Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
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Transcript of Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
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8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
1/21
PNB : "BUY" 24th Mar 2014
We upgrade PNB from neutral to add rating on account of external factors like better than expected GDP growth and CAD numbers whic
showing some improvement along with softening inflation numbers. Recently market sentiments are also booted on account of opinion po
result which revealed that BJP led NDA would close to formation of Government in coming general election. We raised our price target t
Rs.700 from Rs.600 earlier. ............................................................. ( Page : 5- 7)
Jindal steel & Power : Challenging Fundamentals "NEUTRAL" 24th Mar 2014
The Company has embarked on expansion projects of US$9bn in steel and power, backed by resource availability and steady cash flows
Improving free-cash-flows and volumes would be visible from end-FY15. Profitability is geared to iron ore and coal, which, against the presen
backdrop of improving iron-ore prices and higher coal consumption, would drive a re-rating. The stock quotes at 1.1x FY14e P/B. We initiate ou
coverage on this stock with a target of Rs.285/share on the basis of improving steel business, and Recommend Neutra
.................................................................. ( Page : 2-4)
No doubt the stock's fundamentals are good and also available at a cheaper rate comparing to its early trade . In the previous one month th
stock performed well & recover 20-22% from its estimated low of CY2013. We didn't expected this rise to be so fast.The CMP was estimated fo
a medium term target price looking at its earnings and fundamentals . How ever the target price got achieved few days back. we believe th
stock's fundamental is still good and price too cheap also , but for the earning up gradation and revised target price we would like to see the 1s
quarter earnings, hence we recommend Book Profit on the stock at a price range between Rs.1253 to Rs.131
......................................................................... Pa e : 18- 20
IEA-Equity
Strate
24th Mar, 20
Edition : 230
ACC Limited :
KPIT Tech: "On billion dollar journey" "BUY" 19th Mar 2014
Impressive organic growth despite inorganic thrust (acquired 10 companies in the last 10 yrs), Potential option value from success of its hybr
engine venture Revolo (on trial). KPIT has targeted to reach $1bn sales by 2017. Its differentiated positioning and competitive edge in its focu
areas, imperatives to the success of smaller-sized IT vendors impress to investors. ........................................................................ ( Page : 1617
HDFC Bank : "HOLD" 20th Mar 2014
Profitability of bank is likely to report better in next few quarters on the back of mobilization of FCNR deposits which would reflect better N
growth for being a low cost carry, RBI allowed banks to use counter cycle buffer for making specific provisions against bad loans, declining shar
of priority sector lending but still met regulatory requirement and exempted foreign deposits with tenure more than 3 years from SLR, CRR an
PSL. Now the economy is witnessing some sign of revival and market sentiment boost up on account of exit poll result. We raised our price
target to Rs.760/share which is upper side of our valuation band. . ................... ( Page : 13-15)
Persistent System : "Persistently innovating.." 21th Mar 2014
We cover Persistent System as one of the few companies in the tier-II with potential to grow revenue at a range of 18-20%, specially focused o
emerging business and relationship building with marquee clients. Despite better predictability of growth and attractive visibility of its expansio
in new emerging verticals, we advice to book profit on the stock because of its premium valuation. ............................................................
Pa e : 8-9
"BOOK PROFIT"
TCS : " Strong Fundamentals" "BUY" 20th Mar 2014
On Mid Quarter Analyst Meet, TCS commented on weak revenue growth momentum for 4QFY14E due to weak seasonality. Growth in 4QFY14
would be lower than the preceding quarter and margin would decline 40-50 basis points on cross currency movement and higher investments
However, sigh of relief was seen on FY15E outlook and comments on overall demand environment. .................................................................
Page : 10-12 )
"BOOK PROFIT" 18th Mar 2014
Narnolia Securities Ltd,
India Equity Analytics aily Fundamental Report on Indian Equities
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8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
2/21
Jindal steel & Power
265
285
NA8%
NA
532286
24796
11158
6495
1M 1yr YTD
solute 6.9 -21.7 -27.9
l. to Nifty 0.5 -36.3 -37.6
3QFY14 2QFY14 1QFY13
omoters 59.7 59.1 59.1
21.9 21.3 20.8
4.7 6.2 6.7
hers 13.7 13.3 13.4
Financials : Q3FY14 Y-o-Y % Q-o-Q % Q3FY13 Q2FY1
Revenue 5377 12.0 7.9 4802 498EBIDTA 1701 -5.0 16.7 1790 145
Net Profit 562 -35.2 24.3 867 45
EBIDTA% 32 -15.1 8.2 37 2
NPM% 10 -42.1 15.2 18 (In Cr
tial Coverage Neutral
side
ange from Previous
MP
rget Price
evious Target Price
The consolidated turnover was up by 12% to Rs.5377 Cr against Rs. 4683 Cr in previou
year period. Net Profit is after tax for the quarter is Rs. 562Cr (Rs. 867 Cr in Q3FY13). Th
steel business in volume and value terms grew by 11% and 7% respectively compared t
the previous quarter.
JSPL achieved a spectacular growth in its export volumes which in volume and valu
terms grew by 32% and 104% for the same period last year. The Company has receive
Rail order from DFCC for the prestigious Delhi Kolkata corridor and export order fromFerrotech Alloys, UK.
JSPLsretail segment has been very successful and the sale during Q3 FY14. Jindal Powe
Ltd., a subsidiary of JSPL sales grew by 17.7% while PBT and PAT increased by 16.9% an
15.7% respectively in Q3 this year compared to Q3FY13.Net Sales of the company
expected to grow at a CAGR of 6% over 2012 to 2015E respectively.
erage Daily Volume (Nos.)
E Code
JINDALSTEL
fty
Balance sheet at inflection point:In the past three years, 3bn dollar has been spent o
expansion, and a further 6bn will be expended in the next three years. The expansion ha
been supported by the strong business cash flows. However, the net-debt-to-EBITD
level has hit 3.7x due to delayed cash flows, though the leverage ratio is likely to hav
peaked.
Steel segment improving : Steel sales volumes of Jindal Steel and Power are likely t
have improved in 3QFY14, to 0.75m tons. On the changing business and client mix, price
are likely to have been better. Export opportunities in the quarter due to favorabl
currency could have offset the impact of iron ore realizations and would have improve
EBITDA, aided by stable costs. The Shadeed Oman HBI business, iron ore and coking coamine are likely to have been stable.Management expects the companys total stee
capacity, both in India and overseas, to increase around 8 million ton as compared t
current 3 million ton by the end of the fiscal.
Please refer to the Disclaimers at the end of this Report.
ock Performance-%
are Holding Pattern-%
yr Forward P/B
Source - Comapany/EastWind Research
arket Data
Challenging Fundamentals
E Symbol
wk Range H/L
kt Capital (Rs Crores)
362/181
The Company has embarked on expansion projects of US$9bn in steel and powe
backed by resource availability and steady cash flows. Improving free-cash-flows an
volumes would be visible from end-FY15. Profitability is geared to iron ore and coa
which, against the present backdrop of improving iron-ore prices and higher coaconsumption, would drive a re-rating. The stock quotes at 1.1x FY14e P/B. We initiat
our coverage on this stock with a target of Rs.285/share on the basis of improving ste
business, and Recommend Neutral.
