TOP 10 PICKS -...

TOP 10PICKS

FOR

201826th DEC, 2017

TOP 10PICKS

FOR

2018

1 Larsen&Toubro Construction&Engineering 1266.65 1450 15

2 ZeeEntertainment Broadcasting&CableTV 574.10 667 16

3 TechMahindra ITConsulting&Software 492.55 569 16

4 BharatElectron Defence 188.55 213 13

5 NHPCLtd PowerGeneration&Distribution 30.35 38 24

6 IndianBank Banks 391.25 448 15

7 EngineersIndia InfrastructureDevelopers&Operators 205.00 239 17

8 SwarajEngines AutoParts&Equipment 2036.10 2384 17

9 AhluwaliaContr. Realty 373.40 473 27

10 Gati Transportation-Logistics 137.65 158 15FROM

SM

C RE

SEAR

CH D

ESK

....FR

OM S

MC

RESE

ARCH

DES

K ....

SR.NO. CO_NAME SECTOR CLOSEPRICE* TARGET(RS.) UPSIDEPOTENTIAL(%)

*CMPason22ndDecember2017

FROMSMCRESEARCHDESK

ndianstockmarketssawanotherspectacularyearwithbenchmarkindicesgainingcloseto25percentonthebackofreformsinitiatedbythegovernmentandincreasingIappetiteforequitiesofdomesticinvestors.Asamatteroffactdomesticmutualfundspouredinabouttwicethemoneyinequitiesputinbytheforeigninstitutional

investorsamountingtocloseto$8billion.Thegainsinthedomesticmarketswereinlinewiththemajorglobalmarketsindicatingfirmnessingrowthgoingin2018with

someagenciespredictingbestgrowthin2018sinceseenintheyear2011.WithBenchmarksNifty50andNiftyMidcap150tradingat26and54timestoearnings,these

benchmarksaretradingatpremiumofabout26percentand116percenttotheirhistoricalfiveyearaverage.Actually,riseindomesticandgloballiquidityledtoP/Ere-rating

inthemarket.Ontheflipside,sincetheGujaratstateelectionwinwasnotaneasywinforBhartiyaJantaParty(BJP),weexpectgovernmenttoembracemorepopulist

measuresandfocusoncompletingthereformsundertakeninthelastthreeyears.

Nowtalkingabouttherisksgoingin2018,thefirstriskcomingfromtheglobalarenawouldbethemajorcentralbankerswouldbeoncoursetotrimtheirbalancesheetand

alsotheywouldhikeinterestratesgiventhefirmnessingrowththeyareexperiencing.Whilemajorcentralbanksarecalibratingtheirmovesinsuchamannerthatthere

shouldnotbeanydisruptioninfinancialmarketsbutallofthiscanmeantroubleforemergingmarketsinthesensethattherewouldbeliquidityconstraintandalsomaysee

withdrawalfrombondmarkets.AsamatteroffactForeignInstitutionshavepumpednearly$8billioninequitiesand$23billionindebtmarketsofarin2017.Theotherrisks

wouldbesustenanceofhighoilpricesandadditionalspendingbygovernmentaheadof2019electionstherebyleadingtochallengeforfiscaldeficitandcontinuationof

neutralstancebytheReservebankofIndiainresponsetocommitmenttokeepinflationcloseto4percent.

2018isexpectedtobeanothergoodyear—withtheresultsofallpolicyinitiativestakeninthelast2yearsbeginningtotakeshape.Thegovernmentisexpectedtooutlinea

roadmaponNPAresolutionandframeabetteroutlookgoingforwardwithPSUbanks.Theclean-upandrecapitalizationofpublicsectorbanks(PSU)anditspositiveimpacton

overallearningsgrowthisexpectedtobethemajordriversofthestogckmarketin2018.Ontheeconomyfront,after7.1%growthin2016andaprojected6.7%uptickin2017,

theIndianeconomyisexpectedtogrow7.4%nextyearwithgovernmentpoliciesshiftingtowardsthestress-riddenrurallandscape.ModigovernmenthasenactedGoodsand

ServicesTax(GST),ade-monetizationplan,anewbankruptcylaw,aninflation-targetingframeworkforitscentralbank,aRealEstateRegulationActandmanymoreinthelast

twoyears,andthereisanexpectationthatgovernmentwouldtrytogiveshapetotheseinitiatives.Theupcomingbudgetisexpectedtobefocusedonfarmers,creatingjobsand

infrastructurewhilemakingallattemptstofollowafiscalprudencepath.AlongTerminvestorsshouldremaininvested.HappyInvesting

TOP10PICKS-2018

1

PERFORMANCEOF“TOP10PICKS-2017”

2

Performanceofreport"TOP10PICKS-2017"releasedon29thDecember2016

"SMCRetailResearchcameoutwithareport""TOP10PICKS-2017""on29thDecember2016.Itisapleasuretosharewithyouthatoutoftenstocksrecommendation,

eightstocksmetthetargetsgiveninthereportforoneyearperspective.Theaveragereturngeneratedis17%."

