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Strategy - Kotak - 12th Oct PDF
Strategy - Kotak - 12th Oct PDF
Strategy INDIA
INDIA
October 05, 2016
BSE-30: 28,221
CPI inflation: 5.05%
September 2016 quarter earnings preview. We expect net profits of the KIE US$/INR: 66.5
universe to increase 15.3% yoy, led by sharp increase in profits of downstream oil
companies. We expect yoy growth in net income of automobile, cement, consumer
products and industrials sectors. We see banking sector dragging overall earnings as
companies in the sector are likely to make high provisions for bad loans. We expect
net profit of the BSE-30 Index to grow 4% yoy. Excluding banking companies, we
expect net income to grow 9.8% yoy. We have prepared our estimates under Ind-AS,
though 2QFY16 results are under I-GAAP. We calculate BSE-30 Indexs FY2017E EPS
at 1,479 and FY2018E EPS at 1,792. Our Nifty Index EPS estimates for FY2017E
and FY2018E are 446 and 539.
We expect the net income of the KIE universe to grow 15.3% yoy
Sector-wise earnings of the KIE universe
Sales growth (%) EBITDA growth (%) PAT growth (%) EBITDA margin (%)
yoy qoq yoy qoq yoy qoq Sep-15 Jun-16 Sep-16E
Automobiles 11.3 5.1 18.2 11.4 35.4 20.4 13.1 13.1 13.9
Banks/Financial Institutions 6.0 3.5 3.5 7.0
Cement 6.4 (4.7) 42.3 (8.4) 87.3 (12.0) 15.7 21.8 21.0
Consumer Products 7.8 1.7 10.9 0.4 11.5 2.1 20.6 21.5 21.2
Energy 0.3 4.7 36.5 (23.0) 47.6 (26.5) 9.2 17.0 12.5
Industrials 6.6 10.8 28.0 29.5 81.3 46.2 8.1 8.3 9.7
Infrastructure 2.9 (1.7) 4.0 0.1 3.7 (12.8) 39.5 39.2 39.9
Internet 13.4 4.8 16.8 10.8 (4.3) (7.8) 21.2 20.6 21.8
Media 12.5 (0.6) 17.9 2.2 12.6 (2.5) 30.9 31.6 32.4
Metals & Mining (4.7) 3.9 12.7 (5.5) (2.3) (7.5) 15.8 20.5 18.7
Others 14.1 (1.2) 14.5 (27.0) 28.4 (42.4) 13.2 17.9 13.2
Pharmaceuticals 10.0 0.5 3.7 (4.6) 1.9 (11.1) 25.8 25.6 24.3
Real estate (21.9) 0.8 (20.8) 3.9 (19.5) (32.9) 31.0 30.5 31.4
Technology 9.1 1.0 3.4 1.2 0.5 (2.0) 24.8 23.4 23.5
Telecom 2.5 (3.6) 5.1 (5.5) (16.1) (3.4) 32.9 34.4 33.7
Utilities 3.2 (0.5) 15.5 2.5 5.6 5.5 36.9 40.0 41.2
KIE universe 4.0 3.1 16.5 (6.2) 15.3 (5.7) 15.0 18.5 16.8
KIE universe (ex-energy) 5.7 2.5 11.7 0.3 9.0 1.8 17.7 19.1 18.7
KIE universe (ex-banks) 3.9 3.1 16.5 (6.2) 18.8 (8.6) 16.2 20.0 18.2
We expect the net income of the BSE-30 Index to increase 4% yoy Sunita Baldawa
Sector-wise earnings of the BSE-30 Index sunita.baldawa@kotak.com
Sales growth (%) EBITDA growth (%) PAT growth (%) EBITDA margin (%)
Mumbai: +91-22-4336-0896
yoy qoq yoy qoq yoy qoq Sep-15 Jun-16 Sep-16E
Automobiles 14.2 6.0 23.2 14.1 43.0 27.9 13.1 13.1 14.1
Anindya Bhowmik
Banking 7.0 1.6 (15.2) (1.3)
anindya.bhowmik@kotak.com
Consumers 5.3 (1.5) 6.9 (1.4) 5.9 0.0 27.0 27.4 27.4
Mumbai: +91-22-43360897
Energy (7.5) 7.9 (1.1) (4.0) 3.2 (6.9) 22.1 26.6 23.6
Industrials 6.7 14.1 7.2 45.8 76.1 98.3 11.1 8.7 11.1
Infrastructure 2.8 3.7 (0.2) 2.8 5.2 (16.0) 65.4 64.0 63.5
Metals & Mining (8.9) (2.1) 13.9 (28.6) 8.5 (32.4) 9.3 16.0 11.6
Pharmaceuticals 10.9 (0.1) 10.1 (5.0) 15.3 (10.8) 25.6 26.7 25.4
Technology 8.7 0.7 2.4 1.8 (0.1) (1.1) 27.0 25.2 25.4
Telecom 1.7 (5.1) 9.6 (5.5) 23.8 5.0 34.5 37.4 37.2
Utilities 6.3 (3.9) 27.3 (0.6) 0.8 (2.1) 36.1 41.8 43.2
BSE-30 Index 3.7 3.1 9.2 (0.7) 4.0 (0.8) 19.1 20.9 20.1
BSE-30 Index (ex-energy) 6.8 1.9 12.8 0.3 4.2 0.9 18.3 19.6 19.3
BSE-30 Index (ex-banks) 3.4 3.2 9.2 (0.7) 9.8 (0.7) 20.6 22.7 21.8 Kotak Institutional Equities
Research
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India Strategy
TABLE OF CONTENTS
Sector-wise expectations............................................................................................ 3
Automobiles................................................................................................................ 7
Banking....................................................................................................................... 9
Cement...................................................................................................................... 12
Consumers................................................................................................................ 13
Energy....................................................................................................................... 17
Industrials.................................................................................................................. 18
Infrastructure............................................................................................................. 20
Internet.. 21
Media........................................................................................................................ 21
Metals & mining........................................................................................................ 22
Others....................................................................................................................... 23
Pharmaceuticals......................................................................................................... 25
Real estate................................................................................................................. 27
Technology................................................................................................................ 27
Telecom..................................................................................................................... 29
Utilities...................................................................................................................... 29
Disclosures................................................................................................................. 36
The prices in this report are based on the market close of October 5, 2016.
SECTORS-WISE EXPECTATIONS
Exhibit 1: A yoy increase in the net income of automobiles, cement, consumer products, energy and industrials sectors
Sector-wise expectations for the September 2016 quarter results
Key points Key points
Automobiles We expect auto companies under our coverage universe to report 35% yoy We expect a strong quarter particularly from Eicher Motors, Hero Motocorp,
growth in net profits, led by 11% yoy revenue growth and 90 bps yoy expansion Maruti Suzuki, Tata Motors and TVS Motors.
in EBITDA margin. Strong growth in net profit is partly led by sharp improvement
in consolidated profit of Tata Motors due to low base (+76% yoy).
Banks/Financial Banks: Earnings will likely decline 15% yoy as banks will likely make high NBFCs: We expect NBFCs to deliver qoq stable trends in growth and profitability.
Institutions provisions for bad loans. We see public banks reporting lower slippages qoq, but Most NBFCs are looking forward to 2HFY17 with optimism although they have
high provisions will continue, while Axis/ICICI Bank will likely see very weak not seen much of a pick up during 2QFY17. We do not see significant change in
results on slippages. Large treasury gains will be primarily used to improve NIM qoq (baring seasonal variations) as gradual re-pricing down of liabilities is
coverage. getting passed on as well in the form of lower yields. The decline in yields should
be visible in 2H.
Cement All-India cement prices increased by Rs9/bag qoq in 2QFY17, led by (a) higher After sharp increase in cement prices in 1QFY17 in north & central regions,
prices in north & central regions (+Rs10/bag to +Rs16/bag qoq), and (b) strong another round of price increase in 2QFY17 will favor earnings of regional names
rebound in Andhra Pradesh & Telangana region where prices increased by including Shree Cement, JK Cement and JK Lakshmiwe estimate EBITDA
Rs48/bag qoq. Prices were broadly flat qoq in east, west regions but weaker in increase of 70-100% yoy for these regional names. Regional companies will also
some of the southern states such as Karnataka and Tamil Nadu. Costs are likely benefit from higher-than-industry volume growth due to the ramp-up of expanded
to increase due to increase in pet-coke prices since March 2016, though we build capacities. Among pan-India names, we expect EBITDA growth of 30-60% yoy,
in some cushion assuming usage of carry-over of low-priced inventory. Cement led by strong prices in north, central region and states of AP, Telangana. We
volume growth (per DIPP) moderated to 2% yoy for July-August 2016 from 5.7% expect subdued quarter for India Cements (-24% yoy) due to lower volume base,
in 1QFY17 owing to good monsoonswe expect weak growth for pan-India increase in fuel costs and weak prices in some southern states.
companies and certain regional names.
Consumer For 2QFY17, we estimate aggregate revenue growth for KIE consumer universe to ITC: We expect cigarette volumes to grow 4% yoy driving a moderate 10% yoy
products inch up a tad to 10% yoy, led by price hikes across several categories and pickup growth in cigarette EBIT; we model 10.5% yoy revenue growth in FMCG
in discretionary revenues ahead of the festive season (strong growth in paints; business.
jewelry led by higher gold prices). We model 30 bps yoy aggregate GM HUVR: We model 5% domestic FMCG sales growth led by 3% UVG and 2%
expansion (significantly lower versus 140-260 bps expansion witnessed over past price-led growth; we have modeled 6.5% and 3% yoy growth in core home care
six quarters). We expect EBITDA and PAT growth of 13% for our consumer and personal care segment respectively (latter dragged by volume weakness in
universe (ex-Nestle/ITC) aided by modest pickup in revenue growth, sustained soaps).
benefits of RM tailwinds (though pace of benefits has narrowed significantly) and We expect Titan, TGBL, APNT, UB, GCPL and Page to post strong net profit
lower A&SP (aggregate A&SP spends to remain flattish yoy). growth while JYL, BJCOR, CLGT, BRIT, BJCOR and HUVR are likely to post
relatively muted net profit growth (single-digit growth).
Energy Upstream: We expect OIL and ONGC to report modest qoq decline in EBITDA Downstream: We expect OMCs to report sequentially lower net income
despite steady volumes and realizations, reflecting increase in operating costs reflecting lower refining margins and lack of adventitious gains that boosted
from the previous quarter. We expect GAIL to report steady EBITDA qoq, as lower 1QFY17 results. We expect RIL to report sequential decline in profitability led by
contribution from gas trading and LPG segments will likely be offset by higher weaker refining margins, partially offset by an improvement in petchem margins
contribution from petchem and gas transmission segments. and higher refining and petchem volumes.
Industrials L&T is likely to report modest consolidated E&C sales growth and higher yoy Construction: SELs (standalone) revenues and earnings may decline moderately
EBITDA margin. BHEL's revenues may start stabilizing yoy with backlog decline given the limited backlog and high base, while that of IRB would improve on the
having been arrested and execution on some stalled projects likely to start. recent project wins entering the phase of faster execution.
Overall sector earnings and order inflow/backlog position may remain lackluster Infrastructure: For Concor, container volumes may strengthen on recent
(excluding L&T) and management commentary is likely to be cautiously commissioning of the Kathuwas terminal; margins may remain weak. For Adani
optimistic. Ports, new ports would continue to drive revenue growth. For GPPV, new services
would lead to modest qoq growth in container volumes; margin may remain
weak on pricing pressure from shipping lines.
Internet We expect Just Dial's growth trajectory to remain weak given weakness in core
business (particularly weak realizations) as well as Omni (sales were stopped
during 2Q). We expect steady revenue growth for INFOE, led by 18% yoy growth
in the recruitment business. Our EBITDA forecasts now include the impact of
higher ESOP charges (post Ind-AS).
Media Broadcasting and distribution:We expect a robust 15% yoy growth in Zees ad Print media: We expect DB Corp. to report 10% yoy growth in print ad revenues
revenues, led by market share gains in select regional genres. Zees EBITDA partly aided by low base. We expect Jagran to deliver 8% growth in print ad
margin will improve 380 bps yoy to 29.4%. We estimate 6% yoy growth in Sun revenues. We expect EBITDA margin to be flat for Jagran and expand for DB Corp
TVs ad revenues (versus 2.7% decline in June quarter) led by some recovery in on healthy ad revenue growth and muted increase in operating expenses.
ratings of Telugu and Malayalam GECs. For Dish TV, we expect 350,000 net Multiplex industry: Sep quarter Box Office collections growth was muted due
subscriber additions, marginal increase in ARPU (qoq) and 80 bps expansion in high base and weak performance of select movies. We estimate (1) 1.5% yoy
EBITDA margin (qoq). decline in footfalls to 18.5 mn despite addition of 29 screens of DT cinemas
(consolidated from June 2016). Comparable properties footfalls will be down
15%, (2) about 6% and 14% yoy growth in average ticket price and F&B spends
per head and (3) about 20% growth in ad revenues. EBITDA margin would be
down 270 bps yoy to 16.4% largely due to 500 bps decline in occupancy to
about 32%.
