India Equity Analytics for today - Buy DCB with value the bank at Rs.62/share

IEA-Equity

Strategy

27th Dec, 2013

CMC : "On track to deliver" "BUY" 20th Dec 2013

Considering recent healthy demand environment across the IT space with favorable supply side scenario, we remain confident on the stock for

better earning visibility and stable margin picture. Still, we reiterate our positive stance on the long-term story of CMC due to its focus on high

margin SI and ITES businesses.At a CMP of Rs 1510, stock trades at 14.9X FY14E earnings. We have "BUY" view on the stock and we revise our

target price from Rs1490 to Rs1690.............................. (Page : 14-15)

Tech Mahindra : "On a stronger footing.." "BUY" 23rd Dec 2013

Post merger with Satyam, strong demand traction in Telecom (Non BT) has improved and company's attractive deal win ratios make us

optimistic view on the stock. At a CMP of Rs 1691, relatively the stock is trading at a fair valuation, 12.8x of FY14E earnings (at USD of

Rs60/59.5 for FY14E/FY15E). We maintain “BUY” on the stock with a price target of Rs 2330 (revised from Rs 1875)..................... ( Page : 12-13)

Persistent System : "Persistently innovating.." "REDUCED" 23rd Dec 2013

We had initiated this stock at a CMP of Rs 526(on 16th Feb 2013) and now, it achieved its target of Rs 960. Despite better predictability of

growth and attractive visibility of its expansion in new emerging verticals, we advice to book profit on the stock because of its premium

valuation. However, sentiment could take a knock in the short run, since investors may prefer paying a premium for stocks with better earnings

visibility. Our view could be change with management guidance and post earnings of coming quarter................................................... ( Page : 10-

11)

Infosys : Bala exit; a pros and cons? "BUY" 26th Dec , 2013

Last week, V Balakrishnan a former CFO and member of Board director resigned from the company to turn entrepreneur of Private Equity

space. Currently, he is the head of Infosys business process outsourcing unit, the company's core banking software Finacle, its India business

and chairman of Infosys Lodestone. This was now the 8th senior and top level departure after the taking charges by Company founder Narayana

Murthy. At a CMP of Rs 3486, it trades at 19.2x FY14E and 16.7x FY15E earnings. We retain our “BUY” view on the stock with a target price of

target price of Rs 3620............................... ( Page : 5-6)

DCB : "REDUCE" 27th Dec 2013

DCB is currently trading at 1.3 times of one year forward book which is almost upper side of valuation band. We value the bank at Rs.62/share

which is 1.4 times of one year forward book and 15 times of FY14E earnings. Valuation multiple is justified at present fundamental in our view

but has potential to expand the multiple once visibility of ROE improvement clearly come to on the floor after 1-2 quarters.

......................................................... ( Page : 2-4)

email: [email protected], website : www.narnolia.com

Narnolia Securities Ltd,

402, 4th floor 7/1, Lords Sinha Road Kolkata 700071, Ph 033-32011233 Toll Free no : 1-800-345-4000

HINDALCO : "BUY" 24th Dec 2013

Hindalco has expanded its aluminium capacity recently, low aluminium prices, sticky costs, delay in commencement of mining from captive

blocks and higher interest and depreciation costs may hit its profitability. In the near-term, there is lack of clarity over production from the

Mahan coal block for its Mahan smelter. Without captive coal block, the Mahan smelter is expected to face cost pressures, resulting in lower

return ratios over FY2013-15.So Clearance of Mahan coal block will be most awaited trigger for Hindalco. Mean While on the Positive Side We

can expect 7% growth on the Stock with a Target Price of Rs.132.............. ( Page:7-9)

DIVISLAB : Good Growth Ahead "BUY" 19th Dec 2013

The company posted strong 2QFY4 results with net sales growing to Rs 566 Cr up by 19.7% YoY on the back of good growth coming from all

business segments. The generic API grew by 18% YoY to Rs 261 Cr for the quarter and CRAMS business segment grew by 20% YoY to Rs 271

Cr............................................. ( Page : 16-18)

India Equity Analytics

57.25

62

62

8

-

1M 1yr YTD

Absolute 19.2 20.4 20.4

Rel.to Nifty 15.6 13.1 13.1

Current 4QFY13 3QFY1

3Promoters 18.5 18.5 18.5

FII 11.4 11.4 11.1

DII 14.1 12.5 13.0

Others 56.1 57.7 57.5

Financials Rs, Cr

2011 2012 2013 2014E 2015E

NII 189 228 284 127 190

Total Income 301 328 401 272 334

PPP 86 84 126 95 127

Net Profit 21 55 102 95 127

EPS 1.1 2.3 4.1 3.8 5.1

2

DCB

Change from Previous

DCB Vs Nifty

Share Holding Pattern-%

2158026

Nifty 6279

Development Credit Bank (DCB) currently trading at 1.3 times of one year

forward book which is now almost of higher side of our valuation range. We

value the bank at Rs.62/share at the higher side which is 1.4 times of one year

forward book and 15 times of FY14E’s earnings. Present valuation multiple

justified on account of DCB’s consistent improvement in its return ratio and

management guided similar trend of growth in FY14,however bank cited

margin could be compressed by 25-30 bps. We can’t rule out the valuation

multiple expansions but there is need to watch 1-2 quarters more as per our

view

Average Daily Volume

1437

Previous Target Price

Market Data

Upside

Well capitalized and stable asset quality

Bank is well capitalized with tier 1 ratio of 13% means no need to raise money in

short term. Bank’s management guided loan and deposits growth of 25-27% and 30-

32% in FY14 which seen possible looking at present scenario. Management is also

very focus on low ticket size loan (prefer less than 30 mn) on account of avoiding

large slippage. At the 2QFY14, bank reported slippage of Rs.21 cr which was 1.3%

in annualized basis. Fresh slippage ratio remains in the range of 1.1-1.5 times in last

few quarters, so we believe bank would maintain similar trend in term of fresh

slippage which restrict GNPA out of control. Provision coverage ratio at the end of

2QFY14 stood at 84% (without technical write off) and management reiterate PCR to

maintain above of 80%.

Mkt Capital (Rs Cr)

Please refer to the Disclaimers at the end of this Report.