SR.NO. CO_NAME RECOMENDEDPRICE TARGET(RS.) STATUS/CMP* RETURN(%)

1 RelianceInds. 526.10 628 TargetMet 19

2 NTPC 160.80 185 TargetMet 15

3 PowerGridCorpn 180.00 226 TargetMet 26

4 BharatElectron 123.59 154 TargetMet 25

5 PIInds. 810.85 1107 956.90 11

6 ArvindLtd 331.10 412 TargetMet 24

7 JBChem&Pharm 342.40 494 322.05 -14

8 NavneetEducat. 109.85 131 TargetMet 19

9 SuprajitEngg. 182.50 224 TargetMet 23

10 GujInds.Power 94.90 116 TargetMet 22

AveragePrice 17

LARSEN&TOUBROLIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

Larsen&ToubroisamajorIndianmultinationalengagedintechnology,

engineering, construction,manufacturing and financial services, with

global operations. Its products and systems aremarketed in over 30

countries worldwide. A strong, customer–focused approach and the

constant quest for top-class quality have enabled L&T to attain and

sustainleadershipinitsmajorlinesofbusinessforoversevendecades.

Consolidated order book stood at Rs 257526 crore, up by 2% YoY.

Internationalorderbookconstitutesaround26%of totalorderbook.

Publicsectorcontinuedtodrivethecapex.OrderwinsinInfrastructure

segment,HydrocarbonandHeavyEngineeringsegmentscontributedto

theorderflowduringtheyear.OrderinflowinSep17quarterstoodatRs

28732croredownby8%YoY.Internationalorderinflowaccountedfor

around36%oftotalorderinflowsandwaslargelyduetohydrocarbon

orders.Sep17quarterrevenuegrowthwasledbywater,servicesand

heavyengineeringbusinesses.

The Companywill continue to focus on reducing theworking capital

levels by emphasis on speedy customer collections, accelerating

invoicingofworkcompletedandreducinginventorylevels.

The Company collaborateswith technology partners to participate in

some large programs being launched for augmentation of defence

equipmentfortheArmyandtheNavy.DuringFy16-17,theCompanyalso

receivedalargeorderformanufactureoftrackedartillerygunsandits

shipyardatKattupalliaugmentstheabilityoftheGrouptobidforlarge

naval orders.Defence is amajor focus area for theCompany and the

managementexpectslargeprospectsinthecomingyears.

Thecompanyexpectsthatthevariousreformsandeconomicmeasures

overthepastyearwouldtakesometimetostokegrowth.Focusforthe

company continues to remain on improvement of return on equity

throughreductionofworkingcapitalandhigheroperationalefficiencies.

Managementexpectsorderinflowtogrowbyaround12-15%andnet

salesgrowthofaround10-12%inFY18.Moreover, ithascompletely

comeoutfromthelegacyordersinhydrocarbonspace.

3

CMP:Rs.1266.65 Target:Rs.1450.00 UpsidePotential:15%

VALUATION

The Company continues to focus on profitable execution of the large

Order Book, selective order picking, on-time deliveries& operational

excellencethroughdigitalization.Themanagementisalsoemphasizing

on cost competitiveness, continuous optimization of working capital,

restructuringofitsbusinessportfolioandvaluecreationwithanaimto

enhanceitsReturnonEquity.TheGovernment'sdeterminedeffortsto

revivetheinvestmentsentimentandglobally,thedevelopedeconomies

appear hopeful of a recovery and better growth prospects. The

investmentclimateinthecompany'sfocusmarketMiddleEastcontinues

toprovidesomeselectiveopportunitiesdespitetheoilpriceshockand

thegeopoliticalrisks. Thus,itisexpectedthatthestockwillseeaprice

targetofRs.1450in8to10monthstimeframeona1yearaverageP/Exof

26.05xandFY19EPSofRs.55.68.

ACTUAL FORECAST

FYMar-17 FYMar-18 FYMar-19

REVENUE 110,011.00 120,817.20 136,008.00

EBITDA 11,074.70 13,076.30 15,327.70

EBIT 8,704.80 10,975.70 12,905.10

PRE-TAXPROFIT 8,765.90 10,859.80 12,405.40

NETINCOME 5,919.80 6,881.70 7,802.40

EPS 42.19 49.11 55.68

BVPS 358.83 404.38 450.06

RoE 12.54 12.86 13.24

(Rs.inCr.)FINANCIALPERFORMANCE

Source:Company'sWebsite,Reuters&Capitaline

CurrentMkt.Price(Rs.) 1266.65

FaceValue(Rs.) 2.00

52WeekHigh/Low 1274.00/868.00

M.Cap(Rs.inCr.) 177461.67

EPS(Rs.) 53.00

P/ERatio(times) 23.90

P/BRatio(times) 3.50

DividendYield(%) 1.10

StockExchange BSE

VALUEPARAMETERS

AsonSep’17 %OfHolding

Foreign 19.76

Institutions 39.29

Govtholding 0.21

NonPromoterCorporateHolding 7.53

Promoters 0

Public&Others 33.22

SHAREHOLDINGPATTERN

P/ECHART

ZEEENTERTAINMENTENTERPRISESLIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

ZeeEntertainmentEnterprisesLimitedisoneofIndia’sleadingmedia

andentertainmentcompanies.Itisamongstthelargestproducersand

aggregators of entertainment content in theworld,with an extensive

libraryhousingover250,000hoursoftelevisioncontent.Withrightsto

morethan4,200movietitlesfromforemoststudiosandof iconicfilm

stars, ZEEL houses theworld’s largestHindi film library. Through its

strong presenceworldwide, ZEEL entertains over 1.3 billion viewers

acrossmorethan170countries.

Thecompany’soverallmarketsharehasrisenfrom16.9%inQ1to18.3%

inQ2.IntheHindipayGECspace,itsmarketsharehasrisenfrom22.7%

to 25.5%. The company continues to see good ad spend from FMCG

vertical.TheE-commerceverticalalsoremainsstrong.

