Total Returns 1M Performance Name Price Stock Sector Relative · name price stock sector relative...

1

05 December 2013

The Indian markets closed lower last month, impacted by speculation

around when the US Federal Reserve could start reducing the level of

QE. Sentiment was, however, supported on hopes that oil prices may

fall after Iran clinched a ‘deal’ with world powers. Foreign institutional

investors invested c.INR 80bn in November 2013 in the local equity

market.

The Indian economy grew a higher-than-expected 4.8% y/y, during Q2-

FY14, aided by an uptick in agriculture, services and construction.

Good monsoon rainfall is expected to have supported the agriculture

sector and the strong growth in services was led by a 10% y/y

expansion in financial services. Both the first phase of state elections

(8 December) and the Reserve Bank of India’s monetary policy

meeting (18 December) will be watched closely by the markets.

After the recent strong performance and with consideration to the

various upcoming events such as the elections, we expect

markets to be more volatile over the next few months. We would

advocate that underweight investors consider using any pullback

to add exposure to appropriate levels. Technical charts and

comments can be found at the rear of the report.

Contents

Outlook for India top picks Pg 1 Sector Review Pg 2 Stock Review

Earnings Release

Technical Commentary

Pg 3

Pg 7

Pg 8

Performance & Valuation Tables Pg 14

Definitions

Disclosure and disclaimer

Pg 16

Pg 17

Sirshendu Basu Chief Investment Strategist

Nishit Sheregar Equity Strategist Shishir Narsinghani Associate Strategist Soumen Das Senior Technical Strategist

Performance of our Top Sector picks

Performance relative to MSCI India Sectors

Data as of 03 December 2013

Source: Bloomberg, Standard Chartered

1M = 30 days rolling month

Top sector picks

Source: Standard Chartered

Total Returns

Name Price Stock Sector Relative

CIPLA 390.6 -5.9% -0.4% -5.4%

LARSEN & TOUBRO 1054.7 8.9% 9.3% -0.3%

TECH MAHINDRA 1690.9 10.7% -0.4% 11.1%

MARUTI SUZUKI IN 1663.3 1.5% -0.2% 1.7%

RELIANCE INDUSTRIES 861.9 -5.8% -4.2% -1.7%

ICICI BANK 1085.4 -4.0% -2.5% -1.5%

ACC 1100.5 -4.3% 0.3% -4.6%

BHARTI AIRTEL 331.0 -9.4% -5.1% -4.4%

ITC 319.2 -2.0% -2.4% 0.4%

INDRAPRASTHA GAS 280.4 0.2% -2.8% 3.0%

Average -1.0% -0.8% -0.2%

MSCI INDIA Index 801.7 -1.4%

1M Performance

India Top10 Ticker Rationale

CIPLA LTD CIPLA IN Focus on geographical expansion through direct presence, is growth and margin positive.

LARSEN & TOUBRO LT IN Strong sales growth, resilient order book and margin expansion are the key drivers.

TECH MAHINDRA TECHM IN Healthy deal pipeline and improved demand outlook are long term positive. Recent up move warrants caution.

MARUTI SUZUKI MSIL IN Strong new product pipeline, export growth and margin expansion are key triggers.

RELIANCE INDS RIL IN Large gas finds and increase in gas pricing are key positives.

ICICI BANK LTD ICICIBC IN High capital adequacy, stable asset quality and traction in retail loan growth are drivers.

ACC LTD ACC IN Demand outlook remains muted, price recovery key to improvement in stock price.

BHARTI AIRTEL BHARTI IN India business continues to gain traction, global business metrics improving.

ITC LTD ITC IN Muted volume growth and likely margin pressure are near term worry.

INDRAPRASTHA GAS IGL IN Volume growth remains strong but costly imported gas can impact margins.

Outlook for India top picks

Tech Mahindra, Indraprastha Gas and Maruti Suzuki were

the best performers over the month, up 11.1%, 3.0% and

1.7% against their respective sectors.

Since inception, the top performers in absolute terms are

Tech Mahindra (c.71%), ITC (c.46%), and Cipla (c.29%).

On a sector agnostic basis, our top picks are Cipla, Bharti

Airtel, ICICI Bank and ITC.

Equity Strategy – India Top10 Review

2

Industrials (Overweight):

We remain positive on the sector on expectation that the domestic

economic downturn may have bottomed out. The better than expected

Q2 FY14 GDP growth and eight month high HSBC PMI index are

testimony of the same. Furthermore, the sector’s focus on international

growth and reasonable valuations are both positives.

