[Kotak] India Daily, April 2, 2019 - Kotak Securities

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

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Contents

Daily Alerts

Company alerts

Coal India: Back on track

Dispatch growth improves 8% yoy in March 2019; YTD growth at 4.8%,

ahead of estimate

Decline in premium with softening of imported coal prices, no plants with

critical inventory

Improved pricing and attractive valuations, maintain BUY

Avenue Supermarts: Price competition on the rise

Dmart versus competitors: price competition on the rise

Private label category expansion: strategy to protect margins

Dmart Ready: expanded to 150 outlets in Mumbai

High competitive intensity may keep margins capped

Sector alerts

Automobiles & Components: High inventory weighs on auto industry sales performance

PV OEMs report single digit decline amid high dealer inventory levels in

March 2019

M&M's auto volumes grew by 1% yoy; tractor volumes declined by 31%

yoy in March 2019

MHCV industry volumes remain under pressure in March 2019

Hero Motocorp and Royal Enfield volumes down 20% yoy in March 2019

Telecommunication Services: 4QFY19E preview

Bharti - stable India wireless, pressure elsewhere

Bharti Infratel - expect rental/tenant surge to continue and robust net

tenancy adds

TCOM - another quarter of slow progress on key internals

Transportation: DFC shares prospects of price discount, though not over the near term

Pricing of DFC a function of several variables, key being whether IR will

cede control to DFCCIL

Pricing change unlikely to happen by the time the stretch till Gujarat gets

ready (Dec 2019)

Concor to weigh benefits of operating leverage to lead price action for the

sector

DFCCIL to help weed out connectivity issues for large CTOs; raise Concor's

fair value to Rs515

Economy alerts

Economy: Expenditure cuts to the rescue

February GST collections at Rs1,066 bn

FY2019 CGST collections shortfall likely at Rs770 bn

Expenditure cut of Rs500-750 bn required to bridge shortfall from direct

and indirect taxes

INDIA DAILY April 2, 2019 India 1-Apr 1-day 1-mo 3-mo

Sensex 38,872 0.5 7.8 8.3

Nifty 11,669 0.4 7.4 8.1

Global/Regional indices

Dow Jones 26,258 1.3 0.9 12.5

Nasdaq Composite 7,829 1.3 3.1 17.4

FTSE 7,317 0.5 3.0 8.7

Nikkei 21,633 0.6 0.1 8.1

Hang Seng 29,562 1.8 2.6 17.6

KOSPI 2,177 0.4 (0.8) 8.3

Value traded – India

Cash (NSE+BSE) 417 412 358

Derivatives (NSE) 6,439 4,081 4,121

Deri. open interest 3,024 2,653 2,925

Forex/money market

Change, basis points

1-Apr 1-day 1-mo 3-mo

Rs/US$ 69.3 8 (158) (69)

10yr govt bond, % 7.6 - (1) 3

Net investment (US$ mn)

29-Mar MTD CYTD

FIIs - #N/A 7,063

MFs 20 #N/A 244

Top movers – 3-mo basis

Change, %

Best performers 1-Apr 1-day 1-mo 3-mo

YES IN Equity 276 0.3 16.1 49.4

RIL IN Equity 1,392 2.1 13.5 25.8

PNB IN Equity 98 2.1 27.2 25.2

UPLL IN Equity 934 (2.6) 7.4 23.5

GMRI IN Equity 20 (1.5) 17.1 22.3

Worst performers

RCOM IN Equity 4 (4.8) (40.2) (71.5)

RPWR IN Equity 11 (3.5) (11.3) (60.5)

RELI IN Equity 138 0.4 9.8 (55.0)

UT IN Equity 1 3.7 3.7 (33.3)

IDBI IN Equity 46 (0.9) 4.3 (24.6)

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


Dispatch growth improves 8% yoy in March 2019; YTD growth at 4.8%, ahead of estimate

Coal India reported volume growth of 8% yoy in dispatches at 59.6 mn tons in March 2019 on

the back of strong performance across its subsidiaries. The performance is a marked improved

over the weak dispatch numbers in the preceding months. We highlight CIL reported decline of

2.4% yoy in January 2019 and growth of 3% yoy in February 2019. Dispatch numbers for

4QFY19 now stand at 163.5 mn tons (+2.9% yoy) taking the overall growth to 4.8% yoy in

FY2019, beating our volume growth estimate of 4% for the year. Production for the month

remained equally robust at 79.2 mn tons, an increase of 9.6% yoy in volumes in March 2019

(194.4 mn tons in 4QFY19).

Among subsidiaries, WCL and ECL showed the highest dispatch growth of 15.5% yoy and

13.7% yoy, respectively followed by CCL at 13% yoy. On the production front, all but one

subsidiaries reported positive volume growth numbers with SECL reporting the highest growth

of 22.2% yoy followed by WCL at 14.5% in March 2019.

Decline in premium with softening of imported coal prices, no plants with critical inventory

E-auction premium declined to 84% in February 2019 from 104% in January 2019. Premiums

are still well above those seen in FY2018, however, have started to show downward trajectory

with decline in the prices of imported coal. We note that e-auction sales were down 33% yoy in

9MFY19, although overall e-auction revenues were growing by 0.5% yoy on the back of 50%

yoy growth in e-auction realizations. Coal inventory across plants in India improved to an

impressive 18 days with no plant having critical/supercritical levels of inventory in the country.

Improved pricing and attractive valuations, maintain BUY

Coal India has had a much improved year with 9MFY19 delivering 100% yoy growth in

earnings on the back of 18% yoy growth in revenue. The continued divestment by the

government has made for valuations to be incrementally attractive at 9X P/E and 5.9X

EV/EBITDA on adjusted earnings coupled with 10.7% dividend yield on FY2020E earnings.

Maintain BUY with an unchanged fair value of Rs290/share.

Coal India (COAL) Oil, Gas & Consumable Fuels

Back on track. Coal India reported 8% yoy growth in dispatches, an improvement over

the declining volumes in preceding months supported by an equally strong production

growth of 9.6% yoy in March 2019. E-auction premiums declined to 84% in February

2019. Inventory across plants improved during the month with no plant reporting

critical inventory of coal. Maintain BUY rating with fair value of Rs290 on improved

earnings trajectory and attractive valuations (9X P/E on FY2020E adjusted earnings).

BUY

APRIL 01, 2019

UPDATE

Coverage view: Attractive

Price (`): 236

Fair Value (`): 290

BSE-30: 38,872

Murtuza Arsiwalla

Samrat Verma

Coal India

Stock data Forecasts/Valuations 2019 2020E 2021E

52-week range (Rs) (high,low) EPS (Rs) 25.8 27.3 27.6

Market Cap. (Rs bn) EPS growth (%) 128.5 5.7 1.0

Shareholding pattern (%) P/E (X) 9.2 8.7 8.6

Promoters 72.9 Sales (Rs bn) 943.3 1,015.6 1,074.5

FIIs 6.0 Net profits (Rs bn) 160.4 169.6 171.2

MFs 5.4 EBITDA (Rs bn) 197.6 217.9 226.7

Price performance (%) 1M 3M 12M EV/EBITDA (X) 6.5 6.0 5.5

Absolute 1.6 (2.1) (16.6) ROE (%) 64.2 67.5 71.3

Rel. to BSE-30 (5.7) (8.7) (29.2) Div. Yield (%) 8.5 10.6 10.6

Company data and valuation summary

303-211

1,467.4

Coal India Oil, Gas & Consumable Fuels

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Exhibit 1: Coal India’s dispatches increased 8% yoy in March2019; production volume increased by 9.6% yoy Subsidiary-wise monthly dispatch volumes, March fiscal year-ends (mn tons)

Source: Company, Kotak Institutional Equities

Exhibit 2: Monthly dispatches to power sector increased by 6% yoy in February 2019 Monthly trend of coal dispatches to power sector, March fiscal year-ends, Feb-2017 -Feb-2019

Source: Ministry of Power, Kotak Institutional Equities

Growth (%) YTD Quarterly

Mar-19 Mar-18 Feb-19 yoy mom 2019 2018 (% chg.) 4QFY19 4QFY18 (% chg.)

Dispatches

ECL 5.8 5.1 4.8 13.7 20.3 50.4 43.6 15.5 15.7 14.0 12.1

BCCL 3.2 3.5 2.6 (7.2) 23.6 33.1 33.4 (0.7) 8.6 9.6 (10.8)

CCL 7.2 6.4 6.0 13.0 19.4 68.4 67.6 1.2 19.4 18.3 6.4

NCL 8.8 9.1 8.1 (2.9) 9.3 101.5 96.9 4.8 25.7 25.8 (0.2)

WCL 5.5 4.8 5.1 15.5 7.2 55.5 48.8 13.8 15.8 13.6 16.2

SECL 14.8 13.3 13.1 11.5 13.3 156.1 151.1 3.3 40.6 40.2 1.1

MCL 14.2 13.1 11.7 8.8 21.8 142.3 138.3 2.9 37.4 37.2 0.7

NEC 0.1 0.1 0.1 (28.6) (9.1) 0.8 0.9 (13.5) 0.3 0.4 (20.5)

CIL 59.6 55.2 51.5 8.0 15.8 608.1 580.3 4.8 163.5 158.9 2.9

Production

ECL 6.8 6.0 5.3 13.1 29.0 50.2 43.6 15.1 17.2 15.5 11.4

BCCL 3.7 4.0 2.9 (7.5) 29.8 31.0 32.6 (4.9) 9.5 10.6 (10.5)

CCL 13.2 13.0 7.0 1.9 88.3 68.7 63.4 8.4 27.1 26.1 3.7

NCL 9.3 9.1 8.3 2.5 11.5 101.5 88.5 14.7 26.9 25.6 5.0

WCL 9.1 8.0 5.9 14.5 54.8 53.2 46.2 15.1 21.1 18.5 14.0

SECL 18.9 15.5 14.1 22.2 33.9 157.4 144.7 8.8 46.6 43.0 8.4

MCL 18.1 16.7 14.5 8.4 25.0 144.2 143.1 0.8 45.8 43.8 4.7

NEC 0.1 0.1 0.1 (21.9) 11.1 0.7 0.8 (4.6) 0.3 0.4 (32.1)

CIL 79.2 72.3 58.0 9.6 36.5 606.9 567.4 7.0 194.4 183.4 6.0

39

35 33 33 35 31

34 32

40 41 42 41

38

43 40 42

40 40 37

35

42 43 42 42 40

(10)

(5)

-

5

10

15

20

25

30

35

-

5

10

15

20

25

30

35

40

45

50

Feb-1

7

Mar-

17

Apr-

17

May-

17

Jun-1

7

Jul-1

7

Aug

-17

Sep

-17

Oct

-17

Nov-

17

Dec-

17

Jan

-18

Feb-1

8

Mar-

18

Apr-

18

May-

18

Jun-1

8

Jul-1

8

Aug

-18

Sep

-18

Oct

-18

Nov-

18

Dec-

18

Jan

-19

Feb-1

9

Dispatch to power (LHS, mn tons) YoY growth (RHS, %)(mn tons) (%)

Oil, Gas & Consumable Fuels Coal India

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 3: Coal inventory at plants improved in March 2019; no plant with critical inventory across India Inventory position of coal across power plants in India, March fiscal year-ends, 2017-18

Source: CEA, Kotak Institutional Equities

Exhibit 4: Coal-based generation declined by 1.6% yoy in February 2019 Key details of installed capacity, generation and PLF in India, March fiscal year-ends

Source: CEA, Kotak Institutional Equities

Exhibit 5: Railways freights remained flat in February 2019 even as volumes increased 7.5% yoy Volume and freight rates for coal movement by railway (mn tons, Rs/ton km)

Source: Indian Railways, Kotak Institutional Equities

Mar-2019 Feb-2019 Jan-2019

Days Critical (#) Super-Critical (#) Days Critical (#) Super-Critical (#) Days Critical (#) Super-Critical (#)

North 26 — — 20 1 — 15 1 1

West 15 — — 14 2 2 12 1 3

South 13 — — 15 — — 13 — —

East 17 — — 14 — — 10 — —

All India 18 — — 16 3 2 12 2 4

Mar-2018 Feb-2018 Jan-2018

Days Critical (#) Super-Critical (#) Days Critical (#) Super-Critical (#) Days Critical (#) Super-Critical (#)

North 13 2 3 13 6 6 11 — 5

West 8 7 10 9 6 14 8 5 9

South 12 1 3 12 4 3 13 — 1

East 8 0 0 6 6 5 6 — —

All India 10 10 16 10 22 29 9 5 15

Feb-19 Feb-18 yoy (%) Feb-19 Feb-18 yoy (%)

Overall

Installed capacity (MW) 350,162 334,147 4.8 350,162 334,147 4.8

Generation (MU) 91,160 91,953 (0.9) 1,133,276 1,097,032 3.3

PLF (%) 49.3 50.4 -113 bps 51.5 50.5 99 bps

Coal

Installed capacity (MW) 197,353 193,822 1.8 197,353 193,822 1.8

Generation (MU) 75,311 76,508 (1.6) 896,879 864,498 3.7

PLF (%) 58.6 60.7 -209 bps 58.7 57.6 112 bps

Monthly YTD

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

35

40

45

50

55

60

Feb/1

7

Mar/

17

Apr/

17

May/

17

Jun/1

7

Jul/17

Aug

/17

Sep

/17

Oct

/17

Nov/

17

Dec/

17

Jan

/18

Feb/1

8

Mar/

18

Apr/

18

May/

18

Jun/1

8

Jul/18

Aug

/18

Sep

/18

Oct

/18

Nov/

18

Dec/

18

Jan

/19

Feb/1

9

Volumes (LHS, mn tons) Freight (RHS,Rs/ton km)

Coal India Oil, Gas & Consumable Fuels


Exhibit 6: Spot e-auction premiums declined to 84% in February 2019 Monthly trend in spot coal volumes and premium for Coal India, March fiscal year-ends, Feb-2017 – Feb-2019

Source: Ministry of Power, Kotak Institutional Equities

Exhibit 7: Imported coal prices averaged at US$79/ton in March 2019 Trend in price of imported coal, March fiscal year-ends, Mar-2010 - Mar-2019

Source: Bloomberg, Kotak Institutional Equities

Exhibit 8: Our earnings assumptions factor 4% yoy growth in volumes for FY2019E Key operational and financial assumptions, March fiscal year-ends, 2017-21E (Rs mn)

Source: Company, Kotak Institutional Equities estimates

5.3 5.4 4.1 4.2 3.2 3.9 3.4 3.1 4.3 5.2 9.1 4.6 6.0 3.8 3.4 3.5 3.6 2.4 2.2 2.6 0.2 1.0 3.4 4.8 3.1

28 29

42 44

32

47

65 67

95

35

74

58

73 63

92 87

80 76

93 102

97

111

131

104

84

-

20

40

60

80

100

120

140

0

1

2

3

4

5

6

7

8

9

10

Feb-1

7

Mar-

17

Apr-

17

May-

17

Jun-1

7

Jul-1

7

Aug

-17

Sep

-17

Oct

-17

Nov-

17

Dec-

17

Jan

-18

Feb-1

8

Mar-

18

Apr-

18

May-

18

Jun-1

8

Jul-1

8

Aug

-18

Sep

-18

Oct

-18

Nov-

18

Dec-

18

Jan

-19

Feb-1

9

Spot e-auction volumes (mn tons, LHS)

Spot e-auction premium (%, RHS)(mn tons) (%)

40

50

60

70

80

90

100

110

120

130

140

Mar-

10

Sep

-10

Mar-

11

Sep

-11

Mar-

12

Sep

-12

Mar-

13

Sep

-13

Mar-

14

Sep

-14

Mar-

15

Sep

-15

Mar-

16

Sep

-16

Mar-

17

Sep

-17

Mar-

18

Sep

-18

Mar-

19

Thermal coal (US$/ton) Exchange rate (Rs/US$)

Growth (%)

2017 2018 2019E 2020E 2021E 2017 2018 2019E 2020E 2021E

Volumes (mn tons) 543 580 604 633 654 2 7 4 5 3

Realization (Rs/ton) 1,389 1,408 1,522 1,561 1,600 (2) 1 8 3 3

Revenue (Rs mn) 754,666 817,000 919,632 988,092 1,045,976 (0) 8 13 7 6

Employee costs (335,143) (426,336) (383,902) (400,125) (417,879) 13 27 (10) 4 4

Overburden (26,722) (33,583) (34,096) (36,762) (39,358) (5) 26 2 8 7

EBITDA 122,242 83,845 197,624 217,916 226,721 (33) (31) 136 10 4

PAT 92,678 70,198 160,367 169,588 171,217 (35) (24) 128 6 1

Oil, Gas & Consumable Fuels Coal India


Exhibit 9: Profit model, balance sheet, cash model of Coal India, March fiscal year-ends, 2016-21E (Rs mn)


2016 2017 2018 2019E 2020E 2021E

Profit model

Net sales 756,443 754,666 817,000 919,632 988,092 1,045,976

Transport and loading recovery 22,386 27,382 29,806 26,348 27,673 28,599

Total income 793,271 794,430 830,011 943,315 1,015,648 1,074,454

EBITDA 181,791 122,242 83,845 197,624 217,916 226,721

Interest income 48,042 37,306 29,518 20,975 6,240 6,470

Other Income (ex transport, interest) 10,515 18,008 28,884 71,976 71,976 71,976

Interest expense (207) (4,117) (4,318) (4,149) (4,156) (4,156)

Depreciation (24,664) (29,101) (30,664) (32,982) (37,383) (40,561)

Pretax profits 215,476 144,337 107,264 253,444 254,594 260,450

Tax (73,148) (51,660) (37,067) (93,077) (85,005) (89,232)

Net income 142,329 92,678 70,198 160,367 169,588 171,217

Extraordinary items 415 (18) — — — —

Reported profit 142,743 92,660 70,198 160,367 169,588 171,217

Earnings per share (Rs) 23 15 11 26 27 28

Balance sheet

Paid-up common stock 63,164 62,074 62,074 62,074 62,074 62,074

Total shareholders' equity 338,976 245,268 198,466 213,592 201,629 191,295

Minority interest 1,048 3,459 3,625 3,625 3,625 3,625

Total borrowings 11,988 30,078 15,309 15,598 15,598 15,598

Shifting and rehab fund 31,777 38,197 43,666 43,666 43,666 43,666

Total liabilities and equity 383,788 317,002 261,065 276,481 264,518 254,184

Net fixed assets 183,608 220,900 275,774 312,190 344,206 334,489

Capital work-in progress 58,942 103,078 102,864 122,462 142,059 150,770

Investments 29,019 14,829 15,086 15,086 15,086 15,086

Cash 383,128 312,298 314,751 203,000 189,433 234,770

Current assets (excl. cash) 427,055 482,357 512,892 527,045 543,109 551,321

Current liabilities and provisions 718,408 843,787 1,013,852 955,464 1,021,562 1,084,739

Deferred tax asset 20,445 27,328 53,551 52,161 52,187 52,488

Misc. expenditure — — — — — —

Total assets 383,788 317,002 261,065 276,481 264,518 254,184

Free cash flow

Operating cash flow, excl. working capital 165,021 121,761 100,862 194,739 206,945 211,478

Working capital changes (62,730) 70,077 139,530 (72,542) 50,035 54,964

Capital expenditure (43,450) 162,491 (85,324) (88,996) (88,996) (39,554)

Investments (885) 14,191 (258) — — —

Free cash flow 57,957 368,519 154,810 33,201 167,985 226,888

Ratios

Net debt/equity (%) (109) (115) (151) (88) (86) (115)

Return on equity (%) 38 32 32 78 82 87

Book value per share (Rs) 54 40 32 34 32 31

ROCE (%) 39 34 38 94 99 104



Dmart versus competitors: price competition on the rise

Analysis of prices of food and FMCG products retailed by Dmart Ready and its online

competitors reveals that price differential of Dmart versus others is steadily coming down. In

October 2018, Dmart had the lowest priced product in 21 of 30 products we tracked, while in

March 2019 this count shrank to 12 of the same 30 products. Further, competition seems to be

fairly broad-based: Flipkart, Easyday and Amazon are aggressive in the food and grocery

segment, while BigBasket is aggressive in the HPC segment.