(Source: Company/Eastwind)

Company Update Book Profit

CMP

Target Price

Potential to expand valuation multiple, need to watch growth trajectory 1-2

quarters more

On valuation front, DCB valuation could be expanded if visibility of ROE

improvement is clearly seen. ROE improvement could be possible in two front- first

reducing cost income ratio which will boost the profit and second loan growth

specially in high yield segment like SME and MSME. We observed that bank’s Cost-

Income ratio was higher at 66.2% at the end of 2QFY14. Cost income ratio would

reduce to less than 65% in FY14 and would further reduce to 60% in FY15 according

to management. To reduce the cost, bank initiated to invest high yield segment,

planning to maintain CASA at 30% in long run while in short term does not expect

below of 27% and escalating branch network. In FY13 bank opened 10 branches but

in 1HFY14, DCB opened 9 branches and will go upto 120-125 branches in FY14.

54.85/38

BSE Code 532772

NSE Symbol DCB

52wk Range H/L

Stock Performance

"Book Profit"27th Dec,2013


3

DCB

Source: Company/Eastwind



Quarterly Result( Rs Cr) 2QFY14 1QFY14 2QFY13 % YoY % QoQ

Interest/discount on advances / bills 205.2 201.5 170.9 20.1 1.8

Income on investments 57.9 56.7 47.6 21.8 2.1

Interest on balances with Reserve Bank of India 5.5 2.3 1.1 378.2 142.4

Others 0.2 0.2 0.4 -45.6 -9.7

Total Interest Income 268.8 260.7 219.9 22.2 3.1

Others Income 27.3 45.1 27.5 -0.9 -39.5

Total Income 296.1 305.8 247.5 19.6 -3.2

Interest Expended 177.6 177.6 153.0 16.1 0.0

NII 91.3 83.1 67.0 36.3 9.8

Other Income 27.3 45.1 27.5 -0.9 -39.5

Total Income 118.5 128.2 94.5 25.5 -7.6

Employee 38.8 37.7 34.1 13.9 2.9

Other Expenses 39.6 39.2 33.9 16.8 1.1

Operating Expenses 78.4 76.9 68.0 15.4 2.0

PPP( Rs Cr) 40.1 51.3 26.5 51.4 -21.8

Provisions 7.0 8.5 4.4 60.8 -17.4

PBT 33.1 42.8 22.1 49.5 -22.7

Tax 0.0 0.0 0.0

Net Profit 33.1 42.8 22.1 49.5 -22.7

Balance Sheet (Rs Cr)

Net Worth 1079 1046 902 19.6 3.2

Deposits 8788 8320 7137 23.1 5.6

Loan 6677 6472 5671 17.7 3.2

Asset quality (Rs Cr)

GNPA 235 226 226 4.0 4.0

NPA 57 54 38 50.0 5.6

% GNPA 3.5 3.5 4

% NPA 0.9 0.8 0.7

4

DCB

Source: Eastwind/ Company



Income Statement 2010 2011 2012 2013 2014E 2015EInterest Income 459 536 717 916 1090 1279

Interest Expense 317 347 489 632 963 1089

NII 142 189 228 284 127 190

Change (%) -28.2 33.6 20.4 24.9 -55.3 49.1

Non Interest Income 107 112 100 117 145 145

Total Income 249 301 328 401 272 334

Change (%) -21.6 21.2 8.9 22.4 -32.3 23.0

Operating Expenses 201 215 244 275 177 207

Pre Provision Profits 48 86 84 126 95 127

Change (%) -36.5 79.9 -2.6 50.5 -24.5 33.5

Provisions 121 57 29 24 0 0

PBT -73 29 55 102 95 127

PAT -79 21 55 102 95 127

Change (%) -10.1 -127.2 157.1 85.3 -6.7 33.5

Balance SheetDeposits( Rs Cr) 4787 5610 6336 8364 9618 11061

Change (%) 3 17 13 32 15 15

of which CASA Dep 1693 1975 2035 2272 2597 1825

Change (%) 17 17 3 12 14 -30

Borrowings( Rs Cr) 504 861 1123 1526 1697 1952

Investments( Rs Cr) 2018 2295 2518 3359 2886 3318

Loans( Rs Cr) 3460 4271 5284 6586 7903 9484

Change (%) 6 23 24 25 20 20

RatioAvg. Yield on loans 10.4 9.4 10.1 10.8 9.7 9.7

Avg. Yield on Investments 4.7 5.8 6.9 5.8 6.8 6.8

Avg. Cost of Deposit 5.9 5.2 6.4 6.4 5.9 5.9

Avg. Cost of Borrowimgs 6.8 6.4 7.2 6.4 6.0 6.0

Valuation

Book Value 30 31 36 40 44 49

CMP 32.2 45.9 45 45 57.3 57.3

P/BV 1.1 1.5 1.3 1.1 1.3 1.2

Infosys

How do we see the impacts of this buzz?

1M 1yr YTD

Absolute 4.1 52.1 27.2

Rel. to Nifty -0.3 44.9 23.3


Promoters 16.04 16.04 16.04

FII 40.52 40.55 39.42

DII 17.51 18.7 18.33

Others 25.93 24.71 26.21

Financials2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%

Revenue 12965 11267 15.07 9858 31.5

EBITDA 2836.9 2664 6.49 2597 9.2

PAT 2406.9 2374 1.39 2369 1.6

EBITDA Margin 21.9% 23.6% (170bps) 26.3% (440bps)

PAT Margin 18.6% 21.1% (250bps) 24.0% (540bps)

5

(b) V Balakrsihnan’s resignation is not one night decision and not an affect of internal

hiccups. Post declaration of his resignation V Balakrishnan stated to media “it was my

long term plan and we were waiting for SEBI approval for my new Private Equity firm”.

Even, he sold 1,00,000 shares in the company for Rs 33 crore in the open market on 9th

Nov 2013 (50,000 shares each held by his daughters), it indicates its earlier decision.

Therefore, we think Bala’s exit is a part of an ongoing strategy to reshuffle the top

management at Infosys.

(c) The top management conundrum has not been new to Infosys. Even, as Infosys’s

hyper-growth story played out over the course of three decades, powered by not just its

seven cofounders but also several talented employees that came on later on. Even, most

of company founders have churned out and company has been working for growth story

and committing for strategy 3.0.


1 year forward P/E

Rs, Crore



(d) Post Narayana Murthy, company has committed for future transformational changes

and next generation growth plan. Recently, the company has undertaken a clear shift in

direction where it has been focusing on higher-margin businesses, a strategy that rival

TCS that has successfully implemented.