Information Technology (Overweight):

The sector continues to outperform, supported by the continuing

improvement in outlook for economic activity in various key markets.

Visibility of revenue and a strong renewal deal pipeline are also key

supports. After the recent sharp run up, however, we expect the sector

to consolidate and so turn more cautious for the short term.

Financials (Neutral):

We remain watchful on the sector, because we expect another policy

rate hike in December and the pipeline of stressed assets continues to

be high. Furthermore, with slow economic growth, the recovery in loan

growth is expected to be muted. We are looking for opportunities to add

exposure, though asset quality is still a concern.

Consumer Staples (Underweight):

Consumer demand continues to be weak, negatively impacting the

sector. Also, the increase in prices of key inputs and deceleration in

high margin products is likely to affect margins. We consider the sector

to be relatively expensive and are Underweight.

India Sector performance

MSCI India Index




Market is near an all time high

MSCI India Index

Source: Bloomberg, data as on 03 December 2013

MSCI India Sector YTD Performance (USD)

Source: Bloomberg, data as on 03 December 2013

India Sector Views

Blue (Red) indicates upward (downward) revisions, Weights are relative to MSCI India Index. Source: Standard Chartered

Total Returns

MSCI INDIA Index 1 M YTD 1 M YTD

Healthcare -0.4% 24.3% 0.9% 17.6%

Industrials 9.3% -9.0% 10.6% -15.8%

Information Technology -0.4% 52.9% 1.0% 46.1%

Consumer Discretionary -0.2% 8.0% 1.2% 1.3%

Energy -4.2% 0.8% -2.8% -5.9%

Financials -2.5% -10.0% -1.1% -16.7%

Materials 0.3% -8.5% 1.6% -15.2%

Telecommunication Svs -5.1% 32.2% -3.7% 25.5%

Consumer Staples -2.4% 15.7% -1.0% 8.9%

Utilities -2.8% -13.0% -1.4% -19.7%

Index -1.4% 6.7% 0.0% 0.0%

Sector Performance Relative

Performance

India Sectors Weight Rationale

Health Care OW Expansion of geographical footprint and new product launches are the key drivers.

Industrials OW Expected bottoming out of economic downturn, focus on global business and reasonable valuation.

Information Technology OW Recovery of economic growth in US and Europe and expected win of large long term renewal deals are positive.

Consumer Discretionary N Lukewarm festive season demand and continued moderation of growth are concerns; rural demand is the silver lining.

Energy N Government focus on de-bottlenecking the sector is positive.

Financials N Asset quality and muted loan growth are concerns; valuations appear reasonable.

Materials N Improved Q2 FY14 GDP growth is positive, we pin hopes on pre election spending to provide some demand uptick.

Telecommunication Svs N Uptick in business metrics and moderation of regulatory concern warrants rerating of the sector.

Consumer Staples UW Muted demand, margin pressure and high valuation are the key concerns.

Utilities UW Availability of coal is key for revival of the sector.

Sector Review

The MSCI India Index was down 1.4% for the month of

November.

Industrials, Materials and Consumer Discretionary

outperformed, while Telecommunication Services and

Energy underperformed.


3

Healthcare:

Cipla (CIPLA IN) was down 5.9% last month, underperforming the

health care sector. The company is aggressively pursuing

geographical expansion and establishing a direct presence in all its key

overseas markets. Furthermore, to strengthen its domestic business,

the company is looking at product licensing agreements and joint

ventures with global companies. The stock has underperformed the

sector and at current levels we feel it’s a good entry point and

would advocate investors consider adding exposure.

Risks: Setting up overseas business infrastructure could take time.

We continue to also like Lupin (LPC IN) as the company is looking at

high-margin branded drugs in the US to drive growth. Furthermore, the

company intends to expand into Latin America, Eastern Europe and

China, and has allocated USD 1bn for inorganic growth. The stock has

outperformed Cipla significantly, so we feel the upside opportunity is

now skewed to Cipla.

Risks: Margins could come under pressure going forward, led by price

cuts and increased competition.

Industrials:

Larsen & Toubro (LT IN) was up 8.9% for the month, performing in-

line with the industrials sector. Management has reiterated its guidance

of 15% y/y sales growth, 20% y/y order inflow growth and margin

expansion target. We believe LT continues to be an excellent play in

the India industrial space, powered by strong execution capabilities and

a large order book.

Risks: Moderating investment cycle continues to be an overhang.

