NiveshDaily FROM RESEARCH DESK October 13, 2014

Transcription

NiveshDaily
October 13, 2014
INDICES
Indices
Previous (day) Close
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Sensex
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(As on 10th October, 2014)
FROM RESEARCH DESK
 Stock Update
HSIL Ltd: Price target achieved; Maintain target price of Rs 425 and revise rating to HOLD
 Q2FY15E Results Preview
Q2FY15E Results Preview | Oil & Gas Sector
Q2FY15E Results Preview | Telecom Sector | Seasonality to haunt wireless revenue growth
trajectory...
 Results Preview
Liberty Shoes, RIL
 Economy Update
Index of industrial production growth slows to 0.4% in August 2014
 Research Update included
Infosys Ltd.|Q2FY15 Result Update | Above expectation performance; Maintain HOLD with
previous target price of Rs.3,952
 Global Markets - Outlook
 IndiaNivesh Universe | Valuation Table
 Result Today
Daljeet S. Kohli
Head of Research
Mobile: +91 77383 93371, 99205 94087
Tel: +91 22 66188826
daljeet.kohli@indianivesh.in
IndiaNivesh Research
IndiaNivesh Securities Private Limited
601 & 602, Sukh Sagar, N. S. Patkar Marg, Girgaum Chowpatty, Mumbai 400 007. Tel: (022) 66188800
IndiaNivesh Research is also available on Bloomberg INNS, Thomson First Call, Reuters and Factiva INDNIV.
Stock Update
Prerna Jhunjhunwala
Research Analyst
Mobile: +91 77388 92065
Tel: +91 22 66188848
prerna.jhunjhunwala@indianivesh.in
HSIL Ltd: Price target achieved; Maintain target price of Rs 425
and revise rating to HOLD
We had recommended HSIL Ltd in portfolio at Rs 140 with target price of Rs 180.
Thereafter, we initiated coverage on HSIL Ltd at price of Rs 215 on 23rd May 2014,
with BUY rating and target price of Rs 278 per share. On outperformance in FY14
results, we upgraded our target price to Rs 330 per share. Our target of Rs 330 per
share was achieved on 2nd September 2014 which was further revised to Rs 425. On
10th October 2014 target price of Rs 425 was also achieved. Our key investment
rationale for recommending HSIL were: 1) Thrust on premiumisation in building
products 2) packaging products segment expected to return to black 3) focus on
better sanitation levels due to increasing disposable household income and rapid
urbanisation and 4) improving financial performance. In our opinion, these levers
are still in place. Due to increasing focus of government and corporates on better
sanitation levels in the country, the growth visibility has improved. Even on packaging
products segment, the losses are reducing.
At CMP of Rs 402, the stock trades at 24.5x and 15.8x its FY15E and FY16E earnings
of Rs 16.4 and Rs 25.5 per share respectively. Despite the sharp run-up in share
price post Q1FY15 results, the valuation appears attractive. Its key competitor Cera
Sanitaryware Ltd trades at PE of 25.2x its FY16E Bloomberg consensus earnings
estimate. However, we would wait till Q2FY15E results to revise our target price.
Currently we maintain our SOTP based target price of Rs 425 and revise the rating
to HOLD.
NiveshDaily
October 13, 2014 | 2
Results Preview
Prerna Jhunjhunwala
Research Analyst
Mobile: +91 77388 92065
Tel: +91 22 66188848
prerna.jhunjhunwala@indianivesh.in
Liberty Shoes
Particulars (Rs Mn)
Net Sales
EBITDA
PAT
EPS
Q2FY15E
1479
111
40
2.3
EBITDA
PAT
Q1FY15 Q2FY14 QoQ (%) YoY(%)
1016
1044
45.6
41.7
93
82
19.8
35.5
33
30
20.6
31.4
2.0
1.8
19.8
31.4
Margin (%)
Bps Chg
7.5
9.1
7.8
-161
-34
2.7
3.3
2.9
-56
-21
Source: Company, IndiaNivesh Research
Liberty is likely to declare its Q2FY15E standalone results today. We expect the
company to report sales growth of 41.7% yoy to reach Rs 1479 mn in Q2FY15E
against Rs 1044 mn in Q2FY14. This growth is likely to be fuelled by higher domestic
sales. In Q1FY15, the company had reported about non-completion of an
institutional order, which is likely to complete in Q2FY15E – boosting the topline.
We expect 34 bps contractions in EBITDA margin due to higher share of lower margin
businesses of institutions / wholesale orders. EBITDA is likely to grow 35.5% yoy at
7.5% in Q2FY15E against 7.8% in Q2FY14. PAT is likely to grow 31.4% yoy to reach
Rs 40 mn in Q2FY15E from 30 mn in Q2FY14.
Key things to watch:
Development in corporate restructuring and expansion of retail stores
Valuation
At CMP of Rs 300, the stock is trading at PE of 22.2x and 15x its FY15E and FY16E
earnings of Rs 13.5 and Rs 20 per share. We have a BUY rating on the stock with
target price of Rs 400, valuing the stock at 20x its FY16E earnings.
Abhishek Jain
Research Analyst
Mobile: +91 77383 93433
Tel: +91 22 66188832
abhishek.jain@indianivesh.in
Reliance Ind. (RIL)
Quick Fundamentals (Rs. Mn)
Reliance Industries
Revenue
EBIDTA
PAT
EPS (RS.)
EBITDA %
PAT %
Q2 FY15e
983,570
79,412
55,810
17.29
Margin %
8.1
5.7
Q1 FY15
963,510
75,300
56,490
17.50
Margin %
7.8
5.9
Q2 FY14
1,037,580
78,490
54,900
17.01
Margin %
7.6
5.3
Q-o-Q %
Y-o-Y%
2.1
‐5.2
5.5
1.2
‐1.2
1.7
‐1.2
1.7
bps
26
51
-19
38
Source: Company Filings; IndiaNivesh Research; BL‐ Bloomberg

RIL’s Q2FY15 revenue is expected to down by 5.2% YoY (up 2.1% QoQ) due to
lower refining and natural gas volume.

Refining margin is expected to hurt slightly due o decline in GRMs. Singapore
GRM declined 19% QoQ from USD5.8/bbl to USD4.7/bbl, touching low of
USD2.5/bbl in July-end, as auto-fuel cracks declined.

We expect RIL to report GRM at ~ USD 8.1/bbl in Q2FY15 vs. USD 7.7/bbl in
Q2FY14 and USD 8.7/bbl in Q1FY15.

Petchem margins would expand QoQ basis led by higher polymer and polyester
spreads.
NiveshDaily
October 13, 2014 | 3
Results Preview (contd...)