"Neutral"24th March' 14
Narnolia Securities Ltd,
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8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
3/21
overage :
Products
Mining
ants Locations
indal Industrial Park (Chhattisgarh)
Raipur Division (Chhattisgarh)
Tamnar (Odisha)
Angul (Odisha) Zambia
Barbil (Odisha) Tanzania
Tensa - (Jharkhand)
Patratu (Jharkhand) Australia
3
Earning Ratios
Revenue & Growth
EBIDTA & Margin
Mozambique
South America
usiness Areas
Madagascar
ndal Steel and Power Limited started as a steel manufacturing company, enhanced the
mpany position as a major steel producer and diversified into various other sectors
ch as:
Petroleum
Cement and Infrastructure.Power Generation & Trading
Global Presence
Earning Ratios
Semi-Finished Products
Power
Ferro Chrome
Silico Manganese
Sponge Iron
abilizing Power segment:With a steady performance and power sales to Rs.1130 Cr
3QFY14 (Rs.1068Cr in 3QFY13), the PLF in 3QFY14 would have held at ~100%, helping
aintain realizations. Capped realizations and the power-surplus situation would have
sed downside risks to earnings.
ndal Steel and Power Limited (JSPL) is one of Indiasmajor steel producers with a
gnificant presence in sectors like Steel, Mining, Power Generation and Infrastructure.
ith an annual turnover of over US$ 3.6 billion, JSPL is a part of the over US$ 18 billion
versified O. P. Jindal Group. In the recent past, JSPL has expanded its steel, power and
ning businesses to various parts of the world particularly in Asia, Africa and Australia.
e company has committed investments exceeding US$ 30 billion in the future and has
veral business initiatives running simultaneously across continents. The company
oduces economical and efficient steel and power through backward and forward
tegration.
Rails
Parallel Flange Beams
Plates & Coils
Angels & Channels
TMT Re-bars
Wire Rods
Oman (Middle East)
EBIDTA & Margin
Debt Structure
indal steel & Power
Fabricated Sections
Narnolia Securities Ltd,
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8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
4/21
FY10 FY11 FY12 FY13
11092 13112 18209 19807
60 82 142 136
11152 13194 18351 19943
4197 5078 5311 6151273 415 591 641
774 1303 5513 7020
5244 6795 11415 13812
5848 6317 6793 5994
997 1151 1386 1539
358 260 360 758
4553 4988 5189 3833
919 1184 1186 922
3573 3754 3965 2910
34 27 22 14
6.3 4.6 2.8 1.5
FY10 FY11 FY12 FY13
93 93 93 93
10324 14017 18018 21159
10417 14110 18111 21252
5330 5549 11180 15402
3274 8428 4569 8247
17 25 34 33
2266 2573 1251 1398
2036 3081 4111 4884
25122 36091 45008 57073
14 20 31 20
9883 14824 16463 192557947 10041 92 19230
1090 1527 2181 2421
1431 2773 3580 4524
753 1154 1307 1954
113 480 149 200
3464 4852 6927 8079
25122 36091 45008 57073
FY10 FY11 FY12 FY13
6.3 4.6 2.8 1.5
32.0 28.5 21.6 14.6
52.4 47.9 37.0 30.117.8 12.8 11.2 6.1
4.2 1.9 2.3 3.2
#N/A #N/A #N/A #N/A
4
tal Income
her Expenses
penditure
ITDA
epriciation
indal steel & Power
L PERFORMANCE
ost Of Projects & Contractualmployee benefit Expence
et Revenue from Operation
her Income
BT
et tax expense / (benefit)
AT
eighted Average Cost of Debt %
ebt/Equity (debt/debt+networth or
ITDA %OCE%
ATIOS
PM %
pital work-in-progress
ng-term loans and advances
ventories
ade receivables
ort-term loans and advances
tal Assets
B
tal liabilities
sh and bank balances
tangibles
ngible assets
S PERFORMANCE
are capital
serve & Surplus
tal equity
ng-term borrowings
ort-term borrowings
ng-term provisions
ade payables
ort-term provisions
terest Cost
OE%
B
Narnolia Securities Ltd,
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8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
5/21
641
700
6009
17
1M 1yr YTD
bsolute 18.9 -19.7 -19.7
el.to Nifty 14.0 -30.2 -30.2
Current 4QFY13 3QFY1
omoters 58.9 57.9 57.9
I 17.5 17.9 18.0
I 18.5 18.4 19.1
hers 5.1 5.9 5.1
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 11807 13414 14857 16536 17691
Total Income 15420 17617 19072 20775 21930
PPP 9056 10614 10907 11155 12500
Net Profit 4433 4884 4748 3408 5209
EPS 140.6 144.0 134.3 94.1 143.9
kt Capital (Rs Cr)
Please refer to the Disclaimers at the end of this Report.
Creation of fresh slippage lower, impaired asset high but showi
improvement
hange from Previous
NB Vs Nifty
hare Holding Pattern-%
7.4 cr
fty 6495
(Source: Company/Eastwind)
wk Range H/L
During the last quarter PNB experienced improvement of asset quality especially
fresh slippage front. Fresh addition in GNPA was declined by 52% sequential to R
1142 cr as against average run rate in last ten quarter was Rs.2124cr. In percenta
to gross advances, slippage ratio came down to 1.4% versus 3% in 2Q and 4.7%
1Q. Cash recoveries were better which drag net NPA to 2.8% from 3.1% in previo
quarter. Further bank restructure Rs. 2115 cr in 3QFY14 mainly come from pow
sector which was offset by similar amount of bond received from SEBs. Ba
management has not indicated restructure pipeline in near term which means stab
to improving asset quality trend could be seen.
Margin expansion on the back of shifting concentration of portfolio mix and
CASA growth
During the last quarterbanksmargin expanded by 10 bps QoQ despite of modera
loan growth. Bank witnessed 9.7% YoY loan growth led by SME growth of 21.6
and retail segment growth of 17.5%. Retail and SME segment are high yield
nature. Furtherbankslow cost deposits CASA increased by 13% in absolute term
which saving account supported with 14% growth current account 7% YoY. B
overall deposits declined by 20% led by 33% declined of term deposits which inflat
CASA ratio to 38.3% from 27%. Sequentially cost of fund declined by 25 bps wh
yield on loan declined by 11 bps on account of creation of low deposits franchise a
shifting of portfolio.
Over the last one month, PNB has outperform Nifty by 14% and Bank Nifty b
5.7% largely on account of external factor like economy and fiscal defic
showing some positive trend, softening of inflation from its peak level. Mark
sentiment are also boosted by recent opinion poll result which revealed BJ
led NDA would come to power and economy would revived. Although we lik
Bank of Baroda over PNB but former is trading close to our target price. W
value PNB at Rs.600 to Rs.775 per share implying 0.6 to 0.75 times of one ye
forward book depending upon current economy scenario and banks ow
fundamental. Looking at current fundamental and market sentiments w
believe bank would trade in the range of Rs.600 to Rs.700.
