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For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES. REFER TO THE END OF THIS MATERIAL.

Contents

Daily Alerts

Company alerts

Zee Entertainment Enterprises: FY2018 AR analysis

FCF generation muted but broadly on guided lines; treasury management

short of expectations

Key message - it is 'TV and digital' and not 'TV versus digital'

Core on full steam, digital catch-up will be key trigger for the stock

Bharat Forge: Annual report takeaways

Export revenues boost FY2018 revenue growth

Free cash-flow generation decent in FY2018 but could have been better

Keep earnings estimates unchanged for FY2020; maintain SELL with TP of

Rs600

INDIA DAILY July 12, 2018 India 11-Jul 1-day 1-mo 3-mo

Sensex 36,266 0.1 2.2 6.9

Nifty 10,948 0.0 1.5 5.1

Global/Regional indices

Dow Jones 24,920 0.6 (1.6) 3.0

Nasdaq Composite 7,759 0.0 1.3 9.8

FTSE 7,601 (1.2) (1.8) 4.7

Nikkei 21,932 (1.2) (3.8) 1.1

Hang Seng 28,312 (1.3) (8.9) (8.4)

KOSPI 2,281 (0.6) (7.7) (6.7)

Value traded – India

Cash (NSE+BSE) 300 304 331

Derivatives (NSE) 5,864 4,894 5,302

Deri. open interest 3,632 3,570 3,779

Forex/money market

Change, basis points

11-Jul 1-day 1-mo 3-mo

Rs/US$ 68.8 10 127 361

10yr govt bond, % 8.2 1 (4) 57

Net investment (US$ mn)

9-Jul MTD CYTD

FIIs (108) (206) (828)

MFs 2 205 10,708

Top movers

Change, %

Best performers 11-Jul 1-day 1-mo 3-mo

TCS IN Equity 1,980 5.6 13.1 31.4

GCPL IN Equity 1,324 5.5 16.2 23.2

KMB IN Equity 1,387 1.1 4.8 23.2

HUVR IN Equity 1,714 1.6 7.0 21.6

NEST IN Equity 10,191 1.9 2.8 20.2

Worst performers

HDIL IN Equity 20 (1.0) (14.2) (52.8)

RCOM IN Equity 14 (2.2) (12.8) (40.3)

UT IN Equity 4 (2.4) (20.2) (37.6)

IDEA IN Equity 54 (3.1) (15.2) (26.9)

VEDL IN Equity 218 (3.5) (11.4) (26.5)

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

FCF generation muted but broadly on guided lines; treasury management short of expectations

Cash generation. Zee reported negative FCF of `857 mn due to (1) elevated investments in

movies. Outgo of `14-15 bn towards purchase/advance for satellite/digital rights of movies +

w-cap for movie production. This shows up in 55% increase in inventory to `26.3 bn. Other

W-cap items were broadly in line, (2) elevated capex of `8 bn includes acquisition capex of

`6.3 bn (RBNL, IWPL, Margos and an ‘investment property’) and organic capex of `1.7 bn,

(3) higher taxes (repatriation of funds attracted dividend tax of `1.35 bn included in direct taxes).

FCF should normalize starting FY2019E as Zee has guided reduced investments in movies.

Treasury management. Zee’s aggregate investment in high-risk asset classes such as

unknown overseas funds, ICDs and real estate entities increased to Rs9.8 bn from Rs7.8 bn

and to 28% of cash and cash equivalents (including ICDs) from 18%. These investments

were made for higher yields. However, Zee’s yields have tapered to a 4-5% range over the

past two years and it is facing issues recovering one such investment (`1.7 bn in SGGD).

Given this, we hope Zee revisits its treasury management strategy.

Key message— it is ‘TV and digital’ and not ‘TV versus digital’

Zee has given disproportionate but due importance to digital in its AR. It views digital as an

opportunity and not a threat to TV at least for some more time. The company seems a lot more

focused on its digital platform than market perception. Zee reiterated that it would launch 90

originals by March 2019 (about 15 so far) and disclose operating metrics of ZEE5 in the next

few quarters. We believe ZEE5 has what it takes to be a key OTT player on the entertainment

side. The extent of success will be determined by its execution and competitive intensity.

Core on full steam, digital catch-up will be key trigger for the stock

Even as Zee’s execution in the core broadcasting business continues to be impressive and

consistent, the next leg of stock performance is contingent on sustenance of rich valuations,

which hinges on the success of ZEE5. Zee’s digital strategy of focusing on Hindi/regional

language content is pragmatic and aligns with its strength and positioning. However, the

company needs to step up its game and keep pace with the fast evolving competitive landscape.

We will closely track ZEE5’s execution. We value Zee at 28X FY2020E core earnings (excluding

RPS and digital losses; no positive/negative value ascribed to ZEE5 as of now). ADD.

Zee Entertainment Enterprises (Z) Media

FY2018 AR analysis. Zee achieved an important milestone in FY2018—#1 non-sports

entertainment network and it set the tone for enhanced focus on digital. FY2019 will

be a year to watch out for as Zee executes its well-articulated digital strategy and

monetizes investments made over the past two years. On BS and CF front, (1) FCF was

marginally negative due to elevated investments in movies, acquisition capex and higher

taxes, (2) treasury management could have been better in our view; it is not

representative of a company known for flawless execution.

ADD

JULY 12, 2018

UPDATE

Coverage view: Attractive

Price (`): 538

Target price (`): 625

BSE-30: 36,266

Jaykumar Doshi

Zee Entertainment Enterprises

Stock data Forecasts/Valuations 2018 2019E 2020E

52-week range (Rs) (high,low) EPS (Rs) 15.0 17.1 20.0

Market Cap. (Rs bn) EPS growth (%) 7.8 13.8 16.8

Shareholding pattern (%) P/E (X) 35.8 31.5 27.0

Promoters 41.6 Sales (Rs bn) 66.9 77.4 88.8

FIIs 41.4 Net profits (Rs bn) 14.4 16.4 19.2

MFs 5.5 EBITDA (Rs bn) 20.8 24.0 28.3

Price performance (%) 1M 3M 12M EV/EBITDA (X) 23.3 20.1 16.9

Absolute (5.1) (6.4) 6.3 ROE (%) 20.3 20.3 20.9

Rel. to BSE-30 (7.0) (12.3) (6.9) Div. Yield (%) 0.5 0.8 1.0

Company data and valuation summary

619-477

517.1

Zee Entertainment Enterprises Media

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

FCF generation muted but broadly on guided lines

Zee reported negative free cash flow on account of elevated investments in movies,

acquisition capex and higher taxes (repatriation of funds attracted dividend tax included in

direct taxes) (see Exhibit 1).

Investment in movies. Zee has stepped up its investment in movies (largely

purchase/advance for satellite/digital rights + w-cap for movie production) in the past two

years after exiting sports. This shows up in Rs9.4 bn increase in inventory to Rs26.3 bn in

FY2018. As per our estimate, aggregate gross investment in movies was about Rs14-15 bn

in FY2018 (Rs9.4 bn net of amount expensed through P&L). We note that aggregate

gross and net investment in movies was about Rs10 bn and Rs5.7 bn in FY2017. Thus,

over the past two years, Zee has invested an aggregate of about Rs25 bn in movies at a

gross level and about Rs15 bn (net of investment expensed), much higher than previous

years (annual run-rate was about Rs4-5 bn (gross) and Rs1-1.5 bn (net) over FY2013-16)

Our view: Even as Zee’s management had indicated elevated investment is movies, the

quantum was a tad higher than our earlier expectations and not visible in Zee’s Hindi

movie slate. It looks like Zee may have acquired rights of a lot of regional movies. We will

not be surprised if the company launches movie channels in Tamil and Kannada markets

to further strengthen its regional portfolio. We note that, in FY2018 AR, the company has

guided that investment in movies will continue but at a reduced pace going forward.

Capex. Capex of about Rs8 bn includes acquisition capex of Rs5.7 bn (1) Rs1.99 bn for

acquisition of 49% stake in IWPL, (2) about Rs3 bn for acquisition of RBNL’s TV channels,

and (3) Rs750 mn for 80% stake in Margo networks. Further the company also spent

Rs601 mn to acquire an ‘Investment property’. Organic capex was Rs1.7 bn; a tad higher

than usual perhaps due to the last leg of investment in studios.

Cash and cash equivalents (including ICDs + investment property) declined to Rs35.4 bn

from Rs42.3 bn due to (1) negative FCF, (2) Rs4 bn paid out towards redemption of first

20% tranche of RPS, and (3) equity dividend of Rs3 bn.

Treasury management— falls short of our expectations (Exhibit 2)

Unknown offshore funds— Zee has reduced its investment in Poseidon (Bermuda-

based fund) by 24% but invested Rs1.97 bn in Actinium Investments Funds Ltd (another

unknown offshore fund based out of British Virgin Islands). At an aggregate level, Zee’s

investments in offshore funds went up by 27% to Rs5.4 bn. We note that investment in

Poseidon has earned a CAGR of 4.5% in US$ terms over FY2015-18.

Investment in real estate entities— Status quo on investment of Rs1.7 bn in NCDs of

SGGD projects. Zee is facing issues recovering its investment of Rs1.7 bn in 17% secured

redeemable un-rated non-convertible debentures of SGGD Projects Development Ltd. It

has initiated legal action to enforce/invoke security and is hopeful of recovering the entire

amount based on security against the company’s assets and personal guarantees

provided by SGGD’s promoters. Zee has neither provided for it nor recovered the amount

as at FY2018-end.

Investment property— Investment property are properties held to earn rentals or for

capital appreciation. Zee invested Rs601 mn in land/building (Rs601 mn gross and Rs403 mn

net of transfer to PPE) in FY2018.

Inter-corporate deposits (ICDs)—Zee’s inter-corporate deposits have increased to Rs2.4 bn

from Rs1.5 bn (‘loans’ under current assets are ICDs). Incremental lending is in overseas

geography.

Media Zee Entertainment Enterprises

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Other highlights

Yields on cash and cash equivalents. Zee’s gross yield on cash and investments

(including ICDs) was about 4.8% in FY2018. We note that yields have dropped to 4-5%

range over the past two years as compared to 8-9% over FY2013-15 (Exhibit 3). As per

the management, working capital is higher during the year as compared to year-end.

Significant amount of subscription is collected at the end of the financial year; cash

balance during the course of the quarter/year is lower than the average of year end

numbers. We believe there is room for improvement in cash yields.

Loss on investments. Under Ind-AS accounting, investments have to be marked to

market (fair value). Zee’s investments in Morpheus media fund was marked down to

Rs323 mn from Rs446 mn in FY2018 (MTM loss passed through ‘Fair value through P&L’

line item on the P&L). We note that in FY2016 and FY2017, Zee wrote off investments of

Rs313 mn in MirriAD and Rs413 mn in Morpheus media fund, respectively. These small

investments can give meaningful returns, but the track record so far is not encouraging

Pledged shares. Pledged shares have increased to 21.9% of total shares outstanding in

FY2018 from 16.9% as at FY2017-end. Promoter shareholding as at FY2018-end was

41.6% (down 140 bps yoy); about 52.6% of promoter shareholding is pledged

Related party transaction. As per disclosures, Zee’s subscription income from Dish TV

increased by 5% to Rs2.4 bn and that from Siti cable increased 5.5% to Rs746 mn. The

management indicated that related party transactions factor in revenues pertaining to

receivables but not revenues pertaining to unbilled revenues; hence it does not represent

underlying growth in subscription income from related parties.

Contingent liabilities. Contingent liabilities reduced further in FY2018 due to a

reduction in corporate guarantees to Rs1 bn from Rs3.4 bn; we note that it was Rs21.3

bn in FY2016. This drop is largely due to the sale of its sports business; Zee had granted

corporate guarantees for sports subsidiary. Contingent liabilities pertaining to disputed

direct taxes reduced to Rs2.6 bn from Rs3.3 bn.

A few data points shared in the annual report. (1) Zee’s network viewership market

share increased 200 bps to 18% in FY2018 and Zee network became the #1 non-sports

entertainment network in the country surpassing Star, (2) Zee produces 500 hours of

original content across 12 languages every week, (3) Zee owns IP rights of all the content

it produces, (4) Zee network’s estimated reach is 700 mn in India and 570 mn overseas,

(5) Zee operates 39 channels in India, (6) Zee operates 39 Indian-language channels and

13 non-Indian language channels in international markets

ZEE5 content library. Zee’s new digital platform, ZEE5 has 100,000+ hours of content.

It carries 3,500+ movie titles and has rights of 100+ movie premiers Zee has content in

twelve languages and original content in six languages. International content— ZEE5

carries popular shows from Turkey, Brazil, Pakistan and Korea dubbed in multiple Indian

languages. Besides this, it also carries popular English shows of a few international

studios including BBC.

Zee studios and Zee music. Zee studios released 9 movies spanning three languages

during the year FY2018. Zee music acquired 140+ titles across 11 languages and

garnered 14% share (second largest) on streaming platforms



A round-up of FY2018

Robust ad growth on absolute basis and relative to the industry. Zee reported

15.8% yoy growth in ad revenues (like-for-like; excluding sports and acquisitions) in

FY2018, about 500 bps higher than the industry. Zee’s network viewership share at all-

Indian level increased to 18% in FY2018 from 16% in FY2017 (per company disclosures).

Zee was the #1 network in non-sports entertainment. We note that the benefit of a

favorable base (demonetization in 2HFY17) was largely offset by disruption ahead of GST

implementation (weak 1HFY18). On a 2-year CAGR basis (FY2016-18), ad revenues grew

12-13% on a like-for-like basis.

Domestic subscription revenue growth. Domestic subscription revenues grew 11.8%

yoy, a tad below our beginning-of-the-year expectations owing to a pending court case

pertaining to TRAI’s new tariff order. With tariff order overhang behind us, a modest

pickup in domestic subscription revenue growth can be expected in FY2019E.

Profitability. EBITDA grew 8% yoy to Rs20.8 bn after absorbing (1) one-time costs of

about Rs500 mn pertaining to corporate re-branding around 25th anniversary of the

company, (2) digital losses. Zee launched ZEE5 in February 2018. We estimate Rs750 mn

loss in 4QFY18. FY2018 EBITDA margin stood at 31.1% (versus 33% ex-sports EBITDA

margin in FY2017). Adjusted net profit (excluding RPS impact, exceptional gains from sale

of sports business and one-time tax pertaining to repatriation of funds) grew about 9%

yoy to Rs14.4 bn. Equity dividend for the year was Rs2.9/share, translating into about

20% dividend payout in addition to preference dividends paid to redeemable preference

shareholders. Zee redeemed a first tranche of 20% of RPS amounting to Rs4 bn outgo.

A note on taxation and adjustments for computation of recurring profit

We note that FY2018 reported net profit is not comparable with previous year due to

1. fair value adjustments pertaining to RPS liability (notional) and

2. RPS dividend included in finance costs under Ind-AS,

3. tax paid on dividends paid out by foreign subsidiaries to the parent.

Effective tax rate for FY2018 was at 41.4%, higher than the marginal tax rate. During the

year, Zee’s foreign subsidiaries paid out dividend of Rs7.8 bn to the parent entity from the

sale proceeds of sports business. As per Indian tax laws, dividend receipts from foreign

subsidiaries attract a tax at the rate of ~17%. Accordingly, Zee paid a tax of Rs1.35 bn on

the dividend amount received, which is a part of the current tax line item in the P&L

statement. As per Indian Income tax act, the tax paid on the dividend received from foreign

subsidiaries can be offset against dividend distribution tax payable on equity dividend,

preference dividend and redemption of preference shares. Accordingly, despite higher

effective tax rate on P&L, there is no impact on consolidated cash flow. Zee’ normalized tax

rate in FY2018 was 34.8%.

4. exceptional gains pertaining to the sale of its sports business and re-measurement of

previously held equity interests in IWPL and Fly by Wire.

Adjusted net profit in Exhibit 7 excludes the impact of the above line items for an accurate

assessment of underlying net profit and for like-for-like comparison.



