Equity Research

December 7, 2021
ICICI Securities Limited
is the author and India Update
distributor of this report
Contents
Page 2 Strategy: i-Lens Screener: Yield and growth curves indicate 'sweet spot' for stock
Market data as on Dec 06, 2021 picking within diverse economic activities!
INDICES
% chg Page 4 White goods & durables: Switch and switchgear industry: Organised sector
(DoD) domination to continue
BSE Sensex
S&P CNX Nifty
56747
16912
1.7
1.7 Page 5 Aviation: Impact of Omicron remains limited till date, average weekly passenger
BSE 100 17241 1.7 dips to 357k
BSE 200 7363 1.6
Page 7 Recent reports/updates
OVERSEAS MARKETS#
% chg Highlights
(DoD)
Dow Jones 35227 1.9 Sector/event Impact
Nasdaq Comp. 15225 0.9
S&P 500 45992 1.2 Strategy: i-Lens Screener: Yield and growth curves indicate 'sweet spot' for stock
Hang Seng 23705 1.5 iLens picking within diverse economic activities! Inverse correlation between
Nikkei 28261 1.2
Screener growth expectations and earnings yield indicates largely rational expectations:
ADVANCES/DECLINES (BSE) Earnings yield curve and earnings growth curve indicate an inverse correlation
Group
Advances
A
114
B
315 1356
S
between the two factors, thereby reflecting a largely rational behaviour (higher
Declines 575 620 2073 the growth expectations, lower the yield). We have considered the largest
Unchanged 2 11 171
player within each industry for calculating the yield (consensus FY24E) and
FII TURNOVER (BSE+NSE)* growth expectations (consensus FY22E-FY24E CAGR) as they are the
(Rs mn) bellwethers of their respective sectors. Also, being large caps, their price
Bought Sold Net
78010 107560 (29550) discovery is much better as is the quality of consensus estimates; this avoids
the noise created by idiosyncratic cases of outlier growths and yields.
CURRENCY
US$1 = Rs75.39 Snippets
*FII turnover (BSE + NSE) as on Global
Dec 03, 2021
 Russia President Vladimir Putin, currently on visit to India, said in New Delhi that India is a
"time-tested friend" and referred to growing cooperation between the two countries in areas of
environment, trade and investment and high technology among others. "Right now, the mutual
investments stand at about US$38bn. More investments are coming from the Russian side,"
he said. (Business Standard)
India - Sectoral
 The Union finance ministry told Parliament yesterday (6th Dec'21) that the government has no
plans for boosting the cryptocurrency sector in India and the proposed Central Bank Digital
Currency (CBDC) will not have volatility, which is normally associated with the private virtual
currencies. However, there are associated risks with CBDC which need to be carefully
evaluated, the Lok Sabha was informed. (Business Standard)
 Despite the pandemic, many developers and entities sealed around 45 separate land deals
cumulatively accounting for over 1,757 acres of area across the top-7 cities between Q3 2020
and November 2021, according to ANAROCK data. Of the total transacted land area, approx.
69% or 1,205 acres are proposed to be developed into multiple residential projects across
these cities. The total development potential of these deals works out to at least 45-50mn-sqft
of residential area. (Financial Express)
Market movement (BSE+NSE) Volumes in Rs mn (BSE and NSE) Advances & Declines ratio (BSE)
62000 18400 1200000 70000 3.5
BSE NSE (RHS) NSE BSE (RHS)
1100000 3.0
61000 65000
17900
1000000 2.5
60000 60000
17400 900000 2.0
59000 55000
800000 1.5
16900
58000 50000 1.0
700000
16400 45000
57000 600000 0.5

56000 15900 500000 40000 0.0

18-1120-1122-1124-1126-1128-1130-11 2-12 4-12 6-12 18-1120-1122-1124-1126-1128-1130-11 2-12 4-12 6-12 18-1120-1122-1124-1126-1128-1130-11 2-12 4-12 6-12