We expect average Q2FY15 KG-D6 volume of ~12.5mmscmd v/s 13.7mmscmd
in Q1FY15.
Key points to watch out
(1) GRM, (2) Petchem margin (3) comment on ramp up of KG-D6 production and (4)
Refinery volume growth
Valuation
We believe the company would be beneficiary of hike in natural gas price. RIL’s new
refining/ petchem projects likely to add to earnings from end-FY16/FY17,Further,
Shale Gas and Retail business also showing remarkable growth and likely to be a
key revenue and profitability driver going Ahead. At CMP Rs. 960 stock is trading at
11.5x FY16E EPS which is lower than its mean of 15x. We maintain buy rating on the
stock with target price of Rs. 1274.
NiveshDaily
October 13, 2014 | 4
Economy Update
Daljeet S. Kohli
Head of Research
Mobile: +91 77383 93371, 99205 94087
Tel: +91 22 66188826
Kaushal Patel
Research Associate
Mobile: +91 77383 93414
Tel: +91 22 66188834
kaushal.patel@indianivesh.in
Index of industrial production growth slows to 0.4% in August
2014
Weightage
Growth YoY (%)
(%)
Aug-13
Jul-14
IIP
100.0
0.4
0.4
Mining
14.2
‐0.9
1.2
Manufacturing
75.5
‐0.2
‐1.0
Electricity
10.3
7.2
11.7
Source: MOSPI, IndiaNivesh Research
Description
Aug-14
0.4
2.6
‐1.4
12.9
Index of Industrial Production (IIP) increased by 0.4% y-o-y (-3.5% m-o-m) in August
2014 which was similar to y-o-y expansion in July 2014 and in August 2013. IIP
numbers were way below market expectations of 2.6% y-o-y growth. August 2014
IIP numbers were in positive zone only because of positive performance by mining
and electricity. Mining and Electricity sectors showed positive growth of 2.6% y-o-y
and 12.9% y-o-y, respectively in August 2014 whereas Manufacturing sector continue
to report negative growth and it contracted 1.4% y-o-y. The cumulative growth in
the mining, manufacturing and electricity during Apr-Aug’15 over the corresponding
period has been 2.5%, 1.7% and 11.7%, respectively.
Manufacturing:
Manufacturing segment index (76.0% weight in IIP index) decreased 1.4% y-o-y
(-4.4% m-o-m) in August 2014 as compared to 0.8% y-o-y growth in July 2014 and
-4.0% y-o-y growth in August 2013. However, 11 out of the 22 industries in the
manufacturing sector registered a positive growth during August 2014. Industries
with considerable positive growth in August 2014 include ‘Basic metals’ (+19.1%),
‘Other transport equipment’ (+14.3%) and ‘Luggage, handbags, saddlery, harness
& footwear; tanning and dressing of leather products’ (+10.9%). On the other hand,
industries with considerable negative growth in July 2014 include ‘Radio, TV and
communication equipment & apparatus’ (-48.8%), ‘Office, accounting & computing
machinery’ (-43.9%) and ‘Furniture; manufacturing’ (-17.8%).
Mining:
Mining segment, forming 14.0% weight in the IIP index, reported a positive growth
of 2.6% y-o-y (-0.8% m-o-m) in August 2014 as compared to 1.2% y-o-y growth in
July 2014 and 0.9% y-o-y de-growth in August 2013.
Electricity:
Electricity segment (10.0% weight in IIP index) is continue to registered a positive
growth as it increased by 12.9% y-o-y in August 2014 (+0.2% m-o-m) as compared
to 11.7% y-o-y growth in July 2014 and 7.2% y-o-y growth in August 2013.
User Based Classification:
As per user based classification, Basic goods production increased 9.6% y-o-y (+0.9%
m-o-m) for the month of August 2014 as compared to 7.4% y-o-y growth in July
2014 and 0.9% growth in August 2013. The segment has shown 8.6% y-o-y
cumulative growth in Apr-Aug’15.
Capital goods production, a barometer of demand, for the month of August 2014
continue to decline as it decreased 11.3% y-o-y (-16.6% m-o-m) as compared to degrowth of 3.9% in July 2014 and de-growth of 2.0% in August 2013. The segment
has shown cumulative positive growth of 4.3% in Apr-Aug’15.
Intermediate goods production for the month of August 2014 increased 0.3% y-o-y
(-1.9% m-o-m) as compared to growth of 3.0% in July 2014 and growth of 3.8% in
August 2013. The segment has shown cumulative positive growth of 2.5% in AprAug’15.
Consumer goods segment de-grew by 6.9% y-o-y (-4.9% m-o-m) in August 2014 as
compared to 7.7% y-o-y de-growth in July 2014 and 0.9% y-o-y de-growth in August
2013. The segment has shown cumulative negative growth of 4.9% in Apr-Aug’15.
NiveshDaily
October 13, 2014 | 5
Economy Update (contd...)
Consumer goods had been posting a de-growth for almost 14 months and it was
only in May 2014 that the sector posted a growth, thus implying that consumers
are reeling under high inflation and expenditure has subdued.
The consumer durables reported negative growth of 15.0% y-o-y (-0.5% m-o-m) as
compared to de-growth of 20.9% y-o-y in July 2014 and de-growth of 8.3% in August
2013. The segment has shown cumulative negative growth of 12.9% in Apr-Aug’15.
The consumer non durables registered de-growth of 0.9% y-o-y (-7.5% m-o-m) in
August 2014 as compared to 2.4% y-o-y growth in July 2014 and 5.4% y-o-y growth
in August 2013. The segment has shown cumulative positive growth of 0.9% in AprAug’15.
Overall, Indian consumers are still not opening up their purses to buy stuff which
will make India’s factories buzz with activities.
High positive growth in important items:
Some of the important items showing high positive growth during August 2014
on y-o-y basis include Stainless/ alloy Steel’ (+161%), ‘Sealed compressors’’ (+121%),
‘Air Conditioner (Room)’ (+80%), ‘Plastic Machinery Incl. Moulding Machinery’
(+59%), ‘Rice’ (+57%), ‘Scooter and Mopeds’ (+32%), ‘Three-Wheelers (including
passenger & goods carrier)’ (+31%) and ‘Fasteners (Excl. Zip-Fasteners)’ (25%).
High negative growth in important items:
Some of the important items showing high negative growth during August 2014
on y-o-y basis include ‘Telephone Instruments (incl. Mobile Phones &
Accessories)’ (-57%), ‘Generator/ Alternator’ (-51%), ‘Computers ‘ (-50%), ‘Marble
Tiles/ Slabs’ (-44%), ‘Polythene Bags Incl. HDPE & LDPE Bags’ (-42%), ‘Aluminium
Conductor’ (-37%), ‘Sugar Machinery’ (-34%), and ‘Sugar’ (-31%).
Our Take:
India’s factory output surprised negatively as it increased only 0.4% y-o-y in August
2014 as against market expectations of 2.6% y-o-y growth. IIP growth slowed mainly
due to contraction in manufacturing output and lower offtake of consumer goods.
Manufacturing sector grew by -1.4% y-o-y in August 2014 as compared to -1.0% yo-y growth in July 2014. This suggests there is still no pickup in investment activities
in the economy. It shows that manufacturing sector is still not out of the woods and
any visible turnaround in industrial growth is still not happening.
The consumer goods sector was in the positive zone only in May 2014 which shows
that positive sentiments haven’t translated into concrete demand that will drive
production of goods. People are still putting off their discretionary purchases. This
certainly has to do with high retail inflation refusing to come down significantly.
With food taking up the bulk of the household budget, there is little scope for
spending on other things. There is need to stimulate demand in the economy.
IIP for July 2014 was also revised downwards to 0.4% from the provisional estimates
of 0.5%.
As we mentioned in the May 2014 IIP report that one month data raised the hope
of recovery in the economy but one should refrain to conclude that we are back on
the growth path as we have to wait for few more months. Overall, the number
indicates that full fledged industrial recovery could still be some distance away. The
cancellation of coal block allocations by the Supreme Court is another risk to growth.
Overall, the new government will need to put in greater efforts to sustain the strong
GDP growth of the Q1FY15.
NiveshDaily
October 13, 2014 | 6
Economy Update (contd...)
Weightage
(%)
100.0
Description
IIP
Industry-based classification:
Mining
14.2
Manufacturing
75.5
Electricity
10.3
Use-based classification:
Basic goods
45.7
Capital goods
8.8
Intermediate goods
15.7
Consumer goods
29.8
Consumer durables
8.5
Consumer non-durables
21.3
Aug-13
165.4
Index Value
Jul-14 Aug-14
172.1
166.1
Growth YoY (%)
Jun-14 Jul-14
3.9
0.4
Aug-13
0.4
Aug-14
0.4
Aug-13
‐3.5
Growth MoM (%)
Jun-14 Jul-14
‐2.2
0.4
Growth YoY (%)
Aug-14 Apr13-Aug13 Apr14-Aug14
‐3.5
0.0
2.8
113.6
175.4
163.1
117.5
180.8
183.8
116.6
172.9
184.1
‐0.9
‐0.2
7.2
4.5
2.5
15.7
1.2
‐1.0
11.7
2.6
‐1.4
12.9
‐2.2
‐4.0
‐0.9
‐2.8
‐2.3
‐1.3
‐3.5
0.8
1.2
‐0.8
‐4.4
0.2
‐3.6
‐0.1
4.6
2.5
1.7
11.7
150.4
245.0
152.0
171.7
257.4
137.8
163.4
260.8
155.5
168.1
219.7
147.6
164.9
217.4
152.5
159.9
218.7
136.6
0.9
‐2.0
3.8
‐0.9
‐8.3
5.4
10.0
23.3
2.4
‐9.7
‐23.4
0.6
7.4
‐3.9
3.0
‐7.7
‐20.9
2.4
9.6
‐11.3
0.3
‐6.9
‐15.0
‐0.9
‐1.1
‐9.7
0.7
‐5.7
‐7.3
‐4.4
‐2.3
18.7
‐3.0
‐9.5
‐19.5
‐2.6
0.1
‐3.7
3.0
1.6
3.9
0.3
0.9
‐16.6
‐1.9
‐4.9
‐0.5
‐7.5
0.2
0.7
2.4
‐1.6
‐11.2
6.8
8.6
4.3
2.5
‐4.9
‐12.9
0.9
Jun-14
Aug-14
Apr-14
Feb-14
Oct-13
Dec-13
Jun-13
Aug-13
Apr-13
Feb-13
Oct-12
Dec-12
Jun-12
Aug-12
Apr-12
Mining growth (%)
Aug-14
Jun-14
Apr-14
Feb-14
Oct-13
Dec-13
Aug-13
Jun-13
Apr-13
Feb-13
Oct-12
Electricity index value
Dec-12
-5
Aug-12
0.0
Jun-12
0
Apr-12
50.0
Feb-12
5
Oct-11
100.0
Dec-11
10
Aug-11
150.0
Jun-11
15
Apr-11
200.0
Aug-14
Jun-14
Apr-14
Feb-14
Oct-13
Dec-13
Aug-13
Jun-13
Apr-13
Feb-13
Oct-12
Mining index value
Dec-12
-10
Aug-12
0.0
Jun-12
-5
Apr-12
50.0
Feb-12
0
Oct-11
100.0
Dec-11
Manufacturing growth (%)
5
Aug-11
Feb-12
Manufacturing index value
150.0
Jun-11
Oct-11
IIP growth (%)
Apr-11
Dec-11
Jun-14
Aug-14
Oct-13
Jun-12
IIP index value
Jun-11
-10
Aug-11
0.0
Apr-11
-10
Apr-14
0.0
Feb-14
-5
Dec-13
50.0
Jun-13
-5
Aug-13
50.0
Apr-13
0
Feb-13
100.0
Oct-12
0
Dec-12
100.0
Aug-12
5
Apr-12
150.0
Feb-12
5
Oct-11
150.0
Dec-11
10
Jun-11
200.0
Aug-11
10
Apr-11
200.0
Electricity growth (%)
15.0
10.0
5.0
IIP growth (%)
Jun-14
Aug-14
Apr-14
Feb-14
Dec-13
Oct-13
Jun-13
Aug-13
Apr-13
Feb-13
Oct-12
Dec-12
Jun-12
Aug-12
Apr-12
Feb-12
Oct-11
Dec-11
Jun-11
-10.0
Aug-11
-5.0
Apr-11
0.0
IECI growth (%)
Source: MOSPI, IndiaNivesh Research; IECI: Index of Eight Core Industries
NiveshDaily
October 13, 2014 | 7
October 13, 2014
Oil & Gas Sector
Q2FY15E Results Preview
Daljeet S. Kohli
Head of Research
Mobile: +91 77383 93371, 99205 94087
Tel: +91 22 66188826

In Q2FY15, Brent average crude price decreased 7% QoQ to US$102.5/bbl
driven by rise in output from Iraq and Libya in spite of the unrest in the region,
higher production from US and lower demand from China due to economic
slowdown.

Upstream companies revenue would be supported by lower under recovery
in Q2FY15. We estimate subsidy at Rs. 205 bn (down 28% QoQ) benefited
from Stable rupee dollar exchange rate, monthly hike in diesel prices and
lower crude prices. We assume upstream sharing would be 50% of total
subsidy.

Refining margin is expected to hurt slightly due o decline in GRMs. Singapore
GRM declined 19% QoQ from USD5.8/bbl to USD4.7/bbl, touching low of
USD2.5/bbl in July-end, as auto-fuel cracks declined.

Petchem business would be benefited from increase in the margins across all
the petchem products. Petchem margins would expand QoQ basis led by
higher polymer and polyester spreads

Spot LNG prices declined during the quarter due to seasonality factor and
lower global demand which is likely to benefit GAIL’s spot LNG volumes along
with marketing margins on spot sales.

