axis capital- essence of the week - 14 feb 2014

Axis Capital is available on Bloomberg (AXCP<GO>), Reuters.com, Firstcall.com and Factset.com 01

ESSENCE OF THE WEEK

14 FEB 2014

Sensex: 20367

Nifty: 6048

MARKET OUTLOOK The govt is all set to present the Vote on Account on Monday, 17th Feb 2014. This would be the last available opportunity for the government before the election commission notifies election dates, when a ban on further Govt announcements kicks in. In an interim budget changes in direct taxes cannot be attempted, as it would require the Finance Bill to be passed. That is the reason why a slew of populist measures have already been announced. Expectations Our expectations remain muted as: 1) In a Vote on Account an outgoing govt obtains the vote of Parliament for monies sufficient to incur expenditure on various items till a new govt takes over. Normally, no significant tax proposals or economic policy decisions are announced in the interim budget 2) Moreover, the government has already announced a slew of populist measures outside the budget and 3) The fiscal deficit target of 4.8% of GDP for FY14 leaves the govt with little room for any major populist measures. Key expectations The FM may likely outline a vision for the future and present his perspective on the future course of action on taxation and fiscal consolidation path, if the UPA is voted back to power. Fiscal deficit & gross borrowing: The government may report a Fiscal deficit number of 4.5-4.7% of GDP (vs target of 4.8%) given; 1) success of spectrum auctions (revenues may be ~Rs 180 bn vs Rs 110 bn budgeted enabling the govt to just about meet its Rs 400bn overall revenue target from telecom sector), 2) higher special dividends from PSUs, 3) residual stake sales, direct disinvestments, & SUUTI stake sale and 4) Plan expenditure cuts of ~400-500 bn. The gross borrowing number for FY15 may be projected at ~Rs 6.2-6.4 trillion.

(Continued on page 2…)

I ndex EPS FY13 FY14E FY15E

Sensex 1,217 1,374 1,652

EPS gwth % 13 20

Nifty 380 415 500

EPS gwth % 9 21

Headline inflation has cooled off significantly

8

9

10

11

12

4

5

6

7

8

Ap

r-13

May-

13

Jun-

13

Jul-1

3

Aug

-13

Sep

-13

Oct

-13

Nov-

13

Dec-

13

Jan-

14

(YoY %)

WPI CPI (RHS)

Source: Bloomberg

WHAT'S IN IT FOR YOU?

1. Market outlook A. Axis Capital Model portfolio. ........... 4-5 B. Earnings Review Q3FY14................ 6-9 C. EPS changes during the week ........... 10

2. Summaries of reports this week A. Eco: Headline inflation cools off but core

uptick disconcerting ......................... 11 A. Eco: Trade data .............................. 11 B. Eco: Vote-on account: Muted

expectations ................................... 12 C. Highways: Muddling through…recovery

still some time away ........................ 13 D. Indian Logistics: Improving volume mix to

aid margins .................................... 13

3. Ear to the ground ................................ 14

4. Macro overview: Debt & Money Mkt ..... 15

5. Market snapshot: Equity valns & perf/ Derivatives/ Commodity ................. 16-25

6. Valuation guide ............................. 26-32

Axis Capital SCREENER: An investment enabler just for you!!! The following screener helps you in identifying investment ideas: 1. Implied growth: Choose stock returns; 2. Stock screener/ filter: Shortlist companies with parameters chosen by YOU!;

3. Valuations: Comparing current valuations to long term averages; 4. BSE500 performance: Stock performance across various periods

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14 FEB 2014 Strategy

ESSENCE OF THE WEEK

(Continued from page 1…)

Indirect taxes: The govt may tinker around with duties in segments that could ease inflation or specific sectors where certain exemptions are expiring. Changes in indirect taxes are executive decisions that can be changed through notifications —parliamentary approval is not required.

Gold import norms: Expectations are ripe over the easing of gold import curbs. The import duty on gold was hiked to a record 10%, and import quantity was tied to exports under the 80/20 rule. These moves helped lower India’s CAD in the current fiscal year. However, given that the Fed tapering is still wreaking havoc on EM currencies and the fact that structural measures are still required to contain CAD, it will be a tricky decision to relax these norms, and if announced, may weigh on the INR in the short term. Service tax: Certain end-use specific exemptions in service tax for services rendered to specific infrastructure businesses could get relief. However, the current rate of tax of 12% is unlikely to be changed. Extension of the excise duty exemption: For hill states such as Himachal Pradesh and Jammu and Kashmir the government may extend excise duty exemption by either five years or until the GST comes into force as the exemption expires in May 2014.



ESSENCE OF THE WEEK

Key Indices: Fwd P/E

0

5

10

15

20

25

30

Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13

Sensex CNX Midcap 100 BSE Smallcap

Fwd PE range - Ap r'07 to date

Sensex * CNX Mid B SE Smal l

Current 13 11 7

Top Quartile 17 15 14

Median 16 13 11

Low Quartile 14 11 9

Source: Axis Capital, Bloomberg Note: * based on Axis Capital estimates. Midcap & Small cap estimates are from Bloomberg

Sensex sectoral long term valuation snapshot: Fwd PE*

6

10

14

18

22

26

30

34

Auto BFSI Engg FMCG IT Services Metals Oil & Gas Pharma Power Telecom Sensex

Current Top Low Median

Source: Axis Capital, Bloomberg Note: * Since April -2005

Sensex: Sector valuation based on Axis Capital numbers

Weight s

Sector (% ) FY14E FY15E FY14E FY15E FY14E FY15E FY14E FY15E

Auto 11.0 33 21 11 9 2.9 2.3 26 25

BFSI 24.6 9 14 12 11 1.9 1.7 15 16

Engg 5.4 (15) 2 17 16 2.1 1.9 13 12

FMCG 12.4 8 15 30 26 11.2 9.7 38 38

IT Services 19.5 22 25 21 17 5.5 4.6 27 28

Metals 4.5 9 17 10 8 1.6 1.4 16 17

Oil & Gas 12.6 13 26 10 8 1.4 1.2 13 15

Pharma 5.8 31 16 21 19 5.1 4.1 24 22

Power 2.2 (16) 11 14 13 1.3 1.2 9 9

Telecom 2.1 (3) 174 49 18 2.0 1.8 4 10

Sensex 100.0 14 20 15 12 2.5 2.2 17 18

Earnings gwth (% ) PER (x) PB R (x) ROE (% )

