india equity analytics today- buy stock of jyothy lab, icici bank, crompton greaves ltd and bank of...

8/13/2019 India Equity Analytics Today- Buy Stock of Jyothy Lab, ICICI BANK, Crompton Greaves Ltd and BANK OF INDIA

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BANK OF INDIA

187

217235

16

1M 1yr YTDsolute -21.6 -47.5 -18.1l.to Nifty -17.9 -47.5 -18.1

Current 1QFY14 4QFY1omoters 64.1 64.1 64.1I 13.2 13.6 13.5I 15.3 15.6 16.3

hers 7.4 6.7 6.0

Financials Rs, Cr 2011 2012 2013 2014E 2015E

NII 7878 8313 9024 10578 10869Total Income 10519 11635 12790 15082 15373PPP 5398 6694 7458 8701 8917Net Profit 2542 2678 2749 2776 3170EPS 46.5 46.7 47.9 43.2 49.4

532149

ompany Update BUY Ban k of India repo rted pro fit de-gro wth of 27% YoY larg ely du e to hig her loan loss p rovis ion. At operat ing profi t level , bank reported 15.5% YoY grow th but

high er prov ision s against loan loss (almo st doub le from last quarter) drag p r o f i t d o w n w a r d . Banks l oan and depos i t s g rew handsomely and asse t qual i t ies w ere also im prov ed sequential ly . Restructu re loan was at Rs 1146 cr (0.3% loan ) wh ich is not alarm ing . We hav e no t fou nd any stres s at op eratin g profi t level . The s tock is c orrected almo st 10% l ikely du e to profi t de-grow th.We bel ieve buffer up prov ision wo uld be tempo ral ly pheno men a. The s toc k cou ld reshape i ts valuat ion mult ip le . We have buy rat ing on the s tock with pr ice targ et of Rs.217.

NII growth on the back of higher loan growth and margin expansionDuring quarter, Bank India reported NII growth of 17.8% YoY to Rs.2719 cr versus

our expectation of Rs.2683 largely due to higher than expected loan growth,

improvement in credit deposits ratio and margin expansion. Bank reported other

income of Rs.1097 cr versus Rs.937 cr in last quarter and Rs.1097 cr in previous

quarter. Total revenue grew by 17.6% YoY to Rs.3816 cr.

erage Daily Volume12260

evious Target Price

arket Data

pside

393/126

SE Code

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

(Source: Company/Eastwind)

ock Performance

wk Range H/L

MP

rget Price

2271804fty 6074

kt Capital (Rs Cr)

Operating leverage remained stableBanks operating leverage remained stable at 0.3% which is quite impressive. In

absolute term, operating expenses increased by 20.3% YoY in which employee cost

and other operating expenses increased by 18.7% and 22.8% respectively. Healthy

NII growth and higher operating cost led pre provisioning profit growth of 15.5% YoY.

Loan loss provisions were almost double from last quarter, but asset qualityimprovedProvisions and contingencies increased by 53.3% which includes loan loss provisionof Rs.1173 cr which was double from last quarter. But in absolute term, GNPAmarginally increased by 1.4% on sequential basis while in percentage to grossadvance, it improved by 12.5 bps to 2.8% from 3%. Provisions were little higher by4% in sequential basis taking almost flat improvement in net NPA. In percentageterm, NPA improved to 1.7% from 1.9% in previous quarter. Provision coverage ratiowithout technical write-off was 38.7% and with technical write off, it stood at 63.8%.Slippage during the quarter was at Rs.1747 cr (2% of advance) versus Rs.1469 cr (1.8% of advance).

hange from Previous

ANKINDIA Vs Nifty

are Holding Pattern-%

"BUY"31th Jan, 2014

Narnolia Securities Ltd,


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M for the quarter was 2.89%, an improvement of 50 bps YoY due to improvement of

vestment yield. However fund yield and cost of fund both were declined marginally in

quential but investment yield improved to 8.2% from 7.9% in previous quarter.

ofit declined on account of higher loan loss provisionsnk of India (Bank India) profit was declined by 27.1% YoY to Rs.586 cr as against our pectation of Rs.602 cr. Profit growth was lower on account of 98% YoY rise in loan lossovisions. Overall provisions were increased by 53.3% YoY which drag PBT to 21.3%Y de-growth. Tax rate were 21% versus 28.5% of PBT in previous quarter and 14.5 of

BT in 3QFY13. Total provisions for the quarter stood at 0.4% of net advances higher an 0.28% in 3QFY13.

luation & Viewank of India reported profit de-growth of 27% YoY largely due to higher loan lossovision. At operating profit level, bank reported 15.5% YoY growth but higher provisionsainst loan loss (almost double from last quarter) drag profit downward. Banks loand deposits grew handsomely and asset qualities were also improved sequentially.structure loan was at Rs 1146 cr (0.3% loan) which is not alarming. We have not

und any stress at operating profit level. The stock is corrected almost 10% likely due toofit de-growth. We believe buffer up provision would be temporally phenomena. Theock could reshape its valuation multiple. We have buy rating on the stock with price

et of Rs.217.

