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Contents

Equity Advisory April 30, 2012

7/31/2019 Stocks Emkay 030512

2/30Emkay Global Financial Services Ltd 1

April 27, 2012

Reco

Buy

Previous Reco

BuyCMP

Rs 186

Target Price

Rs 225

EPS change FY13E/14E (%) NA

Target Price change (%) NA

Nifty 5,191

Sensex 17,134

Price Performance

(%) 1M 3M 6M 12M

Absolute 17 68 57 109

Rel. to Nifty 17 67 62 133

Source: Bloomberg

Relative Price Chart

80

104

128

152

176

200

Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12

Rs

-10

20

50

80

110

140%

K aja ri a C era mic s (L HS) Re l t o Ni ft y ( RH S)

Source: Bloomberg

Stock DetailsSector Ceramics

Bloomberg KJC@IN

Equity Capital (Rs mn) 147

Face Value(Rs) 2

No of shares o/s (mn) 74

52 Week H/L 188/80

Market Cap (Rs bn/USD mn) 14/266

Daily Avg Volume (No of sh) 168132

Daily Avg Turnover (US$mn) 0.5

Shareholding Pattern (%)

Mar-12 Dec-11 Sep-11

Promoters 53.5 53.5 52.0

FII/NRI 9.6 7.8 6.1

Institutions 6.8 8.6 9.6

Private Corp 10.8 12.1 12.7

Public 19.3 18.0 19.6

Source: Capitaline

Q4 FY12 resul ts w ere in l ine wi t h our est . Revenues grew by32% yoy to Rs 3.7bn whi le EBITDA grew by 37% yoy t oRs 585mn. Company repor ted PAT of Rs 236mn, 28% yoy

Recent ly Ka ja r ia Ceramics acqu i red 51% stake in VennarCeramics, an Andhra Pradesh based p layer . Acquis i t ion w i l ls trengt hen presence in southern region

Inorgan ic g row th is l i ke ly t o remain the th rust a rea fo r thecompany s ince i t i s h ighly RoE acc re t ive & g ives companyacc ess to read i ly ava i lab le capac i t ies

With sust a inable revenue grow th of 22% (FY11-14E), PATgrow th of 31% & RoE expansion, re-rat ing is l ik e ly. Mainta inBuy, target of Rs 225

Revenue growth of 32% yoy driven by strong demand

Kajarias consol net revenues increased by 32% yoy to Rs 3.7 bn which was in l ine with

our est of Rs 3.9bn. Strong demand coupled with improving product profile towards

value added products helped the company to sustain its healthy growth momentum

during the quarter. For FY12, Kajaria reported consol revenues of Rs 13bn, with a

growth of 38% yoy.

Improved product mix helped Kajaria to sustain margins

Kajaria reported EBITDA of Rs 585mn, +37% yoy, in line with our est. EBITDA margins

at 15.7% (56bps yoy/-30bps qoq) were marginally above est of 15.5%. PAT for the

quarter stood at Rs 236mn, 28% yoy in line with est. Company reported EPS of Rs 3.2

for Q4FY12. For FY12, Kajaria reported PAT of Rs 810mn, 34% yoy. EPS for FY12

stood at Rs 11.

Inorganic opportunities to drive growth ahead

Recently, Kajaria Ceramics acquired 51% stake in Vennar Ceramics, an Andhra

Pradesh based player, which is in advanced stages of putting up a plant to produce

2.3mn sqm of high end ceramic tiles. This acquisition marked Kajarias first acquisition

in the southern region and companys third acquisition within a span of 1 year. Kajarias

latest acquisition has enhanced its regional strength and enables the company to cater

directly to southern markets. We believe inorganic growth continues to remain the thrust

area for Kajaria since it is highly RoE accretive and gives the company overnight access

to readily available capacity.

Maintain BUY with target price of Rs 225Kajaria is likely to emerge as the largest player in the domestic tiles industry taking over

the leader H & R Johnson within the next couple of quarters. We believe that the new

growth model adopted by the company of acquiring small players & branding their

products under its own umbrella will ultimately strengthen Kajarias regional presence

and help it to meet its requirements locally. Kajarias improving product profile towards

high margin value added products combined with lucrative joint venture arrangements

would also help the company to improve profitability. We maintain Buy with target price

of Rs 225.

Financial Snapshot Rs Mn

YE-Mar Net EBITDA EPS EPS RoE EV/

Sales (Core) (%) APAT (Rs) % chg (%) P/E EBITDA P/BVFY11 9,523 1,475 15.5 607 8.2 69.2 29.5 22.6 11.1 6.1

FY12 13,130 2,062 15.7 810 11.0 33.5 32.1 16.9 7.6 4.9

FY13E 15,437 2,432 15.8 1,095 14.9 35.3 33.7 12.5 6.3 3.7

FY14E 17,401 2,798 16.1 1,373 18.7 25.3 32.4 10.0 5.3 2.9

Re

sultUpdate

Kajaria Ceramics

Growth momentum continues, results in line

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Kajaria Ceramics Result Update

Emkay Research 27 April 2012 2

Key Financials Quarterly Rs Mn

Rs mn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%) FY12 FY11 YoY (%)

Revenue 2,819 2,718 3,179 3,507 3,727 32.2 6.2 13,130 9,534 37.7

Expenditure 2,392 2,285 2,695 2,947 3,142 31.3 6.6 11,068 8,049 37.5

as % of sales 84.9 84.1 84.8 84.0 84.3 84.3 84.4

Consumption of RM 1,742 1,232 1,566 1,807 1,903 9.2 5.3 6,508 5,399 20.6

as % of sales 61.8 45.3 49.3 51.5 51.1 49.6 56.6

Power & Fuel 242 476 540 529 562 132.2 6.2 2,107 927 127.4

as % of sales 8.6 17.5 17.0 15.1 15.1 16.0 9.7

Employee Cost 169 256 288 265 263 55.2 (0.8) 1,072 758 41.4

as % of sales 6.0 9.4 9.1 7.5 7.0 8.2 8.0

Other expenditure 239 320 300 346 415 73.6 20.0 1,381 965 43.1

as % of sales 8.5 11.8 9.5 9.9 11.1 10.5 10.1

EBITDA 427 433 484 561 585 37.1 4.3 2,062 1,485 38.8

Depreciation 72 90 91 103 108 51.3 5.2 393 295 33.1

EBIT 355 343 393 458 477 34.2 4.1 1,669 1,190 40.2

Other Income - - - - 15 15 -

Interest 67 91 109 154 132 98.5 (14.1) 485 299 62.5

PBT 289 252 284 304 359 24.5 18.2 1,199 892 34.4

Total Tax 104 78 88 91 123 18.4 35.8 381 285 33.4

Adjusted PAT 184 174 196 213 236 27.9 10.7 819 607 34.9

(Profit)/loss from JV's/Ass/MI 0 2.9 3.4 2.5 0.9 9.7 0

APAT after MI 184 171 193 211 235 27.5 11.5 809 607 33.3

Extra ordinary items 0 0 0 0 0 0 0

Reported PAT 184 171 193 211 235 27.5 11.5 809 607 33.3

Reported EPS 2.5 2.3 2.6 2.9 3.2 27.5 11.5 11.0 8.2 33.3

Margins (%) (bps) (bps) (bps)

EBIDTA 15.1 15.9 15.2 16.0 15.7 56 (29) 15.7 15.6 12

EBIT 12.6 12.6 12.4 13.0 12.8 19 (26) 12.7 12.5 23

EBT 10.2 9.3 8.9 8.7 9.2 (99) 58 9.0 9.4 (33)

PAT 6.5 6.3 6.1 6.0 6.3 (24) 30 6.2 6.4 (20)

Effective Tax rate 36.1 31.1 31.0 29.9 34.4 (176) 445 31.7 32.0 (25)

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Kajaria Ceramics Result Update


Key Financials

Income Statement Balance Sheet

Y/E, Mar (Rs. mn) FY11 FY12 FY13E FY14E Y/E, Mar (Rs. mn) FY11 FY12P FY13E FY14E

Net Sales 9,523 13,130 15,437 17,401 Equity share capital 147 147 147 147

Growth (%) 29.5 37.9 17.6 12.7 Reserves & surplus 2,078 2,674 3,529 4,645

Expenditure 8,049 11,068 13,005 14,602 Net worth 2,226 2,821 3,676 4,792

Materials Consumed 5,399 6,508 8,131 9,018 Minority Interest 0 72 28 55

Employee Cost 758 1,072 1,127 1,270 Secured Loans 2,757 917 767 267

Other Exp 1,892 3,488 3,747 4,314 Unsecured Loans 40 1,143 1,143 1,143

EBITDA 1,475 2,062 2,432 2,798 Loan Funds 2,797 2,060 1,910 1,410

Growth (%) 28.4 39.8 18.0 15.1 Net deferred tax liability 602 644 694 744

EBITDA margin (%) 15.5 15.7 15.8 16.1 Total Liabilities 5,624 5,596 6,308 7,002

Depreciation 295 393 429 451

EBIT 1,180 1,669 2,003 2,347 Gross Block 7,000 7,001 7,835 8,235

EBIT margin (%) 12.4 12.7 13.0 13.5 Less: Depreciation 2,209 2,602 3,031 3,482

Other Income 11 15 10 10 Net block 4,790 4,399 4,804 4,753

Interest expenses 299 485 409 357 Capital work in progress 1 834 400 300

PBT 892 1,199 1,604 2,000 Investment 90 90 90 90

Tax 285 381 481 600 Current Assets 3,263 3,900 4,211 5,127

Effective tax rate (%) 32.0 31.7 30.0 30.0 Inventories 1,515 1,865 2,229 2,860

Adjusted PAT 607 819 1,123 1,400 Sundry debtors 909 1,442 1,368 1,526

Growth (%) 69.2 34.9 37.2 24.7 Cash & bank balance 30 43 65 191

Net Margin (%) 6.4 6.2 7.3 8.0 Loans & advances 808 152 152 152

(Profit)/loss from JVs/Ass/MI - 9.7 27.7 27.7 Other current assets - 398 398 398

Adjusted PAT After JVs/Ass/MI 607 809 1,095 1,373 Current lia & Prov 2,519 3,628 3,197 3,268

E/O items - - - - Current liabilities 2,130 3,209 2,806 2,860

Reported PAT 607 809 1,095 1,373 Provisions 389 419 391 408

PAT after MI 607 809 1,095 1,373 Net current assets 743 273 1,014 1,859

Growth (%) 69.2 33.3 35.4 25.3 Misc. exp - - - -

Total Assets 5,624 5,596 6,308 7,002

Cash Flow Key Ratios

Y/E, Mar (Rs. mn) FY11 FY12P FY13E FY14E Y/E, Mar FY11 FY12P FY13E FY14E

PBT (Ex-Other income) 881 1,184 1,594 1,990 Profitability (%)

Depreciation 295 393 429 451 EBITDA Margin 15.5 15.7 15.8 16.1

Interest Provided 288 485 409 357 Net Margin 6.4 6.2 7.1 7.9

Other Non-Cash items 16 (701) (133) - ROCE 22.3 30.2 34.1 35.6

Chg in working cap 698 853 (692) (735) ROE 29.5 32.1 33.7 32.4

Tax paid -210 -381 -431 -550 RoIC 22.5 33.2 39.0 38.8

Operating Cashflow 1,968 1,833 1,176 1,513 Per Share Data (Rs)

Capital expenditure (1,629) (442) (400) (300) EPS 8.2 11.0 14.9 18.7

Free Cash Flow 340 1,392 776 1,213 CEPS 12.3 16.3 20.7 24.8Other income 11 15 10 10 BVPS 30.2 38.3 50.0 65.1

Investments (56) - - - DPS 2.0 2.5 2.8 3.0

Investing Cashflow -45 15 10 10 Valuations (x)

Equity Capital Raised - 0 - - PER 22.6 16.9 12.5 10.0

Loans Taken / (Repaid) 169 (737) (150) (500) P/CEPS 15.2 11.4 9.0 7.5

Interest Paid (288) (485) (409) (357) P/BV 6.1 4.9 3.7 2.9

Dividend paid (incl tax) (86) (171) (205) (240) EV / Sales 1.7 1.2 1.0 0.9

Income from investments 0 0 0 0 EV / EBITDA 11.1 7.6 6.3 5.3

Others -103 0 0 0 Dividend Yield (%) 1.1 1.3 1.7 1.9

Financing Cashflow -309 -1,393 -764 -1,097 Gearing Ratio (x)