Source: Bloomberg, Axis Capital Note: Valuations based on current prices; PE not adjusted for value of investments

*Definition of Quartile: One of the three numbers (values) that divide a range of data into four equal parts. The first quartile (also called 'lower quartile') is the number below which lies the 25% of the bottom Data. The second quartile (the 'median') divides the



ESSENCE OF THE WEEK

range in the middle and has 50% of the data below it. The third quartile (also called 'upper quartile') has 75 percent of the data below it and the top 25% of the data above it.

A. Nifty-benchmarked Axis Capital Model Portfolio

Portfolio monthly update as of 6-December-13: Allocations UNCHANGED, while CMP and resultant Upside as of date.

Notes: a) Nil-cash portfolio

b) Non-Nifty stocks highlighted in blue, usually > USD 1 bn mcap (unless exceptional & LT returns) & capped at 2%

c) Allocations capped at 10% (eg RIL, ICICI)

d) TP upsides are based on 1-yr analyst-outlook while Model portfolio may be at variance to reflect nearer term concerns/ triggers, allocative imperatives, impending changes in multiples for factors not yet quantifiable into forecasts

e) Highlighted wtgs are those that are changed from previous wtgs, underlined = major OW vs. Nifty

Note: Sector totals include that of Nifty stocks where we have Nil wtg

06-Dec- 13 27-Aug- 13

Sector/ CompanyMcap

(USD mn)

CMP

(Rs)

Nift y

Cur rent

Axis Cap

6- Dec- 13

TP

(Rs)

Up side

(% )

P r ice

(Rs)

Weight s

(% )

OW/ UW

wr t Nift y

Au to 9.3 10.5 7.0 ◄►

Tata Motors 18,376 388 3.8 4.0 446 15 391 5.0 ◄►

Bajaj Auto 8,571 1,840 1.2 2.0 2,119 15 1,951 2.0 ▲

Maruti Suzuki 7,991 1,643 1.1 3.0 1,670 2 1,698 0.0 ▲

Hero Motocorp 6,226 1,937 1.2 1.5 1,786 (8) 2,099 0.0 ◄►

B anks & Financial Services 25.1 26.0 23.5 ◄►

ICICI Bank 18,373 988 5.7 10.0 1,185 20 1,143 5.5 ▲

HDFC 19,372 772 6.0 4.0 860 11 814 5.5 ▼

HDFC Bank 24,756 642 6.0 5.0 735 15 682 8.0 ◄►

Axis Bank 8,331 1,103 1.7 2.0 NR - 1,281 1.5 ◄►

Indusind Bank 3,185 377 0.8 1.0 465 23 446 2.0 ◄►

IDFC 2,327 95 0.6 1.0 98 3 113 0.0 ▲

PNB 3,131 537 0.4 2.0 695 29 597 0.0 ▲

LIC Hsg Fin 1,615 199 - 0.0 261 31 203 1.0 -

Power Finance 3,102 146 - 1.0 175 20 162 0.0 -

Cement 2.7 1.0 0.0 ▼

Ambuja Cement 3,768 151 0.6 1.0 - - 185 0.0 ▲

Engineer ing & Infra 4.9 9.0 5.5 ▲

Larsen & Toubro 14,814 993 4.1 5.0 1,213 22 1,097 3.5 ◄►

Adani Por t s 4,899 147 - 2.0 180 22 163 2.0 -

Adani Enterp r ises 3,808 215 - 2.0 290 35 274 0.0 -

FMCG, Media, Re tai l , e t c 11.9 9.0 18.0 ◄►

ITC 40,877 320 8.9 6.0 371 16 312 10.0 ▼

Hindustan Unilever 19,496 560 2.0 0.0 565 1 561 1.0 ▼

Zee 4,037 261 - 0.0 285 9 272 1.0 -

Sun TV 2,092 330 - 0.0 465 41 373 2.0 -

Tata Global B everages 1,399 141 - 0.0 153 9 146 1.0 -

B r i tannia Inds 1,743 903 - 0.0 UR - 869 1.0 -

Dabur 4,862 173 - 0.0 200 15 164 2.0 -

Dish TV 784 46 - 2.0 75 64 61 0.0 -

Uni ted Sp ir i t 5,468 2,337 - 1.0 2,997 28 2,555 0.0 -

I T - Services 18.2 16.0 17.5 ◄►

Infosys Tech 33,700 3,646 8.8 9.0 4,200 15 3,327 9.0 ◄►

Tata Consultancy 68,305 2,166 5.5 4.0 2,350 8 2,000 5.5 ◄►

Wipro 22,387 564 1.8 1.5 585 4 493 1.0 ◄►

HCL Tech 16,854 1,497 2.0 1.5 1,800 20 1,127 2.0 ◄►

Weightages (% )



ESSENCE OF THE WEEK

Continued…

06-Dec- 13 27-Aug- 13

Sector/ CompanyMcap

(USD mn)

CMP

(Rs)

Nift y

Cur rent

Axis Cap

6- Dec- 13

TP

(Rs)

Up side

(% )

P r ice

(Rs)

Weight s

(% )