Private label category expansion: strategy to protect margins

Dmart has traditionally had a strong private label offering in the food+grocery and home

furnishing segment. It has now introduced its ‘Reflect’ brand of kitchen cleaning products,

highlighted prominently as newly launched products within stores, and priced 30-50% cheaper

than the competing brand. We believe more such products may be in the pipeline, though

wresting meaningful share from more established FMCG brands will take a long time.

Dmart Ready: expanded to 150 outlets in Mumbai

Dmart now has 150+ Dmart Ready pick-up points (PUPs) in Mumbai, Navi Mumbai and Thane

areas, up from 75 PUPs a year back. These stores geographically cover almost all regions from

Mumbai, though Dmart may continue to make this network more dense. Further, instead of

acting as only PUPs, these stores have begun selling small-ticket kitchenware items. We believe

the company will continue to expand the ‘Ready’ offering, though we expect a more big-bang

expansion only once the business model stabilizes in Mumbai.

High competitive intensity may keep margins capped

We believe the Street’s margin improvement expectation may not be met as Dmart will remain

focused on boosting sales and will pass on most margin benefits (pricing benefits from

suppliers) to customers in its bid to retain its position of being the lowest price retailer. We think

positives of business model such as low price and localized offering are in the stock price,

though negatives in the form of increasing competition from online players is not. Roll-forward

leads to a new fair value of Rs945 (Rs915 earlier). Reiterate SELL.

Avenue Supermarts (DMART) Retailing

Price competition on the rise. Competition from well-funded online players in the

grocery space seems to be on the rise, resulting in some dilution of Dmart’s lowest

product price proposition. We believe Dmart will continue to focus on revenue growth

(via both offline and online channels), though future margin expansion may be tepid,

higher private label focus notwithstanding. Roll-forward leads to a revised DCF-based

fair value of Rs945 (Rs915 earlier). SELL stays.

SELL

APRIL 01, 2019

UPDATE

Coverage view: Cautious

Price (`): 1,494

Fair Value (`): 945

BSE-30: 38,872

Garima Mishra

Avenue Supermarts

Stock data Forecasts/Valuations 2019 2020E 2021E

52-week range (Rs) (high,low) EPS (Rs) 15.5 20.3 26.3

Market Cap. (Rs bn) EPS growth (%) 24.7 31.6 29.3

Shareholding pattern (%) P/E (X) 96.7 73.4 56.8

Promoters 81.2 Sales (Rs bn) 198.4 254.4 321.2

FIIs 5.9 Net profits (Rs bn) 9.6 12.7 16.4

MFs 2.8 EBITDA (Rs bn) 16.7 22.1 28.4

Price performance (%) 1M 3M 12M EV/EBITDA (X) 55.8 42.2 32.7

Absolute 2.6 (6.1) 12.8 ROE (%) 18.7 20.3 21.3

Rel. to BSE-30 (4.8) (12.4) (4.4) Div. Yield (%) 0.0 0.0 0.0

Company data and valuation summary

1,699-1,126

932.3

Retailing Avenue Supermarts


Retail price comparison: competition from online players on the rise

Dmart till mid of last year was the lowest price retailer of a basket of 30 standard

consumption items we tracked. However, this began changing in 2HCY18 as Amazon

aggressively expanded its Amazon Pantry offering. Flipkart has jumped into the fray (even

selling a few staples at Rs1/kg), while BigBasket is steadily becoming more price aggressive.

We concede that some of the offers shown below may be promotional in nature and may be

taken off/toned down going forward. Directionally, however, we reckon competitive intensity

is unlikely to reduce. Flipkart and Amazon have stated their ambitions to ramp up their grocery

offering, and we expect them to allocate greater capital to this vertical going forward.

Exhibit 1: Dmart’s low price promise is witnessing competition from other retailers Comparison of product prices across various retailers

Source: Web portals of companies (prices retrieved on 28th March 2019), Kotak Institutional Equities

Dmart's

differential

versus cheapest

Big Basket Easyday (%)

Food

Staples

Aashirvaad Multigrain Flour (1 kg) 50 58 56 na 50 57 50 —

Branded sugar (1 kg) 46 47 60 49 46 1 1 4,500

Devaaya rice (5 kg) 428 399 425 425 428 na 399 7

Fortune Sunflower Oil (5 ltr) 510 525 522 na 522 na 510 —

Tur dal - private label (1 kg) 99 99 102 99 92 1 1 9,800

Cashew nut - private label (500 gm) 520 599 467 461 515 520 461 13

Cumin - private label (100 gm) 28 40 36 35 35 30 28 —

Packaged food

Kellogg's Cornflakes - Original (875 gm) 245 na 290 221 276 285 221 11

Tropicana Orange Juice (1 ltr) 59 135 107 89 na 128 59 —

Parle G Biscuits (800 gm) 58 59 59 65 62 58 —

Hide and Seek Biscuits (120 gm) 25 30 29 27 30 24 24 4

Britannia Bourbon (150 gm) 22 28 28 25 27 na 22 —

Dairy

Amul Butter (500 gm) 210 225 215 203 na 214 203 4

Amul Taaza Milk (1 ltr) 57 60 59 60 na na 57 —

Beverages

Brooke Bond Red Label (500 gm) 195 215 193 167 185 204 167 17

Nescafe Instant Coffee (50 gm jar) 134 135 141 131 132 na 131 3

HPC

Shampoo

Dove Intense Repair (340 ml) 190 250 168 225 168 na 168 13

Sunsilk thick and long (340 ml) 140 198 165 178 164 157 140 —

Pantene Smooth care (340 ml) 205 230 165 198 na na 165 24

Clinic Plus Strong & Long (650 ml) 225 360 211 324 173 228 173 30

Soap

Lux Fresh Splash (3x150 gm) 93 112 86 112 107 103 86 8

Dettol Cool Soap (4x125 gm) 165 na 180 na 165 na 165 —

Pears Soap (3x125 gm) 152 164 131 148 131 143 131 16

Lifebuoy (4x125 gm) 98 na 120 94 na na 94 5

Detergents

Rin detergent powder (1 kg) 70 79 75 75 78 na 70 —

Surf Excel Quick Wash (2 kg) 339 400 400 360 340 380 339 —

Tide Plus (2 kg) 174 212 187 184 181 195 174 —

Ariel Matic front load (1 kg) 205 265 219 197 239 217 197 4

Toothpaste

Colgate calci-lock (150 gm) 61 na 65 na 65 64 61 —

Himalaya herbal toothpaste (150 gm) 80 na 77 80 76 78 76 5

Pepsodent germicheck (300 gm) 108 139 94 106 94 100 94 15

Cheapest

price

Flipkart

Supermart

Amazon

Pantry

Reliance

Smart

Dmart

Ready

Avenue Supermarts Retailing


New private label ‘Reflect’ in the cleaning products category

Exhibit 2: Dmart's Reflect brand cleaning products are priced significantly cheaper than third-party

brands Price comparison of Dmart's Reflect brand with Vim and Pril


Dmart’s peers in the grocery retail space have private labels in various categories. Most of

these categories are in the dry grocery space (kitchen staples such as flour, pulses, oils, etc.),

where large FMCG companies have a relatively limited presence. Amazon has already

introduced products such as cleaners and air fresheners under its Presto brand. We haven’t

observed significant changes to sale of these private label products post the e-commerce

regulations in December 2018. For instance, Cloudtail continues to sell these products on

Amazon’s India portal and we reckon will launch more brands in related categories in the

future.

Exhibit 3: Most retailers/e-tailers have introduced private labels List of private labels introduced by various companies

Notes:

(a) Future Retail’s brands belong to Future Consumer, a group company.

Source: Companies, Kotak Institutional Equities

Discount to Vim

SKU MRP Dmart price (%)

Reflect concentrated gel 1 litre 99 85 54

Reflect lemon dishwash round bar 500 gm 39 32

Reflect lemon dishwash bar 3*200 gm 44 29 31

Reflect metal shining powder 200 gm 28 14

Vim dishwash gel 1 litre 199 186

Vim dishwash bar 3*200 gm 45 42

Pril lime liquid 500 ml 107 98

Amazon India Solimo Food products, home & kitchenware

Presto FMCG products such as cleaners, tissues and air fresheners

Vedaka Food and grocery

Dmart Dmart Premia Food and grocery

Dmart Healthy Choice Food and grocery

Swaad Cooking oil

D'Homes Home décor, small appliances (not available online)

Reflect Kitchen Cleaning Product

Future Retail Golden Harvest, Kosh, Desi Atta Company Food and grocery

Karmiq Healthy foods

Ektaa Regional foods

Mother Earth Organic staples

Tasty Treats Ready to eat snacks

Sunkist Fresh juices

Fresh & Pure Beverages

Baker Street Baked products

Kara Wipes

Think Skin Body Wash

Cleanmate Home cleaning products

Care Mate Tissues, wipes, foils

Reliance Retail Reliance Healthy Life Food and grocery

Reliance Value Food and grocery

Relaince Retail Ltd Food and grocery

Reliance Dairy Life Dairy products

Reliance Aarambh Beverages



Dmart Ready: 150+ store footprint in Mumbai; e-commerce companies have a

much wider pan-India network

Dmart Ready store network is now at 150+, compared to 75 stores as of March 2019. These

stores operate independent of the large stores, and have until now mostly acted as PUPs. Of

late, Dmart has started retailing small kitchen items (non-perishables) from these stores as

well. Our rough-cut estimate suggests that these stores may account for ~1% of Dmart’s

overall revenue in FY2019. This figure is small currently, but has the potential to increase as

more shoppers take to online shopping, and Dmart Ready expands to more cities.

Exhibit 4: Dmart’s PUP network is attempting to cover most regions of Mumbai Distribution of PUP network within Mumbai

Source: Dmart Ready website, Kotak Institutional Equities

We note that other online competitors are investing aggressively in the grocery business

given the large target segment size, high proportion of grocery in the Indian consumption

basket as well as relatively unorganized nature of the market.

No. of PUPs

Area within Mumbai and Thane (#)

Andheri East 9

Andheri West 7

Bandra West 3

Bhandup 1

Borivali West 10

Byculla West 1

Charni Road East 3

Chembur East 6

Chembur West 2

Cotton Green 1

Cumbala Hill 1

Dadar West 6

Ghatkopar East 6

Ghatkopar West 7

Goregaon East 2

Goregaon West 6

Govandi East 1

Juhu 2

Kandivali West 10

Khar West 2

Kurla East 2

Lalbaug 1

Lower Parel West 1

Mahalaxmi 11

Mahim West 6

Malabar Hill 1

Malad East 6

Malad West 10

Mulund 6

Mumbai Central 1

Parel 4

Prabhadevi 1

Powai 1

Santa Cruz East 3

Sion 3

Tardeo 2

Thane 3

Vile Parle East 5

Wadala East 1

Total 154



As a result, these companies have expanded operations to several major cities in India,

compared to Dmart which has its online venture limited to only Mumbai/Thane. We

acknowledge that Dmart’s core customer base is loyal and possibly less amenable to online

shopping, but high incentives and discounts doled out by competitors may change this over

a period of time. Dmart is certain to compete, and we believe it will expand its Ready

offering much wider over the medium term. Price competition from well-funded competitors

may continue, particularly as most of these are well-funded: Amazon and Flipkart enjoy the

backing of their parent companies, BigBasket and Grofers have recently raised US$150 mn

and US$60 mn, respectively.

Exhibit 5: E-commerce companies have a much wider reach Number of cities covered by various grocery retailers as of March 31, 2019

Source: Companies, company websites, Kotak Institutional Equities

We reckon that Dmart will compete aggressively with e-commerce companies in the grocery

space in a bid to maintain its price leadership proposition and thus customers’ wallet share.

Consequently, it may pass on scale benefits to consumers, resulting in stagnant margins.

Exhibit 6: Dmart’s margins have been under pressure in 9MFY19 Margin trends for Dmart, March fiscal year-ends, 1QFY17-3QFY19 (%)


FY2020 will see promoter stake reduction

Per SEBI regulations, Dmart’s promoter group will need to reduce its stake down to 75%

from the current 81.2%. This will happen within the next one year (Dmart has already

completed two years since listing).

Company Offering Number of cities present

Amazon India Amazon Pantry 112

Avenue Supermarts Dmart Ready 2

Avenue Supermarts Dmart store 49

Bigbasket Bigbasket 23

Flipkart Flipkart Supermart 4

Future Retail Easyday stores 168

Easyday online 3

Grofers Grofers 20

Reliance Retail Reliance Smart 3

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

13.0

13.5

14.0

14.5

15.0

15.5

16.0

16.5

17.0

1Q

FY1

7

2Q

FY1

7

3Q

FY1

7

4Q

FY1

7

1Q

FY1

8

2Q

FY1

8

3Q

FY1

8

4Q

FY1

8

1Q

FY1

9

2Q

FY1

9

3Q

FY1

9

(%) Gross margin (%, LHS) EBITDA margin (%, RHS)



Exhibit 7: Key assumptions for D-Mart, March fiscal year-ends, 2012-21E


xx

Exhibit 8: DCF-based valuation of Dmart, March fiscal year-ends


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

Revenue

Net revenues (Rs mn) 22,086 33,409 46,865 64,394 85,838 118,977 150,332 198,402 254,424 321,232

Yoy growth (%) 51 40 37 33 39 26 32 28 26

SSSG (%) 20 32 26 22 21 21 14 19 18 17

Revenue per sq. ft (Rs) 14,185 20,132 23,983 26,784 28,595 32,116 33,329 36,282 39,272 43,041

Margins

Gross margin (%) 14.7 14.5 15.0 14.8 14.9 15.3 15.9 14.9 15.0 15.0

EBITDA margin (%) 6.2 6.4 7.3 7.1 7.7 8.2 9.0 8.4 8.7 8.9

Capital expenditure

Period-ending store count (#) 55 62 75 89 110 131 155 182 212 242

New store additions (#) 10 7 13 14 21 21 24 27 30 30

Retail trading area (mn sq. ft) 1.6 1.8 2.1 2.7 3.3 4.1 4.9 6.0 7.0 7.9

Capital expenditure (Rs mn) 2,086 1,863 2,999 4,333 3,654 5,804 8,949 10,631 12,078 13,800

Working capital

Inventory days (#) 32 30 29 31 29 29 28 28 28 28

Debtor + loans and advances days (#) 10 10 8 8 8 7 8 7 7 7

Creditor days (#) 19 16 14 11 14 13 12 12 12 12

2018 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2035E 2040E

Net Sales 150,332 198,402 254,424 321,232 401,153 493,853 596,288 707,710 826,452 952,505 1,083,665 1,223,231 1,364,482 2,152,531 2,935,437

Yoy growth (%) 26 32 28 26 25 23 21 19 17 15 14 13 12 8 5

EBIT 11,938 14,726 19,584 25,315 32,067 39,951 48,646 58,027 67,763 78,099 88,853 100,297 111,878 176,493 240,686

EBIT margin (%) 7.9 7.4 7.7 7.9 8.0 8.1 8.2 8.2 8.2 8.2 8.2 8.2 8.2 8.2 8.2

EBIT*(1-tax rate) 7,814 9,572 12,730 16,455 20,844 25,968 31,620 37,718 44,046 50,764 57,755 65,193 72,721 114,720 156,446

Depreciation/Amortisation 1,590 1,991 2,524 3,133 3,833 4,612 5,447 6,340 7,294 8,300 9,358 10,484 11,680 13,526 15,248

(Inc.)/Dec. in working capital (2,295) (3,159) (3,655) (4,359) (5,215) (6,048) (6,683) (7,270) (7,747) (8,224) (8,558) (9,106) (9,216) (10,710) (9,502)

Capital expenditure (9,865) (10,631) (12,078) (13,800) (16,010) (17,147) (18,361) (19,656) (20,954) (21,830) (23,210) (24,674) (26,226) (6,469) (8,256)

Free cash flows (2,755) (2,228) (479) 1,428 3,452 7,385 12,023 17,132 22,639 29,010 35,345 41,896 48,958 111,068 153,936

Years discounted — 1 2 3 4 5 6 7 8 9 10 15 20

Discount factor 1.00 0.90 0.80 0.72 0.65 0.58 0.52 0.47 0.42 0.38 0.34 0.20 0.11

Discounted cash flow (479) 1,281 2,777 5,328 7,779 9,941 11,782 13,540 14,796 15,729 16,485 21,700 17,452

Risk free rate (%) 6

Risk premium (%) 5.5

Beta (X) 1

Cost of equity (%) 11.5 580 10.5 11.0 11.5 12.0 12.5

WACC (%) 11.5 4.0 1,089 977 881 799 727

Terminal growth rate (%) 5 4.5 1,137 1,014 911 823 747

Sum of free cash flow (Rs mn) 309,002 5.0 1,193 1,058 945 850 769

Terminal value (Rs mn) 281,916 5.5 1,260 1,109 985 881 794

Enterprise value (Rs mn) 590,918 6.0 1,342 1,171 1,032 918 823

Investments (Rs mn) —

Net debt (Rs mn) 1,066

Equity value (Rs mn) 589,852

No. of shares (mn) 624

Equity value per share (Rs) 945

WACC (%)

Terminal

growth

rate (%)



Exhibit 9: Consolidated income statement, balance sheet and cash flow, March fiscal year-ends, 2012-21E (Rs mn)


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

Income statement

Net revenues 22,086 33,409 46,865 64,394 85,838 118,977 150,332 198,402 254,424 321,232

Gross profit 3,246 4,834 7,021 9,522 12,802 18,167 23,976 29,562 38,164 48,185

EBITDA 1,380 2,150 3,418 4,590 6,636 9,812 13,528 16,716 22,109 28,447

Depreciation (375) (458) (570) (815) (984) (1,278) (1,590) (1,991) (2,524) (3,133)

EBIT 1,006 1,692 2,848 3,775 5,652 8,534 11,938 14,726 19,584 25,315

Other income 139 143 158 183 179 286 693 468 262 216

Financial charges (260) (426) (557) (724) (913) (1,220) (596) (355) (315) (270)

Pre-tax profit 884 1,409 2,449 3,233 4,918 7,600 12,036 14,838 19,531 25,260

Taxation (282) (472) (835) (1,109) (1,715) (2,683) (4,158) (5,193) (6,836) (8,841)

Net income 602 937 1,614 2,124 3,203 4,917 7,878 9,645 12,695 16,419

Prior period items (7) 2 (0) (5) — — — — — —

Minority interest & associate profits — — — (0) (1) (129) (200) — — —

Reported net income 594 939 1,614 2,119 3,202 4,788 7,677 9,645 12,695 16,419

Year-ending number of shares - diluted (mn) 506 538 546 547 562 563 624 624 624 624

EPS (Rs) 1.2 1.7 3.0 3.9 5.7 8.5 12.3 15.5 20.3 26.3

Balance sheet

Shareholders' funds 6,811 7,890 9,550 11,989 15,204 38,418 46,691 56,335 69,031 85,450

Minority interest 3 3 0 1 1 1 6 6 6 6

Total debt 3,807 5,261 6,408 9,043 11,923 14,973 4,393 3,500 3,500 2,500

Deferred tax liability 131 203 267 305 399 506 452 452 452 452

Total shareholders' funds + liabilities 10,752 13,356 16,226 21,337 27,527 53,898 51,542 60,294 72,989 88,408

Net fixed assets 8,640 10,428 12,605 16,262 21,752 27,033 35,307 43,948 53,501 64,169

Investments 227 160 155 152 293 531 845 1,245 1,545 1,845

Cash balances 479 616 554 380 351 18,843 5,602 2,154 1,341 1,434

Net current assets excluding cash 1,406 2,153 2,911 4,542 5,220 7,491 9,786 12,945 16,600 20,959

Total assets 10,752 13,356 16,226 21,337 27,527 53,898 51,542 60,294 72,989 88,408

Key ratios (%)

Revenue growth NA 51.3 40.3 37.4 33.3 38.6 26.4 32.0 28.2 26.3

EBITDA growth NA 55.8 59.0 34.3 44.6 47.9 37.9 23.6 32.3 28.7

EPS growth NA 48.5 69.4 31.1 47.2 49.1 44.7 25.6 31.6 29.3

Gross margin 14.7 14.5 15.0 14.8 14.9 15.3 15.9 14.9 15.0 15.0

EBITDA margin 6.2 6.4 7.3 7.1 7.7 8.2 9.0 8.4 8.7 8.9

Tax rate 31.9 33.5 34.1 34.3 34.9 35.3 34.5 35.0 35.0 35.0

Debt/equity (X) 0.6 0.7 0.7 0.8 0.8 0.4 0.1 0.1 0.1 0.0

RoE 13 19 20 24 18 18 19 20 21

RoCE 10 13 14 16 14 16 18 19 21

Cash flow

Operating profit before working capital changes 1,236 1,821 2,741 3,663 5,101 7,286 9,863 11,991 15,535 19,822

Change in working capital/ other adjustments (510) (746) (759) (1,631) (678) (2,271) (2,295) (3,159) (3,655) (4,359)

Capital expenditure (1,833) (2,246) (2,747) (4,473) (6,474) (6,559) (9,865) (10,631) (12,078) (13,800)

Free cash flow (1,106) (1,171) (765) (2,440) (2,052) (1,544) (2,296) (1,799) (198) 1,663



PV OEMs report single digit decline amid high dealer inventory levels in March 2019

As per our estimate, PV industry will likely post single-digit volume decline yoy in March 2019

due to high dealer inventory levels and weak retail demand. Maruti’s overall volumes declined

by 2% yoy to 158,076 units in March 2019 led by (1) 1% yoy decline in domestic volumes and

(2) 13% yoy decline in exports. Entry and compact hatchback/sedan car segment volumes

declined by 7% yoy in March 2019. Ciaz volumes declined by 15% yoy, SUV volumes were up

12% yoy possibly aided by new Ertiga and van segment volumes growing 20% yoy. In terms of

other OEMs, Honda’s domestic volumes grew 27% yoy aided by attractive year-end offers and

launch of the company’s best seller Civic and CR-V and Toyota’s PV volumes increased by 2%

yoy. Tata Motors’ domestic PV volumes declined by 12% yoy in March 2019.