ICICI Securities Limited, ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai-400 025, India.
Phone: +91 22 2288 2460/70 Fax: +91 22 2298 2448
ICICI Securities Inc, 275 Madison Avenue - Suite 1417, 7th Floor, New York, NY 10017
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Equity Research
December 6, 2021
CNX Nifty: 16912
ICICI Securities Limited
is the author and
distributor of this report
iLens Screener
i-LENS is our screening
framework for critical
factors related to
economy / sectors /
stocks
INDIA
Strategy
Yield and growth curves indicate ‘sweet spot’ for stock
picking within diverse economic activities!
 Inverse correlation between growth expectations and earnings yield indicates
largely rational expectations: Earnings yield curve and earnings growth curve
indicate an inverse correlation between the two factors, thereby reflecting a largely
rational behaviour (higher the growth expectations, lower the yield). We have
considered the largest player within each industry for calculating the yield
(consensus FY24E) and growth expectations (consensus FY22E-FY24E CAGR) as
they are the bellwethers of their respective sectors. Also, being large caps, their price
discovery is much better as is the quality of consensus estimates; this avoids the
noise created by idiosyncratic cases of outlier growths and yields.
 Irrationality possible at extreme ends of the earnings yield curve. Directionally,
the correlation of expected growth and earnings yield appears rational; however, due
to excessive ‘optimism’ as well as ‘pessimism’, the extent to which the correlation is
pushed creates irrationality at the extremes of the earnings yield curve. For example,
on the low-growth side of the spectrum (<10% CAGR), some of the businesses have
earnings yield of >10% (energy, power etc.), which is a significant spread over the
10-year bond yield (bonds are ‘zero growth investments’ with annual coupon
payments remaining flat while high-yield industry leading stocks are still growing
albeit at a low rate). On the other extreme, some of the growth stocks have negative
or <1% earnings yield, which is an indication of high optimism by investors leaving
very little ‘margin of safety’.
Yield and growth curves for sector leadership stocks (FY24E earnings yield vs
FY22E-FY24E PAT CAGR)
22.0% 50%
Earnings Yield FY24 Earnings yield - NIFTY 50 FY22E -24E CAGR (RHS)
20.0% 45%
18.0%
40%
16.0%
35%
14.0% Low
base for 30%
12.0% Telecom Sweet spot : EY >= 5% and
, PVs earnings growth >12%
10.0% 25%
and
8.0% Aviation
20%
6.0%
15%
4.0% Low yield - EY <3% &
High growth expectations 10%
2.0%
0.0% 5%

-2.0% 0%
Consumer durables

Digital infra
QSR

FMCG

AMC

PVs

Coal
Fintech
Food Tech

Discount retailer

Paints
Adhesives

Liquor

Real estate

Credit cards

media

PSU Bank
Aluminium
Steel
NBFC - others

Software services

Cement
Rail logistics
Telecom

Pharma

Infrastructure
Aviation
Private bank

CVs , Global Auto

Power
Gas Transmission
Tobacco

Power transmission
Telecom tower

Oil & Gas - Upstream

Fashion e-commerce

Jewellery retail
Life insurance

Branded innerwear

NBFC - Mortgage lender

O2C, Telecom, Retail

Two wheeler exports

Agrochemicals

Source: Bloomberg, I Sec Research

Research Analysts:
Vinod Karki
vinod.karki@icicisecurities.com
+91 22 6807 7586
 ‘Sweet spot’ visible in the earnings yield – growth curve (FY24 earnings yield ≥
5%; FY22-24 earnings CAGR >13% or nominal GDP). Key sectors where the
bellwether stock’s earnings growth expectations over FY22E-FY24E will exceed or
keep pace with nominal GDP growth of around 13% while yielding around 5% or
above fulfill our criteria of being attractive. Current environment of earnings upgrade
cycle provides additional comfort on the sustainability of the consensus earnings
growth estimate over FY22-24.
(Contd.)
Please refer to important disclosures at the end of this report
Strategy, December 6, 2021 ICICI Securities