OW/ UW

wr t Nift y

Resources 4.5 3.0 2.0 ▼

Sesa Sterlite 9,053 190 1.2 1.0 178 (6) 182 0.0 ◄►

NMDC 9,274 145 0.6 0.0 160 10 143 1.0 ▼

Hindustan Zinc 8,451 124 - 2.0 148 19 126 1.0 -

Oi l & Gas 11.5 12.0 14.0 ◄►

Reliance Inds 42,737 822 6.8 10.0 1,100 34 867 10.0 ▲

ONGC 37,985 276 2.5 0.0 UR - 295 2.0 ▼

Cairn 9,911 322 1.0 1.0 385 19 325 2.0 ◄►

BPCL 4,138 356 0.5 1.0 UR - 364 0.0 ▲

Pharmaceu t ical s 6.2 8.0 7.0 ◄►

Sun Pharma 20,303 609 2.3 2.0 700 15 582 2.5 ◄►

Dr Reddy 7,062 2,580 1.6 3.0 3,000 16 2,422 2.5 ▲

Lupin 6,504 901 1.1 1.0 971 8 858 2.0 ◄►

Biocon 1,377 428 - 1.0 417 (3) 403 0.0 -

Divi's Lab 2,920 1,366 - 1.0 1,516 11 1,139 0.0 -

Power U t i l i t ies 3.5 2.0 3.0 ▼

NTPC 17,547 132 1.4 1.0 171 29 149 2.0 ◄►

Tata Power 2,821 74 0.6 0.0 84 14 88 1.0 ▼

JSW Energy 1,181 45 - 1.0 60 34 55 0.0 -

Real Estate 0.3 1.0 1.0 ▲

Oberoi Real t y 977 185 - 0.0 264 43 186 1.0 -

P rest ige Estate 758 134 - 1.0 177 32 153 0.0 -

Te l ecommunicat ions 1.8 2.5 1.5 ▲

Bharti Airtel 19,640 305 1.8 1.5 UR - 332 1.5 ◄►

I dea Cel l u l ar 7,079 133 - 1.0 - - 176 0.0 -

Nift y Index 6,048 100.0 100.0 100.0

Nift y Index per formance From Incep t ion 7 - Jan- 10 14.9

Axis Cap Model Por t fol io per formance From Incep t ion 7 - Jan- 10 24.3

Weightages (% )

Source: Bloomberg; Axis Capital Note: Sector totals include that of Nifty stocks where we have Nil wtg



ESSENCE OF THE WEEK

B. Axis Capital: Earnings Review Q3FY14

Company Dec'13A YoY (% ) Dec'13A YoY (% ) Dec'13A YoY (% )

Apol l o Hosp i tal s 9,933 16 1,578 8 834 3 Resu l t s expectat ions : In-line

EPS up/dngrade : ◄►

PE up/dngrade : ◄►

TP up/dngrade : ◄►

B ata India 4,844 (5) 633 (21) 376 (26) Resu l t s expectat ions : In-line



TP up/dngrade : ▲

B PCL 647,676 4 (9,158) NA (10,889) NA Resu l t s expectat ions : In-line

EPS up/dngrade : --

PE up/dngrade : --

TP up/dngrade : --

Cadi l a Heal thcare 18,717 17 2,953 20 1,894 105 Resu l t s expectat ions : Above

EPS up/dngrade : ▲


TP up/dngrade : ▲

Cip la 25,808 25 4,673 (5) 2,843 (16) Resu l t s expectat ions : Below

EPS up/dngrade : ▼


TP up/dngrade : ▼

Coal India 177,280 (2) 49,036 (4) 39,051 (11) Resu l t s expectat ions : In-line




Dalm ia B harat 7,002 2 1,209 (15) (124) NA Resu l t s expectat ions : In-line




Dr Reddys 35,338 23 8,731 70 5,686 50 Resu l t s expectat ions : Above



TP up/dngrade : ▲

Eicher Motors 16,795 2 1,666 41 962 32 Resu l t s expectat ions : Above



TP up/dngrade : ▲

For t is Heal thcare 10,187 (34) 466 (69) (351) NA Resu l t s expectat ions : --




Fu tu re Re tai l 23,233 (27) 2,269 (18) (91) NA Resu l t s expectat ions : Below


PE up/dngrade : ▼

TP up/dngrade : ▼

Interest cost increase is eating into margin gains. Debt remains elevated and is a concern.

Fortis Healthcare (FHL) reported PAT of Rs 3.9 bn in Q3FY14 led by exceptional gain of Rs 4.2 bn due to

stake sale of Quality Healthcare – Hong Kong. Adjusted for one-time gain, Fortis reported a net loss of Rs

352 mn due to higher initial operating costs for new hospitals. Lower interest outgo coupled with higher

number of maturing beds and improving margin profile at SRL Diagnostics to drive turnaround in FY15E.

Adj PAT (Rs mn)

Volumes declined 3% YoY to 117 mnt mainly due to cyclone and flooding in key states. Avg. realization

improved 2% QoQ to Rs 1,445/ton led by (a) Average FSA realization improving 1% QoQ as grade

normalized during the quarter (Q2 was impacted by grade slippage) and (b) higher proportion of e-auction

volumes (13% vs 12% in Q2).

Higher expenses towards R&D and front-end set impacted margins.

Revenues (Rs mn) EB ITDA (Rs mn)

Consolidated EBITDA improved 33% QoQ mainly led by recovery in South profitability. South EBITDA/T

improved 46% QoQ to Rs 868 led by cement price increases in South during the quarter and cost saving

efforts.

While Apollo reported 16% YoY increase in revenue to Rs 9.9 bn, PAT growth was muted at 3% YoY to Rs

834 mn (in line with our estimates), due to higher initial operating costs for new clinics and hospitals.

Apollo is on course to add (1) ~2,300 beds over FY14-17E (1,000 beds to be added in FY15), and (2) 150-

200 pharmacies p.a. Margin expansion likely post FY15, as hospitals and pharmacies mature.

Q3 surprised with: (i) Strong sequential growth in US , (ii) EBITDA margin improvement led by better

product-mix, and (iii) 31 ANDA filings (including 30% non-oral). We expect, Cadila would now show a

steady recovery from here.

Gross margin expansion compensated for topline weakness. We rolled over our valuation to FY16E.

Q3 loss is in line with our estimate after adjusting for timely (but insufficient) subsidy support (Rs 25 bn) by

the government. Refining margin at US$ 1.7/bl was lower than HPCL (US$ 2.3/bl) due to partial closure of

Mumbai and Kochi refineries. Place all oil PSUs Under Review.

