MVML) (INR Million)



Change (%) 31.5 26.8 24.7 9.5 9.3 22.2 (0.4)

EBITDA 12,350 12,797 13,795 14,352 14,008 53,293 52,973

Change (%) 27.9 33.2 26.5 30.1 13.4 28.1 (0.6)

EBITDA Margin (%) 13.9 13.8 13.5 14.4 14.4 13.9 13.9

Reported PAT 7,785 9,781 9,149 9,630 9,097 36,344 35,682

Adjusted PAT 7,785 9,781 9,149 8,941 9,097 36,344 35,682

Change (%) 25.9 28.4 35.1 11.4 16.9 25.8 (1.8)

PAT Margin (%) 8.8 10.6 8.9 9.0 9.4 9.5 9.3


Volumes (units) 182,149 188,412 209,266 195,528 194,962 775,358 782,079

Realiz.(INR/unit) 487,431 491,082 489,452 510,569 497,564 494,696 488,581

Auto PBIT (%) 11.2 12.2 11.2 12.4 11.2 11.8 10.9

FES PBIT (%) 15.7 14.8 15.5 16.0 16.7 15.5 16.8

E: MOSL Estimates

111September 2 - 6, 2013


Mahindra & Mahindra: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Total Income 318,535 404,412 404,949 454,535

Change (%) 35.8 27.0 0.1 12.2


EBITDA 37,707 47,093 49,662 58,572

Margins (%) 11.8 11.6 12.3 12.9

Margins (%, incl MVML) 13.3 13.9 13.9 14.7

Depreciation 5,761 7,108 7,947 8,979

EBIT 31,946 39,985 41,715 49,593

Int. & Finance Charges 1,628 1,912 2,054 2,247

Other Income 4,658 5,455 6,707 7,272

Non-recurring Income 1,083 906 0 0


Tax 7,270 10,943 11,128 13,655

Eff. Tax Rate (%) 20.2 24.6 24.0 25.0

Profit after Tax 28,789 33,492 35,240 40,964

Change (%) 8.1 16.3 5.2 16.2

% of Net Sales 9.0 8.3 8.7 9.0

Adj. Profit after Tax 27,924 32,809 35,240 40,964

Change (%) 8.5 17.5 7.4 16.2

Adj. PAT (incl MVML) 28,888 36,344 35,682 42,087


Y/E March 2012 2013 2014E 2015E

Share Capital 2,945 2,952 2,952 2,952

Reserves 118,640 143,638 170,613 202,723

Net Worth 121,585 146,589 173,565 205,674

Deferred tax 5,271 6,149 6,149 6,149

Loans 31,738 42,792 42,792 42,792




Net Fixed Assets 40,808 48,213 52,766 58,787

Capital WIP 10,000 10,000 15,000 17,500

Investments 103,105 118,335 127,074 134,574

Curr.Assets, L & Adv. 85,082 97,988 126,122 153,758

Inventory 23,584 24,198 29,955 33,623

Sundry Debtors 19,884 22,084 26,627 29,887

Cash & Bank Bal. 11,884 17,814 28,654 45,014

Loans & Advances 24,077 28,509 35,502 39,850

Others 5,653 5,384 5,384 5,384




Provisions 18,453 19,055 27,736 31,133


Working Capital -7,202 1,168 -989 -1,261


Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

Fully diluted EPS 46.7 54.8 58.9 68.4

FD EPS (incl MVML) 48.3 60.7 59.6 70.3


Cash EPS 57.2 67.6 73.2 84.6


DPS 12.5 13.0 14.0 15.0


Valuation (x)

P/E 16.5 13.1 13.3 11.3

Consolidated P/E 15.5 13.1 11.2 8.9

Cash P/E 13.9 11.8 10.9 9.4

EV/EBITDA 6.3 5.7 4.2

EV/Sales 0.7 0.7 0.5


Dividend Yield (%) 1.6 1.6 1.8 1.9


RoE 23.0 22.4 20.3 19.9

RoCE 23.1 23.2 21.8 22.3

Turnover Ratios




Leverage Ratio

Debt/Equity (x) 0.3 0.3 0.2 0.2


Y/E March 2012 2013 2014E 2015E


Int./Dividends Received -1,113 -2,043 6,707 7,272

Depreciation & Amort. 5,761 7,108 7,947 8,979


(Inc)/Dec in Wkg. Capital -4,843 1,559 2,157 272

CF from Oper.Activity 27,350 41,457 47,398 52,462

Extra-ordinary Items 1,083 906 0 0

CF after EO Items 28,432 42,363 47,398 52,462

(Inc)/Dec in FA+CWIP -13,404 -13,893 -17,500 -17,500

(Pur)/Sale of Invest. -5,961 -9,416 -8,740 -7,500


Change in Net Worth 818 0 1,405 1,434

Inc/(Dec) in Debt 6,442 -1,534 0 0

Interest Paid -1,496 -2,015 -2,054 -2,247

Dividends Paid -8,008 -8,670 -9,866 -10,457


Inc/(Dec) in Cash 5,741 5,930 10,840 16,193


Closing Balance 11,884 17,814 28,654 45,015

September 2 - 6, 2013 112


Mahindra & Mahindra Financial Services



Promoter 52.2 52.2 57.2

Dom. Inst. 4.4 4.8 5.4

Foreign 38.4 38.2 32.7

Others 5.0 4.8 4.7

Stock info

Bloomberg Code MMFS IN



Mcap (INR b) 124.6

Mcap (USD b) 1.9


1, 6, 12 Rel Perf (%) -6/12/39

Company descriptionMahindra and Mahindra Financial Services (MMFS) is

one of India's leading NBFCs, providing personalized

finance for utility vehicles, tractors, cars, commercial

vehicles and construction equipment. It focuses on the

rural and semi-urban regions. As at June 2013, MMFS

operated through a wide network of 675 branches and

had AUM of INR295b.

Key investment positives & long-term prospects MMFS has achieved strong asset growth in the last

five years (24% CAGR over FY07-13) on the back of

its multi-product strategy and buoyant rural

demand. Its multi-product strategy has protected it

from cyclical shocks. We expect AUM CAGR of ~25%

over the next two years.

MMFS delivered stellar asset quality performance ;

with GNPAs falling from ~10% in FY09 to 3% in FY13.

Monsoons have been very good this year, which

should further improve asset quality outlook.

Given its lower dependence on securitization for

resource mobilization (less than 15% as at June

2013), MMFS remains relatively insulated from the

current regulatory changes pertaining to

securitization and priority sector lending.

Key challenges & near-term concerns Proposed regulatory changes for NBFCs relating to

asset classification and provisioning norms could

lead to lower return ratios.

Continued economic moderation may lead to some

stress in CE/CV segments.

Key news flows / triggers to watch MMFS has decided not to apply for new banking

license; if some of its competitors get a banking

license, it will benefit from easing competition.

RBI's final guidelines for NBFCs based on the

recommendations by the Usha Thorat Committee

will determine the impact of regulatory changes

on MMFS' return ratios, going forward.

1QFY14 highlights; guidance for FY14, FY15 MMFS' 1QFY14 PAT grew 19% YoY to INR1.91b.

Product diversification, deeper penetration and

new tie-ups strategy helped MMFS to report

healthy AUM growth of 35% YoY and 6.5% QoQ.

AUM growth during the quarter was driven by strong

growth in cars (48% of incremental loans; up 10%

QoQ, 39% YoY) and refinanced vehicles.

For FY14, the management has maintained its 25-

30% disbursement growth target.

If the 90-day asset classification norms are made

applicable, GNPAs may increase by INR2.5b-3b.



Net Income 4,916 5,394 5,665 6,784 6,224 22,759 28,935

Change(%) 32.4 42.8 39.4 32.9 26.6 29.8 22.2


Change(%) 57 52 36 31 28 42 30

PAT 1,610 1,876 2,002 3,184 1,912 8,674 10,088

Change(%) 58 38 29 40 19 40 16

NIMs 9.72 9.86 9.53 10.61 9.34 9.6 9.4

AUM growth 39.3 35.6 32.0 35.1 34.8 35.1 28.8

GNPA 3.80 3.90 4.00 3.00 4.20 3.00 3.8

E: MOSL Estimates

113September 2 - 6, 2013


Mahindra & Mahindra Financial Services: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Interest Income 26,500 36,268 47,426 57,719



Change (%) 28.1 31.3 29.8 22.2

Income from Securitisation 925 2,145 2,427 3,358

Other Income 521 533 450 690

Net Income 16,743 22,759 28,935 35,886

Change (%) 27.1 35.9 27.1 24.0



Change (%) 29.0 41.7 29.8 26.1

Provisions and W/Offs 1,570 2,833 4,512 5,990

PBT 9,253 12,506 15,400 19,121

Tax 3,051 3,833 5,313 6,597

Tax Rate (%) 33.0 30.7 34.5 34.5

PAT 6,201 8,673 10,087 12,524

Change (%) 33.9 39.9 16.3 24.2

Proposed Div. (Incl Tax) 1,682 2,389 2,644 3,283

Note: EO (post-tax) items added to net worth and notincluded for presentation purpose


Y/E March 2012 2013 2014E 2015E



Net Worth 29,510 44,546 51,989 61,230

Borrowings 139,611 188,723 249,594 309,995

Change (%) 44.3 35.2 32.3 24.2


Investments 5,025 7,315 8,047 8,851

Change (%) -25.5 45.6 10.0 10.0


Change (%) 41.4 36.3 28.7 22.7

Net Fixed Assets 989 1,068 1,191 1,397


Total Assets 169,121 233,269 301,583 371,224

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E


Yield on Portfolio 18.0 17.7 17.5 17.0

Cost of Borrowings 9.5 9.9 9.8 9.3


Net Interest Margin (on AUMs)9.7 9.6 9.4 9.2


RoE 22.8 23.4 20.9 22.1

RoA (on balance sheet) 4.3 4.3 3.8 3.7

RoA on AUM 3.8 3.9 3.4 3.3

Average Leverage (x) 5.3 5.4 5.5 5.9

Average leverage on AUM (x) 6.0 6.1 6.2 6.7




Empl. Cost/Op. Exps. 33.7 30.1 26.0 24.5

Secur. Inc./Net Income 5.5 9.4 8.4 9.4



Net NPAs to Adv. 0.7 1.1 1.6 2.0

Valuation

Book Value (INR) 57.5 79.1 92.3 108.8

BV Growth (%) 18.3 37.7 16.7 17.8

Price-BV (x) 3.8 2.8 2.4 2.0

Adjusted BV (INR) 55.9 76.1 86.8 100.0

Price-ABV (x) 3.9 2.9 2.5 2.2

OPS (INR) 21.1 27.2 35.4 44.6

OPS Growth (%) 28.7 29.3 29.8 26.1

Price-OP (x) 10.4 8.0 6.2 4.9

EPS (INR) 12.1 15.7 17.9 22.2

EPS Growth (%) 33.6 29.8 14.3 24.2

Price-Earnings (x) 18.1 14.0 12.2 9.8

Dividend 2.8 3.6 4.0 5.0

Dividend Yield (%) 1.3 1.6 1.8 2.3

September 2 - 6, 2013 114


Marico



Promoter 59.7 59.7 59.8

Dom. Inst. 1.8 2.1 3.6

Foreign 31.7 31.7 29.4

Others 6.9 6.5 7.2

Stock info

Bloomberg Code MRCO IN



Mcap (INR b) 133.2

Mcap (USD b) 2.0


1, 6, 12 Rel Perf (%) 5/-1/7



Net Sales 12,672 11,559 11,640 9,973 13,797 45,843 51,949

YoY Change (%) 21.7 19.5 10.9 9.7 8.9 15.5 13.3

EBITDA 1,839 1,477 1,620 1,189 2,270 6,125 7,337

Margins (%) 14.5 12.8 13.9 11.9 16.5 13.4 14.1

YoY Change (%) 47.0 27.8 31.1 9.3 23.5 29.5 19.8

Adjusted PAT 1,258 859 1,068 723 1,553 3,862 4,804

YoY Change (%) 48.0 9.7 21.2 1.2 23.5 21.1 24.4

Dom. org. vol gr (%) 14.0 10.0 9.0 8.0 10.0 11.0 10.0


Parachute Rigid 18.0 9.0 6.0 5.0 4.0 7 8

Saffola 12.0 6.0 4.0 5.0 10.0 10 12

Hair Oils 25.0 20.0 30.0 24.0 16.0 18 18

Domestic Business 16.0 14.0 9.0 8.0 10.0 11.0 12.0

E: MOSL Estimates

Company descriptionMarico (MRCO) has emerged as a dominant player in

the Hair Care and Edible Oil segments. It has also made

inroads to international markets. Acquisition of

personal care brands of Paras from Reckitt has given

Marico an entry into emerging youth oriented personal

care categories. It has recently announced demerger of

its Skin care business i.e. Kaya.

Key investment positives & long-term prospects We are positive on MRCO’s growth strategy, its

successful overseas forays and new product

development for the domestic markets.

Multiple growth drivers, with strong positioning in

its core Coconut and Edible Oil segments.

International operations margins are improving,

given better operating leverage.

Preference for volume growth overrides margins –

a key long-term positive to expand core consumer

franchise, in our view.

Key challenges & near-term concerns Volume growth moderation, given the pressure on

discretionary consumption.

Fluctuation in prices of raw material, especially

copra.

Price deflation in Parachute and Saffola.

Key news flows / triggers to watch Performance of acquired Paras brands.


Recovery in Saffola volume growth.

1QFY14 highlights; outlook for FY14, FY15 10% volume growth, with 250bp margin expansion.

24% EBITDA and PAT growth.

Upgraded to Buy; believe underperformance is

behind after bridging of valuation gap with other

mid-cap Consumer names.

115September 2 - 6, 2013


Marico: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 39,682 45,843 51,949 60,334

Change (%) 26.8 15.5 13.3 16.1

Gross Profit 18525 23771 26661 30823

Margin (%) 46.7 51.9 51.3 51.1


EBITDA 4,729 6,125 7,337 8,621

Margin (%) 11.9 13.4 14.1 14.3



Other Income - Recurring 440 468 644 780


Margin (%) 10.1 11.3 12.4 12.9

Current Tax (excl MAT Ent) 783 1,245 1,482 2,103

Tax Rate (%) 19.5 24.0 24.1 28.0

Minority Interest -50 -79 -76 -88


Margin (%) 8.0 8.4 9.2 9.1

Reported PAT 3,171 3,978 4,804 5,520


Y/E March 2012 2013 2014E 2015E


Reserves 10,790 19,024 23,225 28,143

Net Worth 11,404 19,668 23,869 28,787

Loans 7,657 6,207 5,944 6,330



Intangibles 1,342 8,647 8,552 8,456

Less: Accum. Depn. -4,085 -4,944 -5,919 -7,011

Net Fixed Assets 5,019 12,181 12,410 12,523

Capital WIP 1,234 1,500 1,500 1,500

Goodwil l 3,955 3,976 3,976 3,976

Investments 2,956 1,916 4,886 9,841

Curr. Assets, L&A 12,699 13,630 15,380 17,058

Inventory 7,202 8,107 8,572 9,955



Others 1,995 2,127 2,261 2,409


Current Libilities 5,570 6,625 7,457 8,630

Provisions 1,206 917 1,072 1,304


Deferred Tax Liability 223 214 190 154


E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 5.2 6.0 7.5 8.6

Cash EPS 6.1 7.3 9.0 10.3

BV/Share 18.6 30.5 37.1 44.7

DPS 0.7 0.8 0.8 0.8

Payout % 13.5 12.5 10.7 9.3

Valuation (x)

P/E 39.9 34.5 27.7 24.1

Cash P/E 33.7 28.3 23.1 20.2

EV/Sales 3.3 3.0 2.5 2.1

EV/EBITDA 27.5 22.3 18.0 14.8

P/BV 11.2 6.8 5.6 4.6

Dividend Yield (%) 0.3 0.4 0.4 0.4

Return Ratios (%)

RoE 28.0 19.6 20.1 19.2

RoCE 30.5 28.8 30.0 29.9




Leverage Ratio

Debt/Equity (x) 0.7 0.3 0.2 0.2


Y/E March 2012 2013 2014E 2015E


Int./Div. Received 440 468 644 780

Interest Paid -424 -540 -576 -520

Direct Taxes Paid 783 1,245 1,482 2,103

(Incr)/Decr in WC 659 -584 129 -511


(Incr)/Decr in FA -1,491 -8,871 -1,205 -1,205

(Pur)/Sale of Investments -2,067 1,041 -2,970 -4,955

CF from Invest. -3,558 -7,830 -4,175 -6,159

(Incr)/Decr in Debt -61 -1,451 -263 387

Dividend Paid -503 -565 -603 -603

Others -2,511 2,887 -3,029 -3,651


Incr/Decr of Cash -445 1,770 946 447


Closing Balance 1,686 3,456 2,211 2,604

September 2 - 6, 2013 116


Maruti Suzuki



Promoter 56.2 56.2 54.2

Dom. Inst. 13.1 12.6 16.4

Foreign 22.1 22.5 20.4

Others 8.6 8.8 9.0

Stock info

Bloomberg Code MSIL IN



Mcap (INR b) 389.5

Mcap (USD b) 6.0

52-Wk Range (INR) 1,773/1128

1, 6, 12 Rel Perf (%) -2/-7/6




Change (%) 27.5 8.2 44.9 13.4 (5.0) 22.5 (0.3)

EBITDA 7863.8 5085.5 8912.7 19,996 11,662 42,296 48,287

Change (%) (3.0) 15.4 121.0 132.9 48.3 68.3 14.2

EBITDA Margin (%) 7.3 6.1 8.0 15.0 11.4 9.7 11.1

Reported PAT 4238.6 2274.5 5012.9 12,396 6,316 23,921 25,774

Adjusted PAT 4238.6 2274.5 5012.9 12,396 6,316 23,921 25,774

Change (%) (22.8) (5.4) 143.8 93.7 49.0 46.3 13.6

PAT Margin (%) 3.9 2.7 4.5 9.3 6.2 5.5 5.9


Volume (units) 295,899 230,376 301,453 343,756 266,434 1,171,484 1,147,916

Realiz.(INR/unit) 355,839 350,302 363,471 379,812 375,144 363,749 369,762

Avg. disc./unit (INR) 11,646 14,750 12,000 10,600 13,426 12,049 14,000

Diesel share (%) 38.0 33.0 40.0 36.3 34.0 37.4 45.0

E: MOSL Estimates

Company descriptionMaruti Suzuki India Ltd (MSIL), a subsidiary of Suzuki

(Japan), is the largest passenger vehicle manufacturer

in India, with annual sales of 1.2m units. It dominates

the domestic segment with ~41% market share. MSIL

has two plants in Haryana - Gurgaon and Manesar.

Key investment positives & long-term prospects While near term demand headwinds exist on weak

macro, over the long run expects healthy industry

volume growth of 12-15%, with rise in income,

aspiration levels and low penetration rates.

Industry demand seems to have stabilized and could

surprise positively on pent-up demand (FY14 being

third year of low industry growth).

Strong presence in high growing rural region (~30%

of volumes) coupled with other key strategic

advantages of deep customer understanding and

strong distribution and service network are difficult

to replicate and scale.

There are no significant launches in small car

segment in FY14, except for Honda Amaze (compact

sedan with diesel variant) and i10 (diesel). Company

believes the worst of competition is overcome, with

MSIL being able to sustain market share at ~40%.

Suzuki (Japan) has decided MSIL will be responsible

for the markets of Africa, the Middle East and Saarc

countries, thus driving exports growth.

Management is focused to lower net forex exposure

over the next three years to USD0.4b from USD1.8b

in FY12 by increasing localization and exports.

Key challenges & near-term concerns Continued weakness in consumer sentiments led

by poor macro, higher interest rates and fuel prices

are delaying the demand recovery.

Adverse forex movement may impact margins

negatively.

Key news flows / triggers to watch Status on forex hedging, especially INR/USD, as

~20% of sales are net imports.

Trend in diesel demand and its implications on

product mix and margins.

Plans to launch compact SUV in 4QFY14/1QFY15.

1QFY14 highlights; outlook for FY14, FY15 MSIL's 1QFY14 performance was above estimates,

with EBITDA margin of 11.4% (decline of 40bp QoQ

on like-to-like basis), driven by favorable forex.

Retained 0-5% industry growth guidance for FY14.

Discounts increased QoQ by ~INR2,800 to

INR13,426; expects discounts to increase further due

to introduction of discounts in the diesel portfolio

since June 2013.

JPY/USD exposure for direct import and royalty

hedged at 98-100. However, INR/USD remains

unhedged.

Import content expected to further reduce by 2-3%

in FY14 from 19.5% as in March 2013.

Capacity addition of 0.25m units at Manesar and

0.15m units of diesel engine at Gurgaon to start in

September 2013. However, the second phase of

diesel engine capacity expansion is deferred.

117September 2 - 6, 2013


Maruti Suzuki: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 347,059 426,126 424,456 492,160

Change (%) -3.9 22.8 -0.4 16.0

Operating Other Income 8,812 9,753 10,217 10,563

Total Op. Income 355,872 435,879 434,673 502,723

Change (%) -3.6 22.5 -0.3 15.7

Total Cost 330,741 393,583 386,386 443,380

EBITDA 25,130 42,296 48,287 59,343

Change (%) -29.9 68.3 14.2 22.9

EBITDA Margins (%) 7.1 9.7 11.1 11.8

Depreciation 11,384 18,612 21,307 24,493

EBIT 13,747 23,684 26,980 34,850

Interest 552 1,898 2,015 1,941

Other Income 8,268 8,124 9,400 10,975

PBT 21,463 29,910 34,365 43,885

Tax 5,110 5,989 8,591 10,093

Effective tax Rate (%) 23.8 20.0 25.0 23.0

PAT 16,353 23,921 25,774 33,791

Change (%) -28.5 46.3 7.7 31.1

% of Net Sales 4.7 5.6 6.1 6.9

Adj. PAT 16,353 23,921 25,774 33,791

Change (%) -29.2 46.3 7.7 31.1


Y/E March 2012 2013 2014E 2015E

Share Capital 1,445 1,510 1,510 1,510

Reserves 150,429 184,279 206,165 235,744

Net Worth 151,873 185,790 207,676 237,254

Loans 11,749 14,928 14,928 14,928



Net Fixed Assets 75,207 97,992 111,107 121,614

Capital WIP 9,419 19,422 15,000 10,000

Investments 61,474 70,783 70,783 70,783

Curr.Assets, Loans 76,922 78,683 90,278 121,740

Inventory 17,965 18,407 19,054 22,037

Sundry Debtors 9,376 14,237 13,100 15,151


Loans & Advances 21,193 23,940 23,940 23,940

Others 4,027 14,349 14,349 14,349



Provisions 6,985 8,741 9,518 10,756


Appl. of Funds 166,647 204,805 226,691 256,269

* including SPIL (Suzuki Powertrain India Ltd)

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

Adjusted EPS 56.6 79.2 85.3 111.9

EPS Growth (%) (29.2) 39.9 7.7 31.1

Consol EPS 58.2 80.2 86.7 111.9

Cash EPS 96.0 141.8 157.2 192.9


DPS 7.5 8.0 11.0 12.0

Div. payout (%) 13.3 10.1 12.9 10.7

Valuation (x)

Consol. P/E 22.2 16.1 14.9 11.5

Cash P/E 13.4 9.1 8.2 6.7

EV/EBITDA 11.9 7.7 6.5 4.8

EV/Sales 0.9 0.8 0.7 0.6


Dividend Yield (%) 0.6 0.6 0.9 0.9


RoE 10.8 12.9 12.4 14.2

RoCE 13.2 15.5 16.0 17.9

Leverage Ratio

Debt/Equity (x) 0.1 0.1 0.1 0.1


Y/E March 2012 2013 2014E 2015E


Int./Div. Received -7,003 -4,470 9,400 10,975

Depreciation 11,384 18,612 21,307 24,493


(Inc)/Dec in WC 2,265 5,123 -1,107 2,357


(Inc)/Dec in FA -29,630 -38,100 -30,000 -30,000

(Pur)/Sale of Invest. -1,328 2,359 0 0


Inc/(Dec) in Debt 8,758 -5,493 0 0

Interest Paid -426 -2,003 -2,015 -1,941

Dividends Paid -2,167 -2,167 -3,888 -4,213


Inc/(Dec) in Cash 806 -1,562 12,085 26,428

Add: Op. Balance 25,085 24,362 7,750 19,835

Closing Balance 25,891 22,799 19,835 46,263

September 2 - 6, 2013 118


MCX



Promoter 26.0 26.0 26.0

Dom. Inst. 20.0 20.8 23.5

Foreign 38.6 37.6 31.6

Others 15.4 15.6 18.9

Stock info

Bloomberg Code MCX IN



Mcap (INR b) 14.2

Mcap (USD b) 0.2

52-Wk Range (INR) 1,617/238

1, 6, 12 Rel Perf (%) -53/-71/-79

Company descriptionHeadquartered in Mumbai, MCX is a state-of-the-art

electronic commodity futures exchange, with an

extensive reach of 2,100+ members, operations through

400,000+ terminals and offers trading in more than 30

commodity futures contracts across segments. In terms

of contracts traded in CY12, it is the third largest globally,

largest in gold and silver, second-largest in natural gas

and copper and third-largest in crude oil.

Key investment positives & long-term prospects In developed markets, commodity derivatives

volumes are at a much higher multiple of the

underlying physical commodity volumes. Indian

futures market is ~4x the physical market, compared

to 35-40x being the global average.

The total number of clients trading on commodities

platform is less than 2m, as compared to that in

equities estimated at ~18-20m. Globally, the number

of clients trading in commodities is higher than

those in equities.

Over the last five years, MCX's market share has been

upwards of 82%, making switching to competition's

exchange unviable as liquidity is only a fraction

compared to MCX.

Company has a policy of paying 50% of its profits

every year as dividends.

Amid globalization, with physical commodities,

derivatives trading volumes too are shifting to

countries like India, and MCX caters to growing

demand for commodities and need to hedge.

Key challenges & near-term concerns Following the imposition of the Commodities

Transaction Tax (CTT), volumes on the exchange fell

by over 40%.

Declining commodity prices and volatility in the

same, coupled with Government's measures to curb

trade in bullion can potentially hurt volumes at MCX.

Key news flows / triggers to watch The FCRA Bill will be a key trigger to volumes on the

exchange. However, the same has been held in

abeyance for a while.

Uncertainties over the exchange's future increased

recently due to turmoil in one of the parent group

exchanges - NSEL.

1QFY14 highlights; outlook for FY14, FY15 Performance in 1Q was impacted by higher costs,

while volume growth was 4% QoQ and 3% YoY. CTT

became effective from July 1st and hence the impact

of the same does not reflect in 1QFY14. However,

going forward, MCX's volumes will be severely

impacted.

Market share gain at MCX-SX looks tougher post crisis

in the parent company on suspension of trading and

settlement issues at NSEL. This cripples potential

option value from selling the stake in MCX-SX.

FCRA, if implemented, will drive significant volume

growth.




Change (%) (0.7) 6.5 (4.9) (3.1) 1.8 (6.2) (31.3)

EBITDA 756 817 723 637 632 2,825 1,544

Change (%) 8.1 (11.5) (11.9) (0.7) (15.6) (45.3)

EBITDA Margin (%) 61.5 62.4 58.0 52.8 51.5 57.2 45.6

Adjusted PAT 647 814 759 766 601 2,800 1,688

Change (%) (1.6) 25.7 (6.8) 1.0 (21.5) (2.2) (39.7)

PAT Margin (%) 52.6 62.1 60.9 63.5 48.9 56.7 49.8


Volumes (INR t) 36 39 37 36 37 149 104

Growth in Volumes (%) 0.6 8.0 (5.8) (2.6) 4.0 (4.6) (30.0)

E: MOSL Estimates

119September 2 - 6, 2013


MCX: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Sales 5,262 4,935 3,391 3,610

Change (%) 42.6 (6.2) (31.3) 6.5

Cost of Services 1,036 1,122 892 1,006

SG&A Expenses 879 987 954 969

EBITDA 3,347 2,825 1,544 1,634

% of Net Sales 63.6 57.2 45.6 45.3


Other Income 1,027 1,355 1,138 1,336

EO Item (net) 142 - - -

PBT 3,960 3,865 2,344 2,628

Tax 1,098 1,065 656 709

Rate (%) 27.7 27.6 28.0 27.0

PAT 2,862 2,800 1,688 1,918

Net Income 2,862 2,800 1,688 1,918

Change (%) 65.6 (2.2) (39.7) 13.7


Y/E March 2012 2013 2014E 2015E


Reserves 9,461 11,058 11,766 12,670

Net Worth 9,969 11,567 12,274 13,178

Loan & other long term liab. 432 569 432 432


Net Block 1,369 2,044 3,378 3,285

CWIP 1 - - -

Other LT Assets 1,907 531 531 531

Investments 2,208 1,481 1,481 1,481

Curr. Assets 13,274 13,802 14,259 15,579

Current Investments 9,294 9,201 9,294 9,294

Debtors 514 69 358 479







Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 56.1 54.9 33.1 37.6

Cash EPS 61.4 61.1 39.7 44.3

Book Value 195.5 226.8 240.7 258.4

DPS 24.0 25.0 14.0 17.0

Payout % 50.0 53.3 49.5 52.9

Valuation (x)

P/E 5.0 5.1 8.4 7.4

Cash P/E 4.5 4.6 7.0 6.3

EV/EBITDA 0.6 0.7 0.5 (0.2)

EV/Sales 0.4 0.4 0.2 (0.1)


Dividend Yield (%) 10.1 10.5 5.9 7.2


RoE 31.0 26.0 14.2 15.1

RoCE 24.8 24.8 13.6 14.6

Turnover Ratios

Debtors (Days) 35.7 5.1 40.0 40.0



Y/E March 2012 2013 2014E 2015E

CF from Operations 1,600 1,867 833 925

Cash for Working Capital 1,160 (1,151) (4) 121

Net Operating CF 2,760 716 828 1,046

Net Purchase of FA (200) (300) (250) (250)

Net Purchase of Invest. (2,723) 1,427 1,150 1,336

Net Cash from Invest. (2,923) 1,127 900 1,086

Dividend Payments (296) (1,492) (835) (1,014)

Cash Flow from Fin. (296) (1,492) (835) (1,014)

Free Cash Flow 2,561 416 578 796

Others 273 - -

Net Cash Flow (186) 351 894 1,118

Opening Cash Bal. 3,310 3,124 3,475 4,369

Add: Net Cash (186) 351 894 1,118

Closing Cash Bal. 3,124 3,475 4,369 5,486

September 2 - 6, 2013 120


Motherson Sumi Systems



Promoter 65.6 65.6 65.6

Dom. Inst. 9.8 9.6 9.9

Foreign 15.3 15.3 12.4

Others 9.3 9.5 12.2

Stock info

Bloomberg Code MSS IN



Mcap (INR b) 118.0

Mcap (USD b) 1.8


1, 6, 12 Rel Perf (%) -1/7/61

Company descriptionMotherson Sumi Systems (MSS) is the flagship company

of the Samvardhana Motherson Group and is a JV

between Samvardhana Motherson Group and

Sumitomo Wiring Systems, Japan. It is a full system

solution provider for the automotive industry. Post

acquisition of VisioCorp (SMR) and Peguform (SMP), it

has a strong foothold in the global automotive supply

chain. SMR is one of the world’s largest manufacturers

of exterior rear view mirrors. SMP is one of Europe’s

largest manufacturers of IP modules, door trims and

bumpers.