BANK OF INDIA


lance sheet growth impressivee are impressed with banks balance sheet growth trajectory during the quarter as bankported deposits growth of 30% YoY higher than peers (result so far announced) led bym deposits growth of 35% YoY. Current deposits and saving deposits reported growth

24% and 14% respectively taking overall CASA deposits growth of 16%. In percentagetotal deposits, CASA ratio declined to 22.5% from 24.6% in 3QFY13 largely due to

gher growth in term deposits than CASA deposits. Loan grew by 27.2% YoY which isghest so far result announced. Credit deposits ratio for the quarter stood at 77.4% asainst 76.8% in previous quarter and 79.2% in last quarter.

argin expansion led by imrprovement in investment yield



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ndamental Through Graph

NII growth on the back of higher loan growthand margin expansion

Loan loss provisions were almost double from

last quarter, but asset quality improved

Profit declined on account of higher loan loss

provisions

BANK OF INDIA

Source: Eastwind/Company




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BANK OF INDIA




uarterly Result 3QFY14 2QFY14 3QFY13 % YoY Gr % QoQ Gr 3QFY14E Variationerest/discount on advances / bills 7017 6631 5791 21.2 5.8 6910 -1.5

come on investments 2207 2129 1809 22.0 3.7 2261 2.5erest on balances with Reserve Bank of India 546 479 298 83.4 14.0 472 -13.5

tal Interest Income 9769 9239 8023 21.8 5.7 9644 -1.3hers Income 1097 1100 937 17.1 -0.3 1141 4.0tal Income 10866 10340 8960 21.3 5.1 10784 -0.8erest Expended 7050 6712 5714 23.4 5.0 6960 -1.3I 2719 2527 2308 17.8 7.6 2683 -1.3her Income 1097 1100 937 17.1 -0.3 1141 4.0tal Income 3816 3627 3246 17.6 5.2 3824 0.2

mployee 989 897 833 18.7 10.2 931 -5.8her Expenses 684 628 557 22.8 8.8 674 -1.3

perating Expenses 1672 1525 1390 20.3 9.7 1606 -4.0P( Rs Cr) 2144 2102 1856 15.5 2.0 2218 3.4ovisions 1404 1232 916 53.3 13.9 1382 -1.5et Profit 586 622 803 -27.1 -5.8 602 2.7

lance Sheet Datauity Capital 643 597 575 11.9 7.8 597 -7.2serve & Surplus 26,672 25,686 22,698 17.5 3.8 27,243 2.1posits 454,140 432,282 349,117 30.1 5.1 449,063 -1.1rrowings 40,545 41,751 28,686 41.3 -2.9 42,513 4.9her liabilities and provisions 14,492 12,727 14,890 -2.7 13.9tal Liability 536,492 513,042 415,966 29.0 4.6 -100.0sh in hand 21,406 24,621 17,940 19.3 -13.1 -100.0sh and balances with reserve bank of india 39,662 34,658 22,580 75.7 14.4 -100.0

vestment 108,253 107,413 86,083 25.8 0.8 2,261 -97.9dvance 351,725 332,190 276,486 27.2 5.9 345,503 -1.8xed Assets 2,975 2,957 2,853 4.3 0.6hers Assets 12,470 11,203 10,024 24.4 11.3tal Assets 536,492 513,042 415,966 29.0 4.6

set QualityNPA 9881 8765 8898 11.0 12.7 PA 6156 5947.3 5,228 17.7 3.5NPA(%) 3.0 3.0 3.5PA(%) 1.9 2.0 2.0

CR(%) Without technical write off 37.7 32.1 41.2


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BANK OF INDIA




nancials & Assuption 2011 2012 2013 2014E 2015Eerest/discount on advances / bills 15570 20241 23139 27015 31171

come on investments 5195 7142 7261 8562 10773erest on balances with Reserve Bank of India 798 834 1257 1987 1987

hers 295 264 251 1 1tal Interest Income 21858 28481 31909 37565 43932hers Income 2642 3321 3766 4504 4504tal Income 24500 31802 35675 42069 48436erest on deposits 12218 17957 20238 29922 30362erest on RBI/Inter bank borrowings 813 1145 1489 1419 1419hers 950 1065 1158 1281 1281erest Expended 13981 20167 22885 26987 33063I 7878 8313 9024 10578 10869her Income 2642 3321 3766 4504 4504tal Income 10519 11635 12790 15082 15373

mployee 3492 3069 3131 0 3810

her Expenses 1629 1871 2201 0 3656perating Expenses 5121 4941 5332 6381 6457P( Rs Cr) 5398 6694 7458 8701 8917ovisions 2909 4016 4709 4766 5045t Profit 2542 2678 2749 2776 3170

46.0 5.3 2.7 1.0 14.2ey Balance Sheet Dataposits 299559 318216 381840 465844 535721posits Growth(%) 30 6 20 22 15rrowings 22021 32114 35368 43275 49766rrowings Growth(%) -2 46 10 22 15an 213708 248833 289367 358816 366720an Growth(%) 26 16 16 24 2

vestment 86677 86754 94613 117097 134662vestment Growth(%) 27 0 9 24 15

astwind Calculationeld on Advances 7.3 8.1 8.0 7.5 8.5eld on Investments 6.3 8.7 7.1 7.3 8.0eld on Funds 6.5 7.8 7.7 7.5 8.4st of deposits 4.1 5.6 5.2 6.4 5.7st of Borrowings 8.0 6.9 6.8 7.5 7.5st of fund 4.3 5.8 5.3 5.3 6.2

aluationok Value 322.7 365.3 416.9 434.0 0.0

BV 1.5 1.0 0.7 0.6 0.5E 10.3 7.7 6.3 5.6 4.9


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1M 1yr YTDsolute -7.1 2.9 35.0l. to Nifty -3.4 2.5 22.0

Current 2QFY14 1QFY1omoters 56.2 56.2 56.2

21.5 19.7 22.0I 14.0 15.4 13.1hers 8.3 8.8 8.7

Financials Rs, Cror3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%

Revenue 10894 10468 4.1 11200 -2.7EBITDA 1355 1321 2.6 891 52.0PAT 681 669 1.8 501 35.9EBITDA Margin 12.4% 12.6% (20bps) 8.0% 450bpsPAT Margin 6.3% 6.4% (10bps) 4.5% 180bps

4..In any case Suzuki Motor will make profit equal to its stake in MSIL whether it makes itsown capex as in this case or MSIL made capex then why did Suzuki made this huge capex.

