October 2019 / Vol. XXII / Issue 10Regd. Office : 'Regent Chambers', Opp. Garware College, 33/15-B, Karve Road, Pune 411004.

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our Custody.

1

MARKET REVIEW

than 7%. Core inflation, which excludes food and energy prices, also likely got a boost last month from a surge in gold prices, which recently hit a six-year high on rising worries about a deeper global economic downturn.

4 India's merchandise exports in August declined for the second time in the current financial year, which began in April, while imports dropped for the third consecutive month, signalling that rising protectionism and trade tensions between the US and China are impacting India's trade prospects as well. Data released by the commerce ministry showed India's merchandise exports declined 6.05% in August while merchandise imports dropped 13.45% leading to the narrowing of trade deficit to $13.45 billion during the same month. India has agreed to remove duties on 74% of its traded goods with China over a period of 20 years. This figure may even be increased to 80% on China's request. However, China is unwilling to offer tariff elimination in 90% of traded goods.

4 The Indian rupee (INR) fell against the US dollar, failing to hold on to gains after rising to two-month high of 70.35 against the US dollar. The rupee settled at 70.86, as compared to its Friday's close of 70.56. The rupee traded in the range of 70.35 to 70.88 against the US dollar. India's current account deficit (CAD) narrowed to $14.3 billion or 2% of Gross Domestic Product (GDP) during April-June quarter from 2.3% during the same period a year ago, data released by the Reserve Bank of India showed. However, on a sequential basis, CAD widened from $4.6 billion or 0.7% of GDP. The CAD contracted on a year-on-year (y-o-y) basis, primarily on account of higher invisible receipts at $31.9 billion as compared with $29.9 billion a year ago

4 The government stuck to its gross borrowing target for the second half of this fiscal at ̀ 2.68 trillion despite an expected revenue shortfall because of cuts in corporate taxes earlier in September. The finance ministry had front-loaded its borrowing and has completed sale of bonds worth `4.42 trillion during April-September period or 62.25% of the full-year target of ?7.1 trillion.

Reflecting consumption slowdown in the economy, the Goods and Services Tax (GST) collection fell 2.67% to ?91,916 crore in September on a year on year basis. This is yet another month in a row when GST mop-up has slipped below `1 lakh crore. The total gross GST revenue collected in the month of September, 2019 was `91,916 crore of which Central GST (CGST) was `16,630 crore, State GST (SGST) was `22,598 crore, Integrated GST (IGST) was `45,069 crore (including `22,097 crore collected on imports) and Cess is `7,620 crore (including `728 crore collected on imports). The government has settled ̀ 21,131 crore to CGST and `15,121 crore to SGST from IGST as regular settlement. The total revenue earned by the central government and the state governments after regular settlement in September was `37,761 crore for CGST and `37,719 crore for the SGST. The lower indirect tax collection is set to put

The month of September witnessed Finance Minister Nirmala Sitharaman announcing a big reduction in income tax rate for corporates. The government slashed basic corporate tax rate to 22% from 30% while for new manufacturing companies it has been cut down to 15% from 25%. These announcements are sure to boost the economy and have given a big relief to India Inc. PM Modi tweeted that this action will give a great stimulus to #MakeInIndia, attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians.

Key developments during the month were,

4 India's industrial production increased 4.3 per cent year-on-year in July, following a downwardly revised 1.2 per cent gain in the previous month and beating market consensus of a 2.3 per cent rise. The core factory output for the month shrank 0.5 per cent.

4 India's wholesale price index (WPI)-based inflation remained unchanged at 1.08% in August as inflation for manufactured items fell to 0%. Wholesale prices of manufactured products in August were at the same level as a year ago, signalling that producers lacked pricing power. The expected rise in inflation comes despite the price of oil, India's biggest import, falling by more

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Index and data indicators

Source: RBI, NSE, ET, Prowess

Time period 30/09/2019 31/08/2019 31/12/2007

Nifty 11474.45 11023.25 6138

Valuation

Trailing PE 26.44 27.27 27.62

Trailing PB 3.53 3.35 6.39

Mcap/GDP 0.88 0.85 1.23

Nifty return

1 year 4.98% -5.63% 54.77%

2 year 8.27% 5.43% 47.11%

3 year 10.04% 7.85% 43.43%

EPS growth

1 year 4.98% -1.72% 19.13%

2 year 6.18% 2.19% 15.95%

3 year 5.65% 3.49% 17.85%

Other data points

Credit growth 10.24% 11.6% 25%

10-year bond yield 6.59 6.52 7.57

Brent Oil Futures 60.30 60.70 93.25

USD/INR 70.86 71.74 39.23

Gold (oz/USD) 1465.70 1519.1 843.2

*Global indices corrected sharply in 2008 January, so the data prior to

the month is taken for reference, FY19 GDP estimate at 6.8%

2

further pressure on the government finances.