Key investment positives & long-term prospects Post acquisition by MSS, both the major European

subsidiaries (SMR and SMP) are witnessing steady

improvement in profitability, with increasing

utilization, new order wins and restructuring

initiatives. SMP reported PAT in 1QFY14, led by sharp

profitability improvement, for the first time post

acquisition.

Growth in standalone business, though moderated,

remains strong in view of the challenging

macroeconomic environment and consequent weak

auto industry.

Robust order book in each of its key business

segments and steady performance improvement at

both SMR and SMP, led by improvement in synergies

within the group, are likely to drive earnings growth.

Key challenges & near-term concerns Weak near-term outlook for standalone business,

led by slackness in domestic auto OEM segment.

High exposure to the European market through

subsidiaries, SMP and SMR.

Key news flows / triggers to watch Further profitability improvement in SMP, led by

synergies within the group.

1QFY14 highlights; outlook for FY14, FY15 Consolidated net sales grew 11% YoY and 6% QoQ

to INR70.8b. EBITDA margin expanded 170bp YoY

and 30bp QoQ to 8.8%. Adjusted PAT grew 29% YoY

and 12% QoQ. Standalone revenues grew 1.6% YoY

to INR10.8b.

The key highlights were the steady improvement

in profitability of both the major European

subsidiaries, led by benefits from group synergies.

SMP EBITDA margin improved 230bp QoQ to 5.5%.

SMR reported strong 22% revenue growth, led by

new client traction in the US; adjusted EBITDA

margin was 8.6% on higher utilization at the more

profitable Hungary and Brazil plants.

The management continues to target 6% EBITDA

margin for SMP. Improving efficiency and higher

group synergies would be the key driver of margin

expansion.




Change (%) 181.2 151.9 73.5 3.9 10.9 78.1 71.8

EBITDA 4,552 4,100 5,095 5,693 6,216 10,744 19,440

Change (%) 186.7 101.4 195.2 33.2 36.5 20.9 80.9

EBITDA Margin (%) 7.1 7.0 7.6 8.5 8.8 7.2 7.6

Reported PAT 81 1,376 1,030 1,958 732 2,596 4,445

121September 2 - 6, 2013


Motherson Sumi Systems: Financials and valuation


Y/E March 2010 2011 2012 2013

Net Sales 69,240 83,711 149,076 256,170

Total Cost 63,369 74,824 139,141 236,730

EBITDA 5,871 8,887 9,935 19,440

Change (%) 79.1 51.4 11.8 95.7

EBITDA Margins (%) 8.5 10.6 6.7 7.6

Depreciation 2,601 2,465 3,796 7,145

EBIT 3,270 6,422 6,139 12,295

Interest 635 576 1,649 2,495

Other Income 146 130 135 170

Forex loss/ (income) -649 -337 509 1,628

PBT 3,430 6,312 4,117 8,342

Tax -79 27 2,153 3,835

Effective tax Rate (%) -2.3 0.4 52.3 46.0

PAT before Minority 3,508 6,285 1,964 4,507

Change (%) 35.9 79.2 -68.8 129.5

Minority Interest -91.4 521.2 -632.9 61.6

PAT after Minority 3,599.8 5,764.3 2,596 4,445

Change (%) 68.8 60.1 -55.0 71.2


Y/E March 2010 2011 2012 2013


Reserves 11,275 15,700 18,325 22,302

Net Worth 11,649 16,088 18,717 22,890

Loans 8,179 12,607 46,023 49,039

Deferred Tax Liability 40 10 602 559





Net Fixed Assets 14,548 17,645 46,922 52,770

Capital WIP 1,808 3,921 4,458 3,859


Curr.Assets, Loans

Inventory 6,752 10,376 22,496 26,036

Sundry Debtors 7,688 9,560 30,127 29,400


Loans & Advances 3,101 4,607 7,210 5,807

Others 0 1,021 2,950 2,861

Current Liab. & Prov.


Other Liabilities 0 1,217 2,632 4,067

Provisions 2,861 3,299 3,512 3,576


Misc. Expenditures 18 0 0 0

Appl. of Funds 21,896 30,981 70,369 76,513

Ratios

Y/E March 2010 2011 2012 2013

Basic (INR)

EPS 6.1 9.8 4.4 7.6

EPS Growth (%) 68.8 60.1 (55.0) 71.2

Cash EPS 10.5 14.0 10.9 19.7


DPS 1.8 2.8 2.3 2.0

Div. payout (%) 18.7 18.6 34.3 26.5

Valuation (x)

P/E 31.0 19.4 43.0 25.1

Cash P/E 18.0 13.6 17.5 9.6

EV/EBITDA 26.4 17.4 15.6 8.0

EV/Sales 2.2 1.8 1.0 0.6


Dividend Yield (%) 0.9 1.4 1.2 1.1


RoE 36.0 45.3 11.3 21.7

RoCE 16.7 24.8 12.4 17.0

Turnover Ratios





Leverage Ratio

Debt/Equity (x) 0.4 0.6 2.2 1.9


Y/E March 2010 2011 2012 2013


Int./Div. Received 573.1 493 1530 2372

Depreciation 2,601 2,479 3,814 7,145


(Inc)/Dec in WC -661 -3,085 -3,357 -1,019


(Inc)/Dec in FA -3,780 -7,568 -10,337 -10,895

(Pur)/Sale of Invest. 51 -486 -8,404 105


Issue of shares 0 0 5 0

Inc/(Dec) in Debt 1,176 5,368 16,603 1,835

Interest Paid -496 -568 -1,471 -2,537

Dividends Paid -479 -677 -1,063 -1,988

Others 111 -113 -174 132

CF from Fin. Activity 312 4,010 13,900 -2,558

Inc/(Dec) in Cash 666 61 1,046 1,512

Add: Op. Balance 2,766 3,432 3,493 4,539

Closing Balance 3,432 3,493 4,539 6,051

September 2 - 6, 2013 122


NTPC



Promoter 75.0 75.0 84.5

Dom. Inst. 9.9 10.5 7.8

Foreign 10.3 9.4 4.0

Others 4.8 5.1 3.7

Stock info

Bloomberg Code NTPC IN



Mcap (INR b) 1081.0

Mcap (USD b) 16.6


1, 6, 12 Rel Perf (%) 1/-8/-26

Company descriptionNTPC is the largest power generator in India, with an

installed capacity of 41.2GW and contributes ~30% of

electricity generation in India. It aims to add 14GW in

the 12th Five Year Plan v/s ~9GW addition in the 11th

Plan period. It has also ventured into related areas like

coal mining, distribution, transmission and gas

exploration.

Key investment positives & long term prospect NTPC plans to commission 15GW of capacity in the

12th Plan (11.1GW remaining). The 9GW of capacity

to be added in the 13th Plan is already under

construction and balance under project award. This

provides strong visibility on growth option.

Company's plant availability factor (PAF) has been

consistently above 85%, while lower demand

impacted PLF. Base RoE recovery is linked to PAF

and is thus assured.

Strong operating cash flow and cash equivalent of

INR169b (FY13) would support its expansion plans

and thus growth will not be equity dilutive.

Higher generation growth led by improved domestic

coal supply and demand by distribution companies

(Discoms) would drive core earnings and incentives.

Key challenges NTPC has witnessed meaningful delays in capacity

commissioning/project awards in the past.

Continued delays could limit upfront earnings

growth (capacity addition target for FY14 stands at

1.9GW).

Lower demand/backdown from SEBs may impact

company's generation incentives (generation

growth is muted at 4.5% in FY13).

Delay in restoration of coal mine may impact NTPC's

diversification policy of coal sourcing (FY14 coal

mining target is at 3mt and to be increased to 33mt

by FY17).

Key news flows / triggers to watch Commissioning of coal jetty for Faraka and

Kahalgaon project and commencement of Pakri

Barwadih coal mine.

Generation incentives contribute 20-25% to NTPC's

earnings; thus, generation growth to be watched.

PLF in 1QFY14 was down to 79%.

4 blocks already allocated, this would further

improve fuel visibility for upcoming projects.

1QFY14 highlights; outlook for FY14, FY15 Adj. PAT was below estimate due to lower-than-

estimated other income. Coal PAF stood at 84.8%.

Though NTPC did not add capacity during the

quarter, it commissioned 500MW of capacity.

Company is confident to start the captive coal

production in FY14.

We have assumed commissioning of 1.9GW in FY14

and ~4GW in FY15.




Change (%) 12.6 4.8 2.9 1.2 (2.2) 5.2 1.7

EBITDA 36,306 42,243 39,952 39,065 42,653 157,565 166,563

Change (%) 26.7 30.4 39.9 (5.0) 17.5 19.9 5.7

EBITDA margin (%) 22.7 26.2 25.3 23.7 27.3 24.5 25.5

Reported PAT 24,987 31,424 25,968 43,816 25,270 126,194 104,013

Adjusted PAT 24,093 18,869 22,069 22,054 23,263 91,885 102,005

Change (%) 26.7 27.5 6.7 (3.9) (3.4) 15.3 11.0

PAT margin (%) 15.1 11.7 14.0 13.4 14.9 14.3 15.6


Instal. Capa. (MW) 39,174 39,174 39,674 41,174 41,174 41,174 43,029

Qtrly Addition (MW) 2,160 - 500 1,500 - 4,160 1,855

Coal plant PAF (%) 86.5 74.9 84.7 86.9 79.1 83.0 81.9

E: MOSL Estimates

123September 2 - 6, 2013


NTPC: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 615,937 647,024 653,933 757,209

Change (%) 12.2 5.0 1.1 15.8

Other operating income 4,586 9,715 1,423 1,494


EBITDA 140,399 171,141 167,986 197,777

Margin (%) 22.8 26.5 25.7 26.1

Depreciation 27,917 33,968 40,520 48,116

Interest 17,116 19,244 23,684 28,383

Other Income - Rec. 27,897 31,016 32,027 33,946

Exceptional item 16,841


Current Tax 31,024 39,592 31,796 35,668

Tax Rate (%) 25.2 23.9 23.4 23.0

Reported PAT 92,237 126,194 104,013 119,557

EO Exp/(Inc) 12,518 34,309 2,007 0

Adjusted PAT 79,720 91,885 102,005 119,557

Change (%) 0.2 15.3 11.0 17.2

Margin (%) 12.9 14.2 15.6 15.8

Balance Sheet

Y/E March 2012 2013 2014E 2015E


Total Reserves 650,457 721,421 781,543 851,824

Net Worth 732,912 803,875 863,998 934,278


Total Loans 476955 553309 603539 649040


Gross Block 818,283 1,032,457 1,190,593 1,341,114

Less: Accum. Deprn. 365,719 403,096 443,616 491,732

Net Fixed Assets 452,564 629,361 746,976 849,383

Capital WIP 418,278 371,094 351,937 326,722

Investments 95,839 91,376 81,431 67,784

Curr. Assets 427,908 508,005 484,007 543,465

Inventory 37,029 40,572 45,035 49,535



Others 154,911 228,877 154,518 166,014



Provisions 38,374 77,445 28,099 29,738


Appl. of Funds 1,216,236 1,366,337 1,476,689 1,592,471


Y/E March 2012 2013 2014E 2015E

Installed capacity (MW) 37,014 41,174 43,029 47,114

- Own (MW) 4,364 5,364 6,059 6,754

- JV (MW) 32,650 35,810 36,970 40,360

Coal plant PAF (%) 88.4 87.4 88.6 88.4

Coal plant PLF (%) 85.0 80.5 80.5 83.0

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS (Adjusted) 9.7 11.1 12.4 14.5

Cash EPS 13.1 15.3 17.3 20.3

BV/Share 88.9 97.5 104.8 113.3

DPS 4.0 5.8 4.6 5.2

Payout (%) 41.5 43.4 42.2 41.2

Valuation (x)

P/E 13.5 11.8 10.6 9.0

P/BV 1.5 1.3 1.3 1.2

EV/Sales 2.2 2.2 2.2 1.9

EV/EBITDA 9.5 8.3 8.6 7.5

Dividend Yield (%) 3.1 4.4 3.5 4.0

Return Ratios (%)

RoE 11.3 12.0 12.2 13.3

RoCE 12.0 14.3 11.2 12.0






Wkg. Capital Turnover (Days) 43 51 42 45

Leverage Ratio (x)


Debt/Equity 0.7 0.7 0.7 0.7


Y/E March 2012 2013 2014E 2015E


Interest 17,116 19,244 23,684 28,383

Depreciation 27,917 33,968 40,520 48,116


(Inc)/Dec in WC -10,525 -17,693 14,937 -19,449


CF fr. Oper. incl EO Exp. 126,745 161,713 183,154 176,607

(inc)/dec in FA -126,303 -166,990 -138,978 -125,307

(Pur)/Sale of Investments -27,609 -4,463 -9,946 -13,647


(Inc)/Dec in Debt 44,491 75,823 50,859 45,501

Dividend Paid -27,703 -40,086 -32,143 -36,088

Interest -17,116 -19,244 -23,684 -28,383

Others 43,286 506 7,515 14,106

CF from Fin. Activity 42,957 16,999 2,547 -4,864

Inc/Dec of Cash 13,167 -17,272 50,416 32,371


Closing Balance 177,643 184,902 221,679 254,468

September 2 - 6, 2013 124


ONGC



Promoter 69.2 69.2 69.2

Dom. Inst. 10.7 10.8 11.7

Foreign 6.4 6.3 5.3

Others 13.7 13.6 13.8

Stock info

Bloomberg Code ONGC IN



Mcap (INR b) 2301.0

Mcap (USD b) 35.4


1, 6, 12 Rel Perf (%) -3/-11/-9

Company descriptionONGC, a Fortune 500 company, is an eminent exploration

and production (E&P) company in India. With over 300

discoveries, it has established in-place reserves of 6.9b

ton of oil equivalent (btoe), with ultimate reserves of

2.4btoe. It currently accounts for ~68% of India's domestic

oil and gas production. Through its 100% subsidiary ONGC

Videsh Ltd (OVL), it has equity investments in E&P blocks

in 16 countries. Downstream presence is marked through

its subsidiary (71.6% stake), MRPL.

Key investment positives & long-term prospects Diesel reforms to lead to significant cut in under-

recovery: On-going diesel reforms (a) increasing

diesel prices by INR0.45/lt every month and (b)

market pricing for bulk buyers would lead to a

significant cut in under-recovery (~40% reduction

in under-recovery in FY15E over FY13).

Gas price hike could add significantly to ONGC's

earnings: Recently, CCEA approved Rangarajan

committee formula's implying ~USD8/mmbtu for

domestically produced gas from April 1, 2014. This

would increase ONGC's FY15E EPS by 27% in

comparison to old price of USD4.2/mmbtu.

Increased capex, IOR/EOR projects to provide

production growth: Impressive RRR of >1 for last six

years. Production likely to be flat in short term;

however, we expect volume growth in the long term

led by IOR/EOR, marginal fields and monetization

of discovered fields.

Key challenges & near-term concerns Production growth: ONGC's domestic production

has declined at a CAGR of 0.7% in the last 10 years

and improving production will be a key challenge.

Management has guided FY14/FY15 standalone

production of oil at 24.1/25mmt (v/s 26.2 in FY13)

and gas (incl. JV) at 25.1/26.2bcm (v/s 25.3 in FY13).

Acquisition of overseas assets at high valuations

against stiff competition from China.

Uncertainty on subsidy sharing (currently model

INR600b of upstream sharing in FY14E/15E).

Key news flows / triggers to watch Clarity on production from Sudan and Syria.

Clarity on benefit of gas price hike.

Subsidy rationalization by the Government and

decontrolling of diesel prices.

Discoveries in its NELP blocks and acquisition of

overseas assets.

1QFY14 highlights; guidance for FY14, FY15 In 1QFY14, ONGC's subsidy share was INR126b and

its share in upstream stood at 82.5% (v/s ~82.4% in

FY13). We model FY14E/15E upstream subsidy

sharing at INR600b and ONGC's share at 82.4%.

Net realization was at USD40.2/bbl v/s USD47.9/bbl

in FY13.

Reported numbers were impacted by the voluntary

one-time employee cost provision of INR13b;

adjusted for that, results were operationally in line

with expectations.

Quarterly Performance (Standalone) (INR Billion)


Operating Income 201 198 210 214 192 822 861

Change (%) 24.0 -12.5 15.8 13.7 -4.3 8.6 4.7

EBITDA 110 103 112 103 84 428 443

Change (%) 19.1 -27.5 5.4 -6.9 -23.9 -5.1 301.1

EBITDA Margin (%) 55.0 51.9 53.5 48.1 43.7 52.1 51.4

Reported PAT 61 59 56 34 40 209 209

Adjusted PAT 61 59 56 34 40 209 209

Change (%) 48.4 -31.8 20.0 -40.0 -33.9 -9.1 -0.2

PAT Margin (%) 30.3 29.8 26.5 15.8 20.9 25.4 24.3

Key Metrics (USD/bbl)

Fx rate (INR/USD) 54 55 54 54 56 55 58

Gross Oil Realization110 110 110 114 103 111 105

Subsidy 63 63 62 63 63 63 58

Net Oil Realization 47 47 48 51 40 48 47

Subsidy (INR b) 123 123 124 123 126 494 494

E: MOSL Estimates

125September 2 - 6, 2013


ONGC: Financials and valuation

Income Statement (Consolidated) (INR Billion)

Y/E March 2012 2013 2014E 2015E

Net Sales 1,464 1,614 1,791 2,033

Growth (%) 24.4 10.3 10.9 13.5

Total Operating Costs 886 1,075 1,215 1,278

EBITDA 578 540 576 755

% of Net Sales 39.5 33.4 32.2 37.1

Interest 4 5 8 7

D,D&A 234 232 249 272


Prov, wrtie-offs prior period -31 0 0 0

PBT 428 367 388 548

Tax 144 128 138 191

Rate (%) 34 35 35 35

Adj PAT 263 240 250 357

Growth (%) 23.3 -8.8 4.3 42.6

Minority int., assoc profits 3 -2 2 4

Net Profit post MI 260 242 248 353

Balance Sheet (INR Billion)

Y/E March 2012 2013 2014E 2015E


Reserves 1,322 1,469 1,620 1,833

Net Worth 1,364 1,512 1,663 1,876

Debt 152 135 135 136

Deferred Tax 122 137 147 162

Liability for Abandonment 204 207 210 213




Producing Properties 608 660 731 806

Pre-producing Properties 117 105 123 142

Investments (incl. mkt. sec.) 29 32 32 32

Goodwil l 78 73 68 63

Cash & Bank Balances 374 388 416 502

Inventories 132 92 101 104

Sundry debtors 117 95 94 111



Total Curr. Assets 797 740 779 887

Current Liabilities 390 299 309 320


Total current liabilities 452 354 364 381

Net Curr. Assets 345 387 415 506

Total assets 1,865 2,011 2,177 2,412


Exchange rate 47.9 54.5 57.5 57.0

Subsidy (INRb) 445 494 494 508

Dom. Oil prodn (mmt) 26.9 26.2 27.3 28.6

Dom. Gas prodn (bcm) 25.5 25.3 26.4 27.9

Gross realization (USD/bbl) 117 111 105 105

Subsidy (USD/bbl) 63 63 58 57

Net realization (USD/bbl) 55 48 47 48


Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 30.4 28.3 29.0 41.3

Cash EPS 58.2 57.2 59.2 74.7

Book Value 159.5 176.7 194.4 219.3

DPS 9.8 9.5 9.7 14.0

Payout (incl. div tax) 32.8 39.2 39.0 39.6

Valuation (x)

P/E 9.2 9.9 9.6 6.8

Cash P/E 4.8 4.9 4.7 3.7

EV / EBITDA 3.7 3.9 3.6 2.6

EV / Sales 1.5 1.3 1.2 1.0


Dividend Yield (%) 3.5 3.4 3.5 5.0

EV/BOE (USD, 1P basis) 6.5 5.6 5.2 5.1


RoE 20.7 16.8 15.6 20.0

RoCE 19.4 15.6 14.9 18.9

Turnover Ratios

Debtors (No. of Days) 26.8 23.9 19.2 18.4


Leverage Ratio

Net Debt / Equity (x) -0.2 -0.2 -0.2 -0.2

Cash Flow Statement (INR Billion)

Y/E March 2012 2013 2014E 2015E

OP/(Loss) before Tax 428 367 388 548

DD & A 129 182 205 231

Other op. expenses 107 0 0 0


(Inc)/Dec in Wkg. Capital -71 -27 -1 -6

CF from Op. Activity 475 410 464 597

(Inc)/Dec in FA & CWIP -393 -281 -340 -371

(Pur)/Sale of Investments 3 -3 0 0

Loans and Advances

Inc from Invst 0 0 0 0

CF from Inv. Activity -390 -283 -340 -371


Inc / (Dec) in Debt 92 -17 0 0

Dividends Paid (incl.tax) -85 -95 -97 -140

Interest paid -4 0 0 0

CF from Fin. Activity 2 -112 -97 -140

Inc / ( Dec) in Cash 86 15 28 86

Add: Opening Balance 287 373 388 416


September 2 - 6, 2013 126


Oil India



Promoter 68.4 68.4 78.4

Dom. Inst. 6.9 7.9 5.2

Foreign 9.6 7.7 1.7

Others 15.0 15.9 14.7

Stock info

Bloomberg Code OINL IN



Mcap (INR b) 263.8

Mcap (USD b) 4.1


1, 6, 12 Rel Perf (%) -8/-14/-11

Company descriptionOil India Ltd (OINL), established in 1959, is a 'Navratna'

state-owned company engaged in exploration,

development, production and transportation of crude

oil and natural gas in India. OIL has 2P reserves of

944mmboe, ~94% of these located in north-east India.

It owns 1,157km of common carrier cross-country crude

oil pipeline and the 660km product pipeline and the

192km pipeline to Numaligarh refinery.

Key investment positives & long-term prospects Valuations attractive; cash deployment - a near term

trigger: OINL trades at 40% discount to global peers on

EV/BOE (1P basis). Cash reserves at ~USD2b are ~60%

of its balance sheet and though it hampers RoE in the

short term, it provides wide investment options.

Diesel reforms to lead to significant cut in under-

recovery: Ongoing diesel reforms (a) increasing

diesel prices by INR0.40-0.50/lt every month and

(b) market pricing for bulk buyers would lead to a

significant cut in under-recovery (50% reduction in

under-recovery in FY15E over FY13).

Gas price hike could add significantly to OINL's

earnings: Recently, CCEA approved Rangarajan

committee formula's implying ~USD8/mmbtu for

domestically produced gas from April 1, 2014. This

could add significantly to OINL's earnings if the

benefits are passed on.

Key challenges & near-term concerns Production growth: OINL's domestic production has

posted a CAGR of 3.1% in the last 10 years to

6.3mmtoe. Management guidance for FY14 - oil

production at 3.95mmt and natural gas production

at 2.74bcm, implying total at 6.71mmtoe. We model

total production at 6.4/6.8mmtoe in FY14E/15E.

Uncertainty on subsidy sharing (currently we model

INR600b of upstream sharing in FY14E/15E).

Key news flows / triggers to watch Subsidy rationalization by the Government and

decontrolling of diesel prices.

Likely acquisition of overseas E&P assets given the

high cash balance.

1QFY14 highlights; guidance for FY14, FY15 In 1QFY14, OINL's subsidy share stood at INR19.8b

and its share in upstream subsidy stood at 13.2%

(similar to FY12). We model FY14E/15E upstream

subsidy sharing at INR600b and OINL share at 13%.

1QFY14 net realization at USD45.9/bbl v/s USD53.8/

bbl in 1QFY13 and USD55.4/bbl in 4QFY13.

OINL believes that the subsidy sharing at USD56/

bbl is high given the current crude price levels. It

has already written to the oil ministry to consider

lowering the subsidy burden in FY14.



Operating Income 23 24 24 24 20 95 98

Change (%) 2.0 -26.6 -3.3 38.2 -15.1 -2.5 3.1

EBITDA 11 11 11 9 7 42 45

Change (%) -12.2 -29.2 -15.7 82.6 -36.4 287.6 5.9

EBITDA Margin (%) 47.0 47.8 46.6 37.1 35.2 44.6 45.8

Reported PAT 9 10 9 8 6 36 36

Adjusted PAT 9 10 9 8 6 36 36

Change (%) 9.5 -16.2 -7.3 71.9 -34.5 4.1 1.1

PAT Margin (%) 39.9 39.7 39.0 32.2 30.7 37.7 36.9

Key Metrics (USD/bbl)

Fx rate (INR/USD) 54 55 54 54 56 55 58

Gross Oil Realzn. 110 109 109 111 102 110 104

Subsidy 56 56 56 56 56 56 51

Net Oil Realization 54 53 53 55 46 54 53

Subsidy (INR b) 20 21 19 18 20 79 78

E: MOSL Estimates

127September 2 - 6, 2013


Oil India: Financials and valuation



Exchange rate 47.9 54.5 57.5 57.0

Subsidy (INRb) 73.5 78.9 77.9 79.3

Oil production (mmt) 3.8 3.7 3.7 3.8

Gas production (bcm) 2.6 2.6 2.7 2.9

Gross realization (USD/bbl) 115 110 104 104

Subsidy (USD/bbl) 55 56 51 50

Net realization (USD/bbl) 60 54 53 54


Y/E March 2012 2013 2014E 2015E

Net Sales 97,741 95,252 98,244 114,207

Change (%) 17.7 -2.5 3.1 16.2

Change in Stocks -88 -274 -161 0

Production Costs 23,074 22,598 22,153 24,953

Statutory Levies 27,904 30,439 31,276 33,451

EBITDA 46,851 42,489 44,976 55,803

% of Net Sales 47.9 44.6 45.8 48.9

D,D&A 15,263 9,201 10,712 13,574

Interest 105 26 53 53

Other Income 19,536 19,570 19,964 26,926

PBT 51,019 52,832 54,174 69,102

Tax 16,550 16,939 17,878 22,954

Rate (%) 32.4 32.1 33.0 33.2

Adj. PAT 34,469 35,893 36,297 46,148

Change (%) 19.4 4.1 1.1 27.1


Y/E March 2012 2013 2014E 2015E

Share Cap. (incl sh. susp.) 6,011 6,011 6,011 6,011

Reserves 171,202 186,204 208,980 237,938

Net Worth 177,213 192,215 214,991 243,949

Total Loans 101 10,679 10,679 10,679

Deferred Tax 10,767 11,857 12,940 15,163

Well Abandonment 2,031 2,031 2,031 2,031




Net Fixed Assets 10,584 11,610 12,558 13,377

Capital WIP 5,106 5,106 5,106 5,106

Producing/pre-producing 40,560 57,893 80,732 100,884

Investments 26,142 26,142 26,142 26,142

Inventory 5,333 5,607 5,855 6,400

Debtors 10,518 9,843 10,275 11,945


Loans & Adv. and Other CA 19,214 19,214 19,214 19,214

Liabi l i t ies 23,188 25,232 26,349 28,802

Provisions 13,511 13,782 14,057 14,338



Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS (Adj) 57.3 59.7 60.4 76.8

Cash EPS 65.9 69.1 69.9 86.9

Book Value 294.8 319.8 357.6 405.8

DPS 19.0 30.0 19.0 25.0


Valuation (x)

P/E 7.9 7.6 7.5 5.9

Cash P/E 6.9 6.5 6.5 5.2

EV / EBITDA 3.5 3.8 3.6 2.7

EV/Sales 1.7 1.7 1.6 1.3

EV / BOE (1P Reserves) 6.7 5.9 5.5 5.2


Dividend Yield (%) 4.2 6.6 4.2 5.5


RoE 20.7 19.4 17.8 20.1

RoCE 27.7 26.0 23.7 27.0

Turnover Ratios


Fixed Asset Turnover (x) 3 3 2 3

Leverage Ratio

Net Debt / Equity (x) -0.6 -0.6 -0.5 -0.5


Y/E March 2012 2013 2014E 2015E


Depreciation 5,142 5,671 5,747 6,089

Interest /Other Income -13,509 -12,888 -12,024 -11,334


(Inc)/Dec in Wkg. Capital 3,125 2,715 713 520

Other op activities 4,163 2,970 3,465 5,940


(Inc)/Dec in FA & CWIP -8,599 -27,000 -33,000 -33,000


Other In activities 11,335 12,914 12,077 11,388


Inc / (Dec) in Debt -10,042 10,578 0 0

Interest paid -68 -26 -53 -53

Dividends Paid -15,231 -20,891 -13,521 -17,190


Inc / ( Dec) in Cash -8,320 11,026 784 10,730


Closing Balance 109,355 120,381 121,165 131,894

September 2 - 6, 2013 128


Power Grid Corp of India



Promoter 69.4 69.4 69.4

Dom. Inst. 7.6 7.8 7.8

Foreign 14.7 14.2 13.1

Others 8.3 8.6 9.7

Stock info

Bloomberg Code PWGR IN



Mcap (INR b) 454.4

Mcap (USD b) 7.0


1, 6, 12 Rel Perf (%) -2/-3/-20

Company descriptionPower Grid Corp of India (PWGR) is a central

transmission utility (CTU) with a Navratna status, which

owns and operates most of India's inter-state and inter-

regional transmission network. In addition to its

regulated business, PWGR provides consultancy

services in the transmission space and has laid down an

optical fibre network for leasing to telecom companies.

Key investment positives & long term prospect Management has increased the capex target to

INR1.1t in the 12th Five Year Plan (previously INR1t),

which is ~2x the 11th Plan capex.

CERC has approved the setting up of nine high speed

transmission corridors (HSTCs) at a cost of INR750b

(PWGR scope at INR660b), thus significantly

improving the business visibility for PWGR.

PWGR's RAB is set to increase from ~INR215b as in

March 2013 to INR330b by FY15E (CAGR of 24%), as

projects of ~INR446.5/385b are estimated to be

commissioned and capitalized in this period. This

will lead to corresponding increase in regulatory

returns.

Short term open access, consultancy division and

telecom business are source of income, which aids

core earnings and improves reported RoE.

Company's board approved an FPO of 15% capital

base. The clarity on FPO would remove the hangover

of the same, which was there for a year.

Key challenges & near-term concerns Meaningful delay in project execution due to delay

in obtaining right of way.

Continued delays in generation projects may slow

down the growth momentum for PWGR.

Weak financials of SEBs could elongate cash flow

cycle and receivables.

Key news flows / triggers to watch Timeline for FPO of 15% on current capital base.

PWGR has worked out a detailed report on Green

Energy corridor, with an investment of INR420b.

Possible award of the same could improve visibility.

1QFY14 highlights; outlook for FY14, FY15 Numbers were below estimate led by lower other

income and higher fixed charges.

PWGR's 1QFY14 capitalization stood higher at

INR30b v/s INR41b YoY.

Company increased its 12th Plan capex target to

INR1.1t+.