View & Valuation: At CMP Rs 1638 the stock is trading at highest 5 year historical P/E multiple and in currentscenario we donot see much upsides from hereon. Therefore we are Neutral for the stocwith target price Rs 1700 .The CMP seems to factored almost all the upsides includingimproving operational efficiency and volume growth. The stock may see some upward

movement from current price on buzz that Suzuki may increase its stake in MSIL.



are Holding Pattern-% How we see the deal :1.The near term effect of the deal on PAT is neutral, as this Greenfield facility at Gujrat willtake 2 -3 year to get commissioned and another 1 year to get its full capacity utilization, thistranslates period FY17 onwards.

2.The MSIL is getting cars at cost of manufacturing plus portion of incremental capex whichmeans MSIL will lose manufacturing margins and will getting only the trading margin. Thenewly formed company will be 100 % subsidiary of Suzuki Motors Limited.

ne Year Price Vs NIFTY 3.The profit sharing from the upcoming Gujrat facility would depend on the stake of SuzukiMotor in MSIL.

ock Performance-%Recent Event :MSIL has announced that the proposed capacity expansion (1.5 Million units per annum) inGujarat would be through a 100% Suzuki (parent) owned subsidiary. The subsidiary wouldbe fully dedicated to Maruti.

wk Range H/L 1864/1217 The net profits for the company during 3QFY14 came at Rs 681 Cr and NPM at 6.25%.Effective tax rate is around 23.1%.arket Cap (Rs/Cr) 22,266

erage Daily Volume 423015 On realization front, the Net realization for company is up 1.4% YoY to Rs.368547 however there is sequential decrease in net realization mainly due weak product mix, lower exportsales number and higher contribution of Mini Segments. Discounts in 3QFY14 is at all timehigh to Rs.19412/unit vs. 17,500/unit QoQ.

fty 6073

EBITDA for MSIL is up 52% YoY to Rs.1,355 Cr and EBITDA margin was up 448 bps YoYto 12.3%. However results are not comparable on yearly basis as 3QFY13 does notinclude impact of SPIL merger. Raw material cost as % of net sales is down 671 bpsYoY.Employee cost as % of net sales is up 62 bps YoY but down 82 bps QoQ to2.8%.Royalty payments for Q3 FY14 were around levels of H1 FY14.

arket DataE Code 532500

SE Symbol MARUTI

evious Target Price -side 4%ange from Previous -

Maruti Suzuki India Limited

esult Update NEUTRAL Result Analysis:MP 1638 The company for 3QFY14 has registered net sales of Rs 10620 Cr down by 2.7% YoY led

by 4.5 % volume decline to 288151 units for the period under review. The decline in the

volume came majorly due to weaker performance on export business front. Export salesvolumes were down 38.6% YoY and 41.3% QoQ to 19,966 units.

rget Price 1700

"NEUTRAL"31st Jan' 14



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- Crom ton Greaves Ltd.

MP 110

rget Price 130evious 120side 15%ange from 8%

arket DataE Code 500093E Symbol

4,251775,133

fty 6,074

ock1M 1yr YTD

solute (14.2) 2.3 17.9

l. to Nifty (10.6) 2.3 11.0

are3QFY14 2QFY14 1QFY14

omoters 42.5 42.5 41.7 18.5 16.6 15.2

I 23.8 24.5 23.7hers 15.2 16.5 19.4

Financials Rs, CroreConsolidated 3QFY14 2QFY13 (QoQ)-% 3QFY13 (YoY)-%Revenue 3351.9 3204.9 4.6% 2971.8 12.8%EBITDA 169.3 161.3 5.0% 2.0 8322.4%PAT 59.5 57.8 3.0% -69.0 186.2%EBITDA Margin 5.1% 5.0% 10 bps 0.1% 500 bpsPAT Margin 1.8% 1.8% 0 bps -6.3% 810 bps

72/137

Order scenerio :

Domestic power systems and consumer products segment were key margin drivers as theysustained healthy operating margins of 9.4% and 11.7%, respectively. Collectively, both segmentsconstitute 41% of total consolidated revenue. Consumer products segment continued its marketshare expansion following higher distribution reach in categories like lighting (up 17% yoy andfans up 13% yoy.

Crompton consolidated net sales rose 12.8% on yearly basis to Rs 3351.9 crore during thequarter, which were inline with street expectations. Consolidated earnings before interest, tax,

depreciation & amortisation (EBITDA) stands to Rs 169.3 crore and EBITDA margin at 4.9percent. Power systems revenues increased 17.3 percent on yearly basis to Rs 2132.2 croreduring Dec quarter FY14, and earnings before interest & tax (EBIT) from power segment duringthe quarter were Rs 53.3 crore. Meanwhile, its consumer products and industrial systemsdivisions posted single digit growth in topline during the quarter and it gone by 7.3% to Rs 651crore. EBIT of consumer products rose to Rs 75.9 crore up by 19.9% and industrial systems'EBIT decreased by 42.7% to Rs 29.5 crore. Other income jumped 33.0% yoy to Rs 40.4 crorewhile finance cost climbed to Rs 26.7 crore up by 25.6% yoy. At the current level of INR 110, wemaintain 'ACCUMULATE' at the Stock as Power sector has shown sign of revival by posting anEBIT of Rs 53.3 crore VS Loss of Rs 104.6 crore qoq and also performance of Consumer divisionwas satisfactory with a sales growth of 7.25% yoy and EBIT Growth of 19.9%.

Margin to improve further :

erage Daily Volume

"Rebounds begains.."

