08july 2019 India Daily

INDIA DAILY
July 8, 2019 India 5-Jul 1-day 1-mo 3-mo

Sensex 39,513 (1.0) (0.3) 2.1
Nifty 11,811 (1.1) (0.5) 1.8
Contents Global/Regional indices

Dow Jones 26,922 (0.2) 3.6 2.2
Special Reports Nasdaq Composite 8,162 (0.1) 5.4 2.6
Strategy FTSE 7,553 (0.7) 3.0 1.4

Nikkei 21,576 (0.8) 3.3 (0.9)
Strategy: Some direction, now for execution
Hang Seng 28,775 (0.1) 6.7 (4.3)
Strategy: June 2019 quarter earnings preview
KOSPI 2,080 (1.4) 0.4 (5.9)
Value traded – India

Daily Alerts
Cash (NSE+BSE) 361 324 356
Change in Reco Derivatives (NSE) 10,483 9,495 6,238
Mindtree: A phase of transition Deri. open interest 2,992 3,139 3,174
Sector alerts
Diversified Financials: Some steps to comfort stakeholders Forex/money market
Change, basis points

IT Services: An end to structured buyback program?
5-Jul 1-day 1-mo 3-mo
Oil, Gas & Consumable Fuels: Budget takeaways - technical overhang on Rs/US$ 68.6 13 (94) (98)
PSUs 10yr govt bond, % 7.0 (5) (24) (63)
Oil, Gas & Consumable Fuels: 1QFY20E preview - up for upstream and gas, Net investment (US$ mn)
down for downstream 4-Jul MTD CYTD
Real Estate: A month in transition FIIs 81 (456) 10,883
MFs 28 (4) 1,261
Top movers – 3mo basis
Change, %
Best performers 5-Jul 1-day 1-mo 3-mo
TGBL IN Equity 267 (1.1) 3.7 25.9
SBIN IN Equity 371 0.9 8.4 18.5
TTAN IN Equity 1,278 (0.9) 0.7 15.7
HPCL IN Equity 288 (0.4) (7.7) 13.7
LT IN Equity 1,558 (0.8) 2.9 13.4
Worst performers
RCAPT IN Equity 62 (3.3) (37.8) (66.8)
YES IN Equity 88 (8.4) (37.0) (66.1)
RELI IN Equity 51 (6.4) (30.8) (61.4)
RPWR IN Equity 4 (3.5) (32.5) (59.3)
RCOM IN Equity 2 3.3 (16.2) (51.6)
kspcg.research@kotak.com
Contact: +91 22 6218 6427
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES.
REFER TO THE END OF THIS MATERIAL.
Company Report
Strategy INDIA
INDIA
July 05, 2019
BSE-30: 39,513
Some direction, now for execution. The FY2020 union budget has laid stress on
(1) higher private investment to increase India’s GDP growth rate and (2) social welfare
programs to improve the lives of India’s rural poor. The key to a higher investment rate
would be economic reforms in the area of investment, many of which may not be easy
to implement. The central government’s GFD/GDP of 3.3% for FY2020 should cheer
the bond markets but may disappoint the equity markets given no real fiscal stimulus.
Some fiscal slippage versus FY20202BE interim estimates and some more likely
We see moderate upside risks to the government’s central GFD/GDP target of 3.3%. The
INSIDE
government has prudently budgeted for lower tax revenues and maintained expenditure versus
its FY2020BE interim budget estimates, which put GFD/GDP at 3.4%. We see risks to tax Central GFD/GDP at
revenues and GFD from lower-than-expected GST collections although lower farm income 3.3% for FY2020BE
support pay-outs due to administrative reasons may also lead to lower expenditure and .................. pg04
contain GFD.
18% growth in gross
Investment may become a priority area although the budget did not provide any impetus tax revenues, 21% in
The government stressed the importance of a higher investment rate to increase India’s GDP expenditure…
growth rate in the economic survey and the finance minister’s budget speech. However, it has .................. pg21
not increased the allocation for capital expenditure as it had little scope to do so, given committed
revenue expenditure and high fiscal deficit. FY2020BE allocation for capital expenditure stands FY2020BE capex
at `3.4 tn (+12% over `3.03 tn in FY2019P) with total expenditure for all central government including IEBR lower
ministries at `27.9 tn (+21% yoy). than FY2019..
.................. pg22
Focus on economic development with a social angle
The government has increased allocation to various social welfare schemes to `4.3 tn, which is
22% higher than `3.5 tn in FY2019P as part of its objective to improve the quality of life and
livelihood of India’s poor. It has budgeted `1.8 tn for food subsidy, which seems to be on the
lower side considering `700 bn of carry-forward payment pertaining to FY2019 to FCI. The Sanjeev Prasad
government may have rolled over payment of a portion of food subsidy payment to the FCI to sanjeev.prasad@kotak.com
Mumbai: +91-22-4336-0830
FY2021, which distorts expenditure and fiscal deficit.
Suvodeep Rakshit
Market to broadly welcome budget proposals suvodeep.rakshit@kotak.com
Mumbai: +91-22-4336-0898
In our view, equity markets will not be overly perturbed by a possible 10-20 bps of slippage in
GFD/GDP versus FY2020BE figure as they find solace in (1) low global bond yields due to dovish Anindya Bhowmik
anindya.bhowmik@kotak.com
monetary policies of the major central banks, (2) strong growth in earnings for FY2020 and Mumbai: +91-22-4336-0897
(3) potential investment-related economic reforms. They will welcome the government’s
renewed focus on investment although will wait to see the progress on key investment-related Sunita Baldawa
sunita.baldawa@kotak.com
reforms before changing their overwhelming bias for consumption-related stocks and sectors. Mumbai: +91-22-4336-0896
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Strategy India
FY2020 UNION BUDGET: SOME DIRECTION

The FY2020 union budget provided some direction to the government’s economic and social agenda—(1)
large role of the government in economic development of India’s low-income households, (2) continued
commitment to economic reforms although there were no specific announcements in the budget and
(3) taxation policies to achieve the abovementioned objectives. The union budget did not provide any major
fiscal stimulus with FY2020 central GFD/GDP at 3.3%.
Stress on social welfare and economic reforms

We discuss the key highlights of the FY2020 union budget below, implications for the
market and our understanding of the government’s economic and social agenda.
 Modest risk of fiscal slippage despite central GFD/GDP at 3.3%. The government’s
FY2020 GFD/GDP target of 3.3% reflects a 10 bps consolidation versus its earlier target
of 3.4% (see Exhibit 1 for details). The government has prudently shown realistic tax
revenue assumptions compared to the FY2020 interim budget figures. However, the
government has assumed higher non-tax revenues and non-debt capital receipts
(divestment, dividend payment from the RBI), which broadly make up for the shortfall in
tax revenues compared to the FY2020 interim budget estimates.
KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

India Strategy
Exhibit 1: GFD/GDP budgeted at 3.3% in FY2020BE

Major central government budgetary items, March fiscal year-ends, 2016-20E (Rs bn)
Change (%)
2017/ 2018/ 2019P/ 2020BE/ 2020E/
2016 2017 2018 2019P 2020BE 2020E 2016 2017 2018 2019P 2019P
Receipts
1. Revenue receipts (2d + 3) 11,950 13,742 14,352 15,632 19,628 19,408 15 4 9 26 24
2. Gross tax revenues (a + b ) 14,556 17,158 19,190 20,802 24,612 24,392 18 12 8 18 17
2.a. Direct taxes 7,458 8,539 10,068 11,428 13,419 13,419 14 18 14 17 17
2.a.1. Corporation tax 4,532 4,849 5,712 6,636 7,660 7,660 7 18 16 15 15
2.a.2. Income tax 2,876 3,646 4,308 4,739 5,690 5,690 27 18 10 20 20
2.a.3. Other taxes 50 43 48 53 69 69 (13) 11 12 30 30
2.b. Indirect taxes 7,098 8,620 9,122 9,374 11,192 10,972 21 6 3 19 17
2.b.1. Goods and Services Tax — — 4,426 5,816 6,633 6,413 31 14 10
2.b.1.1. CGST — — 2,033 4,575 5,260 5,040 125 15 10
2.b.1.2. IGST — — 1,767 289 280 280 (84) (3) (3)
2.b.1.3. Compensation cess — — 626 951 1,093 1,093 52 15 15
2.b.2. Customs duty 2,103 2,254 1,290 1,179 1,559 1,559 7 (43) (9) 32 32
2.b.2.1. Basic duties 572 646 808 1,045 1,429 1,429 13 25 29 37 37
2.b.2.2. Others 1,532 1,608 483 134 130 130 5 (70) (72) (4)
2.b.3. Excise duty 2,881 3,821 2,594 2,310 3,000 3,000 33 (32) (11) 30 30
2.b.4. Service tax 2,114 2,545 812 69 — — 20 (68)
2.c Transfers to states, UTs and national funds 5,119 6,145 6,765 7,633 8,116 8,116 20 10 13 6 6
2.d Net tax revenues 9,438 11,014 12,425 13,170 16,496 16,276 17 13 6 25 24
3. Non-tax revenues 2,513 2,728 1,927 2,462 3,132 3,132 9 (29) 28 27 27
3.a. RBI's transfer of surplus 659 659 407 680 900 900 (0) (38) 67 32 32
4. Non-debt capital receipts (a + b) 630 654 1,157 1,029 1,198 1,198 4 77 (11) 16 16
4.a Recovery of loans 208 176 156 178 148 148 (15) (11) 14 (17) (17)
4.b Other receipts (disinvestments) 421 477 1,000 850 1,050 1,050 13 110 (15) 23 23
5. Total receipts (1 + 4) 12,580 14,396 15,509 16,661 20,826 20,606 14 8 7 25 24
Expenditure
6. Revenue expenditure 15,378 16,906 18,788 20,085 24,478 24,328 10 11 7 22 21
6.a. Interest payments 4,417 4,807 5,290 5,827 6,607 6,607 9 10 10 13 13
6.b. Subsidies 2,418 2,040 1,912 1,971 3,017 3,017 (16) (6) 3 53 53
6.b.1. Food 1,394 1,102 1,003 1,019 1,842 1,842 (21) (9) 2 81 81
6.b.2. Fertilizer 724 663 664 706 800 800 (8) 0 6 13 13
6.b.3. Oil 300 275 245 246 375 375 (8) (11) 0 53 53
6.c. Pay, allowances and pensions 3,301 3,996 4,464 4,936 5,258 5,258 21 12 11 7 7
6.c.1.a. Pay and allowances 2,334 2,682 3,007 3,270 3,515 3,515 15 12 9 7 7
6.c.1.b. Pensions 967 1,314 1,457 1,666 1,743 1,743 36 11 14 5 5
6.d. Agriculture and farmers' welfare 153 369 374 461 1,305 1,155 142 1 23 183 151
6.e. Education 672 720 800 781 927 927 7 11 (2) 19 19
6.f. Health and family welfare 322 364 483 506 609 609 13 33 5 20 20
6.g. Rural development 774 951 1,086 1,118 1,175 1,175 23 14 3 5 5
6.h. Others 3,321 3,658 4,381 4,485 5,579 5,579 10 20 2 24 24
7. Capital expenditure 2,530 2,846 2,631 3,030 3,386 3,386 12 (8) 15 12 12
7. a. Defence 836 915 954 995 1,082 1,082 9 4 4 9 9
7. b. Railways 350 452 434 528 658 658 29 (4) 22 25 25
7. c. Roads and Highways 275 412 508 676 721 721 50 23 33 7 7
7. d. Housing and urban affairs 106 165 153 158 195 195 56 (7) 3 24 24
7. e. Others 963 902 582 572 729 729 (6) (35) (2) 27 27
8. Total expenditure (6 + 7) 17,908 19,752 21,420 23,114 27,863 27,713 10 8 8 21 20
Deficit
Primary deficit (PD) 911 549 621 627 430 500 (40) 13 1 (31) (20)
Revenue deficit (RD) 3,427 3,164 4,436 4,453 4,850 4,920 (8) 40 0 9 10
Gross fiscal deficit (GFD) 5,328 5,356 5,911 6,454 7,038 7,108 1 10 9 9 10
Gross borrowings (dated securities) 5,850 5,830 5,880 5,710 7,100 7,170 (0) 1 (3) 24 26
Net market borrowing 4,406 4,082 4,507 4,227 4,731 4,801 (7) 10 (6) 12 14
Net market borrowing (adjusted for buyback) 4,041 3,497 4,103 4,227 4,231 4,301 (13) 17 3 0 2
Short-term borrowing (T-bills) 507 55 449 250 250 250
Nominal GDP at market prices 137,719 153,624 170,950 190,102 211,006 209,682 11.5 11.3 11.2 11.0 10.3
PD/GDP (%) 0.7 0.4 0.4 0.3 0.2 0.2
RD/GDP (%) 2.5 2.1 2.6 2.3 2.3 2.3
GFD/GDP (%) 3.9 3.5 3.5 3.4 3.3 3.4
Notes:
(a) 'Gross tax revenues' means revenues post refunds and 'net tax revenues' means gross tax revenues minus devolution to states.
(b) RBI's transfer of surplus for FY2020BE and FY2020E are our estimate.
(c) Pay and allowances include pay and allowances from Ministry of Railways.
Source: Ministry of Finance, Kotak Institutional Equities estimates
4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Strategy India
Nonetheless, we see risk of modest slippages if tax revenues, particularly GST revenues,
were to continue to disappoint. The government’s FY2020BE estimates for central GST,
IGST and compensation cess imply about `12.7 tn of total GST collections. This translates
to `1.06 tn monthly run-rate, which is meaningfully higher than the monthly run-rate of
about `891 bn based on collections for 3MFY20 (March-May 2019).
We note that India’s high consolidated fiscal deficit (more like 6.1% including GFD of
states) poses two challenges for the economy—(1) limited impact of RBI’s accommodative
monetary policy with market interest rates staying stubbornly high despite 75 bps rate cut
CYTD19 by the RBI; high government and quasi-government market borrowing through
government bonds, PSE bonds and small saving scheme funds results in classic ‘crowding
out’ of the private sector and (2) limit on India’s investment rate; a large portion of India’s
investment in infrastructure results from governments (central and states) running high
fiscal deficits, which will put a ‘cap’ on the government’s ability to increase investment in
infrastructure.
 No major taxation changes. The government did not announce any major changes to
India’s direct tax rates. It did not reduce tax rates of either companies or individuals, as it
did not have any fiscal scope to reduce taxes. On the other hand, it has raised tax rates on
high-income individuals to compensate for the benefits announced for low-income
households in the interim budget.
 Corporate. The government retained the basic corporate tax rate (for larger companies)
at 30%. It seems to have quietly buried its earlier commitment to reduce the corporate
tax rate to 25% (its original target was FY2020). Nonetheless, the government did
extend the scope of lower corporate tax rate of 25% to companies with turnover up to
`4 bn from `2.5 bn earlier. Exhibit 2 gives the corporate tax rates broken down by
various revenue and taxable income categories.
Exhibit 2: Lower corporate tax rate of 25% extended to companies with turnover up to Rs4 bn from
Rs2.5 bn earlier
Effective tax rates for domestic companies (%)
Effective
Tax Surcharge Cess tax rate
Turnover/Gross receipts less than Rs4 bn
Taxable income less than Rs10 mn 25 0 4 26.0
Taxable income more than Rs10 mn but less than Rs100 mn 25 7 4 27.8
Taxable income more than Rs100 mn 25 12 4 29.1
Turnover/Gross receipts more than Rs4 bn
Taxable income less than Rs10 mn 30 0 4 31.2
Taxable income more than Rs10 mn but less than Rs100 mn 30 7 4 33.4
Taxable income more than Rs100 mn 30 12 4 34.9
Source: Union budget, Kotak Institutional Equities
We can only hope that the government will have some scope to reduce corporate tax
rates over the next few years as and when India’s tax base expands significantly. We
had pinned our hopes on the GST system achieving the same but both GST collections
and the number of GST filings have stagnated over the past few months (see Exhibit 3).

India Strategy
Exhibit 3: GST revenues have declined in the past two months; May GST collection is up 4.5% yoy
Breakup of July 2017-May 2019 GST collection (Rs bn)
Compensation Total
CGST SGST IGST IGST (imports) cess Total GST filings (mn)
Jul-17 151 230 481 213 73 936 5.9
Aug-17 148 216 486 238 80 930 5.9
Sep-17 145 219 505 247 82 951 5.7
Oct-17 157 230 448 223 79 913 5.0
Nov-17 136 193 428 218 81 837 5.3
Dec-17 145 205 453 231 86 889 5.6
Jan-18 145 204 447 229 85 880 5.8
Feb-18 157 214 445 232 77 893 6.0
Mar-18 187 257 505 212 86 1,035 6.0
Apr-18 159 217 491 244 73 940 6.2
May-18 160 220 495 245 81 956 6.5
Jun-18 159 223 500 249 84 965 6.6
Jul-18 153 212 499 265 76 940 6.7
Aug-18 153 211 501 253 80 944 6.7
Sep-18 165 228 534 269 80 1,007 6.7
Oct-18 168 231 497 241 80 976 7.0
Nov-18 164 225 479 236 79 947 7.2
Dec-18 178 248 512 241 87 1,025 7.3
Jan-19 176 242 470 214 85 972 7.3
Feb-19 204 275 504 235 83 1,066 7.6
Mar-19 212 288 547 233 92 1,139 7.2
Apr-19 178 245 499 249 81 1,003 7.2
May-19 184 253 478 220 85 999 7.4
Source: PIB, CGA, Kotak Institutional Equities
The government has also imposed a 20% income tax on buybacks, which would nullify
the advantage of buybacks over dividends as a means of returning cash to shareholders.
This will result in companies largely following the dividend route to return cash to
shareholders.
 Individual. The government broadly left the individual tax rates unchanged but
increased the surcharge on individual tax rate to 25% from 15% for high-income
individuals (annual income >`20-50 mn) and to 37% from 15% for very high-income
households (annual income >`50 mn). This is tantamount to 3% and 7% increase in tax
rates for individuals in the respective income tax brackets. Exhibit 4 gives details of
income tax rate and surcharge by income slabs. The government retained the full tax
rebate under Section 87A to individuals with taxable annual income below `0.5 mn
announced in the FY2020 interim budget. The increase in surcharge on income tax rate
will result in additional revenues of `85-95 bn versus the `185 bn of tax foregone on
higher rebate for 30 mn households with taxable income below `0.5 mn.

Strategy India
Exhibit 4: Current income tax rates for individuals; steep increase in surcharge and effective tax rate for high-income households
Income tax rates for individuals for FY2019 and FY2020 (as per interim budget)
FY2019 FY2020
Individual tax rates Up to Rs250,000 - Nil Up to Rs250,000 - Nil
Above Rs250,000 - Rs500,000 - 5% Above Rs250,000 - Rs500,000 - 5%
Above Rs500,000 - Rs1,000,000 - 20% Above Rs500,000 - Rs1,000,000 - 20%
Above Rs1,000,000 - 30% Above Rs1,000,000 - 30%
Senior citizen (60 years) Exemption limit - Rs300,000 Exemption limit - Rs300,000
Very senior citizen (80 years+) Exemption limit - Rs500,000 Exemption limit - Rs500,000
Surcharge 10% on income between Rs5 mn and Rs10 mn 10% on income between Rs5 mn and Rs10 mn
15% on income exceeding Rs10 mn 15% on income between Rs10 mn and Rs20 mn
25% on income between Rs20 mn and Rs50 mn
37% on income above Rs50 mn
Cess 4% (health and education cess) 4% (health and education cess)
Notes:
(a) Standard deduction of Rs50,000 in lieu of medical and transport allowance.
(b) For senior citizens, exemption of interest income on deposits increased to Rs50,000 from Rs10,000.
(c) Individual tax-payers having taxable income up to Rs0.5 mn will get full tax rebate.
Source: Ministry of Finance, Kotak Institutional Equities
 Economic and social agenda. The government emphasized its commitment to

economic development of India’s poor by (1) increasing rural spends by 22% (FY2020BE
over FY2019P) under various central government schemes to `4.3 tn (see Exhibit 5 for
expenditure under major social welfare schemes for the past few years) and (2) keeping
the outlay for the PM-KISAN (farm income support) scheme at `750 bn, same as in the
FY2020 interim budget despite low registration under the scheme so far; it had earlier
announced its intention to extend the schemes to all farmers versus restricting it to
farmers with farm holdings of less than five acres.
Exhibit 5: Significant focus on rural schemes

Major social welfare schemes, March fiscal year-ends, 2017-20BE (Rs bn) (sorted on descending order of FY2020BE)
2020BE/
2017 2018 2019P 2020BE 2019RE (%)
Food subsidy to FCI under National Food Security Act. 783 1,020 1,401 1,510 8
Income support scheme for farmers (PM-KISAN) 200 750 275
Mahatma Gandhi National Rural Employment Guarantee Program (NREGS) 482 550 611 600 (2)
Food subsidy for decentralized procurement of foodgrains under NFSA 273 380 310 330 6
Pradhan Mantri Awas Yojna (PMAY) 210 290 264 259 (2)
Pradhan Mantri Gram Sadak Yojna (PMGSY) 179 169 155 190 23
Interest subsidy for short term credit to farmers 134 148 150 180 20
Crop insurance scheme 111 107 130 140 8
Green revolution 101 112 118 126 6
Pradhan Mantri Krishi Sinchai Yojna (PMKSY) 51 74 83 97 17
National Rural Drinking Water Mission 60 71 55 82 49
Market intervention scheme and price support scheme 1 10 20 30 50
LPG connection to poor households 25 23 32 27 (15)
White Revolution 13 16 24 22 (8)
Total 2,424 2,968 3,552 4,343 22
Source: Budget documents, Kotak Institutional Equities

India Strategy
It also focused on investment-related reforms to increase India’s investment rate (see

Exhibit 6), which has fallen over the past few years. In particular, the government
recognized the primary role of private sector in investment and has sought greater private
sector investment in new areas of chip fabrication, electronics manufacturing, photo-
voltaic cells, among others. We await greater clarity on the government’s policy
framework (both generic and sector-specific) to increase private sector investment rate.
Exhibit 6: Government investment accounts for a small proportion of the Indian economy's overall
investments
Public sector GFCF and overall investment rate of India, March fiscal year-ends, 2012-18 (% of GDP)
Public sector GFCF (%, LHS) Overall investment rate (%, RHS)
8.0 40
7.5
35
7.0
6.5 30
6.0
25
5.5
5.0 20
2012 2013 2014 2015 2016 2017 2018
Source: CEIC, Kotak Institutional Equities
 ‘Direct’ capital expenditure from the budget shows 12% growth. The government
has broadly retained its estimates of capital expenditure, made in the FY2020BE interim
budget. The budget estimate of `3.4 tn for capital expenditure translates into 12%
growth over FY2019P figure of Rs3.03 tn. Among the key items, it has increased
spending on defense by 9% to `1.08 tn, railways by 25% to `658 bn and roads and
highways to `721 bn.
However, we note that overall capital expenditure of the central government and central
PSUs is lower than last year. The government’s budget estimate of capital expenditure
represents a declining share of the overall expenditure of various government ministries
and PSUs with several of the PSUs funding capital expenditure through internal accruals
and market borrowings (internal and extra budgetary resource or IEBR in government
parlance).
As can be seen in Exhibit 7, the IEBR portion of total capital expenditure of the key
government ministries associated with investment in infrastructure has shot up over the
past few years. Unfortunately, internal accruals have not picked up, which means that
several quasi-government entities such as NHAI and Indian Railways have to borrow
money from the market. This has contributed to continued high levels of market
borrowings of government and quasi-government entities staying at high levels despite
the government ostensibly reducing its capital expenditure and fiscal deficit.

Strategy India
Exhibit 7: IEBR is the major funding source for capex of various ministries
Total plan outlay by public enterprises, March fiscal year-ends, 2014-20BE (Rs bn)
Growth (%)
2019RE / 2020BE /
2014 2015 2016 2017 2018 2019RE 2020BE 2018 2019RE % share
Department of Atomic Energy 51 66 73 69 85 126 114 49 (10) 2
Nuclear Power Corp. of India (NPCIL) 47 62 59 66 79 123 111
Ministry of Chemicals & Fertilizers 8 27 29 18 8 11 15 40 41 0
National Fertilizers Ltd 5 2 1 2 2 4 8
Rashtriya Chemicals and Fertilizers Ltd 2 17 17 15 5 6 7
Ministry of Civil Aviation 79 75 58 52 89 88 126 (1) 42 2
Air India Asset Holding Limited 70
Airport Authority of India 11 13 18 21 25 42 51
Ministry of Coal 86 100 106 143 159 175 201 10 15 3
Coal India Ltd 43 52 61 77 93 95 100
Neyveli Lignite Corp. Ltd 18 20 17 46 51 69 83
Singareni Colleries Co. Ltd 25 28 28 20 15 11 19
Min. of Heavy Industries & Public Enterprises 11 4 7 10 3 4 7 46 49 0
Others 6 0 2 7 1 2 4
Min. of Housing & Urban Affairs 200 166 250 291 327 353 378 8 7 5
Housing and Urban Development Corp. 117 81 129 113 168 175 175
Chennai Metro Rail Project 20 10
Delhi Metro Rail Corp. (DMRC) 50 52
119 172 157 156 185
Kochi Metro 1 5
Jaipur Metro — —
National Capital Region Transport Corporation 7 7
Others 3 3 2 6 2 14 11
Ministry of Mines 8 53 58 13 17 17 17 2 (3) 0
National Aluminium Company Ltd 5 49 54 9 11 11 10
Others —
Ministry of Petroleum & Natural Gas 1,099 892 972 1,044 1,320 944 936 (28) (1) 13
Gas Authority of India Ltd 41 19 19 18 37 59 53
Hindustan Petroleum Corp. Ltd 26 27 59 58 72 84 95
Indian Oil Corp. Ltd 167 143 144 207 215 256 251
Mangalore Refineries & Petrochem. Ltd 14 131 152 6 13 10 8
Oil & Natural Gas Corp. Ltd 325 300 301 280 729 330 329
Oil & Natural Gas Corp. Videsh Ltd 370 72 65 176 68 61 52
Oil India Ltd 94 125 123 111 82 38 41
Chennai Petroleum Corporation Ltd. 13 5 13 13 10 12 11
Shipping Corp. of India 3 — 0 3 6 2 1
JNPT 10 4 3 4 14 28 21
Dredging Corporation of India 8 1 0 0 0 0 0
Ennore Port Ltd 6 1 3 5 1 2 5
Kandla Port Trust 1 3 1 — 3 4 7
Visakhapatnam Port Trust 3 2 2 3 3 1 1
Tuticorin Port Trust 0 1 4 1 4 2 3
Ministry of Steel 140 117 133 119 89 79 90 (12) 14 1
NMDC Ltd 25 31 37 35 20 18 30
Rashtriya Ispat Nigam Ltd 15 16 15 14 16 14 14
Steel Authority of India Ltd 99 68 60 49 51 43 40
Ministry of Communications & IT 146 46 59 29 122 165 140 35 (15) 2
Bharat Sanchar Nigam Ltd 48 31 33 (31) 51 58 67
Bharat Broadband Network Limited 8 — 31 61 60 89 65
Ministry of Power 542 525 562 645 599 738 437 23 (41) 6
Damodar Valley Corp. Ltd 30 15 19 12 8 15 18
National Hydro Electric Power Corp. Ltd 31 26 28 24 27 26 38
National Thermal Power Corp. Ltd 218 232 257 280 241 223 200
Power Grid Corp. of India Ltd 232 225 226 244 258 285 150
Ministry of Road Transport & Highways 196 184 510 480 744 993 1,117 33 12 15
National Highway Authority of India (NHAI) 196 184 510 480 744 993 1,117
Ministry of Railways 520 565 935 1,099 1,020 1,389 1,599 36 15 22
Indian Railways 520 565 935 1,099 1,020 1,389 1,599
Other ministries 199 131 346 420 3,293 3,294 2,174 0 (34) 29
Grand total 3,322 2,966 4,126 4,463 7,920 8,432 7,409 6 (12) 100
IEBR 2,631 2,291 3,216 3,381 6,107 6,126 5,377 0 (12)
Source: Union budget documents, Kotak Institutional Equities

India Strategy
 Market-related measures to result in significant overhang. We see significant

overhang on the market from future sale of shares from two proposed measures of the
government. (1) The government’s intention to increase the minimum public
shareholding (MPS) to 35% from 25% currently will result in large overhang of shares
assuming the proposal is accepted by the SEBI. We compute the total amount at `3.6 tn
(see Exhibit 8 for details). We will wait for further details on the timeframe for the
increase in MPS. (2) The government’s plan to treat shareholding in PSUs by other
government companies as part of the promoter (government) shareholding will allow the
government to reduce its shareholding in the PSUs to even below 51% without giving up
control of the companies. In other words, the government will look at the combined
shareholding of the government and other government companies to arrive at the 51%
minimum ownership limit. This plan reflects the government’s compulsion to raise
additional finances from PSUs since the government would be able to raise only `1.4 tn if
it was to bring down its shareholding in the listed PSUs (barring financial companies) to
51% and `2.7 tn if it was to bring down in shareholding in all listed PSUs to 51% (see
Exhibit 9). As a corollary, we would conclude that the government has no intention to
privatize companies or give up control over the PSUs.
Exhibit 8: US$35 bn of stake sale required by private companies to meet the minimum public holding of 35%
List of companies with promoter holding above 65% in the BSE-500 Index (sorted on stake sale)
Promoter Stake sale Promoter Stake sale
holding to reach at 65% Market cap. Stake sale holding to reach at 65% Market cap. Stake sale
Company (%) (%) (Rs bn) (Rs bn) Company (%) (%) (Rs bn) (Rs bn)
Private PSUs
TCS 72.1 7.1 8,117 572 IDBI Bank 97.5 32.5 278 90
Wipro 73.9 8.8 1,641 145 Coal India 71.0 6.0 1,491 89
Avenue Supermart 81.2 16.2 846 137 General Insurance 85.8 20.8 406 84
Bandhan Bank 82.3 17.3 653 113 Bank of India 87.1 22.1 308 68
HDFC Life Insurance 76.1 11.1 956 106 Hindustan Aeronautics 90.0 25.0 232 58
Hindustan Unilever 67.2 2.2 3,878 85 New India Assurarance 85.4 20.4 246 50
HDFC AMC 82.7 17.7 420 74 Allahabad Bank 92.0 27.0 181 49
Interglobe Aviation 74.9 9.9 601 60 Corporation Bank 93.5 28.5 170 48
ICICI Prudential Life Insurance 75.0 10.0 572 57 UCO Bank 93.3 28.3 144 41
Siemens 75.0 10.0 449 45 Punjab National Bank 75.4 10.4 377 39
SBI Life Insurance Company 69.8 4.8 754 36 IOB 92.5 27.5 117 32
ABB 75.0 10.0 327 33 Oriental Bank 87.6 22.6 128 29
Berger Paints India 75.0 10.0 304 30 United Bank 96.8 31.8 79 25
DLF 71.9 6.9 437 30 NMDC 72.3 7.3 339 25
Pidilite Industries 69.8 4.8 613 29 SJVN 88.8 23.8 97 23
L&T Infotech 74.8 9.8 289 28 Central Bank 91.2 26.2 86 22
Reliance Nippon Life 85.8 20.8 135 28 Bank of Maharashtra 87.7 22.7 97 22
Bosch 70.5 5.5 487 27 Bank of Baroda 69.2 4.2 502 21
3M India 75.0 10.0 256 26 ITI 90.0 25.0 84 21
MRPL 88.6 23.6 104 25 Indian Bank 81.5 16.5 126 21
Adani Transmission 74.9 9.9 248 25 NHPC 73.3 8.3 246 20
L&T Technology 78.9 13.9 177 25 HUDCO 89.8 24.8 81 20
Adani Power 75.0 10.0 245 24 SAIL 75.0 10.0 200 20
GlaxoSmithkline Consumer 72.5 7.5 327 24 Andhra Bank 87.8 22.8 68 16
Gillette 75.0 10.0 241 24 NLC India 81.9 16.9 89 15
Oracle Financial Services Software 73.5 8.5 283 24 Syndicate Bank 78.5 13.5 109 15
Kansai Nerolac Paints 75.0 10.0 236 24 Union Bank 74.3 9.3 148 14
Cadila Healthcare 74.8 9.8 234 23 Rites 87.4 22.4 60 13
Vodafone Idea 71.6 6.6 345 23 Bharat Dynamics 87.8 22.8 58 13
Honeywell Automation 75.0 10.0 217 22 Canara Bank 70.6 5.6 219 12
Muthoot Finance 73.5 8.5 251 21 IRCON International 89.2 24.2 38 9
Dabur India 67.9 2.9 719 21 MMTC 89.9 24.9 36 9
Whirlpool 75.0 10.0 200 20 Cochin Shipyard 75.2 10.2 50 5
Glaxosmithkline Pharmaceuticals 75.0 10.0 200 20 ITDC 87.0 22.0 22 5
P&G Hygiene and Healthcare 70.6 5.6 353 20 Hindustan Copper 76.1 11.1 36 4
Sun TV Network 75.0 10.0 190 19 RCF 75.0 10.0 33 3
Abbott India 75.0 10.0 189 19 NBCC 68.2 3.2 104 3
Adani Gas 74.8 9.8 184 18 GMDC 74.0 9.0 24 2
Torrent Pharmaceuticals 71.3 6.3 258 16 MOIL 65.7 0.7 40 0
Adani Enterprises 74.9 9.9 162 16 Total 7,149 1,058
Total 33,274 2,545
Source: Capitaline, Kotak Institutional Equities

Strategy India
Exhibit 9: Government can raise around Rs15 tn if it sells entire holding but only Rs2.7 tn from stake
sale above 51%
List of PSUs with more than 51% government holding (sorted on market capitalization)
Market cap. Govt holding Stake sale
Company (Rs bn) (US$ bn) (%) Entire up to 51%
ONGC 2,032 30 64.2 1,305 269
Coal India 1,491 22 71.0 1,058 298
Indian Oil Corp. 1,433 21 52.2 748 17
NTPC 1,351 20 56.1 758 69
Power Grid Corp. 1,077 16 55.4 596 47
BPCL 803 12 53.3 428 18
GAIL (India) 691 10 51.8 358 5
NMDC 339 5 72.3 245 72
Container Corp. 351 5 54.8 192 13
Bharat Electronics 264 4 58.8 155 21
NHPC 246 4 73.3 180 55
BHEL 244 4 63.2 154 30
Hindustan Aeronautics 229 3 90.0 206 89
SAIL 200 3 75.0 150 48
Oil India 188 3 61.6 116 20
NBCC 104 2 68.2 71 18
SJVN 97 1 89.5 87 37
National Aluminium Co. 91 1 52.0 47 1
Neyveli Lignite Corp. 89 1 84.4 75 30
ITI 84 1 90.0 75 33
KIOCL 81 1 99.1 80 39
Engineers India 72 1 52.0 37 1
RITES 60 1 87.4 53 22
Rail Vikas Nigam 56 1 64.8 36 8
Bharat Dynamics 58 1 87.8 51 21
Cochin Shipyard 50 1 75.2 38 12
MOIL 40 1 65.7 26 6
Hindustan Copper 36 1 76.1 28 9
IRCON International 38 1 89.2 34 15
BEML 38 1 54.0 20 1
MMTC 36 1 89.9 32 14
Rashtriya Chemicals & Fertilizers 33 0 75.0 25 8
CPCL 31 0 51.9 16 0
Mishra Dhatu Nigam 24 0 74.0 17 5
GMDC 24 0 74.0 17 5
ITDC 22 0 87.0 19 8
National Fertilizer 18 0 74.7 13 4
Fertilizers & Chemicals Travancore 14 0 90.0 13 6
Garden Reach Shipbuilders & Engineers 14 0 74.5 10 3
Shipping Corp. 15 0 63.8 10 2
Dredging Corp. 12 0 73.5 9 3
Andrew Yule & Co. 8 0 89.3 7 3
HMT 7 0 93.7 7 3
State Trading Corp. 7 0 90.0 6 3
MSTC 7 0 64.8 5 1
Madras Fertilizers 4 0 59.5 2 0
MTNL 2 0 56.3 1 0
Hindustan Organic Chemicals 1 0 58.8 1 0
Scooters India 1 0 93.7 1 1
Bharat Immunolog 0 0 59.3 0 0
Punjab Communications 0 0 71.3 0 0
Gujarat State Financial Corp. 0 0 84.0 0 0
Banks/Finance
State Bank of India 3,308 48 57.1 1,890 203
Bank of Baroda 502 7 63.3 317 62
GIC 406 6 85.8 348 141
Punjab National Bank 377 5 75.4 284 92
Power Finance Corp. 347 5 59.0 205 28
Bank of India 308 4 87.1 268 111
New India Assurance 246 4 85.4 211 85
Canara Bank 219 3 70.6 155 43
Allahabad Bank 181 3 79.4 143 51
Corporation Bank 170 2 86.8 147 61
UCO Bank 144 2 90.8 131 57
Indian Bank 126 2 81.5 103 38
Union Bank of India 148 2 74.3 110 35
Oriental Bank of Commerce 128 2 77.2 99 34
Indian Overseas Bank 117 2 92.0 107 48
Syndicate Bank 109 2 76.2 83 27
Central Bank of India 86 1 91.2 78 34
Bank of Maharashtra 97 1 87.0 84 35
HUDCO 81 1 89.8 73 31
United Bank of India 79 1 92.3 73 32
Andhra Bank 68 1 84.8 58 23
J&K Bank 22 0 59.2 13 2
IFCI 15 0 56.4 9 1
Punjab & Sind Bank 15 0 85.6 13 5
Balmer Lawrie Investment 10 0 59.7 6 1
Total 19,519 285 12,628 2,673
Total (excluding banks/financial PSUs) 12,210 178 7,620 1,392
Source: Capitaline, Kotak Institutional Equities

India Strategy
Market valuations supported by a heady mix

In our view, the rich valuations of the Indian market (see Exhibits 10-11) reflect (1) low
global bond yields (and related risk-free rate) arising from the market’s expectation about
rate cuts by the US Fed (see Exhibit 12) and continued benign monetary policies of other
major central banks, (2) the market’s high expectations of economic reforms over the next
few months and (3) continued high faith in India’s growth story.
Exhibit 10: We expect net profits of the Nifty-50 Index to grow 24% in FY2020 and 16% in FY2021
Valuation summary of Nifty-50 sectors (full-float basis), March fiscal year-ends, 2019-21E (based on current constituents)
Mcap. Adj. mcap. Earnings growth (%) PER (X) EV/EBITDA (X) Price/BV (X) Div. yield (%) RoE (%)
(US$ bn) (US$ bn) 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E
Automobiles & Components 75 41 (27) 40 17 25 17.7 15.2 8.8 7.2 6.2 2.9 2.6 2.3 1.2 1.3 1.4 11.5 14.4 15.0
Banks 273 201 32 141 30 45 18.5 14.2 — — — 2.9 2.6 2.2 0.3 0.6 0.7 6.6 13.8 15.4
Capital Goods 31 28 19 11.0 9.0 25 23 21 20 18 16 3.9 3.5 3.2 1.2 1.5 1.6 15.5 15.5 15.3
Commodity Chemicals 19 9 9.7 20 20 60 51 42 37 30 25 14 12 11 0.8 1.0 1.2 23 24 26
Construction Materials 27 12 20 37 27 28 21 16.4 14 9.3 7.4 2.2 2.0 1.8 0.4 0.4 0.4 7.8 9.8 11.1
Consumer Staples 114 57 14.9 11.8 13.0 40 36 32 27 24 21 11 10 9.5 1.5 1.7 2.0 28 29 30
Diversified Financials 109 75 5.1 20 21 36 30 25 — — — 5.5 4.9 4.3 0.8 0.9 1.0 15.3 16.2 17.2
Electric Utilities 36 15 13.2 5.2 13.0 11.8 11.2 9.9 9.2 8.6 7.6 1.5 1.4 1.3 4.2 2.9 3.3 12.6 12.3 12.8
Fertilizers & Agricultural Chemicals 7 5 (12.9) 52 14.5 25 16.7 14.6 18 9.9 8.4 3.3 3.0 2.6 0.8 1.4 1.9 13.0 17.7 17.8
Gas Utilities 10 4 37 10.1 7.2 11.0 10.0 9.3 7.2 6.3 5.8 1.6 1.4 1.3 2.6 3.1 3.4 14.3 14.3 14.0
IT Services 223 95 16 8.6 9.6 22 20 18.3 15 14 13 5.6 5.4 4.8 1.8 2.6 2.8 26 27 26
Media 5 3 9.9 10.0 12.5 21 18.9 16.8 12 11 9.9 3.7 3.4 3.0 1.0 1.3 1.6 17.8 17.8 17.7
Metals & Mining 34 19 11.0 (14.4) 15 7.8 9.1 7.9 5.4 5.7 5.4 1.1 1.0 0.9 4.0 4.1 4.2 13.7 11.0 11.8
Oil, Gas & Consumable Fuels 197 83 21 3.7 7.0 12.3 11.8 11.1 7.0 6.7 6.0 1.7 1.6 1.4 2.3 2.8 2.9 13.9 13.3 13.1
Pharmaceuticals 27 15 21 32 16 25 19.1 16.5 14 11 8.5 2.6 2.3 2.1 0.6 0.9 1.2 10.3 12.1 12.6
Retailing 17 8 32 28 22 79 62 50 55 42 34 19 16 13 0.4 0.5 0.6 25 26 26
Telecommunication Services 33 12 NM NM NM NM NM NM 11 9.3 7.8 2.7 2.2 2.3 1.7 2.2 2.3 NM NM 1.9
Transportation 12 5 17 7.4 11.4 18.7 17.5 15.7 15 13 11 3.4 3.0 2.6 0.5 1.3 1.2 18.3 17.3 16.8
Nifty-50 Index 1,248 686 12.6 24 16 23 18.5 15.9 11 9.5 8.5 3.0 2.7 2.4 1.4 1.7 1.9 13.0 14.6 15.3
Nifty-50 Index (ex-banks) 975 643 10.5 8.8 12.5 20 18.5 16.5 11 9.5 8.5 3.0 2.7 2.5 1.7 2.1 2.2 14.9 14.8 15.2
Nifty-50 Index (ex-energy) 1,051 603 9.5 32 20 27 21 17.3 12 11 9.7 3.5 3.1 2.8 1.3 1.5 1.7 12.7 15.1 16.1
Notes:
(a) We use consensus numbers for Indiabulls Housing Finance and Kotak Mahindra Bank.
Source: Kotak Institutional Equities estimates
Exhibit 11: The Nifty-50 Index trades at 19.2X FY2019E 'EPS' and 16.3X FY2020E 'EPS' (free-float basis)
Valuation summary of Nifty-50 sectors (free-float basis), March fiscal year-ends, 2019E-21E (based on current constituents)
Mcap. Adj. mcap. Adjusted net profits (Rs bn) Adjusted P/E (X)
(Rs bn) (Rs bn) 2019 2020E 2021E 2019 2020E 2021E
Automobiles & Components 5,124 2,773 116 168 197 24 16.5 14.1
Banks 19,006 13,967 328 700 900 43 20.0 15.5
Capital Goods 2,186 1,923 76 84 98 25 23 19.6
Commodity Chemicals 1,303 613 10 12 14 60 51 43
Construction Materials 1,852 838 35 46 59 24 18.1 14.3
Consumer Staples 7,982 4,010 113 125 141 35 32 29
Diversified Financials 7,736 5,406 153 177 208 35 31 26
Electric Utilities 2,428 1,028 89 94 106 11.5 10.9 9.7
Fertilizers & Agricultural Chemicals 509 366 14 21 24 27 17.7 15.4
Gas Utilities 691 276 25 28 30 11.0 10.0 9.3
IT Services 14,870 6,347 315 336 373 20 18.9 17.0
Media 332 193 9 10 11 21 19.0 16.9
Metals & Mining 2,243 1,229 166 147 169 7.4 8.4 7.3
Oil, Gas & Consumable Fuels 13,241 5,586 399 426 467 14.0 13.1 12.0
Pharmaceuticals 1,775 1,009 41 55 63 24 18.3 16.1
Retailing 1,135 533 7 9 11 76 59 49
Telecommunication Services 2,355 840 3 (0) 10 NM NM NM
Transportation 833 317 17 18 21 18.6 17.1 15.3
Nifty-50 Index 85,601 47,254 1,918 2,456 2,900 25 19.2 16.3
Nifty-50 Index (ex-banks) 66,595 33,287 1,590 1,756 2,000 21 19.0 16.6
Nifty-50 Index (ex-energy) 72,359 41,668 1,519 2,030 2,433 27 21 17.1

Strategy India
Exhibit 12: Market expects US Fed to cut rates by 50 bps in CY2019

Implied probabilities of Fed funds rate based on Fed fund future contract prices (%)
Federal funds rate (%)

1.00 1.25 1.50 1.75 2.00 2.25
31-Jul-19 2.8 97.2
FOMC meeting
18-Sep-19 1.8 63.8 34.4
54.4
dates
30-Oct-19 0.6 21.7 23.4
11-Dec-19 0.2 8.7 34.2 42.5 14.4
29-Jan-20 0.1 2.7 16.0 36.6 34.4 10.3
18-Mar-20 0.5 5.0 19.7 36.2 30.1 8.4
Source: CME, Kotak Institutional Equities
The market is clearly less worried about the reasons for the decline in global bond yields—(1)
growing concerns about slowdown in global economic growth, which could potentially
impact corporate earnings too and also lead to higher equity risk premium thereby nullifying
the ‘benefits’ of lower bond yields and risk-free rate, (2) China-US economic, investment and
trade issues, which has the potential to snowball into a full-blown economic ‘war’ between
the world’s two largest economies and (3) Iran-US ‘political’ differences, which could result
in continued high geopolitical tensions in the crucial Middle East region; any escalation in
tensions may result in higher crude oil prices.
The market remains hopeful that the government will deliver on economic reforms, which
will result in India’s GDP growth returning to about 7% after a recent slump in growth (see
Exhibit 13). We are also hopeful that the government will implement key reforms to increase
India’s investment rate, which is critical for higher GDP growth. However, we would note
that it may not be easy for the government to implement reforms related to (1) factors of
production such as labor and land and easier approval processes to enable higher
investment in labor-intensive manufacturing and (2) role of government in business and
proper pricing of basic infrastructure services to enable higher private/foreign investment in
infrastructure.
Exhibit 13: Sharp slowdown in the past 2-3 quarters; gradual recovery in growth over the quarters
Real GVA and components growth,1QFY18-4QFY20E (%)
1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20E 2QFY20E 3QFY20E 4QFY20E
Real GVA 5.9 6.6 7.3 7.9 7.7 6.9 6.3 5.7 5.7 6.3 6.7 7.4
Agriculture and allied 4.2 4.5 4.6 6.5 5.1 4.9 2.8 (0.1) 1.9 1.8 3.2 4.6
Industry 0.8 6.9 8.0 8.1 9.8 6.7 7.0 4.2 4.1 5.0 5.7 7.9
Mining 2.9 10.8 4.5 3.8 0.4 (2.2) 1.8 4.2 4.4 6.0 5.0 4.9
Manufacturing (1.7) 7.1 8.6 9.5 12.1 6.9 6.4 3.1 3.2 4.3 5.5 8.7
Electricity 8.6 9.2 7.5 9.2 6.7 8.7 8.3 4.3 5.5 6.1 6.8 8.9
Construction 3.3 4.8 8.0 6.4 9.6 8.5 9.7 7.1 5.6 6.2 6.2 7.2
Services 9.4 6.8 8.0 8.2 7.1 7.3 7.2 8.4 7.6 7.9 8.5 7.9
Trade, hotel, transport, communication 8.3 8.3 8.3 6.4 7.8 6.9 6.9 6.0 5.9 6.2 6.8 7.7
Financial, real estate, professional services 7.8 4.8 6.8 5.5 6.5 7.0 7.2 9.5 8.2 8.1 9.0 8.1
Public admin, defence, and others 14.8 8.8 9.2 15.2 7.5 8.6 7.5 10.7 9.1 9.7 10.3 7.8
Real GDP 6.0 6.8 7.7 8.1 8.0 7.0 6.6 5.8 5.9 6.5 6.9 7.6
Source: CEIC, Kotak Institutional Equities estimates
Lastly, as we have argued over the past few months, two of India’s growth drivers (private
consumption and government spending) over the past few years may face headwinds given
(1) sharp decline in household savings rate (see Exhibit 14), which may have supported
consumption (see Exhibit 15) and (2) high consolidated fiscal deficit, which has supported
government spending, especially in infrastructure (see Exhibit 16).