Eicher Motors’ Q4CY13 performance was driven by better realization across segments. We raise our

CY14/CY15 2W volume estimates by ~10% each to 300K/374K. This drives upgrade in consolidated

EBIDTA by ~2% in CY14/CY15. However, we lower CY14/ CY15 EPS by 4%/ 5% to Rs 237/ Rs 320

due to higher depreciation in 2W and VECV businesses, lower other income, and higher tax rate.

EBITDA margin were ahead of expectations led by better sales-mix. PSAI continued to laggard. Though

current margins are difficult to sustain, we believe focus on complex generic products is now yielding .

continued..



ESSENCE OF THE WEEK


Godre j I nd 20,074 17 1,237 34 652 36 Resu l t s expectat ions : --




Gujarat Gas 7,802 2 1,339 22 906 29 Resu l t s expectat ions : In-line




Hathway Cab le 2,348 52 367 4 (393) NA Resu l t s expectat ions : In-line




Hindal co Inds 72,731 6 6,295 8 3,340 15 Resu l t s expectat ions : Above




HPCL 554,550 4 (9,307) NA (17,339) NA Resu l t s expectat ions : In-line

EPS up/dngrade : --

PE up/dngrade : --

TP up/dngrade : --

HT Media 5,813 6 948 8 670 25 Resu l t s expectat ions : Above


PE up/dngrade : ▼


I ndia Cement 10,327 (5) 1,405 (28) (73) NA Resu l t s expectat ions : In-line




I ndian Oil 1,176,720 2 (3,416) NA (12,344) NA Resu l t s expectat ions : Above

EPS up/dngrade : --

PE up/dngrade : --

TP up/dngrade : --

I ndrap rastha Gas 10,414 20 1,952 4 895 4 Resu l t s expectat ions : In-line




I TNL 19,659 11 4,877 8 1,098 6 Resu l t s expectat ions : Below



TP up/dngrade : ▼

Jain I r r igat ion 9,625 25 1,435 13 158 (38) Resu l t s expectat ions : Above


PE up/dngrade : ▲

TP up/dngrade : ▲

EB ITDA (Rs mn) Adj PAT (Rs mn)

Q3 loss in line with our estimate after adjusting for timely (though insufficient) subsidy support (Rs 23 bn) by

the government. Refining margin declined 40% QoQ to US$ 2.3/bl due to lower gasoline spreads. Place

all oil PSUs Under Review.

Lower pagination and calibrated circulation helped HTML limit the adverse impact of higher newsprint

prices (up 14% YoY). We revise upwards our FY14/15E EPS to Rs 7.3/8.6 to factor in better margin and

lower tax outgo. Given the recent stock correction, we upgrade the stock to BUY with a TP of Rs 86 (10x

FY15E EPS of Rs 8.6)

Standalone EBITDA was marginally better than our estimate of Rs 5.8 bn due to better than expected

copper profitability. Copper EBIT improved 26% QoQ to Rs 3 bn led by (a) higher volumes (89 kt, up 6%

QoQ), (b) improving Tc/Rc charges and (c) improved by-product realizations.

Q3 loss was significantly better than our/ Street estimates (adjusted for subsidy) due to higher refining

margin and other income. IOC’s GRM at US$ 4.2/bl was best among peers (BPCL: US$ 1.7/bl, HPCL: US$

2.3/bl) due to better inventory management and partial closures of BPCL/ HPCL’s refineries. Place all oil

PSUs Under Review.

Revenues (Rs mn)

Results were in line with estimates. YoY decline in profitability reflects industry concerns on (a) overcapacity

situation in South resulting in volatile cement prices and (b) cost pressures, particularly energy and freight

costs. Cement volumes declined 5% YoY to 2.3 mnt.

HATH started gross billing in Delhi from Dec ’13. However, there may be some delays in implementing

gross billing in Kolkata (expected in Q4FY14), Mumbai and phase II cities (expected in Q1FY15). Given

these delays, we revise our FY14E EBITDA downwards by 17%, but maintain FY15E estimates (gross billing

across phase I & II cities from Q1FY15

EBITDA at Rs 4.9 bn (up 8% YoY) was driven by steady performance of BOT vertical (EBITDA excl.

standalone at Rs 4 bn; up 27% YoY). Margin decline of 577 bps YoY in standalone business was due to (a)

lower proportion of high margin fee income vs. Q2 and (b) one time technical fee of Rs 0.5 bn. However,

this was offset to some extent by strong execution.

Domestic MIS growth turned positive after 6 quarters on the back of higher farm income and better

monsoon. Moreover, working capital continues to fall alongside revenue improvement which is a big

positive.

Godrej Industries (GIL) Adj. PAT rose 27% YoY to Rs 652 mn due to strong performance from Agrovet

division (58% increase in EBIT to Rs 470 mn). We expect growth momentum in Agrovet to continue led by

(1) Continuous R&D in animal feed and increasing volumes in aqua feed, (2) Launch of new agri-products,

and (3) Yearly addition of ~8,000 hectares of palm oil and higher yield from maturing plantations.

Volumes expectedly declined 2% QoQ to 347 mscm. CNG prices have been cut by 30% in Q4 (Rs 35/kg

from Rs 50/kg) on allocation of 100% domestic gas. However, prices are likely to go up to earlier levels

once domestic gas prices are hiked from Apr ‘14.

Volumes declined 7% QoQ to 230 mscm due to seasonality and higher gas price. Gross margin expectedly

declined 15% QoQ to Rs 8.2/scm due to higher spot-LNG sourcing costs and limited price hikes. GGAS is

focusing on increasing Liquid Fuel Replacement users in its customer mix, which augurs well for margins as

they can absorb higher prices.

continued..



