TopPicks-10Mar15

India Strategy & Top Ideas

Q3FY15 disappointed, will Q4 deliver?

R Sreesankar [email protected]

+91-22-66322214

Click to edit Master title style LilladherPrabhudas March 2015

Prabhudas Lilladher Pvt. Ltd. and/or its associates (the 'Firm') does and/or seeks to do business with companies covered in its research reports. As a result investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision.

Please refer to important disclosures and disclaimers at the end of the report.

LilladherPrabhudas Contents

3/10/2015 2

Page No.

Large Caps

Tata Consultancy Services 25

HDFC Bank 27

Infosys 29

State Bank of India 31

ICICI Bank 33

Larsen & Toubro 35

Maruti Suzuki 38

Ultratech Cement 40

Bank of Baroda 42

Aurobindo Pharma 44

Mid-Caps

Cummins India 47

Ashok Leyland 49

Federal Bank 51

MindTree 53

Hexaware Technologies 56

JK Lakshmi Cement 58

KPIT Technologies 60

Ashoka Buildcon 62

Page No.

Union Budget FY16 – Infrastructure to lead the way 3-4

Global Issues – Growth to remain on the lower side 5

Union Budget-FY16 Overview 6-7

Budget FY16-Receipts & Expenditure 8

Budget FY16- Key policy announcements 9

Trade deficit - Lowest in the last twelve months 10

Inflation, Will the new base help? 11

Markets

Russia, the biggest gainer in equity markets 12

Infrastructure and Capital goods Outperform 13

Large caps preferred 14

Global Currencies – Weak Real and Turkish Lira 15

India: FII Equity Flows still continues 16

Global Agri commodity Prices correct sharply over the last 12 months 17

Global Commodities continues to decline 18

US steady while European markets recover 19

Nifty Valuations: Historic Trends 20

Indian Market – Valuation and Strategy 21

Nifty Valuation 22

Top Pick Summary 23

(Prices as on March 09, 2015)

LilladherPrabhudas Union Budget FY16 – Infrastructure to lead the

way • Union budget FY16: Devoid of any big bang announcements : The equity markets were expecting big bang announcements

but the budget was devoid of any of these while stressing the need for increasing growth and laying out a roadmap for accelerating growth, enhancing investment and passing the benefits to the common man. While the GDP for FY16 is estimated to be between 8.0-8.5%, the target to hold the fiscal deficit to 3.9% of GDP in FY16 is above the earlier estimate of 3.6% with the incremental fiscal spend to go for infrastructure spending which in turn is expected to spur growth.

• Infrastructure, key beneficiary of increased fiscal expenditure: While the total plan expenditure has remained neutral, the plan capital expenditure has seen an increase of 35%, which is expected to drive growth. Over the last ten months, BOT road projects across the country has been seeing traffic growth in double digits.

• Corporate tax rates on their way down, service tax rates up: The union budget has proposed the corporate tax rates to be brought down from 30% to 25% in a phased manner over a four year time frame, while withdrawing some of the exemptions. This is expected to benefit high tax paying corporates like banks, MNC companies etc while increasing the tax outgo for the companies in the MAT bracket. The service tax rates have been increased and we believe this is a part of the governments objective to increase the tax to GDP ratio further by taxing it at the consumption stage.

• GST to be implemented by 01 April 2016: It was also proposed to implement the uniform tax regime of (Goods and Service Tax or GST) wef 01 April 2016. A speedy implementation and simplification of the tax issues can lead to better management for a large number of corporates. It is expected that once the GST is implemented, it will lead to the abolition of plethora of other taxes such as Octroi, Central Sales Tax, State-level Sales Tax, Entry Tax, Stamp Duty, Telecom License Fees, Turnover Tax, Tax on Consumption or Sale of Electricity, Taxes on Transportation of Goods and Services, etc, thus avoiding multiple layers of taxation that currently exist in India.

• Government Spending and defense, how much will it boost the private sector? Public sector continues to be the significant creator of assets and except in the last cycle where private sector added large capacities, the private sector has always rode on the back of government spending. With defense seeing one of the large capital expenditure, market will be keenly waiting to see the effect of new defense tenders to see the competitiveness of the Indian private sector especially in the manufacture of combat ships, sub marines and artillery guns as this is expected to help in the Make in India theme and should be boost for the domestic industry and especially the should pave the way for the entry of the private sector in defense.

3/10/2015 3

LilladherPrabhudas Contd…

• Coal blocks auction, PSU disinvestments, and Telecom auction; how much will it increase the government kitty: The coal block auctions have been a real success and this has given more in the hands of the states in terms of revenues which can be used by them for the development of infrastructure within the states. The disinvestments have been a success and we expect the disinvestment process to continue to add higher revenues and so is the case with the telecom spectrum auctions. While the auction of coal blocks will not result in immediate addition to central government kitty, the revenue addition to the states will be higher on an annual basis. In certain cases, the bidders have even paid a premium to obtain the coal blocks. In case of Eastern states, this will end up as wind fall as these resources are mainly based in these states, they will see a significant increase in the revenue share. Though the coal block auctions have brought out the hidden gains to the government, we are yet to see the real potential of what the Telecom auction can bring out.

• Remain Overweight Financials, Automobiles and add IT : Benign crude and commodity prices leading to low inflation should result in a reduction in interest rates and consequently improvement in capital expenditure. We expect the M&HCVs to continue do well and remain bullish on the commercial vehicle segment. However, lower increase in MSP and poor Rabi output could impact the rural consumption. We remain optimistic on M&HCVs, Financials, IT and Infrastructure while maintaining an underweight on FMCG.

• Capital Goods and Infrastructure rallies, but commodities continue to be under pressure: The market touched a new high of 8996 on 03 March 2015. The near term triggers to the market seem to be over with the budget on the 28th of February 2015. We expect the market to trade on a range bound basis for the near term between 8200-9300 levels, though the 12 month outlook is at 10000 levels for the NIFTY.

• Our preferred picks continue to be HDFC Bank, SBI, and ICICI bank among the financials, L&T and Ashoka Buildcon among Engineering & Capital Goods and Infosys, TCS, Hexaware Technologies and KPIT Technologies among IT, UltraTech Cement and JK Lakshmi Cement among Basic materials and Ashok Leyland among Automobiles. While we continue to like the FMCG sector from a margin expansion and earnings growth perspective, the steep valuations in the sector forces us to maintain underweight on the sector.

3/10/2015 4

LilladherPrabhudas Global Issues – Growth to remain on the lower

side • Global Economic indicators: US to lead Growth: The US economy is expected to drive global growth in both 2015 and 2016.

IMF expects the global growth to be at 3.5% in 2015 and 3.7% in 2016, with the US expected to grow at 3.6% and 3.3% in 2015 and 2016 respectively. Eurozone is facing challenges despite benefit of lower oil prices, weaker euro, moderate fiscal adjustment and accommodative monetary policies. Economies in the Euro zone is expected to recover slower than expected due to a variety of factors led by weaker investment prospects offsetting the benefit of lower oil prices, weaker Euro and easy monetary policies. Japanese growth is expected to recover aided by the low oil prices and yen deprecation and many emerging markets are expected to have a stable growth with both China and Russia expected to see lower growth. Many of the emerging and commodity exporters are likely to see a downward revision to economic growth forecasts from the earlier levels.

• US Non farm pay roll, continues to be on a roll and Un employment looks downwards: February 2015 saw an addition of 295,000 to non farm payroll numbers. The US non farm payroll additions have remained strong and the Jan 2015 were non farm payroll were at 239,000( revised downwards from 257,000), while the un employment rate has dropped to 5.5% from 5.8% in January 2015.

• Europe, continues to face challenges despite Euro depreciation: The European growth estimates continue to remain under pressure, and the ECB has cut the GDP estimates to 0.8% in CY14. The revised forecasts of 1.0% and 1.5%, for 2015 and 2016 reflects the poor outlook and are down from the earlier estimates of 1.6% and 1.9% respectively. Though growth is expected to be supported by (i) low oil prices, (ii) further monetary easing, (iii) more neutral fiscal stance and (iv) recent euro deprecation, but these are likely to be offset by the weaker investments partly arising out of weaker growth in the emerging market economies in the export sector.

• Crude oil Prices, have bounced from lows: The Brent crude oil prices have corrected from a low of US$49 before recovering to US$59 at present. The benefit of lower crude oil prices and weaker Euro and Yen on European and Japanese economies have been more than offset by other factors thereby impacting growth.

• Volatility reduces, Key to flows into equity and especially emerging markets: The CBOE VIX volatility index, a measure of the cost of equity portfolio protection has had seen some volatility and trades at 15.20, while the Indian VIX at 15.80 coming off the volatile levels post the Union budget of 2015.

3/10/2015 5

LilladherPrabhudas Union Budget-FY16 Overview

• No big bang announcements: The budget did not make any big bang announcements, while stressing the need for increasing

growth and laying out a roadmap for accelerating growth, enhancing investment and passing the benefit of the growth

benefits to the common man. While the GDP estimates as per the revised methodology for FY15 is at 7.4%, for FY16 it is

targeted at 8-8.5%, and a road map is laid out for improving the growth to double digits going forward. While the fiscal deficit

for FY15 was maintained at 4.1% of GDP, the target set last year to achieve a fiscal deficit of 3.6% in FY16 have been revised

to 3.9% with a road map to achieve a fiscal deficit of 3% of GDP by FY18. The additional fiscal spend is expected to go to

infrastructure spending which in turn is expected to spur growth.

• Capital expenditure to lead to economic recovery: The Finance Minister have assumed a gross tax revenue growth of 15.9%

in FY16. This translates into an expectation of around 8-8.5% growth in the economic growth, and this expected to be

achieved through a 35% increase in plan capital expenditure, while the total plan expenditure has remained neutral..

• Gross tax collection estimates an increase of 14.6% to Rs13.6trn while the direct taxes are estimated to go up by 13.4% and

the indirect taxes are expected to see an increase of 19.2%. Within the direct taxes, corporate taxes are expected to increase

by 10.5% to Rs4.7trn and the income tax by 17.5% to Rs3.2trn. Within the indirect taxes, Excise duties are expected to

increase by 23.9% to Rs2.29trn, Customs duty by 15.3% to Rs2.08trn and the Service tax by 24.8% to Rs2.09trn.

• The subsidies have not seen any increase in FY16. While both the food and fertilizer subsidies have been maintained more or

less at the same level as in FY15, the petroleum subsidy has seen a decrease of 50% owing to lower crude oil prices. With the

beginning of direct transfer of LPG subsidies and low crude prices, the maneuverability of the government to provide less has

been high.

• The budget has seen a larger devolution to states from the gross tax collection, and has increased to 36.0% in FY16 from a

level of 26.9% in FY15, thereby implementing the recommendation of the 14th Finance commission which had recommended

for passing on higher share of the tax collection to the states.

• The total plan expenditure is expected to be at the same level as in FY15 at Rs4.65tn vs Rs4.67tn in FY15, the capital plan

expenditure has seen an increase of 33.8% to Rs1.35tn vs Rs1.01tn.

3/10/2015 6

LilladherPrabhudas Contd…

• Defense continues to see a thrust in terms of capital expenditure and is expected to increase by 15.4% to Rs946bn. The

major increases in the non plan expenditure stems from interest payments, up 10.9% while the food subsidy and fertilizer

subsidy has been maintained more or less at the same level as at FY15..

• Proceeds from the non tax revenues including telecom fees and dividends & profits are expected to see only a modest

growth of 1.8% in FY16.

• GST is estimated to be implemented from 01 April 2016.

• Reducing the corporate taxation by 500bps to the Asean levels of 25%, while removing exemptions is one of the key steps

taken to simplify the corporate tax mechanism and improve the effective tax rate of the corporate.

• With the changes made in the personal income tax exemption levels, with proper tax planning an individual tax payer with an

income of Rs445,000 will be able to have a zero tax.

• Tobacco and tobacco products have been seeing heavy taxation in the last few years and this budget too has seen an increase

in the same.

• The government continues to bring in more services to the tax net and we have seen additional services like theme parks,

water parks, rides, toll manufacturers of liquor etc being brought into the service tax net thereby broad basing the target to

tax at the consumption levels. Measures against black money could lead to increased tax collections.

• We have seen a steady reduction in the capital infusion by the government in the PSU banks. The allocation for FY16 at

Rs79bn is lower than in FY15.

3/10/2015 7

LilladherPrabhudas Budget FY16-Receipts & Expenditure

3/10/2015 8

Receipts - (Rs billion)

2013-14

(A)

2014-15

(RE) YoY gr.

2015-16

(BE) YoY gr.

Gross tax revenue 11,387 12,504 9.8% 14,495 15.9%

Direct tax 6,375 7,047 10.5% 7,980 13.2%

% of Gross Tax Revenue 56.0% 56.4% 55.1%

Corporation tax 3,947 4,261 8.0% 4,706 10.5%

% of Direct Tax 61.9% 60.5% 59.0%

Income tax 2,429 2,786 14.7% 3,274 17.5%

% of Direct Tax 38.1% 39.5% 41.0%

Indirect tax 5,012 5,458 8.9% 6,515 19.4%

% of Gross Tax Revenue 44.0% 43.6% 44.9%

Excise duties 1,702 1,855 9.0% 2,298 23.9%

% of Indirect Tax 34.0% 34.0% 35.3%

Customs 1,721 1,887 9.7% 2,083 10.4%

% of Indirect Tax 34.3% 34.6% 32.0%

Service tax 1,548 1,681 8.6% 2,098 24.8%

% of Indirect Tax 30.9% 30.8% 32.2%

Less s tates share 3,182 3,368 5.8% 5,240 55.6%

% of total receipts 20.4% 20.0% 29.5%

Net tax revenue 8,158 9,085 11.4% 9,198 1.2%


Proceeds from telecom sector 401 432 7.6% 429 -0.7%

Dividends & profi ts 904 888 -1.8% 1,007 13.4%

Total nontax revenue 1,989 2,178 9.5% 2,217 1.8%


Total revenue receipts 10,147 11,263 11.0% 11,416 1.4%


Capital receipts

Non debt reciepts 419 422 0.9% 803 90.0%

% of total capital receipts 7.4% 7.4% 12.9%

Debt reciepts 5,220 5,283 1.2% 5,436 2.9%

% of total capital receipts 92.6% 92.6% 87.1%

Total Capital receipts 5,639 5,705 1.2% 6,239 9.3%


Total Receipts 15,594 16,812 7.8% 17,775 5.7%

Expenditure - (Rs billion)

2013-14

(A)

2014-15E

(RE) YoY gr.

2015-16E

(BE) YoY gr.

Revenue expenditure

Interest payments 3,743 4,114 9.9% 4,561 10.9%

Defence 1,244 1,404 12.9% 1,521 8.4%

Subs idies 2,546 2,667 4.7% 2,438 -8.6%

Food 920 1,227 33.3% 1,244 1.4%

Ferti l i zers 673 710 5.4% 730 2.8%

Petroelum 854 603 -29.4% 300 -50.2%

Others 99 128 28.9% 164 28.5%

Others 2,658 3,034 14.2% 3,539 16.6%

Total revenue non-plan expenditure 10,190 11,219 10.1% 12,060 7.5%

% of total expenditure 65.3% 66.7% 67.9%

Capital expenditure

Defence 791 820 3.6% 946 15.4%

Other expenditures 80 94 116 23.7%

Total capital non-plan expenditure 871 913 4.9% 1,062 16.3%


Total non-plan expenditure 11,061 12,132 9.7% 13,122 8.2%


Plan expenditure

Revenue expenditure

Centra l plan 2,522 1,020 -59.5% 1,397 36.9%

Centra l ass is tance to s tate 1,005 2,648 163.5% 1,904 -28.1%


Total revenue plan expenditure 3,527 3,669 4.0% 3,300 -10.0%


Capital expenditure

Centra l plan 883 877 -0.6% 1,208 37.7%

Centra l ass is tance to s tate 123 133 8.0% 144 8.2%

Total capital plan expenditure 1,006 1,011 0.5% 1,353 33.9%

Total plan expenditure 4,533 4,679 3.2% 4,653 -0.6%


Total expenditure 15,594 16,812 7.8% 17,775 5.7%

LilladherPrabhudas Budget FY16- Key policy announcements

• The government is continuing with the

commitment to provide a predictable and

stable taxation regime that would be investor

friendly and spur growth.