Net chg in cash -15 14 22 126 Net Debt/ Equity 1.2 0.7 0.5 0.2

Opening cash position 45 30 43 65 Net Debt/EBIDTA 1.8 0.9 0.7 0.4

Closing cash position 30 43 65 191 Working Cap Cycle (days) 11 3 19 32

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April 27, 2012

Reco

Accumulate

Previous Reco

AccumulateCMP

Rs127

Target Price

Rs140

EPS change FY12E/13E (%) 10/16

Target Price change (%) 27

Nifty 5,189

Sensex 17,134

Price Performance

(%) 1M 3M 6M 12M

Absolute 14 53 42 79

Rel. to Nifty 16 52 43 102

Source: Bloomberg


60

78

96

114

132

150


Rs

-10

14

38

62

86

110%

Hexaware Technology (LHS) Rel to Nif ty (RHS)

Source: Bloomberg

Stock DetailsSector IT Services

Bloomberg HEXW@IN


Face Value(Rs) 2


52 Week H/L 134/61

Market Cap (Rs bn/USD mn) 38/723





Promoters 28.0 28.2 28.2

FII/NRI 51.4 50.3 51.8



Public 9.8 11.0 11.2

Source: Capitaline

Hexaw are s Mar 12 per fo rmance v ind ica te pos i t i ve thes is .Rev at US$ 88 mn (+4.6% QoQ) w ere in l ine w i th pf t s at Rs884 mn beat est a ided by be t t e r marg ins and fo rex ga ins

Op met r ics per fo rmance good. Top c l ien ts con t inue t o d r ivegrow t h ( top 1/5/10 c l ient s +11%/4.6%/4.8% QoQ). US andEurope repor t +3.7%/7.9% sequent ia l grow th

Ju ne12 qtr g uidanc e of US$ 91-92 m n (+3.4-4.5%QoQ) impli esa 2.1-3.2% CQGR through H2CY12 for com pany t o ac hieve i t sannual gu idance of US$ 370 mn.

Tw eak CY12/13E rev h igher and bui ld in bett er mgns at22.6/22.3% drive 9/16% raise in CY12/13E EPS to Rs 11.5/12.8.ACCUM stays , revise TP to Rs 140, based on 11x CY13 P/E

Another consistent performance

Hexaware reported rev at US$ 88 mn (+4.6% QoQ), seq vol growth of 6.6%) in line with

est and higher than co guidance of ~4% QoQ growth .EBITDA mgns at 22.4% (down

~60 bps QoQ) were better than est despite ~3% currency appreciation and strong hiring

(co had a net HC addition of ~307 during the qtr) aided by offshore shift ( offshore % of

rev increased by ~170 bps QoQ with offshore rev increasing by ~9% QoQ). Profits at Rs

884 mn were flat QoQ, beat expectations aided by better margin show and forex gains

(V/s est of forex losses). Top clients continued to drive growth with top 1/5/10 clients

growing by 11%/4.6%/4.8% sequentially and US and Europe growing impressively by

3.7%/8% QoQ respectively. Amongst service lines, BI/ Analytics (+25% QoQ) and

IMS(+15% QoQ) drove growth. Emp addition was in line with co adding ~307 people

during the qtr to take the HC to 8,624 with attrition declining to nearly lowest in the

industry at 11%.

June12 qtr rev guidance of 3.4-4.5% QoQ growth, See raise in CY12revenue outlook ahead

Hexaware has guided for rev of US$ 91-92 mn (3.4-4.5% seq rev growth) which implies

a 2.1-3.2% CQGR through H2CY12 for company to achieve its annual rev guidance of

~US$ 370 mn (+20% growth). We raise our est further and now build in 22.4% YoY

growth for CY12 and expect the company to raise its annual guidance going forward.

Hexaware has announced 2 US$ 10 mn+ TCV deals in Q1CY12 and is currently

pursuing 6 large deals (TCV of US$ 25 mn+) currently with 2 in advanced stages of

negotiation. We highlight that Hexaware intends to give low double digit wage hikes in

Q2CY12 ahead of Tier I peers showing confidence on growth over the next few quarters

CY12/13E EPS raised by 9/16% each, ACCUMULATE, TP raised to Rs 140

We tweak our US$ revenue estimates higher and build in EBITDA margins at

22.6%/22.3% (V/s 20.9%/18.5% earlier) driven by higher confidence in op margins

ahead which drive 9%/16% raise in our CY12/13E earnings to Rs 11.5/12.8 (V/s Rs

10.5/11 earlier). Although valuations at ~11x/10x CY12/13E earnings capture some of

the upside, we remain positive on Hexaware given continuous streak of earnings beat

and consistent performance. Worth highlighting is that we have raised earnings for

the past 5 quarters in a row. Valuations remain reasonable in that context with 5%

dividend yield another positive. Retain ACCUMULATE, TP Rs 140(V/s Rs 110

earlier), based on 11x CY13earnings (V/s 10x earlier)

Financials

Y/E Dec Net EBITDA PAT EPS ROE P/E EV/ P/B

(in Rs mn) Sales (Core) % (Rs) % (x) EBITDA (x)

FY11 10,545 938 8.9 853 2.9 9.4 44.2 35.7 3.9

FY12 14,505 2,646 18.2 2,670 9.2 26.9 14.1 12.6 3.7

FY13E 18,830 4,254 22.6 3,452 11.5 31.5 11.3 8.1 3.3

FY14E 21,354 4,764 22.3 3,857 12.8 30.4 10.1 7.0 2.9

Comp

anyUpdate

Hexaware Technologies

Focus delivers consistency, retain ACCUMULATE

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Hexaware Technologies Result Update


Quarterly performance

Rs mn Q4CY10 Q1CY11 Q2CY11 Q3CY11 Q4CY11 Q1CY12 YoY (%) QoQ (%) CY12YTD CY11YTD YoY (%)

Revenue (US $ Mn) 66.6 70.4 74.8 78.8 84.1 88.0 25.0 4.6 88.0 70.4 25.0

Revenue Rs. Mn 2,996 3,185 3,341 3,660 4,319 4,383 37.6 1.5 4,382.9 3,185 37.6

Operating Expenditure 2,651 2,730 2,830 2,974 3,325 3,401 24.6 2.3 3,401 2,730 24.6

Cost of revenues 1,962 1,998 2,117 2,262 2,562 2,574 28.8 0.5 2,574 1,998 28.8

as % of sales 65.5 62.7 63.4 61.8 59.3 58.7 58.7 62.7

SG&A expenses 689 732 713 712 763 827 13.0 8.4 827 732 13.0

as % of sales 23.0 23.0 21.3 19.5 17.7 18.9 18.9 23.0

EBITDA 345 455 511 686 994 982 115.6 -1.2 982 455 115.6

Depreciation 66 62 59 64 63 71 71 62 14.7

EBIT 279 394 452 622 931 911 131.4 -2.1 911 394 131.4

Other Income 172 188 267 160 62 138 138 188

PBT 451 582 719 782 993 1,049 80.3 5.6 1,049 582 80.3

Total Tax 55 44 116 136 111 165 276.5 48.6 165 44 276.5

Adjusted PAT 396 538 603 646 882 884 64.3 0.2 884 538 64.3

(Profit)/loss from JV's/Ass/MI - - - - - - 0 0

APAT after MI 396 538 603 646 882 884 64.3 0.2 884 538 64.3

Extra ordinary items 0 0 0 0 0 0 0 0

Reported PAT 396 538 603 646 882 884 64.3 0.2 884 538 64.3

Reported EPS 1.4 1.9 2.1 2.2 3.0 2.9 58.7 -3.2 2.9 1.9 58.7


EBIDTA 11.5 14.3 15.3 18.7 23.0 22.4 811 (61) 22.4 14.3 811

EBIT 9.3 12.4 13.5 17.0 21.6 20.8 843 (77) 20.8 12.4 843

EBT 15.1 18.3 21.5 21.4 23.0 23.9 566 94 23.9 18.3 566

PAT 13.2 16.9 18.1 17.7 20.4 20.2 328 (25) 20.2 16.9 328

Effective Tax rate 12.2 7.5 16.1 17.3 11.2 15.7 819 454 15.7 7.5 819

Source: Company, Emkay Research

All fig in Rs mn CY12E CY13 E

except (EPS and %) Old New % change Old New % change

Revenues (US$ mn) 372.4 377.1 1.3% 432 445 3.0%

Revenues 18,788 18,830 0.2% 20,755 21,354 2.9%

EBITDA 3,928 4,254 8.3% 3,830 4,764 24.4%

EBITDA mgns, % 20.9 22.6 169 18.5 22.3 385

Net profits 3,039 3,452 13.6% 3,204 3,857 20.4%

EPS 10.5 11.5 9.5% 11.0 12.8 16.1%

Raise our CY12/13E earnings by

9.5%/16% to Rs 11.5/12.8 now. Note

that we have raised our earnings for

the past 5 quarters in a row

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Operating metrics at a glance

Growth %

Q1CY12 % QoQ % YoY

Vertical wise split

BFSI 27.3% 0.2% 19.3%

TTHL 22.0% 11.2% 10.9%

Emerging Segment 33.4% 1.6% 20.7%

Healthcare and Insurance 17.3% 10.4% 80.2%

Service Line Split

ADM 38.9% 2.5% 25.0%

EAS 28.9% 1.5% 14.3%

Testing/BTO 10.5% 1.7% 41.1%

Business Intelligence & Analytics 12.5% 24.6% 57.8%

BPO 4.7% -3.6% 3.1%

Others 4.5% 14.8% 22.3%

Geographical Split

US 63.8% 3.7% 20.8%

Europe 29.6% 7.9% 32.6%

ROW 6.6% 0.1% 35.2%

Onsite Offshore Revenue Mix

Onsite 53.4% 1.8% 13.9%

Offshore 46.6% 9.1% 44.3%

Client Concentration

Top client 14.8% 11.4% 59.5%

Top 5 clients 38.9% 4.6% 29.0%

Top 10 clients 52.7% 4.8% 33.1%

Non Top 10 client revenues 49.5% 4.4% 17.1%

TOTAL HEADCOUNT 8,624 6% 29%

Growth continues to be led by

mining of top clients.

US and Europe saw good growth

during the qtr

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Financials


Y/E, Dec. (Rs. m) FY11 FY12 FY13E FY14E Y/E, Dec. (Rs. m) FY11 FY12 FY13E FY14E

Net Sales 10,545 14,505 18,830 21,354 Equity share capital 581 586 586 586

Growth (%) 37.6 29.8 13.4 Reserves & surplus 9,074 9,575 11,172 12,998

Total Expenditure (9,607) (11,859) (14,576) (16,590) Minority Interest - - - -

Growth (%) 23.4 22.9 13.8 Networth 9,655 10,162 11,758 13,585

Cost Of Revenues (6,915) (8,939) (11,170) (13,030) Secured Loans 112 - - -

Growth (%) 29.3 25.0 16.7 Unsecured Loans - - - -

COR, as % of Revenues 65.6 61.6 59.3 61.0 Loan Funds 112 - - -

SG&A expenses (2,692) (2,920) (3,406) (3,560) Deferred Tax Liabiltiies 13 32 0 0

Growth (%) 8.5 16.6 4.5 Total Liabilities 9,780 10,194 11,758 13,585

SG&A exp. as % of Revenues 25.5 20.1 18.1 16.7 Goodwill 1,160 1,377 1,377 1,377

EBIDTA 938 2,646 4,254 4,764 Gross Block 3,469 4,292 5,038 5,998

Growth (%) 182.1 60.8 12.0 Less: Depreciation (1,519) (1,697) (1,999) (2,344)