India Strategy
Exhibit 14: Household savings have seen steady decline implying increased consumption as a
proportion of income
Savings rates as proportion of GDP, March fiscal year-ends, 2012-18 (%)
2012 2013 2014 2015 2016 2017 2018
Household (physical + net financial savings) (a) 23.6 22.5 20.3 19.6 18.0 17.1 17.2
Household physical savings 16.3 15.1 12.9 12.5 9.9 10.8 10.6
- Savings in gold 0.4 0.4 0.3 0.4 0.3 0.3 0.2
Gross household financial savings 10.7 10.7 10.6 10.1 10.9 9.4 10.9
Financial liabilities (3.3) (3.3) (3.2) (3.0) (2.8) (3.1) (4.3)
Net household financial savings 7.4 7.4 7.4 7.1 8.1 6.3 6.6
Public savings (b) 1.5 1.4 1.0 1.0 1.2 1.7 1.7
Private corporate savings (c) 9.5 10.0 10.7 11.7 11.9 11.5 11.6
Domestic savings rate (a) + (b) + (c) 34.6 33.9 32.1 32.2 31.1 30.3 30.5
Notes:
(a) Gold savings is assumed to be equal to net gold imports.
Exhibit 15: Share of private consumption has increased as savings rate has fallen
Share of private domestic consumption expenditure and household savings in GDP, March fiscal year-ends,
2005-19E (%)
Private consumption/GDP (%, LHS) Household savings/GDP (%, RHS)

60 59 28
59
59 59 26
26 59
24 24 24 24
58 23 24 24 58
58 23 22 58
22
57 57
56 20 20
56 20
56 57
56
56 18 18
56 17
17
55 17 16
55
54 14
2019E
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Strategy India
Exhibit 16: Public sector GFCF is more or less equal to India's consolidated fiscal deficit
Consolidated fiscal deficit, government capex and public sector GFCF as a proportion of GDP, March fiscal
year-ends, 2012-18 (%)
10 Consolidated government capex/GDP (%) Consolidated fiscal deficit/GDP (%)

Public sector GFCF (%)
7.8
8 7.3 7.5
7.1 7.2
6.97.0 6.7 6.7
7.0 7.0 7.06.8
6.6
6
4.9 5.1 5.0
4.7 4.6 4.7 4.8
0
2012 2013 2014 2015 2016 2017 2018
Exhibit 17 is our revised large-cap. model portfolio. Among the key changes, we have added
Lupin (LPC, 200 bps) to the recommended model portfolio and trimmed positions in ICICIBC
(60 bps to 10%), NTPC (30 bps to 200 bps), PWGR (30 bps to 230 bps) and INFO (80 bps to
650 bps).
Exhibit 17: 'Barbell' portfolio of 'growth' and 'value' stocks

KIE large-cap. model portfolio
Price (Rs) KIE weight Price (Rs) KIE weight

Company 5-Jul-19 (%) 5-Jul-19 (%)
Automobiles & Components Insurance
Mahindra & Mahindra 642 1.8 ICICI Prudential Life 398 2.4
Automobiles & Components 1.8 SBI Life Insurance 754 2.3
Banks Insurance 4.8
Axis Bank 806 4.7 IT Services
HDFC Bank 2,475 10.0 HCL Technologies 1,016 2.0
ICICI Bank 436 10.0 Infosys 718 6.5
State Bank of India 371 7.3 L&T Infotech 1,666 1.8
Banks 31.9 Tech Mahindra 681 1.8
Capital Goods IT Services 12.1
L&T 1,558 4.2 Metals & Mining
Capital Goods 4.2 Hindalco Industries 199 1.6
Consumer Staples Tata Steel 478 2.5
Colgate-Palmolive (India) 1,178 2.0 Metals & Mining 4.0
United Breweries 1,381 2.0 Oil, Gas & Consumable Fuels
United Spirits 581 2.1 ONGC 162 1.8
Consumer Staples 6.1 Reliance Industries 1,263 6.5
Diversified Financials Oil, Gas & Consumable Fuels 8.3
Bajaj Finserv 8,438 2.1 Pharmaceuticals
HDFC 2,279 8.3 Cipla 550 1.9
Diversified Financials 10.4 Lupin 736 2.0
Electric Utilities Sun Pharmaceuticals 375 1.8
NTPC 136 2.0 Torrent Pharmaceuticals 1,510 1.9
Power Grid 206 2.3 Pharmaceuticals 7.5
Electric Utilities 4.3 Real Estate
Gas Utilities DLF 187 1.9
GAIL (India) 306 2.6 Real Estate 1.9
Gas Utilities 2.6 BSE-30 39,513 100

India Strategy
Exhibit 18 is our revised mid-cap. model portfolio. We have added JUBI to the portfolio.
Exhibit 18: We recommend mid-cap. stocks in automobiles & components, banks, capital goods, diversified financials and gas utilities
KIE mid-cap. model portfolio
Fair
Price Value Upside Mkt cap. EPS (Rs) PER (X) PBR (X) RoE (%)
Company Sector Rating (Rs) (Rs) (%) (Rs bn) (US$ mn) 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E
CESC Electric Utilities BUY 768 830 8 102 1,486 90 104 114 8 7 7 0.8 0.8 0.7 10 11 11
Escorts Automobiles & Components BUY 541 1,000 85 48 968 54 61 67 10 9 8 1.6 1.4 1.2 16 16 15
Equitas Holdings Banks BUY 122 180 48 42 607 6 10 13 19 12 9 1.7 1.6 1.3 9 13 14
Federal Bank Banks BUY 107 130 21 213 3,111 6 9 10 17 12 10 1.7 1.6 1.5 10 13 13
Jubilant Foodworks Hotels & Restaurants BUY 1,235 1,410 14 163 2,378 24 30 41 51 41 30 12.9 10.3 8.0 29 28 30
Kalpataru Power Transmission Capital Goods BUY 510 570 12 78 1,142 30 37 45 17 14 11 2.5 2.2 1.8 16 17 18
Mahindra & Mahindra Financial Diversified Financials ADD 397 500 26 245 3,582 25 31 36 16 13 11 2.5 2.2 1.9 15 17 17
Max Financial Services Insurance BUY 416 530 27 112 1,636 2 5 5 227 76 79 — — — 3 7 7
Narayana Hrudayalaya Health Care Services BUY 231 265 15 47 689 2 5 7 122 51 31 4.4 4.0 3.6 4 8 12
Petronet LNG Gas Utilities BUY 249 270 9 373 5,444 15 17 19 17 14 13 3.7 3.3 3.0 22 24 24
Prestige Estates Projects Real Estate ADD 275 320 17 103 1,502 9 14 21 32 20 13 2.4 2.2 1.9 7 12 16
Shriram City Union Finance Diversified Financials ADD 1,480 1,900 28 98 1,426 150 156 189 10 9 8 1.7 1.5 1.3 17 15 16
Shriram Transport Diversified Financials BUY 1,078 1,425 32 244 3,568 113 128 145 10 8 7 1.6 1.4 1.2 17 17 17
Tata Power Electric Utilities BUY 71 85 20 191 2,789 2 5 7 33 14 10 1.1 1.1 1.0 4 8 10
Thermax Capital Goods ADD 1,048 1,100 5 125 1,822 28 36 44 37 29 24 3.9 3.6 3.2 11 13 14
Source: Companies, Kotak Institutional Equities estimates

Strategy India
FY2020 UNION BUDGET: SECTOR AND STOCK IMPACT

We see the following implications for various sectors and stocks—(1) modest financial flexibility to NBFCs and
regulation of housing finance companies by the RBI, (2) moderate stimulus to housing, which is a positive for
residential real estate stocks, (3) increased focus on investment, which may be a positive for capital goods,
construction and infrastructure companies subject to potential investment-related reforms and (4) nominal
change in excise duty on cigarettes, which is a positive versus expectations.
Implications for sectors and stocks

Exhibit 19 gives details of the various announcements in the budget and the implications for
various sectors and stocks. We see sectors such as cigarettes, NBFCs and residential real
estate being positively impacted by the budget proposals.
Exhibit 19: Budget impact on sectors at a glance
Sector Net impact Proposals Implications

Automobiles & components
Significant reduction in cost of reduction of electric two-
 Proposal to reduce GST on electric vehicles (EV) from 12% to 5% wheelers/three-wheelers versus ICE vehicles This will give impetus
to adoption of electric two-wheelers and three-wheelers
Interest rate subsidy on electric vehicles up to Rs0.15 mn to buyer This will reduce cost of ownership of electric vehicles versus ICE

of an EV vehicles
Exemption from customs duty on parts for exclusive use in
 electric vehicles. This includes components such as e-drive This could help bring down the cost of electric vehicles
assembly, on-board charger, e-compressor and a charging gun
Increase in custom duty on certain auto parts such as rear-view Negligible impact as most of the auto parts are manufactured

mirrors, oil filters, air filters, horns, etc. locally
Increase in customs duty of certain types of sythetic rubber such Negligible impact as these components account for less than 1% of

as butyl rubber, cholorbutyl rubber to 10% from 5% earlier RM cost of tire companies
Banks/Diversified financials/Insurance
Recapitalisation of public sector banks by Rs70 bn through
 Positive for public sector banks
recapitalization bonds
Regulatory amendments to increase RBI's control over NBFCs and This will provide comfort to debt markets participants and other

HFCs stakeholders
Additional deduction from taxable income up to Rs150,000 on Will encourage first-time home buyers, boost demand of affordable

home loan interest for first-time home buyers homes
Reduction in budgetary allocation for Credit Linked Subsidy
 Scheme (CLSS) to Rs10 bn from Rs19 bn in FY2019RE (similar to Negative for affordable housing segment
interim Budget)
Partial credit guarantee by government up to 10% for six months
 Will improve financial flexibility of NBFCs to some extent
on high-rated loan pool of NBFCs sold to PSU banks
Construction Materials
The government aims to construct 19.5 mn rural houses under The target appears ambitious, nonetheless, focus on rural housing
 the PMAY (Gramin) scheme over the next three years against should continue to support cement demand growth. 19.5 mn
15.4 mn completed in the last five years houses imply additional 100-110 mn tons of cement consumption
Consumer Durables
This is negative as most of the AC companies import fully-built

Increase in customs duty on Indoor and outdoor unit of split indoor unit currently; note that outdoor units (ODUs) are not

–system air conditioner to 20% from 10% earlier imported and are assembled in India. Price increase of 2-3% will be
required to offset the impact of increase in duties
Consumer Staples
Basic custom duty of 7.5% on palm stearin and other oils (having
20% or more free fatty acid), Palm Fatty Acid Distillate (PFAD) It will result in some increase in production cost of soaps. Modest

and other industrial monocarboxylic fatty acids used in negative for GCPL and HUVR
manufacture of soaps
Increase in duty may encourage smuggling. Further, increase in gold

 Increase in custom duty on gold and silver to 12.5% from 10% price could impact demand in the short term. Modest negative
impact for Titan
Basic excise duty of Rs5-10 per thousand sticks levied on
 Negligible impact as the quantum is immaterial
Cigarettes

India Strategy
Budget impact on sectors at a glance (contd)

Electric utilities
Likely to further bring cost of development of solar PV panels,
 Income tax exemptions for investments in PV manufacturing
which will bring down renewable tariffs
Losses for DISCOMs are likely to come down leading to more
 Impetus on UDAY and UJALA schemes to continue
prompt payment to generators leading to revival of the sector
Oil, gas & consumable fuels
The government’s proposal to include holding of the government-
controlled entities in its calculation of requisite promoter stake of
 Technical overhang on the stocks
51% provides it significantly higher headroom for divestments in
energy PSUs going forward
 Increase in excise duties on auto fuels Reduction in headroom on auto fuel margins for OMCs
 Unchanged subsidy provision on LPG and kerosene Adequate compensation at crude price levels of US$65-70/bbl
Internet services
E-verification of source of funds of investors in start-ups, no

scrutiny of valuation of share premiums for both start-ups and
 investors, prior grievances to be resolved by special Positive for start-ups and investors
arrangements made by the CBDT, no IT scrutiny of valuation of
shares issued to Category I and Category II AIFs
TDS of 2% on cash withdrawal exceeding Rs10 mn in a year from

a bank account; businesses with annual turnover >Rs500 mn will
 Positive for digital payment providers
provide digital payment mechanisms to customers free of charge
with related MDR to be absorbed by RBI and banks
Industrials/Infrastructure
Exemption from basic customs duty in select defence imports

The exception makes imported defence products cheaper by 7.5-
including steam turbines, ships, electric generating sets,
 10% and may lower scope of value addition for India defence
helicopters, aircrafts and artillery weapons under the category of
companies
Guns
Cess accounts for 15% of the funding for NHAI and would support
increase in related spending on roads construction. The quantum
Increase in central road and infrastructure cess by Rs1 per liter of
 would depend on the share of cess funds allocated to NHAI.
diesel and petrol
Development and O&M of state highways would also be eligible
for a share of cess funds
Promoters of select MNCs owning 75% shareholding have to

Proposal to reduce the cap on promoter shareholding in listed consider whether to delist the entities or to lower their

companies to 65% from 75% shareholding. Wider participation of investors in the market would
improve price discovery
Media
Newsprint cost is about 33% of print business revenues.
Imported/domestic newsprint account for 20%/80% of newsprint
 Basic custom duty on newsprint increased to 10% from nil consumption. Domestic newsprint price usually tracks international
newsprint price. Thus, introduction of custom duty could have some
inflationary impact on domestic newsprint price
Metals and Mining
Hindustan Zinc produces silver, which is sold in domestic market at

import parity price. Higher import duty on silver would increase its
 Increase in custom duty on silver to 12.5% from 10%
silver realization. 2.5% increase in silver customs duty will increases
HZ's FY2020E EBITDA by 0.75%
Pharmaceuticals
Ayushman Bharat budget remains unchanged at Rs64 bn. No With Ayushman Bharat budget remaining unchanged, procedure

proposals for pharmaceuticals prices are unlikely to see an upward revision
Real Estate
Proposal to increase deduction on income tax on interest
Effective rate of interest will be lower. Listed players in the
 payment on home loan from Rs 0.2mn to Rs0.35 mn for houses
affordable housing segment will likely benefit
with value up to Rs4.5 mn
Proposed development of infrastructure on land parcels held by Potential joint development projects with real estate developers and

central ministries government would be beneficial
Increased use of technology to further bring down development
 Impetus on PMAY-G and PMAY-Urban schemes to continue
cycle for houses
IT services
All Tier 1 IT companies have payout ratios of 50-100%. They partly

Imposition of tax at the rate of 20% on buyback of shares listed used buyback as more tax efficient form of payout. The change will

on recognized stock exchanges increases tax liability on payout and make it difficult for companies
to have structured buyback program

Strategy India
Budget impact on sectors at a glance (contd)

Telecommunication Services
Total receipts from communication services pegged at Rs505 bn,

The government has not factored receipts from fresh spectrum
29% yoy higher than Rs392 bn in FY2019. The increase reflects
 auctions in the budget (despite giving some indications of the
commencement of payment for spectrum auctioned in October
same)
2016
Transportation
Indigenous aircraft leasing industry is dependent on successful
Aviation. Policy initiatives to develop the: (1) maintenance, repair development of the MRO industry. MRO industry development will
 and overhaul (MRO) industry and (2) aircraft financing and leasing require significant capex and time to develop. Hence, while these
activities in India measures can potentially bring down maintenance and leasing
costs for airlines, this will play out only over the long term.
Proposal to move to an electronic invoice system wherein invoice

details will be captured in a central system at the time of Electronic invoice system will significantly reduce the compliance

issuance, obviating e-way bill over time. Its roll out would begin burden
from January, 2020

India Strategy
FY2020 UNION BUDGET: INTENT INTACT ON FISCAL CONSOLIDATION

Key financial highlights of the budget are—(1) 25% growth in receipts and 21% growth in expenditure
leading to a fiscal deficit of ₹7 tn, (2) `6.6 tn of GST revenues, (3) divestment target of ₹1.05 tn and
(4) revenue expenditure growth of 22% and capital expenditure growth of 12%. The share of capital
expenditure in total expenditure is at 12.2%. The government has clearly shown its intent to stick to the fiscal
glide path. We believe that any slippage on tax revenues (quite likely) will be matched with expenditure cuts.
Government targets GFD/GDP of 3.3%

The government has projected central government fiscal deficit of ₹7 tn in FY2020BE and
3.3% as a proportion of GDP, above the 3.4% in FY2019P (see Exhibit 20 for key revenue
and expenditure items). The government assumed a nominal GDP growth of 11% for
FY2020. We model FY2020E central GFD/GDP at 3.4% (we assume nominal GDP growth of
10.3%). We believe that in case of revenue shortfalls, the government will undertake a
commensurate expenditure reduction (such as in food subsidy, agriculture and farmers’
welfare, transfers to states, etc.) in order to stick to the GFD/GDP mark.

Strategy India
Exhibit 20: GFD/GDP budgeted at 3.3% in FY2020BE

Major central government budgetary items, March fiscal year-ends, 2016-20E (Rs bn)
Change (%)
2017/ 2018/ 2019P/ 2020BE/ 2020E/
2016 2017 2018 2019P 2020BE 2020E 2016 2017 2018 2019P 2019P
Receipts
1. Revenue receipts (2d + 3) 11,950 13,742 14,352 15,632 19,628 19,408 15 4 9 26 24
2. Gross tax revenues (a + b ) 14,556 17,158 19,190 20,802 24,612 24,392 18 12 8 18 17
2.a. Direct taxes 7,458 8,539 10,068 11,428 13,419 13,419 14 18 14 17 17
2.a.1. Corporation tax 4,532 4,849 5,712 6,636 7,660 7,660 7 18 16 15 15
2.a.2. Income tax 2,876 3,646 4,308 4,739 5,690 5,690 27 18 10 20 20
2.a.3. Other taxes 50 43 48 53 69 69 (13) 11 12 30 30
2.b. Indirect taxes 7,098 8,620 9,122 9,374 11,192 10,972 21 6 3 19 17
2.b.1. Goods and Services Tax — — 4,426 5,816 6,633 6,413 31 14 10
2.b.1.1. CGST — — 2,033 4,575 5,260 5,040 125 15 10
2.b.1.2. IGST — — 1,767 289 280 280 (84) (3) (3)
2.b.1.3. Compensation cess — — 626 951 1,093 1,093 52 15 15
2.b.2. Customs duty 2,103 2,254 1,290 1,179 1,559 1,559 7 (43) (9) 32 32
2.b.2.1. Basic duties 572 646 808 1,045 1,429 1,429 13 25 29 37 37
2.b.2.2. Others 1,532 1,608 483 134 130 130 5 (70) (72) (4)
2.b.3. Excise duty 2,881 3,821 2,594 2,310 3,000 3,000 33 (32) (11) 30 30
2.b.4. Service tax 2,114 2,545 812 69 — — 20 (68)
2.c Transfers to states, UTs and national funds 5,119 6,145 6,765 7,633 8,116 8,116 20 10 13 6 6
2.d Net tax revenues 9,438 11,014 12,425 13,170 16,496 16,276 17 13 6 25 24
3. Non-tax revenues 2,513 2,728 1,927 2,462 3,132 3,132 9 (29) 28 27 27
3.a. RBI's transfer of surplus 659 659 407 680 900 900 (0) (38) 67 32 32
4. Non-debt capital receipts (a + b) 630 654 1,157 1,029 1,198 1,198 4 77 (11) 16 16
4.a Recovery of loans 208 176 156 178 148 148 (15) (11) 14 (17) (17)
4.b Other receipts (disinvestments) 421 477 1,000 850 1,050 1,050 13 110 (15) 23 23
5. Total receipts (1 + 4) 12,580 14,396 15,509 16,661 20,826 20,606 14 8 7 25 24
Expenditure
6. Revenue expenditure 15,378 16,906 18,788 20,085 24,478 24,328 10 11 7 22 21
6.a. Interest payments 4,417 4,807 5,290 5,827 6,607 6,607 9 10 10 13 13
6.b. Subsidies 2,418 2,040 1,912 1,971 3,017 3,017 (16) (6) 3 53 53
6.b.1. Food 1,394 1,102 1,003 1,019 1,842 1,842 (21) (9) 2 81 81
6.b.2. Fertilizer 724 663 664 706 800 800 (8) 0 6 13 13
6.b.3. Oil 300 275 245 246 375 375 (8) (11) 0 53 53
6.c. Pay, allowances and pensions 3,301 3,996 4,464 4,936 5,258 5,258 21 12 11 7 7
6.c.1.a. Pay and allowances 2,334 2,682 3,007 3,270 3,515 3,515 15 12 9 7 7
6.c.1.b. Pensions 967 1,314 1,457 1,666 1,743 1,743 36 11 14 5 5
6.d. Agriculture and farmers' welfare 153 369 374 461 1,305 1,155 142 1 23 183 151
6.e. Education 672 720 800 781 927 927 7 11 (2) 19 19
6.f. Health and family welfare 322 364 483 506 609 609 13 33 5 20 20
6.g. Rural development 774 951 1,086 1,118 1,175 1,175 23 14 3 5 5
6.h. Others 3,321 3,658 4,381 4,485 5,579 5,579 10 20 2 24 24
7. Capital expenditure 2,530 2,846 2,631 3,030 3,386 3,386 12 (8) 15 12 12
7. a. Defence 836 915 954 995 1,082 1,082 9 4 4 9 9
7. b. Railways 350 452 434 528 658 658 29 (4) 22 25 25
7. c. Roads and Highways 275 412 508 676 721 721 50 23 33 7 7
7. d. Housing and urban affairs 106 165 153 158 195 195 56 (7) 3 24 24
7. e. Others 963 902 582 572 729 729 (6) (35) (2) 27 27
8. Total expenditure (6 + 7) 17,908 19,752 21,420 23,114 27,863 27,713 10 8 8 21 20
Deficit
Primary deficit (PD) 911 549 621 627 430 500 (40) 13 1 (31) (20)
Revenue deficit (RD) 3,427 3,164 4,436 4,453 4,850 4,920 (8) 40 0 9 10
Gross fiscal deficit (GFD) 5,328 5,356 5,911 6,454 7,038 7,108 1 10 9 9 10
Gross borrowings (dated securities) 5,850 5,830 5,880 5,710 7,100 7,170 (0) 1 (3) 24 26
Net market borrowing 4,406 4,082 4,507 4,227 4,731 4,801 (7) 10 (6) 12 14
Net market borrowing (adjusted for buyback) 4,041 3,497 4,103 4,227 4,231 4,301 (13) 17 3 0 2
Short-term borrowing (T-bills) 507 55 449 250 250 250
Nominal GDP at market prices 137,719 153,624 170,950 190,102 211,006 209,682 11.5 11.3 11.2 11.0 10.3
PD/GDP (%) 0.7 0.4 0.4 0.3 0.2 0.2
RD/GDP (%) 2.5 2.1 2.6 2.3 2.3 2.3
GFD/GDP (%) 3.9 3.5 3.5 3.4 3.3 3.4
Notes:
(a) 'Gross tax revenues' means revenues post refunds and 'net tax revenues' means gross tax revenues minus devolution to states.
(b) RBI's transfer of surplus for FY2020BE and FY2020E are our estimate.
(c) Pay and allowances include pay and allowances from Ministry of Railways.
Source: Ministry of Finance, Kotak Institutional Equities estimates

India Strategy
The key highlights of the FY2020 budget are: (1) nominal GDP growth estimate of 11%,
(2) 25% growth in receipts and 21% growth in expenditure, (3) `6.6 tn of GST revenues
with CGST revenues at `5.26 tn, (4) divestment target of `1.05 tn and (5) revenue
expenditure growth of 22% and capital expenditure growth of 12%. The share of capital
expenditure in total expenditure is at 12.2%, lower than 13.1% in FY2019P (see Exhibit 21).
Growth in capital expenditure, including IEBR, is pegged at (-)4.3% in FY2020BE against
23.7% in FY2019 (see Exhibit 22).
Exhibit 21: Bias towards revenue expenditure versus capital expenditure

Revenue and capital expenditure as a percentage of total expenditure, March fiscal year-ends, 2000-20 (%)
Revenue expenditure Capital expenditure

100
90 89
87 88 87 88 88 88 88 86 86 88 87 88
84 85 83 82 83
77 77
80
60
40
23 23
16 15 17 18 17 14
20 13 12 10 11 13 12 12 12 12 14 12 13 12
0
2001
2003
2005
2008
2010
2012
2014
2015
2017
2019
2000
2002
2004
2006
2007
2009
2011
2013
2016
2018
2020
Exhibit 22: Market borrowing by government entities substituting capital expenditure by the government
Revenue and capital expenditure through budget and IEBR (internal and extra budgetary resources), March fiscal year-ends, 2018-20BE (Rs bn)
2018 2019BE 2019 2020BE
Revenue Capital IEBR Bonds Revenue Capital IEBR Bonds Revenue Capital IEBR Bonds Revenue Capital IEBR Bonds
Atomic Energy 95 56 79 31 78 61 60 29 83 87 78 — 88 81 82 —
Communication and IT 269 44 176 30 328 54 258 — 283 38 158 30 330 54 141 —
Defense 2,843 954 — — 3,048 996 — — 3,067 985 — — 3,228 1,082 — —
Food and Public Distribution 1,058 0 721 130 1,737 4 721 130 1,765 14 1,961 210 1,909 13 905 133
Housing and Urban Development 247 153 156 — 253 164 163 — 260 170 197 98 285 195 194 100
Petroleum and Natural Gas 321 11 874 61 274 37 893 52 305 20 944 39 412 17 936 74
Power 120 19 643 327 128 22 535 224 135 21 732 449 135 24 424 165
Railways 18 434 800 451 20 531 934 549 21 531 858 — 22 658 941 —
Road Transport and Highways 103 508 593 530 116 594 620 520 101 686 620 620 110 721 750 750
Others 13,715 451 728 372 15,434 541 599 221 15,387 480 578 305 17,959 540 1,003 513
All ministries 18,788 2,631 4,769 1,932 21,418 3,004 4,783 1,726 21,406 3,030 6,126 1,750 24,478 3,386 5,376 1,735
Notes:
(a) Bonds imply bonds and debentures issued as part of the IEBR.
(b) Data for bonds are based on revised estimates for each year.
Source: Union budget, Kotak Institutional Equities
Revenue: Slippage risks remain
The government expects total receipts to grow 25% in FY2020BE (against FY2019P) based
on 11% nominal GDP growth, 25% growth in net tax revenues (post devolution to states),
`3.1 tn of non-tax revenues and `1.05 tn of divestments. CGST revenues will likely
disappoint given the current run-rate of `390 bn compared to budgeted CGST run-rate of
`440 bn per month. We assume CGST collections of `5 tn compared to budgeted `5.26 tn.
The FY2020 budget assumes 17% growth in direct taxes and 19% in indirect taxes. This
compares with our FY2020 estimate of 17% growth for both direct taxes and indirect taxes.
Compared to the FY2020 interim budget, the government has assumed around `555 bn of
lower net tax revenues (`910 bn of lower gross tax revenues), which is balanced by `405 bn
of higher non-tax revenues and `150 bn of higher divestment to keep total receipts estimate
unchanged.

Strategy India
 Direct taxes. On personal income tax, surcharge of 25% will be applicable on incomes
above `20 mn and up to `50 mn and surcharge of 37% will be applicable on income
above `50 mn. Earlier, surcharge of 10% was applicable on income above `10 mn. On
the corporate tax, companies with turnover/gross receipts lower than `4 bn will be taxed
at 25% against earlier threshold of `2.5 bn.
Direct tax collection is budgeted at `13.4 tn (growth of 17%) with corporate tax
collection at `7.7 tn (growth of 15%) and income tax at `5.7 tn (growth of 20%). For
2MFY20, direct tax collections have grown 12% though much of the weakness could be
due to higher refunds in corporate taxes (see Exhibit 23).
Exhibit 23: Low tax collections in 2MFY20 possibly due to higher refunds in corporation tax
Monthly tax receipts of the Indian government, March fiscal year-ends (Rs bn)
Chg. (%) FYTD (Apr-May) Chg. (%)

Date May-19 May-18 Apr-19 yoy mom 2020 2019 yoy
Gross tax revenues 934 1,008 1,212 (7) (23) 2,146 2,141 0.2
Direct taxes 109 143 527 (24) (79) 635 567 12.0
Corporation tax (113) (54) 124 107 (191) 11 23 (51.6)
Income tax 208 185 397 12 (48) 606 527 15.0
Other taxes 13 12 6 6 130 18 17 8.9
Indirect taxes 329 342 132 (4) 149 1,507 1,573 (4.1)
Customs duty 151 131 131 15 15 282 233 21.4
Excise duty 174 190 (1) (8) (15,404) 173 184 (5.9)
Service tax 3 21 2 (84) 47 5 27 (80.3)
GST 495 523 552 1,046 1,128 (7.3)
CGST 346 281 468 814 602 35.2
IGST 72 169 (6) 66 369 (82.0)
Compensation cess 77 72 89 166 157 5.6
Net tax revenues 437 449 716 (3) (39) 1,153 1,024 12.6
Non-tax revenues 51 109 233 (53) (78) 284 240 18.2
Non-debt capital receipts 4 2 27 73 (86) 31 10 205
 Indirect taxes. Indirect tax collection has been budgeted at `11.2 tn (growth of 19%).
We estimate indirect tax collection to be `11 tn—a shortfall of `220 bn based on our
estimate of GST revenues. GST collection has been budgeted at `6.6tn, lower than the
interim budget estimate of `7.6 tn. In our view, CGST collections have been budgeted
slightly on the higher side. We pencil in CGST collections of `5 tn or run-rate of `420 bn
per month (current run-rate is `390 bn in 3MFY20) against a budgeted run-rate of `440
bn. We expect around `220 bn of lower CGST collections in FY2020E, which could be
around `580 bn if the current run-rate continues.
Excise duty has been budgeted at `3 tn (growth of 30%) on the back of `2/liter increase
through special additional excise duty and road and infrastructure cess for both petrol
and diesel, which would bring in additional revenues of `210 bn in FY2020 (`290 bn on
annualized basis). Customs duty has been budgeted at `1.6 tn (growth of 32%) on the
back of customs duty increase of (1) 5 ppt increase in construction materials, (2) 2.5 ppt
increase in precious metals, (3) 2.5-7.5 ppt increase in automobile parts, (4) 5-10 ppt
increase in electronics and electrical equipment, along with other changes across various
items.
 Non-tax revenue and divestments. The government budgeted non-tax revenue at `3.1
tn (`405 bn higher than the interim budget) with `1.8 tn from dividends and profits
(`231 bn higher dividend factored from RBI, PSU banks, and FIs compared to interim
budget) and `505 bn from the telecom sector (`415 bn was factored in the interim
budget). We expect the government to receive dividend of around `900 bn from the RBI
in FY2020 (`680 bn received in FY2019).

India Strategy
Expenditure: Revenue expenditure share increases
FY2020BE puts total expenditure at ₹27.9 tn (in line with interim budget), a growth of 21%
over ₹23.1tn in FY2019P. Broadly, the government has maintained the expenditure budget
in line with the estimates of the interim budget. Revenue expenditure growth has seen
significant increase due to higher allocations to agriculture (income support scheme for
farmers), subsidies (food and fuel), and interest payments. Revenue expenditure growth has
been budgeted at 22% while capital expenditure has been budgeted at 12%. Borrowings
through the EBR have been budgeted at `3.2 tn, which continues to push the consolidated
borrowings (center + state + PSEs) to nearly 8.1% of GDP. In case of revenue slippages, we
expect the government’s to reduce revenue expenditure through (1) savings in PM-KISAN
scheme expenditure as complete rollout will take time and it shifts a portion of food subsidy
(again!) to the FCI as an off-budget spending.
 Rural development and agriculture sector. Against the backdrop of stagnating farm
incomes, the government has budgeted (1) `1.3 tn to agriculture and farmers’ welfare
(183% growth in FY2020BE due to direct income support to farmers of `750 bn) and (2)
`1.2 tn (5% growth over FY2019P) for rural development expenditure. This includes
allocation to interest subvention (short-term crop loans) of `180 bn, rural employment
scheme (NREGS) of `600 bn, rural roads (PMGSY) of `190 bn, and rural housing (PMAY-
G) of `190 bn. We factor in `150 bn lower expenditure in PM-KISAN.
 Subsidy. The government has allocated `3 tn towards various subsidies. The government
has pegged food subsidy at `1.8 tn, fertilizer subsidy at `799 bn (`50 bn higher than
interim budget), and petroleum subsidy at `375 bn. We note that the government is
likely rolling over food subsidy payments to the FCI and will likely continue to do so in
case it has to reduce on-budget expenditure due to lower revenues.
 Capital expenditure. The ‘direct’ (budget) capital expenditure has been budgeted at
`3.4 tn (12.2% of GDP) compared to ₹24.5 tn of revenue expenditure. The key areas of
capital expenditure are railways (₹658 bn) and roads (₹721 bn). Capital outlay in defense
services has been budgeted at ₹1.1 tn. FY2020 capital expenditure has been budgeted
12% higher than FY2019P. However, we note that this amounts to the government’s
portion of overall spending on these infrastructure items. We also note that public sector
capex including IEBR (internal and external budgetary sources) is projected to grow (-)
4.3% in FY2020BE compared to 23.7% in FY2019 (over FY2018).
Some relief for the G-Sec market

The bond market saw some relief due to (1) the unchanged gross market borrowing plan in
the FY2020 union budget compared to FY2020 interim budget levels and (2) the
government’s intention to tap the global markets through dollar-denominated bonds. We
have been advocating diversifying the G-Sec ownership base towards FPIs in order to reduce
the strain on the domestic participants.
However, till the time sizeable portion of the issuances move to the international markets
(no timeline outlined in the budget), we see pressure on the debt market as the level of
public sector borrowings (center + state + PSEs) as well as reliance on small savings continue
to impede monetary policy transmission (see Exhibits 24-25), banking system liquidity and
overall transparency of public finances (Exhibit 26-28). Overall, we expect 10-year G-Sec
yield to be in the range of 6.25-6.75% for the rest of FY2020 while factoring in another 25
bps of rate cut in August.

Strategy India
Exhibit 24: Deposit rates have been increasing, especially for private sector banks, despite fall in repo
rate
Weighted average term deposit rates for SCBs, PSU banks, private banks and foreign banks
Repo (month end) Commercial Banks

Public Sector Banks Private Sector Banks
9.5
8.7
7.9
7.1
6.3
5.5
Apr-18
Apr-19
Apr-14
Apr-15
Jul-15
Apr-16
Jul-16
Apr-17
Jul-17
Jul-18
Jul-14
Oct-14
Oct-15
Oct-16
Oct-17
Oct-18
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19
Source: RBI, Kotak Institutional Equities
Exhibit 25: Yield on advances has increased in recent months

Yield on advances for SBI versus WALR for SCBs, PSU and private sector banks
Calculated yield on advances (SBI) Outstanding WALR (SCBs)

Outstanding WALR (PSUs) Outstanding WALR (private banks)
14.0
12.5
11.0
9.5
8.0
6.5
Apr-14
Apr-15
Apr-16
Apr-17
Apr-18
Apr-19
Oct-14
Jul-15
Oct-15
Jul-16
Oct-16
Jul-18
Oct-18
Jul-14
Jul-17
Oct-17
Jan-15
Jan-16
Jan-17
Jan-18
Jan-19

India Strategy
Exhibit 26: Central PSE borrowings have kept overall borrowings at elevated levels
General government and central PSE borrowings as proportion of GDP, March fiscal year-ends (%)
10 General govt (LHS) Total borrowings (LHS) Central PSE borrowings (RHS) 2.6
9 2.3
8
2.0
7
1.7
6
1.4
5
1.1
4
3 0.8
2 0.5
2019RE
2020BE
2011
2013
2015
2017
2018
2012
2014
2016
Notes:
(a) Central PSE borrowings includes bonds, ECB/suppliers' credit, and others.
Source: Union budget, CEIC, Kotak Institutional Equities
Exhibit 27: Fiscal deficit funding is becoming increasingly reliant on National Small Savings Funds
(NSSF)
Securities issued to NSSF as a proportion of center's GFD, March fiscal year-ends (%)
25 NSSF used/GFD (%)
19.7
20 18.5
17.4
15 12.6
9.8
10
6.3
5 3.2 3.0 2.5
1.8
0
2019RE
2020BE
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
(5)
(0.4) (2.0)
(10)
(8.9)
(15)

Strategy India
Exhibit 28: Small savings accretion could potentially reduce bank deposits accretion
Trend in ratio of small savings accretion to bank deposits accretion, March fiscal year-ends (%)
Small savings accretion/Deposits accretion (%)

25
20
15
10
2019E
2020E
2010
2013
2016
2018
2011
2012
2014
2015
2017
Source: Union budget, Kotak Institutional Equities estimates

Company Report
Strategy INDIA
INDIA
July 05, 2019
BSE-30: 39,908
June 2019 quarter earnings preview. We expect net income of the KIE coverage
universe to increase 1.3% yoy in 1QFY20, led by the banking sector, which will likely
report strong earnings growth due to a low base. Excluding the banking sector, we
expect net income to decline 6.7% yoy. We expect robust yoy growth in the net
income of (1) banks (stable operating performance, despite marginal qoq slowdown
in loan growth), (2) construction materials (increase in realization papering over low
volumes) and (3) capital goods (uptick in execution from base orders for L&T) sectors.
We expect a weak quarter for (1) automobiles (lower sales volumes and margin
compression due to increase in discounts), (2) metals & mining (decline in realizations)
and (3) oil, gas & consumable fuels (weak refining margins and adventitious losses for
downstream companies). We expect net income of the BSE-30 Index to grow 13.2%
yoy while that of Nifty-50 Index to increase 1.3% yoy. We estimate ‘EPS’ of the BSE-
30 Index at Rs1,975 for FY2020 and Rs2,353 for FY2021. Our ‘EPS’ estimates for
Nifty-50 Index for FY2020 and FY2021 are Rs614 and Rs725.
We expect net income of the KIE universe to increase 1.3% yoy in 1QFY20
Sector-wise earnings of the KIE universe
Sales growth (%) EBITDA growth (%) EBITDA margin (%) PAT growth (%)
yoy qoq yoy qoq Jun-18 Mar-19 Jun-19E yoy qoq
Automobiles & Components (7.6) (18.5) (24.2) (27.1) 11.9 10.9 9.8 (51.6) (63.4)
Banks 12.4 2.1 — — — — — 152.2 463.8
Building Products 28.0 (21.2) 28.9 (15.5) 16.3 15.4 16.4 31.5 (22.8)
Capital Goods 7.4 (28.9) 12.9 (37.1) 11.4 13.6 12.0 15.3 (45.6)
Commercial & Professional Services 25.4 5.9 58.6 6.8 3.6 4.5 4.5 63.0 1.5
Commodity Chemicals 10.6 1.5 8.3 9.2 19.1 17.4 18.7 4.4 2.8
Construction Materials 8.6 (4.1) 25.8 10.7 18.7 18.8 21.6 36.4 10.5
Consumer Durables & Apparel 12.6 16.1 9.3 31.4 14.2 12.1 13.7 6.9 23.6
Consumer Staples 4.3 0.5 5.2 2.8 25.4 25.0 25.6 7.0 0.2
Diversified Financials 25.8 0.3 — — — — — 25.5 2.2
Electric Utilities 1.8 3.1 8.9 13.3 41.0 39.9 43.8 15.1 (7.4)
Fertilizers & Agricultural Chemicals 48.4 2.7 52.9 37.9 18.3 14.0 18.8 (1.1) 35.2
Gas Utilities 3.0 (0.7) 3.7 24.2 14.0 11.3 14.1 3.0 0.1
Health Care Services 16.6 (0.7) 29.4 (19.7) 9.9 13.6 11.0 118.9 (47.0)
Hotels & Restaurants (43.1) (52.3) (36.1) (34.3) 16.8 13.7 18.9 (1.4) 3.3
Internet Software & Services 18.5 6.3 19.4 12.7 30.1 28.6 30.3 51.0 19.0
IT Services 12.1 0.7 7.2 (3.9) 23.1 23.2 22.1 3.7 (7.3)
Media (9.6) 6.8 (4.8) 30.0 33.9 29.3 35.7 1.4 16.1
Metals & Mining (0.4) (9.4) (15.3) (12.1) 23.8 20.8 20.2 (30.2) (16.3) Sanjeev Prasad
Oil, Gas & Consumable Fuels 3.1 0.3 (17.6) (21.7) 13.5 13.8 10.7 (21.0) (34.3)
Pharmaceuticals 12.9 2.6 19.5 8.8 19.6 19.5 20.7 12.9 27.5
Real Estate 20.6 (23.2) (4.6) (22.3) 30.4 23.8 24.0 (3.8) (28.4)
Retailing 21.8 13.1 25.4 29.1 9.6 8.6 9.8 29.3 0.7
Speciality Chemicals 8.5 5.7 16.2 16.6 20.2 19.6 21.7 23.1 16.2 Sunita Baldawa
Telecommunication Services 4.9 1.4 (0.7) 0.7 32.2 30.7 30.5 (158.6) 61.3
Transportation 31.5 9.1 69.4 13.3 17.6 21.9 22.7 159.6 15.8
KIE universe 4.4 (4.7) (5.0) (10.3) 17.3 16.8 15.9 1.3 (8.9)
KIE universe (ex-energy) 5.1 (7.3) 0.5 (5.3) 19.7 18.5 19.1 9.8 2.0
KIE universe (ex-banks) 3.9 (5.1) (5.0) (10.3) 17.3 16.8 15.9 (6.7) (18.6) Anindya Bhowmik
KIE universe (ex enegy, ex-banks) 4.4 (8.2) 0.5 (5.3) 19.7 18.5 19.1 (0.8) (11.7)
Contact: +91 22 6218 6427
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Strategy India
SECTORS-WISE EXPECTATIONS
Exhibit 1: We expect yoy decline in the net income of automobiles, metals & mining and oil & gas sector
Sector-wise expectations for the June 2019 quarter results
Key points Key points
Automobiles & We expect a weak quarter for auto companies; revenue/EBITDA/net profit for companies We expect auto component companies under our coverage to report a relatively better
Components under our coverage are likely to decline by 8%/24%/52% yoy. EBITDA margin will likely quarter with 6% yoy revenue growth due to exposure to steady aftermarket demand and
decline by 210 bps yoy due to an increase in discounts and negative operating leverage. increase in exports (for Bharat Forge) while EBITDA will likely decline by 3% yoy in
1QFY20. Battery companies will likely benefit from the recent decline in lead prices and
will report 7-25% yoy EBITDA growth.
Banks We expect banks under coverage to report stable operating performance and recovery in We maintain our positive outlook on corporate banks (ICICI Bank and SBI) given their
earnings though there are a few one-offs for the quarter: (1) BoB (with Dena and Vijaya) inexpensive valuations and visibility of steady progress towards RoE normalization in
and IndusInd Bank (with Bharat Financial) will report merged financials, (2) treasury income FY2020-21E. Yes Bank would face one of its most challenging quarters. There is likely to
support would be higher given the interest rate movement, (3) the base quarter had a one- be a lot more focus on asset quality for IndusInd Bank and RBL Bank. Slowdown in
off net interest income (Bhushan Steel). Loan growth has slowed to ~12% yoy which revenue growth (loan and non-interest income) for banks like HDFC Bank is likely to
would put pressure on revenue growth and we expect the decelerating trends to be more dominate the discussion for the quarter. We see limited business concerns for Federal
visible in private banks with retail oriented loan books like HDFC Bank and IndusInd Bank. Bank and SFBs like Equitas, AU and Ujjivan which are seeing steady improvement in core
performance. Sharp rise in ticket size and risks emerging from rapid growth in MFI AUMs
in eastern India would be a key discussion area for banks which have a high share of
MFI loans.
Capital Goods The key themes in the industrial space are (1) continued weakness in greenfield private Roads: 1QFY20 will see weak execution trends for companies with limited executable
capex, (2) good support to capital goods companies from base orders for capacity order backlog (Sadbhav Engineering, Dilip Buildcon). IRB would grow construction
augmentation, efficiency improvements, and specific large orders in hydrocarbon and revenues meaningfully over a low yoy base and Ashoka Buildcon would report steady
urban infrastructure segments, (3) moderating PGCIL capex, (4) improving trends in growth given it's large executable backlog. Companies with good execution track
execution for EPC companies and (5) some support to margin from operating leverage records such as Dilip Buildcon and Ashoka Buildcon are better-placed on this count, in
benefits and lower commodity prices. our view.
Within the EPC space, the recent uptick in the pace of execution will help L&T report
~10% yoy revenue growth for its core E&C business. KEC and KPTL will post strong
double-digit growth driven by the railways and civil businesses. BHEL will likely focus on
the strong executable backlog in the power segment and on diversification through new
order wins in the industry segment. We expect revenues of ABB and Siemens to be driven
by base orders as greenfield private capex is still weak. Thermax will report a good result,
benefitting from recent momentum in execution and low yoy base of margin.
Construction 1QFY20 witnessed a sharp increase in cement prices despite stagnant demand. Pan-India We expect costs to increase sequentially due to negative operating leverage with weak
Materials trade prices were up Rs35/bag (+11% qoq), North and East witnessed Rs30-50/bag (+11- volumes partially offset by lower variable costs. While pet coke prices were flat qoq,
16% qoq) hike, whereas prices in West and Central regions increased Rs30-35/bag (10- most companies consumed high cost inventory in 4QFY19 and should witness 0-2%
12% qoq). Blended prices for our coverage universe during the quarter are +8% qoq or reduction in fuel cost in 1QFY20E. Diesel prices were flat qoq implying stable freight
Rs20/bag, factoring price discounts and smaller hikes in the trade segment. Industry costs. We estimate a sharp increase in EBITDA/ton across the sector led by higher prices
cement volumes (per DIPP) increased by 1.8% for April-May 2019. However, our checks across regions and stable costs. For our coverage, we estimate Rs250/ton qoq increase
suggest weaker volumes during the quarter. We estimate volume decline of 1-3% yoy for in EBITDA/ton or 27% qoq in 1QFY20E with higher expansion in North/pan-India players
our coverage universe in 1QFY20E. UTCEM and SRCM should witness 0-2% yoy volume versus South focused companies.
growth with ramp-up of new capacity, whereas others would see 0-3% yoy volume
decline in 1QFY20E.
Consumer staples Even as we expect most companies in our coverage universe to report similar-to-4QFY19 HUVR: We model 9% yoy revenue growth in domestic FMCG business led by 6% UVG
yoy volume/revenue growth, aggregate growth is likely to be better than 4QFY19 on and 3% price-led growth. On a segmental basis, we bake in 11.5% yoy revenue growth
account of a positive swing in yoy revenue growth rates for names like Dabur, Page, PIDI, for Home Care and 7% yoy growth for Personal Care. Not building impact of Ind-AS
JYL and the alcoholic beverages names. The then-surprising sudden slowdown in the 116, we expect EBITDA margin to expand 50 bps yoy, aided by operating cost
month of March 2019 continued in the first half of 1QFY20 for the staples pack. Some efficiencies (including A&SP spends); expect gross margin to move up marginally (+20
companies have indicated emergence of some green shoots in the month of June. We bps yoy). Ind-AS 116 adoption to reflect in EBITDA uplift of Rs1 bn and a corresponding
expect the urban-centric discretionary pack to continue to report better growth than the higher D&A and interest expenses; negligible impact at the PBT and PAT level. Our
staples pack. We do note that the discretionary names under our coverage form a fairly estimates do not bake in this impact.
wide spectrum and the aggregate does not mean much, to that extent, beyond the relative ITC: We model 5.5% yoy increase in cigarette volumes and 3% increase in realization
performance versus staples aggregate being a decent proxy of the urban/rural trends. (portfolio-level). We forecast 11% yoy growth in cigarette EBIT. We model 9%, 15% and
Reasons being offered for the ‘slowdown’ remain the same – tight liquidity conditions and 10% yoy growth in FMCG, hotels and agri-business. Expect strong margin expansion for
sluggishness in rural demand. these segments as well (except hotels where margins would be impacted as gestation
costs of the new Kolkata property kick in).
Diversified financials 1QFY20E will likely be a muted quarter for most non-banks with weak loan growth, stable While liquidity was not a constraint for most part of the quarter, concerns on impact of
to compressed NIM even as asset quality held on well in most segments. Slowdown defaults and rating downgrades of NBFCs raised some anxieties and likely prompted
across autos, weakness in rural cash flows and delay in government spending led to NBFCs to get a bit cautious on select segments like developer loans. NBFCs are better
muted performance in vehicle finance. Retail home loan sales were likely stable but placed to face any potential liquidity or credit crises (than August 2018) due to well
slowdown in developer/LAP segment affected overall loan growth for HFCs. Asset quality matched ALMs and higher cash/liquidly assets on balance sheet. NBFCs have made
performance will likely be strong, in line with the trends observed over the previous few conscious efforts to diversify their funding sources such as foreign bonds, retail NCDs
quarters. Rise in NPLs in the wholesale lending segment, especially developer loans, etc; rise in loan securitization/assignment has also been a significant avenue.
remains a major overhang on the sector. We hence expect non-banks to remain a bit
cautious on liquidity and growth over the next few months; management commentary in
this regard will be crucial.
Electric Utilities Under-recovery of fixed costs, which has been a drag on earnings of NTPC in FY2019 will Realization for merchant capacities is expected to remain weak due to subdued demand
likely be addressed in forthcoming quarters on account of improvement in plant availability in the short-term market. JSW Energy will benefit on account of the decline in spot prices
factor. We expect NTPC to report 5.5% qoq increase in PAT in 1QFY20. For Power Grid, of coal which have reduced to US$64 as of June 2019. Tata Power will likely report
we expect healthy growth in net profits (+27.1% yoy) on the back of asset capitalization lower losses at Mundra, though the benefit of the same will be lost to lower earnings
of Rs192 bn in the trailing 12 months. contribution from the coal business.
Gas Utilities We expect GAIL to report sequentially higher EBITDA, driven by (1) modest recovery in CGD companies are expected to report robust profits led by (1) healthy growth in
profits of LPG and petchem production segment, (2) lower operating costs and (3) steady volumes, (2) sequential expansion in unit gross margins post the recent increase in CNG
profits of gas transmission and marketing segments. We expect PLNG to report qoq prices and (3) seasonal decline in operating costs.
improvement in EBITDA led by (1) robust recovery in volumes and (2) seasonally lower
operating costs.
Internet Software & We expect Just Dial's growth to moderate to 14.5% yoy as base effect catches up.
Services INFOE's core Naukri segment's yoy growth will be buoyant at 20% on improving hiring
trends and collections growth. We expect 99acres' revenue growth to sustain at 40% yoy
driven primarily by the secondary market. Despite decent revenue growth metrics, we
expect margins for both companies to be flat-to-marginally-up on account of investments
in tech (INFOE), and higher ad-spends (both INFOE and JUST).

India Strategy
We expect yoy decline in the net income of automobiles, metals & mining and oil & gas sector
Sector-wise expectations for the June 2019 quarter results
Key points Key points
IT Services We expect double-digit organic revenue growth on yoy comparison for TCS and Infosys We expect 20-340 bps yoy decline in EBIT margins of tier-1 IT companies. Reasons for
powered by ramp-up of large deals and chunkier digital deal sizes. On sequential basis, margin decline vary across companies although they can be categorized in the following
we expect TCS and Infosys to deliver constant currency (c/c) revenue growth of 3.3% and buckets—(1) higher visa applications compared to the previous year, (2) shortage of
3.1%, respectively. HCLT will report a weak sequential quarter due to annual reset of talent in the US and decline in H-1B visa approvals have forced companies to rework
productivity on a few IMS deals and high base of the earlier quarter. Tech Mahindra will their talent supply model. Changes in talent supply model, viz. higher localization and
disappoint with sequential revenue decline and muted low-single-digit growth on yoy increase in subcontracting, have increased the cost structure, (3) investments in business.
comparison. We expect mid-tier companies to report deceleration in growth rates. We Infosys and HCLT have stepped up investments in digital through organic build-out and
expect demand in the financial services verticals of IT services companies to moderate acquisitions and (4) transition costs of large deals won in the past 2-3 quarters. Some of
through the course of FY2020E. We expect volatility in growth in the vertical in the near the impact on margins is transient. We note that significant INR depreciation and
term. acceleration in revenue growth provided a cushion for margins in FY2019. These factors
are not available to offset headwinds in FY2020E. INR depreciation is critical to defend
margins; else there are downside risks to profitability in FY2020E.
Media Broadcasting and distribution: We expect a weak quarter from TV advertising standpoint Print media: Print media ad spends were muted during the quarter due to broad-based
for listed players (Zee and Sun) due to (1) slowdown in FMCG and auto categories, (2) weakness in key categories such as auto as well as rural consumption. Further, we
significant decline in advertising revenue of FTA channels on withdrawal from DD Freedish gather than the impact of the election code on government ad spends was not fully
platform, (3) impact of the drop in reach/viewership of select channels on implementation offset by higher political advertising. We expect DB Corp. and Jagran to report 5%
of TRAI’s tariff order, and (4) higher-than-usual allocation of ad spends to the sports genre decline and flat print ad revenues, respectively. Both companies would report a modest
owing to the Cricket World Cup. We expect Zee/Sun to report 7%/2% yoy growth in EBITDA decline despite some easing of newsprint price. We note that the full benefit of
advertisement revenues. The impact of TRAI’s new tariff order will be visible in domestic lower newsprint prices will flow through over the next two quarters.
subscription revenue growth. We expect Zee/Sun to report 25%/15% yoy growth in
domestic subscription revenues. For Dish TV, we estimate 150K net subscriber additions
and recovery in ARPU to Rs200 (pre-TRAI tariff order implementation levels).
Metals Ferrous: (1) Domestic steel prices declined by 1-5% qoq, led by a fall in global prices. Non-ferrous: All-in aluminum prices declined 3% qoq to US$1,900/ton while zinc prices
Quarterly average prices for flat segment were down by Rs300-500/ton qoq and increased 2% qoq to US$2,755/ton in 1QFY20. Alumina prices declined by 7% qoq to
Rs2,000/ton qoq in long product segment. On costs, we expect some respite for coking US$361/ton, which will provide some respite in costs to non-integrated aluminum
coal costs ($5-7/ton) whereas Rs100-150/ton higher domestic iron-ore prices will impact producer (Vedanta). We expect Hindustan Zinc's EBITDA to decline by 12% qoq to
non-integrated steelmakers. (2) Lower exports and contract volumes for JSW and TATA Rs24.5 bn (-10% yoy) led by lower zinc metal volumes (-4% qoq). Vedanta's EBITDA will
should partially offset the weak domestic prices in 1QFY20E. We expect EBITDA/ton for decline by 5% qoq to Rs58 bn (-8% yoy) led by lower production at Zinc India
domestic steel companies to decline by 0-6% qoq—we estimate Tata Steel's India operations partially offset by higher EBITDA in Zinc International. Hindalco's standalone
EBITDA/ton at Rs13,216/ton (-4% qoq), JSW Steel's EBITDA/ton at Rs10,078/ton (flat qoq) EBITDA (including Utkal) will decline by 8% qoq to Rs12.6 bn (-32% yoy) due to lower
and Jindal Steel & Power's EBITDA/ton at Rs10,900/ton (-6% qoq), (3) On volumes, we aluminum prices partially offset by favorable hedges. We estimate Nalco's EBITDA to
expect strong growth for Jindal Steel & Power aided by ramp-up of Angul operations (-3% decline by 22% qoq to Rs4 bn due to lower alumina and aluminum realizations and
qoq, 15% yoy to 1.4 mn tons in 1QFY20). TATA and JSW, both face capacity constraints lower alumina volumes.
and were hit with weak off-take in June as per our channel checks. We estimate stagnant
volumes (0-1% yoy) for both TATA and JSTL and (4) Overall, weak prices and muted
volumes would keep earnings subdued for steel companies. We estimate TATA to report
consolidated EBITDA of Rs55 bn with US$40/ton margin in Europe division. JSW to report
an EBITDA of Rs40 bn, and JSPL to report an EBITDA of Rs16 bn.
Oil, Gas & Upstream: We expect OIL and ONGC to report a sharp sequential jump in EBITDA driven RIL: We expect RIL to report a marginal qoq increase in standalone EBITDA led by
Consumable Fuels by (1) ~US$5/bbl increase in global crude prices and (2) ~US$0.4/mn BTU increase in modestly higher refining margins at US$8.5/bbl (+US$0.3/bbl qoq) and increase in crude
domestic gas price; we assume that the government will continue to exempt upstream throughput and petchem volumes, which will be partly offset by moderation in overall
companies from sharing LPG subsidies. petchem margins. Consolidated EBITDA may still be lower qoq, as higher standalone and
Downstream: We expect OMCs to report muted results led by (1) weak underlying refining retail EBITDA will be offset by a decline in Jio's EBITDA (-Rs6.2 bn qoq) due to
margins with Singapore complex averaging US$3.5/bbl and (2) accounting of adventitious accounting of capacity cost pertaining to Jio's fiber/tower InvITs in lieu of interest and
losses amid ~US$3/bbl decline in end-period crude price, which will be partly offset by depreciation cost earlier; we have assumed these adjustments to be PBT neutral.
higher-than-normal (+Rs0.5/liter) blended marketing margins on auto fuels.
Pharmaceuticals We expect the domestic formulations segment to see a moderate quarter with 7-8% yoy We expect SUNP's EBITDA margin at 21.9%, while LPC’s EBITDA margin is likely to
organic growth for the sector, with Torrent likely to be at the lower end at ~4%, given the decline to 16.1%, given lower Ranexa sales. We expect Cipla to report ~19% EBITDA
change in its revenue recognition. We expect Lupin to lead the pack with ~10% yoy margin given lower benefit from Sensipar sales. DRRD's EBITDA margin will likely remain
growth, and expect Cipla and SUNP to report 7-9% yoy growth. We expect US revenues stable at 21.1%, though, adjusting for the sale of proprietary products portfolio in
to remain flat in the quarter, with LPC and CIPLA likely to be impacted by lower sales from 4QFY19, it indicates >300 bps qoq margin expansion. We expect a stable quarter for
Ranexa and Sensipar respectively, while DRRD should benefit from full quarter benefit of ARBP, with EBITDA margin at 20.2%. We expect margin improvement in hospitals driven
Suboxone and Propofol launches. We expect SUNP's US business to decline marginally, by no addition/commissioning of facilities in 1QFY20. APHS's EBITDA margin will expand
and expect limited sales from Ilumya, given the ongoing patient assistance program, even to 11.2% (+70 bps yoy), while HCG should benefit from lower losses across new
as the underlying trend suggests that the product is now annualizing US$35 mn net sales. centers. We expect DLPL's EBITDA margin at 25.0% (-70 bps yoy, +300 bps qoq) as
We expect healthcare services companies to have a healthy quarter with mature centers revenue growth moderates to 14%
growing at 10% yoy and ramp-up of newly set up facilities aiding growth. We expect 14%
yoy revenue growth for DLPL primarily led by volume growth.
Real estate Sluggish start to sales during the quarter on account of transition to new GST rates as well DLF's dev-co will see residential sales of Rs6 bn from its completed inventory in the
as clarity on applicable GST rates for under-construction projects. Exit month will likely see absence of launch of new projects. DCCDL will report revenues of Rs10.3 bn (+4% yoy)
an improvement in sales towards the end of the quarter. Overall our industry-level data as its rental portfolio will witness stable occupancy. Sobha will see strong sales on
suggests some weakness in launches for residential projects, even as vacancy rates for account of new launches in NCR along with steady cash flows from its EPC business.
commercial real estate remain at historical lows (especially in cities like Bengaluru). Oberoi Realty will likely see a sharp drop in earnings (yoy) as 1QFY19 saw several
projects achieve critical milestones for revenue recognition. Sunteck will continue to see
strong sales momentum from Naigaon as witnessed in the previous quarters.
Telecommunication We expect a steady and unexciting quarter for the Indian wireless players. Even as like-for- For Bharti, we expect consolidated 1QFY20E revenues and EBITDA of Rs210 bn and Rs67
Services like pricing has been stable for the past few quarters, incumbents continue to see net bn, up 2% and 0.8% qoq, respectively. We expect a 1.6% qoq uptick in India wireless
negative impact of consumers trading up and trading down on the ARPU axis. 1QFY20 revenues; EBITDA for the segment will likely be down 3% qoq (and 10% yoy) on a
does not enjoy any sequential revenue uplift from minimum recharge construct, either, reported basis to Rs24.9 bn. We expect a 2% qoq jump in ARPU to Rs127/month.
unlike 4QFY19. Deliberate strategy to smoothen the IC EBITDA glide path down to zero For VIL, we expect revenues of Rs118 bn, broadly flat qoq. We do expect a sharp jump in
(from 4QFY20E) would continue to have a bearing on earnings. BHIN is likely to have EBITDA on the back of further progress on delivery of cost synergies. Net finance costs
another subdued quarter while TCOM is likely to report healthy yoy comps. should see a sharp sequential decline on account of lower debt balance post the Rs250
bn rights issue. We expect an ARPU print of Rs114/month, up 9.6% qoq; sequential
jump is optical thanks to the sharp decline in average subs base.
Transportation Ports: Cargo tonnage at India's major ports grew 2.5% yoy in Apr-May 2019. We model Airlines: For Indigo, we forecast a sharp improvement in profitability on account of
a higher 16% growth for the portfolio, driven by strong growth in Mundra and Dhamra higher yields (we expect 6% yoy improvement in yields) on account of seasonal strength
ports. This is partly on a low base. We model qoq flattish volumes. Our optimism is also as well as the impact of termination of services by Jet Airways. Higher yields will drive
based on better container market growth of 10% in Apr-May 2019 at India's major ports. healthy EBITDAR margins of 27.6% (+150 bps qoq). We forecast capacity growth of
For GPPV, we expect strong volume growth in containers due to new line additions and a 30% yoy on steady addition of A320neo and ATR aircraft.
ramp-up of existing lines; expect improvement in margin given recent increase in container
tariffs.
Logistics: For Concor, we build in a similar 6-7% exim volume growth as reported by
Indian Railways over Apr-May 2019. We expect recent price increases to yield a higher
16% overall revenue growth, net of weak volumes for the domestic business. The recent
4% price hike with protection from price increases would drive a 200 bps+ sequential
margin expansion. In 3PL, Mahindra Logistics will see 11% yoy growth in overall revenues,
blend of a single digit growth in M&M group revenues and an acceleration in growth for
M&M group revenues. EBITDA margin would be steady, though would decline yoy on
account of a high base and ESOP/RSU charges.