We continue to also like Adani Ports & SEZ (ADSEZ IN) for its best in

class asset base, visibility on cargo traffic and sustained cash flows.

Furthermore, its strategic position, diversified mix of cargo and superior

realizations makes it a preferred port company.

Risks: Rise in consolidated loans and advances.

Performance of our Top Sector picks

Performance relative to MSCI India Sectors




Cipla’s improving return ratios

ROE and ROC (%)

Source: Bloomberg, Company, Standard Chartered

LT still trading below its 10yr median EV/EBITDA

EV/EBITDA

Source: Bloomberg

Total Returns

Name Price Stock Sector Relative

CIPLA 390.6 -5.9% -0.4% -5.4%

LARSEN & TOUBRO 1054.7 8.9% 9.3% -0.3%

TECH MAHINDRA 1690.9 10.7% -0.4% 11.1%

MARUTI SUZUKI IN 1663.3 1.5% -0.2% 1.7%

RELIANCE INDUSTRIES 861.9 -5.8% -4.2% -1.7%

ICICI BANK 1085.4 -4.0% -2.5% -1.5%

ACC 1100.5 -4.3% 0.3% -4.6%

BHARTI AIRTEL 331.0 -9.4% -5.1% -4.4%

ITC 319.2 -2.0% -2.4% 0.4%

INDRAPRASTHA GAS 280.4 0.2% -2.8% 3.0%

Average -1.0% -0.8% -0.2%

MSCI INDIA Index 801.7 -1.4%

1M Performance

Stock Review

Our sector picks performed in-line with their respective

sectors this month, on an equally weighted basis.

Tech Mahindra, Indraprastha Gas and Maruti Suzuki were

the best performers over the month, up 11.1%, 3.0% and

1.7% against their respective sectors.

The top performers (YTD) in absolute terms are Tech

Mahindra (c.82%), Indraprastha Gas (c.15%), and ITC

(c.14%)

On a sector agnostic basis, our top picks are Cipla,

Bharti Airtel, ICICI Bank and ITC.


4

Information Technology:

Tech Mahindra (TECHM IN) was up 10.7% for the month,

outperforming the IT sector. We continue to be constructive on the

company on the back of improving demand and a healthy pipeline of

large deals. However, post the recent sharp run up, c.82% ytd, we

expect the stock price to consolidate in the near term.

Risks: Rising wage cost could impact the margins.

We continue to also like HCL Technologies (HCLT IN), as revenue

visibility remains high, driven by robust deal signings and improved

reliability on margin expansion.

Risks: The company had the highest quarterly annualized attrition

among peers.

Consumer Discretionary:

Maruti Suzuki (MSIL IN) was up 1.5% over the month, outperforming

the consumer discretionary sector. We exercise caution on the sector

due to slowing demand, but continue to like MSIL on the back of its

rich line-up of new product launches, increase in exports volumes and

margin expansion led by rising localization.

Risks: If industry volumes remain weak, the company’s performance

may be impacted. The continuance of large discounts may lead to

margin erosion.

We are cautious on Titan Industries (TTAN IN), as the demand

scenario remains challenging and consumer sentiments remain

subdued.

Risks: Jewellery demand remains weak due to moderating

discretionary spending.

Energy:

Reliance Industries (RIL IN) was down 5.8% over the month,

underperforming the energy sector. A positive government stance on

RIL’s exploration and production efforts, in terms of project approvals

and gas pricing, augurs well for the company. In addition, revised gas

pricing will be key trigger.

Risks: New capacity additions and weakening demand on account of

slowdown in the global economy.

ONGC (ONGC IN) offers an investment opportunity on the back of its

relatively attractive valuation which factors in negatives such as high

subsidies and no hike in gas prices.

Risks: Subsidy burden and regulatory concerns.

TECHM operating metrics improving

Margins (%)


Total sales down 10.7% y/y in November, with exports

down 46.2%

Maruti Suzuki’s monthly sales


RIL revenue outside India increasing as a % of total

Revenue Contribution (%)

Source: Standard Chartered Research estimates


5

Financials:

ICICI Bank (ICICIBC IN) fell 4.0% for the month, underperforming the

financial sector. The growing proportion of retail loans, low exposure to

SMEs, high capital adequacy and stable asset quality are key positives,

in our view.

Risks: The bank’s exposure to the large overleveraged corporate

groups remains a concern.

We maintain our conviction in HDFC Bank (HDFCB IN), as we believe

retail banks will continue to have better earnings visibility. Growth rates

are expected to be higher than average and asset quality is considered

the best of the local banks, so valuations may remain at elevated

levels.

