investment funds advisory today- buy stock of ultratech cement ltd, db corp and infosys
TRANSCRIPT
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8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
1/25
"BUY" 14th Jan 2014
In view of upcoming general election, we expect government ad spending to go up substantially. Being one of the biggest player, company wi
benefit from this. Considering its long-term growth story with favorable earning scenario and leadership position in key market, we are positiv
on the stock. We initiate BUY view on the stock with the target price of Rs 340. At a CMP of Rs 305, stock trades at 4.3x of FY15E P/BV
............................................... ( Page : 5-6)
UltraTech Cement Ltd : "BUY" 14th Jan 2014
We are expecting 8%-15% Sales growth with ~19% ROE in FY15E.We expect cement demand to pick up from 2HFY14 onwards driven b
governments pre-election spending as well as on account of rural demand pick post the good monsoon witnessed this year. UTCL is a large
cement player in India and we expect it to maintain or increase the same through timely commissioning of capacities, which are expect to come
on stream by FY15E.We value the stock and arrive at the target price of Rs 1846. As from the current level the upside is very limited (10%), so w
recommend investors to "Buy" the stock at lower level dips to get a decent returns over a time horizon of 12-18 month
................................................. ( Page :2-4)
Zensar Tech :"Better growth trajectory" "BUY" 14th Jan 2014
The deal booking and pipeline is good and expects to perform well going forward. It expects double digit growth in the Enterprise Service
business for the FY15E on the back of healthy pipeline. Also, it anticipates good growth from the IMS for the FY'15E. Considering healthy orde
pipeline and its earning visibility in near future, we maintain BUYview on the stock and we revise our target price from Rs 400 to Rs 440. At
CMP of Rs 412, stock trades at 7.2x FY14E EPS . ............................................. ( Page : 7-8)
14th Jan, 201
Edition : 183
IEA-Equity
Strategy
GAIL : "Neutral" 10th Jan 2014
INDUSIND BANK "Neutral" 13th Jan 2014
Despite of reported higher than expected profit we have neutral view on the stock owing to shifting of loan mix from consumer finance to
corporate loan which will lead to margin compression and deterioration in asset quality as per our view. Corporate loans generally are big tick
size in nature and with slowing of economy there are higher chances of these loan slip into NPA than other loan. Moreover retail loans are hig
yield in nature than corporate loan. At current price, we have neutral view on the stock due to trading almost near to our valuation multiple an
anticipating margin compression and higher slippage......................... ( Page : 13-18)
Infosys : "On the way of excitement" "BUY" 13th Jan 2014
Infosys largely reported inline set of sales numbers and beats the street on margin front, In USD term, Sales grew by 1.65%(QoQ) and 0.5%(QoQ
in INR term, led by 0.7% (QoQ) volume growth and 0.7%(QoQ) pricing growth. At a CMP of Rs 3549, it trades at 16.3x FY15E At a CMP of R
3549, it trades at 16.3x FY15E earnings. We retain ourBUYview on the stock with a target price of target price of Rs 3910 (revised from 3620
....................................... ( Page : 9-12)
DB Corp :"On strong footing"
Company registered a turnover of Rs. 26902.25 Cr, up by 19% in H1FY14 compared to corresponding previous year period. There was fall o
10% in operating profits of the company to Rs 2971.72 Cr for H1FY14. The Other income was down 8% to Rs 279.6 Cr while Interest cost gre
99% to Rs 169.36 Cr. .......................................... ( Page : 22-24)
Private Bank Result Preview 3QFY14 : 13th Jan 2014
Broadly banking indices outperform Nifty by 6% in third quarter and most of banking stocks are trading at attractive valuation. Despite of, w
have caution view on account of slowdown in economy, high interest rate and inflationary pressure. High inflation would be risk for th
economy going forward. Any rise in inflation would result of rise in interest rate by RBI in its third quarter monetary policy review on 28t
Jan.2014 which would be negative for banking industry. Most of banking stocks are expected to report moderate revenue and profit growt
owing to multiple headwinds. In private sector banking universe we like HDFC Bank, ICICI bank and DCB. ............................................. ( Page
19-21)
Narnolia Securities Ltd,
India Equity Analytics aliy Fundamental Report on Indian Equities
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8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
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UltraTech Cement Ltd.
1675
1846
187510%
-2%
532538
45942
18377
6272
1M 1yr YTD
solute -7.3 -14.8 -10.2
l. to Nifty -9.0 -19.9 -14.3
2QFY14 1QFY14 4QFY13
omoters 62.0 62.0 62.0
20.7 20.7 20.6
4.8 4.6 4.6
hers 12.6 12.7 12.7
Financials : Q2FY14 Y-o-Y % Q-o-Q % Q2FY13 Q1FY1
Net Revenue 4522 -4.3 -9.2 4727 498
EBITDA 679 -34.4 -36.7 1035 107Depriciation 257 10.8 2.0 232 25
Interest Cost 89 48.3 34.8 60 6
Tax 107 -54.1 -56.7 233 24
PAT 264 -52.0 -60.8 550 67(In Cr
side
ange from Previous
MP
Struggle for beter Manufacturing : Financial performance impacted by lower selling price an
subdued demand. The demand remained sluggish due to prolonged monsoon across the country
resulted in reduced offtake by infrastructure and real estate companies. During the quart
,benefit of lower imported coal prices was get cancelled due to sharp depreciation of the rupe
against the dollar. Logistics and raw material costs continued to rise given the high diesel price
However, optimisation of fuel mix i.e use of pet coke helped to lower power and fuel costs to a
Please refer to the Disclaimers at the end of this Report.
ock Performance-%
are Holding Pattern-%
yr Forward P/B
Source - Comapany/EastWind Research
Capacity Addition : Meanwhile, UltraTech Cement agreed to purchase debt-laden Jaiprakas
Associates' Gujarat cement unit having a capacity of 4.8 million tonnes for Rs 3,800 crore. Gujara
cement unit comprises of an integrated cement unit at Sewagram and grinding unit at Wankbor
With this acquisition of 4.8 million tonnes per annum, the company's current capacity increases t
59 million tonnes per annum. The transaction implies a valuation of $124 per tonne of cemen
which is lower than the existing benchmark of around $140 per tonne, and is a positive fo
UltraTech.Currently,UltraTechsdebt is around Rs.4,500 crore. After the transaction is completed
the companysnet debt-to-equity ratio will increase to around 0.45 from 0.27. Debt will increas
to 2 times EBIDTA. With projects underway it will stand raised to 70 million tonnes by 2015.
rget Price
evious Target Price
ompany Update Buy
arket Data
The outlook continues to remain challenging. Demand growth in FY14 is likely to be around 5 %
though in the long term growth is likely to be over 8 % - 15% . Government initiatives t
expedite large infrastructure projects have yielded little so far and this is putting pressure o
cement makers, especially those with debt that has become expensive to service due to higinterest rates.We believe that UltraTech will maintain its healthy debt protection metrics
supported by its earnings and cash flows.At present Ultratech is running at 79% of its capacit
utilization.The utilization levels will decline due to stabilization of supply from new capacitie
owing to insufficient demand in the domestic market. UltraTech plans to strengthen its logistic
infrastructure and increase its captive power plant capacity, which will help to reduce it
operational cost.We value the stock at the target price of Rs 1846. From the current level th
upside is very limited (10%), so we recommend investors to "Buy" the stock at dips to get
erage Daily Volume (Nos.)
