DOMESTIC:

Nalco registers record bauxite, alumina production MBL Infra bags Rs2,126cr road development projects in

UP, Uttarakhand Adani Group secures approval for Australian coal

project Blackstone to buy majority of Mphasis in upto USD1.1bn

deal L&T wins Rs2,125cr contracts including major Karnataka

highway project Lupin launches generic insomnia drug in US RPG Life receives GMP certificate for Gujarat facility Indian Oil Corporation to spend Rs20,000cr in

expansion of its Gujarat refinery Toshiba to set up rail systems equipment facility in

Hyderabad UK's SFO initiates investigation into Tata Steel's

operations

ECONOMY:

FPIs pour in USD3bn in stock markets in March Finance Ministry lines up 16 PSUs for disinvestment RBI cuts repo rate by just 25 bps, but pumps loads of

money into the system Manufacturing growth hits 8-month high in March: PMI

INDUSTRY:

Government plans to achieve 20,000 MW of solar production by 2017

Government slashes spectrum use charge, phone bills may drop

India serves steel products anti-dumping notice on China

Government clears ATC buying 51% stake in Viom for Rs5,856.51cr

TM

One Year Sensex Performance

Coverage Universe Valuations

Company CMP Reco. Tgt price Upside Mcap EV/Sales (x) EV/EBITDA (x) PE(x)

(Rs) (Rs) (%) (Rs bn) FY16E FY17E FY16E FY17E FY16E FY17E

Supreme Petrochem Ltd 120 BUY 150 25.0 10.7 16.2 11.0 0.3 0.2 7.0 4.7

Indian Hume Pipe Co. Ltd 327 BUY 475 45.3 7.7 15.1 10.6 8.6 7.7 8.0 6.5

Shanthi Gears Ltd 85 BUY 150 75.5 7.1 61.5 48.4 3.6 3.8 24.6 22.7

Hind Rectifiers Ltd 63 BUY 110 75.6 0.9 52.1 11.9 1.0 0.8 20.3 8.7

KCP Limited 91 BUY 105 15.9 10.9 29.4 20.9 2.1 1.9 12.4 10.5

Navneet Education Ltd 84 BUY 130 54.6 19.9 13.6 11.8 2.0 1.8 8.2 7.3

Harita Seating System Ltd 520 BUY 600 15.4 3.5 41.1 30.2 1.4 1.3 25.8 20.1

Camlin Fine Sciences 92 BUY 140 52.3 8.7 11.3 8.6 1.6 1.4 8.5 6.9

GEE Limited 38 BUY 70 86.7 0.9 16.2 11.7 0.7 0.6 6.4 5.6

Hester Biosciences Ltd 538 BUY 750 39.5 4.3 33.0 27.1 4.8 3.8 16.6 13.5

West Coast Paper Mills Ltd 81 BUY 110 36.2 4.6 15.2 4.1 0.7 0.6 4.1 3.3

Rallis India Limited 170 BUY 260 52.7 32.8 21.7 17.0 2.0 1.7 12.2 10.1

The Hitech Gears Limited 255 BUY 450 76.5 4.7 17.9 13.7 1.0 0.8 7.6 6.5

Bharat Bijlee Limited 934 BUY 1100 17.7 5.2 93.3 43.2 0.9 0.8 31.2 26.7

Castrol India Limited 377 BUY 650 72.3 186.4 28.5 26.6 4.7 4.6 18.2 17.0

Engineers India Limited 163 BUY 325 99.8 57.7 15.5 14.8 1.7 2.7 11.1 17.8

TNPL 232 BUY 350 51.2 15.4 7.4 6.3 1.5 1.4 5.8 5.2

Triveni Turbines Limited 97 BUY 135 39.2 31.6 31.4 26.4 0.4 0.4 2.1 1.7

Rajoo Engineers Limited 16 BUY 24 50.5 0.9 12.5 9.0 0.8 0.6 6.6 5.0

Siemens Limited 1128 BUY 1500 33.0 395.2 42.9 36.9 3.4 3.0 24.9 21.2

Price Performance (%)