M&M’s auto volumes grew by 1% yoy; tractor volumes declined by 31% yoy in March 2019

Mahindra reported 1% yoy volume growth in the automotive segment, which was driven by 5-

15% yoy growth in three-wheeler and export volumes. CV segment volumes declined by 4%

led by (1) 33% decline in MHCV volumes and (2) 3% decline in LCV volumes. Passenger vehicle

segment grew by 4% yoy led by 5% yoy growth in UV segment due to good response for XUV

300 model. M&M’s overall tractor volumes declined by 31% yoy led by (1) 32% yoy decline in

domestic volumes and (2) 6% yoy decline in export volumes. Tractor volumes were hit due to

postponement of festive season to April 2019 and lower Rabi sowing than expected. Escorts

reported 1% yoy growth in tractor volumes led by strong growth export volumes, which was

partially offset by 1% decline in domestic volumes.

MHCV industry volumes remain under pressure in March 2019

Tata Motors reported 4% yoy growth in domestic CV volumes led by 1) 17% yoy growth in

I&LCV truck sales and 2) 11% growth in SCV cargo and pick-up trucks. However, domestic

M&HCV truck volumes declined by 4% yoy due to low consumer sentiment amid slowing

economy and postponement of purchases due to elections. However, the tipper segment

continued to grow (+12% yoy) strongly and was relatively unaffected on the back of road

construction, affordable housing, irrigation projects and government spending on infrastructure

projects. VECV’s volumes declined by 8% yoy led by 8% yoy decline in domestic volumes while

exports declined by 4% yoy. Ashok Leyland also reported a 4% yoy decline led by 6% yoy

decline in MHCV volumes.

Hero Motocorp and Royal Enfield volumes down 20% yoy in March 2019

Higher inventory weighed on two-wheeler volumes in March 2019. Hero Motocorp’s volumes

declined by 20% yoy in March 2019. Royal Enfield’s volumes declined by 20% yoy led by 21%

yoy decline in domestic volumes. TVS Motors reported flattish volume growth led by 1) 5%

growth in motorcycle volumes and 2) 33% yoy growth in three- wheeler volumes, which was

offset by 1) 2.5% yoy decline in scooter volumes and 2) 11% yoy decline in moped volumes.

Automobiles & Components India

High inventory weighs on auto industry sales performance. Retail demand in auto

industry continues to remain under pressure as OEMs corrected dealer inventory levels

in March 2019, which led to weakness in volumes across segments. PV industry likely to

post single-digit volume decline on yoy basis in March 2019 while two-wheeler industry

volumes declined yoy led by Hero Motocorp and Royal Enfield. MHCV volume growth

also remained under pressure indicating spillover of the liquidity crisis.

NEUTRAL

APRIL 02, 2019

UPDATE

BSE-30: 38,872

Hitesh Goel

Nishit Jalan

Rishi Vora



Exhibit 1: Maruti Suzuki reported 2% yoy decline in volumes in March 2019; mini and compact sub segment down 7% yoy Maruti Suzuki monthly sales volume, March fiscal year-ends (units)


Exhibit 2: Mahindra & Mahindra: CV volumes declined by 4% yoy in March 2019; domestic tractor volumes down 32% yoy Mahindra & Mahindra monthly sales volume, March fiscal year-ends (units)


Exhibit 3: Tata Motors reported 2% yoy volume decline in March 2019; domestic CV volumes grew by 4% yoy Tata Motors monthly sales volume, March fiscal year-ends (units)


YTD January-March

Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 2018 2019

Sales volume (units)

M800, Alto, A-Star, Wagon R 37,511 37,794 37,864 29,381 37,710 35,895 34,971 32,835 29,954 27,661 33,408 24,751 16,826 4,27,183 3,79,050

Swift, Baleno, Ritz, Celerio, Dzire 68,885 83,834 77,263 71,570 74,373 71,364 74,011 64,789 72,533 51,334 65,523 72,678 82,532 7,48,475 8,61,804

Gypsy, Ertiga, S-Cross, Brezza 22,764 20,804 25,629 19,321 24,505 17,971 21,639 20,764 23,512 20,225 22,430 21,834 25,563 2,53,759 2,64,197

Omni and Eeco 13,689 15,886 16,717 12,185 15,791 13,663 14,645 13,668 14,053 15,850 15,145 14,565 16,438 1,55,137 1,78,606

Ciaz 4,321 5,116 4,024 1,579 48 7,002 6,246 3,892 3,838 4,734 2,934 3,084 3,672 58,913 46,169

Light commercial vehicle 1,412 1,544 1,703 1,626 1,723 1,805 2,038 2,152 2,128 1,675 2,710 2,188 2,582 10,033 23,874

Total domestic 1,48,582 1,64,978 1,63,200 1,35,662 1,54,150 1,47,700 1,53,550 1,38,100 1,46,018 1,21,479 1,42,150 1,39,100 1,47,613 16,53,500 17,53,700

Exports 12,016 8,008 9,312 9,319 10,219 10,489 8,740 8,666 7,521 6,859 9,571 9,582 10,463 1,26,074 1,08,749

Total volumes 1,60,598 1,72,986 1,72,512 1,44,981 1,64,369 1,58,189 1,62,290 1,46,766 1,53,539 1,28,338 1,51,721 1,48,682 1,58,076 17,79,574 18,62,449

Yoy change (%)

M800, Alto, A-Star, Wagonr 21.1 (2.8) (3.1) 15.1 (10.9) 1.3 (9.1) 1.1 (21.6) (14.0) 0.3 (26.7) (55.1) (11.3)

Swift, Baleno, Ritz, Celerio, Dzire 11.3 31.8 50.8 76.7 17.8 (3.6) 1.7 3.7 10.8 (3.8) (3.5) 11.4 19.8 15.1

Gypsy, Ertiga, S-Cross, Brezza 24.3 0.8 13.4 39.2 (4.9) (16.2) 8.7 (11.2) 1.9 4.9 8.4 7.4 12.3 4.1

Omni and Eeco 17.7 14.0 32.7 32.3 0.5 (1.9) 6.6 7.9 3.6 38.8 23.6 17.2 20.1 15.1

Ciaz (12.1) (27.2) (14.8) (60.0) (99.2) 8.4 11.5 (5.2) (4.3) 98.7 (42.0) (37.0) (15.0) (21.6)

Light commercial vehicle 364.5 275.7 297.9 689.3 145.1 147.3 131.9 146.8 112.2 130.7 92.1 74.8 82.9

Total domestic 16.1 14.2 24.9 45.5 0.1 (2.8) 1.4 1.5 0.5 1.8 1.1 0.9 (0.7) 6.1

Exports 2.1 19.1 48.1 (29.0) (9.9) (10.4) (25.1) (17.0) (19.1) (36.4) (11.0) (19.6) (12.9) (13.7)

Total volumes 14.9 14.4 26.0 36.3 (0.6) (3.4) (0.5) 0.2 (0.7) (1.3) 0.2 (0.8) (1.6) 4.7

YTD



Passenger UVs (incl. Verito) 26,555 21,927 20,715 18,137 19,781 19,758 21,411 24,066 16,188 15,091 23,872 26,109 27,646 2,49,571 2,54,701

Commercial Vehicles 25,496 18,963 18,748 19,229 19,284 20,326 22,917 24,353 19,673 16,906 22,625 21,154 24,423 2,16,797 2,48,601

3-wheelers 6,602 4,327 4,355 4,323 5,540 5,289 6,940 6,931 5,703 4,693 6,003 5,652 6,943 54,625 66,699

Exports (Auto sector) 3,424 2,880 3,031 3,466 2,594 2,951 3,754 3,066 3,537 3,065 3,222 3,090 3,940 28,252 38,596

Auto division 62,077 48,097 46,849 45,155 47,199 48,324 55,022 58,416 45,101 39,755 55,722 56,005 62,952 5,49,245 6,08,597

Tractors (Dom + Exp) 28,477 30,925 29,330 40,529 22,679 17,785 37,581 47,376 25,949 17,404 22,212 18,978 19,688 3,18,888 3,30,436

Total 90,554 79,022 76,179 85,684 69,878 66,109 92,603 1,05,792 71,050 57,159 77,934 74,983 82,640 8,68,133 9,39,033

Yoy change (%)

Passenger UVs (incl. Verito) 4.7 13.1 2.1 12.2 (5.6) 2.2 (15.5) 0.7 1.0 (2.9) 0.8 16.6 4.1 2.1

Commercial vehicles 11.3 25.9 15.3 27.1 28.4 24.7 19.4 26.3 26.5 (3.6) 7.7 1.0 (4.2) 14.7

3-wheelers 30.4 25.9 7.3 68.9 46.7 35.4 17.1 13.1 28.0 20.5 26.5 10.0 5.2 22.1

Exports (Auto sector) 26.4 88.5 134.4 86.8 30.8 14.3 17.1 30.9 39.7 38.0 22.5 16.4 15.1 36.6

Auto division 10.8 22.0 11.8 26.4 13.1 14.7 2.5 13.1 16.9 1.4 7.0 9.5 1.4 10.8

Tractors (Dom + Exp) 47.3 18.3 14.6 23.1 20.4 6.9 (17.9) 17.7 12.9 (5.9) 0.7 (8.1) (30.9) 3.6

Total 20.1 20.5 12.9 24.8 15.4 12.5 (6.9) 15.1 15.4 (0.9) 5.1 4.5 (8.7) 8.2

YTD January-March



MHCVs 24,321 18,271 17,565 17,456 16,143 19,698 23,292 19,203 16,172 17,836 17,541 17,968 1,90,367 2,01,145

LCVs 31,296 20,915 22,861 26,147 23,535 25,389 28,127 24,610 21,785 22,179 22,634 23,914 2,59,072 2,62,096

Total CVs 55,617 39,186 40,426 43,603 39,678 45,087 51,419 43,813 37,957 40,015 40,175 41,882 56,417 4,49,439 4,63,241

UVs 7,908 6,659 6,043 6,044 5,706 6,558 6,351 6,818 5,655 6,263 6,920 7,843 53,071 70,860

Cars 12,628 10,676 11,525 12,372 11,483 12,112 12,221 11,633 11,462 8,161 11,090 10,426 1,36,548 1,23,161

Total PVs 20,536 17,335 17,568 18,416 17,189 18,670 18,572 18,451 17,117 14,424 18,010 18,269 18,262 1,89,619 1,94,021

Total sales 76,153 56,521 57,994 62,019 56,867 63,757 69,991 62,264 55,074 54,439 58,185 60,151 74,679 6,39,058 6,57,262

Yoy change (%)

MHCVs 20.1 208.9 70.8 59.4 26.2 31.5 37.0 23.8 (8.2) (18.4) (4.8) (13.2) 5.7

LCVs 47.9 72.4 33.4 44.4 28.3 29.7 19.4 16.7 (2.7) (10.0) (12.5) (4.2) 1.2

Total CVs 34.3 117.1 47.4 50.1 27.4 30.5 26.8 19.7 (5.1) (13.9) (9.3) (8.3) 1.4 3.1

UVs 223.3 309.3 447.4 406.6 101.1 127.5 21.7 31.1 (0.4) 1.4 1.0 22.7 33.5

Cars (5.1) (5.5) 17.1 22.4 (6.2) 4.8 (0.9) 2.0 (2.1) (1.1) (17.8) (10.8) (9.8)

Total PVs 30.4 34.1 60.5 62.9 14.0 29.3 5.8 11.1 (1.5) (0.0) (11.4) 1.0 (11.1) 2.3

Total sales 33.3 82.5 51.2 53.7 23.0 30.1 20.4 17.0 (4.0) (10.6) (10.0) (5.7) (1.9) 2.8

India Automobiles & Components


Exhibit 4: Ashok Leyland volumes declined by 4% yoy in March 2019 ;MHCV volumes down by 6% yoy Ashok Leyland monthly sales volume, March fiscal year-ends (units)


Exhibit 5: VECV reported 8% yoy volume decline in March 2019; domestic MHCV volumes declined by 13% yoy VECV monthly sales volume, March fiscal year-ends (units)


Exhibit 6: Escorts reported 1% yoy volume growth in March 2019; domestic tractor volumes declined by 1% yoy Escorts monthly sales volume, March fiscal year-ends (units)


Exhibit 7: Hero Motocorp’s volumes declined by 20% yoy in March 2019 Hero Motocorp monthly sales volume, March fiscal year-ends (units)


YTD



LCV 5,396 3,709 3,238 4,534 4,203 4,228 5,141 5,352 4,403 4,198 5,047 4,954 5,501 43,441 54,508

MHCV 17,057 8,968 10,421 11,257 10,996 13,158 14,232 9,797 8,718 11,295 14,694 13,291 16,034 1,31,460 1,42,861

Total CVs 22,453 12,677 13,659 15,791 15,199 17,386 19,373 15,149 13,121 15,493 19,741 18,245 21,535 1,74,901 1,97,369

Yoy change (%)

LCV 57.6 45.0 10.4 44.9 42.2 37.9 44.2 40.7 15.3 27.1 13.2 11.2 1.9 25.5

MHCV 11.8 97.9 69.8 21.8 21.8 24.5 20.6 7.2 (18.0) (29.2) 7.7 (3.2) (6.0) 8.7

Total CVs 20.2 78.8 50.6 27.6 26.9 27.5 26.0 17.0 (9.2) (19.5) 9.1 0.4 (4.1) 12.8

YTD


Domestic sales

LCV 2,193 1,124 1,864 1,857 1,731 1,423 1,536 1,369 908 1,240 1,478 1,530 2,276

MHCV 5,787 2,265 3,404 3,639 3,427 3,420 4,149 3,752 2,909 3,872 3,699 3,699 5,053

Total 7,980 3,389 5,268 5,496 5,158 4,843 5,685 5,121 3,817 5,112 5,177 5,337 7,329 55,877 61,732

Export sales

LCV 404 168 115 233 223 195 201 169 328 151 105 333 357

MHCV 861 382 491 586 535 910 702 536 457 850 526 598 859

Total 1,265 550 606 819 758 1,105 903 705 785 1,001 631 931 1,216 9,001 10,010

Total sales 9,245 3,939 5,874 6,315 5,916 5,948 6,588 5,826 4,602 6,113 5,808 6,268 8,545 64,878 71,742

Yoy change (%)

LCV 20.1 (8.6) 9.1 56.6 51.3 45.8 22.7 11.5 (10.8) (12.1) (11.2) 2.1 3.8

MHCV 26.2 68.0 51.6 65.7 33.1 20.3 8.3 16.0 (4.4) 6.5 (14.9) (13.7) (12.7)

Total domestic 24.5 31.5 33.2 62.5 38.7 26.8 11.8 14.7 (6.0) 1.3 (13.9) (7.7) (8.2) 10.5

Export sales

LCV 101.0 0.0 (19.6) 26.6 (4.7) (21.1) 24.1 1.8 404.6 36.0 (31.8) 1.2 (11.6)

MHCV 80.5 15.4 10.8 83.7 45.4 99.6 2.0 (0.2) (23.8) 6.4 (4.0) (12.6) (0.2)

Total exports 86.6 10.2 3.4 62.8 25.9 57.2 6.2 0.3 18.0 10.0 (10.1) (8.1) (3.9) 11.2

Total sales 30.4 28.0 29.4 62.5 36.9 31.6 11.0 12.8 (2.6) 2.7 (13.5) (7.8) (7.6) 10.6

YTD



Escorts 11,790 6,186 8,325 9,983 5,626 4,812 10,617 13,140 8,005 4,598 5,991 7,240 11,905 80,417 96,428

Domestic 11,557 6,094 8,087 9,758 5,483 4,674 10,396 12,867 7,641 4,212 5,762 6,918 11,431 78,446 93,323

Exports 233 92 238 225 143 138 221 273 364 386 229 322 474 1,971 3,105

Yoy change (%)

Escorts 66.5 26.3 20.9 72.8 3.6 5.2 2.5 28.8 56.4 27.5 12.7 12.0 1.0 19.9

Domestic 64.8 28.0 19.5 72.1 3.9 6.3 2.5 28.7 54.6 21.2 11.7 9.9 (1.1) 19.0

Exports 258.5 (33.8) 105.2 110.3 (7.7) (22.0) 5.7 33.8 104.5 196.9 46.8 92.8 103.4 57.5

YTD January-March


Total sales 7,30,473 6,94,022 7,06,365 7,04,562 6,79,862 6,85,047 7,69,138 7,34,668 6,10,252 4,53,985 5,82,756 6,17,215 5,81,279 75,82,857 78,19,151

Yoy change (%) 19.8 17.4 11.4 12.9 9.1 0.9 6.7 16.4 0.8 (4.0) (9.2) (2.0) (20.4) 3.1



Exhibit 8: TVS Motors volume remained flattish yoy in March 2019; motorcycle volumes up by 5% yoy TVS Motors monthly sales volume, March fiscal year-ends (units)


Exhibit 9: Eicher Motors volume declined by 20% yoy in March 2019; domestic volumes down by 21% yoy Eicher Motors monthly sales volume, March fiscal year-ends (units)


YTD January-March



Motorcycles 1,34,420 1,31,704 1,26,711 1,28,825 1,21,434 1,31,743 1,66,489 1,50,429 1,19,883 1,07,189 1,11,253 1,22,551 1,41,086 13,55,549 15,59,297

Scooters 1,00,972 89,245 95,879 1,02,763 1,18,996 1,26,676 1,42,562 1,51,040 1,11,763 91,480 85,299 86,935 98,477 11,34,916 13,01,115

Mopeds 80,381 72,469 75,545 69,613 67,426 71,657 1,01,645 82,838 75,496 60,040 72,725 76,125 71,338 8,76,930 8,96,917

Three-wheelers 10,894 11,377 11,730 12,413 13,323 13,141 13,282 14,120 12,823 12,686 13,353 13,742 14,444 98,684 1,56,434

Total sales 3,26,667 3,04,795 3,09,865 3,13,614 3,21,179 3,43,217 4,23,978 3,98,427 3,19,965 2,71,395 2,82,630 2,99,353 3,25,345 34,66,079 39,13,763

Yoy change (%)

Motorcycles 40.5 31.8 7.4 14.9 11.0 17.7 15.7 20.0 28.6 12.5 12.8 8.2 5.0 15.0

Scooters 20.0 9.6 11.9 13.6 28.8 10.8 17.2 41.3 42.6 9.4 (0.3) (7.1) (2.5) 14.6

Mopeds 13.0 21.4 5.3 5.4 9.6 (13.5) 19.1 8.9 5.3 (12.6) (7.7) 2.8 (11.3) 2.3

Total three-wheelers 103.2 114.5 78.2 140.9 70.0 56.1 47.6 56.1 48.4 36.7 51.6 41.2 32.6 58.5

Total sales 27.4 23.7 9.9 14.5 18.4 8.1 17.8 25.5 27.0 5.7 4.0 3.0 (0.4) 12.9

YTD



Royal Enfield 76,087 76,187 74,697 74,477 69,063 69,377 71,662 70,451 65,744 58,278 72,701 62,630 60,831 8,21,795 8,26,098

Domestic 74,209 74,627 72,510 72,588 67,001 68,014 70,065 70,044 65,026 56,026 70,872 60,066 58,434 8,02,531 8,05,273

Exports 1,878 1,560 2,187 1,889 2,062 1,363 1,597 407 718 2,252 1,829 2,564 2,397 19,264 20,825

Yoy change (%)

Royal Enfield 26.6 26.7 23.1 17.9 5.0 2.1 1.7 1.4 (6.2) (13.0) (6.6) (14.3) (20.1) 0.5

Domestic 26.7 27.4 23.6 17.7 3.9 1.7 1.0 3.0 (4.1) (14.3) (7.0) (15.8) (21.3) 0.3

Exports 20.1 (1.1) 6.7 26.9 58.4 23.3 53.9 (72.5) (69.4) 40.7 9.3 48.8 27.6 8.1



Bharti – stable India wireless, pressure elsewhere

At a consolidated level, we expect Bharti to report a topline of Rs202 bn for 4QFY19E, down

1.5% qoq and up 3% yoy. We expect consolidated EBITDA to decline 2.5% qoq and 13% yoy

to Rs60.6 bn despite expected qoq stability in India wireless EBITDA. We bake in a sharp 80%

yoy decline in EBIT to Rs4 bn (sub-2% RoCE on 4Q-annualized EBIT) and a PAT loss of Rs12 bn.