In the subsequent section we will discuss two positive fronts that bank h
witnessed in last quarter result (a) asset quality improvement especially
fresh slippage side, (b) margin expansion. We will discuss the possibilvaluation contraction from current level.
MP
arget Price
evious Target Price
verage Daily Volume
19646
PNB
arket Data
pside
890/400
SE Code 532461
SE Symbol PNB
ompany update ADD
"ADD"24th March2014
Narnolia Securities Ltd,
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8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
6/21
urrent Valuation Range
PNB
Please refer to the Disclaimers at the end of this Report.
anagement guided stable NIM, more focus on liability rather than asset yield
ccording to bank management, PNB is focusing more on liability side rather than yield.
ank has reduced high cost bulk deposits from Rs.880 bn in Sept.2012 to Rs.220 bn in
ec.2013 and certificate of deposits came down to Rs.110 bn from Rs.240 bn inQFY13. Share of low cost deposits improved to 40% which would help bank to maintain
M at 3.5% according to management.
aluation & View
e upgrade PNB from neutral to add rating on account of improving sign of economy led
y CAD number and softening of inflation. Recently market sentiments are also boosted
p due to exit poll result which revealed that BJP led NDA government would be close to
overnment formation in coming general election. In our valuation matrix, we value in the
nge of 0.6 times to 0.75 times of F14E book depending upon banksfundamental and
arket sentiment. Looking at current market sentiment and fundamental, we value bank
the range of Rs.600 to Rs.770 per share. We have added rating on the stock withrrent price target of Rs.700.
Narnolia Securities Ltd,
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8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
7/21
PNB
nancial & Assuption
Source : Eastwind/ Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
ncome Statement 2011 2012 2013 2014E 2015E
terest Income 26986 36476 41893 43513 49565
terest Expense 15179 23062 27037 26977 31875
II 11807 13414 14857 16536 17691
hange (%) 39.3 13.6 10.8 11.3 7.0
on Interest Income 3613 4203 4216 4240 4240
otal Income 15420 17617 19072 20775 21930
hange (%) 27.6 14.2 8.3 8.9 5.6
perating Expenses 6364 7003 8165 9621 9430
re Provision Profits 9056 10614 10907 11155 12500
hange (%) 23.6 17.2 2.8 2.3 12.1
rovisions 4622 3577 4386 6253 5059
BT 4433 7037 6522 4902 7442
AT 4433 4884 4748 3408 5209
hange (%) 13.5 10.2 -2.8 -28.2 52.8
alance Sheet
eposits( Rs Cr) 312899 379588 391560 450294 517838
hange (%) 25 21 3 15 15
f which CASA Dep 120325 134129 153344 139752 153766
hange (%) 18 11 14 -9 10
orrowings( Rs Cr) 31590 37264 39621 47857 44728
vestments( Rs Cr) 95162 122703 129896 143572 149094
oans( Rs Cr) 242107 293775 308725 339598 356578
hange (%) 30 21 5 10 5
atio
vg. Yield on loans 8.7 9.7 10.3 9.6 10.5
vg. Yield on Investments 6.0 6.4 7.4 7.2 7.8
vg. Cost of Deposit 4.4 5.6 6.5 6.4 6.6
vg. Cost of Borrowimgs 4.4 4.5 3.9 4.0 4.1
aluation
ook Value 682 820 924 1000 1107
MP 1220 926 759 543 543/BV 1.8 1.1 0.8 0.5 0.5
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8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
8/21
Persistent System.
Footing on Product Business, and working aggressively on new emerging services;
11%
Key facts from Management Interview to Media( on 20th
March,2014)
1M 1yr YTD
bsolute 1.1 76.8 85.7
l. to Nifty 3.4 75.8 82.3
Current 2QFY14 1QFY14
omoters 38.96 38.96 38.96
18.26 15.28 14.84
I 18.78 21.23 19.31
hers 24 24.53 26.89
3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
432.75 432.37 0.1 332.98 30.0
104.3 100.8 3.5 82.4 26.6
64.2 60.8 5.6 49.5 29.7
24.1% 23.3% 80bps 24.7% (60bps
14.8% 14.1% 70bps 14.9% (10bps
year forward P/E-x
Rs, Cro
(Source: Company/Eastwi
kt Capital (Rs Crores)
Please refer to the Disclaimers at the end of this Report.
4236
"Persistently innovating.."
MP 1059
rget Price 1070
On recent management Interview, Persistent System announced its new footing
dedicated product business unitAccelerite to align its business strategy combined w
Products and IP (Intellectual Property) based on SMAC (Social, Mobility, Analyti
Cloud) platform.
fty
are Holding Pattern-%
6483
ock Performance
PERSISTENT
wk Range H/L 1220/477
erage Daily Volume 12139
arket Data
E Code 533179
SE Symbol
PAT
(1) Persistent System is setting up a unit related to product and Product services, named
Acceleriteto manage efficiently. They are taking some of its IP led products into t
Accelerite. We expect that company is able to compete as a product company, whi
Accelerite will in the market.(2) Management expects that the overall trends are looking good on Industry per se a
new emerging segment will play a major role for growth. Now, clients are moving into n
changes and focusing into new services and solution.
(3) For 4QFY14E, muted set of growth could be seen and expecting Intellectual Proper
(IP) growth this quarter.
(4) The business outlook though is very positive in the sense, and they are seeing go
opportunities, good pipeline growth and many good interesting deals being signed.
(5) Persistent system is expecting to see IP led growth at a range of 18-19% in FY14E a
20%+ in FY15E driven by HPCA without any addition of new IPs. At same point of tim
they are also looking to scale strong potential of rCloud after adding new capabilities.
EBITDA Margin
PAT Margin
ompany update Book Profit
Persistent management suggests that deal pipeline are looking strong and seeing go
activity and traction in the market across the board. Its focus on some of new
technologies like cloud, analytics and mobility, M2M, digital transformation are gaini
a lot of traction because of pickup in demand environment. Because of active
investment in these themes, management is very confident to see healthy growth.
View and Valuation: The companys focus is shifting greater proportion to IP led servic
and company has marquee clientele in cutting-edge technologies around cloud, mobili
digital and analytics; witnessing faster growth. Considering the companys premiu
valuation, we advice Book Profit on the stock. At a CMP of Rs 1059, stock trades
13.4x FY15E earnings. Our view could be change with management guidance, high
currency flactuations and post earnings of coming quarter.
Financials
Revenue
EBITDA
We cover Persistent System as one of the few companies in the tier-II with potential
grow revenue at a range of 18-20%, specially focused on emerging business a
relationship building with marquee clients. Despite better predictability of growth a
attractive visibility of its expansion in new emerging verticals, we advice to book pro
on the stock because of its premium valuation.
ange from Previous
evious Target Price 960
pside 1%
"Book Profit"21st Mar' 14
Narnolia Securities Ltd,
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8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
9/21
inancials
Please refer to the Disclaimers at the end of this Report.
Persistent S stem.