For near term, there could be some small sort of rally on the stock because of this knee

jerk and as the December quarter is generally expected to be a bit tepid for the

technology sector. Although, the street will forget all things after a good quarter

earnings or a strong commentary on the business outlook. For long term, we do not

see any major pressure because of co’s poster boy exit.

Bala exit; a pros and cons?

CMP 3486

Target Price 3622

Company update BUY Does Balakrishnan departure from Infosys would affect the company’s bread and

butter?

Last week, V Balakrishnan a former CFO and member of Board director resigned from

the company to turn entrepreneur of Private Equity space. Currently, he is the head of

Infosys business process outsourcing unit, the company's core banking software

Finacle, its India business and chairman of Infosys Lodestone. This was now the 8th

senior and top level departure after the taking charges by Company founder Narayana

Murthy. Market Data

Stock Performance

160944

(a) We think, there would not be any major impact on qualitative and quantitative sense

and company would not see any major gap between sales executives and clients. Yes,

the magnitude of the exits could create a leadership vacuum. However, very soon

company will try to turn into smoothie organization structure.

Previous Target Price 3390

Upside 4%

BSE Code 500209

Mkt Capital (Rs Crores)

Average Daily Volume 1240448

Nifty 6268

NSE Symbol INFY

Change from Previous 7%

Behind the top-level departure, only one cause reflects on the picture that is the tussle

of CEO post. Current CEO Shibulal is going to complete its tenure by next years.

Among the front-runner of this post, Balakrishnan was strong contender for the post

of CEO race.

52wk Range H/L 3570/2190

"BUY"26th Dec' 13


6

Considering the revised guidance by management and its growth priority than margin

inching up strategy, we are positive on the stock. At a CMP of Rs 3486, it trades at 19.2x

FY14E and 16.7x FY15E earnings. We retain our “BUY” view on the stock with a target

price of target price of Rs 3622.

Infosys.

View and Valuation: Infosys seems to be on its way to rediscovering its past mojo with revenue momentum

kicking, its past strategy of under-promising and over delivering - remember present

guidance now factors flat gorwth in next 2 qtrs, and the NRN invisible hand in play.

Further announcement of strategic acquisitions, better utilization of cash balances, ramp-

up in sales investment ,better deal win, consistent client traction and revenue

momentum would help the company to bridge the gap with rivals such as TCS and HCL

Tech.


Financials



Rs in Cr, FY10 FY11 FY12 FY13 FY14E FY15E

Sales, INR 22742 27501 33734 40352 48659.6 55939.5

Employee Cost 12085 14856 18340 22565 27736.0 32165.2

Other expenses 2792 3677 4671 6254 7785.5 9230.0

Total Expenses 14877 18533 23011 28819 35521.5 41395.2

EBITDA 7865 8968 10723 11533 13138.1 14544.3

Depreciation 905 854 928 1099 1325.3 1523.5

Other Income 982 1211 1904 2365 2433.0 3356.4

EBIT 7942 9325 11699 12799 14245.8 16377.1

Interest Cost 0 0 0 0 0.0 0.0

PBT 7942 9325 11699 12799 14245.8 16377.1

Tax 1681 2490 3367 3370 3846.4 4421.8

PAT 6261 6835 8332 9429 10399.4 11955.3

Growth-%

Sales 4.8% 20.9% 22.7% 19.6% 20.6% 15.0%

EBITDA 9.3% 14.0% 19.6% 7.6% 13.9% 10.7%

PAT 4.6% 9.2% 21.9% 13.2% 10.3% 15.0%

Margin -%

EBITDA 34.6% 32.6% 31.8% 28.6% 27.0% 26.0%

EBIT 34.9% 33.9% 34.7% 31.7% 29.3% 29.3%

PAT 27.5% 24.9% 24.7% 23.4% 21.4% 21.4%

Expenses on Sales-%

Employee Cost 53.1% 54.0% 54.4% 55.9% 57.0% 57.5%

Other expenses 12.3% 13.4% 13.8% 15.5% 16.0% 16.5%

Tax rate 21.2% 26.7% 28.8% 26.3% 27.0% 27.0%

Valuation

CMP 2615.1 2765.1 2865.0 2400.0 3486 3486

No of Share 57.4 57.4 57.4 57.4 57.4 57.4

NW 23049.0 25976.0 31332.0 37994.0 45236.1 53832.6

EPS 109.1 119.0 145.1 164.2 181.1 208.2

BVPS 401.7 452.4 545.6 661.7 787.8 937.5

RoE-% 27.2% 26.3% 26.6% 24.8% 23.0% 22.2%

Dividen Payout ratio 25.1% 45.9% 24.0% 45.1% 23.8% 20.7%

P/BV 6.5 6.1 5.3 3.6 4.4 3.7

P/E 24.0 23.2 19.7 14.6 19.2 16.7

Hindalco Industries Ltd.

124

132

NA

7%

NA

500440

25497

17848

6284

1M 1yr YTD

Absolute -1.3 11.3 8.7

Rel. to Nifty -2.7 0.5 0.0

2QFY14 1QFY14 4QFY13

Promoters 37.0 37.0 32.1

FII 24.9 24.8 24.5

DII 14.4 14.3 15.5

Others 23.7 23.9 28.0

Financials : Q2FY14 Y-o-Y % Q-o-Q % Q2FY13 Q1FY14

Net Revenue 6585 4.6 5.1 6296 6266

EBITDA 540 4.8 12.8 515 478

Depriciation 196 13.7 7.3 173 183

Tax 83 -5.9 -17.4 88 101

PAT 357 -0.5 -24.7 359 474(In Crs)

7


Stock Performance-%


1 yr Forward P/B

Source - Comapany/EastWind Research

Hindalco Industries, the world's largest Aluminium rolling company, disappointed with

the second quarter net profit declining marginally to Rs 357Cr from Rs 358.9Cr y-o-y,

dented by higher finance cost. Bottom line was largely supported by other income;

otherwise profit would have much lower than currently reported. Other income, which

included Rs61 Cr non-recurring income and dividend of Rs 100 Cr from subsidiaries, more

than doubled to Rs 280Cr in three-month period ended September 2013 from Rs 132.4Cr

in a year ago period. Net sales increased over 2 percent year-on-year to Rs 6245Cr during

September quarter. EBITDA climbed 3 percent Y-o-Y to Rs 481Cr while operating profit

margin improved marginally to 7.7 percent from 7.63 percent during the same period on

higher inventory. Finance cost surged 6.5 times on a yearly basis to Rs 183Cr in the

quarter gone by, given higher average borrowing. Revenue from Aluminium business

grew 11 percent y-o-y to Rs 2,342.6Cr, driven by higher volumes, but EBIT margin of the

same business declined to 7.1 percent during 2QFY14

During the same period, total metal production increased to 1,32,000 ton (excluding

Mahan production) from 1,28,000 ton while alumina production (excluding Utkal alumina

production) rose to 3,34,000 ton from 3,28,000 ton y-o-y, but sequentially it was down

from 3,48,000 ton due to a planned ramp down at one of refineries. In case of copper

business, revenue slipped 2.2 percent Y-o-Y to Rs 3,974Cr in the quarter gone by, but its

EBIT margin expanded to 6 percent. Cathode production declined to 77,000 ton from

78,000 ton y-o-y.