• The FDI and FII split has been combined for

investments, which should see an increased

investments in companies where the FII limits

have already reached.

• A number of tax saving proposals have been

given to the middle class tax payers, which

should spur growth in savings.

• The direct tax proposals should result in a

revenue loss of Rs83.15bn while the indirect

taxes should yield Rs233bn resulting into a net

revenue gain of Rs150.6bn.

3/10/2015 9

(Rs billion)2013-14

(A)

2014-15E

(RE)YoY %

2015-16E

(BE)YoY %

RECEIPTS

Revenue Receipts 10,147 11,263 11.0% 11,416 1.4%


Tax Revenues (net to centre) 8,159 9,085 11.4% 9,198 1.3%

% of revenue receipts 80.4% 80.7% 80.6%

Non-Tax Revenues 1,989 2,178 9.5% 2,217 1.8%

% of revenue receipts 19.6% 19.3% 19.4%

Capita l Receipts (ex-Borrowings) 419 422 0.9% 803 90.0%


Recoveries of Loans 125 109 -12.9% 108 -1.2%

% of capital receipts (ex-Borr.) 29.9% 25.8% 13.4%

Other receipts 294 314 6.7% 695 121.7%

% of capital receipts (ex-Borr.) 70.1% 74.2% 86.6%

Total Receipts 15,594 16,812 7.8% 17,775 5.7%

EXPENDITURES

Revenue Expenditure 13,717 14,888 8.5% 15,360 3.2%

as a % of Total Expenditure 88.0% 88.6% 86.4%

Capita l Expenditure 1,877 1,924 2.5% 2,414 25.5%

as a % of Total Expenditure 12.0% 11.4% 13.6%

Total Expenditure 15,594 16,812 7.8% 17,775 5.7%

Primary Deficit 1,286 1,013 -21.2% 995 -1.7%

% of GDP 1.1% 0.8% 0.7%

Revenue Deficit 3,570 3,625 1.5% 3,945 8.8%

% of GDP 3.1% 2.9% 2.8%

Fiscal Deficit 5,028 5,126 2.0% 5,556 8.4%

% of GDP 4.4% 4.1% 3.9%

Net Market Borrowings 4,536 4,469 -1.5% 4,564 2.1%

Gross Market Borrowings 5,637 5,920 5.0% 6,000 1.4%

Nominal GDP 114,278 125,031 9.4% 142,474 14.0%

LilladherPrabhudas Trade deficit - Lowest in the last twelve months

3/10/2015 10

• The benign oil prices and restrictions on gold imports continue to result in lower import numbers, while exports continue to face

headwinds and remain on the lower side due to slowing global growth, imports declined by over USD2.5bn in Jan 2015 compared to Dec

2014. Trade deficit improved to US$8.3bn Vs US$9.4bn Dec 14. We continue to believe as the domestic economic growth improves,

chances are that we will see an increase in non oil non gold imports and managing the trade deficit will be a challenge.

External debt break-up between ST and LT

Source: RBI, PL Research * Data revised on exchange rate fluctuation

Trade Deficit

Source: RBI, PL Research

US $ Mn Mar'14 Apr'14 May'14 Jun'14 Jul'14 Aug'14 Sep'14 Oct'14 Nov'14 Dec'14 Jan'15 YTD YTD YoY

Exports 29,578 25,634 27,999 26,480 27,728 26,958 28,903 26,094 25,961 25,398 23,883 265,037 231,287

Imports 40,086 35,720 39,233 38,243 39,956 37,797 43,151 39,452 42,822 34,833 32,206 383,411 342,300

- Oil 15,784 12,978 14,465 13,343 14,355 12,839 14,497 12,365 11,716 9,942 8,248 124,747 123,349

- Gold 3,136 1,750 2,600 3,120 1,810 2,040 3,752 4,170 5,610 1,340 1,550 27,742 25,931

- Non Oil Non Gold 21,166 20,992 22,168 21,780 23,791 22,918 24,902 22,916 25,496 23,551 22,408 230,922 193,021

Trade Deficit (10,507) (10,086) (11,235) (11,763) (12,229) (10,839) (14,247) (13,357) (16,861) (9,435) (8,323) (118,375) (111,013)

3.6 2.8 4.7 4.4 17.7 19.5 28.1 45.8 43.3 52.4 64.9 78.2 98.9 98.3 95.4 92.9 86.2 87.8 86.2

97.7 96.0 100.2 108.2 116.3 119.6

144.3 178.6 181.2

208.5 241.0

267.6 301.4 304.5 307.0 333.1 356.1 362.3 369.7

0

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Short Term Debt Long Term Debt

LilladherPrabhudas Inflation, Will the new base help?

• With the WPI continuing at near zero, thanks to low crude oil prices, the CPI inflation too have reduced to 5.11% for January 2015 as against 5.0% in Dec 2014.

• 10yr G-Sec Yield is trading at 7.71%, and has traded in the range of 7.66-7.72% in the last one month.

• The Dec 14 IIP data has been disappointing, and we expect

improvements to start from 1QFY16.

Source: Bloomberg, PL Research


CPI Inflation

GDP Growth YoY (Quarterly)


10yr. G-Sec Yield & Liquidity

3/10/2015 11

-

2.0

4.0

6.0

8.0

10.0 (2,500)

(2,000)

(1,500)

(1,000)

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Mar

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(%)

10.810.910.4

9.4 9.39.9 9.6 9.5

9.810.2

11.2

9.9

8.8

8.0 8.3 8.68.3

7.58.0 7.7

6.5

5.5

4.3

4.0

5.0

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LilladherPrabhudas Russia, the biggest gainer in equity markets

• MoM: Russia was the biggest gainer of the month both from the currency angle as well as the equity market performance. The Russian market is up 41% YoY, while the currency is down 70% YoY. India continues to see the out performance among the peers.

• YoY and YTD: India continues to display strength, while monetary easing has resulted in the Chinese markets gaining the maximum YoY so far with a gain of 57%.



Month-on-Month

Year-on-Year


Calendar Year-to-date

3/10/2015 12

9.8

8.5

5.0 4.2 4.0 3.5 3.5 3.3

2.5 2.0 1.8 1.2

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(%)

30.1

7.8

16.6

2.0

9.7

2.6 4.7

2.8 4.5

7.6

0.9

5.9 4.7

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41.0

28.4 22.2

8.3 10.2 13.1

19.4 14.7

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41.3

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LilladherPrabhudas Infrastructure and Capital goods Outperform

• MoM: Expectation of an investment friendly budget had catapulted the infrastructure space to an out performer, while the increasing stressed assets affected the performance of the PSU banks resulting in the under performance of the Bankex.

• YoY: On a YOY basis, Financials, Autos and Capital Goods have been the best performers, while Metals, Oil& Gas and FMCG continue to be under performers.



Month-on-Month

Year-on-Year



3/10/2015 13

7.4 6.8 5.7

4.1 3.3 2.7

0.3

(1.0) (1.5)

(3.6)(4.4)(6.0)

(4.0)

(2.0)

-

2.0

4.0

6.0

8.0

(%)

25.6

80.0

53.4 52.8

88.2

21.4

49.2 58.7

25.2 17.5

70.6

-10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0

100.0

(%)

14.7

19.7

11.4 10.3 6.8

(2.4)

15.4

6.0 4.2

0.3

6.8

(5.0)

-

5.0

10.0

15.0

20.0

25.0

(%)

LilladherPrabhudas Large caps preferred

• MoM: Small cap index have under performed the broader indices in the last one and three months.

• YoY: While the small cap index has out performed the broader index over the last twelve months, of late, the broader indices have started out performing the small caps, indicating a preference of the investors towards the large caps.



Month-on-Month

Year-on-Year



3/10/2015 14

2.9 2.9 2.9

0.9

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

BSEMDCAP Index BSE100 Index BSE500 Index BSESMCAP Index

(%)

71.0

47.2 51.8

78.8

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0


(%)

6.8

8.8 8.4

4.0

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0


(%)

LilladherPrabhudas Global Currencies – Weak Real and Turkish Lira

• MoM: Pressure continued across geographies resulting in fall in currencies across geographies from Brazil to Turkey to South Africa. Easy monetary policies across have been playing havoc with the currencies.

• YoY: Brazilian Real and Turkish Lira saw near term pressures while Russia continues to be the worst affected over a twelve month period.



Month-on-Month

Year-on-Year



3/10/2015 15

(6.2)(5.1)

(4.0)(3.5)(2.5)(1.9)

(1.3)(0.9)(0.4)(0.4)(0.3)(0.2)

0.1 0.1 0.7 0.8

2.7

4.6

(8.0)

(6.0)

(4.0)

(2.0)

-

2.0

4.0

6.0

(%)

(8.9)(8.0)

3.3

(1.8)

(4.7)

(0.0)

1.3

(7.8)

(3.7)

1.8

(1.1)

4.5

1.4

(0.5)

0.9 1.7

7.7

(2.5)

(10.0)(8.0)(6.0)(4.0)(2.0)

-2.0 4.0 6.0 8.0

10.0

(%)

(23.5)(13.0)(8.8)(8.1)(11.9)

(18.1)

7.8

(13.1)(10.5)

0.2

(2.1)

12.7

1.4

(2.4)(3.4)

0.5

18.7

(70.1)(80.0)(70.0)(60.0)(50.0)(40.0)(30.0)(20.0)(10.0)

-10.0 20.0 30.0

(%)

LilladherPrabhudas India: FII Equity Flows still continues

• India continue to offer a better growth opportunity among the Emerging markets and the FII inflow continues to be positive keeping the markets on a high. The YTD net FII inflow at Rs265.82bn(US$4.28bn) in CY2015.

• While the FII inflows are encouraging, the domestic numbers are negative, given the selling seen in some of the domestic institutions especially the outflows seen in insurance companies.

3/10/2015 16

(200.00)

(100.00)

-

100.00

200.00

300.00 Ja

n-1

2Fe

b-1

2M

ar-1

2A

pr-

12

May

-12

Jun

-12

Jul-

12

Aug

-12

Sep

-12

Oct

-12

Nov

-12

Dec

-12

Jan

-13

Fe

b-1

3M

ar-1

3A

pr-1

3M

ay-

13

Jun

-13

Jul-

13

Aug

-13

Sep

-13

Oct

-13

Nov

-13

Dec

-13

Jan

-14

Feb

-14

Ma

r-1

4A

pr-1

4M

ay-1

4Ju

n-1

4Ju

l-1

4A

ug-1

4Se

p-1

4O

ct-1

4N

ov-1

4D

ec-1

4Ja

n-1

5Fe

b-1

5

DII Net Cash Market FII Net Cash Market

CY13 - Total FII buying Rs1,112.77bn against DII net

selling at Rs-734.64bn

CY14FII Rs970.68bnDII Rs-303.21bn

CY15FII Rs265.82bnDII Rs-54.29bn

LilladherPrabhudas Global Agri commodity Prices correct sharply

over the last 12 months • Large inventory has put pressure on the prices globally with Maize

prices correcting 20.4% over the last twelve months.

• Record Soyabean production continue to keep the prices under check with an expected increase in global production in 2015.

• Wheat price continue to remain close to four year low with a 24.5% decline over the last twelve months.

• Rice prices fell 25.5% over the last twelve months.

• Palm Oil prices recovered sharply in the last one month by 10.5%, as Indonesia's plans top boost bio diesel subsidies resulted in recovery in prices, but still is 17.1% lower on a twelve month basis.

• Sugar saw a sharp decline and is down 27.4% over the last twelve months.


Source: Bloomberg, PL Research *Price in US$

Performance of Global Agricultural Commodities

Year-on-Year Performance


Month-on-Month Performance

3/10/2015 17

60

70

80

90

100

110

120

130

Mar

-14

Apr

-14

Ma

y-1

4

Jun-

14

Jul-

14

Aug

-14

Sep

-14

Oct

-14

Nov

-14

Dec

-14

Jan

-15

Feb

-15

Mar

-15

Rice Wheat Corn Soya Plam Oil Sugar

10.6

4.9 3.1

(0.8) (1.1)

(10.0)

(15.0)

(10.0)

(5.0)

-

5.0

10.0

15.0

Palm Oil Soya Corn Rice Wheat Sugar

(%)

(17.1)

(13.8)

(20.4)

(25.5) (24.6)

(27.4)(30.0)

(25.0)

(20.0)

(15.0)

(10.0)

(5.0)

-

Palm Oil Soya Corn Rice Wheat Sugar

(%)

LilladherPrabhudas Global Commodities continues to decline

• With the exception of crude oil, all global commodities continue to remain under pressure, with increasing losses not only on a twelve month basis, but also CYTD in 2015, indicating the weak global outlook.



Month-on-Month

Year-on-Year



3/10/2015 18

9.4 7.2

(0.6)

(3.5) (3.6)(5.5)

(9.7)

(15.0)

(10.0)

(5.0)

-

5.0

10.0

15.0

Brent crude

Copper Thermal Coal

Zinc Aluminium Lead Nickel

(%)

(45.2)

(16.3)

(25.4)

(2.9)

4.5

(18.0)

(6.1)

(50.0)

(40.0)

(30.0)

(20.0)

(10.0)

-

10.0

Brent

crude

Copper Thermal

Coal

Zinc Aluminium Lead Nickel

(%)

9.1

(6.9)

(2.0)

(5.5)

(2.0)

(5.9)

(8.5)(10.0)

(8.0)

(6.0)

(4.0)

(2.0)

-

2.0

4.0

6.0

8.0

10.0

Brent

crudeCopper Thermal

CoalZinc Aluminium Lead Nickel

(%)

LilladherPrabhudas US steady while European markets recover

Sources : Bloomberg

• Among the large economies, US continue to drive growth while the German and French markets have seen a good performance over the last three months. The global growth is expected to be at 3.5% in CY15 and 3.7% in CY16 with the IMF estimating the US growth at 3.6%, Euro zone at 1.2% and the emerging markets at 4.3% for CY15. The non farm payroll additions in the USA were at 295,000 in Feb 2015 with the job additions being widespread among different sectors leading to a reduction in un employment rates to 5.5%.

• The Eurozone continue to face challenges despite the benefit of a weak oil price, weak euro, easy monetary policies and a more prudent fiscal policy getting offset by weak investment. Germany has withstood the challenges growing at 0.7% in Q4CY14 with the IMF estimating the Eurozone to grow 1.2% in 2015 and 1.6% in 2016.

• The Chinese slowdown has deepened in Q4 of CY2014 with the IMF further cutting estimates for 2015 to 6.8%.

• The Indian equity markets touched an all-time high, with Nifty at 8996 and have since corrected. With the union budget behind us, we believe it is going to be the earning growth expectations which will be driving the markets in the near term apart from the global flows. With the recovery in economy expected to happen only from 1QFY16, we expect the 4QFY15 performance also to disappoint in terms of an earnings growth. With the budget behind us, we expect the market to trade in a range bound manner for the next one quarter in a trading range of 8200-9300, while maintaining our 12 month target of 10000 for the Nifty.

