Strategy - Motilal Oswal PDF

January 2017
India Strategy | Get on track please !
India Strategy
Happy
2017
Growth
Guru
?
? ?
Budget
ities
com obal
mod
Gl
n
s
tio
omic
on Re
n
iza
umpo
Tr
et
New Year, New Cards

m
Research Team (Gautam.Duggad@MotilalOswal.com)

Contents
India Strategy - New Year, New Cards........................................................................................................................... 3-41
3QFY17 Highlights & Ready Reckoner ....................................................................................................................... 42-54
Sectors & Companies ...............................................................................................................................................55-290
Automobiles ......................................... 56-72 ICICI Bank ................................................ 135 Oil & Gas ............................................ 209-224
Amara Raja Batt .......................................... 60 IDFC Bank ................................................. 136 BPCL .........................................................214
Ashok Leyland ............................................. 61 Indian Bank ............................................... 137 GAIL ..........................................................215
Bajaj Auto ................................................. 62 IndusInd Bank ........................................... 138 Gujarat State Petronet ..............................216
Bharat Forge ............................................... 63 Kotak Mahindra Bank................................. 139 HPCL .........................................................217
Bosch .......................................................... 64 Oriental Bank of Commerce ...................... 140 IOC ...........................................................218
Eicher Motors.............................................. 65 Punjab National Bank ................................ 141 Indraprastha Gas .......................................219
Escorts ........................................................ 66 RBL Bank ................................................... 142 MRPL ........................................................220
Exide Inds.................................................... 67 State Bank ................................................ 143 Oil India ....................................................221
Hero Motocorp............................................ 68 Union Bank ............................................... 144 ONGC ........................................................222
Mahindra & Mahindra ............................... 69 Yes Bank .................................................... 145 Petronet LNG ............................................223
Maruti Suzuki .............................................. 70 Reliance Inds. ............................................224
Tata Motors .............................................. 71 Financials – NBFC ............................... 146-158
TVS Motor ................................................... 72 Bajaj Finance ............................................ 148 Retail.................................................. 225-230
Bharat Financial ........................................ 149 Jubilant Foodworks ...................................228
Capital Goods......................................... 73-87 Dewan Housing ......................................... 150 Shopper's Stop ..........................................229
ABB .......................................................... 76 GRUH Finance............................................ 151 Titan Company ..........................................230
Bharat Electronics........................................ 77 HDFC ...................................................... 152
BHEL ......................................................... 78 Indiabulls Housing...................................... 153 Technology ......................................... 231-251
CG Consumer Elect. ..................................... 79 LIC Housing Fin ......................................... 154 Cyient .......................................................238
Crompton Greaves .................................... 80 M & M Financial ........................................ 155 HCL Technologies ......................................239
Cummins India .......................................... 81 Muthoot Finance ...................................... 156 Hexaware Tech. ........................................240
GE T&D India ............................................... 82 Repco Home Fin ........................................ 157 Infosys ......................................................241
Havells India................................................ 83 Shriram Transport Fin. ............................... 158 KPIT Tech. .................................................242
Larsen & Toubro ....................................... 84 L&T Infotech .............................................243
Siemens ...................................................... 85 Healthcare ......................................... 159-176 Mindtree ..................................................244
Thermax ................................................... 86 Alembic Pharma ........................................ 161 MphasiS ....................................................245
Voltas.......................................................... 87 Alkem Lab.................................................. 162 NIIT Tech. ..................................................246
Aurobindo Pharma..................................... 163 Persistent Systems ....................................247
Cement .................................................. 88-98 Biocon ...................................................... 164 TCS ...........................................................248
ACC .......................................................... 92 Cadila Healthcare ...................................... 165 Tech Mahindra ..........................................249
Ambuja Cements ......................................... 93 Cipla ......................................................... 166 Wipro ......................................................250
Grasim Industries ...................................... 94 Divis Labs .................................................. 167 Zensar Tech .............................................. 251
India Cements ............................................. 95 Dr Reddy’ s Labs ........................................ 168
Ramco Cements .......................................... 96 Glenmark Pharma ...................................... 169 Telecom ............................................. 252-260
Shree Cement.............................................. 97 Granules India ........................................... 170 Bharti Airtel ...............................................258
Ultratech Cement ........................................ 98 GSK Pharma............................................... 171 Bharti Infratel ............................................259
IPCA Labs................................................... 172 Idea Cellular...............................................260
Consumer ............................................ 99-120 Lupin ......................................................... 173
Asian Paints............................................... 102 Sanofi India................................................ 174 Utilities............................................... 261-270
Britannia ................................................... 103 Sun Pharma ............................................... 175 CESC ..........................................................266
Colgate...................................................... 104 Torrent Pharma ......................................... 176 Coal India...................................................267
Dabur ........................................................ 105 JSW Energy ................................................268
Emami....................................................... 106 Logistics ............................................. 177-181 NTPC .........................................................269
Godrej Consumer ...................................... 107 Allcargo Logistics ....................................... 179 Power Grid Corp. .......................................270
GSK Consumer........................................... 108 Concor....................................................... 180
Hind. Unilever ........................................... 109 Gateway Distriparks................................... 181 Others ................................................ 271-290
ITC ............................................................ 110 Arvind........................................................271
Jyothy Labs................................................ 111 Media ................................................ 182-194 Bata India ..................................................272
Marico ...................................................... 112 D B Corp .................................................... 186 Castrol India...............................................273
Nestle ....................................................... 113 Dish TV ...................................................... 187 Coromandel International ..........................274
P&G Hygiene ............................................. 114 Hathway Cable........................................... 188 Dynamatic Tech. ........................................275
Page Industries.......................................... 115 HT Media................................................... 189 Indo Count Inds..........................................276
Parag Milk Foods ....................................... 116 Jagran Prakashan ....................................... 190 Info Edge ...................................................277
Pidilite Inds................................................ 117 PVR ........................................................... 191 Inox Leisure ...............................................278
Radico Khaitan .......................................... 118 Siti Networks ............................................. 192 Interglobe Aviation ....................................279
United Breweries....................................... 119 Sun TV ....................................................... 193 Jain Irrigation.............................................280
United Spirits............................................. 120 Zee Entertainment..................................... 194 Just Dial .....................................................281
Kaveri Seed................................................282
Financials ............................................121-145 Metals................................................ 195-208 MCX ..........................................................283
Axis Bank................................................... 127 Hindalco ................................................... 201 Manpasand Beverages ...............................284
Bank of Baroda .......................................... 128 Hindustan Zinc........................................... 202 Monsanto India..........................................285
Bank of India ............................................. 129 JSW Steel................................................... 203 P I Industries..............................................286
Canara Bank ............................................ 130 Nalco......................................................... 204 SRF ............................................................287
DCB Bank .................................................. 131 NMDC ....................................................... 205 S H Kelkar ..................................................288
Equitas Holdings........................................ 132 SAIL ........................................................... 206 Tata Elxsi ...................................................289
Federal Bank ............................................. 133 Tata Steel ................................................. 207 TTK Prestige ...............................................290
HDFC Bank .............................................. 134 Vedanta..................................................... 208
Note: All stock prices and indices for companies as on 4 January 2017, unless otherwise stated
Investors are advised to refer through important disclosures made at the last page of the Research Report.
India Strategy | New Year, New Cards
India Strategy
BSE Sensex: 26,633 S&P CNX: 8,191
New Year, New Cards

Earnings growth returns, but quality of growth weak
Earnings growth optically high; driven by low base of Cyclicals

 The earnings performance for 3QFY17 would be significantly impacted by
demonetization. Given the unprecedented nature of the event, prediction of
earnings for 3QFY17 is challenging. That said, we expect 3QFY17 earnings
performance to benefit from the low base of several cyclical sectors like PSU
Banks and Metals. MOSL Universe PAT is likely to grow 30% YoY, the highest
since 1QFY15; also, 3QFY17 would be the second consecutive quarter of double-
digit PAT growth. Excluding PSU Banks and Metals, MOSL Universe PAT growth
is estimated at 8.1%. The entire YoY earnings growth of INR240b for MOSL
Universe in 3QFY17 would be led by PSU Banks, Metals and Oil & Gas.
 We expect the contribution of Cyclicals to increase further. Cyclicals would
account for the entire growth in 2HFY17 MOSL Universe earnings; Defensives
would post a 4% YoY decline.
 We have cut our Sensex EPS estimates by 1% to INR1,360 for FY17 and by 2% to
INR1,668 for FY18. We now expect 3% EPS growth for Sensex in FY17, followed
by 23% growth in FY18 on a low base of 2HFY17, particularly in demonetization-
hit sectors like Consumer, Autos, Cement and Private Banks.
Key sectoral trends/highlights

 Oil & Gas would report another strong quarter, led by OMCs. This quarter, it
accounts for ~27% of MOSL Universe earnings (v/s ~24% in 3QFY16).
 Metals and PSU Banks would benefit from favorable base; both sectors reported
losses in 3QFY16. PSU Banks profits are over 40% below their peak profits.
 Technology is expected to report another quarter of muted performance, with
0.3% YoY PAT growth. This sector continues to see weaker PAT growth.
 3QFY17 would be the first ever quarter of PAT decline for our Consumer
universe. Demonetization-led revenue moderation and consequent operating
deleverage is likely to impact earnings.
 Telecom, Media, Retail and Utilities would have a lackluster quarter, with YoY
earnings decline.
 In BFSI, Private Banks are expected to post 12% YoY PAT decline, led by Axis
Bank and ICICI Bank. NBFCs are likely to have a healthy quarter, with 16%
earnings growth despite demonetization (RBI dispensation should prevent any
disproportionate impact on P&L).
Three key trends to watch out for

1. Demonetization impacting revenues for key B2C sectors like Autos (-1.6% YoY),
Consumer (flat), NBFCs, and Cement (-1%).
2. Global commodity prices recovering, in turn driving recovery for Cyclicals like Oil
& Gas ex OMCs (revenue growth of 15.3% YoY; one of the highest in five years)
and Metals (+22.3% YoY; highest in four years).
Sources of exhibits in this report include RBI, CMIE, Bloomberg, IMF, Industry, Companies, and MOSL database
January 2017 3
3. No respite for Healthcare (11.7% YoY revenue growth in 3QFY17 v/s 18.4%
CAGR in 10 years) and Technology (8.6% YoY revenue growth in 3QFY17; one of
the weakest in 10 years).
Model portfolio changes

The 2 important events that are driving changes in our Model portfolio are Impact of
Demonetisation (both on earnings and valuations) and recovery in global cyclicals.
Our stance reflects our belief that earnings growth for Defensives will decelerate in
2HFY17. We have reduced our weights for Autos, Consumer, Technology and NBFCs.
We partake in the anticipated cyclical earnings recovery by upgrading our stance on
Private Banks, Capital Goods and Metals. Summary of the changes in our model
portfolio:
 We have increased weightage in Private Banks and added Axis Bank to the
model portfolio. Valuations for Axis at P/B of 1.7x FY18 does factor the near
term asset quality concerns; our earnings growth estimate for FY18 is fairly
strong at 78%. Ratnakar Bank is a new addition; we initiated coverage recently
with a Buy. In PSU Banks, we replace Union Bank with PNB as the subsidiary
valuations and CASA growth makes PNB very attractive. We are further
magnifying our Underweight stance on NBFC. In Housing finance, we replace LIC
Housing with Repco as the latter has seen significant correction in valuations
with a strong positioning to benefit from affordable housing boom.
 We have reduced our Overweight in Autos, and removed TVS from the model
portfolio. We have increased weightage in Tata Motors and also added Bharat
Forge in the model portfolio.
 Consumer will continue to see challenges on volumes and margins, and hence
sees a lower weight. Britannia and Jubilant are the two stocks, where valuations
have become reasonable now.
 Within Energy, we remain positive on OMCs. However, we replace HPCL with
IOC, as the former has an aggressive capex plans, which will lead to higher debt
to equity ratio. IOC is exiting its capex plans, which will driver higher cash flows
and can lead to strong dividend payouts.
 In Capital Goods, we have increased weights in L&T.
 We have also upgraded our stance on Metals from Underweight to Neutral, and
further magnified our Overweight position on Hindalco. We have also
introduced NMDC in our model portfolio.
 We continue with our Underweight stance on Technology and replace HCL Tech
with Tech Mahindra.
 In midcaps, we have introduced SH Kelkar, Endurance, Alkem Labs, Dewan
Housing, Dish TV and Muthoot Finance in our model portfolio.
January 2017 4
3QFY17 PREVIEW Earnings growth returns, but quality of growth weak

Cyclicals drive growth; demonetization, cost inflation hurt Defensives
3QFY17 earnings growth to be led by low base of Cyclicals
3QFY17 earnings performance would be supported by the low base of cyclical
sectors like PSU Banks and Metals. We expect MOSL Universe revenue to grow 7.2%
YoY – a 10-quarter high (revenue had declined 7% YoY in the base quarter). EBITDA
growth would be 19.7% YoY, the highest in 10 quarters. PAT is likely to grow 30.2%
YoY, the highest since 1QFY15; also, 3QFY17 would be the second consecutive
quarter of double-digit PAT growth. However, excluding PSU Banks and Metals, we
estimate 5.4% YoY sales growth, 10.8% YoY EBITDA growth, and 8.1% YoY PAT
growth for MOSL Universe. While EBITDA margin is likely to expand 240bp YoY to
22.7%, PAT margin would expand 200bp YoY to 10.9%. This would be driven by
400bp expansion in EBITDA margin and 250bp expansion in PAT margin of Global
Cyclicals. Defensives would report the first margin decline in seven quarters, a
reflection of demonetization and rising commodity costs in Consumer and Autos.
Three key trends coming to the fore

 Demonetization impacting revenues of key sectors like Autos (-1.6% YoY),
Consumer (flat), NBFCs, and Cement (-1%)
 Global commodity price recovery driving recovery for Cyclicals like Oil & Gas ex
OMCs (revenue growth of 15.3% YoY, one of the highest in five years) and
Metals (+22.3% YoY; highest in four years)
 No respite for Healthcare (11.7% YoY revenue growth in 3QFY17 v/s 10-year
CAGR of 18.4%) and Technology (8.6% YoY revenue growth in 3QFY17, one of
the weakest in 10 years)
Earnings growth momentum back, but quality of growth weak

3QFY17 earnings growth would be driven by Cyclicals – Cement, Capital Goods and
Oil & Gas are expected to post 24%, 59% and 42% growth, respectively. PSU Banks
and Metals, which reported losses of INR39b and INR10b in the base quarter, are
expected to post a PAT of INR52b and INR73b, respectively. PAT growth would be
50% YoY (-24% YoY in 3QFY16) for Domestic Cyclicals and 59% YoY (13% YoY in
3QFY16) for Global Cyclicals – multi-quarter high for both. However, Defensives
would report 3% YoY decline in PAT to the lowest in 20 quarters. MOSL Universe (ex
Metals, Oil and PSBs) PAT is likely to decline 1.4% YoY in 3QFY17, the first decline in
eight years.
Expect earnings to decline for consumer-facing sectors

 Demonetization would impact the Auto and Consumer sectors, which are likely
to witness sharp moderation in PAT growth. We expect Consumer sector PAT to
decline 1% YoY, the first decline in 11 years. For Autos, we expect just 3% YoY
earnings growth.
 PAT growth for the Technology sector would continue to moderate. We expect
YoY flat PAT – no growth for the first time in last 12 years.
 Private Banks (-12%), Media (-5%), Retail (-10%) and Utilities (-6%) are the other
sectors that would report YoY PAT decline.
January 2017 5
 NBFCs should post a healthy 16% YoY PAT growth – the impact of
demonetization on asset quality could come with a quarter’s lag.
 Defensives’ share in MOSL earnings would continue to decline to 35% (recent
high was 47% in 4QFY16); the share of Global Cyclicals would be 31% in 3QFY17,
up from 26% in 3QFY16 and 24% in 2QFY17.
 Nifty sales would grow 4% YoY, the highest in nine quarters. PAT is likely to grow
13% YoY, the highest in 10 quarters. EBITDA is likely to post robust 10% YoY
growth. Nifty aggregates would be influenced by Cyclicals – excluding PSU Banks
and Metals, Nifty sales would grow 4% YoY, EBITDA would grow 5% YoY, and
PAT would grow 1% YoY.
 Post demonetization, we have cut our 2HFY17E earnings for MOSL Universe by
3%, driven by cuts in Cement (22.5%), Autos (12%), Consumer (11%), NBFCs (6%)
and Capital Goods (~8%). Also, Telecom sectors’ 2HFY17E PAT has seen sharp
cut of ~75%, reflecting tectonic shift in competitive intensity.
Exhibit 1: Growth bounces back on low base

Sales EBITDA PAT PAT EBITDA* PAT*
% % % % % % Sh. Chg bp Chg bp
(NO OF COMPANIES) Dec-16 Dec-16 Dec-16 Delta
YoY QoQ YoY QoQ YoY QoQ % YoY YoY
High growth sectors 5,430 10 8 1,106 46 18 484 126 19 270 52 497 458
PSU Banks (8) 310 4 -2 254 27 -1 52 LP 6 91 5 1,449 2,973
Metals (9) 1,163 22 13 222 168 26 73 LP 73 82 8 1,038 725
Capital Goods (12) 478 6 3 35 42 -12 15 59 -35 6 2 183 105
Oil & Gas (12) 3,034 8 9 450 40 36 265 42 25 78 28 338 209
Others (19) 183 13 6 40 20 43 19 30 64 4 2 138 136
Cement (7) 167 -1 0 29 3 -14 15 24 -27 3 2 71 189
NBFC (11) 96 14 4 76 14 3 46 16 -2 6 5 12 97
Med/Low growth sectors 2,537 4 1 470 3 2 303 2 -1 7 32 -13 -15
Healthcare (17) 381 12 1 92 10 -1 57 8 -6 4 6 -47 -45
Auto (13) 1,264 -2 1 174 -2 7 89 3 6 2 9 0 29
Technology (15) 891 9 1 204 4 -1 157 0 -2 1 17 -96 -146
PAT de-growth sectors 1,631 3 1 603 0 3 255 -12 1 -36 27 -123 -272
Consumer (19) 405 0 -2 89 -5 -5 63 -1 -3 -1 7 -107 -21
Logistics (3) 31 4 1 5 1 13 3 -3 18 0 0 -31 -67
Media (9) 61 3 5 19 0 8 8 -5 15 0 1 -106 -117
Utilities (5) 476 4 5 154 3 23 73 -6 39 -5 8 -24 -161
Retail (3) 53 8 26 4 -1 18 3 -10 17 0 0 -73 -92
Private Banks (11) 243 10 0 208 1 1 97 -12 -2 -13 10 -783 -980
Telecom (3) 361 0 -3 125 -3 -9 8 -67 -64 -17 1 -115 -465
MOSL (176) 9,598 7.2 4.8 2,179 19.7 9.6 1,042 30.2 8.3 238 192
MOSL Ex Metals, Oil & PSU Banks (147) 5,091 4.0 1.3 1,253 3.2 2.5 653 -1.4 -0.9 -20 -70
Sensex (30) 4,686 4.7 3.5 1,243 8.2 5.8 614 5.5 3.0 86 9
Nifty (50) 6,176 4.3 3.3 1,508 9.8 5.6 728 13.3 1.2 123 94
*Margins
January 2017 6
MOSL Universe headline performance at multi-quarter high

Exhibit 1: Sales growth for MOSL Universe to come in at 10 Exhibit 2: …but sales growth of Defensives to moderate
quarter high… sharply
18.6 24.8
15.9 22.7
14.4 19.1
11.8 11.4
9.9 12.3 18.6
7.7 11.3 7.2 17.7 17.7
6.6 14.9
4.5 13.2
2.9 12.6 11.9 11.9
0.2 10.8 9.6 11.2
9.0 9.1 8.0 8.5
-0.9 5.54.8
-2.3
-6.7 -7.1
-8.4
-11.3
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16E
Mar-17E
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16E
Mar-17E
Source: MOSL Source: MOSL
Exhibit 3: 3QFY17 EBITDA margin (ex-OMCs, Financials) at Exhibit 4: PAT growth for MOSL Universe will be boosted by
20.6% (+170bp YoY) low base in cyclicals…
22.4
85.3
21.9
MOSL Universe EBITDA

21.8
21.7
71.3
21.6
20.2
Margin LPA: 20%

20.2
21.8
20.4
18.9
20.6
35.0
20.0
19.9
21.3
20.2
19.0
20.9
31.4
18.8
30.2
19.1
20.1
21.3
19.3
11.7
18.8
19.4
19.0
5.3 5.2
18.5
1.0 0.1 4.1 1.4

18.5
18.9
18.8
18.6
18.4
18.5
19.2
18.6
18.4
-3.0
18.0
-2.3 -5.1 -0.4

-8.2 -13.3
-18.6
-33.9
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3QE
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16E
Mar-17E
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Exhibit 5: …first PAT decline in multiple quarters for Exhibit 6: 3QFY17 PAT margin (ex-OMCs, Financials) would
Defensives… expand 80 bps to 10.4% led by Metals, O&G and Cements
14.1
33.1
12.9
27.9 27.5 MOSL Universe PAT

12.6
12.2
12.6
24.1 23.3 26.3 Margin LPA: 11%

11.9
12.0
21.1
11.5
18.5
11.0
13.1
10.7
11.2
12.6
16.1
10.7
10.7
12.2
10.9
10.3
11.6
9.6 10.7 11.2

11.6
10.6
10.4
10.0
6.3 10.6
11.0
11.0
5.7
10.5
10.5
10.3
10.5
5.1
10.2
10.5
10.3
10.4
10.0
10.0
9.9
9.6
9.3
-2.7-4.6
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16E
Mar-17E
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3QE
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

January 2017 7
MOSL Universe PAT to be at all-time high in 2HFY17

 PAT growth for several sectors in MOSL universe to benefit from low base: PSU
Banks and Metals to benefit from low base. However, demonetization will drag
earnings for Autos, FMCG and Cement.
Exhibit 7: Sectoral quarterly PAT trend (INR b)
Sector FY13 FY14 FY15 FY16 FY17
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep DecE MarE
Auto 59 52 49 79 53 74 83 81 93 77 77 60 98 67 86 104 78 84 89 106
Capital Goods 26 27 28 60 14 21 22 52 17 19 19 48 12 15 9 45 15 23 15 55
Cement 25 19 16 20 19 11 11 18 17 14 9 15 13 15 12 19 24 21 15 24
Consumer 42 43 47 45 48 49 54 51 53 56 60 57 58 58 64 63 65 65 63 66
Financials 170 165 177 190 186 163 169 196 204 190 183 198 196 190 106 -18 169 190 192 216
Private Banks 54 57 67 71 70 72 80 85 82 85 95 100 91 98 106 83 94 94 94 99
PSU Banks 92 83 82 83 87 61 59 73 90 72 54 57 71 54 -39 -146 33 49 52 62
NBFC 24 25 28 35 29 31 30 38 32 33 34 41 34 38 39 45 41 46 45 54
Healthcare 21 27 36 29 32 42 49 43 45 51 33 37 53 51 48 51 56 57 54 56
Logistics 3 3 3 3 3 3 3 3 4 3 4 4 3 3 3 2 3 2 3 3
Media 4 5 5 4 5 5 6 5 5 5 8 6 7 8 9 12 7 8 9 9
Metals 75 54 42 76 60 57 57 71 67 73 61 33 36 51 -8 22 31 30 43 43
Oil & Gas -251 342 217 403 94 203 137 346 187 153 71 248 251 131 187 191 278 213 265 206
Oil & Gas Ex OMCs 154 173 166 133 138 174 175 165 149 149 95 135 147 128 131 137 148 161 163 137
Retail 2 2 3 2 2 2 2 3 2 3 2 3 2 2 3 2 2 2 3 2
Technology 90 93 97 97 106 121 129 134 132 137 144 141 141 152 153 158 153 158 155 161
Telecom 12 12 8 12 15 12 15 20 23 26 27 28 23 26 25 28 26 23 8 0
Utilities 81 63 88 99 76 68 84 99 77 57 73 89 77 68 78 90 78 53 73 82
Others 6 6 6 4 7 6 7 6 9 7 7 6 9 6 7 9 10 9 8 10
MOSL Universe 366 915 821 1123 719 837 829 1126 934 869 780 972 979 843 784 778 996 936 994 1038
MOSL Ex Metals, Oil & PSU Banks 451 435 479 561 478 516 575 636 590 572 593 634 621 607 644 712 653 645 634 726
Exhibit 8: Sectoral quarterly PAT growth trend (%)
Sector FY13 FY14 FY15 FY16 FY17
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep DecE MarE
Auto 11 -4 -26 -5 -10 41 68 3 75 5 -7 -26 6 -13 12 73 -21 24 3 2
Capital Goods 12 -5 -18 -7 -47 -25 -20 -13 26 -7 -13 -9 -31 -20 -54 -4 29 50 63 21
Cement 28 63 -2 -14 -26 -44 -33 -11 -10 26 -12 -16 -20 12 32 26 82 37 24 26
Consumer 24 15 22 17 14 16 13 13 12 14 11 13 9 5 7 10 13 11 -1 5
Financials 38 19 14 3 9 -1 -4 3 10 16 8 1 -4 0 -42 PL -14 0 81 LP
Private Banks 30 27 28 25 29 26 20 20 18 19 19 17 10 14 12 -16 3 -3 -12 19
PSU Banks 48 11 -2 -18 -5 -27 -28 -12 3 18 -7 -23 -21 -25 PL PL -53 -9 LP LP
NBFC 27 30 43 38 19 24 9 6 10 7 10 10 7 17 16 10 21 21 16 19
Health Care 5 26 66 26 51 53 38 45 42 21 -32 -13 17 1 44 38 5 12 12 10
Logistics -1 22 -7 -15 -6 -1 9 22 13 -2 32 20 -9 4 -31 -41 -17 -25 -3 29
Media -2 8 22 25 26 12 18 13 -5 3 33 17 33 48 16 113 4 -3 -4 -26
Metals -15 -19 -23 6 -20 5 36 -6 11 27 7 -53 -47 -30 PL -35 -12 -42 LP 99
Oil & Gas PL 812 -24 10 LP -41 -37 -14 99 -25 -48 -28 34 -14 162 -23 11 62 42 8
Oil & Gas Ex OMCs 3 -3 19 -4 -10 1 6 24 8 -14 -46 -18 -1 -14 37 2 1 26 25 -1
Retail 6 14 22 24 15 5 -12 12 -6 24 5 -2 -12 -37 16 -11 26 20 -10 -23
Technology 36 35 19 15 17 31 33 38 25 13 11 6 7 11 7 12 9 4 1 2
Telecom -13 7 -46 -24 27 2 94 71 50 111 82 36 -1 -2 -7 1 16 -9 -67 -100
Utilities 17 39 32 1 -6 7 -5 0 0 -17 -13 -10 1 19 6 0 1 -22 -6 -9
Others -16 -15 -2 -34 13 7 31 43 26 12 1 6 1 -9 -4 40 13 44 20 14
MOSL Universe -37 70 -3 5 96 -8 1 0 30 4 -6 -14 5 -3 0 -20 2 11 27 33
MOSL Ex Metals, Oil & PSU Banks 19 21 13 6 6 19 20 13 23 11 3 0 5 6 9 12 5 6 -1 2
Note: Comparable Universe excludes Vedanta due to merger, Just Dial, Alembic Pharma, Hathway, Repco Home Finance, MCX, Alkem Labs,
Interglobe Aviation, CG Consumer Electricals, Parag Milk Foods, Equitas Holding, IDFC Bank, RBL Bank, L&T Infotech, Manpasand, and SH
Kelkar.
January 2017 8
Exhibit 9: Key Assumptions – Commodities bottoming out in 2QFY17

Macro FY16 1QFY17 2QFY17 3QFY17E 4QFY17E FY17E
GDP Growth (%) 7.6 7.1 7.3 6.1 6.2 6.7
IIP Growth (%) 2.4 0.7 -0.9 1.8 2.9 1.2
Inflation CPI-RU (%) 4.9 5.7 5.2 3.8 4.5 4.8
Currency: USD/INR 65.5 66.9 67.0 67.4 68.2 67.4
Oil: Brent (US$/bbl) 47.5 46.0 45.8 50.2 55.0 49.3
Repo Rate (%) 6.9 6.52 6.50 6.25 6.00 6.32
Interest Rate (%): 1Year CP Rate (Avg) 8.6 8.30 7.85 7.27 7.25 7.67
10Year G Sec (Avg) 7.7 7.46 7.12 6.54 6.50 6.90
Sectoral FY16 1QFY17E 2QFY17E 3QFY17E 4QFY17E FY17E
Banking: Loan Growth (%) 10.7 8.1 6.6 7.5 8.2 8.2
Auto: CV Volume growth (%) 11.1 9.2 10.3 -4.0 12.0 5.0
Car Volume growth (%) 10.6 2.1 18.4 2.6 17.7 10.0
Cement: Volume growth (%) 4.0 5.6 3.3 -3.0 -10.0 -1.3
Capital Goods: L&T order Intake (INRb) 1,369 297 311 416 481 1,505
Capital Goods: L&T order Intake (% YoY) -11.9 12.5 8.7 8.1 11.0 10.0
Metal: Steel (USD/Tonne) 494 492 465 515 515 497
Aluminium (USD/Tonne) 1,592 1,570 1,619 1,720 1,712 1,655
Zinc (USD/Tonne) 1,846 1918 2,252 2,500 2,600 2,318
Oil & Gas: Under Recoveries (INRb) 124.3 24.0 27.8 8.8 13.9 50.5
Singapore GRM (USD/bbl) 7.5 5.0 4.5 6.4 6.4 5.5
Technology: $Revenue growth (%) 6.9 3.6 1.1 1.1 2.4 7.9
* CV volume for Tata Motors and Ashok Leyland; PV Volume for Maruti Suzuki
Interesting sectoral trends

Key PAT growth sectors
 At 2.6% YoY, 3QFY17 PAT growth for Autos would be one of the weakest in
recent quarters.
 Eicher, Maruti and Ashok Leyland stand out with 56%, 39% and 38% growth,
respectively.
 Excluding Tata Motors (which is expected to post 16% YoY PAT decline), Autos
should post 15% YoY growth.
 Capital Goods sector is expected to post 20-quarter high PAT growth of 59%
YoY, driven by favorable base. BHEL posted a loss in the base quarter; excluding
BHEL, growth would be 7% YoY.
 PSU Banks would report a PAT of INR52b v/s a loss of INR39b in the base
quarter. SBIN (up 2.4x), PNB (up 8.7x) and UBI (up 2.9x) are expected to post
strong performance.
 NBFCs are likely to post another quarter of healthy performance, with 16% YoY
PAT growth. MMFS (125%), LIC Housing Finance (27%), Muthoot Finance (40%),
Bharat Financial (31%) and Gruh Finance (19%) are expected to deliver strong
performance.
 Metals would also have a strong quarter and report a PAT of INR73b v/s a loss
of INR10b in the base quarter. Hindalco (up 2.3x), Vedanta (loss to profit) and
Tata Steel (loss to profit) are expected to post strong results.
 Cement is expected to continue its strong momentum, led by Shree Cement.
Key PAT de-growth sectors
 Consumer companies would report the first YoY PAT decline in 11 years.
 Asian Paints would post 4% YoY PAT decline.
 Britannia would see ~20% YoY decline in PAT.
January 2017 9
 HUVR and ITC are likely to report flattish YoY PAT performance.
 For Private Banks, aggregate PAT is likely to decline 12% YoY, driven by Axis
Bank (-69%) and ICICI Bank (-26%). Yes Bank (+25%), Kotak Mahindra Bank
(27%), and IndusInd Bank (+23%) would report strong growth.
 Utilities would post 6% YoY PAT decline, largely led by Coal India (-22%).
 Telecom would report PAT decline (-67% YoY), despite the low base (PAT was
down 7% in 3QFY16).
Exhibit 10: 3QFY17 sectoral sales growth (%)
22
15
12
9 8 8 8 6 4 4 3
0
0 -1 -2
MOSL Ex. OMCs

Metals
Utilities
Oil Ex. OMCs
Health Care
Telecom
Technology
Logistics
Consumer
Cement
Auto
Cap Goods
Media
Retail
Exhibit 11: 3QFY17 sectoral PAT growth (%) Financials
LP
77
59
26 25 24
8 3 0
-1 -3 -5 -6 -10
-67
MOSL Ex. OMCs
Utilities
Metals
Health Care
Telecom
Oil Ex. OMCs
Consumer
Logistics
Cement
Auto
Technology
Media
Cap Goods
Retail
Financials
Exhibit 12: ~40% of the universe to report >15% PAT growth

Earnings Gr. >30% >15-30% >0-15% <0% Ex RMs (%)
15 24 26 20 -8 -15 -15-11 23 42 26 22 24 9 13 11 4 18 11 9 6 0 -3 8 12 9 17 7 -7 -8 -3 -3 -10 -10 -2 6 26 35
% of MOSL Universe companies
21 24 23 26 27 25 24 31 26
42 41 32 35 31 30 27 34 30 35 35 37 47 36 39 36 33 33 37 34
42 40 38 39 42 41 37 38
45
14
19 24 9 9 10 20 18 18
26 14 14 27
21 11 13 24 19
13 27 17 16 20 24 22 25 25 18 17 18 21 22 21
18 17 22 18 23 16 17 21 22
18 22 10 16 19
22 21
18 19 21 18 12 18
10 14 24 25 18 22 18 17 19 16 18 13 22 21 27 14
18 19 23 16 13
44 45 51
35 30 41 43 38 32 39 35
32 29 27
26 27 21 21 24 25 25 28 26 24 19 26 25 20 20 26 18 22 21 20 24 29 28 28
Dec 07
June 08
June 09
Mar 08
Sep 08
Dec 08
Mar 09
Sep 09
Dec 09
June 10
June 11
June 12
Mar 10
Sep 10
Dec 10
Mar 11
Sep 11
Dec 11
Mar 12
Sep 12
Dec 12
June 13
June 14
June 15
Mar 13
Sep 13
Dec 13
Mar 14
Sep 14
Dec 14
Mar 15
Sep 15
Dec 15
June 16
Mar 16
Sep 16
Dec 16E
Mar 17E
PAT Growth Ex RMs (%)

40% of the companies would grow at >15% YoY, and almost 30% of the Universe would report >30% PAT growth. More than 1/3rd of the
Universe would report PAT de-growth.
January 2017 10
Three key trends for 3QFY17
1] Demonetization impacting revenues for key sectors like Autos,

Consumer, and Cement
 We expect Autos (ex JLR) to report flat revenue YoY, impacted by sharp
moderation in volumes across segments, especially 2Ws and PVs. Higher
discounts and negative operating leverage would lead to sharp moderation in
PAT growth for Autos (ex JLR).
 Cement revenue is likely to decline ~1% YoY, reflecting ~1% YoY volume decline.
With cost inflation offsetting higher realization, EBITDA growth would be
restricted to ~3% YoY. PAT growth would moderate considerably to ~24% YoY
(v/s ~58% YoY in 1HFY17).
 For our Consumer universe, we expect revenue to be flat YoY, translating into a
PAT decline for the first time in 12 years.
Exhibit 13: Demonetization to impact PAT growth for sectors like Auto, Cement, Consumers etc (% YoY)
Consumer
30
24 26
22 24 22
21 19 19 20 19 21
17 18 16 17 17
15 15 14 15 14 16 13 13 12 14 11 13
9 8 9 11 13 12
7
5 5
-1
June-07
June-08
June-09
June-10
June-11
June-12
June-13
June-14
June-15
June-16
Sep- 07
Dec-07
Mar-08
Sep- 08
Dec-08
Mar-09
Sep-09
Dec-09
Mar-10
Sep-10
Dec-10
Mar-11
Sep-11
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16E
Exhibit 14: PAT growth moderates sharply for Autos & Cement sector (%)
Autos Excl JLR 157 Cement 82

126 63
98 32 26 37
28 26 24
12
26 17 19 17 18 9
4 2
-2
-14 -11 -10 -12 -16 -20
-3 -1 -8 -26
-16 -20 -30 -15 -33
-26 -44
June-12
June-13
June-14
June-15
June-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16E
June-12
June-13
June-14
June-15
June-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16E
2] Global commodity price recovery driving recovery for Global Cyclicals

 Recovery in base commodity prices has led to sharp recovery in revenues and
PAT for Global Cyclicals like Oil and Metals.
 We estimate revenue growth for Oil & Gas at 8% YoY, one of the highest in five
years, influenced by ~14% YoY increase in crude oil prices. This would reflect in
PAT growth of ~42% YoY (~25% QoQ).
 For Metals, we expect 22.3% YoY revenue growth, the highest in four years,
driven by recovery in prices – Steel (up 70% from recent lows), Copper (up 35%),
January 2017 11
and Aluminum (up 15%). More importantly, PAT is likely to grow ~72% QoQ
(from loss to profit on YoY basis).
Exhibit 15: Global cyclicals showing smart recovery in PAT on the back of rising commodity prices (INR b)
Oil & Gas PAT (INR b) Metals PAT (INR b)
403 100
342 346
248 278 265
89 84 87 90 77
217 251 71 75 73
203 187153 187191 213 67 66
137 131 59 59
94 71 50
41
33 37 42
-251 -10
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16E
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16E
3] No respite for Healthcare (expect 11.7% YoY revenue growth in 3QFY17
v/s 18.4% CAGR in 10 years) and Technology (expect 8.6% YoY revenue
growth in 3QFY17, one of the weakest in 10 years)
 We estimate revenue growth for our Technology universe at 8.6% YoY, one of
the lowest in 10 years. For the first time in 12 years, PAT would remain flat YoY.
 For our Healthcare universe, we expect moderation in revenue growth (11.7%
YoY in 3QFY17 v/s 10-year CAGR of 18.4%), reflecting in 8.4% YoY PAT growth.
Exhibit 16: PAT growth for defensives like Technology and Healthcare continues to be weak (%YoY)
Technology 64 Healthcare
36 35 38 51 53 47
33 45 42
31 38 38
26 27 21 21
25
19 5 10 6 8 8
15 17 13 11 13 14
9 9
6 8
4 0 -10
-28
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16E
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16E
Cyclicals to drive entire 2HFY17 earnings growth

 After witnessing severe stress in 1HFY17, Cyclicals like PSU Banks and Metals are
making strong recovery, driven by favorable base, interest rate moderation,
recovery in commodity prices, etc. PAT for Cyclicals is likely to grow 54% YoY in
3QFY17 (v/s just 5% growth in 1HFY17).
 While we estimate MOSL Universe PAT growth at 33% YoY for 2HFY17 (v/s 6%
YoY in 1HFY17), 95% of this growth would be driven by Cyclicals. Defensives
would drag overall performance.
 For Domestic Cyclicals, PAT is likely to grow 101% YoY in 2HFY17 (v/s 6% YoY in
1HFY17), driven by PSU Banks, Cement and Capital Goods. For Global Cyclicals,
we expect PAT to grow 34% YoY in 2HFY17 (v/s 4% YoY in 1HFY17), driven by
Metals and Oil & Gas.
January 2017 12
Exhibit 17: Cyclicals are expected to drive the entire earnings growth in 2H
94 Contribution to 1HFY17 PAT growth (%) Contribution to 2HFY17 PAT growth (%)
57
16 15 13 12 11 24
7 6 4 1 1 18
3 3 2 2 1 1 1 1 0 0
0 -1 -4
-12
-25 0 -1 -2
-37 -9
Capital Goods
Healthcare
Banks-PSU
Utilities
Metals
NBFC
Others
Telecom
Consumer
Logistics
Cement
Banks-Pvt
Technology
Media
Automobiles
Oil & Gas
Retail
Capital Goods
Healthcare
NBFC
Utilities
Others
Telecom
Metals
Banks-PSU
Consumer
Technology
Cement
Logistics
Banks-Pvt
Media
Automobiles
Oil & Gas
Retail
Exhibit 18: Cyclicals are expected to grow significantly ahead of MOSL Universe average in 2HFY17
1HFY17 PAT growth (%) LP 2HFY17 PAT growth (%)

58 539
46
28 23
21 17
12 7 6
6 3 3
33 26 25 25 18 14 11 9 2 2 2 1
-1 -2
-10 -7 -16 -17
-21 -84
-27 -34
Healthcare
Utilities
Capital Goods
Healthcare
Utilities
Capital Goods
Telecom
Telecom
Others
NBFC
Others
Metals
Banks-PSU
Banks-PSU
Metals
NBFC
Logistics
Logistics
Consumer
Cement
Consumer
Cement
Technology
Media
Banks-Pvt
Media
Automobiles
Automobiles
Banks-Pvt
Technology
MOSL
MOSL
Oil & Gas
Retail
Oil & Gas
Retail
Defensives to drag 2HFY17 earnings

 Defensives solely drove MOSL Universe PAT growth over FY14-16; Cyclicals
(both domestic and global) were under pressure, resulting in the share of
Defensives in aggregate PAT rising to 36%.
 However, we expect Cyclicals to be the key driver of PAT growth over FY17-18,
with over 78% of the increase in MOSL Universe PAT being driven by Cyclicals.
 As a result, we expect the share of Cyclicals to increase to 70% by FY18 from
63% in FY16. Key drivers of growth within Cyclicals would be PSU Banks, Autos,
Metals, and Cement.
 For 3QFY17, Defensives would report a 2.7% YoY decline in PAT to the lowest in
20 quarters. This is expected to continue even in 4QFY17, with a decline of 5%
YoY. Large part of the 2HFY17 weakness would be due to demonetization-led
growth moderation in the Consumer sector.
January 2017 13
Exhibit 19: Cyclicals to drive entire PAT growth in 3QFY17
6 6 4 4 3 2 1
78
82 -0 -0 -0 -1 -5 -13
91 -17
1,042
801
Capital Goods
Healthcare
Banks-PSU
Utilities
Metals
NBFC
Others
Telecom
Logistics
Consumer
Cement
MOSL 3QFY16
Technology
Media
Automobiles
Banks-Pvt
MOSL 3QFY17E
Oil & Gas
Retail
PAT (INRb)
PAT (INRb)
Source: MOSL
Share of defensives comes off further
Exhibit 20: PAT share of global cyclicals to see sharp sequential pick up
100%
Defensives
33 26 23 27
36 39 40 39 35 33
75%
Global cyclicals
25 33 40 45 41 31 29
50% 37 36 27 26 26 24
Domestic cyclicals 34 37 34 38
25%
42 38 37
35 31 34 34 32 35
0%
June-09
June-10
June-11
June-12
June-13
June-14
June-15
June-16
Mar-09
Sep-09
Dec-09
Mar-10
Sep-10
Dec-10
Mar-11
Sep-11
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16E
Mar-17E
Defensives includes Consumer, Healthcare, Technology, Telecom and Utilities

Global cyclicals includes Metals, Oil & Gas and JLR
Domestic cyclicals includes Automobiles, Banks, Capital Goods, Cement, Media, NBFCs, Real Estate and Retail
Nifty sales and PAT growth to be 4% and 13%, respectively

 Nifty PAT is likely to grow 13% YoY in 3QFY17, the highest in 10 quarters. Sales
are expected to grow 4% YoY.
 Performance of Nifty would be driven by Cyclicals like PSU Banks and Metals
that are benefiting from the depressed base of 2HFY16. Excluding PSU Banks
and Metals, Nifty PAT would be flat YoY.
 17 Nifty companies are expected to post YoY PAT decline – two each from
Consumer, Cement, Telecom and Technology, and three from Autos.
 Another notable feature of 3QFY17, as discussed in earlier sections, would be
the YoY PAT decline for large-cap Consumer companies (ITC, Asian Paints), an
impact of demonetization.
January 2017 14
Exhibit 21: Nifty - Sectoral contribution to growth 3QFY17 vs Index Weight
3.1 1.5 9.4 4.0 6.3 11.3 6.6 14.4 3.0 0.8 0.8 10.1 4.4 21.5 2.3
66.9
Contr to growth for 3QFY17 (%) Weight in Index (%)
29.2 26.0
5.8 5.3 1.7 1.6 1.4 0.9 0.3
-0.2 -0.8 -3.6

-14.8
-19.7
Healthcare
Utilities
Banks-PSU
Metals
NBFC
Telecom
Consumer
Cap. Goods
Auto
Technology
Cement
Media
Banks-Pvt
Oil & Gas
Infra
Exhibit 22: Nifty sales to grow 4% in 3QFY17, fourth consecutive quarter of positive sales growth
37
35 33
30 32 30
26 25 28 26 26
23 23 26 LPA: 14%
19 20 22 18 22 21 21
16
16 16 15
14 14 14 14 15
8 8 8
4 4 4 3 3 4
-1 0
-6
-4
-8 -6 -4
-9
-12
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3QE
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Exhibit 23: 3QFY17 Nifty PAT to grow 13% YoY, highest in ten quarters
65
38 36 LPA: 11%
34 29
22 27 24 24
20 16 16 19 13 12 21 19 16 20
11 10 12 11 13
7 4 5 5 9 9 6
0 2 4 1 0 4
-1 0 0 -5
-7 -8 -5 -15 -7
-12
-20
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3QE
4QE
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
January 2017 15
Exhibit 24: Nifty companies 3QFY17 performance (INR b)

Company Sales EBITDA PAT PAT Contbn EBITDA margin
Var % Var % Var %
Dec-16 Dec-16 Dec-16 (%) Grw. (%) Dec-16 Var (bp)
YoY YoY YoY
High PAT Growth (16) 1,790 5 443 34 181 179 26 150 25 546
Bank of Baroda 33 21 27 56 8 LP 1 54 81 1809
Tata Steel 283 1 34 335 5 LP 1 25 12 918
State Bank 143 5 119 24 27 138 4 20 83 1232
Hindalco 254 9 32 39 10 130 1 7 13 274
Bharti Infratel 34 8 15 8 8 58 1 4 44 -2
Eicher Motors 18 -44 6 12 4 56 1 2 32 1591
BPCL 459 -2 34 44 23 52 3 10 7 234
GAIL 151 13 17 55 10 45 1 4 11 305
Grasim Industries 25 7 5 22 4 42 1 1 21 257
Maruti Suzuki 166 10 25 16 19 39 3 7 15 81
Bosch 28 3 4 4 3 39 0 1 13 13
Kotak Mahindra Bank 20 14 14 14 8 27 1 2 68 -39
Yes Bank 15 26 14 22 8 25 1 2 96 -379
Sun Pharma 80 13 27 24 18 24 2 4 33 276
Power Grid Corp. 66 23 59 25 20 23 3 5 90 99
IndusInd Bank 15 29 13 23 7 23 1 2 86 -412
Med/Low PAT Growth (17) 2,406 8 615 9 374 8 53 34 26 24
Cipla 39 26 7 30 4 18 1 1 18 64
Lupin 42 19 10 20 6 18 1 1 25 6
Aurobindo Pharma 39 10 9 15 6 16 1 1 25 96
HDFC Bank 80 13 63 9 39 16 6 7 78 -300
Ambuja Cements 22 -7 3 -12 2 11 0 0 12 -69
Reliance Inds. 641 13 120 17 80 11 11 10 19 52
Zee Entertainment 16 3 4 2 3 10 0 0 27 -45
ONGC 193 5 97 12 44 9 6 5 50 326
HDFC 24 10 22 9 17 9 2 2 93 -70
Mahindra & Mahindra 103 -1 15 6 9 9 1 1 15 99
Larsen & Toubro 273 6 28 5 11 6 2 1 10 -11
NTPC 177 2 50 11 22 5 3 1 28 231
Tata Power 95 3 23 -5 4 5 1 0 24 -194
HCL Technologies 117 13 25 11 20 3 3 1 21 -36
TCS 295 8 80 3 63 2 9 2 27 -112
Hind. Unilever 79 1 14 -4 10 2 1 0 17 -100
Infosys 171 7 45 5 35 1 5 0 27 -67
Negative PAT Growth (17) 1,981 0 449 -6 173 -25 24 -74 23 -142
Ultratech Cement 53 -7 10 -8 5 0 1 0 18 -13
Wipro 139 8 27 2 22 -2 3 -1 20 -110
Adani Ports 18 8 12 9 6 -2 1 0 62 100
ITC 88 -4 34 -6 26 -3 4 -1 38 -100
Asian Paints 40 5 8 -3 5 -4 1 0 19 -150
Bajaj Auto 50 -9 10 -16 8 -6 1 -1 19 -165
Tech Mahindra 74 10 12 1 7 -7 1 -1 16 -133
Hero MotoCorp 64 -12 10 -16 7 -13 1 -1 16 -88
Bharti Airtel 241 0 87 3 11 -14 2 -2 36 120
Tata Motors 708 -2 89 -5 29 -16 4 -7 13 -38
Coal India 197 4 33 -22 29 -22 4 -10 17 -552
Dr Reddy’ s Labs 37 -6 8 -22 4 -22 1 -2 21 -429
ICICI Bank 52 -5 51 -22 22 -26 3 -10 99 -2083
ACC 27 -7 2 -13 1 -43 0 -1 7 -52
Axis Bank 45 8 43 7 7 -69 1 -19 95 -101
Idea Cellular 87 -4 23 -27 -10 PL -1 -23 26 -836
BHEL 61 14 -8 Loss -7 Loss -1 5 -12 1837
Nifty (50) 6,176 4 1,508 10 728 13 103 110 24 123
January 2017 16
Exhibit 25: Nifty Sectoral 3QFY17 PAT chg YoY (%)

LP
LP
LP
PSU Banks, Cap Goods, 13 12 12 10 9 8 2 1
Metals to report profits
in 3QFY17 against -2 -2 -4
losses in 3QFY16 -12
-67
Healthcare
Utilities
Telecom
Banks-PSU
Metals
Oil Ex BPCL
NBFC
Consumer
Auto
Cap Goods
Media
Cement
Technology
Banks-Pvt
Nifty Ex BPCL
Infra
Key trends to watch out for in 4QFY17 and thereafter
Trend # 1: Re-monetization
 Re-monetization has been faster than expected. Value-wise, almost 50% of the
withdrawn currency has been replaced as at the end of December 2016.
 We expect it to pick up pace over the next quarter. Overall, by the end of March
2017, we expect things to normalize in the economy.
 The government’s digitization push coupled with lazy money coming back into
the banking system should lead to currency in circulation being less than earlier.
 With the banking system flushed with funds and lower inflation, we expect
lower interest rates than in the pre-demonetization era.
 We expect a shift from unorganized credit sources to organized credit. Banks
with strong liability franchise are likely to be key beneficiaries of this shift. Even
mid-size private sector banks with strong management and under-utilized
capacity are likely to benefit.
 Apart from banks, other financial intermediaries like insurance and asset
management companies also stand to benefit.
 Normalization of liquidity by March 2017 would also help in restoring normalcy
for consumer-focused businesses, especially in rural markets.
Trend # 2: Government actions to improve economic activity
Exhibit 26: While some measures have been announced post demonetization, we expect more relief measures over next few
months
Measures announced New measures expected
1. 4% subsidy in interest rate for housing loan upto INR0.9m, and 1. A 1-2pp cut in corporate tax rate, providing a relief of INR 150-300b
3% subsidy for housing loan upto ~INR1.2m. to corporates.
2. Loan @3% on housing in rural area for construction/renovation of 2. Increasing income tax slab and 80C exemptions by INR50k each.
home. This will cost government ~INR300b.
3. Small traders credit guarantee to increase from loan of INR10m 3. Some compensation to states could help fasten GST passage. It
to INR20m. could cost ~INR100-200b.
4. 60 days interest on agriculture loan from cooperative bank will be 4. Since states would be restricted in terms of their ability to invest,
paid by the government. higher capex (by 15-20%) is expected from the Central Govt.
5. INR6k will be paid to pregnant ladies in rural area to reduce death 5. An increase in MGNREGA by INR50b to INR430b.
rate of ladies.
6. Senior citizen to get 8% interest on 10 years fixed deposit of upto
~INR0.75m.
7. 30m Kisan Credit Cards holders to be given RuPay Debit Cards.
Source: GoI, MOSL
January 2017 17
Trend # 3: Cost pressures from commodity inflation

 After bottoming out in the last 2-3 quarters, global commodities have witnessed
sharp recovery – Crude (up over 90% from the bottom), Steel (up over 70%),
Aluminum (up over 15%), Copper (up over 35%), Lead (up over 55%), Rubber (up
over 100%), etc.
 MOSL Universe (ex Metals and OMCs) EBITDA margin has expanded ~310bp
over the last two years, partly driven by favorable commodity prices and
operating leverage.
 With commodity prices recovering from recent lows and impact of
demonetization on demand, Corporate India would have to focus on cost
management.
Exhibit 27: Base commodities have started recovering, after sharp fall over last 2 years
Bloomberg Base Metals Spot Price Steel (USD/Ton) Brent Crude (USD/Barrel)
Commodity Index (Ex Steel) 700 125
260
600
100
220
500
180 75
400
140 300 50
100 200 25
Apr-12
Apr-13
Apr-14
Apr-15
Apr-16
Apr-12
Apr-13
Apr-14
Apr-15
Apr-16
Apr-12
Apr-13
Apr-14
Apr-15
Apr-16
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
Source: Bloomberg, MOSL
Exhibit 28: EBITDA margin improvement over last 2 years partly driven by lower
commodity prices
MOSL Excl Metals & OMCs (EBITDA Margin, %)

28.0
28.0
26.9
26.8
26.7
26.4
26.3
26.2
25.4
24.5
24.1
24.0
23.8
23.7
23.6
23.5
23.5
23.5
23.4
23.0
June-12
June-13
June-14
June-15
June-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17
Source: MOSL
Cutting 2HFY17E PAT for consumer-focused businesses following

demonetization
 Post demonetization, we have cut our 2HFY17E earnings for MOSL Universe by
3%, driven by cuts in Cement (~22.5%), Autos (12%), Consumer (11%), NBFCs
(~6%) and Capital Goods (~8%).
 2HFY17E PAT for Telecom has seen sharp cut of ~75%, reflecting tectonic shift in
competitive intensity.
 However, the impact of cuts in above sectors has been offset by upgrades in
Metals (+8%) and Oil & Gas (+11%).
January 2017 18
Exhibit 29: Earnings cut in Cement, Autos, Consumer, Financials diluted by upgrades in
Metals and Oil & Gas
11.0
8.4
-4.5
-7.9
-11.4
-20.4 -17.4
-22.5
Cement Retail Auto Ex JLR Consumer Capital Financials Metals Oil & Gas
Goods
Source: MOSL
Exhibit 30: Auto Ex JLR Exhibit 31: Consumer
PAT growth Pre-Demon YoY (%) PAT growth Pre-Demon YoY (%)
Current est. PAT growth YoY (%) Current est. PAT growth YoY (%)
20.4 14.5 14.5 14.5
16.5
13.3
4.3
1.5
2.6 2.0 2.3
-1.3
3QFY17 4QFY17 2HFY17 3QFY17 4QFY17 2HFY17

Exhibit 32: Cement Exhibit 33: NBFCs
Current est. PAT growth YoY (%) 27.7 Current est. PAT growth YoY (%)
73.5
25.7
61.8 24.0
54.0 19.3
17.8
16.0
24.3 26.0 25.3

Exhibit 34: Metals Exhibit 35: Oil & Gas
Current est. PAT growth YoY (%) Current est. PAT growth YoY (%)
539.0
489.7 41.9
24.8
16.0
133.5 12.5
99.9 9.1 8.0
LP LP
January 2017 19
Exhibit 36: Intra-sector 3QFY17 earnings divergence (%)

Sector +30% 15-30% 0-15% -Ve earnings Earnings
Sectors
growth growth growth growth growth momentum
High growth sectors
INBK: 778%,PNB:
Banks - 768%,CBK: 386%,UNBK:
LP
PSU 194%,SBIN: 138%,BOB,
BOI & OBC: LP
HNDL: 130%,NACL:
93%,HZ: 62%,NMDC: JSP: Loss,
Metals LP
61%,JSTL, SAIL: Loss
TATA & VEDL: LP
VOLT: -3%,TMX: -
Capital CRG: 133%, BHE: 9%,LT: 6%,ABB:
59 SIEM: 18% 9%,CROMPTON: -23%,HAVL: -
Goods ATD: LP 5%,KKC: 3%
41%,BHEL: Loss
CAIR: 6817%,MRPL:
277%,IOCL: 109%,PLNG:
Oil & Gas RIL: 11%,
25 87%,BPCL: 52%,HPCL: GUJS: -6%
(Ex OMCs) ONGC: 9%
50%,GAIL: 45%,
OINL & IGL: 37%
ICEM: 781%,SRCM: ACEM: 11%,
Cement 24 TRCL: 20% ACC: -43%
152%,GRASIM: 42% UTCEM: 0%
DEWH: 14%,HDFC:
MMFS: 125%,MUTH: LICHF: 27%,IHFL:
NBFC 16 9%,BAF: 8%,REPCO:
40%,BHAFIN: 31% 21%,GRHF: 19%
7%,SHTF: 1%
Medium/Low growth sectors
IPCA: 136%,GNP: SUNP: 24%,CIPLA:
Health SANL: 15%, CDH: -6%,DRRD: -22%,TRP: -
8 83%,GRAN: 43%, 18%,LPC: 18%,
Care DIVI: 12%,ALKEM: 11% 35%,ALPM: -58%,FORH: Loss
GLXO: 40%,BIOS: 34% ARBP: 16%
ESC: 137%,EIM: EXID: -4%,BJAUT: -6%,
Autos 3 56%,MSIL & BOS: TVSL: 21% MM: 9% AMRJ: -12%,HMCL: -13%,
39%,AL: 38% TTMT: -16%,BHFC: -19%
WPRO: -2%,
TELX: 24%, ZENT: 15%,MPHL:
NITEC: -4%,TECHM: -7%,
Technology 0 HEXW: 20%, 12%,HCLT: 3%,
PSYS: -12%,KPIT: -16%,
CYL: 19% TCS: 2%,INFO: 1%
LTI: -26%,MTCL: -30%
PAT de-growth sectors
GCPL: -1%,ITC: -3%,
PAG: 13%,UBBL:
PIDI: -3%,APNT: -4%,
UNSP: 2146%, 5%,CLGT: 4%,
Consumer -1 DABUR & NEST: -5%,
JYL: 42% HUVR & SKB: 2%,
HMN: -7%,MRCO: -8%,PG: -
PARAG: 0%
14%,BRIT: -20%,RDCK: -28%
CCRI: -7%,
Logistics -3 AGLL: 10%
GDPL: -10%
DBCL: -3%,PVRL & JAGP: -
16%,HTML: -31%,
Media -5 SUNTV: 13%,Z: 10%
DITV: -36%,SITINET: -57%,
HATH: Loss
PWGR: 23%, COAL: -22%,
Utilities -6 CESC: 29%
NTPC: 5% JSW: -54%
SHOP: -52%,
Retail -10 TTAN: 1%
JUBI: -56%
KMB: 27%,YES: 25%,
Banks FB: 15%, IDFCBK: -21%,
-5 IIB: 23%,DCBB: 21%,
Private EQUITAS: 0% ICICIBC: -26%,AXSB: -69%
HDFCB: 16%
BHARTI: -14%,
Telecom -67 BHIN: 58%
IDEA: PL%
January 2017 20
Key Sectoral Highlights - 3QFY17

3QFY17E YoY (%)
Sales EBIDTA PAT Margin
SECTOR Key highlights Key stock to watch
Chg YoY (pp)
Auto  Automobile volumes were subdued in the -1.6 -1.6 2.6 0.0  TVS Motor (+ve, despite demonetization
quarter due to the impact of impact, PAT is expected to grow 21%
demonetization. In our view, 2Ws and 3Ws YoY).
are likely to be the worst hit as the cash
component in transactions is higher in this
space along with higher rural exposure. PVs
are expected to be relatively well placed,
primarily due to waiting periods in many
models of OEMs and lower cash component.
In CVs, LCV volumes are expected to decline
due to higher cash component, while MHCV
growth is likely to moderate.
 EBITDA margins for our Auto OEM (ex-JLR)  HMCL ( -ve, demonetization impact to
coverage universe are likely to contract hit HMCL’s volumes and financial
140bp QoQ (stable YoY), given pressure performance; EBTDA margins expected
from negative operating leverage due to to contract 100bp, while PAT is likely to
decline in volumes. decline 13% YoY).
 Auto aggregate PAT is expected to grow 2%  MSIL (+ve, PAT is expected to rise 39%
(incl. JLR). Ex JLR, auto sector PAT is YoY, while EBITDA margins are expected
estimated to grow ~9% YoY, led by MSIL and to rise 80bp YoY due to benefits of
AL. Bajaj Auto and HMCL, however, are operating leverage and favorable
expected to drag overall PAT. currency movement).
Capital  We expect order intake by most companies 6.1 41.9 59.3 1.8  Execution from LT is likely to remain
Goods to be flattish in 3QFY17, based on subdued in 3QFY17; profit is likely to
announced orders during the quarter. grow 6.3% YoY. Operating margins are
Industrial capex continues to remain expected to remain stable.
sluggish, while roads, rail and power T&D
remain the only bright spots on the infra
side.
 Execution to remain subdued on account of  Bharat Electronics is likely to report
weak opening backlog and continued strong revenue growth of 22% YoY, led
challenges in execution on account of by pick-up in revenue booking of orders
demonetization scheme, delay in procuring in hand.
clearances, funding and land acquisition
issues.
 Margins to improve YoY on account of  Havells to report marginal revenue
improvement in operational performance decline of 1% YoY on account of
and reduction in loss from BHEL. demonetization. We expect net profit to
decline 41% YoY on account of increase
in other expenses led by vendor support
provided by the company.
Cement  Cement demand witnessed healthy recovery -1.0 3.3 24.3 0.7  Shree Cement would report volume
in October-16, with all-India production growth, as against ex-south players that
increasing ~7% YoY on a relatively high base. are likely to report volume decline due
However, demand in November was to ramp-up of capacity in eastern
severely impacted due to demonetization. operations.
The impact was particularly pronounced in
the initial 15 days of implementation of
demonetization due to acute shortage of
cash. November all-India production
declined 15% MoM, but increased ~1% YoY
due to low base on account of festival
season in November-15. We expect volumes
in December to decline in double-digit YoY,
partly led by high base and due to the
January 2017 21
3QFY17E YoY (%)

Chg YoY (pp)
 Prices under pressure: Prices increased in  Ramco Cement would continue
October on expectation of better 2HFY17 reporting strong profitability due to
volume demand, but declined in December strong volume growth and sustenance of
due to demonetization. In our view, ASPs prices in south markets.
should be impacted for north and east
markets.
Consumer  We expect our consumer universe’s revenue 0.1 -4.5 -1.2 -1.1  We expect ITC’s sales to decline 7% YoY
and PAT to decline 0.5% and 2.8%, (led by 10% fall in cigarette volumes)
respectively, in 3QFY17. Demonetization is and PAT to decline 6.5%. HUVR’s sales
likely to affect all companies, particularly growth is estimated at 1.5% (volume
those selling products with discretionary decline of 1%), with 100bp EBITDA
demand and which have higher proportion margin contraction. Barring PAGE, for
of wholesale trade vis-à-vis direct which we expect 13% PAT growth YoY,
distribution. The anticipated rural demand none of the other companies is expected
recovery after a good monsoon was dented to report any material growth in PAT. 11
by the effect of demonetization-led liquidity out of 18 companies under coverage
crunch. MOSL Consumer universe EBITDA is actually are expected to report YoY
likely to decline 6.1%, with 130bp margin decline in PAT.
decline. PFAD and Palm Oil prices saw steep
YoY inflation of 70% and 37%, respectively.
Ti02 and Mentha prices have not increased
sharply, up just 4% YoY and 3% YoY on
average for 3QFY17. Mentha prices over
past 20 days are up 10% YoY, though. LLP
and HDPE prices still remain benign, with
low-single-digit growth YoY.
Financials 7.7 13.6 76.8 4.3
Private  Mixed picture expected with sustained 10.1 0.9 -11.7 -7.8  Prefer ICICIBC and YES among corporate
Banks earnings pressure at corporate lenders like lenders; HDFCB and IIB top pick among
ICICIBC and AXSB (led by asset quality strain) retail lenders.
and sustained growth trajectory at lenders
like YES and IIB. We expect most private
banks to report a drop in loan growth post
demonetization, but deposit intake will be
strong. CASA ratio will receive a boost
during the quarter, leading to lower cost of
funds. Lower C-D ratio and blended yields
may have marginal impact on NIMs.
PSU Banks  Loan growth trajectory will continue 4.2 26.6 LP 14.5  Prefer SBIN, PNB and BOB among PSU
remaining muted, while deposit influx will banks.
be strong, leading to downward pressure on
NIMs. Provisions are expected to remain at
elevated levels during the quarter, and
operating expenses will increase steeply.
Although core revenue will remain under
pressure, strong trading gains owing to
falling bond yields will provide cushion to
earnings.
NBFC  Housing finance companies with low share 13.7 13.9 16.0 0.1  We expect LICHF to post strong results
of LAP and corporate loans are expected to among HFCs. Other key stocks to watch
perform relatively well than others. Those out for are BHAFIN, MUTH and BAF.
with high share of LAP/corporate loans will
see significant slowdown in disbursements
as well as problems in collections.
Companies dealing in vehicle finance are
also likely to witness significant slowdown
and poor collection levels due to high share
January 2017 22
3QFY17E YoY (%)

Chg YoY (pp)
of cash dealings. Gold financiers and MFIs
are likely to be the worst hit, and AUM is
unlikely to register sequential growth.
Healthcare  With respect to the US market, Glenmark is 11.7 9.6 8.4 -0.5  GNP (+ve; gFTF launch should help drive
expected to exhibit strong growth in the US, growth and margins).
led by Zetia FTF and series of other generic
launches.
 Sun and Lupin should continue to see  ARBP (+ve; should report double-digit
sequential decline in the US business on the growth in the US, despite key launches
back of competition in key products. getting deferred and pricing pressure).
Aurobindo should report stable US sales on
the back of key launches, including Crestor.
 After strong 1H numbers, the domestic  Sun & LPC (-ve; should report sequential
business is expected to get impacted in 3Q decline in US sales on the back of
on the back of seasonality and competition in key products).
demonetization.
Logistics  EXIM trade continues to be sluggish for 3.6 1.5 -3.4 -0.3  Concor and GDL would report moderate
3QFY17. We expect overall container rail volume growth on YoY basis due to
volumes for 3QFY17 to decline by 2% YoY. higher transhipment volumes.
Margins to remain flat QoQ, with no major
improvement in trade.
Media  We expect our universe ad revenue growth 3.2 -0.2 -5.1 -1.1  Zee Ent: 4%/12% ad/domestic
to grow at a meager ~1% YoY, lower than 7- subscription CAGR.
13% in the preceding four quarters. Both
Broadcasters and Print companies are
expected to face the demonetization brunt.
The ad pain is expected to be more
debilitating for Print media, given their
higher reliance on local/retail advertisers –
most impacted group by the cash squeeze.
Zee’s ad growth is expected to moderate to
~4% YoY post six quarters of strong ad
revenues. Apart from FMCG, Auto, Telecom,
other sectors such as Auto, Consumer
Durables, Traditional retail too have cut
back on ad spends. Regional/niche channels
and publishers are expected to take a bigger
hit. Our industry interactions suggest that a
full recovery could be expected by 1QFY18.
 DTH companies are expected take a hit in  20% EPS CAGR (adj. for pref dividend)
recharges and fresh seeding as over FY16-19.
demonetization impacts both. One can
expect cable companies to step up their
seeding rates from 1H levels as Delhi HC has
quashed all stay orders pertaining to DAS III
implementation. Phase III monetization
remains a key concern for all stakeholders.
Monetization expected to improve in
4QFY17.
Metals  Across-the-board increase in commodity 22.3 167.6 LP 10.4  NMDC EBITDA to increase 79% QoQ on
prices. Zinc/lead average LME up 11/15%. higher volumes and realization.
 EBITDA for our coverage universe is  NALCO EBITDA to almost double QoQ to
expected to increase 18% QoQ (2.7x YoY) on INR3.5b on higher aluminum and
higher realization and volume increase. alumina prices.
 NMDC, Nalco and Vedanta to report strong  Vedanta to report 44% QoQ EBITDA
performance. increase, led by strong volume and price
growth in zinc and aluminum.
January 2017 23
3QFY17E YoY (%)

Chg YoY (pp)
Oil & Gas  Benchmark Singapore GRMs were up from 8.0 39.8 41.9 3.4  BPCL, HPCL and IOCL (+ve).
USD5.1/bbl in 2QFY17 to USD6.7/bbl in the
quarter, but lower than USD7.8/bbl in
3QFY16. Inventory gains would also help
earnings in the quarter.
 Expect ~50% YoY jump in PAT of BPCL and
HPCL. Led by higher inventory gains, IOCL is
expected to report 109% YoY PAT growth.
Excl. OMCs  Brent averaged USD49.1/bbl v/s 15.3 23.1 24.5 1.4  ONGC/OINL (+ve; Oil producer countries'
USD45.7/bbl in 2QFY17 and USD43.4/bbl in efforts to cap production could revive
3QFY16. Expect better realization YoY. the oil price realization).
However, operating cost may be higher IGL (+ve; Expect double-digit volume
sequentially. growth to continue).
 Expect RIL's PAT to be up +11% YoY, led by PLNG (+ve; Capacity expansion + take-
higher petchem volume and largely flat or-pay contracts to boost earnings).
refining profit benefited by exchange rate.
 IGL witnessed slowdown in conversion of
vehicles due to clampdown of authorities on
spurious kits. We expect flat sequential
performance for GAIL and GSPL.
Retail  For our Retail coverage universe, we expect 8.1 -1.0 -9.5 -0.7  Titan’s jewelry retail revenue reportedly
tepid 8.1% revenue growth and 9.5% PAT grew at 15% YoY due to healthy festive
decline in 3QFY17. EBITDA is likely to decline season growth. However, its watches
1% YoY. Retail companies under our segment sales through the trade channel
coverage are moderating store expansion. (50% of segment sales) continue to be
Titan added four Tanishq stores (adding badly affected. We expect Jubilant
12ksf), Jubilant has likely added 30 stores, Foodworks’ sales to decline by 8%, with
while Shoppers Stop is likely to have actually same-store sales declining by 14% due
reduced its net store count by 1 in 3QFY17. to adverse effect of demonetization on
Expansion plans are likely to be a function of discretionary consumption as well as
pickup in consumer sentiment, which is likely weak festive season sales.
getting delayed. Shoppers Stop’s LTL growth is likely to
be flat YoY and sales growth to be only
5% YoY.
Technology  Seasonality and subdued spend in the BFSI 8.6 4.2 0.3 -1.0  TECHM is expected to lead QoQ growth
vertical have kept expectations muted for at 3.1% CC. It would include residual
revenue growth in 3Q. Revenue growth has one-month contribution from the
been tepid despite strength in deal wins, acquisition of Target, but organically too
and that is expected to continue playing out. growth at 2.5% CC would be better than
peers.
 To add to this, currencies have depreciated  INFO: Revenue decline expected as the
against the USD, which means yet another RBS deal cancellation takes effect.
quarter of significant cross-currency impact, Guidance for FY17 (implying growth for
and lower USD revenue growth. 4Q) and outlook for the year ahead
would be keenly watched.
 Pricing pressure in traditional  WPRO (Outlook for 4QFY17; post a
services/renewals and necessary disappointing guidance of -1 to +1%
investments for transitioning to Digital have organic revenue growth for 3Q, given
been weighing on margins. Although the INR bottoming out of the Energy vertical,
has depreciated against the USD by 2% QoQ, and restructuring of the India and
the impact of depreciation of other Middle East business).
currencies limits any tailwind.
Telecom  Expect 3QFY17 to see the strong effect of -0.2 -3.4 -66.5 -1.2
disruption in the telecom market led by
RJio's free usage. We expect revenue de-
growth of 6-7% for Bharti/Idea with ~300-
400bp margin decline. Despite being
seasonally strong quarter, 3Q is likely to see
no respite. Idea is expected to report loss at
net level for the first time in the history of
January 2017 24
3QFY17E YoY (%)

Chg YoY (pp)
listing. Bharti on consolidated basis is
expected to report 2.4% revenue de-growth
and 210bp decline in EBITDA margin.
 Voice business is expected to de-grow ~4-
5%, led by 6-7% price decline and 2% traffic
growth. RJio's free voice usage has changed
incoming/outgoing proportion. Since
incoming generates meager INR 0.14/min,
the impact on price is significant.
 Data revenues are expected to fall about 15-
20% for Bharti/Idea as subscribers shift
toward RJio's free usage. This is led by the
impact in both data traffic as well as pricing.
Utilities  PAT growth will be led by PWGR on strong 3.8 3.1 -6.0 -0.2  Coal India e-auction and ASQ realization.
capitalization momentum over last few
quarters. NTPC's PAT growth would be
muted on lower PLFs and other income. JSW
Energy would see impact of under-utilized
capacities.
 Coal India EBITDA (ex-OBR) is estimated to
decline by 19% YoY on wage hike and flat
realization.
January 2017 25
EARNINGS FY17-FY19
Demonetization mars 2HFY17, Sensex EPS to grow ~3%
Low base drive growth expectations for FY18, risk to growth from unknowns
 FY17 to be third consecutive year of muted Sensex EPS growth: After YoY flat Sensex
EPS in 1HFY17, there were expectations of a recovery from 2HFY17, driven by normal
monsoon, the 7th Pay Commission, and bottoming out of Global Cyclicals among others.
However, demonetization is likely to defer the recovery by at least six months. We
expect muted EPS growth (~3% to ~INR1,360) in FY17 – the third consecutive year of no
growth. However, the broader MOSL Universe is likely to witness ~20% earnings growth
in FY17, driven by sharp recovery in Cyclicals on low base of 2HFY16.
 FY18 to see smart recovery, albeit on low base (4% CAGR over FY12-17E): We expect
Sensex EPS to grow 22.6% to INR1,668 in FY18 and at a CAGR of ~21% over FY17-19.
These growth estimates come on a low base of the last five years, when EPS grew at just
4% CAGR (FY12-17E). Cyclicals are likely to outperform the Defensives over FY17-19,
with Financials, Cement, Metals, Capital Goods and Autos delivering 35%, 29%, 31%,
24% and 31% FY17-19E PAT CAGR, respectively. Cyclicals would contribute 2/3rd of
Sensex EPS growth and ~73% of MOSL Universe EPS growth in FY18.
 Risk to earnings – fear the unknown: Given the unprecedented nature of
demonetization and multiple moving parts, the exercise has been rendered a little more
challenging than usual. Normalization in sectors impacted by demonetization
(contributing ~45% of MOSL Universe earnings) would depend on the pace of re-
monetization. However, there are several unknowns that could materially influence
earnings in FY18/19 – GST (timing and magnitude of change), commodity prices
(runaway inflation in base commodity prices), further government measures (on direct
tax, black money, investments, etc), global factors (Trumponomics, fed rate, etc).
Exhibit 37: Recovery in Cyclicals to drive robust 21% CAGR (FY17-19E) in Sensex EPS
EBITDA
Sales Gr. / EBIDTA EBIDTA PAT PAT Gr. / PAT delta
Sector margin
CAGR (%) Margin (%) CAGR (%) (INR B) CAGR (%) Share (%)
change (bp)
(No of Companies) (FY17-19) FY17E (FY17-19) FY17-19 FY17E FY17E FY18E FY19E (FY17-19) FY17-19
High PAT CAGR (>25%) 14 29.7 17 168 1,912 31 37 28 32 72
Financials (35) 18 84.8 15 -391 888 44 39 32 35 37
PSU Banks (10) 15 80.1 11 -478 168 LP 107 36 68 15
Private Banks (12) 20 89.4 16 -592 406 -1 27 32 30 14
NBFC (13) 20 88.8 21 58 313 10 17 27 22 8
Media (11) 15 28.3 24 447 33 1 43 26 34 1
Auto (14) 15 13.9 23 197 363 7 33 30 31 13
Metals (9) 8 18.1 13 161 222 66 41 22 31 8
Cement (13) 11 18.6 20 291 111 42 32 26 29 4
Others (25) 18 19.3 24 188 71 15 29 25 27 2
Healthcare (17) 15 23.8 20 221 225 15 33 18 25 6
Medium PAT CAGR (20-25%) 12 9.7 22 170 136 26 24 24 24 4
Capital Goods (16) 12 9.6 22 178 117 34 23 25 24 3
Logistics (3) 11 13.9 18 193 11 -9 29 18 24 0
Retail (3) 15 7.9 21 86 9 1 22 22 22 0
Low PAT CAGR (up to 20%) 11 25.4 13 70 1,873 4 12 12 12 25
Consumer (19) 14 22.4 16 93 259 6 17 17 17 5
Utilities (5) 12 31.1 20 436 287 -11 17 15 16 5
Technology (15) 12 23 11 -48 636 6 12 9 10 7
Oil & Gas (12) 11 14.8 8 -85 1,006 32 4 9 6 7
Excl. OMCs (9) 11 22.9 12 28 633 16 15 10 13 8
Telecom (3) 7 35.4 7 36 59 -42 -59 102 -9 0
MOSL Excl. OMCs (197) 13 26.4 15.4 133.7 3,922 16 25 21 23 100
MOSL (200) 12 23.4 14.4 88.9 4,295 20 21 20 21 NA
Sensex (30) 13 26.2 14.5 90.4 1,250 5 23 20 21 NA
Nifty (50) 12 24.9 14.6 111.3 1,532 9 22 20 21 NA
January 17 26
Demonetization overshadows other positives: FY17 to be another year of flat Sensex EPS; several sectors
to report multi-year low earnings growth
 The narrative for FY17 was shaping up well (normal monsoon, 7th Pay Commission awards, softening interest
rates) till 2QFY17, and confidence of double-digit Sensex earnings growth was building up.
 However, this was pre-demonetization. The aforementioned positive narrative has since been overshadowed by
demonetization and its consequences for the economy as well as various sectors.
 This is reflected in our earnings estimates for FY17. Post demonetization, we now expect another flat year of
Sensex EPS - just 2% YoY growth v/s the 14% YoY growth prediction we began with.
 Several sectors would report multi-year low earnings growth in FY17 - Autos, Consumer, Private Banks, NBFCs,
Telecom, Technology, and Utilities. Technology, Utilities and Telecom are impacted by sector-specific issues
while deceleration in earnings growth for Autos, Consumer, Private Banks and NBFCs can be largely attributed to
demonetization.
FY17-19E estimates: Sensex EPS CAGR at 21%
 We expect Sensex EPS CAGR of 21% over FY17-19, significantly higher than the
4% CAGR over FY12-17. Cyclicals would contribute 2/3rd of FY18E Sensex EPS
growth and ~73% of MOSL Universe EPS growth.
 We estimate Sensex EPS at INR1,360 (3% growth) for FY17, INR1,668 for FY18
(23% growth), and ~INR2,005 for FY19 (20% growth).
Exhibit 38: Sensex EPS – expect rebound in FY17-19, with 21% CAGR versus 6% CAGR witnessed during FY08-17
FY01-08: FY08-17: FY17-19E:
21% CAGR 6% CAGR 21% CAGR
20%
23% 2,005
3%
1,668
1,337 1,356 1,324 1,360
1,181
1,024 1,120
833 820 834
720
446 540
272 361
216 236
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
FY19E
Exhibit 39: Nifty EPS – expect rebound in FY17-19, with 21% CAGR versus 4% CAGR witnessed during FY08-17
FY01-08: FY08-17: FY17-19E:
21% CAGR 4% CAGR 21% CAGR 20%
22% 612
6% 508
406 415 393 417
351 369
315
281 251 247
236
169 184
131
73 78 92
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
FY19E
January 17 27
FY17/18E Sensex EPS cut 1%/2%; FY18 estimate builds in sharp recovery
 We have cut our FY17 and FY18 Sensex EPS estimates by 1% and 2%,
respectively. This follows our 2% cut in Sensex EPS estimates in December 2016,
post demonetization. Essentially, our Sensex EPS growth for FY17 now stands
revised downwards to 3%.
 However, the lower base of FY17 (especially in 2HFY17 due to demonetization)
should aid sharp rebound in FY18. In FY18, we build 23% Sensex EPS growth.
 However, we note that visibility of FY18 growth is hazy, given the multiple
moving parts around [1] GST implementation, and [2] pace of re-monetization
and consequent restoration of normalcy in trade.
Exhibit 40: Top Sensex companies EPS Upgrade/Downgrade since 2QFY17 review (%)
Company FY17 Company FY18
Tata Steel 33.3 ONGC 10.6
SBI 19.8 Tata Steel 6.3
Adani Ports 3 SBI 4.9
M&M -2.6 Reliance Ind. 2.5
Reliance Ind. -2.8 Axis Bank 2.1
ONGC -2.9 ICICI Bank 1.9
Tata Motors -2.9 Wipro -2.1
ITC -3.3 M&M -2.4
Sun Pharma -3.7 Sun Pharma -3.7
Coal India -4.6 ITC -5.4
ICICI Bank -6.1 L&T -7.6
L&T -7 Bajaj Auto -7.9
Hero Moto -7.2 Hero Moto -7.9
Dr Reddy’s -7.6 Coal India -12.8
Bajaj Auto -8.1 Tata Motors -15.3
Bharti -11.2 Bharti -21.1
Estimate Nifty PAT CAGR at 21%, sales CAGR at 12% over FY17-19
 50% of the Nifty universe is expected to post 20%+ PAT CAGR over FY17-19.
 Only Idea is expected to report negative PAT CAGR over FY17-19.
 EBITDA margin for Nifty is expected to expand 117bp to 24.9% in FY17 and
further increase at 25.3% in FY18. PAT margin is likely to expand 25bp in FY17 to
11.4% and 80bp in FY18 to 12.2%.
January 17 28
Exhibit 41: Nifty performance: Expect FY17-19 PAT CAGR at 21%

Sales (INR b) Sales EBIDTA Margin (%) EBITDA PAT (INR b) PAT YoY (%) PAT Contbn to
Company FY17 FY18 FY19 CAGR % FY17 FY18 FY19 CAGR % FY17 FY18 FY19 FY17 FY18 FY19 CAGR % Delta %
High PAT Growth (20%+) 11,818 13,585 15,398 14 27 29 30 20 1,184 1,667 2,144 12 41 29 35 72
Tata Steel 1,125 1,288 1,292 7 11 12 13 15 7 36 40 0 383 10 130 2
Axis Bank 181 212 257 19 93 89 86 15 31 55 112 -62 79 102 90 6
State Bank 785 905 1,026 14 78 73 73 10 76 181 240 -38 137 33 77 12
Tata Motors 2,866 3,289 3,815 15 12 14 16 29 99 155 239 -21 57 55 56 11
BHEL 314 334 381 10 4 5 7 49 10 13 21 LP 39 54 47 1
Bank of Baroda 135 154 187 18 80 77 75 14 28 43 61 LP 53 39 46 2
Dr Reddy’ s Labs 147 173 201 17 18 23 24 36 14 24 29 -38 71 20 43 1
ACC 109 119 133 10 11 13 13 22 6 9 12 2 50 34 42 0
Eicher Motors 70 90 106 23 31 33 33 27 17 24 30 23 43 26 34 1
Cipla 155 182 210 16 18 20 21 26 15 21 26 -4 41 27 34 1
Ultratech Cement 233 264 296 13 20 23 24 23 26 37 46 19 43 25 33 2
Yes Bank 58 72 92 26 95 96 95 26 31 40 50 24 29 25 27 1
Kotak Mahindra Bank 81 94 117 21 71 75 80 28 49 59 77 41 22 29 25 2
GAIL 528 545 730 18 12 14 12 18 36 46 57 58 27 23 25 2
IndusInd Bank 59 73 89 23 87 88 89 23 28 35 44 24 25 24 25 1
Sun Pharma 309 334 373 10 32 34 36 17 67 91 103 42 37 13 24 3
ONGC 1,293 1,550 1,622 12 39 41 44 18 190 243 292 9 28 20 24 8
Zee Entertainment 66 75 86 14 28 31 32 23 13 17 20 31 26 20 23 1
Mahindra & Mahindra 832 934 1,044 12 14 14 14 14 39 50 59 23 27 18 22 1
Grasim Industries 372 403 447 10 20 22 23 18 36 41 53 58 17 28 22 1
Maruti Suzuki 675 813 938 18 16 16 17 21 78 94 115 65 21 21 21 3
HDFC Bank 321 385 472 21 77 78 79 23 146 177 215 19 21 22 21 5
NTPC 823 964 1,107 16 28 31 34 29 98 118 142 -4 21 21 21 3
Bosch 107 128 145 16 17 19 20 23 15 20 23 2 30 12 21 1
Lupin 175 206 232 15 26 27 28 19 28 35 40 22 25 16 20 1
Medium PAT Growth (10-20%) 6,382 7,142 7,824 11 26 25 26 12 941 1,069 1,224 2 14 15 14 21
Larsen & Toubro 1,092 1,250 1,382 12 10 11 12 19 50 58 71 20 16 22 19 2
Tata Power 93 97 102 5 27 24 26 2 14 16 19 86 15 22 18 0
Bajaj Auto 221 260 299 16 20 21 20 16 38 46 54 1 19 17 18 1
Power Grid Corp. 264 312 351 15 89 89 90 16 74 88 101 24 18 15 16 2
Aurobindo Pharma 155 179 203 14 24 25 25 16 25 29 33 24 19 14 16 1
Hindalco 1,010 1,089 1,106 5 13 13 13 5 38 46 51 55 20 12 15 1
ITC 387 431 489 12 37 38 38 15 101 116 132 9 14 15 14 2
Asian Paints 153 172 199 14 19 19 19 13 19 22 25 8 12 17 14 0
Hind. Unilever 322 352 394 11 18 19 20 14 43 49 56 4 14 15 14 1
Ambuja Cements 91 98 110 10 17 18 18 12 11 14 15 33 22 7 14 0
Coal India 753 823 886 8 14 16 17 21 100 114 129 -30 15 13 14 2
HDFC 97 109 124 13 95 96 96 14 75 85 97 6 13 15 14 2
Tech Mahindra 291 329 361 11 15 16 16 13 28 32 35 -12 16 10 13 1
Wipro 556 619 672 10 20 21 20 11 84 96 107 -5 13 12 13 2
ICICI Bank 208 243 282 16 125 95 94 1 100 105 126 3 5 21 12 2
Infosys 688 781 866 12 27 27 27 12 141 155 171 4 10 11 10 2
Low PAT Growth (<10%) 7,734 8,757 9,251 9 21 20 20 7 844 876 940 4 4 7 6 7
HCL Technologies 466 539 603 14 22 21 20 10 80 90 96 42 12 7 9 1
TCS 1,184 1,341 1,478 12 27 27 26 9 258 285 306 7 11 7 9 4
Hero MotoCorp 288 329 360 12 16 16 15 6 34 38 39 7 13 1 7 0
Bharti Infratel 133 146 159 9 44 44 44 10 32 33 36 42 4 10 7 0
Adani Ports 81 92 102 13 66 66 65 12 35 35 39 21 0 12 6 0
Reliance Inds. 2,401 2,759 2,768 7 18 17 17 4 297 321 324 9 8 1 4 2
Bharti Airtel 975 1,010 1,113 7 37 36 37 8 50 38 54 4 -24 42 4 0
BPCL 1,851 2,182 2,275 11 8 7 7 4 80 82 86 1 2 6 4 0
Idea Cellular 356 359 392 5 29 27 28 4 -23 -46 -41 PL Loss Loss Loss -1
Nifty (PAT free float) 25,934 29,485 32,473 12 25 25 26 15 1,532 1,867 2,248 7 22 20 21 100
January 17 29
NIFTY FY17E 2969 NIFTY FY16 2787
SBI 105 BOB 82
January 17
Tata Motors 56 Maruti 31
ONGC 53 HCL Tech. 24
HDFC Bank 30 HDFC Bank 24
Tata Steel 29 Reliance Ind. 23
TCS 27 Sun Pharma 20
Axis Bank 24 BHEL 19
Sun Pharma 24 TCS 16
Reliance Ind. 24 ONGC 16
NTPC 20 Power Grid 14
Maruti 17 Kotak Mah. Bk 14
BOB 15 Hindalco 14
Coal India 15 GAIL 13
ITC 14 Grasim 13
Infosys 14 Bharti Infratel 9
Power Grid 13 L&T 8
Wipro 11 ITC 3127.292931 8
Ultratech 11 M&M 7
Kotak Mah. Bk 11 Tata Power 6
M&M 11 Infosys 6
Dr Reddy’s 10 Yes Bank 6
HCL Tech. 10 Adani Ports 6
Exhibit 43: Nifty stock absolute FY18E PAT change (INR b)

Exhibit 42: Nifty stock absolute FY17E PAT change (INR b)
GAIL 10 IndusInd Bk 5
HDFC 10 Lupin 5
Yes Bank 9 Aurobindo 5
L&T 8 Ultratech 4
Hindalco 7 HDFC 4
Bajaj Auto 7 Zee Ent. 3
IndusInd Bk 7 Eicher Mot. 3
Eicher Mot. 7 ICICI Bank 3
Lupin 7 Ambuja Cem 3
Cipla 6 Hero Moto 2
Grasim 6 Bharti Airtel 2
HUL 6 HUL 1
Aurobindo 5 Asian Paints 1
ICICI Bank 5 BPCL 0
Bosch 5 Bajaj Auto 0
Hero Moto 5 Bosch 0
Tech Mah. 5 ACC 0
BHEL 4 Tata Steel 0
Zee Ent. 4 Cipla -1
ACC 3 Tech Mah. -4
Ambuja Cem 2 NTPC -4
Asian Paints 2 Wipro -4
Tata Power 2 Dr Reddy’s -8
BPCL 1 Tata Motors -27
Bharti Infratel 1 Coal India -43
Adani Ports 0 SBI -46
Bharti Airtel -12 Axis Bank -51
Idea Cellular -24 Idea Cellular -53
NIFTY FY18E 3,611 NIFTY FY17E 2,969
30
Disappointing finish to an otherwise strong 2016!

MARKETS & FLOWS
Flat returns in a year marked by major disruptive events
 The Nifty ended just 3% higher (in INR terms; flat in USD terms) in a year which until
November looked set for an encouraging finish. Key events like Brexit, US elections,
India’s demonetization, US Fed hike and geopolitical tensions with Pakistan took the
center stage in the second half of CY16, fueling significant volatility in the markets.
However, the Indian government’s decision to demonetize high-value currency notes
triumphed over other narratives, wiping out bulk of the CY16 gains (Nifty was up 8.5%
until 8-November).
 In CY16, Brazil (+39%), Russia (+24%) and the UK (+14%) were the best performers
among the key global markets. Over the last 12 months, MSCI EM delivered 9% return,
as against MSCI India’s flat return. Over the last ten years, MSCI India outperformed
MSCI EM by 81%.
 In the sectoral space, Metals (+37%) and Oil (+27%) – the underperformers of CY15 –
were the top performers in CY16, led by the bottoming out of commodity prices and
inexpensive valuations. Cement (+17%), Auto (+9%), PSU Banks (+9%), Media (+6%),
Private Banks (+5%), NBFC (+4%), Consumer (+3%) and Utilities (+2%) too ended the
year on a positive note. On the other hand, Telecom (-25%), Healthcare (-13%),
Technology (-8%), Real Estate (-6%) and Capital Goods (-3%) were the losers for CY16.
Midcaps outperformed large caps, delivering +7% returns.
 Market breadth was positive in CY16, with 30 of the Nifty-50 stocks ending higher.
Notably, all Technology, Healthcare and Telecom stocks on the Nifty delivered
negative returns.
 Among the Nifty components, Hindalco (+83%), Yes Bank (+59%), Tata Steel (+51%),
BPCL (+42%) and Power Grid (+30%) were the top performers of CY16. Idea (-49%),
BHEL (-28%), Aurobindo (-24%), Sun Pharma (-23%) and Bharti Infratel (-20%) were the
worst performers.
 India witnessed FII equity inflows of USD2.9b in CY16 (USD6.8b until 8-November),
while DII equity inflows stood at USD5.3b. Domestic MFs recorded inflows of USD7.1b,
while DIIs (ex-MFs) saw outflows of USD1.9b in CY16.
 FII debt outflows were more pronounced at USD6.5b in CY16 (USD5.9b post 8-
November). Despite these outflows, the INR remained relatively stable with just 2.5%
annual depreciation.
 Correction in 4QCY16 has brought valuations marginally below the 10-year averages.
Nifty trades at a P/E of 16.6x, near its long-period average of 16.7x.
 Mid-cap outperformance continued in CY16, delivering return of +7% v/s +3% by Nifty.
However, valuation premium of mid-caps over large-caps has come off to just 1%.
Exhibit 44: After delivering negative return of 4% in CY15, Nifty staged a comeback to end 3% higher in CY16
2016 3
2015 -4 2013 7
2011 -25 2012 28 2014 31
2001 -16 2010 18 2007 55
2000 -15 2004 11 2006 40 2009 76
1998 -18 2002 3 2005 36 2003 72
1996 -1 1997 20 1993 37 1999 67
2008 -52 1995 -23 1994 13 1992 36 1991 69
Year % Year % Year % Year % Year %
-30 to -60 -30 to 0 0 to 30 30 to 60 >60
Percentage return range
January 17 31
Exhibit 45: Over CY06-16, Indian markets recorded a CAGR of Exhibit 46: In CY16, losses in the last quarter offset gains of
7.5% in local currency and 3.0% in USD preceding two quarters
40 55 -52 76 18 -25 28 7 31 -4 3 QoQ Return (%)
42 74 -61 84 23 -37 24 -5 29 -8 0
Trend in Nifty CAGR in INR: 7.5% 15 14

CAGR in USD: 3.0%
10
8 7
6
3 5 4 4
4 3
0
0 -1
-2 -3
3,966
6,139
2,959
5,201
6,135
4,624
5,905
6,304
8,283
7,946
8,186
-4 -5 -5
-6
CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16
Jun-12
Jun-14
Jun-15
Jun-16
June-13
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Annual Return in INR (%) Annual Return in USD (%)
Equities: Global market performance

 In CY16, Brazil (+39%), Russia (+24%) and the UK (+14%) were the top
performers among the key global markets. Over the last 12 months, MSCI EM
delivered +9% return, as against MSCI India’s flat return.
Exhibit 47: World equity indices (CY16) – local currency (%) Exhibit 48: World equity indices (CY16) – USD (%)
Brazil 39 Brazil 69
Russia MICEX 24 Russia MICEX 49
UK 14 Taiwan 13
Taiwan 11 S&P 500 10
S&P 500 10 MSCI EM 9
MSCI EM 9 Japan 4
South Korea 3 South Korea 1
India - Nifty 3 India - Nifty 0

Japan 0 China (HSCEI) -3
China (HSCEI) -3 UK -4
January 2017 32
Sector performance: Laggards of yesteryears outperformed in CY16

Telecom, Healthcare and Technology top negative performers for CY16
 In the sectoral space, Metals (+37%) and Oil (+27%) – the underperformers of
CY15 – were the top gainers in CY16, driven by the bottoming out of commodity
prices and inexpensive valuations.
 Cement (+17%), Auto (+9%), PSU Banks (+9%), Media (+6%), Private Banks
(+5%), NBFC (+4%), Cement (+3%) and Utilities (+2%) were the other gainers.
 On the other hand, Telecom (-25%), Healthcare (-13%), Technology (-8%), Real
Estate (-6%) and Capital Goods (-3%) were the losers for CY16.
 In CY16, mid-caps outperformed large-caps, delivering 7% positive return.
Exhibit 49: Sectoral performance in CY16 (% return)

37
27
17
9 9
7 6 5 4 3 3 2 2
-3 -6 -8
-13
-25
Utilities
Healthcare
Metal
Midcap 100
Nifty
Capital Goods
Telecom
Pvt - Banks
NBFC
Sensex
Oil
Consumer
Technology
Cement
Auto
Media
Real Estate
PSU - Banks
Exhibit 50: Sectoral performance over the last 10 years (%)

Return YoY (%) CAGR (%) CAGR (%)
Sector CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY11-CY16 CY06-CY16
Metal 39 121 -74 234 1 -47 19 -10 8 -31 37 2 1
Oil 40 115 -55 73 1 -29 13 4 12 -3 27 10 7
Cement 108 12 -60 84 37 5 41 -14 37 1 17 14 15
Auto 30 3 -57 204 38 -20 40 7 52 -1 9 20 14
PSU - Banks 27 71 -33 73 33 -39 46 -26 79 -30 9 8 9
Nifty Midcap 29 77 -59 99 19 -31 39 -5 56 6 7 19 11
Media 94 45 -59 94 32 -34 55 6 27 12 6 20 18
Pvt - Banks 58 99 -56 98 36 -26 63 1 61 2 5 23 17
NBFC 28 126 -52 109 38 -27 48 -8 49 -8 4 14 17
Consumer 17 20 -14 40 32 10 47 11 18 1 3 15 15
Nifty 50 40 55 -52 76 18 -25 28 7 31 -4 3 12 8
Sensex 47 47 -52 81 17 -25 26 9 30 -5 2 11 7
Utilities 41 122 -60 74 -6 -40 11 -15 23 -6 2 2 0
Capital Goods 56 117 -65 104 9 -48 35 -6 50 -9 -3 11 4
Real Estate -82 70 -26 -52 53 -32 8 -14 -6 -2 -23
Technology 41 -14 -51 133 32 -16 -1 60 17 5 -8 12 7
Healthcare 22 17 -33 69 34 -13 39 23 47 15 -13 20 15
Telecom 82 59 -48 -10 6 -9 -1 26 1 -3 -25 -2 -5
Note: Real Estate CAGR is from CY07-CY16 Source: Company, MOSL
January 2017 33
Market breadth positive; 30 Nifty stocks end higher

Technology, Healthcare and Telecom stocks in the Nifty delivered negative returns
 Among the Nifty components, Hindalco (+83%), Yes Bank (+59%), Tata Steel
(+51%), BPCL (+42%) and Power Grid (+30%) were the top performers of CY16.
 Idea (-49%), BHEL (-28%), Aurobindo (-24%), Sun Pharma (-23%) and Bharti
Infratel (-20%) were the worst performers.
 Notably, six Nifty stocks – Eicher, Maruti, IndusInd Bank, Zee Entertainment,
Asian Paints and Kotak Mahindra Bank – delivered positive returns for five
straight years.
 Stocks delivering negative returns for the first time in the last five years were
Aurobindo, Lupin, M&M, HUL and HCL Tech.
 BHEL delivered negative returns in four of the last five years. Stocks delivering
negative returns in at least three of the last five years were Tata Steel, GAIL,
Tata Power, ACC, ICICI Bank, BOB, Coal India, Bharti Airtel, Wipro and Idea
Cellular.
Exhibit 51: Best and worst Nifty performers for CY16 (%)—50% companies outperformed the benchmark
83
59
51
42
30 29
20 19 17 17 15 15 14
13 13 12 11 11 11 10 7
6 4 3 3 33 1 1 0 0
0 -1 -2 -2 -2 -3 -3 -4 -6 -7
-8 -9 -10-13-15
-19-20-23-24-28
-49
L&T
Idea Cellular
Zee Ent.
Dr Reddy's
ICICI Bank
Infosys
Tata Motors
Maruti
Sun Pharma
Hero Moto
Bosch
Bharti Airtel
Wipro
Grasim Ind.
Yes Bank
NTPC
SBI
HDFC Bank
Nifty
Ambuja Cem.
Tech Mah.
Tata Steel
Eicher Mot.
Bajaj Auto
ONGC
Asian Paints
Axis Bank
HDFC
ACC
TCS
HCL Tech
Coal India
Cipla
Bharti Infratel
Hindalco
BPCL
Power Grid
IndusInd Bk
Tata Power
ITC
Reliance Ind.
Tata Mot.-DVR
Adani Ports
M&M
BoB
GAIL
UltraTech
Kotak Mah.Bk
HUL
BHEL
Lupin
Aurobindo
Source: Company, MOSL
Exhibit 52: Stocks that delivered positive returns in at least 4 of the last 5 years
Absolute return YoY (%) CAGR (%) Relative to Nifty (%) CAGR (%)
Company CY12 CY13 CY14 CY15 CY16 CY11-16 CY12 CY13 CY14 CY15 CY16 CY11-16
BPCL 49 -2 86 38 42 40 21 -9 54 42 39 27
Power Grid 15 -13 39 2 30 13 -13 -20 7 6 27 1
Eicher Motors 97 71 203 12 29 71 69 65 172 16 26 59
Tata Motors 75 20 32 -20 20 22 47 14 0 -16 17 10
ONGC 4 8 18 -29 19 2 -24 1 -13 -25 16 -10
UltraTech 71 -11 51 4 17 23 43 -18 20 8 14 11
Maruti Suzuki 62 18 89 39 15 42 34 12 57 43 12 30
Grasim Inds 26 -14 25 10 15 11 -2 -21 -6 15 12 -1
IndusInd Bk 85 1 91 21 14 37 57 -6 60 25 11 25
Bosch 40 6 93 -4 12 25 12 0 62 0 9 13
HDFC Bank 59 -2 43 14 11 23 31 -9 12 18 8 11
ITC 42 12 15 -11 10 12 15 5 -17 -7 7 0
Reliance Ind. 21 7 0 14 7 9 -7 0 -32 18 4 -3
Bajaj Auto 34 -10 28 4 4 11 6 -17 -4 8 1 -2
Zee Entert. 87 25 38 15 3 31 59 18 6 19 0 19
Adani Ports 12 15 105 -18 3 17 -16 8 74 -14 0 5
Asian Paints 70 11 53 18 1 28 43 4 22 22 -2 16
Kotak Mah. Bk 50 12 73 14 0 27 23 5 42 18 -3 15
January 2017 34
Exhibit 53: Stocks that delivered negative return for the first time in the last 5 years
Aurobindo 122 108 189 54 -24 73 95 101 158 58 -27 61
Lupin 37 48 57 29 -19 27 9 41 26 33 -22 15
M&M 36 1 31 3 -7 12 8 -5 -1 7 -10 0
HUL 29 9 33 14 -4 15 1 2 2 18 -7 3
HCL Tech. 59 104 26 7 -3 34 32 97 -5 11 -6 22
Exhibit 54: Stocks that delivered negative returns in at least 3 of the last 5 years
Tata Steel 28 -1 -6 -35 51 3 0 -8 -37 -31 48 -9
GAIL -7 -4 30 -16 17 3 -35 -11 -1 -12 14 -9
Tata Power 26 -17 -7 -17 11 -2 -1 -24 -38 -13 8 -14
ACC 26 -22 26 -3 -2 3 -2 -29 -5 1 -5 -9
ICICI Bank 66 -3 61 -26 -2 13 38 -10 29 -22 -5 1
Bank of Baroda 31 -26 68 -28 -2 3 3 -32 37 -24 -6 -9
Coal India 18 -18 32 -14 -9 0 -10 -25 1 -10 -12 -12
Bharti Airtel -8 4 7 -4 -10 -2 -35 -2 -25 0 -13 -14
Wipro -1 42 -1 1 -15 4 -29 35 -32 5 -18 -9
BHEL -4 -23 50 -36 -28 -13 -32 -30 19 -32 -31 -25
Idea Cellular 26 61 -8 -7 -49 -2 -1 54 -39 -2 -52 -14
Exhibit 55: % of stocks delivering positive and negative return on the Nifty
Nifty Positive return (%) Negative return (%)
Return
YoY (%)
40 55 -52 76 18 -25 28 7 31 -4 3
2
12 17 14 10
30
48 42
52
76
96 98
88 83 86 90
70
52 58
48
24
4
CY06 CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16
January 2017 35
Institutional flows: FII flows muted for second consecutive year
FIIs sell off in 4QCY16 due to demonetization concerns

 India witnessed FII equity inflows of USD2.9b in CY16 (USD6.8b until 8-
November).
 On debt side, FII debt outflow was more pronounced at USD6.5b in CY16
(USD5.9b post 8-November). Despite these outflows, the INR remained
relatively stable with just 2.5% annual depreciation.
Exhibit 56: Cumulative FII flows in CY16 (USD b)
6.8
8.0
2.9
5.0
2.0 -2.5
USD3.9b outflows since
-1.0
demonetization reform
-4.0
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Jan-16
Jan-16
Mar-16
Mar-16
Sep-16
Oct-16
Exhibit 57: Yearly FII flows in equity (USD b) Exhibit 58: Half-yearly FII flows in equity (USD b)
29.3 1st half 2nd half

24.5
17.8 20.0
17.6 15.3
16.2 6.4
8.1 5.9
3.3 2.9
9.2 13.5
10.3
-0.5 0.9 6.2
3.0
-1.4 -2.9 -0.1
-12.2
2011
2012
2013
2014
2015
2016
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY15
CY16
Exhibit 59: Yearly FII flows in debt (USD b) Exhibit 60: Half-yearly FII flows in debt (USD b)
15.7
10.1 8.4 7.6

6.9 5.8 2.5 1.1
2.7 4.3 10.5
0.9
2.3 1.1 2.6 6.4
-1.3 -1.9
-6.7
-4.5
-6.5
2011
2012
2013
2014
2015
2016
-8.0
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY15
CY16
January 2017 36
Institutional flows: DII flows remained healthy in CY16
Two thirds of DII equity inflows received post 8-November

 DII equity inflows stood at USD5.3b in CY16. DII inflows of USD3.5b post 8-
November offset FII outflows of USD3.9b during the same period. In fact, in full-
year CY16, two thirds of DII equity inflows were received post 8-November.
Exhibit 61: Cumulative DII flows in CY16 (USD b)
5.3
6.0
3.4
USD3.5b inflows since
demonetization reform
4.0
2.0 -0.6
0.0
-2.0
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Jan-16
Jan-16
Mar-16
Mar-16
Sep-16
Oct-16
Exhibit 62: Yearly domestic MF flows in equity (USD b) Exhibit 63: Half-yearly domestic MF flows in equity (USD b)
7.1
6.0
3.4 3.3 3.9
1.7 5.7
1.3
0.7 5.0 5.2
1.4
0.6 -1.2 -1.1
-1.2 -2.4
-3.9 -3.7 -2.7 -1.4
-6.1
2011
2012
2013
2014
2015
2016
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY15
CY16
Exhibit 64: Yearly DII ex-MF flows in equity (USD b) Exhibit 65: Half-yearly DII ex-MF flows in equity (USD b)
13.6
1st half 2nd half
2.0
6.5
4.7 0.2
3.7 2.6
-1.1 -0.1
1.4 -2.7 -3.8
0.3 -5.2 -1.8
-4.2
-5.0
-1.0 -4.1
-1.9
-7.0
-9.3 -8.8
2011
2012
2013
2014
2015
2016
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY15
CY16
January 2017 37
Valuations near 10-year average; Mid-cap valuation premium

comes off further
 Correction in the last quarter of CY16 has brought valuations marginally near the
10-year averages. The Nifty trades at a P/E of 16.6x, near its long-period average
of 16.7x.
 Market-cap-to-GDP ratio of 72% (FY17E GDP) is below the long-period average
of 78%.
Exhibit 66: 12-month forward Nifty P/E (x) Exhibit 67: 12-month forward Nifty P/B (x)
25 23.73 4.5
4.06
21 3.8
10 Year
10 Year
Avg: 16.7x
17 3.0 Avg: 2.6x
16.6
2.4
13 2.3
11.11 1.7
9 1.5
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Exhibit 68: 12-month forward Nifty RoE (%) Exhibit 69: India’s market cap to GDP (%)
22.5 Average of 78%
103
95 for the period
20.0 88
82 83 81
71 70 72
10 Year Avg: 64 66
17.5
15.8% 55
15.0 14.7
12.5
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
Midcaps continue to outperform, trade at a premium to Nifty P/E FY17E
 In CY16, midcaps delivered 7% positive return, as against +3% by the Nifty.

