02january 2017 India Daily

INDIA DAILY
January 2, 2017 India 30-Dec 1-day 1-mo 3-mo

Sensex 26,626 1.0 1.5 (4.4)
Nifty 8,186 1.0 1.2 (4.9)
Contents Global/Regional indices

Dow Jones 19,763 (0.3) 3.1 7.9
Special Reports Nasdaq Composite 5,383 (0.9) 2.4 1.3
Strategy FTSE 7,143 0.3 6.1 3.5

Nikkei 19,114 (0.2) 3.7 16.2
Strategy: 2016: The year of 'nothing'
Hang Seng 22,001 1.0 (2.5) (5.6)
The year of 'nothing' despite all the ups and downs KOSPI 2,018 (0.4) 1.8 (1.3)
The year of 'know-thing'; most people don't know much Value traded India
Cash (NSE+BSE) 179 179 227
However, a 'do-nothing' approach may or may not have worked depending
Derivatives (NSE) 2,048 3,638 2,831
on positioning
Deri. open interest 2,086 2,335 2,271
A new year always brings fresh hopes: Earnings and valuations will matter
more in CY2017
Forex/money market
Daily Alerts
Change, basis points
Sector alerts 30-Dec 1-day 1-mo 3-mo
Banks: Not the best despite efforts Rs/US$ 68.0 (1) (8) 155
10yr govt bond, % 6.8 - 29 (25)

DRT and Lok Adalat show improvement; weak on SARFAESI
Net investment (US$ mn)
Slippages remain high but there is hope of stronger improvement in 29-Dec MTD CYTD
2HFY17/FY2018 FIIs (97)
(1,702
3,003
)
Priority sector shows deterioration in FY2016 for public banks MFs 209 1,078 6,564
Top movers
Slippages hard to extrapolate; many weapons and channels to address the
Change, %
asset quality issues
Best performers 30-Dec 1-day 1-mo 3-mo
Cement: Cement - the year in review VEDL IN Equity 216.2 (0.4) (3.1) 25.6
CAIR IN Equity 242.2 0.1 (1.5) 21.0

Volumes remained lackluster, prices had large regional disparities
GAIL IN Equity 439.2 3.2 1.5 17.2
Sharp decline in pet-coke prices aided by lower cost, though trends have NMDC IN Equity 123.4 0.3 6.0 16.6
reversed since TECHM IN Equity 488.9 1.3 3.3 16.4
Story of earnings downgrades partially off-set by expanding multiples Worst performers
continued DIVI IN Equity 783.7 (0.7) (31.0) (39.3)
UT IN Equity 4.0 2.6 (15.8) (32.2)

Stock performance extended until September 2016, under-performance
SHTF IN Equity 853.5 2.6 (4.7) (26.6)
since
RCOM IN Equity 34.1 1.8 (4.9) (26.5)
Technology: 3QFY17E preview - muted quarter MMFS IN Equity 270.3 (1.2) (1.6) (25.8)
Dec 2017 quarter - weak on revenue growth
Margins - Crosses impact offset Rupee depreciation. Expect moderate

margin decline
CY2017 - balanced setup; financial services can be a source of positive
surprise
Key areas of focus: H-1B dependence, budgeting cycle and pricing pressure
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES.
REFER TO THE END OF THIS MATERIAL.
INDIA
Strategy
Market JANUARY 2, 2016
UPDATE
BSE-30: 26,626
2016: The year of nothing. CY2016 turned out to be another nothing year for the
Indian market with flat returns in US$ terms. However, the market had its fair share of
ups and downs and gave several money-making opportunities. A portfolio of value
stocks at the beginning of the year would have given excellent returns unlike growth
stocks that flattered to deceive during the post-Brexit and pre-Trump period when
markets got carried away by expectations of continued low DM and EM bond yields.
QUICK NUMBERS
0% return for the

The year of nothing despite all the ups and downs Indian market in
The Indian market delivered 3% (LC- basis) and 0.5% (USD-basis) return in CY2016 and CY2016 versus 5%
underperformed DM and EM markets by 5% and 8% in USD terms (see Exhibit 1). The year had for MSCI World and
several ups and downs (see Exhibit 2) though, driven by global macro factors (consensus view 8% for MSCI EM
on GDP growth and yields in DMs). The year started (up to mid-February) and ended (from late-
October) with dramatic declines in EM markets due to the investors expectations of swift rate
20 stocks in Nifty-50
hikes by the US Fed. However, EMs saw a strong rally from mid-February when consensus view Index gave >10%
shifted to continued weak economic growth in the DMs and consequent further monetary return, 21 stocks -
accommodation by the DM central banks. This view got strengthened by the Brexit event as 10% to +10% and 9
investors betted on further monetary accommodation by the BoE and other DM central banks. stocks <-10%
The year of know-thing; most people dont know much US$3.1 bn and
US$5.3 bn of FPI
Several events in CY2016 badly exposed the ability of experts to predict (1) the outcomes of
and MF equity
political events; the outcomes of both the major political events (US Presidential elections,
inflows; US$6.6 bn
Brexit) were quite different from poll results and (2) the reaction of the markets to unexpected
outcomes of the political events; the post-event reaction of markets to the unexpected outcome of FPI debt outflows
were quite different from pre-event consensus views. Interestingly, CY2017 has a fair share of
such economic and political events (see Exhibit 3).
However, a do-nothing approach may or may not have worked depending on positioning
With the benefit of hindsight, a portfolio of value stocks (loosely defined as PSU banks, private
corporate banks, metals, oil & gas, utilities) at the beginning of CY2016 would have performed
very well. Growth stocks (autos, consumer, IT and pharmaceuticals) disappointed in general
although they had had their good periods. Sectors and stocks (see Exhibits 4-5) showed very
diverse movements during the year, which provided great opportunities for active investors. Sanjeev Prasad
Exhibit 4 shows the divergent performance of various sectors over various periods. Our early-
CY2016 unchanged portfolio would have hypothetically given 3% returns while our Model
Portfolio (with periodic changes) gave 11% returns (see Exhibits 6 and 7). Sunita Baldawa
A new year always brings fresh hopes: Earnings and valuations will matter more in CY2017
Anindya Bhowmik
We believe the global macro factors may be less relevant in CY2017. Asset prices in the past
7-8 years have been largely driven by DM bond yields and monetary policies of central banks.
With DM yields starting to move towards normal levels on the back of anticipated economic
recovery, attention will shift to fundamentals once again unless DM economic growth were to
falter in CY2017, which would result in global central banks being called into action again.
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
Strategy India
Earnings: Low base should help (hopefully!) finally

Given the disappointment in earnings over the past few years (see Exhibit 8), investors would
naturally be a bit wary about placing a great deal of confidence in consensus earnings
estimates for FY2017-19. Unexpected global and domestic events derailed earnings in
FY2014-16. Exhibit 9 shows the earnings growth and valuation by sectors for the Nifty-50
Index for FY2017-19E. Valuations for the broad market look more reasonable in the context
of earnings growth and bond yields.
Our FY2017 earnings growth of 13% (Nifty-50 Index basis) is largely back-ended (4.9% in
1HFY17) and reflects the very low base of net profits in several stocks in 2HFY16. As can be
seen in Exhibit 10, companies such as BHEL, BoB, SBI and Tata Steel had reported either
large losses or very low profits compared to trend levels.
Our FY2018 earnings growth of 20% is largely predicated on normalization of profits in

sectors such as automobiles and banks with the latter being the biggest contributor of
incremental profits (see Exhibit 11). We model a decline in loan-loss provisions (LLP) starting
2HFY18 (see Exhibit 12) for private corporate banks (ICICIBC in particular) and PSU banks
(see Exhibit 12). However, we do see some risks to our banking sector estimates from
(1) lower-than-expected credit growth and (2) potentially higher-than-estimated credit costs
(LLPs) from higher NPLs in the SME sector as a result of the recent demonetization measure.
As discussed in detail our CY2017 strategy report dated December 16, 2016 titled New year,
old ideas, several sector-specific factors in metal & mining, oil & gas, pharmaceuticals and
regulated utilities make us slightly more confident about our FY2018E earnings estimates.
We have already cut volume and pricing assumptions for FY2017 and FY2018 for the
domestic consumption sectors such as automobiles, cement and consumer staples and
discretionary to factor in the negative impact of demonetization on volumes and
profitability. These sectors account for only 15% of the net profits of the Nity-50 Index
(excluding the share of TTMT from the automobiles sector).
Also, we note that 60% of the net profits of the Nifty-50 Index does not depend on Indias
GDP growth as their revenues, profits and profitability largely depend on global factors
and/or regulations(1) global GDP growth in the case of IT, (2) global commodity prices or
profitability in the case of metals and oil & gas and (3) regulations in the case of regulated
utilities. We do not anticipate any major negative surprises in the case of earnings of the
aforementioned sectors.
Lastly, we do not rule out a reduction in the corporate tax rate by the government in the
forthcoming union budget on February 1, 2017, which could provide some buffer to our
earnings estimates in case the negative effects of demonetization on domestic consumption
demand were to extend into FY2018. The Indian government has already announced its
intention to reduce basic corporate tax rate by 5% by FY2020 to 25% from the current
30% (5% cut over four years in the FY2016 union budget speech of the finance minister).
The finance minister recently argued for (1) lower tax rates based on a (2) broader tax base
in the economy.
Flows: Multi-year lows for FPIs

FPI equity inflows dropped to US$3.1 bn in CY2016, in line with CY2015s US$3.3 bn and
much lower than the US$20 bn average seen in CY2012-14 (see Exhibit 13). However,
domestic equity inflows were quite strong (see Exhibit 14), largely driven by continued
strong savings by retail investors in equities through mutual funds (see Exhibit 15).
However, FPI debt outflows were quite large at US$6.6 bn in CY2016 as FPI debt investors
exited domestic debt from late October given growing concerns about higher DM yields and
narrowing differential between DM and EM yields, which would reduce the relative
attractiveness of EM bonds versus DM bonds.
It would be interesting to see if CY2017 sees the same level of interest among domestic
equity investors as CY2014-16. Equity returns have been negligible over this period.
KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

India Strategy
However, we continue to be positive about strong growth in household financial savings

(including equities) in the medium term on the back of (1) a favorable monetary policy for
financial savings in the form of positive real interest rates, (2) favorable government policy
on financial inclusion and (3) unfavorable government policy towards black money including
the recent action of demonetization, which will likely divert household savings into financial
savings, away from physical savings over a period of time.
Exhibit 1: The Indian market hardly delivered any returns in CY2016

Performance (not annualized) of emerging and developed markets over period of time (%)
% change in local currency % change in USD
1-mo 3-mo 6-mo 1-yr 3-yr 5-yr 1-mo 3-mo 6-mo 1-yr 3-yr 5-yr
Developed markets
Australia 4 4 8 7 6 40 0 (2) 4 6 (14) (2)
F rance 6 9 13 4 12 53 5 2 7 1 (14) 24
Germany 8 9 17 6 20 94 7 2 11 3 (9) 58
Hong Kong (3) (6) 6 0 (6) 19 (3) (6) 6 0 (6) 20
J apan 4 16 22 0 17 126 1 1 7 4 6 49
Singapore 0 0 1 (0) (9) 9 (1) (5) (6) (2) (21) (2)
UK 5 3 8 14 5 27 3 (2) (0) (5) (22) 1
US (Dow J ones) 4 8 10 14 20 62 4 8 10 14 20 62
US (S&P500) 2 4 7 10 22 79 2 4 7 10 22 79
MSCI World 2 2 6 5 6 48
Emerging markets
Brazil (1) 3 15 39 17 6 3 3 14 69 (15) (39)
India 1 (5) (2) 3 30 77 2 (7) (3) 0 18 38
Indonesia 3 (1) 7 15 24 39 4 (4) 4 19 13 (6)
Korea 2 (1) 2 3 1 11 (1) (10) (3) 1 (12) 6
Malay sia 1 (1) (0) (3) (12) 7 0 (9) (11) (7) (36) (24)
Mexico 1 (3) (1) 7 7 24 1 (9) (12) (11) (32) (17)
Philippines 1 (10) (13) (2) 16 56 1 (13) (17) (7) 4 38
Russia 6 12 17 26 47 58 13 14 21 50 (21) (17)
Shanghai (5) 3 6 (12) 47 41 (6) (1) 1 (18) 28 28
Taiw an 1 1 6 11 7 31 (1) (2) 6 13 (1) 23
Thailand 3 4 7 20 19 50 3 1 5 21 9 33
MSCI EM (0) (5) 2 8 (14) (6)
Source: Bloomberg, Kotak Institutional Equities
Exhibit 2: A roller-coaster ride in CY2016 for the Indian market

Key events and performance of the Indian market (Nifty-50 Index) in CY2016
9,500
Continui Rally on F inal Approv al Rajy a Sabha Banks Global
ng fears gov ernmen forecast of 7th passes GST; rally markets
Concerns
of global t's show ing CPC Bank of England after Rising jolted ov er
on EM
slow do commitme abov e recomme passes more Essar possible
after DM
9,000 w n, nt to fiscal, normal ndations stimulus deal shift in US
Chinese y ields
disappoi inv estment F ed monsoon, measures election Rising
stock
nting & taxation signaling good outcome US bond
markets Britain
results reforms in corporate y ields
crash, slow er rate v otes to
Signals of PSU the hike results, hastens
falling oil exit EU
8,500 of banks budget; trajectory , strong US EM
prices and Weak
more increasin easing of hopes of home outflow s
dow ngrad Chinese
stimulu g capital sales data
e of IMF rate cut by
s from concerns requiremen exports data,
global RBI Donald
ECB; on bad t norms by F ed minutes
grow th pointed a Trump
8,000 BOJ loans of RBI
estimates Weak US strong case elected
adopts Indian Expectation as US
negativ banks of more pay roll data of rate hike Continued
in December President
e rates stimulus diminished F II outflow
the hope of , Indian
from BoE amid F ed
F orecast an interest- gov ernm Rally
7,500 post 'Brexit' rate hike,
of abov e ent
and from rate hike by Global in IT delay in
normal announc
BoJ after the US w eakness stocks normalizat
monsoon, F ederal ed on
J apan's ahead of US ion post
positiv e Reserv e cancellati accou
ruling presidential on of de-
7,000 macro- coalition debate, India nt of
high monetizati
economic w on upper conducts falling
data v alue on, rise in
house surgical strikes rupee
currency crude
on Pakistan notes prices
6,500
5-Feb
1-Apr
8-Apr
4-Nov
5-Aug
14-Oct
21-Oct
28-Oct
17-Jun
10-Jun
24-Jun
2-Dec
16-Dec
23-Dec
9-Dec
3-Jun
15-Jul
7-Oct
1-Jul
8-Jul
22-Jul
29-Jul
9-Sep
2-Sep
16-Sep
23-Sep
30-Sep
13-May
20-May
27-May
4-Mar
15-Jan
22-Jan
29-Jan
11-Mar
18-Mar
25-Mar
6-May
12-Aug
1-Jan
8-Jan
19-Aug
26-Aug
12-Feb
19-Feb
26-Feb
15-Apr
22-Apr
29-Apr
11-Nov
18-Nov
25-Nov
Source: Kotak Institutional Equities
4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Strategy India
Exhibit 3: A number of global factors will be at play in CY2017

Key events globally and their implications for India
Events Implications for India

General events
DM recovery: US economic fundamentals hav e improv ed and recent economic data suggest that the
recov ery may be quite robust. Likely strong economic recov ery w ill likely keep the F ed on a haw kish Moderately negativ e as it w ill result in low er inflow s
footing in CY2017. The market expects tw o rate increases of 25 bps each in CY2017. F urther, Euro zone to EMs and India on low er y ield differentials and
is also show ing some nascent strength and the ECB reduced the QE quantum by EUR20 bn per month stronger USD relativ e to EM currencies
ev en as it increased the duration of its QE program (until December 2017)
US fiscal policy: The US gov ernment may be keen to use fiscal space to increase spending in
This may result in faster increase in inflation and y ields.
infrastructure to promote job creation and grow th. F urther, it may reduce taxes for companies and
Some of this may be priced in higher US G-Sec y ields
personal income
US trade policy: The US may become more 'nativ ist' and 'protectionist' in its trade policies. It could also This may not hav e a significant impact on India directly
spill ov er to serv ices exports, w hich could see v isa rules for immigrant w orkers being made more stringent. giv en India's low merchandise exports to the US.
Lastly , any rev iew of the treatment of imports from a taxation perspectiv e as per a proposed Republican How ev er, any v isa-related changes w ill be negativ e
Party tax plan, w hich w ill effectiv ely disallow the v alue of imports as costs for computation of corporate for IT exports. Also, global sentiment may suffer on
taxes may result in retaliation by trade partners and escalation of trade issues trade 'w ars' among the major economies
US foreign policy: The new administration may reduce focus on the prev ious administration's 'Piv ot to
Asia' strategy . It may also improv e relationships w ith Russia at the expense of its joint defense Any escalation of geo-political issues w ill result in
commitments to its traditional allies in Western Europe or support to NATO. This could shift geo-political higher cost of capital globally
pow er balance, w hich can hav e significant ramifications for major Asian and European countries
Specific events
This may not hav e a direct impact on India but 'Brexit'
BREXIT': Article 50 likely to be triggered as a formal commencement of UK's slow exit from the EU. along w ith unfav orable election outcomes in other
Negotiations w ill begin w ith v arious countries on immigration, labor, and trade policies large EU countries may escalate concerns about the
future of the EU
EM debt: EM priv ate sector non-financial debt at ov er 110% of GDP is at decadal highs on the back of Any increase in concerns about EM foreign currency
low global rates. Higher US interest rates might put this at risk. China's debt profile w ill be in focus w ith debt on the back of stronger USD and higher y ields
financial sector health being re-questioned w ill result in w eaker sentiment for EM debt and equity
This many hav e any direct implication for India but any
National elections: Outcome of national elections in F rance, Italy and Netherlands has some probability
unfav orable outcomes of national elections in the
of stringent protectionist policies being introduced. These could hav e knock-on effects on v isa rules, trade
major EU economies w ill result in w eaker inv estment
policies and stability of Euro zone cluster
sentiment in general
Source: Kotak Institutional Equities estimates

India Strategy
Exhibit 4: Performance of sectoral indices over the past few months

Performance of BSE-30 Index versus sectoral indices (%)
Healthcare Realty
Metal % Change 1 month Healthcare % Change 3 months
BSE Midcap Auto
Capital goods BSE Midcap
Banks Capital goods
BSE Smallcap Banks
Realty BSE Smallcap
Sensex Sensex
Auto F MCG
F MCG IT
O&G Metal
IT O&G
(8) (6) (4) (2) 0 2 4 (20) (15) (10) (5) 0 5 10
Realty Healthcare
% Change 6 months
IT IT % Change YTD
Capital goods Realty

Healthcare Capital goods
F MCG BSE Smallcap
Sensex Sensex
Banks F MCG
BSE Smallcap Banks
Auto BSE Midcap
BSE Midcap Auto
Metal O&G
O&G Metal
(20) (15) (10) (5) 0 5 10 15 20 25 30 (20) (10) 0 10 20 30 40

Strategy India
Exhibit 5: Many large-caps. offer attractive reward-risk balance at current levels