Risks: Uncertain macro environment and high valuations are key

concerns.

Bank of Baroda (BOB IN) is our preferred stock amongst the state

owned banks, although we would exercise caution given the stock has

run up considerably since its lows in August and uncertainty remains

over asset quality.

Risks: Increased concern over asset quality, declining NIMs and

pressure on fee income could weigh on the sentiment in the medium

term.

Materials:

ACC Ltd (ACC IN) was down 4.3% for the month, underperforming the

materials index. While cement demand continues to remain weak, after

some signs of growth in September 2013, cement prices have

witnessed recovery since the end of monsoon.

We are cautious in this space and maintain that the sustainability of

price recovery and improvement in operating performance are critically

dependent on a sustained recovery in demand.

Risks: On the back of challenging macro-economic conditions,

realisations may not improve materially in the medium term.

We are positive on Hindustan Zinc (HZ IN), driven by higher sales

volume, good operating metrics and strong cash flows. Corporate

action is likely to be a near term catalyst for the stock.

Risks: Volatility in commodity prices.

Bank-wise pipeline of stress loans

Gross and Net NPAs as of Sep 2013 (%)

Source: Standard Chartered Research

Cumulative position of CDR referrals continue to rise

Average monthly Corporate Debt Restructuring (CDR)

referrals

Source: Standard Chartered Research

ACC impacted by the current economic slowdown

ACC Sales Growth (%)



6

Telecommunication Services:

Bharti Airtel (BHARTI IN) was down 9.4% for the month,

underperforming the telecom sector. India business fundamentals are

improving and we believe things should incrementally look better in

African markets as well. Furthermore, the sale of the Africa tower

business will be positive. Given the stock’s weak performance and

improving fundamentals we are becoming a little more optimistic. We

would though like to wait for confirmation of this improving trend before

advocating investors consider adding to the name.

Risks: Regulatory concerns and profitability of African business.

We like IDEA Cellular (IDEA IN) because of strong growth in data

volumes and expected pick up in revenues per minute.

Risks: Aggressive bidding in upcoming spectrum auction.

Consumer Staples:

ITC (ITC IN) fell 2.0% for the month, marginally outperforming the

consumer staples sector. We believe the recent stock correction is

because of muted outlook for the sector.

In our opinion, the expectation of a fall in cigarette volume growth

is priced in and the earnings forecasts are fairly modest. Hence we

see this weakness as a buying opportunity.

Risks: Sustained weakness in cigarette volume growth, regulatory

impact and a slowdown in FMCG demand.

Britannia Industries (BRIT IN) is also a preferred pick, given the fact

that it has witnessed strong volume growth at a time when most of its

peers witnessed muted growth. Superior product mix, higher price

realizations and new launch of value added products is expected to

drive revenue growth in the long term.

Risks: Rise in input costs and slowdown in FMCG demand.

Utilities:

Indraprastha Gas Ltd (IGL IN) was flat over the month, outperforming

the utilities sector. The company’s margins face pressure as the

proportion of costly imported gas is expected to increase. Further, the

regulator’s proposal to cap gas marketing margin remains an overhang

on the stock.

Risks: Regulatory risk continues to be a major concern.

We continue to also like NTPC (NTPC IN) on the back of improved

visibility on the capacity-addition program and emergence of clarity on

coal-availability issues.

Risks: Rise in imported fuel cost may impact margins.

Bharti Africa business gaining traction

Revenue Contribution to Mobile Services Revenue (%)


Keeping costs under control has aided margins

Britannia EBITDA Margin (%)


Indraprastha Gas operating margins continue to be

stable

Margins (%)



7

Earnings Release:

Tech Mahindra Ltd. (TECHM IN) – Q2 FY14 (7 November 2013)

Vs Consensus – BEAT

Consolidated net profit rose 57.6% y/y to INR 7.2bn.

Revenue rose 35.4% y/y to INR 47.7bn.

EBITDA jumped 28.5% q/q to INR 11.1bn.

Debt was at INR 3.4bn and cash and cash equivalent stood at

INR 32.7bn.

The company reported a net addition of 2,171 employees in

the September quarter—it’s highest in the last eight quarters.

Cipla (CIPLA IN) – Q2 FY14 (13 November 2013)

Vs Consensus – MISS

Income from operations increased 14.6% y/y to INR 25.1bn.