Exhibit 1: Zee Entertainment— Cash flow analysis, March fiscal year-ends (Rs mn)

Source: Company, Kotak Institutional Equities estimates

2012 2013 2014 2015 2016 2017 2018

Operating cash flow

PBT 8,406 10,519 13,191 14,040 14,040 29,009 23,187

Depreciation 323 399 501 673 777 1,152 1,821

Other income (1,072) (1,133) (1,232) (1,626) (1,081) (1,205) (1,798)

Interest expense 10 30 76 22 28 73 101

MTM (gains)/ loss on RPS 673 2,205 68

RPS div idends 1,458 1,211 1,328

Other adjustments 1,069 69 440 100 (262) (12,193) (2,317)

OCF before w-cap changes and taxes 8,736 9,884 12,976 13,209 15,633 20,252 22,390

Working capital

Increase in trade and other receivables (1,232) (3,028) (2,464) (2,693) (3,545) (2,425) (2,510)

Increase in inventories (1,943) (1,406) (2,991) (142) (1,275) (3,676) (9,359)

Increase in trade and other payables 1,563 2,086 551 599 2,323 65 3,318

Increase in working capital (1,612) (2,348) (4,904) (2,236) (2,497) (6,036) (8,551)

Taxes (3,025) (3,669) (4,242) (4,164) (5,827) (6,810) (8,295)

Operating cash flow (OCF) 4,099 3,867 3,830 6,809 7,309 7,406 5,544

Capex (816) (757) (1,482) (1,147) (3,696) (2,817) (8,098)

FCF 3,283 3,110 2,348 5,662 3,613 4,589 (2,554)

FCF including net other income (a) 4,345 4,213 3,504 7,266 4,666 5,721 (857)

FCF/PAT (%) (b) 74 59 39 74 45 26 (6)

Notes:

(c ) FCF incl other income does not include proceeds of Rs18.4 bn and Rs1.34 bn from sale of sports business in FY2017 and FY2018, respectively.

(b) FCF including net other income / Reported PAT (excluding RPS div idends).

(c) FY2012-15 financials as per Indian GAAP and FY2016 and FY2017 as per Ind-AS accounting standard.



Exhibit 2: Zee's investments in overseas funds, real estate entities and inter-corporate deposits, March fiscal year-ends (Rs mn)

Source: Company, Kotak Institutional Equities

2010 2011 2012 2013 2014 2015 2016 2017 2018

Investments

Investments in unfamiliar overseas mutual funds (Quoted)

- Socrates Money Market Fund Ltd. (Units of USD1000 each) — 2,309 2,645 633 31 — — — —

- F irst Global Wealth Ltd. (Units of USD1000 each) — — — 954 2,241 — — — —

- Globex Fund Ltd. (Units of USD1000 each) 225 — — 981 1,077 — — — —

- Poseidon Opportunities Fund Ltd. (Units of USD1000 each) — — — — — 3,775 4,192 4,250 3,418

- Actinium Investments Funds Limited (Units of USD1000 each) — — — — — — — — 1,976

Total investment in unfamiliar overseas MFs 225 2,309 2,645 2,568 3,349 3,775 4,192 4,250 5,394

Investments in high-risk real estate entities

Parsvnath Developers Ltd. (18% secured redeemable NCDs) — — — — 237 — — — —

SGGD Projects Development P. Ltd. (17% secured redeemable Unrated NCDs) — — — — 1,250 1,250 1,469 1,543 1,725

Total investment in high-risk real estate entities — — — — 1,487 1,250 1,469 1,543 1,725

Other investments (largely equity investments in unlisted companies)

Total other investments 309 50 52 42 747 762 1,279 1,399 1,424

Commercial paper and NCDs

Total investments in Commercial paper and NCDs 1,000 1,477 2,729 2,397 150 1,395 160 164 169

Other regular low risk / risk free investments

Total regular low risk / risk free investments 1,095 2,555 2,000 2,350 2,000 2,000 3,400 6,075 6,577

Investment in 'Investment property' (Land/building)

Investment Property (Net block value) 573 573 573 573 573 573 573 1,150 1,555

Less: provisions on diminution in value of investments 0 0 0 (14) (16) 0 0 0 0

Total investments 3,203 6,964 7,999 7,930 8,306 9,755 11,073 14,581 16,844

Cash and bank balances

Cash and bank balances 5,865 3,856 3,283 5,316 5,644 7,365 9,631 26,133 16,117

Inter-corporate deposits (ICDs)

Inter-corporate deposits (ICDs) - Not related party transaction 1,292 2,500 1,700 1,750 3,450 4,250 1,750 1,542 2,428

Total cash + investments + ICDs 10,359 13,320 12,982 14,996 17,400 21,370 22,454 42,256 35,389

High risk / unfamiliar investments + loans/advances (ICDs) 1,517 4,809 4,345 4,318 8,706 9,695 8,270 7,781 9,870

As % of total cash + investments + ICDs 15 36 33 29 50 45 37 18 28



Exhibit 3: Yields on cash and cash equivalents have declined over the past two years Zee: Break-up of other income, March fiscal year-ends, 2012-18


2013 2014 2015 2016 2017 2018

Break-up of other income

Interest income

- Bank deposits 33 64 105 67 172 493

- Other financial assets 763 955 1,116 985 801 807

- Income tax refunds 133 303

Div idend income 133 117 42 3 99 195

Net gain on sale of investments 204 96 365 194 90 12

Total interest + investment income 1,133 1,232 1,628 1,249 1,295 1,810

As % of cash + investments + ICDs (a) 8.3 7.9 8.7 5.9 4.1 4.8

Rent income 70 78 104 246 244 435

Insurance claim received 7 195 30 26 157 -

Liabilities / excess provision written back 142 83 251 63 365 10

Foreign exchange gain (net) 30 174 186 383 48 357

Remeasurement income 1,609

Miscellaneous income 37 35 79 49 131 182

Total other income 1,419 1,797 2,278 2,016 2,240 4,403

Total cash + investments + ICDs (a) 14,423 16,827 20,797 21,881 41,106 33,834

Notes:

(a) Excludes Investment property



Exhibit 4 : Zee’s inventory, March fiscal year-ends (Rs mn)


Exhibit 5: Zee's net cash and cash equivalents (including ICDs), March fiscal year-ends (Rs bn)


173

235 229 251

215 194

234

407

0

75

150

225

300

375

450

0

5,000

10,000

15,000

20,000

25,000

30,000

2011 2012 2013 2014 2015 2016 2017 2018

Inventory (Rs mn, LHS) Inventory days (no. of days, RHS)

13.3 13.015.0

17.4

21.4 22.5

42.3

35.4

0.0

10.0

20.0

30.0

40.0

50.0

2011 2012 2013 2014 2015 2016 2017 2018



Exhibit 6: Zee's advertising and publicity costs, March fiscal year-ends (Rs bn)


Exhibit 7: P&L of Zee Entertainment, March fiscal year-ends, 2017-18 (Rs mn)


0

2

4

6

8

10

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2011 2012 2013 2014 2015 2016 2017 2018

Advertising and publicity expense (LHS) As % of revenues (RHS)

FY2018 FY2017 % chg.

Total revenues 66,857 64,341 4

Advertising revenues 42,048 36,735 14

Subscription revenues 20,287 22,629 (10)

--Domestic subscription 16,388 18,216 (10)

--International subscription 3,899 4,404 (11)

Other sales (incl. syndication) 4,522 4,977 (9)

Total expenditure (46,095) (45,073) 2

Content and other direct costs (25,275) (27,825) (9)

Employee costs (6,657) (6,043) 10

Advt. and publicity costs (5,773) (4,473) 29

Other expenses (8,390) (6,732) 25

EBITDA 20,761 19,269 8

EBITDA margin (%) 31.1 29.9

Other income 2,795 2,240 25

Fair value through P&L (RPS) (68) (2,205) (97)

F inance costs (b) (1,448) (1,372) 5

D&A expenses (1,821) (1,152) 58

Pretax profits 20,220 16,780 21

Extraordinaries 2,955 12,234

Tax provision (c) (8,409) (6,805) 24

Minority interest 25 4 533

Reported PAT (post RPS impact) 14,791 22,213 (33)

EPS post RPS impact (Rs) 15.4 23.1

Adj. PAT (pre-RPS and pre-exceptional) 14,428 13,248 9

Adj. EPS (pre-RPS and pre-exceptional) (Rs) 15.0 13.8 9



Exhibit 8: Balance Sheet of Zee Entertainment, March fiscal year-ends, 2017-18 (Rs mn)


Mar-17 Mar-18 YoY (%)

EQUITY AND LIABILITIES

Equity

Share capital 960 961 0

Other equity 65,945 74,657 13

Total equity 66,905 75,617 13

Minority Interest 10 142 1,383

Non-current Liabilities

Long-term borrow ings 19,076 15,245 (20)

Long-term provisions 768 892 16

Other Non-current liabilities 2,947 10

Total non-current liabilities 22,791 16,146 (29)

Current liabilities

Trade payables 8,343 11,497 38

Other current liabilities 3,752 4,017 7

Short-term provisions 90 83 (8)

Income tax liabilities / DTL 683 3,795 455

Total current liabilities 12,868 19,391 51

Total equity and liabilities 102,574 111,297 9

ASSETS

Non-current assets

Fixed assets 4,872 6,005 23

CWIP 1,558 920 (41)

Investment property 1,150 1,555 35

Goodwill 2,676 5,467 104

Intangible assets 458 1,734 278

Non-current investments 1,564 1,593 2

- Investments in associates 8 2

- Investments in JVs 163 194 19

- Other investments 1,392 1,397 0

Deferred tax assets (net) 903 0

Income tax assets 6,391 7,026 10

Other non-current assets 558 340 (39)

Total non-current assets 20,130 24,640 22

Current assets

Current investments 11,868 13,695 15

Inventories 16,962 26,278 55

Trade receivables 12,418 15,365 24

Cash and bank balances 26,133 16,117 (38)

Short-term loans and advances 1,542 2,428 57

Other financial assets 3,387 2,556 (25)

Other current assets 10,134 10,218 1

Total current assets 82,444 86,657 5

Total assets 102,574 111,297 9



Exhibit 9: Hindi genre- BARC ratings market share, 10-Oct-15 to 31-Mar-18 (Week 41, 2015 to Week 13, 2018) (%)


3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18

Hindi GEC (Urban + Rural)- Viewership share in the top 7 channels (%)

Star Plus 21.9 21.0 21.0 21.9 20.8 21.7 21.5 18.9 16.3 15.9

Colors (TV18) 20.5 20.8 20.7 17.6 20.8 20.1 17.3 18.1 19.9 19.1

Zee TV 18.9 19.2 17.5 18.0 14.9 15.0 17.4 20.1 20.9 19.1

Sony TV 10.5 9.5 10.1 11.9 13.3 13.3 12.3 13.8 13.4 14.9

Sony SAB 9.9 10.6 11.4 11.4 11.9 12.1 14.5 12.3 12.5 13.2

&TV (Zee) 4.7 5.7 5.3 6.0 6.0 5.9 5.4 6.4 6.0 5.6

Life Ok (Star Bharat) 13.6 13.2 14.0 13.1 12.3 11.9 11.6 10.5 11.0 12.2

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Zee Network 23.6 24.9 22.8 24.1 20.8 20.9 22.8 26.4 26.9 24.7

Hindi movies (Urban + Rural)- Viewership share in the top 6 channels (%)

Sony Max 24.9 22.9 26.0 25.8 26.7 25.6 27.2 26.8 28.2 27.6

Star Gold 20.3 22.7 21.7 21.2 18.1 20.2 20.2 20.2 19.1 19.9

Zee Cinema 21.9 22.2 22.2 22.0 23.7 22.0 22.1 20.8 20.7 20.3

Movies OK 14.6 13.2 11.7 11.5 11.5 11.3 10.8 12.0 11.7 11.3

& Pictures 10.2 10.8 10.9 11.3 11.9 12.3 11.5 11.4 11.3 11.2

Sony Max 2 8.1 8.1 7.6 8.1 8.1 8.5 8.2 8.8 9.1 9.6

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Zee Network 32.1 33.0 33.1 33.4 35.6 34.4 33.7 32.2 32.0 31.5

FTA Hindi GEC (Urban + Rural)- Viewership share in the top 8 channels (%)

Star Bharat 4.1 10.9 10.7

Zee Anmol 32.4 24.9 21.8 24.5 22.0 19.0 19.7 25.0 21.1 21.5

Sony PAL 12.6 17.9 22.8 20.5 21.6 21.3 23.9 19.3 18.6 19.2

Colors Rishtey 13.3 16.0 17.2 15.5 19.6 21.5 21.2 18.3 13.5 13.2

Star Utsav 23.3 19.0 21.6 24.5 19.1 18.8 15.4 10.7 15.7 16.6

Zee Big Magic 1.4 5.2 8.4 7.0 8.9 7.6 7.9 7.9 7.0 7.1

Dangal TV 4.8 3.2 2.8 3.3 3.7 4.5 4.9 8.1 9.2 9.6

DD National 12.0 13.8 5.4 4.8 5.0 7.3 6.9 6.5 4.0 2.2

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Zee Network 33.9 30.1 30.2 31.4 30.9 26.7 27.6 32.9 28.1 28.6

FTA Hindi movies (Urban + Rural)- Viewership share in the top 4 channels (%)

Sony Wah 18.6 41.9 35.2 32.0 29.9 29.7 27.2 29.2

Rishtey Cineplex 41.8 24.3 20.9 21.9 24.5 26.0 27.2 27.3

Zee Anmol Cinema 0.0 9.0 23.1 24.0 23.8 21.7 22.6 21.9

Star Utsav movies 39.6 24.7 20.8 22.1 21.8 22.7 23.0 21.5

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Notes:

(a) Top 5-8 channels (relevant channels) in each genre are considered for market share calculation.

(b) Life Ok was rebranded as Star Bharat (Free-to-Air channel) on 28th August 2017. We have split its ratings in 50:50 (Paid/FTA) ratio

for market share calculation of Paid and FTA Hindi GEC groups starting 28th Aug 2017.



Exhibit 10: Regional genres- BARC ratings market share, 10-Oct-15 to 31-Mar-18 (Week 41, 2015 to Week 13, 2018) (%)


3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18

Tamil GEC (Urban + Rural)- Viewership share in the top 6 channels (%)

Sun TV 67.4 67.5 65.7 61.5 62.3 61.7 57.5 50.5 52.8 50.7

STAR V ijay 12.9 12.9 12.2 12.9 10.7 12.6 16.9 24.6 21.9 20.5

Zee Tamil 3.8 5.8 8.4 12.4 14.0 13.4 13.6 14.3 15.6 18.1

Polimer 6.9 5.6 5.5 4.9 4.5 4.7 4.8 3.8 3.7 3.3

Kalaignar TV 4.1 4.2 4.6 3.6 3.5 3.3 3.1 2.9 3.5 3.4

Jaya TV 4.8 3.9 3.6 4.7 5.0 4.2 4.0 3.9 2.5 2.4

Colors Tamil 1.5

Total of top 7 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Telugu GEC (Urban + Rural)- Viewership share in the top 4 channels (%)

Zee Telugu 23.6 26.5 27.9 24.5 22.8 24.0 24.3 22.9 24.6 24.0

Star Maa TV 25.7 25.1 24.4 22.1 22.5 23.0 22.2 27.7 24.5 25.7

Gemini TV (Sun) 21.4 20.4 21.8 28.3 30.1 29.3 29.4 25.6 24.4 24.8

ETV Telugu 29.3 28.0 25.9 25.1 24.6 23.7 24.1 23.8 26.4 25.6

Total of Top 4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Kannada GEC (Urban + Rural)- Viewership share in the top 5 channels (%)

Colors Kannada 40.6 36.9 35.5 36.2 35.2 34.2 34.4 35.0 34.8 35.0

Colors Super 0.0 0.0 0.0 2.8 4.5 6.5 8.0 8.4 11.4 10.3

Zee Kannada 18.7 21.4 23.4 22.4 24.5 24.8 25.6 24.5 22.3 24.7

Udaya TV (Sun) 20.2 19.0 20.2 18.8 12.8 13.0 13.6 16.4 18.7 18.0

Star Suvarna 20.6 22.8 20.9 19.8 23.0 21.6 18.3 15.6 12.8 12.0

Total of Top 5 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Telugu movie channels (Urban + Rural)- Viewership share in the top 4 channels (%)

Gemini movies (Sun) 57.2 49.0 48.3 47.0 42.2 41.0 35.6 32.2 31.9 33.1

Zee Cinemalu 0.0 0.0 0.0 3.3 14.2 17.2 18.9 21.7 21.8 23.1

Star MAA movies 38.2 37.7 35.3 32.3 26.2 25.3 29.2 32.4 30.2 28.3

ETV cinema 4.6 13.4 16.4 17.4 17.4 16.6 16.2 13.6 16.1 15.5

Total of Top 4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0



Exhibit 11: Consolidated financial summary of Zee Entertainment, March fiscal year-ends, 2014-21E (Rs mn)


2014 2015 2016 2017 2018 2019E 2020E 2021E

Profit model (Rs mn)

Total revenues 44,217 48,837 58,514 64,332 66,857 77,440 88,793 101,194

EBITDA 12,033 12,538 15,094 19,260 20,761 24,011 28,252 32,261

Other income 1,807 2,278 2,016 2,240 2,795 2,736 2,930 3,280

Interest (158) (103) (123) (161) (1,448) (100) (50) (50)