Accumulatesult update

kt Capital (Rs Crores)wk Range H/L

yr Forward P/B

CROMPGREAV

(Consolidat


We have rolled forward our valuation to FY16E earnings and maintained our Accumulated ratingon CGL with a revised target price of Rs130 (Rs105 earlier) based on 14xFY16E EPS, driven bylikely turnaround in international operations and a better earnings growth trajectory. We believethat a record backlog, better/leaner cost structure, good & increasing product basket, improvedreach in terms of geography will drive earnings & intrest coverage ratio over the next few years.It has assumed break even EBIT level for international subsidiaries in FY14. Further, In our view,the stock's performance would largely be driven by an improvement in overseas business, thoughstandalone performance would protect downsides.

Valuations :

(Source: Company/ Eastwind Research)

Consolidated order book at the quarter ended Dec'14 was Rs. 10074 crore, up 9.12% yoy.Consolidated order inflow for the quarter was Rs. 2624 crore up 15.7% yoy. Crompton expects arobust order intake in high value-added segments like UHV/EHV in Asia, Automation/smart gridin the power segment, Motors in EMEA market, Railway transportation and electronic drives in

the industrial segment.

"Accumulate "31th Jan' 14



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981

10941118

12-2.147

1M 1yr YTDsolute -11.3 -18.1 -18.1l.to Nifty -7.6 -18.1 -18.1

Current 4QFY13 3QFY1omoters 66.7 64.1 64.1I 11.0 13.2 13.6

I 15.4 15.3 15.6hers 6.9 7.4 6.7

Financials Rs, Cr

2011 2012 2013 2014E 2015ENII 10739 10734 13866 17734 21111Total Income 42252 18237 22212 27035 30413PPP 10950 10386 13199 16762 18856Net Profit 6093 6465 8325 10658 11955EPS 52.9 56.0 72.2 92.3 103.6

kt Capital (Rs Cr)



ock Performance

wk Range H/L

hange from Previous

ICI Bank Vs Nifty


19.54 lakhsfty 6073

ICICIBANK

Stable operating leverage led healthy operating profit growthOperating leverage (opex to total assets) was remained very impressive and wasstable at 0.46% versus 0.43% in 3QFY13. Cost to income ratio of the bank improvedby 250 bps YoY to 37.4% as against 39.6%. Operating expenses increased by15.7% YoY in which employee cost and other operating expenses increased by 6%and 23% YoY respectively. Healthy revenue growth and controlled operating

expenses led operating profit growth of 28.6% YoY to Rs.4440 cr.

Asset quality by and large stable sequentially but provision declinedBank reported deterioration in asset quality (GNPA) in sequential basis by 3.7% inabsoluter term. In percentage to gross advance, GNPA stood at 3.07% versus 3.1%in previous quarter (marginally improved). Provisions were declined by 0.6% QoQtaking net NPA increased by 15.3% QoQ. In percentage to net advance, this ratiostood at 0.94% versus 0.85% in previous quarter. Lower provisions made PCR to70.1% versus 73.1% in previous quarter.

rget Price

Banks profi t grow th of 12.6% YoY des pit e of 21.6% YoY gro wt h in NII and 28.6% growth in operat ing profi t was largely due to higher tax provisions

mad e of ban k (32.4% of PBT vers us 27.9% of PBT in 2QFY14). Durin g quart er,ban k has created spec ial reserve for deferred tax liability to the tune of Rs.215 Cr as per recen t RBI gu ideli ne dated 20th Decemb er 2013. Ad jus tin g the sam e,profi t grew by 22% YoY whic h was qui te impres sive. But banks cost of fund increased high er than loan yield whic h would restr ic t margin expan sion . We low er ou r bo ok value estim ates to Rs.643 fro m earlier of Rs.657. Ac co rdi ng ly we reduc e our target pr ic e to Rs.1094 from earl ier of Rs.1118.

ICICI BANK

erage Daily Volume11104

evious Target Price

arket Data

pside

358/127

SE Symbol

Healthy NII growth on the back of higher loan growth and margin expansion

During quarter, bank reported NII growth of 21.6% YoY to Rs.4256 cr on the back of higher than expected loan growth and loan yield led by credit deposits ratio andexpansion NIM. Other income registered growth of 26.5% YoY to Rs.2801 cr versusRs.2166 cr in previous quarter and Rs.2215 Cr in last quarter in correspondingquarter. Healthy NII along with higher support from other income, revenue of thebank grew by 23.5% YoY to Rs.7057 Cr.

esult update ACCUMULATEMP

"ACCUMULATE"31th Jan, 2013



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ICICI BANK

nks profit growth of 12.6% YoY despite of 21.6% YoY growth in NII and 28.6% growthoperating profit largely due to higher tax provisions made of bank (32.4% of PBTrsus 27.9% of PBT in 2QFY14). During quarter, bank has created special reserve for ferred tax liability to the tune of Rs.215 Cr as per recent RBI guideline dated 20thecember 2013. Adjusting the same, profit grew by 22% YoY which was quitepressive. But banks cost of fund increased higher than loan yield would restrict marginpansion. We lower our book value estimates to Rs.643 from earlier of Rs.657.cordingly we reduce our target price to Rs.1094 from earlier of Rs.1118.


wer growth in deposits led by muted growth in term depositsbalance sheet front, banks deposits grew by 11% YoY lower than expectation largely

e to lower growth in term deposits. Demand deposits and saving deposits grew by

3% and 11.8% YoY taking overall CASA deposits growth to 16% YoY. In percentage to

al deposits, CASA stood at 42.9% versus 40.9% in last quarter. But in sequential

sis, bank reported 40 bps declined in CASA and borrowing also increased by 4%.

verall cost of fund was increased by 32 bps in sequential basis which restricted margin

pansion despite of improvement in loan yield.