(Source: Company/Eastwi
perating Metrics
Narnolia Securities Ltd,
2QFY12 3QFY12 4QFY13 1QFY13 QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
op1 16.0% 15.9% 17.2% 17.8% 20.7% 21.1% 21.6% 21.2% 22.5% 19.8%
op 5 38.6% 37.0% 36.6% 33.5% 36.3% 37.3% 36.7% 34.7% 36.4% 36.9%
op 10 49.4% 48.3% 48.8% 45.3% 47.0% 49.4% 47.9% 46.0% 47.3% 46.9%
nsite - Linear 12665 12387 12603 12789 12863 12772 14014 14567 14283 14510
ffshore - Linear 3803 3778 3895 3898 3978 4032 4143 4111 4109 4179
eild per Employee(excld- Trainee) 3208 3247 3350 3345 3746 3817 3769 3602 3919 3934
otal Employee 6900 6706 6628 6536 6370 6719 6970 7144 7457 7602
ttrition 17.7% 17.4% 18.3% 18.9% 16.9% 16.0% 14.4% 14.2% 14.0% 13.2%
tilization rate %(xclude IP Led ) 73.8% 74.1% 71.7% 74.1% 75.2% 77.3% 72.5% 70.0% 71.7% 72.9%
lling Rate-USD/ppm
mployee Metrics
ient Concentration
s in Cr, FY10 FY11 FY12 FY13 FY14E FY15E
ales 601.16 775.84 1000.3 1294.5 1666.59 2061.7
mployee Cost 368.74 481.62 599.05 719 899.96 1123.6ost of technical professionals 0 30.67 41.68 54 91.66 113.39
ther expenses 86.05 105.24 135.2 218 291.65 366.99
otal expenses 454.79 617.53 775.93 990.78 1283.28 1604.0
BITDA 146.37 158.31 224.37 303.72 383.32 457.70
epreciation 33.52 42.39 61.1 78 100.55 93.54
ther Income 11.23 34.44 34.44 34.44 55.00 72.16
BIT 112.85 115.92 163.27 225.44 282.76 364.16
nterest Cost 0 0 0.00 0.03 0.05 0.05
rofit (+)/Loss (-) Before Taxes 124.08 150.36 197.71 259.851 337.71 436.28
rovision for Taxes 9.05 10.62 55.09 75.37 92.03 119.98
et Profit (+)/Loss (-) 115.03 139.74 142.62 184.481 245.69 316.30
rowth-% (YoY)
ales 1.2% 29.1% 28.9% 29.4% 28.7% 23.7%
BITDA 60.2% 8.2% 41.7% 35.4% 26.2% 19.4%
AT 74.1% 21.5% 2.1% 29.4% 33.2% 28.7%
xpenses on Sales-%
mployee Cost 61.3% 62.1% 59.9% 55.5% 54.0% 54.5%
ther expenses 14.3% 13.6% 13.5% 16.9% 17.5% 17.8%
ax rate 7.3% 7.1% 27.9% 29.0% 27.3% 27.5%
Margin-%
BITDA 24.3% 20.4% 22.4% 23.5% 23.0% 22.2%
BIT 18.8% 14.9% 16.3% 17.4% 17.0% 17.7%
AT 19.1% 18.0% 14.3% 14.3% 14.7% 15.3%
aluation:
MP 310 366.7 409.2 541 1059 1059
o of Share 4 4 4 4 4 4
W 639.0 747.1 840.5 1018.3 1212.5 1477.3
PS 28.8 34.9 35.7 46.1 61.4 79.1
VPS 159.7 186.8 210.1 254.6 303.1 369.3
oE-% 18.0% 18.7% 17.0% 18.1% 20.3% 21.4%
/BV 1.9 2.0 1.9 2.1 3.5 2.9
/E 10.8 10.5 11.5 11.7 17.2 13.4
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8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
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TCS
Key facts from Management Commentary:
1M 1yr YTD
solute -5.9 29.9 67.2
l. to Nifty -13.3 18.8 57.1
Current 2QFY14 1QFY14
omoters 73.9 73.96 73.96
16.33 16.09 15.67
5.26 5.58 5.90
hers 4.51 4.37 4.47
3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
21294 20977.2 1.5 16069.93 32.5
6686.76 6633.0 0.8 4660.49 43.5
5333.43 4633.3 15.1 3549.61 50.3
31.4% 31.6% (20bps) 29.0% 240bp
25.0% 22.1% 290bps 22.1% 290bp
are Holding Pattern-%
fty 6524
ock Performance
year forward P/E
Rs, Cro
(Source: Company/Eastwi
Please refer to the Disclaimers at the end of this Report.
(5) Currency will play a small role with marginal impact of cross currency movement a
average currency movement. There may be some accounting changes related
recognition of forex gains or losses, but it is not likely to be material.
View and Valuation:We continue to remain positive on its demand outlook and marg
profile, the management expects for robust deal pipeline going forward and also expec
to materialize its emerging space like Digital as well as Cloud, Mobility, Analytics and B
data. We expect, TCS will be star performer in growth sense than other peers. Hence, w
are maintaining 17% (revised from 18%) revenue growth in dollar term for FY1
because of improved demand environment, while NASSCOM expects 12-14% for t
Industry. At a price of Rs 2041, it is trading at 18x FY15E earnings, We maintain" BU
view on the stock with a target price of Rs 2510.
Financials
Revenue
EBITDA
EBITDA Margin
PAT Margin
PAT
Mid Quarter's Analyst Meet: Lower than expected growth for 4QFY14E, but still bett
outlook for FY15E than FY14E,
" Strong Fundamentals"
MP 2041
rget Price 2510
ompany update Buy
On Mid Quarter Analyst Meet, TCS also commented on weak revenue grow
momentum for 4QFY14E followed by Infosys due to weak seasonality. Growth4QFY14E would be lower than the preceding quarter and margin would decline 40-
basis points on cross currency movement and higher investments. However, sigh
relief was seen on FY15E outlook and comments on overall demand environment.
arket Data
E Code 532540
evious Target Price 2360side 23%
ange from Previous 6%
Now, revenue in 4QFY14E could be a bit lighter than what we had expected post 3QFY
earnings. We are not much surprise on comments on weak revenue as well as rampi
down on margin picture for current quarter. We believe that the 1QFY15E, the fi
seasonally strong quarter of the year, is the stern litmus test of TCSs confidence f
FY15E.
(1) For 4QFY14E, revenue would be lower than preceding quarter because of season
impacts, and domestic revenue may clock negative growth largely impacted by upcom
general election. However, no pressure would be seen on revenue for FY15E.
(2)Margin would decline by 40-50 basis points on cross currency movement and high
investments. However, company is expecting no hiccups on margin for long- te
prospect.
(3) The company is very optimistic on Europe, US and UK growth could be inline. Lat
America will see good growth. Europe will continue to do well, and the US and the UK w
be close to industry average. Middle East and APAC could be seen on flattish node.