Valuation summary of Nifty-50 Index stocks, March fiscal year-ends, 2017E-19E
P/E (X) EV/EBITDA (X) Price Target price Upside Performance
2017E 2018E 2019E 2017E 2018E 2019E (Rs) (Rs) (%) 1-mo 3-mo 1-Year YTD
Hindalco Industries 13.2 12.5 12.3 7.2 6.8 6.5 155 150 (3) (12) 2 83 83
Yes Bank 16.6 14.9 12.4 1,156 1,275 10 (1) (8) 58 59
Tata Steel 25.9 7.8 6.7 9.3 6.4 5.8 391 460 18 (6) 5 51 51
BPCL 11.3 11.8 11.0 8.0 7.3 6.8 636 660 4 (1) 4 43 42
Power Grid 12.7 11.8 10.3 9.4 8.2 7.2 184 210 14 (4) 4 30 30
Eicher Motors 36.4 29.5 24.9 27.1 22.1 17.9 21,803 17,300 (21) 1 (12) 32 29
Tata Motors 12.9 9.3 8.0 5.0 3.9 3.4 472 600 27 3 (12) 20 21
O NGC 12.0 10.8 9.8 5.2 4.7 4.2 191 180 (6) (1) 12 20 19
GAIL (India) 14.9 12.2 11.0 9.2 7.7 6.8 439 490 12 3 17 19 17
Ultratech Cement 33.5 24.5 20.4 17.8 13.6 11.4 3,250 2,750 (15) (10) (16) 17 17
Maruti Suzuki 23.0 18.2 15.7 14.2 10.5 8.7 5,320 5,900 11 1 (3) 16 15
Grasim Industries 11.8 9.9 8.7 5.9 4.4 3.4 863 990 15 (1) (11) 16 15
IndusInd Bank 22.4 19.5 16.9 1,107 1,350 22 2 (7) 14 14
Hero Motocorp 17.5 16.2 14.9 11.6 10.6 9.5 3,044 2,900 (5) (4) (11) 12 13
Bosch 41.7 31.5 29.0 27.6 20.8 18.0 21,050 22,788 8 3 (8) 13 13
NTPC 13.6 10.8 9.7 11.2 9.4 7.7 165 180 9 1 11 14 13
Tata Power 16.5 10.5 8.0 10.4 8.9 7.9 76 85 12 2 1 12 12
State Bank of India 15.5 8.2 6.4 250 320 28 (3) (0) 11 11
HDFC Bank 20.5 17.3 14.7 1,206 1,400 16 1 (5) 12 11
ITC 30.1 25.9 23.0 19.8 16.9 14.8 242 260 8 4 0 12 11
Reliance Industries 11.9 11.0 10.6 10.7 8.5 7.7 1,082 1,150 6 9 (0) 8 7
L&T 24.3 19.0 15.9 19.9 16.9 14.8 1,349 1,400 4 (2) (6) 5 6
Bajaj Auto 19.0 16.6 14.5 13.7 11.5 9.5 2,632 2,850 8 (2) (7) 5 4
Zee Entertainment Enterprises 40.4 29.4 24.1 22.1 17.7 14.7 453 520 15 (1) (17) 6 4
Adani Port and SEZ 15.8 19.1 18.3 14.3 12.8 12.2 268 325 21 (3) 5 3 3
Ambuja Cements 37.2 26.2 18.0 13.8 9.5 6.7 206 210 2 (2) (18) 1 2
Asian Paints 45.6 38.0 32.3 28.8 23.9 20.1 891 920 3 (8) (23) 1 1
Axis Bank 31.1 15.1 10.6 450 500 11 (4) (17) (1) 0
Kotak Mahindra Bank 27.0 21.5 16.8 720 843 17 (5) (7) 1 (0)
HDFC 24.8 22.7 19.5 1,263 1,550 23 (0) (9) 2 (0)
Dr Reddy's Laboratories 39.0 25.1 19.9 20.3 12.9 10.2 3,060 2,500 (18) (4) (2) (2) (2)
Bank of Baroda 22.1 8.0 6.3 153 160 4 (7) (8) (2) (2)
ACC 42.0 26.9 18.2 19.5 13.7 9.8 1,331 1,275 (4) (1) (17) (1) (2)
ICICI Bank 15.6 11.7 9.7 255 340 33 (4) 1 (3) (2)
TCS 17.9 16.6 15.1 12.8 11.4 10.2 2,366 2,325 (2) 4 (3) (2) (3)
HCL Technologies 14.2 13.8 13.1 10.1 9.5 8.7 825 800 (3) 3 3 (2) (3)
Hindustan Unilever 41.4 36.4 32.3 29.0 24.9 21.7 826 870 5 (2) (5) (4) (4)
Tech Mahindra 14.4 12.3 10.8 9.8 7.8 6.5 489 520 6 1 16 (6) (5)
Mahindra & Mahindra 18.0 16.0 14.2 12.1 10.7 9.6 1,185 1,375 16 (0) (16) (6) (7)
Infosys 16.3 14.6 13.2 10.5 9.1 7.9 1,011 1,175 16 4 (2) (7) (9)
Coal India 15.2 12.5 11.2 9.5 8.3 7.4 300 295 (2) (3) (7) (7) (9)
Bharti Airtel 25.7 38.4 24.2 6.1 6.1 5.3 306 375 23 (6) (3) (8) (10)
Cipla 29.2 20.8 15.8 17.2 12.9 9.9 569 650 14 0 (2) (13) (12)
Wipro 13.8 12.3 11.5 8.3 7.2 6.0 474 485 2 2 (1) (15) (15)
Lupin 22.7 20.5 17.0 14.9 12.8 10.3 1,487 1,600 8 (1) 0 (19) (19)
Bharti Infratel 21.8 20.2 18.0 10.4 9.5 8.7 343 410 19 (9) (6) (20) (20)
Sun Pharmaceuticals 19.7 19.2 17.1 11.5 10.5 8.8 630 715 13 (11) (15) (22) (23)
Aurobindo Pharma 15.6 13.1 12.2 10.7 8.8 8.0 669 956 43 (10) (22) (23) (24)
BHEL 47.1 21.9 14.2 19.1 7.8 3.8 121 115 (5) (7) (10) (29) (28)
Idea 153.7 (15.4) (24.6) 6.8 7.3 6.3 74 100 35 (4) (6) (47) (48)
Nifty-50 Index 19.0 15.6 13.4 10.4 8.9 7.8 8,186 9,200 12.4 (0.5) (4.9) 3.7 3.0
Notes:
(a) We have used consensus numbers for Bosch, Aurobindo and Kotak Mahindra Bank.
Source: Bloomberg, Kotak Institutional Equities estimates

India Strategy
Exhibit 6: Performance of early-CY2016 model portfolio on a buy-and-hold strategy
31-Dec-15 30-Dec-16 Diff 31-Dec-15 30-Dec-16 Diff

Company Price (Rs) KS Reco. Price (Rs) (bps) Company Price (Rs) KS Reco. Price (Rs) (bps)
Bajaj Auto 2,532 2.0 2,632 0.1 IOCL 214 2.0 325 1.0
Bharat F orge 892 2.0 900 0.0 ONGC 161 2.5 191 0.5
Mahindra & Mahindra 1,272 3.5 1,185 (0.2) Reliance Industries 1,015 8.0 1,082 0.5
Maruti Suzuki 4,622 3.0 5,320 0.5 Energy 14.5 0.3
Tata Motors 391 5.0 472 1.0
Automobiles 15.5 1.3 L&T 1,275 3.0 1,349 0.2
Industrials/Construction 3.0 0.2
State Bank of India 224 4.0 250 0.5
PSU Banking 4.0 0.5 Cipla 650 4.0 569 (0.5)
Pharmaceuticals 4.0 (0.5)
Axis Bank 449 5.0 450 0.0
HDF C 1,264 7.0 1,263 (0.0) Infosy s 1,105 10.0 1,011 (0.9)
HDF C Bank 1,082 10.0 1,206 1.1 TCS 2,437 4.0 2,366 (0.1)
ICICI Bank 261 8.0 255 (0.2) Tech Mahindra 515 3.0 489 (0.2)
LIC Housing F inance 510 2.0 560 0.2 Technology 17.0 (1.1)
Shriram Transport 859 2.0 816 (0.1)
Pvt. Banking/Financing 34.0 1.1 NTPC 146 3.0 165 0.4
Pow er Grid 141 3.0 184 0.9
Britannia Industries 2,966 2.0 2,846 (0.1) Utilities 6.0 1.3
Consumers 2.0 (0.1)
BSE-30 26,118 100.0 26,626 1.9
GAIL (India) 375 2.0 439 0.3
Performance from Dec 31, 2015 to Dec 30, 2016

Performance of the portfolio 2.9
Performance of the BSE-30 Index 1.9
Over/(under) performance 1.0
Notes:
(a) We hav e used adjusted prices.

Strategy India
Exhibit 7: An 'active' strategy added to the performance of our Model Portfolio through CY2016
Comparison of returns of our model portfolio and the BSE-30 Index
KIE BSE-30 Difference

100 100
Dec 31, 2015 to J an 15, 2016 (5.3) (6.4) 1.0
95 94
J an 15, 2016 to F eb 12, 2016 (8.0) (6.0) (2.0)
87 88
F eb 12, 2016 to F eb 29, 2016 (0.4) 0.1 (0.4)
87 88
F eb 29, 2016 to Mar 14, 2016 9.4 7.8 1.5
95 95
Mar 14, 2016 to Apr 6, 2016 1.3 0.4 0.9
96 95
Apr 6, 2016 to Apr 18, 2016 4.7 3.7 1.0
101 99
Apr 18, 2016 to Apr 26, 2016 0.9 0.7 0.1
101 100
Apr 26, 2016 to May 31, 2016 1.6 2.5 (1.0)
103 102
May 31, 2016 to J une 7, 2016 0.8 1.3 (0.4)
104 103
J une 7, 2016 to J une 24, 2016 (2.3) (2.3) 0.0
102 101
J une 24, 2016 to J uly 1, 2016 3.4 2.8 0.6
105 104
J uly 1, 2016 to J uly 29, 2016 4.9 3.3 1.5
110 107
J uly 29, 2016 to Aug 3, 2016 (1.5) (1.3) (0.2)
109 106
Aug 3, 2016 to Aug 30, 2016 4.1 2.3 1.8
113 109
Aug 30, 2016 to Sep 14, 2016 0.9 0.1 0.8
114 109
Sep 14, 2016 to Sep 30, 2016 (1.6) (1.8) 0.2
112 107
Sep 30, 2016 to Oct 28, 2016 1.6 0.3 1.3
114 107
Oct 28, 2016 to Nov 9, 2016 (1.5) (2.5) 1.0
112 104
Nov 9, 2016 to Nov 30, 2016 (1.4) (2.2) 0.8
111 102
Nov 30, 2016 to Dec 16, 2016 (0.5) (0.6) 0.1
110 101
Dec 16, 2016 to current 1.0 0.5 0.4
111 102
Return since January 2016 11.2 1.9 9.3
Note:
(a) We hav e not included any div idiends from stocks or trading commissions on portfolio changes.
(b) We hav e not computed interest on cash in the portfolio w henev er w e hav e held cash in the portfolio.
(c) We hav e not taken short position in any stock.

India Strategy
Exhibit 8: Our FY2018 and FY2019 EPS estimates have seen moderate declines in the last few months
Nifty-50 Index EPS estimates trend, March fiscal year-ends, 2014E-19E (Rs)
700
2015E 2016E 2017E 2018E 2019E
650
625 628 611
622
600
550 525
523
500
450 431
400 398
384
350
Dec-13
Dec-14
Dec-15
Dec-16
Jun-14
Jun-16
Jun-15
Apr-15
Apr-16
Apr-14
Aug-14
Aug-15
Oct-15
Oct-16
Oct-14
Aug-16
Feb-14
Feb-15
Feb-16
Exhibit 9: We expect earnings of the Nifty-50 Index to grow 13% in FY2017 and 20% in FY2018
Valuation summary of Nifty-50 sectors (full-float basis), March fiscal year-ends, 2017-19E
Mcap. Adj. mcap. Earnings growth (%) PER (X) EV/EBITDA (X) Price/BV (X) Div. yield (%) RoE (%)
(US$ bn) (US$ bn) 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E 2017E 2018E 2019E
Automobiles 95.2 51.5 11.4 26.1 15.0 19.1 15.2 13.2 9.6 7.6 6.5 3.5 2.9 2.5 1.0 1.2 1.3 18.1 19.3 18.9
Banking 182.8 137.8 19.6 43.7 24.5 20.7 14.4 11.6 2.2 1.9 1.7 1.0 1.3 1.5 10.4 13.4 14.6
Cement 28.8 13.3 22.3 31.5 23.9 25.2 19.2 15.5 11.9 8.9 7.0 2.6 2.4 2.1 0.8 0.8 0.8 10.4 12.3 13.5
Consumers 82.0 44.8 4.1 16.1 13.3 35.0 30.1 26.6 23.3 19.8 17.3 11.8 11.1 10.5 2.0 2.3 2.8 33.7 36.8 39.7
Energy 104.8 39.4 13.8 8.2 7.0 11.5 10.6 9.9 7.8 6.6 6.0 1.3 1.2 1.1 2.1 2.2 2.4 11.7 11.6 11.4
Industrials 22.9 17.9 51.8 37.3 25.3 26.8 19.5 15.6 19.8 15.9 13.3 2.1 2.0 1.9 1.5 1.9 2.4 7.9 10.2 11.9
Infrastructure 8.2 3.5 23.2 (17.2) 4.7 15.7 19.0 18.1 14.3 12.8 12.2 3.4 2.9 2.6 0.6 0.8 1.0 21.5 15.5 14.4
Media 6.4 3.7 19.5 37.5 21.7 40.4 29.4 24.1 22.1 17.7 14.7 4.7 4.3 4.0 0.6 0.8 0.9 11.5 14.8 16.5
Metals & Mining 37.7 12.3 28.4 38.3 11.6 15.8 11.5 10.3 8.8 7.2 6.6 2.6 2.4 2.2 3.7 4.5 4.9 16.4 20.8 21.2
Pharmaceuticals 52.1 27.7 20.1 14.6 17.4 22.2 19.3 16.5 13.5 11.3 9.3 4.1 3.4 2.9 0.7 0.8 1.0 18.4 17.8 17.7
Technology 143.9 64.0 8.1 8.8 9.4 16.4 15.0 13.7 11.1 9.7 8.6 3.9 3.4 3.0 2.3 2.4 2.7 23.8 22.8 22.0
Telecom 31.3 9.9 (16.2) (41.4) 62.9 27.1 46.2 28.4 6.7 6.8 5.9 1.9 2.0 2.0 1.8 1.8 2.6 7.2 4.3 6.9
Utilities 37.2 14.0 6.3 21.0 13.8 13.4 11.1 9.7 10.3 8.8 7.5 1.6 1.4 1.3 1.9 2.3 2.5 11.8 13.0 13.4
Nifty-50 Index 833.3 439.8 13.2 20.0 15.6 18.3 15.3 13.2 10.4 8.9 7.8 2.6 2.3 2.1 1.6 1.9 2.1 13.9 15.1 15.6
Nifty-50 Index (ex-energy) 728.4 400.3 13.1 22.9 17.5 20.1 16.3 13.9 11.2 9.6 8.3 2.9 2.6 2.3 1.6 1.8 2.1 14.6 16.1 16.8
Notes:
(a) We hav e used consensus numbers for Aurobindo, Bosch and Kotak Mahindra Bank.

Strategy India
Exhibit 10: Low base in 2HFY16 the case of BOB, SBI, TATA to drive strong yoy growth in 2HFY17
Half-yearly net profit and earnings growth of Nifty-50 Index, March fiscal year-ends, 2016-17
Net profit (Rs mn) Earnings growth (%)
Company Sector 1HFY16 2HFY16 1HFY17 2HFY17E 1HFY16 2HFY16 1HFY17 2HFY17E
Bajaj Auto Automobiles 20,097 18,509 21,011 19,045 26 25 5 3
Bosch Automobiles 7,684 5,864 7,979 7,376 25 41 4 26
Eicher Motors Automobiles 5,218 6,307 7,895 8,383 62 81 51 33
Hero Motocorp Automobiles 15,337 16,305 18,873 15,883 16 34 23 (3)
Mahindra & Mahindra Automobiles 18,029 14,844 21,481 15,959 (4) 16 19 8
Maruti Suzuki Automobiles 27,051 21,530 38,842 31,008 66 3 44 44
Tata Motors Automobiles 54,998 81,856 26,888 97,085 (36) 31 (51) 19
Axis Bank Banking 38,941 43,295 18,746 15,685 19 6 (52) (64)
Bank of Baroda Banking 11,767 (65,722) 9,757 6,253 (52) (1,093) (17) NA
HDF C Banking 29,655 41,277 36,972 37,945 10 26 25 (8)
HDF C Bank Banking 55,652 67,311 66,942 81,465 21 20 20 21
ICICI Bank Banking 60,062 37,199 53,351 42,294 12 (36) (11) 14
IndusInd Bank Banking 10,851 12,014 13,656 15,702 27 27 26 31
Kotak Mahindra Bank Banking 14,585 20,004 22,695 23,759 3 23 56 19
State Bank of India Banking 75,715 23,789 50,593 75,114 17 (64) (33) 216
Yes Bank Banking 11,616 13,779 15,333 13,938 27 26 32 1
ACC Cement 2,484 3,348 3,219 2,741 (44) (36) 30 (18)
Ambuja Cements Cement 3,799 4,485 6,765 4,230 (41) (21) 78 (6)
Grasim Industries Cement 9,732 13,735 16,762 17,278 8 62 72 26
Ultratech Cement Cement 9,979 11,900 13,760 12,862 (4) 22 38 8
Asian Paints Consumers 8,574 9,388 10,110 8,628 21 32 18 (8)
Hindustan Unilev er Consumers 20,571 21,136 21,805 21,390 6 16 6 1
ITC Consumers 44,286 48,827 48,847 48,612 (4) (2) 10 (0)
BPCL Energy 33,952 40,377 39,257 41,859 102 19 16 4
GAIL (India) Energy 6,869 14,465 17,705 19,686 (71) 35 158 36
ONGC Energy 100,498 68,232 92,075 81,792 (2) (15) (8) 20
Reliance Industries Energy 129,030 145,380 152,520 143,054 13 28 18 (2)
BHEL Industrials (1,303) (7,424) 1,868 4,434 (141) (167) (243) NA
L&T Industrials 11,516 32,399 16,418 35,248 171 14 43 9
Adani Port and SEZ Infrastructure 13,166 15,590 19,265 16,074 15 33 46 3
Zee Entertainment Enterprises Media 4,413 4,630 6,636 4,147 21 (1) 50 (10)
Coal India Metals & Mining 63,059 79,269 36,654 86,177 2 5 (42) 9
Hindalco Industries Metals & Mining 1,846 3,968 6,653 2,782 (74) (36) 260 (30)
Tata Steel Metals & Mining (2,171) (17,714) 1,934 12,712 (122) 82 (189) NA
Aurobindo Pharma Pharmaceuticals 8,842 10,978 11,906 12,802 12 39 35 17
Cipla Pharmaceuticals 10,805 3,180 7,003 8,691 82 (46) (35) 173
Dr Reddy 's Laboratories Pharmaceuticals 13,520 9,862 4,213 8,813 20 (16) (69) (11)
Lupin Pharmaceuticals 9,775 12,777 15,441 14,035 (22) 11 58 10
Sun Pharmaceuticals Pharmaceuticals 23,134 32,098 42,876 33,987 (34) 148 85 6
HCL Technologies Technology 34,984 38,420 40,613 41,502 (5) 7 16 8
Infosy s Technology 64,280 70,620 70,420 70,898 7 11 10 0
TCS Technology 117,641 124,507 129,030 131,944 14 34 10 6
Tech Mahindra Technology 14,617 16,563 13,947 15,569 8 33 (5) (6)
Wipro Technology 44,232 44,692 41,190 42,235 6 0 (7) (5)
Bharti Airtel Telecom 18,678 29,390 22,770 24,740 (36) (7) 22 (16)
Bharti Infratel Telecom 10,340 11,483 13,854 15,333 11 8 34 34
Idea Telecom 16,641 13,398 3,118 (1,381) 14 (22) (81) (110)
NTPC Utilities 46,883 47,948 48,655 51,458 7 (11) 4 7
Pow er Grid Utilities 28,140 31,480 36,738 38,892 18 19 31 24
Tata Pow er Utilities 4,105 10,091 6,369 6,540 499 1,229 55 (35)
Total 1,384,172 1,357,638 1,451,411 1,586,658 2.5 1.5 4.9 16.9
Notes:
(a) Our F Y2016/2HF Y16 numbers are on IGAAP and 1HF Y16/1HF Y17 numbers are on Ind-AS.
(b) Aurobindo, Bosch and Kotak Mahindra Bank are not under KIE cov erage.
Source: Companies, Kotak Institutional Equities estimates