E Code
ULTRACEMCOE Symbol
wk Range H/L
kt Capital (Rs Crores)
2066/1404 Q2FY14 Update :Ultratech Cement reported a 52 per cent dip in net profit for the July-Septembe
quarter at Rs 264. Net sales were down 4 per cent at Rs 4,502 crore .Cement and clinker sale
remained unchanged compared with last year at 9.1 million tonnes while white cement and wal
care putty sales were up 15 per cent at 2.75 lakh tonnes (2.39 lakh tonnes). Despite flat cemen
sales, overall cost increased 4 per cent to Rs 4,100 crore (Rs 3,927 crore) on the back of hig
logistics cost.Overal realisation during the quarter was down 5 per cent at Rs 239 per 50 kg ba
compared with Rs 252 in last year.The companyslong-term borrowings stood lower at Rs 3,84
crore (Rs 3,893 crore), while deferred tax liabilities increased 9 per cent to Rs 2,073 crore (R
1,906 crore). EBITDA slipped 34.3 percent on yearly basis to Rs 660 crore and operating prof
margin declined 670 basis points Y-o-Y to 14.7 percent in the quarter.
fty
"BUY"14th Jan' 14
Narnolia Securities Ltd,
Mar-05
Oct-05
May-06
Dec-06
Jul-07
Feb-08
Sep-08
Apr-09
Nov-09
Jun-10
Jan-11
Aug-11
Mar-12
Oct-12
May-13
Price 1x
2x 3x
4x 5x
6x 7x
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8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
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UT LOOK :
FY11 FY12 FY13 FY14E
13798 19232 21319 21267
154 371 304 363
13952 19603 21623 21630
3280 4639 4646 4607
2881 3741 4243 4586
2696 4194 4839 3791
813 963 1023 1110
292 256 252 325
384 948 1179 7751367 2403 2678 1934
13 19 18 11
2.9 3.2 3.4 2.9
Source - Comapany/EastWind Research
UltraTech Cement Ltd.
L PERFORMANCE
et Revenue from Operation
her Income
tratech's EBIDTA growth has been consistently beats the industry average as well as its peers
C and Abuja cements. In last few years it also led the industry and its peers on PAT growth .It
ats its peers on account of cement realization and volume sales. Additionally Ultratech has
o been increasing the usage of low cost pet coke in its fuel mix there by moderating its cost
essure. Strong Brand premium and operational efficiency drives its industry leading
ofitability . With the overall slow down in demand, Ultratech will continue to loose its market
are in FY14E on capacity delay. Hence, We are expecting 8%-15% Sales growth with ~19% ROE
FY15E.We expect cement demand to pick up from 2HFY14 onwards driven by governments
e-election spending as well as on account of rural demand pick post the good monsoon
tnessed this year. UTCL is a largest cement player in India and we expect it to maintain or
crease the same through timely commissioning of capacities, which are expect to come on
eam by FY15E.We value the stock and arrive at the target price of Rs 1846. As from the
rrent level the upside is very limited (10%), so we recommend investors to "Buy" the stock
lower level dips to get a decent returns over a time horizon of 12-18 months.
tal Income
ompany Description :, -
rth being the largest, contributing 33 per cent to its sales, followed by west (31 per cent),
uth (20 per cent), and east (16 per cent) - thereby insulating it from downtrends in any single
gion. The company has a strong focus on improving operating efficiencies; it has 529
egawatts (MW) of captive power generation capacity, which meets 80 per cent of its power
quirement and also maintains power consumption norms in line with the other players in the
dustry.
n The Expansion Front : Setting up a cement plant with 5.5 MMTPA cement and a 75 mega
att (MW) captive power plant, with an investment of Rs 2,500 crore. The company hasceived approval from Expert Appraisal Committee (EAC), under the Ministry of Environment,
r the proposed facility. The cement plant will be based on the dry process technology for
ment manufacturing with pre-heater and pre-calciner technology and the coal requirement for
e project will be met by importing it from Indonesia and South Africa, as an interim basis.
tcoke will be procured from Reliance Industries Limited, Jamnagar.
Source - Comapany/EastWind Research
AT
OE%
B
wer and fuel
eight and forwarding
ITDA
epriciation
terest Cost
x
Narnolia Securities Ltd,
(20
-
20.0
40.0
60.0
80.0
100
120
140
160
-
1,000
2,000
3,000
4,000
5,000
6,000
Q1FY11
Q2FY11
Q3FY11
Q4FY11
Q1FY12
Q2FY12
Q3FY12
Q4FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Q3FY14E
Q4FY14E
Net Revenue from Operation
Sales Growth
0
10
20
30
40
50
60
FY09 FY10 FY11 FY12 FY13
Capacity Of Cement Production (in MT)
Cement Production
Cement Capacity Utilisation in %
14 15
10
12 1
19
22
13
161
24
27
19
212
-
5
10
15
20
25
30
FY09 FY10 FY11 FY12 FY13
NPM % OPM % EBITDA %
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8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
4/25
FY10 FY11 FY12 FY13
124 274 274 274
4495 10373 12550 14955
4620 10647 12824 15230
857 3295 4843 5169750 727 705 1227
32 113 121 135
683 1830 2207 2338
133 473 709 949
8375 21630 24904 29590
6 39 40 62
4953 12265 12729 14254
260 760 1940 3601
146 583 1544 1066
827 2094 2198 2541
210 825 1089 1376
112 190 214 185
219 873 1041 1048
8375 21630 24904 29590
FY10 FY11 FY12 FY13
3.1 2.9 3.2 3.4
88.1 49.9 87.7 97.7
2.9 6.0 5.7 6.5
9.5 13.3 11.5 11.0
1.2 1.5 1.1 1.2
FY10 FY11 FY12 FY13
1673 2195 3482 4122
-79 -197 -96 -4811593 1998 3385 3641
-843 -2240 -3050 -4407
-740 248 -353 715
10 6 -18 -51
et Cash From Operation
sh From Investment
sh from Finance
et Cash Flow during year
sh from Operation
anges In Working Capital
S PERFORMANCE
rading At :
ATIOS
ASH FLOWS
pital work-in-progress
ade payables
ort-term provisions
tal liabilities
tangibles
ngible assets
Source - Comapany/EastWind Research
ng-term loans and advances
ventories
ade receivables
sh and bank balances
UltraTech Cement Ltd.
are capital
serve & Surplus
tal equity
ng-term borrowingsort-term borrowings
ng-term provisions
editors to Turnover%
ventories to Turnover%
ort-term loans and advances
tal Assets
B
S
ebtor to Turnover%
Narnolia Securities Ltd,
0
50 0
1000
1500
2000
2500
0
000
000000
000
000
000
000
NIFTY ULTRACEMCO
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8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
5/25
DB Corp
302
340
-
13%
-
1M 1yr YTD
bsolute 11.5 25.0 -
l. to Nift 14.0 21.6 -
Current 2QFY14 1QFY14
omoters 74.96 74.97 75.0
17.7 16.5 14.7
I 2.95 4.00 5.34
hers 4.36 4.57 5.02
Financials Rs, Cr
2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%
Revenue 437.98 449.4 -2.5% 378.37 15.8%
EBITDA 112.45 135.38 -17% 81.36 38%
PAT 63.24 77.71 -19% 45.41 39%
EBITDA Margin 25.7% 30.1% (440 bps) 21.5% 420 bp
PAT Margin 14.4% 17.3% (290 bps) 12.00% 220 bp
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
ock Performance
wk Range H/L
ange from Previous
ock Performace with Nifty
are Holding Pattern-%
25750
fty 6273
Recently, Print media companies decided to hike its cover prices selectively in
mature market to maintain its margin due to increase in news print cost. Goi
forward, improving ad revenue, cost control measures and expanding into new ar
would energize its revenue visibility in near future.