EBIDTA % 8.9 18.2 22.6 22.3 Net block 3,109 3,972 4,417 5,032

Other Income 249 677 347 463 Capital WIP 969 813 813 813

Depreciation 242 247 302 345 Investment 397 229 229 229

EBIT 945 3,076 4,299 4,882 Current Assets 7,907 9,317 10,748 12,560

Interest - - - - Inventories - - - -

EBT 945 3,076 4,299 4,882 Sundry debtors 1,919 2,993 3,611 4,095

Tax 92 406 847 1,025 Cash & bank balance 4,356 4,377 4,506 5,481

EAT 853 2,670 3,452 3,857 Loans & advances 976 1,946 2,631 2,984

Growth (%) 212.9 29.3 11.7 Other current assets 657 - - -

EAT (%) 8.1 18.4 18.3 18.1 Current Liab & Prov 2,785 4,331 4,643 5,265

Current liabilities 1,475 2,891 4,643 5,265

Provisions 1,309 1,440 - -

Net current assets 5,122 4,986 6,105 7,295

Misc exps - - - -

Deferred Tax Assets 182 195 195 195

Total Assets 9,780 10,194 11,759 13,563


Y/E, Dec. (Rs. m) FY11 FY12 FY13E FY14E Y/E, Dec. FY11 FY12 FY13E FY14E

Net Profit after Tax 853 2,670 3,452 3,857 EPS (Rs) 2.9 9.2 11.5 12.8

Add : Depreciation 242 247 302 345 CEPS (Rs) 3.8 10.0 12.5 14.0

Add : Misc exp w/off - - - - Book Value Per Share (Rs) 33.2 35.0 39.1 45.2

Net changes in WC (1,683) 276 393 (142) Dividend Per Share (Rs) 1.5 4.0 5.2 5.8

Operational Cash Flows 122 3,082 2,730 3,988 DSO 66.4 75.3 70.0 70.0

Capital expenditure 37 (954) (747) (960) Valuations Ratios (x)Investments 1,047 - - (1,275) PER 44.2 14.1 11.3 10.1

Investing Cash Flows 1,084 (954) (747) (2,235) P/CEPS 34.4 12.9 10.4 9.3

Borrowings (51) (112) - - P/BV 3.9 3.7 3.3 2.9

dividend paid (510) (1,359) (1,817) (2,030) EV/EBIDTA 35.7 12.6 8.1 7.0

Issue of shares 342 (246) - - EV/Sales 3.2 2.3 1.8 1.6

Share Premium M-Cap/sales 3.6 2.6 2.0 1.8

Financing Cash Flows (219) (1,717) (1,817) (2,030)

changes in cash 1,363 411 166 (278) Profitability Ratios (%)

Opening balance 2,992 4,356 4,377 4,506 RoCE 7.5 24.0 36.0 34.9

Closing balance 4,356 4,377 4,506 5,481 RoNW 9.4 26.9 31.5 30.4

EBITDA Margin 8.9 18.2 22.6 22.3EBIT Margins 6.6 16.5 21.0 20.7

Net Profit Margin 8.1 18.4 18.3 18.1

7/31/2019 Stocks Emkay 030512


April 27, 2012

Reco

Accumulate

Previous Reco

AccumulateCMP

Rs82

Target Price

Rs101

EPS change FY13E/14E (%) +13.6/ -

Target Price change (%) -3.8

Sensex 5,191

Nifty 17,134

Price Performance

(%) 1M 3M 6M 12M

Absolute (17) (13) (12) 20

Rel. to Nifty (17) (14) (9) 33

Source: Bloomberg


50

65

80

95

110

125

Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12

Rs

-20

0

20

40

60

80%

Idea Cellular (LHS) Rel to Nifty (RHS)

Source: Bloomberg

Stock Details

Sector Telecom

Bloomberg IDEA@IN


Face Value(Rs) 10


52 Week H/L 104/63

Market Cap (Rs bn/USD mn) 270/5,134





Promoters 46.0 46.0 46.0

FII/NRI 45.2 43.5 42.2



Public 2.1 2.3 2.3

Source: Capitaline

Q4FY12 resul ts w ere bett er than expec ted Revenues atRs53.7bn (up 6.7% QoQ), EBITDA (adj. for one-off provi sions)at Rs15.1bn (up 12.1% QoQ) & APAT at Rs3.3bn (up 41% QoQ)

Strong rev. g row th w as dr iven by robust subscr iber add i t ion& s l igh t up t ick in ARPU. Both estab l ished & new c i rc lesrepor ted st rong rev. growt h of 5 .8% and 13.5% QoQ, resp.

Tota l m inutes rec orded robust grow th of 9% QoQ led by 5.9%QoQ grow th in subscr ibers and 2.7% QoQ grow th in MOU (379v/s 369 in Q3FY12). ARPM dec l ined 2.5% QoQ to Rs0.42

On back of strong operat ional per formance, w e ra ise ourFY13E EPS by 13.6% to Rs4.4. Retain ACCUMULATE w it hrevis ed TP of Rs101 (adj. for ve Rs17 for regul at ory issues )

Strong set of results

Strong revenue growth was led by 5.8% and 13.5% qoq revenue growth inestablished and new circles, respectively. Adjusted EBITDA (excluding one-off

provisions to the tune of Rs1.5bn pertaining to license fees) at Rs15.1bn grew

12.1% sequentially (6.2% ahead of our estimate).

Reported EBITDA from established circles was flat qoq, however EBITDA lossesfrom new circles reduced to Rs1.6bn v/s Rs1.7bn in last quarter.

APAT at Rs3.3bn (our est. of Rs2.2bn) grew 41% qoq. Higher APAT is primarilyattributed to solid EBITDA (adj.). Tax rate for Q4FY12 was at 30.8% v/s 32.8% in

Q3FY12. Forex gain at Rs135mn v/s loss of Rs311mn in Q3FY12.

Robust traffic growth & VAS share improvement continues

Idea reported subscriber addition of 6.2mn (+5.9% qoq). ARPU stood at Rs160 v/sRs159 in Q3FY12. It reported robust 9.1% qoq growth in minutes on network to

124bn. MoU during the quarter improved to 379 v/s 369 in Q3FY12, subsequently

ARPM declined 2.5% to Rs0.42. Voice ARPM at Rs0.37 decline by 3.0% QoQ to

due to intense competition.

Share of VAS improved to 14.3% as compared 13.7% in Q3FY12, leading to 11.1%QoQ revenue growth in non-voice segment. It reported 2.6mn active 3G

subscribers v/s 2.25mn in Q3FY12.

EBITDA impacted by one-offs, losses from new circles witness reduction

Reported EBIDTA from established circles remained flat sequentially with EBITDAmargin of 28.6% v/s 30.4% in Q3FY12. Losses in new circles declined to Rs1.6bn

v/s Rs1.7bn in Q3FY12.

Revision in estimates

Given the strong performance in Q4FY12, we are raising our FY13E revenue and

EBITDA estimates by 2.3% and 4.5% respectively. Our revised EPS for FY13E stands

at Rs4.3 v/s Rs3.9 earlier. We have introduced FY14E EPS at Rs5.8.

Maintain ACCUMULATE with revised TP of Rs101 (earlier Rs105)

At CMP of Rs82, Idea trades at 6.0x and 5.3x EV/EBIDTA and 18.4x and 14.2x

estimated EPS of Rs4.4 and Rs5.8 for FY13E and FY14E, respectively. We remain

positive on the stock and reiterate ACCUMULATE rating with TP of Rs101.

Financial Snapshot Rs Mn

Y/E- Net EBITDA PAT EPS EPS ROE EV/

Mar Sales (Core) (%) (Rs) (Rs) %chg (%) P/E EBITDA P/BV

FY11 155034 37908 24.5 8989 2.7 -2.5 7.3 30.0 9.6 2.2

FY12 195412 50923 26.1 7230 2.2 -19.6 5.6 37.2 7.8 2.1

FY13E 236570 65092 27.5 14620 4.4 102.2 10.1 18.4 6.0 1.9

FY14E 269156 73895 27.5 19016 5.8 30.1 11.6 14.2 5.3 1.6

Re

sultUpdate

Idea Cellular

Another strong quarter, Maintain ACCUMULATE

7/31/2019 Stocks Emkay 030512

10/30

Idea Cellular Result Update


Quarterly financials

Rs mn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%) FY12 YTD11 YoY (%)

Mobile 41,751 44,843 45,817 49,924 53,146 27.3 6.5 193,730 153,480 26.2

NLD 478 646 615 637 692 44.8 8.6 2,591 1,759 47.3

Others 3,210 3,345 3,352 3,488 3,575 11.4 2.5 13,760 12,031 14.4

Other operating revenue 360 49 121 105 250 (30.5) 139.5 525 648 (19.0)

Total gross Sales 45,799 48,882 49,906 54,154 57,664 25.9 6.5 210,605 167,918 25.4

Inter-segmental elimination 3451.3 3675.2 3706.4 3845.3 3966.8 15193.7 12,884 17.9

Net Sales 42,347 45,207 46,199 50,308 53,697 26.8 6.7 195,412 155,034 26.0

Roaming & Access charge 6812.4 7321.4 7877.2 8456.6 9143.6 34.2 8.1 32,799 24,755 32.5

as % of sales 16.1 16.2 17.1 16.8 17.0 16.8 16.0

Network Operating 10269.7 11155.8 11422.6 12182.4 12579.2 22.5 3.3 47,340 40,456 17.0

as % of sales 24.3 24.7 24.7 24.2 23.4 24.2 26.1

Employee Expenses 2113.6 2110.4 2416.9 2424.0 2547.9 20.5 5.1 9,499 8,056 17.9

as % of sales 5.0 4.7 5.2 4.8 4.7 4.9 5.2

Marketing Expenses 6160.2 5492.0 5421.5 6431.5 6805.2 10.5 5.8 24,150 19,743 22.3

as % of sales 14.5 12.1 11.7 12.8 12.7 12.4 12.7

License Fee 4779.5 5116.1 5132.4 5610.7 7372.6 54.3 31.4 23,232 17,728 31.0as % of sales 11.3 11.3 11.1 11.2 13.7 11.9 11.4

Administrative expenses 1459.8 1971.5 2062.3 1757.1 1677.3 14.9 (4.5) 7,468 6,389 16.9

as % of sales 3.4 4.4 4.5 3.5 3.1 3.8 4.1

Total operating expenditure 31595 33167 34333 36862 40126 27.0 8.9 144488 117126 23.4

EBITDA 10752.0 12040.0 11866.3 13445.9 13571.1 26.2 0.9 50,923 37,908 34.3

Depreciation 6572.1 7026.1 7368.7 7574.8 7843.8 19.3 3.6 29813.4 23973.4 24.4

EBIT 4179.9 5013.9 4497.6 5871.1 5727.3 37.0 (2.4) 21110 13935 51.5

Other Income 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Interest 854.1 2463.4 2938.9 2880.3 2274.7 166.3 (21.0) 10557.3 3964.6 166.3

PBT 3325.8 2550.5 1558.7 2990.8 3452.6 3.8 15.4 10552.6 9970.4 5.8

Tax 580.6 777.9 501.1 981.0 1062.8 83.1 8.3 3322.8 981.5 238.5PAT 2745.2 1772.6 1057.6 2009.8 2389.8 (12.9) 18.9 7229.8 8988.9 (19.6)


EBIDTA 25.4 26.6 25.7 26.7 25.3 130 -145 26.1 24.5 161

EBIT 9.9 11.1 9.7 11.7 10.7 167 -100 10.8 9.0 181

EBT 7.9 5.6 3.4 5.9 6.4 (18) 48 5.4 6.4 (103)

PAT 6.5 3.9 2.3 4.0 4.5 (169) 46 3.7 5.8 (210)

Effective Tax rate 17.5 30.5 32.1 32.8 30.8 2,369 -202 31.5 9.8 2,164

KPIs

KPIs Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412Subscribers ('000) 63,824 68,886 74,213 81,778 89,503 95,108 1,00,180 1,06,400 1,12,722

QoQ % 10.8% 7.9% 7.7% 10.2% 9.4% 6.3% 5.3% 6.2% 5.9%

ARPU (Rs) 185 182 167 168 161 160 155 159 160

(% QoQ) -7.5 -1.6 -8.2 0.6 -4.2 -0.6 -3.1 2.6 0.6

MOU (mins) 398 415 394 401 397 391 364 369 379

(% QoQ) 2.3 4.3 -5.1 1.8 -1.0 -1.5 -7.8 1.4 2.7

RPM (Rs) 0.46 0.44 0.42 0.42 0.41 0.41 0.43 0.43 0.42

(% QoQ) -9.6 -5.7 -3.3 0.0 -2.9 1.0 4.1 1.4 -2.5

Total traffic (mn) 68,275 82,274 84,828 93,503 1,01,960 1,08,275 1,06,627 1,13,964 1,24,305

(% QoQ) 18.0 20.5 3.1 10.2 8.7 6.5 -2.2 7.3 9.1

7/31/2019 Stocks Emkay 030512

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Other highlights of the result

Wireless churn came down to 9.9% from 10.4% in 3QFY12 and 10.7% in 4QFY11.

Idea added 2,553 2G cell-sites taking total count to 83,190 at the end of FY12. 3GNode B count increased 1,923 to 12,825 at the end of Q4FY12.

Standalone capex for the quarter was Rs9.5 bn, Idea ended FY12 with total capexof Rs42bn which stands in line with managements guidance. Capex guidance for

FY2013E stands at Rs35 bn, in line with our assumption.