The Sensex rose 1,921 points to close at 38,014 while Nifty surged 5.5% to 11,274 after the announcements for corporate tax cut this month. Banking and auto stocks were in the limelight too with Nifty Bank index rising 8% and Nifty Auto index surging 10%.

Among key indices, almost all were major gainers led by MNC Index gaining 9.39% followed by Energy, Auto and Metal at 8.48%, 8.26% and 7.50% respectively. Infrastructure Index gained at 7.16% followed by FMCG at 6.93%. The Bank and Consumption indices, both gained at 6.84%. Pharma Index was a major loser at 6.04% followed by IT at 3.04%. The realty Index lost at 1.91%.

Market Outlook

4 US-China trade war could slow global manufacturing activity into start of 2020 as manufacturing data from China, the United States and Europe weakened to record levels in September, economists argued that a downward trend could be expected to continue until at least the first quarter of 2020. Manufacturing activities across China, the US and Germany have been contracting continuously in the last few months amid uncertainty caused by the protracted trade war between Beijing and Washington, with data from September released this week further emphasising the issues faced by the global economy. China's manufacturing activity has now contracted for five consecutive months, while readings for both Germany and the US dropped to their lowest levels in a decade.

4 The Indian rupee, after opening at 71.68 to a dollar, traded at 71.64, up 0.13% from its close of 71.73 in the beginning of September. Asian currencies were trading higher. South Korean won was up 0.43%, Malaysian ringgit rose 0.2%, Indonesian rupiah gained 0.17%, Philippines peso climbed 0.16%, Singapore dollar rose 0.08%, and Taiwan dollar was marginally higher.

4 The euro wobbled at $1.0995, falling below a key support around $1.10 and not far from a 28-month low of $1.0926 touched earlier this month. Sterling also slipped to $1.2435, having peaked at a two-month high of $1.2582. The collapse of the British travel firm Thomas Cook could also put some pressure on the pound by highlighting the weakness of British retailing.

4 The global economy flashed clearer warning signs on Tuesday as a wave of data showed manufacturing stuck in a slump, exports falling and sentiment sliding. In the US, a closely watched factory index unexpectedly dropped to the lowest since 2009 - driving down stocks as well as yields on Treasuries. With a trade war between the US and China still raging, industry executives from the US and Germany to Japan and Russia complained of contracting business, and the

Nifty began the month of September on a soft note, nifty opened at 10960 made a low of 10670 but bounced

back sharply and marked a high of 11694 and closed the month at 11474 with a handsome gain of 451 points .

The booster shot by Finance Minister to revive the economy lifted sentiment. The market rally begun after FM

Nirmala Sitharaman cut the corporate tax from 30 percent to 22 percent for existing companies and for new

manufacturing ventures corporate tax rate was brought down from 25 percent to 15 percent.

In our last report we mentioned that if nifty sustains above 11100 then a strong pull back rally can be seen

accordingly above 11100 nifty bounced back sharply to make a high of 11694 .

Going ahead, the Nifty has strong support at 11000 followed by 10800 on the other hand if nifty sustains above

11250 level we may witness rally towards 11450 and 11650 levels.

INVESTMENT IDEAS - MEDIUM TERM (3-6 MONTHS)

HDFC LTD. CMP (AS ON 30 SEPTEMBER 2019) - 1977 TARGET - 2220Housing Development Finance Corporation Ltd (HDFC) is India's premier housing finance company. The company's main business is to provide loans for the purchase or construction of residential houses. As at end September 2017, HDFC's distribution network comprised of 439 outlets including 135 offices of HDFC's distribution company, HDFC Sales Private Limited (HSPL). HDFC'S profit on sale of investments rose 83% Rs 1,632 crore in Q2 September 2019 compared with Rs 891 crore in Q2 September 2019. Profit included profit on sale of part stake of equity shares in Gruh Finance. HDFC's stake in Gruh Finance stood at 38.2%. Income from dividend stood at Rs 1,074 crore in Q2 September 2019 versus Rs 6 crore in Q2 September 2019. The dividend from HDFC Bank was Rs 865 crore while that from Gruh Finance was Rs 70 crore. On a consolidated basis, HDFC's net profit rose 5.2% to Rs 3094.38 crore on a 18.6% increase in total income to Rs 24515.47 crore in Q1 June 2019 over Q1 June 2018. HDFC is India's leading mortgage lender.