Nifty

Upside


Company UpdateCMP

Target Price

Previous Target Price

Novelis, leader in aluminum rolling and recycling completed $400 millionexpansion

program in South Korea. The expansion of its Yeongju and Ulsan plants increases the

company's production capacity in the region by more than 50 percent to approximately

one million metric tons of aluminum sheet per year.Hindalco has expanded its smelting

capacity by 359kt via Mahan greenfield project.Aruna Sundarajan is back and set to

take charge as Industries new additional chief secretary and looks forward

optimistically for a better industrial climate focusing on young entrepreneurship.

Average Daily Volume (Nos.)

The PM's Project Monitoring Group has sorted out issues with regards to Hindalco's 7000

Cr rupees Utkal Alumina refinery among others. On a medium-term view we would still

be positive on Hindalco Industries. As the improvement happens across economies

whether it is US, Europe, to an extent in China also we think Hindalco is very well

positioned.

Market DataBSE Code

HINDALCONSE Symbol

52wk Range H/L


137/83

"Buy"24 Dec' 13


0.0

0.5

1.0

1.5

2.0

2.5

3.0

0

100

200

300

400

500

600

700

800

Mar

-06

Sep

-06

Mar

-07

Sep

-07

Mar

-08

Sep

-08

Mar

-09

Sep

-09

Mar

-10

Sep

-10

Mar

-11

Sep

-11

Mar

-12

Sep

-12

Mar

-13

Sep

-13

PRICE BV 1x 2x

3x 4x P/BV

LME Price/Ton

LME Price/Ton

FY10 FY11 FY12 FY13

6761 7965 9041 8779

11752 15902 17575 17305

1963 2004 1822 930

599 602 802 768

138254 74799 178990 225246

FY11 FY12 FY13 FY14E

72078 80821 80193 86000

431 783 1012 1360

72509 81604 81205 87360

64102 72856 72395 78572

7976 7965 7798 7428

2725 2645 2822 2700

1839 1758 2079 2500

964 786 886 825

366 211 -20 0

57 -50 16 0

2456 3397 3027 2763

8.5 10.6 8.6 7.3

8


Minority Interest

Share in Profit/(Loss) of Associates

PAT

ROE%

Tax

Out Look : Although Hindalco has expanded its aluminium capacity recently, low

aluminium prices, sticky costs, delay in commencement of mining from captive blocks

and higher interest and depreciation costs may hit its profitability. In the near-term,

there is lack of clarity over production from the Mahan coal block for its Mahan smelter.

Without captive coal block, the Mahan smelter is expected to face cost pressures,

resulting in lower return ratios over FY2013-15.So Clearance of Mahan coal block will be

most awaited trigger for Hindalco. Mean While on the Positive Side We can expect 7%

growth on the Stock with a Target Price of Rs.132.

Expenditure

EBITDA

Depriciation

Copper Revenue

Net Revenue from Operation

Other Income

Total Income

Interest Cost


OPERATING MATRIX

Aluminium Revenue

P/L PERFORMANCE

Aluminium Results

Copper Results

Capital Employed




90000

95000

100000

105000

110000

115000

120000

Jan

-13

Fe

b-1

3

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-

13

Au

g-1

3

Se

p-1

3

Oct

-13

No

v-1

3

De

c-1

3

Primary Aluminium

340000

360000

380000

400000

420000

440000

460000

480000

Jan

-13

Fe

b-1

3

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-

13

Au

g-1

3

Se

p-1

3

Oct

-13

No

v-1

3

De

c-1

3

Copper

FY10 FY11 FY12 FY13

191 191 191 191

21346 28824 31179 34597

21545 29023 31911 35330

10763 13736 37127 49857

13236 13956 3731 6442

3901 4138 5289 5691

9742 12980 11052 9613

1016 1077 1377 1610

69235 84376 101402 120590

7876 12272 15429 16435

21124 20133 19871 21490

5801 13131 22798 33831

1983 2035 3774 3170

11275 14096 13246 14332

6544 8000 8017 8952

2195 2556 3296 3770

1134 1164 2159 3257

69235 84376 101402 120590

FY10 FY11 FY12 FY13

1.6 1.4 0.8 0.5

20.5 12.8 17.7 15.8

10.8 11.1 9.9 11.2

16.0 18.0 13.7 12.0

1.9 2.0 1.6 1.8

FY10 FY11 FY12 FY13

5542 6929 8534 6852

-598 -703 -932 -3874

4944 6226 7602 2978

-5448 -6710 -13220 -13765

428 825 6237 10278

-76 341 619 -510

9

Trading At :

Changes In Working Capital

Net Cash From Operation

Cash From Investment

Cash from Finance

Net Cash Flow during year

Debtor to Turnover%

Creditors to Turnover%

Inventories to Turnover%


CASH FLOWS


B/S PERFORMANCE

Share capital

Reserve & Surplus

Total equity

Long-term borrowings

Short-term borrowings

Long-term provisions

Cash from Operation

Short-term loans and advances

Total Assets

RATIOS

P/B

EPS



Trade payables

Short-term provisions

Total liabilities

Intangibles

Cash and bank balances

Tangible assets

Capital work-in-progress

Long-term loans and advances

Inventories

Trade receivables


0

20

40

60

80

100

120

140

160

0

1000

2000

3000

4000

5000

6000

7000

NIFTY HINDALCO

Persistent System.