Company 1M 3M 12M

Supreme Petrochem Ltd 8% 8.7% 74%

Indian Hume Pipe Co.Ltd 11% -24% 2%

Shanthi Gears Ltd 0.1% -15% -30%

Hind Rectifiers Ltd -4% -30% -12%

KCP Limited 26% 13% 39%

Navneet Education Ltd 2% -9% -23%

Harita Seating System Ltd 22% 23% 177%

Camlin Fine Sciences 6% -11% -5%

GEE Limited -3% -25% 34%

Hester Biosciences Ltd 29% -8% -9%

West Coast Paper Mills Ltd 26% 12% 52%

Rallis India Limited 11% 1% -25%

The Hitech Gears Limited 1% -20% -16%

Bharat Bijlee Limited 25% 7% 37%

Castrol India Limited 3% -14% -20%

Engineers India Limited 0% -30% -21%

TNPL 12.0% -9% 76%

Triveni Turbines Limited -1% -9% -27%

Rajoo Engineers Limited 4.7% -25% 5%

Siemens Limited 8% -1% -23%

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The week that went by: The markets opened on a decent note for the week with some buying activity witnessed. The market pace would be decided by the RBI monetary policy and fourth quarter results. Ahead of the policy announcement the markets were strong. However, post the announcement of a slash of 25bps in the repo rate, the markets tumbled. The markets hit three eek low on Thursday led by the heavy weights. Furthermore, weakness in European markets and oil prices added to the drop. There was selling witnessed by the foreign institutional investors after strong buying witnessed in March.

Result Update:

Kitex Garments Limited: Total income came in at Rs1,843mn as against Rs1,580mn in the corresponding quarter last year, an increase of 16.7%. For the full year, the total income grew from Rs5,110mn to Rs5,458mn on comparative basis. Net profit clocked a growth of 7.9% to Rs449mn as against Rs416mn in the corresponding quarter last year. A growth of 13.7% is witnessed on y-o-y basis from Rs985mn to Rs1,121mn in FY16. Ebitda margins came in at 37.6% for the quarter under review. For the full year, the Ebitda margins grew from 33% to 34% in FY16. EPS came in at Rs9.4. For the full year, the EPS came in at Rs23.6 in FY16 as compared to Rs20.7 in FY15.

Other highlights:

The long term borrowings have reduced to Rs83mn from Rs268mn.

The company is currently clocking margin of nearly 30% at PBT levels & intends to maintain it.

Capex for FY17 is estimated to be around Rs600mn as per the management, which will be used for upgrading new generation of boilers, sewage plant treatment and green initiative-green factory upgradation. Management has further projected capex of nearly Rs600mn for FY18 and Rs550mn for FY19; thus nearly Rs1,800mn for the next three years. This explains the reason for maintaining very high cash in the books.

Management has guided for an average growth of 20% for the next three years.

The Board of Directors have recommended final dividend of Rs.0.75 (FV = 1).

Our Comments: The company has performed reasonably well in the fourth quarter despite positive commentary given by the management in the conference call; one is advised to wait for a couple of quarters before making any investment decisions.

TM

Decent set of numbers

COVERAGE STOCK NEWS

We initiated a fundamental research report on Siemens Limited. Siemens Limited is an integrated technology providing hub in the domain of electrification, automation and digitalization, where Siemens Aktiengesellschaft (SAG) holds 75% of the capital. Siemens Limited has 22 factories located across India along with a work force of nearly 16,000 employees, 8 centers of competence and 11 R&D Centers. Innovation has always been the key to success of Siemens which is driven by a dedicated team of researchers. The factories in India mainly aim at manufacturing steam turbines, motors, switchgears, generators, transformers, railway bogies, relay and smart grid systems etc. The strategic business unit in India can be divided into seven divisions namely: Power and Gas, Energy Management, Building Technologies, Mobility, Digital Factory, Process Industries and Drives and Healthcare. (Recently, in March 2016, the management decided to hive off the Healthcare division for Rs3,050cr to its German parent.) Siemens has its associations with the Indian Railways for more than six decades and has been a preferred technology and customized solution provider since then. It has been the leading supplier of rail automation products and solutions (whether mainline or metro). The company focuses on the specific needs of industry and provides customized solutions. Siemens is one of the most favoured candidates for smart cities project and partner in India’s growth via its future oriented solutions. Being a leading player in the engineering space, it has the advantage of being a debt free company as well. We have initiated a BUY on the stock with a target price of Rs1500 from a 12 months’ perspective. *PAT / EPS for CY15 reflects exceptional item of Rs7,828mn