World Equity Indices:

3/10/2015 19

Index Country Value YTD (%) 1 Week (%) 1 Mth (%) 3 Mth (%)

Dow Jones USA 17,924 0.56 (2.00) 1.10 0.69

S&P 500 USA 2,071 0.60 (2.18) 1.20 0.56

Nasdaq USA 4,932 4.15 (1.51) 4.37 3.48

FTSE 100 LONDON 6,871 4.64 (1.00) 0.50 5.23

DAX GERMANY 11,549 17.78 1.21 8.30 17.92

CAC 40 FRANCE 4,939 15.60 0.44 6.19 15.84

Nikkei JAPAN 18,791 7.68 (0.19) 6.09 5.49

TSX CANADA 14,953 2.19 (2.04) (0.98) 5.33

MICEX RUSSIA 1,729 23.77 (1.73) (1.14) 17.17

JSE SA 46,755 6.33 (0.04) 1.92 8.96

SGX SA 8,757 5.72 (1.63) 1.10 2.56

TING TURKEY 98,992 (6.74) (4.04) (5.22) (3.88)

IBOV BRAZIL 49,530 (0.95) (2.92) 0.30 (1.32)

Jakarta Comp INDONESIA 5,445 4.16 (0.61) 1.80 6.29

PSEI Phillipine PHILIPPINES 7,820 8.16 0.60 0.48 8.86

SE THAI 50 THAILAND 1,027 2.60 (1.51) (3.46) (1.34)

Euro Stoxx EUROZONE 3,606 14.59 0.40 7.70 14.00

IBEX 35 SPAIN 11,041 7.41 (1.23) 6.52 5.54

Hang Seng HONG KONG 24,123 2.19 (3.07) (1.62) 2.71

AS30 AUSTRALIA 5,793 7.51 (2.25) 0.40 10.17

Shanghai CHINA 3,302 2.09 (1.02) 6.70 15.62

Taiwan TAIWAN 9,563 2.75 (0.40) 1.50 4.76

Kospi KOREA 1,993 4.03 (0.20) 2.35 1.11

CNX Nifty INDIA 8,757 5.72 (1.63) 1.10 2.56

BSE Sensex INDIA 28,845 4.89 (1.76) 0.44 1.36

KLCI MALAYSIA 1,792 1.73 (1.40) (1.10) 3.09

NZX 50 NEWZEALAND 5,897 5.90 0.07 2.21 6.39

MEXBOL MEXICO 43,281 0.31 (1.37) 1.10 2.22

LilladherPrabhudas Nifty Valuations: Historic Trends


Nifty 1-year forward P/E


MSCI India Premium to MSCI Asia (Ex‐Japan)

3/10/2015 20

38%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Ma

r-0

5

Jun-

05

Sep

-05

Dec

-05

Mar

-06

Jun-

06

Sep

-06

Dec

-06

Mar

-07

Jun-

07

Sep

-07

De

c-0

7

Ma

r-0

8

Jun-

08

Sep

-08

Dec

-08

Mar

-09

Jun-

09

Sep

-09

De

c-0

9

Mar

-10

Jun-

10

Sep

-10

De

c-1

0

Ma

r-1

1

Jun-

11

Sep

-11

Dec

-11

Mar

-12

Jun-

12

Sep

-12

De

c-1

2

Ma

r-1

3

Jun-

13

Sep

-13

De

c-1

3

Ma

r-1

4

Jun-

14

Sep

-14

Dec

-14

Mar

-15

10 year Avg.

26%

17.8

5.0

10.0

15.0

20.0

25.0

30.0

Ma

r-0

5

Jun

-05

Sep

-05

De

c-0

5

Ma

r-0

6

Jun

-06

Se

p-0

6

De

c-0

6

Ma

r-0

7

Jun

-07

Sep

-07

De

c-0

7

Ma

r-0

8

Jun

-08

Se

p-0

8

De

c-0

8

Mar

-09

Jun

-09

Sep

-09

De

c-0

9

Ma

r-1

0

Jun

-10

Se

p-1

0

De

c-1

0

Mar

-11

Jun

-11

Sep

-11

De

c-1

1

Ma

r-1

2

Jun

-12

Se

p-1

2

De

c-1

2

Mar

-13

Jun

-13

Sep

-13

De

c-1

3

Ma

r-1

4

Jun

-14

Se

p-1

4

De

c-1

4

Mar

-15

Average

15.3

LilladherPrabhudas Indian Market – Valuation and Strategy

• NIFTY earnings revised downwards again for FY15: The free float EPS for NIFTY companies in FY15 is revised downwards to Rs432.6 while the FY16 and FY17 remained more or less unchanged at 512.5 and 610.7 respectively, representing a YoY growth of 6.7%, 18.5% and 19.2% respectively. The major growth in earnings is expected from BFSI at 14.9% in FY15, 21.9% in FY16 and 21.2% in FY17, IT at 15.5%, 13.6% and 12.5% FMCG at 12.8%, 17.6% and 16.6% and Automobiles at 19.3%, 22.3% and 19.2%.

• NIFTY at 8,757 is trading at 20.2x FY15E, 17.1x FY16E and at 14.3x FY17E estimated free-float earnings. The last ten-year average for NIFTY’s one-year forward PE is at 15.3x, implying the NIFTY at 17.8x (EPS for year-ending March 2016is Rs512.5) is trading at a premium to its last 10-years average of one-year forward multiple.

• The chart on Page 20 indicates MSCI India’s premium to MSCI Asia (excluding Japan) over the last ten years. The average of the last 10-year’s premium was at 26% and the current premium is at 38%. With the better earnings growth among the peers, India still continues to be one of the favoured destination for the FIIs reflected in the increased premium.

• With the governments focus on adhering to fiscal discipline, our channel checks indicate that the government spending in 4QFY15 is lower than the expectations. This could lead to disappointment in terms of earnings across the sectors and we expect the recovery to get postponed to 2QFY16 as the government expenditure resumes in 1QFY16 and the effect of it getting reflected in the economy from 2QFY16 onwards. The corporate confidence levels continue to remain high, while the confidence level has not materialized into big ticket investments, our channel checks also indicate that the initial thrust is more on the completion of un finished projects which have been stuck half way. Post the reduction in repo rates by 25bps, the 10 year GSecs too is trading at 7.74%. India continues to remain in a sweet spot with a potential of higher economic growth while most of the economies in the world are struggling to fight its economic woes. Consequently we expect India to attract higher FIIs interest keeping the valuation metrics on elevated levels.

• The recent Rabi harvest output has not been encouraging with lower yields, lower production as well as lower than normal increases in MSP. We expect this to have a pressure on the disposable income in the rural areas. Given this, we continue to recommend overweight position in the Financial Services, M&HCVs in the Automobiles, overweight in Infrastructure and IT while remaining Neutral in Capital Goods and Healthcare while remaining underweight in FMCG.

• Keeping in mind the possibility of superior economic growth among peers, benefits from benign crude oil prices and the resultant interest from the FIIs, we are revising our Nifty trading range for the market to 8200-9300 levels for the next three months while maintaining the 12 month target of 10,000. While the impact of domestic factors seem to be behind us, the global issues though continue to overshadow the domestic optimism.

3/10/2015 21

LilladherPrabhudas Nifty Valuation

3/10/2015 22

Note: Telecom Nos. are Bloomberg Consensus / Sector Weightages are updated as on March 09, 2015

Weight-

age (%)FY14 FY15E FY16E FY17E

Weight-

age (%)FY14 FY15E FY16E FY17E

Banking & Fin. 26.7% Cement 3.2%

PER (x) 24.4 21.2 17.4 14.4 PER (x) 30.7 33.3 26.0 19.8

PAT Growth (%) 1.7 14.9 21.9 21.2 PAT Growth (%) (15.5) (7.7) 28.3 31.0

Technology 21.7% Telecom 1.6%

PER (x) 26.6 23.0 20.3 18.0 PER (x) 50.4 25.0 20.6 16.4

PAT Growth (%) 28.6 15.5 13.6 12.5 PAT Growth (%) 21.8 101.3 21.3 25.5

FMCG 9.6% Media 0.6%

PER (x) 41.3 36.6 31.1 26.7 PER (x) 37.5 36.6 31.1 25.0

PAT Growth (%) 13.4 12.8 17.6 16.6 PAT Growth (%) 24.0 2.5 17.5 24.4

Auto 8.9% Real Estate 0.2%

PER (x) 17.6 14.7 12.0 10.1 PER (x) 41.7 44.9 29.2 21.2

PAT Growth (%) 24.4 19.3 22.3 19.2 PAT Growth (%) (9.2) (7.2) 53.8 38.1

Eng. & Power 8.4% Nifty as on Mar 09 8,757

PER (x) 19.8 21.1 18.5 16.0 EPS (Rs) - Free Float 405.4 432.6 512.5 610.7

PAT Growth (%) (12.9) (6.3) 14.1 16.0 Growth (%) 14.0 6.7 18.5 19.2

PER (x) 21.6 20.2 17.1 14.3

Oil & Gas 8.3%

PER (x) 10.3 11.5 10.8 9.1 EPS (Rs) - Free Float

PAT Growth (%) 10.6 (10.9) 7.2 18.1 Nifty Cons. 405.4 443.8 528.2 635.8

Var. (PLe v/s Cons.) (%) - (2.5) (3.0) (3.9)

Pharma 6.3% Sensex as on Mar 09 28,845

PER (x) 35.0 33.6 29.1 25.4 EPS (Rs) - Free Float 1,349.8 1,377.8 1,623.8 1,930.2

PAT Growth (%) 38.5 4.1 15.6 14.7 Growth (%) 19.9 2.1 17.9 18.9

PER (x) 21.4 20.9 17.8 14.9

Metals 4.4%

PER (x) 12.5 13.8 11.3 9.7 Sensex Cons. 1,349.8 1,403.8 1,661.1 1,982.6

PAT Growth (%) 6.7 (9.5) 21.6 16.4 Var. (PLe v/s Cons.) (%) - (1.9) (2.2) (2.6)

LilladherPrabhudas Top Pick Summary

3/10/2015 23

2016E 2017E 2016E 2017E 2016E 2017E 2016E 2017E 2016E 2017E 2016E 2017E

Large Cap

Tata Consultancy Services 2,647 3,100 17.1% 5,184.3 14.4 14.5 12.5 13.9 30.5 28.2 29.4 27.4 21.6 19.0 6.0 4.9

HDFC Bank 1,059 1,200 13.3% 2,630.3 21.3 21.7 21.2 23.8 19.1 20.2 2.0 2.0 20.6 16.7 3.8 3.3

Infosys 2,190 2,550 16.4% 2,505.4 11.6 14.5 10.0 15.0 24.7 25.5 24.6 25.4 18.3 15.9 4.3 3.8

State Bank of India 291 350 20.4% 2,169.9 14.7 15.1 23.6 24.0 12.3 13.7 0.8 0.8 13.0 10.5 1.9 1.6

ICICI Bank 333 390 17.2% 1,922.0 18.0 20.3 19.0 17.7 15.8 16.5 1.8 1.7 14.2 12.1 2.6 2.3

Larsen & Toubro 1,762 1,821 3.3% 1,618.7 15.0 20.0 10.7 35.0 13.3 16.6 12.3 14.9 31.8 23.6 4.1 3.7

Maruti Suzuki 3,671 4,215 14.8% 1,109.0 19.0 18.0 43.8 27.9 19.4 21.1 18.9 20.7 22.3 17.4 4.0 3.4

Ultratech Cement 3,066 3,700 20.7% 840.9 16.3 17.6 38.0 24.8 16.4 17.6 12.6 13.7 24.8 19.9 3.8 3.2

Bank of Baroda 180 220 22.2% 387.7 10.9 16.1 29.4 17.1 11.9 12.7 0.6 0.6 8.0 6.9 1.2 1.0

Aurobindo Pharma 1,103 1,308 18.6% 321.4 15.2 11.1 16.2 14.1 31.3 27.2 20.3 19.7 17.2 15.0 4.7 3.6

Mid Caps

Cummins India 897 1,036 15.4% 248.7 22.5 24.3 34.1 27.8 29.6 31.9 29.3 31.5 29.6 23.2 8.2 6.8

Ashok Leyland 73 79 8.7% 206.8 29.0 25.0 595.3 59.3 14.4 20.0 10.9 15.0 25.7 16.1 3.5 3.0

Federal Bank 143 165 15.4% 122.3 12.1 19.8 15.8 21.7 13.7 15.0 1.2 1.2 11.0 9.0 1.5 1.3

MindTree 1,408 1,530 8.6% 117.5 15.5 15.0 22.0 22.4 27.4 26.3 27.2 26.2 17.7 14.4 4.3 3.4

Hexaware Technologies 262 300 14.5% 78.6 21.2 14.8 36.4 20.3 36.0 40.1 36.0 40.0 17.6 14.7 6.1 5.6

JK Lakshmi Cement 379 475 25.3% 44.7 28.3 18.5 (12.3) 82.1 11.4 18.6 8.2 11.3 27.3 15.0 3.0 2.6

KPIT Technologies 215 280 30.4% 40.4 17.0 15.5 28.2 25.8 20.3 21.3 16.2 17.4 12.2 9.7 2.3 1.9

Ashoka Buildcon 181 194 7.3% 28.5 25.9 22.4 (8.7) 79.7 4.8 8.3 5.3 6.1 44.8 24.9 2.1 2.0

* For Banks P/ABV

RoE (%)Upside

Mcap

(Rs bn)

RoCE (%)CMP (Rs.) TP (Rs)

Revenue Growth (%) Earnings Growth (%) PER (x) P/BV (x)*

LilladherPrabhudas

LARGE CAP

3/10/2015 24

LilladherPrabhudas Tata Consultancy Services

CMP: Rs2,647 TP: Rs3,100 Rating: BUY MCap: Rs5,184.3bn

Recovery in Retail, Manufacturing & Hi-Tech; Europe steady: According to management, Q4FY15 witnessed slow pick-up in momentum in Jan-Feb month compared to the expectation of acceleration in momentum. In terms of verticals, BFS is expected to be in line, while Retail, Hi-Tech, and Manufacturing are expected to do better than company average. Challenges in Insurance (incl. Diligenta) are more broad-based. Falling crude prices accelerated weakness in Energy vertical, and Telecom continues to be volatile (growth in Europe & weakness in Emerging Market). In terms of geography, not much change is expected. Europe (ex UK) to grow stronger than other geographies.

Currency headwinds across P&L, margin band unchanged: A) Revenue negative impact: There will be a negative cross currency impact. 1) (-)275bps impact from cc to reported INR 2) -200bps impact from cc to reported USD due to GBP/Euro weakening. B) Margin down-tick: In Q4FY15, EBIT will get impacted due to CC movement by (-)40bp. We expect margins to soften by (~25bps QoQ) for Q4FY15. C) Other income: Hedging gain of ~Rs1,500-2,000m.

Long term investment likely to sustain: The company has undertaken long-term investments decision like investment in newer geographies like France, Germany, Japan etc. and newer service offering like Digital. Management expects investments to stay despite cross-currency headwinds.

Other highlights: 1) Target EBIT band remains un-changed. 2) No client specific issues in BFS or Insurance. 3) Japan to grow better than average in CC.

Valuation & Recommendation – BUY with revised TP of Rs 3,100: We don’t expect downward revision in earnings for FY16 and FY17 despite near-term challenges. Retain our “BUY” rating, and revise TP to Rs 3,100 (from Rs 2,950).