Our numbers do not bake in any forex losses or gains.

India wireless – we expect a modest 1% sequential uptick in revenues to Rs102.9 bn.

Underlying assumption of stable qoq revenues in the mobile broadband (MBB) segment and

marginal uptick in revenues from 2G subs, led by full-quarter impact of the ‘minimum recharge

construct’. Reported ARPU will likely see a sharp 14% qoq uptick to Rs120/sub/month, largely

optical on account of the sharp subs base clean-up done in Dec 2018. We note that Bharti had

indicated an exit ARPU of Rs118 for 3QFY19. We expect India wireless EBITDA of Rs20.1 bn,

broadly stable versus the Rs19.5 bn print for 3QFY19. We bake in modest uptick in voice

volumes and 20% qoq growth in data volumes.

Other businesses – we expect sequential decline in EBITDA in all non-India-wireless businesses.

Africa EBITDA decline (in INR terms) would primarily be on account of INR appreciation while

sequential decline in other businesses reflects segment-specific issues like ARPU pressure in

home broadband and high base in the enterprise segment.

Bharti Infratel – expect rental/tenant surge to continue and robust net tenancy adds

We forecast a 4.3% and 11.7% sequential growth in overall revenues and EBITDA to Rs37.4 bn

and Rs16.2 bn, respectively. We note that our revenue and EBITDA numbers do not include the

expected Rs900 mn exit penalties; we treat this as an extraordinary. On a reported basis, this

would mean revenue and EBITDA expectation of Rs38.3 bn and Rs17.1 bn, respectively. From

an operational standpoint, we bake in (a) net sequential tenancy additions of 6,009, and (b)

2.7% qoq and 15.1% yoy jump in rental/tenant to Rs40,034/month. Our PAT estimate

(including exit penalty) stands at Rs8 bn. Our 12% sequential EBITDA growth assumption

breaks down into a 7% qoq growth in core service EBITDA (excluding exit penalty) and a sharp

60% qoq jump in energy EBITDA. We note that 4Q is a seasonally strong quarter for energy

EBITDA. Our energy EBITDA estimate implies a yoy growth of 25%.

TCOM – another quarter of slow progress on key internals

We expect consolidated revenues and EBITDA of Rs39.8 bn (+1.5% qoq, down 1% yoy) and

Rs6.5 bn (+2.7% qoq, +17% yoy), respectively. We bake in voice segment EBITDA of Rs585 mn

and data segment EBITDA of Rs5.91 bn for the quarter. Our forecast of 6% sequential growth

in data segment EBITDA primarily flows from expectation of sharp positive swing in growth

services EBITDA and stability in other data sub-segments. Commentary on growth services

EBITDA prognosis for FY2020E and deal wins in innovation services would be key to watch.

Telecommunication Services India

4QFY19E preview. We expect Bharti to report flattish sequential India wireless EBITDA

for 4QFY19E; we note Bharti’s India wireless EBITDA has declined sequentially for 10

straight quarters since 1QFY17 and to that extent, stability would be a minor inflection.

We expect a strong sequential EBITDA uptick for Bharti Infratel assuming the recent

inexplicable rental/tenant surge continues. TCOM is likely to report another quarter of

slow progress on key internals – traditional data EBITDA growth and EBITDA breakeven

in the growth services segment. We are compliance-restricted on Vodafone-Idea.

CAUTIOUS

APRIL 01, 2019

UPDATE

BSE-30: 38,872

Rohit Chordia

Aniket Sethi



Exhibit 1: Bharti - 4QFY19E preview, Ind-AS, March fiscal year-ends (Rs mn)

Source: Kotak Institutional Equities estimates

4QFY18 1QFY19 2QFY19 3QFY19 4QFY19E qoq yoy

Consolidated results

Revenues 196,343 200,800 204,225 205,192 202,186 (1.5) 3.0

Operating costs (127,044) (133,542) (141,790) (143,012) (141,543)

EBITDA 69,299 67,258 62,435 62,180 60,643 (2.5) (12.5)

EBITDA margin (%) 35.3 33.5 30.6 30.3 30.0

Depreciation and Amortization (48,991) (51,452) (52,366) (54,723) (56,556)

EBIT 20,308 15,806 10,069 7,457 4,088 (45.2) (79.9)

EBIT margin (%) 10.3 7.9 4.9 3.6 2.0

Net finance (cost)/income (17,728) (20,309) (30,238) (19,493) (22,440)

PBT 2,580 (4,503) (20,169) (12,036) (18,352) NM NM

Tax provision 3,021 2,490 10,889 1,824 9,574

PAT before minority interest 5,601 (2,013) (9,280) (10,212) (8,778)

Minority interest (3,361) (5,003) (2,004) (2,964) (2,874)

Equity in earnings of affiliates 1,836 1,653 1,633 (98) (244)

Extraordinary items (3,247) 6,336 10,838 14,137 —

Reported net income 829 973 1,187 863 (11,896)

Adjusted net income 4,076 (5,363) (9,651) (13,274) (11,896)

Reported EPS 0.21 0.24 0.30 0.22 (2.98)

Segmental performance

Wireless - India

Revenues 103,532 104,803 102,521 101,894 102,864 1.0 (0.6)

EBITDA 29,428 27,603 21,468 19,498 20,106 3.1 (31.7)

OPM (%) 28.4 26.3 20.9 19.1 19.5

ARPU (Rs/sub/month) 116 108 101 105 120 14.1 3.3

MOU (min/sub/month) 665 703 682 726 832 14.6 25.1

RPM (Rs/min) 0.175 0.153 0.148 0.145 0.144 (0.4) (17.4)

EPM (Rs/min) 0.050 0.040 0.031 0.028 0.028 1.7 (43.2)

Total minutes (bn) 592.7 684.2 693.1 702.9 712.7 1.4 20.3

Wireless - South Asia

Revenues 1,033 1,060 1,122 1,130 1,117 (1.1) 8.2

EBITDA 67 10 30 42 50 19.6 (25.3)

OPM (%) 6.5 0.9 2.7 3.7 4.5

Bharti Africa

Revenues 49,713 52,841 56,472 59,035 55,987 (5.2) 12.6

EBITDA 17,911 19,221 20,934 21,868 20,645 (5.6) 15.3

EBITDA margin (%) 36.0 36.4 37.1 37.0 36.9

Telemedia services

Revenues 6,042 5,745 5,607 5,503 5,358 (2.6) (11.3)

EBITDA 3,001 2,859 2,932 2,583 2,399 (7.1) (20.1)

OPM (%) 49.7 49.8 52.3 46.9 44.8

Enterprise Services

Revenues 28,195 29,923 33,458 31,116 30,042 (3.5) 6.6

EBITDA 11,418 10,425 10,759 9,874 9,417 (4.6) (17.5)

OPM (%) 40.5 34.8 32.2 31.7 31.3

Passive infra business

Revenues 16,739 16,949 17,206 17,325 17,441 0.7 4.2

EBITDA 8,144 7,815 7,968 8,510 8,248 (3.1) 1.3

OPM (%) 48.7 46.1 46.3 49.1 47.3

Others (incl DTH)

Revenues 10,589 10,297 10,772 10,554 10,532 (0.2) (0.5)

EBITDA 3,033 2,779 2,506 2,010 2,253 12.1 (25.7)

OPM (%) 28.6 27.0 23.3 19.0 21.4

Change (%)

India Telecommunication Services


Exhibit 2: TCOM - 4QFY19E preview, Ind-AS, March fiscal year-ends (Rs mn)


4QFY18 1QFY19 2QFY19 3QFY19 4QFY19E qoq yoy

Revenues 40,086 39,123 40,682 39,215 39,787 1.5 (0.7)

Total expenditure (34,531) (33,569) (34,381) (32,889) (33,291) 1.2 (3.6)

EBITDA 5,555 5,554 6,302 6,326 6,496 2.7 16.9

Depreciation and amortization (5,052) (4,849) (5,006) (5,235) (5,428) 3.7 7.5

EBIT 503 705 1,296 1,091 1,068 (2.1) 112.3

Other income 2,330 244 86 192 118

Interest expense (910) (909) (979) (1,040) (1,020)

Pre-tax profits 1,922 41 404 243 166 (31.7) (91.4)

Tax (incl. deferred tax) (1,451) (641) (418) (667) (524)

Net income pre exceptionals 472 (600) (14) (425) (358)

Exceptional items (1,621) — 16 2,100 —

PAT after exceptional items (1,149) (600) 2 1,676 (358)

Minority int. share of loss (5) (5) (5) (5) (4)

Share in loss of associates (55) 21 20 63 32

Reported net income (1,210) (585) 16 1,733 (331)

Margins (%)

EBITDA 13.9 14.2 15.5 16.1 16.3

EBIT 1.3 1.8 3.2 2.8 2.7

PBT 4.8 0.1 1.0 0.6 0.4

PAT (pre exceptionals and MI) 1.2 (1.5) (0.0) (1.1) (0.9)

Change (%)



Exhibit 3: Bharti Infratel - 4QFY19E preview, Ind-AS, March fiscal year-ends (Rs mn)


Rs mn 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19E qoq yoy

Revenues 36,622 36,735 36,683 35,849 37,375 4.3 2.1

Costs

Power and fuel (13,148) (14,204) (14,367) (14,184) (14,050) (0.9) 6.9

Rent (3,230) (3,206) (3,168) (3,050) (3,039) (0.4) (5.9)

Employee expenses (1,269) (1,229) (1,222) (1,242) (1,254) 1.0 (1.1)

Others (3,052) (2,900) (3,062) (2,885) (2,844) (1.4) (6.8)

Total (20,699) (21,539) (21,819) (21,361) (21,187) (0.8) 2.4

EBITDA 15,923 15,196 14,864 14,488 16,188 11.7 1.7

Of which, service EBITDA 14,306 14,654 13,749 13,232 14,175 7.1 (0.9)

Energy EBITDA 1,617 542 1,115 1,256 2,013 60.3 24.5

Net revenues (ex power and fuel) 23,474 22,531 22,316 21,665 23,326 7.7 (0.6)

EBITDA margin (%, overall) 43.5 41.4 40.5 40.4 43.3

Service EBITDA margin (%) 65.5 66.6 64.9 64.8 66.5

D&A - net (5,721) (5,389) (5,625) (5,727) (5,646) (1.4) (1.3)

EBIT 10,202 9,807 9,239 8,761 10,542 20.3 3.3

Net finance costs and other income 827 894 999 1,061 938

PBT 11,029 10,701 10,238 9,822 11,480 16.9 4.1

Provision for taxes (4,469) (4,321) (3,883) (3,703) (4,396) 18.7 (1.6)

Recurring PAT 6,560 6,380 6,355 6,119 7,084 15.8 8.0

EO items (500) — (357) 365 900

Reported PAT 6,060 6,380 5,998 6,484 7,984 23.1 31.8

# of shares 1,850 1,850 1,850 1,850 1,850

Recurring EPS (Rs/share) 3.55 3.45 3.44 3.31 3.83 15.8 8.0

Margins (%)

EBITDA 43.5 41.4 40.5 40.4 43.3

EBIT 27.9 26.7 25.2 24.4 28.2

PAT 17.9 17.4 17.3 17.1 19.0

Effective tax rate 40.5 40.4 37.9 37.7 38.3

Key operating metrics

Consolidated

Service revenues (Rs mn) 21,857 21,989 21,201 20,409 21,312 4.4 (2.5)

Energy reimbursements (Rs mn) 14,765 14,746 15,482 15,440 16,041 3.9 8.6

Gross revenues (Rs mn) 36,622 36,735 36,683 35,849 37,354 4.2 2.0

Total towers (#) 91,451 91,759 92,123 92,301 92,645 0.4 1.3

Total tenants (#) 205,596 200,778 174,512 174,449 180,458 3.4 (12.2)

Incremental tenants (#) (7,880) (4,819) (26,266) (63) 6,009

Tenancy ratio (end-period) 2.25 2.19 1.89 1.89 1.95

Rental/tenant (Rs/month) 34,770 36,073 37,662 38,990 40,034 2.7 15.1

Bharti Infratel - Standalone

Total towers (#) 39,523 39,719 39,946 40,192 40,423 0.6 2.3

Total tenants (#) 88,665 86,053 78,275 77,693 81,083 4.4 (8.6)


Sharing revenue per tower (Rs/month) 83,716 84,316 82,621 79,647 83,284 4.6 (0.5)

Sharing revenue per operator (Rs/month) 36,511 37,281 38,687 40,923 42,286 3.3 15.8

Indus towers

Total towers (#) 123,639 123,904 124,230 124,069 124,339 0.2 0.6

Total tenants (#) 278,408 273,154 229,136 230,372 236,609 2.7 (15.0)


Sharing revenue per tower (Rs/month) 76,874 76,729 72,477 69,266 71,970 3.9 (6.4)

Sharing revenue per operator (Rs/month) 33,426 33,753 34,961 37,428 38,284 2.3 14.5

Change (%)



Pricing of DFC a function of several variables, key being whether IR will cede control to DFCCIL

Our analysis of DFC’s cost economics suggests possibility of Indian Railways (IR) taking a price

cut to support initial utilization levels of DFC. The imponderables over here would be (1) ability

of IR to use the freed up space on the existing corridor for passenger travel, (2) ability to absorb

initial losses from DFC and (3) internal targets on minimum capacity utilization of DFC. The

passing of autonomy of pricing to the Dedicated Freight Corridor Corporation of India (DFCCIL),

if it were to happen, would increase the probability of such price discount. This is based on

DFCCIL’s assessment of the origin-destination profile of cargo.

Pricing change unlikely to happen by the time the stretch till Gujarat gets ready (Dec 2019)

Our recent discussion with DFCCIL suggests limited preparedness of the DFC from a business

perspective (pricing, logistics parks, and industrial sectors). Progress here has not kept pace with

that of the development of infrastructure (track laying, electrification, feeder routes and

stations). For the Rewari-Palanpur stretch (to be functional by Dec 2019), DFCCIL expects the

uptick in utilization to be constrained because of lack of business support. This is what makes

DFCCIL cautious on the utilization levels that will get achieved over the first few years of the

commissioning of the western DFC, a critical period given the 9X addition to capacity

happening to the related existing rail corridor. DFCCIL has had limited play in business decisions

in the past, neither are there any incentives in its concession agreement to have higher volumes.

Recently, it has received approval to invest in logistics parks. DFCCIL recently came close to

being given the autonomy of pricing from Indian Railways, only for the decision to be deferred

closer to the commissioning of the full western DFC.

Concor to weigh benefits of operating leverage to lead price action for the sector

Openness of DFCCIL to price discounts is a positive for rail CTOs, if and when IR considers

ceding autonomy of pricing. CTOs have some operating leverage gains to make (fixed cost at

10% of sales) from DFC and such price discount would make it an easier choice to use the

pricing lever. Past origin-destination study of exim container cargo along the north-to-west exim

freight corridor suggests a minority share of rail operators in the 700+ km distance journey

indicating good scope for gaining share by IR. Given the state of the competition for rail

transportation, Concor would have to take the lead on pricing action.

DFCCIL to help weed out connectivity issues for large CTOs; raise Concor’s fair value to Rs515

In our recent meeting, DFCCIL highlighted investment in a six-km link near Ateli (entry point for

Concor on DFC) for enabling faster movement of cargo. At present, Concor would have to

move from Khatuwas to Ateli (old IR station), reverse the locomotive and then join DFC at Ateli

(new DFC station). We note good competitive positioning of Concor to benefit from DFC;

increase our fair value as we increase our medium-term margin assumptions by 200 bps.

Transportation India

DFC shares prospects of price discount, though not over the near term. Limited

preparedness on the business front may delay the gains for DFC as the infrastructure

gets ready. There may be a silver lining for rail CTOs given the possibility of price

discount being offered; may not happen in time for the commissioning of the Rewari-

Palanpur stretch. Given the state of competition, Concor would lead on price action.

Having built in material scale-up in Concor’s exim volume (3X FY2020-26E), we increase

our medium-term margin assumptions. Fair value increases to Rs515 after roll-forward.

ATTRACTIVE

APRIL 01, 2019

UPDATE

BSE-30: 38,872

Aditya Mongia

Ajinkya Bhat



Exhibit 1: Indian Railways is operating at low profitability versus the quantum required to compensate for DFC in absence of new

business Key financials of Indian Railways, March fiscal year-ends, 2005-18

Source: Company, DFFCIL, Kotak Institutional Equities

Exhibit 2: In the absence of usage of freed up capacity on existing rail corridor, the railways needs to

grow volumes by ~25%. The requirement increases to ~35/55% if a 10/20% discount is to be offered Sensitivity analysis of required freight volume growth for IR to maintain overall revenues

Source: DFCCIL, Kotak Institutional Equities estimates

161

101

32

119

9184

7976

9095 95 95

9094 91 91

96 98

0

20

40

60

80

100

-

50

100

150

200

250

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Fixedcost of

DFC inyear 1

Surplus+depreciation (LHS, Rs bn) Operating ratio (RHS %)

0 10 20 30

0 23 37 55 79

4 17 31 48 71

8 11 24 41 63

13 6 18 34 54

Notes:

(a) The above analysis is for all rail cargo and not for container cargo in specific

Discount to current rail freight price (%)

Growth in

passenger

revenues (%)

India Transportation


Exhibit 3: All container operators have scope of benefitting from operating leverage gains Comparison of gross margin and EBITDA margin for container rail operators for year-ending March 2018 (%)


Exhibit 4: Concor would be better-placed to lead price action; others may follow but won’t drive

price action Comparison of return on invested capital for container rail operators for year-ending March 2018 (%)


29 28

26

21

17

13

-

5

10

15

20

25

30

35

Container Corporation Gateway Rail Freight Limited Hind Terminals

Gross margin EBITDA margin

17

7

14

0

2

4

6

8

10

12

14

16

18

Container Corporation Gateway Rail Freight Limited Hind Terminals

RoIC (post tax)



Exhibit 5: Rail transportation generates almost nil margin for Hind Terminals Segment margin for Hind Terminals, March fiscal year-ends


Exhibit 6: We limit RoIC improvement to levels last seen before the large increase in haulage price hike Trends in post-tax RoIC and exim segment margin for Container Corporation, March fiscal year-ends, 2008-24E


29

23 20

5

1 1

-

5

10

15

20

25

30

35

2016 2017 2018

Container & Logistics Terminal Rail Division and allied activities

Notes:

(a) We have adjusted RoIC series for change in depreciation rates in the past, the impact of SEIS income (and receivables) and capital work-in-progress.