The results include Cipla Medpro South Africa (Medpro),

which became a wholly owned subsidiary of Cipla on 15 July

2013.

Cipla’s Q2 FY14 consolidated net profit fell 28.4% y/y to INR

3.6bn. Consolidated EBITDA fell 16.7% y/y to INR 5.6bn and

operating profit margin declined 850 basis points to 22.5%.

Domestic revenues grew 11.6% y/y to INR 10.4bn and

International business rose 14.9% y/y to INR 12.2bn.

Indraprastha Gas Ltd. (IGL IN) – Q2 FY14 (7 November 2013)

Vs Consensus – IN-LINE

IGL’s standalone sales turnover rose by 18.1% y/y to INR

10.1bn.

Net profit for the quarter declined by 6.5% y/y to INR 0.9bn.

IGL’s operating profit margin narrowed to 20% from 24% y/y,

due to higher quantum of imported gas.

Compressed natural gas (CNG) sales volume increased by

3% and piped natural gas (PNG) sales volumes increased by

10% y/y.

Earnings Release


IGL’s steady operational performance

Revenue and EPS


Name Year QuarterEst.

EPS

Reported

EPSSurprise

CIPLA LTD 2013 Q2FY14 5.3 4.5 (15.05)

TECH MAHINDRA 2013 Q2FY14 31.5 31.0 (1.60)

INDRAPRASTHA GAS 2013 Q2FY14 6.2 6.6 6.95


8

BSE SENSEX – BSE Sensex is trading near its key resistance at 21000. The Sensex is expected to consolidate

within the range of 20000 – 21000 in the near term before resuming its uptrend and it may touch 22500 in the medium term. Long term uptrend would remain intact as long as Sensex stays above 18000.

Source: Metastock, data as on 03 December 2013 _______ 50 EMA _______ 100 EMA

Cipla (CIPLA IN) – Stock is trading near the lower band of the current trading range at INR380. We expect technical

pullback from the current level. Resistance is at INR 428.

Source: Metastock, data as on 03 December 2013 _______ 50 EMA _______ 100 EMA _______ 200 EMA



9

Larsen & Toubro (LT IN) – The stock has seen a sharp up move and has crossed INR 1000 mark. LT is likely to

face strong resistance at INR 1100 and above that at INR 1150. We expect the stock to consolidate within a range of INR 1000 – 1100 in the near term.


Tech Mahindra (TECHM IN) – The stock is expected to maintain positive momentum and it may touch INR 1850 in

the medium term. Strong support is at INR 1600. .

Source: Metastock, data as on 03 December 2013 _______ 50 EMA



10

Maruti Suzuki (MSIL IN) – The stock is likely to face strong resistance at INR 1730. MSIL continues to consolidate

within a range of INR 1550 - 1730 in the near term before resuming its uptrend. Resistance is at INR 1900.

Source: Metastock, data as on 03 December 2013

Reliance Industries (RIL IN) – The stock continues to trade within a broad range of INR 785 – INR 950 in the

medium term.




11

ICICI Bank (ICICIBC IN) – The stock has seen a sharp rebound from key intermediate support at INR 760. We

expect the rally to continue, with key resistance at INR 1230. Stock continues to trade within a broad range of INR 900-1250 in the medium term.


ACC Ltd (ACC IN) – The stock has found support at trend line and has seen a pullback. Currently stock is

consolidating within a range of INR 980 – 1180. The medium term uptrend would remain intact as long as the stock stays above INR 920.




12

Bharti Airtel (BHARTI IN) – The stock appears to have stabilised around crucial support of INR 280, with higher

highs and higher lows formation which is positive. Current rally may face resistance at INR 380. A breakout above INR 380 can take the stock price to INR 400.

.


ITC (ITC IN) – Stock continues to consolidate within a range of INR 309-350 in the near term. Key support is at INR

309 and below that at INR 270. The medium term uptrend would remain intact as long as stock stays above INR309.

Source: Metastock, data as on 03 December 2013



13

IGL (IGL IN) – Stock continues to consolidate within a broad range of INR 250-315 in the medium term.