3/10/2015 25

Key Financials (Rs m)

Y/e March FY13 FY14 FY15E FY16E FY17E

Revenue (Rs m) 629,895 818,094 948,557 1,084,749 1,241,605

Growth (%) 28.8 29.9 15.9 14.4 14.5

EBITDA (Rs m) 180,872 251,570 269,861 304,139 339,096

PAT (Rs m) 140,122 191,889 212,925 239,557 272,806

EPS (Rs) 71.6 98.0 108.7 122.3 139.3

Growth (%) 31.0 36.8 11.0 12.5 13.9

Net DPS (Rs) 29.0 28.0 34.0 38.0 43.0

Source: Company Data, PL Research

Profitability & valuation


EBITDA margin (%) 28.7 30.8 28.4 28.0 27.3

RoE (%) 38.1 39.9 33.9 30.5 28.2

RoCE (%) 38.1 39.8 32.5 29.4 27.4

EV / sales (x) 8.1 6.2 5.2 4.5 3.8

EV / EBITDA (x) 28.3 20.0 18.3 15.9 13.9

PER (x) 37.0 27.0 24.3 21.6 19.0

P / BV (x) 12.6 9.4 7.4 6.0 4.9

Net dividend yield (%) 1.1 1.1 1.3 1.4 1.6


Stock Performance

(%) 1M 6M 12M

Absolute 5.3 0.6 20.6

Relative to Sensex 4.9 (6.1) (13.5)

LilladherPrabhudas Financials

Tata Consultancy Services

3/10/2015 26

Income Statement (Rs m)


Net Revenue 629,895 818,094 948,557 1,084,749 1,241,605

Direct Expenses 339,245 430,645 521,698 602,482 699,716

% of Net Sales 53.9 52.6 55.0 55.5 56.4

Employee Cost - - - - -

% of Net Sales 0.0 0.0 0.0 0.0 0.0

SG&A Expenses 109,779 135,878 156,999 178,128 202,793

% of Net Sales 17.4 16.6 16.6 16.4 16.3

Other Expenses - 0 - - -

% of Net Sales 0.0 0.0 0.0 0.0 0.0

EBITDA 180,872 251,570 269,861 304,139 339,096

Margin (%) 28.7 30.8 28.4 28.0 27.3

Depreciation 10,792 13,492 15,819 19,116 22,891

PBIT 170,080 238,079 254,042 285,023 316,205

Interest Expenses - - - - -

PBT 181,960 254,691 280,384 314,674 348,692

Total tax 40,345 60,712 65,049 72,375 72,727

Effective Tax rate (%) 22.2 23.8 23.2 23.0 20.9

PAT 140,122 191,889 212,925 239,557 272,806

Extraordinary Gain/(Loss) - - - - -

Adjusted PAT 140,122 191,889 212,925 239,557 272,806


Balance Sheet (Rs m)


Share Capital 1,957 1,959 1,959 1,959 1,959

Reserves & Surplus 379,319 517,434 666,224 834,091 1,025,853

Shareholder's Fund 409,560 553,352 702,142 870,009 1,061,771

Preference Share Capital - - - - -

Total Debt 1,310 1,273 1,273 1,273 1,273

Other Liabilities(net) 15,358 18,193 18,193 18,193 18,193

Deferred Tax Liability 4,982 5,556 5,556 5,556 5,556

Total Liabilities 431,209 578,374 727,164 895,031 1,086,792

Gross Block 135,005 170,197 208,139 251,529 301,194

Less: Depreciation 53,062 66,553 82,372 101,488 124,379

Net Block 81,943 103,644 125,767 150,041 176,815

Capital Work in Progress - - - - -

Cash & Cash Equivalent 87,950 179,396 268,261 377,554 509,021

Total Current Assets 305,367 418,115 577,307 736,946 920,412

Total Current Liabilities 89,526 110,752 143,278 159,322 177,801

Net Current Assets 215,841 307,363 434,030 577,623 742,611

Other Assets 113,021 132,878 132,878 132,878 132,878

Total Assets 431,209 578,374 727,164 895,031 1,086,792


LilladherPrabhudas HDFC Bank


HDFCB reported Q3FY15 PAT at Rs27.9bn as higher treasury gains offset 44% YoY rise in loan loss provisions. NII grew 23% YoY on back of healthy loan growth while margins compressed by 10bp QoQ to 4.4%. Other income improved in a seasonally strong quarter and was further boosted by robust treasury gains while controlled operating expenses pulled operating profit growth to 23% YoY. Asset quality has remained stable. We retain our positive view with PT of Rs1,200 at 3.7x Mar-17 ABV.

Revenue growth momentum to be maintained: HDFCB delivered ~18% YoY growth in core operating profits as (1) NII growth was robust on back of healthy loan growth and better retail mix (healthy growth in auto loans, home loans & unsecured credit). Margins declined by 10bp as proportion of wholesale loans increased while CASA mix declined by 230bps QoQ. (2) Core fee growth of ~15% was better on higher volumes in third party distribution products (3) Opex remained under control. Opex synergies to continue while business prospects improve from new branches will reflect in bottom-line going ahead.

Loan growth still remains healthy despite competitive intensity: Overall loan growth stood at 17% YoY (6% QoQ) led by healthy growth in wholesale book. The mix of wholesale loans has increased by ~450bp YoY to ~52.5%. HDFCB will continue with healthy loan growth prospects on underlying improvement in product segments where it has notable market share, and as it benefits from increasing footprint.

Asset quality stress should start abating in riskier product segments: GNPLs have stood stable while healthy provisioning helped slight reduction in Net NPLs in Q3FY15. CVs portfolio which was seeing some stress in last few quarters is now showing stabilising signs. HDFCB has been comfortable with continued build-up in unsecured book and does not see large slippages, which will keep credit cost at current levels of 50-60bps.

3/10/2015 27



Net interest income 158,111 184,826 221,163 268,326 326,426

Growth (%) 22.7 16.9 19.7 21.3 21.7

Operating profit 114,276 143,601 174,508 216,432 268,380

PAT 67,263 84,784 103,313 127,413 157,752

EPS (Rs) 28.5 35.5 42.3 51.3 63.5

Growth (%) 28.7 24.7 19.2 21.2 23.8

Net DPS (Rs) 5.5 6.8 7.4 9.0 10.5




NIM (%) 4.6 4.4 4.4 4.5 4.5

RoAE (%) 20.3 21.3 19.7 19.1 20.2

RoAA (%) 1.8 1.9 1.9 2.0 2.0

P / BV (x) 7.0 5.8 4.3 3.7 3.1

P / ABV (x) 7.2 6.2 4.5 3.8 3.3

PE (x) 37.2 29.8 25.0 20.6 16.7



Stock Performance

(%) 1M 6M 12M

Absolute 1.8 22.3 48.9

Relative to Sensex 1.4 15.6 14.8


HDFC Bank

3/10/2015 28



Int. Earned from Adv. 268,224 316,869 380,302 445,831 542,095

Int. Earned from Invt. 78,203 90,368 105,975 123,944 141,889

Others - - - - -

Total Interest Income 350,649 411,355 491,394 575,615 691,060

Interest expense 192,538 226,529 270,231 307,289 364,634

NII 158,111 184,826 221,163 268,326 326,426

Growth (%) 22.7 16.9 19.7 21.3 21.7

Treasury Income 349 65 - - -

NTNII 68,178 79,131 87,116 100,183 118,216

Non Interest Income 68,526 79,196 87,116 100,183 118,216

Total Income 419,175 490,552 578,510 675,799 809,276

Growth (%) 24.5 17.0 17.9 16.8 19.8

Operating Expense 112,361 120,422 133,771 152,077 176,262

Operating Profit 114,276 143,601 174,508 216,432 268,380

Growth (%) 21.7 25.7 21.5 24.0 24.0

NPA Provisions 12,342 16,326 18,359 23,362 28,733

Investment Provisions 522 (41) (37) (33) (30)

Total Provisions 16,770 15,873 20,310 26,263 32,929

PBT 97,506 127,728 154,198 190,169 235,450

Tax Provisions 30,243 42,944 50,885 62,756 77,699

Effective Tax Rate (%) 31.0 33.6 33.0 33.0 33.0

PAT 67,263 84,784 103,313 127,413 157,752

Growth (%) 30.2 26.0 21.9 23.3 23.8




Par Value 2 2 2 2 2

No. of equity shares 2,379 2,399 2,484 2,484 2,484

Equity 4,759 4,798 4,968 4,968 4,968

Networth 362,141 434,786 615,461 716,721 843,960

Adj. Networth 357,452 426,586 605,989 707,587 832,404

Deposits 2,962,470 3,673,375 4,253,768 5,044,969 6,280,986

Growth (%) 20.1 24.0 15.8 18.6 24.5

Low Cost deposits 1,405,215 1,646,214 1,884,419 2,310,596 2,926,940

% of total deposits 47.4 44.8 44.3 45.8 46.6

Total Liabilities 4,003,318 4,915,995 5,831,349 6,918,204 8,513,242

Net Advances 2,397,206 3,030,003 3,526,923 4,260,523 5,317,133

Growth (%) 22.7 26.4 16.4 20.8 24.8

Investments 1,116,136 1,209,511 1,511,125 1,711,613 2,025,629

Total Assets 4,003,318 4,915,995 5,831,349 6,918,204 8,513,242


LilladherPrabhudas Infosys


Revenue just short of expectation, but strong beat to margin: Infosys’ revenue grew by 3.4% QoQ to Rs137.96bn for Q3FY15 (PLe: Rs137.8bn, Cons: Rs137.6bn) in INR, whereas revenue in USD term grew by 0.8% (2.6% @CC) QoQ to US$ 2,218m (PLe: $2,230m, Cons.: $2,227m). The company reported an operating margin expansion by 63bps to 26.7% (PLe: 25.8%, Cons: 26.0%) driven by cost optimization and currency depreciation. Infosys reported EPS of Rs28.44 (PLe:Rs27.46, Cons:Rs27.59), a growth of 5% QoQ.

Slicing guidance and margin performance: The guidance retained at 7-9% YoY for USD revenue at September 30, 2014 currency rate. This implies -1% to +6% QoQ growth in constant currency term for Q4FY15 implying a mid-range USD revenue guidance of ~1.5% QoQ. Moreover, the strong margin performance was driven by ~70bp QoQ contribution from bad-debt written back that we believe are non-recurring in nature. We may witness muted revenue growth with soft margin performance in Q4FY15.

Innovation fund increased to $500m – Acquisition on the cards?: The company has expanded innovation fund to $500mn from $100mn to support the creation of a ecosystem of strategic partners. The management showed keen interest in acquiring next generation technology companies in areas like AI, IoT, Automation etc.. Infosys may take inorganic route to strengthen its offerings.

Commentary positive: According to the management, few verticals (Insurance, Auto) are witnessing pick-up in discretionary spend. However, the challenges in few verticals (like Energy) are accompanied by growth in large deal due to cost pressure. Overall, the management commentary was positive on the demand environment.

Valuation & Recommendation – Retain ‘BUY’, revise TP to Rs2,550: We expect new strategic initiatives announced by Dr. Vishal Sikka to start bearing fruits only from H2CY15. However, we believe, his initial client-connect (met 500 clients) will start translating into improved growth momentum in H1CY15. Retain “BUY”.

3/10/2015 29



Revenue (Rs m) 403,520 501,330 539,405 602,162 689,688

Growth (%) 19.6 24.2 7.6 11.6 14.5

EBITDA (Rs m) 115,580 134,150 151,451 164,184 187,290

PAT (Rs m) 94,210 106,480 124,703 137,131 157,665

EPS (Rs) 82.4 93.1 109.0 119.9 137.8

Growth (%) (43.4) 13.0 17.1 10.0 15.0

Net DPS (Rs) 27.3 27.5 64.9 69.9 77.9




EBITDA margin (%) 28.6 26.8 28.1 27.3 27.2

RoE (%) 25.7 24.4 24.9 24.7 25.5

RoCE (%) 25.6 24.3 24.8 24.6 25.4

EV / sales (x) 5.7 4.5 4.1 3.6 3.1

EV / EBITDA (x) 19.8 16.7 14.7 13.3 11.5

PER (x) 26.6 23.5 20.1 18.3 15.9

P / BV (x) 6.3 5.3 4.8 4.3 3.8



Stock Performance

(%) 1M 6M 12M

Absolute (2.6) 17.2 17.1

Relative to Sensex (3.1) 10.5 (17.0)


Infosys

3/10/2015 30



Net Revenue 403,520 501,330 539,405 602,162 689,688

Direct Expenses 241,510 307,670 322,772 365,160 419,486

% of Net Sales 59.9 61.4 59.8 60.6 60.8


% of Net Sales 0.0 0.0 0.0 0.0 0.0

SG&A Expenses 46,430 59,510 65,182 72,818 82,912

% of Net Sales 11.5 11.9 12.1 12.1 12.0

Other Expenses - - - - -

% of Net Sales 0.0 0.0 0.0 0.0 0.0

EBITDA 115,580 134,150 151,451 164,184 187,290

Margin (%) 28.6 26.8 28.1 27.3 27.2

Depreciation 11,290 13,740 10,624 11,579 13,180

PBIT 104,290 120,410 140,827 152,605 174,111


PBT 127,880 147,100 174,410 187,851 213,061

Total tax 33,670 40,620 49,707 50,720 55,396


PAT 94,210 106,480 124,703 137,131 157,665


Adjusted PAT 94,210 106,480 124,703 137,131 157,665




Share Capital 5,720 5,720 5,720 5,720 5,720

Reserves & Surplus 361,350 438,680 489,130 546,295 614,857

Shareholder's Fund 397,970 475,300 525,750 582,915 651,477


Total Debt - - - - -


Deferred Tax Liability 1,190 640 640 640 640

Total Liabilities 400,650 479,170 529,620 586,785 655,347

Gross Block 106,760 134,120 156,236 180,924 209,201


Net Block 64,680 78,870 90,362 103,471 118,569

Capital Work in Progress - - - - -





Other Assets 45,700 61,490 61,490 61,490 61,490

Total Assets 400,650 479,170 529,620 586,785 655,347


LilladherPrabhudas State Bank of India

CMP: Rs291 TP: 350 Rating: BUY MCap: Rs2,169.9bn

SBI defied the trend displayed by most other PSU banks as it reported

sequential decline in fresh slippages in Q3FY15 and was able to display

minor aberration in PAT. Revival in project financing remains critical for a

sustained turnaround in revenue growth while retail business has been

faring well. Opex efficiency continues to benefit SBI. We retain BUY with

PT of Rs350 which corresponds to 1.9x Sep-16E ABV.

Revenue growth on-track; bond-gains / opex efficiency driving earnings:

SBI’s core PPoP grew 13% YoY on continued opex efficiency (headcount

has declined by 8,700 in past one year; similar retrials expected over next

three years) and momentum in other income growth – led by robust bond

gains (Rs9.2 bn). NII growth was slightly soft due to tepid advances growth

(~2% in 9MFY15) and flattish trend in margins.

Asset quality showing positive signs, but stress not over yet: Asset quality

held stable with fresh slippages moderating to 2.3% annualized (2.9% in

1HFY15) while fresh standard restructuring also declined to Rs25.2 bn.

GNPL ratio thus remain flat on QoQ basis, aided by aggressive write-offs,

and appeared better when compared with most other SOE banks.

SME/mid-corporate/Agri segments continue to drive most of the slippages

while corporate and retail segments reported improvement in asset

quality. O/s std. restructured asset stands at 3.8% of total loans and SBIN

guided for restructuring pipeline of ~Rs55bn going ahead.

Return ratios to improve; reiterate BUY with PT of Rs350: We estimate

SBIN’s RoA to improve gradually over next two years as – (i) provisioning

expenses moderates in line with improving asset quality; bank is already

going slow on mid-corporate and SME segments for few quarters now, (ii)

CD ratio picks up and low yielding investments (30% of total assets

currently) moves to loans, (iii) international NIM continues to improve

further.