20
30
40
10
30
40
50
10
20
60
0
(10)
(20)
10
20
30
40
50
(20)
(10)
0
(10)
(20)
Jun-09 Jun-09 Jun-09
Sep-09
Strategy
Sep-09 Sep-09
Dec-09 Dec-09 Dec-09
Mar-10 Mar-10 Mar-10
Sep-10 Sep-10 Sep-10
KOTAK INSTITUTIONAL EQUITIES RESEARCH

Dec-11

Dec-11 Dec-11
Adjusted earnings growth of BSE-30 Index (%)

Exhibit 2: We expect net income of the BSE-30 Index to increase 13.2% yoy in 1QFY20

BSE-30 Index earnings growth (%)

Mar-16 Mar-16
BSE-30 Index earnings growth ex-energy (%)
Mar-16
BSE-30 Index earnings growth ex-energy ex-banks (%)

Sep-18 Sep-18
3.8
4.7 Sep-18
10.1

10.4
16.2

21.7
21.2
(0.9)
Jun-19E Jun-19E
5
Jun-19E
15.8
13.2
(9.8) (11.0)
India
India Strategy
Exhibit 3: Sector-wise net income of companies in the KIE universe (` bn)
Net sales EBITDA PAT

Company (#) Jun-18 Mar-19 Jun-19E Jun-18 Mar-19 Jun-19E Jun-18 Mar-19 Jun-19E
Automobiles & Components (23) 1,756 1,991 1,623 209 218 159 76 100 37
Banks (21) 726 798 815 — — — 56 25 141
Building Products (1) 5 8 6 1 1 1 0 1 1
Capital Goods (15) 548 827 588 63 112 71 31 65 35
Commercial & Professional Services (2) 26 31 33 1 1 2 1 1 1
Commodity Chemicals (2) 71 78 79 14 14 15 8 8 8
Construction Materials (10) 298 337 324 56 63 70 25 31 35
Consumer Durables & Apparel (7) 103 100 116 15 12 16 10 8 10
Consumer Staples (14) 425 441 444 108 110 113 72 76 77
Diversified Financials (13) 222 278 279 — — — 77 95 97
Electric Utilities (6) 395 390 402 162 155 176 62 77 71
Fertilizers & Agricultural Chemicals (6) 78 113 116 14 16 22 9 7 9
Gas Utilities (5) 288 298 296 40 34 42 23 24 24
Health Care Services (5) 52 60 60 5 8 7 1 4 2
Hotels & Restaurants (2) 20 23 11 3 3 2 1 1 1
Internet Software & Services (2) 5 5 6 1 2 2 1 1 2
IT Services (9) 964 1,072 1,080 223 249 239 173 194 180
Media (5) 65 55 59 22 16 21 10 9 10
Metals & Mining (8) 1,115 1,226 1,110 265 255 224 103 86 72
Oil, Gas & Consumable Fuels (7) 4,508 4,634 4,649 606 639 500 309 372 244
Pharmaceuticals (8) 265 292 300 52 57 62 28 25 32
Real Estate (7) 48 75 57 14 18 14 7 10 7
Retailing (3) 108 116 131 10 10 13 6 8 8
Speciality Chemicals (4) 48 50 52 10 10 11 6 6 7
Telecommunication Services (4) 274 283 288 88 87 88 10 (16) (6)
Transportation (6) 116 140 153 21 31 35 10 23 26
KIE universe 12,527 13,724 13,078 2,003 2,121 1,903 1,115 1,240 1,130

Strategy India
Exhibit 4: Sector-wise net income of companies in the BSE-30 Index (` bn)

Banks (7) 516 581 578 — — — 42 101 130
Capital Goods (1) 283 449 311 29 56 35 12 34 17
IT Services (4) 755 844 854 186 204 197 143 159 147
Metals & Mining (2) 600 659 598 128 131 113 38 41 28
BSE-30 Index 5,782 6,469 6,066 1,120 1,161 1,108 574 703 650
Exhibit 5: Sector-wise net income of companies in the Nifty-50 Index (` bn)

Banks (7) 516 581 578 — — — 42 101 130
Capital Goods (1) 283 449 311 29 56 35 12 34 17
Construction Materials (2) 134 159 150 27 31 33 12 15 16
Fertilizers & Agricultural Chemicals (1) 41 85 76 8 14 16 5 6 5
Gas Utilities (1) 173 188 181 22 17 22 13 13 12
IT Services (5) 896 996 1,003 211 236 227 164 184 170
Media (1) 18 20 20 6 6 6 3 3 4
Metals & Mining (4) 912 1,006 907 192 185 161 66 59 42
Retailing (1) 43 47 52 5 5 7 3 4 5
Transportation (1) 24 31 31 16 19 19 7 13 16
Nifty-50 Index 9,161 10,073 9,550 1,541 1,614 1,434 838 999 849

India Strategy
Exhibit 6: Sector-wise earnings growth of BSE-30 Index (%)
Banks 11.9 (0.6) — — — — — 211.9 29.2
Capital Goods 10.0 (30.7) 20.3 (37.4) 10.3 12.5 11.3 41.3 (49.8)
Commodity Chemicals 11.0 (2.9) 2.1 8.5 19.9 16.4 18.3 (3.4) 13.9
Consumer Staples 11.3 2.5 12.3 5.1 32.0 31.4 32.2 12.1 (2.1)
IT Services 13.0 1.1 6.0 (3.4) 24.7 24.2 23.1 3.2 (7.4)
Metals & Mining (0.5) (9.3) (11.5) (14.2) 21.2 20.0 18.9 (26.7) (31.5)
Oil, Gas & Consumable Fuels 12.1 6.0 2.8 6.2 22.7 20.7 20.8 6.4 7.3
Pharmaceuticals 13.4 14.4 11.9 76.8 22.2 14.2 21.9 7.8 66.6
BSE-30 Index 4.9 (6.2) (1.1) (4.6) 21.5 19.9 20.4 13.2 (7.5)
BSE-30 Index (ex-energy) 2.2 (10.4) (2.9) (9.2) 20.9 19.6 20.2 15.8 (11.7)
BSE-30 Index (ex-banks) 4.2 (6.8) (1.1) (4.6) 21.5 19.9 20.4 (2.4) (13.7)
Exhibit 7: Sector-wise earnings growth of Nifty-50 Index (%)
Banks 11.9 (0.6) — — — — — 211.9 29.2
Capital Goods 10.0 (30.7) 20.3 (37.4) 10.3 12.5 11.3 41.3 (49.8)
Commodity Chemicals 11.0 (2.9) 2.1 8.5 19.9 16.4 18.3 (3.4) 13.9
Construction Materials 11.6 (5.4) 22.6 5.5 19.9 19.6 21.9 32.2 7.6
Consumer Staples 11.2 2.2 12.2 4.7 30.1 29.6 30.4 12.0 (2.3)
Fertilizers & Agricultural Chemicals 84.3 (10.6) 88.9 13.4 20.5 16.5 21.0 (1.0) (7.6)
Gas Utilities 4.3 (3.8) (2.0) 30.5 13.0 9.0 12.2 (6.2) (11.4)
IT Services 11.9 0.7 7.3 (3.8) 23.6 23.7 22.6 3.9 (7.4)
Media 12.3 (1.4) 12.5 12.0 31.9 28.1 32.0 16.1 42.3
Metals & Mining (0.5) (9.9) (16.0) (12.8) 21.0 18.4 17.8 (36.7) (28.6)
Oil, Gas & Consumable Fuels 4.5 1.1 (16.2) (18.7) 14.7 14.7 11.8 (19.4) (27.0)
Pharmaceuticals 9.7 4.9 10.9 22.5 20.7 18.0 21.0 (1.0) 29.8
Retailing 20.4 11.3 33.5 31.8 11.5 10.7 12.7 34.0 25.9
Transportation 28.9 0.9 22.4 0.7 65.9 62.7 62.6 131.4 24.3
Nifty-50 Index 4.2 (5.2) (7.0) (11.2) 18.1 17.4 16.3 1.3 (15.0)
Nifty-50 Index (ex-energy) 4.1 (9.2) (1.7) (7.1) 20.9 19.3 20.0 12.0 (9.4)
Nifty-50 Index (ex-banks) 3.8 (5.5) (7.0) (11.2) 18.1 17.4 16.3 (9.7) (19.9)

Strategy India
1QFY20/2QCY19 EARNINGS PREVIEW FOR KIE UNIVERSE

Company-wise earnings of the KIE universe (` mn)
Change (%)
Jun-18 Mar-19 Jun-19E yoy qoq Comments
Automobiles
Amara Raja Batteries
Net sales 17,787 15,667 17,431 (2.0) 11.3 We expect revenues to decline by 2% yoy, led by (1) 12% yoy volume decline in the auto
OEM segment due to decline in industry production, (2) flattish volumes in overall industrial
EBITDA 2,203 2,421 2,759 25.2 13.9 segment, (3) 8% yoy volume growth in the automotive replacement segment and (4) 4%
negative impact due to price cuts done to pass on the benefit of decline in lead prices in non-
EBIT 1,573 1,738 2,069 31.5 19.0 replacement segments (50-55% of overall revenues).
PBT 1,695 1,783 2,151 26.9 20.7 We expect EBITDA margin to improve by 40 bps qoq to 15.8% (up 340 bps yoy) largely due
to improvement in gross margin led by benefit of decline in lead prices. LME lead prices have
Reported PAT 1,130 1,193 1,441 27.5 20.7
declined by 4% qoq in rupee terms in 1QFY20 (assuming 1.5-month lag in prices due to
Extraordinaries — — — — — inventory). As per our channel checks, the company has not taken price cuts in the
automotive replacement segment (40-45% of overall revenues; RM cost benefit normally
Adjusted PAT 1,130 1,193 1,441 27.5 20.7 gets passed on in other segments), which should aid margins. Having said that, it is difficult
to predict the exact quantum of benefit from lead prices on quarterly basis due to (1) lead-lag
EPS (Rs/share) 6.6 7.0 8.4 27.5 20.7
impact owing to quarterly variations in RM and finished goods inventory levels and (2)
EBITDA margin (%) 12.4 15.5 15.8 344 bps 37 bps volatility in lead prices in a quarter even as we work with averages.
Apollo Tyres
Net sales 42,880 42,737 44,231 3.1 3.5 We expect standalone revenues to increase by 3% yoy, driven largely by some price
increases taken during the year. Volumes will likely be flattish yoy as growth in the
EBITDA 5,281 4,246 4,593 (13.0) 8.2 replacement market due to market share gain (~10% yoy) will be offset by around 18-20%
yoy volume decline in the OEM segment. We expect standalone EBITDA margin to improve
EBIT 3,440 1,933 2,343 (31.9) 21.3 by 30 bps qoq (down 170 bps yoy) led by the lagged benefit of lower RM costs. Marketing
spend will likely be higher this quarter due to advertisement campaigns done during the
PBT 3,416 1,984 2,123 (37.8) 7.0 cricket world cup.
Reported PAT 2,518 840 1,550 (38.5) 84.6 We expect Europe revenues to grow by 2% yoy in 1QFY20, led by (1) 7% yoy revenue
growth in EUR terms in manufacturing operations led by ramp-up of the Hungary plant, (2)
Extraordinaries — (1,000) — — — marginal yoy decline in Reifencom revenues (distribution business) and (3) negative impact of
INR appreciation versus EUR. We build in negative EBIT margin of 2% in our estimates in
Adjusted PAT 2,518 1,694 1,550 (38.5) (8.5)
1QFY20 (negative EBIT margin of 3.8% in 4QFY19 and EBIT margin of 2.2% in 1QFY19); note
EPS (Rs/share) 4.4 3.0 2.7 (38.5) (8.5) that this is a seasonally weak quarter for the company and overall manufacturing revenues
will likely be flattish qoq. Yoy decline in EBIT margin is due to increase in fixed overheads and
EBITDA margin (%) 12.3 9.9 10.4 -194 bps 44 bps higher depreciation expenses associated with the Hungary plant.
Ashok Leyland
Net sales 62,627 88,459 58,865 (6.0) (33.5)
EBITDA 6,717 9,854 3,999 (40.5) (59.4)
We expect revenues to decline by 6% yoy in 1QFY20, led by 6% yoy decline in volumes.
EBIT 5,191 8,257 2,389 (54.0) (71.1)
PBT 5,574 8,182 2,314 (58.5) (71.7)
Reported PAT 4,216 6,530 1,666 (60.5) (74.5)
Extraordinaries (215) (117) — — —
We expect EBITDA to decline by 40% yoy as we expect EBITDA margin to decline by 390 bps
Adjusted PAT 4,366 6,612 1,666 (61.8) (74.8)
yoy, led by 240 bps yoy decline in gross margin and negative operating leverage.
EPS (Rs/share) 1.5 2.3 0.6 (61.8) (74.8)
EBITDA margin (%) 10.7 11.1 6.8 -394 bps -435 bps
Bajaj Auto
Net sales 74,193 73,952 72,507 (2.3) (2.0)
EBITDA 12,814 11,623 11,010 (14.1) (5.3) Volumes increased by 2% yoy, led by (1) 3% yoy growth in domestic bike volumes, (2) 8%
EBIT 12,115 11,014 10,401 (14.1) (5.6) yoy growth in export bike volumes offset by 23% yoy decline in export three-wheeler
PBT 16,156 15,339 14,899 (7.8) (2.9) volumes and 9% yoy decline in domestic three-wheeler volumes. We expect revenues to
Reported PAT 11,152 13,056 10,280 (7.8) (21.3) decline by 2% yoy as ASPs will decline by ~4% yoy due to an inferior product mix.
Extraordinaries — 3,420 — — —
Adjusted PAT 11,152 10,662 10,280 (7.8) (3.6) We expect EBITDA margin to decline by 210 bps on yoy basis largely due to a inferior product
EPS (Rs/share) 38.5 36.8 35.5 (7.8) (3.6) mix, higher commodity costs and increase in discounting in the economy motorcycle
EBITDA margin (%) 17.3 15.7 15.2 -209 bps -54 bps segment.
Balkrishna Industries
Net sales 14,134 13,540 13,070 (7.5) (3.5) We expect volumes to decline by 6% yoy particularly due to (1) weakness in demand across
EBITDA 4,106 3,360 3,265 (20.5) (2.8) markets particularly in the agriculture segment and (2) the higher base of last year—volumes
EBIT 3,265 2,538 2,425 (25.7) (4.4) were up 23% yoy in 1QFY19. Revenues will likely decline by 8% yoy due to pricing pressures
PBT 3,524 2,759 2,647 (24.9) (4.1) (increase in discounts) in the market.
Reported PAT 2,302 1,847 1,773 (23.0) (4.0) We expect EBITDA margin to be flattish qoq (down 410 bps yoy); while there will be marginal
Extraordinaries — — — — — improvement in gross margin qoq due to lagged benefit of lower commodity prices, this will
Adjusted PAT 2,162 1,833 1,773 (18.0) (3.3) be offset by negative operating leverage. Decline in margin on a yoy basis will be due to
EPS (Rs/share) 11.2 9.5 9.2 (18.0) (3.3) pricing pressures globally and adverse impact of currency movements (INR appreciation versus
EBITDA margin (%) 29.1 24.8 25.0 -407 bps 16 bps USD). We expect EBITDA per kg to be flat qoq but down 15% yoy.
Bharat Forge
Net sales 23,538 24,734 24,900 5.8 0.7 We expect consolidated revenues to increase by 6% yoy, which will be driven by (1) 12% yoy
EBITDA 4,982 5,565 5,504 10.5 (1.1) growth in the standalone business and (2) 5% yoy decline in the European subsidiary.
EBIT 4,982 5,565 5,504 10.5 (1.1) Revenue growth in the standalone business will be driven by (1) 13% yoy growth in exports
PBT 3,793 4,711 4,581 20.8 (2.7) revenues and (2) 9% yoy growth in domestic revenues led by strong growth in the non-auto
Reported PAT 2,541 3,156 3,069 20.8 (2.7) segment.
Extraordinaries — — — — —
We expect consolidated EBITDA margin to improve by 90 bps yoy, led by 130 bps
Adjusted PAT 2,541 3,156 3,069 20.8 (2.7)
improvement in standalone EBITDA margin due to operating leverage benefits. We build in
EPS (Rs/share) 5.5 6.8 6.6 20.8 (2.7)
6.0% EBITDA margin in the European business, down 200 bps yoy.
EBITDA margin (%) 21.2 22.5 22.1 93 bps -40 bps

India Strategy
Change (%)
Ceat
Net sales 17,063 17,605 17,153 0.5 (2.6)
EBITDA 1,758 1,623 1,524 (13.3) (6.1) We expect consolidated revenues to be flattish yoy led by (1) 3% yoy volume decline in the
standalone business due to volume decline in the OEM segment and lack of meaningful
EBIT 1,298 1,116 994 (23.4) (10.9)
growth in the replacement market and (2) 3% yoy increase in ASPs due to price increases
PBT 1,131 1,153 744 (34.2) (35.4) taken during the quarter.
Reported PAT 720 643 560 (22.2) (12.8)
Adjusted PAT 736 601 560 (23.9) (6.8) We expect EBITDA margin to decline marginally qoq due to negative operating leverage and
EPS (Rs/share) 18.2 14.9 13.9 (23.9) (6.8) higher marketing spend in the quarter. We expect gross margin to be flat qoq.
Eicher Motors
Net sales 25,478 25,001 24,100 (5.4) (3.6)
EBITDA 8,096 6,847 6,128 (24.3) (10.5) Royal Enfield volumes declined by 19% yoy in 1QFY20 due to weak demand and high
ownership cost; we expect standalone revenues to decline by 5% yoy, led by increase in
EBIT 7,524 6,134 5,421 (28.0) (11.6)
prices as the company has introduced ABS in all its models to comply with the new safety
PBT 8,777 7,549 6,813 (22.4) (9.7)
norms. We expect EBITDA margin of Royal Enfield to decline by 660 bps yoy due to negative
Reported PAT 5,762 5,448 4,880 (15.3) (10.4) operating leverage (-270 bps yoy) and decline in gross margin (-390 bps yoy).
Adjusted PAT 5,762 5,448 4,880 (15.3) (10.4)
We expect consolidated adjusted net profit to decline by 15% yoy led by weak performance
EPS (Rs/share) 211.7 200.2 179.3 (15.3) (10.4)
of both RE and VECV.
Endurance Technologies
Net sales 18,604 19,004 20,542 10.4 8.1
EBITDA 2,714 3,246 3,202 18.0 (1.4) We expect consolidated revenues to increase by 10% yoy in 1QFY20 led by (1) 13% yoy
increase in standalone revenues aided by increase in Bajaj Auto's production volumes and
EBIT 1,894 2,161 2,092 10.4 (3.2)
increase in content per vehicle due to new product introductions and (2) 5% yoy revenue
PBT 1,876 2,149 2,087 11.2 (2.9)
growth in the European subsidiary (in INR terms) despite decline in production volumes in
Reported PAT 1,246 1,486 1,419 13.9 (4.5) Europe largely due to market share gains.
Adjusted PAT 1,246 1,486 1,419 13.9 (4.5)
We expect consolidated EBITDA margin to improve by 100 bps yoy (down 150 bps qoq) led
EPS (Rs/share) 8.9 10.6 10.1 13.9 (4.5)
by higher gross margin in both India and Europe businesses.
Escorts
Net sales 15,113 16,317 13,946 (7.7) (14.5)
EBITDA 1,855 1,898 1,483 (20.1) (21.9) We expect revenues to decline by 8% yoy in 1QFY20 led by (1) 14% yoy decline in tractor
EBIT 1,650 1,680 1,263 (23.5) (24.8) volumes and (2) 7% and 14% yoy increase in construction and railway segment revenues,
PBT 1,791 1,778 1,356 (24.3) (23.7) respectively.
Reported PAT 1,196 1,214 922 (22.9) (24.0)
Adjusted PAT 1,196 1,214 922 (22.9) (24.0) We expect EBITDA margin to decline by 170 bps yoy, led by decline in gross margin and
EPS (Rs/share) 13.5 13.7 10.4 (22.9) (24.0) negative operating leverage.
Exide Industries
Net sales 27,725 25,987 27,838 0.4 7.1 We expect revenues to be flattish yoy as steady 8% yoy growth in the automotive
replacement segment will be offset by (1) double-digit volume decline in the auto OEM
EBITDA 3,909 3,733 4,185 7.1 12.1 segment, (2) demand weakness in the industrial segment and (3) price cuts in non-
replacement segments (3-4% negative impact on revenues) due to pass-through of benefit
EBIT 3,190 2,898 3,345 4.8 15.4 from lower lead prices.
PBT 3,221 3,051 3,455 7.3 13.2 We expect EBITDA margin to improve by 70 bps qoq to 15% (up 90 bps yoy) largely due to
improvement in gross margin led by benefit of decline in lead prices and normalization of
Reported PAT 2,099 2,107 2,315 10.3 9.9 higher warranty expenses. LME lead prices have declined by 4% qoq in INR terms in 1QFY20
(assuming 1.5-month lag in prices due to inventory). As per our channel checks, the company
Extraordinaries — — — — — has not taken price cuts in the automotive replacement segment (35-40% of overall
revenues; RM cost benefit normally gets passed on in other segments), which should aid
Adjusted PAT 2,099 2,107 2,315 10.3 9.9
margins. Having said that, it is difficult to predict the exact quantum of benefit from lead
EPS (Rs/share) 2.5 2.5 2.7 10.3 9.9 prices on quarterly basis due to (1) lead-lag impact owing to quarterly variations in RM and
finished goods inventory levels and (2) volatility in lead prices in a quarter even as we work
EBITDA margin (%) 14.1 14.4 15.0 93 bps 66 bps with averages.
Hero Motocorp
Net sales 88,098 78,850 81,580 (7.4) 3.5
EBITDA 13,773 10,693 11,880 (13.7) 11.1
We expect revenues to decline by 7.4% yoy largely led by 12.4% yoy volume decline.
EBIT 12,291 9,191 10,377 (15.6) 12.9
PBT 13,427 10,811 11,998 (10.6) 11.0
Reported PAT 9,092 7,303 8,098 (10.9) 10.9
We expect EBITDA margin to decline by 100 bps yoy due to increase in commodity costs and
Adjusted PAT 9,092 7,303 8,098 (10.9) 10.9
higher discounting due to a weak demand scenario.
EPS (Rs/share) 45.5 36.6 40.5 (10.9) 10.9
EBITDA margin (%) 15.6 13.6 14.6 -108 bps 100 bps

Strategy India
Change (%)
Mahindra CIE Automotive
We expect consolidated revenues to increase by 4%, yoy led by (1) 10% yoy revenue growth
Net sales 19,547 20,684 20,405 4.4 (1.4) in the European business (in INR terms) aided by strong growth in Metalcastello business and
further ramp-up of the Lithuania plant and (2) 4% yoy revenue decline in the India business
(including Bill Forge) due to decline in domestic automotive industry production across
EBITDA 2,909 2,974 2,813 (3.3) (5.4)
segments.
We expect consolidated EBITDA margin to decline by 110 bps yoy (down 60 bps qoq) due to
normalization of profitability from high levels of 2QCY18 in the European business (EBITDA
margin of 14.2% in 2Q versus our estimate of 13% for 2QCY19) and 80 bps yoy decline in
EBITDA margin for the India business due to negative operating leverage.
Mahindra & Mahindra
Net sales 133,577 138,079 127,033 (4.9) (8.0)
EBITDA 21,101 18,678 17,258 (18.2) (7.6)
Overall volumes declined by 9% yoy led by 14% yoy decline in tractor volumes and 6% yoy
EBIT 16,806 12,982 11,458 (31.8) (11.7)
decline in auto volumes. We expect revenues to decline by 5% yoy.
PBT 18,305 15,151 13,858 (24.3) (8.5)
Reported PAT 12,572 9,692 9,701 (22.8) 0.1
Extraordinaries 245 (1,047) — — —
Adjusted PAT 12,401 10,426 9,701 (21.8) (7.0)
We expect EBITDA margin to decline by 220 bps due to negative operating leverage.
EPS (Rs/share) 10.9 9.2 8.5 (21.8) (7.0)
Maruti Suzuki
Net sales 224,594 214,594 193,245 (14.0) (9.9)
EBITDA 33,511 22,634 19,375 (42.2) (14.4) We expect revenues to decline by 14% yoy in 1QFY20 on the back of 18% yoy volume
EBIT 26,311 14,530 11,273 (57.2) (22.4) decline, which will be offset by 4% yoy increase in ASPs due to increase in costs owing to
PBT 28,824 23,121 18,165 (37.0) (21.4) new safety regulations.
Reported PAT 19,753 17,956 13,260 (32.9) (26.2)
Adjusted PAT 19,753 17,956 13,260 (32.9) (26.2) We expect EBITDA to decline by 42% yoy in 1QFY20 led by (1) rise in commodity costs, (2)
EPS (Rs/share) 65.4 59.4 43.9 (32.9) (26.2) negative operating leverage and (3) high fixed costs in the Gujarat plant due to low volumes.
Motherson Sumi Systems
Net sales 147,755 171,695 165,890 12.3 (3.4) We expect 9% yoy revenue decline for the standalone entity as we build in steep cut in
EBITDA 14,121 12,428 12,652 (10.4) 1.8 passenger vehicle industry production volumes. Standalone EBITDA margin will likely remain
EBIT 9,650 6,910 7,134 (26.1) 3.2 flat yoy.
PBT 9,093 6,562 6,786 (25.4) 3.4
We expect consolidated revenue to grow by 12% yoy, led by (1) 25% yoy growth in EUR
Reported PAT 4,431 4,100 3,871 (12.6) (5.6) revenues of the SMRPBV business due to addition of revenues of SMC business and (2) 1%
Extraordinaries — — — — — growth (in EUR terms) in the PKC business, which will be partially offset by 9% decline in
Adjusted PAT 4,431 4,100 3,871 (12.6) (5.6) revenues for the standalone business. We expect consolidated EBITDA to decline by 10% yoy
EPS (Rs/share) 1.4 1.3 1.2 (12.6) (5.6) driven by sharp decline in SMP EBITDA margin due to issues in ramping up the plant in the
US.
MRF
Net sales 38,556 40,735 39,327 2.0 (3.5)
We expect revenues to grow by 2% yoy, led by increase in ASPs due to price increases taken
EBITDA 5,953 5,712 5,525 (7.2) (3.3) during the year. Volumes will likely decline by 1% yoy due to weakness in the OEM segment;
EBIT 4,086 3,567 3,355 (17.9) (5.9) we note that MRF has lower exposure to the OEM segment compared to peers, which should
PBT 3,971 4,088 3,725 (6.2) (8.9) benefit them this quarter given sharp volume decline in the OEM segment. Strong growth in
Reported PAT 2,607 2,938 2,533 (2.8) (13.8) the truck radial segment (in replacement market) and MRF's weaker presence in that category
will largely offset the positives from lower exposure to OEMs, we believe.
Adjusted PAT 2,607 2,938 2,533 (2.8) (13.8)
We expect EBITDA margin to be flat qoq (down 140 bps yoy) as marginal benefit of gross
EPS (Rs/share) 615.0 693.0 597.5 (2.8) (13.8)
margin will be offset by negative operating leverage and higher marketing spend.
Schaeffler India
Net sales 11,003 11,723 11,553 5.0 (1.5)
We expect revenues to grow by 5% yoy, led by mid-teens revenue growth in automotive
EBITDA 1,801 1,844 1,902 5.6 3.1 replacement, industrial segments and exports (higher focus on exports due to slowdown in
EBIT 1,435 1,466 1,512 5.4 3.1 the domestic market) while automotive OEM revenues (40-45% of overall revenues) will
PBT 1,710 1,626 1,682 (1.6) 3.5 likely be weak (10-11% yoy decline) due to slowdown in automotive industry production and
Reported PAT 1,114 1,062 1,110 (0.4) 4.6 lower diesel vehicle mix in the passenger vehicle segment (lower engine and transmission
content in petrol vehicles compared to diesel vehicles).
Adjusted PAT 1,118 1,064 1,110 (0.7) 4.3 We expect EBITDA margin to improve by 70 bps qoq (+10 bps yoy) as we build in the benefit
EPS (Rs/share) 35.8 34.0 35.5 (0.7) 4.3 of recent softness in commodity prices and price increases from certain customers, which
EBITDA margin (%) 16.4 15.7 16.5 9 bps 73 bps were under negotiations.

India Strategy
Change (%)
SKF
Net sales 7,550 7,484 7,851 4.0 4.9 We expect revenues to grow by 4% yoy, led by (1) 12-13% yoy growth in automotive
EBITDA 1,160 1,110 1,190 2.6 7.2 replacement and overall industrial segments (~65% of revenues) aided partly by market share
EBIT 1,043 994 1,072 2.8 7.8 gain and (2) 10-11% yoy decline in the automotive OEM segment and exports (35% of
PBT 1,251 1,268 1,287 2.8 1.5 revenues) due to decline in domestic automotive industry production and weakness in global
Reported PAT 809 822 849 5.0 3.3 markets.
Extraordinaries — — — — — We expect EBITDA margin to decline marginally on a yoy basis (down 20 bps yoy but up 30
Adjusted PAT 809 822 849 5.0 3.3 bps qoq) largely due to adverse impact of a weaker product mix (auto segment is more
EPS (Rs/share) 15.8 16.0 16.6 5.0 3.3 profitable for the company) on the company's gross margins partly offset by its cost-
EBITDA margin (%) 15.4 14.8 15.2 -22 bps 32 bps reduction efforts and some softness in commodity prices.
Tata Motors
Net sales 670,813 864,220 562,778 (16.1) (34.9) We expect standalone revenues to decline by 22% yoy, led by decline in volumes across
EBITDA 54,307 80,193 31,448 (42.1) (60.8) segments while ASPs will be flattish yoy. We build in standalone EBITDA margin of 4.2% in
EBIT (4,265) 26,662 (21,952) 414.7 (182.3) 1QFY20 (6% in 4QFY19 and 8% in 1QFY19); the yoy decline is due to increase in discount
PBT (15,770) 19,418 (35,152) 122.9 (281.0) levels, a weaker mix and negative operative leverage.
Reported PAT (19,024) 11,175 (35,512) 86.7 (417.8) JLR's UK P&L volumes will likely decline by 9% yoy (assuming 31,000 wholesale volumes in
Extraordinaries (10,073) (6,769) — — — June 2019; up 4% yoy). ASPs will likely decline by 0.5% qoq due to a weaker mix. We
expect reported EBITDA margin to decline by 80 bps yoy as the benefit of lower hedging loss
Adjusted PAT (11,973) 16,252 (35,512) 196.6 (318.5)
will be offset by a weaker mix, pricing pressures and negative operating leverage. We build in
EPS (Rs/share) (3.5) 4.8 (10.5) 196.6 (318.5) hedged forex loss of GBP115 mn in our estimates for 1QFY20 (GBP158 mn in 4QFY19 and
EBITDA margin (%) 8.1 9.3 5.6 -251 bps -370 bps GBP212 mn in 1QFY19).
Timken
Net sales 3,834 4,480 4,332 13.0 (3.3) We expect revenues to increase by 13% yoy, led by (1) 4% due to consolidation of ABC
EBITDA 593 1,012 780 31.5 (22.9) Bearings (note that ABC was consolidated from May 1, 2018), (2) strong double-digit growth
in industrial, aftermarket and export segments (growth in exports will be driven by ramp-up of
EBIT 473 790 555 17.3 (29.8) exports from ABC's plants and execution of new order wins from non-US markets) and (3)
PBT 486 857 623 28.1 (27.3) 12% yoy revenue decline in the CV segment due to decline in industry production (~30-33%
of overall revenues). We note that 9% organic revenue growth is higher than peers due to
Reported PAT 316 572 417 31.9 (27.1) lower exposure to the auto OEM segment and focus on growing exports of railway and CV
Extraordinaries — — — — — bearings from India.
Adjusted PAT 316 572 417 31.9 (27.1) We expect EBITDA margin to normalize from higher levels of last quarter but still improve by
EPS (Rs/share) 4.2 7.6 5.5 31.9 (27.1) 250 bps yoy due to price increases from customers, recent decline in commodity prices and
benefit of backward integration.
TVS Motor
Net sales 41,685 43,840 44,923 7.8 2.5
Volumes declined by 1% yoy possibly led by (1) 2% growth in exports and (2) 1% yoy
EBITDA 3,212 3,081 3,493 8.7 13.3
decline in domestic markets. We expect revenues to grow by 8% yoy in 1QFY20 largely led
EBIT 2,279 2,050 2,461 8.0 20.0
by 8% yoy increase in ASP.
PBT 2,124 1,839 2,246 5.8 22.1
Reported PAT 1,466 1,338 1,640 11.9 22.5
We expect EBITDA margin to increase by 9% yoy, which is likely to remain in line with
Adjusted PAT 1,466 1,338 1,640 11.9 22.5
revenue growth. We expect net profit to increase by 12% yoy.
EPS (Rs/share) 3.1 2.8 3.5 11.9 22.5
EBITDA margin (%) 7.7 7.0 7.8 6 bps 74 bps
Varroc Engineering
Net sales 29,435 31,534 29,284 (0.5) (7.1)
We expect consolidated revenues to decline by 1% yoy, led by (1) 5% yoy decline in India
EBITDA 2,411 2,931 2,692 11.7 (8.2) business revenues as growth in production of Bajaj Auto (accounts for 50-55% of India
revenues) will be more than offset by double-digit decline in production of other two-wheeler
EBIT 1,347 1,402 1,152 (14.5) (17.8)
OEMs and (2) 5% yoy EUR revenue growth in VLS (3% yoy growth in INR terms due to INR
PBT 1,215 1,429 1,052 (13.4) (26.4) appreciation versus EUR) driven by new business wins particularly from VW Group even
though global industry volumes are under pressure.
Reported PAT 1,004 1,500 882 (12.2) (41.2)
Extraordinaries — — — — — We expect consolidated EBITDA margin to improve by 100 bps due to 230 bps yoy margin
expansion in VLS business led by lower launch costs, Ind-AS impact and potential
Adjusted PAT 1,004 1,500 882 (12.2) (41.2)
improvement in operational efficiency, which will be offset by 120 bps yoy margin decline in
EBITDA margin (%) 8.2 9.3 9.2 100 bps -11 bps India business due to negative operating leverage.

Strategy India
Change (%)
Banks/Diversified financials
AU Small Finance Bank
Net interest income 2,864 3,869 3,992 39.4 3.2 We expect AUM growth to remain strong at ~45% yoy and off-balance sheet loans to
Pre-provision profit 1,524 2,157 2,154 41.3 (0.1) decline further. There would be focus on the progress and NIM improvement as there has
Loan-loss provisions 210 190 200 (5.0) 5.0 been revenue pressure in recent quarters due to change in loan mix and pricing.
Adjusted PAT 768 1,182 1,147 49.3 (3.0) We expect cost-income ratio similar to 4QFY19 levels at ~60%. Liability side should see
further improvement on deposit contribution but the mix should be a bit more favorable on
EPS (Rs/share) 2.6 4.0 3.9 48.1 (3.0)
wholesale side. Gross NPL ratios should see a marginal increase qoq, especially on the retail
NIM (%) 5.8 5.1 4.8 -101 bps -37 bps side.
Axis Bank
Net interest income 51,668 57,056 58,978 14.1 3.4
We expect loan growth at 13% yoy with greater focus on retail, and NIM at 3.5% (unchanged
Pre-provision profit 43,720 50,144 49,943 14.2 (0.4)
qoq but there is a positive bias as pricing environment has been favorable for banks).
Fee income 21,170 30,200 27,521 30.0 (8.9)
Treasury income (net) (320) 30 3,000 NM 9,900.0
We expect slippages of Rs25 bn (2% of loans) mostly from 'below investment grade book'.
Loan-loss provisions 30,660 16,380 15,561 (49.2) (5.0)
Expect more traction on recovery as well from the write-off pool. No major concerns on asset
Adjusted PAT 7,011 15,051 16,946 141.7 12.6
quality.
EPS (Rs/share) 3.0 6.4 7.2 141.7 12.6
Bajaj Finance
We expect loan growth to remain strong at 37% yoy, marginally lower than 41% in 4QFY19.
Pre-provision profit 16,241 22,209 24,410 50.3 9.9
Loan-loss provisions 3,268 4,093 4,500 37.7 10.0 NIM will likely expand qoq by 10 bps to 9.8%, in line with seasonal trends; we expect the
Adjusted PAT 8,359 11,761 12,942 54.8 10.0 cost-income ratio to improve to 55% from 57% qoq due to higher contribution from the
EPS (Rs/share) 15.3 21.5 23.7 54.8 10.0 consumer business.
Bandhan Bank
We expect loan growth at ~40% yoy resulting in strong revenue growth of ~32% yoy. NIM
will be flat qoq at ~9.5% of AUM.
Fee income 1,485 2,879 — — —
Loan-loss provisions 536 1,537 1,691 215.6 10.0
We expect stable trends on asset quality. Commentary on loan growth and borrower
Adjusted PAT 4,817 6,509 6,509 35.1 0.0
indebtedness in key markets would be key monitorables.
EPS (Rs/share) 4.0 5.5 5.5 35.1 0.0
Bank of Baroda
This would be the first quarter with the merged financials of BoB, Vijaya and Dena Bank. The
bank has given an opening balance sheet but the net worth for 1QFY20 would be closely
Fee income 7,680 9,620 8,448 10.0 (12.2)
watched. Yoy changes are not comparable given the recent changes at the bank level.
Treasury income (net) (3,830) 7,600 4,500 NM (40.8)
Loan-loss provisions 17,597 55,500 33,300 89.2 (40.0) We expect fresh slippages at <2% (balance sheet post M&A) with negligible surprises from
Adjusted PAT 5,283 (9,914) 9,507 80.0 NM Vijaya or Dena Bank. Coverage ratio will improve qoq. Progress of the merger would be
EPS (Rs/share) 10.0 (18.7) 17.9 80.0 NM discussed.
Canara Bank
Net interest income 38,829 35,002 33,736 (13.1) (3.6)
We expect 10% yoy loan growth but ~10 bps qoq decline in NIM (one-off) to 2.4%. The
Pre-provision profit 29,328 29,735 27,907 (4.8) (6.1)
base quarter has one-off interest income from recovery of a bad loan. We expect to see a
Fee income 3,460 2,960 3,463 0.1 17.0
higher contribution from treasury this quarter.
Treasury income (net) (1,970) (1,780) 5,223 NM NM
Loan-loss provisions 23,240 51,518 23,183 (0.2) (55.0) We expect slippages of ~2% of loans and mostly from non-corporate loans but NPL decline
Adjusted PAT 2,815 (5,515) 2,830 0.5 NM would be slower as there were no major resolutions during the quarter. Coverage ratio will
EPS (Rs/share) 3.8 (7.3) 3.8 (2.1) NM improve qoq.
Cholamandalam
We expect loan growth to moderate to 23% from 26% on the back of slowdown in CVs.
Credit cost is seasonally high in 1Q.
Loan-loss provisions 980 560 800 (18.4) 42.9
Adjusted PAT 2,854 2,920 3,251 13.9 11.3
Competition in CV finance and high liquidity on balance sheet will put pressure on NIM.
EPS (Rs/share) 18.2 18.7 20.8 14.0 11.3
City Union Bank
We expect loan growth to slow down to ~15% yoy for the quarter. NII growth will be
marginally lower than loan growth at 13% yoy. NIM would decline ~10 bps at 4.3%.
Fee income 759 777 835 10.0 7.5
Treasury income (net) 48 256 306 536.9 19.4
Loan-loss provisions 673 754 829 23.3 10.0 We expect gross NPLs at ~3% (higher qoq); slippages are expected at ~2.2% of loans,
Adjusted PAT 1,616 1,751 1,829 13.1 4.4 mostly from small-ticket loans.
EPS (Rs/share) 2.4 2.4 2.5 2.4 4.4
DCB Bank
Net interest income 2,730 3,009 3,123 14.4 3.8 We expect revenue growth at 14% yoy on the back of 14% yoy NII growth and 17% yoy
Pre-provision profit 1,414 1,853 1,749 23.7 (5.6) loan growth. NIM would be unchanged qoq but there is some easing of pressure (portfolio
Fee income 626 846 738 17.8 (12.7) level) on product segments, which compete with NBFCs. Cost of deposits will be stable qoq.
Treasury income (net) 153 90 143 (6.6) 58.8 Performance in LAP would be the key monitorable given rising NPLs at the sector level.
Loan-loss provisions 299 330 363 21.4 10.0
We expect PAT growth at 27% yoy led by operating leverage. RoE progression for FY2020
Adjusted PAT 695 963 879 26.5 (8.8)
would be the key monitorable as the progress in FY2019 has been impressive.
EPS (Rs/share) 2.2 3.1 2.8 28.6 (7.4)

India Strategy
Change (%)
Equitas Holdings
We expect AUM growth of ~45% yoy led by SME and auto loans. NIM to be unchanged qoq
at 9%. Operating expenses are likely to be flat yoy resulting in an improvement in cost-
income ratio to ~65-68%. The progress on deposits, especially on wholesale and retail term
Pre-provision profit 761 1,263 1,370 80.1 8.5 deposits, would be a key monitorable.
Loan-loss provisions 209 249 350 67.5 40.7 We expect impairment ratios to show further improvement with gross NPLs <3% on the back
Adjusted PAT 354 687 663 87.3 (3.5) of strong loan growth and normalized slippages trends. Progress on listing would be
EPS (Rs/share) 1.0 2.0 1.9 86.6 (3.5) discussed as not much has happened since March 2019.
Federal Bank
We expect loan growth to be slower than past few quarters at ~17% yoy though retail and
SME businesses should see solid traction. NIM would be flat to marginally positive.
Treasury income (net) 190 500 412 116.7 (17.7)
We expect slippages at ~1.5% of loans though we await to see if there is further stress from
Adjusted PAT 2,627 3,815 3,461 31.7 (9.3)
Kerala floods. RoA progression for FY2020 would be a key monitorable.
EPS (Rs/share) 2.7 3.8 3.5 30.9 (9.3)
HDFC
Net interest income 27,367 31,611 30,835 12.7 (2.5) We expect HDFC to deliver 17% retail loan growth; this will drive 15% growth in overall
Pre-provision profit 30,897 40,889 49,335 59.7 20.7 loans.
Adjusted PAT 21,900 28,616 32,772 49.6 14.5 Pressure on retail home loan rates will likely lead to marginal compression in NIM to 2.6%
(2.8% in 4QFY19); high PAT growth will be driven by capital gains of Rs19 bn from stake-
EPS (Rs/share) 13.0 16.6 19.0 46.4 14.5 sale in Gruh Finance.
HDFC Bank
Net interest income 108,136 130,895 129,579 19.8 (1.0)
We expect loan growth to slow down to ~17% yoy resulting in NII growth at ~20% yoy.
Pre-provision profit 86,478 108,436 106,904 23.6 (1.4) Retail loan growth slowdown is on account of weak volume growth in auto and a more
Fee income 31,710 36,921 37,101 17.0 0.5 cautious approach towards unsecured loans. Fee income growth from MFs is expected to be
Treasury income (net) (2,832) 2,289 4,167 NM 82.0 slower yoy due to changes in regulations, while asset and payment fees will grow at a slower
rate.
Loan-loss provisions 16,154 16,224 20,002 23.8 23.3
Adjusted PAT 46,014 58,851 55,140 19.8 (6.3) We expect gross NPL ratio (1.5% of loans), which is a marginal increase on a qoq basis.
EPS (Rs/share) 17.7 21.6 20.2 14.6 (6.3) Growth in credit costs, especially from rural loans, would be a key monitorable.
ICICI Bank
Net interest income 61,019 76,201 72,519 18.8 (4.8) We expect core earnings (base quarter had stake sale gains of ICICI Life) trajectory to remain
Pre-provision profit 58,084 62,334 61,943 6.6 (0.6) strong at ~15% yoy, led by healthy loan growth (~15% yoy) and better NII growth (19%
yoy). NIM will decline qoq by ~10 bps due to lower one-offs.
Fee income 27,540 31,780 31,946 16.0 0.5
Treasury income (net) 7,660 1,560 4,250 (44.5) 172.4 We expect reduction in gross NPLs on the back of write-offs. Credit costs will decline qoq led
Loan-loss provisions 59,713 54,514 46,300 (22.5) (15.1) by lower slippages (~<1.7% of loans, primarily from agriculture). Below investment grade
portfolio would decline qoq and coverage ratio would improve qoq.
Adjusted PAT (1,196) 9,691 13,931 NM 43.8
IIFL Finance
Net interest income 5,144 6,935 5,558 8.1 (19.8) We expect IIFL Finance’s loan growth to be depressed at 2% qoq, due to slowdown in the
real estate business; the loan book will be down 5% yoy due to sell-down of the CV
Adjusted PAT 1,949 2,586 1,013 (48.0) (60.8) business in 4QFY19.
EPS (Rs/share) 6.1 8.1 3.2 (48.0) (60.8) NIM (excluding one-offs) will likely remain stable qoq at 8.3%.
IndusInd Bank
Net interest income 21,224 22,324 27,716 30.6 24.2 We are incorporating the merged financials of BHAFIN for the current quarter and hence, the
Pre-provision profit 18,211 20,677 22,605 24.1 9.3 yoy numbers are not comparable. There would be no immediate benefits of the merger as
Fee income 11,646 14,190 14,397 23.6 1.5 the transaction, though effective from January 1, 2018, was consumated only on July 4,
Treasury income (net) 470 1,400 1,050 123.4 (25.0) 2019.
Loan-loss provisions 2,090 20,040 8,016 283.5 (60.0) We expect the bank to make high provisions for their IL&FS exposure (holding company -
Adjusted PAT 10,357 3,601 9,498 (8.3) 163.8 100% from 70%). We would look at their guidance on credit costs, given the exposures they
EPS (Rs/share) 17.3 6.0 15.8 (8.7) 163.8 have to select companies that are currently under stress.
J&K Bank
Loan growth within J&K will be healthy but we expect overall loan growth slower at ~10%
yoy, NIM unchanged qoq at 3.9%.
Fee income 418 486 452 8.0 (6.9)
Treasury income (net) (345) 2,279 100 NM (95.6)
We expect fresh impairment ratios to decline sharply as IL&FS exposure has been fully
Loan-loss provisions 2,348 4,058 2,840 21.0 (30.0)
reported. Movement of the restructured loan (5% of loans) would be the key monitorable
Adjusted PAT 526 2,148 641 21.8 (70.2)
along with any lumpy slippages due to change in management in the current quarter.
EPS (Rs/share) 0.9 3.9 1.2 21.8 (70.2)
Karur Vysya Bank
We expect earnings growth of ~20% yoy (low base) led by flat provisions but revenue
growth to remain muted. Loan growth will remain sluggish at 4% yoy.
Fee income 1,867 2,239 2,035 9.0 (9.1)
Treasury income (net) (370) 150 264 NM 75.8
We expect slippages to be higher at ~4% of loans as it is mostly coming from the SME
Loan-loss provisions 3,850 2,790 3,767 (2.2) 35.0
exposure, which was guided by the bank in 3QFY19. Guidance on slippage for the rest of
Adjusted PAT 459 600 554 20.7 (7.7)
FY2020 would be a key monitorable.
EPS (Rs/share) 3.8 4.9 4.5 20.7 (7.7)

Strategy India
Change (%)
LIC Housing Finance
We expect loan growth to moderate to 3% qoq (19% yoy) from 7% qoq in 4QFY19 due to
slowdown in non-housing segments.
Loan-loss provisions 1,610 1,052 1,250 (22.3) 18.8
Adjusted PAT 5,686 6,936 6,904 21.4 (0.5) NIMs will likely moderate 10 bps qoq to 2.5% reflecting pressure on yields in its retail
EPS (Rs/share) 11.3 13.7 13.7 21.4 (0.5) business.
Mahindra & Mahindra Financial
Weakness in vehicle sales will lead to muted loan growth (3% qoq, down from 6% qoq in
FY2019).
Loan-loss provisions 2,938 (1,144) 3,500 19.1 NM
Adjusted PAT 2,691 5,879 2,984 10.9 (49.2) Qoq rise in NPLs will likely lead to 15 bps qoq compression in NIM to 7.9% even as falling
EPS (Rs/share) 4.8 10.4 5.3 10.9 (49.2) bond yields and increase in lending rates will support incremental spreads.
Magma Fincorp
We expect loan growth to remain muted at 9% yoy reflecting slowdown in vehicle sales.
Loan-loss provisions 846 413 700 (17.2) 69.6
Rise in borrowing cost since 3QFY19 coupled with declining rates on CV loans will put
Adjusted PAT 681 853 719 5.6 (15.7)
pressure on NIM.
EPS (Rs/share) 2.9 3.6 3.0 5.6 (15.7)
Muthoot Finance
We expect Muthoot Finance to report strong (19% yoy and 8% qoq) growth in loan book on
the back of 4% rise in gold prices.
Loan-loss provisions 26 204 50 92.3 (75.5)
Adjusted PAT 4,916 5,115 5,798 17.9 13.3 NIM will likely remain stable qoq at 14.7%; GNPLs/provisions will likely remain low supported
EPS (Rs/share) 12.3 12.8 14.5 17.9 13.3 by rising gold prices.
PNB Housing Finance
We expect PNBHF to deliver 27% yoy and 3% qoq AUM growth (6% qoq growth in 4QFY19)
due to slowdown in the wholesale segment.
Loan-loss provisions 440 101 600 36.3 493.5
Tax 1,195 1,653 1,521 27.3 (8.0)
Increase in benchmark lending rates will support calculated NIM at 2.6% (2.57% in 4QFY19
Adjusted PAT 1,401 1,748 1,605 14.6 (8.1)
and 2.8% in 1QFY19).
EPS (Rs/share) 11.0 10.5 12.6 14.6 20.1
Punjab National Bank
Net interest income 46,919 42,003 43,734 (6.8) 4.1
We expect losses to be lower on the back of lower provisions. Decline in gross and net NPLs
Pre-provision profit 41,947 28,612 31,066 (25.9) 8.6
will continue (LLP at ~4%, annualized) but there is no major account for either upgradation or
Fee income 10,570 9,525 10,001 (5.4) 5.0
slippage this quarter.
Treasury income (net) (4,860) 1,050 3,612 NM 244.0
Loan-loss provisions 49,580 91,536 45,768 (7.7) (50.0) We expect strong contribution from treasury income given the decline in yields. Revenues not
Adjusted PAT (9,400) (47,496) (12,024) 27.9 (74.7) comparable yoy due to high one-off recovery from one large steel account in the base
EPS (Rs/share) (3.4) (10.3) (2.6) (23.3) (74.7) quarter. We expect loan growth at 8% and ~5 bps NIM expansion qoq.
RBL Bank
We expect solid NII growth (~35% yoy) on the back of healthy loan growth (35% yoy), driven
by robust traction cards and MFI business.
Treasury income (net) 370 205 275 (25.6) 34.4
Loan-loss provisions 1,010 1,570 1,413 39.9 (10.0) We expect high operating expense growth (~35% yoy) due to the cards business. We expect
Adjusted PAT 1,900 2,472 2,502 31.7 1.2 stable trends on asset quality although we would look at the commentary on their corporate
EPS (Rs/share) 5.1 6.6 6.7 31.7 1.2 exposure.
Shriram City Union Finance
Net interest income 9,377 9,380 9,693 3.4 3.3 We expect SCUF to deliver 7% yoy loan growth (7% in 4QFY19) as the overall business
Loan-loss provisions 2,154 1,830 1,850 (14.1) 1.1 environment remains weak.
Adjusted PAT 2,296 2,513 2,641 15.0 5.1
NIM will likely compress 15 bps qoq to reflect higher funding costs in 2HFY19.
EPS (Rs/share) 34.8 38.1 40.1 15.0 5.1
Shriram Transport
We expect STFC’s loan growth to remain muted (6% yoy and 2% qoq, 1% qoq in 4QFY19)
on the back of weak CV volumes.
Adjusted PAT 5,729 7,460 6,583 14.9 (11.8)
Rise in borrowing costs in 2HFY19 will lead to 15 bps qoq NIM compression to 7.2%.
EPS (Rs/share) 25.2 32.9 29.0 14.9 (11.8)
State Bank of India
Net interest income 217,984 229,538 225,207 3.3 (1.9) We expect loan growth at ~12% yoy and NIM unchanged qoq at ~2.9%. Non-interest
Pre-provision profit 119,731 169,331 151,738 26.7 (10.4) income growth will be higher due to higher treasury income and income from written-off
Fee income 49,760 85,890 53,243 7.0 (38.0) loans.
Treasury income (net) (83,620) 21,490 13,750 NM (36.0)
We expect slippages at 1.6% of loans as recognition of large accounts is complete while
gross NPLs could decline led by higher write-offs. Provisions would be high due to ageing of
Adjusted PAT (48,759) 8,384 25,357 NM 202.4
NPLs. RoE recovery would be a key monitorable.
EPS (Rs/share) (5.5) 0.9 2.8 NM 202.4

India Strategy
Change (%)
Ujjivan Financial Services
Net interest income 2,224 2,863 3,249 46.1 13.5 We expect Ujjivan to report strong PAT growth on the back of strong AUM growth (~45%
Loan-loss provisions 151 124 144 (4.9) 15.8 yoy) driven by solid performance in MFI, housing space and SME financing.
Adjusted PAT 451 638 662 46.8 3.7 We expect cost ratios to be high (~75%) as transition to a bank continues. Commentary on
EPS (Rs/share) 3.8 5.3 5.5 46.8 3.7 the path of listing of the bank as well as outlook on MFI loans would be key monitorable.
Union Bank
Pre-provision profit 20,617 17,562 18,015 (12.6) 2.6 We expect NII growth at 1% yoy driven by ~1% yoy loan growth. We expect NIM to be flat
Fee income 7,070 8,670 6,363 (10.0) (26.6) qoq at 2.3%.
Treasury income (net) 1,669 2,140 2,547 52.6 19.0
We expect slippages to fall to ~2.5% of loans but provisions to remain high (ageing of NPLs).
Adjusted PAT 1,295 (33,692) (8,212) (734.0) (75.6)
GNPL and net NPL would decline qoq.
EPS (Rs/share) 1.1 (19.1) (4.7) (520.2) (75.6)
YES Bank
Net interest income 22,191 25,059 22,650 2.1 (9.6) We expect loan growth to decelerate further to ~8% yoy and -4% qoq. Revenue pressure will
Pre-provision profit 24,547 13,234 13,609 (44.6) 2.8 remain high due to weak fee income growth (sharp decline) and NIM pressure (higher funding
Fee income 15,241 5,267 6,743 (55.8) 28.0 costs).
Treasury income (net) 1,700 50 813 (52.2) 1,525.0
Asset quality ratios could further deteriorate (lumpy corporate exposure). Commentary from
Loan-loss provisions 3,799 33,700 21,905 476.6 (35.0) the new MD & CEO would be crucial as there have been a few more 'stress accounts', where
Adjusted PAT 12,604 (15,066) (5,786) (145.9) (61.6) the bank has had exposure. The progress of "below investment grade", deposit profile and
capital consumption would be a key monitorable.
EPS (Rs/share) 5.5 (6.5) (2.5) (145.9) (61.6)
Building products
Astral Poly Technik
Net sales 4,770 7,747 6,107 28.0 (21.2)
EBITDA 779 1,190 1,005 28.9 (15.5) We expect EBITDA margins to improve by ~100 bps qoq to 16.4% on account of higher
EBIT 619 966 780 26.1 (19.3) margins in pipes business.
PBT 618 931 745 20.5 (20.0)
Reported PAT 384 653 505 31.5 (22.8)
Extraordinaries (77.5) 13.7 20.0 NM 46.0
Yoy numbers are not comparable due to accounting of contribution from Rex Polyextrusion,
Adjusted PAT 384 653 505 31.5 (22.8)
which was acquired in July 2018.
EPS (Rs/share) 3.2 5.5 4.2 31.5 (22.8)
Capital Goods
ABB
Net sales 27,127 18,503 18,497 (31.8) (0.0) We expect ~12% yoy growth on like-for-like basis in 2QCY19 led by 12-13% yoy growth
EBITDA 1,959 1,455 1,482 (24.4) 1.8 across all the segments of the continuing business, on the back of robust order book as well
EBIT 1,603 1,222 1,227 (23.5) 0.4 as short-cycle nature of these segments. As most of the industry capex is through brownfield
PBT 1,607 1,387 1,340 (16.6) (3.3) route for efficiency improvement, national elections are unlikely to have affected such growth
Reported PAT 1,021 1,162 1,256 22.9 8.1 materially in 2QCY19.
Extraordinaries — 272 384 — 41.3 We expect a modest 50 bps qoq improvement in Robotics & Motion and Industrial
Adjusted PAT 1,021 1,162 1,256 22.9 8.1 Automation segments as the INR appreciation versus USD would have helped control cost of
EPS (Rs/share) 4.8 5.5 5.9 22.9 8.1 imported components. We model overall EBIT margin to be flat qoq after unallocated
EBITDA margin (%) 7.2 7.9 8.0 78 bps 14 bps expenses.
Ashoka Buildcon
Net sales 6,837 9,972 7,724 13.0 (22.5)
EBITDA 813 1,258 972 19.6 (22.7) In line with the management guidance, we model Rs44 bn of standalone revenues in
FY2020E. We build a modest 13% yoy revenue growth for 1QFY20 and expect the growth to
EBIT 677 1,071 716 5.7 (33.2)
accelerate through the year once the company receives appointed date for the remaining
PBT 871 1,190 778 (10.8) (34.6) HAM projects.
Reported PAT 639 703 529 (17.2) (24.8)
We model 1QFY20 standalone EBITDA margin of 12.6%, similar to the full year assumption,
Adjusted PAT 639 703 529 (17.2) (24.8)
implying a decline of 90 bps yoy for FY2020E. The decline is driven by higher share of HAM
EPS (Rs/share) 2.3 2.5 1.9 (17.2) (24.8)
projects and T&D projects in the revenue mix.
Bharat Electronics
Net sales 21,021 38,846 23,859 13.5 (38.6)
We expect a strong 14% revenue growth in 1QFY20 driven by strong opening order book of
EBITDA 3,105 9,290 4,098 32.0 (55.9)
~Rs520 bn and a historically observed execution pattern of 17% share of annual revenues
EBIT 2,416 8,358 3,106 28.5 (62.8)
typically reported in 1Q.
PBT 2,502 9,526 3,259 30.3 (65.8)
Tax 705 2,840 968 37.3 (65.9)
Reported PAT 1,797 6,686 2,291 27.5 (65.7) We model EBITDA margin of 17% in 1QFY20, much lower than 24% reported in FY2019
which was driven by better product mix and delivery of indigenous products such as VVPAT.
Such mix advantage will be absent in FY2020. Also the start of execution of projects like
Adjusted PAT 1,797 6,686 2,291 27.5 (65.7)
LRSAM will lead to margin impact due to higher import content in the initial stages of
EPS (Rs/share) 0.7 2.7 0.9 27.5 (65.7) execution.