Expect Cairn’s revenues to decline led by lower oil production volumes, due
to shutdown in Mangala processing terminal.
Abhishek Jain
Research Analyst
Mobile: +91 77383 93433
Tel: +91 22 66188832
abhishek.jain@indianivesh.in
Under-recovery and subsidy sharing by upstream companies
Particulars
FY11
FY15E
FY16E
Bre nt (USD/bbl )
87.0
113.0
111.0
108.0
109.0
102.0
105.0
105.0
Rs /USD excha nge ra te
45.6
49.5
54.8
60.6
60.0
61.0
60.0
60.0
782.0
1,385.0
1,610.3
1,406.0
285.0
205.0
823.4
760.0
302.6
550.0
600.0
670.2
155.5
102.5
411.7
380.0
Tota l under-recoveri es (Rs b
FY12
FY13
FY14
Q1FY15
Q2FY15e
Subsidy sharing
Ups trea m s ha re (Rs bn)
s ha re of ONGC (Rs bn)
248.8
444.7
494.2
563.8
132.0
86.1
345.8
319.2
s ha re of OIL (Rs bn)
33.0
73.5
78.9
87.4
18.5
13.1
55.6
54.7
s ha re of GAIL (Rs bn)
21.2
31.8
26.9
19.0
5.0
3.3
10.3
6.1
70.0
0.0
0.0
20.0
0.0
0.0
0.0
0.0
GoI s ha re (Rs bn)
% share
409.0
835.0
1,010.3
702.7
129.5
102.5
411.7
380.0
Upstream share
38.7%
39.7%
37.3%
45.0%
54.6%
50.0%
50.0%
50.0%
s ha re of ONGC
82.2%
80.8%
82.4%
84.0%
84.9%
84.0%
84.0%
84.0%
s ha re of OIL
10.9%
13.4%
13.2%
13.8%
11.9%
12.8%
13.5%
14.4%
7.0%
5.8%
4.5%
2.8%
3.2%
3.2%
2.5%
1.6%
OMCs (Rs bn)
s ha re of GAIL
Source PPAC; IndiaNivesh Research
Outlook and valuation
Despite strong rally in oil & Gas sector, we continue with our positive stance on the sector on the back of ongoing reforms like
rationalization of subsidy, increase in natural gas prices and potential reserve accretion from large E&P acreage. Further fall in crude
prices will lead to lower under-recovery in coming quarters. ONGC and Oil India is expected to outperform due to reduction in
subsidy burden and volume growth from new fields. We believe GAIL would be able to overcome constrains of gas supply shortages
and maintain growth due to dominant market position in gas transmission as well as diversified business model. We expect Cairn to
deliver strong production growth from Rajasthan field, that will enable Cairn to generate strong free cash flows. We believe that
hike in natural gas price and plans to invest Rs. 1.5t in the next 3 years in petcoke gasification, polyester expansion & off-gases crack,
E&P activities, telecom and retail businesses are big trigger in medium term for RIL.
Q2FY15E Results Preview (contd...)
Cairn India
Rs. Mn
Q2 FY15e
Q1 FY15
Revenue
39,200
44,829
46,499
‐12.6
‐15.7
EBIDTA
27,100
30,524
34,812
‐11.2
‐22.2
PAT
23,440
10,929
33,851
114.5
‐30.8
Adjusted PAT(Exc forex gain/loss)
21,940
26,214
29,559
‐16.3
‐25.8
12.29
5.73
17.74
114.5
‐30.8
Margin %
69.1
56.0
Margin %
68.1
58.5
Margin %
74.9
63.6
bps
104
-251
bps
-573
-760
EPS (RS.)
EBITDA %
Adjusted PAT %
Q2 FY14 Q-o-Q %
Y-o-Y%
Source: Company Filings; IndiaNivesh Research

We expect Cairn India to report net sales of Rs 39.2 bn (down 15.7% YoY and
12.6 % Q-o-Q) in Q2FY15. Cairn’s revenues to decline led by lower oil
production volumes, due to shutdown in Mangala processing terminal.

During the quarter gross oil sales stood at 163.26 kboepd from the Rajasthan
field vs 181.8 kboepd in Q1FY15 and 174.2 kboepd in Q2FY14.

EBITDA margin to contract by 573 bps YoY due to lower realization and higher
unsuccessful exploration cost.

We estimate realization at USD 92.8/bbl in Q2FY15 vs USD 97/bbl in Q1FY15
and USD 95.3/bbl in Q2FY14.

We expect other income to increase led by higher cash balance. We estimate
forex gain (due to depreciation of INR QoQ basis) Rs. 1.5 bn in Q2FY14.
Key points to watch out for: (a) Net realization, (b) Forex fluctuations (c)
Management commentary on production ramp-up d) profit petroleum sharing
Valuation
We believe effective utilization of cash will be critical to stock performance in the
medium term and re-investment of cash in value accretive E&P opportunities will
be positive for the company and vice versa. Cairn India is a play on crude price and
INR/USD exchange rate. Its flagship Rajasthan block is a quality asset with potential
for significant upgrades in 2P reserves. Key catalysts for upside in the stocks are 1)
high production; 2) increasing reserve base; 3) strong free cash flow; and 4) being a
key gainer from a weaker INR and exchange rate. At CMP of Rs. 285 the stock trades
at 4.5x FY16E EPS. We maintain buy rating on the stock with DCF based target price
of Rs. 425.
<<Exchange rate
Sensitivity of Cairn's value to brent oil prices and exchange rates
Oil prices>>
424
53
55
57
59
61
90
369
370
372
373
371
100
396
398
400
401
403
110
427
429
431
433
435
120
452
454
456
458
461
130
482
484
487
489
492
140
512
515
518
520
523
Oil & Gas Sector
October 13, 2014 | 2
GAIL
Rs. Mn
Revenue
Q2FY15e
141,134
Q1FY15
133,722
Q2FY14
140,025
EBITDA
PAT
EPS (RS.)
14,210
10,448
9,400
7.41
6,214
4.90
Margin
10.07
6.7
EBITDA Margin%
PAT Margin %
Q-o-Q %
6
y-o-y%
1
14,634
36
‐3
9,156
7.22
51
51
3
3
Margin
7.81
Margin
10.45
bps
225
bps
-38
4.6
6.5
201
12

Transmission volumes are expected to be marginally higher due to higher
LNG imports by GAIL on a QoQ basis. We expect gas transmission volumes to
increase QoQ to 98 mmscmd v/s 97 in Q1FY15

Petchem business would be benefited from increase in the margins across all
the petchem products.

Trading margin would be strong due to lower LNG prices.

We expect GAIL’s subsidy sharing at Rs. 3.3 bn in Q2FY15 v/s Rs. 7bn in Q2FY14
and Rs.5bn in Q1FY15
Key points to watch out for: a) Subsidy sharing, b) transmission volume c) Petchem
and trading business margin d) LPG/LHC business performance
Valuation
We believe that GAIL would be able to overcome constraints on gas supply shortages
and maintain growth due to dominant market position in gas transmission as well
as diversified business model. We expect the growth to resume from H2FY15, with
new supplies from the LNG terminals at Kochi, Dahej and incremental gas in the KG
basin from RIL and ONGC. Further cap on of subsidized LPG cylinders and hike in
diesel prices are positive for the stock.
At CMP Rs. 444 GAIL trades at a P/E of 11.4x FY16e earnings estimates, which is
lower than its historical PE of 14x.We maintain buy rating on the stock with target
price Rs. 468 (based on 12xFY16E EPS).
Oil India
(Rs. Mn)
Q2FY15e
Q1FY15
Q2FY14
Revenue
28,206
26,553
14,109
12,552
9,939
16.53
EBIDTA
PAT
EPS (RS.)
Q-o-Q %
Y-o-Y %
28,364
6.2
‐0.6
14,512
12.4
‐2.8
8,519
9,036
16.7
10.0
14.17
15.03
16.7
bps
10.0
bps
EBITDA %
50.0
47.3
51.2
275
-114
PAT %
35.0
32.1
31.9
296
318

We expect top line to grow 6.2% QOQ due to lower subsidy payment

EBITDA margin to contract by 114 bps YoY due to higher staff cost and other
expenditure. However, sequentially margin would improve due to higher net
realization.

We estimate gross realization at USD101/bbl v/s USD108 in Q1FY15 and net
realization at USD 60/bbl v/s USD52.4/bbl in Q1FY15
Oil & Gas Sector
October 13, 2014 | 3

We expect Oil India would share subsidy burden of Rs 13.1 bn vs. Rs. 18.5 bn
Q1FY15.

Subsidy burden & Net realization USD/ bbl

Volume growth

DD&A charges
Valuation
Hike in diesel prices and proposed increase in natural gas prices are key positive
and boost the profitability of Oil India in coming years. Further expected favorable
policy environment and couple of acquisition in overseas would help in revival in
volume. At the CMP of Rs. 599, the stock is trading at 8.3x FY16 E EPS, which looks
attractive vs. historical average of 11x. We maintain buy rating on the stock with
target price of Rs. 720 (based on 10xFY16e EPS).
ONGC
(Rs. Mn)
Revenue
EBIDTA
PAT
Q2FY15e
Q1FY15
Q2FY14
Q-o-Q %
y-o-y%
229,200
218,513
224,147
4.89
2.25
107,465
61,772
88,643
47,817
100,329
30,254
21.23
29.18
7.11
104.18
8.24
6.38
4.03
29.18
104.18
Margin %
Margin %
Margin %
46.9
27.0
40.6
21.9
44.8
13.5
EPS (RS.)
EBITDA %
PAT %
(BPS)
632
507
(BPS)
213
1345

We expect top line to increase by 2.25% YoY and 4.9% QoQ due to lower
subsidy payment.

Less than anticipated oil gain from new development wells of D-1 field, delay
in commissioning of B-193 process platform affected production in Q2FY15

EBITDA margin to expand by 632 bps QoQ due to higher net realization.

We estimate gross realization at USD102/bbl v/s USD109 in Q1FY15 net
realization at USD55/bbl v/s USD47.2/bbl in Q1FY15.

ONGC would share subsidy burden of Rs. 86 bn vs. Rs. 132 bn in Q1FY15.