-

1M 1yr YTD

Absolute 24.1 105.2 91.2

Rel. to Nifty 23 99.4 84.6


Promoters 38.96 38.96 38.96

FII 15.28 14.84 12.39

DII 21.23 19.31 21.59

Others 24.53 26.89 27.06

Financials

2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%

Revenue 432.37 357.29 21.0 326.86 32.3

EBITDA 100.8 76.8 31.3 89.06 13.2

PAT 60.8 57.1 6.5 44.71 36.0

EBITDA Margin 23.3% 21.5% 180bps 27.2% (390bps)

PAT Margin 14.1% 16.0% (190bps) 13.7% 40bps

10

BSE Code 533179

Market Data


Upside -

Recently , Persistent System reported superlative set of numbers during the 2QFY14

with 21%(QoQ) sales growth in INR term and 8.6%(QoQ) growth in USD term led by

38%(QOQ) growth on the intellectual property (IP) revenues. PAT growth was at 6.5%

(QoQ).

With the potential revenue growth, strong deal pipeline and multi-year relationships

with marquee clientele in the Infrastructure vertical, we expect for better earning

visibility across niche IT players.

Nifty


6274

Stock Performance

NSE Symbol PERSISTENT


"Persistently innovating.."

CMP 1007

Target Price 960

Company update Book Profit We had initiated this stock at a CMP of Rs 526(on 16th

Feb 2013) and now, it achieved

its target of Rs 960. Despite better predictability of growth and attractive visibility of

its expansion in new emerging verticals, we advice to book profit on the stock because

of its premium valuation. However, sentiment could take a knock in the short run,

since investors may prefer paying a premium for stocks with better earnings visibility.Change from Previous

Persistent Sytem’s management remains confident of FY14 with deal pipeline being

strong and remains focused on increasing the share of IP-led revenues in its portfolio.

They expect to see more than 15% USD revenue growth for FY14E.

1 year forward P/E-x

Rs, Crore


View and Valuation: The company’s focus is shifting greater proportion to IP led services

and company has marquee clientele in cutting-edge technologies around cloud,

mobility, collaboration and analytics; witnessing faster growth. Considering the

company’s premium valuation, we advice “Book Profit” on the stock. At a CMP of Rs

1007, stock trades at 15.9x FY14E earnings. Our view could be change with

management guidance and post earnings of coming quarter.

Persistent's management suggests that deal pipeline are looking strong and seeing

good activity and traction in the market across the board. Its focus on some of newer

technologies like cloud, analytics and mobility are gaining a lot of traction because of

pickup in demand environment. The emerging themes, (CAMB) Cloud, Analytics,

Mobility, and Big data could also see strong demand traction ahead. Because of

actively investment in these themes, management is very confident to see healthy

growth and also they expressed their confidence to beat the NASSCOM guidance (12-

14% revenue growth for FY14E).

52wk Range H/L 1023/477


Clients Metrics: During the quarter, company added 2 clients at 32 under medium

category( >$1mn to $3mn) and 1 client at 16 from large ( > $ 3Mn) . Revenue from top-1

client was improved from 21.2% (1QFY14) to 22.5% . DSO at 62days, almost 12

quarters low.

4029


Margin ramp up: During the quarter, Its EBITDA margin improved by 180bps to 23.3%,

positively impacted by currency gain(270bps), while during the quarter company wage

hike to its off shore employee at a range of 8-9% was impacted margin by 310 bps

adversely. However, management expects to maintain margin at a range of 24-25% for

FY14E.

"Book Profit"23rd Dec' 13


11

Persistent System.


Financials


Rating and Price Target Chart Updation Detail



Rs, in Cr. FY10 FY11 FY12 FY13 FY14E FY15E

Sales 601.16 775.84 1000.3 1294.5 1657.54 2053.93

Employee Cost 368.74 481.62 599.05 719 895.07 1119.39

Cost of technical professionals 0 30.67 41.68 54 82.88 102.70

Other expenses 86.05 105.24 135.2 218 290.07 379.98

Total expenses 454.79 617.53 775.93 990.78 1268.02 1602.06

EBITDA 146.37 158.31 224.37 303.72 389.52 451.86

Depreciation 33.52 42.39 61.1 78 93.54 84.18

Other Income 11.23 34.44 34.44 34.44 66.30 71.89

EBIT 112.85 115.92 163.27 225.44 295.98 367.68

Interest Cost 0 0 0.00 0.03 0.00 0.00

Profit (+)/Loss (-) Before Taxes 124.08 150.36 197.71 259.851 362.29 439.57

Provision for Taxes 9.05 10.62 55.09 75.37 108.69 131.87

Net Profit (+)/Loss (-) 115.03 139.74 142.62 184.481 253.60 307.70

Growth-% (YoY)

Sales 1.2% 29.1% 28.9% 29.4% 28.0% 23.9%

EBITDA 60.2% 8.2% 41.7% 35.4% 28.3% 16.0%

PAT 74.1% 21.5% 2.1% 29.4% 37.5% 21.3%

Expenses on Sales-%

Employee Cost 61.3% 62.1% 59.9% 55.5% 54.0% 54.5%

Other expenses 14.3% 13.6% 13.5% 16.9% 17.5% 18.5%

Tax rate 7.3% 7.1% 27.9% 29.0% 30.0% 30.0%

Margin-%

EBITDA 24.3% 20.4% 22.4% 23.5% 23.5% 22.0%

EBIT 18.8% 14.9% 16.3% 17.4% 17.9% 17.9%

PAT 19.1% 18.0% 14.3% 14.3% 15.3% 15.0%

Valuation:

CMP 310 366.7 409.2 541 1007 1007

No of Share 4 4 4 4 4.00 4.00

NW 639.0 747.1 840.5 1018.3 1234.4 1504.7

EPS 28.8 34.9 35.7 46.1 63.4 76.9

BVPS 159.7 186.8 210.1 254.6 308.6 376.2

RoE-% 18.0% 18.7% 17.0% 18.1% 20.5% 20.4%

P/BV 1.9 2.0 1.9 2.1 3.3 2.7

P/E 10.8 10.5 11.5 11.7 15.9 13.1

Date Update Detail CMP View Target Price

16-Feb-13 Initiation 526 BUY 580

25-Jun-13 Company Update 499 BUY 580

7-May-13 Result Update 514 BUY 580

31-Jul-13 Result Update 522 BUY 580

18-Sep-13 Company Update 573 BUY 642

26-Sep-13 Company Update 623 BUY 834

9-Oct-13 Company Update 682 BUY 834

22-Oct-13 Result Update 739 BUY 890

13-Dec-13 Company Update 876 BUY 960

23-Dec-13 Company Update 1007 Book Profit

Tech Mahindra

BUY

24%

1M 1yr YTD

Absolute 9.3 99 39.2

Rel. to Nifty 6.8 93 32.7


Promoters 36.46 47.17 47.41

FII 32.59 26.79 27.34

DII 15.13 15.83 16

Others 15.82 10.21 9.25

Financials


Revenue 4771.5 4103.2 16.3 3523.7 35.4

EBITDA 1110.85 864.5 28.5 756.9 46.8

PAT 718.2 686.3 4.6 455.9 57.5

EBITDA Margin 23.3% 21.1% 220bps 21.5% 150bps

PAT Margin 15.1% 16.7% (160bps) 12.9% 220bps

12

Green flag on Margin front: EBITDA margin expanded 222 basis points sequentially to

23.3% aided by a weaker rupee. Despite sweet flavor on margin front, management is

still cautious for coming quarter due to Furloughs .