Depreciation (501) (673) (840) (1,152) (1,821) (2,068) (2,369) (2,610)

Pretax profits 13,181 14,040 16,147 20,187 20,287 24,579 28,763 32,881

Extraordinary items — — (331) 12,234 2,955 — — —

Taxes (4,291) (4,284) (5,528) (6,805) (8,409) (8,185) (9,578) (11,015)

Minority interest 21 20 (22) 5 25 25 25 25

RPS div idends (incl tax) (101) (1,453) (1,457) (1,211) 0 (969) (727) (545)

PAT 8,810 8,323 8,810 22,205 14,791 15,451 18,484 21,346

Adj PAT (pre-exceptional; excl RPS impact) 8,911 9,776 10,482 13,386 14,428 16,419 19,177 21,857

EPS (Rs) 9.2 8.7 9.2 23.1 15.4 16.1 19.2 22.2

Adj EPS (Rs) - (excl RPS impact) 9.3 10.2 10.9 13.9 15.0 17.1 20.0 22.8

Balance sheet (Rs mn)

Total Equity 27,207 35,306 42,145 66,567 75,617 85,864 97,988 111,239

Preference capital 20,169 20,192 20,169 0 0 0 0 0

Minority interest 61 4 85 10 141 141 141 141

Total borrow ings 29 12 9 19,088 15,254 11,441 7,627 3,814

Currrent liabilities 12,850 14,544 16,532 14,702 20,284 23,352 26,598 30,297

Total capital 47,467 55,514 62,408 85,665 91,012 97,446 105,756 115,194

Cash and cash eq 16,500 20,476 21,346 40,935 33,264 35,596 40,053 46,218

Inventories 11,736 11,878 13,160 16,843 26,278 29,278 32,278 35,278

Receivables 10,281 10,692 13,245 13,059 15,365 16,973 19,461 22,180

Loans and advances 7,645 11,627 12,972 14,156 13,114 14,994 16,723 18,265

Other current assets 1,243 1,706 2,127 3,429 7,026 7,326 7,726 8,126

Net fixed assets 11,730 12,254 14,960 9,721 14,125 14,507 13,988 12,978

Investments 884 894 576 1,321 2,124 2,124 2,124 2,124

Deferred tax assets 298 531 556 903 0 0 0 0

Total assets 47,467 55,514 62,408 85,665 91,012 97,446 105,756 115,194

Free cash flow (Rs mn)

Operating cash flow, excl. W-cap, ex-taxes 12,976 13,209 15,713 19,170 22,390 24,330 28,277 32,286

Working capital (4,904) (2,236) (2,632) (5,670) (8,551) (3,719) (4,372) (3,960)

Taxes paid (4,242) (4,164) (5,827) (6,810) (8,295) (8,185) (9,578) (11,015)

Capital expenditure (1,482) (1,147) (4,064) (2,768) (4,605) (2,450) (1,850) (1,600)

Other income (net) 1,108 1,126 1,003 1,001 1,107 2,636 2,880 3,230

Free cash flow (prior to RPS dividends) 3,456 6,788 4,193 4,923 2,046 12,612 15,357 18,941

RPS div idends (101) (1,453) (1,457) (1,211) - (969) (727) (545)

Free cash flow to equity holders 3,355 5,335 2,736 3,712 2,046 11,643 14,631 18,396

Key assumptions / metrics

Ad revenue growth (%) 21.2 11.8 28.9 9.2 14.5 18.0 15.5 14.5

Domestic subscription revenue growth (%) 13.2 8.0 14.5 11.7 11.8 14.5 15.0 15.0

Overseas subscription revenue growth (%) 5.5 (23.6) 15.7 3.0 (2.8) 2.0 3.0 3.0

Content cost as % of revenue 37.7 38.6 41.2 42.2 40.9 35.3 36.7 37.6

Effective tax rate (%) 32.6 30.5 34.2 33.7 41.5 33.3 33.3 33.5

EBITDA margin (%) 27.2 25.7 25.8 29.9 31.1 31.0 31.8 31.9

ROAE 26.6 26.6 22.7 40.9 20.8 19.1 20.1 20.4

ROACE 24.9 21.8 21.6 20.5 15.7 20.2 22.5 24.0

Notes:

(1) Indian GAAP until FY2016 and Ind-AS thereafter.

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

Export revenues boost FY2018 revenue growth

Standalone gross revenues increased by 32% yoy in FY2018 led by 53% yoy increase in export

revenues and 12% yoy growth in domestic business revenues. Non-auto revenues increased by

46% yoy primarily driven by strong export (+94% yoy) while domestic non-auto revenue

growth was muted (+2% yoy). The export non-auto business was positively impacted by sharp

improvement in the oil and gas vertical and commodity-driven segments.

Free cash-flow generation decent in FY2018 but could have been better

The company generated a free cash-flow of ₹2.95 bn in FY2018 (versus ₹3.2 bn in FY2017).

The company made a capex of ₹5.8 bn in FY2018. The company’s net working capital led to a

drag of ₹3.98 bn in FY2018 primarily led by—(1) significant increase in receivables (drag of

₹6 bn) and inventories (drag of ₹2.85 bn) offset by (2) increase in payable days (cash inflow of

₹7.1 bn).

Keep earnings estimates unchanged for FY2020; maintain SELL with TP of ₹600

We have increased our FY2019 standalone revenue estimates by 2% as we build in higher

growth in the export MHCV segment led by strong growth in the US Class 8 truck segment but

kept FY2020 earnings estimates almost unchanged. We have, however, cut our target price to

`600 (from `650 earlier) as we cut our target multiple to 22X (from 25X earlier). We believe the

company’s growth trajectory will slow down materially during FY2019-21E as high base effects

of export CVs and oil and gas revenues catch up. Our target multiple also incorporates the

increase in yields globally, which should result in increase in cost of capital.

Bharat Forge (BHFC) Automobiles

Annual report takeaways. FY2018 was a very successful year for Bharat Forge as both

automotive and non-auto segments fired on all cylinders. The commercial vehicle cycle

was favorable in the US as well as Indian market and crude oil prices increased during

the year, which boosted revenues. Working capital was stretched despite strong

revenue growth with inventory and receivable days increasing significantly. We retain

SELL rating as we cut TP to `600 (from `650 earlier) due to stretched valuations.

SELL

JULY 12, 2018

UPDATE

Coverage view: Neutral

Price (`): 636

Target price (`): 600

BSE-30: 36,266

Hitesh Goel

Nishit Jalan

Bharat Forge

Stock data Forecasts/Valuations 2018 2019E 2020E

52-week range (Rs) (high,low) EPS (Rs) 16.2 23.2 27.0

Market Cap. (Rs bn) EPS growth (%) 10.1 43.0 16.8

Shareholding pattern (%) P/E (X) 39.3 27.5 23.5

Promoters 45.7 Sales (Rs bn) 83.6 90.7 101.1

FIIs 21.4 Net profits (Rs bn) 7.5 10.8 12.6

MFs 7.5 EBITDA (Rs bn) 17.2 20.4 23.2

Price performance (%) 1M 3M 12M EV/EBITDA (X) 18.8 15.5 13.4

Absolute (1.8) (12.9) 15.4 ROE (%) 17.3 21.5 21.4

Rel. to BSE-30 (3.9) (18.5) 1.0 Div. Yield (%) 0.7 0.8 0.9

Company data and valuation summary

798-549

296.1

Automobiles Bharat Forge


Oil and gas segment and Class 8 trucks lead to sharp growth in revenues

Standalone gross revenues increased by 32% yoy in FY2018 led by 53% yoy increase in

export revenues and 12% yoy growth in domestic business revenues. Non-auto revenues

increased by 46% yoy primarily driven by strong export (+94% yoy) while domestic non-

auto revenue growth was muted (+2% yoy). The export non-auto business was positively

impacted by sharp improvement in the oil and gas vertical and commodity-driven segments.

In India, the non-auto business was muted led by slow growth in process-driven industries

such as cement and steel and decline in private sector capex. The commercial vehicle

business reported a strong growth (+24% yoy) led by 17% yoy growth in India commercial

vehicle business and 30% yoy growth in export CVs (primarily driven by strong growth in

Class 8 trucks in the US market). Passenger vehicle revenues grew by 24% yoy in FY2018.

Overall average capacity utilization of Bharat Forge India plants stood at 71% in FY2018.

The company does not need much capex in standalone entity, which will help it reduce debt

over the next 2-3 years. The company will likely become a net cash company at the

standalone level in two years.

We expect standalone revenues to grow at 11% CAGR over FY2019-21E driven by—(1)

14% CAGR in domestic revenues and (2) 9% CAGR in export revenues. We expect

commercial vehicle segment revenues to grow at a 7% while we expect a 30% CAGR in

passenger vehicle segment revenues during this period. We expect non-auto segment

revenues to grow at 10% CAGR driven by addition of new business from the aviation sector

and defense business.

Exhibit 1: Export revenues increased by 53% yoy in FY2018 Standalone domestic and export sales, March fiscal year-ends, 2012-21E (` mn)

Source: Kotak Institutional Equities estimates

2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E

Domestic sales

Commercial Vehicles 9,138 6,727 6,204 7,858 9,041 9,765 11,463 12,838 15,406 14,636

Passenger Vehicles 2,333 2,816 2,482 2,558 2,030 2,000 2,530 3,036 3,946 4,341

Non Auto 7,972 6,102 6,825 7,858 7,381 8,127 8,279 9,446 10,398 11,385

Total 19,443 15,645 15,511 18,274 18,452 19,892 22,272 25,320 29,751 30,362

Export sales


Passenger Vehicles 348 317 370 1,088 2,002 2,284 2,802 3,363 4,372 5,683

Non Auto 6,618 6,347 7,208 13,220 8,778 7,254 14,106 16,922 18,615 19,545

Total 17,417 15,867 18,482 27,207 24,985 19,417 29,712 36,952 40,487 43,604

Standalone sales


Passenger Vehicles 2,681 3,133 2,851 3,647 4,032 4,284 5,332 6,399 8,318 10,025

Non Auto 14,590 12,448 14,033 21,078 16,159 15,381 22,386 26,368 29,013 30,930

Total 36,860 31,512 33,993 45,369 43,437 39,309 51,984 62,272 70,238 73,966

Revenue Mix (%)

Commercial Vehicles 53.1 50.6 50.3 45.5 53.5 50.0 46.7 47.4 46.9 44.6

Passenger Vehicles 7.3 9.9 8.4 8.0 9.3 10.9 10.3 10.3 11.8 13.6

Non Auto 39.6 39.5 41.3 46.5 37.2 39.1 43.1 42.3 41.3 41.8

Bharat Forge Automobiles


Exhibit 2: Capacity utilization in standalone operations stood at 71% in FY2018 Standalone production, capacity and utilization, March fiscal year-ends, 2010-18 (tons, %)


Subsidiaries report sharp improvement in FY2018 on a low base

Subsidiaries reported a profit before tax of ₹277 mn in FY2018 versus a profit of ₹139 mn in

FY2017 largely driven by improvement in performance of CDP Bharat Forge. CDP Bharat

Forge GmbH, Germany (CDP BF), a direct subsidiary of the company in Germany had

undertaken a corporate reorganization along with its subsidiaries, which has resulted in

improvement in profitability of the company. The manufacturing operations of CDP Bharat

Forge have been transferred to a new subsidiary company in Germany, viz. Bharat Forge

CDP GmbH (BF CDP), CDP BF has been renamed as ‘Bharat Forge Global Holding GmbH’

(BFGH) and this entity will continue to serve as the holding company for the company’s

investments in Europe. Bharat Forge Global Holding GmBH reported a profit of ₹278 mn in

FY2018 versus ₹570 mn in FY2017. BF Infrastructure posted a profit of ₹1.05 bn in FY2018

but also made an impairment of ₹870 mn in FY2018. The impairment was related to

diminution of carrying cost of investment in two oil blocks in which BF Infrastructure had

invested. The company invested ₹295 mn in BF Infrastructure in FY2018.

Exhibit 3 gives a breakup of profit and loss contributions of key subsidiaries.

0

10

20

30

40

50

60

70

80

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

2010 2011 2012 2013 2014 2015 2016 2017 2018

Capacity (tons) (LHS) Production (tons) (LHS) Utilization (%) (RHS)



Exhibit 3: Subsidiaries reported steady performance in FY2018 Performance of key subsidiaries, FY2012-18 (` mn)

Source: Kotak Institutional Equities

Working capital increases significantly in FY2018

The company’s net working capital led to a drag of ₹3.98 bn in FY2018 primarily led by—

(1) significant increase in receivables (drag of ₹6 bn) and inventories (drag of ₹2.85 bn)

offset by (2) increase in payable days (cash inflow of ₹7.1 bn).

The company generated a free cash-flow of ₹2.95 bn in FY2018 (versus ₹3.2 bn in FY2017).

The company spent capex of ₹5.8 bn in FY2018.

Consolidated net debt of the company declined by ₹1.33 bn to ₹5.14 bn in FY2018. Total

capital expenditure in subsidiaries was ₹2 bn in FY2018. The company had stated two years

ago that it will not need to incur any major capex in the joint venture/subsidiaries and

therefore, overall capex in subsidiaries will come down to ₹1 bn annually in the next 2-3 years.

Year end 2012 2013 2014 2015 2016 2017 2018

Revenues

CDP Bharat Forge December 11,428 10,550 13,402 13,109 12,974 11,244 13,797

Bharat Forge Aluminiumtechnik December 1,962 2,558 3,513 3,466 4,183 4,166 4,835

Bharat Forge Kilsta December 7,295 6,366 7,110 6,046 6,573 5,593 6,304

Bharat Forge International March 914 5,645 8,955 10,870 9,957 9,856 15,386

Profit before tax

CDP Bharat Forge December 429 42 683 391 (1,666) 180 232

Bharat Forge Aluminiumtechnik December 58 1 189 42 0 257 288

Bharat Forge Kilsta December (472) (172) (122) (360) 53 (160) (180)

Bharat Forge International March (34) 66 149 162 213 296 148

Profit after tax

CDP Bharat Forge December 386 42 577 291 (1,654) 180 232

Bharat Forge Aluminiumtechnik December 55 1 166 33 0 257 288

Bharat Forge Kilsta December (232) (144) (122) (422) 57 (156) (174)

Bharat Forge International March (25) 50 114 127 170 236 113



Exhibit 4: Working capital days increased in FY2018 led by increase in inventories and receivables Working capital trend, March fiscal year-ends, 2012-18 (₹ mn, days)


Exhibit 5: Consolidated net debt declined in FY2018 Consolidated debt details, March fiscal year-ends, 2012-18 (₹ mn)


2012 2013 2014 2015 2016 2017 2018

Standalone

Inventories 5,031 4,757 5,084 5,372 3,664 4,265 5,381

Debtors 4,912 4,742 5,252 5,595 14,222 13,805 17,908

Other current assets 8,251 7,314 9,155 14,198 10,711 11,095 9,586

Current liabilities 9,642 7,173 7,453 7,871 6,919 7,187 9,844

As days of sales

Inventories 50 55 55 43 31 36 46

Debtors 49 55 56 45 121 117 152

Other current assets 82 85 98 114 91 94 81

Current liabilities 95 83 80 63 59 61 83

Net working capital 85 112 129 139 184 186 195

Consolidated

Inventories 12,228 11,320 10,386 10,339 9,968 10,752 13,599

Debtors 8,134 7,967 8,660 8,535 14,017 13,411 19,371

Other current assets 10,741 12,093 12,893 16,817 10,700 11,404 10,707

Current liabilities 20,088 21,792 20,088 19,450 12,297 12,610 19,740

As days of sales

Inventories 71 80 56 49 48 51 65

Debtors 47 56 47 41 67 64 92

Other current assets 62 85 70 81 51 54 51

Current liabilities 117 154 109 93 59 60 94

Net working capital 64 68 64 78 107 110 114

2012 2013 2014 2015 2016 2017 2018

Standalone

Gross debt 19,817 18,737 19,943 17,974 26,688 24,231 25,128

Cash and cash equivalent 9,633 6,644 10,222 10,468 10,188 13,723 15,949

Net debt 10,184 12,093 9,721 7,506 16,500 10,508 9,179

Consolidated

Gross debt 27,615 27,845 25,613 25,464 33,712 31,178 31,444

Cash and cash equivalent 10,965 9,428 11,949 11,386 10,931 14,195 17,121

Net debt 16,650 18,417 13,664 14,078 22,781 16,983 14,323

Subsidiary

Gross debt 7,798 9,108 5,670 7,490 7,024 6,947 6,316

Cash and cash equivalent 1,332 2,784 1,727 919 744 473 1,172

Net debt 6,466 6,324 3,943 6,571 6,281 6,474 5,144



Exhibit 6: We expect strong free cash-flow generation in the standalone entity Standalone cash-flow statement, March fiscal year-ends, 2014-21E (` mn)