Subsidy burden & Net realization USD/ bbl

Volume growth

DD&A charges
Valuation
We believe that the recent reforms undertaken by the Indian government in pricing
of petroleum products (partial diesel regulation and increase in natural gas prices)
is expected to be significantly value-accretive for ONGC. At CMP Rs 404 ONGC is
trading 9.8xFY16E EPS, lower than of historical average PE of 12x. We maintain
Hold rating on the stock with target price of Rs. 495 (based on 12xFY16e earnings).
Oil & Gas Sector
October 13, 2014 | 4
Telecom Sector
October 13, 2014
Q2FY15E Results Preview
Seasonality to haunt wireless revenue growth trajectory...
Daljeet S. Kohli
Head of Research
Mobile: +91 77383 93371, 99205 94087
Tel: +91 22 66188826
Amar Mourya
Research Analyst
Tel: +91 22 66188836
amar.mourya@indianivesh.in
We expect Telecom companies to report de-growth in wireless revenues (0.5-2.0%
Q/Q), led by seasonality. However, increased contribution of data is expected to
reduce the impact of voice-led seasonality during the quarter. We estimate 1315% Q/Q data revenue growth for the incumbents. Wireless EBITDA margin is
likely to contract slightly for both Idea/Bharti (-68/-62 bps Q/Q) led by decline in
wireless traffic. For Bharti Africa, we model flat sequential US$ revenue growth
due to significant depreciation in Africa revenue currency basket (v/s USD). The
street expects no impact on continuing hangovers like: (1) Reliance Jio Infocomm’s
4G launch, and (2) upcoming 900/1800 MHz auction. As a result, telecom stocks
delivered ~29% return over last 3-4 months. In our view, at current price level
both Bharti and Idea leaves no safety margin, we maintain SELL on Bharti/Idea.
Seasonal weakness in wireless volumes performance: We expect Bharti/Idea to
report a -0.5%/-2.0% Q/Q revenue growth in Q2FY15 Mobile India wireless revenues
led by volume de-growth. However, the growth on wireless data front is likely to
remain robust, expect strong volume (18/20% qoq) and revenue (13/15% qoq)
growth for Bharti/Idea. In Q2FY15, Idea is likely to lead the subscriber gross addition
and could add nearly 4.0 mn subscribers (v/s 2.0 mn for Bharti). We estimate Bharti’s
consolidated revenue to increase 1.0% Q/Q led by South Asia business and others,
partially offset by decline in India Mobile-Wireless revenue.
Improvement on ARPM front should continue: After ~9.2% improvement on ARPM
front in last eight quarters, we model 0.9/1.7% Q/Q increase in ARPM for the Idea
and Bharti. The ARPM growth would be delivered by stable voice realizations and
continued strong data growth.
Bharti Africa Performance to be impacted by currency depreciation: In Africa, we
estimate flat $-revenue growth on sequential basis due to significant depreciation
in its Africa revenue currency basket. Africa’s rupee revenue is expected to increase
by 1.0% Q/Q on account of 0.8% Q/Q depreciation in INR (v/s USD). We expect
Africa’s EBITDA margins to increase by 102 bps Q/Q to 25.4%, partially offset by
higher SG&A spend to win back subscriber in markets like Nigeria. PAT level loss in
Africa is expected to decline on sequential basis.
Reliance JIO 4G rollout, upcoming spectrum auction, key monitorables: After
aggressive competition in recent spectrum auction, key event to watch out would
be next round of spectrum auction (scheduled in 2HFY15). Additionally, 4G launch
plan of Reliance JIO, would be critical to watch given potential impact on data tariffs.
Reliance JIO would have to launch 4G services before May-2015 in order to meet
the roll-out obligations associated with its 2,300 band spectrum.
Maintain SELL rating on Idea/Bharti: After ~29% run-up in the stock price, in our
view major positive news is very well factored in the stock price. The hangover like
(1) Reliance JIO launch, and (2) upcoming spectrum auction could impact the overall
performance. In the past main trigger for the stock performance was curtailment
of freebies and margin improvement, which could take a hit post Reliance-JIO launch.
We maintain SELL on Idea/Bharti both of these have already reached our target
price of Rs.165/share (Idea) and Rs.405/share (Bharti). Since our SELL
recommendation Idea and Bharti had corrected nearly by 27% and 10%, respectively.
Valuation
Company
Mcap P/E (x)
P/Sales (x) EV/EBITDA (x) PBV (x)
Name
Bharti
Rs. Mn
FY16E FY16E FY16E FY16E 15,68,180 24.3x
1.5x
6.3x
2.2
Idea
5,49,553 18.6x
1.6x
6.6x
2.3
EBITDA % ROE % CMP
FY16E FY16E Price Current
Rs.
Target
Rating
34.3
9.9 392
UR
SELL
32.0
12.4 153
UR
SELL
Bharti Airtel Ltd.
(Rs Mn)
Net Sales
EBITDA
Net Profit
EPS
Forex income/(Loss)
Q2FY15E Q1FY15A Q2FY14A Q‐o‐Q %
2,31,976 2,29,616 2,13,244
1.0
78,160
77,200
68,321
1.2
13,527
11,085
5,120
22.0
3.40
2.79
1.29
22.0
-1,603
-1,409
-10,113
33.7
5.8
33.6
4.8
32.0
2.4
EBITDA Margin %
PAT Margin %
Note: Consolidated
13.8
bps
7.2
100.4
Y‐o‐Y %
8.8
14.4
164.2
164.2
-84.1
165.4
343.0
Key Performance Indicators
Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15E
India - Subscribers (mn)
191
193
198
206
210
211
India - Mobile ARPU (INR/Month) Rs. 200.0 Rs. 192.1 Rs. 195.0 Rs. 196.0 Rs. 202.0 Rs. 197.5
India - Mobile MOU / Sub / Month
454.9
436.5
434.0
437.0
435.0
416.0
India - Mobile RPM (paisa / min)
44.0
44.0
44.8
44.9
46.5
47.5
India - Mobile Traffic (bn min)
258.4
251.0
255.0
265.0
270.8
264.4
Africa - Subscribers (mn)
Africa - ARPU (USD/month)
64.2
$5.5
66.4
$5.7
68.3
$5.8
70.3
$5.5
72.3
$5.6
74.3
$5.7
Update

We expect consolidated revenue growth of 1.0% Q/Q / 8.8% Y/Y to ~232 bn.

India wireless business is expected to grow by 11.7% Y/Y (down 0.5% Q/Q) to
~Rs.127 bn. Africa segment is likely to grow by 1.0% Q/Q to Rs.70.4 bn.

On a consolidated level, EBITDA margin could expand by 7 bps Q/Q and 165
bps Y/Y on account of better margin from Bharti Africa, Telemedia Services,
Passive Infra Business, Wireless - South Asia, partially offset by muted margin
performance from India Wireless segment.

India-ARPM is likely to improve 2.2% Q/Q, partially offset by 3.4% Q/Q decline
MoU per subscribers. On Africa front subscribers are likely to grow by 1.4%
Q/Q (to 73.3 mn), however, ARPUs (to $5.7) is likely to remain flat.

Net profit is likely to went-up 164% y/y due to higher EBITDA base, lower
interests cost (appreciation in rupee v/s USD) and lower tax rate.
Key thing to watch out for:
(1) India mobile traffic, (2) Data business performance, (3) Africa business
performance, (4) RPM growth (we expect RPM to increase by 8.0% Y/Y), and (5)
competitive intensity post Reliance-Jio launch.
Telecom Sector
October 13, 2014 | 2
Idea Cellular Ltd.
(Rs Mn)
Revenue
EBITDA
Net Profit
EPS
Q2FY15E Q1FY15A Q2FY14A Q‐o‐Q %
74,121
75,610
63,232
-2.0
24,106
25,106
19,715
-4.0
7,127
7,282
4,475
-2.1
2.2
2.2
1.4
-2.1
Forex income/(Loss)
-70
-68
-134
EBITDA Margin %
PAT Margin %
Note: Consolidated
32.5
9.6
33.2
9.6
31.2
7.1
2.9
bps
-68.2
-1.6
Y‐o‐Y %
17.2
22.3
59.3
59.3
-47.8
134.4
253.8
Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15E Q2FY15E
India - Subscribers (mn)
125
127
129
136
139
143
India - Mobile ARPU (INR/Month) Rs. 174.0 Rs. 164.1 Rs. 169.2 Rs. 173.0 Rs. 181.0 Rs. 174.0
India - Mobile MOU / Sub / Month
398.0
368.1
376.2
397.0
401.0
376.0
India - Mobile RPM (paisa / min)
43.7
44.7
44.9
43.6
45.1
45.5
India - Mobile Traffic (bn min)
147.0
139.0
145.3
157.0
165.2
159.0
Update

We expect Idea to report mobile traffic growth of 14.4% Y/Y (down 3.8% Q/
Q). We expect RPM to improve 0.9% Q/Q (+1.8% Y/Y). ARPU is likely to increase
6.0% Y/Y (down 3.9% Q/Q) to Rs.174.

EBITDA margin should expand 134 bps Y/Y (down 68 bps Q/Q) to 32.5% in
Q2FY15. We expect net profit to grow 59.3% Y/Y (down 2.1% Q/Q) to Rs 7.1bn.
Key thing to watch out for
(1) mobile traffic & Data business growth, (2) RPM trajectory, (3) EBITDA loss in
new circles (we expect INR1.6b), and (4) update on capex requirement in order to
fund the upcoming spectrum auction.
Telecom Sector
October 13, 2014 | 3
Result Update
Infosys Ltd.
October 10, 2014
Previous
Above expectation performance; Maintain HOLD with previous
target price of Rs.3,952
Rating : HOLD
Rating : HOLD
Q2FY15 Result Highlights
Target : Rs.3,952
Target : Rs.3,952
Current
CMP : Rs.3,888
STOCK INFO
BSE
NSE
Bloomberg
Reuters
Sector
Industry
Face Value (Rs)
Equity Capital (Rs Mn)
Mkt Cap (Rs Mn)
52w H/L (Rs)
Avg Daily Vol (BSE+NSE)
500209
INFY
500209
INFY. BO
IT- Software
IT
5
2870
2,229,788
4010 /3281
1,195,626
SHAREHOLDING PATTERN
%
(as on 30th Jun. 2014)
Institutions
Others, Incl Public
Promoters
55.8
28.3
15.9
Infosys Q2FY15 result was above INSPL estimates on all fronts. Expansion in EBIT
margin (96 bps Q/Q) and higher $-revenue growth (+3.2% Q/Q) remains the
positive surprise for the street. The improvement on the EBIT front was primarily
on back of high utilization level and changes in depreciation policy. The company
maintains its earlier FY15 $-revenue growth guidance range of 7-9% [to $8,826
mn to $8,991 mn]. The revenue guidance implies 1.4% to 4.4% Q/Q $-revenue
growth next two quarters. FY15, rupee revenue guidance went up to 6.7% - 8.7%
(v/s 5.6% - 7.6% y/y previous) on account of change in INR v/s USD realization
estimate from INR/USD=60.00 to INR/USD=61.00. During the quarter, Infosys won
five large deals. The management sounded positive on overall deal pipeline. Key
segment like IMS, SMAC and Manufacturing are seeing good traction.
The lower volatility in Infosys stock price after Q2FY15 result announcements
illustrates that confidence in coming back for investors. We see Infosys as longterm winner and maintain our FY15E EPS of Rs.205. We remain confident on Infosys
matching its peer revenue growth over long-term. The management’s initiatives to
focus on three areas (1) accelerating revenue growth, (2) upgrading delivery models,
and (3) cost optimization should bode well for future performance. As a result, we
maintain our HOLD rating on the stock with target price of Rs.3,952.
Rs.mn
Q2FY15
Q1FY15
Q2FY14
Q‐o‐Q % Y‐o‐Y % INSPL est Variance(%)
Comments Source: Company, BSE
STOCK PERFORMANCE (%) 1m
INFY
1
SENSEX
-1
3m
13
3
12m
17
32
Source: IndiaNivesh Research
$‐Rev
Revenue
EBIDTA
PAT
Adjusted PAT
2,133
127,700
35,614
28,860
28,860
129,650
129,650
31,700
24,070
24,070
3.2% ‐98.3%
4.5%
2.9%
7.9% 21.2%
7.3% 28.6%
4.2% 25.0%
2,193
132,664
37,184
29,594
29,594
0.4% Above Est
0.6% Above Est
3.4% Above Est
4.6% Above Est
1.6% Above Est
Q2FY15 Results Update
INFOSYS v/s SENSEX
160.00
140.00

During the quarter, $-revenue went up 3.2% Q/Q (+3.8% Q/Q constant
currency) to $2,201 mn, above our expectations of $2,193 mn. IT Services
volumes increased 3.0% Q/Q, partially offset by 0.2% Q/Q decline in pricing.
BPO services remained flat to $139 mn during the quarter. This was partially
offset by 2.5% Q/Q decline (to $66mn) in Product segment.

Sequentially, top clients delivered positive performance (top 1/top5/top10/
Non-Top10 increased by 3.2%/2.4%/3.2%/3.2%). Infosys added 49 new clients
(v/s 61 clients in Q1FY15). During the quarter, Infosys bagged five multi-year
& multi-million dollar deals.

US, geographies delivered 3.2% Q/Q growth followed by Europe (+4.0 Q/Q)
and RoW (+1.1% Q/Q), partially offset by 5.4% Q/Q decline in India. The key
reason for decline in India business was due to de-growth in Product and
other verticals.