Change (%) 31.1 36.3 36.3 8.8 23.0 26.6 19.7

EBITDA 24,646 26,693 29,231 28,311 30,529 108,880 132,098

Change (%) 33.6 40.6 39.0 8.7 23.9 29.9 21.3

EBITDA margin (%) 85 87 87 84 86 86 87

Reported PAT 8,705 11,259 11,291 11,094 10,404 42,345 47,489

Adjusted PAT 9,065 10,071 11,072 10,926 10,343 41,359 47,429

Change (%) 29.1 32.5 43.0 0.9 14.1 24.6 14.7

PAT margin (%) 31.4 32.6 32.9 32.4 29.1 32.5 31.2


Capitalization 41,000 26,600 25,860 78,540 29,500 172,000 185,000

Capex 30,070 41,000 55,360 73,570 50,000 172,000 185,000

RAB 190,112 198,092 205,850 215,000 223,850 215,000 270,500

E: MOSL Estimates

129September 2 - 6, 2013


Power Grid Corp of India: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 100,353 127,095 152,134 182,323

Change (%) 19.6 26.6 19.7 19.8


Staff Cost 8,100 9,350 10,285 11,828

EBITDA 83,824 108,880 132,098 159,282

% of Net Sales 83.5 85.7 86.8 87.4

Depreciation 25,725 33,519 39,727 48,775

Interest 19,432 25,352 29,990 38,475

Other Income 7,497 6,193 4,357 4,545

Extra-ord. Itm (as reported) -187 247 0 0

PBT 45,976 56,449 66,738 76,578

Tax 13,427 14,104 19,249 21,615

Rate (%) 29.2 25.0 28.8 28.2

Reported PAT 32,550 42,345 47,489 54,963

Extra-ordinary items 649 -986 -60 0

Adjusted PAT 33,199 41,359 47,429 54,963

Change (%) 30.6 24.6 14.7 15.9


Y/E March 2012 2013 2014E 2015E


Reserves 188,581 216,097 302,567 338,321

Net Worth 234,878 262,395 355,809 391,562

Loans 507,692 650,763 760,542 859,438

Deferred tax liability 16,009 19,592 26,240 33,935

Advance against dep 26,370 37,176 37,176 37,176

Grant in Aid 1,393 0 0 0


Gross Fixed Assets 634,363 752,765 937,765 1,137,765


Net Fixed Assets 477,359 562,242 707,514 858,740

Capital WIP 294,266 400,000 379,289 404,289

Investments 12,845 11,475 57,464 5,682

Deffered Tax Asset 0 17,163 0 0

Curr. Assets 137,691 120,456 192,155 209,957

Inventory 4,403 5,515 6,618 7,942

Debtors 23,154 14,341 15,058 15,359



Loans & Advances 80,485 65,584 75,538 77,504


Net Current Assets 1,872 -20,955 35,499 53,401

Application of Funds 786,341 969,925 1,179,767 1,322,111

Key assumptions/operating metricsCapex 178,000 200,000 221,500 225,000

Capitalization 141,000 172,000 185,000 200,000

Regulated Equity 177,812 215,000 270,500 330,500

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)


Growth (%) 30.6 24.6 -0.3 15.9

Cash EPS 12.7 16.2 16.4 19.5

Book Value 50.7 56.7 66.8 73.5

DPS 2.2 2.7 2.7 3.1

Eq. Div.Payout (incl. Div. Tax.)35.6 34.1 34.9 35.0

Valuation

P/E 13.1 10.5 10.6 9.1

Cash P/E 7.4 5.8 5.7 4.8

EV/EBITDA 11.0 9.8 9.0 8.0

EV/Sales 9.2 8.4 7.8 7.0


Dividend Yield (%) 2.3 2.9 2.8 3.3


RoE 14.8 16.6 15.3 14.7

RoCE 9.2 9.3 9.0 9.2

Turnover Ratios



Leverage Ratio

Debt/Equity (x) 2.1 2.4 1.9 2.0


Y/E March 2012 2013 2014E 2015E



Interest 19,432 25,352 29,990 38,475

Less: Direct Taxes Paid 13,427 14,104 19,249 21,615

(Inc)/Dec in WC -6,792 16,077 2,552 -4,657


EO Income -187 247 0 0

CF frm Oper. incl. EO Items 70,915 117,294 119,759 137,556

0 0 0 0

(Inc)/Dec in FA -184,692 -224,136 -164,289 -225,000

(Pur)/Sale of Investments 1,139 1,370 -45,989 51,783


(Inc)/Dec in Net Worth 261 -17,536 79,664 0

(Inc)/Dec in Debt 129,980 156,067 116,428 106,591


Dividend Paid 11,603 14,455 16,576 19,210

CF from Fin. Activity 99,206 98,724 149,525 48,907

Inc/Dec of Cash -13,432 -6,749 59,006 13,245


Closing Balance 23,369 16,620 75,626 88,870

September 2 - 6, 2013 130


Prestige Estates Projects



Promoter 75.0 75.0 80.0

Dom. Inst. 6.1 7.6 6.6

Foreign 17.3 15.6 11.7

Others 1.7 1.9 1.8

Stock info

Bloomberg Code PEPL IN



Mcap (INR b) 40.9

Mcap (USD b) 0.6


1, 6, 12 Rel Perf (%) -2/-30/-4

Company descriptionPrestige Estates Projects Ltd (PEPL), a premium

developer in the South India real estate market, has

strong brand equity, notably in Bangalore. In its 26 years

of legacy, company has delivered 168 projects of 51msf

of developable area across various RE segments,

including landmarks like UB City, Prestige Shantiniketan

and Cessna Business Park etc. PEPL has one of the

richest portfolio of annuity assets, with expected annual

rentals of INR5b by FY15/16.

Key investment positives & long-term prospects Presence across asset classes, superior execution,

and favorable medium term potential of southern

cities make it an attractive play.

It has recorded one of the best operating

performance in terms of launches, growth in pre-

sales and customer collections, meaningful capex

in reaching INR5b rental targets by FY15/16, without

worsening gearing level.

Despite various concerns over the Bangalore

market, we expect the dynamics will likely remain

favorable in the medium term. In strong growth

outlook in annuity income and steady pre-sales,

PEPL would be a key beneficiary.

Key challenges & near-term concerns High dependence on IT sector demand (50% of

housing demand) may impact growth in pre-sales if

IT/ITES expansion sees an extended slowdown.

Oversupply concern in Bangalore market, coupled

with sharp rise in prices in certain recent launches.

Till FY15-16, balance sheet will be capex heavy as it

has high exposure to under-construction annuity

assets. Hence, scope for de-leveraging and increase

in payout is limited over the near term.

Key news flow/triggers to watch Mitigation of concerns -- a) improvement in debtors'

level, b) on-time monetization and execution of

flagship projects such as Golf Shire, Kingfisher Tower

etc and (c) acquisition of new turnkey projects

would be key triggers for the stock.

1QFY14 highlights; outlook for FY14, FY15 PEPL launched three projects of 4.1msf in 1QFY14

across premium and mid-income segment v/s FY14

guidance of 14msf launch.

It sold INR10.2b in 1QFY14 and achieved ~28% of

FY14 guidance of INR37b (v/s our est. of INR36b).

Key management focus over FY14-15 would be: (1)

fast track completion of ongoing annuity portfolio

to reach the INR5b of rental income guidance by

FY15 and (2) replenishment of land parcels at regular

intervals (outright or JDA) to create a base for

medium term growth. Company has been confident

to maintain a fast project turnaround time to avoid

any pressure on liquidity.

There is no plan to diversify outside south, as it is

yet to penetrate optimally in south and the

untapped opportunity is huge.




Change (%) -11.8 88.5 195 177 127.3 85.1 23.6

EBITDA 704 725 1,424 1,321 1,289 5,791 7,219

Change (%) 2.1 47.2 184.1 92.5 83.2 95.2 24.7

EBITDA Margin (%) 32.1 30.0 28.9 23.6 25.9 30 30

Reported PAT 493 457 920 890 867 2,941 3,742

Adjusted PAT 493 457 920 890 867 2,941 3,742

Change (%) 35.3 73.9 227.9 132.6 75.8 246.2 25.6

PAT Margin (%) 22.5 18.9 18.7 15.9 17.4 15.1 15.5


Presales volume 2.0 1.6 1.4 0.9 1.8 6.0 6.1

Presales value 10.1 8.2 7.5 5.4 10.2 31.2 35.7

Collections 4.2 5.1 5.1 5.3 6.1 19.7 22.8

E: MOSL Estimates

131September 2 - 6, 2013


Prestige Estates Projects: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 10,523 19,476 24,073 30,787

Change (%) -31.8 85.1 23.6 27.9

Construction expenses 5,965 11,518 14,014 18,225

Staff Cost 894 1,444 1,588 1,668

Selling & Adm. exp 697 723 1,252 1,601

EBITDA 2,966 5,791 7,219 9,294

% of Net Sales 28.2 29.7 30.0 30.2


Interest 1,193 1,489 1,671 1,947

Other Income 342 636 676 699

PBT 1,510 4,256 5,390 7,032

Tax 626 1,314 1,671 2,180

Rate (%) 41.5 30.9 31.0 31.0

Reported PAT 884 2,941 3,719 4,852

EO Income (net of exp) -58 -82 -150 -200

Adjusted PAT 826 2,860 3,569 4,652

Change (%) -51.7 246.2 24.8 30.3


Y/E March 2012 2013 2014E 2015E

Share Capital 3,281 3,500 3,500 3,500

Reserves 18,229 23,923 27,000 31,161

Net Worth 21,510 27,423 30,500 34,661

Loans 18,829 25,467 24,400 24,263




Net Fixed Assets 13,862 15,807 18,772 20,758

Capital WIP 5,216 9,123 11,123 13,523

Curr. Assets 36,965 46,426 49,520 56,543

Inventory 16,133 18,048 20,818 23,534

Debtors 8,490 8,010 7,703 7,697


Loans & Advances 10,329 15,488 17,092 20,012


Sundry creditors 13,745 20,432 26,480 33,866

Provisions 2,511 1,544 1,544 1,544



E: MOSL Estimates


INR b FY12 FY13 FY14E FY15E

Presales 21.5 31.2 35.5 38.6

Rental assets (msf) 4.0 4.4 5.2 6.6

Total collections 13.5 19.7 22.8 26.6

Total Annuity 1.8 2.1 2.9 4.3

Total cash inflow 17.2 24.0 28.4 34.2

Construction cost 6.9 11.5 13.1 15.9

Annuity capex 4.0 4.8 4.7 4.9

Hotel Capex 0.9 1.6 1.0 1.2

FCF -2.0 -0.6 0.8 2.2

FCFE -4.5 -3.8 -3.0 -1.6

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

Adjusted EPS 2.4 8.2 10.2 13.3

Growth (%) -51.7 246.2 24.8 30.3

Cash EPS 4.5 10.4 13.0 16.8

Book Value 65.6 78.4 87.1 99.0

DPS 1.2 1.2 1.2 1.2


Valuation (x)

P/E 49.8 14.4 11.5 8.8

Cash P/E 25.9 11.3 9.0 7.0

EV/EBITDA 18.7 10.7 8.5 6.5

EV/Sales 5.3 3.2 2.6 2.0


Dividend Yield (%) 1.0 1.0 1.0 1.0


RoE 4.1 12.0 12.8 14.9

RoCE 6.6 11.7 12.5 15.1

Leverage Ratio

Debt/Equity (x) 0.8 0.8 0.7 0.5


Y/E March 2012 2013 2014E 2015E


Add : Depreciation 605 682 834 1,014

Interest 1,193 1,489 1,671 1,947

Less : Direct Taxes Paid 626 1,314 1,671 2,180

(Inc)/Dec in WC 227 875 -1,981 -1,756


(Inc)/Dec in FA -6,556 -6,533 -5,800 -5,400

(Pur)/Sale of Investments 938 -9 0 0


(Inc)/Dec in Networth 303 4,556 0 0

(Inc)/Dec in Debt 3,626 6,638 -1,066 -138

Less : Interest Paid 1,193 1,489 1,671 1,947

Dividend Paid 461 491 491 491


Inc/Dec of Cash -1,096 3,945 -973 1,393


Closing Balance 2,436 5,957 3,907 5,300

September 2 - 6, 2013 132


Radico Khaitan



Promoter 40.5 40.5 40.4

Dom. Inst. 7.4 7.6 10.1

Foreign 33.1 33.0 26.4

Others 19.0 18.9 23.1

Stock info

Bloomberg Code RDCK IN



Mcap (INR b) 13.3

Mcap (USD b) 0.2


1, 6, 12 Rel Perf (%) 16/-23/-9

Company descriptionRadico Khaitan (RDCK) is India’s oldest alcoholic

beverages company. It entered the IMFL segment in

1999, with the launch of its flagship brand, 8PM. RDCK

has three distilleries in Rampur, UP and holds 36%

interest in a JV in Aurangabad, Maharashtra. It owns six

bottling units and maintains 27 contract bottling units.

It holds 8% market share in the IMFL industry and ~24%

market share in the CSD segment. The company offers

all types of liquor, except for beer and wine, in regular

and premium categories.

Key investment positives & long-term prospects RDCK is a pure India play on the huge growth

opportunity in the IMFL space.

Rising sales of Magic Moments vodka and new

launches (After Dark whisky, Morpheus brandy) in

the premium segment will reduce dependence on

mass segment and improve profitability.

Large spirits capacity, pan-India distribution (second

only to United Spirits) and increasing focus on

premium segment gives RDCK an edge over other

emerging IMFL players.

Key challenges & near-term concerns Increasing competition can reduce success rate for

new launches in premium segment, as many mid-

size players are eyeing this segment.

Firm molasses prices and higher glass bottle costs

could restrict margin expansion, going ahead.

Government regulations for distribution, pricing

and taxes on IMFL and inputs (molasses and grain)

are a threat to industry profitability and cash flows.

Key news flows / triggers to watch Price hikes in southern states.

Movement in ENA prices.

1QFY14 highlights; outlook for FY14, FY15 17.6% revenue growth, led by 7.6% volume growth.

Operating margin declined 20bp to 17.1%.


Premiumization trend continues and share of

premium brands is now 17.9% of total volumes.

Risk-reward favorable; Buy.



Net sales 3,038 2,970 3,260 3,315 3,573 12,584 14,114

YoY Change (%) 2.1 13.9 8.1 16.8 17.6 10.0 12.2

EBITDA 524 491 501 403 611 1,987 2,300

Margins (%) 17.3 16.5 15.4 12.2 17.1 15.8 16.2

YoY Change (%) 22.4 10.7 12.1 1.5 16.5 15.8

Adjusted PAT 253 221 184 167 306 891 1,065

YoY Change (%) 21.8 49.1 -22.3 -1.4 21.2 17.0 19.5

Key operating metrics (%)

Volume growth 8.2 7.8 6.5 7.2 7.6 7.4 9.0

Salience of

premium.brands 16.2 16.1 17.1 15.3 17.9 16.2 18.0

E: MOSL Estimates

133September 2 - 6, 2013


Radico Khaitan: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 11,439 12,584 14,114 16,453

Change (%) 20.8 10.0 12.2 16.6


EBITDA 1,716 1,987 2,300 2,800

Change (%) 14.9 15.8 15.8 21.7

Margin (%) 15.0 15.8 16.3 17.0



Financial Other Income 214 304 338 354

Profit before Taxes 995 1,211 1,500 1,995

Change (%) 1.8 21.8 23.8 33.0

Margin (%) 8.7 9.6 10.6 12.1

Tax 233 320 435 579

Tax Rate (%) 23.4 26.4 29.0 29.0

Profit after Taxes 762 891 1,065 1,416

Change (%) 5.8 17.0 19.5 33.0

Margin (%) 6.7 7.1 7.5 8.6

Extraordinary Income -125 -67 0 0

Reported PAT 637 824 1,065 1,416


Y/E March 2012 2013 2014E 2015E


Reserves 6,687 7,297 8,175 9,343

Net Worth 6,953 7,563 8,441 9,609

Loans 6,547 7,568 7,518 7,158

Deferred Tax 563 659 809 1,009


Gross Block 6,870 7,670 8,470 8,870

Less: Accum. Depn. 1,847 2,223 2,647 3,090

Net Fixed Assets 5,022 5,446 5,823 5,779

Capital WIP 48 300 200 200

Investments 1,113 1,134 1,134 984

Curr. Assets, L&A 10,139 11,374 12,569 14,262

Inventory 1,774 1,894 2,090 2,268



Others 4,669 5,146 5,524 6,143




Provisions 193 200 274 346


Misc. Exp./Others 268 268 268 268


E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 6.0 6.7 8.0 10.7

Cash EPS 8.2 9.4 11.2 14.0

BV/Share 52.4 57.0 63.6 72.4

DPS 1.2 1.6 1.2 1.6

Payout % 15.4 17.6 17.6 17.6

Valuation (x)

P/E 16.6 14.9 11.4 8.6

Cash P/E 12.2 10.7 8.2 6.5

EV/Sales 1.7 1.6 1.4 1.2

EV/EBITDA 11.4 9.8 8.5 6.8

P/BV 1.9 1.6 1.4 1.3

Dividend Yield (%) 1.3 1.7 1.3 1.7

Return Ratios (%)

RoE 11.3 12.3 13.3 15.7

RoCE 9.9 10.3 11.2 13.3




Leverage Ratio

Debt/Equity (x) 0.9 1.0 0.9 0.7


Y/E March 2012 2013 2014E 2015E

OP before Tax 781 907 1,162 1,640

Int./Div. Received 214 304 338 354

Depn & Amortzn. 328 353 423 443



Incr in WC 1,155 1,074 834 1,033

CF from Operations 607 993 1,518 1,742

Extraordinary Income -125 -67 0 0

Incr in FA 971 1,052 700 400

Other Assets 268 0 0 0

Pur of Investments -94 20 0 -150

CF from Invest. -1,003 -1,139 -700 -250

Issue of Shares -70 0 0 0


Incr in Debt 1,612 1,021 -50 -360


Others Inflows -308 130 -31 -62

CF from Fin. Activity 519 302 -918 -1,325

Incr/Decr of Cash 124 155 -100 168



September 2 - 6, 2013 134


Ranbaxy Laboratories



Promoter 63.5 63.5 63.7

Dom. Inst. 10.4 10.0 11.1

Foreign 13.1 13.3 12.2

Others 13.1 13.2 13.0

Stock info

Bloomberg Code RBXY IN



Mcap (INR b) 163.0

Mcap (USD b) 2.5


1, 6, 12 Rel Perf (%) 31/-2/-31

Company descriptionRanbaxy Laboratories (RBXY) is a leading global generic

company with global revenue of over USD2b. Company

has established a direct presence across the world in

key markets like the US, UK, Germany, France and Brazil.

Around 40% of its revenue come from the developed

markets of the US and Europe, while emerging markets

contribute ~55% of revenue. RBXY's fully integrated

operations give it a cost advantage, which along with

its aggressive foray into lucrative markets, places it

several notches above peers in India.

Key investment positives & long-term prospects One of the largest generic pipeline, coupled with a

wide product basket and presence across different

geographies to ensure sustained growth, despite

growing competition.

Strong distribution presence in key global markets

and fully integrated operations make it well placed

to ride the generics wave.

US pipeline led by FTF opportunities. RBXY looking

to develop products in the derma space and

controlled substances in the longer run.

Key challenges & near-term concerns Own filings not getting approved by the US FDA.

High dependence on India till US turns around.

Key news flows / triggers to watch Progress on the consent decree with the US FDA.

Market share gains in Absorica and Pristiq.

Near term FTF launches like Diovan and Valcyte.

2QCY13 highlights; outlook for CY13, CY14 US sales delivered a strong sequential growth led

by Absorica. Core margins came at 10%, a sequential

improvement of 150bp driven by US and emerging

markets. Forex loss for the quarter was INR5.24b.

RBXY continued to gain good market share in

Absorica, a key product launched in the US over the

last six months.

Outlook for CY13/14 continues to remain

challenging due to ongoing US FDA issues,

implementation of the drug pricing policy in India

and ongoing restructuring within the company. Core

margins however are estimated to improve to 13%

at end-CY14 from 10% in 2QCY13. FTF opportunities

like Diovan, Valcyte and Nexium hold the key.




Change (%) 54.2 28.4 -28.5 -34.0 -16.9 22.6 -7.5

EBITDA 5,113 3,495 811 1,906 2,625 19,379 14,117

Change (%) 126.3 49.9 31.7 32.5 23.2 50.9 37.6

EBITDA Margin (%) 15.8 13.0 3.0 7.6 9.8 15.6 12.3

Reported PAT (5,857) 7,542 (4,924) 1,257 (5,241) 9,228 1,893

Adjusted PAT 1,720 2,411 (196) 904 1,302 5,953 4,490

Change (%) 63.0 48.8 -112.6 -55.2 -24.3 0.0 -24.6

PAT Margin (%) 5.3 9.0 -0.7 3.6 4.9 4.8 3.9


US Sales YoY Gr.(%)*168.6 84.1 -64.7 -72.5 -45.8 31.1 -29.8

India Sales YoY Gr.(%)-5.2 -4.7 6.0 2.3 -5.1 -1.0 -2.2

Gross Margins (%) 67.6 60.8 56.8 63.2 64.6 67.4 64.9

E: MOSL Estimates

135September 2 - 6, 2013


Ranbaxy Laboratories: Financials and valuation


Y/E December 2011 2012 2013E 2014E

Net Sales 99,673 121,663 112,960 124,191

Change (%) 16.8 22.1 -7.2 9.9

EBITDA 17,000 19,379 14,117 19,252

Margin (%) 16.6 15.6 12.3 15.2

Depreciation 3,940 3,202 3,241 3,634

EBIT 13,060 16,176 10,875 15,618

Int. and Forex loss 795 1,796 2,012 2,136

Other Income - Rec. 1,444 2,732 1,665 1,416

PBT pre EO Expense 13,709 17,112 10,529 14,898

Change (%) -22.6 24.8 -38.5 41.5

Extra Ordinary Expense 40,573 4,662 6,146 0

PBT after EO Exp. -26,863 12,450 4,383 14,898

Tax 1,969 2,939 2,316 3,724

Tax Rate (%) -7.3 23.6 52.8 25.0

Reported PAT -28,832 9,510 2,067 11,173


Adj PAT after Min. Int. -28,995 12,789 1,893 10,983

Change (%) -330.5 -144.1 -85.2 480.2

Margin (%) -29.1 10.5 1.7 8.8

Adj PAT excl one-offs 5,955 5,953 4,490 5,485


Y/E December 2011 2012 2013E 2014E


Reserves 26,509 38,658 39,561 48,071

Net Worth 28,690 40,843 41,747 50,256

Minority Interest 810 890 974 1,074

Loans 40,328 48,462 56,243 56,243

Deferred liabilities -375 -357 -357 -357


Gross Block 72,234 76,146 82,185 88,205

Less: Accum. Deprn. 23,930 26,069 29,310 32,944

Net Fixed Assets 48,304 50,078 52,876 55,261

Capital WIP 2,270 2,079 2,039 2,020


Goodwill/Intangibles 21,548 21,616 21,616 21,616

Curr. Assets 105,190 111,217 88,490 101,087

Inventory 26,106 27,314 27,262 28,266



Others 18,397 17,532 20,056 22,947



Provisions 30,769 32,729 5,255 6,881


Appl. of Funds 69,453 89,838 98,606 107,216

E: MOSL Estimates

Ratios

Y/E December 2011 2012 2013E 2014E

Basic (INR)

EPS (Fully diluted) 14.1 14.1 10.6 13.0

Cash EPS -59.4 37.8 12.1 34.6

BV/Share 67.8 96.4 98.5 118.7

DPS 2.0 0.0 2.0 5.0

Payout (%) -3.4 0.0 47.9 22.1

Valuation (x)

P/E (Fully diluted) 23.9 24.0 31.8 26.0

Cash P/E -5.7 8.9 27.8 9.8

P/BV 5.0 3.5 3.4 2.8

EV/Sales 1.7 1.3 1.8 1.5

EV/EBITDA 10.2 8.5 14.4 10.0

Dividend Yield (%) 0.6 0.0 0.6 1.5

Return Ratios (%)

RoE -101.3 31.4 4.5 21.9

RoCE 20.9 21.0 12.7 15.9



Debtor (Days) 110 61 82 71


Working Capital (Days) -47 -27 88 69

Leverage Ratio


Debt/Equity 1.4 1.2 1.3 1.1


Y/E December 2011 2012 2013E 2014E

Op.Profit/(Loss) bef. Tax 17,000 19,379 14,117 19,252



(Inc)/Dec in WC 25,625 -3,627 -36,193 3,745

CF from Operations 41,953 15,563 -22,727 20,689

EO Expense 3,228 2,391 6,146 0

CF frm Op.incl EO Exp. 38,725 13,172 -28,873 20,689

(Inc)/Dec in FA -5,218 -4,784 -6,000 -6,000

(Pur)/Sale of Investments 4,002 193 0 0


Change in networth -34,881 371 -174 -190

Inc/(Dec) in Debt -2,857 8,214 7,865 100

Interest Paid -795 -1,796 -2,012 -2,136

Dividend Paid -987 0 -990 -2,474

CF from Fin. Activity -39,520 6,789 4,690 -4,700

Inc/Dec of Cash -2,010 15,369 -30,183 9,989


Closing Balance 30,634 46,003 15,820 25,809

September 2 - 6, 2013 136


Reliance Communications



Promoter 67.9 67.9 67.9

Dom. Inst. 9.8 9.3 9.3

Foreign 10.8 8.9 8.0

Others 11.6 13.9 14.8

Stock info

Bloomberg Code RCOM IN



Mcap (INR b) 250.1

Mcap (USD b) 3.8


1, 6, 12 Rel Perf (%) -5/80/121

Company descriptionReliance Communications (RCOM) is an integrated

telecom operator, with presence in wireless

(CDMA+GSM), long distance (wholesale voice and

data), and broadband services. It has a wireless

subscriber base of ~125m, implying subscriber market

share of ~14%. Its Global Enterprise Business Unit

(GEBU) includes wholesale voice services, retail ILD

calling cards, and network infrastructure based services

and voice, data, video, internet, and IT infrastructure

requirements of enterprises.

Key investment positives & long-term prospects Ongoing sector consolidation is driving RPM/margin

improvement for Indian wireless operators. We

expect 14% consolidated EBITDA CAGR and 57% PAT

CAGR over FY13-16, driven by 7%/4% CAGR in mobile

traffic/RPM.

Reliance JIO Infocomm has entered into strategic

deals with RCOM for its 4G rollout – an INR12b deal

for sharing RCOM’s inter-city fiber network and an

INR120b deal to utilize its ~45,000 towers.

Potential balance sheet deleveraging through stake

sale in Reliance Globalcom, Reliance DTH or its

tower business.

Key challenges & near-term concerns High leverage – FY13E net debt/EBITDA of ~6x.

Continued decline in CDMA subscriber base.

Regulatory uncertainty on 2G spectrum case.

Key news flows / triggers to watch TRAI recommendations on reserve price and other

modalities of the upcoming spectrum auction.

RPM expansion post the seasonally weak 2QFY14.

Deal with Reliance JIO on intra-city fiber sharing or

stake sale in GEBU/DTH/tower business.

1QFY14 highlights; outlook for FY14, FY15 Adjusted EBITDA grew 2% QoQ to INR17.01b, led by

strong wireless business but offset by decline in

GEBU EBITDA.

Wireless EBITDA grew 6.5% QoQ to INR13.1b, led

by 4% increase in ARPM; traffic remained flat QoQ.

We expect EBITDA CAGR of 11% over FY13-15 to

INR81.6b. The stock is trading at an EV of 8.1x FY14E

and 6.5x FY15E EBITDA. We have a Neutral rating,

with a target price of INR110.



Revenue 53,192 52,020 53,013 54,059 54,117 210,035 219,928

YoY Change(%) 7.7 3.2 4.9 1.8 1.7 3.3 4.7

EBITDA 16,502 16,382 16,533 16,684 17,012 66,101 71,525

YoY Change(%) 3.0 2.1 2.6 2.2 3.1 2.5 8.2

EBITDA Margin (%) 31.0 31.5 31.2 30.9 31.4 31.5 32.5

Adjusted PAT 1,914 1,323 1,142 -2,434 1,304 1,945 10,430

YoY Change(%) -14.4 -59.0 -52.6 NA -31.9 -80.3 NM

PAT Margin(%) 3.6 2.5 2.2 -4.5 2.4 0.9 4.7


Mobile Traffic (B Min)105 102 103 105 106 416 425

Mobile RPM (INR) 0.43 0.43 0.44 0.44 0.46 0.43 0.46

Mobile ARPU (INR) 98 102 119 128 129 109 128

Mobile MoU (INR) 228 236 271 291 283 251 277

E: MOSL Estimates

137September 2 - 6, 2013


Reliance Communications: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Revenues 203,424 210,035 219,928 236,521

Change (%) -1.1 3.3 4.7 7.5

EBITDA 64,506 66,101 71,525 81,575

% of Gross Sales 31.7 31.5 32.5 34.5


EBIT 24,723 27,649 36,050 45,731

Net Interest & others -15,901 -24,992 -25,564 -22,199

PBT 8,822 2,657 10,486 23,532

Tax -1,062 712 56 126

Rate (%) -12.0 26.8 0.5 0.5

Adjusted PAT 9,884 1,945 10,430 23,407

Change (%) -33.8 -80.3 436.2 124.4

PAT after EO 9,274 6,727 9,461 21,951


Y/E March 2012 2013 2014E 2015E

Share Capital 10,320 10,320 10,320 10,320


Reserves 216,497 186,621 188,262 209,609

Net Worth 317,123 287,247 288,888 310,236

Loans 369,178 401,458 358,981 306,074



Gross Block 1,045,869 1,084,561 1,096,656 1,109,805


Net Block 714,778 692,520 657,223 634,528

Investments 1,230 1,115 1,218 1,218

Curr. Assets 160,806 156,939 178,576 190,992

Inventories 5,663 4,967 5,360 5,764

Debtors 35,839 39,105 45,568 49,006



Curr. Liab. & Prov. 181,911 154,616 180,895 200,721

Net Curr. Assets -21,105 2,323 -2,319 -9,729

Appl. of Funds 694,903 695,958 656,122 626,017

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 4.8 0.9 5.1 11.3

Cash EPS 24.1 19.6 22.3 28.7

Book Value 157.9 142.8 144.0 155.1

DPS 0.3 0.3 0.3 0.3


Valuation (x)

P/E 25.3 128.5 24.0 10.7

Cash P/E 5.0 6.2 5.4 4.2

EV/EBITDA 9.4 9.7 8.3 6.6

EV/Sales 3.0 3.0 2.7 2.3


Dividend Yield (%) 0.2 0.2 0.2 0.2


RoE 2.9 0.6 3.5 7.6

RoCE 2.7 3.3 3.8 5.6

Turnover Ratios


Asset Turnover (x) 0.30 0.31 0.33 0.38

Leverage Ratio

Debt/Equity Ratio(x) 1.1 1.4 1.2 1.0


Y/E March 2012 2013 2014E 2015E

Op.P/L bef Tax 63,896 70,883 70,555 80,120

Interest Paid -15,901 -24,992 -25,564 -22,199

Direct Taxes Paid 1,062 -712 -56 -126

(Inc)/Dec in Wkg. Cap. -61,424 -57,399 -1,371 7,409

CF from Op.Activity -12,367 -12,220 43,563 65,205

(inc)/Dec in FA + CWIP -25,153 -16,194 -178 -13,149

(Pur)/Sale of Investments -141 115 -103 0

CF from Inv.Activity -25,294 -16,079 -281 -13,149

Inc/(Dec) in Debt -4,579 32,280 -42,477 -52,907

Dividends Paid 2 2 2 2

Other Financing Activities -246 -1,952 397 852

CF from Fin.Activity -4,823 30,330 -42,078 -52,054

Inc/(Dec) in Cash -42,487 2,029 1,202 0


Closing Balance 10,785 12,814 14,016 14,016

September 2 - 6, 2013 138


Reliance Industries



Promoter 45.4 45.4 45.3

Dom. Inst. 11.5 10.9 11.1

Foreign 21.5 22.0 21.0

Others 21.6 21.7 22.6

Stock info

Bloomberg Code RIL IN



Mcap (INR b) 2602.4

Mcap (USD b) 40.1


1, 6, 12 Rel Perf (%) -2/-1/-3

Company descriptionReliance Industries Ltd (RIL), a Fortune 500 company, is

India's largest private sector entity, with a turnover of

USD66.8b and net profit of USD3.9b. Over the years, RIL

has grown through backward integration in energy chain

(textiles, petchem, refining and E&P) and is now moving

into new areas like organized retail and BWA. It

operates one of the largest refining capacity of

1.24mmbbl/d at a single location and is the largest

producer of polyester fibre and yarn.