Siemens inks pact with NTPC to boost power generation Siemens announced that it has partnered with NTPC to boost power generation in South India. The company started dispatch of the largest-ever 'Made in India' single-phase Genera-tor step-up (GSU) transformer of rating 315 MVA, 23.5kV / 420kV for installation at NTPC's Kudgi Super Thermal PowerStation in Bijapur, Karnataka.

Our Comments: This transformer is an essential component of the power station, which once operational will boost the high-capacity power generation for the southern states of Karnataka, Andhra Pradesh, Tamil Nadu and Kerala. As per the management the transformer successfully underwent the lab tests.

TM

STOCKS NEWS ANALYSIS

Fundamental pick of the month

Annual Performance

(Rsmn) FY13 FY14 FY15 FY16E

Sales (Net) 113526 106783 105124 113650

EBIDTA 4207 5943 9761 15269

EBIDTA (%) 4% 6% 9% 13%

Other Income 345 1039 1604 1004

Interest 189 82 73 50

Depreciation 2502 2291 2156 2254

PBT 1861 4609 9136 13968

PAT 1940 6032 11833 9359

Equity 712 712 712 712

EPS 5 17 33 26

Siemens pact with NTPC

FPIs pour in USD3bn in stock markets in March Overseas investors have pumped in over Rs21,000cr (over USD3bn) into Indian equity markets in March, after pulling out massive funds in the preceding four months. However, Foreign Portfolio Investors (FPIs) have pulled out Rs1,476cr in the debt markets during the period under review.

Our Comments: FPIs have turned net buyers of equities in March after pulling out a massive Rs41,661cr from the market in the previous four months.

Finance Ministry lines up 16 PSUs for disinvestment Finance Ministry has drawn up a list of 16 PSUs including ONGC, Oil India and Coal India for disinvestment in 2016-17 which could fetch the exchequer Rs40,000cr at current stock value. The list includes state-owned companies such as NMDC, MOIL, MMTC, National Fertilisers, NHPC, NALCO and Bharat Electronics. The list mostly contains PSUs which were up for sale in the last fiscal itself but volatile market conditions delayed the plan. Besides, the Cabinet approvals are also in place for some of these PSUs.

Our Comments: The Budget has set a disinvestment target of Rs56,500cr for current fiscal. Of this, Rs36,000cr is estimated to come from minority stake sale in PSUs, and the remaining Rs20,500cr is projected to come from strategic sale in both profit and loss-making companies.

RBI cuts repo rate by just 25 bps, but pumps loads of money into the system The Reserve Bank of India cut the repo rate by 25bps in its first money policy review of the new financial year. The repo rate, at which the central bank lends short-term funds to banks, has now fallen to 6.5%. While the rate cut was minimal, the central bank also effected a slew of other changes to facilitate more and cheaper liquidity in the system. The central bank kept the CRR unchanged at 4% but lowered the minimum daily cash reserve ratio (CRR) requirement to 90% from 95%. It raised the reverse repo rate by 25bps.

Our Comments: The Dalal street gave an initial thumb down to the policy, but some of the losses were pared later.

Manufacturing growth hits 8-month high in March: PMI India’s manufacturing sector performance is estimated at an eight-month high in March because of improved demand from domestic and export markets. However, rising prices could make the central bank hold key rates, according to Nikkei India Manufacturing Purchasing Managers’ Index (PMI). The seasonally adjusted PMI remained firmly above the threshold of 50 for a third consecutive month and jumped up to 52.4 in March from 51.1 in February.

Our Comments: PMI data suggest we should expect another quarter of robust economic growth in the last quarter of the 2015-16. Despite gathering momentum, growth of production and new orders still remained below trend rates however.