About the Company:DB Corp, the publisher of Dainik Bhaskar, is a leading publishi
house with its highest readership in the country. It publishes 8 newspapers,
newspaper editions and around 200 sub-editions in 4 languages (Hindi, Gujarati, Engl
and most recently Marathi) in 13 Indian states.
Earning Preview (3QFY14E):DB Corp is like to report 19% (YoY) revenue growth to 366cr led by 18% of revenue growth and 15% of subscription revenue. PAT is expect
to grow by 17% (YoY) to Rs 85Cr. We expect to see EBITDA margin up by 100-150b
(YoY) to 28-28.5% because of benign RM cost.
Key facts to watch out: Commentary on response of new editions (Patna, Akola a
Amravati), new expansion plan, trend of ad revenue from 4 states poll and fro
governments.
Fit well on strong footing: Management is very confident of achieving 17% to 20
growth rate in upcoming quarter. The Company is following principle of launching
least 2 editions in a year and enter into at least one 1 market in every 2 years. Compa
launched Akola edition in July and Amravati edition in August. Recently company h
launched its Patna edition. According to the company, the initial response in Biharquite encouraging and as per booking, record of new subscription makes it no.1 in t
first day of its launch.
Expanding into new exposure: The company has interest in radio under the MY F
brand (94.3), operating in 17 FM radio stations across mini metros and small towns. T
company also has exposure to new media with internet and short messaging servi
(SMS) portals.
View and Valuation: In view of upcoming general election, we expect government
spending to go up substantially. Being one of the biggest player, company will bene
from this. Considering its long-term growth story with favorable earning scenario a
leadership position in key market, we are positive on the stock. We initiateBUY vie
on the stock with the target price of Rs 340. At a CMP of Rs 305, stock trades at 4.3xFY15E P/BV.
"On strong footing"
MP
pside
ompany update BUY
rget Price
Festive season coupled with the recently held state assembly elections in 4 stat
(Rajasthan, M.P, Chhattisgarh, and Delhi) will likely drive revenue growth for pr
media companies. Across the print media players, DB Corp will be one of the stro
beneficiaries for prospect of revenue generation. These 4 states contribute almost 60
of its revenue.
verage Daily Volume
5502
evious Target Price
arket Data
318.65/210
E Code 533151
SE Symbol DBCORP
kt Capital (Rs Cr)
"BUY"14th Jan' 14
Narnolia Securities Ltd,
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8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
6/25
DB Corp
Please refer to the Disclaimers at the end of this Report.
nancials
Source: Com an /Eastwi
evenue Geography-wise Revenue Segments
Narnolia Securities Ltd,
s,cr FY10 FY11 FY12 FY13 FY14E FY15E
ales 1062.1 1265.18 1451.51 1592.32 1865.97 2182.15
M Cost 327.87 383.91 508.04 544.54 653.09 763.75
WIP -0.0016 -0.06 -0.04 0.03 0.04 0.04
mployee Cost 131.81 184.56 242.93 279.5 335.88 403.70
d Spend 12.98 12.52 15.04 17.21 22.39 28.37
vent Expenses 11.83 16.02 15.04 12.08 18.66 21.82
onsumption of store & spare 51.49 58.7 83.62 94.81 115.69 150.57
istribution expenses 22.81 21.28 24.34 28.01 33.59 41.46
ther expenses 161.24 185.2 216.06 234.07 279.90 329.51
otal expenses 720.0284 862.13 1105.03 1210.25 1459.2 1739.2
BITDA 342.0716 403.05 346.48 382.07 406.7 442.9
epreciation and Amortisation 37.83 43.28 50.57 58.06 64.6 75.6
ther Income 11.15 14.18 24.02 21.34 24.3 28.4
BIT 304.2416 359.77 295.91 324.01 342.1 367.4
nterest 35.69 15.3 9.23 7.99 8.0 5.1
BT 279.7016 358.65 310.7 337.36 358.4 390.7
ax Exp 105.72 99.97 98.32 113.18 120.2 131.1
AT 173.9816 258.68 212.38 224.18 238.2 259.6
rowth-% (YoY)
ales 10.5% 19.1% 14.7% 9.7% 17.2% 16.9%
BITDA 132.2% 17.8% -14.0% 10.3% 6.5% 8.9%
AT 265.4% 48.7% -17.9% 5.6% 6.2% 9.0%
xpenses on Sales-%
M Cost 30.9% 30.3% 35.0% 34.2% 32.0% 34.3%
mployee Cost 12.4% 14.6% 16.7% 17.6% 16.6% 17.0%
ther expenses 15.2% 14.6% 14.9% 14.7% 15.0% 15.1%
ax rate 10.0% 7.9% 6.8% 7.1% 6.4% 6.0%
Margin-%
BITDA 32.2% 31.9% 23.9% 24.0% 21.8% 20.3%
BIT 28.6% 28.4% 20.4% 20.3% 18.3% 16.8%
AT 16.4% 20.4% 14.6% 14.1% 12.8% 11.9%aluation:
MP 239.15 246.25 219.45 212.1 302.0 302.0
o of Share 18.15 18.3 18.3 18.33 18.3 18.3
W 648.7 828.87 927.08 1029.15 1160.1 1301.7
PS 9.59 14.14 11.61 12.23 12.99 14.16
VPS 35.74 45.29 50.66 56.15 63.29 71.02
oE-% 26.8% 31.2% 22.9% 21.8% 20.5% 19.9%
/BV 6.7 5.4 4.3 3.8 4.8 4.3
/E 24.9 17.4 18.9 17.3 23.2 21.3
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8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
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Zensar Tech
1M 1yr YTD Key Facts
solute 29.1 49 23.99
l. to Nifty 28.5 43.6 21.42
Current 1QFY14 4QFY13
omoters 48.27 48.35 48.36
11.99 11.68 10.75
0.96 1.26 1.28
hers 38.78 38.71 39.61
Financials2QFY14 1QFY13 (QoQ)-% 2QFY13 (YoY)-%
Revenue 599.7 533.5 12.4 545.05 10.0
EBITDA 102.54 74.1 38.4 81.05 26.5
PAT 70.6 60.9 15.9 32.17 119.5
EBITDA Margin 17.1% 13.9% 320bps 14.9% 220bp
PAT Margin 11.8% 11.4% 40bps 5.9% 590bp
Zensar is on the way to shut down few if its data centre in on site business, a
entering into new emerging space in Social networking, Mobility, Analytics and Clo
because of good demand. We expect that order pipeline could be healthier on t
back of good demand seen in these emerging areas.
3QFY14E earnings preview:Zensar Tech is likely to report 5-6% (QoQ) sales growth l
by healthy growth across all geographies and PAT growth could be seen at 4-5% (QoQ
We expect that EBITDA margin could be down by 100-150bps (QoQ) to 16%.
Key things to watch:Updates on new deal win, revenue traction from all geographiesinorganic initiatives.
424/181
E Code 504067
E Symbol ZENSARTECH
arket Data
ange from Previous
erage Daily Volume 20884
kt Capital (Rs Crores)
fty 6273
1800
year forward P/E
Rs, Cro
Please refer to the Disclaimers at the end of this Report.