38 34

29 27 23 23

20 23

16 15 17 17 18 20 22 23 24

28

30

26 28

26

24 23 21

18 18 18 20 20 21 22 22 23

-

5

10

15

20

25

30

35

-

10

20

30

40

50

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2023E 2024E

RoIC (LHS, %) Revised estimate of exim segment EBIT margin (RHS, %) Old estimate of exim segment EBIT margin (RHS, %)



Exhibit 7: We arrive at a one-year forward fair value of Rs515/share DCF-based valuation of Container Corporation


2016 2017 2018 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2030E

Revenue model

Handling at Terminals (mn TEUs)

Exim 2.5 2.6 3.0 3.3 3.7 4.3 5.3 6.4 7.7 9.2 14.6

Domestic 0.4 0.5 0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.9

Total 2.9 3.1 3.5 3.9 4.4 5.0 6.2 7.3 8.7 10.4 16.5

TEU growth (%)

Exim (5.6) 6.7 13.7 9.0 13.0 15.0 25.0 20.0 20.0 20.0 8.0

Domestic (8.4) 2.6 15.3 11.5 13.0 13.0 13.0 13.0 13.0 12.0 8.0

Total (6.0) 6.1 13.9 9.4 13.0 14.7 23.2 19.0 19.1 19.0 8.0

EBIT margin (%)

Exim 17.9 17.6 18.0 20.0 20.3 21.0 21.5 22.0 22.5 22.5 22.5

Domestic 2.2 2.6 7.3 7.0 7.5 8.0 8.0 8.0 8.0 8.0 8.0

Unallocable as % of total EBIT 12.3 13.3 10.7 10.1 8.8 7.3 5.5 4.6 2.2 1.8 1.2

Total 13.1 12.7 14.0 15.3 15.8 16.8 17.7 18.4 19.4 19.6 19.8

FCFF calculation

Operating Cash flow (before Wcap changes) 10,813 10,976 12,529 13,818 16,178 15,989 20,758 25,783 32,350 37,627 62,728

Cash flow from change in working capital (3,006) (681) 340 93 (403) (473) 2,631 (876) (1,159) (288) (657)

Operating Cash flow 7,807 10,296 12,869 13,911 15,774 15,516 23,389 24,907 31,191 37,340 62,072

Capex (change) 11,255 (10,264) (8,431) (4,104) (7,102) (9,111) (20,115) (20,760) (25,555) (10,364) (23,654)

Free Cash flow to the firm 19,062 32 4,438 9,807 8,672 6,405 3,274 4,147 5,636 26,975 38,418

Terminal Valuation

Terminal Growth rate 5% 5% 5% 5% 5% 5%

Cash flow in terminal year 27,604 33,993 37,019 40,339 43,982 47,980

Terminal Value 345,046 424,917 462,733 504,234 549,776 599,752

Valuation 2017 2018 2019 2020 2021 2022

NPV of FCF for explicit period 51,354 63,129 71,916 83,910 100,752 124,037

PV of terminal value 101,646 125,176 136,316 148,541 161,957 176,680

EV 153,000 188,305 208,231 232,451 262,710 300,718

Net Debt (20,913) (21,563) (27,266) (31,075) (33,273) (30,793)

Value to Equity holders 173,913 209,868 235,497 263,526 295,983 331,511

No of Shares (mn) 609 609 609 609 609 609

Implied Price (Rs/share) 285 344 387 433 486 544

Target Price (Mar-2021) 515

WACC 13.0%



Exhibit 8: Key financials of Container Corporation, March fiscal year-ends, 2012-21E (Rs mn)


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

Income statement

Net revenues 40,609 44,062 49,846 55,737 56,717 53,946 58,992 65,587 79,427 95,340

Total operating cost (30,372) (33,586) (38,827) (42,772) (45,834) (43,593) (46,843) (51,311) (62,440) (74,834)

Terminal+service charges (27,762) (30,570) (35,128) (38,308) (41,984) (39,588) (41,712) (45,223) (53,163) (61,540)

Employee cost (999) (1,072) (1,235) (1,579) (1,568) (1,869) (2,779) (3,113) (3,486) (3,902)

Repairs & maintenance (425) (485) (504) (712) (806) (520) (493) (679) (822) (987)

Other S, G & A (1,187) (1,459) (1,960) (2,173) (1,476) (1,616) (1,859) (2,296) (4,969) (8,405)

EBIDTA 10,237 10,476 11,019 12,965 10,884 10,354 12,149 14,276 16,987 20,506

Other income 3,165 3,372 3,717 3,707 3,175 2,892 3,026 2,536 2,673 2,876

Depreciation (1,585) (1,727) (1,893) (3,727) (3,478) (3,518) (3,927) (4,234) (4,767) (5,450)

Pre tax profits 11,818 12,121 12,843 12,946 10,580 9,691 11,248 12,578 14,893 17,931

Tax (3,039) (2,721) (2,995) (2,469) (2,746) (1,622) (2,372) (3,522) (4,319) (5,379)

Adjusted PAT 8,779 9,400 9,848 10,477 7,833 8,069 8,876 9,056 10,574 12,552

Extraordinary items — — — (1) 1,675 512 1,615 2,128 2,507 —

Reported PAT 8,779 9,400 9,848 10,476 9,508 8,580 10,490 11,184 13,081 12,552

Volume handled ('000 TEUs)

Exim 2,136 2,152 2,361 2,621 2,476 2,641 3,002 3,272 3,697 4,252

Domestic 468 434 507 489 448 460 530 591 668 755

Total volumes 2,604 2,586 2,869 3,111 2,924 3,101 3,532 3,863 4,365 5,007

Yoy growth (%)

Volumes 1.6 (0.7) 10.9 8.4 (6.0) 6.1 13.9 9.4 13.0 14.7

Sales 6.1 8.5 13.1 11.8 1.8 (4.9) 9.4 11.2 21.1 20.0

EBITDA 2.2 2.3 5.2 17.7 (16.1) (4.9) 17.3 17.5 19.0 20.7

Net PAT (0.1) 7.1 4.8 6.4 (25.2) 3.0 10.0 2.0 16.8 18.7

Key ratios (%)

EBITDA margin 25.2 23.8 22.1 23.3 19.2 19.2 20.6 21.8 21.4 21.5

Net PAT margin 21.6 21.3 19.8 18.8 13.8 15.0 15.0 13.8 13.3 13.2

Efffective tax rate 25.7 22.4 23.3 19.1 26.0 16.7 21.1 28.0 29.0 30.0

Adjusted EPS (Rs) 14.4 15.4 16.2 17.2 12.9 13.2 14.6 14.9 17.4 20.6

Reported EPS (Rs) 14.4 15.4 16.2 17.2 15.6 14.1 17.2 18.4 21.5 20.6



Exhibit 9: Key balance sheet and cash flow details of Container Corporation, March fiscal year-ends, 2012-21E (Rs mn)


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

Balance sheet

Networth 56,064 62,811 69,853 76,357 83,457 88,462 94,011 99,866 106,715 113,286

Share capital 1,300 1,300 1,950 1,950 1,950 1,950 2,437 3,047 3,047 3,047

Reserves & surplus 54,764 61,512 67,903 74,407 81,507 86,512 91,574 96,820 103,668 110,239

Total liabilities 56,064 62,811 69,853 76,357 83,457 88,462 94,011 99,866 106,715 113,286

Net fixed assets 28,659 32,283 38,037 40,479 45,250 52,009 56,570 56,440 58,775 62,435

Investments 2,931 4,822 8,640 11,548 13,576 13,737 13,890 13,890 13,890 13,890

Cash & Bank balance 27,615 29,162 25,451 25,879 24,371 20,913 21,563 27,266 31,075 33,273

Net current assets (703) (712) 775 518 3,524 4,205 3,865 3,772 4,176 4,648

Net deferred tax asset (2,438) (2,743) (3,050) (2,067) (3,264) (2,402) (1,877) (1,502) (1,201) (961)

Total assets 56,064 62,811 69,853 76,357 83,457 88,462 94,011 99,866 106,715 113,286

Cash flows

Operating cash flows 8,796 8,672 9,152 9,956 10,573 9,006 12,180 12,507 14,875 14,886

Working capital changes (756) 524 (1,696) 1,108 (21,026) (3,115) 1,099 93 (403) (473)

Op. cash adj for WCap 8,040 9,196 7,456 11,064 (10,453) 5,891 13,279 12,600 14,472 14,413

Net capex (2,373) (5,855) (5,209) (8,022) (5,899) (9,143) (8,595) (4,104) (7,102) (9,111)

Free cash flow 5,667 3,340 2,247 3,043 (16,352) (3,252) 4,684 8,496 7,369 5,302

Net finance cash flow (2,342) (2,568) (3,042) (3,081) (3,146) (3,580) (4,999) (5,329) (6,233) (5,981)

Net cash generated 4,658 1,587 (3,649) 368 (17,881) (3,854) 2,983 5,703 3,810 2,197

Cash at start of year 22,957 27,615 29,202 25,553 25,879 7,999 16,835 21,563 27,266 31,075

Year-end cash (incl. bank deposits) 27,615 29,162 25,451 25,879 24,371 20,913 21,563 27,266 31,075 33,273

Key ratios

Net debt to equity (0.5) (0.5) (0.4) (0.3) (0.3) (0.2) (0.2) (0.3) (0.3) (0.3)

RoE (%) 16.6 15.8 14.8 14.3 9.8 9.4 9.7 9.3 10.2 11.4

RoCE (%) 16.6 15.8 14.8 14.3 9.8 9.4 9.7 9.3 10.2 11.4

Ind-AS-changes in balance sheet

For Private Circulation Only.


February GST collections at Rs1,066 bn

Based on the monthly PIB release, GST collection was at Rs1,066 bn in February, higher than

Rs972 bn in January. CGST collection amounted to Rs204 bn (January: Rs176 bn), SGST was at

Rs275 bn (Rs242 bn), IGST at Rs504 bn (Rs470 bn), and compensation cess was at Rs83 bn

(Rs85 bn). After allocations from the IGST, CGST for February was at Rs476 bn (January: Rs371

bn) and SGST was Rs512 bn (January: Rs399 bn). 7.6 mn returns were filed in February against

7.35 mn in January implying an improvement in the compliance at the year-end.

FY2019 CGST collections shortfall likely at Rs770 bn

After accounting for refunds (final numbers will be released at month-end), February CGST

collections is likely at Rs467 bn and unallocated IGST at (-)Rs79 bn. This implies that FY2019

CGST collections and unallocated IGST would be at Rs4.6 tn and Rs187 bn (Exhibit 1). The

CGST+IGST shortfall would be around Rs770 bn compared to FY2019RE. If the unallocated

compensation cess funds were to be divided between the center and the states equally (as per

Goods and Services Tax (Compensation to States) Amendment Act, 2018), the shortfall would

be around Rs370 bn.

Expenditure cut of Rs500-750 bn required to bridge shortfall from direct and indirect taxes

Based on the revised estimates for corporate and personal income tax collections, the March tax

collections target seemed quite high, especially when compared to historical collection yoy

growth (Exhibit 2). We expect the shortfall to be around Rs500 bn, in line with the shortfall

indicated in unconfirmed media reports. Combining the GST and direct tax collections shortfalls

along with marginal gain in divestment receipts, the total shortfall in central government’s

receipt (on net tax basis) will be around Rs500 bn (assuming the center and states equally divide

the unallocated part of the compensation cess fund). If the compensation cess fund is not used,

then the shortfall would be Rs750 bn. In order to achieve the FY2019 GFD/GDP target of 3.4%,

expenditure cuts/deferment of similar magnitudes would be required. In case of unchanged

expenditure plan, the slippage in FY2019 GFD/GDP would be 25-40 bps.

Economy Public Finance

Expenditure cuts to the rescue. Given the tax collections, meeting the FY2019RE

GFD/GDP of 3.4% will have required around Rs500-750 bn of expenditure

cuts/deferment. The shortfall in GST revenues will be around Rs370 bn after drawing

from the unutilized portion of the compensation cess fund (Rs770 bn without using the

fund). We estimate Rs500 bn as the direct taxes shortfall in line with the shortfall

indicated in unconfirmed media reports.

INDIA

APRIL 01, 2019

UPDATE

BSE-30: 38,872

QUICK NUMBERS

February GST

collections at

Rs1,066 bn

FY2019 CGST+IGST

collection at Rs4.8

tn; shortfall of

Rs370 bn assuming

utilization of

compensation cess

Direct taxes shortfall

likely around Rs500

bn

Likely expenditure

cut of Rs500-750 bn

Suvodeep Rakshit

Upasna Bhardwaj

Avijit Puri

India Economy

30 KOTAK ECONOMIC RESEARCH

Exhibit 1: FY2019 CGST+IGST collection shortfall would be around Rs370 bn with utilization of unallocated compensation cess fund Summary of GST collections, March fiscal year-ends (Rs bn)

Source: CGA, PIB, Kotak Economics Research estimates

Exhibit 2: Required growth rate of March direct tax collections is unachievable Growth rate (yoy) of direct taxes for the month of March, March fiscal year-ends (Rs bn)

Source: CEIC, CGA, Kotak Economics Research estimates

Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19

Monthly collections (PIB press releases)

Center 325 288 316 579 370 306 490 351 439 361 371 476

Center GST (CGST) 187 159 160 159 153 153 165 168 164 178 176 204

Centre's share of IGST (C-IGST) 138 129 157 420 217 153 325 183 274 183 195 273

States 403 340 367 638 411 350 529 388 463 395 399 512

States' GST (SGST) 257 217 220 223 212 211 228 231 225 248 242 275

States' share of IGST (S-IGST) 146 123 147 415 200 140 301 157 238 147 157 237

Unallocated IGST 222 239 192 (335) 82 209 (92) 158 (33) 182 117 (5)

Compensation cess 86 73 81 84 76 80 80 80 79 87 85 83

Total 1,035 940 956 965 940 944 1,007 976 947 1,025 972 1,066

FYTD collections (post refund adjustments)

Centre 521 971 1,383 1,563 1,975 2,421 2,759 3,193 3,530 3,976 4,380 4,768

- CGST 321 602 911 1,490 1,851 2,149 2,629 2,973 3,404 3,754 4,113 4,581

- Unallocated IGST 200 369 471 72 124 272 130 220 126 222 266 187

State 399 732 1,092 1,730 2,132 2,473 2,993 3,372 3,825 4,211 4,601 5,104


Total 1,004 1,860 2,712 3,609 4,498 5,364 6,298 7,191 8,058 8,974 9,850 10,821

FY2019RE

Centre 5,539

- Unallocated IGST 500

State 5,078

Compensation cess 900

Total 11,517

FYTD19 run rate

Centre 521 486 461 391 395 404 394 399 392 398 398 397

- Unallocated IGST 200 185 157 18 25 45 19 28 14 22 24 16

State 399 366 364 432 426 412 428 421 425 421 418 425


Total 1,004 930 904 902 900 894 900 899 895 897 895 902

Notes:

(a) Mar-19 reqd. is based on direct tax collections of 11MFY19.

(20)

(10)

0

10

20

30

40

50

60

70

80

Mar-

09

Mar-

10

Mar-

11

Mar-

12

Mar-

13

Mar-

14

Mar-

15

Mar-

16

Mar-

17

Mar-

18

Mar-

19 r

eqd

Mar-

19 e

st.

Corporate tax growth Income tax growth

KOTAK ECONOMIC RESEARCH 31

Ind

ia D

aily

Su

mm

ary

- Ap

ril 2, 2

01

9

31

K

OTA

K IN

STIT

UTIO

NA

L EQ

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RC

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Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Source: Company, Bloomberg, Kotak Institutional Equities estimates

Fair O/S ADVT

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

Company Rating 1-Apr-19 (Rs) (%) (Rs bn) (US$ bn) (mn) 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E (US$ mn)

Automobiles & Components

Amara Raja Batteries REDUCE 722 700 (3) 123 1.8 171 29 35 40 4.9 21 14.7 25 21 18.0 13 10.6 9.1 3.7 3.2 2.8 15.7 16.6 16.6 0.6 0.7 0.8 5.4

Apollo Tyres BUY 226 310 37 129 1.9 541 16 21 25 20 33 17 14.1 10.6 9.0 7.9 6.8 5.6 1.2 1.1 1.0 9.1 11.2 11.9 1.3 1.3 1.3 7.7

Ashok Leyland BUY 91 140 55 266 3.8 2,926 6.7 8.0 8.0 12.7 18 -0.2 13.5 11.4 11.4 8.6 7.0 7.3 3.2 2.7 2.3 25 26 22 2.2 2.6 2.6 34

Bajaj Auto REDUCE 2,916 2,400 (18) 844 12.2 289 147 162 171 5.0 10.3 5.2 19.8 18.0 17.1 14 12 11.5 4.0 3.6 3.2 21 21 19.7 2.0 2.2 2.3 24

Balkrishna Industries BUY 991 950 (4) 192 2.8 193 42 49 53 11.1 17 9.6 24 20 18.6 13 11.1 9.9 4.0 3.4 3.0 18.1 18.2 17.1 0.5 0.6 0.6 9.0

Bharat Forge SELL 512 445 (13) 238 3.4 466 23 25 25 44 6.2 2.3 22 21 20 13 11.6 11.0 4.4 3.8 3.3 21 19.6 17.5 1.0 1.1 1.2 11.9

CEAT ADD 1,140 1,150 1 46 0.7 40 67 80 91 3.2 19 13.9 17.1 14.3 12.6 9.7 8.6 7.7 1.6 1.5 1.3 9.9 10.8 11.2 0.6 0.7 0.8 8.5

Eicher Motors SELL 20,048 18,400 (8) 547 7.9 27 855 963 1,039 7.8 12.7 8.0 23 21 19.3 16 15 13 7.7 6.0 4.9 37 32 28 0.1 0.1 0.0 46

Endurance Technologies SELL 1,151 925 (20) 162 2.3 141 36 42 50 25 16 19 32 27 23 15 12 10.6 6.2 5.2 4.4 19.6 19.1 19.1 0.5 0.6 0.7 3.3

Escorts BUY 775 1,050 36 66 1.4 89 57 66 72 47 15 8.9 13.6 11.7 10.8 8.1 6.9 5.9 2.3 2.0 1.7 17.1 17.0 16.1 1.1 1.3 1.4 23

Exide Industries SELL 215 220 2 183 2.6 850 9.1 10.2 11.5 10.9 12.2 12.7 24 21 18.7 13 11.6 10.2 3.1 2.8 2.6 13.7 14.0 14.5 1.4 1.6 1.9 7.2

Hero Motocorp SELL 2,559 2,400 (6) 511 7.4 200 168 173 181 (9.1) 2.9 4.5 15.2 14.8 14.1 8.9 8.4 7.9 3.9 3.5 3.2 27 25 24 3.3 3.4 3.5 29

Mahindra CIE Automotive ADD 233 265 14 88 1.3 378 14.5 16 18 48 7.7 12.2 16.0 14.9 13.3 9.2 7.9 6.9 2.1 1.8 1.6 13.7 12.9 12.7 — — — 0.6

Mahindra & Mahindra BUY 661 1,000 51 822 11.9 1,138 46 50 54 22 8.3 8.7 14.3 13.2 12.1 10.6 8.7 7.8 2.2 1.9 1.7 16.2 15.5 15.0 1.4 1.5 1.6 42

Maruti Suzuki ADD 6,843 7,500 10 2,067 29.8 302 254 297 347 -0.8 17 17 27 23 19.7 14 11.7 9.6 4.4 3.9 3.4 17.2 17.8 18.4 0.9 1.1 1.3 87

Motherson Sumi Systems SELL 154 125 (19) 485 7.0 3,158 5.5 6.7 7.6 0.1 22 13.8 28 23 20 10.2 8.6 7.4 4.4 3.9 3.4 16.5 17.9 17.9 1.0 1.1 1.2 17.0