A yoy increase in the net income of automobiles, cement, consumer products, energy and industrials sectors
Sector-wise expectations for the September 2016 quarter results
Key points Key points
Metals Ferrous: Post strong improvement in 1QFY17 earnings of steel companies aided Non-ferrous: Zinc prices increased by 17% qoq to US$2,253/ton (+22% yoy) due
by MIP, we expect sequential decline due to (a) 2-6% decline in domestic steel to weak global supplies while aluminum prices increased by 3% qoq to
prices in a seasonally weak period, and (b) sharp increase in spot coking coal US$1,620/ton (+2% yoy) in 2QFY17. Higher prices combined with increase in
prices towards August-September 2016. We expect blended realization for large- mined metal volumes (+42% qoq) will aid strong sequential improvement in
cap. steel names to decline by Rs1,200-1,500/ton depending upon their product earnings for Hindustan Zinc (+51% qoq, -21% yoy) and Vedanta (+19% qoq, flat
mix. The impact of coking coal cost increase will be limited due to carry-over of yoy)Vedanta will also benefit from ramp-up of aluminum, power volumes. We
low-priced inventories and purchases on quarterly contractsthough a higher expect 15% qoq increase in Hindalco's EBITDA (standalone) led by higher
contract price for 3QFY17 will impact margins later. We expect EBITDA for Tata aluminum prices (+3% qoq) and higher volumesour estimates also assume
Steel and JSW Steel to decline by 6-12% qoq. We estimate net income hedging gains for aluminum operations. We estimate Nalco's EBITDA to increase
(adjusted) of Rs 2.5 bn and Rs8.2 bn for Tata Steel and JSW Steel compared to 23% qoq due to higher alumina shipments even as lower alumina realizations
Rs3.2 bn and Rs11 bn in 1QFY17. NMDC will report another subdued quarter due (-9% qoq) will partially offset the gains.
to weak iron ore prices (EBITDA: -18% yoy).
Pharmaceuticals We expect domestic formulations growth to be strong across the industry. We We expect the sector's EBITDA margins to come under pressure on a sequential
expect US to be under pressure as lack of meaningful approvals, competition in basis due to a combination of reducing contribution from exclusivities and
existing products and FDA issues for certain companies will impact growth. Cipla increasing R&D costs. SUNP's EBITDA margin is likely to stabilize at around
will be the biggest beneficiary of new launches though we expect the full impact 31.5% (excluding other income), while LPCs EBITDA margin (excluding other
of recent launches in 2HFY17, while we expect SUNP and LPC to continue to operating income) should also remain strong at ~27%. We expect Cipla's EBITDA
benefit from Gleevec and Glumetza exclusivities respectively though we expect margins to remain stable at 17.3% as incremental benefit from US launches is
the contribution from these products to substantially decline on a qoq basis. We offset by increase in R&D costs. On our estimates, DRRD will have the lowest
expect DRRD and TRP to struggle in the US, as both continue to grapple with a EBITDA margins amongst peers in 2QFY17, and despite a sequential recovery, we
portfolio mix, with limited new launches to offset the decline in existing key expect margins to only recover to 16.6%.
products.
Real estate Financials: Liquidity remains weak for the sector despite a lot of capital chasing Operations: 2Q is a seasonally weak quarter. Heavy rains are expected to result
select developers (listed and unlisted). In the listed space, excluding DLF, we do in lower sales in Mumbai and Pune. Mumbai has witnessed sales slowing since
not expect major debt increase for the real estate developers. Ind-AS changes April 2016, unlike FY2015 and FY2016 being growth years on absolute volumes.
remain a challenge for companies to incorporate fully. 2QFY17 will see balance Strikes, political issues and resultant negative sentiment is likely to result in
sheet disclosures; however, off-balance sheet debt (JVs and associates) remains slower sales in August and September and affect 2QFY17 results for Bangalore-
a challenge, unless disclosed by developers. based developers. NCR continues its weak performance.
Technology 2QFY17 will be the weakest September quarter for Indian IT in the past eight Slowdown in growth rate and strong Rupee will lead to toning down of margin
years. We expect tier-1 IT to report c/c revenue growth rate of 0.5-3% qoq. We expectations by companies. Infosys will likely guide for margins at the lower end
forecast cross-currency headwind of 50-100 bps for tier-1 IT due to depreciation of the band of 24-26% and TCS will guide for FY2017 EBIT margin below the 26-
of GBP partly offset by appreciation of JPY, AUD and EUR against USD. Infosys 28% range. September quarter is characterized by sequential recovery in margins
would lead the pack with c/c growth of 3% followed by HCLT (2.6%) and TCS for several players following wage-hike and visa cost-led margin drop in the June
(2.4%) and Wipro (0.5%). Growth will be impacted by broad-based weakness in quarter. This trend will continue for Infosys and TCS, but the extent of the
BFSI, weak healthcare and delays in projects across many clients. Growth verticals sequential recovery will be muted given cross currency headwinds, marginal
will vary across players and will largely be an imprint of recent deals wins/wallet appreciation in rupee and weak growth. We expect 40-50 bps improvement in
share gain. We expect some cut in growth guidance, partly baked in the Streets margins of Infosys and TCS. HCLT and Wipros margins will decline 100-120 bps
and our estimates. largely due partial impact of wage hike over and above cross currency headwinds.
Tech Mahindras margins will decline marginally due to one-off restructuring costs
associated with largely onsite-centric employee separations. We expect
companies to moderate margin guidance.
Telecom We expect Bhartis India wireless revenue to decline 2.4% qoq (impact of Bhartis India wireless voice volumes are expected to decrease 3% qoq while
seasonality) and grow 7.3% yoy to Rs146.5 bn; this yoy revenue growth would increasing 8.2% yoy, voice realizations are expected to decline to 32.8p in
largely be driven by strong growth in data business, while voice is expected to be 2QFY17 versus 33.5p in 1QFY17. For Idea, we expect voice volumes to decline
flat. Ideas revenue is expected to decline 3.4% qoq and increase 5.4% yoy to 3.5% qoq and 1.5% yoy, while realizations are expected to decline to 33.4p from
Rs91.6 bn. Bhartis India wireless EBITDA is expected to decline 4.1% qoq but 34.3p in the previous quarter. On data, we expect Bharti to report sub-30% yoy
increase 16.5% yoy; yoy growth is expected to be driven by greater operating growth in revenues driven by close to 50% volume growth and close to 4p
leverage driven by increasing data revenues and decreasing ICR costs; this is decline in data realizations. Ideas data revenue growth is expected to be closer
expected to drive a 300 bps margin expansion yoy. Bhartis consolidated EBITDA to 15%, driven by about 40% data volume growth and 4p dip in realizations. We
however, is expected to grow slower at 9.6% yoy driven by weakness in Africa. expect BHIN to also report a soft quarter driven by subdued increase in tenancies
Ideas consolidated EBITDA is expected to decline 10.5% qoq and 10% yoy, as operators are expected to delay site rollouts to post-auctions. We expect qoq
driven by lower overall revenue growth, while costs are expected to increase with tenancy growth of 1.1%, overall revenue growth of 1.3% and qoq overall EBITDA
increasing site rollouts. growth of 2.4% driven largely by better energy margins.
Utilities Modest demand and contribution from hydro capacities will impact capacity JSW Energy's standalone earnings will be impacted by a sharp drop in capacity
utilization of coal-based capacities. Rising coal prices, both domestic as well as utilization of its Vijaynagar facility, although contribution from acquired hydro
imported, will further weigh on earnings of players operating under the capacities (not in the base period) during the peak generation season will help
competitive-bid and/or merchant sales route. NTPCs reported earnings will show compensate the weakness in Vijaynagar in consolidated earnings.
a decline on account of lower effective tax rate during the same period last year
while Powergrid will continue to report strong earnings growth based on strong
asset capitalization of preceding twelve months.
10
30
10
40
50
60
20
30
0
(20)
(10)
30
40
50
10
20
(20)
(10)
0
(20)
(10)
Sep-07 Sep-07 Sep-07
Strategy
Mar-13 Mar-13
Exhibit 2: We expect the net income of the BSE-30 Index to increase 4% yoy in 2QFY17
Mar-13
Sensex earnings growth ex-energy (%)
Sep-16E Sep-16E
5
Sep-16E
4.2
12.3
4.0
India
India Strategy
Banks/Financial Institutions
Axis Bank
Net interest income 40,621 45,169 44,673 10.0 (1.1)
We expect revenue growth to remain moderate at 11% yoy but NII would be
Pre-provision profit 36,280 44,694 39,645 9.3 (11.3)
under pressure due to high NPLs. We model NIM to decline by over 10 bps qoq
Treasury income (net) 945 9,290 10,072 965.8 8.4
Loan-loss provisions 6,190 18,940 17,993 190.7 (5.0)
We expect fresh impairments at elevated levels due to corporate defaults. We
Adjusted PAT 19,156 15,555 14,340 (25.1) (7.8)
expect net profits to decline 25% yoy due to high loan-loss provisions
EPS (Rs/share) 8.1 6.6 6.1 (25.1) (7.8)
Bank of Baroda
Net interest income 32,445 33,711 33,419 3.0 (0.9)
We expect loan growth to decline yoy partly due to SEB and portfolio rebalancing.
Pre-provision profit 23,371 26,695 27,474 17.6 2.9
NII growth would be under pressure but NIM (core) should improve qoq
Treasury income (net) 1,121 5,380 8,125 624.6 51.0
Loan-loss provisions 18,438 19,860 19,661 6.6 (1.0)
We expect fresh slippages to decline sharply leading to lower provisions and
Adjusted PAT 1,245 4,236 5,030 303.9 18.7
comfortable coverage ratio at 60% levels. We expect strong qoq treasury gains
EPS (Rs/share) 2.7 9.2 10.9 303.9 18.7
Bank of India
Net interest income 30,197 27,752 29,421 (2.6) 6.0
We expect flat NII and negligible loan growth. Strong treasury income and stake
Pre-provision profit 14,583 16,539 22,140 51.8 33.9
sale of insurance venture will boost revenues
Treasury income (net) 520 3,910 9,650 1,755.8 146.8
Loan-loss provisions 31,370 27,825 23,651 (24.6) (15.0)
We expect fresh impairment ratios to decline but credit costs to remain high due to
Adjusted PAT (11,262) (7,414) (1,406) (87.5) (81.0)
the composition of NPLs
EPS (Rs/share) (14.2) (9.4) (1.8) (87.5) (81.0)
Canara Bank
Net interest income 26,465 23,074 24,284 (8.2) 5.2
We expect NII to be be under pressure due to high NPLs and low growth. We
Pre-provision profit 19,441 18,189 19,514 0.4 7.3
expect PPoP to be flat despite strong treasury contribution
Treasury income (net) 2,310 5,900 5,970 158.4 1.2
Loan-loss provisions 11,390 14,760 16,236 42.5 10.0
Adjusted PAT 5,289 2,290 2,552 (51.7) 11.5 We expect provisions for existing NPLs but slippages to decline sharply qoq
EPS (Rs/share) 9.7 4.2 4.7 (51.7) 11.5
Cholamandalam
Net interest income 5,063 5,604 5,887 16.3 5.1
Pre-provision profit 2,979 3,341 3,492 17.2 4.5 We expect loan growth to remain strong at 18% yoy
Loan-loss provisions 1,147 804 900 (21.6) 12.0
Adjusted PAT 1,205 1,657 1,698 40.9 2.4
NIM will likely expand by 10 bps qoq to 7.5%
EPS (Rs/share) 7.8 10.7 11.0 40.9 2.4
Cement
ACC
Net sales 27,400 28,698 28,098 2.5 (2.1)
EBITDA 2,638 4,092 4,213 59.7 3.0 We factor in 2% yoy growth in volumes, compared to 1% yoy decline reported in
EBIT 1,031 2,682 2,709 162.8 1.0 the preceding quarter
PBT 1,559 3,185 3,181 104.1 (0.1)
Reported PAT 1,170 2,378 2,386 103.9 0.3
Extraordinaries
Our estimates factor in Rs6/bag sequential increase in cement prices given strong
Adjusted PAT 1,170 2,378 2,386 103.9 0.3
prices in north and central regions
EPS (Rs/share) 6.2 12.6 12.7 103.9 0.3
EBITDA margin (%) 9.6 14.3 15.0 536 bps 73 bps
Ambuja Cements
Net sales 20,952 25,412 22,044 5.2 (13.3)
EBITDA 2,944 5,813 4,320 46.7 (25.7)
Sequential improvement in cement prices will be offset by lower volumes
EBIT 1,392 4,303 2,783 100.0 (35.3)
PBT 2,082 5,465 3,785 81.8 (30.7)
Reported PAT 1,536 3,995 2,650 72.5 (33.7)
Extraordinaries
We factor in marginal decline in volumes taking into consideration the weakness in
Adjusted PAT 1,536 3,995 2,650 72.5 (33.7)
cement demand through the quarter
EPS (Rs/share) 1.1 3.0 2.0 72.5 (33.7)
EBITDA margin (%) 14.1 22.9 19.6 554 bps -328 bps
Dalmia Bharat
Net sales 13,981 17,654 15,711 12.4 (11.0)
We expect realizations to increase by Rs8/bag qoq aided by higher prices in south
EBITDA 2,819 4,963 4,146 47.1 (16.5)
and east markets. The benefit of improved realizations to will be partially offset by
EBIT 1,711 3,625 2,795 63.4 (22.9)
higher pet-coke costs
PBT 666 2,100 1,166 75.2 (44.5)
Reported PAT 188 940 670 256.7 (28.7)
Extraordinaries
We expect 13% yoy volume growth, led by ramp-up of capacities in east and north-
Adjusted PAT 188 940 670 256.7 (28.7)
east markets
EPS (Rs/share) 2.3 11.6 8.2 256.7 (28.7)
EBITDA margin (%) 20.2 28.1 26.4 622 bps -173 bps
Grasim Industries
Net sales 82,975 90,041 87,147 5.0 (3.2)
EBITDA 13,026 19,401 18,262 40.2 (5.9) Strong performance as (1) VSF and chemical businesses continue to operate at
EBIT 8,449 15,037 13,666 61.7 (9.1) near-capacity utilization and (2) price trends remain firm
PBT 8,586 15,739 13,920 62.1 (11.6)
Reported PAT 4,885 8,302 7,322 49.9 (11.8)
Extraordinaries 471
Adjusted PAT 4,885 7,831 7,322 49.9 (6.5) Volume growth of 4% yoy in Ultratech, supplemented by improving cement prices
EPS (Rs/share) 53.2 83.9 78.4 47.5 (6.5)
EBITDA margin (%) 15.7 21.5 21.0 525 bps -60 bps
India Cements
Net sales 10,791 10,521 10,982 1.8 4.4
EBITDA 2,286 2,014 1,747 (23.6) (13.3) We factor in 6% yoy growth in volumes at 2.3 mn tons, which is a moderation
EBIT 1,734 1,503 1,231 (29.0) (18.1) from the 10% yoy growth reported in 1QFY17
PBT 813 710 408 (49.8) (42.6)
Reported PAT 410 440 298 (27.4) (32.3)
Extraordinaries (40)
Sequential improvement in cement pricess offset by lower volume base and
Adjusted PAT 450 440 298 (33.8) (32.3)
possible increase in fuel costs
EPS (Rs/share) 1.5 1.4 1.0 (33.8) (32.3)
EBITDA margin (%) 21.2 19.1 15.9 -528 bps -324 bps
J K Cement
Net sales 8,679 8,867 9,234 6.4 4.1
EBITDA 1,064 1,657 1,813 70.4 9.4 We expect subdued grey cement volumes (1.6 mn tons, 1% yoy) but expect white
EBIT 682 1,232 1,375 101.7 11.6 cement/putty volumes to increase by 15% yoy
PBT 140 840 996 612.0 18.6
Reported PAT 137 609 747 444.4 22.8
Extraordinaries (111) We expect grey cement realizations to improve by Rs7/bag qoq aided by higher
Adjusted PAT 137 609 747 444.4 22.8 prices in north India (key market). However, the benefit of higher cement prices on
EPS (Rs/share) 2.0 8.7 10.7 444.4 22.8 earnings will be diluted due to increase in pet-coke prices
EBITDA margin (%) 12.3 18.7 19.6 737 bps 94 bps
Consumer Products
Asian Paints
Net sales 37,794 36,374 39,277 3.9 8.0 We have prepared our estimates for consumer product companies under Ind-AS as
EBITDA 6,208 8,203 7,570 21.9 (7.7) companies will report under Ind-AS. However, 2QFY16 results are under I-GAAP.