ZEEL’sconsolidatedadvertisingrevenueinQ2FY18grewby2.9%YoYto

Rs. 9,867 million. Despite the adverse impact of GST on advertising,

domesticadvertisinggrewby5.8%YoY,onacomparablebasis(excluding

sports,RBNLandIWPL)toRs.9,028million.

Domestic and international subscription revenues for the quarter

declinedby13.5%YoYand16.1%YoYrespectively,onaccountofsaleof

sports business. On a like for like basis, the domestic subscription

revenuegrewby7.2%.DomesticsubscriptionrevenueforQ2FY17had

benefittedfromearlyclosureofcontentcontractswithourdistributors,

resultinginahighbase.

TheCompanyhasenteredintoadefiniteagreementtoacquire6music

channels from9XMedia and its subsidiaries. The channels include 3

Hindi music channels (9XM, 9X Jalwa, 9X Bajao) and one each in

Punjabi(9x Tashan), Marathi (9x Jhakas) and English (9XO). The

acquisitionwillsignificantlystrengthenZEEL’stelevisionmusicportfolio

inHindiandregionallanguages.ItwillalsocomplementtheCompany’s

movieandmusicbusiness.

2HDchannels-ZeeTamilHDandpremiumEnglishmoviechannels&

privéHDwerelaunchedtakingthecountofHDchannelsto11.

4


VALUATION

Thecompanyhasenteredintonewergeographiesbothdomesticallyand

globally, launched multiple channels, strengthened distribution,

expanded the genres andwidened its audienceprofile.Moreover, the

managementfocusestowardsexpansionanditisexpectedthatmarket

sharewouldgivestronggrowthtothecompanyincomingyears.Thus,it

is expected that the stockwill see aprice targetofRs.667 in8 to10

months time frame on a target P/E of 38x and FY19 (E) earnings of

Rs.17.54.

ACTUAL FORECAST


REVENUE 6434.10 6566.10 7562.70

EBITDA 1926.90 2080.10 2487.10

EBIT 1811.60 1980.60 2361.10

PRE-TAXPROFIT 2901.00 2207.40 2548.30

NETINCOME 998.20 1418.20 1688.90

EPS 10.39 14.62 17.54

BVPS 69.31 83.67 96.84

RoE 17.42 19.16 19.67




FaceValue(Rs.) 1.00

52WeekHigh/Low 595.85/428.50


EPS(Rs.) 14.68




StockExchange BSE

VALUEPARAMETERS


Foreign 44.09

Institutions 6.52


Promoters 43.07

Public&Others 3.10

SHAREHOLDINGPATTERN

P/ECHART

TECHMAHINDRALIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

TechMahindra isaspecialist indigital transformation,consultingand

business re-engineering solutions. It has major focus on two key

verticals,telecommunicationsandmanufacturingthataccountfor70%

ofitsrevenue.ItalsoservesotherverticalslikeBFSI,technology,media,

retailandlogistics.

The company is getting aggressive on new age technologies and has

trained11,000employeesonautomationtechnologies.Italsoplansto

train additional 10,000 people in areas such as artificial intelligence,

machinelearningandautomation;ithasadded21activeclients,taking

itsoverallactiveclientbaseto885.Thecompanyadded7clientsunder

US$10millioncategory,8inUS$5millionbandand13inUS$1million

band.

Attritionrate(LTM)forthequarterdeclinedto16percentfrom17per

centinpreviousquarterandhasadded1,250employeesinthequarter.IT

utilizationinthesecondquarterimprovedto81percentfrom77percent

on sequential basis while IT utilization (excluding trainees) was

unchangedat81percentquarteronquarter.

Onthedevelopmentfront,TechMahindraandPTCopenanIndustrialIoT

CenterofExcellencetoshowcasethetechnologiesthatcompaniescan

utilizeforitsdigitaltransformations.

TechMahindrahastransformeditselfintoafullrangeITserviceprovider,

withpresenceinallverticalsacrossmultiplegeographies.Ithasafairly

distributed market in US, Europe and emerging markets such as

Australia,MiddleEastandLATAM.

DuringQ2FY17,Consolidatednetprofitgrew29.7percentyear-on-year

toRs836crorefromRs644.73croreintheJuly-Septemberquarterlast

year,backedby improvement inoperationalperformance. Itsrevenue

fromoperationswas up 6.1 per cent at Rs 7,606.38 crore during the

quarterascomparedwithRs7,167.41croreinthesameperiodlastyear.

Indollarterms,thenetprofitwasupnearly34percentto$129.3million,

whilerevenuewasup10percentto$1.17billioninthesecondquarter.

5


VALUATION

According to the management, the company would focus on Digital,

Domain and Execution to transform it from IT (Information

Technologies)toDT(DigitalTechnologies).Ithasonceagainprovedthat

despite the occasional headwinds, geopolitical uncertainties and

changingdemands,itwouldrisetogrow.WithitsDAVID(Digitalization,

Automation,Verticalization,Innovation,andDisruption)Strategyatplay,

it has posted reasonably good growth in the quarter across revenue,

profitandnewbusiness.Thus,itisexpectedthatthestockwillseeaprice

targetofRs.569in8to10monthstimeframeonatwoyearaverageP/Eof

15.12xandFY19(E)earningsofRs.37.66.