(4) Across vertical, Media and Entertainment has reported better, Telecom rema
challenged. While, there could be some ray of growth because of higher penetration
Europe.
erage Daily Volume 1011877
E Symbol TCS
wk Range H/L 2384/1300
kt Capital (Rs Crores) 433985
"BUY"20th Mar' 14
Narnolia Securities Ltd,
-
8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
11/21
TCS.
there any setback?
Please refer to the Disclaimers at the end of this Report.
o sign of any ramp down: Management suggests that Continental Europe will likely
ow ahead of overall company growth in FY15E. On vertical front, smaller verticals such
Energy & Utilities, Transportation and Life sciences & Healthcare might grow ahead of
erall company average. While, its mature verticals like BFSI and Retails could grow
ttish, Telecom continues to face structural issue. Contracts wins from continental
rope could change the shape of verticals. Still, we are not seeing any project ramp
wn.
ew emerging business on demand: A part of legacy business, the emerging
pportunities in helping large corporations tap areas such as social media and data
alytics are seen as increasingly contributing to the IT sector's next phase of growth. TCS
d its Indian competitors are winning a significant share of several 2nd and 3rd
neration renewal contracts as western companies look to both cut costs and moderniseeir IT infrastructure.
ales (USD) and Sales growth-%
onsidering above growth factors, we are not expecting any major concern with
mpany's growth. The company is also focussed to drive operational improvements in
e business and aims to expand reach in non-traditional markets and servicelines.
(Source: Company/Eastwind)
We expect 1% (QoQ) revenue growth
USD term for 4QFY14E,
nlike Infosys, TCS comments are based on potential impact from seasonally lower
mand in its biggest market (US and Europe) and weak domestic demand environment.
n previous comments, management had already quoted regarding demand volatility atme because of upcoming poll.
omparing with its nearest rival Infosys, TCS is not facing largely with any specific issue.
espite a weak commentary on 4QFY14E, management is aggressively confident to report
tter numbers in FY15E with healthy demand outlook. We are considering following
ctors for its growth story in FY15E.
ealthy Demand Environment:TCS is much confident on healthy demand outlook and
pects that FY15E could be better year than FY14E propelled by better discretionary
ending in the US. Management suggests that except India, other emerging markets
ontributes 18-19% of revenue) continue to see healthy demand. Also, in its FY15
venue growth models, India (contributes 7% of sales) is the only market which TCS
pects to be weak.
Narnolia Securities Ltd,
-
8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
12/21
TCS.
(Source: Company/Eastwi
nancials
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
s, Cr FY10 FY11 FY12 FY13 FY14E FY15
et Sales-USD 6339.0 8187.0 10171.0 11569.0 13531.7 16012
et Sales 30029.0 37325.1 48894.3 62989.5 81731.2 96073
mployee Cost 10879.6 13850.5 18571.9 24040.0 30060.7 35547verseas business expenses 4570.1 5497.7 6800.5 8701.9 11565.0 13930
ervices rendered by business associates and others 1262.0 1743.7 2391.3 3763.7 4952.9 5764.
peration and other expenses 4622.8 5054.3 6694.8 8443.9 10044.8 12009
otal Expenses 21334.4 26146.2 34458.5 44949.6 56623.4 67251
BITDA 8694.6 11178.9 14435.8 18040.0 25107.8 28822
epreciation 601.8 686.2 860.9 1016.3 1279.2 1503.
mortisation 59.1 49.1 57.1 63.7 57.5 76.7
ther Income 272.0 604.0 428.2 1178.2 1348.6 1921.
xtra Ordinery Items 0.0 0.0 0.0 0.0 0.0 0.0
BIT 8033.7 10443.6 13517.9 16960.1 23828.6 27318
terest Cost 16.1 26.5 22.2 48.5 35.9 33.8
BT 8289.6 11021.2 13923.8 18089.8 25141.3 29206
ax 1197.0 1830.8 3399.9 4014.0 5933.3 7009.
AT 7092.7 9190.3 10524.0 14075.7 19208.0 22196
AT (Reported PAT) 7000.6 9068.6 10414.0 13917.4 19208.0 22196
ales-USD 29.2% 24.2% 13.7% 17.0% 18.3%
ales 8.0% 24.3% 31.0% 28.8% 29.8% 17.5%
BITDA 21.3% 28.6% 29.1% 25.0% 39.2% 14.8%
AT 31.8% 29.6% 14.5% 33.7% 36.5% 15.6%
BITDA 29.0% 30.0% 29.5% 28.6% 30.7% 30.0%
BIT 26.8% 28.0% 27.6% 26.9% 29.2% 28.4%AT 23.6% 24.6% 21.5% 22.3% 23.5% 23.1%
mployee Cost 36.2% 37.1% 38.0% 38.2% 36.8% 37.0%
verseas business expenses 15.2% 14.7% 13.9% 13.8% 14.2% 14.5%
ervices rendered by business associates and others 4.2% 4.7% 4.9% 6.0% 6.1% 6.0%
peration and other expenses 15.4% 13.5% 13.7% 13.4% 12.3% 12.5%
ax rate 14.4% 16.6% 24.4% 22.2% 23.6% 24.0%
MP 780.8 1182.5 1322.0 1563.0 2041.0 2041.
o of Share 195.7 195.7 195.7 196.0 196.0 196.0
W 18466.7 24504.8 29579.2 38645.7 49940.0 62991
PS 36.2 47.0 53.8 71.8 98.0 113.2
VPS 94.4 125.2 151.1 197.2 254.8 321.4
oE-% 38.4% 37.5% 35.6% 36.4% 38.5% 35.2%
viden Payout ratio 28.1% 50.8% 37.5% 41.2% 41.2% 41.2%
/BV 8.3 9.4 8.7 7.9 8.0 6.4
/E 21.5 25.2 24.6 21.8 20.8 18.0
Margin -%
xpenses on Sales-%
aluation
rowth-%
-
8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
13/21
HDFC Bank
741
760
720
36
1M 1yr YTD
bsolute 11.8 15.1 15.1
el.to Nifty 4.7 4.8 4.8
Current 4QFY13 3QFY1
omoters 22.7 22.7 22.7
I 34.9 33.6 34.9
I 9.3 9.8 6.6
hers 33.1 33.8 34.2
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 10543 12885 15811 18713 22944
Total Income 14878 18668 22664 26604 30835
PPP 7725 9391 11428 14516 15572
Net Profit 3926 5167 6726 8453 9119
EPS 84.4 22.0 28.7 36.0 38.9
MP
arget Price
We have raised our price target to Rs.760/share on account ofbankslikely
get benefit from FCNR deposits mobilization that it had recently raised. W
value bank in the range of Rs.660 to Rs.760 per share on the back of curren
fundamental and prevailing economic scenario. Now the economy
witnessing some sign of revival and market sentiment boost up on account
exit poll result. HDFC bank is likely to see earnings boost-up in near term o
account of mobilization of FCNR deposits which would reflect better NII fo
being a low cost carrying in nature, recently RBI allow banks to use 33%
buffer/floating provisions for bad loan and declining of low yielding PSL sha
in overall lending.