14

Sector Stock Picks



SCB 12m target price: Blue (Red) indicates upward (downward) revisions


Name

Initiation

Date

Stock Price

SCB 12m

Target

1 M ITD YTD

Consensus

Rating

SCB Rating

CIPLA LTD 3/30/2012 390.6 460.0 -5.9% 29.4% -4.9% 4.1 OUTPERFORM

LUPIN LTD 3/30/2012 870.4 685.0 -0.6% 66.1% 43.5% 4.2 OUTPERFORM

LARSEN & TOUBRO 3/30/2012 1054.7 965.0 8.9% 24.1% 1.4% 4.1 OUTPERFORM

ADANI PORTS AND 3/30/2012 158.1 189.0 10.3% 23.7% 19.2% 4.5 OUTPERFORM

TECH MAHINDRA LT 10/3/2012 1690.9 1850.0 10.7% 70.7% 82.0% 4.3 OUTPERFORM

HCL TECH 10/3/2012 1118.4 1390.0 1.6% 88.4% 82.1% 4.3 OUTPERFORM

MARUTI SUZUKI IN 3/4/2013 1663.3 2046.0 1.5% 19.6% 12.1% 4.2 OUTPERFORM

TITAN INDS LTD 8/3/2012 225.4 226.0 -12.7% -0.5% -19.0% 2.9 IN-LINE

RELIANCE INDS 3/30/2012 861.9 907.0 -5.8% 17.5% 3.0% 4.1 IN-LINE

OIL & NATURAL GA 4/4/2013 292.4 430.0 2.5% -4.8% 11.7% 4.6 OUTPERFORM

ICICI BANK LTD 3/30/2012 1085.4 1105.0 -4.0% 26.6% -2.8% 4.5 OUTPERFORM

HDFC BANK LTD 8/3/2012 655.8 740.0 -3.3% 12.4% -1.7% 4.0 OUTPERFORM

BANK OF BARODA 3/30/2012 648.1 550.0 -3.1% -13.7% -22.3% 3.4 IN-LINE

ACC LTD 3/30/2012 1100.5 1179.0 -4.3% -16.2% -21.7% 3.3 IN-LINE

HINDUSTAN ZINC 3/30/2012 125.0 172.0 -8.3% -1.3% -5.3% 4.6 OUTPERFORM

BHARTI AIRTEL 3/30/2012 331.0 404.0 -9.4% -1.3% 5.2% 4.2 OUTPERFORM

IDEA CELLULAR 3/30/2012 175.4 196.0 4.1% 77.9% 69.4% 3.9 OUTPERFORM

ITC LTD 3/30/2012 319.2 350.0 -2.0% 45.5% 13.8% 4.3 OUTPERFORM

BRITANNIA INDS 9/5/2013 905.2 980.0 -4.2% 20.7% 82.6% 4.1 OUTPERFORM

INDRAPRASTHA GAS 3/30/2012 280.4 430.0 0.2% -22.9% 15.4% 4.1 OUTPERFORM

NTPC LTD 4/4/2013 145.7 200.0 0.5% 2.2% -2.2% 4.5 OUTPERFORM

Name Sector

12m

Fwd P/E

ROE 5yr

AV

Div Yield

Div

Payout

Beta

Expected

DVD

Ex-Date

Expected

Reporting Date

CIPLA LTD Health Care 18.1 18.1 0.5 10.4 0.5 8/5/2014 5/29/2014

LUPIN LTD Health Care 20.6 30.6 0.5 13.6 0.6 7/29/2014 1/31/2014

LARSEN & TOUBRO Industrials 17.9 23.0 1.2 21.9 1.5 8/14/2014 5/22/2014

ADANI PORTS AND Industrials 15.1 22.9 0.6 13.0 0.8 - 1/28/2014

TECH MAHINDRA LT Information Technology 12.9 34.0 0.3 5.0 0.6 7/31/2014 2/6/2014

HCL TECH Information Technology 13.4 27.3 0.5 20.4 0.7 1/24/2014 1/17/2014

MARUTI SUZUKI IN Consumer Discretionary 15.5 16.2 0.5 9.8 1.1 8/13/2014 4/25/2014

TITAN INDS LTD Consumer Discretionary 22.1 42.2 0.9 25.7 0.9 7/18/2014 5/2/2014

RELIANCE INDS Energy 11.0 14.1 1.0 14.7 1.1 5/12/2014 4/16/2014

OIL & NATURAL GA Energy 8.2 20.6 3.2 33.6 1.2 - 5/29/2014

ICICI BANK LTD Financials 9.5 11.3 1.8 24.0 1.5 5/29/2014 1/31/2014

HDFC BANK LTD Financials 15.7 17.9 0.8 19.1 1.1 6/12/2014 4/23/2014

BANK OF BARODA Financials - 20.3 3.3 22.1 1.4 6/24/2014 5/13/2014

ACC LTD Materials 16.7 21.2 2.7 53.2 0.9 3/21/2014 2/7/2014

HINDUSTAN ZINC Materials - 23.2 2.5 19.0 0.9 5/9/2014 1/17/2014

BHARTI AIRTEL Telecommunication Services 23.6 16.5 0.3 16.7 1.0 5/23/2014 1/31/2014