ACTUAL FORECAST


REVENUE 29140.80 30758.50 33838.20

EBITDA 4184.40 4426.80 5108.70

EBIT 3206.40 3459.00 4036.40

PRE-TAXPROFIT 3853.00 4306.00 4580.00

NETINCOME 2850.90 3218.10 3407.30

EPS 31.64 35.82 37.66

BVPS 168.74 204.49 230.55

RoE 18.51 18.37 17.46




FaceValue(Rs.) 5.00

52WeekHigh/Low 517.00/357.60


EPS(Rs.) 31.37




StockExchange BSE

VALUEPARAMETERS


Foreign 38.38

Institutions 12.83


Promoters 36.14

Public&Others 10.76

SHAREHOLDINGPATTERN

P/ECHART

BHARATELECTRONICSLIMITED(BEL) RECOMMENDATION:BUY

INVESTMENTRATIONALE

BharatElectronicsLimitedisamulti-product,multi-technology,multi-

unitNavratnacompanyprovidingthetechonologyandproductasperthe

needsofdefenceindiversefieldsinIndiaandoutsideindia.

BELwouldbetheprimebeneficiaryofgovernmentinitiativesindefence

sector through “MAKE IN INDIA” and to take the benefit as it has

enhanceditsfocusonprocurementofnewcapitalequipments.Moreover,

its Increased focus on R&D, system integrator and outsourcing to

increaselongtermsustainabilityofbusiness.

Thecompanyplansacapexof Rs.2000croreoverthenextfiveyears

which includes Defence System Integration Complex, Product

developmentcentre,Opto-Electronicmanufacturingfacilityetc.

AnimpressiveorderbookRs41746croreasonSeptember2017,which

reflectthefivetimesaorderbooktosalesratio,isakeypositiveforthe

company.Themanagementhasguided7-8%growthinorderbook in

comingyears.Moreover,Ithasplannedtoincrease‘Contributionfrom

IndianIndustries’to36%(currentlevel32%)innext5years.

Beinga‘zerodebt’publicsectorfirm,itcouldsupportworkingcapital

requirementofthecompanytoincreaseitsscaleofbusiness.

Inlongterm,thecompanyhasplantofocusonbuildinghealthypipeline

onordersinnetworksystems,tankelectronics,radars,guns,electronic

warfareandavionics,increasedthrustonexports,offsetorders,andnew

offeringsinareasofIndiandefencesecuritysystem,smartcityelements,

etc.

Thecompanyhasregistered19%growthinitsnetprofittoRs412.39

croreforthequarterendedSep2017.Stronggrowthinbottom-linecan

beattributedtogoodoperatingperformance.Onhighersalesup45%to

Rs2476.22crore,theoperatingmarginexpandedby410bpsto24%.

6



FaceValue(Rs.) 1.00

52WeekHigh/Low 192.95/120.88


EPS(Rs.) 6.20




StockExchange BSE

VALUEPARAMETERS


Foreign 8.11

Institutions 16.14


Promoters 67.94

Public&Others 4.28

SHAREHOLDINGPATTERN

P/ECHART

VALUATION

Government’sgreateremphasison‘MakeinIndia’initiativeinDefence

sector provides a great opportunity for the Company to enhance its

indigenisationeffortsandtoaddresstheopportunitiesinIndianDefence

sector. Healthy order book and orders in pipeline, capacity

enhancementsandcreationofnewtestfacilitieshashelpedthecompany

inachievingthetargetedgrowthandalsowouldcontinuetodrivethe

growthinthecoming4to5years.Thusweexpectthestocktoseeaprice

targetofRs213in8to10monthstimeframeona1yearaverageP/Eof

26.46andFY19(E)earningsofRs.8.05.

ACTUAL FORECAST


REVENUE 8,336.60 10,730.20 12,427.70

EBITDA 1,772.60 2,220.70 2,526.60

EBIT 1,561.00 1,916.60 2,194.10

PRE-TAXPROFIT 2,008.90 2,254.80 2,550.40

NETINCOME 1,523.60 1,684.20 1,919.20

EPS 94 6.93 8.05

BVPS 35.61 41.07 45.94

RoE 18.22 20.26 20.60



NHPCLIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

NHPC is India's premier hydropower company, with 15% share of

installed hydro-electric capacity in India. Government of India (GoI)

holds74.5%stakeinNHPC(aspertheshareholdingpatternason30

September2017).

NHPChas22PowerStationswithaninstalledcapacityofover6,691MW

(including2powerstationsof1520MWofNHDC,aJVcompanyofNHPC

andGovtofMadhyaPradesh)withanother3Projectsof3,130MWunder

construction.Duringtheyear2016-17,NHPChascommissioneditsfirst

50MWwindpowerproject in Jaisalmer,Rajasthan and is also in the

processofestablishinga50MWSolarPowerProjectatDindigul/Theni

DistrictofTamilnadu.

TheCompanyisexploringnewopportunitiesfordiversificationtoother

areas of generation of power namely Thermal, Wind, Solar etc.

GovernmentofIndiahassetatargetforcapacityadditionof1,75,000MW

in5years'time.Renewableenergyandpumpedstorageschemeshave

immenseopportunitiesforthedevelopment.

Recently,thecompanyhasannouncedaplantosetupasolarprojectin

Odhishawithcapacityintherangeof100-200Mw.

The Company possesses rich experience and expertise in

implementation of hydro-electric projects. It has a competent and

committedworkforce. Its executiveshave extensive experience in the

industry with capabilities and expertise in conceptualization,

construction, commissioning and operation of hydro power projects.