Recently, following the footsteps of other larger giants such as TCS and Infy, Tech

Mahindra revealed its earning story better than street expectations for 2QFY14. Sales

grew by 16.3% (QoQ) in INR term led by healthy growth across all segments, verticals

and geographies. In USD term, sales grew 4.7% (QoQ) better than all nearest peers

barring TCS. PAT was up by 4.7% (QoQ) adversely impacted by lower other income and

forex loss of Rs 26 Cr during the quarter. The company had forex gains of Rs 134 Cr in

the June quarter.

BSE Code 532755

NSE Symbol TECHM

52wk Range H/L 1872/895

Nifty


Upside 26%


Market Data

6274

Mkt Capital (Rs Crores) 42991

"On a stronger footing.."

Company update

CMP 1844

Target Price 2330

Broad-based performance with positive outlook, positive view retained;

The company remains confident on demand and expects client budgets to remain at

the same levels in FY15E. It announced 2 large deals in the enterprise solutions

(previously Mahindra Satyam) and has a healthy deal pipeline.Previous Target Price 1875

Win- Win on all geographies: During the 2QFY14, winning trio was seen across

geographies. US (contributes 33% on sales) grew by 8%, RoW (23% on sales) by 9.4%

(QoQ). While Europe (contributes 44% on sales) was marginally up by 2.4%(QoQ) in USD

term. Post earning management quoted for better outlook in Europe with greater

traction in Australia and Africa in near term.

All-rounder across all verticals: During the quarter, company reported 2.5% growth in

Telecom, 4.7% growth in manufacturing, media including entertainment, BFSI and

others each in USD term. While Retail, Transport and Logistic snapped a larger growth

figure of 22% sequentially. The company is focusing on BFSI, manufacturing and

telecom.

BT on Slide: The management said revenues from British Telecom (BT) continued to

slide. Those were 12% of consolidated revenues in the June quarter. It believes revenues

from BT will be under pressure.

1 year forward P/E-x

Rs, Crore



Post merger with Satyam, strong demand traction in Telecom (Non BT) has improved

and company's attractive deal win ratios make us optimistic view on the stock. At a

CMP of Rs 1691, relatively the stock is trading at a fair valuation, 12.8x of FY14E

earnings (at USD of Rs60/59.5 for FY14E/FY15E). We maintain “BUY” on the stock with

a price target of Rs 2330 (revised from Rs 1875).


Stock Performance

View and Valuation: Recently, company’s management explained its 6-pillar strategy

i.e., selling 6 service lines of IT, infr- management, network management, security

services, value added services and services such as analytics to telcos. Currently, non-IT

services contribute 33% of telecom revenues for the company. Further, it is focusing on

segments that are growing faster such as platforms, enterprise, mobility and NMACS

(networks, mobility, analytics, cloud and security).

"BUY"23rd Dec' 13


13

Tech Mahindra.


Operating Metrics

Financials



Client contribution to revenue-% 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14

Customer Active 484.00 475.00 475.00 516.00 567.00 576.00

Top 10 clients 50.0% 51.0% 50.0% 50.0% 49.0% 48.0%

Top 5 clients 40.0% 41.0% 39.0% 37.0% 37.0% 36.0%

Top client 17.0% 14.0% 15.0% 13.0% 12.0% 12.0%

Revenue mix - onsite/offshore (%)