 Midcaps now trade at just 1% premium to the Nifty on a P/E basis.
Exhibit 71: Midcaps outperformed large caps by 53% over last

Exhibit 70: Midcaps outperformed large caps in CY16 five years
Nifty Rebased Nifty Midcap 100 Rebased Nifty Rebased Nifty Midcap 100 Rebased
128 275
116 225
107 230
104 175 177
103
92 125
80 75
Apr-12
Dec-11
Aug-12
Apr-13
Dec-12
Aug-13
Apr-14
Dec-13
Aug-14
Apr-15
Dec-14
Aug-15
Apr-16
Dec-15
Aug-16
Dec-16
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
January 2017 38
Exhibit 72: Midcaps v/s Nifty P/E (x) – 12-month forward Exhibit 73: Midcaps trading at 1% premium to Sensex
Midcap PE (x) Nifty PE (x) Midcap Vs Nifty PE Prem/(Disc) (%)
26.5 25
23.0 Nifty Avg: 17.2x 10
Midcap Avg: 16.2x Average: -6% 1
19.5 16.9 -5
16.0
16.6
-20
12.5
9.0 -35
May-12
May-13
May-14
May-15
May-16
Jan-12
Sep-12
Jan-13
Sep-13
Jan-14
Sep-14
Jan-15
Sep-15
Jan-16
Sep-16
Jan-17
May-12
May-13
May-14
May-15
May-16
Jan-12
Sep-12
Jan-13
Sep-13
Jan-14
Sep-14
Jan-15
Sep-15
Jan-16
Sep-16
Jan-17
Sector valuations: Earnings growth remains elusive; expect 2HFY17 earnings
growth to remain subdued
 Technology sector trades at a P/E of 15x (8% discount to historical average).
Stocks have been holding on to current levels, despite seasonal weakness in
3QFY17. The support comes from the sector being shielded from
demonetization, INR depreciation post US elections, and expectations of a
better FY18. The sector was the top performer for December (+3.3%), but
delivered 8% negative return in CY16.
 Oil & Gas trades at a P/B of 1.4x (12% discount to historical average) and a P/E
of 10.5x (10% discount). Oil prices rose ~10% in Nov-Dec’16 due to production
cuts agreed upon by OPEC and non-OPEC. OMCs (HPCL, BPCL and IOCL)
debunked the threat of regulation by increasing retail prices again in mid-
December 2016.
 PSU Banks trade at a 32% discount to historical average P/B. The sector was
second worst performer for December (-6% MoM) after six months of
continuous outperformance. Impact of demonetization is expected to hurt loan
growth and NIM. Overall, we expect stress addition in FY17 to be lower than in
FY16. Sustained traction in large corporate deleveraging and a reduction in net
slippages are the key catalysts for a re-rating.
Exhibit 74: Sector valuations - Snapshot
Relative to Relative to
PE (x) PB (x)
Nifty P/E (%) Nifty P/B (%)
Sector
Prem/ Prem/
Current 10 Yr Avg Current 10 Yr Avg Current 10 Yr Avg Current 10 Yr Avg
Disc (%) Disc (%)
Auto 15.6 14.5 7.3 -6 -15 3.2 3.0 5.6 32 17
Banks - Private 17.2 16.5 4.3 3 -2 2.3 2.2 6.5 -4 -16
Banks - PSU 9.7 8.9 8.7 -41 -46 0.7 1.1 -31.6 -70 -59
NBFC 12.5 12.6 -0.5 -25 -25 2.2 2.3 -4.4 -11 -13
Capital Goods 26.8 27.0 -0.6 61 56 2.6 4.1 -36.5 7 52
Cement 20.8 17.2 20.9 25 2 2.6 2.3 10.4 5 -12
Consumer 33.4 29.2 14.6 101 76 10.0 9.5 4.7 309 273
Healthcare 19.7 21.9 -10.2 18 31 3.8 4.1 -5.6 57 57
Media 22.3 22.6 -1.6 34 36 5.0 4.4 14.2 105 67
Metals 12.2 12.1 1.1 -26 -29 1.2 1.6 -23.9 -51 -41
Oil & Gas 10.5 11.6 -9.6 -37 -30 1.4 1.6 -12.0 -42 -39
Retail 38.7 35.5 9.0 133 110 6.4 8.1 -21.3 161 212
Technology 15.0 16.3 -8.4 -10 -2 3.4 4.4 -21.7 40 67
Utilities 11.7 14.9 -21.1 -29 -9 1.5 1.8 -20.6 -40 -29
January 2017 39
MOSL model SECTOR WEIGHT /

PORTFOLIO PICKS
BSE
100
MOST
WEIGHT
WEIGHT
RELATIVE TO
EFFECTIVE SECTOR STANCE
portfolio Financials 29.3 31.0 1.7 Overweight

Private 18.0 19.0 1.0 Overweight
HDFC Bank 6.7 5.0 -1.7 Buy
ICICI Bank 4.1 5.0 0.9 Buy
Axis Bank 2.1 4.0 1.9 Neutral
Yes Bank 1.1 3.0 1.9 Buy
RBL Bank 0.0 2.0 2.0 Buy
PSU 3.1 7.0 3.9 Overweight
SBI 2.1 5.0 2.9 Buy
PNB 0.2 2.0 1.8 Buy
NBFCs 8.2 5.0 -3.2 Underweight
Max Financial 0.0 3.0 3.0 Buy
Repco Home Fin 0.0 2.0 2.0 Buy
Auto 11.5 12.0 0.5 Overweight
Tata Motors 2.7 5.0 2.3 Buy
Maruti 2.1 3.0 0.9 Buy
M&M 1.6 2.0 0.4 Buy
Bharat Forge 0.3 2.0 1.7 Buy
Cap Goods, Infra & Cement 7.7 9.0 1.3 Overweight
Larsen & Toubro 3.1 5.0 1.9 Buy
Ramco Cement 0.0 2.0 2.0 Buy
Shree Cement 0.0 2.0 2.0 Buy
Technology / Telecom 14.3 9.0 -5.3 Underweight
Infosys 5.6 4.0 -1.6 Buy
Tech Mahindra 0.9 3.0 2.1 Buy
Bharti Infratel 0.5 2.0 1.5 Buy
Consumption / Retail 12.4 9.0 -3.4 Underweight
ITC 5.8 5.0 -0.8 Buy
Britannia 0.5 2.0 1.5 Buy
Jubilant Foodworks 0.0 2.0 2.0 Neutral
Utilities / Metals 7.2 8.0 0.8 Neutral
Hindalco 0.6 4.0 3.4 Buy
NMDC 0.3 2.0 1.7 Buy
Power Grid 1.2 2.0 0.8 Buy
Energy 9.6 8.0 -1.6 Underweight
IOC 1.0 4.0 3.0 Buy
BPCL 1.0 4.0 3.0 Buy
Health Care 6.2 5.0 -1.2 Underweight
Sun Pharma 1.9 3.0 1.1 Buy
Aurobindo 0.5 2.0 1.5 Buy
Others 1.6 9.0 7.4 Overweight
Exide 0.2 1.0 0.8 Buy
Manpasand Beverages 0.0 1.0 1.0 Buy
Muthoot Finance 0.0 1.0 1.0 Buy
Endurance 0.0 1.0 1.0 Buy
Dish TV 0.0 1.0 1.0 Buy
Alkem Labs 0.0 1.0 1.0 Neutral
SH Kelkar 0.0 1.0 1.0 Buy
Arvind 0.0 1.0 1.0 Buy
Dewan Housing 0.0 1.0 1.0 Buy
TOTAL 100.0 100.0
January 2017 40
THIS PAGE INTENTIONALLY LEFT BLANK
January 2017 41
Sectors & Companies

BSE Sensex: 26,633 S&P CNX: 8,191 December 2016
MOSL Universe:
3QFY17 Highlights
&
Ready Reckoner
Note: In our quarterly performance tables, our four-quarter numbers may not always add up to the full-year
numbers. This is because of differences in classification of account heads in the company’s quarterly and annual
results or because of differences in the way we classify account heads as opposed to the company.
All stock prices and indices as on 4 January 2017, unless otherwise stated.
January 2017 42
MOSL Universe: 3QFY17 aggregate performance highlights

Quarterly Performance - MOSL Universe (INR b)
Sector Sales EBITDA PAT
Var % Var % Var %
(Nos of companies) Dec-16 Var % QoQ Dec-16 Var % QoQ Dec-16 Var % QoQ
YoY YoY YoY
Auto (13) 1,264 -1.6 0.8 174 -1.6 7.2 89 2.6 5.8
Capital Goods (12) 478 6.1 3.1 35 41.9 -12.3 15 59.3 -35.3
Cement (7) 167 -1.0 -0.1 29 3.3 -13.6 15 24.3 -26.9
Consumer (19) 405 0.1 -2.3 89 -4.5 -5.2 63 -1.2 -2.9
Financials (30) 650 7.7 -0.5 537 13.6 0.4 194 76.8 -0.2
Private Banks (11) 243 10.1 0.2 208 0.9 1.4 97 -11.7 -2.3
PSU Banks (8) 310 4.2 -2.3 254 26.6 -1.0 52 LP 6.3
NBFC (11) 96 13.7 3.9 76 13.9 2.5 46 16.0 -2.4
Healthcare (17) 381 11.7 0.7 92 9.6 -0.6 57 8.4 -6.2
Logistics (3) 31 3.6 1.4 5 1.5 13.1 3 -3.4 18.2
Media (9) 61 3.2 5.0 19 -0.2 7.7 8 -5.1 15.2
Metals (9) 1,163 22.3 12.7 222 167.6 25.8 73 LP 72.5
Oil & Gas (12) 3,034 8.0 8.9 450 39.8 35.5 265 41.9 24.8
Excl. OMCs (9) 1,242 15.3 11.1 279 23.1 10.7 163 24.5 1.1
Retail (3) 53 8.1 26.1 4 -1.0 17.5 3 -9.5 16.6
Technology (15) 891 8.6 0.6 204 4.2 -0.8 157 0.3 -1.8
Telecom (3) 361 -0.2 -3.1 125 -3.4 -9.3 8 -66.5 -63.6
Utilities (5) 476 3.8 5.3 154 3.1 22.9 73 -6.0 39.1
Others (19) 183 12.9 5.6 40 20.5 42.6 19 30.2 64.0
MOSL (176) 9,598 7.2 4.8 2,179 19.7 9.6 1,042 30.2 8.3
MOSL Excl. OMCs (173) 7,806 8.1 4.2 2,008 16.4 5.3 940 26.3 3.2
Sensex (30) 4,686 4.7 3.5 1,243 8.2 5.8 614 5.5 3.0
Nifty Ex BPCL (49) 5,718 4.8 3.4 1,474 9.2 4.2 705 12.4 -0.2
Quarter-wise sales growth ex OMCs (% YoY) Quarter-wise net profit growth ex OMCs (% YoY)
26.3%
8.1%
4.5% 6.2%
3.4%
-1.3%
0.9%
-14.2%
Mar-16 Jun-16 Sep-16 Dec-16E Mar-16 Jun-16 Sep-16 Dec-16E
Sectoral sales growth - quarter ended Dec-16 (%) Sectoral net profit growth - quarter ended Dec-16 (%)
22
LP 77
15 59
12 26 25 24
9 8 8 8 8 3 0
6 4 4 3
0 -6 -10
-1 -3 -5
0 -1 -2 -67
Utilities
MOSL Ex. OMCs
MOSL Ex. OMCs

Metals
Utilities
Oil Ex. OMCs
Health Care
Metals
Health Care
Telecom
Telecom
Oil Ex. OMCs
Consumer
Logistics
Technology
Logistics
Consumer
Cement
Auto
Technology
Media
Cement
Auto
Cap Goods
Cap Goods
Media
Retail
Retail
Financials
Financials
For Banks: Sales = Net Interest Income, EBITDA = Operating Profits
January 2017 43
Annual performance - MOSL universe (INR Billion)

SECTOR Sales (INR B) Change YoY (%) EBIDTA (INR B) Change YoY (%) PAT (INR B) Change YoY (%)
FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Auto (14) 5,684 6,564 7,532 4.0 15.5 14.7 787 987 1,192 0.0 25.4 20.8 363 484 627 6.8 33.5 29.5
Capital Goods (16) 2,218 2,481 2,777 8.4 11.8 11.9 213 268 317 27.9 25.6 18.1 117 144 179 33.6 23.4 24.6
Cement (13) 1,227 1,359 1,518 3.1 10.7 11.7 229 280 327 17.5 22.4 16.8 111 146 185 41.7 32.5 26.3
Consumer (19) 1,671 1,888 2,159 5.0 13.0 14.3 375 434 505 4.0 15.9 16.2 259 303 353 6.2 16.9 16.6
Financials (35) 3,150 3,655 4,351 6.5 16.1 19.0 2,670 2,963 3,519 13.8 11.0 18.7 888 1,232 1,623 43.8 38.8 31.7
Private Banks (12) 1,028 1,220 1,482 12.8 18.6 21.4 919 1,015 1,237 15.3 10.4 21.9 406 517 682 -0.6 27.2 32.0
PSU Banks (10) 1,532 1,751 2,016 0.4 14.3 15.1 1,227 1,341 1,518 13.6 9.3 13.2 168 349 475 LP 107.4 35.9
NBFC (13) 590 684 854 13.2 16.0 24.8 524 607 763 11.7 15.9 25.7 313 366 465 10.4 16.9 27.2
Healthcare (17) 1,523 1,750 2,008 10.4 14.9 14.7 362 447 522 8.2 23.3 16.9 225 299 353 14.7 33.1 17.8
Logistics (3) 130 140 159 -0.2 8.0 13.3 18 22 25 -6.0 20.4 15.8 11 14 17 -8.6 29.5 18.5
Media (11) 276 321 367 9.3 16.2 14.4 78 100 120 11.3 28.3 19.9 33 48 60 1.1 43.4 25.8
Metals (9) 4,460 5,060 5,228 8.8 13.4 3.3 809 959 1,032 60.0 18.6 7.6 222 313 382 65.8 40.6 22.1
Oil & Gas (12) 12302 14265 15178 0.4 16.0 6.4 1,818 1,991 2,114 24.8 9.5 6.2 1,006 1,049 1,138 31.8 4.2 8.5
Excl. OMCs (9) 5,143 5,958 6,354 2.2 15.8 6.6 1,180 1,378 1,476 15.5 16.8 7.1 633 727 802 15.8 14.9 10.3
Retail (3) 181 209 241 6.4 15.6 15.1 14 17 21 6.4 21.7 21.2 9 11 13 1.4 22.0 22.1
Technology (15) 3,569 4,045 4,467 13.3 13.3 10.4 822 942 1,008 9.0 14.6 7.0 636 712 774 6.5 12.1 8.6
Telecom (3) 1,464 1,515 1,664 1.1 3.5 9.8 518 527 595 -1.2 1.7 12.9 59 24 49 -41.6 -58.9 102.1
Utilities (5) 2,064 2,339 2,604 4.5 13.3 11.3 641 781 922 5.6 21.8 18.1 287 335 385 -10.6 16.8 15.1
Others (25) 793 957 1,105 10.4 20.6 15.5 153 193 234 10.8 26.5 21.0 71 91 114 15.1 28.7 25.2
MOSL (200) 40712 4,549 5,359 4.8 14.3 10.3 9509 10912 12452 14.8 14.8 14.1 4,295 5,205 6,251 19.5 21.2 20.1
Excl. OMCs (197) 33553 38241 42535 6.2 14.0 11.2 8,871 10300 11814 13.1 16.1 14.7 3,922 4,883 5,914 16.2 24.5 21.1
Sensex (30) 10350 11819 13127 5.1 14.2 11.1 2,715 3,114 3,562 12.5 14.7 14.4 1,250 1,533 1,842 4.7 22.6 20.2
Nifty (50) 13188 15009 16587 3.4 13.8 10.5 3,285 3,768 4,316 7.5 14.7 14.5 1,532 1,867 2,248 8.7 21.9 20.4
For Banks: Sales = Net Interest Income, EBIDTA = Operating Profits; Note: Sensex & Nifty Numbers are Free Float
Valuations - MOSL universe
PE (x) EV / EBIDTA (x) P/BV (x) ROE (%) Div Yield (%) EARN. CAGR
Sector FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY16 (FY17-FY19)
Auto (14) 21.4 16.0 12.4 9.5 7.3 5.7 3.8 3.2 2.7 17.6 20.0 21.7 1.0 31.5
Capital Goods (16) 30.8 24.9 20.0 19.8 15.4 13.0 2.9 2.7 2.5 9.5 10.9 12.4 1.1 24.0
Cement (13) 27.1 20.5 16.2 13.6 10.7 8.6 2.8 2.6 2.3 10.5 12.6 14.2 0.6 29.3
Consumer (19) 37.9 32.4 27.8 25.5 21.8 18.6 11.1 9.7 8.4 29.3 29.9 30.3 1.5 16.8
Financials (35) 17.9 12.9 9.8 1.7 1.6 1.4 9.7 12.3 14.5 1.3 35.2
Private Banks (12) 21.0 16.5 12.5 2.5 2.2 2.0 11.9 13.6 15.8 0.9 29.6
PSU Banks (10) 18.2 8.8 6.5 0.8 0.7 0.7 4.2 8.3 10.5 0.9 67.9
NBFC (13) 13.6 11.7 9.2 2.4 2.1 1.8 17.7 18.1 19.9 2.5 21.9
Healthcare (17) 25.0 18.8 16.0 15.4 12.1 9.9 4.5 3.7 3.1 17.8 19.8 19.6 0.6 25.2
Logistics (3) 27.4 21.1 17.8 14.5 11.8 9.9 2.6 2.4 2.2 9.5 11.4 12.4 1.2 23.9
Media (11) 30.7 21.4 17.1 12.7 9.6 7.8 5.1 4.4 3.8 16.7 20.6 22.1 1.2 34.3
Metals (9) 17.1 12.2 10.0 8.1 6.7 5.9 1.3 1.2 1.2 7.8 10.2 11.5 7.3 31.0
Oil & Gas (12) 10.9 10.5 9.7 6.1 5.4 4.7 1.5 1.4 1.3 13.8 13.2 13.1 2.3 6.4
Excl. OMCs (9) 12.5 10.9 9.9 6.3 5.1 4.3 1.3 1.3 1.2 10.7 11.5 11.8 2.0 12.5
Retail (3) 45.8 37.5 30.7 27.9 22.8 18.5 7.0 6.2 5.5 15.2 16.7 17.9 0.5 22.1
Technology (15) 16.5 14.7 13.6 11.4 9.7 8.7 3.9 3.4 3.0 23.4 22.9 21.8 1.8 10.3
Telecom (3) 37.2 90.5 44.8 7.0 6.7 5.6 2.0 1.9 1.9 5.3 2.1 4.2 0.5 -8.8
Utilities (5) 15.4 13.2 11.5 10.5 8.9 7.7 2.3 2.2 2.0 15.1 16.3 17.4 5.7 15.9
Others (25) 23.8 18.5 14.8 11.2 8.7 7.0 5.4 4.7 4.0 22.7 25.5 27.4 1.8 27.0
MOSL (200) 18.9 15.6 13.0 N.M N.M N.M 2.5 2.3 2.0 13.3 14.6 15.8 1.8 20.6
MOSL Excl. OMCs (197) 19.9 16.0 13.2 N.M N.M N.M 2.5 2.3 2.1 12.7 14.4 15.7 1.8 22.8
Sensex (30) 19.6 16.0 13.3 N.M N.M N.M 2.7 2.4 2.1 13.6 15.0 16.2 1.5 21.4
Nifty (50) 19.6 16.1 13.4 N.M N.M N.M 2.7 2.4 2.1 13.5 14.9 16.0 1.5 21.2
N.M.: Not Meaningful.
January 2017 44
Ready reckoner: Quarterly performance

Sector CMP Sales (INR m) EBDITA (INR M) PAT (INR M)
Var % Var % Var % Var % Var % Var %
(INR) RECO Dec-16 Dec-16 Dec-16
YoY QoQ YoY QoQ YoY QoQ
Automobiles
Amara Raja Batt. 899 Buy 12,558 2.5 -6.7 2,066 -9.6 -10.1 1,198 -12.0 -12.1
Ashok Leyland 84 Buy 46,272 13.3 0.1 5,021 16.9 -6.4 2,808 38.1 -4.6
Bajaj Auto 2,689 Buy 50,471 -9.3 -16.6 9,788 -16.4 -24.5 8,498 -5.7 -24.3
Bharat Forge 913 Buy 9,223 -12.3 3.5 2,601 -18.0 5.0 1,377 -18.5 8.5
Bosch 20,450 Neutral 28,228 3.0 8.1 3,613 4.0 -23.0 3,076 39.3 -27.3
Eicher Motors 22,178 Buy 18,440 -44.4 5.1 5,809 12.3 7.1 4,225 56.0 2.3
Escorts 321 Buy 10,746 21.0 8.0 838 145.6 34.2 483 136.6 40.8
Exide Inds. 182 Buy 15,515 2.0 -19.3 2,167 -7.5 -25.3 1,283 -4.3 -28.2
Hero Motocorp 3,014 Neutral 64,319 -11.8 -17.5 10,273 -16.5 -30.7 6,900 -13.3 -31.3
Mahindra & Mahindra 1,221 Buy 103,467 -1.1 1.7 15,006 6.1 2.2 8,917 8.7 -28.8
Maruti Suzuki 5,510 Buy 165,942 10.0 -7.0 25,229 16.3 -16.9 19,433 39.4 -19.0
Tata Motors 487 Buy 708,422 -2.0 7.5 89,260 -4.8 42.1 29,165 -15.9 256.1
TVS Motor 374 Buy 30,341 3.2 -11.5 2,169 10.4 -21.6 1,306 21.2 -26.4
Sector Aggregate 1,263,943 -1.6 0.8 173,841 -1.6 7.2 88,668 2.6 5.8
Capital Goods
ABB 1,037 Neutral 26,779 10.4 30.3 2,721 0.9 79.5 1,424 4.8 63.5
Bharat Electronics 1,431 Buy 18,500 21.9 8.6 3,427 17.1 2.3 3,219 8.9 -6.1
BHEL 127 Sell 60,500 13.6 -9.2 -7,500 Loss PL -6,755 Loss PL
CG Consumer Elect. 152 Buy 7,700 -4.9 -13.5 555 -33.0 -43.0 325 -23.3 -41.3
Crompton Greaves 61 Sell 13,160 7.5 -12.0 1,090 13.0 30.7 969 132.8 261.2
Cummins India 809 Neutral 12,219 6.5 -4.5 1,792 15.6 -10.0 1,680 3.5 -14.7
GE T&D India 302 Neutral 8,500 14.3 1.9 370 LP 9.0 40 LP -80.6
Havells India 351 Buy 13,318 -0.9 -8.3 1,034 -43.0 -49.2 704 -40.9 -50.0
Larsen & Toubro 1,376 Buy 273,000 5.7 9.2 27,700 4.5 20.6 11,000 6.3 6.6
Siemens 1,121 Neutral 22,650 -2.1 -26.7 1,940 0.0 -19.7 1,340 17.5 -27.4
Thermax 780 Sell 9,664 -7.0 11.0 902 -8.7 16.7 614 -9.5 2.9
Voltas 335 Buy 11,688 -10.6 20.8 575 -1.4 -16.3 505 -2.9 -30.0
Sector Aggregate 477,678 6.1 3.1 34,606 41.9 -12.3 15,065 59.3 -35.3
Cement
ACC 1,320 Neutral 26,566 -6.7 7.5 1,880 -13.0 -16.3 583 -43.2 -30.7
Ambuja Cements 212 Buy 21,800 -7.5 8.8 2,664 -12.4 -3.5 1,612 10.9 -41.8
Grasim Industries 867 UR 24,792 7.2 -0.4 5,238 22.1 -1.2 3,701 42.2 -37.5
India Cements 122 Neutral 11,919 28.2 -8.8 2,011 37.6 -10.4 481 780.8 -22.9
Ramco Cements 575 Buy 9,264 14.1 -8.5 2,627 7.4 -24.8 1,409 19.7 -31.9
Shree Cement 14,131 Buy 18,879 3.3 -5.9 4,941 16.5 -24.7 2,592 151.8 -11.1
Ultratech Cement 3,299 Buy 53,435 -7.0 -1.0 9,634 -7.7 -11.9 5,078 -0.2 -15.5
Sector Aggregate 166,654 -1.0 -0.1 28,995 3.3 -13.6 15,457 24.3 -26.9
Consumer
Asian Paints 906 Neutral 40,343 5.0 7.2 7,632 -2.7 7.0 5,025 -3.6 5.6
Britannia 2,851 Buy 20,158 -6.0 -14.6 2,483 -19.1 -20.7 1,827 -19.5 -22.0
Colgate 895 Buy 9,953 7.5 -5.1 2,440 3.9 -11.2 1,417 3.5 -21.8
Dabur 277 Neutral 19,943 2.0 0.9 3,505 -6.0 -13.0 3,007 -5.1 -14.4
Emami 1,031 Buy 7,608 5.0 30.2 2,543 1.9 45.1 1,820 -6.8 36.2
Godrej Consumer 1,532 Neutral 25,145 10.0 6.7 4,617 1.7 -0.3 3,270 -1.2 1.8
GSK Consumer 5,058 Neutral 9,517 -3.0 -11.9 1,577 -4.2 -35.7 1,356 1.8 -26.2
Hind. Unilever 821 Neutral 78,804 1.5 0.5 13,728 -4.0 -2.3 9,898 1.9 -8.5
ITC 245 Buy 88,097 -4.0 -8.8 33,729 -6.4 -7.1 25,824 -2.7 3.3
Jyothy Labs 335 Neutral 3,763 1.0 -8.6 468 -10.0 -26.6 218 42.1 -31.9
Marico 258 Buy 14,526 -5.0 0.9 2,654 -7.5 6.5 1,858 -8.0 2.9
Nestle 5,893 Neutral 19,376 -0.5 -17.4 3,474 -0.5 -22.6 1,972 -5.5 -31.5
January 2017 45

P&G Hygiene 6,891 Buy 7,505 10.0 25.0 1,855 -14.3 22.7 1,255 -14.4 20.2
Page Industries 13,782 Buy 4,805 9.0 -10.6 961 6.3 -10.6 650 13.3 -5.3
Parag Milk Foods 264 Neutral 3,991 3.0 -15.6 350 -7.6 -7.3 146 0.4 1.7
Pidilite Inds. 608 Buy 13,525 1.0 -4.6 2,847 -3.6 -11.7 1,815 -2.7 -21.4
Radico Khaitan 117 Neutral 4,244 0.0 -5.1 471 -15.3 -17.0 163 -27.7 -27.8
United Breweries 796 Buy 10,676 -2.9 2.8 1,356 -22.5 11.9 747 4.8 176.1
United Spirits 1,952 Buy 22,894 -5.0 12.4 2,447 41.2 8.7 1,128 2145.7 15.3
Sector Aggregate 404,872 0.1 -2.3 89,135 -4.5 -5.2 63,395 -1.2 -2.9
Healthcare
Alembic Pharma 605 Neutral 8,075 -12.3 -7.3 1,696 -55.8 -4.2 1,137 -57.7 -4.2
Alkem Lab 1,670 Neutral 14,404 13.0 -12.1 2,548 8.2 -17.9 2,083 11.2 -26.4
Aurobindo Pharma 666 Buy 38,595 10.4 2.2 9,456 14.9 1.8 6,106 16.3 3.3
Biocon 936 Sell 9,273 12.0 -1.3 2,253 25.3 0.2 1,382 34.2 -6.0
Cadila Health 362 Buy 25,827 6.4 9.8 5,553 -4.0 7.6 3,688 -5.5 9.2
Cipla 568 Neutral 39,015 25.6 4.0 6,897 30.3 1.3 4,077 18.3 15.1
Divis Labs 753 Neutral 10,349 21.5 4.3 3,881 20.8 5.5 2,764 12.1 -8.8
Dr Reddy’ s Labs 3,091 Neutral 37,242 -6.1 3.9 7,821 -22.0 29.8 4,494 -22.4 38.5
Fortis Health 189 Buy 11,244 8.0 -6.0 1,054 665.5 6.5 -766 Loss PL
Glenmark Pharma 899 Neutral 23,424 35.8 7.8 5,388 59.5 35.4 3,108 82.9 41.7
Granules India 110 Buy 4,070 18.0 11.9 834 23.2 12.4 389 43.2 -4.7
GSK Pharma 2,747 Neutral 8,016 10.0 2.4 1,523 48.3 22.3 1,166 40.2 18.2
IPCA Labs. 550 Neutral 8,098 18.4 -7.1 1,218 36.5 -4.8 567 135.8 20.3
Lupin 1,494 Buy 42,453 19.4 -1.1 10,499 19.7 2.1 6,241 17.8 -5.8
Sanofi India 4,290 Buy 6,145 8.1 -1.6 1,438 27.3 -0.7 809 14.8 0.3
Sun Pharma 638 Buy 80,368 13.5 -2.8 26,834 23.7 -15.3 17,534 23.8 -21.6
Torrent Pharma 1,351 Buy 14,773 -4.0 5.1 3,565 -41.8 8.0 2,250 -35.4 8.7
Logistics
Allcargo Logistics 179 Buy 14,613 9.3 3.8 1,316 11.2 4.4 680 10.5 5.5
Concor 1,151 Neutral 13,674 -2.6 -0.8 2,738 -2.2 19.7 1,924 -6.7 21.9
Gateway Distriparks 255 Buy 2,876 7.6 0.6 616 -0.4 6.0 280 -9.6 28.8
Sector Aggregate 31,163 3.6 1.4 4,671 1.5 13.1 2,883 -3.4 18.2
Media
D B Corp 374 Buy 6,137 4.8 16.1 1,811 -3.1 20.3 1,039 -2.8 17.3
Dish TV 85 Buy 7,935 2.9 1.8 2,731 2.9 3.4 441 -35.7 -37.1
Hathway Cable 37 Buy 3,387 12.7 5.5 569 14.3 6.7 -413 Loss Loss
HT Media 75 Neutral 6,595 -3.2 9.5 1,002 -15.5 98.6 476 -30.8 54.0
Jagran Prakashan 181 Buy 5,833 1.2 27.1 1,586 -7.9 30.7 782 -16.2 7.7
PVR 1,173 Buy 5,505 10.0 -0.7 881 3.3 -5.3 258 -15.6 -11.6
Siti Networks 38 Buy 3,347 -9.5 15.8 957 -23.5 102.1 167 -57.2 LP
Sun TV 524 UR 6,252 8.9 0.0 4,785 8.6 2.6 2,439 13.1 -9.8
Zee Entertainment 458 Buy 16,492 3.4 -2.7 4,373 1.7 -10.6 3,024 10.0 26.8
Sector Aggregate 61,484 3.2 5.0 18,694 -0.2 7.7 8,212 -5.1 15.2
Metals
Hindalco 159 Buy 254,247 8.8 3.7 32,029 39.0 5.7 10,044 130.0 8.1
Hindustan Zinc 251 Neutral 56,904 65.9 61.4 33,801 128.6 62.8 29,300 61.8 54.1
JSPL 71 Neutral 56,664 23.3 16.6 13,574 146.6 60.0 -3,293 Loss Loss
JSW Steel 163 Buy 149,227 71.6 12.8 24,441 174.1 -17.4 4,170 LP -42.6
Nalco 66 Buy 18,766 14.8 1.7 3,581 162.6 107.8 1,922 93.4 58.5
January 2017 46

NMDC 134 Buy 24,300 60.2 39.7 14,744 128.9 78.5 10,572 61.0 37.2
SAIL 51 Sell 107,930 20.7 -3.9 -2,259 Loss PL -14,906 Loss Loss
Tata Steel 405 Sell 282,582 0.8 7.2 33,750 335.1 13.6 5,073 LP LP
Vedanta 217 Neutral 212,241 42.7 33.8 68,574 136.0 46.9 29,702 LP 137.2
Sector Aggregate 1,162,860 22.3 12.7 222,233 167.6 25.8 72,585 LP 72.5
Oil & Gas

BPCL 656 Buy 458,795 -1.6 2.8 33,984 43.8 154.6 22,583 51.7 73.0
Cairn India 243 Neutral 22,977 12.7 12.7 11,570 56.7 11.2 6,010 6816.5 -22.8
GAIL 440 Neutral 150,533 12.5 26.9 16,796 54.8 10.8 9,608 44.6 3.9
Gujarat State Petronet 140 Neutral 2,523 1.9 -1.6 2,205 5.7 -1.8 1,159 -6.1 -10.7
HPCL 461 Buy 432,589 -0.4 2.9 28,369 30.7 138.6 15,646 50.1 123.1
IOC 343 Buy 900,208 8.2 12.5 108,326 118.4 98.9 63,907 109.1 104.7
Indraprastha Gas 935 Neutral 8,889 -4.1 -7.6 2,461 33.0 -4.4 1,439 36.9 -7.3
MRPL 108 Buy 118,538 34.4 18.9 16,173 166.2 159.0 11,279 277.3 171.2
Oil India 457 Buy 23,154 4.4 3.2 7,952 26.4 6.3 5,645 37.5 -2.7
ONGC 194 Neutral 193,263 5.1 5.7 97,075 12.4 1.8 44,489 9.0 -10.6
Petronet LNG 375 Buy 81,218 57.8 22.8 5,314 68.2 -26.9 3,342 87.4 -27.3
Reliance Inds. 1,069 Neutral 640,982 13.3 7.6 119,725 16.6 13.4 80,021 10.9 3.9
Sector Aggregate 3,033,669 8.0 8.9 449,949 39.8 35.5 265,129 41.9 24.8
Oil & Gas Excl. OMCs 1,242,077 15.3 11.1 279,270 23.1 10.7 162,992 24.5 1.1
Retail
Jubilant Foodworks 860 Neutral 5,832 -8.0 -12.4 552 -24.0 -14.1 130 -55.6 -39.7
Shopper's Stop 295 Neutral 9,573 5.0 1.9 507 -28.8 53.6 113 -52.2 5.6
Titan Company 359 Neutral 38,062 12.0 44.4 3,144 12.0 20.7 2,276 0.9 23.9
Sector Aggregate 53,468 8.1 26.1 4,204 -1.0 17.5 2,519 -9.5 16.6
Technology
Cyient 494 Buy 9,234 18.1 1.1 1,243 12.8 -3.1 1,031 18.8 6.0
HCL Technologies 859 Buy 117,094 13.2 1.7 24,779 11.4 -1.3 19,735 2.8 -2.1
Hexaware Tech. 213 Neutral 9,148 11.6 1.2 1,591 22.2 0.9 1,196 20.4 7.4
Infosys 998 Buy 170,887 7.5 -1.3 45,358 4.8 -4.2 34,912 0.8 -3.2
KPIT Tech. 137 Neutral 8,283 1.9 -0.3 997 -15.5 9.1 619 -15.8 10.2
L&T Infotech 695 Buy 16,279 12.1 1.6 3,007 13.2 -1.2 2,367 -25.6 1.8
Mindtree 526 Neutral 12,995 7.0 0.3 1,633 -23.9 0.8 1,058 -29.9 11.6
MphasiS 534 Neutral 14,904 -1.7 -1.8 2,186 0.9 -11.3 1,952 12.4 -9.9
NIIT Tech. 437 Neutral 7,175 5.7 3.8 1,209 -2.1 7.8 712 -3.9 -1.1
Persistent Systems 647 Neutral 7,326 23.7 4.1 1,196 7.7 8.0 680 -12.2 -7.4
Tata Elxsi 1,419 Buy 3,097 13.0 2.1 773 16.6 3.8 494 23.8 14.7
TCS 2,379 Neutral 294,529 7.6 0.6 80,095 3.4 -1.3 62,523 2.3 -5.1
Tech Mahindra 500 Buy 73,632 9.9 2.7 11,502 1.3 7.5 7,063 -7.0 9.5
Wipro 476 Neutral 138,960 8.1 0.9 27,351 2.3 3.1 21,863 -2.1 5.8
Zensar Tech 944 Buy 7,954 5.1 2.4 1,119 2.7 2.4 820 14.7 19.4
Telecom
Bharti Airtel 314 Buy 240,516 -0.1 -2.4 86,965 3.4 -7.9 10,894 -14.3 -25.6
Bharti Infratel 353 Buy 33,587 8.1 2.0 14,727 8.1 1.6 7,798 57.5 0.8
Idea Cellular 74 Sell 86,883 -3.6 -6.6 22,903 -26.8 -19.4 -10,222 PL PL
Sector Aggregate 360,986 -0.2 -3.1 124,595 -3.4 -9.3 8,471 -66.5 -63.6
January 2017 47

Utilities
CESC 646 Buy 16,028 4.2 -20.5 3,576 20.0 -39.5 1,450 29.5 -40.1
Coal India 306 Neutral 196,628 3.6 25.7 32,585 -22.3 1761.1 28,763 -21.9 379.3
JSW Energy 61 Buy 20,531 -22.5 0.3 8,478 -28.8 -11.9 1,462 -54.4 -32.7
NTPC 165 Buy 176,559 2.0 -8.2 50,238 11.0 -4.1 21,775 5.2 -7.0
Power Grid Corp. 186 Buy 66,159 23.4 6.3 59,272 24.8 6.3 19,887 23.3 6.2
Others
Arvind 358 Buy 22,869 6.0 -1.9 2,767 -1.3 19.1 1,123 7.7 47.1
Bata India 463 Buy 5,682 -8.0 -2.7 540 -32.3 0.9 314 -29.5 -9.2
Castrol India 386 Buy 7,834 -0.6 3.2 2,179 4.1 3.7 1,461 3.7 5.2
Coromandel International 304 Buy 28,381 3.0 -20.6 2,327 40.8 -39.5 1,177 82.9 -44.8
Dynamatic Tech. 2,960 Buy 3,809 5.0 -0.3 430 43.3 -2.4 85 244.5 5.3
Indo Count Inds. 166 Buy 5,529 10.0 -4.1 1,205 11.2 3.5 701 10.5 11.8
Info Edge 859 Buy 2,133 23.0 1.5 634 64.8 -8.7 573 163.3 -28.5
Inox Leisure 230 Sell 3,122 5.0 5.0 518 -1.9 90.6 178 -6.7 1017.2
Interglobe Aviation 843 Neutral 58,156 35.3 39.6 22,255 33.6 130.0 9,446 43.7 575.6
Jain Irrigation 93 Buy 14,474 5.0 0.5 1,737 13.8 -9.1 49 LP -82.5
Just Dial 343 Buy 1,713 0.0 -5.0 274 -26.7 22.2 221 -18.3 -25.5
Kaveri Seed 414 Neutral 1,057 15.0 56.0 63 -50.9 87.8 26 -71.7 -66.3
MCX 1,281 Buy 601 20.7 0.9 194 44.5 -0.6 343 45.5 -8.8
Manpasand Beverages 557 Buy 989 10.0 -3.5 179 0.7 -19.5 66 34.7 22.4
Monsanto India 2,254 Buy 1,767 15.0 83.2 498 7.0 2715.8 448 -3.1 4938.2
P I Industries 825 Buy 5,621 10.0 -1.7 1,282 22.3 0.2 939 33.5 -7.4
SRF 1,554 Buy 11,468 4.5 0.3 2,236 -4.3 -3.9 970 -8.1 -14.5
S H Kelkar 336 Buy 2,416 5.0 -1.5 403 -2.6 -3.1 242 3.6 -0.2
TTK Prestige 5,718 Neutral 5,016 12.0 0.1 627 7.9 0.9 377 1.4 -3.0
Other Sector Aggregate 182,637 12.9 5.6 40,350 20.5 42.6 18,741 30.2 64.0
PL: Profit to Loss; LP: Loss to Profit; UR: Under Review
January 2017 48

Sector Net Interest Income Operating Profit Net Profit
(INR Million) CMP (INR) RECO Dec-16 Dec-16 Dec-16
Financials
Private Banks
Axis Bank 454 Neutral 44,917 7.9 -0.5 42,552 6.8 3.8 6,836 -68.6 114.2
DCB Bank 112 Neutral 1,949 21.5 2.4 1,048 24.4 3.9 498 20.8 2.6
Equitas Holdings 148 Buy 2,116 39.7 5.5 786 -3.8 -37.9 432 0.4 -6.8
Federal Bank 66 Buy 7,377 21.9 1.6 4,598 41.3 -3.2 1,871 15.0 -7.0
HDFC Bank 1,186 Buy 80,157 13.4 0.3 62,637 9.2 4.0 39,019 16.2 12.9
ICICI Bank 251 Buy 51,555 -5.5 -1.9 51,278 -21.8 3.5 22,336 -26.0 -28.0
IDFC Bank 60 UR 5,143 33.1 3.8 3,912 0.6 -32.8 1,917 -20.8 -50.6
IndusInd Bank 1,101 Buy 15,140 29.0 3.7 13,066 23.2 1.9 7,128 22.7 1.2
Kotak Mahindra Bank 695 Buy 20,213 14.4 1.3 13,713 13.8 -4.8 8,049 26.8 -1.0
RBL Bank 345 Buy 3,293 NA 8.7 2,393 NA 9.2 1,197 NA 33.1
Yes Bank 1,163 Buy 14,632 26.5 1.2 13,985 21.7 0.9 8,449 25.0 5.4
Pvt Banking Aggregate 243,200 10.1 0.2 207,575 0.9 1.4 96,535 -11.7 -2.3
PSU Banks
Bank of Baroda 148 Buy 32,781 21.2 -4.3 26,580 56.0 -1.2 8,246 LP 49.4
Bank of India 108 Neutral 26,224 -3.2 -3.6 18,361 30.3 -26.3 242 LP -80.9
Canara Bank 264 UR 23,925 7.4 -2.0 21,899 41.1 2.3 4,130 386.1 15.7
Indian Bank 225 Buy 12,238 10.2 -4.3 10,121 33.1 0.6 3,713 777.8 -8.3
Oriental Bank of Commerce 107 Neutral 12,437 -5.0 -5.5 8,841 15.4 -7.5 2,019 LP 31.7
Punjab National Bank 115 Buy 37,397 -9.2 -3.6 32,789 12.4 -1.0 4,426 767.6 -19.4
State Bank 243 Buy 143,275 5.3 -0.8 118,715 23.7 5.8 26,554 138.1 4.6
Union Bank 125 Buy 22,097 10.7 -3.0 16,519 23.8 -9.2 2,307 193.7 30.6
PSU Banking Aggregate 310,374 4.2 -2.3 253,825 26.6 -1.0 51,637 LP 6.3
NBFC
Bajaj Finance 870 Buy 14,773 12.6 6.2 8,623 11.8 8.4 4,404 7.8 8.0
Bharat Financial 629 Buy 1,958 32.6 -7.4 1,243 11.2 -19.7 1,043 31.2 -28.5
Dewan Housing 244 Buy 4,785 12.2 -2.8 3,770 14.8 -5.1 2,122 14.1 -8.8
GRUH Finance 328 Neutral 1,332 10.9 0.7 1,057 6.1 0.7 640 19.2 3.4
HDFC 1,213 Buy 23,927 9.6 4.2 22,357 8.8 3.7 16,539 8.8 -9.5
Indiabulls Housing 644 Buy 9,409 10.8 6.7 9,806 21.7 6.4 7,298 21.1 6.6
LIC Housing Fin 518 Buy 9,298 24.5 7.4 8,517 25.2 7.7 5,316 26.9 7.5
M & M Financial 274 Buy 8,364 14.5 6.8 4,834 8.8 7.3 1,512 125.1 59.5
Muthoot Finance 287 Buy 7,386 31.5 -2.3 4,201 41.3 -12.4 2,617 40.2 -11.8
Repco Home Fin 577 Buy 889 13.9 -1.5 778 13.9 -7.1 411 6.6 -10.0
Shriram Transport Fin. 911 Buy 14,003 7.7 3.5 10,553 6.5 0.2 3,781 0.8 -2.5
NBFC Banking Aggregate 96,124 13.7 3.9 75,739 13.9 2.5 45,683 16.0 -2.4
Financials Sector Aggregate 649,697 7.7 -0.5 537,139 13.6 0.4 193,855 76.8 -0.2
PL: Profit to Loss; LP: Loss to Profit; UR: Under Review
January 2017 49
Ready reckoner: Full year valuations

Sector / Companies CMP RECO EPS (INR) PE (x) EV/EBIDTA (x) ROE (%)
(INR) FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Automobiles
Amara Raja Batt. 899 Buy 29.7 38.8 46.1 30.3 23.2 19.5 17.5 13.9 11.5 21.9 23.6 23.1
Ashok Leyland 84 Buy 4.9 6.6 7.9 17.0 12.8 10.6 9.1 7.1 5.7 23.5 26.5 26.8
Bajaj Auto 2,689 Buy 133.0 158.9 186.5 20.2 16.9 14.4 14.1 11.5 9.6 29.4 30.9 31.8
Bharat Forge 913 Buy 25.8 36.4 46.3 35.4 25.1 19.7 16.5 13.1 10.7 15.9 20.0 21.9
Bosch 20,450 Neutral 507.6 657.7 738.1 40.3 31.1 27.7 32.3 24.1 20.4 19.7 24.5 23.0
Endurance Tech. 572 Buy 22.6 28.7 34.6 25.3 19.9 16.5 11.5 9.4 7.9 19.9 21.1 21.4
Eicher Motors 22,178 Buy 608.7 869.5 1091.6 36.4 25.5 20.3 26.3 19.2 15.4 40.3 41.6 37.8
Escorts 321 Buy 20.7 34.2 46.2 15.5 9.4 6.9 12.6 8.2 5.9 10.9 16.3 19.1
Exide Inds. 182 Buy 7.8 9.4 11.2 23.3 19.3 16.3 11.8 9.9 7.9 13.6 14.7 15.3
Hero Motocorp 3,014 Neutral 169.5 192.2 195.0 17.8 15.7 15.5 11.8 10.2 9.9 39.0 37.5 32.6
Mahindra & Mahindra 1,221 Buy 66.0 83.7 99.0 18.5 14.6 12.3 5.5 4.6 3.9 14.5 14.5 15.4
Maruti Suzuki 5,510 Buy 257.4 312.5 379.1 21.4 17.6 14.5 13.4 10.2 8.1 23.1 23.1 23.1
Tata Motors 487 Buy 29.0 45.6 70.5 16.8 10.7 6.9 5.6 4.2 2.9 11.5 15.9 20.6
TVS Motor 374 Buy 11.9 16.5 19.6 31.4 22.7 19.1 19.5 14.5 12.0 26.5 29.5 28.1
Sector Aggregate 21.4 16.0 12.4 9.5 7.3 5.7 17.6 20.0 21.7
Capital Goods
ABB 1,037 Neutral 18.2 26.9 32.2 57.0 38.5 32.3 29.1 19.3 16.5 11.4 14.5 15.4
Bharat Electronics 1,431 Buy 60.0 69.9 80.3 23.8 20.5 17.8 18.8 16.5 13.5 19.2 18.3 18.5
BHEL 127 Sell 3.9 5.5 8.5 32.2 23.1 15.0 17.0 9.2 7.4 2.9 3.9 5.8
CG Consumer Elect. 152 Buy 3.7 5.1 6.3 40.6 29.5 24.1 24.8 18.8 15.6 80.9 74.2 66.1
Crompton Greaves 61 Sell 0.6 1.9 3.2 109.3 32.9 19.0 7.8 6.3 5.1 4.2 6.0 8.0
Cummins India 809 Neutral 26.0 30.2 36.3 31.1 26.8 22.3 28.7 23.8 19.2 22.0 23.1 25.2
GE T&D India 302 Neutral 5.6 10.7 15.0 53.6 28.4 20.2 32.6 15.5 11.6 -6.8 20.1 25.1
Havells India 351 Buy 7.5 11.3 13.6 46.8 31.0 25.9 26.4 20.4 16.4 16.9 23.3 24.6
Inox Wind 183 Neutral 17.5 20.0 23.8 10.5 9.2 7.7 7.4 6.8 5.4 19.3 18.6 18.8
K E C International 144 Buy 10.1 12.1 14.0 14.3 11.9 10.3 7.7 6.8 5.9 16.0 16.7 16.8
Larsen & Toubro 1,376 Buy 53.6 62.2 76.1 25.7 22.1 18.1 18.8 14.9 13.1 10.9 11.7 13.0
Siemens 1,121 Neutral 17.0 25.4 31.6 65.9 44.1 35.5 37.3 28.4 22.9 9.2 12.6 14.3
Solar Inds. 713 Neutral 19.3 22.9 29.6 37.0 31.1 24.1 20.5 17.6 14.0 18.6 19.0 20.9
Thermax 780 Sell 24.8 27.6 32.0 31.5 28.3 24.4 20.3 17.6 14.7 12.2 12.5 13.4
Va Tech Wabag 486 Buy 25.2 32.6 36.0 19.2 14.9 13.5 9.7 7.4 6.7 13.2 15.4 15.2
Voltas 335 Buy 11.8 14.0 17.6 28.4 23.8 19.0 19.5 17.0 12.9 15.4 16.4 18.1
Cement
ACC 1,320 Neutral 32.6 48.9 65.6 40.5 27.0 20.1 19.6 15.3 12.9 7.2 10.9 14.6
Ambuja Cements 212 Buy 5.7 6.9 7.4 37.4 30.6 28.8 25.9 22.6 20.2 5.9 7.1 7.3
Birla Corporation 675 Buy 33.8 44.5 56.6 20.0 15.2 11.9 9.9 7.3 5.9 8.5 9.8 11.9
Dalmia Bharat 1,580 Buy 34.2 50.4 72.3 46.2 31.3 21.9 11.8 9.8 9.3 7.6 10.3 13.1
Grasim Industries 867 UR 76.1 88.7 113.4 11.4 9.8 7.6 5.7 4.6 2.7 12.9 13.3 14.9
India Cements 122 Neutral 8.9 10.6 12.7 13.6 11.5 9.6 7.5 7.4 6.6 7.0 7.4 8.0
J K Cements 728 Buy 26.4 36.5 48.7 27.5 20.0 15.0 12.7 10.6 9.5 10.9 13.7 16.1
JK Lakshmi Cem. 365 Buy 4.7 12.2 17.6 77.3 29.9 20.7 15.8 12.6 10.4 4.2 10.5 14.7
Orient Cement 126 Buy -1.1 3.3 5.7 -114.9 37.8 21.9 19.2 12.1 10.6 -2.3 6.8 11.0
Prism Cement 84 Buy 0.9 3.5 5.1 94.4 24.0 16.6 22.2 13.0 8.9 4.5 16.0 19.8
Ramco Cements 575 Buy 29.4 31.5 42.3 19.5 18.3 13.6 12.4 10.4 8.2 20.6 18.6 21.0
Shree Cement 14,131 Buy 394.3 582.0 725.4 35.8 24.3 19.5 19.0 14.1 11.2 20.2 24.3 24.2
Ultratech Cement 3,299 Buy 94.6 134.8 168.4 34.9 24.5 19.6 19.0 14.1 11.7 11.9 15.0 16.4
January 2017 50

Consumer
Asian Paints 906 Neutral 20.2 22.6 26.4 44.9 40.0 34.3 28.6 25.7 22.1 32.4 32.0 32.3
Britannia 2,851 Buy 70.6 82.1 97.8 40.4 34.7 29.1 29.0 24.5 20.3 42.2 38.8 36.9
Colgate 895 Buy 22.3 27.2 32.9 40.2 32.9 27.2 24.1 19.8 16.5 56.3 63.2 70.5
Dabur 277 Neutral 7.2 8.5 10.0 38.6 32.6 27.8 31.1 26.1 22.1 27.8 27.9 27.8
Emami 1,031 Buy 24.7 30.6 37.1 41.7 33.7 27.8 31.0 26.4 22.0 34.1 33.6 33.8
Godrej Consumer 1,532 Neutral 36.8 43.8 50.4 41.7 35.0 30.4 30.5 25.9 22.7 22.3 22.7 22.1
GSK Consumer 5,058 Neutral 157.7 178.8 201.2 32.1 28.3 25.1 22.0 19.1 16.3 25.1 24.7 24.2
Hind. Unilever 821 Neutral 19.7 22.4 25.8 41.6 36.6 31.8 29.1 25.7 22.3 68.7 79.1 89.8
ITC 245 Buy 8.4 9.6 11.0 29.2 25.6 22.3 19.8 17.1 14.6 28.4 28.3 28.5
Jyothy Labs 335 Neutral 7.2 8.5 10.1 46.5 39.5 33.4 25.9 22.1 19.4 15.0 16.5 17.9
Marico 258 Buy 6.0 7.2 8.5 43.2 35.6 30.3 29.7 24.6 21.1 32.8 33.1 34.8
Nestle 5,893 Neutral 111.5 139.2 168.7 52.8 42.3 34.9 31.4 25.0 20.6 35.9 39.2 40.1
P&G Hygiene 6,891 Buy 138.5 168.9 201.7 49.8 40.8 34.2 32.3 25.7 21.2 27.7 29.4 30.3
Page Industries 13,782 Buy 247.4 312.7 402.4 55.7 44.1 34.2 36.4 28.1 22.4 42.9 42.7 44.0
Parag Milk Foods 264 Neutral 7.0 9.7 14.1 37.5 27.3 18.7 16.0 12.8 9.7 10.8 10.5 13.5
Pidilite Inds. 608 Buy 16.4 18.4 20.6 37.1 33.1 29.5 24.2 21.4 18.6 27.6 25.6 23.5
Radico Khaitan 117 Neutral 5.3 7.1 8.2 22.2 16.6 14.2 12.5 11.3 10.2 7.3 9.1 9.9
United Breweries 796 Buy 12.3 16.4 19.7 64.5 48.7 40.4 30.8 24.7 20.2 14.5 16.9 17.5
United Spirits 1,952 Buy 27.8 45.7 61.7 70.3 42.8 31.6 34.4 25.1 19.7 20.3 23.6 24.5
Healthcare
Alembic Pharma 605 Neutral 23.5 30.7 36.5 25.7 19.7 16.6 16.7 12.7 10.2 25.1 26.8 25.6
Alkem Lab 1,670 Neutral 77.3 84.4 98.4 21.6 19.8 17.0 18.0 14.8 11.6 23.9 21.8 21.5
Aurobindo Pharma 666 Buy 42.0 50.0 56.9 15.8 13.3 11.7 11.2 9.2 7.7 29.9 27.2 24.2
Biocon 936 Sell 27.1 34.3 45.0 34.6 27.3 20.8 19.8 15.7 12.2 12.2 13.9 16.2
Cadila Health 362 Buy 13.6 18.7 22.9 26.6 19.3 15.8 17.5 13.0 10.5 23.9 27.2 26.8
Cipla 568 Neutral 18.1 25.6 32.4 31.4 22.2 17.5 17.8 13.5 10.8 11.2 13.9 15.1
Divis Labs 753 Neutral 45.4 51.0 57.0 16.6 14.8 13.2 11.7 10.0 8.5 26.7 26.5 25.7
Dr Reddy’ s Labs 3,091 Neutral 82.7 141.7 170.0 37.4 21.8 18.2 19.7 13.0 10.3 10.6 16.1 16.8
Fortis Health 189 Buy -1.3 3.5 6.7 -143.0 53.6 28.2 19.7 11.4 9.0 -1.5 3.8 6.4
Glenmark Pharma 899 Neutral 41.4 49.7 60.5 21.7 18.1 14.9 11.1 9.8 9.6 20.4 19.1 19.0
Granules India 110 Buy 7.1 10.0 13.9 15.6 11.0 7.9 8.3 6.4 4.8 20.5 22.7 26.0
GSK Pharma 2,747 Neutral 50.4 61.8 71.6 54.5 44.5 38.3 45.7 36.4 29.9 29.6 40.8 50.3
IPCA Labs. 550 Neutral 17.0 29.4 39.0 32.3 18.7 14.1 15.1 11.2 8.7 9.0 14.1 16.5
Lupin 1,494 Buy 61.6 77.0 89.0 24.3 19.4 16.8 15.6 12.5 10.4 22.8 23.4 22.2
Sanofi India 4,290 Buy 142.2 172.8 198.9 30.2 24.8 21.6 16.2 13.7 11.6 17.8 19.4 19.7
Sun Pharma 638 Buy 27.8 37.9 42.9 22.9 16.8 14.9 14.0 11.1 9.0 20.3 23.9 22.3
Torrent Pharma 1,351 Buy 57.7 78.4 96.0 23.4 17.2 14.1 15.4 12.3 9.8 26.4 29.9 30.2
Logistics
Allcargo Logistics 179 Buy 10.5 12.8 14.3 17.0 14.0 12.5 8.3 6.8 5.8 13.3 16.9 16.5
Concor 1,151 Neutral 36.6 46.8 54.4 31.4 24.6 21.1 18.4 14.7 12.5 8.7 10.5 11.5
Gateway Distriparks 255 Buy 9.9 15.6 22.4 25.8 16.3 11.4 11.1 8.8 6.3 8.5 12.8 16.9
January 2017 51

Media
D B Corp 374 Buy 20.0 23.5 27.4 18.7 15.9 13.7 10.4 8.9 7.6 25.7 26.9 27.6
Den Networks 72 Neutral -3.6 1.9 7.7 -19.7 38.7 9.3 11.8 4.8 3.0 -4.1 2.1 8.1
Dish TV 85 Buy 2.0 3.3 5.1 43.1 25.4 16.7 8.9 7.0 5.5 43.2 46.3 44.6
Hathway Cable 37 Buy -2.4 -1.4 0.3 -15.0 -27.1 134.9 12.5 8.9 6.7 -16.6 -11.0 2.3
Hindustan Media 270 Buy 26.9 29.7 33.2 10.1 9.1 8.1 5.0 3.7 2.5 19.6 18.0 16.9
HT Media 75 Neutral 5.4 7.0 8.0 13.9 10.7 9.4 3.0 1.8 0.9 5.2 6.3 6.6
Jagran Prakashan 181 Buy 10.8 12.2 13.9 16.8 14.8 13.0 9.2 8.0 6.9 20.7 20.6 20.4
PVR 1,173 Buy 20.4 35.8 57.0 57.6 32.7 20.6 18.0 12.5 9.3 10.4 16.4 22.0
Siti Networks 38 Buy -0.9 2.7 3.2 -41.1 13.8 11.8 11.6 5.2 3.8 -10.2 23.5 20.0
Sun TV 524 UR 25.4 30.3 33.9 20.6 17.3 15.4 10.1 8.4 7.5 25.3 27.6 28.1
Zee Entertainment 458 Buy 11.7 17.7 21.3 39.3 25.9 21.5 21.3 16.7 13.4 29.4 30.7 29.9
Metals
Hindalco 159 Buy 18.5 22.1 24.7 8.6 7.2 6.4 6.4 5.7 5.0 17.3 18.1 17.1
Hindustan Zinc 251 Neutral 21.5 25.4 25.3 11.7 9.9 9.9 7.4 5.5 5.1 22.5 22.6 19.4
JSPL 71 Neutral -23.8 -8.4 -5.3 -3.0 -8.4 -13.3 11.8 11.0 10.1 -12.8 -5.0 -3.3
JSW Steel 163 Buy 12.3 18.7 19.1 13.3 8.7 8.5 7.6 6.0 5.5 14.9 19.6 17.1
Nalco 66 Buy 3.7 4.8 4.9 17.8 13.7 13.4 8.2 5.4 5.1 7.1 8.7 8.5
NMDC 134 Buy 10.9 10.8 11.3 12.3 12.4 11.9 8.7 8.0 7.6 12.8 14.2 13.7
SAIL 51 Sell -10.4 -14.3 -1.4 -4.9 -3.5 -36.9 938.5 133.7 11.4 -11.5 -18.4 -2.0
Tata Steel 405 Sell 7.7 37.1 40.7 52.8 10.9 9.9 10.0 7.7 7.3 5.8 29.2 26.0
Vedanta 217 Neutral 21.3 27.3 27.9 10.2 7.9 7.8 5.0 4.0 3.7 13.0 14.8 14.0
Oil & Gas

BPCL 656 Buy 55.5 56.4 59.8 11.8 11.6 11.0 7.8 7.2 6.8 26.2 22.7 20.8
Cairn India 243 Neutral 14.0 12.5 12.8 17.4 19.5 19.0 5.9 4.6 3.7 5.3 4.6 4.6
GAIL 440 Neutral 28.7 36.4 44.7 15.3 12.1 9.8 9.7 7.7 6.4 12.9 13.2 14.9
Gujarat State Petronet 140 Neutral 8.8 11.0 13.2 15.9 12.7 10.6 8.9 7.0 5.7 11.9 13.5 14.5
HPCL 461 Buy 52.7 45.1 46.2 8.7 10.2 10.0 5.8 6.6 6.6 26.6 19.7 17.8
Indraprastha Gas 935 Neutral 42.0 43.7 47.6 22.3 21.4 19.7 12.4 11.5 10.4 21.8 19.8 18.6
IOC 343 Buy 49.3 40.1 41.9 7.0 8.6 8.2 5.1 5.6 5.2 29.3 20.8 19.2
MRPL 108 Buy 17.0 15.8 17.2 6.3 6.8 6.3 4.6 4.7 3.3 39.4 28.4 25.1
Oil India 457 Buy 44.7 54.1 55.7 10.2 8.4 8.2 7.0 6.3 6.0 11.5 13.0 12.5
ONGC 194 Neutral 14.8 18.9 22.7 13.1 10.3 8.6 6.0 4.8 4.1 10.1 12.4 14.4
Petronet LNG 375 Buy 19.8 26.9 36.3 18.9 13.9 10.3 11.7 8.6 5.9 21.5 24.7 27.6
Reliance Inds. 1,069 Neutral 100.9 109.0 110.0 10.6 9.8 9.7 5.8 4.5 3.8 11.8 11.5 10.6
Oil & Gas Aggregate 10.9 10.5 9.7 6.1 5.4 4.7 13.8 13.2 13.1
Oil & Gas Ex OMCs 12.5 10.9 9.9 6.3 5.1 4.3 10.7 11.5 11.8
Retail
Jubilant Foodworks 860 Neutral 10.8 18.5 27.2 80.0 46.4 31.7 22.7 16.0 11.5 8.9 15.3 20.2
Shopper's Stop 295 Neutral 3.0 9.2 13.8 96.9 32.2 21.5 17.9 10.6 7.8 3.1 8.8 11.9
Titan Company 359 Neutral 8.7 9.8 11.3 41.0 36.8 31.6 30.5 27.3 23.4 20.2 19.7 20.1
Technology
Cyient 494 Buy 34.6 44.2 47.5 14.3 11.2 10.4 9.4 7.2 6.2 16.4 18.3 17.3
HCL Technologies 859 Buy 56.7 63.2 67.2 15.2 13.6 12.8 10.8 9.1 8.1 26.6 25.5 23.2
Hexaware Tech. 213 Neutral 13.6 15.5 15.9 15.6 13.8 13.4 11.0 9.0 8.4 27.7 27.5 24.0
Infosys 998 Buy 61.7 67.8 75.0 16.2 14.7 13.3 10.1 8.7 7.7 22.8 22.6 22.5
KPIT Tech. 137 Neutral 12.6 15.6 16.3 10.9 8.8 8.4 4.7 3.2 2.5 16.9 17.6 15.5
January 2017 52

L&T Infotech 695 Buy 54.9 58.6 62.1 12.7 11.9 11.2 9.5 8.6 7.9 42.3 36.8 32.5
Mindtree 526 Neutral 26.6 36.2 38.1 19.8 14.5 13.8 12.4 9.3 8.7 18.0 22.0 20.6
MphasiS 534 Neutral 42.2 54.0 57.2 12.7 9.9 9.3 4.8 3.8 2.9 13.7 16.3 15.9
NIIT Tech. 437 Neutral 38.6 50.2 54.3 11.3 8.7 8.1 4.8 3.9 3.3 14.2 16.6 16.0
Persistent Systems 647 Neutral 36.2 45.0 54.8 17.9 14.4 11.8 9.6 7.1 6.2 16.7 19.2 22.5
TCS 2,379 Neutral 131.0 144.9 155.3 18.2 16.4 15.3 13.5 11.7 10.8 33.0 31.3 28.7
Tata Elxsi 1,419 Buy 60.2 73.6 88.4 23.6 19.3 16.1 13.7 11.0 8.9 42.8 41.7 41.0
Tech Mahindra 500 Buy 30.9 36.0 39.5 16.2 13.9 12.6 10.7 8.6 7.4 19.1 19.3 18.5
Zensar Tech 944 Buy 69.5 92.5 99.2 13.6 10.2 9.5 8.6 6.1 5.1 20.3 22.8 20.7
Wipro 476 Neutral 34.3 39.5 44.1 13.9 12.1 10.8 9.5 7.8 7.2 17.7 18.5 18.5
Telecom
Bharti Airtel 314 Buy 12.4 9.4 13.4 25.3 33.4 23.4 6.1 5.8 4.7 7.3 5.3 7.1
Bharti Infratel 353 Buy 17.2 17.8 19.7 20.5 19.8 17.9 10.3 8.8 7.5 17.2 16.6 16.2
Idea Cellular 74 Sell -6.3 -12.9 -11.4 -11.8 -5.7 -6.5 8.1 8.8 7.8 -9.2 -21.9 -24.1
Utilities
CESC 646 Buy 48.4 70.7 77.6 13.4 9.1 8.3 6.5 5.8 5.4 4.7 6.3 6.6
Coal India 306 Neutral 16.1 18.4 20.8 19.1 16.6 14.7 14.3 11.6 10.0 32.9 37.7 42.6
JSW Energy 61 Buy 5.1 3.2 1.5 11.9 18.8 41.8 6.5 7.5 8.3 9.6 5.9 2.6
NTPC 165 Buy 11.9 14.3 17.3 13.9 11.5 9.5 11.2 9.1 7.3 10.6 11.9 13.3
Power Grid Corp. 186 Buy 14.2 16.8 19.3 13.1 11.1 9.7 9.2 7.9 7.1 16.1 16.6 16.9
Others
Arvind 358 Buy 14.8 24.0 29.8 24.1 14.9 12.0 10.9 8.4 7.0 11.3 15.2 16.5
Bata India 463 Buy 10.9 14.2 17.7 42.5 32.6 26.2 23.3 18.1 14.4 11.3 13.4 15.0
Castrol India 386 Buy 13.4 14.3 15.9 28.8 27.0 24.3 18.2 17.3 15.4 108.8 104.6 105.2
Century Plyboards 175 Buy 4.6 8.8 11.3 38.4 20.0 15.6 20.6 12.2 10.0 18.2 29.8 30.7
Coromandel International 304 Buy 16.3 20.0 25.5 18.7 15.2 11.9 10.1 8.7 7.1 18.5 20.4 22.8
Dynamatic Tech. 2,960 Buy 67.6 112.9 166.7 43.8 26.2 17.8 13.5 11.0 8.8 15.1 20.7 24.3
Eveready Inds. 224 Buy 9.2 12.9 16.7 24.2 17.4 13.4 14.7 11.9 9.6 29.5 33.7 34.9
Indo Count Inds. 166 Buy 15.7 18.5 21.5 10.6 9.0 7.7 6.5 5.5 4.5 37.8 31.2 26.6
Info Edge 859 Buy 18.4 20.7 23.5 46.6 41.4 36.5 38.5 33.4 29.1 12.0 12.3 12.9
Inox Leisure 230 Sell 4.1 8.6 10.9 55.9 26.8 21.1 14.8 10.5 8.9 6.2 11.8 13.2
Interglobe Aviation 843 Neutral 58.3 72.5 91.2 14.4 11.6 9.2 4.6 3.4 2.7 105.1 110.2 116.0
Jain Irrigation 93 Buy 5.5 7.6 10.0 16.8 12.2 9.3 7.2 5.9 5.1 8.6 11.7 14.8
Just Dial 343 Buy 15.6 18.5 23.0 22.0 18.5 14.9 13.8 10.5 7.5 15.1 15.7 16.9
Kaveri Seed 414 Neutral 23.1 28.8 36.3 18.0 14.4 11.4 13.7 10.4 8.0 17.1 20.0 23.1
Kitex Garments 409 Buy 29.3 35.1 41.7 14.0 11.7 9.8 8.1 6.6 5.0 33.1 31.0 29.3
MCX 1,281 Buy 28.6 47.4 65.2 44.8 27.0 19.6 70.4 28.1 18.1 11.5 17.5 21.7
Manpasand Beverages 557 Buy 14.9 23.8 39.0 37.3 23.4 14.3 17.5 12.9 7.6 8.6 9.9 16.5
Monsanto India 2,254 Buy 68.4 87.2 106.6 33.0 25.9 21.2 28.0 22.0 18.0 28.8 35.9 39.8
P I Industries 825 Buy 31.3 38.4 47.6 26.4 21.5 17.3 19.8 15.1 11.9 31.7 30.1 29.2
S H Kelkar 336 Buy 7.5 10.1 13.0 44.9 33.1 25.8 26.8 20.4 16.1 13.5 16.6 18.9
SRF 1,554 Buy 81.0 106.8 129.7 19.2 14.6 12.0 10.5 8.6 6.9 16.2 18.5 19.4
Symphony 1,169 Sell 27.0 35.1 42.9 43.3 33.3 27.2 32.2 24.7 20.1 56.8 65.0 66.3
TTK Prestige 5,718 Neutral 107.8 139.9 178.6 53.0 40.9 32.0 32.2 24.9 20.1 16.6 19.7 22.4
V-Guard Inds 165 Neutral 4.5 5.8 7.0 36.5 28.6 23.4 24.3 19.1 15.7 26.1 27.4 27.3
Wonderla Holiday 340 Buy 7.0 11.9 16.0 48.7 28.5 21.2 22.5 14.2 10.8 9.5 14.8 17.5
January 2017 53

Sector / Companies CMP EPS (INR) PE (x) PB (x) ROE (%)
(INR) Reco FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Banks-Private
Axis Bank 454 Neutral 13.0 23.2 46.9 34.9 19.5 9.7 2.0 1.8 1.6 5.8 9.7 17.5
DCB Bank 112 Neutral 7.2 8.5 10.7 15.6 13.1 10.5 1.6 1.4 1.3 11.0 11.7 12.9
Equitas Holdings 148 Buy 6.0 6.8 8.9 24.8 21.7 16.7 2.2 2.0 1.8 11.2 9.7 11.4
Federal Bank 66 Buy 4.5 5.5 7.1 14.5 12.1 9.3 1.3 1.2 1.1 9.3 10.4 12.3
HDFC Bank 1,186 Buy 57.9 69.8 84.9 20.5 17.0 14.0 3.6 3.1 2.6 18.7 19.5 20.3
ICICI Bank 251 Buy 17.2 18.0 21.7 14.6 14.0 11.6 1.7 1.6 1.4 10.4 10.0 11.3
IDFC Bank 60 UR 3.1 4.2 5.7 19.2 14.2 10.5 1.4 1.3 1.2 7.5 9.5 11.9
IndusInd Bank 1,101 Buy 47.6 59.6 74.0 23.1 18.5 14.9 3.3 2.9 2.5 15.3 16.7 17.8
J&K Bank 61 Neutral -21.5 12.9 15.8 -2.8 4.7 3.8 0.5 0.5 0.4 -17.7 11.1 12.0
Kotak Mahindra Bank 695 Buy 26.6 32.4 41.7 26.2 21.4 16.6 3.4 2.9 2.5 13.6 14.5 16.1
RBL Bank 345 Buy 12.2 14.8 20.5 28.3 23.3 16.8 3.0 2.7 2.4 12.4 12.3 15.3
South Indian Bank 20 Buy 3.0 3.6 4.3 6.8 5.5 4.6 0.7 0.6 0.6 10.3 11.7 12.7
Yes Bank 1,163 Buy 74.5 95.8 119.3 15.6 12.1 9.7 3.0 2.5 2.1 20.9 22.6 23.4
Private Bank Aggregate 21.0 16.5 12.5 2.5 2.2 2.0 11.9 13.6 15.8
Banks-PSU
Bank of Baroda 148 Buy 12.3 18.8 26.2 12.0 7.9 5.6 0.9 0.9 0.8 8.1 11.5 14.5
Bank of India 108 Neutral -4.0 18.5 25.1 -27.0 5.8 4.3 0.5 0.4 0.4 -1.7 7.5 9.5
Canara Bank 264 UR 27.2 37.9 58.4 9.7 7.0 4.5 0.5 0.5 0.5 5.6 7.4 10.6
IDBI Bank 70 Neutral 1.5 6.4 8.6 45.7 10.9 8.2 0.6 0.6 0.6 1.4 5.8 7.3
Indian Bank 225 Buy 30.4 31.9 38.5 7.4 7.1 5.9 0.7 0.7 0.6 10.4 10.1 11.2
Oriental Bank of Commerce 107 Neutral 19.3 21.3 31.0 5.5 5.0 3.4 0.3 0.2 0.2 4.8 5.1 7.1
Punjab National Bank 115 Buy 8.5 13.2 17.8 13.6 8.8 6.5 0.6 0.6 0.5 4.8 7.0 8.8
State Bank 243 Buy 9.8 23.3 30.9 24.7 10.4 7.9 1.1 1.0 0.9 4.7 10.1 12.2
Union Bank 125 Buy 15.6 30.4 45.7 8.0 4.1 2.7 0.4 0.4 0.3 5.2 9.5 12.9
PSU Bank Aggregate 18.2 8.8 6.5 0.8 0.7 0.7 4.2 8.3 10.5
NBFC
Bajaj Finance 870 Buy 31.8 41.3 56.7 27.4 21.1 15.3 5.3 4.4 3.5 21.1 22.8 25.4
Bharat Financial 629 Buy 42.7 38.5 63.1 14.7 16.3 10.0 3.2 2.7 2.1 28.6 17.7 23.5
Dewan Housing 244 Buy 29.0 36.8 44.6 8.4 6.6 5.5 1.2 1.1 0.9 15.8 17.2 18.2
GRUH Finance 328 Neutral 7.8 9.6 12.3 41.8 34.0 26.7 11.7 9.5 7.8 30.7 30.9 32.2
HDFC 1,213 Buy 47.5 53.7 61.4 25.5 22.6 19.7 4.9 4.4 4.0 20.8 21.1 21.6
Indiabulls Housing 644 Buy 69.5 87.7 113.1 9.3 7.3 5.7 2.3 2.0 1.8 26.0 29.3 33.2
LIC Housing Fin 518 Buy 39.4 48.1 57.3 13.2 10.8 9.0 2.4 2.1 1.7 20.0 20.7 20.9
M & M Financial 274 Buy 12.7 14.6 16.0 21.6 18.7 17.1 2.3 2.1 2.0 11.3 11.9 12.0
Muthoot Finance 287 Buy 27.5 32.0 39.0 10.4 9.0 7.4 1.8 1.6 1.4 18.4 19.0 20.4
Power Finance Corp 124 Neutral 24.0 25.5 40.5 5.2 4.8 3.1 0.8 0.7 0.6 16.8 16.2 22.3
Repco Home Fin 577 Buy 26.9 38.0 51.6 21.4 15.2 11.2 3.3 2.7 2.3 16.4 19.7 22.2
Rural Electric. Corp. 125 Neutral 29.4 35.3 39.9 4.2 3.5 3.1 0.7 0.6 0.6 18.8 19.5 18.9
Shriram Transport Fin. 911 Buy 63.5 82.3 101.4 14.3 11.1 9.0 1.8 1.6 1.4 13.4 15.4 16.6
NBFC Aggregate 13 13.6 11.7 9.2 2.4 2.1 1.8 17.7 18.1 19.9
Financials Sector Aggregate 17.9 12.9 9.8 1.7 1.6 1.4 9.7 12.3 14.5
UR: Under Review
January 2017 54
Sectors & Companies

BSE Sensex: 26,633 S&P CNX: 8,191 December 2016
Note: In our quarterly performance tables, our four-quarter numbers may not always add up to the full-year
numbers. This is because of differences in classification of account heads in the company’s quarterly and
annual results or because of differences in the way we classify account heads as opposed to the company.
All stock prices and indices as on 4 January 2017, unless otherwise stated.
January 2017 55
December 2016 Results Preview | Sector:
December Automobiles
2016 Results Preview
Automobiles
Company name
Demonetization derails 3QFY17 auto volumes
2Ws/3Ws/CVs likely to see a decline; PVs relatively well placed
Amara Raja Batteries
 We expect the automobile industry’s performance in 3QFY17 to be subdued due to
Ashok Leyland the impact of demonetization. We believe 2Ws and 3Ws are likely to be worst hit as
Bajaj Auto the cash component in transactions in this space is relatively high compared to other
segments like PVs and CVs. We estimate 2W and 3W volumes to decline 4% and 20%
Bharat Forge YoY, respectively. Volumes in PVs are expected to grow by 5% YoY, while those in CVs
BOSCH should decline 4% YoY.
 EBITDA margin for our auto OEM (ex-JLR) coverage universe is likely to remain
Eicher Motors constant YoY (-140bp QoQ) at 13%. The 2W pack along with MSIL and ALL are
Escorts
expected to see a QoQ margin decline.
 We lower our FY18E EPS for TTMT (-17%), HMCL (-8%), BJAUT (-5%), BOS (-6%), but
Exide Industries increase for BHFC (+6.5%).
Hero MotoCorp
 Our top picks are MSIL and TTMT among large caps, and AL and Amara Raja among
midcaps.
Mahindra & Mahindra
2W/CV volumes to decline, PVs relatively well placed
Maruti Suzuki 2W sales are expected to decline 4% YoY in 3QFY17, which is relatively steep
Tata Motors compared to other segments, as the cash component in 2W transactions is relatively
high due to lower ticket size of vehicles and higher exposure to rural areas. Besides,
TVS Motor Company
currency-related issues are likely to pull down 2W exports. Growth in passenger car
volumes is expected to moderate to be flat YoY, while UV volumes are expected to
increase robustly by 16% driven by new launches. PVs were less impacted, primarily
due to waiting periods in many models of OEMs and lower cash component. CV
volumes are expected to decline 4% YoY in 3QFY17, with volumes declining by 9% in
LCVs offset by 4% growth in MHCV volumes. Many fleet operators have postponed
their purchases due to the cash crunch post demonetization.
EBITDA margin to contract as negative operating leverage kicks in
EBITDA margin for our auto OEM (ex-JLR) universe is likely to contract 140bp QoQ
(stable YoY), given pressure from negative operating leverage due to lower volumes.
Among 2Ws, we expect margin contraction in BJAUT (-170bp YoY), HMCL (-100bp),
TTMT S/A (-240bp), and expansion in M&M (+100bp) and EIM (+290bp).
Demonetization impact likely to moderate

While November and especially December saw a decline in volumes on account of
demonetization, the situation on the ground has started showing some signs of
recovery. Retail sales volumes have started to gradually pick up, albeit are still below
normal levels.
Valuation and view
We lower our FY18E EPS for TTMT (-17%), HMCL (-8%), BJAUT (-5%), BOS (-6%), but
increase for BHFC (+6.5%). In our view, demand and competition would be the key
determinants of stock performance. Our top picks are MSIL, TTMT among large
caps, and AL and Amara Raja among midcaps.
Jinesh Gandhi (Jinesh@MotilalOswal.com); +91 22 3982 5416

Aditya Vora (Aditya.Vora@MotilalOswal.com); +91 22 3078 4701
January 2017 56
December 2016 Results Preview | Sector: Automobiles
Exhibit 1: Summary of expected quarterly performance (INR m)

Sector Sales (INR M) EBDITA (INR M) Net Profit (INR m)
CMP Var % Var % Var % Var % Var % Var %
RECO Dec-16 Dec-16 Dec-16
(INR) YoY QoQ YoY QoQ YoY QoQ
Automobiles
Amara Raja Batt. 899 Buy 12,558 2.5 -6.7 2,066 -9.6 -10.1 1,198 -12.0 -12.1
Ashok Leyland 84 Buy 46,272 13.3 0.1 5,021 16.9 -6.4 2,808 38.1 -4.6
Bajaj Auto 2,689 Buy 50,471 -9.3 -16.6 9,788 -16.4 -24.5 8,498 -5.7 -24.3
Bharat Forge 913 Buy 9,223 -12.3 3.5 2,601 -18.0 5.0 1,377 -18.5 8.5
Bosch 20,450 Neutral 28,228 3.0 8.1 3,613 4.0 -23.0 3,076 39.3 -27.3
Eicher Motors 22,178 Buy 18,440 -44.4 5.1 5,809 12.3 7.1 4,225 56.0 2.3
Escorts 321 Buy 10,746 21.0 8.0 838 145.6 34.2 483 136.6 40.8
Exide Inds. 182 Buy 15,515 2.0 -19.3 2,167 -7.5 -25.3 1,283 -4.3 -28.2
Hero Motocorp 3,014 Neutral 64,319 -11.8 -17.5 10,273 -16.5 -30.7 6,900 -13.3 -31.3
Mahindra & Mahindra 1,221 Buy 103,467 -1.1 1.7 15,006 6.1 2.2 8,917 8.7 -28.8
Maruti Suzuki 5,510 Buy 165,942 10.0 -7.0 25,229 16.3 -16.9 19,433 39.4 -19.0
Tata Motors 487 Buy 708,422 -2.0 7.5 89,260 -4.8 42.1 29,165 -15.9 256.1
TVS Motor 374 Buy 30,341 3.2 -11.5 2,169 10.4 -21.6 1,306 21.2 -26.4
Auto Sector Aggregate 1,263,943 -1.6 0.8 173,841 -1.6 7.2 88,668 2.6 5.8
Exhibit 2: Volume snapshot for 3QFY17 ('000 units)

3QFY17 3QFY16 YoY (%) 2QFY17 QoQ (%) FY16 FY15 YoY (%)
Two wheelers 4,567 4,738 -3.6 5,119 -10.8 19,005 18,434 3.1
Three wheelers 183 230 -20.3 205 -10.7 943 939 0.3
Passenger cars 682 678 0.6 600 13.6 2,555 2,424 5.4
UVs & MPVs 269 232 16.3 252 7.0 901 806 11.9
Total PVs 951 909 4.6 852 11.6 3,457 3,229 7.0
M&HCV 77 74 3.8 80 -4.2 336 263 27.9
LCV 104 115 -9.1 112 -7.3 442 431 2.6
Total CVs 181 189 -4.1 193 -6.0 778 693 12.2
Total 5,883 6,066 -3.0 6,369 -7.6 24,182 23,296 3.8
Exhibit 3: Trend in segment-wise EBITDA margin (%) Exhibit 4: Commodity prices recover from lows (index)
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
17.0
16.1
15.9 16.3 14.8 14.6 16.1
14.0 14.2 14.9
9.6
8.1
7.1
6.1 5.6
100
147
146
156
155
100
101
119
117
100
112
112
112
100
126
142
134
139
98
99
2W Cars CVs Steel Lead Alu Rubber
Source: Company, MOSL Source: Company, MOSL
January 2017 57
Exhibit 5: Trend in key currencies v/s INR Exhibit 6: Continued improvement in EBITDA margins (%)
USD GBP JPY Aggregate (excld JLR) Aggregate (incl JLR)
170
15
140
12
110
9
80 6
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-11
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
Source: Bloomberg, MOSL Source: Company, MOSL
Exhibit 7: Revised estimates

EPS (INR) FY17E FY18E
Rev Old Chg (%) Rev Old Chg (%)
Bajaj Auto 133.0 140.3 -5.2 158.9 167.3 -5.0
Hero MotoCorp 169.5 182.7 -7.2 192.2 208.7 -7.9
TVS Motor 11.9 12.5 -4.8 16.5 17.1 -3.8
Maruti * 257.4 265.7 -3.1 312.5 322.3 -3.0
M&M * 66.0 67.7 -2.6 83.7 85.7 -2.4
Tata Motors * # 29.0 27.1 7.0 45.6 55.0 -17
Ashok Leyland 4.9 4.8 2.0 6.6 6.5 1.6
Eicher Motors * 608.7 601.6 1.2 869.5 867.5 0.2
Amara Raja 29.7 30.9 -3.9 38.8 40.1 -3.4
Bharat Forge 25.8 25.0 2.9 36.4 34.2 6.5
Exide Industries 7.8 8.0 -2.2 9.4 9.7 -2.2
BOSCH 507.6 539.7 -5.9 657.7 700.9 -6.2
* Consolidated Source: Company, MOSL
Exhibit 8: 3QFY17 estimates

Volumes ('000 units) EBITDA margins (%) Adj PAT (INR m)
3QFY17 YoY (%) QoQ (%) 3QFY17 YoY (bp) QoQ (bp) 3QFY17 YoY (%) QoQ (%)
BJAUT 852 -10 -17 19.4 -170 -200 8,498 -6 -24
HMCL 1473 -13 -19 14.7 -90 -280 6,900 -13 -31
TVS Motor 719 2 -12 7.2 50 -90 1,306 21 -26
MSIL 387 3 -7 15.2 80 -180 19,433 39 -19
MM 195 1 5 14.5 100 10 8,917 9 -29
TTMT (S/A) 133 8 -2 3.3 -240 -40 -3,558 -800 46
TTMT (JLR) 151 0 9 12.4 -200 210 325 21 33
TTMT (Cons) 12.6 -40 310 29,165 -16 256
Ashok Leyland 33 6 -2 10.9 30 -80 2,808 38 -5
Eicher (RE) 174 38 4 31.5 290 20 4,205 72 6
Eicher (VECV) 12 -7 -12 5.5 -190 -180 266 -59 -59
Eicher (Consol) 32 290 20 4,225 56 2
Agg. (ex JLR) 3,977 -5.4 -14.0 13.0 -10 -120 48,529 8.9 -19.1
January 2017 58
Exhibit 9: Relative performance – Three months (%) Exhibit 10: Relative performance – One-year (%)
Sensex Index MOSL Automobiles Index Sensex Index MOSL Automobiles Index
102
125
99
115
96 105
93 95
90 85
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Nov-16
Dec-16
Sep-16
Oct-16
Source: Bloomberg, MOSL Source: Bloomberg, MOSL
Exhibit 11: Comparative valuation

Automobiles
Amara Raja Batt. 899 Buy 29.7 38.8 46.1 30.3 23.2 19.5 17.5 13.9 11.5 21.9 23.6 23.1
Ashok Leyland 84 Buy 4.9 6.6 7.9 17.0 12.8 10.6 9.1 7.1 5.7 23.5 26.5 26.8
Bajaj Auto 2,689 Buy 133.0 158.9 186.5 20.2 16.9 14.4 14.1 11.5 9.6 29.4 30.9 31.8
Bharat Forge 913 Buy 25.8 36.4 46.3 35.4 25.1 19.7 16.5 13.1 10.7 15.9 20.0 21.9
Bosch 20,450 Neutral 507.6 657.7 738.1 40.3 31.1 27.7 32.3 24.1 20.4 19.7 24.5 23.0
Endurance Tech. 572 Buy 22.6 28.7 34.6 25.3 19.9 16.5 11.5 9.4 7.9 19.9 21.1 21.4
Eicher Motors 22,178 Buy 608.7 869.5 1091.6 36.4 25.5 20.3 26.3 19.2 15.4 40.3 41.6 37.8
Escorts 321 Buy 20.7 34.2 46.2 15.5 9.4 6.9 12.6 8.2 5.9 10.9 16.3 19.1
Exide Inds. 182 Buy 7.8 9.4 11.2 23.3 19.3 16.3 11.8 9.9 7.9 13.6 14.7 15.3
Hero Motocorp 3,014 Neutral 169.5 192.2 195.0 17.8 15.7 15.5 11.8 10.2 9.9 39.0 37.5 32.6
Mahindra & Mahindra 1,221 Buy 66.0 83.7 99.0 18.5 14.6 12.3 5.5 4.6 3.9 14.5 14.5 15.4
Maruti Suzuki 5,510 Buy 257.4 312.5 379.1 21.4 17.6 14.5 13.4 10.2 8.1 23.1 23.1 23.1
Tata Motors 487 Buy 29.0 45.6 70.5 16.8 10.7 6.9 5.6 4.2 2.9 11.5 15.9 20.6
TVS Motor 374 Buy 11.9 16.5 19.6 31.4 22.7 19.1 19.5 14.5 12.0 26.5 29.5 28.1
Auto Sector Aggregate 21.4 16.0 12.4 9.5 7.3 5.7 17.6 20.0 21.7
January 2017 59
Amara Raja Batteries

Bloomberg AMRJ IN CMP: INR899 TP:INR1,061 (+18%) Buy
Equity Shares (m) 170.8
 We expect AMRJ’s revenues to grow 2.5% YoY (-6.7% QoQ) to
M. Cap. (INR b)/(USD b) 153 / 2
INR12.6b. Price hikes of 3-4% were taken in Nov-16.
52-Week Range (INR) 1077 / 773
1,6,12 Rel Perf. (%) -3 / 6 / -1
 Impact of demonetization on OEM sales is likely to moderate
growth.
 Spot LME lead prices increased 9% QoQ in 2QFY16 —the impact is
Financial Snapshot (INR b)
INR million 2016 2017E 2018E 2019E
likely to be reflected in 3QFY17.
Sales 46.9 52.5 62.3 71.9
 EBITDA margin is likely to contract ~220bp YoY (-60bp YoY) to
EBITDA 8.2 8.8 11.0 12.9 16.5%. Rise in raw material costs due to higher lead prices YoY is
NP 4.9 5.1 6.6 7.9 likely to be offset lower other expenses.
EPS (INR) 29 30 39 46  We expect PAT to decline 12% YoY to INR1.2b.
EPS Gr. (%) 19.8 3.5 30.6 19.0  The stock trades at 23.2x FY18E and 19.5x FY19E EPS; Buy.
BV/Sh. (INR) 123 148 180 219
RoE (%) 25.8 21.9 23.6 23.1
RoCE (%) 24.2 20.8 22.6 22.2 Key issues to watch
Valuations  Update on demand environment for OEMs, auto replacement and
P/E (x) 31.3 30.3 23.2 19.5 industrial battery segments.
P/BV (x) 7.3 6.1 5.0 4.1  Outlook for raw material cost trend, recent pricing action and
EV/EBITDA (x) 18.7 17.5 13.9 11.5 currency hedges (if any).
EV/Sales (x) 3.3 2.9 2.4 2.1  Update on capacity expansion plans across product segments.
Quarterly Performance
Y/E March (INR m) FY16 FY17 FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
Net Sales 11,376 11,511 12,251 11,697 13,208 13,455 12,558 13,316 46,907 52,537
YoY Change (%) 10.5 8.6 14.9 9.7 16.1 16.9 2.5 13.8 11.4 12.0
RM Cost(% of sales) 64.6 64.4 61.6 62.7 66.2 64.3 65.2 65.8 63.2 65.4
Staff Cost (% of sales) 4.9 5.0 5.0 5.3 5.0 5.2 5.1 5.4 4.6 4.7
Other Exp(% of sales) 13.0 13.2 14.7 15.7 11.6 13.5 13.3 12.8 13.3 13.9
EBITDA 1,988 1,999 2,286 1,908 2,273 2,297 2,066 2,126 8,169 8,761
Margins (%) 17.5 17.4 18.7 16.3 17.2 17.1 16.5 16.0 17.4 16.7
Depreciation 328 343 355 372 441 457 475 485 1,399 1,858
Interest 13 13 3 1 14 15 4 2 5 35
Other Income 136 112 113 97 90 120 125 141 457 475
PBT before EO expense 1,782 1,756 2,041 1,632 1,908 1,945 1,712 1,779 7,222 7,344
PBT 1,782 1,756 2,041 1,632 1,908 1,945 1,712 1,779 7,222 7,344
Rate (%) 32.1 29.7 33.3 33.5 31.5 29.9 30.0 32.6 32.2 31.0
Adj PAT 1,210 1,234 1,362 1,086 1,307 1,363 1,198 1,199 4,894 5,067
YoY Change (%) 14.2 23.1 33.0 6.2 8.0 10.4 -12.0 10.4 24.8 3.5
E: MOSL Estimates
January 2017 60
Ashok Leyland
Bloomberg AL IN CMP: INR84 TP:INR92 (+9%) Buy
 Volumes grew 6% YoY (-2% QoQ). M&HCV sales grew 9% YoY, while
M. Cap. (INR b)/(USD b) 239 / 4
LCV sales declined 3% YoY led by demonetization impact, especially
1,6,12 Rel Perf. (%) 8 / -12 / -13
in Dec-16.
 We expect realization to improve 4.9% YoY (flat QoQ) on price
increase and higher contribution from Defense business.
Y/E March 2016 2017E 2018E 2019E
 Net revenue is likely to grow ~13% YoY (flat QoQ), led by growth in
Sales 188.2 205.2 239.2 273.7
volume and realization.
EBITDA 21.7 24.4 29.7 34.1  EBITDA margin is likely to expand 40bp YoY (-70bp QoQ), driven by
NP 11.1 14.1 18.7 22.5 lower RM costs YoY.
Adj. EPS (INR) 3.9 4.9 6.6 7.9  EBITDA should grow 17% YoY (decline 6% QoQ) to ~INR5b.
EPS Gr. (%) 375.1 26.6 32.9 20.2  Further, lower interest and higher other income would boost
BV/Sh. (INR) 19.4 22.7 26.9 32.1 adjusted PAT growth by 38% YoY (+1% QoQ) to INR2.8b.
RoE (%) 20.9 23.5 26.5 26.8  The stock trades at EV of 7.8x FY18E and 6.4x FY19E EBITDA. Buy.
RoCE (%) 12.8 17.3 20.8 21.8
Payout (%) 25.6 30.4 30.4 28.5 Key issues to watch
Valuations  Current demand environment and discounting trend, as well as
P/E (x) 21.5 17.0 12.8 10.6 plant and channel inventory for MHCVs post demonetization.
P/BV (x) 4.3 3.7 3.1 2.6  Pre-buying in 4QFY17.
EV/EBITDA (x) 11.5 9.9 7.8 6.4
 Raw material cost outlook and margin guidance for FY17–18.
Div. Yield (%) 1.2 1.8 2.4 2.7
 Capex and investment guidance for FY17.
FY16 FY17E FY16 FY17E
Total Volumes (nos) 28,154 37,369 30,928 43,991 31,163 33,446 32,838 47,751 140,457 145,198
Growth % 41.2 47.3 21.8 28.8 10.7 -10.5 6.2 8.5 33.9 3.4
Realizations (INR '000) 1,379 1,329 1,321 1,354 1,367 1,382 1,386 1,468 1,340 1,413
% change 11.0 4.8 -0.2 2.6 -0.9 4.0 4.9 8.5 3.7 5.5
Net operating revenues 38,831 49,672 40,853 59,553 42,588 46,224 46,272 70,120 188,216 205,205
RM/sales % 68.4 69.7 70.8 71.0 68.7 67.8 68.3 69.2 70.5 68.6
Staff/sales % 8.5 7.6 8.5 5.7 8.4 8.0 7.8 7.0 7.4 7.7
Other exp/sales % 13.0 10.2 10.1 10.7 11.6 12.6 13.0 10.8 10.6 11.9
EBITDA 3,925 6,240 4,297 7,531 4,820 5,365 5,021 9,173 21,660 24,380
EBITDA Margins(%) 10.1 12.6 10.5 12.6 11.3 11.6 10.9 13.1 11.5 11.9
Other Income 78 454 259 320 385 316 475 680 1,099 1,856
Interest 701 631 666 602 338 339 425 500 2,735 1,603
PBT before EO Item 1,984 4,754 2,803 6,071 4,154 4,146 3,846 8,168 15,586 20,315
EO Exp/(Inc) 1,570 65 3,793 0 0 0 3,858 0
Effective Tax Rate (%) 36.3 45.9 27.5 66.2 30.0 29.0 27.0 26.9 38.1 28.0
Adj. PAT 1,264 2,571 2,034 4,563 2,908 2,944 2,808 5,967 11,112 14,627
Change (%) -364 527 534 93 130 14 38 31 330.0 31.6
E: MOSL Estimates
January 2017 61
Bajaj Auto
Bloomberg BJAUT IN CMP: INR2,689 TP:INR3,097 (+18%) Buy
 Overall volume declined 10.5% YoY (-17% QoQ) to 851.6k units due
M. Cap. (INR b)/(USD b) 778 / 11
to a 17.5% YoY fall in exports, while domestic sales volumes
52-Week Range (INR) 3122 / 2173
1,6,12 Rel Perf. (%) -3 / 4 / 4
declined 5% YoY due to the impact of demonetization in November
and December. Total 2W sales declined 10% YoY in 3QFY17. 3W
volumes fell sharply by 17% YoY primarily due to a fall in exports as
Y/E MARCH 2016 2017E 2018E 2019E
currency issues in African markets continued along with a decline in
Sales 225.9 221.4 259.8 298.6
domestic 3Ws.
EBITDA 47.8 45.1 53.3 61.0  We expect realization to grow 1% YoY (+1% QoQ) as the launch of
NP 38.1 38.5 46.0 54.0 premium products in 2Ws is shadowed by a decline in 3Ws. As a
Adj. EPS (INR) 131.8 133.0 158.9 186.5 result, net revenues are expected to decline by 9.3% YoY.
EPS Gr. (%) 25.1 0.9 19.4 17.4  EBITDA margin should contract 160bp YoY (-200bp QoQ) to 19.4%
BV/Sh. (INR) 424.8 479.7 548.4 623.0 due to deterioration of product mix as well as negative operating
RoE (%) 33.2 29.4 30.9 31.8 leverage.
RoCE (%) 32.3 28.6 30.0 30.7  We expect PAT to decline ~5.7% YoY (-24% QoQ) to INR8.4b.
Payout (%) 50.2 58.7 56.7 60.0  We have lowered our total volume estimates by 4%, resulting in EPS
Valuation
cut of 5% for FY17E/FY18E.
P/E (x) 20.4 20.2 16.9 14.4
 The stock trades at 16.9x FY18E and 14.4x FY19E EPS; maintain Buy.
P/BV (x) 6.3 5.6 4.9 4.3
EV/EBITDA (x) 14.1 14.1 11.5 9.6
Div. Yield (%) 2.0 2.4 2.8 3.6 Key issues to watch
 Update on demand environment at the retail level, channel
inventory; outlook for FY18 based on impact of demonetization.
 Outlook for export demand and pricing, especially the Nigerian
market (sharp currency depreciation); outlook for FY18.
Quarterly Performance (INR Million)

FY16 FY17 FY16E FY17
Volumes ('000 units) 1,013 1,057 951 872 995 1,032 852 848 3,893 3,726
Growth YoY (%) 2.5 0.1 -3.4 11.4 -1.8 -2.3 -10.5 -2.8 2.2 (4.3)
Realization (INR/unit) 55,273 57,543 58,486 61,490 57,784 58,676 59,263 62,455 58,274 59,432
Growth YoY (%) 4.0 1.9 1.8 1.5 4.5 2.0 1.3 1.6 2.8 2.0
Net Sales 55,993 60,799 55,649 53,627 57,480 60,545 50,471 52,949 226,876 221,444
Change (%) 6.6 2.0 -1.6 13.2 2.7 -0.4 -9.3 -1.3 5.0 -2.4
RM/Sales % 67.4 66.7 66.4 65.9 67.2 67.0 67.5 66.7 66.3 66.8
Staff cost/Sales % 4.3 4.0 4.1 3.8 4.7 4.3 5.2 4.8 4.0 4.7
Oth. Exp./Sales % 8.0 7.7 8.5 8.9 7.7 7.4 8.0 8.5 8.2 7.9
EBITDA 11,402 13,167 11,713 11,534 11,763 12,961 9,788 10,637 48,835 45,746
EBITDA Margins (%) 20.4 21.7 21.0 21.5 20.5 21.4 19.4 20.1 21.5 20.7
Other Income 3,063 2,680 1,997 2,569 2,671 3,420 2,900 2,873 10,736 11,864
Interest 1 3 3 4 2 7 3 -3 11 9
Depreciation 784 780 746 761 775 770 800 817 3,072 3,161
PBT 13,680 15,063 12,961 13,338 13,657 15,605 11,885 12,696 56,488 54,439
Tax 4,106 4,540 3,947 3,844 3,873 4,378 3,387 3,707 17,328 15,345
Adj. PAT 9,574 10,524 9,013 9,493 9,784 11,228 8,498 8,989 39,124 38,498
Change (%) 29.4 26.4 4.7 52.7 2.2 6.7 (5.7) (5.3) 28.4 -1.6
January 2017 62
Bharat Forge
Bloomberg BHFC IN CMP: INR913 TP: INR1,096 (+19%) Buy
 We expect BHFC’s shipment tonnage to decline 7% YoY to 47,358
M. Cap. (INR b)/(USD b) 213 / 3
tons, which is an improvement from the previous quarters as
demand for class 8 trucks are showing signs of improvements
1,6,12 Rel Perf. (%) 4 / 20 / 1
along with revival in industrial segments. Net realization is likely to
dip ~6% YoY to ~INR194.7k/ton.
 As a result, net revenue would decline 12.3% YoY (+3.5% QoQ) to
Y/E Mar 2016 2017E 2018E 2019E
Sales 76.5 72.9 82.2 92.7
~INR9.2b.
EBITDA 14.2 13.3 16.3 19.1
 EBITDA margin is likely to contract 200bp YoY (+40bp QoQ) to
NP 6.6 6.0 8.5 10.8 28.2%, as negative operating leverage due to decline in volumes is
EPS (INR) 28.1 25.8 36.4 46.3 likely to put pressure on margins (rise in staff expenses).
EPS Gr. (%) -10.9 -8.4 41.3 27.1  PAT is likely to decline ~18% YoY (+9% QoQ) to INR1.4b.
BV/Sh. (INR) 153.6 169.7 194.1 228.4  The stock trades at 25.1x FY18E and 19.7x FY19E EPS; maintain
RoE (%) 18.7 15.9 20.0 21.9 Buy.
RoCE (%) 12.5 10.9 14.4 16.7
Key issues to watch
Valuations
 Outlook for US Class 8 Trucks for CY16–17.
P/E (x) 32.4 35.4 25.1 19.7
 Outlook for oil & gas and mining segments, primarily with regard
P/BV (x) 5.9 5.4 4.7 4.0
to price recovery.
EV/EBITDA (x) 16.4 17.1 13.6 11.1
EV/Sales (x) 3.0 3.1 2.7 2.3
 Update on ramp-up of new orders under commercial vehicles,
PVs, aerospace and rail.
Consolidated
Quarterly performance (INR Million)

FY16 FY17 FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Tonnage 51,984 54,559 50,741 52,413 49,098 46,203 47,358 50,262 209,697 192,921
Change (%) 5.8 3.8 -4.8 -7.5 -5.6 -15.3 -6.7 -4.1 -0.9 -8.0
Realization (INR '000/ton) 219.1 206.0 207.3 192.3 184.2 192.8 194.7 202.1 205.3 193.5
Change (%) 8.9 -4.9 -7.7 -10.9 -15.9 -6.4 -6.1 5.1 -4.4 -5.7
Net operating income 11,388 11,239 10,520 10,080 9,044 8,909 9,223 10,157 43,054 37,332.4
Change (%) 15.3 -1.3 -12.2 -17.6 -20.6 -20.7 -12.3 0.8 -13.3
RM/Sales (%) 34.1 36.0 34.2 35.9 34.4 34.4 34.5 34.7 35.5 34.5
Staff Cost (% of Sales) 8.2 8.3 9.0 9.2 10.1 10.1 10.3 10.5 8.6 10.3
Other Exp. (% of Sales) 26.4 27.2 26.6 25.3 28.5 27.6 27.0 26.4 26.1 27.3
EBITDA 3,566 3,204 3,173 2,982 2,444 2,477 2,601 2,893 12,830 10,414
EBITDA Margins (%) 31.3 28.5 30.2 29.6 27.0 27.8 28.2 28.5 29.8 27.9
Non-Operating Income 299 282 231 225 256 309 330 317 999 1,213
Interest 213 222 226 202 170 189 175 166 863 700
Depreciation 749 714 674 644 740 726 760 804 2,614 3,030
PBT 2,904 2,550 2,461 2,361 1,791 1,870 1,996 2,240 10,310 7,897
Adj. PAT 1,960 1,723 1,690 1,645 1,221 1,269 1,377 1,582 7,039 5,449
Change (%) 35.2 -2.9 -14.0 -18.9 -37.7 -26.3 -18.5 -3.8 -117.6 -22.6
E: MOSL Estimates
January 2017 63
Bosch
Bloomberg BOS IN CMP: INR20,450 TP:INR20,937 (+1%) Neutral
 Net revenue is likely to grow ~3% YoY (+8.1% QoQ) to INR28.2b.
M. Cap. (INR b)/(USD b) 642 / 9
Sales to OEM (especially 2W OEMs) are likely to moderate on
52-Week Range (INR) 25650 / 15753
1,6,12 Rel Perf. (%) -3 / -6 / 5
demonetization impact. Exports too are likely to decline.
 EBITDA margin is expected to remain flat YoY (-520bp QoQ) as the
decline in raw material costs is likely to be offset by a rise other
Y/E March FY16 FY17E FY18E FY19E
expenses.
 EBITDA is projected to grow just 4% YoY (-23% QoQ) to ~INR3.6b.
Sales 96.6 107.1 127.8 144.8
 Adjusted PAT is likely to grow 39% YoY to INR3b on higher other
EBITDA 18.2 18.7 24.4 28.3
NP 15.2 15.5 20.1 22.5 income.
EPS (INR) 483.3 507.6 657.7 738.1  We are downgrading our EPS estimate for FY17/FY18 by ~6% each
EPS Gr. (%) 11.8 5.0 29.6 12.2 due to the expected decline in revenues post demonetization.
BV/Sh. (INR) 2,639.8 2,434.7 2,928.0 3,481.5  The stock trades at 41.2x FY17E and 32.2x FY18E EPS; maintain
RoE (%) 19.4 19.7 24.5 23.0 Neutral.
RoCE (%) 26.5 27.9 33.6 31.6 Key issues to watch
Valuations  Rollout of BS-IV emission norms and implication on Bosch’s
P/E (x) 41.8 39.8 30.7 27.3 revenue.
P/BV (x) 7.6 8.3 6.9 5.8  Implementation of BS-VI norms for 2Ws and underlying
EV/EBITDA 33.9 31.3 23.4 19.8
(x)
opportunity for Bosch.
EV/Sales (x) 6.4 5.5 4.5 3.9
 Advancement of BS-VI implementation and its impact on Bosch.
Consolidated  Capex plans for BS VI norms.
Quaterly Performance (INR Million)

Y/E March FY16 FY17 FY16 FY17E
Net Sales 23,012 23,814 27,406 24,672 25,196 26,115 28,228 27,606 96,558 107,145
YoY Change (%) -3.2 -6.8 15.1 3.3 9.5 9.7 3.0 11.9 -0.6 11.0
RM Cost (% of sales) 52.0 50.9 52.6 50.7 51.8 50.5 51.2 51.4 51.5
Staff Cost (% of sales) 12.4 14.2 14.2 13.8 12.9 13.3 13.5 16.2 13.5
Other Expenses (% of sales) 14.6 16.8 20.5 13.1 17.4 18.2 22.5 11.1 16.2
EBITDA 4,827 4,326 3,474 5,507 4,511 4,694 3,613 5,874 18,177 18,692
Margins (%) 21.0 18.2 12.7 22.3 17.9 18.0 12.8 21.3 18.8 17.4
Depreciation 704 782 1,115 1,177 860 889 1,150 1,185 3,722 4,084
Interest 15 32 28 14 13 10 19 24 99 66
Other Income 1,408 1,872 882 1,779 1,789 2,107 1,950 1,746 6,488 7,592
PBT after EO Expense 5,516 5,384 3,213 6,096 5,428 5,902 4,394 6,411 21,035 22,134
Tax Rate (%) 31.5 29.1 31.3 22.6 30.9 28.3 30.0 30.7 27.2 30.0
Adj PAT 3,777 3,817 2,208 4,720 3,749 4,229 3,076 4,440 15,176 15,494
YoY Change (%) 23.1 24.6 70.1 64.2 -0.7 10.8 39.3 -5.9 11.8 2.1
E: MOSL Estimates
January 2017 64
Eicher Motors
Bloomberg EIM IN CMP: INR22,178 TP:INR28,755 (+30%) Buy
 Royal Enfield’s volumes grew by 38% YoY (+4% QoQ) to 173,838 units.
M. Cap. (INR b)/(USD b) 602 / 9
It was insulated from demonetization impact as it has an average
52-Week Range (INR) 26602 / 14818
1,6,12 Rel Perf. (%) -4 / 16 / 23
waiting period of 2-3 months. Net realization is expected to improve by
4% YoY (flat QoQ), supported by price hikes. EBITDA margin should
Financial Snapshot (INR b) expand 290bp YoY to 31.5% (+20bp QoQ), driven by lower commodity
Y/E March FY16 (15m) FY17E FY18E FY19E prices and staff expenses, as well as operating leverage.
Net Income 61.7 70.2 90.2 106.9  VECV’s volume declined by 7% YoY (flat QoQ) due to the impact of
EBITDA 16.9 21.8 29.2 35.4 demonetization as major fleet operators postponed their purchases
Net Profit 13.4 16.5 23.6 29.6
on account of cash crunch. Net realization should decline by 8.7%
Adj. EPS (INR) 492.9 608.7 869.5 1,091.6
YoY (-1% QoQ) as discounts are expected to be at peak. Margin is
EPS Gr. (%) 73.7 54.4 42.9 25.5
expected to be at 5.5%, down 190bp YoY (-180bp QoQ).
BV/Sh. (INR) 1,276 1,744 2,440 3,332
 Consolidated revenue would decline ~44% YoY (+5% QoQ) to
RoE (%) 35.8 40.3 41.6 37.8
RoCE (%) 21.3 27.1 30.7 29.4
INR18.4b. Consolidated margin is likely to be 31.5%. Consolidated
Payout (%) 0.5 0.6 0.7 0.8 PAT is estimated to rise 56% YoY (+2% QoQ) to INR4.2b.
Valuations  The stock trades at 25.5x FY17E and 20.3x CY18E EPS. Maintain Buy.
P/E (x) 45.0 36.4 25.5 20.3 Key issues to watch
P/BV (x) 17.4 12.7 9.1 6.7  Demand for RE at the retail level to assess the impact of
EV/EBITDA (x) 27.9 22.7 16.6 12.9 demonetization on order book.
Div. Yield (%) 0.5 0.6 0.7 0.8  Update on current demand trends for commercial vehicles,
discount levels and channel inventory.

(Consolidated) FY16 (15m) FY17 FY16 (15m) FY17E
Y/E March 1Q 2Q 3Q 4Q * 5Q 1Q 2Q 3QE 4QE
Consolidated
Net Operating income 25,680 10,959 12,997 33,166 15,322 15,557 17,549 18,440 18,675 61,735 70,221
Growth (%) 33.5 -51.2 -42.9 44.6 -40.3 42.0 35.0 -44.4 21.9 -47.2 42.2
EBITDA Margins (%) 14.3 26.1 27.0 15.6 29.5 30.2 30.9 31.5 31.7 27.4 33.0
Effective tax rate (%) 32.8 31.3 30.6 30.4 30.6 30.9 32.2 31.0 31.1 31.2 29.6
Recurring PAT 1,953 2,372 2,846 2,708 3,599 3,763 4,132 4,225 4,412 13,375 17,836
Growth (%) 40.3 50.7 72.4 76.1 84.3 58.6 45.2 56.0 22.6 -41.9 66.7
Standalone (Royal Enfield)
Royal Enfield (units) 92,021 106,613 127,611 125,744 148,186 147,483 166,941 173,838 173,500 600,175 661,762
Growth (%) 44.4 43.8 55.7 52.9 61.0 38.3 30.8 38.2 17.1 58.7 37.8
Net Realn (INR/unit) 104,450 102,791 101,852 102,103 104,258 105,603 105,576 106,076 107,095 103,073 106,112
Change - YoY (%) 4.7 2.1 1.7 1.4 -0.2 2.7 3.7 3.9 2.7 2.9 2.9
EBITDA Margins (%) 26.1 26.1 27.2 28.6 29.6 30.8 31.3 31.5 30.8 27.6 31.1
Recurring PAT 2,135 1,988 2,569 2,450 3,977 3,371 3,962 4,205 5,083 13,097 16,621
Growth (%) 32.9 49.2 82.2 97.5 86.3 69.6 54.2 71.6 27.8 288.7 58.6
VECV (derived)
Total CV Volumes 11,020 12,128 11,657 12,687 15,553 16,071 13,408 11,784 18,673 63,045 59,936
Growth (%) 10.4 6.3 20.8 30.1 41.1 32.5 15.0 -7.1 20.1 23.7 18.8
Net Realn (INR '000/unit) 1,458.1 1,472.0 1,529.1 1,602.2 1,427.3 1,331.3 1,470.5 1,463.1 1,512.4 1,526.5 1,444.8
Change - YoY (%) 13.0 12.0 1.5 6.6 -2.1 -9.6 -3.8 -8.7 6.0 8.1 -5.4
EBITDA Margins (%) 7.1 8.2 8.0 7.4 8.0 9.1 7.2 5.5 8.2 7.9 7.7
Recurring PAT 436 768 677 657 830 1,082 657 266 1,249 3,817 3,254
Growth (%) 20.0 69.5 50.3 15.4 90.3 40.9 -3.0 -59.5 50.6 -40.6 6.6
E: MOSL Estimates; * Non-IndAS based
January 2017 65
Escorts
Bloomberg ESC IN CMP: INR321 TP: INR410 (+30%) Buy
 We expect 21% YoY growth (+8% QoQ) in revenue (on a very low
M. Cap. (INR b)/(USD b) 38 / 1
base) to INR10.74b led by strong performance in tractor division.
1,6,12 Rel Perf. (%) -1 / 47 / 90
Construction equipment division is currently facing headwinds
while we expect some impact in this quarter due to divestment of
Financial Snapshot (INR b) its Auto equipment business (done in August 2016).
INR million 2016 2017E 2018E 2019E  EBITDA margin is likely to expand 395bp YoY to 7.8%, translating
Sales 35.4 41.1 47.8 53.8 into EBITDA growth of 146% YoY to INR838m.
EBITDA 1.5 3.0 4.4 5.5  We expect PAT to grow 137% YoY to INR483m.
NP 0.9 1.7 2.8 3.8
EPS (INR) 11.1 20.7 34.2 46.2
EPS Gr. (%) -16.6 86.2 65.0 35.2
BV/Sh. (INR) 184.3 196.3 223.4 260.9
RoE (%) 6.1 10.9 16.3 19.1
RoCE (%) 7.4 10.6 15.7 18.9
Key issues to watch
Valuations
P/E (x) 29.3 15.7 9.5 7.1
 Progress on key initiatives on tractor volume growth strategy, raw
P/BV (x) 1.8 1.7 1.5 1.2
material rationalizations and VRS of employees.
EV/EBITDA (x) 31.4 14.8 9.7 7.1  Management commentary on volumes and outlook given
EV/Sales (x) 1.3 1.1 0.9 0.7 expectations of normal monsoon.
Standalone Quarterly Performance (INR Million)

Y/E March FY16 FY17E FY16 FY17E
Net Sales 9,614 8,180 8,881 8,047 10,514 9,953 10,746 9,174 34,723 40,387
YoY Change (%) -14.8 -17.6 -15.1 -1.6 9.4 21.7 21.0 14.0 -12.9 16.3
Total Expenditure 9,039 7,920 8,540 7,659 9,636 9,329 9,908 8,513 33,157 37,386
EBITDA 576 260 341 388 878 625 838 661 1,566 3,001
Margins (%) 6.0 3.2 3.8 4.8 8.3 6.3 7.8 7.2 4.5 7.4
Depreciation 161 155 149 137 145 163 175 185 601 668
Interest 158 133 112 152 112 96 100 102 555 410
Other Income 118 138 131 187 104 71 90 95 574 361
PBT before EO
expense 374 110 212 287 725 437 653 469 983 2,283
Extra-Ord expense 0 11 -1 131 63 39 410 70 142 582
PBT 374 99 212 155 662 398 243 399 841 1,702
Tax 22 1 7 -9 192 85 63 104 22 444
Rate (%) 6.0 1.5 3.4 -5.7 29.1 21.4 26.0 26.0 2.6 26.1
Reported PAT 352 98 205 164 470 313 180 295 819 1,257
Adj PAT 352 109 204 303 514 343 483 347 957 1,687
YoY Change (%) 3.1 -238.3 -42.8 137.7 46.2 215.9 136.6 14.4 28.1 76.3
Margins (%) 3.7 1.3 2.3 3.8 4.9 3.4 4.5 3.8 2.8 4.2
E: MOSL Estimates
January 2017 66
Exide Industries
Bloomberg EXID IN CMP: INR182 TP:INR205 (+12%) Buy
 We expect net revenue to grow 2% YoY (-19% QoQ) to INR15.5b as
M. Cap. (INR b)/(USD b) 155 / 2
moderation in OEM demand due to the impact of demonetization is
1,6,12 Rel Perf. (%) 2 / 6 / 22
likely to slow down sales.
 EBITDA margin is likely to contract by 150bp YoY (-120bp QoQ) to
13.9%, as employee expenses are likely to jump on account of lower
Y/E MARCH 2016 2017E 2018E 2019E
volumes.
Net Sales 68.1 73.4 82.7 94.6
 Lead prices increased 9% QoQ in 2QFY17, the effect of which will be
EBITDA 10.2 10.9 12.7 14.9 reflected in 3Q raw material costs.
Adj. PAT 6.2 6.6 8.0 9.5  EBITDA is estimated to decrease 7.5% YoY (-25% QoQ) to ~INR2.1b.
Adj. EPS (INR) 7.3 7.8 9.4 11.2  PAT is likely to decline by 4% YoY (-28% QoQ) to INR1.3b. The fall in
EPS Gr. (%) 14.1 6.7 20.7 18.2 PAT is likely to be arrested due to higher other income.
BV/Sh. (INR) 52.2 57.4 64.3 72.9  The stock trades at 19.3x FY18E and 16.3x FY19E EPS; maintain Buy.
RoE (%) 14.0 13.6 14.7 15.3
RoCE (%) 14.5 14.0 15.3 16.0
Valuations  Update on demand environment for OEMs, auto replacement and
P/E (x) 24.8 23.3 19.3 16.3 industrial battery segments post demonetization.
P/BV (x) 3.5 3.2 2.8 2.5  Update on market share in autos and non-autos.
EV/EBITDA (x) 12.6 11.8 9.9 7.9  Outlook for raw material cost trend, recent pricing action and
Div. Yield (%) 1.3 1.2 1.2 1.2 currency hedges, if any.
 Update on technological upgradation.
 Update on capacity expansion plans across product segments.
S/A Quarterly Performance

Net Sales 18,064 17,442 15,211 17,605 20,081 19,233 15,515 18,545 68,092 73,375
Growth YoY (%) -5.4 -0.9 -2.2 7.0 11.2 10.3 2.0 5.3 -0.8 7.8
RM(%) 64.2 62.2 62.2 61.0 62.4 61.2 62.2 62.2 64.1 62.0
Employee cost (%) 6.1 6.7 7.9 7.0 6.4 6.9 8.9 7.6 7.0 7.3
Other Exp(%) 15.1 16.5 14.5 17.0 15.5 16.9 15.0 15.9 14.0 15.9
EBITDA 2,655 2,553 2,343 2,652 3,150 2,901 2,167 2,660 10,171 10,877
EBITDA Margin(%) 14.7 14.6 15.4 15.0 15.7 15.1 13.9 14.3 14.9 14.8
Change (%) -8.8 22.9 30.0 11.3 18.6 13.6 -7.5 0.3 11.3 7.0
Non-Operating Income 31 84 75 226 143 190 175 158 497 666
Interest 2 0 1 0 17 6 5 2 3 30
Depreciation 362 378 406 439 491 506 505 517 1,602 2,019
PBT after EO Exp 2,322 2,259 2,011 2,439 2,784 2,579 1,832 2,298 9,063 9,494
Adj. PAT 1,557 1,551 1,339 1,776 1,961 1,787 1,283 1,616 6,228 6,646
Change (%) -16.0 23.3 37.8 29.1 25.9 15.2 -4.3 -9.0 14.1 6.7
E: MOSL Estimates
January 2017 67
Hero MotoCorp
Bloomberg HMCL IN CMP: INR3,014 TP:INR3,011 (+1%) Neutral
 Sales volume declined 13% YoY (-19% QoQ) to 1.47m units, as
M. Cap. (INR b)/(USD b) 602 / 9
demonetization impact derailed November and December sales
52-Week Range (INR) 3740 / 2375
1,6,12 Rel Perf. (%) -8 / -2 / 10
volumes. Volume decline for Hero was steeper due to higher rural
exposure.
 Realization should grow by 1% YoY (+2% QoQ) to INR43,659 per
Y/E March 2016 2017E 2018E 2019E
unit.
Sales 284.4 287.7 328.9 359.8
 Net revenue is likely to decline 12% YoY (~2% QoQ) to INR64.3b.
EBITDA 44.6 46.5 52.4 52.7  EBITDA margin is expected to contract 90bp YoY (-290bp QoQ) to
NP 31.6 33.8 38.4 38.9 14.7% on higher fixed costs due to decline in volumes.
Adj. EPS (INR) 158.3 169.5 192.2 195.0  EBITDA is likely to decline 17% YoY (-31% QoQ) to ~INR9.4b.
EPS Gr. (%) 26.6 7.1 13.4 1.5  We expect PAT to decline 13% YoY (-31% QoQ) to INR6.9b.
BV/Sh. (INR) 397.8 470.9 554.7 641.2  The stock trades at 15.7x FY18E and 15.5x FY19E EPS; maintain
RoE (%) 43.6 39.0 37.5 32.6 Neutral.
RoCE (%) 42.9 38.1 36.7 32.0
Valuations  Update on demand environment (especially rural areas) at the
P/E (x) 19.0 17.8 15.7 15.5 retail level, channel inventory to assess the impact of
P/BV (x) 7.6 6.4 5.4 4.7 demonetization.
EV/EBITDA (x) 12.5 11.8 10.2 9.9  Guidance on export plans and new launches along with timelines.
Div. Yield (%) 2.4 2.7 3.0 3.0  Update on cost-saving initiatives.

Total Volumes ('000 nos) 1,646 1,575 1,690 1,722 1,745 1,823 1,473 1,648 6,632 6,690
Growth YoY (%) -4.1 -7.0 2.5 9.3 6.1 15.8 -12.8 -4.3 0.0 0.9
Net Realization 41,960 43,237 43,159 43,595 42,391 42,755 43,659 43,363 42,886 43,009
Growth YoY (%) 2.3 5.8 4.0 1.1 1.0 -1.1 1.2 -0.5 3.1 0.3
Net Op Revenues 69,048 68,093 72,948 75,052 73,989 77,963 64,319 71,468 284,427 287,739
Change (%) -1.9 -1.5 6.7 10.5 7.2 14.5 -11.8 -4.8 3.1 1.2
RM Cost (% sales) 69.7 68.5 66.9 66.0 67.1 66.5 66.5 67.1 67.9 66.8
Staff Cost (% sales) 4.5 4.5 4.7 4.7 4.5 4.6 5.8 5.5 4.6 5.1
Other Exp (% sales) 10.7 10.9 12.7 13.4 11.7 11.4 13.0 11.9 11.8 12.0
EBITDA 10,420 10,956 11,399 11,919 12,301 13,689 9,482 11,040 44,603 46,511
EBITDA Margins (%) 15.1 16.1 15.6 15.9 16.6 17.6 14.7 15.4 15.7 16.2
Other Income 1,044 1,115 842 1,168 1,204 1,524 1,500 1,273 4,229 5,500
Interest 12 12 6 12 15 16 8 17 49 55
Depreciation 1,030 1,091 1,139 1,155 1,152 1,193 1,350 1,349 4,414 5,044
PBT 10,422 10,968 11,096 11,920 12,337 14,004 9,624 10,947 44,369 46,912
Adj. PAT 7,475 7,861 7,958 8,347 8,831 10,042 6,900 8,074 31,615 33,848
Growth (%) 32.8 3.0 36.5 32.2 18.1 27.7 -13.3 -3.3 24.4 7.1
E: MOSL Estimates
January 2017 68
Mahindra & Mahindra

Bloomberg MM IN CMP: INR1,221 TP:INR1,497 (+23%) Buy
 Overall volumes were flat YoY (+5% QoQ) as 22% YoY growth in
M. Cap. (INR b)/(USD b) 758 / 11
tractors was offset by 8% YoY decline in the automotive segment.
52-Week Range (INR) 1509 / 1092
1,6,12 Rel Perf. (%) 2 / -14 / -6
UVs (incl pick-ups) declined by 7% due to demonetization impact.
 MM’s (including MVML) realization is expected to decline by 2%
YoY (-3% QoQ), as better product mix due to increase in share of
Y/E March 2016 2017E 2018E 2019E
tractors is offset by a rise in lower-ASP compact UV volumes.
Sales 408.8 431.9 493.1 566.9
 As a result, revenue is likely to marginally decline by 1% YoY (+2%
EBITDA 45.9 47.3 54.1 64.5 QoQ) to ~INR103b.
NP (incl. MVML) 32.9 36.9 41.2 47.9  EBITDA margin should expand 100bp YoY (flat QoQ) to 14.5% due to
Adj. EPS (INR) * 55.0 61.7 68.8 80.1 increase in the share of higher-margin tractor segment.
EPS Gr. (%) 4.2 12.1 11.6 16.3  PAT is projected to grow 9% YoY (-29% QoQ) to INR8.9b.
Cons. EPS (INR) 53.6 66.0 83.7 99.0  We are lowering our consolidated EPS estimate for FY17/FY18 by
BV/Sh. (INR) 366.3 406.4 448.2 501.2 3% to factor in lower-than-estimated volume growth on account of
RoE (%) 15.4 14.5 14.5 15.4 demonetization impact.
RoCE (%) 12.6 12.1 12.3 13.2  The stock trades at 17.7x FY18E and 15.2x FY19E EPS; Maintain Buy.
Payout (%) 26.3 35.3 37.6 31.9
Valuations Key issues to watch
P/E (x) 22.2 19.8 17.7 15.2
 Outlook for UV and tractor businesses post demonetization.
Cons. P/E (x) 22.8 18.5 14.6 12.3
 Product pipeline for FY17.
P/BV (x) 3.3 3.0 2.7 2.4
 Update on launch of mild-hybrid.
EV/EBITDA (x) 15.6 15.0 13.0 10.7
 Update on smaller businesses like two-wheelers, commercial
Div. Yield (%) 1.2 1.4 1.6 1.6
vehicles, Ssangyong, etc.
* incl. MVML
Quarterly Performance (incl MVML)

Total Volumes (nos) 171,925 158,601 193,763 182,093 192,170 185,156 195,047 175,132 707,689 761,088
Growth YoY (%) -8.1 -10.3 11.9 12.6 11.8 16.7 0.7 -3.8 1.3 7.5
Net Realization 549,491 554,969 540,124 557,967 547,674 549,363 530,475 565,584 549,064 536,486
Growth YoY (%) 4.8 8.5 1.0 -1.1 -0.3 -1.0 -1.8 1.4 3.8 -2.3
Net Op. Income 94,471 88,019 104,656 101,602 105,247 101,718 103,467 99,052 388,566 408,313
Growth YoY (%) -3.8 -2.7 13.0 11.4 11.4 15.6 -1.1 -2.5 5.1 5.1
RM Cost (% of sales) 68.0 67.8 68.4 68.7 68.4 67.1 67.6 68.9 68.2 68.2
Staff (% of sales) 7.0 7.3 6.7 5.6 6.8 7.1 7.1 7.8 6.6 7.2
Oth. Exp. (% of Sales) 10.8 11.9 11.4 13.2 10.7 11.3 10.8 10.9 11.8 11.1
EBITDA 13,450 11,445 14,138 12,694 14,885 14,682 15,006 11,461 51,988 54,864
EBITDA Margins (%) 14.2 13.0 13.5 12.5 14.1 14.4 14.5 11.6 13.4 13.4
Other income 1,109 4,867 929 1,004 1,296 6,879 1,150 2,171 7,910 11,495
Interest 562 625 554 588 428 464 440 494 2,329 1,826
Depreciation 2,544 2,711 3,328 3,901 3,484 3,701 3,625 3,656 12,484 14,467
PBT 11,454 12,975 11,185 9,269 13,179 17,397 12,091 9,481 45,144 50,977
Adj PAT 8,299 9,730 8,205 6,442 8,952 12,529 8,917 7,702 32,935 36,921
Change (%) -7.4 -0.1 15.1 15.3 7.9 28.8 8.7 19.6 4.2 12.1
E: MOSL Estimates
January 2017 69
Maruti Suzuki
Bloomberg MSIL IN CMP: INR5,510 TP:INR6,415 (+16%) Buy
 Volume growth moderated to ~3.5% YoY (-7.5% QoQ) in 3QFY17 to
M. Cap. (INR b)/(USD b) 1664 / 24
52-Week Range (INR) 5972 / 3202
~387,251 units, as growth for the mini and compact segment took a
1,6,12 Rel Perf. (%) 5 / 34 / 16 hit on demonetization woes. Moderation in volumes was limited due
to the waiting period of Baleno and Brezza.
 Net realization is likely to improve 6.3% YoY (flat QoQ) to INR428,514
Y/E MARCH 2016 2017E 2018E 2019E per unit, boosting net revenue by 10% YoY (-7% QoQ) to INR165.9b.
Sales 576.5 667.8 805.1 930.1 Growth in realization is likely to be driven by improvement in product
EBITDA 89.0 106.2 132.4 156.0 mix due to compact UV, Vitarra Brezza, and premium hatchback,
Adj. PAT 53.7 76.2 92.7 112.7 Baleno.
EPS (INR)* 155.5 257.4 312.5 379.1  We expect margin to expand 80bp YoY (+180bp QoQ) to 15.2% on
EPS Gr. (%) 23.4 65.5 21.4 21.3 marginally lower fixed costs on operating leverage benefits as well as
BV/Sh. (INR) 894.0 1,092 1,327 1,616 increased exports to Japan on a YoY basis.
RoE (%) 19.9 23.1 23.1 23.1  EBITDA is estimated to grow 16% YoY (-17% QoQ) to INR25.2b.
RoCE (%) 27.2 31.1 31.0 30.5  We expect PAT to grow 39% YoY (-19% QoQ) to INR19.4b.
Payout (%) 23.7 21.4 23.5 22.6  We are lowering our EPS estimate by ~3% for FY17/FY18 to
Valuations ~INR257/INR312 to factor in cut in volumes due to demonetization.
P/E (x) 35.4 21.4 17.6 14.5  The stock trades at 17.6x FY18E and 14.5x FY19E EPS. Maintain Buy.
P/CE (x) 22.1 16.0 13.4 11.3
EV/EBITDA (x) 16.7 13.6 10.3 8.2
Div. Yield (%) 0.6 0.8 1.1 1.3 Key issues to watch
*Consol. & adjusted  Update on retail demand scenario, channel inventory, discounting
trends and new launches (Brezza) post demonetization impact.
 Progress on commissioning of Gujarat plant.