Their skills, industry knowledge and operating experience provides

significantcompetitiveadvantagetotheCompany.

NHPCisactivelyexploringopportunitiesforthedevelopmentofpumped

storage schemes in potential rich states likeMaharashtra, Karnataka,

Odishaetc.TheCompanyhasidentifiedsomeprojectsinMaharashtra

and Karnataka and is under discussion with respective state

governments for DPR preparation and subsequent development of

pumpedstorageprojects.

7


VALUATION

TheCompanyhastakensomeveryeffectivestepsforitscapacityaddition

tomeettheannualdemandforpowerandgrowth.Ithasadoptednew

technologies in the areas of Electrical and Civil Engineering for

improvementinplanningandinvestigation,whichwillreducedelaysin

constructionandproblemsofsiltation.Thus,itisexpectedthatthestock

willseeapricetargetofRs.38in8to10monthstimeframeonacurrent

P/Eof13.12xandFY19(E)earningsofRs.2.88.

ACTUAL FORECAST


REVENUE 8416.50 9095.10 10672.40

EBITDA 4843.30 5065.80 6164.60

EBIT 3381.60 3790.80 4744.10

PRE-TAXPROFIT 3814.70 3770.00 4143.70

NETINCOME 2310.60 2546.50 2966.40

EPS 2.09 2.47 2.88

BVPS 28.28 29.30 32.00

RoE 7.62 8.51 10.84




FaceValue(Rs.) 10.00

52WeekHigh/Low 34.50/25.60


EPS(Rs.) 2.25




StockExchange BSE

VALUEPARAMETERS


Foreign 4.43

Institutions 10.52


Promoters 74.50

Public&Others 5.65

SHAREHOLDINGPATTERN

P/ECHART

INDIANBANK RECOMMENDATION:BUY

INVESTMENTRATIONALE

TheBankexpectstoimproveitsloangrowthtoabove15%byendMarch

2018.Bankaims to reducegrossNonPerformingAssets (NPA)_ ratio

below 6% and net NPA ratio below 3% by March 2018. The bank

proposes to further improve its provision coverage ratio by 2 to 3

percentagepointsto67-68%byMarch2018.

Thebankhaspostedhealthy22%growthinnoninterestincomedriven

by50%growthinthecoreofincome.Asperthebank,feeincomegrowth

is drivenby acceleration in loan growth,while sale ofPriority Sector

LendingCertificates(PSLCs)alsocontributedfeeincomeofRs22crorein

Q2FY2018.

Onthebusinessfront,thebankhasshowedhealthy12%growthinthe

balancesheetendSeptember2017overSeptember2016.Thedepositsof

the bank increased 11.5% driven by 24% growth in current account

savings account deposits. The bank has recorded substantial

improvementinitsCasadepositsratioto37%endSeptember2017from

33%endSeptember2016.

The bank has reported healthy 14.2% growth in its advances end

September 2017. Within the loan book, retail advances grew 21%,

agriculture13%andMSME29%.Thecorporateloanbookofthebankhas

alsoexpanded7.8%endSeptember2017overSeptember2016.

Onassetqualityfront,thebankhasexhibitedsubstantialdeclineinfresh

slippagesofloanstoRs356croreinQ2FY2018,whilereducedgrossNPA

ratioto6.67%andnetNPAratioto3.41%endSeptember2017.Thebank

hasalsoshoweddeclineinitsstressedassetratiotobelow10%at9.69%

endSeptember2017.

Bank’s Customer touch points as of September 30, 2017 was 8593

including 2695 Domestic branches, 3 Overseas branches, 3202

ATM/BNAs and 2693active Business Correspondents. 1442 Domestic

branches(54%)areinsemi-urbanandruralareas.

8


VALUATION

Thebankenjoysahealthystrongbalancesheetwithverygoodcapital

adequacyratio,healthyassetsandextremely lowandcontrollednon-

performingassetsratio.Hence,thebankisexpectedtodowellinnear

future.Thus,itisexpectedthatthestockwillseeapricetargetofRs.448

in8to10monthstimeframeonatargetP/Bvof1.35xandFY19BVPSof

Rs.331.97.

ACTUAL FORECAST


NETINTINCOME 5146.10 6101.90 7026.90

EBITDA 1572.50 4484.10 4624.70

EBIT 1758.20 4876.40 5212.20

PRE-TAXPROFIT 1758.20 2372.60 3222.30

NETINCOME 1405.70 1675.00 2243.90

EPS 29.27 34.65 45.87

BVPS 357.32 281.26 331.97

RoE 6.63 10.26 12.47





52WeekHigh/Low 428.00/196.20


EPS(Rs.) 29.05



StockExchange BSE

VALUEPARAMETERS


Foreign 8.55

Institutions 6.49


Promoters 82.11

Public&Others 2.46

SHAREHOLDINGPATTERN

P/ECHART

ENGINEERSINDIALIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

EngineersIndiaLimited(EIL)providesengineeringconsultancyandEPC

services,mainly to the oil and gas and petrochemical industries. The

companyhasalsodiversifiedintosectorslikeinfrastructure,waterand

wastemanagement,solarandnuclearpowerandfertilizerstoleverage

itsstrongtechnicalcompetenciesandtrackrecord.Thegovernmentof

Indiaholds58.87%(aspershareholdingpatternason30September

2017).

OrderbookasendofSep30,2017stoodatRs8881croreandofwhich

about54% is consultancyordersandbalance46% is turnkeyorders.