Key investment positives & long-term prospects Likely higher gas price from FY15 improves E&P

outlook: Scheduled doubling of domestic gas price

to ~USD8.4/mmbtu from FY15 is a positive, but

meaningful benefit to RIL will accrue only at higher

production levels. While current D1/D3 fields might

see some increase by end-FY15, large production

from satellite/R-series in KG-D6 and NEC-25 is

expected only from FY18.

Refining - petcock gasification to improve GRM:

While GRM is expected to remain range bound in

the medium term, management expects at least

USD2/bbl increase, post the petcoke gasification

project (scheduled completion in 2016/17).

Petchem margins seem to have bottomed, capacity

to be ~2x in next 3-4 years: We believe polymer

margins have bottomed out but anticipate slow

recovery. RIL's polyester expansion and off-gases

based cracker will almost double its petchem

capacity. However, long term margin outlook

depends on the new shale-based capacity additions

in the US.

Key challenges & near-term concerns Further delays in the KG-D6 gas volume ramp-up.

Our estimates could be adversely affected by lower-

than-expected refining and petchem margins.

Key news flows / triggers to watch DGH approvals for its E&P program and update on

its KG-D6 ramp-up.

Profitability update at its organized retail segment.

Developments in its USD12b capex plan on new

capacities.

Launch of its Broadband Wireless Access (BWA)

services.

1QFY14 highlights; guidance for FY14, FY15 RIL's 1QFY14 GRM stood at USD8.4/bbl (11% YoY, 13%

QoQ), a premium of USD1.8/bbl over Singapore.

Petchem EBIT margin stood at 8.6% (v/s 8% in 1QFY13

and 8.6% in 4QFY13).

New polyester capacities expected to be

commissioned from 2HFY14E; however, fully

integrated capacity will be operational only by FY16.



Operating Income 919 903 939 842 876 3,603 3,714

Change (%) 13.4 15.0 10.3 -1.2 -4.6 9.2 3.1

EBITDA 67 77 84 78 71 308 315

Change (%) -32.0 -21.7 14.9 19.2 4.9 -8.4 2.4

EBITDA Margin (%) 7.3 8.5 8.9 9.3 8.1 8.5 8.5

Adjusted PAT 45 54 55 56 54 210 228

Change (%) -21.0 -5.7 23.9 31.9 19.7 4.8 8.6

PAT Margin (%) 4.9 6.0 5.9 6.6 6.1 5.8 6.1

Key Metrics

GRM (USD/bbl) 7.6 9.5 9.6 10.1 8.4 9.2 9.2

KG-D6 prod.(mmscmd) 33 29 24 19 15 26 13

Segmental EBIT Breakup

Refining 22 35 36 35 30 128 141

Petrochemicals 18 17 19 19 19 73 89

E&P, others 10 9 6 5 4 29 14

Total 49 62 62 59 53 230 244

E: MOSL Estimates

139September 2 - 6, 2013


Reliance Industries: Financials and valuation

Income Statement (INR Billion)

Y/E March 2012 2013 2014E 2015E

Net Sales 3,299 3,603 3,714 3,709

Change (%) 32.9 9.2 3.1 -0.1

EBITDA 336 308 315 340

% of Net Sales 10.2 8.5 8.5 9.2


Interest 27 30 32 33


PBT 258 263 287 310

Tax 57 53 59 64

Rate* (%) 22.2 20.1 20.6 20.8

Adj. PAT 200 210 228 246

Change (%) -1.2 4.8 8.6 7.8

Key Operating Metrics

GRM (USD/bbl) 8.6 9.2 9.2 9.2

KG-D6 production (mmscmd) 42.6 26.5 13.2 14.0


Y/E March 2012 2013 2014E 2015E

Share Cap. (incl sh. Susp.) 33 32 32 32

Reserves 1628 1768 1965 2173

Net Worth 1,661 1,800 1,997 2,206

Total Loans 684 724 781 779

Deferred Tax 121 122 128 134


Gross Fixed Assets 2055 2132 2179 2254

Less: Depreciation 918 1034 1121 1210

Net Fixed Assets 1,137 1,097 1,058 1,044

Capital WIP 78 191 349 529


Curr. Assets, L & Adv.

Inventory 360 427 423 420

Debtors 184 119 168 167

Cash & Bank Balance 396 495 481 478

Loans&Adv.and Other CA 257 330 332 344

Current Liab. & Prov.

Liabi l i t ies 442 495 423 422


Net Current Assets 712 832 931 933



2012 2013 2014E 2015E

Exchange rate 47.9 54.5 57.5 57.0

Refining throughput (mmt) 68 69 69 69

Ref. cap. utilization (%) 109% 111% 111% 111%

RIL GRM 8.6 9.2 9.2 9.2

Singapore GRM 8.3 7.9 7.6 7.5

Premium 0.3 1.4 1.6 1.7

KG-D6 gas production* 43 27 13 14

*mmscmd

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 61.3 65.0 70.6 75.9

Adj. EPS (ex Treasury) 67.7 71.9 78.0 83.9

Cash EPS 96.1 94.4 97.4 103.3

Adj. Book Value 560.7 616.5 683.4 752.7

DPS 8.5 9.0 9.9 10.6


Valuation (x)

P/E 13.5 12.7 11.7 10.9

Adj. P/E 12.2 11.5 10.6 9.9

Cash P/E 8.6 8.8 8.5 8.0

EV / EBITDA 8.0 8.4 8.4 7.8

EV / Sales 0.8 0.7 0.7 0.7

Adj. Price / Book Value 1.5 1.3 1.2 1.1

Dividend Yield (%) 1.0 1.1 1.2 1.3


RoE 13.0 12.3 12.1 11.8

RoCE 12.1 11.6 11.5 11.4

Turnover Ratios



Leverage Ratio

Net Debt / Equity (x) 0.0 -0.1 0.0 0.0

Cash Flow Statement (INR Billion)

Y/E March 2012 2013 2014E 2015E

OP/(Loss) before Tax 258 263 287 310

Dep. (excl. revaluation) 114 95 87 89

Interest expense 27 30 32 33


(Inc)/Dec in Wkg. Capital -28 58 -113 -5

Interest/other income -44 -62 -73 -73

Other op activities -8 -7 0 0

CF from Op. Activity 270 330 167 296

(Inc)/Dec in FA & CWIP -80 -159 -205 -255

(Pur)/Sale of Investments 62 22 -44 -44

Interest/other income 19 65 73 73

Other In activities -31 -75 0 0

CF from Inv. Activity -30 -148 -175 -226

Change in Equity -2 -31 0 0

Inc / (Dec) in Debt -85 -23 25 -36

Dividends Paid -28 -29 -31 -38

CF from Fin. Activity -115 -83 -5 -73

Inc / ( Dec) in Cash 125 99 -14 -3



September 2 - 6, 2013 140


Shoppers Stop



Promoter 67.5 67.5 67.8

Dom. Inst. 11.0 10.6 9.5

Foreign 9.3 9.7 9.8

Others 12.2 12.2 12.9

Stock info

Bloomberg Code SHOP IN



Mcap (INR b) 29.2

Mcap (USD b) 0.4


1, 6, 12 Rel Perf (%) 5/-11/-9




change (%) 14.4 14.9 9.9 18.5 13.6 16.3 30.3

EBITDA 263 387 414 363 138 1,427 1,816

Change (%) 5.2 1.4 -19.7 -2.8 -47.7 -6.2 27.3

EBITDA Margin (%) 6.7 7.8 8.2 6.7 3.1 7.4 7.2

Reported PAT 117 195 193 137 12 12 220

Adjusted PAT 117 195 193 137 12 12 220

Change (%) 17.2 12.5 -30.8 -31.0 -89.4 -89.4 12.6

PAT Margin (%) 3.0 3.9 3.8 2.5 0.3 0.1 0.9


LTL Sales Gr % 7.0 11.0 -1.3 10.0 1.0 7.0 10.0

Deptt Stores 41 43 49 51 52 51 60

E: MOSL Estimates

Company descriptionShoppers Stop (SHOP) is one of the largest department

store chains in India, with 52 stores and retail space of

~2.5msf. It is promoted by the CL Raheja Group, one of

India's largest real estate groups. SHOP has also entered

specialty retail formats like home furnishing (Home

Stop) and beauty (Estee Lauder and M.A.C.). It also has

presence in the high potential hypermarket space

through its 51% subsidiary, HyperCITY.

Key investment positives & long-term prospects We believe SHOP is ideally positioned to benefit

from the uptick in consumption sentiment. The

department store format has reached critical mass

and is likely to fund capex through internal accruals,

given its inventory-light model.

SHOP has added 14 stores in the last one year and

20 stores in the past two years, which has impacted

profit margins; recovery is likely only from FY14.

SHOP has presence in the high potential

hypermarket space through its 51% subsidiary,

HyperCITY. It has 12 stores and is likely to add two

stores every year.

Hypercity, though currently loss making, has reached

store profitability and with increased scale can add

to consolidated profitability, going ahead.

Key challenges & near-term concerns Poor consumer sentiment resulting from economic

slowdown could impact sales growth, as had

happened in FY13.

HyperCITY incurred a loss of INR877m in FY13.

Key news flows / triggers to watch Profitability of HyperCITY.

Expansion plans and same store performance.

1QFY14 highlights; outlook for FY14, FY15 Strong 12% SSS growth, driven by low base and

targeted activations.

86% PAT growth due to exceptionally low base.

HyperCITY continue to report losses even with

double digit samestore sales growth.

Cautious outlook given the weak macro

environment and stress on discretionary consumer

spends. Weak SSS growth could hurt operating

leverage and result in continued low profitability.

141September 2 - 6, 2013


Shoppers Stop: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Revenues 19,049 22,274 26,831 31,175

Change (%) 11.3 16.9 20.5 16.2

Other Income - Recurring 276 281 376 425


EBITDA 1,427 1,264 1,614 2,112

Change (%) -6.2 -11.4 27.6 30.9

Margin (%) 7.5 5.7 6.0 6.8



Non-operational Income 179 172 187 199

Profit before Taxes 978 610 876 1,299

Change (%) -14.0 -37.6 43.5 48.3

Margin (%) 5.1 2.7 3.3 4.2

Tax 335 211 303 429

Tax Rate (%) 34.3 34.6 34.6 33.0

Profit after Taxes 643 399 573 870

Change (%) -14.5 -37.9 43.5 51.9

Margin (%) 3.4 1.8 2.1 2.8

Exceptionals 0 7 0 0

Reported PAT 643 406 573 870


Y/E March 2012 2013 2014E 2015E


Reserves 6,069 6,368 6,841 7,559

Net Worth 6,480 6,779 7,251 7,970

Loans 3,062 3,621 3,796 3,727



Gross Block 6,578 7,588 8,567 9,555

Less: Accum. Depn. 2,307 2,761 3,278 3,857

Net Fixed Assets 4,271 4,828 5,289 5,698

Capital WIP 318 250 250 250

Property Lease Deposit 1,336 1,494 1,642 1,792

Investments 2,550 2,652 2,958 3,111

Curr. Assets, L&A 4,521 5,165 5,675 6,415

Inventory 2,036 2,350 2,623 2,887






Other Liabilities 183 211 242 274


Net Current Assets 1,067 1,176 908 846

Miscelleneous Expenditure 0 0 0 0


E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 7.8 4.9 7.0 10.6

Cash EPS 12.4 11.0 13.3 17.6

BV/Share 78.9 82.5 88.3 97.0

DPS 1.1 0.7 1.0 1.6

Payout % 14.6 13.6 15.0 15.0

Valuation (x)

P/E 44.8 72.1 50.2 33.0

Cash P/E 28.2 31.7 26.4 19.8

EV/Sales 1.5 1.3 1.1 0.9

EV/EBITDA 20.4 23.4 18.4 13.9

P/BV 4.4 4.2 4.0 3.6

Dividend Yield (%) 0.3 0.2 0.3 0.5

Return Ratios (%)

RoE 9.9 5.9 7.9 10.9

RoCE 11.0 7.3 9.9 13.1

RoCE Adjusted for Inv 15.0 9.8 13.6 17.9




Leverage Ratio

Debt/Equity (x) 0.5 0.5 0.5 0.5


Y/E March 2012 2013 2014E 2015E

Profit before tax 978 610 876 1,299

Add : Depreciation 372 453 517 580

Interest 250 319 408 433


Incr in WC 471 97 -112 -125

Ch In DFA 33 0 0 0

Extra-ordinay Income 0 7 0 0

CF from Operations 762 1,082 1,610 2,008

Incr in FA 1,393 942 978 989


CF from Invest. 1,572 1,044 1,284 1,142

Increase in networth -34 -44 0 1

Increase In debt 1,575 559 175 -69



Others -203 -158 -149 -150

CF from Fin. Activity 978 -25 -482 -803

Incr/Decr of Cash 168 12 -157 63



September 2 - 6, 2013 142


Shriram Transport Finance



Promoter 25.8 25.8 46.2

Dom. Inst. 1.2 1.3 2.0

Foreign 54.0 53.3 40.2

Others 19.0 19.6 11.6

Stock info

Bloomberg Code SHTF IN



Mcap (INR b) 126.2

Mcap (USD b) 1.9


1, 6, 12 Rel Perf (%) -7/-15/-9



Net Inc (Incl.Securi) 8,025 8,678 8,947 8,939 9,022 34,645 39,480

Change(%) 2.6 4.0 11.3 11.0 12.4 7.4 14.0


Change(%) 2.5 4.4 12.1 14.2 8.3 8.5 14.7

PAT 3,219 3,376 3,460 3,552 3,411 13,606 14,790

Change(%) (7) 12.7 14.3 15.3 6.0 8.2 8.7


NIMs 7.42 7.67 7.52 7.23 7.01 7.71 7.10

AUM growth 13.3 15.8 18.6 23.5 26.1 23.5 24.0

GNPA 3.00 2.89 2.89 3.20 3.09 3.2 3.4

NNPA 0.62 0.62 0.63 0.77 0.68 0.77 0.80

E: MOSL Estimates

Company descriptionShriram Transport Finance (SHTF) is strategically placed

in the niche CV financing space, with over three decades

of experience. It has an evenly distributed pan-India

network of 570 branch offices and an employee base of

over 15,000 people. SHTF has well established and time

tested procedures for valuation of assets, loan

generation and collection. As at June 2013, it had AUM

of INR524b. SHTF posted AUM CAGR of 17% and profit

CAGR of 18% over FY09-13.

Key investment positives & long-term prospects Unique business model: SHTF’s business model is

unique, with high entry barriers. This has enabled it

to sustain superior return ratios – RoA (on AUM) of

over 2.5% and RoE in excess of 20%.

Healthy AUM growth: On the back of significant

moderation in macroeconomic activity and higher

competitive pressures, AUM growth moderated to

20% in FY13 v/s 35% CAGR over FY06-11.

Stable asset quality: While certain state-specific

issues led to periodic spikes in GNPA, overall

delinquency ratio has remained under control.

NNPA ratio remains under control at ~68bp and it

has healthy a PCR of 78%.

Key challenges & near-term concerns Continued moderation in economic growth can

lead to prolonged slowdown in AUM growth.

Tighter securitization norms could impact margins.

Proposed changes in asset classification and

provisioning norms for NBFCs could lead to higher

stress on earnings and reported asset quality.

Moderating freight intake and fall in freight rates

may lead to higher pressure on asset quality.

Key news flows / triggers to watch RBI guidelines on NBFC regulations.

Comments by banks on CV portfolio growth and

asset quality.

1QFY14 highlights; outlook for FY14, FY15 SHTF’s 1QFY14 PAT grew 6% YoY (declined 4% QoQ)

to ~INR3.4b.

AUM grew 25% YoY and 5.7% QoQ to INR525b.

Disbursements grew 48% YoY and 3% QoQ to INR79b.

Spreads on off balance sheet AUM declined to 8.9%

from 9.2% a quarter ago. Higher other income (led

by profit on sale of mutual funds) led to in-line net

income.

Guidance for FY14: (1) Loan growth of 15-18%, (2)

Margins to be maintained above 7%.

143September 2 - 6, 2013


Shriram Transport Finance: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Financing Income 36,659 45,028 62,797 74,859

Finanancing charges 24,473 28,439 38,009 43,143

Net Financing income 12,186 16,588 24,788 31,716

Change (%) -13.0 36.1 49.4 28.0

Income from securitisation20,075 18,057 14,692 14,907

Net Income (Incl Secur) 32,261 34,645 39,480 46,623

Change (%) 11.4 7.4 14.0 18.1

Other Income 1,284 1,885 3,016 3,016

Net Income 33,545 36,530 42,496 49,639

Change (%) 9.3 8.9 16.3 16.8

Employee Cost 3,701 3,848 4,617 5,448

Brokerage & Commission 662 948 1,184 1,362

Other Operating Exp. 2,751 3,065 3,810 4,376


Change (%) 12.7 8.5 14.7 16.9

Total Provisions 7,622 8,508 11,449 13,192

% to operating income 28.8 29.7 34.8 34.3

PBT 18,809 20,162 21,435 25,260

Tax 6,235 6,556 6,645 8,210

Tax Rate (%) 33.1 32.5 31.0 32.5

PAT 12,574 13,606 14,790 17,051

Change (%) 4.5 8.2 8.7 15.3



Y/E March 2012 2013 2014E 2015E

Capital 2,263 2,269 2,269 2,269


Net Worth 59,923 71,947 84,748 99,504

Borrowings 231,219 310,025 400,422 441,385

Change (%) 16.3 34.1 29.2 10.2

Other Liabilities & Prov. 22 22 22 22


Investments 39,646 35,689 39,258 43,184

Change (%) 8.8 -10.0 10.0 10.0

Loans 220,641 311,227 431,044 479,354

Change (%) 13.3 41.1 38.5 11.2



Total Assets 291,164 381,995 485,193 540,912

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E


Avg. Yield-on Fin. portfolio 16.5 16.3 16.4 16.0

Avg Cost of funds 11.4 10.5 10.7 10.3

Int Spread on Fin. portfolio 5.2 5.8 5.7 5.8

NIM (incl Securitisation) 8.4 7.7 7.1 7.2


RoE 23.1 20.6 18.9 18.5

RoA on AUM 2.8 2.6 2.4 2.4





Empl. Cost/Op. Exps. 52.0 49.0 48.0 48.7


Leverage 4.9 5.3 5.7 5.4

Valuations

Standalone BV (INR) 265 317 374 439

BV Growth (%) 22.2 19.8 17.8 17.4

Price-BV (x) 2.1 1.8 1.5 1.3

Consolidated BV (INR) 267 323 386 459

Price-ABV (x) 2.1 1.7 1.4 1.2

Standalone EPS (INR) 55.6 60.0 65.2 75.2

Growth (%) 4.5 7.9 8.7 15.3


Consolidated EPS (INR) 57.8 64.7 71.9 83.1

EPS Growth (%) 9.9 11.9 11.2 15.5


Dividend 6.5 7.0 7.5 8.6

Dividend Yield (%) 1.2 1.3 1.3 1.6

AUM Mix (%)

AUM 402,139 496,760 616,035 679,053

Change (%) 11.1 23.5 24.0 10.2

On Books AUM 219,878 314,438 431,044 479,354

Change (%) 10.7 43.0 37.1 11.2

% of AUM 54.7 63.3 70.0 70.6

Off Books AUM 182,261 182,322 184,990 199,699

Change (%) 11.7 0.0 1.5 8.0

% of AUM 45.3 36.7 30.0 29.4

September 2 - 6, 2013 144


Company descriptionSobha Developers (SOBHA) is one of the leading south

Indian real estate company with backward integrated

business model through a presence in contractual and

manufacturing segment. It is the largest land bank

holder in south India in general and Bangalore in

particular, with a wide range of residential product mix

and recent entry in commercial vertical under the

annuity model. SOBHA enjoys a strong brand due to its

quality of execution. It has been a preferred partner

for Infosys in many of its marquee assets development.

Company has executed over 307 projects, comprising a

total development area of 54.5msf. It has ~2,600 acres

of land across 9 cities, with its share of development

potential of 220msf.

Key investment positives & long-term prospects SOBHA's operations are a strong proxy of the buoyant

markets due to attractive micro locations and cheap

acquisition cost, significantly benefited from MTM

gain.

Company posted a healthy 19% CAGR in annual sales

volume and 25% CAGR in realizations, driven by

steady new launches, and is well on track to maintain

INR25-26b of annual pre-sales over FY14E-15E (v/s

INR22.3b in FY13).

Liquidity outlook remains strong, with consistent

generation of positive OCF and strong growth in cash

EBITDA.

Sobha Developers



Promoter 60.6 60.6 60.6

Dom. Inst. 2.8 3.1 2.6

Foreign 33.7 33.4 33.2

Others 2.9 2.9 3.6

Stock info

Bloomberg Code SOBHA IN



Mcap (INR b) 22.7

Mcap (USD b) 0.3


1, 6, 12 Rel Perf (%) -17/-37/-34

Key challenges & near-term concerns High dependence on IT sector demand (50% of

housing demand) may impact growth in pre-sales,

if IT/ITES expansion sees an extended slowdown.

Oversupply concern in Bangalore, coupled with

sharp rise in prices in recent launches. Blended

realizations in Bangalore projects are up 36% YoY.

Entered annuity assets, which may exert pressure

on liquidity. This may lead to reinvestment risk due

to sub-optimal capital allocation in land and capex.

Key news flows / triggers to watch Plans to enter northern markets, which are

relatively an underperformer than south.

1QFY14 highlights; outlook for FY14, FY15 1QFY14 operating performance continues to remain

strong, with pre-sales growing 25% YoY to INR6b

and on track to meet FY14 guidance of INR26b. It

plans to launch 0.8msf in 2QFY14 across projects in

Bangalore, Mysore and Calicut, of the total 6.7msf

of planned launches in FY14.

Refinancing of certain high cost debt with low cost

one led to average cost of debt at INR12.93% (down

52bp QoQ).

Management commentary indicates (a) favorability

of demand-supply for right products in Bangalore,

(b) high demand from NRI and non-IT segment

continuing and (c) weaker outlook in the NCR

region. Diversification plan in NCR hinges on

attractive proposition and better market outlook.




Change (%) 56 41 37 12 7 2.3 32

EBITDA 1,198 1,285 1,374 1,626 1,390 4,665 5,483

Change (%) 82 35 21 -18 16 33 18

EBITDA Margin (%) 28 31 32 28 30.1 33.1 29.4

Reported PAT 450 501 526 696 501 2,101 2,171

Adjusted PAT 450 501 526 696 501 2,060 2,172

Change (%) 69 42 4 -29 11 12.9 5

PAT Margin (%) 10.4 12.1 12.2 11.9 10.9 14.6 11.7


Presales vol. (msf) 0.8 0.9 0.9 1.1 0.9 3.3 3.8

Presales value 4.8 5.3 5.3 6.8 6.0 10.6 10.9

Collections 3.2 3.7 3.9 5.3 4.9 17.0 22.2

E: MOSL Estimates

145September 2 - 6, 2013


Sobha Developers: Financials and valuation


Y/E March 2010 2011 2012 2013

Net Sales 11,299 13,945 14,079 18,645

Change (%) 16.0 23.4 1.0 32.4

Construction expenses 9,558

Office & site est. exps 1,530 1,532 1,694 1,969

EBITDA 2,637 3,600 4,665 5,483

% of Net Sales 23.3 25.8 33.1 29.4


Interest 693 860 1,165 1,705


PBT 1,658 2,514 3,177 3,239

Tax 275 669 1,076 1,068

Rate (%) 16.6 26.6 33.9 33.0

Adjusted PAT 1,341 1,813 2,060 2,172

Change (%) 24.5 35.1 13.6 5.5


Y/E March 2010 2011 2012 2013


Reserves 16,057 17,527 19,017 20,386

Net Worth 17,038 18,508 19,998 21,367

Loans 14,740 12,416 12,031 13,536

Deffered Tax Liability -52 -74 330 638




Net Fixed Assets 1,429 1,373 2,840 2,646

Capital WIP 632 647 13 13


Curr. Assets 36,459 36,816 39,519 45,295

Inventory 11,101 10,685 16,759 19,018

Debtors 4,430 4,310 3,904 6,935

Cash & Bank Balance 826 230 587 670

Loans & Advances 20,102 21,592 18,268 18,672


Creditors 5,984 6,757 8,272 11,518


Provisions 545 942 1,386 1,437



E: MOSt Estimates; * Nine months ended Dec 2004, #Fifteenmonths ended Mar 2006

Key assumptions/operating metrics1QFY13 2QFY13 3QFY13 4QFY13 1QFY14

Collections 4.9 4.6 5.4 6.3 6.2

Construction outflow 3.1 2.8 3.5 3.0 4.1

Gross CF 1.0 1.0 1.1 2.8 1.3

Tax Paid 0.1 0.4 0.2 0.2 0.1

OCF 0.9 0.6 1.0 2.6 1.2

FCFE -0.3 -0.9 -0.3 1.0 -0.05

Net CF -0.3 -1.4 -0.3 1.0 -0.05

Ratios

Y/E March 2010 2011 2012 2013

Basic (INR)

Adjusted EPS 13.7 18.5 21.0 22.2

Growth (%) -7.5 35.1 13.6 5.5

Cash EPS 37.3 52.4 64.6 72.0

Book Value 173.7 188.7 203.9 217.9

DPS 2.5 3.0 5.0 7.0


Valuation (x)

P/E 20.6 15.2 13.4 12.7

Cash P/E 7.6 5.4 4.4 3.9

EV/EBITDA 15.8 11.1 8.4 7.4

EV/Sales 3.7 2.9 2.8 2.2


Dividend Yield (%) 0.9 1.1 1.8 2.5


RoE 9.6 10.2 10.7 10.5

RoCE 7.5 10.7 13.6 14.5

Turnover Ratios



Leverage Ratio

Debt/Equity (x) 0.9 0.7 0.6 0.6


Y/E March 2010 2011 2012 2013

PBT bef. Eo Items 1,658 2,514 3,177 3,239

Add : Depreciation 323 278 388 594

Interest 693 860 1,165 1,705

Less : Direct Taxes Paid 275 669 1,076 1,068

(Inc)/Dec in WC -1,179 217 -387 -2,396


(Inc)/Dec in FA -137 -236 -1,221 -877

(Pur)/Sale of Investments 0 -10 37 -2

CF from Investments -137 -246 -1,184 -878

(Inc)/Dec in Networth 5,089 -21 407 308

(Inc)/Dec in Debt -4,581 -2,324 -385 1,505

Less : Interest Paid 693 860 1,165 1,705


CF from Fin. Activity -473 -3,549 -1,717 -695

Inc/Dec of Cash 611 -596 356 83



September 2 - 6, 2013 146


State Bank of India



Promoter 62.3 62.3 61.6

Dom. Inst. 16.7 16.0 17.3

Foreign 12.7 13.3 11.2

Others 8.3 8.4 10.0

Stock info

Bloomberg Code SBIN IN



Mcap (INR b) 1074.7

Mcap (USD b) 16.5

52-Wk Range (INR) 2,550/1,489

1, 6, 12 Rel Perf (%) -5/-24/-20

Company descriptionState Bank of India (SBIN) is India's largest commercial

bank, with a standalone balance sheet size of over

~INR16t. The bank has a strong liability franchise, with

15,000+ at the standalone level, and 20,500+ branches

at the group level. SBIN along with its associate banks

has ~25% market share in India.

Key investment positives & long-term prospects SBIN's branch expansion, technological

advancement and marketing efforts led to strong

CASA CAGR of ~16% over FY02-13. The power of its

liability franchise can be gauged from its strong and

improving CASA ratio of ~45%, of which 80%+ are

from highly granular SA deposits.

While reported net slippages have been higher,

restructured loans as a percentage of overall loans

are one of the lowest among state-owned banks.

SBIN's net stress loans stand at 5.9% of loans v/s

PNB's 13.4%, BOB's 8.1% and BOI's 7.3%.

Superior NIM and fees and ability to withstand

higher asset quality stress make SBIN a better bet

than its peers. However, near-term opex pressure

is likely to continue. Overall, we expect higher RoA

(0.7-0.8%) than peers.

Key challenges & near-term concerns SBIN's asset quality is likely to remain under

pressure, given the significant stress in the macro

environment.

Moderating NII growth, led by lower loan

growth,moderation in margins and higher credit

cost poses a threat to earnings growth.

Opex is likely to remain high due to (a) provisioning

related to wage negotiation, (b) higher inflation

leading to high DA expenses, and (c) change in life

expectancy assumption for AS-15 provisions.

Key news flows / triggers to watch One of the biggest beneficiaries of upturn in macro

environment. Any concentrated effort by the

government to get rid of policy paralysis and boost

investment climate will be a key trigger for SBIN.

Expected merger of one of SBIN's associate banks

with itself in 2013.

Top management change in September 2013.

1QFY14 highlights; outlook for FY14, FY15 Guidance for FY14: (1) Domestic NIM of 3.5-3.6%,

(2) 20%+ loan growth; deposit growth of 15-16%,

(3) Additional employee provisions (due to change

in actuarial assumptions of mortality rate) of INR6b

per quarter to continue for the rest of FY14.

Performance highlights of 1QFY14: (a) Highest ever

quarterly slippages of INR138b (slippage ratio of

5.8%), led by pressure across segments, (b) OSRL

increased by INR7.4b to INR330b (3.1% of loans), (c)

NIM was stable QoQ at 3.2%, domestic NIM at 3.44%

(down 4bp QoQ), (d) Fee income flat YoY, (e) MTM

loss of INR5.8b in international operations (led by

rise in US treasury yields).