10%
wk Range H/L
ock Performance
MP 412
rget Price 440
ompany update Buy Management expects good growth starting from 4QFY14E with its Infrastructu
Management (IM) business gaining momentum. The deal booking and pipeline is go
and expects to perform well going forward. It expects double-digit growth in t
Enterprise Services business for the FY15 on the back of healthy pipeline. In addition
anticipates good growth from the IMS for the FY'15.
evious Target Price
(Source: Company/Eastwi
Strong geographical footing:Given the order book Enterprise, business expects to gro
robustly going forward. It consciously slowed down in the Japan market as it is n
profitable and closed one account in Singapore as well. The Chosen markets to perfo
are the Middle East, China and Africa going forward.
Healthy order Pipeline:We are positive on the future prospects on back of the ord
bookings and pipeline. The recent measures like lean execution, improved efficienci
and best practices are targeted at improving the profitability profile of the company
FY14E. Recent Management comments also revealed favourable scenario of ord
booking.Inspirational revenue level of $1bn by FY16:The management has detailed the 4 foc
areas, which are expected to take Zensar to an inspirational revenue level of $1bn
FY16. They will expect to grow its existing US relationships and growing the RIM
business in European nation like UK, Germany and Benelux.
400
side 7%
View and Valuation:The deal booking and pipeline is good and expects to perform w
going forward. It expects double digit growth in the Enterprise Services business for t
FY15E on the back of healthy pipeline. Also, it anticipates good growth from the IMS f
the FY'15E.
Order pipeline continues to be stable at $ 200 mn mainly on the back of good dema
seen in Mobility, Cloud Computing and social networking side. Considering healt
order pipeline and its earning visibility in near future, we maintainBUY view on t
stock and we revise our target price from Rs 400 to Rs 440. At a CMP of Rs 412, sto
trades at 7.2x FY14E EPS.
are Holding Pattern-%
"BUY"14th Jan' 14
Narnolia Securities Ltd,
-
8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
8/25
Please refer to the Disclaimers at the end of this Report.
nancials;
Zensar Tech
ients/Headcounts Metrics;
(Source: Company/Eastwi
Narnolia Securities Ltd,
1mn+ 47 43 41 40 49 47
5mn+ 6 7 7 8 6 6
10mn+ 1 2 2 2 1 1
20mn+ 1 1 1 1 1 1
op 5 clients 35% 35% 35% 35% 37% 39%
op 10 clients 40% 42% 42% 43% 43% 46%
SO 69 59 56 55 66 61
nsite 69% 72% 70% 69% 68% 67%
ffshore 31% 28% 30% 31% 32% 33%
tilization (Including Trainees) 81% 82% 83% 82% 81% 80%
eadcount 7286 6825 6504 6508 6519 6657
umber of million dollar
ient Contribution to Business
ffort & Utilization
s, Cr FY10 FY11 FY12 FY13 FY14E FY15E
et Sales 497.08 562.56 700.15 2114.52 2403.19 3205.9ther Operating Income 0.00 15.03 12.57 13.95 16.82 22.44
otal income from operations (net) 497.08 577.59 712.72 2128.47 2420.01 3228.4
urchases of stock-in-trade 0.00 0.00 0.00 236.86 269.30 359.27
mployee Cost 393.17 343.12 411.36 1177.83 1258.40 1678.7
ther expenses 0.00 135.71 165.98 418.73 532.40 710.26
otal Expenses 393.17 478.83 577.34 1833.42 2060.11 2748.3
BITDA 103.91 98.76 135.38 295.05 359.90 480.13
epreciation 24.92 25.88 25.05 33.16 38.59 51.48
ther Income 8.15 14.20 27.91 8.66 72.60 80.71
xtra Ordinery Items 0.00 0.00 0.00 0.00 0.00 0.00
BIT 78.99 72.88 110.33 261.89 321.31 428.65
nterest Cost 0.55 0.85 1.03 9.95 9.61 7.69
BT 86.59 86.23 137.21 260.60 384.30 501.67
ax 2.43 -2.24 42.67 86.07 134.50 175.58
AT 84.16 88.47 94.54 174.53 249.79 326.08rowth-%
ales 17.8% 13.2% 24.5% 202.0% 13.7% 33.4%
BITDA 28.7% -5.0% 37.1% 117.9% 22.0% 33.4%
AT 38.9% 5.1% 6.9% 84.6% 43.1% 30.5%
Margin -%
BITDA 20.9% 17.6% 19.3% 14.0% 15.0% 15.0%
BIT 15.9% 13.0% 15.8% 12.4% 13.4% 13.4%
AT 16.9% 15.7% 13.5% 8.3% 10.4% 10.2%
xpenses on Sales-%
mployee Cost 79.1% 59.4% 57.7% 55.3% 52.4% 52.4%
ther expenses 0.0% 23.5% 23.3% 19.7% 11.2% 11.2%
ax rate 2.8% -2.6% 31.1% 33.0% 35.0% 35.0%
aluation
MP 272.10 157.85 180.00 248.58 412.00 412.00
o of Share 2.16 4.34 4.34 4.36 4.37 4.37
W 293.93 366.96 417.42 751.69 958.03 1238.1
PS 38.96 20.38 21.78 40.03 57.16 74.62
VPS 136.08 84.55 96.18 172.41 219.23 283.32
oE-% 28.6% 24.1% 22.6% 23.2% 26.1% 26.3%
ividen Payout ratio 16.4% 19.9% 37.3% 21.9% 17.4% 14.1%
/BV 2.00 1.87 1.87 1.44 1.88 1.45
/E 6.98 7.74 8.26 6.21 7.21 5.52
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8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
9/25
Infosys
1M 1yr YTD
solute 6.3 52.4 53.1
l. to Nifty 3.3 49.1 49.4
Current 1QFY14 4QFY13
omoters 15.94 16.04 16.04
39.93 39.55 40.52
16.16 18.28 17.51
hers 27.97 26.13 25.93
Financials3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 13026 12965 0.47 10424 25.0
EBITDA 3258.9 2836.9 14.88 2677 21.7
PAT 2874.9 2406.9 19.44 2369 21.4
EBITDA Margin 25.0% 21.9% 310bps 25.7% (70bps)
PAT Margin 22.1% 18.6% 350bps 22.7% (60bps)
arket Data
View and Valuation: Infosys seems to be on its way to rediscovering its past mojo w
revenue momentum kicking, and the NRN invisible hand in play. Furth
announcement of strategic acquisitions, better utilization of cash balances, better d
win, consistent client traction and revenue momentum would help the company
bridge the gap with rivals such as TCS.
Considering the revised guidance by management and its growth priority than marg
inching up strategy, we upgraded our EPS from Rs 181/208 to Rs 188/218 f
FY14E/15E. At a CMP of Rs 3549, it trades at 16.3x FY15E At a CMP of Rs 3549, it trad
at 16.3x FY15E earnings. We retain ourBUY view on the stock with a target price
target price of Rs 3910 (revised from 3620).
On an ongoing basis, Infosys will retain its revenue acceleration and margin expansio
also operating metrics will turn into greenery from hay. Upgradation of earni
guidance by management hinted to join the party to enjoy with 12-14% earnin
growth for FY14E like its bellwether.
Considering the strategy to build clients relation, execution of growth oriented pol
and combination of reduced onsite costs and higher utilization would be an optimis
growth story despite recent hiccups of top management exit.
Healthy Margin growth:During the quarter, its EBIT margin expanded by 310 bps (Qo
to 25%. The company's cost cutting measures are yielding the expected gains. This agais in line with what the market was expecting. During the December quarter, Infos
selling and marketing expenses declined by 13.3% compared to the second quart
Administrative expenses too have declined by 18.4% in dollar terms. Both these ha
helped improve operating margins.