OrdersbaggedinQ2FY18wereRs1608.4croreandthatforH1FY18were

Rs1952.2crore.OftheQ2FY18orderintakeaboutRs1373.4crorewas

consultancy orders and of which about Rs 1101.2 crore is domestic

consultancy order. Turnkey orders bagged in Q2FY16were Rs 479.7

crore.MostofordersweresecuredfromHydrocarbonsector.Q2FY18is

good in-terms of order intake and for FY19; themanagement of the

companyexpects25%growthinconsultancyrevenue.

Thecompanyisalsoventuringintoinfrastructureprojectssuchasthe

NamamiGangeScheme-aprojecttocleanuptheGangaRiverspanning

2,500kmacrossfivestateswithabudgetofRs20,000crore.

Ithasregistered27%growthinitsstandalonerevenueforthequarter

endedSep2017toRs429.09crore.Highersalestogetherwith470bps

expansioninoperatingprofitmarginfacilitated48%jumpinoperating

profittoRs138.95crore.EventuallythePATstoodhigherby27%toRs

119.17croreasmoderatedbylowerotherincome.

9



FaceValue(Rs.) 5.00

52WeekHigh/Low 206.00/140.95


EPS(Rs.) 5.22




StockExchange BSE

VALUEPARAMETERS

P/ECHART

VALUATION

Thecompanyhasahealthybalancesheetandstrongcashbalance.The

companyisbestplacedtobenefitfromrevivalinOil&Gascapex,givenits

dominantposition in thesegment.Thecompany’sorder inflowshave

improvedinthelastone-twoyears.Thecompanyhasahealthymixof

domesticandoverseasorders.Thus,itisexpectedthatthestockwillseea

pricetargetofRs.239in8to10monthstimeframeona2yearaverage

P/Eof32xandFY19(E)earningsofRs.7.48.

ACTUAL FORECAST


REVENUE 1448.60 1747.10 2285.00

EBITDA 525.90 414.60 545.90

EBIT 279.70 467.70 609.30

PRE-TAXPROFIT 500.20 579.80 719.80

NETINCOME 325.00 386.70 479.30

EPS 7.82 6.04 7.48

BVPS 41.19 42.21 45.45

RoE 11.95 14.20 17.69




Foreign 7.19

Institutions 22.08

Govt.Holding 0.00


Promoters 54.17

Public&Others 12.66

SHAREHOLDINGPATTERN

SWARAJENGINESLIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

SwarajEnginesLimited(SEL)isengagedinmanufacturingenginesfor

fitment into Swaraj tractors, which is manufactured by Mahindra &

MahindraLtd. (M&M)at itsSwarajDivision. It isalsosupplyinghigh-

technology engine components to SML Isuzu Ltd. for assembly of

commercial vehicle engines. Its business activities relate to diesel

engines, diesel engine components and spare parts. Till date, it has

suppliedapproximately720,000enginesforfitmentintoSwarajtractors.

Thecompanyhascompletedthecapacityenhancementprojectwhichhas

increased its capacity to 120000 p.a from 105000 p.a and

commercializationofthesamewillhappeninH2ofFY'18.Thiscapacity

expansionhasbeenfullyfinancedthroughtheinternalresources.

The company has been a direct beneficiary of consistent industry

outperformancebySwarajtractorsandcontinuedmarketsharegainby

swarajtractorstranslatedthecompany’sstrongfinancialgrowthaswell

assubstantialincreaseinmarketshare.

On the development front, the company undertakes continuous

innovation and technologyup gradation tomeet the changing engine

requirementsattheSwarajdivisionatM&M.Itisalsodevelopingengines

inthe>50HPsegmentthatwillfurtherhelpaugmentsalesatSEL.All

expensesfortheaforesaiddevelopmentwereundertakenfrominternal

accruals.

DuringQ2FY18,ithasreporteda17%increaseinnetsalestoRs208.66

crore. Itsenginesaleswitnessedagrowthof11.6%YoYandstoodat

24984unitsandPATforquarterendedSep17stoodatRs23.50croreas

comparedtoPATofRs19.25crore,reported22%growth.

Increase current tractor penetration level, agri-mechanization,

generating ruralemploymentopportunities throughvarious schemes,

scarcityoffarmlabourespeciallyduringthesowingseason,shortened

replacement cycle, healthy credit availability, momentum in

infrastructural projects etc. would be the positive drivers for tractor

industryinlongterm.

10


VALUATION

Themanagementofthecompanyexpectsgoodgrowthfordemandof

domestictractorduetoGovernment’scontinuedthrustonagriandrural

sector, whichwould help the company to increasemarket share and

financialgrowthofthecompany.Thecentralgovernmenthastimeand

again reiterated its aim to double farm income by 2022, which has

envisagedtobeattainedthroughbetterproductivityandenhancedfarm

realizations.SELisaleadingsupplierofenginesforthetractorstomarket

leaderi.e.M&M.Thecompanyisoneofthekeyplayerstobenefitfrom

thistransition.Thus,itisexpectedthatthestockwillseeapricetargetof

Rs.2384in8to10monthstimeframeona2yearaverageP/Exof29.49x

andFY19EPSofRs.80.83.