MRF REDUCE 60,164 56,000 (7) 255 3.7 4 2,672 3,214 3,590 0.1 20 11.7 23 18.7 16.8 9.5 8.2 7.1 2.4 2.1 1.9 11.0 11.8 11.8 0.1 0.1 0.1 6.4

Schaeffler India REDUCE 5,460 5,300 (3) 91 1.3 31 144 179 211 14.9 24 18 38 31 26 11.2 8.5 7.0 6.3 5.3 4.4 17.9 18.8 18.7 0.1 0.2 0.2 0.4

SKF ADD 2,010 2,050 2 103 1.5 51 67 82 97 17 22 17 30 24 21 19 15 13 4.9 4.2 3.6 16.4 17.3 17.5 0.6 0.7 0.8 1.0

Tata Motors BUY 187 280 50 636 8.5 3,396 (9.4) 19 30 (147) 301 57 NM 9.9 6.3 5.6 4.2 3.6 1.0 0.9 0.8 NM 9.4 13.1 — — — 47

Timken SELL 585 550 (6) 44 0.6 68 18 22 25 34 21 14.8 32 27 23 16 14 11.7 5.2 4.4 3.7 17.8 18.1 17.5 0.2 0.2 0.2 0.2

TVS Motor SELL 480 350 (27) 228 3.3 475 14.6 18 19 4.7 22 7.7 33 27 25 16 14 13 6.9 5.9 5.1 22 23 22 0.9 1.1 1.2 11.4

Varroc Engineering BUY 590 950 61 80 1.1 135 32 42 61 (4.1) 32 43 18.4 14.0 9.7 8.8 7.0 5.2 2.4 2.1 1.7 13.2 14.8 17.5 — — — 0.4

WABCO India SELL 6,642 6,100 (8) 126 1.8 19 183 222 223 27 22 0.1 36 30 30 25 20 20 6.8 5.6 4.8 21 21 17.3 0.2 0.2 0.2 0.7

Automobiles & Components Neutral 8,331 120.0 (18.5) 45 17 25 17.5 15.0 10.0 8.1 7.0 3.0 2.7 2.4 11.9 15.3 15.8 1.1 1.2 1.3 422

Banks

Axis Bank REDUCE 765 710 (7) 1,968 28.4 2,567 18 46 53 1,555 161 14.4 43 16.5 14.4 — — — 3.2 2.7 2.3 7.0 16.2 16.2 0.3 0.9 1.0 115

Bank of Baroda ADD 133 140 5 351 5.1 2,652 10.4 25 29 214 143 16 12.8 5.2 4.5 — — — 1.1 0.9 0.7 6.6 15.7 13.8 — — — 28

Canara Bank ADD 294 280 (5) 221 3.2 733 9.4 53 68 116 458 30 31 5.6 4.3 — — — 1.6 1.1 0.7 1.9 10.1 11.8 — — — 19.9

City Union Bank ADD 207 200 (3) 152 2.2 665 9.5 10.6 12.3 7.1 11.0 16 22 19.5 16.8 — — — 3.4 3.0 2.7 15.7 15.4 15.8 0.8 0.9 1.1 2.2

DCB Bank BUY 203 210 4 63 0.9 308 10.3 12.7 17 29 24 33 19.8 15.9 11.9 — — — 2.3 2.1 1.8 11.7 13.0 15.3 0.5 0.6 0.8 5.7

Equitas Holdings BUY 135 180 33 46 0.7 340 6.1 9.7 13.4 558 60 39 22 13.9 10.0 — — — 1.9 1.7 1.5 8.7 12.5 15.0 — — — 4.2

Federal Bank BUY 98 110 12 195 2.8 1,972 6.1 8.3 10.1 36 37 22 16.2 11.8 9.7 — — — 1.6 1.5 1.4 9.4 11.9 13.3 1.4 1.9 2.3 15.9

HDFC Bank ADD 2,312 2,200 (5) 6,296 90.9 2,595 78 93 110 15 20 18 30 25 21 — — — 4.3 3.8 3.4 16.6 16.2 16.8 0.6 0.8 0.9 91

ICICI Bank BUY 399 430 8 2,570 37.1 7,072 8.3 27 32 (12.9) 223 19 48 14.8 12.4 — — — 2.6 2.3 2.0 5.0 15.0 15.8 0.4 1.4 1.6 102

IDFC First Bank NR 56 — — 267 4 3,404 (3.3) 1.6 2.6 (229) 149 66 NM 35 21 — — — 1.4 1.4 1.3 NM 4.0 6.4 — 0.4 0.7 12.9

IndusInd Bank BUY 1,743 1,700 (2) 1,051 15.2 600 56 75 94 (7) 35 25 31 23 18.6 — — — 3.8 3.4 3.0 14.2 15.0 16.4 0.4 0.5 0.6 57

J&K Bank BUY 58 90 56 32 0.5 557 7.1 9.6 18 95 35 84 8.1 6.0 3.3 — — — 0.7 0.6 0.5 6.2 8.0 13.5 2.5 3.3 6.1 0.9

Karur Vysya Bank ADD 72 85 18 58 0.8 799 2.3 4.4 8.6 (51) 89 96 31 16.4 8.4 — — — 1.1 1.0 0.8 2.7 4.9 9.1 0.8 1.5 3.1 1.6

Punjab National Bank ADD 98 95 (3) 371 5.4 2,761 (15) 13.0 15 67 188 18 NM 7.5 6.4 — — — 2.0 1.2 1.0 NM 11.2 11.6 — — — 34

RBL Bank SELL 680 515 (24) 290 4.2 420 20 28 34 35 35 22 33 25 20 — — — 4.0 3.6 3.1 12.2 14.7 15.8 0.5 0.6 0.7 17.8

State Bank of India BUY 323 370 15 2,881 41.6 8,925 7.4 38 51 201 412 35 44 8.6 6.3 — — — 1.9 1.5 1.1 3.0 13.9 16.2 0.1 0.1 0.2 89

Ujjivan Financial Services BUY 345 350 2 42 0.6 121 15 25 31 2,480 62 23 22 13.9 11.3 — — — 2.2 1.9 1.7 10.1 14.6 15.7 0.4 0.7 1.0 9.2

Union Bank ADD 96 90 (7) 113 1.6 1,169 0.3 11.2 29 101 3,653 160 322 8.6 3.3 — — — 1.3 0.9 0.5 0.1 5.6 13.3 0.0 1.7 4.5 13.2

YES Bank SELL 276 200 (27) 638 9.2 2,303 18 18 23 (1.5) 0.1 30 15.3 15.2 11.8 — — — 2.4 2.1 1.8 15.2 13.5 15.6 1.1 1.1 1.4 178

Banks Attractive 17,603 254.1 750 166 26 38 14.3 11.4 2.1 1.8 1.6 5.6 12.9 14.2 0.4 0.7 0.9 797

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


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Building Products

Astral Poly Technik SELL 1,199 720 (40) 144 2.1 120 18 22 26 20 25 17 68 55 47 36 30 25 11 9.4 7.9 18.3 18.7 18.3 0.1 0.1 0.1 1.6

Building Products Cautious 144 2.1 20 25 17 68 54 46 36 30 25 11 9.3 7.8 16.4 17.2 16.9 0.1 0.1 0.1 1.6

Capital goods

ABB SELL 1,318 1,005 (24) 279 4.0 212 12.0 17 25 12.7 44 44 110 76 53 58 47 34 7.0 6.2 5.6 6.7 8.6 11.1 0.4 0.4 15.2 2.5

Ashoka Buildcon BUY 130 205 57 37 0.5 282 10.2 11.0 11.2 21 7.3 1.8 12.7 11.9 11.7 8.5 7.9 7.2 1.7 1.5 1.4 14.0 13.4 12.2 1.0 1.1 1.1 0.5

Bharat Electronics BUY 96 100 4 234 3.4 2,437 5.7 5.8 5.2 (2.9) 2.5 (11.6) 16.8 16.4 18.6 10.4 8.7 8.8 2.7 2.4 2.3 16.5 15.4 12.6 2.1 2.1 1.9 14.1

BHEL REDUCE 76 65 (15) 264 3.8 3,482 3.0 2.7 4.2 29 (9.4) 53 25 28 18.3 14 12 8.1 0.8 0.8 0.8 3.3 3.0 4.5 2.1 1.6 2.2 12.0

Carborundum Universal SELL 413 315 (24) 78 1.1 189 13.7 17 19 20 22 14.3 30 25 22 17 14 11.7 4.5 4.0 3.6 15.7 17.3 17.7 1.0 1.2 1.4 0.9

Cochin Shipyard BUY 392 555 42 52 0.7 132 35 37 39 16 6.4 6.9 11.3 10.6 9.9 4.9 4.8 5.5 1.5 1.4 1.3 13.8 13.8 13.5 2.6 2.7 3.0 0.4

Cummins India REDUCE 748 720 (4) 207 3.0 277 28 32 37 16 15 15 27 23 20 22 19 16 4.9 4.6 4.2 18.8 20 22 2.0 2.3 2.7 7.1

Dilip Buildcon BUY 630 775 23 86 1.2 137 59 54 63 26 (8.0) 16 10.8 11.7 10.0 7.0 6.0 5.4 2.6 2.2 1.8 28 20 19.4 0.2 0.2 0.2 5.6

IRB Infrastructure BUY 156 250 60 55 0.8 351 27 30 16 21 8.6 (45) 5.7 5.3 9.5 6.5 7.1 8.8 0.8 0.7 0.7 15.7 14.9 7.6 2.0 2.3 2.4 4.8

Kalpataru Power Transmission BUY 478 570 19 73 1.1 153 28 35 43 55 22 25 16.9 13.8 11.0 9.0 7.3 5.9 2.4 2.1 1.8 15.2 16.2 17.6 0.8 0.9 1.1 0.4

KEC International BUY 299 360 20 77 1.1 257 20 25 31 11.8 24 23 14.9 12.0 9.8 8.6 7.2 6.0 3.1 2.6 2.1 23 23 23 0.7 0.9 1.1 1.9

L&T BUY 1,412 1,565 11 1,980 28.6 1,401 63 67 76 22 6.5 13.0 22 21 18.5 18 17 15 3.1 2.8 2.6 14.9 14.2 14.7 1.5 1.6 1.8 64

Sadbhav Engineering BUY 244 280 15 42 0.6 172 13.8 17 17 7.3 26 -0.6 17.6 14.0 14.1 12 9.8 8.7 2.0 1.8 1.6 12.0 13.4 11.8 0.0 0.0 0.0 0.9

Siemens SELL 1,131 995 (12) 403 5.8 356 29 34 40 14.1 20 17 39 33 28 23 19 16 4.5 4.1 3.7 11.8 13.1 14.0 0.7 0.8 1.0 8.2

Thermax REDUCE 955 990 4 114 1.6 113 27 38 43 29 42 12.4 36 25 22 25 18 16 25 18 16 10.7 13.9 14.2 0.8 1.1 1.2 1.4

Capital goods Neutral 4,007 57.8 20 9.0 11.8 23 21 18.5 2.6 2.4 2.2 11.8 11.8 12.2 1.3 1.4 2.6 797

Commercial & Professional Services

SIS REDUCE 850 800 (6) 62 0.9 73 27 36 43 19 36 19 32 24 19.7 19 14 11.6 5.3 4.4 3.7 17.7 20 20 0.3 0.4 0.5 0.4

TeamLease Services SELL 3,054 2,000 (35) 52 0.8 17 59 76 99 37 29 30 52 40 31 53 40 31 9.6 7.8 6.2 20 21 22 — — — 0.9

Commercial & Professional Services Cautious 115 1.7 26 33 23 38 29 23 26 19 16 6.6 5.4 4.5 17.1 18.8 19.0 0.2 0.2 0.3 1.3

Commodity Chemicals

Asian Paints REDUCE 1,493 1,225 (18) 1,432 20.7 959 24 30 36 19 25 19 61 49 41 38 30 25 15 13 12 26 29 30 0.7 0.9 1.2 26

Tata Chemicals ADD 585 700 20 149 2.2 255 40 48 53 (22) 18 11.8 14.5 12.3 11.0 6.7 5.5 4.7 1.2 1.2 1.1 8.9 9.8 10.3 2.6 2.9 2.9 7.3

Commodity Chemicals Neutral 1,581 22.8 2.1 23 17 47 38 33 27 22 19 7.3 6.7 6.1 15.6 17.6 18.7 0.9 1.1 1.3 33

Conglomerate

Godrej Industries RS 537 — — 285 4.1 336 16 20 — 8.9 24 34 27 41 45 4.4 3.9 13.9 15.1 0.3 0.3 3.0

Conglomerate Neutral 285 4.1 8.9 24 53 43 41 45 7.0 6.1 13.1 14.2 0.2 0.2 3.0

Construction Materials

ACC SELL 1,652 1,280 (22) 310 4.5 188 54 68 79 9.9 27 15 31 24 21 16 13 11.3 2.9 2.7 2.5 10.1 11.6 12.2 0.8 0.8 0.8 17.0

Ambuja Cements REDUCE 235 190 (19) 466 6.7 1,986 7.2 9.4 11.2 (4.8) 31 19 33 25 21 10.0 8.4 7.1 2.1 2.0 1.9 6.6 8.1 9.1 0.6 1.2 1.2 8.7

Dalmia Bharat ADD 1,078 1,170 18 207 2.9 192 6.6 35 50 (55) 421 44 149 29 19.9 13 9.4 8.1 1.8 1.7 1.6 1.2 6.2 8.3 — — — 2.2

Grasim Industries ADD 857 930 8 564 8.1 657 65 74 98 37 13.6 33 13.2 11.6 8.7 7.7 7.1 6.0 1.0 0.9 0.8 7.3 7.9 9.7 0.6 0.6 0.6 16.0

India Cements REDUCE 111 84 (24) 34 0.5 308 3.0 6.4 9.0 (7.9) 112 42 37 17.5 12.3 9.8 7.9 6.9 0.7 0.6 0.6 1.8 3.7 5.0 0.9 0.9 0.9 8.3

J K Cement ADD 847 770 (9) 65 0.9 70 31 61 62 (28) 97 1.9 27 13.9 13.6 11.5 10.0 8.2 2.5 2.1 1.9 10.3 16.5 14.8 0.9 0.9 0.9 0.3

JK Lakshmi Cement ADD 366 325 (11) 43 0.6 118 3.1 22 31 (31) 624 37 118 16.3 11.9 14 7.8 6.3 3.0 2.6 2.1 2.5 16.8 19.5 0.5 0.5 0.5 0.4

Orient Cement ADD 82 80 (3) 17 0.2 205 0.1 6.2 10.4 (97.5) 11,412 67 1,533 13.3 8.0 12 6.7 4.9 1.7 1.6 1.4 0.1 12.4 18.5 1.8 2.4 2.4 0.1

Shree Cement SELL 18,680 11,750 (37) 651 9.4 35 339 512 642 (15) 51 25 55 36 29 24 17 14 6.7 5.8 4.9 12.7 17.0 18.2 0.3 0.3 0.3 6.1

UltraTech Cement SELL 4,042 2,550 (37) 1,110 16.0 275 79 128 166 (10.7) 62 30 51 32 24 22 16 13 4.0 3.6 3.2 8.1 12.0 13.8 0.2 0.2 0.2 21

Construction Materials Cautious 3,451 49.8 4.2 42 28 33 23 18.0 13 10.2 8.4 2.3 2.1 1.9 7.0 9.2 10.7 0.5 0.5 0.5 80



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Consumer Durables & Apparel

Crompton Greaves Consumer SELL 231 200 (13) 145 2.1 627 6.0 7.2 8.5 16 21 17 39 32 27 24 20 17 13 9.9 7.6 39 35 32 0.9 1.1 — 1.7

Havells India SELL 774 520 (33) 484 7.0 625 13.4 17 20 21 23 18 58 47 40 37 30 25 11 10 8.8 21 23 24 0.6 0.7 0.9 14.2

Page Industries SELL 25,478 22,300 (12) 284 4.1 11 397 479 578 28 21 21 64 53 44 41 34 28 29 23 19 48 48 47 1.0 0.9 1.0 19.0

TCNS Clothing Co. ADD 821 855 4 50 0.7 64 21 22 27 37 5.2 22 39 37 30 26 20 16 8.9 7.0 5.5 26 21 20 — — — 0.4

Vardhman Textiles ADD 1,087 1,230 13 62 0.9 56 124 129 139 20.8 4.1 7.5 8.7 8.4 7.8 6.9 6.6 5.9 1.1 1.0 0.9 13.4 12.6 12.4 1.8 2.8 2.8 0.3

Voltas SELL 624 500 (20) 207 3.0 331 16 18 22 (5.2) 11.8 20 38 34 28 28 25 21 4.8 4.3 3.9 13.2 13.4 14.5 0.5 0.6 0.7 10.6

Whirlpool SELL 1,506 1,220 (19) 191 2.8 127 33 40 46 20 21 15 45 38 33 28 23 19 8.9 7.6 6.6 21 22 22 0.3 0.5 0.9 1.4

Consumer Durables & Apparel Cautious 1,423 20.5 17 16 41 35 30 27 23 19 7.5 6.6 18.3 18.6 18.9 0.7 0.8 48

Consumer Staples

Bajaj Consumer Care ADD 314 405 29 46 0.7 148 15 17 19 7.8 10.1 9.1 20 18.5 16.9 16 14 12 10 10 10 47 53 57 4.5 4.5 4.8 2.2

Britannia Industries REDUCE 3,050 2,935 (4) 733 10.6 240 50 60 71 19 21 18 61 51 43 40 34 28 17 14 12 31 31 30 0.6 0.7 0.9 16.7

Colgate-Palmolive (India) ADD 1,258 1,400 11 342 4.9 272 27 32 37 16 16 17 46 39 34 26 23 20 20 17 15 46 47 48 1.3 1.5 1.8 8.9

Dabur India REDUCE 401 390 (3) 708 10.2 1,762 8.8 10.3 11.9 12.8 17 16 46 39 34 38 32 27 13 11 9.5 27 30 30 0.9 1.1 1.4 15.3

GlaxoSmithKline Consumer RS 7,135 — — 300 4.3 42 218 240 265 31 10.1 10.6 33 30 27 23 21 18 7.6 6.7 6.1 25 24 24 1.3 1.5 1.8 2.5

Godrej Consumer Products REDUCE 677 700 3 692 10.0 1,022 15 18 21 6.6 19 16 45 38 32 31 26 22 9.1 8.0 7.0 22 23 23 0.8 0.9 1.1 12.5

Hindustan Unilever REDUCE 1,690 1,600 (5) 3,658 52.8 2,160 29 34 39 18 18 13.8 59 50 44 41 34 30 46 38 32 83 83 79 1.2 1.4 1.6 41

ITC ADD 297 325 9 3,643 52.6 12,275 9.8 11.0 12.2 10.4 11.3 11.8 30 27 24 20 17 16 6.6 6.2 5.9 21 22 24 1.9 2.3 2.6 57

Jyothy Laboratories ADD 184 210 14 68 1.0 364 5.5 6.2 7.2 24 13.8 16 34 30 25 23 20 17 5.1 4.4 3.9 16.2 16.0 16.4 0.5 0.8 1.1 0.7

Marico ADD 348 380 9 449 6.5 1,291 7.2 8.8 10.3 14.5 23 17 48 39 34 34 28 24 16 15 13 35 40 42 1.4 1.6 1.8 8.8

Nestle India REDUCE 10,915 11,100 2 1,052 15.2 96 167 199 229 31 19 15 65 55 48 38 33 28 29 26 24 45 50 53 1.1 1.3 1.5 15.2

Tata Global Beverages ADD 208 220 6 131 1.9 631 7.3 8.7 9.8 — 18 13.0 28 24 21 16 14 12 1.8 1.7 1.7 6.5 7.4 8.0 1.4 1.7 1.9 5.3

United Breweries REDUCE 1,413 1,390 (2) 374 5.4 264 24 30 37 59 26 23 59 47 38 30 25 21 11 9.5 7.9 21 22 23 0.3 0.4 0.5 15.9