Strategy India
Change (%)
BHEL
Net sales 59,355 102,972 63,592 7.1 (38.2) We expect overall 6% revenue growth in 1QFY20 led by ~5% growth in Power segment and
EBITDA 2,872 13,952 2,862 (0.4) (79.5) a stronger 11% growth in Industry segment. Despite a strong order book in Power segment,
we are cautious on execution pace in FY2020 given flattish topline guidance and likely delays
EBIT 1,111 12,610 1,637 47.3 (87.0)
in starting new projects due to recently concluded elections. Industry sector orders may have,
PBT 2,259 12,854 2,533 12.2 (80.3) however, been executed at a normalized pace as these are short cycle and mostly product-
Reported PAT 1,556 6,827 1,649 6.0 (75.8) supply orders with less dependence on government clearances for execution.
Extraordinaries — — — — — Margin remains a function of execution stage. We expect ~30 bps yoy decline in EBITDA
Adjusted PAT 1,556 6,827 1,649 6.0 (75.8) margin due to higher employee cost as well as likely uptick in RM cost as import content, if
any, is higher in early stages of a project's execution cycle and we note large projects such as
EPS (Rs/share) 0.4 2.0 0.5 6.0 (75.8) Rs35 bn Sagardighi project in West Bengal won in Dec-2018 that may contribute to such
EBITDA margin (%) 4.8 13.5 4.5 -34 bps -905 bps impact as its execution starts.
Carborundum Universal
Net sales 6,343 7,021 6,999 10.3 (0.3) We expect a weak start to the year in abrasives (+8% yoy), as industrial activity (IIP up 3.5%
in April) and weakness in automobile sector point at persistent weakness in manufacturing
EBITDA 1,075 1,193 1,104 2.8 (7.4) activity. Ceramics and EMD segments will likely grow at double digit given their B2B, annual-
EBIT 795 934 808 1.6 (13.5) contract nature of business, closer to ~12% growth that the management has guided for
FY2020 in their bear-case, Rs30 bn topline, scenario. Overall consolidated sales growth is
PBT 881 922 880 (0.1) (4.5) thus expected to be ~10% in 1QFY20, lower than our 13% estimate for FY2020.
Reported PAT 629 619 616 (2.0) (0.5) We model qoq flat EBIT margin in abrasives as the volumes are unlikely to have picked up
materially to support any price hikes. In ceramics, hit by input cost increase in 4QFY19, we
model ~100 bps qoq margin improvement assuming some B2B contracts may have seen
Adjusted PAT 629 619 616 (2.0) (0.5) price reset in this period. For EMD, we model yoy flat margins as the segment has been
running at full capacity and 1QFY19 margins indicate normal operations before the Kerala
EPS (Rs/share) 3.4 3.3 3.3 (2.0) (0.5) floods led to closure of hydel power plant and subsequent margin decline. The hydel power
EBITDA margin (%) 16.9 17.0 15.8 -116 bps -121 bps plant has now been operationalized again.
Cochin Shipyard
Net sales 6,587 7,876 7,848 19.1 (0.4) Based on opening shipbuilding order book of Rs82 bn, we expect revenues of over Rs62 bn
EBITDA 1,152 1,100 1,482 28.6 34.8 in 1QFY20 versus Rs55 bn and Rs66 bn reported in 3QFY19 and 4QFY19, respectively. Ship
EBIT 1,068 1,012 1,373 28.5 35.6 repair is expected to see a yoy dip due to completion of INS Vikramaditya re-fit order. Overall,
PBT 1,612 1,609 1,762 9.3 9.5 we expect a strong 19% revenue growth in 1QFY20.
Reported PAT 1,063 975 1,147 7.9 17.7
Extraordinaries — — — — — We expect EBITDA margin of 19% for the quarter, in line with that reported in FY2019 and
stable margin guided for FY2020. However, we note the risk of quarterly volatility in margin
Adjusted PAT 1,063 975 1,147 7.9 17.7
due to execution stage of specific projects even though final annual numbers may come out
EPS (Rs/share) 8.1 7.4 8.7 7.9 17.7 as per the guidance.
Cummins India
Net sales 13,280 13,404 14,118 6.3 5.3
EBITDA 2,147 1,718 2,172 1.2 26.4 In line with the management guidance, we model ~13% growth in domestic revenues, and
EBIT 1,876 1,438 2,172 15.8 51.0 flat exports on yoy basis in 1QFY20.
PBT 2,536 2,085 2,732 7.7 31.0
Reported PAT 1,830 1,409 1,940 6.0 37.6
We build-in 70-80 bps yoy decline in margin as the company is struggling with pricing power
Adjusted PAT 1,830 1,409 1,940 6.0 37.6
as well as negative impact of operating leverage amid weak volume growth.
EPS (Rs/share) 6.6 5.1 7.0 6.0 37.6
Dilip Buildcon
Net sales 24,363 25,710 18,967 (22.1) (26.2)
EBITDA 4,326 4,495 3,328 (23.1) (26.0) We expect a substantial 22% yoy decline in revenues on the back of limited executable order
backlog and high yoy base. Segments beyond Roads and Bridges segments will form ~19%
EBIT 3,572 3,625 2,451 (31.4) (32.4)
share of revenues Newly won long-term mining contracts will start reflecting in financials from
PBT 2,453 2,388 1,109 (54.8) (53.5) 2QFY20 onwards.
Reported PAT 2,549 2,199 993 (61.0) (54.8)
Extraordinaries — 43 105 — 147.2
Adjusted PAT 2,549 2,157 888 (65.2) (58.8) We model 17.5% EBITDA margin for the quarter, accounting for weakness in execution
EPS (Rs/share) 18.6 15.8 6.5 (65.2) (58.8) versus 18% assumption for the full year.
IRB Infrastructure
Net sales 15,380 19,483 19,754 28.4 1.4
We expect a 43% growth in construction revenues in 1QFY20 on a low base of 1QFY19 (2-
EBITDA 7,467 7,601 7,973 6.8 4.9
year CAGR 5%), supported by start of newly won HAM projects. In BOT, we expect 2%
EBIT 6,123 6,244 6,607 7.9 5.8
revenue growth based on weak sequential trends.
PBT 4,098 3,612 3,710 (9.4) 2.7
Reported PAT 2,304 1,881 2,115 (8.2) 12.4
Extraordinaries (197) (199) — — — We model 1QFY20 margin of 22% in construction segment (20% for the full year versus 23%
yoy) and 87% in BOT segment. We highlight here that construction segment margin varies
Adjusted PAT 2,501 2,080 2,115 (15.4) 1.7
from quarter to quarter depending on execution stage and job mix. Increasing relevance of
EPS (Rs/share) 7.1 5.9 6.0 (15.4) 1.7 HAM projects would be key overhang on construction segment margin.

India Strategy
Change (%)
Kalpataru Power Transmission
Net sales 13,249 24,914 15,244 15.1 (38.8)
While elections may have delayed ordering activity in 1QFY20, we estimate that standalone
EBITDA 1,571 2,664 1,756 11.8 (34.1)
opening order book of Rs140 bn, up 13% yoy, will suffice to report a similar ~15% yoy
EBIT 1,377 2,427 1,519 10.3 (37.4)
revenue growth in the quarter.
PBT 1,245 2,185 1,325 6.4 (39.4)
Reported PAT 810 1,369 862 6.3 (37.0)
Extraordinaries — — — — — Higher RM cost and employee cost on yoy basis is expected to cause ~40 bps yoy decline in
Adjusted PAT 810 1,369 862 6.3 (37.0) EBITDA margin to 11.5%, which in turn will lead to a lower 6% yoy growth in profit in our
EPS (Rs/share) 5.3 8.9 5.6 6.3 (37.0) view.
KEC International
Net sales 21,043 42,663 24,827 18.0 (41.8)
EBITDA 2,163 4,490 2,557 18.2 (43.0) We expect a strong 18% yoy consolidated revenue growth in 1QFY20 on high base, driven
EBIT 1,865 4,154 2,252 20.8 (45.8) by start of execution of large order wins in Brazil and deferment of revenues from 4QFY19.
PBT 1,327 3,436 1,548 16.6 (55.0)
Reported PAT 868 2,188 1,007 15.9 (54.0)
Extraordinaries 15 (45) — — — We expect a steady EBITDA margin of 10.3% in the quarter, flat yoy. Working capital will be
Adjusted PAT 853 2,233 1,007 18.0 (54.9) the key variable to monitor for pending payments from Saudi Arabia and support from
EPS (Rs/share) 3.3 8.7 3.9 18.0 (54.9) customer advances on the large order book.
L&T
Net sales 282,835 449,340 311,234 10.0 (30.7)
We expect 10% growth in core EPC execution in 1QFY20 driven by (1) Infrastructure segment
EBITDA 29,133 55,991 35,057 20.3 (37.4)
(11%), (2) defense engineering, and (3) heavy engineering. Power, E&A and others segments
EBIT 22,684 51,244 30,080 32.6 (41.3)
would drag down revenue growth.
PBT 21,477 52,386 29,798 38.7 (43.1)
Reported PAT 12,148 34,182 17,161 41.3 (49.8) We expect core E&C business to report EBITDA margin of 9.5%, not comparable yoy due to
Extraordinaries — — — — — large write-off taken in a select real-estate project in 1QFY19. Among individual segments,
Adjusted PAT 12,148 34,182 17,161 41.3 (49.8) margin remains a function of job mix and execution stage. We nonetheless expect the key
EPS (Rs/share) 8.7 24.4 12.2 41.3 (49.8) Infrastructure segment to report improved margin of 70 bps on a yoy basis to 7.5%. We also
EBITDA margin (%) 10.3 12.5 11.3 96 bps -120 bps expect hydrocarbon segment margin to improve by a similar 80 bps to 7.8%.
Siemens
Net sales 30,730 35,496 34,896 13.6 (1.7)
EBITDA 3,023 4,100 3,901 29.0 (4.9) Even though Siemens may exhaust some of the large orders won last year, base order inflow
remains robust. We thus model a healthy 11% revenue growth in 2QFY19 for Siemens. The
EBIT 2,523 3,529 3,342 32.5 (5.3)
growth will be driven by energy management, Digital Factory and process industries and
PBT 3,211 4,335 4,076 26.9 (6.0) drives segments.
Tax 1,167 1,532 1,423 21.9 (7.1)
Reported PAT 2,044 2,803 2,654 29.8 (5.3)
Extraordinaries — — — — — We expect EBITDA margin of 11% for the quarter, flat qoq, led by margin improvement in the
Adjusted PAT 2,044 2,803 2,654 29.8 (5.3) Building Technologies segment. We expect normalization in margin for both mobility and
EPS (Rs/share) 5.7 7.9 7.5 29.8 (5.3) process industries and drives segments.
Sadbhav Engineering
Net sales 9,114 10,217 8,084 (11.3) (20.9)
We expect 11% yoy decline in revenues in 1QFY20 on account of limited executable starting
EBITDA 1,070 1,268 984 (8.0) (22.3)
order backlog. Our FY2020E revenue estimate of Rs37 bn is lower than the management
EBIT 830 1,036 744 (10.4) (28.2)
guidance of Rs38-39 bn
PBT 681 809 621 (8.8) (23.2)
Reported PAT 634 289 440 (30.6) 52.4
Extraordinaries — 8 — — —
We expect sequentially flat EBITDA margin of 12% in the quarter. Key monitorable would be
Adjusted PAT 634 281 440 (30.6) 56.5
the extent of debt reduction on account of normalization in working capital levels.
EPS (Rs/share) 3.7 1.6 2.6 (30.6) 56.5
Thermax
Net sales 10,353 20,737 12,373 19.5 (40.3) We expect ~20% yoy consolidated revenue growth in 1QFY20 driven by 22% growth in
EBITDA 693 1,708 943 36.1 (44.8) energy segment on back of continuation of good growth momentum as seen in 4QFY19. The
EBIT 484 1,461 698 44.3 (52.2) quarter would less reflective of full year revenue growth, which we expect to be modest at
PBT 761 1,946 1,068 40.4 (45.1) 10% yoy. We expect a strong growth of 20%+ yoy in chemical segment due to ramp-up in
Tax 274 653 374 36.4 (42.7) capacity utilization quarter after quarter.
Reported PAT 490 1,269 693 41.6 (45.4)

Extraordinaries — (20) — — — Quarterly segmental margin in Thermax have shown a lot of volatility in the past. We model
segmental margins in line with reported numbers for full year FY2019, implying a yoy margin
Adjusted PAT 490 1,289 693 41.6 (46.2)
improvement across all segments. We thus arrive at 1QFY20 EBITDA margin of 8.8% versus
EPS (Rs/share) 4.3 11.5 6.2 41.6 (46.2) 8.4% reported in FY2019 and 7.3% reported in 1QFY19.

Strategy India
Change (%)
Commercial & Professional Services
SIS
Net sales 16,114 19,549 20,486 27.1 4.8
EBITDA 745 1,148 1,184 59.0 3.2 We expect healthy 27% yoy revenue growth, aided by healthy growth in India security and FM
EBIT 612 957 1,014 65.7 6.0 segments as well as inorganic contribution from Uniq and Henderson.
PBT 501 629 758 51.2 20.5
Reported PAT 395 724 672 70.2 (7.1)
Normalization of margins in the India security business to 6.3% (+140 bps yoy) is the key
Adjusted PAT 395 724 672 70.2 (7.1)
driver of the sharp 59% growth in EBITDA.
EPS (Rs/share) 5.4 9.9 9.2 70.2 (7.1)
Teamlease Services
Net sales 10,213 11,634 12,521 22.6 7.6
EBITDA 202 257 317 57.1 23.2 We expect sequential associate employee headcount addition of 5,000 (higher than 4Q on
EBIT 175 232 289 65.0 24.3 account of seasonality) and steady commissions.
PBT 217 270 329 51.8 21.8
Reported PAT 219 262 329 50.0 25.4
We expect contribution from Ecentric, margin improvement in specialized staffing and HR
Adjusted PAT 219 262 329 50.0 25.4
services segments to drive overall EBITDA growth of 57% yoy.
EPS (Rs/share) 13 15 19 50.0 25.4
Commodity Chemicals
Asian Paints
Net sales 43,903 50,182 48,722 11.0 (2.9)
EBITDA 8,744 8,230 8,928 2.1 8.5 We model 11% yoy growth in domestic sales led by 8% volume growth and 3% price/mix-
EBIT 7,839 6,929 7,598 (3.1) 9.7 led growth.
PBT 8,368 7,344 8,168 (2.4) 11.2
Reported PAT 5,580 4,731 5,388 (3.4) 13.9
Extraordinaries — — — — — We expect 160 bps yoy decline in EBITDA margin led by 70 bps drop in GM, higher SG&A
Adjusted PAT 5,580 4,731 5,388 (3.4) 13.9 and other expenses pertaining to recently commissioned Vizag and Mysuru facilities. We
EPS (Rs/share) 5.8 4.9 5.6 (3.4) 13.9 expect healthy sequential improvement in EBITDA margin aided by favorable RM trends.
Tata Chemicals
Net sales 27,444 27,594 30,189 10.0 9.4
EBITDA 4,910 5,309 5,856 19.3 10.3 We expect 10% yoy growth in revenues driven by higher soda ash volumes and increase in
EBIT 3,559 3,804 4,275 20.1 12.4 consumer business revenues.
PBT 3,735 3,811 4,240 13.5 11.2
Reported PAT 2,140 3,108 2,674 25.0 (14.0)
We expect EBITDA margin to remain healthy at 19.4% led by higher realizations on soda ash
Adjusted PAT 2,140 3,108 2,674 25.0 (14.0)
in the current calendar year.
EPS (Rs/share) 8 12 10 24.5 (14.0)
ACC
Net sales 38,483 39,191 39,371 2.3 0.5
EBITDA 6,677 5,309 6,824 2.2 28.5 We factor a 2% yoy decline in volumes to 7.1 mn tons (-6% qoq). We estimate realizations
EBIT 5,195 3,842 5,327 2.5 38.6 to increase by 6.2% qoq to to Rs5,550/ton (+6% yoy) led by 8-16% qoq increase in cement
PBT 5,236 5,159 5,434 3.8 5.3 prices in the company's key markets in South, Central and East regions. We factor a lower
Reported PAT 3,255 4,379 3,641 11.8 (16.9) blended realization on account of higher non-trade sales.
Extraordinaries (438) 995 — — —
Adjusted PAT 3,693 3,384 3,641 (1.4) 7.6
We estimate EBITDA/ton to increase by 4% yoy to Rs962/ton (+36% qoq) aided by higher
EPS (Rs/share) 19.6 18.0 19.4 (1.4) 7.6
realizations that offset marginal increase in costs due to lower volumes during the quarter.
Ambuja Cements
Net sales 30,169 29,276 31,237 3.5 6.7
We expect volume decline of 1% yoy to 6.3 mn tons (-1% qoq). ACEM's key markets are in
EBITDA 6,223 4,633 6,563 5.5 41.7
North, Central and West regions where prices increased by 10-16% qoq in 1QFY20—we
EBIT 4,859 3,319 5,213 7.3 57.1
estimate 8% qoq increase in realization to Rs4,950/ton (+5% yoy).
PBT 6,578 5,546 6,447 (2.0) 16.3
Reported PAT 4,993 4,270 4,964 (0.6) 16.3
Extraordinaries — — — — — We estimate EBITDA/ton to increase 43% qoq to Rs1,041 (+7% yoy) led by higher realization
that offset the increase in costs due lower volumes and increased costs of raw materials
Adjusted PAT 4,993 4,270 4,964 (0.6) 16.3
during the quarter. The sequential increase in profitability for ACEM will be higher compared
EPS (Rs/share) 3.3 2.2 2.5 (23.2) 16.3 to peers due to its low presence in South markets.

India Strategy
Change (%)
Dalmia Bharat
Net sales 23,680 27,983 24,682 4.2 (11.8)
EBITDA 5,250 6,193 5,845 11.3 (5.6) We expect volumes to remain flat to negative yoy at around 4.5 mn tons (-19% qoq). We
estimate realizations to increase by 9% qoq to Rs5,480/ton (+4% yoy) led by sharp
EBIT 2,200 2,633 2,285 3.9 (13.2)
increases in prices in South and East markets. Volume growth was absent on account of low
PBT 1,010 2,203 1,845 82.6 (16.3) demand due to unavailability of labor and general elections during the quarter.
Reported PAT 540 2,280 2,214 309.9 (2.9)
Adjusted PAT 540 2,280 2,214 309.9 (2.9) We estimate EBITDA/ton to increase 17% qoq to Rs1,300/ton (+11% yoy) led by higher
EPS (Rs/share) 2.8 11.9 11.5 309.9 (2.9) realizations, which offset higher other costs on account of low volumes.
Grasim Industries
Net sales 47,892 53,523 50,890 6.3 (4.9)
EBITDA 10,542 8,986 8,474 (19.6) (5.7) We model volumes to increase (1) in chemicals operations by 9% yoy to 255,000 tons (-2%
EBIT 8,714 7,011 6,499 (25.4) (7.3) qoq), and (2) in VSF operations by 5% yoy to 149,000 tons (flat qoq).
PBT 9,343 7,557 7,249 (22.4) (4.1)
Reported PAT 6,426 4,512 4,857 (24.4) 7.6
Extraordinaries — (551) — — — We expect sequential decline in operating margins due to lower VSF prices. We estimate (1)
Adjusted PAT 6,426 5,063 4,857 (24.4) (4.1) VSF EBITDA of Rs3.7 bn (-10% qoq, -37% yoy), and (2) chemicals EBITDA of Rs4.2 bn (-2%
EPS (Rs/share) 9.8 7.7 7.4 (24.4) (4.1) qoq, -14% yoy) due to lower realizations and higher costs.
India Cements
Net sales 13,607 15,478 15,149 11.3 (2.1)
We expect a decline of 1% yoy in volumes to 3 mn tons (-8% qoq). We estimate blended
EBITDA 1,561 1,945 2,437 56.1 25.3
realizations to increase by 6% qoq to Rs4,980/ton (+12% yoy) due to stability in pricing
EBIT 945 1,297 1,789 89.4 37.9
during 1QFY20 post a sharp rise in 4QFY19 in South markets.
PBT 267 645 1,040 289.6 61.3
Reported PAT 210 438 744 253.9 69.7
Extraordinaries — (23) — — — We expect EBITDA/ton to increase by 36% qoq to Rs800/ton (+58% yoy) led by (1) higher
Adjusted PAT 210 461 744 253.9 61.3 realizations, and (2) lower fuel costs aided by decline in pet-coke prices that offset higher
EPS (Rs/share) 0.7 1.5 2.4 253.9 61.3 other costs due to lower volumes.
J K Cement
Net sales 11,314 14,919 12,382 9.4 (17.0)
EBITDA 1,661 2,795 2,582 55.4 (7.6) We expect (1) total cement volumes to decline by 3% yoy to 2.2 mn tons (-23% qoq) on a
high base (+15% growth in 4QFY18), and (2) realizations to increase by 8% qoq led by
EBIT 1,187 2,298 2,085 75.6 (9.3)
higher prices in North markets (prices increased by 16% qoq in the North and 8% in the
PBT 798 2,326 1,824 128.6 (21.6) South).
Reported PAT 651 1,712 1,339 105.6 (21.8)
We expect EBITDA/ton to increase to Rs1,160/ton (from Rs970/ton in 4QFY19) aided by
Adjusted PAT 493 1,500 1,184 140.0 (21.1)
higher realizations. Cost (per ton basis) will also be marginally higher due to lack of operating
EPS (Rs/share) 7.1 21.4 16.9 140.0 (21.1)
leverage gains given lower 1Q volumes.
JK Lakshmi Cement
Net sales 9,234 11,725 9,801 6.1 (16.4)
We expect (1) cement volumes to decline by 2% yoy to 2.3 mn tons (-24% qoq) on a high
EBITDA 939 1,312 1,460 55.6 11.3
base (+28% growth in 4QFY18), and (2) realizations to increase by 9.5% qoq led by higher
EBIT 493 866 1,010 104.8 16.6
prices in North markets (prices increased by 16% qoq in the North).
PBT 152 574 692 356.2 20.6
Reported PAT 138 433 522 279.2 20.6
Extraordinaries — — — — — We estimate EBITDA/ton to increase by 46% qoq to Rs650/ton (+52% yoy) led by higher
Adjusted PAT 138 433 522 279.2 20.6 realizations, We expect costs to be higher on account of lower volumes due to cyclones in
EPS (Rs/share) 1.2 3.7 4.4 279.2 20.6 Orissa and higher start-up costs of stabilizing operations in the affected markets.
Orient Cement
Net sales 6,399 7,508 6,878 7.5 (8.4) We expect cement volumes to decline by 2% yoy to 1.6 mn tons (-14% qoq) on the back of
EBITDA 854 1,530 1,539 80.1 0.6 lack of labor, low availability of water and general elections in the state. We estimate
EBIT 530 1,200 1,209 128.1 0.7 blended realizations to increase by 6% qoq led by price increase in the company's key
PBT 269 938 947 251.5 1.0 markets in West, South by 8-12% qoq. We expect actual blended realizations to be lower as
Reported PAT 160 620 626 290.7 1.0 non-trade sales were higher during the quarter.
We expect EBITDA/ton to increase to Rs980/ton (from Rs837/ton in 4QFY19) aided by (1)
Adjusted PAT 160 620 626 290.7 1.0
higher realizations and (2) stable energy, other costs. Cost (per ton basis) will also be
EPS (Rs/share) 0.8 3.0 3.1 290.7 1.0
marginally higher due to lack of operating leverage gains given lower 1Q volumes.

Strategy India
Change (%)
Shree Cement
Net sales 30,699 32,849 34,204 11.4 4.1
EBITDA 5,752 8,478 10,003 73.9 18.0 We expect volumes to remain flat yoy at 6.9 mn tons (-4% qoq) on poor volumes suggested
by DIPP data. We expect blended realizations to increase by 8.5% qoq to Rs4,900/ton
EBIT 2,697 4,273 5,587 107.2 30.8
(+11% yoy) led by 10-16% price increase in North, Central and East regions. We assume a
PBT 3,071 4,026 5,503 79.2 36.7 lower rate of increase on the assumption of higher non-trade sales.
Reported PAT 2,795 3,210 4,387 57.0 36.7
We estimate EBITDA/ton (blended) to increase 23% qoq to Rs1,432/ton (+74% yoy) aided by
Adjusted PAT 2,795 3,209 4,387 57.0 36.7
higher realization and lower fuel cost. We expect marginally higher costs with stable variable
EPS (Rs/share) 80.2 92.1 125.9 57.0 36.7
costs and higher fixed costs due to weak volumes.
UltraTech Cement
Net sales 86,550 105,003 99,126 14.5 (5.6)
EBITDA 16,238 22,133 24,351 50.0 10.0 We expect volumes to increase by 2% yoy to 17.9 mn tons (-12% qoq) as suggested by
DIPP data for the months of April and May and its underutilized capacity. We expect blended
EBIT 11,378 17,140 19,358 70.1 12.9
realizations to increase by 7.5% qoq to Rs5,550/ton (+12% yoy) led by 11% price increase
PBT 8,753 14,829 16,823 92.2 13.5 pan India. We assume a lower rate of increase on the assumption of higher non-trade sales.
Reported PAT 5,984 10,175 11,543 92.9 13.5
We estimate EBITDA/ton to increase by 25% qoq to Rs1,360 (+47% yoy) led by higher
Adjusted PAT 5,984 10,175 11,543 92.9 13.5
realization. We expect marginally higher costs with stable variable costs and higher fixed
EPS (Rs/share) 21.8 37.1 42.0 92.9 13.5
costs due to weak volumes.
Consumer Durables & Apparel

Crompton Greaves Consumer
Net sales 12,039 12,069 13,373 11.1 10.8 We expect revenues to grow by 11% yoy, led by (1) 15% yoy growth in lighting segment due
EBITDA 1,673 1,671 1,918 14.7 14.8 to low base (revenues up 4% yoy in 1QFY19) and strong EESL order-book and (2) 10% yoy
EBIT 1,642 1,638 1,884 14.8 15.0 revenue growth in electrical consumer durables segment driven by strong growth in the fans
PBT 1,578 1,664 1,894 20.0 13.8 segment.
Reported PAT 1,043 1,405 1,269 21.7 (9.7)
Extraordinaries — — — — — We expect EBITDA margin to improve by 50 bps qoq (up 40 bps yoy) due to operating
leverage benefits and higher revenue mix of high-margin ECD segment (due to seasonality).
Adjusted PAT 1,043 1,405 1,269 21.7 (9.7)
We build in segmental EBIT margin of 10% in lighting segment (11.5% in 4QFY19 and 6.7%
EPS (Rs/share) 1.7 2.2 2.0 21.7 (9.7) in 1QFY19) and 19.5% in ECD segment (flat yoy and qoq).
Havells India
Net sales 25,963 27,519 29,048 11.9 5.6 We expect 12% yoy revenue growth, led by (1) 13-15% yoy growth in Lloyds business and
EBITDA 3,123 3,229 3,624 16.1 12.3 ECD segment due to strong summer season, (2) 16% yoy growth in lighting segment
primarily due to low base (revenues down 1% yoy in 1QFY19) even though demand in
EBIT 2,772 2,838 3,214 15.9 13.3
professional lighting segment will likely be subdued and (3) 8-9% yoy growth in cables and
PBT 3,039 3,086 3,499 15.1 13.4 wires and switchgear segments; demand for cables will likely be soft due to slowdown in
Reported PAT 2,104 2,068 2,344 11.4 13.3 government ordering ahead of elections.
We expect EBITDA margin to improve by 70 bps qoq (up 40 bps yoy) due to benefit of
Adjusted PAT 2,104 2,068 2,344 11.4 13.3 decline in commodity prices in cables and wires segment (expect segmental contribution
EPS (Rs/share) 3.4 3.3 3.8 11.4 13.3 margin of 18%; up 100 bps and 50 bps qoq) and seasonal uptick in margins in AC business
and ECD segment (due to higher share of fans).
Page Industries
Net sales 8,153 6,079 8,962 9.9 47.4
EBITDA 1,893 1,197 1,938 2.4 62.0 We expect 7% volume growth on the back of a weak base and some improvement in
EBIT 1,820 1,117 1,853 1.8 66.0 execution.
PBT 1,852 1,163 1,896 2.4 63.1
Reported PAT 1,244 750 1,270 2.1 69.4
Extraordinaries — — — — — Higher incentives could weigh on gross margins this quarter (we bake in a 120 bps yoy
Adjusted PAT 1,244 750 1,270 2.1 69.4 decline). The typical operating leverage benefit, which Page enjoys, will be offset by subdued
EPS (Rs/share) 111.6 67.2 113.9 2.1 69.4 topline growth and GM pressure, driving a 160 bps EBITDA margin contraction.
TCNS Clothing Co.
Net sales 2,366 2,907 2,721 15.0 (6.4)
EBITDA 292 400 337 15.6 (15.6) We expect 15% yoy revenue growth, driven by 3-4% SSSG, store expansion and higher
EBIT 241 336 273 13.1 (19.0) contribution from online sales. Low SSSG will drive yoy flattish margin performance.
PBT 259 350 291 12.6 (16.7)
Reported PAT 205 327 189 (7.4) (42.1)
Normalization to full tax rate will drive yoy net profit decline. Our estimates do not factor in
Adjusted PAT 205 327 189 (7.4) (42.1)
the impact of Ind-AS 116.
EPS (Rs/share) 3.2 5.1 3.0 (7.9) (42.1)

India Strategy
Change (%)
Vardhman Textiles
Net sales 17,000 17,634 18,700 10.0 6.0
EBITDA 2,922 2,635 2,649 (9.3) 0.6
We expect 10% yoy growth in revenues amid increased offtake and higher realizations.
EBIT 2,303 1,963 1,979 (14.0) 0.8
PBT 2,238 2,173 2,029 (9.3) (6.6)
Reported PAT 1,591 1,794 1,349 (15.2) (24.8)
We expect EBITDA margin to moderate ~80 bps qoq led by lower yarn-cotton spreads amid
Adjusted PAT 1,591 1,374 1,349 (15.2) (1.8)
rising cotton prices.
EPS (Rs/share) 28.2 24.3 23.9 (15.2) (1.8)
Voltas
Net sales 21,344 20,516 24,445 14.5 19.1
We expect revenues to grow by 15% yoy in 1QFY20 led by (1) 20% yoy growth in UCP
EBITDA 2,295 1,331 2,628 14.5 97.4
segment due to strong demand in summer season this year and (2) 8% yoy growth in EMP
EBIT 2,236 1,272 2,568 14.9 101.9
segment (projects business).
PBT 2,627 1,849 3,118 18.7 68.6
Reported PAT 1,839 1,396 1,995 8.5 42.9 For UCP segment, we expect EBIT margin to improve by 150 bps yoy to 14% led by strong
Extraordinaries — — — — — revenue growth. For EMP segment, we build in 7% EBIT margin, down 320 bps yoy due to
Adjusted PAT 1,839 1,396 1,995 8.5 42.9 exceptionally high margin last year due to execution of more profitable projects and benefit
EPS (Rs/share) 5.6 4.2 6.0 8.5 42.9 of rupee depreciation on overseas order execution. We build in loss of Rs225 mn from Voltas-
EBITDA margin (%) 10.8 6.5 10.8 -1 bps 426 bps Beko JV in our quarterly estimates.
Whirlpool
Net sales 16,511 13,552 19,153 16.0 41.3
EBITDA 2,440 1,714 2,902 18.9 69.3 We expect revenues to increase by 16% yoy due to strong growth in refrigerators in this
quarter led by strong summer season this year. As per our checks, industry growth is also
EBIT 2,168 1,394 2,577 18.9 84.8
driven by volume growth as well as upgrades to high-end models (frost-free, two doors, etc.)
PBT 2,507 1,614 2,857 14.0 77.0 leading to higher ASPs.
Reported PAT 1,638 1,041 1,914 16.9 83.9
Adjusted PAT 1,638 1,041 1,914 16.9 83.9 We expect EBITDA margin to improve by 40 bps yoy (+250 bps qoq) due to a better product
EPS (Rs/share) 12.9 8.2 15.1 16.9 83.9 mix and some benefit of commodity prices (particularly copper prices).
Consumer Staples
Bajaj Consumer Care
Net sales 2,214 2,457 2,432 9.8 (1.0)
EBITDA 691 777 756 9.4 (2.6)
We expect 5.5% yoy growth in volumes and 4% yoy improvement in realizations for ADHO.
EBIT 676 760 739 9.2 (2.8)
PBT 685 773 754 9.9 (2.5)
Reported PAT 538 606 590 9.7 (2.7)
Extraordinaries — — — — — Easing of RM prices, smart RM procurement at dips and modest rupee appreciation would aid
GM. We model 40 bps yoy expansion in GM. We expect cost savings on shelving of
Adjusted PAT 538 606 590 9.7 (2.7)
diversification initiatives and non-core portfolio in view of recent change in strategy. Expect
EPS (Rs/share) 3.6 4.1 4.0 9.7 (2.7) EBITDA margin to remain broadly flat.
Britannia Industries
Net sales 25,438 27,990 27,963 9.9 (0.1)
EBITDA 3,894 4,366 4,323 11.0 (1.0) Our standalone operating revenue estimate (+10% yoy) bakes in (1) 6% volume growth in
EBIT 3,537 3,897 3,868 9.3 (0.7) the biscuits segment and (2) 4% increase in realizations (price/mix).
PBT 3,933 4,502 4,336 10.2 (3.7)
Reported PAT 2,582 2,972 2,848 10.3 (4.2)
Extraordinaries — — — — — Optical impact of change in bread production model from 3P to 2P to continue—expect
Adjusted PAT 2,582 2,972 2,848 10.3 (4.2) consolidated gross margin expansion of 205 bps yoy. However, a corresponding increase in
EPS (Rs/share) 10.7 12.4 11.9 10.3 (4.2) other expenses should limit EBITDA margin expansion to 15 bps yoy.
Colgate-Palmolive (India)
Net sales 10,413 11,538 11,038 6.0 (4.3)
EBITDA 2,816 3,104 3,006 6.8 (3.2) We bake in volume growth of 4% and realization increase of 2%. CLGT is continuing with
EBIT 2,422 2,711 2,606 7.6 (3.9) heavy discounting on multi-packs in select channels.
PBT 2,514 2,805 2,691 7.1 (4.1)
Reported PAT 1,895 1,976 1,760 (7.1) (10.9)
Extraordinaries 229 161 — — —
With gross margins likely to stay broadly flat, we expect EBITDA margin expansion of 20 bps
Adjusted PAT 1,666 1,815 1,760 5.6 (3.1)
yoy.
EPS (Rs/share) 6.1 6.7 6.5 5.6 (3.1)

Strategy India
Change (%)
Dabur India
Net sales 20,807 21,282 22,471 8.0 5.6
We model around 8% yoy growth in domestic revenues, a combination of 5.5% volume
EBITDA 3,861 4,572 4,155 7.6 (9.1) growth and 2.5% realization improvement. We expect continued weakness in a few
EBIT 3,434 4,110 3,685 7.3 (10.3) categories, especially in juices perhaps due to some shift in on-the-go consumption to dairy-
PBT 4,022 4,647 4,324 7.5 (6.9) based beverages. We expect hair oils and oral care categories to do well. International
Reported PAT 3,292 3,704 3,501 6.4 (5.5) business revenue growth would be modest 5-6% in c/c terms partly due to continued
weakness in the GCC region.
Extraordinaries — (2) — — —
Adjusted PAT 3,292 3,702 3,501 6.4 (5.4)
We expect consolidated EBITDA margin to be broadly flat despite subdued sales growth on
EPS (Rs/share) 1.9 2.1 2.0 6.4 (5.4)
account of benign RM environment and better mix (lower contribution of foods).
GlaxoSmithKline Consumer
Net sales 11,071 12,861 11,873 7.2 (7.7)
We model 6% yoy growth in domestic revenues on a strong base led by 4% growth in
EBITDA 2,303 3,185 2,561 11.2 (19.6)
volumes and 2% improvement in realization. We model 20% revenue growth in exports led
EBIT 2,156 3,036 2,396 11.1 (21.1)
by sales to a new market (Malaysia; not yet in the base).
PBT 3,119 4,263 3,454 10.8 (19.0)
Reported PAT 2,004 2,858 2,245 12.0 (21.4)
We estimate 76 bps yoy expansion in EBITDA margin driven by GM expansion and operating
Adjusted PAT 2,004 2,858 2,245 12.0 (21.4)
leverage benefits.
EPS (Rs/share) 47.7 68.0 53.4 12.0 (21.4)
Godrej Consumer Products
Net sales 24,760 24,526 24,353 (1.6) (0.7) We model 4% yoy growth in domestic revenues led by (1) flat revenues in HI, (2) 3% growth
EBITDA 4,442 5,779 4,477 0.8 (22.5) in soaps segment (partly muted due to price reduction) and (3) 7% growth in hair colors. We
EBIT 4,020 5,353 4,037 0.4 (24.6) expect International business revenues to decline 8% yoy due to divestment of UK business;
PBT 3,853 5,070 3,862 0.2 (23.8) adjusted for the same, we model 4% growth led by Indonesia and modest recovery in Africa
Reported PAT 4,050 9,352 3,003 (25.8) (67.9) and US.
Extraordinaries 1,075 5,393 — — —

We forecast 50 bps yoy improvement in consolidated EBITDA margin led by 70 bps
Adjusted PAT 2,975 3,959 3,003 1.0 (24.1)
expansion in standalone (domestic) EBITDA margin (on account of GM tailwinds and tight
EPS (Rs/share) 2.9 3.9 2.9 1.0 (24.1)
leash on costs).
Hindustan Unilever
Net sales 94,870 99,450 103,330 8.9 3.9
We model 9% revenue growth in domestic FMCG business, led by 6% UVG and 3% price-
EBITDA 22,510 23,210 25,039 11.2 7.9
led growth. On a segmental basis, we bake in 11.5% yoy revenue growth for home care and
EBIT 21,240 21,870 23,689 11.5 8.3
7% yoy growth for personal care.
PBT 22,520 22,980 25,172 11.8 9.5
Reported PAT 15,290 15,380 17,368 13.6 12.9 Not building impact of Ind-AS 116, we expect EBITDA margin to expand 50 bps yoy aided by
Extraordinaries (380) (520) — — — operating cost efficiencies (including A&SP spends); expect gross margin to move up
Adjusted PAT 15,670 15,900 17,368 10.8 9.2 marginally (+20 bps yoy). Ind-AS 116 adoption will reflect in EBITDA uplift of Rs1 bn and a
EPS (Rs/share) 7.2 7.3 8.0 10.8 9.2 corresponding higher D&A and interest expenses; negligible impact at the PBT and PAT level.
EBITDA margin (%) 23.7 23.3 24.2 50 bps 89 bps Our estimates do not bake in this impact.
ITC
Net sales 107,070 119,921 121,475 13.5 1.3
EBITDA 42,021 45,717 47,407 12.8 3.7 We model 5.5% yoy increase in cigarette volumes and 3% increase in realization (portfolio-
EBIT 39,034 42,215 43,757 12.1 3.7 level). We forecast 11% yoy growth in cigarette EBIT.
PBT 42,999 48,834 48,190 12.1 (1.3)
Reported PAT 28,187 34,819 31,806 12.8 (8.7)
Extraordinaries — 465 — — — We model 9%, 15% and 10% yoy growth in FMCG, hotels and agri-business. Expect strong
Adjusted PAT 28,187 34,354 31,806 12.8 (7.4) margin expansion for these segments as well (except hotels where margins would be
EPS (Rs/share) 2.3 2.8 2.6 12.7 (7.4) impacted as gestation costs of the new Kolkata property kick in).
Jyothy Laboratories
Net sales 4,026 5,043 4,247 5.5 (15.8)
EBITDA 583 826 581 (0.3) (29.6) We expect modest 5.5% growth in revenues led by weakness in HI and personal wash
EBIT 445 659 413 (7.2) (37.3) categories and broad-based slowdown in other categories.
PBT 417 709 428 2.7 (39.6)
Reported PAT 324 670 364 12.3 (45.7)
We estimate EBITDA margin decline of 80 bps yoy partly led by yoy drop in GM on a high
Adjusted PAT 324 670 364 12.3 (45.7)
base.
EPS (Rs/share) 3.2 3.2 3.2 0.0 0.0
Marico
Net sales 20,268 16,090 21,783 7.5 35.4
We model 6.3% topline growth in the domestic business driven by 6% volume growth and
EBITDA 3,549 2,830 4,368 23.1 54.3
modest realization improvement. We bake in volume growth of 5%, 4% and 7% in
EBIT 3,325 2,540 4,130 24.2 62.6
Parachute rigid, Saffola and VAHO, respectively.
PBT 3,512 2,740 4,480 27.6 63.5
Reported PAT 2,557 4,010 3,131 22.5 (21.9)
We expect 254 bps yoy expansion in EBITDA margin, led by 466 bps yoy expansion in GM
Adjusted PAT 2,557 2,130 3,131 22.5 47.0
aided by easing of copra prices (copra prices down 25% on yoy basis from 1QFY19 peak).
EPS (Rs/share) 2.0 1.7 2.4 22.5 47.0

India Strategy
Change (%)
Nestle India
Net sales 26,984 30,030 30,146 11.7 0.4
EBITDA 6,648 7,495 7,426 11.7 (0.9) We model 12% growth in net domestic revenues, broad-based across segments. For exports,
EBIT 5,830 6,715 6,626 13.7 (1.3) we are building an 8% growth.
PBT 6,150 7,131 7,108 15.6 (0.3)
Reported PAT 3,950 4,633 4,546 15.1 (1.9)
Extraordinaries (197) (118) (220) 11.5 86.9
We model some contraction in gross margin (-35 bps yoy) due to RM pressure. However,
Adjusted PAT 4,147 4,750 4,766 14.9 0.3
operating leverage benefit should help maintain EBITDA margin ( broadly flat yoy).
EPS (Rs/share) 41.0 48.0 47.1 15.1 (1.9)
Tata Global Beverages
Net sales 18,026 17,755 19,107 6.0 7.6
We model 6% yoy growth in consolidated revenues led by (1) 9% revenue growth in the
EBITDA 2,488 1,743 2,529 1.7 45.1
domestic tea business driven by 10% volume growth and (2) 3% growth in the international
EBIT 2,193 1,413 2,224 1.4 57.4
business.
PBT 2,352 1,610 2,364 0.5 46.8
Reported PAT 1,162 229 1,584 36.3 591.5
We model 100 bps decline in standalone EBITDA margin led by 90 bps decline in standalone
Adjusted PAT 1,344 313 1,584 17.8 406.1
GM.
EPS (Rs/share) 2.1 0.5 2.5 17.8 406.1
United Breweries
Net sales 18,659 16,294 21,536 15.4 32.2
EBITDA 4,004 1,712 4,318 7.8 152.2 We model 15% revenue growth aided by volume growth of 12% and 3% increase in net
EBIT 3,367 1,073 3,668 8.9 241.7 realization.
PBT 3,428 1,062 3,773 10.1 255.4
Reported PAT 2,219 679 2,415 8.8 255.5
We expect 142 bps contraction in EBITDA margin due to gross margin contraction of 96 bps
Adjusted PAT 2,219 679 2,415 8.8 255.5
yoy and higher marketing investments.
EPS (Rs/share) 8.4 2.6 9.1 8.8 255.5
United Spirits
Net sales 20,119 22,500 21,953 9.1 (2.4)
EBITDA 2,283 2,836 2,488 9.0 (12.3) We model 9% net revenue growth led by 3.1% volume growth (8% growth in P&A and 2%
EBIT 1,944 2,435 2,113 8.7 (13.2) decline in popular), pricing and mix benefits.
PBT 1,599 1,949 1,828 14.3 (6.2)
Reported PAT 813 1,262 1,207 48.4 (4.4)
We expect GMs to contract 168 bps yoy on account of increase in ENA prices. Cost controls
Adjusted PAT 1,051 1,327 1,207 14.8 (9.1)
to keep EBITDA margin flattish yoy at 11.3%.
EPS (Rs/share) 7.2 9.1 8.3 14.8 (9.1)
Electric Utilities
CESC
Net sales 21,090 20,450 22,556 6.9 10.3
EBITDA 4,450 5,330 4,871 9.5 (8.6)
Modest growth in unit sales at 2,892 MU (2% yoy) will partially aid earnings.
EBIT 3,340 4,300 3,802 13.8 (11.6)
PBT 2,340 3,930 2,797 19.5 (28.8)
Reported PAT 1,820 3,090 2,182 19.9 (29.4)
Adjusted PAT 1,820 3,090 2,182 19.9 (29.4) Earning performance still does not reflect tariff increase in the absence of regulatory order.
EPS (Rs/share) 13.7 23.3 16.5 19.9 (29.4)
JSW Energy
Net sales 23,605 19,246 23,147 (1.9) 20.3
EBITDA 7,762 4,768 8,873 14.3 86.1 Strong growth in generation for hydro assets, offset by weakness in thermal assets leading
EBIT 4,863 1,896 5,970 22.8 214.9 generation of 6 BU (flat yoy).
PBT 2,407 68 4,062 68.8 5,873.6
Reported PAT 2,104 58 2,843 35.2 4,810.9
Extraordinaries 124 116 — — —
Prices of imported coal are now down 32% yoy at US$68/ton, though we highlight that a
Adjusted PAT 1,980 (58) 2,843 43.6 NM
lagged earnings benefit will see the full impact of spot prices of imported coal.
EPS (Rs/share) 1.2 (0.0) 1.7 43.6 NM

Strategy India
Change (%)
NHPC
Net sales 21,290 19,503 23,277 9.3 19.3
EBITDA 12,904 9,832 14,407 11.6 46.5 Strong generation growth (+16% yoy) with generation of 8.2 BU will aid earnings in a
EBIT 9,179 5,717 10,282 12.0 79.8 seasonally strong quarter for hydro generation.
PBT 9,527 11,549 10,483 10.0 (9.2)
Reported PAT 7,376 4,923 8,177 10.9 66.1
Earnings are not comparable on a sequential basis due to seasonally strong quarter for hydro
Adjusted PAT 7,376 4,923 8,177 10.9 66.1
generation as well as accounting for non-recurring accounting adjustments in 4QFY19.
EPS (Rs/share) 0.7 0.4 0.7 10.9 66.1
NTPC
Net sales 227,036 212,224 218,806 (3.6) 3.1
EBITDA 59,548 46,444 58,858 (1.2) 26.7 Drop in generation (3% yoy) at 67 BU despite commercialization of 1.2 GW in trailing 12
EBIT 40,947 31,397 42,386 3.5 35.0 months.
PBT 31,712 47,763 34,117 7.6 (28.6)
Reported PAT 25,881 43,503 27,293 5.5 (37.3)
Improved plant availability is likely to address fixed charge under-recovery of Rs8 bn in
Adjusted PAT 25,881 37,080 27,293 5.5 (26.4)
FY2019.
EPS (Rs/share) 2.6 3.7 2.8 5.5 (26.4)
Power Grid
Net sales 83,365 97,284 94,715 13.6 (2.6)
EBITDA 71,365 83,038 82,346 15.4 (0.8) Revenue growth (13.6% yoy) aided by aggressive capitalization of Rs192 bn in trailing 12
EBIT 46,859 57,067 55,984 19.5 (1.9) months.
PBT 28,458 37,329 35,605 25.1 (4.6)
Reported PAT 22,405 30,540 28,484 27.1 (6.7)
We factor asset capitalization of Rs37 bn in 1QFY20 compared to Rs64 bn of asset
Adjusted PAT 22,405 30,540 28,484 27.1 (6.7)
capitalization in 4QFY19.
EPS (Rs/share) 4.3 5.8 5.4 27.1 (6.7)
Tata Power
Net sales 18,440 21,190 19,559 6.1 (7.7)
EBITDA 5,720 5,968 6,761 18.2 13.3 Decline in standalone PAT should be seen in the context of lower other income on account
EBIT 4,149 4,363 5,159 24.3 18.2 of lower dividends from coal companies.
PBT 2,738 915 2,919 6.6 218.9
Reported PAT 11,338 539 2,189 (80.7) 306.6
Extraordinaries 8,963 (703) — — —
Tariffs at Mundra will likely reduce due to implementation of six-monthly tariff review, though
Adjusted PAT 2,374 1,241 2,189 (7.8) 76.4
losses will be contained due to decline in prices of imported coal.
EPS (Rs/share) 0.9 0.5 0.8 (7.8) 76.4
Fertilizers & Agricultural Chemicals
Bayer Cropscience
Net sales 8,318 1,288 8,734 5.0 578.1
EBITDA 2,298 (1,218) 1,989 (13.5) NM We expect a modest 5% yoy growth in revenues amid a slow start to the sowing season due
EBIT 2,211 (1,304) 1,899 (14.1) NM to delayed monsoons.
PBT 2,299 (1,254) 1,974 (14.2) NM
Reported PAT 1,472 (798) 1,283 (12.9) NM
We assume sharp yoy decline in EBITDA margin to 22.8% led by higher operating costs due
Adjusted PAT 1,472 (798) 1,283 (12.9) NM
to increase in distribution expenses.
EPS (Rs/share) 42.9 (23.3) 37.4 (12.9) NM
EBITDA margin (%) 27.6 (94.6) 22.8 -486 bps 11733 bps
Dhanuka Agritech
Net sales 2,130 1,927 2,066 (3.0) 7.2
EBITDA 159 330 289 82.4 (12.4) We expect 3% yoy decline in revenues due to likely weaker off-take amid a slow start to the
EBIT 128 300 252 97.8 (15.9) sowing season due to delayed monsoons.
PBT 211 361 290 37.4 (19.6)
Reported PAT 162 268 215 32.9 (19.6)
We expect EBITDA margin to decline by ~300 bps yoy to 14% on account of (1) higher RM
Adjusted PAT 162 268 215 32.9 (19.6)
costs and (2) limited ability to pass on increased price amid a weak demand environment.
EPS (Rs/share) 3.4 5.6 4.5 32.9 (19.6)

India Strategy
Change (%)
Godrej Agrovet
Net sales 14,844 13,439 16,572 11.6 23.3
EBITDA 1,393 772 1,440 3.4 86.6 We expect ~12% yoy increase in revenues driven by growth across animal feeds, vegetable
EBIT 1,169 514 1,164 (0.5) 126.4 oil and crop protection segments.
PBT 1,126 546 1,149 2.0 110.4
Reported PAT 802 1,136 786 (2.0) (30.8)
We expect ~300 bps qoq rise in EBIT margin to 7.4% led by strength in margins across all
Adjusted PAT 802 276 787 (1.9) 185.3
business segments.
EPS (Rs/share) 4.2 1.4 4.1 (1.9) 185.3
PI Industries
Net sales 6,056 8,048 6,662 10.0 (17.2)
EBITDA 1,181 1,719 1,366 15.6 (20.6) We expect moderate 10% yoy growth in revenues led by a healthy growth in exports, which
EBIT 961 1,475 1,091 13.5 (26.1) will be offset by slower off-take in domestic markets.
PBT 1,046 1,684 1,236 18.1 (26.6)
Reported PAT 817 1,244 914 11.9 (26.5)
We expect modest ~100 bps yoy expansion in EBITDA margin to 20.5% led by higher share
Adjusted PAT 817 1,244 914 11.9 (26.5)
of exports.
EPS (Rs/share) 6.0 9.1 6.7 11.9 (26.5)
Rallis India
Net sales 5,731 3,397 6,161 7.5 81.4
EBITDA 831 190 832 0.0 337.8 We expect modest 7.5% yoy growth in revenues amid a slow start to the sowing season due
EBIT 716 85 707 (1.3) 732.4 to delayed monsoons.
PBT 756 178 757 0.1 325.4
Reported PAT 547 15 556 1.6 3,559.2
We expect EBITDA margin to moderate ~100 bps yoy to 13.5% led by higher distribution
Adjusted PAT 547 45 556 1.6 1,145.3
costs.
EPS (Rs/share) 2.8 0.2 2.9 1.6 1,145.3
UPL
Net sales 41,340 85,250 76,172 84.3 (10.6)
EBITDA 8,470 14,100 15,996 88.9 13.4 We expect healthy 11% yoy growth in revenues (ex-Arysta) amid sustained growth in Latin
EBIT 6,720 9,790 10,588 57.6 8.2 American markets.
PBT 5,700 5,030 6,913 21.3 37.4
Reported PAT 5,100 2,060 5,084 (0.3) 146.8
Extraordinaries (40) (2,990) — — —
We expect overall EBITDA margin, including Arysta, to revert to 21% assuming sharply lower
Adjusted PAT 5,136 5,504 5,084 (1.0) (7.6)
write-off on Arysta's inventories as compared to 4QFY19.
EPS (Rs/share) 6.8 7.2 6.7 (1.0) (7.6)
Gas Utilities
GAIL (India)
Net sales 172,986 187,634 180,505 4.3 (3.8)
We expect GAIL to report sharp qoq jump in EBITDA led by (1) modest recovery in LPG and
EBITDA 22,436 16,841 21,977 (2.0) 30.5
petchem production profits, (2) lower operating costs and (3) steady profits of gas
EBIT 18,647 12,267 17,372 (6.8) 41.6
transmission and marketing segments.
PBT 19,403 20,663 18,171 (6.3) (12.1)
Reported PAT 12,593 11,222 11,811 (6.2) 5.2
Extraordinaries — (3,263) — — — We assume (1) modest improvement in gas transmission and marketing volumes to 110
Adjusted PAT 12,593 13,327 11,811 (6.2) (11.4) mcm/d and 99 mcm/d, respectively and (2) 5% qoq moderation in petchem volumes to 203
EPS (Rs/share) 5.6 5.9 5.2 (6.2) (11.4) ktons.
GSPL
Net sales 3,912 4,338 5,115 30.7 17.9
EBITDA 3,438 3,293 4,410 28.2 33.9 We expect sharp qoq jump in GSPL's EBITDA driven by (1) higher gas transmission volumes
EBIT 2,990 2,817 3,937 31.6 39.7 and (2) likely decline in operating costs.
PBT 2,466 2,392 3,556 44.2 48.7
Reported PAT 1,445 1,533 2,280 57.8 48.7
We assume (1) 15% qoq rise in gas transmission volumes to 37.2 mcm/d and (2) steady
Adjusted PAT 1,445 1,533 2,280 57.8 48.7
regulated tariffs at Rs1.5/scm.
EPS (Rs/share) 2.6 2.7 4.0 57.8 48.7

Strategy India
Change (%)
Indraprastha Gas
Net sales 12,874 15,426 16,196 25.8 5.0
EBITDA 2,951 3,312 3,771 27.8 13.9 We expect IGL's EBITDA to increase 28% yoy led by robust 16% growth in volumes and
EBIT 2,478 2,790 3,251 31.2 16.6 sharp expansion in gross margins amid favorable pricing changes.
PBT 2,735 3,303 3,571 30.6 8.1
Reported PAT 1,930 2,413 2,500 29.5 3.6
We assume (1) overall volumes at 6.5 mcm/d versus 5.6 mcm/d in 1QFY19 and (2) unit
Adjusted PAT 1,930 2,413 2,500 29.5 3.6
EBITDA at Rs6.4/scm as compared to Rs5.9/scm in 4QFY19.
EPS (Rs/share) 2.8 3.4 3.6 29.5 3.6
Mahanagar Gas
Net sales 6,323 7,225 7,660 21.1 6.0
EBITDA 2,239 2,140 2,464 10.1 15.2 We expect 15% qoq increase in MGL's EBITDA, led by (1) 7% growth in volumes and (2)
EBIT 1,944 1,811 2,134 9.8 17.8 sharp expansion in gross margins amid favorable pricing changes.
PBT 2,096 2,049 2,308 10.1 12.7
Reported PAT 1,283 1,335 1,504 17.2 12.7
Extraordinaries (129) — — — —
We assume (1) overall volumes at 3.1 mcm/d versus 2.9 mcm/d in 1QFY19 and (2) unit
Adjusted PAT 1,368 1,335 1,504 9.9 12.7
EBITDA at Rs8.8/scm as compared to Rs7.9/scm in 4QFY19.
EPS (Rs/share) 13.8 13.5 15.2 9.9 12.7
Petronet LNG
Net sales 91,692 83,832 86,902 (5.2) 3.7
EBITDA 9,344 8,152 9,274 (0.8) 13.8 We expect 14% qoq increase in EBITDA led by recovery in volumes amid favorable LNG
EBIT 8,322 7,136 8,238 (1.0) 15.4 demand environment and seasonally lower operating costs.
PBT 9,012 7,825 8,932 (0.9) 14.1
Reported PAT 5,870 4,402 5,806 (1.1) 31.9
Extraordinaries — (1,280) — — —
We assume LNG re-gasification volumes at 217 tn BTUs as compared to 205 tn BTUs in
Adjusted PAT 5,870 5,263 5,806 (1.1) 10.3
4QFY19 and 220 tn BTUs in 1QFY19.
EPS (Rs/share) 3.9 3.5 3.9 (1.1) 10.3
Health Care Services

Apollo Hospitals
Net sales 22,046 25,214 25,948 17.7 2.9 We expect revenue growth of 18% yoy, driven by 16% growth in healthcare business and
20% yoy growth in pharmacy business. Within healthcare, we expect existing centers to grow
EBITDA 2,323 2,827 2,915 25.5 3.1
at 12% yoy with new centers' contribution driving incremental growth. We expect 20%
EBIT 1,388 1,968 2,015 45.2 2.4 growth in standalone pharmacy business driven by aggressive expansion of store network.
Reported PAT 351 844 950 170.7 12.6 We expect consolidated EBITDA margin to remain steady qoq at 11.2% as improvement in
performance at new hospitals and AHLL will be offset by losses in Proton and seasonal
Adjusted PAT 351 844 950 170.7 12.6
weakness in 1Q. We expect 17.6% margin in healthcare business, 5.5% margin in pharmacy
EBITDA margin (%) 10.5 11.2 11.2 69 bps 2 bps business and Rs80 mn EBITDA loss in AHLL business.
Aster DM Healthcare
Net sales 17,747 22,010 20,452 15.2 (7.1)
We expect revenues to grow by 15% yoy, driven by 12% organic growth and rest led by INR
EBITDA 1,239 3,504 1,633 31.8 (53.4)
depreciation yoy.
EBIT 502 2,725 833 66.0 (69.4)
PBT 274 2,246 353 28.8 (84.3)
Tax 117 44 100 (14.2) 125.7 1Q is one of the weakest quarters for Aster, with this quarter accounting for only 15-16% of
Reported PAT 124 2,093 183 47.3 (91.3) annual EBITDA and qoq comparison is not meaningful. We expect EBITDA to grow by 32%
Extraordinaries — — — — — yoy, led by ramp-up of new hospital at Qusais and positive EBITDA contribution from Sharjah
Adjusted PAT 124 2,093 183 47.3 (91.3) and Doha facilities. We expect EBITDA margin at 8% (+100 bps yoy).
Dr Lal Pathlabs
Net sales 2,923 3,011 3,332 14.0 10.7
EBITDA 750 662 833 11.0 25.8
We expect revenues to grow at 14% yoy, primarily led by volume growth. We expect
EBIT 662 558 728 9.9 30.4
realizations to remain steady qoq and yoy.
PBT 754 692 872 15.6 26.0
Reported PAT 494 471 581 17.6 23.3
Adjusted PAT 494 471 581 17.6 23.3 We expect EBITDA margin to increase 300 bps qoq, though declining 70 bps yoy to 25%
EPS (Rs/share) 5.9 5.6 7.0 17.6 23.3 driven by operating leverage as revenues grow by 14% yoy.