evious Target Price
arket Data
pside
SE Code 500180
Mounting bad loans have major cause of worry; RBI allowed banks to use 33%
of counter cycle, floating provisions for specific provisions
Recently RBI allows banks to use 33% of counter cycle provisioning buffer, floati
provisions for making specific provisions against impaired accounts which would he
bank to make lower provisions and hence boost up earnings. HDFC bank reportvery strong asset quality with GNPA and net NPA stood at 1% and 0.3% at the e
of December quarter. Bank would use counter cycle buffer, floating provisions fspecific provisions and make lower fresh provisions. This would be the result boosting up profitability.
verage Daily Volume
Counter cycle provisions and floating provisions are represented as capital reserv
that bank need to build up in good times and can only use for contingencies und
extra circumstance. This is the first time when central bank allows to use since th
reserve were created starting 2010. At the end of quarter all banks reported Rs.1.
trillion of GNPA, the rise of 39.4% YoY. In a very rough estimate, banking syste
has nearly about Rs. 2 trillion in bad loans and another Rs.4 trillion loans are beirestructured pipeline out of total Rs.82 trillion.
ompany update HOLD
176874
Raised foreign deposits higher amount in comparison to peers; likely to repo
better NII for being low cost in nature
750/528
SE Symbol HDFCBANK
wk Range H/L
hange from Previous
DFC Bank Vs Nifty
hare Holding Pattern-%
4.17 lakhs
fty 6524
kt Capital (Rs Cr)
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
ock Performance
In last quarter, HDFC bank has raised FCNR deposits to the tune of $3.4 bn nea
about Rs.21000 cr through RBI special window which carry interest rate of 3.5
while normal deposits rate are in the range of 6.5% to 7%. HDFC Bank raised larg
chunk of monies in compare to other banks like SBI and ICICI bank. SBI and ICI
bank raised monies through FCRN deposits to the tune of $2bn each. Furth
incremental foreign deposits with tenure are more than 3 years are exempted fro
SLR, CRR and PSL lending. This would help bank to lower cost of fund by 75 bps
100 bps and hence margin expansion. Bank management guided margin would be
the range of 4.1% to 4.5% going forward.
"HOLD"20th March.,2014
Narnolia Securities Ltd,
-
8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
14/21
Source:Eastwind/Company
HDFC BANK
Please refer to the Disclaimers at the end of this Report.
hare of PSL down sharply; release fund would be deployed in high yield sector
ecently share of PSL in HDFC bank came sharply but bank already met PSL target of
0% which means addition fund would be deployed in high yield segment which would
flect in NII growth. According to RBI, banks need to spend 40% in net advance in
ority sector lending and HDFC bank are among those which have highest share in PSL
private bank category. Additionally fund raised fund through FCNR deposits with
nure more than 3 years are exempted from SLR, CRR and PSL means bank would
ave higher fund for deploying in sector those are high yield in nature.
aluation & View
DFC bank is expected to report better earnings on the back of (a) likely to get benefit
om FCRN deposits mobilization, (b) recent RBI allow bank to use 33% of counter cycle
ffer provisions for specific provisions, this would help bank to make lower provisions
d hence profitability and (c) share of additional PSL lending would be deployed in high
elding sector. We have raised our price target to Rs.760/share which is upper side ofr valuation band.
aluation Band
Narnolia Securities Ltd,
-
8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
15/21
HDFC BANK
nancials
Source: Eastwind/ Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
L 2011 2012 2013 2014E 2015E
erest/discount on advances / bills 15085 21124 26822 32002 40213
come on investments 4675 6505 7820 9311 10952
erest on balances with Reserve Bank of India 148 137 282 373 373
hers 20 108 141 65 65
tal Interest Income 19928 27874 35065 41751 51603
hers Income 4335 5784 6853 7891 7891
tal Income 24263 33658 41917 49642 59494
erest on deposits 8028 12690 16321 20281 24337
erest on RBI/Inter bank borrowings 1336 2253 2889 4571 4278
hers 20 47 44 44 44
erest Expended 9385 14990 19254 23038 28659
10543 12885 15811 18713 22944
Growth(%) 25.7 22.2 22.7 18.4 22.6
her Income 4335 5784 6853 7891 7891
tal Income 14878 18668 22664 26604 30835
tal Income Growth(%) 20.3 25.5 21.4 17.4 15.9
mployee 2836 3400 3965 4231 5342
her Expenses 4317 5878 7271 7857 9921
erating Expenses 7153 9278 11236 12087 15263
P( Rs Cr) 7725 9391 11428 14516 15572
ovisions( Incl tax provision) 3799 4224 4701 1751 6453
t Profit 3926 5167 6726 8453 9119
t Profit Growth(%) 33.2 31.6 30.2 25.7 7.9
ey Balance Sheet Data
posits 208586 246706 296247 355496 426596
posits Growth(%) 24.6 18.3 20.1 20 20
rrowings 14394 23847 33007 50785 47529
rrowings Growth(%) 11.4 65.7 38.4 54 -6
an 159983 195420 239721 299651 365574
an Growth(%) 27.1 22.2 22.7 25 22
vestment 70929 97483 111614 114580 156461
vestment Growth(%) 21.0 37.4 14.5 3 37
stwind Calculation
eld on Advances 9.4 10.8 11.2 10.7 11.0
eld on Investments 6.6 6.7 7.0 8.1 7.0
eld on Funds 7.7 8.9 9.3 10.1 9.9
st of deposits 4.3 5.6 6.0 6.5 6.2
st of Borrowings 9.4 9.6 8.9 9.0 9.0
st of fund 4.2 5.5 5.8 5.7 6.0
aluation
ok Value 545.5 127.5 154.3 189.4 222.3
BV 4.3 4.1 4.1 3.5 3.0
E 27.8 23.6 21.8 18.7 17.3
-
8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
16/21
KPIT Tech.
Key Facts from recent Management Interview to media (on 12t
March, 2014)
1M 1yr YTD
solute -4.7 52.9 -
l. to Nifty -12 41.9 -
Current 2QFY14 1QFY14
omoters 22.53 22.87 24.25
41.96 36.42 32.79
6.99 11.12 10.93
hers 28.52 29.59 32.03
3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
677.93 702.76 (3.5) 567.02 19.6
103.5 108.1 (4.3) 94.1 10.0
66.7 66.7 0.0 48 39.0
15.3% 15.4% (10bps) 16.6% (130bp
9.8% 9.5% 30bps 8.5% 130bp
Expectation of margin improvement:The decline in SAP revenue has impacted the over
margins, and margin was seen almost flat at 15.4% in 2QFY14 and 3QFY14. We expect th
profitability from SAP business would support to shape up its margin in next couple
quarters. Even, Utilization rate in SAP has declined to below 90% at onsite and below 70
mark at offshore. This is expected to improve in FY15E. Management expects to see P
margin at double digit by next couple of quarters.