Steady volume growth: The volume growth in the quarter was weak, 0.7% (Qo
growth with stable pricing growth of 0.7%(QoQ), but it is also weak for the group and f
Infosys. we expect it to be improve in the coming quarters.
Healthy deal pipeline:Overall, the company continues to show signs of recovery at t
operational level. The company has added 54 new clients in the quarter and added
clients where the deal size is over $100 million. This implies that client confidence
returning.
year forward P/E
Rs, Cro
Please refer to the Disclaimers at the end of this Report.
E Code 500209
E Symbol INFY
are Holding Pattern-%
Earning Guidance: Infosys upgrades its earning guidance from 6-10% to 9-10% to 11
12% for FY14E, now nearest to NASSCOM guidance (12-14%). Management is ve
confident to achieve the guidance figure and stated much focused on creating super
financial performance ahead.
1240448
fty 6171
wk Range H/L 35810/2190
kt Capital (Rs Crores)
ock Performance
erage Daily Volume
203790
"On the way of excitement"
MP 3549
rget Price 3910
Inl ine sales and beats the street on margin fro nt, upgraded earning gu idance;esult update BUY
Infosys largely reported inline set of sales numbers and beats the street on marg
front, In USD term, Sales grew by 1.65%(QoQ) and 0.5%(QoQ) in INR term, led by 0.7
(QoQ) volume growth and 0.7%(QoQ) pricing growth. However, the good news is th
the PAT grew by 21% because of cost rationalization, sequentially.
evious Target Price 3620
side 10%
ange from Previous 8%
"BUY"13th Jan' 14
Narnolia Securities Ltd,
-
8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
10/25
argin-%
n segmental front: Infosys has reported teen set of growth in all segments;
(Source: Company/Eastwind)
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
With 0.7% pricing growth, volum
growth was reported by 0.
growth(QoQ), impacted by seaso
wave.
On QoQ,Companys margin improved
entire segments .
olume and Pricing Growth (QoQ)-%
(Source: Company/Eastwind)
(Source: Company/Eastwind)
In USD term, Sales grew by 1.65%(Qo
in USD term and 0.5%(QoQ) in INR ter
led by 0.7% volume growth a
0.7%(QoQ) pricing growth. Mgt revis
revenue growth to 11.5%-12% for FY14
EBIT margin expanded by 310 bps (Qo
to 25%. Mgt expects to see margrowth in near term.
gmental Performance:
Infos s.
evenue growth in USD term-(QoQ)
Narnolia Securities Ltd,
QoQ YoY QoQ YoY
SI 33.5% 0.8% 24.2% 29.9% 340bps 80bps
anufacturing 22.8% -1.3% 31.3% 24.2% 340bps (50bps)
ergy&Utilities 19.1% -0.1% 16.4% 28.8% 30bps (130bps)
tail, Logis-&Life sc- 24.6% 2.1% 27.6% 27.52% 560bps (230bps)
Margin-%Sales contribution-%gments
Sales Growth-%Margin-%
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8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
11/25
ilization:
(Source: Company/Eastwind)
e Company's Utilization is likely to keep inching up, which could lead to margin
pansion for a couple of quarters and that is going to be a huge positive for Infosys as a
mpany.
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
We expect that Infys improv
utilization despite higher attriticompare to its nearest bellwethers
good sign for its future growth story.
eadcount Metrics: Its attrition increased to 18% fro
17.3%(2QFY14) on LTM basis, howev
on sequentially basis they have been a
to control its attrition. we hope that t
further salary hikes across the board w
bring down the attrition levels go
forward.
ents Concentration:
tal Clients and Clients Addition:
Infos s.
eography wise revenue contribution-
we expect that growth from Euro as w
as Europe would prove a milestone
the company ahead because of healt
demand environment and optimis
tempo of clients expanding.
(Source: Company/Eastwind)
n geographical front: During the quarter, company has reported 4% revenue growth
om Euro and RoW each, which contributes 25% and 13% of sales. While revenue from
S declined by 2%, it contributes 60% of Sales.
ents MetricsThe company has added 54 new clients
the quarter and added 15 clients whe
the deal size is over $100 million. T
implies that client confidence
returning.
Narnolia Securities Ltd,
ents Category 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
p clients 4.1% 4% 3.60% 3.6% 3.9% 4% 3.70%
p 5 clients 16.2% 16% 15% 14.7% 14.9% 15% 14%
p 10 clients 25.3% 25.40% 23.90% 24.0% 24.0% 24.5% 23.5%
ents, number 3QFY13 4QFY13 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
tive clients,nos 665 694 711 715 776 798 836 873 888
ew clients 49 52 51 39 89 56 66 68 54
mployee's 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
tal Employees (Cons-) 151,151 153,761 155,629 156,688 157,263 160,227 158404
et additions 1,157 2,610 1,868 1,059 575 2,964 -1823
terals hired 5,233 3,656 4,351 3,545 3,008 3,806 3,333
M Attrition (Stand-) 14.9% 15.0% 15.1% 16% 16.9% 17.3% 18.10%
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8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
12/25
Infos s.
ey facts from Management Interview;
Management upgraded its earning guidance for FY14E from 9-10% to 11.5-12%. This
idnace means the company only has to achieve flat growth in the fourth quarter to
eet the projection.
Please refer to the Disclaimers at the end of this Report.
With 85% of the companysrevenues coming from clients based in US and Europe, the
mpany should hope the current economic recovery in developed countries would help
revenues.
They are seeing confidence coming back from clients metrics. However, they expect
heir] budgets only remain stable from last year. Clients are still focused on cost.
The Company is looking to bring in about maximum 6,000 off-campus offers starting
te January early February, so there is a lot of activity going on that is bringing people in,
gaging and developing.
nancials
(Source: Company/Eastwi
Narnolia Securities Ltd,
Rs in Cr, FY10 FY11 FY12 FY13 FY14E FY15E
Sales, INR 22742 27501 33734 40352 50330 59631
Employee Cost 12085 14856 18340 22565 28185 33691
Other expenses 2792 3677 4671 6254 8556 10734
Total Expenses 14877 18533 23011 28819 36741 44425
EBITDA 7865 8968 10723 11533 13589 15206
Depreciation 905 854 928 1099 1371 1624
Other Income 982 1211 1904 2365 2567 3578
EBIT 7942 9325 11699 12799 14785 17160
nterest Cost 0 0 0 0 0 0
PBT 7942 9325 11699 12799 14785 17160
Tax 1681 2490 3367 3370 3992 4633
PAT 6261 6835 8332 9429 10793 12527
Growth-%
Sales 4.8% 20.9% 22.7% 19.6% 24.7% 18.5%
EBITDA 9.3% 14.0% 19.6% 7.6% 17.8% 11.9%
PAT 4.6% 9.2% 21.9% 13.2% 14.5% 16.1%
Margin -%
EBITDA 34.6% 32.6% 31.8% 28.6% 27.0% 25.5%
EBIT 34.9% 33.9% 34.7% 31.7% 29.4% 28.8%
PAT 27.5% 24.9% 24.7% 23.4% 21.4% 21.0%
Expenses on Sales-%
Employee Cost 53.1% 54.0% 54.4% 55.9% 56.0% 56.5%
Other expenses 12.3% 13.4% 13.8% 15.5% 17.0% 18.0%
Tax rate 21.2% 26.7% 28.8% 26.3% 27.0% 27.0%
Valuation
CMP 2615 2765 2865 2400 3549 3549
No of Share 57.4 57.4 57.4 57.4 57.4 57.4NW 23049.0 25976.0 31332.0 37994.0 45629.8 54797.5
EPS 109.1 119.0 145.1 164.2 188.0 218.2
BVPS 401.7 452.4 545.6 661.7 794.7 954.3
RoE-% 27.2% 26.3% 26.6% 24.8% 23.7% 22.9%
Dividen Payout ratio 25.1% 45.9% 24.0% 45.1% 23.0% 19.8%
P/BV 6.5 6.1 5.3 3.6 4.5 3.7
P/E 24.0 23.2 19.7 14.6 18.9 16.3
-
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INDUSIND BANK
402
428-
6
-
1M 1yr YTD
bsolute -9.2 -6.9 -6.9
el.to Nifty -7.0 -9.7 -9.7
Current 24QFY1 3QFY1
omoters 15.2 15.2 15.3
I 41.1 39.9 42.3
I 7.2 7.4 7.0hers 36.4 37.5 35.4
Financials Rs, Cr2011 2012 2013 2014E 2015E
NII 1376 1704 2233 2787 4053
Total Income 2090 2716 3596 4562 5827
PPP 1082 1373 1839 2452 2972
Net Profit 577 803 1061 1320 1633
EPS 12.4 17.2 20.3 25.3 31.1
hange from Previous( Rs)
DUSIND Bank Vs Nifty
hare Holding Pattern-%
7.88
fty 6171
Please refer to the Disclaimers at the end of this Report.