In terms of services, Business IT Services [Contri. ~60.8% of overall revenue],
delivered 3.4% Q/Q growth followed by consulting and system integration
[Contri. ~32.4% of overall revenue], up 3.5% Q/Q. Products, platforms &
solution space [Contri. ~7.0% of overall revenue] delivered muted
performance, Up 0.2% Q/Q The key dragger for products & consulting space
was sluggishness in Finacle and delayed client spending.

EBIT Margin Update: EBIT margin expanded 96.0 bps Q/Q to 26.1% (v/s 25.1%
in Q1FY15) in Q2FY15 due to higher operating efficiency and better utilization
120.00
100.00
80.00
01/10/2014
10/09/2014
20/08/2014
30/07/2014
09/07/2014
18/06/2014
28/05/2014
07/05/2014
Infosys
16/04/2014
26/03/2014
05/03/2014
12/02/2014
22/01/2014
01/01/2014
11/12/2013
20/11/2013
30/10/2013
09/10/2013
60.00
2,201
133,420
38,430
30,960
30,079
Sensex
Source: IndiaNivesh Research, Capitaline
Daljeet S. Kohli
Head of Research
Mobile: +91 77383 93371, 99205 94087
Tel: +91 22 66188826
Amar Mourya
Research Analyst
Tel: +91 22 66188836
amar.mourya@indianivesh.in
Result Update (contd...)
level. The management expects to close the year with 25% (+1%/-1%) EBIT
margin. The company’s attrition rate during the quarter surged to 19.5% [v/s
18.7% in Q1FY15] due to the involuntary attrition. However, uptick in the
utilization level 75.2% [v/s 74.8% in Q1FY15] remains the solace. The company
reported the forex gain of Rs.148 mn (v/s 1290 mn in Q1FY15) during the
quarter. Net profit during the quarter stood at Rs.30.9 bn with margin
expansion of 60 bps Q/Q to 23.2% (v/s 22.6% in Q1FY15). Additionally, the
company’s focus to shift major revenue from onsite to offshore also positively
impacted the overall margin performance.
Chart: Onsite/Offshore Mix (in %)

FY15 Guidance Update: Infosys management maintains its FY15E $-revenue
guidance range between 7-9% despite improved global economic environment.
Extrapolating $-revenue growth of 7%-9% Y/Y implies that the company would be
growing at an average of +1.4%/+4.4% in next two quarters (See Table Below). We
maintain our $-revenue growth forecast of 8.7% Y/Y in FY15, which implies 3.3%
Q/Q $-revenue growth in next two quarter. As a result, we are of the view that
Infosys FY15 guidance could be revised upward going ahead. We have assumed
INR/USD realization rate of 60 for FY15E/FY16E, giving rupee revenue growth of
7.5%/12.1% Y/Y with EPS of Rs.205/Rs.242.
Q1FY15A
Q2FY15E
Q3FY15E
Q4FY15E
FY14A
FY15E
% Chg YoY
Revenue 7% Gr Y/Y
QoQ growth (%)
2,133
1.8
2,201
3.2
2,227
1.2
2,264
1.7
8,249
8,826
7.0
Revenue 9% Gr Y/Y
QoQ growth (%)
2,133
2.3
2,201
3.2
2,298
4.4
2,397
4.3
8,286
9,028
9.0
2,133
2.0
2,201
3.2
2,283
3.7
2,349
2.9
8,249
8,965
8.7
FY14
Dollar Guidance ($ Mn)
INSPL Rev 8.7% Gr Y/Y
QoQ growth (%)

During the quarter, Infosys management announced 1:1 bonus along with interim
dividend of Rs.30 per share. In our view, the announcement of bonus does not
have any financial impact. This is likely to increase share capital from Rs.2860 mn to
Rs.5720 mn and same amount (Rs.2860 mn) will be reduced from the reserves.
This will only result in increase of liquidity of shares on the bourses.
Other Key Details of Q2FY15 Results

The proportion of fixed price contracts was at 41.4% (v/s 40.1% in Q1FY15).

Infosys increased 4,127 (v/s 2,257) employees (net), taking its total employee base
to 1,65,411.

Cash balances totaled Rs.284 bn v/s Rs. 250 bn in Q1FY15.
Infosys Ltd | Result Update
October 10, 2014 | 2

Total outstanding hedge position stood at US$1.3 bn higher relative to $1.1 bn at
the end of the Q1FY15.