2014 2015 2016 2017 2018 2019E 2020E 2021E

Cash flow from operating activities

Operating cash profit before working capital changes 8,989 14,000 13,849 11,365 16,417 19,297 22,102 23,030

Inventories (327) (288) 127 (601) (1,116) (1,081) (822) (394)

Sundry debtors (266) (599) 2,163 (13) (3,824) (3,544) (2,744) (1,284)

Other current assets and loans and advances (1,042) (1,334) 1,030 648 (467) — — —

Increase/(decrease) in current liabilities 1,669 869 (1,097) 164 2,220 1,166 981 577

Working capital change 34 (1,352) 2,223 197 (3,187) (3,460) (2,585) (1,102)

Direct taxes paid (1,400) (3,620) (3,008) (2,639) (3,817) (5,142) (5,974) (6,197)

Net cash from operating activities 7,623 9,028 13,064 8,924 9,413 10,695 13,543 15,731

Cash flow from investing activities

Investment in Subsidiary (578) (1,223) — — — — — —

(Increase)/Decrease in investment in mutual funds (3,794) 3,237 (1,070) (3,224) (2,393) — — —

capital expenditure (1,782) (2,889) (5,757) (4,292) (3,849) (5,000) (4,000) (4,000)

Loans 1,184 (992) — — — — — —

Interest, dividend, etc 565 572 — — — — — —

Others 297 570 — 2,045 583 616 531 418

Net cash used in investing activities (4,217) (1,382) (6,513) (5,793) (6,968) (5,000) (4,000) (4,000)

Cash flow from financing activities

Secured loans - term loans 3,259 3,146 (2,577) (2,067) (488) (3,000) (5,000) (7,000)

FCCBs, FDs, other unsecured loans (5,186) (5,296) — — — — — —

Cash credit & other borrowings 672 (291) — — — — — —

Adjustments to net worth — — — — — — — —

Interest paid (1,517) (1,230) (953) (812) (656) — — —

Interest capitalized — — — — — — — —

Dividend (incl. tax) (1,202) (1,569) (3,222) (841) (2,522) (2,794) (3,073) (3,352)

Net cash used in financing activities (3,974) (5,239) (6,767) (3,719) (3,666) (5,794) (8,073) (10,352)

Free cash flow 4,324 4,909 6,353 3,820 4,909 5,695 9,543 11,731



Exhibit 7: We expect strong free cash-flow generation in the consolidated business over FY2019-21E Consolidated cash-flow statement, March fiscal year-ends, 2014-21E (` mn)


Exhibit 8: Salaries of key management personnel declined yoy as % PBT in FY2018 Salaries of key management personnel, March fiscal year-ends, 2012-18 (` mn)


2014 2015 2016 2017 2018 2019E 2020E 2021E

Cash flow from operating activities

Operating cash profit before working capital changes 11,115 15,633 14,627 13,460 17,578 20,999 24,025 25,138

Inventories 934 36 (1,304) (784) (2,847) (1,166) (1,685) (1,030)

Sundry debtors (455) (178) 2,250 150 (5,688) 1,968 (1,986) (1,214)

Other current assets and loans and advances (1,842) (139) 1,187 382 (132) 1,471 (734) (807)

Increase/(Decrease) in current liabilities (440) (908) (157) 38 4,688 (1,705) 1,247 904

Working capital change (1,802) (1,190) 1,975 (215) (3,979) 568 (3,158) (2,148)

Direct taxes paid (2,113) (4,088) (3,044) (2,729) (3,925) (5,310) (6,200) (6,468)

Cash from operating activities 7,199 10,355 13,558 10,516 9,674 16,257 14,667 16,522

Less: minority interest 28 10 — (131) — — — —

Net cash from operating activities 7,171 10,345 13,558 10,648 9,674 16,257 14,667 16,522

Cash flow from investing activities

Investment in JVs (33) — — — — — — —

(Increase)/Decrease in investment in mutual funds (3,789) 3,236 (1,015) (3,222) (2,560) — — —

Investment in Associates, Subsidiaries & equity shares (1,767) (1,357) 34 2,293 — — — —

capital expenditure (5,850) (7,172) (8,904) (6,446) (5,844) (6,000) (5,000) (5,000)


sale proceeds of assets 7,512 41 — — (156) — — —

Interest, dividend, etc 2,045 583 616 531 418 — — —

Non-operating income — — — — — — — —

Goodwill on consol — — — — — — — —

Net cash used in investing activities (1,882) (4,669) (9,268) (6,844) (8,142) (6,000) (5,000) (5,000)

Cash flow from financing activities

Share capital — — — — — — — —

Secured loans - term loans 699 (621) (55) (2,118) (38) (5,000) (6,000) (6,000)

FDs, other unsecured loans (4,176) — — — — — — —

Cash credit & other borrowings — — — — — — — —

Adjustments to net worth — — — — — — — —

Interest paid (1,702) (1,460) (1,206) (1,048) (875) — — —


Dividend (incl. tax) (1,221) (1,519) (3,222) (841) (2,522) (2,794) (3,073) (3,352)

Net cash used in financing activities (6,400) (3,599) (4,483) (4,007) (3,144) (7,794) (9,073) (9,352)

Free cash flow (381) 1,714 3,448 3,154 2,955 10,257 9,667 11,522

2012 2013 2014 2015 2016 2017 2018

Mr. B. N. Kalyani 99.7 95.6 125.3 176.5 141.7 150.9 185.9

Mr. A. B. Kalyani 34.9 31.6 40.3 51.9 42.7 44.0 54.5

Mr. G. K. Agarwal 35.3 32.1 40.8 52.6 43.3 44.3 54.6

Mr. S. E. Tandale 25.9 22.8 32.8 39.8 32.8 34.1 42.4

Mr. S. K. Chaturvedi 22.4 23.8 23.5 — — — —

Mr. B. P. Kalyani 23.3 20.9 30.5 37.2 30.7 32.2 39.9

Directors 25.7 17.0 21.9 59.1 57.2 34.2 42.2

Total 267.1 243.6 315.0 417.0 348.3 339.6 419.5

Consolidated net sales 62,791 51,665 67,161 76,248 68,091 63,961 83,577

Consolidated PBT 5,984 4,169 6,250 10,795 9,713 8,183 12,916

Management salary as % of net sales 0.4 0.5 0.5 0.5 0.5 0.5 0.5

Management salary as % of PBT 4.5 5.8 5.0 3.9 3.6 4.2 3.2



Exhibit 9: We value Bharat Forge on SoTP basis at `600 Bharat Forge SoTP valuation table


Exhibit 10: We have kept our earnings estimates almost unchanged for FY2020 but reduced earnings estimates for FY2021 Earnings revision table, March fiscal year-ends, 2019-21E


EPS Multiple

Value per

share

(Rs) (X) (Rs)

March 2018 standalone EPS 26.3 22 578

March 2018 subsidiary EPS 1.0 10 10

Equity value per share (Rs) 589

Target price 600

New estimates Old estimates % change

2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E

Standalone

Net sales 63,747 71,859 75,750 62,710 71,198 77,178 1.7 0.9 (1.8)

EBITDA 18,517 21,119 21,770 17,909 20,832 22,663 3.4 1.4 (3.9)

EBITDA margin (%) 29.0 29.4 28.7 28.6 29.3 29.4

Adjusted net profit 10,440 12,129 12,582 9,837 11,712 13,024 6.1 3.6 (3.4)

EPS 44.0 51.1 53.0 41.5 49.4 54.9 6.1 3.6 (3.4)

Consolidated

Net sales 90,745 101,101 107,433 91,746 102,660 111,280 (1.1) (1.5) (3.5)

EBITDA 20,405 23,177 24,012 19,955 23,061 25,093 2.3 0.5 (4.3)

EBITDA margin (%) 22.5 22.9 22.4 21.8 22.5 22.5

Adjusted net profit 10,781 12,588 13,132 10,402 12,423 13,878

EPS 45.4 53.0 55.3 43.8 52.4 58.5 3.6 1.3 (5.4)



Exhibit 11: We expect standalone EPS to grow by 11% CAGR over FY2019-21E Bharat Forge profit model, standalone balance sheet and cash-flow, March fiscal year-ends, 2014-21E (` mn)


2014 2015 2016 2017 2018 2019E 2020E 2021E


Net sales 33,993 45,481 43,338 38,647 53,160 63,747 71,859 75,750

EBITDA 8,638 13,300 13,168 10,726 15,368 18,517 21,119 21,770

Other income 1,147 933 1,123 995 1,187 1,607 1,669 1,736

Interest 1,496 1,118 905 728 848 827 687 477

Depreciation 2,453 2,505 3,085 2,949 3,068 3,715 3,999 4,251

Profit before tax 5,836 10,610 10,302 8,045 12,638 15,581 18,103 18,779

Current tax 1,539 3,407 3,131 2,600 4,234 5,142 5,974 6,197

Net profit 3,999 7,190 6,976 5,851 7,072 10,440 12,129 12,582

Earnings per share (Rs) 8.4 15.5 15.0 12.0 17.2 22.4 26.0 27.0


Equity 26,933 34,957 35,815 42,319 46,143 53,789 62,845 72,074

Deferred tax liability 1,791 1,639 2,370 3,033 2,545 2,545 2,545 2,545

Total borrowings 19,943 17,974 26,688 24,231 25,128 22,128 17,128 10,128

Current liabilities 8,318 9,188 6,919 7,187 9,844 11,010 11,991 12,568

Total liabilities 56,985 63,758 71,792 76,770 83,660 89,471 94,508 97,315

Net fixed assets 21,568 21,638 26,018 27,479 28,303 29,588 29,589 29,338

Investments 13,409 11,037 14,210 17,719 20,605 20,605 20,605 20,605

Cash 2,517 5,918 2,968 2,408 1,877 1,778 3,248 4,627


Total assets 56,985 63,758 71,792 76,770 83,660 89,471 94,508 97,315


Operating cash flow excl. working capital 7,589 10,379 10,841 8,727 12,600 14,155 16,128 16,833

Working capital changes 34 (1,352) 2,223 197 (3,187) (3,460) (2,585) (1,102)


Free cash flow 5,841 6,139 7,306 4,632 5,564 5,695 9,543 11,731

Ratios

EBITDA margin (%) 25.4 29.2 30.4 27.8 28.9 29.0 29.4 28.7

PAT margin (%) 11.8 15.8 16.1 15.1 13.3 16.4 16.9 16.6

Net debt/equity (X) 0.6 0.3 0.4 0.2 0.2 0.1 (0.0) (0.1)

Book value (Rs/share) 57.8 75.1 76.9 90.9 99.1 115.5 135.0 154.8

RoAE (%) 16.0 23.2 19.7 15.0 16.0 20.9 20.8 18.7

RoACE (%) 11.7 17.5 15.5 11.5 16.8 19.3 20.8 20.7



Exhibit 12: We expect consolidated EPS to grow by 10% CAGR over 2019-21E Bharat Forge consolidated profit model, balance sheet and cash-flow, March fiscal year-ends, 2014-21E (` mn)


2014 2015 2016 2017 2018 2019E 2020E 2021E


Net sales 67,161 76,248 68,091 63,961 83,577 90,745 101,101 107,433

EBITDA 10,272 14,408 14,081 12,511 17,230 20,405 23,177 24,012

Other income 1,249 1,368 1,321 1,193 1,420 1,607 1,669 1,736

Interest 1,692 1,356 1,160 1,000 1,065 1,013 821 611

Depreciation 3,579 3,624 4,530 4,521 4,669 4,908 5,238 5,538

Profit before tax 6,250 10,795 9,713 8,183 12,916 16,092 18,787 19,600

Current tax 2,100 3,587 3,165 2,492 4,418 5,310 6,200 6,468

Minority interest (160) (30) 260 131 4 — — —

Adj. net profit 4,985 7,625 6,754 7,107 7,540 10,781 12,588 13,132

Earnings per share (Rs) 9.7 15.8 14.6 13.3 17.6 23.2 27.0 28.2


Equity 26,832 34,442 34,132 41,164 46,143 54,131 63,645 73,425

Deferred tax liability 1,645 1,638 1,964 2,606 2,544 2,544 2,544 2,544

Total borrowings 25,613 25,464 33,712 31,178 31,444 26,444 20,444 14,444

Current liabilities 21,085 20,816 12,297 12,610 19,740 18,034 19,281 20,185

Minority interest 170 (20) — — 294 294 294 294

Total liabilities 75,345 82,339 82,106 87,558 100,164 101,447 106,208 110,891

Net fixed assets 31,110 34,336 35,261 36,768 38,006 39,098 38,860 38,322

Investments 8,012 4,955 8,004 11,915 15,011 15,011 15,011 15,011

Cash 4,227 6,820 3,711 2,884 3,041 5,504 6,099 8,268


Total assets 75,345 82,339 82,106 87,558 100,164 101,447 106,208 110,891


Operating cash flow excl. working capital 9,002 11,545 11,583 10,731 13,652 15,689 17,825 18,670

Working capital changes (1,802) (1,190) 1,975 (215) (3,979) 568 (3,158) (2,148)


Free cash flow (381) 1,714 3,448 3,154 2,955 10,257 9,667 11,522

Ratios

EBITDA margin (%) 15.3 18.9 20.7 19.6 20.6 22.5 22.9 22.4

PAT margin (%) 7.4 10.0 9.9 11.1 9.0 11.9 12.5 12.2

Net debt/equity (X) 0.5 0.4 0.6 0.4 0.3 0.1 (0.0) (0.1)

Book value (Rs/share) 57.6 74.0 73.3 88.4 99.1 116.3 136.7 157.7

RoAE (%) 19.5 24.8 18.9 18.5 17.3 21.5 21.4 19.2

RoACE (%) 10.3 14.4 11.5 9.1 12.3 14.5 16.0 15.7


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June 2018: Results calendar

Source: NSE, Kotak Institutional Equities

Mon Tue Wed Thu Fri Sat Sun

9-Jul 10-Jul 11-Jul 12-Jul 13-Jul 14-Jul 15-Jul

Dish TV India Karnataka Bank Bajaj Corp. DCB Bank

Infosys


Hindustan Unilever Ashok Leyland Bandhan Bank ABB India Bajaj Auto HDFC Bank

CRISIL Mahindra CIE Automotive Bajaj Finance Bajaj Holdings & Investment

Federal Bank Mindtree Bajaj Finserv Bata India

ICICI Lombard UltraTech Cement Kotak Mahindra Bank Havells India

Rallis India RBL Bank HDFC Standard Life

Zee Entertainment Enterprises Kansai Nerolac Paints

Wipro


L&T Infotech Asian Paints Crompton Greaves Consumer Bharat Financial Inclusion Coromandel International J K Cements

GlaxoSmithkline Pharma GRUH Finance Biocon ICICI Bank

Hexaware Technologies Hero MotoCorp Cholamandalam Investment MMFSL

ICICI Pru Life JSW Steel Colgate-Palmolive (India) Prestige Estates Projects

Info Edge (India) Jubilant Foodworks Dr Reddys Laboratories

Kajaria Ceramics Tata Elxsi WABCO India

Yes Bank

30-Jul 31-Jul 1-Aug 2-Aug 3-Aug 4-Aug 5-Aug

Godrej Consumer Products Bharat Electronics Aditya Birla Fashion Marico P I Industries

HDFC Castrol India Exide Industries The Ramco Cements

IDFC Dabur India Torrent Power

IDFC Bank

Shree Cement

Tech Mahindra

6-Aug 7-Aug 8-Aug 9-Aug 10-Aug 11-Aug 12-Aug

MphasiS Cipla Dr Lal Pathlabs

PNB Housing Timken India


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Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Source: Company, Bloomberg, Kotak Institutional Equities estimates

Target O/S ADVT

Price (Rs) price Upside Mkt cap. shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) 3mo

Company Rating 11-Jul-18 (Rs) (%) (Rs bn) (US$ bn) (mn) 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E (US$ mn)

Automobiles

Amara Raja Batteries REDUCE 821 780 (4.9) 140 2.0 171 28 33 39 (1.6) 21.2 15.5 29.7 24.5 21.2 15.8 13.1 11.2 4.8 4.1 3.6 17.0 18.0 18.0 0.5 0.6 0.7 6.1

Apollo Tyres BUY 265 340 28.4 151 2.2 541 13 20 25 (38.0) 48.6 24.7 19.8 13.3 10.7 10.8 7.7 6.5 1.5 1.4 1.3 8.5 11.1 12.5 1.2 1.1 1.1 10.5