NII 111,246 109,738 111,545 110,784 115,119 443,313 475,881

Change (%) 14.7 4.7 -3.2 -4.4 3.5 2.4 7.3


Change (%) 12.9 -1.6 7.3 -19.1 -7.6 -1.6 -6.4

PAT 37,516 36,581 33,961 32,992 32,411 141,050 115,599

Change (%) 136.9 30.2 4.1 -18.5 -13.6 20.5 -18.0

NIM (Calc, %) 3.7 3.4 3.4 3.2 3.2 3.3 3.1

Loan Gr. (YoY, %) 18.9 17.2 15.6 20.5 15.7 20.5 15.0

GNPA (%) 5.0 5.2 5.3 4.8 5.6 4.8 5.7

NNPA (%) 2.2 2.4 2.6 2.1 2.8 2.1 3.0

OSRL (%) 1.8 2.4 2.4 3.1 3.1 3.1

E: MOSL Estimates

147September 2 - 6, 2013


State Bank of India: Financials and valuation

Income Statement (Standalone) (INR Billion)

Y/E March 2012 2013 2014E 2015E

Interest Income 1,065 1,197 1,326 1,489

Interest Expense 632 753 850 940

Net Interest Income 433 443 476 549

Change (%) 33.1 2.4 7.3 15.4

Non Interest Income 144 160 170 190

Net Income 576 604 646 739

Change (%) 19.2 4.7 7.1 14.3

Operating Expenses 261 293 355 383

Pre Provision Profits 316 311 291 356

Change (%) 24.6 -1.6 -6.4 22.3

Provisions (excl tax) 131 111 124 141

PBT 185 200 168 215

Tax 68 58 52 70

Tax Rate (%) 36.7 29.3 31.0 32.5

PAT 117 141 116 145

Change (%) 41.7 20.5 -18.0 25.3

Consolidated PAT post MI 153 179 145 183

Change (%) 43.6 16.8 -18.9 25.9


Y/E March 2012 2013 2014E 2015E


Reserves & Surplus 833 982 1,071 1,181

Net Worth 840 989 1,077 1,188

Deposits 10,436 12,027 13,832 16,114

Change (%) 11.7 15.2 15.0 16.5

of which CASA Dep 4,676 5,391 6,199 7,129

Change (%) 1.3 15.3 15.0 15.0

Borrowings 1,270 1,692 1,793 2,000

Other Liabilities & Prov. 809 955 1,098 1,305


Current Assets 972 1,148 1,111 1,292

Investments 3,122 3,509 4,036 4,641

Change (%) 5.6 12.4 15.0 15.0

Loans 8,676 10,456 12,025 13,949

Change (%) 14.7 20.5 15.0 16.0

Fixed Assets 55 70 78 92

Other Assets 531 479 551 633

Total Assets 13,355 15,663 17,800 20,607

Asset Quality (%)

GNPA (INR b) 397 512 706 828

NNPA (INR b) 158 220 357 394

GNPA Ratio 4.5 4.8 5.7 5.8

NNPA Ratio 1.8 2.1 3.0 2.8



E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E










RoE 16.0 15.9 11.6 13.2

RoA 0.9 1.0 0.7 0.8

Consolidated RoE 17.2 16.5 12.0 13.5

Consolidated RoA 0.9 0.9 0.7 0.7


Cost/Income* 45.3 50.3 57.7 54.5

Empl. Cost/Op. Exps. 65.1 62.8 63.2 60.7



* ex treasury and recoveries

Valuation

Book Value (INR) 1,215 1,395 1,524 1,686

BV Growth (%) 19.8 14.8 9.3 10.6

Price-BV (x) 1.3 1.1 1.0 0.9

Consol BV (INR) 1,541 1,769 1,942 2,160

BV Growth (%) 18.3 14.8 9.8 11.2

Price-Consol BV (x) 1.0 0.8 0.8 0.7

Adjusted BV (INR) 1,050 1,170 1,158 1,283

Price-ABV (x) 1.5 1.3 1.4 1.2

Adjusted Consol BV 1,321 1,475 1,479 1,656

Price-Consol ABV (x) 1.1 1.0 1.0 0.9

EPS (INR) 174.5 206.2 169.0 211.7

EPS Growth (%) 34.0 18.2 -18.0 25.3


Consol EPS (INR) 228.6 261.9 212.4 267.4

Con. EPS Growth (%) 35.9 14.6 -18.9 25.9

Price-Consol EPS (x) 6.5 5.6 6.9 5.5


Dividend Yield (%) 2.2 2.6 2.2 2.7

September 2 - 6, 2013 148


Sun Pharmaceuticals



Promoter 63.7 63.7 63.7

Dom. Inst. 3.2 3.4 5.3

Foreign 22.9 22.7 20.6

Others 10.2 10.2 10.4

Stock info

Bloomberg Code SUNP IN



Mcap (INR b) 520.0

Mcap (USD b) 8.0


1, 6, 12 Rel Perf (%) 0/31/48

Company descriptionSun Pharma (SUNP) is among the largest players in the

domestic formulations market and the most profitable

one. It makes and markets specialty medicines and APIs

for chronic therapy areas such as cardiology, psychiatry,

neurology etc. SUNP has forayed into the regulated

markets by acquiring a majority stake in Caraco and

strengthened its presence in the US with the recent

acquisition of Taro.

Key investment positives & long-term prospects Ability to identify niches in long term therapy areas

with high entry barriers and build strong franchise

to ensure sustainable growth and high margins.

Sustaining superior profitability on a higher base is

a strong positive.

One of the strongest ANDA pipelines from India,

with 135 ANDAs pending approval. The pipeline

includes a combination of low competition, patent

challenge and normal product opportunities.

Strong acquisition track record; Taro is a classic

example of success in an acquisition.


Faster-than-expected and more aggressive

competition in Taro.

Key news flows / triggers to watch Competitive landscape for key products in Taro.


Inorganic growth initiatives in the US and emerging

markets.

1QFY14 highlights; outlook for FY14, FY15 Reported loss of INR12.1b resulted from the

INR25.2b provision for Protonix settlement

payment. Adjusted for this, net profit was INR13b.

Revenue growth was aided by (1) 44% YoY growth

in India formulations on a low base (like-to-like

growth of 11%) and (2) 32% YoY growth in the US

despite YoY decline in Taro sales. RoW formulations

grew 23% YoY.



over FY13-15E.




Change (%) 62.5 40.3 33.0 31.8 31.0 40.4 36.5

EBITDA 12,169 11,685 12,611 12,599 15,306 49,063 66,718

Change (%) 122.3 49.0 30.8 31.6 25.8 50.8 36.0

EBITDA Margin (%) 45.8 44.0 44.2 41.0 44.0 43.7 43.5

Reported PAT 7,956 3,196 8,813 10,116 (12,761) 30,081 31,858

Adjusted PAT 6,716 8,320 8,243 9,496 10,752 32,775 42,618

Change (%) 53.1 52.6 34.9 30.5 60.1 41.1 30.0

PAT Margin (%) 25.3 31.3 28.9 30.9 30.9 29.2 27.8


US Sales YoY Gr. (%) 147.8 66.5 43.7 76.9 31.8 77.3 51.1

India Sales YoY Gr.(%)-8.0 14.9 13.3 -11.1 44.4 1.7 18.1

Gross Margins (%) 81.1 81.6 80.4 82.8 84.9 81.8 81.6

E: MOSL Estimates

149September 2 - 6, 2013


Sun Pharmaceuticals: Financials and valuation

Consolidated Income Statement (INR Million)

Y/E March 2012 2013 2014E 2015E

Net Sales 80,095 112,389 153,440 176,540

Change (%) 40.0 40.3 36.5 15.1

EBITDA 31,944 49,063 66,723 72,796

Margin (%) 39.9 43.7 43.5 41.2

Depreciation 2,912 3,362 4,107 4,478

EBIT 29,032 45,701 62,616 68,318


Other Income - Rec. 4,856 3,726 4,512 5,872

PBT 33,595 43,148 41,078 73,314

Tax 3,826 8,206 9,938 13,197

Tax Rate (%) 11.4 19.0 24.2 18.0

Profit after Tax 29,769 34,942 31,140 60,118

Less: Mionrity Interest 3855 4863 5107 5618

Net Profit 25,914 30,080 26,033 54,500

Adj. PAT 23,270 32,775 43,218 48,754


Y/E March 2012 2013 2014E 2015E


Total Reserves 120,628 147,678 194,645 244,298

Net Worth 121,663 148,714 196,716 246,369


Deferred Liabilities -5199 -4313 -4313 -4313

Secured Loan 1,096 830 830 830

Unsecured Laon 1,644 1,242 1,242 1,242

Total Loans 2,739 2,072 2,072 2,072


Net Fixed Assets 26,136 29,508 31,513 32,840

Capital WIP 3,447 2,223 1,612 1,306

Goodwil l 13,378 13,378 13,378 13,378

Investments 22,129 17,428 17,428 17,428

Curr. Assets 90,681 122,127 179,018 237,687

Inventory 20,870 25,788 24,948 31,212



L & A and Others 16,878 22,110 25,365 29,103



Provisions 10,541 11,523 12,997 13,928


Appl. of Funds 130,820 162,951 216,061 271,332

E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 11.2 15.8 20.9 23.5

Fully Diluted EPS 11.2 15.8 20.9 23.5

Cash EPS 13.9 16.1 14.6 28.5

BV/Share 58.7 71.8 95.0 119.0

DPS 1.1 1.3 1.8 2.0

Payout (%) 8.6 8.7 13.6 8.1

Valuation (x)

P/E 44.7 31.7 24.1 21.3

Cash P/E 36.1 31.1 34.5 17.6

P/BV 8.5 7.0 5.3 4.2

EV/Sales 12.3 8.6 6.1 5.0

EV/EBITDA 30.9 19.7 13.9 12.2

Dividend Yield (%) 0.2 0.2 0.3 0.4

Return Ratios (%)

RoE 21.5 24.2 25.0 22.0

RoCE 30.4 31.7 24.0 33.2





Working Capital T/O (Days) 146 145 136 140

Leverage Ratio




Y/E March 2012 2013 2014E 2015E

OP/(Loss) bef. Tax 31,933 43,227 41,549 72,796

Int./Dividends Recd. 4,856 3,726 4,512 5,872


(Inc)/Dec in WC -8,319 -12,658 -12,489 -10,639


(inc)/dec in FA -10,585 -5,510 -5,500 -5,500

(Pur)/Sale of Invest. 169 4,700 0 0

CF from investments -10,416 -810 -5,500 -5,500

Change in networth 2,780 0 26,210 0

(Inc)/Dec in Debt -978 -668 0 0

Interest Paid -282 -443 -876 -876

Dividend Paid -2,575 -3,029 -4,241 -4,847

CF from Fin. Activity -1,055 -4,140 21,093 -5,723

Inc/Dec of Cash 11,626 22,026 39,227 43,610


Closing Balance 33,672 55,698 94,924 138,535

Note: Cashflows do not tally due to acquisition

September 2 - 6, 2013 150


Sun TV Network



Promoter 75.0 77.0 77.0


Foreign 14.5 14.3 13.3

Others 7.6 6.9 6.7

Stock info

Bloomberg Code SUNTV IN



Mcap (INR b) 147.5

Mcap (USD b) 2.3


1, 6, 12 Rel Perf (%) 4/-4/20

Company descriptionSun TV Network Ltd (SUNTV) is a leading regional

television broadcaster, with well-established brands,

including the flagship channel Sun TV in Tamil. Along

with Tamil, SUNTV has prominent channels in Telugu,

Kannada and Malayalam. Its channels can be viewed in

27 countries. Company is also the owner of IPL (cricket)

franchise "Sunrisers".

Key investment positives & long-term prospects Digitization remains a strong theme over medium-

to-long term even though short term challenges

continue, as "addressability" is yet to be fully

achieved even in the phase I markets.

With its offering of 33 channels, company reaches

more than 95m households in India.

SUNTV's GEC channels command a leadership

position in Tamil (~60% market share), Kannada

(~35%) and Telugu (~35%). In Malayalam, GEC is

currently at the No. 2 spot (~20%).

SUNTV is a net cash company and offers attractive

dividend yield (2.7%) and payout (~55%).

High return ratios, with RoE and RoCE of 24% and

45% respectively in FY13, despite ad slowdown.

Key challenges & near-term concerns TRAI's guidelines of ad cap of 10+2 minutes are

expected to reduce the inventory. Broadcasters will

have to take sharp rate hikes to completely offset

inventory loss.

Lack of visibility on digitization in Tamil Nadu due

to licensing issues for Arasu Cable.

Rollout of digitization in Phase III/Phase IV; delay

in revenue monetization from digitization.

Key news flows / triggers to watch Possible postponement of ad cap of 10+2 minutes.

Subscription revenue trend, post collection of

customer details by MSOs from digital subscribers.

Performance of IPL franchise "Sunrisers".

1QFY14 highlights; outlook for FY14, FY15 SUNTV's 1QFY14 PAT (ex-IPL) grew 12.5% YoY to

INR1.85b (est. of INR1.85b). Reported PAT was lower

at INR1.64b due to loss in the IPL franchise.

EBITDA grew 19% YoY to INR3.8b (v/s est. of

INR3.7b).

We expect ad and broadcast revenue to grow at 13%

in FY14E and 12% in FY15E. Domestic subscription

revenue is expected to grow at 20% in FY14E and

23% in FY15E, led by digitization.

We expect 18% earnings CAGR over FY13-15E. The

stock trades at a P/E of 19.1x FY14E and 15.4x FY15E.

Maintain Buy with a target price of INR515 based on

18x FY15E EPS plus INR80/sh to incorporate 50% of

potential digitization upside.



Revenue 4,258 4,333 4,859 4,727 6,019 18,176 22,086

YoY Change(%) -6 -4 14 11 41 3 22

EBITDA 3,230 3,290 3,763 3,486 3,537 13,769 15,773

YoY Change(%) -12 -10 10 6 9 -2 15

EBITDA Margin(%) 75.9 75.9 77.5 73.7 58.8 75.8 71.4

Adjusted PAT 1,643 1,517 1,899 1,775 1,644 6,832 7,681

YoY Change(%) -12 -16 13 12 0 -2 12

PAT Margin(%) 39 35 39 38 27 38 35


Ad revenue gr. (%) 4 3 15 9 12 8 13

Dom. subsc. gr. (%) -15 -2 16 18 24 3 20

E: MOSL Estimates

151September 2 - 6, 2013


Sun TV Network: Financials and valuation

Consolidated Income Statement (INR Million)

Y/E March 2012 2013 2014E 2015E

Advertising Revenue 9,450 10,200 11,565 13,038

Broadcasting Revenue 1,640 1,730 1,866 2,061

International Subscrip. 840 1,040 1,196 1,375

Domestic Subscription 4,961 5,125 6,173 7,596

Others 682 82 1,286 1,699

Net Sales 17,574 18,176 22,086 25,769

Change (%) -8.6 3.4 21.5 16.7

Operating Cost 1,006 1,552 1,908 2,194

Staff Cost 1,641 1,771 1,912 2,294

Administrative Exp 920 1,085 2,494 2,711

EBITDA 14,007 13,769 15,773 18,570

% of Net Sales 79.7 75.8 71.4 72.1

Depreciation 1,000 1,084 1,168 1,255

Film Amortization 3,430 3,048 3,633 4,100


Other Income 742 550 660 879

PBT after EOI 10,263 10,138 11,596 14,046

Tax 3,317 3,306 3,915 4,537

Rate (%) 32.3 32.6 33.8 32.3

Extra-ordinary Expenses 0 -2 12 0

Adjusted PAT 6,946 6,835 7,656 9,509

Change (%) -10.0 -1.6 12.0 24.2


Y/E March 2012 2013 2014E 2015E

Share Capital 1,970 1,970 1,970 1,970

Reserves 24,482 26,958 29,860 33,679

Net Worth 26,452 28,929 31,830 35,650





Net Fixed Assets 4,612 6,193 6,363 6,006

Capital WIP 6,030 6,036 6,036 6,036

Investments 4,775 4,678 4,543 4,408

Curr. Assets 13,514 15,111 18,439 23,210

Inventory 4 5 5 5

Debtors 4,649 5,353 6,016 6,959


Loans & Advances 5,282 5,098 5,098 5,098

Other Current Asset 680 768 845 930


Creditors 296 296 424 483


Provisions 364 954 1,144 1,373



E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

Adjusted EPS 17.6 17.3 19.4 24.1

Growth (%) -10.0 -1.6 12.0 24.2

Cash EPS 20.2 20.1 22.4 27.3

Book Value 67.1 73.4 80.8 90.5

DPS 9.5 9.5 10.5 12.5

Payout (incl. Div. Tax) 53.9 54.8 53.9 51.8

Valuation (x)

P/E 21.1 21.4 19.1 15.4

Cash P/E 18.4 18.5 16.6 13.6

EV/EBITDA 10.2 10.3 8.9 7.3

EV/Sales 8.2 7.8 6.3 5.3


Dividend Yield (%) 2.6 2.6 2.8 3.4


RoE 26.3 23.6 24.1 26.7

RoCE 51.2 45.3 47.5 50.6

Turnover Ratios




Leverage Ratio

Debt/Equity (x) 0.0 0.0 0.0 0.0


Y/E March 2012 2013 2014E 2015E


Add : Depreciation 4,430 4,132 4,801 5,355



(Inc)/Dec in WC -5,630 98 -266 -568


(Inc)/Dec in FA -4,948 -5,718 -4,972 -4,998


CF from Investments 1,489 5,490 7,415 9,481

(Inc)/Dec in Net Worth -55 -130 12 0

(Inc)/Dec in Debt 0 0 0 0

Less : Interest Paid 56 48 48 48

Dividend Paid 4,324 4,324 4,779 5,690


Inc/Dec of Cash -2,945 988 2,600 3,743


Closing Balance 2,899 3,887 6,474 10,218

Note: Cashflows do not tally due to acquisition

September 2 - 6, 2013 152


Tata Motors



Promoter 34.4 34.8 34.8

Dom. Inst. 11.7 10.4 12.0

Foreign 46.2 47.2 44.9

Others 7.7 7.6 8.4

Stock info

Bloomberg Code TTMT IN



Mcap (INR b) 800.6

Mcap (USD b) 12.3


1, 6, 12 Rel Perf (%) 7/3/15

Company descriptionTata Motors (TTMT) is the largest CV manufacturer in

India with 56% market share in MHCV and 51% in LCVs.

TTMT is also the fourth largest PV player in India. To

transform into a global automotive company, it

acquired Jaguar & Land Rover from Ford for USD2.5b in

FY09.

Key investment positives & long-term prospects JLR's product action and market expansion to drive

13.5% CAGR (FY12-15). JLR plans a total of 30 new

product actions by CY15. This would include (1) a

new platform for existing models every seven years,

(2) major refreshes every four years for each model,

and (3) minor refreshes every two years.

While majority of the new launches would be

replacement of existing models, the launch of

smaller Jaguar (late CY14) and crossovers (for both

Jaguar & Land Rover) would lead to an entry into

newer segments for JLR.

JLR's own dealer expansion and Chery JV would

enable it to compete better with a production base

in China.

We expect JLR volumes of 411,000/483,000 units

(10.6%/17.3% growth) and EBITDA margins of 16.1%/

16.7% for FY14E/FY15E respectively.

CV business in India would witness an improvement

driven by cyclical recovery, although competitive

intensity has increased.

Key challenges & near-term concerns Demand slowdown in China and developed

countries, and adverse forex movement could

impact JLR's profitability adversely.

Delay in economic recovery in India could continue

to impact severely its domestic business, especially

in an increasingly competitive environment.

Key news flows / triggers to watch Dispatches of new Range Rover Sport expected to

commence from August 2013, while retail would

commence from September 2013.

Any listing plans for JLR.

1QFY14 highlights; outlook for FY14, FY15 TTMT's 1QFY14 operating performance was above

estimates driven by JLR, while standalone

continued to disappoint with weak margins.

JLR's demand outlook positive, particularly driven

by upcoming launch of new RR Sport. Barring Fx,

current margins would get further support from RR

Sport launch. Expect FY14 volume growth of 10-12%.

Contrary to media reports, inventory levels

(especially in China) are under control at 30-45 days.

Domestic business to remain weak, given prolonged

slowdown in economic activity and higher

competitive pressures, resulting in CV volumes de-

growth of 6.5% and PVs de-growth of 22% in FY14.

Consolidated net automotive debt rose to INR134b

(v/s INR90b in March 2013). Net automotive debt/

equity ratio stood at 0.31 (v/s 0.24 in 4QFY13).

Quarterly Performance (Consolidated) (INR Million)


Operating Income 433,236 434,029 460,895 560,016 467,847 1,888,176 2,149,420

Change (%) 30.1 19.9 1.8 10.0 8.0 14.0 13.8

EBITDA 57,548 53,336 56,573 78,015 62,192 245,473 290,585

Change (%) 35.9 18.4 (17.1) 15.7 8.1 10.0 18.4

EBITDA Margin (%) 13.3 12.3 12.3 13.9 13.3 13.0 13.5

Reported PAT 23,138 21,010 16,362 38,116 17,628 98,625 105,207

Adjusted PAT 25,651 20,816 17,341 39,280 18,337 103,286 105,482

Change (%) 25.2 (7.3) (50.9) (11.5) (28.5) (17.7) 2.1

PAT Margin (%) 5.9 4.8 3.8 7.0 3.9 5.5 4.9


JLR vol. (units) 83,452 77,442 94,828 116,345 90,620 372,067 411,410

JLR EBITDA (%) 14.5 14.8 14.0 16.9 16.5 15.2 16.4

S/A vol.(units) 190,783 223,665 203,852 196,370 153,172 809,503 720,349

S/A EBITDA (%) 7.3 5.9 2.2 3.6 2.3 4.8 3.5

E: MOSL Estimates

153September 2 - 6, 2013


Tata Motors: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Total Income 1,656,545 1,888,176 2,149,420 2,472,077

Change (%) 35.6 14.0 13.8 15.0

EBITDA 237,005 265,689 312,274 359,911

Change (%) 33.0 12.1 17.5 15.3

Depreciation 56,254 75,693 108,652 124,893

EBIT 180,751 189,996 203,623 235,018

Product Dev. Exp. 13,892 20,216 21,690 22,236

Interest 29,822 35,533 36,979 35,642

Other Income 6,618 8,115 6,414 5,634

PBT 135,339 136,335 151,368 182,773

Tax -400 37,710 46,161 54,149

Effective Rate (%) -0.3 27.7 30.5 29.6

Reported PAT 135,739 98,625 105,207 128,624


Sh. of profit of associate 249 1,138 1,040 1,097

Net Profit 135,165 98,926 105,482 128,858

Adj. PAT 125,568 103,286 105,482 128,858

Change (%) 38.5 -17.7 2.1 22.2

E: MOSL Estimates; * Normalized for capitalized expenses


Y/E March 2012 2013 2014E 2015E

Share Capital 6,348 6,381 6,438 6,438

Reserves 320,638 369,992 467,942 590,922

Net Worth 326,985 376,373 474,380 597,360

Loans 471,490 557,223 554,139 545,082


Deferred Tax -23,743 -24,094 -24,094 -24,094


Gross Fixed Assets 897,791 1,205,654 1,464,731 1,728,160


Net Fixed Assets 402,667 634,836 785,261 923,798

Capital WIP 159,458 60,000 70,000 70,000

Goodwil l 40,937 41,024 41,024 41,024

Investments 89,177 90,577 91,617 92,715

Curr.Assets 711,679 829,538 874,871 978,203

Inventory 182,160 209,690 235,553 270,913

Inventory Days 47 47 47 47

Sundry Debtors 82,368 109,427 105,999 121,911

Debtor Days 18 21 18 18

Cash & Bank Bal. 182,381 211,127 232,524 263,085

Loans & Advances 249,952 280,739 280,739 300,739

Others 14,818 18,556 20,056 21,556




Provisions 128,418 160,717 176,665 203,184

Net Current Assets 85,564 86,769 20,992 -3,856

Appl. of Funds 777,803 913,206 1,008,894 1,123,681


Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 39.6 32.4 32.8 40.0

EPS Growth (%) 38.5 -17.7 2.1 22.2

EPS Fully Diluted 39.0 32.1 32.8 40.0

Cash EPS 57.3 56.1 66.5 78.8

Book Value (Rs/Share) 103.0 118.0 147.4 185.6

DPS 4.0 2.0 2.0 3.0


Valuation (x)

Consolidated P/E 7.5 9.1 8.9 7.3

EV/EBITDA 4.8 4.5 3.8 3.1

EV/Sales 0.7 0.6 0.5 0.5


Dividend Yield (%) 1.4 0.7 0.7 1.0


RoE 38.4 27.4 22.2 21.6

RoCE 24.1 21.7 20.8 21.4

Turnover Ratios




Leverage Ratio

Debt/Equity (x) 1.4 1.5 1.2 0.9


Y/E March 2012 2013 2014E 2015E


Int/Div. Received 5,376 8,115 6,414 5,634

Depreciation 56,209 75,693 108,652 124,893


(Inc)/Dec in WC -22,801 27,540 87,175 55,407

Other Items 24,401 547 765 864

CF from Op Activity 180,670 172,760 262,326 261,507

Extra-ordinary Items 8,549 -6,027 0 0

CF after EO Items 189,219 166,733 262,326 261,507

(Inc)/Dec in FA+CWIP -137,829 -208,404 -269,077 -263,430

(Pur)/Sale of Invest. -72,976 -1,400 -1,040 -1,097

CF from Inv Activity -210,804 -209,804 -270,117 -264,527

Free Cash Flow -21,585 -43,071 -7,791 -3,021

Issue of Shares 1,386 -42,124 57 5,344

Inc/(Dec) in Debt 113,054 85,733 -3,084 -9,057

Interest Paid -33,737 -35,533 -36,979 -35,642

Dividends Paid -15,031 -7,414 -7,532 -11,221

CF from Fin Activity 65,672 662 -47,537 -50,577

Inc/(Dec) in Cash 44,087 -42,410 -55,328 -53,597

Add: Beginning Bal. 104,244 148,330 105,921 50,592

Closing Balance 148,330 105,921 50,592 -3,005

September 2 - 6, 2013 154


Tata Steel



Promoter 31.4 31.4 31.4

Dom. Inst. 26.3 27.2 28.7

Foreign 15.9 16.1 15.8

Others 26.5 25.3 24.1

Stock info

Bloomberg Code TATA IN



Mcap (INR b) 265.4

Mcap (USD b) 4.1


1, 6, 12 Rel Perf (%) 26/-20/-33

Company descriptionTata Steel (TATA) is the lowest-cost steel producer in

India. Globally, it is the 12th largest steel company, with

24.3mt of steel sales in FY12. It has operations spread

over Europe, the UK, Asia, North America and rest of

the world, with an annual capacity of 27mt. On a

consolidated level, it has ~22% raw material security

and plans to increase this to 50-60%. Annual production

is likely to increase to 34mt through brownfield

expansions in Jamshedpur and greenfield projects in

Orissa.

Key investment positives & long-term prospects The 2.9mt expansion at Jamshedpur would lead to

~3mt of incremental sales volumes over FY12-15E.

Total consolidated sales tonnage is expected to be

27mt in FY15E.

Overseas investments in raw material assets are

likely to start generating cash flows in FY14E.

In Europe, restructuring initiatives such as

upgradation of plants, shutdown of old units and

downsizing of manpower should increase cost

effectiveness, going forward.

Key challenges & near-term concerns TATA's earnings have high leverage to steel prices

and earnings from European operations. The

demand scenario remains challenging in Europe.

Key news flows / triggers to watch Tata Steel Europe (TSE), at the current level of

profitability, is unable to support its interest

obligation and capex program and remains a drag

on the group's performance. A demand side boost

in Europe could improve profitability, thereby

triggering a rerating of the stock.

1QFY14 highlights; outlook for FY14, FY15 EBITDA declined 16% QoQ to INR36.9b on expected

lines. Volumes declined 7% QoQ due to seasonal

factors in Tata Steel India's (TSI) and weaker demand

in TSE and South East Asia (SEA).

TSE reported a turnaround in production due to

restart of two furnaces, which led to better

absorption of fixed cost. TSE's EBITDA per ton

increased by USD11/t to USD44/t. TSE's operational

troubles are behind but poor demand is leading to

inventories build-up.

TATA remains committed to USD2-2.5b capex

annually for investment in the Odisha project and

sustenance requirements. This will eat away more

than the operating cash flows. Consolidated debt

will still rise due to translation loss and negative

free cash flows.



Operating Inc. 338,212 341,327 321,071 346,505 328,048 1,347,115 1,426,262

Change (%) 2.5 4.1 -3.0 1.9 -3.0 1.4 5.9

EBITDA 36,003 23,101 22,389 43,689 36,880 123,212 155,582

Change (%) -19.2 -19.4 17.0 37.4 2.4 -1.9 6.8

EBITDA Margin (%) 10.6 6.8 7.0 12.6 11.2 9.1 10.9

Reported PAT 5,170 -4,133 -7,886 -66,775 11,423 -73,624 32,136

Adjusted PAT 7,949 -4,066 -7,433 8,843 11,213 3,323 32,433

Change (%) -59.9 -291.4 23.3 104.0 41.1 -83.6 876.2

PAT Margin (%) 2.4 -1.2 -2.3 2.6 3.4 0.2 2.3


Sales (mt) 5.7 6.1 5.8 6.6 6.1 24.1 26.0

Realizat.(INR/ton) 59,544 56,232 55,072 52,821 53,955 55,804 54,856

EBITDA/ton(USD/ton) 117 69 71 123 108 94 104

E: MOSL Estimates

155September 2 - 6, 2013


Tata Steel: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 1,328,997 1,347,115 1,426,262 1,414,107

Change (%) 11.9 1.4 5.9 -0.9

EBITDA 124,168 123,212 155,582 157,475

% of Net Sales 9.3 9.1 10.9 11.1


EBIT 79,001 67,459 96,741 97,169

Finace cost 42,501 39,681 41,473 43,143

Other income 15,730 4,792 3,884 4,030

PBT before EO 52,231 32,569 59,151 58,056

EO income 33,619 -73,899

PBT after EO 85,850 -41,330 59,151 58,056

Tax 36,365 32,294 27,015 28,733

Rate (%) 42.4 -78.1 45.7 49.5

Reported PAT 49,485 -73,624 32,136 29,323

Minority interest P/L -1,731 -2,145 -179 -261

Share of asso. PAT 2,681 903 119 123

PAT (After MI & asso.) 53,898 -70,576 32,433 29,707

Div. on Pref. /Hybrid Sec. 2,225 1,798 1,798 1,798

Adjusted PAT 18,054 1,524 30,635 27,909

Change (%) -69.8 -91.6 1,910.0 -8.9


Y/E March 2012 2013 2014E 2015E

Share Capital 9,714 9,714 9,714 9,714

Reserves 416,623 332,008 349,310 368,566

Net Worth 426,337 341,722 359,024 378,280


Total Loans 647,385 707,696 759,701 775,599



Gross Block 1,133,047 1,352,650 1,508,742 1,642,213

Less: Accum. Deprn. 712,043 798,379 857,220 917,526

Net Fixed Assets 421,003 554,271 651,522 724,687

Capital WIP 200,280 137,862 137,862 137,862

Investments 26,229 24,974 24,974 24,974

Goodwill on consol. 173,546 130,650 130,650 130,650

Curr. Assets 609,675 580,338 562,027 532,473

Inventory 255,980 240,912 234,454 232,456


Cash & liquid invest. 121,972 106,200 77,984 51,759

Others 82,938 93,287 93,287 93,287





Appl. of Funds 1,109,058 1,097,297 1,170,818 1,216,160

E: MOSL Estimates


Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 18.6 1.6 31.5 28.7

Cash EPS 97.4 -18.4 93.7 92.3

BV/Share 260.2 217.3 235.1 254.9

DPS 12.0 8.0 8.0 8.0

Payout (%) 74.6 886.5 44.1 48.4

Valuation (x)

P/E 14.7 174.2 8.7 9.5

Cash P/E 2.8 -14.9 2.9 3.0

P/BV 1.1 1.3 1.2 1.1

EV/Sales 0.6 0.6 0.7 0.7

EV/EBITDA 6.4 7.0 6.1 6.3

Dividend Yield (%) 4.4 2.9 2.9 2.9

Return Ratios (%)

RoE 7.9 0.7 13.9 11.7

RoCE (pre-tax) 9.2 6.6 8.9 8.5



Debtor (Days) 40.9 37.9 40.0 40.0

Inventory (Days) 70.3 65.3 60.0 60.0

Leverage Ratio (x)



Net Debt/Equity 2.1 2.8 3.0 2.9


Y/E March 2012 2013 2014E 2015E

EBITDA 124,168 123,212 155,582 157,475

Non cash opr exp. (inc.) 13,603 4,424

(Inc)/Dec in Wkg. Cap. 11,590 31,293 -4,486 1,598

Tax Paid -36,524 -25,690 -22,622 -18,285


(Inc)/Dec in FA + CWIP -121,360 -154,715 -138,000 -136,800

(Pur)/Sale of Investments 78,503 29,484

Acquisition in subsidiaries -1,557

Int. & Divident Income 6,194 3,576 3,884 4,030

Other investing activities -11,343 -5,352


Equity raised/(repaid) 6,045 2,646

Debt raised/(repaid) -39,803 25,153 30,000 20,000


Interest & equiv. paid -37,646 -34,657 -43,272 -44,942


(Inc)/Dec in Cash -18,212 -15,772 -28,216 -26,225

Add: opening Balance 140,183 121,972 106,200 77,984

Closing Balance 121,972 106,200 77,984 51,759

September 2 - 6, 2013 156


Tech Mahindra



Promoter 47.2 47.4 70.8

Dom. Inst. 15.8 16.0 14.8

Foreign 27.3 27.7 6.3

Others 9.7 8.9 8.2

Stock info

Bloomberg Code TECHM IN



Mcap (INR b) 163.9

Mcap (USD b) 2.5

52-Wk Range (INR) 1,347/775

1, 6, 12 Rel Perf (%) 18/28/46

Company descriptionTech Mahindra (TECHM) offers innovative and

customer-centric information technology services and

solutions, enabling enterprises and associates. It is a

USD2.7b company with 83,000+ professionals across 49

countries, helping over 500 global customers, including

Fortune 500 companies. It is a part of the USD16.2b

Mahindra Group that employs more than 155,000 people

in over 100 countries.