EBIT 5,499 7,348 6,700 21.8 (8.8) For the sake of proper comparison, we give like-for-like comparison in the
PBT 5,982 8,003 7,395 23.6 (7.6) individual comments on companies
Reported PAT 3,990 5,351 4,886 22.5 (8.7)
We model domestic sales growth of ~13% yoy, led by 15% volume growth and
Extraordinaries
2% price deflation (due to price cuts). We model robust 23% yoy growth in
Adjusted PAT 3,990 5,351 4,886 22.5 (8.7)
EBITDA (like-for-like) aided by 150 bps expansion in EBITDA margin due to higher
EPS (Rs/share) 4.2 5.6 5.1 22.5 (8.7)
GMs
EBITDA margin (%) 16.4 22.6 19.3 284 bps -328 bps
Bajaj Corp.
Net sales 1,901 2,037 1,966 3.4 (3.5)
We expect ADHO volumes to grow 3% yoy. NOMARKS revenues is likely to
EBITDA 642 704 686 7.0 (2.5)
remain flat qoq (pickup still some time away, in our view). Overall revenues to
EBIT 632 694 676 6.9 (2.5)
grow 3% yoy (like-for-like)
PBT 712 781 767 7.7 (1.8)
Reported PAT 468 522 552 18.0 5.7
Extraordinaries (94) (94) (53) (43.5) (43.5)
We model 7% yoy growth in EBITDA aided by 120 bps expansion in EBITDA
Adjusted PAT 562 616 605 7.7 (1.8)
margin on account of higher GMs
EPS (Rs/share) 3.8 4.2 4.1 7.7 (1.8)
EBITDA margin (%) 33.8 34.5 34.9 115 bps 36 bps
Britannia Industries
Net sales 22,087 21,408 23,690 7.3 10.7
EBITDA 3,250 3,162 3,426 5.4 8.3 We expect consolidated revenues to grow 11% yoy (like-for-like) led by similar
EBIT 2,978 2,883 3,138 5.4 8.8 domestic business growth (7% volume growth and 4% price/mix-led growth)
PBT 3,265 3,263 3,543 8.5 8.6
Reported PAT 2,186 2,191 2,349 7.4 7.2
Extraordinaries
Adjusted PAT 2,186 2,191 2,349 7.4 7.2 We model 6% yoy EBITDA growth dragged by lower GMs
EPS (Rs/share) 18.2 18.3 19.6 7.4 7.2
EBITDA margin (%) 14.7 14.8 14.5 -26 bps -32 bps
Industrials
ABB
Net sales 19,690 21,015 21,281 8.1 1.3
We expect a modest 8% yoy growth in revenues in 3QCY16, most of it led by
EBITDA 1,557 1,701 2,078 33.4 22.2
DA&M segment growth of over 20% yoy with other segments in low-single digits.
EBIT 1,198 1,344 1,687 40.7 25.5
However, we expect ordering to pick up over the next few quarters
PBT 954 1,208 1,540 61.4 27.5
Reported PAT 587 774 1,031 75.6 33.2
Extraordinaries
We expect broad margin uptick to continue yoy; key monitorable is the power grid
Adjusted PAT 587 774 1,031 75.6 33.2
business, one of the biggest revenue contributors for the company
EPS (Rs/share) 2.8 3.7 4.9 75.6 33.2
EBITDA margin (%) 7.9 8.1 9.8 185 bps 167 bps
BHEL
Net sales 59,380 56,225 63,506 6.9 13.0
Environmental clearances will delay full recovery, but renewed focus on executing
EBITDA (4,742) 710 1,060 NM 49.3
jobs at hand (as demonstrated in the last quarter) could lead to modest yoy
EBIT (6,991) (1,471) (1,142) (83.7) (22.4)
growth in the power segment (+5% yoy). Industry segment likely to remain weak
PBT (3,302) 965 1,549 NM 60.4
Reported PAT (2,049) 778 1,038 NM 33.4
Extraordinaries
The company may post positive EBITDA given tighter control on raw material
Adjusted PAT (2,049) 778 1,038 NM 33.4
(especially JDU-related) and staff costs
EPS (Rs/share) (0.8) 0.3 0.4 NM 33.4
EBITDA margin (%) (8.0) 1.3 1.7 965 bps 40 bps
Infrastructure
Adani Port and SEZ
Net sales 18,423 18,266 18,945 2.8 3.7
EBITDA 12,051 11,698 12,030 (0.2) 2.8 We build modest yoy volumes growth for Mundra; other ports will support healthy
EBIT 9,295 8,888 9,130 (1.8) 2.7 overall volume growth
PBT 7,092 8,787 7,634 7.6 (13.1)
Reported PAT 6,675 8,357 7,019 5.2 (16.0)
Extraordinaries 161 179 32 (80.4) (82.4)
Adjusted PAT 6,675 8,357 7,019 5.2 (16.0) We expect EBITDA margin to be modestly down qoq
EPS (Rs/share) 3.2 3.4 5.2 #DIV/0!
EBITDA margin (%) 65.4 64.0 63.5 -192 bps -55 bps
Ashoka Buildcon
Net sales 4,676 4,683 4,245 (9.2) (9.3)
EBITDA 652 596 467 (28.4) (21.6) We estimate modest revenue growth on a yoy basis (adjusted for land-sale
EBIT 487 472 323 (33.7) (31.7) income booked in the base) driven by start of new projects
PBT 453 478 399 (11.9) (16.5)
Reported PAT 315 308 289 (8.2) (6.1)
Extraordinaries
We expect high share of T&D segment in the revenue mix to lead to weak EBITDA
Adjusted PAT 315 308 289 (8.2) (6.1)
margin in 2QFY17
EPS (Rs/share) 2.0 1.9 1.8 (8.2) (6.1)
EBITDA margin (%) 13.9 12.7 11.0 -295 bps -172 bps
Container Corporation
Net sales 15,019 13,392 14,741 (1.9) 10.1
We expect 5% volume growth in EXIM and flat domestic volumes yoy. However,
EBITDA 3,161 2,619 3,014 (4.7) 15.1
lower lead distance (on cargo shift to Gujarat ports) would impact realization per
EBIT 2,286 1,778 2,107 (7.8) 18.5
TEU (expect 5-6% drop yoy)
PBT 3,144 2,470 2,865 (8.9) 16.0
Reported PAT 2,335 1,785 2,106 (9.8) 18.0
Extraordinaries
We expect segmental margin to be flat yoy and qoq for both EXIM and domestic
Adjusted PAT 2,335 1,785 2,106 (9.8) 18.0
cargo
EPS (Rs/share) 12.0 9.2 10.8 (9.8) 18.0
EBITDA margin (%) 21.0 19.6 20.4 -61 bps 88 bps
Gateway Distriparks
Net sales 2,609 2,782 2,833 8.6 1.8
EBITDA 655 555 658 0.5 18.6 We expect rail share gains from Tughlakabad ICD to drive yoy growth in revenues
EBIT 453 361 443 (2.1) 22.9 and direct port delivery to limit recovery in CFS operations
PBT 437 349 430 (1.7) 23.2
Reported PAT 306 232 302 (1.2) 30.3
Extraordinaries
Adjusted PAT 306 232 302 (1.2) 30.3 EBITDA margin will remain under pressure on weak overall demand
EPS (Rs/share) 2.8 2.1 2.8 (1.2) 30.3
EBITDA margin (%) 25.1 19.9 23.2 -188 bps 327 bps
Gujarat Pipavav Port
Net sales 1,491 1,672 1,790 20.1 7.1
We expect recent additions of shipping services and uptick in fertilizer imports to
EBITDA 765 1,002 1,074 40.5 7.2
support 7% sequential increase in revenues; yoy numbers non comparable due to
EBIT 537 751 803 49.4 6.8
low base
PBT 608 817 879 44.5 7.6
Reported PAT (677) 598 633 NM 5.9
Extraordinaries (604)
We estimate EBITDA margin at the lower end of the 60-65% band shared by the
Adjusted PAT (73) 598 633 NM 5.9
management, below the 62% average of the past two quarters
EPS (Rs/share) (0.2) 1.2 1.3 NM 5.9
EBITDA margin (%) 51.3 59.9 60.0 873 bps 5 bps
Internet
Info Edge
Net sales 1,741 1,976 2,048 17.6 3.6
EBITDA 334 478 527 57.9 10.2
We expect steady 18% yoy growth in the recruitment business
EBIT 283 418 465 64.2 11.1
PBT 478 661 672 40.7 1.7
Reported PAT 339 444 457 34.8 3.0
Extraordinaries
Estimates now also include the higher impact of ESOP expenses post Ind-AS
Adjusted PAT 339 444 457 34.8 3.0
implementation
EPS (Rs/share) 2.8 3.7 3.8 34.8 3.0
EBITDA margin (%) 19.2 24.2 25.7 655 bps 153 bps
Just Dial
Net sales 1,713 1,763 1,869 9.1 6.0
EBITDA 397 293 327 (17.7) 11.8 We expect core business growth to remain tepid. We also expect a slowdown in
EBIT 318 203 234 (26.6) 15.1 Omni due to sales slowdown
PBT 581 490 414 (28.7) (15.4)
Reported PAT 463 389 311 (32.9) (20.2)
Extraordinaries
Adjusted PAT 463 389 311 (32.9) (20.2) We expect sequential increase in employee costs due to employee addition
EPS (Rs/share) 6.7 5.6 4.5 (32.9) (20.2)
EBITDA margin (%) 23.2 16.6 17.5 -570 bps 90 bps
Media
DB Corp.
Net sales 4,783 5,704 5,412 13.1 (5.1)
We expect 10% yoy growth in print ad revenue (1) aided by low base (ad
EBITDA 1,117 1,812 1,460 30.7 (19.4)
revenues declined 7% in 2Q last year), (2) partly offset by impact of early 'Pitru
EBIT 902 1,601 1,249 38.5 (22.0)
paksha' (2-week period when advertising is subdued). Circulation revenue growth
PBT 928 1,608 1,264 36.2 (21.4)
would be steady at 14% yoy
Reported PAT 591 1,040 828 40.1 (20.4)
Extraordinaries
Adjusted PAT 591 1,040 828 40.1 (20.4) We estimate 360 bps yoy expansion in EBITDA margin driving 31% and 40% yoy
EPS (Rs/share) 3.2 5.7 4.5 40.1 (20.4) growth in EBITDA and net profit
EBITDA margin (%) 23.4 31.8 27.0 362 bps -479 bps
DishTV
Net sales 7,524 7,786 8,086 7.5 3.9
EBITDA 2,550 2,646 2,811 10.2 6.2 We estimate 350K net subscriber additions and 1% qoq increase in ARPU to
EBIT 1,220 1,034 1,261 3.4 22.0 Rs167
PBT 870 631 871 0.1 37.9
Reported PAT 870 409 583 (32.9) 42.8
Extraordinaries
We estimate EBITDA margin to improve 80 bps qoq to 34.8% largely driven by
Adjusted PAT 870 409 583 (32.9) 42.8
ARPU growth. A yoy decline in net profits reflects full tax rate versus nil in FY2016
EPS (Rs/share) 0.8 0.4 0.5 (32.9) 42.8
EBITDA margin (%) 33.9 34.0 34.8 87 bps 77 bps
Jagran Prakashan
Net sales 5,195 4,734 5,555 6.9 17.3
EBITDA 1,469 1,304 1,580 7.5 21.1 We expect 8%, 6% and 15% yoy growth in print ad revenues, circulation revenues
EBIT 1,182 1,115 1,330 12.5 19.3 and radio revenues.