Ashok Leyland BUY 133 160 20.2 391 5.7 2,926 5.4 6.2 8.9 8.0 15.3 43.2 24.7 21.5 15.0 14.3 11.1 8.0 5.4 4.7 3.9 23.7 23.4 28.4 1.8 1.4 2.0 36.6

Bajaj Auto SELL 3,154 2,800 (11.2) 913 13.3 289 140 160 176 6.0 14.0 10.0 22.5 19.7 17.9 15.8 14.2 12.6 4.8 4.2 3.8 22.9 22.8 22.3 1.9 2.0 2.2 20.7

Balkrishna Industries BUY 1,227 1,260 2.7 237 3.4 193 37 51 63 4.8 35.4 24.6 32.8 24.2 19.4 17.4 13.3 10.6 5.8 4.8 3.9 19.0 21.6 22.1 0.3 0.4 0.4 8.5

Bharat Forge SELL 636 600 (5.7) 296 4.3 466 16 23 27 10.1 43.0 16.8 39.3 27.5 23.5 18.8 15.5 13.4 6.4 5.5 4.7 17.3 21.5 21.4 0.7 0.8 0.9 10.7

CEAT ADD 1,282 1,600 24.9 52 0.8 40 65 101 113 (29.5) 55.4 12.6 19.8 12.7 11.3 9.7 8.2 6.9 2.0 1.7 1.5 10.4 14.6 14.4 0.9 0.8 0.8 13.6

Eicher Motors SELL 28,161 26,000 (7.7) 768 11.2 27 792 995 1,200 29.3 25.5 20.6 35.5 28.3 23.5 25.6 20.6 16.8 14.3 10.3 7.7 46.4 42.3 37.5 0.1 0.1 0.1 17.5

Escorts BUY 878 1,170 33.3 75 1.6 89 39 56 69 71.3 43.6 23.6 22.6 15.8 12.8 12.9 9.6 7.5 3.1 2.6 2.3 13.5 16.8 17.7 0.5 1.0 1.2 17.2

Exide Industries SELL 269 225 (16.2) 228 3.3 850 8 10 11 0.6 23.7 10.9 32.7 26.4 23.8 18.3 15.4 13.7 4.2 3.8 3.5 13.5 15.2 15.3 0.9 1.1 1.3 8.2

Hero Motocorp SELL 3,541 3,500 (1.1) 707 10.3 200 185 206 227 9.5 11.1 10.1 19.1 17.2 15.6 11.9 10.7 9.5 6.0 5.3 4.6 33.8 32.6 31.6 2.4 2.9 3.2 18.0

Mahindra CIE Automotive ADD 260 275 5.8 98 1.4 378 10 13 15 107.0 35.8 12.9 27.1 19.9 17.7 13.3 10.0 8.7 2.6 2.3 2.1 10.4 12.5 12.4 — — — 3.0

Mahindra & Mahindra BUY 931 1,015 9.0 1,157 16.8 1,138 38 44 50 22.0 15.6 14.8 24.5 21.2 18.5 16.1 13.7 11.9 3.5 3.1 2.7 15.1 15.4 15.7 0.8 0.9 1.1 32.7

Maruti Suzuki ADD 9,385 9,700 3.4 2,835 41.2 302 256 330 395 5.1 29.2 19.6 36.7 28.4 23.8 20.6 16.1 12.9 6.8 5.8 5.0 19.8 22.0 22.6 0.7 0.9 1.1 61.7

Motherson Sumi Systems SELL 293 265 (9.4) 616 9.0 2,105 8 11 14 6.1 37.7 21.7 35.8 26.0 21.4 13.5 10.4 8.6 6.2 5.3 4.5 19.0 22.1 22.9 0.8 0.9 1.1 13.3

MRF REDUCE 76,154 76,000 (0.2) 323 4.7 4 2,669 3,896 4,447 (23.9) 46.0 14.1 28.5 19.5 17.1 13.0 9.6 8.2 3.3 2.8 2.4 12.3 15.7 15.4 0.1 0.1 0.1 7.3

Schaeffler India BUY 5,549 6,000 8.1 92 1.3 17 143 171 207 22.0 19.4 21.1 38.7 32.5 26.8 22.9 19.7 15.9 5.4 4.8 4.2 15.0 15.8 16.9 0.3 0.6 0.7 0.7

SKF REDUCE 1,780 1,700 (4.5) 91 1.3 51 58 70 81 24.6 20.8 16.4 30.9 25.5 22.0 19.2 16.5 13.8 5.0 4.3 3.8 16.1 17.0 17.2 0.7 0.8 0.9 0.2

Tata Motors BUY 268 445 66.2 909 12.4 3,396 20 24 38 (28.0) 18.0 63.0 13.4 11.4 7.0 3.9 3.6 2.9 1.0 0.9 0.8 8.8 8.0 11.9 — — — 60.6

Timken SELL 723 660 (8.8) 49 0.7 68 14 19 25 (5.3) 42.3 27.5 53.4 37.6 29.5 29.8 20.8 16.6 7.0 6.0 5.0 13.9 17.1 18.5 0.1 0.1 0.1 0.4

TVS Motor SELL 581 410 (29.4) 276 4.0 475 14 17 21 18.7 23.0 22.0 41.6 33.8 27.7 25.3 19.8 16.5 9.6 8.1 6.8 25.1 26.0 26.7 0.6 0.9 1.1 11.7

WABCO India SELL 7,001 6,350 (9.3) 133 1.9 19 144 169 222 27.8 17.8 31.3 48.7 41.3 31.5 31.7 27.0 20.4 8.7 7.3 6.0 19.5 19.2 20.9 0.1 0.1 0.2 0.5

Automobiles Neutral 10,539 153 (0.9) 23.3 25.4 27.0 21.9 17.4 12.0 9.9 8.2 3.8 3.4 3.0 14.2 15.5 16.9 0.8 0.9 1.1 359.7

Banks

Axis Bank ADD 537 600 11.8 1,378 20.0 2,567 1 20 39 (92.6) 1,735.5 100.1 499.5 27.2 13.6 — — — 2.6 2.3 2.0 0.5 7.7 13.8 0.9 0.6 1.1 64.2

Bank of Baroda NR 116 — — 307 4.5 2,652 (9) 20 23 (253.2) 323.2 10.5 (12.7) 5.7 5.1 — — — 1.4 1.0 0.7 (5.8) 12.6 12.3 — — — 28.6

Bank of India ADD 86 120 39.6 150 2.2 1,744 (35) (6) 16 (134.7) 82.2 366.7 (2.5) (14.0) 5.2 — — — 1.3 1.6 1.0 (21.3) (3.6) 9.5 — (1.4) 3.8 11.5

Canara Bank ADD 245 300 22.3 180 2.6 733 (58) (2) 60 (406.6) 97.3 4,031.4 (4.3) (159.6) 4.1 — — — 1.5 1.5 0.9 (11.9) (0.3) 11.8 — — — 29.1

City Union Bank ADD 174 190 9.2 127 1.9 665 9 10 12 6.4 16.2 13.0 19.5 16.8 14.9 — — — 3.0 2.6 2.3 15.3 15.5 15.5 0.2 1.1 1.2 2.0

DCB Bank ADD 179 210 17.5 55 0.8 308 8 11 13 13.8 32.2 20.5 22.4 17.0 14.1 — — — 2.2 2.0 1.8 10.9 12.0 12.9 — 0.6 0.7 5.9

Equitas Holdings BUY 142 190 33.7 48 0.7 340 0.9 4.4 8.3 (80.4) 374.7 88.2 153.6 32.4 17.2 — — — 2.2 2.1 1.9 1.4 6.4 11.0 — — — 4.4

Federal Bank BUY 82 130 58.5 162 2.4 1,972 4.5 5.8 7.8 (7.5) 29.5 34.9 18.4 14.2 10.5 — — — 1.4 1.3 1.2 8.0 9.0 11.2 1.2 1.4 1.9 17.4

HDFC Bank REDUCE 2,148 1,900 (11.6) 5,594 81.3 2,595 67 77 93 18.7 14.7 20.0 31.9 27.8 23.2 — — — 5.3 4.1 3.6 17.9 16.6 16.2 0.6 0.7 0.8 76.3

ICICI Bank BUY 269 400 48.8 1,729 25.1 6,429 11 15 25 (31.1) 46.5 64.1 25.5 17.4 10.6 — — — 2.1 1.8 1.5 6.6 9.1 13.7 0.6 1.1 1.9 88.0

IDFC Bank NR 39 — — 134 1.9 3,404 2.5 1.6 3.3 (16.0) (38.5) 109.8 15.6 25.4 12.1 — — — 0.9 0.9 0.8 5.7 3.4 6.9 1.3 0.8 1.7 9.0

IndusInd Bank REDUCE 1,915 1,900 (0.8) 1,150 16.7 600 60 71 87 25.3 17.5 23.6 31.9 27.1 21.9 — — — 5.0 4.1 3.5 17.1 17.6 16.8 — 0.4 0.5 30.4

J&K Bank BUY 50 105 109.4 28 0.4 557 4 8 11 111.6 116.7 44.4 13.8 6.4 4.4 — — — 0.6 0.5 0.5 3.4 6.9 9.4 — 3.1 4.5 0.4

Karur Vysya Bank ADD 102 120 17.5 75 1.1 727 5 4 14 (52.2) (22.8) 274.8 21.5 27.8 7.4 — — — 1.5 1.4 1.2 6.1 4.2 14.7 0.6 0.9 3.4 1.8

Punjab National Bank ADD 76 90 19.1 209 3.0 2,761 (44) (39) 9 (814.7) 13.4 124.1 (1.7) (2.0) 8.1 — — — 4.5 (3.4) (12.9) (32.4) (31.3) 8.2 — (11.1) 2.7 30.0

RBL Bank SELL 579 450 (22.3) 244 3.5 420 15 20 25 27.3 32.9 21.8 38.3 28.8 23.7 — — — 3.7 3.4 3.1 11.5 12.0 13.2 0.4 0.5 0.6 10.1

State Bank of India BUY 259 370 42.9 2,311 33.6 8,925 (7) 18 37 (155.8) NM 106.1 NM 14.4 7.0 — — — 2.1 1.6 1.2 (3.2) 7.1 13.2 - 0.1 0.2 76.1

Ujjivan Financial Services REDUCE 387 420 8.4 47 0.7 121 1 22 29 (96.5) 3,564.0 30.0 642.0 17.5 13.5 — — — 2.8 2.4 2.1 0.4 14.2 16.1 0.0 0.6 0.8 7.2

Union Bank ADD 79 130 65.3 92 1.3 1,169 (45) 1 24 (655.5) 101.4 3,896.2 (1.8) 128.5 3.2 — — — 1.3 1.2 0.7 (23.6) 0.3 11.8 — 0.1 4.7 9.8

YES Bank SELL 372 325 (12.5) 857 12.5 2,303 18 19 21 25.7 4.6 11.0 20.3 19.4 17.5 — — — 3.4 3.0 2.7 17.7 16.0 15.7 0.6 0.9 1.0 64.0

Banks Attractive 14,876 216 (101.2) 9,969.4 103.3 (2,448.8) 24.8 12.2 1.9 1.7 1.5 (0.1) 6.9 12.6 0.5 0.4 1.0 566.4

P/B (X) RoE (%) Dividend yield (%)


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Target O/S ADVT



NBFCs

Bajaj Finance REDUCE 2,356 1,850 (21.5) 1,361 19.8 575 46 63 82 38.5 34.9 30.0 50.7 37.6 28.9 — — — 8.2 6.9 5.7 20.5 19.9 21.5 0.2 0.3 0.3 41.3

Bajaj Finserv ADD 6,114 5,900 (3.5) 973 14.1 159 174 206 266 13.5 18.7 28.8 35.2 29.6 23.0 — — — 4.8 3.9 3.3 15.3 14.5 15.6 0.2 0.2 0.2 14.0

Bharat Financial Inclusion NA 1,170 — — 163 2.4 139 33 43 54 55.5 31.1 27.2 35.8 27.3 21.5 — — — 5.4 4.4 3.6 16.7 17.9 18.5 — — — 10.5

Cholamandalam REDUCE 1,573 1,510 (4.0) 246 3.6 156 62 76 92 35.5 22.3 20.8 25.3 20.7 17.1 — — — 5.0 4.2 3.5 20.6 21.0 21.2 0.4 0.6 0.7 7.3

HDFC BUY 1,928 2,075 7.6 3,249 47.2 1,676 75 58 67 52.1 (23.1) 15.2 25.6 33.3 28.9 — — — 5.1 4.4 4.0 23.9 14.3 14.5 1.0 1.1 1.2 70.0

HDFC Standard Life Insurance SELL 469 405 (13.6) 944 13.7 2,007 6 6 7 24.4 14.8 10.9 84.8 73.8 66.6 — — — 21.9 19.6 17.5 27.3 28.0 27.7 0.3 0.3 0.4 13.6

ICICI Lombard SELL 698 600 (14.0) 317 4.6 454 19 26 30 22.0 36.4 17.0 36.7 26.9 23.0 — — — 7.0 5.9 5.0 20.8 23.7 23.5 0.6 0.9 1.1 1.8

ICICI Prudential Life BUY 365 500 36.8 525 7.6 1,436 11 12 13 (3.7) 3.8 7.6 32.4 31.2 29.0 — — — 8.0 6.6 5.6 25.0 23.2 20.9 1.5 0.5 0.6 12.0

IIFL Holdings SELL 670 625 (6.8) 214 3.1 319 29 34 41 32.4 17.3 21.4 23.5 20.0 16.5 — — — 4.2 3.6 3.1 19.0 19.3 20.0 0.9 1.1 1.3 1.5

L&T Finance Holdings REDUCE 154 185 20.1 307 4.5 1,996 7 10 12 23.7 34.6 24.1 21.0 15.6 12.6 — — — 2.4 2.2 1.9 14.2 14.7 16.1 1.1 1.3 1.3 9.9

LIC Housing Finance BUY 495 610 23.2 250 3.6 505 44 50 58 3.2 13.8 17.5 11.3 10.0 8.5 — — — 1.9 1.6 1.3 14.5 14.3 14.4 1.4 1.6 1.8 12.5

Magma Fincorp BUY 160 200 25.2 43 0.6 237 10 12 15 1,014.5 24.6 25.8 16.4 13.2 10.5 — — — 1.6 1.6 1.4 10.2 12.9 14.1 0.5 1.1 1.4 1.6

Mahindra & Mahindra Financial REDUCE 477 475 (0.4) 295 4.3 614 15 22 26 105.0 53.5 16.6 32.9 21.4 18.4 — — — 3.4 3.0 2.7 11.3 14.0 14.8 0.8 1.3 1.5 11.6

Max Financial Services BUY 459 650 41.5 123 1.8 268 5 6 6 (20.4) 36.9 1.8 100.2 73.2 71.9 — — — — — — 6.5 8.3 8.0 — 0.5 0.5 5.0

Muthoot Finance ADD 408 480 17.7 163 2.4 400 43 38 40 45.6 (10.8) 4.0 9.5 10.6 10.2 — — — 2.1 1.8 1.6 24.1 18.4 16.9 2.4 2.2 2.3 4.6

PNB Housing Finance REDUCE 1,235 1,375 11.3 207 3.0 167 50 61 77 57.8 23.0 25.3 24.8 20.2 16.1 — — — 3.3 3.0 2.6 14.0 15.2 16.8 0.7 0.3 0.3 9.9

SBI Life Insurance ADD 663 815 22.9 663 9.6 1,000 12 15 18 20.8 26.0 22.9 57.5 45.6 37.1 — — — 10.3 8.7 7.2 19.4 20.6 21.3 0.3 0.4 0.4 5.4

Shriram City Union Finance ADD 1,931 2,325 20.4 127 1.9 66 101 140 174 19.6 39.4 23.8 19.2 13.7 11.1 — — — 2.4 2.1 1.9 12.5 15.5 16.7 0.9 0.9 1.1 0.9

Shriram Transport ADD 1,206 1,400 16.1 274 4.0 227 69 105 125 24.7 52.1 18.7 17.5 11.5 9.7 — — — 2.3 2.0 1.7 13.1 17.6 18.0 0.9 1.2 1.4 24.8

NBFCs Neutral 10,444 152 38.0 7.0 19.3 30.4 28.4 23.8 5.1 4.4 3.8 16.8 15.4 16.1 0.7 0.7 0.8 566.4

Cement

ACC SELL 1,361 1,205 (11.4) 255 3.7 188 49 54 66 32.7 10.6 23.0 27.9 25.3 20.6 14.7 13.7 11.0 2.7 2.6 2.4 10.1 10.5 11.9 1.2 1.2 1.2 10.9

Ambuja Cements REDUCE 203 215 6.1 402 5.8 1,986 8 7 9 29.7 (1.3) 27.0 27.0 27.3 21.5 8.8 8.7 7.0 1.9 1.9 1.8 7.4 7.0 8.6 1.8 1.8 1.8 9.2