Indus revenues grew 2.6% sequentially with flat EBITDA margin at 45.3%.

Circle-wise financial performance

Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 QoQ % YoY %

Established circles (13)

Revenues (Rs mn) 35,941.0 38,298.0 40,746.0 41,579.0 45,144.0 47,784.0 5.8% 24.8%

EBITDA (Rs mn) 9597 10667 12066.4 12212 13708 13671 -0.3% 28.2%

EBITDA margin (%) 26.7 27.9 29.6 29.4 30.4 28.6 (176)bps 76bps

New circles (9)

Revenues (Rs mn) 3960 4393 4814 4975 5508 6251 13.5% 42.3%EBITDA (Rs mn) -1384 -1173 -1397 -1776 -1722 -1601 -7.0% 36.5%

EBITDA margin (%) -34.95 -26.70 -29.02 -35.70 -31.26 -25.61 565bps 109bps

Wireless revenue break-up

Rsm Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 QoQ % YoY %

Voice revenue (Rs mn) 34174.4 36698.9 39417.1 39768.9 43084.4 45546.3 5.7% 24.1%

qoq growth (%) 8.6% 7.4% 7.4% 0.9% 8.3% 5.7%

Non-voice revenue (Rs mn) 5107 5052 5426 6048 6840 7600 11.1% 50.4%

qoq growth (%) 9.6% -1.1% 7.4% 11.5% 13.1% 11.1%

Outlook

Idea continues to impress with its strong execution ability to manage the volume/pricing

balance in highly competitive environment. Idea managed strong show on both volume and

margin front (adjusting for one-off items). Voice ARPM declined 3.0% QoQ was offset by

the strong volume growth of 9% QoQ. We believe decline in voice ARPM is the indicative of

pricing pressure due to intense competition. We remain positive on the execution ability and

strong operational performance in medium term. However, regulatory uncertainties would

limit the share price movement in short term.

Upward revision in estimates

On the back of strong performance in Q4FY12, we are raising our FY13E revenue andEBITDA estimates by 2.3% and 5.5% respectively. Our revised EPS for FY13E stands at

Rs4.4 v/s Rs3.9 earlier. We have introduced FY14E EPS at Rs5.8.

FY13E

Old New Chg %

Revenue 231255 236570 2.3%

EBIDTA 61723 65092 5.5%

EBIDTA % 26.7 27.5 82 bps

PAT 12875 14620 13.6%

EPS 3.9 4.4 13.6%

7/31/2019 Stocks Emkay 030512

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Financials

Profit & Loss Balance Sheet

Y/E, Mar (Rs m) FY11 FY12 FY13E FY14E Y/E, Mar (Rs m) FY11 FY12 FY13E FY14E

Net Sales 155,034 195,412 236,570 269,156 Equity share capital 33,033 33,033 33,033 33,033

Growth (%) 25.0 26.0 21.1 13.8 Reserves & surplus 89,461 96,691 111,311 130,327

Employee cost 8,056 9,499 11,792 14,340 Net worth 122,494 129,724 144,344 163,360Roaming & Access Charges 24,754 32,799 40,453 46,026 Loan Funds 120,705 135,705 122,205 112,205

Network Operating cost 40,131 47,340 55,505 63,196 Net deferred tax liability 3,099 3,099 3,099 3,099

Licence fees 17,728 23,232 26,496 30,146 Other liabilities 497 497 497 497

SG&A 19,743 24,150 29,571 32,837 Total Liabilities 246,795 269,025 270,145 279,161

Others 6,714 7,468 7,661 8,717 Gross Block 265,320 313,305 346,289 375,204

Total operating expenditure 117,126 144,488 171,478 195,261 Less: Depreciation 89,316 115,175 144,731 176,742

EBITDA 37,908 50,923 65,092 73,895 Net block 176,005 198,130 201,558 198,462

Growth (%) 12.9 34.3 27.8 13.5 Capital work in progress 36,467 26,467 24,467 24,467

Depreciation 23,973 29,813 34,106 36,761 Net Intangible assets 48,851 46,917 44,387 41,657

EBIT 13,935 21,110 30,986 37,134 Investment 10,200 10,200 10,200 10,200

EBIT margin (%) 9.0 10.8 13.1 13.8 Goodwill on consolidation 61 61 61 61

Other Income 0 0 0 0 Current Assets 30,543 48,868 56,206 72,992

Interest expenses 3,965 10,557 9,165 8,752 Inventories 659 832 1,008 1,148

PBT 9,970 10,553 21,821 28,382 Sundry debtors 4,789 5,890 7,051 7,675

Tax 982 3,323 7,201 9,366 Cash & bank balance 4,562 20,126 25,476 41,058

Effective tax rate (%) 9.8 31.5 33.0 33.0 Loans & advances 19,756 21,041 21,483 21,760

PAT 8,989 7,230 14,620 19,016 Other current assets 776 980 1,187 1,351

Net Current liabilities 55,331 61,618 66,735 68,678

Net current assets -24,789 -12,750 -10,528 4,314

Total Assets 246,795 269,025 270,145 279,161

Cash Flow Statement Ratios

Y/E, Mar (Rs m) FY11 FY12 FY13E FY14E Y/E, Mar FY11 FY12 FY13E FY14E

PBT 9,970 10,553 21,821 28,382 Profitability (%)

Depreciation 23,973 29,813 34,106 36,761 Core EBITDA Margin 24.5 26.1 27.5 27.5

Interest 3,965 10,557 9,165 8,752 Net Margin 8.1 7.4 8.8 9.2

Other Non-Cash items 0 0 0 0 ROCE 5.7 7.9 11.6 13.5

Chg in working cap 22,401 3,525 3,129 739 ROE 7.3 5.6 10.1 11.6

Tax paid -982 -3,323 -7,201 -9,366 RoIC 8.3 12.1 16.9 20.7


Capital expenditure -98,153 -40,004 -33,004 -30,934 EPS (adjusted) 2.7 2.2 4.4 5.8

Free Cash Flow -38,824 11,121 28,016 34,334 CEPS 10.0 11.2 14.8 16.9

Other income 0 0 0 0 BVPS 37.2 39.4 43.8 49.6

Investments 1,104 0 0 0 DPS 0.0 0.0 0.0 0.0

Investing Cashflow -97,049 -40,004 -33,004 -30,934 Valuations (x)

Equity Capital Raised 69 0 0 0 PER 30.0 37.2 18.4 14.2

Loans Taken / (Repaid) 42,112 15,000 -13,500 -10,000 P/CEPS 8.2 7.3 5.5 4.8

Interest Paid -3,965 -10,557 -9,165 -8,752 P/BV 2.2 2.1 1.9 1.6

Dividend paid (incl tax) 0 0 0 0 EV / Sales 2.4 2.0 1.6 1.5

Other financing activities 1,178 -4 0 0 EV / EBITDA 9.6 7.8 6.0 5.3

Financing Cashflow 39,394 4,439 -22,665 -18,752 Dividend Yield (%) 0.0 0.0 0.0 0.0

Net chg in cash 1,673 15,559 5,351 15,582 Gearing Ratio (x)

Opening cash position 2,889 4,562 20,126 25,476 Net Debt/ Equity 0.7 0.7 0.5 0.3

Closing cash position 4,562 20,122 25,476 41,058 Net Debt/EBIDTA 1.8 1.3 0.8 0.4

7/31/2019 Stocks Emkay 030512


April 27, 2012

RecoBuy

Previous RecoAccumulate

CMPRs861

Target PriceRs1,200

EPS change FY13E/14E (%) 6.7/-


Nifty 5,191

Sensex 17,134

Price Performance(%) 1M 3M 6M 12M

Absolute 0 (2) (8) (23)

Rel. to Nifty 0 (3) (5) (14)

Source: Bloomberg


650

745

840

935

1030

1125


Rs

-30

-22

-14

-6

2

10%

ICICI Bank (LHS) Rel to Nifty (RHS)

Source: Bloomberg

Stock DetailsSector Banks

Bloomberg ICICIBC@IN


Face Value(Rs) 10


52 Week H/L 1,129/641





Mar-12 Dec-11 Sep-11Promoters 0.0 0.0 0.0

FII/NRI 63.2 61.8 65.0



Public 6.2 6.0 5.7

Source: Capitaline

Re

sultUpdate

ICICI Bank

Surprised positively; Upgrade to BUY

ICICI Bank Q4FY12 NII at Rs31bn / PAT Rs19bn ahead of

est imat es. 35% growt h in non-in t incom e compensated fo r

h igher credi t cost (18bps for Q4) and tax es ( tax rate @28%) Domest ic loan grow th led by SME + corporate. NIM at 3.01%

surpr is ing ly expand 30bps qoq led by fore ign business NIMs,

lower domest ic t e rm depos i ts and some re -pr ic ing impact

Concerns on asset qual i ty c ont inue t o ease. Gross sl ippages

at Rs6.3bn lowest in four quar ters. FY12-14E sl ippages /

c red i t c ost a t 1 .4%/ 70bps respect ive ly

Upgrade to BUY. Key +ves : strong c api ta l base, stable credi t

cost , RoA / core RoE inch ing upw ards (avg 1.6% /16% FY12-

14E). Valuat ions seem reasonable post rec ent c orrect ion

Results above estimates; reported NIM at 3% was highest in near past

ICICI Bank Q4FY12 NII at Rs31bn (+24% yoy / 15% qoq) and net profit at Rs19bn

(+31% yoy / 10% qoq) was significantly ahead of our / street estimates. The NII growth

was aided by 17% yoy growth in loan portfolio and 30bps sequential improvement in

reported NIM to 3.01% (highest in near past). Growth in non-interest income came in

healthy at 36% yoy (18% qoq) and compensated for higher provisioning (+22% yoy /

38% qoq) and taxes (tax rate @28%). The bank has added 200 branches in Q4. Asset

quality continues to report second quarter of sequential improvement with GNPA /

NNPA down 4%/11% qoq respectively. Restructured loan portfolio increased to

Rs42.6bn (+39% qoq). This increase however was largely anticipated.

On the balance sheet front: Domestic loan portfolio grew 14% yoy (4% qoq) largely

led by healthy growth in SME and domestic corporate front. Growth in international bookadjusted for INR depreciation was at 10%yoy. Deposits were up 13% yoy (-2% qoq);

CASA ratio continues to remain at healthy 40+% levels for consecutive ninth quarter.

Yield analysisYoY QoQ

% Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12(bps) (bps)

Yield on advances* 8.6 9.0 9.5 9.5 9.8 123 33

Yield on investments* 6.6 6.6 6.5 6.6 6.8 18 11

Yield on assets* 7.2 7.4 7.6 7.6 7.9 70 23

Cost of funds* 4.7 5.1 5.3 5.2 5.2 55 -2NIM* 2.5 2.3 2.3 2.4 2.7 15 25

NIM (Reported) 2.6 2.6 2.6 2.7 3.0 37 31

Source: Company, Emkay Research Note:* Calculated on basis of average quarterly balances

Valuation tableY/E March 31 Net Net EPS ABV RoA RoE PE P/ABV

income profit (Rs) (Rs) (%) (%) (x) (x)

FY11 156,648 51,514 44.7 457.4 1.3 9.7 19.3 1.9

FY12A 182,364 64,648 56.1 506.7 1.5 11.2 15.4 1.7

FY13E 212,451 76,026 66.0 548.4 1.6 12.1 13.1 1.6

FY14E 248,713 90,265 78.3 601.7 1.6 13.1 11.0 1.4


7/31/2019 Stocks Emkay 030512

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ICICI Bank Result Update


Key financials Quarterly

Rs mn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%) YTD' 12 YTD' 11 YoY (%)

Net Interest Income 25,097 24,109 25,064 27,120 31,048 23.7 14.5 107,342 90,169 19.0

Other Income 16,410 16,429 17,396 18,918 22,280 35.8 17.8 75,023 66,478 12.9

Fee Income 17,910 15,780 17,000 17,010 17,280 -3.5 1.6 67,070 64,190 4.5

Net Income 41,507 40,538 42,460 46,038 53,328 28.5 15.8 182,364 156,647 16.4Total Operating Expenses 18,455 18,198 18,922 19,168 22,216 20.4 15.9 78,504 66,168 18.6

As % Of Net Income 44.5 44.9 44.6 41.6 41.7 43.0 42.2

Employee Expenses 8,566 7,329 8,427 8,366 11,031 28.8 31.9 35,153 28,169 24.8

As % Of Net Income 20.6 18.1 19.8 18.2 20.7 19.3 18.0

Other Expenses 9,436 10,533 10,133 10,429 10,652 12.9 2.1 41,747 36,433 14.6

As % Of Net Income 22.7 26.0 23.9 22.7 20.0 22.9 23.3

Operating Profit 23,053 22,340 23,538 26,870 31,111 35.0 15.8 103,860 90,479 14.8

As % Of Net Income 55.5 55.1 55.4 58.4 58.3 57.0 57.8

Provisions 3,836 4,539 3,188 3,411 4,693 22.3 37.6 15,831 22,867 -30.8

PBT 19,217 17,802 20,350 23,459 26,418 37.5 12.6 88,030 67,612 30.2

Total Tax 4,692 4,480 5,318 6,179 7,405 57.8 19.8 23,382 16,093 45.3

Adjusted PAT 14,524 13,322 15,032 17,280 19,013 30.9 10.0 64,648 51,519 25.5

Extra Ordinary Items 0 0 0 0 0 0 0

Reported PAT 14,524 13,322 15,032 17,280 19,013 30.9 10.0 64,648 51,519 25.5

Reported EPS 12.6 11.6 13.0 15.0 16.5 30.8 10.0 56.1 45.0 24.6


Almost everything helped NIMs expansion

Q4FY12 NIM at 3.01% (+31bps qoq) was aided by +33bps qoq improvement in domestic

NIM to 3.3% and +12bps qoq increase in international NIM to 1.52%.