Key investment positives & long-term prospects The merged entity has been able to chase deals in

the higher TCV range, offering the direct synergy of

scale, apart from diversifying the company's

customer and vertical base.

Prowess in the Telecom vertical is reflected in 20%+

growth every year (ex-BT) in the past five years.

Only in FY13, growth had contribution from inorganic

segment. Despite tight client budgets, TECHM

managed to grow by gaining share.

Large deals like those of KPN and a gradual revival

in the Telecom vertical will help volume growth.

Over the long term, contribution from non-growth

segments like BT and HGS will become lesser, and

this could come earlier if the company, as per its

plans, ventures into another sizeable acquisition in

the near future.

In the Enterprise segment, large deal wins are still in

the nature of work in progress, which could potentially

compound to TECHM's performance, going forward.

Key challenges & near-term concerns Continued sluggishness in the Telecom vertical will

hurt growth in the merged entity.

The US Immigration Bill is an overhang, considering

the proportion of TECHM's US-based employees

that are locals, is at the lower end of peers.

Key news flows / triggers to watch TECHM's merger with Satyam was completed in the

first quarter, and 1QFY14 was the first time that it

reported the merged entity's financials.

TECHM won three large deals in the Enterprise space

of the seven it was chasing in the pipeline.

Deal pipeline remains healthy and continued

conversion will help sustain strength in

performance.

1QFY14 highlights; outlook for FY14, FY15 Large deal wins, expectations-beat and broad-

based nature of growth were the key highlights of

TECHM's 1Q results.

We expect TECHM to post USD revenue at a CAGR of

11.7% over FY13-15E and EPS at a CAGR of 16.8%

during this period.

Company aims to take its revenue to USD5b in 2015

(v/s USD3b annualized rate at present), inorganic

contribution for which is imperative.

Any such sizeable buy will help further marginalize

the non-growth segments, and there exists enough

wherewithal in the form of cash and treasury stock

to fund the same.



Operating Inc. 33,725 35,237 36,688 37,675 41,032 143,324 172,801

Change (%) 9.1 4.5 4.1 2.7 8.9 20.6

EBITDA 7,390 7,569 7,962 7,715 8,645 30,635 36,358

Change (%) 2.4 5.2 (3.1) 12.1 18.7

EBITDA Margin (%) 21.9 21.5 21.7 20.5 21.1 21.4 21.0

Adjusted PAT 5,067 4,224 5,825 4,703 6,528 19,818 24,319

Change (%) (16.6) 37.9 (19.3) 38.8 22.7

PAT Margin (%) 15.0 12.0 15.9 12.5 15.9 13.8 14.1


Headcount 76,292 86,906 85,646 83,109 83,063 83,109 85,933

Utilization* 75 74 76 77 76 75.5 77.0

Rev. frm offshore(%) 52.4 51.8 51.7 51.6 49 51.9 49.2


157September 2 - 6, 2013


Tech Mahindra: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Sales 54,897 143,320 175,073 190,367

Change (%) 13.4 161.1 22.2 8.7

Total Expenses 45,703 112,689 137,580 151,846

EBITDA 9,194 30,631 37,494 38,521

% of Net Sales 16.7 21.4 21.4 20.2

Depreciation 1,614 3,896 4,739 4,338

Interest 1,413 922 951 1,045

Other Income 1,368 2,121 4,232 3,102

Exceptional Items -1,600 0 0

PBT 7,535 26,334 36,036 36,240

Tax 1,438 6,479 9,007 8,698

Rate (%) 19.1 24.6 25.0 24.0

PAT 6,097 19,855 27,029 27,542

MI & EO items 714 301 520 520

PAT before EO 10,918 19,554 26,509 27,022

Change (%) 24.2 79.1 35.6 1.9

Effect of restructuring fees-1,618 -1,340 -1,340 0

PAT after RF before EO 9,299 18,214 25,169 27,022

Change (%) 31.1 95.9 38.2 7.4

PAT after EO 9,978 18,214 25,169 27,022

Change (%) 29.2 82.5 38.2 7.4


Y/E March 2012 2013 2014E 2015E

Share Capital 1,275 2,316 2,316 2,316

Reserves 42,032 66,214 82,123 105,867

Net Worth 43,307 68,530 84,439 108,183

Minority Interest 0 1,349 1,349 1,349

Loans 11,266 14,702 13,642 13,642

Amount pending invest. 12,304 12,304 12,304


Assets 6,868 22,318 24,746 26,408

CWIP 1,629 2,595 2,595 2,595

Investments 35,876 12,429 12,429 12,429

Long term loans and adv 7,433 6,000 6,000

Deferred Tax Assets 998 3,477 2,500 2,500

Other non-current assets 219 219 219

Curr. Assets 20,437 89,634 101,998 128,474

Debtors 13,172 33,688 39,707 43,347


Loans & Advances 4,845 12,925 15,000 15,000

Current Investments 1,745 1,745 1,745

Other Current Assets 2 6,647 8,051 8,779


Creditors 10,377 8,577 11,086 12,423

Provisions 3,080 32,643 27,667 30,724



Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 72.9 95.3 121.1 130.0

Diluted EPS 70.4 93.2 118.4 127.1

Cash EPS 82.6 104.0 140.6 147.5

Book Value 339.7 322.3 406.2 520.5

DPS 4.0 5.0 5.0 5.0

Payout % 5.7 5.8 4.2 3.9

Valuation (x)

P/E 18.1 14.9 10.8 10.0

Cash P/E 15.4 12.2 9.0 8.6

EV/EBITDA 17.9 7.6 6.1 5.4

EV/Sales 3.0 1.6 1.3 1.1


Dividend Yield (%) 0.3 0.4 0.4 0.4


RoE 26.0 32.6 32.9 28.1

RoCE 14.3 35.3 31.4 27.7

Turnover Ratios



Leverage Ratio



Y/E March 2012 2013 2014E 2015E


Chg.inWrkingCap.&others 7,778 -2,297 -11,966 26

Other adjustments 31,797

Net Operating CF 11,470 11,962 17,942 31,387


Net Purchase of Invest. -6,796 -1,940 -5,292 0


Inc./(Dec) in Equity & other related items -528 1,032 0 0

Proceeds from LTB/STB -961 -6,791 -1,060 0

Dividend Payments -597 -750 -2,732 -3,279

Cash Flow from Fin. -2,086 -6,509 -3,792 -3,279

Net Cash Flow -248 32,211 2,865 22,108

Opening Cash Balance 2,666 2,418 34,629 37,494

Add: Net Cash -248 32,211 2,865 22,108

Closing Cash Balance 2,418 34,629 37,494 59,603

September 2 - 6, 2013 158


Titan Industries



Promoter 53.1 53.1 53.1

Dom. Inst. 2.8 2.8 3.8

Foreign 20.1 19.1 16.2

Others 24.0 25.1 27.0

Stock info

Bloomberg Code TTAN IN



Mcap (INR b) 202.4

Mcap (USD b) 3.1


1, 6, 12 Rel Perf (%) -7/-6/-2

Company descriptionTitan Industries (TTAN) is one of India’s largest specialty

retailers. It is the market leader in Watches and a

pioneer in Branded Jewelry. The company’s economy

segment watch, Sonata is the largest selling watch in

the country. TTAN entered the Branded Jewelry

segment in 1996 and remains the largest player in this

segment.

Key investment positives & long-term prospects TTAN is the leader in the organized segment of the

domestic watch industry, with ~60% share. The

branded watch retailing segment is likely to report

strong growth; the unorganized segment accounts

for 60% of the watch retailing industry.

Tanishq, TTAN’s branded jewelry brand, is the largest

player in the branded jewelry market in India.

Branded jewelry accounts for less than 10% of the

total jewelry market in India and is expected to

report 30% CAGR over the next five years.

Operating margins are likely to expand, as TTAN

benefits from rising share of studded jewelry.

Eyewear is likely to break even in FY14, driving

margins further.

TTAN has demonstrated the ability to develop

market leading positions in the evolving lifestyle

consumption space with efficient capital

deployment and strong balance sheet

characteristics.

Key challenges & near-term concerns Regulatory headwinds, given the urgency to curb

current account deficit. Recently, RBI stopped the

Gold-on-Lease scheme, which provided a natural

hedge against gold price fluctuations and low cost

inventory funding for organized players.

Weak macroeconomic conditions have put pressure

on discretionary consumption.

Continued decline in watch margins due to INR

depreciation as well as raw material cost inflation.

Key news flows / triggers to watch Regulatory actions from the RBI/government on

import duties/import curbs.

Festive demand, given the shortage of gold faced

by unorganized jewelers.

1QFY14 highlights; outlook for FY14, FY15 67% Jewelry volume growth, with 70bp margin

contraction owing to mix change in favor of gold

jewelry. Jewelry EBIT grew 28%.


We have downgraded our stock rating to Neutral

owing to regulatory headwinds and withdrawal of

the low cost gold-on-lease scheme.

Outlook remains uncertain, given the precarious

CAD situation and possibility of further stringent

measures from the RBI/government to restrict gold

consumption in India.



Net Sales 22,057 22,760 29,829 25,931 31,077 120,102 101,127

YoY Change (%) 9.2 8.6 23.2 14.8 40.9 18.8 15.6

EBITDA 2,120 2,494 2,478 2,464 2,449 11,222 10,116

EBITDA Growth (%) 10.3 19.4 20.1 34.1 16 11 37

Margins (%) 9.6 11.0 8.3 9.5 7.9 9.3 10.0

Adjusted PAT 1,561 1,801 2,039 1,850 1,825 8,391 7,262

YoY Change (%) 8.7 21.3 24.4 28.2 16.9 15.6 20.1


Jewellery vol. gr -21.0 -11.0 12.0 9.0 67.0 1.0 20.0

Jewellery EBIT mar. 10.2 12.5 9.8 11.9 8.8 11.0 10.0

Watches EBIT mar. 14.0 11.6 12.1 10.9 10.3 12.0 11.1

E: MOSL Estimates

159September 2 - 6, 2013


Titan Industries: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 88,384 101,127 120,102 141,967

Change (%) 35.5 14.4 18.8 18.2


EBITDA 8,329 10,116 11,222 13,284

Change (%) 42.2 21.4 10.9 18.4

Margin (%) 9.4 10.0 9.3 9.4



Other Income - Recurring 941 1,008 1,439 1,807


Change (%) 40.0 20.1 12.5 19.8

Margin (%) 9.5 10.0 9.4 9.6

Tax 2,389 2,854 2,997 3,590


Tax Rate (%) 27.9 27.9 27.0 25.9


Change (%) 40.5 20.1 13.9 19.8

Margin (%) 6.8 7.2 6.9 7.0

Extraordinary income -47 0 0 0

Reported PAT 6,002 7,262 8,269 9,906


Y/E March 2012 2013 2014E 2015E


Reserves 13,611 18,761 24,445 31,379

Net Worth 14,499 19,649 25,333 32,267

Loans 59 60 0 0

Deferred Tax -38 -80 -142 -215


Gross Block 7,271 8,480 9,655 10,830

Less: Accum. Depn. 3,693 4,078 4,667 5,312

Net Fixed Assets 3,578 4,402 4,988 5,518

Intangibles 110 84 0 0

Capital WIP 249 417 150 150


Curr. Assets, L&A 42,802 53,579 62,689 75,652

Inventory 28,787 36,779 39,586 46,002



Others 2,779 3,797 4,176 4,697



Provisions 2,942 3,561 4,210 5,043



E: MOSL Estimates

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 6.8 8.2 9.3 11.2

Cash EPS 7.3 8.8 10.0 11.9

BV/Share 16.3 22.1 28.5 36.3

DPS 2.0 2.5 2.8 3.3

Payout % 30.1 30.0 30.0 30.0

Valuation (x)

P/E 33.2 27.6 24.3 20.3

Cash P/E 31.1 25.7 22.7 19.0

EV/Sales 2.2 1.9 1.5 1.3

EV/EBITDA 22.9 18.7 16.4 13.4

P/BV 13.8 10.2 7.9 6.2

Dividend Yield (%) 0.9 1.1 1.2 1.5


RoE 48.9 42.5 32.6 30.7

Operating RoE 43.2 38.4 32.4 30.1

RoCE 66.9 59.4 52.6 49.1




Leverage Ratio

Debt/Equity (x) 0.0 0.0 0.0 0.0


Y/E March 2012 2013 2014E 2015E


Int./Div. Received 941 1,008 1,439 1,807

Deferred Revenue Exp. 0 0 0 0

Depreciation & Amort. 449 545 589 645



Incr in WC 3,953 2,357 -246 666


Extraordinary Income -47 0 0 0

Incr in FA 1,212 1,352 824 1,175


CF from Invest. -1,328 -1,376 -824 -1,175


Incr in Debt -618 1 -60 0

Dividend Paid 1,290 1,806 2,181 2,481

Others 1,564 968 2,869 3,918


Incr/Decr of Cash -1,360 1,760 5,574 5,665


Closing Balance 9,605 11,365 16,939 22,604

September 2 - 6, 2013 160


UltraTech Cement



Promoter 62.0 62.0 63.3

Dom. Inst. 4.6 4.6 4.8

Foreign 23.5 23.5 22.1

Others 10.0 10.0 9.8

Stock info

Bloomberg Code UTCEM IN



Mcap (INR b) 448.5

Mcap (USD b) 6.9

52-Wk Range (INR) 2,075/1,565

1, 6, 12 Rel Perf (%) -6/-10/-8

Company descriptionUltraTech Cement (UTCEM), L&T's erstwhile cement

division, is a subsidiary of Grasim, a part of the Aditya

Birla Group. Post merger of Grasim's cement business,

it is the largest cement company in India, with cement

capacity of 61.5mt (by 1QFY16) and a pan-India

presence. It is the largest exporter of cement and

clinker from India.

Key investment positives & long-term prospects UTCEM is a pan-India play, without concentration in

any particular region, insulating it from wide

variation in regional demand and price volatility.

Potential to increase throughput without incurring

major capex by increasing utilization and blending,

and location advantage, gives it the flexibility to

either export or sell in the domestic market.

UTCEM has a well diversified fuel mix, with only

~53% dependence on domestic coal (~33% linkage

coal). Apart from domestic coal, it uses imported

coal (~33%) and pet coke (~14%).

Strong brand equity and efficient operations would

drive above average profitability at ~INR1,066/ton

in FY14 (v/s industry average of ~INR809/ton).

Allied businesses of white cement and RMC lend

stability to overall performance.

Key challenges & near-term concerns High operating leverage, especially post

commissioning of new capacities in 1QFY14, could

result in volatile earnings.

Higher leverage among large caps, with investment

plan of ~INR137b in capacities, CPP, marketing,

logistics infrastructure, modernization/up-

gradation and in RMC business.

Key news flows / triggers to watch The Board has approved fresh brownfield capacity

addition of 2.9mt at Rajasthan (including two split

grinding units), with capex of INR21b and

commissioning by March 2015, taking total capacity

in India to 61.45mt.

1QFY14 highlights; outlook for FY14, FY15 Gray cement volumes declined 2% YoY and 9% QoQ

to 10.09mt v/s our estimate of 10.47mt, while white

cement (including putty) volumes grew 11% YoY but

declined 16% QoQ.

Blended realization (including RMC and white

cement) grew 1% QoQ to INR4,846/ton (v/s our

estimate of INR4,739/ton).

Blended EBITDA/ton was INR1,026 (down INR207

YoY and INR37 QoQ) v/s our estimate of INR945.

We estimate INR2/INR15 increase in realizations/

bag and 5%/9.6% volume growth in FY14/15, leading

to EBITDA/ton of INR1,066/INR1,273.




Change (%) 16.6 20.3 6.4 1.0 -2.3 10.2 6.0

EBITDA 12,897 10,052 10,243 11,993 10,491 45,185 46,120

Change (%) 8.5 72.2 7.1 -5.1 -18.7 10.2 2.1

EBITDA Margin (%) 25.4 21.4 21.1 22.3 21.2 22.6 21.7

Reported PAT 10,987 7,834 8,545 10,888 9,192 38,254 37,508

Adjusted PAT 10,987 7,834 8,545 10,888 9,192 38,254 37,508

Change (%) 14.0 97.2 5.5 -15.8 -13.6 10.7 3.1

PAT Margin (%) 15.3 11.7 12.4 13.5 13.6 13.3 12.9


Volume (mt) 10.33 9.29 9.94 11.13 10.09 40.7 42.7

Realizations (INR/t)4,121 4,219 4,050 4,011 4,120 4,102 4,148

EBITDA (INR/T) 1,233 1,067 1,016 1,063 1,026 1,096 1,066

E: MOSL Estimates

161September 2 - 6, 2013


UltraTech Cement: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Net Sales 181,664 200,179 212,231 249,061

Change (%) 37.6 10.2 6.0 17.4


% of Sales 78.0 77.4 78.3 75.8

EBITDA 40,039 45,185 46,120 60,346

Margin (%) 22.0 22.6 21.7 24.2

Depreciation 9,026 9,454 11,227 13,247

EBIT 31,013 35,731 34,893 47,099

Int. and Finance Charges 2,239 2,097 2,885 2,912

Other Income - Rec. 4,568 4,620 5,500 5,000

PBT 33,343 38,254 37,508 49,188

EO Expense/(Income) -666 0 0 0

PBT after EO expense 34,009 38,254 37,508 49,188

Tax 9,467 11,700 10,127 14,510

Tax Rate (%) 27.8 30.6 27.0 29.5

Reported PAT 24,542 26,554 27,381 34,677

Adj PAT 24,062 26,554 27,381 34,677

Change (%) 71.4 10.4 3.1 26.6


Y/E March 2012 2013 2014E 2015E


Reserves 125,858 149,606 173,780 204,634

Net Worth 128,598 152,348 176,522 207,376


Loans 41,529 54,085 49,085 44,085


Gross Block 190,138 213,822 258,876 298,876

Less: Accum. Deprn. 73,797 82,599 93,825 107,072

Net Fixed Assets 116,342 131,224 165,051 191,804

Capital WIP 18,965 35,054 32,000 30,000

Investments 37,888 51,087 17,475 33,975

Curr. Assets 56,257 56,723 81,890 77,930

Inventory 20,359 23,505 26,165 30,706

Debtors 7,660 10,172 8,722 10,235

Cash & Bank Bal 1,896 1,427 20,837 6,282

Others 26,342 21,619 26,165 30,706


Creditors 33,740 37,903 43,028 50,495

Provisions 8,207 10,692 8,722 10,235


Appl. of Funds 187,505 225,493 244,666 272,980


Y/E March 2012 2013 2014E 2015E

Capacity (m ton) 49.4 50.0 59.2 62.1

Production (m ton) 41.3 41.2 43.3 47.4

Grey Realization (INR/ton) 3,735 4,102 4,148 4,448

EBITDA (INR/ton) 970 1,096 1,066 1,273

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 87.8 96.8 99.9 126.5

Cash EPS 120.7 131.3 140.8 174.8

BV/Share 469.2 555.7 643.8 756.3

DPS 8.0 9.0 10.0 12.0

Payout (%) 10.4 10.9 11.7 11.0

Valuation (x)

P/E 18.6 16.9 16.4 12.9

Cash P/E 13.6 12.5 11.6 9.4

P/BV 3.5 2.9 2.5 2.2

EV/Sales 2.4 2.1 2.0 2

EV/EBITDA 10.8 9.2 9.3 7.0

EV/Ton (Cap-USD) 148 141 122 115

Dividend Yield (%) 0.5 0.6 0.6 0.7

Return Ratios (%)

RoE 20.5 18.9 16.7 18.1

RoCE 23.5 21.4 18.7 21.8





Creditor (Days) 68 69 74 74


Wkg Capital Turnover (Days) 29 15 52 25

Leverage Ratio

Debt/Equity 0.3 0.4 0.3 0.2


Y/E March 2012 2013 2014E 2015E

Op. Profit/(Loss) bef. Tax 41,304 46,244 46,120 60,346

Interest/Dividends Recd. 478 566 5,500 5,000


(Inc)/Dec in WC 158 -3,887 -2,602 -1,614


EO expense 22 32 0 0

CF fr. Oper. incl EO exp. 34,578 35,727 38,891 51,680

(inc)/dec in FA -31,575 -32,676 -42,000 -38,000

(Pur)/Sale of Investments 2,159 -10,349 33,612 -16,500

CF from investments -29,416 -43,025 -8,388 -54,500


(Inc)/Dec in Debt 83 12,557 -5,000 -5,000

Interest Paid -2,907 -3,268 -2,885 -2,912

Dividend Paid -1,905 -2,539 -3,207 -3,823


Inc/Dec of Cash 448 -469 19,410 -14,554


Closing Balance 1,896 1,427 20,837 6,282

September 2 - 6, 2013 162


Union Bank of India



Promoter 57.9 57.9 54.4

Dom. Inst. 17.7 18.0 19.6

Foreign 11.7 10.7 9.5

Others 12.8 13.4 16.5

Stock info

Bloomberg Code UNBK IN



Mcap (INR b) 66.8

Mcap (USD b) 1.0


1, 6, 12 Rel Perf (%) -19/-45/-34



NII 18,217 18,502 18,915 19,795 19,091 75,428 79,543

Change (%) 14.6 11.4 9.9 8.7 4.8 11.0 5.5


Change (%) 8.7 5.6 5.8 5.4 11.4 6.3 -2.8

PAT 5,116 5,546 3,024 7,894 5,602 21,579 18,788

Change (%) 10.2 57.3 53.5 2.1 9.5 20.7 -12.9

NIM (Calc, %) 3.0 3.0 2.9 2.8 2.5 2.8 2.5

Loan Gr. (YoY, %) 19.1 19.4 21.3 17.0 16.0 17.0 12.0

GNPA (%) 3.8 3.7 3.4 3.0 3.5 3.0 3.7

NNPA (%) 2.2 2.1 1.7 1.6 2.0 1.6 2.3

E: MOSL Estimates

Company descriptionUnion Bank (UNBK) is a state-owned bank, with a

balance sheet size of over INR3.1t+. The government

holds 58% in the bank. UNBK has a pan-India presence,

with higher concentration in the western region, with

3,600+ branches and 5,000+ ATMs.

Key investment positives & long-term prospects UBNK is one of the few mid-size state-owned banks,

where CASA ratio has remained stable (30-32%)

despite strong balance sheet growth (20%+) over

FY05-13.

While reported net slippages have been higher,

restructured loans as a percentage of overall loans

(5% v/s 6-10% for peers) are one of the lowest among

state-owned banks. It has maintained PCR of 60%+

(one of the highest among peers).

UNBK's net stress loans are the lowest at ~7% v/s

PNB's 13.4%, BOB's 8.1% and BOI's 7.3%.

One of the biggest beneficiaries of upturn in the

macro environment. Any concentrated effort by the

government to get rid of policy paralysis and boost

investment climate will be a key trigger.

Key challenges & near-term concerns Slippages remain volatile led by higher growth in

the mid-corporate and SME segments in the past.

Core tier-I capital under Basel III stands at 7.4%. As

profitability remains under pressure, further capital

infusion will be book value dilutive at current

prices.

Core operating profitability is under pressure, led

by moderating margins and pressure on fees. Asset

quality is also leading to further strain on earnings.

Top management change in November 2013.

1QFY14 highlights; outlook for FY14, FY15 Guidance for FY14: (1) For 2QFY14, the management

has guided further restructuring of INR50b, of which

(a) INR23b is on account of SEBs, and (b) INR27b is

on account of private segment (both CDR and

bilateral); INR9b is already classified as NPA, (2) NIM

of 2.9-3%, (3) Business growth in line with industry.

Performance highlights of 1QFY14: (a) Stress

addition increased QoQ, with gross slippages at

INR14.7b (annualized slippage ratio of 3.4%) v/s

INR8.8b in 4QFY13, (b) Deposit growth was 14% YoY

(flat QoQ) and CASA ratio stood at ~30%, (c) Full

impact of 25bp reduction in base rate in February

2013, coupled with higher interest income reversals

impacted NIM (down 26bp QoQ to 2.6%), (e)

Provided INR450m in 1Q (INR1.2b till now) on

account of impending wage negotiation.

163September 2 - 6, 2013


Union Bank of India: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Interest Income 210,285 251,247 285,969 317,872



Change (%) 9.3 11.0 5.5 15.7


Net Income 92,413 100,949 106,485 120,739

Change (%) 11.9 9.2 5.5 13.4



Change (%) 22.0 6.3 -2.8 13.1


PBT 27,128 30,642 26,095 32,782

Tax 9,256 9,063 7,307 9,835

Tax Rate (%) 34.1 29.6 28.0 30.0

PAT 17,871 21,579 18,788 22,947

Change (%) -14.2 20.7 -12.9 22.1

Core PPP* 39,702 42,216 40,415 47,027

Change (%) 24.1 6.3 -4.3 16.4



Y/E March 2012 2013 2014E 2015E


Preference Share Capital 1,110 1,110 1,110 1,110


Net Worth 146,331 172,962 186,910 204,047

Of which Equity Networth 145,221 171,852 185,800 202,937

Deposits 2,228,689 2,637,616 3,033,258 3,518,579

Change (%) 10.1 18.3 15.0 16.0

of which CASA Dep 697,051 816,349 888,220 993,213

Change (%) 8.4 17.1 8.8 11.8

Borrowings 179,095 237,973 265,451 293,889



Current Assets 156,751 162,104 184,208 217,158

Investments 623,636 808,304 969,965 1,115,460

Change (%) 6.8 29.6 20.0 15.0

Loans 1,778,821 2,081,022 2,330,744 2,680,356

Change (%) 17.8 17.0 12.0 15.0

Fixed Assets 23,358 24,790 26,630 28,304

Other Assets 39,549 42,388 46,627 51,289

Total Assets 2,622,114 3,118,608 3,558,174 4,092,567

Asset Quality (%)

GNPA (INR m) 54,499 63,138 87,558 114,287

NNPA (INR m) 30,250 33,534 52,595 72,567

GNPA Ratio 3.02 2.99 3.70 4.20

NNPA Ratio 1.70 1.61 2.26 2.71



Ratios

Y/E March 2012 2013 2014E 2015E










RoE 14.8 15.0 11.4 12.7

RoA 0.7 0.7 0.6 0.6





Cost/Income* 45.3 46.9 51.3 51.3

Empl. Cost/Op. Exps. 62.2 61.1 60.5 59.3



* ex treasury



CASA Ratio 31.3 31.0 29.3 28.2



CAR 11.9 11.5 10.7 9.9

Tier 1 8.4 8.2 7.7 7.2

Valuation

Book Value (INR) 235.9 262.9 286.9 316.3

Change (%) 11.7 11.4 9.1 10.2

Price-BV (x) 0.4 0.4 0.4

Adjusted BV (INR) 197.5 223.6 225.2 231.1

Price-ABV (x) 0.5 0.5 0.5

EPS (INR) 32.3 36.0 31.3 38.3

Change (%) -18.5 11.5 -13.0 22.3

Price-Earnings (x) 3.1 3.6 2.9


Dividend Yield (%) 7.1 5.6 6.8

September 2 - 6, 2013 164


Wipro



Promoter 73.5 78.3 78.4

Dom. Inst. 4.6 3.3 3.5

Foreign 10.3 10.0 9.3

Others 11.6 8.4 8.9

Stock info

Bloomberg Code WPRO IN



Mcap (INR b) 1096.3

Mcap (USD b) 16.9


1, 6, 12 Rel Perf (%) 22/28/38



Operating Inc. 106,530 106,566 109,487 96,078 97,294 374,256 416,551

Change (%) 7.9 0.0 2.7 (12.2) 1.3 17.4 11.3

EBITDA 21,426 21,382 21,422 19,496 20,151 83,726 89,978

Change (%) 9.3 (0.2) 0.2 (9.0) 3.4 12.9 7.5

EBITDA Margin (%) 20.1 20.1 19.6 20.3 20.7 22.4 21.6

Adjusted PAT 15802 16106 17164 15756 16233 61362 71156

Change (%) 6.7 1.9 6.6 (8.2) 3.0 17.3 16.0

PAT Margin (%) 14.8 15.1 15.7 16.4 16.7 16.4 17.1


Headcount 138,552 140,569 142,905 145,812 147,281 145,812 157,026

Utilization* 75.5 73.7 71.7 71.7 71.4 73.1 72.3

Rev. frm offshore(%) 46.2 46.6 46.2 46.6 46.1 46.2 45.9


Company descriptionWipro (WPRO) is the third largest Indian IT services

company and the largest third-party BPO operator in

India. It is also the largest third-party R&D services

provider globally, employing over 147,000 employees.

WPRO offers among the widest range of IT and ITeS

services and its corporate governance and transparency

are at the highest level in the industry.

Key investment positives & long-term prospects Post the restructuring that began over two years

ago, WPRO has rectified multiple factors

responsible for holding growth earlier.

Growth readiness reflects in its increase in SGA

(200bp in two years), decline in utilization (770bp

in two years) and focus on client mining (USD100m+

accounts up from 1 to 10).

Weak segments that had been witnessing revenue

decline (Telecom OEM R&D services, investment

banking, hi-Tech) are likely to bottom out.

WPRO is favorably placed to protect its margin

profile, given leverage from SGA, utilization and

successful focus on productivity.

Improving climate in discretionary spending and the

US should benefit Infosys more than peers, given

its skew towards these segments.

For the longer term, WPRO has been extremely

proactive in scaling up new technologies

(Analytics), while focusing on growing the share of

annuity business in the overall mix.

Key challenges & near-term concerns Risk pricing in FPP projects could go wrong (47.4%

revenue from FPP in 1QFY14).

Margin recovery will be hit if growth challenges

persist over the medium term.

Key news flows / triggers to watch Won a major, multi-year deal from a leading

provider of analytics solutions to Healthcare, CPG

and Retail industries.

WPRO has won a big multi-year deal in the

infrastructure management space from a large

global bank.

Its guidance for 3Q will help further reinstate

confidence in growth recovery.

1QFY14 highlights; outlook for FY14, FY15 WPRO's guidance of 2-4% QoQ growth in USD

revenue in 2Q was above our expectation of 1-3%,

a key highlight that drove expectations of growth

recovery.

Company's 3Q guidance too could be healthy given:

[1] improvement in deal signings, [2] bottoming out

of weak areas and [3] turnaround in discretionary

spending.

We expect WPRO to post USD revenue at a CAGR of

8% over FY13-15E and EPS (ex de-merged business)

at a CAGR of 12%.

We believe that non-conducive macro delayed

fruition of its initiatives, which may be more visible

going forward.