PBT 1,094 1,093 1,305 19.2 19.4
Reported PAT 913 737 887 (2.8) 20.5
Extraordinaries 145
We expect EBITDA margin to be flat yoy. Note that, qoq financials are not
Adjusted PAT 782 737 887 13.4 20.5
comparable as Jagran reported standalone financials in 1QFY17
EPS (Rs/share) 2.4 2.3 2.7 13.4 20.5
EBITDA margin (%) 28.3 27.5 28.4 16 bps 89 bps
Net sales 13,849 15,716 16,349 18.1 4.0 We expect TV industry advertisement growth to moderate to 11-12% yoy in the
September quarter from 13-14% in the June quarter largely due to softness in
EBITDA 3,546 4,532 4,802 35.4 6.0
FMCG and ecommerce advertisement spends. Zees advertisement revenue growth
EBIT 3,349 4,280 4,532 35.4 5.9
will decelerate on similar lines. We expect Zee to deliver 14.5% yoy growth in
PBT 3,916 3,808 5,142 31.3 35.1 advertisement revenues largely driven by market share gains in the regional genres
Reported PAT 2,474 2,170 3,414 38.0 57.3
Extraordinaries (331)
We expect domestic subscription revenue to grow 15% yoy. Success of Rustom
Adjusted PAT 2,338 3,363 3,051 30.5 (9.3)
movie (co-produced by Zee) will boost other sales. We expect 380 bps yoy
EPS (Rs/share) 2.4 3.5 3.2 30.5 (9.3)
increase in EBITDA margin to 29.4%. Adjusted EPS is EPS post RPS impact
EBITDA margin (%) 25.6 28.8 29.4 376 bps 54 bps
Others
Astral Poly Technik
Net sales 3,061 3,172 3,633 18.7 14.6
EBITDA 424 408 491 15.8 20.6
Yoy increase in revenues and profitability driven by 10% growth in volumes
EBIT 338 309 388 14.8 25.5
PBT 314 284 362 15.1 27.3
Reported PAT 167 163 229 37.1 40.5
Extraordinaries (57.7) (35.7) (15.0) (74.0) (58.0)
We assume sequential improvement in EBITDA margin to 13.5% versus 12.8% in
Adjusted PAT 167 163 229 37.1 40.5
1QFY17 and 13.9% in 2QFY16
EPS (Rs/share) 1.4 1.4 1.9 37.1 40.5
EBITDA margin (%) 13.9 12.8 13.5 -34 bps 67 bps
Pharmaceuticals
Apollo Hospitals
Net sales 15,526 16,563 17,924 15.4 8.2
Yoy numbers are not comparable due to change in accounting standards
EBITDA 2,120 1,798 2,161 1.9 20.2
EBIT 1,515 1,069 1,411 (6.9) 31.9
We expect EBITDA margin to improve by 120 bps qoq as 1QFY17 was impacted
Adjusted PAT 1,095 505 761 (30.5) 50.7
by elections in Chennai
EBITDA margin (%) 13.7 10.9 12.1 -161 bps 119 bps
Biocon
Net sales 8,282 9,810 9,534 15.1 (2.8)
We expect revenue growth at 15% due to 20% growth in research services, which
EBITDA 1,886 2,540 2,229 18.2 (12.2)
will offset continued slow growth in biopharma and domestic formulations (~15%
EBIT 1,290 1,880 1,529 18.5 (18.7)
each). Our estimates for biopharma also reflect one-time changes to revenue
PBT 1,597 2,320 1,719 7.7 (25.9)
recognition that boosted 1QFY17 revenues by Rs700 mn
Reported PAT 3,059 1,670 1,159 (62.1) (30.6)
Extraordinaries 2,028 We expect 250 bps EBITDA margin decline on qoq basis, as we estimate 6.8%
Adjusted PAT 1,031 1,670 1,159 12.4 (30.6) R&D spend (5.3% in 4QFY16). This is after estimated Rs400 mn capitalization of
EPS (Rs/share) 5.1 8.3 5.8 12.4 (30.6) R&D (~4% of revenues). We expect 12% yoy EPS growth, although this translates
EBITDA margin (%) 22.8 25.9 23.4 60 bps -252 bps into ~30% qoq decline
Technology
HCL Technologies
Net sales 100,970 113,360 115,482 14.4 1.9
EBITDA 20,904 25,209 24,527 17.3 (2.7)
EBIT 19,550 23,330 22,579 15.5 (3.2) We expect 2.1% c/c revenue growth and 50 bps impact of cross currency
PBT 21,967 25,861 25,055 14.1 (3.1)
Reported PAT 17,239 20,467 19,638 13.9 (4.0)
Extraordinaries
Adjusted PAT 17,239 20,467 19,638 13.9 (4.0) We expect EBIT margin to decline 100 bps qoq largely due to wage hikes for a
EPS (Rs/share) 12.2 14.5 13.9 13.9 (4.0) section of employees and cross-currency headwind
EBITDA margin (%) 20.7 22.2 21.2 53 bps -100 bps
Hexaware Technologies
Net sales 8,184 8,696 8,941 9.3 2.8
EBITDA 1,460 1,352 1,459 (0.1) 7.9 We expect robust 3% growth in US Dollar terms and cross-currency headwind of
EBIT 1,339 1,213 1,309 (2.2) 7.9 20 bps. Growth will be driven by IMS and BPO
PBT 1,436 1,345 1,381 (3.9) 2.6
Reported PAT 1,115 998 1,023 (8.3) 2.5
Extraordinaries EBIT margin will recover by 70 bps led by (1) absence of visa costs (90-100 bps
Adjusted PAT 1,115 998 1,023 (8.3) 2.5 tailwind), (2) lower branding costs, (3) improvement in utilization and (4) partly
EPS (Rs/share) 3.7 3.3 3.4 (8.3) 2.5 offset by offshore wage hike (about 50 bps impact)
EBITDA margin (%) 17.8 15.5 16.3 -152 bps 77 bps
Utilities
Adani Power
Net sales 57,433 55,773 60,739 5.8 8.9
EBITDA 17,833 19,151 21,719 21.8 13.4 Improved financial performance due to healthy capacity utilization and accrual of
EBIT 11,956 13,166 15,694 31.3 19.2 compensatory tariff
PBT (3,691) (929) 1,099 NM NM
Reported PAT (3,691) (312) 1,099 NM NM
Extraordinaries
Our estimates continue to factor in accrual of compensatory tariff despite
Adjusted PAT (3,691) (312) 1,099 NM NM
uncertainty of the same
EPS (Rs/share) (1.1) (0.1) 0.3 NM NM
EBITDA margin (%) 31.1 34.3 35.8 470 bps 142 bps
CESC
Net sales 17,570 18,880 17,988 2.4 (4.7)
EBITDA 4,230 3,870 4,063 (4.0) 5.0 5% yoy growth in unit sales due to higher generation at captive capacities as well
EBIT 3,330 2,910 3,076 (7.6) 5.7 as Haldia
PBT 2,570 2,260 2,395 (6.8) 6.0
Reported PAT 1,950 1,740 1,796 (7.9) 3.2
Extraordinaries
Adjusted PAT 1,950 1,740 1,796 (7.9) 3.2 2QFY17 estimates do not factor in tariff increase in the absence of tariff order
EPS (Rs/share) 15.6 13.9 14.4 (7.9) 3.2
EBITDA margin (%) 24.1 20.5 22.6 -149 bps 208 bps
JSW Energy
Net sales 24,910 24,112 26,491 6.3 9.9
EBITDA 9,579 10,785 10,655 11.2 (1.2) Peak generation from hydro assets off-set by sharp drop in generation at
EBIT 7,338 8,387 8,116 10.6 (3.2) Vijaynagar
PBT 5,129 4,899 4,550 (11.3) (7.1)
Reported PAT 4,920 3,665 3,185 (35.3) (13.1)
Extraordinaries 1,328 14
2QFY17 results are not comparable with 2QFY16 results on account of inclusion of
Adjusted PAT 3,592 3,651 3,185 (11.3) (12.8)
hydro assets acquired from Jaiprakash
EPS (Rs/share) 2.2 2.2 1.9 (11.3) (12.8)
EBITDA margin (%) 38.5 44.7 40.2 176 bps -451 bps
Target O/S
Price (Rs) price Upside Mkt cap. shares EPS (Rs) EPS growth (%) PER (X) EV/EBITDA (X) Price/BV (X) Dividend yield (%) RoE (%) ADVT-3mo
Company Rating 05-Oct-16 (Rs) (%) (Rs mn) (US$ mn) (mn) 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E (US$ mn)
Automobiles
Amara Raja Batteries SELL 1,055 800 (24.2) 180,199 2,708 171 34.0 38.6 44.3 18.8 13.3 14.9 31.0 27.3 23.8 17.9 16.0 14.3 7.1 5.9 5.0 0.6 0.7 0.8 25.0 23.6 22.7 6.2
Apollo Tyres BUY 229 230 0.2 116,796 1,755 509 20.7 22.6 28.5 2.8 9.0 26.2 11.1 10.2 8.0 6.9 6.2 4.9 1.7 1.5 1.3 0.8 0.9 1.2 16.1 15.5 16.9 10.7
Ashok Leyland SELL 82 75 (8.1) 232,366 3,492 2,846 4.5 5.2 5.7 29.6 14.1 10.1 18.0 15.8 14.4 9.9 9.0 8.4 3.7 3.2 2.8 1.7 1.9 2.1 21.7 21.6 20.8 19.0
Bajaj Auto REDUCE 2,858 2,850 (0.3) 826,996 12,429 289 141.2 160.1 189.2 11.9 13.4 18.2 20.2 17.9 15.1 14.4 12.4 10.1 5.7 4.9 4.2 2.0 2.2 2.6 30.5 29.5 29.8 12.5
Balkrishna Industries ADD 1,145 950 (17.1) 110,703 1,664 97 63.3 72.5 84.2 6.2 14.6 16.2 18.1 15.8 13.6 11.0 9.4 7.8 3.3 2.8 2.4 0.5 0.6 0.6 20.0 19.2 18.9 1.3
Bharat Forge SELL 925 835 (9.7) 215,346 3,236 237 25.3 34.6 44.1 (7.6) 37.0 27.3 36.6 26.7 21.0 18.0 14.1 11.4 5.5 4.8 4.1 0.6 0.9 1.1 15.8 19.1 21.0 14.8
Eicher Motors SELL 26,281 14,500 (44.8) 713,833 10,728 27 646.6 736.0 835.2 37.4 13.8 13.5 40.6 35.7 31.5 32.2 28.1 24.2 19.9 13.7 10.2 0.1 0.1 0.1 49.8 45.5 37.1 17.4
Exide Industries SELL 194 155 (20.3) 165,240 2,483 850 7.8 8.5 9.2 6.5 8.5 8.6 24.9 23.0 21.2 14.9 13.8 12.3 3.4 3.1 2.9 1.3 1.5 1.5 14.3 14.2 14.2 11.1
Hero Motocorp SELL 3,491 2,950 (15.5) 697,159 10,477 200 183.8 194.6 205.3 17.2 5.8 5.5 19.0 17.9 17.0 12.6 11.8 11.1 7.4 6.4 5.5 2.6 2.8 2.9 42.3 38.2 34.8 21.1
Mahindra CIE Automotive ADD 200 205 2.7 64,617 971 323 7.8 9.9 12.5 77.2 27.5 26.3 25.7 20.1 16.0 11.6 8.3 7.0 2.9 2.0 1.8 11.8 12.5 11.9 0.9
Mahindra & Mahindra REDUCE 1,399 1,370 (2.1) 869,032 13,060 569 65.2 74.2 83.6 12.5 13.8 12.8 21.5 18.9 16.7 14.4 12.7 11.3 3.2 2.8 2.5 1.2 1.3 1.5 15.6 15.9 16.0 23.9