ACTUAL FORECAST


REVENUE 683.30 794.40 900.20

EBITDA 121.60 133.30 152.20

EBIT 105.30 110.50 127.00

PRE-TAXPROFIT 105.50 133.90 153.20

NETINCOME 68.83 87.32 100.40

EPS 55.38 70.82 80.83

BVPS 228.16 240.51 253.04

RoE 25.18 29.72 31.89





52WeekHigh/Low 2545.00/1290.00


EPS(Rs.) 60.85




StockExchange BSE

VALUEPARAMETERS

P/ECHART


Foreign 6.83

Institutions 12.58

Govtholding 0


Promoters 50.61

Public&Others 26.89

SHAREHOLDINGPATTERN

ACTUAL FORECAST


REVENUE 1426.50 1680.10 1906.60

EBITDA 173.00 216.90 252.60

EBIT 148.90 197.30 237.50

PRE-TAXPROFIT 130.60 177.90 219.80

NETINCOME 85.99 119.30 148.00

EPS 12.84 17.79 22.10

BVPS 75.82 91.92 111.99

RoE 18.50 21.10 21.48

AHLUWALIACONTRACTSLIMITED RECOMMENDATION:BUY


FaceValue(Rs.) 2.00

52WeekHigh/Low 409.00/236.00


EPS(Rs.) 12.84




StockExchange BSE

VALUEPARAMETERS


Foreign 19.93

Institutions 15.04


Promoters 57.96

Public&Others 3.55

SHAREHOLDINGPATTERN

P/ECHART

INVESTMENTRATIONALE

Ahluwalia Contracts (India) Limited is an India-based integrated

construction company. The Company's project portfolio encompasses

projects across residential and commercial complexes, hotels,

institutional buildings, hospitals and corporate offices, information

technology(IT)parksandindustrialcomplexes,metrostationanddepot,

powerplantsandautomatedcarparkinglot,amongothers.

Recently,thecompanyhasbaggednewconstructionordersworthalmost

Rs311croreforconstructionofinstitutional,hospitalandcommercial.

Orders include electrical, plumbing and firefighting services. The

company has also received new ordersworth of Rs 170.99 crore for

constructionof300bedshospitalinexistingpremisesofESICHospital

KolkataandworthRs140croreforotherconstructionwork.Thetotal

orderinflowduringthecurrentfiscalstandsatRs866.76crore.

The company is bidding only for selective projects as some contracts

termsarenotskewedtowardscontractors.Moreover,themanagementis

expectedtosecuredecentordersonthebackoflikelyup-tickaffordable

housing and institutional segments. Further, it is in the process of

extendingprojectsfromexistingclientsalso.

ThemanagementisplanningtoreduceitsdebtandexpectstheCompany

to be debt-free in the coming years. This improving balance sheet

position is expected to increase profitability levels going forward.

Further, margins are also expected to improve driven by a higher

proportion of government orders, better operating efficiencies along

withbetterutilizationsofcapitalequipment.

The past couple of years have witnessed increasing opportunities in

building construction like residential & commercial space and

educational&medicalfacilities,largelydrivenbypublicsectorspending.

It is believed that Ahluwalia Contracts (ACIL) is likely to be key

beneficiaries of this construction boom, anchored by their extensive

experienceandburgeoningopportunitiesinthesegment.

VALUATION

Thestrongorderbacklog,combinedwithprovenexecutioncapabilities

andlow-gearedbalancesheetwouldhelpthecompanytodeliverhealthy

growthintheforeseeablefuture.Thegovernment’sincreasingfocuson

the construction industry is expected to generate better order flows

going forward.Thus, it is expected that the companywould seegood

growthgoingforwardandthestockwillseeapricetargetofRs.473in8to

10monthstimeframeonaonethreeyearaverageP/Eof21.41xand

FY19(E)earningsofRs.22.1.

11




GATILIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

GatiLimitedisapioneerandleaderinExpressDistributionandSupply

ChainSolutionsinIndiaanddeliversover6millionpackagesamonth.

Thecompanyhasnowgrownintoanorganizationwithmorethan5,000

businesspartnersandanetworkreachof672outoftotal676districtsin

India.Ithasa5000plusfleetincludingrefrigeratedvehiclesandworld

classwarehousingfacilitiesacrossIndia.

Recently,governmenthasgrantedinfrastructurestatustothelogistics

sectorandthisisexpectedtoattractmorefundingatcompetitiverates.

Onaconsolidatedbasis,thecompany’snetprofitjumped179.17%toRs

20.77 crore on 4.62% decline in net sales to Rs 405.97 crore in Q2

September 2017 over Q2 September 2016. The second quarter is

generallyastrongperiodduetoincreasedspendingduringthefestivals.

TheintroductionofGSTinJuly2017,asanticipated,ledtoashortterm

dipinthegeneralbusinessenvironment.Astheinitialteethingtroubles

ofGSTsettle,themanagementofthecompanyremainsconfidentthatthe

medium and long-term benefits of GST will start reflecting in

performancegoingforward.

GatihasastrongmarketpresenceintheAsiaPacificregionandSouth

Asian countries. It has offices in India, Singapore, Hong Kong, China,

NepalandThailand.

In November 2016, the company has invested in BrownTape, a

technologyplatformthathelpsonlinesellersonmultiplee-Commerce

marketplacestomanagetheirordersfromasinglewindow.Thealliance

willworkonthevisionofsimplifyinge-Commerceforalllevels(small,

medium,andlarge)ofonlinesellers,whowillbeabletomanagetheire-

Commerceecosystemseamlessly.

12


VALUATION

Withitscomprehensiveintegratedserviceportfolio,Gatiisdistinctively

positioned to support the consequent supply chain realignment.