TM

KEY NEWS ANALYSIS

FPIs pour into stock markets

PSUs for disinvestments

RBI policy on expected lines

Manufacturing growth on uptrend

Government plans to achieve 20,000 MW of solar production by 2017 The solar energy mission envisaged 20,000 MW of solar electricity generation by 2022. But this target has been scaled up by Prime Minister Narendra Modi to 1,00,000 MW (1Gw) by 2022. Ministry has already bid out 19,000 MW of solar energy projects and the installed capacity of 20,000 MW would be achieved as early as 2017.

Our Comments: These are aggressive targets set by the government and need to be tracked to see how far they are achieved.

Government slashes spectrum use charge, phone bills may drop In a move that could lower consumer tariffs for calls and broadband while also freeing up cash for debt-laden mobile service operators, the government has cut spectrum usage charges (SUC) from 5% of adjusted gross revenues (AGR) to 3%. The move is expected to be a confidence booster ahead of mega auctions, slated for July, which will see the government sell over 2,000 MHz of spectrum across seven frequencies, including the lucrative but highly-expensive 700 MHz band that will go on sale for the first time.

Our Comments: The decision could free up as much as Rs3,200cr for mobile companies. Top sources within the government said the decision to reduce SUC was approved by the inter-ministerial telecom commission that met in late March.

India serves steel products anti-dumping notice on China A government body has issued notices to China, Japan and South Korea proposing to initiate a probe on the 'dumping' of some steel products into India. The notices have been issued for hot-rolled coils of alloy and non-alloy steel, as per a source at the Directorate General of Anti-Dumping & Allied Duties.

Our Comments: Indian steelmakers Steel Authority of India Ltd, JSW Steel and Essar Steel had approached the DGAD seeking anti-dumping duties on cheap imports flooding local markets and pressuring margins. Imports of steel into India rose 20.5% in the 11 months to February compared with the same period last year, government data showed.

Government clears ATC buying 51% stake in Viom for Rs5,856.51cr The Cabinet Committee on Economic Affairs cleared the proposal of American Tower Corp (ATC) to acquire 51% stake in Viom Networks for Rs5,856.51cr. Under the agreement, ATC may also acquire or be required to acquire all or a portion of the remaining 49% ownership stake in Viom. Also, as a pre-condition for the deal, ATC's existing 14,000 telecom mobile masts will be merged with Viom.

Our Comments: Tata Teleservices Ltd owns 54% of Viom, while Kolkata-based SREI Group of Kanoria family holds 18.5% with management control. Singapore state investor GIC, Macquarie SBI Infrastructure Fund, Oman Investment Fund and India's IDFC Private Equity are other investors in the company. ATC will buy all of Srei's 18.50% stake and will also acquire stake from other shareholders. Tata Teleservices stake will come down to about 34% from current 54%.

TM

KEY NEWS ANALYSIS

Solar production targets set

Spectrum use charges slashed

ATC to buy Viom

Anti dumping notice

Nalco registers record bauxite, alumina production Nalco has clocked a record production of alumina and bauxite in fiscal 2015-16. The aluminium major has registered an all-time high production of 63.40 lakh tonnes of bauxite in 2015-16 fiscal which is 10.47% higher, and 19.53 lakh tonnes of alumina, 5.51% higher than the corresponding period previous fiscal. These are the highest-ever production figures since inception of the company

Our Comments: At a time when 70% aluminium companies’ world over have reported loss and the aluminium industry is reeling under heavy pressure due to sluggish international market, NALCO has remained profitable. The company has handled the market downturn by focusing on its bauxite mining and alumina refining arm, besides effecting several cost reduction measures, particularly in metal production.

MBL Infra bags Rs2,126cr road development projects in UP, Uttarakhand MBL Infrastructure has bagged road development projects worth Rs2,126cr from NHAI in Uttarakhand and Uttar Pradesh. MBL Infrastructures Ltd has been awarded the following projects on DBFOT (Design-Build-Finance-Operate-Transfer) Hybrid Annuity basis by the National Highways Authority of India.

Our Comments: First project is worth Rs942cr for four-laning of Chutmalpur-Ganeshpur section of NH-72A from 0 km to 16 km and Roorkee-Chutmalpur-Gagalheri section of NH-73 from 0 km to 33 km in the state of Uttarakhand and Uttar Pradesh under NHDP-IV. Second project is worth Rs 1,184 crore for four landing of Gagalheri-Saharanpur-Yamunanagar section of NH-73 from 33 km to 71.64 km state of Uttar Pradesh under NHDP-IV. Construction period is 730 days for both the projects.