Table 1: Key businesses fulfilling the ‘sweet spot’ criteria (FY24 – EY>5% & PAT
CAGR FY22E-FY24E > nominal GDP growth) are as follows:
Market Earnings FY22E-
cap Yield FY24E PAT
Company name Bloomberg Code (Rs bn) Economic activity FY24E CAGR
State Bank of India SBIN IN Equity 4,153 PSU Bank 13.4% 21%
Bajaj Auto BJAUT IN Equity 940 Two wheeler exports 7.8% 18%
HDFC Bank HDFCB IN Equity 8,332 Private bank 6.5% 21%
Larsen & Toubro LT IN Equity 2,504 Infrastructure 5.8% 22%
Dr Reddy's Laboratories DRRD IN Equity 749 Pharma 5.8% 23%
Tata Communications TCOM IN Equity 368 Digital infra 5.7% 20%
Zee Entertainment Z IN Equity 342 Media 5.3% 20%
Reliance Industries RIL IN Equity 15,486 O2C, Telecom, Retail 5.4% 21%
HDFC HDFC IN Equity 5,012 NBFC - Mortgage lender 5.2% 16%
Source: Bloomberg; I Sec research

2
 Equity Research INDIA
December 7, 2021
BSE Sensex: 56747
White goods & durables
ICICI Securities Limited
is the author and
distributor of this report
Switch and switchgear industry: Organised
sector domination to continue
Sector update Preference for safe products and stringent technical standards for manufacturing
switch and switchgear have led to the organised sector dominating these two
White Goods & markets in India (unlike most sub-segments of the white goods & durables
industry). We believe organised players such as Havells India (Havells) and V-
Durables Guard Industries will likely be net beneficiaries of further shift of share from the
unorganised segment on the back of high inflation in commodity costs and supply
chain disruptions. The switch and switchgear market is expected to reach size of
Rs62bn and Rs286bn respectively by FY23E. Havells’ share in switch sub-segment
is 13%. Our top picks in the sector: Havells (BUY) and Crompton Greaves (ADD).
Our earlier reports in this series are: Pressure cooker, Fans, Air coolers
Cookware and Mixer grinders
 Steady growth rates of switch and switchgear market: The switch market is
growing at a steady CAGR of ~9.2%. It is expected to reach Rs62bn in FY23E. The
switchgear market too is growing at a steady CAGR of ~9.3%. The size of domestic
switchgear industry was Rs183bn in FY18 and is expected to reach Rs286bn in
FY23E (Source: IEEMA).
 Modular switches – the growth driver for switch market: Since modular switches
are 4-5x more expensive than traditional switches, they command higher share by
value. They are witnessing higher demand, especially in urban areas. The modular
switch market is expected to grow at 11.2% CAGR to reach a size of Rs41.5bn in
FY23E. The share of modular switch is estimated to increase to 67% of the total
switch market by FY23E. (Source: Crisil research)
 Competitive landscape for switch market: Switch market is dominated by the
brand Anchor (Panasonic Life Solutions India Private Limited) with a massive market
share of 36%. Havells’ market share is 13%.
 Low-voltage (LV) switchgear is the consumer category: Residential demand is
for LV switchgear only. The sub-segment formed roughly 70% of total switchgear
market in India in FY18. We believe: (1) rising customer preference for safer
products, (2) rising real estate demand, and (3) improved electrification will likely
drive the growth for LV switchgear market.
 Sector view & top picks: Considering the strong return ratios, healthy growth
potential and low penetration levels, we remain structurally positive on the white
goods and durables sector. We also expect the migration from unorganised to
organised sector to steadily generate value. Havells India and Crompton Greaves
are our top picks.
Research Analysts:
Aniruddha Joshi Valuation summary
aniruddha.joshi@icicisecurities.com Price MCap Target RoE RoCE EPS CAGR P/E (x)
+91 22 6807 7249 Company (Rs) (Rs bn) Price (Rs) Rating (FY23E) (FY23E) FY21-24E FY24E
Manoj Menon Bajaj Electricals 1,024 117.5 1,165.0 ADD 17.4 20.0 34.2 26.6
manoj.menon@icicisecurities.com Crompton 429 269.6 504.0 ADD 28.2 36.6 8.6 34.1
+91 22 6807 7209 Dixon 5,111 303.2 5,200.0 HOLD 34.5 37.9 55.9 49.4
Karan Bhuwania Havells 1,370 858.2 1,650.0 BUY 21.9 24.4 22.5 44.7
karan.bhuwania@icicisecurities.com TTK Prestige 10,094 139.9 12,580.0 ADD 17.2 20.3 16.8 38.0
+91 22 6807 7351
V-Guard 233 100.3 282.0 ADD 18.9 22.3 20.1 28.8
Pranjal Garg Whirlpool
pranjal.garg@icicisecurities.com
1,983 251.6 2,500.0 ADD 16.4 17.5 28.0 34.1
+91 22 6807 7650 Source: Company data, I-Sec research