3/10/2015 31




Growth (%) 2.4 11.2 10.2 14.7 15.1


PAT 141,050 108,912 134,992 166,832 206,877

EPS (Rs) 20.8 15.2 18.1 22.3 27.7

Growth (%) 16.1 -26.9 18.8 23.6 24.0

Net DPS (Rs) 4.1 1.5 3.3 3.5 3.8




NIM (%) 3.2 3.0 2.9 2.9 2.8

RoAE (%) 15.4 10.0 10.9 12.3 13.7

RoAA (%) 1.0 0.6 0.7 0.8 0.8

P / BV (x) 1.8 1.7 1.5 1.4 1.2

P / ABV (x) 2.8 2.5 2.2 1.9 1.6

PE (x) 14.0 19.1 16.1 13.0 10.5



Stock Performance

(%) 1M 6M 12M

Absolute 4.0 13.2 76.2



State Bank of India

3/10/2015 32



Int. Earned from Adv. 905,371 1,024,841 1,185,947 1,342,346 1,551,830


Others - - - - -

Total Interest Income 1,196,571 1,363,508 1,550,735 1,762,334 2,043,647

Interest expense 753,258 870,686 1,007,883 1,139,588 1,327,137

NII 443,313 492,822 542,852 622,746 716,510

Growth (%) 2.4 11.2 10.2 14.7 15.1

Treasury Income 10,981 20,767 15,160 24,256 38,810

NTNII 149,367 164,762 188,922 208,397 228,742


Total Income 1,356,919 1,549,037 1,754,817 1,994,987 2,311,199

Growth (%) 12.3 14.2 13.3 13.7 15.9



Growth (%) (1.6) 3.3 13.2 17.6 18.7

NPA Provisions 106,570 144,785 152,111 163,158 183,081

Investment Provisions (9,670) 5,633 (1,690) 1,014 (608)


PBT 199,509 161,739 201,481 249,003 308,772

Tax Provisions 58,459 52,827 66,489 82,171 101,895


PAT 141,050 108,912 134,992 166,832 206,877

Growth (%) 20.5 (22.8) 23.9 23.6 24.0




Par Value 1 1 1 1 1


Equity 6,840 7,466 7,466 7,466 7,466

Networth 988,837 1,182,822 1,287,085 1,420,823 1,592,242

Adj. Networth 769,272 871,862 958,729 1,079,816 1,246,358

Deposits 12,027,396 13,944,085 15,924,145 18,806,415 22,304,409

Growth (%) 15.2 15.9 14.2 18.1 18.6




Net Advances 10,456,165 12,098,287 13,683,163 15,981,934 18,890,646

Growth (%) 20.5 15.7 13.1 16.8 18.2

Investments 3,509,273 3,983,082 4,641,409 5,543,017 6,506,627

Total Assets 15,662,609 17,922,346 20,307,892 28,198,553 32,812,368


LilladherPrabhudas ICICI Bank

CMP: Rs333 TP: Rs390 Rating: BUY MCap: Rs1,922.0bn

Core PPOP holding up well: PPOP reported a growth of 13% YoY at Rs50.37bn helped by exchange gains (Rs1.92bn), treasury profits (Rs4.43bn) and relatively steady growth in NII. Opex growth moderated as bank further pruned down its employee base (6.5% reduction in workforce in 9MFY15) and helped boost earnings. Growth has been better on back of robust retail lending(largely unsecured & mortgage).

Pain from prolonged slowdown now impacting ICICIBC as well: ICICIBC reported weak performance on asset quality as fresh slippages increased sharply to Rs22.8bn (Rs16.73bn in Q2FY15) while fresh restructuring also stood elevated. Management guided for further caution on asset quality in Q4FY15 and suggested a restructuring pipeline of Rs23bn. O/s restructured assets now stands at 3.2% of total loans while credit cost increased to 106bp.

Retain BUY rating: On Subs - AMC, capital market and life insurance business all reported healthy performance while overseas business performance remains tepid, on expected lines. ICICIBC suggested monetising part of its stake in life insurance which we believe could be positive for the stock. Revenue growth otherwise remains largely on track as domestic NIMs improved by 4bp QoQ while loan growth stood at 13% YoY (16% YoY in domestic business).We maintain our BUY rating with PT of Rs390.

3/10/2015 33




Growth (%) 29.2 18.8 20.6 18.0 20.3


PAT 83,255 98,105 113,652 135,279 159,245

EPS (Rs) 14.4 17.0 19.7 23.4 27.6

Growth (%) 28.7 17.7 15.8 19.0 17.7

Net DPS (Rs) 4.0 4.5 5.5 6.4 7.0




NIM (%) 2.9 3.1 3.3 3.3 3.2

RoAE (%) 13.1 14.0 14.7 15.8 16.5

RoAA (%) 1.6 1.7 1.8 1.8 1.7

P / BV (x) 2.9 2.6 2.4 2.1 1.9

P / ABV (x) 3.7 3.3 3.0 2.6 2.3

PE (x) 23.0 19.6 16.9 14.2 12.1



Stock Performance

(%) 1M 6M 12M

Absolute 4.0 7.7 38.4



ICICI Bank

3/10/2015 34





Others - - - - -



NII 138,664 164,756 198,759 234,476 282,116

Growth (%) 29.2 18.8 20.6 18.0 20.3

Treasury Income 4,364 7,654 - - -

NTNII 79,093 96,625 117,418 136,440 157,042


Total Income 484,213 546,060 631,701 736,221 881,199

Growth (%) 18.0 12.8 15.7 16.5 19.7



Growth (%) 27.1 25.7 19.0 17.9 18.5

NPA Provisions 13,948 22,523 32,952 36,582 44,197

Investment Provisions 1,262 711 - - -


PBT 113,967 139,682 162,360 193,255 227,492

Tax Provisions 30,712 41,577 48,708 57,977 68,248


PAT 83,255 98,105 113,652 135,279 159,245

Growth (%) 28.8 17.8 15.8 19.0 17.7




Par Value 2 2 2 2 2


Equity 11,536 11,550 11,550 11,550 11,550

Networth 667,015 732,068 811,133 906,166 1,021,392

Adj. Networth 644,708 699,087 771,284 862,276 970,431

Deposits 2,926,135 3,319,137 3,886,709 4,648,504 5,675,823

Growth (%) 14.5 13.4 17.1 19.6 22.1




Net Advances 2,902,494 3,387,026 3,935,725 4,671,705 5,727,511

Growth (%) 14.4 16.7 16.2 18.7 22.6

Investments 1,713,936 1,770,218 2,068,436 2,496,295 2,959,043

Total Assets 5,367,946 5,946,416 6,998,486 8,332,486 10,064,390


LilladherPrabhudas Larsen & Toubro


Domestic Inflow picking up: Consolidated Order inflow for the Q3FY15

and 9MFY15 was up 16% YoY & 15% to Rs340bn and Rs 1078bn

respectively. The company need order inflow of Rs 390bn in Q4FY15( up

15% YoY) to meet the lower end of guidance for FY15. The management

highlighted that the domestic market has started to see some revival ( up

35% YoY form 9M FY15) driven largely by infrastructure segment. It also

highlighted that pipeline for Q4FY15 at ~ Rs 1.7tn looked healthy.

Domestic orders contributed 82% Inflow in Q3FY15 ( Vs 54% In Q1 FY15).

Consolidated order book at the end of Q3FY15 stood at Rs2.2trn (up 17%

YoY.

IDPL - Fund-raising to ease burden on parent’s balance sheet: IDPL has a

current portfolio of 28 projects; with total project cost of Rs613bn. IDPL

has invested equity worth Rs70bn and has balance equity commitment of

Rs65bn for current portfolio of projects. IDPL has recently raised INR10bn

from Canadian Pension Fund and INR13.5bn from Dhamra port stake sale.

The fund-raising will help reduce burden on standalone balance sheet and

help improve RoEs.

Outlook and Valuation: The stock is trading at a core PE of 19x FY17E

earnings. L&T continues to be the best play in the Indian infrastructure

space, given its strong business model, diverse skill sets, strong execution

capabilities and relatively healthy/large balance sheet. Maintain ‘BUY’.

3/10/2015 35



Revenue (Rs m) 516,110 565,989 597,685 687,337 824,805

Growth (%) (2.9) 9.7 5.6 15.0 20.0

EBITDA (Rs m) 54,731 66,671 64,434 75,634 100,099

PAT (Rs m) 41,366 49,047 45,977 50,905 68,704

EPS (Rs) 45.0 53.4 50.1 55.4 74.8

Growth (%) (6.1) 18.6 (6.3) 10.7 35.0

Net DPS (Rs) 12.1 14.4 13.5 14.9 20.2




EBITDA margin (%) 10.6 11.8 10.8 11.0 12.1

RoE (%) 15.2 15.3 12.7 13.3 16.6

RoCE (%) 13.1 13.3 11.7 12.3 14.9

EV / sales (x) 3.3 3.0 2.9 2.5 2.1

EV / EBITDA (x) 30.9 25.7 26.8 22.9 17.2

PER (x)* 28.9 24.3 26.0 23.5 17.4

P / BV (x) 5.6 4.6 4.3 4.1 3.7


Source: Company Data, PL Research * Core PE

Stock Performance

(%) 1M 6M 12M

Absolute 12.1 9.8 47.0


LilladherPrabhudas SOTP

3/10/2015 36

Fair Value (Rs) Basis

L&T Core business 1,386 20x Dec'16 EPS

L&T Hydrocarbon business 18 10x Dec '16EPS

L&T IDPL 146 2x P/B

L&T InfoTech 109 11x Dec '16EPS

L&T Finance Holding 87 83% stake; 20% Hold co discount on current market cap

L&T's equity investment in BTG 4 2x equity investment

Other businesses 70 Manufacturing, urban Infra,

Target price 1,821


Larsen & Toubro

3/10/2015 37



Net Revenue 516,110 565,989 597,685 687,337 824,805

Direct Expenses 440,658 480,088 515,943 593,530 700,172

% of Net Sales 85.4 84.8 86.3 86.4 84.9


% of Net Sales 0.0 0.0 0.0 0.0 0.0

SG&A Expenses 20,721 19,231 17,308 18,173 24,534

% of Net Sales 4.0 3.4 2.9 2.6 3.0


% of Net Sales 0.0 0.0 0.0 0.0 0.0

EBITDA 54,731 66,671 64,434 75,634 100,099

Margin (%) 10.6 11.8 10.8 11.0 12.1

Depreciation 7,277 7,924 7,988 9,174 9,694

PBIT 47,454 58,746 56,446 66,460 90,405

Interest Expenses 9,548 10,761 15,547 17,792 18,142

PBT 56,779 66,794 62,131 70,702 95,422

Total tax 15,413 17,748 16,154 19,796 26,718


PAT 43,845 54,932 44,265 50,905 68,704

Extraordinary Gain/(Loss) 2,479 5,885 (1,712) - -

Adjusted PAT 41,366 49,047 45,977 50,905 68,704




Share Capital 1,231 1,231 1,231 1,231 1,231




Total Debt 88,342 114,589 124,589 129,589 129,589

Other Liabilities(net) - - - - -



Gross Block 119,606 129,137 137,137 145,136 153,136


Net Block 84,109 85,716 85,728 84,553 82,859

Capital Work in Progress 4,911 5,000 5,000 5,001 5,001





Other Assets - - - - -

Total Assets 382,191 468,763 501,673 524,010 569,001


LilladherPrabhudas Maruti Suzuki


With fundamental drivers expected to fall in place over the next 6-18 months, demand for PVs would be healthy. As a market leader, Maruti Suzuki would be a a key beneficiary. We expect market share gains to continue in the passenger cars space for MSIL, while operating leverage benefits would also accrue.

Market share gains driven by newer model: MSIL is likely launch five new vehicles in the next 12-18 months, (1) SX4 crossover, (2) a light commercial vehicle powered by 800cc diesel engine, (3) diesel Celerio, (4) a premium hatchback and (5) a compact SUV. The trend has been that the newer models have been able to garner a good response (eg Celerio, Ertiga, Amaze, EcoSport, Mobilio etc). We expect these newer models to drive market share gain for MSIL over FY15-17E.

Exports to provide an additional edge: Even as global majors are committing resources to India to gain a share of the domestic market and have a low-cost export base, Maruti has already achieved the same, and would be in a position to service export requirements both under its own brand and that of Suzuki’s.

Operating leverage benefits: A highly favourable exchange rate, better operating leverage, steps to control costs would help improve margins ~60bps in FY15, even after witnessing higher discounts and sales promotion schemes. We believe that positives from a better operating performance—favourable currency rates, a better product mix and more export revenues—would continue to benefit the company, despite competitive pressures. Hence we expect an EBITDA margin expansion of ~260bps expansion over FY14-17e.

Our TP is Rs4215: We value MSIL at 20x FY17E Mar’17E EPS to arrive at a target price of Rs4215/share. Our earnings CAGR over FY14-17e is 30.1%. At our TP, MSIL would trade at an EV/EBITDA of ~11x FY17e. We rate MSIL a BUY and we foresee a potential upside of ~15% from the current levels.

11/17/2014 38



Revenue (Rs m) 435,879 438,437 501,837 597,073 704,311

Growth (%) 22.5 0.6 14.5 19.0 18.0

EBITDA (Rs m) 41,797 52,046 62,730 83,590 101,773

PAT (Rs m) 23,215 28,917 34,610 49,784 63,654

EPS (Rs) 76.8 95.7 114.6 164.8 210.7

Growth (%) 37.8 24.6 19.7 43.8 27.9

Net DPS (Rs) 8.0 12.0 25.0 35.0 45.0




EBITDA margin (%) 9.6 11.9 12.5 14.0 14.5

RoE (%) 13.8 14.6 15.5 19.4 21.1

RoCE (%) 13.5 14.0 14.9 18.9 20.7

EV / sales (x) 2.6 2.6 2.2 1.9 1.6

EV / EBITDA (x) 26.7 21.5 17.8 13.3 10.9

PER (x) 47.8 38.4 32.0 22.3 17.4

P / BV (x) 6.0 5.3 4.7 4.0 3.4



Stock Performance

(%) 1M 6M 12M

Absolute 7.6 26.2 111.6



Maruti Suzuki

11/17/2014 39



Net Revenue 435,879 438,437 501,837 597,073 704,311

Direct Expenses 325,149 313,488 356,806 418,548 492,666

% of Net Sales 74.6 71.5 71.1 70.1 70.0

Employee Cost 10,696 13,681 15,055 17,912 21,129

% of Net Sales 2.5 3.1 3.0 3.0 3.0

SG&A Expenses 33,700 34,360 39,143 44,183 50,006

% of Net Sales 7.7 7.8 7.8 7.4 7.1

Other Expenses 24,538 24,861 28,103 32,839 38,737

% of Net Sales 5.6 5.7 5.6 5.5 5.5

EBITDA 41,797 52,046 62,730 83,590 101,773

Margin (%) 9.6 11.9 12.5 14.0 14.5

Depreciation 18,612 20,844 24,505 26,841 28,750

PBIT 23,185 31,202 38,225 56,749 73,023

Interest Expenses 1,898 1,416 995 407 289

PBT 28,981 36,585 45,241 65,505 83,755

Total tax 5,989 8,755 10,632 15,721 20,101


PAT 23,921 27,830 34,610 49,784 63,654


Adjusted PAT 23,215 28,917 34,610 49,784 63,654




Share Capital 1,510 1,510 1,510 1,510 1,510




Total Debt 13,892 18,239 8,851 6,851 6,851




Gross Block 198,007 227,018 278,232 318,232 358,232


Net Block 97,992 107,904 134,613 147,772 159,023





Net Current Assets 15,572 (1,412) (4,237) (186) (1,376)


Total Assets 203,768 233,885 251,555 288,766 338,826


LilladherPrabhudas UltraTech Cement

CMP: Rs3,066 TP: Rs3,700 Rating: Accumulate MCap: Rs840.9bn

UltraTech cement (UTCEM) ranks way ahead of its peers, ACC and ACEM, across the fronts on the back of highly efficient operations and strong management quality. Backed by aggressive capacity addition and proactive management, we have ‘Accumulate’ rating with TP of Rs3,700.

Outsmarts its peers; build capabilities to sustain the performance: UTCEM outperformed its peers on majority of parameters including capacity expansion, shift to pet coke, timely M&A, balanced mix between non-trade and trade sales, timely project execution, high market share, etc. Company is continuously building capabilities to sustain the current performance through accelerated investment in mines and land (the most critical resource in India) and sizeable investments envisaged towards reducing freight cost.

Recovery in demand to allay the concerns on UTCEM’s aggressive capacity addition: UTCEM’s addition of 6m tonnes would be commissioned in H2FY16, taking UTCEM’s total capacity to 66m (excluding 4.9m tonnes of JPA’s MP based plants) tonnes. These additions are equally distributed between growing East and Northern regions. Given the strong recovery expected in demand of these regions, UTCEM would be the key beneficiary on the back of sizeable capacities added in these markets. Further, the acquisition of JPA’s Gujarat based 4.8mtpa plant would help UTCEM in increasing its market share by 11% to ~33% in the Gujarat market, followed by 16% of ACEM. The recent acquisition of MP plants would help increase its presence in central region which constitutes lowest proportion of its overall sales.