Moreover,thecompany'span-Indiareachhasbeenalreadydesignedona

hubandspokemodelforefficiencyandspeed.Overthelastfewyears,the

companyhasundertakensignificantinitiativestofortifyitsstrongholdto

deliverconsistentlytocustomers,bydevelopingend-to-endsolutions,

enhancing technology capabilities and augmenting operationsquality

processes.Thus, it isexpectedthatthestockwillseeapricetargetof

Rs.158in8to10monthstimeframeonatargetP/Eof25xandFY19(E)

earningsofRs.6.31.

ACTUAL FORECAST


REVENUE 1,691.00 1,766.70 1,966.60

EBITDA 124.90 139.10 162.70

EBIT 90.13 119.70 142.10

PRE-TAXPROFIT 50.24 93.54 93.20

NETINCOME 29.51 68.04 68.15

EPS 2.49 6.28 6.31

BVPS 65.08 58.93 65.24

RoE 5.19 10.91 9.74




FaceValue(Rs.) 2.00

52WeekHigh/Low 148.50/101.60


EPS(Rs.) 4.92




StockExchange BSE

VALUEPARAMETERS


Foreign 9.96

Institutions 21.76


Promoters 29.82

Public&Others 32.44

SHAREHOLDINGPATTERN

P/ECHART

13

E-mail: [email protected]

Corporate Office:

11/6B, Shanti Chamber,

Pusa Road, New Delhi - 110005

Tel: +91-11-30111000

www.smcindiaonline.com

Mumbai Office:

Dheeraj Sagar, 1st Floor,

Opp. Goregaon sports club, link road

Malad (West), Mumbai - 400064

Tel: 91-22-67341600, Fax: 91-22-28805606

Kolkata Office:

18, Rabindra Sarani,

"Poddar Court", Gate No. 4,

4th Floor, Kolkata - 700001

Tel: 91-33-39847000, Fax: 91-33-39847004

SMC Research also available on Reuters

SMC Research Desk

Disclaimer: This Research Report is for the personal information of the authorized recipient and doesn't construe to be any investment, legal or taxation advice to the investor. It is only for private circulation and use. The Research Report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. No action is solicited on the basis of the contents of this Research Report. The Research Report should not be reproduced or redistributed to any other person(s)in any form without prior written permission of the SMC. The contents of this material are general and are neither comprehensive nor inclusive. Neither SMC nor any of its affiliates, associates, representatives, directors or employees shall be responsible for any loss or damage that may arise to any person due to any action taken on the basis of this Research Report. It does not constitute personal recommendations or take into account the particular investment objectives, financial situations or needs of an individual client or a corporate/s or any entity/s. All investments involve risk and past performance doesn't guarantee future results. The value of, and income from investments may vary because of the changes in the macro and micro factors given at a certain period of time. The person should use his/her own judgment while taking investment decisions. Please note that SMC its affiliates, Research Analyst, officers, directors, and employees, including persons involved in the preparation or issuance if this Research Report: (a) from time to time, may have long or short positions in, and buy or sell the securities thereof, of the subject company(ies) mentioned here in; or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company(ies) discussed herein or may perform or seek to perform investment banking services for such company(ies) or act as advisor or lender/borrower to such subject company(ies); or (c) may have any other potential conflict of interest with respect to any recommendation and related information and opinions.

All disputes shall be subject to the exclusive jurisdiction of Delhi High court.

SMC Global Securities Ltd. (hereinafter referred to as “SMC”) is regulated by the Securities and Exchange Board of India (“SEBI”) and is licensed to carry on the business of broking, depository services and related activities. SMC is a registered member of National Stock Exchange of India

Limited, Bombay Stock Exchange Limited, MSEI (Metropolitan Stock Exchange of India Ltd) and M/s SMC Comtrade Ltd is a registered member of National Commodity and Derivative Exchange Limited and Multi Commodity Exchanges of India and other commodity exchanges in India. SMC is

also registered as a Depository Participant with CDSL and NSDL. SMC’s other associates are registered as Merchant Bankers, Portfolio Managers, NBFC with SEBI and Reserve Bank of India. It also has registration with AMFI as a Mutual Fund Distributor.

SMC is a SEBI registered Research Analyst having registration number INH100001849. SMC or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities market. SMC or its associates or its Research Analyst or his relatives

do not hold any financial interest in the subject company interest at the time of publication of this Report. SMC or its associates or its Research Analyst or his relatives do not hold any actual/beneficial ownership of more than 1% (one percent) in the subject company, at the end of the month

immediately preceding the date of publication of this Report. SMC or its associates its Research Analyst or his relatives does not have any material conflict of interest at the time of publication of this Report.

SMC or its associates/analyst has not received any compensation from the subject company covered by the Research Analyst during the past twelve months. The subject company has not been a client of SMC during the past twelve months. SMC or its associates has not received any

compensation or other benefits from the subject company covered by analyst or third party in connection with the present Research Report. The Research Analyst has not served as an officer, director or employee of the subject company covered by him/her and SMC has not been engaged in the

market making activity for the subject company covered by the Research Analyst in this report.

The views expressed by the Research Analyst in this Report are based solely on information available publicly available/internal data/ other reliable sources believed to be true. SMC does not represent/ provide any warranty expressly or impliedly to the accuracy, contents or views expressed

herein and investors are advised to independently evaluate the market conditions/risks involved before making any investment decision. The research analysts who have prepared this Report hereby certify that the views /opinions expressed in this Report are their personal independent

views/opinions in respect of the subject company.

TOP 10 PICKS -...

Documents

Transcript of TOP 10 PICKS -...