Dalmia Bharat ADD 2,345 2,900 23.7 209 3.0 89 60 98 128 55.4 62.6 30.3 38.9 23.9 18.3 12.2 9.3 7.5 3.4 3.0 2.6 9.7 13.4 15.2 0.1 0.1 0.1 5.2

Grasim Industries BUY 979 1,275 30.3 644 9.4 657 47 52 69 (30.1) 9.1 32.8 20.7 18.9 14.2 11.9 7.3 6.7 1.1 1.1 1.0 7.0 5.8 7.2 0.6 0.6 0.6 13.4

India Cements REDUCE 109 135 24.1 34 0.5 308 3 5 9 (42.5) 56.2 84.4 33.3 21.3 11.6 9.4 8.1 6.4 0.6 0.6 0.6 2.0 3.0 5.3 0.9 0.9 0.9 6.5

J K Cement REDUCE 828 1,000 20.7 58 0.8 70 43 51 83 25.1 17.0 65.0 19.2 16.4 9.9 10.0 10.7 8.6 2.9 2.6 2.1 16.2 16.7 23.2 1.0 1.0 1.0 0.6

JK Lakshmi Cement ADD 348 425 22.3 41 0.6 118 4 18 33 (35.7) 311.2 79.6 77.8 18.9 10.5 14.1 8.5 6.1 2.8 2.5 2.1 3.7 14.1 21.5 0.6 0.6 0.6 0.5

Orient Cement ADD 111 165 48.2 23 0.3 205 2 8 12 237.8 250.7 64.8 51.5 14.7 8.9 11.5 7.3 5.3 2.2 2.0 1.7 4.4 14.3 20.6 0.7 1.3 1.8 0.1

Shree Cement SELL 16,937 12,700 (25.0) 590 8.6 35 397 486 662 3.4 22.3 36.2 42.6 34.8 25.6 22.9 17.3 13.5 6.6 5.7 4.7 16.7 17.6 20.2 0.3 0.3 0.3 4.5

UltraTech Cement SELL 3,952 3,000 (24.1) 1,085 15.8 275 89 119 153 (7.0) 33.1 28.9 44.2 33.2 25.8 20.5 16.1 13.4 4.2 3.8 3.3 9.9 12.0 13.7 0.3 0.3 0.3 17.4

Cement Cautious 3,341 49 6.1 21.2 33.4 32.1 26.5 19.9 14.4 10.4 8.8 2.4 2.3 2.1 7.5 8.5 10.3 0.6 0.6 0.6 68.5



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Target O/S ADVT



Consumer products

Asian Paints REDUCE 1,360 1,100 (19.1) 1,304 19.0 959 21 24 28 2.9 18.7 14.7 66.2 55.8 48.7 40.5 34.8 30.3 15.5 13.7 12.2 24.6 26.1 26.6 0.6 0.8 1.0 17.3

Bajaj Corp. ADD 421 520 23.4 62 0.9 148 14 17 19 (10.5) 18.7 10.5 29.8 25.1 22.7 23.5 20.2 17.2 12.6 12.2 11.6 42.3 49.4 52.4 2.8 3.1 3.3 0.4

Britannia Industries ADD 6,358 6,000 (5.6) 763 11.1 120 84 104 126 13.5 24.4 21.5 76.0 61.1 50.3 50.3 39.5 32.5 22.4 17.8 14.4 32.9 32.4 31.6 0.4 0.6 0.7 9.1

Coffee Day Enterprises REDUCE 265 340 28.4 56 0.8 211 3 8 13 49.1 149.7 59.4 79.2 31.7 19.9 13.4 — — 2.4 2.2 2.0 3.1 7.2 10.4 — — — 1.2

Colgate-Palmolive (India) ADD 1,143 1,300 13.8 311 4.5 272 24 27 32 15.2 14.6 16.9 48.1 41.9 35.8 27.5 24.1 20.7 20.4 20.5 17.4 46.2 48.8 52.6 2.1 1.4 1.7 7.9

Dabur India REDUCE 379 350 (7.6) 669 9.7 1,762 8 9 10 7.2 16.1 11.7 48.7 42.0 37.6 41.2 35.7 31.3 11.7 11.7 10.2 25.9 27.9 29.1 2.0 1.0 1.2 8.7

GlaxoSmithKline Consumer ADD 6,400 6,750 5.5 269 3.9 42 166 189 211 6.6 13.3 11.9 38.4 33.9 30.3 26.4 22.7 19.5 7.7 7.0 6.4 21.2 21.7 22.2 1.2 1.4 1.6 2.2

Godrej Consumer Products REDUCE 1,324 1,020 (23.0) 902 13.1 681 21 25 28 11.5 17.6 13.3 62.0 52.7 46.5 43.9 37.4 32.7 14.4 12.5 10.8 25.2 25.4 24.9 0.5 0.6 0.7 8.8

Hindustan Unilever REDUCE 1,714 1,430 (16.6) 3,710 53.9 2,160 25 28 32 25.0 14.9 13.0 69.9 60.8 53.9 50.1 42.4 37.2 52.3 47.0 41.0 78.1 81.4 81.3 1.2 1.2 1.4 28.1

ITC ADD 276 315 14.2 3,366 48.9 12,275 9 10 11 7.8 7.8 12.4 30.9 28.7 25.5 20.2 18.5 16.3 6.6 6.2 5.8 19.4 20.3 22.2 1.9 2.1 2.4 41.0

Jubilant Foodworks BUY 1,428 1,500 5.0 188 2.7 132 15 24 33 191.7 64.1 39.2 98.1 59.8 43.0 41.9 29.0 21.8 19.5 14.2 10.9 21.7 27.5 28.8 0.1 0.1 0.2 37.6

Jyothy Laboratories ADD 220 220 0.2 80 1.2 364 4 6 6 35.1 25.4 17.2 49.9 39.8 33.9 30.6 25.3 21.9 7.0 6.0 5.3 14.3 16.3 16.6 0.2 0.5 0.7 1.5

Manpasand Beverages SELL 144 132 (8.1) 16 0.2 114 9 11 13 37.6 21.3 26.5 16.4 13.6 10.7 8.4 5.6 4.5 1.3 1.2 1.1 8.3 9.3 10.7 0.3 0.3 0.3 3.5

Marico ADD 343 345 0.6 443 6.4 1,291 6 7 8 7.4 16.7 13.7 54.7 46.9 41.2 38.6 32.4 28.2 17.4 16.1 14.9 33.2 35.7 37.5 1.2 1.4 1.6 8.1

Nestle India ADD 10,191 9,500 (6.8) 983 14.3 96 127 168 191 21.1 32.5 13.4 80.2 60.5 53.4 44.1 34.3 30.2 28.7 26.4 24.3 36.6 45.5 47.3 0.8 1.1 1.3 8.9

Page Industries SELL 28,460 21,000 (26.2) 317 4.6 11 311 392 482 32.5 26.1 22.9 91.5 72.5 59.0 58.3 46.1 37.9 37.5 29.3 23.4 45.9 45.3 44.0 0.5 0.6 0.7 7.6

Pidilite Industries REDUCE 1,085 1,050 (3.2) 551 8.0 508 18 22 26 7.5 20.4 20.4 60.2 50.0 41.5 40.2 33.5 27.6 15.4 13.0 10.8 26.0 28.2 28.5 0.6 0.6 0.8 14.0

S H Kelkar and Company BUY 214 315 47.0 31 0.5 145 7 8 11 2.1 11.8 28.4 29.0 25.9 20.2 20.1 16.8 13.2 3.6 3.3 2.9 12.8 13.3 15.3 0.8 0.8 0.9 0.3

Tata Global Beverages REDUCE 270 285 5.6 170 2.5 631 7 10 11 20.7 29.4 19.1 36.7 28.4 23.8 19.4 16.4 14.1 2.4 2.3 2.2 7.0 8.3 9.4 0.9 1.1 1.3 13.6

Titan Company SELL 810 800 (1.2) 719 10.4 888 13 16 20 43.3 26.7 20.6 63.3 50.0 41.4 43.4 33.1 26.5 14.1 11.9 10.0 24.3 25.8 26.2 0.5 0.6 0.7 36.3

United Breweries SELL 1,187 1,000 (15.8) 314 4.6 264 15 19 24 71.6 29.7 23.4 79.5 61.3 49.7 35.0 29.2 25.2 11.7 10.0 8.5 15.7 17.6 18.6 0.2 0.2 0.3 9.7

United Spirits SELL 620 560 (9.7) 450 6.5 727 8 11 14 39.1 40.5 27.4 81.5 58.0 45.5 46.8 34.5 28.5 18.0 12.2 9.0 24.9 25.1 22.8 — — 0.3 18.8

Varun Beverages ADD 747 750 0.4 136 2.0 183 12 17 22 377.8 45.4 29.8 64.9 44.6 34.4 19.7 15.9 13.7 7.7 6.6 5.6 12.1 16.0 17.7 — — 0.1 1.3

Consumer products Cautious 15,812 230 15.0 16.4 15.2 52.2 44.9 38.9 34.0 28.9 25.0 12.8 11.6 10.4 24.5 25.8 26.6 1.1 1.2 1.4 285.8

Energy

BPCL REDUCE 368 390 6.1 797 11.6 1,967 40 39 41 (1.5) (3.6) 5.3 9.1 9.5 9.0 7.4 7.0 6.5 2.1 1.9 1.7 24.8 21.1 20.0 5.7 4.2 4.4 38.0

Castrol India ADD 160 215 34.5 158 2.3 989 7 8 9 3.3 13.6 10.9 23.3 20.5 18.5 14.5 12.8 11.5 15.5 14.7 14.4 67.9 73.6 78.6 3.0 3.8 4.4 4.1

GAIL (India) BUY 357 410 14.7 806 11.7 2,255 20 25 27 21.8 23.2 8.3 17.5 14.2 13.1 11.0 9.1 8.4 2.0 1.8 1.7 11.7 13.5 13.5 2.0 2.4 2.5 21.0

GSPL SELL 179 170 (5.2) 101 1.5 564 12 11 11 34.5 (7.0) (4.6) 15.1 16.3 17.1 7.7 6.4 6.3 2.0 1.8 1.7 14.0 11.7 10.2 1.0 0.9 0.9 1.5

HPCL REDUCE 265 320 20.7 404 5.9 1,524 42 32 33 (3.2) (23.4) 3.4 6.4 8.3 8.0 5.6 7.4 7.5 1.7 1.5 1.4 28.7 19.3 18.2 6.4 4.9 5.1 32.3

Indraprastha Gas SELL 261 240 (8.1) 183 2.7 700 10 12 13 19.0 16.5 12.0 25.3 21.7 19.4 15.9 13.8 12.2 5.2 4.5 3.9 22.4 22.2 21.5 0.8 1.0 1.2 10.3

IOCL REDUCE 155 160 3.5 1,501 21.8 9,479 21 17 18 (24.8) (17.9) 7.4 7.5 9.2 8.5 4.4 5.1 4.7 1.3 1.2 1.2 18.5 14.0 14.0 7.4 4.4 4.7 27.6

Mahanagar Gas ADD 814 850 4.4 80 1.2 99 48 52 54 21.5 6.5 5.3 16.8 15.8 15.0 10.2 9.1 8.5 3.8 3.4 3.0 24.3 22.8 21.4 2.3 2.5 2.7 8.6

ONGC ADD 158 200 26.5 2,029 29.5 12,833 17 21 21 3.1 19.6 (1.3) 9.1 7.6 7.7 4.9 3.9 3.7 0.9 0.8 0.8 9.9 11.5 10.7 4.2 4.4 4.4 17.4

Oil India SELL 210 220 4.7 238 3.5 1,135 25 24 24 22.6 (1.3) (0.7) 8.5 8.6 8.7 6.6 6.0 6.0 0.9 0.8 0.8 9.8 9.7 9.2 4.9 5.2 5.2 3.6

Petronet LNG BUY 221 280 26.8 331 4.8 1,500 14 16 18 22.1 17.3 13.2 15.9 13.6 12.0 10.6 9.1 7.7 3.4 3.0 2.6 23.3 23.4 23.3 2.0 2.6 3.3 11.6

Reliance Industries REDUCE 1,036 930 (10.3) 6,133 89.2 5,922 59 68 77 16.9 14.9 13.9 17.5 15.3 13.4 13.2 10.7 8.9 2.1 1.9 1.7 11.6 11.9 12.1 0.6 0.6 0.7 104.4

Energy Attractive 12,762 186 1.0 5.8 7.3 12.4 11.7 10.9 8.2 7.2 6.6 1.6 1.5 1.4 13.3 12.8 12.6 2.7 2.3 2.4 280.5



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Target O/S ADVT

Price (Rs) price Upside shares 3mo


Industrials

ABB SELL 1,246 1,100 (11.7) 264 3.8 212 20 26 34 12.1 31.2 31.7 62.9 47.9 36.4 34.7 29.5 22.4 7.3 6.7 5.9 12.2 14.6 17.3 0.3 0.7 0.7 1.5

BHEL SELL 71 81 14.3 260 3.8 3,671 2.2 2.6 5.4 62.7 19.4 106.9 32.2 27.0 13.0 7.6 7.0 3.5 0.8 0.8 0.8 2.5 3.0 6.1 2.6 3.1 6.3 8.8

Carborundum Universal SELL 338 310 (8.3) 64 0.9 189 11 14 17 22.8 25.4 20.2 29.6 23.6 19.7 16.0 11.9 10.2 4.1 3.7 3.3 14.6 16.4 17.6 0.7 1.3 1.5 0.3

CG Power and Industrial BUY 60 65 9.2 37 0.5 627 0.8 3.1 4.3 (72.2) 275.7 40.5 72.9 19.4 13.8 10.8 8.1 6.7 1.4 1.5 1.4 1.5 7.3 10.4 — — — 6.2

Crompton Greaves Consumer SELL 235 210 (10.7) 147 2.1 627 5.2 6.2 7.5 13.3 20.0 20.9 45.5 37.9 31.4 27.9 23.6 20.0 18.7 13.0 10.0 49.5 40.5 35.9 0.6 0.9 1.1 2.7

Cummins India REDUCE 667 680 2.0 185 2.7 277 24 28 32 (7.8) 16.1 13.9 27.5 23.7 20.8 24.2 20.8 17.2 4.6 4.3 4.0 17.4 18.9 20.1 2.3 2.2 2.5 4.4

Havells India SELL 567 460 (18.8) 355 5.2 625 11 14 17 16.6 26.2 19.6 51.2 40.5 33.9 32.5 25.8 21.1 9.5 8.4 7.3 19.8 21.9 23.0 0.6 0.9 1.0 9.9

Kalpataru Power Transmission BUY 399 530 32.7 61 0.9 153 19 24 34 36.5 24.3 39.8 20.6 16.6 11.9 8.7 7.2 5.7 2.3 2.1 1.8 11.7 13.1 16.1 0.6 0.6 0.6 0.6

KEC International BUY 341 430 26.1 88 1.3 257 18 22 29 51.1 22.0 34.4 19.0 15.6 11.6 10.2 8.5 6.8 4.4 3.6 2.8 25.7 25.2 27.1 0.7 0.9 1.2 3.3

L&T BUY 1,275 1,560 22.4 1,787 26.0 1,401 52 62 76 22.4 19.4 23.0 24.7 20.6 16.8 20.5 16.9 15.0 3.6 3.2 2.9 15.0 16.5 18.2 1.3 1.8 2.2 41.4

Siemens SELL 996 975 (2.2) 355 5.2 356 24 30 37 22.5 23.0 23.2 41.2 33.5 27.2 23.3 18.7 14.9 4.4 4.1 3.8 10.9 12.6 14.5 1.0 1.2 1.5 3.5

Thermax REDUCE 1,040 1,065 2.4 124 1.8 113 21 30 42 (3.6) 44.2 42.8 50.5 35.0 24.5 30.7 21.7 15.4 4.3 4.0 3.6 8.8 11.8 15.3 0.6 0.8 0.9 0.9

Voltas SELL 539 525 (2.6) 178 2.6 331 17 19 22 12.6 8.3 15.6 31.2 28.8 24.9 25.9 22.0 18.3 4.6 4.1 3.7 15.9 15.0 15.5 0.7 0.8 0.9 14.3

Industrials Neutral 3,905 57 19.8 21.6 28.9 30.4 25.0 19.4 20.0 16.6 13.6 3.3 3.1 2.8 10.8 12.3 14.6 1.1 1.5 2.0 97.9

Infrastructure

Adani Ports and SEZ BUY 374 470 25.8 774 11.2 2,071 20 20 23 6.1 (0.2) 14.7 18.6 18.7 16.3 13.3 12.9 11.3 3.7 3.1 2.7 21.5 18.1 17.9 0.6 0.7 0.8 25.9