Auto Engineering Services; a growth driver: The global Automotive Industry h
witnessed a strong revival. US industry sales in 2013 finished at 15.6 million vehicles,
7.6% from 2012, and China became the first country in which more than 20-milli
vehicles were sold in any given year. Considering healthy demand outlook in Au
Industry, KPIT is seeing exports growth above the industry rates, driven by demand f
services around safety systems, intelligent driving, hybrid electric cars, fuel efficiency etc
Management expects revenues from Auto Engineering to exceed 30% of thecompan
revenues, in the next 3 years, as KPIT expected to achieve the mark of USD1b
revenues.
6517
kt Capital (Rs Crores)
are Holding Pattern-%
fty
wk Range H/L 189/92
"On billion dollar journey"
MP 160
rget Price 185 SAP business back to growth trajectory: KPITsrevenue has been facing growth relat
issues on account of deficit in SAP business (contributes 24% of sales). Profitability on Sbusiness was also a challenge for the company. On 3QFY14 revenues from SAP was do
by 10% (QoQ). However, on the back of deal signings and visible deal pipeline, SAP shou
return into growth path in 4QFY14E and FY15E. Considering healthy demand environme
in FY15E, We expect that USD revenue growth in SAP could be in double digits.
evious Target Price -
ompany update Buy
16%
ange from Previous -
arket Data
SAP revival and Auto Engineering Services shape; a growth driver in near term,
side
E Code 532400
ice Performance
Rs, Cro
Please refer to the Disclaimers at the end of this Report.
Incremental revenue by REVOLO and Systime: As per the management comment,
dream project REVOLO Technology REVOLO would play a key role to report
incremental growth in FY15E. KPITs acquisition Systime from Integrated Enterpr
Services (IES) segment would report healthy growth prospects at least over the ne
couple of years.
View and Valuation: Impressive organic growth despite inorganic thrust (acquired
companies in the last 10 yrs), Potential option value from success of its hybrid engi
venture Revolo (on trial). KPIT has targeted to reach $1bn sales by 2017. Its differentiat
positioning and competitive edge in its focus areas, imperatives to the success of smalle
sized IT vendors impress to investors.
E Symbol KPIT
ock Performance
3103
erage Daily Volume 144511
EBITDA Margin
PAT Margin
We expect that the company would report better earnings with margin ramp up a
signing of larger deals in next couple of quarters. Now, we upgrade our view on t
stock from Neutral to Buy with a price target of Rs 185. At a CMP of Rs 160, sto
trades at 9.5x FY15E EPS.
Financials
Revenue
EBITDA
PAT
"BUY"19th Mar' 14
Narnolia Securities Ltd,
-
8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
17/21
Please refer to the Disclaimers at the end of this Report.
nancials
(Source: Company/Eastwi
KPIT Tech
perating Metrics
Narnolia Securities Ltd,
4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY1
o. of Customers Added 4 3 4 2 5 6 3 3
o. of Active Customers 169 172 176 178 183 189 192 195
ustomers with run rate of >$1Mn 59 65 69 72 78 78 78 78
op Client Cummins 19.5% 20.6% 19.7% 19.1% 16.6% 16.8% 16.5% 17.9%
op 5 Clients 33.0% 36.3% 35.2% 36.8% 35.2% 38.6% 38.0% 38.2%
op 10 Clients 42.2% 44.0% 43.7% 45.2% 44.0% 47.3% 46.3% 47.6%
SO 90 75 75 70 75 77 75 76
otal Employee 7719 7873 8111 8286 8321 8456 8816 9136
nsite Utilization 94.5% 94.7% 94.5% 92.8% 94.3% 94.2% 92.4% 88.1%
ffshore Utilization 74.3% 74.1% 74.7% 72.9% 74.1% 73.4% 72.9% 71.3%
ient Metrics
ient Concentration
mployee Metrics
s, Cr FY10 FY11 FY12 FY13 FY14E FY15E
et Sales-USD 153.76 224.07 306.71 410.46 445.78 535.96
et Sales 731.64 987.05 1500.00 2238.63 2692.54 3215.75
mployee Cost 265.92 529.95 771.78 1140.79 1378.58 1640.03ther expenses 304.70 308.82 511.97 762.32 902.00 1061.20
otal Expenses 570.62 838.77 1283.75 1903.11 2280.58 2701.23
BITDA 161.02 148.28 216.25 335.52 411.96 514.52
epreciation 30.80 41.12 44.49 47.16 54.42 67.93
ther Income 1.20 6.74 13.82 11.74 12.12 24.12
xtra Ordinery Items -26.45 0.00 10.05 -1.30 -21.05 16.08
BIT 130.22 107.16 171.76 288.36 357.54 446.59
nterest Cost 2.74 3.78 7.32 13.99 24.31 24.56
BT 128.68 110.12 178.26 286.11 345.35 446.15
ax 16.91 15.49 43.67 76.55 96.70 122.69
AT 111.77 94.63 134.59 209.56 248.65 323.46
ales-USD -11.7% 45.7% 36.9% 33.8% 8.6% 20.2%ales-INR -7.8% 34.9% 52.0% 49.2% 20.3% 19.4%
BITDA -12.2% -7.9% 45.8% 55.2% 22.8% 24.9%
AT 169.6% -15.3% 42.2% 55.7% 18.7% 30.1%
BITDA 22.0% 15.0% 14.4% 15.0% 15.3% 16.0%
BIT 17.8% 10.9% 11.5% 12.9% 13.3% 13.9%
AT 15.3% 9.6% 9.0% 9.4% 9.2% 10.1%
mployee Cost 36.3% 53.7% 51.5% 51.0% 51.2% 51.0%
ther Exp 41.6% 31.3% 34.1% 34.1% 33.5% 33.0%
ax rate 13.1% 14.1% 24.5% 26.8% 28.0% 27.5%
MP 115.00 168.05 122.90 99.0 160.0 160.0o of Share 7.90 8.70 17.80 19.28 19.28 19.28
W 387.11 603.19 712.55 1036.23 1269.09 1570.00
PS 14.15 10.88 7.56 10.87 12.90 16.78
VPS 49.00 69.33 40.03 53.75 65.82 81.43
oE-% 28.9% 15.7% 18.9% 20.2% 19.6% 20.6%
ividen Payout ratio 6.4% 6.8% 4.9% 7.9% 6.3% 7.0%
/BV 2.35 2.42 3.07 1.84 2.43 1.96
/E 8.13 15.45 16.25 9.11 12.41 9.54
aluation
xpenses on Sales-%
Margin -%
rowth-%
-
8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
18/21
ACC Ltd.