165September 2 - 6, 2013


Wipro: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Sales 318,747 374,256 421,140 457,899

Change (%) 17.4 12.5 8.7

Operating Costs 225,794 260,665 286,488 313,128

SG&A 36,369 46,245 52,351 55,603

EBIT 56,584 67,346 82,302 89,168

% of Net Sales 17.8 18.0 19.5 19.5

Other Income 8,939 11,250 12,043 13,703

PBT 65,523 78,596 94,345 102,871

Tax 12,955 16,912 21,220 23,146

Rate (%) 19.8 21.5 22.5 22.5

PAT 52,568 61,684 73,125 79,725


PAT bef EO 52,325 61,362 72,789 79,389

Net Income 52,325 61,362 72,789 79,389

Change (%) 17.3 18.6 9.1


Y/E March 2012 2013 2014E 2015E

Share Capital 4,917 4,926 4,928 4,928

Reserves 280,397 278,886 330,860 387,274

Net Worth 285,314 283,812 335,788 392,202

MI & others 10,492 10,324 10,735 10,735

Loans 58,958 63,816 54,068 53,889


Gross Block 113,369 114,586 130,586 150,586


Net Block 58,988 50,525 66,525 86,525

Investments 41,961 69,171 69,171 69,171

Intangible Assets 72,166 56,470 63,737 63,737

Other non current assets 27,897 25,332 24,591 25,899

Curr. Assets 234,989 238,232 263,912 306,137

Debtors 110,353 108,623 113,662 124,181

Inventories 10,662 3,263 3,282 3,569


Adv., Other Current Assets 36,308 38,477 34,475 38,964




Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 21.3 25.0 29.6 32.3

Book Value 116.5 115.6 136.8 159.8

DPS 6.0 7.0 7.5 8.0

Payout % 28.2 28.0 25.3 24.7

Valuation (x)

P/E 21.9 18.7 15.7 14.4

EV/EBITDA 16.2 13.5 11.1 10.0

EV/Sales 3.4 2.8 2.4 2.2


Dividend Yield (%) 1.3 1.5 1.6 1.7


RoE 19.9 21.6 23.5 21.8

RoCE 17.1 18.9 21.7 20.8

Turnover Ratios

Debtors (Days) 112 107 96 95


Leverage Ratio



Y/E March 2012 2013 2014E 2015E


Cash for Wkg. Capital -16,462 7,501 4,510 -7,995

Net Operating CF 37,053 68,263 75,090 67,371


Net Pur. of Investments -11,691 -8,949 -6,526 -1,308


Issue of Shares/Other adj 10,663 -42,441 580 0

Proceeds from LTB/STB 2,780 4,368 -9,191 -180


Net CF from Finan. 5,186 -46,924 -18,107 -9,452

Free Cash Flow 23,030 66,076 49,256 37,691

Net Cash Flow 16,525 10,203 24,624 26,931

Opening Cash Bal. 61,141 77,666 87,869 112,493

Add: Net Cash 16,525 10,203 24,624 26,931

Closing Cash Bal. 77,666 87,869 112,493 139,424

September 2 - 6, 2013 166


Wockhardt



Promoter 73.5 73.5 73.6

Dom. Inst 3.2 3.3 3.7

Foreign 10.8 9.5 5.6

Others 12.4 13.8 17.0

Stock info

Bloomberg Code WPL IN



Mcap (INR b) 46.6

Mcap (USD b) 0.7

52-Wk Range (INR) 2,166/344

1, 6, 12 Rel Perf (%) -38/-73/-69




Change (%) 27.4 21.3 18.7 19.7 1.3 23.0 21.6

EBITDA 4,828 5,170 5,448 5,457 4,211 14,399 20,903

Change (%) 55.3 59.9 44.7 27.1 -12.8 58.5 45.2

EBITDA Margin (%) 36.0 38.4 38.0 36.7 31.0 31.2 37.3

Reported PAT 3,679 4,490 4,278 3,956 3,233 3,416 15,795

Adjusted PAT* 3,172 3,929 3,669 3,348 3,137 6,976 14,094

Change (%) 109.4 165.4 114.1 -47.7 -1.1 4.3 102.1

PAT Margin (%) 23.6 29.2 25.6 22.5 23.1 15.1 25.1


US Sales Growth (%) 78.4 46.8 45.1 45.3 10.6 77.7 51.9

Emerging Mkt Gr.(%)**10.0 19.1 15.3 2.9 -4.8 -4.5 11.8

Gross Margins (%) 63.4 69.9 70.6 71.1 66.0 63.5 68.8

E: MOSL Estimates; * Adjusted for MTM Losses/(Gains); ** Includes India

Company descriptionWockhardt (WPL) is a leading pharmaceutical company

producing finished dosage forms, active pharmaceutical

ingredients and biotechnology products. WPL

generates ~85% of its sales from exports and has

significant presence in the US. WPL is a business in

transition as it recently exited the corporate debt

restructuring (CDR) after a rough patch of performance

over 2008-11, when it was not being valued as an

ongoing concern.

Key investment positives & long-term prospects Strong R&D capabilities have enabled it to capitalize

on product opportunities that have low competition

intensity. We note that the company has been able

to penetrate such markets that offer natural entry

barriers to subsequent entrants, given the complex

manufacturing process involved. Increasing focus

on such products provides stable growth and

profitability.

WPL has exited CDR and repaid ~INR26b of long term

obligations since FY11. Given the strong balance

sheet, valuations seem at a steep discount, based

on consensus estimates.

Key challenges & near-term concerns The US FDA has imposed an import alert on the Waluj

unit, which contributes ~USD100m to US sales. While

management has guided to recover the lost revenue

over 9 months, any further delay could impact future

estimates.

Management commented that during its recent

inspection of Chikalthana unit, the US FDA has

awarded 483s, some of which are "serious in

nature". This unit contributes USD230m revenue,

which is ~43% of US sales and is also where the high

margin product, Toprol XL, is manufactured.

Key news flows / triggers to watch Update on the US FDA's action following the 483s

issued for Chikalthana.

Outcome of the US FDA's inspection (expected in

two to three months) of the alternative sterile unit

at Shendra.

Update on progress of the site transfer process.

1QFY14 highlights; outlook for FY14, FY15 Sales growth and profitability for the coming

quarters could be under pressure due to (1) pricing

erosion for existing products in the US, (2) full

quarter impact of the US FDA and UK MHRA alerts,

(3) discontinuation of Spasmoproxyvon in India and

(4) slowdown in Irish market due to a shift to

generic-generic model.

We believe the next two to three years could be

years of consolidation for the company as it works

to resolve the US FDA compliance issues.

167September 2 - 6, 2013


Wockhardt: Financials and valuation


Y/E March 2010* 2011 2012 2013

Net Sales 45,014 37,512 46,138 56,094

Change (%) 25.3 -16.7 23.0 21.6

EBITDA 8,231 9,087 14,399 20,904

Margin (%) 18.3 24.2 31.2 37.3

Depreciation 1,481 1,166 1,225 1,221

EBIT 6,750 7,921 13,174 19,682

Net Interest 3,851 1,266 2,263 2,154

Other Income - Rec. -12,756 -5,612 -5,144 234

PBT before EO Expense -9,856 1,043 5,767 17,762

PBT after EO & bef R&D Cap -9,856 1,043 5,767 18,377

Tax 167 86 2,351 2,582

Tax Rate (%) -1.7 8.3 40.8 14.1

Share of profit in associate 16 -52 11 -6

PAT -10,007 905 3,427 15,789

PAT Adj 2,943 6,637 8,709 15,261

Margin (%) 6.5 17.7 18.9 27.2


Y/E March 2010* 2011 2012 2013


Preference Share Capital 6,686 7,452 7,614 2,986

Reserves -516 1,432 6,549 23,508

Net Worth 6,717 9,431 14,710 27,042

Deferred Liabilities -476 -748 1010 -242

Secured Loan 35,522 33,792 29,581 14,752

Unsecured Laon 4,653 4,703 3,233 1,820

Total Loans 40,175 38,495 32,814 16,572


Gross Block 38,343 40,487 42,116 33,407

Less: Accum. Deprn. 13,049 14,684 16,403 17,624

Net Fixed Assets 25,294 25,802 25,713 15,783

Capital WIP 7,076 8,874 9,023 9,023


Curr. Assets 21,827 20,732 26,895 35,327

Inventory 7,654 7,137 8,886 10,588



Others 4,854 2,713 3,422 4,193



Provisions 629 1,220 1,955 2,546


Appl. of Funds 46,416 47,178 48,534 43,371

E: MOSt Estimates; *For 15 months ending 31st March 2010

Ratios

Y/E March 2010* 2011 2012 2013

Basic (INR)

EPS 26.9 60.6 79.6 139.4

Fully diluted EPS 5.5 11.9 15.7 43.9

Cash EPS 40.4 71.3 90.8 150.6

BV/Share 0.3 18.1 64.8 219.8

Valuation (x)

P/E (fully diluted) 5.3 3.1

Cash P/E 4.7 2.8

P/BV 6.6 1.9

EV/Sales 1.6 0.9

EV/EBITDA 5.0 2.5

Dividend Yield (%) 0.0 0.0

Return Ratios (%)

RoE 34.8 82.2 72.2 73.1

RoCE -12.1 4.9 16.8 43.7





CWIP Turnover (Days) 106 113 102 121

Leverage Ratio


Debt/Equity 1,269.0 19.5 4.6 0.7


Y/E March 2010* 2011 2012 2013


Int./Dividends Recd. -12,756 -5,612 -5,144 234

Direct Taxes Paid -167 -86 -2,351 -2,582

(Inc)/Dec in WC -1,226 2,800 897 -1,079

CF from Operations -5,917 6,189 7,800 17,476

(inc)/dec in FA 2,445 -3,472 -1,285 8,710

(Pur)/Sale of Investments -16 52 -11 881

CF from Investments 2,429 -3,420 -1,296 9,591

Issue of Shares 6,547 1,809 1,852 -3,458

(Dec)/Inc in Debt -2,237 -1,952 -3,923 -17,495

Interest Paid -3,851 -1,266 -2,263 -2,154

CF from Fin. Activity 459 -1,409 -4,333 -23,106

Inc/Dec of Cash -3,029 1,359 2,171 3,961


Closing Balance 3,470 4,829 7,000 10,961

September 2 - 6, 2013 168


Yes Bank



Promoter 25.6 25.7 26.1

Dom. Inst. 15.4 13.1 14.2

Foreign 46.8 49.6 43.5

Others 12.2 11.6 16.3

Stock info

Bloomberg Code YES IN



Mcap (INR b) 87.3

Mcap (USD b) 1.3


1, 6, 12 Rel Perf (%) -34/-45/-35



NII 4,722 5,242 5,843 6,381 6,591 22,188 28,339

Change (%) 33.3 35.9 36.7 42.4 39.6 37.3 27.7


Change (%) 41.4 25.6 41.3 47.3 47.9 39.1 21.4

PAT 2,901 3,061 3,423 3,622 4,008 13,007 15,454

Change (%) 34.3 30.2 34.7 33.2 38.2 33.1 18.8

NIM (Calc, %) 2.8 2.9 3.1 3.0 2.9 2.8 2.9

Loan Gr. (YoY, %) 16.4 22.9 22.3 23.7 24.3 23.7 19.0

GNPA (%) 0.3 0.2 0.2 0.2 0.2 0.2 0.6

NNPA (%) 0.06 0.05 0.04 0.01 0.03 0.01 0.08

E: MOSL Estimates

Company descriptionUnder the leadership of Mr Rana Kapoor, Yes Bank (YES)

has posted "above industry" loan growth and healthy

return ratios, while maintaining asset quality. A strong

management team in place, YES now targets to scale up

its branch network to 900 by FY15 (from 475 as at June

2013) and increase the balance sheet to INR1.5t by FY15

(from INR1t as at June 2013).

Key investment positives & long-term prospects YES is better placed than earlier cycles to absorb

the impact of systemic rates, with higher proportion

of retail term deposits (18.6% v/s 12% in FY09) and

CASA deposits (20.2% v/s 9% in FY09). However, the

recent liquidity tightening has weakened the

outlook of NIM improvement and trading gains. We

now factor 20bp NIM expansion over FY14/15 as

against 35bp+ earlier.

While core tier-I ratio of 8.6% is low, healthy internal

accruals of 20% (post dividend payout) will help to

take care of near-term growth.

Key operational parameters like asset quality, fee

income growth and control over C/I ratio would

remain strong and help earnings. We expect EPS

CAGR of 19%+ over FY14/15 (without assuming

dilution) on ~40% EPS CAGR over FY08-13.

Strong growth, proven execution capabilities and

superior return ratios are key positives.

Key challenges & near-term concerns YES' tier-I ratio stood at 9.7% (core tier-I at 8.6%) as

at June 2013. With growth likely to resume in CY13,

it becomes imperative for the bank to raise capital

or it may act as a hurdle.

YES' growth plans are heavily dependent on strong

branch expansion. If there is a delay in getting

branch licenses from the RBI, it could impact retail

liability and asset growth.

Key news flows / triggers to watch Any reversal of RBI stance in terms of interest rate

will be a key trigger for the stock.

Recent news flows in relation to appointment of

board members are raising some concerns over stock

performance.

1QFY14 highlights; outlook for FY14, FY15 PAT grew 38% YoY to INR4b (v/s our estimate of

INR3.9b), aided by strong income from financial

markets. Lower than expected NIM (stable QoQ at

3%) and customer asset growth (+1.5% QoQ; +24%

YoY) led to NII being 7% below our estimate.

YES made countercyclical provisions of INR750m in

1QFY14. Asset quality remains the best, with NNPA

at 0.03% and restructured loans of 29bp.

Traction in SA deposits was strong (+10% QoQ; 120%

YoY). As a proportion of overall deposits, SA deposits

increased from 9% in 4QFY13 to 10.2%.

169September 2 - 6, 2013


Yes Bank: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Interest Income 63,074 82,940 100,420 111,456



Change (%) 29.6 37.3 27.7 20.3


Net Income 24,728 34,762 43,891 53,638

Change (%) 32.2 40.6 26.3 22.2



Change (%) 29.4 39.1 21.4 21.7

Provisions (excl tax) 902 2,160 3,277 4,340

PBT 14,500 19,257 22,726 27,294

Tax 4,730 6,251 7,272 8,870

Tax Rate (%) 32.6 32.5 32.0 32.5

PAT 9,770 13,007 15,454 18,423

Change (%) 34.4 33.1 18.8 19.2


Core PPP* 15,024 19,860 23,246 28,127

Change (%) 21.5 32.2 17.0 21.0



Y/E March 2012 2013 2014E 2015E



Net Worth 46,766 58,077 70,560 85,442

Deposits 491,517 669,556 763,294 885,421

Change (%) 7.0 36.2 14.0 16.0

of which CASA Dep 73,921 126,875 183,648 247,628

Change (%) 55.6 71.6 44.7 34.8

Borrowings 141,565 209,221 247,211 287,906


Total Liabilities 736,257 991,041 1,143,428 1,330,636

Current Assets 35,855 40,658 53,277 61,605

Investments 277,573 429,760 472,736 520,010

Change (%) 47.4 54.8 10.0 10.0

Loans 379,886 469,996 559,295 682,340

Change (%) 10.5 23.7 19.0 22.0

Fixed Assets 1,771 2,295 2,538 2,763

Other Assets 41,170 48,332 55,582 63,919

Total Assets 736,257 991,041 1,143,428 1,330,636

Asset Quality (%)

GNPA (INR m) 839 943 3,173 6,516

NNPA (INR m) 175 70 469 1,087

GNPA Ratio 0.22 0.20 0.56 0.95

NNPA Ratio 0.05 0.01 0.08 0.16


Ratios

Y/E March 2012 2013 2014E 2015E










RoE 23.1 24.8 24.0 23.6

RoA 1.5 1.5 1.4 1.5





Cost/Income* 38.3 40.2 43.5 43.9

Empl. Cost/Op. Exps. 51.0 49.1 45.8 45.6



* ex treasury



CASA Ratio 15.0 18.9 24.1 28.0

Investment/Dep. Ratio 56.5 64.2 61.9 58.7


CAR 17.9 18.3 17.7 17.0

Tier 1 9.9 9.5 9.7 9.7

Valuation

Book Value (INR) 132.5 161.9 196.8 238.2

Change (%) 21.2 22.2 21.5 21.1

Price-BV (x) 1.8 1.5 1.2 1.0

Adjusted BV (INR) 132.2 161.8 195.9 236.3

Price-ABV (x) 1.8 1.5 1.2 1.0

EPS (INR) 27.7 36.3 43.1 51.4

Change (%) 32.1 31.0 18.8 19.2



Dividend Yield (%) 1.6 2.5 2.9 3.5

September 2 - 6, 2013 170


Zee Entertainment Enterprises



Promoter 43.1 43.4 43.9

Dom. Inst. 7.8 8.7 13.1

Foreign 42.8 42.0 35.6

Others 6.3 5.9 7.4

Stock info

Bloomberg Code Z IN



Mcap (INR b) 223.2

Mcap (USD b) 3.4


1, 6, 12 Rel Perf (%) 5/13/35



Revenue 8,430 9,536 9,388 9,643 9,733 36,997 42,397

YoY Change(%) 20.7 32.7 24.4 11.0 15.5 21.7 14.6

EBITDA 2,332 2,177 2,611 2,423 2,915 9,544 11,715

YoY Change(%) 49.5 4.9 20.9 51.5 25.0 29.0 22.7

EBITDA Margin(%) 27.7 22.8 27.8 25.1 30.0 25.8 27.6

Adjusted PAT 1,582 1,876 1,941 1,795 2,246 7,194 8,734

YoY Change(%) 18.3 20.3 39.3 26.3 42.0 26.0 21.4

PAT Margin(%) 18.8 19.7 20.7 18.6 23.1 19.4 20.6


Ad revenue gr. (%) 18 34 29 15 19 24 17

Dom. subs. gr. (%) 21 44 33 14 26 28 26

Sports EBITDA (INRm)-210 -169 -86 -405 -95 -870 -1,324

Non-sports

EBITDA margin (%) 34.2 30.4 32.5 33.0 35 33 35

E: MOSL Estimates

Company descriptionZee Entertainment Enterprises (ZEE) is a leading player

in television broadcasting and syndication of content

overseas, with well established brands, including its

flagship channel Zee TV. It has presence in various

genres including regional languages, sports, Hindi

movies and niche channels like cookery. ZEE has a large

Hindi film library and a well-established reach of over

670m viewers across 169 countries.

Key investment positives & long-term prospects Digitization remains a strong theme over the

medium-to-long term, though short-term

challenges continue, as ‘addressability’ is yet to be

fully achieved even in the phase-I markets.

With its offering of 32 channels, ZEE addresses ~70%

of the viewership market in India.

ZEE’s flagship channel, Zee TV is placed strongly

among the top-3 in the Hindi GEC segment.

Market share and ratings improvement are driving

above industry ad revenue growth for ZEE.

Highly profitable international subscription business

and strong bargaining power in domestic

subscription revenue, led by Media Pro, which

distributes channels of ZEE and Star India.

Several businesses like sports, new media

initiatives and channels are currently in investment

mode. As these businesses reach maturity, ZEE’s

margin profile would improve.

Key challenges & near-term concerns TRAI guidelines of ad cap of 10+2 minutes will

reduce inventory; broadcasters will have to hike

rates sharply to offset the inventory loss.

Investment in content and losses in sports business

will drag short-term profitability.

Rollout of digitization in phase-III/phase-IV; delay

in revenue monetization from digitization for MSOs

can impact subscription revenue growth.

Key news flows / triggers to watch Possible postponement of ad cap of 10+2 minutes.

Launch of new channels.

Subscription revenue trend post collection of

customer details by MSOs from digital subscribers.

1QFY14 highlights; outlook for FY14, FY15 1QFY14 PAT grew 42% YoY to INR2.25b, above our

estimate of INR1.93b. Revenue grew 15% YoY to

INR9.73b.

EBITDA grew 25% YoY to INR2.92b; margin improved

228bp YoY to 30%.

We expect ad revenue to grow 17% in FY14 and 15%

in FY15. Domestic subscription revenue is likely to

grow 19% in FY14 and 24% in FY15, led by increasing

penetration of digital system.

We expect 21% earnings CAGR over FY13-15.

However, we believe valuations at 25.8x FY14E EPS

adequately capture the positive outlook. We have

a Neutral rating, with a target price of INR242 (22x

FY15E EPS).

171September 2 - 6, 2013


Zee Entertainment Enterprises: Financials and valuation


Y/E March 2012 2013 2014E 2015E

Advertisement Rev. 15,841 19,639 23,063 26,540

Subscription Rev. 13,245 16,234 18,374 21,649

Other Sales & Sevices 1,320 1,123 960 965

Net Sales 30,406 36,997 42,397 49,153

Change (%) 3.4 21.7 14.6 15.9

Total Income 30,406 36,997 42,397 49,153

Total Expenses 23,011 27,453 30,683 35,187

EBITDA 7,395 9,544 11,715 13,966

Change (%) -2.2 29.0 22.7 19.2

% of Net Sales 24.3 25.8 27.6 28.4


EBIT 7,073 9,144 11,312 13,506

Other Income 1,204 1,459 1,886 1,972

Interest & Fin. Charges 50 86 87 87

Extraordinay Income 180 0 0 0

PBT 8,407 10,517 13,111 15,391

Tax 2,500 3,338 4,392 4,925

Effective Rate (%) 29.7 31.7 33.5 32.0

PAT 5,907 7,179 8,719 10,466

Minority Interest 15 -15 -15 -15

Extraordinay Income 180 0 0 0

Adj. PAT 5,712 7,194 8,734 10,481

Change (%) -2.4 26.0 21.4 20.0


Y/E March 2012 2013 2014E 2015E


Reserves 33,396 38,161 44,334 51,741

Net Worth 34,355 39,115 45,288 52,695

Minority Interest -32 33 0 0

Loans 12 17 17 17

Deffered tax liability -337 -287 -337 -337


Net Fixed Assets 9,001 9,575 9,672 10,011

Capital WIP 399 399 399 399

Investments 7,999 7,916 7,916 7,916


Program Films 7,339 8,745 10,270 11,818

Sundry Debtors 8,690 9,890 11,334 13,140


Loans & Advances 6,101 8,429 9,293 10,773




Provisions 1,932 2,602 2,602 2,602


Appl.of Funds 33,998 38,878 44,969 52,377

Ratios

Y/E March 2012 2013 2014E 2015E

Basic (INR)

EPS 5.9 7.5 9.2 11.0

Cash EPS 6.3 8.0 9.6 11.5


DPS 1.5 2.0 2.3 2.7


Valuation

P/E 39.3 30.8 25.3 21.1

Cash P/E 36.9 29.1 24.2 20.2

EV/EBITDA 28.6 21.8 17.5 14.5

EV/Sales 6.9 5.6 4.8 4.1


Dividend Yield (%) 0.6 0.9 1.0 1.2


RoE 17.5 19.6 20.7 21.4

RoCE 25.5 29.1 31.5 31.8

Turnover Ratios


Inventory (No. of Days) 169 163 163 163

Creditors (No. of Days) 93 69 75 75


Leverage Ratio

Debt/Equity (x) 0.0 0.0 0.0 0.0


Y/E March 2012 2013 2014E 2015E


Interest/Div. Received 1,204 1,459 1,886 1,972

Interest paid -50 -86 -87 -87

Depreciation & Amort. 323 399 403 461


(Inc)/Dec in Wkg. Capital -1,946 -2,357 -3,376 -3,478


(Inc)/Dec in FA + CWIP -1,259 -973 -500 -800


CF from Invest. Activity -2,294 -890 -500 -800

Issue of Shares -1,120 -396 -446 -438

Inc/(Dec) in Debt -5 5 0 0

Dividends Paid -1,438 -1,908 -2,184 -2,620

CF from Finan. Activity -2,563 -2,299 -2,629 -3,058

Inc/(Dec) in Cash -574 2,033 2,617 3,590


Closing Balance 3,283 5,316 7,933 11,523

172September 2 - 6, 2013


Company descriptionAditya Birla Nuvo (ABNL) is a conglomerate, with

interests in growth businesses such as Telecom (25.3%

stake in listed company, Idea Cellular), Insurance (74%

stake in unlisted Birla Sun Life Insurance, BSLI), Asset

Management (51% stake in Birla Sun Life Asset

Management Company), IT/ITES (through subsidiary,

Aditya Birla Minacs), and Apparel Retailing. Its

traditional business is Manufacturing (Carbon Black,

Insulators, Rayon, Textiles and Fertilizers), which has

supported its venture into the services sector.

Key investment positives & long term prospects ABNL has a well-balanced portfolio of value and

growth businesses . The value businesses are

instrumental in funding ABNL's growth and

transformation. The well-business mix is best placed

in its own way with annual free cash flows of

~INR5bn., helping to fund growth businesses.

Aditya Birla Nuvo

Direct play on fast growing Insurance and Telecom

businesses: ABNL is a direct play on the fast growing

Insurance and Telecom businesses. It also has stable

cash generating businesses such as Fertilizers and

Insulators.

Key challenges & near-term concerns Execution risk relating to the Pantaloon transaction.

Regulations regarding traditional insurance

products: Stricter regulations adopted earlier for

Unit Linked Insurance Products (ULIP) could be

introduced for traditional insurance products as

well. This could impact BSLI because its product mix

consists predominantly of traditional products.

Key news flows / triggers to watch Regulatory developments in key businesses like

Insurance, Telecom and Fertilizers.

ABNL has applied for new banking license and is

one of the key contenders in the race.



Promoter 53.8 53.8 51.1

Dom. Inst. 13.4 12.7 11.8

Foreign 18.8 19.1 22.7

Others 14.1 14.4 14.4

Stock info

Bloomberg Code ABNL IN



Mcap (INR b) 125.0

Mcap (USD b) 1.9

52-Wk Range (INR) 1,271/738

1, 6, 12 Rel Perf (%) -4/4/27



Revenues 52,536 59,214 62,347 69,069 56,801 218,403 254,902

Change (%) -11.3 12.7 5.3 10.8 -17.8 20.1 16.7

EBITDA 8,483 9,112 9,990 9,432 10,790 28,783 38,183

Change (%) 28.2 7.4 9.6 -5.6 14.4 20.4 32.7

EBITDA Margin (%) 16.1 15.4 16.0 13.7 19.0 13.2 15.0

Reported PAT 3,071 3,421 3,751 1,991 3,556 10,102 11,839

Adjusted PAT 2,668 3,042 3,232 1,989 3,116 9,577 10,410

Change (%) 1.1 14.0 6.3 -38.5 56.7 7.3 8.7

PAT Margin (%) 5.1 5.1 5.2 2.9 5.5 4.4 4.1

173September 2 - 6, 2013


Company descriptionBajaj F inserv (BJFIN) is a holding company, with

diversified interests in Insurance (Life and General),

Lending and Asset Management businesses. While its

Life and General Insurance businesses are under

separate joint ventures with Allianz, the lending

business is housed under subsidiary, Bajaj Finance

(formerly known as Bajaj Auto Finance). BJFIN currently

holds 74% in each of the Insurance ventures and ~61%

in Bajaj Finance.

Key investment positives & long term prospects BJFIN is a diversified financial services player, with

strong presence in the Insurance, Lending and

Wealth Management businesses.

In Life Insurance, it continues to focus on profitable

growth and has sacrificed market share to improve

profitability. The improvement in profitability could

be attributed to tight control on opex, as the

commission ratio declined to ~5% in FY13 from 15%

in FY08 and the opex ratio moderated to slightly

over 15% from 20%+ in FY08.

In General Insurance, it retains the second position.

Bajaj Allianz General Insurance Company (BAGIC)

achieved a PAT of INR4.9b in FY13, driven by strong

operating efficiencies.

Bajaj Finserv

Bajaj Finance (the lending arm) is rapidly growing

its loan book by diversifying into 10 products across

consumer, SME, commercial businesses.

BJFIN has applied for banking license; if it obtains a

license than bajaja finance will be converted into a

bank.

Key challenges & near-term concerns Regulatory risk is a major challenge in the Insurance

business.

Significant deterioration in asset quality /

moderation in asset growth could adversely impact

BJFIN's consolidated profitability.

Key news flows / triggers to watch Announcement on increasing FDI in Insurance could

be a key trigger for BJFIN. However, increasing FDI

limit to 49% from 26% currently could be negative

for BJFIN, as it already has an agreement in place

through which Allianz can increase its stake in the

Life and General Insurance businesses at a

predetermined price, much lower than current

valuations.

BJFIN has applied for new banking license and is

one of the key contender in the race.



Promoter 58.9 58.9 58.9

Dom. Inst. 4.2 4.3 5.1

Foreign 11.6 11.5 10.5

Others 25.4 25.2 25.5

Stock info

Bloomberg Code BJFIN IN



Mcap (INR b) 90.0

Mcap (USD b) 1.4


1, 6, 12 Rel Perf (%) -2/-27/-40




Change (%) 35.9 8.7 11.1 -1.8 15.5 12.4 40.8


Change (%) -66.8 12.1 14.1 157.7 -56.2 34.4 21.7

EBITDA Margin (%) 46.8 48.3 49.6 130.1 49.4 82.5 71.3

Reported PAT 2,854 3,106 3,611 12,571 4,016 18,898 22,142

Adjusted PAT 1,952 2,168 2,487 9,129 2,788 13,378 15,736

Change (%) -77.8 11.1 14.7 267.0 -69.5 34.8 17.6

PAT Margin (%) 21.0 21.5 22.2 83.0 22.0 49.3 41.2

174September 2 - 6, 2013


Company descriptionCholamandalam Investment & Finance Company (CIFC),

a part of the Murugappa Group, operates as a pure asset

finance company (AFC) offering vehicle finance, home

equity loans and business loans. It has 526 branches

across India and AUM of INR200b as at June 2013. In the

last three years, CIFC has built a scalable and sustainable

business model, with attractive NIM, strong loan

growth, control over asset quality and wide reach.

Key investment positives & long term prospects Forte in LCV segment: CIFC offers vehicle finance

(73% of AUM, focus on LCVs and used CVs), home

equity, LAS, gold loans, etc. In 2010, CIFC exited the

personal loans JV with DBS due to heavy losses and

renewed focus on its core strength of vehicle

finance.

Operating efficiencies to kick in: CIFC is well

positioned to deliver growth through network

expansion, product additions and market share

gains. Despite this, its cost to income ratio

improved, reflecting improving productivity. CIFC

intends to add 100 branches in FY14 and targets to

expand its network to 750 branches in 2-3 years.

Cholamandalam Investment & Finance Company

Key challenges & near-term concerns Continued moderation in economic growth can

lead to a slowdown in AUM growth.

Proposed changes in asset classification and

provisioning norms for NBFCs could lead to stress

on earnings and reported asset quality.

Moderating freight intake and fall in freight rates

can lead to higher pressure on asset quality.

Key news flows / triggers to watch CIFC has decided not to apply for a banking license;

if some of its competitors get banking licenses, it

will benefit from easing competition.

RBI's final guidelines for NBFCs based on the

recommendations by the Usha Thorat Committee

will determine the impact of regulatory changes on

CIFC's return ratios, going forward.

1QFY14 highlights; guidance for FY14, FY15 In 1QFY14, AUM grew 39.1% YoY and 6.2% QoQ.

Vehicle finance grew 42.6% YoY and 6.2% QoQ and

constituted 75.6% of total AUM. Home equity

increased 38.8% YoY and 7.5% QoQ.

NII grew 57.5% YoY and 5.8% QoQ, driven by higher

disbursement growth and lower cost of funds

following capital raising.

Cost-to-income ratio headed southwards, reflecting

improved productivity.