Total Volumes (nos) 341,329 353,335 374,182 360,354 348,443 418,470 387,251 416,244 1,429,200 1,570,408
Change (%) 13.8 9.8 15.5 3.9 2.1 18.4 3.5 15.5 10.6 9.9
Realizations (INR/car) 391,907 392,013 403,063 424,742 428,202 426,382 428,514 418,577 403,394 425,243
Change (%) 2.8 2.5 3.6 8.1 9.3 8.8 6.3 -1.5 4.3 5.4
Net operating revenues 133,769 138,512 150,819 153,057 149,204 178,428 165,942 174,230 576,530 667,804
Change (%) 17.1 12.5 19.7 12.3 11.5 28.8 10.0 13.8 15.4 15.8
RM Cost (% of sales) 67.4 66.9 68.5 66.0 67.9 67.7 68.2 67.5 67.4 67.8
Staff Cost (% of sales) 3.5 3.0 3.3 3.9 3.9 2.9 3.5 3.7 3.4 3.5
Other Cost (% of sales) 12.9 13.9 13.8 14.8 13.4 12.4 13.1 12.5 13.8 12.8
EBITDA 21,673 22,457 21,701 23,500 22,157 30,374 25,229 28,410 88,962 106,170
EBITDA Margins (%) 16.2 16.2 14.4 15.4 14.9 17.0 15.2 16.3 15.4 15.9
Non-Operating Income 2,065 4,736 4,065 3,744 4,833 8,126 8,000 3,949 14,610 24,908
Interest 190 178 244 203 181 197 200 222 815 800
Depreciation 6,716 6,694 7,221 7,608 6,389 6,300 6,500 7,087 28,239 26,276
PBT 16,832 20,321 18,301 19,433 20,420 32,003 26,529 25,050 74,518 104,003
PAT 12,081 14,973 13,943 13,868 14,862 23,980 19,433 17,907 53,654 76,182
Adjusted PAT 12,081 14,973 13,943 13,868 14,862 23,980 19,433 17,907 53,654 76,182
Change (%) 58.5 73.6 68.2 8.0 23.0 60.2 39.4 29.1 44.6 42.0
E:MOSL Estimates
January 2017 70
Tata Motors
Bloomberg TTMT IN CMP: INR487 TP:INR613 (+26%) Buy
 We expect JLR’s (including JV) volume to be flat YoY (+9% QoQ). Net
M. Cap. (INR b)/(USD b) 1652 / 24
realization should increase 15% YoY (flat QoQ) led by ramp-up of
1,6,12 Rel Perf. (%) 10 / 6 / 25
F-Pace and increase in share of China. EBITDA margin would
contract 200bp YoY (and +200bp QoQ) to 12.4%. Adjusted PAT is
likely to decline ~21% YoY (+33% QoQ) to GBP325m.
Y/E March 2016 2017E 2018E 2019E
 S/A volume grew 8.4% YoY (-2% QoQ) led by a 36% rise in PVs due
Net Sales 2,756 2,866 3,289 3,815
to the launch of Tiago, while CVs declined by 1% due to the
EBITDA 402.4 353.7 503.4 619.3 demonetization impact. Margin is likely to contract 240bp YoY
NP 125.2 92.2 186.9 257.6 (-30bp QoQ) to 3.3%, as the share of CVs decreases. Adjusted PAT is
Adj. EPS (INR) 36.9 27.2 55.0 75.9 likely to be -INR3.6b (vis-à-vis -INR0.3m in 3QFY16).
EPS Gr. (%) -15.5 -26.3 102.7 37.8  Consolidated PAT would fall 16% YoY (+256% QoQ) to INR29.2b.
BV/Sh. (INR) 237.9 264.1 315.9 388.5  We are increasing our FY17 EPS estimates by 7% while downgrade
RoE (%) 18.3 10.8 19.0 21.5 our FY18 estimates by 17% to factor in for Fx hedge loss.
RoCE (%) 14.3 8.4 13.9 16.3  The stock trades at 8.9x FY18E and 6.4x FY19E EPS. Buy.
Payout (%) 0.7 13.3 8.8 6.4
Key issues to watch
Valuations
 Impact of Brexit on JLR business.
P/E (x) 13.2 17.9 8.9 6.4
 Current demand trends for JLR and outlook, particularly in China
P/BV (x) 2.0 1.8 1.5 1.3
EV/EBITDA (x) 4.4 5.3 3.5 2.4
and the US.
Div. Yield (%) 0.0 0.6 0.8 0.8
 Update on Chery JV operations and CV business outlook.
(Consolidated) 1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
JLR vols. (incl JV) 114,452 116,745 150,461 162,427 134,334 139,227 151,182 183,580 544,085 608,323
JLR Realizations (GBP/unit) 45,206 43,460 42,004 43,991 45,216 47,937 48,177 48,399 43,602 47,526
JLR EBITDA (%) 16.4 12.2 14.4 16.2 12.3 10.3 12.4 14.3 14.9 12.5
JLR PAT (GBP m) 492 52 414 560 265 245 325 558 1584 1392
S/A vol. (units) 117,160 117,439 122,377 146,766 126,839 134,869 132,657 168,608 532,724 562,973
S/A Realizations (INR/unit) 795,852 910,574 817,198 856,454 813,594 765,369 771,109 820,383 6 6
S/A EBITDA (%) 6.1 8.2 5.7 8.1 6.8 3.6 3.3 5.7 6.5 4.9
S/A PAT (INR m) 333 351 -395 5,014 996 -6,621 -3,558 -1,904 -1,297 -10,728
Net Op Income 604,009 615,240 722,564 806,844 658,950 659,004 708,422 839,462 2,755,611 2,865,838
Growth (%) -6.6 1.5 3.3 19.4 9.1 7.1 -2.0 4.0 4.7 4.0
EBITDA 110,068 65,189 93,800 113,872 76,220 62,826 89,260 94,827 365,160 323,132
EBITDA Margins (%) 18.2 10.6 13.0 14.1 11.6 9.5 12.6 11.3 13.3 11.3
Interest Expenses 11,496 12,228 10,915 12,552 11,785 10,249 6,500 10,438 46,234 38,972
PBT before EO Exp 63,398 11,911 41,300 59,567 20,663 9,831 34,560 39,819 158,602 104,874
EO Exp/(Inc) -6,338 33,411 -457 -6,044 -4,851 -162 0 0 18,794 -5,013
PAT 53,251 -17,209 35,244 52,065 18,314 5,747 25,001 29,720 111,083 78,781
Minority Interest -232 -214 -204 -383 -240 -198 -175 -363 -1,059 -976
Share in profit of Associate -708 -139 36 89 4,290 2,735 4,339 6,636 213 18,000
Adj PAT 47,470 9,180 34,690 46,975 18,882 8,191 29,165 35,993 125,170 92,211
Growth (%) (10.9) (72.0) (10.2) 158.4 (60.2) (10.8) (15.9) (23.4) -11.3 -26.3
E: MOSL Estimates
January 2017 71
TVS Motor Company

Bloomberg TVSL IN
CMP: INR374 TP:INR407 (+9%) Buy
 Total volume growth moderated to 2% YoY (-12% QoQ) to 718,562
M. Cap. (INR b)/(USD b) 178 / 3
units, as volumes declined in Dec-16 due to demonetization impact.
1,6,12 Rel Perf. (%) 4 / 22 / 27
 Motorcycle and scooter volumes declined 5% YoY (-25% QoQ) and
5% YoY (-4% QoQ), respectively, while mopeds volume surged 27%
YoY (-5% QoQ) on positive rural sentiment.
Y/E March 2016 2017E 2018E 2019E
 Net realization is likely to improve 1% YoY (+0.5% QoQ) to
Sales 112.4 122.7 143.1 165.9
INR42,224 per unit as share of mopeds increased, resulting in a
EBITDA 7.5 9.2 12.1 14.1
better product mix. As a result, net sales would grow 3.2% YoY to
Adj. PAT 4.3 5.7 7.8 9.3 ~INR30.4b.
EPS (INR) 9.1 11.9 16.5 19.6  Margin should expand 50bp YoY (-90bp QoQ) to 7.2%, driven by
EPS Gr. (%) 24.2 31.3 38.2 18.7 benefit of operating leverage and better product mix YoY.
BV/Sh (INR) 40.8 49.4 62.3 77.1  We expect PAT to increase ~21% YoY (-26% QoQ) to INR1.3b.
RoE (%) 24.1 26.5 29.5 28.1  We downgrade our EPS estimates for FY17/18 by 5/3% to factor in
RoCE (%) 23.3 27.4 32.1 31.9 moderation in volumes due to demonetization.
Payout (%) 33.7 27.7 21.9 24.6  The stock trades at 22.7x FY18E and 19.1x FY19E EPS; maintain Buy.
Valuations
P/BV (x) 9.2 7.6 6.0 4.9  Launch of product with BMW tie-up.
EV/EBITDA (x) 24.1 19.1 14.2 11.7  Double-digit EBITDA margin target by FY18.
Div. Yield (%) 0.7 0.7 0.8 1.1
S/A Quarterly Performance

Y/E March (INR m) FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE FY16 FY17E
Volumes (units) 638,033 678,749 702,044 659,512 717,964 815,562 718,562 694,069 2,678,338 2,946,157
Growth (%) 9.2 0.4 7.1 9.4 12.5 20.2 2.4 5.2 6.3 10.0
Realization (INR/unit) 40,344 41,803 41,872 42,688 40,127 42,014 42,224 42,183 41,981 41,645
Growth (%) 2.2 5.3 3.5 4.8 (0.5) 0.5 0.8 (1.2) 5.3 (0.8)
Net Sales 25,741 28,374 29,396 28,154 28,809 34,265 30,341 29,278 112,439 122,692
Growth (%) 11.7 5.8 10.8 14.6 11.9 20.8 3.2 4.0 12.0 9.1
RM (% of sales) 73.0 72.1 71.6 70.2 72.6 72.3 72.7 72.5 71.4 72.5
Emp cost ( % of sales) 6.0 5.7 6.0 5.8 6.3 5.8 5.8 5.8 5.9 5.9
Other exp (% of sales) 14.2 14.2 15.7 17.6 14.2 13.8 14.4 14.0 16.0 14.1
EBITDA 1,728 2,270 1,966 1,785 2,004 2,767 2,169 2,262 7,507 9,202
EBITDA Margin(%) 6.7 8.0 6.7 6.3 7.0 8.1 7.2 7.7 6.7 7.5
Interest 130 102 100 131 98 94 90 87 462 369
Depreciation 504 466 493 518 660 724 700 698 1,898 2,782
Other Income 210 57 117 243 362 392 350 359 513 1,462
PBT before EO Exp 1,304 1,760 1,490 1,380 1,608 2,340 1,729 1,835 5,660 7,513
Tax rate (%) 23.2 25.3 27.7 14.7 24.6 24.2 24.5 24.8 24.2 24.5
Adjusted PAT 1,001 1,315 1,077 1,178 1,213 1,774 1,306 1,380 4,289 5,672
Growth (%) 38.4 38.7 19.4 30.1 21.2 34.9 21.2 17.2 23.3 32.2
January 2017 72
December
March2016
2016Results
2015 ResultsPreview
Preview ||Sector:
December Sector:Capital
2016 Results Goods
CapitalPreview
Goods
Technology
Capital Goods
Demonetization to extend near-term pain
Company name
Impending structural reforms to rekindle investment cycle
ABB
Domestic investment cycle: Demonetization impacts capex cyle
Bharat Electronics temporarily; exports hamstrung by weak global demand
BHEL The recent demonetization has temporarily impacted capex activity. CMIE data
Crompton Greaves
indicates that the new investment proposals by India Inc reduced to INR1.3t for the
December quarter as compared to an average of INR2.4t per quarter in the
Crompton Greaves Consumer
preceding nine quarters. The near-term outlook remains cautious, with
Cummins India demonetization impacting fresh investments and challenges such as restrained
GE T&D capex activity by private players. However, policy initiatives and efforts are
underway for (i) expediting government approvals, and (ii) establishing monetary
Havells India
conditions conducive to industrial revival in the medium term.
Larsen & Toubro
 We believe investment revival would be triggered by: (i) sustained recovery in
Siemens
consumption demand, and thus, capacity utilization, and (ii) investment push by
Thermax the public sector, leading to a virtuous cycle of cash flow generation.
Voltas Simultaneously, sustained progress in reviving stalled projects is imperative for
attracting new investments and providing much-needed stimulus to aggregate
demand.
 By initiating GST, labor and energy sector reforms, the government has partly
addressed concerns about the pace and extent of reforms. Successful
implementation of substantive reforms is essential for structured investment
growth.
 Indian machinery exports have decelerated due to factors such as weak global
demand, geopolitical concerns and sharp currency volatility across several
markets. Also, falling crude prices had an adverse impact on global trade, and
thus, investment demand. Project awards in the Middle East have been
muted—in fact, revenue estimates for global industrial players suggest that
sluggishness has continued for around nine quarters.
Equipment manufacturers key beneficiaries of ‘ Make in India’ initiative

‘ Make in India’ is the central government’s initiative to improve the manufacturing
sector’s contribution through import substitution and increased exports. The intent
is to ensure that customers in the public and private sectors increasingly procure
equipment manufactured locally. Power Grid has mandated T&D players to
manufacture certain components in India for orders tendered out in key high-end
technology products such as SVC/STATCOM, GIS, 765K V transformers and reactors,
HTLS conductors, OPGW and HVDC.
In our opinion, successful implementation of this initiative should benefit capital

goods players. Increased imports over past 5-6 years, particularly from China/South
K orea, have been a critical area of concern across several product segments, even
where domestic manufacturing capabilities and competitiveness exist. K ey
beneficiaries include BHEL/Siemens (railways, solar cells, power T&D, defense, etc),
L&T/BEL (defense), ABB/Alstom/CRG/Siemens (power T&D, etc) and TMX (industrial
products/power BTG).
Ankur Sharma (Ankur.vsharma@MotilalOswal.com); +91 22 3982 5449
Amit Shah (Amit.Shah@MotilalOswal.com); +91 22 3029 5126
January 2017 73
December 2016 Results Preview | Sector: Capital Goods
Exhibit 1: Summary of expected quarterly performance

Sector Sales (INR m) EBDITA (INR m) PAT (INR m)
Reco. Dec-16 Dec-16 De-16
Capital Goods
ABB 1,037 Neutral 26,779 10.4 30.3 2,721 0.9 79.5 1,424 4.8 63.5
Bharat Electronics 1,431 Buy 18,500 21.9 8.6 3,427 17.1 2.3 3,219 8.9 -6.1
BHEL 127 Sell 60,500 13.6 -9.2 -7,500 Loss PL -6,755 Loss PL
CG Consumer Elect. 152 Buy 7,700 -4.9 -13.5 555 -33.0 -43.0 325 -23.3 -41.3
Crompton Greaves 61 Sell 13,160 7.5 -12.0 1,090 13.0 30.7 969 132.8 261.2
Cummins India 809 Neutral 12,219 6.5 -4.5 1,792 15.6 -10.0 1,680 3.5 -14.7
GE T&D India 302 Neutral 8,500 14.3 1.9 370 LP 9.0 40 LP -80.6
Havells India 351 Buy 13,318 -0.9 -8.3 1,034 -43.0 -49.2 704 -40.9 -50.0
Larsen & Toubro 1,376 Buy 273,000 5.7 9.2 27,700 4.5 20.6 11,000 6.3 6.6
Siemens 1,121 Neutral 22,650 -2.1 -26.7 1,940 0.0 -19.7 1,340 17.5 -27.4
Thermax 780 Sell 9,664 -7.0 11.0 902 -8.7 16.7 614 -9.5 2.9
Voltas 335 Buy 11,688 -10.6 20.8 575 -1.4 -16.3 505 -2.9 -30.0
Source: MOSL
Ordering activity supported by finalization of base orders; slight pick-up in

domestic tendering activity
 Overall ordering activity has been impacted by delay in finalization of large
orders (> INR15b) and restrained capex activity by the private sector.
 Local ordering activity has seen some improvement, led by finalization of base
orders. After remaining subdued for most of 2015, tendering has seen some
improvement since January 2016, mainly supported by central government
activity. Sector-wise, roads, railways, power T&D and defense registered strong
tendering activity (fiscal allocations for roads/railways have been increased).
 Overseas project awards, particularly in the Middle East, have started to see
some signs of revival since 4QFY16, despite a sharp decline in crude oil prices.
Aggregate project awards in the region improved 40% YoY to USD140b (12-
month moving average).
 We believe that growth in large orders is imperative to further boost ordering
activity.
Exhibit 3: EBITDA margin under pressure on slower project
Exhibit 2: Constrained growth in revenue execution
Engg Sector (revenue growth %) EBITDA Margin (%) EBITDA Margin (%)
17.9
16.9
16.3
16.1
16.0
15.6
15.5
14.5
14.0
13.8
13.5
13.5
17.9
12.3
12.2
12.1
12.0
12.0
12.0
11.6
11.6
11.3
11.0
10.2
16.9
10.0
10.0
16.3
16.1
16.0
26.3 9.9
11.7 9.2
15.6
15.5
3.1 8.7
8.4
8.4
8.3
7.2
14.5
14.0
13.8
13.5
13.5
2.7 4.3
12.3
12.2
12.1
12.0
12.0
12.0
19.6
18.2
15.6
16.6
15.3
11.6
11.6
11.3
16.8
21.7
20.9
16.9
31.8
11.0
6.6
1.3
20.5
12.8
16.4
29.0
22.0
28.8
27.5
2.8
10.2
7.5
10.0
10.0
9.2
9.9
3.7
2.8
9.2
8.7
8.4
8.4
8.3
7.2
4.3
-5.2
2QFY14 -3.5
4QFY15 -1.0
-0.8
2QFY16 -1.4
2QFY09
4QFY09
2QFY10
4QFY10
2QFY11
4QFY11
2QFY12
4QFY12
2QFY13
4QFY13
4QFY14
2QFY15
4QFY16
2QFY17
2QFY09
4QFY09
2QFY10
4QFY10
2QFY11
4QFY11
2QFY12
4QFY12
2QFY13
4QFY13
2QFY14
4QFY14
2QFY15
4QFY15
2QFY16
4QFY16
2QFY17
Source: MOSL, Company Source: MOSL, Company
January 2017 74
Exhibit 4: Book-to-bill stable at 3.0x Exhibit 5: Order intake growth remains muted
Order book (INR b) BTB (x) Order intake YoY %
58
56
52
3.3
3.3
3.3
3.1
3.2
39
3.0
3.1
3.0
2.9
2.8
31
2.6
2.6
17
15
22
14
18
2.4
2.4
2.3
2.3
2.3
2.3
2.2
2.2
2.1
-1
15
-1
-2
-11
-12
3,367
3,263
3,112
3,168
3,127
2,964
2,893
2,958
2,989
3,028
2,943
3,230
3,482
3,594
3,605
3,813
3,717
3,641
3,837
3,922
3,871
-17
-20
-24
-34
4QFY12-47
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
2QFY12
2QFY13
4QFY13
2QFY14
4QFY14
2QFY15
4QFY15
2QFY16
4QFY16
2QFY17
Source: MOSL, Company Source: MOSL, Company
Exhibit 6: Relative performance – Three-month (%) Exhibit 7: Relative performance – One-year (%)
Sensex Index MOSL Capital Goods Index
Sensex Index MOSL Capital Goods Index
108 110
101 102
94 94
87 86
80 78
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Nov-16
Dec-16
Sep-16
Oct-16

CMP Reco EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
Sector / Companies
(INR) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E
Capital Goods
ABB 1,037 Neutral 18.2 26.9 32.2 57.0 38.5 32.3 29.1 19.3 16.5 11.4 14.5 15.4
Bharat Electronics 1,431 Buy 60.0 69.9 80.3 23.8 20.5 17.8 18.8 16.5 13.5 19.2 18.3 18.5
BHEL 127 Sell 3.9 5.5 8.5 32.2 23.1 15.0 17.0 9.2 7.4 2.9 3.9 5.8
CG Consumer Elect. 152 Buy 3.7 5.1 6.3 40.6 29.5 24.1 24.8 18.8 15.6 80.9 74.2 66.1
Crompton Greaves 61 Sell 0.6 1.9 3.2 109.3 32.9 19.0 7.8 6.3 5.1 4.2 6.0 8.0
Cummins India 809 Neutral 26.0 30.2 36.3 31.1 26.8 22.3 28.7 23.8 19.2 22.0 23.1 25.2
GE T&D India 302 Neutral 5.6 10.7 15.0 53.6 28.4 20.2 32.6 15.5 11.6 -6.8 20.1 25.1
Havells India 351 Buy 7.5 11.3 13.6 46.8 31.0 25.9 26.4 20.4 16.4 16.9 23.3 24.6
Inox Wind 183 Neutral 17.5 20.0 23.8 10.5 9.2 7.7 7.4 6.8 5.4 19.3 18.6 18.8
K E C International 144 Buy 10.1 12.1 14.0 14.3 11.9 10.3 7.7 6.8 5.9 16.0 16.7 16.8
Larsen & Toubro 1,376 Buy 53.6 62.2 76.1 25.7 22.1 18.1 18.8 14.9 13.1 10.9 11.7 13.0
Siemens 1,121 Neutral 17.0 25.4 31.6 65.9 44.1 35.5 37.3 28.4 22.9 9.2 12.6 14.3
Solar Inds. 713 Neutral 19.3 22.9 29.6 37.0 31.1 24.1 20.5 17.6 14.0 18.6 19.0 20.9
Thermax 780 Sell 24.8 27.6 32.0 31.5 28.3 24.4 20.3 17.6 14.7 12.2 12.5 13.4
Va Tech Wabag 486 Buy 25.2 32.6 36.0 19.2 14.9 13.5 9.7 7.4 6.7 13.2 15.4 15.2
Voltas 335 Buy 11.8 14.0 17.6 28.4 23.8 19.0 19.5 17.0 12.9 15.4 16.4 18.1
January 2017 75
ABB
Bloomberg ABB IN CMP: INR1,037 TP: INR1,125 (+8%) Neutral
 ABB has received an order to supply 1,600 traction transformers
M. Cap. (INR b)/(USD b) 220 / 3
for 800 new electric freight locomotives in India. The transformers
52-Week Range (INR) 1433/950
1,6,12 Rel Perf. (%) -2 / -13 / -11
will be manufactured locally in ABB’s Vadodara facility, supporting
the government’s ‘ Make in India’ initiative.
 ABB continues to focus on increased localization and cost
Y/E Dec 2015 2016E 2017E 2018E optimization, whereby its direct RM costs have declined to 65.4%
Net Sales 81.4 88.3 99.6 111.3 of revenue, from a peak of 81% in 4QCY10. The company has set an
EBITDA 7.5 7.5 11.1 12.9 internal target to reduce it to 65% over next few years. This has
Adj PAT 3.0 3.7 5.7 6.8 aided margins, despite negative operating leverage.
Adj EPS (INR) 15.8 18.2 26.9 32.2
 We expect revenue to register 11% YoY growth, led by execution
EPS Gr (%) 22.8 15.6 48.0 19.3
BV/Sh (INR) 142.0 159.5 186.5 208.9
ramp-up in the project segment. Operating margins are expected
RoE (%) 11.1 11.4 14.5 15.4 to decline 90bp YoY to 10.2%, as contribution from projects
RoCE (%) 17.5 16.3 21.8 22.9 increases (56% of sales as against 63% in 4QCY15). Net profit is
Payout (%) 23.5 25.2 26.1 26.1 likely to increase 5% YoY to INR1.4b. Maintain Neutral.
Valuations
P/E (x) 65.8 57.0 38.5 32.3
P/BV (x) 7.3 6.5 5.6 5.0
EV/EBITDA (x) 29.8 22.9 17.5 13.3 Key issues to watch
Div. Yield (%) 0.4 0.4 0.7 0.8  Management commentary suggests cautious optimism; continued
focus on exports and services to be an important driver, with
projection of strong double-digit revenue and profit growth.
 Continued preference for cash generation vis-à -vis profits.
Quarterly Performance (INR m)

Y/E December CY15 CY16
CY15 CY16E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 18,146 19,316 19,690 24,251 20,003 21,015 20,550 26,779 80,152 87,158
Change (%) (0.7) 6.0 6.7 8.3 10.2 8.8 4.4 10.4 5.0 8.7
EBITDA 1,436 1,610 1,557 2,697 1,571 1,701 1,516 2,721 7,465 7,509
Change (%) 5.0 15.2 15.3 41.2 9.4 5.6 -2.7 0.9 24.6 0.6
As % of Sales 7.9 8.3 7.9 11.1 7.9 8.1 7.4 10.2 9.3 8.6
Depreciation 422 375 359 442 359 357 406 477 1598 1598
Interest 208 246 250 207 206 180 178 221 912 786
Other Income 7 10 5 108 148 44 44 366 130 578
PBT 813 999 954 2,155 1,154 1,208 976 2,389 5,086 5,704
Tax 270 315 366 796 364 434 427 620 1,747 1,845
Repoted PAT 543 575 587 1,294 710 774 811 1,424 2,999 3,718
Adj. PAT 543 685 587 1,359 790 774 871 1,424 3,339 3,858
Change (%) -13.4 12.8 4.9 42.8 45.5 13.1 48.2 4.8 22.8 15.6
Order Intake 18,560 18,950 22,920 20,580 18,300 20,400 29,670 26,340 81,000 94,710
Order Book 79,730 79,560 82,750 79,460 78,040 77,520 86,760 77,449 79,460 123,830
BTB (x) 1.0 1.0 1.0 1.0 0.9 0.9 1.0 0.9 1.0 1.4
E: MOSL Estimates,*: As reported by ABB
January 2017 76
Bharat Electronics
Bloomberg BHE IN CMP: INR1,431 TP: INR1,600 (+12%) Buy
 Bharat Electronics plans to establish a defense system integration
M. Cap. (INR b)/(USD b) 343 / 5
52-Week Range (INR) 1540 / 1009
complex, with a capex of USD120m, to manufacture missile
1,6,12 Rel Perf. (%) -1 / 15 / 0
systems like navigation, seeker, radar, fire control and guidance.
 BHE expects order inflow of INR120b-150b in FY17, led by
finalization of key projects like Akash missile.
Y/E March 2016 2017E 2018E 2019E  BHE has guided revenue growth of 10-12% in FY17, led by
Net Sales 73.0 82.6 95.6 109.3 execution of key orders in hand, like Akash missile, WLR, hand-held
EBITDA 14.6 15.6 17.2 20.3 thermal device, tactical control radar, etc.
NP 13.7 14.4 15.6 17.9  The company has guided that FY17 EBITDA margin would be in the
EPS (INR) 56.9 60.0 69.9 80.3
+/-100bp range of FY16 margin (20%).
EPS Gr. (%) 17.1 5.5 16.5 14.8
BV/Sh (INR) 364.2 336.7 382.4 434.9
 BHE plans to explore opportunities in critical infrastructure
RoE (%) 15.6 19.2 18.3 18.5 protection, air traffic management radars, intelligent traffic
RoCE (%) 16.5 17.7 19.4 19.6 management systems, solar power plants and smart city elements.
P/E (x) 25.1 22.2 20.5 17.8  BHE has planned capex of INR23b over the next five years toward
P/BV (x) 3.9 4.2 3.7 3.3 modernization and expansion of existing facilities to support the
EV/EBITDA (x) 18.5 17.3 15.1 12.3
government’s “ Make in India” initiative. Majority of the capex
EV/ Sales (x) 3.8 3.3 2.8 2.3
would be spent on developing BMS test bed, TCS test bed, test bed
for missile system, etc. Maintain Buy.
Key issues to watch
 Revenue growth: Key orders (Akash missile, intake INR67b in FY11–
12) are currently under execution for Army and Air Force.
 Operating at 60% capacity utilization; possibility of strong operating
leverage.
FY16 FY17
Y/E March FY16 FY17
1Q 2Q 3Q 4Q 1QE 2Q 3QE 4QE
Sales 10997 14692 15172 32148 8714 17033 18500 38388 72952 82636
Change (%) 8.6 13.5 -5.7 9.8 -20.8 15.9 21.9 19.4 6.6 13.3
EBITDA 78 1807 2926 9988 -467 3349 3427 9297 14582 15606
Change (%) -117 52 5 26 -699 85 17 -7 27 7
As of % Sales 0.7 12.3 19.3 31.1 -5.4 19.7 18.5 24.2 20.0 18.9
Depreciation 408 407 414 468 435 455 450 566 1689 1905
Interest 0 3 1 41 0 3 0 -3 45 0
Other Income 1337 1316 1355 1336 1387 1714 1150 1004 5322 5256
PBT 1007 2712 3865 10888 486 4606 4127 9738 18169 18956
Tax 241 654 908 2799 125 1178 908 2338 4515 4550
Reported PAT 767 2059 2957 8089 361 3427 3219 7399 13654 14407
Change (%) 199.5 40.1 8.8 11.9 -52.9 66.5 8.9 -8.5 17.6 5.5
Adj PAT 767 2059 2957 8017 361 3427 3219 7399 13654 14407
Change (%) 199.5 40.1 8.8 10.9 -52.9 66.5 8.9 -7.7 17.4 5.5
E: MOSL Estimates
January 2017 77
BHEL
Bloomberg BHEL IN CMP: INR127 TP: INR110 (-13%) Sell
 BHEL is expected to post loss on the operational front, led by
M. Cap. (INR b)/(USD b) 311 / 5
continued weakness in gross profit margin. However, we expect
1,6,12 Rel Perf. (%) -2 / -6 / -27
operational performance to improve YoY. We estimate revenue
growth of 13.5% YoY, decline in operating loss from INR16.4b in
3QFY16 to INR7.5b, and decline in net loss from INR11b in 3QFY16
Y/E March 2016 2017E 2018E 2019E at INR6.7b. Loss in 3QFY16 was led by provisioning of INR11.8b for
Net Sales 256.3 314.0 333.9 380.8 dues and inventory for the projects put on hold.
EBITDA -19.6 12.1 17.9 27.1  During the quarter, BHEL bagged an order worth INR4.6b for R&M
PAT -9.1 9.7 13.5 20.8 of the 6x60MW Balimela HEP of Odhisa Hydro Power Corporation
EPS (INR) -3.7 3.9 5.5 8.5
and the 3x60MW Bairaisul HEP of NHPC.
EPS Gr. (%) -163.6 -206.3 39.4 54.2
BV/Sh. INR 135.0 138.1 142.3 148.9
 BHEL also secured an order for the supply of 118 sets of IGBT-
RoE (%) -2.7 2.9 3.9 5.8 based traction converters for 3-phase 6,000 HP electric
RoCE (%) -4.1 1.2 2.2 3.5 locomotives valued at INR2b.
Payout (%) -10.8 0.0 0.0 20.0  BHEL is L1 in 12GW of orders, of which it expects 7GW of orders to
Valuations be finalized in FY17.
P/E (x) -32.9 30.9 22.2 14.4
P/BV (x) 0.9 0.9 0.9 5.8
EV/EBITDA (x) -10.2 16.5 8.8 7.2
Key issues to watch
Div Yield (%) 0.3 0.6 0.9 1.4  Continued constraint on execution due to operational issues.
* Consolidated  Trends in provisions, particularly for liquidated damages on
project completion.
FY16 FY17
Y/E March FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Sales (Net) 43,617 59,380 53,256 100,048 56,225 66,645 60,500 130,585 256,300 313,954
Change (%) -15.0 -3.4 -14.1 -21.1 28.9 12.2 13.6 30.5 -15.1 22.5
EBITDA -2,093 -4,379 -16,387 3,638 710 1,551 -7,500 17,377 -19,597 12,139
Change (%) -196.1 -250.2 -657.8 -78.4 -133.9 -135.4 -54.2 377.6 -193.4 -161.9
As a % Sales -4.9 -7.4 -30.8 3.6 1.3 2.3 -12.4 13.3 -7.6 3.9
Interest 33 44 52 140 57 50 55 106 268 268
Depreciation 2,425 2,249 2,255 2,428 2,182 2,080 2,500 3,191 9,356 9,953
Other Income 4,924 3,739 1,706 4,139 2,493 1,961 1,800 4,209 14,501 2,899
PBT 373 -2,933 -16,989 5,209 965 1,382 -8,255 18,289 -14,721 12,381
Tax 34 -1,125 -5,969 1,555 188 292 -1,500 3,745 -5,633 2,724
Reported PAT 339 -1,808 -11,020 3,596 778 1,090 -6,755 14,544 -9,088 9,657
Change (%) -82.5 -244.8 -618.3 -59.5 129.5 -160.3 -38.7 304.5 -164.0 -206.3
Adj. PAT 339 -1,808 -11,020 3,655 778 1,090 -6,755 14,544 -9,088 9,657
Change (%) -82.5 -244.8 -618.3 -61.7 129.5 -160.3 -38.7 298.0 -163.6 -206.3
E: MOSL Estimates
January 2017 78
Crompton Greaves
Bloomberg CRG IN CMP: INR61 TP: INR48 (-21%) SELL
 During the quarter, deal for sale of overseas power business in
Europe, North America and Indonesia to First Reserve for an
1,6,12 Rel Perf. (%) -13 / -15 / -10
enterprise value of EUR115m on a debt-free, cash-free basis was
called off owing to non-fulfillment of certain conditions precedent
to the share purchase agreement.
Y/E March 2016 2017E 2018E 2019E  The management now intends to sell the overseas power business
Net Sales 52.7 59.3 54.7 59.1 on either geographical basis or product-wise basis.
EBITDA 3.7 4.7 5.5 6.5  CRG has reached an agreement to sell its B2B automation business
Adj PAT 1.3 0.3 1.1 2.0 in Spain, UK , Ireland, France and India at an EV of EUR120m.
EPS(INR) 2.1 0.6 1.9 3.2
Successful completion of the deal would help Crompton to reduce
EPS Gr. (%) -51.0 -73.0 232.6 73.1
BV/Sh. (INR) 73.3 73.2 72.7 72.0
the debt on its books.
RoE (%) 3.0 4.2 6.0 8.0  The management intends to monetize ~INR10b of non-core assets,
RoCE (%) 5.1 6.0 7.5 7.9 including additional land at K anjurmarg, to lower standalone
Payout (%) 0.0 107.4 107.4 107.4 business debt. Maintain SELL.
Valuations
P/E (x) 35.3 109.3 32.9 19.0
P/BV (x) 1.0 0.8 0.8 0.8
Div Yield (%) 0.0 1.0 3.3 4.5  Lowering debt in demerged business through asset sale.
* Consolidated
 Concrete developments on plans to sell international power
business.
Quarterly performance (Consolidated)

FY16 FY17
FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Sales (Net) 10,275 14,292 12,247 16,699 15,239 14,952 13,160 16,530 52,721 59,314
Change (%) -70.1 -58.3 -49.2 6.0 48.3 4.6 7.5 -1.0 -62.4 12.5
EBITDA -136 1,295 964 1,548 1,206 834 1,090 1,006 3,671 4,736
Change (%) -107.9 -23.1 53.8 -48.3 -983.2 -35.6 13.0 -35.0 -42.9 29.0
As of % Sales (Adj) -1.3 9.1 7.9 9.3 7.9 5.6 8.3 6.1 7.0
Depreciation 603 604 622 728 604 567 550 381 2,558 2,101
Interest 153 169 103 240 306 443 306 307 814 1,363
Other Income 425 178 109 257 176 500 150 274 1,116 1,100
EO Income/(Exp) -11 -1 -1,585 -2,030 0 -372 -350 -382 -1,113
PBT -479 698 -1,237 -1,193 471 696 734 974 -2,211 2,372
Tax 166 225 -65 -182 68 52 120 208 144 447
Effective Tax Rate (%) -34.7 32.2 5.3 15.2 14.3 7.4 16.3 21.3 -6.5 18.8
Minority interest -8.3 -23.7 -3.1 9.8 3.6 4.1 -5.0 -28.0 -25.3 -25.3
Reported PAT -637 497 -1,168 -1,022 400 641 619 794 -2,329 1,950
Adjusted PAT -626 499 416 1,008 400 268 969 1,176 1,297 1,950
Change (%) (197.7) (28.4) (185.0) (63.4) (163.9) (46.2) 132.8 16.7 (29.5) 50.3
Order book 79,050 84,280 79,540 41,670 35,270 45,290 - - 75,790 44,071
Order Intake 25,060 16,644 21,040 12,920 13,730 17,460 22,513 - 75,664 51,918
BTB (x) 1.6 2.1 2.2 0.8 0.8 1.0 - - 1.4
E: MOSL Estimates
January 2017 79
CG Consumer Electricals
Bloomberg CROMPTON IN CMP: INR152 TP: INR180 (+18%) Buy
 We expect CROMPTON’s 3QFY17 operational performance to be
impacted on account of the demonetization-led sluggishness.
1,6,12 Rel Perf. (%) -
 We expect sales to decline 5% YoY, led by weak demand for
products on account of liquidity tightness witnessed by consumers
following the demonetization.
Y/E March 2016E 2017E 2018E 2019E  We expect operating profit of INR405m in 3QFY17, a decline of
Net Sales 18.1 37.6 42.9 48.7 51% YoY on account of increase in employee cost, led by provision
EBITDA 2.1 4.0 5.3 6.3 of ESOP cost and negative operating leverage.
Adj PAT 1.1 2.3 3.2 3.9  Operating margin would be 5.3% in 3QFY17 as against 10.2% in
EPS (INR) 1.9 3.7 5.1 6.3
3QFY16. Net profit is expected to be INR175m in 3QFY17 as against
EPS Gr. (%) (70.3) 96.6 37.6 22.5
BV/Sh. (INR) 3.6 5.6 8.3 10.8
INR412m in 3QFY16, a decline of 58.7% YoY.
RoE (%) 52.1 80.9 74.2 66.1
RoCE (%) 27.4 30.2 33.4 34.9
Payout (%) - 40.0 40.0 50.0 Key issues to watch
Valuations
 Impact of demonetization on the sales of the company.
P/E (x) 79.8 40.6 29.5 24.1
P/BV (x) 41.6 27.1 18.3 14.1
 Details of segmental sales, as CROMPTON intends to improve
EV/EBITDA sales of premium category products.
46.0 23.8 18.0 14.9
(x)  Ad spends incurred by the company during the quarter, as
Div Yield (%) - 1.0 1.4 2.2 CROMPTON intends to position itself as an electrical consumer
* Consolidated
durables brand as against its current positioning as a fans brand.

FY16 FY17
Y/E March FY16 FY17
3Q 4Q 1Q 2Q 3Q 4Q
Sales 8,101 10,016 11,208 8,900 7,700 9,753 18,117 37,561
Change (%) 12.0 10.6 -4.9 -2.6 107.3
EBITDA 828 1,272 1,550 974 555 892 2,095 4,047
Change (%) -8.1 2.0 -33.0 -29.8 93.2
As of % Sales 10.2 12.7 13.8 10.9 7.2 9.2 11.6 10.8
Depreciation 30 33 28 27 25 29 63 109
Interest 158 159 180 161 160 164 318 709
Other Income 1 0 34 42 25 20 39 165
PBT 641 1,079 1,376 827 395 719 1,753 3,394
Tax 218 321 457 273 70 252 525 1,052
Effective Tax Rate (%) 33.9 29.7 33.2 33.0 17.7 35.0 29.9 31.0
Adjusted PAT 424 759 919 554 325 468 1,228 2,342
Change (%) (51.1) (10) (23.3) (38) (69.4) 90.7
Extra-ordinary Income (net) (11.9) (93) - - - - (139.3)
Reported PAT 412 666 919 554 325 468 1,089 2,342
Change (%) (52.4) (21) (21.1) (30) (72.9) 115.1
January 2017 80
Cummins India
Bloomberg K K C IN CMP: INR809 TP: INR836 (-3%) Neutral
 We expect revenue improvement of 7% YoY, supported by growth
M. Cap. (INR b)/(USD b) 224 / 3
in the industrial (21%) and automotive (9%) segments. Industrial
1,6,12 Rel Perf. (%) 3 / -3 / -25
segment growth would be driven by a pick-up in the infrastructure
(roads and metros) and data center segments. Pick-up in the
domestic demand environment and various pricing actions taken
Y/E March 2016 2017E 2018E 2019E by K K C to regain lost market share post CPCB-2 compliance will
Net Sales 47.0 50.0 56.6 65.5 help domestic revenue to grow 8% YoY in 3QFY17.
EBITDA 7.7 7.7 9.2 11.3  We expect export revenue to improve 4% YoY to INR3.8b in
Adj PAT 7.5 7.2 8.4 10.1 3QFY17. Exports had witnessed a muted growth of 1% in 1QFY17,
EPS (INR) 27.2 26.0 30.2 36.3
led by weak demand in LatAm, Europe and China.
EPS Gr. (%) -4.0 -4.6 16.4 20.0
BV/Sh. (INR) 114.4 124.8 136.9 151.5
 EBIDTA margin is expected to improve by 120bp YoY to 14.7%; net
RoE (%) 24.9 22.0 23.1 25.2 profit should grow 3.5% YoY to INR1.7b. Maintain Neutral.
RoCE (%) 25.2 21.9 23.3 25.4
Payout (%) 51.5 51.5 51.5 51.5
Valuations
P/BV (x) 7.1 6.5 5.9 5.3
 Cost optimization possibilities in power gen business, given
EV/EBITDA
28.9 29.0 24.0 19.5 increased localization due to a significant decline in imports post
(x)
Div Yield (%) 1.7 1.7 1.9 2.3 CPCB-2 implementation.
 Performance of export segment, as exports remained weak, led
by poor demand in LatAm, Europe and China.

FY16 FY17
Y/E March FY16 FY16
Sales 13,101 11,946 11,469 10,614 12,590 12,790 12,219 12,621 47,130 49,966
Change (%) 25.3 4.4 5.9 -6.4 -3.9 7.1 6.5 18.9 7.0 6.0
EBITDA 2,217 2,019 1,550 1,773 2,063 1,990 1,792 2,100 7,822 7,692
Change (%) 23.3 6.3 -18.2 0.8 -6.9 -1.4 15.6 18.5 3.3 10.0
As of % Sales 16.9 16.9 13.5 16.7 16.4 15.6 14.7 16.6 16.6 15.4
Depreciation 203 200 201 206 206 209 258 216 810 889
Interest 24 24 2 24 21 43 24 24 96 96
Other Income 595 601 566 513 416 692 590 594 2,279 2,292
PBT 2,585 2,396 1,912 2,056 2,252 2,430 2,100 2,455 9,195 9,000
Tax 472 417 288 386 440 461 420 479 1,561 1,800
Adjusted PAT 2,114 1,980 1,624 1,670 1,812 1,969 1,680 1,976 7,634 7,200
Change (%) (0.3) (2.2) (10.3) (12.3) (14.3) (0.5) 3.5 18.3 (2.9) (5.7)
Reported PAT 2,114 1,980 1,624 1,670 1,812 1,969 1,680 1,976 7,634 7,200
Change (%) (0.3) (2.2) (10.3) (12.3) (14.3) (0.5) 3.5 18.3 (2.9) (5.7)
January 2017 81
GE T&D
Bloomberg GETD IN CMP: INR302 TP: INR320 (+6%) Neutral
 We expect GETD to register robust revenue growth of 14% YoY to
INR8.5b in 3QFY17. Revenue growth would be driven by
1,6,12 Rel Perf. (%) -4 / -12 / -38
execution of the Champa-K urukshetra Phase-I project.
 We expect operating profit in 3QFY17 as against loss of INR14m in
3QFY16. Loss at operating level in 3QFY16 was primarily on
Y/E March 2016 2017E 2018E 2019E account of cost overrun on certain projects. Gross margin is likely
Net Sales 34.1 38.3 43.9 50.4 to expand 130bp to 32.9% from 31.6% in 3QFY16.
EBITDA 2.3 2.4 5.0 6.6  GETD is expected to book net profit of INR40m as against loss of
Adj PAT 0.8 1.4 2.7 3.8 INR182m in 3QFY16. Maintain Neutral.
EPS (INR) 3.0 5.6 10.7 15.0
EPS Gr. (%) -35.7 86.3 88.9 40.6
BV/Sh. (INR) 52.1 50.3 55.8 63.6
RoE (%) 5.9 -6.8 20.1 25.1
RoCE (%) 10.1 13.2 24.5 29.7
Payout (%) 59.5 40.0 40.0 40.0
Valuations
P/E (x) 99.9 53.6 28.4 20.2
P/BV (x) 5.8 6.0 5.4 4.8
EV/ Sales (x) 2.4 2.1 1.8 1.5  Progress in the Champa-Kurukshetra Phase-I project.
Div Yield (%) 0.6 -0.5 1.4 2.0
FY16 FY17
Y/E March FY16E FY17E
Sales 7,660 8,729 7,436 9,715 8,546 8,340 8,500 12,892 34,135 38,278
Change (%) 1.2 1.2 1.2 -28.6 11.6 -4.4 14.3 32.7 -7.8 12.1
EBITDA 72 680 -14 850 21 339 370 1,675 2,324 2,405
Change (%) -90.4 -22.4 NA -18.5 -70.3 -50.1 -2,705.6 97.1 -9.0 -9.0
As of % Sales 0.9 7.8 -0.2 8.7 0.2 4.1 4.4 13.0 6.8 6.3
Depreciation 212 215 215 216 217 220 220 234 873 873
Interest 117 143 168 189 226 239 220 221 589 589
Other Income 412 213 117 64 326 435 130 70 427 427
Extra-ordinary Items 0 0 0 0 2,330 0 0 0 0 0
PBT 155 536 -280 509 -2,425 315 60 1,290 1,289 1,370
Tax 54 174 -98 210 -455 109 20 451 508 508
Effective Tax Rate (%) 34.7 32.6 NA 41.3 18.8 34.6 33.3 35.0 39.4 37.1
Reported PAT 102 361 -182 299 -1,970 206 40 839 781 862
Change (%) -67.5 1.8 -803.1 -44.8 -2,041.0 -43.0 -122.0 180.7 0.0 0.0
Adj PAT 102 361 -182 299 360 206 40 839 781 862
Change (%) -64.4 1.8 NA -44.8 254.6 -43.0 NA 180.7 2.0 2.0
January 2017 82
Havells India
Bloomberg HAVL IN CMP: INR351 TP: INR390 (+11%) BUY
 We expect HAVL’s 3QFY17 operational performance to be
M. Cap. (INR b)/(USD b) 219 / 3
impacted on account of the demonetization-led sluggishness.
1,6,12 Rel Perf. (%) 3 / -2 / 10
 Standalone revenue is expected to decline 1% YoY on account of
decline in the demand for products like switchgears (-10% YoY),
electrical consumer durables (-5% YoY) and lighting (-8% YoY). We
Y/E March 2016 2017E 2018E 2019E expect the cables segment, which contributes 41% of the
Net Sales 77.1 59.9 68.9 79.9 company’s revenue, to register 5% YoY growth, led by
EBITDA 8.0 7.7 9.7 11.9 improvement in the prices of the copper (+11% YoY).
Adj PAT 4.8 4.7 7.1 8.5  We expect operating margin to shrink 570bp YoY to 7.8% in
Adj EPS (INR) 7.8 7.5 11.3 13.6
3QFY17, led by negative operating leverage, increase in staff cost,
EPS Gr. (%) -6.0 -3.6 51.0 19.9
BV/Sh(INR) 41.0 44.3 48.6 55.2
and higher ad spend.
RoE (%) 19.0 16.9 23.3 24.6  Net profit is expected to decline 42% YoY. Maintain BUY.
RoCE (%) 20.4 20.4 23.7 25.7
Payout (%) 93.0 63.6 62.1 51.7
Valuations
P/E (x) 45.2 46.9 31.0 25.9
P/BV (x) 8.6 7.9 7.2 6.4 Key issues to watch
EV/EBITDA (x) 25.4 26.4 20.4 16.4  Commentary on the impact of demonetization on demand for the
Div Yield (%) 1.1 1.4 1.7 1.7 company’s product portfolio and outlook for FY18.
* Consolidated  Guidance on deployment of cash received from the sale of
Sylvannia to Sanghai Feilo.
Quarterly Performance (Standalone)

FY16E FY17
Sales 12,523 13,359 13,445 14,754 14,668 14,522 13,318 14,505 54,369 57,014
Change (%) -1.9 -2.1 7.8 9.3 17.1 8.7 -0.9 -1.7 3.8 4.9
Adj EBITDA 1,620 1,890 1,815 2,196 2,004 2,034 1,034 1,406 7,479 6,555
Change (%) -1.4 2.9 0.0 11.1 23.7 7.6 -43.0 -36.0 2.9 -12.3
Adj EBITDA margin (%) 13.1 14.2 13.5 14.9 13.7 14.0 7.8 9.7 13.8 11.5
Depreciation 248 261 232 237 280 308 300 371 922 1,259
Interest 30 31 19 48 16 19 19 -4 126 50
Other Income 170 98 132 291 307 253 270 317 687 1,147
PBT 1,489 1,683 1,712 2,208 2,022 2,030 985 1,356 7,119 6,394
Tax 421 488 505 567 567 572 281 371 1,988 1,790
Reported PAT 1,068 1,195 1,208 1,641 1,456 1,458 704 985 5,130 4,604
Change (%) -0.4 -0.1 3.9 34.7 36.3 22.0 -41.7 -39.9 10.3 -10.3
Adj PAT 1,085 1,204 1,191 1,637 1,450 1,409 704 985 5,117 4,684
Change (%) -0.4 -1.0 0.3 23.6 33.7 17.0 -40.9 -39.8 6.2 -8.5
E: MOSL Estimates
January 2017 83
Larsen & Toubro

Bloomberg LT IN CMP: INR1,376 TP: INR1,600 (+16%) Buy
 LT announced order intake of INR70b in 3QFY17 compared to
M. Cap. (INR b)/(USD b) 1287 / 19
INR9.0b in 3QFY16. Domestic order wins are supported by order
52-Week Range (INR) 1615 / 1017
finalization in the water and T&D space. However, large ticket order
1,6,12 Rel Perf. (%) 0 / -10 / 6
finalization has not materialized. K ey orders finalized during the
quarter are (a) EPC order of INR14.2b from Department of Water
Resources for execution of mega lift irrigation schemes in Odhisa, (b)
Y/E March 2016E 2017E 2018E 2019E
Sales 1,020 1,092 1,250 1,382
electrification project of INR10.4b under IPDS scheme from
EBITDA 103.5 113.1 141.7 159.4 North/South Bihar Power Distribution Limited.
Adj PAT * 41.8 50.2 58.2 71.1  Overseas wins have been muted, particularly impacted by the sharp
EPS (INR)* 44.7 53.6 62.2 76.1 decline in crude prices. LT along with EMAS Chiyoda has won two
EPS Gr. (%) -5.3 19.9 15.9 22.3 EPC contracts from Saudi Aramco.
BV/Sh (INR) 470.2 510.3 555.5 612.0  For 3QFY17, we expect revenue growth of 6% YoY to INR270b. We
RoE (%) 9.9 10.9 11.7 13.0
expect operating profit growth of 4.5% YoY.
RoCE (%) 6.3 7.5 9.2 10.0
Payout (%) 28.7 21.8 24.0 22.5
 We expect net profit growth of 6.3% YoY to INR11b.
Valuations  L&T-MHPS Boiler Private Limited has signed a technology license
P/E (x)* 30.8 25.7 22.1 18.3 agreement for selective catalytic reduction systems. The technology
P/BV (x) 3.1 2.9 2.7 2.5 licensing agreement is for design, engineering, manufacture,
EV/EBITDA (x) 21.7 19.7 15.6 13.8 installation, commissioning, and sale of new boilers under BTG, EPC
Div Yield (%) 0.9 0.8 1.1 1.2 or SG packages or standalone SCR systems, and for existing and
* C ons olid ated
under construction boilers on exclusive basis in India. Maintain Buy.
Key issues to watch
 Recent demonetization drive has led to 24 days revenue loss for
the road BOT Toll players. We have factored in loss of INR300m for
3QFY17 on account of the demonetization drive.
 Net working capital (excluding financial services) at 22% of revenue
in 2QFY17 remains at a high, given tight liquidity conditions.
Quarterly Performance (Consolidated)
Y/E March FY16 FY17
FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Sales 200,482 231,235 258,293 331,570 218,738 250,107 273,000 354,838 1,019,641 1,092,044
Change (%) 7.0 9.3 8.3 18.3 9.1 8.2 5.7 7.0 10% 7%
EBITDA 16,411 21,310 26,499 48,592 19,050 22,977 27,700 43,403 103,494 113,130
Change (%) -8.9 8.6 -8.3 34.6 16.1 7.8 4.5 -10.7 -8.7 9.3
Margin (%) 8.2 9.2 10.3 14.7 8.7 9.2 10.1 12.2 10% 10%
Depreciation 4,658 5,286 6,198 8,203 4,648 4,602 4,400 4,108 17,867 17,758
Interest 3,893 4,388 7,446 7,737 3,375 3,517 5,000 7,513 16,405 19,404
Other Income 2,833 3,217 4,517 2,182 3,024 4,813 3,100 1,897 10,032 12,834
Extraordinary Inc/(Exp) 0 457 0 485 0 4,024 0 0 942 0
Reported PBT 10,692 15,310 17,371 34,834 14,052 19,671 21,400 33,678 80,196 88,801
Tax 4,282 5,347 5,555 9,537 5,488 6,807 7,000 7,942 23,782 23,782
Reported PAT 6,410 9,506 11,816 25,297 8,564 12,864 14,400 25,737 54,946
Reported PAT 4,190 7,784 10,348 24,536 6,096 14,346 11,000 22,767 42,790 50,185
Change (%) -37.3 -9.7 19.4 18.6 45.5 84.3 6.3 -7.2 3.8 3.8
Adjusted PAT 4,190 7,327 10,348 24,051 6,096 10,322 11,000 22,767 41,848 50,185
Change (%) -21.0 -15.0 19.4 22.0 45.5 40.9 6.3 -5.3 7.9 7.9
E: MOSL Estimates
January 2017 84
Siemens
Bloomberg SIEM IN CMP: INR1,121 TP: INR1260 Neutral
 During the quarter, SIEM approved the sale and transfer of its
M. Cap. (INR b)/(USD b) 399 / 6
engineering, design and development services for global wind
1,6,12 Rel Perf. (%) 2 / -11 / -10
power business to a subsidiary, Wind Holdco Sociedada Limitada
(SA), Spain for a consideration of INR75m.
 SIEM and Whispering Heights Real Estate Private Limited have
Y/E September 2015 2016 2017E 2018E executed an MoU for the transfer of the company’s leasehold
Net Sales 52.6 46.2 47.7 54.3 interest in a property for a consideration of INR6.1b.
EBITDA 4.1 4.1 4.6 5.5  We expect SIEM to register muted YoY revenue decline of 2.1% to
Adj PAT 2.8 3.0 3.3 3.8 INR22.6b, as we exclude revenue of the healthcare division, which
Adj EPS (INR) 23.5 24.8 27.6 32.0
it sold in 3QFY16. Excluding healthcare, we expect robust revenue
EPS Gr (%) 8.2 5.2 11.2 16.1
BV/Sh. (INR) 197.7 212.5 229.2 249.2
growth of 19% YoY, led by strong performance by the industrial
RoE (%) 12.5 12.2 12.5 13.4 and energy segments.
RoCE (%) 11.3 10.7 12.2 12.9  We expect SIEM to register sales of INR22.1b, a growth of 12% YoY
Payout (%) 32.9 34.2 33.8 32.1 (excluding healthcare division). EBITDA is likely to decline 3% YoY to
Valuations INR1.9b and net profit is likely to grow 22% YoY to INR1.4b on
P/E (x) 33.2 31.5 28.3 24.4
higher other income and lower tax rate. Maintain Neutral.
P/BV (x) 3.9 3.7 3.4 3.1
Div. Yield (%) 1.0 1.1 1.2 1.3  Raw material imports account for 55% of raw material cost;
Siemens AG’s network comprises 82% of imports; EUR
depreciating 1% YoY v/s INR could bolster product
competitiveness and margin profile.
Quarterly Performance (Standalone) (INR Million)

FY17 FY18
Y/E September FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Total Revenues 23,142 27,836 26,204 30,906 22,650 27,350 26,400 33,498 108,088 109,898
Change (%) 5.9 4.9 10.3 -6.3 -2.1 -1.7 0.7 8.4 1.4 4.5
EBITDA 1,940 3,061 2,338 2,414 1,940 3,000 3,300 4,323 9,731 12,563
As % of Revenues 8.4 11.0 8.9 7.8 8.6 11.0 12.5 12.9 9.0 11.4
Depreciation 586 590 625 462 570 600 625 646 2,263 2,441
interest 19 21 21 21 20 20 20 19 59 79
Other Income 411 270 279 683 640 740 740 774 1,639 2,894
Extra-ordinary Items 0 0 0 22,825 0 0 0 0 0 0
PBT 1,746 2,720 1,971 25,439 1,990 3,120 3,395 4,431 9,166 13,095
Tax 606 946 670 770 650 920 1,002 1,309 2,992 3,881
Reported PAT 1,140 1,774 1,300 24,670 1,340 2,200 2,393 3,122 6,174 9,214
Adjusted PAT 1,140 1,774 1,300 1,845 1,340 2,200 2,393 3,122 6,056 1,340
Change (%) 7.5 14.9 -22.7 7.1 17.5 24.0 84.1 69.3 33.5 -77.8
Order Intake (INR b) 34 29 32 25 35 0 0 0 121 120
Order book (INR b) 108 110 116 111 0 0 0 0 100 101
BTB (x) 1.0 1.0 1.1 1.0 0.0 0.0 0.0 0.0 0.9 0.9
E: MOSL Estimates, Adj EBITDA: Adjusted for change in project revenues and cost estimates
January 2017 85
Thermax
Bloomberg TMX IN CMP: INR780 TP: INR706 (-9%) Sell
 Revenue is likely to decline 7% YoY, led by constrained execution
environment prevailing in the energy segment. Operating margin is
1,6,12 Rel Perf. (%) -7 / -7 / -16
expected to remain stable YoY at 9.3%.
 Ordering activity remains muted on a weak macro environment.
We believe domestic orders have remained at the base level
Y/E March 2016 2017E 2018E 2019E (INR5b-7b per quarter), as the company has not announced any
Net Sales 52.6 46.2 47.7 54.3 meaningful order during the quarter.
EBITDA 4.1 4.1 4.6 5.5  Increased internationalization of the business is a vital part of
Adj PAT 2.8 3.0 3.3 3.8 TMX’s ongoing strategy. The company also announced plans to
EPS (INR) 23.5 24.8 27.6 32.0
partly localize operations in SE Asia by setting up subsidiaries. It is
EPS Gr. (%) 8.2 5.2 11.2 16.1
BV/Sh. (INR) 197.7 212.5 229.2 249.2
planning to set up a boiler facility in Indonesia with capex of
RoE (%) 12.5 12.2 12.5 13.4 USD50m. TMX expects the facility to generate revenue of
RoCE (%) 11.3 10.7 12.2 12.9 USD100m over 3-4 years post commissioning of the plant. Maintain
Payout (%) 32.9 34.2 33.8 32.1 Sell.
Valuations
P/E (X) 33.2 31.5 28.3 24.4
P/BV (X) 3.9 3.7 3.4 3.1
EV/EBITDA (X) 23.3 22.7 19.7 16.4
Key issues to watch
Div Yield (%) 1.0 1.1 1.2 1.3
 Demand environment in domestic and overseas markets.
 Sustainability of margins in energy (10.1% in 2QFY17) and
environment (8% in 2QFY17) segments.

FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Sales 10,173 10,829 10,390 12,932 8,145 8,708 9,664 12,382 44,589 39,387
Change (%) 21.2 -9.1 -9.4 -14.3 -19.9 -19.6 -7.0 -4.3 -5.1 -11.7
EBITDA 788 907 988 1,182 637 773 902 1,401 3,742 3,714
Change (%) 36.5 -25.8 -24.8 -27.3 -19.1 -14.7 -8.7 18.5 -20.4 -0.7
As of % Sales 7.7 8.4 9.5 9.1 7.8 8.9 9.3 11.3 8.4 9.4
Depreciation 158 157 160 135 168 166 187 183 609 704
Interest 12 12 2 -1 7 7 10 22 46 46
Other Income 210 195 131 478 211 289 185 193 1,140 877
Extra-ordinary Items
PBT 829 933 957 1,526 673 888 890 1,389 4,227 3,840
Tax 271 315 279 413 221 292 276 387 1,252 1,176
Reported PAT 558 618 678 1,113 452 597 614 1,001 2,975 2,665
Change (%) 34.8 (28.2) (11.1) (15.9) (19.0) (3.5) (9.5) (10.0) (11.4) (10.4)
Adj PAT 558 618 678 1,113 452 597 614 1,001 2,975 2,665
Change (%) 34.8 (28.2) (11.1) (15.9) (19.0) (3.5) (9.5) (10.0) (11.4) (10.4)
January 2017 86
Voltas
Bloomberg VOLT IN CMP: INR335 TP: INR370 (+10%) BUY
 Unitary cooling division (UCP) is likely to report revenue decline of
M. Cap. (INR b)/(USD b) 111 / 2
5% YoY, with demonetization impacting demand for ACs. As 3Q is
1,6,12 Rel Perf. (%) 9/7/5
usually a lean quarter for AC sales, the impact would be limited.
 We expect revenue decline of 10% YoY in the MEP segment, led
by high base effect (56% YoY growth in 3QFY16). However, the
Y/E March 2016 2017E 2018E 2019E key monitorable would be margins in the segment. VOLT had
Net Sales 58.6 58.9 65.6 73.9 booked a loss of INR86m in 3QFY16 on cost overrun getting
EBITDA 4.4 4.7 5.3 6.8 booked for the UAE project, while the acceleration claim is yet to
Adj PAT 3.9 3.9 4.6 5.8 be booked.
EPS(INR) 11.7 11.8 14.0 17.6
 Sharp decline in crude prices has raised apprehensions over the
EPS Gr. (%) 14.0 1.2 19.1 25.3
BV/Sh. (INR) 72.4 80.8 90.8 103.4
pace of order awards and also execution in the Middle East. Even
RoE (%) 15.3 15.4 16.4 18.1 in the domestic market, new project awards remain constrained.
RoCE (%) 14.8 14.6 15.3 16.7 Maintain Buy.
Payout (%) 28.6 28.6 28.6 28.6
Valuations
P/E (x) 32.1 26.4 22.2 17.7
P/BV (x) 4.6 3.9 3.4 3.0 Key issues to watch
EV/EBITDA (x) 25.5 21.2 18.5 14.1  Impact of demonetization scheme on the sales of UCP division
Div Yield (%) 0.8 0.9 1.1 1.4 and outlook for FY18.
 Progress on legacy projects and also capital employed in MEP
business.

FY16 FY17
Y/E March FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Sales 15,585 10,401 13,077 18,888 18,500 9,672 11,688 18,853 58,574 58,907
Change (%) -11.3 5.6 37.5 26.8 18.7 -7.0 -10.6 -0.2 13.0 0.6
EBITDA 1,313 645 583 1,853 1,995 687 575 1,475 4,369 4,732
Change (%) -0.4 -17.0 1.6 29.5 52.0 6.4 -1.4 -20.4 6.6 8.3
As of % Sales 8.4 6.2 4.5 9.8 10.8 7.1 4.9 7.8 7.5 8.0
Depreciation 59 64 69 80 66 63 85 106 278 320
Interest 34 33 33 59 48 33 45 60 153 186
Other Income 248 477 183 478 357 658 300 254 1,176 1,569
Extra-ordinary Items 0 0 -22 -279 -9 0 0 0 106 0
PBT 1,468 1,025 687 2,471 2,248 1,249 745 1,562 5,220 5,795
Tax 452 378 126 664 651 505 220 437 1,599 1,813
Reported PAT 1,025 647 542 1,764 1,576 721 505 1,110 3,620 3,903
Change (%) -7.0 28.9 -49.5 47.9 53.7 11.5 -6.8 -37.1 -7.4 7.8
Adj PAT 1,025 647 520 1,485 1,567 721 505 1,110 3,515 3,903
Change (%) -7.9 29.5 -17.3 27.1 52.8 11.5 -2.9 -25.3 3.9 11.0
Order Book 40,390 35,990 35,140 39,140 44,170 42,520 - - 39,140
Order Intake 5,940 2,010 4,960 9,590 9,500 3,820 4,450 9,230 22,500
BTB - TTM basis (x) 1.8 1.3 1.3 1.0 1.4 1.3 1.6 - 1.4
E: MOSL Estimates
January 2017 87
December 2016 Results Preview
Cement
Demonetization affects demand recovery
Company name
Volume growth to be muted; prices under pressure
ACC
Ambuja Cements Demonetization derails recovery

Grasim Industries Cement demand witnessed healthy recovery in October 2016; all India production
India Cements
grew ~7% YoY on a relatively higher base. However, following the announcement of
demonetization in November, cement demand was severely impacted. The impact
Shree Cement
was particularly pronounced in the initial 15 days due to acute cash shortage and
Ramco Cement absence of alternate methods of payment for a large part of users. November all-
UltraTech Cement India production declined 15% MoM while still registering a growth of ~1% YoY due
to low base – November 2015 was part of the festive season.
We expect double-digit YoY volume decline in December, led by high base and
demonetization. However, there should be marginal improvement MoM. We expect
all-India volume to decline 1% YoY in 3QFY17. MOSL cement universe is likely to see
volume decline of 0.9% YoY (+ 2.6% QoQ). We expect (a) pan-India players to report
volume decline of 4-8% YoY, (b) players with capacity headroom (SRCM, JK LC) to
deliver 2-5% YoY increase in volumes, (c) South-based companies to deliver
15%+YoY growth due to lesser impact of demonetization as also low base.
In 4QFY17, we expect industry volume to decline on a YoY basis due to absence of

new construction activity as also high base of 4QFY16. In FY18, industry volumes
should see over 5% growth, led by stronger government push towards infrastructure
and low cost housing.
Prices under pressure

Prices increased in October in expectation of demand improvement in 2HFY17, but
declined in December due to demonetization that resulted in dampened demand.
ASP should decline 2% QoQ in 3QFY17 due to weak realization in North and East
markets. We estimate price changes of: (a) -5% QoQ in North India, (b) -2% QoQ in
Central India, (c) ~+5% QoQ in West India, (d) -6% QoQ in East India, and (e) -2%
QoQ in South India.
Profitability likely to be under check

Weaker realizations coupled with subdued volumes and cost push in terms of higher
power and fuel cost should result in sharp sequential decline in profitability. The
impact would be particularly accentuated for North, Central & East market where
price correction has been more dominant. MOSL cement coverage universe
EBITDA/ton would be INR728 (-15% QoQ, +3% YoY).
Abhishek Ghosh (Abhishek.Ghosh@motilaloswal.com); +91 22 3982 5436

Varun Gadia (Varun.Gadia@MotilalOswal.com); +91 22 3982 5446
January 2017 88
December 2016 Results Preview | Sector: Cement
Top picks include Shree Cement, Ramco Cement and Dalmia Cement
The steep ask rate in terms of realization growth should result in a time correction
for cement stocks. We believe this could be an attractive entry opportunity for
stocks with strong operating cash flows, superior return ratios and higher medium-
to-longer-term earnings visibility. We prefer Shree Cement due to superior return
ratios – RoCE of 30%, with 38% EBITDA CAGR over FY16-18. Ramco Cement is likely
to generate free annual cash flows of INR7b-8b, given strong profitability; it
generates a yield of 6-7%. Dalmia Cement trades at an attractive EV/EBITDA of 9.3x
FY18E, given strong earnings growth on sustenance of profitability and lower
interest cost.
Exhibit 1: Expected quarterly performance summary
Sector Sales (INR M) EBDITA (INR M) PAT (INR M)
Cement
ACC 1,320 Neutral 26,566 -6.7 7.5 1,880 -13.0 -16.3 583 -43.2 -30.7
Ambuja Cements 212 Buy 21,800 -7.5 8.8 2,664 -12.4 -3.5 1,612 10.9 -41.8
Grasim Industries 867 UR 24,792 7.2 -0.4 5,238 22.1 -1.2 3,701 42.2 -37.5
India Cements 122 Neutral 11,919 28.2 -8.8 2,011 37.6 -10.4 481 780.8 -22.9
Ramco Cements 575 Buy 9,264 14.1 -8.5 2,627 7.4 -24.8 1,409 19.7 -31.9
Shree Cement 14,131 Buy 18,879 3.3 -5.9 4,941 16.5 -24.7 2,592 151.8 -11.1
Ultratech Cement 3,299 Buy 53,435 -7.0 -1.0 9,634 -7.7 -11.9 5,078 -0.2 -15.5
Cement Sector Aggregate 166,654 -1.0 -0.1 28,995 3.3 -13.6 15,457 24.3 -26.9
UR: Under Review Source: MOSL
Exhibit 2: MOSL universe volume at 42mt (-1%YoY)

Volumes (MT) - RHS Volume growth (%)
16.9
9.3
8.9
8.3
6.3
42
5.7
42
5.5
5.1
3.7
3.2
42
2.5
1.8
1.6
1.6
1.2
0.4
-0.9
-1.3
-5.0
39 36 38 39 37 38 44 43 39 40 43 40 42 49 47 41
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17E
Exhibit 4: Pan-India average cement prices (INR/bag) lower

Exhibit 3: Utilizations remain flattish qoq(%) in 3QFY17 due to weak prices in North and East
80
78
78
1QFY17 2QFY17 3QFY17

77
76
76
73
73
72
71
71
71
70
72
70
68
68
67
67
66
65
65
65
65
65
65
65
337
331
330
299
298
298
296
296
295
293
293
291
288
285
282
280
278
270
North East West South Central Average

prices
1QFY11
3QFY11
1QFY12
3QFY12
1QFY13
3QFY13
1QFY14
3QFY14
1QFY15
3QFY15
1QFY16
3QFY16
1QFY17
3QFY17E
(INR/bag)
January 2017 89
Exhibit 5: MOSL coverage realization to decline 2% QoQ in Exhibit 6: Profitability to decline 15% QoQ, led by weak
3QFY17 volume and lower operating leverage
Realization (INR/ton) EBITDA (INR/ton)
4,339
4,307
4,294
4,269
4,229
4,226
4,223
4,200
4,179
4,176
4,147
4,100
1,010
4,028
4,017
4,000
3,989
3,962
3,960
3,946
3,873
3,841
966
3,777
948
3,617
857
3,566
837
833
814
806
806
793
788
3,220
759
750
747
728
724
717
714
705
683
681
498
489
566
570
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17E
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17E
Exhibit 7: Relative performance— 3 months (%) Exhibit 8: Relative performance— 1 year (%)
Sensex Index MOSL Cement Index Sensex Index MOSL Cement Index
107 149
98 133
117
89
101
80 85
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Nov-16
Dec-16
Sep-16
Oct-16
Exhibit 9: 3QFY17 estimates for MOSL coverage

Volume (m ton) Realization (INR/ton) EBITDA (INR/ton)
YoY QoQ YoY QoQ
3QFY17 YoY (%) QoQ (%) 3QFY17 3QFY17
(INR/T) (INR/T) (INR/T) (INR/T)
ACC 5.5 -8.5 8.1 4,285 -54 -87 343 -18 -100
Ambuja Cement 5.1 -7.1 11.1 4,284 -16 -92 524 -32 -79
UltraTech 10.9 -5.1 0.1 4,081 -58 -80 873 -11 -119
Birla Corp 1.8 -10.0 0.5 4,336 647 -100 232 -93 -261
India Cement 2.2 16.0 -8.7 5,259 512 0 895 140 -17
Shree Cement 4.9 4.7 7.7 3,765 266 -200 1,000 204 -300
Dalmia Bharat 3.4 16.0 0.4 4,865 -30 125 997 -132 -144
J K Cements 1.9 -5.0 -0.1 4,693 223 -50 623 0 -138
JK Lakshmi 1.7 -2.0 1.1 3,722 59 -100 242 -136 -304
Madras Cement 1.9 19.0 -4.9 4,769 -282 0 1,376 -149 -150
Orient Cement 1.2 15.0 2.9 3,423 84 150 520 321 383
Prism Cement 1.2 -2.0 1.5 4,412 594 70 617 141 174
Sector Aggregate 41.8 -0.9 2.6 4,269 90 -70 728 24 -129
Source: MOSL
January 2017 90

Cement
ACC 1,320 Neutral 32.6 48.9 65.6 40.5 27.0 20.1 19.6 15.3 12.9 7.2 10.9 14.6
Ambuja Cements 212 Buy 5.7 6.9 7.4 26.1 21.4 20.1 17.2 14.7 13.1 5.9 7.1 7.3
Birla Corporation 675 Buy 33.8 44.5 56.6 20.0 15.2 11.9 9.9 7.3 5.9 8.5 9.8 11.9
Dalmia Bharat 1,580 Buy 34.2 50.4 72.3 46.2 31.3 21.9 11.8 9.8 9.3 7.6 10.3 13.1
Grasim Industries 867 Under Review 76.1 88.7 113.4 11.4 9.8 7.6 5.7 4.6 2.7 12.9 13.3 14.9
India Cements 122 Neutral 8.9 10.6 12.7 13.6 11.5 9.6 7.5 7.4 6.6 7.0 7.4 8.0
J K Cements 728 Buy 26.4 36.5 48.7 27.5 20.0 15.0 12.7 10.6 9.5 10.9 13.7 16.1
JK Lakshmi Cem. 365 Buy 4.7 12.2 17.6 77.3 29.9 20.7 15.8 12.6 10.4 4.2 10.5 14.7
Orient Cement 126 Buy -1.1 3.3 5.7 -114.9 37.8 21.9 19.2 12.1 10.6 -2.3 6.8 11.0
Prism Cement 84 Buy 0.9 3.5 5.1 94.4 24.0 16.6 22.2 13.0 8.9 4.5 16.0 19.8
Ramco Cements 575 Buy 29.4 31.5 42.3 19.5 18.3 13.6 12.4 10.4 8.2 20.6 18.6 21.0
Shree Cement 14,131 Buy 394.3 582.0 725.4 35.8 24.3 19.5 19.0 14.1 11.2 20.2 24.3 24.2
Ultratech Cement 3,299 Buy 94.6 134.8 168.4 34.9 24.5 19.6 19.0 14.1 11.7 11.9 15.0 16.4
Cement Sector Aggregate 27.1 20.5 16.2 13.6 10.7 8.6 10.5 12.6 14.2
Source: MOSL
January 2017 91
ACC
Bloomberg ACC IN CMP: INR1320 TP: INR1,321 (+0%) Neutral
Dispatches in 4QCY16 are estimated at 5.48mt (-9% YoY). Average
M. Cap. (INR b)/(USD b) 307 / 5
52-Week Range (INR) 1,738/1,173
realizations are expected to be lower by 2% QoQ (-1% YoY) at
1,6,12 Rel Perf. (%) -1/4/12
INR4285/ton due to weak realization in East and North markets.
Revenues are expected to de-grow 7% YoY to INR26.6b. EBITDA

Financial Snapshot (INR Billion)
margin is expected to be 7.1%, down 2pp QoQ (and +0.5pp YoY).
Y/E Dec 2015 2016E 2017E 2018E
Sales 114.3 109.2 118.6 133 EBITDA/ton is estimated at INR343 (-INR18 YoY, -INR100 QoQ).
EBITDA 11.7 11.9 15.1 18 Pure cement EBITDA/ton is estimated at INR315 (-INR103 QoQ)
NP 6.0 6.1 9.2 12 due to weak volumes. PAT is likely to de-grow 43% YoY to
Adj. EPS (INR) 32.0 32.6 48.9 66 INR583m.
EPS Gr. (%) -30.3 1.9 50.0 34
BV/Sh (INR) 449.3 451.7 446.4 452 The stock trades at 27x CY17E EPS, 15x CY17E EV/EBITDA, and CY17
RoE (%) 7.2 7.2 10.9 15 EV/ton of USD103. Maintain Neutral.
RoCE (%) 7.4 7.4 10.8 14
Payout (%) 65.1 92.5 111.0 92
Valuations Key issues to watch out for
P/E (x) 41 41 27 20  Cement pricing recovery.
P/BV (x) 3 3 3 3  Volume growth and demand revival.
EV/EBITDA (x) 19 19 15 13
 Update on post demonetization volume demand.
EV/Ton (x) 107 104 103 98
 Ramp up of new plant in East.

Y/E December CY15 CY16 CY15 CY16E CY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Cement Sales (m ton) 5.82 6.20 5.61 5.99 6.36 6.12 5.07 5.48 23.62 23.03 23.61
YoY Change (%) -10.2 -2.4 -0.2 4.0 9.3 -1.3 -9.6 -8.5 -2.4 -2.5 2.5
Cement Realization 4,535 4,385 4,438 4,339 4,171 4,267 4,371 4,285 4,423 4,268 4,513
YoY Change (%) 5.5 -1.2 -1.8 -2.3 -8.0 -2.7 -1.5 -1.2 0.0 -3.5 5.7
QoQ Change (%) 2.1 -3.3 1.2 -2.2 -3.9 2.3 2.4 -2.0
Net Sales 28,854 29,612 27,400 28,461 29,274 28,698 24,706 26,566 114,328 109,243 118,571
YoY Change (%) -2.8 -1.6 -0.1 3.0 1.5 -3.1 -9.8 -6.7 -0.4 -4.4 8.5
Total Expenditure 24,718 26,817 24,762 26,300 25,578 24,607 22,458 24,685 102,597 97,328 103,425
EBITDA 4,137 2,795 2,638 2,162 3,696 4,092 2,247 1,880 11,731 11,916 15,146
Margins (%) 14.3 9.4 9.6 7.6 12.6 14.3 9.1 7.1 10.3 10.9 12.8
Depreciation 1,698 1,657 1,607 1,559 1,434 1,410 1,529 1,704 6,521 6,077 7,034
Interest 226 143 150 154 164 183 197 206 673 750 700
Other Income 1,141 775 678 844 1,121 686 744 748 3,437 3,300 5,000
PBT before EO Item 3,353 1,771 1,559 1,292 3,220 3,185 1,265 719 7,974 8,389 12,412
PBT after EO Item 3,230 1,771 1,559 1,292 3,220 3,185 1,265 719 7,974 8,389 12,412
Tax 824 456 389 267 898 806 424 136 1,936 2,265 3,227
Rate (%) 25.5 25.8 24.9 20.6 27.9 25.3 33.5 18.9 24.3 27.0 26.0
Reported PAT 2,406 1,314 1,170 1,026 2,322 2,378 841 583 6,039 6,124 9,185
Adjusted PAT 2,497 1,314 1,170 1,026 2,322 2,378 841 583 6,039 6,124 9,185
Margins (%) 8.7 4.4 4.3 3.6 7.9 8.3 3.4 2.2 5.3 5.6 7.7
YoY Change (%) -5.2 -45.5 -42.9 -15.5 -7.0 81.0 -28.1 -43.2 -30.0 1.4 50.0
E: MOSL Estimates
January 2017 92
Ambuja Cements
Bloomberg ACEM IN
CMP: INR212 TP: INR246 (+15%) Buy
Equity Shares (m) 1,551.9
Dispatches in 3QCY16 are estimated to decline 7.1% YoY to 5.1mt.
M. Cap. (INR b)/(USD b) 402 / 6
Average realizations are expected to remain flat YoY (-2.1% QoQ) at
1,6,12 Rel Perf. (%) -5/-2/16
INR4,284/ton. Revenue is estimated at INR21.8b (-7.5% YoY).
EBITDA margin is expected to be 12.2% (-1.5pp QoQ, -0.7pp YoY).

EBITDA/ton is estimated at ~INR524 (-INR79 QoQ, -INR32 YoY).
Y/E DEC 2015 2016E 2017E 2018E
Sales 93.7 91.4 98.1 109.7 Adjusted PAT is estimated to grow 10.9% YoY to INR1.61b due low
EBITDA 14.4 15.5 17.3 19.3 base.
NP 8.5 11.3 13.7 14.6
Adj. EPS (INR) 5.5 5.7 6.9 7.4 The stock trades at 21.4x CY17E EPS, 14.7x CY17E EV/EBITDA, and
EPS Gr. (%) -35.9 3.8 22.1 6.6 CY17E EV/ton of USD125. Maintain Buy.
BV/Sh. (INR) 66.9 96.2 99.6 101.8
RoE (%) 8.3 5.9 7.1 7.3
RoCE (%) 8.9 8.0 7.3 7.6
Payout (%) 44.9 61.2 50.7 69.9
Key issues to watch out for
Valuations
 Volume growth recovery and outlook.
P/E (x) 38.8 26.1 21.4 20.1
 Cement pricing outlook and sustainability.
P/BV (x) 3.2 1.5 1.5 1.5
 Post demonetization volume demand.
EV/EBITDA (x) 19.0 17.2 14.7 13.1
EV/Ton (USD) 138 131 125 119
Y/E December CY15 CY16 CY15 CY16E CY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales Volume (m ton)* 5.43 5.95 4.90 5.48 5.97 5.85 4.58 5.09 21.76 21.49 22.02
YoY Change (%) -10.4 1.8 1.9 0.8 9.9 -1.7 -6.5 -7.1 -1.8 -1.2 2.5
Realization (INR/ton) 4,465 4,190 4,277 4,300 4,053 4,344 4,376 4,284 4,306 4,256 4,456
YoY Change (%) 2.6 -9.5 -6.0 -1.8 -9.2 3.7 2.3 -0.4 -3.8 -1.2 4.7
QoQ Change (%) 2.0 -6.2 2.1 0.5 -5.7 7.2 0.7 -2.1
Net Sales 24,246 24,928 20,952 23,558 24,183 25,412 20,043 21,800 93,683 91,438 98,128
YoY Change (%) -8.1 -7.9 -4.2 -1.0 -0.3 1.9 -4.3 -7.5 26.8 7.5 1.4
EBITDA 4,715 3,661 2,944 3,042 4,235 5,813 2,760 2,664 14,362 15,472 17,285
Margins (%) 19.4 14.7 14.1 12.9 17.5 22.9 13.8 12.2 15.3 16.9 17.6
Depreciation 1,578 1,485 1,553 1,641 1,477 1,511 1,595 1,587 6,257 6,170 6,140
Interest 214 316 207 181 182 205 192 185 918 763 625
Other Income 1,336 1,234 898 1,067 1,415 1,368 2,503 1,114 4,535 6,400 7,800
PBT before EO Item 4,259 3,094 2,082 2,287 3,992 5,465 3,477 2,006 11,722 14,939 18,320
Rate (%) 25.4 26.8 26.2 36.4 27.7 26.9 20.3 19.6 27.7 24.7 25.0
Reported Profit 3,177 2,264 1,536 1,100 3,038 3,995 2,770 1,612 8,076 11,415 13,740
Adj PAT 3,177 2,264 1,536 1,454 2,885 3,995 2,770 1,612 8,478 11,256 13,740
YoY Change (%) -29.0 -44.6 -35.8 -43.2 -9.2 76.5 80.4 10.9 -35.8 32.8 22.1
E: MOSL Estimates
January 2017 93
Grasim Industries
Bloomberg GRASIM IN CMP: INR867 Under review
We expect VSF volumes to grow 2% YoY (-1% QoQ) to 123,114 tons
M. Cap. (INR b)/(USD b) 458 / 7
in 3QFY17, while realizations are expected to improve 3.9% YoY
52-Week Range (INR) 5,349/3,242
1,6,12 Rel Perf. (%) 7/15/31
(0.2% QoQ) to INR130,963/ton. We expect Chemicals volumes to
decline 5%YoY. Standalone revenues likely to increase 7%YoY to
INR24.8bn.
Y/E March 2016 2017E 2018E 2019E
Standalone EBITDA margin is estimated at 21.1%, +2.6pp YoY
Sales 365.9 371.8 403.5 447.1 (-0.2pp QoQ).
EBITDA 60.2 73.4 87.8 103.0
Adj. PAT 22.6 35.5 41.4 53.0 EBITDA is estimated to de-grow 1.2% QoQ (+ 22% YoY) to INR5.24b,
Adj. EPS (INR) 241.7 76.1 88.7 113.4 translating into PAT of INR3.7b (+42.2% YoY).
EPS Gr. (%) 26.8 57.5 16.6 27.8
BV/Sh. (INR) 2,767 624.2 708.0 816.4 The stock trades at 9.8x FY18E consolidated EPS, 6.8x FY18E
RoE (%) 9.2 12.9 13.3 14.9 EV/EBITDA, and implied cement EV/ton of USD103.
RoCE (%) 10.0 12.8 14.1 16.4
Payout (%) 11.0 6.9 5.6 4.4
 Pick-up in cement demand and pricing thereon.
Valuations
 Outlook on VSF business, and strategy to utilize upcoming
P/E (x) 17.9 11.4 9.8 7.6
capacities globally.
P/BV (x) 1.6 1.4 1.2 1.1
EV/EBITDA (x) 10.2 8.5 6.8 6.3
 Impact of demonetization on caustic soda demand
EV/Ton (x) 125 105 103 98

Y/E March FY16 FY17 FY16 FY17E FY18E
(Standalone) 1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
VSF Volume (ton) 102,737 113,756 120,700 130,000 121,000 123,994 123,114 123,292 468,000 491,400 496,314
YoY Change (%) 18.9 12.7 24.4 9.7 17.8 9.0 2.0 -5.2 16.2 5.0 1.0
VSF Realization (INR/ton) 113,309 116,708 126,090 126,090 128,039 130,713 130,963 130,617 121,693 130,093 133,593
YoY Change (%) -4.8 -1.4 8.0 13.8 13.0 12.0 3.9 3.6 5.0 6.9 2.7
QoQ Change (%) 2.3 3.0 8.0 0.0 1.5 2.1 0.2 -0.3
Net Sales 19,261 21,197 23,120 25,044 23,959 24,887 24,792 24,136 88,622 97,772 100,438
YoY Change (%) 35.3 34.0 49.7 47.2 24.4 17.4 7.2 -3.6 41.7 10.3 2.7
EBITDA 2,671 3,354 4,289 4,298 5,078 5,301 5,238 4,978 14,613 20,594 21,910
Margins (%) 13.9 15.8 18.6 17.2 21.2 21.3 21.1 20.6 16.5 21.1 21.8
Depreciation 947 1,006 1,231 1,287 1,104 1,119 1,150 1,109 4,471 4,481 4,731
Interest 409 401 396 268 231 156 150 158 1,474 694 694
Other Income 249 2,557 550 635 781 3,587 1,350 1,582 3,992 7,300 7,500
PBT after EO Items 1,564 4,504 3,213 3,086 4,525 7,612 5,288 5,001 12,659 22,719 23,984
Tax 537 688 609 1,001 1,317 1,690 1,586 1,768 2,835 6,361 7,195
Rate (%) 34.3 15.3 19.0 32.4 29.1 22.2 30.0 35.4 22.4 28.0 30.0
Reported PAT 1,028 3,815 2,604 2,086 3,209 5,923 3,701 3,233 9,825 16,357 16,789
Adj. PAT 1,028 3,815 2,604 2,086 3,209 5,923 3,701 3,233 9,825 16,357 16,789
Margins (%) 5.3 18.0 11.3 8.3 13.4 23.8 14.9 13.4 11.1 16.7 16.7
YoY Change (%) -2.9 27.5 182.4 359.1 212.2 55.2 42.2 55.0 81.1 66.5 2.6
E: MOSL Estimates
January 2017 94
India Cements
Bloomberg ICEM IN
CMP: INR122 TP: INR118 (-3.2%)) Neutral
M. Cap. (INR b)/(USD b) 46 / 1 India Cements’ volumes are expected to grow 16% YoY to 2.25mt in
52-Week Range (INR) 156/64 3QFY17 on account of low base and higher infrastructure spend in
1,6,12 Rel Perf. (%) 0/59/76 A.P and Telangana due to creation of new state. We expect
realizations to grow 11% YoY (flat QoQ) to INR5,259/ton. Revenue
Financial Snapshot (INR Billion) is estimated at INR11.9b (+28.2% YoY, -9% QoQ).
Y/E March 2016 2017E 2018E 2019E
Sales 42.3 51.9 54.2 62.1 EBITDA is estimated at INR2.01b, and EBITDA margin is likely to
EBITDA 7.7 8.9 9.1 9.9 decline 0.3pp QoQ to 16.9%, translating into blended EBITDA/ton
NP 1.4 2.7 3.0 3.4 of INR895 (+INR140 YoY). PAT is expected at INR481m (v/s INR55m
Adj. EPS (INR) 4.4 8.9 10.6 12.7 in 3QFY16).
EPS Gr. (%) -11,446 103.5 18.2 20.0
BV/Sh (INR) 118.8 126.2 134.8 145.9 Valuations stand at 11.5x FY18E EPS and 6.7x FY18E EBITDA. The
RoE (%) 3.9 7.0 7.4 8.0 stock trades at US$ D65/t on FY18 replacement cost. Maintain
RoCE (%) 5.9 7.2 7.5 8.1 Neutral.
Payout (%) 25.9 13.5 12.0 0.0
Valuations Key issues to watch out for
P/E (x) 27.7 13.6 11.5 9.6
 Visibility on AP demand recovery.
P/BV (x) 1.0 1.0 0.9 0.8
 Demand, especially in South India, post demonetization.
EV/EBITDA(x) 8.6 7.1 6.7 6.0
EV/Ton (USD) 67 65 65 64
 Pricing outlook in South India.

Sales Dispatches (m ton) 2.10 2.17 1.94 2.50 2.31 2.46 2.25 2.79 8.70 9.80 9.94
YoY Change (%) -18 -8 -8 19 10 14 16 12 -4.5 12.7 1.4
YoY Change (%) 18.9 19.7 -0.6 -17.9 2.5 -5.6 10.8 33.1 4.1 9.2 3.0
QoQ Change (%) 4.7 10.4 -14.8 -16.6 30.7 1.7 0.0 -4.0
Net Sales 10,743 12,258 9,296 11,471 12,025 13,075 11,919 14,918 42,269 51,937 54,191
YoY Change (%) -12.4 8.3 -10.3 11.9 11.9 6.7 28.2 30.0 -4.4 22.9 4.3
EBITDA 1,960 2,296 1,462 2,115 2,014 2,244 2,011 2,637 7,813 8,907 9,092
Margins (%) 18.2 18.7 15.7 18.4 16.7 17.2 16.9 17.7 18.5 17.1 16.8
Depreciation 554 557 552 522 511 521 545 701 2,180 2,279 2,378
Interest 965 985 906 913 825 876 890 545 3,704 3,135 3,043
Other Income 44 33 74 70 32 69 65 130 222 296 296
PBT before EO expense 485 788 79 750 710 917 641 1,521 2,150 3,789 3,966
Extra-Ord expense 107 40 0 0 0 0 0 0 147
PBT 378 748 79 750 710 917 641 1,521 2,003 3,789 3,966
Tax 0 363 24 238 271 293 160 413 625 1,137 992
Rate (%) 0.0 48.5 30.9 31.7 38.1 31.9 25.0 27.2 31.2 30.0 25.0
Reported PAT 378 385 55 512 440 624 481 1,107 1,378 2,652 2,975
Adj PAT 485 405 55 512 440 624 481 1,107 1,480 2,652 2,975
E: MOSL Estimates
January 2017 95
Ramco Cements
Bloomberg TRCL IN
M. Cap. (INR b)/(USD b) 146 / 2
3QFY17 volumes are estimated to grow 19% YoY (decline 5% QoQ) to
1.93mt on account of low base as also higher volumes to eastern
1,6,12 Rel Perf. (%) 11/41/75 market. Average realizations are expected to decline 5.6% YoY (flat
QoQ) to 4,769/ton due to firm realizations in southern market.
EBITDA margin is likely to decline 6.1pp QoQ to 28.4%. EBITDA/ton
Y/E MARCH 2016 2017E 2018E 2019E
(ex-windmill) is estimated at INR1,376 (-INR150 QoQ, -INR149 YoY)
Sales 35.9 39.9 44.2 51.1 due to partial increase in power and fuel cost.
EBITDA 10.5 12.3 14.0 16.8
NP 5.6 7.0 7.5 10.1
Interest cost is likely to decline 35%YoY due to debt repayment as also
Adj EPS (INR) 23.4 29.4 31.5 42.3 re pricing of debt at lower rate.
EPS Gr. (%) 130.3 25.5 6.9 34.4
BV/Sh. (INR) 129.9 155.8 182.6 220.3 PAT is estimated to increase 20% YoY to INR1.4b.
RoE (%) 19.5 20.6 18.6 21.0
RoCE (%) 13.2 14.5 14.3 17.3 The stock trades at 18.3x FY18E EPS, 10.2x FY18E EBITDA, and FY18E
Payout (%) 14.9 11.8 14.8 11.0 EV/ton of USD131. Maintain Buy.
Valuations
P/E (x) 24.5 19.5 18.3 13.6
EV/EBITDA (x) 14.9 12.3 10.2 8.0
EV/Ton (USD) 149 138 131 123
 Volume growth recovery and outlook.
 Cement pricing outlook and demand sustainability in South (AP and
Tamil Nadu).

Sales Dispatches (m ton) 1.81 1.71 1.63 2.09 2.08 2.03 1.93 2.31 7.235 8.36 8.94
YoY Change (%) -14.8 -11.9 -5.4 10.9 14.5 18.9 19.0 10.9 -5.6 15.5 7.0
YoY Change (%) 17.7 2.9 6.5 -6.0 -12.3 -2.2 -5.6 -5.0 5.0 -6.4 3.6
QoQ Change (%) -2.5 -5.8 3.6 -1.2 -9.0 5.0 0.0 -0.6
Net Sales 9,041 8,766 8,119 9,788 9,667 10,124 9,264 10,849 35,872 39,904 44,187
YoY Change (%) -2.2 -4.9 3.3 1.8 6.9 15.5 14.1 10.8 -0.2 11.2 10.7
EBITDA 2,104 2,840 2,446 2,956 2,988 3,493 2,627 3,181 10,504 12,288 14,005
Margins (%) 23.3 32.4 30.1 30.2 30.9 34.5 28.4 29.3 29.3 30.8 31.7
Depreciation 667 671 679 652 663 667 650 710 2,670 2,690 2,843
Interest 493 456 418 435 291 282 270 325 1,802 1,168 1,028
Other Income 452 130 109 308 73 93 100 404 999 669 880
PBT 1,396 1,842 1,458 2,176 2,106 2,637 1,807 2,549 7,031 9,100 11,015
Tax 403 421 280 342 547 567 398 582 1,448 2,093 3,525
Rate (%) 28.9 22.8 19.2 15.7 26.0 21.5 22.0 22.8 20.6 23.0 32.0
Adj PAT 992 1,421 1,177 1,834 1,559 2,070 1,409 1,968 5,583 7,007 7,490
YoY Change (%) 173.7 58.4 412.8 96.3 57.1 45.6 19.7 7.3 130.4 25.5 6.9
Margins (%) 11.0 16.2 14.5 18.7 16.1 20.4 15.2 18.1 15.6 17.6 17.0
E: MOSL Estimates
January 2017 96
Shree Cement
Bloomberg SRCM IN CMP: INR14,131 TP: INR17,096 (+21%) Buy
We expect 3QFY17 cement volumes to grow 4.7% YoY (and 7.7%
M. Cap. (INR b)/(USD b) 626 / 9
QoQ) to 4.92mt (including clinker) led by ramp up of new capacity
52-Week Range (INR) 18,519/9,350
1,6,12 Rel Perf. (%) 5/34/42
in eastern market. Realizations to decline 5% QoQ to INR3,765/ton
due to weak realization in its focus markets of North and East.
Merchant power sale is expected to be meaningfully lower at 100m
Y/E March 2016 2017E 2018E 2019E
units (v/s 538m units in 2QFY17) due to shrp decline in merchant
Sales 72.9 84.3 98.9 112.1 power rates. Power EBITDA is estimated at INR20m (v/s INR622m
EBITDA 16.7 24.1 30.5 36.3
in 2QFY17).
NP 5.9 13.7 20.3
25.3
Adj EPS (INR) 168.0 394.3 582.0 725.4
Revenue is estimated at INR18.88b (+11% YoY) and EBITDA at
EPS Gr. (%) 26.1 96.1 47.6 24.6
INR4.9b, translating into margin of 26.2% (-6.5pp QoQ, +1.14pp
BV/Share (INR) 1,774 2,128 2,663 3,342
YoY). Adjusted PAT is likely to be INR2.6b (v/s INR2.2b in 3QFY16).
RoE (%) 10.2 20.2 24.3 24.2
RoCE (%) 10.6 19.8 23.4 23.7 Valuations stand at 24.3x FY18E EPS, 14.1x FY18E EBITDA, and
Payout (%) 17.4 10.3 8.0 6.4 FY18E EV/ton of USD211. Maintain Buy.
Valuation
P/E (x) 70.3 35.8 24.3 19.5
P/BV (x) 8.0 6.6 5.3 4.2 Key issues to watch out for
EV/EBITDA (x) 27.9 19.0 14.1 11.2  Volume and pricing recovery for North India.
EV/Ton (USD) 267 240 211 174  Update on scale-up of recently commissioned units in East.
 New expansion plan.
Quarterly Performance - Shree Cement (S/A) (INR Million)

Y/E June FY16 FY17 FY16 FY17E FY18E
1Q 2Q 3Q 1Q 2Q 3QE 4QE
Sales Dispat. (m ton) 4.19 4.70 5.60 5.13 4.57 4.92 5.03 18.83 19.65 21.62
YoY Change (%) 7.9 23.3 35.6 18.0 9.2 4.7 -10.2 16.5 4.4 10.0
Realization (INR/Ton) 3,619 3,500 3,200 3,885 3,965 3,765 3,914 3,431 3,881 4,231
YoY Change (%) -0.8 -1.1 -9.5 11.8 9.6 7.6 22.3 -3.3 13.1 9.0
QoQ Change (%) 4.1 -3.3 -8.6 21.4 2.1 -5.0 4.0
Net Sales 17,119 18,268 20,174 21,987 20,068 18,879 23319 72,755 84,253 98,864
YoY Change (%) 6.6 18.5 28.2 27.9 17.2 3.3 15.6 13.0 15.8 17.3
EBITDA 4,163 4,240 5,050 7,308 6,563 4,941 5249 16,969 24,060 30,509
Margins (%) 24.3 23.2 25.0 33.2 32.7 3.3 22.5 23.3 28.6 30.9
Depreciation 2,448 3,042 3,338 1,540 4,322 2750 3421 11,210 12,033 12,242
Interest 235 233 286 276 293 300 286 1,017 1155 541
Other Income 958 236 755 979 1,233 1350 1539 2,393 5100 7,000
PBT before EO Exp 2,438 1,200 2,182 6,471 3,180 3241 3081 7,133 15972 24,727
PBT 2,438 1,199 2,181 6,471 3,180 3241 3081 6,891 15972 24,727
Tax -26 170 -53 1,394 265 648 -71 125 2236 4,451
Rate (%) -1.1 14.2 -2.4 21.5 8.3 20.0 -2.3 1.8 14.0 18.0
Reported PAT 2,464 1,029 2,233 5,077 2,915 2592 3152 6,767 13736 20,276
Adj PAT 2,464 1,030 2,234 5,077 2,915 2592 3152 7,004 13736 20,276
YoY Change (%) 107.4 9.0 79.3 106.1 18.3 16.0 41.0 50.9 96.1 47.6
E:MOSL Estimates ** FY16 is March ending 12 months
January 2017 97
UltraTech Cement
Bloomberg UTCEM IN CMP: INR3,299 TP: INR3,749 (+14%) Buy
3QFY17 cement volumes are estimated to de-grow 5.1% YoY (flat
M. Cap. (INR b)/(USD b) 1,077 / 16
QoQ) to 10.88mt due to lower demand in North and West markets.
52-Week Range (INR) 4,130/2,581
1,6,12 Rel Perf. (%) -3/11/34
Realizations are estimated to de-grow 1.4% YoY (and 1.9% QoQ) to
INR4,081/ton.
We estimate grey cement EBITDA/ton at INR873 (-INR119 QoQ) due
Y/E March 2016 2017E 2018E 2019E
to weak realizations. EBITDA margin is expected to decrease 2.2pp
Sales 238.4 232.5 264.0 295.5
QoQ (and 0.1pp YoY) to 20.3%.
EBITDA 43.5 47.2 61.6 71.9
NP 21.7 26.0 37.0 46.2
EBITDA is estimated to decline 12% QoQ (and 8% YoY) to INR10.9b,
Adj EPS(INR) 79.3 94.6 134.8 168.4
translating into PAT de-growth of 16% QoQ to INR5.1b.
EPS Gr. (%) 7.9 19.3 42.5 24.9
BV/Sh (INR) 755.8 838.8 956.2 1,101.3 The stock trades at 24.5x FY18E EPS, 13.5x FY18E EV/EBITDA, and
RoE (%) 11.0 11.9 15.0 16.4 FY18E EV/ton of USD186. Maintain Buy.
RoCE (%) 9.3 10.2 12.7 14.0
Payout (%) 13.9 12.3 12.9 13.8
Valuation Key issues to watch out for
P/E (x) 41.6 34.9 24.5 19.6  Volume growth recovery and outlook.
P/BV (x) 4.4 3.9 3.5 3.0  Cement pricing outlook and sustainability.
EV/EBITDA (x) 20.5 18.4 13.5 10.8  Update on scale-up of newly commenced Rajasthan plant.
EV/Ton (USD) 200 195 186 175

Sales (m ton) 12.14 10.80 11.47 13.60 12.91 10.87 10.88 12.09 48.1 46.8 49.7
YoY Change (%) 3.8 4.3 4.4 15.2 6.3 0.6 -5.1 -11.1 7.2 -2.8 6.3
Grey Cement Realn.(INR/ton) * 4,183 4,192 4,139 3,946 4,083 4,161 4,081 4,228 4,138 4,138 4,438
YoY Change (%) 2.2 -2.8 -0.1 -9.4 -2.4 -0.7 -1.4 7.2 -2.1 0.0 7.2
QoQ Change (%) -4.0 0.2 -1.3 -4.7 3.5 1.9 -1.9 3.6
Net Sales 59,476 55,270 57,473 64,359 61,823 53,979 53,435 63,281 238,410 232,518 263,992
YoY Change (%) 5.3 2.8 4.7 4.8 3.9 -2.3 -7.0 -1.7 5.2 -2.5 13.5
EBITDA 10,939 9,212 10,439 12,850 13,723 10,938 9,634 12,903 43,498 47,198 61,604
Margins (%) 18.4 16.7 18.2 20.0 22.2 20.3 18.0 20.4 18.2 20.3 23.3
Depreciation 2,852 3,352 3,238 3,493 3,027 3,139 3,300 4,099 12,890 13,565 13,755
Interest 1,399 1,319 1,257 1,110 1,525 1,367 1,330 1,337 5,053 5,558 5,012
Other Income 1,770 1,945 1,318 1,055 2,006 2,335 2,250 2,409 5,015 9,000 10,000
PBT after EO Expense 8,459 6,485 7,262 9,301 11,177 8,767 7,254 9,877 30,570 37,075 52,837
Rate (%) 28.6 29.5 30.0 26.7 30.7 31.4 30.0 28.0 28.9 30.0 30.0
Adj PAT 6,040 4,574 5,086 6,814 7,749 6,011 5,078 7,115 21,747 25,953 36,986
YoY Change (%) -3.4 11.5 39.6 10.8 28.3 31.4 -0.2 4.4 7.9 19.3 42.5
E: MOSL Estimates; * Grey cement realization is our estimate
January 2017 98
December
December 2016 2016 Results
Results Preview Preview
| Consumer
Consumer
Company name Demonetization dents monsoon recovery narrative
Asian Paints Sales likely to decline, resulting in adverse margin effect
Britannia Industries
Discretionary demand likely to suffer
Colgate
We expect our consumer universe’s revenues to remain flat YoY in 3QFY17, with a
Dabur
PAT decline of 1.2%. Demonetization is likely to affect all companies, particularly
Emami those selling products with discretionary demand and having higher proportion of
Godrej Consumer wholesale trade vis-à-vis direct distribution. Hopes of rural demand recovery after
GSK Consumer good monsoon this year were dashed due to demonetization-led cash crunch.
MOSL consumer universe EBITDA is likely to decline 4.5% YoY, with 110bp margin
Hindustan Unilever
contraction. Barring Nestle (likely flat margins YoY), we expect a YoY margin decline
ITC
for all FMCG companies under our coverage due to weak sales growth/sales decline
Jyothy Labs and increasing cost for a few commodities. Adspends, which could have acted as a
Marico buffer to margins, are unlikely to decline steeply enough to protect margin. We
Nestle India expect ITC’s sales to decline 4% YoY (led by a 7% decline in cigarette volumes) and
PAT to fall 3% YoY. HUVR’s sales growth is estimated at 1.5% YoY (volume decline of
Page Industries
1%), with 100bp EBITDA margin contraction. Barring PAGE, for which we expect 13%
Parag Milk Foods
PAT growth YoY, none of the other companies are expected to report any material
Pidilite Industries growth in PAT (11 out of the 18 companies under our coverage expected to report
P&GHH YoY decline in PAT).
Radico K haitan
RM costs, promotions and new launches
United Breweries
PFAD and palm oil prices increased steeply by 70% and 37% YoY, respectively, while
United Spirits
Ti02 and mentha prices saw moderate increases of 4% YoY and 3% YoY,
respectively. Mentha prices over past 20 days are up by 10% YoY, however. LLP and
HDPE prices still remain benign, with low-single-digit growth YoY. Some companies
have started taking selective price hikes/grammage reduction/reduction of offers
following increase in raw material costs. However, promotion intensity remains high
in other categories owing to the weak operating environment. Thus, majority of new
launches are likely to be postponed to 1QFY18.
Preference for quality and longevity of growth

The consumer sector is characterized by rich near-term valuations, given the
market’s continued preference for quality with healthy growth. Our framework for
earnings visibility, longevity of growth and quality management drives our choices in
the sector universe. We continue preferring Britannia, Colgate, Emami and P&G
Hygiene, notwithstanding the near-term challenges. We recently upgraded Marico
to Buy, as correction in the share price provided a reasonable entry point in an
admirable business franchise with remarkable track record of earnings growth, top-
notch management quality and impressive disclosure levels. In the discretionary
pack, we like Pidilite, Page Industries and United Breweries, despite the near-term
challenges.
Krishnan Sambamoorthy (K rishnan.Sambamoorthy@MotilalOswal.com); +91 22 6129 1545

Vishal Punmiya (Vishal.Punmiya@MotilalOswal.com); +91 22 6129 1547
January 2017 99
December 2016 Results Preview | Consumer

Sector Sales (INR M) EBDITA (INR M) PAT (INR M)
CMP Var % Var % Var %
RECO Dec-16 Var % YoY Dec-16 Var % YoY Dec-16 Var % YoY
(INR) QoQ QoQ QoQ
Consumer
Asian Paints 906 Neutral 40,343 5.0 7.2 7,632 -2.7 7.0 5,025 -3.6 5.6
Britannia 2,851 Buy 20,158 -6.0 -14.6 2,483 -19.1 -20.7 1,827 -19.5 -22.0
Colgate 895 Buy 9,953 7.5 -5.1 2,440 3.9 -11.2 1,417 3.5 -21.8
Dabur 277 Neutral 19,943 2.0 0.9 3,505 -6.0 -13.0 3,007 -5.1 -14.4
Emami 1,031 Buy 7,608 5.0 30.2 2,543 1.9 45.1 1,820 -6.8 36.2
Godrej Consumer 1,532 Neutral 25,145 10.0 6.7 4,617 1.7 -0.3 3,270 -1.2 1.8
GSK Consumer 5,058 Neutral 9,517 -3.0 -11.9 1,577 -4.2 -35.7 1,356 1.8 -26.2
Hind. Unilever 821 Neutral 78,804 1.5 0.5 13,728 -4.0 -2.3 9,898 1.9 -8.5
ITC 245 Buy 88,097 -4.0 -8.8 33,729 -6.4 -7.1 25,824 -2.7 3.3
Jyothy Labs 335 Neutral 3,763 1.0 -8.6 468 -10.0 -26.6 218 42.1 -31.9
Marico 258 Buy 14,526 -5.0 0.9 2,654 -7.5 6.5 1,858 -8.0 2.9
Nestle 5,893 Neutral 19,376 -0.5 -17.4 3,474 -0.5 -22.6 1,972 -5.5 -31.5
P&G Hygiene 6,891 Buy 7,505 10.0 25.0 1,855 -14.3 22.7 1,255 -14.4 20.2
Page Industries 13,782 Buy 4,805 9.0 -10.6 961 6.3 -10.6 650 13.3 -5.3
Parag Milk Foods 264 Neutral 3,991 3.0 -15.6 350 -7.6 -7.3 146 0.4 1.7
Pidilite Inds. 608 Buy 13,525 1.0 -4.6 2,847 -3.6 -11.7 1,815 -2.7 -21.4
Radico K haitan 117 Neutral 4,244 0.0 -5.1 471 -15.3 -17.0 163 -27.7 -27.8
United Breweries 796 Buy 10,676 -2.9 2.8 1,356 -22.5 11.9 747 4.8 176.1
United Spirits 1,952 Buy 22,894 -5.0 12.4 2,447 41.2 8.7 1,128 2145.7 15.3
Sector Aggregate 404,872 0.1 -2.3 89,135 -4.5 -5.2 63,395 -1.2 -2.9
Exhibit 2: 3QFY17 volume growth expectations (%)

Quarter Ending 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16E 1Q17 2Q17 3Q17E
Asian Paints 7.0 12.0 11.0 10.0 3.0 4.0 12.0 5.0 15.0 13.0 11.0 12.0 6.0
Britannia (Biscuits) 3.0 3.0 10.0 6.0 8.0 8.0 10.0 12.0 11.0 10.0 8.0 10.0 -5.0
Colgate (Toothpaste) 11.0 7.0 5.0 7.0 5.0 5.0 2.0 3.0 1.0 1.5 5.0 4.0 2.0
Dabur 9.0 9.2 8.3 8.7 7.4 8.1 8.1 5.5 -2.5 6.0 4.1 4.5 5.0
Emami 1.5 -10.0 12.5 11.5 11.0 12.0 15.0 13.5 9.3 13.0 18.0 11.0 1.0
Godrej Consumer
Soaps 6.0 -4.0 MSD LSD LSD 5.0 DD MSD MSD MSD LDD -MSD -MSD
GSK Consumer 11.0 8.0 3.0 2.0 5.0 2.0 2.0 2.0 0.0 2.0 -6.0 -3.0 -4.0
Hindustan Unilever 4.0 3.0 5.0 5.0 3.0 6.0 6.0 7.0 6.0 6.0 4.0 -1.0 -1.0
ITC (cigarette) -2.0 -3.0 -2.5 -4.0 -13.0 -12.0 -17.0 -15.0 -5.0 -3.0 3.0 4.0 -7.0
Marico
Parachute 2.0 10.0 6.0 7.0 8.0 5.0 8.0 11.0 4.0 7.0 7.0 -6.0 0.0
Hair Oil 8.0 5.0 11.0 13.0 10.0 5.0 14.0 8.0 21.0 15.0 9.0 11.0 -5.0
Saffola 9.0 11.0 10.0 9.0 3.0 -1.0 4.0 4.0 17.0 10.0 11.0 8.0 -1.0
Pidilite 11.0 12.0 13.0 10.0 7.0 5.5 5.0 3.0 11.0 12.0 9.0 7.8 1.0
Radico K haitan 7.6 3.5 -3.5 -3.9 2.0 -4.2 -10.3 -7.2 -3.8 2.0 3.6 4.5 -5.0
Exhibit 3: Relative performance – 3m (%) Exhibit 4: Relative performance – 1Yr (%)
Sensex Index MOSL Consumer Index Sensex Index MOSL Consumer Index
102
115
99
105
96
93 95
90 85
Nov-16
Dec-16
Sep-16
Oct-16
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
January 2017 100

Exhibit 5: PFAD prices up 70.5% YoY and 12.6% QoQ Exhibit 6: Palm oil prices rise 36.7% YoY and 12.3% QoQ
Palm Fatty Acid price (INR/MT) Palm Oil (Malaysian Ringgit Per Metric Tonne)
46,904 3,500
3,199
Malaysian Ringgit\ MT
42,000 3,000
33,000 2,500
24,000 2,000
15,000 1,500
Apr-14
Dec-13
Aug-14
Apr-15
Dec-14
Aug-15
Apr-16
Dec-15
Aug-16
Dec-16
Apr-14
Dec-13
Aug-14
Apr-15
Dec-14
Aug-15
Apr-16
Dec-15
Aug-16
Dec-16
Exhibit 7: Mentha prices up 2% YoY and 3% QoQ Exhibit 8: TiO2 prices up 3.7% YoY and 1.6% QoQ
Mentha Oil prices INR / kg TiO2 price (INR/kg)

310
1,250 1,065
270
1,000
230 225
750 190
500 150
Jun-14
Jun-15
Jun-16
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Apr-14
Dec-13
Aug-14
Apr-15
Dec-14
Aug-15
Apr-16
Dec-15
Aug-16
Dec-16

Consumer
Asian Paints 906 Neutral 20.2 22.6 26.4 44.9 40.0 34.3 28.6 25.7 22.1 32.4 32.0 32.3
Britannia 2,851 Buy 70.6 82.1 97.8 40.4 34.7 29.1 29.0 24.5 20.3 42.2 38.8 36.9
Colgate 895 Buy 22.3 27.2 32.9 40.2 32.9 27.2 24.1 19.8 16.5 56.3 63.2 70.5
Dabur 277 Neutral 7.2 8.5 10.0 38.6 32.6 27.8 31.1 26.1 22.1 27.8 27.9 27.8
Emami 1,031 Buy 24.7 30.6 37.1 41.7 33.7 27.8 31.0 26.4 22.0 34.1 33.6 33.8
Godrej Consumer 1,532 Neutral 36.8 43.8 50.4 41.7 35.0 30.4 30.5 25.9 22.7 22.3 22.7 22.1
GSK Consumer 5,058 Neutral 157.7 178.8 201.2 32.1 28.3 25.1 22.0 19.1 16.3 25.1 24.7 24.2
Hind. Unilever 821 Neutral 19.7 22.4 25.8 41.6 36.6 31.8 29.1 25.7 22.3 68.7 79.1 89.8
ITC 245 Buy 8.4 9.6 11.0 29.2 25.6 22.3 19.8 17.1 14.6 28.4 28.3 28.5
Jyothy Labs 335 Neutral 7.2 8.5 10.1 46.5 39.5 33.4 25.9 22.1 19.4 15.0 16.5 17.9
Marico 258 Buy 6.0 7.2 8.5 43.2 35.6 30.3 29.7 24.6 21.1 32.8 33.1 34.8
Nestle 5,893 Neutral 111.5 139.2 168.7 52.8 42.3 34.9 31.4 25.0 20.6 35.9 39.2 40.1
P&G Hygiene 6,891 Buy 138.5 168.9 201.7 49.8 40.8 34.2 32.3 25.7 21.2 27.7 29.4 30.3
Page Industries 13,782 Buy 247.4 312.7 402.4 55.7 44.1 34.2 36.4 28.1 22.4 42.9 42.7 44.0
Parag Milk Foods 264 Neutral 7.0 9.7 14.1 37.5 27.3 18.7 16.0 12.8 9.7 10.8 10.5 13.5
Pidilite Inds. 608 Buy 16.4 18.4 20.6 37.1 33.1 29.5 24.2 21.4 18.6 27.6 25.6 23.5
Radico K haitan 117 Neutral 5.3 7.1 8.2 22.2 16.6 14.2 12.5 11.3 10.2 7.3 9.1 9.9
United Breweries 796 Buy 12.3 16.4 19.7 64.5 48.7 40.4 30.8 24.7 20.2 14.5 16.9 17.5
United Spirits 1,952 Buy 27.8 45.7 61.7 70.3 42.8 31.6 34.4 25.1 19.7 20.3 23.6 24.5
Consumer Sector Aggregate 37.9 32.4 27.8 25.5 21.8 18.6 29.3 29.9 30.3
Source: MOSL
January 2017 101

Asian Paints
Bloomberg APNT IN CMP: INR906 TP: INR1,020 (13%) Neutral
 We expect Asian Paints’ (APNT) revenue to grow 5% to INR40.3b in
M. Cap. (INR b)/(USD b) 869 / 13
3QFY17, with ~6% rise in domestic decorative volumes.
1,6,12 Rel Perf. (%) -4 / -7 / -1  We note crude prices are up 18% YoY in 3QFY17. The magnitude of
price movement in crude derivatives is lower vis-à-vis crude prices.
Financial Snapshot (INR b) Operating margin should contract 150bp to 18.9% in 3QFY17. We
Y/E March 2016 2017 2018E 2019E estimate 3.6% PAT decline for 3QFY17.
Sales 142.8 153.4 172.2 198.9
EBITDA 27.7 29.6 32.8 37.9
 The stock trades at 40x FY18E EPS of INR22.6; maintain Neutral.
Adj. PAT 18.0 19.3 21.7 25.3
Adj. EPS.INR 18.7 20.2 22.6 26.4
EPS Gr. (%) 26.3 7.7 12.2 16.7
BV/Sh.(INR) 58.4 66.2 75.4 88.3
RoE (%) 34.7 32.4 32.0 32.3
RoCE (%) 30.6 29.0 28.9 29.4
Payout (%) 40.4 49.6 50.8 43.6
Key issues to watch for
Valuations
 Volume growth trends and demand scenario in urban/rural
P/E (x) 48.4 44.9 40.0 34.3
geographies.
P/BV (x) 15.5 13.7 12.0 10.3
EV/EBITDA (x) 30.6 28.5 25.5 21.9
 Demand outlook for industrial paints.
Div. Yield (%) 1.0 1.3 1.5 1.5  Outlook for raw materials/pricing actions.
Quarterly Performance (Consolidated, INR m)

Y/E March FY16 FY17 FY16 FY17
Volume Growth % * 12.0 7.0 15.0 13.0 11.0 12.0 6.0 7.0 11.8 7.5
Net Sales 33,343 34,349 38,422 36,698 36,374 37,633 40,343 39,018 142,811 153,368
Change (%) 9.1 9.6 5.0 6.3 7.4
Raw Material/PM 19,088 19,641 21,713 20,055 19,191 20,876 22,799 21,896 80,497 84,761
Gross Profit 14,254 14,708 16,709 16,643 17,183 16,758 17,544 17,123 62,314 68,607
Gross Margin (%) 42.8 42.8 43.5 45.4 47.2 44.5 43.5 43.9 43.6 44.7
Operating Expenses 7,468 8,628 8,864 9,669 8,981 9,628 9,912 10,452 34,630 38,973
% of Sales 22.4 25.1 23.1 26.3 24.7 25.6 24.6 26.8 24.2 25.4
EBITDA 6,786 6,080 7,845 6,974 8,203 7,130 7,632 6,670 27,685 29,634
Margin (%) 20.4 17.7 20.4 19.0 22.6 18.9 18.9 17.1 19.4 19.3
Change (%) 20.9 17.3 -2.7 -4.4 34.5 7.0
Interest 89 92 76 149 64 60 76 151 407 352
Depreciation 663 677 694 721 855 844 778 845 2,756 3,321
Other Income 610 629 430 466 719 791 473 457 2,134 2,441
PBT 6,643 5,940 7,504 6,570 8,003 7,017 7,250 6,131 26,656 28,402
Tax 2,047 1,843 2,274 2,279 2,603 2,207 2,175 1,819 8,444 8,805
PAT before Minority 4,596 4,096 5,230 4,291 5,400 4,810 5,075 4,312 18,213 19,597
Minority Interest 59 59 15 117 50 51 50 101 250 251
Adjusted PAT 4,537 4,037 5,215 4,174 5,351 4,759 5,025 4,211 17,962 19,347
E: MOSL Estimates
January 2017 102

Britannia Industries
Bloomberg BRIT IN CMP: INR2,851 TP: INR3,380 (+19%) Buy
 We estimate Britannia’s (BRIT) sales to decline 6% YoY to INR20.2b,
M. Cap. (INR b)/(USD b) 342 / 5
with ~5% volumes decline.
52-Week Range (INR) 3575 / 2507
1,6,12 Rel Perf. (%) -8 / 3 / -8  Sales decline, coupled with higher wheat and sugar prices YoY, will
affect margins. We expect 200bp contraction in operating margin
Financial Snapshot (INR b) YoY. We expect EBITDA and PAT to decline 19.1% and 19.5%,
Y/E March 2016 2017E 2018E 2019E respectively.
Sales 83.3 88.3 104.0 120.9
EBITDA 11.5 11.5 13.4 15.9  The stock trades at 34.7x FY18E EPS of INR82.1; maintain Buy.
Adj. PAT 8.4 8.5 9.9 11.7 Britannia is one of our top picks in the tier-II consumer space.
Adj. EPS. INR 70.1 70.6 82.1 97.8
EPS Gr. (%) 46.3 0.8 16.3 19.1
BV/Sh.(INR) 147.2 187.1 235.8 293.8
RoE (%) 55.9 42.2 38.8 36.9
RoCE (%) 46.0 34.4 32.1 30.9
Payout (%) 28.5 35.0 35.0 35.0
Valuations
P/E (x) 40.7 40.4 34.7 29.1
 Volume growth in biscuits.
P/BV (x) 19.4 15.2 12.1 9.7
EV/EBITDA (x) 29.0 28.9 24.4 20.2
 Outlook for raw materials.
Div. Yield (%) 0.7 0.9 1.0 1.2  Performance of subsidiaries.

Base business volume growth (%) 9.0 11.0 13.0 10.0 10.0 10.0 -5.0 8.0 10.8 5.7
Net Sales 19,411 21,277 21,444 21,121 21,063 23,612 20,158 23,431 83,254 88,263
YoY Change (%) 8.5 11.0 -6.0 10.9 7.1 6.0
COGS 11,587 12,717 12,807 12,878 12,879 14,902 12,321 14,086 49,989 54,188
Gross Profit 7,824 8,560 8,637 8,244 8,184 8,709 7,837 9,345 33,265 34,075
Margins (%) 40.3 40.2 40.3 39.0 38.9 36.9 38.9 39.9 40.0 38.6
Other Operating Exp 5,102 5,492 5,567 5,557 5,367 5,578 5,354 6,300 21,718 22,599
% of Sales 26.3 25.8 26.0 26.3 25.5 23.6 26.6 26.9 26.1 25.6
EBITDA 2,722 3,068 3,070 2,687 2,817 3,131 2,483 3,045 11,547 11,476
Margins (%) 14.0 14.4 14.3 12.7 13.4 13.3 12.3 13.0 13.9 13.0
YoY Growth (%) 3.5 2.0 -19.1 13.3 38.2 -6.3
Depreciation 274 272 281 308 279 289 337 470 1,134 1,375
Interest 7 15 12 15 15 15 9 9 49 49
Other Income 401 506 478 578 739 670 549 539 1,962 2,497
PBT 2,842 3,287 3,256 2,942 3,263 3,496 2,686 3,104 12,326 12,549
Tax 906 1,076 986 952 1,071 1,156 860 992 3,920 4,078
Rate (%) 31.9 32.7 30.3 32.4 32.8 33.1 32.0 32.0 31.8 32.5
Adjusted PAT 1,936 2,211 2,270 1,990 2,192 2,340 1,827 2,112 8,407 8,471
YoY Change (%) 13.2 5.8 -19.5 6.2 46.4 0.8
E: MOSL Estimates
January 2017 103

Colgate
Bloomberg CLGT IN CMP: INR895 TP: INR1,200 (+34%) Buy
 We expect Colgate’s (CLGT) sales to grow 7.5% YoY to INR10b.
M. Cap. (INR b)/(USD b) 244 / 4
Toothpaste volume growth is likely to be ~2%.
1,6,12 Rel Perf. (%) -4 / -1 / -12  We estimate gross margin expansion of 30bp and EBITDA margin
Financial Snapshot (INR b) contraction of 80bp to 24.1%. Hence, we have modeled EBITDA
Y/E March 2016 2017E 2018E 2019E growth of 3.9% and adjusted PAT growth of 3.5% in 3QFY17.
Sales 38.0 41.3 46.7 53.0  The stock trades at 32.9x FY18E EPS of INR27.2; we have Buy rating
EBITDA 9.5 10.0 12.0 14.3 on the stock.
Adj. PAT 6.1 6.1 7.4 9.0
Adj. EPS (INR) 22.3 22.3 27.2 32.9
EPS Gr. (%) 8.7 -0.4 22.4 20.9
BV/Sh.(INR) 37.5 41.6 44.6 48.8
RoE (%) 67.9 56.3 63.2 70.5
RoCE (%) 67.0 55.2 62.0 69.4
Payout (%) 49.1 70.0 70.0 70.0 Key issues to watch for
Valuations  Volume growth in toothpaste and market share movement.
P/E (x) 40.1 40.2 32.9 27.2  Ad spends and competitive intensity in toothpaste, especially from
P/BV (x) 23.9 21.5 20.1 18.4 Patanjali.
EV/EBITDA (x) 25.4 24.1 19.8 16.5
Div. Yield (%) 1.2 1.7 2.1 2.6

Toothpaste Volume Gr % 2.0 3.0 1.0 3.0 5.0 4.0 2.0 3.0 2.3 3.5
Net Sales 9,237 9,581 9,259 9,939 10,056 10,483 9,953 10,784 38,016 41,276
YoY Change (%) 8.9 9.4 7.5 8.5 -3.9 8.6
COGS 3,641 3,658 3,584 4,070 3,818 3,910 3,823 4,456 14,953 16,006
Gross Profit 5,596 5,924 5,674 5,869 6,238 6,574 6,130 6,328 23,063 25,270
Gross Margin (%) 60.6 61.8 61.3 59.1 62.0 62.7 61.6 58.7 60.7 61.2
Other operating Expenses 3,630 3,448 3,496 3,478 4,197 3,909 3,852 3,779 14,051 15,736
% to sales 39.3 36.0 37.8 35.0 41.7 37.3 38.7 35.0 37.0 38.1
Other operating Income 72 67 170 142 76 83 161 139 451 458
EBITDA 2,038 2,543 2,349 2,533 2,117 2,748 2,440 2,688 9,463 9,992
Margins (%) 21.9 26.4 24.9 25.1 20.9 26.0 24.1 24.6 24.6 23.9
YoY Growth (%) 3.9 8.1 3.9 6.1 15.1 5.6
Depreciation 253 269 295 297 316 333 339 324 1,114 1,313
Interest 0 0 0 0 0 0 0 0 0 0
Financial other Income 81 107 32 26 96 113 80 66 246 355
PBT 1,866 2,380 2,086 2,263 1,897 2,527 2,180 2,429 8,595 9,034
Tax 626 812 717 770 640 714 763 864 2,516 2,981
Rate (%) 33.5 34.1 34.4 34.0 33.7 28.3 35.0 35.6 29.3 33.0
Adj PAT 1,241 1,569 1,369 1,493 1,257 1,813 1,417 1,565 6,079 6,053
YoY Change (%) 1.3 15.6 3.5 4.9 8.7 -0.4
E: MOSL Estimates
January 2017 104

Dabur
Bloomberg DABUR IN CMP: INR277 TP: INR300 (+8%) Neutral
 We expect sales to grow 2% YoY to INR19.9b, led by ~5% domestic
M. Cap. (INR b)/(USD b) 487 / 7
organic volume growth.
1,6,12 Rel Perf. (%) -4 / -8 / -4  We expect Dabur’s EBITDA margin to contract 150bp.

 Hence, we have modeled EBITDA and PAT decline of 6% and 5%,
Y/E March 2016 2017E 2018E 2019E
respectively, in 3QFY17.
Sales 77.6 79.9 91.0 103.7  The stock trades at 32.6x FY18E EPS of INR8.5; maintain Neutral.
EBITDA 15.0 15.0 17.5 20.3
Adj. PAT 12.5 12.6 14.9 17.5
Adj. EPS (INR) 7.1 7.2 8.5 10.0
EPS Gr. (%) 17.2 0.8 18.5 17.2
BV/Sh.(INR) 23.6 27.9 32.9 38.8
RoE (%) 33.3 27.8 27.9 27.8
RoCE (%) 27.7 23.7 24.1 24.7
Payout (%) 28.0 35.0 35.0 35.0
Valuations
P/E (x) 38.9 38.6 32.6 27.8
 Domestic volume growth and outlook for rural demand.
P/BV (x) 11.7 9.9 8.4 7.1  Update on project CORE.
EV/EBITDA (x) 31.1 31.0 26.0 22.0  Margin performance in international business.
Div. Yield (%) 0.7 0.9 1.1 1.3  Competitive intensity, especially from Patanjali.
Quarterly Performance (Consolidated, INR m) 49% 0%

Domestic Vol Growth (%) 8.1 5.5 -2.5 7.0 4.1 4.5 5.0 3.5 4.5 4.3
Net Sales 19,017 19,553 19,552 19,800 19,239 19,757 19,943 20,919 77,616 79,858
YoY Change (%) 1.2 1.0 2.0 5.7 -0.6 2.9
Total Exp 15,861 15,551 15,822 15,688 15,796 15,730 16,437 16,915 62,614 64,878
EBITDA 3,157 4,001 3,730 4,112 3,443 4,028 3,505 4,004 15,002 14,980
Margins (%) 16.6 20.5 19.1 20.8 17.9 20.4 17.6 19.1 19.3 18.8
YoY Growth (%) 9.1 0.7 -6.0 -2.6 15.8 -0.1
Depreciation 325 328 320 358 343 357 384 442 1,332 1,527
Interest 118 125 111 132 118 166 113 122 485 519
Other Income 531 558 655 578 655 893 753 522 2,352 2,823
PBT 3,244 4,106 3,953 4,201 3,637 4,397 3,762 3,962 15,538 15,757
Tax 620 744 783 868 701 873 752 793 2,999 3,120
Rate (%) 19.1 18.1 19.8 20.7 19.3 19.9 20.0 20.0 19.3 19.8
Adjusted PAT 2,615 3,362 3,167 3,318 2,927 3,513 3,007 3,165 12,512 12,612
YoY Change (%) 12.0 4.5 -5.1 -4.6 17.4 0.8
E: MOSL Estimates 22% 12% 4% 27%
January 2017 105

Emami
Bloomberg HMN IN CMP: INR1,031 TP: INR1,240 (+20%) Buy
 We project Emami’s (HMN) sales to grow 5% YoY to INR7.6b, with
M. Cap. (INR b)/(USD b) 234 / 3
~1% volume growth.
1,6,12 Rel Perf. (%) -1 / -6 / 0  We expect gross margin to contract 50bp to 66.1% and EBITDA
margin to contract 100bp to 33.4%. Thus, EBITDA is likely to increase
Financial Snapshot (INR b) 1.9% YoY to INR2.5b.
Y/E March 2016 2017E 2018E 2019E
 PAT is expected to decline 6.8% YoY to INR1.8b due to low tax rate of
Sales 23.9 25.9 29.7 34.4
EBITDA 6.8 7.6 8.8 10.3
14.1% in the base quarter.
NP 5.7 5.6 6.9 8.4  The stock trades at 33.7x FY18E EPS of INR30.6; maintain Buy.
EPS (INR) 25.2 24.7 30.6 37.1 Emami remains one of our preferred ideas.
EPS Gr. (%) 17.7 -1.9 23.6 21.3
BV/Sh. (INR) 61.8 83.1 98.7 120.9
RoE (%) 43.4 34.1 33.6 33.8
RoCE (%) 37.9 31.4 35.3 39.1
Payout (%) 27.9 44.5 39.3 32.4
Valuations
P/E (x) 40.9 41.7 33.7 27.8
 Volume growth and broad consumer demand across categories.
P/BV (x) 16.7 12.4 10.4 8.5
 Outlook for mentha oil prices.
EV/EBITDA (x) 35.0 31.0 26.4 22.0  Competitive intensity, especially from Patanjali.
Div. Yld (%) 0.8 1.1 1.2 1.2  Performance of re-launches this year.
Quarterly Performance (INR m) -17%

Y/E MARCH FY16 FY17 FY16 FY17E
Domestic volume Growth (%) 15.0 13.5 9.3 18.0 18.0 11.0 1.0 -4.0 14.0 9.0
Net Sales 5,372 5,306 7,246 6,026 6,444 5,846 7,608 6,035 23,937 25,933
YoY Change (%) 19.9 10.2 5.0 0.2 8.0 8.3
COGS 2,114 1,783 2,423 2,193 2,287 1,929 2,582 2,228 8,513 9,026
Gross Profit 3,258 3,523 4,823 3,833 4,157 3,916 5,026 3,807 15,424 16,906
Gross margin (%) 60.6 66.4 66.6 63.6 64.5 67.0 66.1 63.1 64.4 65.2
Other Expenditure 2,271 2,001 2,329 1,992 2,684 2,164 2,484 2,006 8,580 9,338
% to sales 42.3 37.7 32.1 33.1 41.7 37.0 32.6 33.2 35.8 36.0
EBITDA 987 1,523 2,494 1,841 1,473 1,752 2,543 1,801 6,844 7,569
Margins (%) 18.4 28.7 34.4 30.6 22.9 30.0 33.4 29.8 28.6 29.2
YoY Change 49.2 15.1 1.9 -2.1 26.7 10.6
Depreciation 88 92 99 169 106 111 111 165 450 493
Interest 44 192 172 136 125 160 110 91 543 486
Other Income 187 122 53 88 51 87 105 146 449 389
PBT 1,041 1,361 2,276 1,623 1,292 1,568 2,427 1,692 6,301 6,980
Tax 42 139 320 87 117 230 607 416 459 1,370
Rate (%) 4.0 10.2 14.1 5.4 9.1 14.7 25.0 24.6 7.3 19.6
PAT 996 1,219 1,953 1,541 1,175 1,336 1,820 1,276 5,841 5,610
YoY Change (%) 18.0 9.6 -6.8 -17.2 20.7 -4.0
Amortization 137 620 617 727 609 680 600 511 2,100 2,400
Reported PAT 866 631 1,367 850 596 690 1,220 765 3,741 3,210
E: MOSL Estimates
January 2017 106

Godrej Consumer
Bloomberg GCPL IN CMP: INR1,532 TP: INR1,655 (+8%) Neutral
 We expect Godrej Consumer’s revenue to rise 10% YoY to INR25.1b.
M. Cap. (INR b)/(USD b) 522 / 8
52-Week Range (INR) 1710 / 1120  Demand trends in international business remain weak, primarily
1,6,12 Rel Perf. (%) 3 / -4 / 11 driven by macroeconomic trends.