ESSENCE OF THE WEEK


JP Associates 31,635 (8) 7,447 (6) (887) NA Resu l t s expectat ions : Below



TP up/dngrade : ▼

NMDC 28,232 38 19,028 37 15,673 21 Resu l t s expectat ions : In-line




Oil I ndia 27,304 8 13,112 7 9,230 (2) Resu l t s expectat ions : Above

EPS up/dngrade : --

PE up/dngrade : --

TP up/dngrade : --

ONGC 238,702 13 139,034 23 71,259 28 Resu l t s expectat ions : Above

EPS up/dngrade : --

PE up/dngrade : --

TP up/dngrade : --

Oracl e Financial 9,817 15 3,597 27 3,228 20 Resu l t s expectat ions : In-line



TP up/dngrade : ▼

Page Indust r ies 3,025 40 551 50 347 36 Resu l t s expectat ions : In-line



TP up/dngrade : ▲

Puravankara P roject s 2,681 (14) 861 (45) 201 (69) Resu l t s expectat ions : In-line




Ramco Cement 8,682 (4) 1,549 (34) 256 (70) Resu l t s expectat ions : Above


PB up/dngrade : ◄►


Re l iance Cap i tal 12,610 13 12,270 10 1,660 64 Resu l t s expectat ions : --

EPS up/dngrade : --

PB up/dngrade : ◄►


Sun Pharma 42,866 50 19,751 53 15,311 68 Resu l t s expectat ions : Above



TP up/dngrade : ▲

Revenues (Rs mn) EB ITDA (Rs mn) Adj PAT (Rs mn)

PAT higher than our estimate due to 53% QoQ decline in depreciation. Depreciation was lower on account

of 87% decline in dry well write-off to Rs 0.4 bn. Place all PSUs Under Review.

Leisure wear volume growth was significantly above expectation. Jockey is competing with the likes of Nike

and Adidas at much lower price points enabling market share gains.

H1CY14 should see a pick up in license sales driven by year-end closure of parent co. (Oracle Y/E May).

We are given to understand that pipeline is healthy (esp. for Tier 1 banks) and hence we build in USD 83

mn license fees in FY15 (USD 63 mn in FY14). Our TP stands at Rs 2,951 (16x FY15E EPS of Rs 184) vs. Rs

3,232 earlier, which implies 4% downside from CMP. Maintain HOLD.

Adjusted PAT at Rs 71.3 bn was significantly higher than our/Street estimates (Rs 60/57 bn) due to higher

crude sales and higher income from LPG/naphtha (Rs 36 bn vs. our estimate of Rs 30 bn). ONGC has

written back provision of Rs 30 bn made towards deductions taken by OMCs after calculating VAT/CST on

net crude oil realization (vs. gross oil realization earlier).

Taro performance was better-than-expectation led by further price hikes. Ex-Taro performance in line.

gCymbalta, gDepo-Testestrone inj, gTemodar and ramp-up in gDoxil to lead growth in near term.

Blended realization improved 10% QoQ to Rs 4,430 (vs. our estimate of Rs 4,250) led by price increases

in South during the quarter. EBITDA/ton was Rs 750 on an estimated volume of 1.95 mnt (up 2% YoY) vs Rs

450 in Q2FY14 and Rs 1,200 in Q3FY13.

Q3 sales of 0.9 msf largely from its new launches (~0.77 msf). Was unable to sign sale agreements for new

launches in Q3, resulting in lower revenues and collections. Slower off-take at its ready/ near ready

inventory (~25% of Q3 sales). One-time cost escalations and reallocation (Rs 220 mn) impact margins (32%

in Q3 vs 40% in Q2). Net debt remained steady at Rs 14.8 bn.

Q3 performance was led by commercial finance and AMC businesses. Premium growth in life insurance

and general insurance remained high.

JPA reported loss of Rs 0.9 bn (vs profit of Rs 0.6 bn estimated), mainly due to high interest (Rs 7.5 bn vs. Rs

6.5 bn expected). Management clarified that there is no significant increase in debt vs. Q2, however

interest was high due to Rs 0.26 bn of forex loss and Rs 0.8 bn of one time finance charge. Adjusted for one-

offs, interest is in line with Q2. EBITDA was below our estimates on account of weak results in cement (due

to weak demand) and realty.

EBITDA was in line with our estimate, however was higher than Bloomberg consensus estimate of Rs 18.2

bn. Volumes were at 7.5 mnt (up 42% YoY). Sharp improvement in volumes YoY was led by a) higher

volumes in Karnataka due to shortage in the state and b) base effect, where volumes in Q3FY13 were

impacted by poor demand for lumps due to higher prices.

continued..



ESSENCE OF THE WEEK


Sunteck Real t y 157 276 70 9,886 25 NA Resu l t s expectat ions : --




Sun TV 5,083 5 3,720 (1) 1,858 (2) Resu l t s expectat ions : In-line




Tata Motors 638,768 39 99,485 76 49,058 182 Resu l t s expectat ions : Above



TP up/dngrade : ▲

Tata Power 85,150 (5) 18,619 2 661 (79) Resu l t s expectat ions : Below



TP up/dngrade : ▼

Tata Stee l 367,358 14 37,719 52 2,682 NA Resu l t s expectat ions : In-line




TD Power Systems 1,223 28 41 (54) 1 (98) Resu l t s expectat ions : --

EPS up/dngrade : --

PE up/dngrade : --

TP up/dngrade : --

Tube Investment s 8,337 9 763 26 154 36 Resu l t s expectat ions : In-line




VA Tech Wabag 5,893 66 443 95 241 132 Resu l t s expectat ions : Above



TP up/dngrade : ▲

West l i fe Devlp 1,795 4 151 (1) 40 (57) Resu l t s expectat ions : Below


PE up/dngrade : ▼

TP up/dngrade : --

Revenues (Rs mn) EB ITDA (Rs mn) Adj PAT (Rs mn)

Consolidated APAT at Rs 49 bn (est. of Rs 30 bn) was driven by revenue surprise at JLR (GBP 5.3 bn vs est.

of GBP 4.9 bn). JLR margin came in at 17.9% (above our est. of 15.3%) despite 220 bps adverse currency

impact (est. 200 bps) due to richer product mix. Lower other expenses and tax rate also aided net profit.