Quality of operations justifies current valuations: We expect UTCEM to consistently outperform the sector on growth as well as quality of earnings, led by timely addition and highly efficient operations. Current valuations at EV/EBITDA of 12.3x FY17 may sound expensive but strong volume growth and expansion in EBITDA/t from six years low of Rs875 in FY14 to ~Rs1250/t in FY17 would drive the expansion in stock’s valuation to the peak cycle average of 14x one year forward earnings.

3/10/2015 40



Revenue (Rs m) 211,611 214,437 251,203 292,266 343,620

Growth (%) 10.9 1.3 17.1 16.3 17.6

EBITDA (Rs m) 46,764 38,264 45,249 59,718 76,493

PAT (Rs m) 26,739 21,105 24,583 33,923 42,350

EPS (Rs) 97.5 77.0 89.6 123.7 154.4

Growth (%) 11.7 (21.1) 16.5 38.0 24.8

Net DPS (Rs) 9.0 9.0 12.0 14.0 14.0




EBITDA margin (%) 22.1 17.8 18.0 20.4 22.3

RoE (%) 19.1 13.0 13.5 16.4 17.6

RoCE (%) 13.8 10.0 10.7 12.6 13.7

EV / sales (x) 4.3 4.2 3.7 3.1 2.7

EV / EBITDA (x) 19.5 23.8 20.7 15.4 12.3

PER (x) 31.4 39.8 34.2 24.8 19.9

P / BV (x) 5.5 4.9 4.4 3.8 3.2



Stock Performance

(%) 1M 6M 12M

Absolute 3.5 13.8 55.3



UltraTech Cement

3/10/2015 41



Net Revenue 211,611 214,437 251,203 292,266 343,620

Direct Expenses 89,787 94,020 108,741 122,658 139,350

% of Net Sales 42.4 43.8 43.3 42.0 40.6

Employee Cost 10,427 11,042 12,234 13,658 16,203

% of Net Sales 4.9 5.1 4.9 4.7 4.7

SG&A Expenses 47,572 51,836 62,610 71,355 83,312

% of Net Sales 22.5 24.2 24.9 24.4 24.2

Other Expenses 17,061 19,277 22,370 24,877 28,262

% of Net Sales 8.1 9.0 8.9 8.5 8.2

EBITDA 46,764 38,264 45,249 59,718 76,493

Margin (%) 22.1 17.8 18.0 20.4 22.3

Depreciation 10,234 11,390 12,284 14,092 17,938

PBIT 36,530 26,874 32,965 45,626 58,555


PBT 38,672 28,576 34,173 47,122 58,777

Total tax 11,791 6,448 9,475 13,083 16,311


PAT 26,777 22,060 24,583 33,923 42,350

Extraordinary Gain/(Loss) 38 956 - - -

Adjusted PAT 26,739 21,105 24,583 33,923 42,350




Share Capital 2,742 2,742 2,742 2,742 2,742




Total Debt 73,423 73,319 97,119 92,119 130,319

Other Liabilities(net) 781 166 281 397 513



Gross Block 229,968 268,876 326,890 368,239 444,822


Net Block 143,161 171,332 217,062 244,318 302,963






Other Assets 7,420 9,758 9,758 9,758 9,758

Total Assets 245,595 268,301 315,617 343,856 424,618


LilladherPrabhudas Bank of Baroda

CMP: Rs180 TP: Rs220 Rating: BUY MCap: Rs387.7bn

PPOP growth remains modest; domestic NIM declines by 10bp q-q: BOB’s PPOP growth stood modest at 6.4% YoY dragged by weak NII growth (affected by interest reversals and 10bp margin compression) even as core-fee income registered healthy growth of 16% y-y. However aggravated provisioning to maintain coverage ratio and one-off tax expenses of Rs4.1bn (including penalty) levied by Dubai Income Tax Authority resulted in 68% y-y decline in net profits..

Business growth has remained subdued: BOB’s business growth remains tepid (1% decline in 9MFY15) led by weak trends in both domestic and international business. BOB shed preferential term deposits from Rs117.9 bn at FY14 end to Rs80.8bn while cut down the share of CDs in term deposits from 7.5% to 2.5% during the similar period. BOB management guided that an acute dearth of loan demand arising from prolonged economic slowdown remains an overhang on business growth.

Asset quality has surprised negatively displaying elevated slippages: Fresh slippages stood elevated at Rs30.42 bn while BOB restructured loans worth Rs15.98bn (Rs 11.75bn in 2QFY15). The bank guided for elevated levels of slippages/potential restructuring in 4QFY15 as well. We believe that while BOB still has relatively better asset quality and coverage ratio than peers but turnaround is now pushed into FY16. We retain BUY with price target of Rs220 based on 1.2x Mar-17E ABV.

3/10/2015 42




Growth (%) 9.7 5.7 8.8 10.9 16.1


PAT 44,807 45,411 37,245 48,179 56,434

EPS (Rs) 21.5 21.3 17.3 22.4 26.2

Growth (%) -13.7 -0.8 -18.8 29.4 17.1

Net DPS (Rs) 5.0 5.0 4.6 5.0 5.5




NIM (%) 2.3 2.0 1.9 1.9 1.9

RoAE (%) 15.1 13.4 10.0 11.9 12.7

RoAA (%) 0.9 0.8 0.5 0.6 0.6

P / BV (x) 1.2 1.1 1.0 0.9 0.9

P / ABV (x) 1.4 1.3 1.4 1.2 1.0

PE (x) 8.4 8.5 10.4 8.0 6.9



Stock Performance

(%) 1M 6M 12M

Absolute 3.8 (0.2) 38.6

Relative to Sensex 3.4 (7.0) 4.5


Bank of Baroda

3/10/2015 43





Others - - - - -



NII 113,153 119,653 130,219 144,407 167,587

Growth (%) 9.7 5.7 8.8 10.9 16.1

Treasury Income 6,173 7,438 8,182 5,138 6,577

NTNII 30,133 37,189 37,338 45,844 50,523


Total Income 388,273 434,025 492,107 540,716 618,769

Growth (%) 17.3 11.8 13.4 9.9 14.4



Growth (%) 4.9 3.2 2.6 9.7 15.6

NPA Provisions 30,670 29,352 36,874 34,152 37,361

Investment Provisions 2,255 1,986 (1,243) (746) (448)


PBT 48,312 54,973 58,195 67,857 79,485

Tax Provisions 3,505 9,562 20,950 19,679 23,051


PAT 44,807 45,411 37,245 48,179 56,434

Growth (%) (10.5) 1.3 (18.0) 29.4 17.1




Par Value 2 2 2 2 2


Equity 4,225 4,307 4,307 4,307 4,307

Networth 319,694 359,857 385,611 421,300 463,995

Adj. Networth 277,774 299,509 288,712 341,134 390,837

Deposits 4,738,833 5,688,944 6,035,969 6,953,437 8,121,614

Growth (%) 23.1 20.0 6.1 15.2 16.8




Net Advances 3,281,858 3,970,058 4,224,142 4,883,108 5,791,366

Growth (%) 14.2 21.0 6.4 15.6 18.6

Investments 1,213,936 1,161,127 1,167,258 1,322,663 1,495,773

Total Assets 5,471,353 6,595,045 7,104,400 8,233,893 9,674,037


LilladherPrabhudas Aurobindo Pharma

CMP: Rs1,103 TP: Rs1,308 Rating: BUY MCap: Rs321.4bn

Diversified portfolio strategy to be a winner: The strategy to leverage on its manufacturing and strong product filings capability is likely to result in strong earnings growth. Unlocking Injectable Portfolio with launches of more products from Unit IV would accelerate growth and margin expansion in US. We believe that main drivers for Aurobindo are a) Business mix improvement with more formulation sales, b) Scaling up of Aurolife’s control substances sales c) Scale‐up of injectable business and d) Higher operating cash flow to reduce debt.

US remains mainstay for growth: Formulation growth will be driven by injectables and orals. It has filed 22 products from Unit IV (NPNC injectable/ophthalmic) and expects approval of 3-5 products to start with. It is targeting US$36m sales from this unit in FY15E. The company plans to file 100 products from this facility, addressing brand size of US$40bn and hopes to achieve sales of US$200-300m in 2-3 years. High value para-IV opportunities especially in injectables would provide boost for growth, margin and operating cash flow in FY15E-17E.

Maintainable margins revised: Management revised maintainable operating margins to 22-24% in FY15E-16E. Core EU formulation sales of US$100m are from six key markets – UK, Netherlands, Italy, Spain, Germany and Portugal. It expects to turn profitable in EU in FY16E, while FY15E is earmarked for operational break-even. The company’s EU acquisition would include additional sales of US$430m in FY15E, while we expect improvement in EBITDA margin in FY16E.

Strong candidate for valuation re-rating: The stock currently trades at PE of 17.2x and 15.0x of FY16E and FY17E, which is at a significant (20%) discount to mid-cap peers. Better cash flow from launches of high margin and limited competition drugs to further reduce gearing ratio and narrow valuation differential with peers in the industry. Our SOTP valuation of Aurobindo’s set immediate target price at Rs1,308. We maintain ‘BUY’.

3/10/2015 44



Revenue (Rs m) 58,553 80,998 120,824 139,132 154,548

Growth (%) 26.5 38.3 49.2 15.2 11.1

EBITDA (Rs m) 8,891 21,328 26,340 30,609 34,773

PAT (Rs m) 4,573 13,759 16,124 18,734 21,371

EPS (Rs) 15.7 47.2 55.3 64.3 73.3

Growth (%) 8.6 200.6 17.2 16.2 14.1

Net DPS (Rs) 1.5 3.0 1.3 1.3 1.3




EBITDA margin (%) 15.2 26.3 21.8 22.0 22.5

RoE (%) 18.5 43.3 36.4 31.3 27.2

RoCE (%) 9.4 21.2 20.4 20.3 19.7

EV / sales (x) 6.0 4.4 2.9 2.5 2.2

EV / EBITDA (x) 39.8 16.8 13.2 11.3 9.7

PER (x) 70.2 23.4 19.9 17.2 15.0

P / BV (x) 12.3 8.6 6.3 4.7 3.6



Stock Performance

(%) 1M 6M 12M

Absolute 5.3 26.7 117.7



Aurobindo Pharma

3/10/2015 45



Net Revenue 58,553 80,998 120,824 139,132 154,548

Direct Expenses 36,242 43,234 64,279 74,435 81,910

% of Net Sales 61.9 53.4 53.2 53.5 53.0

Employee Cost 6,633 8,319 14,499 16,000 17,773

% of Net Sales 11.3 10.3 12.0 11.5 11.5

SG&A Expenses 6,788 8,117 15,707 18,087 20,091

% of Net Sales 11.6 10.0 13.0 13.0 13.0


% of Net Sales 0.0 0.0 0.0 0.0 0.0

EBITDA 8,891 21,328 26,340 30,609 34,773

Margin (%) 15.2 26.3 21.8 22.0 22.5

Depreciation 2,487 3,125 3,637 4,298 4,897

PBIT 6,403 18,203 22,703 26,311 29,877

Interest Expenses 1,313 1,079 915 949 904

PBT 5,376 17,356 22,025 25,601 29,214

Total tax 827 3,635 5,947 6,912 7,888


PAT 2,939 11,729 16,094 18,734 21,371

Extraordinary Gain/(Loss) (1,634) (2,031) (30) - -

Adjusted PAT 4,573 13,759 16,124 18,734 21,371




Share Capital 291 291 291 291 291




Total Debt 34,445 37,783 36,703 34,032 31,367

Other Liabilities(net) 110 257 27 (18) (63)

Deferred Tax Liability 680 2,054 317 (195) (779)


Gross Block 37,635 41,830 45,830 55,330 64,830


Net Block 26,389 27,217 27,877 33,079 37,682






Other Assets 2,565 8,074 3,431 4,094 4,889

Total Assets 61,292 77,595 88,142 102,417 119,255


LilladherPrabhudas

MID-CAP

3/10/2015 46

LilladherPrabhudas Cummins India

CMP: Rs897 TP: Rs1,036 Rating: Accumulate MCap: Rs248.7bn

Technology edge in new CPCB-2 Norms: Central Pollution Control Board (CPCB) has notified CPCB-2 norms for implementation w.e.f July 1, 2014 or Diesel gensets up to 800kw (~1000hp). We expect KKC to benefit most, as stringent norms would lead to increased consolidation, given the technology requirements.

Strong exports and bottoming of domestic markets: Management believes that the domestic business has bottomed out and expects recovery to be visible from H2FY15. They expect domestic business to grow by 0-5% in FY15 and exports to grow by 30% in FY15 due to strong ramp-up in LHP (~Rs7bn in FY15 against Rs3.8bn in FY14) . The current utilization levels are at ~50-60%.

Outlook and Valuation: The stock is trading at 23.2x FY17E earnings. Cummins continues to be the best franchise in the Capital goods space. Outlook for Cummins continues to be positive, given the strong ramp-up in exports and likely improvement in market position, post changes in emission norms. Low capitalization utilization of 50-60% also leaves upside surprise on margin once volumes improve.

3/10/2015 47


Y/e March FY17E FY14 FY15E FY16E FY17E

Revenue (Rs m) 45,894 39,786 43,567 53,380 66,370

Growth (%) 11.5 (13.3) 9.5 22.5 24.3

EBITDA (Rs m) 8,349 6,986 7,319 9,555 12,478

PAT (Rs m) 6,846 5,676 6,262 8,400 10,733

EPS (Rs) 24.7 20.5 22.6 30.3 38.7

Growth (%) 26.8 (17.1) 10.3 34.1 27.8

Net DPS (Rs) 13.0 13.0 14.0 13.6 13.6




EBITDA margin (%) 18.2 17.6 16.8 17.9 18.8

RoE (%) 30.9 22.9 24.1 29.6 31.9

RoCE (%) 30.8 23.0 24.0 29.3 31.5

EV / sales (x) 5.4 6.2 5.7 4.6 3.7

EV / EBITDA (x) 29.5 35.5 34.0 25.9 19.7

PER (x) 36.3 43.8 39.7 29.6 23.2

P / BV (x) 10.4 9.7 9.4 8.2 6.8



Stock Performance

(%) 1M 6M 12M

Absolute 0.8 27.3 74.5



Cummins India

3/10/2015 48



Net Revenue 45,894 39,786 43,567 53,380 66,370

Direct Expenses 28,874 24,241 27,011 33,096 40,818

% of Net Sales 62.9 60.9 62.0 62.0 61.5

Employee Cost 3,386 3,396 2,832 3,470 4,314

% of Net Sales 7.4 8.5 6.5 6.5 6.5

SG&A Expenses - - - - -

% of Net Sales 0.0 0.0 0.0 0.0 0.0

Other Expenses 5,285 5,162 6,404 7,260 8,761

% of Net Sales 11.5 13.0 14.7 13.6 13.2

EBITDA 8,349 6,986 7,319 9,555 12,478

Margin (%) 18.2 17.6 16.8 17.9 18.8

Depreciation 473 528 742 806 934

PBIT 7,876 6,459 6,577 8,749 11,543

Interest Expenses 46 42 6 - -

PBT 10,492 8,194 7,927 10,633 13,586

Total tax 2,872 2,175 1,665 2,233 2,853


PAT 6,846 6,019 7,085 8,400 10,733

Extraordinary Gain/(Loss) - 343 823 - -

Adjusted PAT 6,846 5,676 6,262 8,400 10,733




Share Capital 554 554 554 554 554




Total Debt 150 - 200 400 600


Deferred Tax Liability - - - - -


Gross Block 11,703 16,203 21,203 25,203 29,203


Net Block 6,177 10,149 14,407 17,600 20,666

Capital Work in Progress 1,208 - - - -





Other Assets (328) (465) (465) (465) (465)

Total Assets 24,017 25,652 26,530 30,797 37,400


LilladherPrabhudas Ashok Leyland


We remain positive on Ashok Leyland given the ongoing recovery from cyclical lows in M&HCVs. Higher capacity utilisation in FY16/17, coupled with benefits of cost rationalisation carried out in FY14/15 provides huge potential for operating leverage benefits. Attempts at de-leveraging the balance sheet and exiting non-core / non-performing businesses would have a long-term positive impact. We upgrade AL to a Buy with a TP of Rs79.