TATA CONSULTANCY SERVICES LTD CMP (AS ON 30 SEPTEMBER 2019) - 2099 TARGET - 2290Tata Consultancy Services Ltd is a leading global IT services, consulting and business solutions organization. The company offers a range of IT services, outsourcing and business solutions. They also offer IT infrastructure services, business process outsourcing services, engineering and industrial services, global consulting and asset leveraged solutions. Their segments include banking, financial services and insurance; manufacturing; retail and distribution, and telecom. The company is a part of Tata Group, one of India's most respected business conglomerates and most respected brands. They are headquartered in Mumbai. They are having 142 offices in 42 countries as well as 105 delivery centers in 20 countries. On a consolidated basis, the IT firm's net profit rose 0.06% to Rs 8131 crore on a 0.43% increase in net sales to Rs 38172 crore in Q1 June 2019 over Q4 March 2019. Tata Consultancy Services (TCS) is an IT services, consulting and business solutions organization that has been partnering with many of the world's largest businesses in their transformation journeys for the last fifty years.

TECHNICAL VIEW

World Trade Organization cut its forecast for commerce to the lowest in a decade.

4 India's economy has been hobbled by a demand slump, prompting policymakers to step up fiscal and monetary stimulus to revive growth. The Reserve Bank of India, which has already slashed rates by 110 basis points so far this year on the back of the low growth and below-target inflation, is expected to ease further. Growth in India's manufacturing sector remained weak in September and forward looking indicators in a private business survey suggest the country's wobbly economy is unlikely to start recovering anytime soon.

4 The Asian Development Bank in September slashed its growth forecast for India for fiscal 2019-20 to 6.5% from 7% projected in July, following weaker growth in the first quarter due to a slowdown in consumption and investment activities that hit manufacturing and service sectors. India's current account deficit (CAD) narrowed to $14.3 billion or 2% of Gross Domestic Product (GDP) during April-June quarter from 2.3% during the same period a year ago, data released by the Reserve Bank of India showed. However, on a sequential basis, CAD widened from $4.6 billion or 0.7% of GDP.

4 Overall government expenditure in FY18 and FY19 went up by 15% and 9.3% (adjusted for inflation), respectively, at a time the economy was growing by 7.2% and 6.8%, respectively. From Q1 FY20, the economy grew by 5%-private consumption expenditure went up just 3.1% and?government spending grew 8.9%.

4 India seems to be back in favour among foreign investors with the government announcing fiscal stimulus measures to boost market confidence. After aggressive selling in the previous months, foreign institutional investors (FIIs) have bought Indian shares worth $1.04 billion in September, the highest monthly inflow since May. Investor sentiment about India turned positive after a slew of measures were taken by the government to lift the sagging economy. In September, the government unexpectedly reduced corporate tax rates leading to foreign brokerages upgrading ratings on India, while earnings estimates of companies were also increased. The net buying by FIIs in Indian equities in September follows a sell-off to the tune of $4.13 billion in July & August.

There are several opportunities amid the challenges the country faces today, but together, the financial sector, the business community, policymakers and regulators should address these challenges and look ahead with greater confidence.

MUTUAL FUNDS PERFORMANCE

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NAV as on 31 August 2019

Liquid Funds NAV 30 DAYS 3 MON 6 MON 1 YR

Franklin - India Liquid Fund Super Ins (G) 2883.01 0.46 1.59 3.44 7.38

Aditya Birla SL - Liquid Fund Reg (G) 309.20 0.46 1.61 3.43 7.28

Axis - Liquid Fund (G) 2133.77 0.46 1.54 3.35 7.21

Hybrid Aggressive Funds NAV 1 YR 2 YR 3 YR 5 YR

Mirae - Asset Hybrid Equity Fund Reg (G) 14.77 7.72 6.77 10.06 N.A.

SBI - Equity Hybrid Fund Reg (G) 139.80 12.42 8.93 9.98 10.85

Principal - Hybrid Equity Fund (G) 74.22 -0.89 2.71 8.52 9.59

HDFC - Hybrid Equity Fund (G) 53.57 6.98 4.53 7.99 9.82

Tax Saving Schemes NAV 1 YR 2 YR 3 YR 5 YR

Mirae - Asset Tax Saver Fund Reg (G) 17.70 8.84 7.73 13.86 N.A.