India Strategy
Change (%)
HCG
Net sales 2,266 2,579 2,632 16.2 2.0
EBITDA 306 322 340 11.4 5.7 We expect revenue to increase by 16% yoy, led by 10% yoy growth in mature centers along
EBIT 108 94 110 2.0 17.4 with ramp-up of newly set up facilities.
PBT (58) (29) (20) (66.0) (33.0)
Reported PAT (34) (87) (70) 104.2 (20.1)
We expect EBITDA margin to increase 40 bps qoq to 12.9% as losses from new centers
Adjusted PAT (34) (87) (70) 104.2 (20.1)
decline modestly and expect gradual improvement in Milann performance after weak FY2019.
EPS (Rs/share) (0.4) (1.0) (0.8) 104.2 (20.1)
Narayana Hrudayalaya
Net sales 6,523 7,652 7,680 17.7 0.4
We expect revenues to increase by 18% yoy, driven by (1) 12% yoy growth in mature
EBITDA 474 895 870 83.5 (2.8)
hospitals, (2) higher contribution from new hospitals at Mumbai, Gurugram and Dharmshila
EBIT 148 536 510 243.9 (4.8)
and (3) Cayman revenues growing by 55% yoy on a low base.
PBT 6 434 403 6,157.8 (7.0)
Reported PAT (41) 372 312 NM (16.0) We expect EBITDA margin to improve 400 bps yoy to 11.3%, led by (1) strong performance
Extraordinaries — — — — — at Cayman versus nil EBITDA in 1QFY19, and (2) new hospitals gradually ramping up. On a
Adjusted PAT (41) 372 312 NM (16.0) sequential basis, we expect modest 40 bps decline in EBITDA margins as 1Q is relatively
EPS (Rs/share) (0.2) 1.8 1.5 NM (16.0) weaker seasonally versus 4Q. We expect losses from new centers to remain steady at Rs140-
EBITDA margin (%) 7.3 11.7 11.3 406 bps -37 bps 150 mn in the quarter.
Hotels & Restaurants

Jubilant Foodworks
Net sales 8,551 8,652 9,587 12.1 10.8
EBITDA 1,421 1,476 1,593 12.1 7.9 We model 5.5% SSSG (base quarter SSSG: 25.9%). We build in 18 Domino's store additions
EBIT 1,055 1,076 1,168 10.7 8.5 and no store additions in DD (net).
PBT 1,126 1,227 1,257 11.6 2.4
Reported PAT 747 739 833 11.6 12.7
Extraordinaries — (79) — — — Building a normal opex inflation trajectory in combination with muted optical growth (on a
Adjusted PAT 747 819 833 11.6 1.8 tough base) and start-up costs related to Hong's Kitchen, we expect EBITDA margin to stay
EPS (Rs/share) 5.8 5.8 5.8 0.0 0.0 broadly flat. This is despite gross margin expanding 100 bps.
Lemon Tree Hotels
Net sales 1,279 1,505 1,572 23.0 4.4
EBITDA 348 489 517 48.5 5.7
We factor ARR of Rs4,211/day (+8% yoy) and occupancy of 74% for 1QFY20.
EBIT 217 346 361 66.2 4.2
PBT 40 148 148 273.2 (0.4)
Reported PAT 23 10 93 306.1 790.6
Addition of 303 keys during 1QFY20 at Lemon Tree Premier in Andheri towards the end of
Adjusted PAT 23 10 93 306.1 790.6
the quarter will weigh on earnings profile.
EPS (Rs/share) 0.0 0.0 0.1 306.1 790.6
Internet Software & Services
Info Edge
Net sales 2,595 2,927 3,161 21.8 8.0
EBITDA 843 913 1,024 21.5 12.2 We expect Naukri to report healthy revenue growth of 20% yoy driven by new client addition
EBIT 790 864 970 22.9 12.3 and realization growth. Segment margin may remain in the 54-55% band on account of
PBT 1,026 1,168 1,272 24.1 8.9 higher investments in tech.
Reported PAT 630 663 891 41.4 34.3
Adjusted PAT 630 663 891 41.4 34.3 We expect 99acres to report healthy 40% yoy revenue growth. Other segment EBITDA loss is
EPS (Rs/share) 5.2 5.5 7.3 40.9 33.9 expected to remain at 4QFY19 levels.
Just Dial
Net sales 2,114 2,323 2,421 14.5 4.2
EBITDA 574 588 667 16.2 13.4 We expect yoy revenue growth to moderate to 14.5% yoy in 1QFY20 from 15.9% yoy in
EBIT 490 506 580 18.3 14.7 4QFY19 as base effect catches up.
PBT 573 827 880 53.7 6.4
Reported PAT 385 626 643 66.8 2.7
We expect seasonal employee attrition to lead to sequential reduction in employee expenses
Adjusted PAT 385 626 643 66.8 2.7
driving a 220 bps qoq EBITDA margin increase.
EPS (Rs/share) 5.7 9.7 9.9 73.5 2.7

Strategy India
Change (%)
IT Services
HCL Technologies
We expect constant currency revenue growth rate of 1.55% of which 1% will be organic with
Net sales 138,780 159,899 160,145 15.4 0.2
the balance contribution from Strong-Bridge Envision acquisition. We forecast cross-currency
headwind of 55 bps. Revenue growth will be impacted by productivity adjustment for select
EBIT 27,297 30,263 28,307 3.7 (6.5) clients in IMS and high base of earlier quarters due to transformation revenues booked from
large IMS deals. We have not baked in any revenues from proposed acquisition of select
products of IBM due to delay in closure by a month from the expected date of end-May
PBT 30,258 31,789 29,717 (1.8) (6.5) 2019. EBIT margin decline will be steep on account of delay in closure of acquisition of select
IBM products. Note that the company has invested in people, infrastructure, systems and
processes to integrate select IBM products' acquisition for the entire quarter even as the
Reported PAT 24,031 25,576 23,252 (3.2) (9.1)
consummation of the acquisition has been delayed a tad.
Extraordinaries — — — — — We expect the company to retain 14-16% revenue growth guidance despite delay in
consummation of the acquisition by a month. We expect the company to also retain organic
Adjusted PAT 24,031 25,576 23,252 (3.2) (9.1) revenue growth guidance of 7-9% and EBIT margin guidance of 18.5-19.5%. Expect investor
focus on - (1) revenue growth from digital which has shown promising signs in the last two
EPS (Rs/share) 17.0 18.1 16.5 (3.2) (9.1) quarters, (2) capital allocation in light of aggressive product acquisitions, (2) M&A strategy
given that the company has started making a few digital acquisitions, (3) EBIT margin direction
EBIT margin (%) 19.7 18.9 17.7 -200 bps -126 bps in light of the recent reset and (4) deflationary impact from renewal of legacy IMS deals.
Hexaware Technologies
Net sales 11,367 12,640 13,105 15.3 3.7 We expect c/c revenue growth of 4.8% sequentially and a cross-currency headwind of 15
bps. We expect organic revenue growth of 3.1%. We expect Mobiquity acquisition to
EBIT 1,591 1,739 1,756 10.4 1.0 contribute US$3.1mn to revenues. We expect a modest recovery in banking and financial
services vertical. Growth will likely be driven by professional services and healthcare &
PBT 1,918 1,697 1,864 (2.8) 9.8 insurance verticals. We expect EBIT margin of 13.4% a decline of 35 bps qoq on account of
visa costs, marginal rupee appreciation. We do not bake in one-time transaction cost for
Reported PAT 1,536 1,386 1,485 (3.3) 7.2 Mobiquity acquisition.
Extraordinaries 2 1 — — — We expect ~US$1 mn of hedge gains for the quarter. The company had posted a hedge loss
of US$1.2 mn in the previous quarter. Decline in net profit on yoy basis is due to high forex
Adjusted PAT 1,534 1,385 1,485 (3.2) 7.2
gains in 2QCY18. We expect investor focus on (1) progress on integration of Mobiquity and
synergy benefits from the acquisition, (2) more clarity on impact of cancellation of a large net
EPS (Rs/share) 5.1 4.6 5.0 (3.2) 7.2
new deal on 4QCY19 revenues and on CY2020 revenues, (3) TCV of net new deal wins, (4)
EBIT margin (%) 14.0 13.8 13.4 -60 bps -36 bps high attrition rates and (3) BFS vertical outlook.
Infosys
Net sales 191,280 215,390 221,385 15.7 2.8 We expect constant currency revenue growth of 3.1% and cross-currency headwind of 45
bps. We expect financial services vertical to report robust growth. Revenues include one
EBIT 45,370 46,180 44,909 (1.0) (2.8) month of revenues from the Stater acquisition. Expect EBIT margin decline of 110 bps due to--
(1) wage revision for 85% of employees that will impact margin by 100 bps, (2) higher H-1B
PBT 49,930 52,830 50,077 0.3 (5.2) visa applications relative to the previous year that will result in additional costs and (3) Rupee
appreciation impact of 30 bps. Margin impact will be offset to some extent through higher
Reported PAT 36,120 40,780 36,306 0.5 (11.0) utilization and cost control measures.
Extraordinaries — — — — — Pricing and margin trend will be followed closely due to a belief that the company has been
aggressive on deal structures and pricing to win contracts and accelerate growth. We expect
Adjusted PAT 36,120 40,780 36,306 0.5 (11.0)
investor focus on -- (1) momentum of large deals noting the strong trend of the last four
quarters, (2) attrition rate that has remained high and sticky despite multiple interventions
EPS (Rs/share) 8.3 9.4 8.4 1.7 (9.9)
made by the management, (3) levers to defend margin, (4) talent strategy in the US in light of
EBIT margin (%) 23.7 21.4 20.3 -344 bps -116 bps higher H-1B visa applications in the current year and (5) pricing outlook.
L&T Infotech
Net sales 21,557 24,860 24,835 15.2 (0.1) We expect muted revenue growth and forecast c/c revenue growth of 1.1% and cross-
currency headwind of 20 bps. We forecast organic revenue growth of 0.6% and contribution
EBIT 3,811 4,395 3,910 2.6 (11.0) of 0.5% from full quarter consolidation of acquisitions done in the earlier quarter. We expect
revenue decline from top client to continue and to weigh on performance. In addition June is
PBT 4,847 5,041 4,943 2.0 (1.9) a seasonally weak quarter for India business contributing to overall weakness.
Reported PAT 3,612 3,789 3,684 2.0 (2.8) We expect EBIT margin decline of 200 bps due to --(1) 100 bps impact from sales and
marketing investments, (2) 100 bps impact from H-1B visa application cost and (3) 20 bps
Extraordinaries — — — — — impact from Rupee appreciation. The impact will be partly offset by operational
improvements. We forecast Fx gains of Rs651 mn, up from Rs334 mn in March 2019 quarter.
Adjusted PAT 3,612 3,789 3,684 2.0 (2.8)
Expect investor focus on (1) implications for LTI from the intention of the parent to acquire
Mindtree, (2) large deal momentum, (3) outcome of annual client budgeting process and its
EPS (Rs/share) 20.6 21.6 20.9 1.6 (3.1)
implications for growth, (4) growth outlook from the top client, and (5) status of the hedge
EBIT margin (%) 17.7 17.7 15.7 -194 bps -194 bps book after the recent Rupee appreciation.
Mindtree
Net sales 16,395 18,394 18,581 13.3 1.0 We expect muted revenue growth at 1.9% due to the twin impact of weaker revenue growth
from the top client and (2) distractions resulting from L&T's bid. We expect EBIT margin
EBIT 1,910 2,375 2,030 6.3 (14.5) decline of 200 bps from wage revision, H-1B visa costs and Rupee appreciation. We expect
weak TCV of deal wins. Uncertainty on outcome of L&T bid has distracted management and
PBT 2,161 2,665 2,239 3.6 (16.0) could have potentially impacted client decisions.
Reported PAT 1,582 1,984 1,623 2.6 (18.2)
We expect investor focus on (1) management changes following L&T's acquisition of majority
Extraordinaries — — — — — stake in Mindtree (2) attrition rate and talent retention strategies, (3) growth outlook of top
Adjusted PAT 1,582 1,984 1,623 2.6 (18.2) client, (4) margin outlook given that it will be an important focus for the primary shareholder
EPS (Rs/share) 9.6 12.1 9.8 2.2 (18.4) and (5) clarity on segments of the market that L&T will focus on noting that the largest
shareholder has another IT services firm in its stable.
EBITmargin (%) 11.6 12.9 10.9 -73 bps -199 bps

India Strategy
Change (%)
Mphasis
Net sales 18,202 20,250 20,908 14.9 3.2 We expect c/c revenue growth of 3.2% sequentially and a cross-currency headwind of 20 bps.
EBIT 3,022 3,204 3,252 7.6 1.5 We expect core business to be the primary driver for growth and expect growth in DXC/HP
business to moderate on yoy basis. We expect EBIT margin decline of 30 bps qoq due to
PBT 3,429 3,477 3,532 3.0 1.6 investments in business, rupee appreciation and higher visa costs partially offset by margin
Reported PAT 2,584 2,663 2,632 1.9 (1.1) tailwind from reduced hedge losses on account of better hedge rates.
Extraordinaries — — — — — Impact of DXC's cost rationalization and vendor consolidation programs will be keenly
Adjusted PAT 2,584 2,663 2,632 1.9 (1.1) watched. We expect investor focus on - (1) growth outlook for DXC/HP channel, (2) deal
wins in direct channel and confidence on sustenance of growth in direct core, (3) TCV of deal
EPS (Rs/share) 13.4 14.3 14.1 5.6 (1.1) wins, (4) revenue contribution from Blackstone portfolio companies and new client
EBIT margin (%) 16.6 15.8 15.6 -106 bps -27 bps acquisition channel and (5) impact of hedge gain/(loss) on margins in FY2020E.
TCS
Net sales 342,610 380,100 385,592 12.5 1.4 We expect constant currency revenue growth rate of 3.3% and cross currency headwind of 55
EBIT 85,780 95,370 94,015 9.6 (1.4) bps. Revenue growth will be broad-based except for challenges in a large client in capital
markets segment. EBIT margin will decline 70 bps qoq on reported basis and 130 bps on
PBT 97,860 107,020 104,537 6.8 (2.3) adjusted basis largely on account of wage revision and Rupee appreciation. 4QFY19 had one-
Reported PAT 73,400 81,260 78,183 6.5 (3.8) time contribution to electoral bonds that impacted margin by 60 bps.
Net profit growth appears modest due to completion of buyback of equity. EPS growth
Adjusted PAT 73,400 81,260 78,183 6.5 (3.8) stands at 7.9% yoy. Expect investor focus on -- (1) demand from the financial services vertical
EPS (Rs/share) 19.2 21.7 20.8 8.7 (3.8) especially the capital markets segment, (2) order bookings, (3) impact of talent crunch in the
US on margins and (4) progress on localization.
EBIT margin (%) 25.0 25.1 24.4 -66 bps -71 bps
Tech Mahindra
Net sales 82,763 88,923 86,862 5.0 (2.3) Tech Mahindra will disappoint with revenue decline of 85 bps and cross-currency headwind of
65 bps. Revenue growth has slowed down to a trickle on yoy comparison. We forecast
EBIT 10,761 13,683 11,157 3.7 (18.5) sequential revenue decline of 2.5% in the telecom business, pretty much along expected lines
PBT 11,570 15,073 12,615 9.0 (16.3) and due to seasonal weakness in Comviva. Enterprise segment will disappoint with modest
0.5% growth in c/c. Weakness in BFSI and manufacturing will contribute to weak numbers,
Reported PAT 8,978 11,325 9,360 4.3 (17.3) while healthcare segment will recover a tad.
Extraordinaries — — — — — We expect sequential EBIT margin decline of 250 bps contributed by -- (1) 100 bps impact
from wage revision, (2) higher visa applications, (3) Rupee appreciation and (4) seasonal
impact of lower Comviva revenues. We expect robust new deal signings with good spread
Adjusted PAT 8,978 11,325 9,360 4.3 (17.3)
across enterprise and telecom segments. We expect investors to focus on (1) timelines for 5G
deal flow and impact of US ban on Huawei on 5G adoption, (2) health of enterprise business
EPS (Rs/share) 9.1 11.4 9.6 5.1 (15.6) especially in the manufacturing vertical where the company has high exposure to the auto
sector, (3) reasons for slowdown in revenue growth in the enterprise segment, and (4) M&A
EBIT margin (%) 13.0 15.4 12.8 -16 bps -255 bps strategy and capital allocation.
Wipro
Net sales 140,548 151,926 148,778 5.9 (2.1) We expect constant currency revenue growth of 0.4% and cross-currency headwind of 65bps.
EBIT 20,777 27,321 24,964 20.2 (8.6) On reported basis revenue growth will be lower due to divestment of Workday business that
impacted revenues by US$9 mn. Note that Wipro had guided for revenue decline of 1% to
PBT 26,853 32,018 29,849 11.2 (6.8) revenue growth of 1% for June 2019 quarter. EBIT margin will likely decline due to wage
revision effective June 1, marginal appreciation of Rupee against USD and weak revenue
Reported PAT 21,205 24,833 22,985 8.4 (7.4) performance.
Extraordinaries — — — — — Net profit growth appears modest on yoy comparison despite strong EBIT growth due to high
base of June 2018 quarter where the company booked non-recurring gain of Rs2.5 bn from
Adjusted PAT 21,205 24,833 22,985 8.4 (7.4) sale of hosted data center business. We expect Wipro to guide for revenue growth of 0.5-
2.5% for September 2019 quarter, an improvement from the expected performance of June
EPS (Rs/share) 3.5 4.1 3.8 8.3 (7.5) 2019 quarter. We expect investor focus on (1) outlook for the key growth driver viz financial
services vertical, (2) sustainability of margin noting the aggressive cost rationalization, (3)
EBIT margin (%) 14.8 18.0 16.8 199 bps -121 bps state of demand from healthcare vertical, and (4) performance of acquired entities.
Media
DB Corp.
Net sales 6,324 5,885 6,154 (2.7) 4.6 We forecast 5% yoy decline in print advertisement revenues due to weakness in key
EBITDA 1,680 1,042 1,612 (4.1) 54.8 categories such as auto, slowdown in rural consumption and perhaps a post-elections lull in
EBIT 1,437 798 1,362 (5.2) 70.6 government/political ad spends. Circulation revenue would be broadly flat yoy (flat volumes
PBT 1,488 805 1,392 (6.4) 72.8 as well as flat pricing).
Reported PAT 976 545 933 (4.4) 71.3
Extraordinaries — — — — — We expect modest 40 bps yoy decline in EBITDA margin aided by benefit of easing newsprint
prices. Newsprint costs have declined 30-40% from peak; expect significant decline in RM
Adjusted PAT 976 545 933 (4.4) 71.3
costs over the next 2-3 quarters starting 1Q. A higher decline in net profit is due to the lower
EPS (Rs/share) 5.3 3.1 5.3 0.3 71.3 tax rate (non-recurring) in the base quarter.
DishTV
Net sales 16,556 13,988 15,150 (8.5) 8.3
EBITDA 5,568 4,150 5,035 (9.6) 21.3 We estimate 150K net subscriber additions and recovery in ARPU to Rs200 (pre-TRAI tariff
EBIT 1,959 557 1,435 (26.8) 157.9 order implementation levels). At this juncture, we are not expecting any tailwinds from TRAI's
PBT 342 (823) 85 (75.1) NM tariff order implementation; we are only building recovery from 4QFY19 that was impacted by
Reported PAT 255 (13,613) 68 (73.3) NM interim disruption associated with the tariff order.
Adjusted PAT 255 2,012 68 (73.3) (96.6)
We expect sharp recovery in profitability and EBITDA on sequential basis but it will still be
EPS (Rs/share) 0.1 1.0 0.0 (73.3) (96.6)
down on yoy basis.

Strategy India
Change (%)
Jagran Prakashan
Net sales 6,026 5,928 6,076 0.8 2.5
EBITDA 1,636 1,380 1,563 (4.4) 13.3 We expect print advertisement revenues to be flat due to broad-based weakness across
categories and loss of government advertising due to election code that was not offset by
EBIT 1,328 1,049 1,228 (7.6) 17.1
political advertising. We model 8% yoy growth in radio revenues and 2% yoy decline in
PBT 1,346 1,095 1,268 (5.8) 15.8 circulation revenues.
Reported PAT 854 665 817 (4.3) 23.0
Newsprint costs have declined 30-40% from peak but the benefit will flow through starting
Adjusted PAT 854 665 817 (4.3) 23.0
2QFY20. We model 2-3% growth in RM costs in 1QFY20 and 140 bps yoy decline in EBITDA
EPS (Rs/share) 2.7 2.2 2.8 0.6 23.0
margin.
Sun TV Network
Net sales 11,204 8,889 11,321 1.0 27.4 We forecast modest 2% yoy growth in advertisement revenues (including slot sales) given the
EBITDA 6,029 3,829 6,336 5.1 65.5 weak ad spend environment and viewership share. We estimate 15%/15% yoy growth in
EBIT 5,879 3,665 6,172 5.0 68.4 domestic DTH/cable subscription revenues aided by ongoing digitization in the Tamil Nadu
PBT 6,267 4,336 6,769 8.0 56.1 market. We model (1) Rs300 mn revenues from the movie production business (nil in the
Reported PAT 4,091 2,831 4,467 9.2 57.8 base quarter) pertaining to satellite/digital rights of Petta, and (2) Rs3.1 bn from IPL.
We forecast modest 5% growth in EBITDA, largely subscription-led. We model operating
Adjusted PAT 4,091 2,831 4,467 9.2 57.8
profit of Rs1.5 bn from IPL for the June quarter and Rs1.7 for the recently ended IPL season
EPS (Rs/share) 10.4 7.2 11.3 9.2 57.8
(Rs205 mn of operating profit was booked in the March quarter).
Zee Entertainment Enterprises
Net sales 17,720 20,193 19,902 12.3 (1.4)
We expect 7% yoy growth in advertisement revenues due to (1) broad-based weakness in ad
EBITDA 5,657 5,683 6,366 12.5 12.0 spend environment in line with the slowdown in the consumption space, (2) sharp 85-90%
EBIT 5,080 5,115 5,791 14.0 13.2 drop in viewership (and corresponding drop in advertising) of Zee Anmol and Zee Anmol
PBT 5,312 4,635 6,105 14.9 31.7 Cinema post withdrawal from the DD Freedish platform. We expect strong 25% yoy growth in
domestic subscription revenue driven by benefits of implementation of TRAI's tariff order.
Reported PAT 3,259 2,925 4,029 23.6 37.7
We expect EBITDA margin to be broadly flat on a yoy basis as headwinds on advertising front
Adjusted PAT 3,472 2,832 4,029 16.1 42.3 would be partly offset by subscription tailwinds. Adjusted PAT/EPS is excluding RPS impact.
EPS (Rs/share) 3.6 2.9 4.2 16.1 42.3 Investor focus will be on (1) progress around promoter stake sale, and (2) cash generation in
FY2019.
Metals & Mining

Hindalco Industries
Net sales 105,932 123,727 107,941 1.9 (12.8)
EBITDA 13,253 9,024 8,311 (37.3) (7.9) We estimate India EBITDA (including Utkal Alumina) at Rs12.5 bn to decline by 9% qoq (-
EBIT 9,210 4,427 3,714 (59.7) (16.1) 32% yoy) led by lower LME Aluminum prices and weak Copper earnings.
PBT 6,157 3,890 1,125 (81.7) (71.1)
Reported PAT 4,135 2,358 743 (82.0) (68.5)
Extraordinaries — — — — — We estimate aluminum EBITDA (including Utkal) to decline by 11% qoq to Rs9.4 bn (-38%
yoy)—favorable hedges will partially offset the impact of lower aluminum prices on earnings.
Adjusted PAT 4,135 2,358 742 (82.0) (68.5)
We expect Copper EBITDA of Rs3.1 bn (-6% yoy, 0% qoq) impacted by 15-20 days of
EPS (Rs/share) 1.9 1.1 0.3 (82.0) (68.5) maintenance shutdown and weak by-product credits.
Hindustan Zinc
Net sales 53,100 54,910 50,307 (5.3) (8.4)
EBITDA 27,130 27,890 24,515 (9.6) (12.1) The company's (1) zinc production declined 4% qoq to 170,000 tons (flat yoy) and, (2) lead
production declined 11% qoq to 46,000 tons (+10% yoy) due to lower mined metal volumes
EBIT 23,260 22,360 18,930 (18.6) (15.3)
(230,000 tons, -6% qoq). Silver production declined 20% qoq to 159 tons (+13% yoy) led by
PBT 26,100 27,240 22,830 (12.5) (16.2) lower lead volumes.
Reported PAT 19,180 20,120 17,122 (10.7) (14.9)
Adjusted PAT 19,180 20,120 17,122 (10.7) (14.9) Lower Zinc, Lead and Silver prices to drive 10% yoy decline in EBITDA of Rs24.5 bn despite
EPS (Rs/share) 4.5 4.8 4.1 (10.7) (14.9) better volumes. The sequential decline in earnings is largely due to lower production volumes.
Jindal Steel and Power
Net sales 96,024 100,264 94,841 (1.2) (5.4)
EBITDA 21,508 17,800 15,997 (25.6) (10.1) We estimate JSP's steel EBITDA/ton to decline by 3% qoq to Rs9,288/ton (-28% yoy) due to
(1) 3% qoq decline in steel realizations, partially offset by (2) lower raw material costs and
EBIT 11,109 (5,933) 5,582 (49.8) NM
lower fixed cost due to operational leverage. We model India steel deliveries of 1.4 mn tons (-
PBT 2,637 (16,917) (4,086) (255.0) (75.8) 3% qoq, +18% yoy) led by ramp-up of Angul plant.
Reported PAT 1,808 (21,458) (2,611) (244.4) (87.8)
Jindal Power's generation was flat yoy at 2.7 bn units (+5% qoq) in 1QFY20. We estimate
Adjusted PAT 1,808 (9,321) (2,611) (244.4) (72.0)
Jindal Power's EBITDA to increase by 8% qoq to Rs2.9 bn (-8% yoy) led by softer coal
EPS (Rs/share) 2.0 (10.2) (2.9) (244.4) (72.0)
costs.

India Strategy
Change (%)
JSW Steel
Net sales 205,190 223,680 201,508 (1.8) (9.9)
We expect JSTL to report flat volume (0% yoy) with weak off-take in June offsetting growth in
EBITDA 51,050 44,400 40,019 (21.6) (9.9)
April-May 2019. We estimate only a 1% qoq decline in realization as weak domestic prices
EBIT 42,000 33,560 29,157 (30.6) (13.1)
would be partially offset by lower export volumes and higher domestic sales in 1QFY20.
PBT 33,710 23,630 19,685 (41.6) (16.7)
Reported PAT 23,660 15,230 13,037 (44.9) (14.4)
Extraordinaries — — — — — We expect raw-material cost to remain stable sequentially as higher iron ore prices would be
Adjusted PAT 23,660 15,230 13,037 (44.9) (14.4) offset by US$5-7/ton reduction in coking coal costs. We estimate EBITDA/ton to remain flat
EPS (Rs/share) 9.9 6.3 5.4 (44.9) (14.4) qoq.
National Aluminium Co.
Net sales 29,733 27,662 24,257 (18.4) (12.3)
EBITDA 10,111 5,176 4,015 (60.3) (22.4) Earnings decline is due to a fall in (1) alumina prices by 6% qoq to US$361/ton (-35% yoy),
EBIT 8,894 3,972 2,812 (68.4) (29.2) and (2) LME aluminum prices by 4% qoq to US$1,790/ton.
PBT 9,509 4,943 3,783 (60.2) (23.5)
Reported PAT 6,871 2,336 2,459 (64.2) 5.3
Extraordinaries 910 (910) — — —
We build in (1) 11% qoq decline in alumina sales to 337,000 tons (+5% yoy) aided by sales
Adjusted PAT 6,270 2,937 2,459 (60.8) (16.3)
of inventories, and (2) 2% qoq decline in aluminum sales to 110,000 tons (+5% yoy).
EPS (Rs/share) 3.2 1.5 1.3 (60.8) (16.3)
NMDC
Net sales 24,220 36,433 33,748 39.3 (7.4)
EBITDA 14,239 19,589 18,607 30.7 (5.0) NMDC's iron-ore sales to increase by 28% yoy to 8.7 mn tons (-15% qoq) in 1QFY20 led by
EBIT 13,623 18,785 17,803 30.7 (5.2) strong demand partially offset by 5-6 days disruption at Chhattisgarh due to an employee
PBT 14,767 20,644 19,701 33.4 (4.6) strike. We estimate blended iron-ore realizations to increase by 9% yoy, qoq at Rs3,888/ton
Reported PAT 9,753 14,664 13,145 34.8 (10.4) led by price hikes during the quarter.
Adjusted PAT 9,753 13,659 13,145 34.8 (3.8)
We estimate EBITDA/ton to increase to Rs2,144/ton (+2% qoq, +11% yoy) led by higher
EPS (Rs/share) 3.1 4.3 4.2 34.8 (3.8)
realization.
Tata Steel
Net sales 378,328 424,239 379,354 0.3 (10.6)
EBITDA 64,677 70,133 54,782 (15.3) (21.9) We estimate India steel realization to be flat qoq as weak domestic prices to be offset by
lower exports and contract volumes. We expect volumes to grow by 1% yoy at 3 mn tons,
EBIT 46,620 51,327 35,884 (23.0) (30.1)
due to capacity constraints and weak domestic demand. India EBITDA/ton to decline by 4%
PBT 33,392 36,849 21,301 (36.2) (42.2) qoq to Rs13,216/ton (-23% yoy) with negative operating leverage and stable costs.
Reported PAT 19,540 28,284 12,605 (35.5) (55.4)
Extraordinaries (3,436) 5,115 — — — We estimate Europe EBITDA/ton to decline to US$40/ton (US$66/ton in 4QFY19) due to
Adjusted PAT 22,976 23,170 12,605 (45.1) (45.6) lower steel spreads. We estimate EBITDA at Bhushan Steel to decline 7% qoq to Rs7.3 bn
EPS (Rs/share) 20.0 20.2 11.0 (45.1) (45.6) due to weak steel prices and higher iron ore costs. We estimate volumes to remain stable at
EBITDA margin (%) 17.1 16.5 14.4 -266 bps -210 bps 1.14 mn tons, flat qoq, with EBITDA/ton at Rs6,430/ton.
Vedanta
Net sales 222,060 234,680 218,236 (1.7) (7.0) The sequential decline in EBITDA is mainly led by lower EBITDA at HZ (Rs24.3 bn,-13% qoq)
EBITDA 62,840 61,350 58,089 (7.6) (5.3) impacted by lower volumes. Aluminum division EBITDA of Rs4.3 bn is +8% qoq (-66% yoy)
EBIT 44,880 38,770 35,509 (20.9) (8.4) with lower prices more than offset by cost reduction in coal and alumina. Zinc International
PBT 33,600 32,720 29,459 (12.3) (10.0) EBITDA of Rs4.4 bn is +13% qoq led by ramp up of Gamsberg volumes and better prices.
Reported PAT 15,330 26,150 15,472 0.9 (40.8)
Extraordinaries — 8,320 — — — We estimate Oil and Gas division to report EBITDA of Rs18 bn, flat qoq, with higher crude
prices to offset volume decline. Steel EBITDA of Rs2.7 bn (-18% qoq) led by 4-5% qoq
Adjusted PAT 15,330 17,830 15,472 0.9 (13.2)
decline in long steel prices. We expect stable sequential earnings from Iron ore, power
EPS (Rs/share) 4.1 4.8 4.2 0.9 (13.2) business whereas Copper division remains shut.
Oil, Gas & Consumable Fuels

BPCL
Net sales 716,967 744,366 736,729 2.8 (1.0)
We expect BPCL to report weak results impacted by (1) adventitious loss of Rs7.5 bn and (2)
EBITDA 38,752 60,838 17,524 (54.8) (71.2)
muted refining margins, which will be partially offset by higher-than-normal (+Rs0.5/liter)
EBIT 31,361 52,459 8,802 (71.9) (83.2)
blended marketing margins on auto fuels.
PBT 33,823 58,843 11,833 (65.0) (79.9)
Reported PAT 22,933 38,836 8,046 (64.9) (79.3)
We assume (1) 3% qoq decline in crude throughput to 8 mn tons and (2) weak, albeit qoq
Adjusted PAT 22,933 38,836 8,046 (64.9) (79.3)
higher, normalized refining margins at US$3.4/bbl (+US$0.8/bbl qoq).
EPS (Rs/share) 11.7 19.7 4.1 (64.9) (79.3)
Coal India
Net sales 225,978 267,043 233,092 3.1 (12.7)
EBITDA 40,694 63,702 44,799 10.1 (29.7) Absence of volume growth with dispatches of 153 mn tons in 1QFY20 will likely lead to
EBIT 33,242 53,331 36,725 10.5 (31.1) subdued earnings performance.
PBT 60,869 88,927 65,067 6.9 (26.8)
Reported PAT 37,843 60,268 43,595 15.2 (27.7)
Blended realizations will improve 3.6% yoy at Rs1,526/ton in 1QFY20 primarily driven by
higher e-auction realizations, as the benefit of increase in notified prices of coal is already in
Adjusted PAT 37,843 60,268 43,595 15.2 (27.7)
the base realizations of 1QFY19.

Strategy India
Change (%)
HPCL
Net sales 676,289 679,381 646,241 (4.4) (4.9)
We expect HPCL to report weak results impacted by (1) adventitious loss of Rs8.5 bn and (2)
EBITDA 31,907 51,662 15,733 (50.7) (69.5)
EBIT 24,843 43,378 7,862 (68.4) (81.9)
PBT 25,990 46,731 10,549 (59.4) (77.4)
Reported PAT 17,192 29,903 7,015 (59.2) (76.5)
We assume (1) 10% qoq decline in crude throughput to 4 mn tons amid shutdown and (2)
Adjusted PAT 17,192 29,903 7,015 (59.2) (76.5)
weak, albeit qoq higher, normalized refining margins at US$3.6/bbl (+US$1.5/bbl qoq).
EPS (Rs/share) 11.3 19.6 4.6 (59.2) (76.5)
IOCL
Net sales 1,294,750 1,262,141 1,249,846 (3.5) (1.0)
We expect IOCL to report weak results impacted by (1) adventitious loss of Rs22 bn and (2)
EBITDA 125,758 108,759 42,285 (66.4) (61.1)
EBIT 107,879 88,192 23,169 (78.5) (73.7)
PBT 103,422 86,344 18,018 (82.6) (79.1)
Reported PAT 68,311 60,993 12,072 (82.3) (80.2)
We assume (1) qoq steady crude throughput at 17.4 mn tons and (2) weak, albeit qoq higher,
Adjusted PAT 68,311 60,993 12,072 (82.3) (80.2)
normalized refining margins at US$3.7/bbl (+US$2.3/bbl qoq).
EPS (Rs/share) 7.2 6.4 1.3 (82.3) (80.2)
ONGC
Net sales 272,128 263,507 288,490 6.0 9.5
We expect 18% qoq jump in ONGC's EBITDA led by (1) higher crude realization at US$69/bbl
EBITDA 147,321 134,069 158,552 7.6 18.3
(+US$5.1/bbl qoq) and (2) increase in domestic gas price to US$4.1/mn BTU (+US$0.4/mn
EBIT 97,055 65,801 104,439 7.6 58.7
BTU).
PBT 96,068 78,912 104,863 9.2 32.9
Reported PAT 61,439 56,028 68,161 10.9 21.7
We model (1) 3% yoy decline in oil sales volumes to 5.6 mn tons and (2) 10% yoy growth in
Adjusted PAT 61,439 56,028 68,161 10.9 21.7
natural gas sales volumes to 5.4 bcm.
EPS (Rs/share) 4.8 4.4 5.3 10.9 21.7
Oil India
Net sales 33,905 30,869 34,356 1.3 11.3
We expect 40% qoq jump in EBITDA led by (1) higher net crude realization at US$67/bbl
EBITDA 15,276 11,157 15,595 2.1 39.8
(+US$5.2/bbl qoq) and (2) increase in domestic gas price to US$4.1/mn BTU (+US$0.4/mn
EBIT 10,712 6,552 11,008 2.8 68.0
BTU).
PBT 10,855 9,546 12,014 10.7 25.9
Reported PAT 7,032 (2,085) 7,809 11.0 NM
We model (1) modest 1% qoq increase in oil sales volumes to 0.79 mn tons and (2) 12%
Adjusted PAT 7,032 27,568 7,809 11.0 (71.7)
qoq growth in gas sales volumes to 0.69 bcm.
EPS (Rs/share) 5.8 22.9 6.5 11.0 (71.7)
Reliance Industries
Net sales 1,287,560 1,386,590 1,459,908 13.4 5.3
We expect RIL to report a marginal qoq increase in standalone EBITDA led by modestly higher
EBITDA 206,610 208,320 205,145 (0.7) (1.5)
refining margins at US$8.5/bbl (+US$0.3/bbl qoq) and increase in crude throughput and
EBIT 154,880 155,370 155,316 0.3 (0.0)
petchem volumes, which will be partly offset by moderation in overall petchem margins.
PBT 137,160 132,960 135,324 (1.3) 1.8
Reported PAT 94,590 103,620 97,800 3.4 (5.6)
Extraordinaries — 4,940 — — — We expect consolidated EBITDA to decline qoq, as higher standalone and retail EBITDA will
be offset by lower Jio EBITDA (-Rs6.2 bn qoq) due to accounting of capacity cost pertaining
Adjusted PAT 94,590 98,680 97,800 3.4 (0.9)
to Jio's fiber/tower InvITs in lieu of interest and depreciation cost earlier; we have assumed
EPS (Rs/share) 16.0 16.7 17 3.4 (0.9) these adjustments to be PBT neutral.

India Strategy
Change (%)
Pharmaceuticals
Aurobindo Pharma
Net sales 42,503 51,925 51,990 22.3 0.1
EBITDA 7,792 10,454 10,488 34.6 0.3 We expect the US business to stabilize at US$325 mn (-US$7 mn qoq), reflecting stable
ertapenem sales. We expect the RoW business to grow by 25% yoy, and EU business to
EBIT 6,247 8,755 8,738 39.9 (0.2)
grow by 27% yoy, reflecting full quarter revenues from Apotex acquisition. We expect ARV
PBT 6,389 8,465 8,488 32.9 0.3 sales to grow 50% yoy off a low base.
Reported PAT 4,557 6,603 6,537 43.5 (1.0)
Extraordinaries (682) 74 — — —
Adjusted PAT 4,557 6,603 6,537 43.5 (1.0) We expect EBITDA margin to remain flat at ~20%. We expect EPS to grow 43% yoy and
EPS (Rs/share) 7.8 11.3 11.2 43.5 (1.0) decline 1% qoq.
Biocon
Net sales 11,238 15,288 15,241 35.6 (0.3) We expect 36% yoy growth, driven by biologics (+90% yoy; +5% qoq) given the continuing
EBITDA 2,378 4,030 4,104 72.6 1.8 benefits of US (Fulphila) and EU launches (Semglee and Hulio), as well as increasing
EBIT 1,383 2,828 2,850 106.1 0.8 contribution from RoW exports. We expect small molecules and research services to have
PBT 1,895 2,951 2,975 57.0 0.8 steady growth (~15% and ~25% respectively) and expect domestic formulations to grow
Reported PAT 1,197 2,137 2,102 75.6 (1.7) 10% yoy.
Adjusted PAT 1,197 2,137 2,102 75.6 (1.7) We expect 26.9% EBITDA margin in the quarter (+60 bps qoq). We expect EPS to grow 76%
EPS (Rs/share) 1.0 1.8 1.7 75.6 (1.7) yoy and decline 2% qoq.
Cipla
Net sales 39,390 44,040 42,312 7.4 (3.9)
EBITDA 7,264 9,611 8,029 10.5 (16.5) We expect domestic formulations growth to be muted with 7% yoy growth. We expect US
sales to decline US$30 mn to US$135 mn in the quarter, given erosion in cinacalcet, as well
EBIT 4,854 4,508 4,879 0.5 8.2
as diclofenac gel. We expect South Africa, Global access and RoW to remain under pressure,
PBT 6,204 5,014 5,154 (16.9) 2.8 with -15%, +5% and -2% yoy growth, due to base effect.
Reported PAT 4,456 3,672 3,854 (13.5) 5.0
Adjusted PAT 4,456 3,672 3,854 (13.5) 5.0 We expect EBITDA margins to contract 285 bps to19%, with R&D likely to remain at 7.7% of
EPS (Rs/share) 5.5 4.6 4.8 (13.5) 5.0 sales. We expect reported EPS to decline 14% yoy and grow 5% qoq.
Dr Reddy's Laboratories
Net sales 37,365 40,166 39,239 5.0 (2.3) We expect the US business to grow US$10 mn qoq, given scale-up in propofol and suboxone
EBITDA 7,575 8,198 8,266 9.1 0.8 launches, offset by continued pressure in the base business. We forecast 10% yoy growth
EBIT 4,465 5,015 5,006 12.1 (0.2) for India, while we expect Russia/CIS to grow 17% yoy with CIS benefitting from a favorable
PBT 4,924 5,694 5,506 11.8 (3.3) base effect as well. We expect RoW to grow at 20% yoy.
Reported PAT 4,561 4,344 6,829 49.7 57.2 We expect gross margin to bounce back to ~55% in 1QFY20. We expect EBITDA margins at
Extraordinaries — — 3,500 — — 21.1%, given the qoq gross margin expansion. We expect reported EPS to jump 50% yoy,
though, this is largely due to a one-time US$50 mn settlement income from Celgene for
Adjusted PAT 4,561 4,344 4,204 (7.8) (3.2)
Revlimid. Excluding the licensing income, we expect EPS to decline 8% yoy. Notably, our
EPS (Rs/share) 27.5 26.2 25.3 (7.8) (3.2) estimates do not include the out-licensing income from the recently announced deal with
EBITDA margin (%) 20.3 20.4 21.1 79 bps 65 bps Upsher Smith.
Laurus Labs
Net sales 5,390 6,352 5,760 6.9 (9.3)
EBITDA 806 1,120 928 15.2 (17.1) We expect ARV APIs to remain flat on qoq basis (-18% yoy), while Hep-C will decline 13%
yoy. We expect ingredients to remain flat yoy, and expect 57% yoy growth in synthesis
EBIT 424 685 478 12.8 (30.2)
business. We expect formulations to have only a modest contribution in the quarter (Rs150
PBT 226 526 273 20.6 (48.1) mn), and expect US$3 mn contribution from first tender formulation sales in Africa.
Reported PAT 166 432 207 25.3 (52.0)
We expect gross margin to improve to 47.2% (+100 bps qoq) helped by product mix, with
Adjusted PAT 166 652 428 158.4 (34.4)
partial benefits of shift in intermediate source, and expect EBITDA margin to expand 120 bps
EPS (Rs/share) 1.6 6.2 4.0 158.4 (34.4)
yoy to 16.1%
Lupin
Net sales 38,559 44,063 43,126 11.8 (2.1) We expect US business to decline US$40 mn qoq, impacted by the loss of Ranexa exclusivity
EBITDA 5,270 8,723 7,027 33.3 (19.4) in May 2019, and supported by a stable base business, with minimal incremental
EBIT 2,680 5,915 4,077 52.1 (31.1) contributions from Solosec and levothyroxine. We expect the domestic business to grow
PBT 3,835 5,925 3,827 (0.2) (35.4) 10% yoy, South Africa, Europe and RoW to grow 8%, 7% and 20% yoy respectively, and
Reported PAT 2,001 2,896 2,487 24.3 (14.1) Japan to grow 4% yoy.
Adjusted PAT 2,001 2,896 2,487 24.3 (14.1) We expect EBITDA margin to decline 350 bps qoq to ~16.3%, given the declining
EPS (Rs/share) 4.4 6.4 5.5 24.3 (14.1) contribution from Ranexa exclusivity. We expect EPS to grow 24% yoy and decline 14% qoq.