 We estimate operating margin to contract 150bp YoY to 18.4%.
Y/E March 2016 2017E 2018E 2019E  We have modeled 1.7% EBITDA growth, but expect PAT to decline
Sales 89.7 94.9 107.0 122.6 1.2% YoY.
EBITDA 16.2 17.9 20.9 23.7
 The stock trades at 35x FY18E EPS of INR43.8. We have Neutral
Adj. PAT 11.3 12.5 14.9 17.1
Adj. EPS (INR) 33.2 36.8 43.8 50.4
rating on the stock.
EPS Gr. (%) 24.4 10.8 19.0 15.2
BV/Sh.(INR) 152.2 177.0 209.0 247.7
RoE (%) 23.4 22.3 22.7 22.1
RoCE (%) 16.7 15.3 15.5 15.9
Payout (%) 29.3 32.1 27.0 23.4
Valuations
 Growth trend in soap volumes.
P/E (x) 46.2 41.7 35.0 30.4
 Competitive intensity across categories.
P/BV (x) 10.1 8.7 7.3 6.2  Outlook for international business— demand outlook in Indonesia
EV/EBITDA (x) 33.4 30.5 26.0 22.7 and margin guidance for LatAm.
Div. Yield (%) 0.6 0.8 0.8 0.8

Net Sales 19,854 21,166 22,859 22,087 21,202 23,575 25,145 24,974 89,678 94,897
YoY Change (%) 6.8 11.4 10.0 13.1 8.8 5.8
EBITDA 3,132 4,072 4,540 4,547 3,775 4,631 4,617 4,908 16,242 17,931
Margins (%) 15.8 19.2 19.9 20.6 17.8 19.6 18.4 19.7 18.1 18.9
YoY Growth (%) 20.5 13.7 1.7 8.0 21.7 10.4
Depreciation 230 235 257 284 327 358 193 195 1,031 1,072
Interest 329 313 296 250 326 350 340 316 1,002 1,332
Other Income 218 220 196 159 166 194 255 249 820 864
PBT 2,806 3,750 4,264 4,228 3,298 4,118 4,338 4,647 15,028 16,391
Tax 636 757 948 1,030 754 907 1,063 1,146 3,171 3,869
Rate (%) 22.7 20.2 22.2 24.4 22.9 22.0 24.5 24.7 21.1 23.6
Minority Int 5 0 5 0 6 0 6 0 395 12
Adj PAT 2,166 2,993 3,311 3,199 2,538 3,212 3,270 3,490 11,298 12,510
YoY Change (%) 17.2 7.3 -1.2 9.1 28.1 10.7
E: MOSL Estimates
January 2017 107

GSK Consumer
Bloomberg SK B IN CMP: INR5,058 TP: INR5,465 (+8%) Neutral
 We expect GSK Consumer to report net sales of INR9.5b (-3% YoY)
M. Cap. (INR b)/(USD b) 213 / 3
led by 2% volume decline in MFD. In our view, discretionary
52-Week Range (INR) 6675 / 4650
demand in core MFD category is yet to witness an uptrend.
1,6,12 Rel Perf. (%) 0 / -15 / -26
 We estimate EBITDA margin to contract 20bp YoY to 16.6%, and
Financial Snapshot (INR b) PAT growth of 1.8% YoY.
Y/E December 2016 2017E 2018E 2019E
Sales 41.9 40.2 45.0 51.3  The stock trades at 28.3x FY18E EPS. We have a Neutral rating on
EBITDA 9.4 8.4 9.5 10.9 the stock.
Adj. PAT 7.0 6.6 7.5 8.5
Adj. EPS (INR) 167.1 157.7 178.8 201.2
EPS Gr. (%) 20.4 -5.6 13.4 12.6
BV/Sh. (INR) 581.5 673.6 774.4 774.4
RoE (%) 30.8 25.1 24.7 24.7
RoCE (%) 30.8 25.2 24.7 24.7
Payout (%) 33.7 35.0 40.0 40.0
Valuations Key issues to watch for
P/E (x) 30.3 32.1 28.3 25.1  Growth in MFD volume.
P/BV (x) 8.6 7.4 6.5 6.5  Outlook for market growth and raw materials.
EV/EBITDA (x) 20.1 24.8 21.5 21.5  Performance of non-MFD portfolio.
Div. Yield (%) 1.1 1.1 1.3 1.3  Competitive intensity, especially from Patanjali.

Y/E Mar FY16 FY17 FY16 FY17E
MFD Volume Growth (%) 2.0 0.0 0.0 0.0 -6.0 -3.0 -4.0 -2.0 0.5 -3.8
Net Sales 9,955 10,918 9,811 10,565 9,439 10,803 9,517 10,454 41,887 40,212
YoY Change (%) -5.2 -1.1 -3.0 -1.1 -4.0
Total Exp 7,907 8,537 8,165 8,152 7,404 8,351 7,939 8,073 32,438 31,767
EBITDA 2,048 2,381 1,646 2,413 2,035 2,452 1,577 2,380 9,450 8,445
Margins (%) 20.6 21.8 16.8 22.8 21.6 22.7 16.6 22.8 22.6 21.0
YoY Change (%) -0.6 3.0 -4.2 -1.3 -10.6
Depreciation 192 136 173 182 147 148 199 225 718 718
Interest 7 7 2 2 6 6 6 5 8 24
Other Income 549 589 569 578 592 578 682 646 1,921 2,498
PBT 2,398 2,827 2,039 2,807 2,474 2,876 2,055 2,796 10,645 10,200
Tax 838 988 708 966 868 1,039 699 965 3,619 3,570
Rate (%) 34.9 35.0 34.7 34.4 35.1 36.1 34.0 34.5 34.0 35.0
Adj PAT 1,561 1,839 1,332 1,841 1,606 1,837 1,356 1,831 7,026 6,630
YoY Change (%) 2.9 -0.1 1.8 -0.5 -5.6
E: MOSL Estimates
January 2017 108

Hindustan Unilever
Bloomberg HUVR IN CMP: INR821 TP: INR900 (+10%) Neutral
 We expect Hindustan Unilever’s revenue to grow 1.5%, with
M. Cap. (INR b)/(USD b) 1776 / 26
underlying ~1% volume decline.
1,6,12 Rel Perf. (%) -4 / -6 / -8  PFAD prices have gone up by 70% YoY in 3QFY17 of a low base and
LAB prices are up 3% YoY.
 We expect operating margin to contract 100bp YoY to 17.4% in
Y/E March 2016 2017E 2018E 2019E
Sales 305.0 315.3 345.1 386.4
3QFY17.
EBITDA 57.3 59.1 67.0 76.9  We estimate EBITDA decline of 4% YoY, but expect PAT to grow
Adj. PAT 41.2 42.7 48.5 55.8 1.9% YoY. The stock trades at 36.6x FY18E EPS of INR22.4; maintain
Adj. EPS (INR) 19.0 19.7 22.4 25.8 Neutral.
EPS Gr. (%) 12.9 3.6 13.7 15.0
BV/Sh.(INR) 29.0 28.5 28.3 29.1
RoE (%) 82.4 68.7 79.1 89.8
RoCE (%) 108.1 89.3 103.2 117.8
Payout (%) 84.0 96.3 91.4 87.2
Valuations
P/E (x) 43.1 41.6 36.6 31.8
 Comments on volume growth and consumer demand
P/BV (x) 28.3 28.9 29.0 28.2
environment.
EV/EBITDA (x) 30.5 29.5 26.0 22.6
Div. Yield (%) 1.9 2.3 2.5 2.7
 Competitive intensity in S&D and shampoos.
Quarterly performance (INR m)

Y/E March FY16 FY17 FY16 Ind AS FY17E
Volume Growth (%) 6.0 7.0 6.0 4.0 4.0 -1.0 -1.0 5.0 5.8 1.8
Net Sales 78,445 77,314 77,640 77,212 81,282 78,427 78,804 83,012 310,610 321,525
YoY Change (%) 3.6 1.4 1.5 7.5 3.5
COGS 38,976 38,965 37,424 37,688 39,555 39,620 39,167 41,818 153,053 160,161
Gross Profit 39,469 38,349 40,216 39,523 41,727 38,807 39,637 41,194 157,557 161,364
Margin % 50.3 49.6 51.8 51.2 51.3 49.5 50.3 49.6 50.7 50.2
Operating Exp 24,349 24,982 25,914 24,820 25,368 24,760 25,909 26,190 100,065 102,227
% to sales 31.0 32.3 33.4 32.1 31.2 31.6 32.9 31.5 32.2 31.8
EBITDA 15,120 13,366 14,302 14,703 16,359 14,046 13,728 15,004 57,491 59,137
YoY Change (%) 8.2 5.1 -4.0 2.0 2.9
Margins (%) 19.3 17.3 18.4 19.0 20.1 17.9 17.4 18.1 18.5 18.4
Depreciation 749 761 822 875 933 945 904 843 3,208 3,624
Interest 47 45 45 16 60 49 45 16 153 170
Other Income 1,230 1,944 1,451 1,014 1,076 2,528 1,161 1,317 5,638 6,082
PBT 15,554 14,503 14,886 14,826 16,442 15,580 13,940 15,463 59,769 61,425
Tax 4,960 4,560 4,373 4,203 5,411 4,807 4,043 4,475 18,096 18,735
Rate (%) 31.9 31.4 29.4 28.3 32.9 30.9 29.0 28.9 30.3 30.5
Adjusted PAT 10,628 9,902 9,717 11,135 11,277 10,818 9,898 10,988 41,673 42,690
Reported Profit 10,692 9,822 9,717 11,135 11,739 10,956 9,898 10,988 41,673 42,690
YoY Change (%) 9.8 11.5 1.9 (1.3) 2.4
E: MOSL Estimates
January 2017 109

ITC
Bloomberg ITC IN CMP: INR245 TP: INR290 (+19%) Buy
 We expect net sales to decline 4% YoY to INR88.1b, with cigarette
M. Cap. (INR b)/(USD b) 2954 / 43
volume declining 7% YoY (base quarter saw volume decline of 5%).
1,6,12 Rel Perf. (%) 4/2/9  We expect cigarette EBIT to decline 7.6% YoY. We have factored in
EBITDA decline of 6.4% YoY to INR33.7b for the company.
 We expect Other FMCG to post revenue decline of ~8% YoY.
Y/E March 2016 2017E 2018E 2019E
Sales 362.2 382.9 426.2 484.0  We estimate PAT decline of 3% YoY to INR25.8b.
EBITDA 137.2 142.2 162.4 187.3  The stock trades at 25.6x FY18E EPS of INR9.6; maintain Buy.
Adj. PAT 93.1 101.0 115.5 132.5
Adj. EPS (INR) 7.7 8.4 9.6 11.0
EPS Gr. (%) -3.5 8.5 14.3 14.6
BV/Sh.(INR) 27.3 31.6 36.1 40.8
RoE (%) 29.3 28.4 28.3 28.5
RoCE (%) 27.8 27.3 27.6 28.3
Payout (%) 88.4 64.4 64.4 64.4
Valuations
P/E (x) 31.7 29.2 25.6 22.3 Key issues to watch for
P/BV (x) 9.0 7.7 6.8 6.0  Trends in cigarette volume.
EV/EBITDA (x) 20.1 19.3 16.6 14.2  Demand outlook for FMCG category and segmental profitability.
Div. Yield (%) 2.8 2.2 2.5 2.9

Cigarette Vol Gr (%) -17.0 -14.0 -5.0 0.0 3.0 4.0 -7.0 -4.0 -9.0 -1.0
Net Sales 91,600 87,989 91,767 101,687 100,540 96,607 88,097 101,608 365,827 386,852
YoY Change (%) 9.8 9.8 -4.0 -0.1 0.2 5.7
Total Exp 59,078 54,162 55,715 64,817 65,278 60,307 54,368 64,656 228,647 244,608
EBITDA 32,522 33,827 36,052 36,871 35,262 36,300 33,729 36,952 137,179 142,244
Growth (%) 8.4 7.3 -6.4 0.2 1.4 3.7
Margins (%) 35.5 38.4 39.3 36.3 35.1 37.6 38.3 36.4 37.5 36.8
Depreciation 2,576 2,582 2,625 2,549 2,613 2,684 2,888 3,413 10,319 11,597
Interest 105 103 161 123 101 107 195 175 491 578
Other Income 3,565 3,926 6,779 4,116 4,205 4,754 6,779 5,002 17,693 20,740
PBT 33,407 35,068 40,045 38,315 36,754 38,262 37,426 38,367 144,061 150,809
Tax 11,746 12,443 13,517 13,363 12,907 13,262 11,602 11,996 50,949 49,767
Rate (%) 35.2 35.5 33.8 34.9 35.1 34.7 31.0 31.3 35.4 33.0
Adj PAT 21,661 22,625 26,528 24,952 23,847 25,000 25,824 26,371 93,113 101,042
E: MOSL Estimates
January 2017 110

Jyothy Labs
Bloomberg JYL IN CMP: INR335 TP: INR360 (+7%) Neutral
 We expect Jyothy Labs’ net sales to grow 1% YoY to INR3.8b.
52-Week Range (INR) 381 / 253  EBITDA margin is likely to contract by 150bp YoY to 12.4%.
1,6,12 Rel Perf. (%) -10 / 12 / 4
 We have factored in EBITDA decline of 10% YoY to INR468m.
Financial Snapshot (INR b)  The stock trades at 22.1x FY18E EV/EBITDA. Speculation around
Y/E March 2016 2017E 2018E 2019E Henkel deal will overshadow fundamentals in FY17, in our view.
Net Sales 16.6 17.4 19.8 22.8 Maintain Neutral.
EBITDA 2.2 2.5 2.8 3.2
Adj PAT 0.7 1.3 1.5 1.8
Adj PAT for NCD 0.1 0.7 0.8 1.1
Adj.EPS (INR) 4.1 7.2 8.5 10.1
EPS Gr. (%) -41.6 75.7 17.8 18.4
BV/Sh (INR) 46.7 49.5 53.5 59.1
RoE (%) 9.1 15.0 16.5 17.9
RoCE (%) 7.2 12.1 13.5 14.5
Valuations
P/E (x) 81.7 46.5 39.5 33.4
 Update on new launches and innovations.
P/BV (x) 7.2 6.8 6.3 5.7
EV/EBITDA 29.3 25.9 22.1 19.4
 Update on Henkel call option.
Dividend Yield (%) 1.2 1.2 1.2 1.2  Pick-up in Henkel brands’ performance.

Net Sales 4,040 3,894 3,726 4,917 4,373 4,117 3,763 5,184 16,576 17,437
YoY Change (%) 8.3 5.7 1.0 5.4 10.1 5.2
Other Operating Income 3.4 6.6 6.4 3.8 3.9 4.2 6.7 7.4 20.2 22.2
Total Sales 4,043 3,900 3,732 4,920 4,377 4,121 3,770 5,191 16,596 17,460
COGS 2,096 2,029 1,923 2,910 2,219 2,101 1,983 3,122 8,958 9,425
Gross Profit 1,947 1,871 1,810 2,010 2,158 2,020 1,787 2,070 7,638 8,035
Margins (%) 48.2 48.0 48.5 40.8 49.3 49.0 47.4 39.9 46.1 46.1
Total Exp 1,366 1,374 1,290 1,381 1,364 1,383 1,319 1,497 5,410 5,563
EBITDA 581 498 520 625 795 637 468 573 2,227 2,473
EBITDA Growth % 36.8 28.0 -10.0 -8.3 36.6 11.0
Margins (%) 14.4 12.8 13.9 12.7 18.2 15.5 12.4 11.0 13.4 14.2
Depreciation 69 72 74 100 71 73 78 96 314 317
Interest 164 151 151 152 157 164 151 155 618 628
Other Income 50 35 25 32 29 31 29 80 141 168
PBT 398 310 320 405 596 430 267 401 1,436 1,695
Tax 149 121 166 257 146 119 49 75 693 390
Rate (%) 37.5 39.0 52.0 63.4 24.6 27.7 18.5 18.6 48.3 23.0
Adjusted PAT 258 199 153 148 459 320 218 327 743 1,305
YoY Change (%) 78.2 61.2 42.1 120.8 -39.6 75.7
E: MOSL Estimates
January 2017 111

Marico
Bloomberg MRCO IN CMP: INR258 TP: INR300 (+16%) Buy
 We expect sales to decline 5% YoY to INR14.5b, with flat domestic
M. Cap. (INR b)/(USD b) 332 / 5
volumes. In our opinion, Parachute volumes would likely remain
flat, while Saffola and VAHO volumes would decline 1% and 5%,
1,6,12 Rel Perf. (%) 0 / -1 / 10
respectively (Saffola and VAHO volumes grew 17% and 21%,
Financial Snapshot (INR b) respectively, in the base quarter).
Y/E March 2016 2017E 2018E 2019E  We observe copra prices have corrected 10% YoY (two months data
Sales 60.1 60.1 70.1 79.7
available for 3QFY17), while kardi oil prices are up 5% YoY. We are
EBITDA 10.4 10.9 13.1 15.2
modeling 100bp YoY gross margin expansion, with 50bp EBITDA
Adj. PAT 7.2 7.7 9.3 11.0
margin contraction for 3QFY17.
Adj. EPS (INR) 5.6 6.0 7.2 8.5
EPS Gr. (%) 26.1 6.4 21.1 17.7  PAT is projected to decline 8% YoY to INR1.9b.
BV/Sh.(INR) 16.3 20.1 23.5 25.5
 The stock trades at 35.6x FY18E EPS of INR7.2; maintain Buy. We
RoE (%) 36.9 32.8 33.1 34.8
like MRCO’s franchise, portfolio strength, management quality and
RoCE (%) 31.4 28.7 29.2 30.7
its multiple growth driver models.
Payout (%) 60.2 50.3 44.3 64.6
P/E (x) 45.9 43.2 35.6 30.3  Comments on volume growth trends across key categories.
P/BV (x) 15.8 12.8 11.0 10.1  Outlook for raw materials.
EV/EBITDA (x) 31.5 29.7 24.6 21.1
 Margin expansion and guidance for international business.
Div. Yield (%) 1.3 1.2 1.2 2.1

Domestic volume growth (%) 6.0 5.5 10.5 8.4 8.0 3.4 0.0 4.0 7.0 4.0
Net Sales 17,482 14,518 15,290 12,878 17,499 14,390 14,526 13,685 61,224 60,099
YoY Change (%) 0.1 -0.9 -5.0 6.3 7.0 -1.8
COGS 9,662 7,595 7,530 5,993 8,419 6,847 7,008 6,449 30,614 28,724
Gross Profit 7,821 6,922 7,760 6,885 9,079 7,543 7,517 7,236 30,610 31,376
Gross margin (%) 44.7 47.7 50.8 53.5 51.9 52.4 51.8 52.9 50.0 52.2
% to Sales 26.6 32.0 32.0 37.1 30.8 35.1 33.5 37.6 32.8 34.0
EBITDA 3,164 2,271 2,870 2,102 3,695 2,493 2,654 2,093 10,558 10,935
Margins (%) 18.1 15.6 18.8 16.3 21.1 17.3 18.3 15.3 17.2 18.2
YoY Change (%) 16.8 9.8 -7.5 -0.4 23.1 3.6
Depreciation 188 221 230 311 208 209 253 388 1,018 1,058
Interest 45 37 60 68 54 21 18 15 202 107
Other Income 337 193 190 320 319 285 238 242 830 1,084
PBT 3,267 2,206 2,770 2,044 3,753 2,548 2,620 1,932 10,167 10,854
Tax 982 676 720 678 1,072 740 760 575 2,956 3,148
Rate (%) 30.1 30.7 26.0 33.2 28.6 29.1 29.0 29.8 29.1 29.0
Adjusted PAT 2,285 1,530 2,020 1,362 2,679 1,806 1,858 1,355 7,092 7,698
YoY Change (%) 17.2 18.1 -8.0 -0.5 23.7 14.6
E: MOSL Estimates
January 2017 112

Nestle India
Bloomberg NEST IN CMP: INR5,893 TP: INR6,410 (+9%) Neutral
 We expect Nestle India’s net sales to remain flattish YoY at
M. Cap. (INR b)/(USD b) 568 / 8
INR19.4b, despite Maggi sale for part of the base quarter.
52-Week Range (INR) 7390 / 4990
Demonetization is likely to have detrimental on sales. Maggi re-
1,6,12 Rel Perf. (%) -7 / -7 / 0
launch has been successful, with several new variants. It has already
Financial Snapshot (INR b) clawed back to > 57% market share.
Y/E December 2015 2016E 2017E 2018E  We estimate EBITDA margin to also stay flattish YoY at 17.9%.
Sales 81.2 88.4 104.5 120.4
EBITDA and PAT are projected to decline 0.5% YoY (to INR3.5b) and
EBITDA 15.9 17.5 21.6 25.8
5.5% YoY (to INR2b), respectively.
Adj. PAT 11.6 10.8 13.4 16.3
Adj. EPS (INR) 119.9 111.5 139.2 168.7  The stock trades at 42.3x CY17E EPS; maintain Neutral.
EPS Gr. (%) -7.3 -7.0 24.8 21.2
BV/Sh.(INR) 292.3 329.3 381.2 460.1
RoE (%) 40.9 35.9 39.2 40.1
RoCE (%) 40.7 35.9 39.2 40.1
Payout (%) 40.5 49.3 46.7 39.1
Valuations
P/E (x) 49.2 52.8 42.3 34.9
 Volume trends and management commentary on demand
P/BV (x) 20.2 17.9 15.5 12.8
EV/EBITDA (x) 34.5 31.3 24.8 20.5
environment.
Div. Yield (%) 0.8 0.9 1.1 1.1  Recovery in sales and market share of Maggi.
Quarterly performance (INR m)

Y/E December CY15 CY16 CY15 CY16E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 25,068 19,338 17,362 19,464 22,957 22,561 23,462 19,376 81,233 88,356
YoY Change (%) 8.4 -20.1 -32.1 -22.6 -8.4 16.7 35.1 -0.5 -17.2 8.8
COGS 10,626 8,553 7,429 8,082 9,851 9,495 9,860 8,083 34,689 37,288
Gross Profit 14,442 10,785 9,934 11,383 13,106 13,066 13,602 11,293 46,544 51,067
Margin (%) 57.6 55.8 57.2 58.5 57.1 57.9 58.0 58.3 57.3 57.8
Operating Exp 8,443 7,183 7,075 7,892 7,927 8,709 9,115 7,819 30,593 33,570
EBITDA 6,000 3,602 2,858 3,491 5,180 4,357 4,487 3,474 15,951 17,497
Margins (%) 23.9 18.6 16.5 17.9 22.6 19.3 19.1 17.9 19.6 19.8
YoY Growth (%) 23.5 -26.1 -46.5 -36.0 -13.7 21.0 57.0 -0.5 -22.3 9.7
Depreciation 950 720 906 897 891 889 882 881 3,473 3,544
Interest 34 1 0 -2 38 1 1 3 33 42
Other income 352 533 334 403 416 522 547 419 1,621 1,904
PBT 5,367 3,414 2,286 2,999 4,666 3,989 4,151 3,010 14,067 15,815
Tax 1,663 1,093 637 913 1,614 1,136 1,273 1,038 4,305 5,061
Rate (%) 31.0 32.0 27.9 30.4 34.6 28.5 30.7 34.5 30.6 32.0
Adjusted PAT 3,704 2,322 1,649 2,086 3,052 2,853 2,878 1,972 9,762 10,754
YoY Change (%) 26.4 -21.9 -49.6 -36.7 -17.6 22.9 74.5 -5.5 -21.7 10.2
E : M O S L E s tim ates
January 2017 113

Page Industries
Bloomberg PAG IN CMP: INR13,782 TP: INR17,100 (+24%) Buy
 We expect Page to report net sales of INR4.8b, up 9% YoY, led by
M. Cap. (INR b)/(USD b) 154 / 2
double-digit volume growth.
52-Week Range (INR) 17351 / 9770
1,6,12 Rel Perf. (%) 2 / 1 / -2  We expect EBITDA margin to contract 50bp YoY to 20%, and PAT to
post 13.3% YoY growth to INR650m.
Y/E March 2016 2017E 2018E 2019E
 The stock trades at 44.1x FY18E EPS of INR312.7; maintain Buy.
Sales 17.8 21.1 26.1 32.1
EBITDA 3.8 4.2 5.5 6.8
Adj. PAT 2.3 2.8 3.5 4.5
Adj. EPS (INR) 208.6 247.4 312.7 402.4
EPS Gr. % 18.7 18.6 26.4 28.7
FCF to PAT 0.8 0.6 0.6 0.9
BV/Sh.INR 453.0 576.6 733.0 914.1
RoE (%) 46.0 42.9 42.7 44.0
RoCE (%) 42.6 40.2 41.1 45.3
Payout (%) 49.1 50.0 50.0 55.0
 Volume trends and management commentary on demand
Valuations environment.
P/E (x) 66.1 55.7 44.1 34.2  Update on foray into kidswear segment.
EV/EBITDA (x) 40.9 36.4 28.1 22.4  GST impact.
Quarterly Performance (INR m) 26% 25% 24% 27% 26% 23% 25%
Y/E MARCH FY16 FY17 FY16 FY17E
Net Sales 4,489 4,663 4,408 4,343 5,719 5,378 4,805 5,160 17,840 21,062
YoY Change (%) 27.4 15.3 9.0 18.8 15.6 18.1
COGS 1,783 1,808 1,653 1,630 2,570 2,156 1,802 1,868 6,913 8,395
Gross Profit 2,705 2,855 2,755 2,712 3,149 3,222 3,003 3,293 10,927 12,667
Gross margin (%) 60.3 61.2 62.5 62.5 55.1 59.9 62.5 63.8 61.2 60.1
% to sales 37.9 39.6 42.0 41.7 36.0 39.9 42.5 42.3 40.1 40.0
EBITDA 1,004 1,011 904 901 1,092 1,075 961 1,111 3,776 4,239
Margins (%) 22.4 21.7 20.5 20.7 19.1 20.0 20.0 21.5 21.2 20.1
YoY Change 8.8 6.3 6.3 23.3 18.5 12.2
Depreciation 56 58 57 69 59 60 51 50 238 221
Interest 50 37 34 36 39 40 40 50 153 170
Other Income 56 9 2 3 59 62 60 61 62 242
PBT 953 926 814 800 1,053 1,037 929 1,072 3,448 4,090
Tax 327 323 241 241 373 350 279 326 1,116 1,328
Rate (%) 34.3 34.9 29.5 30.2 35.5 33.8 30.0 30.5 32.4 32.5
PAT 626 602 574 558 679 687 650 745 2,332 2,762
YoY Change (%) 8.5 14.0 13.3 33.5 19.0 18.4
E: MOSL Estimates
January 2017 114

Parag Milk Foods

Bloomberg PARAG IN CMP: INR264 TP: INR285 (+8%) Neutral
 We expect Parag to report net sales of INR4b, up 3% YoY, led by
growth in value-added products.
1,6,12 Rel Perf. (%) -/-/-  We estimate EBITDA margin to contract 100bp YoY to 8.8%, and
PAT to stay fattish at INR146m.
 The stock trades at 27.3x FY18E EPS of INR9.7. We have a Neutral
Y/E March 2016 2017E 2018E 2019E
Sales 16.5 17.1 19.9 23.9
rating on the stock.
EBITDA 1.5 1.5 1.9 2.4
Adj. PAT 0.5 0.6 0.8 1.2
Adj. EPS (INR) 6.7 7.0 9.7 14.1
EPS Gr. % -66.7 4.6 37.7 45.5
BV/Sh.INR 51.4 87.3 97.0 111.1
RoE (%) 19.5 10.8 10.5 13.5
RoCE (%) 12.4 8.8 9.4 11.9
Valuations
P/E (x) 39.2 37.5 27.3 18.7
 Milk prices and global SMP price movement.
P/BV (x) 5.1 3.0 2.7 2.4  Execution of value-added products distribution.
EV/EBITDA (x) 15.1 16.0 12.8 9.7  Competitive intensity.
EV/Sales (x) 1.4 1.4 1.2 1.0  Impact from higher sales tax.
Consolidated - Quarterly Earning Model (INR m)

Net Sales 3,738 4,696 3,875 4,142 3,835 4,728 3,991 4,564 16,451 17,118
YoY Change (%) 19.6 2.6 0.7 3.0 10.2 13.9 4.1
Gross Profit 959 1,258 1,156 1,303 1,147 1,444 1,250 1,502 4,676 5,343
Margin (%) 25.7 26.8 29.8 31.4 29.9 30.5 31.3 32.9 28.4 31.2
Total Expenditure 674 844 777 904 817 1,067 900 1,093 3,200 3,877
EBITDA 285 414 378 399 330 377 350 409 1,476 1,465
YoY Change (%) 38.1 15.8 -8.9 -7.6 2.5 37.7 -0.7
Margins (%) 7.6 8.8 9.8 9.6 8.6 8.0 8.8 9.0 9.0 8.6
Depreciation 90 64 82 97 98 115 90 80 334 383
Interest 112 146 112 120 92 64 60 63 490 280
Other Income 5 -3 10 4 8 23 10 12 16 53
PBT before EO expense 87 201 194 186 147 222 210 278 668 857
PBT 87 201 194 186 147 222 210 278 668 857
Tax 17 105 49 25 39 78 64 84 195 266
Rate (%) 19.3 51.9 25.1 13.4 26.5 35.4 30.5 30.3 29.2 31.0
Adj PAT 70 97 145 161 108 143 146 194 473 591
YoY Change (%) 0.1 54.0 47.8 0.4 20.5 46.9 24.9
Margins (%) 1.9 2.1 3.7 3.9 2.8 3.0 3.6 4.2 2.9 3.5
E: MOSL Estimates
January 2017 115

P&G Hygiene and Healthcare

Bloomberg PG IN CMP: INR6,891 TP: INR8,340 (+21%) Buy
 We expect PGHH to report net sales of INR7.5b, up 10% YoY.
M. Cap. (INR b)/(USD b) 224 / 3
52-Week Range (INR) 7280 / 5171  We estimate EBITDA margin to contract 700bp YoY to 24.7% over an
1,6,12 Rel Perf. (%) 1 / 12 / 19 unusually high margin base in 2QFY16 (June ending), and PAT to post
14.4% YoY decline to INR1.3b in 2QFY17 (June ending).
Y/E March 2016 2017E 2018E 2019E  The stock trades at 40.7x FY18E EPS of INR168.9; maintain Buy.
Sales 22.8 25.5 30.9 36.9
EBITDA 6.1 6.5 8.0 9.6
Adj. PAT 4.2 4.5 5.5 6.6
Adj. EPS (INR) 129.9 138.5 168.9 201.7
EPS Growth (%) 22.0 6.6 22.0 19.4
BV/Share (INR) 465.6 534.1 617.6 717.5
RoE (%) 30.8 27.7 29.4 30.3
 Healthcare business growth, given high base.
RoCE (%) 31.3 28.0 29.6 30.5
 Margin performance, given exceptionally high base.
Valuations
P/E (x) 53.0 49.8 40.8 34.2
P/BV (x) 14.8 12.9 11.2 9.6
Standalone - Quarterly Earning Model (INR m)

Y/E June FY16 FY17 FY16 FY17
Net Sales 5,387 6,823 5,208 5,336 6,004 7,505 5,885 6,124 22,754 25,518
YoY Change (%) 5.9 -6.2 -4.3 11.5 10.0 13.0 14.8 -2.5 12.1
EBITDA 970 2,164 1,332 1,588 1,512 1,855 1,623 1,505 6,053 6,494
Margins (%) 18.0 31.7 25.6 29.8 25.2 24.7 27.6 24.6 26.6 25.4
Depreciation 127 142 124 124 127 163 142 209 517 641
Interest 17 25 10 8 4 10 6 15 60 35
Other Income 212 206 236 222 225 206 236 282 876 950
PBT 1,038 2,203 1,435 1,677 1,605 1,887 1,711 1,564 6,353 6,768
Tax 343 736 466 585 561 632 573 501 2,129 2,267
Rate (%) 33.0 33.4 32.5 34.9 34.9 33.5 33.5 32.0 33.5 33.5
Reported PAT 696 1,467 969 1,092 1,044 1,255 1,138 1,063 4,223 4,500
Adj PAT 696 1,467 969 1,092 1,044 1,255 1,138 1,063 4,223 4,500
YoY Change (%) 61.8 11.5 2.0 50.1 -14.4 17.4 -2.7 22.0 6.6
Margins (%) 12.9 21.5 18.6 20.5 17.4 16.7 19.3 17.4 18.6 17.6
E: MOSL Estimates
January 2017 116

Pidilite Industries
Bloomberg PIDI IN CMP: INR608 TP: INR700 (+15%) Buy
 We expect Pidilite’s (PIDI) revenue to grow 1% YoY, led by single-
M. Cap. (INR b)/(USD b) 311 / 5
digit volume growth in Consumer and Bazaar segment.
 EBITDA margin is expected to contract 100bp YoY to 21%. Base
1,6,12 Rel Perf. (%) -5 / -13 / 5
quarter (3QFY16) had witnessed 600bp YoY EBITDA margin
Financial Snapshot (INR b) expansion.
Y/E March 2016 2017E 2018E 2019E  We expect EBITDA and PAT to decline 4% and 3% YoY, respectively.
Sales 54.1 55.9 63.7 73.9  The stock trades at 33.1x FY18E EPS of INR18.4; maintain Buy.
EBITDA 12.2 12.5 13.9 15.6 Pidilite is one of our preferred ideas. Dominant leadership position
Adj. PAT 7.6 8.4 9.4 10.6 in core Adhesives segment imparts strong pricing power. This,
Adj. EPS (INR) 14.8 16.4 18.4 20.6 coupled with its strategy of building adjacencies in portfolio and
EPS Gr. (%) 47.3 10.9 12.2 12.3 potential gains from distribution outreach, drives our long-term
BV/Sh.(INR) 54.3 64.3 79.1 96.2 preference for Pidilite.
RoE (%) 29.9 27.6 25.6 23.5
RoCE (%) 28.5 26.1 24.5 22.7
Payout (%) 28.5 29.6 16.3 14.6
P/E (x) 41.2 37.1 33.1 29.5  Volume growth in Fevicol.
P/BV (x) 11.2 9.5 7.7 6.3  Outlook for VAM prices.
EV/EBITDA (x) 25.0 24.2 21.4 18.6  Outlook for industrial and construction chemical segments.
Div. Yield (%) 0.7 0.8 0.5 0.5  Progress on Elastomer project (if any).

Net Sales 14,695 13,185 13,391 12,409 15,694 14,177 13,525 12,463 54,138 55,858
YoY Change (%) 9.4 5.1 11.4 18.9 6.8 7.5 1.0 0.4 11.8 3.2
EBITDA 3,423 3,010 2,953 2,384 3,943 3,225 2,847 2,449 12,183 12,465
Margins (%) 23.3 22.8 22.0 19.2 25.1 22.8 21.0 19.7 22.5 22.3
Depreciation 242 248 330 351 258 303 297 265 1,331 1,122
Interest 39 31 31 35 35 26 16 8 133 85
Other Income 139 216 97 186 241 324 97 63 66 724
Extra-Ord expense -9 14 7 35 4 11 0 -11 48 4
PBT 3,290 2,932 2,681 2,150 3,887 3,209 2,631 2,251 10,737 11,978
Tax 948 893 822 637 1,174 912 816 693 3,221 3,595
Rate (%) 28.8 30.5 30.7 29.6 30.2 28.4 31.0 30.8 30.0 30.0
Adj PAT 2,333 2,053 1,866 1,547 2,717 2,309 1,815 1,547 7,564 8,387
YoY Change (%) 35.5 49.6 48.6 83.9 16.4 12.4 -2.7 0.0 45.7 10.9
Margins (%) 15.9 15.6 13.9 12.5 17.3 16.3 13.4 12.4 14.0 15.0
January 2017 117

Radico Khaitan
Bloomberg RDCK IN CMP: INR117 TP: INR120 (+3%) Neutral
 We expect Radico’s (RDCK ) revenue to remain flat at INR4.2b, with
a 5% decline in volumes.
1,6,12 Rel Perf. (%) -3 / 27 / -2  The premium segment should continue accelerating, aided by
uptrading (premiumization) and RDCK ’s strategy to defocus on
Financial Snapshot (INR b) regular brands (given the harsh taxation environment and
Y/E March 2016 2017E 2018E 2019E unfavorable raw material scenario).
Sales 16.4 17.0 19.3 21.2
EBITDA 2.1 1.9 2.2 2.4  We expect operating margin to contract 200bp YoY to 11.1%.
Adj. PAT 0.9 0.7 0.9 1.1  PAT is estimated to decline 27.7% YoY to INR163m.
Adj. EPS (INR) 6.9 5.3 7.1 8.2
EPS Gr. (%) 3.9 -23.5 33.8 16.6  The stock trades at 16.6x FY18E EPS of INR7.1. Maintain Neutral.
BV/Sh.(INR) 69.5 74.3 80.1 86.9
RoE (%) 10.3 7.3 9.1 9.9
RoCE (%) 8.6 6.8 7.7 8.1
Payout (%) 10.8 15.0 15.0 15.0
Valuations
P/E (x) 17.0 22.2 16.6 14.2
P/BV (x) 1.7 1.6 1.5 1.3
 Further price hikes, if any.
EV/EBITDA (x) 11.4 12.5 11.3 10.2
Div. Yield (%) 0.6 0.7 0.9 1.1
 Price trend and outlook for ENA.

Net sales 4,173 4,026 4,244 3,997 4,304 4,473 4,244 4,026 16,367 17,047
YoY Change (%) 3.1 11.1 0.0 0.7 10.0 4.2
Total Expenses 3,710 3,536 3,688 3,661 3,733 3,905 3,773 3,746 14,275 15,157
EBITDA 462 490 556 336 571 568 471 280 2,092 1,890
Margins (%) 11.1 12.2 13.1 8.4 13.3 12.7 11.1 7.0 12.8 11.1
YoY Change (%) 23.5 15.8 -15.3 -16.6 15.7 -9.7
Depreciation 107 108 100 103 105 105 115 134 403 459
Interest 213 208 197 230 214 206 187 173 847 780
Other Income 98 81 68 148 39 44 68 159 371 310
PBT 240 255 327 150 291 301 237 132 1,212 961
Tax 68 78 103 55 68 76 75 41 296 259
Rate (%) 28.4 30.4 31.3 36.7 23.4 25.1 31.5 31.2 24.4 27.0
Adjusted PAT 172 178 225 95 223 225 163 91 917 701
YoY Change (%) 29.6 26.8 -27.7 -4.3 25.5 -23.5
E: MOSL Estimates
January 2017 118

United Breweries
Bloomberg UBBL IN CMP: INR796 TP: INR1,065 (+34%) Buy
 We expect United Breweries’ revenue to decline 2.9% YoY to
M. Cap. (INR b)/(USD b) 211 / 3
INR10.7b.
1,6,12 Rel Perf. (%) -8 / 5 / -19  We build in EBITDA margin contraction of 320bp YoY to 12.7%, and
22.5% EBITDA decline YoY to INR1.4b.
Y/E March 2016 2017E 2018E 2019E
 We estimate 5% PAT growth in 3QFY17, mainly due to low interest
Sales 48.3 49.5 57.4 66.0 costs and tax rate compared to the base quarter.
EBITDA 6.8 6.9 8.8 10.6  The stock trades at 48.7x FY18E EPS of INR16.4. Maintain Buy.
PAT 2.9 3.3 4.3 5.2
EPS (INR) 11.1 12.3 16.4 19.7
EPS Gr. (%) 12.8 11.2 32.6 20.4
BV/Sh.(INR) 79.8 90.2 103.9 120.7
RoE (%) 14.8 14.5 16.9 17.5
RoCE (%) 13.2 12.9 14.7 15.5
Valuations
P/BV (x) 10.0 8.8 7.7 6.6  Trends in volume growth and margins.
EV/EBITDA (x) 31.7 30.8 24.7 20.2
 Price trend and outlook for raw materials.
EV/Sales (x) 4.4 4.3 3.8 3.2

Y/E March FY16 FY17
Net Sales 14,546 10,723 10,996 12,074 15,642 10,386 10,676 12,784 48,340 49,487
YoY Change (%) 7.5 -3.1 -2.9 5.9 2.4
EBITDA 2,484 1,350 1,749 1,235 2,909 1,212 1,356 1,391 6,818 6,868
YoY Change (%) 17.1 -10.3 -22.5 12.6 0.7
Margins (%) 17.1 12.6 15.9 10.2 18.6 11.7 12.7 10.9 14.1 13.9
Depreciation 583 598 615 638 637 702 600 608 2,435 2,547
Interest 202 205 184 168 148 141 90 90 759 469
Other Income 167 242 191 311 136 8 330 340 910 814
PBT before EO expense 1,866 789 1,140 739 2,260 376 996 1,033 4,534 4,665
Extra-Ord expense 0 0 0 0 0 0 0 0 0 0
PBT 1,866 789 1,140 739 2,260 376 996 1,033 4,534 4,665
Tax 645 268 428 216 790 106 249 258 1,556 1,403
Rate (%) 34.5 33.9 37.5 29.2 34.9 28.1 25.0 25.0 34.3 30.1
Minority Interest & Profit/Loss of Asso. Cos. 0 0 0 0 0 0 0 0 0 0
Reported PAT 1,221 521 713 524 1,471 270 747 775 2,979 3,263
Adj PAT 1,221 521 713 524 1,471 270 747 775 2,979 3,263
YoY Change (%) 20.4 -48.1 4.8 47.9 9.5
Margins (%) 8.4 4.9 6.5 4.3 9.4 2.6 7.0 6.1 6.2 6.6
E: MOSL Estimates
January 2017 119

United Spirits
Bloomberg UNSP IN CMP: INR1,952 TP: INR2,620 (+34%) Buy
 We expect United Spirits’ (UNSP) revenue to decline 5% YoY to
M. Cap. (INR b)/(USD b) 284 / 4
INR22.9b and have built in 10% YoY volume growth.
52-Week Range (INR) 3017 / 1775
1,6,12 Rel Perf. (%) 0 / -23 / -38  We build in EBITDA margin expansion of 350bp YoY to 10.7% (base
quarter margins stood at 7.2%).
Y/E March 2016 2017E 2018E 2019E
 We estimate PAT of INR1.1b in 3QFY17, mainly due to low interest
Sales 83.4 86.7 98.0 114.2 costs and low tax rate compared to the base quarter.
EBITDA 8.8 9.2 12.4 15.6  Maintain Buy.
PAT 2.4 4.0 6.6 9.0
EPS (INR) 16.7 27.8 45.7 61.7
EPS Gr. (%) LP 66.0 64.5 35.2
BV/Sh.(INR) 123.1 150.9 193.6 252.5
RoE (%) 19.8 20.3 23.6 24.5
RoCE (%) 8.5 10.6 14.4 17.2
Payout (%) 0.0 0.0 5.5 4.0
P/E (x) 116.7 70.3 42.8 31.6  Trends in volume growth, premiumization and margins.
P/BV (x) 15.9 12.9 10.1 7.7  Price trend and outlook for ENA.
EV/EBITDA (x) 33.7 31.4 22.8 17.9
 Impact of ban on alcohol in certain states.
Div. Yield (%) 0.0 0.0 0.1 0.1

Volume Growth % 0.4 -2.3 1.6 -4.0 -0.2 1.0 -10.0 0.0 -1.1 -4.2
Net Sales 18,487 18,923 24,099 21,251 20,273 20,377 22,894 22,446 82,760 85,990
YoY Change (%) 9.7 7.7 -5.0 5.6 2.1 3.9
Total Exp 16,773 16,020 22,366 19,421 18,251 18,126 20,447 19,982 74,580 76,805
EBITDA 1,715 2,903 1,733 1,830 2,023 2,251 2,447 2,464 8,180 9,185
Margins (%) 9.3 15.3 7.2 8.6 10.0 11.0 10.7 11.0 9.9 10.7
Depreciation 249 241 249 271 261 332 299 320 1,010 1,212
Interest 1,284 1,100 1,077 1,009 1,030 885 646 568 4,469 3,128
PBT From operations 182 1,562 407 550 732 1,034 1,502 1,576 2,701 4,845
Other income 320 293 82 965 346 389 220 222 1,660 1,177
PBT 502 1,855 488 1,515 1,078 1,423 1,722 1,798 4,361 6,021
Tax 386 601 438 504 309 445 594 639 1,930 1,987
Rate (%) 76.9 32.4 89.7 33.3 28.6 31.3 34.5 35.5 44.3 33.0
PAT 116 1,254 50 1,010 769 978 1,128 1,159 2,431 4,034
E: MOSL Estimates
January 2017 120

December 2016 Results PreviewDecember
| Sector:2016 Results Preview
Financials - Banks
Financials - Banks
Technology
An unusual quarter; Several moving parts
Sharp CASA uptick, weak core profitability but high trading gains
 3QFY17 is a historic quarter for banks, with three defining trends (1) sharp
uptick in CASA (expect at least 500bp QoQ rise in CASA) and digitalization drive,
(2) massive flows to bond markets and sharp drop in yields (down ~30bp;
difference between peak and low at 65bp), and (3) collapse in loan growth to a
multi-year low. We believe the current quarter cannot to be extrapolated,
however benefits of demonetization – improved CASA ratio and low interest
rates (led by low inflation) are here to stay.
 Weak loan growth (down 4% QoQ for our coverage universe), negative carry on
old currency notes and excess liquidity would impact NIM. Moderation in loan
growth, delayed buying decision for some retail products, and RBI directive on
cards/payments would impact fee income growth. High footfalls and occupation
of complete bandwidth in accepting deposits will impact branch profitability.
 Bond yields in India are divergent with global trends, with Indian bond yields
down ~30bp QoQ (difference between peak and low at 65bp). Our interactions
with banks’ indicate that they have realized high trading gains/are sitting on
high MTM gains on investment portfolios. This would be handy to clean the
stress loans from balance sheet. Within our universe, we believe SBIN, PNB, CBK
and AXSB are likely to be large beneficiaries.
 We do not see material change in reported asset quality as (a) large corporate
slippages are already taken care of, (b) small value accounts have got
forbearance from the RBI for a quarter, and (c) small value NPAs were
recovered, with borrowers depositing old currency. We would keenly watch
management comments on SME repayments. RBI AQR in FY16 led to high NPAs
and due to weak recoveries till date, provision levels are likely to remain
elevated (ageing of NPAs).
 Retail loan growth has moderated during the quarter, as the entire focus of the
management was towards demonetization. We see this as temporary and
expect retail products like vehicle finance, credit cards and personal loans to
bounce back soon. The big impact of demonetization would be shift in the
market share from unorganized to organized credit. This along with low interest
rates and improvement in resolution process for stress loans would benefit
Financials. Our top picks are ICICIBC and YES amongst private banks; SBIN and
PNB amongst PSU banks; and RBL and Equitas amongst emerging banks.
Alpesh Mehta (Alpesh.Mehta@MotilalOswal.com); +91 22 6129 1526

Sohail Halai (Sohail.Halai@MotilalOswal.com); +91 22 6129 1544
January 2017 121
December 2016 Results Preview | Sector: Financials - Banks
Exhibit 1: Expected quarterly performance (INR m)

Reco. Dec-16 Dec-16 Dec-16
Private Banks
Axis Bank 454 Neutral 44,917 7.9 -0.5 42,552 6.8 3.8 6,836 -68.6 114.2
DCB Bank 112 Neutral 1,949 21.5 2.4 1,048 24.4 3.9 498 20.8 2.6
Equitas Holdings 148 Buy 2,116 39.7 5.5 786 -3.8 -37.9 432 0.4 -6.8
Federal Bank 66 Buy 7,377 21.9 1.6 4,598 41.3 -3.2 1,871 15.0 -7.0
HDFC Bank 1,186 Buy 80,157 13.4 0.3 62,637 9.2 4.0 39,019 16.2 12.9
ICICI Bank 251 Buy 51,555 -5.5 -1.9 51,278 -21.8 3.5 22,336 -26.0 -28.0
IDFC Bank 60 Under Review 5,143 33.1 3.8 3,912 0.6 -32.8 1,917 -20.8 -50.6
IndusInd Bank 1,101 Buy 15,140 29.0 3.7 13,066 23.2 1.9 7,128 22.7 1.2
K otak Mahindra Bank 695 Buy 20,213 14.4 1.3 13,713 13.8 -4.8 8,049 26.8 -1.0
RBL Bank 345 Buy 3,293 NA 8.7 2,393 NA 9.2 1,197 NA 33.1
Yes Bank 1,163 Buy 14,632 26.5 1.2 13,985 21.7 0.9 8,449 25.0 5.4
Pvt Banking Sector Aggregate 243,200 10.1 0.2 207,575 0.9 1.4 96,535 -11.7 -2.3
PSU Banks
Bank of Baroda 148 Buy 32,781 21.2 -4.3 26,580 56.0 -1.2 8,246 LP 49.4
Bank of India 108 Neutral 26,224 -3.2 -3.6 18,361 30.3 -26.3 242 LP -80.9
Canara Bank 264 Under Review 23,925 7.4 -2.0 21,899 41.1 2.3 4,130 386.1 15.7
Indian Bank 225 Buy 12,238 10.2 -4.3 10,121 33.1 0.6 3,713 777.8 -8.3
Oriental Bank of Commerce 107 Neutral 12,437 -5.0 -5.5 8,841 15.4 -7.5 2,019 LP 31.7
Punjab National Bank 115 Buy 37,397 -9.2 -3.6 32,789 12.4 -1.0 4,426 767.6 -19.4
State Bank 243 Buy 143,275 5.3 -0.8 118,715 23.7 5.8 26,554 138.1 4.6
Union Bank 125 Buy 22,097 10.7 -3.0 16,519 23.8 -9.2 2,307 193.7 30.6
PSU Banking Sector Aggregate 310,374 4.2 -2.3 253,825 26.6 -1.0 51,637 LP 6.3
Financials Sector Aggregate 648,997 7.6 -0.6 537,189 13.6 0.4 194,296 77.2 0.1
Demonetization: CASA flows strong...

Demonetization led to strong CASA inflows for the banking sector. Of the total
INR15t+, we expect 30-40% to remain with the banking sector by end of FY17. Our
back-of-the-envelope calculations suggest that it will lead to ~5% QoQ increase in
the CASA ratio at the industry level. QTD deposit growth was 4% and banks have
utilized strong liquidity to repay high cost borrowings. If only demonetization is
accounted for, QoQ deposit growth would be 7-8%; however, due to FCNR (B)
deposit redemption, deposit growth would be ~4%. Strong liquidity and high CASA
balance would lead to a sharp fall in cost of funds for banks in 2H, in turn supporting
margins.
… but, near-term loan growth disrupted

QTD loans declined 4%+, as (a) a large part of the branch bandwidth was engaged in
deposit collection, (b) demand for working capital loans was weak due to economic
disruption, (c) banks took a cautious approach to SME/LAP/MFI, etc, (d) investment
sentiment was weak due to uncertainty, (e) FCNR (B) deposit-related loans came up
for redemption, and (f) repayments from loans completing the restructuring
moratorium were higher. ICICIBC and SBIN may report less than 5% YoY loan growth
for the quarter. Improvement in sentiment (led by improving liquidity at the ground
level) and fiscal/monetary policies hold the key for loan growth improvement. We
expect retail growth to moderate for private banks; yet growth would remain
healthy, as they would have captured market share from NBFCs. We expect smaller
private banks to grow, as their market share is low.
January 2017 122

Margins stable/decline marginally; bulk financiers to benefit

We expect NII to decline 2% QoQ (but grow 4% YoY) for state-owned banks, and
grow 10% YoY (stable QoQ) for private sector banks. Weak loan growth, negative
carry on old currency notes (until 10th December) and excess liquidity would impact
margins. With sharp reduction in the MCLR rates, yields on loans may come under
pressure, negating the benefit of high interest income reversals in 3QFY16 and
lower cost of funds. Increasingly, intense competition in the refinancing market and
retail loans should put some pressure on blended yields. Banks’ lending rate cuts
have been in sync with the 75-200bp deposit rate cuts over the past year; hence,
margins could be stable or decline a little.
Profit on sale of investments to drive earnings

During the quarter, bond yields declined ~30bp (65bp differential between peak and
bottom during the quarter), which should benefit trading income. Volatility was high
during the quarter, which led to high trading gains. SBIN’s profit on sale of
investments factors in gain on life insurance stake sale during the quarter. To
provide for balance sheet stress, banks may have booked trading gains on the sale
of HTM security in OMO. MTM/realized losses on equity exposure (taken via SDRs)
would marginally negate gains on the investment portfolio.
Asset quality stress to be elevated, but decline QoQ

Factors likely to continue weighing on performance include (a) banks’ continued
cleanup exercise (expect largely from RL and watch list), (b) non-fund-based
exposure turning into NPAs for some stressed corporates, and (c) impact on the
supply chain of stressed large corporates. Performance on the watch list will be the
key thing to watch out for. SME and agriculture portfolio may see stable asset
quality partially, driven by prepayment of loans and dispensation on recognition of
NPL given by the RBI. We factor slippage ratio of 2.2% (2.5% in 2QFY17) and
provision-to-average-assets of 1.1% (1.5% in 2QFY17) for state-owned banks and
120bp (135bp in 2QFY17) for private sector banks. Ageing of NPA will lead to higher
provisioning charge during the quarter.
Core operating profits under pressure; trading gains a key to profitability

Core revenue growth is likely to remain muted YoY, led by moderate balance sheet
growth, stable/declining margins and moderate fee income growth. Non-core
revenue is expected to be high but operating expenditure would also be high and
credit cost would be elevated. Private sector banks would continue outperforming
state-owned banks. Over the past year, Indian banks (mainly state-owned) have sold
assets worth ~INR700b to asset reconstruction companies (ARCs). We believe write-
downs and the resultant MTM provisioning for the same (as per the RBI’s guidelines)
would begin over the coming 1-2 quarters. Overall profit growth is expected to be
1.1x YoY (on a lower base; 3QFY16 was impacted by AQR exercise). We expect
private banks’ earnings to decline 11% YoY and state-owned banks’ earnings to be
INR52b v/s loss of INR39b in 3QFY16.
January 2017 123

Marginal cut in estimates; expect flat earnings QoQ

Demonetization is likely to have higher impact on loan growth. While we have
marginally lowered growth estimates and factored in margin reduction, better
trends on profit on sale of investment are leading to just 2-3% earnings cut. We are
closely looking at the activities at the ground level/management commentary for
small value delinquencies (expected to hit in 1QFY18) due to demonetization.
Rather than current quarter earnings, management commentary on business
growth in the ensuing quarters (with more data in place) is important. Our top picks
are ICICIBC and YES amongst private banks; SBIN and PNB amongst PSU banks; and
RBL and Equitas amongst emerging banks.
Exhibit 2: Financials - valuations

Sector / Companies CMP EPS (INR) PE (x) PB (x) ROE (%)
(INR) Reco FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Banks-Private
Axis Bank 454 Neutral 13.0 23.2 46.9 34.9 19.5 9.7 2.0 1.8 1.6 5.8 9.7 17.5
DCB Bank 112 Neutral 7.2 8.5 10.7 15.6 13.1 10.5 1.6 1.4 1.3 11.0 11.7 12.9
Equitas Holdings 148 Buy 6.0 6.8 8.9 24.8 21.7 16.7 2.2 2.0 1.8 11.2 9.7 11.4
Federal Bank 66 Buy 4.5 5.5 7.1 14.5 12.1 9.3 1.3 1.2 1.1 9.3 10.4 12.3
HDFC Bank 1,186 Buy 57.9 69.8 84.9 20.5 17.0 14.0 3.6 3.1 2.6 18.7 19.5 20.3
ICICI Bank 251 Buy 17.2 18.0 21.7 14.6 14.0 11.6 1.7 1.6 1.4 10.4 10.0 11.3
IDFC Bank 60 UR 3.1 4.2 5.7 19.2 14.2 10.5 1.4 1.3 1.2 7.5 9.5 11.9
IndusInd Bank 1,101 Buy 47.6 59.6 74.0 23.1 18.5 14.9 3.3 2.9 2.5 15.3 16.7 17.8
J&K Bank 61 Neutral -21.5 12.9 15.8 -2.8 4.7 3.8 0.5 0.5 0.4 -17.7 11.1 12.0
K otak Mahindra Bank 695 Buy 26.6 32.4 41.7 26.2 21.4 16.6 3.4 2.9 2.5 13.6 14.5 16.1
RBL Bank 345 Buy 12.2 14.8 20.5 28.3 23.3 16.8 3.0 2.7 2.4 12.4 12.3 15.3
South Indian Bank 20 Buy 3.0 3.6 4.3 6.8 5.5 4.6 0.7 0.6 0.6 10.3 11.7 12.7
Yes Bank 1,163 Buy 74.5 95.8 119.3 15.6 12.1 9.7 3.0 2.5 2.1 20.9 22.6 23.4
Private Bank Aggregate 21.0 16.5 12.5 2.5 2.2 2.0 11.9 13.6 15.8
Banks-PSU
Bank of Baroda 148 Buy 12.3 18.8 26.2 12.0 7.9 5.6 0.9 0.9 0.8 8.1 11.5 14.5
Bank of India 108 Neutral -4.0 18.5 25.1 -27.0 5.8 4.3 0.5 0.4 0.4 -1.7 7.5 9.5
Canara Bank 264 UR 27.2 37.9 58.4 9.7 7.0 4.5 0.5 0.5 0.5 5.6 7.4 10.6
IDBI Bank 70 Neutral 1.5 6.4 8.6 45.7 10.9 8.2 0.6 0.6 0.6 1.4 5.8 7.3
Indian Bank 225 Buy 30.4 31.9 38.5 7.4 7.1 5.9 0.7 0.7 0.6 10.4 10.1 11.2
Oriental Bank of Commerce 107 Neutral 19.3 21.3 31.0 5.5 5.0 3.4 0.3 0.2 0.2 4.8 5.1 7.1
Punjab National Bank 115 Buy 8.5 13.2 17.8 13.6 8.8 6.5 0.6 0.6 0.5 4.8 7.0 8.8
State Bank 243 Buy 9.8 23.3 30.9 24.7 10.4 7.9 1.1 1.0 0.9 4.7 10.1 12.2
Union Bank 125 Buy 15.6 30.4 45.7 8.0 4.1 2.7 0.4 0.4 0.3 5.2 9.5 12.9
PSU Bank Aggregate 18.2 8.8 6.5 0.8 0.7 0.7 4.2 8.3 10.5
UR: Under Review Source: Company, MOSL
Exhibit 3: State-owned banks— one-year forward P/BV Exhibit 4: Private sector banks— one-year forward P/BV
PSU Banks Sector PB (x) LPA (x) Pvt Banks Sector PB (x) LPA (x)
2.0 1.9 3.5 3.3
2.4
1.4 2.5 2.2
1.1
0.8 0.8 1.5
0.6 0.9
0.2 0.5
Jun-09
Jun-14
Jun-09
Jun-14
Dec-06
Mar-08
Sep-10
Dec-11
Mar-13
Sep-15
Dec-16
Dec-06
Mar-08
Sep-10
Dec-11
Mar-13
Sep-15
Dec-16
January 2017 124

3QFY12 2.0 3QFY13 50.3 15.1
5.0
6.0
7.0
8.0
9.0
10.0
4QFY12 1.1 4QFY13 53.5 14.0
Jan-06
January 2017
1QFY13 2.7
1QFY14 54.0 13.5
2QFY13 2.7 Jan-07
3QFY13 2.0 2QFY14 56.5 17.5
4QFY13 1.1 Jan-08 3QFY14 57.6 14.5
1QFY14 3.3 4QFY14 60.1 14.3
2QFY14 1.9 Jan-09
1QFY15 61.2 13.3
3QFY14 2.1 Jan-10 2QFY15 62.7 11.0
Loans (INR t)
4QFY14 1.1
1QFY15 1.9 Jan-11 3QFY15 63.2 10.1
2QFY15 2.1 4QFY15 65.4 9.0
3QFY15 2.6 Jan-12
1QFY16 66.6 9.9
4QFY15 1.9
Net Slippage Ratio (%)

Jan-13
Exhibit 5: Loan growth to moderate in 3Q
1QFY16 2.0 2QFY16 68.3 9.5
Exhibit 7: 10-year g-sec yields fell steeply (%)

2QFY16 2.5 Jan-14 3QFY16 70.2 11.1
3QFY16 8.4 4QFY16 72.8 11.3
Chg YoY (%)
decline QoQ but remain elevated (%, annualized)

Jan-15
9.0
4QFY16 11.0 1QFY17 72.6 9.4
1QFY17 3.2
Jan-16 2QFY17 75.7 11.2
2QFY17 2.4
3QFY17E 2.0 3QFY17 73.4 5.8
6.42
Exhibit 9: State-owned banks’ net slippage ratio expected to
Source: MOSL, Company

20
1QFY12 3.1 3QFY13 64.7
3.4 11.0
41
1QFY14 3.3
3.5 4QFY13 69.0 13.1
2QFY14 3QFY12 3.4
3.6
3.3 1QFY14 70.7 13.5
3QFY14 3.7
1QFY13 3.0 2QFY14 73.3
3.6 14.4
PBs
3.0
16 12 13
55 57 61
4QFY14 3.7 3QFY14 75.0 15.9
13
3QFY13 3.0
3.7
39
1QFY15 2.9 4QFY14 77.4 14.6
of state-owned banks
3.8
2QFY15 1QFY14 2.8 1QFY15 79.5 12.4
3.8
2.8
PSBS
3.8
52 61
3QFY15 2QFY15 82.9 13.1
2.8
PSU
3QFY14 3.8
Deposits (INR t)
3QFY15 82.8 10.8
76
4QFY15 2.7
3.8
1QFY15 2.7 4QFY15 85.3 10.7
3.9
53
1QFY16
2.7 4.1 1QFY16 87.1 11.0
Private
65
16 15 17 21 17
2QFY16 3QFY15 2.7
4.1 2QFY16 91.6 11.3
2.6
24
3QFY16 4.0
131
Exhibit 6: Deposit growth to pick up sharply
1QFY16 2.6 3QFY16 91.8 10.9

4.1
47
4QFY16 2.6
173
4.0 4QFY16 93.8 9.9

3QFY16 2.4
32
1QFY17 4.0
Chg YoY (%)
1QFY17 96.0 9.7

Exhibit 8: NIMs expected to decline sequentially (%)
2.5 4.0
2QFY17
49
1QFY17 2.5 2QFY17 102.1 12.0
4.0
35
2.5
80 75 72
3QFY17 3.9 3QFY17 105.9 15.9
2.4
Exhibit 10: Provisions to PPoP (%) to remain elevated in case
125
3QFY17 3.8
Exhibit 11: Relative performance— 3 months (%) Exhibit 12: Relative performance— 1-year (%)
Sensex Index MOSL Financials Index Sensex Index MOSL Financials Index
102 125
99
110
96
95
93
90 80
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Nov-16
Dec-16
Sep-16
Oct-16
January 2017 126

December
December 2016
2016 Results
December ResultsPreview
2015 Results ||Sector:
Preview
Preview Financials
| Sector:
Sector: --Banks
Financials
Financials Banks
Axis Bank
Bloomberg AXSB IN CMP: INR454 TP: INR519 (+14%) Neutral
Equity Shares (m) 2382.8  In line with the industry trend, we expect loan growth to moderate
M. Cap. (INR b)/(USD b) 1081 / 16
to ~14% YoY. Deposit growth is likely to be higher at ~21% YoY, led
by strong CASA inflows. CD ratio would fall from 93% in 2QFY17 to
1,6,12 Rel Perf. (%) -3 / -14 / -1
88%.
Financial Snapshot (INR b)  Sequentially, NIM is likely to contract ~15bp to 3.6% due to (a)
Y/E March 2016 2017E 2018E 2019E lower incremental spreads, (b) RBI’s temporary incremental CRR
NII 168.3 180.6 212.1 256.7 hike, and (c) continued high stress addition. Though incremental
OP 161.0 168.4 189.6 222.0 cost of funds would have fallen significantly, this would only
NP 82.2 30.9 55.4 111.8 partially compensate for the negative impact.
NIM (%) 3.8 3.6 3.6 3.6  AXSB had created a stressed asset watch list of INR252.5b (both
EPS (INR) 34.5 13.0 23.2 46.9
fund-based and non-fund based) in 4QFY16. The management has
EPS Gr. (%) 11.2 -62.4 79.1 101.9
guided for materially higher slippages from the watch list, above
BV/Sh. (INR) 216.8 229.8 248.9 287.6
the previous 60% guidance. As at the end of 2QFY17, the watch list
ABV/Sh. (INR) 209.9 202.3 226.5 269.8
stood at INR137.9b. We continue to expect relatively high
RoE (%) 17.1 5.8 9.7 17.5
proportion of slippages in FY17, leading to higher credit costs. High
RoA (%) 1.7 0.5 0.8 1.4
Payout (%) 15.0 0.0 17.6 17.6
provisions may be partially compensated by strong trading gains.
Valuations
 AXSB trades at 1.8x FY18E BV and 19.5x FY18E EPS. Neutral.
P/E(X) 13.1 34.9 19.5 9.7 Key issues to watch for
P/BV (X) 2.1 2.0 1.8 1.6  Quantum of slippages from stressed asset watch list.
P/ABV (X) 2.2 2.2 2.0 1.7  Quantum of loans rescheduled under the 5:25, SDR and S4A
Div. Yield (%) 1.1 0.0 0.8 1.6 schemes.

Net Interest Income 40,562 40,621 41,621 45,526 45,169 45,139 44,917 45,380 168,330 180,604
% Change (Y-o-Y) 22.5 15.2 15.9 19.8 11.4 11.1 7.9 -0.3 18.3 7.3
Other Income 22,983 20,414 23,378 26,940 27,383 25,397 30,085 28,196 93,715 111,061
Net Income 63,545 61,035 64,998 72,466 72,552 70,535 75,002 73,576 262,044 291,665
Operating Profit 40,921 36,280 39,851 43,985 44,694 41,002 42,552 40,188 161,036 168,435
% Change (Y-o-Y) 41.3 14.7 20.2 9.6 9.2 13.0 6.8 -8.6 20.3 4.6
Other Provisions 11,218 7,072 7,126 11,683 21,172 36,227 32,349 32,177 37,099 121,925
Profit before Tax 29,703 29,208 32,725 32,302 23,522 4,774 10,203 8,011 123,938 46,510
Tax Provisions 9,919 10,051 10,972 10,759 7,967 1,584 3,367 2,664 41,701 15,581
Net Profit 19,784 19,156 21,753 21,543 15,555 3,191 6,836 5,348 82,237 30,929
% Change (Y-o-Y) 18.7 18.9 14.5 -1.2 -21.4 -83.3 -68.6 -75.2 11.8 -62.4
Operating Parameters
NIM (Reported,%) 3.8 3.9 3.8 4.0 3.8 3.6 3.9
NIM (Cal, %) 3.9 3.9 3.8 4.0 3.8 3.7 3.6 3.5 3.8 3.6
Deposit Growth (%) 13.2 14.2 16.2 11.0 16.3 17.3 20.8 20.0 11.0 20.0
Loan Growth (%) 23.5 23.1 21.0 20.5 21.2 18.5 14.2 12.0 20.5 12.0
CD Ratio (%) 92.5 92.0 93.2 94.6 96.4 92.9 88.1 88.3 94.6 88.3
Asset Quality
OSRL (INR b) 85.2 84.3 77.5 80.7 73.6 67.0 80.7
OSRL (%) 3.0 2.8 2.5 2.4 2.1 1.9 2.4
Gross NPA (INR b) 42.5 44.5 57.2 60.9 95.5 163.8 196.1 226.7 60.9 226.7
Gross NPA (on cust. assets, %) 1.4 1.4 1.68 1.67 2.5 4.2 5.3 5.8 1.7 5.8
E: MOSL Estimates
January 2017 127

Bank of Baroda
Bloomberg BOB IN CMP: INR148 TP: INR223 (+51%) Buy
 We expect balance sheet consolidation to continue, with a YoY
M. Cap. (INR b)/(USD b) 342 / 5
decline in loans in absolute terms. Portfolio rebalancing towards
granular loans and SEB loans conversion could weigh on growth.
1,6,12 Rel Perf. (%) -10 / -5 / -6
 While deposit intake has been muted in the past few quarters, this
quarter will see a strong revival in deposit growth.
Y/E March 2016 2017E 2018E 2019E
 We expect margins to decline sequentially to 2.1%, led by fall in C-D
NII 127.4 134.6 154.5 186.9 ratio.
OP 88.2 107.8 119.5 140.7  Bulk of the asset quality stress has been taken over the last few
NP -54.0 28.4 43.5 60.6 quarters, and we expect only a marginal deterioration in asset
NIM (%) 2.0 2.1 2.3 2.4 quality. We expect only a marginal increase in GNPAs in 3QFY17.
EPS (INR) -23.4 12.3 18.8 26.2
 Fee income would remain muted. However, higher share of non-
EPS Gr. (%) -252.4 NM 52.9 39.3
core income should support earnings.
BV/Sh. (INR) 146 155.9 170.3 190.4
ABV/Sh. (INR) 92 101.2 127.7 159.6  PAT should increase ~50% sequentially; however, return ratios will
RoE (%) -15.3 8.1 11.5 14.5 still remain sub-optimal.
RoA (%) -0.8 0.4 0.6 0.7  The stock trades at 7.9x FY18E EPS and 0.9x FY18E BV. Buy.
Div. Payout (%) 0.0 23.2 23.2 23.2
Valuations
P/E(X) -6.3 12.0 7.9 5.6 Key issues to watch for
P/BV (X) 1.0 0.9 0.9 0.8  Stress addition, mainly from international book.
P/ABV (X) 1.6 1.5 1.2 0.9  Guidance on loan growth, margins and operating expenses.
Div. Yield (%) 0.0 1.7 2.5 3.5

% Change (YoY) 3.9 -4.6 -17.7 5.0 -2.6 5.6 21.2 1.7 -3.4 5.7
Other Income 9,672 11,440 11,129 17,747 14,444 15,614 18,038 19,428 49,989 67,524
Net Income 44,269 43,885 38,183 51,051 48,155 49,875 50,819 53,283 177,387 202,132
% Change (YoY) -11.2 -2.7 -27.1 -4.5 21.2 15.1 56.0 7.4 -11.1 22.3
Profit before Tax 16,022 4,453 -44,604 -42,852 6,654 8,944 11,780 15,066 -66,981 42,444
Tax Provisions 5,501 3,208 -11,184 -10,551 2,418 3,422 3,534 4,632 -13,025 14,006
Net Profit 10,522 1,245 -33,420 -32,301 4,236 5,521 8,246 10,434 -53,955 28,437
% Change (YoY) -22.7 -88.7 -1,100.7 -639.8 -59.7 343.5 -124.7 -132.3 -258.8 -152.7
NIM (Reported, %) 2.3 2.1 1.7 2.2 2.2 2.3 2.1
NIM (Calculated, %) 2.1 2.0 1.7 2.1 2.2 2.2 2.1 2.2 2.0 1.9
Deposit Growth (%) 7.5 8.0 4.4 -7.0 -5.2 -7.3 2.0 8.0 -7.0 8.0
Loan Growth (%) 7.0 7.6 -2.4 -10.3 -11.2 -14.6 -8.8 -5.0 -10.3 -5.0
CD Ratio (%) 68.9 67.7 65.2 66.9 64.5 62.4 58.3 58.8 66.9 58.8
Asset Quality
OSRL (INR B) 255 229 171 137 142 139 137
OSRL (%) 6.3 5.5 4.5 3.6 3.9 3.9 3.6
Gross NPA (INR B) 173 237 389 405 430 429 434 435 405 435
Gross NPA (%) 4.1 5.6 9.7 10.0 11.2 11.4 11.6 11.2 10.0 11.2
E: MOSL Estimates
January 2017 128

Bank of India
Bloomberg BOI IN CMP: INR108 TP: INR125 (+14) Neutral
 Continued asset quality strain and capital conservation efforts
M. Cap. (INR b)/(USD b) 114 / 2
would keep loan growth below the industry average – expect 4%
decline on a YoY basis, although deposit growth will pick up
1,6,12 Rel Perf. (%) -9 / 1 / -10
marginally. We expect NIM to decline marginally QoQ to ~1.9%
Financial Snapshot (INR b)  Non-interest income is likely to grow ~70% YoY, led by higher non-
Y/E March 2016 2017E 2018E 2019E
core income. Fee income is expected to remain muted.
NII 117.2 107.6 136.1 154.9
OP 60.4 80.1 94.7 100.8  We expect operating profit to decline 26% QoQ (but grow 30% YoY)
NP -60.9 -4.2 19.5 26.5 as a result of lower NII growth and one-off gains booked from stake
NIM (%) 2.1 1.9 2.2 2.2 sale in the previous quarter. Continued deterioration in asset
EPS (INR) -74.5 -4.0 18.5 25.1 quality would keep provisioning elevated.
EPS Gr. (%) NM NM -562.6 35.7
 BOI trades at 0.4x FY18E BV and 5.8x FY18E EPS. Maintain Neutral.
ROE (%) -24.5 -1.7 7.5 9.5
ROA (%) -1.0 -0.1 0.3 0.3
BV/Sh. (INR) 283 239 254 273 Key issues to watch for
ABV/Sh. (INR) 61 86 129 184  Stress addition trends and outlook for FY17.
Div. Payout (%) 0.0 0.0 23.2 23.2  Upgrade/recovery trends; management is targeting INR175b in
Valuations
FY17 v/s INR85.5b in FY16.
P/E(X) -1.4 -27.0 5.8 4.3
P/BV (X) 0.38 0.45 0.42 0.39
 Quantum of loans rescheduled under the 5:25 scheme.
P/ABV (X) 1.77 1.26 0.84 0.59  Outlook on balance sheet growth and further capital infusion.
Div. Yield (%) 0.0 0.0 3.4 4.7  Update on asset monetization plan to increase Tier I ratio.

% Change (Y-o-Y) 8.4 -0.4 -2.6 12.0 -4.7 -9.9 -3.2 -16.9 3.0 -8.2
Other Income 8,406 7,781 10,473 8,836 12,384 20,106 19,174 19,723 36,525 71,388
Net Income 37,533 37,978 37,553 40,708 40,136 47,304 45,398 46,195 153,772 179,034
% Change (Y-o-Y) -17.3 -31.7 -24.5 2.6 -3.0 70.9 30.3 38.6 -19.4 32.8
Profit before Tax 1,895 -17,791 -21,950 -40,062 -11,163 1,966 361 2,540 -77,908 -6,296
Tax Provisions 598 -6,529 -6,894 -4,191 -3,750 698 119 855 -17,016 -2,078
Net Profit 1,297 -11,262 -15,056 -35,871 -7,414 1,268 242 1,685 -60,892 -4,218
% Change (Y-o-Y) -83.9 -243.3 -968.4 NM NM NM NM NM NM NM
NIM (Reported, %) 2.1 2.3 2.0 2.1 2.2 2.2 2.1
NIM (Cal, %) 2.1 2.2 1.9 2.3 2.0 2.0 1.9 1.9 2.1 2.0
Deposit Growth (%) 1.5 1.3 -0.3 -3.6 -2.0 -3.8 0.3 2.0 -3.6 2.0
Loan Growth (%) 3.5 -1.1 -3.2 -7.2 -1.9 -1.8 -4.3 5.2 -7.2 5.2
CD Ratio (%) 77.7 75.2 75.1 74.3 77.8 76.8 71.7 76.6 74.3 76.6
Asset Quality
OSRL (INR b) 193.9 193.1 172.7 128.7 119.5 120.1 128.7
OSRL (%) 4.9 4.9 4.3 3.4 3.1 3.1 3.4
Gross NPA (INR b) 268.9 298.9 365.2 498.8 518.7 522.6 524.1 523.9 498.8 523.9
Gross NPA (%) 6.8 7.6 9.2 13.1 13.4 13.5 13.8 13.1 13.1 13.1
E: MOSL Estimates
January 2017 129

Canara Bank
Bloomberg CBK IN CMP: INR264 Under Review
 We expect slippages to moderate (2% of loans), however, credit
M. Cap. (INR b)/(USD b) 143 / 2
cost is likely to stay elevated (due to ageing of the portfolio) and we
pencil in credit costs at ~190bp for the quarter.
1,6,12 Rel Perf. (%) -16 / 19 / 9
 Low balance sheet growth and subdued margins (-8bp QoQ) would
Financial Snapshot (INR b) mar core PPoP growth (-23% YoY).
Y/E March 2016 2017E 2018E 2019E
 Loan growth is expected to decline 4% YoY, while deposits are
NII 97.6 96.6 102.3 120.1
OP 71.5 87.1 96.1 115.8
expected to increase 4% YoY.
NP -28.1 14.8 20.6 31.7  We expect CBK ’s fee income growth to be muted. However, trading
NIM (%) 1.9 1.8 1.8 1.9 gains are expected to come in strong, leading to 75% YoY growth in
EPS (INR) -51.8 27.2 37.9 58.4 non-interest income.
EPS Gr. (%) NM NM 39.3 54.3
BV/Sh. (INR) 477 499 528 573
 Non-core income growth is expected to provide cushion to
ABV/Sh. (INR) 227 242 304 398 provisions; we expect PBT to grow 13%, sequentially. The banking
RoE (%) -10.8 5.6 7.4 10.6 business trades at 0.5x FY18E BV and 7x FY18E EPS. Under Review.
RoA (%) -0.5 0.3 0.3 0.4
Div. Payout (%) 0.0 20.9 23.2 23.2
Valuations
P/E (x) -5.1 9.7 7.0 4.5 Key issues to watch for
P/BV (x) 0.55 0.53 0.50 0.46  Quantum of loans rescheduled under the 5:25, SDR and S4A
P/ABV (x) 1.16 1.09 0.87 0.66
schemes.
Div. Yield (%) 0.0 1.9 2.9 4.4
 Outlook on balance sheet growth.

% Change (Y-o-Y) 3.6 11.8 -6.5 -4.5 -8.3 -7.7 7.4 5.9 1.0 -1.1
Other Income 11,130 12,105 11,686 13,832 15,847 17,818 20,455 21,196 48,752 75,316
Net Income 36,295 38,570 33,952 37,570 38,921 42,241 44,380 46,325 146,386 171,867
% Change (Y-o-Y) 11.6 19.6 -13.6 -5.0 -9.2 10.1 41.1 55.3 2.8 21.8
Profit before Tax 6,438 7,318 1,236 -46,850 3,260 5,550 6,074 7,163 -31,858 22,047
Tax Provisions 1,650 2,029 386 -7,795 970 1,981 1,944 2,381 -3,730 7,276
Net Profit 4,788 5,289 850 -39,055 2,290 3,569 4,130 4,783 -28,128 14,772
% Change (Y-o-Y) -40.7 -15.6 -87.0 -737.2 -52.2 -32.5 386.1 -112.2 -204.1 -152.5
NIM (Rep, %) 2.2 2.2 2.2 2.2 2.2 2.2 2.2
NIM (Cal, %) 2.0 2.1 1.7 1.9 1.9 2.0 1.9 1.9 1.9 1.9
Deposit Growth (%) 10.0 5.2 6.1 1.3 -1.4 -0.2 3.7 9.0 1.3 9.0
Loan Growth (%) 7.0 3.9 6.3 -1.6 -0.9 1.3 -4.4 4.0 -1.6 4.0
CD Ratio (%) 68.7 66.6 67.7 67.7 69.0 67.5 62.4 64.6 67.7 64.6
Asset Quality
OSRL (INR b) 230.4 228.9 206.1 130.6 133.8 131.5 130.6
OSRL (%) 7.1 7.1 6.2 4.0 4.2 4.0 4.0
Gross NPA (INR b) 130.8 140.2 198.1 316.4 323.3 333.2 341.7 346.7 316.4 346.7
Gross NPA (%) 4.0 4.3 5.8 9.4 9.7 9.8 10.4 9.9 9.4 9.9
E: MOSL Estimates
January 2017 130

DCB Bank
Bloomberg DCBB IN CMP: INR112 TP: INR128 (+14%) Neutral
Equity Shares (m) 284.4  Loan growth (26% YoY) and deposit growth (32% YoY) would be
significantly above industry average.
 We expect NII to grow 22% YoY, led by strong loan growth,
1,6,12 Rel Perf. (%) 2 / 11 / 36
although margins are expected to contract ~20bp QoQ.
 Non-interest income is expected to grow by ~62% YoY, led by
healthy trading gains. Overall, we expect revenue growth to remain
Y/E MARCH 2016 2017E 2018E 2019E
NII 6.2 7.7 9.3 11.5 strong at 30% YoY and PPP growth to be 24% YoY. We model opex
OP 3.5 4.1 4.7 5.9 growth of 35% YoY, led by branch expansion strategy and
NP 1.9 2.0 2.4 3.0 demonetization-related manpower and ATM costs.
NIM (%) 3.9 3.9 3.8 3.8  Credit costs may be elevated this quarter (estimated at 82bp)
EPS (INR) 6.8 7.2 8.5 10.7 owing to stress in SME segment. We expect PBT/PAT growth of
EPS Gr. (%) 0.9 5.0 18.7 25.1
18%/21% YoY.
BV/Sh. (INR) 61.6 68.8 77.3 88.0
 DCBB trades at 1.4x FY18E BV and 13.1x FY18E EPS. Maintain
ABV/Sh. (INR) 59.2 65.9 74.2 84.6
RoE (%) 11.8 11.0 11.7 12.9 Neutral.
RoA (%) 1.1 1.0 0.9 0.9 Key issues to watch for
Valuations  Management commentary on slippages in SME segment.
P/E (x) 16.4 15.6 13.1 10.5
 Update and commentary on balance sheet growth strategy.
P/BV (x) 1.8 1.6 1.4 1.3
 CASA ratio and NIM performance.
P/ABV (X) 1.9 1.7 1.5 1.3

% Change (Y-o-Y) 1.0 27.4 31.6 30.1 26.1 26.9 21.5 23.3 21.9 24.3
Other Income 631 487 472 615 601 616 765 722 2,205 2,704
Net Income 2,035 1,987 2,077 2,301 2,372 2,519 2,714 2,801 8,400 10,406
Operating Profit 897 781 843 970 927 1,009 1,048 1,138 3,490 4,122
% Change (Y-o-Y) 10.4 30.5 23.3 42.6 3.4 29.2 24.4 17.3 25.8 18.1
Other Provisions 180 217 210 273 205 265 300 257 879 1,027
Profit before Tax 716 564 633 698 722 744 748 881 2,611 3,095
Tax Provisions 248 195 221 2 252 259 251 291 666 1,052
Net Profit 469 369 412 695 470 485 498 590 1,945 2,043
% Change (Y-o-Y) 5.0 -10.1 -3.1 10.4 0.3 31.3 20.8 -15.2 1.7 5.0
NIM (Reported,%) 3.8 3.8 4.0 3.9 4.1 4.0 3.9
NIM (Cal, %) 3.6 3.8 3.9 3.9 3.8 3.8 3.6 3.7 3.8 3.8
Deposit Growth (%) 25.8 24.4 18.9 18.4 18.2 30.4 31.8 28.0 18.4 28.0
Loan Growth (%) 25.7 27.2 23.7 23.5 27.9 29.1 25.5 20.0 23.5 20.0
Tax Rate (%) 34.6 34.6 34.9 0.3 34.9 34.8 33.5 33.0 25.5 34.0
Asset Quality
Gross NPA (INR B) 2.1 2.2 2.3 2.0 2.3 2.6 2.7 2.7 2.0 2.7
Gross NPA (%) 2.0 2.0 2.0 1.5 1.7 1.8 1.8 1.7 1.5 1.7
E: MOSL Estimates
January 2017 131

Equitas Holdings
Bloomberg EQUITAS IN CMP: INR148 TP: 240 (+62%) Buy
 We expect NII growth of 40% YoY, led by healthy loan growth of
24%+ YoY and margin expansion. Margins (calculated) would
improve ~13bp QoQ, led by sharp fall in cost of funds owing to
1,6,12 Rel Perf. (%) -/-/-
strong inflow of deposits.
Y/E March 2016 2017E 2018E 2019E
 Non-interest income would be ~INR300m (+20%YoY).
NII 5.1 8.4 11.1 14.4  Operating expenses are expected to grow significantly by ~70% YoY
OP 3.2 4.1 4.8 6.3 (v/s 37% YoY growth in total income), driven by greater employee
NP 1.7 2.0 2.3 3.0
and other expenses as a result of increased focus on collections
NIM (%) 11.6 12.4 10.2 9.1
during the past few months.
EPS (INR) 6.2 6.0 6.8 8.9
EPS Gr. (%) 56.1 -3.2 14.1 29.9  We expect asset quality to remain largely stable, with the company
BV/Sh. (INR) 50 67 74 83 witnessing relatively strong collection efficiency. We factor in
ABV/Sh. (INR) 49 66 72 79 provisions of INR150m during the quarter. The stock trades at 2x
RoE (%) 13.3 11.2 9.7 11.4
FY18E BV. Maintain Buy.
RoA (%) 3.0 2.3 1.7 1.5
Div. Payout (%) 0.0 0.0 0.0 0.0
Valuations
P/E(X) 24.0 24.8 21.7 16.7
P/BV (X) 3.0 2.2 2.0 1.8  Update on the transition progress.
P/ABV (X) 3.1 2.3 2.1 1.9  Commentary on growth and asset quality in MFI.
Div. Yield (%) 0.0 0.0 0.0 0.0

% Change (Y-o-Y) 62.7 40.4 39.7 37.1 65.6
Other Income 237 178 250 296 230 667 300 522 1,718 1,719
Net Income 1,493 1,607 1,765 1,925 2,273 2,673 2,416 2,754 6,789 10,115
Operating Expenses 745 851 948 1,050 1,134 1,408 1,630 1,865 3,597 6,037
Operating Profit 748 755 817 875 1,139 1,265 786 889 3,192 4,078
% Change (Y-o-Y) 52.3 67.5 -3.8 1.6 27.8
Other Provisions 165 138 143 146 176 528 150 129 591 983
Tax Provisions 207 218 243 261 352 273 203 255 930 1,083
Net Profit 376 399 431 468 612 464 432 505 1,671 2,012
% Change (Y-o-Y) 62.6 16.1 0.4 7.9 20.4
E: MOSL Estimates
January 2017 132

Federal Bank
Bloomberg FB IN CMP: INR66 TP: INR106 (+60%) Buy
 We expect 21% YoY (-1% QoQ) loan growth, aided by greater focus
M. Cap. (INR b)/(USD b) 113 / 2
on corporate credit growth. Traction in SME, agriculture and retail
loans would be maintained. We expect NIM to contract marginally
1,6,12 Rel Perf. (%) -5 / 11 / 14
by 7bp QoQ (but expand 13bp YoY).
Y/E Mar 2016 2017E 2018E 2019E  We build in higher opex growth of 20% YoY, led by demonetization-
NII 25.0 29.3 33.4 41.6 related expenses.
OP 14.2 18.7 21.0 27.0  Non-interest income would grow by 50%+ YoY, led by strong
NP 4.8 7.8 9.4 12.2
trading gains, leading to strong PPoP growth of 41% YoY.
NIM (%) 3.2 3.2 3.1 3.1
EPS (INR) 2.8 4.5 5.5 7.1  We expect slippages to increase marginally owing to stress in SME
EPS Gr. (%) -52.9 63.5 20.6 29.7 book. We expect trading gains to be utilized for shoring up the
BV/Sh. (INR) 47 51 55 60 coverage ratio. Accordingly, we factor in higher credit cost.
ABV/Sh. (INR) 43 47 51 57
ROE (%) 6.0 9.3 10.4 12.3  PBT/PAT is expected to grow 14/15% YoY. We maintain Buy with a
ROA (%) 0.5 0.8 0.8 0.8 target price of INR106. FB trades at 1.2x FY18E BV and 12.1x FY18E
Payout (%) 29.3 23.2 23.2 23.2 EPS.
P/E(X) 23.8 14.5 12.1 9.3
 Outlook on asset quality.
P/BV (X) 1.4 1.3 1.2 1.1
P/ABV (X) 1.5 1.4 1.3 1.2  Strategy on balance sheet growth.
Div. Yield (%) 1.1 1.4 1.7 2.2

% Change (YoY) 7.2 0.4 3.1 10.1 14.5 19.4 21.9 12.2 5.2 16.9
Other Income 1,939 1,823 1,833 2,269 2,370 2,616 2,777 2,978 7,864 10,742
Net Income 7,987 7,906 7,885 9,128 9,297 9,878 10,155 10,677 32,906 40,007
% Change (YoY) 4.5 -17.9 -18.1 -15.9 16.0 41.1 41.3 30.2 -12.5 31.6
Other Provisions 1,531 873 751 3,886 1,685 1,684 1,750 1,736 7,041 6,855
Profit before Tax 2,141 2,493 2,504 59 2,574 3,066 2,848 3,399 7,197 11,887
Tax Provisions 727 880 877 -44 901 1,053 977 1,170 2,440 4,101
Net Profit 1,414 1,613 1,627 103 1,673 2,013 1,871 2,229 4,757 7,786
% Change (YoY) -35.8 -32.9 -38.5 -96.3 18.3 24.8 15.0 2,072.2 -52.7 63.7
NIM (Cal, %) 3.2 3.1 3.1 3.4 3.3 3.3 3.2 3.2 3.2 3.3
Deposit Growth (%) 16.7 14.3 14.1 11.8 12.5 17.0 21.2 19.0 11.8 19.0
Loan Growth (%) 10.1 5.0 9.8 13.3 19.3 27.2 21.4 20.0 13.3 20.0
CD Ratio (%) 68.7 68.9 70.5 73.4 72.9 75.0 70.7 74.0 73.4 74.0
Asset Quality
Gross NPA (INR b) 13.0 15.0 16.8 16.7 17.5 18.2 19.1 20.7 16.7 20.7
Gross NPA (%) 2.6 2.9 3.2 2.8 2.9 2.8 3.0 3.0 2.8 3.0
E: MOSL Estimates
January 2017 133

HDFC Bank
Bloomberg HDFCB IN CMP: INR1,186 TP: INR1,510 (+27%) Buy
 We expect loan growth to be ~15% YoY due to constrained growth
M. Cap. (INR b)/(USD b) 2999 / 44
strategy post demonetization and FCNR (B) linked loans
repayments; however it will still remain ~2x the system growth.
1,6,12 Rel Perf. (%) -2 / 4 / 7
 Fee income growth would continue to lag loan growth in the near
term; however, trading gains should compensate.
Y/E MARCH 2016 2017E 2018E 2019E
 Computed NIM is likely to decline 15bp QoQ owing to controlled
NII 275.9 321.5 385.3 471.9 loan growth amidst strong deposit inflows. Opex growth is expected
OP 213.6 247.6 299.8 373.1 to be ~16% YoY.
NP 123.0 146.5 176.6 214.7  Moderation in core PPP growth would lead to 16% YoY PAT growth,
NIM (%) 4.7 4.6 4.6 4.5 lower than the trend rate of 20%. Reversal of contingency
EPS (INR) 48.6 57.9 69.8 84.9
provisions may lead to 20% YoY growth – not factored in our
EPS Gr. (%) 19.3 19.1 20.5 21.6
estimates. GNPA would remain stable QoQ at ~1.1 %.
BV/Sh. (INR) 287 331.8 385.3 450.5
ABV/Sh. (INR) 284 325.9 378.0 436.9  HDFCB trades at 3.1x FY18E BV and 17x FY18E EPS. Comfort on
RoE (%) 18.3 18.7 19.5 20.3 earnings (~20% CAGR over FY16-19) remains high. Maintain Buy.
RoA (%) 1.9 1.9 1.9 1.9
Payout (%) 22.9 23.4 23.4 23.4
 Performance in retail loan/SME portfolio— especially in segments
Valuations
P/E(X) 24.4 20.5 17.0 14.0 like CV/CE.
P/BV (X) 4.1 3.6 3.1 2.6  Trends in digital banking/payment industry and various initiatives
P/ABV (X) 4.2 3.6 3.1 2.7 by the bank.
Div. Yield (%) 0.8 1.0 1.2 1.4  Overall B/S growth outlook and economic recovery.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
% Change (Y-o-Y) 23.5 21.2 24.0 24.0 21.8 19.6 13.4 12.1 23.2 16.5
Other Income 24,619 25,518 28,722 28,659 28,066 29,010 31,062 34,926 107,517 123,064
Net Income 88,507 92,327 99,407 103,192 105,881 108,945 111,219 118,496 383,432 444,542
% Change (Y-o-Y) 26.2 24.2 20.0 21.5 20.0 19.5 9.2 16.0 22.7 15.9
Tax Provisions 14,262 14,922 17,251 16,982 17,136 18,202 19,218 19,729 63,417 74,285
Net Profit 26,957 28,695 33,568 33,742 32,389 34,553 39,019 40,512 122,962 146,473
% Change (Y-o-Y) 20.7 20.5 20.1 20.2 20.2 20.4 16.2 20.1 20.4 19.1
NIM (Reported,%)* 4.3 4.2 4.3 4.3 4.4 4.2 4.3
NIM (Cal, %)# 4.7 4.6 4.6 4.7 4.7 4.5 4.4 4.5 4.7 4.5
Deposit Growth (%) 30.1 29.7 26.5 21.2 18.5 16.7 20.8 16.0 21.2 16.0
Loan Growth (%) 22.4 27.9 25.7 27.1 23.2 18.1 15.6 16.0 27.1 16.0
CD Ratio (%) 78.9 82.6 83.3 85.0 82.0 83.6 79.7 85.0 85.0 85.0
Asset Quality
OSRL (INR B) 3.8 4.2 4.4 4.6 4.7 4.9 4.6 0.0
OSRL (%) 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0
Gross NPA (INR B) 38.5 38.3 42.6 43.9 49.2 50.7 56.9 58.9 43.9 58.9
Gross NPA (%) 1.0 0.9 1.0 0.9 1.0 1.0 1.1 1.1 0.9 1.1
E: MOSL Estimates; * Reported on total assets; # Cal. on interest earning assets
January 2017 134

ICICI Bank
Bloomberg ICICIBC IN CMP: INR251 TP: INR332 (+32%) Buy
Equity Shares (m) 5813.3  We expect loan growth to moderate to 4.5% YoY. Retail loan growth
M. Cap. (INR b)/(USD b) 1460 / 21 has picked up over the last two years. However, demonetization
52-Week Range (INR) 298 / 181 may have resulted in a temporary moderation.
1,6,12 Rel Perf. (%) -5 / 4 / -6  Slower growth, coupled with a YoY decline in NIM (due to lower C-D
ratio) should lead to moderate growth in NII on a YoY basis.
Financial Snapshot (INR b)  Fee income growth will remain muted. We have factored in ~2%
Y/E March 2016 2017E 2018E 2019E YoY growth in fee income, led by low corporate fees. Trading gains
NII 212.2 208.3 242.9 282.3 should be healthy. Overall, we expect non-interest income to
OP 238.6 260.7 230.5 265.4 decline 12% YoY owing to gains booked on stake sale in PruLife in
NP 97.3 100.1 104.7 126.4 3QFY16.
NIM (%) 3.6 3.2 3.3 3.3  Gross slippages are expected to remain high in 3QFY17, with
EPS (INR) 16.7 17.2 18.0 21.7 slippage ratio estimated at ~7%. Outstanding watch list (fund based
EPS Gr (%) -13.2 2.9 4.6 20.8 and non-fund based) stood at INR324.9b in 2QFY17.
BV/Sh (INR)* 132.9 145.2 158.0 173.4  We expect PAT to decline 26% YoY, led by higher operating
ABV/Sh (INR)* 117.3 118.3 127.6 145.7 expenses and elevated credit costs. ICICIBC trades at 1.1x FY18E
RoE (%) 11.3 10.4 10.0 11.3 core BV and 9.4x FY18E EPS. Buy.
RoA (%) 1.4 1.3 1.2 1.3
Valuations
AP/E (x) 11.7 10.5 9.4 7.2 Key issues to watch for
AP/BV (x) 1.5 1.2 1.1 0.9  Movement of watch list accounts.
AP/ABV (x) 1.7 1.5 1.3 1.1  Plans on monetization of stakes in various ventures.
Div. Yield (%) 2.0 1.8 1.9 2.3  Outlook on asset quality and trend on further relapse from RL.
* BV adj for invt in subsidiaries  Quantum of loans rescheduled under the 5/25 scheme.

% Change (YoY) 13.9 12.8 13.3 6.4 0.8 0.0 -5.5 -2.6 11.5 -1.8
Other Income 29,899 30,074 42,169 51,089 34,293 91,197 37,216 38,309 153,231 201,014
Net Income 81,050 82,588 96,698 105,134 85,878 143,730 88,771 90,976 365,471 409,354
% Change (YoY) 11.5 9.8 30.2 30.0 3.5 106.2 -21.8 -28.4 21.0 9.2
Tax Provisions 11,063 11,862 6,976 -5,206 4,679 4,511 3,942 4,528 24,694 17,660
Net Profit 29,762 30,301 30,181 7,019 22,324 31,023 22,336 24,389 97,263 100,072
% Change (YoY) 12.1 11.9 4.5 -76.0 -25.0 2.4 -26.0 247.5 -13.0 2.9
NIM (Reported,%) 3.5 3.5 3.5 3.4 3.2 3.1 3.5
NIM (Cal, %) 3.7 3.7 3.7 3.5 3.3 3.3 3.1 3.1 3.6 3.2
Deposit Growth (%) 9.6 9.2 14.6 16.6 15.3 16.8 15.2 18.6 16.6 18.6
Loan Growth (%) 15.2 13.3 15.8 12.3 12.4 10.9 4.5 10.2 12.3 10.2
Asset Quality
Gross NPA (INR b) 151.4 158.6 211.5 262.2 271.9 321.8 364.9 391.7 262.2 391.7
Gross NPA (%) 3.7 3.8 4.7 5.8 5.9 6.8 7.8 7.9 5.8 7.9
E: MOSL Estimates
January 2017 135

IDFC Bank
Bloomberg IDFCBK IN CMP: INR60 Under Review
 We expect 22% YoY (5% QoQ) loan growth, aided by greater focus
M. Cap. (INR b)/(USD b) 203 / 3
on retail banking. Though incremental deposits raised in 3Q would
aid cost of funds, we expect NIM (calculated) to remain largely
1,6,12 Rel Perf. (%) -11 / 31 / -2
stable at 2%, led by lower asset yields.
Financial Snapshot (INR b)  Non-interest income would be ~INR2.5b (-40% QoQ due to one-off
Y/E March 2H2016 2017E 2018E 2019E gains in 2Q), led by moderate fee income growth. Trading gains are
NII 8.5 20.5 25.3 31.1 expected to be healthy. Operating expenses are likely to grow 15%
OP 7.4 18.4 22.9 31.2 QoQ (v/s 16% QoQ de-growth in total income), driven by costs
NP 4.7 10.6 14.3 19.3 associated with expansion of retail and rural banking franchise and
NIM (%) 2.5 2.2 2.2
demonetization-related overheads, leading to 33% QoQ decline in
EPS (INR) 3.1 4.2 5.7
EPS Gr. (%) 34.8 35.2
PPP (flat YoY).
BV/Sh. (INR) 40.2 42.6 45.8 50  We expect high provisioning at ~INR1.05b.
ABV/Sh. (INR) 37.8 39.4 42.1 46
 The stock trades at 1.3x FY18E BV and 14.2x FY18E EPS. Under
RoE (%) 7.5 9.5 11.9
RoA (%) 1.1 1.1 1.3 Review
Valuations
P/E(X) 19.2 14.2 10.5
P/BV (X) 1.4 1.3 1.2
P/ABV (X) 1.5 1.4 1.3
 Outlook on balance sheet growth and costs.
Div. Yield (%) 1.0 1.4 1.9  Retail franchise building plans and update.

FY16 FY17E 2HFY16 FY17E
3Q 4Q 1Q 2Q 3QE 4QE
Net Interest Income 3,863 4,168 4,989 4,956 5,143 5,408 8,031 20,496
% Change (Y-o-Y) 33.1 29.8 NA
Other Income 2,179 1,377 2,128 4,101 2,500 3,270 3,556 12,000
Net Income 6,042 5,545 7,117 9,057 7,643 8,679 11,587 32,496
Operating Expenses 2,153 2,947 2,768 3,234 3,731 4,400 5,100 14,134
Operating Profit 3,889 2,598 4,349 5,823 3,912 4,278 6,487 18,362
% Change (Y-o-Y) 0.6 64.7 NA
Other Provisions 123 119 236 223 1,050 1,044 242 2,554
Profit before Tax 3,766 2,479 4,113 5,600 2,862 3,234 6,246 15,809
Tax Provisions 1,345 829 1,465 1,722 944 1,085 2,173 5,217
Net Profit 2,422 1,651 2,648 3,878 1,917 2,149 4,072 10,592
% Change (Y-o-Y) NA NA NA NA -20.8 30.2 NA
NIM (Reported,%) 2.0 2.1 2.4 2.2
Tax Rate (%) 35.7 33.4 35.6 30.8 33.0 33.6 34.8 33.0
E: MOSL Estimates
January 2017 136

Indian Bank
Bloomberg INBK IN CMP: INR225 TP: INR314 (+40%) Buy
 We expect an uptick in deposit growth to 5.6% v/s 3.2% in 2QFY17
M. Cap. (INR b)/(USD b) 108 / 2
and 2.1% in FY16. Net loans are expected to decline ~5% YoY owing
to muted credit environment. Decline in cost of funds would be
1,6,12 Rel Perf. (%) -8 / 51 / 95
negated by excessive liquidity and reducing yields, leading to ~17bp
Financial Snapshot (INR b) decline in margins on a QoQ basis.
Y/E March 2016 2017E 2018E 2019E  Fee income would be subdued. Trading gains growth is expected to
NII 44.5 49.7 55.2 66.8
drive 62% YoY growth in non-interest income.
OP 30.3 39.6 41.9 48.6
NP 7.1 14.6 15.3 18.5
 We expect slippage ratio to remain elevated at 2.7% and credit
NIM (%) 2.5 2.6 2.7 2.9 costs to increase to 1.6% v/s 1.1% in 2QFY17, as INBK looks to
EPS (INR) 14.8 30.4 31.9 38.5 improve provision coverage; however, trading gains will provide
EPS Gr. (%) -29.2 105.3 5.0 20.5 cushion to earnings
BV/Sh. (INR) 281 304 328 358  INBK trades at 0.7x FY18E BV and 7.1x FY18E EPS. Maintain Buy.
ABV/Sh (INR) 202 222 262 305
RoE (%) 5.5 10.4 10.1 11.2
RoA (%) 0.4 0.7 0.7 0.7
Div. Payout (%) 23.2 23.2 23.2 23.2
 Outlook on business growth and asset quality remains the key
Valuations
P/E (x) 15.2 7.4 7.1 5.9 factor to monitor.
P/ BV (x) 0.8 0.7 0.7 0.63  Quantum of loans rescheduled under the 5/25 scheme.
P/ABV (x) 1.1 1.0 0.9 0.74  View on margins with an improvement in liquidity and lower
Div. Yield (%) 0.7 2.7 2.8 3.4 interest rates.

% Change (Y-o-Y) 4.5 -8.2 0.5 2.4 10.4 18.3 10.2 8.9 -0.3 11.9
Other Income 3,756 4,375 4,390 5,294 4,417 5,846 7,126 6,906 17,814 24,295
Net Income 14,959 15,179 15,498 16,640 16,780 18,629 19,364 19,265 62,277 74,039
% Change (Y-o-Y) 11.2 -3.8 -4.3 1.2 27.5 36.8 33.1 25.7 6.9 18.9
Profit before Tax 3,006 5,984 425 138 4,862 5,279 5,018 5,126 9,554 20,286
Tax Provisions 853 2,291 2 -707 1,788 1,228 1,305 1,359 2,439 5,680
Net Profit 2,153 3,693 423 845 3,074 4,051 3,713 3,767 7,115 14,606
% Change (Y-o-Y) 3.9 17.5 -84.8 -59.0 42.8 9.7 777.8 345.8 -29.2 105.3
NIM (Rep, %) 2.4 2.3 2.3 2.4 2.5 2.6 2.3
NIM (Cal, %) 2.5 2.4 2.5 2.5 2.7 2.8 2.6 2.6 2.5 2.7
Deposit Growth (%) 12.9 4.7 8.1 5.4 1.1 3.2 5.6 7.0 5.4 7.0
Loan Growth (%) 5.7 5.0 6.4 2.5 1.5 0.1 -4.7 -2.0 2.5 -2.0
Asset Quality
OSRL (INR b) 101.1 100.6 88.6 63.7 62.9 64.1 63.7
OSRL (%) 8.3 8.2 7.0 4.9 5.1 5.2 4.9
Gross NPA (INR b) 58.2 57.7 70.7 88.3 88.9 91.9 93.9 94.6 88.3 94.6
Gross NPA (%) 4.7 4.6 5.6 6.7 7.0 7.3 7.6 7.3 6.7 7.3
E: MOSL Estimates
January 2017 137

IndusInd Bank
Bloomberg IIB IN CMP: INR1,101 TP: INR1,405 (+28%) Buy
Equity Shares (m) 595.0  We expect strong loan/deposit growth of ~25%/~38% YoY in
M. Cap. (INR b)/(USD b) 655 / 10
3QFY17. Continuation of positive growth trend in the CV/CFD
segment would remain a key factor to monitor. Overall, NIM is
1,6,12 Rel Perf. (%) 1 / 2 / 14
likely to remain largely stable QoQ at 3.8-3.9%, led by lower cost of
Financial Snapshot (INR Billion) funds.
Y/E MARCH 2016 2017E 2018E 2019E  We expect non-interest income growth to be strong at ~25%,
NII 45.2 59.2 72.7 89.0 helped by high trading gains. We expect moderation in fee growth.
OP 41.4 51.8 64.1 78.9
Opex growth would remain high at ~32%+ YoY, led by higher
NP 22.9 28.3 35.5 44.0
demonetization-related currency management costs.
NIM (%) 4.0 4.3 4.3 4.2
EPS (INR) 38.4 47.6 59.6 74.0  Strong PPP growth (+23% YoY) would keep earnings growth strong
EPS Gr. (%) 13.4 23.9 25.2 24.1 at 22%+ YoY, despite factoring in higher credit costs (+27% YoY
BV/Sh. (INR) 291 332 383 446.9 increase in provisions)
ABV/Sh. (INR) 288 328 379 441.9  IIB trades at 2.9x FY18E BV and 18.5x FY18E EPS, with best-in-class
RoE (%) 16.6 15.3 16.7 17.8 RoA of ~2% and RoE of 17-18%. Buy.
RoA (%) 1.8 1.8 1.9 1.9
Valuations  Uptick in CV/CE demand would be the key for CFD growth.
P/E (X) 28.6 23.1 18.5 14.9
 Corporate asset quality a key monitorable.
P/BV (X) 3.8 3.3 2.9 2.5
P/ABV (X) 3.8 3.4 2.9 2.5
 Traction in the non-vehicle consumer lending portfolio.
Div. Yield (%) 0.4 0.5 0.7 0.8

% Change (YoY) 22.5 31.3 36.2 37.1 38.3 33.4 29.0 25.2 32.1 31.1
Other Income 7,616 7,835 8,390 9,128 9,730 9,704 10,525 11,318 32,970 41,277
Net Income 17,423 18,778 20,124 21,810 23,294 24,307 25,665 27,200 78,135 100,467
% Change (YoY) 23.2 38.9 37.1 35.4 33.7 27.3 23.2 17.6 33.7 25.0
Tax Provisions 2,744 2,884 3,029 3,172 3,419 3,635 3,688 3,916 11,828 14,659
Net Profit 5,250 5,600 5,810 6,204 6,614 7,043 7,128 7,545 22,865 28,329
% Change (YoY) 24.7 30.2 29.9 25.3 26.0 25.8 22.7 21.6 27.5 23.9
NIM (Reported,%) 3.7 3.9 3.9 3.9 4.0 4.0 3.9
NIM (Cal, %) 3.5 3.7 3.7 3.8 3.8 3.9 3.8 3.8 3.7 3.8
Deposit Growth (%) 21.6 22.5 24.6 25.4 31.0 38.9 37.8 32.0 25.4 32.0
Loan Growth (%) 23.1 30.6 28.7 28.5 29.7 26.4 24.6 24.0 28.5 24.0
Asset Quality
OSRL (INR b) 4.6 4.9 4.8 4.7 4.6 4.4 4.7
OSRL (%) 0.6 0.6 0.6 0.5 0.5 0.4 0.5
Gross NPA (INR b) 5.7 6.0 6.8 7.8 8.6 9.0 10.1 11.5 7.8 11.5
Gross NPA (%) 0.8 0.8 0.8 0.9 0.9 0.9 1.0 1.0 0.9 1.0
E: MOSL Estimates; Quarterly calculated margins based on total assets, yearly on interest earning assets
January 2017 138

Kotak Mahindra Bank

Bloomberg K MB IN CMP: INR695 TP: INR932 (+34%) Buy
 We expect the standalone bank to report 10%+ loan growth and
M. Cap. (INR b)/(USD b) 1275 / 19
11%+ deposit growth in 3QFY17. NIMs are expected to decline
marginally by ~10bp QoQ, but improve 10bp on a YoY basis. Overall,
1,6,12 Rel Perf. (%) -6 / -4 / -5
we expect NII growth of 14% YoY.
 With strong customer acquisition and merger synergies from eIVBL,
Y/E MARCH 2016 2017E 2018E 2019E
fee growth should remain healthy. Traction on CASA should pick up
NII 69.0 80.6 93.8 117.1 considerably post demonetization, leading to incrementally lower
OP 40.4 56.9 70.5 93.7 cost of funds.
NP 20.9 33.2 41.3 55.2  We expect asset quality to remain stable, with GNPA less than
Cons. NP 34.6 48.7 59.4 76.6 ~2.5%, and NSL to decline sequentially, with increase in provision
NIM (%) 4.1 4.4 4.5 4.6
coverage ratio.
Cons. EPS (INR) 18.9 26.6 32.4 41.7
 On a reported basis, we expect standalone bank earnings to grow
EPS Gr. (%) 40.8 22.0 28.8
Cons. BV. (INR) 182 207 239 279 27% YoY.
Cons. RoE (%) 10.9 13.6 14.5 16.1  The stock trades at 2.9x FY18E consolidated BV and 21.4x FY18E
RoA (%) 1.1 1.6 1.8 2.0 consolidated earnings. Maintain Buy.
Payout (%) 5.1 5.8 5.8 5.8
Valuations
P/E(X) (Cons.) 36.9 26.2 21.4 16.6
 Guidance on balance sheet growth.
P/BV (X) (Cons.) 3.8 3.4 2.9 2.5  Performance on CASA, fees and growth – the initial pain of merger
Div. Yield (%) 0.0 0.1 0.1 0.1 is behind now.
 Performance of non-banking subsidiaries and their contribution to
overall profit.
Y/E March FY16 FY17E FY16 FY17
Kotak Bank (standalone)
% Change (Y-o-Y) 59.5 61.6 66.7 65.4 20.1 18.9 14.4 14.5 63.4 16.8
% Change (Y-o-Y) -10.3 42.4 63.4 38.7 120.3 37.8 13.8 31.3 34.8 40.9
Net Profit 1,898 5,695 6,347 6,958 7,420 8,133 8,049 9,564 20,898 33,165
% Change (Y-o-Y) -55.8 28.1 36.6 32.0 291.0 42.8 26.8 37.5 12.0 58.7
Other Businesses
K otak Prime 1,190 1,270 1,260 1,300 1,200 1,300 1,375 1,483 5,025 5,358
K otak Mah. Investments 300 360 390 500 400 530 575 623 1,540 2,128
K otak Mah. Capital Co 30 70 60 170 230 50 210 276 320 766
K otak Securities 670 780 550 510 600 960 700 765 2,515 3,025
International subs 250 320 260 220 130 310 225 235 1,050 900
K otak Mah. AMC & Trustee Co. 200 230 40 250 190 70 150 443 720 853
K otak Investment Advisors 0 0 -10 50 110 10 80 100 50 300
K otak OM Life Insurance 660 480 600 770 710 630 650 646 2,510 2,636
Con.adj and MI -30 230 -40 -180 -240 30 -95 -115 -19 -420
Conso. PAT 5,168 9,435 9,457 10,548 10,750 12,023 11,919 14,019 34,608 48,710
% Change (Y-o-Y) -25.9 31.5 32.0 15.5 108.0 27.4 26.0 32.9 13.7 40.8
E: MOSL Estimates, Quarterly numbers vary from full year number due to difference in reporting
January 2017 139

Oriental Bank of Commerce

Bloomberg OBC IN CMP: INR107 TP: INR108 (+1%) Neutral
 Loan portfolio is expected to decline 7% YoY and deposit growth is
also expected to be muted at 2% YoY. CD ratio is expected to
decline by ~700bp YoY and ~600bp QoQ.
1,6,12 Rel Perf. (%) -11 / -6 / -26
 NII is likely to remain subdued (-5% YoY), led by moderate loan
Financial Snapshot (INR b) growth and sequentially lower NIMs (factored decline of ~10bp).
Y/E March 2016 2017E 2018E 2019E  Given the subdued economic environment, fee income growth is
NII 53.7 51.2 54.1 65.7
likely to remain in low single digit. Overall, non-interest income is
OP 36.8 37.8 36.5 45.4
expected to increase by 67%+ YoY, driven by favorable base and
NP 1.6 6.7 7.4 10.7
EPS (INR) 4.9 19.3 21.3 31.0 trading gains during the quarter.
EPS Growth (%) 0.0 0.0 10.3 46.0  Opex is expected to grow by ~9%. Overall PPP is expected to de-
BV/Sh. (INR) 418.0 411.5 427.8 451.6 grow 15% YoY.
ABV/Sh. (INR) 202 129 148 213  Over the last two quarters, slippages (ex AQR) have risen sharply.
RoE (%) 1.2 4.8 5.1 7.1 However, the clean-up exercise taken up by the new management
RoA (%) 0.1 0.3 0.3 0.4
might throw more negative surprises in 3Q. Hence, we remain
Div. Payout (%) 16.7 23.2 23.2 23.2
Valuations
cautious on asset quality (expect 150bp of credit costs).
P/E (x) 0.0 5.5 5.0 3.4  The stock trades at 0.25x FY18E BV and 5x FY18E EPS. Neutral.
P/BV (x) 0.26 0.26 0.25 0.24
P/ABV (x) 0.53 0.83 0.72 0.50
Div. Yield (%) 0.0 3.6 4.0 5.8
 Outlook on asset quality, as net stressed loans remain one of the
highest in the industry.
 Quantum of loans rescheduled under the 5:25 scheme.
 Balance sheet growth and traction in focus loan segments.

Interest Income 51,149 50,296 49,560 49,584 47,789 46,953 46,976 48,757 200,587 190,475
Interest Expense 37,863 36,465 36,466 36,047 35,743 33,797 34,539 35,156 146,841 139,235
% Change (YoY) 6.9 11.0 0.9 4.3 -9.3 -4.9 -5.0 0.5 5.7 -4.7
Other Income 4,539 4,246 3,945 4,933 6,138 5,834 6,607 6,906 17,663 25,485
Net Income 17,824 18,076 17,038 18,469 18,184 18,991 19,044 20,506 71,408 76,724
% Change (YoY) -8.5 16.1 -24.5 -27.7 -12.2 -3.7 15.4 16.9 -12.9 2.8
Profit before Tax 4,668 4,231 -4,167 -1,474 1,667 1,813 2,784 2,934 3,258 9,198
Tax Provisions 2,090 1,218 80 -1,690 660 280 766 823 1,698 2,530
Net Profit 2,578 3,013 -4,247 216 1,007 1,533 2,019 2,111 1,561 6,669
% Change (YoY) -29.3 3.4 NM NM -60.9 -49.1 NM 876.2 -68.6 327.3
NIM (Rep, %) 2.7 2.8 2.6 2.7 2.4 2.7 2.7
NIM (Cal,%) 2.5 2.7 2.5 2.5 2.2 2.5 2.4 2.5 2.6 2.4
Deposit Growth (%) 5.0 6.9 4.4 2.4 4.4 1.2 2.5 5.0 2.4 5.0
Loan Growth (%) 8.3 7.0 7.9 3.7 4.0 -1.0 -6.3 -3.4 3.7 -3.4
Asset Quality
OSRL (INR b) 147.9 140.6 133.0 95.4 95.4 76.2 95.4
OSRL (%) 9.9 9.4 8.7 6.2 6.1 5.1 6.2
Gross NPA (INR b) 85.8 85.6 118.2 147.0 172.1 183.8 189.3 194.9 147.0 194.9
Gross NPA (%) 5.9 5.7 7.8 9.6 11.5 12.4 13.3 13.1 9.6 13.1
January 2017 140

Punjab National Bank

Bloomberg PNB IN CMP: INR115 TP: INR172 (+49%) Buy
 In line with industry trend, loan growth is expected to be muted.
M. Cap. (INR b)/(USD b) 245 / 4
Deposits should grow 11%+ YoY. CD ratio is expected to fall from
~72% to ~64%. However, CASA ratio is expected to improve.
1,6,12 Rel Perf. (%) -16 / 5 / -2
 NII is likely to be muted (-9% YoY), led by drop in CD ratio, following
Financial Snapshot (INR b) the bank’s strategy to grow in safer assets.
Y/E March 2016 2017E 2018E 2019E  Fee income growth is likely to remain moderate (+10% YoY); overall
NII 153.1 152.1 168.6 199.7
non-interest income is expected to grow 59%+ YoY, led by higher
OP 122.2 133.7 145.3 166.6
growth in non-core income.
NP -39.7 18.1 28.0 37.9
NIM (%) 2.6 2.4 2.5 2.6  Stress addition is likely to be elevated but recoveries could surprise
EPS (INR) -20.2 8.5 13.2 17.8 positively, with intense efforts. Expect credit costs to remain
EPS Gr. (%) NM NM 55.1 35.3 ~275bp in an effort to tick coverage ratio up (37% in 2QFY17).
BV/Sh. (INR) 180 183 195 210  Value unlocking in housing finance and insurance business, and
ABV/Sh. (INR) 54 69 93 135 improvement in asset quality remains a key trigger. The stock
RoE (%) -10.9 4.8 7.0 8.8
trades at 0.6x FY18E BV and 8.8x FY18E EPS. Maintain Buy.
RoA (%) -0.6 0.3 0.4 0.4
Valuations
P/E(X) -5.7 13.6 8.8 6.5 Key issues to watch for
P/BV (X) 0.6 0.6 0.6 0.5  Outlook on asset quality, as net stressed loans remain one of the
P/ABV (X) 2.13 1.68 1.24 0.85 highest in the industry.
Div. Yield (%) 0.0 1.1 1.7 2.3  Capital raising plans via fresh issue and sale of non-core assets.

% Change (YoY) -6.3 4.1 -2.7 -27.0 -9.8 -10.2 -9.2 40.6 -7.5 -0.7
Other Income 13,974 13,569 16,706 24,522 23,551 23,879 26,526 28,310 68,770 102,265
Net Income 54,998 56,789 57,902 52,199 60,541 62,678 63,923 67,217 221,888 254,358
% Change (YoY) 0.2 2.2 6.1 0.8 4.6 12.7 12.4 8.5 2.2 9.4
Profit before Tax 13,207 10,564 -8,577 -72,574 5,362 7,783 6,605 7,599 -57,379 27,349
Tax Provisions 6,000 4,354 -9,087 -18,902 2,299 2,289 2,180 2,531 -17,635 9,299
Net Profit 7,207 6,210 510 -53,671 3,064 5,494 4,426 5,068 -39,744 18,050
% Change (YoY) -48.7 7.9 -93.4 NM -57.5 -11.5 NM NM NM NM
NIM (Rep, %) 2.9 3.0 2.8 1.8 2.5 2.5 2.6
NIM (Cal, %) 2.9 3.0 2.8 1.8 2.4 2.6 2.4 2.5 2.6 2.5
Deposit Growth (%) 16.4 14.0 13.3 10.3 7.0 6.5 11.6 12.5 10.3 12.5
Loan Growth (%) 9.6 6.7 8.4 8.4 2.8 3.4 -0.8 0.0 8.4 0.0
CD Ratio (%) 73.6 70.6 71.6 74.6 70.7 68.5 63.7 66.3 74.6 66.3
Asset Quality
Gross NPA (INR B) 254 249 343 558 567 565 554 569 558 569
Gross NPA (%) 6.5 6.4 8.5 12.9 13.8 13.6 13.5 13.1 12.9 13.1
E: MOSL Estimates
January 2017 141

RBL Bank
Bloomberg RBK IN CMP: INR345 TP: 450 (+30%) Buy
 Loan growth (+ 4%QoQ) and deposit growth (+9% QoQ) would be
M. Cap. (INR b)/(USD b) 125 / 2
significantly above industry average.
 We expect NII to grow 9% QoQ, led by strong loan growth and
1,6,12 Rel Perf. (%) -/-/-
~10bp QoQ expansion in NIMs (owing to substantial CASA inflow,
sharp fall in bulk rates and recent equity infusion).
Y/E MARCH 2016 2017E 2018E 2019E
 Overall non-interest income is expected to grow by ~9% QoQ,
NII 8.2 12.2 14.4 19.5 which in our view would be driven by strong growth in trading
OP 5.4 8.7 10.3 14.2 gains. While opex will be high during the quarter owing to branch
NP 2.9 4.4 5.4 7.4 expansion costs and demonetization-related manpower and
NIM (%) 2.7 3.0 2.9 3.0 currency costs, we expect PPP growth to be strong at 9% QoQ.
EPS (INR) 9.0 12.2 14.8 20.5
 Asset quality is expected to remain stable this quarter, although
EPS Gr. (%) 27.6 35.0 21.9 38.4
BV/Sh. (INR) 92.0 114.2 126.2 142.7
there may be some stress that could materialize in the SME
ABV/Sh. (INR) 89.5 113.7 125.5 141.7 segment. Credit costs will largely be under control.
RoE (%) 11.2 12.4 12.3 15.3  We expect PBT/PAT growth of 27%/33% QoQ.
RoA (%) 0.9 1.0 1.0 1.0  RBL trades at 2.7x FY18E BV and 23.3x FY18E EPS. Maintain Buy.
Valuations
P/E(X) 38.3 28.3 23.3 16.8 Key issues to watch for
P/BV (X) 3.7 3.0 2.7 2.4  Management commentary on slippages in SME segment.
P/ABV (X) 3.9 3.0 2.7 2.4
 Update and commentary on balance sheet growth strategy.
 CASA ratio and traction on NIMs.