Axis - Long Term Equity Fund (G) 46.88 12.13 10.04 12.34 12.55

Can Robeco - Equity Taxsaver Fund Reg (G) 65.48 8.02 8.71 10.21 9.19

Kotak - Tax Saver Scheme (G) 44.07 8.61 5.44 8.75 10.98

IDFC - Tax Advantage Reg (G) 53.19 -1.13 0.22 8.57 9.42

Hybrid Dynamic Asset Funds NAV 1 YR 2 YR 3 YR 5 YR

ICICI Pru - Balanced Advantage Fund Reg (G) 36.47 9.13 6.85 8.31 9.19

HDFC - Balanced Advantage Fund (G) 193.24 5.63 4.34 7.80 8.18

Aditya Birla SL - Balanced Advantage Fund (G) 53.74 6.86 3.90 6.70 8.70

Kotak - Balanced Advantage Fund Reg (G) 10.79 9.24 N.A. N.A.

Equity Saving Funds NAV 1 YR 2 YR 3 YR 5 YR

Axis - Equity Saver Fund Reg (G) 13.19 7.59 7.27 7.80 N.A.

Kotak - Equity Savings Fund Reg (G) 14.47 5.76 5.97 7.36 7.61

ICICI Pru - Equity Savings Fund (G) 14.16 8.42 6.51 7.00 N.A.

Equity Value Funds NAV 1 YR 2 YR 3 YR 5 YR

Tata - Equity P/E Fund Reg (G) 133.06 2.10 0.47 8.78 11.51

L&T - India Value Fund (G) 34.39 -0.75 -0.95 6.23 11.11

IDFC - Sterling Value Fund Reg (G) 45.91 -7.12 -5.78 5.73 7.40

Equity Focused Funds NAV 1 YR 2 YR 3 YR 5 YR

Axis - Focused 25 (G) 29.33 9.85 9.60 14.01 13.76

SBI - Focused Equity Fund Reg (G) 145.30 13.91 10.47 11.71 12.20

Motilal Oswal - Focused 25 Reg (G) 22.97 11.98 6.04 9.99 10.61

Large Cap Funds NAV 1 YR 2 YR 3 YR 5 YR

Axis - Bluechip Fund (G) 31.11 17.22 14.50 15.24 11.81

Mirae - Asset Large Cap Fund Reg (G) 50.93 7.23 7.29 11.77 11.93

ICICI Pru - Bluechip Fund Reg (G) 42.31 4.44 6.24 9.88 9.49

HDFC - Top 100 Fund - (G) 477.38 4.17 6.10 9.26 8.10

Arbitrage Funds NAV 30 DAYS 3 MON 6 MON 1 YR

IDFC - Arbitrage Fund Reg (G) 24.06 0.30 1.54 3.34 6.43

Aditya Birla SL - Arbitrage Fund Reg (G) 19.56 0.33 1.55 3.39 6.29

Kotak - Equity Arbitrage Fund (G) 27.24 0.29 1.50 3.26 6.26

Mid Cap Funds NAV 1 YR 2 YR 3 YR 5 YR

Axis - Midcap Fund (G) 37.81 10.01 11.02 12.10 11.43

L&T - Mid Cap Fund (G) 127.32 -1.65 -2.96 7.23 11.68

Kotak - Emerging Equity (G) 38.09 7.03 1.35 6.61 12.42

HDFC - Mid Cap Opportunities Fund (G) 51.64 -0.50 -1.41 4.38 10.12

4

source: investwell

Index NAV 1 YR 2 YR 3 YR 5 YR

S&P BSE Sensex 38667.33 6.74 11.16 11.54 7.74

Sector & Thematic Funds NAV 1 YR 2 YR 3 YR 5 YR

SBI - Banking & Financial Services Fund Reg (G) 18.34 21.11 12.51 15.96 N.A.

Tata - Digital India Fund Reg Plan (G) 15.03 -2.20 25.17 17.22 N.A.

ICICI Pru - Technology Fund (G) 59.49 -3.30 20.97 15.85 9.10

ICICI Pru - US Bluechip Equity Fund Reg (G) 28.63 3.84 14.93 14.91 10.97

ICICI Pru - Banking & Financial Services Fund Reg (G) 63.42 16.62 4.23 11.72 15.06