1253
1257
12570%
0%
500410
19634
9817
6063
Holcim eyeing Jaypee Group's cement grinding plant in Panipat
1M 1yr YTD
solute -3.5 -22.3 -21.0
l. to Nifty -1.9 -24.4 -22.8
Cureent 3QCY13 2QCY13
omoters 50.3 50.3 50.3 JP Associates looks to exit JV with SAIL
20.0 20.9 19.5
12.9 11.9 11.7
hers 16.8 16.9 18.6
Management Quotes :
Financials : Q4CY13 Y-o-Y % Q-o-Q % Q4CY12 Q3CY1
Net Revenue 2792 -12.2 8.6 3180 257
EBITDA 361 -9.3 26.2 398 28Depriciation 153 -3.2 6.3 158 14
Interest Cost 12 -55.6 9.1 27 1
Tax -36 -190.0 -170.6 40 5
PAT 278 16.3 129.8 239 12(In Cr
1
arket Data
E Code
ACC
Source - Comapany/EastWind Research
According to Management the economic environment in the country was sluggish, thu
impacting the demand for cement and concrete. As a result, the company's cemen
volumes remained almost flat. The company appears not enthusiastic for demand growt
going forward. Based on current demand indications, we do not foresee any significan
improvement in the cement.
kt Capital (Rs Crores)
erage Daily Volume (Nos.)
wk Range H/L 1355/912
MP
side
ange from Previous
esult Update Book Profit Nearly we saw a upward rally in stocks due to the forecasting of a stable governmen
after election by the market players. The sentimental effect on market is on positive sid
,hence the low valued stock like ACC took very less time like one month to come to it
near fare value, which we had estimated for a medium term target.
No doubt the stock's fundamentals are good and also available at a cheaper rat
comparing to its early trade . In the previous one month the stock performed well &
recover 20-22% from its estimated low of CY2013. We didn't expected this rise to be s
fast.The CMP was estimated for a medium term target price looking at its earnings an
fundamentals . How ever the target price got achieved few days back. we believe th
stock's fundamental is still good and price too cheap also , but for the earnin
upgradation and revised target price we would like to see the 1st quarter earnings, henc
we recommend Book Profit on the stock at a price range between Rs.1253 to Rs.1310.
E Symbol
rget Price
evious Target Price
fty
Please refer to the Disclaimers at the end of this Report.
ock Performance-%
are Holding Pattern-%
yr Forward P/B
Holcim Cements has expressed interest in the grinding unit which has an annual capacit
of 1.5 million tonnes per annum and the talks are at a preliminary stage. Holcim wants t
expand its presence in North India through this strategic asset and will take a call if thi
potential deal can be routed through ACC cements.ACC Cements has a cement plan
nearby in Himachal Pradesh and if JP's grinding unit is absorbed, it would be beneficia
logistically and even in terms of costs.
JP Associates,looking to sell its entire stake in its cement joint ventures with SAIL to cu
down its debt.The company is likely to part with its 74% stake in Bhilai and Bokar
cement plants that together have an installed capacity of 4.3 mtpa. As per the story , th
company is eying around Rs. 2900 crore from the deal with cement major ACC.The deawith ACC if it happens would imply enterprise value of USD 147 per MT as against US
127 per MT it got for Gujarat plant sale.
"Book
Profit"18th March' 14
Narnolia Securities Ltd,
-
8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
19/21
utlook
luation And Recommendation
ompany Description :
Margin Gap
Margin Gap
CY11 CY12 CY13 CY14E
10237 11358 11169 13027
191 263 219 219
10428 11621 11389 19723
2199 2384 2384 0
1940 2219 2299 0
8316 9162 9540 10942
1921 2197 1848 2084
510 569 584 639
97 115 52 50215 391 132 323
1276 1050 1094 1292
17.7 18.8 13.8 15.3
19
Source - Comapany/EastWind Research
x
AT
OE%
wer and fuel
eight and forwarding
penditure
ITDA
ACC Ltd.
L PERFORMANCE
et Revenue from Operation
her Income
Cement Sales Volume
Cement Realization
Cement Realization
Cement Realization
Per Ton Analysis
Per Ton Analysis
Cement Realization
CC Limited (ACC) is engaged in manufacture of cement & ready mixed concrete. The
ompany has grinding plants in Karnataka and clinkering line in Maharashtra. The
ompanyssubsidiaries include ACC Mineral Resources Limited, Lucky Minmat Limited,
lk Cement Corporation (India) Limited, National Limestone Company Private Limited
d Encore Cement and Additives Private Limited. The Company is subsidiary of Ambujament India Private Limited.
ment prices witnessed an increase during Oct-Nov,13 but also witnessed a sharp fall
ring Dec,13 which has contributed towards lower average realizations for the year for
e company.Further,with a strong balance sheet with zero debt and better dividend
eld of 3%,we continue to remain positive despite near term challenges.We revise our
timates downwards to factor in lower demand growth scenario. At current price of Rs
53, stock is trading at 2.8x P/B and 2.8x P/B on CY14 estimates.Valuation looks good
r this company,but we would like to see the 1st quarter for earning upgrading hence
e recommend Book Profit on the stock at a price range between 1253 to 1310.
ompany has made several capacity expansion plans in the region. ACC is replacing the
isting facilities at Jamul, Chhattisgarh with a clinker plant with an annual production
pacity of 2.8 MT and local grinding capacity of 1.1 MT of cement, while a new plant
th annual capacity of 2.7 MT is scheduled to be built in Kharagpur. The capacitypansion plant will increase the company's total cement production capacity to 35 MT
om the existing 30 MT.On a QoQ basis, the EBITDA/tonne improved 10.4% due to an
provement in realisations & comparatively lower increase in total expenditure/tonne,
shows a positive view for the further quarters.onsidering the expansion plans we
pect 4% growth in sales volume and 10% growth in realization for CY14.
terest Cost
tal Income
epriciation
Narnolia Securities Ltd,
-
8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
20/21
CY10 CY11 CY12 CY13
6281 6979 7372 7813
510 506 85 0
14 0 0 0
188 126 157 891581 816 661 642
1466 1051 1227 1081
11041 11921 11928 12101
77 48 39 40
5230 6359 5893 6040
1564 370 314 322
283 461 566 880
926 1113 1134 1122
249 266 303 397
1086 1660 681 506
162 279 325 340
11041 11921 11928 12101
CY10 CY11 CY12 CY13
3.2 3.1 3.6 2.7
57.4 68.7 73.8 57.6
3.0 2.6 2.7 3.6
19.1 8.0 5.8 5.7
19632 20180 26240 20296
18.7 16.5 19.4 19.2
12.7 10.5 11.9 12.5
2.8 2.5 2.1 2.7
14.6 15.2 16.3 12.3
0.1 0.1 0.0 0.01.0 1.3 1.4 1.4
ading At :
20
rrent Ratio
vidend Yield%
OCE%
ventories
ng-term loans and advances
pital work-in-progress
ade payables
V
editors to Turnover%
E
V/EBIDTA
B
S
ebtor to Turnover%
tangibles
ngible assets
ebt/Equity
ng-term provisions
sh and bank balances
ACC Ltd.
tal equity
ng-term borrowings
ort-term borrowings
S PERFORMANCE
ade receivables
ort-term loans and advances
ATIOS
tal Assets
ort-term provisions
tal liabilities
Source - Comapany/EastWind Research
Narnolia Securities Ltd,
-
8/12/2019 Stock Recommendation for Today: Buy Stock of PNB and Neutral View on Jindal steel & Power
21/21
Narnolia Securities Ltd
402, 4th floor 7/ 1, Lord s Sinha Road Kolkata 700071, Ph
033-32011233 Toll Free no : 1-800-345-4000
email: [email protected],website : www.narnolia.com
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