Please refer to important disclosures at the end of this report

Equity Research INDIA
December 6, 2021
BSE Sensex: 57696 Aviation
ICICI Securities Limited
is the author and Impact of Omicron remains limited till date, average weekly
distributor of this report passenger dips to 357k
The number of weekly average daily fliers stood at 357k in the week ended (W.E)
Sector update 4th Dec’21 vs 374k in the W.E. 27th Nov’21. For W.E. 4th Dec’21, the average
number of daily departures increased marginally to 2,762 from 2,755 in the
Indigo previous week, and the number of fliers per departure fell to 129 from 136.
2600 Chart 1: Average daily passenger traffic is seeing signs of recovery
2100
Daily flier trend ( past two weeks)
1600
(Rs)

410000
1100
Omicron news
390000
600
Jun-19

Dec-21
Dec-18

Dec-19
Jun-20
Dec-20
Jun-21

370000

350000

330000

310000
20-Nov

21-Nov

22-Nov

23-Nov

24-Nov

25-Nov

26-Nov

27-Nov

28-Nov

29-Nov

30-Nov

01-Dec

02-Dec

03-Dec

04-Dec
Source: MOCA, I-Sec research
Chart 2: Average daily passenger traffic stood at 357k in W.E. 4th Dec’21
450 Daily Fliers ('000) 350

400
283
350 280
244 249 211 231
300 230
(000)

209
250 166
158
186
200 129
101
150 90
Weekly av erage:
357K
100 67
50 63

-
Jul-21
Jul-20

Aug-20

Sep-20

Aug-21

Sep-21
Jun-20

Jan-21
Nov-20

Jun-21

Nov-21
Dec-20

Dec-21
Oct-21
Oct-20

Feb-21

Mar-21

May-21
May-20

Source: MOCA, I-Sec research; Number in boxes indicates monthly averages

Table 1: Global airline stocks saw sharp correction* in past one month
1 1 3
Name Daily YTD 1 Year
Week Month Years
Airasia 0.00% -7.18% -25.00% -5.08% 9.80% -53.80%
AerCap Holdings NV -2.34% -3.74% -17.66% 21.94% 28.18% 10.48%
Air Lease -1.97% -0.51% -16.51% -7.92% -4.26% 10.30%
Interglobe Aviation Ltd -1.90% -0.66% -13.60% 8.84% 7.50% 89.25%
Research Analysts:
United Airlines Holdings -2.47% -3.90% -22.96% -6.10% -17.53% -56.35%
Ansuman Deb Delta Air Lines -1.80% -1.10% -18.76% -10.52% -15.06% -38.05%
ansuman.deb@icicisecurities.com EasyJet -0.56% 5.68% -19.63% -24.41% -32.45% -52.24%
+91 22 6807 7312 Ryanair 0.43% 4.86% -16.68% -8.32% -11.52% 34.49%
Ravin Kurwa Southwest Airlines -2.34% -1.51% -15.22% -5.00% -6.96% -17.39%
ravin.kurwa@icicisecurities.com
Source: Investing.com, I-Sec research. *Price performance is based on closing prices as on 3rd December, 2021
+91 22 6807 7653