Capacity ramp-up remains critical for FY15 volume upgrade (our est. at 500K). Upgrade FY15E EPS by

14% to Rs 56.2.

Macro headwinds sustain with the company reporting like to like de-growth of 10%. However, 300 bps

improvement in gross margin softened profit impact.

Adj. PAT at ~Rs 0.7 bn was below our estimate of Rs 2.3 bn mainly on higher interest cost and tax rate

(67% vs. 35% exp.) though operational result was in line with expectations.

Tube Investment’s (TI) Q3FY14 standalone revenue increased 9% YoY to Rs 8.3 bn, while EBIDTA margin

improved 120 bps to 9.1%. Despite sluggish automotive and industrial demand, the engineering and metal

formed division each showed ~12% YoY increase in revenue along with improvement in margins. This was

largely due to the company’s ability to pass on costs and improve efficiencies.

Q3 was robust with revenue growth of 66% YoY, EBITDA margin of 8% (up 170 bps YoY), and 132%

growth in adjusted net profit. Order inflow was at Rs 10 bn vs. Rs 6 bn YoY. Working capital reduced to 51

days as of Dec ’13 from 76 days as of Sep ’13. Net cash increased to Rs 1.9 bn (Rs 1.6 bn as of Sep ’13).

SunTV's ad revenue continued to be under pressure (down 7% YoY but up 17% QoQ) due to continued

impact of ad inventory cut (to adhere to TRAI’s mandate of 12 min ad cap by Oct ’13). However, we expect

the company’s ad growth to rebound Q4 onwards as (a) most of the ad rate hike (corresponding to inventory

cut) has been passed through and (b) reduction in content providers’ ad inventory share

Despite revenue growth, EBITDA margin slumped to ~3%, led by poor performance in the EPC/Projects

business. As a result, adjusted PAT significantly declined to Rs 1 mn (vs. Rs 57 mn in Q3FY13).

Higher sales of Rs 1.27 bn (vs. Rs 0.9 bn in Q2). Sold only 3 units in its BKC projects in Q3. Pre-launched its

Goregaon Phase-2 (sold 35 units out of 100 units launched) in Q3. Collections improved to Rs 1.24 bn due

to improved collections at its Goregaon Ph-1. Signature Island to contribute to revenue from Q4FY14. We

revise our project timelines (slow demand/ approval delays) and cost estimates (increase in Ready Reckoner

rates in Mumbai).

International operations’ EBITDA/ton was flat QoQ at USD 30/ton. Domestic volumes improved 9% YoY to

2.1 mnt led by ramp up at its 3 mnt Jamshedpur expansion. Avg. steel realization was flat QoQ at Rs

45,000/t.

Source: Axis Capital



ESSENCE OF THE WEEK

C. EPS changes during the week

Shaded cells highlight changes in TP/ EPS made during the past two week

Curr

Rat ing P rev Cur r % Chg Prev Cur r % Chg Prev Cur r % Chg

Autos

Eicher Motors 2,110 4,848 Buy 5,421 5,529 2 128 128 - 248 237 (4)

Mah & Mah* 8,949 903 Hold 937 894 (5) 59 58 (0) 62 62 0

Tata Motors* 18,376 388 Buy 431 446 3 41 45 10 49 56 14

B anking & Finance

Rural Electrification 3,043 191 Buy 218 218 - 45 47 4 53 53 -

State Bank* 17,728 1,475 Hold 1,492 1,425 (4) 184 141 (23) 220 178 (19)

Engineer ing

Alstom T&D 738 179 Hold 193 197 2 4 5 21 8 8 3

VA Tech Wabag 256 599 Hold 567 608 7 38 40 4 42 46 10

Infrast ructu re

ITNL 335 107 Buy 162 150 (7) 18 14 (26) 20 17 (14)

Jaiprakash Associates 1,397 39 Buy 52 45 (13) 0 (1) PL 5 2 (56)

I T Services

Oracle Financial 4,180 3,086 Hold 3,232 2,951 (9) 155 163 5 202 184 (9)

Media

HT Media 271 72 Buy 92 86 (7) 7 7 11 8 9 12

Misce l l aneous

Apollo Hospitals 2,044 912 Hold 982 960 (2) 25 24 (4) 31 29 (5)

Godrej Industries 1,456 270 Buy 336 350 4 12 10 (16) 18 15 (20)

Jain Irrigation 422 59 Buy 71 78 10 3 3 (3) 6 6 (5)

Tube Invst 534 178 Buy 216 217 0 6 6 (5) 9 8 (3)

Pharmaceu t ical s

Cipla* 4,826 373 Hold 480 436 (9) 20 18 (9) 24 22 (9)

Dr Reddys* 7,062 2,580 Buy 2,811 3,000 7 119 130 9 141 150 7

Sun Pharma* 20,303 609 Buy 661 700 6 26 27 5 29 30 6

Real Estates

Sunteck Realty 244 241 Buy 434 391 (10) 55 49 (10) 64 54 (16)

Re tai l

Page Industries 1,011 5,631 Buy 5,430 6,200 14 130 136 4 173 173 (0)

Westlife Development 879 351 Buy 406 405 (0) 2 1 (44) 3 3 (16)

EPS FY14E (Rs) EPS FY15E (Rs)Mcap

(USD mn)

CMP

(Rs)

TP (Rs)

Source: Axis Capital, Bloomberg Note: *Sensex cos

For Axis Capital Universe Rating/ valuation, refer Section 6



ESSENCE OF THE WEEK

2. SUMMARIES OF REPORTS RELEASED THIS WEEK

A. Eco: Headline inflation cools off but core uptick disconcerting (14th Feb) Click for detailed report

([email protected]; 91 22 4325 1108)

WPI inflation moderated to a lower than expected 5.05% YoY in Jan (6.16% in Dec, 7.5% in Nov) – an 8 month low.