1Q 2Q 1Q 2Q 3QE 4QE
Interest Income 6,049 6,644 8,637 9,019 9,507 9,931 27,443 37,095
Interest Expense 4,382 4,744 6,190 5,990 6,215 6,480 19,251 24,875
Net Interest Income 1,667 1,899 2,447 3,029 3,293 3,451 8,192 12,220
% Change (Y-o-Y) 46.8 59.5 47.2 49.2
Other Income 1,259 1,123 1,675 1,691 1,850 1,735 4,905 6,952
Net Income 2,926 3,022 4,122 4,721 5,143 5,186 13,097 19,172
Operating Expenses 1,810 1,814 2,277 2,530 2,750 2,895 7,673 10,452
Operating Profit 1,116 1,209 1,845 2,191 2,393 2,291 5,424 8,719
% Change (Y-o-Y) 65.3 81.3 50.6 60.7
Other Provisions 227 223 426 781 600 297 1,144 2,104
Profit before Tax 889 986 1,419 1,410 1,793 1,994 4,280 6,616
Tax Provisions 286 316 445 512 596 663 1,355 2,216
Net Profit 603 669 973 899 1,197 1,330 2,925 4,399
% Change (Y-o-Y) 61.4 34.3 41.2 50.4
NIM (Reported,%) 3.0 3.0 2.8 3.4
NIM (Cal, %) 0.0 3.2 3.3 3.3 2.7 3.0
CD Ratio (%) 85.2 86.3 89.0 84.5 85.0
Asset Quality
Gross NPA (INR b) 0.0 1.6 2.5 2.7 3.0 3.3 2.1 3.3
Gross NPA (on customer assets, %) 0.0 0.93 1.1 1.1 1.2 1.1 1.0 1.1
E: MOSL Estimates
January 2017 142

State Bank of India

Bloomberg SBIN IN CMP: INR243 TP: INR338 (+39%) Buy
 We expect loan growth to be muted at 2% YoY. With deposit
M. Cap. (INR b)/(USD b) 1886 / 28
growth being strong at 17% YoY, CD ratio should fall 600bp YoY.
Incremental loan growth would be driven by retail loans and
1,6,12 Rel Perf. (%) -6 / 11 / 6
relatively low-yielding low-risk corporate loans.
Financial Snapshot (INR b)  Computed NIM is likely to decline marginally QoQ to 2.7%. The
Y/E March 2016 2017E 2018E 2019E bank has reduced its MCLR by ~90bp, which may pressurize NIMs in
NII 569 578.8 666.5 756.9 the ensuing quarter, despite strong CASA flow. We expect stress
OP 433 465.8 500.6 563.4
additions to moderate broadly in line with the last quarter.
NP 100 106.4 140.4 186.0
NIM (%) 3.0 2.7 2.8 2.8
 We expect non-interest income growth of 56% YoY, primarily led by
EPS (INR) 15.7 9.8 23.3 30.9 income from stake sale in SBI Life and higher trading gains. Fee
EPS Gr. (%) -30.8 -37.6 137.5 32.5 income growth would remain muted and cost pressure would
Cons. BV (INR) 222 229.9 248.7 273.7 remain high (+19% YoY) on account of administrative expense.
Cons. ABV (INR) 159 144.6 182.5 232.2 Overall PPoP growth is expected to be 24% YoY.
RoE (%) 7.6 7.5 9.2 11.3
 We expect credit cost to remain elevated, led by focus on improving
RoA (%) 0.5 0.4 0.5 0.6
Div. Payout (%) 20.1 20.1 19.3 19.3
strength of the balance sheet. The stock trades at 0.9x FY18E
Valuations consolidated BV and 10x FY18E consolidated EPS. Buy.
Cons. P/E (x) 14.8 23.8 10.0 7.6
Cons. P/BV (x) 1.0 0.9 0.9 0.8 Key issues to watch for
Cons P/ABV (x) 1.5 1.6 1.3 1.0  Performance and guidance on asset quality.
Div. Yield (%) 1.1 0.7 1.6 2.1
 Growth outlook and key focus segments for growth.
 Outlook and update on non-core stake sales and ABs merger.

% Change (YoY) 3.6 7.4 -1.2 3.9 4.2 1.3 5.3 -3.2 3.4 1.8
Other Income 50,880 61,973 61,775 106,956 73,351 84,241 96,237 111,547 281,584 365,376
Net Income 188,200 204,498 197,840 259,864 216,474 228,616 239,512 259,598 850,402 944,199
% Change (YoY) 4.7 21.9 3.3 11.2 20.1 9.3 23.7 -12.4 9.4 7.7
Tax Provisions 15,099 20,262 5,332 -2,460 11,198 7,893 11,380 13,007 38,234 43,478
Net Profit 36,924 38,791 11,153 12,638 25,210 25,383 26,554 29,299 99,507 106,446
% Change (YoY) 10.3 25.1 -61.7 -66.2 -31.7 -34.6 138.1 131.8 -24.0 7.0
NIM (Reported, %) 3.0 3.0 2.8 3.1 2.8 2.8 3.0
NIM (Cal, %) 3.0 3.0 2.8 3.2 2.9 2.8 2.7 2.7 3.0 2.8
Deposit Growth (%) 13.7 10.9 10.7 9.8 10.5 13.8 16.8 14.0 9.8 14.0
Loan Growth (%) 6.8 10.5 12.9 12.6 10.7 7.2 2.0 4.0 12.6 4.0
Asset Quality
OSRL (INR B) 560 535 486 391 366 366 391
OSRL (%) 4.4 4.0 3.5 2.7 2.6 2.6 2.7
Gross NPA (INR B) 564 568 728 982 1,015 1,058 1,081 1,097 982 1,097
Gross NPA (%) 4.3 4.2 5.1 6.5 6.9 7.1 7.4 7.0 6.5 7.0
E: MOSL Estimates
January 2017 143

Union Bank of India

Bloomberg UNBK IN CMP: INR125 TP: INR168 (+34%) Buy
 Demonetization, capital constraint and low risk appetite would lead
to lower loan growth of 1.5% YoY. Deposit growth is expected to be
healthy at ~12% YoY, and resultantly, CD ratio is expected to
1,6,12 Rel Perf. (%) -14 / -5 / -17
contract by 350bp+ QoQ (and 750bp+ YoY).
Y/E March 2016 2017E 2018E 2019E  We expect NIM decline of 10bp+ on account of excess liquidity built
NII 83.1 88.9 100.2 116 during the quarter and lower incremental spreads on investments.
OP 56.4 68.2 77.1 89.6 Despite this, NII growth is expected to be healthy at 11% YoY, on
NP 13.5 10.7 20.9 31.4 account of lower interest income reversals (3QFY16 had an impact
NIM (%) 2.3 2.3 2.4 2.5
of higher slippages based on AQR review).
EPS (INR) 19.7 15.6 30.4 45.7
EPS Gr. (%) -29.6 -20.5 94.3 50.6  Non-interest income is likely to grow 45%+ YoY, led by higher non-
BV/Sh. (INR) 293.9 307.7 334.5 375 core income.
ABV/Sh. (INR) 151.1 121.4 130.0 179
 The stock trades at 0.4x FY18E BV and 4.1x FY18E EPS. Buy.
RoE (%) 7.0 5.2 9.5 12.9
RoA (%) 0.3 0.3 0.4 0.6
Div. Payout (%) 11.5 11.6 11.6 11.6 Key issues to watch for
Valuations  Performance on asset quality— slippage from restructured loans,
P/E(X) 6.4 8.0 4.1 2.7 going forward.
P/BV (X) 0.43 0.41 0.38 0.33  Quantum of loans rescheduled under the 5:25 scheme.
P/ABV (X) 0.8 1.0 1.0 0.70
 Trends and efforts to improve CASA ratio and NIM.
Div. Yield (%) 1.6 1.2 2.4 3.6
 Update and trends on balance sheet growth.

% Change (YoY) 0.6 0.8 -5.9 -1.7 -1.3 8.4 10.7 10.1 -1.5 6.9
Other Income 7,832 9,595 8,927 9,964 10,399 11,394 13,082 12,359 36,317 47,234
Net Income 29,134 30,612 28,892 30,811 31,421 34,169 35,179 35,318 119,448 136,087
% Change (YoY) 8.5 5.8 -9.0 -14.7 9.2 29.0 23.8 22.0 -3.1 20.8
Profit before Tax 8,458 9,782 965 -1,551 2,721 1,994 2,957 6,844 17,654 14,516
Tax Provisions 3,270 3,200 180 -2,512 1,058 227 651 1,838 4,138 3,774
Net Profit 5,188 6,582 785 961 1,663 1,767 2,307 5,006 13,516 10,742
% Change (YoY) -21.9 77.3 -74.0 -78.3 -67.9 -73.2 193.7 420.8 -24.1 -20.5
NIM (Cal, %) 2.4 2.3 2.2 2.3 2.3 2.4 2.2 2.3 2.3 2.3
Deposit Growth (%) 10.0 10.2 4.6 8.2 3.5 9.3 12.6 9.5 8.2 9.5
Loan Growth (%) 6.0 3.3 5.0 4.6 3.5 7.7 1.4 2.0 4.6 2.0
Asset Quality
OSRL (%) 5.5 5.5 5.2 3.1 2.7 2.0 3.1 0.0
Gross NPA (INR b) 141.4 155.4 185.0 241.7 272.8 298.6 316.2 329.4 241.7 329.4
Gross NPA (%) 5.5 6.1 7.1 8.7 10.2 10.7 11.7 11.5 8.7 11.5
E: MOSL Estimates
January 2017 144

Yes Bank
Bloomberg YES IN CMP: INR1,163 TP: INR1,500 (+30%) Buy
 On a lower base, we expect loan growth to be above the industry
M. Cap. (INR b)/(USD b) 490 / 7
average at 33%+ YoY (nearly 5x industry growth rates) on the back
of refinancing opportunities and strong growth in retail banking.
1,6,12 Rel Perf. (%) -3 / 6 / 61
 Despite benefits flowing in form of lower cost of funds, excess
Y/E March 2016 2017E 2018E 2019E
liquidity, incremental CRR and competitive pressure on the lending
NII 45.7 57.5 72.3 91.8 side would pressurize NIMs (factored a 10bp decline).
OP 43.0 54.5 69.2 87.1 Consequently, NII growth is expected to be healthy at ~27% YoY –
NP 25.4 31.4 40.4 50.2 the best among peers.
NIM (%) 3.4 3.5 3.6 3.7  Non-interest income growth is likely to be ~23% YoY, led by strong
EPS (INR) 60.4 74.5 95.8 119.3
growth from third-party distribution, continued momentum in
EPS Gr. (%) 25.8 23.4 28.6 24.5
financial advisory and higher trading gains.
BV/Sh. (INR) 327.8 386.8 463.0 558.0
ABV/Sh. (INR) 323.4 381.2 456.7 549.9  Led by aggressive franchise expansion, we expect opex growth to
RoE (%) 19.9 20.9 22.6 23.4 remain high (30%+ YoY).
RoA (%) 1.7 1.7 1.8 1.8  Asset quality performance so far has been significantly better than
Div. Payout (%) 19.1 20.3 20.3 20.3 industry; we expect this trend to continue.
Valuations  YES trades at 2.5x FY18E BV and 12.1x FY18E EPS. Return ratios also
P/E(X) 19.3 15.6 12.1 9.7
remain strong (RoA of ~1.8% and RoE of 20%+). Maintain Buy.
P/BV (X) 3.5 3.0 2.5 2.1
P/ABV (X) 3.6 3.1 2.5 2.1 Key issues to watch for
Div. Yield (%) 0.9 1.1 1.4 1.8  Implementation of retail strategy on assets and liabilities sides.
 Performance on asset quality and quantum of loans rescheduled
under 5:25 scheme/sale to ARCs.

% Change (Y-o-Y) 42.2 29.4 27.3 27.1 24.2 30.5 26.5 23.0 30.9 26.0
Other Income 5,452 6,181 7,461 8,028 9,005 8,879 9,175 10,624 27,121 36,512
Net Income 16,050 17,266 19,030 20,443 22,171 23,340 23,807 25,888 72,789 94,036
% Change (Y-o-Y) 43.7 24.7 33.2 30.7 43.9 36.0 21.7 20.2 32.4 26.6
Other Provisions 980 1,039 1,479 1,865 2,066 1,617 1,375 1,856 5,363 6,914
Tax Provisions 2,591 3,048 3,260 3,369 3,683 4,228 4,161 4,096 12,268 16,168
Net Profit 5,512 6,104 6,757 7,021 7,318 8,015 8,449 8,773 25,394 31,385
% Change (Y-o-Y) 27.7 26.5 25.1 27.4 32.8 31.3 25.0 25.0 26.6 23.6
NIM (Cal, %) 3.5 3.6 3.6 3.6 3.5 3.7 3.6 3.6 3.6 3.6
Deposit Growth (%) 25.2 24.0 23.1 22.5 28.6 28.9 32.5 27.0 22.5 27.0
Loan Growth (%) 35.1 29.0 26.7 30.0 33.0 37.7 33.2 25.0 30.0 25.0
CD Ratio (%) 83.6 80.5 83.2 87.9 86.4 86.1 83.6 86.5 87.9 86.5
Tax Rate (%) 32.0 33.3 32.5 32.4 33.5 34.5 33.0 31.8 32.6 34.0
Asset Quality
Gross NPA (INR B) 3.7 4.9 5.6 7.5 8.4 9.2 10.8 10.4 7.5 10.4
Gross NPA (%) 0.5 0.6 0.7 0.8 0.8 0.8 1.0 0.8 0.8 0.8
E: MOSL Estimates
January 2017 145

December 2016 Results Preview | Dec 2016
Financials - NBFCs
Company name Expect demonetization-led subdued performance
Bajaj Finance Disbursement growth – the key monitorable; Asset quality impact camouflaged
Bharat Financial Inclusion  We expect NBFCs under our coverage universe to report PAT growth of 16%
Dewan Housing YoY in 3QFY17. In our view, disbursements for all NBFCs have been hit on
account of demonetization. Asset quality woes may not be reflected in the
GRUH Finance
quarterly numbers due to the Reserve Bank of India (RBI) dispensation. We
HDFC expect housing finance companies (HFCs), especially those with a low share of
Indiabulls Housing LAP and corporate loans, to perform relatively well on the asset quality front
LIC Housing Fin compared to NBFC-AFCs. Our discussions with managements indicate that the
business performance was not as bad as envisaged. We believe management
M & M Financial
commentary on the 4Q outlook is the key. Within our NBFC coverage universe,
Muthoot Finance
BHAFIN and LICHF are likely to post strong earnings growth of 25%+ YoY,
Repco Home Fin which is commendable in this environment. HFCs should see a stable quarter
Shriram Transport Fin. in terms of loan growth due to the outstanding sanction pipeline. We would
closely look at the margins performance, considering the sharp reduction in
bond yields and the significant proportion of incremental funding from bonds.
 Housing finance companies: HFCs under our coverage universe should deliver
PAT growth of 15% YoY in 3QFY17, driven by a continued focus on the individual
segment. The sharp rally in bond yields was the key positive in the quarter. DHFL
raised INR140b via bonds in the prior quarter, the full benefits of which should
be reflected in the NIM in this quarter, in our view. HDFC is likely to deliver 14%
loan growth, and dividend from the bank will support earnings growth. We
believe players with a high share of self-employed customers and LAP/builder
loans are likely to witness slowdown in disbursements and problems in
collections. However, the numbers might not reflect the stress in the segment
due to the RBI dispensation on NPA recognition.
 Asset finance companies: We expect growth for AFCs under our coverage to
slow down sharply from prior quarters, especially in vehicle finance. We expect
SHTF/MMFS to report flat AUM QoQ. BAF, however, will be an exception, with
25%+ AUM growth, driven by all segments, except 2W/3W financing and LAP.
We do not foresee significant asset quality issues for BAF as its customers are
mostly salaried and collections are mainly non-cash based.
 Gold financing: Specialized gold financing company, MUTH, is likely to have a
subdued quarter with stable AUM QoQ (+10% YoY). We expect margins to
improve YoY, but remain largely stable QoQ. We believe future movements in
gold prices hold the key.
 Microfinance: BHAFIN is likely to report slower AUM growth of ~30%, given
slowdown in disbursements post demonetization. Margins, however, should
remain stable, resulting in ~30% NII growth. The company recently raised
INR7.5b, the benefit of which should be reflected in 2H. Reduction in lending
rates due to declining cost of funds and increase in one-year loan ticket-size by
the RBI should boost demand for microcredit over medium term, in our view.
Sunesh Khanna (Sunesh.K hanna@MotilalOswal.com); +91 22 3982 5521

Alpesh Mehta (Alpesh.Mehta@MotilalOswal.com)/Piran Engineer (Piran.Engineer@MotilalOswal.com); +91 22 3980 4393
January 2017 146
December 2016 Results Preview | Sector: Financials
Exhibit 1: Expected quarterly performance summary (INR m)

Reco Dec-16 Dec-16 Dec-16
NBFC
Bajaj Finance 870 Buy 14,773 12.6 6.2 8,623 11.8 8.4 4,404 7.8 8.0
Bharat Financial 629 Buy 1,958 32.6 -7.4 1,243 11.2 -19.7 1,043 31.2 -28.5
Dewan Housing 244 Buy 4,785 12.2 -2.8 3,770 14.8 -5.1 2,122 14.1 -8.8
GRUH Finance 328 Neutral 1,332 10.9 0.7 1,057 6.1 0.7 640 19.2 3.4
HDFC 1,213 Buy 23,927 9.6 4.2 22,357 8.8 3.7 16,539 8.8 -9.5
Indiabulls Housing 644 Buy 9,409 10.8 6.7 9,806 21.7 6.4 7,298 21.1 6.6
LIC Housing Fin 518 Buy 9,298 24.5 7.4 8,517 25.2 7.7 5,316 26.9 7.5
M & M Financial 274 Buy 8,364 14.5 6.8 4,834 8.8 7.3 1,512 125.1 59.5
Muthoot Finance 287 Buy 7,386 31.5 -2.3 4,201 41.3 -12.4 2,617 40.2 -11.8
Repco Home Fin 577 Buy 889 13.9 -1.5 778 13.9 -7.1 411 6.6 -10.0
Shriram Transport Fin. 911 Buy 14,003 7.7 3.5 10,553 6.5 0.2 3,781 0.8 -2.5
NBFC Banking Sector 96,124 13.7 3.9 75,739 13.9 2.5 45,683 16.0 -2.4
Source: MOSL
Exhibit 2: Relative performance— 3 months (%) Exhibit 3: Relative performance— 1-year (%)
Sensex Index MOSL Financials Index Sensex Index MOSL Financials Index
102
120
99 110
96 100
93 90
90 80 Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Nov-16
Dec-16
Sep-16
Oct-16

Sector / Companies CMP EPS (INR) PE (x) PB (x) RoE (%)
(INR) Reco FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E
NBFC
Bajaj Finance 870 Buy 31.8 41.3 56.7 27.4 21.1 15.3 5.3 4.4 3.5 21.1 22.8 25.4
Bharat Financial 629 Buy 42.7 38.5 63.1 14.7 16.3 10.0 3.2 2.7 2.1 28.6 17.7 23.5
Dewan Housing 244 Buy 29.0 36.8 44.6 8.4 6.6 5.5 1.2 1.1 0.9 15.8 17.2 18.2
GRUH Finance 328 Neutral 7.8 9.6 12.3 41.8 34.0 26.7 11.7 9.5 7.8 30.7 30.9 32.2
HDFC 1,213 Buy 47.5 53.7 61.4 25.5 22.6 19.7 4.9 4.4 4.0 20.8 21.1 21.6
Indiabulls Housing 644 Buy 69.5 87.7 113.1 9.3 7.3 5.7 2.3 2.0 1.8 26.0 29.3 33.2
LIC Housing Fin 518 Buy 39.4 48.1 57.3 13.2 10.8 9.0 2.4 2.1 1.7 20.0 20.7 20.9
M & M Financial 274 Buy 12.7 14.6 16.0 21.6 18.7 17.1 2.3 2.1 2.0 11.3 11.9 12.0
Muthoot Finance 287 Buy 27.5 32.0 39.0 10.4 9.0 7.4 1.8 1.6 1.4 18.4 19.0 20.4
Power Finance Corp 124 Neutral 24.0 25.5 40.5 5.2 4.8 3.1 0.8 0.7 0.6 16.8 16.2 22.3
Repco Home Fin 577 Buy 26.9 38.0 51.6 21.4 15.2 11.2 3.3 2.7 2.3 16.4 19.7 22.2
Rural Electric. Corp. 125 Neutral 29.4 35.3 39.9 4.2 3.5 3.1 0.7 0.6 0.6 18.8 19.5 18.9
Shriram Transport Fin. 911 Buy 63.5 82.3 101.4 14.3 11.1 9.0 1.8 1.6 1.4 13.4 15.4 16.6
NBFC Aggregate 13.6 11.7 9.2 2.4 2.1 1.8 17.7 18.1 19.9
Source: MOSL
January 2017 147

Bajaj Finance
Bloomberg BAF IN CMP: INR900 TP: INR1,096 (+22%) Buy
 We expect AUM growth of 27% YoY in 3QFY17, driven by strong
M. Cap. (INR b)/(USD b) 466 / 7
growth in consumer and commercial lending. LAP and 2W/3W
1,6,12 Rel Perf. (%) -5 / 9 / 40
financing will be a drag on AUM growth.
 NII should grow 13% YoY; margins are likely to decline 190bp YoY off
a high base.
Y/E March 2016 2017E 2018E 2019E
 Asset quality is likely to remain stable. As of September 2016,
NII 40.3 51.4 66.3 85.7 GNPAs were at 1.58% and NNPAs at 0.43%.
PPP 25.1 33.3 44.1 58.8  We expect provisions of INR1.9b, as against INR1.7b in 2QFY17 and
PAT 12.8 17.0 22.1 30.4 INR1.6b in 3QFY16.
EPS (INR) 23.9 31.8 41.3 56.7  Net profit is likely to grow 8% YoY to INR4.2b.
EPS Gr. (%) 33.4 33.1 30.1 37.2
 The stock trades at 5.1x FY17E and 4.2x FY18E BV. Maintain Buy.
BV/Sh. (INR) 136.8 163.9 199.2 247.6
RoA on AUM (%) 3.2 3.3 3.3 3.4
RoE (%) 21.1 21.1 22.8 25.4
Valuations  Commentary on business growth momentum due to the impact of
P/E (x) 37.7 28.3 21.8 15.9 demonetization.
P/BV (x) 6.6 5.5 4.5 3.6  Guidance on margin due to changing product mix going forward.
Div. Yield (%) 0.3 0.3 0.3 0.5
 Asset quality trends, especially in LAP and 2W/3W businesses.
 Performance of businesses such as rural SME lending, lifestyle
financing and e-commerce financing.

FY16 FY17
Income from operations 15,716 15,921 19,717 18,212 21,659 21,802 23,001 23,611 69,566 90,073
Other Operating Income 746 878 897 957 1,205 1,668 1,668 1,648 3,477 6,189
Operating Income 16,462 16,799 20,614 19,168 22,864 23,470 24,669 25,259 73,043 96,262
YoY Growth (%) 32.4 36.3 39.6 34.1 38.9 39.7 19.7 31.8 35.7 31.8
Interest expenses 6,771 6,947 7,493 8,058 8,833 9,562 9,896 10,408 29,269 38,699
Net Income 9,692 9,853 13,121 11,110 14,031 13,909 14,773 14,851 43,775 57,564
YoY Growth (%) 30.3 43.3 48.4 35.9 44.8 41.2 12.6 33.7 39.7 31.5
Other income 96 206 83 406 147 190 250 315 792 901
Total Income 9,788 10,059 13,203 11,516 14,178 14,098 15,023 15,166 44,566 58,465
YoY Growth (%) 30.3 49.1 54.0 40.9 58.1 40.8 11.8 29.9 42.4 33.3
Provisions and Cont. 1,033 1,368 1,462 1,565 1,797 1,691 1,900 1,915 5,429 7,303
Tax Provisions 1,468 1,486 2,167 1,740 2,275 2,185 2,319 2,181 6,861 8,961
Net Profit 2,756 2,794 4,085 3,150 4,240 4,078 4,404 4,292 12,785 17,013
YoY Growth (%) 30.4 41.7 58.1 36.4 53.8 45.9 7.8 36.2 42.4 33.1
Loan Growth (%) 32.0 35.6 41.0 36.5 39.5 38.0 34.0 38.0 38.8 26.0
Borrowings Growth (%) 34.7 30.0 37.2 38.7 40.5 39.0 36.0 42.1 38.7 29.7
Cost to Income Ratio (%) 46.3 43.9 41.6 43.9 41.4 43.6 42.6 44.7 44.5 43.8
Tax Rate (%) 34.8 34.7 34.7 35.6 34.9 34.9 34.5 33.7 34.1 35.1
E: MOSL Estimates
January 2017 148

Bharat Financial Inclusion

Bloomberg SK SM IN CMP: INR632 TP: INR893 (41%) Buy
 BFI’s GLP growth is likely to slow down to 30% YoY, given slower
M. Cap. (INR b)/(USD b) 86.6/1.3
pace of disbursements post 8-November.
 Net profit is likely to grow 54% YoY to INR1.2b, driven by strong
1,6,12 Rel Perf. (%) -3/16/64
loan growth and stable costs.
 Net interest income is likely to grow 31% YoY to INR2.75b, with
Financial Snapshot (INR m)
Y/E March 2016 2017E 2018E 2019E
margins largely stable.
NII 5,796 7,902 10,954 16,905  Cost-to-income ratio is expected to increase sharply from 47% in
PPP 4,325 5,592 7,750 12,427 3QFY16 and 2QFY17 to 55% in 3QFY17.
PAT 3,030 5,858 5,278 8,647  Asset quality is expected to remain stable; in 2QFY17, GNPAs were
EPS (INR) 23.8 42.7 38.5 63.1 at 0.1% and NNPAs at 0.04%.
BV/Share (INR) 108.6 198.4 236.9 300.0
 We factor in provisions of INR200m, as against INR90m in 2QFY17.
RoA on AUM (%) 5.1 6.3 3.8 4.4
RoE (%) 24.9 28.6 17.7 23.5  The stock trades at 3.0x FY17E and 2.5x FY18E BV (post-dilution).
Valuations Maintain Buy.
P/BV (x) 5.8 3.2 2.7 2.1  Management commentary on growth trends/demand for loans.
 Guidance on C/I ratio.
 Movement in borrowing costs and margins.
 Asset quality trends and collection efficiency in UP and
Maharashtra.

Y/E March FY16 FY17
FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Other Income 236 249 268 297 348 382 344 534 1,049 1,609
Total income 2,409 2,913 3,073 3,298 3,690 4,074 4,036 4,334 11,691 16,133
Y - o- Y G row th ( % ) 5 8 .6 5 3 .2 6 6 .6 6 6 .9 5 3 .2 3 9 .9 3 1 .3 6 1 .0 6 1 .5 3 8 .0
Other income 418 330 362 406 452 422 450 392 1,515 1,715
Net Income 1,819 2,073 2,107 2,362 2,780 2,921 2,753 2,773 8,361 11,226
Y - o- Y G row th ( % ) 5 0 .1 5 4 .8 6 4 .3 6 7 .8 5 2 .9 4 0 .9 3 0 .7 1 7 .4 5 9 .6 3 4 .3
Operating Expenses 952 974 989 1,121 1,269 1,372 1,509 1,483 4,036 5,634
Provisions 72 88 87 139 120 90 200 295 386 705
Profit before tax 795 1,012 1,031 1,102 1,391 1,459 1,043 995 3,939 4,888
Y - o- Y G row th ( % ) 6 1 .2 7 8 .2 1 5 1 .1 1 3 7 .2 7 4 .9 4 4 .2 1 .2 -9 .7 1 0 3 .5 2 4 .1
Tax Provisions 183 233 236 257 -969 0 0 0 909 -969
Net Profit 611 779 795 845 2,359 1,459 1,043 995 3,030 5,856
Y - o- Y G row th ( % ) 2 4 .0 3 7 .2 9 3 .6 1 0 8 .4 2 8 5 .8 8 7 .4 3 1 .2 1 7 .8 6 1 .4 9 3 .3
January 2017 149

Dewan Housing Finance

Bloomberg DEWH IN CMP: INR255 TP: INR413 (62%) Buy
 AUM is likely to grow moderately by 8% YoY on account of the
1,6,12 Rel Perf. (%) -4 / 18 / 2
 NII growth is likely to moderate to 16%, and margins are likely to
remain largely stable on a sequential basis. DHFL will get the full
benefit of NCD raise in the prior quarter.
Financials & Valuation (INR b)  Operating expenses will grow moderately at 10.5% YoY. However,
Y/E March 2016 2017E 2018E 2019E
NII 14.8 19.5 23.7 29.2
due to sluggish NII growth, C/I ratio will increase 270bp QoQ to
PPP 12.8 15.7 19.4 24.2 28.7%.
Adj. PAT 7.3 8.9 11.0 13.4  Asset quality to remain stable. As of June 2016, GNPAs were 0.96%
EPS (INR) 25.0 29.7 36.8 44.6 and NNPAs nil. We factor in provisions of INR550m for 3QFY17.
EPS Gr. (%) 17.2 19.0 23.7 21.2  Net profit is likely to grow 23% YoY to INR2.23b.
BV (INR) 172 201 228 263
 The stock trades at 1.5x FY17E and 1.3x FY18E BV. Maintain Buy.
RoAA (%) 1.2 1.2 1.3 1.3
RoE (%) 15.1 16.1 17.1 18.2
Payout (%) 46.1 23.2 23.2 23.2
Valuations
P/E (x) 10.2 8.6 6.9 5.7
 Business growth trends and momentum, and management
P/BV (x) 1.5 1.3 1.1 1.0 commentary on the same.
P/ABV (x) 1.5 1.3 1.1 1.0  Management views on margins due to change in liability mix.
Div. Yield (%) 7.8 2.3 2.9 3.5  Asset quality trends in non-retail and LAP segments.
DEWH: Quarterly performance (INR Million)

YoY Growth (%) 21.6 22.5 20.2 19.7 14.5 21.1 15.6 16.3 21.0 16.9
Fees and other income 201 477 392 507 275 447 500 872 1,577 2,094
Net Income 4,189 4,542 4,656 4,880 4,840 5,371 5,430 5,958 18,267 21,599
YoY Growth (%) 17.7 22.5 18.5 19.9 15.5 18.3 16.6 22.1 19.7 18.2
YoY Growth (%) 15.6 7.6 8.5 28.1 8.4 6.1 2.4 10.4 14.8 6.9
Operating Profits 2,934 3,223 3,285 3,330 3,479 3,972 4,025 4,248 12,772 15,724
YoY Growth (%) 18.6 30.0 23.3 16.4 18.6 23.2 22.6 27.5 21.9 23.1
Provisions 320 450 480 500 450 450 550 750 1,750 2,200
Tax Provisions 881 970 946 934 1,015 1,196 1,185 1,216 3,730 4,612
Profit after tax 1,733 1,804 1,859 1,897 2,014 2,326 2,290 2,282 7,292 8,912
YoY Growth (%) 17.8 18.5 16.5 16.9 16.2 29.0 23.2 20.3 17.4 22.2
Tax Rate (%) 33.7 35.0 33.7 33.0 33.5 34.0 34.1 34.8 33.8 34.1
E: MOSL Estimates
January 2017 150

Gruh Finance
Bloomberg GRHF IN CMP: INR333 TP: INR339 (+2%) Neutral
 We expect loan growth to moderate to 15% YoY from 22% YoY in
M. Cap. (INR b)/(USD b) 119 / 2
the prior quarter.
1,6,12 Rel Perf. (%) 6 / 15 / 19
 Margins are likely to remain largely unchanged sequentially, but
decline modestly on a YoY basis.
 NII is likely to grow 11% YoY to INR1.3b.
Financials & Valuation (INR b)  Operating expenses are likely to grow 34% YoY and 1% QoQ.
Y/E March 2016 2017E 2018E 2019E  We expect asset quality to remain stable despite the impact of
NII 4.2 5.2 6.4 8.2 demonetization. We expect provisions of INR80m for the quarter.
PPP 3.8 4.7 5.8 7.4  Net profit is likely to grow 19% YoY to INR640m.
PAT 2.4 2.9 3.5 4.5
 The stock trades at 11.5x FY17E and 9.4x FY18E BV. Maintain
EPS (INR) 6.7 7.8 9.6 12.3
EPS Gr. (%) 19.4 17.0 22.9 27.6 Neutral.
BV/Sh. (INR) 23.0 28.1 34.3 42.1
ABV/Sh. (INR) 23.0 28.1 34.3 42.2
RoA (%) 2.4 2.2 2.2 2.3
RoE (%) 31.5 30.7 30.9 32.2 Key issues to watch for
Payout (%) 34.3 30.0 30.0 31.0  Business outlook, loan growth in various geographies.
Valuations
P/E (x) 49.7 42.5 34.6 27.1
P/BV (x) 14.5 11.9 9.7 7.9  Outlook on asset quality.
Div. Yield (%) 0.7 0.7 0.9 1.1  Management’s outlook on developments in the affordable
housing space.
GRHF IN: Quarterly performance (INR Million)

FY16 FY17
Y/E MARCH FY16 FY17E
Total income 2,967 3,118 3,236 3,705 3,463 3,674 3,766 4,695 12,754 15,599
Y-o-Y Growth (%) 22.8 21.0 19.3 21.5 16.7 17.8 16.4 26.7 20.3 22.3
Net Income 1,066 1,131 1,202 1,554 1,222 1,323 1,332 1,880 4,680 5,758
Operating Expenses 196 257 205 245 201 273 275 296 844 1,046
Operating Profit 869 874 997 1,309 1,021 1,050 1,057 1,584 3,836 4,712
Y-o-Y Growth (%) 18.6 22.7 21.8 22.8 17.5 20.1 6.1 21.0 20.4 22.8
Provisions and Cont. 121 72 178 61 125 91 80 63 219 359
Profit before Tax 749 803 818 1,248 896 958 977 1,521 3,617 4,353
Tax Provisions 246 286 281 370 294 339 337 532 1,181 1,502
Net Profit 503 517 537 878 601 619 640 989 2,436 2,851
Y-o-Y Growth (%) 20.0 19.9 20.0 18.5 19.6 19.9 19.2 12.7 19.5 17.0
Int Exp/ Int Earned (%) 64.1 63.7 62.9 58.1 64.7 64.0 64.6 60.0 63.3 63.1
Tax Rate (%) 32.8 35.6 34.4 29.6 32.8 35.4 34.5 35.0 32.7 34.5
E: MOSL Estimates
January 2017 151

HDFC
Bloomberg HDFC IN
CMP: INR1,216 TP: INR1,553 (+28%) Buy
 We expect moderate earnings growth of 12%+ YoY, in line with
M. Cap. (INR b)/(USD b) 1909 / 28
growth witnessed in the prior quarter.
52-Week Range (INR) 1463 / 1012
1,6,12 Rel Perf. (%) -2 / -1 / -4
 We estimate AUM growth at 14%, which will be largely driven by
the individual segment. We expect demonetization to have a
lagged impact on growth, i.e. growth will be impacted more in
4QFY17.
Y/E March 2016 2017E 2018E 2019E
NII 87.0 96.9 108.8 124.4  Margins are likely to decline 20+bp YoY, but remain largely stable
PAT 70.9 75.0 84.8 97.1 QoQ. This will drive 6% YoY NII growth for the quarter.
Adj. EPS (INR) 30.6 34.3 36.9 42.1  Cost-to-income ratio will inch up marginally to 8%.
EPS Gr. (%) 5.8 12.2 7.6 14.0  Asset quality has remained healthy over past several quarters,
BV/Sh. (INR) 221.7 245.3 272.5 304.7 and the trend is likely to continue. However, asset quality in
ABV/Sh. (INR) 169.5 193.2 215.9 248.1
corporate loan book would be a key monitorable.
RoAA (%) 2.6 2.5 2.5 2.5
 We estimate provisions of INR700m, as against INR950m in
Core RoE (%) 21.4 19.5 18.9 18.1
Payout (%) 43.9 43.5 43.5 43.5
2QFY17.
Valuation  The stock trades at 3.7x FY17E AP/ABV and 3.0x FY18E AP/ABV
AP/E (x) 26.1 19.6 16.4 11.7 (price adjusted for value of other businesses and book value
P/BV (x) 5.5 5.0 4.5 4.0 adjusted for investments made in those businesses). Buy.
AP/ABV (x) 4.7 3.5 2.8 2.0
Div. Yield (%) 1.4 1.5 1.7 1.9 Key issues to watch for
 Loan growth and uptick in corporate loans.
 Impact of demonetization on real estate demand.
 Movement in spreads and margins (on individual loans) and
asset quality trends.
HDFC: Quarterly Performance (INR Million)

Y/E March FY16 FY17
FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Interest Income 68,630 68,632 70,037 73,400 73,552 75,431 76,734 83,523 280,699 309,241
Interest Expense 48,245 48,586 48,216 48,699 51,262 52,459 53,508 56,221 193,745 213,449
Y oY C h ang e ( % ) 1 6 .8 6 .7 8 .2 4 .9 9 .3 1 4 .6 6 .4 1 0 .5 8 .8 1 0 .2
Gross fee income 1,755 1,768 1,810 2,894 1,913 1,985 2,750 2,596 8,183 9,245
Core Income 22,140 21,815 23,631 27,595 24,204 24,958 25,977 29,898 95,137 105,037
Y oY C h ang e ( % ) 1 6 .8 6 .5 9 .8 8 .0 9 .3 1 4 .4 9 .9 8 .3 1 0 .1 1 0 .4
% of c ore inc om e 9 .2 8 .6 8 .5 6 .1 9 .4 8 .2 8 .4 6 .3 8 .0 8 .0
Commission expenses 978 1,053 1,087 1,304 1,369 1,344 1,400 1,635 4,422 5,748
% of c ore inc om e 4 .4 4 .8 4 .6 4 .7 5 .7 5 .4 5 .4 5 .5 4 .6 5 .5
Core Operating profits 19,133 18,890 20,543 24,603 20,561 21,565 22,407 26,372 83,126 90,905
Y oY C h ang e ( % ) 1 6 .5 6 .5 9 .1 7 .4 7 .5 1 4 .2 9 .1 7 .2 9 .7 9 .4
Provisions 500 520 680 950 650 950 700 450 2,650 2,750
Core PBT 18,633 18,370 19,863 23,653 19,911 20,615 21,707 25,922 80,476 88,155
Y oY C h ang e ( % ) 1 6 .0 5 .6 8 .1 5 .5 6 .9 1 2 .2 9 .3 9 .6 8 .5 9 .5
Profit on Sale of Inv. 230 480 569 15,199 9,216 281 750 1,503 16,478 11,750
Dividend income 548 4,248 1,356 1,917 510 4,560 1,650 2,609 8,113 9,329
One off expense/Prov 0 0 0 -4,500 -2,750 -4,500 -2,750
PBT 19,520 23,236 21,905 36,421 26,997 25,575 24,257 30,247 101,081 107,076
Provision for Tax 5,910 7,193 6,700 10,350 8,290 7,310 7,277 9,246 30,150 32,123
PAT 13,610 16,043 15,205 26,071 18,707 18,265 16,980 21,001 70,931 74,953
YoY Change (%) 1.2 18.2 6.7 40.0 37.5 13.9 11.7 -19.4 18.4 5.7
E: MOSL Estimates
January 2017 152

Indiabulls Housing
Bloomberg IHFL IN CMP: INR688 TP: INR1,015 (+48%) Buy
 We expect strong loan growth to continue, driven by retail home
M. Cap. (INR b)/(USD b) 271 / 4
loans.
1,6,12 Rel Perf. (%) -14 / -4 / -15  NII is likely to grow 11% YoY in the quarter. Spreads are likely to
contract (but remain over 300bp) due to increased share of home
Financial Snapshot (INR b) loans.
Y/E March 2016 2017E 2018E 2019E  Expenses are likely to grow 28% YoY, resulting in modest uptick in
Net Fin inc 28.7 38.9 49.7 63.7 cost-income ratio.
PPP 36.4 45.4 57.0 71.4
EPS (INR) 55.7 69.5 87.7 113.1  Asset quality is expected to remain stable. In 1QFY17, GNPAs were
EPS Gr. (%) 4.1 24.9 26.1 29.0 at 0.83% and NNPAs at 0.34%.
BV/Sh. (INR) 254 281 317 364  PAT is likely to grow 21% YoY to INR7.3b during the quarter.
RoA on AUM (%) 3.3 3.3 3.3 3.4
RoE (%) 27.1 26.0 29.3 33.2  The stock trades at 2.3x FY17E and 2.0x FY18E BV. Maintain Buy.
Payout (%) 76.0 52.5 50.0 58.5
Valuations
P/E (x) 12.4 9.9 7.8 6.1  AUM growth trend and growth guidance post demonetization.
P/BV (x) 2.7 2.5 2.2 1.9  Movement in incremental spreads and margins.
P/ABV (x) 2.7 2.5 2.2 1.9  Asset quality trends in corporate segment and loan against
Div. Yield (%) 6.5 5.3 6.4 8.2 property.
 Updates on acquisition of retail bank, NorthOak Bank, in the UK.

Y/E March FY16 FY17
FY16 FY17E
Other Income 1,960 2,607 2,326 2,463 2,255 3,651 3,940 4,224 9,356 14,070
Total income 20,249 22,457 23,077 26,472 25,975 28,749 29,790 30,976 92,256 115,490
Y-o-Y Growth (%) 27.4 31.7 24.2 24.7 28.3 28.0 29.1 17.0 26.8 25.2
Net Income 8,859 10,007 10,820 12,855 11,866 12,470 13,348 15,290 42,541 52,975
Y-o-Y Growth (%) 26.6 33.4 30.2 22.3 33.9 24.6 23.4 18.9 27.7 24.5
Profit before tax 6,922 7,413 8,055 8,898 8,750 9,212 9,806 11,668 31,289 39,437
Y-o-Y Growth (%) 29.2 31.1 29.5 18.7 26.4 24.3 21.7 31.1 26.5 26.0
Tax Provisions 1,810 1,858 2,010 2,083 2,401 2,352 2,452 2,852 7,761 10,056
Net Profit 5,113 5,555 6,045 6,815 6,349 6,861 7,355 8,816 23,528 29,380
Minority Int 0 0 -21 -60 -49 -18 -57 -56 -81 -179
Net Profit after MI 5,113 5,555 6,024 6,754 6,301 6,843 7,298 8,760 23,447 29,201
Y-o-Y Growth (%) 20.7 23.9 26.0 22.6 23.2 23.2 21.1 29.7 23.3 24.5
E: MOSL Estimates
January 2017 153

LIC Housing Finance

Bloomberg LICHF IN CMP: INR521 TP: INR719 (+38%) Buy
 LICHF is likely to report strong earnings growth of 27% YoY, led by
M. Cap. (INR b)/(USD b) 262 / 4
stable loan growth and improvement in spreads.
1,6,12 Rel Perf. (%) -9 / 6 / 2
 Margins are likely to improve ~20bp YoY, driven by significantly
lower cost of funds due to falling bond yields as well as significant
share of fixed rate book.
Y/E March 2016 2017E 2018E 2019E  We expect loan growth of 15% YoY, driven primarily by the retail
NII 29.4 36.4 42.6 50.7 home loan segment. The share of builder loans is likely to remain
PPP 27.1 33.2 38.7 46.0 below 3% of overall book.
Adj. PAT 16.6 19.9 24.3 28.9  Operating expenses shall grow 6% YoY, resulting in C/I ratio of
Adj. EPS (INR) 32.9 39.4 48.1 57.3
13% (v/s 15% YoY).
EPS Gr. (%) 23.3 19.7 22.3 19.1
BV/Sh (INR) 181.1 212.8 251.4 297.4  Asset quality is likely to remain stable. We model provisions of
RoAA (%) 1.5 1.5 1.5 1.6 INR400m, as against INR303m in 2QFY17.
Payout (%) 19.4 20.3 20.3 20.3
Valuations
P/E (x) 15.8 13.2 10.8 9.1
P/BV (x) 2.9 2.4 2.1 1.8 Key issues to watch for
Div. Yield (%) 1.1 1.3 1.6 1.9  Trend in incremental spreads, given stable share of LAP and
lower cost of funds.
 Performance of corporate loan book and loans against property.
 Management commentary on increasing competitive intensity
(which is resulting in higher repayments) and margin trends.
LICHF: Quarterly Performance (INR Million)

Y/E March FY16 FY17
FY16 FY17E
Interest Income 29,174 30,260 31,018 32,057 33,263 34,283 35,821 37,282 122,508 140,649
YoY Growth (%) 30.2 34.8 36.2 26.4 25.1 20.8 24.5 24.5 31.6 23.7
Fees and other income 481 634 549 683 535 616 500 918 2,346 2,569
Net Income 7,069 7,803 8,018 8,897 8,780 9,273 9,798 11,143 31,787 38,994
YoY Growth (%) 24.6 31.3 30.0 25.3 24.2 18.8 22.2 25.2 27.7 22.7
Operating Expenses 835 1,060 1,214 1,578 1,382 1,364 1,281 1,758 4,687 5,784
YoY Growth (%) 25.3 35.4 28.8 27.0 18.7 17.3 25.2 28.2 29.1 22.5
Provisions and Cont. 443 301 344 376 1,165 303 400 432 1,465 2,300
Tax Provisions 1,969 2,325 2,271 2,463 2,156 2,659 2,800 3,204 9,028 10,819
Net Profit 3,821 4,117 4,189 4,480 4,078 4,948 5,316 5,749 16,608 20,092
YoY Growth (%) 18.6 20.6 21.7 18.5 6.7 20.2 26.9 28.3 19.8 21.0
Adj PAT (Post Tax) 3,821 4,117 4,189 4,480 4,078 4,948 5,316 5,749 16,608 19,884
YoY Growth (%) 18.6 20.6 21.7 18.5 6.7 20.2 26.9 28.3 23.3 19.7
Loan Growth (%) 17.9 17.0 15.2 15.5 15.4 14.9 15.0 16.6 15.5 16.6
Borrowings Growth (%) 17.8 15.2 14.6 14.9 15.7 14.2 0.0 0.0 14.9 21.1
Tax Rate (%) 34.0 36.1 35.2 35.5 34.6 35.0 34.5 35.8 35.2 35.0
E: MOSL Estimates
January 2017 154

Mahindra Financial Services

Bloomberg MMFS IN CMP: INR281 TP: INR339 (+21%) Buy
 MMFS’ AUM is likely to grow 8% YoY, but remain largely stable on
M. Cap. (INR b)/(USD b) 154 / 2
a sequential basis.
1,6,12 Rel Perf. (%) 0 / -19 / 8
 NII is likely to grow 15% YoY to INR8.5b, on account of modest
spread expansion.
 Net income is likely to remain flat YoY at INR7.9b. Margins are
Y/E March 2016 2017E 2018E 2019E likely to improve QoQ on back of lower slippages.
NII 32.1 33.7 37.9 43.4  Asset quality might deteriorate sequentially. We expect MMFS to
PPP 20.9 20.1 21.9 24.6 use the RBI dispensation regarding NPA recognition norms.
PAT 6.7 7.1 8.2 9.1  We expect provisions of INR2.5b v/s INR3.0b in 2QFY17 and
EPS (INR) 11.9 12.7 14.6 16.0
INR3.4b in 3QFY16.
BV/Sh.(INR) 107.8 116.9 127.5 139.0
ABV/Sh (INR) 93.6 105.0 117.7 130.1
 As a result, we expect net profit to grow 125% YoY to INR1.5b.
RoA on AUM (%) 1.9 1.8 1.9 1.8  The stock trades at 2.2x FY17E and 2.0x FY18E BV. Maintain Buy.
RoE (%) 11.4 11.3 11.9 12.0
Payout (%) 47.2 28.1 28.1 28.1
Valuations
P/BV (x) 2.6 2.4 2.2 2.0  Management commentary on performance of rural areas.
P/ABV (x) 3.0 2.7 2.4 2.2  Commentary on pick-up in the CV cycle
Div. Yield (%) 1.4 1.1 1.2 1.4  Asset quality trend in the wake of good monsoon.
 Margin and growth trends.
 Performance of subsidiaries.

Y/E March FY16 FY17
FY16 FY17E
Other Income 76 183 85 176 93 241 120 138 519 591
Total income 13,684 14,383 14,087 16,897 13,757 15,157 15,782 17,730 59,051 62,426
YoY Growth (%) 6.7 5.1 0.9 9.9 0.5 5.4 12.0 4.9 5.7 5.7
Net Income 7,239 7,841 7,391 10,186 6,847 8,071 8,484 10,879 32,658 34,281
YoY Growth (%) -0.2 0.7 -6.8 5.7 -22.1 -10.5 8.8 5.6 0.3 -3.7
Provisions 3,228 2,772 3,406 1,089 2,245 3,042 2,500 1,289 10,495 9,077
Tax Provisions 486 799 367 2,003 472 514 821 2,074 3,656 3,881
Net Profit 890 1,462 672 3,703 870 948 1,512 3,815 6,727 7,146
YoY Growth (%) -42.6 -29.4 -50.8 11.1 -2.2 -35.1 125.1 3.0 -19.1 6.2
Provisions/Operating Profits (%) 70.1 55.1 76.6 16.0 62.6 67.5 51.7 18.0 50.3 45.1
Tax Rate (%) 35.3 35.3 35.3 35.1 35.2 35.2 35.2 35.2 35.2 35.2
E: MOSL Estimates
January 2017 155

Muthoot Finance
Bloomberg MUTH IN CMP: INR288 TP: INR373 (+29%) Buy
 AUM is expected to grow 10% YoY, but remain largely stable on a
M. Cap. (INR b)/(USD b) 114 / 2
sequential basis at INR275b.
1,6,12 Rel Perf. (%) -3 / 2 / 57
 Calculated margins are likely to improve YoY to ~11% led by better
auction realization and increase in lending rates. Moreover, cost of
funds is also declining.
Y/E March 2016 2017E 2018E 2019E
 As a result, NII is expected to grow 31% YoY to INR7.6b.
NII 25.4 29.7 34.4 40.1  Asset quality is likely to remain stable with GNPL of ~2.2%.
PPP 14.8 17.6 20.6 24.6  We estimate provisions of INR200m, as against INR171m in 2QFY17
PAT 8.1 11.0 12.8 15.6 and INR74m in 1QFY17.
EPS (INR) 20.3 27.5 32.0 39.0  The stock trades at 1.8x FY17E and 1.6x FY18E BV. Maintain Buy.
BV/Sh.(INR) 140.8 158.4 178.7 203.6
RoA on AUM (%) 3.4 4.2 4.2 4.2
RoE (%) 15.1 18.4 19.0 20.4
Div. Yld. (%) 2.1 2.9 3.3 4.1
P/E (x) 14.2 10.5 9.0 7.4  Management commentary on business growth and steps taken to
P/BV (x) 2.0 1.8 1.6 1.4
sustain AUM growth in the wake of demonetization.
 Movement in yields and margins, with declining cost of funds.
 Progress in gold auctions.

Y/E March FY16 FY17
FY16 FY17E
Other operating income 145 136 148 179 252 320 150 135 607 857
Total Operating income 11,401 11,361 11,383 14,469 12,964 13,817 13,782 13,660 48,614 54,224
YoY Growth (%) 4.8 7.4 6.6 31.5 13.7 21.6 21.1 -5.6 12.7 11.5
Other income 26 38 29 43 44 45 45 52 136 186
Total Income 11,426 11,400 11,412 14,513 13,008 13,862 13,827 13,712 48,750 54,410
YoY Growth (%) 4.6 7.4 6.7 31.7 13.8 21.6 21.2 -5.5 12.7 11.6
Net Income 5,756 5,747 5,796 8,874 7,437 7,925 7,581 7,766 26,173 30,710
YoY Growth (%) 4.6 7.2 23.3 116.9 50.1 69.5 41.3 -30.2 38.9 19.2
Provisions 106 146 74 1,299 176 171 200 199 1,624 746
Tax Provisions 1,003 939 1,032 2,098 1,534 1,657 1,384 1,334 5,072 5,909
Net Profit 1,832 1,745 1,867 2,652 2,703 2,967 2,617 2,687 8,097 10,975
YoY Growth (%) 1.7 2.2 20.9 60.6 47.6 70.0 40.2 1.3 20.7 35.5
E: MOSL Estimates
January 2017 156

Repco Home Finance

Bloomberg REPCO IN CMP: INR607 TP: INR842 (+39%) Buy
 We expect loan growth to slow down to 18% YoY (stable on a
sequential basis), driven by strong sanction pipeline and
1,6,12 Rel Perf. (%) -1 / -23 / -19
incremental sanctions during the quarter.
 Calculated margins are likely to be decline marginally YoY on
account of yield pressure.
Y/E March 2016 2017E 2018E 2019E  Asset quality is expected to remain stable on a sequential basis.
NII 3.0 3.6 4.8 6.4 We believe it would take some time for asset quality pressure to
PPP 2.7 3.2 4.3 5.8 ease.
PAT 1.5 1.7 2.4 3.2  Provisions are expected to be INR150m v/s INR127m in the prior
EPS (INR) 24.0 26.9 38.0 51.6
quarter and INR92m in 3QFY16.
BV/Sh. (INR) 152.7 176.5 210.1 255.7
RoAA (%) 2.2 1.9 2.2 2.4
 As a result, PAT is expected to grow 7% YoY to INR411m.
Payout (%) 9.0 11.6 11.6 11.6
Valuation
P/E (x) 25.3 22.6 16.0 11.8  Business outlook, loan growth, and share of home loans and
P/BV (x) 4.0 3.4 2.9 2.4 LAP.
Div. Yield (%) 0.3 0.4 0.6 0.9  Repayment trends on account of high share of self-employed
customers.
 Asset quality trends in the LAP segment.
REPCO: Quarterly performance (INR Million)

Interest Income 1,935 2,084 2,191 2,312 2,389 2,500 2,550 2,980 8,521 10,418
Net Interest Income 664 740 781 852 840 903 889 925 3,036 3,557
YoY Growth (%) 25.2 24.7 32.8 28.7 26.5 22.1 13.9 8.6 27.7 17.2
Other income 66 80 63 91 80 98 90 65 300 333
Total Income 730 820 843 943 920 1,000 979 991 3,336 3,890
YoY Growth (%) 24.7 28.4 32.4 26.2 26.0 22.0 16.1 5.1 27.7 16.6
Operating Expenses 154 175 160 153 149 163 201 199 643 712
YoY Growth (%) 37.0 36.8 13.0 -7.1 -3.5 -6.8 25.3 29.9 17.5 10.7
Operating Profits 576 644 683 790 771 837 778 792 2,693 3,178
YoY Growth (%) 21.8 26.3 37.9 35.7 33.9 29.9 13.9 0.3 30.4 18.0
Provisions 113 47 92 140 179 127 150 152 392 608
Tax Provisions 161 207 205 228 196 253 217 220 800 886
Profit after tax 302 391 386 422 395 457 411 420 1,501 1,683
YoY Growth (%) 21.8 21.2 25.5 21.3 30.8 17.0 6.6 -0.6 21.9 12.1
Tax Rate (%) 34.7 34.6 34.7 35.0 33.2 35.7 34.5 34.5 34.8 34.5
E: MOSL Estimates
January 2017 157

Shriram Transport Finance

Bloomberg SHTF IN CMP: INR939 TP: INR1,282 (+37%) Buy
 SHTF’s AUM is expected to continue to slow down to 13% YoY.
M. Cap. (INR b)/(USD b) 207 / 3
 Calculated margins on AUMs will decline QoQ given higher share
1,6,12 Rel Perf. (%) 0 / -24 / 4
of newer vehicles.
 Cost to income is likely to increase ~100bp YoY to 26%, given
sluggish NII growth
Y/E March 2016 2017E 2018E 2019E  GNPLs would remain elevated at +6.5%. We expect the company
Net Inc. 50.7 57.0 66.1 76.8 to use the RBI dispensation provision regarding NPA recognition.
PPP 38.4 42.9 49.8 58.0  Recoveries in the construction equipment financing business also
PAT 11.8 14.4 18.4 22.6 remain a key monitorable.
Cons.PAT 12.1 14.4 18.7 23.0
 We factor in provisions of INR4.8b, as against INR4.6b in 2QFY17.
EPS (INR) 51.9 63.3 81.2 99.7
Cons. EPS (INR) 53.3 63.5 82.3 101.4
 The stock trades at 1.7x FY17E and 1.5x FY18E consolidated BV.
BV/Sh (INR) 447.5 497.3 561.1 639.5 Maintain Buy.
Cons. BV (INR) 449.6 499.6 564.5 644.6
RoA on AUM (%) 2.1 2.2 2.5 2.7
Payout (%) 22.3 21.2 21.2 21.2
 Business growth and momentum, and management
Valuations
P/Cons. EPS (x) 17.6 14.8 11.4 9.3
commentary on the same.
P/Cons. BV (x) 2.1 1.9 1.7 1.5  Movement in borrowing costs and margins.
Div. Yield (%) 1.1 1.2 1.6 1.9  Asset quality trends given impact of demonetization
 Recoveries in equipment financing portfolio.
SHTF: Quarterly Performance (INR Million)

Y/E March FY16 FY17
FY16 FY17
Interest Income 22,015 22,402 23,675 27,207 24,764 24,626 25,611 28,633 95,300 103,634
YoY Growth (%) 39.3 31.3 24.5 34.3 15.5 8.9 2.5 5.6 32.0 7.8
Securitization income 1,313 1,586 1,567 1,705 1,863 2,262 2,285 2,575 6,171 8,984
Net Income (Incl. Securitization) 11,356 11,929 13,002 14,438 13,461 13,530 14,003 16,016 50,727 57,010
YoY Growth (%) 17.4 18.4 23.5 33.0 18.5 13.4 7.7 10.9 23.3 12.4
Fees and Other Income 162 211 193 197 167 169 250 242 762 800
Net Operating Income 11,519 12,140 13,195 14,635 13,628 13,699 14,253 16,258 51,489 57,810
YoY Growth (%) 16.2 18.6 23.6 32.9 18.3 12.8 8.0 11.1 23.1 12.3
YoY Growth (%) 16.4 19.3 24.3 33.9 19.4 15.2 6.5 7.8 23.7 11.8
Provisions 3,823 3,997 4,199 8,567 4,591 4,591 4,780 7,012 20,586 20,973
Tax Provisions 1,579 1,761 1,959 733 1,956 2,063 1,992 1,560 6,032 7,571
Net Profit 3,211 3,381 3,751 1,439 3,741 3,877 3,781 3,002 11,782 14,373
YoY Growth (%) 4.8 11.9 20.1 -54.6 16.5 14.7 0.8 108.6 -4.8 22.0
AUM Growth (%) 11.3 13.8 16.6 23.1 23.6 19.1 0.0 0.0 23.1 14.2
Securitization Inc. / Net Inc. (%) 11.4 13.1 11.9 11.7 13.7 16.5 16.0 15.8 12.0 15.5
Tax Rate (%) 33.0 34.3 34.3 33.7 34.3 34.7 34.5 34.2 33.9 34.5
E: MOSL Estimates; * Quarterly nos. and full year nos. will not tally due to different way of reporting financial nos
January 2017 158

Healthcare
Company name Pricing pressure in the US to keep growth under check
Alembic Pharmaceuticals
Biocon
 We expect our pharma universe to report sequentially flat EBITDA growth in
Cadila Healthcare
Cipla 3QFY17, largely led by pricing pressure and higher R&D expenditure. Also,
Divi's Laboratories increased US regulatory scrutiny is resulting in higher remediation expenses and
Dr Reddy’ s Labs
de-risking of key products. This, in turn, should weigh down on operating
Glenmark Pharma
GSK Pharma margins for our coverage universe.
Ipca Laboratories  Glenmark is expected to exhibit strong growth in the US, led by Z etia FTF and a
Lupin series of other generic launches. Aurobindo should report stable US sales, driven
Ranbaxy Labs
Sanofi India by key launches (including Crestor). On the other hand, Sun and Lupin should
Sun Pharma continue witnessing a sequential decline in the US business on the back of
Torrent Pharmaceuticals competition in key products.
 After a strong 1HFY17, the domestic pharma business is expected to face
headwinds from seasonal weakness and demonetization. Although the chronic
business may benefit at the margin due to demonetization, the acute segment
may be see some impact in the near term.
 Among MNCs, Sanofi is likely to report better numbers, while GSK should face
some pressure from the ongoing supply issues.
 The pace of approvals has picked up at the US FDA. However, the lack of key
approvals, higher R&D spends and regulatory concerns in the domestic/US
markets are likely to keep growth under check.
 We maintain our top picks – Aurobindo, Sun Pharma, Fortis and Granules.

CMP Var Var Var Var Var Var
(INR) % YoY % QoQ % YoY % QoQ % YoY % QoQ
Healthcare
Alembic Pharma 605 Neutral 8,075 -12.3 -7.3 1,696 -55.8 -4.2 1,137 -57.7 -4.2
Alkem Lab 1,670 Neutral 14,404 13.0 -12.1 2,548 8.2 -17.9 2,083 11.2 -26.4
Aurobindo Pharma 666 Buy 38,595 10.4 2.2 9,456 14.9 1.8 6,106 16.3 3.3
Biocon 936 Sell 9,273 12.0 -1.3 2,253 25.3 0.2 1,382 34.2 -6.0
Cadila Health 362 Buy 25,827 6.4 9.8 5,553 -4.0 7.6 3,688 -5.5 9.2
Cipla 568 Neutral 39,015 25.6 4.0 6,897 30.3 1.3 4,077 18.3 15.1
Divis Labs 753 Neutral 10,349 21.5 4.3 3,881 20.8 5.5 2,764 12.1 -8.8
Dr Reddy’ s Labs 3,091 Neutral 37,242 -6.1 3.9 7,821 -22.0 29.8 4,494 -22.4 38.5
Fortis Health 189 Buy 11,244 8.0 -6.0 1,054 665.5 6.5 -766 Loss PL
Glenmark Pharma 899 Neutral 23,424 35.8 7.8 5,388 59.5 35.4 3,108 82.9 41.7
Granules India 110 Buy 4,070 18.0 11.9 834 23.2 12.4 389 43.2 -4.7
GSK Pharma 2,747 Neutral 8,016 10.0 2.4 1,523 48.3 22.3 1,166 40.2 18.2
IPCA Labs. 550 Neutral 8,098 18.4 -7.1 1,218 36.5 -4.8 567 135.8 20.3
Lupin 1,494 Buy 42,453 19.4 -1.1 10,499 19.7 2.1 6,241 17.8 -5.8
Sanofi India 4,290 Buy 6,145 8.1 -1.6 1,438 27.3 -0.7 809 14.8 0.3
Sun Pharma 638 Buy 80,368 13.5 -2.8 26,834 23.7 -15.3 17,534 23.8 -21.6
Torrent Pharma 1,351 Buy 14,773 -4.0 5.1 3,565 -41.8 8.0 2,250 -35.4 8.7
Kumar Saurabh (K umar.Saurabh@MotilalOswal.com); +91 22 6129 1519

January 2017 159
Exhibit 2: 3QFY17 Aggregates

Healthcare Universe YoY Growth (%) EBITDA Margin (%) PAT margin (%)
Sales EBITDA Adj PAT Dec-16 Dec-15 CHG (BPS) Dec-16 Dec-15 CHG (BPS)
MNC Pharma 9.1 37.3 28.6 20.9 16.6 429 13.9 11.8 211
Big 5 Generics 9.3 10.4 10.6 26.8 26.6 25 17 16.8 19
CRAMS 20.5 21.2 15.2 32.7 32.5 20 21.9 22.9 -101
Second Tier generics 16.2 -0.5 1 20.1 23.5 -337 12.5 14.3 -187
Sector Aggregate 11.7 9.6 8.4 24.2 24.7 -47 15 15.4 -45
Depreciated USD/INR to benefit export-oriented companies

 The average rate of the INR against the USD has depreciated by ~2.3% YoY over
the past year (67.46 in 3QFY17 v/s 65.95 last year).
 USD/INR, however, has been flat sequentially. It is thus unlikely to result in any
significant MTM impact for companies with large forex debt and derivative
exposure.
 Brexit was expected to have a negative impact on companies from 2QFY17.
However, we note that most Indian companies have limited exposure to the UK
market (< 1-2% of sales). Also, post the Brexit vote, it is still unclear whether or
not Indian companies will have to conduct separate trials for approval in the UK
and other EU markets. Separate trials would mean additional cost for companies
(however, this is not expected to happen at least for next two years).
Relative Performance-1 Yr (%) Relative Performance-3- month (%)
Sensex Index MOSL Health care Index Sensex Index MOSL Health care Index
120
104
110 100
100 96
90 92
80 88
Nov-16
Dec-16
Sep-16
Oct-16
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16

Healthcare
Alembic Pharma 605 Neutral 23.5 30.7 36.5 25.7 19.7 16.6 16.7 12.7 10.2 25.1 26.8 25.6
Alkem Lab 1,670 Neutral 77.3 84.4 98.4 21.6 19.8 17.0 18.0 14.8 11.6 23.9 21.8 21.5
Aurobindo Pharma 666 Buy 42.0 50.0 56.9 15.8 13.3 11.7 11.2 9.2 7.7 29.9 27.2 24.2
Biocon 936 Sell 27.1 34.3 45.0 34.6 27.3 20.8 19.8 15.7 12.2 12.2 13.9 16.2
Cadila Health 362 Buy 13.6 18.7 22.9 26.6 19.3 15.8 17.5 13.0 10.5 23.9 27.2 26.8
Cipla 568 Neutral 18.1 25.6 32.4 31.4 22.2 17.5 17.8 13.5 10.8 11.2 13.9 15.1
Divis Labs 753 Neutral 45.4 51.0 57.0 16.6 14.8 13.2 11.7 10.0 8.5 26.7 26.5 25.7
Dr Reddy’ s Labs 3,091 Neutral 82.7 141.7 170.0 37.4 21.8 18.2 19.7 13.0 10.3 10.6 16.1 16.8
Fortis Health 189 Buy -1.3 3.5 6.7 -143.0 53.6 28.2 19.7 11.4 9.0 -1.5 3.8 6.4
Glenmark Pharma 899 Neutral 41.4 49.7 60.5 21.7 18.1 14.9 11.1 9.8 9.6 20.4 19.1 19.0
Granules India 110 Buy 7.1 10.0 13.9 15.6 11.0 7.9 8.3 6.4 4.8 20.5 22.7 26.0
GSK Pharma 2,747 Neutral 50.4 61.8 71.6 54.5 44.5 38.3 45.7 36.4 29.9 29.6 40.8 50.3
IPCA Labs. 550 Neutral 17.0 29.4 39.0 32.3 18.7 14.1 15.1 11.2 8.7 9.0 14.1 16.5
Lupin 1,494 Buy 61.6 77.0 89.0 24.3 19.4 16.8 15.6 12.5 10.4 22.8 23.4 22.2
Sanofi India 4,290 Buy 142.2 172.8 198.9 30.2 24.8 21.6 16.2 13.7 11.6 17.8 19.4 19.7
Sun Pharma 638 Buy 27.8 37.9 42.9 22.9 16.8 14.9 14.0 11.1 9.0 20.3 23.9 22.3
Torrent Pharma 1,351 Buy 57.7 78.4 96.0 23.4 17.2 14.1 15.4 12.3 9.8 26.4 29.9 30.2
January 2017 160

Alembic Pharma
Bloomberg ALPM IN CMP: INR605 TP: INR640 (+6%) Neutral
 We expect Alembic Pharma (ALPM) to post 12.3% YoY decline in
M. Cap. (INR b)/(USD b) 114 / 2
3QFY17 reported sales to INR8b. International business is expected
1,6,12 Rel Perf. (%) -4 / 7 / -15
to decline 34.4% YoY owing to lower contribution from gAbilify,
while India business is expected to witness 14.2% YoY growth aided
by strong traction within the Anti-Infective portfolio.
Y/E MARCH 2016 2017E 2018E 2019E
 Reported EBITDA is likely to decline 55% YoY to INR1.7b, with
Sales 31.5 31.9 38.5 45.1
EBITDA margin contracting 2070bp YoY, primarily on account of
EBITDA 10.0 6.7 8.9 10.8 lower gAbilify sales in 3QFY17 numbers.
NP 4.8 4.4 5.8 6.9  We expect reported PAT to decrease 57.7% YoY to INR1.1b, in line
EPS (INR) 38.2 23.5 30.7 36.5 with operational performance.
EPS Gro. (%) 154.6 -38.4 30.4 18.8  We believe increase in competition in gAbilify, coupled with high
BV/Sh. (INR) 84.9 102.4 127.1 157.6 R&D expense and rise in depreciation due to planned capex of
RoE (%) 38.8 25.1 26.8 25.6 INR15b over next 2-3 years, will keep profit growth under check.
RoCE (%) 50.6 23.5 25.6 24.9 The stock trades at 19.7x FY18E EPS—in line with peers. We
Valuations maintain our Neutral rating with a target price of INR640 (20x
P/E (x) 15.8 25.7 19.7 16.6 FY18E EPS).
P/BV (x) 7.1 5.9 4.8 3.8
EV/EBITDA (x) 11.1 16.7 12.7 10.2
Key issues to watch out
EV/Sales (x) 3.5 3.5 2.9 2.4
 Contribution of Chronic portfolio and growth strategy.
Div. Yield (%) 0.7 0.8 0.8 0.8  Performance of US operations amid market pressure.
 Outlook on future ANDA launches/filings.
Quarterly performance (INR million)

Net Sales 5,833 10,033 9,210 6,256 7,270 8,716 8,075 7,824 31,453 31,885
YoY Change (%) 18.0 83.7 80.3 24.7 24.6 -13.1 -12.3 25.1 68.8 1.4
EBITDA 1,021 3,748 3,839 1,423 1,559 1,771 1,696 1,670 10,025 6,696
Margins (%) 17.5 37.4 41.7 22.7 21.4 20.3 21.0 21.3 31.9 21.0
Depreciation 129 133 217 244 194 206 222 405 722 1,027
Interest 6 7 10 13 11 10 3 -11 37 12
Other Income 0 10 28 26 14 12 15 -9 91 32
PBT 886 3,618 3,640 1,192 1,369 1,567 1,486 1,267 9,357 5,688
Tax 188 737 951 286 333 332 350 237 1,986 1,251
Rate (%) 21.2 20.4 26.1 24.0 24.3 21.2 23.6 18.7 21.2 22.0
MI & Profit/Loss of Asso. Cos. 1 -1 -1 -5 16 49 -1 -5 6 -2
Reported PAT 698 2,882 2,690 911 1,020 1,187 1,137 1,034 7,365 4,438
Adj PAT 698 2,882 2,690 911 1,020 1,187 1,137 1,034 7,365 4,438
YoY Change (%) 7.9 273.1 280.7 29.5 46.2 -58.8 -57.7 13.6 212.8 -39.7
Margins (%) 12.0 28.7 29.2 14.6 14.0 13.6 14.1 13.2 23.4 13.9
E: MOSL Estimates
January 2017 161

Alkem Labs
Bloomberg ALK EM IN CMP: INR1670 TP: INR1800 (+8%) Buy
Equity Shares (m) 119.6  After growing strongly (~20% YoY) over past two quarters,
M. Cap. (INR b)/(USD b) 200 / 3
revenues are expected to increase 13% YoY in 3Q. The slowing
52-Week Range (INR) 1853 / 1175
1,6,12 Rel Perf. (%) -3 / 25 / 5
pace of growth can be attributed to seasonal weakness and
demonetization. Additionally, we expect revenues to be weighed
down by NPPA-led downward price erosions.
Y/E March 2016 2017E 2018E 2019E
 EBITDA margin is expected to decline 80bp YoY and 130bp QoQ on
Sales 49.9 59.2 68.0 80.5
the back of high base effect, seasonality factor and
EBITDA 8.5 10.7 12.5 15.3 demonetisation.
NP 7.7 9.2 10.1 11.8  We expect PAT to grow 10% YoY, while tax rate is expected to inch
EPS (INR) 64.7 77.3 84.4 98.4 up to ~14% from mid-single-digit in 1HFY17.
EPS Gro. (%) 67.4 19.3 9.3 16.6  ALK EM's US business could potentially double from ~USD150m in
BV/Sh. (INR) 293.0 354.7 420.1 496.3 FY16 to ~USD300m over next 3-4 years, driven by a strong pipeline
RoE (%) 23.8 23.9 21.8 21.5 of ~50 pending ANDAs.
RoCE (%) 17.6 22.0 20.2 25.0  Lower base effect will continue to have a positive impact, as the
Valuations US will still contribute ~22% to sales, much lower than peers at
P/E (x) 25.8 21.6 19.8 17.0 ~40%+. Maintain Buy.
P/BV (x) 5.7 4.7 4.0 3.4
EV/EBITDA (x) 23.3 18.4 15.1 11.9 Key issues to watch out
 Impact of demonetization.
 Update on visibility of approval post EIR at Ankleshwar facility.
 Pick-up in chronic business.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net Revenues 12,075 13,820 12,747 11,426 14,808 16,383 14,404 13,560 49,915 59,156
YoY Change (%) 29.0 25.3 22.6 18.6 13.0 18.7 31.7 18.5
EBITDA 2,062 2,556 2,354 1,580 2,711 3,105 2,548 2,344 8,482 10,707
Margins (%) 17.1 18.5 18.5 13.8 18.3 19.0 17.7 17.3 17.0 18.1
Depreciation 206 259 244 260 230 255 260 259 1,006 1,003
Net Other Income 251 502 161 319 181 219 205 294 975 899
PBT before EO Exp 2,107 2,798 2,270 1,639 2,663 3,069 2,493 2,378 8,451 10,603
EO Exp/(Inc) 0 0
PBT 2,107 2,798 2,270 1,639 2,663 3,069 2,493 2,378 8,451 10,603
Tax 68 81 345 1,066 230 187 360 389 1,606 1,166
Rate (%) 3.2 2.9 15.2 65.0 8.6 6.1 14.4 16.4 19.0 11.0
PAT (pre Minority Interest) 2,039 2,717 1,925 573 2,433 2,882 2,133 1,989 6,845 9,436
Reported PAT 2,011 2,670 1,889 567 2,388 2,828 2,083 1,937 6,731 9,236
YoY Change (%) 17 -56.3 0 0
Adj Net Profit 2,011 2,670 1,872 1,577 2,388 2,828 2,083 1,937 6,731 9,236
YoY Change (%) 17.0 21.4 18.7 5.9 11.2 22.8 45.5 37.2
January 2017 162

Aurobindo Pharma
Bloomberg ARBP IN CMP: INR666 TP: 1050(+58%) Buy
 We expect Aurobindo (ARBP) to post 10% YoY sales growth to
M. Cap. (INR b)/(USD b) 390 / 6
INR38.5b in 3QFY17, aided by sustained traction in the US.
 We expect US business (~58% of formulation sales) to grow 18%
1,6,12 Rel Perf. (%) -9 / -10 / -25
YoY in 3Q. Europe and RoW sales are expected to exhibit modest
3% YoY growth, while API sales are estimated to grow ~5% YoY in
3Q.
 EBITDA margin is likely to expand 100bp YoY to 24.5% (stable
Y/E MARCH 2016 2017E 2018E 2019E
sequentially). Overall EBITDA is estimated to grow 15% YoY to
Sales 139.0 155.2 178.5 203.3
INR9.45b. We expect reported PAT at INR6.1b, compared to
EBITDA 32.1 37.7 44.6 50.8
NP 19.8 24.6 29.2 33.3
INR5.3b in the corresponding quarter last year.
EPS (INR) 33.9 42.0 49.9 56.9  The stock trades at 13.3x FY18E EPS, which is at ~15% discount to
EPS Gro. (%) 25.5 23.9 18.9 14.0 peers. We maintain Buy as we expect the valuation gap to narrow
BV/Sh. (INR) 120.6 160.1 207.5 261.8 on account of the company’s increasing profitability, strong
RoE (%) 32.5 29.9 27.2 24.2 earnings growth trajectory (25% CAGR) and improving free cash
RoCE (%) 20.8 20.6 20.7 19.8 flow. Maintain Buy.
Valuations
P/E (x) 19.7 15.9 13.3 11.7 Key issues to watch out
P/BV (x) 5.5 4.2 3.2 2.5  Debt reduction during the quarter.
EV/EBITDA (x) 13.2 11.2 9.2 7.7  Outlook on US business (~ 35-40 launches expected over next 12
EV/Sales (x) 3.0 2.7 2.3 1.9 months).
Div. Yield (%) 0.2 0.3 0.3 0.4  Profitability of acquired Actavis business in Europe.

Net Sales 32,989 33,651 34,955 37,468 37,666 37,755 38,595 41,199 138,961 155,214
YoY Change (%) 13.3 16.8 10.4 18.5 14.2 12.2 10.4 10.0 14.6 11.7
EBITDA 7,251 7,791 8,230 8,824 8,890 9,292 9,456 10,080 32,056 37,717
Margins (%) 22.0 23.2 23.5 23.5 23.6 24.6 24.5 24.5 23.1 24.3
Depreciation 890 926 995 1,113 1,062 1,102 1,050 1,154 3,926 4,368
Interest 208 241 227 251 206 175 200 233 927 815
Other Income 294 122 69 206 159 83 150 158 3,137 3,496
Extra-Ord expense 106 439 -129 -46 -70 -202 0 2 660 -270
PBT 6,340 6,306 7,206 7,711 7,850 8,300 8,356 8,849 29,680 36,299
Tax 1,634 1,767 1,860 2,097 2,008 2,240 2,250 2,340 7,444 8,839
Rate (%) 25.8 28.0 25.8 27.2 25.6 27.0 26.9 26.4 25.1 24.3
Minority Interest -19 4 -3 -14 -8 3 -15 -30 -39 -50
Reported PAT 4,725 4,536 5,350 5,629 5,850 6,057 6,121 6,538 22,275 27,511
Adj PAT 4,784 4,856 5,251 5,582 5,789 5,912 6,106 6,510 20,304 24,366
YoY Change (%) 15.8 20.9 32.3 38.7 21.0 21.8 16.3 16.6 36.6 20.0
Margins (%) 14.5 14.4 15.0 14.9 15.4 15.7 15.8 15.8 14.6 15.7
E: MOSL Estimates
January 2017 163

Biocon
Bloomberg BIOS IN CMP: INR936 TP: INR750 (-20%) Sell
 Biocon’s revenue is likely to increase 12% YoY to INR9.3b, driven by
M. Cap. (INR b)/(USD b) 187 / 3
18% growth in CRO division, 12% growth in bio-pharma sales and
1,6,12 Rel Perf. (%) 1 / 28 / 71
licensing income at INR67m.
 EBITDA is expected to increase 22% YoY to INR2.2b, with EBITDA
margins at 24.3%.
Y/E MARCH 2016 2017E 2018E 2019E
 We expect PAT to grow to INR1.4b (up 34% YoY), primarily owing to
Sales 34.5 40.5 49.2 62.2
stable revenue growth and EBITDA margin improvement. The key
EBITDA 7.9 9.6 12.1 15.4 thing to watch would be the impact of fire at the R&D center of
NP 4.6 5.4 6.9 9.0 Syngene.
EPS (INR) 23.2 27.1 34.3 45.0  K ey growth drivers for FY17E/18E will be 1) commercialization and
EPS Gro. (%) 15.5 16.5 26.5 31.4 ramp-up of the insulin plant in Malaysia, 2) ramp-up in CRO
BV/Sh. (INR) 202.7 221.9 246.1 278.0 division, 3) contribution from API/immuno-suppressants supplies to
RoE (%) 11.5 12.2 13.9 16.2 partners and 4) branded formulations in India. However, capex for
RoCE (%) 15.9 8.7 10.1 14.7 long-term initiatives is likely to exert pressure on profitability and
Valuations return ratios in the near term.
P/E (x) 40.3 34.6 27.3 20.8  The stock trades at 27.3x FY18E earnings. Maintain Sell.
P/BV (x) 4.6 4.2 3.8 3.4
EV/EBITDA (x) 24.0 19.8 15.8 12.2
Div. Yield (%) 0.5 0.7 0.9 1.2
 Update on Middle-East problems.
 Progress on Rh-Insulin/Glargine in Europe/US and other out-
licensing opportunities.

Net Sales 8,105 7,860 8,282 9,450 9,814 9,400 9,273 11,820 34,507 40,473
YoY Change (%) 12.8 4.9 8.8 13.8 21.1 19.6 12.0 25.1 12.8 17.3
EBITDA 1,978 1,590 1,799 1,852 2,538 2,250 2,253 2,344 7,853 9,551
Margins (%) 24.4 20.2 21.7 19.6 25.9 23.9 24.3 19.8 22.8 23.6
Depreciation 591 610 621 647 661 680 621 803 2,423 2,765
Interest 44 30 15 166 57 70 75 50 102 252
Other Income 304 -750 289 3,014 502 520 375 103 1,192 1,500
PBT 1,647 200 1,452 4,053 2,322 2,020 1,932 1,594 6,520 8,034
Tax 376 290 241 591 552 420 400 355 1,131 1,727
Rate (%) 22.8 145.0 16.6 14.6 23.8 20.8 20.7 22.3 17.3 21.5
Adj PAT 1,238 970 1,030 742 1,466 1,470 1,382 923 4,646 5,414
YoY Change (%) 20.2 -4.9 13.4 -63.2 34.6 51.5 34.2 -72.1 -7.0 16.5
Margins (%) 15.3 12.3 12.4 7.9 17.0 15.6 14.9 7.8 13.5 13.4
January 2017 164

Cadila Healthcare
Bloomberg CDH IN CMP: INR362 TP: INR450 (+24%) Buy
 Cadila Healthcare's (CDH) 3QFY17 revenue is likely to grow 6.4%
M. Cap. (INR b)/(USD b) 370 / 5
YoY to INR25.8b, driven by 5% YoY growth in the US formulations
1,6,12 Rel Perf. (%) -10 / 11 / 9
business. Growth in the US formulations business is expected to be
largely driven by the recent launch of authorized generic of Asacol
HD.
Y/E MARCH 2016 2017E 2018E 2019E
 Overall export formulations are expected to grow 5.4% YoY to
Sales 97.5 100.3 120.5 141.4
INR13.7b, while domestic formulation is likely to grow 13.4% YoY to
EBITDA 23.0 22.0 28.9 34.6 INR10.1b.
NP 15.8 13.9 19.2 23.4  We expect EBITDA to decline 4% YoY to INR5.5b and the margin to
EPS (INR) 15.4 13.6 18.7 22.9 contract 230bp. Adj. PAT is also likely to decline 5.5% YoY to
EPS Gro. (%) 37.7 -11.8 37.5 22.2 INR3.7b.
BV/Sh. (INR) 52.3 61.5 75.9 94.4  We believe CDH has made investments in the right areas, and will
RoE (%) 32.8 23.9 27.2 26.8 start accruing benefits over next 2-3 years. We expect sharp ramp-
RoCE (%) 23.3 18.9 22.8 23.7 up in the US business post successful remediation of Moraiya
Valuations warning letter. We estimate 10% EPS CAGR for FY16-18E, with
P/E (x) 23.5 26.6 19.4 15.8 better return ratios over next two years.
P/BV (x) 6.9 5.9 4.8 3.8  The stock trades at 19.3x FY18E EPS. Maintain Buy.
EV/EBITDA (x) 16.7 17.5 13.0 10.6
Div. Yield(%) 0 0 0 0 Key issues to watch out
 Update on US FDA resolution for Moraiya facility.
 Outlook for recovery in domestic formulations.
 Progress on improvement in balance sheet.

Net Revenues 23,159 23,308 24,284 24,491 22,871 23,531 25,827 28,059 95,242 100,288
YoY Change (%) 23.7 10.6 10.9 7 -1.2 1 6.4 14.6 12.9 5.3
EBITDA 5,111 5,907 5,787 5,814 5,239 5,160 5,553 6,011 20,695 21,963
Margins (%) 22.1 25.3 23.8 23.7 22.9 21.9 21.5 21.4 21.7 21.9
Depreciation 691 725 770 783 843 864 860 906 3,022 3,473
Interest 119 130 126 100 140 187 140 99 463 566
Other Income 240 200 255 241 153 236 215 188 918 792
PBQ before EO Income 4,541 5,252 5,146 5,172 4,409 4,345 4,768 5,194 18,128 18,716
EO Exp/(Inc) -506 -155 9 -8 2 0 0 0 -660 0
PBQ after EO Income 5,047 5,407 5,137 5,180 4,407 4,345 4,768 5,194 18,788 18,716
Tax 577 736 1,149 1,259 966 1,068 1,200 1,071 4,298 4,305
Rate (%) 11.4 13.6 22.4 24.3 21.9 24.6 25.2 20.6 22.9 23
Min. Int/Adj on Consol -132 -79 92 34 -121 -99 -120 -140 300 -480
Adj PAT 4,096 4,595 3,903 3,881 3,564 3,376 3,688 4,263 14,350 14,891
YoY Change (%) 103.2 64.6 38.6 -15.7 -13 -26.5 -5.5 9.9 22.4 3.8
Margins (%) 17.7 19.7 16.1 15.8 15.6 14.3 14.3 15.2 15.1 14.8
E: MOSL Estimates
January 2017 165

Cipla
Bloomberg CIPLA IN CMP: INR568 TP: INR525 (-8%) Neutral
 We expect Cipla’s revenues to grow 25.6% YoY to INR39b in
M. Cap. (INR b)/(USD b) 456 / 7
3QFY17.
1,6,12 Rel Perf. (%) -2 / 14 / -16
 Export formulation business is expected to grow 25.5% YoY to
INR21.7b. Domestic business is also expected to grow 15% YoY to
INR13.7b, driven by traction in Respiratory business. Impact of
Y/E MARCH 2016 2017E 2018E 2019E
demonetization will be the key to watch. Export API sales are
Sales 136.8 155.2 182.2 210.1
expected to report 11.8% YoY growth to INR2.4b.
EBITDA 25.0 27.3 35.5 43.1  EBITDA is likely to grow 30.3% YoY to INR6.9b, with margin
NP 15.1 14.5 20.5 26.0 expansion of 70bp to 17.7%, owing to lower gNexium sales
EPS (INR) 18.8 18.1 25.6 32.4 compared to 3QFY16. We expect reported PAT to increase 18.3%
EPS Gro. (%) 34.0 -3.8 41.2 26.6 YoY to INR4.07b.
BV/Sh. (INR) 147.4 161.8 184.4 213.7  We believe that earnings acceleration and potential upgrades on
RoE (%) 12.8 11.2 13.9 15.1 successful EU inhaler portfolio monetization would help it sustain
RoCE (%) 10.6 8.8 11.1 12.5 current multiples going forward (24x one-year forward P/E). The
Valuations stock trades at 22.2x FY18E earnings. Maintain Neutral.
P/E (x) 30.2 31.4 22.2 17.5
P/BV (x) 3.9 3.5 3.1 2.7
EV/EBITDA (x) 20.0 18.1 13.7 10.9  Launch of combination inhaler in UK market (USD450m market
Div. Yield (%) 0.4 0.4 0.4 0.4 size).
 Margin improvement in Medpro operations (acquired in July
2014).
 Sustained strong growth in domestic formulations (38% of sales).

Net Revenues 38,385 34,551 31,066 32,665 36,500 37,510 39,015 42,172 136,666 155,197
YoY Change (%) 41.1 24.9 12.3 5.6 -4.9 8.6 25.6 29.1 20.5 13.6
EBITDA 10,545 7,860 5,294 4,421 6,112 6,807 6,897 7,498 28,120 27,315
Margins (%) 27.5 22.7 17.0 13.5 16.7 18.1 17.7 17.8 20.6 17.6
Depreciation 1,494 1,584 1,375 1,414 2,038 2,292 1,650 2,614 5,867 8,594
Interest 639 636 230 368 315 352 350 333 1,872 1,350
Other Income 505 308 51 547 252 272 275 301 1,411 1,100
PBT after EO expense 8,917 5,948 3,741 3,186 4,011 4,436 5,172 4,852 21,792 18,471
Tax 2,418 401 120 -39 553 719 1,000 1238 2,899 3,510
Rate (%) 27.1 6.7 3.2 -1.2 13.8 16.2 19.3 25.5 13.3 19.0
Minority Interest 7.4 117.0 174.2 185.4 67.6 173.6 95.0 83.8 484.0 420.0
Reported PAT 6,492 5,430 3,447 3,040 3,391 3,543 4,077 3,531 18,409 14,542
YoY Change (%) 120.4 81.8 5.1 17.1 -47.8 -34.7 18.3 16.1 55.9 -21.0
Margins (%) 16.9 15.7 11.1 9.3 9.3 9.4 10.4 8.4 13.5 9.4
E: MOSL Estimates
January 2017 166

Divis Laboratories
Bloomberg DIVI IN CMP: INR753 TP: INR975 (+29%) Neutral
 Divis Laboratories (DIVI) is likely to register 21.5% YoY growth in
M. Cap. (INR b)/(USD b) 200 / 3
3QFY17 revenue to INR10.3b on the back of lower base and muted
1,6,12 Rel Perf. (%) -35 / -32 / -38
2QFY17 growth.
 Adjusted EBITDA is also likely to exhibit 21% YoY growth to INR3.9b,
with margins at 37.5% aided by lower raw material costs.
Y/E MARCH 2016 2017E 2018E 2019E
 We expect PAT to increase 12.1% YoY to INR2.8b, in line with
Sales 37.7 42.9 48.4 54.8
EBITDA growth during this quarter.
EBITDA 14.1 16.1 18.4 21.1  Management expects FY17 revenue to grow at low-to-mid-teens,
NP 11.1 12.0 13.5 15.1 with EBITDA margin sustaining at 37%.
EPS (INR) 41.9 45.4 51.0 57.0  Steep correction in the stock price over past few days is attributed
EPS Gro. (%) 30.6 8.3 12.3 11.9 to form 483 observations which the company received for its Unit 2
BV/Sh. (INR) 161.5 178.4 206.4 237.8 API plant. Notably, this plant accounts for more than 60% of
RoE (%) 28.6 26.7 26.5 25.7 revenue for Divi’s. Delay in the commissioning of the new plant is
RoCE (%) 28.4 26.5 26.4 25.6 another key concern for the company.
Valuations  The stock trades at 14.8x FY18E earnings. Maintain Neutral.
P/E (x) 18.0 16.6 14.8 13.2
P/BV (x) 4.7 4.2 3.6 3.2
EV/EBITDA (x) 14.2 12.2 10.5 8.9 Key issues to watch out
Div. Yield (%) 2.1 2.2 2.6 2.9  Clarity on Unit 2 483s.
 Ramp-up at Vizag SEZ .
 Outlook for growth beyond FY18.

Net Op Revenue 8,069 9,619 8,518 10,934 10,060 9,918 10,349 12,540 37,690 42,867
YoY Change (%) 26.1 15.9 8.1 34.2 24.7 3.1 21.5 14.7 21.5 13.7
EBITDA 3,000 3,736 3,212 3,960 4,016 3,680 3,881 4,541 14,064 16,118
Margins (%) 37.2 38.8 37.7 36.2 39.9 37.1 37.5 36.2 37.3 37.6
Depreciation 289 301 299 292 301 308 525 690 1,182 1,824
Interest 2 3 2 15 4 4 7 7 23 22
Other Income 360 321 163 193 184 226 340 461 922 1,212
PBT before EO Income 3,069 3,752 3,074 3,845 3,896 3,595 3,689 4,305 13,781 15,484
EO Income 0 0 0 0 0 0 0 0 0 0
PBT 3,069 3,752 3,074 3,845 3,896 3,595 3,689 4,305 13,781 15,484
Tax 617 795 608 623 878 565 925 865 2,662 3,262
Deferred Tax 0 0 0 0 0 0 0 0 21 0
Rate (%) 20.1 21.2 19.8 16.2 22.5 15.7 25.1 20.1 19.5 22.2
Adj PAT 2,452 2,957 2,466 3,222 3,018 3,030 2,764 3,440 11,098 12,047
YoY Change (%) 46.0 28.8 11.8 40.8 23.1 2.5 12.1 6.8 30.6 8.6
Margins (%) 30.4 30.7 28.9 29.5 30.0 30.5 26.7 27.4 29.4 28.1
Reported PAT 2,452 2,957 2,466 3,222 3,018 2,239 2,764 3,440 11,098 11,431
E: MOSL Estimates; Quarterly numbers are standalone
January 2017 167

Dr Reddy’s Labs
Bloomberg DRRD IN CMP: INR3,091 TP: INR3,000 (-3%) Neutral
 Dr Reddy’s Lab is expected to report subdued numbers in 3QFY17,
M. Cap. (INR b)/(USD b) 527 / 8
with revenue declining 6.1% YoY to INR37.2b and PAT down 22.4%
52-Week Range (INR) 3689 / 2750
1,6,12 Rel Perf. (%) -4 / -8 / -3
to INR4.5b. This is primarily due to the lack of new launches in the
US and increased generic competition in gVidaza.
 US business is likely to decline 13.6% YoY to INR8.96b, while Russia
Y/E MARCH 2016 2017E 2018E 2019E
and CIS region sales are expected to decline in single-digits due to
Sales 154.7 146.9 172.6 200.9
currency devaluation. However, India business is expected to report
EBITDA 39.1 26.5 39.7 48.8 robust 12% YoY growth in 3QFY17
NP 22.6 14.1 24.2 29  EBITDA is expected to decline 4% YoY to INR7.8b and the margin to
EPS (INR) 132.3 82.7 141.7 170 contract 430bp YoY to 21%, weighed down by higher remediation
EPS Gro. (%) 1.7 -37.5 71.3 19.9 costs and increased competition in the key products.
BV/Sh. (INR) 752 814 942 1087  PAT is expected to decline 22.4% YoY with taxes at 23% in 3QFY17.
RoE (%) 18.8 10.6 16.1 16.8  Even though near-term earnings growth is muted due to recent
RoCE (%) 13.9 7.9 12.9 14.2 warnings letters, we believe the company is focusing on the right
Valuations areas for growth in the US. Stock trades at 21.8x FY18E earnings.
P/E (x) 23.4 38.7 22.6 18.8 Maintain Neutral.
P/BV (x) 4.1 3.9 3.4 2.9
EV/EBITDA (x) 13.2 20.4 13.4 10.7
Div. Yield (%) 0.6 0.4 0.7 0.8  Update on USFDA resolution of warning letters for Srikakulam,
Duvvada and Miryalaguda API plants.
 FY18 outlook for both generics and PSAI businesses.

Sales 37,578 39,890 39,679 37,562 32,345 35,857 37,242 41,479 154,708 146,946
YoY Change (%) 6.8 11.2 3.2 -3 -13.9 -10.1 -6.1 10.4 4.4 -5
EBITDA 9,855 11,404 10,033 8,249 3,773 6,023 7,821 8,810 39,088 26,450
Margins (%) 26.2 28.6 25.3 22 11.7 16.8 21 21.2 25.3 18
Amortization 2,268 2,466 2,577 3,032 2,681 2,914 2,500 2,191 10,343 10,286
Other Income 390 160 124 -2,732 615 726 515 70 -1,605 1,926
Tax 1,721 1,879 1,788 1,739 444 885 1,342 1,309 7,127 3,980
Rate (%) 21.6 20.7 23.6 70 26 23.1 23 19.6 26.3 22
Reported PAT 6,256 7,219 5,792 745 1,263 2,950 4,494 5,381 20,012 14,109
Adjusted PAT 6,256 7,219 5,792 3,762 1,263 3,244 4,494 5,381 20,012 14,109
YoY Change (%) 13.7 25.7 0.8 -27.5 -79.8 -55.1 -22.4 43 -9.8 -29.5
Margins (%) 16.6 18.1 14.6 10 3.9 9 12.1 13 12.9 9.6
E - MOSL Estimates
January 2017 168

Glenmark Pharma
Bloomberg GNP IN CMP: INR899 TP: INR990 (+10%) Neutral
 We expect Glenmark Pharmaceuticals (GNP) to report robust 36%
M. Cap. (INR b)/(USD b) 244 / 4
YoY growth in overall revenues to INR23.4b, driven by buoyant
1,6,12 Rel Perf. (%) 2 / 12 / -7
performance in the US and India market.
 The India branded business is likely to grow 15% YoY, while the US
generic segment is expected to grow 70.6% YoY, primarily aided by
Y/E MAR 2016 2017E 2018E 2019E
the gZ etia launch. LatAm business is expected to witness a 19% YoY
Sales 75.9 95.7 109.9 125.0
decline in 3Q sales owing to no sales in Venezuela. We also do not
EBITDA 13.7 24.7 27.3 26.9 factor any out-licensing income in our 3QFY17 assumptions.
NP 7.0 11.7 14.0 17.1  EBITDA is likely to increase 59% YoY to INR5.4b. Nevertheless, we
EPS (INR) 24.9 41.4 49.7 60.5 expect margins to increase 340bp YoY to 23% on the back of Z etia
EPS Gro. (%) 42.0 66.4 20.1 21.6 launch in Dec-16. Adjusted PAT is expected at INR3.1b, up 82.9%
BV/Sh. (INR) 151.3 202.9 260.8 317.6 YoY, aided by lower tax expenses.
RoE (%) 16.4 20.4 19.1 19.0  We expect GNP to gradually reduce its net debt over FY16-18E,
RoCE (%) 12.7 20.6 19.3 17.2 resulting in an improvement in D/E from 1.0x in FY16 to 0.6x by
Valuations FY18E. We also expect a gradual improvement in return ratios over
P/E (x) 36.1 21.7 18.1 14.9 the same period.
P/BV (x) 5.9 4.4 3.4 2.8  The stock trades at 18.1x FY18E EPS. Maintain Neutral.
EV/EBITDA (x) 20.1 11.1 9.8 9.6
Div. Yield (%) 0.2 0.3 0.3 0.3
 New ANDA filings in complex category.
 Update on free-cash generation and debt repayment schedule.
 Progress of NCE/NBE pipeline and potential out-licensing
prospects.

Net Revenues (Core) 16,258 18,440 17,245 21,740 18,832 21,732 23,424 30,538 75,909 95,676
YoY Change (%) 10.0 10.3 1.9 24.0 15.8 17.9 35.8 40.5 15.1 26.0
EBITDA 3,374 3,713 3,379 1,952 3,192 3,978 5,388 11,025 14,326 25,211
Margins (%) 20.8 20.1 19.6 9.0 17.0 18.3 23.0 36.1 18.9 26.4
Depreciation 654 634 559 584 642 770 770 762 2,691 2,945
Interest 419 426 469 475 430 629 600 580 1,789 2,239
Other Income 273 314 340 1,189 1,358 491 340 -939 787 1,250
PBT before EO Expense 2,574 2,967 2,692 2,082 3,477 3,070 4,358 8,744 10,632 21,277
Extra-Ord Expense 0 0 0 0 0 0 0 0 0 0
Tax 745 962 992 594 1,209 876 1,250 1,864 3,028 5,200
Rate (%) 28.9 32.4 36.9 28.5 34.8 28.5 28.7 21.3 28.5 24.4
Reported PAT (incl one-offs) 1,829 2,004 1,699 1,487 2,268 2,193 3,108 6,880 7,604 16,077
Reported PAT (excl MI) 1,829 2,004 1,699 1,487 2,268 2,193 3,108 6,880 7,604 16,077
YoY Change (%) -1.1 21.4 48.1 1,301.5 24.0 9.4 82.9 362.5 60.0 111.4
Margins (%) 11.2 10.9 9.9 6.8 12.0 10.1 13.3 22.5 10.0 16.8
E: MOSL Estimates
January 2017 169

Granules India
Bloomberg GRAN IN CMP: INR110 TP: INR160 (+46%) Buy
 We expect Granules India (GRAN) to post 5% YoY growth in 3QFY17
reported sales to INR3.6b.
1,6,12 Rel Perf. (%) -3 / -21 / -29
 However, reported EBITDA is likely to increase 8.1% YoY to
INR732m, with EBITDA margin expanding 60bp YoY, primarily owing
to lower raw material costs and better business mix.
Y/E MARCH 2016 2017E 2018E 2019E
 We expect reported PAT to increase 43.8% YoY to INR391m, in line
Sales 14.3 14.3 16.7 24
with operational performance.
EBITDA 2.8 2.9 3.5 5.3  We expect GRAN to report 34% PAT CAGR over FY16-18E, driven by
NP 1.2 1.6 2 2.9 improving traction in finished dosages formulations. However, the
EPS (INR) 5.5 7 8 11.7 story beyond FY18 is much rosier, as we see more approvals in the
EPS Gro. (%) 22.3 27.3 14.3 46.3 US for the OTC and Rx business and ramp-up is expected in
BV/Sh. (INR) 30.7 40.9 59.2 68.3 Omnichem JV, which will drive both revenue and profitability. At
RoE (%) 21.6 20 16.5 18.3 CMP, the stock trades at 11x FY18E EPS. We maintain Buy with
RoCE (%) 14 11.5 9.9 12 target price of INR160 (@16x FY18E EPS).
Valuations
P/E (x) 20.1 15.7 13.7 9.4
P/BV (x) 3.6 2.7 1.9 1.6
 Contribution of Auctus portfolio and outlook on ANDA filings.
EV/EBITDA (x) 11 11.4 8.6 6.1
 Performance of Omnichem JV operations.
Div. Yield (%) 0.6 0.9 1.4 2
 Outlook for growth beyond FY18E.

Net Sales 3,226 3,529 3,449 3,723 3,498 3,638 3,621 3,536 14,295 14,294
YoY Change (%) 3.7 14.7 7.9 5.0 8.4 3.1 5.0 -5.0 11.2 0.0
EBITDA 627 685 677 783 685 742 732 700 2,725 2,859
Margins (%) 19.4 19.4 19.6 21.0 19.6 20.4 20.2 19.8 19.1 20.0
Depreciation 139 144 167 174 163 185 189 164 643 701
Interest 81 88 114 99 79 83 92 92 399 346
Other Income 14 10 26 14 30 39 35 36 77 140
PBT before EO expense 420 462 422 525 472 513 486 481 1,759 1,952
Tax 133 144 151 193 154 156 145 150 617 605
Rate (%) 31.6 31.1 35.7 36.7 32.5 30.4 29.9 31.3 35.1 31.0
Reported PAT 285 323 272 332 390 408 391 409 1,140 1,597
YoY Change (%) 24.8 46.2 15.2 48.2 36.5 43.1 43.8 23.1 36.9 40
Margins (%) 8.8 9.1 7.9 8.9 11.1 11.2 10.8 11.6 8.0 11.2
E: MOSL Estimates
January 2017 170

GSK Pharma
Bloomberg GLXO IN CMP: INR2,747 TP: INR3,150 (+15%) Neutral
 In 3QFY17, we expect GlaxoSmithK line Pharmaceuticals (GLXO) to
M. Cap. (INR b)/(USD b) 233 / 3
report 10% YoY increase in revenues to INR8b.
52-Week Range (INR) 3850 / 2600
 EBITDA is also likely to increase 48.3% YoY to INR1.5b, with the
1,6,12 Rel Perf. (%) -2 / -19 / -20
margin expanding 490bp YoY to 19%.
 We expect adjusted PAT to increase 40.2% YoY to INR1.16b. Growth
Y/E MARCH 2016 2017E 2018E 2019E
and profitability are expected to gradually improve with volume
ramp-up in key NLEM products.
Sales 27.4 30.5 34.3 38.4
EBITDA 4.5 4.9 6.2 7.6
 We believe GLXO has strong parent support, superior brand
NP 3.7 4.3 5.2 6.1 portfolio (competitive advantage), high payout ratio (~100%) and
EPS (INR) 44.2 50.4 61.8 71.6 industry-leading return ratios (RoCE of 50%+).
EPS Gro. (%) -29.2 14.1 22.6 16.0  However, the current valuation of 44.5x FY18E EPS adequately
BV/Sh. (INR) 200.2 170.1 151.4 142.5 reflects the recovery in business over this period, in our view.
RoE (%) 22.1 29.6 40.8 50.3 Maintain Neutral.
RoCE (%) 21.2 27.2 38.4 48.7
Valuations
P/E (x) 62.2 54.5 44.5 38.4
P/BV (x) 13.7 16.1 18.1 19.3 Key issues to watch out
EV/EBITDA (x) 48.5 45.7 36.4 29.9  New product introductions in FY17-18E.
Div. Yield (%) 2.4 2.5 2.5 2.5  Market performance of products impacted by DPCO 2013.

Net Sales 6,219 7,000 7,287 6,861 6,852 7,829 8,016 7,810 27,411 30,507
YoY Change (%) -5.1 -5.3 12.8 11.8 10.2 11.8 10.0 13.8 N/A 11.3
EBITDA 1,036 1,105 1,027 1,220 702 1,245 1,523 1,448 4,516 4,918
Margins (%) 16.7 15.8 14.1 17.8 10.2 15.9 19.0 18.5 16.5 16.1
Depreciation 49 53 78 67 54 66 42 98 248 259
Other Income 463 489 334 310 441 343 310 713 1,500 1,808
Tax 493 507 450 565 386 536 625 653 2,026 2,199
Rate (%) 34.0 32.9 35.1 38.6 35.4 35.2 34.9 31.6 35.1 34.0
Adjusted PAT 957 1,034 832 898 705 987 1,166 1,411 3,742 4,269
YoY Change (%) -2.7 -19.6 -8.9 -17.3 -26.4 -4.5 40.2 57.0 -29.2 14.1
Margins (%) 15.4 14.8 11.4 13.1 10.3 12.6 14.6 18.1 13.7 14.0
Extra-Ord Expense 24 78 33 -18 -2 0 0 135 111
Reported PAT 933 956 799 898 723 988 1,166 1,411 3,607 4,157
E: MOSL Estimates
January 2017 171

Ipca Laboratories
Bloomberg IPCA IN CMP: INR550 TP: INR540 (-2%) Neutral
 We expect Ipca Laboratories (IPCA) to witness 18.4% YoY growth in
overall revenues, aided by strong domestic anti-malarial sales.
Domestic formulation is expected to exhibit robust 16% YoY
1,6,12 Rel Perf. (%) -2 / 16 / -29
growth, while total API sales would witness 34.4% YoY growth.
 EBITDA is likely to grow 36.5% YoY, with margin improving 200bp
Y/E MARCH 2016 2017E 2018E 2019E
YoY to 15% in 3QFY17. However, profitability is still lower due to
negative operating leverage (US import alerts and weak traction in
Sales 28.9 32.7 38.1 44.6
EBITDA 3.4 4.9 6.6 8.2
institutional business).
NP 1.3 2.1 3.7 4.9  We expect reported PAT to improve to INR567m, with taxes at 30%
EPS (INR) 10.5 17.0 29.4 39.0 in 3QFY17.
EPS Gro. (%) -46.9 61.8 72.8 32.7  While we believe that the regulatory overhang would weigh on
BV/Sh. (INR) 181.0 195.4 220.4 253.6 valuation multiples, growth in the domestic business remains
RoE (%) 5.9 9.0 14.1 16.5 healthy. We expect IPCA to clock FY16-18E EPS CAGR of 75% on the
RoCE (%) 5.5 7.9 12.1 14.1 back of 15% revenue CAGR and recovery in EBITDA margin to 18%.
Valuations  Stock trades at 18.7x FY18E EPS. Maintain Neutral.
P/E (x) 52.3 32.3 18.7 14.1
P/BV (x) 3.0 2.8 2.5 2.2
EV/EBITDA (x) 15.1 11.9 11.9 0.0
Div. Yield (%) 0.0 0.5 0.8 1.1 Key issues to watch out
 Update on resolution of USFDA regulatory issues.
 Outlook for institutional tender business.
 Impact of emerging market currency weakness.

Net Revenues (Core) 7,580 7,468 6,841 6,246 8,422 8,720 8,098 7,449 28,850 32,689
YoY Change (%) -19.0 -4.3 -7.6 -0.5 11.1 16.8 18.4 19.3 -8.2 13.3
EBITDA 822 841 892 635 1,285 1,280 1,218 1,133 3,417 4,917
Margins (%) 10.8 11.3 13.0 10.2 15.3 14.7 15.0 15.2 11.8 15.0
Depreciation 421 369 448 392 422 429 430 427 1,722 1,708
Interest 55 73 91 81 65 68 76 86 316 294
Other Income 41 56 50 87 49 62 60 79 169 250
PBT before EO Expense 388 455 403 249 847 845 772 699 1,548 3,164
Extra-Ord Expense 116 236 9 28 81 -78 0 0 116 236
PBT after EO Expense 271 218 394 221 766 923 772 699 1,432 2,928
Tax 82 95 162 -156 290 374 205 147 186 1016
Rate (%) 21.3 20.9 40.3 -62.7 34.2 44.2 26.5 21.0 12.0 32.1
Adj PAT 305 360 241 405 557 471 567 552 1,362 2,148
YoY Change (%) -79.0 -41.3 -54.3 -375.5 82.5 31.1 135.8 36.3 -51.1 53.4
Margins (%) 2.5 1.7 3.4 6.0 5.6 6.3 7.0 7.4 4.3 5.8
E: MOSL Estimates
January 2017 172

Lupin
Bloomberg LPC IN CMP: INR1,494 TP: INR1,825 (+22%) Buy
 We expect Lupin's (LPC) 3QFY17 revenue to grow 19.4% YoY to
M. Cap. (INR b)/(USD b) 669 / 10
IN42.4b, aided by buoyant performance in US generic segment
52-Week Range (INR) 1912 / 1294
(gGlumetza and gFortamet sales, consolidation of Gavis financials).
1,6,12 Rel Perf. (%) -4 / -2 / -21
 India business is expected to exhibit 13% YoY growth to INR9.8b.
Japan sales are expected to improve 20.3% YoY to INR4.5b in
3QFY17, aided by currency tailwinds.
Y/E MARCH 2016 2017E 2018E 2019E
 EBITDA is estimated to improve 19.7% YoY to INR10.5b, with
Sales 142.1 174.6 205.6 232.1
EBITDA margin at 24.7%.
EBITDA 37.5 45.2 55.1 63.8
 Reported PAT is likely to grow 17.8% YoY to IN6.2b, slower than
NP 22.7 27.7 34.7 40.1
EPS (INR) 50.4 61.6 77.0 89.0
EBITDA growth, due to higher interest expenses.
EPS Gro. (%) -5.7 22.2 25.1 15.5  K ey growth drivers for FY17/18 will be the strong product pipeline
BV/Sh. (INR) 243.8 295.6 362.1 440.6 for the US, including higher contribution from oral contraceptives
RoE (%) 22.9 22.8 23.4 22.2 and launches in niche areas of ophthalmic and dermatology. The
RoCE (%) 16.8 15.3 16.4 16.4 stock trades at 19.4x FY18E EPS. Maintain Buy.
Valuations
P/E (x) 29.6 24.3 19.4 16.8
P/BV (x) 6.1 5.1 4.1 3.4
 Gavis sales ramp-up.
EV/EBITDA (x) 19.5 15.6 12.5 10.4
Div. Yield (%) 0.5 0.6 0.6 0.6
 Outlook on future ANDA launches and Gavis integration.
 Impact of new competition in Glumetza and Fortamet.
 Outlook on inorganic growth initiatives.

Net Sales 31,561 33,297 35,558 41,707 44,677 42,905 42,453 44,538 142,085 174,574
YoY Change (%) -5.5 4.9 11.9 35.5 41.6 28.9 19.4 6.8 11.3 22.9
EBITDA 8,248 6,626 8,772 13,050 13,080 10,281 10,499 11,354 37,534 45,215
Margins (%) 26.1 19.9 24.7 31.3 29.3 24.0 24.7 25.5 26.4 25.9
Depreciation 1,014 1,155 1,114 1,487 2,027 2,112 2,110 2,073 4,635 8,322
Interest 70 241 92 213 320 263 350 277 446 1,210
Other Income 757 578 653 349 826 271 600 603 1,877 2,300
PBT 7,921 5,809 8,219 11,699 11,560 8,177 8,639 9,606 34,330 37,982
Tax 2,258 1,591 2,909 4,188 2,734 1,589 2,300 2,672 11,536 9,496
Rate (%) 28.5 27.4 35.4 35.8 23.7 19.4 26.6 27.8 33.6 25.0
Minority Interest -3 27 13 51 6 8 98 263 88 375
Recurring PAT 5,686 4,198 5,298 7,479 8,820 6,622 6,241 6,671 22,707 28,112
YoY Change (%) -9.0 -33.4 -11.9 36.7 55.1 58.0 17.8 -10.8 -5.5 23.8
Margins (%) 18.0 12.6 14.9 17.9 19.7 15.4 14.7 15.0 16.0 16.1
E: MOSL estimates; Quarterly nos will not add up to full year nos due to restatement of past quarters
January 2017 173

Sanofi India
Bloomberg SANL IN CMP: INR4,290 TP: INR5,200 (+21%) BUY
 We expect Sanofi India's (SANL) revenue to grow 8.1% YoY in
4QCY16 to INR6.1b. High growth of brands like Lantus, Allegra,
52-Week Range (INR) 4770 / 3850
Amaryl M, Enterogermina, Avila, Vaxlgrip and Cardace, and new
1,6,12 Rel Perf. (%) -1 / -5 / -5
product launches should drive SANL’s revenue growth.
 EBITDA is also likely to grow 27.4% YoY to INR1.4b during this
quarter.
Y/E December 2015 2016 2017E 2018E
 We expect PAT to increase 14.8% YoY to INR809m.
Sales 21.9 23.9 27.0 30.5
EBITDA 4.6 5.6 6.5 7.4
 We expect earnings growth momentum to sustain over next few
Net Profit 2.4 3.3 4.0 4.6 years, led by strong revenue CAGR of 13% over CY15-17E and
Adj. EPS (INR) 103.2 142.2 172.8 198.9 ~210bp margin expansion from current levels.
EPS Gr. (%) 20.6 37.8 21.6 15.1  The stock trades at 24.8x CY17E EPS. Maintain Buy.
BV/Sh. (INR) 725.2 797.8 889.4 1,007.1
RoE (%) 14.2 17.8 19.4 19.7
RoCE (%) 16.1 17.8 19.6 20.2
Payout (%) 41.6 49.0 47.0 40.8
Valuations
 Amortization of goodwill and brands acquired from Universal
P/E (x) 41.6 29.9 24.6 21.4
Medicare.
P/BV (x) 5.9 5.3 4.8 4.2
 Clarity on nature of reversal of recently withdrawn NPPA
EV/EBITDA (x) 20.3 16.0 13.5 11.5
guidelines.
Div. Yield (%) 1.2 1.4 1.6 1.6

Y/E December CY15 CY16E CY15 CY16E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,889 5,497 5,858 5,687 5,444 6,080 6,242 6,145 21,931 23,911
YoY Change (%) 9.9 8.7 13.8 11.1 11.4 10.6 6.6 8.1 10.9 9.0
EBITDA 829 1,214 1,419 1,129 1,291 1,458 1,447 1,438 4,591 5,634
Margins (%) 17.0 22.1 24.2 19.9 23.7 24.0 23.2 23.4 20.9 23.6
Depreciation 259 284 290 296 301 300 300 295 1,129 1,196
Interest 1 1 1 1 1 7 3 -7 4 4
Other Income 194 99 94 126 256 164 148 114 514 682
PBT before EO Items 763 1,028 1,222 958 1,245 1,315 1,292 1,263 3,972 5,115
Extra-Ord Expense -161 0 0 -677 0 0 0 0 -838 0
PBT after EO Items 924 1,028 1,222 1,635 1,245 1,315 1,292 1,263 4,810 5,115
Tax 279 386 497 433 439 462 486 454 1,595 1,841
Effective tax Rate (%) 30.2 37.5 40.7 26.5 35.3 35.1 37.6 36 33.2 36
Reported PAT 645 642 725 1,202 806 853 806 809 3,215 3,274
Adj PAT 484 642 725 704 806 853 806 809 2,377 3,274
YoY Change (%) -6.4 11.7 16.9 171.9 66.5 32.9 11.2 14.8 20.6 37.7
Margins (%) 9.9 11.7 12.4 12.4 14.8 14.0 12.9 13.2 10.8 13.7
E: MOSL Estimates
January 2017 174

Sun Pharma
Bloomberg SUNP IN CMP: INR638 TP: INR925 (+45%) Buy
 Sun Pharmaceuticals (SUNP) is likely to register 13.5% YoY growth in
M. Cap. (INR b)/(USD b) 1534 / 23
revenues, primarily driven by Benicar AG launch.
 India business is expected to grow 9% YoY to INR20.6b, while the
1,6,12 Rel Perf. (%) -12 / -15 / -24
US business is likely to report 11.1% YoY jump in revenues.
 We expect margins to improve to 33.4% in 3QFY17 compared to
Y/E MARCH 2016 2017E 2018E 2019E
30.6% in 3QFY16. Overall EBITDA is expected to grow 23.7% YoY to
INR26.8b over a low base.
Sales 277.4 309.3 334.0 373.5
EBITDA 79.6 97.6 115.1 132.7
 We expect total reported PAT at INR17.5b, compared to INR14.1b
NP 47.1 66.9 91.3 103.2 in 3QFY16 and INR22.3b in 2QFY17.
EPS (INR) 19.6 30.6 37.9 42.9  We believe SUNP is an attractive Indian play on specialty business in
EPS Gro. (%) -0.7 56.4 24.0 13.1 the US. We maintain Buy rating in light of its multiple earnings
BV/Sh. (INR) 130.5 143.5 174.4 210.3 triggers (MK -3222, RBXY integration benefits and specialty product
RoE (%) 16.5 20.3 23.9 22.3 pipeline), superior execution track record, high RoIC (30%) and
RoCE (%) 18.7 22.3 24.8 23.9 cash-rich balance sheet (net cash of USD850m). The stock trades at
Valuations 16.8x FY18E EPS.
P/E (x) 32.6 23.0 16.8 14.9
P/BV (x) 4.9 4.4 3.7 3.0
EV/EBITDA (x) 18.4 14.0 11.1 9.0
 Update on resolution of USFDA warning letter and 483
Div. Yield (%) 0.0 0.9 0.9 0.9
observations on Halol.
 Turnaround of Ranbaxy’s business.
 Outlook on competitive landscape for Taro’s products.

Net Revenues 67,615 68,733 70,821 76,342 82,430 82,651 80,368 76,869 282,697 322,318
YoY Change (%) 6.6 -14.5 2.2 24.0 21.9 20.2 13.5 0.7 3.0 14.0
EBITDA 17,678 18,729 21,690 25,203 29,210 31,677 26,834 22,835 84,816 110,555
Margins (%) 26.1 27.2 30.6 33.0 35.4 38.3 33.4 29.7 30.0 34.3
Depreciation 2,402 2,584 2,508 2,643 3,160 3,038 3,100 3,102 10,135 12,400
Net Other Income 296 -429 1,022 -1,235 225 657 400 118 -177 1,400
PBT before EO Exp 15,573 15,716 20,205 21,325 26,275 29,295 24,134 19,851 74,505 99,555
EO Exp/(Inc) 6,852 0 0 0 0 0 0 0 0 0
PBT 8,721 15,716 20,205 21,325 26,275 29,295 24,134 19,851 74,505 99,555
Tax 1,128 2,946 2,020 1,706 3,527 4,417 3,850 3,140 9,349 14,933
Rate (%) 7.2 18.7 10.0 8.0 13.4 15.1 16.0 15.8 12.5 15.0
PAT (pre Minority Interest) 7,593 12,769 18,185 19,619 22,748 24,879 20,284 16,711 65,156 84,622
Minority Interest 2,034 2,481 4,019 2,482 2,411 2,528 2,750 3,312 11,145 11,000
Reported PAT 5,559 10,288 14,166 17,137 20,337 22,351 17,534 13,400 54,011 73,622
YoY Change (%) -53.9 -49.8 258.3 93.0 265.8 117.3 23.8 -21.8 19.0 36.3
January 2017 175

Torrent Pharmaceuticals
Bloomberg TRP IN CMP: INR1,351 TP: INR1,750 (+30%) Buy
 We expect Torrent Pharmaceuticals (TRP) to post 4% YoY decline in
M. Cap. (INR b)/(USD b) 229 / 3
3QFY17 reported sales to INR14.7b. US business is expected to
52-Week Range (INR) 1768 / 1186
decline 36.3% YoY owing to lower contribution from gAbilify, while
1,6,12 Rel Perf. (%) 0 / -1 / -11
India business is expected to witness 13% YoY growth with
successful integration of Elder’s portfolio.
Y/E MARCH 2016 2017E 2018E 2019E
 Reported EBITDA is likely to decline 42% YoY to INR3.5b, with
EBITDA margin contracting 1570bp YoY, primarily on account of
Sales 66.8 60.8 70.8 82.2
EBITDA 27.2 15.2 18.4 22.2
lower gAbilify sales in 3QFY17 numbers.
NP 10.1 9.8 13.3 16.2  We expect reported PAT to decrease 35.4% YoY to INR2.25b, in line
EPS (INR) 59.7 57.7 78.4 96.0 with operational performance.
EPS Gro. (%) 78.9 -3.4 35.8 22.4  We expect core earnings (excluding one-offs) trajectory to remain
BV/Sh. (INR) 200.3 237.2 287.2 348.6 strong (forecast 20% CAGR over FY16-18E) as we think margin
RoE (%) 34.4 26.4 29.9 30.2 upside in domestic portfolio is still not fully reflected. The stock
RoCE (%) 40.7 19.3 25.4 27.7 trades at 17.2x FY18E EPS, which is at 20% premium over its last
Valuations five-year average valuations. Maintain Buy.
P/E (x) 22.6 23.4 17.2 14.1
P/BV (x) 6.7 5.7 4.7 3.9
EV/EBITDA (x) 8.9 16.1 12.8 12.8
 Contribution of Elder Pharma portfolio and growth strategy.
Div. Yield (%) 2.6 1.3 1.7 2.1  Performance of Brazilian operations amid market pressure.
 Outlook on future ANDA launches.

INR m 1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
Net Revenues 19,470 16,570 15,390 14,990 15,070 14,060 14,773 15,739 66,760 60,842
YoY Change (%) 74.8 36.2 31.8 29.9 -22.6 -27.8 -4.0 2.3 43.5 -8.9
EBITDA 9,090 7,170 6,130 4,840 4,370 3,300 3,565 3,945 27,201 15,180
Margins (%) 46.7 43.3 39.8 32.3 29.0 23.5 24.1 25.1 40.7 25.0
Depreciation 590 590 610 650 680 690 690 696 2,460 2,756
Interest 580 480 420 380 490 510 450 459 1,859 1,909
Other Income 670 710 510 240 260 430 425 285 2,156 1,400
Extra-Ord Expense 0 0 1,930 0 0 0 0 0 0 0
Tax 4,100 1,720 200 480 540 460 600 545 6,414 2,145
Rate (%) 47.7 25.3 3.6 11.9 15.6 18.2 21.1 17.7 25.6 18.0
Reported PAT 4,490 5,090 3,480 3,570 2,920 2,070 2,250 2,530 18,625 9,770
YoY Change (%) 75.4 157.1 108.4 174.6 -35.0 -53.9 -35.4 -27.3 148.0 -47.5
Margins (%) 23.1 30.7 22.6 23.8 19.4 14.7 15.2 16.1 27.9 16.1
E: MOSL Estimates
January 2017 176

December 2016 Results Preview | Sector: Logistics
Logistics
Company name EX IM trade continues to suffer
Allcargo No major impact of demonetization on EX IM trade
Concor
 EX IM originating container rail volume declined ~ 2% YoY in October-November 2016
Gateway Distriparks
as trade continues to be weak.
 Margins are unlikely to see meaningful improvement due to increased competitive
intensity.
 Sequential improvement in earnings for CCRI would be due to low base in 2QFY17.
GDPL’s earnings are likely to be flat sequentially.
EX IM originating container trade declined ~ 2%YoY in October-November

 EXIM originating volume by rail is likely to decline by 2% for 3QFY17, as EXIM
trade continues to be sluggish.
 CCRI is likely to report EXIM volume growth of 7% YoY for 3QFY17, led by strong
volume growth in the month of November.
 GDPL is likely to report 6-7% YoY volume growth in the rail segment, led by ramp
up of Faridabad terminal.
Margins likely to be flattish sequentially

 We expect CCRI to report flat margins QoQ, as higher volumes would be offset
by rate rationalization in select routes by key players.
 GDPL should see some sequential improvement in rail profitability, led by higher
proportion of double-stacking.
 AGLL is likely to see marginal improvement in margins, led by profitability
improvement in MTO segment.
Lower leads to hurt margins

 Lead distance for EXIM trade by rail has declined by ~6% YoY (October-
November 2016) due to higher container movement from the Mundra and
Pipavav ports than from JNPT.