DSO stood at 63 in the quarter as compared to 67 days in the last quarter.
Valuation & Outlook
At CMP of Rs.3,888, the stock is trading at 19.0x FY15E and 16.0x FY16E EPS estimate.
The improvement on employee utilization and efficiency on operating front remains
positive. Further the announcement of 1:1 bonus and Rs.30 of dividend remains positive.
Given the positive commentary from the management, we are of the view that Infosys
FY15 guidance is bit on the conservative side; hence we expect the upward revision in the
guidance going ahead. However, sustenance of the similar performance is required to
reduce the valuation gap between TCS. We maintain HOLD rating with the previous target
price of Rs.3,952 (valuing at 16.4x FY16 EPS) on stock.
Quarterly Performance
Particulars
(Rs.Mn)
Revenues
Staff Costs (Soft.dev.exp.)
Selling expenses
General and Admin expenses
EBIDTA
Margin
Depreciation
EBIT
Other Income
PBT
Provision for tax
PAT bef. Extraordinary
EPS (Rs)
Margin %
EBITDA
EBIT
PBT
PAT
Tax Rate (as % of PBT)
Units
Rs.Mn
Rs.Mn
Rs.Mn
Rs.Mn
Rs.Mn
Rs.Mn
Rs.Mn
Rs.Mn
Rs.Mn
Rs.Mn
Rs.Mn
Rs.Mn
Rs
Actual
2Q2015
1,33,420
78,410
7,690
8,890
38,430
28.8
3,600
34,830
8,770
43,600
12,640
30,960
54.1
0
Units
P%
P%
P%
P%
P%
Actual
1Q2015
1,27,700
76,956
6,660
8,470
35,614
27.9
3,504
32,110
8,290
40,400
11,540
28,860
50.5
0
Actual
2Q2014
1,29,650
80,510
7,570
9,870
31,700
24.5
3,330
28,370
5,100
33,470
9,400
24,070
42.1
0
Q‐o‐Q%
Change
4.5
1.9
15.5
5.0
7.9
NM
2.7
8.5
5.8
7.9
9.5
7.3
7.3
Margin %
28.8
26.1
32.7
23.2
29.0
Y‐o‐Y%
Change
2.9
-2.6
1.6
-9.9
21.2
NM
8.1
22.8
72.0
30.3
34.5
28.6
28.6
basis points (bps)
27.9
25.1
31.6
22.6
28.6
24.5
21.9
25.8
18.6
28.1
91.5
96.0
104.2
60.5
42.7
435.3
422.4
686.3
464.0
90.6
$ Amount
Q2 FY15
(As % of
Rev)
% Change
Qtr/Qtr
% Change
Yr/Yr
Clinets Concentration
Top Client
Top 5 Clients
Top 10 Clients
Non Top 10 clients
75
3.4
3.2
-7.1
299
504
1,697
13.6
22.9
77.1
2.4
3.2
3.2
-3.4
-0.4
8.8
1,090
4
54.6
104.0
3.8
906.3
3.5
79.5
911
1290
41.4
58.6
6.5
0.9
9.7
4.4
Onsite‐Offshore Revenue Split
Onsite
Offshore
Revenue by project type
Fixed Price
Time & Materials
October 10, 2014 | 3
$ Amount
Q2 FY15
(As % of
Rev)
% Change
Qtr/Qtr
% Change
Yr/Yr
1,338
544
48
271
60.8
24.7
2.2
12.3
3.2
4.0
-5.4
3.2
5.3
9.6
-2.3
8.3
1,338
354
416
174
207
139
48
60.8
16.1
18.9
7.9
9.4
6.3
2.2
3.4
5.1
4.3
3.2
2.1
0.0
-1.3
9.2
7.2
5.4
16.9
19.2
6.5
1.9
Consulting & Systems Integration
713
32.4
3.5
3.7
Products, Platforms and Solutions
Products
Product Engineering Services
Others
150
64
75
11
6.8
2.9
3.4
0.5
0.2
-6.5
3.2
29.0
‐2.1
-16.5
9.8
33.2
FSI (Financial Services and Insurance)
Banking & financial services
Insurance
722
590
132
32.8
26.8
6.0
1.3
0.9
3.2
4.6
5.4
1.5
Manufacturing
513
23.3
3.6
7.0
RCL (Retail, Logistics, CPG and Life Sciences)
Retail & CPG
Transport & Logistics
Life Sciences
Healthcare
515
337
33
103
42
23.4
15.3
1.5
4.7
1.9
1.5
-0.1
3.2
5.4
3.2
3.0
3.8
-11.2
8.9
-3.6
ECS (Energy & Utilities, Communications and Services)
Energy & Utilities
Communication and Services
Others
451
121
196
134
20.5
5.5
8.9
6.1
7.9
11.3
5.6
8.5
13.7
14.9
14.2
12.0
Revenue breakup‐Geography
North America
Europe
India
RoW
Revenue by Service Offerings
Business IT Services
Application Development
Application Maintenance
Infrastructure Management Services
Testing Services
Business Process Management
Others
Revenue by Industry Offerings
October 10, 2014 | 4
Consolidated Financial Statements
Income statement
Y E March (Rs m)
Net sales
Growth %
Employee cost
SG&A
EBITDA
Growth %
EBITDA Margin %
Deprecaition
EBIT
EBIT Margin %
Other Income
Interest
PBT
Tax
Effective tax rate %
Extraordinary items
Minority Interest
Adjusted PAT
Growth%
PAT margin %
Reported PAT
Growth%
Balance sheet
FY12
3,37,340
22.7
1,88,770
41,470
1,07,100
18.3
31.7
9,310
97,790
29.0
19,040
0
1,16,830
33,670
28.8
0
0
83,160
21.9
24.7
83,160
21.9
FY13
4,03,520
19.6
2,41,870
46,430
1,15,220
7.6
28.6
10,930
1,04,290
25.8
23,590
0
1,27,880
33,670
26.3
0
0
94,210
13.3
23.3
94,210
13.3
FY14
5,01,330
24.2
3,07,670
59,510
1,34,150
16.4
26.8
13,740
1,20,410
24.0
26,690
0
1,47,100
40,620
27.6
0
0
1,06,480
13.0
21.2
1,06,480
13.0
FY15e
5,39,008
7.5
3,30,281
62,278
1,46,449
9.2
27.2
14,752
1,31,697
24.4
32,491
0
1,64,188
46,633
28.4
0
0
1,17,556
10.4
21.8
1,17,556
10.4
FY16e
6,04,062
12.1
3,65,140
62,822
1,76,100
20.2
29.2
16,547
1,59,553
26.4
35,128
1
1,94,680
56,457
29.0
0
1
1,38,221
17.6
22.9
1,38,221
17.6
Y E March (Rs m)
Share Capital
Reserves & Surplus
Net Worth
Defered tax liability
Total Liabilities
Gross Block
Less Depreciation
Net Block
Capital Work in Progress
Investments
Defered tax assets
FY12
FY13
FY14
FY15e FY16e
2,860
2,860
2,860
5,720
5,720
331,750 395,110 472,440 551,869 648,625
334,610 397,970 475,300 557,589 654,345
1,210
2,680
3,870
3,123
3,424
335,820 400,650 479,170 560,712 657,770
90,300 111,820 139,750 173,053 212,329
36,210 47,140 60,880 75,632 92,178
54,090 64,680 78,870 97,421 120,150
0
0
0
0
0
23,770 40,670 54,930 54,787 55,049
3160
5030
6560
6560
6560
Current Assets
Sundry Debtors
Cash & Bank Balance
Loans & advances
302,460
77,550
205,910
19,000
353,130
95,180
218,320
39,630
430,190 492,956 578,385
111,620 128,003 144,301
259,500 304,181 369,816
59,070 60,772 64,268
Current Liabilities
Provisions
Net Current Assets
Total assets
46,330
1,330
254,800
335,820
60,730
2,130
290,270
400,650
87,590 87,223 98,567
3,790
3,790
3,808
338,810 401,943 476,009
479,170 560,712 657,770
Source:Company filings; IndiaNivesh Research
Cash Flow
Key ratios
Y E March (Rs m)
PAT
Depreciation
Others
Changes in working capital
Tax
Cash flow from operations
Capital expenditure
Free Cash Flow
Other income
Investments
Cash flow from investments
FY12
83,160
9,371
33,206
‐12,920
-31,950
80,867
-17,530
63,337
344
-3,870
‐21,055
FY12
145.4
161.7
41.9
585.0
FY13
164.7
183.8
52.4
695.8
FY14
186.2
210.2
98.1
830.9
FY15e
205.5
231.3
61.7
974.8
FY16e
241.6
270.6
72.5
1,144.0
ROCE %
ROE %
ROIC %
EBITDA Margin %
Net Margin %
40.8
30.5
21.7
31.7
24.7
30.9
23.7
16.1
28.6
23.3
31.1
22.4
10.6
26.8
21.2
28.0
21.1
14.8
27.2
21.8
28.7
21.1
14.8
29.2
22.9
Equity capital raised
Dividend paid (incl tax)
Cash flow from Financing
213 -2,236
-23,989 -29,977
‐23,776 ‐32,213
PER (x)
P/BV (x)
P/CEPS (x)
EV/EBITDA (x)
Dividend Yield %
22.3x
5.6x
20.3x
16.0x
1.5
17.9x
4.7x
17.9x
14.4x
1.8
19.0x
4.0x
15.6x
12.1x
2.8
18.8x
3.4x
14.2x
10.8x
1.6
16.0x
2.9x
12.1x
8.6x
1.9
Effect of exchange rate changes on cash -20,781 1,753
3,980
0
0
Net change in cash
‐5,527 14,782 21,389 44,681 65,635
Cash at the beginning of the year
2,11,437 2,03,538 2,38,111 2,59,500 3,04,182
Cash at the end of the year
2,05,910 2,18,320 2,59,500 3,04,181 3,69,816
m cap/sales (x)
net debt/equity (x)
net debt/ebitda (x)
5.6x
0.0x
0.0x
4.7x
0.0x
0.0x
3.7x
0.0x
0.0x
3.5x
0.0x
0.0x
3.1x
0.0x
0.0x
FY13
FY14
FY15e
FY16e
94,158 1,06,480 1,17,556 1,38,223
11,293 13,740 14,752 16,547
31,791 13,930 10,999 21,329
‐9,644 ‐7,360 ‐18,452 ‐8,450
-32,899 -40,620 -46,633 -56,457
95,184 86,170 81,365 1,11,192
-30,913 -27,930 -33,303 -39,275
64,271 58,240 48,062 71,917
-1,177 10,900 32,634 34,866
-17,852
0
0
0
‐49,942 ‐17,030
‐669 ‐4,409
4,370
-56,101
‐51,731
-747
-35,267
‐36,014
319
-41,467
‐41,148
Y E March
EPS (Rs)
Cash EPS (Rs)
DPS (Rs)
BVPS
October 10, 2014 | 5
October 13, 2014
IndiaNivesh Universe | Valuation Table
Company Nam e
Auto
Ashok Leyland**
Bajaj Auto
Eicher Motors** $$$
Exide Industries
Hero MotoCorp
Mahindra & Mahindra**
Maruti Suzuki India
Tata Motors Company**
TVS Motor Company
SKF India $$$
Sw araj Engines
Rs. Mn
Mcap
Rs.
CMP
Rs.
TP
Reco
%
(-) Dow n/(+) Up
125,503
681,069
305,458
142,333
567,312
818,227
896,030
1,483,622
106,467
59,696
12,240
44
2,354
11,270
167
2,841
1,317
2,966
493
224
1,132
986
NA
2,556
NA
195
3,240
1,212
2,214
NA
146
808
1,184
NEUTRAL
BUY
NEUTRAL
BUY
BUY
HOLD
HOLD
NOT RATED
HOLD
HOLD
BUY
NA
8.6
NA
16.5
14.0
-8.0
-25.4
NA
-34.9
-28.6
20.1
Information Technology
Infosys
Tata Consultancy Services
Wipro
HCL Technologies###
Tech Mahindra
NIIT Technologies
KPIT Cummins
Mastek
NIIT Ltd
Thinksoft Services Ltd
2,233,004
5,246,453
1,442,908
1,218,542
550,733
23,851
30,847
5,896
8,696
NA
3,889
2,679
585
1,738
2,339
392
158
264
53
NA
3,952
2,666
611
1,697
2,151
414
190
550
55
494
HOLD
HOLD
HOLD
HOLD
HOLD
HOLD
BUY
BUY
HOLD
HOLD
1.6
-0.5
4.5
-2.3
-8.0
5.6
20.5
108.0
4.5
NA
Oil & Gas
Cairn India
Gail India
Oil India
Oil & Natural Gas Corporation
Reliance Industries**
535,816
563,204
360,772
3,458,129
3,106,974
286
444
600
404
961
425
468
720
495
1,274
BUY
BUY
BUY
BUY
BUY
48.7
5.4
20.0
22.5
32.6
697
130
202
227
222
251
810
1,055
332
148
613
110
180
167
233
223
NA
NA
366
216
SELL
HOLD
HOLD
HOLD
HOLD
HOLD
NOT RATED
NOT RATED
BUY
HOLD
-12.1
-15.4
-11.1
-26.4
5.1
-11.2
NA
NA
10.2
45.6
Capital Goods
Ingersoll Rand
Greaves Cotton
Crompton Greaves
Voltas
Bharat Heavy Elec (BHEL)
Kirloskar Oil Engines
Siemens
ABB
Alstom T&D
BGR Energy Systems
22,009
31,771
126,885
75,045
542,388
36,320
288,368
223,606
85,046
10,705
(CMP as of previous day)
Sales (Rs. Mn)
FY14
FY15E
FY16E
114,867 117,488 150,494
197,263 215,132 250,948
68,098
28,262
39,526
59,727
70,123
84,989
251,249 290,028 321,940
669,310 777,369 909,931
444,506 446,109 487,937
2,308,031 2,705,923 3,135,766
83,790
99,124 119,308
22,464
25,355
29,664
6,083
6,144
7,668
EBITDA (Rs.Mn)
FY14
FY15E
FY16E
PAT (Rs. Mn)
FY14
FY15E
FY16E
FY14
EPS (Rs.)
FY15E
FY16E
P/E (x)
FY15E FY16E
4,239
41,650
7,178
8,253
35,649
101,641
54,649
328,026
4,895
2,699
906
7,642
39,946
6,769
10,178
48,246
108,415
52,661
433,581
6,015
3,251
921
13,669
48,063
10,011
13,213
61,402
130,374
53,414
499,069
8,125
3,905
1,226
-1,641
33,803
3,939
4,872
21,027
46,669
28,529
119,604
1,863
1,667
670
474
35,353
4,976
6,346
25,599
47,981
28,444
188,182
3,179
2,252
702
5,604
41,098
7,576
8,362
36,434
59,938
30,374
217,278
4,627
2,711
915
-0.6
116.8
145.0
5.7
105.3
75.8
94.4
37.2
3.9
31.6
54.0
0.2
122.0
164.7
7.5
138.6
81.7
94.2
58.6
6.7
42.6
56.5
2.0
142.0
243.8
9.8
180.8
100.3
100.6
67.7
9.7
51.8
73.7
NA
19.3
68.4
22.3
20.5
16.1
31.5
8.4
33.4
26.6
17.4
22.4
16.6
46.2
17.1
15.7
13.1
29.5
7.3
23.1
21.9
13.4
539,008 604,062
963,693 1,127,343
490,894 556,458
379,099 433,537
217,827 248,231
23,142
25,724
30,195
33,468
10,533
12,559
10,099
12,125
2,349
2,827
133,604
251,528
95,078
86,660
42,076
3,631
4,204
726
598
399
146,449
293,779
106,080
98,358
45,959
3,587
4,938
959
793
552
176,100
340,321
123,185
109,193
53,147
4,090
5,690
1,184
974
576
105,999
191,639
77,967
63,690
30,288
2,305
2,490
518
178
300
117,556
223,323
81,481
72,698
31,372
2,292
2,959
738
-26
349
138,221
260,870
91,019
82,031
36,901
2,612
3,436
889
173
454
185.2
97.7
31.7
91.2
126.8
37.8
13.0
23.0
1.1
NA
205.5
114.1
33.1
102.8
138.6
38.2
14.9
33.1
4.2
22.3
235.1
128.9
36.9
116.0
161.6
43.5
17.3
39.9
4.9
36.3
18.9
23.5
17.7
16.9
16.9
10.3
10.6
8.0
12.5
NA
16.5
20.8
15.8
15.0
14.5
9.0
9.1
6.6
10.7
NA
187,612 186,668 214,665
616,435 541,034 724,424
97,157 127,422 132,396
1,744,771 1,940,108 2,075,075
4,344,600 4,375,650 4,512,307
137,504
80,111
37,028
491,947
357,610
130,548
73,712
54,831
689,956
411,890
147,238
74,443
65,638
785,040
474,891
124,318
47,862
29,420
265,065
224,930
109,247
45,173
37,277
321,489
252,760
125,002
49,411
44,469
375,906
263,332
65.0
37.7
48.9
31.0
76.6
57.2
35.6
62.0
37.6
81.0
65.4
39.0
74.0
42.8
90.6
5.0
12.5
9.7
10.8
11.9
4.4
11.4
8.1
9.4
10.6
455
1,877
6,820
2,693
67,764
3,067
4,383
4,699
3,380
3,992
459
2,197
9,779
3,624
41,631
2,949
6,766
5,731
3,882
4,520
610
2,659
11,125
4,378
44,331
3,274
10,003
7,526
4,834
4,650
670
1,234
2,443
2,454
35,029
1,785
1,940
1,769
1,170
932
681
1,455
4,658
3,111
35,448
1,935
3,348
2,730
1,315
1,607
775
1,788
5,218
3,458
37,998
2,153
5,612
3,987
2,453
1,654
21.2
5.1
3.9
7.4
13.9
12.3
5.5
8.4
3.5
12.9
21.6
6.0
5.1
5.0
14.5
14.2
10.0
12.4
5.1
18.5
24.5
7.3
6.3
6.5
15.5
15.4
16.3
17.9
9.6
17.7
32.3
21.7
39.8
45.4