India Strategy
Exhibit 11: About 60% of the net profits of the Nifty-50 Index comes from global and government-regulated sectors
Break-up of net profits of the Nifty-50 Index across sectors, March fiscal year-ends, 2015-18E
Incremental profits
Net profits (Rs bn) Contribution (%) 2017E 2018E
2014 2015 2016 2017E 2018E 2019E 2015 2016 2017E 2018E 2019E (Rs bn) (%) (Rs bn) (%)
Automobiles 282 286 303 338 426 490 11 11 11 12 11 34 10 88 14
Tata Motors 150 142 131 124 172 202 5 5 4 5 5 (7) (2) 48 8
Banking 509 582 502 600 863 1,074 22 18 19 23 25 98 27 262 43
PSU banks 154 165 46 142 280 359 6 2 5 8 8 96 27 138 22
Priv ate banks 354 417 456 458 583 715 16 17 15 16 17 2 1 124 20
Cement 61 59 63 78 102 126 2 2 3 3 3 14 4 24 4
Consumers 134 148 153 159 185 210 5 6 5 5 5 6 2 26 4
Energy 567 501 545 620 670 717 19 20 20 18 17 75 21 51 8
ONGC 266 189 173 205 226 251 7 6 7 6 6 32 9 21 3
Reliance Industries 220 227 274 296 320 332 8 10 10 9 8 21 6 24 4
Industrials 80 47 38 58 80 100 2 1 2 2 2 20 5 22 4
Infrastructure 17 12 29 35 29 31 0 1 1 1 1 7 2 (6) (1)
Media 9 8 9 11 15 18 0 0 0 0 0 2 0 4 1
Metals & Mining 213 158 126 162 224 250 6 5 5 6 6 36 10 62 10
Coal India 151 137 143 123 149 167 5 5 4 4 4 (20) (6) 27 4
Pharmaceuticals 123 123 133 160 183 215 5 5 5 5 5 27 7 23 4
Technology 468 505 553 597 650 711 19 20 19 18 17 45 12 52 9
Telecom 62 112 94 78 46 75 4 3 3 1 2 (15) (4) (32) (5)
Utilities 156 149 177 189 228 260 6 7 6 6 6 11 3 40 6
Nifty-50 Index 2,682 2,690 2,725 3,085 3,700 4,276 100 100 100 100 100 360 100 616 100
Nifty-50 change (%) 7.9 0.3 1.3 13.2 20.0 15.6
Nifty-50 ex-energy change (%) 8.6 3.5 (0.4) 13.1 22.9 17.5
Nifty-50 EPS (FF) 410 398 381 431 525 611
Exhibit 12: We expect loan-loss provisions to decline in FY2018E-19E

LLP as a percentage of average loans, March fiscal year-ends, 2013-19E (%)
2013 2014 2015 2016 2017E 2018E 2019E

Public banks
BOB 1.2 1.0 1.1 3.3 2.0 1.0 0.8
BOI 1.6 1.4 1.5 3.5 2.3 1.3 1.2
Canara Bank 1.1 1.0 1.3 3.1 1.9 1.1 1.1
OBC 1.4 1.4 1.6 2.4 1.8 1.4 1.0
PNB 1.4 1.8 2.3 4.4 2.2 1.4 1.1
SBI 1.3 1.4 1.6 2.2 2.0 1.3 1.1
Union Bank 1.0 1.2 1.2 1.5 1.9 1.5 1.2
Old private banks
City Union Bank 0.9 1.1 0.9 1.1 1.1 0.7 0.7
DCB 0.3 0.5 0.7 0.6 0.7 0.7 0.7
F ederal Bank 0.7 0.4 0.4 1.1 0.9 0.7 0.6
Karur V y sy a Bank 0.6 0.7 1.6 0.8 0.9 0.8 0.5
J &K Bank 0.6 0.3 2.2 2.0 2.1 1.2 0.8
New private banks
Axis Bank 1.0 1.0 0.9 1.5 3.2 1.8 1.0
HDF C Bank 0.8 0.7 0.6 0.6 0.6 0.6 0.7
ICICI Bank 0.6 0.8 0.9 2.7 3.0 0.9 0.7
Yes Bank 0.5 0.5 0.6 0.6 0.8 0.7 0.7
IndusInd Bank 0.6 0.8 0.7 0.8 0.7 0.7 0.6

Strategy India
Exhibit 13: FII equity inflows US$3 bn in CYTD16

Net FII flows, calendar year-ends, 2000-16 (US$ bn)
40
29.3
30
24.5
18.5 19.8
20 17.6 16.2
10.9 3.1
8.6 8.3 4.1 0.60.4
10 6.7 1.7
3.3
1.5 2.7 0.7 0.8 1.5 1.4
0
(0.5) (1.2)
(1.7) (1.1)
(2.6)
(10) (0.7)
(12.9)
(20)
Sep
May
2000
2001
2002
2003
2004
2005
2008
2009
2010
2011
2012
2013
2006
2007
2014
2015
2016
Jan
Mar
Aug
Nov
Feb
Apr
Jun
Dec
Oct
Jul
Exhibit 14: DIIs invested US$5 bn in CYTD16

Equity flows by domestic institutions (MFs + Insurance companies) (US$ bn)
20
16.6
DIIs MFs Insurance and Banks/FIs flows
15
10.3
10
6.0 5.3 5.9 5.3
5
1.9
Sep
May
2007
2009
2010
2011
2013
2014
2015
2008
2012
2016
Jan
Mar
Aug
Nov
Feb
Apr
Jun
Dec
Oct
Jul
(5)
(4.8) (5)
(10)
(10.9)
(15) (13)
Source: BSE, SEBI, , Kotak Institutional Equities
Exhibit 15: Equity MFs have seen US$6.6 bn of net inflows as per AMFI data in CYTD16
Net MF flows, calendar year-ends, 2005-15 (Rs bn)
1,000 906
800
600 495
444
372
400 311
249 266
77 65
200 94 91
14 29 25 44 47 25 37
0
2005
2007
2008
2009
2010
2012
2014
2016
2006
2011
2013
2015
Mar-16
May-16
Jun-16
Sep-16
Apr-16
Nov-16
Jul-16
Jan-16
Oct-16
Feb-16
Aug-16
(0)
(200) (111)
(158)
(14)
(400) (156)
Source: AMFI, Kotak Institutional Equities

ATTRACTIVE
Banks
India JANUARY 02, 2017
UPDATE
BSE-30: 26,626
Not the best despite efforts. FY2016 was quite a weak period for the recovery
environment while accelerated recognitions resulted in a sharp rise in NPLs for the
banking system. Latest data from RBI shows that the issuances of SARFAESI declined in
FY2016 but the only positive is that recovery trends through DRT and Lok Adalat
improved. The first case under the new bankruptcy law has been filed by ICICI Bank in
the current quarter and we wait to see the progress under it.
DRT and Lok Adalat show improvement; weak on SARFAESI
Against our expectations, the performance on recovery trends was weak in FY2016 as per the QUICK NUMBERS
latest reports from RBI. Exhibits 1 and 2 show the recovery activity through SARFAESI, DRT and
Lok Adalat. Note that FY2016 was weak on SARFAESI notices by banks with a decline of ~50% Notices and
yoy and a similar trend is visible on the amount recovered. DRT has seen an increase of ~10- recovery under
15% by cases and amount involved but recovery was stronger with a growth of ~50% yoy. Lok SARFAESI reduced
Adalat stands out for the year with strong overall performance, but the quantum is not that by ~50% in FY2016
meaningful.
NPLs in the priority
Slippages remain high but there is hope of stronger improvement in 2HFY17/FY2018 sector increased by
Compared to FY2015, FY2016 was extremely weak from slippages standpoint as it represented 125bps yoy to 6.8%
the sharpest increase at ~6% of loans as compared with the trend levels of ~3% reported for and 630bps yoy to
FY2012-15 (exhibit 6) resulting in a sharp rise in NPLs (see exhibit 4/5). Slippages were led by 12% in non-priority
the corporate sector. As per the last financial stability report, the overall stress in infrastructure sector for public
has increased marginally to 35% in 2QFY17 from 33% in FY2016 while iron and steel has seen banks.
an increase to ~45% in 2QFY17 from 35% in FY2016 (see exhibit 7). Stress has remained
unchanged in the textiles and construction sectors. RBI has indicated that stress in the retail First case under the
portfolio is broadly stable but with a marginally increasing bias. new Insolvency and
Bankruptcy Act filed
Priority sector shows deterioration in FY2016 for public banks
Exhibit 8 shows the break-up of NPLs for public and private banks. A major cause for the rise in
NPLs was the non-priority sector, but it is important to note that the priority sector too has seen
deterioration, mainly for public sector banks. FY2016 saw NPLs in the non-priority sector more
than double to 12% while the ratio increased 125bps yoy to 6.8% in the priority sector. Private
banks too have seen deterioration in the priority sector, albeit with a marginal increase of 20bps
yoy to 1.8%.
Slippages hard to extrapolate; many weapons and channels to address the asset quality issues
India is probably still a tale of two halves; improvement in macro but weakness in the large M B Mahesh CFA
corporate segment which intensified last year is showing signs of stability. Banks have been
working with them in Joint Lenders Forum (JLF), converting to equity the existing debt through
Strategic Debt Restructuring/ Scheme for Sustainable Structuring of Stressed Assets (SDR/S4A), Nischint Chawathe
adopting 5:25 scheme. This makes it challenging to predict NPLs as they are large and chunky.
However, one of the key positives that we are seeing today is the active involvement of various
Abhijeet Sakhare
stakeholders. Government is clearing a lot of bottlenecks across the various sectors, especially in
power. RBI and banks are working with the borrowers though various measures mentioned
previously and corporates are looking at various measures to actively deleverage their balance
sheets. The recent decline in interest rates, improvement in project cash flows and
announcement of deleveraging is giving us confidence that the stress in the sector is likely to
reduce in the medium term.
Banks India
Exhibit 1: There has been a sharp rise on all parameters: cases referred, amount involved and recovered
March fiscal year-ends, 2004-16
SARFAESI (1) DRT Lok Adalat

No. of cases Amount Amount No. of cases Amount Amount No. of cases Amount Amount
referred involved recovered referred involved recovered referred involved recovered
('000) (Rs bn) (Rs bn) ('000) (Rs bn) (Rs bn) ('000) (Rs bn) (Rs bn)
2004 3 78 12 8 123 21 186 11 1
2005 39 132 24 5 143 27 185 8 1
2006 41 85 34 4 63 47 268 21 3
2007 60 91 37 4 92 35 160 8 1
2008 84 73 44 4 58 30 187 21 2
2009 62 121 40 2 41 33 548 40 1
2010 78 142 43 6 98 31 779 72 1
2011 119 306 116 13 141 39 616 53 2
2012 141 353 101 13 241 41 476 17 2
2013 191 681 185 13 310 44 841 66 4
2014 195 953 253 28 553 53 1,637 232 14
2015 175 1,568 256 22 604 42 2,958 310 10
2016 174 801 132 25 693 64 4,457 720 32
Notes:
(a) SARFAESI cases referred are the total notices issued
(b) Amount recovered includes amount from prior years
Source: RBI, Kotak Institutional Equities
Exhibit 2: FY2016 was a relatively weak year on recovery through select instruments
Recovery through various instruments, March fiscal year-ends, 2004-16
Gross NPLs SARFAESI DRT Lok Adalat Total

(Rs bn) (%) (%) (%) (%)
2004 631 12.4 19.5 1.7 33.6
2005 595 22.2 24.1 1.3 47.6
2006 511 16.7 12.3 4.2 33.1
2007 505 17.9 18.1 1.5 37.6
2008 554 13.1 10.5 3.9 27.5
2009 683 17.7 6.0 5.9 29.6
2010 818 17.4 12.0 8.8 38.2
2011 980 31.2 14.4 5.4 51.0
2012 1,429 24.7 16.9 1.2 42.8
2013 1,941 35.1 16.0 3.4 54.5
2014 2,642 36.1 20.9 8.8 65.8
2015 3,243 48.3 18.6 9.6 76.5
2016 6,119 13.1 11.3 11.8 36.2

India Banks
Exhibit 3: Gross NPLs have increased by 18% CAGR since FY2007 Exhibit 4: Gross NPL ratio has been rising since FY2011
Gross and net NPL, March fiscal year-ends, ( bn) Gross and net NPL ratio, March fiscal year-ends, (%)
Gross NPL Net NPL Gross NPL Ratio Net NPL Ratio Restructured loans
6,500 15
13
5,200 12 11
10
9 9
3,900 9
7 8
7 7
6 6 6
2,600 6 6
6 5 5 5
4 44
4 4
3 3
1,300
3
2 3 2 2 23 33 3 3
3 2 2 2
1 1 11 1 1 1 1
-
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2012
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2013
2014
2015
2016
1HFY17
Source: RBI, Kotak Institutional Equities Source: RBI, Kotak Institutional Equities
Exhibit 5: Slippages ratio increased sharply in FY2016 Exhibit 6: Slippages were led by the corporate segment
Slippages ratio for the sector, March fiscal year-ends, 1995-2016 (%) Slippages for the sector, March fiscal year-ends, 1995-2016 ( bn)
7 5,000
6
4,000
5
4 3,000
3 6 6
6 2,000
5
4 4
2 4
3 3 3 3 3 3
3 3 1,000
2
1 2 2 2 2 2 2
0 0
1997
1995
1996
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2008
2009
2010
2011
2012
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2013
2014
2015
2016
Source: RBI, Kotak Institutional Equities Source: RBI, Kotak Institutional Equities

Banks India
Exhibit 7: Few sectors which has chunky loans like infrastructure has seen a sharp rise in NPLs
Break-up of loans across sectors, March fiscal year-ends, 2009-2QFY17 (%)
2009 2010 2011 2012 2013 2014 2015 2016 2QFY17

Infrastructure Share in loans 10.2 12.3 14.0 14.4 14.7 14.8 15.2 14.5 13.1
Gross NPL ratio 3.0
Standard restructured loans 17.6
Stressed loan portfolio 20.6 32.8 35.0
Pow er Share in loans 4.7 6.1 7.1 7.6 8.4 8.6 9.1 8.7 7.7
Gross NPL ratio 1.6
Stressed loan portfolio 19.4
Iron and steel Share in loans 4.9 5.3 5.7 6.0 6.3 6.4 6.3 6.3 6.0
Gross NPL ratio 6.7
Textiles Share in loans 3.9 3.9 3.9 3.6 3.7 3.6 3.3 3.1 2.8
Gross NPL ratio 9.9 16.4
Standard restructured loans 13.2 4.9
Construction Share in loans 1.5 1.4 1.2 1.1 1.1 1.1 1.2 1.1 1.0
Gross NPL ratio
Standard restructured loans
Stressed loan portfolio 27.1 27.9
Exhibit 8: Public banks have witnessed a sharp rise in NPLs in priority sector and non-priority sector portfolio
Break-up of NPLs for public and private banks, March fiscal year-ends, 2004-16 (%)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Public banks
Priority 9.8 7.5 5.5 4.4 4.1 3.4 3.6 4.0 5.0 5.2 5.2 5.6 6.8
Non Priority 6.8 4.5 2.7 1.7 1.6 1.3 1.4 1.3 2.0 3.2 4.5 5.4 11.7
Ov erall 7.9 5.6 3.7 2.7 2.5 1.9 2.1 2.2 2.9 3.8 4.7 5.4 9.9
Private banks
Priority 5.1 3.2 2.1 2.0 2.2 1.9 2.2 1.9 1.8 1.6 1.6 1.6 1.8
Non Priority 6.5 4.4 2.7 2.3 3.7 3.4 3.0 2.4 1.9 2.0 2.0 2.4 3.1
Ov erall 6.1 4.0 2.5 2.2 3.3 2.9 2.7 2.3 1.9 1.9 1.9 2.2 2.7
Sector
Priority 9.0 6.7 4.8 3.9 3.7 3.1 3.3 3.6 4.3 4.5 4.5 4.7 5.7
Non Priority 6.7 4.4 2.7 1.8 2.1 1.7 1.7 1.5 2.0 3.0 4.0 4.7 9.3
Ov erall 7.5 5.3 3.5 2.6 2.6 2.1 2.2 2.2 2.7 3.4 4.1 4.7 8.0
Source: RBI

India Banks
Exhibit 9: There is an expectation that slippages would start to recede further as the peak of impairment appears to be complete
Fresh additions to NPLs and restructured loans, March fiscal year-ends, 2QFY16-2QFY17
Fresh slippages (%) Fresh restructuring (%)

2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17
Bank of Baroda 6.7 16.4 6.2 6.7 3.2 0.1 0.3 1.3 1.4 3.2
Bank of India 6.3 9.9 17.6 6.4 4.1 0.2 0.2 0.3 0.2 0.0
Canara Bank 2.7 6.5 18.0 4.8 3.0 0.7 0.3 0.1 0.7 0.1
Oriental Bank of Commerce 2.1 10.4 10.5 9.2 5.8 0.8 0.1 - - -
Punjab National Bank 2.7 12.9 25.2 9.4 6.3 0.2 0.1 - - -
State Bank of India 1.8 5.9 8.3 3.0 3.3 0.7 0.4 - - -
Union Bank 3.0 5.2 8.9 5.4 4.9 0.7 1.5 1.0 - -
Axis Bank 3.5 2.6 1.7 4.2 9.9 0.6 0.2 1.1 0.6 -
ICICI Bank 2.2 6.0 6.4 7.3 7.1 0.1 0.5 - - -
City Union Bank 2.1 2.6 2.4 1.9 2.2 - - - - -
DCB 2.2 1.9 1.6 1.7 1.4 NA NA NA NA NA
F ederal Bank 3.2 4.3 3.7 1.9 1.6 0.0 NA NA NA NA
Karur V y sy a Bank 1.9 1.9 6.8 2.4 4.6 3.2 0.5 - 0.0 0.1
J &K Bank 1.8 2.8 11.8 11.3 8.9 - - 5.0 5.1 21.7
Total 3.1 7.7 10.6 5.4 4.8 0.5 0.4 0.4 0.3 0.5
Total (ex SBI) 3.8 8.6 11.7 6.5 5.5 0.4 0.4 0.5 0.4 0.8
Source: Company, Kotak Institutional Equities

CAUTIOUS
Cement
UPDATE
BSE-30: 26,626
Cementthe year in review. The year gone by would be most remembered for the
quantum of acquisitions undertaken, even as modest volume growth and lackluster
pricing (barring North India) resulted in another year of earnings downgrades,
expansion of valuation multiples allowed for stock performance. Lower cost of
production owing to the sharp decline in pet-coke prices during the early part of the
year reversed sharply in the second half, even as de-monetization threatens to push-
back recovery in industry utilizations at least by another year.
Volumes remained lackluster, prices had large regional disparities
Volumes for the year remained lackluster, despite a promising start with 1QCY16 reporting a
strong 11.4% yoy growth in volumes. Initial data on post-demonetization suggests a 10% yoy
decline in cement volumes for November 2016 with market participants suggesting an even
weaker December, pushing back hopes of improving demand-supply dynamics by at least
another year.
Cement prices started off on a very weak note, though the sharp price increase in North and
Central in the month of March 2016, brought some respectability to all-India prices that have
remained largely flat since. Westa region that was witnessing price weakness for the last two
years saw healthy price increase in September 2016, that helped salvage the earnings of players
concentrated in that region. Overall, average prices remained largely unchanged for the year,
barring North and Central that saw a healthy price trend (Exhibit 2).
Sharp decline in pet-coke prices aided by lower cost, though trends have reversed since
Weak volumes and prices notwithstanding, a sharp decline in pet-coke prices in 2HCY15 helped
cement players lower production cost and report healthy earnings growth in the early part of
the year. The merriment has however been short-lived with pet-coke prices having rebounded
sharply and likely to impact production cost over the next few quarters (Exhibit 3). Cost of
freight (railways and road) was also supportive for most part of the year, though we do expect
some headwinds on this front going into CY2017 (Exhibit 5).
Story of earnings downgrades partially off-set by expanding multiples continued
Despite a promising start to the year, cement earnings were not able to meet the lofty
expectation for another year standing, with earnings downgrade for FY2017 at 12-24% from
the start of the year, while FY2018E has been downgraded by 24-27% from the start of the
year for large cap. stocks (Exhibits 6-8). We do concede the impact of de-monetization in
November 2016 to have played an accelerated part in the earnings downgrade towards the end
of the year. In our view, the de-monetization has added an increased element of uncertainty to
the already hard-to-predict earnings for the cement sector, and we do not rule out further
downgrades over the next few months as the full impact of de-monetization gets clearer.
Murtuza Arsiwalla
Stock performance extended until September 2016, under-performance since
In a departure from the past, cement stocks outperformed the benchmark up to September Abhishek Poddar
2016, (12% out-performance in 1QCY16) while under-performing the benchmark in the last
three months (10% under-performance in 4QCY16) (See Exhibits 9-10). However, in a
departure from past trends the stock performance continued to trend up until September 2016
largely on account of continued expansion of multiples in an environment of declining global
yields (Exhibits 11-12).
India Cement
The under-performance of the sector since September 2016 was prompted by (1) continued
earnings downgrades as well as sharp increase in pet-coke prices, (2) contraction of
valuation multiples, and (3) most importantly the announcement of de-monetization scheme
that appears to have immediate as well as ,medium-term implications for the volume growth
trajectory of the sector. While traditionally believers, in the out-performance of the sector in
the first quarter of the calendar year owing to peaking of construction activity and strong
price action, the current state of market dynamics puts a question on sustenance of the
seasonal trade this time along.
Re-structuring, asset sale activity marked a new high in CY2016