Maruti Suzuki BUY 5,689 5,800 1.9 1,718,594 25,828 302 232.4 292.5 354.8 53.6 25.9 21.3 24.5 19.4 16.0 14.0 11.0 8.8 5.4 4.5 3.8 1.0 1.3 1.6 23.8 25.2 25.6 56.2
Minda Corp. REDUCE 106 110 3.5 22,239 334 209 5.5 6.9 8.9 19.6 24.9 28.1 19.2 15.3 12.0 9.7 8.0 6.5 3.3 2.8 2.3 0.5 0.6 0.7 18.8 19.7 21.0 0.8
Motherson Sumi Systems SELL 333 260 (22.0) 467,821 7,031 1,323 11.8 14.6 17.1 21.8 23.8 17.7 28.3 22.9 19.4 11.9 9.7 8.3 8.4 6.8 5.5 1.1 1.3 1.5 32.8 32.8 31.3 16.4
Suprajit Engineering REDUCE 216 190 (12.1) 28,382 427 131 7.6 9.1 10.8 39.5 18.9 19.0 28.3 23.8 20.0 15.7 13.6 11.7 5.4 4.6 3.9 0.6 0.8 0.9 20.6 20.8 21.1 0.3
Tata Motors BUY 560 580 3.6 1,798,570 27,030 3,396 47.6 57.9 66.7 22.9 21.7 15.3 11.8 9.7 8.4 4.7 4.0 3.4 2.0 1.6 1.4 18.2 18.4 17.7 63.6
TVS Motor SELL 379 235 (38.1) 180,248 2,709 475 11.6 14.3 16.8 50.7 24.1 17.4 32.8 26.4 22.5 18.7 15.6 13.4 9.2 7.4 6.0 0.8 1.0 1.1 31.0 31.0 29.5 11.1
WABCO India BUY 6,125 7,200 17.6 116,177 1,746 19 158.1 182.2 209.0 46.5 15.2 14.8 38.8 33.6 29.3 25.0 21.3 18.1 8.8 7.1 5.8 0.2 0.2 0.3 25.2 23.3 21.8 0.8
Automobiles Neutral 8,524,319 128,108 23.8 18.8 16.0 19.3 16.3 14.0 9.7 8.2 6.9 3.9 3.2 2.7 0.9 1.1 1.2 19.9 19.9 19.5 288.0
Banks
Axis Bank REDUCE 536 530 (1.1) 1,278,586 19,215 2,383 32.0 38.0 47.8 (7.2) 18.4 26.0 16.7 14.1 11.2 2.3 2.1 1.8 0.9 1.1 1.4 13.6 14.3 15.9 98.8
Bank of Baroda REDUCE 169 150 (11.5) 390,440 5,868 2,310 6.7 18.4 25.0 128.7 174.0 36.2 25.2 9.2 6.8 1.8 1.7 1.5 0.8 2.2 3.0 4.2 10.9 13.5 24.1
Bank of India ADD 120 120 0.3 126,194 1,897 817 (8.4) 32.3 42.7 88.8 486.9 32.2 (14.3) 3.7 2.8 1.0 0.7 0.5 (1.4) 5.4 7.1 (2.6) 9.9 12.0 11.7
Canara Bank REDUCE 335 260 (22.4) 181,929 2,734 543 17.5 56.2 55.8 133.8 221.4 (0.6) 19.2 6.0 6.0 1.6 1.4 1.0 3.0 9.4 8.9 21.4
City Union Bank ADD 138 135 (1.9) 82,311 1,237 598 8.7 10.2 11.5 17.5 16.7 12.4 15.8 13.5 12.0 2.5 2.2 1.9 1.0 1.2 1.3 16.0 16.4 16.1 0.9
DCB Bank ADD 126 130 2.9 35,976 541 284 6.3 7.9 10.9 (8.0) 26.1 37.7 20.1 15.9 11.6 2.0 1.8 1.6 9.8 11.1 13.5 2.7
Equitas Holdings REDUCE 186 180 (3.4) 62,497 939 270 6.0 7.3 7.9 (3.3) 22.7 7.7 31.1 25.4 23.6 2.9 2.6 2.4 11.1 10.3 10.0 5.7
Federal Bank BUY 74 80 7.7 127,661 1,919 1,719 5.1 6.7 7.5 85.5 31.3 10.5 14.5 11.0 10.0 1.6 1.5 1.3 1.7 2.3 2.5 10.5 12.7 12.8 9.6
HDFC Bank ADD 1,286 1,350 5.0 3,256,073 48,934 2,528 58.9 69.7 83.1 21.1 18.3 19.2 21.8 18.5 15.5 3.9 3.4 2.9 0.9 1.1 1.3 19.0 19.4 19.8 27.5
ICICI Bank BUY 255 340 33.1 1,485,933 22,331 5,849 17.5 24.7 28.6 5.4 41.1 15.7 14.6 10.3 8.9 1.8 1.6 1.4 2.1 2.9 3.4 11.0 14.3 15.0 63.4
IDFC Bank ADD 76 75 (1.7) 259,027 3,893 - 2.6 4.0 5.6 113.4 54.9 40.7 29.8 19.2 13.7 1.8 1.7 1.5 0.7 1.0 1.5 6.2 9.1 11.8 9.4
IndusInd Bank ADD 1,216 1,250 2.8 724,466 10,888 595 48.9 56.7 66.4 27.3 15.9 17.2 24.9 21.5 18.3 3.7 3.3 2.8 0.5 0.6 0.7 15.9 15.9 16.3 22.2
J&K Bank BUY 90 85 (5.6) 43,654 656 485 4.9 13.0 16.2 (42.9) 166.3 24.2 18.4 6.9 5.6 1.0 0.7 0.6 1.1 3.0 3.7 3.6 9.2 10.6 2.4
Karur Vysya Bank BUY 475 600 26.2 57,440 863 122 52.2 56.3 79.2 12.0 8.0 40.5 9.1 8.4 6.0 1.2 1.1 1.0 2.7 3.0 4.2 13.3 13.0 16.5 1.5
Oriental Bank of Commerce ADD 132 120 (9.2) 45,729 687 321 12.8 27.1 45.5 163.6 111.9 67.6 10.3 4.9 2.9 1.2 1.0 0.7 1.9 4.1 6.9 2.7 5.6 8.9 10.1
Punjab National Bank REDUCE 144 125 (13.4) 307,066 4,615 1,964 3.8 23.2 26.0 118.8 509.6 11.8 37.8 6.2 5.6 2.1 1.2 0.9 0.5 3.2 3.6 2.1 11.9 12.1 36.8
Ujjivan Financial Services REDUCE 467 400 (14.4) 55,231 830 101 18.9 15.0 14.9 7.7 (20.4) (1.1) 24.8 31.1 31.4 3.2 2.9 2.7 0.3 0.3 0.3 15.1 9.7 8.8 14.4
State Bank of India BUY 261 280 7.3 2,024,920 30,432 7,763 16.7 31.7 41.4 30.6 89.6 30.6 15.6 8.2 6.3 1.4 1.2 1.0 1.1 1.2 1.2 7.9 12.5 14.4 74.2
Union Bank ADD 152 145 (4.8) 104,732 1,574 687 22.0 37.6 46.3 11.8 71.2 23.1 6.9 4.0 3.3 0.9 0.7 0.6 1.4 2.4 3.0 7.2 11.2 12.4 13.0
YES Bank REDUCE 1,279 1,200 (6.2) 538,520 8,093 421 64.8 77.2 93.3 7.3 19.1 20.9 19.7 16.6 13.7 3.5 3.0 2.5 0.8 1.0 1.2 18.3 18.8 19.4 73.3
Banks Attractive 11,188,385 168,145 91.7 60.0 23.2 18.8 11.7 9.5 1.6 1.5 1.3 1.0 1.4 1.7 8.6 12.5 13.7 523.3
NBFCs
Bajaj Finserv REDUCE 3,155 2,440 (22.7) 502,004 7,544 159 144.4 169.4 199.5 18.0 17.3 17.8 21.8 18.6 15.8 3.5 3.0 2.6 0.4 0.4 0.4 16.5 17.3 17.6 9.6
Cholamandalam REDUCE 1,228 1,010 (17.8) 191,796 2,882 156 47.5 58.2 71.6 31.3 22.5 23.0 25.8 21.1 17.2 4.7 4.0 3.3 0.5 0.6 0.7 18.7 19.4 20.2 6.7
Dewan Housing Finance BUY 297 250 (15.7) 86,518 1,300 291 32.1 37.4 43.3 16.4 16.3 15.9 9.2 7.9 6.8 1.6 1.3 1.2 1.2 1.4 1.6 17.0 17.6 17.1 10.3
HDFC ADD 1,423 1,430 0.5 2,249,951 33,814 1,580 52.3 58.0 66.7 10.7 10.8 15.0 27.2 24.5 21.3 5.5 4.9 4.0 1.3 1.4 1.6 21.9 21.2 20.8 54.1
IDFC BUY 70 80 14.0 111,955 1,683 1,594 4.5 6.2 8.4 176.1 39.2 35.7 15.7 11.3 8.3 1.0 0.9 0.8 0.4 0.5 0.6 10.1 13.6 17.0 7.4
IIFL Holdings ADD 272 310 13.9 86,223 1,296 317 19.2 23.3 27.4 18.9 21.3 17.8 14.2 11.7 9.9 2.0 1.8 1.5 0.9 1.1 1.3 20.2 19.1 19.7 1.3
L&T Finance Holdings ADD 97 90 (6.8) 169,291 2,544 1,754 5.2 6.4 7.9 6.0 24.6 23.2 18.7 15.0 12.2 2.1 1.9 1.7 0.5 0.8 0.9 11.9 13.0 14.3 10.2
LIC Housing Finance ADD 592 590 (0.3) 298,685 4,489 505 42.8 49.8 57.7 18.0 16.3 15.8 13.8 11.9 10.3 2.5 2.1 1.8 1.1 1.3 1.5 19.7 21.4 20.8 19.7
Magma Fincorp ADD 119 125 5.1 28,161 423 235 10.0 12.1 15.1 10.6 21.5 24.9 11.9 9.8 7.9 1.2 1.1 1.0 1.3 1.5 1.9 10.7 11.4 13.0 0.8
Mahindra & Mahindra Financial REDUCE 379 320 (15.6) 215,533 3,239 565 13.3 16.9 20.7 11.3 27.1 22.8 28.6 22.5 18.3 3.4 3.1 2.8 0.9 1.2 1.4 11.8 13.7 15.2 11.4
Max Financial Services NR 562 150,134 2,256 267 7.0 7.1 7.2 62.8 1.5 1.5 80.1 78.8 77.7 0.5 0.5 0.5 10.9 10.5 10.0 7.8
Muthoot Finance ADD 346 370 7.0 137,935 2,073 399 28.1 30.4 35.2 38.6 8.2 15.5 12.3 11.4 9.8 2.2 1.9 1.7 2.4 2.6 3.1 18.8 18.0 18.5 7.3
PFC REDUCE 126 50 (60.5) 333,838 5,017 2,640 16.5 20.7 25.6 (28.7) 25.5 23.5 7.7 6.1 4.9 1.3 1.1 0.9 2.6 3.3 4.1 10.9 12.5 13.9 10.0
Rural Electrification Corp. ADD 134 130 (2.9) 264,442 3,974 1,975 23.9 17.2 19.4 (16.1) (27.9) 12.9 5.6 7.8 6.9 1.0 1.3 1.2 3.8 2.8 3.1 16.0 10.8 11.2 18.1
Shriram City Union Finance REDUCE 2,220 1,900 (14.4) 146,358 2,200 66 94.1 127.1 160.7 17.4 35.0 26.5 23.6 17.5 13.8 3.0 2.7 2.4 0.5 0.6 0.8 12.8 15.3 16.8 2.3
Shriram Transport ADD 1,229 1,385 12.7 278,930 4,192 223 75.1 93.8 110.7 42.2 25.0 18.0 16.4 13.1 11.1 2.6 2.3 2.0 0.9 1.1 1.3 15.4 16.8 17.2 11.9
NBFCs Neutral 5,366,680 80,653 8.3 11.9 19.4 16.9 15.1 12.6 2.6 2.3 2.0 1.2 1.3 1.6 15.5 15.5 16.0 523.3
India
31
India
Kotak Institutional Equities: Valuation summary of KIE universe stocks
32
Target O/S
Price (Rs) price Upside Mkt cap. shares EPS (Rs) EPS growth (%) PER (X) EV/EBITDA (X) Price/BV (X) Dividend yield (%) RoE (%) ADVT-3mo
Company Rating 05-Oct-16 (Rs) (%) (Rs mn) (US$ mn) (mn) 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E (US$ mn)
Cement
ACC SELL 1,633 1,400 (14.3) 306,694 4,609 188 51.1 74.4 92.1 29.0 45.6 23.7 32.0 22.0 17.7 17.3 12.1 9.8 3.4 3.1 2.7 1.0 1.0 1.0 11.0 14.7 16.2 7.8
Ambuja Cements SELL 256 230 (10.2) 508,623 7,644 1,552 8.2 10.9 14.4 47.7 32.3 32.1 31.2 23.6 17.8 13.2 9.5 7.2 2.2 2.1 2.0 1.3 1.3 1.3 9.6 9.2 11.4 9.7
Dalmia Bharat ADD 1,928 1,600 (17.0) 171,241 2,573 89 57.1 91.9 112.9 165.8 60.9 22.9 33.8 21.0 17.1 11.1 8.8 7.6 3.9 3.3 2.8 0.1 0.1 0.1 12.4 17.2 17.8 2.6
Grasim Industries ADD 4,934 4,700 (4.7) 460,580 6,922 93 358.7 430.9 485.7 30.6 20.2 12.7 13.8 11.4 10.2 6.2 4.8 3.7 1.6 1.4 1.2 0.5 0.5 0.5 12.2 13.0 13.0 14.4
India Cements REDUCE 158 92 (41.6) 48,427 728 307 6.6 9.0 11.1 43.7 36.3 23.5 NM 17.5 14.2 8.9 7.7 6.9 1.3 1.2 1.1 1.3 1.3 1.3 5.5 7.1 8.3 11.4
J K Cement BUY 889 850 (4.4) 62,165 934 70 40.0 74.9 97.8 368.4 87.2 30.6 22.2 11.9 9.1 10.4 7.4 6.0 3.3 2.6 2.1 0.4 0.4 0.4 16.0 24.7 25.4 0.5
JK Lakshmi Cement ADD 510 480 (5.8) 59,959 901 118 20.2 33.4 48.0 921.6 65.3 44.0 25.3 15.3 10.6 12.2 8.1 6.2 3.8 3.1 2.4 0.4 0.4 0.4 16.3 22.6 25.8 0.9