Despite of higher prof it we remain have neutral view on the stoc k ow ing
shif t in g of loan mix from retai l loan to cor porate bankin g. We anticipate tw
thing s-(a) margi n com press ion, (b) higher slipp age. Retail loan generally hahigh er yield in nature than corp orate loans. Corpo rate loan has big tick et siz
loans and in slowdown of economy, corporate loan emerges as bigge
slip page risk than other loans . At the curr ent pr ice of Rs.405, stoc k is tradin
at 2.4 tim es of one year forw ard boo k. We valu e ban k at Rs.428/share wh ic
would be 2.5 times of FY14Es book value.
Better than expected earnings led by higher loan growth and margin
esult update
pside
During quarter Indusind bank reported better than expected earnings largely due
higher loan growth and margin expansion. In 3QF14, bank reported NII growth
26.4% YoY supported higher yield on asset to 13.7% and margin expansion of
bps YoY. Other income grew by 35% YoY to Rs. 480 cr in which fee incomregistered growth of 30% and trading, forex and other reported 101% growth in Y
due to low base.
Declined cost to income ratio boost PPP growth
NEUTRAL
MP
evious Target Price
arket Data
Asset quality witnessed deterioration in sequential basis
During quarter bank witnessed deterioration in asset quality with GNPA and net NPin absolute term deteriorated by 14.7% QoQ and 51% QoQ respectively. Freslippages were 1.4% (annualized) as against 1.1% in last quarter. Bank made low
provisions against loan loss, as the result net NPA as the percentage of net loareached to 0.3% as against 0.2% in 2QFY14. Provision coverage ratio (witho
technical write off) declined to 73.6% from 80% in 2QFY14 but still above regulatory requirement of 70%.
(Source: Company/Eastwind)
arget Price
ock Performance
2wk Range H/L 561/318
SE Code 532187
SE Symbol
Operating leverage (Operating expenses to total asset) remained at elevated lev
but cost to income ratio declined on both front i.e. on sequential and yearly basis
well. During quarter bank reported employee cost growth of 22% and operating co
growth of 22% YoY to Rs.206 cr and Rs.563 cr respectively. Cost to income ra
improved by 80 bps sequentially and 280 bps yearly to 46.5%. This led p
provisioning profit growth of 37% YoY.
INDUSINDBK
verage Daily Volume
22400kt Capital (Rs Cr)
"NEUTRAL"13th Jan, 2014
Narnolia Securities Ltd,
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14/25
Please refer to the Disclaimers at the end of this Report.
etter than expected profit on the back of healthy core earnings, lower CI ratio and
wer provision
With the support of healthy core earnings, improvement in cost income ratio and lower
ovisions, net profit grew by 30% YoY to Rs. 347 cr as against our expectation of
s.303 cr largely due to higher than expected loan growth and operating leverage.
ealthy profit led ROA and ROE to 1.74% and 16.8% respectively.
argin expansion of 10 bps YoY to 3.7%
ank reported NIM expansion of 20 bps YoY to 3.7% largely due to improvement in loan
eld whereas cost of deposits remained flat. Going forward margin would be
mpressed due to banksstrategy to shift loan mix from consumer to corporate. Loan on
eld during quarter was 13.7% versus 13.5% in last quarter while cost of fund by and
rge stable at 10%.
oderate deposits growth due to muted current and term deposits growth
balance sheet front, bank reported moderate growth 10% YoY in deposits largely due
stagnant growth in current account and term deposits. Demand deposits grew by 4%
oY whereas saving deposits grew by 50% YoY. As a percentage of total deposits
emand deposits and saving deport were 15.7% and 16.5% versus 16.6% and 12.1% in
QFY13 respectively. CASA ratio was remained flat at 29.6% from 31.4% in 2QFY14 and
8.7% in 3QFY13. Term deposited reported growth of 4.7% YoY to Rs.382 bn.
oan growth higher than industry average and shifting of loan mix
oan reported 27.4% YoY growth above industry average of 20% despite of slowdown in
conomy. During quarter bank witnessed shifting of loan composition from consumer
ance division to corporate finance which would be result of margin compression and
eterioration asset quality. Consumer loan (which is generally high yielding in nature)omposition has changed to 47% of loan advance from 52% in 3QFY13 whereas
rporate banking division constitute 53% of loan. Corporate loans are generally in high
ket size and in slowdown of economy; there is high chances of such loan slip into NPA.
ut this quarter we note that bank is able to improve it yield in both front. Corporate yield
proved to 11.9% from 11.5% and retail loan improved to 15.6% from 15.5% in
quential basis.
INDUSIND BANK
Narnolia Securities Ltd,
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undamenatl Through Graph
INDUSIND BANK
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
NII profit led by higher loan growth a
margin expansion
Sequentail and yearly improvement of
ratio boosted PPP
Higher core earnings, improvement in CI ra
and lower provisions support profit growth
higher than expecattion
Narnolia Securities Ltd,
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16/25
aluation Band (1yr forward book value)
Loan growth higher than industry avera
and moderate growth in deposits ledmuted current deposits and term deposits
Margin expansion of 10 bps on account
increased in loan yiled and stable cost of fu
Trading at 1.5 times of one year forw
book which we believe fair looking at inds
headwinds and economy
Please refer to the Disclaimers at the end of this Report.
INDUSIND BANK
undamenatl Through Graph
Source: Eastwind/Company
Narnolia Securities Ltd,
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17/25
Please refer to the Disclaimers at the end of this Report.