The year 2016, marked some of the largest asset acquisitions and company restructurings
seen in recent times with (1) Ultratechs acquisition of 21 mtpa of cement asset from
Jaiprakash Associates, (2) the long pending restructuring of ACCs ownership, wherein the
latter now is a subsidiary of Ambuja Cement, (3) advent of a new entrant in Nirma on the
acquisition of the cement assets of Lafarge, (4) exit of Reliance Infrastructure from the
cement business to allow Birla Corp. to gain in size, and (5) continued simplification of the
ownership structure of Dalmia Bharat including part-exit given to KKR (Exhibit 13).
Amendment to the MMDR Act coupled with bottom-of-cycle earnings trajectory with
leveraged balance sheets for select players prompted the increased M&A activity in the
sector. We expect moderation in activity levels going forward especially for larger players
with dominant presence across markets, as the CCI clearance will be a hindrance to
incremental acquisitions hereon.
Exhibit 1: Cement volumes increased by 4.8% yoy during April - October 2016
Monthly cement production volumes in India, October 2014 - 2016 ('000 tons, %)
('000 tons) (LHS) (%, yoy) (RHS) (%, yoy 3MA) (RHS)
31,000 20
15
27,000
10
23,000
5
19,000
0
15,000 (5)
Dec-14
Dec-15
Apr-15
Apr-16
Oct-14
Oct-15
Oct-16
Feb-15
Feb-16
Jun-15
Jun-16
Aug-15
Aug-16
Source: DIPP, Kotak Institutional Equities

Cement India
Exhibit 2: Price increase in North and Central in March 2016 and in West in October 2016 were key spikes in the past twelve months
Monthly cement prices across regions in India, Dec 2015 Dec 2016 (Rs per 50 kg bag)
Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16
North 251 246 257 296 306 303 307 319 318 309 305 305 298
Central 263 261 273 300 308 303 303 325 324 314 316 306 304
East 330 331 331 330 330 333 329 332 332 333 330 328 321
West 255 262 273 275 280 289 290 290 278 285 308 304 300
South 351 350 347 344 338 336 352 349 345 368 364 357 356
All India average 299 298 302 314 316 316 321 327 323 329 331 325 322
Change per bag (Rs, mom)
North (23) (5) 11 40 9 (2) 4 12 (1) (9) (4) (0) (7)
Central (16) (2) 12 27 7 (5) 1 21 (0) (11) 3 (10) (2)
East (11) 1 (1) () 2 (4) 3 1 1 (4) (2) (7)
West (22) 7 11 2 5 9 1 0 (13) 7 24 (4) (4)
South (5) (2) (2) (4) (6) (1) 16 (3) (4) 23 (4) (7) (1)
All India average (14) (0) 4 12 1 (0) 6 6 (4) 5 2 (5) (4)
Change per bag (Rs, yoy)
North (23) (36) (23) 2 23 31 46 57 46 2 16 31 47
Central (28) (37) (25) 3 16 22 27 48 20 8 28 27 41
East (9) (12) (15) (15) (12) (10) (16) (14) (18) (22) (22) (13) (8)
West (48) (55) (42) (35) (9) 2 4 3 (8) (7) 26 27 45
South (2) (11) (16) (18) (26) (30) (18) (17) (20) 3 2 1 4
All India average (19) (27) (23) (13) (5) (1) 6 12 1 (1) 10 13 23
Source: Industry, Kotak Institutional Equities estimates
Exhibit 3: Pet-coke prices have increased sharply since June 2016; cost to increase as benefit of low
priced inventory wanes
US pet coke prices (CFR basis), November 2014 - 2016 (US$/ton)
110 US Petcoke prices (US$/ton) (CFR)
100
90 91 88
90 84 84
81 80 80
80 76 77 78 76 75 76
72 71
70 65
60 54
48 46 48 50
50 45 45
39
40
30
20
Aug-15
Aug-16
Apr-15
Apr-16
Sep-15
Sep-16
Oct-16
Jul-15
Oct-15
Jul-16
Mar-15
Feb-16
Mar-16
Feb-15
Nov-14
Nov-15
Jun-16
Nov-16
Jun-15
May-16
May-15
Dec-14
Dec-15
Jan-15
Jan-16
Source: Industry, Kotak Institutional Equities

India Cement
Exhibit 4: Imported coal costs have increased by 30% since June 2016 (in rupee terms)
Coal prices at Richard Bay (US$/ton, Rs/ton)
125 Richard Bay (US$/ton) [LHS] INR (Rs/US$) [LHS] 8,000

Richard Bay (Rs/ton) [RHS]
7,000
95
6,000
5,000
65
4,000
35 3,000
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Exhibit 5: We expect cost headwinds on the freight going forward

Trend in monthly rail freight pricing, March fiscal year-ends, Dec 2014 - Nov 2016 (Rs/NTKM)
2.0
1.9
1.8
1.7
1.6
1.5
1.4
1.3
Aug-15
Aug-16
Apr-15
Sep-15
Apr-16
Sep-16
Jul-15
Jul-16
Oct-15
Oct-16
Mar-16
Mar-15
Feb-15
Nov-15
Feb-16
Nov-16
Jun-16
Jun-15
Dec-14
Dec-15
Jan-15
Jan-16
May-15
May-16
Source: Indian Railways, Kotak Institutional Equities

Cement India
Exhibit 6: UTCEM's consensus EPS estimate is cut by 13-24% over past one year
UTCEMEPS downgrade over last one year for FY2017 & FY2018E (Rs)
180 EPS - 2017 (Rs) EPS - 2018 (Rs)
160
140
120
100
80
Sep-15
Apr-16
Sep-16
Jul-16
Aug-16
Feb-16
Mar-16
Oct-15
Oct-16
Nov-15
Nov-16
Jun-16
May-16
Dec-15
Jan-16
Dec-16
Exhibit 7: ACEM's consensus EPS estimate is cut by 22-27% over past one year
ACEMEPS downgrade over last one year for CY2016 & CY2017 (Rs)
16 EPS - 2016 (Rs) EPS - 2017 (Rs) EPS - 2018 (Rs)
14
12
10
0
Aug-16
Sep-15
Sep-16
Mar-16
Apr-16
Jul-16
Oct-15
Oct-16
Nov-15
Feb-16
Nov-16
Jun-16
Dec-15
Jan-16
Dec-16
May-16

India Cement
Exhibit 8: ACC's consensus EPS estimate is cut by 24-26% over past one year
ACCEPS downgrade over last one year for CY2016 & CY2017 (Rs)
90 EPS - 2016 (Rs) EPS - 2017 (Rs) EPS - 2018 (Rs)
80
70
60
50
40
30
Jul-16
Aug-16
Sep-15
Sep-16
Mar-16
Apr-16
Oct-15
Oct-16
Feb-16
Nov-15
Nov-16
Jun-16
Dec-15
Jan-16
Dec-16
May-16
Exhibit 9: Cement stocks outperformed the index during January - March in 8 out of 11 times
Returns of the cement index versus the Sensex January-March, 2005-16 (%)
Cement Sensex
100
80
60
40
20
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
(20)
(40)

Cement India
Exhibit 10: Cement stocks out-performed the benchmark until September 2016
Returns of the cement index versus the Sensex April-December, 2005-16 (%)
Cement Sensex
120
100
80
60
40
20
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
(20)
(40)
(60)
Exhibit 11: Trading multiples peaked in August 2016, have seen some contraction since
12-month forward EV/EBITDA for Ultratech, ACC and Ambuja on consensus estimates (X)
UTCEM ACC ACEM Average

20
18
16
14
12
10
8
6
4
2
-
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16

India Cement
Exhibit 12: Cement companies have traditionally traded within 8X of the 24-month EV/EBITDA
multiple
24-month forward EV/EBITDA for Ultratech, ACC and Ambuja on consensus estimates (X)
UTCEM ACC ACEM Average

14
12
10
-
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Exhibit 13: CY2016 saw increased M&A activitiy in cement sector due to leveraged balance sheets of few companies and on clarity on
transfer of mines from MMDR Act amendment
Details of recent acquisitions in the cement sector and their valuations
Grinding Clinker
capacity capacity Enterprise Value
Seller company Buyer company Date Plant (mtpa) (mtpa) (Rs bn) (US$ mn) (US$/ton)
Jaiprakash Associates Orient Cement Oct-16 Bhilai, Madhya Pradesh 2.2 1.1 15 216 98
Jaiprakash Associates Orient Cement Oct-16 Nigrie, Madhya Pradesh 2.0 5 75 37
Lafarge Nirma Jul-16 Eastern and Central India 11.0 Y 94 1,403 128
Jaiprakash Associates Ultratech Feb-16 Various 21.2 16.2 167 2,505 118
Reliance Cement Birla Corp. Feb-16 Madhya Pradesh, Uttar Pradesh 5.6 3.3 48 722 129
Jaiprakash Associates Shree Cement Aug-14 Panipat* 1.5 4 54 36
Jaiprakash Associates Dalmia Cement Mar-14 Bokaro* 2.1 12 180 86
Jaiprakash Associates Ultratech Sep-13 Wanakbori and Sewagram 4.8 3.6 38 571 119
ACC (Holcim India) Ambuja Jul-13 50% stake Y 155 2,331 142
Adhunik Cement Dalmia Cement Oct-12 Meghalaya 1.5 1.0 10 155 103

Cement India
Exhibit 14: Cement comparative valuation
Market cap. CMP (Rs) Target price EPS (Rs) P/E (X)
Company (US$ mn) 30-Dec (Rs) Rating 2016 2017E 2018E 2019E 2016 2017E 2018E 2019E
Large-cap. stocks
ACC 3,737 1,331 1,275 SELL 40 32 49 73 34 42 27 18
Ambuja Cements 6,113 206 210 REDUCE 6 6 8 11 37 37 26 18
Grasim Industries 5,904 863 990 ADD 55 73 87 99 16 12 10 9
Shree Cement 7,661 14,733 12,750 SELL 115 439 570 736 128 34 26 20
UltraTech Cement 13,294 3,250 2,750 SELL 79 97 133 159 41 34 24 20
Mid-cap. stocks
Dalmia Bharat 1,636 1,350 1,800 ADD 21 28 87 122 63 49 16 11
India Cements 535 117 95 SELL 5 5 7 9 25 25 16 12
JK Cement 751 720 880 ADD 9 24 69 92 84 30 10 8
JK Lakshmi Cement 616 351 440 ADD 2 7 27 41 177 53 13 9
O rient Cement 375 123 160 ADD 3 1 12 16 40 183 10 8
EV/EBITDA (X) EV/ton of capacity (US$) P/B (X)

Company 2016 2017E 2018E 2019E 2016 2017E 2018E 2019E 2016 2017E 2018E 2019E
Large-cap. stocks
ACC 20.6 19.5 13.8 9.8 115 106 103 99 3.0 2.9 2.7 2.5
Ambuja Cements 18.8 18.2 12.6 9.1 136 127 124 120 2.9 2.9 2.8 2.6
Grasim Industries 9.2 7.3 5.8 4.7 NA NA NA NA 1.6 1.4 1.2 1.1
Shree Cement 37.5 17.4 13.4 10.6 385 264 249 201 8.3 6.7 5.4 4.3
UltraTech Cement 20.7 17.8 13.6 11.4 208 198 190 181 4.3 3.9 3.4 2.9
Mid-cap. stocks
Dalmia Bharat 13.9 11.5 8.1 6.4 131 119 115 108 3.1 2.9 2.5 2.0
India Cements 8.5 8.5 7.1 6.3 63 62 61 60 1.0 1.0 0.9 0.9
JK Cement 15.3 11.8 7.1 5.7 105 104 99 92 3.1 2.9 2.3 1.8
JK Lakshmi Cement 22.6 14.8 7.4 5.5 102 90 76 71 3.1 2.9 2.4 1.9
O rient Cement 21.4 16.7 7.1 5.7 70 70 68 62 2.5 2.5 2.1 1.7

NEUTRAL
Technology
UPDATE
BSE-30: 26,626
3QFY17E preview muted quarter. Dec 2016 quarter revenue growth will be muted
due to twin combination of usual end-of-the-year furloughs and continuing weak
spending environment. Tech Mahindra and HCLT will report strong quarter, while the
rest will have a weak print. The set up for 2017 is promising with early indications of
stronger financial services spending and initial signs of integrated digital contracts but is
counterbalanced by possible delays in budgeting in select verticals. Likely changes to
visa rules will be the key element to focus on in FY2018.
Dec 2017 quarterweak on revenue growth
We expect weak revenue growth for Tier 1 players due to (1) usual end-of-the-year furloughs
and (2) multiple factors that have dragged growth in 1HFY17 will continue to persist, especially
weak financial services spending and captive shift and insourcing. In addition, contract specific
factors will also have a bearing; for example cancellation of W&G program by RBS will impact
Infosyss revenues by 1.4%. We expect Infosys to report 0.3% c/c revenue decline and TCS to
report 1.3% c/c revenue growth. Acquisitions/ inorganic activity will aid numbers for HCLT,
Wipro and Tech Mahindra. On reported c/c basis, we expect Wipro, HCLT and Tech Mahindra
to report growth of 1.2%, 2.9% and 3.8% respectively, while on organic c/c basis our growth
forecast stands at 0.4%, 1.7% and 3.2%. On yoy comparison, organic revenue growth across
companies has drifted down to single digits, but will steady out or improve moving into FY2018
MarginsCrosses impact offset Rupee depreciation. Expect moderate margin decline
Rupee depreciated by modest 0.8%. However, the benefit of Rupee depreciation will be offset
by its appreciation against GBP, EUR and Yen. Cross-currency headwind for the quarter varies
from 100 bps (Infosys) to 150 bps (TCS). This, combined with furloughs, will have moderate
adverse impact on margins; expect stable to modest decline in EBIT margins on sequential basis.
On yoy comparison most companies will report decline in margins due to(1) appreciation of
INR against most currencies except USD and (2) continued pricing pressure in core business.
We believe companies that have invested in digital in early stages can protect profitability with
modest benefit of Rupee depreciation
CY2017 balanced setup; financial services can be a source of positive surprise
CY2017 set up is promising with(1) initial indications of higher spending in financial services
vertical, (2) announcements of integrated digital deals, albeit sporadic, and (3) no acceleration
in intensity of captive shift as witnessed at the beginning of CY2016. These factors indicate that
CY2017 holds promise for the Indian IT. However, these positives are partly negated by possible
delays in budgeting in select verticals in US. Indian IT will likely grow 8-9% in FY2017E and
could grow at same pace or accelerate in FY2018. Expect divergence in performance of
companies depending on the mix of business (run versus change) and ability to capitalize on the
digital opportunity Kawaljeet Saluja
Key areas of focus: H-1B dependence, budgeting cycle and pricing pressure
Jaykumar Doshi
The broad stance of Mr. Trump on immigration, the presence of select long-time proponents of
visa reforms in his cabinet and Republican control over both Senate and House of Representatives
increase the risk of implementation of visa restrictions. Expect investor focus on exposure to
H-1B visas and risk mitigation measures in case minimum H-1B wages were to be hiked. We
also expect focus on (1) budgeting cycle given that some verticals such as healthcare may
delay in view on new President in US and (2) magnitude of pricing pressure and offsets available
Technology India
Infosys remains our top pick

We back Infosys given it is gaining share in large deals and wallets of large clients, and is
positioned well to capture discretionary spends. Near-term volatility and risks pertaining to
potential tightening of H-1B rules aside, Infosys is making right investments in automation
and digital for sustained profitable growth over the next few years. We also like Tech
Mahindra due to inexpensive valuations with the stock trading at 12X FY2018E earnings.
These multiples are near ex-growth multiples. We expect stable revenue growth backed by
margin expansion. We like TCS impressive execution engine and strong margin defense, we
find the stock trading at 16.6X FY2018E earnings fully valued leaving little elbow room to be
constructive.
Comments on individual companies
Infosys. We estimate sequential revenue decline of 0.3% in c/c and 1.3% in US$ terms
led by ramp down in the cancelled RBS contract (1.4% impact on revenue growth) and
usual end-of-the-year furloughs. EBIT margin will decline by 80 bps on account of lower
utilization due to RBS project cancellation and associated revenue loss. We expect Infosys
to maintain FY2017E c/c revenue growth guidance of 8-9% even as it would imply wide
guidance band for 4QFY17. We expect investor focus on (1) demand environment across
verticals, (2) timely closure of budgets and outcome of the budgeting cycle especially for
the financial services vertical, (3) risk mitigation strategy in the light of likely tightening of
H-1B rules, (4) pricing outlook and progress on automation, (5) risk of captive shift
amongst its large accounts, and (6) TCVs. We have an ADD rating on the stock with a
target price of `1,175.
TCS. We expect TCS to report 1.3% growth in c/c and cross-currency impact of 150 bps.
Cross-currency headwind from 12%, 8% and about 4% exposure to GBP, EUR, JPY
(depreciated 6%, 4.5% and 8% versus US$) will be about 150 bps. We expect TCS to be
able to maintain stable margin, offsetting the impact of cross currency headwinds with
operational improvements. We expect investor focus on (1) demand environment across
verticals, budgeting cycle and its implications for CY2017 outlook and impact of in-
sourcing to captives, if any, in key clients (2) TCS' positioning in the evolving digital
landscape and growth outlook for digital practice, (3) risk mitigation from any potential
increase in minimum wages for H-1B workers and (4) margin outlook. We have a
REDUCE rating on TCS with a target price of `2,325.
Wipro. We estimate organic c/c revenue growth of 0.4%. Reported c/c growth of 1.2%
will be around midpoint of its c/c growth guidance of 0-2%. Our estimates build cross
currency headwind of 115 bps and include US$15 mn from Appirio acquisition for one
month period. We expect IT services margin to be flat at 17.8% on a sequential basis;
headwinds from cross currency movement and acquisition will be offset by operational
improvement. We expect investor focus on (1) progress on the initiatives taken by the
new CEO (2) efficacy of measures taken to improve sales effectiveness, account mining
and to defend shares in core areas of competence. Growth from top 10 accounts and
increase in US$100 mn+ clients, (3) risk mitigation measures from potential increase in
minimum wages for H-1B workers, and (4) integration of recent acquisitions of cellent
AG, HPS and Appirio. We have a REDUCE rating on Wipro with a target price of `485.
HCLT. We expect HCLT to report 2.9% growth in c/c and 1.7% growth in US$ terms.
Growth would be driven by IMS and IBM deals (we build US$20 mn from two IBM deals).
On organic basis, c/c revenue growth would be 1.7%. We expect EBIT margin to decline
30 bps qoq largely due to wage hikes for a section of employees. Expect investor focus on
(1) demand outlook, (2) growth strategy and prospects in service lines other than IMS and
ERD, (3) how the company intends to catch up with competition in digital, (4) competitive
intensity in IMS and HCLT's win rates, and (5) M&A strategy in the light of multiple
acquisitions announced by the company. We have a REDUCE rating with TP of `800.