gher loan growth led by retail loan followed by overseas and corporate loan

an grew by 16% YoY higher than expectation. Incremental loan growth came fromail advances which grew by 22% YoY followed by oversea and corporate loan. Retailan now constituted 39% of total loan versus 37% in last quarter. Retail loans are

nerally high yield in nature and higher loan constitute would result of margin sustainingcurrent level. We are susceptible about the margin improvement because of higher st of fund as bank reported lower CASA and higher borrowing as a percentage to

DTL in sequential basis.

argin expansion marginally on account of higher cost of fund than depositsNIM improved marginally from previous quarter to 3.32% from 3.31% largely due togher cost of fund than loan yield. Sequentially, cost of fund increased to 9.1% from8% in previous quarter due to higher borrowing cost along with lower CASA ratio. Loaneld improved to 9.9% from 9.7% in previous quarter. We believe NIM of the bank wouldhighest as increasing cost of fund would cushion loan yield improvement.

luation & View



13/25

ICICI BANK

Source: Company/Eastwind


hart Focus

NII growth on account of higher than expected

loan growth and margin expansion

Healthy revenue growth and impressive

operating leverage led operating profit

Despite of higher revenue grwoth and

operating profit growth, net profit muted

because of higher tax provisions against DTL



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ICICI BANK

uarterly Result




uarterly Result 3QFY14 2QFY14 3QFY13 % YoY % QoQ 3QFY14E Variationterest/discount on advances / bills 8224 7737 7066 16.4 6.3 7971 -3.1come on investments 2923 2839 2742 6.6 2.9 3012 3.0terest on balances with Reserve Bank of India 34 47 136 -75.3 -28.5 52 55.8hers 275 190 194 42.1 44.7 236 -14.1

otal Interest Income 11456 10813 10138 13.0 5.9 11271 -1.6hers Income 2801 2166 2215 26.5 29.3 2325 -17.0

otal Income 14257 12980 12353 15.4 9.8 13597 -4.6terest Expended 7200 6770 6639 8.4 6.4 6766 -6.0I 4256 4044 3499 21.6 5.2 4505 5.9her Income 2801 2166 2215 26.5 29.3 2325 -17.0

otal Income 7057 6210 5714 23.5 13.6 6831 -3.2mployee 997 872 941 6.0 14.4 0 -100.0her Expenses 1620 1451 1321 22.7 11.7 0 -100.0

perating Expenses 2617 2322 2261 15.7 12.7 2596 -0.8PP( Rs Cr) 4440 3888 3452 28.6 14.2 4235 -4.6ovisions 695 625 369 88.4 11.2 657 -5.4

BT 3745 3263 3084 21.4 14.8 3578 -4.5x 1212 911 834 45.4 33.1 1073 -11.5

et Profit 2533 2352 2250 12.6 7.7 2504 -1.1

alance Sheetet Worth 74057 73103 67119 10.3 1.3 75608 2.1

eposits 316970 309046 286418 10.7 2.6 318387 0.4orrowings 150940 145356 147149 2.6 3.8 153387 1.6vestment 171985 168829 166842 3.1 1.9 3012 -98.2oan 332632 317786 286766 16.0 4.7 328689 -1.2

set QualityNPA (Rs Cr) 10448 10078 9803 6.6 3.7 PA (Rs Cr) 3121 2707 2185 42.8 15.3

GNPA 3.1 3.1 3.4 NPA 0.9 0.9 0.8

CR(w/o technical write-off)(%) 70.1 73.1 77.7


15/25

ICICI BANK

nancials & Assuption




arterly Result 2011 2012 2013 2014E 2015Eerest/discount on advances / bills 19098 22130 27341 31646 34992ome on investments 9181 9684 11009 11785 13220erest on balances with Reserve Bank of India 469 491 543 184 184hers 1334 1238 1182 946 946tal Interest Income 30081 33543 40076 44561 49342hers Income 31513 7503 8346 9302 9302tal Income 61595 41045 48421 53863 58644erest on deposits 11315 14304 16889 18217 20402erest on RBI/Inter bank borrowings 1683 1469 2087 0 0hers 6345 7035 7234 10146 11364erest Expended 19343 22808 26209 27812 28840I 10739 10734 13866 16749 20502her Income 31513 7503 8346 9302 9302tal Income 42252 18237 22212 26051 29804

mployee 4393 3515 3893 4451 5096her Expenses 26910 4335 5120 5441 6229erating Expenses 31302 7850 9013 9892 11325

P( Rs Cr) 10950 10386 13199 16159 18478visions 4631 1583 1803 2592 2853T 0 8803 11397 13567 15626x 0 2338 3071 4071 4688t Profit 6093 6465 8325 9496 10938

lance SheetPOSITS 259106 255500 292,614 321,875 360,500posits Growth 7.3 -1.4 14.5 10.0 12.0rrowings 125839 140165 145,341 158,535 177,560rrowings Growth(%) 8.8 11.4 3.7 9.1 12.0estment 209653 159560 171,394 187,360 209,843

owth(%) 12.5 -23.9 7.4 9.3 12.0vances 256019 253728 290,249 339,592 380,343owth(%) 13.4 -0.9 14.4 17.0 12.0

stwind Calculationeld on Advances 7.5 8.7 9.4 9.3 9.2eld on Investments 4.7 6.4 6.7 6.3 6.3st of deposits 4.4 5.6 5.8 5.7 8.0st of Borrowings 6.4 6.1 6.4 6.4 6.4st of fund 5.0 5.8 6.0 0.0 5.9

luationok Value 480 524 578 643 682

BV 2.3 1.7 1.5 1.6 1.5E 5.5 7.3 9.4 9.2 10.6


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Jyothy Lab

207

260 -

26% -

1M 1yr YTDbsolute 7.9 36.6 3.5l. to Nift 11.7 36.2 4.9

Current 2QFY14 1QFY14

omoters 66.7 63.7 63.7I 15.3 16.0 17.0I 8.6 9.8 9.1

hers 9.4 10.5 10.2

Financials Rs, Cr3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%

Revenue 297.44 306.1 -2.8% 233.3 27.5%EBITDA 42.7 40 7% 36.5 17%PAT 27.2 19.6 39% 16.9 61%EBITDA Margin 14.4% 13.1% 130bps 15.6% (12bps)PAT Margin 9.14% 6.40% 270bps 7.24% 180bps