Franklin - India Technology Fund (G) 155.43 -4.70 14.08 12.22 7.22

Aditya Birla SL - India Gen Next Fund Reg (G) 86.61 15.07 7.99 10.44 14.41

Reliance - Pharma Fund (G) 140.30 -11.35 4.36 -0.98 2.91

Small Cap Funds NAV 1 YR 2 YR 3 YR 5 YR

SBI - Small Cap Fund Reg (G) 52.10 4.06 2.72 11.97 16.77

Axis - Small Cap Fund Reg (G) 30.31 17.89 8.80 10.92 12.40

HDFC - Small Cap Fund (G) 39.08 -6.50 1.31 8.55 10.97

L&T - Emerging Businesses Fund (G) 22.56 -7.10 -4.44 7.22 12.12

Multicap Funds NAV 1 YR 2 YR 3 YR 5 YR

Can Robeco - Equity Diversified Fund (G) 134.74 8.26 7.91 10.94 9.16

Kotak - Standard Multicap Fund (G) 35.58 8.75 6.56 10.46 12.42

SBI - M Multicap Fund Reg (G) 49.81 10.14 5.70 9.92 12.40

Motilal Oswal - Multicap 35 Reg (G) 26.33 7.24 1.59 9.10 14.20

HDFC - Equity Fund (G) 642.70 4.79 5.46 8.84 7.72

Large & Mid Cap Funds NAV 1 YR 2 YR 3 YR 5 YR

Mirae - Asset Emerging Bluechip Fund Reg (G) 53.36 11.32 6.42 12.39 16.48

Can Robeco - Emerging equities Reg (G) 90.82 2.98 2.10 8.82 13.11

DSP - Equity Opp Fund Reg (G) 223.30 8.24 4.00 8.53 11.33

Kotak - Equity Opportunities Fund (G) 119.31 8.28 3.98 8.46 10.89

CORPORATE ACTIONS IN OCTOBER 2019

COMPANY RECORD DATE PURPOSE

GOVERNMENT OF INDIA 9-Oct-19 Interest Payment

GOVERNMENT OF INDIA 10-Oct-19 Interest Payment

Century Textiles & Industries Limited 14-Oct-19 Demerger

GOVERNMENT OF INDIA 15-Oct-19 Interest Payment

GOCL Corporation Limited 15-Oct-19 Interim Dividend - Rs 2 Per Share

Satia Industries Limited 16-Oct-19 Face Value Split (Sub-Division) - From Rs 10/- Per Share To Re 1/- Per Share

Tata Consultancy Services Limited 18-Oct-19 Interim Dividend

NIIT Limited 18-Oct-19 Buyback

GOVERNMENT OF INDIA 21-Oct-19 Interest Payment

COMPANY OPEN CLOSE %

BPCL 355 470 32.5%

IOC 117.75 147.4 25%

BAJAJ FINANCE 3303 4046 22.5%

BAJAJ FINSERV 7050 8513 20.75%

TITAN CO 1098 1273 16%

COMPANY OPEN CLOSE %

INDIABULLS HOUSING 445 255 42.8%

YES BANK 59 41 30.5%

ZEE ENTERTAINMENT 367 265 28%

SUN PHARMA 450 389 13.5%

CIPLA 467 425 9%

GAINERS AND LOSERS OF THE MONTH (NIFTY-50)

Visit us at www. online.comsajag

Mkt. Cap. : 5103.16 Cr

Equity : 27.19

Trading Vol. : 9000

52 Week High/Low : 2151/1475

Face Value : 10

BSE Group : A

BSE Code :

NSE Symbol : JCHAC

Bloomberg : JCHACIN

Reuters : JCHA.BO

523398

Shareholding Pattern

Promoters : 74.26

Institutions : 16.53

Public : 8.17

Others : 1.04

Johnson Controls-Hitachi Air Conditioning India Company (formerly known as Hitachi Home and Life

Solutions (India) Limited) was incorporated in December 1984 as 'Acquest Air Conditioning Systems

Private Limited'. It was converted into a deemed public limited company in Jun.'89. The Company is

engaged in the business of manufacturing, selling and trading of `Hitachi' brand of Air conditioners,

refrigerators, chillers and VRF (variable refrigerant flow) systems. Manufacturing facility for Air

conditioners is set up at Kadi (North Gujarat). The Company performs its marketing activities through 23

branches and 8 service centers spread across India.

Investment rationale

4 Johnson Controls-Hitachi Air Conditioning India Company currently manufactures room air-

conditioners consisting of window, split and multi-split air-conditioners under a technical

collaboration with Hitachi, Japan, and markets them under the Amtrex brand. AHAL has entered into a

joint venture with Cornelius, US, which will hold 51% of the equity in the venture.

4 It has adopted the technology route and is constantly developing and introducing new models along with upgrading existing models in all categories of Air-

conditioning products. Johnson Controls-Hitachi Air Condition India announced the opening of a new Global Development Center in Kadi, Gujarat State,

India. The result of a USD 22.5 million (approximately Rs 157 crore) investment, the state-of-the-art facility will drive the company's world class innovation

capabilities with a strong focus on developing residential air conditioners and commercial packaged air conditioners for India as well as the Southeast Asia,

Middle East and European markets.