Logistics
Allcargo Logistics 179 Buy 14,613 9.3 3.8 1,316 11.2 4.4 680 10.5 5.5
Concor 1,151 Neutral 13,391 -4.7 -2.9 2,625 -6.3 14.7 1,818 -11.8 15.2
Gateway Distriparks 255 Buy 2,938 10 2.8 592 -4.3 1.8 243 -16.6 -3.4
Source: MOSL
Abhishek Ghosh (Abhishek.Ghosh@MotilalOswal.com); +91 22 3982 5436

Abhinil Dahiwale (Abhinil.Dahiwale@motilaloswal.com); +91 22 3980 4309
January 2017 177
Expect EX IM originating rail volumes to decline by ~ 2% YoY

Exhibit 2: EX IM volumes to decline ~ 2% YoY in Oct-Nov 16 Exhibit 3: Domestic volumes to grow ~ 9% YoY in Oct-Nov 16
EXIM tonnes originating (million) YoY (%) Domestic tonnes originating (millions) YoY (%)
24
10 13 6
4 3 3 6 14
(1) (4) (4) (4) (2) (2) (2) 4 4
(6) (9) (5) (6) (8)
(5)
(12)
(11) (10)(9) (6) (8)
(16) (15)(18)(17) (20)(12) (18) (16)
(19) (20)
2.9
3.1
3.2
3.1
3.1
3.2
3.2
2.8
3.3
3.2
2.8
3.2
3.2
3.5
3.0
3.2
3.2
3.1
2.9
3.0
0.8
0.8
0.8
0.8
0.7
0.7
0.7
0.7
0.8
0.8
0.8
0.8
0.6
0.6
0.7
0.7
0.7
0.7
0.9
0.8
Apr'15
May'15
Apr'16
May'16
June'15
Aug'15
Dec'15
June'16
Aug'16
Apr'15
May'15
Apr'16
May'16
June'15
Aug'15
Dec'15
June'16
Aug'16
Sep'15
Jan'16
Feb'16
Mar'16
Sep'16
Sep'15
Jan'16
Feb'16
Mar'16
Sep'16
Oct'16
July'15
Oct'15
July'16
July'15
Oct'15
July'16
Oct'16
Nov'15
Nov'16
Nov'15
Nov'16
Source: Indian Rail, MOSL Source: Indian Rail, MOSL
Exhibit 4: EX IM lead distance declined YoY in October- Exhibit 5: Domestic lead distance flat YoY for October-
November 2016 November 2016
EXIM average lead (kms) YoY (%) Domestic average lead (kms) YoY (%)
(0) (2) (0) (3) (2) (2) 1 4 6 3 2 0 3
(4) (5) (4) (3) (2) (7) (6)
(3)
(7) (7) (7) (5) (8) (2) 1
(4) (4) (5) (3) (4)
(8) (6) (10) (7) (7) (10)(10)
1,362
1,381
1,364
1,375
1,369
1,382
1,418
1,295
1,304
1,368
1,388
1,452
1,446
1,419
1,334
1,390
1,393
1,386
1,359
1,337
948
907
921
923
932
926
917
927
908
910
913
930
882
857
890
861
864
860
871
856
Apr'15
May'15
Apr'16
May'16
Apr'15
May'15
Apr'16
May'16
June'15
Aug'15
Dec'15
June'16
Aug'16
June'15
Aug'15
Dec'15
June'16
Aug'16
Sep'15
Jan'16
Feb'16
Mar'16
Sep'16
Sep'15
Jan'16
Feb'16
Mar'16
Sep'16
July'15
Oct'15
July'16
Oct'16
July'15
Oct'15
July'16
Oct'16
Nov'15
Nov'16
Nov'15
Nov'16
Source: Indian Rail, MOSL Source: Indian Rail, MOSL
Exhibit 6: India’s EX IM trade grew ~ 8% YoY in Oct-Nov 2016

(imports grew 9% YoY, exports grew 5% YoY) Exhibit 7: IIP declined ~ 2% YoY in October 2016
Export - YoY (%) Import - YoY (%) IIP growth (% YoY)
20%
9.9
10%
6.3
0% 4.8 4.24.3
2.8 2.53.02.5 3.7
-10% 1.9 1.32.2 0.6
0.3
-20% (0.9)
(0.7)
-30% (1.3)
(1.6) (1.9)
(3.3) (2.6)
-40%
Jul-15
Jul-16
Jun-15
Jun-16
Nov-15
Apr-15
May-15
Apr-16
May-16
Aug-15
Dec-15
Aug-16
Jan-15
Feb-15
Mar-15
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
Oct-16
Jul-15
Jul-16
Nov-15
Nov-16
May-15
May-16
Jan-15
Mar-15
Sep-15
Jan-16
Mar-16
Sep-16
Source: CEIC, MOSL Source: CEIC, MOSL
January 2017 178

Allcargo
Bloomberg AGLL IN CMP: INR179 TP: INR196 (+9%) Buy
 We expect AGLL to report EBITDA of INR1.3b (+11% YoY, +4% QoQ)
and PAT of INR680m (+10% YoY, +6% QoQ), led by volume growth
1,6,12 Rel Perf. (%) 8 / 3 / -13
and higher margins.
 We estimate MTO volumes at 125k TEU (-2% QoQ, +8% YoY) and
Financial snapshot (INR b)
CFS volumes at 73k TEU (+6% QoQ, +11% YoY); the rise in volumes
Y/E March 2016 2017E 2018E 2019E would be led by recovery in macro trade.
Sales 56.6 57.9 62.2 67.1  We estimate EBITDA/PAT CAGR of 5%/10% over FY16-18, and
EBITDA 5.2 5.1 5.7 5.9 expect return ratios to improve from ~13% to ~17%, driven by
NP 2.7 2.6 3.2 3.6 margin expansion and reduction in capex intensity in the business.
EPS (INR) 10.8 10.5 12.8 14.3  The stock trades at 14x FY18E EPS of INR12.8. Maintain Buy.
EPS Growth (%) 17.2 (2.7) 22.1 11.7
BV/Share (INR) 87.5 71.0 81.2 92.5
RoE (%) 13.2 13.3 16.9 16.5
RoCE (%) 11.2 10.8 13.7 13.9
Valuations
P/BV (x) 2.0 2.5 2.2 1.9  (a) Volume data, and (b) set up of logistics park in Jhajjar.
EV/EBITDA (x) 9.4 8.5 7.1 6.1
Consolidated - Quarterly Earning Model (INR Million)

Net Sales 14,764 14,534 13,365 13,976 13,937 14,084 14,613 15,133 56,639 57,768
YoY Change (%) 11.8 -0.6 -6.7 -1.2 -5.6 -3.1 9.3 8.3 0.6 2.0
EBITDA 1,411 1,340 1,183 1,216 1,297 1,261 1,316 1,259 5,150 5,132
Margins (%) 9.6 9.2 8.9 8.7 9.3 9.0 9.0 8.3 9.1 8.9
Depreciation 362 556 386 359 436 434 445 436 1,663 1,750
Interest 106 102 115 95 75 75 76 77 419 303
Other Income 67 70 125 122 111 80 122 192 384 505
PBT before EO expense 1,009 752 807 884 897 832 917 939 3,453 3,584
PBT 960 737 769 878 880 822 917 939 3,344 3,558
Tax 190 131 162 169 256 178 238 244 652 917
Rate (%) 19.8 17.8 21.1 19.3 29.1 21.7 26.0 26.0 19.5 25.8
Reported PAT 770 606 606 709 624 643 679 695 2,691 2,641
Min. Interest & P& L of Asso.
Cos. -4 9 -18 -32 -14 1 1 1 -45 -12
Adj PAT 751 603 615 691 610 644 680 696 2,660 2,629
YoY Change (%) 45.7 -16.9 -22.4 22.5 -18.7 6.9 10.5 0.7 2.5 -1.1
Margins (%) 5.1 4.1 4.6 4.9 4.4 4.6 4.7 4.6 4.7 4.6
E: MOSL Estimates
January 2017 179

Concor
Bloomberg CCRI IN CMP: INR1,151 TP: INR1,317(+14%) Neutral
 We expect CCRI to report net sales of INR13.4b (-5% YoY, -3%
M. Cap. (INR b)/(USD b) 224 / 3
QoQ), led by (a) realization decline of 12% YoY (flat QoQ), and (b)
52-Week Range (INR) 1544 / 1051
1,6,12 Rel Perf. (%) 2 / -19 / -19
volume growth of 8% YoY (decline of 2% QoQ).
 We expect EXIM volumes to improve 7% YoY and expect domestic
Financial snapshot (INR b) volumes to grow 15% YoY.
Y/E March 2016 2017E 2018E 2019E  We estimate EBITDA at INR2.6b (-6% YoY, +15% QoQ) and PAT at
Sales 63.1 59.8 65.0 73.0
INR1.8b (-12% YoY, +15% QoQ).
EBITDA 11.6 10.5 13.0 14.3
 The stock trades at 15.4x/13.9x FY18E/FY19E EV/EBITDA. CCRI
NP 7.9 7.1 9.0 9.8
remains a direct play on the upcoming dedicated freight corridor
EPS (INR) 40.6 36.3 45.9 50.2
(DFC) project, which will multiply its asset turnover and
EPS Gr. (%) -24.9 -10.7 26.6 9.3
significantly improve profitability. Neutral.
BV/Sh (INR) 409.4 431.0 458.3 488.2
RoE (%) 10.2 8.6 10.3 10.6
RoCE (%) 9.8 8.3 10.0 10.3
Payout (%) 40.0 40.5 40.5 40.5
P/E (x) 28.3 31.7 25.1 22.9  EX IM and domestic volumes, and realizations.
P/BV (x) 2.8 2.7 2.5 2.4  Progress on MMLPs and DFC projects.
EV/EBITDA (x) 17.1 19.2 15.4 13.9
Div. Yield (%) 1.2 1.1 1.3 1.5
Container Corporation (INR Million)

1Q 2Q 3Q 4QE 1Q 2Q 3QE 4QE
Net Sales 14,209 15,019 14,046 14,152 13,392 13,786 13,391 13,861 57,426 54,430
YoY Change (%) 11.9 10.9 -3.3 -6.2 -5.7 -8.2 -4.7 -2.1 15.2 -5.2
Terminal & Service Charges 8,963 9,456 8,848 9,180 8,493 8,497 8,253 8,543 68,844 33,786
A s a % of rev enu e 6 3 .1 6 3 .0 6 3 .0 6 4 .9 6 3 .4 6 1 .6 6 1 .6 6 1 .6 1 1 9 .9 62.1
Employee Expenses 373 369 396 401 380 405 393 437 3,118 1,615
Other Expenses 1,994 2,034 2,001 2,596 1,901 2,597 2,120 1,939 17,421 8,556
EBITDA 2,878 3,161 2,800 1,975 2,619 2,288 2,625 2,942 10,813 10,473
Margins (%) 20.3 21.0 19.9 14.0 19.6 16.6 19.6 21.2 18.8 19.2
YoY Change (%) -3.6 1.1 -23.7 -40.1 -9.0 -27.6 -6.3 49.0
Depreciation 907 876 876 988 841 873 870 956 4,027 3,540
Interest 0 0 0 0 0 3 0 0 0 0
Other Income 798 858 813 978 692 763 770 808 3,447 3,032
PBT 2,770 3,137 2,737 1,965 2,470 2,175 2,525 2,794 10,232 9,960
Tax 701 808 676 555 685 596 707 741 2,740 2,729
Rate (%) 25.3 25.8 24.7 28.3 27.7 27.4 28.0 26.5 26.8 27.4
Adj PAT 2,069 2,335 2,061 1,409 1,785 1,578 1,818 2,053 7,492 7,235
YoY Change (%) -21.0 21.7 -31.5 -51.9 -13.7 -32.4 -11.8 45.7 -23.9 -3.4
Margins (%) 14.6 15.5 14.7 10.0 13.3 11.4 13.6 14.8 13.0 13.3
E: MOSL Estimates
January 2017 180

Gateway Distriparks
Bloomberg GDPL IN CMP: INR255 TP: INR313 (+23%) Buy
 We expect GDPL to report net sales of INR2.9b (+10% YoY, +3%
QoQ), led by increased volumes in Rail and CFS businesses.
1,6,12 Rel Perf. (%) 9 / -16 / -23
 We estimate EBITDA at INR592m (-4% YoY, +2% QoQ) and EBITDA
margin at 20.1%. We estimate adjusted PAT at INR243m (-17% YoY,
Financial snapshot (INR b) -3% QoQ).
Y/E March 2016 2017E 2018E 2019E  The stock trades at 9.9/8x FY18E/FY19E adjusted EV/EBITDA.
Sales 10.5 11.6 12.3 14.0
 GDPL remains a direct play on the upcoming dedicated freight
EBITDA 2.5 2.4 2.9 3.5
corridor project, which will multiply its asset turnover and
NP 1.2 1.0 1.7 2.2
significantly improve profitability. Buy.
EPS (INR) 11.4 9.6 15.6 20.0
EPS (INR)* 8.7 7.6 11.7 14.3
EPS Gr. (%)* -31.3 -12.8 54.1 22.5 Key issues to watch for
RoE (%) 10.1 8.3 12.8 15.2
 Volume growth, realization and per TEU profitability.
RoCE (%) 7.5 7.7 10.7 12.7
Payout (%) 81.7 59.0 45.1 45.4
Valuations
P/E (x) 22.4 26.6 16.3 12.7
Adj. P/E (x) 29.4 33.7 21.9 17.8
EV/EBITDA (x) 2.2 2.2 2.0 1.9
EV/EBITDA (x)* 11.8 12.5 9.9 8.0
Div. Yield (%) 16.6 17.6 14.0 11.5
* Adjusted for Blackstone’s stake

(Consolidated) 1Q 2Q 3Q 4Q 1Q* 2Q* 3QE 4QE
Net Sales 2,628 2,595 2,671 2,575 2,782 2,857 2,938 2,978 10,470 11,556
YoY Change (%) -6.1 -11.3 -2.4 -2.9 5.9 10.1 10.0 15.7 -5.8 10.4
EBITDA 690 641 619 569 555 581 592 642 2,518 2,370
M arg ins ( % ) 2 6 .3 2 4 .7 2 3 .2 2 2 .1 1 9 .9 2 0 .3 2 0 .1 2 1 .5 2 4 .1 2 0 .5
YoY Change (%) -8 -25 -28 -28 -20 -9 -4 13 -23 -6
Depreciation 201 202 202 200 195 194 206 211 805 805
Interest 51 50 46 38 51 88 89 82 184 310
Other Income 57 48 47 13 40 80 67 74 165 261
PBT 495 437 418 345 349 379 364 422 1,695 1,515
Tax 296 141 126 108 124 127 121 124 671 496
Rate (%) 59.8 32.2 30.1 31.4 35.6 33.6 33.2 29.3 39.6 32.7
PAT before minority /
199 297 292 237 225 252 243 299 1,024 1,019
profit of assoc.
YoY Change (%) -48.0 -38.0 -44.5 -46.0 13.0 -15.0 -16.6 26.3 -43.9 -0.5
Margins (%) 7.6 11.4 10.9 9.2 8.1 8.8 8.3 10.0 9.8 8.8
E: MOSL Estimates, *1QFY17 and 2QFY17 is addition of Rail and CFS details as provided and not actual consolidated number
January 2017 181

Media
Company name Demonetization-led pain to be felt across Media
D B Corp Aggregate earnings to remain flat
Dish TV India Expect muted ad revenue growth: We expect ad revenue for our Media universe to
Hathway Cable & Datacom grow at a meager ~1% YoY, lower than the 7-13% growth in the preceding four
HT Media quarters. Both broadcasters and print companies are likely to face the brunt of
Jagran Prakashan demonetization. The ad pain is expected to be more debilitating for print media,
PVR given higher reliance on local/retail advertisers, who are most impacted by the cash
Sun TV
squeeze. Z ee’s ad growth is expected to moderate to ~4% YoY after six quarters of
strong ad revenues. Apart from FMCG, Telecom, Auto, Consumer Durables, and
Z ee Entertainment
Traditional Retail too have cut back on ad spends. Regional/niche channels and
publishers are expected to take a bigger hit. Our industry interactions suggest that a
full recovery could be expected by 1QFY18.
Expect aggregate Media universe earnings to remain flat YoY: Aggregate Media
sector earnings are expected to remain flat YoY, largely led by a decline in
profitability of print and distribution platforms. Z ee/SUNTV are expected to clock
earnings growth of 10%/13% YoY. Within the print pack, DB Corp, Jagran, HT Media
and HMVL’s earnings are expected to decline by 3%, 16%, 31% and 9%, respectively.
While DB Corp’s relative outperformance v/s its print peers is courtesy a lower base,
Jagran is expected to report a lower dip in profitability than smaller UP rivals HT
Media/HMVL due to its stronger foothold in the government ad revenue pie. Dish
TV too is expected to see an impact on profitability as both recharges and activation
take a hit following demonetization. However, normalization of the same is
expected to be swift.
Expect monetization to improve over the next two quarters for Pay TV operators;
increased activity toward Phase III seeding: We expect monetization for Pay TV
operators to improve over the next two quarters as all stay orders on DAS III
implementation have been now lifted by the Delhi High Court. This should drive
increased MSO share in digital cable revenue—the key to improve economics of
MSOs as well as pricing for broadcasters and DTH operators. However, with Phase
I/II monetization remaining sub-par, we expect MSOs to be more cautious in Phase
III markets. We expect subscriber additions to remain flat QoQ for Dish TV due to
demonetization. We model 0.6m gross additions for Dish TV during the quarter
compared with an estimated 0.67m in 2QFY17.
Digitization upside, ad growth revival remain key themes: Subscriber-level ARPU

increases in Phase I/II markets and Phase III digitization are key growth triggers.
MSOs are likely to witness profitability improvement, as they continue to drive
monetization efforts in Phase I/II/III. FMCG-led ad spend outlook remains weak;
however, any revival in the same coupled with renewed spends by Telecom and
Auto over the next two quarters could keep ad growth healthy. Broadcasters as well
as print companies will be the key beneficiaries of the same, in our view.
Jay Gandhi (Jay.Gandhi@MotilalOswal.com); +91 22 3089 6693

Aliasgar Shakir (Aliasgar.Shakir@MotilalOswal.com); +91 22 6129 1565
January 2017 182
December 2016 Results Preview | Sector: Media
Media coverage: Quarterly snapshot

FY15 FY16 FY17
YoY (%) QoQ (%)
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3QE
Advertisement Revenue (INR b)
Z EEL 7.4 6.7 7.8 8.3 9.4 8.6 9.1 9.6 9.8 4 2
Sun TV 3.2 3.3 3.5 3.3 3.3 3.1 3.4 3.4 3.4 5 1
Dish TV NM NM NM NM NM NM NM NM NM NM NM
DB Corp 3.9 3.2 3.1 3.1 3.9 3.2 3.7 3.3 4.0 2 21
Jagran Prakashan 3.4 2.9 3.3 3.2 3.7 3.3 3.5 3.4 3.8 3 12
Hathway cable and Datacom NM NM NM NM NM NM NM NM NM NM NM
HT Media 0.0 0.0 0.0 0.0 5.1 4.4 4.5 4.3 4.7 -8 10
HMVL 1.5 1.5 1.7 1.7 1.8 1.7 1.8 1.7 1.7 -5 1
Subscription Revenue (INR b)
Z EEL 4.5 5.1 4.6 4.8 5.2 5.9 5.3 5.8 5.8 11 0
Sun TV 2.3 2.3 2.3 2.3 2.4 2.5 2.7 2.7 2.8 15 4
Dish TV 6.6 6.8 6.8 6.9 7.1 7.4 7.3 7.3 7.4 4 2
DB Corp 1.0 1.0 1.0 1.1 3.9 3.2 3.7 3.3 4.0 2 21
Hathway Cable and Datacom 1.0 1.2 0.9 0.9 1.1 1.2 1.1 1.1 1.2 7 5
HT Media 0.0 0.0 0.0 0.0 0.8 0.8 0.8 0.8 0.8 4 6
HMVL 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.5 0.6 6 7
Total Revenue (INR b)
Z EEL 13.6 13.5 13.4 13.8 16.0 15.3 15.7 17.0 16.5 3 -3
Sun TV 5.5 5.5 6.9 5.7 5.7 5.7 7.6 6.3 6.3 9 0
Dish TV 7.1 7.5 7.4 7.5 7.7 8.0 7.8 7.8 7.9 3 2
DB Corp 5.5 4.9 4.7 4.8 5.9 5.1 5.7 5.3 6.1 5 16
Hathway cable and Datacom 2.4 2.7 2.6 2.7 3.0 3.4 3.0 3.2 3.4 13 5
HT Media 6.1 5.8 5.9 6.0 6.8 6.3 6.1 6.0 6.6 -3 10
HMVL 2.1 2.0 2.2 2.3 2.4 2.3 2.4 2.3 2.3 -2 2
EBITDA (INR b)
Z EEL 3.5 2.7 3.1 3.6 4.3 4.1 4.5 4.9 4.4 2 -11
Sun TV 4.3 4.2 4.1 4.3 4.4 4.3 4.4 4.7 4.8 9 3
Dish TV 1.9 2.2 2.4 2.6 2.7 2.6 2.6 2.6 2.7 3 3
DB Corp 1.8 1.2 1.2 1.1 1.87 1.1 1.8 1.5 1.8 -3 20
Jagran Prakashan 1.3 1.0 1.3 1.4 1.7 1.4 1.5 1.2 1.6 -8 31
Hathway cable and Datacom 0.2 0.3 0.4 0.5 0.5 0.8 0.4 0.5 0.6 14 7
HT Media 0.0 0.0 0.0 0.0 1.2 0.7 0.6 0.5 1.0 -16 99
HMVL 0.4 0.4 0.5 0.5 0.6 0.5 0.6 0.5 0.5 -13 4
EBITDA Margin (%)
Z EEL 25.9 20.1 23.2 26.0 27.0 27.0 28.8 28.9 26.5 -45bps -234bps
Sun TV 77.5 77.2 59.2 76.1 76.7 74.7 57.4 74.6 76.5 -19bps 198bps
Dish TV 26.8 29.4 32.1 33.9 34.4 32.6 34.0 33.9 34.4 0bps 51bps
DB Corp 33.3 24.6 25.7 23.6 31.9 22.2 31.8 28.5 29.5 -238bps 103bps
Jagran Prakashan 28.2 24.8 28.0 28.0 29.9 25.6 27.7 21.5 27.2 -268bps 570bps
Hathway cable and Datacom 10.3 11.5 15.9 16.9 16.6 23.5 14.7 16.6 16.8 22bps 18bps
HT Media 0.0 0.0 0.0 0.0 17.4 11.1 10.5 8.4 15.2 -222bps 682bps
HMVL 19.4 22.0 24.4 23.1 25.0 22.5 23.8 22.0 22.3 -273bps 28bps
Adj. PAT (INR b)
Z EEL 3.09 2.31 2.44 2.85 2.75 2.61 2.17 2.38 3.23 18 36
Sun TV 2.14 2.03 1.97 2.18 2.16 2.36 2.33 2.70 2.44 13 -10
Dish TV -0.03 0.35 0.54 0.87 0.68 4.83 0.41 0.70 0.44 -36 -37
DB Corp 1.05 0.64 0.66 0.60 1.07 0.64 1.04 0.89 1.04 -3 17
Jagran Prakashan 0.66 0.49 0.78 0.71 0.93 0.80 0.84 1.08 0.78 -16 -28
Hathway cable and Datacom -0.6 -0.8 -0.4 -0.3 -0.3 -0.5 -0.5 -0.4 -0.4 26 2
HT Media 0.67 0.39 0.25 0.37 0.69 0.38 0.22 0.31 0.48 -31 54
HMVL 0.37 0.39 0.42 0.45 0.47 0.47 0.49 0.55 0.43 -9 -22
January 2017 183

Exhibit 2: 3QFY17 estimated ad revenue growth (YoY, %)

5
4
3 2
-5
-8
Z EEL HMVL Jagran HT Media Sun TV DB Corp

Exhibit 3: 3QFY17 estimated subscription/circulation growth (YoY, %)
15
11
4 4 4
2
DB Corp Sun TV Dish TV HT Media JAGP Z EEL

Exhibit 4: Media universe quarterly PAT (INR b)
11.6
8.4 8.2 8.4

7.4 7.7
6.7 7.0
5.8 5.8
4.9 5.0
4QFY13
1QFY14
2QFY14
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17E

Exhibit 5: Newsprint prices moderating
Newsprint price - INR (RHS) Newsprint price - USD
800
43,000
650
36,000
29,000 500
22,000 350
15,000 200
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
January 2017 184


Sales (INR m) EBITDA (INR m) Net Profit (INR m)
CMP
Sector RECO Var % Var % Var % Var % Var % Var %
(INR) Dec-16 Dec-16 Dec-16
Media
D B Corp 374 Buy 6,137 4.8 16.1 1,811 -3.1 20.3 1,039 -2.8 17.3
Dish TV 85 Buy 7,935 2.9 1.8 2,731 2.9 3.4 441 -35.7 -37.1
Hathway Cable 37 Buy 3,387 12.7 5.5 569 14.3 6.7 -413 Loss Loss
HT Media 75 Neutral 6,595 -3.2 9.5 1,002 -15.5 98.6 476 -30.8 54.0
Jagran Prakashan 181 Buy 5,833 1.2 27.1 1,586 -7.9 30.7 782 -16.2 7.7
PVR 1,173 Buy 5,505 10.0 -0.7 881 3.3 -5.3 258 -15.6 -11.6
Siti Networks 38 Buy 3,347 -9.5 15.8 957 -23.5 102.1 167 -57.2 LP
Sun TV 524 UR 6,252 8.9 0.0 4,785 8.6 2.6 2,439 13.1 -9.8
Z ee Entertainment 458 Buy 16,492 3.4 -2.7 4,373 1.7 -10.6 3,024 10.0 26.8
Media Sector Aggregate 61,484 3.2 5.0 18,694 -0.2 7.7 8,212 -5.1 15.2
Source: MOSL
Exhibit 2: Relative Performance-3m (%) Exhibit 3: Relative Performance-1 Yr (%)
Sensex Index MOSL Media Index Sensex Index MOSL Media Index
102 120
99 110
96 100
93 90
90 80
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Nov-16
Dec-16
Sep-16
Oct-16
Exhibit 4: Comparative valuations

Sector / CMP Reco. EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
Companies (INR) FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Media
D B Corp 374 Buy 20.0 23.5 27.4 18.7 15.9 13.7 10.4 8.9 7.6 25.7 26.9 27.6
Den Networks 72 Neutral -3.6 1.9 7.7 -19.7 38.7 9.3 11.8 4.8 3.0 -4.1 2.1 8.1
Dish TV 85 Buy 2.0 3.3 5.1 43.1 25.4 16.7 8.9 7.0 5.5 43.2 46.3 44.6
Hathway Cable 37 Buy -2.4 -1.4 0.3 -15.0 -27.1 134.9 12.5 8.9 6.7 -16.6 -11.0 2.3
Hindustan Media 270 Buy 26.9 29.7 33.2 10.1 9.1 8.1 5.0 3.7 2.5 19.6 18.0 16.9
HT Media 75 Neutral 5.4 7.0 8.0 13.9 10.7 9.4 3.0 1.8 0.9 5.2 6.3 6.6
Jagran Prakashan 181 Buy 10.8 12.2 13.9 16.8 14.8 13.0 9.2 8.0 6.9 20.7 20.6 20.4
PVR 1,173 Buy 20.4 35.8 57.0 57.6 32.7 20.6 18.0 12.5 9.3 10.4 16.4 22.0
Siti Networks 38 Buy -0.9 2.7 3.2 -41.1 13.8 11.8 11.6 5.2 3.8 -10.2 23.5 20.0
Sun TV 524 UR 25.4 30.3 33.9 20.6 17.3 15.4 10.1 8.4 7.5 25.3 27.6 28.1
Z ee Entertainment 458 Buy 11.7 17.7 21.3 39.3 25.9 21.5 21.3 16.7 13.4 29.4 30.7 29.9
Source: MOSL
January 2017 185

D B Corp
Bloomberg DBCL IN CMP: INR374 TP: INR450 Buy
 We expect ad growth for print media to be impacted by
demonetization. Print media companies receive ~55% of ad
1,6,12 Rel Perf. (%) 3 / -1 / 11
revenues from local advertisers that have been most impacted.
 Despite low base, we expect weak 2% YoY ad growth (~INR4b) for
DBCL in 3QFY16. Circulation revenue is likely to grow 11% YoY to
Y/E MARCH 2016 2017E 2018E 2019E
INR1.27b.
Net Sales 20.5 22.8 25.7 28.7
 DBCL’s aggregate revenue is likely to grow 5% YoY to INR6.13b, as
EBITDA 5.4 6.4 7.3 8.2 print ad revenue, which accounts for ~65% of overall revenue,
Adj. Net Profit 3.0 3.7 4.3 5.0 remains under pressure.
Adj. EPS (INR) 16.2 20.0 23.5 27.4  Raw material cost is expected to increase 2% YoY despite an
Adj. EPS Gr. (%) -7.4 23.6 17.6 16.2 expected 5% YoY growth in newsprint prices. DBCL has been trying
BV/Sh (INR) 73.3 82.3 92.9 105.2 to reduce newsprint consumption to salvage margins. We expect
RoE (%) 22.6 25.7 26.9 27.6 EBITDA margin to decline by ~240bp YoY to 29.5%.
RoCE (%) 20.0 23.0 24.3 25.2  Startup losses related to the Bihar footprint expansion are
Div. Payout (%) 81.5 55.0 55.0 55.0 expected to continue at 2Q levels.
Valuations  We estimate net profit at INR1.04b, down 3% YoY.
P/E (x) 23.1 18.7 15.9 13.7  We have cut our FY17/FY18 ad revenue estimates by ~6% each,
P/BV (x) 5.1 4.5 4.0 3.6 and consequently, our EPS estimates by 8%/9% to factor in the
EV/EBITDA (x) 12.9 10.4 8.9 7.6
demonetization impact. We revise our target price to INR450 (17x
Div. Yield (%) 2.9 2.5 2.9 3.3
December 2018E EPS). The stock trades at 18.7x/15.9 FY17E/FY18E
EPS. Buy.
Key things to watch for
 YoY ad growth (we expect 2%).
 EBITDA margin (we expect 29.5%).
Y/E March FY16 FY17 FY17E
FY16
Sales 4,734 4,781 5,859 5,143 5,704 5,287 6,137 5,706 20,516 22,835
YoY (%) -3.2 -0.4 5.6 5.9 20.5 10.6 4.8 11.0 1.9 11.3
EBITDA 1,218 1,127 1,868 1,142 1,812 1,505 1,811 1,315 5,355 6,443
YoY (%) -9.5 -8.7 1.2 -4.4 48.7 33.6 -3.1 15.2 -5.6 20.3
EBITDA margin (%) 25.7 23.6 31.9 22.2 31.8 28.5 29.5 23.0 26.1 28.2
Depreciation 208 215 233 222 211 216 227 226 878 880
Interest 21 27 19 24 34 6 25 26 92 91
Other Income 68 53 37 122 41 41 51 52 281 187
PBT 1,057 938 1,654 1,017 1,608 1,325 1,610 1,115 4,666 5,660
Tax 393 337 585 375 568 440 572 400 1,690 1,981
Adj PAT 665 601 1,068 642 1,040 885 1,039 714 2,976 3,679
YoY (%) -16.0 -11.8 1.6 0.4 56.5 47.3 -2.8 11.2 -7.3 23.6
January 2017 186

Dish TV India
Bloomberg DITV IN CMP: INR85 TP: INR115 Buy
 We expect DITV’s revenue to increase 3% YoY and 2% QoQ on a
reported basis to INR7.93b.
1,6,12 Rel Perf. (%) -2 / -13 / -19
 Subscription revenue is expected to increase 2% QoQ to INR7.42b as
demonetization is expected to impact both monthly recharges as
well as fresh set-top box seeding.
Y/E March 2016 2017E 2018E 2019E
 We expect gross additions of 0.6m and net additions of 0.28m. ARPU
Net Sales 30.6 31.7 36.0 40.7
is expected to be flat QoQ at INR162 per subscriber per month.
EBITDA 10.2 10.9 13.0 15.7  EBITDA margin is expected to be largely flat QoQ at 34.4%.
Adj. NP 6.9 2.1 3.6 5.4  We expect net profit of INR0.44b in 3QFY17.
Adj. EPS (INR) 6.5 2.0 3.3 5.1  The stock trades at EV/EBITDA of 8.8x FY17E and 6.9x FY18E. Buy.
Adj. EPS Gr.(%) NA -69.7 69.4 52.5
BV/Sh (INR) 3.6 5.5 8.9 14.0
RoE (%) NA 43 46 45
RoCE (%) 12.7 11.4 14.3 18.1
Div. Payout(%) NA NA NA NA
Valuations
P/E (x) 13 43 25 17 Key things to watch for
P/BV (x) NA 15.3 9.6 6.1  Quarterly gross adds (we expect 0.6m).
EV/EBITDA (x) 9.6 8.8 6.9 5.5  ARPU (we expect INR162).
EV/Sub (INR) 6,789 6,082 5,152 4,514  EBIDTA margin (we expect 36.2%)

FY16 FY17
Sales 7,367 7,524 7,715 7,994 7,786 7,793 7,935 8,142 30,599 31,656
YoY Change (%) 15.0 11.9 8.1 5.9 5.7 3.6 2.9 1.9 10.0 3.5
Operating expenses 4,998 4,974 5,060 5,385 5,140 5,151 5,204 5,284 20,350 20,776
EBITDA 2,368 2,550 2,655 2,609 2,646 2,642 2,731 2,859 10,249 10,880
YoY Change (%) 50.8 57.1 38.8 17.6 11.7 3.6 2.9 9.6 39.4 6.2
EBITDA margin (%) 32.1 33.9 34.4 32.6 34.0 33.9 34.4 35.1 33.5 34.4
Depreciation 1,598 1,330 1,463 1,516 1,613 1,635 1,659 1,662 5,907 6,509
Interest 480 548 549 512 521 554 452 380 2,087 1,925
Other Income 252 197 42 218 119 111 120 120 640 470
PBT 542 870 686 799 631 565 741 937 2,895 2,916
Tax -4,029 223 -136 300 384 -4,029 817
Effective Tax Rate (%) (504.2) 35.3 (24.1) 40.5 41.0 28.0
Net profit 542 870 686 4,828 409 701 441 553 6,924 2,100
Net Subs (m) 13.3 13.7 14.0 14.5 14.9 15.2 15.4 15.8 14.5 15.8
ARPU (INR/month) 173 171 172 174 165 162 162 161 172 163
January 2017 187

Hathway Cable
Bloomberg HATH IN CMP: INR37 TP: INR47 Buy
 We expect standalone revenue to grow 5% QoQ to INR3.38b.
 Cable subscription revenue is expected to grow 5% QoQ to
1,6,12 Rel Perf. (%) 1 / 10 / -19
INR1.16b.
 EBITDA is expected to grow 7% QoQ to INR569m on overall basis,
and 11% QoQ on an ex-activation basis to INR349m. EBITDA margin
Y/E March 2016 2017E 2018E 2019E
is likely to largely remain flat QoQ at ~16.8%. On an ex-activation
Net Sales 20.8 22.7 26.4 29.3
basis too, EBITDA margin is likely to largely remain flat QoQ at 10%
EBITDA 3.9 4.0 5.7 7.3  We expect net loss to largely remain flat QoQ at INR0.41b in
EBITDA # 1.6 2.2 5.1 6.9 3QFY17.
Adj. NP -1.6 -2.0 -1.1 0.2  The stock trades at attributable EV/EBITDA (ex-activation) of 27.4x
Adj. EPS (INR) -1.9 -2.4 -1.4 0.3 FY17E and 11.9x FY18E. Maintain Buy.
Adj. EPS Gr. (%) NA NA NA NA
BV/Sh (INR) 16.3 13.2 11.5 11.8
RoE (%) -11.3 -16.6 -11.0 2.3
RoCE (%) -2.6 -4.7 -0.1 6.9
Valuations
P/E (x) -19.4 -15.0 -27.1 134.9
EV/EBITDA (x)* 15.4 15.1 10.7 8.1
 Cable subscription revenue growth (we expect 5% QoQ).
EV/EBITDA (x)*# 37.2 27.3 11.9 8.6
EV/Sub (INR)* 4,858 4,928 4,965 4,819  EBITDA margin (ex-activation) (we expect 10%).
* Based on attributable EBITDA and subs post
minority stake; # (ex-activation)

FY16 FY17
Sales 2,587 2,704 3,004 3,399 3,021 3,211 3,387 3,703 11,694 13,321
YoY Change (%) 3.4 2.6 25.6 25.9 16.8 18.8 12.7 8.9 14.3 13.9
EBITDA 411 457 498 798 445 533 569 735 2,163 2,282
YoY Change (%) -6.3 13.9 102.5 157.4 8.3 16.7 14.3 -7.9 55.0 5.5
EBITDA margin (%) 15.9 16.9 16.6 23.5 14.7 16.6 16.8 19.8 18.5 17.1
Depreciation 592 615 637 701 704 727 742 749 2,545 2,923
Interest 214 231 225 230 298 246 255 264 900 1,063
Other Income 45 34 28 17 51 16 16 16 124 99
PBT -349 -356 -336 -116 -505 -424 -413 -263 -1,158 -1,605
Adjusted net profit -349 -356 -336 -116 -505 -424 -413 -263 -1,158 -1,605
YoY Change (%) NA NA NA NA NA NA NA NA -35.4 38.6
Forex and exceptional items 24 -36 -10 343 27 -20 0 0 321 7
Reported PAT -374 -320 -326 -459 -532 -404 -413 -263 -1,479 -1,612
January 2017 188

HT Media
Bloomberg HTML IN CMP: INR75 TP: INR85 Neutral
 We expect revenue to decline 3% YoY to INR6.59b.
 Print ad revenue is likely to decline 8% YoY to INR4.71b, impacted
1,6,12 Rel Perf. (%) 3 / -5 / -22
by languishing English print ad revenue and demonetization. Hindi
ad revenue is also likely to decline 5% YoY to INR1.72b.
 Radio ad revenue growth is expected to moderate to 18% YoY to
Y/E MARCH 2016 2017E 2018E 2019E
INR381m.
Net Sales 25.0 25.7 28.6 31.2
 We expect circulation revenue to increase 4% YoY to INR0.8b.
EBITDA 3.1 2.8 3.4 3.7  EBITDA margin is expected to decline by ~220bp YoY to 15.2%.
Adj. NP 1.7 1.2 1.6 1.8  Adjusted net profit is likely to decline YoY to INR0.47b, primarily led
Adj. EPS (INR) 7.3 5.4 7.0 8.0 by higher interest outgo related to new radio licenses and trickle-
Adj. EPS Gr. (%) -16.2 -26.1 29.4 14.5 down impact of revenue decline.
BV/Sh (INR) 99.2 106.5 115.5 125.7  The stock trades at 13.8x FY17E and 10.7x FY18E EPS. We revise
RoE (%) 7.7 5.2 6.3 6.6 our target price to INR85 (11x December 2018E EPS). Neutral.
RoCE (%) 8.7 7.0 7.9 8.4
Div. Payout (%) 4.3 4.3 4.3 4.3
Valuations
P/E (x) 10.2 13.9 10.7 9.4
P/BV (x) 0.8 0.7 0.6 0.6
EV/EBITDA (x)* 4.6 4.6 3.1 2.2  YoY English ad growth (we expect 9% YoY de-growth).
Div. Yield (%) 0.4 0.3 0.4 0.5  Hindi ad growth (we expect 5% YoY de-growth).
* Proportionate
Quarterly Performance (Consolidated) (INR Million)

FY16 FY17
Revenue 5,872 6,011 6,811 6,310 6,147 6,022 6,595 6,914 25,004 25,678
YoY (%) 7.5 7.2 12.5 9.4 4.7 0.2 -3.2 9.6 9.2 2.7
EBITDA 568 659 1,186 697 643 505 1,002 686 3,111 2,836
YoY (%) -8.3 -8.5 37.7 44.4 13.1 -23.4 -15.5 -1.7 15.9 -8.9
EBITDA margin (%) 9.7 11.0 17.4 11.1 10.5 8.4 15.2 9.9 12.4 11.0
Depreciation 228 269 247 271 295 304 322 340 1,015 1,261
Interest 94 123 209 202 247 245 260 260 628 1,012
Other Income 281 457 271 535 478 780 300 301 1,543 1,859
Extra-ordinary exps 0 0 0 0 0 0 0 0 0 0
PBT 527 724 1,001 759 579 736 720 387 3,011 2,421
Tax 171 208 193 263 186 224 182 97 834 690
PAT 356 516 809 497 392 512 538 289 2,178 1,731
Reported PAT 249 368 688 376 224 309 476 229 1,682 1,238
Adj PAT 249 368 688 376 224 309 476 229 1,682 1,238
YoY (%) -23.8 -16.0 -11.7 -4.2 -10.1 -16.1 -30.8 -39.1 -6.5 -26.4
January 2017 189

Jagran Prakashan
Bloomberg JAGP IN CMP: INR181 TP: INR215 Buy
 We expect advertising revenue to grow 3% YoY to INR4.45b.
 Advertising revenue (ex-Radio) is expected to grow 3% YoY to
1,6,12 Rel Perf. (%) 4/4/6
INR3.78b. We expect circulation revenue to grow 4% YoY to
INR1.06b.
 We estimate Radio revenue at INR0.68b and EBITDA at INR0.23b.
Y/E March 2016 2017E 2018E 2019E
 Aggregate revenue is expected to grow 1% YoY to INR5.83b.
Net Sales 21.1 22.9 25.4 28.3
 We estimate EBITDA at INR1.59b and EBITDA margin at 27.2%.
EBITDA 6.0 6.3 7.1 8.0 Adjusted earnings are expected at INR0.78b, down 16% YoY.
Adj. NP 3.4 3.5 4.0 4.5  While our numbers factor in a further 3% cut in FY18 EPS for
Adj. EPS (INR) 10.5 10.8 12.2 13.9 demonetization impact, our target price remains unchanged at
Adj.EPS Gr (%) 44.6 2.7 13.8 14.0 INR215 (16x December 2018E EPS). The stock trades at 16.7x FY17E
BV/Sh (INR) 49.3 55.4 63.5 73.4 and 14.7x FY18E EPS. Buy.
RoE (%) 24.7 20.7 20.6 20.4
RoCE (%) 24.8 16.6 16.9 17.1
Div. Payout (%) 40.5 38.1 33.5 29.4
Valuations
P/E (x) 17.2 16.7 14.7 12.9
P/BV (x) 3.7 3.2 2.8 2.5 Key things to watch for
EV/EBITDA (x) 10.1 9.1 7.9 6.8  YoY ad growth (we expect 3%).
Div. Yield (%) 2.0 1.9 1.9 1.9  YoY ad growth (ex-Radio City) (we expect ~ 3%).

FY16 FY17
Sales 4,750 5,064 5,764 5,295 5,580 4,590 5,833 5,825 21,065 22,882
YoY (%) 7.9 16.1 22.5 25.3 17.5 -9.4 1.2 10.0
EBITDA 1,341 1,416 1,721 1,358 1,546 1,213 1,586 1,594 5,896 6,291
YoY (%) 25.3 33.2 29.9 29.5 15.3 -14.3 -7.9 17.4 30.9 6.7
EBITDA margin (%) 28.2 28.0 29.9 25.6 27.7 26.4 27.2 27.4 28.0 27.5
Depreciation 231 287 284 242 244 209 355 304 1,044 1,112
Interest 186 81 172 143 139 91 100 103 523 432
Other Income 195 -6 64 148 89 164 90 43 345 386
Exceptional item 51 -145 0 0 0 0 0 0 -95 0
PBT 1,068 1,186 1,329 1,120 1,252 1,077 1,222 1,229 4,769 5,133
Tax 348 327 396 319 407 351 440 445 1,390 1,642
Reported net profit 721 859 933 802 840 726 782 784 3,378 3,490
YoY (%) 30.8 51.8 40.8 -38.2 8.9 1.7 -16.2 -2.1 44.5 6.3
January 2017 190

PVR
Bloomberg PVRL IN CMP: INR1,173 TP: INR1,429(+22%) Buy
 Hindi movie, D ang al reported stellar net box office collection (NBO)
of INR2.4b until December 31, 2016 in India. This should boost
1,6,12 Rel Perf. (%) 9 / 19 / 42
3QFY17 performance of PVR, which has ~20% market share.
 We broadly expect average ticket prices (ATP) to remain flattish,
Financial Snapshot (INR Billion) given poor content overall (except for D ang al), SPH improvement
Y/E March 2016 2017E 2018E 2019E of ~5%, and advertisement income growth of 10-11%. SSG is
Sales 18.7 21.2 26.0 32.8 expected to decline ~3% – the decline would be lower than we had
EBITDA 3.3 3.5 4.8 6.2 anticipated initially. The base quarter was very strong, with 19.7%
NP 1.2 1.0 1.7 2.7 footfall growth to 18.8m and 37% occupancy.
EPS (INR) 25.5 20.4 35.8 57.0  On a high base, we expect 10% revenue growth to INR5.5b. EBITDA
EPS Gr (%) 664.3 -20.2 75.9 58.9 is expected to increase 3.3% to INR881m, while EBITDA margin is
BV/Sh (INR) 186.2 204.0 234.4 282.9 expected to decline 100bp to 16%.
RoE (%) 18.7 10.4 16.4 22.0  We expect PAT to decline 15.6% YoY to INR258m.
RoCE (%) 14.5 8.8 12.4 17.8
Payout (%)
Valuations 45.7 57.3 32.6 20.5
P/E (x) 6.3 5.7 5.0 4.1 Key things to watch for
P/BV (x) 19.3 18.7 13.0 9.7  Footfalls, occupancy rate during the quarter.
EV/EBITDA 0.3 0.3 0.7 1.1
(x)
 Impact of demonetization on ATP and SPH.
Div Yield (%) 18.7 21.2 26.0 32.8

Y/E March FY16 FY17
FY16 FY17E
Net Sales 4,860 4,746 5,005 4,126 5,702 5,542 5,505 4,497 18,736 21,199
YoY Change (%) 34.2 18.6 19.1 37.7 17.3 16.8 10.0 9.0 26.8 13.1
EBITDA 1,107 875 853 465 1,167 930 881 495 3,299 3,477
Margins (%) 22.8 18.4 17.0 11.3 20.5 16.8 16.0 11.0 17.6 16.4
Depreciation 267 273 304 359 331 346 380 430 1,202 1,486
Interest 218 206 192 223 192 193 180 185 839 759
Other Income 25 114 67 65 63 49 45 55 271 200
PBT before EO expense 647 510 424 -52 707 440 366 -65 1,530 1,431
PBT 615 491 420 -81 681 440 366 -65 1,443 1,431
Tax 175 184 119 22 249 149 109.7 -20 500.5 479.4
Rate (%) 28.5 37.5 28.4 -27.1 36.6 33.8 30.0 30.0 34.7 33.5
Reported PAT 435 307 299 -104 428 291 254 -46 941 952
Adj PAT 458 319 305 -66 444 291 258 -46 1,248 952
YoY Change (%) 468.0 233.6 -5.3 -70.1 -3.0 -8.7 -15.6 NM 744.2 -23.8
Margins (%) 9.0 6.5 6.0 -2.5 7.5 5.3 4.6 -1.0 5.0 4.5
E: MOSL Estimates
Niket Shah (Niket.Shah@MotilalOswal.com)

Chintan Modi (Chintan.Modi@MotilalOswal.com) / Chitvan Oza (Chitvan.Oza@MotilalOswal.com)
January 2017 191
SITI Cable
Bloomberg SITINET IN CMP: INR38 TP: INR45 Buy
 We expect reported revenue to grow 16% QoQ to INR3.35b,
primarily led by higher activation and broadband revenue.
1,6,12 Rel Perf. (%) 7 / -1 / -2
 Cable subscription revenue is expected to grow 6% QoQ to
~INR1.48b as digitization-led triggers for subscription remain
elusive in 3Q and are expected to pick up in 4Q.
Y/E March 2016 2017E 2018E 2019E
 Activation revenue is expected to more than double QoQ to
Net Sales 11.9 12.5 17.4 21.0 INR0.76b in 3QFY17, as seeding picks up post a subdued 1H. We
EBITDA 3.0 3.0 6.5 8.5 have factored in set-top box seeding of ~0.8m for 3Q.
EBITDA# 0.9 0.7 5.4 7.5  Carriage revenue expected to decline QoQ to INR0.72b in 3Q.
Adj. NP 0.0 -0.8 2.4 2.9  EBITDA is expected to nearly double QoQ to INR0.96b, primarily led
Adj. EPS (INR) 0.0 -0.9 2.7 3.2 by higher activation and broadband revenue. On an ex-activation
Adj. EPS Gr. (%) NM NM NM NM basis, EBITDA is expected to improve to INR197m in 3Q from
BV/Sh (INR) 9.1 9.5 14.1 17.7 INR90m in 2QFY17.
RoE (%) 0.1 -10.2 23.5 20.0  We expect net profit of INR167m v/s net loss of ~INR469m in 2Q.
RoCE (%) 6.4 1.4 18.2 17.3  The stock trades at attributable EV/EBITDA (ex-activation) of 6.7x
Valuation FY18E. Maintain Buy with a DCF-based target price of INR45.
P/E (x) NM NM 13.8 11.8
EV/EBITDA (x)* 13.7 14.2 6.3 4.7 Key things to watch for
EV/ EBITDA 47.8 63.2 7.5 5.3  Subscription revenue growth (6% QoQ).
(x)*
EV/Sub (INR)* 3,335 3,457 3,346 3,201  Activation revenue (we expect INR0.76b).
* Based on attributable EBITDA and subs post  EBITDA margin (we expect 28.6%).
minority stake; # (ex-activation)

Sales 2,297 2,339 3,699 3,567 2,820 2,890 3,347 3,449 11,890 12,506
YoY (%) 9.9 6.7 66.9 39.3 22.7 23.6 -9.5 -3.3
Operating Expenses 1,953 1,943 2,449 2,614 2,395 2,416 2,390 2,340 8900 9,542
EBITDA 344 395 1,251 952 425 473 957 1,109 2,990 2,964
YoY (%) 0.5 -4.0 159.2 913.1 23.5 19.7 -23.5 16.4
EBITDA margin (%) 15.0 16.9 33.8 26.7 15.1 16.4 28.6 32.1 25.1 23.7
Depreciation 358 367 391 515 547 572 566 566 1,632 2,251
Interest 344 348 346 351 297 280 276 298 1,378 1,336
Other Income 24 87 48 81 49 24 80 74 240 178
PBT -334 -233 562 167 -370 -355 194 318 220 -446
Tax 5 35 2 89 65 22 42 41 131 170
Effective Tax Rate (%) -1.6 -14.9 0.4 53.1 -17.7 -6.1 21.6 12.9 59.6 -38.2
Reported Net Profit -367 -315 390 241 -536 -469 167 293 -16 -778
January 2017 192

Sun TV
Bloomberg SUNTV IN CMP: INR524 Under Review
 We expect Sun TV’s revenue to grow 9% YoY to INR6.25b.
M. Cap. (INR b)/(USD b) 206 / 3
 Advertising and broadcasting revenue is expected to grow 5% YoY
1,6,12 Rel Perf. (%) 5 / 43 / 20
to INR3.4b as demonetization impact sets in.
 We expect domestic subscription revenue to grow 5% QoQ to
INR2.4b.
 Sun TV’s EBITDA/EBIT is estimated to grow ~9%/13% YoY to
Y/E March 2016 2017E 2018E 2019E
Net Sales 24.0 26.7 30.8 34.4
INR4.78b/INR3.73b. PAT is expected to grow 13% YoY to
EBITDA 17.1 18.8 22.1 24.7 INR2.44b.
Adj. Net Profit 8.3 10.0 11.9 13.4  The stock trades at 20.6x FY17E and 17.3x FY18E EPS. Under
Adj. EPS (INR) 21.1 25.4 30.3 33.9 Review.
Adj. EPS Gr. (%) 13.0 20.2 19.4 12.0
BV/Sh (INR) 92.2 100.3 109.8 120.6
RoE (%) 23.4 25.3 27.6 28.1
RoCE (%) 24.1 26.3 28.7 29.3
Div. Payout (%) 59.0 59.1 59.4 58.9
Valuations
P/BV (x) 5.7 5.2 4.8 4.3  YoY ad growth (we expect 5%).
EV/EBITDA (x) 11.3 10.1 8.4 7.5  QoQ domestic subscription growth (we expect 5%).
Div. Yield (%) 2.5 2.9 3.4 3.8
Quarterly Performance (Standalone) * (INR million)

FY16 FY17
Revenue 6,911 5,681 5,741 5,707 7,608 6,255 6,252 6,558 24,040 26,673
YoY (%) 9.1 11.6 3.9 4.0 10.1 10.1 8.9 14.9 7.2 11.0
EBITDA 4,092 4,322 4,404 4,266 4,364 4,663 4,785 5,018 17,084 18,830
YoY (%) 11.3 9.2 2.9 0.8 6.7 7.9 8.6 17.6 5.8 10.2
As of % Sales 59.2 76.1 76.7 74.7 57.4 74.6 76.5 76.5 71.1 70.6
Depreciation and Amortization 1,302 1,176 1,348 1,007 1,008 1,030 1,300 1,363 4,835 4,701
Interest 8 1 5 8 1 2 8 10 21 21
Other Income 222 204 246 223 216 488 244 223 911 1,170
PBT 3,003 3,349 3,298 3,475 3,571 4,119 3,721 3,868 13,139 15,278
Tax 1,031 1,166 1,142 1,294 1,240 1,415 1,282 1,334 4,633 5,271
Reported PAT 1,973 2,184 2,156 2,180 2,331 2,704 2,439 2,534 8,507 10,007
Extraordnary Item 180
Adj PAT 1,973 2,184 2,156 2,360 2,331 2,704 2,439 2,534 8,673 6,700
YoY (%) 19.1 41.4 0.7 16.3 18.1 23.8 13.1 7.4 17.6 -22.7
*Incl IPL rev/EBITDA loss
January 2017 193

Z ee Entertainment
Bloomberg Z IN CMP: INR458 TP: INR590 Buy
 We expect advertising revenue to grow 4% YoY to INR9.79b, as the
M. Cap. (INR b)/(USD b) 439 / 6
demonetization impact is largely expected to wipe off gains from
1,6,12 Rel Perf. (%) 2/1/4
the festive season.
 Subscription revenue is likely to grow 11% YoY to INR5.81b.
(Domestic subscription to grow 12% YoY to INR4.7b).
Y/E MARCH 2016 2017E 2018E 2019E
 Total revenue growth is expected to moderate to 3% YoY
Net Sales 58.3 66.2 74.9 86.2
(INR16.5b), led by demonetization-led ad pain and lack of any
EBITDA 15.0 18.4 23.2 28.0 syndication and movie-based revenue triggers.
Adj. NP 10.2 13.3 16.9 20.3  We are building in ~11% YoY increase in content cost.
Adj. EPS (INR) 10.6 11.7 17.7 21.3  We expect EBITDA margin to largely remain flat YoY at 26.5%.
Adj. EPS Gr. (%) 3.9 10.1 51.6 20.4  Sports losses are expected to be minimal at INR126m.
EPS ex-&TV (INR) 11.8 12.4 18.4 21.0  Adjusted PAT is expected to grow ~10% YoY to INR3.02b.
RoE (%) 27.0 29.4 30.7 29.9  We have cut our FY17/FY18 earnings estimates by 5%/8.5% to
RoCE (%) 17.7 19.6 23.4 25.0 factor in the demonetization impact and sluggishness in FMCG ad
Div. Payout (%) 21.3 19.3 18.4 19.3 spends (contributes ~55% to TV ad spends). Our revised TP is
Valuations INR590 (29x December 2018E EPS (ex-&TV) plus INR19/share
P/E (x) 43.2 39.3 25.9 21.5 towards &TV DCF less INR19/share towards preference share
P/E ex-&TV (x) 38.8 37.0 24.9 21.8 liability). The stock trades at 39.3x FY17E and 25.9x FY18E EPS. Buy.
EV/EBITDA (x) 29.5 22.4 17.4 13.8
Div. Yield (%) 0.5 0.5 0.7 0.9 Key things to watch for
 YoY ad growth (we expect 4%).
 Sports loss (we expect INR126m).

FY16 FY17
Advertsing Revenue 7,799 8,290 9,419 8,645 9,120 9,592 9,796 9,714 34,037 38,220
Subscription Revenue 4,625 4,791 5,218 5,944 5,282 5,833 5,816 6,744 20,578 23,675
Other Sales and Services 974 705 1,314 727 1,315 1,529 880 549 3,640 4,273
Net Sales 13,399 13,786 15,951 15,316 15,716 16,954 16,492 17,006 58,255 66,168
Change (%) 23.4 23.3 17.0 13.7 17.3 23.0 3.4 11.0 19.3 13.6
Prog, Transmission & Direct Exp 6,108 6,032 7,023 6,881 6,575 7,688 7,765 7,617 25,969 29,646
Staff Cost 1,380 1,197 1,288 1,297 1,499 1,533 1,484 1,531 5,209 6,046
Selling and Other Exp 2,799 2,971 3,337 3,002 3,110 2,841 2,870 3,221 12,084 12,043
EBITDA 3,112 3,586 4,302 4,136 4,532 4,892 4,373 4,636 14,992 18,433
Change (%) 0.7 11.9 21.8 52.7 45.6 36.4 1.7 12.1 22.5 23.0
EBITDA margin (%) 23.2 26.0 27.0 27.0 28.8 28.9 26.5 27.3 25.7 27.9
Depreciation 168 198 201 273 251 336 319 302 840 1,208
Finance cost 15 21 45 42 75 86 83 80 123 323
Other Income 680 589 290 458 734 432 442 653 2,016 2,262
Fair Value through P&L -1,132 -829 -300 -2,261
Extraordinary items -331 -331 0
PBT 3,609 3,626 4,346 4,278 3,807 4,074 4,113 4,908 15,714 16,902
Tax 1,185 1,123 1,602 1,618 1,626 1,634 1,069 1,275 5,528 5,605
PAT 2,423 2,504 2,744 2,658 2,181 2,440 3,044 3,633 10,186 11,297
Minority Interest/Associates -15 -11 -6 53 12 56 20 20 22 108
Adj PAT after Minority Interest 2,438 2,846 2,750 2,605 2,170 2,384 3,024 3,613 10,495 11,190
Change (%) 15.8 25.0 -10.9 12.9 -11.0 -16.2 10.0 38.7 7.4 6.6
Sports EBITDA 15 22 -150 -236 171 -168 -126 0 -349 -123
Non-Sports EBITDA 3,097 3,564 4,452 4,372 4,361 5,060 4,499 4,636 15,341 18,555
January 2017 194

December 2016 Results Preview | Sector: Metals
Metals
Company name Across-the-board price increase drives strong
Hindalco performance
Hindustan Z inc NMDC, Nalco and Vedanta benefit from volume and price increases
JSW Steel
Nalco Across-the-board increase in commodity prices
NMDC
Metal stocks continue benefiting from across-the-board rise in metal prices and
volume ramp-up. Steel prices in 3QFY17 were up 9-12% QoQ or INR3,000-3,800 per
SAIL
ton, led by a seasonally weak base (monsoon) and cost-led price increase. Among
Tata Steel
base metals, zinc/lead average LME was up 11%/15% to USD2,511/USD2,156 per
Vedanta
ton. Z inc LME is up ~USD930 per ton (~60%) since the recent low in 4QFY16, driven
by supply tightness. Aluminum LME was up 6% QoQ to USD1,710 per ton, driven by
steady demand, slower supply ramp-up in China and cost pressure. Alumina was up
29% QoQ to USD302 per ton on increased demand in China, transportation issues
and cost factors.
NMDC and Nalco to outperform

We estimate EBITDA for our metal coverage universe to increase 18% QoQ (2.7x
YoY) on higher realization and volume increase. NMDC and Nalco are likely to
outperform the pack. NMDC’s EBITDA is estimated to rise 79% QoQ to INR14.7b, led
by an increase of 24% QoQ in volumes (to 10mt) and 13% QoQ in domestic
realization (to INR2,440 per ton). Strong domestic iron ore demand and pricing
discount to international ore would continue driving strong earnings momentum for
NMDC. Nalco’s EBITDA is estimated to almost double QoQ to INR3.5b on higher
realization (both aluminum and alumina) and alumina volumes, and lower cost.
Vedanta to benefit from volume ramp-up and commodity price increases

Vedanta’s EBITDA is estimated to increase 44% QoQ to INR67b, led by strong
volume- and price-led growth in zinc and aluminum. Other commodities should also
contribute positively, with iron ore benefiting from price increase and volume
recovery post lull in 2Q due to monsoon, and oil & gas benefiting from an increase in
oil prices (USD51/bbl v/s QoQ USD45/bbl). Hindalco’s EBITDA is estimated to
increase 6% QoQ to INR32b, led by higher aluminum prices.
Steel companies to see margins decline on higher cost; Tata Steel to

outperform
Among the steel mills, while realization was impressively higher, the margins will be
impacted by an increase in coking coal prices and volume impact due to
demonetization. Tata Steel, however, is likely to outperform, with estimated EBITDA
increase of 14% QoQ to INR33b led by advantage on captive coking coal and limited
impact on margins in EU (USD53/t v/s USD67 in 2Q). JSW Steel’s EBITDA is estimated
to decline 17% QoQ to INR24b due to raw material price increase. SAIL will be back
in red at operating level.
Sanjay Jain (SanjayJain@motilaloswal.com); +91 22 3982 5412

Dhruv Muchhal (Dhruv.Muchhal@MotilalOswal.com); +91 22 3027 8033
January 2017 195
Revising zinc LME estimate

We have revised our FY18 zinc price estimates to USD2,570/t from USD2,200/t
earlier. Our revised TPs are presented in Exhibit 15, Exhibit 16 and Exhibit 17.
Vedanta’s TP is upgraded to INR250/share from INR220/share on higher zinc price
estimate – maintain Neutral. Tata Steel’s TP is revised to INR321 from INR290 on
higher margins in India – maintain Sell.

Sector Sales (INR M) EBDITA (INR M) Net Profit (INR M)
Metals
Hindalco 159 Buy 254,247 8.8 3.7 32,029 39.0 5.7 10,044 130.0 8.1
Hindustan Z inc 251 Neutral 56,904 65.9 61.4 33,801 128.6 62.8 29,300 61.8 54.1
JSPL 71 Neutral 56,664 23.3 16.6 13,574 146.6 60.0 -3,293 Loss Loss
JSW Steel 163 Buy 149,227 71.6 12.8 24,441 174.1 -17.4 4,170 LP -42.6
Nalco 66 Buy 18,766 14.8 1.7 3,581 162.6 107.8 1,922 93.4 58.5
NMDC 134 Buy 24,300 60.2 39.7 14,744 128.9 78.5 10,572 61.0 37.2
SAIL 51 Sell 107,930 20.7 -3.9 -2,259 Loss PL -14,906 Loss Loss
Tata Steel 405 Sell 282,582 0.8 7.2 33,750 335.1 13.6 5,073 LP LP
Vedanta 217 Neutral 212,241 42.7 33.8 68,574 136.0 46.9 29,702 LP 137.2
Metals Sector Aggregate 1,162,860 22.3 12.7 222,233 167.6 25.8 72,585 LP 72.5
Source: MOSL

Metals
Hindalco 159 Buy 18.5 22.1 24.7 8.6 7.2 6.4 6.4 5.7 5.0 17.3 18.1 17.1
Hindustan Z inc 251 Neutral 21.5 25.4 25.3 11.7 9.9 9.9 7.4 5.5 5.1 22.5 22.6 19.4
JSPL 71 Neutral -23.8 -8.4 -5.3 -3.0 -8.4 -13.3 11.8 11.0 10.1 -12.8 -5.0 -3.3
JSW Steel 163 Buy 12.3 18.7 19.1 13.3 8.7 8.5 7.6 6.0 5.5 14.9 19.6 17.1
Nalco 66 Buy 3.7 4.8 4.9 17.8 13.7 13.4 8.2 5.4 5.1 7.1 8.7 8.5
NMDC 134 Buy 10.9 10.8 11.3 12.3 12.4 11.9 8.7 8.0 7.6 12.8 14.2 13.7
SAIL 51 Sell -10.4 -14.3 -1.4 -4.9 -3.5 -36.9 938.5 133.7 11.4 -11.5 -18.4 -2.0
Tata Steel 405 Sell 7.7 37.1 40.7 52.8 10.9 9.9 10.0 7.7 7.3 5.8 29.2 26.0
Vedanta 217 Neutral 21.3 27.3 27.9 10.2 7.9 7.8 5.0 4.0 3.7 13.0 14.8 14.0
Metals Sector Aggregate 17.1 12.2 10.0 8.1 6.7 5.9 7.8 10.2 11.5
Source: MOSL
Exhibit 3: India import parity HRC prices

Spot Quaterly average
39,000
Avg. is up
HRC Mumbai (INR/t)
36,000 INR4210 QoQ

33,000
Domestic HRC steel prices
average is higher by 30,000
INR4,210/t QoQ. 27,000
24,000
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
January 2017 196

Exhibit 4: China steel spreads with raw material

HRC Rebar
315
Chinese steel mills product
spreads have improved on 270
rise in steel prices. 225
180
135
90
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Exhibit 5: Domestic steel demand growth – trailing 12-month (YoY %)
Domestic steel
consumption declined in Cons. (mt) Trailing 12m Growth (%)
October. It grew by 4.6%
8.1
10.0
7.4
7.3
7.3
7.2
7.2
7.1
7.1
7.1
7.0
6.9
6.9
6.9
6.9
6.8
6.7
6.7
6.7
YoY in November. YTD
6.7
6.7
6.6
6.6
6.6
6.6
6.5
6.5
6.3
6.3
6.3
6.3
6.2
6.2
6.1
8.0
5.9
5.9
5.9
5.9
5.8
5.7
5.6
5.5
5.4
5.1
5.1
growth remains tepid at just 6.0

3.1% to 54mt. 4.0 3.3
2.0 3.4
0.0 1.6
-2.0
Jun-13
Jun-14
Jun-15
Apr-13
Jun-16
Aug-13
Apr-14
Dec-13
Feb-14
Aug-14
Apr-15
Dec-14
Apr-16
Feb-15
Aug-15
Dec-15
Feb-16
Aug-16
Oct-13
Oct-14
Oct-15
Oct-16
However, domestic mills Exhibit 6: India net steel imports – kt

benefit from import Net steel imports (kt)
substitution. India has 700 582 611
500 551
turned into a marginal net 461
500
exporter of steel in the last
300
three months to November. 94
100 -284
-100
-300
Jun-12
Jun-13
Jun-14
Apr-12
Aug-12
Apr-13
Jun-15
Jun-16
Dec-12
Apr-14
Feb-13
Aug-13
Dec-13
Feb-14
Aug-14
Apr-15
Dec-14
Feb-15
Aug-15
Apr-16
Dec-15
Oct-12
Feb-16
Aug-16
Oct-13
Oct-14
Oct-15
Oct-16
Exhibit 7: India steel – sales volumes (mt)

Tata Steel SAIL JSW Steel
9.8 10.1
8.6 9.2
7.7 8.1 8.0 7.9 8.2 7.8 8.3
3.3 3.8 3.6
3.1 3.0 3.1 3.1 3.1 2.6 3.3
2.9
3.2 3.8 3.6 3.1
2.8 2.9 2.9 2.7 2.7 2.9 2.8
2.1 2.1 2.1 2.4 2.1 2.3 2.3 2.7 2.2 2.6 2.6
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
January 2017 197

Exhibit 8: India steel – EBITDA/ton (INR)

Average Tata Steel SAIL JSW Steel
20,000
15,000
10,000
5,000
0
-5,000
-10,000
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Exhibit 9: India steel – realization (INR/ton)

Average Tata Steel SAIL JSW Steel
60
Realization (000' INR/T)
53
46
39
32
25
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Exhibit 10: Quarterly average aluminum prices – USD/ton

Aluminum Premium Aluminum total price Alumina
Quarter
Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY
3QFY17E 1,710 6% 14% 73 -3% -21% 1,783 5% 12% 302 29% 29%
2QFY17 1,620 3% 2% 76 -24% -25% 1,696 1% 0% 235 -7% -20%
1QFY17 1,570 4% -11% 100 -10% -50% 1,672 3% -15% 253 15% -25%
4QFY16 1,516 1% -16% 111 20% -70% 1,627 2% -25% 219 -6% -36%
3QFY16 1,495 -6% -24% 93 -8% -78% 1,588 -6% -33% 233 -20% -34%
2QFY16 1,591 -10% -20% 100 -49% -75% 1,692 -14% -29% 293 -13% -9%
1QFY16 1,765 -2% -2% 198 -48% -47% 1,963 -10% -10% 336 -2% 6%
4QFY15 1,800 -8% 5% 377 -9% 20% 2,177 -9% 8% 343 -3% 4%
3QFY15 1,966 -1% 11% 414 3% 68% 2,380 0% 18% 355 11% 10%
2QFY15 1,987 11% 12% 404 8% 63% 2,391 10% 18% 322 2% 1%
1QFY15 1,798 5% -2% 374 19% 52% 2,172 7% 4% 317 -3% -3%
4QFY14 1,708 -3% -15% 313 27% 29% 2,022 0% -10% 328 2% -4%
3QFY14 1,768 -1% -11% 246 -1% 1% 2,015 -1% -10% 323 1% -1%
2QFY14 1,780 -3% -7% 248 1% -1% 2,029 -2% -6% 318 -3% 1%
1QFY14 1,834 -8% -7% 246 2% 2,081 -7% 327 -4% 3%
January 2017 198

Exhibit 11: Global aluminum production trend Exhibit 12: China aluminum production trend
Production YoY Production YoY
2.9 50
5,400 23.0
2.6 40
YoY growth (%)

YoY growth (%)
'000 tons
4,800 14.0
m tons
2.3 30
4,200 5.0 2.0 20
3,600 -4.0 1.7 10

1.4 -
3,000 -13.0
Jul-14
Jul-15
Jul-16
Apr-15
Apr-16
Jan-15
Jan-16
Oct-14
Oct-15
Oct-16
Jul-15
Jul-16
Apr-15
Apr-16
Jan-15
Jan-16
Oct-14
Oct-15
Oct-16
Source: MOSL, Company, Bloomberg Source: MOSL, Company, Bloomberg
Exhibit 13: LME aluminum and inventories

Inventories (RHS) Spot
1,800 3.5
1,700
USD/t
2.9
m tons
1,600
2.3
1,500
1,400 1.7
Jul-16
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Source: MOSL, Bloomberg
Exhibit 14: Other base metals quarterly average prices – USD/ton

Z inc Copper Lead Silver (Rs/kg)
Quarter
Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY
3QFY17E 2,511 11% 56% 5,266 10% 8% 2,156 15% 28% 41,340 -10% 19%
2QFY17 2,253 17% 22% 4,772 1% -9% 1,873 9% 9% 45,851 15% 32%
1QFY17 1,875 19% -14% 4,726 1% -22% 1,718 -1% -12% 39,726 12% 7%
4QFY16 1,581 -2% -24% 4,672 -4% -20% 1,744 4% -3% 35,595 2% -4%
3QFY16 1,616 -15% -28% 4,892 -7% -26% 1,681 -2% -16% 34,804 0% -5%
2QFY16 1,892 -13% -18% 5,259 -13% -25% 1,714 -12% -21% 34,651 -7% -19%
1QFY16 2,183 5% 5% 6,043 4% -11% 1,942 8% -7% 37,194 0% -11%
4QFY15 2,083 -7% 3% 5,818 -12% -17% 1,806 -10% -14% 37,167 1% -17%
3QFY15 2,235 -3% 17% 6,624 -5% -7% 2,000 -8% -5% 36,694 -14% -20%
2QFY15 2,311 11% 24% 6,995 3% -1% 2,181 4% 4% 42,691 2% -7%
1QFY15 2,073 2% 13% 6,787 -4% -5% 2,095 0% 2% 41,862 -7% -7%
4QFY14 2,029 6% 0% 7,040 -2% -11% 2,105 0% -8% 44,935 -3% -20%
3QFY14 1,906 3% -2% 7,153 1% -10% 2,111 0% -4% 46,099 0% -23%
2QFY14 1,859 1% -1% 7,073 -1% -8% 2,101 2% 6% 46,077 3% -17%
1QFY14 1,840 -9% -5% 7,147 -10% -9% 2,053 -11% 4% 44,837 -20% -18%
January 2017 199

Exhibit 15: Earnings and TP change – Steel and Iron ore

EBITDA (INR b) Adj. PAT (INR b) TP Comments
3QFY17E FY17E FY18E 2QFY17E FY17E FY18E
Old 32 123 158 4 7 36 290
Tata Steel New 34 125 161 5 9 38 321 Increase in margins in India due to price increase.
Change 5% 2% 2% 31% 25% 6% 11%
Old 4 2 23 -9 -38 -38 30
SAIL New -2 -4 0 -15 -45 -60 28 Impact of coking coal price increase.
Change -273% -98% 17% 58% -7%
Old 30 110 137 8 26 45 190
JSW Steel New 24 116 138 4 30 45 195 Increase in margins in India due to price increase.
Change 6% 1% 16% 1% 3%
Old 15 43 48 11 34 32 156
NMDC New 15 44 51 11 35 34 162 Realization increase
Change 0% 2% 5% 0% 1% 5% 4%
Exhibit 16: Earnings and TP change – Aluminum

EBITDA (INR b) Adj. PAT (INR b) TP
Comments
Old 12 47 50 3 14 17
Hindalco
New 13 49 51 4 16 18 Slightly higher LME aluminum
(Standalone)
Change 6% 4% 1% 16% 10% 3%
Old 31 130 141 9 37 45 234
Hindalco
New 32 132 141 10 38 46 234
(Consol)
Change 2% 2% 0% 6% 5% 1% 0%
Old 3 11 18 1.8 7 10 77
Nalco New 4 12 17 2.0 7 10 75 Slightly lower LME premium in FY18
Change 9% 11% -5% 11% 13% -5% -3%
Exhibit 17: Earnings and TP change – Others

EBITDA (INR b) Adj. PAT (INR b) TP
Comments
Old 30 95 108 25 89 96 242
Increasing zinc LME estimate from
HZ L New 34 106 130 29 91 107 282
USD2,200/t earlier to USD2,570/t
Change 12% 11% 20% 18% 2% 12% 17%
Old 62 209 239 24 69 85 209
Increasing zinc LME estimate from
VEDL New 69 227 266 30 82 102 250
USD2,200/t earlier to USD2,570/t
Change 11% 9% 11% 25% 18% 19% 20%
Exhibit 18: Relative performance – three-month (%) Exhibit 19: Relative performance – one-year (%)
Sensex Index MOSL Metals Index Sensex Index MOSL Metals Index
118 180
111 155
104 130
97 105
90 80
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Nov-16
Dec-16
Sep-16
Oct-16
January 2017 200

Hindalco
Bloomberg HNDL IN CMP:INR159 TP:INR234 (+47%) Buy
 Standalone: We estimate standalone EBITDA to increase by 11%
M. Cap. (INR b)/(USD b) 328 / 5
QoQ (91% YoY) to INR12.8b on higher aluminum realization.
Aluminum segment EBITDA is estimated to increase by 16% QoQ to
1,6,12 Rel Perf. (%) -10 / 29 / 93
INR9b on higher realization. Aluminum sales volumes are estimated
to be broadly flat QoQ at 318kt. LME aluminum averaged
Y/E March 2016 2017E 2018E 2019E USD1,660/t (up 3% QoQ). While average cash LME is higher, we
Sales 1,000.5 1,010 1,089 1,106
estimate the benefit to Hindalco will be lower due to hedges.
EBITDA 106.1 132.1 141.0 146.0
Copper volumes are estimated to be down by 7% QoQ to 95kt.
NP 24.7 38.2 45.7 51.0
 Novelis: We estimate Novelis to report adjusted EBITDA of
Adj. EPS (INR) 12.0 18.5 22.1 24.7
USD273m, up 1% QoQ. Adj. EBITDA/t is estimated at USD350 (v/s.
EPS Gr(%) -11.5 54.6 19.6 11.5
USD349 in 2QFY17). Volumes are estimated to be flat YoY at 779kt.
BV/Sh. (INR) 101.8 112.3 132.8 155.9
RoE (%) 11.6 17.3 18.1 17.1
RoCE (%) 5.9 8.2 8.9 9.2
Payout (%) 13.7 8.9 7.4 6.6
Valuations
P/E (x) 13.0 8.4 7.0 6.3
P/BV 1.5 1.4 1.2 1.0 Key issues to watch for
EV/EBITDA (x) 8.3 6.4 5.6 5.0  Lower margins in aluminum.
Div. Yield (%) 0.9 0.9 0.9 0.9  Foreign exchange rate impact at Novelis.
Quarterly Performance (INR million)

Alumina (Production, kt) 660 628 704 703 708 726 715 710 2,298 2,859
Aluminium (sales, kt) 248 277 292 329 291 320 318 327 1,146 1,256
Copper (sales, kt) 96 104 87 97 62 102 95 95 384 354
Exchange USD/INR 63.7 65.0 65.9 67.6 67.0 67.0 68.0 68.0 65.5 67.5
Avg LME Aluminium (USD/T) 1,765 1,593 1,495 1,516 1,570 1,619 1,660 1,680 1,592 1,632
Net Sales 85,753 89,246 81,503 86,675 75,973 90,123 93,333 96,814 343,177 356,243
Change (YoY %) 7.2 4.3 -5.3 -7.5 -11.4 1.0 14.5 11.7 -0.6 3.8
EBITDA 8,773 6,028 6,716 11,664 11,325 11,564 12,853 13,467 33,182 49,209
Change (YoY %) 17.2 -32.8 -27.3 37.6 29.1 91.8 91.4 15.5 -2.9 48.3
As % of Net Sales 10.2 6.8 8.2 13.5 14.9 12.8 13.8 13.9
EBITDA - Aluminium 5,088 2,275 2,988 7,642 8,488 7,905 9,174 9,767 17,992 35,334
EBITDA-Copper 3,686 3,753 3,728 4,023 2,837 3,659 3,679 3,700 15,190 13,874
Interest 6,017 6,160 5,824 5,747 5,996 5,943 5,986 5,976 23,748 23,900
Depreciation 3,320 2,958 3,080 3,412 3,382 3,516 3,498 3,481 12,770 13,877
Other Income 1,944 4,175 2,501 2,041 2,184 3,364 2,184 2,335 10,662 10,067
PBT (after EO item) 1,381 1,086 313 4,547 4,129 6,326 5,553 6,345 7,326 22,353
Total Tax 309 53 -92 983 1,189 1,929 1,506 1,448 1,254 6,071
% Tax 22.4 4.9 -29.3 21.6 28.8 35.3 27.1 22.8 17.1 27.2
Reported PAT 1,072 1,033 405 3,563 2,941 4,397 4,047 4,897 6,073 16,282
Adjusted PAT 1,145 900 259 3,769 3,009 3,984 4,045 4,622 6,073 15,659
Consolidated Financials
Net Sales 250,505 247,542 233,588 246,016 226,771 245,276 254,247 260,712 1,000,538 1,010,323
EBITDA 22,977 22,004 23,034 31,025 29,916 30,289 32,029 32,856 106,053 132,129
Consolidated adj. PAT 3,471 5,801 4,367 10,272 7,582 9,293 10,044 10,771 24,717 38,222
January 2017 201

Hindustan Z inc
Bloomberg HZ IN CMP:INR251 TP: INR282 (+12%) Neutral
 We expect HZ L’s EBITDA to increase 61% QoQ (+2x YoY) to
M. Cap. (INR b)/(USD b) 1061 / 16
INR33.8b on normalization in production and higher product prices.
Z inc LME is up 11% QoQ to USD2,511/t, while lead LME is up 15%
1,6,12 Rel Perf. (%) -10 / 38 / 70
QoQ to USD2,156/t. Z inc production is estimated to increase 57%
Financial Snapshot (INR Billion) QoQ to 233kt. Lead production is estimated to increase 19% QoQ to
Y/E March 2016E 2017E 2018E 2019E 37kt.
Sales 142.3 181.5 212.4 210.6  We estimate PAT to increase 54% QoQ to INR29.3b.
EBITDA 67.8 105.9 129.9 125.9
NP 83.6 90.8 107.2 106.7
Adj. EPS (INR) 19.8 21.5 25.4 25.3
EPS Gr(%) 2.1 8.6 18.1 -0.5
BV/Sh. (INR) 88.5 103.0 121.3
RoE (%) 20.7 22.5 22.6 19.4
RoCE (%) 20.6 26.7 27.1 23.4
Payout (%) 164.9 32.7 27.7 27.8
Valuations
P/E (x) 12.7 11.7 9.9 10.0
P/BV 2.8 2.4 2.1 1.8 Key issues to watch for
EV/EBITDA (x) 10.5 7.4 5.5 5.1  Delay in recovery of volumes at Rampura Agucha.
Div. Yield (%) 11.0 2.4 2.4 2.4  Decline in global zinc prices.

Production (integrated only)
Z n refined (000 tons) 187 211 206 154 102 149 233 250 758 734
Pb refined (000 tons) 27 39 35 38 25 31 37 45 139 138
Silver (tons) 86 110 116 127 95 107 118 144 439 464
Z inc LME (USD/t) 2,190 1,898 1,616 1,680 1,918 2,252 2,511 2,580 1,846 2,315
Net Sales 36,302 40,333 34,306 31,324 25,306 35,257 56,904 64,010 142,264 181,477
Change (YoY %) 20.7 34.1 -9.8 -18.7 -30.3 -12.6 65.9 104.4 -3.8 27.6
EBITDA 19,655 20,245 14,783 13,081 11,309 20,767 33,801 40,008 67,763 105,884
As % of Net Sales 54.1 50.2 43.1 41.8 44.7 58.9 59.4 62.5 47.6 58.3
Interest 16 12 51 90 712 712 90 90 169 1,604
Depreciation 1,729 1,750 1,716 1,930 3,644 4,317 3,644 3,644 6,716 15,250
Other Income 5,637 8,689 5,547 7,422 6,101 7,702 6,559 4,389 27,294 24,751
PBT (before EO item) 23,546 27,171 18,562 18,482 13,053 23,440 36,625 40,663 88,173 113,781
Extra-ordinary Income -1,761 0 0 4 5 0 0 0 -1,757 0
PBT (after EO item) 21,785 27,171 18,562 18,487 13,059 23,440 36,625 40,663 86,416 113,781
Total Tax 1,287 5,715 449 -3,013 2,680 4,421 7,325 8,539 4,438 22,965
% Tax 5.9 21.0 2.4 -16.3 20.5 18.9 20.0 21.0 5.1 20.2
Reported PAT 20,498 21,456 18,114 21,500 10,379 19,019 29,300 32,123 81,978 90,816
Adjusted PAT 22,155 21,456 18,114 21,495 10,375 19,019 29,300 32,123 83,644 90,816
Change (YoY %) 37.0 32.6 -17.1 -9.7 -53.2 -11.4 61.8 49.4 2.1 8.6
E: MOSL Estimates
January 2017 202

JSW Steel
Bloomberg JSTL IN CMP: INR163 TP: INR195 (+20%) Buy
 Consolidated EBITDA is estimated to decline by 17% QoQ to
M. Cap. (INR b)/(USD b) 394 / 6
INR24.4b due to increase in raw material cost and impact on
volumes due to demonetization of currency. Adj. PAT is estimated
1,6,12 Rel Perf. (%) -2 / 13 / 52
to decline by 43% QoQ to INR4.2b.
 Standalone EBITDA is estimated to decline 16% QoQ to INR22.8b.
Volumes are estimated to be down 7% QoQ (+40% YoY) to 3.6mt
Y/E March 2016 2017E 2018E 2019E
Sales 418.8 580.4 651.6 654.2
due impact of demonetization. Realization is estimated to increase
EBITDA 60.7 115.7 138.1 139.0
12% QoQ to ~INR35,700/t, coming off a weaker base (monsoon in
Adj. PAT -0.1 29.6 45.2 46.1 2Q) and cost pressure-led price increases. EBITDA margin estimated
Adj. EPS (INR) 0.0 12.3 18.7 19.1 at INR6,392/t, down from INR7,077/t in 2Q.
EPS Gr(%) -100.5 -35,195 52.4 2.0
BV/Sh. (INR) 77.5 87.2 103.3 119.9
RoE (%) 0.0 14.9 19.6 17.1
RoCE (%) 2.7 7.6 9.0 8.4
Payout (%) -36.6 12.4 8.0 7.8
Valuation
P/E (x) -4,521.9 12.9 8.5 8.3 Key issues to watch for
P/BV 2.0 1.8 1.5 1.3  Steel price hikes and impact of coking coal.
EV/EBITDA (x) 14.6 7.5 5.9 5.4  Domestic steel demand growth.
Div. Yield (%) 0.7 0.8 0.8 0.8

Net Sales 115,762 109,069 86,983 106,975 117,080 132,278 149,227 181,785 418,789 580,370
Change (YoY %) -12.7 -21.5 -34.2 -15.1 1.1 21.3 71.6 69.9 -20.9 38.6
EBITDA 16,273 17,293 8,918 18,246 32,694 29,586 24,441 29,023 60,730 115,744
Change (YoY %) -37.7 -38.5 -61.2 8.4 100.9 71.1 174.1 59.1 -35.4 90.6
Interest 8,222 8,363 8,107 8,335 9,358 9,646 10,047 10,139 33,027 39,191
Depreciation 9,385 6,822 7,734 7,938 8,315 8,915 9,075 9,236 31,879 35,541
Other Income 258 390 226 808 334 296 830 836 1,682 2,296
PBT (before EO Item) -1,077 2,498 -6,696 2,781 15,356 11,320 6,149 10,482 -2,494 43,307
EO Items -7 -14 -21,221 -11 0 0 0 0 -21,254 0
PBT (after EO Item) -1,084 2,483 -27,917 2,770 15,356 11,320 6,149 10,482 -23,748 43,307
Total Tax 166 1,424 -18,100 1,270 4,507 4,734 2,657 4,044 -15,241 15,941
% Tax -15.3 57.3 64.8 45.8 29.4 41.8 43.2 38.6 64.2 36.8
Reported PAT -1,250 1,060 -9,817 1,500 10,848 6,587 3,492 6,439 -8,508 27,366
MI (Profit)/Loss 199 132 610 10 112 -117 -117 -117 950 -240
Share of P/(L) of Ass. -17 -22 -26 203 130 795 795 795 138 2,516
Pref. Dividend 70 70 70 70 0 0 0 0 279 0
Adjusted PAT -1,135 1,105 -1,701 1,649 11,090 7,265 4,170 7,117 -84 29,641
Change (YoY %) -117.5 -85.2 -152.8 161.4 -1,076.8 557.5 -345.2 331.6 -100.5 nm
E: MOSL Estimates
January 2017 203

Nalco
Bloomberg NACL IN CMP: INR66 TP: INR75 (+17%) Buy
 We estimate Nalco’s 3QFY17 EBITDA to more than double QoQ to
M. Cap. (INR b)/(USD b) 127 / 2
INR3.5b on higher alumina volumes, aluminum and alumina
realization.
1,6,12 Rel Perf. (%) 15 / 55 / 65
 Aluminum sales volume is estimated to decline marginally QoQ to
96kt.
 Aluminum LME is up 6% QoQ to USD1,710/t. Realized premium is
Y/E March 2016 2017E 2018E 2019E
estimated at USD153/t, up from USD132/t in 2QFY17.
Sales 68.2 73.3 80.0 80.0
EBITDA 9.4 11.9 16.8 16.9
 Alumina realization is estimated at USD290/t, up 9% QoQ.
NP 7.0 7.1 9.3 9.5
Adj. EPS (INR) 2.7 3.7 4.8 4.9
EPS Gr(%) -43.4 36.9 29.7 2.4
BV/Sh. (INR) 50.1 53.7 56.4 59.2
RoE (%) 5.4 7.1 8.7 8.5
RoCE (%) 7.5 8.3 11.7 11.5
Payout (%) 74.0 56.8 43.8 42.8
Valuations
P/E (x) 21.6 15.8 12.2 11.9
P/BV 1.2 1.1 1.0 1.0
 Availability of coal for captive power plant.
EV/EBITDA (x) 9.9 7.0 4.6 4.3
Div. Yield (%) 3.0 3.0 3.0 3.0
 LME price trend, utilization of smelter.

Aluminium Prod. ('000 tons) 86 94 96 96 94 94 96 104 372 388
Alumina Sales ('000 tons) 220 315 285 375 291 290 335 361 1,195 1,277
Avg LME Aluminium (USD/ton) 1,769 1,593 1,495 1,517 1,570 1,619 1,710 1,720 1,593 1,655
NSR premiums (USD/ton) 349 300 261 224 290 132 153 153 283 182
Alumina NSR (USD/ton) 306 308 263 239 257 266 290 301 299 263
Net Sales 14,913 18,151 16,353 18,744 15,490 18,461 18,766 20,571 68,160 73,289
Change (YoY %) -11.2 -9.0 -14.2 4.1 3.9 1.7 14.8 9.8 -7.7 7.5
EBITDA 2,237 3,393 1,363 2,387 1,946 1,723 3,581 4,609 9,380 11,859
Change (YoY %) -19.1 -28.5 -74.1 -44.2 -13.0 -49.2 162.6 93.1 -45.0 26.4
Other Income 1,308 1,260 1,240 1,558 1,336 1,369 632 689 5,366 4,025
PBT (before EO Item) 2,543 3,581 1,558 2,812 2,089 1,733 2,853 3,931 10,493 10,606
Extra-ordinary Income 0 0 535 0 0 0 0 0 535
PBT (after EO Item) 2,543 3,581 2,092 2,812 2,089 1,733 2,853 3,931 11,028 10,606
Total Tax 908 1,319 757 733 739 521 931 1,283 3,718 3,474
% Tax 35.7 36.8 36.2 26.1 35.4 30.1 32.6 32.6 33.7 32.8
Reported PAT 1,634 2,261 1,335 2,079 1,350 1,212 1,922 2,648 7,310 7,132
Adjusted PAT 1,634 2,261 994 2,079 1,350 1,212 1,922 2,648 6,956 7,132
E: MOSL Esitmates
January 2017 204

NMDC
Bloomberg NMDC IN CMP: INR134 TP: INR162 (+21%) Buy
 NMDC’s EBITDA is estimated to increase 79% QoQ to INR14.7b on
M. Cap. (INR b)/(USD b) 425 / 6
higher realization and volumes.
 Iron ore sales volumes are estimated to increase by 24% QoQ (38%
1,6,12 Rel Perf. (%) 8 / 44 / 45
YoY) to 10mt, aided by increase in domestic demand.
 Domestic iron ore realization is up 14% QoQ to INR2,284/t on price
hikes taken amid increase in international iron ore prices and strong
Y/E March 2016E 2017E 2018E 2019E
Sales 64.6 82.4 91.0 95.3
domestic demand.
EBITDA 32.3 43.7 50.6 53.0  PAT is estimated to increase 37% QoQ to INR10.6b.
Adj. PAT 33.2 34.6 34.2 35.7
Adj. EPS (INR) 8.4 10.9 10.8 11.3
EPS Gr(%) -49.7 30.7 -1.0 4.3
BV/Sh. (INR) 75.9 74.9 78.5 82.6
RoE (%) 15.9 12.8 14.2 13.7
RoCE (%) 15.6 11.9 13.3 12.9
Payout (%) 177.0 65.9 66.5 63.8
Valuation
P/E (x) 14.6 11.2 11.3 10.8
 Increase in global iron ore prices.
P/BV 1.6 1.6 1.6 1.5
 Stronger-than-expected iron ore demand.
EV/EBITDA (x) 10.9 7.8 7.2 6.9
Div. Yield (%) 9.0 4.9 4.9 4.9

Production (m tons) 6.0 6.4 7.4 8.8 7.6 6.3 10.0 9.1 28.8 34.9
Sales (m tons) 6.7 6.4 7.2 8.5 7.8 8.1 10.0 9.1 28.8 34.9
Avg Dom. NSR (USD/t) 45 39 31 25 32 29 33 36 34 33
Avg Dom. NSR (INR/t) 2,786 2,409 2,054 1,658 2,162 2,005 2,284 2,432 2,201 2,230
Net Sales 18,557 15,528 15,172 15,299 17,207 17,392 24,300 23,466 64,556 82,365
EBITDA 11,027 9,395 6,441 5,398 8,164 8,258 14,744 12,557 32,260 43,724
Change (QoQ %) -43.4 -14.8 -31.4 -16.2 -13.1 1.2 78.5 -14.8 -58.5 35.5
EBITDA per ton (USD) 27 24 14 9 16 15 22 20 17 18
EBITDA per ton (INR/t) 1,655 1,457 892 634 1,051 1,025 1,480 1,380 1,119 1,253
Interest 0 0 0 654 81 15 0 0
Depreciation 401 506 523 647 560 544 558 572 2,078 2,234
Other Income 4,887 4,264 4,212 4,380 3,452 2,735 1,361 1,390 17,744 8,938
PBT (before EO Item) 15,513 13,153 10,130 8,476 10,975 10,434 15,547 13,375 47,927 50,428
Extra-ordinary item 0 -154 -23 -1,672 0 0 0 0 -1,848
PBT (after EO Item) 15,513 12,999 10,107 6,804 10,975 10,434 15,547 13,375 46,079 50,428
Total Tax 5,412 4,525 3,557 1,275 3,862 2,727 4,975 4,280 14,769 15,843
% Tax 34.9 34.8 35.2 18.7 35.2 26.1 32.0 32.0 32.1 31.4
Reported PAT 10,101 8,474 6,550 5,529 7,113 7,708 10,572 9,095 31,309 34,584
Adjusted PAT 10,101 8,574 6,565 6,888 7,113 7,708 10,572 9,095 32,565 34,584
E: MOSL Estimates
January 2017 205

SAIL
Bloomberg SAIL IN CMP: INR51 TP: 28 (-45%) Sell
 We estimate SAIL to turn EBITDA negative in 3QFY17 at INR2.2b on
M. Cap. (INR b)/(USD b) 209 / 3
increase in coking coal prices and impact of demonetization on
volumes.
1,6,12 Rel Perf. (%) -2 / 10 / 2
 Realization is estimated to increase 12% QoQ to INR34,816/t,
coming off a weak base (monsoon in 2Q) and cost pressure-led
price increase.
Y/E March 2016 2017E 2018E 2019E
 EBITDA/t loss is estimated at ~INR730, as against profit of
Sales 395.0 450.5 574.5 673.4
EBITDA -28.6 0.7 5.3 63.9
~INR310/t in 2Q.
NP -37.0 -43.0 -58.9 -5.7
 PAT loss is estimated at INR14.9b, up from INR6b in 2Q.
Adj. EPS (INR) -9.0 -10.4 -14.3 -1.4
EPS Gr(%) -271.5 16.1 37.1 -90.4
BV/Sh. (INR) 95.5 84.7 70.4 69.1
RoE (%) -8.8 -11.5 -18.4 -2.0
RoCE (%) -6.0 -3.4 -3.7 3.4
Payout (%) 0.0 0.0 0.0 0.0
Valuation
P/E (x) -5.5 -4.7 -3.4 -35.8 Key issues to watch for
P/BV 0.5 0.6 0.7 0.7  Commissioning of ISP and Bhilai capacity expansion.
EV/EBITDA (x) -19.5 929.4 132.5 11.3
Div. Yield (%) 0.0 0.0 0.0 0.0

Production (m tons) 3.1 2.7 3.0 3.6 3.4 3.5 3.4 3.7 12.4 14.0
Change (YoY %) 4.5 -18.3 -4.6 5.0 10.1 30.6 13.2 2.5 -3.4 13.1
Sales (m tons) 2.7 2.7 2.9 3.8 2.8 3.6 3.1 3.5 12.1 13.0
Change (YoY %) -2.3 -6.7 1.4 19.3 4.1 31.4 6.9 -6.9 3.3 7.5
Realization (INR per ton) 35,313 33,797 30,825 30,163 32,993 31,182 34,816 38,080 32,290 34,299
Change (YoY %) -14.2 -15.1 -20.6 -17.7 -6.6 -7.7 12.9 26.2 -17.3 6.2
Net Sales 95,028 92,569 89,391 113,716 92,381 112,256 107,930 133,661 390,704 446,227
Change (%) -16.2 -20.7 -19.5 -1.8 -2.8 21.3 20.7 17.5 -14.5 14.2
EBITDA -817 -7,685 -13,815 -11,235 2,338 1,114 -2,259 -5,448 -33,551 -4,256
Change (YoY %) -107.2 -157.5 -214.4 -220.8 -386.2 -114.5 -83.6 -51.5 -172.9 -87.3
EBITDA per ton (INR) -303 -2,806 -4,764 -2,980 835 310 -729 -1,552 -2,773 -327
EBITDA per ton (USD) -5 -43 -72 -44 12 5 -11 -23 -42 -5
Interest 4,430 4,674 5,242 6,121 5,941 6,028 6,521 6,815 20,468 25,304
Depreciation 4,261 4,358 4,591 7,786 6,002 6,659 7,145 7,625 20,995 27,432
Other Income 1,743 1,306 1,046 1,735 893 682 560 557 5,830 2,691
PBT (after EO Inc.) -7,765 -15,410 -22,603 -23,406 -9,254 -12,531 -15,367 -19,332 -69,184 -56,484
Total Tax -4,549 -7,651 -7,315 -11,097 -3,899 -5,215 -461 -580 -30,612 -10,155
% Tax 58.6 49.6 32.4 47.4 42.1 41.6 3.0 3.0 44.2 18.0
Reported PAT -3,216 -7,760 -15,287 -12,309 -5,355 -7,316 -14,906 -18,752 -38,572 -46,329
Adjusted PAT -3,216 -7,760 -15,287 -12,309 -5,042 -6,358 -14,906 -18,752 -38,572 -44,539
Change (YoY %) -160.7 -219.5 -465.4 -468.3 56.8 -18.1 -2.5 52.3 -301.4 15.5
E: MOSL Estimates
January 2017 206

Tata Steel
Bloomberg TATA IN CMP: INR405 TP: 321 (+52%) Sell
 India: We estimate Tata Steel’s standalone EBITDA to increase 22%
M. Cap. (INR b)/(USD b) 394 / 6
QoQ to INR23.3b on higher realization. Volumes are estimated at
2.6mt, down 2% QoQ, despite the ramp-up at K alinganagar, on
1,6,12 Rel Perf. (%) -3 / 25 / 54
impact of demonetization. Blended sales realization is estimated to
increase by INR3,600/t QoQ to INR44,000/t. Steel EBITDA is
estimated at INR9,086/t, up from INR7,297/t in 2Q.
Y/E March 2016 2017E 2018E 2019E
Sales 1,172 1,125 1,288 1,292
 Europe: EU steel margin is estimated to decline by USD14/t QoQ to
EBITDA 76 125 161 166
USD53/t on higher raw material cost. Volumes are estimated to be
Adj. PAT 7 7 36 40 up 7% QoQ to 2.4mt. EBITDA is estimated at INR8.7b, down from
Adj. EPS (INR) 7.7 7.7 37.1 40.7 INR10.3b in 2Q.
EPS Gr(%) 168.6 -0.1 383.3 9.9  Consolidated EBITDA is estimated at INR33b, an increase of 6%
BV/Sh. (INR) 152 113 141 172 QoQ. PAT is estimated at INR5.1b, an improvement from a loss of
RoE (%) 4.6 5.8 29.2 26.0 INR1.1b in 2QFY17.
RoCE (%) 5.4 6.0 8.5 8.6
Payout (%) -28.6 -36.0 23.8 21.8
Valuation
P/E (x) 51.2 51.3 10.6 9.6 Key issues to watch out
P/BV 2.6 3.5 2.8 2.3
 Imports from China and global iron ore prices.
EV/EBITDA (x) 15.2 9.9 7.7 7.2
Div. Yield (%) 2.0 2.0 2.0 2.0

Sales (k tons) 6,330 6,290 6,370 6,940 5,410 5,650 5,693 6,029 25,930 22,781
Change (YoY %) -2.0 -3.2 1.1 -1.7 -14.5 -10.2 -10.6 -13.1 -1.5 -12.1
Avg Realization (INR/tss) 47,868 46,589 44,017 42,518 46,635 46,674 49,639 54,090 45,180 49,368
Net Sales 303,003 293,047 280,390 295,076 252,298 263,710 282,582 326,091 1,171,516 1,124,680
Change (YoY %) -16.8 -18.1 -16.6 -12.4 -16.7 -10.0 0.8 10.5 -16.0 -4.0
EBITDA 27,742 18,305 7,757 22,052 32,420 29,700 33,750 29,397 75,857 125,267
(% of Net Sales) 9.2 6.2 2.8 7.5 12.8 11.3 11.9 9.0 6.5 11.1
Steel EBITDA(USD/tss) 69 45 18 47 89 78 87 72 45 81
Interest 10,980 10,487 9,641 10,178 10,707 13,511 13,441 13,364 41,286 51,023
Depreciation 13,465 13,708 11,327 12,319 12,417 14,677 14,422 14,497 50,818 56,012
Other Income 7,622 29,382 962 1,291 1,367 1,084 983 1,298 39,257 4,733
PBT (before EO Inc.) 10,919 23,491 -12,249 847 10,662 2,597 6,871 2,835 23,008 22,964
EO Income(exp) 1,584 -5,637 -7,118 -28,578 -35,231 634 -39,749 -34,597
PBT (after EO Inc.) 12,503 17,854 -19,367 -27,731 -24,568 3,230 6,871 2,835 -16,740 -11,632
Total Tax 5,154 2,402 2,434 5,060 7,405 3,634 1,712 849 15,050 13,598
% Tax 47.2 10.2 -19.9 597.4 69.4 139.9 24.9 29.9 65.4 59.2
Reported PAT 7,349 15,452 -21,801 -32,791 -31,973 -403 5,159 1,986 -31,790 -25,231
Minority Interests -68 8 -310 -720 -6 -8 -1,089 -14
Share of asso. PAT 212 -157 219 -67 142 -91 -92 -92 207 -133
Adj. PAT (after MI & asso) 6,045 20,925 -14,155 -3,560 3,400 -1,127 5,073 1,901 9,256 9,247
E: MOSL Estimates
January 2017 207

Vedanta
Bloomberg VEDL IN CMP:INR217 TP:INR202 (+15%) Neutral
 We estimate VEDL’s EBITDA to increase 44% QoQ to INR67b on
M. Cap. (INR b)/(USD b) 806 / 12
higher prices and volumes in zinc and aluminum. Other
commodities are also supportive.
1,6,12 Rel Perf. (%) -5 / 59 / 140
 Ex-Cairn and HZ L, we estimate EBITDA to increase by 41% QoQ to
INR21.9b, driven by an increase in aluminum prices and volumes.
Iron ore EBITDA is estimated to be up ~3x QoQ to INR3.6b on an
Y/E March 2016E 2017E 2018E 2019E
Sales 644.3 749.4 857.4 897.1
increase in iron ore prices and a recovery in volumes post a lull 2Q
EBITDA* 110.4 186.3 215.3 217.7
(due to monsoon).
NP 31.9 79.4 101.5 103.7  HZ L EBITDA is estimated to increase by 63% QoQ to INR33.8b on
Adj. EPS (INR) 10.8 21.4 27.3 27.9 higher zinc/lead prices and volumes.
EPS Gr(%) -37.3 6.4 153.7 30.6  Cairn India EBITDA is estimated to increase by 24% QoQ to
BV/Sh. (INR) 151.8 176.9 191.3 206.5 INR12.8b on higher oil realization.
RoE (%) 7.9 13.0 14.8 14.0
RoCE (%) 7.4 12.5 13.9 13.3
Payout (%) 48.9 24.7 19.3 18.9
Valuation
P/BV 1.3 1.1 1.0 1.0  Progress on ramp-up of 1.25mtpa smelter.
EV/EBITDA (x) 9.2 6.0 4.9 4.5
 Movement in base metal prices.
Div. Yield (%) 2.1 2.1 2.1 2.1
Note: Sesa-Sterlite merged entity basis
* attrib.

Net Sales 170,169 165,609 148,766 159,793 144,371 158,596 210,583 235,832 644,336 749,382
Change (YoY %) -0.2 -15.3 -22.6 -10.3 -15.2 -4.2 41.6 47.6 -12.5 16.3
EBITDA 45,353 38,601 29,057 34,720 34,396 46,674 67,202 78,914 147,731 227,186
Change (YoY %) -20.1 -39.0 -52.7 -13.7 -24.2 20.9 131.3 127.3 -33.4 53.8
As % of Net Sales 26.7 23.3 19.5 21.7 23.8 29.4 31.9 33.5 22.9 30.3
Interest 13,578 14,181 13,906 15,380 13,931 14,503 14,627 14,685 57,045 57,746
D&A 17,175 16,602 17,704 15,629 14,920 15,289 16,481 16,423 67,109 63,112
Other Income 11,480 12,152 7,154 13,757 10,935 12,521 12,611 10,736 44,543 46,803
PBT (before EO item) 26,080 19,969 4,602 17,468 16,480 29,403 48,705 58,542 68,119 153,130
Extra-ordinary Income -4,143 0 2,000 -123,123 0 0 0 0 -125,266 0
PBT (after EO item) 21,937 19,969 6,602 -105,655 16,480 29,403 48,705 58,542 -57,147 153,130
Total Tax 3,525 2,040 1,606 -2,841 4,914 6,623 9,570 11,808 4,330 32,915
% Tax 16.1 10.2 24.3 2.7 29.8 22.5 19.6 20.2 -7.6 21.5
Reported PAT 18,412 17,929 4,996 -102,814 11,567 22,780 39,134 46,734 -61,477 120,215
Minority interest 8,459 9,587 4,819 9,004 5,417 10,259 10,509 11,659 31,869 37,843
Adjusted PAT 14,096 8,342 -1,823 11,305 6,150 12,521 28,625 35,076 31,920 82,372
Change (YoY %) -29.6 -51.2 -111.5 54.7 -56.4 50.1 -1,670.5 210.3 -47.1 158.1
E: MOSL Estimates
January 2017 208

December 2016 Results Preview | Sector: Oil & Gas
Oil & Gas

Company name A quarter of sunshine for OMCs
BPCL GRMs up, Inventory gains to help too
GAIL
 Singapore complex GRM increased sequentially from USD5.1/bbl in 2QFY17 to
Gujarat State Petronet
USD6.7/bbl in 3QFY17. However, it was lower than USD7.8/bbl in 3QFY16. Rise in
HPCL
crude oil prices is also expected to help with inventory gains.
Indraprastha Gas  While rise in oil prices would be beneficial for upstream companies, we expect
IOC operating cost to be higher, which would result in marginal QoQ rise in EBITDA of
MRPL ONGC and Oil India.
Oil India  RIL is also likely to benefit from good GRMs this quarter. However, HDPE and LLDPE
ONGC delta seem to have declined 5-10% QoQ.
Petronet LNG
Brent up 7% QoQ and 13% YoY; upstream subsidy nil in 3QFY17
Reliance Industries  Brent averaged at USD49.1/bbl (Brent has risen from USD35.8/bbl on 31st
December 2015 to USD55.8/bbl on 31st December 2016), up from USD45.7/bbl
in 2QFY17 and USD43.4/bbl in 3QFY16 on account of OPEC and non-OPEC
decision to cut oil production with effect from January 2017.
 We do not build any net under-recovery either for the OMCs or for the
upstream companies.
GRM at USD6.7/bbl, up from USD5.1/bbl in 2QFY17; refiners to benefit

 Petrol crack spread of USD11.8/bbl in 3QFY17 was higher than USD8.9/bbl in
2QFY17, but lower than USD15.9/bbl in 3QFY16. Diesel crack spread also
increased from USD10.6/bbl in 2QFY17 to USD11.3/bbl in 3QFY17; however, it
was down from USD13/bbl in 3QFY16.
 Both PE and PP deltas seem to have declined 3-4% QoQ. However, PVC has
strengthened by 1% QoQ. Compared with 3QFY16, PE, PP and PVC deltas are up
7-22%. RIL is expected to benefit from YoY strengthening.

Sales (INR m) EBDITA (INR m) PAT (INR m)
Sector CMP Var % Var % Var % Var % Var % Var %
Oil & Gas
BPCL 656 Buy 452,342 -3.0 1.3 33,984 43.8 154.6 22,569 51.6 72.9
GAIL 440 Neutral 150,533 12.5 26.9 16,796 54.8 10.8 9,608 44.6 3.9
Gujarat State Petronet 140 Neutral 2,523 1.9 -1.6 2,205 5.7 -1.8 1,159 -6.1 -10.7
HPCL 461 Buy 432,589 -0.4 2.9 28,369 30.7 138.6 15,646 50.1 123.1
IOC 343 Buy 900,208 8.2 12.5 108,326 118.4 98.9 63,907 109.1 104.7
Indraprastha Gas 935 Neutral 8,889 -4.1 -7.6 2,461 33.0 -4.4 1,439 36.9 -7.3
MRPL 108 Buy 116,760 32.4 17.2 16,173 166.2 159.0 11,280 277.4 171.2
Oil India 457 Buy 23,154 4.4 3.2 7,952 26.4 6.3 5,645 37.5 -2.7
ONGC 194 Neutral 193,263 5.1 5.7 97,075 12.4 1.8 44,489 9.0 -10.6
Petronet LNG 375 Buy 81,218 57.8 22.8 5,314 68.2 -26.9 3,342 87.4 -27.3
Reliance Inds. 1,069 Neutral 640,982 13.3 7.6 119,725 16.6 13.4 80,021 10.9 3.9
Sector Aggregate 3,025,437 7.7 8.6 449,949 39.8 35.5 265,116 41.9 24.8
Excl. OMCs 1,240,299 15.1 10.9 279,270 23.1 10.7 162,993 24.5 1.1
Source: MOSL
Swarnendu Bhushan (Swarnendu.Bhushan@MotilalOswal.com);

Auto fuel marketing margins+91 higher
22 6129QoQ
1529
Abhinil Dahiwale (Abhinil.Dahiwale@motilaloswal.com); +91 22 3980 4309
January 2017 209
 Despite rise in crude oil prices, the OMCs have broadly been able to take price
hikes to maintain gross marketing margin of ~INR2.7/liter (including freight) on
diesel and petrol in the quarter.
 The gross marketing margins are higher than INR2.3/liter during the regulation
era. We expect marketing margins to remain higher than regulated era margins.
Valuation and view
 Against the backdrop of a lower oil price regime, auto fuel pricing freedom and
stable marketing margins, we retain OMCs (IOCL/HPCL/BPCL) as our top picks.
 We expect strong performance from MRPL due to revival in GRM in the quarter.
 RIL is expected to report improvement in GRM in the quarter. While core
earnings growth would be significant, telecom losses would cap consolidated
earnings and return ratios.
 Although volume growth would continue for CGD players, we might see margin
compression in the industrial segment due to increase in LNG prices. Cut in APM
price is negative for ONGC/OINL; however, OPEC and non-OPEC efforts to cut oil
production should revive realizations, benefitting ONGC/OINL.
Exhibit 2: Relative performance - 3m (%) Exhibit 3: Relative performance - 1Yr (%)

Sensex Index MOSL Oil & Gas Index Sensex Index MOSL Oil & Gas Index
111 129
107 118
103 107
99 96
95 85
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Nov-16
Dec-16
Sep-16
Oct-16
Exhibit 4: Comparative valuations

CMP EPS (INR) PE (x) P/BV (x) RoE (%)
Sector / Companies Reco
Oil & Gas
BPCL 656 Buy 55.5 56.3 59.8 11.8 11.6 11.0 2.8 2.5 2.1 26.2 22.6 20.8
GAIL 440 Neutral 28.7 36.4 44.7 15.3 12.1 9.8 1.7 1.5 1.4 12.9 13.2 14.9
Gujarat State Petronet 140 Neutral 9.5 11.0 13.2 14.7 12.7 10.6 1.8 1.6 1.4 12.8 13.4 14.4
HPCL 461 Buy 52.7 45.1 46.2 8.7 10.2 10.0 2.1 1.9 1.7 26.6 19.7 17.8
Indraprastha Gas 935 Neutral 42.0 43.7 47.6 22.3 21.4 19.7 4.6 3.9 3.4 21.8 19.8 18.6
IOC 343 Buy 49.3 40.1 41.9 7.0 8.6 8.2 1.9 1.7 1.5 29.3 20.8 19.2
MRPL 108 Buy 17.0 15.8 17.2 6.3 6.8 6.3 2.2 1.7 1.4 39.4 28.4 25.1
Oil India 457 Buy 44.7 54.1 55.7 10.2 8.4 8.2 1.1 1.1 1.0 11.5 13.0 12.5
ONGC 194 Neutral 14.8 20.0 23.8 13.1 9.7 8.2 1.3 1.3 1.2 10.1 13.1 15.1
Petronet LNG 375 Buy 19.8 26.9 36.3 18.9 13.9 10.3 3.8 3.2 2.6 21.5 24.7 27.6
Reliance Inds. 1,069 Neutral 100.9 109.0 110.0 10.6 9.8 9.7 1.2 1.1 1.0 11.8 11.5 10.6
Ex OMCs 12.5 10.7 9.7 1.3 1.3 1.2 10.7 11.7 12.0
Source: MOSL
January 2017 210

On QoQ basis, GRM up 31%, Brent up 9%, light/heavy spreads rise

Exhibit 5: Brent crude price was up +9% QoQ and +15% YoY Exhibit 6: Premium of Brent over WTI declined QoQ to
to an average of USD49.9/bbl in 3QFY17 USD0.7/bbl in 3QFY17
Brent Crude Price (USD/bbl) Brent less WTI (USD/bbl)
140 24
105 16
70 8
35 0
0 (8)
2QFY05
1QFY07
4QFY08
3QFY10
2QFY12
1QFY14
4QFY15
3QFY17
2QFY05
1QFY07
4QFY08
3QFY10
2QFY12
1QFY14
4QFY15
3QFY17
Exhibit 7: Reuters Singapore GRM up 31% QoQ, but down

16% YoY to average of USD6.7/bbl Exhibit 8: YoY GRM decline led by lower gasoline cracks
Reuters Singapore GRM (USD/bbl) 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
20
10
8 10
6 0
4
(10)
2
0 (20)
Gasoline
LPG
Naphtha
Jet/K ero
Diesel
Fuel Oil
2QFY05
1QFY07
4QFY08
3QFY10
2QFY12
1QFY14
4QFY15
3QFY17
Source: Bloomberg, MOSL Source: Reuters, MOSL
Exhibit 9: Crude differentials declined in 3QFY17 (USD/bbl) Our key assumptions

In USD/bbl Brent - Dubai Arab L-H  Our crude price assumptions are USD49.3/bbl for
11 FY17 and USD60/bbl over long term.
 We expect the regional benchmark Singapore
8
Reuters GRM to remain in the USD5-6/bbl range
5 for the near term, with downward bias.
2
(1)
2QFY05
1QFY07
4QFY08
3QFY10
2QFY12
1QFY14
4QFY15
3QFY17
January 2017 211

Exhibit 10: Polymer spreads declined QoQ

(INR/kg) RIL Basic prices Simple Spreads Int. Spreads
PE PP PVC POY PSF Naphtha PE PP PVC POY PSF
3QFY14 107.6 109.8 72.3 103.4 106.0 59.3 48.4 50.6 13.1 56.3 58.9
4QFY14 112.3 113.0 74.3 97.9 100.9 58.4 53.9 54.6 15.9 51.4 54.4
1QFY15 109.0 107.7 77.0 97.7 97.6 57.6 51.4 50.1 19.5 51.8 51.7
2QFY15 113.0 110.3 79.4 102.9 103.6 55.9 57.1 54.4 23.5 58.5 59.2
3QFY15 109.3 107.0 70.0 92.7 92.4 40.2 69.1 66.8 29.8 61.0 60.7
4QFY15 90.7 84.3 63.7 80.6 79.8 30.5 60.1 53.8 33.2 56.6 55.8
1QFY16 102.3 100.3 70.1 84.8 84.0 35.6 66.7 64.7 34.5 56.8 56.0
2QFY16 95.8 85.8 65.5 79.0 80.5 29.4 66.4 56.4 36.1 56.1 57.5
3QFY16 88.8 76.7 65.0 73.0 77.5 29.2 59.6 47.6 35.8 50.2 54.7
4QFY16 85.6 70.4 62.3 71.5 74.0 22.8 62.8 47.6 39.5 53.8 56.3
1QFY17 92.4 81.5 68.1 74.4 79.7 27.4 65.0 54.1 40.7 53.1 58.3
2QFY17 91.4 83.9 69.2 74.1 79.3 26.0 65.5 57.9 43.3 53.9 59.2
3QFY17 88.8 82.7 70.8 74.1 79.3 27.1 63.7 55.6 43.7 53.0 58.2
QoQ (%) -2.9% -1.4% 2.2% 0.0% 0.0% 4.3% -2.7% -4.0% 0.9% -1.7% -1.6%
YoY (%) -0.0% 7.8% 8.9% 1.5% 2.4% -7.0% 6.8% 16.8% 21.8% 5.6% 6.5%
Exhibit 11: Polymer spreads declined (INR/kg): PE , PP, PVC Exhibit 12: POY spread down 1.7% QoQ; PSF spreads down
spreads change -2.7%/-4.0%/0.9% QoQ 1.6% QoQ (INR/kg)
PE PP PVC POY PSF
80 80
60
60
40
40
20
0 20
2QFY11 3QFY12 4QFY13 1QFY15 2QFY16 3QFY17 2QFY11 3QFY12 4QFY13 1QFY15 2QFY16 3QFY17
Source: Bloomberg, Company, MOSL Source: Bloomberg, Company
Exhibit 13: We model nil subsidy for OMCs in FY17 and FY18
(INR b) FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Fx Rate (INR/USD) 40.3 46.0 47.5 45.6 47.9 54.5 60.6 61.1 65.5 67.4 70.0
Brent (USD/bbl) 82 85 70 86 114 111 108 86 48 49.3 60
Product-wise Gross Under recoveries (INR b)
Petrol 73 52 52 27 0 0 0 0 0 0 0
Diesel 353 523 93 348 819 915 628 109 0 0 0
K erosene 191 282 174 200 278 296 306 248 116 114 126
LPG* 156 176 143 205 284 399 465 366 161 174 242
Total 773 1,033 461 780 1,385 1,610 1,399 723 276 287 368
Sharing of Gross Under recoveries (INR b)
Government 353 713 260 410 829 1,000 707 273 263 270 332
Upstream 257 329 145 303 552 600 671 428 13 17 36
OMC's 163 (9) 56 67 0 10 21 22 0 0 0
Total 773 1033 461 780 1,385 1,610 1,399 723 276 287 368
Sharing of Gross Under recoveries (%)
Government 46 69 56 53 60 62 51 38 95 94 90
Upstream 33 32 31 39 40 37 48 59 5 6 10
OMC's 21 (1) 12 9 0 1 2 3 0 0 0
Total 100 100 100 100 100 100 100 100 100 100 100
*LPG includes DBTL component Source: Company, MOSL
January 2017 212

Exhibit 14: Petrol-diesel price difference (INR/liter) Exhibit 15: Diesel in over-recovery zone post deregulation
40 Diesel (under)/over recovery (INR/ltr)
3
Petrol - Diesel price
difference (INR/ltr)
30
2
20 1
10 0
0 (1)
Jun-15
Jun-16
Nov-15
Nov-16
May-15
May-16
Dec-14
Aug-15
Aug-16
Feb-15
Mar-15
Sep-15
Dec-15
Jan-16
Mar-16
Sep-16
Dec-16
Jun-12
Jun-15
Dec-16
Dec-10
Dec-13
Sep-11
Mar-
Sep-14
Mar-
13
16
Source: PPAC, MoPNG, MOSL Source: PPAC, MoPNG, MOSL
Exhibit 16: With almost nil subsidy, model ONGC’s net Exhibit 17: Expect higher LNG volumes in 3QFY17 (mmscmd)
realization for 3QFY17 at USD50/bbl and lower production in RIL’s KG-D6
Net Realization Subsidy Burden Gross Realization RIL K G-D6 PLNG GSPL GAIL India 105
96 95 97 95 96
94
100
114
101 101
110
110
110
109
109
108
107
91
103
102
90 95
86 87 97
57 59
90
76
51
5 64
38 36
85
62
48
56
43 46 25
2Q 49 2 51
43 46 44 29
63
50
61
63
48
62
74
46
44
64
63
63
62
40 24 25 25
35
80
3Q 36 40
20 21 22 24 23 75
23 24 24 25
3Q 48
4Q 51
1Q 40
2Q 45
3Q 46
4Q 33
1Q 47
2Q 41
4Q 56
1Q 59
3Q 44
4Q 35
1Q 46
2Q 48
3Q 50
2Q 47
9 8 8
70
1Q 47
12 14 13 13 12 12 12 11 11 10
65
60
FY13 FY14 FY15 FY16 FY17 3QFY14 1QFY15 3QFY15 1QFY16 3QFY16 1QFY17 3QFY17E
Exhibit 18: Expect RIL’s GRM at USD11.5/bbl (USD/bbl)

Singapore GRM Premium / (Disc) RIL GRM
11.5
11.5
11.5
10.8
10.6
10.4
10.1
10.1
10.1
9.6
9.5
9.3
8.7
8.4
8.3
7.7
7.6
7.6
3
7.3
1 1 2 3 5
0 3 4 7
2 3 3 5
1 2 4 1
3
9
8
7
7
7
7
6
6
6
6
5
5
5
5
4
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
FY13 FY14 FY15 FY16 FY17
January 2017 213

BPCL
Bloomberg BPCL IN
M. Cap. (INR b)/(USD b) 948 / 14
 We expect OMCs’ (IOCL, BPCL, HPCL) core earnings to improve, led
52-Week Range (INR) 695 / 366 by improvement in refining margins QoQ. Also, on a reported basis,
1,6,12 Rel Perf. (%) 7 / 21 / 44 earnings would increase due to inventory gains during 3QFY17.
Financial snapshot (INR b)  We model nil subsidy-sharing for OMCs; the subsidy in 3QFY17
Y/E March 2016 2017E 2018E 2019E would entirely be borne by the government.
Sales 1,884 1,844 2,182 2,275
EBITDA 142 142 150 154  We peg BPCL’s refinery throughput at 6.43mmt for 3QFY17 v/s
Adj. PAT 80 80 81 86
5.87mmt in 3QFY16 and 6.39mmt in 2QFY17.
Adj. EPS (INR) 55.2 55.5 56.3 59.8
EPS Gr.% 104.1 67.0 2.1 7.7
BV/Sh.INR 193.8 230.2 267.3 306.6
 We expect BPCL to report PAT of INR22.5b in 3QFY17 (+73% QoQ,
RoE (%) 31.6 26.2 22.6 20.8 +52% YoY).
RoCE (%) 18.8 16.0 15.1 14.9
Payout*(%) 33.0 34.3 34.1 34.3  BPCL trades at 11.6x FY18E EPS and 2.4x FY18E BV (adjusted for
Valuation investments), with ~3% dividend yield. Buy.
P/E (x) 11.8 11.8 11.6 10.9
P/BV (x) 3.4 2.8 2.4 2.1
EV/EBITDA (x) 8.2 8.3 7.7 7.3
 (a) Inventory and forex change impact, (b) GRM, (c) Kochi refinery
Div. Yld (%) 2.4 2.5 2.5 2.7
expansion, and (d) update on Mozambique/Brazil E&P blocks.
Standalone - Quarterly Earning Model (INR Million)

Y/E March FY16 FY17
FY16 FY17E
Net Sales 519,167 464,227 466,131 441,455 468,902 446,464 458,795 480,527 1,890,981 1,854,688
YoY Change (%) -22.2 -25.1 -19.5 -14.0 -9.7 -3.8 -1.6 8.9 -20.5 -1.9
Total Expenditure 481,481 451,415 442,500 407,075 430,195 433,114 424,811 454,961 1,782,471 1,743,080
EBITDA 37,686 12,813 23,631 34,380 38,707 13,351 33,984 25,567 108,510 111,608
Margins (%) 7.3 2.8 5.1 7.8 8.3 3.0 7.4 5.3 5.7 6.0
Depreciation 5,372 4,172 4,564 4,435 4,315 4,524 4,582 4,582 18,543 18,002
Interest 1,147 1,074 975 2,433 1,111 1,024 1,482 1,482 5,629 5,099
Other Income 3,794 7,373 3,545 7,461 4,134 10,687 5,953 5,953 22,174 26,726
PBT 34,962 14,940 21,637 34,973 37,415 18,489 33,873 25,455 106,512 115,232
Tax 11,200 4,760 6,751 9,482 11,210 5,437 11,290 8,484 32,193 36,421
Rate (%) 32.0 31.9 31.2 27.1 30.0 29.4 33.3 33.3 30.2 31.6
Reported PAT 23,762 10,180 14,886 25,491 26,205 13,052 22,583 16,971 74,319 78,811
Adj PAT 23,762 10,180 14,886 25,491 26,205 13,052 22,583 16,971 74,319 78,811
YoY Change (%) 95.4 119.3 170.1 -10.6 10.3 28.2 51.7 -33.4 46.2 6.0
Margins (%) 4.6 2.2 3.2 5.8 5.6 2.9 4.9 3.5 3.9 4.2
Key Assumptions
Refining throughput (mmt) 6.1 6.0 5.9 6.2 6.2 6.4 6.4 6.4 21.5 24.5
GRM (USD/bbl) 8.6 3.9 7.7 6.3 6.1 3.1 8.3 5.6 6.6 5.8
Mkt. sales volume incl exports (mmt) 9.3 9.1 9.7 10.3 10.1 9.6 10.0 10.0 38.4 39.6
Marketing GM per litre (INR/litre) 4.4 3.0 3.2 4.9 4.5 3.1 3.3 3.3 4.4 3.3
E: MOSL Estimates
January 2017 214

GAIL
Bloomberg GAIL IN
CMP: INR440 TP: INR429 (-2%) Neutral
M. Cap. (INR b)/(USD b) 558 / 8
 We expect GAIL to report a PAT of INR9.6b (+45% YoY and +4%
52-Week Range (INR) 456 / 291 QoQ). We model nil subsidy sharing for GAIL in 3QFY17 (v/s nil in
1,6,12 Rel Perf. (%) 2 / 13 / 18 3QFY16 and 2QFY17).
Financial snapshot (INR b)  We estimate EBITDA at INR16.8b in 3QFY17 v/s INR10.8b in 3QFY16
Y/E March 2016 2017E 2018E 2019E and INR15.1b in 2QFY17.
Sales 516.1 528.2 544.5 729.7
EBITDA 39.7 65.0 77.9 90.4  Segmental EBIT (pre-subsidy) is expected to be INR15.6b, up 52%
Adj. PAT 23.0 36.4 46.2 56.7
YoY, led by turnaround in petchem division profitability and likely
Adj. EPS (INR) 18.1 28.7 36.4 44.7
higher gas transmission profitability.
EPS Gr. (%) -23.2 58.3 26.9 22.8
BV/Sh.(INR) 241.1 263.2 286.3 314.7
RoE (%) 7.7 12.9 13.2 14.9  GAIL trades at 12.1x FY18E EPS of INR36.4. Maintain Neutral.
RoCE (%) 6.5 9.6 10.9 12.3
Valuations  (a) Petchem profitability, (b) profitability in gas trading business,
P/E (x) 24.3 15.3 12.1 9.8 (c) progress of pipeline projects worth USD4b, (d) pending tariff
P/BV (x) 1.8 1.7 1.5 1.4
revisions for key pipelines, and (e) transmission volumes post
EV/EBITDA (x) 12.9 8.6 6.8 5.6
RasGas contract renegotiation.
Div. Yield (%) 1.3 2.0 2.5 3.2

Net Sales 125,191 140,880 133,801 116,272 106,866 118,582 150,533 152,553 516,143 528,534
Change (%) -6.4 -0.3 -10.6 -18.5 -14.6 -15.8 12.5 31.2 -9.0 2.4
EBITDA 9,976 7,675 10,847 11,186 15,732 15,155 16,796 17,315 39,684 64,998
% of Net Sales 8.0 5.4 8.1 9.6 14.7 12.8 11.2 11.4 7.7 12.3
Depreciation 3,077 3,227 3,330 3,497 3,354 3,563 3,697 3,810 13,131 14,425
Interest 1,636 1,635 1,583 1,546 1,774 1,198 1,258 1,535 6,400 5,765
Other Income 1,248 3,787 3,284 3,256 1,362 3,361 2,499 1,585 11,576 8,807
Extraordinary item* 0 0 0 0 4,893 0 0 0 0 4,893
PBT 6,511 6,599 9,218 9,399 16,858 13,755 14,340 13,556 31,728 58,508
Tax 2,270 2,194 2,576 1,699 3,506 4,508 4,732 4,473 8,739 17,220
Rate (%) 34.9 33.2 27.9 18.1 20.8 32.8 33.0 33.0 27.5 29.4
PAT 4,241 4,405 6,643 7,700 13,352 9,247 9,608 9,082 22,989 41,288
Adj PAT 4,241 4,405 6,643 7,700 8,459 9,247 9,608 9,082 22,989 36,395
Change (%) -31.7 -66.2 18.7 50.8 99.4 109.9 44.6 18.0 -23.2 58.3
EPS (INR) 3.3 3.5 5.2 6.1 6.7 7.3 7.6 7.2 18.1 28.7
Key Assumptions
Gas Trans. volume (mmsmd) 87 90 97 95 96 101 101 101 92 100
Petchem sales ('000MT) 50 84 84 116 110 136 155 193 334 594
Segmental EBIT Breakup (INR m)
Gas Transmission 3,937 3,955 4,277 4,510 5,554 6,424 6,701 5,885 16,679 24,564
LPG Transmission 822 580 543 693 526 710 654 655 2,639 2,544
Natural Gas Trading 3,424 1,925 4,834 3,766 4,219 3,292 3,100 3,029 13,950 13,641
Petrochemicals -3,002 -2,369 -1,606 -1,089 930 1,553 1,713 2,119 -8,066 6,315
LPG & Liq.HC (pre-subsidy) 2,768 721 2,328 1,642 2,144 1,469 2,460 2,434 7,459 8,506
Unallocated; GAILTEL 681 1,101 -121 979 606 51 969 969 2,640 2,596
Total 8,630 5,914 10,255 10,501 13,979 13,499 15,598 15,090 35,300 58,167
January 2017 215

Gujarat State Petronet

Bloomberg GUJS IN CMP: INR140 TP: INR168 (+20%) Neutral
 We expect GUJS to report net sales of INR2.5b and PAT of INR1.16b
(-11% QoQ, -6% YoY).
1,6,12 Rel Perf. (%) -7 / 4 / -4
 We model transmission volume at 25mmscmd (falt YoY, +2% QoQ)
and transmission tariff at INR1,080/mscm (+2% YoY, flat QoQ).
Y/E March 2016 2017E 2018E 2019E
Sales 9.9 10.4 12.6 14.4
 GUJS had won the bids for three cross-country pipelines (Mehsana-
EBITDA 8.6 9.2 11.1 12.6 Bhatinda, Bhatinda-Srinagar, Mallavaram-Bhilwara). We await
Adj. PAT 4.4 4.9 6.2 7.4 clarity on the current status, timelines and other details regarding
Adj. EPS (INR) 7.9 8.8 11.0 13.2 these pipelines.
EPS Gr. (%) 23.9 11.2 25.7 20.0
BV/Sh.(INR) 70 77.3 85.9 96.2  We build gas transmission volumes of 25.7mmscmd for FY17 and
RoE (%) 11.7 11.9 13.5 14.5 28mmscmd for FY18 and model tariff at INR1,078/mscm for FY17
RoCE (%) 9.7 9.9 11.3 12.2 and INR1,200/mscm for FY18. The stock trades at 12.7x FY18E EPS
Payout (%) 22.2 22.7 22.3 22.1 of INR11. Maintain Neutral.
Valuations
P/BV (x) 2.0 1.8 1.6 1.5  Transmission volumes.
EV/EBITDA (x) 9.9 8.9 7.0 5.7
 Progress on clearances of the three pipelines.
Div. Yield (%) 1.1 1.2 1.5 1.8

FY16 FY17E
Net Sales 2,557 2,526 2,475 2,313 2,579 2,564 2,523 2,761 9,870 10,426
Change (%) 11.0 -28.0 1.9 -2.1 0.9 1.5 1.9 19.4 -6.9 5.6
Employee Costs 74 113 89 71 79 77 96 123 347 375
Operating expenses 193 121 243 130 117 175 156 166 687 614
Other Expenditure 53 52 57 69 52 67 66 72 231 257
EBITDA 2,237 2,240 2,086 2,042 2,330 2,245 2,205 2,399 8,605 9,179
% of Net Sales 87.5 88.7 84.3 88.3 90.4 87.6 87.4 86.9 87.2 88.0
% Change 11.9 -30.7 2.7 3.5 4.2 0.2 5.7 17.5 -6.8 6.7
Depreciation 434 464 472 473 430 436 465 483 1,843 1,814
Interest 207 213 184 168 167 148 150 151 773 616
Other Income 143 122 288 137 147 304 175 169 690 795
PBT 1,738 1,685 1,718 1,538 1,881 1,965 1,765 2,165 6,679 8,183
Tax 610 600 483 541 668 666 606 743 2,234 2,823
Rate (%) 35.1 35.6 28.1 35.2 35.5 33.9 34.3 34.3 33.4 34.5
PAT 1,128 1,085 1,235 997 1,213 1,298 1,159 1,422 4,445 5,359
Adj. PAT 1,128 1,085 1,235 997 1,213 1,298 1,159 1,422 4,445 5,359
Change (%) 33 -2 39 35 8 20 -6 43 24 21
EPS (INR) 2.0 1.9 2.2 1.8 2.2 2.3 2.1 2.5 7.9 9.5
Transmission Vol. (mmscmd) 24.2 24.3 25.1 24.4 25.1 24.6 25.0 28.0 24.5 25.7
Implied adj. tariff (INR/mscm) 1,126 1,068 1,054 1,028 1,073 1,079 1,080 1,080 1,069 1,078
January 2017 216

HPCL
Bloomberg HPCL IN
M. Cap. (INR b)/(USD b) 469 / 7
52-Week Range (INR) 486 / 212 by improvement in refining margins QoQ. Also, on a reported basis,
1,6,12 Rel Perf. (%) 6 / 36 / 58 earnings would increase due to inventory gains during 3QFY17.
Financial snapshot (INR b)  We model nil subsidy-sharing for OMCs; the subsidy in 3QFY17
Y/E MARCH 2016 2017E 2018E 2019E would entirely be borne by the government.
Sales 1,793 1,734 1,922 2,002
EBITDA 76.2 100.8 94.9 99.5  We peg refinery throughput at 4mmt for 3QFY17 (v/s 4.57mmt in
Adj. PAT 38.6 53.6 45.9 46.9 3QFY16 and 4.04mmt in 2QFY17).
Adj. EPS (INR) 38.0 52.7 45.1 46.2
EPS Gr. (%) 41.3 38.8 (14.4) 2.3
 We expect HPCL to report PAT of INR15.6b in 3QFY17 (+50% YoY;
BV/Sh.(INR) 182.1 214.7 243.9 273.9
RoE (%) 22.4 26.6 19.7 17.8
+123% QoQ).
RoCE (%) 13.0 14.7 10.5 9.4
Payout (%) 36.4 35.1 35.1 35.1  HPCL trades at 10.2x FY18E standalone EPS and 1.9x FY18E BV. Buy.
Valuations
P/BV (x) 2.5 2.1 1.9 1.7  (a) GRM,
EV/EBITDA (x) 8.0 6.9 7.7 7.7
 (b) impact of forex and inventory change, and
Div. Yield (%) 2.5 3.4 2.9 3.0
 (c) Bhatinda refinery profits.