CPI Inflation eased sharply to 8.8% YoY - 24 mth low in Jan (9.8% in Dec). However, core inflation inched up above

3% (higher by ~20 bps) - the 1st time since April’ 13 even as Core CPI remained sticky at 8.1% (8.09 in Dec).

Data takeaways

Primary articles inflation fell ~4% (MoM) after falling ~5% MoM in Dec. Fuel segment saw an uptick of 95 bps whereas

Manufacturing inflation saw marginal moderation (13 bps).

‘Vege-deflation’ continues: Fall in WPI inflation owed to sharply lower Primary article inflation (shaving off ~1%

from the overall number). Food prices softened to 8.9% YoY (14% in Dec & 20% in Nov) with vegetable prices

crashing further to 16% YoY (54% in Dec & 95% YoY in Nov) though milk prices continued to edge up. However,

vegetables, eggs, meat and fish price inflation continues to be in double digits despite the cool off. In fact, protein

inflation has inched by 30 bps since Nov.

Fuel Inflation: Was higher by 95 bps MoM due to diesel and petrol price hikes (up by 50 paise & 75 paise

respectively in Jan) along that of unsubsidized LPG cylinders (prices raised to ~Rs 1200) by oil retailers. We expect

the LPG component to subside from here.

Weaker growth conditions and subdued global commodity prices continue to limit the pass through from imported

prices. Input price inflation remains stable and prevents an increase in output inflation in the near term.

Policy implications: The uptick in core WPI along with a sticky core CPI will prevent RBI from lowering its guard as

vegetable prices have a tendency to rise especially during summer, which can push headline inflation higher. However,

as headline inflation has fallen sharply along the expected lines, we expect the RBI to maintain status quo in April.

B. Eco: Trade data (11th Feb) Click for detailed report

([email protected]; 91 22 4325 1108)

Import contraction keeps trade deficit in check India’s merchandise trade deficit in Jan remained in check at USD 9.9 bn (vs 10.1 bn in Dec) – with imports shrinking

18% (YoY) to USD 36.6 bn while exports rose 3.8% (YoY) to USD 26.8 bn. We expect trade deficit to remain the

range of USD 10-11 bn pm through the year.

Export growth remained anemic though it improved a tad to 3.8% YoY (3.5% YoY in Dec). Indian exports grew in

double digits during Jul-Oct13. However, base effect and a sharp drop in transport equipment exports and moderation

in textile and machinery and instruments exports contributed to slower export growth thereafter.

Non-Oil imports declined 22% YoY owing largely to the curbs on gold. The import duty on gold was hiked to a record

10%, and import quantity was tied to exports under the 80/20 rule which dictated that 20% of all gold imports have to

A. Eco: Headline inflation cools off but core uptick disconcerting

B. Eco: Trade data

C. Eco: Vote-on account: Muted expectations

D. Highways: Muddling through…recovery still some time away

E. Indian Logistics: Improving volume mix to aid margins

http://www.axiscapital.co.in/AxiscapitalResearch/WPI%20-%20CPI%20Quick%20Note%20-%2014%20Feb%202014.pdf

http://www.axiscapital.co.in/AxiscapitalResearch/Eco%20-%20Trade%20Deficit%20-%2011%20Feb%2014.pdf



ESSENCE OF THE WEEK

be re-exported. These have resulted in Gold & Silver imports being restricted to USD 27 bn (down 31% YoY) during

Apr-Dec 2013. Gold imports are likely to remain ~ USD 35 bn in FY14 as compared to USD 55 bn in FY13.

Oil imports fell 10% YoY owing to moderation in domestic demand. Diesel consumption (~44% of the total oil

consumption) has declined by 1% YoY during Apr-Dec. However, Consumption of Oil (incl products) during the same

period was higher by 1.7% YoY (vs 5.4% in the corresponding period last year).

In view of these data points and the fact that service export growth is likely to be in line with that in Q2, India’s current

account deficit is expected to remain modest in the near term (1.2% of GDP). While the INR has largely been stable

~62 level, in REER terms it has risen to 88 (36-country) and 96 (6-country) in Jan’14.However, evidence suggests that in

the longer term, global demand is relatively more important for export growth than INR depreciation.

C. Eco: Vote-on account: Muted expectations (12th Feb) Click for detailed report

([email protected]; 91 22 4325 1108)

The govt is all set to present the Vote on Account on 17th Feb 2014. This would be the last available opportunity for the

government before the election commission notifies election dates, when a ban on further Govt announcements kicks in.

In an interim budget changes in direct taxes cannot be attempted, as it would require the Finance Bill to be passed. That

is the reason why a slew of populist measures have already been announced.

Expectations

Our expectations remain muted as: 1) In a Vote on Account an outgoing govt obtains the vote of Parliament for monies

sufficient to incur expenditure on various items till a new govt takes over. Normally, no significant tax proposals or

economic policy decisions are announced in the interim budget 2) Moreover, the government has already announced a

slew of populist measures outside the budget and 3) The fiscal deficit target of 4.8% of GDP for FY14 leaves the govt

with little room for any major populist measures.

Key expectations

The FM may likely outline a vision for the future and present his perspective on the future course of action on taxation (to

answer the BJP’s promise of a simpler tax regime) and fiscal consolidation path, if the UPA is voted back to power.

Fiscal deficit & gross borrowing: The government may report a Fiscal deficit number of 4.5-4.7% of GDP (vs target of

4.8%) given; 1) success of spectrum auctions (revenues may be ~Rs 170 bn vs Rs 110 bn budgeted enabling the govt to

meet its Rs 400bn overall revenue target from telecom sector), 2) higher special dividends from PSUs, 3) the possibility

of residual stake sales in Hindustan Zinc and BALCO, 4) direct disinvestments, & SUUTI stake sale and 4) Plan

expenditure cuts of ~400-500 bn. The gross borrowing number for FY15 may be projected at ~Rs 6.2-6.4 trillion.

Indirect taxes: The govt may tinker around with duties in segments that could ease inflation or specific sectors where

certain exemptions are expiring. Changes in indirect taxes are executive decisions that can be changed through

notifications —parliamentary approval is not required.