IDEA CELLULAR Telecommunication Services 23.5 7.8 0.2 9.8 0.7 - 1/29/2014

ITC LTD Consumer Staples 25.4 31.5 1.6 54.5 0.8 6/9/2014 5/16/2014

BRITANNIA INDS Consumer Staples 25.5 38.8 0.9 39.2 0.6 - 5/23/2014

INDRAPRASTHA GAS Utilities - 27.6 2.0 21.7 0.8 - 2/11/2014

NTPC LTD Utilities 10.7 14.7 3.9 37.7 0.9 1/30/2014 5/9/2014

Performance & Valuation Tables


15

MSCI India Sectors



MSCI INDIA Index

1M YTD

Rel to

Index

YTD%

Trailing

P/E

12m

Fwd P/E

Trailing

P/B

EV/

EBITDA

DVD

Yield%

DVD

Payout %

Health Care -0.4% 24.3% 17.6% 41.4 20.9 4.4 19.2 0.6 25.7

Industrials 9.3% -9.0% -15.8% 17.6 14.9 2.1 11.2 1.3 22.2

Information Technology -0.4% 52.9% 46.1% 20.0 16.4 5.2 14.3 1.2 23.8

Consumer Discretionary -0.2% 8.0% 1.3% 15.3 10.9 3.5 8.5 1.5 22.9

Energy -4.2% 0.8% -5.9% 10.0 9.5 1.5 6.7 2.1 21.7

Financials -2.5% -10.0% -16.7% 14.5 13.3 2.3 - 1.4 20.4

Materials 0.3% -8.5% -15.2% 25.9 10.7 1.2 11.2 1.2 34.1

Telecommunication Svs -5.1% 32.2% 25.5% 43.1 23.2 1.9 8.7 0.2 10.1

Consumer Staples -2.4% 15.7% 8.9% 37.7 30.7 9.4 25.8 1.3 48.6

Utilities -2.8% -13.0% -19.7% 11.6 10.0 1.2 8.8 2.7 31.1

Index -1.4% 6.7% 0.0% 17.5 14.1 2.6 11.2 1.4 24.2


16

Consensus rating: A rating provided by Bloomberg that reflects

the aggregation of all brokers rating for a particular stock. 1 is a

Sell, whilst 5 is a Strong Buy.

YTD: Year to date.

ITD: Inception to date.

PT: Price Targets (SCB uses an investment horizon of 12 months

for its price targets).

RSI: Relative Strength Index.

Relative Volatility index: A measure of the standard deviation of

the daily price change.

MA: Moving Average.

Basket average performance: Basket average is the un-

weighted performance of the shortlisted stocks

Consensus estimates: An aggregation of revenue and earning

estimates of brokers complied by Bloomberg / Newswire18.

P/E: Price/Earnings ratio. The Trailing P/E refers to 12m of trailing

earnings, whilst the forward refers to 12m forecast earnings,

against current price.

EV/EBITDA: Enterprise value/Earnings before Interest, Tax and

Depreciation Amortisation.

PAT: Profit after tax.

ROE and ROA: Return on Equity and Return on Assets (book

value).

Dividend Yield: Dividend paid/ current price.

Beta: Correlation between a stock and the market. Is based on

two years of weekly data, but modified by the assumption that a

security's beta moves toward the market average over time.

P/E bands: 10-year price series with 0.5 and 1 Standard

deviation bands from Median Forward PE. Dotted lines are the

Forward 'target' prices derived from forward EPS estimates and

median 10 yr Forward P/E (Forward PE*EPS).

DEMA: Daily exponential moving average.

WEMA: Weekly exponential moving average.

MSCI: Morgan Stanley Composite Index. We have compared

stock and sector performance with MSCI India sectoral indices.

CASA: Current account and savings account.

NIM: Net interest margin.

NPA: Non performing asset.

Definitions


17

ure Appendix

DISCLOSURE

SCB and/or its affiliates have received compensation for the provision of investment banking or financial advisory

services within the past one year for the following companies: Tata Motors Ltd., Reliance Industries Ltd., Bank of Baroda,

HDFC Bank Ltd., ICICI Bank, Hindustan Zinc Ltd. and Bharti Airtel Ltd.