Y/E March FY16 FY17
FY16 FY17E
Net Sales 517,204 420,036 434,311 421,260 447,793 420,306 432,589 430,004 1,792,811 1,730,692
YoY Change (%) -12.6 -18.7 -14.9 -5.4 -13.4 0.1 -0.4 2.1 -13.1 -3.5
EBITDA 29,802 -1,265 21,711 25,921 35,653 11,890 28,369 21,913 76,168 97,825
Margins (%) 5.8 -0.3 5.0 6.2 8.0 2.8 6.6 5.1 4.2 5.7
Depreciation 7,508 5,428 6,978 6,754 6,108 6,160 6,817 6,817 26,668 25,902
Interest 1,227 1,650 1,610 1,913 1,395 1,164 1,407 1,407 6,401 5,373
Other Income 3,138 3,640 2,732 4,771 3,368 6,188 3,324 3,324 14,282 16,203
PBT 24,204 -4,704 15,855 22,025 31,518 10,755 23,468 17,012 57,381 82,753
Tax 8,324 -1,499 5,433 6,495 10,534 3,741 7,822 5,670 18,753 27,767
Rate (%) 34.4 31.9 34.3 29.5 33.4 34.8 33.3 33.3 32.7 33.6
Reported PAT 15,880 -3,205 10,423 15,529 20,984 7,013 15,646 11,342 38,627 54,985
Adj PAT 15,880 -3,205 10,423 15,529 20,984 7,013 15,646 11,342 38,627 54,985
YoY Change (%) 3,349.3 -137.7 -420.3 -28.2 32.1 -318.8 50.1 -27.0 41.3 42.3
Margins (%) 3.1 -0.8 2.4 3.7 4.7 1.7 3.6 2.6 2.2 3.2
Key Assumptions
GRM (USD/bbl) 8.6 2.7 7.9 7.5 6.8 3.2 8.3 5.0 6.7 5.8
Mkt sales volume incl exports (mmt) 8.6 7.8 8.7 9.1 8.9 8.0 8.9 8.9 34.1 34.6
Marketing GM per litre (INR/litre) 4.5 1.9 3.7 5.1 4.7 3.5 3.8 3.8 3.8 3.9
January 2017 217

Indraprastha Gas
Bloomberg IGL IN CMP: INR935 TP: INR898 (-4%) Neutral
 We expect IGL to report volumes of 4.4mmscmd and PAT of INR1.4b
M. Cap. (INR b)/(USD b) 131 / 2
(up 36% YoY, flat QoQ) for 3QFY17.
1,6,12 Rel Perf. (%) 14 / 53 / 76
 We expect 3QFY17 CNG volumes at 3.38mmscmd (+10% YoY, -2.5%
QoQ). We model total volumes of 4.4/4.8mmscmd in FY17/FY18.
Y/E MARCH 2016 2017E 2018E 2019E
Sales 36.7 36.2 41.5 45.7
 Due to increased gas cost, IGL has hiked CNG prices by INR1.85/kg.
EBITDA 7.6 10.0 10.4 11.0 However, it is yet to pass on the increased gas cost to industrial
Adj. PAT 4.2 5.9 6.1 6.7 consumers. In 3QFY17, EBITDA/scm could be lower than INR6.5 in
Adj. EPS (INR) 29.7 42.0 43.7 47.6 1QFY17 and INR6.1 in 2QFY17.
EPS Gr. (%) -4.9 41.2 4.0 9.0
BV/Sh.(INR) 172.6 204.4 237.5 273.4  We expect IGL to report EBITDA of INR2.5b (+33% YoY, -4.4% QoQ)
RoE (%) 18.4 21.8 19.8 18.6 for 3QFY17.
RoCE (%) 17.1 21.0 18.8 17.8
Payout (%) 20.2 19.1 20.6 21.0  The stock trades at 21.4x FY18E EPS of INR43.7. Neutral.
Valuation
P/BV (x) 5.4 4.6 3.9 3.4  (a) Likely increase in volumes following lower gas prices, and
EV/EBITDA (x) 16.6 12.4 11.5 10.4
 (b) EBITDA margin.
Div. Yield (%) 0.6 0.9 1.0 1.1

Y/E MARCH FY16 FY17
FY16 FY17E
Net Sales 8,994 9,658 9,269 8,816 8,970 9,624 8,889 8,759 36,737 36,242
Change (%) 3.7 1.8 -1.5 -3.4 -0.3 -0.3 -4.1 -0.6 0.1 -1.3
EBITDA 1,938 1,880 1,850 1,929 2,570 2,575 2,461 2,429 7,597 10,036
EBITDA (Rs/scm) 5.6 5.0 5.0 5.2 6.5 6.1 6.1 6.0 5.2 5.1
% of Net Sales 21.5 19.5 20.0 21.9 28.7 26.8 27.7 27.7 20.7 27.7
% Change -6.3 -12.4 -1.9 12.2 32.7 37.0 33.0 25.9 -2.9 32.1
Depreciation 386 395 399 398 466 483 478 478 1,577 1,905
Interest 36 27 18 10 0 0 0 0 91 0
Other Income 79.1 99.2 135.1 106.1 106.5 251.4 189.0 170.3 419.5 717.2
PBT after EO 1,596 1,557 1,569 1,627 2,211 2,177 2,172 2,121 6,349 8,681
Tax 577 542 517 551 731 735 734 716 2,187 2,916
Rate (%) 36.2 34.8 33.0 33.9 33.1 33.8 33.8 33.8 34.4 33.6
PAT 1,018 1,016 1,051 1,076 1,480 1,442 1,439 1,405 4,162 5,765
EPS (INR) 7.3 7.3 7.5 7.7 10.6 11.1 10.3 10.0 29.7 42.0
Gas Volumes (mmscmd)
CNG 2.97 3.10 3.07 3.15 3.31 3.47 3.38 3.42 3.07 3.40
PNG 0.87 0.98 0.94 0.95 1.02 1.11 1.02 1.02 0.93 1.04
Total 3.84 4.08 4.01 4.10 4.34 4.58 4.40 4.44 4.01 4.44
YoY Change (%)
CNG 4.7 2.9 4.1 7.1 11.7 11.9 10.0 8.5 4.7 10.5
PNG (4.8) 4.7 5.1 7.7 17.7 13.3 8.0 8.3 3.1 11.7
T o ta l 2.3 3.3 4.3 7.2 13.0 12.3 9.5 8.4 4.3 10.8
E: MOSL Estimates
January 2017 218

IOC
Bloomberg IOCL IN CMP: INR343 TP: INR464 (+35%) Buy
M. Cap. (INR b)/(USD b) 1666 / 24
by improvement in refining margins QoQ. Also, on a reported basis,
1,6,12 Rel Perf. (%) 17 / 46 / 58
earnings would increase due to inventory gains during 3QFY17.
 We model nil subsidy-sharing for OMCs; the subsidy in 3QFY17

Y/E MARCH 2016 2017E 2018E 2019E
would entirely be borne by the government.
Sales 3,544 3,574 4,203 4,547
EBITDA 217.0 395.2 367.6 384.3  We peg refinery throughput at 15.7mmt for 3QFY17 (+8.8% YoY) –
Adj. PAT 98.5 239.5 194.5 203.3 higher due to contribution from Paradip refinery.
Adj. EPS (INR) 20.3 49.3 40.1 41.9
EPS Gr. (%) 203.8 143.0 (18.8) 4.6  We expect IOCL to report net profit of INR64b in 3QFY17 (+105%
BV/Sh.(INR) 156.5 179.8 205.2 230.3 QoQ, +109% YoY).
RoE (%) 13.6 29.3 20.8 19.2
RoCE (%) 10.3 19.8 14.9 14.3  IOCL trades at 8.6x FY18E EPS and at 1.7x FY18E BV. Dividend yield is
Payout (%) 36.4 34.5 34.7 34.6 ~4%. Buy.
Valuations
P/E (x) 16.9 7.0 8.6 8.2
EV/EBITDA (x) 9.9 5.5 6.0 5.6  (a) Update on Paradip refinery, (b) GRM, (c) capex plans, and (d)
Div. Yield (%) 2.0 4.2 3.5 3.6 forex/inventory changes.

Y/E March FY16 FY17
FY16 FY17E
Net Sales 1,010,089 851,148 831,788 800,189 856,553 800,435 900,208 944,128 3,493,214 3,501,323
YoY Change (%) -19.0 -23.5 -22.2 -14.4 -15.2 -6.0 8.2 18.0 -20.0 0.2
EBITDA 98,027 4,249 49,589 36,136 132,581 54,456 108,326 74,146 188,001 369,509
Margins (%) 9.7 0.5 6.0 4.5 15.5 6.8 12.0 7.9 5.4 10.6
Depreciation 11,435 11,286 11,693 14,114 14,350 15,048 15,070 15,070 48,528 59,537
Interest 5,922 7,293 6,104 10,682 6,800 6,147 6,249 6,249 30,001 25,445
Other Income 6,604 8,465 9,331 10,881 8,957 11,807 8,849 8,849 35,280 38,462
PBT 91,999 -1,604 45,854 22,146 120,388 45,069 95,856 61,676 158,395 322,989
Tax 27,642 1,688 15,286 9,789 37,698 13,850 31,949 20,557 54,405 104,053
Rate (%) 30.0 -105.2 33.3 44.2 31.3 30.7 33.3 33.3 34.3 32.2
Reported PAT 64,357 -3,292 30,569 12,356 82,690 31,219 63,907 41,120 103,991 218,935
Adj PAT 64,357 -3,292 30,569 12,356 82,690 31,219 63,907 41,120 95,034 218,935
YoY Change (%) 155.1 -63.4 -215.9 -80.3 28.5 -1,048.4 109.1 232.8 127.7 130.4
Margins (%) 6.4 -0.4 3.7 1.5 9.7 3.9 7.1 4.4 2.7 6.3
Key Assumptions
GRM (USD/bbl) 10.8 0.8 6.0 3.0 10.0 4.3 9.0 5.1 5.1 7.1
Mkt sales volume incl exports (mmt) 19.4 18.1 19.1 20.5 20.4 18.5 18.9 18.9 77.1 76.7
Blended marketing GM (INR/lit) 3.4 3.4 3.5 3.4 3.4 3.5 3.5 3.5 3.4 3.5
January 2017 219

MRPL
Bloomberg MRPL IN CMP: INR108 TP: INR115 (+7%) Buy
 We expect MRPL to report EBITDA of INR16b (v/s INR6.2b in
M. Cap. (INR b)/(USD b) 188 / 3
2QFY17). We estimate adjusted PAT of INR11.3b (v/s INR4.1b in
1,6,12 Rel Perf. (%) 2 / 61 / 58
2QFY17).
 Regional benchmark Reuters Singapore GRM is down 14% YoY and

Y/E MARCH 2016 2017E 2018E 2019E
up 31% QoQ to USD6.7/bbl. We model MRPL’s GRM at USD9.5/bbl
Sales 396.3 425.8 553.2 568.9
v/s USD5.5/bbl in 2QFY17 and USD8.4/bbl in 3QFY16.
EBITDA 29.6 47.3 44.2 45.3
Adj. PAT 12.9 29.8 27.7 30.1  We expect refinery throughput at 4mmt v/s 3.8mmt in 3QFY16 and
Adj. EPS (INR) 7.4 17.0 15.8 17.2 4.03mmt in 2QFY17.
EPS Gr. (%) NA 130.4 (6.8) 8.5
BV/Sh.(INR) 36.6 49.7 61.8 74.9  For MRPL, we model GRM of ~USD7bbl for FY17/FY18. The stock
RoE (%) 22.1 39.4 28.4 25.1 trades at 6.8x FY18E EPS, and at an EV of 5.1x FY18E EBITDA. Buy.
RoCE (%) 14.3 23.2 19.4 19.4
Payout (%) - 23.4 23.4 23.4
Valuation Key issues to watch for
P/E (x) 14.6 6.3 6.8 6.3  (a) GRM, (b) forex fluctuations, and (c) inventory changes.
P/BV (x) 2.9 2.2 1.7 1.4  Updates on foray into petrol and diesel marketing.
EV/EBITDA (x) 4.0 4.9 5.1 3.6  Payment of outstanding dues to Iran.
Div. Yield (%) - 3.2 2.9 3.2

Y/E March FY16 FY17
FY16 FY17E
Net Sales 113,131 102,176 88,166 92,848 84,259 99,664 116,760 125,017 396,320 425,699
YoY Change (%) -28.1 -35.8 -40.1 -16.3 -25.5 -2.5 32.4 34.6 -31.0 7.4
EBITDA 10,283 -2,151 6,075 15,438 15,814 6,245 16,173 11,039 29,645 49,269
Margins (%) 9.1 -2.1 6.9 16.6 18.8 6.3 13.9 8.8 7.5 11.6
Depreciation 1,486 1,593 1,596 2,449 1,707 1,681 1,758 1,758 7,124 6,903
Interest 1,218 1,588 1,515 1,458 1,431 1,115 1,076 1,076 5,778 4,699
Other Income -945 -4,590 26 2,333 -1,306 2,536 749 749 -3,177 2,728
PBT before EO expense 6,634 -9,922 2,991 13,864 11,370 5,984 14,088 8,954 13,566 40,395
Extra-Ord expense 1,542 205 6 77 0 0 0 0 1,830 0
PBT 5,092 -10,127 2,984 13,787 11,370 5,984 14,088 8,954 11,736 40,395
Tax 1,032 -1,032 0 254 4,167 1,826 2,808 1,785 254 10,584
Rate (%) 20.3 10.2 0.0 1.8 36.6 30.5 19.9 19.9 2.2 26.2
Reported PAT 4,060 -9,095 2,984 13,534 7,203 4,159 11,280 7,169 11,483 29,811
Adj PAT 5,278 -8,933 2,989 13,594 7,203 4,159 11,280 7,169 13,273 29,811
YoY Change (%) -1,564.1 -8.4 -115.8 16.2 36.5 -146.6 277.4 -47.3 -176.3 124.6
Margins (%) 4.7 -8.7 3.4 14.6 8.5 4.2 9.7 5.7 3.3 7.0
Key Assumptions
GRM (USD/bbl) 5.1 5.3 8.4 9.0 5.3 5.5 9.5 6.9 6.9 5.4
E: MOSL Estimates
January 2017 220

Oil India
Bloomberg OINL IN CMP: INR457 TP: INR508 (+11%) Buy
 We expect OINL to report adjusted PAT of INR5.6b (v/s INR4.1b in
M. Cap. (INR b)/(USD b) 275 / 4
3QFY16 and INR5.8b in 2QFY17).
1,6,12 Rel Perf. (%) 4 / 25 / 11
 We estimate EBITDA at INR7.8b (up 25% YoY and 5% QoQ). We
estimate gross and net realization at USD47.8/bbl, with no subsidy
Y/E MARCH 2016 2017E 2018E 2019E
sharing burden.
Sales 92.7 91.8 114.2 118.4
EBITDA 31.2 39.4 43.6 45.1  Our Brent price assumption is USD49.3/60/bbl for FY17/18.
Adj. PAT 23.3 26.9 32.5 33.5 The stock trades at 8.4x FY18E EPS of INR54. We remain positive on
Adj. EPS (INR) 38.8 44.7 54.1 55.7 OINL due to attractive valuations and high dividend yield of ~4%.
EPS Gr. (%) -7.2 15.3 21.1 2.8 Buy.
BV/Sh.(INR) 377.9 402.2 431.7 461.9
RoCE (%) 8.3 8.5 9.6 9.3  (a) Subsidy sharing, (b) DD&A charges, and (c) oil & gas
Payout (%) 48.3 45.6 45.6 45.6 production volumes.
Valuations
P/E (x) 11.8 10.2 8.4 8.2
P/BV (x) 1.2 1.1 1.1 1.0
EV/EBITDA 8.9 7.0 6.3 6.0
(x)
Div. Yield (%) 3.5 3.7 4.6 4.8
Quarterly Performance (INR Billion)

Y/E March FY16 FY17
FY16 FY17E
Net Sales 27.5 24.0 22.2 19.0 21.3 22.4 23.2 24.9 92.7 91.8
Change (%) 9.4 15.2 7.6 -26.2 -22.4 -6.5 4.4 31.0 0.4 -0.9
EBITDA 10.8 7.7 6.3 6.3 7.8 7.5 8.0 16.3 31.2 39.4
% of Net Sales 39.4 32.1 28.4 33.2 36.3 33.3 34.3 65.4 33.6 43.0
Change (%) -2.7 10.4 21.3 -7.6 -28.5 -2.9 26.4 157.6 3.4 26.6
D,D&A 1.9 2.2 2.5 3.1 2.3 2.5 2.3 2.3 9.7 9.5
Interest 0.8 0.9 0.9 0.9 1.0 1.0 1.0 0.9 3.5 3.9
OI (incl. Oper. other inc) 4.1 5.6 3.7 5.4 3.3 4.8 3.8 2.6 18.8 14.5
PBT before exceptionals 12.2 10.2 6.6 7.8 7.7 8.8 8.4 15.6 36.8 40.6
Exceptional item 0.0 0.0 0.0 2.2 0.0 0.0 0.0 0.0 2.2 0.0
PBT after exceptionals 12.2 10.2 6.6 5.6 7.7 8.8 8.4 15.6 34.6 40.6
Tax 4.5 3.4 2.5 0.9 2.8 2.9 2.8 5.2 11.3 13.7
Rate (%) 36.7 33.8 37.6 11.7 36.2 33.7 33.0 33.0 30.8 33.8
PAT 7.8 6.7 4.1 4.7 4.9 5.8 5.6 10.5 23.3 26.9
Change (%) -9.0 10.9 -17.6 -14.9 -36.2 -14.0 37.5 123.2 -7.2 15.3
Adj. EPS (INR) 12.9 11.2 6.8 11.4 8.2 9.7 9.4 17.4 42.3 44.7
Key Assumptions(USD/bbl)
Exchange rate (INR/USD) 63.5 65.0 65.9 67.5 66.9 67.0 67.4 68.0 65.5 67.3
Gas Price (USD/bbl) 4.7 4.7 4.2 4.2 3.4 3.4 2.6 2.6 4.4 3.0
Gross Oil Realization 61.9 48.7 42.0 32.6 43.1 44.6 47.8 52.8 46.3 47.0
Subsidy 4.4 2.3 - - - - - - 1.7 -
Net Oil Realization 57.4 46.4 42.0 32.6 43.1 44.6 47.8 52.8 44.6 47.0
Subsidy (INR b) 1.7 0.8 - (1.0) - - - - 1.6 -
January 2017 221

ONGC
Bloomberg ONGC IN CMP: INR194 TP:INR223 (+15%) Neutral
 We expect ONGC to report adjusted PAT of INR44.5b in 3QFY17
M. Cap. (INR b)/(USD b) 2494 / 37
(v/s INR49.7b in 2QFY17 and INR40.8b in 3QFY16).
1,6,12 Rel Perf. (%) -2 / 28 / 18
 We estimate EBITDA at INR97.1b (v/s INR95.4b in 2QFY17 and
INR86.4b in 3QFY16). We estimate gross and net realization at
Y/E March 2016 2017E 2018E 2019E
USD50.1/bbl, as we expect the entire subsidy to be borne by the
Sales 1,293 1,293 1,573 1,646
government.
EBITDA 452 505 659 730
Adj. PAT 176 193 263 312  The stock trades at 9.7x FY18E consolidated EPS of INR20, with
Adj. EPS 13.6 14.8 20.0 23.8 implied dividend yield of 3-4%. Neutral.
(INR)
EPS Gr. (%) -0.7 9.9 36.3 18.7
BV/Sh.(INR) 144 150 155 161
RoE (%) 9.5 10.1 13.1 15.1
RoCE (%) 8.7 8.5 10.8 12.4
Payout (%) 73.2 71.0 75.9 73.6
Valuation
P/E (x) 14.3 13.1 9.7 8.2
 (a) Subsidy sharing, (b) DD&A charges, (c) oil & gas production
P/BV (x) 1.4 1.3 1.3 1.2
volumes, and (d) new investments in KG Basin following new
EV/EBITDA 6.1 6.0 4.7 4.0
(x) deep water gas pricing policy.
Div. Yield (%) 4.4 4.6 6.7 7.7
Quarterly performance (Standalone) (INR Billion)

FY16 FY17E
Net Sales 227.0 205.6 184.0 161.4 176.7 182.9 193.3 197.6 778.0 750.4
Change (%) 4.4 1.0 -1.7 -24.2 -22.1 -11.1 5.1 22.4 -5.3 -3.5
EBITDA 120.0 103.9 86.4 59.7 92.8 95.4 97.1 97.8 370.0 383.0
% of Net Sales 52.9 50.5 47.0 37.0 52.5 52.2 50.2 49.5 47.6 51.0
Change (%) -4.7 -4.3 -8.0 -39.9 -22.7 -8.2 12.4 63.9 -13.5 3.5
D,D & A 45.8 46.1 39.5 41.0 37.0 34.5 34.3 58.1 172.4 163.9
Interest 0.0 0.0 0.0 0.1 2.9 3.0 3.0 3.0 0.1 12.0
Other Income 9.4 12.5 9.6 20.9 10.7 12.9 9.6 6.3 52.4 39.5
(Impairment) / writeback -39.9 24.0 0.0 0.0 0.0 0.0 -15.9 0.0
PBT 83.5 70.4 16.6 63.5 63.5 70.7 69.4 43.0 233.9 246.6
Tax 28.9 22.0 3.7 19.3 21.2 21.0 24.9 19.2 73.9 86.3
Rate (%) 34.6 31.2 22.3 30.4 33.4 29.7 35.9 44.7 31.6 35.0
PAT 54.6 48.4 12.9 44.2 42.3 49.7 44.5 23.8 160.0 160.3
Change (%) 14.2 -11.1 -64.0 12.2 -22.5 2.7 245.8 -46.2 -9.7 0.2
Adjusted PAT 54.6 48.4 40.8 27.5 42.3 49.7 44.5 23.8 171.3 160.3
Adj. EPS 4.3 3.8 3.2 2.1 3.3 3.9 3.5 1.9 13.3 12.5
Key Assumptions (USD/bbl)
Fx rate (INR/USD) 63.7 65.0 66.0 67.3 67.0 67.0 67.4 68.0 65.5 67.4
Gross Oil Realization 63.8 51.2 44.3 34.9 46.1 47.9 50.1 55.1 48.6 49.8
Subsidy 4.9 2.4 0.0 0.0 0.0 0.0 0.0 0.0 1.8 0.0
Net Oil Realization 58.9 48.8 44.3 34.9 46.1 47.9 50.1 55.1 46.7 49.8
Subsidy (INR b) 11.3 6.0 0.0 0.0 0.0 0.0 0.0 0.0 17.3 0.0
E: MOSL Estimates
January 2017 222

Petronet LNG
Bloomberg PLNG IN CMP: INR375 TP: INR411 (+11%) Buy
 We expect PLNG to report PAT of INR3.3b (+87% YoY, -27% QoQ)
M. Cap. (INR b)/(USD b) 281 / 4
and EBITDA of INR5.3b (+68% YoY, -27% QoQ) for 3QFY17.
1,6,12 Rel Perf. (%) -1 / 29 / 46
 We model Dahej LNG volumes at 3.3mmt in 3QFY17.
Y/E March 2016 2017E 2018E 2019E
 Dahej terminal utilization is above ~110% and long-term growth
Sales 271.3 263.8 281.0 375.4
would depend on Dahej’s ramp-up and K ochi terminal’s pipeline
EBITDA 15.9 23.6 30.4 40.7 connectivity.
Adj. PAT 8.4 14.9 20.2 27.3
Adj. EPS (INR) 11.2 19.8 26.9 36.3  As against 15mmt capacity, PLNG has ~16mmt (RasGas: 8.5, new
EPS Gr. (%) 12.2 76.6 35.6 35.2 contracts: ~7.5) long-term take-or-pay contracts.
BV/Sh.(INR) 85.0 99.3 118.6 144.7
RoE (%) 14.0 21.5 24.7 27.6  The stock trades at 13.9x FY18E consolidated EPS of INR26.9.
RoCE (%) 11.0 16.1 20.7 25.9 Maintain Buy.
Payout (%) 24.0 28.1 28.1 28.1
Valuation
 (a) Ramp-up at Dahej terminal, (b) progress on Kochi-Mangalore
P/E (x) 33.4 18.9 13.9 10.3
pipeline, (c) spot volumes and marketing margin on spot volumes.
P/BV (x) 4.4 3.8 3.2 2.6
 Petronet LNG’s earnings are largely protected due to take-or-pay
EV/EBITDA (x) 1.1 1.1 0.9 0.6
Div. Yield (%) 0.7 1.3 1.7 2.3
contracts with ‘ off-takers’.

Y/E March FY16 FY17
FY16 FY17E
Net Sales 83,772 75,450 51,460 60,653 53,373 66,144 81,218 63,068 271,334 263,803
YoY Change (%) -17.6 -31.3 -54.0 -15.3 -36.3 -12.3 57.8 4.0 -31.3 -2.8
EBITDA 3,611 4,668 3,158 4,466 6,425 7,264 5,314 4,623 15,903 23,626
Margins (%) 4.3 6.2 6.1 7.4 12.0 11.0 6.5 7.3 5.9 9.0
Depreciation 801 808 807 800 806 860 882 882 3,216 3,429
Interest 612 612 588 576 556 554 399 399 2,387 1,909
Other Income 333 360 584 427 494 915 742 742 1,704 2,892
PBT 2,531 3,608 2,348 3,517 5,556 6,765 4,775 4,085 12,004 21,181
Tax 780 1,120 564 1,124 1,777 2,170 1,432 1,225 3,588 6,605
Rate (%) 30.8 31.0 24.0 32.0 32.0 32.1 30.0 30.0 29.9 31.2
Reported PAT 1,751 2,488 1,784 2,393 3,779 4,596 3,342 2,859 8,416 14,576
Adj PAT 1,751 2,488 1,784 2,393 3,779 4,596 3,342 2,859 8,416 14,576
YoY Change (%) 11.8 -5.3 9.9 42.1 115.8 84.7 87.4 19.5 12.2 73.2
Margins (%) 2.1 3.3 3.5 3.9 7.1 6.9 4.1 4.5 3.1 5.5
Key Assumptions
Sales volume (tbtu) 92.6 84.5 63.0 127.0 118.1 124.7 131.6 109.9 367.1 484.3
E: MOSL Estimates
January 2017 223

Reliance Industries
Bloomberg RIL IN CMP: INR1,069 TP: INR1,002 (-6%) Neutral
 We expect RIL to report GRM of USD11.3/bbl (v/s USD10.1/bbl in
M. Cap. (INR b)/(USD b) 3463 / 51
2QFY17 and USD11.5/bbl in 3QFY16.
1,6,12 Rel Perf. (%) 6 / 11 / 3
 RIL’s refining segment profit is likely to improve QoQ due to
improvement in GRMs. Petchem profitability is expected to
increase YoY, led by improved petchem.
Y/E March 2016 2017E 2018E 2019E
Net Sales 2,331.6 2,400.7 2,759.4 2,768.4
 We expect RIL to report standalone PAT of INR80.0b (+10% YoY).
EBITDA 401.4 435.9 470.7 468.7
Reported consolidated numbers would include shale gas business,
Net Profit 274.2 297.5 321.2 324.2
Adj. EPS 93.0 100.9 109.0 110.0
but with a one-quarter lag.
(INR)
EPS Gr. (%) 20.5 8.5 8.0 0.9
BV/Sh. (INR) 814.7 901.2 994.4 1,088.5
 RIL trades at 9.8x FY18E adjusted EPS of INR109. RIL's new
RoE (%) 12.0 11.8 11.5 10.6 refining/petchem projects are likely to add to earnings from
RoCE (%) 8.9 9.3 9.7 9.3 2HFY18/FY19, but Telecom business would be a drag on
Payout (%) 13.5 14.4 14.4 14.4 profitability. Maintain Neutral.
Valuations
Adj. P/E (x) 11.5 10.6 9.8 9.7 Key issues to watch for
P/BV (x) 1.3 1.2 1.1 1.0  GRM.
EV/EBITDA 1.8 1.6 1.2 1.1  Petchem margins.
(x)
EV/Sales (x) 10.3 8.6 7.1 6.4  KG-D6 production.
 Update on Telecom venture.

Y/E March FY16 FY17
FY16 FY17E
Net Sales 658,170 608,170 565,670 499,570 534,960 595,770 640,982 629,020 2,331,580 2,400,732
YoY Change (%) -31.7 -37.0 -29.5 -10.9 -18.7 -2.0 13.3 25.9 -29.1 3.0
EBITDA 93,070 98,330 102,720 107,270 108,170 105,550 119,725 102,430 401,390 435,875
Margins (%) 14.1 16.2 18.2 21.5 20.2 17.7 18.7 16.3 17.2 18.2
Depreciation 22,650 23,720 24,050 25,240 19,500 20,290 25,613 25,613 95,660 91,017
Interest 5,970 6,940 6,090 5,540 9,240 6,330 10,820 10,820 24,540 37,210
Other Income 18,180 16,170 22,890 18,580 20,330 22,800 22,000 26,113 75,820 91,243
PBT 82,630 83,840 95,470 95,070 99,760 101,730 105,291 92,109 357,010 398,890
Tax 19,450 18,230 23,290 21,870 24,280 24,690 25,270 20,264 82,840 94,504
Rate (%) 24 22 24 23 24 24 24 22 23 24
Adj PAT 63,180 65,610 72,180 73,200 75,480 77,040 80,021 71,845 274,170 304,386
YoY Change (%) 11.8 14.2 41.9 17.3 19.5 17.4 10.9 -1.9 20.7 11.0
Margins (%) 9.6 10.8 12.8 14.7 14.1 12.9 12.5 11.4 11.8 12.7
Key Assumptions
GRM (USD/bbl) 10.4 10.6 11.5 10.8 11.5 10.1 11.3 9.0 10.8 10.5
Petchem EBITDA/tonne (USD/MT) 273.2 259.9 261.4 271.6 303.8 314.4 250.0 250.0 266.5 279.6
Petchem volumes (mmt) 1.9 2.1 2.1 2.1 1.9 2.1 2.5 2.5 8.2 9.0
January 2017 224

December 2016 Results Preview | January 2017
Retail
Company name Hit by double whammy of demonetization, weak festive season
Jubilant Foodworks
Barring Titan, sales likely to be anemic for retail peers
Shoppers Stop Retail coverage universe likely to grow sales at 8.1%

Titan Company For our retail coverage universe, we expect revenues to increase 8.1% YoY, but PAT
to decline 9.5% YoY in 3QFY17. EBITDA is likely to decline 1% YoY. Titan’s jewelry
retail revenue reportedly grew 15% YoY in 3QFY17, led by healthy festive season
growth. The company also exhibited a sharp recovery relative to unorganized peers
in the jewelry segment, leading to market share gains. However, its watches
segment sales via the trade channel (50% of segment sales) continued to be
adversely affected, while its retail segment reported single-digit sales growth. We
expect Jubilant Foodworks’ sales to drop 8% YoY, with same-store sales declining
14% due to the adverse impact of demonetization on discretionary consumption as
well as likely weak festive season sales (according to our channel checks).
Demonetization and weak festive season sales are also likely to result in flat LTL
growth at Shoppers Stop, with sales growth of just 5% YoY. Brick-and-mortar retail
companies continue to face the onslaught of online retailers.
Store expansion subdued

Retail companies under our coverage are moderating store expansion. Titan added
four Tanishq stores (adding 12ksf), Jubilant has likely added 30 stores, while
Shoppers Stop is likely to have reduced its net store count by 1 in 3QFY17.
Expansion plans are likely to be a function of pick-up in consumer sentiment.
No preferred pick in the sector given weak environment

Demand remains sluggish across retail players with no recovery in sight.
Competition is also a worry for JUBI and SHOP in a period of slowdown. While we
like JUBI’s business model (decent RoEs even during slowdown and strong potential
earnings growth on recovery), poor medium-term visibility (possible worsening in
consumer sentiment) refrains us from turning constructive. The share price
correction has been concurrent with a steep cut in earnings estimates as a result of
delayed recovery, which means that valuations still remain expensive. Similarly,
while we like TTAN’s franchise, management quality and long-term opportunity in
the jewelry segment, demand headwinds remain a worry for the company.

Retail
Jubilant Foodworks 860 Neutral 5,832 -8.0 -12.4 552 -24.0 -14.1 130 -55.6 -39.7
Shopper's Stop 295 Neutral 9,573 5.0 1.9 507 -28.8 53.6 113 -52.2 5.6
Titan Company 359 Neutral 38,062 12.0 44.4 3,144 12.0 20.7 2,276 0.9 23.9
Retail Sector Aggregate 53,468 8.1 26.1 4,204 -1.0 17.5 2,519 -9.5 16.6
January 2017 225

Exhibit 2: SHOP to post flat LTL sales in 3QFY17 on a base of Exhibit 3: Jubilant Foodworks’ SSS to decline by 14% in
17.4% LTL sales growth in 3QFY16 3QFY17
LTL Sales growth (%)
17.4 SSS Growth (%)
15.5
12.5 12.0 12.7
11.0
10.0
8.4
19.8
16.1
7.7
6.3
6.6
1.9
6.6
4.6
3.2
2.0
2.9
4.2
5.0 5.5
4.0
5.5 5.9 2.2
-2.6
-3.4
-2.4
-5.3
-3.2
3.7 0.8 0.1
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Exhibit 4: Gold prices rose 13% YoY in 3QFY17
Gold price YoY (%) 20.4%

12.2% 13.0%
8.0% 10.2%
4.3% 3.5%
-2.1% -0.1% -5.7% -6.8%

-2.9%
-6.3% -4.1% -4.9%
-10.2%
-12.8%
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
Exhibit 5: Shoppers Stop has 81 stores and 19 HyperCITY

stores Exhibit 6: Dominos is expected to add 30 stores in 3QFY17
Shoppers Stop Hypercity Dominos stores
82 81
77 81
72 73 72 73 74 76
1,081
1,049
1,026
69
990
65 67
950
911
60 61
876
838
55 55
797
761
726
19 20 19
679
632
602
576
17 17 17 17
552
16
515
489
14 15 15 15 15 15
465
439
411
12 12 13
Jun-13
Jun-14
Jun-15
Jun-16
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
January 2017 226

Exhibit 7: Relative performance – three months (%) Exhibit 8: Relative performance – one-year (%)
Sensex Index MOSL Retail Index Sensex Index MOSL Retail Index
108
112
101
104
94 96
87 88
80 80
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Nov-16
Dec-16
Sep-16
Oct-16

Retail
Jubilant Foodworks 860 Neutral 10.8 18.5 27.2 80.0 46.4 31.7 22.7 16.0 11.5 8.9 15.3 20.2
Shopper's Stop 295 Neutral 3.0 9.2 13.8 96.9 32.2 21.5 17.9 10.6 7.8 3.1 8.8 11.9
Titan Company 359 Neutral 8.7 9.8 11.3 41.0 36.8 31.6 30.5 27.3 23.4 20.2 19.7 20.1
Retail Sector Aggregate 45.8 37.5 30.7 27.9 22.8 18.5 15.2 16.7 17.9
January 2017 227

December 2016 Results Preview | Sector: Retail
Jubilant Foodworks
Bloomberg JUBI IN CMP: INR860 TP: INR900 (+5%) Neutral
 We expect JUBI’s revenues to decline 8% YoY. 3QFY17 SSSG is likely
to be negative at around 14%. Discretionary spending was expected
to improve in 2HFY17, but it is likely to be impacted by
1,6,12 Rel Perf. (%) 0 / -28 / -45
demonetization. Commodity inflation continues.
 We expect EBITDA margin to contract 200bp YoY to 9.5%, and
Y/E March 2016 2017E 2018E 2019E
EBITDA to decline 24% YoY to INR552m.
Sales 24.4 25.4 30.4 37.8
 We estimate PAT to decline 55.6% to INR130m.
EBITDA 2.6 2.4 3.4 4.6  The stock trades at 46.4x FY18E EPS of INR18.5. Maintain Neutral.
Adj. PAT 1.0 0.7 1.2 1.8
Adj. EPS (INR) 15.0 10.8 18.5 27.2
EPS Gr. (%) -11.7 -28.1 72.3 46.6
BV/Sh.(INR) 111.3 121.0 121.3 134.7
RoE (%) 13.4 8.9 15.3 20.2
RoCE (%) 14.1 9.2 15.3 21.1
Valuations  Clarity on appointment of new CEO.
P/E (x) 57.5 80.0 46.4 31.7  Demand outlook for QSR and Pizza space, as well as competition.
P/BV (x) 7.7 7.1 7.1 6.4  Performance of D u n k i n D o n u t s and margin guidance.
EV/EBITDA (x) 21.0 22.7 16.0 11.5  Changes in expansion and capex strategy (if any).
Div. Yield (%) 0.3 0.3 0.3 1.4
Y/E March FY16 FY17 Consol. Consol.
No of Stores 911 950 990 1026 1049 1081 1111 1146 1026 1146
LTL Growth (%) 4.6 3.2 2.0 2.9 -3.2 4.2 -14.0 2.0 3.2 -2.7
Net Sales 5,707 5,875 6,339 6,180 6,089 6,655 5,832 6,808 24,383 25,385
YoY Change (%) 14.4 14.0 6.7 13.3 -8.0 10.2 17.5 4.1
Gross Profit 4,320 4,474 4,880 4,728 4,675 4,979 4,402 5,133 18,583 19,189
Gross Margin (%) 75.7 76.1 77.0 76.5 76.8 74.8 75.5 75.4 76.2 75.6
Other Expenses 3,647 3,870 4,153 4,015 4,098 4,336 3,850 4,463 15,943 16,746
EBITDA 673 604 727 713 577 643 552 671 2,640 2,443
EBITDA Growth % -14.2 6.4 -24.0 -6.0 0.4 -7.4
Margins (%) 11.8 10.3 11.5 11.5 9.5 9.7 9.5 9.9 10.8 9.6
Depreciation 292 307 316 328 326 366 389 423 1,282 1,504
Other Income 29 29 24 29 31 43 31 11 110 115
PBT 411 326 436 415 282 320 194 258 1,467 1,054
Tax 135 107 143 136 92 104 64 86 483 347
Rate (%) 32.9 33.0 32.8 32.9 32.7 32.5 33.1 33.5 32.9 32.9
Adjusted PAT 276 219 293 278 190 216 130 172 984 707
YoY Change (%) -31.1 -1.3 -55.6 -38.2 -20.2 -28.1
E: MOSL Estimates
January 2017 228

Shoppers Stop
Bloomberg SHOP IN CMP: INR295 TP: INR300 (+2%) Neutral
 We expect SHOP’s revenue to grow 5% YoY to INR9.6b.
 Same-store sales (SSS) are estimated to be flat on a base of 17.4%
LTL sales growth.
1,6,12 Rel Perf. (%) -2 / -21 / -30
 EBITDA margin is likely to contract 250bp to 5.3% in 3QFY17; we
have factored in EBITDA decline of 28.8% and PAT decline of 52% to
INR113m.
Y/E March 2016 2017E 2018E 2019E
 The stock trades at 32.2x FY18E EPS of INR9.2; maintain Neutral.
Sales 34.1 36.2 41.6 47.8
EBITDA 2.2 1.4 2.4 3.1
Adj. PAT 0.5 0.3 0.8 1.1
Adj. EPS (INR) 5.8 3.0 9.2 13.8
EPS Gr. (%) 19.3 -47.7 201.0 50.0
BV/Sh.(INR) 95.6 101.1 110.4 124.4
RoE (%) 6.3 3.1 8.8 11.9
RoCE (%) 6.2 4.3 7.8 9.8
Payout (%) 0.0 0.0 0.0 0.0
P/E (x) 50.6 96.9 32.2 21.5  Comments on same-store performance; margin outlook.
P/BV (x) 3.1 2.9 2.7 2.4  Update on Omni-channel strategy.
EV/EBITDA (x) 12.0 17.9 10.6 7.8  Guidance on HyperCITY’s breakeven.
Quarterly performance
LTL Sales Gr % 12.7 0.1 17.4 5.9 5.5 2.2 0.0 2.7 9.0 2.6
Deptt Stores 73 74 76 77 81 82 81 82 77 82
Net Sales 6,846 8,769 9,118 8,959 7,559 9,395 9,573 9,652 34,132 36,180
YoY Change (%) 11.8 2.5 19.1 9.7 10.4 7.1 5.0 7.7 11.9 6.0
Total Exp 6,677 8,359 8,405 8,437 7,485 9,065 9,066 9,152 31,960 34,768
EBITDA 169 410 712 523 74 330 507 500 2,173 1,412
Growth % -45.2 -26.2 33.0 6.5 -56.4 -19.3 -28.8 -4.3 15.0 -35.0
Margins (%) 2.5 4.7 7.8 5.8 1.0 3.5 5.3 5.2 6.4 3.9
Depreciation 199 309 211 258 372 243 226 163 977 1,003
Interest 139 135 158 141 159 143 155 105 573 562
Other Income 207 242 58 50 237 225 58 50 213 570
PBT 37 207 402 174 -220 170 185 282 836 417
Tax 16 87 166 72 -85 63 72 112 346 163
Rate (%) 41.9 42.0 41.2 41.5 38.5 37.1 39.0 39.7 41.4 39.0
Adjusted PAT 22 120 236 102 -136 107 113 170 490 254
YoY Change (%) 188.1 -24.5 71.3 -1.2 -726.9 -11.0 -52.2 67.2 20.3 -48.1
E: MOSL Estimates;
January 2017 229

Titan Company
Bloomberg TTAN IN CMP: INR359 TP: INR360 (0%) Neutral
 We expect TTAN’s revenue to increase 12% to INR38b.
M. Cap. (INR b)/(USD b) 318 / 5
 The jewelry division witnessed 40% YoY like-to-like sales growth in
the festive period, and also saw abnormally high sales on 8
1,6,12 Rel Perf. (%) 9 / -9 / -2
November. Retails sales growth for Tanishq stood at 15% for
3QFY17.
 During the quarter, TTAN added only four Tanishq stores (12ksf).
Y/E March 2016 2017E 2018E 2019E
 We factor in EBITDA growth of 12% in 3QFY17, with underlying flat
Sales 111.8 119.6 137.5 155.4
EBITDA 8.6 10.4 11.6 13.4
margins of 8.3%, and 0.9% PAT growth.
Adj. PAT 7.1 7.8 8.7 10.1
 The stock trades at 36.8x FY18E EPS of INR9.8; maintain Neutral.
Adj. EPS (INR) 8.0 8.7 9.8 11.3
EPS Gr. (%) -13.4 8.9 11.5 16.2
BV/Sh.(INR) 40.4 46.3 52.7 60.3
RoE (%) 21.3 20.2 19.7 20.1
RoCE (%) 21.8 20.4 19.8 20.0
Payout (%) 30.0 30.0 30.0 30.0
Valuation
P/E (x) 44.6 41.0 36.8 31.6
P/BV (x) 8.9 7.7 6.8 5.9
 Comments on consumer demand for Jewelry and Watches.
EV/EBITDA (x) 36.9 30.4 27.3 23.3  Expansion initiatives.
Div. Yield (%) 0.7 0.7 0.8 0.9  Update on the new Golden Harvest Scheme.
Net Sales 26,868 26,547 33,984 24,372 27,825 26,364 38,062 27,343 111,770 119,594
YoY Change (%) -7.1 -25.5 17.3 -1.5 3.6 -0.7 12.0 12.2 -5.5 7.0
Total Exp 24,872 24,717 31,041 22,414 25,067 23,760 34,918 25,445 103,179 109,189
EBITDA 1,996 1,830 2,807 1,958 2,759 2,604 3,144 1,898 8,591 10,405
EBITDA Growth % -27.3 -39.9 11.6 -21.2 38.2 42.3 12.0 -3.1 -20.4 21.1
Margins (%) 7.4 6.9 8.3 8.0 9.9 9.9 8.3 6.9 7.7 8.7
Depreciation 227 240 250 254 261 260 283 265 971 1,068
Interest 118 87 114 104 88 117 131 129 423 465
Other Income 395 326 440 452 297 277 440 466 1,612 1,479
PBT 2,045 1,829 2,883 2,052 2,706 2,504 3,171 1,970 8,809 10,350
Tax 530 365 627 156 471 667 894 556 1,678 2,588
Rate (%) 25.9 20.0 21.7 7.6 17.4 26.6 28.2 28.2 19.0 25.0
Adjusted PAT 1,516 1,464 2,257 1,896 2,236 1,837 2,276 1,413 7,131 7,763
YoY Change (%) -14.5 -39.0 18.3 -11.9 47.5 25.5 0.9 -25.5 -13.4 8.9
January 2017 230

Technology
Company Name In the middle of old and (potentially) new problems
Cyient Gradual recovery to continue at TECHM; seasonality and BFSI keep 3Q
HCL Technologies
Hexaware Technologies expectations modest
Infosys
K PIT Technologies Expectations laid low by macro and seasonality…
L&T Infotech After a seasonally strong 1H offered nothing to write home about, compounding of
MindTree Consulting
furloughs in the third quarter keeps our expectations muted. The situation would be
Mphasis
NIIT Tech further accentuated by the depreciation of GBP, EUR, AUD and JPY against the USD.
Persistent Systems The brunt of client-specific and other issues has been evident in:
TCS  INFO’s termination of a contract with RBS’ standalone UK bank, Williams & Glyn
Tech Mahindra
Wipro (W&G), leading to gradual ramp down of as many as 3,000 employees, which is
Z ensar Technologies expected to kick off in 3Q.
 MTCL’s revenue decline in 2Q, and lack of visible revival in 3Q from top client
spending bumps, pricing pressure and delayed ramp-up of projects.
 WPRO’s organic growth guidance of -1% to +1% for 3Q despite improvement
measures under the new leadership.
… but expect TECHM’s slow and gradual recovery to continue

 We expect TECHM to lead sequential growth at 3.1% QoQ CC. Its revenue would
include residual one-month contribution from Target acquisition (~0.6pp).
However, excluding this too, our organic growth estimate of ~2.5% QoQ CC
betters peers.
 It also enjoys a favorable base to expand margins this quarter, given 100bp
impact from one-time hit in the last quarter. We model 70bp QoQ expansion in
EBITDA margin to 16.6% and better sequential performance than other top-tier
peers.
Cross currencies are at it again!

 We see top-tier growth in constant currency ranging between -1% and 3.1%
QoQ and 6.6% to 13.1% YoY. However, strengthening of the USD against other
major global currencies means yet another quarter of significant cross-currency
impact, with QoQ depreciation in EUR, JPY, GBP and AUD of 1% to 10% QoQ.
 Consequently, in USD terms (including impact from GBP depreciation and other
currencies), we expect growth of -2.1% to 1.7% QoQ and 4.1% to 10.8% YoY.
Margin movement YoY is a fair reflection of business pressure

Pricing pressure in traditional services and renewals, and necessary investments for
transitioning to Digital have been weighing on margins. Although the INR has
depreciated against the USD by 2.1% QoQ, the impact of depreciation of other
currencies limits any tailwind. We see sequential movement of margins in the range
of -80bp and 70bp for Tier-I, and -160bp and 100bp for Tier-II. Six of the 14
companies under our coverage are expected to report positive sequential
movement in EBITDA margins. On a YoY basis though, margin movement for Tier-I
ranges from -130bp to -40bp.
Ashish Chopra (Ashish.Chopra@MotilalOswal.com); +91 22 3982 5424

Sagar Lele (Sagar.Lele@MotilalOswal.com); +91 22 3982 5585
January 2017 231
December 2016 Results Preview | Sector: Technology
Any hopes of the sector’s health getting on the mend?

 As if uncertain macro, deteriorating pricing and margins in traditional services
combined with capability uptick challenges in Digital were not enough, any
protectionist impetus in the US is an added overhang, going forward.
 But for that, there is a case for a rosier picture come FY18, given that
macroeconomic challenges that resulted in a deterioration of performance
through FY17 aren’t expected to impact FY18 with the same force. Interest rate
cycle reversal in the US augurs well for BFSI spending.
 Add to that, deal wins haven’t been showing any signs of let-off. INFO’s TCV of
large deal wins at USD3.1b is 34% higher YoY, and MTCL’s deal wins of USD888m
are up 24% YoY – quite a contradiction from revenue growth.
 Companies’ outlook on the balance of these counteracting forces will be keenly
watched, with valuation multiples still at corrected levels.
PAT decline led by margin contraction and forex movement
 Aggregate PAT is expected to grow by a tepid 1% YoY for tier-I and decline by
6.9% YoY for tier-II. The primary reasons for the drop have been [ 1] industry-
wide pressure on margins, and [ 2] forex losses (on hedges, and on translation).
 EBITDA margins are expected to decline YoY in 3QFY17 for all companies under
our coverage (barring Mphasis, Hexaware and L&T Infotech). Cumulative EBITDA
margins are modeled to decline by ~100bp for both Tier-I and Tier-II companies
under our coverage.
Valuation comfort offset by uncertainty; prefer INFO, HCLT, TECHM

 Lest the macro turns for the better, we see limited upside triggers for the sector
over the near term. Although issues cited as causes for the recent slowdown
have been taking a turn, other than improved deal wins, there are few signs to
find comfort in.
 Risks are lesser at HCLT given visibility from its unchanged guidance for the year,
and TECHM, with improvement in Telecom and continued strength in
Enterprise.
 Moreover, the prospective improvement in profitability at TECHM, led by
leverage lent by revival of Top 10 customers, and likely profitability
stability/resurrection in subsidiaries could lead to a trajectory different from the
industry.
 Given the traction in revenue growth leadership (notwithstanding the cyclical
speed breaker) at INFO under new leadership, we take greater comfort in its
valuations, compared to TCS, which too is citing challenges in BFSI – a risk to its
premium multiple.
 Potential of double-digit organic growth at HCLT (substantiated by order book),
better growth compared to TECHM and WPRO, along with 25%+ RoE leaves
ample room for upside despite embedding conservatism on the margin outlook.
Moreover, its exposure to IMS and Engineering Services protects it from the
weakness seen in BFSI.
 Among the Tier-II IT, we prefer CYL, LTI and Z ENT.
January 2017 232

Exhibit 1: Earnings aggregate for 3QFY17

Sector Sales (INR M) EBDITA (INR M) Net Profit (INR M)
CMP (INR) Reco Dec-16 Dec-16 Dec-16
Cyient 494 Buy 9,234 18.1 1.1 1,243 12.8 -3.1 1,031 18.8 6.0
HCL Technologies 859 Buy 117,094 13.2 1.7 24,779 11.4 -1.3 19,735 2.8 -2.1
Hexaware Tech. 213 Neutral 9,148 11.6 1.2 1,591 22.2 0.9 1,196 20.4 7.4
Infosys 998 Buy 170,887 7.5 -1.3 45,358 4.8 -4.2 34,912 0.8 -3.2
K PIT Tech. 137 Neutral 8,283 1.9 -0.3 997 -15.5 9.1 619 -15.8 10.2
L&T Infotech 695 Buy 16,279 12.1 1.6 3,007 13.2 -1.2 2,367 -25.6 1.8
Mindtree 526 Neutral 12,995 7.0 0.3 1,633 -23.9 0.8 1,058 -29.9 11.6
MphasiS 534 Neutral 14,904 -1.7 -1.8 2,186 0.9 -11.3 1,952 12.4 -9.9
NIIT Tech. 437 Neutral 7,175 5.7 3.8 1,209 -2.1 7.8 712 -3.9 -1.1
Persistent Systems 647 Neutral 7,326 23.7 4.1 1,196 7.7 8.0 680 -12.2 -7.4
Tata Elxsi 1,419 Buy 3,097 13.0 2.1 773 16.6 3.8 494 23.8 14.7
TCS 2,379 Neutral 294,529 7.6 0.6 80,095 3.4 -1.3 62,523 2.3 -5.1
Tech Mahindra 500 Buy 73,632 9.9 2.7 11,502 1.3 7.5 7,063 -7.0 9.5
Wipro 476 Neutral 138,960 8.1 0.9 27,351 2.3 3.1 21,863 -2.1 5.8
Z ensar Tech 944 Buy 7,954 5.1 2.4 1,119 2.7 2.4 820 14.7 19.4
Technology Sector Aggregate 891,494 8.6 0.6 204,039 4.2 -0.8 157,026 0.3 -1.8
Exhibit 2: Double-digit USD revenue growth (YoY) seen only in HCLT amongst tier-I
Revenue (USD m) Revenue (INR b)
Company 3QFY17E 3QFY16 YoY (%) 2QFY17 QoQ (%) 3QFY17E 3QFY16 YoY (%) 2QFY17 QoQ (%)
TCS 4,363 4,145 5.3 4,374 (0.2) 295 274 7.6 293 0.6
Infosys 2,532 2,407 5.2 2,587 (2.1) 171 159 7.5 173 (1.3)
Wipro 1,914 1,838 4.1 1,916 (0.1) 139 129 8.1 138 0.9
HCLT 1,735 1,566 10.8 1,722 0.7 117 103 13.2 115 1.7
TECHM 1,091 1,015 7.5 1,072 1.7 74 67 9.9 72 2.7
Aggregate 11,635 10,971 6.1 11,672 (0.3) 795 732 8.7 790 0.6
EBITDA Margin (%) PAT (INR b)
TCS 27.2 28.3 (110) 27.7 (50) 63 61 2.3 66 (5.1)
Infosys 26.5 27.2 (70) 27.3 (80) 35 35 0.8 36 (3.2)
Wipro 19.7 20.8 (110) 19.3 40 22 22 (2.1) 21 5.8
HCLT 21.2 21.5 (40) 21.8 (60) 20 19 2.8 20 (2.1)
TECHM 15.6 16.9 (130) 14.9 69 7 8 (4.2) 6 12.8
Aggregate 23.8 24.7 (97) 24.1 (36) 146 145 1.0 149 (1.9)
January 2017 233

Exhibit 3: Margin decline expected to be steep across tier-II, YoY

Revenue (USD m) Revenue (INR b)
Persistent Systems 109 90 21.1 105 3.2 7.3 5.9 23.7 7.0 4.1
Hexaware 136 124 9.2 135 0.2 9.1 8.2 11.6 9.0 1.2
K PIT Tech. 123 123 (0.5) 123 (0.6) 8.3 8.1 1.9 8.3 (0.3)
Mindtree 193 184 4.4 193 (0.3) 13.0 12.1 7.0 13.0 0.3
Mphasis 226 229 (1.4) 224 0.7 14.9 15.2 (1.7) 15.2 (1.8)
Cyient 137 118 15.5 137 0.2 9.2 7.8 18.1 9.1 1.1
NIIT Tech 106 103 3.2 103 2.9 7.2 6.8 5.7 6.9 3.8
Z ensar 118 115 2.6 116 1.6 8.0 7.6 5.1 7.8 2.4
LTI 241 225 7.2 240 0.6 16.3 15.5 12.1 16.0 1.6
Aggregate 1,387 1,312 5.8 1,376 0.8 93.3 87.2 8.2 92.4 1.0
EBITDA margin (%) PAT (INR b)
Persistent Systems 16.3 18.8 (240) 15.7 60 0.7 0.8 (12.2) 0.7 (7.4)
Hexaware 17.4 15.9 150 17.4 - 1.2 1.0 20.4 1.1 7.4
K PIT Tech. 12.0 14.5 (250) 11.0 100 0.2 0.3 (18.0) 0.2 15.5
Mindtree 12.6 17.7 (510) 12.5 10 1.1 1.5 (29.9) 0.9 11.6
Mphasis 14.7 14.3 40 16.2 (160) 2.0 1.7 12.4 2.2 (9.9)
Cyient 13.5 14.1 (60) 14.0 (60) 1.0 0.9 18.8 1.0 6.0
NIIT Tech 16.9 18.2 (130) 16.2 60 0.7 0.7 (3.9) 0.6 19.5
Z ensar 14.1 14.4 (30) 14.1 - 0.8 0.7 14.7 0.7 19.4
LTI 18.5 34.6 20 19.0 (50) 2.4 3.2 (25.6) 2.3 1.8
Aggregate 15.2 16.2 (100) 15.4 (20) 10.0 10.8 (6.9) 9.7 3.1
Exhibit 4: Seasonal weakness dampens revenue growth (QoQ, CC, %)
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17E
6.0
4.4
3.5 3.9
3.1 2.9 2.8 3.2
2.7 3.1
2.1 1.91.7 2.0 1.7 2.1
1.5
1.0 0.91.3 1.3
0.2 0.3 0.4
-1.0
TCS INFO WPRO HCLT TECHM
Exhibit 5: YoY traction seen picking up only at HCLT, led by Volvo IT acquisition (YoY,CC,%)
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17

15.8
12.0
10.3
10.8
14.0
12.4
15.0
12.0
15.8
13.6
11.4
13.1
13.1
9.8
9.9
6.8
7.9
8.9
6.6
8.3
8.4
6.0
7.6
9.5
7.2
7.1
9.2
8.1
TCS INFO WPRO HCLT

January 2017 234

Exhibit 6: TCS and HCLT to outperform peers organically in 3Q (revenue growth, QoQ,
USD, %)
TCS Infosys Wipro HCL Tech Tech Mahindra

9
7
5
1.7
3
0.7
-0.1
1
-1
-0.2
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
Exhibit 7: Incremental revenue to revive at TECHM, aided by acquisitions; cross-currency movements unsupportive again
TCS Infosys Wipro HCL Tech Tech Mahindra Cross currency impact on USD revenues (bp)
200 Incremental revenue (USD m)
150
100
(50) -40
50 (70) (80) (70) (80)
0 (110) (110) (120)
-50 (140)(140)(140) (140)
(160)
-100
NITEC
TCS
MPHL
K PIT
CYL
INFO
MTCL
PSYS
TECHM
WPRO
LTI
HEXW
Z ENT
HCLT
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
Exhibit 8: Margins lower across the board in YoY terms (EBITDA margin, %)
TCS Infosys HCL Tech Wipro Tech Mahindra
30
27.2
26 26.5
22 21.2
19.7
18
15.6
14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
January 2017 235

Exhibit 9: Sequential improvement seen in some midcaps due to company-specific

dynamics (revenue growth, QoQ, USD, %)
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
12.0
9.5
8.1
6.2
6.1
4.6
4.3
4.2
3.7
3.2
3.1
3.1
3.0
2.9
2.3
2.1
2.1
1.8
1.7
1.6
0.7
0.7
0.6
0.6
0.4
0.4
0.2
0.2
0.0
-0.2
-0.8
-0.3
-0.3
-0.6
-1.0
-1.2
-1.4
-1.4
-1.6
-3.5
-1.9
-3.4
-2.5
-3.7
-3.0
Persistent Hexaware K PIT Tech. Mindtree Mphasis Cyient NIIT Tech Z ensar LTI
Systems
Exhibit 10: 3QFY17 currency highlights (INR)

Rates (INR) Change (QoQ)
USD EUR GBP AUD USD EUR GBP AUD
Average 67.45 72.7 83.7 50.5 0.7% -2.7% -4.9% -0.5%
Closing 67.92 71.7 83.5 49.1 2.0% -3.7% -3.4% -3.3%
Exhibit 11: 3QFY17 currency highlights (in USD)

Rates (USD) Change (QoQ)
EUR GBP AUD EUR GBP AUD
Average 1.08 1.24 0.87 -3.4% -5.4% -1.4%
Closing 1.05 1.23 0.72 -6.4% -4.9% -5.9%
Exhibit 12: Cross currencies: Assumed rates v/s actual

Guided at EUR GBP AUD INR/USD
Infosys 1.10 1.51 0.73 nm
Wipro 1.11 1.26 0.76 67.01
Actual (Average) 1.08 1.24 0.87 67.45
Exhibit 13: Cross currencies: Change compared to guided

Change (%) EUR GBP AUD INR/USD
Infosys -2.0% -17.8% 18.7% nm
Wipro -2.9% -1.5% 14.0% 0.7%
January 2017 236

Exhibit 14: Relative performance— 3m (%) Exhibit 15: Relative performance— 1Yr (%)
Sensex Index MOSL Technology Index Sensex Index MOSL Technology Index
101 115
99 105
97 95
95 85
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Nov-16
Dec-16
Sep-16
Oct-16

Companies CMP RECO EPS (INR) PE (x) ROE (%) EPS Growth (%)
Cyient 494 Buy 34.6 44.2 47.5 14.3 11.2 10.4 16.4 18.3 17.3 12.8 27.7 7.5
HCL Technologies 859 Buy 56.7 63.2 67.2 15.2 13.6 12.8 26.6 25.5 23.2 5.9 11.5 6.3
Hexaware Tech. 213 Neutral 13.6 15.5 15.9 15.6 13.8 13.4 27.7 27.5 24.0 5.4 13.7 2.8
Infosys 998 Buy 61.7 68.7 75.0 16.2 14.5 13.3 22.8 22.8 22.5 4.5 11.4 9.2
K PIT Tech. 137 Neutral 12.6 15.6 16.3 10.9 8.8 8.4 16.9 17.6 15.5 -10.3 23.7 4.0
L&T Infotech 695 Buy 54.9 58.6 62.1 12.7 11.9 11.2 42.3 36.8 32.5 4.7 6.8 5.9
Mindtree 526 Neutral 26.6 36.2 38.1 19.8 14.5 13.8 18.0 22.0 20.6 -25.8 36.1 5.3
MphasiS 534 Neutral 42.2 54.0 57.2 12.7 9.9 9.3 13.7 16.3 15.9 22.4 28.1 5.9
NIIT Tech. 437 Neutral 38.6 50.2 54.3 11.3 8.7 8.1 14.2 16.6 16.0 -15.6 30.1 8.1
Persistent Systems 647 Neutral 36.2 45.0 54.8 17.9 14.4 11.8 16.7 19.2 22.5 -2.6 24.2 21.8
TCS 2,379 Neutral 131.0 144.9 155.3 18.2 16.4 15.3 33.0 31.3 28.7 6.4 10.6 7.2
Tech Mahindra 500 Buy 30.9 36.0 39.5 16.2 13.9 12.6 19.1 19.3 18.5 -11.8 16.4 9.8
Z ensar Tech 944 Buy 69.5 92.5 99.2 13.6 10.2 9.5 20.3 22.8 20.7 1.9 33.1 7.2
Wipro 476 Neutral 34.3 39.5 44.1 13.9 12.1 10.8 17.7 18.5 18.5 -5.1 15.2 11.8
Source: MOSL
January 2017 237

Cyient
Bloomberg CYL IN CMP: INR494 TP: INR600 (+21%) Buy
 We expect CYL’s USD revenue to grow 0.2% QoQ in 3QFY17 (+1.6%
QoQ in CC).
 In the core services business, CYL’s revenue is expected to decline
1,6,12 Rel Perf. (%) -2 / 4 / -4
by 1.8% QoQ, led by cross-currency headwinds. We expect a CC
decline of 0.4% in core services revenue because of seasonal
Y/E Mar 2016 2017E 2018E 2019E weakness on the high base of 2Q formed by the 7.4% QoQ growth.
Sales 31.0 36.3 42.6 47.9  The movement of Rangsons towards achieving its 50% annual
EBITDA 4.2 5.0 6.2 6.8 growth guidance is expected to be bulky in 2H, in line with which
PAT 3.3 3.9 5.0 5.3 we expect USD16m revenue in 3Q (+16% QoQ).
EPS (INR) 30.7 34.6 44.2 47.5  Margins are expected to decline by 50bp QoQ to 13.5% because of
EPS Gr. (%) -1.9 12.8 27.7 7.5
cross-currency headwinds and higher incremental revenue from
BV/Sh. (INR) 186.6 210.9 241.8 275.1
lower-margin Rangsons.
RoE (%) 16.5 16.4 18.3 17.3
RoCE (%) 15.1 15.4 17.2 16.2  PAT estimate for the quarter is INR1b, up 6% QoQ. Higher other
Payout (%) 22.8 30.0 30.0 30.0 income is a function of translation gains in 3Q, compared to a loss
Valuations in the previous quarter.
P/E (x) 15.6 13.9 10.9 10.1  The stock trades at 13.9x FY17E and 10.9x FY18E EPS. Maintain Buy.
P/BV (x) 2.6 2.3 2.0 1.7
EV/EBITDA (x) 11.1 9.1 6.9 5.9
 Update on problem verticals like Semiconductor and Energy.
Div yld (%) 1.5 2.2 2.8 3.0
 Outlook for Rangsons for FY17/18 and progress on synergy
through DLM.
 Margin trajectory going ahead.

Revenue (USD m) 114 118 118 121 125 137 137 141 472 539
QoQ (%) -2.6 3.6 0.0 2.1 3.1 9.5 0.2 3.3 5.6 14.3
Revenue (INR m) 7,263 7,717 7,818 8,158 8,349 9,136 9,234 9,607 30,955 36,326
YoY (%) 16.8 14.8 9.8 11.7 15.0 18.4 18.1 17.8 13.1 17.4
GPM (%) 35.4 36.6 34.4 34.2 35.0 34.4 33.2 33.9 35.1 34.1
SGA (%) 22.7 21.6 20.3 21.1 22.0 20.4 19.7 19.7 21.4 20.4
EBITDA Margin (%) 12.6 15.1 14.1 13.0 13.1 14.0 13.5 14.2 13.7 13.7
EBIT Margin (%) 10.1 12.6 11.3 9.4 10.4 11.5 11.3 12.1 10.8 11.3
Other income 298 299 246 222 116 184 287 310 1,065 897
ETR (%) 28.7 23.5 20.8 20.4 25.5 22.6 23.5 23.5 23.4 23.7
PAT before EOI 748 985 869 844 740 973 1,031 1,141 3,446 3,885
QoQ (%) -20.3 31.7 -11.8 -2.8 -12.3 31.5 6.0 10.6
YoY (%) 9.2 9.2 -13.9 -10.1 -1.1 -1.2 18.8 35.1 -1.9 12.8
EPS (INR) 6.7 8.8 7.7 7.5 6.6 8.7 9.2 10.2 30.7 34.6
Headcount 11,507 11,311 11,481 11,569 12,297 12,797 12,747 12,847 11,569 12,847
Util excl. trainees (%) 75.4 76.1 76.7 73.3 75.5 77.2 74.8 76.3
Attrition (%) 18.8 21.6 20.6 18.4 19.9 22.7
Fixed Price (%) 44.7 44.6 43.3 41.0 42.9 42.4 40.3 41.1
E: MOSL Estimates
January 2017 238

HCL Technologies
Bloomberg HCLT IN CMP: INR
INR859 TP: INR960 (+12%) Buy
 We expect HCLT’s USD revenue to grow 0.7% QoQ in 3QFY17 and
M. Cap. (INR b)/(USD b) 1214 / 18
2.1% QoQ on a constant currency basis. Impact from cross currency
movement should shave off ~140bp from revenue growth.
1,6,12 Rel Perf. (%) 7 / 17 / -2
 We expect momentum to continue in the IMS business. Deal
signings over the last many quarters, and growth so far provide
visibility and confidence in execution of its 12-14% revenue growth
Y/E June 2016 2017E 2018E 2019E
Sales 311.4 466.3 539.3 602.7
guidance.
EBITDA 68.2 100.5 114.5 121.8
 EBIT margin is likely to decline by 60bp to 19.5% because of
PAT 56.7 80.5 90.4 96.3 continued investments in the business. EBIT margin of 19.5% over
EPS (INR) 40.1 56.7 63.2 67.2 the remainder of the year is likely to lead to 19.9% EBIT margin for
EPS Gr. (%) -20.3 41.2 11.5 6.3 FY17 – near the mid-point of the 19.5-20.5% guidance range.
BV/Sh. (INR) 200.2 232.5 273.7 319.0  PAT estimate for the quarter is INR19.7b, -2.1% QoQ, on the back of
RoE (%) 21.5 26.6 25.5 23.2 lower margins.
RoCE (%) 19.9 24.2 23.5 21.6  The stock trades at 15.2x FY17E and 13.6x FY18E EPS. Maintain Buy.
Payout (%) 42.4 35.3 30.1 28.3
Valuation
P/BV (x) 4.3 3.7 3.1 2.7  Commentary on performance expectations for FY17.
EV/EBITDA 12.0 10.7 9.0 8.1  Deal signings.
(x)
Div yld (%) 2.0 2.3 2.2 2.2  Organic growth in IMS and traction in Engineering.
Quarterly Performance (US GAAP) (INR m)

Y/E March FY15 FY16 FY17 FY16 FY17E
Revenue (USD m) 1,538 1,545 1,566 1,587 1,691 1,722 1,735 1,774 4,698 6,922
QoQ (%) 3.2 0.5 1.4 1.3 6.5 1.9 0.7 2.3 7.1 11.0
Revenue (INR m) 97,770 100,970 103,410 106,980 113,360 115,190 117,094 120,649 311,360 466,293
YoY (%) 16.1 15.6 11.4 15.4 15.9 14.1 13.2 12.8 14.6 14.0
GPM (%) 34.2 34.4 34.6 34.9 34.4 33.6 33.2 33.0 34.6 33.5
SGA (%) 12.8 12.5 13.0 12.7 12.1 11.8 12.0 12.0 12.7 12.0
EBITDA Margin (%) 21.5 21.9 21.5 22.2 22.2 21.8 21.2 21.0 21.9 21.5
EBIT Margin (%) 20.2 20.6 20.0 20.8 20.6 20.1 19.5 19.4 20.5 19.9
Other income 2,120 2,410 3,550 2,000 2,530 2,350 2,353 2,340 7,960 9,573
ETR (%) 18.6 21.3 20.9 20.5 21.0 21.1 21.5 21.5 20.9 21.3
PAT before EOI 17,820 18,230 19,190 19,250 20,430 20,150 19,735 20,182 56,670 80,497
QoQ (%) 5.8 2.3 5.3 0.3 6.1 -1.4 -2.1 2.3
YoY (%) -2.9 6.1 -0.2 14.3 14.6 10.5 2.8 4.8 4.0 8.1
EPS 12.6 12.9 13.6 13.6 14.5 14.3 13.8 14.1 40.1 56.7
Headcount 106,107 105,571 103,696 104,896 107,968 109,795 111,245 114,245 104,896 114,245
Util excl. trainees (%) 83.5 83.6 84.7 85.6 85.8 85.3 85.5 85.0 81.8 83.0
Attrition (%) 16.5 16.3 16.7 17.3 17.8 18.6
Fixed Price (%) 56.1 56.2 57.0 56.8 60.9 61.3
E: MOSL Estimates
January 2017 239

Hexaware Technologies
Bloomberg HEXW IN CMP: INR213 TP: INR230 (+8%) Neutral
 We expect USD revenue to grow 0.2% QoQ to USD135.5m (1% QoQ
CC).
 The expectation is on the back of volume growth in the underlying
1,6,12 Rel Perf. (%) 4 / -4 / -14
business, partly offset by seasonality and furloughs, and further by
cross-currency headwinds (-80bp).
 EBITDA margin expanded 180bp QoQ in 3QCY16 despite part-
Y/E Dec 2015 2016E 2017E 2018E
Sales 31.2 35.1 40.4 45.4
impact of wage hikes. The management has been guiding for better
EBITDA 5.4 5.7 6.8 7.1 profitability compared to revenue growth in 2HCY16.
PAT 3.9 4.2 4.7 4.8  However, 4Q margins too are expected to be impacted by part
EPS (INR) 12.9 13.6 15.5 15.9 wage hikes. We expect EBITDA margin to remain flat QoQ at 17.4%.
EPS Gr. (%) 22.1 5.4 13.7 2.8  This would lead to EBITDA margin of 16% for CY16, lower than the
BV/Sh. (INR) 47.4 51.4 61.5 71.1 management’s desired level of 17%.
RoE (%) 28.9 27.7 27.5 24.0  Our PAT estimate for the quarter is INR1,155m, up 3.7% from the
RoCE (%) 27.7 25.1 26.4 23.5 previous quarter, on the back of higher other income led by
Payout (%) 64.5 38.8 24.8 30.2 translation gains.
Valuation  The stock trades at 14.6x CY16E and 12.8x CY17E earnings. Neutral.
P/E (x) 15.4 14.6 12.8 12.5
EV/EBITDA 10.1 9.9 8.1 7.5  Large deal pipeline and traction post the increased S&M spend.
(x)
Div yld (%) 4.3 2.8 2.0 2.5  Commentary on sustenance of revenue growth.
 Margin outlook for the next year.
Quarterly Performance (Indian GAAP) (INR m)

Y/E Dec CY15 CY16 CY15 CY16E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 114.9 121.3 125.1 124.1 121.7 129.7 135.2 135.5 485 522
QoQ (%) 0.3 5.6 3.1 -0.8 -1.9 6.6 4.2 0.2 14.9 7.5
Revenue (INR m) 7,134 7,722 8,184 8,195 8,202 8,697 9,041 9,148 31,235 35,088
YoY (%) 21.1 26.5 22.0 15.1 15.0 12.6 10.5 11.6 21.0 12.3
GPM (%) 35.7 35.0 35.3 34.7 33.6 34.6 35.4 34.9 35.1 34.6
SGA (%) 17.9 17.8 17.4 18.8 19.0 19.0 18.0 17.5 18.0 18.4
EBITDA Margin (%) 17.8 17.1 17.8 15.9 14.6 15.6 17.4 17.4 17.1 16.3
EBIT Margin (%) 16.2 15.6 16.4 14.3 12.9 14.0 15.9 15.8 15.6 14.7
Other income -96 84 97 88 55 132 67 167 173 421
ETR (%) 21.2 23.5 22.4 21.0 24.2 25.8 25.8 25.8 22.1 25.5
PAT 834 989 1,115 994 842 999 1,114 1,196 3,932 4,151
QoQ (%) -11.2 18.6 12.7 -10.9 -15.3 18.6 11.5 7.4
YoY (%) 18.6 29.3 29.7 5.9 1.0 1.0 -0.1 20.4 20.4 5.6
EPS (INR) 2.8 3.3 3.7 3.3 2.8 3.3 3.7 3.9 12.9 13.6
Headcount 10,100 11,009 11,341 11,375 11,599 11,875 11,859 12,008 11,375 12,008
Utilization (%) 73.6 72.1 70.4 69.7 69.6 70.0 74.1 74.0 72.3 72.5
Attrition (%) 16.6 17.1 17.4 16.9 16.0 16.6 16.5
Offshore rev. (%) 41.1 38.8 39.2 37.7 36.9 36.1 34.4 35.1 39.2 35.6
E: MOSL Estimates
January 2017 240

Infosys
Bloomberg INFO IN CMP: INR998 TP: INR1,250 (+25%) Buy
 INFO revised its revenue guidance for FY17 downward after 2Q to
M. Cap. (INR b)/(USD b) 2282 / 33
8-9% CC from 10.5-12% earlier. Termination of the RBS contract and
worsening of the macro has led to a further dampened outlook.
1,6,12 Rel Perf. (%) 3 / -13 / -12
 In CC terms, our revenue growth estimate is -1% QoQ on the back
of seasonal weakness and the RBS ramp-down. Cross-currency
headwinds of 110bp are likely to lead to USD revenue decline of
Y/E Mar 2016E 2017E 2018E 2019E
Sales 624.4 687.5 781.1 865.6
2.1% QoQ.
EBITDA 170.8 184.6 210.3 230.3  A 1% CC decline in revenue in 3Q would result in an ask rate of 0-4%
PAT 134.9 141.0 157.1 171.5 for 4Q in order to achieve the revised guidance.
EPS (INR) 59.0 61.7 68.7 75.0  We expect EBITDA margin to decline 80bp QoQ to 26.5%, as
EPS Gr. (%) 9.4 4.5 11.4 9.2 revenue growth momentum gets affected.
BV/Sh. (INR) 270.3 300.3 332.8 369.1  Our PAT estimate is INR34.9b, -3.2% QoQ, led by lower revenue and
RoE (%) 24.7 22.8 22.8 22.5 profitability.
RoCE (%) 23.2 21.6 21.7 21.4  The stock trades at 16.2x FY17E and 14.5x FY18E earnings. Buy.
Payout (%) 41.9 50.3 43.7 45.3
Valuations
P/E (x) 16.9 16.2 14.5 13.3
 TCV of deal wins during the quarter.
P/BV (x) 3.7 3.3 3.0 2.7
 Commentary around contribution of newly-launched services.
EV/EBITDA (x) 11.3 10.1 8.7 7.7
 Commentary around macro, verticals, margins and pricing.
Div Yield (%) 2.5 3.1 3.0 3.4
Quarterly Performance (IFRS) (INR m)

Revenue (USD m) 2,256 2,392 2,407 2,446 2,501 2,587 2,532 2,584 9,501 10,204
QoQ (%) 4.5 6.0 0.6 1.6 2.2 3.4 -2.1 2.1 9.1 7.4
Revenue (INR m) 143,540 156,350 159,020 165,500 167,820 173,100 170,887 175,710 624,410 687,517
YoY (%) 12.4 17.2 15.3 23.4 16.9 10.7 7.5 6.2 17.1 10.1
GPM (%) 38.6 40.1 39.5 40.5 38.7 39.1 38.7 39.0 39.7 38.9
SGA (%) 12.4 12.3 12.3 12.5 12.2 11.8 12.2 12.0 12.4 12.0
EBITDA Margin (%) 26.2 27.8 27.2 28.0 26.5 27.3 26.5 27.0 27.4 26.8
EBIT Margin (%) 24.0 25.5 24.9 25.5 24.1 24.9 24.1 24.6 25.0 24.4
Other income 7,580 7,930 8,020 7,720 7,530 7,600 8,057 6,845 31,250 30,032
ETR (%) 27.9 29.0 27.2 27.9 28.4 28.8 29.0 29.0 28.0 28.8
PAT 30,300 33,980 34,650 35,970 34,360 36,060 34,912 35,577 134,930 140,959
QoQ (%) -2.2 12.1 2.0 3.8 -4.5 4.9 -3.2 1.9
YoY (%) 5.0 9.8 6.6 16.1 13.4 6.1 0.8 -1.1 9.4 4.5
EPS (INR) 13.3 14.9 15.2 15.7 15.0 15.8 15.3 15.6 59.0 61.7
Headcount 179,523 187,976 193,383 194,044 197,050 199,829 203,687 209,283 194,044 209,283
Attrition (%) 19.2 19.9 18.1 17.3 21.0 20.0
Offshore rev. (%) (IT Serv) 43.9 43.9 43.5 43.5 43.0 43.0
Fixed Price (%) 42.4 44.0 44.6 45.1 45.7 47.1
E: MOSL Estimates
January 2017 241

KPIT Technologies
Bloomberg K PIT IN CMP: INR137 TP: INR170 (+24%) Neutral
 Revenue performance has been lumpy for K PIT, with guidance of a
M.Cap. (INR b) /(USD b) 34/1
better 2H compared to 1H.
1, 6, 12 Rel. Per (%)
 We expect the impact of seasonal weakness, and pressure in ERP
2/-7/-23
implementation to continue weighing on overall performance,
further accentuated by cross-currency movements.
 We expect revenue of US123m, down 0.6% QoQ in USD terms and
Y/E Mar 2016 2017E 2018E 2019E
up 0.5% QoQ CC.
Sales 32.2 33.2 36.9 40.4
EBITDA 4.4 4.0 5.0 5.3
 Cost optimization methods, operational efficiency improvement
PAT 3.0 2.5 3.1 3.2
and increased fresher hiring are likely to lead to margin expansion
EPS (INR) 14.1 12.6 15.6 16.3 (+100bp QoQ) post the cumulative 515bp decline in EBITDA margin
EPS Gr. (%) 19.0 -10.3 23.7 4.0 over the last two quarters.
BV/Sh. (INR) 69.0 80.8 96.4 112.7  Our PAT estimate is INR619m, up 10.2% QoQ because of the
RoE (%) 21.0 16.9 17.6 15.5 compounding of higher margins and other income.
RoCE (%) 24.3 18.9 20.9 19.2  K PIT trades at 10.8x FY17E and 8.8x FY18E earnings. Maintain
Payout (%) 10.6 15.8 12.8 12.3 Neutral.
P/E (x) 9.7 10.8 8.8 8.4  Growth in IES, Engineering services and top client.
P/BV (x) 2.0 1.7 1.4 1.2
 Margin performance and guidance.
EV/EBITDA (x) 5.4 5.1 3.6 2.9
 Commentary on deal wins across segments.
Div yld (%) 1.1 1.5 1.5 1.5
 Plan to recoup revenue growth and profitability.
Quarterly Performance (Indian GAAP) (INR m)

Revenue (USD m) 118 125 123 124 120 123 123 126 490 492
QoQ (%) -3.3 5.3 -1.0 0.7 -3.5 3.0 -0.6 2.7 0.3 0.3
Revenue (INR m) 7,583 8,123 8,130 8,407 8,032 8,310 8,283 8,566 32,243 33,191
YoY (%) 9.9 7.2 4.3 10.2 5.9 2.3 1.9 1.9 7.8 2.9
GPM (%) 28.2 32.1 32.9 35.3 28.9 29.5 30.0 31.3 32.2 30.0
SGA (%) 18.7 18.1 18.3 19.1 18.3 18.5 18.0 16.7 18.6 17.9
EBITDA Margin (%) 9.5 14.0 14.6 16.2 10.7 11.0 12.0 14.6 13.5 12.1
EBIT Margin (%) 7.3 11.9 12.3 13.6 8.3 8.6 9.5 12.1 11.4 9.7
Other income 106 86 36 20 116 49 86 75 248 326
Interest 47 44 35 25 56 14 39 37 152 146
ETR (%) 27.9 25.4 26.5 13.4 24.3 25.1 26.0 26.0 22.8 25.4
PAT 444 751 735 885 551 562 619 796 2,815 2,527
QoQ (%) -11.8 69.1 -2.1 20.4 -37.8 2.0 10.2 28.6
YoY (%) -12.6 6.3 12.5 75.7 24.0 -25.2 -15.8 -10.1 18.7 -10.2
EPS (INR) 2.2 3.8 3.7 4.4 2.8 2.8 3.1 4.0 14.1 12.6
Headcount 10,839 10,659 10,559 10,910 11,288 11,666 11,565 11,724 10,910 11,724
Offshore rev. (%) 44.7 44.9 41.2 42.1 41.5 43.3 43.8 43.7 43.2 43.1
Fixed Price (%) 26.2 27.1 29.1 26.4 28.5 28.0
E: MOSL Estimates
January 2017 242

L&T Infotech
Bloomberg LTI IN CMP: INR695 TP: INR800 (+15%) Buy
 LTI has been seeing strong traction across its portfolio, which we
M. Cap. (INR b)/(USD b) 122 / 2
expect to continue into 3Q.
 We expect the confluence of this traction, with seasonality and
1,6,12 Rel Perf. (%) - / -/ -
cross-currency movements to result in 0.6% QoQ revenue growth
to USD241m. This would translate into constant currency revenue
growth of 1.4% QoQ.
Y/E March FY16 FY17E FY18E FY19E
Net Sales 58.5 64.6 72.8 81.4
 LTI has been making investments to augment its S&M capabilities,
EBITDA 10.4 12.4 13.4 14.2 which is likely to keep margins under check.
PAT 9.2 9.6 10.3 10.9  We expect 50bp decline in EBITDA margin to 18.5% because of
EPS (INR) 52.4 54.9 58.6 62.1 increased costs.
Gr. (%) 21.5 4.7 6.8 5.9  Our PAT estimate for the quarter is INR2.4b, which implies 1.8%
BV / Sh (INR) 115.6 144.1 174.6 206.9 QoQ growth.
ROE (%) 45.3 42.3 36.8 32.5  The stock trades at 12.7x FY17E and 11.3x FY18E earnings. Buy.
ROCE (%) 39.9 45.2 39.5 35.7
Payout (%) 59.6 40.0 40.0 40.0
P /E (x) 13.3 12.7 11.9 11.2  Health and outlook of top accounts and E&U vertical.
P / BV (x) 6.0 4.8 4.0 3.4  Margin trajectory, going forward, given the increased
EV/EBITDA 11.6 9.5 8.6 7.9 investments.
Div. Yield 4.5 3.2 3.4 3.6  Growth in Digital.
(%)

Revenue (USD m) 209 224 225 230 231 240 241 246 887 958
QoQ (%) 0.0 7.3 0.4 2.1 0.6 3.7 0.6 2.2 9.5 8.0
Revenue (INR m) 13,332 14,682 15,451 15,939 15,550 16,020 16,279 16,754 58,471 64,603
YoY (%) 14.5 18.7 16.8 20.5 16.6 9.1 5.4 5.1 17.5 10.5
GPM (%) 34.0 34.5 nm 35.0 35.3 35.4 35.2 35.9 33.5 35.4
SGA (%) 18.5 17.9 nm 14.9 15.7 16.4 16.7 16.3 15.8 16.3
EBITDA Margin (%) 2,068 2,431 5,349 3,204 3,050 3,044 3,007 3,282 10,359 12,383
EBIT Margin (%) 15.5 16.6 34.6 20.1 19.6 19.0 18.5 19.6 17.7 19.2
Other income 12.2 13.6 nm 17.4 16.9 16.1 15.5 16.7 14.7 16.3
ETR (%) 512 532 nm 500 372 365 477 437 2,802 1,651
PAT 18.2 24.4 nm 19.2 21.2 21.0 21.0 21.0 19.7 21.0
QoQ (%) 1,746 1,917 2,363 2,644 2,359 2,326 2,367 2,552 9,171 9,604
YoY (%) -21.2 9.8 23.3 11.9 -10.8 -1.4 1.8 7.8
EPS (INR) 7.5 7.2 18.4 19.4 35.1 21.3 0.2 -3.5 21.5 4.7
Headcount 10.0 11.0 13.5 15.1 13.5 13.3 13.5 14.6 52.4 54.9
Util incl. trainees (%) 20,331 21,171 nm 20,072 19,292 21,074 21,344 21,614 20,072 21,614
Attrition (%) 73.8 72.8 nm 75.9 77.4 78.7 75.0 76.0 73.8 76.7
Offshore rev. (%) 20.1 19.7 nm 18.4 19.5 18.5
E: MOSL Estimates
January 2017 243

MindTree
Bloomberg MTCL IN CMP: INR526 TP: INR520 (-1%) Neutral
 MTCL’s performance continues to be weighed upon by [ 1] cross-
currency movements, [ 2] project cancellations, [ 3] slower ramp-up
at large clients, and [ 4] continued weakness in Bluefin.
1,6,12 Rel Perf. (%) 16 / -19 / -31
 We expect these factors to result in 0.3% decline in revenue to
USD193m. We are modeling 0.4% QoQ growth in CC terms.
Y/E Mar 2016 2017E 2018E 2019E
 We don’t see margins reviving till revenue growth bounces back.
Sales 46.9 52.6 60.3 68.1
Ongoing optimization measures and cessation of revenue decline
EBITDA 8.3 7.1 9.3 9.7 are likely to result in flat margins QoQ.
PAT 6.0 4.5 6.1 6.4  We expect the trend of robust deal wins to continue. The company
EPS (INR) 35.9 26.6 36.2 38.1 won deals with TCV of USD888m LTM (average of USD222m per
EPS Gr. (%) 16.5 -25.8 36.1 5.3 quarter), of which 36% is Digital.
BV/Sh. (INR) 142.4 153.5 175.3 195.3  Our PAT estimate for the quarter is INR1.1b, which implies 11.6%
RoE (%) 27.4 18.0 22.0 20.6 QoQ growth and 30% YoY decline.
RoCE (%) 30.6 19.6 25.0 22.9  The stock trades at 19.8x FY17E and 14.5x FY18E earnings. Neutral.
Payout (%) 29.3 47.0 33.1 39.3
P/E (x) 14.7 19.8 14.5 13.8  Update on top clients, pricing pressure and outlook, going
P/BV (x) 3.7 3.4 3.0 2.7 forward.
EV/EBITDA (x) 10.1 11.8 8.9 8.3  Margin trajectory, going forward, given the increased investments
Div Yld (%) 2.0 2.4 2.3 2.9 and revenue growth issues.
 Deal wins during the quarter and growth in Digital.

Revenue (USD m) 154 180 184 195 199 193 193 197 715 781
QoQ (%) 4.4 16.9 2.3 5.7 2.1 -3.0 -0.3 2.2 22.5 9.2
Revenue (INR m) 9,775 11,693 12,145 13,203 13,276 12,954 12,995 13,372 46,896 52,597
YoY (%) 15.9 31.6 33.2 43.8 35.8 10.8 7.0 1.3 31.7 12.2
GPM (%) 41.1 41.3 40.3 38.0 37.0 34.2 34.3 35.4 40.2 35.2
SGA (%) 24.0 22.8 22.6 21.3 22.3 21.7 21.7 21.2 22.5 21.7
EBITDA Margin (%) 17.1 18.5 17.7 16.7 14.7 12.5 12.6 14.2 17.7 13.5
EBIT Margin (%) 13.6 15.8 14.8 13.1 10.8 8.6 8.6 10.2 14.8 9.6
Other income 321 195 147 42 198 170 275 256 810 900
ETR (%) 22.4 22.5 22.6 25.0 24.2 26.0 24.0 24.0 22.4 24.5
PAT 1,283 1,582 1,509 1,330 1,235 948 1,058 1,233 6,033 4,474
QoQ (%) -0.3 23.3 -4.6 -11.9 -7.1 -23.2 11.6 16.5
YoY (%) -0.9 15.1 7.2 3.3 -3.7 -40.1 -29.9 -7.3 12.5 -25.8
EPS (INR) 7.6 9.4 9.0 7.9 7.4 5.6 6.3 7.3 35.9 26.6
Headcount 14,427 15,582 16,243 16,623 16,110 16,219 16,119 16,419 16,623 16,419
Util incl. trainees (%) 70.3 71.4 68.5 69.4 71.4 71.4 71.5 72.0 69.9 71.6
Attrition (%) 18.4 17.1 16.0 15.7 16.5 16.4
Offshore rev. (%) 51.9 47.6 45.5 42.4 40.5 40.8 40.6 40.8 46.6 40.7
Fixed Price (%) 48.9 49.7 50.0 47.7 48.7 50.6
E: MOSL Estimates
January 2017 244

Mphasis
Bloomberg MPHL IN CMP: INR534 TP: INR560 (+5%) Neutral
 In 2QFY17, HP channel revenue grew for the first time in 20
M. Cap. (INR b)/(USD b) 112 / 2
quarters. This is expected to remain stable with the renewed MSA
coming into effect after the completion of the transaction between
1,6,12 Rel Perf. (%) 1 / -3 / 4
HPE and Blackstone.
 We expect revenue growth of 0.7% QoQ (1.4% QoQ CC), driven by
Y/E Mar 2016 2017E 2018E 2019E
stability in HP channel and Digital Risk and continued traction in the
Sales 60.9 60.6 66.8 73.4 Direct International business.
EBITDA 9.0 9.5 10.5 11.3  Margins are likely to be lower in 3Q on account of wage hikes. We
PAT 7.2 8.9 11.3 12.0 estimate a 160bp decline in EBIT margin to 13%.
EPS (INR) 34.5 42.2 54.0 57.2  MPHL had raised its EBIT margin guidance by 100bp at the end of
EPS Gr. (%)* 6.8 22.4 28.1 5.9
BV/Sh. (INR) 299.4 317.2 344.7 375.5
4QFY16 to 14-16% for FY17, and expressed confidence in achieving
RoE (%) 12.3 13.7 16.3 15.9 the higher end of the range.
RoCE (%) 11.2 12.8 15.8 15.6  Our PAT estimate is INR1.9b (-9.9% QoQ).
Payout (%) 0.0 87.7 40.7 38.4  The stock trades at 12.7x FY17E and 9.9x FY18E EPS. Neutral.
Valuations
P/E (x) 15.5 12.7 9.9 9.3
EV/EBITDA (x) 9.8 2.1 1.3 0.6  Outlook for Digital Risk given an interest rate cycle reversal.
Div yld (%) 0.0 6.9 4.1 4.1
 Deal TCV during the quarter in Direct Channel (organic business),
*Annualized values for 5m FY14
and focus areas.
 Performance in Direct International business, and outlook for the
year.

Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17
Revenue (USD m) 234 237 229 225 224 224 226 230 926 905
QoQ (%) 1.7 1.2 -3.4 -1.7 -0.3 -0.2 0.7 2.1 -2.2 -2.3
Revenue (INR m) 14,945 15,575 15,167 15,160 15,167 15,176 14,904 15,343 60,879 60,590
YoY (%) 0.3 6.3 7.5 6.1 1.5 -2.6 -1.7 1.2 5.1 -0.5
GPM (%) 26.2 26.9 25.6 27.9 28.1 28.1 26.6 27.5 26.6 27.6
SGA (%) 11.9 11.9 11.3 12.2 12.0 11.8 11.9 11.8 11.8 11.9
EBITDA Margin (%) 14.1 15.1 14.3 15.7 16.1 16.2 14.7 15.7 14.7 15.7
EBIT Margin (%) 12.7 13.9 13.2 14.5 15.2 15.3 13.7 14.6 13.5 14.7
Other income 440 492 456 490 572 711 670 1,492 1,954 3,445
ETR (%) 29.2 26.4 27.7 31.1 27.7 27.7 27.7 27.7 27.1 27.7
PAT 1,658 1,900 1,736 1,920 2,043 2,166 1,952 2,691 7,242 8,852
QoQ (%) -6.7 14.6 -8.6 10.6 6.4 6.0 -9.9 37.9
YoY (%) -5.1 18.6 5.1 8.0 23.2 14.0 -25.1 -6.6 6.9 22.2
EPS (INR) 8.3 9.0 8.3 9.2 9.7 10.3 9.3 12.8 34.5 42.2
Headcount 34,159 24,169 23,563 22,324 22,374 22,284 21,202 21,647 22,324 21,647
Net Additions 100 -9990 -606 -1239 50 -90 -1082 445 -11735 -677
HP Channel rev. (%) 28.8 26.5 24.2 24.3 23.4 23.9
Fixed Price (%) 12.3 14.0 19.2 21.1 19.8 19.1
E: MOSL Estimates
January 2017 245

NIIT Technologies
Bloomberg NITEC IN CMP: INR 437 TP: INR450 (+3%) Neutral
 We expect revenue growth for NITEC to remain subdued in 3Q
(0.5% QoQ CC).
 Although deal wins have been strong for NITEC in recent quarters,
1,6,12 Rel Perf. (%) 3 / -14 / -29
project completions and delays in the commencement of new deals
have been keeping revenue growth under check.
Y/E March FY16 FY17E FY18E FY19E  This would be further aggravated by cross-currency movement,
Sales 26.8 28.1 30.9 33.3 which is likely to result in 0.7% decline in revenue: 120bp negative
EBITDA 4.7 4.6 5.2 5.5 impact.
PAT 2.8 2.7 3.1 3.3  Deal wins in international geographies are expected to continue
EPS (INR) 45.7 38.6 50.2 54.3 showing strength.
EPS Gr. (%) 143.7 -15.6 30.1 8.1
 We expect EBITDA margin to expand by 70bp QoQ to 16.9%, aided
BV/Sh (INR) 259.8 283.1 320.2 360.0
by higher international revenue.
RoE (%) 19.0 14.2 16.6 16.0
RoCE (%) 18.6 15.7 15.6 15.0  Our PAT estimate is INR712m, down 1.1% QoQ, driven by the
Payout (%) 21.9 28.5 21.9 22.1 decline in revenue.
Valuation  The stock trades at 11.3x FY17E and 8.7x FY18E earnings. Neutral.
P/E (x) 9.6 11.3 8.7 8.1
EV/EBITDA (x) 4.9 4.9 4.0 3.4  Traction in the international business.
Div Yield (%) 2.3 2.5 2.5 2.7  Demand environment and update on ramp-up delays.
 Deal wins.

1Q 2Q 3Q 3Q 1Q 2Q 3Q 4Q
Revenue (USD m) Ex. forex 98 104 103 102 99 103 103 105 406 410
QoQ (%) 5.9 6.2 -0.9 -1.2 -2.5 4.2 -0.7 2.5 8.6 1.4
Revenue (INR m) 6,411 6,779 6,787 6,847 6,692 6,913 7,175 7,331 26,824 28,506
YoY (%) 11.0 15.2 14.0 12.0 4.4 2.0 5.7 7.1 338.9 344.6
GPM (%) 36.4 37.2 37.3 37.1 35.3 35.3 36.9 36.7 37.0 36.6
SGA (%) 20.1 19.6 19.1 18.7 20.0 19.0 20.0 19.3 19.5 19.4
EBITDA Margin (%) 16.3 17.6 18.2 18.4 15.3 16.2 16.9 17.4 17.6 17.3
EBIT Margin (%) 12.0 13.7 14.2 14.2 10.9 12.0 12.9 13.4 13.5 13.2
Other income 79 13 52 39 71 27 90 83 183 234
ETR (%) 25.9 22.9 20.9 18.2 10.3 24.2 24.5 24.5 21.8 21.4
Minority Interest 40.0 43.0 48.0 39.0 46.0 54.0 54.0 54.0 170.0 208.0
PAT 587 683 741 790 720 720 712 751 2,801 2,578
QoQ (%) -433.5 16.4 8.5 6.6 -8.9 0.0 -1.1 5.4 145.9 -8.0
YoY (%) 35.6 70.8 53.7 -548.9 22.7 5.4 -3.9 -5.0
EPS (INR) 9.6 11.2 12.1 12.9 5.1 9.7 11.6 12.2 45.8 42.0
Headcount 9,228 9,592 9,517 9,476 9,022 8,868 9,058 9,258 9,476 9,318
Attrition (%) 14.3 13.7 13.6 13.6 13.4 12.9
Offshore rev. (%) 39.0 41.0 41.0 39.0 39.0 39.0 40.0 38.5
Fixed Price (%) 42.0 41.0 43.0 46.0 46.0 46.0
January 2017 246

Persistent Systems
Bloomberg PSYS IN CMP: INR647 TP: INR700 (+8%) Neutral
 Revenue growth is expected to be strong at PSYS, led by the
Enterprise segment and pick-up in the recently announced IBM
Watson deal.
1,6,12 Rel Perf. (%) 8 / -3 / -3
 Growth in ISV, however, is likely to continue following the same
trajectory as earlier. Aided by these factors, we expect 3QFY17
revenue to grow 3.2% QoQ to USD108.5m.
Y/E March 2016 2017E 2018E 2019E
 EBITDA margin is likely to expand, as revenue from the IBM Watson
Sales 23.1 29.0 33.9 38.1
IoT deal continues to gradually increase. However, 2Q had a one-
EBITDA 4.2 4.7 6.3 7.0
time tailwind of 150bp because of accounting changes relating to
Adj. PAT 3.0 2.9 3.6 4.4
leave encashment, which won’t be present in 3Q. We expect 60bp
Adj. EPS (INR) 37.2 36.2 45.0 54.8
QoQ EBITDA margin expansion to 16.7%.
EPS Gr. (%) 2.3 -2.6 24.2 21.8
 Our PAT estimate for the quarter is INR680m, down 7.4% QoQ
BV/Sh.(INR) 211.0 236.0 245.6 256.5
owing to lower other income. A sharp decline in the cash balance is
RoE (%) 19.5 16.7 19.2 22.5
likely to result in lower absolute yield.
RoCE (%) 18.9 17.0 15.4 18.3  The stock trades at 17.9x FY17E and 14.4x FY18E earnings. Neutral.
Payout (%) 29.6 33.1 26.7 21.9
Valuations
P/E (x) 17.4 17.9 14.4 11.8
 Performance and outlook for top clients in ISV (ex-IBM).
P/BV (x) 3.1 2.7 2.6 2.5
 Commentary on traction with Enterprise customers and potential
EV/EBITDA (x) 10.2 9.3 6.8 6.0
of winning large deals.
 Outlook on sustainable profit margins in the near to medium
Div. Yield (%) 1.7 1.9 1.9 1.9
term.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Revenue (USD m) 78.6 83.0 89.7 100.4 104.8 105.2 108.5 112.0 352 430
QoQ (%) -1.8 5.5 8.1 12.0 4.3 0.4 3.2 3.2 14.0 22.4
Revenue (INR m) 5,004 5,427 5,921 6,771 7,018 7,040 7,326 7,616 23,123 28,999
QoQ (%) 0.6 8.5 9.1 14.4 3.6 0.3 4.1 4.0
YoY (%) 15.0 16.9 19.7 36.1 40.2 29.7 23.7 12.5 22.3 25.4
GPM (%) 39.7 38.9 38.8 35.7 34.7 35.5 36.8 38.5 38.1 36.4
SGA (%) 20.4 20.2 20.1 19.8 19.6 19.8 19.7 20.3 20.1 20.2
EBITDA Margin (%) 19.4 18.7 18.8 15.9 15.1 15.7 16.3 17.7 18.0 16.2
EBIT Margin (%) 14.8 14.4 14.6 12.1 10.2 10.5 11.7 13.2 13.9 11.4
Other income 198 182 160 210 253 243 57 1 750 555
ETR (%) 28.5 25.5 24.4 21.4 24.3 25.3 25.3 25.3 24.8 25.1
PAT 672 718 775 808 733 735 680 750 2,974 2,898
QoQ (%) -11.6 6.9 7.8 4.3 -9.3 0.3 -7.4 10.2
YoY (%) -2.3 0.7 4.1 6.3 9.0 2.3 -12.2 -7.2 2.3 -2.6
EPS (INR) 8.4 9.0 9.7 10.1 9.2 9.2 8.5 9.4 37.2 36.2
Headcount 8,454 8,545 8,966 9,264 9,389 9,305 9,475 9,645 9,264 9,645
Attrition (%) 16.4 17.1 17.1 16.4 16.7 15.9
IP rev. proportion (%) 18.4 16.2 20.1 28.2 28.2 27.8 28.1 28.6 21.1 28.2
E: MOSL Estimates
January 2017 247

TCS
Bloomberg TCS IN CMP: INR 2,379 TP: INR2,500 (+5%) Neutral
 TCS saw a deferment to the tune of ~USD27m in an India-based
M. Cap. (INR b)/(USD b) 4687 / 69
contract, which is expected to get added in 3Q.
52-Week Range (INR) 2740 / 2055
 A 0.6% tailwind from the deferment coupled with seasonal weakness
1,6,12 Rel Perf. (%) 8 / -2 / -4
leads us to expect 1.5% CC growth.
 Cross-currency movement is expected to shave off 160bp from
Y/E March 2016 2017E 2018E 2019E
revenue, leading to 0.1% QoQ decline in USD terms.
Sales 1,086.5 1,183.9 1,340.7 1,478.0
 A pullback in discretionary spend has been weighing on TCS’
EBITDA 306.8 322.8 364.5 386.1 performance; outlook on deal wins, project delays and budgets
PAT 242.7 263.1 290.9 311.7 would be keenly watched.
EPS (INR) 123.5 133.8 148.0 158.6  Our EBIT margin estimate for 3Q stands at 25.5% QoQ (-50bp QoQ),
EPS Gr. (%) 11.5 8.3 10.6 7.2 below the lower end of the guided range of 26-28%. There is a
BV/Sh. (INR) 371.4 423.5 501.0 580.7 possibility of TCS’ margins being lower than the range for FY17 lest
RoE (%) 38.2 33.4 30.8 28.0 there is a pick-up in profitability in 4Q.
RoCE (%) 36.8 32.4 30.0 27.3  Our PAT estimate stands at INR62.5b (-5.1% QoQ). The decline
Payout (%) 35.2 34.8 37.7 39.5 would be led by lower revenue, profitability and other income.
Valuations  The stock trades at 17.8x FY17E and 16.1x FY18E earnings. Neutral.
P/E (x) 19.3 17.8 16.1 15.0
EV/EBITDA (x) 14.4 13.4 11.6 10.6  Outlook on revenue from TCS Japan.
Div. yield (%) 1.8 2.0 2.3 2.6  Traction in new Digital initiatives (automation/solutions).
 Outlook for BFSI vertical, going ahead.

Revenue (USD m) 4,036 4,156 4,145 4,207 4,362 4,374 4,363 4,463 16,544 17,563
QoQ (%) 3.5 3.0 -0.3 1.5 3.7 0.3 -0.2 2.3 7.1 6.2
Revenue (INR m) 256,681 271,655 273,640 284,486 293,050 292,840 294,529 303,502 1,086,462 1,183,920
YoY (%) 16.1 14.1 11.7 17.5 14.2 7.8 7.6 6.7 14.8 9.0
GPM (%) 44.9 45.5 45.6 44.8 43.9 44.8 44.5 44.7 45.2 44.5
SGA (%) 16.8 16.7 17.3 17.0 17.1 17.1 17.3 17.3 17.0 17.2
EBITDA Margin (%) 28.1 28.8 28.3 27.8 26.7 27.7 27.2 27.4 28.2 27.3
EBIT Margin (%) 26.3 27.1 26.6 26.1 25.1 26.0 25.5 25.7 26.5 25.6
Other income 7,707 6,751 6,990 9,050 9,630 10,520 7,180 9,567 30,498 36,897
ETR (%) 23.2 24.1 23.2 23.7 24.0 23.8 23.8 23.8 23.6 23.9
PAT 57,086 60,553 61,095 63,412 63,179 65,860 62,523 66,608 242,146 258,170
QoQ (%) -3.3 6.1 0.9 3.8 -0.4 4.2 -5.1 6.5
YoY (%) 12.9 14.5 12.2 7.4 10.7 8.8 2.3 5.0 11.6 6.6
EPS (INR) 29.1 30.8 31.0 32.3 32.1 33.4 31.7 33.8 123.2 131.0
Headcount 324,935 335,620 344,691 353,843 362,079 371,519 369,802 377,448 353,843 377,448
CC QoQ rev gr (%) 3.4 3.9 0.5 2.1 3.1 1.0 -0.2 2.3 11.8 8.4
Attrition (%) 15.9 16.2 15.9 15.5 13.6 12.9
E: MOSL Estimates
January 2017 248

Tech Mahindra
Bloomberg TECHM IN CMP: INR500 TP: INR550 (+10%) Buy
 We expect 3.1% QoQ CC growth in TECHM’s revenue. In USD terms,
M. Cap. (INR b)/(USD b) 492 / 7
we expect TECHM’s revenue to grow by 1.7% QoQ – 140bp negative
impact of cross-currency movement.
1,6,12 Rel Perf. (%) 7 / -1 / -7
 In Telecom, 2H is expected to be strong because of seasonality in
Comviva. Moreover, Enterprise is also likely to do well in 3Q, as
Y/E Mar 2016 2017E 2018E 2019E
revenue got deferred in 2Q, resulting in a spillover effect. On an
Sales 264.9 291.0 328.6 360.7
organic basis, we expect 2.5% CC growth.
EBITDA 43.4 44.6 52.8 57.1  Revenue will also include one-month addition of Target, which
Adj. PAT 31.2 28.4 32.0 35.2 should result in an additional 0.6pp in growth.
Adj. EPS (INR) 35.1 32.0 36.0 39.5  We expect EBITDA margin to expand by 70bp to 15.6%. A reversal
EPS Gr. (%) 18.4 -8.7 12.5 9.8 of the one-time expense incurred in 2Q would result in a 100bp
BV/Sh.(INR) 165.6 176.7 203.1 233.0 tailwind, which is likely to be partly offset by cross-currency
RoE (%) 23.4 19.1 19.3 18.5 movement.
RoCE (%) 20.1 16.0 16.7 16.3  We expect PAT to grow 12.8% QoQ to INR7.3b, also led by
Payout (%) 34.2 28.3 24.3 22.1 normalization of the ETR (23.5% in 3Q v/s 30.8% in 2Q).
Valuation  The stock trades at 15.6x FY17E and 13.9x FY18E earnings. Buy.
P/E (x) 14.3 15.6 13.9 12.6
P/BV (x) 3.0 2.8 2.5 2.1
 Performance of the Telecom segment.
EV/EBITDA (x) 9.1 9.4 7.5 6.4
 Comments on profitability including LCC.
Div. Yield (%) 2.4 1.8 1.8 1.8
 TCV of deal wins in the Enterprise segment.