4 A joint-venture between two companies, the US-based Johnson Controls and Japan-based Hitachi Appliances, Johnson Controls-Hitachi Air Conditioning

India Limited (JCH-IN) is one of the top three players in the Indian air conditioning market today. Established in 1984, the company has grown from strength to

strength over time and today JCH-IN is one of the most respected and largest business entities in the air conditioning products industry in India.

4 Apart from manufacturing room and commercial air-conditioners, the company also has forayed into trading of Refrigerators, Air Purifiers & Washing

machines within the country. Johnson Controls-Hitachi Air Conditioning India Limited adopts world-class technologies to constantly innovate and inculcate

newer concepts and advanced features in its products for a comfortable and relaxed life.

4 For the quarter ended June 2019, it registered a 20% rise in sales to Rs 951.91 crore. OPM improved 100 bps to 11.6%, which saw OP rise 32% to Rs 110.69

crore.

4 Special emphasis is being laid on increasing the company's presence in e-commerce sector by collaborating with online retail platforms and modern retail

partners. The comfort on the business front and huge potential due to strong financials is why we recommend investing with a long term perspective.

Year End 201903 201803 201703 201603 201503

Equity 27.19 27.19 27.19 27.19 27.19

Networth 612.99 535.2 440.23 357.95 312.88

Capital Employed 864.95 596.81 543.22 553.88 485.01

Sales 2241.3 2258.27 2098.55 1798.2 1707.26

Other Income 15.42 7.39 6.78 1.78 7.12

PBIDTA 179.22 206.26 174.54 124.51 145.2

PAT 85.94 100.15 81.33 49.98 77.76

Book Value (Rs) 225.45 196.84 161.91 131.64 115.07

EPS (Rs.) 31.61 36.83 29.91 18.07 28.29

Dividend (%) 15 15 15 15 15

Payout (%) 4.75 4.07 5.02 8.3 5.3

Consolidated Financial Performance (Rs. Crore) Latest Results (Rs. Crore)

SENSEX – 38667 NIFTY – 11474

OCTOBER 2019CMP (As on 30 Sep. 2019) – 1850 INDUSTRY - AIR-CONDITIONERS

JOHNSON CONTROLS- HITACHI AIR CONDITIONING INDIA LTD.

5

COMPANY ANALYSIS

Quarter Ended 201906 201806 Var. (%)

Sales 951.91 794.07 19.88

Other Income 2.29 5.81 -60.59

PBIDT 112.98 90.1 25.39

PBT 98.53 78.27 25.88

PAT 63.6 50.73 25.37

6

Carborundum Universal Ltd, which is known by its acronym CUMI, is a largest high alumina ceramic

manufacturing company in India. They are an industrial ceramic material-based products and service

provider, with operations spread across three business segments namely Abrasives, Ceramics and

Electrominerals. They pioneered the manufacture of coated and bonded abrasives in India, besides super

refractories, electrominerals, industrial ceramics and ceramic fibres. The company's major customers

include bearing, automobile and auto ancillary, alloy steel, foundry and forging, fabrication and general

engineering industries. The company products are manufactured in fourteen locations across various

parts of the country in which all their manufacturing units are ISO 9001:2000 certified. The company has

their presence in 43 countries and also has 200,000 retail outlets.

Investment rationale

4 Carborundum Universal Ltd was incorporated in the year 1954 as a joint venture between

Carborundum company, USA, Universal Grinding Wheel company, UK and Murugappa Group, India.

Within ten year, they acquired a coated abrasives facility from Ajax Products Pvt Ltd and set up a bonded abrasive facility at Thiruvottiyur in Chennai and

bauxite mining in Bhatia. In the year 1978, the company acquired the Eastern Abrasives Ltd which is a coated abrasives manufacturer in Kolkata.

4 In the year 1982, the company established MMTCL as a joint venture company with Morgan Group plc for manufacturing ceramic fibres. The company had

collaboration with Wendt GmBH of Germany, Morgan Crucible Co, UK, and also a Joint venture in Australia for the supply of wear resistant ceramics to coal

washeries. The industrial ceramics division was started in the year 1991 in technical collaboration with Coors Ceramics, USA and the manufacturing plant is

located at Hosur in Tamil Nadu.

4 Carborundum Universal (Cumi), the abrasive major has registered 6% increase in consolidated sales for the quarter ended June 2019 to Rs 671.40 crore. Sale

excluding other operating income was up by 6% to Rs 663.58 crore. The Upside in revenue is largely due to higher ceramics and electro-minerals (EM) sales.