INDUSIND BANK
uarterly Performance
Source: Eastwind/Company
Narnolia Securities Ltd,
arterly Result( Rs. Cr) 3QFY14 2QFY14 3QFY13 % YoY % QoQ
erest/discount on advances / bills 1739 1611 1455 19.5 7.9
come on investments 368 365 325 13.5 0.8
erest on balances with Reserve Bank of India 36 42 21 71.9 -12.9
hers 0 0 0 333.3 -13.3
tal Interest Income 2143 2019 1800 19.1 6.2
hers Income 480 417 356 35.0 15.2
tal Income 2624 2435 2156 21.7 7.7
erest Expended 1413 1319 1223 15.6 7.2
730 700 578 26.4 4.3
her Income 480 417 356 35.0 15.2
tal Income 1210 1117 934 29.6 8.4
mployee 206 202 168 22.1 1.9
her Expenses 357 327 293 21.9 9.3erating Expenses 563 529 461 22.0 6.5
P( Rs Cr) 647 588 472 37.1 10.1
ovisions 126 89 79 60.3 42.0
T 521 499 393 32.5 4.4
x 174 169 126 38.1 3.2
t Profit 347 330 267 29.8 5.0
lance Sheet data( Rs. Bn)
t Worth 8664 8313 7495 15.6 4.2
posits 56247 53058 51098 10.1 6.0
rrowings 14771 13995 6567 124.9 5.5
tal Liabilities 81799 77422 67896 20.5 5.7
vestments 20134 19413 17594 14.4 3.7
vances 52469 48968 42426 23.7 7.1
tal Assets 81799 77422 67896 20.5 5.7
set Quality
NPA 626 546 422 48.3 14.7
A 165 109 125 32.0 51.0
GNPA 1.2 1.1 1.0
NPA 0.3 0.2 0.3
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INDUSIND BANK
nancials & Assuptions
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
come Statement 2011 2012 2013 2014E 2015
terest Income 3589 5359 6983 8308 10419
terest Expense 2213 3655 4750 5521 6367
I 1376 1704 2233 2787 4053
hange (%)
on Interest Income 714 1012 1363 1775 1775
otal Income 2090 2716 3596 4562 5827
hange (%)
perating Expenses 1008 1343 1756 2110 2855
e Provision Profits 1082 1373 1839 2452 2972
hange (%)
ovisions 504 180 263 455 535
BT 577 1193 1576 1997 2437
AT 577 803 1061 1320 1633
hange (%)
alance Sheet 2011 2012 2013 2014E 2015E
eposits( Rs Cr) 34365 42362 54117 62234 74681
hange (%) 23 28 15 20
which CASA Dep 9331 11563 15867 20537 22404
hange (%) 24 37 29 9
orrowings( Rs Cr) 5525 8682 9460 15559 18670
vestments( Rs Cr) 13551 14572 19654 23338 28005
ans( Rs Cr) 26166 35064 44321 54071 67589
hange (%) 34 26 22 25
atio 2011 2012 2013 2014E 2015E
vg. Yield on loans 10.8 12.0 12.7 0.0 12.5
vg. Yield on Investments 5.4 7.4 6.5 6.6 6.5
vg. Cost of Deposit 5.3 7.3 8.8 8.9 8.5
vg. Cost of Borrowimgs 7.0 6.7 7.6 7.5 7.5
aluation 2011 2012 2013 2014E 2015E
ook Value 87 101 146 171 195
MP 264 321 405 405 405
BV 3.0 3.2 2.8 2.4 2.1
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Private Bank Result Preview 3QFY14
Revenue growth would be moderate owing to tepid loan growth
Performance of banking sector is likely to remain modest in 3QFY14E as most
private sector banks in our coverage are expected to reported muted net intere
income owing to tepid loan growth and stress in asset quality. However private sect
banks are expected to report stable asset quality on sequential basis as compare
PSBs. Loan loss provision are expected to remain high due to higher restructu
assets are in pipeline as per some of key bank management. We expect impairme
of asset in private sector banks are less and slippages are expected to remain sam
as in 2QFY14. We expect NII to grow by 23.6% YoY in our private banki
coverage universe. HDFC Bank and DCB are expected to report 34% and 22% Yo
in 3QFY14E led by higher than industry loan growth and stable NIM.
ock Performance During Quarter
Operating leverage high provision dent net profit
Profitability of private sector banks are expected to report 11% YoY on the back
loan loss provisions, MTM provisions, cost income ratio and lower core earning
HDFC bank and DCB are expected to report 23% YoY and 26% YoY growth in th3QFY14E while most of large and mid cap banks are expected to report muted pro
growth. With the flow of FCNR deposits, we expect deposits cost to come down fro
present level but most likely the bank get benefit from 4QFY14 and onwards.
Please refer to the Disclaimers at the end of this Report.
Asset quality pressure continue to persist
Asset quality pressure is likely to remain in 3QFY14E due to rising interest rate, hi
inflation and slower pace of economic growth. Gross slippages are expected to
elevated as per most of banker. We expect restructure asset in private sector ba
would be less as compare to PSBs. With the implementation of FRP (route throu
which loans lead to investment book), banks are expected to report lower le
restructure asset as against previous queerer. In worsen macroeconom
environment, we expect asset quality to remain at the level of 2QFY14.
fty Vs Bank Nifty during Quarter
oan (Rs tn) and YoY Gr(%)
Muted loan growth reported by system
In 2QFY14 banking industry experience loan growth of 18% YoY led by transfer
CP/CD borrowings to bank loans while in 3QFY14 loan growth has moderated
15% YoY (as on 13th Dec.2013) due to revival of bond and lower demand
corporate loan led by slowdown in economy. We expect loan growth of 15-20% Y
growth in private sector while DCB and HDFC bank are expected to grow
20%+YoY loan growth.
Deposits growth lead by flow of FCNR deposits
Deposits growth in the system registered 17% YoY growth as per RBI date (as
13th Dec.2013) due to flow of FCNR deposits through RBIs special concessi
window. As per RBI data total fund inflow through FCNR is the tune of US$ 26
which would help bank to keep cost of deposits low. But we expect bank would g
benefit from 4QFY14 and onwards. We expect lower cost of deposits of deposits
private sector banks largely due to strong franchise base network. HDFC bank a
ICICI bank which have CASA of 40%+ would be benefited more than other banks
term of low cost of fund. Through FCNR deposits we expect Yes Bank would
leader but actual benefit would come from next quarter.
Narnolia Securities Ltd,
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utlook
We expect Axis Bank to report 20% YoY loan growth and 12% YoY deposits growth.
ost Income ratio is expected to be 42% while loan loss provision was remain same at
quential basis. Profitability of bank would be muted on account of non improvement of
an yield.
CB
e expect loan and deposits growth of DCB would be higher than industry average.
ofitability would be grown on account of stable asset quality. We expect Cost to Income
tio at 66% and NIM are expected to compression by >10 bps on sequential basis. Key
onitor able would be CI ratio.
DFC Bank
e expect bank to report loan and deposits growth of 21% and 14% respectively. Asset
ality would be remained under control and profitability are expected to grow on account
comfortable core earnings and stable asset quality. Operating leverage is expected to
e in better position.
oadly banking indices outperform Nifty by 6% in third quarter and most of banking
ocks are trading at attractive valuation. Despite of, we have caution view on account of
owdown in economy, high interest rate and inflationary pressure. High inflation would be
k for the economy going forward. Any rise in inflation would result of rise in interestte by RBI in its third quarter monetary policy review on 28th Jan.2014 which would be
egative for banking industry. Most of banking stocks are expected to report moderate
venue and profit growth owing to multiple headwinds. In private sector banking
iverse we like HDFC Bank, ICICI bank and DCB.
xis Bank
Private Bank Result Preview 3QFY14
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
Cr 3QFY14E 2QFY14 3QFY13 % YoY Growth % QoQ Growth
I 3006 2937 2495 20.5 2.3
PP 2772 2750 2311 19.9 0.8
et Profit 1333 1362 1296 2.9 -2.1
xis Bank
Cr 3QFY14E 2QFY14 3QFY13 % YoY Growth % QoQ Growth
I 88 91 72 22.2 -3.3
PP 42 40 32 31.3 5.0
et Profit 34 33 27 25.9 3.0
CB
Cr 3QFY14E 2QFY14 3QFY13 % YoY Growth % QoQ Growth
I 5087 4477 3799 33.9 13.6
PP 3695 3387 3024 22.2 9.1
et Profit 2289 1982 1859 23.1 15.5
DFC Bank
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8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
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ES Bank
e expect Yes bank to report muted earnings on account of high credit cost andstructure assets. Loan growth and deposits growth are expected to be line with industry
verage. We expect NIM compression on account higher cost of fund and lower loan
eld. NIM is key monitorable for the quarter.
esult Preview ; at a glance
Private Bank Result Preview 3QFY14
Please refer to the Disclaimers at the end of this Report.