15.3
17.7
80.6
85.4
65.1
8.0
28.5
17.8
32.1
34.9
14.3
16.3
49.6
58.9
34.6
8.4
499,365
818,094
434,269
329,170
188,314
23,050
26,940
9,096
9,510
1,944
5,787
17,359
134,806
52,437
403,660
22,870
113,526
76,316
35,638
33,008
6,259
17,648
147,648
56,566
412,187
23,272
110,800
80,525
37,291
38,246
6,961
19,131
154,587
61,835
422,196
24,725
123,683
91,245
42,616
39,968
IndiaNivesh Universe | Valuation Table (contd...)
Company Nam e
Cement
ACC$$$
Ambuja Cements$$$
Ultratech Cement
Prism Cement
Mangalam Cement
FMCG
Bajaj Corp
Godrej Consumer Products**
Marico**
Dabur**
Tata Global Beverages**
Pharma
Ajanta Pharma
Aurobindo Pharma
Alembic Pharma
Biocon
Cadila
Cipla
Divis Lab
Dr Reddy
Glenmark
Jubilant Life Science
Lupin
Sun Pharma
Ipca Lab
Torrent Pharma
JB Chemical
Shilpa Medicare
Sharon Bio-Medicine
Others
BASF India Ltd.** &&
UPL
Coromandel International Ltd.
Sesa Sterlite **
Kajaria Ceramics
Somany Ceramics
Aditya Birla Nuvo Ltd.**
Radico Khaitan Ltd.**
Kaveri Seed Ltd**
HSIL Ltd**
Jindal steel and Pow er**
Godaw ari pow er and Ispat ltd
Liberty Shoes Ltd
HIL Ltd
Pennar Industries Ltd
Rs. Mn
Mcap
Sales (Rs. Mn)
FY14
FY15E
EBITDA (Rs.Mn)
FY14
FY15E
PAT (Rs. Mn)
FY14
FY15E
FY16E
FY14
EPS (Rs.)
FY15E
FY16E
10,989
14,098
25,327
525
450
14,444
17,356
31,961
1,990
979
58.2
8.3
84.1
-1.8
11.1
58.5
9.1
92.3
1.0
16.9
76.9
11.2
116.5
4.0
36.7
24.0
23.2
26.9
74.2
14.5
18.2
18.9
21.3
19.6
6.7
1,489
7,597
4,854
9,139
4,805
1,955
9,067
5,731
10,654
4,512
NA
11,101
6,813
12,667
5,273
10.1
22.3
7.5
5.2
7.8
13.3
26.5
8.8
6.1
7.3
NA
32.4
10.5
7.3
8.6
20.2
37.0
34.4
35.2
21.8
NA
30.3
28.8
29.5
18.6
2,339
11,729
2,355
4,138
8,036
13,884
7,733
21,515
5,423
1,090
18,364
31,415
4,785
6,639
615
757
703
2,772
14,671
3,114
4,608
10,287
13,022
9,951
22,035
8,965
2,137
22,627
58,032
5,501
7,814
1,559
994
1,054
3,262
14,871
3,824
5,320
13,255
16,853
11,962
24,401
10,460
3,288
26,861
62,928
6,493
9,053
1,784
1,306
1,471
66.4
40.2
12.5
20.8
39.3
17.3
58.3
126.0
20.0
6.9
40.8
15.2
37.9
39.2
7.3
19.6
4.7
78.4
50.3
17.0
23.0
49.3
16.2
75.0
130.0
33.2
16.2
50.5
28.4
43.3
49.1
18.4
25.8
10.0
92.3
51.1
20.0
26.6
63.0
21.0
90.1
143.9
38.8
20.6
59.9
30.4
52.6
53.5
21.1
33.9
13.9
21.7
18.7
22.7
21.0
26.7
36.6
23.6
23.1
21.4
9.0
26.3
28.9
17.3
19.0
12.4
20.8
7.1
18.4
18.4
19.3
18.1
20.9
28.2
19.6
20.8
18.3
7.1
22.2
27.0
14.2
15.8
10.8
15.9
5.1
1,279
9,498
3,565
62,985
1,242
289
11,429
712
2,090
340
19,104
578
132
71
260
1,601
13,285
5,310
68,570
1,405
451
14,047
875
2,872
1,082
22,726
907
230
563
713
1,899
16,723
6,052
86,776
2,127
646
17,770
953
3,635
1,283
23,870
1,146
340
1,019
1,063
23.6
21.6
15.4
21.5
16.7
8.3
91.1
3.7
30.3
5.1
20.5
17.7
7.9
14.3
2.0
37.0
31.0
18.8
23.5
17.7
11.6
108.1
7.0
39.6
16.0
23.2
27.7
13.5
75.4
5.4
34.7
10.7
15.6
10.6
37.7
27.6
15.0
12.2
21.5
25.1
6.7
5.4
22.3
8.5
9.6
29.9
8.3
13.7
8.5
24.9
19.2
10.6
11.4
17.6
15.4
5.9
4.2
15.1
4.7
6.4
Rs.
CMP
Rs.
TP
Reco
%
(-) Dow n/(+) Up
263,463
327,501
680,877
38,935
6,521
1,403
211
2,481
77
244
1,476
229
3,029
117
276
HOLD
HOLD
BUY
BUY
BUY
5.2
8.3
22.1
51.3
13.0
109,084
91,180
214,437
49,932
6,973
119,460
98,751
233,966
56,274
10,345
132,733
108,544
260,411
65,646
12,983
16,300
16,908
39,284
2,056
558
17,490
19,131
47,446
3,784
1,275
22,921
21,789
58,859
6,373
1,987
10,947
12,786
23,080
-862
296
39,678
333,668
195,010
377,793
99,098
269
980
302
215
160
215
UR
UR
UR
180
HOLD
UR
UR
UR
BUY
-20.1
NA
NA
NA
12.3
6,707
76,024
46,865
70,734
77,376
7,593
87,082
56,568
81,383
82,157
8,522
100,999
64,870
93,917
89,344
1,860
11,784
7,591
11,690
7,521
2,369
13,605
8,686
13,600
8,099
NA
16,211
10,220
16,068
9,268
59,824
273,562
72,814
96,440
269,910
475,651
234,528
510,685
192,899
23,287
596,196
1,701,101
94,236
142,665
19,396
20,729
7,480
1,701
939
386
482
1,318
592
1,767
2,999
711
146
1,328
821
747
843
229
538
71
1,385
817
345
479
1,553
440
1,532
3,166
659
191
1,318
754
823
856
211
544
140
HOLD
BUY
HOLD
HOLD
BUY
HOLD
HOLD
BUY
HOLD
HOLD
BUY
HOLD
BUY
BUY
BUY
HOLD
BUY
-18.6
-13.0
-10.7
-0.7
17.8
-25.7
-13.3
5.6
-7.3
30.6
-0.8
-8.2
10.2
1.5
-7.7
1.2
97.6
12,083
80,366
18,632
28,773
70,600
101,004
25,253
132,170
60,052
58,034
112,866
160,804
32,288
40,363
10,006
5,482
13,248
13,935
115,440
22,694
33,263
84,145
111,016
31,786
150,023
69,747
62,022
129,978
184,908
35,985
48,834
11,282
7,441
15,897
16,466
130,127
26,585
38,801
99,115
126,616
38,011
169,881
80,060
70,639
153,813
199,976
39,758
57,643
12,734
9,421
19,077
3,690
21,396
3,615
7,249
12,207
21,572
10,152
25,465
11,004
11,165
30,859
71,969
8,141
10,545
1,546
1,222
1,575
4,208
24,481
4,614
7,810
16,154
22,763
13,570
33,898
14,876
10,034
33,204
78,457
8,552
12,338
1,817
1,539
1,987
4,989
25,212
5,593
8,970
19,983
28,079
16,400
37,794
17,166
11,701
39,121
81,584
9,722
13,622
2,113
1,978
2,575
55,583
142,232
83,708
740,427
50,482
12,434
210,970
11,322
58,717
26,511
142,634
4,869
5,132
4,760
6,228
1,284
332
293
250
668
320
1,621
85
852
401
156
149
301
638
52
NA
480
279
378
482
266
1,645
165
795
425
201
198
400
721
81
UR
BUY
HOLD
BUY
SELL
HOLD
BUY
BUY
HOLD
BUY
HOLD
BUY
BUY
BUY
BUY
NA
44.6
-4.7
51.4
-27.8
-16.9
1.5
93.9
-6.7
5.9
28.9
33.2
32.8
13.0
56.5
42,347
107,709
71,269
661,524
18,387
12,629
258,934
14,122
10,111
18,582
200,040
15,409
4,835
8,657
11,133
51,646
121,670
111,207
797,989
20,972
15,853
277,997
15,878
12,368
22,029
259,617
17,103
6,189
10,984
16,366
54,907
138,703
125,040
897,529
27,748
20,483
310,730
17,857
15,041
26,642
315,046
18,976
8,009
13,840
20,784
3,642
20,484
9,982
203,918
2,818
868
46,232
1,935
2,213
2,651
55,287
2,119
394
406
898
3,772
23,250
9,675
278,336
3,271
1,013
53,413
2,273
2,965
3,229
74,280
2,854
554
1,074
1,637
FY16E
FY16E
4,513
27,784
10,879
309,740
4,414
1,320
62,431
2,475
3,699
4,107
84,648
3,152
730
1,748
2,182
43.0
40.2
21.4
29.5
26.8
16.6
153.4
7.5
48.4
26.0
26.2
35.0
20.0
136.5
8.1
P/E (x)
FY15E FY16E
Company Nam e
Telecom
Bharti Airtel
Idea Cellular
Infra
IRB Infra. Dev
IL&FS Trans. Netw orks
Reliance Infra
Engineers India
Larsen & Toubro
Jaiprakash Associates
Gujarat Pipavav Ports
Real Estate
Oberoi Realty
Phoenix Mills
Nesco
Company Nam e
Power
Adani Pow er**
CESC Ltd
Coal India
JSW Energy**
NHPC
NTPC
Pow er Grid Corporation
Reliance Pow er
Torrent Pow er**
Tata Pow er Company**
Rs. Mn
Rs.
Rs.
Mcap
CMP
TP
Reco
(-) Dow n/(+) Up
%
1,568,180
549,553
392
153
405
166
SELL
SELL
3.2
8.6
857,461
264,320
960,690
302,317
NA
341,618
277,778
81,430
318,045
95,230
355,769
109,318
27,727
19,678
29,683
24,488
75,945
41,831
153,086
78,624
1,356,798
72,487
78,221
229
170
582
233
1,462
30
162
226
246
NA
301
NA
94
151
HOLD
BUY
EXIT
HOLD
NOT RATED
BUY
HOLD
-1.1
45.1
NA
29.0
NA
215.4
-6.7
37,319
65,870
190,337
18,465
851,284
198,344
5,830
47,924
72,571
247,011
19,405
642,293
261,957
7,308
57,491
74,321
NA
21,864
759,421
291,923
NA
17,652
19,031
31,720
3,889
110,951
65,313
2,880
21,758
20,237
46,061
4,424
75,061
87,015
3,864
25,529
22,945
NA
5,267
90,161
101,386
NA
4,591
4,630
19,137
4,827
49,020
-8,248
2,459
70,291
52,535
17,662
214
363
1,253
308
329
1,680
BUY
HOLD
BUY
43.8
-9.3
34.0
7,842
14,485
1,413
11,498
14,782
2,140
13,435
17,168
2,698
4,205
6,792
1,039
6,285
7,421
1,548
7,295
9,322
2,039
3,111
1,285
816
Rs. Mn
Mcap
Rs.
CMP
Rs.
TP
Reco
%
(-) Dow n/(+) Up
FY16E 0
EBITDA (Rs.Mn)
FY14
FY15E
FY16E 0
PAT (Rs. Mn)
FY14
FY15E
123,205
91,884
2,117,561
119,314
211,450
1,164,672
711,758
199,164
64,607
223,943
43
735
335
73
19
141
136
71
137
83
50
NR
422
NA
NA
190
164
118
NA
104
SELL
NOT RATED
HOLD
NOT RATED
NOT RATED
BUY
BUY
BUY
NOT RATED
BUY
16.6
NA
25.9
NA
NA
34.5
20.5
66.2
NA
25.6
Sales (Rs. Mn)
FY14
FY15E
Sales (Rs. Mn)
FY14
FY15E
157,541
101,109
688,100
87,054
74,159
789,217
156,754
51,748
86,811
356,487
194,821
59,564
842,422
93,600
78,488
810,918
178,396
63,220
100,307
373,593
FY16E 0
206,000
63,367
891,311
95,038
81,428
889,763
210,265
89,011
102,305
392,487
EBITDA (Rs.Mn)
FY14
FY15E
49,899
17,375
178,713
NA
44,460
198,795
133,129
19,167
13,046
77,118
66,541
15,535
208,109
33,076
51,106
228,669
152,433
21,394
18,993
84,519
FY16E 0
72,169
16,233
240,101
31,656
52,458
207,209
180,051
39,784
19,274
87,191
PAT (Rs. Mn)
FY14
FY15E
-2,906
4,916
151,117
7,547
12,188
114,036
45,476
10,267
1,053
-2,600
FY14
EPS (Rs.)
FY15E
NA
29,038
7.0
5.9
8.7
6.9
NA
8.2
7.0
6.9
6.2
6.0
5,368
4,774
26,771
5,355
51,420
6,225
3,703
5,971
5,598
NA
6,350
61,620
13,992
NA
13.8
21.8
72.8
14.3
52.7
-3.7
4.4
16.2
17.7
71.2
15.9
53.9
-1.0
7.7
18.0
21.6
77.4
18.8
69.6
3.2
NA
8.1
11.5
7.6
12.1
18.8
9.4
20.1
6.8
10.1
NA
10.2
15.7
8.1
NA
3,966
2,153
1,159
4,787
3,221
1,473
9.5
8.9
58.0
12.1
20.2
82.2
14.6
23.6
104.5
10.5
12.4
9.0
9.1
9.8
7.6
FY16E 0
FY14
EPS (Rs.)
FY15E
-1.04
39.35
23.92
4.60
1.02
13.83
9.47
3.66
2.23
-1.61
-0.07
44.10
28.40
7.58
2.09
11.69
10.51
3.60
8.70
6.16
-487
6,815
179,348
11,882
23,320
96,955
54,965
7,723
2,921
15,396
FY16E 0
5,594
7,241
208,341
11,824
25,220
105,659
66,617
19,735
1,759
18,516
FY16E 0
FY16E 0
2.14
66.79
33.00
7.52
2.30
12.69
12.73
7.00
7.53
7.27
EV/EBITDA (x)
FY15E FY16E
P/BV (x)
FY15E FY16E
1.9
1.5
4.4
1.6
0.7
1.3
1.9
1.0
1.0
1.5
1.7
1.4
3.9
1.4
0.7
1.2
1.7
0.9
1.1
1.4
Company Nam e
Banking & Financial Services
State Bank of India
Punjab National Bank
Allahabad Bank
Bank of Baroda
Corporation Bank
Federal Bank
Canara Bank
ICICI Bank
HDFC Bank**
Axis Bank
DCB Bank
Karur Vysya Bank
Rs. Mn
Mcap
Rs.
CMP
Rs.
TP
Reco
%
(-) Dow n/(+) Up
1,830,000
325,827
54,352
368,911
54,493
109,797
169,443
1,688,457
2,093,942
894,782
20,589
55,975
2,451
900
100
859
325
128
367
1,459
867
379
82
522
3,003
860
87
1,058
NA
137
383
1,600
830
412
88
620
BUY
HOLD
SELL
BUY
NOT RATED
HOLD
HOLD
HOLD
HOLD
HOLD
HOLD
BUY
22.5
-4.4
-12.8
23.2
NA
6.7
4.3
9.7
-4.3
8.6
7.2
18.7
492,822
161,460
53,113
119,654
37,837
22,286
89,444
164,756
191,096
119,516
3,684
12,837
565,451
180,094
60,883
135,576
43,107
24,292
105,599
183,854
223,081
132,326
4,726
14,497
633,554
201,079
67,548
154,389
50,840
27,693
124,515
207,915
270,240
145,617
5,959
17,362
321,092
113,845
40,204
93,532
30,394
14,804
67,962
165,946
149,386
114,561
1,880
8,378
373,776
126,411
42,062
102,214
34,848
16,307
76,545
184,169
176,227
126,220
2,500
9,054
423,230
141,865
47,937
118,014
43,195
19,064
86,643
213,622
216,178
139,779
3,366
11,203
108,912
33,426
11,720
45,411
5,617
8,389
24,382
98,105
87,435
62,177
1,514
4,296
132,987
40,315
11,077
50,972
2,729
9,652
26,394
107,636
104,111
66,947
1,899
4,759
12.1
-15.8
18.5
3.0
-8.5
18.0
18,989
22,153
19,821
116,830
2,295
4,038
22,004
28,032
23,929
137,304
2,658
5,202
25,688
34,554
28,626
157,365
3,088
6,581
18,470
13,490
13,929
5,060
1,466
1,278
21,253
16,854
16,360
5,574
1,712
1,949
24,856
20,562
19,421
6,703
1,995
2,750
13,172
7,190
5,948
1,395
1,287
370
14,126
8,791
7,072
1,551
1,452
847
LIC Housing Finance
157,531
312
350
BUY
Bajaj Finance
136,974
2,732
2,299
HOLD
L&T Finance Holding
113,118
66
78
BUY
Max India+++
85,144
320
329
HOLD
CARE+++
41,141
1,419
1,298
HOLD
CFL
25,325
305
360
BUY
Note: ** Bloomberg Est; +++ Manufacturing Format; $$$ Calendar Year; ### Y/E June, && EBIT
Net Interest Income (Rs. Mn)
FY14
FY15E
FY16E 0
Pre-Tax Pre-Prov. Profit (Rs.Mn)
FY14
FY15E
FY16E 0
PAT (Rs. Mn)
FY14
FY15E
FY14
EPS (Rs.)
FY15E
155,704
45,235
13,827
61,329
7,322
11,339
29,322
121,254
128,731
73,274
2,060
5,870
146.0
92.0
21.5
105.4
33.5
9.8
52.9
85.0
36.3
132.0
6.0
40.1
178.0
111.0
20.3
118.4
16.3
11.3
57.2
93.0
43.1
142.0
7.6
39.5
209.0
125.0
25.4
142.4
43.7
13.3
63.6
105.0
53.4
156.0
8.2
48.7
1.9
1.1
0.9
1.1
0.8
1.5
0.7
2.2
4.0
0.4
1.6
1.6
1.7
1.0
0.8
1.0
0.8
1.4
0.7
2.0
3.3
0.4
1.4
1.5
16,524
10,640
9,019
1,777
1,680
1,299
26.1
143.0
3.5
5.2
44.4
4.5
28.0
177.0
4.1
5.8
50.1
10.3
32.7
214.0
5.2
6.7
57.9
14.1
1.9
2.8
1.7
2.7
7.2
2.1
1.6
2.4
1.5
2.6
6.2
1.9
FY16E 0
FY16E 0
P/ABV (x)
FY15E FY16E
Global Markets - Outlook
Dharmesh Kant
VP Strategies & Fund Manager (PMS)
Mobile: +91 77383 93372
Tel: +91 22 66188890
dharmeshh.kant@indianivesh.in
Global Market Update