Onsite 48.0% 48.0% 48.0% 48.0% 51.0% 51.0%

Offshore 52.0% 52.0% 52.0% 52.0% 49.0% 49.0%

Employee Metrics

Utilisation % 75.0% 74.0% 76.0% 77.0% 76.0% 75.0%

Attrition % 17.0% 16.0% 16.0% 16.0% 15.0% 16.0%

Rs, Cr FY12 FY13 FY14E FY15E FY16E

Net Sales(mn)-USD 1157 2633 3124.01 3592.61 4023.73

Net Sales 11702.4 14332.0 18744.06 21376.04 24343.54

Employee Cost 6591.9 8099.5 10309.24 11756.82 13388.95

Operation and other expenses 2210.1 2287.3 3373.93 3847.69 4381.84

Subcontracting Cost 948.6 882.0 1405.80 1603.20 1947.48

Total Expenses 9750.6 11268.8 13683.17 15604.51 17770.79

EBITDA 1951.8 3063.2 5060.90 5771.53 6572.76

Depreciation 319.0 389.6 509.54 581.08 661.75

Other Income 501.3 212.2 281.16 213.76 243.44

Extra Ordinery Items 36.9 -160.1 -209.39 -238.79 -121.72

EBIT 1632.80 2673.60 4551.36 5190.45 5911.00

Interest Cost 107.3 92.1 98.04 91.37 86.93

PBT 2063.7 2633.6 4525.09 5074.05 5945.79

Tax 228.9 647.9 1176.5 1319.3 1545.9

PAT 1834.8 1985.7 3348.6 3754.8 4399.9

Growth-%

Sales-USD 2.7% 127.6% 18.6% 15.0% 12.0%

Sales 13.8% 22.5% 30.8% 14.0% 13.9%

EBITDA 11.9% 56.9% 65.2% 14.0% 13.9%

PAT 11.9% 8.2% 68.6% 12.1% 17.2%

Margin -%

EBITDA 16.7% 21.4% 27.0% 27.0% 27.0%

EBIT 14.0% 18.7% 24.3% 24.3% 24.3%

PAT 15.7% 13.9% 17.9% 17.6% 18.1%

Expenses on Sales-%

Employee Cost 56.3% 56.5% 55.0% 55.0% 55.0%

Subcontracting Cost 8.1% 6.2% 7.5% 7.5% 8.0%

Operation and other expenses 18.9% 16.0% 18.0% 18.0% 18.0%

Tax rate 11.1% 24.6% 26.0% 26.0% 26.0%

Valuation

CMP 652.5 1081.7 1844 1844 1844

No of Share 23.2 23.2 23.2 23.2 23.2

NW 4815.8 5529.1 8741.77 12360.68 16624.68

EPS 79.0 85.5 144.1 161.6 189.4

BVPS 207.3 238.0 376.31 532.10 715.66

RoE-% 38.1% 35.9% 38.3% 30.4% 26.5%

Dividen Payout-% 3.2% 3.0% 4.1% 3.6% 3.1%

P/BV 3.1 4.5 4.9 3.5 2.6

P/E 8.3 12.7 12.79 11.41 9.74

CMC

1M 1yr YTD

Absolute 15.0 29.2 54.5

Rel. to Nifty 15.4 24.6 37.1


Promoters 51.12 51.12 51.12

FII 23.32 21.84 19.87

DII 17.83 19.05 20.46

Others 7.73 7.99 8.55

Financials2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%

Revenue 560.75 486.61 15.2 458.64 22.3

EBITDA 88.41 77.04 14.8 76.59 15.4

PAT 67.3 53.12 26.7 49.4 36.2

EBITDA Margin 15.8% 15.8% - 16.7% (90bps)

PAT Margin 12.0% 10.9% 110bps 10.8% (120bps)

14

"On track to deliver"

CMP 1510

Target Price 1690

We believe, CMC will continue with its efforts to enhance revenue contribution of high

margin System Integration and ITES segments. Further, its high focus on education

space will also add margin in near term.

Company update Buy




Stock Performance

Nifty

Deal pipeline: The deal pipeline is in line with the last year. It indicated that pursuing

good number of deals in the Developed and as well emerging markets. Considering

current sound demand environment across geographies (like US and Europe) and

verticals Company is more optimistic for clients acquisition and deal executions ahead.

Now, CMC is focusing on new emerging segments like IMS (Infrastructure

Management Services), Cloud, Big data, Mobility and Analytics. Considering its

impressive client as well as market response, company is expecting to quantify into

revenue. Its new and emerging projects like Mining Management System, GPS System

and Port & Cargo Management System would play a major role for generating

revenue.

View and Valuation: CMC expects the growth momentum to improve in the quarters

ahead and the revenue growth to be higher than the NASSCOM guidance in FY14. The

Company remains a strong with excellent earning visibility led by joint effort of market

strategy by TCS (contributes 59% of sales) in its product and solutions. For a long-term

prospect, we remain positive on the stock, taking its earning visibility and healthy

earnings among the mid-cap IT space (over 25% CAGR in earnings over FY2013-15E). At

a CMP of Rs 1510, stock trades at 14.9X FY14E earnings. We have "BUY" view on the

stock and we revise our target price from Rs1490 to Rs1690.

Steady Margin: During the quarter, EBITDA margin was almost unchanged at 15.8% due

to wage hikes (70 bps), but also has positive impact from currency gain (170 bps) which

were reinvested into the business. However, Management is still confident to maintain

the margin in a range of 15-16%.

6167

4575

1 year forward P/E

Rs, Crore



Considering recent healthy demand environment across the IT space with favorable

supply side scenario, we remain confident on the stock for better earning visibility and

stable margin picture. Still, we reiterate our positive stance on the long-term story of

CMC due to its focus on high margin SI and ITES businesses.

For 2QFY14E earnings, CMC witnessed better Sales and PAT growth with 15% sales

growth driven by the strong growth from the System Integration (29%) coupled with the

good growth from the System Integration (24%) and ITES business (16%) sequentially.

PAT grew by 27%(QoQ) because lower effective tax rate (from 34%, 1QFY14) to 20% of

earning before tax) .

517326

CMC

13.4%

Market Data

52wk Range H/L 1560/1107

BSE Code


Upside 12%

NSE Symbol


"BUY"20th Dec' 13


15

CMC

Key facts from recent Concall ►CMC continues to target growth ahead of the overall IT industry; the company expects

to grow faster than that in the current financial year

►Expects operating Profit margin between 15 percent and 16 percent for FY14E,

►The Capex expected to be Rs 190 crore (planned is around Rs 230 crore) for FY'14.The

capex will be financed by internal accruals.

►Company’s hiring Plan; a net addition of 400-500 this year

► Notably, it targets revenues of Rs 250-300 crore from Education and Training business

in next two 3-4 years timeline.



Financials;