16

verage Daily Volume3741



ock Performance

Home Care, which includes mosquito repellant Maxo and Exo scrubber, saw revenuesgrowth of 26% . The coils saw moderation due to a weak season. Others business,which include brands like Fa and Neem, saw revenue to Rs 4cr from negative Rs 0.32cr(3QFY13).

The Companys products are available through 2.9 mn outlets in India and expects thesub-stockist will increase by 20% from the current 2000 to 2400 by the end of FY14E.We believe the distribution restructuring would lead to generate sales and its presencein highly demanding categories would help to manage high margins and volumegrowth simultaneously. We maintain "BUY" view with a target price of Rs 260. At aCMP of Rs207, stock trades at 3.9x FY15E P/BV.

View and Valuation: Going forward, the company will focus on brand building withextension of current brands and continue to adapt to the continuous changes of consumers. Management is confident that these efforts will further strengthenbrands and establish better consumer connect.

hange from Previous

yr Forward P/B


51716fty 6074

For 3QFY14, Jyothy Lab registered better growth with 27.5% sales growth led by

stellar set of performance across all segments. Its synergy affect of the HenkelIntegration and entry into new geographies combined with rural, urban, modern andtraditional shops envisage its brilliant performance during the quarter. PAT grew by60.5% on YoY basis.We expect that companys new management and new strategy of product reachwould energize its growth story in near future. Hence, the management hasmaintained its guidance of achieving around 25% revenue growth and OPM of 14% -15% for FY14.Volume growth: Volume grew by 22% while 5% was price/product mix growth. Thedishwash and personal care grew higher versus overall volume growth while fabriccare and HI grew slower.Margin impacted due to higher Ad spend: Companys EBITDA margin declined 130bps(YoY) to 14.3% and improved 130bps sequentially. Company increased its RM cost from28.5% (3QFY13) to 29.5% and Ad spend from 6.9%(3QFY13) to 9.2%. While, PAT marginimproved by 180bps(YoY) and 270bps(QoQ) to 9.1%. Management expected to seeEBITDA margin at a range of 14-15% and Ad spends at 10-12%, which is in-line.However, they will spend little more on Ad spend in coming quarters but it will not bemore than 12%.Segments/ Brandwise Performance: In its bread and butter business detergent & soapsegment which includes brands like Ujala, Henko, Exo, Pril, Margo, Mr. White, grew by27.6%. Ujala fabric whitener continues to be the market leader with a market share of 72.5% by value. There was a strong over 25% growth in the dishwash segmentespecially Exo bars. Pril posted a modest growth.

kt Capital (Rs Cr)

"Efforts for stability"

MP

pside

sult update BUY

rget Price

Better numbers than expectation and hope to maintain healthy growth ahead;

evious Target Price

arket Data

221/140

SE Code 532926SE Symbol JYOTHYLABwk Range H/L

"BUY"31st Jan' 14



17/25


18/25

Jyothy Lab

) The company will continue to invest aggressively in expanding its share of revenueom non-South markets. Next year target is 40% should be from south and 60% from restsouth India. And finally, 70-30% in favour of rest of India.

ey takeaways from Conference call;The company has maintained its guidance of achieving around 22% - 25% revenue

owth.) EBITDA margin will be between 14-15% and ad spends will be 10-12% which is in-lined they will spend little more ad spend in coming quarters but it will not be more than

%. For FY15, the company will re-launch Henko with a completely new positioning and

rmulation in Q1 FY15,) They will extend Margo brand in skin care category and planned several activities foraxo in FY15 including entry into low smoke coil.


nancials

Source: Com an /EastwindNarnolia Securities Ltd,

in Cr FY10 FY11 FY12 FY13 FY14E FY15Eles 596.32 626.39 912.99 1105.96 1373.60 1703.27

w Materials Cost 317.19 320.27 502.99 584.35 714.27 885.70mployee Cost 75.38 81.31 113.67 130.48 151.10 178.84dvertisement and Publicity 26.62 33.99 41.79 95.54 137.36 153.29her expenses 85.31 111.52 170.46 165.92 185.44 238.46tal expenses 504.5 547.09 828.91 976.29 1188.17 1456.29

BITDA 91.82 79.3 84.08 129.67 185.44 246.97preciation 12.36 13.03 24.65 22.43 26.57 32.95her Income 17.8 16.91 22.73 5.202 54.94 68.13

BIT 79.46 66.27 59.43 107.24 158.87 214.03erest Cost 1.7 1.99 23.83 68.22 63.25 49.25

ofi t (+)/Loss (-) Before Taxes 95.56 81.19 58.33 44.222 150.56 232.91ovision for Taxes 21.48 15.43 19.94 -14.87 28.61 44.25et Profit (+)/Loss (-) 74.08 65.76 38.39 59.092 121.95 188.66owth-% (YoY)les 65.3% 5.0% 45.8% 21.1% 24.2% 24.0%