Orient Cement BUY 224 175 (21.8) 45,819 689 205 6.8 16.6 21.0 124.3 143.9 26.1 32.8 13.5 10.7 14.5 8.5 7.0 4.1 3.2 2.6 0.8 0.8 0.8 13.1 27.0 26.8 0.7
Shree Cement SELL 17,768 12,000 (32.5) 618,974 9,302 35 625.3 719.9 825.4 442.0 15.1 14.7 28.4 24.7 21.5 18.9 14.9 12.6 7.5 5.8 4.6 0.1 0.1 0.1 30.2 26.5 23.9 3.7
UltraTech Cement SELL 4,033 2,825 (30.0) 1,106,849 16,634 274 124.0 159.1 181.7 56.4 28.4 14.2 32.5 25.3 22.2 17.8 14.3 12.4 4.6 4.0 3.4 0.2 0.2 0.2 15.3 16.9 16.5 15.3
Cement Cautious 3,389,331 50,937 78.4 30.4 19.0 26.3 20.2 16.9 12.7 9.8 8.1 3.2 2.8 2.5 0.5 0.5 0.5 12.2 14.0 14.5 67.1
Consumer products
Asian Paints REDUCE 1,209 950 (21.4) 1,159,430 17,425 959 21.5 25.4 29.3 14.9 18.1 15.2 56.2 47.6 41.3 35.6 30.0 25.8 17.5 14.9 12.7 0.7 0.9 1.1 33.7 33.8 33.2 16.1
Bajaj Corp. BUY 397 465 17.1 58,558 880 148 17.5 19.5 21.6 10.4 11.5 10.5 22.7 20.3 18.4 18.4 15.8 13.5 11.7 11.2 10.7 3.1 3.8 4.2 52.5 56.1 59.3 0.8
Britannia Industries ADD 3,461 3,650 5.5 415,176 6,239 120 79.5 99.3 118.6 16.9 24.9 19.4 43.5 34.8 29.2 29.0 23.1 19.3 17.6 13.3 10.3 0.7 0.9 1.0 46.2 43.4 39.7 10.1
Coffee Day Enterprises ADD 232 290 24.9 47,823 719 206 2.6 6.2 7.3 809.8 138.0 18.2 89.3 37.5 31.7 12.5 10.8 9.9 2.2 2.1 1.9 2.5 5.6 6.3 0.4
Colgate-Palmolive (India) ADD 979 1,060 8.2 266,342 4,003 272 23.6 27.9 33.5 11.2 18.4 20.0 41.5 35.1 29.2 24.8 21.0 17.6 20.7 16.3 13.0 1.2 1.3 1.5 55.7 52.0 49.4 4.8
Dabur India REDUCE 283 305 7.8 497,925 7,483 1,759 7.8 8.9 10.2 10.9 14.6 14.4 36.4 31.8 27.8 29.7 25.3 21.8 10.1 8.6 7.3 1.0 1.1 1.3 30.1 29.2 28.4 6.9
GlaxoSmithKline Consumer ADD 6,223 6,650 6.9 261,693 3,933 42 171.5 195.3 220.3 10.9 13.9 12.8 36.3 31.9 28.2 24.4 21.1 18.2 9.5 8.4 7.5 1.3 1.5 1.8 27.7 28.0 28.2 0.9
Godrej Consumer Products SELL 1,625 1,375 (15.4) 553,299 8,315 341 39.9 45.9 52.1 13.4 15.0 13.6 40.7 35.4 31.2 29.4 25.0 21.6 9.4 7.7 6.4 0.4 0.4 0.4 24.7 23.9 22.5 5.6
Hindustan Unilever REDUCE 871 885 1.6 1,884,950 28,328 2,164 21.0 23.3 25.7 8.8 11.1 10.4 41.5 37.4 33.9 28.6 25.2 22.3 30.6 31.3 32.7 2.1 2.3 2.6 73.0 82.7 94.3 18.2
ITC ADD 240 270 12.4 2,899,409 43,574 12,104 8.6 9.7 10.9 11.0 13.1 12.9 28.0 24.8 22.0 18.2 16.0 14.0 8.2 7.6 7.2 2.2 2.6 3.2 27.3 29.9 32.8 36.1
Jubilant Foodworks REDUCE 993 1,000 0.7 65,405 983 66 20.4 29.3 39.7 28.0 43.8 35.6 48.8 33.9 25.0 18.8 14.0 10.7 7.9 6.7 5.6 0.4 0.6 0.9 17.2 21.4 24.5 12.3
Jyothy Laboratories NR 363 65,949 991 181 9.9 11.1 11.5 36.0 11.9 3.9 36.8 32.9 31.6 25.8 22.1 19.2 8.2 7.6 7.1 1.4 1.7 1.9 27.1 24.0 23.2 1.0
Manpasand Beverages REDUCE 761 630 (17.2) 38,089 572 50 15.3 20.4 28.7 51.8 33.2 40.8 49.6 37.3 26.5 23.6 18.3 13.5 5.7 5.0 4.3 0.2 0.3 0.4 12.1 14.3 17.5 1.8
Marico REDUCE 286 270 (5.7) 369,505 5,553 1,290 6.8 7.9 8.8 19.9 15.2 12.5 42.0 36.5 32.4 28.7 24.9 21.9 14.7 12.4 10.5 1.0 1.2 1.4 38.2 36.9 35.2 5.5
Nestle India SELL 6,776 5,650 (16.6) 653,270 9,818 96 121.3 149.8 173.3 30.9 23.5 15.6 55.8 45.2 39.1 31.1 26.0 23.0 20.4 17.8 15.9 1.0 1.3 1.5 38.9 42.1 42.9 3.7
Page Industries SELL 15,977 11,500 (28.0) 178,206 2,678 11 251.5 309.7 382.9 20.6 23.2 23.6 63.5 51.6 41.7 39.9 32.7 26.5 27.1 20.7 15.5 0.6 0.7 0.7 48.2 45.4 42.5 2.4
PC Jeweller ADD 492 450 (8.5) 88,063 1,323 179 26.2 30.7 37.5 22.0 17.3 22.3 18.8 16.0 13.1 9.8 7.9 6.6 3.0 2.5 2.2 0.8 0.9 1.1 17.7 17.6 17.6 2.1
Pidilite Industries REDUCE 734 690 (6.0) 376,150 5,653 513 17.6 20.1 23.1 19.4 14.1 15.2 41.7 36.6 31.7 27.1 23.6 20.4 11.1 9.3 7.8 0.7 0.8 1.0 29.2 27.6 26.7 6.7
S H Kelkar and Company REDUCE 304 260 (14.6) 44,015 661 145 8.8 10.1 11.5 51.2 15.6 13.4 34.7 30.1 26.5 22.2 19.2 16.9 5.2 4.6 4.2 0.7 0.9 1.1 15.7 16.3 16.5 0.7
Speciality Restaurants SELL 87 75 (13.6) 4,078 61 47 (0.3) 0.8 1.9 (642.3) 373.3 136.1 (289.2) 105.8 44.8 20.1 11.8 9.0 1.3 1.3 1.3 (0.5) 1.2 2.9 0.1
Tata Global Beverages ADD 153 150 (2.2) 96,752 1,454 631 6.1 7.0 8.2 22.3 14.6 17.0 25.2 22.0 18.8 12.8 11.3 9.8 1.6 1.6 1.5 1.5 1.6 2.0 6.6 7.3 8.1 5.1
Titan Company REDUCE 406 320 (21.2) 360,352 5,416 888 9.9 12.2 13.9 26.5 23.9 13.7 41.1 33.2 29.2 27.5 21.9 18.7 8.9 7.6 6.6 0.8 0.9 1.1 23.3 24.9 24.2 6.7
United Breweries SELL 952 730 (23.3) 251,661 3,782 264 13.5 17.3 21.4 20.4 28.3 23.9 70.8 55.1 44.5 31.6 26.7 22.8 10.5 9.1 7.8 0.2 0.3 0.3 15.8 17.6 18.8 5.1
United Spirits ADD 2,558 2,800 9.4 371,792 5,587 145 34.4 53.8 73.1 180.9 56.4 35.8 NM 47.5 35.0 32.5 24.4 19.7 12.2 8.1 6.6 20.7 20.6 20.8 15.3
Consumer products Cautious 11,007,892 165,433 15.3 16.3 14.6 38.3 33.0 28.8 24.6 21.1 18.2 11.0 9.7 8.7 1.4 1.6 1.9 28.7 29.5 30.2 168.3
Energy
BPCL REDUCE 650 580 (10.8) 939,865 14,125 1,446 50.9 54.5 57.8 (1.0) 7.0 6.1 12.8 11.9 11.2 7.9 6.9 6.4 2.9 2.5 2.2 2.3 2.5 2.7 24.9 22.9 21.1 30.8
Cairn India ADD 222 415,657 6,247 1,875 8.9 11.3 14.4 (22.1) 26.9 27.5 24.9 19.6 15.4 9.0 7.3 5.7 0.8 0.8 0.8 1.1 2.0 3.2 3.4 4.2 5.2 13.6
Castrol India ADD 486 450 (7.5) 240,505 3,614 495 14.3 15.4 16.5 19.1 7.7 6.8 33.9 31.5 29.5 22.4 20.8 19.4 38.1 35.2 31.8 2.3 2.5 2.6 117.4 116.2 113.3 19.0
GAIL (India) ADD 400 430 7.4 507,898 7,633 1,268 27.1 32.7 37.0 51.3 20.4 13.3 14.8 12.3 10.8 9.1 7.7 6.8 1.5 1.4 1.3 1.9 2.5 3.0 10.8 11.9 12.5 12.5
GSPL ADD 158 150 (5.3) 89,267 1,342 563 9.0 11.1 12.2 14.4 23.5 9.3 17.6 14.2 13.0 8.8 7.2 6.5 2.1 1.9 1.8 1.6 2.1 3.1 12.3 13.9 14.0 0.9
HPCL REDUCE 435 400 (8.1) 442,010 6,643 1,017 41.4 41.6 42.0 8.9 0.6 0.8 10.5 10.5 10.4 7.4 7.5 7.6 2.1 1.9 1.7 2.9 2.9 2.9 21.4 18.9 17.0 33.3
Indraprastha Gas ADD 828 760 (8.2) 115,955 1,743 140 43.4 46.8 50.0 30.9 7.9 6.7 19.1 17.7 16.6 11.0 10.1 9.3 4.2 3.7 3.4 1.4 1.8 2.1 23.5 22.3 21.4 9.9
IOCL ADD 618 595 (3.7) 1,499,746 22,539 2,428 57.2 61.2 63.1 46.3 6.9 3.0 10.8 10.1 9.8 6.2 5.8 5.6 1.8 1.6 1.5 2.8 3.0 3.1 17.7 17.0 15.8 25.6
Mahanagar Gas ADD 698 650 (6.9) 68,991 1,037 99 38.0 40.2 42.2 21.7 5.7 5.0 18.4 17.4 16.5 10.8 10.0 9.4 4.0 3.7 3.4 2.5 2.7 3.0 23.2 22.2 21.3 -
ONGC SELL 267 230 (13.7) 2,281,321 34,285 8,556 19.8 22.6 26.8 (2.2) 14.0 18.6 13.5 11.8 10.0 5.3 4.8 4.1 1.2 1.1 1.0 2.6 3.0 3.6 8.8 9.6 10.7 21.7
Oil India SELL 411 370 (9.9) 246,826 3,709 601 35.9 37.9 43.0 (7.5) 5.6 13.7 11.4 10.8 9.5 6.6 6.3 5.6 1.0 1.0 0.9 3.0 3.7 4.1 9.4 9.4 10.2 3.3
Petronet LNG ADD 370 370 (0.1) 277,725 4,174 750 19.0 24.0 26.8 69.4 26.1 11.7 19.5 15.4 13.8 12.2 9.6 8.1 3.7 3.2 2.8 1.1 1.8 2.4 20.6 22.3 21.7 7.6
KOTAK INSTITUTIONAL EQUITIES RESEARCH
Reliance Industries ADD 1,089 1,100 1.0 3,207,682 48,207 3,240 83.0 94.4 99.3 (2.0) 13.8 5.1 13.1 11.5 11.0 11.2 8.5 7.8 1.3 1.2 1.1 1.1 1.3 1.4 10.7 11.1 10.7 61.9
Energy Attractive 10,346,320 155,490 7.0 11.9 8.7 12.9 11.5 10.6 7.8 6.7 6.1 1.4 1.3 1.2 2.0 2.3 2.7 11.1 11.5 11.6 244.6
Strategy
Strategy
Kotak Institutional Equities: Valuation summary of KIE universe stocks
KOTAK INSTITUTIONAL EQUITIES RESEARCH
Target O/S
Price (Rs) price Upside Mkt cap. shares EPS (Rs) EPS growth (%) PER (X) EV/EBITDA (X) Price/BV (X) Dividend yield (%) RoE (%) ADVT-3mo
Company Rating 05-Oct-16 (Rs) (%) (Rs mn) (US$ mn) (mn) 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E (US$ mn)
Industrials
ABB SELL 1,171 950 (18.9) 248,219 3,730 212 18.4 27.6 36.9 29.7 50.3 33.7 63.8 42.5 31.8 30.7 23.4 18.5 7.6 6.7 5.9 0.4 0.6 0.8 12.4 16.8 19.7 1.1
BHEL SELL 137 100 (26.9) 334,832 5,032 2,448 2.3 5.0 7.8 161.2 118.6 55.4 59.9 27.4 17.6 27.5 11.1 5.5 1.0 1.0 0.9 0.4 0.9 1.5 1.7 3.6 5.4 22.1
Carborundum Universal REDUCE 289 250 (13.4) 54,395 817 188 10.4 13.6 16.8 36.7 30.5 23.7 27.7 21.3 17.2 14.8 11.8 9.7 4.1 3.7 3.2 1.1 1.4 1.7 15.7 18.3 20.0 2.5
Crompton Greaves REDUCE 79 75 (4.8) 49,388 742 627 2.4 3.8 5.7 3.4 57.9 50.1 32.7 20.7 13.8 10.7 7.6 6.0 1.0 1.0 1.0 0.6 0.8 1.5 3.2 5.0 7.2 5.0
Cummins India REDUCE 935 850 (9.1) 259,085 3,894 277 28.5 32.6 36.1 7.7 14.4 10.6 32.8 28.7 25.9 30.6 26.3 22.9 7.4 6.7 6.1 1.6 1.8 2.0 23.7 24.6 24.6 4.5
Havells India REDUCE 449 355 (20.9) 280,279 4,212 624 10.8 12.4 14.0 39.2 14.3 13.1 41.5 36.3 32.1 28.2 24.1 20.9 8.7 7.7 7.0 0.9 1.1 1.4 22.3 22.6 22.8 9.7