Please refer to important disclosures at the end of this report

Aviation, December 6, 2021 ICICI Securities
Chart 3: Number of daily departures rose marginally to 2,762 in W.E. 4th Dec’21
Daily Departures 2,698
3,000 2,189 2,319
2,298 1,890
2,297
2,032
2,500 1,807 2,054
1,640
1,575 2,010
2,000
1,310
1,140
1,500
921 Weekly average:
1,000 782
923 2762
500
-

Jun-20

Jul-20

Nov-20

Dec-20

Jan-21

Jul-21

Nov-21

Dec-21
Jun-21
Aug-20

Sep-20

Aug-21

Sep-21
May-21
May-20

Oct-20

Oct-21
Feb-21

Mar-21
Source: MOCA, I-Sec research; Number in boxes indicates monthly averages

Chart 4: Number of fliers per departure stood at 129 in W.E. 4th Dec’21
160 Flier per departrures 129
122
112 111 121
140 115 112 113
99 106 108
120 98 97
86
100 91 88

80
Weekly
67 av erage: 129
60

40
Jul-20

Jul-21
Sep-20

Nov-20

Dec-20

Aug-21

Sep-21

Nov-21

Dec-21
Aug-20
Jun-20

Jan-21

Jun-21
Oct-20

Oct-21
May-20

May-21
Feb-21

Mar-21

Source: MOCA, I-Sec research; Number in boxes indicates monthly averages

2
India Update, December 7, 2021 ICICI Securities

Recent reports/updates
Analyst Company/Sector Date
Aniruddha / Manoj / Karan White goods & durables: Switch and switchgear industry: Organised sector Dec 7
/ Pranjal domination to continue
Vinod Karki Strategy: i-Lens Screener: Yield and growth curves indicate 'sweet spot' for Dec 6
stock picking within diverse economic activities!
Ansuman / Ravin Aviation: Impact of Omicron remains limited till date, average weekly Dec 6
passenger dips to 357k
Krupal / Darshit Cement: All eyes on demand recovery Dec 5
Manoj / Aniket / Karan Consumer: Emergence of quick grocery delivery players to accelerate Dec 5
consolidation
Ansuman / Kunal / Renish Credit cards: CC spends show robust growth in October; receivables per Dec 3
/ Ravin / Chintan card lag spends but reach pre-covid levels
Ansuman / Ravin Indian exchanges: Primary subscriptions could have weighed upon Dec 3
secondary cash market volumes in Nov; growth in options continues
Kunal / Renish / Chintan / NBFC: Harmonisation and uniformity of IRACP norms: Defers NPA upgrade Dec 1
Vishal and stress unwinding; stage-3 pool to rise
Sanjesh / Akash Gujarat Fluorochemicals: Fluoropolymer is core; battery chemicals is option Dec 1
value
Aniruddha / Manoj / Karan White goods & durables: Analysis of Indian cookware market: Strong Dec 1
/ Pranjal volume growth likely to continue
Kunal / Renish / Chintan Banking: Bank credit – October sectoral deployment: 1.2% MoM accretion Dec 1
pushes YTD growth in positive territory
Aniruddha / Manoj / Karan Dairy: Milk prices likely to move upward from Q4FY22 Nov 30
/ Pranjal
Ansuman / Ravin Aviation: Average daily fliers remain >90% of pre-covid levels; tracking Nov 29
airport rankings and developments with regards to Omicron
Rahul / Anshuman JSW Energy: Grey and green businesses to be reorganised Nov 29
Renish / Kunal / Chintan Microfinance: Gradually approaching normalcy; covid-led consolidation Nov 29
promises quality incremental growth over next two years
Sriraam / Vinay/ Mitesh / Pharmaceuticals: Rs150bn incentives for drug manufacturers Nov 29
Rohan
Sanjesh / Akash Media: BARC rating – Zee ratings unimpressive Nov 29
Vinod Karki Strategy: Anatomy of equity market indicates 'consolidation phase' as Nov 29
earnings catch up with extended valuations, thereby improving expected
returns; Omicron puts a lid on rising risk-free rate and oil prices!
Manoj / Aniket / Aniruddha Consumer: In Staples, we expect the basket of Dabur, Godrej Consumer Nov 28