Domestic NIM was aided by

a) Full impact of base rate hike this came as a surprise as we believed that re-

pricing impact was over

b) Higher investment income as there was no securitization loss

c) Lower domestic deposits during the quarter the domestic CDR was higher by

500bps qoq as the domestic term deposits declined by ~2.7% qoq

d) Change in domestic portfolio mixin favor of SME and retail deposits

Strong traction in SME + Corporate book drives domestic loan growth

As against 17.3% yoy (3.1% qoq) growth in overall loan portfolio, growth in domestic loanscame in at 14.3% yoy (4.4% qoq). This growth was led by strong traction in segments of a)

SME (+30% yoy / 16% qoq) and domestic corporates (+27% yoy / 10% qoq). Rural portfolio

at Rs223bn (+28% qoq) was largely due to year end phenomenon. Growth in retail portfolio

came in lower at 7.6% yoy (9% qoq). Unlike its peers HDFC Bank / Yes Bank which

reported muted growth in credit towards large corporate loans, ICICI Bank reported healthy

26% yoy growth in domestic corporates. The mgmt attributed the reason for growth towards

increasing credit demand in the nature of working capital / term loans. Growth in the

international book came in healthy at 26% yoy. Adjusted for INR dep., book was +10% yoy.

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Advances mix SME + domestic corporate book reported healthy traction

Rs bn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%) % of total

Retail 837 828 819 825 901 7.6 9.2 35.5

International 552 558 669 697 695 26.0 -0.2 27.4

Rural 210 188 175 175 223 6.4 27.8 8.8

SME 104 110 110 116 134 29.5 16.2 5.3

Others 461 523 566 650 584 26.6 -10.2 23.0

Total 2,164 2,207 2,340 2,462 2,537 17.3 3.1 100.0


High yielding retail loans gain traction

While growth in retail loan portfolio at 7.6% yoy qoq seems muted, on qoq basis, the high

yielding loans like cars and CVs has gained traction sequentially. Amongst retail loans

growth was witnessed in segments Cars (+13% yoy / 9% qoq), CVs (+20% yoy / 27% qoq).

Retail advances mix Increasing share of secured loansRs bn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%) % of total

Cars 77 78 75 80 87 13.4 9.2 9.7

CV 148 137 131 141 178 20.3 26.5 19.8

Personal loans 23 20 12 10 10 -57.7 0.1 1.1

Credit cards 28 26 25 25 25 -8.7 1.9 2.8

Mortgages 539 554 551 548 576 6.9 5.3 64.0

Others 22 12 24 21 23 7.6 9.2 2.6

Total 837 828 819 825 901 7.6 9.2 100.0


Guides towards 20% growth in dom. advances at 15bps expansion in NIMs

Going forward, the management has guided towards 20% growth in domestic advances

with strong growth in both retail and corporate segments. International book is likely toremain flat as H2FY12 has created unfavorable base effect due to strong growth driven by

INR depreciation.

On NIMs front, the management has guided towards a moderate 15bps to improvement to

~2.9%, contrary to sharp jump in Q4FY12 to 3%+. We believe that couple of things which

could cap margins expansions are a) some moderation in the CDR from peak of Q4FY12,

and b) Q1FY13 will also see full impact of PSL lending and borrowings done in Q4FY12

CASA continues to remain healthy

An increasing branch network with focus at garnering CASA deposits has enabled ICICI

Bank retain its CASA ratio at 40+ levels for past several quarters. Q4FY12 CASA ratio

came in at 43.5% (avg 39%), with growth in CASA deposits at 9.2% yoy. Growth in SA

deposits came in higher at 14% yoy (4% qoq). The CA was down 13% qoq due to one-offs

in CA account in Q3FY12 (float due to NHAI bonds).

CASA Mix

Rs bn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%)

Current Deposits 348 298 330 400 350 0.6 -12.7

Savings Deposits 669 669 701 735 760 13.7 3.5

CASA 1,016 966 1,031 1,135 1,110 9.2 -2.2

Term deposits 1,240 1,340 1,419 1,471 1,445 16.6 -1.7

Total Deposits 2,256 2,307 2,451 2,606 2,555 13.3 -2.0

CASA (%) 45.1 41.9 42.1 43.6 43.5 -160 -12


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Fee inc. continues to disappoint; dividend from subs. came in as a rescue

As against 36% yoy (18% qoq) growth in non-interest income, growth in core fee income

continues to remain fragile at -3.5% yoy / +1.6% qoq. The management attributed lower fee

income to limited M&A activities and syndication business. It has also guided for low double

digit growth in fee income for FY13 and expects healthy traction in segments like

transaction banking and remittances business. Treasury income came in at +Rs1.6bn vs

loss of Rs2bn in Q4FY11. Other income included dividend income from UK subs. (Rs1bn)

and life insurance (~Rs1bn). Adjusted for the same, growth in non-inc int was at 24% yoy

(7% qoq).

Other income


Fee/Commission income 17,910 15,780 17,000 17,010 17,280 -3.5 1.6 67,070 64,190 4.5

Trading gains/(losses) -1,960 -250 -804 -650 1,580 -180.6 -343.1 -124 -2,150 -94.2

Others 460 899 1,200 2,558 3,420 643.5 33.7 8,077 4,438 82.0

Total 16,410 16,429 17,396 18,918 22,280 35.8 17.8 75,023 66,478 12.9


QoQ improvement in NPA; restructured loans / credit cost to remain high

ICICI Bank reported another quarter of qoq improvement in its asset quality. GNPA / NNPA

at Rs94.7bn / Rs18.6bn declined 4% / 11% qoq respectively. Gross slippages at Rs6.3bn

(Rs8.8bn in Q3FY12) remained broad based across various segments. However, with

strong recoveries / up-gradation, net slippages came in far too lower at Rs0.6bn.

Restructuring assets (+39% qoq) at Rs42.6bn was largely towards exposure to GTL + 3i

infotech (Rs13bn). The bank has booked NPV loss on the same. PCR came in at 80.4%

with credit cost for Q4 at relatively higher 18bps.

While the mgmt has guided for minimal restructuring, we believe with increasing stress in

segments of construction, shipping, power, iron & steel, restructured book is expected to

remain higher. We have factored in higher slippages at 1.4% (avg assets) and have

correspondingly plugged in credit cost estimates to 70bps average for FY13-14E.

Asset qualityRs mn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%)

Gross NPAs 100,343 99,828 101,070 98,200 94,753 -5.6 -3.5

Net NPAs 24,074 23,025 22,360 20,820 18,608 -22.7 -10.6

Gross NPAs (%) 4.5 4.4 4.1 3.8 3.6

Net NPAs (%) 1.1 1.3 0.8 0.7 0.7

Net NPAs/Net worth (%) 4.4 4.1 3.8 3.4 3.1

Provision cover (%) 76.0 76.9 77.9 78.8 80.4


Aging of NPAs to ensure provisions do not cross 70bps even if there arehigher slippages

An analysis of the profile of ICICI Banks NPAs suggests that the aging of NPAs for ICICI

Bank is almost over. Amongst most of the private and PSU banks, ICICI Bank is one of the

few banks where migration of NPAs from sub-standard and D1 category to the lower

categories has already happened.

Hence, going forward there will be very minimal requirement of provisions for D2/3 and loss

category and the provision costs will largely go towards fresh slippages only. For the same,

we are anyways building in 70bps of credit costs over next two years.

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International subs report dismal growth but improved chances of gettingcapital back

With tough operating environment, ICICI bank continues with its balance sheet

consolidation at its UK subsidiary. For FY12, balance sheet stood at US$4.1bn (US$4.8bn

in Q3FY12 and US$6.4bn in FY11). CAR remains healthy 32.4% PAT was down 31% yoy

to US$25.4mn (US$36.6mn in FY11). FY12 Canadian balance sheet stood at CAD 5.2bn

with PAT under IFRS at CAD 34.4mn and CAR at 31.7%.

However, there visibility of repatriating the capital in those subsidiaries to the parent has

improved significantly. UK sub has already paid dividend of Rs1bn during the quarter. The

Canada sub is in talks with the regulator to explore ways to repatriate capital back to the

parent.

UK subsidiary asset bookUSD bn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%)

Cash & liquid securities 1.3 1.2 1.2 1.2 1.0 -28.0 -16.4

Loans & advances 3.6 3.4 3.0 2.8 2.4 -32.6 -13.9

India linked investments 0.3 0.2 0.2 0.2 0.2 -21.5 4.6

Bonds/notes of fin inst 0.7 0.6 0.3 0.2 0.2 -74.0 -23.5

Asset backed securities 0.1 0.1 0.1 0.1 0.1 -15.7 18.6

Other assets & investments 0.4 0.4 0.4 0.3 0.2 -43.3 -29.0

Total 6.4 6.0 5.1 4.8 4.1 -35.9 -14.6


Canada subsidiary asset bookCAD bn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%)

Cash & liquid securities 0.5 0.6 0.5 0.6 0.7 22.4 1.3

India linked investments 0.1 0.0 0.0 0.0 0.0 -74.3 -1.9

Federally insured mortgage 0.3 1.1 1.3 1.6 1.4 340.5 -13.1

Loans to customers 3.0 2.8 2.6 2.5 2.6 -13.7 3.4

Asset backed securi ties 0.1 0.1 0.1 0.1 0.1 -18.4 -1.9

Other assets & investments 0.5 0.5 0.5 0.5 0.5 0.7 4.2

Total 4.5 5.1 5.1 5.3 5.2 15.6 -1.9


Mixed performance on domestic subsidiaries front

Domestic subsidiaries reported mixed performance viz a) ICICI securities FY12 PAT at

Rs770mn (-32% yoy) b) ICICI Securities PD FY12 PAT at Rs860mn (+62% yoy) c) ICICI

Venture FY12 PAT at Rs680mn (-8% yoy) d) AMC FY12 PAT at Rs880mn (+22% yoy) e)

Home Finance FY12 PAT at Rs2.6bn (+12% yoy) f) Pru life FY12 PAT at Rs13.8bn (+71%

yoy) and g) General insurance FY12 loss at 416mn (vs loss of Rs800mn in FY11)

ICICI Pru life reported FY12 PAT at Rs13.8bn (+72% yoy). It continues to enjoy healthy

5.9% market share in insurance space. The bank reported FY12 APE business of Rs31.2bnwith NBAP margin at 16% and AuM of Rs707bn (Rs682bn in FY11).

Profit after tax

PAT FY12 FY11 FY10 YoY (%)

ICICI Securities Ltd. 770 1,130 1,230 -31.9

ICICI Securities PD 860 530 850 62.3

ICICI Venture 680 740 510 -8.1

ICICI Prudential Asset Management 880 720 1,280 22.2

ICICI Home Finance Company 2,600 2,330 1,610 11.6

ICICI Prudential Life Insurance 13,840 8,080 2,580 71.3

ICICI Lombard General Insurance -416 -800 1,440 -48.0

Total 19,214 12,730 9,500 50.9


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Capital remains healthy; factoring 12% CAGR in balance sheet for FY12-14E

ICICI Bank continues to enjoy healthy capital base CAR at 18.5% including Tier I CAR at

12.7%. Improved loan mix (more in favor of secured loans) and enhanced asset quality has

enabled the bank to conserve capital and in-turn suffice balance sheet growth. However,

given tough environment and intense competition, we are now factoring 12% CAGR in

balance sheet for FY12-14E.