DISCLAIMER

Global Disclaimer:

This document is not research material and it has not been prepared in accordance with legal requirements designed to

promote the independence of investment research and is not subject to any prohibition on dealing ahead of the

dissemination of investment research. This document does not represent the views of Standard Chartered Bank,

particularly those of the Global Research function.

Standard Chartered Bank is incorporated in England with limited liability by Royal Charter 1853 Reference Number ZC18.

The Principal Office of Standard Chartered Bank is situated in England at 1 Basinghall Avenue, London, EC2V 5DD.

Standard Chartered Bank is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct

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In Dubai International Financial Centre (“DIFC”), the attached material is circulated by Standard Chartered Bank DIFC on

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Banking activities may be carried out internationally by different Standard Chartered Bank branches, subsidiaries and

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This document is being distributed for general information only and it does not constitute an offer, recommendation,

solicitation to enter into any transaction or adopt any hedging, trading or investment strategy, in relation to any securities

or other financial instruments. This document is for general evaluation only, it does not take into account the specific

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prepared for any particular person or class of persons.

Opinions, projections and estimates are solely those of SCB at the date of this document and subject to change without

notice. Past performance is not indicative of future results and no representation or warranty is made regarding future

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SCB, and/or a connected company, may at any time, to the extent permitted by applicable law and/or regulation, be long

or short any securities, currencies or financial instruments referred to in this document or have a material interest in any

THIS IS NOT A RESEARCH REPORT AND HAS NOT BEEN PRODUCED BY A RESEARCH UNIT


18

such securities or related investments, or may be the only market maker in relation to such investments, or provide, or

have provided advice, investment banking or other services, to issuers of such investments. Accordingly, SCB, its

affiliates and/or subsidiaries may have a conflict of interest that could affect the objectivity of this document.

This document must not be forwarded or otherwise made available to any other person without the express written

consent of SCB.

Copyright: Standard Chartered Securities (India) Limited 2013. Copyright in all materials, text, articles and information

contained herein is the property of, and may only be reproduced with permission of an authorised signatory of, Standard

Chartered Securities (India) Limited. Copyright in materials created by third parties and the rights under copyright of such

parties are hereby acknowledged. Copyright in all other materials not belonging to third parties and copyright in these

materials as a compilation vests and shall remain at all times copyright of Standard Chartered Securities (India) Limited

and should not be reproduced or used except for business purposes on behalf of Standard Chartered Securities (India)

Limited or save with the express prior written consent of an authorised signatory of Standard Chartered Securities (India)

Limited. All rights reserved. © Standard Chartered Securities (India) Limited 2013.

Investment Strategy Disclaimer:

This document and/or trading calls are issued by Investment Strategy Team of Standard Chartered Securities (India)

Limited, a registered broker regulated by the Securities and Exchange Board of India. This is not research material and it

does not represent the views of the Standard Chartered Group, particularly those of the Global Research function. This

document is not independent of Standard Chartered Group’s own trading strategies or positions. Therefore, it is possible,

and you should assume, that Standard Chartered Group has a material interest in one or more of the financial

instruments mentioned herein. Opinions, projections and estimates are subject to change without notice. This document

and/or the trading calls are for information purposes only. It does not constitute any offer, recommendation or solicitation

to any person to enter into any transaction or adopt any hedging, trading or investment strategy, nor does it constitute any

prediction of likely future movements in rates or prices or any representation that any such future movements will not

exceed those shown in any illustration.

The data, opinions and other information that form the basis of this document and/or the trading calls may be provided by

third parties for SCSI. While all reasonable care has been taken in preparing this document and/or the trading calls, and

the information in it is believed to be reliable, it has not been independently verified by SCSI. Any opinions or views of

third parties expressed in this material are those of the third parties identified, and not of SCSI.

Trading recommendations based on quantitative analysis are based on index / stock’s momentum, price movement,

trading volume and other volatility parameters, as opposed to study of macro economic scenario and a company’s

fundamentals and as such, may not match with India Equity Research’s report / view on a company’s fundamentals.

The trading calls and/or contents of this document are not made with regard to the specific investment objectives,

financial situation or the particular needs of any particular person. Any investments discussed may not be suitable for all

investors. Past performance is not necessarily indicative of future performance; the value, price or income from

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professional advisers as necessary) with respect to the risks and consequences of any matter contained herein. We

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This communication is intended for the recipient only and no further distribution of this communication or any part thereof

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