United Spirits REDUCE 549 550 0 399 5.8 727 10.9 13.3 17 44 22 25 50 41 33 31 26 21 12 8.2 5.6 27 24 20 — 0.4 0.5 13.7

Varun Beverages BUY 898 900 0 164 2.4 183 16 19 25 39 19 31 56 47 36 19 16 13 8.2 7.1 6.0 15.5 16.1 18.1 0.3 0.1 0.2 1.5

Consumer Staples Cautious 12,761 184.2 16 15 14.3 43 38 33 29 25 21 12 10 9.3 27 28 28 1.3 1.5 1.7 218

Diversified Financials

Bajaj Finance REDUCE 3,001 2,250 (25) 1,735 25.0 575 67 90 118 54 34 31 45 33 25 — — — 9.0 7.3 5.8 22 24 25 0.2 0.3 0.4 60

Bajaj Finserv ADD 7,141 6,500 (9) 1,136 16.4 159 242 307 384 38 27 25 30 23 18.6 — — — 4.6 3.9 3.3 17.5 18.3 19.1 0.2 0.2 0.2 21

Bharat Financial Inclusion NA 1,100 — — 154 2.2 139 63 68 86 93 8.1 27 17.4 16.1 12.7 — — — 3.9 3.1 2.5 25 21 21 — — — 8.4

Cholamandalam ADD 1,510 1,525 1 236 3.4 156 76 90 111 30 18 23 19.8 16.7 13.5 — — — 4.1 3.3 2.7 21 21 22 0.6 0.7 0.9 5.8

HDFC ADD 1,960 2,125 8 3,373 48.7 1,676 54 60 71 (29) 11.6 18 37 33 28 — — — 4.5 4.2 3.8 13.3 13.2 14.4 1.0 1.2 1.4 85

IIFL Holdings REDUCE 436 410 (6) 139 2.0 319 26 28 33 (9.0) 9.4 17 16.8 15.4 13.1 — — — 2.4 2.2 1.9 15.6 15.1 15.9 1.3 1.4 1.6 1.6

L&T Finance Holdings REDUCE 152 145 (5) 304 4.4 1,996 11.7 13.0 15.0 59 11.2 16 13.0 11.7 10.1 — — — 2.2 1.9 1.7 17.7 17.7 17.7 1.3 1.6 1.6 14.1

LIC Housing Finance BUY 539 590 9 272 3.9 505 46 54 63 4.8 17 17 11.8 10.1 8.6 — — — 1.8 1.5 1.3 16.2 16.0 16.4 1.3 1.5 1.8 14.4

Magma Fincorp BUY 118 145 23 32 0.5 237 11.3 15 18 16 35 18 10.5 7.7 6.6 — — — 1.2 1.0 0.9 12.1 14.3 14.9 1.4 1.9 2.3 0.4

Mahindra & Mahindra Financial ADD 422 475 12 261 3.8 614 22 27 33 25 23 23 19.3 15.7 12.7 — — — 2.6 2.4 2.1 13.6 14.9 16.4 1.2 1.5 1.8 10.2

Muthoot Finance ADD 614 550 (10) 246 3.6 400 48 45 50 11.3 (6.0) 11.2 12.8 13.6 12.3 — — — 2.7 2.3 2.1 23 18.3 17.9 1.8 1.7 1.9 9.4

PNB Housing Finance REDUCE 943 950 1 158 2.3 167 62 70 83 (3.5) 12.8 19 15.2 13.5 11.3 — — — 2.2 2.0 1.7 15.1 14.8 15.6 0.4 0.4 0.4 2.9

Shriram City Union Finance ADD 1,793 1,950 9 118 1.7 66 146 158 188 45 8.2 19 12.3 11.4 9.6 — — — 2.0 1.8 1.5 16.2 15.4 16.0 1.0 1.1 1.3 0.6

Shriram Transport BUY 1,236 1,475 19 280 4.0 227 109 128 147 57 18 15 11.4 9.6 8.4 — — — 1.9 1.6 1.4 16.9 17.3 17.2 1.2 1.5 1.8 21

Diversified Financials Neutral 8,445 121.9 8.0 18 21 26 22 18.5 3.9 3.4 3.0 14.9 15.4 16.2 0.8 0.9 1.0 255



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Price (Rs) Value Upside shares 3mo


Electric Utilities

CESC BUY 725 800 10 96 1.4 133 63 97 107 (6.8) 55 10.4 11.6 7.5 6.8 7.1 5.9 5.3 0.8 0.7 0.7 6.7 10.0 10.2 1.6 1.5 1.6 4.3

JSW Energy REDUCE 74 67 (9) 121 1.7 1,640 4.3 5.4 5.7 42 25 5.6 17.0 13.6 12.9 6.4 5.4 4.9 1.0 1.0 0.9 6.2 7.2 7.1 — — — 1.2

NHPC ADD 25 28 12 252 3.6 10,260 2.7 2.7 3.5 10.4 0.9 28 9.3 9.2 7.2 8.1 7.9 6.8 0.8 0.8 0.8 9.1 8.8 10.9 6.0 5.5 7.3 2.5

NTPC BUY 135 158 17 1,337 19.3 9,895 10.9 12.3 14.0 3.9 12.8 14.1 12.4 11.0 9.7 9.8 8.7 7.4 1.2 1.1 1.1 10.2 10.8 11.4 2.4 2.7 3.1 30

Power Grid BUY 196 235 20 1,023 14.8 5,232 18 21 24 16 17 11.5 10.7 9.1 8.2 7.6 7.0 6.6 1.7 1.5 1.4 16.7 17.6 17.6 3.1 3.6 4.1 18.0

Tata Power BUY 74 85 14 201 2.9 2,705 4.4 5.2 7.6 (18.3) 19 46 17.0 14.3 9.8 10.2 10.5 10.1 1.2 1.1 1.0 7.5 8.2 10.9 — — — 6.3

Electric Utilities Attractive 3,030 43.7 7.8 15 15 11.7 10.2 8.8 1.3 1.2 1.1 10.7 11.4 12.2 2.7 2.9 3.4 62

Fertilizers & Agricultural Chemicals

Bayer Cropscience SELL 4,380 3,550 (19) 150 2.2 34 94 114 135 7.4 21 19 47 39 32 28 24 20 7.4 6.5 5.6 17.0 18.0 18.6 0.4 0.5 0.6 0.5

Dhanuka Agritech ADD 396 435 10 19 0.3 49 20 24 28 (22.1) 21 17 19.8 16.4 14.0 13 10.7 8.7 2.7 2.4 2.2 14.7 15.8 16.4 1.1 1.3 1.5 0.1

Godrej Agrovet ADD 522 540 3 100 1.4 189 11.4 16 20 (1.0) 38 26 46 33 27 22 17 14 5.2 4.6 3.9 12.2 14.6 15.9 0.4 0.5 0.6 0.8

Kaveri Seed SELL 465 515 11 29 0.4 66 34 34 37 7.3 0.1 8.3 13.5 13.5 12.5 10.2 9.5 8.3 3.3 2.8 2.4 26 22 21 1.7 2.2 2.2 10.7

PI Industries BUY 1,035 970 (6) 143 2.1 138 30 39 46 13.9 27 19 34 27 23 24 19 16 6.3 5.3 4.4 20.0 21 21 0.4 0.6 0.7 1.9

Rallis India ADD 163 195 19 32 0.5 195 8.8 10.5 11.1 1.7 20 5.4 18.6 15.5 14.7 12 10.2 9.1 2.5 2.3 2.1 13.8 15.4 15.0 2.2 2.4 2.7 0.8

UPL ADD 935 775 (17) 476 6.9 507 45 55 62 6.0 21 12.9 21 17.1 15.1 12 10.8 9.5 4.4 3.6 3.1 23 23 22 0.9 1.2 1.3 24

Fertilizers & Agricultural Chemicals Attractive 949 13.7 5.5 21 14.5 25 21 18.1 15 13 11.4 4.7 4.0 3.4 18.8 19.4 18.9 0.8 1.0 1.1 39

Gas Utilities

GAIL (India) BUY 355 455 28 800 11.5 2,255 29 33 34 40 13.8 5.9 12.4 10.9 10.3 8.0 6.9 6.5 1.8 1.7 1.5 15.3 16.0 15.5 3.1 3.2 3.5 22

GSPL SELL 184 170 (8) 104 1.5 564 15 14.3 13.6 31 (7.6) (4.6) 11.9 12.9 13.5 5.0 5.0 4.8 1.8 1.6 1.5 16.1 13.2 11.4 1.3 1.2 1.1 1.4

Indraprastha Gas SELL 307 250 (19) 215 3.1 700 11.9 13.7 15 16 14.7 11.3 26 22 20 16 14 12 5.3 4.7 4.2 22 22 22 0.9 1.2 1.6 9.8

Mahanagar Gas ADD 1,027 950 (8) 101 1.5 99 57 62 64 19 7.6 4.2 17.9 16.7 16.0 10.5 9.6 9.0 4.3 3.8 3.5 25 24 23 2.2 2.7 3.1 5.4

Petronet LNG BUY 247 270 9 371 5.4 1,500 15 18 20 11.2 15 11.8 16.0 13.9 12.4 10.6 9.0 8.0 3.5 3.2 2.9 23 24 24 3.1 3.6 4.4 11.0

Gas Utilities Attractive 1,591 23.0 29 12.4 6.8 14.5 12.9 12.0 8.9 7.9 7.3 2.4 2.2 2.0 16.5 16.9 16.5 2.6 2.9 3.3 50

Health Care Services

Apollo Hospitals ADD 1,270 1,275 0 177 2.5 139 23 30 37 177 30 21 54 42 34 20 17 15 5.1 4.7 4.3 9.6 11.7 12.9 0.5 0.6 0.7 16.4

Aster DM Healthcare BUY 154 240 56 78 1.1 505 6.1 8.3 11.9 120 37 44 25 18.6 12.9 11.9 9.6 7.7 2.5 2.2 1.9 10.3 12.7 16.1 — — — 0.2

Dr Lal Pathlabs SELL 1,050 945 (10) 88 1.3 83 24 28 33 17 15 18 44 38 32 27 23 19 9.3 7.8 6.6 23 22 22 0.5 0.5 0.6 1.3

HCG BUY 206 260 26 18 0.3 85 (2.5) 0.9 3.4 (261) 137 263 NM 221 61 19 15 12 3.5 3.5 3.3 NM 1.6 5.6 — — — 0.1

Narayana Hrudayalaya BUY 210 265 26 43 0.6 204 1.9 4.5 7.5 (25) 139 64 111 46 28 18 15 11.4 4.0 3.7 3.3 3.7 8.3 12.2 — — — 0.2

Health Care Services Attractive 403 5.8 72 38 34 47 34 26 18 15 12 4.4 4.0 3.6 9.3 11.7 13.8 0.3 0.4 0.5 18.1

Hotels & Restaurants

Coffee Day Enterprises NR 285 — — 60 0.9 211 7.6 10.1 12.5 127 34 24 38 28 23 12 10.7 9.8 2.4 2.2 0.0 6.5 8.1 9.2 — — — 1.4

Jubilant Foodworks BUY 1,460 1,450 (1) 193 2.8 132 24 32 42 67 33 30 60 45 35 30 24 18 14 11 8.7 28 28 28 0.1 0.2 0.3 47

Lemon Tree Hotels ADD 80 86 8 63 0.9 786 0.5 1.2 2.0 162 157 68 169 66 39 41 23 18 7.4 6.6 6.2 4.5 10.6 16.3 — — 1.2 0.9

Hotels & Restaurants Attractive 316 4.6 88 42 33 61 43 32 23 18 15 6.7 5.8 5.0 11.0 13.6 15.7 0.1 0.1 0.4 50

Insurance

HDFC Life Insurance ADD 384 435 13 774 11.2 2,007 6.5 8.1 9.8 18 24 21 59 47 39 — — — 15 13 11 26 29 31 0.4 0.5 0.6 10.5

ICICI Lombard SELL 1,015 720 (29) 461 6.7 454 26 32 36 35 24 15 40 32 28 — — — 8.5 7.2 6.0 23 24 23 0.6 0.7 0.8 4.1

ICICI Prudential Life BUY 363 480 32 521 7.5 1,436 8.9 10.3 12.3 (21) 16 20 41 35 29 — — — 6.8 5.9 5.1 18.1 18.1 18.7 0.4 0.5 0.6 13.9

Max Financial Services BUY 442 530 20 119 1.7 268 6.3 6.4 6.5 37 1.8 1.8 70 69 68 — — — 8.3 8.0 7.8 0.5 0.5 0.5 4.1

SBI Life Insurance BUY 598 790 32 598 8.6 1,000 12.7 14.3 16 10.8 12.4 12.1 47 42 37 — — — 7.9 6.8 5.9 18.0 17.5 17.0 0.3 0.4 0.4 25

Insurance Attractive 2,473 35.7 6.8 18 17 48 40 34 8.8 7.7 6.7 18.6 19.1 19.4 0.3 0.4 0.4 58

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


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Internet Software & Services

Info Edge ADD 1,830 1,720 (6) 223 3.2 121.6 24 32 39 6.8 35 20 76 56 47 60 43 35 8.4 7.6 6.9 12.3 14.2 15.4 0.4 0.4 0.5 7.3

Just Dial SELL 603 625 4 39 0.6 67.4 30 32 34 39 7.7 7.2 20 18.9 17.6 12.0 10.4 9.2 4.2 3.5 3.0 20 20 18.3 0.5 0.5 0.6 27

Internet Software & Services Attractive 262 3.8 16 24 16 54 44 38 41 32 27 7.4 6.5 5.8 13.6 14.9 15.3 0.4 0.5 0.5 34

IT Services

HCL Technologies ADD 1,111 1,140 3 1,506 21.7 1,409 73 78 82 17 6.7 6.3 15.3 14.3 13.5 10.1 9.0 8.1 3.4 3.0 2.6 25 22 21 0.7 2.8 3.0 28

Hexaware Technologies REDUCE 358 345 (4) 107 1.5 302 19 21 25 17 10.9 16 18.6 16.7 14.5 13 11.4 9.6 4.5 4.0 3.5 27 25 26 2.4 2.4 2.8 6.1

Infosys ADD 755 760 1 3,299 47.6 4,350 36 40 44 11.2 10.6 10.9 21 19.0 17.1 15 13 11.7 4.8 4.5 4.1 24 24 25 3.4 2.9 3.2 87

L&T Infotech ADD 1,715 2,000 17 298 4.3 175 86 96 112 35 11.9 16 20 17.9 15.4 15 13 10.5 6.3 5.1 4.2 35 31 30 1.4 1.5 1.8 4.3

Mindtree ADD 945 1,000 6 155 2.2 165 45 52 61 31 14.1 17 21 18.2 15.5 14 11.3 9.6 4.8 4.1 3.5 25 24 24 1.4 1.6 1.9 26

Mphasis REDUCE 987 900 (9) 184 2.7 193 56 63 65 29 11.1 3.7 17.5 15.8 15.2 13 10.8 10.1 3.7 3.2 2.9 20 22 20 2.0 2.5 3.0 4.3

TCS REDUCE 2,032 1,825 (10) 7,624 110.1 3,829 83 91 100 23 10.3 9.6 25 22 20 18 16 15 7.5 7.1 6.7 33 33 34 1.6 3.1 3.4 89

Tech Mahindra ADD 786 875 11 693 10.0 891 49 56 64 13.8 16 14.5 16.2 14.0 12.2 9.6 8.1 6.8 3.2 2.7 2.3 21 21 20 1.2 1.3 1.4 38

Wipro REDUCE 262 265 1 1,580 22.8 6,009 15 18 20 19 19 9.2 17.3 14.5 13.3 11.3 9.4 8.7 2.7 2.5 2.4 17.0 17.8 18.3 0.6 3.8 4.2 31

IT Services Cautious 15,445 223.0 16 10.8 9.9 21 18.7 17.1 15 13 11.6 5.0 4.6 4.2 24 24 24 1.8 3.0 3.3 314

Media

DB Corp. ADD 185 220 19 32 0.5 184 16 21 24 (10.5) 31 18 11.7 8.9 7.6 6.1 4.6 3.8 1.8 1.7 1.5 14.9 19.5 21 2.2 5.4 6.8 0.3

DishTV ADD 40 30 (25) 74 1.1 1,925 0.2 1.4 2.4 145 593 71 201 29 16.9 4.3 3.6 2.9 14 11 7.6 7.9 43 53 — — — 11.5

Jagran Prakashan REDUCE 122 110 (10) 36 0.5 311 8.9 11.1 13.0 (8.1) 25 17 13.8 11.1 9.4 5.9 4.9 4.2 2.0 1.9 1.9 13.4 17.6 20 4.1 7.3 7.3 0.3

PVR RS 1,651 NA - 77 1.1 47 37 51 65 38 37 28 44 32 25 16 13 10.7 6.5 5.5 4.6 15.5 18.3 19.8 0.2 0.3 0.4 10.1

Sun TV Network REDUCE 630 600 (5) 248 3.6 394 38 39 42 31 2.7 7.4 16.6 16.2 15.1 11.0 10.5 9.7 4.6 4.1 3.7 30 27 26 2.4 2.8 3.2 22

Zee Entertainment Enterprises ADD 432 490 14 415 6.0 960 17 20 22 14.7 15 11.9 25 22 19.4 15 13 11.5 4.8 4.2 3.7 20 21 20 1.0 1.3 1.6 73

Media Attractive 882 12.7 20 19 16 23 19.0 16.5 10.2 9.0 7.9 4.5 4.0 3.6 20 21 22 1.4 1.9 2.2 117

Metals & Mining

Hindalco Industries BUY 216 275 27 485 7.0 2,229 27 27 29 24 (1.3) 7.8 7.9 8.0 7.5 5.2 5.0 4.5 0.8 0.7 0.7 10.5 9.5 9.3 0.6 0.6 0.6 24

Hindustan Zinc REDUCE 284 235 (17) 1,200 17.3 4,225 20 20 21 (6.0) (0.1) 7.3 14.3 14.3 13.3 8.9 8.2 7.4 3.5 3.2 2.9 24 23 23 7.0 3.5 3.8 2.8

Jindal Steel and Power REDUCE 183 145 (21) 177 2.6 968 4.4 4.4 13.2 152 (0.1) 198 41 41 13.8 7.0 7.1 6.0 0.6 0.6 0.6 1.5 1.4 4.1 — — — 27

JSW Steel REDUCE 292 265 (9) 707 10.2 2,406 31 19 23 17 (38) 16 9.3 15.0 13.0 6.3 8.3 7.5 2.2 1.9 1.7 25 13.5 14.0 1.1 1.1 1.1 30

National Aluminium Co. BUY 57 78 38 106 1.5 1,933 9.7 6.7 7.0 236 (31.3) 4.4 5.8 8.5 8.1 2.6 3.8 3.6 1.0 1.0 1.0 17.3 11.9 12.5 10.6 10.6 10.6 11.1

NMDC REDUCE 105 110 4 323 4.7 3,164 13.5 9.4 10.1 15 (31) 7.6 7.8 11.3 10.5 4.5 6.5 6.0 1.3 1.2 0.0 16.8 11.0 11.4 5.2 5.2 5.2 7.5

Tata Steel ADD 535 535 0 608 8.8 1,205 87 68 81 29 (21.7) 19 6.1 7.8 6.6 5.6 6.6 6.4 1.0 0.9 0.8 16.7 12.1 13.4 1.9 1.9 1.9 61

Vedanta BUY 189 275 46 702 10.1 3,717 18 29 30 (14.7) 59 2.8 10.3 6.5 6.3 5.8 4.6 4.3 1.1 1.1 1.0 10.9 16.9 16.4 9.0 9.0 9.0 34

Metals & Mining Attractive 4,306 62.2 15 (6.7) 11.3 9.4 10.1 9.0 6.0 6.2 5.7 1.3 1.2 1.2 14.1 12.4 12.8 4.6 3.6 3.7 36



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Oil, Gas & Consumable Fuels

BPCL SELL 392 275 (30) 850 12.3 1,967 30 33 35 (25) 10.6 6.5 13.1 11.8 11.1 9.5 8.7 8.1 2.1 1.9 1.7 16.5 16.8 16.4 3.1 3.4 3.6 24