Ashoka Buildcon BUY 240 310 29.2 45 0.7 188 13 13 13 34.6 0.5 5.2 19.0 18.9 18.0 15.3 12.9 11.4 2.3 2.0 1.8 13.0 11.4 10.7 0.7 1.0 0.7 1.0

Container Corp. SELL 647 635 (1.9) 316 4.6 487 18 21 26 7.3 20.0 21.4 36.6 30.5 25.1 24.2 18.8 14.9 3.4 3.1 2.9 9.4 10.6 11.9 2.6 1.4 1.7 8.8

Dilip Buildcon BUY 796 1,220 53.2 109 1.6 137 46 54 69 76.5 16.1 28.0 17.1 14.8 11.5 9.6 7.0 5.8 4.4 3.4 2.6 29.5 25.9 25.4 — — — 8.2

Gateway Distriparks BUY 166 250 50.7 18 0.3 109 8 8 9 12.1 (1.2) 17.5 21.7 21.9 18.7 20.7 10.4 8.7 1.8 3.5 3.1 8.2 10.8 17.6 4.2 — 1.8 0.8

Gujarat Pipavav Port BUY 120 170 41.7 58 0.8 483 4.1 5.9 7.2 (20.6) 43.7 22.5 29.2 20.3 16.6 14.4 11.9 9.4 2.9 2.8 2.8 9.8 14.0 16.8 2.8 4.0 4.9 0.8

IRB Infrastructure BUY 212 330 55.6 75 1.1 351 23 31 33 10.8 36.8 7.1 9.4 6.9 6.4 7.2 6.8 7.2 1.3 1.1 1.0 14.5 17.6 16.3 1.1 1.4 1.9 11.3

Mahindra Logistics BUY 595 540 (9.3) 42 0.6 71 10 14 18 16.2 42.8 31.2 60.7 42.5 32.4 35.0 23.5 17.8 10.1 8.4 6.9 18.2 21.6 23.5 — — — 0.8

Sadbhav Engineering BUY 296 440 48.8 51 0.7 172 13 18 18 17.4 38.4 2.2 23.0 16.6 16.2 15.8 12.6 9.8 2.7 2.4 2.1 12.5 15.2 13.7 — — — 0.8

Infrastructure Attractive 1,487 22 10.9 10.5 15.5 20.5 18.6 16.1 13.1 11.6 10.1 3.2 2.9 2.5 15.8 15.4 15.5 1.1 0.9 1.1 58.5

Internet

Info Edge BUY 1,329 1,390 4.6 162 2.4 122 23 26 32 33.3 13.9 25.9 59.0 51.9 41.2 49.3 38.8 29.7 7.7 6.2 5.6 13.4 13.2 14.3 0.4 0.6 0.6 1.6

Just Dial BUY 585 550 (5.9) 39 0.6 67 21 25 28 21.7 16.7 12.9 27.5 23.6 20.9 16.6 13.9 11.6 4.0 3.5 3.0 15.2 15.9 15.6 — 0.4 0.5 46.7

Internet Cautious 201 3 28.0 14.8 21.4 48.3 42.1 34.7 37.6 30.6 24.3 6.5 5.4 4.8 13.5 12.8 13.9 0.3 0.5 0.6 48.4

Media

DB Corp. REDUCE 280 295 5.5 51 0.7 184 18 20 24 (14.1) 13.2 18.8 15.9 14.0 11.8 8.5 7.5 6.3 3.1 2.9 2.8 19.9 21.5 24.5 4.6 5.7 7.1 0.5

DishTV ADD 73 90 23.2 135 2.0 1,925 (0.4) 1.8 3.4 (143.0) 514.6 88.2 NM 40.0 21.2 11.9 6.2 5.0 2.1 2.0 1.8 (2.3) 5.1 8.9 — — — 10.5

Jagran Prakashan REDUCE 131 168 28.4 41 0.6 311 10 12 14 (6.0) 21.7 15.3 13.1 10.8 9.3 5.9 5.3 4.6 2.0 2.0 1.9 14.8 18.1 20.9 2.3 3.8 6.9 0.7

PVR REDUCE 1,389 1,425 2.6 65 0.9 47 27 38 50 25.5 39.8 33.2 51.8 37.0 27.8 17.3 14.3 11.8 6.0 5.3 4.5 12.3 15.2 17.5 0.1 0.3 0.4 5.9

Sun TV Network REDUCE 800 925 15.6 315 4.6 394 29 35 39 10.2 20.7 10.9 27.8 23.0 20.8 18.6 15.6 13.6 6.8 6.1 5.5 26.3 28.1 27.9 1.2 2.2 2.5 22.3

Zee Entertainment Enterprises ADD 540 625 15.7 519 7.5 960 15 17 20 7.8 13.8 16.8 36.0 31.6 27.1 23.4 20.1 17.0 6.9 6.0 5.3 20.3 20.3 20.9 0.5 0.8 1.0 14.9

Media Attractive 1,126 16 (1.5) 31.1 21.5 34.6 26.4 21.7 16.7 12.8 10.8 4.8 4.4 3.9 13.7 16.6 18.2 0.9 1.4 1.8 54.9

Mkt cap. EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%)


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Metals & Mining

Coal India ADD 265 326 22.9 1,647 23.9 6,207 11 27 28 (24.2) 138.2 3.0 23.5 9.8 9.6 17.4 6.2 5.9 6.8 6.2 6.5 26.7 66.1 66.4 6.2 7.5 9.4 13.4

Hindalco Industries BUY 221 315 42.7 496 7.2 2,229 22 27 31 155.4 23.5 14.3 10.1 8.2 7.2 6.4 5.4 4.7 0.9 0.8 0.7 9.7 10.4 10.8 0.5 0.5 0.5 39.6

Hindustan Zinc REDUCE 274 325 18.8 1,156 16.8 4,225 22 24 28 9.3 13.6 13.8 12.7 11.2 9.8 7.8 6.4 5.2 3.2 2.7 2.3 27.2 26.4 25.6 2.9 2.9 3.0 8.8

Jindal Steel and Power REDUCE 218 255 17.1 211 3.1 968 (8) 8 18 59.3 194.2 129.1 (25.6) 27.2 11.9 9.8 7.0 6.0 0.7 0.7 0.7 (2.7) 2.6 5.7 — — — 27.3

JSW Steel ADD 313 345 10.1 757 11.0 2,417 27 27 25 83.9 (0.7) (5.7) 11.7 11.8 12.5 7.7 7.1 7.6 2.6 2.2 1.9 24.8 20.4 16.5 1.1 1.1 1.1 19.3

National Aluminium Co. ADD 61 85 39.3 118 1.7 1,933 4 7 7 12.7 63.0 11.1 14.8 9.1 8.2 6.0 4.0 3.6 1.1 1.1 1.1 7.7 12.4 13.6 9.3 9.0 9.0 13.3

NMDC REDUCE 103 125 21.4 326 4.7 3,164 12 10 10 43.3 (16.5) 3.6 8.8 10.5 10.2 4.8 6.4 6.1 1.3 1.3 1.2 15.8 12.5 12.4 5.3 5.3 5.3 3.9

Tata Steel ADD 556 700 26.0 636 9.2 1,205 67 69 82 62.6 3.1 18.4 8.3 8 6.8 6.2 6.1 6.2 1.1 1.0 0.9 17.2 13.1 13.9 1.7 1.8 1.8 67.5

Vedanta BUY 218 415 90.3 811 11.8 3,717 22 37 43 9.6 71.9 16.9 10.1 5.9 5.0 5.6 4.1 3.4 1.3 1.1 1.0 12.9 20.6 21.4 3.7 5.1 6.0 57.8

Metals & Mining Attractive 6,157 90 32.3 41.4 11.3 13.0 9.2 8.3 7.4 5.8 5.3 1.9 1.7 1.5 14.3 18.0 18.4 3.5 4.1 4.7 251.1

Pharmaceutical

Apollo Hospitals ADD 999 1,090 9.1 139 2.0 139 8 19 26 (46.9) 124.3 38.0 118.4 52.8 38.2 21.5 18.3 15.4 4.3 4.0 3.8 3.4 7.9 10.2 0.2 0.5 0.7 6.7

Aurobindo Pharma ADD 609 640 5.1 357 5.2 584 42 43 46 6.0 2.3 7.9 14.6 14.2 13.2 10.2 9.8 8.8 3.0 2.6 2.2 23.2 19.5 16.6 0.7 0.9 1.0 20.7

Biocon SELL 625 300 (52.0) 375 5.5 601 6 8 15 (39.2) 27.1 84.9 100.9 79.4 43.0 45.3 33.3 21.9 6.7 6.2 5.6 6.9 8.1 13.7 0.3 0.4 0.8 23.4

Cipla BUY 625 650 4.0 503 7.3 805 18 26 34 40.2 48.7 30.8 35.7 24.0 18.4 18.5 13.6 10.8 3.5 3.1 2.7 10.2 13.6 15.9 0.6 0.9 1.1 24.0

Dr Lal Pathlabs REDUCE 904 865 (4.3) 75 1.1 83 20 25 29 7.0 20.8 18.5 44.2 36.6 30.9 26.8 22.5 18.8 9.5 8.0 6.6 23.5 23.7 23.4 0.5 0.5 0.6 1.3

Dr Reddy's Laboratories REDUCE 2,301 2,250 (2.2) 382 5.6 166 59 100 134 (18.5) 69.8 33.3 39.0 23.0 17.2 18.0 11.4 8.5 3.0 2.7 2.4 7.8 12.5 13.9 1.0 0.7 0.9 30.1

HCG REDUCE 294 305 3.7 26 0.4 85 2 3 5 (40.0) 120.9 57.3 188.0 85.1 54.1 24.6 19.2 16.3 4.9 4.6 4.2 2.8 5.5 8.1 — — — 0.2

Laurus Labs ADD 469 540 15.2 50 0.7 106 16 22 34 (11.9) 37.3 54.4 29.6 21.5 13.9 14.4 11.8 8.6 3.3 2.9 2.4 11.9 14.4 18.8 — — — 0.7

Lupin REDUCE 900 800 (11.2) 407 5.9 450 38 35 45 (32.9) (7.7) 28.6 23.6 25.6 19.9 14.5 12.9 10.6 3.0 2.7 2.4 12.6 11.1 12.9 0.6 0.6 0.8 31.2

Narayana Hrudayalaya ADD 249 275 10.3 51 0.7 204 3 4 7 (38.1) 52.2 76.9 99.1 65.1 36.8 27.3 20.6 15.1 4.9 4.6 4.1 5.1 7.3 11.7 — — — 0.4

Sun Pharmaceuticals REDUCE 561 500 (10.8) 1,345 19.6 2,406 15 17 24 (47.5) 12.0 42.0 37.0 33.0 23.2 21.8 17.9 13.2 3.5 3.2 2.9 9.8 10.2 13.1 0.4 0.6 0.9 52.2

Torrent Pharmaceuticals NR 1,461 — — 247 3.6 169 40 46 61 (27.4) 15.1 32.9 36.5 31.7 23.9 20.4 14.6 12.1 5.3 4.7 4.1 15.1 14.9 17.2 1.1 0.7 1.0 5.1

Pharmaceuticals Neutral 3,958 58 (27.6) 18.9 32.6 33.6 28.3 21.3 18.7 15.0 11.8 3.7 3.3 2.9 10.9 11.7 13.7 0.5 0.6 0.9 196.0

Real Estate

Brigade Enterprises BUY 202 340 68.3 27 0.4 136 11 9 9 (17.7) (15.1) (1.6) 18.2 21.5 21.8 11.1 11.3 11.1 1.2 1.2 1.1 7.6 5.5 5.2 1.2 1.2 1.2 0.4

DLF RS 192 — — 343 5.0 1,784 19.6 6.5 3.9 403.9 (66.9) (39.6) 9.8 29.6 49.0 29.1 12.6 12.5 1.0 1.0 0.9 11.7 3.2 1.9 1.0 1.0 1.0 17.7

Godrej Properties SELL 703 400 (43.1) 161 2.3 216 11.6 16.8 19.2 21.9 43.9 14.9 60.4 42.0 36.5 151.3 107.6 76.5 6.7 5.8 5.0 11.8 14.9 14.7 — — — 2.7

Oberoi Realty BUY 489 560 14.5 178 2.6 340 13 62 44 14.0 385.4 (28.1) 38.5 7.9 11.0 28.7 10.9 13.7 2.7 1.8 1.6 7.3 27.4 15.2 0.4 0.4 0.4 3.5

Prestige Estates Projects ADD 272 315 15.8 102 1.5 375 13 10 10 24.3 (24.2) 8.4 21.7 28.6 26.4 15.0 15.5 15.6 2.2 2.0 1.9 10.3 7.3 7.5 0.6 0.6 0.6 0.9

Sobha REDUCE 485 510 5.2 46 0.7 95 22 20 23 30.9 (7.5) 14.8 22.2 24.0 20.9 13.3 13.5 12.7 1.7 1.6 1.5 7.6 6.8 7.4 1.4 1.4 1.4 1.6

Sunteck Realty REDUCE 395 330 (16.4) 58 0.8 140 15 18 20 4.8 20.2 6.9 25.9 21.5 20.1 16.6 18.3 16.9 2.1 1.9 1.8 9.7 9.4 9.2 0.3 0.3 0.3 1.8

Real Estate Neutral 915 13 140.1 (12.6) (20.2) 17.5 20.0 25.1 24.3 14.8 15.2 1.6 1.5 1.4 9.3 7.5 5.7 0.7 0.7 0.7 28.7

Dividend yield (%)Mkt cap. EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%)


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Technology

HCL Technologies REDUCE 993 1,010 1.7 1,383 20.1 1,409 62 68 71 5.3 9.0 5.0 15.9 14.6 13.9 11.2 9.5 8.7 3.8 3.2 2.9 24.8 23.8 21.9 0.8 2.9 3.1 34.1

Hexaware Technologies SELL 487 420 (13.8) 145 2.1 304 16 20 22 19.8 20.5 12.5 29.7 24.6 21.9 21.2 17.9 15.3 7.4 6.4 5.5 26.6 27.8 27.0 0.8 1.6 1.6 13.6

Infosys ADD 1,320 1,350 2.2 2,884 41.9 2,175 65 70 76 3.0 8.1 9.5 20.4 18.9 17.3 14.1 12.9 11.6 4.4 4.2 3.8 21.8 22.7 23.1 2.1 3.3 3.0 79.0

L&T Infotech ADD 1,791 1,650 (7.9) 308 4.5 175 64 73 84 13.9 14.5 15.7 28.2 24.6 21.3 24.7 18.4 15.5 8.1 6.8 5.6 31.8 30.0 29.0 0.9 1.3 1.5 4.4

Mindtree ADD 1,047 1,015 (3.1) 172 2.5 165 35 43 52 37.8 23.2 23.2 30.3 24.6 20.0 22.1 15.5 12.6 6.3 5.4 4.6 21.4 23.6 24.9 1.0 1.2 1.5 29.9

Mphasis SELL 1,149 760 (33.8) 222 3.2 193 44 52 56 14.4 18.3 8.2 26.2 22.1 20.5 19.0 15.4 13.7 4.0 3.7 3.3 14.6 17.4 17.1 1.7 1.7 1.7 11.4

TCS REDUCE 1,980 1,790 (9.6) 7,579 110.2 3,829 67 82 89 1.1 21.2 8.8 29.3 24.2 22.2 21.9 17.7 16.3 8.7 7.6 7.5 29.4 33.4 33.8 1.3 2.1 3.6 113.6

Tech Mahindra ADD 654 775 18.4 578 8.4 891 43 45 53 33.1 6.6 15.8 15.3 14.4 12.4 11.2 8.7 7.1 3.1 2.7 2.3 21.5 19.9 19.7 2.2 1.4 1.6 35.8

Wipro REDUCE 272 295 8.4 1,231 17.9 4,507 17 19 21 (3.1) 11.1 13.7 16.1 14.5 12.7 10.1 8.6 7.5 2.5 2.2 2.0 16.0 16.3 16.6 0.4 0.6 3.7 12.0

Technology Cautious 14,501 211 1.6 12.0 9.4 22.6 20.2 18.5 16.5 13.8 12.5 5.4 4.8 4.4 23.7 23.6 24.0 1.3 2.2 3.2 333.9

Telecom

Bharti Airtel ADD 362 470 29.8 1,447 21.0 3,997 5 (4) 0 (42.9) (187.4) 104.6 76.5 (87.5) 1,915.9 8.1 9.2 7.4 2.1 2.2 2.2 2.8 (2.4) 0.1 1.5 0.3 0.0 35.2