Bet on the CV cycle recovery: With the M&HCV cycle on the mend, Ashok Leyland would benefit from the ongoing recovery in M&HCV demand in CY15/16. We expect a robust 23.5% volume CAGR for AL over FY15-17e . An increase in volumes coupled with the benefits of cost rationalisation exercise undertaken in the downturn provides strong potential for operating leverage benefits ahead. We expect EBITDA margin improvement from 1.7% in FY14 to 7.3%/10.2%/10.9% in FY15e/16e/17e.

Balance sheet position improving: While not yet fully out of the woods, AL’s attempts at de-leveraging the balance sheet and exiting non-core / non-performing businesses would have a long-term positive impact. The gross debt equity ratio has been lowered from 1.5x to 1x in FY15, and is expected to get lowered to 0.8x/0.6x by FY16e/17e.

Robust earnings growth: We estimate a volume growth of 25.3% and 21.7% yoy in FY16/17, with a higher skew towards the M&HCV segment (30.3%/24.2% yoy growth in FY16/17). This coupled with better EBITDA would translate into a strong earnings growth at 233% CAGR over FY15-17e.

Our target price stands at Rs79: We value AL at 17.5x FY17E Mar’17E EPS at Rs79/share. With M&HCV segment bottoming out, we built in a strong recovery in volumes and margins in FY16/17e. At our TP, AL would trade at an EV/EBITDA of 15x/11x FY16/17e. We rate AL a BUY and as we see it as a major beneficiary of the recovery in the CV cycle.

11/17/2014 49



Revenue (Rs m) 124,812 99,434 130,911 168,882 211,096

Growth (%) (3.3) (20.3) 31.7 29.0 25.0

EBITDA (Rs m) 8,645 1,666 9,543 17,279 22,979

PAT (Rs m) 1,322 (4,763) 1,157 8,046 12,820

EPS (Rs) 0.5 (1.8) 0.4 2.8 4.5

Growth (%) (78.5) NA NA 595.3 59.3

Net DPS (Rs) 0.6 0.0 0.3 0.5 0.8




EBITDA margin (%) 6.9 1.7 7.3 10.2 10.9

RoE (%) 3.1 (10.7) 2.4 14.4 20.0

RoCE (%) 4.7 (1.9) 4.1 10.9 15.0

EV / sales (x) 1.9 2.4 1.9 1.4 1.1

EV / EBITDA (x) 27.5 144.7 26.1 14.1 10.3

PER (x) 146.3 NA 178.7 25.7 16.1

P / BV (x) 4.3 4.3 3.9 3.5 3.0



Stock Performance

(%) 1M 6M 12M

Absolute 26.7 78.1 323.6



Ashok Leyland

11/17/2014 50



Net Revenue 124,812 99,434 130,911 168,882 211,096

Direct Expenses 95,120 79,248 100,160 125,933 157,086

% of Net Sales 76.2 79.7 76.5 74.6 74.4

Employee Cost 10,755 9,997 11,782 14,355 17,415

% of Net Sales 8.6 10.1 9.0 8.5 8.2

SG&A Expenses 10,292 8,524 9,426 11,315 13,616

% of Net Sales 8.2 8.6 7.2 6.7 6.4


% of Net Sales 0.0 0.0 0.0 0.0 0.0

EBITDA 8,645 1,666 9,543 17,279 22,979

Margin (%) 6.9 1.7 7.3 10.2 10.9

Depreciation 3,808 3,770 4,218 4,458 4,676

PBIT 4,837 (2,105) 5,325 12,821 18,303


PBT 4,707 (912) 3,194 10,058 16,025

Total tax 370 (1,206) 947 2,012 3,205


PAT 4,337 294 2,247 8,046 12,820

Extraordinary Gain/(Loss) 3,016 5,057 1,090 - -

Adjusted PAT 1,322 (4,763) 1,157 8,046 12,820




Share Capital 2,661 2,661 2,846 2,846 2,846




Total Debt 44,261 47,799 42,799 38,799 33,549

Other Liabilities(net) (10) (59) (59) (59) (59)



Gross Block 79,913 86,723 91,539 95,539 99,539


Net Block 52,819 56,599 57,196 56,738 56,062

Capital Work in Progress 5,626 1,551 - - -





Other Assets 1,263 264 - - -

Total Assets 94,086 96,346 99,427 101,809 106,881


LilladherPrabhudas Federal Bank


Federal Bank’s Q3FY15 profitability was better but on account of treasury gains and write-back of investment depreciation provisions. Bank reported slippages which were highest in past six quarters on stress in consortium based lending. Asset quality pressure to remain, but medium to long term prospects remain excellent management’s ability to drive business which will improve return ratios as well as having a control on the level of slippages. We maintain BUY on the stock with a PT of Rs165.

Focus remains on B/s growth, but less opportunities for good credit: After robust 1HFY15, loan growth moderated to ~15% YoY as draw-downs from the sanctioned corporate loans didn’t happen on expected lines. Management in recent earnings cut the FY15 loan growth guidance to 18% from 20% earlier.

PPOP drivers like fees & opex will take some time to improve: Core fee growth has been sluggish as FB relies more on traditional asset based lending fee products but retail fees fared well (on a low base). Operating expenses increased – (i) due to aggressive print & media advertisements, and, (ii) higher employee expenses on account of provisions towards decrease in return on plan assets (from 8.75% to 8.5%) and increase in wage hike assumption to 12.5% from 11%.

Asset quality pressures have increased, so is for all Banks: Fresh slippages increased to Rs2.3 bn in Q3FY15 on pressures from consortium based lending, but trend of asset quality pressures has been visible in most other banks including large private banks. The bank has total restructured assets of ~Rs24 bn (5.1% of total loans). The management in recent earnings call has guided for high stress in asset quality mainly from the consortium based lending.

3/10/2015 51




Growth (%) 1.1 12.9 9.1 12.1 19.8


PAT 8,382 8,389 9,589 11,107 13,523

EPS (Rs) 9.8 9.8 11.2 13.0 15.8

Growth (%) 7.9 0.1 14.3 15.8 21.7

Net DPS (Rs) 1.8 2.0 2.3 2.6 3.2




NIM (%) 3.1 3.2 3.1 3.0 3.1

RoAE (%) 13.9 12.6 13.1 13.7 15.0

RoAA (%) 1.3 1.2 1.2 1.2 1.2

P / BV (x) 1.9 1.8 1.6 1.4 1.3

P / ABV (x) 2.1 1.8 1.7 1.5 1.3

PE (x) 14.6 14.6 12.8 11.0 9.0



Stock Performance

(%) 1M 6M 12M

Absolute 1.6 14.5 69.7



Federal Bank

3/10/2015 52





Others - - - - -



NII 19,747 22,286 24,305 27,236 32,618

Growth (%) 1.1 12.9 9.1 12.1 19.8

Treasury Income 2,059 1,575 1,900 2,100 1,850

NTNII 4,585 5,363 6,069 7,098 8,339


Total Income 68,320 76,399 81,092 91,644 107,257

Growth (%) 12.2 11.8 6.1 13.0 17.0



Growth (%) (3.1) 1.4 7.4 15.4 23.8

NPA Provisions 2,386 2,409 2,900 2,242 3,111

Investment Provisions (368) 1,116 (800) - -


PBT 11,938 12,120 13,797 16,098 19,598

Tax Provisions 3,556 3,731 4,208 4,990 6,075


PAT 8,382 8,389 9,589 11,107 13,523

Growth (%) 7.9 0.1 14.3 15.8 21.7




Par Value 2 2 2 2 2

No. of equity shares 855 855 855 855 855

Equity 1,711 1,711 1,711 1,711 1,711

Networth 63,595 69,456 76,757 85,215 95,511

Adj. Networth 59,275 66,240 72,995 81,370 91,271

Deposits 576,149 597,313 686,720 808,877 956,028

Growth (%) 17.7 3.7 15.0 17.8 18.2

Low Cost deposits 156,521 186,638 212,595 252,838 301,703


Total Liabilities 710,444 745,891 849,822 999,458 1,177,142

Net Advances 440,967 434,361 506,031 609,767 731,720

Growth (%) 16.8 (1.5) 16.5 20.5 20.0

Investments 211,546 241,179 265,636 298,450 337,874

Total Assets 710,444 745,891 849,822 999,458 1,177,142


LilladherPrabhudas MindTree

CMP: Rs1,408 TP: Rs1,530 Rating: BUY MCap: Rs117.5bn

Mindtree (MTCL) continues to remain one of our top-pick despite management indicating a soft Q4FY15 performance, on the back of healthy deal closure. According to Management, cross currencies headwinds and delay in project commencement could result in minor decline in organic revenue for Q4FY15. However, we expect overall revenue to report marginal growth aided by Discoverture. We don’t expect downgrade in Consensus expectation. We retain our “BUY” rating.

Discoverture Solutions ‐ To aid growth: MTCL completed the acquisition of Discoverture Solutions on February 13, 2015. Hence, it will aid to growth. We expect it to contribute ~$1.5m for the quarter. Hence, we expect overall revenue in USD term to witness ~0.3% QoQ growth in Q4FY15.

Consensus still cold – No major downgrade expected: Consensus continues to remain cold on strong revenue momentum that the company is likely to witness on account of healthy deal closure. We revise our estimates down by 2‐3% for FY16 for revenue and earnings. We expect limited downside revision from Consensus due to this event.

Valuation & Recommendation – BUY with Target Price of Rs 1,530: There is delay in two projects commencement resulting in warning. Hence, we expect revenue for the same to flow through in Q1FY16 setting a strong beginning for FY16. Nevertheless, we expect near term weakness. However, we continue to remain positive on the structural revenue momentum. We retain our “BUY” rating.

3/10/2015 53



Revenue (Rs m) 23,618 30,316 35,636 41,144 47,317

Growth (%) 23.3 28.4 17.5 15.5 15.0

EBITDA (Rs m) 4,864 6,104 7,150 8,566 10,216

PAT (Rs m) 3,395 4,512 5,444 6,644 8,133

EPS (Rs) 40.9 54.1 65.3 79.7 97.5

Growth (%) 53.7 32.3 20.7 22.0 22.4

Net DPS (Rs) 2.6 6.0 7.0 8.0 10.0




EBITDA margin (%) 20.6 20.1 20.1 20.8 21.6

RoE (%) 29.9 30.5 28.9 27.4 26.3

RoCE (%) 29.3 30.3 28.7 27.2 26.2

EV / sales (x) 4.9 3.8 3.2 2.6 2.1

EV / EBITDA (x) 23.8 19.1 15.7 12.5 9.9

PER (x) 34.4 26.0 21.6 17.7 14.4

P / BV (x) 8.9 7.2 5.5 4.3 3.4



Stock Performance

(%) 1M 6M 12M

Absolute 2.7 22.3 83.4


LilladherPrabhudas Operating Metrics

MindTree

3/10/2015 54

Y/e March FY12 FY13 FY14 FY15E FY16E FY17E

Volume (persons months) 80,671 85,803 97,203 110,228 123,455 140,122

Realization (US$ / Hr) 28 29 26 28 30 30

Currency (USDINR) 48 54 60 61 62 61

SW Devp. Cost (% of Sales) 64.0 60.4 58.8 59.2 58.8 58.1

SG&A (% of sales) 20.7 19.0 21.1 20.7 20.4 20.3

Revenue (US$ m) 403 436 502 584 669 782

EBITDA Margin Expansion/(Erosion) (bps) 352 530 (46) (7) 75 77

Tax Rate (%) 16.4 20.0 22.0 22.5 22.0 22.0



MindTree

3/10/2015 55



Net Revenue 23,618 30,316 35,636 41,144 47,317

Direct Expenses 14,274 17,820 21,100 24,175 27,507

% of Net Sales 60.4 58.8 59.2 58.8 58.1


% of Net Sales 0.0 0.0 0.0 0.0 0.0

SG&A Expenses 4,480 6,392 7,386 8,403 9,594

% of Net Sales 19.0 21.1 20.7 20.4 20.3


% of Net Sales 0.0 0.0 0.0 0.0 0.0

EBITDA 4,864 6,104 7,150 8,566 10,216

Margin (%) 20.6 20.1 20.1 20.8 21.6

Depreciation 624 809 990 1,108 1,202

PBIT 4,240 5,295 6,160 7,458 9,014

Interest Expenses 10 4 2 5 6

PBT 4,242 5,787 7,025 8,518 10,427

Total tax 847 1,275 1,581 1,874 2,294


PAT 3,395 4,512 5,444 6,644 8,133


Adjusted PAT 3,395 4,512 5,444 6,644 8,133




Share Capital 415 417 417 417 417




Total Debt 89 156 156 156 156




Gross Block 6,407 7,846 8,879 10,073 11,445


Net Block 2,589 3,436 3,479 3,565 3,735

Capital Work in Progress 571 496 496 496 496





Other Assets 2,023 2,199 2,199 2,199 2,199

Total Assets 13,226 16,561 21,906 27,881 35,176


LilladherPrabhudas Hexaware Technologies


Strong beat to expectation: HEXW’s Q4CY14 revenue was up by 6.1% QoQ to Rs7,118m (PLe: Rs6,994m, Cons.: Rs6,954m), whereas in USD terms, revenue was up by 4.1% QoQ to US$114.5m (PLe: US$113.4m, Cons:US$112.7m). EBITDA margins expanded by 191bps to 19.9% (PLe: 18.2%, Cons.: 18.1%) despite wage hike and onsite shift, due to currency depreciation and utilization improvement. EPS, adjusted for Rs66m exceptional loss, was up by 9.3% QoQ to Rs3.11 (PLe: Rs3.09, Cons.: Rs3.11) despite Rs113m higher forex loss QoQ.

Focus to mine existing clients: Top 10 clients grew at a CQGR of 7.8% QoQ compared to overall revenue CQGR of 6.1% over the last 4 quarters. According to the management, the growth is driven by 1) Efforts for customer delight 2) Focus on top 70 clients mining 3) Efforts to increase wallet share with larger deals and cross selling services like IMS.

Continued focus on large deals: Management has increased their focus on large deals. The strategy they want to drive is lower number of higher value deals. The deal pipeline for large deals continue to be healthy (2-3 large deals) even after strong closure during the quarter. Large deals are sourced in IMS, App Outsourcing, legacy system modernization etc.

Strong dividend payout – set to improve RoE: Hexaware has the highest dividend payout in the industry. We believe strong payout would continue to support sustained improvement in RoE. We believe that strong return ratios could drive re-rating of Hexaware. (Exhibit: 3, 4)

Valuation & Recommendation – Retain “BUY” with a revised TP of Rs300: We see HEXW at the point of inflexion in terms of growth driven by new strategic initiatives. We expect revenue momentum to be sustained with some improvement in margin in CY15. We retain “BUY”, with a revised TP of Rs300 (from Rs250) as we revise our CY15/CY16 estimates higher.