Valuations and view

ICICI Bank Q4FY12 results reflected material improvement in its operating matrix viz a)

stable loan growth, b) NIM expansion (both domestic and international), c) CASA retention

d) sequential improvement in asset quality and e) lower credit cost. The bank has

capitalized the current phase of growth moderation towards branch expansion and

moderation in growth. However, as economic activities revive, we expect ICICI Bank to gain

market share. A well diversified loan mix with stable cost will ensure NIM improvement over

FY12-14E. We have raised our NII assumption for FY13 by 7% following higher than

expected improvement in Q4FY12 NIM. We are now factoring NIM at average 2.6% over

FY12-14E. Even after factoring 70bps of credit cost, we expect RoA to move upwards of

1.6-1.7% over FY12-14E and resultant core RoE to improve to 16-18%. We expect bank to

report 18% / 17% CAGR in net profit / customer assets over FY12-14E. Upgrade to BUY

with price target of Rs1200. Higher than expected increase in restructured loan portfolio /

slippages from the same and lower credit growth remain key risks to our estimates.

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Key Financials

Income Statement (Rs. Mn) Balance Sheet (Rs. Mn)

(Year Ending Mar 31) FY11 FY12A FY13E FY14E (Year Ending Mar 31) FY11 FY12A FY13E FY14E

Net interest income 90,169 107,342 126,545 148,023 Liabilities

Other income 66,479 75,023 85,907 100,689 Equity 11,518 11,528 11,528 11,528

Net income 156,648 182,364 212,451 248,713 Reserves 539,391 592,525 643,147 708,008

Operating expenses 66,173 78,504 87,891 100,563 Net worth 550,909 604,052 654,674 719,535

Pre provision profit 90,476 103,860 124,561 148,150 Deposits 2,256,021 2,555,000 2,754,444 3,568,592

PPP excl treasury 88,299 103,984 123,461 147,050 Borrowings 1,255,406 1,577,419 1,625,954 1,683,839

Provisions 22,898 15,831 21,823 26,170 Total liabilities 4,062,337 4,736,471 5,035,072 5,971,966

Profit before tax 67,577 88,030 102,738 121,980 Assets

Tax 16,063 23,382 26,712 31,715 Cash and bank 340,901 362,293 330,763 428,529

Tax rate 23.8% 26.6% 26.0% 26.0% Investments 1,185,397 1,384,137 1,285,666 1,510,274

Profit after tax 51,514 64,648 76,026 90,265 Customer assets 2,325,122 2,748,740 3,175,986 3,787,897

Others 210,917 241,301 242,658 245,267

Total assets 4,062,337 4,736,471 5,035,072 5,971,966

Key Ratios (%) Valuations Table


NIM 2.3 2.4 2.6 2.7 Net profit (Rs mn) 51,514 64,648 76,026 90,265

Non-II/avg assets 1.7 1.7 1.8 1.8 Shares in issue (mn) 1,152 1,153 1,153 1,153

Fee income/avg assets 1.4 1.3 1.3 1.4 EPS (Rs) 44.7 56.1 66.0 78.3

Opex/avg assets 1.7 1.8 1.8 1.8 PER (x) 19.3 15.4 13.1 11.0

Provisions/avg assets 1.0 0.7 0.7 0.7 FDEPS(Rs) 44.7 56.1 66.0 78.3

PBT/avg assets 1.8 2.0 2.1 2.2 FDPER (x) 19.3 15.4 13.1 11.0

Tax/avg assets 0.4 0.5 0.5 0.6 Book value (Rs) 478.3 524.0 567.9 624.2

RoA 1.3 1.5 1.6 1.6 P/BV (x) 1.8 1.6 1.5 1.4

RoAE 9.7 11.2 12.1 13.1 Adj book value (Rs) 457.4 506.7 548.4 601.7

Core RoAE 11.9 14.5 16.2 17.8 P/ABV (x) 1.9 1.7 1.6 1.4

GNPA (%) 5.0 4.0 3.9 3.9 P/PPP (x) 11.0 9.6 8.0 6.7

NNPA (%) 1.1 0.8 0.8 0.7 Dividend yield (%) 1.8 1.9 2.6 2.6

7/31/2019 Stocks Emkay 030512


April 27, 2012

Reco

Accumulate

Previous Reco

AccumulateCMP

Rs1,103

Target Price

Rs1,380

EPS change FY13E/14E (%) 4.7/ -


Nifty 5,191

Sensex 17,134

Price Performance

(%) 1M 3M 6M 12M

Absolute (1) 4 (4) (17)

Rel. to Nifty (1) 3 (1) (8)

Source: Bloomberg


750

875

1000

1125

1250

1375


Rs

-30

-22

-14

-6

2

10%

Axis Bank (LHS) Rel to Nifty (RHS)

Source: Bloomberg

Stock DetailsSector Banks

Bloomberg AXSB@IN


Face Value(Rs) 10


52 Week H/L 1,370/785






Promoters 37.4 37.6 37.2

FII/NRI 41.7 40.6 42.9



Public 6.2 6.4 6.0

Source: Capitaline

Re

sultUpdate

Axis Bank

Results inline; slippages/recoveries surprise positively

Axis Bank (AXSB) Q4FY12 NII a t Rs21.5bn in l ine w i th

consensus. How ever led by sharp ly low er provis ions, net

p ro f i t a t Rs12.8bn w as ahead o f expect a t ions

Sharp incre ase in LDR to 77% (71% in Q3FY12) and st able

CASA at 41.5% restr ic ted NIMs com pression to 20bps to

3 .6%, inl ine w i th our est im ates

Stable s l ippages at Rs5.1bn and h igher recover ies/upgrades

at Rs5.9bn (30% of op GNPAs) dr ive asset qual i ty even as

rest. assets at Rs5.9bn w as sl ight ly on the h igher s ide

Cont inues to surpr ise on asset qual i t y but rat ing prof i le of

corpora tes wi t nesses ma jor sh i f t tow ards low er s ide (AA to

BBB). Mainta in ACCUMULATE wi t h TP of Rs1,380

Strong performance; Recoveries surprises positively

Axis Banks Q4FY12 NII grew by 26.2%yoy to Rs21.5bn, inline with consensus

expectations. However driven by lower provisions, net profit at Rs12.8bn was ahead of

consensus/our expectations. While advances grew by a strong 19.2% yoy (14.1%qoq),

deposit growth was relatively lower at 16.3% yoy (5.5% qoq). Resultantly CD ratio

increased significantly from 71.3% in Q3FY12 to 77.1% in Q4FY12helping the

contraction in NIMs remain limited to 20bps qoq to 3.1%, inline with our expectations.

The bank surprised positively on the balance sheet front as GNPA declined by

5.7%qoq. Stable slippages at Rs5.1bn and substantially higher recoveries at Rs5.9bn

(Rs1.3bn avg rec/upgradation in earlier two quarters) led to the improvement in asset

quality. Resultantly the provision cover also improved to 80.2% from 75.3% (incl tech

write off) in previous quarter. However the restructuring during the quarter was slightly

on the higher side at Rs5.9bn, as against the run rate of Rs3bn in last two quarters.

Yield analysis

YoY QoQ% Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12

(bps) (bps)

Yield on advances* 9.2 10.1 10.8 11.0 10.7 148 -28

Yield on investments* 7.4 7.2 7.7 8.1 7.6 20 -53

Yield on assets* 7.8 8.2 8.7 8.9 8.7 96 -15

Cost of funds* 4.7 5.3 5.4 5.6 5.6 90 5

NIM* 3.0 2.9 3.3 3.3 3.1 7 -20

Cost of funds # 5.6 6.1 6.2 6.3 6.5 89 11NIM # 3.4 3.3 3.8 3.8 3.6 11 -20

Source: Company, Emkay Research Note:* Calculated on basis of average quarterly balances # Reported

Valuation tableY/E March 31 Net Net EPS ABV RoA RoE PE P/ABV

income profit (Rs) (Rs) (%) (%) (x) (x)

FY2011 111,951 33,885 82.5 440.8 1.6 19.3 14.0 2.5

FY2012A 134,379 42,682 103.3 528.7 1.6 20.4 11.1 2.1

FY2013E 154,333 48,777 113.7 633.1 1.6 19.1 9.7 1.7

FY2014E 181,699 58,840 136.1 736.8 1.7 19.2 8.0 1.5


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Axis Bank Result Update


Key financials Quarterly


Net Interest Income 17,010 17,241 20,073 21,403 21,461 26.2 0.3 80,178 65,630 22.2

Other Income 14,504 11,679 12,349 14,298 15,876 9.5 11.0 54,202 46,321 17.0

Fee Income 12,311 10,570 11,207 12,210 13,270 7.8 8.7 47,256 37,904 24.7

Net Income 31,514 28,920 32,422 35,701 37,337 18.5 4.6 134,380 111,951 20.0

Total Operating Expenses 13,306 13,335 14,665 15,109 16,962 27.5 12.3 60,071 47,794 25.7As % Of Net Income 42.2 46.1 45.2 42.3 45.4 44.7 42.7

Employee Expenses 3,960 5,100 4,986 5,420 5,296 33.7 -2.3 20,802 16,139 28.9

As % Of Net Income 12.6 17.6 15.4 15.2 14.2 15.5 14.4

Other Expenses 9,346 8,235 9,679 9,689 11,666 24.8 20.4 39,269 31,655 24.1

As % Of Net Income 29.7 28.5 29.9 27.1 31.2 29.2 28.3

Operating Profit 18,208 15,585 17,756 20,592 20,376 11.9 -1.1 74,309 64,157 15.8

As % Of Net Income 57.8 53.9 54.8 57.7 54.6 55.3 57.3

Provisions 2,544 1,758 4,056 4,223 1,393 -45.2 -67.0 11,430 11,497 -0.6

Prov for NPA 1,760 1,530 2,470 3,340 1,393 -20.9 -58.3 8,733 9,021 -3.2

PBT 15,664 13,827 13,701 16,369 18,983 21.2 16.0 62,879 52,660 19.4

Total Tax 5,463 4,403 4,497 5,346 6,210 13.7 16.2 20,456 17,472 17.1

Adjusted PAT 10,201 9,424 9,203 11,023 12,773 25.2 15.9 42,422 35,188 20.6

Extra Ordinary Items 0 0 0 0 0 0 0

Reported PAT 10,201 9,424 9,203 11,023 12,773 25.2 15.9 42,422 35,188 20.6

Reported EPS 24.8 22.9 22.3 26.7 30.9 24.4 15.7 102.8 86.0 19.6


Large corp/ Retail drive advances growth; PSL targets may still be way off

The banks advances grew by a strong 19.2%yoy to Rs1.7tn led by strong growth in Retail

and large corporate book. While retail book grew by a stellar 35.3%yoy to Rs376bn, large

corporate book grew by a healthy 19.9%yoy to Rs911bn. The growth in retail book was

driven by strong growth in all the segments (ex personal loans); mortgages which constitute

75% of the total retail book grew by 49.3%yoy to Rs282bn.The large spike in the agriculture loans was more seasonal in nature for meeting year end

PSL targets. However, since as % of last years loan book the agricultural loans stood at

12.2% vs 16% last year, we believe that PSL targets are still way off the norm and may

continue to put pressure on NIMs next year.

Advances mixRs bn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%) % of total

Large corporates 759 703 794 841 911 19.9 8.3 53.6

Mid-corporate/SME 214 198 208 207 238 11.2 15.0 14.0

Agriculture 173 147 106 107 173 0.1 62.1 10.2

Retail 278 270 293 333 376 35.3 12.9 22.1

Personal loans 39 11 12 20 23 -42.0 12.9 1.3

Mortgages 189 203 223 249 282 49.3 12.9 16.6

Car Loans 31 35 38 43 49 60.0 12.9 2.9

Credit cards 6 5 6 3 8 35.3 125.9 0.4

Others 14 16 15 17 15 8.3 -9.6 0.9

Total 1,424 1,319 1,401 1,487 1,698 19.2 14.1 100.0


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CASA mix stable despite strong advance growth

The banks CASA mix remain stable at 41.5% despite strong growth in advances, as CASA

deposit grew by a strong 5.4%qoq, inline with growth in term deposits. The entire growth in

CASA deposit was driven by saving deposit which grew by 9.2%qoq.