Promoter 57.7 57.7 62.3

Dom. Inst. 12.2 12.6 12.2

Foreign 23.3 23.0 17.4

Others 6.8 6.7 8.2

Stock info

Bloomberg Code CIFC IN



Mcap (INR b) 31.3

Mcap (USD b) 0.5


1, 6, 12 Rel Perf (%) 1/-18/-6


Y/E March Jun-12 Sep-12 Dec-12 Mar-13 Jun-12 FY13

NII 2,226 2,434 2,798 3,314 3,506 10,097

Change(%) 46 50 48 47 58 45

Operating profit 1,172 1,264 1,533 1,772 1,964 5,751

Change(%) 21 75 74 67 68 68

PAT 697 697 814 858 912 3,066

Change(%) 16 75 98 31 31 78

Key Operating Metrics

NIMs 6.4 6.5 6.8 7.3 7.2 7

AUM growth 46.6 42.5 41.5 41.1 38.4 40

GNPA 0.9 1.1 1.2 1.0 1.1 1.0

E: MOSL Estimates

175September 2 - 6, 2013


Company descriptionIncorporated on 31 October 1904 as The Kumbakonam

Bank Limited, City Union Bank (CUB) now has 382

branches, with 86% in South India, mainly in its home

state of Tamil Nadu. CUB has shown consistent

performance, with RoA averaging 1.6% over FY08-13.

Key investment positives & long-term prospects CUB has outperformed peers in terms of business

growth and profitability. Its loan book has grown at

a CAGR of 28% over FY08-13. CUB has focused on

catering to niche working capital requirements of

local traders (60% of total book), with adequate

collateral, which has helped it maintain profitable

growth and healthy asset quality. It remains

confident of above industry average growth rates.

The bank has been able to maintain asset quality

even through the challenging phase, with GNPA at

1.3% and NNPA at 0.6% as compared to 1.4% and

0.6% as at end-FY10. This is largely on account of

timely servicing and close-to-client business model.

Further, restructured loan portfolio remains low at

1.4%, of which TNSEB is ~20%.

CUB’s margins are better than most of its peers at

3%+ (3.6% in 1QFY14). With focus on the retail

segment and on working capital loans, the bank is

able to generate higher yields, helping overall

margins.

Strong capitalization, with tier-I ratio of 12.6%.

City Union Bank

Key challenges & near-term concerns Gold loan portfolio remains at 20%+ of the overall

portfolio, reflecting high concentration risk.

Liability franchise continues to weaken, with CASA

ratio declining to 16%, exposing the bank to interest

rate volatility.

Key news flows / triggers to watch CUB has a strong presence. With new banking

licenses a near-term reality, it could be a good

acquisition target.

1QFY14 highlights PBT growth was strong at 46% YoY. However, higher

tax rate of 36% v/s 23.3% in 1QFY13 led to PAT growth

being lower at 22% YoY (INR903m).

Loans and deposits each grew 20%+ YoY. With NIM

expansion of 37bp YoY (14bp QoQ) to 3.55%, NII

growth was strong at 36% YoY.

The proportion of CASA continued to decline and

stood at just 16.2% as at the end of 1QFY13, one of

the lowest in the system.

Gross NPAs grew 11% QoQ, led by fresh slippages

of INR379m (annualized slippage ratio of 1.2%). The

bank increased its provision coverage ratio

(excluding technical write-offs) by 5%+ to 49.5%.




Dom. Inst. 7.3 7.2 7.3

Foreign 29.4 29.7 30.8

Others 63.4 63.2 61.9

Stock info

Bloomberg Code CUBK IN



Mcap (INR b) 23.6

Mcap (USD b) 0.4


1, 6, 12 Rel Perf (%) -7/-18/-2



NII 1,379 1,493 1,634 1,733 1,873 4,998 6,240

Change (%) 14.9 24.2 33.1 26.8 35.8 19.0 24.9


Change (%) 7.3 26.4 25.1 31.0 41.5 18.3 22.6

PAT 739 804 852 825 903 2,803 3,220

Change (%) 26.3 3.7 18.0 14.6 22.2 30.3 14.9

GNPA (%) 1.1 1.2 1.2 1.1 1.3 1.0 1.1

NNPA (%) 0.5 0.6 0.6 0.6 0.6 0.4 0.6

E: MOSL Estimates

176September 2 - 6, 2013


Company descriptionEmami is a unique player in the personal and healthcare

space, with a strong herbal positioning. It has leadership

in niche categories like cooling oil (~49%), antiseptic

cream (~75%), men's fairness cream (~60%) and pain

balm (~57%). Exports account for ~14% of its revenues,

with key regions being Middle East, Africa and SAARC.

Key investment positives & long-term prospects Emami enjoys strong leadership position in its four

key categories (cooling oil, balm, men's fairness,

antiseptic cream) and continues to post strong

double-digit sales growth in these categories.

The recent distribution expansion and thrust on rural

markets should provide incremental growth drivers

and help sustain double-digit volume growth.

Presence in niche categories with ayurvedic/herbal

positioning ensures relatively lower competitive

intensity.

Strong innovations and focus on Zandu's OTC

portfolio will further accelerate volume growth.

High gross margins provide the lever to invest in

brands and defend market shares.

Emami

Key challenges & near-term concerns Slowdown in consumer demand in Emami's

categories.

Volatility in the prices of mentha oil and LLP (largest

two inputs) and other crude-related inputs poses a

key risk to margins.

Increasing competition in cooling oils from domestic

players (Marico, Bajaj Corp) and in men's fairness

from the MNCs (Hindustan Unilever, L'Oreal, and

Nivea) could impact growth and market shares).

Key news flows / triggers to watch Growth and market shares in cooling oil and men's

fairness categories, which have seen new entrants.

Aggressive acquisition intent in the domestic

market; high deal multiples could be a key risk.

1QFY14 highlights; outlook for FY14, FY15 6% volume growth, with 170bp margin expansion.


The management has guided 16-18% sales growth

and 20% PAT growth in FY14.

Menthol locked in at current prices for FY14.

Distribution expansion, new launches and

innovations in core portfolio should support mid-

teen sales and earnings growth. Not Rated.



Promoter 72.7 72.7 72.7

Dom. Inst. 3.3 3.4 4.0

Foreign 15.7 14.7 14.9

Others 8.3 9.1 8.4

Stock info

Bloomberg Code HMN IN



Mcap (INR b) 97.6

Mcap (USD b) 1.5


1, 6, 12 Rel Perf (%) -7/9/29



Net Sales 3,388 3,607 5,487 4,510 3,837 14,535 16,991

YoY Change (%) 14.1 17.9 20.0 13.2 13.2 16.6 16.9

EBITDA 718 876 1,624 1,255 847 2,795 4,474

Margins (%) 21.2 24.3 29.6 27.8 22.1 19.2 26.3

YoY Change (%) 8.6 16.9 17.7 16.4 18.0 5.4 60.1

Adjusted PAT 466 592 1,149 940 607 2,596 3,147

YoY Change (%) 12.3 16.9 21.6 29.9 30.2 10.3 21.2


Volume Growth (%) 16 16 16 13 6 12 15

177September 2 - 6, 2013


Future Retail

Company descriptionFuture Retail (FRL) is India's largest organized retailer,

with retail space of over 10m square feet. It retails

multiple categories through different formats like

hypermarket format (Big Bazaar), home format (Home

Town) and electronics format (eZone) stores.

Key investment positives FRL is a play on the fast growing organized retail

sector, with presence across categories and formats.

Divestment of non-core retail assets will provide

earnings boost due to reduction in interest cost.

Recent focus on driving efficiencies and optimizing

space expansion should drive better inventory turns

and capital efficiency ratios.

Key challenges & near-term concerns Poor consumer sentiment resulting from economic

slowdown could impact sales growth.

Delay in realizing benefits (balance sheet

deleveraging) of divestment of non-core assets.

Key news flows / triggers to watch Listing of FLF.

Realization of cash flows post insurance stake sale.

2QCY13 highlights; outlook for FY14, FY15 Strong 10% SSS growth in Value format, driven by

low base and store renovation.

90bp operating margin expansion to 8.5%.

Cautious outlook, given weak macro environment

and stress on discretionary consumer spends.

Balance sheet deleveraging should help drive

earnings growth.



Promoter 44.6 44.2 43.7

Dom. Inst. 10.4 12.6 11.9

Foreign 25.0 26.0 22.4

Others 20.1 17.3 22.0

Stock info

Bloomberg Code FRL IN



Mcap (INR b) 15.1

Mcap (USD b) 0.2


1, 6, 12 Rel Perf (%) -14/-52/-48

Quarterly Performance (Core Retailing) (INR Million)

Y/E March Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13

Net Sales 29,106 28,933 30,264 29,627 30,600 31,708 23,360 22,561

YoY Change (%) 12.8 4.9 7.6 3.6 5.1 9.6 -22.8 -23.9

EBITDA 2,523 2,612 2,776 2,763 2,647 2,779 1,780 1,901

Growth % 18.6 9.6 12.0 6.9 4.9 6.4 -35.9 -31.2

Margins (%) 8.7 9.0 9.2 9.3 8.7 8.8 7.6 8.4

PBT 468 193 180 58 44 66 -80 -107


LTL sales Growth %

Value Retailing 4 3.2 2.7 0.4 -0.2 5.1 8.1 10.4

Lifestyle Retailing 7 5.3 3.5 4.7 10.8 12.7 9.6 NA

Home Retailing 1 -3.2 -7.3 -0.9 -3.5 -3.4 -4.1 3.7

178September 2 - 6, 2013


Indiabulls Housing Finance



Promoter 37.8 0.0 37.0

Dom. Inst. 3.6 0.0 2.7

Foreign 47.0 0.0 41.0

Others 11.7 0.0 19.4

Stock info

Bloomberg Code IBULL IN



Mcap (INR b) 85.1

Mcap (USD b) 1.3


1, 6, 12 Rel Perf (%) 9/8/43

Company descriptionIndiabulls Housing Finance (IHFL) is the third largest

housing finance company, with total loan assets on a

managed basis of INR350b as in June 2013. IHFL offers

home loans, loan against property, commercial vehicle

loans to both salaried and self-employed segments and

targets client base of middle and upper middle income

individuals and small and medium-sized enterprises or

SMEs. It has a presence across 200+ locations across

India.

Key investment positives & long-term prospects Focus on secured lending: IHFL has shifted its focus

from high risk personal/consumer loans to low risk

mortgage portfolio, thus enabling it to have low risk

profitable growth. As part of the new strategy, two-

third of portfolio will constitute low risk mortgage

and LAP products and remaining will be high

yielding business (SME and CV loan). This will

enable a balance of risk profile and maintain good

blended margins and spreads.

Strong loan growth momentum to continue: IHFL

has delivered on growth front. In FY10-13, loan book

grew almost 3.5x from INR100b to INR350b.

Stable asset quality: Focus on underwriting low risk

mortgage assets at low LTVs, with emphasis on cash

flows of borrowers has allowed the company to

maintain low GNPAs of 0.8%.

Key challenges & near-term concerns Continued change in regulations from the National

Housing Bank (NHB).

Moderation in economic growth and high real estate

prices may impact overall demand.

Recent RBI actions and its impact on borrowing

costs.

Key news flows / triggers to watch Any announcement by the NHB related to capital

requirements.

IHFL has applied for a new banking licence.

Plan to divest 26% stake in the company to a strategic

player.

1QFY14 highlights; outlook for FY14, FY15 Company reported a PAT growth of 31% YoY but

down 4.4% QoQ to INR3.48b, driven by higher net

income (up by 31% YoY) and stable operating

expenses.

AUMs grew by 25% YoY and 4% QoQ to INR368b. The

overall AUM mix remained stable QoQ, with 72% of

loans in mortgages segment, followed by 21% in

corporate loans segment and 7% in commercial

vehicles segment. Disbursements during the

quarter stood at ~INR35.5b, compared to INR42b in

4QFY13.

GNPAs/NNPAs stood at 0.78%/0.34% and have

remained stable since the last six quarters.

Guidance for FY14: (1) Loan growth of ~20% and (2)

margins and spreads to remain stable.


Y/e March Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 FY13

NII 4,655 5,074 5,452 6,287 5,988 16,643

Change(%) 10 15 21 15 29 28

Operating profit 3,519 3,891 4,329 4,811 4,711 17,114

Change(%) 17 25 29 28 34 10

PAT 2,677 3,036 3,272 3,676 3,515 12,661

Change(%) 21 31 31 21 31 26

NIMs 5.4 5.4 5.6 5.3 5.2 5

AUM growth (%) 41 30 30 25 25 25

GNPA 0.8 0.8 0.8 0.8 0.8 0.8

NNPA 0.3 0.3 0.3 0.3 0.3 0.3

179September 2 - 6, 2013


McLeod Russel



Promoter 45.7 45.7 45.7

Dom. Inst. 3.2 3.6 5.4

Foreign 36.4 35.5 33.4

Others 14.6 15.2 15.4

Stock info

Bloomberg Code MCLR IN



Mcap (INR b) 27.4

Mcap (USD b) 0.4


1, 6, 12 Rel Perf (%) -2/-28/-22

Company descriptionMcleod Russel (MCLR) is the world’s largest tea

producer and plantation company. It produces ~100m

kilograms of tea per year from tea estates in Assam,

West Bengal, Vietnam, Uganda and Rwanda. As India’s

largest tea exporter, it maintains strong connections

with buyers in Europe, Middle East and North America.

Its modern blending facility provides clients with

unique/bespoke bulk-blended teas.

Key investment positives Increasing tea consumption, particularly in

developing countries, with rising per capita income,

along with constrained supply of land to grow tea

should result in an upward trend in tea prices.

Due to adverse weather conditions, tea prices are

likely to remain high, increasing profitability.

Key challenges Government not allowing acquisition of tea gardens

in India makes expansion challenging.

Managing labor costs is a key challenge.

Key news flows / triggers to watch Production during the peak season, 2Q and 3Q.

Crop loss in North India and increasing consumption

resulting in higher tea prices.

Rationalization of labor costs can increase

profitability.

1QFY14 highlights MCLR’s tea realization declined 7% to INR178/kg in

1QFY14 due to improved supply of black tea from

North India.

Sales volume improved 30% to 10m kilograms in

1QFY14.

In its international operations, MCLR has guided

improvement in Vietnam and Uganda, apart from a

marginal decline in its performance in Rwanda.

We do not have coverage on the stock.



Revenues 1,435 4,391 4,341 3,230 1,745 12,378 13,780

Change (%) -43.2 206.1 -1.1 -25.6 -46.0 12.4 11.3

EBITDA 229 2,439 1,364 -1,132 285 2,894 2,900

Change (%) -119.1 966.6 -44.1 -183.0 -125.2 -6.4 0.2

EBITDA Margin (%) 15.9 55.6 31.4 -35.0 16.3 23.4 21.0

Reported PAT 193 2,303 1,232 -1,471 262 2,203 2,257

Adjusted PAT 193 2,303 1,232 -1,447 279 2,300 2,247

Change (%) -48.3 3.2 5.2 -2.0 44.7 -0.4 -2.3

PAT Margin (%) 13.5 52.5 28.4 -44.8 16.0 18.6 16.3

180September 2 - 6, 2013


Motilal Oswal Financial Services Ltd



Promoter 70.5 70.3 70.2

Dom. Inst. 9.7 9.8 10.3

Foreign 6.5 6.3 7.4

Others 13.3 13.6 12.2

Stock info

Bloomberg Code MOFS IN



Mcap (INR b) 10.4

Mcap (USD b) 0.2


1, 6, 12 Rel Perf (%) 2/-15/-31

Company descriptionMotilal Oswal Financial Services (MOFS) is a diversified

capital markets focused company, serving retail clients,

institutions, corporates and HNIs. It is engaged in retail

broking, institutional equities, wealth management,

investment banking, asset management, private equity

and fund based business. It has used the ‘Solid Research

Solid Advice’ and ‘Knowledge First’ mantras to position

itself as a research-driven house. Using the mantra

‘Partnering for Growth’, MOFS made use of the

entrepreneurial spirit of its partners to grow further.

Its pan-India distribution covered 1,490 locations across

501 cities, one of the largest networks amongst peers.

Total registered clients are 781,663, including 685,022

retail and distribution clients.

Key investment positives & long-term prospects Strong franchise in the capital markets space:

Building an agency-based business across the entire

capital markets space, pitching research and

advisory as value proposition and leveraging on

technology to enhance the client experience.

Maintained consistent margins through cycles: With

superior cost management practices, its business

partner strategy has helped to “variablize” costs,

enabling delivery of consistent profit margins across

market cycles.

Zero leverage minimizing balance sheet risk: MOFS

has maintained an approach of not using leverage

to grow its business. This strategy has helped it

deliver consistent performance through volatile

interest rate scenarios.

Key challenges & near-term concerns Muted capital market activity has impacted near-

term business flow across areas like broking, wealth

management, investment banking, etc.

Cash equities volumes in the secondary markets,

MOFS’ main focus area, has not shown any signs of

uptrend in recent months.

Key news flows / triggers to watch Improvement in overall economic outlook would

improve investor sentiment and confidence. As the

investment cycle shows signs of uptick, it would

consequently give a boost to overall capital markets

activity.

Historical trends have shown that during periods of

uptrend in the capital markets activity, there is

typically a disproportionate upside in the cash

equities side of business, especially in cash

deliveries, a key focus area for MOFS.

1QFY14 highlights 1QFY14 PAT declined 9% YoY to INR185m, while

revenues grew a marginal 1% YoY to INR1.1b. PAT

margins remained consistent at 17-18%.

Despite the challenges, MOFS has maintained its

market share in the high-yield cash equities

segment, including in the delivery segment.

The new private equity fund continues to see good

traction in commitments towards final closing. Its

new mutual fund product too saw good investor

interest.



Total Revenues 1,103 1,128 1,150 1,341 1,109 4,729

Change (%) (1) (1) 4 3 1 0

Operating Profits (EBIT) 304 335 322 504 298 1,485

Change (%) (5) (9) (16) 40 (2) 2

PAT 202 229 292 367 185 1,091

Change (%) (4) (34) 12 69 (9) 5

PAT Margin (%) 18 20 25 27 17 23

181September 2 - 6, 2013


Tribhovandas Bhimji Zaveri



Promoter 74.1 74.2 74.2

Dom. Inst. 0.0 0.0 0.0

Foreign 14.5 14.2 11.3

Others 11.3 11.6 14.6

Stock info

Bloomberg Code TBZL IN



Mcap (INR b) 9.3

Mcap (USD b) 0.1


1, 6, 12 Rel Perf (%) -21/-20/21

Company descriptionTribhovandas Bhimji Zaveri (TBZL) is one of India's

oldest jewelers. It is a specialty retailer, focusing on

both wedding and fashion jewelry. It has 26 retail stores,

with total area of 84ksf spread across 20 cities in 7 states.

Currently, its focus markets are South and West India.

Key investment positives & long-term prospects TBZL is a play on rising penetration of branded

jewelry in India. It enjoys good brand recall and is a

strong wedding jewelry player.

Its strong expansion plans - adding 43 stores over

FY12-15 to reach 57 stores - are on track. It has added

12 stores as planned in FY13.

TBZL is concentrating on studded jewelry to improve

margins. Currently, studded jewelry contributes 25-

26% of turnover with 35% gross margin, as against

10-11% for plain gold jewelry.

It has a demonstrated track record of executing

expansion plans and strengthening its brand

proposition in South and West India, which stand

TBZL in good stead in the medium-to-long term.

Key challenges & near-term concerns Regulatory headwinds, given the urgency to curb

current account deficit (CAD). Recently, RBI stopped

the Gold-on-Lease scheme, which provided a

natural hedge against gold price fluctuations and

low cost inventory funding for organized players.

Weak macroeconomic conditions have put pressure

on discretionary consumption.

50% of TBZL's jewelry inventory is on outright

purchase. Hence, it is exposed to price fluctuations.

Key news flows / triggers to watch Regulatory actions from the RBI/government on

import duties/import curbs.

Festive demand, given the shortage of gold faced

by unorganized jewelers.

1QFY14 highlights; outlook for FY14, FY15 89% revenue growth led by >100% volume growth.


We do not have a rating on the stock.

Outlook remains uncertain, given the precarious

CAD situation and possibility of further stringent

measures from the RBI/government to restrict gold

consumption in India.



Revenue 2,823 3,490 5,748 4,433 5,330 13,804 16,494

YoY change (%) NA NA NA 66 89 NA 19.5

EBITDA 275 288 413 409 379 1,170 1,385

OPM (%) 9.7 8.3 7.2 9.2 7.1 8.5 8.4

YoY change (%) NA NA NA 32 -27 NA -0.9

PAT 163 190 247 250 208 572 850

YoY change (%) NA NA NA 231 28 NA 48.6

Key operating metrics (%)

Gold 14.3 12.9 11.8 14.5 11.7 10.9 13.2

Diamon 39.4 34.9 33.8 34.3 33.1 35.9 35.2

182September 2 - 6, 2013


TTK Prestige



Promoter 71.9 75.0 74.9

Dom. Inst. 4.4 3.4 3.4

Foreign 16.3 13.9 12.3

Others 7.5 7.8 9.5

Stock info

Bloomberg Code TTKPT IN



Mcap (INR b) 37.6

Mcap (USD b) 0.6

52-Wk Range (INR) 3,996/2,870

1, 6, 12 Rel Perf (%) 2/3/-4

Company descriptionTTK Prestige (TTKPT) drives by the vision 'A Prestige in

every Indian kitchen' and the strategy of 'Total Kitchen

Solutions', and has been enlarging its scope to occupy the

entire kitchen space. TTKPT through its brand 'Prestige' is

among the leading names in the kitchen appliances space

in India, especially in the pressure cooker and non-stick

cookware category. It has a well-diversified product

profile, with 55-60% of revenue from pressure cookers

and non-stick cookware products and remaining from gas

stoves and kitchen electrical appliances.

Key investment positives & long-term prospects With its immense brand recall, TTKPT enjoys 45%

market share in the organized cooker segment, 55%

in cookware and ~3-4% in appliances.

Company has incurred a capex of INR3b to double

its pressure cooker manufacturing capacity from

4.8m to 9.6m units and quadruple the non-stick

cookware capacity from 3m to 15m units to meet

future demand and reduce exposure on imports.

It has a strong distribution network of more than

30,000 dealers and 450 Prestige smart kitchens.

Company has been spending 6-7% of its sales on

advertising and promotion and has consistently

introduced 70-80 SKUs every year.

Contribution from non-south markets have

increased to 50% in FY13 from 25% in FY09.

Key challenges & near-term concerns Increase in power cost and higher power cuts to

impact demand for induction cooktops.

Increase in RM cost due to import of induction

cooktops, cookware and appliances from China.

Increase in competitive intensity.

Key news flows / triggers to watch Commissioning of capex and ramp-up.

Improvement in power situation in south India to

help revive demand for induction cooktops.

Inorganic acquisitions.

1QFY14 highlights; outlook for FY14, FY15 Non-south markets grew at 43% to INR1.3b v/s south

markets which de-grew by 13% to INR1.7b, primarily

due to power issues in Tamil Nadu and Andhra

Pradesh, thus leading to a decline in induction

cooktops.

Cooker sales saw a de-growth of 1.7% due to a

slowdown and decline in exports (higher margin

microwave pressure cookers). Domestic sales

growth in cooker segment stood at 3%. Company

stopped selling world kitchen products in 1QFY14,

thus impacting cookware sales.

TTKPT has taken a 6% price increase in the cooker

segment and ~8-12% in appliances, and has also

negotiated with vendors on price reduction to

negate the impact of rupee depreciation.

Outsourced contribution stands at 25%.



Net Sales 3,025 3,356 4,371 2,833 3,063 13,585

YoY Change (%) 29.8 10.6 30.7 21.8 1.3 23.1

EBITDA 478 497 621 430 414 2,026

Margins (%) 15.8 14.8 14.2 15.2 13.5 14.9

PBT 439 449 577 387 376 1,852

Tax 132 147 136 107 118 521

Rate (%) 30.1 32.6 23.6 27.6 31.5 28.1

Reported PAT 307 303 441 280 258 1,331

Adj PAT 307 303 441 280 258 1,331

YoY Change (%) 21.1 -10.2 27.6 42.0 -15.9 17.4

Margins (%) 10.1 9.0 10.1 9.9 8.4 9.8

183September 2 - 6, 2013


United Breweries



Promoter 74.8 74.8 74.8

Dom. Inst. 0.1 0.1 0.7

Foreign 19.0 18.9 17.9

Others 6.1 6.2 6.6

Stock info

Bloomberg Code UBBL IN



Mcap (INR b) 195.8

Mcap (USD b) 3.0

52-Wk Range (INR) 1023/537

1, 6, 12 Rel Perf (%) 11/24/28

Company descriptionUnited Breweries (UBBL) is India’s largest beer

company, with 54% market share. The Heineken Group

holds 37.5% in UBBL, which it acquired from S&N in 2006.

Kingfisher, Zingaro, Kalyani Black Label and Bullet are

some of the key brands in its portfolio.

Key investment positives & long-term prospects Dominant position in one of the world’s fastest

growing markets, with 54% market share.

Incumbents have disproportionate competitive

advantage, given the plethora of entry barriers –

tight government controls, ban on advertising, etc.

While per capita beer consumption is low in India,

comparison with other markets is not relevant due

to difference in income profiles and government

policies towards the sector. Per capita consumption

has grown at 12% per year in the last five years.

Rising proportion of target consumers augurs well

for long-term volume growth.

Key challenges & near-term concerns Government controlled market – controls on pricing,

distribution.

Rising duties and taxation (tax on inter-state

movement etc).

Changes in ordering patterns by state governments

– e.g. Tamil Nadu in 2012-13, Andhra Pradesh in 2010.

Maharashtra state excise department banned the

use of recycled bottles, which increased bottling

costs in the state by INR6/bottle.

Key news flows / triggers to watch Changes in duties by state governments.


1QFY14 highlights; outlook for FY14, FY15 1.5% volume growth (7% ex Tamil Nadu), with 100bp

gross margin and 270bp operating margin

expansion.


Volume growth to remain weak in the near term

due to issues in the Tamil Nadu market.

We do not have coverage on the stock.



Revenues 10,993 7,811 7,712 9,319 12,083 33,840 35,835

Change (%) 22.2 -28.9 -1.3 20.8 29.7 10.6 5.9

EBITDA 1,889 1,102 845 928 2,503 3,921 4,764

Change (%) 102.0 -41.6 -23.4 9.9 169.7 0.6 21.5

EBITDA Margin (%) 17.2 14.1 11.0 10.0 20.7 11.6 13.3

Reported PAT 986 342 335 59 1,210 1,264 1,722

Adjusted PAT 986 342 335 59 1,210 1,378 1,722

Change (%) 38.9 75.2 17.1 -46.6 22.6 -6.4 25.0

PAT Margin (%) 9.0 4.4 4.3 0.6 10.0 4.1 4.8

184September 2 - 6, 2013


Au Financiers

Company descriptionJanalakshmi Financial Services (JFS) is a Bengaluru-

based NBFC-MFI, and is a full-scale financial services

provider for the Indian sub-prime sector, which

includes the urban poor and the large population that

has difficulty accessing financial services. The sub-

prime sector has to make do with informal credit (from

money lenders, pawn brokers etc), paying interest

rates as high as 10% per day. It has minimal access to

savings instruments, insurance and integrated financial

services. JFS has built a suite of financial products

encompassing credit, savings, and insurance targeting

this segment.

Products offerings JFS is primarily in retail financing and offers

microfinance loans, gold loans, education loans,

home loans (both salaried and self employed), auto

Janlakshmi Microfinance

loans (like auto-rickshaw loans) and business loans

to micro and small enterprises.

JFS started a new initiative, partnering with Axis

Bank, to embark on its first Urban Financial Inclusion

Initiative launched in Bengaluru, and expanded to

Chennai and Delhi/NCR. This initiative is aimed at

reaching out to the urban underprivileged and

providing them with convenient banking without

having to go to a bank branch to transact.

Janalakshmi Social Services would act as the bank's

business correspondent for this initiative.

Banking licenseJFS has applied for a new banking license. As the

company's business model revolves around financial

inclusion, it has emerged as a strong contender for the

new banking license.

Company descriptionIncorporated in 1996, Au Financiers is an asset financing

company based in Rajasthan. It largely offers its

products and services in semi-urban and rural regions

and is classified as "Systemically Important Non Deposit

Accepting NBFC". It enjoys "A-" rating from CARE and

"BBB+/Positive" rating from CRISIL on its long-term

borrowings.

Area of presenceApart from Rajasthan, Au Financiers has presence in

Maharashtra, Gujarat, Goa, Punjab, Madhya Pradesh,

Haryana and Chhattisgarh, with an overall network of

222 branches. ~40% of its branches are in Rajasthan

alone. Its customer base stands at over 0.2m. Au

Financiers aims to expand and reach out to the un-

banked masses pan-India to identify and finance true

entrepreneurial potential.

About the businessAu Financiers offers vehicle financing for both new and

old vehicles, SME loans, loans against property and

commercial vehicle loans. It also offers general

insurance and life insurance products as a service

provider. To diversify its product portfolio, it recently

started the housing finance business (both rural and

micro loans). The company also plans to diversify

further into the insurance and broking businesses.

185September 2 - 6, 2013


Mrs Bector Food

Parag Food Speciality

Company descriptionThe CREMICA Group is a diversified food products

organization, with interests in both food retailing and

food services. Established as a small enterprise by Mrs

Bector, a food enthusiast, three decades ago, it has

metamorphosed into a food products conglomerate.

Product portfolio Product portfolio includes biscuits, breads, sauces,

bread spreads, ready-to-eat curries and syrups.

It services various customer groups such as coffee

chains, pizza chains, sandwich chains, ethnic chains,

food retail chains, hotel groups and airlines.

Key customers include Domino's, McDonald's,

Barista, Café Coffee Day, Pizza Hut, Papa Johnes,

Jet, Taj, ITC, and Pizza Corner.

Key innovations Developing vegetarian burgers and vegetarian

mayonnaise for McDonalds.

Creating imli (tamarind) and mint chutneys for

McDonalds.

Creating makhni gravy for Pizza Hut.

Developing curry bread for McDonalds.

Developing types of choco sauces.

Ingredient substitution for syrups for Barista.

Evolving solutions for the soft serve industry.

Development of retail and institutional packaging

options.

Company descriptionParag Milk Foods (PMF) is a leading ‘cow milk’ product

company, with manufacturing presence in West and

South India. It was founded by Mr Devendra Shah and

his brothers, a Gujarati business family in 1992. The

company has a milk processing capacity of 1.2m liters

per day at Manchar (near Pune) and 0.5m liters per day

at Palamner (near Bangalore). It owns the largest cow

farm in India and the largest cheese plant in Asia. The

company posted revenues of INR9b for FY12.

Product portfolio PMF markets liquid milk and UHT milk in tetra packs

as well as valued-added milk products like ghee,

curd, yoghurt, butter milk, cheese (mozzarella and

cheddar), whey, table butter, gulab jamun mix and

milk powder (skimmed and whole).

It sells traditional consumer products like ghee,

butter, pouch-packed milk and curd under the

Gowardhan brand, and contemporary products like

cheese, flavored yoghurt, UHT milk (in tetra packs),

butter milk and instant milk powder (Milko and Dairy

Whitener) under the GO brand.

Exports & other channels PMF exports milk powder, butter and butter oil,

anhydrous milk fats and ghee to 27 countries in the

Middle East, South East Asia and Africa. It will now

include cheese in the product mix. Some of its key

customers are Yakult (for skimmed milk powder)

and BEL, Morocco (a cheese manufacturer).

Apart from traditional retail and modern retail

outlets, PMF also supplies to institutional partners

like hotels, restaurants and caterers.

It has a national tie-up with chains like Baskin

Robbins, Barista, Café Coffee Day, etc.

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