India Technology
Tech Mahindra. We expect organic c/c revenue growth of 3.2% and cross currency
headwind of 120 bps. Reported growth would be 3.8% and 2.7% in c/c and US$ terms
aided by US$6 mn from full-quarter consolidation of Target Group acquisition. We expect
80 bps qoq expansion in EBIT margin led by non-recurrence of one-off restructuring costs
that impact margin by 120 bps in the June quarter. This 120 bps tailwind would be partly
offset by seasonal furloughs and transition costs in large deals. On yoy comparison,
EBITDA margin performance will disappoint with 122 bps decline. We expect investors to
focus on (1) pipeline in telecom and deal wins in the Enterprise segment, (2) turnaround
strategy for LCC, (3) roadmap for improvement in margins, productivity and automation,
and (4) growth outlook for top telecom accounts especially its top client in view of recent
M&A activity involving it (AT&T- Time Warner merger). We have BUY rating and target
price of `520.
Exhibit 1: Currency movement in Dec 2016 quarter
INR/USD USD/GBP USD/EUR USD/AUD JPY/USD

Depreciation of currencies against the US Dollar
Sep 2016 quarter average 66.9 1.31 1.12 0.76 102.3
Dec 2016 quarter average 67.4 1.23 1.07 0.74 111.5
Appr/ (Depr) (%) (0.8) (6.0) (4.7) (2.5) (8.2)
INR/USD INR/GBP INR/EUR INR/AUD JPY/INR

Appreciation of the Rupee against other currencies
Sep 2016 quarter average 66.9 87.7 74.9 50.9 1.5
Dec 2016 quarter average 67.4 83.1 72.0 50.0 1.7
Appr/ (Depr) (%) (0.8) 5.5 4.1 1.8 7.5
Exhibit 2: Cross currency headwinds in 3QFY17E
Currency-wise revenue mix (a) Impact in bps on

US Europe Rest of the world US$ revenue
USD GBP EUR AUD Others growth
TCS 57 12 8 23 (150)
Infosy s 69 6 10 8 8 (100)
Wipro 61 10 9 4 16 (115)
HCL Tech 62 8 21 9 (120)
Tech M 50 10 11 5 24 (120)
Mindtree 68 21 11 (60)
Hexaw are 82 12 6 (60)
Notes:
(a) As per disclosures for Infosy s, TCS, Wipro, HCLT and Tech M;
assumed to be in line w ith geographic mix for other companies.
Source: Company, Kotak Institutional Equities estimates

Technology India
Exhibit 3: Results preview for the quarter ending Dec 2016 (Rs mn)
Financials Dec-15 Sep-16 Dec-16E qoq (%) yoy (%) Comments/what to look for
TCS (Jan 12, 2017)
We expect constant currency (c/c) revenue growth of 1.3%; and cross-currency
headwind of 150 bps (led by 6%, 4.5% and 8% depreciation of GBP, EUR and JPY
Revenues (US$ mn) 4,145 4,374 4,364 (0.2) 5.3
against USD). Spillover of revenue recognition of Rs1.8 bn of India-based contract
to the current quarter will aid overall performance
We expect EBIT margin to remain stable. Impact of cross currency headwind will be
Revenues 273,640 292,840 294,131 0.4 7.5
absorbed through marginal Rupee depreciation and operational improvements
We do not assume any forex gain in our model. Note that, FX gain in the Sep 2016
EBITDA 77,469 81,110 82,095 1.2 6.0
quarter was Rs3.95 bn.
We expect investor focus on (1) demand environment across verticals, budgeting

cycle and its implications for CY2017 outlook and impact of in-sourcing to captives,
Adjusted net profit 61,095 65,860 63,437 (3.7) 3.8 if any, in key clients (2) TCS' positioning in the evolving digital landscape and growth
outlook for digital practice, (3) risk mitigation from any potential increase in
minimum wages for H-1B workers and (4) margin outlook.
EBITDA margin (%) 28.3 27.7 27.9 21 bps (40) bps

EBIT margin (%) 26.6 26.0 26.1 6 bps (52) bps
Wipro (Jan 25, 2017)
We expect c/c revenue growth of 1.2%, close to mid-point of guidance of 0-2%.
Our estimates build cross currency headwind of 115 bps and include US$15 mn
Total revenues 129,516 138,938 136,494 (1.8) 5.4
revenues from Appirio acquisition (one month contribution). We expect organic c/c
revenue growth of 0.4%
We expect flat operating margins on sequential basis. Margin headwind for the
Global IT revenues (US$ mn) 1,838 1,916 1,918 0.1 4.3 quarter is consolidation of Apperio acquisition from which we expect 0.2% drag
which will be offset by operational improvements
Global IT revenues 123,147 131,366 129,955 (1.1) 5.5 We expect c/c revenue growth guidance of 0-2% for Mar 2017 quarter
We expect investor focus on (1) progress on the initiatives taken by the new CEO (2)
efficacy of measures taken to improve sales effectiveness, account mining and to
defend shares in core areas of competence. Growth from top 10 accounts and
EBIT 23,874 22,971 22,926 (0.2) (4.0)
increase in US$100 mn+ clients will be closely tracked, (3) risk mitigation measures
from potential increase in minimum wages for H-1B workers, and (4) integration of
recent acquisitions of cellent AG, HPS and Appirio
Adj. net profit 22,341 20,672 20,610 (0.3) (7.7)
Total EBIT margin (%) 18.4 16.5 16.8 26 bps (164) bps
Global IT - EBITDA margin
23.2 21.5 21.7 23 bps (150) bps
(%)
Global IT - EBIT margin (%) 20.2 17.8 17.8 1 bps (236) bps
Infosys (Jan 13, 2017)
We expect c/c revenue decline of 0.3% and (1.3% decline in US$ terms) due to (1)
rampdown of RBS contract that will impact revenues by 1.4% and (2) usual end-of-
Revenues (US$ mn) 2,407 2,587 2,554 (1.3) 6.1 the-year furloughs. Revenue recognition from GST contract is the wild card in light of
likely delay in roll out by the Indian Government; note that the company recognized
US$20 mn from GST contract in 2QFY17
We expect EBIT margin to decline due to-- (1) likely lower utilization rate from RBS
Revenues 159,020 173,100 172,153 (0.5) 8.3 contract ramp down and (2) impact of furloughs. Lower revenues have consequent
impact on profitability
We expect other income to decline on sequential and yoy basis since-- (1) we do not
EBITDA 43,280 47,330 45,868 (3.1) 6.0 model Fx gain that Infosys benefitted from in 2QFY17 and 3QFY16 and (2) softening
of yields leading to lower interest income
Infosys' revised c/c revenue growth guidance of 8-9% for FY2017 will remain
Adjusted net profit 34,650 36,090 34,554 (4.3) (0.3)
unchanged even as it would imply a wide guidance band for 4QFY17
We expect investor focus on (1) demand environment across verticals, (2) timely
closure of budgets and outcome of the budgeting cycle especially for the financial
EBITDA margin (%) 27.2 27.3 26.6 (70) bps (57) bps services vertical, (3) risk mitigation strategy in light of likely tightening of H-1B rules,
(4) pricing outlook and progress on automation, (5) risk of captive shift amongst its
large accounts, and (6) TCVs
EBIT margin (%) 24.9 24.9 24.1 (82) bps (83) bps
HCL Technologies (4th week of Jan)
We forecast c/c revenue growth rate of 2.9% (cross currency headwind of 120 bps);
growth will be led by IMS which we expect to grow by 3.5% in c/c. We model
Revenues (US$ mn) 1,566 1,722 1,751 1.7 11.8
incremental revenues of US$20 mn from the two IBM deals. Our organic c/c revenue
growth forecast stands at 1.7%
Revenues 103,410 115,190 118,022 2.5 14.1 We expect EBIT margin to decline 30 bps largely on account of wage revision
EBITDA 22,253 25,115 25,393 1.1 14.1 We do not assume any forex gain. FX gain in the Sep 2016 quarter was US$4.6 mn
Expect investors focus on (1) demand outlook, (2) growth strategy and prospects in
service lines other than IMS and ERD, (3) how the company intends to catch up with
Adjusted net profit 19,202 20,146 20,089 (0.3) 4.6
competition in digital, (4) competitive intensity in IMS and HCLT's win rates, and (5)
M&A strategy in light of multiple acquisitions announced by the company
EBITDA margin (%) 21.5 21.8 21.5 (29) bps (0) bps
EBIT margin (%) 20.0 20.1 19.8 (32) bps (24) bps

India Technology
Exhibit 3 (continued): Results preview for the quarter ending Dec 2016 (Rs mn)
Financials Dec-15 Sep-16 Dec-16E qoq (%) yoy (%) Comments/what to look for
Tech Mahindra (Jan 30, 2017)
We expect c/c rev enue grow th of 3.8% and cross currency headw ind of 120 bps.
Acquisitions (Target Group) w ill contribute incremental US$6 mn for the quarter; organic
Rev enues (US$ mn) 1,015 1,072 1,101 2.7 8.5 rev enue grow th stands at 3.2% in c/c. Rev enue grow th w ill be led by -- (1) ramp up of
deals in the enterprise segment, (2) moderate ramp up in the telecom v ertical, and (3)
slightly higher rev enues from Comv iv a (seasonal)
EBITDA margin performance w ill disappoint w ith 122 bps decline on y oy basis. On
sequential basis EBITDA margin w ill improv e by modest 80 bps. Note that Sep 2016
Rev enues 67,011 71,674 74,215 3.5 10.8 quarter w as impacted by 120 bps by one-off restructuring costs. Headw inds for the
quarter are -- (1) seasonal furloughs and (2) transition costs in large deals in the enterprise
segment
We expect robust TCV of US$300 mn led by the enterprise segment. Tech Mahindra is
EBITDA 11,358 10,701 11,671 9.1 2.8
making steady progress in deal signings
We expect inv estors to focus on (1) pipeline in telecom and deal w ins in Enterprise
segment, (2) turnaround strategy for LCC, (3) roadmap for improv ement in margins,
Adjusted net profit 7,592 6,447 7,284 13.0 (4.1) productiv ity and automation, and (4) grow th outlook for top telecom accounts
especially its top client in v iew of recent M&A activ ity inv olv ing it (AT&T- Time Warner
merger).
EBITDA margin (%) 16.9 14.9 15.7 80 bps (122) bps
Mindtree (Jan 19, 2017)
We expect organic c/c rev enue grow th of 0.7% and cross currency headw ind of 60
Rev enues (US$ mn) 184.4 193.0 193.3 0.1 4.8 bps. Seasonally w eak quarter and muted spends of important large accounts w ill
contribute to w eak grow th
We expect EBITDA margin to increase 40 bps largely on account of reduced burn at
Rev enues 12,145 12,954 13,026 0.6 7.3
Bluefin
We expect strong TCV signings led by rebid w ins and conv ersion of deals in the pipeline.
EBITDA 2,147 1,621 1,686 4.0 (21.5) Ev en as the ov erall grow th has slipped, Mindtree's customer relationships and
engagement w ith deal adv isory continues to be strong
YoY numbers are not comparable due to transition to Ind-AS from Indian GAAP that led
Adjusted net profit 1,509 976 1,025 5.0 (32.1)
to amortization charge on intangibles pertaining to acquisitions.
We expect inv estor focus on (1) Replacements of senior management exits v iz: Radha
EBITDA margin (%) 17.7 12.5 12.9 43 bps (474) bps and V eeraraghav an, (2) deal w ins and pipeline, and (3) driv ers of margin improv ement in
face of pricing pressure
Hexaware Technologies (1st week of Feb)
We expect 0.5% grow th in US$ terms and cross currency headw ind of 60 bps. Grow th
Rev enues (US$ mn) 124.1 135.2 135.9 0.5 9.5
w ill be driv en by IMS and BPO.
EBIT margin w ill decline sequentially but improv e on y oy comparison. Sequential decline
Rev enues 8,195 9,041 9,161 1.3 11.8 in margin w ill be on account of w age rev ision for select category of employ ees and
impact of furloughs
We expect inv estor focus on (1) demand outlook in BF S in v iew of high exposure to
EBITDA 1,302 1,576 1,544 (2.0) 18.6 capital markets segment, (2) deal pipeline and deal w ins, (3) rev enue grow th outlook for
CY2017, and (4) near to medium term margin outlook
Adjusted net profit 994 1,114 1,076 (3.4) 8.3
EBITDA margin (%) 15.9 17.4 16.9 (58) bps 96 bps
EBIT margin (%) 14.3 15.9 15.2 (65) bps 92 bps
Mphasis
We expect c/c rev enue grow th of 1.3% (1% in US$ terms) led by Direct International
Rev enues (US$ mn) 229 227 229 1.0 (0.0)
(excluding Digital Risk) w hile Digital Risk and HP channel rev enues w ould be flat
We expect EBIT margin to decline 50 bps due to impact of w age hike (160 bps) partly
Rev enues 15,167 15,176 15,403 1.5 1.6
offset by operational improv ements
Inv estor focus w ill remain on (1) deal w ins in direct channel and confidence on
EBITDA 2,166 2,463 2,418 (1.8) 11.6 sustenance of grow th in v iew of challenges in financial serv ices, (2) outlook of digital
risk, (3) div idend policy and cash utilization strategy , and (4) margin outlook
Adjusted net profit 1,736 2,166 1,958 (9.6) 12.8
EBITDA margin (%) 14.3 16.2 15.7 (53) bps 142 bps
EBIT margin (%) 13.2 15.3 14.8 (50) bps 162 bps
Notes:
(a) Result dates are y et to be announced for some companies.

Technology India
Exhibit 4: Kotak Institutional Equities: valuation summary of key Indian technology companies
30-Dec-16 Mkt cap. EPS (Rs) P/E (X) EV/EBITDA (X) RoE (%)
Company Price (Rs) Rating (Rs m) (US$ m) 2016 2017E 2018E 2016 2017E 2018E 2016 2017E 2018E 2016 2017E 2018E
HCL Technologies 825 REDUCE 1,164,486 17,146 52.0 58.1 59.6 15.9 14.2 13.8 11.9 10.1 9.5 27.7 27.2 24.5
Hexaw are Technologies 207 ADD 62,550 921 12.9 13.2 15.3 16.0 15.7 13.5 10.8 10.3 8.5 28.9 26.3 27.1
Infosy s 1,011 ADD 2,321,292 34,178 59.0 61.8 69.2 17.1 16.3 14.6 11.7 10.5 9.1 24.9 23.1 23.1
Mindtree 522 REDUCE 87,633 1,290 35.9 27.0 34.6 14.5 19.3 15.1 10.1 11.0 8.7 27.4 17.8 20.1
Mphasis 562 SELL 118,215 1,741 34.5 38.6 39.8 16.3 14.6 14.1 10.4 9.3 8.5 12.3 12.6 12.3
TCS 2,366 REDUCE 4,661,146 68,630 122.9 132.4 142.3 19.2 17.9 16.6 14.1 12.8 11.4 37.1 32.6 29.8
Tech Mahindra 489 BUY 475,760 7,005 35.8 33.9 39.9 13.7 14.4 12.3 10.0 9.8 7.8 23.4 19.4 19.9
Wipro 474 REDUCE 1,153,328 16,981 36.0 34.4 38.5 13.2 13.8 12.3 8.6 8.3 7.2 20.3 17.2 17.3
Technology Neutral 10,044,411 147,893 17.6 16.4 15.0 12.5 11.0 9.7 24.8 23.5 22.5
KIE universe 77,718,824 1,144,324 21.8 17.9 14.8 11.6 10.4 8.9 12.1 13.2 14.5
Target O/S shares EPS CAGR (%) EPS growth (%) Net Profit (Rs mn) EBITDA (Rs mn) Sales (Rs mn)
Company Price (Rs) (mn) 2016-18E 2016 2017E 2018E 2016 2017E 2018E 2016 2017E 2018E 2016 2017E 2018E
HCL Technologies 800 1,413 7.0 0.7 11.7 2.6 73,437 82,115 84,369 87,844 101,224 106,161 409,130 468,882 514,295
Hexaw are Technologies 225 304 8.7 19.4 2.0 15.9 3,932 4,019 4,657 5,355 5,671 6,819 31,235 35,114 40,493
Infosy s 1,175 2,286 8.3 9.4 4.8 12.0 3,932 141,318 158,212 170,780 186,602 209,738 624,410 695,030 773,026
Mindtree 460 168 (1.8) 12.5 (24.7) 28.1 6,032 4,541 5,816 8,299 7,333 8,878 46,896 53,227 59,533
Mphasis 460 210 7.5 6.8 11.9 3.2 7,242 8,103 8,364 8,970 9,689 10,338 60,879 61,806 66,446
TCS 2,325 1,970 7.6 22.5 7.8 7.4 242,148 260,974 280,369 306,780 330,977 360,753 1,086,462 1,192,187 1,310,545
Tech Mahindra 520 872 5.6 19.0 (5.3) 17.9 31,181 29,516 34,793 43,337 45,690 54,972 264,942 292,980 326,337
Wipro 485 2,467 3.4 2.8 (4.6) 12.1 88,924 83,425 92,015 112,955 116,332 127,395 516,307 560,152 603,752
Technology 9.5 8.9 8.9 569,808 614,012 668,596 723,376 803,518 885,054 2,942,491 3,359,377 3,694,426
KIE universe (5.4) 21.5 21.2
Notes:
(a) HCL Technologies adjusted for shift to March fiscal y ear-end. F Y2016 financials and ratios are based on TTM March 2016.
(b) Hexaw are Technologies is December y ear-ending.