BITDA 88.3% -13.6% 6.0% 54.2% 43.0% 33.2%AT 93.0% -11.2% -41.6% 53.9% 106.4% 54.7%

penses on Sales-%M Cost 53.2% 51.1% 55.1% 52.8% 52.0% 52.0%mployee Cost 12.6% 13.0% 12.5% 11.8% 11.0% 10.5%d spend 4.5% 5.4% 4.6% 8.6% 10.0% 9.0%her expenses 14.3% 17.8% 18.7% 15.0% 13.5% 14.0%x rate 22.5% 19.0% 34.2% -33.6% 19.0% 19.0%argin-%

BITDA 15.4% 12.7% 9.2% 11.7% 13.5% 14.5%BIT 13.3% 10.6% 6.5% 9.7% 11.6% 12.6%AT 12.4% 10.5% 4.2% 5.3% 8.9% 11.1%luation:

MP 169.85 219.8 155 175 207 207o of Share 7.3 8.1 16.1 16 16 16W 387.8 631.1 612.4 638.6 713.4 854.9S 10.1 8.1 2.4 3.7 7.6 11.8

VPS 53.1 77.9 38.0 39.9 44.6 53.4E-% 19.1% 10.4% 6.3% 9.3% 17.1% 22.1%

BV 3.2 2.8 4.1 4.4 4.6 3.9E 16.7 27.1 65.0 47.4 27.2 17.6


19/25

Hindustan Unilever

1M 1yr YTDbsolute 0.23 21.18 21.63l. to Nifty 3.2 20.33 19.85

Current 2QFY14 1QFY14

omoters 67.25 67.25 52.5I 14.83 15.33 20.23I 3.35 3.03 7.13

hers 14.57 14.39 20.16

Financials3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%

Revenue 7037.78 6747.2 4.3 6433.89 9.4EBITDA 1226.8 1085.31 13.0 1088.99 12.7PAT 1043.7 888.3 17.5 877.08 19.0EBITDA Margin 17.4% 16.1% 130bps 16.9% 50bpsPAT Margin 14.8% 13.2% 160bps 13.6% 120bps

500696We do not see any sign of improvement in volume growth in near future. However,revival in macro economy and resultant improvement in consumer sentiment wouldplay a key triggers for improvement in the volume growth in near term.

BV (x) -1year forward

Rs, Cro



View and Valuation: To continue to deliver strong growth, HUL is likely to continue withaggressive marketing and offer discounts/price cuts, especially in soaps, detergents andpersonal products and the company fights off competition rivals domestic as well asmulti-national. we are confident of the medium to long-term growth prospects of the

FMCG sector. At a CMP of Rs 570, stock trades at 29x FY15E P/BV. We have a NEUTRALview on the stock.

Product Strategy: The company has launched premium range of hair care products -Toni and Guy. This brands are sold through select top end outlets. However, itsoperating metrics was challenging given the volatile cost environment, led by the INRdepreciation, and heightened competitive intensity during the quarter.

kt Capital (Rs Cr) Steady margin growth: During the quarter, EBITDA margin inched up by 50bps(YoY) to17% because of stable INR movement against the USD and stable set of RM cost thansame quarter previous year. PAT margin also improved slightly to 17.4% on YoY. During

the quarter, company has been efficient to manage cost inflation through judiciouspricing and unwinding of promotions.


123161verage Daily Volume 2006314fty 6153

"wait for triggers"

MP 570rget Price -

Delivered stable set of numbers, still expecting key challenges ahead;For 3QFY14, despite slow discretionary demand HUL reported inline set of numbers

with 8.5% (YoY) sales growth led by 4% (YOY) volume growth. PAT grew by 19%(YoY).

sult update NEUTRAL

evious Target Price -Increasing competitive intensity, slow consumer demand and expectation of hike ininput cost in near term could be major concern for HUL. We expect that these concernscould play out over the next couple of quarters.

Volume growth: Volume growth for the quarter was at 4%, which is slightly lower thanthe 5% registered in previous several quarters due to further deterioration in marketgrowth rates and higher component of price versus volume in its core soaps anddetergents category.Segment-wise performance: (a)Soaps and Detergents delivered a healthy performance.The company witnessed a price led growth in this segment during the quarter. Wheelwas re-launched with superior formulation at quarter end. It has grown well comparedto preceding last 2 quarters. (b)Household Care delivered another strong quarter withboth Vim and Domex growing in double digits. (3)On Personal Products, Skin Care

performing well with a revenue growth in mid teens in a slowing market and in spite of the delay in the onset of the winter season.

wk Range H/L 725/432SE Symbol HINDUNILVR

arket DataSE Code

pside -hange from Previous -

ock Performance-%

"NEUTRAL"30th Jan' 14



20/25



Hindustan Unilever

lume and Pricing growth -%(YoY)


les (cr) and Growth(YoY)-%

argin-%

g


Volume growth for the quarter was at 4%,which is slightly lower than the 5% registered

in previous several quarters

EBITDA margin inched up by 50bps(YoY) to

17% because of stable INR movement againstthe USD and stable set of RM cost than same

quarter previous year.

EBITDA Margin up by 90bps to 13.3% fromSoap and Detergent, flat margin growth on

Personal Products.



3QFY13 2QFY14 3QFY14 3QFY13 2QFY14 3QFY14aps & Detergents 47.0% 19.9% 6.4% 7.1% 12.4% 14.0% 13.3%rsonal Products 31.9% 8.5% 11.8% 12.4% 28.3% 22.8% 28.6%verages 11.8% 18.2% 16.1% 7.2% 17.7% 17.0% 16.2%ckaged Foods 5.2% 7.7% 8.7% 12.9% -0.7% 3.3% -3.6%hers 3.8% -33.4% 5.7% -4.7% -6.4% 1.5% -4.9%

Margin-%Revenue Growth-%% of Salesgments


21/25


22/25

V- Escorts Ltd.