Kalpataru Power Transmission BUY 252 300 18.9 38,718 582 153 12.5 13.8 21.9 63.8 10.3 58.3 20.1 18.2 11.5 7.3 6.8 5.3 1.6 1.4 1.3 0.6 0.6 0.6 8.0 8.2 11.9 0.7
KEC International ADD 124 160 29.6 31,750 477 257 9.4 13.1 16.3 26.5 38.6 24.9 13.1 9.5 7.6 6.5 5.6 4.9 1.9 1.6 1.3 1.0 1.4 1.8 15.0 18.1 19.3 0.8
L&T REDUCE 1,454 1,500 3.2 1,355,093 20,365 930 55.5 72.8 87.8 9.0 31.1 20.6 26.2 20.0 16.6 19.3 17.0 14.7 3.4 3.1 2.7 1.5 1.5 1.8 13.4 16.1 17.4 37.9
Siemens SELL 1,261 900 (28.7) 449,210 6,751 356 26.6 32.3 40.3 45.2 21.8 24.5 47.5 39.0 31.3 29.6 24.2 19.2 6.4 6.0 5.5 1.1 1.3 1.6 13.8 15.8 18.3 4.6
Thermax REDUCE 914 770 (15.7) 108,879 1,636 119 25.8 28.4 35.7 11.7 9.9 25.9 35.4 32.2 25.6 23.1 20.7 17.5 4.2 3.8 3.5 0.6 0.7 0.8 12.5 12.5 14.2 1.0
Voltas ADD 396 360 (9.1) 131,080 1,970 331 12.6 15.7 17.8 21.0 24.6 13.1 31.4 25.2 22.3 25.0 19.4 16.8 4.9 4.4 4.0 1.0 1.4 1.8 16.5 18.4 18.8 9.2
Industrials Cautious 3,340,927 50,209 39.1 32.7 24.7 33.3 25.1 20.1 20.5 17.1 14.1 3.2 2.9 2.7 1.1 1.3 1.6 9.5 11.7 13.3 99.0
Infrastructure
Adani Port and SEZ ADD 265 255 (3.9) 549,734 8,262 2,085 14.7 13.0 13.2 6.9 (11.3) 1.2 18.1 20.4 20.1 14.8 13.2 12.9 3.5 3.1 2.7 0.5 0.8 0.9 21.0 16.0 14.3 21.0
Ashoka Buildcon BUY 172 220 28.1 32,152 483 188 4.7 3.5 3.5 49.6 (24.3) 0.5 36.9 48.8 48.5 9.4 8.8 8.0 1.7 1.7 1.6 0.8 1.1 1.3 4.6 3.4 3.4 0.6
Container Corporation REDUCE 1,404 1,350 (3.9) 273,763 4,114 195 42.7 49.5 57.7 5.7 16.0 16.6 32.9 28.4 24.3 21.3 17.5 14.6 3.2 3.0 2.8 1.0 1.2 1.4 10.0 10.9 11.8 4.2
Gateway Distriparks ADD 264 305 15.5 28,704 431 109 10.8 12.3 16.4 7.2 13.7 33.6 24.4 21.5 16.1 11.0 8.4 6.3 2.2 2.0 1.9 1.2 1.4 1.9 9.2 9.9 12.3 0.6
Gujarat Pipavav Port ADD 177 185 4.5 85,545 1,286 483 5.3 6.5 8.9 55.1 21.7 36.9 33.2 27.3 19.9 18.7 14.7 11.6 4.3 4.1 3.7 1.8 2.2 2.0 13.2 15.4 19.5 2.5
IRB Infrastructure BUY 251 285 13.5 88,249 1,326 351 16.6 13.3 18.7 (8.3) (20.1) 41.0 15.1 18.9 13.4 1.5 1.4 1.4 1.5 1.5 10.9 7.6 10.2 8.8
Sadbhav Engineering ADD 289 315 8.9 49,599 745 172 11.1 12.8 13.9 37.8 15.8 8.0 26.1 22.6 20.9 16.8 13.6 11.6 3.0 2.7 2.4 12.2 12.7 12.3 0.6
Infrastructure Attractive 1,107,747 16,648 7.8 (4.8) 11.5 21.6 22.7 20.3 11.1 9.7 8.7 3.0 2.7 2.5 0.8 1.0 1.0 13.7 11.9 12.3 38.2
Internet
Info Edge ADD 941 960 2.0 113,758 1,710 121 16.2 21.3 27.2 38.3 31.3 27.7 58.1 44.2 34.6 43.7 31.0 23.2 6.0 5.5 4.9 0.4 0.6 0.7 10.7 12.9 15.0 1.1
Just Dial REDUCE 433 460 6.3 30,058 452 69 18.4 20.8 22.6 (9.7) 12.7 8.8 23.5 20.8 19.1 15.3 11.1 9.5 3.8 3.3 2.9 0.5 0.5 17.6 17.0 16.0 15.7
Internet Attractive 143,816 2,161 14.3 24.0 20.9 44.4 35.8 29.6 33.0 23.9 18.9 5.4 4.8 4.3 0.4 0.5 0.7 12.1 13.4 14.4 16.9
Media
DB Corp. REDUCE 395 365 (7.5) 72,494 1,089 184 21.8 26.0 31.0 35.1 19.1 19.3 18.1 15.2 12.7 9.8 8.3 6.8 4.8 4.3 3.8 2.8 3.5 4.3 28.0 29.8 31.7 0.3
DishTV BUY 98 115 17.6 104,185 1,566 1,066 2.5 3.6 5.0 (61.9) 45.4 38.6 NM 27.2 19.6 9.4 8.0 7.0 6.2 6.2 6.2 1.0 15.8 23.0 31.9 9.9
Jagran Prakashan REDUCE 205 195 (4.7) 66,870 1,005 327 12.6 14.1 16.4 21.0 11.7 16.9 16.2 14.5 12.4 9.6 8.2 7.0 3.8 3.4 3.0 2.9 3.4 3.4 24.7 24.9 25.9 0.7
Ortel Communications BUY 149 190 27.5 4,524 68 30 5.0 6.7 13.6 28.5 33.9 102.4 29.6 22.1 10.9 8.3 6.9 5.3 2.9 2.6 2.1 10.4 12.4 21.1 0.0
PVR BUY 1,205 1,175 (2.5) 56,320 846 47 26.3 35.0 44.6 (2.2) 33.4 27.3 45.9 34.4 27.0 16.0 13.2 11.1 5.8 5.0 4.3 0.2 0.3 0.4 13.3 15.6 17.2 4.2
Sun TV Network ADD 527 500 (5.2) 207,840 3,124 394 27.0 29.9 34.2 15.3 10.6 14.6 19.5 17.7 15.4 12.3 10.7 9.2 5.4 4.9 4.4 2.8 3.2 3.6 28.7 29.0 30.1 12.8
Zee Entertainment Enterprises BUY 567 560 (1.3) 544,767 8,187 960 14.0 17.8 20.5 48.9 27.4 14.7 40.5 31.8 27.7 25.9 20.0 17.6 5.8 5.3 4.8 0.4 0.6 0.7 17.1 17.3 18.0 14.8
Media Attractive 1,056,999 15,885 10.0 21.3 18.4 29.2 24.1 20.3 15.4 12.7 11.0 5.4 5.0 4.5 1.2 1.4 1.7 18.7 20.7 22.2 42.7
Metals & Mining
Coal India REDUCE 321 315 (1.9) 2,029,132 30,495 6,316 22.1 25.6 28.6 (2.5) 15.8 11.7 14.5 12.6 11.2 9.3 8.3 7.4 5.6 5.2 4.8 4.8 5.6 6.2 38.0 42.6 44.0 18.1
Hindalco Industries SELL 157 110 (30.0) 324,719 4,880 2,065 9.0 10.9 12.6 230.6 21.4 15.6 17.6 14.5 12.5 7.7 7.1 6.6 0.8 0.8 0.7 0.6 0.6 0.6 4.7 5.5 6.0 26.8
Hindustan Zinc REDUCE 253 200 (21.1) 1,070,485 16,088 4,225 18.8 20.1 21.6 (3.0) 6.6 7.7 13.5 12.6 11.7 9.5 8.1 7.0 2.5 2.2 1.9 1.7 1.7 1.7 19.8 18.3 17.3 7.2
Jindal Steel and Power SELL 84 60 (28.1) 76,394 1,148 915 (13.2) (0.5) 5.2 27.7 96.3 1,151.0 (6.3) (170.2) 16.2 10.9 8.0 6.9 0.2 0.2 0.2 (4.4) (0.1) 1.3 20.5
JSW Steel ADD 1,788 2,015 12.7 432,127 6,494 242 150.6 170.9 211.3 1,530.8 13.4 23.7 11.9 10.5 8.5 6.8 6.1 5.3 2.0 1.7 1.4 0.5 0.5 0.5 16.6 17.2 18.0 17.4
National Aluminium Co. SELL 48 36 (25.2) 92,974 1,397 2,577 2.2 2.9 3.2 (20.1) 33.6 10.5 22.3 16.7 15.1 4.3 2.9 2.4 0.9 0.9 0.9 2.1 2.1 2.1 4.3 5.6 5.9 0.9
NMDC SELL 112 75 (32.9) 443,057 6,659 3,965 7.2 7.6 8.0 (9.5) 5.5 5.3 15.5 14.7 14.0 10.5 9.4 8.8 1.5 1.5 1.4 5.4 5.4 5.4 9.5 10.0 10.4 4.8
Tata Steel ADD 391 445 13.9 379,454 5,703 971 27.4 48.0 55.3 217.1 74.9 15.1 14.2 8 7.1 7.8 6.2 5.8 1.4 1.2 1.1 2.0 2.0 2.0 9.6 16.3 16.4 43.6
Vedanta ADD 192 190 (0.9) 568,332 8,541 2,965 16.4 20.7 25.8 108.2 26.6 24.3 11.7 9.3 7.4 6.5 5.4 4.5 1.2 1.1 1.0 1.5 1.5 1.5 11.5 12.1 13.5 37.9
Metals & Mining Cautious 5,416,673 81,405 53.1 22.8 15.3 14.1 11.5 10.0 8.1 6.9 6.1 1.8 1.6 1.5 3.0 3.3 3.6 12.4 14.1 14.9 177.2
Pharmaceutical
Apollo Hospitals REDUCE 1,344 1,270 (5.5) 186,956 2,810 139 22.6 32.0 42.1 4.0 41.6 31.7 59.5 42.1 31.9 25.8 20.9 17.3 5.1 4.7 4.2 0.4 0.6 0.8 8.8 11.6 13.9 4.1
Biocon SELL 957 515 (46.2) 191,390 2,876 200 26.0 27.6 33.0 30.4 5.9 19.6 36.7 34.7 29.0 19.9 16.1 12.9 4.0 3.7 3.4 1.0 1.0 1.2 11.4 11.1 12.2 20.1
Cipla BUY 592 590 (0.3) 475,431 7,145 805 20.6 27.8 37.4 23.1 34.8 34.6 28.7 21.3 15.8 18.4 13.3 10.0 3.6 3.1 2.7 0.7 1.0 1.3 13.0 15.7 16.3
Dr Lal Pathlabs REDUCE 1,063 925 (13.0) 87,956 1,322 83 19.0 22.4 26.3 19.2 18.0 17.8 56.1 47.5 40.4 34.1 28.7 24.1 13.9 11.2 9.1 0.3 0.3 0.4 27.7 26.1 25.0 2.1
Dr Reddy's Laboratories SELL 3,123 2,500 (20.0) 517,498 7,777 171 80.1 118.6 150.0 (42.5) 48.0 26.5 39.0 26.3 20.8 18.4 13.3 10.6 4.2 3.7 3.2 0.4 0.6 0.7 10.5 14.9 16.5 19.7
HCG BUY 224 250 11.7 19,036 286 85 1.9 1.9 4.0 1,171.4 0.7 117.1 120.7 119.9 55.3 22.5 17.9 13.7 3.4 3.4 3.2 2.9 2.8 5.9 0.5
Lupin REDUCE 1,492 1,600 7.2 672,833 10,112 450 62.1 69.5 81.4 23.0 12.0 17.1 24.0 21.5 18.3 15.0 13.0 10.9 5.0 4.2 3.5 0.6 0.7 0.8 22.9 21.2 20.8 30.1
Sun Pharmaceuticals SELL 759 715 (5.9) 1,827,764 27,469 2,406 29.6 32.6 37.5 33.9 10.1 15.2 25.6 23.3 20.2 16.8 13.1 10.9 4.8 4.0 3.4 0.8 0.9 1.0 20.5 18.8 18.3 38.1
Torrent Pharmaceuticals REDUCE 1,667 1,260 (24.4) 282,031 4,239 169 59.0 66.1 (42.4) 12.1 (100.0) 28.2 25.2 - 18.0 16.1 6.8 5.6 0.8 0.9 26.5 24.4 5.3
Pharmaceuticals Cautious 4,260,895 64,035 7.4 17.3 12.6 28.6 24.4 21.6 17.5 13.9 11.2 4.7 4.0 3.6 0.7 0.8 0.9 16.4 16.5 16.7 136.2
India
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India
Kotak Institutional Equities: Valuation summary of KIE universe stocks
34
Target O/S
Price (Rs) price Upside Mkt cap. shares EPS (Rs) EPS growth (%) PER (X) EV/EBITDA (X) Price/BV (X) Dividend yield (%) RoE (%) ADVT-3mo
Company Rating 05-Oct-16 (Rs) (%) (Rs mn) (US$ mn) (mn) 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E (US$ mn)
Real Estate
DLF BUY 159 180 13.3 283,438 4,260 1,801 2.8 1.5 3.0 (9.2) (44.6) 98.7 57.4 103.6 52.2 17.3 15.8 14.2 1.0 1.0 1.0 1.2 1.2 1.2 1.7 1.0 1.9 22.2
Godrej Properties REDUCE 354 280 (20.9) 76,556 1,151 216 9.7 10.3 11.3 (9.3) 6.2 9.8 36.5 34.4 31.3 60.4 47.8 29.0 3.3 3.1 2.9 0.7 0.7 9.3 9.2 9.5 1.2
Oberoi Realty BUY 313 350 11.9 106,083 1,594 339 9.9 29.7 44.7 (21.5) 201.1 50.7 31.7 10.5 7.0 20.1 6.3 5.8 1.9 1.6 1.3 0.6 0.6 0.6 6.2 16.7 21.1 1.6
Prestige Estates Projects BUY 206 250 21.1 77,400 1,163 375 7.0 8.4 8.9 (24.8) 18.7 6.3 29.3 24.7 23.2 13.6 13.1 12.5 1.8 1.7 1.6 0.7 0.7 0.7 6.2 7.0 7.1 0.7