4 As per the yearly performance, operating income net of excise was higher by 14% to Rs 2688.90 crores. The stock has corrected from higher levels, while the

business volumes are picking up. Mega trends in urbanization, infrastructure and increasing affluence provide a huge opportunity for the company. We

recommend investing with a long term perspective.

Financial Performance (Rs. Crore) Latest Results (Rs. Crore)

The stock was earlier recommended in our Sajag Online publication of April 2018. We remain optimistic about the company owing to its strong parentage, sound financials and improving business volumes.

CARBORUNDUM UNIVERSAL LIMITED.

COMPANY ANALYSIS REVIEW

MARICO LIMITEDINDUSTRY - PERSONAL CARE-INDIAN-LARGE

Year End 201903 201803 201703 201603 201503

Equity 23.69 24.36 18.87 18.84 18.82

Networth 1728.88 1569.79 1382.79 1192.26 1088.71

Capital Employed 1873.16 1755.16 1604.4 1574.28 1486.68

Sales 2688.9 2374.5 2112.49 1943.99 2050.17

Other Income 47.23 37.58 41.89 45.29 113.11

PBIDTA 485.53 436.22 376.47 346.6 346.12

PAT 247.68 215.6 174.87 144.1 132.6

Book Value (Rs) 91.15 82.79 73.3 63.16 57.73

EPS (Rs.) 13.09 11.41 9.27 7.47 6.98

Dividend (%) 275 225 175 150 125

Payout (%) 21.38 15.19 10.26 24.78 17.17

INDUSTRY - ABRASIVES GRINDING WHEELS

Mkt. Cap. : 5561.51 Cr

Equity : 23.69

Trading Vol. : 31000

52 Week High/Low : 415/266

Face Value : 1

BSE Group : A

BSE Code :

NSE Symbol : CARBORUNIV

Bloomberg : CUIN

Reuters : CRBR.BO

513375

Shareholding Pattern

Promoters : 42.11

Institutions : 23.81

Public : 19.50

Others : 14.60

OCTOBER 2019CMP (As on 30 Sept. 2019) – 300

Quarter Ended 201906 201806 Var. (%)

Sales 663.58 625.79 6.04

Other Income 10.8 16.99 -36.43

PBIDT 106.04 124.45 -14.79

PBT 77.71 94.57 -17.83

PAT 52.77 62.86 -16.05

The stock was earlier recommended in our Sajag Online publication of January 2016. We maintain our positive outlook of the stock owing to its strong financials, backed by growth component.

OCTOBER 2019CMP (As on 30 Sept. 2019) – 394

Mkt. Cap. : 48857.79 Cr

Equity : 129

Trading Vol. : 1890000

52 Week High/Low : 404/286

Face Value : 1

BSE Group : A

BSE Code :

NSE Symbol : MARICO

Bloomberg : MRCOIN

Reuters : MRCO.BO

531642

Shareholding Pattern

Promoters : 59.70

Institutions : 5.78

Public : 4.49

Others : 32.02

7

Marico Limited is one of India's leading consumer products companies operating in the beauty and

wellness space. Currently present in 25 countries across emerging markets of Asia and Africa, Marico has

nurtured multiple brands in the categories of hair care, skin care, edible oils, health foods, male grooming,

and fabric care. Marico's India business markets household brands such as Parachute, Parachute Advansed,

Saffola, Hair & Care, Nihar, Nihar Naturals, Livon, Set Wet, Mediker and Revive among others. The

International business offers unique brands such as Parachute, HairCode, Fiance, Caivil, Hercules, Black

Chic, Isoplus, Code 10, Ingwe, X-Men and Thuan Phat that are localized to fulfil the lifestyle needs of

international consumers.

Investment rationale

4 Marico Limited (ML), a leading Fast Moving Consumer Goods (FMCG) player was incorporated on 13th

October 1988 under the name of Marico Foods Limited. The name of the company was changed from

Marico Foods Limited to Marico Industries Limited with effect from 31st October of the year 1989.

4 During the same year 1989, in December, the company had entered into an agreement with M/s. Rasoi Industries Limited for purchase of its unit located at

M.I.D.C. Industrial Estate, Jalgaon. After a year, in 1990, ML made a Registered Users Agreement with Bombay Oil Industries Ltd (BOIL) for the use of the

brands Parachute and Saffola for an initial period of 3 years commenced from 1st April of the same year. The Company established a new plant at Kanjikode,

Palghat District of Kerala.