Strategy India
Change (%)
Sun Pharmaceuticals
Net sales 72,242 71,639 81,933 13.4 14.4
EBITDA 16,067 10,168 17,982 11.9 76.8 We expect Taro revenues to decline US$5 mn qoq. We expect SUNP's ex-Taro US revenues to
decline US$15 mn qoq, with minimal contribution from Ilumya given the impact of patient
EBIT 12,051 5,627 13,232 9.8 135.1
access program. We expect domestic business to grow 8% yoy, RoW to grow 34% yoy
PBT 12,739 6,942 14,132 10.9 103.6 reflecting Polapharma consolidation, and EMs to grow 8% yoy.
Reported PAT 9,825 6,383 10,595 7.8 66.0
Extraordinaries — — — — — We expect EBITDA margin at 21.9%, reflecting the launch costs for Ilumya, as well as
Adjusted PAT 9,825 6,359 10,595 7.8 66.6 continued R&D spend (7% of sales). We expect base Taro EBITDA margin to remain stable in
EPS (Rs/share) 4.1 2.6 4.4 7.8 66.6 the quarter and expect ex-Taro EBITDA margin at ~18%. We expect EPS to grow 8% yoy,
EBITDA margin (%) 22.2 14.2 21.9 -30 bps 775 bps though qoq growth is not comparable.
Torrent Pharmaceuticals
Net sales 18,720 18,560 20,085 7.3 8.2
EBITDA 4,770 4,730 5,221 9.5 10.4 We expect domestic segment to grow 5% yoy, reflecting the change in revenue recognition,
which will impact ~5 days of sales, adjusting for which, sales would have grown by ~9% yoy.
EBIT 3,270 3,130 3,571 9.2 14.1
We expect LatAm to grow 10% yoy, and expect other branded markets to grow 20% yoy.
PBT 2,320 2,070 2,471 6.5 19.4 We expect Europe to grow 10% yoy, and expect US to decline US$5 mn qoq.
Reported PAT 1,630 (1,520) 1,853 13.7 NM
Adjusted PAT 1,630 (1,520) 1,853 13.7 NM We expect EBITDA margin to expand 50 bps qoq to 26%. We expect EPS to grow 14% yoy,
EPS (Rs/share) 9.6 (9.0) 11.0 13.7 NM though qoq numbers are not comparable.
Real Estate
Brigade Enterprises
Net sales 6,991 7,600 7,945 13.6 4.5
EBITDA 1,795 2,154 1,969 9.7 (8.6)
We estimate revenue recognition of Rs7.9 bn at 30% gross margin for real estate business.
EBIT 1,479 1,729 1,557 5.3 (9.9)
PBT 938 1,144 886 (5.6) (22.6)
Reported PAT 631 597 623 (1.3) 4.4
Extraordinaries — — — — — We estimate positive PBT contribution of Rs137 mn in 1QFY20 from the hospitality business
Adjusted PAT 632 601 623 (1.4) 3.6 on account of stabilization of hotel properties as well as incremental contribution from
EPS (Rs/share) 4.6 4.4 4.6 (1.5) 3.6 operationalization of a new hotel in Kochi.
DLF
Net sales 15,074 25,004 17,923 18.9 (28.3)
EBITDA 3,086 5,337 3,426 11.0 (35.8)
DCCDL, which shifted to equity method of accounting from 3QFY18 is likely to report 8% yoy
EBIT 2,522 4,770 2,852 13.1 (40.2)
increase in revenues at Rs10.5 bn.
PBT (950) 1,024 580 NM (43.4)
Tax (260) 378 203 NM (46.3)
Reported PAT 1,724 4,348 2,670 54.8 (38.6)
Adjusted PAT 1,851 4,083 2,670 44.3 (34.6) Sales momentum is likely to continue with estimated sales of Rs6 bn for the quarter.
EPS (Rs/share) 1.0 1.6 1.5 44.3 (9.3)
Embassy Office Parks REIT
Net sales — 5,011 5,161 — 3.0
EBITDA — 2,997 3,681 — 22.8 Sequential improvement in net income is largely driven by reduction in interest cost post
EBIT — 2,121 2,788 — 31.4 repayment of debt post equity issuance.
PBT — 603 1,945 — 222.8
Reported PAT — 802 1,561 — 94.5
NOI margins of 83% for 1QFY20 compared to 84% for FY2019.
Adjusted PAT — 802 1,561 — 94.5
EBITDA margin (%) — 59.8 71.3 — 1150 bps
Oberoi Realty
Net sales 8,883 5,735 6,052 (31.9) 5.5
EBITDA 4,617 2,097 2,350 (49.1) 12.1 Decline in revenues to Rs6 bn (-32% yoy) should be seen in the context of milestone related
EBIT 4,511 1,987 2,239 (50.4) 12.7 revenue recognition for several projects in 1QFY19.
PBT 4,533 2,187 2,419 (46.6) 10.6
Reported PAT 3,083 1,544 1,693 (45.1) 9.7
Investment properties (hotel+commercial) will yield revenues of Rs858 mn (+10% yoy) with
Adjusted PAT 3,094 1,558 1,704 (44.9) 9.4
incremental contribution on account of improved occupancy at Commerz II.
EPS (Rs/share) 9.1 4.6 5.0 (44.9) 9.4

India Strategy
Change (%)
Prestige Estates Projects
Net sales 8,613 19,793 13,155 52.7 (33.5)
EBITDA 2,562 4,879 3,297 28.7 (32.4) Sales are likely to see an uptick due to launch of new projects to meet target of 10 mn sq. ft
EBIT 1,980 3,861 2,266 14.4 (41.3) of launches in FY2019
PBT 711 2,028 640 (9.9) (68.4)
Reported PAT 379 1,519 427 12.7 (71.9)
Debt level will continue to remain flat as collections from sold units continue to fund
Adjusted PAT 379 1,519 427 12.7 (71.9)
construction spend.
EPS (Rs/share) 0.1 0.4 0.1 12.7 (71.9)
Sobha
Net sales 5,977 13,978 9,621 61.0 (31.2)
EBITDA 1,306 2,435 1,752 34.2 (28.0)
We estimate blended gross profit margin of 38% for 1QFY20.
EBIT 1,157 2,276 1,589 37.3 (30.2)
PBT 740 1,756 1,078 45.7 (38.6)
Reported PAT 526 1,133 776 47.6 (31.5)
Adjusted PAT 534 1,132 776 45.4 (31.4) New launches planned in NCR will likely increase the sales momentum in 1QFY20.
EPS (Rs/share) 5.6 11.9 8.2 45.4 (31.4)
Sunteck Realty
Net sales 2,111 2,697 2,785 32.0 3.3
We expect a sequential improvement in EBITDA margin to 37% on account of increase in
EBITDA 1,116 888 1,024 (8.2) 15.3
realizations at Naigaon. Construction spend is likely to increase due to under-construction
EBIT 1,112 882 1,017 (8.5) 15.3
commercial properties at ODC and residential projects in Naigaon and Goregaon.
PBT 1,148 900 1,019 (11.3) 13.2
Reported PAT 681 675 613 (10.1) (9.2)
Sales momentum gathered in the last quarter on account of Naigaon is likely to continue in
Adjusted PAT 589 628 613 4.0 (2.4)
1QFY20 as well.
EPS (Rs/share) 4.2 4.5 4.4 4.0 (2.4)
Retailing
Aditya Birla Fashion and Retail
Net sales 19,135 19,153 20,349 6.3 6.2
We expect a tepid 6% yoy revenue growth, driven by 5% yoy revenue growth in Madura and
EBITDA 1,138 1,245 1,119 (1.7) (10.1)
9% yoy growth in Pantaloons. Weak demand will be an added dampener to a typically weak
EBIT 415 516 413 (0.5) (19.9)
quarter.
PBT 56 305 183 227.5 (39.9)
Reported PAT 56 2,026 183 227.5 (91.0)
Higher fixed costs as well as higher ad-spends in the Pantaloons business to result in 45 bps
Adjusted PAT 56 2,026 183 227.5 (91.0)
yoy margin compression. Our estimates do not take into account the impact of Ind-AS 116.
EPS (Rs/share) 0.1 2.6 0.2 227.5 (91.0)
Avenue Supermarts
Net sales 45,594 50,334 59,100 29.6 17.4
EBITDA 4,227 3,765 5,213 23.3 38.4 We expect yoy revenue growth of 30% driven by steady SSSG and ramp-up of revenues from
EBIT 3,824 3,146 4,554 19.1 44.8 new stores opened in 4QFY19 and 1QFY20.
PBT 3,866 3,171 4,561 18.0 43.9
Reported PAT 2,506 2,029 2,965 18.3 46.1
Extraordinaries — — — — — We expect 45 bps yoy compression in EBITDA margins primarily on account of lower GMs.
Adjusted PAT 2,506 2,029 2,965 18.3 46.1 Sharp sequential profitability increase is largely on account of seasonally higher revenues and
EPS (Rs/share) 4.0 3.3 4.8 18.3 46.1 margins.
Titan Company
Net sales 43,189 46,721 52,015 20.4 11.3
EBITDA 4,953 5,016 6,611 33.5 31.8 We model (1) 22% yoy growth in jewelry segment revenues, (2) 11% yoy growth in the
EBIT 4,601 4,681 6,261 36.1 33.8 watches segment revenues, driven by share gains and (3) 18% growth in eyewear.
PBT 4,870 5,110 6,591 35.3 29.0
Reported PAT 3,492 2,946 4,680 34.0 58.9
Extraordinaries — (772.6) — — —
Bulding around 100 bps gold hedging/MTM gains for the jewellery segment, we expect
Adjusted PAT 3,492 3,718 4,680 34.0 25.9
overall EBITDA margins to expand 124 bps yoy.
EPS (Rs/share) 3.9 4.2 5.3 34.0 25.9

Strategy India
Change (%)
Speciality Chemicals
Castrol India
Net sales 10,172 9,762 10,576 4.0 8.3
EBITDA 2,517 2,830 3,175 26.1 12.2 We expect Castrol to report 26% yoy jump in EBITDA driven by expansion in margins
EBIT 2,385 2,668 3,012 26.3 12.9 reflecting a sharp decline in RM costs amid lower base oil prices.
PBT 2,555 2,876 3,189 24.8 10.9
Reported PAT 1,642 1,850 2,051 24.9 10.9
We assume (1) 2.5% yoy decline in volumes to 55.6 mn liters and (2) ~530 bps yoy
Adjusted PAT 1,642 1,850 2,051 24.9 10.9
expansion in EBITDA margins to 30%.
EPS (Rs/share) 1.7 1.9 2.1 24.9 10.9
Pidilite Industries
Net sales 18,341 16,389 20,605 12.3 25.7
EBITDA 3,817 2,788 4,600 20.5 65.0 We model 7% volume growth and 12% revenue growth for the consumer bazaar (CBP)
EBIT 3,516 2,398 4,245 20.7 77.0 business. We expect industrial products segment to report muted 7% revenue growth.
PBT 3,764 2,895 4,910 30.4 69.6
Reported PAT 2,387 2,351 3,285 37.6 39.7
Extraordinaries — 419.2 — — — We expect expansion in consolidated GM (+130 bps qoq; +155 bps yoy) led by easing of
Adjusted PAT 2,387 1,932 3,285 37.6 70.0 prices of key raw materials (VAM and crude derivatives) and modest rupee appreciation. We
EPS (Rs/share) 4.7 3.8 6.5 37.6 70.0 model 150 bps yoy improvement in consolidated EBITDA margin to 22.3%.
S H Kelkar and Company
Net sales 2,364 2,689 2,553 8.0 (5.1)
EBITDA 329 241 328 (0.4) 36.4 We expect the company to return back to revenue growth after two consectutive yoy decline
EBIT 262 161 237 (9.3) 47.2 prints.
PBT 280 220 252 (9.8) 14.6
Reported PAT 187 196 173 (7.1) (11.5)
Jump in staff and other expenses, off a low base, to reflect in EBITDA margin decline of 100
Adjusted PAT 187 196 173 (7.1) (11.5)
bps+ despite some improvement in gross margins.
EPS (Rs/share) 1.3 1.4 1.2 (7.1) (11.5)
SRF
Net sales 17,413 20,720 18,657 7.1 (10.0)
EBITDA 3,112 3,879 3,253 4.5 (16.2) We expect moderation of revenue growth to 7% in 1QFY20 due to likely impact from
EBIT 2,227 2,908 2,253 1.2 (22.5) shutdown of the Dahej plant earlier in the quarter.
PBT 1,823 2,545 1,773 (2.7) (30.3)
Reported PAT 1,338 1,909 1,329 (0.7) (30.4)
We expect 130 bps qoq moderation in EBITDA margins to 17.6% attributed to higher costs
Adjusted PAT 1,338 1,909 1,329 (0.7) (30.4)
amid lack of operating leverage.
EPS (Rs/share) 23.3 33.2 23.2 (0.7) (30.4)
Telecom
Bharti Airtel
Net sales 197,992 206,022 210,072 6.1 2.0
EBITDA 67,258 66,317 66,879 (0.6) 0.8 We expect a 1.6% qoq uptick in India wireless revenues; EBITDA for the segment will likely
EBIT 15,806 11,383 10,529 (33.4) (7.5) be down 3% qoq (and 10% yoy). We expect a 2% qoq jump in ARPU to Rs127/month.
PBT (4,503) (13,452) (12,721) 182.5 (5.4)
Reported PAT 973 1,073 (11,543) (1,286.5) (1,175.3)
Extraordinaries (3,621) 20,221 — — — We expect a steady quarter for the Africa business with 0.8% qoq growth in revenues and
flattish sequential EBITDA. Among the other businesses, we expect – (a) India DTH to report
Adjusted PAT 4,594 (19,148) (11,543) (351.3) (39.7)
healthy sequential performance, (b) modest sequential performance for the home broadband
EPS (Rs/share) 1.1 (4.8) (2.9) (351.3) (39.7) business, and (c) double-digit yoy growth in revenues and EBITDA in the Enterprise segment.
Bharti Infratel
Net sales 36,735 35,006 35,398 (3.6) 1.1
EBITDA 15,196 13,914 13,826 (9.0) (0.6) We expect a subdued quarter overall with weak net tenancy growth; additions from Bharti to
EBIT 9,807 8,416 8,347 (14.9) (0.8) be largely offset by exits from VIL.
PBT 10,701 9,067 9,138 (14.6) 0.8
Reported PAT 6,380 6,076 6,507 2.0 7.1
Extraordinaries — 658 660 — 0.3
We continue to model some increase (qoq) in service rentals, implying ~10% yoy growth;
Adjusted PAT 6,380 5,418 5,847 (8.3) 7.9
expansion in energy spreads should be moderate.
EPS (Rs/share) 3.4 2.9 3.2 (8.3) 7.9

India Strategy
Change (%)
Tata Communications
Net sales 39,438 42,435 42,066 6.7 (0.9)
EBITDA 5,869 6,853 6,975 18.9 1.8
A strong quarter likely for TCOM - we expect EBITDA growth of 19% yoy.
EBIT 1,020 1,266 1,375 34.9 8.6
PBT 41 622 475 1,056.9 (23.6)
Reported PAT (585) (1,988) (389) (33.5) (80.4)
We expect robust momentum in traditional services along with a better margin profile for
Adjusted PAT (585) (1,995) (389) (33.5) (80.5)
growth and innovation services.
EPS (Rs/share) (2.1) (7.0) (1.4) (33.5) (80.5)
Vodafone Idea
Net sales — 117,750 118,001 — 0.2
EBITDA — 15,853 19,159 — 20.9
We expect a sharp jump in EBITDA on the back of further progress on delivery of cost
EBIT — (30,786) (28,230) — (8.3)
synergies.
PBT — (58,680) (52,525) — (10.5)
Tax — (18,770) (18,384) — (2.1)
Reported PAT — (48,819) (38,691) — (20.7)
Extraordinaries — (9,458) (5,000) — (47.1) We expect an ARPU print of Rs114/month, up 9.6% qoq; sequential jump is optical thanks to
Adjusted PAT — (39,361) (33,691) — (14.4) the sharp decline in average subs base. Net finance costs should also see a sharp sequential
EPS (Rs/share) — (1.4) (1.2) — (14.4) decline.
EBITDA margin (%) — 13.5 16.2 — 277 bps
Transportation
Adani Ports and SEZ
Net sales 24,110 30,825 31,089 28.9 0.9
Cargo tonnage at India's major ports has grown 2.5% yoy in Apr-May 2019. We model a
EBITDA 15,884 19,321 19,450 22.4 0.7
higher 16% growth for the portfolio driven by strong growth in Mundra and Dhamra ports.
EBIT 12,659 15,760 15,475 22.2 (1.8)
This is partly on low base. We model qoq flattish volumes.
PBT 12,381 15,785 14,705 18.8 (6.8)
Reported PAT 10,065 12,809 11,656 15.8 (9.0)
Extraordinaries (67) (284) (108) 62.5 (61.8) We model sequentially flat EBITDA margin of 62.7% for Adani Ports in 1QFY20. We expect
Adjusted PAT 6,907 12,859 15,980 131.4 24.3 weakness in EBITDA margin as we factor in reducing share of container in ADSEZ's cargo
EPS (Rs/share) 3.3 6.2 7.7 131.4 24.3 mix.
Container Corp.
Net sales 14,983 17,499 17,338 15.7 (0.9) The EXIM container handling tonnage for Indian Railways has grown 7% yoy in Apr-May
EBITDA 3,202 3,829 4,187 30.8 9.4 2019. We build in a 6% growth in Concor's EXIM handling volumes in building in a modest
EBIT 2,180 2,711 3,042 39.6 12.2 decline in market share. With the price increases taken in FY2019/20, we expect a higher
PBT 2,800 3,993 3,354 19.8 (16.0) 18% growth in EXIM revenues in the quarter. We also expect modest growth in domestic
Reported PAT 2,524 3,523 3,036 20.3 (13.8) volumes. Overall, we expect ~16% revenue growth in 1QFY20.
Extraordinaries 456 549 554 21.5 0.8 We expect a 280 bps yoy increase in EBITDA margin to 24% for 1QFY20 on account of price
Adjusted PAT 2,068 2,974 2,482 20.0 (16.5) increases taken over the past few quarters. We expect a lower 20% yoy growth in PAT in
EPS (Rs/share) 3.4 4.9 4.1 20.0 (16.5) account of lower other income. Note that Concor has given advance payment to Indian
EBITDA margin (%) 21.4 21.9 24.1 277 bps 226 bps Railways of Rs30 bn.
Gateway Distriparks
Net sales 1,031 1,079 3,412 230.9 216.1 Financials are not comparable yoy as rail subdiary financials will now get consolidated line-by-
line after the recent buyout of the Blackstone stake. Container cargo at major ports grew
EBITDA 220 199 618 181.1 209.9
10% yoy in Apr-May 2019 whereas EXIM container tonnage for Indian Railways grew ~7% in
EBIT 135 125 382 183.5 206.7 the same period. This would imply a volume growth higher than 7% for road CFS. We expect
a higher ~11% revenue growth in CFS revenues for the quarter. Rail volumes had
PBT 146 130 226 54.9 73.2 disappointed last quarter on the back of (1) divergence in pricing by road and rail operators
hampering competitive positioning of rail and (2) disruption caused by the ongoing track
Reported PAT 307 3,088 339 10.3 (89.0)
maintenance and doubling work on the northern corridor. We thus expect modest yoy growth
Extraordinaries 131 2,845 160 22.5 (94.4) in rail logistics revenues for GDPL.
Adjusted PAT 192 292 202 5.1 (30.8)

We expect modest 40-50 bps yoy improvement in EBITDA margin for both rail and CFS
EPS (Rs/share) 1.8 2.7 1.9 5.1 (30.8) businesses for the full year. We expect ~18% EBITDA margin for the quarter, similar to our
FY2020 estimate.
Gujarat Pipavav Port
Net sales 1,760 1,802 1,766 0.4 (2.0)
We expect a healthy 18% yoy growth in container volumes and a modest 7% yoy growth on
EBITDA 914 996 1,015 11.1 2.0 an overall basis, dragged down by a decline in bulk and LPG volumes. We expect sequentially
EBIT 644 686 707 9.8 3.1 improving realization per tonne, net of recent price increase in container and lower share of
PBT 749 795 846 13.0 6.4 bulk in the revenue mix. Yoy realization will still decline on a high base (favorable currency)
Reported PAT 471 510 550 16.8 7.9 and increase in share of transshipment volumes yoy. Revenue growth will thus remain
subdued for the quarter.
Adjusted PAT 471 510 550 16.8 7.9
We model EBITDA margin of 57.5% in the quarter, up 220 bps qoq, driven by the recent price
EPS (Rs/share) 1.0 1.1 1.1 16.8 7.9
increase at GPPV effective from April 7, 2019.

Strategy India
Change (%)
InterGlobe Aviation
Net sales 65,120 78,833 89,098 36.8 13.0
We expect a 29% yoy growth in RPKs and 6% yoy increase in yields to drive overall yoy
EBITDA (111) 5,914 9,052 NM 53.1
revenue growth of 36%. Seasonally strong demand coupled with capacity constraints are the
EBIT (1,663) 3,728 6,801 NM 82.4
key drivers of the yield improvement.
PBT 313 6,168 9,590 2,960.0 55.5
Reported PAT 278 5,896 6,905 2,384.7 17.1
Extraordinaries — — — — — Increase in yields will more than offset the impact of increase in fuel costs and will drive a
Adjusted PAT 278 5,896 6,905 2,384.7 17.1 qoq increase in EBITDAR margins. We do not incorporate the impact of IndAS 116 in our
EPS (Rs/share) 0.7 15.4 18.0 2,384.7 17.1 forecasts.
EBITDA margin (%) (0.2) 7.5 10.2 1032 bps 265 bps
Mahindra Logistics
Net sales 9,282 10,147 10,267 10.6 1.2
EBITDA 405 408 433 7.0 6.1 For 1QFY20, we expect 5% yoy growth in M&M SCM business on the back of weak trends
in auto sales. We expect a 20% yoy growth in non-M&M SCM business on the back of a
EBIT 355 348 372 5.0 7.0
low base and start of execution of recent order wins in non-M&M SCM vertical. On an overall
PBT 376 357 386 2.7 8.2 basis, we arrive at 11% yoy growth in revenues in 1QFY20.
Tax 133 118 135 1.6 14.2
Reported PAT 240 235 249 3.8 6.1 We expect EBITDA margin of 4.2% in 1QFY20, marginally higher by 20 bps qoq. Yoy levels
Extraordinaries — — — — — are non comparable on account of ESOP/RSU charge. This is expected to be led by some
Adjusted PAT 240 235 249 3.8 6.1 improvement in non-M&M margin given higher 40% share in warehousing in recent order
EBITDA margin (%) 4.4 4.0 4.2 -15 bps 19 bps wins.

REDUCE
Mindtree (MTCL)
IT Services JULY 08, 2019
CHANGE IN RECO.
Coverage view: Cautious
A phase of transition. Post-acquisition of controlling stake by L&T, Mindtree’s CEO, Price (`): 889
Vice-Chairman and Chairman have stepped down. Critical focus areas are—(1) new Fair Value (`): 930
leaders after the founder group stepped down and plan of action to retain existing
BSE-30: 39,513
ones, (2) collaboration plan with L&T Infotech and focus verticals/ horizontals noting
some potential overlap areas, (3) path to eventual merger with L&T Infotech and (4)
cost rationalization plan to juice up the margin profile. We moderate our near term
estimates to account for this transition. Risk reward is in balance; cut to REDUCE.
C ompany data and valuation summary
Mindtree
Stock data Forecasts/Valuations 2019 2020E 2021E
52-week range (Rs) (high,low) 1,184-752 EPS (Rs) 45.8 46.5 58.0
Market Cap. (Rs bn) 145.9 EPS growth (%) 32.7 1.4 25.0
Shareholding pattern (%) P/E (X) 19.4 19.1 15.3
Promoters 13.3 Sales (Rs bn) 70.2 76.2 85.0
FIIs 39.3 Net profits (Rs bn) 7.5 7.7 9.6
MFs 9.0 EBITDA (Rs bn) 10.6 11.4 13.9
Price performance (%) 1M 3M 12M EV/EBITDA (X) 12.7 11.5 9.1
Absolute (8.6) (6.8) (11.0) ROE (%) 24.9 21.6 23.4
Rel. to BSE-30 (7.2) (8.3) (19.9) Div. Yield (%) 1.5 1.6 2.0
A quick round-up of the recent events
L&T successfully completed its hostile acquisition of Mindtree. L&T now owns ~60% of the
company of which 31% was acquired through the open offer, 8.9%% through open market
purchase and 19.8% from VG Siddharta. Mindtree’s CEO, Rostow Ravanan, COO and Vice
Chairman, NS Parthasarthy and Chairman- Krishna Kumar Natrajan have stepped down from
the board and resigned as employees of the company and will help the new management with
the transition. We note that Subroto Bagchi, co-founder offered not to be re-elected on the
Mindtree board recently.
Focus areas—transition, collaboration, retention, merger and margins
Following factors are critical in view on the stock
 New leaders and employee retention plan. The founder group collectively resigned on
Friday, a setback for the company. L&T will have to take critical call on composition and
profile of new leadership. The choice of new CEO will be interesting—it will not be easy to
attract high profile talent if the plan is for an eventual merger with L&T Infotech (LTI). On the
other hand keeping Mindtree as a separate standalone unit will deprive the group of some of
the potential synergies with LTI. Deputation of CEO from LTI will be the least risky path, in
our view. Do note that Mindtree has followed a carefully calibrated and steady growth
approach. Mindtree has historically followed a low-risk, longer term and measured pace of
growth and alignment of performance management systems to this goal. L&T group on the
other hand is lot more aggressive in its approach to capture the large addressable market.
The growth approach undertaken by L&T will determine the appropriate performance Kawaljeet Saluja
management systems and has implications for talent retention.
 Collaboration with LTI. Even as Mindtree and LTI offerings and verticals are largely
complementary in nature, there are some areas of overlaps in retail, CPG and insurance Sathishkumar S
units. Overlaps are also possible in the manufacturing vertical. While there are areas of
overlap there are also plenty of areas of collaboration. For example Mindtree lacks strength
in SAP and Oracle, products that are used frequently by its clients. LTI can benefit from
Mindtree’s strength in the experience layer of digital, addressing CMO budgets and excels in
handling discretionary spending of clients. Arriving at a common collaboration ground
without compromising interest of minority shareholders will be critical in our view
Contact: +91 22 6218 6427
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
Mindtree IT Services
 Path to eventual merger. Merit in keeping two separate IT services organizations

appears low. Mindtree and LTI businesses are highly complementary. Mindtree has a
broad range of offerings, is strong in digital, particularly in the experience layer and cloud
services, is strong in addressing the CMO agenda and excels in handling the discretionary
spending of clients. Mindtree’s core strengths are in retail, CPG, travel and hospitality,
technology and media & services verticals. Mindtree’s people practices are well
recognized, which shows in its low attrition numbers. LTI’s strengths are geared towards
core transformation, enterprise solutions (a weak of area for Mindtree), and strength in
multiple aspects of digital including cloud, analytics, IoT, cognitive and mobility. Both
companies have a rich client base which can be mined through complementary offerings.
We hope that Mindtree will be eventually merged with LTI to make the most out the
acquisition and eliminate any potential conflicts.
 Margin expansion. L&T management indicated that Mindtree has scope for margin
improvement. Its EBIT margin stood at 12.8% in FY2019 which the management believed
can improve by 100-120 bps in FY2020E. We forecasted EBIT margin to improve led by
scale and operational efficiencies. L&T can flex levers to improve margins. Mindtree
management has invested in platforms and beyond digital group, a couple of initiatives
that are important in the medium term even as they do not generate any revenues today.
Tightening of performance management systems can yield additional margin lever
though the flip side of this can be attrition management.
Cut revenue estimates due to ongoing transition; many moving parts make the
story less attractive. Cut to REDUCE from ADD.
We moderate our FY2020E revenue growth to 7% growth from 12.7% earlier. The
following factors drive the cut:
 We believe that the long process of hostile takeover of Mindtree has impacted
management focus.
 We also note that certain clients could have held back decisions or started with much
smaller engagements due the uncertainty driven by the hostile acquisition process. The
impact of uncertainty showed up in TCV of deals in the March 2019 quarter.
 We do expect increase in attrition after the management change. Client relationships in

services business are sticky as long as the client is comfortable on service delivery and
continuity of client partners. Attrition on the other hand can lead to a loss of customer
connect and revenues.
 Mindtree has possibly the highest exposure to discretionary spending. Project cycles have
relatively short durations, requiring high touch with clients to back-fill completed projects
and win new ones for overall growth. Hence, people continuity becomes even more
important. Management change in IT services business does lead to attrition across
different levels in client organizations.
Managing people and aspects and cultural integration is critical in M&A. L&T is cognizant of
this and would take prudent steps to manage the same. However uncertainty in the near
term leads to 5-7% cut in revenue estimates.
We increase our EBIT margin estimate by 30-60 bps for FY2021E and FY2022E factoring in
some of the potential changes to performance management systems.
The Mindtree story has many uncertainties on integration, attrition, continuation of

independent growth charter and potential consolidation with IT services arm of L&T. This is
in addition to standard industry wide concerns on pricing pressure, talent constraint in the
US and risk of slowdown in BFS. Against this backdrop, valuations of 15.5X FY2021E
earnings are fair and do not have scope for upside. We cut our recommendation to REDUCE
from ADD valuing the stock at 16X FY2021E earnings. Our target price reduces from Rs930
from Rs1,030 earlier.

IT Services Mindtree
Exhibit 1: Key changes to estimates, March fiscal year-ends, 2020E-2022E
New Old Change (%)

2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E
Revenues (Rs mn) 76,162 85,038 92,702 80,284 91,037 99,872 (5.1) (6.6) (7.2)
Revenues (US$ mn) 1,074 1,181 1,288 1,129 1,264 1,387 (4.8) (6.6) (7.2)
Growth (%) 7.3 10.0 9.0 12.7 12.0 9.7
EBITDA (Rs mn) 11,413 13,853 15,701 12,606 14,578 16,268 (9.5) (5.0) (3.5)
Net Profit (Rs mn) 7,660 9,572 10,979 8,436 9,969 11,356 (9.2) (4.0) (3.3)
Fully diluted EPS (Rs/share) 46.5 58.0 66.6 51.2 60.5 68.9 (9.2) (4.0) (3.3)
Re/ $ rate 70.9 72.0 72.0 71.1 72.0 72.0 (0.3) — —
EBITDA margin (%) 15.0 16.3 16.9 15.7 16.0 16.3

Mindtree IT Services
Exhibit 2: Mindtree and LTI proforma operating metrics
Combined (LTI + Mindtree) March 2019 quarter

2016 2017 2018 2019 LTI Mindtree Combined
Revenues (US$ mn) 1,602 1,750 1,979 2,350 354 262 616
Geography-wise revenues (US$ mn)
US (North America) 1,077 1,199 1,358 1,636 235 193 428
Europe 332 344 386 419 58 48 106
India 72 90 110 132 29 10 39
RoW 120 115 125 164 32 11 43
Geography-wise revenues (%)

US (North America) 67 69 69 70 66 74 69
Europe 21 20 19 18 16 18 17
India 5 5 6 6 8 4 6
RoW 7 7 6 7 9 4 7
Vertical-wise revenues (US$ mn)

BFSI 598 650 740 859 161 57 218
CPG, retail,pharma, manufacturing 412 441 488 576 96 58 154
Hi-tech,media and entertainment 344 390 438 550 44 104 148
E&U 112 108 133 144 39 — 39
Travel and hospitality 111 116 127 164 — 43 43
O thers 25 47 52 59 14 — 14
Vertical-wise revenues (%)

BFSI 37 37 37 37 46 22 35
CPG, retail,pharma, manufacturing 26 25 25 24 27 22 25
Hi-tech,media and entertainment 21 22 22 23 12 40 24
E&U 7 6 7 6 11 6
Travel and hospitality 7 7 6 7 16 7
O thers 2 3 3 3 4 2
Revenues by service-lines (US$ mn)

ADM 727 748 814 937 105 136 241
Consulting 23 31 32 33 — 9 9
IP led revenue 10 9 8 8 — 3 3
Testing 181 189 202 237 29 32 61
IMS & tech support 211 260 309 384 39 61 100
Analytics, AI & cognitive 66 85 119 150 38 — 38
Enterprise solutions 303 329 381 458 103 21 124
Enterprise integration & mobility 46 59 75 102 28 — 28
Platform based solutions 35 39 39 42 11 — 11
Revenues by service-lines (%)

ADM 45 43 41 40 30 52 39
Consulting 1 2 2 1 — 3 1
IP led revenue 1 1 0 0 — 1 0
Testing 11 11 10 10 8 12 10
IMS & tech support 13 15 16 16 11 23 16
Analytics, AI & cognitive 4 5 6 6 11 — 6
Enterprise solutions 19 19 19 19 29 8 20
Enterprise integration & mobility 3 3 4 4 8 — 5
Platform based solutions 2 2 2 2 3 — 2
Headcount
Total headcount 36,695 37,673 41,862 48,373 28,169 20,204 48,373
Source: Company, Kotak Institutional Equities

IT Services Mindtree
Exhibit 3: Condensed consolidated financials for Mindtree Limited, March fiscal year-ends, 2014-2022E (Rs mn)
2014 2015 2016 2017 2018 2019 2020E 2021E 2022E

Profit model
Revenues 30,316 35,619 46,896 52,364 54,628 70,215 76,162 85,038 92,702
EBITDA 6,100 7,092 8,299 7,181 7,405 10,645 11,413 13,853 15,701
Interest (expense)/income (4) (1) (4) (191) (169) (29) — — (—)
Depreciation (809) (1,018) (1,332) (1,858) (1,715) (1,641) (1,714) (1,728) (1,851)
O ther income 496 835 810 445 1,902 893 864 1,118 1,435
Pretax profits 5,783 6,908 7,773 5,577 7,423 9,868 10,563 13,243 15,285
Tax (1,275) (1,545) (1,741) (1,363) (1,722) (2,327) (2,903) (3,671) (4,306)
Profit after tax 4,508 5,363 6,032 4,214 5,701 7,541 7,660 9,572 10,979
Diluted earnings per share (Rs) 26.8 31.9 35.9 25.1 34.5 45.8 46.5 58.0 66.6
Balance sheet
Total equity 16,405 20,128 23,956 25,771 27,414 33,061 37,940 44,038 51,032
Deferred taxation liability (402) (449) (602) (624) (318) (388) (388) (388) (388)
Total borrowings 27 23 433 991 3,009 5 5 5 5
Current liabilities 4,562 6,398 9,013 7,144 6,942 8,724 9,396 10,383 11,245
Total liabilities and equity 20,592 26,100 32,800 33,282 37,047 41,402 46,953 54,038 61,894
Cash 6,519 9,114 4,491 8,435 11,304 10,598 15,106 19,379 24,765
O ther current assets 10,141 11,077 15,846 14,435 16,083 20,838 22,322 25,029 27,398
Goodwill — — 7,606 6,411 6,059 5,912 5,513 5,113 4,753
Tangible fixed assets 3,932 5,909 4,857 4,001 3,601 4,054 4,012 4,518 4,977
Total assets 20,592 26,100 32,800 33,282 37,047 41,402 46,953 54,038 61,894
Free cash flow
O perating cash flow, excl. WC 6,081 7,218 8,407 7,181 8,029 10,683 11,372 13,853 15,701
Tax paid (1,297) (1,539) (1,939) (1,771) (1,632) (2,255) (2,903) (3,671) (4,306)
Working capital changes (1,766) 28 (2,243) 1,217 (833) (2,360) (813) (1,719) (1,508)
Capital expenditure (1,517) (1,987) (1,315) (846) (1,011) (1,708) (1,232) (1,834) (1,951)
Acquisitions — — (6,659) (467) (164) — — — —
Free cash flow 1,501 3,720 (3,749) 5,314 4,389 4,360 6,424 6,630 7,938
Ratios (%)
EBITDA margin 20.1 19.9 17.7 13.7 13.6 15.2 15.0 16.3 16.9
EBIT margin 17.5 17.1 14.9 10.2 10.4 12.8 12.7 14.3 14.9
Net debt/equity (0.4) (0.5) (0.2) (0.3) (0.3) (0.3) (0.4) (0.4) (0.5)
RoAE — — — — — — — — —
RoACE 30.5 29.4 27.4 17.0 21.4 24.9 21.6 23.4 23.1
Source: Company, Kotak Institutional Equities estimates

NEUTRAL
Diversified Financials
India JULY 05, 2019
UPDATE
BSE-30: 39,513
Some steps to comfort stakeholders. We find a few measures in the union budget to
provide comfort to debt market participants and promote retail NBFCs. Increase in RBI’s
control over NBFCs and bringing HFCs under its ambit will increase regulatory
supervision and hence provide comfort to debt markets and other stakeholders over the
medium term. Increasing tax deduction for first-time homebuyers and providing partial
guarantees on loan pool are positive at a margin, though reduction in budgetary
allocation for CLSS is negative.
RBI increases control over NBFCs and HFCs

With amendments to the RBI and NHB Act, the regulator gets more power to control non-banks.
 RBI will have power to remove directors of NBFCs, appoint new directors, supersede the board
and appoint administrators in public interest or for financial stability. The regulator can direct
NBFCs to increase disclosures and audit its group companies. It can also amalgamate an NBFC
with another institution, reconstruct the NBFC or split the NBFC into different units or institutions.
 With amendments to the NHB Act, the regulator will effectively replace NHB to supervise
housing finance companies.
We believe that more regulatory power over NBFCs and RBI’s oversight over HFCs will provide
more comfort to debt market participants and other stakeholders of NBFC/HFCs; this will bode
well for growth of the sector in the medium term. However, debt markets may preempt the
immediate regulatory move (now that RBI has assumed more regulatory power), which could
create near-term volatility.
A mixed bag for affordable housing
 The budget has proposed to provide annual tax deduction of Rs150,000 to first-time buyer
buying properties up to Rs4.5 mn for interest on housing loans (Section 80EEA). This will be
in addition to deduction of interest expenses of Rs200,000 under Section 24 and principal
repayment of Rs150,000 under Section 80C.
 In the past, first-time homebuyers could claim deduction of Rs50,000 under Section 80EE.
The total revenue foregone by the government under this section was Rs2.66 bn (FY2019RE)
and Rs2.29 bn in FY2018. Assuming average tax rate of 15-20%, the benefit was claimed by
about 250,000-350,000 individuals in FY2019.
Nischint Chawathe
 Budgetary allocation for Credit Linked Subsidy Scheme (CLSS) has been reduced to Rs10 bn
from Rs19 bn in FY2019RE. The actual subsidy payout was Rs18 bn in FY2018. The reason
behind the reduction in subsidy is not clear even as the government continues to focus on M B Mahesh, CFA
these segments with a target of 19.5 mn houses in the next five years under PMAY as
compared to 15.4 mn in the past five years.
Dipanjan Ghosh
Partial guarantee on loan pools positive at a margin
The government will provide a partial guarantee to PSU banks for buying high-rated pooled
assets of financially sound NBFCs for a period up to six months. This will be restricted to 10% of Shrey Singh
the pool and up to a maximum of Rs1 tn. This, in our view, may increase the quantum of loans
that can be sold to banks, credit enhanced from the aforesaid guarantee. The volume for loan
sell-down (through assignment/securitization route) already increased to Rs1.9 tn in FY2019 Venkat Madasu
from Rs838 bn in FY2018. The key constraint in this provision is the period of six months. This
may mean that either loans with shorter maturity will need to be pooled in or the bank will
have to assume risk beyond six months.
Contact: +91 22 6218 6427
India Diversified Financials
Other measures for NBFCs
 No tax liability on unrealized income from bad loans. NBFCs recognize interest on
NPLs under Ind-AS. They need to make similar/higher provisions to nullify the
income. Provisions are not tax deductible and hence this led to higher net tax
liability for the NBFC. The union budget has exempted NBFCs to pay tax on such
unrealized income on bad loans.
 Removal of debt redemption reserve (DRR) for public issue of NCDs. The RBI has
recently introduced revised ALM and LCR norms for NBFCs. Against this backdrop, DRR
becomes less relevant
Some measures for banks
 Rs700 bn announced towards recapitalization of PSBs. The government has

proposed further recapitalization of public sector banks by Rs700 bn through the issue of
recapitalization bonds. This compares to Rs1.06 tn in FY2019 and Rs1.45 bn over
FY2017-18. Although the allocation to individual banks is yet to be seen, this could be
used towards balance sheet clean-up and improving provision coverage in the weaker set
of banks.
 Charges on digital payments reduced to zero. In its efforts to boost digital payments,
the government has proposed the removal of all charges on digital payment transactions
and the RBI and banks will have to absorb the costs. As of now, it is unclear if this would
be applicable to credit cards but we note that changes to MDR in the past were
applicable only to debit cards. If that is the case, the impact to earnings would not be
significant in our view. HDFC Bank, ICICI Bank, Axis Bank, SBI and RBL Bank would be
most exposed although we believe the hit to earnings would not be meaningful.
 Capital infused to the holding company of Air India. The union budget includes an
allocation of Rs70 bn as budgetary support to Air India’s holding company. This reduces
the near-term risk to the banking system from an asset quality standpoint.
Exhibit 1: 30-40 bps incremental benefit in effective interest rates for first-time homebuyers
Calculation of effective interest rate on home loans considering benefits of sections 24 and 80EEA
Income (Rs/year) 750,000 1,000,000 1,500,000 1,800,000

Post-tax Income per month (Rs) 57,292 73,958 103,125 120,625
EMI/income (%) 50.0 42.59 30.55 26.11
Loan amount (Rs) 2,864,583 3,150,000 3,150,000 3,150,000
Property value at 70% LTV (Rs) 4,092,262 4,500,000 4,500,000 4,500,000
Home loan rate (%) 9.0 9.0 9.0 9.0
Effective rate after section 24 (%) 7.4 7.5 6.7 6.7
Effective rate after section 24 and 80EEA (%) 7.2 7.2 6.3 6.3
Source: Kotak Institutional Equities

Diversified Financials India
Exhibit 2: Average ticket size has been almost stable for HDFC Exhibit 3: LICHF’s ticket size is a tad lower than HDFC
Average ticket size of HDFC home loans, March fiscal year-ends, Average ticket size of LICHF home loans, March fiscal year-ends,
2007-19 (Rs mn) 2011-19 (Rs mn)
Average loans size (Rs mn-LHS) YoY (%-RHS) Average ticket size (Rs mn, LHS) Yoy (%, RHS)
3.0 15
2.6 2.7 3.0 12
2.5 2.6
2.3 2.5
2.4 2.2 2.2 12 2.4
2.0 2.4 2.2 9.6
1.9 2.1
1.7 1.8 1.9
1.8 1.5 9 1.7
1.4 1.8 1.5 1.6 7.2
1.3
1.2 6
1.2 4.8
0.6 3
0.6 2.4
0.0 0
2007
2008
2011
2012
2014
2015
2016
2018
2019
2009
2010
2013
2017
0.0 0
2011 2012 2013 2014 2015 2016 2017 2018 2019

Exhibit 4: EWS, LIG and MIG constituted 64% of all loan approvals for HDFC in FY2019
HDFC split of loan approvals by income group, March fiscal year-end, 2019
Household annual Share of loan

income approvals (%)
Economically Weaker Section Rs0-0.3 mn 2
Lower Income Group Rs0.3-0.6 mn 16
Middle Income Group Rs0.6-1.8 mn 46
High Income Group above Rs1.8 mn 36
Total 100
Source: Company
Exhibit 5: About 200,000-300,000 borrowers benefited from Section 80EE

Calculation of the number of first-time homebuyers that availed tax benefits under Section 80EE, March fiscal year-ends, 2018-19RE
2018 2019RE
Revenue impact of the tax incentive (Rs bn) 2.25 2.66
Effective tax rate of the beneficiary (assumed) 15% 20% 25% 15% 20% 25%
Deduction in taxable income (Rs) 50,000 50,000 50,000 50,000 50,000 50,000
Tax benefit to the home buyer (Rs) 7,500 10,000 12,500 7,500 10,000 12,500
No. of beneficiaries (#) 300,000 225,000 180,000 354,667 266,000 212,800

CAUTIOUS
IT Services
India JULY 05, 2019
UPDATE
BSE-30: 39,513
An end to structured buyback program? The Finance Bill 2019 has introduced tax of
20% on distributed income for buyback of equity shares listed on a recognized stock
exchange. Indian IT stepped up payout of free cash flow through a mix of dividend and
buyback (more tax efficient) in the past three years. The tax-efficient route of buyback
has been constrained by the change. Effectively, the cost of distribution of cash to
shareholders stands a minimum of 20%.
Event—Finance Bill taxes buyback of equity shares

The amendment made in the Finance Bill of 2019 states the following—Clause 36 of the Bill
seeks to amend Section 115QA of the Income Tax Act relating to tax on distributed income to
shareholders. Sub-Section (1) of the said section provides that a domestic company shall be
liable to pay additional income tax at the rate of twenty per cent on the distributed
income on buy-back of shares listed on a recognised stock exchange from a shareholder. It is
proposed to amend the said sub-section so as to provide that the provisions contained
therein shall also apply to the buyback of shares listed on a recognised stock exchange.
This amendment will take effect from 5th July, 2019. Effectively buyback of equity shares
will attract tax at the rate of 20% (plus surcharge). We note that dividend distribution also
attracts a tax of 20.56%. The rationale of imposing this tax is a belief that companies are using
buyback to circumvent payment of dividend distribution tax. On the face of it, the tax on
buyback of equity shares does not differentiate between the mode—tender or open market
route, implying tax liability on both modes of buyback.
Indian IT used a mix of buyback and dividends to return cash to shareholders

Indian IT companies have stepped up payout ratio in the past three years and used a mix of
dividend and buyback as compared to largely dividends in the period prior to this. For example,
of the total cash returned to shareholders by TCS in the past two years, 60% was done through
buyback and 40% through dividend. Wipro has largely used buybacks after continuous increase
in dividend distribution tax with nearly 90% of the payout in the form of buyback in the past
two years. IT companies started using buyback after—(1) consistent increase in dividend
distribution tax, (2) imposition of tax on dividends at the rate of 10% in hands of individuals,
partnerships, etc. for dividend in excess of Rs1 mn and (3) the government allowed tender
buyback to be done through the stock exchange route. This third aspect was important since
there was no long-term capital gains tax imposition on shares sold through a recognized stock
exchange (LTCG was introduced in FY2019 at the rate of 10%) by shareholders.
Making a case for structured buyback program just got difficult

We have advocated buyback consistently and we believe a structured buyback program (akin to
Accenture) will provide sustainable EPS kicker and improve RoE. The buyback route becomes
more attractive through an open market route when the same is done at multiples lower than
post tax yield on excess cash. Imposition of the tax makes the buyback case difficult. Consider a
company with post tax yield on cash at 5%. The buyback would have been EPS accretive if
Kawaljeet Saluja
done at anything less than 20X P/E multiple, i.e. inverse of yield on excess cash balance. One
has to take into consideration the additional tax burden of 20%, which effectively reduces the
implied threshold P/E multiple to 16.7X (20X/120%) for the buyback to be EPS neutral. Sathishkumar S
Dividend vs buyback—dividend is easier to administer
Shareholders tendering shares have to deal with the long-term capital gains tax liability.
Dividend received in the hands of shareholders in excess of Rs1 mn is also taxable at the rate of
10% (plus surcharge). The tax liability is broadly similar under both forms of cash distribution.
Dividends are easier to administer though.
Contact: +91 22 6218 6427
IT Services India
Payout tax—an alternative form of income tax?

IT companies have received valuation support, courtesy smart capital allocation decisions.
Chief among them was to step up payout ratios. The amendment leads to taxation of at
least 20% on payout to shareholders, a disincentive. This tax is effectively an alternative
form of income tax.
Exhibit 1: Kotak Institutional Equities: valuation summary of key Indian technology companies
5-Jul-19 Mkt cap. EPS (Rs) P/E (X) EV/EBITDA (X) RoE (%)
Company Price (Rs) Rating (Rs m) (US$ m) 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E
HCL Technologies 1,016 ADD 1,378,522 20,120 73.2 78.9 84.5 13.9 12.9 12.0 9.3 7.9 7.4 25.6 23.5 22.0
Hexaware Technologies 365 REDUCE 108,641 1,586 19.3 20.9 24.3 18.9 17.5 15.0 13.7 12.4 10.6 26.5 25.0 25.8
Infosys 718 ADD 3,135,427 45,763 35.4 37.8 42.9 20.3 19.0 16.8 14.1 13.3 11.7 24.2 25.3 27.9
L&T Infotech 1,666 ADD 289,047 4,219 86.4 92.5 106.4 19.3 18.0 15.7 14.3 13.1 11.1 34.7 30.2 29.1
Mindtree 889 ADD 145,912 2,130 45.8 51.2 60.5 19.4 17.4 14.7 12.7 10.4 8.8 24.9 23.6 24.0
Mphasis 982 REDUCE 182,920 2,670 56.1 63.3 66.0 17.5 15.5 14.9 12.7 10.7 10.0 20.0 21.4 20.5
TCS 2,163 REDUCE 8,111,342 118,388 83.1 93.1 101.4 26.0 23.2 21.3 19.3 17.2 15.7 35.2 37.0 38.0
Tech Mahindra 681 ADD 604,382 8,821 47.7 53.5 60.5 14.3 12.7 11.3 8.3 7.5 6.4 22.0 22.4 22.6
Wipro 272 REDUCE 1,640,713 23,947 15.0 17.5 19.2 18.2 15.5 14.1 11.6 10.5 9.3 17.2 18.2 18.2
KIE universe 115,592,444 1,686,768 25.0 19.2 16.3 11.3 10.1 8.9 11.5 13.5 14.4
Target O/S shares EPS CAGR (%) EPS growth (%) Net Profit (Rs mn) EBITDA (Rs mn) Sales (Rs mn)
Company Price (Rs) (mn) 2019-21E 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E
HCL Technologies 1,200 1,377 7.4 17.5 7.8 7.0 100,854 107,195 114,795 139,296 164,251 175,844 604,277 706,898 776,612
Hexaware Technologies 345 302 12.2 16.6 8.0 16.5 5,833 6,302 7,342 7,335 8,737 10,438 46,477 57,037 67,049
Infosys 750 4,353 10.0 9.5 6.9 13.3 157,262 160,919 182,317 208,890 224,034 251,195 826,760 920,990 1,018,950
L&T Infotech 1,940 176 10.9 36.0 7.0 15.0 15,184 16,286 18,833 18,833 20,067 22,827 94,458 108,884 125,220
Mindtree 1,030 165 14.9 32.7 11.7 18.2 7,541 8,436 9,969 10,645 12,606 14,578 70,215 80,284 91,037
Mphasis 930 191 8.4 27.9 12.8 4.2 10,734 11,789 12,284 13,240 15,342 16,313 77,311 88,951 98,614
TCS 1,940 3,790 10.5 23.1 12.1 8.9 314,720 349,413 380,552 395,050 440,901 481,652 1,464,630 1,638,364 1,800,713
Tech Mahindra 850 901 12.6 11.9 12.1 13.1 42,974 47,077 53,229 63,368 69,751 77,162 347,421 377,422 414,878
Wipro 270 6,021 13.4 17.7 17.1 9.9 90,223 102,134 109,696 116,587 131,265 139,309 590,607 628,460 669,222
KIE universe 11.9 30.4 17.6 4,617,143 6,018,894 7,079,078 8,543,019 9,567,585 10,669,093 58,641,401 64,106,010 69,777,727
Notes:
(a) Hexaware Technologies is December year-ending.