Revenue (USD m) 989 1,011 1,015 1,023 1,032 1,072 1,091 1,125 4,037 4,320
QoQ (%) 0.5 2.2 0.4 0.8 0.9 4.0 1.7 3.2 10.2 7.0
Revenue (INR m) 62,938 66,155 67,011 68,837 69,209 71,674 73,632 76,519 264,941 291,034
YoY (%) 22.9 20.5 16.5 12.5 10.0 8.3 9.9 11.2 17.9 9.8
GPM (%) 29.4 32.0 31.3 30.6 29.5 30.6 30.3 30.0 30.8 30.1
SGA (%) 15.0 15.4 14.3 13.8 14.6 15.7 14.7 14.2 14.5 14.8
EBITDA Margin (%) 14.4 16.6 16.9 16.7 14.9 14.9 15.6 15.8 16.4 15.3
EBIT Margin (%) 11.6 13.7 14.4 13.6 12.0 11.5 12.2 12.0 13.5 11.9
Other income 1,244 1,658 639 1,603 1,519 1,387 820 1,052 5,322 4,779
Interest expense 215 173 244 340 274 345 381 362 961 1,362
ETR (%) 25.6 24.8 23.2 17.0 25.9 30.8 23.5 23.5 21.4 25.9
PAT excl. BT amort & EOI 6,225 7,855 7,592 8,581 6,561 6,447 7,269 7,685 31,180 27,963
QoQ (%) 31.9 26.2 -3.3 13.0 -23.5 -1.7 12.8 5.7
YoY (%) -1.3 9.2 -2.3 81.8 5.4 -17.9 -4.2 -10.4 20.0 -10.3
EPS (INR) 7.6 8.8 8.5 10.1 7.4 7.3 8.2 8.6 35.1 32.5
Headcount 103,673 105,235 107,137 105,432 107,216 111,743 109,535 111,611 103,673 105,235
Attrition (%) 19.0 20.0 20.0 21.0 21.0 19.0
Offshore rev. (%) 39.0 38.3 37.3 36.8 36.6 36.5 36.0 35.4 37.8 36.1
E: MOSL Estimates
January 2017 249

Wipro
Bloomberg WPRO IN CMP: INR476 TP: INR560 (+18%) Neutral
 We expect revenue to decline by 0.1% in USD terms and growth of
M. Cap. (INR b)/(USD b) 1173 / 17
1.3% QoQ in constant currency terms; a negative impact of 140bp is
likely on account of depreciation of currencies against the USD.
1,6,12 Rel Perf. (%) 3 / -13 / -19
 In 2Q, WPRO had guided for 0-2% QoQ growth in 3Q. However, this
Financial Snapshot (INR b) includes incremental revenue from the acquisition of Appirio. Our
Y/E Mar 2016 2017E 2018E 2019E CC revenue growth estimate bakes in 0.3% QoQ CC organic growth
Sales 512.4 556.2 618.8 672.0 and 1pp contribution from Appirio (1-month revenue).
EBITDA 108.1 109.2 127.5 134.5  We expect EBIT margin in IT Services to decline by 60bp because of
PAT 88.9 84.4 95.8 107.1
flattish organic revenue and the integration of lower margin
EPS (INR) 36.1 34.3 39.5 44.1
Appirio.
EPS Gr. (%) 2.9 -5.1 15.2 11.8
BV/Sh. (INR) 189.7 198.8 225.7 251.8  We expect overall EBIT margin to expand by 40bp, led by improved
RoE (%) 20.3 17.7 18.5 18.5 profitability in the Products business.
RoCE (%) 16.7 14.4 16.3 16.0  Our PAT estimate is INR21.9b, 5.8% QoQ growth on account of
Payout (%) 16.6 37.4 32.9 34.0 improved profitability and higher other income.
Valuations
 The stock trades at 13.9x FY17E and 12.6x FY18E earnings. Neutral.
P/E (x) 13.2 13.9 12.1 10.8
EV/EBITDA (x) 9.8 9.5 7.7 7.0  Revenue growth guidance for 4QFY17.
Div Yld (%) 1.3 2.7 2.7 3.1  Stabilization of the Energy vertical.
 Commentary on large deal wins and ramp-up schedule.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Revenue (USD m) 1,794 1,832 1,838 1,882 1,931 1,916 1,914 1,971 7,346 7,732
QoQ (%) 1.1 2.1 0.3 2.4 2.6 -0.8 -0.1 2.9 3.7 5.3
Revenue (INR m) 122,376 125,135 128,605 136,324 135,992 137,657 138,960 143,607 512,440 556,216
QoQ (%) 0.8 2.3 2.8 6.0 -0.2 1.2 0.9 3.3
YoY (%) 9.9 7.1 7.2 12.3 11.1 10.0 8.1 5.3 9.1 8.5
GPM (%) 30.7 31.4 29.8 29.7 29.1 28.9 28.7 29.1 30.4 29.0
SGA (%) 12.2 12.4 12.0 12.3 13.0 13.2 12.5 12.5 12.2 12.8
EBITDA Margin (%) 21.3 21.8 20.8 20.6 19.5 19.3 19.7 20.0 21.1 19.6
IT Serv. EBIT (%) 21.0 20.7 20.2 20.1 17.8 17.8 17.2 17.5 20.5 17.6
EBIT Margin (%) 18.5 19.0 17.9 17.4 16.1 15.8 16.2 16.6 18.2 16.1
Other income 5,286 5,138 5,715 5,426 4,848 4,958 5,687 3,800 21,565 19,293
ETR (%) 21.2 22.4 21.8 22.7 22.9 22.2 22.2 22.2 22.1 22.4
PAT 21,877 22,354 22,341 22,350 20,518 20,672 21,863 21,393 88,922 84,446
QoQ (%) -3.8 2.2 -0.1 0.0 -8.2 0.8 5.8 -2.2
YoY (%) 4.0 7.2 1.9 -1.8 -6.2 -7.5 -2.1 -4.3 2.7 -5.0
EPS (INR) 8.9 9.1 9.1 9.1 8.3 8.5 9.0 8.8 36.1 34.3
Headcount 161,789 168,396 170,664 172,912 173,863 174,238 174,623 179,208 172,912 179,208
Attrition (%) 16.4 16.4 16.3 16.1 16.5 16.6
Offshore rev. (%) 45.4 46.1 46.2 45.8 45.6 46.1 45.7 45.1 45.9 45.6
Rev Guidance (USDm) 1821-1857 1841-1878 1875-1912 1901-1939 1931-1950 1931-1950
Fixed Price (%) 54.5 53.4 55.9 56.9 56 56.4
E: MOSL Estimates
January 2017 250

Z ensar Technologies
Bloomberg Z ENT IN CMP: INR944 TP: INR1,250 (+32%) Buy
 We expect revenue of USD118m, representing growth of 1.6% QoQ.
This would translate into 2.1% QoQ CC growth. While EUR and GBP
have depreciated against USD, Z AR’s appreciation will slightly offset
1,6,12 Rel Perf. (%) -5 / -7 / -15
the negative impact.
Financial Snapshot (INR b)  The quarter will include ~2 months of revenue from the acquisition
Y/E March 2016 2017 2018 2019 of Foolproof, which should add 1.6pp. Organic revenue growth is
Net Sales 29.6 31.6 37.1 42.2 likely to be 0.5% QoQ CC, as higher-than-usual furloughs are likely
EBITDA 4.3 4.5 5.9 6.5 to be offset by ramp-up in recent deal wins.
PAT 3.1 3.1 4.2 4.5
 Despite the pruning of non-core/low-yield business, we expect
EPS (INR) 68.2 69.5 92.5 99.2
EBITDA margin to remain flat because of the requirement of
Gr. (%) 17.0 1.4 33.1 7.2
investments to boost capabilities and augment sales and marketing.
BV / Sh (INR) 314.4 369.0 441.4 518.3
ROE (%) 24.0 20.3 22.8 20.7  Post this, we expect margin expansion in the remainder of the year.
ROCE (%) 28.5 25.4 28.5 26.7  Our PAT estimate is INR820m, +19.4% QoQ on account of a jump in
Payout (%) 17.6 20.3 18.6 19.2 other income (translation gains).
Valuations
 The stock trades at 13.6x FY17E and 10.2x FY18E earnings. Buy.
P /E (x) 13.8 13.6 10.2 9.5
P / BV (x) 3.0 2.6 2.1 1.8 Key issues to watch for
EV/EBITDA 9.5 8.5 6.0 5.0  Traction in Digital, large deals and other new initiatives.
Div. Yield (%) 1.3 1.5 1.8 2.0  Margin outlook, given the need for reinvestment.
 Progress on restructuring.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Revenue (USD m) 111 116 115 111 114 116 118 121 453 469
QoQ (%) 5.1 4.8 -1.4 -3.7 3.1 1.8 1.6 3.1 5.4 3.6
Revenue (INR m) 7,046 7,564 7,568 7,464 7,624 7,767 7,954 8,261 29,643 31,605
YoY (%) 16.5 16.8 5.5 13.5 8.2 2.7 5.1 10.7 12.8 6.6
GPM (%) 31.7 32.1 30.6 30.8 29.1 29.7 29.6 30.9 31.3 29.8
SGA (%) 16.4 16.6 16.2 18.5 15.3 15.6 15.5 16.0 16.9 15.6
EBITDA 1,080 1,171 1,089 922 1,053 1,092 1,119 1,233 4,262 4,497
EBITDA Margin (%) 15.3 15.5 14.4 12.4 13.8 14.1 14.1 14.9 14.4 14.2
EBIT Margin (%) 13.8 14.0 12.9 10.7 12.5 12.5 12.6 13.4 12.8 12.8
Other income 148 229 95 116 169 37 186 137 588 529
ETR (%) 29.8 26.9 30.4 21.1 30.5 28.0 28.0 28.0 27.3 28.6
PAT 762 913 715 703 763 687 820 866 3,094 3,136
QoQ (%) 6.2 19.8 -21.7 -1.7 8.5 -10.0 19.4 5.6
YoY (%) 36.3 35.7 2.9 -2.1 0.1 -24.8 14.7 23.2 17.0 1.4
EPS (INR) 17.6 20.6 15.8 15.5 16.9 15.2 18.2 19.2 68.2 69.5
Headcount 7,895 8,050 8,192 8,256 8,238 8,316 8,517 8,567 8,256 8,567
Utilization (%) 79.0 80.0 82.0 81.0 79.8 80.1 79.0 80.0 80.5 79.7
Offshore rev. (%) 35.0 37.0 34.0 36.0 31.2 33.8 33.4 33.4 35.5 33.0
E: MOSL Estimates
January 2017 251

December 2016 Results Preview | Sector: Telecom
Telecom
Company name Huge disruption; overhaul of market structure
Bharti Airtel
Voice and data traffic shifting toward RJio
Bharti Infratel
RJio’s freebees and demonetization hurting overall usage
Idea Cellular
Despite being seasonally strong, the third quarter this year is expected to be dismal
for the telecom industry. RJio’s welcome offer with free data/voice – which started
on 5 September 2016 – has significantly diluted voice and data usage in the industry.
Additionally, the demonetization-led cash crunch has led to lower voice/data
recharges, particularly in the initial two weeks, impacting both traffic and pricing.
Bharti and Idea’s revenues are expected to decline 6-7% QoQ (down 1-3% YoY) with
EBITDA margins down by about 300-400bp.
Expect low revenue growth

We expect Bharti’s India wireless revenue to decline 5.9% QoQ and 0.8% YoY to
INR138.6b. On a consolidated basis, Bharti’s revenues should drop 2.4% QoQ to
INR240.5b, with a flat performance in Africa. Idea too should see a revenue decline
of 6.6% QoQ and 3.6% YoY to INR86.9b. However, Bharti Infratel is likely to witness
a healthy quarter with improved tenancy post weakness over the last two quarters,
driven by fresh rollouts across telcos post spectrum auctions and limited exits. We
expect Bharti Infratel’s revenues to increase 2% QoQ and 8% YoY to INR33.6b.
 Voice revenues to decline 4-5% QoQ: 3QFY17 saw a shift in outgoing voice
usage toward RJio. However, the impact was seen on pricing instead of voice
minutes. This is because RJio’s free usage reduced Bharti and Idea’s outgoing
minutes but increased incoming traffic. Given that there is a paltry
INR0.14/minute interconnect charge on income minutes compared to
~INR0.60/min charge on outgoing minutes, we believe voice pricing should be
impacted significantly. Also, telcos are rationalizing high-ARPU subscriber plans
to match RJio’s pricing. Assuming price decline of ~5-6% QoQ and voice traffic
growth of ~2% QoQ, we expect voice revenues for Bharti and Idea to decline
~4% QoQ and 0-2% YoY, respectively.
 Data revenues to see sharper decline: The impact on the data business is likely
to be much steeper as many subscribers have shifted to RJio’s free data offering.
As announced on 30-November, RJio reached the 50m subscriber mark, which is
nearly 35-40% of the industry’s 15m broadband subscribers (as per September
TRAI report) and ~5% of voice subscribers. Further, demonetization is expected
to have had a considerable impact on the industry’s data business, which mostly
relies on the higher-ticket-size data recharges (95% prepaid subscribers in the
Indian telecom market). Given that RJio recorded data usage of about
27GB/sub/month, it is likely to have eaten up significant amount of business of
other operators. We expect Bharti and Idea’s data revenues to decline steeply
by 14-17% QoQ and 4-7% YoY, respectively, in 3QFY17 on the back of ~10-15%
QoQ data price decline and 2-5% QoQ lower data traffic.
Aliasgar Shakir (Aliasgar.Shakir@MotilalOswal.com); +91 22 39825423

Jay Gandhi (Jay.Gandi@MotilalOswal.com); +91 22 3089 6693
January 2017 252
EBITDA margin in contraction mode

Weak revenue performance, coupled with heavy network investment, is expected to
put EBITDA margins under significant pressure in 3QFY17. During the quarter, the
cost structure should see a sharp variation due to declining access cost led by lower
outgoing minutes. On the contrary, we expect network and SG&A costs to increase
significantly in a bid to counter RJio’s aggressive service launch. We expect India
EBITDA margins for Bharti/Idea to see contraction of ~300-400bp QoQ. On a YoY
basis, this implies just 40bp impact for Bharti India wireless to 39.3%, given the
steadily improving margins over past three quarters. However, Idea is expected to
see a strong 840bp YoY impact on EBITDA margin to 26.4% due to its steady rise in
network investment.
Bharti’s Africa business to report flat revenue QoQ, 30bp EBITDA margin
improvement: After the decline last quarter due to the sale of businesses in two
African regions (Burkina Faso and Sierre Leone), Bharti’s Africa revenues are
expected to remain flat QoQ this quarter at USD909m. Nigeria, which contributes
about one-third of Africa revenues, saw flat currency (Naira) movement, leading to
flat revenue expectation in INR terms too. We expect Africa EBITDA margin to
improve 30bp to 24% due to cost-rationalization measures.
Bharti Infratel to see recovery in tenancy: We expect Bharti Infratel to report

healthy numbers with tenancies growing by 5,800, as against average tenancy
addition of 2,000 in 1HFY17. This is driven by fresh rollouts across telcos post the
spectrum auction and limited exits during the quarter. We also expect 2% QoQ and
8% YoY improvement in Bharti Infratel’s revenues to INR33.6b. Ex-energy EBITDA
margin is expected to trend down by 20bp QoQ to 66.1%, translating into 43.8%
overall margin (-20bp QoQ), due to expectations of pricing pressure on rental rates
from tenancy renewals. Ex-energy EBITDA should grow 1.3% QoQ to INR13.9b.
Our view: We expect Bharti and Idea’s revenue and EBITDA to decline sharply as
the industry undergoes a complete overhaul. Bharti Infratel should see healthy
recovery in tenancies, driving its growth further.
Expected quarterly performance summary

Sales (INR m) EBITDA (INR m) Net Profit (INR m)
CMP
Sector RECO Var % Var % Var % Var % Var % Var %
(INR) Dec-16 Dec-16 Dec-16
Telecom
Bharti Airtel 314 Buy 240,516 -0.1 -2.4 86,965 3.4 -7.9 10,894 -14.3 -25.6
Bharti Infratel 353 Buy 33,587 8.1 2.0 14,727 8.1 1.6 7,798 57.5 0.8
Idea Cellular 74 Sell 86,883 -3.6 -6.6 22,903 -26.8 -19.4 -10,222 PL PL
Sector Aggregate 360,986 -0.2 -3.1 124,595 -3.4 -9.3 8,471 -66.5 -63.6
January 2017 253

Exhibit 1: Wireless subscriber net additions (m)

Wireless Subsriber net additions
21
10 9
7 7 8 8 8 7
6 7 9 7
5 6 5 5 4 6 6 5 3 5 5 4
3 3 2 2 2 1 1
-1
-6 -3 -5
Jul-16
Jul-14
Jul-15
Jun-16
Jun-14
Jun-15
Nov-13
Nov-14
Nov-15
May-16
Apr-14
May-14
Apr-15
May-15
Apr-16
Aug-15
Dec-15
Aug-16
Sep-16
Dec-13
Aug-14
Dec-14
Feb-15
Mar-15
Sep-15
Jan-16
Feb-16
Mar-16
Sep-13
Jan-14
Feb-14
Mar-14
Sep-14
Jan-15
Oct-13
Oct-14
Oct-15
Source: TRAI, MOSL
Exhibit 2: QoQ wireless traffic growth (%)

Bharti (India) Idea RCOM Vodafone - India
10
-2
-6
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17E
Exhibit 3: Trend in wireless RPM (INR)

Bharti (India) Idea RCOM Vodafone - India
65
58
51
44
37
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17E
January 2017 254

Exhibit 4: Aggregate India wireless revenue growth (QoQ, %)

Aggregate India wireless revenue growth (QoQ, %)
5.7 5.7
4.8
3.4 3.8
3.1
2.5
1.8 1.7 1.2
1.1
-1.2 -1.1
-1.9
-2.9
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Exhibit 5: Relative Performance-3m (%) Exhibit 6: Relative Performance-1 Yr (%)
Sensex Index MOSL Telecom Index Sensex Index MOSL Telecom Index
103 110
101 100
99 90
97 80
95 70
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Nov-16
Dec-16
Sep-16
Oct-16
January 2017 255

December Telecom
June 2016 Results Preview | Sector: Telecom
Wireless KPIs
FY14 FY15 FY16 FY17 YoY QoQ
2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3QE (%) (%)
EOP Wireless SUBS (m)
Bharti (India) 193 199 206 209 212 217 226 231 235 243 251 256 260 264 8.3 1.4
Idea 127 129 136 139 144 151 158 162 167 172 175 176 179 182 5.7 1.7
RCOM 116 118 112 110 111 107 111 111 112 102 104 99 100
Vodafone - India 156 160 167 170 174 179 184 185 188 194 198 199 201
AV. Wireless Subs (m)
Bharti (India) 192 196 202 207 211 214 222 228 233 239 247 253 258 262 9.4 1.5
Idea 126 128 133 138 142 148 155 160 165 170 174 176 178 180 6.4 1.6
RCOM 122 117 115 111 111 109 109 111 112 107 103 102 100
Vodafone - India 156 158 164 169 172 177 182 185 187 191 196 199 200
ARPU (INR/month)
Bharti (India) 192 195 196 202 198 202 198 198 193 192 194 196 188 174 -9.4 -7.4
Idea 165 170 174 181 176 180 179 180 173 174 179 180 173 159 -9.1 -8.1
RCOM 121 125 128 135 136 141 144 137 134 138 152 144 148
Vodafone - India 191 193 192 193 187 189 184 184 178 175 177 176 171
MOU/Sub
Bharti (India) 437 434 437 435 418 416 418 424 404 405 415 414 406 406 0.2 0.0
Idea 368 376 397 401 384 388 400 408 383 387 387 379 368 370 -4.4 0.5
RCOM 277 288 296 311 307 315 330 316 307 313 329 328 347
Vodafone - India 334 334 335 336 321 319 321 327 316 316 317 314 306
Revenue per min (p)
Bharti (India) 44.0 44.8 44.9 46.5 47.2 48.6 47.5 46.8 47.6 47.5 46.8 47.3 46.3 42.9 -9.7 -7.4
Idea 44.8 45.3 43.7 45.1 45.8 46.3 44.9 44.2 44.7 44.4 46.4 47.7 47.0 42.9 -3.4 -8.8
RCOM 43.5 43.5 43.1 43.5 44.2 44.7 43.7 44.3 43.7 44 46.3 45.2 44.6
Vodafone - India 57.2 57.7 57.3 57.4 58.2 59.3 57.4 56.2 56.2 55.3 55.8 56.2 55.3
Wireless traffic (B min)
Bharti (India) 251 255 265 271 264 267 278 290 282 290 308 315 313 319 9.9 1.7
Idea 139 145 157 165 162 171 185 196 189 196 202 199 196 200 2.1 2.3
RCOM 102 102 102 103 102 103 108 105 103 100 102 100 97.9
Vodafone - India 156 158 164 170 166 169 174 181 177 181 186 187 184
January 2017 256

Quarterly Financials (pro forma)
FY14 FY15 FY16 FY17 YoY QoQ
2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3QE (%) (%)
Revenue (INR b)
Bharti (ex Africa) 143.0 147.1 151.6 159.9 159.5 163.9 168.0 174.3 174.7 177.3 185.1 193.0 193.5 187.2 5.6 -3.2
Bharti (consolidated) 213.2 219.4 222.2 229.6 228.5 232.2 230.2 235.9 237.5 239.8 249.6 255.5 246.5 240.5 0.3 -2.4
Idea 63.2 66.1 70.4 75.6 75.7 80.2 84.2 87.9 86.9 90.1 94.8 94.9 93.0 86.9 -3.6 -6.6
RCOM 53.9 54.0 56.7 55.2 54.0 54.7 57.0 55.4 53.6 53.0 59.2 53.6 53.8
Vodafone - India 89.1 91.1 94.2 97.1 96.5 99.9 100.1 101.7 99.5 100.0 104.0 105.0 102.5
EBITDA (INR b)
Bharti (ex Africa) 49.2 52.1 54.8 59.8 60.6 62.8 68.0 69.6 69.6 70.8 76.8 81.5 81.8 74.2 4.8 -9.4
Bharti (consolidated) 68.1 70.7 72.7 76.8 76.9 77.7 80.9 82.2 82.3 84.1 91.1 95.5 94.4 87.0 3.4 -7.9
Idea 19.7 20.6 22.3 25.0 24.9 27.5 30.6 29.8 30.6 31.3 36.2 30.7 28.4 22.9 -26.8 -19.4
RCOM 18.9 18.5 18.5 18.6 18.3 18.5 19.8 18.8 17.8 18.0 19.6 15.6 16.8
EBITDA Margin (%)
Bharti (ex Africa) 34.4 35.4 36.2 37.4 38.0 38.3 40.5 39.9 39.8 39.9 41.5 42.2 42.3 39.6 -31bps -267bps
Bharti (consolidated) 32.0 32.2 32.7 33.4 33.7 33.5 35.1 34.9 34.7 35.1 36.5 37.4 38.3 36.2 108bps -214bps
Idea 31.2 31.1 31.7 33.1 32.9 34.3 36.4 33.9 35.2 34.7 38.1 32.4 30.5 26.4 -836bps -418bps
RCOM 35.0 34.2 32.7 33.7 33.8 33.8 34.7 33.8 33.3 34.0 33.1 29.1 31.3
PAT (INR b)
Bharti (consolidated) 5.1 6.1 9.6 11.1 13.8 14.4 12.6 21.1 15.4 11.1 13.2 14.6 14.6 10.9 -1.7 -25.4
Idea 4.5 4.7 5.9 7.3 7.6 7.7 9.4 8.5 8.1 7.6 5.8 2.2 0.9 -6.3 -181.9 -784.5
RCOM 2.7 1.5 2.0 1.6 2.1 2.3 0.1 1.9 1.6 2.0 1.5 0.9 -0.6 0.1 -97.3 -108.4
EPS (INR)
Bharti 1.3 1.5 2.4 2.8 3.5 3.6 3.1 5.3 3.8 2.8 3.3 3.7 3.7 2.7 -1.7 -25.4
Idea 1.3 1.4 1.8 2.1 2.1 2.1 2.6 2.4 2.2 2.1 1.6 0.6 0.3 -1.7 -181.9 -784.5
RCOM 1.3 0.7 1.0 0.8 0.9 1.0 0.0 0.8 0.7 0.8 0.6 0.4 -0.3 0.0 -97.3 -108.4
Comparative valuation
CMP EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
Sector / Companies Reco.
(INR) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E
Telecom
Bharti Airtel 314 Buy 12.4 9.4 13.4 25.3 33.4 23.4 6.1 5.8 4.7 7.3 5.3 7.1
Bharti Infratel 353 Buy 17.2 17.8 19.7 20.5 19.8 17.9 10.3 8.8 7.5 17.2 16.6 16.2
Idea Cellular 74 Sell -6.3 -12.9 -11.4 -11.8 -5.7 -6.5 8.1 8.8 7.8 -9.2 -21.9 -24.1
January 2017 257

Bharti Airtel
Bloomberg BHARTI IN CMP: INR309 TP: INR410 Buy
 We expect consol. revenue to decline 2.4% QoQ (flat YoY) to
M. Cap. (INR b)/(USD b) 1678/26
INR240.5b, impacted by RJio’s free offer. We expect India wireless
revenue to decline sharply by 5.9% QoQ (-0.8% YoY) to INR138.6b
1,6,12 Rel Perf. (%) -1 / 18 / 15
and Africa revenue to be flat QoQ at ~USD909b.
 Consol. EBITDA margin is expected to decline 210bp QoQ to
Y/E March 2016 2017E 2018E 2019E
~36.2%, led by India wireless margin contraction of 310bp to
Net Sales 965.3 975.1 1,010.0 1,112.9
39.3%, partly offset by 30bp improvement in Africa EBITDA
EBITDA 340.1 358.5 366.2 414.7 margin to 24%.
Adj. NP 47.5 49.6 37.7 53.6  Consolidated net profit of INR10.9b is expected to decline 25%
AdjEPS(INR) 11.9 12.4 9.4 13.4 QoQ (-2% YoY).
AdjEPS Gr(%) 72.5 -11.1 -20.7 8.2
 India wireless ARPU is expected to come down 7.4% QoQ (-9.4%
BV/Sh (INR) 164.2 174.4 182.2 194.0
YoY) to INR174, as voice ARPU shrinks by 5% and data ARPU by
RoE (%) 7.4 7.3 5.3 7.1
18%.
RoCE (%) 5.9 5.8 5.0 5.9
 Bharti trades at proportionate EV/EBITDA of 6.4x FY17E and 6.1x
Payout (%) 11.9 13.8 17.4 12.2
FY18E. Maintain Buy.
Valuations
P/E (x) 26.2 25.1 33.1 23.2 Key monitorables:
P/BV (x) 1.9 1.8 1.7 1.6  Consol. revenue (expect 2.4% decline QoQ).
EV/EBITDA x 6.3 6.4 6.1 5.0  India wireless revenue (expected to decline 5.9% YoY).
Div. Yld (%) 0.4 0.4 0.4 0.4  Consol. EBITDA margin (expected at 36.2%, -210bp QoQ).
 India wireless EBITDA margin (expected at 39.3%, -310bp QoQ).

FY16 FY17
Gross Revenue 236,709 238,357 240,659 249,596 255,465 246,515 240,516 232,580 965,321 975,076
YoY Change (%) 3.1 4.3 3.7 8.4 7.9 3.4 -0.1 -6.8 315.0 NA
EBITDA 82,243 82,343 84,137 91,122 95,480 94,402 86,965 81,617 340,062 358,464
Margins (%) 34.7 34.5 35.0 36.5 37.4 38.3 36.2 35.1 35.2 36.8
Depreciation 40,404 42,390 43,541 48,163 50,402 49,560 51,058 52,557 174,498 203,577
Interest 19,206 18,752 14,167 17,010 19,399 19,057 18,036 18,036 68,865 74,527
Other Income 2,419 1,929 3,037 3,129 2,787 1,568 2,963 2,963 9,501 10,280
Extra-Ord expense -21,384 -6,761 3,405 2,999 3,536 66 0 0 -14,505 3,602
PBT 46,435 29,890 26,060 26,079 24,930 27,287 20,834 13,988 120,705 87,039
Tax 21,827 13,394 13,523 10,789 10,089 11,136 8,482 5,695 59,368 35,402
Rate (%) 47.0 44.8 51.9 41.4 40.5 40.8 40.7 40.7 49.2 40.7
Minority Interest & Profit/
3,478 1,133 1,457 2,095 222 1,544 1,458 979 6,495 4,202
Loss of Asso. Cos.
Reported PAT 21,130 15,363 11,080 13,195 14,619 14,607 10,894 7,314 54,842 47,435
Mobile ARPU (INR/month) 198.2 192.6 192.0 194.2 195.7 187.9 173.9 157.3 192.9 178.7
QoQ Growth (%) -0.1 -2.8 -0.3 1.1 0.8 -4.0 -7.4 -9.6 -2.6 -7.3
Mobile MOU/sub/month 345.0 333.7 325.8 321.3 310.1 329.3 303.3 322.1 342.7 314.2
QoQ Growth (%) -1.7 -3.3 -2.4 -1.4 -3.5 6.2 -7.9 6.2 -1.1 -8.3
Mobile Traffic (B Min) 9,097 9,480 10,066 10,102 9,427 8,819 9,460 8,850 38,746 36,556
QoQ Growth (%) 4.4 4.2 6.2 0.4 -6.7 -6.4 7.3 -6.4 8.2 -5.7
Mobile RPM (INR) 0.57 0.58 0.59 0.60 0.6 0.6 0.6 0.5 0.6 0.6
QoQ Growth (%) 1.7 0.4 2.1 2.5 4.5 -9.6 0.5 -14.8 -1.5 1.1
E: MOSL Estimates
January 2017 258

Bharti Infratel
Bloomberg BHIN IN CMP: INR342 TP: INR435 Buy
We expect revenue to grow 8.1%/2% on YoY/QoQ to INR33.6b.
M. Cap. (INR b)/(USD b) 843/13
52-Week Range (INR) 505/244  Consol. rental revenue (including Ind-AS) is expected at INR21.1b,
1,6,12 Rel Perf. (%) -7 / 32 / 66 up 1.6% QoQ and 7.1% YoY. Energy and other reimbursements are
expected to grow 2.5% QoQ.
Financial Snapshot (INR Billion)  We expect consol. EBITDA to improve 1.6% QoQ to INR14.7b.
Y/E March 2016 2017E 2018E 2019E EBITDA margin is expected to contract 20bp QoQ to 43.8% owing to
Net Sales 123.3 133.2 146.2 159.0 pressure on rental rates.
EBITDA 54.1 58.4 64.7 70.5  We expect PAT to grow 0.8% QoQ to INR7.8b.
Adj. NP 22.5 31.9 33.0 36.4  Bharti Infratel trades at an attractive valuation of EV/EBITDA of
AdjEPS INR 11.8 17.2 17.8 19.7 10.6x FY17E and 9.1x FY18E. Maintain Buy.
Gr. (%) 48.1 64.0 50.5 14.1
BV/Sh (INR) 96.7 98.5 111.3 126.0
RoE (%) 12.7 17.2 16.6 16.2
RoCE (%) 11.2 12.8 12.9 12.7
Payout (%) 39.0 26.9 26.0 23.6
Key monitorables
Valuations
 Consol. co-location additions (we expect a steady rise of ~ 5,800 v/s
P/E (x) 28.7 19.7 19.1 17.3
P/BV (x) 3.5 3.5 3.1 2.7
avg. of 2,000 in 1HFY17).
EV/EBITDAx 11.5 10.5 9.0 7.8
 Consol. revenue per sharing operator (expected to decline 0.4%
Div. Yld (%) 1.2 1.1 1.1 1.1 QoQ due to tenancy renewal risks).

Y/E March FY16 FY17
FY16 FY17E
Revenue from operations 30,031 30,410 31,056 31,817 32,106 32,919 33,587 34,609 123,314 133,170
YoY Change (%) 5.6 3.8 5.3 8.0 6.9 8.3 8.1 8.8 5.7 8.0
EBITDA 12,896 13,095 13,623 14,495 13,947 14,498 14,727 15,307 54,109 58,429
Margins (%) 42.9 43.1 43.9 45.6 43.4 44.0 43.8 44.2 43.9 43.9
Depreciation 5,450 5,562 5,526 5,697 5,648 5,629 5,664 5,647 22,235 22,605
Interest 566 -1,675 292 -1,029 -1,281 -2,472 -2,753 -2,753 -1,847 -9,891
Other Income 564 564 487 433 352 333 0 0 2,048 685
PBT 7,444 9,772 8,292 10,260 9,932 11,674 11,816 12,414 35,769 46,400
Tax 3,020 3,855 3,342 3,076 2,369 3,936 4,017 4,221 13,293 14,543
Rate (%) 40.6 39.4 40.3 30.0 23.9 33.7 34.0 34.0 37.2 31.3
Reported PAT 4,424 5,917 4,950 7,184 7,563 7,738 7,798 8,193 22,476 31,857
Adj PAT 4,424 5,917 4,950 7,184 7,563 7,738 7,798 8,193 22,476 31,857
YoY Change (%) -4.4 27.2 -2.3 28.9 71.0 30.8 57.5 14.0 12.8 41.7
Margins (%) 14.7 19.5 15.9 22.6 23.6 23.5 23.2 23.7 18.2 23.9
January 2017 259

Idea Cellular
Bloomberg IDEA IN
CMP: INR81 TP: INR75 Sell
 Idea’s consolidated revenue is expected to decline 6.6% QoQ (~3.6%
YoY) to INR86.9b.
1,6,12 Rel Perf. (%) 2 / 13 / 23  Voice RPM is likely to drop 6% on price decline and unfavorable mix
of incoming/outgoing minutes due to RJio’s free plans.
Financial Snapshot (INR Million)  We expect Idea to report voice traffic growth of 2.1% QoQ (flat YoY).
Y/E March 2016 2017E 2018E 2019E MoU per subscriber per month at 370 is estimated to be down 0.5%
Net Sales 359.8 355.5 358.9 392.4 QoQ and 6% YoY.
EBITDA 130.3 101.5 96.4 110.2  EBITDA margin is expected to contract ~420bp QoQ/840bp YoY to
Adj. NP 30.8 -22.6 -46.4 -41.1 26.4% due to weak revenues and increased network cost.
AdjEPS (INR) 8.6 -6.3 -12.9 -11.4  We expect Idea to report net loss for the first time since its listing, at
Adj.EPSGr(%) 56.5 -170.7 -250.7 82.0
INR6.3b v/s INR 7.6b same period last year and INR 915m last
BV/Sh(INR) 71.6 65.3 52.4 42.4
quarter.
RoE (%) 12.6 -9.2 -21.9 -24.1
 Idea trades at an EV/EBITDA of 8.2x FY17E and 8.7x FY18E.
RoCE (%) 7.1 2.7 0.3 1.3
Payout (%) 8.4 0.0 0.0 0.0
Valuations Key monitorables
P/E (x) 9.4 -12.8 -6.2 -7.0  Voice RPM trajectory (we expect RPM to decline 6% QoQ), voice
P/BV (x) 1.1 1.2 1.5 1.9 traffic (we expect 3.7% QoQ growth).
EV/EBITDA(x) 5.3 8.5 9.2 8.1  Data revenue performance (we expect 17% decline QoQ).
Div. Yield (%) 0.7 0.0 0.0 0.0  EBITDA margin (we expect ~ 420bp contraction QoQ).

Y/E March FY16 FY17
FY16 FY17E
Gross Revenue 87,915 86,891 90,097 94,839 94,866 93,002 86,883 80,751 359,809 355,503
YoY Change (%) 16.3 14.8 12.4 12.6 7.9 7.0 -3.6 -14.9 14.0 -1.2
EBITDA 29,793 30,570 31,285 36,160 30,742 28,401 22,903 19,429 130,300 101,476
Margins (%) 33.9 35.2 34.7 38.1 32.4 30.5 26.4 24.1 36.2 28.5
Depreciation 14,117 15,381 16,231 19,737 19,192 19,543 21,107 22,899 66,508 82,741
Share in Profits from Associates 927 1,035 1,057 1,078 1,100 4,270
Interest 3,240 2,726 3,349 7,678 9,224 8,753 13,096 13,096 16,545 44,169
Other Income 0 0 0 0 0 0 0 0 0 0
PBT before EO expense 13,364 12,464 11,705 8,745 3,362 1,162 -10,222 -15,466 47,247 -21,164
PBT 13,364 12,464 11,705 8,745 3,362 1,162 -10,222 -15,466 47,247 -21,164
Tax 4,816 4,371 4,063 2,989 1,158 247 0 0 16,447 1,405
Rate (%) 36.0 35.1 34.7 34.2 34.4 21.3 0.0 0.0 34.8 -6.6
Reported PAT 8,548 8,093 7,642 5,756 2,204 915 -10,222 -15,466 30,799 -22,569
Margins (%) 9.7 9.3 8.5 6.1 2.3 1.0 -11.8 -19.2 8.6 -6.3
E: MOSL Estimates
January 2017 260

DecemberDecember
2016 Results
2016Preview
Results|Preview
Utilities
Utilities
Company name Expect muted profit growth for Utilities universe
CESC Power Grid to outperform on strong capitalization momentum
Coal India
Amongst our Utilities sector coverage universe, we expect Power Grid to report
JSW Energy
strong set of numbers. Other companies would at best report muted profit growth.
NTPC Power Grid’s 3QFY17 PAT is likely to increase 23% YoY to INR19b.
Power Grid Corp.
We expect NTPC’s PAT to grow ~5% YoY to INR21.7b on lower other income. NTPC’s
commercial capacity is flat QoQ at 45.9GW. JSW Energy is likely to be impacted by
under-utilization of its Vijaynagar plant. We estimate Vijaynagar operated at just
~50% PLF in 3QFY17 v/s 96% in 3QFY16. JSWE’s PAT is likely to decline 54% YoY to
INR1.4b on lower generation and higher fuel cost due to higher coal prices. CESC’s
PAT would be broadly flat YoY at INR1.4b, as gain from increase in regulated equity
base would be offset by impact from the negative bid for the captive coal block.
Coal India is likely to disappoint, with EBITDA (ex-OBR) decline estimated at ~19%
YoY to INR40b. Realization would be flat YoY at INR1,378/t while volumes would
grow 4% YoY to 142mt. Provisioning for the wage hike would impact profitability.
Generation growth tepid: Electricity generation was up 4.8% YoY in 3QFY17 (YTD
5.1%). Coal-based generation grew at a similar rate; however, the pace of growth
has improved in the last couple of months. Conventional generation capacity stood
at 262GW (up 6.5% YoY). System PLF was down 67bp to 50% YTD December 2016.
For coal-based plants, PLF was down 243bp to 59% YTD December 2016.
ST prices remain low: Short-term (ST) prices on IEX were marginally higher QoQ at
INR2.37/kWh. IEX day-ahead volumes were up 13% YoY to 10bu in 3QFY17. Growth
was led by the southern region.

Sector Sales (INR m) EBDITA (INR m) Net Profit (INR m)
Reco Mar-16 Mar-16 Mar-16
CESC 646 Buy 16,028 4.2 -20.5 3,576 20.0 -39.5 1,450 29.5 -40.1
Coal India 306 Neutral 196,628 3.6 25.7 32,585 -22.3 1761.1 28,763 -21.9 379.3
JSW Energy 61 Buy 20,531 -22.5 0.3 8,478 -28.8 -11.9 1,462 -54.4 -32.7
NTPC 165 Buy 176,559 2.0 -8.2 50,238 11.0 -4.1 21,775 5.2 -7.0
Power Grid Corp. 186 Buy 66,159 23.4 6.3 59,272 24.8 6.3 19,887 23.3 6.2
Utilities Sector Aggregate 475,904 3.8 5.3 154,149 3.1 22.9 73,337 -6.0 39.1
Sanjay Jain (SanjayJain@MotilalOswal.com); +91 22 3982 5412

Dhruv Muchhal (Dhruv.Muchhal@MotilalOswal.com); +91 22 3027 8033
January 2017 261
December 2016 Results Preview | Utilities
Power generation in Exhibit 2: Power generation - BU

December increased 6%
Generation - BU change yoy - %
YoY. Power generation in
100
3QFY17 is up 4.8% YoY.
99
99
98
97
97
96
95
95
95
94
94
94
93
92
92
90
90
90
89
89
89
89
88
87
87
86
86
86
86
85
85
85
84
84
83
82
81
79
79
79
78
77
77
76
16 15
13 14
12 12 1213 12 12
10 9 10 8 8
6 5
7 686 5 7
536 6 6 7
5 6
4 4 4 3
1 2 1 1 2021
0 -1
Jun-13
Jun-14
Jun-15
Apr-13
Jun-16
Aug-13
Apr-14
Dec-13
Apr-15
Feb-14
Aug-14
Dec-14
Apr-16
Feb-15
Aug-15
Dec-15
Feb-16
Aug-16
Dec-16
Oct-13
Oct-14
Oct-15
Oct-16
Source: MOSL, CEA
PLF was up 100/125bp in Exhibit 3: NTPC coal-based power plants monthly PLF (%)
November/December.
NTPC coal-based monthly PLF - %
However, PLF incentives are
89.6
88.9
87.4
87.2
85.3
83.9
83.1
82.5
82.2
81.7
81.7
81.6
81.5
81.5
81.3
80.9
80.4
79.4
79.4
79.0
78.5
78.2
78.0
77.8
77.7
likely to be lower, as few
77.1
76.7
76.5
76.2
75.7
74.0
73.7
73.6
72.3
72.3
69.8
plants operated at more

than 85% PLF v/s last year.
Jul-14
Jul-15
Jul-16
Nov-14
Nov-15
Nov-16
May-14
May-15
May-16
Jan-14
Mar-14
Sep-14
Jan-15
Mar-15
Sep-15
Jan-16
Mar-16
Sep-16
Source: MOSL, CEA
Exhibit 4: NTPC commercialized and commissioned capacity (MW)
Commercialized Commissioned
1565
1160 1255
1105
800 800
565 675 650 660
500 500 450525
99 110 20 20 15 0 0 0
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
Source: MOSL, Company Data
January 2017 262

Exhibit 5: NTPC regulated equity – INR b
Regulated Equity
414 420 423 427

366 369 369 389 394
326 326 326 352 352 352
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
Exhibit 6: Power Grid capex and capitalization (INR b)
Capitalized Capex
172
71 68 64 66 67 70
49 58 47 49 50 51 45 51 51 45 50 56 53 53
25
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
Regulated equity base is Exhibit 7: Power Grid regulated equity base (INR b)
up 13% YoY.
Regulated equity
404 420
370 382 388
305 316 328
265 276 293
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
January 2017 263

Coal India’s volume monitor – December 2016

Exhibit 1: Production grew 4.1% YoY in December
Production (mt) YoY (%)

15 13 13.5
13 13 12
9 11 10 10.7 10.0
7 5 5 7 7 6.3
5 5 5 6 5 6
3.4 3.9 5.5 5.34.1
2 1
0 -2 -2 -1.9
-3.4 -5.2
44 -10.4
47
43
53
38
36
35
33
35
35
40
44
47
47
48
57
42
41
39
35
36
37
44
47
52
53
51
59
40
43
43
37
32
35
44
50
54
Jun-14
Jun-15
Jun-16
Apr-14
Dec-13
Feb-14
Aug-14
Apr-15
Dec-14
Feb-15
Aug-15
Apr-16
Dec-15
Feb-16
Aug-16
Dec-16
Oct-14
Oct-15
Oct-16
Exhibit 2: Dispatches grew 6.8% YoY in December
Dispatches (mt) YoY (%)

15 14
10 10 9 109.6
6 6 7 7 6 7 7 7 9 5.53.5 4.16.6 6.8
3 2 6.2
1 2 1 2 0 -1
1.5
-2 -2 -2.5 -3.1
-6.6
-9.6
43
44
40
45
41
41
38
38
37
35
39
42
44
44
43
48
44
44
42
41
41
40
44
45
48
48
46
49
42
46
45
41
37
38
43
48
51
Jun-14
Jun-15
Jun-16
Apr-14
Dec-13
Apr-15
Feb-14
Aug-14
Dec-14
Apr-16
Feb-15
Aug-15
Dec-15
Feb-16
Aug-16
Dec-16
Oct-14
Oct-15
Oct-16
Exhibit 3: Inventory at mines declined MoM in December (26mt destocked YTD FY17)
COAL inventory - mt
58 55
54 52 52 49
46 49 45 48 47 44
40 37 44 42 41 38
39 39
37 35 32 32 34 38 35 32
32 32 29 31 33
Jun-14
Jun-15
Jun-16
Apr-14
Aug-14
Apr-15
Dec-14
Apr-16
Feb-15
Aug-15
Dec-15
Feb-16
Aug-16
Dec-16
Oct-14
Oct-15
Oct-16
January 2017 264

Exhibit 4: Coal India monthly e-auction realization
Avg. realization - INR/t
3,616
3,566
3,347
3,114
3,045
2,555
2,317
2,305
2,256
2,220
2,218
2,183
2,164
2,143
2,061
2,023
1,934
1,885
1,879
1,803
1,783
1,769
1,723
1,718
1,715
1,608
1,605
1,515
1,469
1,448
1,447
1,361
1,293
1,285
1,227
Jul-14
Jul-15
Jul-16
Nov-14
Nov-15
Nov-16
May-14
May-15
May-16
Jan-14
Mar-14
Sep-14
Jan-15
Mar-15
Sep-15
Jan-16
Mar-16
Sep-16
Exhibit 5: Relative performance—3m (%) Exhibit 6: Relative performance—1Yr (%)

Sensex Index MOSL Utilities Index Sensex Index MOSL Utilities Index
102 120
99 110
96 100
93 90
90 80
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Dec-15
Aug-16
Dec-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-16
Nov-16
Dec-16
Sep-16
Oct-16

Sector / Companies CMP Reco. EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
Utilities
CESC 646 Buy 48.4 70.7 77.6 13.4 9.1 8.3 6.5 5.8 5.4 4.7 6.3 6.6
Coal India 306 Neutral 16.1 18.4 20.8 19.1 16.6 14.7 14.3 11.6 10.0 32.9 37.7 42.6
JSW Energy 61 Buy 5.1 3.2 1.5 11.9 18.8 41.8 6.5 7.5 8.3 9.6 5.9 2.6
NTPC 165 Buy 11.9 14.3 17.3 13.9 11.5 9.5 11.2 9.1 7.3 10.6 11.9 13.3
Power Grid Corp. 186 Buy 14.2 16.8 19.3 13.1 11.1 9.7 9.2 7.9 7.1 16.1 16.6 16.9
January 2017 265

CESC
Bloomberg CESC IN
CMP: INR646 TP: INR940 Buy
 We expect CESC’s PAT to be broadly flat YoY at INR1.45b (on Ind-AS
basis) as steady increase in capitalization is offset by the impact of
1,6,12 Rel Perf. (%) 10 / 7 / 20
negative bid on the captive coal block.
 Sales volume growth is estimated at 2% YoY to 2,284MU.
Financial Snapshot (INR Million)  Profitability of Dhariwal is likely to improve with the commissioning
Y/E MARCH 2016 2017E 2018E 2019E of 34MW PPA with Noida.
Sales 119.0 137.1 149.0 157.0
EBITDA 28.5 32.9 35.6 36.8
NP 3.7 6.4 9.4 10.3
EPS (INR) 27.8 48.4 70.7 77.6
EPS Gr. (%) 86.6 73.9 46.2 9.8
BV/Sh. (INR ) 470.5 439.4 498.1 563.7
RoE (%) 6.0 10.6 15.1 14.6
RoCE (%) 9.1 10.2 11.2 11.3
Payout (%) 36.0 20.7 14.1 12.9
VALUATION
P/BV (x) 1.0 1.4 1.3 1.1  Performance of Spencer.
EV/EBITDA (x) 6.8 6.4 5.7 5.3  Commissioning of full 187MW PPA with Noida.
Div. Yield (%) 2.1 1.6 1.6 1.6
Quarterly Performance - Standalone INR Million

Y/E March FY16 FY17
FY16 FY17E
Sales 17,040 17,720 15,380 14,790 20,120 20,160 16,028 15,335 64,340 70,772
Change (%) -8.5 6.7 23.1 4.4 18.1 13.8 4.2 3.7 4.9 10.0
EBITDA 3,860 4,380 2,980 4,760 5,110 5,910 3,576 4,218 15,980 18,814
Change (%) 2.1 3.5 -0.3 5.5 32.4 34.9 20.0 -11.4 3.2 17.7
As of % Sales 22.7 24.7 19.4 32.2 25.4 29.3 22.3 27.5 24.8 26.6
Depreciation 910 900 890 990 960 990 1,000 877 3,690 3,827
Interest 1,200 1,160 1,050 1,120 1,150 1,160 1,183 1,261 4,530 4,754
Other Income 250 250 430 300 260 320 443 273 1,230 1,296
Regulatory (inc)/exp 0 0 0 0 620 600 0 0 0 1,220
PBT 2,000 2,570 1,470 2,950 2,640 3,480 1,835 2,353 8,990 10,309
Tax 480 620 350 470 900 1,060 385 -181 1,920 2,165
Effective Tax Rate (%) 24.0 24.1 23.8 15.9 34.1 30.5 21.0 -7.7 21.4 21.0
Reported PAT 1,520 1,950 1,120 2,480 1,740 2,420 1,450 2,534 7,070 8,144
Adjusted PAT 1,520 1,950 1,120 2,480 1,740 2,420 1,450 2,534 7,070 8,144
Change (%) 0.7 1.6 0.9 -12.6 14.5 24.1 29.5 2.2 -3.9 15.2
E: MOSL Estimates
January 2017 266

Coal India
Bloomberg COAL IN
CMP: INR306 TP: INR297 Neutral
 We expect Coal India’s EBITDA (ex-OBR) to decline 19% YoY to
M. Cap. (INR b)/(USD b) 1901 / 28
INR40b, as realization is estimated to be flat YoY while cost is
1,6,12 Rel Perf. (%) -1 / -1 / -11
expected to rise on wage hike provisioning.
 Dispatches are up 4% YoY to 143mt. FSA volumes are estimated to
Financial Snapshot (INR Million) decline 6% YoY to 110mt on weak demand by power sector. E-
Y/E MARCH 2016 2017E 2018E 2019E auction volumes are up 80% YoY to ~27mt on special e-auctions.
Net Sales 756.4 753.0 823.2 885.8  FSA realization is estimated to increase 2% YoY to INR1,303/t.
EBITDA 187.5 132.8 172.3 198.1 While realization has been disappointing over the past couple of
NP 142.7 99.7 114.2 129.4 quarters, we expect the quarter to benefit from increase in share
Adj.EPS (INR) 22.6 16.1 18.4 20.8 of dispatches from higher grade mines and non-power sector.
EPS Gr. (%) 4.0 -29.0 14.6 13.3  E-auction realization is estimated to increase 8% QoQ to
BV/Sh. (INR) 53.6 48.7 48.8 48.9
INR1,450/t due to increase in share of lower grade special e-
RoE (%) 42.2 32.9 37.7 42.6
auction volumes.
RoCE (%) 40.0 33.4 40.5 45.7
 PAT is estimated to decline 22% YoY to INR28.7b on weak
Payout (%) 145.5 99.6 99.6 99.6
operating performance.
VALUATION
P/E (x) 12.8 18.0 15.7 13.9
EV/EBITDA 6.4 9.0 7.2 6.4  E-auction volumes and realization.
(x)
Div. Yield (%) 9.5 4.6 5.3 6.0  Global coal prices.
Quarterly Performance INR Million

FY16 FY17
Sales 189,558 169,576 189,715 207,595 177,961 156,450 196,628 221,990 756,443 753,028
Change (%) 6.5 8.2 6.8 -0.1 -6.1 -7.7 3.6 6.9 5.0 -0.5
Cash EBITDA (OBR adj.) 50,911 25,171 49,337 62,100 38,621 3,176 40,004 50,969 187,519 132,769
As of % Sales 26.9 14.8 26.0 29.9 21.7 2.0 20.3 23.0 24.8 17.6
Depreciation 5,575 5,864 6,279 6,946 6,672 6,921 6,956 7,032 24,664 27,580
OBR 7,091 410 7,419 13,195 2,331 1,425 7,419 15,722 28,114 26,896
Interest 40 15 30 121 890 970 876 804 207 3,540
Other Income 20,095 19,636 19,819 21,393 17,564 19,800 18,177 18,443 80,943 73,985
EO Income/(Expense) -226 248 337 56 0 0 0 0 415 0
PBT 58,072 38,766 55,766 63,287 46,293 13,661 42,930 45,854 215,891 148,738
Tax 20,429 13,328 18,584 20,807 15,641 7,660 14,167 11,602 73,148 49,069
Reported PAT 37,643 25,438 37,182 42,479 30,653 6,001 28,763 34,252 142,743 99,669
Adjusted PAT 37,869 25,190 36,845 42,424 30,653 6,001 28,763 34,252 142,329 99,669
Change (%) -5.7 15.2 12.4 0.4 -19.1 -76.2 -21.9 -19.3 3.7 -30.0
E: MOSL Estimates
January 2017 267

JSW Energy
Bloomberg JSW IN
 We expect JSW Energy’s PAT to decline 54% YoY to INR1.5b due to
M. Cap. (INR b)/(USD b) 100 / 1
under-utilization of Vijaynagar plant and increase in cost of imported
1,6,12 Rel Perf. (%) 7 / -25 / -32
coal.
 Vijaynagar is estimated to have operated at ~50% PLF v/s 96% in
Financial Snapshot (INR Million) 3QFY16.
Y/E March 2016 2017E 2018E 2019E  Imported coal price average is estimated to increase by ~USD14/t
Sales 996.9 872.6 914.5 1,028.1 QoQ to USD72/t.
EBITDA 41.4 37.1 34.5 34.7
NP 12.5 8.4 5.3 2.4
EPS (INR) 7.6 5.1 3.2 1.5
EPS Gr. (%) -10.0 -32.4 -36.8 -54.9
BV/Sh. (INR ) 52.0 54.9 55.9 55.0
RoE (%) 15.5 9.6 5.9 2.6
RoCE (%) 12.5 9.9 8.9 8.0
Payout (%) 26.3 38.9 61.6 136.7
VALUATION
P/BV (x) 1.3 1.0 1.0 1.0  International coal prices.
EV/EBITDA (x) 6.8 6.3 7.3 8.1  Short-term power market prices.
Div. Yield (%) 2.9 3.5 3.5 3.5
FY16 FY17
Net Sales 21,070 25,314 26,491 26,814 24,500 20,470 20,531 21,756 99,690 87,257
YoY Change (%) -17.6 12.4 11.3 22.5 16.3 -19.1 -22.5 -18.9 6.3 -12.5
EBITDA 8,173 9,983 11,913 11,378 11,173 9,627 8,478 7,825 41,446 37,103
Margins (%) 38.8 39.4 45.0 42.4 45.6 47.0 41.3 36.0 41.6 42.5
Depreciation 1,984 2,240 2,650 2,627 2,398 2,471 2,545 2,586 9,502 10,000
Interest 2,640 3,511 4,491 4,389 4,293 4,356 4,225 3,871 15,032 16,745
Other Income 691 898 264 247 416 516 390 238 2,100 1,560
Extra-Ord expense 0 -1,500 0 0 0 0 0 0 -1,500 0
PBT 4,239 6,629 5,035 4,610 4,899 3,316 2,098 1,606 20,513 11,919
Tax 1,155 1,537 1,816 1,543 1,248 1,167 566 237 6,051 3,218
Rate (%) 27.2 23.2 36.1 33.5 25.5 35.2 27.0 14.8 29.5 27.0
310 172 12 12 -14 -25 69 246 507 276
Loss of Asso. Cos.
Reported PAT 2,775 4,920 3,206 3,054 3,665 2,174 1,462 1,123 13,955 8,425
Adj PAT 2,775 3,767 3,206 3,054 3,665 2,174 1,462 1,123 12,897 8,425
YoY Change (%) -15.2 16.4 -19.0 -5.9 32.1 -42.3 -54.4 -63.2 -6.0 -34.7
Margins (%) 13.2 14.9 12.1 11.4 15.0 10.6 7.1 5.2 12.9 9.7
E: MOSL Estimates
January 2017 268

NTPC
Bloomberg NTPC IN
 We estimate a modest 5% YoY growth in adjusted PAT to
M. Cap. (INR b)/(USD b) 1359 / 20
INR21.7b in 3QFY17. Generation business PAT is likely to grow 7%
1,6,12 Rel Perf. (%) 1 / 8 / 11
YoY to INR19.5b while other income is estimated to decline 9%
YoY to INR2.3b.
Financial Snapshot (INR Million)  PLF incentives are expected to be insignificant.
Y/E MARCH 2016 2017E 2018E 2019E  Commercial capacity is estimated to remain unchanged at
Net Sales 787.1 822.9 963.5 1,107. 45.9GW.
2
EBITDA 191.6 230.7 300.4 381.4 NTPC shifted to coal sampling ‘ at wagon’ from ‘ at secondary
NP 101.6 97.8 117.9 142.4 crusher’. The impact of this change will be a key variable to watch
Adj.EPS (INR) 12.3 11.9 14.3 17.3 for.
EPS Gr. (%) 1.7 -3.8 20.6 20.8
BV/Sh. (INR) 108.2 115.2 124.1 135.4
RoE (%) 11.9 10.6 11.9 13.3
RoCE (%) 7.3 6.9 8.1 9.5
Payout (%) 27.2 33.7 31.5 28.9
VALUATION
P/E (x) 10.5 13.5 11.2 9.3
EV/EBITDA (x) 11.1 11.0 9.0 7.2  PLF for coal-based projects and generation loss.
Div. Yield (%) 2.5 2.8 3.1 3.7  Core RoE and incentives.
 Impact of shift in GCV determination.
Quarterly Performance (standalone) INR million

Y/E March FY16 FY17
FY16 FY17E
Sales 170,187 177,229 173,175 179,901 187,354 192,415 176,559 179,415 700,492 735,743
Change (%) -5.9 6.9 -7.6 -6.4 10.1 8.6 2.0 -0.3
EBITDA 33,718 38,550 45,277 53,355 50,874 52,393 50,238 57,299 170,900 210,804
Depreciation 12,380 13,229 13,935 14,710 13,952 14,342 15,829 17,623 54,253 61,745
Interest 7,309 8,145 8,251 8,599 9,004 8,898 9,973 11,174 32,304 39,050
Other income 3,046 4,510 3,405 5,706 2,810 3,471 2,852 5,637 16,667 14,770
Exceptional 0 0 -384 -39 33 -44 0 0 -424 -11
PBT 17,076 21,686 26,113 35,712 30,761 32,580 27,287 34,139 100,587 124,768
Tax -4,278 -7,297 1,184 8,548 7,066 7,621 5,512 6,896 -1,842 27,094
PAT 21,354 28,983 24,929 27,164 23,695 24,960 21,775 27,243 102,429 97,673
Change (%) -3.0 39.9 -18.9 -7.7 11.0 -13.9 -12.7 0.3 -0.5 -4.6
Adj. PAT 21,330 22,165 20,691 25,603 24,047 23,410 21,775 27,243 89,789 96,475
Change (%) 9.6 24.2 -10.1 -6.3 12.7 5.6 5.2 6.4 7.4
A. Generation 18,742 19,364 18,197 21,355 21,850 20,991 19,499 22,745 77,658 85,085
Core RoE (%) 20 20 19 21 21 20 18 21 20 20
a. Base RoE - 15.5% 14,305 14,690 15,168 15,656 16,166 16,337 16,476 16,941 59,819 65,920
b. PLF incentive 780 890 -17 1,052 1,530 0 0 2,061 2,705 3,591
c. Others 3,657 3,784 3,046 4,647 4,154 3,756 3,023 3,743 15,134 14,676
B. Other income 2,588 2,801 2,493 4,248 2,197 2,419 2,276 4,498 12,132 11,391
Key metrics
Regulated Equity 369,160 389,020 393,853 414,204 420,146 423,072 427,302 447,085 414,204 447,085
Commercial capacity (MW) 43,143 43,943 44,443 45,103 45,878 45,928 45,928 48,028 45,103 48,028
Coal-based PLF (%) 77.6 77.3 78.2 81.3 81.4 74.7 0.0 0.0 78.6
E: MOSL Estimates 50
January 2017 269

Power Grid Corporation

Bloomberg PWGR IN
 We expect PWGR’s adjusted PAT to grow 23% YoY to INR19b on
M. Cap. (INR b)/(USD b) 974 / 14
higher capitalization. We estimate capitalization at INR70b.
0 / 15 / 28
 We expect regulated equity base to increase to INR420b by 3QFY17
1,6,12 Rel Perf. (%)
from INR369b in 2QFY16.
Financial Snapshot (INR Million)  We estimate core-RoE of 17.3% (v/s 17.2% in 2Q).
Y/E MARCH 2016 2017E 2018E 2019E
Sales 213.5 263.9 311.6 350.8
EBITDA 186.0 234.3 278.8 314.5
NP 60.1 74.4 87.8 100.7
EPS (INR) 11.5 14.2 16.8 19.3
EPS Gr. (%) 18.2 23.6 18.1 14.7
BV/Sh. (INR ) 82.6 94.5 108.2 119.5
RoE (%) 14.7 16.1 16.6 16.9
RoCE (%) 6.6 7.4 8.0 8.5
Payout (%) 20.8 17.1 18.1 42.0
VALUATION
P/BV (x) 1.7 1.9 1.7 1.5  Capitalization/capex guidance for FY18.
EV/EBITDA 9.5 9.1 7.8 7.0  Details on competitively bid projects.
(x)
Div. Yield (%) 1.5 1.1 1.4 3.7  Development on green energy projects, state JVs, etc.
Quarterly Performance INR million

FY16 FY17
Sales 47,170 49,046 53,596 57,536 60,691 62,254 66,159 66,075 207,348 255,598
Change (%) 19.8 18.1 23.1 23.4 28.7 26.9 23.4 14.8 21.2 23.3
EBITDA 41,369 43,051 47,486 50,874 53,688 55,746 59,272 59,027 182,781 227,903
Change (%) 22.8 21.1 27.0 26.6 29.8 29.5 24.8 16.0 24.5 24.7
As of % Sales 87.7 87.8 88.6 88.4 88.5 89.5 89.6 89.3 88.2 89.2
Depreciation 13,695 14,481 15,805 17,847 17,573 18,769 20,191 21,158 61,828 77,691
Interest 11,091 11,490 12,875 14,773 15,178 15,876 16,447 15,783 50,230 63,283
Other Income 710 1,224 1,452 2,079 1,902 2,507 2,538 -905 5,464 6,098
Extraordinary Inc / (Exp) 0 0 0 0 0 0 0 0 0 0
PBT 17,293 18,304 20,259 20,332 22,840 23,608 25,173 21,180 76,188 93,027
Tax 3,628 3,823 4,127 4,341 4,819 4,888 5,286 4,448 15,920 19,536
Reported PAT 13,665 14,480 16,131 15,991 18,022 18,720 19,887 16,732 60,267 73,491
Adjusted PAT
13,665 14,480 16,131 15,991 18,022 18,720 19,887 16,732 60,267 73,491
(Pre Exceptional)
Change (%) 14.7 19.7 28.8 13.2 31.9 29.3 23.3 4.6 19.0 21.9
E: MOSL Estimates
January 2017 270

December 2016 Results Preview | Sector: Textiles
Arvind
Bloomberg ARVND IN CMP: INR358 TP: INR444 (+24%) Buy
 We expect single-digit growth in the textiles segment, with margin
improvement following inventory gains (cotton price increase).
Based on our industry checks and management interaction, we
1,6,12 Rel Perf. (%) 3 / 8 / -1
believe (a) all formats (EBO/MBO/K ey Accounts (K A)) in the B&R
division did well in October due to festive season, (b) all formats
performed poorly in November due to demonetization, and (c) the
Y/E March 2016 2017E 2018E 2019E
Sales 84.5 92.7 106.2 120.8
EBO and K A format have returned to normalcy in December, while
EBITDA 10.7 10.5 13.4 15.6 MBO is still impacted.
NP 3.6 3.8 6.2 7.7  We expect ARVND’s revenue to grow 6% YoY (but decline 2% QoQ)
EPS (INR) 14.0 14.8 24.0 29.8 to INR22.9b in 3QFY17, driven by impact on brand and retail
EPS Gr. (%) 6.3 5.6 61.9 24.0 segments due to demonetization.
BV/Sh. (INR) 112.8 148.9 168.1 191.8
RoE (%) 12.9 11.3 15.2 16.5  We expect EBITDA margin to decline 90bp YoY (but expand 210bp
RoCE (%) 10.5 9.5 12.0 13.3 QoQ) to 12.1%, and estimate EBITDA at INR2.77b (-1.3% YoY).
Div Payout (%) 20.5 29.0 20.8 20.8 Adjusted PAT is likely to grow 7.7% to INR1.12b. Buy.
Valuations
P/E (x) 25.5 24.1 14.9 12.0
P/BV (x) 3.2 2.4 2.1 1.9
 Impact of demonetization in the brand and retail (B&R) segment.
EV/EBITDA (x) 11.6 11.0 8.5 7.1  Performance of newly acquired brands and newer formats.
Div Yield (%) 0.7 1.0 1.1 1.4  Realizations in textiles segment.

Net Sales 17,868 19,571 21,575 23,196 21,041 23,311 22,869 25,515 82,210 92,695
YoY Change (%) 0.8 -0.4 4.0 13.7 17.8 19.1 6.0 10.0 4.7 12.8
EBITDA 2,077 2,277 2,805 2,967 2,415 2,323 2,767 2,960 10,126 10,475
Margins (%) 11.6 11.6 13.0 12.8 11.5 10.0 12.1 11.6 12.3 11.3
Depreciation 586 572 654 664 691 719 710 700 2,477 2,810
Interest 959 906 895 945 891 731 660 690 3,705 2,971
Other Income 270 196 188 208 196 221 230 240 862 881
PBT before EO expense 802 994 1,445 1,566 1,029 1,094 1,627 1,810 4,807 5,575
Extra-Ord expense -29 56 -13 0 -2 -63 0 0 80 61
PBT 773 1,050 1,432 1,566 1,027 1,031 1,627 1,810 4,727 5,514
Tax 233 358 386 458 317 270 504 570 1,434 1,764
Rate (%) 30.2 34.1 26.9 29.2 30.9 26.1 31.0 31.5 30.3 32.0
MI & Profit/Loss of Asso. Cos. -12 -15 13 5 -24 45 0 0 -9 82
Reported PAT 552 707 1,033 1,103 734 717 1,123 1,240 3,284 3,831
Adj PAT 572 670 1,042 1,104 735 763 1,123 1,240 3,684 3,873
YoY Change (%) -36.9 -30.1 -6.1 47.0 28.5 13.9 7.7 12.3 -3.7 5.1
Margins (%) 3.1 3.6 4.8 4.8 3.5 3.1 4.9 4.9 4.0 4.1
E: MOSL Estimates

January 2017 271
December 2016 Results Preview | Sector: Consumer
Bata India
Bloomberg BATA IN CMP: INR463 TP: INR483 (+4%) Buy
 Bata’s revenue has declined 10-15% in November – sales were
severely affected in the first week of demonetization, but
somewhat improved thereafter. Bata rolled out some company-
1,6,12 Rel Perf. (%) 12 / -15 / -13
level schemes in the second week of demonetization, the response
to which has been in line with management expectations.
Y/E March 2016 2017E 2018E 2019E  We expect revenue to decline 8% YoY (and 2.7% QoQ) to INR5.68b
Sales 24.3 23.1 26.0 29.5 in 3QFY17.
EBITDA 2.7 2.4 3.0 3.7
 EBITDA is likely to decline 32% YoY to INR540m, with margin decline
NP 1.4 1.4 1.8 2.3
of 340bp to 9.5%.
EPS (INR) 11.2 10.9 14.2 17.7
EPS Gr. (%) -31.2 -2.8 30.5 24.5  On a high base, adjusted PAT is expected to decline 30% YoY to
BV/Sh.(INR) 92.0 100.4 111.0 124.5 INR314m.
RoE (%) 13.1 11.3 13.4 15.0
RoCE (%) 13.2 11.4 13.5 15.1
Payout (%) 25.4 22.2 25.5 23.9
Valuations Key things to watch for
P/E (x) 41.5 42.7 32.7 26.3  SSS growth during the quarter.
P/BV (x) 5.1 4.6 4.2 3.7  Share of accessories in total revenue.
EV/EBITDA (x) 20.8 23.4 18.2 14.4  Impact on margins due to promotional campaigns.
Dividend yield 0.8 0.4 0.6 0.8  New store additions.
Consolidated 1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
Net Sales 6,849 5,747 6,176 5,447 6,746 5,837 5,682 5,012 24,220 23,145
YoY Change (%) 10.1 4.9 15.0 10.9 -1.5 1.6 -8.0 -8.0 NM -4.4
EBITDA 834 480 798 553 820 535 540 451 2,666 2,361
Margins (%) 12.2 8.4 12.9 10.2 12.2 9.2 9.5 9.0 11.0 10.2
Depreciation 194 192 195 206 162 160 170 180 788 679
Interest 5 6 4 3 7 13 4 3 18 14
Other Income 78 97 71 104 110 141 110 100 350 450
PBT 1,143 697 669 447 761 504 476 368 1,463 2,118
Tax 240 154 224 169 257 158 162 125 787 720
Rate (%) 33.7 40.6 33.5 37.7 33.8 31.3 34.0 34.0 35.7 34.0
Reported PAT 902 543 445 279 504 346 314 243 2,185 1,398
Adj PAT 473 226 445 279 504 346 314 243 1,439 1,398
YoY Change (%) -22.3 -42.1 27.4 10.5 6.6 53.2 -29 -12.9 315.9 -3
Margins (%) 6.9 3.9 7.2 5.1 7.5 5.9 5.5 4.8 5.9 6.0
E: MOSL Estimates

January 2017 272
Castrol (India)
Bloomberg CSTRL IN CMP: INR386 TP: INR499 (+29%) Buy
 We expect revenue to remain flat YoY (and grow 3% QoQ) at
M. Cap. (INR b)/(USD b) 191 / 3
INR7.8b due to the combined effect of YoY flat volume at 46.4m
liters and realization at INR169/liter.
1,6,12 Rel Perf. (%) -4 / -1 / -17
 We expect CSTRL to report EBITDA of INR2.2b (+4% YoY, +4%
Financial Snapshot (INR b) QoQ). EBITDA margin would be 27.8%, higher than 26.6% in
Y/E Dec 2014 2015 2016E 2017E 4QCY15.
Sales 33.9 33 33.6 36
 We estimate net profit at INR1.5b (+4% YoY, +5% QoQ).
EBITDA 7.2 9.3 9.9 10.3
Adj. PAT 4.7 6.4 6.6 7.1  The stock trades at 28.8x CY16E and 27x CY17E EPS. Buy.
Adj. EPS (INR) 9.6 12.8 13.4 14.3
EPS Gr. (%) 6.1 33.8 4.2 6.7
BV/Sh.(INR) 10 11.6 12.9 14.3
RoE (%) 76 118.4 108.8 104.6
RoCE (%) 76.2 118.5 109.1 104.7
Payout (%) 92.7 87.1 90.3 90.3
P/E (x) 45.9 34.3 28.8 27 (a) Volume growth.
P/BV (x) 43.8 37.8 29.8 26.9 (b) Operating margin expansion.
EV/EBITDA (x) 29.8 22.8 18.2 17.3 (c) Launch of new products.
Div. Yield (%) 1.9 2.2 2.6 2.8 (d) Competitive pressure from other players.

Y/E December CY15 CY16 CY15 CY16E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 7,958 9,202 7,811 7,882 8,521 9,679 7,589 7,834 32,853 33,623
YoY Change (%) -2.4 1.1 -2.3 -7.9 7.1 5.2 -2.8 -0.6 -2.8 2.3
EBITDA 1,873 2,728 2,127 2,093 2,516 3,144 2,101 2,179 8,821 9,940
YoY Change (%) 29.9 45.1 22.7 2.8 34.3 15.2 -1.2 4.1 24.4 12.7
Margins (%) 23.5 29.6 27.2 26.6 29.5 32.5 27.7 27.8 26.8 29.6
Depreciation 111 94 94 91 86 149 107 113 390 455
Interest 3 2 1 2 4 7 10 5 8 26
Other Income 164 186 181 250 223 202 183 193 781 801
PBT 1,923 2,818 2,213 2,250 2,649 3,190 2,167 2,254 9,204 10,260
Tax 761 973 781 842 925 1,121 778 793 3,357 3,617
Rate (%) 39.6 34.5 35.3 37.4 34.9 35.1 35.9 35.2 36.5 35.3
Reported PAT 1,162 1,845 1,432 1,408 1,724 2,069 1,389 1,461 5,847 6,643
Adj PAT 1,162 1,845 1,432 1,408 1,724 2,069 1,389 1,461 5,847 6,643
YoY Change (%) 15.9 43.7 21.5 6.7 48.4 12.1 -3.0 3.7 22.2 13.6
Margins (%) 14.6 20.0 18.3 17.9 20.2 21.4 18.3 18.6 17.8 19.8
E: MOSL Estimates
Swarnendu Bhushan (Swarnendu.Bhushan@MotilalOswal.com) /Abhinil Dahiwale (Abhinil.Dahiwale@motilaloswal.com)

January 2017 273
December 2016 Results Preview | Sector: Fertilizers
Coromandel International
Bloomberg CRIN IN CMP: INR304 Under Review
 We expect revenue to grow 3% YoY (decline 21% QoQ) to INR28.4b
in 3QFY17 on a low base.
1,6,12 Rel Perf. (%) 20 / 23 / 57  EBITDA margin is likely to expand 220bp YoY (shrink 260bp QoQ) to
8.2%. EBITDA should grow 41% YoY to INR2.33b.
 We expect adjusted PAT to grow 83% YoY to INR1,177m on a very
Y/E March 2016 2017E 2018E 2019E
low base.
Sales 115.2 116.4 129.8 143.1
EBITDA 7.7 9.6 10.6 12.6
NP 3.4 4.7 5.8 7.4
EPS (INR) 11.8 16.3 20.0 25.5
EPS Gr. (%) -14.9 37.8 22.7 27.6
BV/Sh. (INR) 83.2 92.3 103.9 119.2
RoE (%) 14.9 18.5 20.4 22.8
RoCE (%) 10.8 13.6 15.6 18.8
Valuations
P/E (x) 25.6 18.6 15.2 11.9
 Performance of exports in the non-subsidy business.
P/BV (x) 3.6 3.3 2.9 2.5
EV/EBITDA (x) 14.1 10.4 9.1 7.4
EV/Sales (x) 0.9 0.9 0.7 0.7

Consolidated 1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
Net Sales 22,041 36,003 27,555 30,209 20,595 35,752 28,381 31,719 115,807 116,448
YoY Change (%) 17.2 3.9 -7.0 0.8 -6.6 -0.7 3.0 5.0 2.4 0.6
EBITDA 929 3,072 1,653 2,004 886 3,846 2,327 2,569 7,658 9,630
Margins (%) 4.2 8.5 6.0 6.6 4.3 10.8 8.2 8.1 6.6 8.3
Depreciation 261 281 247 275 244 254 270 280 1,063 1,064
Interest 599 498 542 567 651 586 480 470 2,206 2,178
Other Income 156 247 142 116 125 177 180 198 660 688
PBT before EO expense 225 2,540 1,006 1,278 117 3,183 1,757 2,017 5,049 7,078
Extra-Ord expense 0 0 -250 0 0 0 0 0 -250 0
PBT 225 2,540 1,256 1,278 117 3,183 1,757 2,017 5,299 7,078
Tax 72 844 453 351 38 1,054 580 666 1,720 2,336
Rate (%) 32.0 33.2 36.0 27.5 32.1 33.1 33.0 33.0 32.4 33.0
Loss of Asso. Cos. 0 1 0 0 5 -4 0 0 1 0
Reported PAT 153 1,695 804 927 75 2,134 1,177 1,352 3,579 4,742
Adj PAT 153 1,695 644 927 75 2,134 1,177 1,352 3,410 4,742
YoY Change (%) -53.0 -5.8 -47.9 35.0 -51.0 25.9 82.9 45.8 -15.6 39.1
Margins (%) 0.7 4.7 2.3 3.1 0.4 6.0 4.1 4.3 2.9 4.1
E: MOSL Estimates

January 2017 274
December 2016 Results Preview | Sector: Aerospace
Dynamatic Tech
Bloomberg DYTC IN CMP: INR2,960 TP: INR3,388 (+14%) Buy
 We expect revenue to grow 5% YoY (flattish QoQ) to INR3.81b in
3QFY17, led by weak performance in the Indian Hydraulics division.
52-Week Range (INR) 3650 / 1482
YoY growth is likely to decline, led by demonetization.
1,6,12 Rel Perf. (%) -1 / 21 / 21
 EBITDA margin is likely to expand 300bp YoY to 11.3%. EBITDA is
Financial Snapshot (INR Billion) expected to grow 43% YoY to INR430m.
Y/E March 2016 2017E 2018E 2019E  We estimate adjusted PAT at INR85m as against profit of INR25m in
Sales 14.9 15.6 17.3 19.1
3QFY16. Buy.
EBITDA 1.4 1.8 2.2 2.7
NP 0.1 0.4 0.7 1.1
EPS (INR) 19.4 67.6 112.9 166.7
EPS Gr. (%) -30.6 249.1 67.0 47.6
BV/Sh(INR) 406.2 489.6 602.5 769.2
RoE (%) 4.7 15.1 20.7 24.3
RoCE (%) 6.8 10.3 12.3 22.4
Valuations
P/BV (x) 7.3 6.0 4.9 3.8  Execution outlook and ramp-up for the Aerospace division.
EV/EBITDA (x) 16.8 13.3 10.8 8.7  Impact of demonetization in Indian Automotive division.
EV/Sales (x) 1.6 1.6 1.4 1.2

Net Sales 3,728 3,704 3,628 3,878 3,946 3,819 3,809 4,034 14,938 15,616
YoY Change (%) -12.3 -14.2 -5.4 -0.2 5.9 3.1 5.0 4.0 -8.3 4.5
EBITDA 245 338 300 528 479 441 430 492 1,411 1,843
Margins (%) 6.6 9.1 8.3 13.6 12.1 11.6 11.3 12.2 9.4 11.8
Depreciation 129 130 127 138 128 131 130 132 524 527
Interest 193 182 175 177 181 188 186 184 727 740
Other Income 11 6 4 28 26 20 12 16 50 65
PBT before EO expense -66 32 2 241 197 142 126 193 209 640
PBT -66 32 2 241 197 142 126 193 209 640
Tax 31 29 -22 49 68 62 42 64 86 211
Rate (%) -46.1 90.1 -973.8 20.3 34.7 43.4 33.0 33.0 41.2 33.0
Reported PAT -97 3 25 192 128 80 85 129 123 429
Adj PAT -97 3 25 192 128 80 85 129 123 429
YoY Change (%) NM -90.4 339.1 281.4 NM 2,452.5 244.5 -32.9 -30.5 248.8
Margins (%) -2.6 0.1 0.7 5.0 3.3 2.1 2.2 3.2 0.8 2.7
E: MOSL Estimates

January 2017 275
December 2016 Results Preview | Sector: Textiles
Indo Count Industries

Bloomberg ICNT IN CMP: INR166 TP: INR223(+29%) Buy
 We expect revenue to grow 10% YoY (decline 4% QoQ) to INR5.53b
in 3QFY17.
1,6,12 Rel Perf. (%) 7 / -15 / -26  EBITDA margin is likely to expand 25bp YoY to 21.8%. EBITDA
should grow 11% YoY to INR1.21b.
 PAT should grow 10.5% YoY to INR701m. Buy.
Y/E March 2016 2017E 2018E 2019E
Sales 22.1 23.6 26.3 29.6
EBITDA 4.7 5.2 5.9 6.8
NP 2.6 3.1 3.7 4.2
EPS (INR) 13.4 15.7 18.5 21.5
EPS Gr. (%) 61.6 17.0 18.2 15.8
BV/Sh. (INR) 33.3 49.7 69.2 92.0
RoE (%) 48.9 37.8 31.2 26.6
RoCE (%) 33.3 30.8 28.8 25.7 Key things to watch for
Valuations  Any addition of clients and geographies, and ramp-up there.
P/E (x) 12.8 11.0 9.3 8.0  Progress on the brands business.
P/BV (x) 5.2 3.5 2.5 1.9  Foreign exchange gains and losses.
EV/EBITDA (x) 7.1 6.1 5.2 4.2
EV/Sales (x) 1.5 1.3 1.2 1.0

Net Sales 4,579 5,765 5,026 5,250 4,926 5,763 5,529 5,880 22,128 23,567
YoY Change (%) 44.9 20.4 17.3 15.0 7.6 0.0 10.0 12.0 24.2 6.5
EBITDA 1,012 1,052 1,084 1,163 1,103 1,164 1,205 1,300 4,735 5,161
Margins (%) 22.1 18.2 21.6 22.2 22.4 20.2 21.8 22.1 21.4 21.9
Depreciation 67 69 45 51 80 73 59 60 188 250
Interest 146 156 93 119 98 116 90 84 549 374
Other Income 0 0 0 0 0 0 6 6 0 85
PBT 798 828 946 993 924 975 1,062 1,162 3,998 4,622
Tax 277 311 311 333 321 348 361 395 1,351 1,525
Rate (%) 34.6 37.6 32.9 33.5 34.8 35.7 34.0 34.0 33.8 33.0
Reported PAT 522 516 634 660 603 627 701 767 2,647 3,097
Adj PAT 522 516 634 660 603 627 701 767 2,647 3,097
YoY Change (%) 109.4 21.5 45.4 44.5 15.6 21.5 10.5 16.2 61.6 17.0
Margins (%) 11.4 9.0 12.6 12.6 12.2 10.9 12.7 13.0 12.0 13.1
E: MOSL Estimates

January 2017 276
December 2016 Results Preview | Sector: Others
Info Edge
Bloomberg INFOE IN CMP: INR859 TP: INR1,050 (+22%) Buy
 We expect standalone revenue to grow 23% YoY to INR2.1b.
M. Cap. (INR b)/(USD b) 105 / 2
 Recruitment segment (~75% of business) is likely to grow 23% YoY
to INR1.6b. We estimate real estate portal, 99acres.com’s revenue
1,6,12 Rel Perf. (%) -3 / 4 / -1
at INR285m (up 5% YoY) and that of matrimonial portal,
Jeevansathi.com at INR146m (up 25% YoY).
Y/E March 2016 2017E 2018E 2019E  Our EBITDA margin estimate for the quarter stands at 29.7%
Sales 7.2 8.5 9.5 10.7 compared to 33.1% in 2QFY17 and 22.2% in 3QFY16. We expect the
EBITDA 1.6 2.5 2.8 3.2 YoY margin improvement to be led by reduced advertisement and
PAT 1.4 2.4 2.5 2.9 marketing spends, especially in 99acres.com.
EPS (INR) 13.0 18.4 20.7 23.5
 We expect PAT to grow 163% YoY to INR573m. In 3QFY16, there
EPS Gr. (%) -5.3 42.1 12.5 13.4
BV/Sh. (INR) 145.3 162.2 175.2 190.4 were exceptional items, including capital gains on
RoE (%) 9.2 12.0 12.3 12.9 policybazaar.com.
RoCE (%) 9.2 12.0 12.3 12.8
Payout (%) 37.0 35.7 37.5 35.6
Valuation
 Impact of consolidation in the real estate segment, and outlook on
P/E (x) 65.5 46.1 41.0 36.1 ad spends, given the state of competitive dynamics.
EV/EBITDA (x) 54.6 34.8 30.1 26.1  Traction in the recruitment business from segments other than IT.
EV/Sales (x) 11.9 10.3 8.9 7.8  Commentary around monetization in Z omato.com.
Quarterly Performance (Standalone) (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Revenues 1,747 1,741 1,734 2,042 1,976 2,100 2,133 2,265 7,235 8,474
YoY (%) 20.6 18.0 19.0 18.0 13.1 20.6 23.0 10.9 18.3 17.1
Salary costs 792 753 804 890 963 915 948 971 3,205 3,797
Ad and 461 375 271 212 258 221 256 294 1,318 1,030
Other Expenses 261 280 274 318 277 269 294 301 1,131 1,142
Operating Profit 234 334 385 623 478 695 634 699 1,580 2,505
Margins (%) 13.4 19.2 22.2 30.5 24.2 33.1 29.7 30.9 21.8 29.6
Other Income 193 195 216 203 243 248 248 229 827 968
Depreciation 45 50 54 60 60 62 63 65 210 249
PBT bef. Extra- 382 478 546 767 661 881 818 863 2,197 3,223
Provision for Tax 95 138 169 195 217 254 246 259 621 976
ETR (%) 24.9 29.0 31.0 25.4 32.9 28.8 30.0 30.0 28.3 30.3
PAT bef. 286 339 377 572 444 627 573 604 1,576 2,248
EOI 0 0 -160 0 0 174 0 0 -160 174
Adjusted PAT 286 339 218 572 444 801 573 604 1,417 2,422
YoY (%) -29.3 0.0 -44.8 -30.9 54.9 136.0 163.3 5.6 -28.0 71.0
EPS (INR) 2.4 2.8 1.8 4.7 3.6 5.1 4.7 5.0 11.7 18.4
E: MOSL
Ashish Chopra (Ashish.Chopra@MotilalOswal.com) / Sagar Lele (Sagar.Lele@MotilalOswal.com)

January 2017 277
Inox Leisure
Bloomberg INOL IN CMP: INR231 TP: INR206 (-11%) Sell
 INOL’s 3QFY17 performance would be buoyed by stellar box office
collections by D ang al. This movie has garnered net box office
collection (NBO) of INR2.4b until December 31, 2016 in India. We
1,6,12 Rel Perf. (%) 4 / -4 / -6
expect the impact of demonetization to be lower than our
expectations, led by D ang al’s collections.
Y/E March 2016 2017E 2018E 2019E  We expect revenue to grow 5% YoY (and 5% QoQ) to INR3.12b.
Sales 11.6 12.2 14.5 17.2
 EBITDA margin is likely to decline 120bp YoY to 16.6%. We expect
EBITDA 1.9 1.7 2.4 2.8
EBITDA to decline 1.9% YoY to INR518m.
NP 0.8 0.4 0.8 1.0
EPS (INR) 8.4 4.1 8.6 10.9  We expect PAT to decline 6.7% YoY to INR178m. Sell.
EPS Gr. (%) 284.0 -51.2 108.3 27.0
BV/Sh. (INR) 61.4 65.4 73.6 84.0
RoE (%) 14.9 6.2 11.8 13.2
RoCE (%) 13.2 6.6 10.4 11.6
Valuations
P/E (x) 27.5 56.3 27.0 21.3
 Footfalls during the quarter due to demonetization.
P/BV (x) 3.8 3.5 3.2 2.8
 Number of screen additions.
EV/EBITDA (x) 13.8 16.0 11.4 9.6

Y/E Mar FY16 FY17 FY16 FY17E
Net Sales 3,025 3,078 2,973 2,513 3,369 2,974 3,122 2,664 11,589 12,174
YoY Change (%) 30.2 15.7 -1.1 15.4 11.4 -3.4 5.0 6.0 14.0 19.7
EBITDA 645 565 528 151 621 272 518 269 1,889 1,672
Margins (%) 21.3 18.4 17.8 6.0 18.4 9.1 16.6 10.1 16.3 13.7
Depreciation 197 197 201 207 203 208 240 255 802 952
Interest 62 62 61 59 58 58 66 62 244 270
Other Income 15 20 9 16 25 21 20 22 60 55
PBT before EO expense 400 327 275 -100 385 27 232 -26 903 505
Extra-Ord expense 0 0 -50 0 0 0 0 0 -50 0
PBT 400 327 226 -100 385 27 232 -26 853 505
Tax 148 115 70 -262 136 11 55 -6 70 126
Rate (%) 36.9 35.0 30.9 N.M 35.2 41.7 23.5 N.M 8.3 25.0
Reported PAT 253 213 156 161 250 16 178 -20 783 378
Adj PAT 253 213 190 161 250 16 178 -20 828 378
YoY Change (%) 452.0 302.8 33.1 N.M -1.3 -92.5 -6.7 N.M 298.6 -54.3
Margins (%) 8.4 6.9 6.4 6.4 7.4 0.5 5.7 -0.7 7.1 3.1
E: MOSL Estimates

January 2017 278
December 2016 Results Preview | Sector: Aviation
InterGlobe Aviation
Bloomberg INDIGO IN
CMP: INR843 TP: INR1,015 (+20%) Neutral
 We expect INDIGO to report revenue of INR58.2b in 3QFY17 (+35%
M. Cap. (INR b)/(USD b) 304 / 4
YoY, +40% QoQ) and EBITDAR of INR22.2b (+34% YoY, +130% QoQ).
1,6,12 Rel Perf. (%) -2 / -17 / -37  We model yield at INR4.1 and RPK at 12.2b (+35% YoY). Any
deviation in yield would have a meaningful impact on our
Financial Snapshot (INR Billion) estimates.
Y/E March 2016 2017E 2018E 2019E
 We expect net profit to grow 44% YoY to INR9.4b.
Sales 161.4 202.1 277.1 325.8
EBITDA 30.1 30.1 38.4 46.9  We model ASK at 55.9b/69.9b in FY17/FY18 v/s 42.8b in FY16, and
NP 19.9 21.0 26.1 32.9 RPK at 46.6b/58.5b in FY17/FY18 v/s 35.9b in FY16, driven by an
EPS (INR) 55.2 58.3 72.5 91.2 increase in fleet size.
EPS Gr. (%) 52.1 5.7 24.3 25.9  We model INDIGO’s fleet at 127 aircraft as at end-3QFY17 (v/s 107
BV/Sh (INR) 50.9 60.1 71.5 85.9 aircraft as at end-FY16), and at 136/154 aircraft by end-FY17/FY18.
RoE (%) 176.5 105.1 110.2 116.0
 The stock trades at 14.4x/11.6x FY17E/FY18E reported EPS of
RoCE (%) 42.9 46.8 55.2 83.0
INR58.3/INR72.5 and at an EV of 8.4x/7.2x FY17E/FY18E adjusted
Payout (%) 93.4 84.3 84.3 84.3
EBITDAR. Maintain Neutral.
Valuations
P/E (x) 15.3 14.4 11.6 9.2
Adj.EV/EBITDAR(x) 8.5 8.4 7.2 6.6  Induction of new aircraft in the fleet.
Div. Yield (%) 9.8 9.9 7.5 6.1
 Fuel costs and their impact on yields.

Net Sales 42,115 35,399 42,978 40,907 45,789 41,669 58,156 56,496 161,399 202,110
YoY Change (%) NA NA NA 7.0 8.7 17.7 35.3 38.1 15.9 25.2
Fuel cost 13,477 12,421 11,659 10,236 13,674 15,524 17,247 20,665 47,793 67,110
Employee cost 3,825 4,472 4,670 4,932 4,789 5,080 5,547 6,187 17,899 21,603
Other expenses 9,072 9,809 9,989 10,689 12,046 11,388 13,107 14,069 39,560 50,611
EBITDAR 15,741 8,697 16,660 15,049 15,279 9,677 22,255 15,575 56,147 62,786
Margins (%) 37 25 39 37 33 23 38 28 35 31
Net Rentals 6,017 6,324 6,782 6,999 7,127 7,721 8,740 9,071 26,122 32,660
EBITDA 9,724 2,373 9,878 8,050 8,152 1,956 13,514 6,504 30,025 30,126
Margins (%) 23.1 6.7 23.0 19.7 17.8 4.7 23.2 11.5 18.6 14.9
Depreciation 1,200 1,283 1,307 1,242 1,148 1,189 1,289 1,330 5,031 4,956
Interest 328 382 340 269 1,163 610 690 771 1,319 3,234
Other Income 1,057 891 1,097 1,569 1,626 1,608 1,585 1,517 4,614 6,335
PBT 9,253 1,599 9,329 8,108 7,467 1,765 13,120 5,919 28,290 28,271
Tax 2,762 473 2,756 2,315 1,549 367 3,674 1,657 8,306 7,247
Rate (%) 29.9 29.5 29.5 28.6 20.7 20.8 28.0 28.0 29.4 25.6
Reported PAT 6,491 1,127 6,573 5,793 5,918 1,398 9,446 4,262 19,983 21,024
EPS 18.0 3.1 18.2 16.1 16.4 3.9 26.2 11.8 55.5 58.3
YoY Change (%) 23.7 0.3 -8.8 24.1 43.7 -26.4 53.2 5.2
E: MOSL Estimates
Swarnendu Bhushan (Swarnendu.Bhushan@MotilalOswal.com); /Abhinil Dahiwale (Abhinil.Dahiwale@motilaloswal.com)

January 2017 279
December 2016 Results Preview | Sector: Agri
Jain Irrigation
Bloomberg JI IN CMP: INR93 Under Review
 We expect revenue to grow 5% YoY to INR14.47b in 3QFY17.
52-Week Range (INR) 109 / 47  EBITDA is likely to increase 14% YoY to INR1.74b. We expect EBITDA
1,6,12 Rel Perf. (%) 5 / 27 / 21 margin to expand 90bp YoY to 12%.
 We expect adjusted PAT at INR49m as against a loss of INR265m in
3QFY16. Buy.
Y/E March 2016 2017E 2018E 2019E
Sales 62.9 69.0 78.2 88.6
EBITDA 8.2 9.7 11.3 13.1
NP 1.0 2.6 3.8 5.4
EPS (INR) 2.2 5.5 7.6 10.0
EPS Gr. (%) 17.7 153.6 37.2 31.9
BV/Sh (INR) 60.5 65.1 66.9 71.1
RoE (%) 4.0 8.6 11.7 14.8
RoCE (%) 8.2 10.0 10.8 12.5
Valuations
P/BV (x) 1.5 1.4 1.4 1.3  Receivable days in the MIS business.
EV/EBITDA (x) 9.4 7.7 6.3 5.4  Execution of solar pump orders and new tenders.
EV/Sales (x) 1.2 1.1 0.9 0.8  Debt reduction.
Quarterly performance (Consolidated, INR Million)

Net Sales 15,950 13,178 13,785 20,100 16,558 14,406 14,474 23,517 63,014 68,979
YoY Change (%) 2.7 3.8 6.7 -1.6 3.8 9.3 5.0 17.0 2.4 9.5
EBITDA 2,000 1,544 1,527 2,876 2,335 1,912 1,737 3,763 7,946 9,723
Margins (%) 12.5 11.7 11.1 14.3 14.1 13.3 12.0 16.0 12.6 14.1
Depreciation 672 639 673 714 687 738 690 692 2,699 2,799
Interest 1,236 1,187 1,199 1,223 1,086 1,200 1,100 1,055 4,846 4,440
Other Income 60 148 56 179 131 145 129 103 443 517
PBT before EO expense 152 -135 -289 1,118 693 119 76 2,119 844 3,001
PBT 152 -135 94 1,135 693 119 76 2,119 1,246 3,001
Tax 15 -72 7 245 84 -174 15 424 194 360
Rate (%) 9.8 53.4 6.9 21.6 12.2 -146.6 20.0 20.0 NM NM
MI& Profit/Loss of Asso. Cos. -8 -9 -4 -7 24 13 12 12 -28 61
Reported PAT 144 -54 92 898 585 280 49 1,683 1,080 2,581
Adj PAT 144 -54 -265 884 585 280 49 1,683 1,042 2,641
YoY Change (%) -29.0 NM NM -14.1 305.5 - - 90.4 21.2 153.6
Margins (%) 0.9 -0.4 -1.9 4.4 3.5 1.9 0.3 7.2 1.7 3.8
E: MOSL Estimates

January 2017 280
Just Dial
Bloomberg JUST IN CMP: INR343 TP: INR426 (+24%) Buy
 JD Omni has temporarily shut down while paid campaign additions
are likely to be impacted due to demonetization. Advertisement
campaigns are expected to start from 4QFY17.
1,6,12 Rel Perf. (%) -11 / -42 / -63
 We expect flattish revenue YoY (-5% QoQ) at INR1.7b in 3QFY17.
 We expect EBITDA margin to contract 580bp YoY (but expand
Y/E March 2016 2017E 2018E 2019E
360bp QoQ) to 16%. Consequently, we expect EBITDA to de-grow
Sales 6.9 7.5 8.4 9.4
27% YoY to INR274m.
EBITDA 1.7 1.1 1.3 1.7
NP 1.4 1.1 1.3 1.6  PAT should decline 18.3% YoY to INR221m. Buy.
EPS (INR) 20.4 15.6 18.5 23.0
EPS Growth (%) 3.7 -23.4 18.4 24.1
BV/Sh (INR) 96.7 110.0 125.6 145.6
RoE (%) 21.1 15.1 15.7 16.9
RoCE (%) 21.1 15.1 15.7 16.9
Payout (%) 0.0 14.8 15.7 12.6
Valuations
 Performance of Search Plus.
P/E (x) 16.8 21.9 18.5 14.9
 Addition of paid campaigns; impact of demonetization on this.
P/BV (x) 3.5 3.1 2.7 2.4
EV/EBITDA (x) 18.1 26.4 21.0 16.0
 Promotional campaigns.
Div Yield (%) 0.0 0.8 1.0 1.0  Employee addition.
Consolidated - Quarterly Earning Model

Net Sales 1,660 1,639 1,713 1,796 1,763 1,803 1,713 1,976 6,908 7,497
YoY Change (%) 23.0 11.2 11.0 14.9 6.2 10.0 0.0 10.0 17.1 8.5
EBITDA 452 317 374 450 293 224 274 336 1,706 1,125
Margins (%) 27.2 19.3 21.8 25.1 16.6 12.4 16.0 17.0 24.7 15.0
Depreciation 67 79 81 84 90 102 106 110 311 397
Interest 0 0 0 0 0 0 0 0 0 0
Other Income 137 264 96 155 287 260 130 110 585 702
PBT 521 501 389 521 490 383 298 336 1,980 1,429
Tax 161 97 119 168 100 86 78 87 561 343
Rate (%) 31 19 31 32 20 23 26.0 26 28.4 24.0
Loss of Asso. Cos. 0 0 0 0 0 0 0 0 0 0
Reported PAT 361 405 270 353 389 296 221 249 1,419 1,086
Adj PAT 361 405 270 353 389 296 221 249 1,419 1,086
YoY Adj PAT Change (%) 28.2 28.6 -16.0 -25.1 8.0 -26.8 -18.3 -29.7 2.8 -23.4
Margins (%) 21.7 24.7 15.8 19.7 22.1 16.4 12.9 12.6 20.5 14.5
E: MOSL Estimates

January 2017 281
Kaveri Seed
Bloomberg K SCL IN CMP: INR414 TP: INR489 (+18%) Buy
 We expect revenue to grow 15% YoY to INR1.06b.
52-Week Range (INR) 472 / 300  We estimate EBITDA at INR63m, with 6% margin in 3QFY17 v/s
1,6,12 Rel Perf. (%) 0 / -5 / 9 EBITDA of INR129m and margin of 14% in 3QFY16.
 We expect adjusted PAT of INR26m in 3QFY17. Buy.
Y/E March 2016 2017E 2018E 2019E
Sales 8.9 7.2 8.7 10.5
EBITDA 1.9 1.7 2.2 2.7
NP 1.7 1.6 2.0 2.5
EPS (INR) 24.9 23.1 28.8 36.3
EPS Gr. (%) -42.9 -7.6 25.1 25.9
BV/Sh (INR) 131.3 138.8 149.6 165.5
RoE (%) 20.7 17.1 20.0 23.1
RoCE (%) 22.2 18.5 21.7 25.0
Payout (%) 48.1 67.6 62.4 56.1
P/E (x) 16.5 17.8 14.2 11.3  Impact on cotton acreages due to reduced sowing.
P/BV (x) 3.1 3.0 2.7 2.5  Cotton yields.
EV/EBITDA (x) 15.0 16.5 12.5 9.7  Any write-offs.
Div Yield (%) 2.5 3.2 3.7 4.2

Net Sales 5,394 663 919 438 4,940 678 1,057 504 7,414 7,244
YoY Change (%) -34.8 -67.5 1.3 9.7 -8.4 2.2 15.0 15.0 -36.2 -2.3
Total Expenditure 3,137 1,109 790 486 3,357 644 994 514 5,522 5,578
EBITDA 2,256 -446 129 -47 1,583 34 63 -10 1,892 1,666
Margins (%) 41.8 -67.3 14.0 -10.8 32.0 5.0 6.0 -2.0 25.5 23.0
Depreciation 52 53 81 75 78 72 82 84 261 317
Interest 0 1 1 1 0 0 0 0 2 2
Other Income 21 29 42 57 54 170 48 50 148 312
PBT before EO expense 2,225 -470 89 -66 1,559 132 29 -44 1,777 1,659
PBT 2,225 -470 89 -66 1,559 132 29 -44 1,777 1,659
Tax 34 11 -1 12 15 54 3 -4 56 66
Rate (%) 1.5 -2.4 -0.7 -17.7 1.0 41.1 10.0 10.0 3.2 4.0
Minority Interest & Profit/Loss of Asso. Cos. 0 0 -3 -3 0 0 0 0
Reported PAT 2,191 -482 92 -75 1,544 77 26 -40 1,721 1,593
Adj PAT 2,191 -482 92 -75 1,544 77 26 -40 1,721 1,593
YoY Change (%) -5.1 NM -74.2 NM -29.6 NM NM NM -42.8 -7.5
Margins (%) 40.6 -72.7 10.0 -17.0 31.3 11.4 2.5 -7.9 23.2 22.0
E: MOSL Estimates

January 2017 282
Manpasand Beverages
Bloomberg MANB IN CMP: INR556 TP: INR761 (+44%) Buy
 We expect revenue to grow 10% YoY to INR989m in 3QFY17,
impacted due to demonetization. Typically, this is a lean quarter,
and hence, the impact is not much.
1,6,12 Rel Perf. (%) -11 / -4 / 5
 EBITDA margin is likely to decline 170bp YoY to 18.1% and EBITDA is
Financial Snapshot (INR Billion) likely to be flat YoY at INR179m.
Y/E March 2016 2017 2018E 2019E
 We expect PAT to grow 35% YoY to INR66m. Buy.
Sales 5.6 7.7 12.1 20.2
EBITDA 1.1 1.5 2.4 4.0
NP 0.5 0.9 1.4 2.2
Adj EPS (INR) 10.1 14.9 23.8 39.0
EPS Gr. (%) 26.7 47.6 59.4 64.0
BV/Sh. (INR) 120.2 204.7 222.4 249.7
RoE (%) 11.4 8.6 9.9 16.5
RoCE (%) 12.2 9.7 11.1 18.6
Valuations
P/E (x) 52.4 35.5 22.2 13.6
 Update on capex plans post fund-raising.
P/BV (x) 4.4 2.6 2.4 2.1
EV/EBITDA (x) 23.1 16.5 12.3 7.2
 Update on advertisement campaigns and plans ahead.
EV/Sales (x) 4.6 3.2 2.4 1.4
 Fruits Up performance and outlook for 4QFY17.

Net Sales 1,453 762 899 2,304 2,293 1,025 989 3,387 5,417 7,694
YoY Change (%) 15.1 23.1 76.1 91.0 57.9 34.6 10.0 47.0 50.6 42.0
Total Expenditure 1,114 602 722 1,876 1,841 803 810 2,753 4,314 6,207
EBITDA 339 159 178 428 453 222 179 633 1,104 1,487
Margins (%) 23.3 20.9 19.8 18.6 19.7 21.7 18.1 18.7 20.4 19.3
Depreciation 123 135 153 160 149 171 180 200 571 700
Interest 41 10 3 3 1 8 0 0 57 8
Other Income 1 35 35 21 17 17 75 75 91 184
PBT 175 49 56 287 320 61 74 508 567 963
Tax 18 6 7 31 33 7 8 53 62 101
Rate (%) 10.3 11.4 12.6 10.8 10.4 10.8 10.5 10.5 10.9 10.5
Minority Interest & P/L of Asso. Cos. 0 0 0 0 0 0 0 0 0 0
Reported PAT 157 43 49 256 286 54 66 455 505 862
Adj PAT 157 43 49 256 286 54 66 455 505 862
YoY Change (%) 9.4 388.6 -290.0 47.6 82.5 24.5 34.7 78.0 68.6 70.6
Margins (%) 10.8 5.7 5.5 11.1 12.5 5.3 6.7 13.4 9.3 11.2
E: MOSL Estimates
Chintan Modi (Chintan.Modi@MotilalOswal.com) / Niket Shah (Niket.Shah@MotilalOswal.com)

Chitvan Oza (Chitvan.Oza@MotilalOswal.com)
January 2017 283
MCX
Bloomberg MCX IN CMP: INR1,243 TP: INR1,450 (+17%) Buy
 Total volumes at MCX traded during the quarter stood at INR13.7t,
down 16.1% QoQ and up 5.2% YoY.
 However, during the quarter, MCX increased its pricing by ~25%.
1,6,12 Rel Perf. (%) 6 / 28 / 36
This drives our revenue estimate for the quarter to INR601m, up
0.6% QoQ and 21% YoY.
Y/E MAR 2016 2017E 2018E 2019E
 Our EBIT margin estimate for the quarter is 25.2%, down 40bp QoQ
Sales 2.1 2.5 4.0 5.3
and compares with 14% in 3QFY16.
EBITDA 0.6 0.9 2.1 3.2  We do not expect much change in costs; including in advertisement
PAT 0.4 1.5 2.5 3.4 expenses, which have declined after FY16.
EPS (INR) 23.4 28.6 47.4 65.2  Our PAT estimate is INR343m, up 5.2% YoY. We are modeling an
EPS Gr. (%) -5.0 22.4 66.0 37.5 ETR of 25% for 3QFY17.
BV/Sh. (INR) 236.1 259.4 283.5 316.7
RoE (%) 3.5 11.5 17.5 21.7
RoCE (%) 8.8 11.3 17.2 21.4 Key things to watch for
Payout (%) 0.0 63.6 51.0 37.1  Any move to enter the commodities space by potential
Valuation competitors like NSE.
P/E (x) 53.2 43.5 26.2 19.1  Cost base and impact on margins.
P/BV (x) 5.3 4.8 4.4 3.9  Pace of reforms under SEBI.

Sales 518 563 498 556 582 596 601 733 2,135 2,512
Q-o-Q Gr. (%) -1.8 8.8 -11.6 11.6 16.9 7.1 0.9 21.9 4.8 17.6
Staff Costs 90 109 100 106 143 144 146 148 406 580
Other expenses 282 318 264 313 265 257 262 309 986 1,035
Depreciation 63 65 64 54 49 42 42 43 246 177
EBIT 83 71 70 82 125 152 151 233 498 719
Margins (%) 16.1 12.7 14.0 14.8 21.5 25.6 25.2 31.8 23.3 28.6
Other Income 300 338 276 278 356 359 307 311 1,191 1,332
PBT bef. Exceptional 382 409 346 360 480 511 458 543 1,689 2,050
Tax 131 99 110 72 152 134 115 136 413 537
Rate (%) 34.3 24.2 31.8 20.1 31.7 26.3 25.0 25.0 24.4 26.2
PAT 251 310 236 287 328 376 343 407 1,277 1,513
Q-o-Q Gr. (%) -49.0 23.5 -24.0 21.8 14.1 14.8 -8.8 18.6 2.1 261.8
EPS (INR) 4.9 6.1 3.5 5.3 6.5 7.4 6.7 8.0 25.0 29.7
Total volumes (INR t) 13.6 14.8 13.0 14.9 16.0 16.4 13.7 17.5 56.3 63.6
Q-o-Q Gr. (%) -3.5 9.2 -12.0 14.3 7.3 2.3 -16.1 27.5
Y-o-Y Gr. (%) 15.4 18.5 -3.3 5.9 17.7 10.3 5.2 17.5 8.7 12.8
E: MOSL Estimates
Ashish Chopra (Ashish.Chopra@MotilalOswal.com) / Sagar Lele (Sagar.Lele@MotilalOswal.com)

January 2017 284
Monsanto India
Bloomberg MCHM IN CMP: INR2,254 TP: INR2,616 (+16%) Under Review
 We expect revenue to grow 15% YoY to INR1.77b in 3QFY17.
52-Week Range (INR) 2745 / 1520  EBITDA is estimated to grow 7% YoY to INR498m, with 210bp fall in
1,6,12 Rel Perf. (%) -2 / -10 / -2 margin to 28.2%.
 We expect adjusted PAT to decline by 3% YoY to INR448m.
Y/E March 2016 2017E 2018E 2019E
Sales 5.4 6.1 7.3 8.7
EBITDA 1.1 1.3 1.7 2.0
NP 1.0 1.2 1.5 1.8
EPS (INR) 60.1 68.4 87.2 106.6
EPS Gr. (%) -2.3 13.8 27.5 22.2
BV/Sh (INR) 239.4 235.6 250.6 285.0
RoE (%) 26.4 28.8 35.9 39.8
RoCE (%) 26.5 28.8 35.9 39.8
Payout (%) 61.6 105.6 82.8 67.8
Valuations
P/E (x) 37.5 32.9 25.9 21.2
P/BV (x) 9.4 9.6 9.0 7.9  Trends in shift of crop to corn due to increasing corn prices.
EV/EBITDA (x) 36.1 29.2 22.9 18.8  Age profile of corn seeds sold.
Div Yield (%) 1.3 2.7 2.7 2.7  Realizations in glyphosate.

Net Sales 2,633 378 1,537 869 2,403 965 1,767 999 5,416 6,096
YoY Change (%) -0.6 -58.2 14.8 28.8 -8.7 155.3 15.0 15.0 -2.7 12.6
Total Expenditure 1,921 634 1,071 710 1,801 947 1,269 827 4,336 4,798
EBITDA 712 -256 466 158 603 18 498 172 1,080 1,298
Margins (%) 27.0 -67.7 30.3 18.2 25.1 1.8 28.2 17.2 19.9 21.3
Depreciation 21 22 29 22 21 22 28 30 93 95
Interest 3 1 1 2 3 3 0 0 7 0
Other Income 27 22 28 64 24 29 45 57 141 170
PBT before EO expense 716 -257 464 198 602 22 515 199 1,121 1,373
Extra-Ord expense 0 0 56 -27 0 13 0 0 29 0
PBT 716 -257 408 225 602 9 515 199 1,092 1,373
Tax 88 6 1 -16 37 0 67 26 79 192
Rate (%) 12.3 -2.5 0.2 -7.0 6.1 3.3 13.0 13.0 7.2 14.0
Reported PAT 628 -264 407 241 566 9 448 173 1,013 1,181
Adj PAT 628 -264 463 241 566 9 448 173 1,039 1,181
YoY Change (%) -11.6 NM -4.3 NM -9.9 NM -3.1 -28.1 -2.2 13.6
Margins (%) 23.8 -69.8 30.1 27.7 23.5 0.9 25.4 17.3 19.2 19.4
E: MOSL Estimates

January 2017 285
PI Industries
Bloomberg PI IN CMP: INR825 TP: INR959 (+16%) Buy
 We expect revenue to grow 10% YoY (decline 2% QoQ) to INR5.62b.
M. Cap. (INR b)/(USD b) 113 / 2
52-Week Range (INR) 922 / 495  We estimate 230bp margin expansion to 22.8%, and expect EBITDA
1,6,12 Rel Perf. (%) -2 / 17 / 21 to grow 22% YoY to INR1.28b.
 We estimate adjusted PAT at INR939m, as against INR704m in
3QFY16, growth of 33.5%. Buy.
Y/E March 2016 2017E 2018E 2019E
Sales 21.0 24.9 30.1 36.1
EBITDA 4.3 5.6 7.2 8.9
NP 3.0 4.3 5.2 6.5
EPS (INR) 22.1 31.3 38.4 47.6
EPS Gr. (%) 22.8 41.6 22.6 24.0
BV/Sh. (INR) 85.8 111.6 143.3 182.9
RoE (%) 29.2 31.7 30.1 29.2
RoCE (%) 26.8 30.4 29.9 29.2
Valuations
P/BV (x) 9.6 7.4 5.8 4.5  CSM growth and order book.
EV/EBITDA (x) 26.7 20.3 15.5 12.2  Agrochemical business updates for FY17.
EV/Sales (x) 5.5 4.6 3.7 3.0

Net Sales 5,921 4,768 5,110 5,848 6,834 5,719 5,621 6,725 21,647 24,899
YoY Change (%) 25.7 11.8 1.2 8.9 15.4 20.0 10.0 15.0 11.6 15.0
EBITDA 1,344 835 1,048 1,073 1,656 1,279 1,282 1,442 4,300 5,659
Margins (%) 22.7 17.5 20.5 18.3 24.2 22.4 22.8 21.4 19.9 22.7
Depreciation 115 117 137 170 178 181 185 195 538 739
Interest 27 15 27 26 16 13 14 12 95 55
Other Income 86 89 51 70 113 134 62 60 296 368
PBT before EO expense 1,288 792 935 947 1,575 1,219 1,145 1,295 3,963 5,233
Extra-Ord expense 0 0 -29 -20 0 0 0 0 -48 0
PBT 1,288 792 964 967 1,575 1,219 1,145 1,295 4,011 5,233
Tax 429 223 239 14 306 205 206 233 904 950
Rate (%) 33.3 28.1 24.7 1.4 19.4 16.8 18.0 18.0 22.5 18.2
Reported PAT 859 570 725 953 1,269 1,014 939 1,062 3,107 4,283
Adj PAT 859 570 704 934 1,269 1,014 939 1,062 3,070 4,283
YoY Change (%) 24.4 25.2 19.1 64.0 47.7 77.9 33.5 13.7 33.1 39.5
Margins (%) 14.5 12.0 13.8 16.0 18.6 17.7 16.7 15.8 14.2 17.2
E: MOSL Estimates

January 2017 286
December 2016 Results Preview | Sector: Consumer Product
SH Kelkar
Bloomberg SHK L IN CMP: INR335 TP: INR338 (+1%) Buy
 We expect revenue to grow 5% YoY (but decline 2% QoQ) to
INR2.4b in 3QFY17, impacted by demonetization.
1,6,12 Rel Perf. (%) 10 / 60 / 31  EBITDA margin is likely to decline 130bp YoY to 16.7%. EBITDA is
expected to be flat YoY at INR403m.
 We estimate PAT at INR242m as against INR234m in 3QFY16 – a
Y/E March 2016 2017 2018E 2019E
growth of 4%. Buy.
Sales 9.3 10.4 12.3 14.3
EBITDA 1.5 1.8 2.3 2.9
NP 0.8 1.1 1.5 1.9
Adj EPS (INR) 5.5 7.5 10.1 13.0
EPS Gr. (%) 4.2 34.8 35.7 28.3
BV/Sh. (INR) 52.7 57.8 64.6 73.4
RoE (%) 12.6 13.5 16.6 18.9
RoCE (%) 16.9 19.5 24.4 28.3
P/E (x) 60.4 44.8 33.0 25.7  Impact on inventory due to demonetization.
P/BV (x) 6.4 5.8 5.2 4.6  Growth in acquired flavors entity, HTT.
EV/EBITDA (x) 31.3 27.0 20.5 16.2  Management commentary on new client acquisition and shift of
EV/Sales (x) 5.2 4.7 3.9 3.3 production from Netherlands to Vapi facility.

1Q 2Q 3Q 4QE 1Q 2Q 3QE 4QE
Net Sales 2,211 2,082 2,301 2,658 2,559 2,453 2,416 2,924 9,251 10,350
YoY Change (%) - - 17.5 12.8 15.7 17.8 5.0 10.0 114.4 11.9
EBITDA 404 255 414 448 473 416 403 515 1,521 1,807
Margins (%) 18.3 12.3 18.0 16.9 18.5 17.0 16.7 17.6 16.4 17.5
Depreciation 74 74 71 77 44 49 50 55 296 198
Interest 72 73 32 14 19 22 12 8 190 61
Other Income 19 23 24 50 32 29 26 25 115 112
PBT 278 131 334 407 442 375 367 477 1,150 1,660
Tax 83 61 100 147 167 132 125 162 391 585
Rate (%) 29.8 46.4 29.9 36.2 37.7 35.1 34.0 34.0 34.0 35.2
Reported PAT 195 70 234 260 275 243 242 315 759 1,075
Adj PAT 195 70 234 260 275 243 242 315 759 1,075
YoY Change (%) - - 413.4 24.0 41.3 246.0 3.6 21.2 197.6 41.7
Margins (%) 8.8 3.4 10.2 9.8 10.8 9.9 10.0 10.8 8.2 10.4
E: MOSL Estimates
Chintan Modi (Chintan.Modi@MotilalOswal.com) / Niket Shah (Niket.Shah@MotilalOswal.com)

Chitvan Oza (Chitvan.Oza@MotilalOswal.com)
January 2017 287
December 2016 Results Preview | Sector: Diversified
SRF
Bloomberg SRF IN
CMP: INR1,554 TP: INR1,922 (+24%) Buy
 Fluorochemicals (refrigerants) is a distribution-based business. We
believe the domestic part of the business has got impacted by
demonetization, but as 3Q is a lean season, not much impact would
1,6,12 Rel Perf. (%) 4/-8/3
be evident in consolidated financials.
Financial Snapshot (INR Billion)  Also, prices of caprolactum (a major raw material for technical
Y/E March 2016 2017 2018E 2019E textiles) have increased from USD1,300/ton to USD1,800/ton in a
Sales 46.0 47.5 55.8 64.0 short span of time. SRF maintains inventory for a month and prices
EBITDA 9.6 9.9 12.2 14.5 its sales based on average raw material costs.
NP 4.2 4.6 6.1 7.6
EPS (INR) 73.7 81.0 106.8 129.7
 We expect SRF’s revenue to grow 4.5% YoY to INR11.47b and
EPS Gr. (%) 39.7 9.9 31.8 21.4
EBITDA to decline 4% YoY to INR2.24b. EBITDA margin could decline
BV/Sh. (INR) 456.8 523.0 610.5 722.8 180bp YoY to 19.5% and adjusted PAT could decline 8.1% YoY to
RoE (%) 17.0 16.2 18.5 19.4 INR0.97b.
RoCE (%) 19.4 18.3 22.1 25.2
P/E (x) 21.1 19.2 14.6 12.0  Growth in the chemicals segment (particularly specialty
P/BV (x) 3.4 3.0 2.5 2.2 chemicals).
EV/EBITDA (x) 11.9 11.5 9.3 7.5  Client additions and capex plans in specialty chemicals.
EV/Sales (x) 2.5 2.4 2.0 1.7  Margins in the technical textiles and packaging segments.

Net Sales 12,214 11,628 10,974 11,150 12,192 11,438 11,468 12,432 45,966 47,529
YoY Change (%) 5.7 -2 -1 3 0 -2 4.5 12 1.2 3.4
Total Expenditure 9,547 9,144 8,637 8,918 9,352 9,112 9,231 9,909 36,245.6 37,609.9
EBITDA 2,667 2,484 2,337 2,232 2,841 2,326 2,236 2,524 9,720 9,919
Margins (%) 21.8 21.4 21.3 20.0 23.3 20.3 19.5 20.3 21.1 20.9
Depreciation 725 733 713 725 734 735 765 795 2,895 3,030
Interest 344 334 305 315 282 242 225 220 1,297 965
Other Income 45 68 92 106 55 70 65 71 312 259
Extra-Ord expense -8 103 65 -57 -63 -72 0 0 104 -135
PBT 1,652 1,382 1,346 1,356 1,943 1,491 1,311 1,580 5,736 6,318
Tax 522 361 339 268 501 298 341 411 1,491 1,567
Rate (%) 31.6 26.1 25.2 19.8 25.8 20.0 26.0 26.0 26.0 24.8
Reported PAT 1,129 1,021 1,007 1,088 1,442 1,193 970 1,169 4,245 4,751
Adj PAT 1,124 1,097 1,056 1,042 1,395 1,135 970 1,169 4,322 4,650
YoY Change (%) 21.3 34 37 80 24 3 -8.1 12 42.7 7.6
Margins (%) 9.2 9.4 9.6 9.3 11.4 9.9 8.5 9.4 9.4 9.8
E: MOSL Estimates

January 2017 288
Tata Elxsi
Bloomberg TELX IN CMP: INR1,419 TP: INR1,766 (+25%) Buy
 We expect revenue to grow 13% YoY (and 2% QoQ) to INR3.1b in
3QFY17, driven by the automotive and broadcast divisions.
52-Week Range (INR) 2396 / 1022
1,6,12 Rel Perf. (%) 5 / -17 / -40  EBITDA margin is likely to expand 76bp YoY to 25%. EBITDA should
grow 17% YoY to INR773m.
 We estimate PAT at INR494m as against INR399m in 3QFY16, a
Y/E March 2016 2017 2018E 2019E
growth of 23.8% YoY. Buy.
Sales 10.8 12.4 14.7 17.3
EBITDA 2.5 3.0 3.6 4.3
PAT 1.5 1.9 2.3 2.8
EPS (INR) 49.7 60.2 73.6 88.4
EPS Gr. (%) 50.5 21.1 22.2 20.1
BV/Sh. (INR) 123.9 157.7 195.3 235.8
RoE (%) 46.3 42.8 41.7 41.0
RoCE (%) 46.3 42.8 41.7 41.0
 Impact of EUR depreciation.
Payout (%) 33.8 43.8 48.9 36.2
 Impact of Brexit on the company’s operations and clients.
Valuations
P/E (x) 28.2 23.3 19.0 15.8
P/BV (x) 11.3 8.9 7.2 5.9
EV/EBITDA (x) 16.9 13.6 10.9 8.8
Div. Yield (%) 1.0 1.6 2.1 2.9

Net Sales 2,435 2,637 2,741 2,940 2,943 3,033 3,097 3,380 10,752 12,445
YoY Change (%) 27.7 28.1 23.7 27.1 20.9 15.0 13.0 15.0 26.6 15.7
EBITDA 560 613 663 672 691 745 773 790 2,508 3,012
Margins (%) 23.0 23.2 24.2 22.8 23.5 24.6 25.0 23.4 23.3 24.2
Depreciation 90 57 57 59 67 64 62 62 263 249
Interest 0 0 0 0 0 0 0 0 0 0
Other Income 76 27 10 6 11 -30 37 40 119 70
PBT 546 583 616 618 634 651 748 767 2,363 2,833
Tax 189 202 217 208 215 220 254 261 815 958
Rate (%) 34.6 34.7 35.2 33.6 33.8 33.8 34.0 34.0 34.5 33.8
Reported PAT 357 381 399 411 419 431 494 506 1,548 1,875
Adj PAT 357 381 399 411 419 431 494 506 1,548 1,875
YoY Change (%) 71.8 61.2 43.8 37.7 17.4 13.1 23.8 23.3 50.5 21.1
Margins (%) 14.7 14.5 14.6 14.0 14.2 14.2 15.9 15.0 14.4 15.1
E: MOSL Estimates

January 2017 289
TTK Prestige
Bloomberg TTK PT IN CMP: INR5,717 TP: INR4,896 (-14%) Hold
 We expect revenue to grow 12% YoY to INR5.1b in 3QFY17. The
impact of demonetization will not be very sharp on TTK , as the
52-Week Range (INR) 6550 / 4010
current year will include incremental sales from the acquired entity,
1,6,12 Rel Perf. (%) 8 / 25 / 17
Horwood (a high margin business). There was disruption in demand
in November. However, healthy sales in October and demand
recovery in December have softened the impact.
Y/E March 2016 2017 2018E 2019E
Sales 15.3 17.3 20.1 22.7  We expect EBITDA margin to decline 50bp YoY to 12.5%. EBITDA
EBITDA 1.8 2.1 2.7 3.2 should increase 8% YoY to INR627m.
NP 1.2 1.3 1.6 2.1
 We expect adjusted PAT to be flattish at INR377m.
EPS (Rs) 100.7 107.8 139.9 178.6
EPS Gr. (%) 29.6 7.0 29.8 27.7
Sales 620.3 675.1 748.7 849.1
RoE (%) 17.2 16.6 19.7 22.4
RoCE (%) 17.3 16.2 18.7 22.1
Valuations
P/E (x) 56.7 53.0 40.8 32.0
 Performance of the appliances division post demonetization.
P/BV (x) 9.2 8.5 7.6 6.7
 Outlook on exports and recent acquisition of Horwood
EV/EBITDA (x) 36.3 32.5 25.1 20.3
Homeware.
EV/Sales (x) 4.3 3.9 3.3 2.9

Net Sales 3,404 4,099 4,478 3,077 3,790 5,011 5,016 3,508 15,059 17,311
YoY Change (%) 1.2 7.3 16.7 7.5 11.3 22.2 12.0 14.0 8.5 15.0
EBITDA 378 524 581 338 470 621 627 368 1,821 2,077
Margins (%) 11.1 12.8 13.0 11.0 12.4 12.4 12.5 10.5 12.1 12.0
Depreciation 47 49 52 62 56 55 82 82 209 279
Interest 6 7 5 2 23 22 18 18 20 79
Other Income 28 24 20 30 18 17 25 25 102 91
PBT 317 492 544 303 327 561 552 293 1,656 1,728
Tax 97 152 172 87 109 172 175 84 508 529
Rate (%) 30.6 30.8 31.7 28.6 33.4 30.6 31.7 28.6 30.7 30.6
Reported PAT 220 340 372 216 217 389 377 209 1,148 1,199
Adj PAT 246 340 372 216 272 389 377 209 1,174 1,256
YoY Change (%) -7.4 21.7 32.6 131.2 10.8 14.3 1.4 -3.1 29.6 7.0
Margins (%) 7.2 8.3 8.3 7.0 7.2 7.8 7.5 6.0 7.8 7.3
E: MOSL Estimates

January 2017 290
Disclosures
This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company (ies) and/sector(s), if any, covered in the reportFinancials | Metals
and may be distributed by it and/or its
affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or
inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to
you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment
objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek
professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for
future performance, future returns are not guaranteed and a loss of original capital may occur.
MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some
companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are
seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors
on investments in such business . The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and
interpreting information. Our research professionals are paid on twin parameters of performance & profitability of MOSt.
MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt
generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates
may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment
decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest.
MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies
mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an
advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing
whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent
conflict of interest in some of the stocks mentioned in the research report Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as
opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research
separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.
Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from,
any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free
and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly available data or other
sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party either publicly or through a
subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the
document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that
may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the
implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.
This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for
any necessary explanation of its contents.
Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation
for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.
Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.
Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this
report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412
Pending Regulatory inspections against Motilal Oswal Securities Limited:
SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and
adjudge violation of SEBI Regulations; MOSL replied to the Show Cause Notice whereby SEBI granted us an opportunity of Inspection of Documents. Since all the documents requested by us were not covered we have requested to
SEBI vide our letter dated June 23, 2015 to provide pending list of documents for inspection.
List of associate companies of Motilal Oswal Securities Limited -Click here to access detailed report
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or
indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive
compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues
Disclosure of Interest Statement Companies where there is interest
 Analyst ownership of the stock No
 Served as an officer, director or employee No
A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes
Regional Disclosures (outside India)

This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which
would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong: This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures
Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has
an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Kong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to
SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities,
products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in
Hong Kong.
For U.S
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a
registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the
absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons.
This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This
document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be
engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by
the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal
Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore,
may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a
subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the
Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.
In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Varun Kumar
Varun.kumar@motilaloswal.com
Contact : (+65) 68189232
Office Address:21 (Suite 31),16 Collyer Quay,Singapore 04931
Motilal Oswal Securities Ltd

11 January 2017 2
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
Motilal Oswal India Strategy Gallery

Strategy - Motilal Oswal PDF

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Strategy - Motilal Oswal PDF

Uploaded by

Copyright:

Available Formats

January 2017

India Strategy | Get on track please !

New Year, New Cards

Research Team (Gautam.Duggad@MotilalOswal.com)

New Year, New Cards

Earnings growth optically high; driven by low base of Cyclicals

Key sectoral trends/highlights

Three key trends to watch out for

Model portfolio changes

3QFY17 PREVIEW Earnings growth returns, but quality of growth weak

Three key trends coming to the fore

Earnings growth momentum back, but quality of growth weak

Expect earnings to decline for consumer-facing sectors

Exhibit 1: Growth bounces back on low base

MOSL Universe headline performance at multi-quarter high

MOSL Universe EBITDA

Margin LPA: 20%

1.0 0.1 4.1 1.4

-2.3 -5.1 -0.4

Source: MOSL Source: MOSL

27.9 27.5 MOSL Universe PAT

24.1 23.3 26.3 Margin LPA: 11%

9.6 10.7 11.2

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

MOSL Universe PAT to be at all-time high in 2HFY17

Exhibit 9: Key Assumptions – Commodities bottoming out in 2QFY17

Interesting sectoral trends

MOSL Ex. OMCs

Exhibit 11: 3QFY17 sectoral PAT growth (%) Financials

Exhibit 12: ~40% of the universe to report >15% PAT growth

PAT Growth Ex RMs (%)

Three key trends for 3QFY17

1] Demonetization impacting revenues for key sectors like Autos,

Autos Excl JLR 157 Cement 82

2] Global commodity price recovery driving recovery for Global Cyclicals

Cyclicals to drive entire 2HFY17 earnings growth

Source: MOSL Source: MOSL

1HFY17 PAT growth (%) LP 2HFY17 PAT growth (%)

Oil & Gas

Source: MOSL Source: MOSL

Defensives to drag 2HFY17 earnings

Exhibit 19: Cyclicals to drive entire PAT growth in 3QFY17

Share of defensives comes off further

Defensives includes Consumer, Healthcare, Technology, Telecom and Utilities

Nifty sales and PAT growth to be 4% and 13%, respectively

Exhibit 21: Nifty - Sectoral contribution to growth 3QFY17 vs Index Weight

5.8 5.3 1.7 1.6 1.4 0.9 0.3

-0.2 -0.8 -3.6

Exhibit 24: Nifty companies 3QFY17 performance (INR b)

Exhibit 25: Nifty Sectoral 3QFY17 PAT chg YoY (%)

Trend # 3: Cost pressures from commodity inflation

MOSL Excl Metals & OMCs (EBITDA Margin, %)

Cutting 2HFY17E PAT for consumer-focused businesses following

Source: MOSL Source: MOSL

24.3 26.0 25.3

3QFY17 4QFY17 2HFY17 3QFY17 4QFY17 2HFY17

Source: MOSL Source: MOSL

3QFY17 4QFY17 2HFY17 3QFY17 4QFY17 2HFY17

Source: MOSL Source: MOSL

Exhibit 36: Intra-sector 3QFY17 earnings divergence (%)

Key Sectoral Highlights - 3QFY17

3QFY17E YoY (%)