Coal India BUY 236 290 23 1,467 21.2 6,207 26 27 28 128 5.7 1.0 9.2 8.7 8.6 6.5 6.0 5.5 5.7 6.0 6.2 64 67 71 8.5 10.6 10.6 27

HPCL SELL 284 185 (35) 432 6.2 1,524 31 27 29 (26) (12.3) 7.3 9.2 10.5 9.7 7.9 9.1 9.0 1.6 1.5 1.4 18.8 15.1 15.0 4.4 3.9 4.2 22

IOCL SELL 159 120 (24) 1,494 21.6 9,479 16 15 17 (22) (4.4) 8.7 9.9 10.3 9.5 5.6 5.8 5.6 1.3 1.2 1.1 13.4 12.0 12.2 4.0 3.9 4.2 31

Oil India BUY 183 235 28 208 3.0 1,135 29 30 31 17.7 4.8 0.8 6.3 6.0 6.0 4.6 4.3 4.2 0.7 0.7 0.6 11.5 11.4 11.0 7.2 7.5 7.6 4.4

ONGC BUY 158 215 36 1,984 28.6 3,752 24 26 26 40 5.3 0.5 6.5 6.2 6.1 3.4 3.2 2.9 0.8 0.8 0.7 13.3 13.0 12.2 5.1 5.4 5.4 29

Reliance Industries SELL 1,392 1,070 (23) 8,235 118.9 5,922 67 78 89 13.0 17 14.2 21 17.8 15.5 13 11.2 9.3 2.5 2.2 2.0 11.8 12.3 12.5 0.5 0.5 0.5 178

Oil, Gas & Consumable Fuels Attractive 14,671 211.8 15.0 7.7 7.2 12.6 11.7 11.0 8.0 7.3 6.6 1.8 1.7 1.5 14.3 14.2 13.9 2.6 2.9 2.9 315

Pharmaceuticals

Aurobindo Pharma ADD 792 785 (1) 464 6.7 584 41 61 64 (1.5) 48 5.4 19.3 13.0 12.3 13 9.0 8.3 3.4 2.7 2.3 18.9 21 18.5 0.7 0.8 0.9 26

Biocon SELL 620 370 (40) 372 5.4 601 11.6 16 19 88 42 14.9 53 38 33 28 20 17 5.9 5.2 4.7 11.7 14.7 14.3 0.7 0.9 1.1 14.2

Cipla BUY 526 600 14 424 6.1 805 19 25 32 6.1 34 28 28 21 16.6 15 12.0 9.6 2.7 2.4 2.2 9.9 12.1 13.2 0.7 1.0 1.3 16.7

Dr Reddy's Laboratories REDUCE 2,795 2,450 (12) 464 6.7 166 115 132 165 95 14.2 25 24 21 17.0 15 10.6 8.3 3.3 2.9 2.5 14.2 13.6 14.8 0.6 0.7 0.9 39

Laurus Labs BUY 396 400 1 42 0.6 106 11.0 20 27 (30.6) 80 35 36 20 14.8 14 9.5 7.8 2.7 2.3 2.0 7.6 12.4 13.7 — — — 1.6

Lupin REDUCE 766 820 7 347 5.0 450 24 33 46 (38) 40 40 32 23 16.5 15 10.9 8.3 2.4 2.2 2.0 7.6 10.0 12.1 0.3 0.6 0.9 23

Sun Pharmaceuticals ADD 479 475 (1) 1,149 16.6 2,406 18 22 27 16 23 23 27 22 17.9 14 11.2 9.1 2.8 2.5 2.2 10.7 12.0 12.5 0.5 0.9 1.1 68

Torrent Pharmaceuticals ADD 1,900 1,950 3 321 4.6 169 48 60 79 20 24 32 40 32 24 17 15 13 6.3 5.6 4.9 16.0 17.7 20 1.1 1.2 1.4 6.0

Pharmaceuticals Neutral 3,583 51.7 11.6 31 22 28 22 17.6 15 11.5 9.5 3.2 2.8 2.5 11.4 13.2 14.2 0.6 0.9 1.1 194

Real Estate

Brigade Enterprises BUY 254 290 14 35 0.5 136 21 26 32 85 25 25 12.4 9.9 7.9 9.4 7.7 5.9 1.4 1.2 1.1 11.6 13.0 14.4 1.0 1.0 1.0 0.6

DLF ADD 196 200 2 383 5.5 1,784 7.0 8.2 8.7 (71) 17.4 5.2 28 24 23 25 27 29 1.1 1.1 1.1 3.8 4.7 4.8 1.0 1.0 1.0 21

Godrej Properties SELL 813 400 (51) 187 2.7 216 7.1 23 24 (35) 231 4.2 115 35 33 190 31 31 5.5 4.7 4.1 5.8 14.6 13.3 — — — 3.5

Oberoi Realty BUY 532 470 (12) 193 2.8 340 47 35 56 273 (26) 60 11.2 15.2 9.5 12 16 6.7 2.1 1.8 1.5 22 12.8 17.7 0.4 0.4 0.4 4.3

Prestige Estates Projects ADD 241 270 12 90 1.3 375 10.6 12.9 20 7 22 58 23 18.8 11.9 11.3 10.8 8.3 2.2 2.0 1.8 9.0 11.3 15.8 0.6 0.6 0.6 2.4

Sobha REDUCE 512 495 (3) 49 0.7 95 26 33 39 14.8 24 18 19.5 15.7 13.3 13 10.8 9.9 2.2 2.0 1.8 10.1 13.5 14.3 1.4 1.4 1.4 1.7

Sunteck Realty REDUCE 471 360 (24) 69 1.0 140 17 20 36 14.2 13.0 84 27 24 13.0 23 19 9.5 2.3 2.1 1.8 8.9 9.3 15.1 0.2 0.2 0.2 1.9

Real Estate Neutral 1,005 14.5 (30) 9.8 32 24 22 16.5 19 18 13 1.8 1.7 1.6 7.7 7.9 9.5 0.6 0.6 0.6 36

Retailing

Aditya Birla Fashion and Retail BUY 224 235 5 173 2.5 773 2.1 3.2 5.2 35 54 63 109 70 43 31 24 19 14 12 9.1 13.6 17.9 24 — — — 3.4

Avenue Supermarts SELL 1,494 945 (37) 932 13.5 624 15 20 26 25 32 29 97 73 57 56 42 33 17 14 11 18.7 20 21 — — — 0.0

Titan Company REDUCE 1,120 900 (20) 995 14.4 888 17 21 25 33 26 18 66 52 44 44 35 28 16 13 11 27 28 27 0.4 0.5 0.6 36

Retailing Cautious 2,100 30.3 30 30 26 80 62 49 46 36 29 16 13 11 20 22 22 0.2 0.2 0.3 40

Speciality Chemicals

Castrol India SELL 166 145 (13) 164 2.4 989 7.2 7.8 8.4 4.2 9.0 7.9 23 21 19.7 15 13 12 14 12 11 65 62 60 3.0 3.2 3.5 4.2

Pidilite Industries REDUCE 1,255 1,025 (18) 638 9.2 508 18 23 28 (2.8) 31 20 70 53 45 45 36 30 16 13 11 24 27 28 0.6 0.7 0.8 11.1

S H Kelkar and Company BUY 151 210 39 22 0.3 145 6.3 8.3 9.8 (14.6) 32 18 24 18.1 15.3 16 12 10.8 2.4 2.2 2.0 10.3 12.5 13.5 1.2 1.3 1.8 0.6

SRF BUY 2,359 2,300 (2) 136 2.0 57 102 127 144 27 24 13.2 23 18.6 16.4 13 10.9 9.6 3.3 2.9 2.5 15.4 16.7 16.4 0.6 0.6 0.7 12.6

Speciality Chemicals Neutral 959 13.8 5.2 23 14.7 42 34 30 25 21 18 9.4 8.2 7.1 23 24 24 1.0 1.1 1.2 28



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Telecommunication Services

Bharti Airtel ADD 341 380 12 1,362 19.7 3,997 (10.0) (11.0) (5.4) NM NM NM NM NM NM 9.8 8.8 7.3 2.2 2.4 2.7 NM NM NM 1.8 1.8 1.8 34

Bharti Infratel REDUCE 315 275 (13) 583 8.4 1,850 14.0 13.3 14.9 1.7 (5.2) 12.6 23 24 21 8.8 9.1 8.4 3.5 3.6 3.5 15.5 14.9 16.6 3.6 3.5 3.9 41

Vodafone Idea NR 18 — — 155 2.2 4,359 (10.7) (2.4) (6.9) NM NM NM NM NM NM 30 10.5 9.3 0.2 0.3 0.4 NM NM NM — — — 14.7

Tata Communications ADD 613 580 (5) 175 2.5 285 (4.2) 3.0 5.2 NM 172 72 NM 204 118 11.1 9.9 9.2 NM NM 1,350 NM NM NM 1.1 1.2 1.2 4.3

Telecommunication Services Cautious 2,275 32.8 NM 10.8 25 NM NM NM 12 9.3 8.0 1.6 1.4 1.6 NM NM NM 2.0 1.9 2.0 94

Transportation

Adani Ports and SEZ BUY 383 390 2 793 11.5 2,071 21 23 29 16 7.2 27 17.9 16.7 13.2 14 11.6 10.3 3.3 2.8 2.4 19.5 18.1 19.5 0.3 0.4 0.4 25

Container Corp. SELL 531 515 (3) 324 4.7 609 14.9 17 21 2.0 17 19 36 31 26 21 17 14 3.2 3.0 2.9 9.3 10.2 11.4 1.4 1.6 1.5 8.1

Gateway Distriparks BUY 141 180 28 15 0.2 109 6.4 3.7 6.2 (16.0) (42) 68 22 38 23 24 9.4 8.1 1.4 2.6 2.3 6.6 4.8 10.8 — 2.1 2.1 0.3

Gujarat Pipavav Port BUY 98 126 29 47 0.7 483 4.6 5.6 6.6 12.2 21 19 21 17.6 14.8 10.9 9.2 7.7 2.3 2.3 2.2 11.0 13.0 15.2 4.0 4.8 5.6 0.7

InterGlobe Aviation ADD 1,417 1,550 9 545 7.9 383 (6) 66 96 (110) 1,212 47 NM 22 14.7 NM 13 8.1 7.9 5.9 4.4 NM 31 34 — 0.2 0.7 25

Mahindra Logistics REDUCE 515 470 (9) 37 0.5 71 12.0 16 21 22 33 33 43 32 24 24 18 13 7.5 6.3 5.2 18.7 21 23 — — — 0.3

Transportation Attractive 1,761 25.4 (25) 59 32 32 20 15.3 20 13 10.0 3.9 3.4 2.9 12.3 17.0 18.9 0.5 0.7 0.9 59

KIE universe 114,159 1647.8 16 30 17 24 18.5 15.8 11.6 10.2 9.0 2.9 2.6 2.3 11.9 14.0 14.7 1.4 1.7 1.9

KIE universe (ex-Oil, Gas & Consumable Fuels) 99,488 1436.0 16 37 19 28 20 16.9 13 11.3 9.9 3.1 2.8 2.5 11.3 13.9 14.9 1.2 1.5 1.7

Notes:

(a) We have used adjusted book values for banking companies.

(b) 2019 means calendar year 2018, similarly for 2020 and 2021 for these particular companies.

(c) Exchange rate (Rs/US$)= 69.27


Disclo

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Disclosures

Ratings and other definitions/identifiers

Definitions of ratings

BUY. We expect this stock to deliver more than 15% returns over the next 12 months.

ADD. We expect this stock to deliver 5-15% returns over the next 12 months.

REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.

SELL. We expect this stock to deliver <-5% returns over the next 12 months.

Our Fair Value estimates are also on a 12-month horizon basis.

Our Ratings System does not take into account short-term volatility in stock prices related to movements in the market. Hence, a particular Rating may not

strictly be in accordance with the Rating System at all times.

Other definitions

Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the following

designations: Attractive, Neutral, Cautious.

Other ratings/identifiers

NR = Not Rated. The investment rating and fair value, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s)

and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction

involving this company and in certain other circumstances.

CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.

NC = Not Covered. Kotak Securities does not cover this company.

RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and fair value, if any, for this stock, because there is not a sufficient

fundamental basis for determining an investment rating or fair value. The previous investment rating and fair value, if any, are no longer in effect for this stock

and should not be relied upon.

NA = Not Available or Not Applicable. The information is not available for display or is not applicable.

NM = Not Meaningful. The information is not meaningful and is therefore excluded.

Kotak Institutional Equities Research coverage universe

Distribution of ratings/investment banking relationships

Source: Kotak Institutional Equities As of December 31, 2018

Percentage of companies covered by Kotak Institutional

Equities, within the specified category.

* The above categories are defined as follows: Buy = We

expect this stock to deliver more than 15% returns over

the next 12 months; Add = We expect this stock to

deliver 5-15% returns over the next 12 months; Reduce

= We expect this stock to deliver -5-+5% returns over

the next 12 months; Sell = We expect this stock to deliver

less than -5% returns over the next 12 months. Our

target prices are also on a 12-month horizon basis.

These ratings are used illustratively to comply with

applicable regulations. As of 31/12/2018 Kotak

Institutional Equities Investment Research had

investment ratings on 203 equity securities.

Percentage of companies within each category for

which Kotak Institutional Equities and or its affiliates has

provided investment banking services within the

previous 12 months.

29.1% 29.6%

22.2%19.2%

1.5%3.9%

1.0% 0.0%0%

10%

20%

30%

40%

50%

60%

70%

BUY ADD REDUCE SELL

Corporate Office Overseas Affiliates

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Tel:+1 212 600 8856

Copyright 2019 Kotak Institutional Equities (Kotak Securities Limited). All rights reserved. 1. Note that the research analysts contributing to this report may not be registered/qualified as research analysts with FINRA; and

2. Such research analysts may not be associated persons of Kotak Mahindra Inc and therefore, may not be subject to NASD Rule 2711 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

3. Any U.S. recipients of the research who wish to effect transactions in any security covered by the report should do so with or through Kotak Mahindra Inc and (ii) any transactions in the securities covered by the research by U.S. recipients must be effected only through Kotak Mahindra Inc at [email protected].

This report is distributed in Singapore by Kotak Mahindra (UK) Limited (Singapore Branch) to institutional investors, accredited investors or expert investors only as defined under the Securities and Futures Act. Recipients of this analysis / report are to contact Kotak Mahindra (UK) Limited (Singapore Branch) (16 Raffles Quay, #35-02/03, Hong Leong Building, Singapore 048581) in respect of any matters arising from, or in connection with, this analysis / report. Kotak Mahindra (UK) Limited (Singapore Branch) is regulated by the Monetary Authority of Singapore. Kotak Securities Limited and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We along with our affiliates are leading underwriter of securities and participants in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationships with a significant percentage of the companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other business selection processes. Investors should assume that Kotak Securities Limited and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may participate in the solicitation of such business. Our research professionals are paid in part based on the profitability of Kotak Securities Limited, which include earnings from investment banking and other business. 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Additionally, other important information regarding our relationships with the company or companies that are the subject of this material is provided herein. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action based on this material. It is for the general information of clients of Kotak Securities Limited. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, clients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Kotak Securities Limited does not provide tax advise to its clients, and all investors are strongly advised to consult with their tax advisers regarding any potential investment. Certain transactions -including those involving futures, options, and other derivatives as well as non-investment-grade securities - give rise to substantial risk and are not suitable for all investors. The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only. We endeavor to update on a reasonable basis the information discussed in this material, but regulatory, compliance, or other reasons may prevent us from doing so. We and our affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material, may from time to time have "long" or "short" positions in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. Kotak Securities Limited and its non US affiliates may, to the extent permissible under applicable laws, have acted on or used this research to the extent that it relates to non US issuers, prior to or immediately following its publication. Foreign currency denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of or income derived from the investment. In addition, investors in securities such as ADRs, the value of which are influenced by foreign currencies affectively assume currency risk. In addition options involve risks and are not suitable for all investors. Please ensure that you have read and understood the current derivatives risk disclosure document before entering into any derivative transactions. Kotak Securities Limited established in 1994, is a subsidiary of Kotak Mahindra Bank Limited. Kotak Securities is one of India's largest brokerage and distribution house. Kotak Securities Limited is a corporate trading and clearing member of Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited (NSE), Metropolitan Stock Exchange of India Limited (MSE), National Commodity and Derivatives Exchange (NCDEX) and Multi Commodity Exchange(MCX). Our businesses include stock broking, services rendered in connection with distribution of primary market issues and financial products like mutual funds and fixed deposits, depository services and Portfolio Management. Kotak Securities Limited is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Kotak Securities Limited is also registered with Insurance Regulatory and Development Authority as Corporate Agent for Kotak Mahindra Old Mutual Life Insurance Limited and is also a Mutual Fund Advisor registered with Association of Mutual Funds in India (AMFI). Kotak Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered in last five years. However SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor penalty on KSL for certain operational deviations. We have not been debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has our certificate of registration been cancelled by SEBI at any point of time. We offer our research services to primarily institutional investors and their employees, directors, fund managers, advisors who are registered with us Details of Associates are available on website i.e. www.kotak.com Research Analyst has served as an officer, director or employee of subject company(ies): No We or our associates may have received compensation from the subject company(ies) in the past 12 months. We or our associates have managed or co-managed public offering of securities for the subject company(ies) in the past 12 months. YES. Visit our website for more details We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months. We or our associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months. We or our associates may have received compensation or other benefits from the subject company(ies) or third party in connection with the research report. Our associates may have financial interest in the subject company(ies). Research Analyst or his/her relative's financial interest in the subject company(ies): No Kotak Securities Limited has financial interest in the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: Container Corp., Coal India, YES Nature of Financial interest: Holding equity shares or derivatives of the subject company. Our associates may have actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report. Research Analyst or his/her relatives has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: No Kotak Securities Limited has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: No Subject company(ies) may have been client during twelve months preceding the date of distribution of the research report. A graph of daily closing prices of securities is available at https://www.moneycontrol.com/india/stockpricequote/ and http://economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose a company from the list on the browser and select the"three years" icon in the price chart). Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051, Telephone No.: +22 43360000, Fax No.: +22 67132430. Website: www.kotak.com / www.kotaksecurities.com. Correspondence Address: Infinity IT Park, Bldg. No 21, Opp. Film City Road, A K Vaidya Marg, Malad (East), Mumbai 400097. Telephone No: 42856825. SEBI Registration No: INZ000200137(Member of NSE, BSE & MSE) AMFI ARN 0164, PMS INP000000258 and Research Analyst INH000000586. NSDL/CDSL: IN-DP-NSDL-23-97. Compliance Officer Details: Mr. Manoj Agarwal. Call: 022 - 4285 8484, or Email: [email protected]. Investments in securities market are subject to market risks, read all the related documents carefully before investing. In case you require any clarification or have any concern, kindly write to us at below email ids: Level 1: For Trading related queries, contact our customer service at ‘[email protected]’ and for demat account related queries contact us at [email protected] or call us

on: Toll free numbers 18002099191 / 1800222299 and 18002099292 Level 2: If you do not receive a satisfactory response at Level 1 within 3 working days, you may write to us at [email protected] or call us on 022-42858445 and if you feel you

are still unheard, write to our customer service HOD at [email protected] or call us on 022-42858208. Level 3: If you still have not received a satisfactory response at Level 2 within 3 working days, you may contact our Compliance Officer (Name: Mr. Manoj Agarwal) at

[email protected] or call on 91- (022) 4285 8484.

Level 4: If you have not received a satisfactory response at Level 3 within 7 working days, you may also approach CEO (Mr. Kamlesh Rao) at [email protected] or call on 91-(022) 4285 8301.

First Cut notes published on this site are for information purposes only. They represent early notations and responses by analysts to recent events. Data in the notes may not have been verified by us and investors should not act upon any data or views in these notes. Most First Cut notes, but not necessarily all, will be followed by final research reports on the subject. There could be variance between the First cut note and the final research note on any subject, in which case the contents of the final research note would prevail. We accept no liability for the contents of the First Cut Notes.

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[Kotak] India Daily, April 2, 2019 - Kotak Securities

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