ATTRACTIVE
India JULY 05, 2019
UPDATE
BSE-30: 39,513
Budget takeaways—technical overhang on PSUs. The government’s elevated

disinvestment target along with the proposal to create more headroom for divestment in
nonfinancial PSUs may act as a technical overhang on the stocks; it may also inhibit
divestment of cross-holdings by other PSUs. The government has increased excise duties
on auto fuels by `2/liter, which have been passed on to end-consumers by the OMCs.
The subsidy provision in the budget remains unchanged amid steady crude price
environment.
Proposal to create more headroom in stake for divestments to act as an overhang on PSU stocks
The government’s proposal to include shareholding of the other government-controlled entities

in its own calculation of requisite promoter stake of 51%, provides it significantly higher
headroom for disinvestments in energy PSUs going forward. Technically the effective
computation of the government’s stake, including LIC and cross-holdings of other PSUs,
increases to (1) 60% for BPCL from 54.2%, (2) 64.2% for GAIL from 52.2%, (3) 78.1% for
IOCL from 52.2%, (4) 83.6% for OIL from 61.6% and (5) 84% for ONGC from 64.2%. The
government’s decision to raise the disinvestment target to `1.05 tn from `0.9 tn also adds to
the technical overhang on the energy PSU stocks except HPCL, now owned by ONGC. We note
that the multiple offerings of CPSE ETF over the past one year has acted as a key overhang on
ONGC stock, which remained flattish during this period, despite the company delivering 38%
jump in their consolidated profits in FY2019 led by higher oil and gas realizations and
exemption from sharing of fuel subsidies by the government.
PSUs may not be able to divest cross-holdings, as it becomes strategic for government’s control
We highlight that as the government brings down its ‘effective’ stake in these companies to
51% gradually through disinvestments, the energy PSUs may not be able to divest their
investment cross-holdings, as it becomes strategic for the government to retain majority stake
and control. GAIL, IOCL, Oil India and ONGC hold significant cross-holdings in each other,
which may have to be held in the longer run in case the government reduces its stake over the
next few years.
Effective increase in excise duties passed on to end-consumers for now
The government has increased excise duties on auto fuels by `2/liter to `15.8/liter for diesel and
`20/liter for gasoline, which will yield incremental revenue receipts of ~`286 bn for the
government on an annualized basis, `210 bn for the remainder of FY2020. The increase in
excise duties, albeit on the expected lines, reduces headroom for marketing margins on auto
fuels for OMCs. We note that OMCs have raised retail prices of auto fuels adequately to pass
on the higher excise duty to the end-consumers; it reduces the headroom for expansion in
marketing margins on auto fuels amid a fall in crude prices as the government may target
additional revenues. The government has also introduced a negligible `1/ton of excise/import Tarun Lakhotia
duty on crude oil, perhaps required to bring it under the purview of GST in future.
Fuel subsidy provision remains unchanged—adequate for US$65-70/bbl of crude prices Hemang Khanna
The government has retained FY2020E budget provision pertaining to (1) LPG subsidy under
DBT scheme at `295 bn and (2) subsidy compensation for kerosene at `42 bn. Our calculations
suggest that the budget provision is adequate for the government to manage subsidy burden
for LPG and kerosene on a recurring basis at global crude price levels of US$65-70/bbl.
Contact: +91 22 6218 6427
Oil, Gas & Consumable Fuels India
Exhibit 1: The government’s proposal to include holdings of the government-controlled entities in

requisite promoter stake calculations of 51% provides significantly higher headroom for divestments
Shareholding pattern of domestic oil and gas companies, March 2019 (%)
BPCL GAIL HPCL IOCL OIL ONGC
Market capitalization (Rs bn) 803 691 438 1,433 188 2,032
Market capitalization (US$ bn) 11.7 10.1 6.4 20.9 2.7 29.7
Shareholding pattern (%)
Government of India 54.2 52.2 52.2 61.6 64.2
BPCL 2.5
GAIL 2.5
HPCL 2.5
IOCL 2.4 4.9 7.8
OIL 5.2
ONGC 4.8 51.1 14.2
LIC 5.9 4.7 3.7 6.5 12.1 9.5
Effective government stakem including other PSUs 60.0 64.2 54.9 78.1 83.6 84.0
Source: Companies, Kotak Institutional Equities
Exhibit 2: The government has raised excise duties on auto fuels when crude prices have moderated
Excise duty on auto fuels and Dated Brent, April 2015 onwards (Rs/liter, US$/bbl)
(Rs/liter) Diesel excise duty [LHS] Gasoline excise duty [LHS] (US$/bbl)
Dated Brent crude price [RHS]
24 90
22 80
70
20
60
18
50
16
40
14
30
12
20
10 10
8 0
Aug-15
Aug-16
Aug-17
Aug-18
Apr-15
Apr-16
Apr-17
Apr-18
Apr-19
Dec-16
Dec-17
Feb-19
Dec-15
Feb-16
Feb-17
Feb-18
Dec-18
Oct-15
Oct-16
Oct-17
Oct-18
Jun-17
Jun-18
Jun-15
Jun-16
Jun-19
Source: PPAC, Bloomberg, Kotak Institutional Equities

India Oil, Gas & Consumable Fuels
Exhibit 3: Marketing margins on diesel have been above the normative level in the recent months
Marketing margin on diesel, April 2015 onwards (Rs/liter)
(Rs/liter) Marketing margin on diesel Average marketing margin on diesel

9.0
8.0
8.3
7.0
6.0 6.5
5.0
4.9
4.0 4.5 4.64.5
4.1 3.6
3.0 3.7 3.6 3.8
3.1 3.1 3.1 3.2
2.8 2.7 2.72.72.72.72.52.62.72.7 2.93.0
2.0 2.42.42.42.42.3 2.5 2.4 2.5 2.32.2 2.52.6
2.32.42.42.1 2.3 2.2 2.0 2.0
1.0
1.31.1 1.3 0.8 1.3
0.0
Aug-15
Aug-16
Aug-17
Aug-18
Apr-15
Sep-15
Apr-17
Sep-18
Jul-15
Apr-16
Sep-16
Sep-17
Apr-18
Oct-18
Apr-19
Oct-15
Jul-16
Oct-16
Jul-17
Oct-17
Jul-18
Jul-19
Mar-17
Mar-16
Feb-17
Mar-18
Mar-19
Jun-15
Nov-15
Feb-16
Nov-16
Nov-17
Feb-18
Nov-18
Feb-19
Jun-16
Jun-17
Jun-18
Jun-19
Dec-15
Dec-16
Dec-17
Dec-18
Jan-16
Jan-17
May-15
May-16
Jan-18
Jan-19
May-17
May-18
May-19
Source: PPAC, Kotak Institutional Equities estimates
Exhibit 4: Marketing margins on gasoline have increased in the current fortnight

Marketing margin on gasoline, April 2015 onwards (Rs/liter)
(Rs/liter)
Marketing margin on gasoline Average marketing margin on gasoline
9.0
8.0
7.9
7.0
6.0 6.6
5.0 5.7
5.0
4.0 4.4
4.1 4.0
3.0 3.5 3.7
3.3 3.4
3.12.9 2.9 3.13.1
2.0 2.62.5 2.62.6 2.82.8 2.72.72.62.62.52.9 2.72.72.72.72.72.7 2.72.8
2.4 2.62.6 2.7 2.6 2.5 2.7
2.2 2.1 2.1
1.0 1.8
1.2 1.4
0.8 0.2
0.0
Aug-16
Jul-17
Jul-15
Aug-15
Jul-16
Aug-17
Jul-18
Aug-18
Jul-19
Sep-15
Apr-16
Sep-18
Apr-19
Apr-15
Sep-16
Apr-18
Mar-16
Mar-17
Apr-17
Sep-17
Mar-18
Mar-19
Oct-17
Oct-15
Oct-16
Oct-18
Feb-18
Feb-16
Feb-17
Feb-19
Nov-15
Nov-16
Nov-17
Nov-18
Jun-15
Jun-16
Jun-17
Jun-18
Jun-19
Dec-15
Jan-16
Dec-16
Dec-17
Dec-18
Jan-17
Jan-18
Jan-19
May-16
May-18
May-15
May-17
May-19

Exhibit 5: We assume the government will manage entire burden related to DBT of LPG subsidies going forward
Share of under-recoveries for various participants, March fiscal year-ends, 2011-20E (Rs bn)
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E
Macro-assumptions
Dated Brent crude oil price (US$/bbl) 84.0 113.5 111.8 107.8 85.7 48.0 49.0 57.5 70.2 60.0 65.0 70.0
Exchange rate (Rs/US$) 45.6 47.9 54.4 60.5 61.1 65.5 67.1 64.5 69.7 69.5 69.5 69.5
Subsidy burden
Petrol 22 49 11 — — — — — — — — —
Diesel 344 812 921 628 109 — — — — — — —
LPG 220 300 396 503 406 161 121 210 316 219 273 326
Kerosene 196 274 294 306 248 115 76 47 60 29 37 46
Subsidy burden 782 1,434 1,621 1,437 763 276 197 256 375 248 310 372
Gross under-recoveries 814 1,465 1,651 1,468 793 276 197 256 375 248 310 372
Subsidy sharing
Payment by government (direct budgetary support) 32 31 31 31 31 — — — — — — —
Payment by government (oil bonds/cash) 410 835 1,000 746 313 263 197 256 375 248 310 372
Receipt from upstream companies 303 550 600 670 428 13 — — — — — —
Share of ONGC 249 445 494 564 363 11 — — — — — —
Share of Oil India 33 74 79 87 55 2 — — — — — —
Share of GAIL 21 32 27 19 10 — — — — — — —
Net under-recovery of OMCs 69 49 21 21 22 0 — — — — — —
Source: Government, companies, Kotak Institutional Equities estimates
Exhibit 6: Budget provision implies excess subsidies will be carried forward to the next fiscal year, as has the case been historically
Subsidy compensation from the government, March fiscal year-ends, 2011-20E (Rs bn)
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E
Dated Brent crude oil price (US$/bbl) 84.0 113.5 111.8 107.8 85.7 48.0 49.0 57.5 70.2 60.0 65.0 70.0
Exchange rate (Rs/US$) 45.6 47.9 54.4 60.5 61.1 65.5 67.1 64.5 69.7 69.5 69.5 69.5
Subsidy compensation remaining from the previous year 140 200 385 450 350 92 70 50 88 255 255 255
Subsidy loss for the given fiscal year 782 1,434 1,621 1,399 763 276 197 256 375 248 310 372
Receipt from upstream companies 303 550 600 670 428 13 — — — — — —
Net under-recovery of OMCs 69 49 21 21 22 — — — — — — —
Government compensation accounted by OMCs 410 835 1,000 708 313 263 197 256 375 248 310 372
Subsidy compensation provided in the Budget 350 650 935 808 571 285 218 218 208 337 337 337
DBT of LPG 211 130 131 165 295 295 295
Keroesene subsidies 73 88 87 43 42 42 42
Provisional amount roll-forward to the next fiscal year 200 385 450 350 92 70 50 88 255 166 228 290
Source: Government, companies, Kotak Institutional Equities estimates
Exhibit 7: India energy PSUs valuations summary, March fiscal year-ends, 2019-21E
KIE Price (Rs) FV Market cap. P/E (X) EV/EBITDA (X)

rating 5-Jul-19 (Rs) (US$ mn) 2019 2020E 2021E 2019 2020E 2021E
BPCL SELL 370 310 11,716 10.2 11.5 10.9 8.1 9.0 8.4
GAIL India BUY 306 440 10,085 11.0 10.0 9.3 7.2 6.3 5.8
HPCL SELL 288 220 6,394 7.2 10.2 9.6 5.8 8.3 8.2
IOCL SELL 152 135 20,913 8.5 10.0 9.4 6.6 7.4 7.1
Oil India BUY 173 240 2,743 5.7 5.3 5.3 3.9 3.6 3.6
ONGC BUY 162 210 29,654 6.7 6.5 6.6 3.7 3.5 3.2

ATTRACTIVE
India JULY 05, 2019
UPDATE
BSE-30: 39,513
1QFY20E preview—up for upstream and gas, down for downstream. We expect
(1) RIL to report steady consolidated profits as muted downstream performance will be
offset by rising contribution from Jio and retail, (2) OMCs to be impacted by subdued
refining margins and inventory losses, which may be partly offset by above-normal
marketing margins, (3) upstream profits to jump amid higher oil and gas realizations
and (4) gas sector companies to benefit from robust growth in volumes and expansion
in margins due to lower operating costs and favorable pricing movements.
RIL: consolidated EBITDA to decline qoq amid sharply lower EBTIDA for Jio
We expect RIL to report a marginal qoq increase in standalone EBITDA led by (1) modestly
higher refining margins at US$8.5/bbl (+US$0.3/bbl qoq) and (2) increase in crude throughput
and petchem volumes, which will be partly offset by moderation in overall petchem margins
and a strengthening rupee. We expect consolidated EBITDA to still be lower sequentially, as
increase in standalone and retail contribution will be offset by a sharp reduction in Jio's EBITDA
(-`6.2 bn qoq) due to accounting of capacity cost being paid to fiber and tower entities post
demerger in lieu of interest and depreciation cost earlier; we expect these adjustments to be
PBT neutral as RIL may continue partial capitalization. We estimate consolidated net income to
decline 6% qoq to `97.8 bn (EPS of `16.5), due to lower other income and a higher tax rate.
OMCs: weak refining and inventory loss to be partly offset by above-normal marketing margin
We expect downstream PSUs to report weak results driven by (1) muted underlying refining
margins with Singapore complex averaging US$3.5/bbl and (2) inventory loss amid a ~US$3/bbl
reduction in end-period crude price, which will be partly offset by higher-than-normal
(+Rs0.5/liter) blended marketing margins on auto fuels. We expect (1) BPCL to report net
income of `8 bn, (2) HPCL’s net income at `7 bn and (3) IOCL’s net income at `12.1 bn, all
down 77-80% qoq from the high base of the previous quarter, which was boosted by
significant adventitious and forex gains and supernormal auto fuel marketing margins. We
expect Castrol’s EPS to jump 25% yoy to `2.1 driven by robust expansion in margins amid
lower RM costs, which will be partly offset by a 3% yoy decline in sales volumes.
Upstream: strong results driven by higher oil and gas realizations and lower costs
We expect a sequential jump in EBITDA for OIL and ONGC, led by (1) ~US$5/bbl increase in
global crude prices and (2) ~US$0.4/mn BTU increase in domestic gas price; we assume that the
government will continue to exempt upstream companies from sharing LPG subsidies. We
expect ONGC’s net income to increase 22% qoq to `68.2 bn (EPS of `5.3) in 1QFY20, driven by
(1) higher net crude realization at US$69/bbl (+US$7.1/bbl qoq) and (2) higher domestic gas
price and 4% qoq higher gas sales volumes. We expect OIL’s net income to jump 66% qoq to
`7.8 bn (EPS of `6.5) driven by (1) higher crude realization at US$67/bbl (+US$5.2/bbl qoq) and
(2) higher domestic gas price and 12% qoq higher gas sales volumes.
Gas utilities: robust results amid healthy growth in volumes and expansion in margins
We expect GAIL to report 30% qoq jump in EBITDA led by (1) recovery in LPG and petchem Tarun Lakhotia
production profits, (2) lower operating costs and (3) steady profits of gas transmission and
marketing segments; marketing and transmission volumes may increase further to 99-110
mcm/d. We estimate GAIL’s recurring net income to decline 11% qoq to `11.8 bn (EPS of `5.2) Hemang Khanna
reflecting sharply lower other income, which included high dividend receipts in 4QFY19. We
expect PLNG’s net income to rise 10% qoq at `5.8 bn (EPS of `3.9), led by (1) 6% qoq increase
in volumes and (2) seasonally lower operating costs. We expect IGL and MGL to report robust
10-28% yoy jump in EBITDA, driven by healthy 7-17% growth in volumes and 3-9% expansion
in unit margins. We expect GSPL to deliver 34% qoq jump in EBITDA led by 15% qoq increase
in gas transmission volumes to 37.2 mcm/d and likely moderation in operating costs.
Contact: +91 22 6218 6427
Exhibit 1: Singapore complex refining margins remained low, albeit rising to US$3.5/bbl in 1QFY20
from US$3.2/bbl in 4QFY19
Singapore complex refining margins, April 2012 onwards (US$/bbl)
(US$/bbl) Singapore complex refining margins Reuters Singapore refining margins

12
10
(2)
Apr-12
Apr-13
Apr-17
Apr-18
Apr-14
Apr-15
Apr-16
Apr-19
Jan-13
Jan-14
Jan-18
Jan-19
Jan-15
Jan-16
Jan-17
Jul-12
Oct-12
Jul-13
Jul-14
Oct-14
Jul-18
Jul-15
Oct-15
Jul-16
Oct-16
Jul-17
Oct-13
Oct-17
Oct-18
Reuters Singapore refining margins, March fiscal year-ends (US$/bbl)
2013 2014 2015 2016 2017 2018 2019 2020
1Q 6.7 6.6 5.8 8.1 5.1 6.4 6.1 3.5
2Q 9.1 5.2 4.8 6.2 5.1 8.3 6.1
3Q 6.6 5.4 6.3 8.0 6.7 7.3 4.3
4Q 8.5 6.2 8.6 7.8 6.4 7.0 3.2
Average 7.7 5.9 6.3 7.5 5.8 7.2 4.9 3.5
Source: Reuters, Kotak Institutional Equities estimates
Exhibit 2: Product cracks for gasoline recovered from the low base of 4QFY19, while diesel remained steady qoq
Product spreads for diesel and gasoline, 1QFY16 onwards (US$/bbl)
(US$/bbl) Gasoline cracks Diesel cracks

25
20
14.7 15.0 14.7 15.2

15 13.5 13.4 13.6 13.3
12.3 12.8 12.7
12.0 11.4
10.5 10.6 10.8
9.6
10 19.6 19.3 18.7
18.2
15.0 14.9 14.9 16.0 14.6
14.3 13.5
11.4 12.6 11.8
5
8.0
5.2 3.9
0
1QFY16
4QFY16
2QFY17
4QFY17
2QFY18
4QFY18
1QFY19
3QFY19
1QFY20
2QFY16
3QFY16
1QFY17
3QFY17
1QFY18
3QFY18
2QFY19
4QFY19
Source: Bloomberg, Kotak Institutional Equities

Exhibit 3: Differential between light and heavy crudes and Saudi OSP differential for Asia increased in 1QFY20
Light-heavy crude differential, 1QFY16 onwards (US$/bbl)
(US$/bbl) Light-heavy crude differential Saudi Arab Light OSP differential for Asia
4.0
3.4
3.5 3.2 3.1
2.8 2.9 2.9 2.9
3.0 2.7 2.7 2.7
2.2 2.2 2.3 2.2
2.5
2.0 1.7 1.7 1.71.6
1.5 1.4 1.5 1.4
1.5
1.0 0.7 0.7
0.5 0.1
0.0
(0.5) (0.1) (0.1)
(0.3) (0.3)
(0.5) (0.5)
(1.0) (0.7)
(0.9) (1.1)
(1.5)
1QFY16
2QFY16
4QFY16
1QFY17
4QFY17
3QFY18
4QFY18
3QFY19
3QFY16
2QFY17
3QFY17
1QFY18
2QFY18
1QFY19
2QFY19
4QFY19
1QFY20
Source: Bloomberg, Kotak Institutional Equities
Exhibit 4: Auto fuel marketing margins declined qoq, albeit remaining above normal level for diesel
Gross margins on diesel and gasoline, 1QFY16 onwards (Rs/liter)
(Rs/liter) Marketing margins on diesel Marketing margins on gasoline
7.0
6.0
5.0
4.0
6.46.5
3.0
2.0 3.7
2.9 2.9 3.13.3 3.1 3.13.1 3.13.0 3.0
2.52.5 2.42.6 2.5 2.7 2.72.7 2.6 2.62.5 2.3 2.6 2.6
1.0 1.9 2.2 1.92.3 1.8 2.0 1.8
0.0
1QFY16
4QFY16
1QFY17
4QFY17
1QFY18
3QFY18
4QFY18
3QFY19
4QFY19
2QFY16
3QFY16
2QFY17
3QFY17
2QFY18
1QFY19
2QFY19
1QFY20

Exhibit 5: Petroleum consumption declined marginally in first two months of 1QFY20

Petroleum consumption volumes and growth, 1QFY17 onwards
1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 Apr-May'19
Consumption (mn tons)
MS 5.9 5.9 6.1 5.8 6.6 6.5 6.5 6.6 7.1 6.9 7.0 7.2 5.2
HSD 20.1 17.2 20.0 18.8 21.3 18.3 20.9 20.5 22.1 18.8 21.4 21.3 15.1
LPG 4.8 5.4 5.7 5.7 5.3 5.9 6.0 6.1 5.8 6.2 6.1 6.8 4.0
SKO 1.6 1.5 1.2 1.2 1.0 0.9 1.0 0.9 0.9 0.9 0.8 0.8 0.5
ATF 1.7 1.7 1.8 1.8 1.8 1.8 1.9 2.0 2.1 2.0 2.1 2.1 1.4
FO & LSHS 1.9 1.8 1.8 1.6 1.8 1.6 1.6 1.6 1.6 1.6 1.7 1.6 1.0
O thers 13.9 13.7 12.6 13.4 13.9 13.8 14.8 14.9 14.8 13.1 14.1 14.7 9.1
Domestic consumption 49.9 47.3 49.2 48.2 51.8 48.9 52.8 52.6 54.4 49.6 53.1 54.5 36.3
Growth (%)
MS 10.0 11.7 12.0 1.8 10.9 9.1 7.2 13.5 8.4 6.6 7.8 9.4 9.5
HSD 4.7 0.8 5.6 (3.7) 5.9 6.7 4.7 9.5 3.7 2.9 2.0 3.5 2.4
LPG 7.8 14.5 11.2 7.1 10.7 8.6 6.1 7.0 9.6 5.1 0.9 11.7 1.3
SKO (7.7) (12.4) (32.1) (31.7) (34.1) (37.2) (18.5) (20.9) (13.2) (6.7) (11.0) (9.0) (11.4)
ATF 11.5 12.6 11.2 11.8 9.3 8.9 7.9 10.1 12.0 11.1 7.6 6.0 (1.7)
FO & LSHS 33.5 9.0 14.8 (17.5) (6.5) (9.2) (8.3) 0.6 (11.5) (0.2) 0.8 (1.3) (3.6)
O thers 23.3 19.2 7.4 (6.2) (0.0) 0.8 17.0 11.0 6.3 (5.1) (4.9) (1.3) (8.4)
Domestic consumption 11.0 8.7 6.5 (3.6) 3.7 3.6 7.4 9.1 5.0 1.4 0.6 3.6 (0.3)
Source: PPAC, Kotak Institutional Equities
Exhibit 6: Petchem margins moderated sequentially for all products in 1QFY20

Asia petchem margins and prices, 1QFY18 onwards (US$/ton)
Change (%)
1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 yoy qoq
Global margins
HDPE – naphtha 666 618 626 626 595 544 509 501 434 (27.1) (13.3)
LLDPE – naphtha 661 649 636 601 564 479 444 510 446 (20.8) (12.6)
PP – naphtha 541 564 575 598 593 577 573 556 532 (10.3) (4.4)
PVC – naphtha 441 454 370 326 329 293 237 389 286 (12.9) (26.4)
PSF – naphtha 801 820 691 686 673 639 771 766 677 0.6 (11.6)
PFY – naphtha 921 1,001 956 997 991 941 1,049 1,075 1,021 3.0 (5.0)
PX – naphtha 365 351 303 339 338 389 592 539 417 23.6 (22.6)
Global prices
HDPE 1,128 1,053 1,169 1,214 1,216 1,196 1,143 1,000 996 (18.0) (0.3)
LLDPE 1,123 1,084 1,179 1,188 1,184 1,132 1,078 1,009 1,008 (14.8) (0.1)
PP 1,003 999 1,117 1,185 1,213 1,230 1,207 1,055 1,094 (9.8) 3.7
PVC 903 889 912 913 949 946 871 887 848 (10.6) (4.4)
PSF 1,263 1,255 1,233 1,273 1,293 1,292 1,405 1,264 1,239 (4.2) (2.0)
PFY 1,383 1,437 1,498 1,585 1,612 1,593 1,683 1,573 1,583 (1.8) 0.6
PX 828 787 845 926 958 1,042 1,226 1,038 979 2.2 (5.7)
Source: Platt’s, Kotak Institutional Equities

Exhibit 7: Modestly higher standalone EBITDA to be offset by sharply lower accounting of Jio’s EBITDA post fiber/tower demerger
1QFY20E preview for RIL (Rs mn)
Change (%)
Reliance Industries (Standalone)
Net sales 911,590 835,970 892,217 (2) 7
EBITDA 151,540 137,040 140,900 (7) 3 We expect RIL to report a marginal qoq increase in
EBIT 123,920 112,390 113,956 (8) 1 standalone EBITDA led by (1) modestly higher
refining margins at US$8.5/bbl (+US$0.3/bbl qoq)
PBT 123,220 108,370 110,609 (10) 2
and (2) rise in crude throughput and petchem
Reported PAT 88,200 85,560 81,300 (8) (5)
volumes, which will be partly offset by moderation
Extraordinaries — 4,940 — in margins for key petchem products and
Adjusted PAT 88,200 80,620 81,300 (8) 1 strengthening Rupee.
EPS (Rs/share) 13.9 12.7 12.8 (8) 1
Jio
Net sales 81,091 111,060 121,326 50 9 We estimate Jio's EBITDA to decline qoq due to
EBITDA 31,460 43,260 37,108 18 (14) accounting of capacity cost pertaining to
fiber/tower InvITs in lieu of interest and
EBIT 17,066 25,820 25,083 47 (3)
depreciation cost earlier; we assume these
PBT 9,405 12,910 15,668 67 21
adjustments to be PBT neutral. We have factored
Reported PAT 6,119 8,400 10,200 67 21 in 26 mn addition to subscriber base and marginal
EPS (Rs/share) 1.0 1.4 1.7 67 21 increase in ARPU to Rs127/month.
Reliance Industries (Consolidated)
Net sales 1,287,560 1,386,590 1,459,908 13 5
EBITDA 206,610 208,320 205,145 (1) (2)
EBIT 154,880 155,370 155,316 0 (0) We expect RIL's consolidated EBITDA to decline
PBT 137,160 132,960 135,324 (1) 2 qoq, as higher standalone and retail EBITDA will be
Reported PAT 94,590 103,620 97,800 3 (6) offset by a decline in Jio's EBITDA (-Rs6.2 bn qoq)
Extraordinaries — 4,940 — attributed to demerger of fiber and tower entities.
Adjusted PAT 94,590 98,680 97,800 3 (1)
EPS (Rs/share) 16.0 16.7 16.5 3 (1)
Refining assumptions
Exchange rate (Rs/US$) 67.0 70.5 69.5 4 (1)
Refining throughput (mn tons) 16.6 16.0 17.3 4 8
Refining margin (US$/bbl) 10.5 8.2 8.5 (19) 4
Petchem volumes ('000 tons)
Polymer 1,421 1,443 1,459 3 1
Polyester 738 711 719 (3) 1
Fiber intermediates 2,504 2,761 2,808 12 2
Petchem margins over naphtha (US$/ton)
HDPE – naphtha 595 501 434 (27) (13)
LLDPE – naphtha 564 510 446 (21) (13)
PP – naphtha 593 556 532 (10) (4)
PVC – naphtha 329 389 286 (13) (26)
PSF – naphtha 673 766 677 1 (12)
PFY – naphtha 991 1,075 1,021 3 (5)
PX – naphtha 338 539 417 24 (23)
Telecom assumptions
End-period subscriber base (# mn) 187 280 333 78 19
Average subscriber base (# mn) 173 266 320 84 20
ARPU (Rs/month) 137 130 127 (8) (3)

Exhibit 8: OMCs’ to be impacted by muted refining margins and adventitious loss, partly offset by above-normal marketing margins
1QFY20E preview for downstream companies (Rs mn)
Change (%)
BPCL
Net sales 716,967 744,366 736,729 3 (1) We expect BPCL to report weak results impacted by (1)
EBITDA 38,752 60,838 17,524 (55) (71) adventitious loss of Rs7.5 bn and (2) muted refining
EBIT 31,361 52,459 8,802 (72) (83) margins, which will be partially offset by higher-than-
PBT 33,823 58,843 11,833 (65) (80) normal (+Rs0.5/liter) blended marketing margins on
Tax 10,890 20,007 3,786 (65) (81) auto fuels.
Reported PAT 22,933 38,836 8,046 (65) (79) We assume (1) 3% qoq decline in crude throughput to
EPS (Rs/share) 11.7 19.7 4.1 (65) (79) 8 mn tons and (2) weak, albeit qoq higher, normalized
Assumptions refining margins at US$3.4/bbl (+US$0.8/bbl qoq).
Crude throughput (mn tons) 7.7 8.2 8.0 3 (3)
Domestic sales (mn tons) 11.0 11.4 11.1 1 (2)
Reported refining margin (US$/bbl) 7.5 2.7 2.6 (65) (5)
Normalized refining margin (US$/bbl) 4.2 2.6 3.4 (18) 33
Marketing margin (Rs/ton) 4,552 7,349 5,525 21 (25)
Adventitious gain/(loss) - refining 12,750 840 (3,183) NM NM
Adventitious gain/(loss) - marketing 14,040 2,720 (4,283) NM NM
Forex gain/(loss) (7,050) 2,750 917 NM (67)
HPCL
Net sales 676,289 679,381 646,241 (4) (5) We expect HPCL to report weak results impacted by (1)
EBITDA 31,907 51,662 15,733 (51) (70) adventitious loss of Rs8.5 bn and (2) muted refining
EBIT 24,843 43,378 7,862 (68) (82) margins, which will be partially offset by higher-than-
PBT 25,990 46,731 10,549 (59) (77) normal (+Rs0.5/liter) blended marketing margins on
Tax 8,798 16,828 3,534 (60) (79) auto fuels.
Reported PAT 17,192 29,903 7,015 (59) (77) We assume (1) 10% qoq decline in throughput to 4 mn
tons amid shutdown and (2) weak, albeit qoq higher,
EPS (Rs/share) 11.3 19.6 4.6 (59) (77)
normalized refining margins at US$3.6/bbl
Assumptions (+US$1.5/bbl qoq).
Crude throughput (mn tons) 4.5 4.6 4.0 (12) (13)
Domestic sales (mn tons) 9.6 10.0 9.7 1 (3)
Normalized refining margin (US$/bbl) 3.7 2.1 3.6 (3) 72
Marketing margin (Rs/ton) 4,960 7,821 5,650 14 (28)
Adventitious gain/(loss) - refining 7,700 5,720 (3,178) NM NM
Forex gain/(loss) (5,377) 2,480 827 NM (67)
IOCL
Net sales 1,294,750 1,262,141 1,249,846 (3) (1) We expect IO CL to report weak results impacted by (1)
EBITDA 125,758 108,759 42,285 (66) (61) adventitious loss of Rs22 bn and (2) muted refining
margins, which will be partially offset by higher-than-
EBIT 107,879 88,192 23,169 (79) (74) normal (+Rs0.5/liter) blended marketing margins on
PBT 103,422 86,344 18,018 (83) (79) auto fuels.
Reported PAT 68,311 60,993 12,072 (82) (80) We assume (1) qoq steady crude throughput at 17.4
EPS (Rs/share) 7.2 6.4 1.3 (82) (80) mn tons and (2) weak, albeit qoq higher, normalized
Assumptions refining margins at US$3.7/bbl (+US$2.3/bbl qoq).
Crude throughput (mn tons) 17.7 17.4 17.4 (2) 0
Domestic sales (mn tons) 21.6 21.7 21.8 1 1
Normalized refining margin (US$/bbl) 3.4 1.4 3.7 10 162
Marketing margin-EBITDA (Rs/ton) 1,059 2,914 1,525 44 (48)
Adventitious gain/(loss) - refining 59,180 23,900 (15,464) NM NM
Forex gain/(loss) (18,050) 8,370 2,790 NM (67)
Castrol India
Net sales 10,172 9,762 10,576 4 8
We expect Castrol to report 26% yoy jump in EBITDA
EBITDA 2,517 2,830 3,175 26 12
driven by expansion in margins reflecting sharp decline
EBIT 2,385 2,668 3,012 26 13
in RM costs amid lower base oil prices.
PBT 2,555 2,876 3,189 25 11
Reported PAT 1,642 1,850 2,051 25 11 We assume (1) 2.5% yoy decline in volumes to 55.6 mn
EPS (Rs/share) 1.7 1.9 2.1 25 11 liters and (2) ~530 bps yoy expansion in EBITDA
Assumptions margins to 30%.
Volumes (mn liters) 57.0 50.4 55.6 (3) 10
Gross realizations (Rs/liter) 178.5 193.7 190.3 7 (2)
Net realizations (Rs/liter) 87.7 103.1 104.2 19 1

Exhibit 9: Upstream to report sequential jump in EBITDA led by higher oil and gas realizations
1QFY20E preview for upstream companies (Rs mn)
Change (%)
ONGC
Net sales 272,128 263,507 288,490 6 9 We expect 18% qoq jump in EBITDA led by (1) higher
EBITDA 147,321 134,069 158,552 8 18 crude realization at US$69/bbl (+US$5.1/bbl qoq) and
EBIT 97,055 65,801 104,439 8 59 (2) increase in domestic gas price to US$4.1/mn BTU
PBT 96,068 78,912 104,863 9 33 (+US$0.4/mn BTU).
Reported PAT 61,439 56,028 68,161 11 22 We model (1) 3% yoy decline in oil sales volumes to 5.6
EPS (Rs/share) 4.8 4.4 5.3 11 22 mn tons and (2) 10% yoy growth in natural gas sales
Assumptions volumes to 5.4 bcm.
Total crude sales (mn tons) 5.8 5.9 5.6 (3) (4)
Total gas sales (bcm) 4.9 5.2 5.4 10 4
Gross crude realization (US$/bbl) 71.5 61.9 69.0 (4) 11
Net crude realization (US$/bbl) 71.5 61.9 69.0 (4) 11
Gas price realization (US$/mn BTU) 3.4 3.7 4.1 21 10
Subsidy burden (Rs bn) — — —
Oil India
Net sales 33,905 30,869 34,356 1 11 We expect 40% qoq jump in EBITDA led by (1) higher
EBITDA 15,276 11,157 15,595 2 40 crude realization at US$67/bbl (+US$5.2/bbl qoq) and
EBIT 10,712 6,552 11,008 3 68 (2) increase in domestic gas price to US$4.1/mn BTU
PBT 10,855 9,546 12,014 11 26 (+US$0.4/mn BTU).
Reported PAT 7,032 (2,085) 7,809 11 NM We model (1) modest 1% qoq increase in oil sales
EPS (Rs/share) 5.8 22.9 6.5 11 (72) volumes to 0.79 mn tons and (2) 12% qoq growth in
Assumptions gas sales volumes to 0.69 bcm.
Total crude sales ('000 tons) 811 777 788 (3) 1
Total gas sales (mcm) 597 620 693 16 12
Gross crude realization (US$/bbl) 72.0 61.8 67.0 (7) 8
Net crude realization (US$/bbl) 72.0 61.8 67.0 (7) 8
Gas price realization (US$/mn BTU) 3.4 3.7 4.1 21 10
Subsidy burden (Rs bn) — — —

Exhibit 10: We expect gas sector companies to deliver robust performance

1QFY20E preview for gas sector companies (Rs mn)
Change (%)
GAIL (India)
Net sales 172,986 187,634 180,505 4 (4) We expect GAIL to report sharp qoq jump in EBITDA led
EBITDA 22,436 16,841 21,977 (2) 30 by (1) modest recovery in LPG and petchem production
EBIT 18,647 12,267 17,372 (7) 42 profits, (2) lower operating costs and (3) steady profits
PBT 19,403 20,663 18,171 (6) (12) of gas transmission and marketing segments.
Reported PAT 12,593 11,222 11,811 (6) 5 We assume (1) modest improvement in gas transmission
EPS (Rs/share) 5.6 5.9 5.2 (6) (11) and marketing volumes to 110 mcm/d and 99 mcm/d
Assumptions respectively and (2) 5% qoq moderation in petchem
Transmission volumes (mcm/d) 107.0 109.2 110.0 3 1 volumes to 203 ktons.
Gas sales volumes (mcm/d) 97.2 98.4 99.0 2 1
Polymers volumes ('000 tons) 166.0 213.0 203.3 22 (5)
LPG volumes ('000 tons) 227.0 234.0 235.0 4 0
O ther liquids ('000 tons) 87.0 101.0 95.8 10 (5)
Transmission tariff (Rs/cu. m) 1.35 1.49 1.50 12 1
GSPL
Net sales 3,912 4,338 5,115 31 18
We expect sharp qoq jump in GSPL's EBITDA driven by (1)
EBITDA 3,438 3,293 4,410 28 34
higher gas transmission volumes and (2) likely decline in
EBIT 2,990 2,817 3,937 32 40
operating costs.
PBT 2,466 2,392 3,556 44 49
Reported PAT 1,445 1,533 2,280 58 49 We assume (1) 15% qoq rise in gas transmission volumes
EPS (Rs/share) 2.6 2.7 4.0 58 49 to 37.2 mcm/d and (2) steady regulated tariffs at
Assumptions Rs1.5/scm.
Volumes (mcm/d) 36.5 32.4 37.2 (11) 15
Transmission tariff (Rs/cu. m) 1.1 1.5 1.5 29 (0)
Petronet LNG
Net sales 91,692 83,832 86,902 (5) 4
We expect 14% qoq increase in EBITDA led by recovery in
EBITDA 9,344 8,152 9,274 (1) 14
volumes amid favorable LNG demand environment and
EBIT 8,322 7,136 8,238 (1) 15
seasonally lower operating costs.
PBT 9,012 7,825 8,932 (1) 14
Reported PAT 5,870 4,402 5,806 (1) 32 We assume LNG re-gasification volumes at 217 tn BTUs
EPS (Rs/share) 3.9 3.5 3.9 (1) 10 as compared to 205 tn BTUs in 4Q FY19 and 220 tn BTUs
Assumptions in 1Q FY19.
Total volumes (tn BTUs) 220.2 205.1 217.2 (1) 6
Blended regas tariff (Rs/mn BTU) 49.3 47.0 50.1 2 7
Indraprastha Gas
Net sales 12,874 15,426 16,196 26 5
We expect IGL's EBITDA to increase 28% yoy led by
EBITDA 2,951 3,312 3,771 28 14
robust 16% growth in volumes and sharp expansion in
EBIT 2,478 2,790 3,251 31 17
gross margins amid favorable pricing changes.
PBT 2,735 3,303 3,571 31 8
Reported PAT 1,930 2,413 2,500 30 4 We assume (1) overall volumes at 6.5 mcm/d versus 5.6
EPS (Rs/share) 2.8 3.4 3.6 30 4 mcm/d in 1Q FY19 and (2) unit EBITDA at Rs6.4/scm as
Assumptions compared to Rs5.9/scm in 4Q FY19.
Volumes (mcm/d) 5.5 6.3 6.5 17 3
CNG sales (mn kgs.) 273 294 314 15 7
PNG sales (mscm) 129 149 150 17 1
O perating profit (Rs/scm) 5.8 5.9 6.4 9 9
Mahanagar Gas
Net sales 6,323 7,225 7,660 21 6
We expect 15% increase in MGL's EBITDA, led by (1) 7%
EBITDA 2,239 2,140 2,464 10 15
growth in volumes and (2) sharp expansion in gross
EBIT 1,944 1,811 2,134 10 18
margins amid favorable pricing changes.
PBT 2,096 2,049 2,308 10 13
Reported PAT 1,283 1,335 1,504 17 13 We assume (1) overall volumes at 3.1 mcm/d versus 2.9
EPS (Rs/share) 13.8 13.5 15.2 10 13 mcm/d in 1Q FY19 and (2) unit EBITDA at Rs8.8/scm as
Assumptions compared to Rs7.9/scm in 4Q FY19.
Volumes (mcm/d) 2.9 3.0 3.1 7 2
CNG sales (mn kgs.) 193 198 205 6 4
PNG sales (mscm) 68 73 75 9 3
O perating profit (Rs/scm) 8.6 7.9 8.8 3 11

NEUTRAL
Real Estate
India JULY 05, 2019
UPDATE
BSE-30: 39,513
A month in transition. Residential real estate across India showed 1% yoy increase in
sales to 35.9 mn sq. ft reflective of the transition to the new GST rates. New launches
declined 60% yoy to 13.3 mn sq. ft in April 2019 accentuating the declining trajectory
of supply post the NBFC crisis. All-India residential inventory dropped 12% yoy to 1.2
bn sq. ft in April 2019.
Steady sales, declining launches have led to a decline in inventory; flat realizations
All-India real estate sales across major cities in India clocked sales of 35.9 mn sq. ft in April 2019
(+1% yoy) while launches declined by a staggering 60% yoy in April 2019. Decline in launch
activity was visible across all key metro cities—particularly in Bengaluru which saw a sharp
decline of 39% yoy in April 2019. Tier-2 cities saw launches declining to just 1.7 mn sq. ft in
April 2019 against monthly average of 6 mn sq. ft in FY2019. Declining launches have
continued to aid draw-down of inventory, with all-India inventory declining 12% yoy to ~1.2 bn
sq. ft from 1.4 bn sq. ft in April 2018. On a trailing twelve months basis, outstanding inventory
is expected to be liquidated in 33 months, an improvement from 40 months in April 2018.
Prices across India increased 4% yoy to Rs5,455 per sq. ft in April 2019 from Rs5,226 per sq. ft
in April 2018.
 National Capital Region. Sales activity in NCR remained tepid in April 2019 with sales of
3.7 mn sq. ft (-13% yoy) due to weak activity witnessed in Greater Noida (1.3 mn sq. ft in
April 2019 as against 2.2 mn sq. ft a year ago). Overall launches in NCR at 2.1 mn sq. ft
remained weak, even though showing optically higher growth (196% yoy) on a weak base
of 0.7 mn sq. ft in April 2018. Launches in Greater Noida remained weak with only 0.3 mn
sq. ft being launched in April 2019 as against monthly average of 0.9 mn sq. ft in trailing 12
months. We highlight that Greater Noida, among the NCR region has the highest quantum
of unsold inventory. Net unsold residential inventory in NCR stood at 223 mn sq. ft as of
April 2019 and is equivalent to 51 months of sales (based on average of trailing 12 months).
Realizations increased 13% yoy in NCR in April 2019 at Rs5,100 per sq. ft.
 Mumbai Metropolitan Region (MMR). Launches in MMR at 4.1 mn sq. ft declined by

29% yoy in April 2019 compared to monthly average of 4.4 mn sq. ft in FY2019. Sales
remained strong at 7.4 mn sq. ft (+14% yoy) in April 2019 with sales activity specifically
picking up in Navi Mumbai and Thane. MMR witnessed the sharpest decline in inventory
among all regions even as outstanding inventory still remains the highest at 270 mn sq. ft in
April 2019 (from 303 mn sq. ft in April 2018), which is expected to be absorbed in 39
months, basis prevailing past 12-month sales.
 Bengaluru. Sales in Bengaluru in April 2019 stood at 5 mn sq. ft (+14% yoy) against
launches of 1.9 mn sq. ft in April 2019. Launch activity in Bengaluru was the weakest among
Murtuza Arsiwalla
all metros in April 2019. Unsold inventory at 152 mn sq. ft continues to be the lowest across
the three key cities. Realizations in April 2019 increased 8% yoy to Rs5,000 per sq. ft.
Loan exposure to commercial real estate sector continues to remain steady Samrat Verma
Outstanding loans to commercial real estate players grew 9.1% yoy to Rs2 tn in May 2019
(Rs1.85 tn in May 2018). Exposure to the housing sector (including priority sector) increased by
Rs1.85 tn yoy to Rs11.8 tn in May 2019. On input cost, all-India cement prices declined by
Rs6/bag in June 2019 to Rs361/bag of 50 kg while rebar prices declined by 1.7% mom to
Rs40,025/ton in June 2019, down 10.4% yoy.
Contact: +91 22 6218 6427
Real Estate India
Exhibit 1: Launches saw a sharp decline across cities April 2019; sales activity too remains tepid
Sales, launches and inventory across India, March fiscal year-ends, Apr 2018 – Apr 2019 (mn sq. ft)
Change (%) TTM

Apr-19 Apr-18 Mar-19 Apr-18 Mar-19 Apr-19 Apr-18 Chg. (%)
All India
Launch 13.3 32.8 19.3 (60) (31) 278.6 299.3 (7)
Sales 35.9 35.7 37.8 1 (5) 448.0 413.9 8
Inventory 1,219 1,388 1,241 (12) (2) 1,219 1,388 (12)
Prices (Rs/sq. ft) 5,455 5,226 5,344 4 2 5,185 4,881 6
NCR
Launch 2.1 0.7 4.7 196 (56) 32 24 35
Sales 3.7 4.3 4.4 (13) (15) 52 43 21
Inventory 223 243 225 (8) (1) 223 243 (8)
Prices (Rs/sq. ft) 5,102 4,499 5,163 13 (1) 4,744 4,651 2
MMR
Launch 4.1 5.8 2.5 (29) 64 51 58 (13)
Sales 7.4 6.5 6.8 14 8 83 73 15
Inventory 270 303 274 (11) (1) 270 303 (11)
Prices (Rs/sq. ft) 9,567 10,553 9,669 (9) (1) 9,382 9,174 2
Bengaluru
Launch 1.9 3.0 2.7 (39) (32) 51 33 55
Sales 5.0 4.4 5.3 14 (5) 61 54 13
Inventory 152 161 155 (6) (2) 152 161 (6)
Prices (Rs/sq. ft) 5,030 4,661 4,944 8 2 4,773 4,703 1
Source: PropEquity, Kotak Institutional Equities
Exhibit 2: Unsold inventory of 1.2 bn sq. ft will take almost 2.7 years to absorb at current rate of sales
Sales, launches and inventory across India, March fiscal year-ends, Apr 2017 – Apr 2019 (mn sq. ft)
All-India
NCR
Launch [LHS) Sales [LHS] Inventory [RHS] Launch [LHS) Sales [LHS] Inventory [RHS]
45 1,600
6 270
40 1,400
5 260
35 1,200
250
30 1,000 4
240
25 800 3
230
20 600
2
220
15 400
1 210
10 200
5 - 0 200
Dec-17
Dec-18
Mar-18
Mar-19
Jun-17
Jun-18
Sep-18
Apr-17
Sep-17
Apr-18
Apr-19
May-18
May-17
Nov-17
Jan-18
Nov-18
Jan-19
Jul-17
Feb-18
Jul-18
Feb-19
Aug-17
Oct-17
Aug-18
Oct-18
Dec-17
Dec-18
Jun-17
Mar-18
May-18
Jun-18
Mar-19
May-17
Apr-19
Apr-17
Sep-17
Apr-18
Sep-18
Nov-17
Nov-18
Jan-18
Jan-19
Jul-17
Oct-17
Jul-18
Oct-18
Aug-17
Feb-18
Aug-18
Feb-19
MMR Bengaluru
Launch [LHS) Sales [LHS] Inventory [RHS] Launch [LHS) Sales [LHS] Inventory [RHS]
10 330 8 200
9 320 7 180
8 310 160
6
7 140
300
6 5 120
290
5 4 100
280
4 3 80
270
3 60
260 2
2 40
1 250 1 20
0 240 0 -
Dec-17
Dec-18
Mar-18
Mar-19
Jun-17
Jun-18
May-17
May-18
Sep-17
Apr-18
Sep-18
Apr-19
Apr-17
Nov-17
Nov-18
Jul-17
Jul-18
Jan-18
Jan-19
Aug-17
Oct-17
Aug-18
Oct-18
Dec-17
Dec-18
Feb-18
Feb-19
Mar-18
Mar-19
Jun-18
Jun-17
Sep-17
Sep-18
Apr-19
Apr-17
May-17
Apr-18
May-18
Nov-18
Nov-17
Jan-18
Jan-19
Jul-17
Feb-18
Jul-18
Feb-19
Aug-17
Oct-17
Aug-18
Oct-18

28
4,000
4,500
5,000
5,500
6,000
3,000
3,500
11,000
3,000
7,000
8,000
10,000
4,000
5,000
6,000
9,000
India
Apr-17 9 ,25 4 Apr-17 4,8 30
May-17 9 ,28 5 May-17 4,79 7
Jun-17 9 ,217 Jun-17 4,738
Jul-17 9 ,0 5 0 Jul-17 4,734
Aug-17 9 ,0 5 0 Aug-17 4,8 42
Sep-17 8 ,9 24 Sep-17 4,70 0
Oct-17 8 ,8 21 Oct-17 4,79 8
Nov-17 9 ,10 6 Nov-17 4,926
Dec-17 9 ,0 10 Dec-17 4,9 12
Jan-18 9 ,234 Jan-18 4,991
Feb-18 8 ,6 51 Feb-18 4,9 35
Mar-18 9 ,0 8 0 Mar-18 4,9 70
MMR
All India
Apr-18 10 ,5 5 3 Apr-18 5,226

May-18 4,9 31
Prices (Rs/sq. ft)

9 ,222
Prices (Rs/sq. ft)
May-18
Jun-18 4,9 8 9

Jun-18 9,254
Jul-18 9 ,776 Jul-18 5 ,139
Aug-18 9 ,717 Aug-18 5 ,147
Sep-18 9 ,336 Sep-18 5 ,172
Oct-18 9 ,271 Oct-18 5 ,147
Nov-18 9 ,0 39 Nov-18 5 ,143
Dec-18 9 ,0 74 Dec-18 5 ,16 2
9,358 Jan-19 5 ,244

Jan-19
9 ,38 8 Feb-19 5,356
Feb-19
Mar-19 5 ,344
Mar-19 9 ,6 6 9
5 ,45 5
Exhibit 3: Real estate prices across India have remained largely flat
Apr-19 9 ,5 6 7 Apr-19
4,000
5,000
3,000
3,500
4,500
5,500
3,500
4,000
4,500
5,000
3,000
5,500
Apr-17 4,5 79
Apr-17 4,6 37
May-17 4,594
Real estate prices across India, March fiscal year-ends, Apr 2017 – Apr 2019 (Rs/ sq. ft)
May-17 4,425
Jun-17 4,5 5 3
Jun-17 4,477
Jul-17 4,5 9 3
Jul-17 4,49 6
Aug-17 4,8 71
Aug-17 4,417
Sep-17 4,76 6
Sep-17 3,6 45
Oct-17 4,6 49
Oct-17 4,5 77
Nov-17 4,6 25
Nov-17 5 ,120
Dec-17 4,6 8 8
Dec-17 4,8 9 5
Jan-18 4,798
Jan-18 5 ,20 4
Feb-18 4,78 4 5 ,10 8
Feb-18
Mar-18 4,79 7 Mar-18 5 ,0 37
NCR
Apr-18 4,6 6 1
Bengaluru
Apr-18 4,49 9
Prices (Rs/sq. ft)
Prices (Rs/sq. ft)
May-18 4,6 77 May-18 4,5 0 4

Jun-18 4,670 Jun-18 4,5 5 2
Jul-18 4,6 8 7 Jul-18 4,40 1
Aug-18 4,5 9 9 Aug-18 4,6 45
Sep-18 4,68 5 Sep-18 4,711
Oct-18 4,5 27 Oct-18 4,725
Nov-18 4,6 5 5 Nov-18 4,674
Dec-18 4,8 6 5 Dec-18 4,792
Jan-19 4,9 6 2 Jan-19 4,8 8 0
Feb-19 4,9 48 Feb-19 4,8 63
Mar-19 4,9 44 Mar-19 5,163

5 ,10 2

Apr-19 5 ,0 30 Apr-19
Real Estate
Real Estate India
Exhibit 4: Coverage companies saw sales grow 38% yoy, compared to 14% yoy increase for industry
Operational performance of our coverage companies, march fiscal year-ends, 1QFY18-4QFY19 (Rs mn)
1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19
Sales
Oberoi 2,870 3,533 4,063 2,633 6,235 5,675 2,416 3,191
Sunteck 1,278 1,698 1,040 1,860 1,816 4,211 3,106 2,890
Godrej 14,740 13,350 12,200 10,530 8,200 8,070 15,280 21,610
Brigade 1,830 2,165 2,621 2,347 2,185 4,597 4,458 5,198
Sobha 5,627 5,927 6,105 6,558 6,118 6,166 6,002 7,115
Prestige 4,511 5,277 5,231 10,482 7,638 7,974 9,368 11,222
DLF (1,250) (550) 4,800 7,500 6,000 6,250 5,630 6,500
Sales (Rs mn) 29,606 31,400 36,060 41,910 38,192 42,943 46,260 57,726
Sales growth (%)
Oberoi (30) (31) 52 (24) 117 61 (41) 21
Sunteck 69 (37) (18) 6 42 148 199 55
Godrej 304 131 76 210 (44) (40) 25 105
Brigade (14) (36) 41 7 19 112 70 121
Sobha 20 14 64 30 9 4 (2) 8
Prestige (12) (12) 51 100 69 51 79 7
DLF (127) NM NM 111 NM NM 17 (13)
Sales growth (%) 18 (4) 36 70 29 37 28 38
Collections
Oberoi 1,026 1,456 4,301 5,466 5,666 5,637 3,487 4,024
Sunteck 1,305 1,455 1,006 1,542 1,611 1,405 1,529 2,065
Godrej 11,670 7,400 9,020 12,770 11,280 11,100 9,180 12,250
Brigade 5,305 3,673 4,230 4,714 4,622 6,082 5,527 6,185
Sobha 5,738 4,338 4,874 5,980 5,030 5,396 5,583 5,767
Prestige 10,050 6,588 9,469 8,363 7,546 8,493 9,334 9,906
Collections (Rs mn) 35,094 24,910 32,900 38,835 35,755 38,113 34,640 40,197
Sales (mn sq. ft)
Oberoi 0.10 0.17 0.15 0.13 0.29 0.24 0.15 0.15
Sunteck 0.04 0.11 0.04 0.07 0.09 0.72 0.33 0.27
Godrej 1.80 1.56 1.43 1.47 1.17 1.07 2.80 3.72
Brigade 0.31 0.37 0.46 0.43 0.43 0.80 0.78 0.96
Sobha 0.82 0.86 0.93 1.02 0.96 1.03 0.91 1.13
Prestige 0.68 0.80 0.78 1.55 1.11 1.33 1.21 2.08
Sales (mn sq. ft) 3.75 3.87 3.80 4.67 4.04 5.19 6.17 8.30
Realizations (Rs/sq. ft)
Oberoi 29,327 20,376 26,775 20,092 21,739 23,791 16,407 21,982
Sunteck 29,813 15,531 26,306 25,727 20,350 5,867 9,438 10,604
Godrej 8,190 8,578 8,532 7,155 7,012 7,551 5,452 5,811
Brigade 5,865 5,915 5,661 5,509 5,117 5,725 5,745 5,426
Sobha 6,902 6,883 6,541 6,457 6,372 5,977 6,604 6,301
Prestige 6,634 6,596 6,706 6,763 6,881 5,995 7,742 5,395
Realizations (Rs/sq. ft) 8,233 8,264 8,232 7,373 7,963 7,070 6,581 6,169

India Real Estate
Exhibit 5: Bank exposure to housing sector continues to inch up despite decline of Rs20 bn in commercial real estate lending in Apr 2019
Outstanding loans in residential and commercial real estate in India, March fiscal year-ends, May 2016 – May 2019 (Rs bn)
Housing (Including Priority Sector) Commercial real estate

14,000 2,050
2,000
12,000
1,950
10,000
1,900
8,000 1,850
6,000 1,800
1,750
4,000
1,700
2,000
1,650
- 1,600
Mar-18
Mar-19
Mar-17
May-17
May-18
May-16
May-19
Sep-16
Sep-17
Sep-18
Nov-16
Nov-17
Nov-18
Jul-16
Jan-19
Jan-17
Jul-17
Jan-18
Jul-18
Mar-17
Mar-19
Mar-18
May-17
May-16
May-18
May-19
Sep-17
Sep-16
Sep-18
Jul-16
Jul-17
Nov-18
Nov-16
Nov-17
Jul-18
Jan-19
Jan-17
Jan-18
Exhibit 6: Cement prices have picked-up in recent months

Monthly cement prices across regions in India, June 2017 – 2019 (Rs/ bag)
North West East South All India

390
370
350
330
310
290
270
250
Dec-16
Dec-17
Dec-18
Jun-17
Jun-18
Jun-19
Jun-16
Apr-17
Apr-19
Apr-18
Feb-17
Feb-18
Feb-19
Oct-16
Oct-18
Aug-16
Aug-17
Oct-17
Aug-18
Source: Industry, Kotak Institutional Equities

Real Estate India
Exhibit 7: Re-bar prices have remained soft in recent months

Primary rebar prices in Mumbai, June 2014 – June 2019 (Rs/ton)
Rebar prices (Rs/ton)

50,000
40,000
30,000
20,000
10,000
-
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Mar-16
Mar-17
Mar-18
Mar-19
Jun-14
Mar-15
Jun-15
Jun-16
Jun-19
Jun-17
Jun-18
Sep-15
Sep-16
Sep-17
Sep-18
Sep-14
Source: Industry, Kotak Institutional Equities

June 2019 : Results calendar
India Daily Summary - July 8, 2019

Mon Tue Wed Thu Fri Sat Sun
8-Jul 9-Jul 10-Jul 11-Jul 12-Jul 13-Jul 14-Jul
TCS IndusInd Bank Avenue Supermarts

Infosys
Bajaj Consumer Care Federal Bank Mindtree Colgate-Palmolive (India) Bandhan Bank Amara Raja Batteries
Wipro L&T Infotech Dabur India HDFC Bank
ICICI Lombard
L&T Finance Holdings
L&T Technology
Mahindra CIE Automotive
RBL Bank
Coromandel International HDFC Standard Life ICICI Prudential Life Bajaj Finserv ABB ICICI Bank
GlaxoSmithkline Pharmaceuticals Mahindra & Mahindra Financial Shriram Transport Bajaj Finance Bajaj Auto
Kotak Mahindra Bank SBI Life Insurance Biocon Bajaj Holding & Investment
TVS Motor SKF GRUH Finance JSW Steel
Mphasis
PVR
29-Jul 30-Jul 31-Jul 1-Aug 2-Aug 3-Aug 4-Aug

Dr Reddy's Laboratories Axis Bank Godrej Consumer Products Exide Industries J K Cement
Kansai Nerolac Cholamandalam GlaxoSmithkline Consumer HDFC
Orient Cement Hero Motocorp Magma Fincorp
Tech Mahindra Marico
5-Aug 6-Aug 7-Aug 8-Aug 9-Aug 10-Aug 11-Aug
Berger Paints Aditya Birla Fashion The Ramco Cement Endurance Technologies Britannia Industries
Hexaw are Technologies Shree Cement
Motherson Sumi Systems Apollo Hospitals
Timken Bosch
Info Edge
P&G Hygiene Gillette India
Source: Company, Bloomberg, Kotak Institutional Equities estimates

32
Kotak Institutional Equities: Valuation summary of KIE Universe stocks
33
Fair O/S ADVT

Price (Rs) Value Upside Mkt cap. shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) 3mo
Company Rating 5-Jul-19 (Rs) (%) (Rs bn) (US$ bn) (mn) 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E 2019 2020E 2021E (US$ mn)
Automobiles & Components
Amara Raja Batteries ADD 644 665 3 110 1.6 171 28 33 39 2.6 18 17 23 19.3 16.5 11.6 9.8 8.3 3.3 2.9 2.6 15.4 16.1 16.8 1.1 1.3 1.5 6.9
Apollo Tyres BUY 195 270 38 112 1.6 572 14.3 18 22 7.0 25 21 13.6 10.9 9.1 7.9 6.9 5.8 1.1 1.0 0.9 8.3 9.8 10.9 1.7 1.5 1.5 9.9
Ashok Leyland BUY 87 130 49 256 3.7 2,936 7.0 7.6 7.7 16 8.6 2.5 12.5 11.5 11.3 7.1 6.2 6.5 3.1 2.6 2.3 26 25 22 3.5 2.6 2.7 30
Bajaj Auto REDUCE 2,843 2,700 (5) 823 12 289 153 155 172 8.4 1.1 10.8 18.5 18.3 16.6 13 13 11.0 3.8 3.4 3.1 23 19.6 19.6 2.1 2.2 2.4 21
Balkrishna Industries BUY 737 870 18 142 2.1 193 40 42 48 6.0 6.7 14.4 18.6 17.4 15.2 9.9 9.4 8.2 3.1 2.7 2.4 17.5 16.5 16.6 1.1 1.2 1.3 7.6
Bharat Forge SELL 458 460 0 213 3.1 466 22 24 26 37 7.6 7.3 21 19.2 17.9 12.0 11.0 10.1 4.0 3.5 3.0 21 19.2 18.0 0.5 1.2 1.3 9.1
CEAT ADD 925 1,080 17 37 0.5 40 62 74 82 (5.0) 20 11.7 15.0 12.5 11.2 8.0 8.0 7.3 1.4 1.2 1.1 9.3 10.3 10.6 1.3 1.3 1.3 9.2
Eicher Motors SELL 19,645 16,200 (18) 536 7.8 27 816 877 888 1.9 7.6 1.3 24 22 22 16 16 15 7.5 6.0 5.0 36 30 25 0.2 0.2 — 30
Endurance Technologies SELL 1,078 900 (17) 152 2.2 141 36 42 49 24 17 17 30 26 22 13 11.3 9.6 5.9 5.0 4.2 19.3 19.4 19.1 0.5 0.7 0.8 0.8
Escorts BUY 541 1,000 85 48 1.0 89 54 61 67 40 11.5 10.7 9.9 8.9 8.1 6.6 5.4 4.5 1.6 1.4 1.2 16.0 15.6 15.1 0.5 1.7 1.9 18.6
Exide Industries SELL 203 210 4 172 2.5 850 9.0 10.0 11.0 10.1 10.6 10.2 22 20 18.4 12 10.8 9.8 2.9 2.7 2.5 13.5 13.6 13.9 1.2 1.7 2.0 5.5
Hero Motocorp SELL 2,512 2,400 (4) 502 7.3 200 166 169 178 (10.2) 1.9 5.3 15.1 14.8 14.1 8.9 8.4 7.7 3.9 3.5 3.2 27 25 24 3.5 3.4 3.5 28
Mahindra CIE Automotive ADD 225 245 9 85 1.2 378 14.5 15 17 48 4.8 11.3 15.5 14.8 13.3 8.9 8.1 7.1 2.0 1.8 1.5 13.7 12.6 12.3 — — — 0.4
Mahindra & Mahindra BUY 642 930 45 798 11.6 1,138 48 48 50 25 — 5.8 13.5 13.5 12.7 10.2 9.0 8.3 2.1 1.9 1.7 16.5 14.6 13.9 1.5 1.5 1.6 32
Maruti Suzuki REDUCE 6,365 6,000 (6) 1,921 28.0 302 248 248 285 (2.9) (0.2) 14.8 26 26 22 14 13 10.7 4.2 3.7 3.4 17.1 15.4 15.8 1.0 1.0 1.1 89
Motherson Sumi Systems SELL 123 110 (10) 388 5.7 3,158 5.1 6.0 7.3 (6.3) 17 23 24 21 16.8 8.7 7.7 6.1 3.5 3.2 2.8 15.5 16.2 17.7 1.3 1.3 1.5 18.8
MRF REDUCE 56,250 50,000 (11) 239 3.5 4 2,667 3,070 3,336 (0.1) 15 8.7 21 18.3 16.9 9.5 8.1 7.1 2.2 2.0 1.8 11.0 11.3 11.1 0.1 0.1 0.1 5.6
Schaeffler India REDUCE 4,758 5,000 5 149 2.2 31 144 159 188 14.9 10.4 18 33 30 25 19 17 14 5.5 4.7 4.0 17.9 16.9 17.1 — — — 0.3
SKF ADD 1,976 2,000 1 101 1.5 51 65 78 91 13.5 19 17 30 25 22 20 17 14 6.0 4.9 4.2 19.8 19.2 19.2 0.6 0.7 0.8 0.7
Tata Motors BUY 160 270 69 544 7.3 3,396 (5.4) 18 27 (127) NM 45 NM 8.7 6.0 4.1 3.1 2.6 0.9 0.8 0.7 NM 9.9 12.8 — — — 77
Timken SELL 705 620 (12) 53 0.8 75 20 24 28 46 22 16 36 29 25 18 15 13 4.0 3.5 3.1 14.6 12.7 13.0 0.1 0.1 0.1 0.6
TVS Motor SELL 424 350 (18) 202 2.9 475 14.1 16 19 1.1 12.5 18.6 30 27 23 15 14 11.9 6.0 5.3 4.6 22 21 22 0.8 1.1 1.3 10.3
Varroc Engineering BUY 470 870 85 63 0.9 135 33 37 58 (0.2) 11.8 55 14.1 12.6 8.1 7.9 6.5 4.6 2.0 1.8 1.5 14.5 14.2 18.3 — — — 1.0
Automobiles & Components Neutral 7,647 111.3 (16.2) 30 16 23 17.6 15.1 9.1 7.7 6.6 2.9 2.6 2.3 12.5 14.5 15.0 1.2 1.2 1.3 413
Banks
AU Small Finance Bank SELL 683 500 (27) 200 2.9 292 13.1 16 23 28 26 40 52 41 30 — — — 6.8 4.9 4.2 14.0 13.2 14.8 0.1 — — —
Axis Bank REDUCE 806 730 (9) 2,111 30.8 2,572 18 45 55 1,593 148 23 44 17.9 14.6 — — — 3.5 2.9 2.4 7.2 16.1 16.6 0.1 0.3 0.4 95
Bandhan Bank SELL 547 475 (13) 653 9.5 1,193 16 20 25 45 20 28 33 28 22 — — — 5.9 5.6 4.7 19.0 23 23 0.5 0.7 0.8 0.0
Bank of Baroda ADD 130 145 11 502 7.3 2,652 1.6 21 25 118 1,171 20 80 6.3 5.2 — — — 1.0 1.1 0.8 0.9 14.5 14.2 — 3.2 3.8 45
Canara Bank ADD 291 315 8 219 3.2 753 4.6 53 72 108 1,046 36 63 5.5 4.0 — — — 1.4 0.9 0.7 1.0 10.4 12.7 — — — 22
City Union Bank ADD 206 215 4 151 2.2 735 9.3 10.7 12.0 4.4 15 11.7 22 19.2 17.2 — — — 3.4 3.0 2.7 15.2 15.3 15.1 0.2 0.9 1.0 2.2
DCB Bank BUY 231 230 (0) 72 1.0 310 10.5 13.3 17 32 27 25 22 17.3 13.9 — — — 2.6 2.3 2.0 12.0 13.5 14.9 0.4 0.5 0.7 7.7
Equitas Holdings BUY 122 180 48 42 0.6 342 6.3 10.0 13.0 585 57 30 19.2 12.2 9.4 — — — 1.7 1.6 1.3 9.1 12.8 14.5 — — — 4.9