/ Karan and Tata Consumer to outperform
Manoj / Aniket / Karan Consumer: Leadership matters #1 – RITESH TIWARI, CFO, HUL Nov 28
Kunal / Renish / Chintan BFSI: Finnovate, Finvest, Finnext #3: Digital Banks – Regulatory innovation Nov 26
recommended by Niti Aayog
Renjith / Aashna Siemens: Cost pressures impact margin Nov 26
Rahul / Abhijit / Anshuman Coal India: Price hike imminent Nov 25
Ansuman / Ravin MCX: Futures volumes remain tepid; growth in options volumes continues Nov 25
to impress
Sanjesh / Akash Telecom: Market Share TRACKER: Bharti Airtel likely to continue winning Nov 25
market shares
Renish / Kunal / Chintan BFSI: Digital mode constitutes >10% of total lending for NBFCs and >2% Nov 24
for SCBs
Aniruddha / Manoj / Karan White goods & durables: Analysis of household air cooler market Nov 24
/ Pranjal
Sanjesh / Akash Telecom: Tariff hike at last, but no structural changes! Nov 24
Rahul / Anshuman CESC: Distribution business to be the key growth driver Nov 23
Ansuman / Ravin Aviation: Average daily fliers go beyond 90% of pre-covid levels Nov 22
Renjith / Aashna ISGEC Heavy Engineering: Cost pressures hit margins; execution muted Nov 21
Krupal / Darshit Nuvoco Vistas Corporation: Improving margins to narrow valuation gap vs Nov 21
peers; initiate with a BUY
Kunal / Renish / Ansuman BFSI: India Financials Conference 2021 – 'Finnovate, Finvest, Finnext' - Nov 19
/ Chintan / Ravin / Vishal The New Reality
Kunal / Renish / Ansuman BFSI: Day 4: India Financials Conference 2021 - Key takeaways Nov 19
/ Chintan / Ravin / Vishal
Kunal / Renish / Ansuman BFSI: Day 3: India Financials Conference 2021 - Key takeaways Nov 18
/ Chintan / Ravin / Vishal
Abhijit / Mohit / Pritish Tata Steel: From whether Tata can trade at 1.5x P/B to what will be the Nov 18
downcycle valuations (II)
Renjith / Aashna Engineers India: Weak execution, stable outlook Nov 18
Kunal / Renish / Ansuman BFSI: Day 2: India Financials Conference 2021 – Key takeaways Nov 17
/ Chintan / Ravin / Vishal
Renjith / Aashna VA Tech Wabag: Healthy execution, but cashflow concerns persist Nov 17

7
 India Update, December 7, 2021 ICICI Securities

Inc. (Singapore branch) in respect of any matters arising from, or in connection with, this report. The contact details of ICICI Securities, Inc. (Singapore branch) are
as follows: Address: 10 Collyer Quay, #40-92 Ocean Financial Tower, Singapore - 049315, Tel: +65 6232 2451 and email: navneet_babbar@icicisecuritiesinc.com,
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New I-Sec investment ratings (all ratings based on absolute return; All ratings and target price refers to 12-month performance horizon, unless mentioned otherwise)
BUY: >15% return; ADD: 5% to 15% return; HOLD: Negative 5% to Positive 5% return; REDUCE: Negative 5% to Negative 15% return; SELL: < negative 15% return

ANALYST CERTIFICATION
I/We Aniruddha Joshi, CA; Manoj Menon, MBA, CMA; Karan Bhuwania, MBA; Pranjal Garg, MBA; Vinod Karki, MMS (Finance); Ansuman Deb, MBA, BE; Ravin Kurwa,
CA; and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s)
or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
Analysts are not registered as research analysts by FINRA and are not associated persons of the ICICI Securities Inc. It is also confirmed that above mentioned Analysts
of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director
or employee of the companies mentioned in the report.
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