Kotak Institutional Equities: Valuation summary of KIE Universe stocks
India Daily Summary - January 2, 2017

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 30-Dec-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)
KOTAK INSTITUTIONAL EQUITIES RESEARCH
Automobiles
Amara Raja Batteries SELL 870 765 (12.1) 148,658 2,188 171 30.8 35.7 40.7 7.6 15.8 13.9 28.2 24.4 21.4 16.2 14.2 12.7 5.9 5.0 4.3 0.7 0.8 0.9 22.9 22.3 21.5 3.9
Apollo Tyres BUY 185 250 35.2 94,119 1,385 509 20.6 21.9 27.6 2.1 6.3 26.1 9.0 8.5 6.7 5.8 5.4 4.2 1.4 1.2 1.0 1.0 1.1 1.4 16.0 15.1 16.5 9.2
Ashok Leyland SELL 80 70 (12.6) 227,955 3,355 2,846 3.7 4.5 5.5 4.6 23.1 21.3 21.9 17.8 14.7 11.6 9.9 8.4 3.7 3.3 2.9 1.4 1.7 2.0 17.8 19.4 20.7 13.9
Bajaj Auto ADD 2,632 2,850 8.3 761,672 11,209 289 138.4 158.7 182.1 9.7 14.7 14.7 19.0 16.6 14.5 13.7 11.5 9.5 5.3 4.5 3.9 2.1 2.4 2.8 30.0 29.4 28.8 11.0
Balkrishna Industries ADD 1,103 1,250 13.4 106,566 1,568 97 71.7 85.5 99.2 20.3 19.2 16.1 15.4 12.9 11.1 9.8 8.0 6.5 3.1 2.6 2.1 0.5 0.6 0.7 22.4 21.8 20.9 2.0
Bharat Forge SELL 907 810 (10.7) 211,040 3,106 237 25.6 34.3 43.2 (6.5) 34.3 25.6 35.5 26.4 21.0 17.5 13.9 11.4 5.3 4.6 4.0 0.6 0.8 1.1 16.0 18.8 20.5 12.9
Eicher Motors SELL 21,803 17,300 (20.7) 593,121 8,728 27 599.3 739.6 877.1 27.4 23.4 18.6 36.4 29.5 24.9 27.1 22.1 17.9 16.7 11.3 8.1 0.1 0.1 0.1 46.5 45.7 38.0 21.0
Exide Industries SELL 180 165 (8.4) 153,085 2,253 850 7.9 8.6 9.3 8.3 8.4 8.5 22.7 21.0 19.3 13.8 12.8 11.5 3.2 2.9 2.7 1.4 1.7 1.7 14.5 14.4 14.4 6.4
Fag Bearings BUY 3,862 5,000 29.5 64,168 944 17 120.4 161.3 196.3 1.3 34.0 21.7 32.1 23.9 19.7 18.3 14.2 11.4 4.4 3.8 3.4 0.3 0.8 1.5 14.5 17.1 18.4 0.4
Hero Motocorp REDUCE 3,044 2,900 (4.7) 607,791 8,944 200 174.0 187.4 204.8 11.0 7.6 9.3 17.5 16.2 14.9 11.6 10.6 9.5 6.5 5.6 4.9 2.9 3.1 3.4 40.2 37.1 35.2 19.8
Mahindra & Mahindra ADD 1,185 1,375 16.1 735,808 10,828 569 65.8 74.2 83.2 13.5 12.7 12.2 18.0 16.0 14.2 12.1 10.7 9.6 2.7 2.4 2.2 1.4 1.6 1.8 15.8 15.9 16.0 19.4
Maruti Suzuki BUY 5,320 5,900 10.9 1,606,930 23,647 302 231.2 292.3 337.8 52.8 26.4 15.6 23.0 18.2 15.7 14.2 10.5 8.7 5.0 4.2 3.6 1.1 1.4 1.6 23.7 25.2 24.5 59.6
Minda Corp. REDUCE 89 105 18.4 18,566 273 209 5.5 6.6 8.4 19.0 19.1 28.1 16.1 13.5 10.6 8.4 7.2 6.0 2.8 2.4 2.0 0.6 0.6 0.7 18.8 19.1 20.4 0.3
Motherson Sumi Systems SELL 326 280 (14.2) 458,139 6,742 1,404 11.7 14.6 17.3 27.9 25.7 18.2 28.0 22.3 18.9 11.3 9.3 7.8 5.8 5.0 4.2 1.1 1.3 1.6 27.0 24.1 24.3 11.1
SKF REDUCE 1,262 1,400 10.9 66,570 980 53 48.0 55.6 64.5 (0.5) 15.9 16.0 26.3 22.7 19.6 17.0 14.5 12.2 3.8 3.5 3.1 1.1 1.3 1.5 15.3 16.1 16.8 0.5
Suprajit Engineering REDUCE 191 190 (0.5) 25,073 369 131 7.6 9.1 10.8 39.5 18.9 19.0 25.0 21.0 17.7 14.0 12.1 10.3 4.8 4.0 3.4 0.7 0.9 1.1 20.6 20.8 21.1 0.1
Tata Motors BUY 472 600 27.1 1,514,845 22,292 3,396 36.5 50.6 59.4 (5.7) 38.5 17.4 12.9 9.3 8.0 5.0 3.9 3.4 1.7 1.5 1.2 - - - 14.3 16.9 16.7 57.5
Timken ADD 597 630 5.5 40,610 598 68 16.2 21.2 26.4 17.4 30.5 24.7 36.8 28.2 22.6 21.3 16.5 13.4 6.6 5.4 4.7 0.3 0.4 1.3 19.3 21.1 22.4 0.4
TVS Motor SELL 361 245 (32.0) 171,269 2,520 475 10.9 14.2 17.3 41.6 30.6 22.2 33.2 25.4 20.8 18.9 15.0 12.5 8.8 7.1 5.7 0.8 1.0 1.2 29.3 31.0 30.6 10.5
WABCO India BUY 5,208 6,300 21.0 98,775 1,454 19 133.8 157.2 191.1 24.0 17.5 21.6 38.9 33.1 27.3 24.7 20.6 16.6 7.7 6.4 5.3 0.2 0.2 0.3 21.7 21.0 21.1 0.7
Automobiles Neutral 7,774,232 114,403 11.4 25.0 16.3 19.3 15.5 13.3 9.7 7.8 6.6 3.5 2.9 2.5 1.0 1.2 1.4 18.0 19.1 18.9 261.0
Banks
Axis Bank ADD 450 500 11.1 1,075,958 15,833 2,383 14.4 29.9 42.6 (58.1) 106.6 42.6 31.1 15.1 10.6 2.2 1.9 1.6 0.5 1.0 1.5 6.3 12.1 15.4 66.0
Bank of Baroda REDUCE 153 160 4.3 353,458 5,201 2,310 6.9 19.1 24.5 129.7 176.2 28.2 22.1 8.0 6.3 1.5 1.2 1.0 0.9 2.5 3.2 4.4 11.3 13.2 23.5
Bank of India ADD 107 140 30.5 113,116 1,665 817 (2.2) 28.5 40.1 97.1 1,406.2 40.7 (49.1) 3.8 2.7 1.0 0.7 0.5 (0.4) 5.3 7.5 (0.8) 10.1 12.9 7.7
Canara Bank REDUCE 263 275 4.6 142,752 2,101 543 17.5 57.8 57.2 133.8 229.7 (0.9) 15.0 4.5 4.6 1.2 1.1 0.7 3.0 9.7 9.1 16.8
City Union Bank REDUCE 129 145 12.3 77,256 1,137 598 8.3 9.9 11.0 11.3 20.0 10.7 15.6 13.0 11.7 2.4 2.1 1.8 1.0 1.2 1.4 15.2 16.1 15.7 2.2
DCB Bank ADD 108 140 29.7 30,770 453 284 6.7 8.0 10.8 (2.0) 18.6 36.0 16.1 13.6 10.0 1.7 1.5 1.3 10.4 11.1 13.3 2.8
Equitas Holdings REDUCE 145 180 23.8 48,780 718 270 5.3 7.1 8.8 (13.9) 33.8 22.8 27.3 20.4 16.6 2.3 2.1 1.9 10.0 10.1 11.2 2.8
Federal Bank BUY 67 95 42.1 115,024 1,693 1,719 5.1 6.7 7.6 82.8 32.2 13.7 13.2 10.0 8.8 1.4 1.3 1.2 1.9 2.5 2.9 10.4 12.6 13.1 10.6
HDFC Bank ADD 1,206 1,400 16.1 3,079,426 45,316 2,528 58.7 69.6 82.3 20.7 18.5 18.3 20.5 17.3 14.7 3.7 3.2 2.7 1.0 1.1 1.3 18.9 19.3 19.7 25.4
ICICI Bank BUY 255 340 33.2 1,485,974 21,867 5,849 16.4 21.8 26.4 (1.7) 33.6 20.8 15.6 11.7 9.7 1.9 1.7 1.5 1.9 2.6 3.1 10.3 12.8 14.1 73.4
IDFC Bank ADD 60 80 33.2 203,923 3,001 - 3.4 4.2 5.6 182.4 23.1 34.3 17.7 14.4 10.7 1.4 1.3 1.2 1.1 1.4 1.9 8.2 9.4 11.6 15.8
IndusInd Bank ADD 1,108 1,350 21.9 661,871 9,740 595 49.3 56.8 65.6 28.4 15.2 15.4 22.5 19.5 16.9 3.4 3.0 2.6 0.6 0.7 0.8 16.0 15.9 16.1 20.9
J&K Bank BUY 59 80 34.8 28,772 423 485 (15.3) 12.6 15.7 (278.2) 182.2 24.8 (3.9) 4.7 3.8 0.8 0.6 0.5 (5.3) 4.3 5.4 (12.1) 10.0 11.5 2.0
Karur Vysya Bank BUY 82 120 46.8 49,403 727 609 9.6 10.4 14.3 2.8 8.7 37.4 8.5 7.9 5.7 1.1 1.0 0.9 14.6 15.9 21.9 12.2 12.2 15.2 1.3
Oriental Bank of Commerce ADD 106 120 13.2 36,694 540 321 13.2 28.1 47.4 172.8 112.3 68.4 8.0 3.8 2.2 0.7 0.6 0.4 2.5 5.3 8.9 2.8 5.8 9.2 6.9
Punjab National Bank REDUCE 115 135 16.9 245,674 3,615 1,964 8.1 23.3 26.2 139.9 188.8 12.3 14.3 5.0 4.4 1.6 1.0 0.8 1.4 4.0 4.5 4.6 12.0 12.2 25.3
Ujjivan Financial Services REDUCE 322 440 36.5 38,115 561 101 26.2 16.3 20.6 49.5 (37.6) 25.9 12.3 19.7 15.7 2.1 1.9 1.7 0.6 0.4 0.6 20.4 10.0 11.5 6.3
State Bank of India BUY 250 320 27.9 1,942,247 28,581 7,763 16.2 30.4 38.9 26.3 87.5 28.2 15.5 8.2 6.4 1.4 1.2 1.0 1.1 1.2 1.3 7.6 12.0 13.7 69.6
Union Bank ADD 123 145 17.8 84,624 1,245 687 15.1 36.4 47.0 (23.3) 141.5 29.0 8.2 3.4 2.6 0.9 0.6 0.5 1.2 2.9 3.8 5.0 11.1 12.8 11.2
YES Bank REDUCE 1,156 1,275 10.3 489,100 7,197 421 69.6 77.5 93.1 15.3 11.4 20.1 16.6 14.9 12.4 3.1 2.7 2.3 1.0 1.1 1.3 19.6 18.7 19.2 49.3
Banks Attractive 10,302,937 151,615 76.2 67.3 24.4 18.8 11.2 9.0 1.5 1.4 1.2 1.0 1.5 1.8 7.9 12.0 13.4 439.8
NBFCs
Bajaj Finserv REDUCE 2,895 2,950 1.9 460,662 6,779 159 142.1 164.7 192.4 16.1 15.9 16.8 20.4 17.6 15.0 3.2 2.8 2.4 0.5 0.5 0.5 16.3 16.9 17.1 13.2
Cholamandalam ADD 947 1,250 32.1 147,921 2,177 156 44.7 55.1 67.3 23.4 23.4 22.1 21.2 17.2 14.1 3.7 3.2 2.7 0.6 0.7 0.9 17.6 18.6 19.3 4.5
HDFC ADD 1,263 1,550 22.8 2,001,094 29,447 1,580 51.0 55.6 64.8 7.8 9.0 16.5 24.8 22.7 19.5 4.9 4.4 3.6 1.4 1.6 1.8 21.4 20.4 20.4 49.6
IDFC BUY 54 80 48.8 85,782 1,262 1,594 5.4 6.5 8.5 192.7 18.7 31.0 9.9 8.3 6.4 0.7 0.7 0.6 0.6 0.6 0.8 12.6 14.0 16.9 5.2
IIFL Holdings ADD 262 330 26.0 83,156 1,224 317 21.6 23.5 27.8 34.1 8.7 18.2 12.1 11.1 9.4 1.9 1.7 1.4 1.1 1.2 1.4 21.2 19.0 19.6 1.0
L&T Finance Holdings BUY 88 125 42.7 153,733 2,262 1,754 2.9 7.5 8.4 (40.0) 157.6 11.9 30.0 11.6 10.4 2.0 1.8 1.6 0.9 2.2 2.5 7.0 16.3 16.3 10.3
LIC Housing Finance BUY 560 670 19.7 282,460 4,157 505 42.3 51.7 62.1 16.5 22.3 20.0 13.2 10.8 9.0 2.4 2.0 1.6 1.1 1.4 1.7 19.4 22.2 22.2 20.5
Mahindra & Mahindra Financial REDUCE 270 315 16.6 153,709 2,262 565 12.0 15.2 19.7 0.7 26.5 29.9 22.5 17.8 13.7 2.5 2.2 2.0 1.2 1.5 1.9 10.7 12.5 14.8 11.7
Max Financial Services ADD 549 595 8 146,664 2,158 267 7.0 7.1 7.2 62.8 1.5 1.5 78.1 77.0 75.8 0.5 0.5 0.5 10.9 10.5 10.0 2.7
India Daily Summary - Janua
Muthoot Finance ADD 283 375 32.6 112,812 1,660 399 26.8 27.9 30.1 32.2 4.0 7.8 10.5 10.1 9.4 1.8 1.6 1.4 2.8 3.0 3.2 17.9 16.7 16.2 2.7
PFC REDUCE 122 120 (1.6) 321,958 4,738 2,640 23.9 21.5 25.5 3.3 (10.3) 18.7 5.1 5.7 4.8 0.8 1.0 0.9 4.0 3.5 4.2 15.5 12.5 13.4 6.9
Rural Electrification Corp. ADD 125 145 16.1 246,569 3,628 1,975 29.0 19.8 21.8 1.8 (31.9) 10.3 4.3 6.3 5.7 0.9 1.0 0.8 5.0 3.4 3.7 19.2 12.0 12.1 10.9
Shriram City Union Finance REDUCE 1,814 2,275 25.4 119,631 1,760 66 99.7 132.5 167.2 24.5 32.8 26.2 18.2 13.7 10.9 2.4 2.2 1.9 0.6 0.8 1.0 13.5 15.8 17.2 1.6
Shriram Transport ADD 853 1,250 46.5 193,633 2,849 223 69.8 83.8 99.6 32.2 20.0 18.8 12.2 10.2 8.6 1.8 1.6 1.4 1.1 1.4 1.6 14.4 15.3 15.9 13.1
NBFCs Neutral 4,590,870 67,558 16.6 4.1 18.1 13.8 13.3 11.3 2.3 2.1 1.8 1.5 1.6 1.8 16.6 15.5 15.9 439.8
Source: Company, Bloomberg, Kotak Institutional Equities estimates

34
Target O/S
35
Cement
ACC SELL 1,331 1,275 (4.2) 249,954 3,678 188 31.7 49.5 73.2 (20.0) 56.2 47.9 42.0 26.9 18.2 19.5 13.7 9.8 2.9 2.7 2.5 1.3 1.3 1.3 7.0 10.4 14.2 9.6
Ambuja Cements REDUCE 206 210 1.8 409,639 6,028 1,552 5.5 7.9 11.5 (0.4) 41.9 45.7 37.2 26.2 18.0 13.8 9.5 6.7 2.9 2.8 2.6 1.7 1.7 1.7 8.8 10.9 14.9 11.1
Dalmia Bharat ADD 1,351 1,800 33.2 120,134 1,768 89 27.6 86.7 121.7 28.6 214.0 40.2 48.9 15.6 11.1 10.4 7.4 5.9 2.9 2.5 2.0 0.1 0.1 0.1 6.2 17.3 20.2 1.9
Grasim Industries ADD 863 990 14.7 402,729 5,926 467 72.9 87.2 98.9 32.8 19.6 13.4 11.8 9.9 8.7 5.9 4.4 3.4 1.4 1.2 1.1 0.5 0.5 0.5 12.4 13.2 13.2 10.2
India Cements SELL 117 95 (18.5) 35,817 527 307 4.7 7.5 9.3 3.0 57.7 25.1 NM 15.6 12.5 8.5 7.1 6.3 1.0 0.9 0.9 1.8 1.8 1.8 3.9 6.0 7.2 8.5
J K Cement ADD 720 880 22.2 50,325 741 70 23.4 66.5 87.5 174.4 183.7 31.7 30.7 10.8 8.2 11.8 7.3 5.9 2.9 2.3 1.8 0.6 0.6 0.6 9.7 23.6 24.7 0.3
JK Lakshmi Cement ADD 351 440 25.5 41,249 607 118 6.6 26.9 40.6 234.0 307.2 51.0 53.1 13.1 8.6 14.8 7.4 5.5 2.9 2.4 1.9 0.6 0.6 0.6 5.7 20.5 25.0 0.9
Orient Cement ADD 123 160 30.3 25,158 370 205 0.7 12.1 16.3 (77.9) 1,691.1 35.6 182.5 10.2 7.5 16.7 7.1 5.7 2.5 2.1 1.7 1.4 1.4 1.4 1.4 22.7 25.1 0.9
Shree Cement SELL 14,733 12,750 (13.5) 513,271 7,553 35 438.6 569.6 735.7 280.2 29.9 29.2 33.6 25.9 20.0 17.4 13.4 10.6 6.7 5.4 4.3 0.2 0.2 0.2 22.2 23.2 23.9 4.1
UltraTech Cement SELL 3,250 2,750 (15.4) 892,082 13,128 274 97.0 132.8 159.4 22.4 36.9 20.1 33.5 24.5 20.4 17.8 13.6 11.4 3.9 3.4 2.9 0.3 0.3 0.3 12.2 14.7 15.4 22.8
Cement Cautious 2,740,358 40,326 37.5 43.1 26.6 27.6 19.3 15.2 12.4 9.1 7.2 2.9 2.6 2.2 0.6 0.6 0.6 10.5 13.4 14.7 70.2
Consumer products
Asian Paints REDUCE 891 920 3.2 854,693 12,577 959 19.5 23.4 27.6 4.3 20.0 17.8 45.6 38.0 32.3 28.8 23.9 20.1 13.3 11.5 10.0 1.0 1.2 1.5 31.1 32.4 33.1 22.7
Bajaj Corp. BUY 371 460 23.8 54,789 806 148 16.5 18.9 21.1 4.0 14.4 11.7 22.5 19.7 17.6 19.0 15.8 13.4 11.2 11.0 10.6 3.4 4.0 4.4 50.3 56.4 61.1 0.4
Britannia Industries ADD 2,886 3,300 14.3 346,358 5,097 120 71.8 91.1 110.6 3.3 26.8 21.4 40.2 31.7 26.1 26.9 21.0 17.2 15.2 11.8 9.2 0.9 1.0 1.2 42.7 42.0 39.7 7.6
Coffee Day Enterprises ADD 198 250 26.1 40,840 601 206 2.0 6.2 9.1 142.1 218.7 46.2 101.3 31.8 21.7 12.1 10.3 9.2 1.9 1.8 1.6 1.9 5.7 7.8 0.5
Colgate-Palmolive (India) ADD 905 1,040 15.0 246,038 3,621 272 22.2 26.8 32.6 4.6 20.9 21.5 40.8 33.7 27.8 24.1 20.1 16.7 19.5 15.6 12.5 1.3 1.4 1.7 52.9 51.4 49.8 3.9
Dabur India REDUCE 278 270 (2.9) 489,967 7,210 1,759 7.0 8.1 9.2 0.3 15.3 13.5 39.6 34.3 30.2 32.7 28.0 24.3 10.2 8.8 7.7 1.0 1.1 1.3 27.7 27.6 27.2 6.8
GlaxoSmithKline Consumer ADD 5,003 5,700 13.9 210,419 3,096 42 146.3 169.0 192.7 (5.4) 15.5 14.0 34.2 29.6 26.0 23.3 19.6 16.6 7.9 7.3 6.7 1.6 1.9 2.2 24.1 25.6 26.9 3.2
Godrej Consumer Products REDUCE 1,510 1,330 (11.9) 514,290 7,568 341 38.4 44.3 50.9 10.8 15.2 14.9 39.3 34.1 29.7 28.5 24.1 20.6 8.8 7.3 6.1 0.4 0.4 0.4 24.0 23.5 22.4 4.7
Hindustan Unilever REDUCE 826 870 5.3 1,788,448 26,318 2,164 20.0 22.7 25.6 3.6 13.9 12.6 41.4 36.4 32.3 29.0 24.9 21.7 30.1 31.4 33.1 2.2 2.4 2.7 70.7 84.6 99.9 16.0
ITC ADD 242 260 7.6 2,929,127 43,104 12,104 8.0 9.3 10.5 4.0 16.2 12.6 30.1 25.9 23.0 19.8 16.9 14.8 8.4 7.9 7.6 2.2 2.6 3.1 26.3 29.8 32.9 39.5
Jubilant Foodworks REDUCE 853 820 (3.9) 56,283 828 66 14.8 20.9 30.4 (6.7) 41.1 45.3 57.5 40.8 28.0 19.4 15.0 11.1 7.1 6.4 5.5 0.5 0.7 1.0 12.8 16.5 21.2 9.2
Jyothy Laboratories NR 339 61,522 905 181 9.3 10.6 10.9 27.6 14.1 3.6 36.6 32.1 31.0 25.7 21.7 19.0 7.8 7.2 6.8 1.5 1.8 2.1 25.9 23.3 22.7 0.5
Manpasand Beverages REDUCE 552 660 19.6 31,578 465 50 13.0 19.7 27.2 28.9 51.6 38.0 42.4 28.0 20.3 19.0 14.1 9.4 2.7 2.5 2.3 0.3 0.4 0.5 8.4 9.3 11.7 1.2
Marico REDUCE 260 255 (2.1) 336,051 4,945 1,290 6.0 7.2 8.2 7.9 19.1 14.4 43.3 36.3 31.7 29.6 25.0 21.7 13.9 12.0 10.4 1.2 1.3 1.5 34.5 35.6 35.1 5.3
Nestle India SELL 6,028 5,550 (7.9) 581,228 8,553 96 105.8 131.7 156.3 14.1 24.5 18.7 57.0 45.8 38.6 31.3 26.0 22.3 19.0 17.4 16.0 1.1 1.4 1.7 34.7 39.7 43.2 3.6
Page Industries SELL 13,651 11,500 (15.8) 152,259 2,241 11 232.0 290.1 362.3 11.2 25.1 24.9 58.8 47.0 37.7 37.1 30.1 24.2 23.9 18.6 14.1 0.7 0.8 0.8 45.3 44.5 42.5 2.8
PC Jeweller REDUCE 396 360 (9.1) 70,924 1,044 179 20.4 22.2 26.0 (5.0) 8.9 17.0 19.4 17.8 15.2 10.0 8.0 7.1 2.5 2.2 1.9 1.0 1.2 1.4 14.1 13.5 13.4 3.8
Pidilite Industries ADD 590 680 15.3 302,376 4,450 513 16.5 18.5 21.3 11.9 12.3 15.2 35.8 31.9 27.7 23.5 20.9 17.8 9.1 7.8 6.7 0.8 1.0 1.2 27.7 26.3 25.9 5.1
S H Kelkar and Company SELL 311 250 (19.5) 44,905 661 145 7.8 9.5 10.7 48.1 21.4 13.0 39.8 32.8 29.0 23.7 20.4 17.8 5.4 4.9 4.4 0.7 0.9 1.0 14.1 15.5 15.9 0.7
Tata Global Beverages ADD 122 140 14.8 76,998 1,133 631 6.5 7.5 8.6 31.4 14.6 14.9 18.7 16.3 14.2 9.4 8.5 7.5 1.3 1.2 1.2 1.8 2.0 2.5 7.1 7.7 8.5 5.4
Titan Company REDUCE 327 330 1.0 290,129 4,269 888 9.6 11.3 13.0 22.6 18.1 15.2 34.1 28.9 25.1 23.1 19.3 16.3 7.3 6.3 5.5 1.0 1.1 1.4 22.7 23.3 23.4 10.7
United Breweries SELL 780 680 (12.8) 206,117 3,033 264 11.6 15.3 19.0 3.0 31.9 23.7 67.0 50.8 41.1 27.7 23.3 20.1 8.7 7.7 6.6 0.2 0.3 0.4 13.8 16.1 17.3 4.7
United Spirits ADD 1,943 2,200 13.2 282,343 4,155 145 30.1 46.6 63.8 149.7 54.5 37.0 64.4 41.7 30.4 28.7 22.0 17.5 9.5 6.4 5.3 18.4 18.3 19.1 10.7
Consumer products Cautious 9,971,066 146,731 7.3 18.1 15.4 37.5 31.7 27.5 24.2 20.4 17.6 10.1 9.1 8.2 1.5 1.8 2.1 27.1 28.6 30.0 169.0