Rs, Cr FY10 FY11 FY12 FY13 FY14E FY15E

Net Sales 870.73 1084.40 1469.34 1927.87 2239.31 2600.41

Purchases of stock-in-trade 99.35 99.28 145.40 188.56 201.54 234.04

Employee Cost 276.16 345.13 440.22 521.65 593.42 702.11

Subcontracting and outsourcing cost 173.56 262.35 446.11 679.73 794.96 923.15

Other expenses 159.94 170.17 213.63 222.88 235.13 273.04

Total Expenses 709.01 876.93 1245.36 1612.82 1825.04 2132.34

EBITDA 161.72 207.47 223.98 315.05 414.27 468.07

Depreciation 9.85 10.46 21.37 23.20 41.95 60.69

Other Income 18.75 11.80 17.46 13.17 22.39 26.00

EBIT 151.87 197.01 202.61 291.85 372.33 407.38

Interest Cost 3.17 0.22 0.02 0.18 0.2 0.25

PBT 167.45 208.59 220.05 304.84 394.52 433.14

Tax 24.23 32.42 68.59 76.76 86.79 99.62

PAT 143.22 176.17 151.46 228.08 307.73 333.52

Growth-%

Sales -7.4% 24.5% 35.5% 31.2% 16.2% 16.1%

EBITDA 27.7% 28.3% 8.0% 40.7% 31.5% 13.0%

PAT 23.3% 23.0% -14.0% 50.6% 34.9% 8.4%

Margin -%

EBITDA 18.6% 19.1% 15.2% 16.3% 18.5% 18.0%

EBIT 17.4% 18.2% 13.8% 15.1% 16.6% 15.7%

PAT 16.4% 16.2% 10.3% 11.8% 13.7% 12.8%

Expenses on Sales-%

Employee Cost 31.7% 31.8% 30.0% 27.1% 26.5% 27.0%

Subcontracting Cost 19.9% 24.2% 30.4% 35.3% 35.5% 35.5%

Tax rate 14.5% 15.5% 31.2% 25.2% 22.0% 23.0%

Valuation

CMP 1340.0 2079.6 994.8 1410.0 1510 1510

No of Share 1.50 1.50 3.00 3.03 3.03 3.03

NW 510.68 654.02 772.19 946.26 1192.11 1454.91

EPS 95.48 117.45 50.49 75.27 101.56 110.07

BVPS 340.45 436.01 257.40 312.30 393.44 480.17

RoE-% 28.0% 26.9% 19.6% 24.1% 25.8% 22.9%

Dividen Payout ratio 18.6% 19.9% 23.2% 19.4% 20.1% 21.2%

P/BV 3.94 4.77 3.86 4.51 3.84 2.78

P/E 14.03 17.71 19.70 18.73 14.87 13.72

BUY

1M 1yr YTD

Absolute 2.8 4.4 1.4

Rel. to Nifty 0.1 -1.3 -14.6


3Promoters 52.1 52.2 52.2

FII 15.8 14.9 14.0

DII 12.5 12.5 13.3

Others 19.5 20.5 20.5

Financials Rs, Crore


Revenue 567 517 9.7 474 19.6

EBITDA 249 197 26.4 165 50.9

PAT 205 174 17.8 117 75.2

EBITDA Margin 43.9% 38.1% 580bps 34.8% 910bps

PAT Margin 36.2% 33.7% 250bps 24.7% 1150bps

16

Change from Previous -

NSE Symbol


Stock Performance-%


Mkt Capital (Rs, Cr)

Nifty 6217

The company have one more business segment ‘Nutraceuticals’ relatively smaller and

newer as compared to other business segment can act as growth driver going forward. The

management of the company is quite optimistic for this business segment and has guided

that this business at 40-50% CAGR (albeit on a low base) over the next 2-3 years.

2QFY14 Results Update.The company posted strong 2QFY4 results with net sales growing to Rs 566 Cr up by

19.7% YoY on the back of good growth coming from all business segments. The generic

API grew by 18% YoY to Rs 261 Cr for the quarter and CRAMS business segment grew by

20% YoY to Rs 271 Cr. The company derives almost 45-50% of revenues each from

CRAMS and generic API business while rest comes from ‘Nutraceuticals’.One Year Price vs Nifty


15631

Average Daily Volume 5.43

The operating EBITDA for the quarter came at Rs 250 Cr and OPM at 43.9 %. Company’s

2QFY14 EBITDA margins were higher than 34.8% reported in Q2FY13 on account of

higher gross margins, lower power cost and forex loss in Q2FY13.The RM cost as % of net

sales stands at 50% for the 2QFY14 while employee cost as % of net sales was 10 %.

Company is one of the few CRAMS (Contract Research and Manufacturing Services)

players with a superior business mix comprising high-margin custom synthesis of APIs

(Active Pharma Ingredients) and intermediates for innovator companies. The company

collaborates with innovators throughout the product development cycle. Post

commercialization, company is usually the key supplier of APIs and intermediates for these

products to the innovators. In 2012-13, the company added six products to its custom

synthesis portfolio.The CRAMS business which contributes nearly 45%- 50% of the total revenues have from

Rs 560 Cr in 2009 to Rs 1000 Cr translating CAGR of 15 %.The Generic API business

which contributes another 45-50 % to the total revenues is also well track after witness

some pressure in FY10.As on FY13 this segment contributed Rs 1029 Cr to the total

revenues and this segment to more revenues to the company in the light of upcoming

patent cliff of US and new launches .

52wk Range H/L 1189/905

DIVISLAB

Market Data

BSE Code 532488

14%Upside

DIVISLABGood Growth Ahead

Target Price 1350

Previous Target Price -

Result Update

CMP 1186

About The Company :Divi’s Laboratories Limited is an India-based manufacturer of Active Pharmaceutical

Ingredients (APIs) and Intermediates. Divi is engaged in manufacture of generic APIs,

custom synthesis of active ingredients for innovator companies and other specialty

chemicals like peptides and nutraceuticals.

Investment Rationale :

"BUY"19th Dec' 13


17


DIVISLAB

Continued…The net profits for the 2QFY14 came at Rs 205 Cr and NPM came at 36.2%.The net profits

also include forex gain of Rs 31 Cr. The company reports its forex gain under other

income headings and forex loss under its other expenditure head. The tax rate for the

quarter stands at 22%.

Graphical Depiction

Revenue Break Up: 2QFY14


Company has capitalized Fixed assets to the tune of Rs120 Cr for H1 FY14. The company

will commercialize DSN SEZ by the end of the year and the FDA inspection post that. The

new DSN SEZ contribution will start in Q1 FY15E and full benefits will fructify only from Q2

FY15E.The existing DSN blocks contributed Rs125 Cr revenues in Q2 FY14 as against

Rs70.8 Cr in Q1 FY14.

Management GuidanceThe management of the company after strong 2QFY14results expects that revenue to

grow by 15-20 % (15% guided earlier), with FY15E growth expected above 20%. The

management further indicated that this high level of OPM is not sustainable but reiterated

that 38% levels OPM is quite reachable . On Power shortage ,which declined the OPM in

1QFY14 has been solved and will aid margin expansion going forward. The capex

guidance stands at INR500-600m (apart from INR2b addition from CWIP) and tax rate

guidance remains between 23-24%.

View & ValuationThe company is not only the most profitable company in the CRAMS space, but also

features among the most profitable companies in the Indian healthcare sector with EBIDTA

margin of 35-40% backed by its strong chemistry skills and custom synthesis presence.The

stock is currently trading at CMP of Rs 1186, strong 2QFY14 results ,optimistic

management guidance and better business model in comparison to its peers makes us

confident for the stock. We are positive for the stock and recommend BUY with

target price of Rs 1350.


18

DIVISLAB

Sales and PAT Trend (Rs)


Net sales growing to Rs 566 Cr up by 19.7%

YoY on the back of good growth coming from

all business segments.

2QFY14 EBITDA margins were higher than

34.8% reported in Q2FY13 on account of

higher gross margins, lower power cost and

forex loss in Q2FY13.

OPM %


NPM %

The 2QFY14 PAT also include forex gain of Rs

31 Cr. The company reports its forex gain

under other income headings and forex loss

under its other expenditure head.




19

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Economy & Finance

India Equity Analytics for today - Buy DCB with value the bank at Rs.62/share