Sobha BUY 306 440 43.8 30,003 451 98 52.9 102.7 78.2 238.2 94.3 (23.9) 5.8 3.0 3.9 4.8 2.0 1.9 1.0 0.8 0.6 2.3 2.3 2.3 18.3 28.7 17.8 0.4
Sunteck Realty BUY 256 360 40.5 16,138 243 60 82.0 53.3 201.9 (34.9) (100.0) 3.1 4.8 - 2.3 0.4 0.7 0.6 0.8 0.8 26.2 14.1 1.0
Real Estate Attractive 589,619 8,861 23.2 35.6 8.6 25.6 18.8 17.4 14.2 10.7 10.8 1.3 1.2 1.2 1.0 1.0 1.0 5.0 6.4 6.9 27.1
Technology
HCL Technologies REDUCE 816 800 (2.0) 1,151,177 17,301 1,413 58.1 59.5 63.1 48.0 2.4 6.1 14.1 13.7 12.9 10.0 9.4 8.6 3.5 3.2 2.9 3.0 3.5 4.0 27.1 24.3 23.4 24.1
Hexaware Technologies ADD 190 215 13.2 57,313 861 304 13.2 15.7 17.6 2.1 18.6 12.6 14.4 12.1 10.8 9.6 7.8 6.7 3.8 3.4 3.0 4.6 4.6 4.6 27.2 29.8 30.0 3.3
Infosys ADD 1,042 1,215 16.7 2,392,268 35,952 2,286 61.8 70.5 78.3 4.8 14.1 11.0 16.8 14.8 13.3 10.8 9.2 8.0 3.7 3.3 2.9 2.6 2.9 3.4 23.1 23.5 23.4 67.5
Mindtree REDUCE 498 540 8.3 83,647 1,257 168 32.3 39.0 45.2 (10.0) 20.8 15.9 15.4 12.8 11.0 8.9 7.3 6.1 3.0 2.6 2.3 1.7 2.1 2.4 21.1 22.0 21.9 6.3
Mphasis SELL 548 460 (16.1) 115,198 1,731 210 38.1 40.0 41.1 10.7 4.9 2.7 14.4 13.7 13.3 8.8 8.0 7.6 1.7 1.7 1.6 3.5 3.7 3.8 12.4 12.4 12.1 1.0
TCS REDUCE 2,386 2,425 1.6 4,702,131 70,666 1,970 132.2 145.2 159.9 7.5 9.8 10.2 18.1 16.4 14.9 12.8 11.3 10.1 5.4 4.6 4.0 2.2 2.4 2.7 32.6 30.4 28.7 49.6
Tech Mahindra BUY 425 540 27.0 412,884 6,205 872 36.3 41.5 47.2 1.5 14.2 13.9 11.7 10.3 9.0 7.9 6.4 5.3 2.3 1.9 1.6 2.9 1.4 1.7 20.7 20.3 19.6 12.4
Wipro REDUCE 480 485 1.1 1,165,655 17,518 2,467 34.5 38.3 41.0 (4.2) 10.9 7.1 13.9 12.5 11.7 8.3 7.2 6.1 2.3 2.0 1.8 1.0 1.0 1.0 17.2 17.2 16.3 16.5
Technology Neutral 10,080,273 151,492 8.2 10.1 9.7 16.3 14.9 13.5 10.9 9.6 8.4 3.8 3.4 3.0 2.3 2.5 2.8 23.5 22.8 22.0 180.6
Telecom
Bharti Airtel BUY 322 365 13.5 1,285,964 19,326 3,997 9.1 7.9 12.5 (6.5) (12.9) 57.7 35.2 40.5 25.7 6.4 6.5 5.6 1.9 1.9 1.8 0.7 0.7 1.5 5.4 4.6 7.2 20.1
Bharti Infratel ADD 376 400 6.3 695,915 10,459 1,897 15.7 17.0 18.9 25.2 8.3 11.2 23.9 22.1 19.9 11.4 10.4 9.6 4.1 4.0 3.9 2.9 3.1 3.5 16.5 18.4 19.7 10.8
IDEA BUY 80 105 31.3 287,884 4,326 3,601 1.1 (2.7) (2.5) (87.1) (341.5) 7.1 72.6 (30.1) (32.4) 6.5 7.1 6.4 1.2 1.3 1.4 1.9 2.6 3.8 1.6 (4.1) (4.1) 14.2
Tata Communications ADD 610 515 (15.6) 173,836 2,613 285 11.2 17.3 23.5 584.3 54.4 35.4 54.3 35.2 26.0 8.3 7.4 6.8 (92.1) 56.7 17.8 1.1 1.1 1.1 (105.4) 838.2 104.2 7.1
Telecom Cautious 2,559,461 38,465 (22.5) (14.7) 40.4 32.7 38.4 27.3 7.1 7.1 6.2 1.8 1.8 1.8 1.3 1.5 2.1 5.6 4.7 6.5 69.3
Utilities
Adani Power SELL 26 26 1.2 87,829 1,320 3,334 2.8 4.7 4.5 93.8 64.2 (2.5) 9.1 5.5 5.7 6.5 5.6 5.3 1.0 0.9 0.8 12.1 17.1 14.2 2.5
CESC ADD 614 685 11.5 81,390 1,223 133 56.2 72.6 93.9 101.1 29.2 29.3 10.9 8.5 6.5 7.0 6.5 5.7 0.9 0.8 0.7 1.7 1.8 1.8 8.1 9.9 11.8 3.3
JSW Energy ADD 75 80 7.1 122,512 1,841 1,640 7.4 8.7 7.9 (2.4) 17.5 (8.8) 10.1 8.6 9.4 5.8 5.2 5.1 1.3 1.2 1.1 2.7 2.7 2.7 13.6 14.4 12.0 4.2
NHPC REDUCE 26 24 (7.2) 286,177 4,301 11,071 2.8 3.4 3.6 4.1 22.1 7.2 9.3 7.7 7.1 7.6 6.1 5.3 0.9 0.9 0.8 6.1 7.5 7.9 9.6 11.3 11.7 1.7
NTPC BUY 152 180 18.1 1,257,021 18,891 8,245 11.5 14.3 15.8 (0.2) 24.7 10.2 13.3 10.6 9.7 11.2 9.2 7.5 1.3 1.2 1.1 2.3 2.8 3.1 10.3 12.0 12.2 10.4
Power Grid BUY 181 210 15.8 949,010 14,262 5,232 13.8 15.1 17.8 20.7 10.0 17.9 13.2 12.0 10.2 9.6 8.3 7.2 2.0 1.7 1.5 1.5 1.7 2.0 15.8 15.5 16.1 13.6
Reliance Power SELL 49 36 (25.9) 136,329 2,049 2,805 4.8 5.3 5.9 (1.1) 11.1 10.1 10.1 9.1 8.3 6.2 6.5 6.7 3.0
Tata Power ADD 78 80 2.2 211,772 3,183 2,800 5.5 6.2 6.8 0.9 12.1 9.6 14.1 12.6 11.5 1.5 1.5 1.5 10.0 10.4 10.5 6.6
Utilities Attractive 3,132,040 47,070 9.2 20.0 10.8 12.3 10.2 9.2 9.1 7.9 6.9 1.3 1.2 1.1 2.2 2.6 2.8 10.6 11.7 11.9 45.4
Others
Astral Poly Technik REDUCE 435 425 (2.3) 52,091 783 120 11.1 14.8 19.1 31.7 34.2 28.5 39.3 29.3 22.8 19.8 15.5 12.2 5.7 4.8 4.0 0.1 0.1 0.2 15.7 17.9 19.3 0.5
Cera Sanitaryware REDUCE 2,471 2,050 (17.0) 32,138 483 13 73.7 93.2 112.2 14.9 26.4 20.4 33.5 26.5 22.0 19.6 15.6 13.0 6.4 5.3 4.4 0.4 0.4 0.4 20.8 21.8 21.7 0.7
Dhanuka Agritech BUY 675 780 15.6 33,763 507 50 25.9 31.0 38.0 19.9 19.6 22.7 26.0 21.8 17.7 19.4 16.1 12.9 5.9 5.0 4.2 1.0 1.1 1.4 24.7 24.8 25.5 0.6
Godrej Industries REDUCE 445 390 (12.3) 149,499 2,247 336 17.6 20.6 21.7 22.4 17.0 5.0 25.2 21.6 20.5 19.4 17.4 17.3 3.7 3.2 2.8 0.4 0.4 0.4 15.8 16.1 14.7 3.0
HSIL ADD 348 345 (0.9) 25,181 378 72 14.6 19.1 25.7 18.9 30.6 34.3 23.8 18.2 13.6 9.7 8.0 6.7 1.7 1.6 1.5 1.1 1.1 1.1 7.5 9.2 11.4 0.8
InterGlobe Aviation ADD 950 1,020 7.4 342,303 5,144 351 53.2 73.9 93.4 (6.2) 38.8 26.4 17.9 12.9 10.2 11.7 8.3 6.5 13.8 9.6 7.0 2.8 3.9 4.9 92.0 88.4 79.4 7.7
Kaveri Seed BUY 411 460 12.0 28,364 426 69 28.9 39.7 48.4 15.2 37.4 22.0 14.2 10.3 8.5 11.0 7.6 5.9 2.7 2.3 2.0 2.1 2.9 4.1 20.5 24.4 25.6 3.9
PI Industries ADD 831 840 1.1 113,939 1,712 136 28.6 33.4 39.9 26.5 16.9 19.4 29.1 24.9 20.8 21.1 17.6 14.6 7.7 6.1 4.9 0.5 0.6 0.7 29.6 27.3 26.1 1.3
Rallis India ADD 237 240 1.1 46,147 694 194 10.2 12.8 15.7 38.7 25.8 22.6 23.3 18.5 15.1 15.0 11.8 9.4 4.5 3.8 3.2 1.3 1.4 1.5 20.6 22.4 23.4 1.3
SRF BUY 1,924 1,980 2.9 110,503 1,661 57 94.2 106.5 123.6 27.9 13.1 16.0 20.4 18.1 15.6 11.7 10.4 9.2 3.5 3.0 2.6 0.6 0.6 0.7 18.6 18.0 17.9 7.2
Tata Chemicals ADD 552 560 1.5 140,562 2,112 255 40.9 54.4 50.5 33.5 33.0 (7.0) 13.5 10.2 10.9 8.0 6.7 5.9 2.1 1.6 1.4 1.8 1.8 1.8 16.3 17.8 13.9 7.8
TeamLease Services ADD 1,065 1,175 10.3 18,208 274 16 22.2 29.3 37.6 39.2 32.2 28.3 48.1 36.4 28.3 35.8 24.1 17.8 5.2 4.6 3.9 11.5 13.4 14.9 0.5
UPL ADD 680 660 (3.0) 344,907 5,183 429 36.2 43.5 51.4 13.9 20.1 18.1 18.8 15.6 13.2 11.5 9.7 8.3 3.6 3.0 2.4 0.7 0.7 0.8 22.4 20.7 20.2 17.6
Whirlpool REDUCE 1,048 900 (14.1) 132,949 1,998 127 24.6 29.8 35.8 26.8 21.1 20.3 42.6 35.2 29.3 26.3 22.1 18.5 9.0 7.5 6.3 0.6 0.7 23.6 23.3 23.4 0.7
Others 1,513,236 22,742 19.4 26.9 16.4 20.6 16.3 14.0 12.9 10.5 8.9 4.6 3.7 3.1 1.2 1.5 1.8 22.3 22.9 22.4 52.3
KIE universe 83,081,932 1,248,601 22.0 21.7 15.5 19.1 15.7 13.6 10.7 9.2 8.1 2.5 2.3 2.0 1.5 1.7 2.0 13.0 14.3 14.9
KOTAK INSTITUTIONAL EQUITIES RESEARCH
KIE universe (ex-energy) 72,735,612 1,093,111 26.0 23.9 16.9 20.5 16.6 14.2 11.5 9.9 8.6 2.8 2.5 2.2 1.4 1.6 1.9 13.6 15.1 15.8
Notes:
(a) We have used adjusted book values for banking companies.
(b) 2017 means calendar year 2016, similarly for 2018 and 2019 for these particular companies.
(c) Exchange rate (Rs/US$)= 66.54
Strategy
Strategy India
"I, Sanjeev Prasad, hereby certify that all of the views expressed in this report accurately
reflect my personal views about the subject company or companies and its or their securities.
I also certify that no part of my compensation was, is or will be, directly or indirectly, related
to the specific recommendations or views expressed in this report."
60%
Percentage of companies within each category for which Kotak
Institutional Equities and or its affiliates has provided
50%
investment banking services within the previous 12 months.
BUY. We expect this stock to deliver more than 15% returns over the next 12 months.
ADD. We expect this stock to deliver 5-15% returns over the next 12 months.
REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.
SELL. We expect this stock to deliver <-5% returns over the next 12 months.
Other definitions
Coverage view. The coverage view represents each analysts overall fundamental outlook on the Sector. The coverage view will consist of one of the following designations:
Attractive, Neutral, Cautious.
Other ratings/identifiers
NR = Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s) and/or
Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction involving this company
and in certain other circumstances.
RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient fundamental
basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied
upon.
NA = Not Available or Not Applicable. The information is not available for display or is not applicable.