Energy
BPCL REDUCE 636 660 3.9 919,040 13,524 1,446 56.1 54.0 57.7 9.1 (3.7) 6.8 11.3 11.8 11.0 8.0 7.3 6.8 2.8 2.5 2.2 2.6 2.6 2.7 27.3 22.4 20.9 26.2
Cairn India ADD 242 260 7.4 454,238 6,684 1,875 12.8 15.8 20.0 11.7 24.0 26.1 18.9 15.3 12.1 9.0 8.4 6.2 0.9 0.9 0.8 1.4 1.9 2.9 4.8 5.8 7.0 10.4
Castrol India ADD 381 470 23.5 188,255 2,770 495 13.5 14.8 16.0 12.0 9.5 8.1 28.2 25.8 23.9 18.1 16.9 15.6 29.0 25.9 22.6 2.6 2.9 3.0 108.9 106.2 101.3 6.4
GAIL (India) ADD 439 490 11.6 557,115 8,198 1,268 29.5 36.0 40.1 64.4 22.0 11.3 14.9 12.2 11.0 9.2 7.7 6.8 1.7 1.5 1.4 2.3 2.5 2.7 11.7 13.1 13.4 14.4
GSPL ADD 140 175 25.2 78,752 1,159 563 8.8 11.2 12.1 11.9 27.1 8.1 15.8 12.5 11.5 8.1 6.3 5.6 1.8 1.6 1.5 1.4 2.0 2.6 12.0 13.9 13.7 1.0
HPCL REDUCE 441 460 4.2 448,309 6,597 1,017 48.1 42.9 43.7 26.7 (10.8) 1.8 9.2 10.3 10.1 7.1 7.6 7.7 2.1 1.9 1.7 3.3 2.9 3.0 24.6 19.1 17.3 28.9
Indraprastha Gas ADD 918 880 (4.2) 128,555 1,892 140 46.6 51.1 55.1 40.5 9.7 7.9 19.7 18.0 16.7 11.7 10.7 9.8 4.6 4.1 3.7 1.4 1.7 2.1 25.1 24.1 23.2 10.2
IOCL BUY 325 400 23.1 1,578,412 23,227 4,856 34.9 34.7 35.8 78.9 (0.5) 3.1 9.3 9.4 9.1 5.8 5.7 5.5 1.9 1.7 1.5 3.3 3.2 3.3 21.4 18.7 17.2 20.8
Mahanagar Gas SELL 788 730 (7.3) 77,822 1,145 99 39.8 42.0 44.4 27.2 5.6 5.7 19.8 18.8 17.8 11.8 11.0 10.3 4.5 4.1 3.7 2.2 2.5 2.8 24.2 22.9 22.0 -
ONGC SELL 191 180 (5.9) 2,455,640 36,136 12,833 16.0 17.6 19.5 18.5 10.2 10.8 12.0 10.8 9.8 5.2 4.7 4.2 1.2 1.2 1.1 2.9 3.1 3.4 10.7 11.1 11.5 25.7
Oil India SELL 452 425 (6.0) 271,774 3,999 601 39.1 40.7 43.8 0.9 4.2 7.4 11.6 11.1 10.3 6.8 6.5 6.1 1.2 1.1 1.0 3.5 3.6 3.9 10.3 10.1 10.3 3.2
Petronet LNG ADD 367 415 12.9 275,588 4,055 750 21.5 26.1 28.6 91.3 21.8 9.3 17.1 14.1 12.9 10.9 8.7 7.5 3.7 3.1 2.7 1.4 1.9 2.4 23.1 23.9 22.5 11.6
Reliance Industries ADD 1,082 1,150 6.2 3,188,200 46,916 3,240 91.1 98.7 102.4 7.7 8.3 3.7 11.9 11.0 10.6 10.7 8.5 7.7 1.3 1.2 1.1 1.1 1.3 1.4 11.7 11.5 10.9 52.5
Energy Attractive 10,621,698 156,305 23.2 6.2 6.7 11.5 10.8 10.1 7.5 6.7 6.1 1.5 1.3 1.2 2.3 2.4 2.7 12.7 12.4 12.1 211.2


Target O/S
Industrials
ABB SELL 1,044 950 (9.0) 221,179 3,255 212 17.8 25.2 34.2 26.0 41.6 35.5 58.5 41.3 30.5 28.9 22.3 17.3 6.8 6.1 5.4 0.5 0.7 1.0 12.1 15.6 18.8 0.7
BHEL SELL 121 115 (5.1) 296,649 4,365 2,448 2.6 5.5 8.6 169.0 114.8 54.8 47.1 21.9 14.2 19.1 7.8 3.8 0.9 0.9 0.8 0.5 1.2 1.8 1.9 4.0 6.0 12.5
Carborundum Universal REDUCE 248 250 0.9 46,706 687 188 9.7 13.0 16.2 27.0 33.9 24.7 25.6 19.1 15.3 14.2 10.8 8.8 3.6 3.2 2.8 1.2 1.6 2.0 14.7 17.7 19.5 0.7
Crompton Greaves REDUCE 59 60 1.3 37,166 547 627 2.2 3.6 5.0 (6.2) 62.7 41.5 27.1 16.7 11.8 9.1 7.6 4.5 0.8 0.8 0.8 0.7 1.1 1.7 3.0 5.0 6.9 5.9
Crompton Greaves Consumer ADD 146 165 13.1 91,442 1,346 627 4.0 4.7 5.8 4.6 17.6 23.6 36.4 31.0 25.1 21.9 19.0 15.6 21.4 13.8 9.5 0.7 1.0 1.4 76.6 54.2 45.1 2.6
Cummins India REDUCE 819 850 3.8 226,958 3,340 277 27.6 30.8 34.6 4.4 11.4 12.4 29.6 26.6 23.7 27.8 24.3 21.2 6.5 5.9 5.4 1.7 1.9 2.2 23.0 23.3 23.8 2.6
Havells India REDUCE 342 370 8.1 213,857 3,147 624 10.2 11.8 13.5 31.8 15.1 14.8 33.4 29.1 25.3 22.1 18.7 15.9 6.7 6.0 5.4 1.2 1.4 1.8 21.1 21.7 22.3 8.4
Kalpataru Power Transmission BUY 249 300 20.7 38,143 561 153 10.2 13.5 20.2 33.0 32.5 49.9 24.4 18.4 12.3 7.9 7.0 5.6 1.6 1.4 1.3 0.6 0.6 0.6 6.5 8.1 11.2 0.5
KEC International ADD 140 170 21.0 36,108 531 257 9.9 13.3 16.5 33.2 33.6 24.4 14.2 10.6 8.5 7.2 6.3 5.5 2.1 1.8 1.5 0.9 1.3 1.6 15.8 18.2 19.3 0.9
L&T REDUCE 1,349 1,400 3.8 1,258,274 18,516 930 55.6 71.0 84.7 9.2 27.8 19.2 24.3 19.0 15.9 19.9 16.9 14.8 3.1 2.9 2.6 1.8 2.1 2.5 13.4 15.8 17.3 35.7
Siemens SELL 1,113 900 (19.1) 396,184 5,830 356 23.6 29.3 36.2 38.8 24.2 23.7 47.1 38.0 30.7 28.4 23.0 18.4 5.7 5.4 5.0 1.1 1.3 1.6 12.4 14.6 17.0 2.8
Thermax REDUCE 744 810 8.9 88,605 1,304 119 26.8 29.6 37.2 15.8 10.5 26.0 27.8 25.2 20.0 19.8 16.8 14.0 3.4 3.1 2.8 0.8 0.8 1.0 12.9 12.9 14.7 0.3
Voltas ADD 328 325 (1.0) 108,613 1,598 331 11.2 12.7 15.6 7.0 14.0 22.9 29.4 25.8 21.0 24.5 20.2 15.7 4.1 3.8 3.5 1.0 1.4 1.9 14.7 15.3 17.2 7.5
Industrials Cautious 3,059,883 45,028 36.3 30.9 24.7 30.3 23.2 18.6 19.9 16.2 13.5 2.9 2.7 2.5 1.3 1.6 2.0 9.5 11.6 13.4 81.2
Infrastructure
Adani Port and SEZ ADD 268 325 21.1 555,947 8,181 2,085 16.9 14.0 14.7 23.2 (17.2) 4.7 15.8 19.1 18.3 14.3 12.8 12.2 3.4 3.0 2.6 0.6 0.8 1.0 23.8 16.6 15.3 19.7
Ashoka Buildcon BUY 158 210 32.8 29,588 435 188 6.1 3.4 3.3 96.3 (43.8) (4.8) 25.9 46.0 48.3 9.0 8.6 7.8 1.5 1.5 1.5 1.1 1.3 1.5 6.0 3.3 3.1 0.4
Container Corporation REDUCE 1,110 1,150 3.6 216,431 3,185 195 35.7 40.9 47.2 (11.7) 14.6 15.3 31.1 27.1 23.5 19.3 15.8 13.2 2.5 2.4 2.3 1.1 1.2 1.4 8.4 9.1 9.9 3.6
Gateway Distriparks BUY 245 280 14.3 26,633 392 109 9.6 11.7 15.7 (5.0) 22.3 33.8 25.5 20.9 15.6 10.6 8.0 6.0 2.0 1.9 1.8 1.2 1.4 1.9 8.2 9.5 11.8 0.6
Gujarat Pipavav Port BUY 132 155 17.9 63,572 936 483 4.8 5.5 7.4 40.8 13.9 34.3 27.2 23.8 17.8 14.9 12.3 10.0 3.3 3.3 3.3 3.0 3.5 4.7 12.2 13.8 18.5 1.3
IRB Infrastructure BUY 196 270 37.8 68,884 1,014 351 17.5 17.0 19.6 (3.3) (2.6) 15.1 11.2 11.5 10.0 6.8 6.9 6.1 1.2 1.0 1.0 1.9 1.9 2.0 11.4 9.5 10.5 6.2
Sadbhav Engineering ADD 275 305 10.9 47,165 694 172 10.5 12.7 14.7 33.9 20.8 16.6 26.3 21.7 18.6 16.3 13.0 11.4 2.9 2.6 2.3 11.6 12.6 13.1 0.4
Infrastructure Attractive 1,008,221 14,837 15.1 (8.7) 10.4 18.4 20.2 18.3 12.3 11.1 10.0 2.7 2.4 2.2 0.9 1.1 1.4 14.5 12.0 12.3 32.2
Internet
Info Edge ADD 896 990 10.5 108,508 1,597 121 16.2 21.1 27.1 38.5 30.3 28.2 55.3 42.4 33.1 39.0 29.2 21.8 5.7 5.2 4.7 0.5 0.6 0.8 10.7 12.8 14.9 1.0
Just Dial REDUCE 339 430 26.9 23,558 347 69 17.1 18.8 21.0 (16.3) 10.3 11.5 19.8 18.0 16.1 11.7 8.4 6.6 3.0 2.6 2.3 1 0.6 0.6 16.4 15.7 15.3 6.1
Internet Attractive 132,066 1,943 11.1 22.8 22.5 42.0 34.2 27.9 29.7 22.3 17.3 4.9 4.4 4.0 0.5 0.6 0.7 11.8 13.0 14.2 7.1
Media
DB Corp. REDUCE 358 380 6.1 65,857 969 184 21.1 25.2 29.8 30.5 19.6 18.1 17.0 14.2 12.0 9.2 7.7 6.4 4.4 4.0 3.6 3.1 3.9 4.7 27.2 29.3 31.1 0.6
DishTV BUY 85 105 24.0 90,228 1,328 1,066 1.9 3.3 4.7 (70.5) 74.6 41.0 NM 25.3 17.9 8.7 7.2 6.3 5.4 5.4 5.4 1.2 12.3 21.4 30.2 8.2
Jagran Prakashan REDUCE 179 180 0.3 58,648 863 327 11.3 12.9 15.0 8.8 14.3 16.1 15.9 13.9 12.0 9.2 7.8 6.7 3.4 3.1 2.8 3.3 3.9 3.9 22.4 23.6 24.9 0.6
Ortel Communications BUY 139 185 33.3 4,213 62 30 4.0 5.6 12.5 1.7 40.6 122.6 34.8 24.7 11.1 8.4 7.0 5.3 2.8 2.5 2.0 8.3 10.6 20.2 0.0
PVR ADD 1,149 1,250 8.8 53,691 790 47 22.3 32.9 42.1 (17.1) 47.8 28.0 51.6 34.9 27.3 16.6 13.1 11.0 5.6 4.9 4.2 0.2 0.3 0.4 11.4 14.9 16.6 2.1
Sun TV Network ADD 492 525 6.6 194,047 2,856 394 26.0 28.5 33.0 11.1 9.6 15.7 18.9 17.3 14.9 11.8 10.4 8.9 5.1 4.7 4.3 3.0 3.5 3.9 27.8 28.1 29.8 16.3
Zee Entertainment Enterprises BUY 453 520 14.8 435,131 6,403 960 11.2 15.4 18.8 19.5 37.5 21.7 40.4 29.4 24.1 22.1 17.7 14.7 4.7 4.3 4.0 0.6 0.8 0.9 13.8 15.3 17.2 18.7
Media Attractive 901,815 13,271 (3.4) 26.3 21.4 28.4 22.4 18.5 13.9 11.6 9.8 4.7 4.4 4.0 1.4 1.7 2.0 16.6 19.5 21.6 46.5
Metals & Mining
Coal India REDUCE 300 295 (1.7) 1,862,223 27,404 6,316 19.8 24.1 26.8 (12.7) 21.6 11.5 15.2 12.5 11.2 9.5 8.3 7.4 5.7 5.3 4.9 4.6 5.6 6.3 35.3 44.2 45.4 15.8
Hindalco Industries REDUCE 155 150 (3.3) 320,356 4,714 2,065 11.8 12.4 12.6 334.9 5.3 1.4 13.2 12.5 12.3 7.2 6.8 6.5 0.8 0.7 0.7 0.6 0.6 0.6 6.2 6.1 5.9 29.8
Hindustan Zinc ADD 255 265 3.8 1,079,147 15,880 4,225 19.4 21.6 23.2 0.3 11.0 7.7 13.1 11.8 11.0 8.6 6.7 5.5 2.5 2.1 1.9 1.7 1.7 1.7 20.4 19.5 18.2 9.6
Jindal Steel and Power SELL 69 60 (13.3) 63,311 932 915 (24.8) (10.1) (2.8) (36.4) 59.4 72.3 (2.8) (6.9) (24.7) 12.8 8.9 7.5 0.2 0.2 0.2 (8.5) (2.7) (0.7) 9.7
JSW Steel ADD 1,628 1,900 16.7 393,403 5,789 242 90.7 160.9 188.8 961.8 77.3 17.4 17.9 10.1 8.6 7.7 6.2 5.5 1.9 1.6 1.4 0.5 0.5 0.5 10.4 17.3 17.2 16.0
National Aluminium Co. SELL 65 42 (35.7) 126,220 1,857 2,577 3.1 3.4 3.4 15.5 9.0 0.1 20.9 19.2 19.2 9.6 7.9 7.6 1.2 1.2 1.1 1.5 1.5 1.5 5.2 6.2 5.9 2.5
NMDC SELL 123 95 (23.0) 390,424 5,745 3,965 9.1 8.6 8.5 14.4 (5.3) (1.7) 13.6 14.3 14.6 9.4 9.4 9.5 1.7 1.7 1.6 4.9 4.9 4.9 10.8 11.6 11.3 9.2
Tata Steel ADD 391 460 17.6 379,988 5,592 971 15.1 50.1 58.7 164.3 232.4 17.1 25.9 8 6.7 9.3 6.4 5.8 1.5 1.3 1.1 2.0 2.0 2.0 5.4 17.7 17.9 38.8
Vedanta ADD 216 235 8.7 640,819 9,430 2,965 20.7 26.0 31.3 163.8 25.4 20.4 10.4 8.3 6.9 6.4 5.3 4.3 1.3 1.1 1.0 1.3 1.3 1.3 14.4 14.5 15.4 44.4
Metals & Mining Cautious 5,255,890 77,344 41.7 33.8 13.8 14.8 11.1 9.7 8.3 6.8 6.0 1.8 1.6 1.5 2.8 3.2 3.4 12.1 14.8 15.3 175.8
Pharmaceutical
Apollo Hospitals REDUCE 1,180 1,325 12.3 164,154 2,416 139 23.9 33.6 43.0 10.4 40.4 28.1 49.3 35.1 27.4 22.7 18.5 15.7 4.4 4.1 3.7 0.5 0.7 0.9 9.3 12.1 14.2 3.4
India Daily Summary - Janua
Biocon SELL 950 585 (38.4) 189,970 2,796 200 28.7 27.5 32.1 43.8 (4.3) 16.9 33.1 34.6 29.6 19.6 16.1 13.1 4.0 3.6 3.3 1.1 1.0 1.2 12.6 11.0 11.8 13.3
Cipla BUY 569 650 14.3 457,540 6,733 805 19.5 27.4 36.0 16.2 40.7 31.5 29.2 20.8 15.8 17.2 12.9 9.9 3.5 3.1 2.7 0.7 1.0 1.3 12.4 15.7 12.1
Dr Lal Pathlabs SELL 1,071 1,000 (6.6) 88,655 1,305 83 20.6 24.1 28.5 29.2 17.0 18.3 52.1 44.5 37.6 32.9 27.4 22.9 13.8 11.0 8.9 0.3 0.3 0.4 29.8 27.6 26.2 1.6
Dr Reddy's Laboratories SELL 3,060 2,500 (18.3) 506,983 7,461 171 75.9 125.1 151.6 (45.5) 64.8 21.2 40.3 24.5 20.2 20.8 12.7 9.8 4.1 3.6 3.1 0.4 0.6 0.8 10.0 15.7 16.6 13.8
HCG BUY 248 270 9.1 21,056 310 85 2.1 2.2 4.3 1,331.8 4.1 97.6 118.6 113.9 57.6 24.0 19.1 14.7 3.8 3.7 3.5 3.3 3.3 6.2 0.5
Lupin REDUCE 1,487 1,600 7.6 671,222 9,877 450 65.5 72.5 87.4 29.8 10.7 20.5 22.7 20.5 17.0 14.9 12.8 10.3 4.9 4.1 3.4 0.7 0.7 0.9 24.0 21.9 21.9 22.4
Sun Pharmaceuticals REDUCE 630 715 13.5 1,511,503 22,243 2,406 31.9 32.8 36.9 44.5 2.6 12.7 19.7 19.2 17.1 11.5 10.5 8.8 3.9 3.3 2.8 1.0 1.0 1.2 22.0 18.8 18.0 49.7
Torrent Pharmaceuticals REDUCE 1,317 1,350 2.5 222,883 3,280 169 55.2 63.1 78.5 (46.1) 14.3 24.4 23.9 20.9 16.8 15.5 13.2 11.0 5.4 4.5 1.0 1.1 1.4 24.9 23.6 22.3 3.9
Pharmaceuticals Cautious 3,833,966 56,419 11.5 14.5 18.9 24.7 21.6 18.2 14.9 12.4 10.1 4.2 3.6 3.1 0.8 0.9 1.1 17.0 16.7 17.0 120.6