CASA Mix

Rs bn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%)Current Deposits 369 315 354 395 398 7.7 0.7

Savings Deposits 409 429 468 473 517 26.5 9.2

CASA 778 744 821 868 914 17.6 5.4

Term deposits 1,115 1,092 1,123 1,219 1,287 15.4 5.5

Total Deposits 1,892 1,836 1,945 2,087 2,201 16.3 5.5

CASA 41.1 40.5 42.2 41.6 41.5 44 -4


Strong fee income/ trading gains drive other income

The bank continued to report strong traction in fee income, as it grew by 8.6%qoq to

Rs13.3bn, helped by business/ retail banking. Higher third party product business and

government business drove retail and business banking Moreover with robust trading gainsat Rs1.5bn, total non interest income grew by even higher 11%qoq to Rs15.9bn.

Fee incomeRs mn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%) YTD' 12 YTD' 11 YoY (%)

Corporate banking 5,381 4,560 4,430 5,390 5,590 3.9 3.7 19,970 15,591 28.1

Business banking 1,070 990 970 1,090 1,280 19.6 17.4 4,330 3,880 11.6

Capital markets 190 160 150 130 130 -31.6 0.0 570 700 -18.6

Retail banking 3,120 2,760 2,910 3,280 3,770 20.8 14.9 12,720 10,010 27.1

Treasury 2,550 2,100 2,740 2,320 2,490 -2.4 7.3 9,650 7,710 25.2

Total fee income 12,311 10,570 11,200 12,210 13,260 7.7 8.6 47,240 37,891 24.7

Trading gains/(losses) 581 702 277 1,180 1,460 151.2 23.7 3,619 4,970 -27.2

Others 1,612 407 866 908 1,146 -28.9 26.2 3,327 3,448 -3.5

Total 14,504 11,679 12,349 14,298 15,876 9.5 11.0 54,202 46,321 17.0

Source: Company, Emkay Research Note: The growth in fee income on yoy basis adjusted for change in accounting policy at 39%

Asset quality improves further; recovery surprises positively

The banks asset quality improved during the quarter as GNPA/ NNPA declined by

5.7%qoq/ 30.8%qoq. While slippages remain stable at 5.2bn, significantly higher

recoveries/ upgradation at Rs5.9bn surprised positively. Moreover provision cover also

improved to 74% in Q4FY12 from 64% in Q3FY12. However restructured assets during the

quarter were slightly higher at Rs5.9bn as against Rs3bn run rate for previous two quarters.

Cumulative restructured book stood at Rs30.6bn, which is 1.8% of the overall advances.

NPA profile

Rs mn Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 YoY (%) QoQ (%)

Gross NPAs 15,994 15,731 17,438 19,145 18,063 12.9 -5.7

Net NPAs 4,104 4,625 5,488 6,829 4,726 15.2 -30.8

Gross NPAs (%) 1.0 1.1 1.1 1.1 0.9

Net NPAs (%) 0.3 0.3 0.3 0.4 0.3

Net NPAs/Net worth (%) 2.2 2.3 2.6 3.1 2.1

Provision cover (%) 74.3 70.6 68.5 64.3 73.8


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However there is a sharp change in the rating profile

Even as the asset quality continued to surprise, there was a sharp shift in the rating profiles

of the large/mid corporate book. There was ~4% shift of in the distribution of ratings from

AA category in favor of lower category of BBB. We believe that this could be due to

lowering of rating of some of the existing loans of the bank.

In fact over past five quarters, there has been 700bps migration from A/AA rated to BBB

rated portfolio.

Axis bank approves the valuation; Merger likely in three months

Axis Bank board approved the valuation of financial services business proposed to be

acquired from Enam Securities Private Limited (ESPL). Pursuant to the Revised Scheme,

Enam Shareholders would receive Axis Bank shares in the ratio of 5:1, translating into

approximately 2.9% shareholding in Axis Bank, which is valued at Rs13.4bn at CMP of

Rs1,103. The proposed transaction is subject to requisite regulatory approvals including

High Courts of Gujarat and Maharashtra and from the shareholders and creditors of the

respective companies. We believe it will take around three months for taking the required

approvals, post which both the entities will merge.

Valuation and view

While Axis Banks performance for Q4FY12 was robust and also positively surprised on

NPLs, we are still factoring in lower 13.4% growth in earnings next year for few reasons (1)

NIMs may continue to remain under pressure due to shortfall on PSL requirements which

may be substituted with RIDF bonds and (2) the downgrading in the loan rating profiles may

spike up restructuring and consequently provisions. We believe that these two can pose

further risks to our earnings estimates. But still valuations at 1.7x/1.4x FY13E/FY14E are

not unreasonable. Maintain accumulate with TP of Rs1,380.

.

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Key Financials

Profit and loss (Rs mn) Balance sheet (Rs mn)


Net interest income 65,630 80,178 91,592 108,463 Liabilities

Other income 46,321 54,202 62,741 73,236 Equity 4,106 4,132 4,288 4,324

Net income 111,951 134,379 154,333 181,699 Reserves 185,883 223,953 278,025 325,714Operating expenses 47,794 59,811 68,917 80,571 Net worth 189,988 228,085 282,314 330,037

Pre provision profit 64,157 74,568 85,417 101,128 Deposits 1,892,378 2,201,043 2,553,941 3,062,319

PPP excl treasury 67,820 78,187 89,036 105,108 Borrowings 344,767 427,150 440,412 454,499

Provisions 12,793 11,430 13,262 14,087 Total liabilities 2,427,134 2,856,278 3,276,667 3,846,854

Profit before tax 51,364 63,138 72,154 87,041 Assets

Tax 17,479 20,456 23,377 28,201 Cash and bank 214,087 139,339 186,588 223,729

Tax rate 34% 32% 32% 32% Investments 539,211 658,928 744,720 870,742

Profit after tax 33,885 42,682 48,777 58,840 Customer assets 1,604,783 1,970,589 2,259,180 2,667,688

Others 68,999 87,422 86,179 84,695

Total assets 2,427,134 2,856,278 3,276,667 3,846,854

Key Ratios Valuations(Year Ending Mar 31) FY11 FY12A FY13E FY14E (Year Ending Mar 31) FY11 FY12A FY13E FY14E

NIM 3.1 3.0 3.0 3.0 Net profit (Rs mn) 33,885 42,682 48,777 58,840

Non-II/avg assets 2.2 2.1 2.0 2.1 Shares in issue (mn) 411 413 429 432

Fee income/avg assets 2.8 2.8 2.9 2.8 EPS (Rs) 82.5 103.3 113.7 136.1

Opex/avg assets 2.3 2.3 2.2 2.3 PER (x) 13.4 10.7 9.7 8.1

Provisions/avg assets 1.0 0.7 0.7 0.7 FDEPS(Rs) 79.0 99.5 113.7 137.2

PBT/avg assets 2.4 2.4 2.4 2.4 FDPER (x) 14.0 11.1 9.7 8.0

Tax/avg assets 0.8 0.8 0.8 0.8 Book value (Rs) 450.8 540.1 646.9 752.0

RoA 1.6 1.6 1.6 1.7 P/BV (x) 2.4 2.0 1.7 1.5

RoAE 19.3 20.4 19.1 19.2 Adj book value (Rs) 440.8 528.7 633.1 736.8GNPA (%) 1.0 0.9 1.0 1.0 P/ABV (x) 2.5 2.1 1.7 1.5

NNPA (%) 0.3 0.3 0.3 0.3 P/PPP (x) 7.1 6.1 5.5 4.7

Dividend yield (%) 1.3 1.5 1.6 2.1

7/31/2019 Stocks Emkay 030512


April 30, 2012

Reco

Reduce

Previous Reco

ReduceCMP

Rs1,397

Target Price

Rs 1,270

EPS change FY13E (%) (12.2)

Target Price change (%) -

Nifty 5,191

Sensex 17,134

Price Performance

(%) 1M 3M 6M 12M

Absolute 7 16 22 6

Rel. to Nifty 7 16 26 18

Source: Bloomberg


900

1000

1100

1200

1300

1400


Rs

-20

-12

-4

4

12

20%

Marut i Suzuk i I nd ia (LHS) Rel to Ni ft y (RHS)

Source: Bloomberg

Stock Details

Sector Automobiles

Bloomberg MSIL@IN


Face Value(Rs) 5


52 Week H/L 1,428/906






Promoters 54.2 54.2 54.2

FII/NRI 21.5 19.5 19.3



Public 2.6 2.9 2.6

Source: Capitaline

Sales/EBIDTA at Rs 117 bn/8 bn w as ~4%/19% below est . due

to 12% QoQ r ise in d isc ounts (petro l c ar) . PAT at Rs 6.4bn

(7% above est.) was due to h igher other inc ome/low er tax

Demand polar i ty cont i nues tow ards d iesel vehic les. Diesel

engine capac i ty restr ic ted to 400,000 uni ts for FY13. New

diesel engine capaci ty t o com e in 1HFY14 (150,000 uni ts)

USD/JPY ne t ex posure hedged 10 0%/67% for Q1/Q2 FY13

Higher d iscount s, addi t ional promot ions required to dr ive

pet ro l sa les to rest r ic t m arg ins recovery

In t roduce FY14 est imat es w i th vo lumes o f 1 .5mn un i ts and

EPS of Rs 104.6. Retain REDUCE wi t h a TP of Rs 1,270. Ke y

upside r isk ar ises from favorable currenc y movement

Net Sales ~4% below est., sharp increase in discounts in petrol cars

Net sales disappointed at Rs 117bn (est. of Rs 123bn) despite favorable product mix

and price hikes. Average selling prices (ASP) declined 0.4% QoQ (11% YoY) to Rs

318,779 vs our est. of Rs 333,886. Management commentary indicated sequential

increase of domestic ASPs by Rs 12,000. However, lower share of spare and other

parts led to lower overall revenues. Also, we were surprised by a 12% QoQ jump in

discounts on petrol cars.

Product mix % 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12

M800, A-Star,Alto, WagonR 53.0 48.7 50.7 48.4 47.9

Vans (Omni, Eeco) 13.4 16.3 16.9 13.0 11.9

Swift, Estilo, Ritz 20.8 22.2 20.2 25.3 25.4

Dzire 9.5 10.0 9.1 11.6 12.5

SX4 3.0 2.2 2.0 1.2 1.7

Gypsy, Vitara 0.3 3.2 4.3 2.1 1.2

Exports 9.0 11.0 11.9 11.6 10.8

Units sold (nos) 343,420 281,526 252,299 239,528 360,324

YoY change 19.5 (0.6) (19.6) (27.6) 4.9

Source: SIAM, Emkay research

Avg. Discount (Rs per unit) 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12

Per vehicle 10,600 9,300 13,500 12,200 13,493

% YoY 14.8 58.8 14.0 27.3

Per diesel unit - - - - -

Per petrol unit 12,815 12,037 16,999 16,531 18,518

% YoY 25.3 67.5 27.9 44.5

Source: Company, Emkay research

Financial Snapshot

YE- Net EBITDA EPS EPS RoE EV/

Mar Sales (Core) (%) APAT (Rs) %chg (%) P/E EBITDA P/BV

FY11 365,747 31,990 8.7 22,886 79.2 (8.8) 17.8 17.6 10.3 2.9

FY12E 354,451 24,575 6.9 16,321 56.5 (28.7) 11.2 24.7 13.4 2.7

FY13E 429,021 37,937 8.8 24,823 85.9 52.1 15.1 16.3 8.7 2.3

FY14E 506,261 46,873 9.3 30,226 104.6 21.8 15.9 13.4 6.7 2.0

Source: Company. Emkay Research

Re

sultUpdate

Maruti Suzuki India Ltd.