Adani Group secures approval for Australian coal project Adani Enterprises Ltd won mining leases for its USD16bn Carmichael coal project in Australia, moving a step closer to starting work at the controversial mine. Adani secured three leases from the Queensland state government for the coal project which would be the largest in Australia. This is a major step forward for this project after extensive government and community scrutiny.

Our Comments: Some approvals are still required before construction can start, and ultimately committing to the project will be a decision for Adani.

Blackstone to buy majority of Mphasis in upto USD1.1bn deal Blackstone Group is buying a majority stake in Indian IT outsourcing services provider Mphasis Ltd from Hewlett Packard Enterprise Co in a deal worth up to USD1.1bn, in the US asset manager's single-biggest investment in India. The all-cash deal reinforces Blackstone's bullish outlook on the outsourcing business, where western clients send IT jobs to countries such as India to cut costs. In December, Blackstone announced the purchase of a minority stake in India's IBS Software for USD170mn.

Our Comments: Blackstone is betting that India's IT industry will continue to grow in double digits as companies move to high-margin digital services to offset a cut-back in routine IT spending by clients.

TM

STOCKS NEWS ANALYSIS

Nalco reports record production

Road development projects in UP granted

Adani gets approval for Australian project

Mphasis to be bought by blackstone

L&T wins Rs2,125cr contracts including major Karnataka highway project Larsen & Toubro has won contracts worth Rs2,125cr, including a major highway project in Karnataka. The transportation infrastructure business has bagged a new engineering, procurement and construction order worth Rs821cr from the National Highways Authority of India. The contract is for four-laning of the Addahole (Gundya) to Bantwal cross of NH-75 (old NH no. 48) in Karnataka. The project is scheduled be completed in 30 months.

Our Comments: The order is an index of L&T's expansion in the road infrastructure space, with the company having bagged prestigious road and bridge projects both in the international and domestic markets, thanks to its well-established capabilities.

Lupin launches generic insomnia drug in US Lupin has launched a generic insomnia drug, Zolpidem Sublingual tablets, in the US market with 180-days of marketing exclusivity. Lupin Pharmaceuticals launched GAVIS Pharmaceuticals' Zolpidem Sublingual tablets after having received final approval from the United States Food and Drug Administration (FDA) as well as from the FTC with 180 days of exclusivity.

Our Comments: GAVIS's product is the generic equivalent of Purdue Pharma LP's Intermezzo Sublingual tablets and is indicated for the treatment of insomnia. As per the IMS sales data, Intermezzo had sales of USD9.46mn in the US market.

RPG Life Sciences receives GMP certificate for Gujarat facility RPG Lifesciences has received GMP (good manufacturing practice) certificate from the German authority for its formulation manufacturing facility in Gujarat. The company said that Bavarian Authority, a competent authority in Germany, has granted GMP certificate to the company for its formulation manufacturing facility at 3102/A, G.l.D.C. Industrial Estate, Ankleshwar, District Bharuch, Gujarat.

Our Comments: This is a major milestone for the company. The certification will help in boosting sales by expanding the company's geographical presence in the European markets. It also reinforces the quality systems established by the company in line with the current stringent good manufacturing practices.

Indian Oil Corporation to spend Rs20,000cr in expansion of its Gujarat refinery Indian Oil Corporation was going to spend Rs20,000cr for brownfield expansion of its refinery. IOC's Gujarat Refinery here has been asked to jump directly from BS IV to the more stringent BS VI norms for petrol and diesel, so that cleaner transport fuels become available sooner to bring down vehicular emissions. Gujarat Refinery was expanding capacity to 18 million tonnes per annum (MTPA) from the existing 13.7 MTPA. The expansion is expected to be commissioned in 2020.

Our Comments: After the expansion, it will become the refinery with largest capacity for the company.

TM

STOCKS NEWS ANALYSIS

Lupin launches insomnia drug

L&T contracts won in Karnataka

RPG lifesciences gets GMP certification

IOC to expand Gujarat refinery

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TM