3/10/2015 56


Y/e Dec CY11 CY12 CY13 CY14E CY15E

Revenue (Rs m) 14,505 19,482 22,854 25,817 31,279

Growth (%) 37.6 34.3 17.3 13.0 21.2

EBITDA (Rs m) 2,647 4,074 5,124 4,776 6,301

PAT (Rs m) 2,669 3,276 3,792 3,266 4,454

EPS (Rs) 9.1 11.0 12.6 10.9 14.9

Growth (%) 22.7 21.4 14.5 (13.9) 36.4

Net DPS (Rs) 4.0 5.4 11.1 11.1 12.0




EBITDA margin (%) 18.2 20.9 22.4 18.5 20.1

RoE (%) 26.9 29.5 31.6 27.3 36.0

RoCE (%) 26.8 29.4 31.4 27.3 36.0

EV / sales (x) 5.0 3.9 3.3 3.0 2.5

EV / EBITDA (x) 27.4 18.6 14.7 16.1 12.4

PER (x) 28.8 23.7 20.7 24.1 17.6

P / BV (x) 7.6 6.5 6.6 6.6 6.1



Stock Performance

(%) 1M 6M 12M

Absolute 10.2 49.2 67.2



Hexaware Technologies

3/10/2015 57



Net Revenue 14,505 19,482 22,854 25,817 31,279

Direct Expenses 8,938 11,846 13,826 16,278 19,151

% of Net Sales 61.6 60.8 60.5 63.1 61.2


% of Net Sales 0.0 0.0 0.0 0.0 0.0

SG&A Expenses 2,920 3,562 3,904 4,763 5,828

% of Net Sales 20.1 18.3 17.1 18.4 18.6


% of Net Sales 0.0 0.0 0.0 0.0 0.0

EBITDA 2,647 4,074 5,124 4,776 6,301

Margin (%) 18.2 20.9 22.4 18.5 20.1

Depreciation 248 324 386 440 504

PBIT 2,399 3,750 4,738 4,336 5,797


PBT 3,076 4,040 4,796 4,246 5,784

Total tax 407 764 1,004 980 1,330


PAT 2,669 3,276 3,792 3,266 4,454


Adjusted PAT 2,669 3,276 3,792 3,266 4,454




Share Capital 587 593 600 600 600




Total Debt - 78 9 9 9


Deferred Tax Liability 32 396 480 480 480


Gross Block 5,669 6,435 7,337 8,241 9,335


Net Block 3,972 4,443 5,150 5,609 6,200






Other Assets 195 1,462 1,695 1,695 1,695

Total Assets 10,194 12,512 12,482 12,414 13,270


LilladherPrabhudas JK Lakshmi Cement


JK Lakshmi cement (JKLC) is the 5th largest cement producer in North India with a ~7% market share in the region with a capacity of 6.6mtpa. This backed by 1) one of the most efficient operations, 2) entry into the most profitable eastern region with a capacity of 2.7mtpa, scheduled to get commissioned by Dec-14, and 3) increasing consolidation in Gujarat (~40% of its total volumes) ranks JKLC as one of our top pick in the sector, with a PT of Rs475 at EV/T of US$100 FY17E capacity of 12m tonnes.

Efficient and focused producer: JKLC is the second lowest cost producer in the region on the back of 100% pet-coke usage (one of the first mover), thermal and waste heat recovery based CPP, balanced rail/road mix and low fixed overheads. We expect the trend to continue at its upcoming green field plant in Durg on the back of proximity to both slag source and end markets with well laid logistics.

Greenfield expansion in Durg to drive the next round of volume growth: JKLC is putting up 2.7mtpa cement plant in Durg, Chhattisgarh at a cost of Rs17.5bn. Thanks to better market dynamics of the region on the front of consolidation and demand outlook, the addition would improve the earnings profile of JKLC.

Concerns on over-leveraged balance sheet overstated: Our interaction suggest that investors are concerned on the company due to steep increase in interest cost and high gearing. On the contrary, we believe that growth in EBITDA (on the back of capacity expansion) would more than off-set the increase in interest and depreciation cost. We expect 27% CAGR (FY15-17) in PAT even after 37%/30% increase in interest and depreciation cost. On the leverage, company is comfortably placed with D/E and Net debt/EBITDA at 0.9x and 2.1x FY17.

3/10/2015 58



Revenue (Rs m) 20,550 20,566 24,295 31,158 36,913

Growth (%) 19.6 0.1 18.1 28.3 18.5

EBITDA (Rs m) 4,287 3,020 3,896 5,429 7,206

PAT (Rs m) 1,879 1,073 1,866 1,637 2,981

EPS (Rs) 16.0 9.1 15.9 13.9 25.3

Growth (%) 40.9 (42.9) 73.9 (12.3) 82.1

Net DPS (Rs) 2.5 2.0 4.0 3.5 6.3




EBITDA margin (%) 20.9 14.7 16.0 17.4 19.5

RoE (%) 15.4 8.4 13.9 11.4 18.6

RoCE (%) 9.9 5.7 7.7 8.2 11.3

EV / sales (x) 2.6 2.8 2.5 1.9 1.7

EV / EBITDA (x) 12.6 19.0 15.9 11.2 8.6

PER (x) 23.8 41.6 23.9 27.3 15.0

P / BV (x) 3.5 3.4 3.2 3.0 2.6



Stock Performance

(%) 1M 6M 12M

Absolute (4.6) 43.1 477.2

Relative to Sensex (8.2) 30.8 434.3


JK Lakshmi Cements

3/10/2015 59



Net Revenue 20,550 20,566 24,295 31,158 36,913

Direct Expenses 8,926 9,732 11,205 13,875 15,829

% of Net Sales 43.4 47.3 46.1 44.5 42.9

Employee Cost 1,132 1,230 1,475 1,844 2,121

% of Net Sales 5.5 6.0 6.1 5.9 5.7

SG&A Expenses 4,215 4,568 5,392 6,897 7,901

% of Net Sales 20.5 22.2 22.2 22.1 21.4

Other Expenses 1,989 2,016 2,327 3,113 3,856

% of Net Sales 9.7 9.8 9.6 10.0 10.4

EBITDA 4,287 3,020 3,896 5,429 7,206

Margin (%) 20.9 14.7 16.0 17.4 19.5

Depreciation 1,489 1,352 1,178 1,911 1,989

PBIT 2,798 1,668 2,718 3,519 5,218

Interest Expenses 835 772 928 1,863 1,802

PBT 2,354 1,154 1,764 2,142 3,901

Total tax 596 229 305 505 920


PAT 1,757 925 1,459 1,637 2,981

Extraordinary Gain/(Loss) (122) (148) (406) - -

Adjusted PAT 1,879 1,073 1,866 1,637 2,981




Share Capital 589 589 589 589 589




Total Debt 13,370 16,313 20,313 20,313 20,313




Gross Block 26,782 29,305 45,245 45,545 48,605


Net Block 14,346 15,715 30,336 28,725 29,797

Capital Work in Progress 7,832 9,938 408 2,246 4,967






Total Assets 27,466 30,990 35,957 37,463 40,096


LilladherPrabhudas KPIT Technologies


Strong beat to expectation: KPIT reported Q3FY15 revenue growth of 1.2% QoQ (@cc: 2.1%) to US$126.4m (PLe: US$125.6m, Cons.: US$125.1m), whereas in INR terms, revenue grew by 3% QoQ to Rs7,798m (PLe: Rs7,764m, Cons: Rs7,730m), despite higher impact due to seasonality (high manufacturing exposure). EBITDA margins expanded by 59bps QoQ to 13.9% (PLe: 13.6%, Cons: 13.7%) despite lower utilization, onsite shift, and lower IP revenue. EPS declined by 7.4% QoQ to Rs3.26 (PLe: Rs3.11, Cons: Rs3.29), due to higher tax rate (Q3FY15: 22.3%, Q2FY15: 8.1%), as Q2FY15 witnessed US jurisdiction on tax-rate revision.

Deal closure healthy – Momentum to improve in CY15: The company announced large deal closure TCV of $40m+ driven by two large deals. The company announced 7 new deal closures and 3 new client addition. The investment by company in new senior level executives, building strength in niche vertical & services, and focus to mine their clients have started showing early signs of success. We expect growth momentum to accelerate in CY15.

These blips not an issue: 1) De-celerated revenue is key negative for Q3FY15, but it was in-line with expectation – impact due to seasonality and ~$2.5mn revenue impact in ITS due to deal structuring. We expect re-acceleration in Q4FY15. 2) Decline in top client was driven by one hi-tech client as expected and it will turnaround in Q4FY15. 3) DSO increase (3d) was due to lower collection in last 15 days (holidays’ impact). We expect DSO to improve to sub-80s level in FY16.

Operating and Margin levers to be unleashed in FY16: We expect margin improvement by 200bp over the next 2-years as utilization improves, SAP turnarounds, and operating leverage - play out in FY16.

Valuation and Recommendation – BUY, revise TP of Rs280: We expect revenue momentum to accelerate in FY16-17 with improvement in margin. We expect consensus upgrade for FY16/FY17E. Retain “BUY” and as our preferred pick.

3/10/2015 60



Revenue (Rs m) 22,386 26,940 30,410 35,590 41,092

Growth (%) 49.2 20.3 12.9 17.0 15.5

EBITDA (Rs m) 3,655 4,233 4,127 5,210 6,417

PAT (Rs m) 1,991 2,490 2,588 3,317 4,172

EPS (Rs) 10.3 13.2 13.8 17.6 22.2

Growth (%) 26.4 28.3 4.0 28.2 25.8

Net DPS (Rs) 0.8 1.9 2.2 2.5 2.5




EBITDA margin (%) 16.3 15.7 13.6 14.6 15.6

RoE (%) 22.8 21.5 18.7 20.3 21.3

RoCE (%) 18.1 17.1 14.7 16.2 17.4

EV / sales (x) 1.9 1.6 1.4 1.1 0.9

EV / EBITDA (x) 11.7 10.1 10.2 7.8 5.9

PER (x) 20.8 16.2 15.6 12.2 9.7

P / BV (x) 4.0 3.2 2.7 2.3 1.9



Stock Performance

(%) 1M 6M 12M

Absolute 3.2 33.1 29.5

Relative to Sensex 2.8 26.4 (4.6)


KPIT Technologies

3/10/2015 61



Net Revenue 22,386 26,940 30,410 35,590 41,092

Direct Expenses 14,640 18,180 21,202 25,042 29,199

% of Net Sales 65.4 67.5 69.7 70.4 71.1


% of Net Sales 0.0 0.0 0.0 0.0 0.0

SG&A Expenses 4,091 4,528 5,080 5,338 5,476

% of Net Sales 18.3 16.8 16.7 15.0 13.3


% of Net Sales 0.0 0.0 0.0 0.0 0.0

EBITDA 3,655 4,233 4,127 5,210 6,417

Margin (%) 16.3 15.7 13.6 14.6 15.6

Depreciation 472 540 853 931 1,007

PBIT 3,184 3,693 3,274 4,279 5,410

Interest Expenses 146 287 182 104 78

PBT 2,860 3,430 3,318 4,483 5,638

Total tax 765 941 730 1,166 1,466


PAT 1,991 2,490 2,588 3,317 4,172


Adjusted PAT 1,991 2,490 2,588 3,317 4,172




Share Capital 386 376 376 376 376




Total Debt 3,213 4,390 4,390 4,390 4,390




Gross Block 4,335 5,179 6,092 7,159 8,392


Net Block 1,762 2,138 2,198 2,335 2,560






Other Assets 5,668 7,058 7,058 7,058 7,058

Total Assets 13,988 17,374 19,541 22,389 26,093


LilladherPrabhudas Ashoka Buildcon


Sector dynamics likely to improve - Expect a pick-up in NHAI ordering: While the Infrastructure/Roads sector continues to face multiple macro headwinds, various steps are being taken in the right direction to revive it like (1) Relaxing environment clearance norms, (2) Easier exit norms to enable faster asset monetization, (3) Premium rescheduling, (4) Contemplating takeover of stalled projects by the National Highway Authority of India (NHAI) and (5) Looking at setting up Finance Corporations to fund projects. NHAI is also expecting to bid for orders of 5000KM in FY15 against 1450KM in FY14. We expect that a pick-up in NHAI ordering will bring back the much needed momentum in the ailing sector.

Strong growth expected in EPC and Toll revenues: We expect EPC sales to grow at a CAGR of 21% and Toll revenues to grow by 121% CAGR to Rs7.1bn over FY14-FY16E, driven by commissioning of large projects like Dhankuni Kharagpur etc. We have assumed average traffic growth of ~5% across projects. We believe this could have an upside bias, given the expected pick-up in economy over the next three years.

Well-funded to benefit from upcoming opportunities in the Road sector: ABL has a total outstanding equity of ~Rs2.1bn (ABL’s share: Rs850m) in the current project portfolio. We believe ABL is able to meet its equity commitment as well as cash shortfalls comfortably in the current portfolio, debt repayments and premium payments arising from the newly operational BOT projects, cash profits of the EPC business, cash flow from its projects and commitment from SBI Macquarie.

Outlook and Valuation: Our NPV for BOT assets works out to Rs104 per share on FY16 basis (1.4x P/B). We have valued the EPC business at PE of 8x Dec'16 earnings.

3/10/2015 62



Revenue (Rs m) 18,527 17,949 21,097 26,569 32,529

Growth (%) 23.5 (3.1) 17.5 25.9 22.4

EBITDA (Rs m) 3,719 3,945 4,895 7,706 8,800

PAT (Rs m) 1,107 1,132 698 637 1,145

EPS (Rs) 7.0 7.2 4.4 4.0 7.2

Growth (%) (5.6) 1.8 (38.3) (8.7) 79.7

Net DPS (Rs) 1.5 1.8 1.8 1.8 1.8




EBITDA margin (%) 20.1 22.0 23.2 29.0 27.1

RoE (%) 10.6 9.8 5.4 4.8 8.3

RoCE (%) 5.0 3.9 3.3 5.3 6.1

EV / sales (x) 2.8 3.3 3.5 2.6 1.7

EV / EBITDA (x) 14.1 14.9 15.1 9.0 6.4

PER (x) 25.7 25.2 40.9 44.8 24.9

P / BV (x) 2.7 2.3 2.2 2.1 2.0



Stock Performance

(%) 1M 6M 12M

Absolute 34.1 31.4 182.1



Ashoka Buildcon

3/10/2015 63



Net Revenue 18,527 17,949 21,097 26,569 32,529

Direct Expenses 13,824 12,988 14,779 17,469 22,022

% of Net Sales 74.6 72.4 70.1 65.7 67.7


% of Net Sales 0.0 0.0 0.0 0.0 0.0

SG&A Expenses - - - - -

% of Net Sales 0.0 0.0 0.0 0.0 0.0

Other Expenses 983 1,015 1,423 1,394 1,707

% of Net Sales 5.3 5.7 6.7 5.2 5.2

EBITDA 3,719 3,945 4,895 7,706 8,800

Margin (%) 20.1 22.0 23.2 29.0 27.1

Depreciation 1,324 1,389 1,783 2,478 2,737

PBIT 2,395 2,556 3,112 5,228 6,063


PBT 1,294 1,467 813 754 1,519

Total tax 577 688 758 779 945


PAT 1,107 1,132 698 637 1,145


Adjusted PAT 1,107 1,132 698 637 1,145




Share Capital 527 790 790 790 790




Total Debt 24,535 31,032 41,519 41,811 44,663




Gross Block 20,275 21,163 141,467 140,958 143,224


Net Block 15,000 14,499 133,020 130,033 129,562


Cash & Cash Equivalent 3,341 3,792 (1,180) 3,551 19,930



Net Current Assets (76,101) (74,433) (86,539) (93,245) (100,991)

Other Assets 7 21 21 21 21

Total Assets 37,829 48,306 59,849 61,155 65,439


LilladherPrabhudas Disclaimer

3/10/2015 64

BUY : Over 15% Outperformance to Sensex over 12-months

Accumulate : Outperformance to Sensex over 12-months

Reduce : Underperformance to Sensex over 12-months

Sell : Over 15% underperformance to Sensex over 12-months

Trading Buy : Over 10% absolute upside in 1-month

Trading Sell : Over 10% absolute decline in 1-month

Not Rated (NR) : No specific call on the stock

Under Review (UR) : Rating likely to change shortly

Prabhudas Lilladher Pvt. Ltd.

3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai 400 018, India.

Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209

Rating Distribution of Research Coverage PL’s Recommendation Nomenclature

41.0%38.6%

19.3%

1.2%

0%

10%

20%

30%

40%

50%

BUY Accumulate Reduce Sell

% o

f To

tal C

ove

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DISCLAIMER/DISCLOSURES ANALYST CERTIFICATION We/I, Mr. R Sreesankar (B.Sc), Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: Prabhudas Lilladher Pvt. Ltd, Mumbai, India (hereinafter referred to as “PL”) is engaged in the business of Stock Broking, Portfolio Manager, Depository Participant and distribution for third party financial products. 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