36
Target O/S
37
Real Estate
DLF BUY 111 160 43.6 198,735 2,925 1,784 3.7 1.6 1.9 18.7 (55.2) 14.2 30.5 68.0 59.6 13.5 14.2 13.9 0.7 0.7 0.7 1.8 1.8 1.8 2.2 1.0 1.1 19.0
Godrej Properties REDUCE 303 280 (7.7) 65,602 965 216 9.7 10.5 11.4 (9.3) 8.5 8.3 31.3 28.8 26.6 60.6 50.0 30.3 2.8 2.6 2.4 0.5 0.8 0.8 9.3 9.4 9.5 1.1
Oberoi Realty BUY 295 350 18.5 100,247 1,475 339 10.8 30.9 43.2 (13.7) 185.2 39.9 27.3 9.6 6.8 18.0 5.9 6.0 1.8 1.5 1.3 0.7 0.7 0.7 6.7 17.3 20.2 2.3
Prestige Estates Projects BUY 170 225 32.4 63,750 938 375 7.0 8.4 8.9 (24.8) 18.7 6.3 24.1 20.3 19.1 12.2 11.7 11.3 1.5 1.4 1.3 0.9 0.9 0.9 6.2 7.0 7.1 1.4
Sobha BUY 246 395 60.8 23,652 348 98 14.1 17.3 21.2 (9.9) 22.7 22.8 17.4 14.2 11.6 10.7 9.8 8.7 0.9 0.9 0.8 2.9 2.9 2.9 5.3 6.4 7.5 0.3
Sunteck Realty BUY 217 360 66.2 13,638 201 60 55.8 57.8 113.7 105.4 3.7 96.6 3.9 3.7 1.9 5.1 3.5 1.5 0.7 0.6 0.9 0.9 0.9 18.6 16.3 26.0 0.4
Real Estate Attractive 465,624 6,852 4.9 22.0 36.4 23.7 19.4 14.2 13.9 11.7 10.6 1.0 1.0 0.9 1.3 1.3 1.3 4.3 5.0 6.5 24.6
Technology
HCL Technologies REDUCE 828 800 (3.4) 1,168,367 17,193 1,413 58.1 59.6 63.0 48.0 2.6 5.8 14.3 13.9 13.1 10.2 9.5 8.7 3.6 3.2 2.9 3.0 3.5 4.0 27.2 24.5 23.5 19.5
Hexaware Technologies ADD 207 225 8.6 62,550 920 304 13.2 15.3 17.4 2.0 15.9 13.8 15.7 13.5 11.9 10.3 8.5 7.2 3.9 3.5 3.1 2.7 3.9 3.9 26.3 27.1 27.6 2.9
Infosys ADD 1,011 1,175 16.3 2,321,292 34,159 2,286 61.8 69.2 76.7 4.8 12.0 10.8 16.3 14.6 13.2 10.5 9.1 7.9 3.6 3.2 2.9 2.7 3.0 3.5 23.1 23.1 23.0 51.2
Mindtree REDUCE 522 460 (11.8) 87,633 1,290 168 27.0 34.6 41.3 (24.7) 28.1 19.4 19.3 15.1 12.6 11.0 8.7 7.1 3.2 2.8 2.5 1.4 1.8 2.1 17.8 20.1 20.9 4.8
Mphasis SELL 565 460 (18.6) 118,920 1,750 210 38.6 39.8 40.3 11.9 3.2 1.3 14.7 14.2 14.0 9.3 8.5 8.1 1.8 1.7 1.6 3.5 3.5 3.5 12.6 12.3 11.9 1.0
TCS REDUCE 2,366 2,325 (1.7) 4,661,146 68,592 1,970 132.4 142.3 156.4 7.8 7.4 9.9 17.9 16.6 15.1 12.8 11.4 10.2 5.4 4.6 4.0 2.2 2.4 2.6 32.6 29.8 28.2 40.8
Tech Mahindra BUY 489 520 6.4 475,760 7,001 872 33.9 39.9 45.4 (5.3) 17.9 13.8 14.4 12.3 10.8 9.8 7.8 6.5 2.7 2.3 1.9 2.5 1.3 1.5 19.4 19.9 19.3 21.2
Wipro REDUCE 474 485 2.2 1,153,328 16,972 2,467 34.4 38.5 41.3 (4.6) 12.1 7.2 13.8 12.3 11.5 8.3 7.2 6.0 2.3 2.0 1.8 1.1 1.1 1.1 17.2 17.3 16.4 10.2
Technology Neutral 10,048,996 147,878 7.8 8.9 9.5 16.4 15.0 13.7 11.0 9.7 8.6 3.8 3.4 3.0 2.3 2.5 2.8 23.5 22.5 21.7 151.6
Telecom
Bharti Airtel BUY 306 375 22.7 1,221,805 17,980 3,997 11.9 8.0 12.6 21.7 (33.0) 58.6 25.7 38.4 24.2 6.1 6.1 5.3 1.8 1.7 1.7 1.1 0.8 1.5 7.0 4.6 7.1 13.6
Bharti Infratel ADD 343 410 19.4 635,248 9,348 1,897 15.8 17.0 19.1 25.7 7.8 12.2 21.8 20.2 18.0 10.4 9.5 8.7 3.8 3.7 3.6 3.4 3.5 4.0 16.7 18.6 20.2 12.3
IDEA BUY 74 100 34.9 267,038 3,930 3,601 0.5 (4.8) (3.0) (94.4) (1,095.9) 37.2 153.7 (15.4) (24.6) 6.8 7.3 6.3 1.1 1.3 1.5 1.4 2.8 4.1 0.7 (7.9) (5.6) 9.5
Tata Communications ADD 628 670 6.8 178,866 2,632 285 23.1 22.7 28.6 1,306.8 (1.9) 26.5 27.2 27.7 21.9 8.4 7.5 6.8 730.5 26.6 12.0 1.0 1.0 1.0 (334.2) 185.4 75.5 10.1
Telecom Cautious 2,302,957 33,890 (9.7) (38.3) 58.4 27.1 43.9 27.7 6.8 6.8 6.0 2.1 2.1 2.1 1.7 1.7 2.4 7.8 4.8 7.6 45.4
Utilities
Adani Power SELL 30 26 (13.5) 104,399 1,536 3,334 2.3 4.7 4.6 58.1 104.0 (2.9) 13.0 6.4 6.6 7.0 5.8 5.4 1.2 1.0 0.9 9.9 17.6 14.6 5.0
CESC ADD 639 650 1.8 84,638 1,245 133 51.4 70.8 92.0 83.9 37.8 30.0 12.4 9.0 6.9 7.3 6.7 5.9 0.9 0.8 0.8 1.6 1.7 1.7 7.4 9.7 11.7 4.1
JSW Energy ADD 61 75 23.3 99,797 1,469 1,640 5.1 8.0 7.6 (32.3) 56.2 (5.7) 11.8 7.6 8.0 6.4 5.0 4.9 1.1 1.0 0.9 3.3 3.3 3.3 9.6 13.9 12.0 2.8
NHPC ADD 26 27 2.1 292,819 4,309 11,071 3.2 3.4 3.6 34.1 6.7 7.2 8.3 7.8 7.3 8.2 6.6 5.7 0.9 0.9 0.8 6.8 7.2 7.6 11.0 11.3 11.7 2.3
NTPC BUY 165 180 9.3 1,358,440 19,990 8,245 12.1 15.3 16.9 (2.3) 26.2 10.5 13.6 10.8 9.7 11.2 9.4 7.7 1.4 1.3 1.2 2.2 2.8 3.1 10.9 12.7 12.9 9.8
Power Grid BUY 184 210 14.4 959,997 14,127 5,232 14.5 15.6 17.9 26.9 7.8 14.5 12.7 11.8 10.3 9.4 8.2 7.2 2.0 1.8 1.6 1.6 1.7 2.0 16.6 15.8 16.0 12.7
Reliance Power SELL 41 36 (12.6) 115,571 1,701 2,805 4.8 5.3 5.9 (1.1) 11.1 10.1 8.6 7.7 7.0 8.7 7.5 7.2 0.5 0.5 0.5 6.2 6.5 6.7 1.9
Tata Power ADD 76 85 12.0 205,281 3,021 2,800 4.6 7.3 9.5 (16.1) 57.3 31.6 16.5 10.5 8.0 10.4 8.9 7.9 1.4 1.2 1.1 1.6 1.6 1.6 8.4 12.3 14.4 5.8
Utilities Attractive 3,220,943 47,398 9.2 22.6 11.7 12.4 10.1 9.0 9.4 8.0 7.0 1.3 1.2 1.1 2.3 2.6 2.8 10.8 12.1 12.4 44.3
Others
Astral Poly Technik SELL 395 360 (8.8) 47,296 696 120 10.2 13.0 16.1 21.0 28.2 23.2 38.9 30.3 24.6 20.0 16.0 13.0 5.6 4.8 4.1 0.1 0.2 0.2 15.0 17.1 17.9 0.3
Cera Sanitaryware REDUCE 2,020 2,050 1.5 26,276 387 13 73.7 93.2 112.2 14.9 26.4 20.4 27.4 21.7 18.0 15.9 12.6 10.6 5.2 4.3 3.6 0.4 0.5 0.5 20.8 21.8 21.7 0.8

Dhanuka Agritech BUY 735 820 11.6 36,744 541 50 25.6 30.5 37.5 22.4 19.3 22.9 28.7 24.1 19.6 20.4 16.8 13.4 6.3 5.2 4.3 1.0 1.2 1.4 24.1 23.8 24.2 0.3
Godrej Industries REDUCE 430 390 (9.3) 144,574 2,127 336 17.6 20.6 21.7 22.4 17.0 5.0 24.4 20.8 19.8 18.9 16.9 16.8 3.6 3.1 2.7 0.4 0.4 0.4 15.8 16.1 14.7 2.3
HSIL ADD 275 345 25.3 19,910 293 72 16.7 19.1 24.2 35.3 14.9 26.7 16.5 14.4 11.4 7.7 6.6 5.6 1.4 1.3 1.2 1.5 1.5 1.5 8.5 9.1 10.7 0.4
InterGlobe Aviation ADD 821 1,060 29.0 296,928 4,369 351 54.7 76.0 95.1 (3.6) 39.0 25.2 15.0 10.8 8.6 10.1 7.0 5.3 11.9 8.2 5.9 3.3 4.6 5.8 94.1 89.8 79.7 2.9
Kaveri Seed BUY 410 470 14.7 28,292 416 69 27.3 38.0 46.2 9.0 38.9 21.8 15.0 10.8 8.9 12.1 8.0 6.1 2.7 2.4 2.0 2.0 2.8 4.0 19.5 23.6 24.8 3.6
PI Industries ADD 831 940 13.1 114,348 1,683 136 31.4 36.1 42.2 35.8 14.9 17.0 26.5 23.0 19.7 20.7 17.1 14.2 7.4 5.8 4.7 0.5 0.6 0.7 31.7 28.3 26.3 1.4
Rallis India ADD 192 250 30.5 37,260 548 194 9.7 12.2 15.3 32.3 25.9 24.7 19.7 15.6 12.5 13.0 10.1 7.9 3.3 2.9 2.5 1.6 1.7 1.9 18.6 19.6 21.2 0.9
SRF BUY 1,546 1,910 23.5 88,798 1,307 57 86.0 102.3 117.6 16.8 19.0 15.0 18.0 15.1 13.1 10.6 9.1 8.0 2.9 2.5 2.1 0.7 0.8 0.9 17.2 17.6 17.4 6.2
Tata Chemicals ADD 503 550 9.3 128,142 1,886 255 32.7 53.0 50.2 6.6 62.2 (5.2) 15.4 9.5 10.0 8.6 6.8 5.8 1.9 1.5 1.3 2.0 2.0 2.0 12.7 17.3 13.8 7.0
TeamLease Services ADD 886 1,100 24.1 15,152 223 16 22.2 26.8 34.7 39.2 21.0 29.4 40.0 33.1 25.5 29.1 18.9 14.3 4.3 3.8 3.3 11.5 12.3 14.0 0.1
UPL ADD 647 760 17.5 327,997 4,827 429 33.9 43.5 51.5 6.7 28.1 18.6 19.1 14.9 12.6 10.9 9.2 7.8 3.5 2.8 2.3 0.7 0.8 0.9 21.2 21.0 20.4 14.2
Whirlpool SELL 889 980 10.2 112,795 1,660 127 26.3 31.8 38.4 36.2 21.2 20.6 33.9 27.9 23.2 20.0 16.7 13.9 7.5 6.2 5.2 0.7 0.9 25.0 24.4 24.4 1.4
Others 1,449,069 21,324 14.9 30.2 15.6 18.7 14.4 12.5 11.6 9.4 7.9 3.9 3.2 2.7 1.3 1.7 2.0 20.6 22.0 21.5 41.5
KIE universe 77,726,778 1,143,801 21.5 21.2 15.7 17.9 14.8 12.8 10.4 8.9 7.8 2.4 2.1 1.9 1.6 1.9 2.1 13.2 14.5 15.0
KIE universe (ex-energy) 67,105,080 987,496 21.1 25.2 17.8 19.7 15.7 13.4 11.4 9.6 8.3 2.6 2.4 2.1 1.5 1.8 2.0 13.3 15.0 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$)= 67.95

Disclosures
Kotak Institutional Equities Research coverage universe

Distribution of ratings/investment banking relationships
Percentage of companies covered by Kotak Institutional
70%
Equities, within the specified category.
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.
40% * The above categories are defined as follows: Buy = We

34.9%
expect this stock to deliver more than 15% returns over the
29.0% next 12 months; Add = We expect this stock to deliver 5-15%
30%
returns over the next 12 months; Reduce = We expect this stock
to deliver -5-+5% returns over the next 12 months; Sell = We
18.8% 17.2%
20% expect this stock to deliver less than -5% returns over the next
12 months. Our target prices are also on a 12-month horizon
basis. These ratings are used illustratively to comply with
10%
4.8% 4.3% applicable regulations. As of 30/09/2016 Kotak Institutional
0.5% 0.5% Equities Investment Research had investment ratings on 186
0% equity securities.
BUY ADD REDUCE SELL
Source: Kotak Institutional Equities As of September 30, 2016
Ratings and other definitions/identifiers

Definitions of ratings
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.
Our target prices are also on a 12-month horizon basis.
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.
CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.
NC = Not Covered. Kotak Securities does not cover this company.
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.
NM = Not Meaningful. The information is not meaningful and is therefore excluded.

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INDIA DAILY

January 2, 2017 India 30-Dec 1-day 1-mo 3-mo

Contents Global/Regional indices

Strategy FTSE 7,143 0.3 6.1 3.5

10yr govt bond, % 6.8 - 29 (25)

CAIR IN Equity 242.2 0.1 (1.5) 21.0

Story of earnings downgrades partially off-set by expanding multiples Worst performers

continued DIVI IN Equity 783.7 (0.7) (31.0) (39.3)

UT IN Equity 4.0 2.6 (15.8) (32.2)

Dec 2017 quarter - weak on revenue growth

Margins - Crosses impact offset Rupee depreciation. Expect moderate

0% return for the

Earnings: Low base should help (hopefully!) finally

Our FY2018 earnings growth of 20% is largely predicated on normalization of profits in

Flows: Multi-year lows for FPIs

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

However, we continue to be positive about strong growth in household financial savings

Exhibit 1: The Indian market hardly delivered any returns in CY2016

Source: Bloomberg, Kotak Institutional Equities

Exhibit 2: A roller-coaster ride in CY2016 for the Indian market

Source: Kotak Institutional Equities

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 3: A number of global factors will be at play in CY2017

Events Implications for India

Source: Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

Exhibit 4: Performance of sectoral indices over the past few months

Capital goods Realty

(20) (15) (10) (5) 0 5 10 15 20 25 30 (20) (10) 0 10 20 30 40

Source: Bloomberg, Kotak Institutional Equities

6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 5: Many large-caps. offer attractive reward-risk balance at current levels

Source: Bloomberg, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 7

Exhibit 6: Performance of early-CY2016 model portfolio on a buy-and-hold strategy

31-Dec-15 30-Dec-16 Diff 31-Dec-15 30-Dec-16 Diff

Performance from Dec 31, 2015 to Dec 30, 2016

Source: Bloomberg, Kotak Institutional Equities

8 KOTAK INSTITUTIONAL EQUITIES RESEARCH

KIE BSE-30 Difference

Source: Bloomberg, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 9

Source: Kotak Institutional Equities estimates

10 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Companies, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 11

Source: Kotak Institutional Equities estimates

Exhibit 12: We expect loan-loss provisions to decline in FY2018E-19E

2013 2014 2015 2016 2017E 2018E 2019E

Source: Companies, Kotak Institutional Equities estimates

12 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 13: FII equity inflows US$3 bn in CYTD16

Exhibit 14: DIIs invested US$5 bn in CYTD16

Source: BSE, SEBI, , Kotak Institutional Equities

Source: AMFI, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 13

DRT and Lok Adalat show improvement; weak on SARFAESI

SARFAESI (1) DRT Lok Adalat

Source: RBI, Kotak Institutional Equities

Gross NPLs SARFAESI DRT Lok Adalat Total

Source: RBI, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 15

16 KOTAK INSTITUTIONAL EQUITIES RESEARCH