Federal Bank BUY 107 130 21 213 3.1 1,985 6.3 8.9 10.4 41 42 16 17.1 12.0 10.3 — — — 1.7 1.6 1.5 9.8 12.7 13.4 1.3 1.9 2.2 19.4
HDFC Bank ADD 2,475 2,400 (3) 6,747 98.5 2,723 77 93 112 14.9 21 20 32 27 22 — — — 4.6 4.1 3.6 16.5 16.0 16.9 0.6 0.7 0.9 117
ICICI Bank BUY 436 460 5 2,815 41.1 6,447 5.2 25 31 (45.6) 378 25 84 17.5 14.0 — — — 2.9 2.5 2.2 3.2 14.0 15.7 0.2 1.1 1.4 105
IndusInd Bank ADD 1,533 1,750 14 924 13.5 614 54 77 99 (10) 44 28 28 19.8 15.4 — — — 3.8 3.0 2.6 13.5 17.3 17.4 0.5 0.7 0.9 94
J&K Bank BUY 40 90 126 22 0.3 557 8.3 9.6 17 129 15 76 4.8 4.1 2.4 — — — 0.5 0.3 0.3 7.3 7.8 12.7 0.0 4.8 8.5 1.2
Karur Vysya Bank ADD 70 85 21 56 0.8 799 2.6 4.2 7.7 (45) 59 83 27 16.7 9.1 — — — 1.1 1.0 0.9 3.3 5.1 8.9 0.9 1.5 2.9 1.5
Punjab National Bank ADD 82 105 28 377 5.5 4,604 (22) 9.4 13.7 51 143 46 NM 8.7 6.0 — — — 1.8 1.3 1.1 NM 9.9 12.7 — — — 37
RBL Bank SELL 633 560 (12) 270 3.9 427 20 28 35 34 40 22 31 22 18.2 — — — 3.7 3.3 2.9 12.2 15.0 16.1 0.4 0.6 0.7 15.5
State Bank of India BUY 371 410 11 3,308 48.3 8,925 1.0 37 52 113 3,736 41 384 10.0 7.1 — — — 2.3 1.7 1.3 0.4 13.9 16.9 0.0 0.1 0.2 118
Ujjivan Financial Services ADD 292 375 28 35 0.5 121 16 23 30 2,650 43 29 17.9 12.5 9.7 — — — 1.8 1.6 1.4 10.7 13.7 15.6 0.4 0.7 1.0 10.9
Union Bank ADD 84 105 25 148 2.2 1,763 (17) 6.3 20 63 137 211 NM 13.4 4.3 — — — 1.3 1.2 0.7 NM 4.4 12.8 0.0 1.1 3.5 12.6
YES Bank SELL 88 170 93 204 3.0 2,315 7.4 4.1 12.3 (59.5) (45) 203 11.9 22 7.2 — — — 0.9 0.9 0.8 6.5 3.5 10.0 3.0 1.2 3.7 169
Banks Attractive 19,069 278.3 373 307 33 65 15.9 12.0 2.3 2.0 1.8 3.6 12.6 14.6 0.4 0.7 0.9 878


Fair O/S ADVT
Building Products
Astral Poly Technik SELL 1,308 720 (45) 157 2.3 120 16 21 25 11.8 27 18 80 63 53 41 33 29 12 10 8.7 17.1 17.8 17.8 0.1 0.1 0.1 1.1
Building Products Cautious 157 2.3 11.8 27 18 80 63 53 41 33 29 12 10 8.7 15.3 16.5 16.4 0.1 0.1 0.1 1.1
Capital goods
ABB SELL 1,542 1,125 (27) 327 4.8 212 24 27 33 22 13.7 22 64 56 46 68 45 35 8.2 7.3 6.5 13.4 13.7 14.9 0.3 0.3 0.4 2.8
Ashoka Buildcon BUY 141 225 59 40 0.6 281 11.8 11.8 12.4 41 (0.4) 5.3 11.9 12.0 11.4 9.0 8.5 7.8 1.8 1.6 1.4 16.1 14.1 13.3 1.1 1.3 1.4 0.7
Bharat Electronics BUY 108 100 (8) 264 3.9 2,437 7.7 5.8 5.2 31.8 (24.4) (11.6) 14.0 18.5 21 8.8 10.0 10.2 2.9 2.7 2.5 22 15.1 12.6 3.1 1.9 1.7 16.6
BHEL REDUCE 70 67 (5) 244 3.6 3,482 3.5 2.9 4.2 51 (17.0) 44 20 24 16.8 9.1 7.5 5.3 0.8 0.8 0.8 3.8 3.2 4.5 2.9 2.0 2.6 15.1
Carborundum Universal SELL 354 310 (13) 67 1.0 189 13.1 16 18 14.8 21 15 27 22 19.5 15 12 10.6 3.9 3.5 3.1 15.1 16.5 17.0 0.8 1.3 1.5 0.6
Cochin Shipyard BUY 383 580 52 50 0.7 132 37 39 42 23 6.0 7.4 10.5 9.9 9.2 4.6 3.5 5.0 1.5 1.4 1.2 14.6 14.6 14.2 3.4 2.7 3.0 0.4
Cummins India SELL 737 660 (10) 204 3.0 277 26 29 33 9.1 9.2 14.4 28 26 22 23 20 17 4.9 4.6 4.3 18.0 18.7 20 2.3 2.1 2.4 4.5
Dilip Buildcon BUY 465 735 58 64 0.9 137 56 47 57 20 (15.2) 22 8.4 9.9 8.1 6.1 5.2 4.8 2.0 1.7 1.4 27 18.3 18.6 0.2 0.2 0.2 3.4
IRB Infrastructure BUY 94 205 119 33 0.5 351 24 20 14.3 7.2 (17.2) (28.5) 3.9 4.7 6.5 5.9 5.9 6.3 0.5 0.5 0.5 14.2 10.7 7.2 3.8 4.2 4.0 7.2
Kalpataru Power Transmission BUY 510 570 12 78 1.1 153 30 37 45 66 23 21 16.8 13.6 11.3 7.4 6.0 4.8 2.5 2.2 1.8 16.1 17.0 17.6 0.6 0.7 0.8 0.9
KEC International BUY 331 340 3 85 1.2 257 19 23 29 5.7 21 26 17.5 14.4 11.4 8.6 7.4 6.2 3.5 2.9 2.4 22 22 23 0.8 0.7 0.9 1.9
L&T BUY 1,558 1,500 (4) 2,186 31.9 1,403 61 68 80 19 10.9 17 25 23 19.6 20 18 17 3.9 3.6 3.2 16.3 16.3 17.2 1.2 1.5 1.7 64
Sadbhav Engineering REDUCE 223 270 21 38 0.6 172 10.9 12.3 17 (15.7) 13.7 40.1 21 18.1 12.9 12 10.1 8.2 1.9 1.7 1.5 9.5 9.9 12.6 — — — 0.7
Siemens SELL 1,260 1,085 (14) 449 6.5 356 31 36 42 22 18 16 41 35 30 25 21 18 5.0 4.5 4.1 12.6 13.6 14.4 0.7 0.8 0.9 8.6
Thermax ADD 1,048 1,100 5 125 1.8 113 28 36 44 37 27 24 37 29 24 27 21 17 27 21 17 11.1 12.8 14.4 0.7 0.8 1.0 1.7
Capital goods Neutral 4,253 62.1 22 4.1 15 23 22 19.5 3.0 2.8 2.6 12.9 12.4 13.1 1.3 1.4 1.6 878
Commercial & Professional Services
SIS REDUCE 885 825 (7) 65 0.9 75 29 35 42 28 22 21 31 25 21 19 14 12 5.3 4.4 3.7 18.8 19.1 19.4 0.3 0.4 0.4 0.3
TeamLease Services SELL 3,036 2,030 (33) 52 0.8 17 58 73 95 33 27 31 53 42 32 54 41 31 9.6 7.8 6.3 20 21 22 — — — 0.7
Commercial & Professional Services Cautious 117 1.7 32 23 24 37 30 24 26 20 16 6.5 5.4 4.5 17.5 18.0 18.5 0.2 0.2 0.2 1.0
Commodity Chemicals
Asian Paints REDUCE 1,359 1,225 (10) 1,303 19.0 959 23 26 32 2.7 18 21 60 51 43 37 31 26 14 12 11 24 25 27 0.8 0.9 1.2 28
Tata Chemicals BUY 606 700 16 154 2.3 255 43 49 54 (9) 13.1 10.4 14.1 12.5 11.3 6.7 5.5 4.8 1.3 1.2 1.1 9.3 9.7 10.0 2.1 2.2 2.4 9.1
Commodity Chemicals Neutral 1,458 21.3 (1.5) 16 17 45 39 33 26 21 18 6.7 6.1 5.6 14.9 15.9 17.1 0.9 1.1 1.3 37
ACC SELL 1,547 1,400 (9) 290 4.2 188 53 65 73 9.3 21 13.0 29 24 21 15 13 11.3 2.8 2.6 2.4 10.1 11.1 11.6 0.9 1.0 1.2 18.3
Ambuja Cements REDUCE 210 192 (9) 417 6.1 1,986 7.3 9.9 11.5 (2.4) 36 16 29 21 18.3 10.4 7.9 6.8 1.9 1.7 1.6 6.7 8.5 9.1 0.7 0.7 0.7 10.5
Dalmia Bharat ADD 1,078 1,225 21 195 2.9 192 14.4 32 43 4.1 120 37 70 32 23 11.8 9.7 8.4 1.8 1.7 1.6 2.6 5.6 7.2 — — — 1.8
Grasim Industries ADD 927 1,020 10 610 8.9 657 63 81 104 36 30 28 14.8 11.4 8.9 10.5 6.2 4.8 1.1 1.0 0.9 7.3 9.2 10.7 0.8 0.8 0.8 22
India Cements REDUCE 104 116 11 32 0.5 310 2.2 8.6 9.7 (31.4) 283 13.2 46 12.1 10.7 10.3 6.0 5.7 0.6 0.6 0.6 1.3 5.0 5.4 0.8 0.8 0.8 12.2
J K Cement ADD 1,000 1,100 10 77 1.1 77 34 74 84 (21) 116 13.4 29 13.5 11.9 13 9.2 7.3 2.9 2.4 2.1 11.3 19.5 18.8 1.0 1.0 1.0 1.4
JK Lakshmi Cement ADD 340 432 27 40 0.6 118 4.1 26 33 (28) 544 27 83 12.9 10.2 13 6.6 5.6 2.7 2.3 1.9 3.3 19.0 20 0.2 0.6 0.6 0.5
Orient Cement ADD 104 106 2 21 0.3 205 2.3 7.7 10.8 7.5 230 41 45 13.6 9.6 10.7 6.9 5.9 2.0 1.8 1.6 4.6 14.2 17.8 1.4 1.9 1.9 0.5
Shree Cement SELL 21,366 14,750 (31) 744 10.9 35 323 465 602 (19) 44 30 66 46 35 27 19 16 7.8 6.8 5.8 12.2 15.7 17.6 0.3 0.3 0.3 9.2
UltraTech Cement SELL 4,522 2,960 (35) 1,242 18.1 275 102 137 170 13.9 35 23 44 33 27 20 16 14 4.4 4.0 3.5 10.4 12.7 13.9 0.3 0.3 0.3 38
Construction Materials Cautious 3,670 53.6 11.5 41 24 33 23 18.7 15 10.0 8.2 2.5 2.3 2.1 7.6 9.8 11.0 0.5 0.5 0.5 114

34
Fair O/S ADVT
35
Consumer Durables & Apparel
Crompton Greaves Consumer SELL 232 200 (14) 145 2.1 627 5.9 7.1 8.4 15 20 18 39 33 28 25 21 18 13 10 8.2 40 35 33 0.9 1.1 1.1 2.2
Havells India SELL 766 520 (32) 479 7.0 625 12.6 16 19 13.5 25 20 61 49 41 39 31 26 11 10.0 8.7 19.8 22 23 0.6 0.7 0.9 15.3
Page Industries REDUCE 20,400 21,300 4 228 3.3 11 353 410 495 13.5 16 21 58 50 41 37 32 27 29 25 20 49 54 54 1.7 1.0 1.3 12.4
TCNS Clothing Co. ADD 786 770 (2) 48 0.7 65 21 19 23 34 (6.8) 21 38 41 34 26 22 17 8.2 6.6 5.4 25 17.9 17.5 — — — 0.4
Vardhman Textiles ADD 1,044 1,230 18 60 0.9 56 129 119 136 25.6 (8.4) 15.0 8.1 8.8 7.7 6.9 6.5 5.4 1.1 1.0 0.9 13.9 11.5 12.1 1.9 2.9 2.9 0.3
Voltas SELL 616 480 (22) 204 3.0 331 16 17 21 (9.1) 7.1 23 39 37 30 33 27 23 5.0 4.5 4.0 13.0 12.9 14.3 0.5 0.6 0.7 15.1
Whirlpool SELL 1,570 1,220 (22) 199 2.9 127 32 38 44 16 18 17 49 41 36 29 25 21 9.3 7.9 6.9 21 21 21 0.3 0.5 0.8 1.3
Consumer Durables & Apparel Cautious 1,363 19.9 12.7 11.3 41 37 31 27 23 20 7.3 6.5 18.0 17.7 18.5 0.8 0.8 47
Consumer Staples
Bajaj Consumer Care BUY 323 410 27 48 0.7 148 15 17 19 5.0 16 11.9 21 18.6 16.6 16 14 13 10 10 10 46 54 60 4.3 4.3 5.0 0.5
Britannia Industries REDUCE 2,825 2,800 (1) 679 9.9 240 48 59 70 15 22 19 59 48 40 39 32 26 16 13 11 30 30 29 0.5 0.7 0.9 18.4
Colgate-Palmolive (India) ADD 1,178 1,310 11 320 4.7 272 27 30 35 12.5 13.4 15 44 39 34 26 23 20 22 22 22 49 57 66 2.0 2.2 2.5 6.6
Dabur India REDUCE 407 370 (9) 719 10.5 1,766 8.1 9.5 10.9 4.6 16 16 50 43 37 41 35 30 13 11 10.0 25 28 28 0.7 1.1 1.4 14.5
GlaxoSmithKline Consumer RS 7,785 — — 327 4.8 42 234 242 273 40 3.5 12.9 33 32 29 25 22 19 8.0 7.2 6.5 26 24 24 1.3 1.5 1.7 1.7
Godrej Consumer Products REDUCE 672 635 (5) 687 10.0 1,022 14.4 16 19 1.0 12.9 16 47 41 36 33 29 25 9.5 8.4 7.5 22 22 22 1.4 0.9 1.1 13.7
Hindustan Unilever REDUCE 1,791 1,575 (12) 3,878 56.6 2,160 28 32 37 18 15 14.9 64 55 48 44 38 33 51 44 38 83 85 84 1.2 1.3 1.5 33
ITC ADD 279 335 20 3,425 50.0 12,288 10.2 11.1 12.3 14.0 8.7 11.1 27 25 23 18 17 15 5.9 5.5 5.2 19.5 21 22 2.1 2.3 2.7 52
Jyothy Laboratories ADD 163 200 23 60 0.9 367 5.6 6.0 6.7 27 7.9 11.4 29 27 24 22 19 17 4.5 4.2 4.0 16.6 16.1 16.9 1.8 2.1 2.5 1.1
Marico ADD 379 380 0 489 7.1 1,290 7.3 8.5 10.0 17 16 17 52 45 38 38 32 27 16 15 14 34 35 38 1.3 1.5 1.6 10.7
Nestle India REDUCE 11,934 10,700 (10) 1,151 16.8 96 167 196 224 31 17 14.8 72 61 53 42 37 32 31 29 27 45 49 52 1.0 1.1 1.3 11.3
Tata Global Beverages ADD 267 240 (10) 168 2.5 631 7.0 8.4 9.4 (4.8) 20 12.4 38 32 28 21 19 17 2.3 2.2 2.1 6.1 7.1 7.6 0.9 1.1 1.3 13.2
United Breweries REDUCE 1,381 1,335 (3) 365 5.3 264 21 26 33 43 24 25 65 52 42 32 27 22 11 9.7 8.1 19.2 20 21 0.2 0.3 0.5 9.0
United Spirits REDUCE 581 550 (5) 422 6.2 727 9.4 12.3 16 24 31 26 62 47 37 35 28 24 13 9.2 6.2 24 23 19.9 0.0 0.3 0.4 13.0
Consumer Staples Cautious 12,912 188.5 16 13.0 14.4 44 39 34 29 26 22 11 10 9.4 26 27 28 1.3 1.5 1.7 200
Diversified Financials
Bajaj Finance SELL 3,719 2,500 (33) 2,156 31.5 577 69 92 122 60 32 33 54 41 30 — — — 11 8.8 7.0 22 24 26 0.2 0.2 0.3 67
Bajaj Finserv REDUCE 8,438 7,250 (14) 1,343 19.6 159 202 286 366 21 41 28 42 30 23 — — — 5.7 4.8 4.0 14.5 17.5 18.9 0.2 0.2 0.2 23
Bharat Financial Inclusion NA 898 — — 126 1.8 140 63 68 86 93 8.1 27 14.2 13.2 10.4 — — — 3.2 2.5 2.0 25 21 21 — — — 16.9
Cholamandalam ADD 289 295 2 226 3.3 782 15 18 21 29 17 19 19.0 16.3 13.7 — — — 3.8 3.1 2.6 21 20 20 2.3 0.7 0.8 6.2
HDFC ADD 2,279 2,175 (5) 3,926 57.3 1,721 56 62 71 (14) 11.5 14.1 41 37 32 — — — 5.1 4.7 4.3 13.6 13.4 14.0 0.9 1.0 1.2 97
IIFL Holdings REDUCE 153 185 21 49 0.7 318 19 14.8 18 (22.5) (24.0) 19 7.9 10.3 8.7 — — — 1.3 1.2 1.1 17.5 12.3 13.5 4.2 3.5 4.2 0.6
L&T Finance Holdings REDUCE 124 140 13 248 3.6 1,999 11.2 12.8 14.6 74 14.6 14.3 11.1 9.7 8.5 — — — 1.8 1.6 1.4 18.0 17.5 17.2 0.8 1.0 1.2 13.3
LIC Housing Finance ADD 567 550 (3) 286 4.2 505 48 57 67 21.4 19 17 11.8 9.9 8.5 — — — 1.8 1.5 1.3 15.9 16.6 16.9 1.3 1.6 1.9 12.2
Magma Fincorp BUY 125 150 20 34 0.5 269 11.3 12.6 15 12.9 11.4 23 11.1 10.0 8.1 — — — 1.2 1.1 1.0 12.8 11.6 12.8 0.6 0.5 1.2 1.3

Mahindra & Mahindra Financial ADD 397 500 26 245 3.6 615 25 31 36 45 24 13.8 15.7 12.6 11.1 — — — 2.5 2.2 1.9 15.2 16.7 16.9 1.6 2.0 2.3 11.9
Muthoot Finance ADD 626 625 (0) 251 3.7 401 49 54 60 10.8 8.7 11.4 12.7 11.7 10.5 — — — 2.6 2.2 1.9 22.4 20 19.6 1.9 2.1 2.3 8.4
PNB Housing Finance REDUCE 783 700 (11) 132 1.9 168 71 69 77 9.7 (2.9) 11.5 11.0 11.3 10.2 — — — 1.8 1.6 1.5 16.9 14.5 14.4 1.1 0.4 0.4 7.9
Shriram City Union Finance ADD 1,480 1,900 28 98 1.4 66 150 156 189 39 4.3 21 9.9 9.5 7.8 — — — 1.7 1.5 1.3 16.6 15.1 16.0 1.5 1.3 1.6 0.6
Shriram Transport BUY 1,078 1,425 32 244 3.6 227 113 128 145 4.2 13.6 12.8 9.5 8.4 7.4 — — — 1.6 1.4 1.2 17.4 17.1 16.7 1.1 1.7 2.0 32
Diversified Financials Neutral 9,363 136.7 12.8 18 19 29 24 21 4.3 3.8 3.3 14.9 15.4 16.1 0.7 0.8 0.9 299


Fair O/S ADVT
Electric Utilities
CESC BUY 768 830 8 102 1.5 133 90 104 114 34.6 14.8 9.7 8.5 7.4 6.8 6.4 5.6 5.2 0.8 0.8 0.7 9.9 10.8 10.9 1.7 1.7 1.8 4.7
JSW Energy REDUCE 72 65 (9) 117 1.7 1,640 4.2 6.2 5.8 36 49 -7.4 17.1 11.5 12.4 6.4 5.0 4.5 1.0 0.9 0.9 6.0 8.3 7.1 — — — 0.7
NHPC ADD 24 27 10 246 3.6 10,260 2.5 2.9 3.1 3.7 17 5.1 9.7 8.3 7.9 8.0 7.1 7.1 0.8 0.8 0.7 8.5 9.4 9.5 5.8 6.1 6.5 1.3
NTPC BUY 136 165 21 1,351 19.7 9,895 11.2 11.5 13.2 7.4 2.2 14.8 12.2 11.9 10.4 11.8 9.8 8.2 1.3 1.2 1.1 10.6 10.2 11.0 4.5 2.5 2.9 22
Power Grid BUY 206 235 14 1,077 15.7 5,232 19 21 23 20 8.5 11.2 10.8 10.0 9.0 7.3 7.4 6.9 1.8 1.6 1.5 17.5 17.3 17.4 4.0 3.5 3.9 20
Tata Power BUY 71 85 20 191 2.8 2,705 2.1 5.0 6.8 (60.5) 138 34 33 14.0 10.5 10.2 8.8 8.7 1.1 1.1 1.0 3.6 7.8 9.6 — — — 7.6
Electric Utilities Attractive 3,083 45.0 9.0 10.6 12.3 11.8 10.7 9.5 1.3 1.2 1.1 11.0 11.3 11.7 3.9 2.9 3.2 57
Fertilizers & Agricultural Chemicals
Bayer Cropscience SELL 3,444 3,000 (13) 118 1.7 34 69 96 114 (20.8) 38 19 50 36 30 31 22 18 6.3 5.5 4.9 13.0 16.3 17.1 0.5 0.6 0.7 0.4
Dhanuka Agritech ADD 417 435 4 20 0.3 48 24 25 27 (8.0) 4.1 10.7 17.6 16.9 15.3 14 10.8 9.4 3.1 2.7 2.4 17.7 17.1 16.6 0.3 1.2 1.3 0.2
Godrej Agrovet ADD 503 540 7 97 1.4 192 11.5 14.7 18 (0.5) 28 25 44 34 28 22 18 14 4.7 4.2 3.7 11.8 13.0 14.4 0.9 0.7 0.9 0.7
PI Industries ADD 1,170 1,165 (0) 161 2.4 138 30 39 47 11.6 32 19 39 30 25 28 21 18 7.1 5.9 4.9 19.5 22 21 0.3 0.5 0.5 2.4
Rallis India ADD 155 160 3 30 0.4 195 8.4 9.8 10.6 (2.2) 16 8.9 18.4 15.8 14.5 12 10.9 9.4 2.3 2.1 1.9 13.2 14.1 14.0 1.6 1.8 2.0 0.5
UPL SELL 666 520 (22) 509 7.4 761 25 38 43 (12.9) 52 14.5 27 17.7 15.4 19 10.3 8.7 3.5 3.1 2.7 15.9 18.6 18.9 0.8 1.3 1.8 37
Fertilizers & Agricultural Chemicals Attractive 935 13.6 (9.4) 43 16 31 22 18.6 20 12 10.3 4.1 3.7 3.2 13.3 17.0 17.2 0.7 1.0 1.4 41
Gas Utilities
GAIL (India) BUY 306 440 44 691 10.1 2,255 28 31 33 37 10.1 7.2 11.0 10.0 9.3 7.2 6.3 5.8 1.6 1.4 1.3 14.9 15.0 14.6 2.6 3.1 3.4 25
GSPL SELL 193 170 (12) 109 1.6 564 14.1 13.8 13.3 19 (1.8) (4.2) 13.7 13.9 14.5 5.7 5.6 5.4 1.9 1.7 1.6 14.7 12.9 11.2 1.0 1.1 1.0 1.2
Indraprastha Gas SELL 297 260 (13) 208 3.0 700 12.0 14.1 16 17 18 12.4 25 21 18.7 16 14 11.8 5.0 4.4 3.8 22 22 22 0.8 1.0 1.3 9.0
Mahanagar Gas ADD 809 950 17 80 1.2 99 56 61 64 16 8.2 4.7 14.4 13.3 12.7 8.6 7.6 7.1 3.3 2.9 2.7 25 23 22 2.5 3.0 3.5 4.5
Petronet LNG BUY 249 270 9 373 5.4 1,500 15 17 19 8.3 14.7 10.6 16.5 14.4 13.0 10.5 8.8 7.8 3.7 3.3 3.0 22 24 24 4.0 3.1 3.8 8.4
Gas Utilities Attractive 1,461 21.3 24 11.7 7.5 13.7 12.3 11.4 8.5 7.4 6.7 2.2 2.0 1.8 16.0 16.2 15.8 2.6 2.7 3.1 48
Health Care Services
Apollo Hospitals ADD 1,307 1,365 4 182 2.7 139 17 26 34 101 55 29 77 50 38 20 18 15 5.5 5.1 4.7 7.2 10.7 12.8 0.5 0.7 0.9 12.2
Aster DM Healthcare BUY 123 240 95 62 0.9 505 6.6 7.7 11.6 140 17 49 18.6 15.9 10.6 9.8 8.3 6.5 1.9 1.7 1.5 11.1 11.5 15.3 — — — 1.5
Dr Lal Pathlabs SELL 1,078 925 (14) 90 1.3 83 24 27 32 17 13.8 18 45 40 34 28 24 21 9.5 8.1 7.0 23 22 22 0.6 0.6 0.7 1.5
HCG BUY 145 245 70 13 0.2 85 (3.5) (1.8) 0.5 (322) 47 126 NM NM 300 15 13 11.1 2.3 2.3 2.3 NM NM 0.8 — — — 0.1
Narayana Hrudayalaya BUY 231 265 15 47 0.7 204 1.9 4.5 7.5 (25) 139 64 122 51 31 20 16 12 4.4 4.0 3.6 3.7 8.3 12.2 — — — 0.4
Health Care Services Attractive 394 5.7 58 36 39 51 37 27 17 15 12 4.3 4.0 3.6 8.5 10.7 13.4 0.3 0.5 0.6 15.7
Hotels & Restaurants
Coffee Day Enterprises NR 231 — — 49 0.7 211 2.9 3.5 8.1 (12.5) 19 132 79 66 29 16 9.4 9.0 1.9 1.0 1.0 2.5 2.0 3.6 — — — 0.5
Jubilant Foodworks BUY 1,235 1,410 14 163 2.4 132 24 30 41 66 26 35 51 41 30 26 21 16 13 10 8.0 29 28 30 0.4 0.4 0.6 23
Lemon Tree Hotels ADD 66 86 30 52 0.8 789 0.3 1.1 2.3 51 297 116 243 61 28 37 21 14 6.0 5.4 4.9 2.5 9.3 18.3 — — 1.4 0.8
Hotels & Restaurants Attractive 264 3.9 45 40 60 66 47 29 23 16 13 5.7 3.6 3.3 8.6 7.7 11.3 0.2 0.2 0.6 25
Insurance
HDFC Life Insurance ADD 474 450 (5) 956 13.9 2,008 6.4 7.4 8.5 15 16 14.6 75 64 56 — — — 17 15 14 25 25 26 0.3 0.4 0.4 15.6
ICICI Lombard SELL 1,106 750 (32) 502 7.3 454 23 28 35 22 23 22 48 39 32 — — — 9.4 8.1 6.8 21 22 23 0.5 0.6 0.8 19.6
ICICI Prudential Life BUY 398 500 25 572 8.4 1,436 6.7 7.5 8.8 (40) 11.7 17 59 53 45 — — — 7.8 7.0 6.2 13.9 13.9 14.5 0.3 0.3 0.0 10.2
Max Financial Services BUY 416 530 27 112 1.6 269 1.8 5.4 5.3 (65.8) 197 -3.5 227 76 79 — — — 2.5 7.2 6.6 0.0 0.5 0.4 3.5
SBI Life Insurance BUY 754 800 6 754 11.0 1,000 13.3 15 18 15 17 14.8 57 49 42 — — — 10 8.6 7.4 19.0 19.1 18.7 0.3 0.3 0.4 9.6
Insurance Attractive 2,896 42.3 (4.4) 19 16 62 52 45 10 9.2 8.1 16.8 17.6 18.0 0.2 0.3 0.2 59

36
Fair O/S ADVT
37
Internet Software & Services
Info Edge REDUCE 2,257 1,870 (17) 276 4.0 122.0 26 31 37 14.7 20 20 87 73 60 76 55 45 12 11 9.5 14.2 15.4 16.6 0.2 0.3 0.4 7.2
Just Dial REDUCE 771 590 (23) 50 0.7 64.8 32 31 33 50 (1.9) 5.4 24 25 23 16 16 14 5.0 4.2 3.7 21 18.6 16.8 0.0 0.4 0.4 45
Internet Software & Services Attractive 325 4.8 25 11.4 15 62 56 49 52 42 36 9.8 8.6 7.6 15.7 15.4 15.7 0.1 0.4 0.4 53
IT Services
HCL Technologies ADD 1,016 1,200 18 1,379 20.1 1,377 73 79 84 18 7.8 7.0 13.9 12.9 12.0 9.3 7.9 7.4 3.3 2.8 2.5 26 24 22 0.8 3.0 3.2 32
Hexaware Technologies REDUCE 365 345 (5) 109 1.6 302 19 21 24 17 8.0 16 18.9 17.5 15.0 14 12 10.6 4.6 4.1 3.6 27 25 26 2.3 2.7 2.7 6.0
Infosys ADD 718 750 4 3,135 45.8 4,353 35 38 43 9.5 6.9 13.3 20 19.0 16.8 14 13 11.7 4.8 4.9 4.5 24 25 28 4.2 3.1 3.3 90
L&T Infotech ADD 1,666 1,940 16 289 4.2 176 86 93 106 36 7.0 15.0 19.3 18.0 15.7 14 13 11.1 6.0 5.0 4.2 35 30 29 1.5 1.8 2.0 4.9
Mindtree REDUCE 889 930 5 146 2.1 165 46 46 58 33 1.4 25 19.4 19.1 15.3 13 11.5 9.1 4.4 3.9 3.3 25 22 23 1.5 1.6 2.0 19.9
Mphasis REDUCE 982 930 (5) 183 2.7 191 56 63 66 28 12.8 4.2 17.5 15.5 14.9 13 10.7 10.0 3.6 3.2 2.9 20 21 20 2.7 3.1 3.5 3.1
TCS REDUCE 2,163 1,940 (10) 8,111 118.4 3,790 83 93 101 23 12.1 8.9 26 23 21 19 17 16 9.0 8.4 7.9 35 37 38 1.4 3.0 3.3 93
Tech Mahindra ADD 681 850 25 604 8.8 901 48 54 61 11.9 12.1 13.1 14.3 12.7 11.3 8.3 7.5 6.4 3.0 2.8 2.4 22 22 23 2.1 2.1 2.4 32
Wipro REDUCE 272 270 (1) 1,641 23.9 6,021 15.0 18 19 18 17 9.9 18.2 15.5 14.1 11.6 10.5 9.3 2.9 2.9 2.4 17.2 18.2 18.2 0.6 0.6 0.7 35
IT Services Cautious 15,597 227.6 16 8.5 9.9 21 19.3 17.6 15 13 12.0 5.3 5.1 4.6 26 27 26 1.9 2.7 2.9 317
Media
DB Corp. ADD 193 210 9 34 0.5 175 16 20 23 (11.0) 30 14.4 12.3 9.5 8.3 6.5 5.2 4.5 1.8 1.9 1.8 14.6 19.9 23 5.2 6.5 7.8 0.2
DishTV REDUCE 30 33 9 56 0.8 1,925 3.1 0.8 1.3 160 (74.0) 59 9.7 37 24 3.1 3.2 2.9 11 8.2 5.8 83 25 29 — — — 10.8
Jagran Prakashan REDUCE 107 110 3 32 0.5 296 8.9 11.1 13.0 (8.1) 25 17 12.1 9.7 8.2 5.0 4.2 3.5 1.7 1.7 1.6 13.4 17.6 20 4.7 8.4 8.4 0.3
PVR RS 1,677 — — 78 1.1 48 37 51 65 38 37 28 45 33 26 17 13 10.9 6.6 5.6 4.7 15.5 18.3 19.8 0.2 0.3 0.4 10.1
Sun TV Network REDUCE 482 575 19 190 2.8 394 36 36 40 26 (0.4) 10.6 13.3 13.3 12.0 8.7 8.4 7.5 3.6 3.2 2.9 29 25 25 3.1 3.6 4.1 17.8
Zee Entertainment Enterprises REDUCE 346 365 6 332 4.8 960 17 18 20 9.9 10.0 12.5 21 19.0 16.9 12 11.4 10.0 3.7 3.4 3.0 19.2 18.7 18.8 1.0 1.3 1.6 66
Media Attractive 722 10.5 22 -1.8 15.0 16.7 17.0 14.8 8.2 7.8 7.0 3.7 3.4 3.0 22 19.8 20 1.8 2.3 2.6 106
Metals & Mining
Hindalco Industries BUY 199 245 23 447 6.5 2,224 25 22 26 13.0 (12.2) 18 8.0 9.2 7.8 5.4 5.5 4.9 0.8 0.7 0.7 9.8 8.1 8.8 0.6 0.6 0.6 22
Hindustan Zinc REDUCE 235 220 (6) 991 14.5 4,225 19 19 19 (12.4) (1.5) 1.2 12.5 12.7 12.5 7.7 7.5 7.4 3.0 3.2 3.4 23 24 26 8.5 8.5 8.5 2.7
Jindal Steel and Power REDUCE 134 150 12 130 1.9 968 (1.7) 2.7 7.0 80 258.8 154 NM 49 19.2 6.5 6.5 5.8 0.4 0.4 0.4 NM 0.8 2.0 — — — 28
JSW Steel REDUCE 267 255 (4) 645 9.4 2,400 32 16 23 18 (49) 43 8.4 16.6 11.5 5.8 8.2 7.0 1.8 1.7 1.5 24 10.7 14.0 1.6 1.6 1.6 26
National Aluminium Co. BUY 49 60 23 91 1.3 1,866 9.3 5.3 5.0 81 (42.9) (5.7) 5.3 9.2 9.8 1.9 3.3 3.4 0.9 0.8 0.8 16.5 9.3 8.6 11.8 6.5 6.1 5.7
NMDC REDUCE 111 106 (4) 339 4.9 3,062 14.7 14.3 11.2 26 (3) (21.4) 7.5 7.7 9.8 4.4 4.6 5.6 1.3 1.2 1.1 17.9 16.2 11.8 5.0 5.2 4.1 6.8
Tata Steel ADD 478 515 8 544 7.9 1,146 91 66 71 31 (27.6) 7.7 5.2 7.2 6.7 5.2 5.6 5.4 0.8 0.8 0.7 16.7 10.9 11.4 2.1 2.1 2.1 78
Vedanta BUY 164 225 37 608 8.9 3,717 15 26 27 (28.9) 70 2.9 10.7 6.3 6.1 5.5 4.5 4.6 1.0 0.9 0.9 9.1 15.4 15.4 11.5 12.2 12.2 26
Metals & Mining Attractive 3,794 55.4 7.5 (9.0) 8.8 8.8 9.6 8.8 5.6 5.8 5.6 1.2 1.1 1.1 13.4 11.6 12.0 5.4 5.4 5.4 58



Fair O/S ADVT

BPCL SELL 370 310 (16) 803 11.7 1,967 36 32 34 (10) (11.6) 5.8 10.2 11.5 10.9 7.8 8.6 8.0 2.0 1.8 1.7 20 16.4 16.0 3.9 3.5 3.7 36
Coal India BUY 242 290 20 1,491 21.8 6,163 28 31 31 151 10.0 0.5 8.5 7.8 7.7 5.7 6.2 5.7 5.6 5.4 5.2 69 71 68 5.4 10.3 10.3 28
HPCL SELL 288 220 (23) 438 6.4 1,524 40 28 30 (5) (29.3) 7.2 7.2 10.2 9.6 6.2 8.8 8.6 1.6 1.4 1.3 23 14.6 14.5 5.5 3.9 4.2 28
IOCL SELL 152 135 (11) 1,433 20.9 9,442 18 15 16 (12) (15.8) 5.7 8.5 10.1 9.5 5.3 6.0 5.8 1.3 1.2 1.1 15.5 12.4 12.3 5.9 4.0 4.2 25
Oil India BUY 173 240 38 188 2.7 1,084 30 33 33 22.0 8.6 (0.2) 5.7 5.3 5.3 3.5 3.3 3.3 0.7 0.6 0.6 11.7 12.4 11.7 5.8 8.5 8.5 3.6
ONGC BUY 162 210 30 2,032 29.7 12,580 24 25 25 38 3.5 (0.9) 6.7 6.5 6.6 3.7 3.4 3.2 0.9 0.8 0.7 13.0 12.7 11.7 4.3 5.3 5.3 30
Reliance Industries SELL 1,263 1,100 (13) 7,483 109.2 5,926 66 75 87 11.7 14.3 16 19.1 16.7 14.4 10.4 9.0 7.6 1.9 1.8 1.6 10.4 9.8 10.3 0.5 0.5 0.6 183
Oil, Gas & Consumable Fuels Attractive 13,867 202.4 19 2.5 6.8 11.5 11.3 10.5 6.7 6.5 5.9 1.6 1.5 1.4 14.1 13.3 13.1 2.6 3.0 3.1 334
Pharmaceuticals
Aurobindo Pharma ADD 597 760 27 350 5.1 584 40 61 63 (3.1) 50 3.8 14.7 9.8 9.5 10.0 7.4 6.9 2.5 2.0 1.7 18.5 21 18.1 0.9 1.0 1.2 30
Biocon SELL 240 185 (23) 288 4.2 1,202 6.1 7.2 8.8 96 18 22 40 33 27 21 17 14 4.3 3.9 3.5 11.8 12.3 12.9 0.9 1.0 1.3 16.1
Cipla BUY 550 600 9 443 6.5 805 19 27 34 8.3 42 24 29 20 16.4 15 11.5 9.4 2.9 2.6 2.3 10.2 13.4 14.1 0.7 1.0 1.3 19.6
Dr Reddy's Laboratories REDUCE 2,601 2,450 (6) 432 6.3 166 113 160 153 92 41 -4.5 23 16.2 17.0 14 11.1 8.2 3.1 2.6 2.3 14.1 16.3 13.8 0.8 0.8 0.9 29
Laurus Labs BUY 342 430 26 36 0.5 106 11.0 20 28 (30.9) 79 43 31 17.4 12.2 13 9.3 7.3 2.3 2.0 1.8 7.6 12.5 14.4 — — — 0.3
Lupin ADD 736 840 14 333 4.9 450 21 30 41 (45) 42 39 35 25 17.8 13 10.4 8.2 2.4 2.2 2.0 6.9 9.3 11.3 0.3 0.6 0.8 22
Sun Pharmaceuticals ADD 375 460 23 900 13.1 2,406 16 20 24 6.3 23 23 23 18.9 15.3 13 9.3 7.5 2.2 2.0 1.8 9.8 11.0 11.5 0.6 1.1 1.3 41
Torrent Pharmaceuticals ADD 1,510 1,840 22 256 3.7 169 26 54 71 -35.7 110 32 59 28 21 14 12 10.6 5.4 4.9 4.3 9.2 17.5 20 1.4 1.5 1.8 7.1
Pharmaceuticals Neutral 3,038 44.3 4.1 39 17 26 18.4 15.8 13 10.2 8.4 2.7 2.4 2.1 10.7 13.1 13.6 0.7 1.0 1.2 164
Real Estate
Brigade Enterprises BUY 270 290 7 37 0.5 136 18 22 28 59 27 26 15.3 12.1 9.6 9.7 8.5 6.6 1.7 1.5 1.3 10.8 13.2 14.7 0.9 0.9 0.9 0.3
DLF ADD 187 200 7 438 6.4 2,207 5.9 8.4 11.1 (76) 41.2 33 31 22 16.8 25 21 17 1.2 1.2 1.1 3.8 5.4 6.9 1.1 1.1 1.1 38
Embassy Office Parks REIT ADD 375 365 (3) 290 4.2 22,904 0.2 14.8 18 (97) 9,197 20 2,353 25 21 22 19 17 38 1.3 1.3 2.8 5.0 6.2 — 6.1 6.9 0.0
Godrej Properties NR 925 - (100) 233 3.4 229 11.0 17 17 2 57 -4.4 84 53 56 145 53 70 8.6 7.4 6.5 10.8 14.9 12.5 — — — 9.1
Oberoi Realty ADD 584 570 (2) 212 3.1 364 22 29 41 24 27 42 26 20 14.4 20 17 10.9 2.6 2.4 2.0 11.6 12.2 15.2 0.3 0.3 0.3 3.9
Prestige Estates Projects ADD 275 320 17 103 1.5 375 8.7 13.8 21 (12) 59 53 32 19.8 13.0 13 10.8 8.5 2.4 2.2 1.9 7.3 11.7 15.7 0.5 0.5 0.5 1.8
Sobha ADD 559 530 (5) 53 0.8 95 31 36 40 36 14.7 11 17.9 15.6 14.0 11.2 11.0 9.9 2.4 2.1 1.9 11.9 14.4 14.3 1.3 1.3 1.3 2.7
Sunteck Realty REDUCE 456 428 (6) 67 1.0 140 16 27 33 6.0 65 25 28 17.1 13.7 18 11.7 8.3 2.3 2.0 1.8 8.3 12.4 13.7 0.2 0.2 0.2 2.3
Real Estate Neutral 1,432 20.9 (41) 56 29 37 24 18.6 21 18 14 1.8 1.7 1.6 4.9 7.3 8.9 0.5 1.7 1.9 58
Retailing
Aditya Birla Fashion and Retail BUY 209 220 5 161 2.4 773 4.2 2.8 4.1 173 -33.3 48 50 75 51 32 25 21 11 9.8 8.2 25 13.9 17.5 — — — 1.9
Avenue Supermarts SELL 1,356 965 (29) 846 12.4 624 14.5 20 26 11.9 37 31 94 69 52 52 39 30 15 12 10 17.6 19.9 21 — — — 0.0
Titan Company REDUCE 1,278 1,000 (22) 1,135 16.6 888 17 22 26 32 28 22 76 59 49 53 40 33 19 15 13 27 28 29 0.4 0.5 0.6 36
Retailing Cautious 2,142 31.3 32 24 27 79 64 50 50 38 30 16 14 11 21 21 22 0.2 0.2 0.3 38
Speciality Chemicals
Castrol India SELL 129 145 12 127 1.9 989 7.2 7.7 8.1 4.2 7.7 5.4 18.0 16.7 15.9 11.9 10.1 9.5 11 10 9.2 65 63 60 3.9 4.3 4.5 2.4
Pidilite Industries REDUCE 1,206 1,025 (15) 613 8.9 508 18 22 26 (3.9) 26 18 68 54 46 44 35 30 15 13 11 23 25 26 0.5 0.7 0.8 11.7
S H Kelkar and Company BUY 130 190 47 19 0.3 145 6.1 7.6 9.0 (17.3) 24 19 21 17.1 14.4 16 12 10.3 2.2 2.0 1.8 10.3 12.2 13.3 1.3 1.5 2.1 0.4
SRF BUY 2,982 2,850 (4) 171 2.5 57 112 141 165 39 26 17 27 21 18.0 15 12 10.6 4.1 3.5 3.0 16.7 18.1 18.1 0.4 0.5 0.6 15.6
Speciality Chemicals Neutral 930 13.6 7.0 21 14.3 40 33 29 24 20 18 9.0 7.9 6.8 23 24 24 1.0 1.2 1.3 30

38
Fair O/S ADVT
39
Telecommunication Services
Bharti Airtel ADD 365 380 4 1,872 27.3 3,997 (6.3) (6.8) (1.7) NM NM NM NM NM NM 11.6 9.6 8.1 2.0 2.1 2.2 NM NM NM 0.7 1.6 1.6 39
Bharti Infratel REDUCE 261 275 5 483 7.0 1,850 13.1 13.0 14.6 (4.6) (0.8) 12.2 19.9 20 17.9 8.1 8.3 7.5 3.3 3.6 3.4 15.4 17.1 19.5 5.9 3.9 4.5 11.8
Vodafone Idea ADD 12 16 33 345 5.0 8,736 (19.1) (0.6) (4.0) NM NM NM NM NM NM 37 12 9.5 0.2 0.4 0.5 NM NM NM — — — 19.6
Tata Communications ADD 461 615 33 131 1.9 285 (10.3) (0.1) 3.3 NM 99 3,040 NM NM 141 8.8 8.0 7.4 NM NM -317.1 NM 1.8 NM 1.4 1.6 1.6 2.4
Telecommunication Services Cautious 2,830 41.3 NM 6.6 34 NM NM NM 13 9.9 8.3 1.9 1.5 1.7 NM NM NM 1.4 1.8 1.9 73
Transportation
Adani Ports and SEZ REDUCE 402 398 (1) 833 12.2 2,071 22 23 26 17 8.2 11.8 18.6 17.1 15.3 15 13 11.1 3.4 3.0 2.6 19.7 18.5 18.1 0.5 1.3 1.2 24
Container Corp. SELL 576 495 (14) 351 5.1 609 16 18 22 12.1 8.2 22 35 33 27 25 19 15 3.4 3.2 3.0 10.1 10.1 11.6 1.5 1.6 1.6 5.7
Gateway Distriparks BUY 127 180 42 14 0.2 109 6.8 6.9 9.1 (11.1) 2 32 18.8 18.4 13.9 26 8.6 7.2 1.0 1.0 0.9 6.3 5.5 6.7 3.5 2.4 2.4 0.3
Gujarat Pipavav Port BUY 83 119 43 40 0.6 483 4.3 5.3 6.4 3.6 25 20 19.5 15.6 13.0 9.0 7.7 6.6 2.0 2.0 1.9 10.2 12.6 14.9 4.6 5.6 6.6 0.4
InterGlobe Aviation REDUCE 1,562 1,575 1 601 8.8 383 4 70 98 (93) 1,612 41 383 22 15.9 NM 14 8.9 8.6 6.1 4.6 2.2 32 33 — 0.2 0.6 50
Mahindra Logistics REDUCE 472 500 6 34 0.5 71 12.5 16 20 26 28 27 38 29 23 22 17 13 6.8 5.7 4.8 19.5 21 22 — — — 1.1
Transportation Attractive 1,873 27.3 (18) 51 22 31 21 16.9 22 14 10.8 4.1 3.5 3.1 13.2 17.1 18.1 0.6 1.1 1.2 82
KIE universe 115,592 1686.8 11.9 30 18 25 19.2 16.3 11.3 10.1 8.9 2.9 2.6 2.4 11.5 13.5 14.4 1.4 1.7 1.8
Notes:
(a) We have used adjusted book values for banking companies.
(b) 2019 means calendar year 2018, similarly for 2020 and 2021 for these particular companies.
(c) Exchange rate (Rs/US$)= 68.52


Disclosures
Kotak Institutional Equities Research coverage universe

Distribution of ratings/investment banking relationships
Percentage of companies covered by Kotak Institutional
70%
Equities, within the specified category.
60%
Percentage of companies within each category for
which Kotak Institutional Equities and or its affiliates has
50%
provided investment banking services within the
previous 12 months.
40% * The above categories are defined as follows: Buy = We
expect this stock to deliver more than 15% returns over
27.9% 28.9% the next 12 months; Add = We expect this stock to
30%
22.5% deliver 5-15% returns over the next 12 months; Reduce
20.6% = We expect this stock to deliver -5-+5% returns over
20% the next 12 months; Sell = We expect this stock to deliver
less than -5% returns over the next 12 months. O ur
10% target prices are also on a 12-month horizon basis.
4.4% 3.4% These ratings are used illustratively to comply with
0.5% 0.0% applicable regulations. As of 31/03/2019 Kotak
0%
Institutional Equities Investment Research had
BUY ADD REDUCE SELL
investment ratings on 204 equity securities.
Source: Kotak Institutional Equities As of March 31, 2019
Ratings and other definitions/identifiers

Definitions of ratings
BUY. We expect this stock to deliver more than 15% returns over the next 12 months.
ADD. We expect this stock to deliver 5-15% returns over the next 12 months.
REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.
SELL. We expect this stock to deliver <-5% returns over the next 12 months.
Our Fair Value estimates are also on a 12-month horizon basis.
Our Ratings System does not take into account short-term volatility in stock prices related to movements in the market. Hence, a particular Rating may not
strictly be in accordance with the Rating System at all times.
Other definitions
Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the following
designations: Attractive, Neutral, Cautious.
Other ratings/identifiers
NR = Not Rated. The investment rating and fair value, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s)
and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction
involving this company and in certain other circumstances.
CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.
NC = Not Covered. Kotak Securities does not cover this company.
RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and fair value, if any, for this stock, because there is not a sufficient
fundamental basis for determining an investment rating or fair value. The previous investment rating and fair value, if any, are no longer in effect for this stock
and should not be relied upon.
NA = Not Available or Not Applicable. The information is not available for display or is not applicable.
NM = Not Meaningful. The information is not meaningful and is therefore excluded.

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INDIA DAILY

July 8, 2019 India 5-Jul 1-day 1-mo 3-mo

Contents Global/Regional indices

Strategy FTSE 7,553 (0.7) 3.0 1.4

Value traded – India

Change, basis points

Real Estate: A month in transition FIIs 81 (456) 10,883

MFs 28 (4) 1,261

Top movers – 3mo basis

Best performers 5-Jul 1-day 1-mo 3-mo

TGBL IN Equity 267 (1.1) 3.7 25.9

SBIN IN Equity 371 0.9 8.4 18.5

TTAN IN Equity 1,278 (0.9) 0.7 15.7

HPCL IN Equity 288 (0.4) (7.7) 13.7

LT IN Equity 1,558 (0.8) 2.9 13.4

RCAPT IN Equity 62 (3.3) (37.8) (66.8)

YES IN Equity 88 (8.4) (37.0) (66.1)

RELI IN Equity 51 (6.4) (30.8) (61.4)

RPWR IN Equity 4 (3.5) (32.5) (59.3)

RCOM IN Equity 2 3.3 (16.2) (51.6)

FY2020 UNION BUDGET: SOME DIRECTION

Stress on social welfare and economic reforms

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Exhibit 1: GFD/GDP budgeted at 3.3% in FY2020BE

Source: Ministry of Finance, Kotak Institutional Equities estimates

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Union budget, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 5

Source: PIB, CGA, Kotak Institutional Equities

6 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Ministry of Finance, Kotak Institutional Equities

 Economic and social agenda. The government emphasized its commitment to

Exhibit 5: Significant focus on rural schemes

Source: Budget documents, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 7

It also focused on investment-related reforms to increase India’s investment rate (see

Source: CEIC, Kotak Institutional Equities

8 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Union budget documents, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 9

 Market-related measures to result in significant overhang. We see significant

Source: Capitaline, Kotak Institutional Equities

10 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Capitaline, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH 11

Market valuations supported by a heady mix

Source: Kotak Institutional Equities estimates

Source: Kotak Institutional Equities estimates

12 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 12: Market expects US Fed to cut rates by 50 bps in CY2019

Federal funds rate (%)

Source: CME, Kotak Institutional Equities

Source: CEIC, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH 13

Source: CEIC, Kotak Institutional Equities estimates

Private consumption/GDP (%, LHS) Household savings/GDP (%, RHS)

Source: CEIC, Kotak Institutional Equities estimates

14 KOTAK INSTITUTIONAL EQUITIES RESEARCH

10 Consolidated government capex/GDP (%) Consolidated fiscal deficit/GDP (%)

Source: CEIC, Kotak Institutional Equities

Exhibit 17: 'Barbell' portfolio of 'growth' and 'value' stocks

Price (Rs) KIE weight Price (Rs) KIE weight