Bharti Infratel REDUCE 317 285 (10.1) 587 8.5 1,850 14 13 11 (7.4) (8.7) (9.0) 23.1 25.2 27.7 8.4 9.2 9.7 3.5 3.6 3.6 15.7 14.0 13.1 4.5 3.2 2.9 14.1

IDEA REDUCE 54 75 38.8 236 3.4 4,359 (10) (15) (14) (656.8) (54.9) 6.4 (5.7) (3.7) (3.9) 12.3 22.5 16.7 0.9 1.1 1.6 (16.0) (26.9) (34.0) — — — 16.8

Tata Communications ADD 606 725 19.6 173 2.5 285 2 4 8 (84.3) 121.9 117.7 368 166.0 76.3 11.0 9.8 8.6 34.6 27.9 20.2 4.5 18.6 30.7 1.1 1.1 1.2 4.6

Telecom Cautious 2,442 36 (94.7) (1,906.6) 36.2 776.5 (43.0) (67.3) 8.8 10.4 8.7 2.1 2.3 2.5 0.3 (5.5) (3.7) 2.0 0.9 0.7 70.8

Utilities

CESC ADD 911 1,180 29.4 121 1.8 133 87 102 118 67.1 16.8 15.5 10.5 9.0 7.8 7.6 5.6 4.9 0.8 0.8 0.7 7.9 8.8 9.4 1.4 1.1 1.2 6.0

JSW Energy REDUCE 69 80 15.5 114 1.7 1,640 3.1 5.9 8.2 (19.2) 92.2 38.7 22.6 11.7 8.5 7.0 5.6 4.6 1.0 1.0 0.9 4.7 8.5 11.0 2.9 2.9 2.9 1.9

NHPC ADD 24 30 24.2 248 3.6 10,260 2.4 3.1 3.2 (17.3) 26.9 1.8 9.9 7.8 7.7 9.2 7.2 7.0 0.8 0.8 0.8 8.5 10.4 10.2 5.8 7.2 7.3 2.1

NTPC BUY 153 190 24.3 1,260 18.3 8,245 11 15 16 (7.6) 30.9 4.4 13.4 10.3 9.8 10.9 8.5 7.9 1.2 1.1 1.1 9.5 11.6 11.3 3.7 2.9 3.1 13.7

Power Grid BUY 183 250 36.7 957 13.9 5,232 16 19 21 9.6 19.3 13.6 11.6 9.7 8.6 8.4 7.1 6.5 1.8 1.6 1.4 15.8 17.1 17.5 2.9 3.4 3.9 30.4

Reliance Power SELL 33 43 31.7 92 1.3 2,805 3.5 5.1 5.2 (16.4) 45.6 2.7 9.4 6.4 6.3 7.9 6.7 6.5 0.4 0.4 0.4 4.5 6.1 5.9 — — — 4.1

Tata Power ADD 72 97 34.3 195 2.8 2,705 5.3 7.8 8.7 (9.6) 46.1 11.2 13.5 9.2 8.3 10.3 9.5 8.6 1.3 1.1 1.0 10.7 12.9 12.7 — — — 5.8

Utilities Attractive 2,986 43 (2.4) 28.6 9.0 12.3 9.6 8.8 9.3 7.6 7.0 1.2 1.1 1.0 9.7 11.5 11.6 3.1 3.1 3.3 64.1

Dividend yield (%)Mkt cap. EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%)


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Others

Astral Poly Technik SELL 1,044 625 (40.1) 125 1.8 120 15 19 23 20.8 28.0 23.0 71.2 55.6 45.2 40.0 31.0 25.2 12.3 10.2 8.4 18.8 20.0 20.3 0.1 0.1 0.1 1.1

Avenue Supermarts SELL 1,594 860 (46.0) 995 14.5 624 13 16 20 47.9 28.6 26.4 126.7 98.6 78.0 74.3 56.9 44.6 21.4 17.6 14.4 18.5 19.6 20.3 — — — —

Bayer Cropscience REDUCE 4,526 4,000 (11.6) 179 2.6 34 86 105 124 4.4 22.7 17.5 52.7 43.0 36.6 42.6 33.3 26.7 8.7 7.6 6.5 15.4 18.8 19.2 0.4 0.5 0.5 0.5

Dhanuka Agritech ADD 538 690 28.2 26 0.4 49 26 28 32 7.7 8.9 15.4 20.9 19.2 16.7 15.3 13.2 11.0 4.2 3.6 3.1 21.9 20.1 20.0 1.0 1.1 1.3 0.1

Godrej Agrovet ADD 612 650 6.1 118 1.7 189 12 16 20 6.9 39.8 24.6 53.2 38.0 30.5 27.4 21.1 17.1 6.9 6.0 5.0 14.7 16.9 17.9 0.3 0.4 0.5 2.1

Godrej Industries RS 600 — — 202 2.9 336 15 16 20 6.8 8.9 24.2 41.2 37.8 30.5 36.8 31.1 33.9 5.6 4.9 4.3 14.4 13.9 15.1 0.3 0.3 0.3 4.8

InterGlobe Aviation BUY 1,074 1,430 33.2 413 6.0 383 59 71 98 27.2 21.8 37.5 18.3 15.1 11.0 10.3 8.4 5.8 5.8 4.3 3.2 41.3 33.0 33.8 0.6 0.7 0.9 25.8

Kaveri Seed SELL 556 470 (15.4) 37 0.5 66 32 31 33 18.4 (3.7) 6.1 17.4 18.0 17.0 14.7 15.1 13.6 4.7 4.0 3.5 23.6 24.0 21.9 1.1 1.4 1.8 4.9

PI Industries BUY 784 900 14.9 108 1.6 138 27 33 41 (20.0) 25.0 23.2 29.5 23.6 19.1 21.7 17.1 13.6 5.6 4.7 3.9 20.7 21.7 22.1 0.4 0.5 0.6 1.7

Rallis India ADD 186 235 26.5 36 0.5 195 9 11 13 (1.5) 26.4 19.7 21.5 17.0 14.2 13.7 11.3 9.5 3.0 2.7 2.4 14.6 16.9 18.1 1.8 2.0 2.2 0.8

SIS REDUCE 1,155 1,250 8.2 85 1.2 73 23 36 43 44.0 58.5 20.6 51.2 32.3 26.8 27.5 20.8 17.2 8.2 6.9 5.7 20.2 23.4 23.3 0.3 0.5 0.6 0.7

SRF BUY 1,692 2,110 24.7 97 1.4 57 80 92 123 (10.4) 14.4 33.6 21.0 18.4 13.8 12.9 10.2 8.3 2.7 2.4 2.1 13.7 14.0 16.4 0.7 0.8 0.9 10.3

Tata Chemicals ADD 705 760 7.7 180 2.6 255 51 46 52 6.5 (11.2) 13.6 13.7 15.4 13.6 7.6 6.5 5.4 1.6 1.5 1.4 13.8 10.0 10.5 3.1 2.1 2.4 8.9

TeamLease Services SELL 2,963 1,750 (40.9) 51 0.7 17 43 59 75 28.0 37.4 27.2 68.7 50.0 39.3 71.7 50.8 39.3 11.5 9.3 7.5 18.2 20.6 21.2 — — — 2.4

UPL ADD 603 850 40.9 307 4.5 507 43 73 82 20.9 71.2 11.9 14.1 8.2 7.3 9.8 8.5 7.2 3.3 2.8 2.3 26.4 23.6 22.4 1.3 1.6 1.8 13.8

Vardhman Textiles ADD 1,222 1,400 14.6 70 1.0 56 103 130 140 (8.0) 26.4 7.4 11.9 9.4 8.7 9.9 7.4 6.6 1.4 1.3 1.1 12.7 14.3 13.8 1.2 1.6 2.5 1.0

Whirlpool SELL 1,524 1,240 (18.6) 193 2.8 127 28 37 45 13.0 33.9 22.5 55.1 41.1 33.6 32.5 25.0 20.2 10.8 8.9 7.4 21.4 23.7 24.1 0.3 0.4 0.6 1.0

Others 3,221 47 15.0 15.9 22.8 31.6 27.2 22.2 20.3 16.8 13.6 5.7 4.9 4.1 18.1 17.8 18.6 0.5 0.6 0.7 80.0

KIE universe 108,672 1,580 (6.2) 30.0 25.0 26.9 20.7 16.6 12.6 10.6 9.4 3.0 2.7 2.4 11.0 12.9 14.7 1.3 1.4 1.8

KIE universe (ex-energy) 95,910 1,394 (8.4) 38.4 29.6 31.9 23.1 17.8 14.1 11.7 10.3 3.3 3.0 2.7 10.4 13.0 15.2 1.1 1.3 1.7

Notes:

(a) We have used adjusted book values for banking companies.

(b) 2018 means calendar year 2017, similarly for 2019 and 2020 for these particular companies.

(c) Exchange rate (Rs/US$)= 68.79

Mkt cap. EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%)

Disclo

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Disclosures

Ratings and other definitions/identifiers

Definitions of ratings

BUY. We expect this stock to deliver more than 15% returns over the next 12 months.

ADD. We expect this stock to deliver 5-15% returns over the next 12 months.

REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.

SELL. We expect this stock to deliver <-5% returns over the next 12 months.

Our target prices are also on a 12-month horizon basis.

Other definitions

Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the following

designations: Attractive, Neutral, Cautious.

Other ratings/identifiers

NR = Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s)

and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction

involving this company and in certain other circumstances.

CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.

NC = Not Covered. Kotak Securities does not cover this company.

RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient

fundamental basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock

and should not be relied upon.

NA = Not Available or Not Applicable. The information is not available for display or is not applicable.

NM = Not Meaningful. The information is not meaningful and is therefore excluded.

Kotak Institutional Equities Research coverage universe

Distribution of ratings/investment banking relationships

Source: Kotak Institutional Equities As of March 31, 2018

Percentage of companies covered by Kotak Institutional

Equities, within the specified category.

* The above categories are defined as follows: Buy = We

expect this stock to deliver more than 15% returns over

the next 12 months; Add = We expect this stock to

deliver 5-15% returns over the next 12 months; Reduce

= We expect this stock to deliver -5-+5% returns over

the next 12 months; Sell = We expect this stock to deliver

less than -5% returns over the next 12 months. Our

target prices are also on a 12-month horizon basis.

These ratings are used illustratively to comply with

applicable regulations. As of 31/03/2018 Kotak

Institutional Equities Investment Research had

investment ratings on 207 equity securities.

Percentage of companies within each category for

which Kotak Institutional Equities and or its affiliates has

provided investment banking services within the

previous 12 months.

16.9%

33.8%

25.6%23.7%

2.4% 3.9% 3.9%1.4%

0%

10%

20%

30%

40%

50%

60%

70%

BUY ADD REDUCE SELL

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This report is distributed in Singapore by Kotak Mahindra (UK) Limited (Singapore Branch) to institutional investors, accredited investors or expert investors only as defined under the Securities and Futures Act. Recipients of this analysis / report are to contact Kotak Mahindra (UK) Limited (Singapore Branch) (16 Raffles Quay, #35-02/03, Hong Leong Building, Singapore 048581) in respect of any matters arising from, or in connection with, this analysis / report. Kotak Mahindra (UK) Limited (Singapore Branch) is regulated by the Monetary Authority of Singapore. Kotak Securities Limited and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We along with our affiliates are leading underwriter of securities and participants in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationships with a significant percentage of the companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other business selection processes. Investors should assume that Kotak Securities Limited and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may participate in the solicitation of such business. Our research professionals are paid in part based on the profitability of Kotak Securities Limited, which include earnings from investment banking and other business. Kotak Securities Limited generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, Kotak Securities Limited generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. Kotak Securities Limited has two independent equity research groups: Institutional Equities and Private Client Group. This report has been prepared by the Institutional Equities Research Group of Kotak Securities Limited. The views and opinions expressed in this document may or may not match or may be contrary with the views, estimates, rating, target price of the Private Client Group. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additionally, other important information regarding our relationships with the company or companies that are the subject of this material is provided herein. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action based on this material. It is for the general information of clients of Kotak Securities Limited. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, clients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Kotak Securities Limited does not provide tax advise to its clients, and all investors are strongly advised to consult with their tax advisers regarding any potential investment. Certain transactions -including those involving futures, options, and other derivatives as well as non-investment-grade securities - give rise to substantial risk and are not suitable for all investors. The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only. We endeavor to update on a reasonable basis the information discussed in this material, but regulatory, compliance, or other reasons may prevent us from doing so. We and our affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material, may from time to time have "long" or "short" positions in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. Kotak Securities Limited and its non US affiliates may, to the extent permissible under applicable laws, have acted on or used this research to the extent that it relates to non US issuers, prior to or immediately following its publication. Foreign currency denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of or income derived from the investment. In addition, investors in securities such as ADRs, the value of which are influenced by foreign currencies affectively assume currency risk. In addition options involve risks and are not suitable for all investors. Please ensure that you have read and understood the current derivatives risk disclosure document before entering into any derivative transactions. Kotak Securities Limited established in 1994, is a subsidiary of Kotak Mahindra Bank Limited. Kotak Securities is one of India's largest brokerage and distribution house. Kotak Securities Limited is a corporate trading and clearing member of BSE Limited (BSE), National Stock Exchange of India Limited (NSE), MSEI a. Our businesses include stock broking, services rendered in connection with distribution of primary market issues and financial products like mutual funds and fixed deposits, depository services and Portfolio Management. Kotak Securities Limited is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Kotak Securities Limited is also registered with Insurance Regulatory and Development Authority as Corporate Agent for Kotak Mahindra Old Mutual Life Insurance Limited and is also a Mutual Fund Advisor registered with Association of Mutual Funds in India (AMFI). Kotak Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered in last five years. However SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor penalty on KSL for certain operational deviations. We have not been debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has our certificate of registration been cancelled by SEBI at any point of time. We offer our research services to primarily institutional investors and their employees, directors, fund managers, advisors who are registered with us Details of Associates are available on our website i.e. www.kotak.com Research Analyst has served as an officer, director or employee of subject company(ies): No We or our associates may have received compensation from the subject company(ies) in the past 12 months. We or our associates have managed or co-managed public offering of securities for the subject company(ies) in the past 12 months. YES We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months. We or our associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months. We or our associates may have received compensation or other benefits from the subject company(ies) or third party in connection with the research report. Our associates may have financial interest in the subject company(ies). Research Analyst or his/her relative's financial interest in the subject company(ies): No Kotak Securities Limited has financial interest in the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: YES Our associates may have actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report. Research Analyst or his/her relatives has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: No Kotak Securities Limited has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: No Subject company(ies) may have been client during twelve months preceding the date of distribution of the research report. A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose a company from the list on the browser and select the"three years" icon in the price chart). Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051, Telephone No.: +22 43360000, Fax No.: +22 67132430. Website: www.kotak.com / www.kotaksecurities.com. Correspondence Address: Infinity IT Park, Bldg. No 21, Opp. Film City Road, A K Vaidya Marg, Malad (East), Mumbai 400097. Telephone No: 42856825. SEBI Registration No: NSE INB/INF/INE 230808130, BSE INB 010808153/INF 011133230, MSE INE 260808130/INB 260808135/INF 260808135, AMFI ARN 0164, PMS INP000000258 and Research Analyst INH000000586. NSDL/CDSL: IN-DP-NSDL-23-97. Compliance Officer Details: Mr. Manoj Agarwal. Call: 022 - 4285 8484, or Email: [email protected]. Investments in securities market are subject to market risks, read all the related documents carefully before investing. In case you require any clarification or have any concern, kindly write to us at below email ids: Level 1: For Trading related queries, contact our customer service at ‘[email protected]’ and for demat account related queries contact us at [email protected] or call us on:

Toll free numbers 18002099191 / 1800222299 and 18002099292 Level 2: If you do not receive a satisfactory response at Level 1 within 3 working days, you may write to us at [email protected] or call us on 022-42858445 and if you feel you are

still unheard, write to our customer service HOD at [email protected] or call us on 022-42858208. Level 3: If you still have not received a satisfactory response at Level 2 within 3 working days, you may contact our Compliance Officer (Name: Mr. Manoj Agarwal) at

[email protected] or call on 91- (022) 4285 8484.

Level 4: If you have not received a satisfactory response at Level 3 within 7 working days, you may also approach CEO (Mr. Kamlesh Rao) at [email protected] or call on 91-(022) 4285 8301.

First Cut notes published on this site are for information purposes only. They represent early notations and responses by analysts to recent events. Data in the notes may not have been verified by us and investors should not act upon any data or views in these notes. Most First Cut notes, but not necessarily all, will be followed by final research reports on the subject. There could be variance between the First cut note and the final research note on any subject, in which case the contents of the final research note would prevail. We accept no liability for the contents of the First Cut Notes.

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