ICI BANK
e expect loan and deposits growth of 15% and 11% YoY for 3QFY14E respectively.
evenue growth was due to hike of lending rate and asset quality is expected to be
able on sequential basis. Operating leverage and cost of fund would be key
onitorable.
&K BANK
&K bank is expected to report 17.5% YoY profit growth on account of 20%+loan growthd stable asset quality. We expect little bit higher of gross slippage during the quarter as
ank reported higher slippage in previous quarter. NIM would be expanded
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8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys
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GAIL
1M 1yr YTD
bsolute 0.6 -5.6 -5.0
l. to Nifty 1.7 -8.7 -20.0
Current 1QFY14 4QFY13
omoters 57.3 57.3 57.3
17 16.7 16.3
I 21.6 22 22.2
hers 3.9 3.9 4
Financials
2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%
Revenue 13944.6 12855.6 8.5 11361.2 22.7
EBITDA 1405.5 1136.7 23.6 1380.3 1.8
PAT 915.7 606.5 51.0 985.4 -7.1
EBITDA Margin 10.1% 8.8% 120bps 12.1% (200bps)
PAT Margin 6.6% 4.7% 180bps 8.7% (210bps)
22
1HFY14 Financial Highlights :
fty
GAIL (India) Limited is a gas utility company. The Company is engaged in transportthrough pipeline; manufacture of basic chemicals, fertilizer and nitrogen compounds,
plastics and synthetic rubber in primary forms; extraction of crude petroleum; extraction ofnatural gas and electric power generation, transmission and distribution. The companyoperates in five segments viz Gas Transmission Business ,LPG Transmission Business,Gas Trading Business, Petrochemical Business and LPG and Liquid HydrocarbonBusiness.
Company registered a turnover of Rs. 26902.25 Cr, up by 19% in H1FY14 compared tocorresponding previous year period. There was fall of 10% in operating profits of thecompany to Rs 2971.72 Cr for H1FY14. The Other income was down 8% to Rs 279.6 Crwhile Interest cost grew 99% to Rs 169.36 Cr, The net profits for H1FY14 was Rs1723.84 Cr down by 19 %in comparison to 2HFY13.
The company during the first half of the current financial year, earned the revenues of Rs.
23,437 Cr from Natural Gas Trading up 24% YoY as compared to corresponding periodof the last year. The revenues from Natural Gas Transmission increased by 9% YoY toRs. 2,066 Cr for H1FY14. The net sales from LPG and Liquid Hydrocarbons businessincreased by 11% YoY to Rs. 2,043 Cr as against Rs. 1,842 Cr for the same period oflast year. The net sales from Petrochemicals business increased by 54% to Rs 2,237 Crfor 1HFY14. The revenues from LPG transmission increased by 72% to Rs. 189 Cr in1HFY14.
arket Data
E Code 532155
SE Symbol GAIL
wk Range H/L 395/273
evious Target Price
ange from Previous
6168
kt Cap (Rs Crores)
ompany Update Neutral
pside
MP 348
rget Price
About The Company
44,047
erage Daily Volume 399457
are Holding Pattern-%
Ministryof Petroleum and Natural gas has capped subsidy burden of Gail (India) at Rs1400 Cr for FY'14.
The company has commissioned Kochi pipeline on 25th August 2013.
Company has shared Rs 698.68 Cr towards LPG subsidy in the quarter endedSeptember 2013 compared to Rs 785.67 Cr in the corresponding previous year period.
The LPG transmission was 1,428 TMT. The Natural Gas transmission was 97.25MMSCMD, against 107.72 MMSCMD. The Natural Gas stood at 80.33 MMSCMD in1HFY14 as against 81.92 MMSCMD in 1HFY3.
Highlights of Conference Call:
During 1HFY14, Petrochemical Production was 231 TMT, up by 20 % YoY it was 193TMT in 1HFY13.The Petrochemical Sales were 229 TMT, up by 37 % against 167 TMT inthe corresponding period in the previous year. The LPG and Other Liquid Hydrocarbonproduction were 685 TMT, against 684 TMT in 1HFY13.
1HFY14 Production Highlights :
ock Performance
yr Price Movement Vs Nifty
Rs, Crore
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
Capexincurred during H1FY'13 was Rs 2525 Cr as Rs 1500 Cr on Petrochemical, Rs400 Cr on pipeline expansion, Rs 270 Cr on E&P and Rs 360 Cr towards equity
contribution.
"NEUTRAL"10th Jan' 14
Narnolia Securities Ltd,
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GAIL
ontinued
Projected Capex for FY'14 is Rs 5000 Cr and Rs 3500 Cr in FY'15.
GAILhas shared Rs 698.68 Cr towards LPG subsidy in the quarter ended September 2013mpared to Rs 785.67 crore in the corresponding previous year period
ecent Events
AIL management indicated that, MoPNG has in-principle agreed to provisionally cap GAILs
Y14 subsidy at INR14b, implying 2HFY14 subsidy to be nil. As per our view the final decisionl be post Finance Ministry consent.
ncertainty on under recovery sharingsk & Concern
(Source: Company/Eastwind)
aphical Dipiction
QFY14 SEGMENTAL SALES TURNOVER
The company has borrowed Rs 585 Cr during Q2FY'14.
Total borrowings stood at Rs 10632 Cr at the end of September 2013 quarter-out of which% loan is foreign currency loan. Almost 90% of foreign currency loan is financially orturally hedged.
The company anticipates increase in gas availability in near future. It expects around 20-25mscmd of gas over a period of 3-4 years including 11-12 mmscmd of gas from domesticurces and 10-15 mmscmd from LNG.
ew and Valuation :
Please refer to the Disclaimers at the end of this Report.
ear-term gas supply visibility which may lead to under-utilization of new pipelines
e stock is currently trading at Rs 346 and business outlook going forward ,managementidance does not provide us with much convincing thought .We donot see much upsides
ached with the stock in current business scenario. We therefore recommend NEUTRAL
ew on the stock.
Narnolia Securities Ltd,
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Please refer to the Disclaimers at the end of this Report.
BITDA & OPM%
(Source: Company/Eastwind)
GAIL
ALES TREND
Sales increased by 22% YoY driven by hig
revenues from the natural gas
trading and petrochemical segments
Higher Depcreciation owing to capitalizat
of assets with respect to new
pipelines and higher interest cost resulted
a NPM decline
(Source: Company/Eastwind)
dj PAT & NPM %
(Source: Company/Eastwind)
Narnolia Securities Ltd,
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Narnolia Securities Ltd
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033-32011233 Toll Free no : 1-800-345-4000
email: [email protected],website : www.narnolia.com
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