US Markets: After a sharp selloff in U.S. stocks on Friday the main benchmarks
recorded their deepest weekly declines in more than two years.
The prices paid for imported goods fell 0.5% in September and declined for
the third straight month, another sign that U.S. inflationary pressures remain
muted. The main reason: falling worldwide oil prices.
Biggest losses came from the technology sector. Internet stocks were hit
hardest.

Day’s Performance: The S&P 500 fell 22 points, or 1.1%, to 1,906.13, losing
3.1% over the week, its biggest weekly drop since May 2012. The Dow Jones
Industrial Average dropped 115 points, or 0.7%, to 16,544.10, and lost 2.7%
over the week. The tech-heavy Nasdaq Composite dropped 102 points, or
2.3%, to 4,276.24 and suffered its worst weekly decline since May 2012.

Set ups on S&P 500, Dow Industrial Average and Nasdaq 100 are consolidating
in top band with signs of weakness creeping in. One set of running correction
about which we have indicated in our earlier report is over, however set ups
remain weak with likely scenario of sell on rallies.

Emerging markets: Asian stocks fell with U.S. equity-indexfutures (DJA),
extending a rout that wiped$1.54 trillion from global shares last week, and
sovereign bonds rose amid concern that pledges to keep record-low interest
rates won’t be enough to offset a global economic slowdown.

Bullions & Commodities: Gold is trading at $1234 per troy ounce this morning
up 1.01% from previous close. WTI Crude future is trading at 84.84 per barrel
while Brent Crude future is trading at $89.28 per barrel.

Currencies: The U.S. Dollar Index tracking the U.S. currency against a basket
of six others currencies trading at 85.45 this morning down (0.27%) from
previous close. Long term set ups up on Dollar Index are looking strong. It has
broken above 84 on a weekly closing basis. Likely upside in medium term
would be around 89 levels. The dollar and U.S. stocks often trade on opposite
paths, with a weak dollar seen as providing investors with cheap funding to
buy stocks. Plus the dollar’s drop generally helps U.S. companies’ overseas
sales.
Source: Bloomberg
NiveshDaily
October 13, 2014 | 8
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