Disappointment continues, Maintain REDUCE

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Maruti Suzuki India Ltd. Result Update


Quarterly Summary

Rs mn 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 YoY(%) QoQ(%) FY12 FY11 YoY(%)

Revenue 100,922 85,293 78,316 78,824 117,270 16.2 48.8 359,703 369,654 (2.7)

Expenditure 90,825 77,149 73,104 74,652 108,685 19.7 45.6 320,794 332,359 (3.5)

as % of sales 90.0 90.5 93.3 94.7 92.7 89.2 89.9

Consumption of RM 78,629 66,917 61,566 62,433 93,328 18.7 49.5 284,244 287,943 (1.3)

as % of sales 77.9 78.5 78.6 79.2 79.6 79.0 77.9

Employee Cost 1,534 1,794 1,995 2,090 2,560 66.9 22.5 8,438 7,036 19.9

as % of sales 1.5 2.1 2.5 2.7 2.2 2.3 1.9

Other expenditure 10,662 8,438 9,544 10,129 12,797 20.0 26.3 28,112 37,381 (24.8)

as % of sales 10.6 9.9 12.2 12.9 10.9 7.8 10.1

EBITDA 10,097 8,144 5,212 4,172 8,585 (15.0) 105.8 38,910 37,295 4.3

Depreciation 2,967 2,425 2,664 2,989 3,306 11.4 10.6 11,383 10,135 12.3

EBIT 7,131 5,719 2,548 1,183 5,279 (26.0) 346.3 27,526 27,160 1.3

Other Income 1,199 1,801 1,177 1,604 2,969 147.6 85.1 7,550 4,823 56.5

Interest 64 58 109 174 208 548 244 124.5

PBT 8,266 7,463 3,617 2,613 8,040 (2.7) 207.7 34,529 31,739 8.8

Total Tax 1,667 1,970 1,018 557 1,642 (1.5) 194.8 5,187 8,489 (38.9)

Adjusted PAT 6,599 5,492 2,598 2,056 6,398 (3.0) 211.2 29,342 23,250 26.2

(Profit)/loss from JV's/Ass/MI - - - - - - -

Adj. PAT after MI 6,599 5,492 2,598 2,056 6,398 (3.0) 211.2 29,342 22,573 30.0

Extra ordinary items - - (194) - - (194) (676) (71.3)

Reported PAT 6,599 5,492 2,405 2,056 6,398 (3.0) 211.2 29,148 22,573 29.1

Reported EPS 22.8 19.0 8.3 7.1 22.1 (3.0) 211.2 56.6 78.1 (27.6)


EBIDTA 10.0 9.5 6.7 5.3 7.3 (268) 203 10.8 10.1 73EBIT 7.1 6.7 3.3 1.5 4.5 (256) 300 7.7 7.3 31

EBT 8.2 8.7 4.6 3.3 6.9 (133) 354 9.6 8.6 101

PAT 6.5 6.4 3.3 2.6 5.5 (108) 285 8.2 6.3 187

Effective Tax rate 20.2 26.4 28.1 21.3 20.4 25 (89) 15.0 26.7 (1,173)

Per Vehicle (Rs) YoY(%) QoQ(%) YoY(%)

Revenue 293,941 302,967 310,400 329,081 325,457 10.7 (1.1) 317,287 290,836 9.1

Raw Material 229,012 237,695 244,010 260,648 259,012 13.1 (0.6) 250,725 226,547 10.7

Staff Cost 4,468 6,371 7,905 8,726 7,104 59.0 (18.6) 7,443 5,536 34.4

Other Expense 31,053 29,973 37,828 42,288 35,516 14.4 (16.0) 24,797 29,410 (15.7)

EBITDA 29,409 28,928 20,657 17,418 23,826 (19.0) 36.8 34,322 29,343 17.0

PAT 19,219 19,509 10,299 8,584 17,757 (7.6) 106.9 25,882 18,292 41.5

Source: Company. Emkay Research

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Adj EBIDTA disappoints significantly at Rs 8 bn vs est. of Rs 9.9bn

Adj EBIDTA (after MTM reversal of Rs 500mn) disappointed significantly. We attribute this

largely to lower than expected sales. It should be noted that RM to sales at 81.3% was lower

than our est. of 81.6%.

Sharp jump in other income and lower tax rate drives net profits

Net profits at Rs 6.4bn was 7% above estimates due to sharp jump in higher other income(Rs 2.9bn vs est. of Rs 1.3bn) and lower tax rates (20% vs est of 26%). Other income was

higher due to maturity of several fixed maturity plans. Depreciation expense at Rs 3.3bn was

higher than our est. of Rs 3bn. Tax rates at ~20.4% were significantly lower than our est.

largely due to higher R&D spend (benefit of 200% weighted deduction for taxes) and higher

share of other income. Absolute tax amount at Rs 1.6bn was 35% lower than our estimate.

Revision in Estimates and Introduction of FY14

We expect demand for petrol vehicles to remain subdued in FY13 thus leading to higher

overall discounts vs last year and additional promotional/incentive schemes to drive sales.

Hence, we lower our margin estimates by 90 bps in FY13 to 8.8%. We also factor in adverse

forex rates (Yen/INR at 1.62 vs 1.64 earlier). Our forex rates imply USD/JPY of 83 and

USD/INR of 51 for FY13. We also introduce FY14 estimates with volumes/EBITDA/profits at1.5mn/Rs 46.9 bn/Rs 30bn.

FY13E FY14E

Rs mn Earlier Revised % Change Our est. % YoY

Volumes 1,296,754 1,330,183 2.6 1,526,609 14.8

Sales 429,109 429,021 (0.0) 506,261 18.0

EBIDTA 41,615 37,937 (8.8) 46,873 23.6

EBIDTA margins(%) 9.7 8.8 9.3

Net Profits 28,284 24,823 (12.2) 30,226 21.8

EPS 97.9 85.9 (12.2) 104.6 21.8

Source: Emkay Research

Valuations and View

At CMP of Rs 1,397 the stock trades at PER of 16.3x and 13.4x, EV/EBIDTA of 8.7x and 6.7x

our FY13 and FY14 estimates respectively. We maintain our REDUCE rating and target price

of Rs 1,270. At our TP, the stock trades at 14.8x/12.1x PER and 7.7x/5.9x EV/EBITDA on our

FY13/14 estimates. We continue to have concerns with unhedged currency exposure beyond

1HFY13 and demand polarity towards diesel vehicles. Key upside risk arises from favorable

currency movement as the stock has shown a ~90% correlation with cross currency

movement.

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Key extracts from the con call

Demand outlook: Strong polarity in demand witnessed in FY12 with petrol salesdeclining 14% while diesel sales increasing 37%. Outlook for FY13 continues to remain

subdued for petrol vehicles driven by rising cost of ownership and increase in fuel

prices. Company is taking steps to lower cost of ownership by offering exchange

bonuses, targeting customers with lower usage and considering interest subventions.

Diesel demand continues to remain strong with waiting periods at 4-5 months for Dzireand 6 months for Swift.

Current capacity is for production of 1.6 mn units annually. Addition of Manesar Cassembly line would increase the capacity by 250,000 units.

Current diesel engine capacity stands at 400,000 units. New diesel engine plant inGurgaon is expected to come on stream in 1HFY14 with a capacity of 150,000 units

and rest 150,000 units by FY15. Total proposed capex for this is Rs 17 bn

Average discount levels have increased to Rs 13,493 per vehicle vs Rs 12,200 in Q3.

Compensation to vendors for indirect imports in Yen (payment with a lag of 1 quarter)

impacted EBITDA by Rs 2bn during this quarter

Company has hedged ~40% of its FY13 USD/Yen net exposure at favorable rates. Ithas fully hedged Q1 exposure and 67% of Q2 exposure. It targets to hedge ~50% of

net exposure each year.

It also has natural hedges for Euro exposure and ~25% of USD exposure. USD/Re hasbeen partially covered for Q1 and rest is unhedged.

Company has received 22,000 bookings for Ertiga with diesel share at more that 80%.It is expected to commence exports to Indonesia in the coming months in CKD form

followed with roll out in other geographies.

Management expects capex (excluding land in Gujarat) of Rs 30 bn in FY13 (Rs 27 bn

in FY12). Of this, amount proposed for R&D is Rs 5 bn in FY13 (Rs 2bn in FY12). Benefits from localization are not expected to filter in before 2- 3 years.

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Financials


Y/E, Mar (Rs. mn) FY11 FY12 FY13E FY14E Y/E, Mar (Rs. Mn) FY11 FY12 FY13E FY14E

Net Sales 365,747 354,451 429,021 506,261 Equity share capital 1,445 1,445 1,445 1,445

Growth (%) 24.7 (3.1) 21.0 18.0 Reserves & surplus 137,230 150,429 174,549 201,966

Expenditure 333,757 329,877 391,083 459,388 Net worth - - - -

Materials Consumed 284,902 281,294 335,685 395,126 Minority Interest 138,675 151,874 175,994 203,411

Employee Cost 7,036 8,438 9,844 11,444 Secured Loans 312 10,784 312 312

Other Exp 41,819 40,144 45,554 52,818 Unsecured Loans 2,781 966 2,781 2,781

EBITDA 31,990 24,575 37,937 46,873 Loan Funds 3,093 11,749 3,093 3,093

Growth (%) (12.8) (23.2) 54.4 23.6 Net deferred tax liability 1,644 3,023 1,644 1,644

EBITDA margin (%) 8.7 6. 8.8 9.3 Total Liabilities 143,412 166,646 180,731 208,148

Depreciation 10,135 10,802 12,657 14,724

EBIT 21,855 13,773 25,280 32,150 Gross Block 117,377 139,377 164,377 186,377

EBIT margin (%) 6.0 3. 5.9 6.4 Less: Depreciation 62,083 72,885 85,542 100,266

Other Income 9,477 8,884 9,023 9,556 Net block 55,294 66,492 78,835 86,111

Interest expenses 244 300 300 300 Capital work in progress 14,286 14,829 15,000 15,000

PBT 31,088 22,357 34,004 41,406 Investment 51,067 61,473 72,567 76,067

Tax 8,202 6,036 9,181 11,180 Current Assets 63,563 80,228 75,242 102,521

Effective tax rate (%) 26.4 27.0 27.0 27.0 Inventories 14,150 17,965 18,127 21,414

Adjusted PAT 22,886 16,321 24,823 30,226 Sundry debtors 8,933 9,377 18,127 21,414

Growth (%) (8.8) (28.7) 52.1 21.8 Cash & bank balance 25,085 24,362 3,761 18,379

Net Margin (%) 6.3 4. 5.8 6.0 Loans & advances 13,722 24,498 33,554 39,640

(Profit)/loss from JV's/Ass/MI - - - - Other current assets 1,673 4,027 1,673 1,673

Adj. PAT After JVs/Ass/MI 22,886 16,321 24,823 30,226 Current lia & Prov 40,798 56,376 60,913 71,552

E/O items - - - - Current liabilities 35,540 49,391 54,752 64,314

Reported PAT 22,886 16,321 24,823 30,226 Provisions 5,258 6,985 6,161 7,237

Growth (%) (8.8) (28.7) 52.1 21.8 Net current assets 22,765 23,852 14,329 30,969

Misc. exp - - - -

Total Assets 143,412 166,646 180,731 208,148


Y/E, Mar (Rs. mn) FY11 FY12E FY13E FY14E Y/E, Mar FY11 FY12 FY13E FY14E

PBT (Ex-Other income) 21,611 13,473 24,980 31,850 Profitability (%)

Depreciation 10,135 10,802 12,657 14,724 EBITDA Margin 8.7 6.9 8.8 9.3

Interest Provided 244 300 300 300 Net Margin 6.3 4.6 5.8 6.0

Other Non-Cash items 3,331 - - - ROCE 23.1 14.6 19.8 21.4

Chg in working cap 3,384 (1,810) (11,077) (2,023) ROE 17.8 11.2 15.1 15.9

Tax paid (8,202) (6,036) (9,181) (11,180) RoIC 41.9 23.2 32.5 34.2


Capital expenditure (23,720) (22,543) (25,171) (22,000) EPS 79.2 56.5 85.9 104.6

Free Cash Flow 6,783 (5,814) (7,492) 11,671 CEPS 114.3 93.8 129.7 155.5

Other income 9,477 8,884 9,023 9,556 BVPS 479.8 525.5 609.0 703.8

Investments 14,977 (10,406) (11,094) (3,500) DPS 7.5 4.5 6.9 8.4

Investing Cashflow 24,454 (1,522) (2,071) 6,056 Valuations (x)

Equity Capital Raised - - - - PER 17.6 24.7 16.3 13.4

Loans Taken / (Repaid) (5,121) 8,656 (8,656) - P/CEPS 12.2 14.9 10.8 9.0

Interest Paid (244) (300) (300) (300) P/BV 2.9 2.7 2.3 2.0

Dividend paid (incl tax) (2,518) (1,517) (2,307) (2,810) EV / Sales 0.9 0.9 0.8 0.6

Income from investments - - - - EV / EBITDA 10.3 13.4 8.7 6.7

Others (226) 226 - Dividend Yield (%) 0.5 0.3 0.5 0.6

Financing Cashflow (7,134) 6,613 (11,038) (3,110) Gearing Ratio (

Documents

Stocks Emkay 030512