MP 125

rget Price 175evious 105side 40%ange from 67%

E Code 500495E Symbol

wk Range 48/96kt Capital 1,505erage Daily 225,953

fty 6,120

1M 1yr YTDsolute (11.3) 62.7 147.9

l. to Nifty (8.2) 61.0 140.2

3QFY14 2QFY14 1QFY14omoter's 42.0 42.0 42.0's 9.4 12.3 12.1

I's 2.1 4.7 5.4hers's 46.5 41.0 40.6

"Out Performer."

ESCORTS


ock Performance-%

sult update

arket Data

In 5QFY13 the company saw revenue growth of 12.8% to Rs 1159.6 crore. This result wasmirrors the pent-up demand for tractor business, partly driven by improved crop cultivationand production and revival in farm equipment segment. In current quarter 84% of Escorrevenues come from the sale of tractors, and it saw volumes growth of 11.3% to 19047 in itstractor sales. Company construction equipment business witnessed a flattish of 1.4% to Rs.130.9 crore and stands at 11% of company total revenue during this quarter. Lower inventorylevels typical of this quarter, where sales are better than in the preceding quarter, translatedinto a 6.1% operating margin, up 100 basis points from the year-ago period. Further, Amarginal price hike in the latter part of the December quarter also propped up realizations.More importantly, the improved financial position in the farm segment eased cash flows andworking capital cycles, which in turn trimmed interest costs.

Buy

Industry players expects the year 2013-14 to end with volume growth of around 15%After an all time high sales in Oct 2013, where the industry saw a volume growth of 28.8% YoY,Nov'13 volume growth was expected on lower side. While in Dec'13, the industry came backstrongly with a 21.1% growth. In April-Dec'13 period, the industry saw a healthy 23.8% growth involume. So while high growth is expected to tilt down in lean season, overall, the industry as awhole is still expected to end the year with a volume growth of about 15% for 2013-14. Keymarkets that supported the growth in FY'14 are Andhra Pradesh, Madhya Pradesh, Rajasthan andChhattisgarh. Some of these markets grew by more than 30% YoY. All macroeconomic factorssuch as crop prices, productivity, soil moisture, government focus on rural spending etc arefavorin the farm e ui ment business.


"Buy"30th Jan' 14



23/25

netration to high HP Tractors

mpany Outlook e stock is currently trading at 6.5x FY14E EPS with a negative bias in case of construction equipment

gment due to adverse macroeconomic conditions . At current price of Rs. 117, the stock is trading atE of 7.1 x for FY13E and 6.5 x the FY14E. Escorts could post EPS of Rs. 12.13 for FY14E and Rs. 12.98

FY15E. An increase in volumes is an indication of healthy demand. Tractor sales revival has enabled company to register strong result. Escorts EBITDA margin and bottom-line exceeded our

pectations. Going forward, we remain positive on the companys growth prospects particularly inMP segment. We expect demand to improve further in FY2014E with the economic recovery.wever, we remain cautious with regards to growth in Construction Equipment segment in near-to-dium. Thus, We revise our estimates upwards to factor in the strong CY13 tractor volumerformance. We therefore revised our rating on the stock from "Reduce" to "Buy" and advised tor investors to enter at current level with Revised price target of Rs. 175

Escorts Ltd.


corts management aims to improve tractor margins from the current ~10% to 15% over the next 1-2ars led by change in focus to higher HP tractors and by cost rationalization measures. Higher tractorrgins would take Escorts' company level EBITDA margins from ~6% to ~10%, as tractor segment

ntributes 80% to the company's overall sales. Moreover, the management's strategy to focus onher HP tractors and increase presence in Southern markets will lead to faster-than-market growth.

tlook on Industryspite being an agricultural nation, Tractors penetration in India is about 5% of total cultivabled. Going forward, we expect deeper penetration of Tractors to happen which will continue tove strong demand for the sector. The growth in farm incomes will fuel the need for furtherchanization, which will tend to accelerate as social welfare programs, urbanization andernative occupations move farm labor to other sectors. So the demand for higher HP tractorsl be the future growth within the sector. The proportion of higher power (greater than 50 HP+)

gment has shown increase in total industry volume share by 380 bps from 12.6% in FY'08 toout 18% in FY'13. For tractor industry more than festive season it is the monsoons that matters

ot. The onset of positive sentiments because of monsoons, the reservoirs are full, the kharif cropwing is more than 1,000 lakh hectors which is almost 6 percent up vis--vis last year. The pricesthe crops declared by the government are pretty good and on top of it there are host of anciers who are financing the tractors and funds are available to prospective buyers and that iso leading to growth.



24/25


25/25

N arno li a Securitie s Ltd

402, 4th floor 7/ 1, Lord s Sinh a Road Kolkat a 700071, Ph033-32011233 Toll Free no : 1-800-345-4000

ema il: resear ch@nar nolia.com ,website : www.narnolia.com

Risk Disclosure & Disclaimer: This report/message is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxationadvice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting anyaction based upon it. This report/message is not for public distribution and has beenfurnished to you solely for your information and should not be reproduced orredistributed to any other person in any from. The report/message is based upon publiclyavailable information, findings of our research wing East wind & information that weconsider reliable, but we do not represent that it is accurate or complete and we do not

provide any express or implied warranty of any kind, and also these are subject to changewithout notice. The recipients of this report should rely on their own investigations,should use their own judgment for taking any investment decisions keeping in mind thatpast performance is not necessarily a guide to future performance & that the the value of any investment or income are subject to market and other risks. Further it will be safe toassume that NSL and /or its Group or associate Companies, their Directors, affiliatesand/or employees may have interests/ positions, financial or otherwise, individually orotherwise in the recommended/mentioned securities/mutual funds/ model funds andother investment products which may be added or disposed including & other mentionedin this report/message.

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