4 Marico Ltd's net profit grew 18% to touch ?213 crore in Q4 (year-on-year basis), in line with analysts estimates. Its profit for the financial year 2019 grew to

14% to ?930 crore. However, marketing expenditure contracted the operating margin to 20.8%, in the quarter ended March 31 this year, as against 21.8% in

Q4 in FY18

4 The Mumbai-based company's flagship product Parachute Rigids (hair oil) posted 6% volume growth. This growth came during the time when copra (dried

coconut) prices were down 19% y-o-y basis. The company recorded 9% volume growth in the third quarter of FY19.

4 The year on year volume growth in Q1, FY20 is 6% on account of the current slash in tax rates. Taking into consideration the overall growth component, we

recommend investing with a long term perspective.

Systematic investment in different equity oriented Mutual funds at the rate of Rs. 10000/- p.m.

and its values at different time intervals.

Scheme

Return (3 Yr) Return (5 Yr) Return (8 Yr) Return (10 Yr) Return (15 Yr)

Total Investment : 360000 % 600000 % 960000 % 1200000 % 1800000 %

Value & % Value & % Value & % Value & % Value & %

Aditya Birla SL - MNC Fund Reg (G) 388,684 5.0 714,769 6.9 1,782,604 15.1 2,734,408 15.7 7,364,584 17.0

Can Robeco - Emerging Equities Reg (G) 380,721 3.7 753,436 9.0 2,043,350 18.3 3,093,769 18.0 N.A. N.A.

Franklin - India Bluechip Fund (G) 368,428 1.5 673,269 4.6 1,373,120 8.7 1,905,272 8.9 4,509,422 11.4

Franklin - India Prima Fund (G) 370,336 1.8 709,766 6.6 1,793,047 15.2 2,648,876 15.1 6,168,079 15.0

ICICI Pru - Value Discovery Fund (G) 363,283 0.6 661,985 3.9 1,581,486 12.2 2,324,752 12.7 6,388,208 15.4

Sundaram - Mid Cap Fund Reg (G) 344,288 -2.9 662,954 3.9 1,650,389 13.2 2,396,070 13.3 6,485,593 15.6

*Past performance of Mutual Funds is not an indicator for future performance.

Source: Company, Prowess, Capital line, Sajag Research

Financial Performance (Rs. Crore)

*Adjusted for bonus issue

Year End 201903 201803 201703 201603 201503

Equity 129.00 129.00 129.05 129.02 64.50

Networth 3508.00 3041.00 2924.24 2538.27 2342.89

Capital Employed 3648.00 3173 3045.67 2745.60 2615.72

Sales 5971 5181 4868.88 4867.99 4689.45

Other Income 301 218 261.86 190.56 140.80

PBIDTA 1280 1029 1218.41 1019.73 802.76

PAT 1132 718 842.70 691.26 545.17

Book Value (Rs) 27.40 23.90 23.13 19.67 36.32

EPS (Rs.) 8.78 5.57 6.09 5.36 8.25

Dividend (%) 475 425 350 425 250

Payout (%) 58.77 87 57.48 69.58 30.31

Latest Results (Rs. Crore)

Quarter Ended 201906 201806 Var. (%)

Sales 1777 1685 5.46

Other Income 26 23 13.04

PBIDT 356 305 16.72

PBT 319 275 16

PAT 251 214 17.29

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8

We have the Sub Brokers at following locations

Area Contact Person Tel. No. Area Contact Person Tel. No.

Apte Road Mr. Sameer Kulkarni 29803733

Aundh Mr. Jaydeep Doshi 25890824

Boat Club Road Mr. Naresh Karpe 41204584

Camp Mr. Naresh Karpe 26346310

Dahanukar Colony Mr. Abhay Oak 25444744

ITI Road, Aundh Mr. Ravi Jadhav 25888511

Kalyani Nagar Ms. Bernadette Dias 9422449266

Karve Nagar Ms. Prajakta Bedekar 8600993930

Kondhwa Mr. Santosh Gupte 26836366

Koregaon Park Mr. Ajit Godbole/Mr. Ninad Parundekar 26158889

Paud Road Mr. Sadanand Damle 9850845567

Phadke Haud Mr. Jayant Mundada 9850990766

Sadashiv Peth Mr. C. V. Sane 24475457 (Res.)

Sahakar Nagar Mr. Tejas Jaykar 9765173434

Aurangabad Mr. Amit Vaidya 0240-2347584

Aurangabad Mr. Abhijit Bhaiwal 0240-2361421

Sangli Mr. Dattaji Gaikwad 0233-6600566

Satara Mr. Vinod Jhamvar 02162-233906

Shrirampur Mr. Amit Somani 02422-228111