Gold import norms: Expectations are ripe over the easing of gold import curbs. The import duty on gold was hiked to a

record 10%, and import quantity was tied to exports under the 80/20 rule which dictated that 20% of all gold imports

have to be re-exported. These moves helped lower India’s CAD in the current fiscal year. However, given that the Fed

tapering is still wreaking havoc on EM currencies and the fact that structural measures are required to contain CAD, it

will be a tricky decision to relax these norms, and if announced, may weigh on the INR in the short term.

Service tax: Certain end-use specific exemptions in service tax for services rendered to specific infrastructure businesses

could get relief. However, the current rate of tax of 12% is unlikely to be changed.

http://www.axiscapital.co.in/AxiscapitalResearch/Vote%20on%20Account%202014%20-%2012%20Feb%202014.pdf



ESSENCE OF THE WEEK

Extension of the excise duty exemption: For hill states such as Himachal Pradesh and Jammu and Kashmir the

government may extend excise duty exemption by either five years or until the GST comes into force as the exemption

expires in May 2014.

D. Highways: Muddling through…recovery still some time away (10th Feb) Click for detailed report

([email protected]; 91 22 4325 1149)

Our interaction with National Highway Authority of India (NHAI) suggests that a recovery is still some time away with

not much traction in FY14 (ordering and execution was slow). We believe ordering will continue to be muted till

elections are over.

Key takeaways:

A sense of déjà vu – most new awards expected on EPC basis as low traffic and inordinate delays have stretched

private sector finances. Further, 2/3rd of balance awards are at remote locations with low traffic – viable only on

EPC basis or with support from NHAI

Funding EPC contracts not a concern: Even if all balance National Highways Development Programme orders

(15,000 kms) are executed on EPC, NHAI will be able to fund it

NHAI wishes to take sympathetic approach to private sector's woes - reflected in policy initiative on premium

restructuring. Note: NHAI maintains this is not an new concept and is permitted under the existing Model Concession Agreement (MCA) in form of a ‘Revenue shortfall Loan’

Developers have inflated project costs, and have been running projects on wafer thin equity – detrimental for sector

as it encourages aggressive bidding. It has created a situation of “Heads I win, tails you lose” for developers. We

believe that banks need to ensure that developers have their own skin in the game

Frenetic policy action witnessed recently (exit policy/ premium restructuring/ forest clearance divorced from

environmental/ etc), albeit late in the day, does augur well for future awards

We prefer players with strong operational risk mitigation via diversified portfolio and cash flow visibility. Maintain BUY

on ITNL with TP of Rs 162, which implies 42% upside from CMP of Rs 114.

E. Indian Logistics: Improving volume mix to aid margins (12th Feb) Click for detailed report

([email protected]; 91 22 4325 1118)

Following a sharp bounce in Dec (pent up volumes due to labor strike), JNPT’s container volumes maintained growth

momentum in Jan 2014. While both export and import volume at JNPT grew ~4% YoY, an overall improved traction in

export volumes vs. imports (YTDFY14) aided steady improvement in export–import volume mix (as visible in last 4-5

months). This reduction in export–import mismatch will continue to aid margin improvement for container train operators

like Container Corporation (Bloomberg: CCRI IN) and Gateway Distriparks (Bloomberg: GDPL IN).

January 2014 data released by Indian Ports Association (IPA) shows ~2% YoY decline (vs. 4% YoY fall during Apr-Dec

2013) in container volumes (teu) across major ports. Tonnage volumes decline was sharper at 7% YoY (vs. ~5% decline

in Apr-Dec 2013) across major ports.

Outlook

While macro headwinds may continue to keep a check on container volume growth across major ports, we expect

steady uptick in export volumes to continue to benefit both CCRI and GDPL through lower empty running losses.

We maintain (a) HOLD rating on CCRI with TP Rs 750 (13x FY15E EPS of Rs 58), implying limited room for upside from

CMP of Rs 722 and (b) BUY rating on GDPL with SoTP-based TP of Rs 155 (implied P/E of 10.3x FY15E EPS of Rs 15),

implying 19% upside from CMP of Rs 130.

http://www.axiscapital.co.in/AxiscapitalResearch/Infra%20-%20SU%20-%2010%20Feb%202014.pdf

http://www.axiscapital.co.in/AxiscapitalResearch/Logistics%20Monitor%20-%20SU%20-%2012%20Feb%202014.pdf



ESSENCE OF THE WEEK

3. EAR TO THE GROUND

Analyst buzz/ Important Developments & Articles

Godrej Consumer (GCPL) - Xpress launch for instant result ([email protected]; 91 22 4325 1105)

Premiumising - a la GCPL’s portfolio

After launching the Cinthol’s premium soaps & grooming range and successfully introducing the cream based hair

colour ‘Expert Rich crème’ last year, GCPL today announced roll out of its premium Good Knight Xpress liquid

vaporizer. Touted as most powerful liquid vaporiser with 4x faster effectiveness vs. regular Liquid vaporizer, it will

primarily target consumers seeking quick relief, greater potency and making anti mosquito regime simpler (removing

dual product usage). Good Knight Xpress to be available at Rs 108 for a combi pack (machine+ refill), a ~10%

premium to Good Knight Activ+ system and 50% premium to original Good Knight system.

Newly Launched GK Xpress liquid vaporizer system

Source: Company

Innovation driving Indian household insecticide market

Innovations such as low smoke coil, anti-cockroach gel and multi-mode liquid vaporiser has been driving faster growth

of household insecticide in India. GCPL has been forefront of these innovations, and thereby gaining market share (at

51% in 2013 vs. 35% in 2008, as per Euromonitor). Thus while market growth has been 10-15% over the last 3 years,

GCPL has reported 25%+ growth in household insecticide segment (~45% of domestic revenues and ~55% of domestic

EBITDA).

Will GCPL’s domestic HI segment growth get a Xpress boost?

Liquid vaporizer (LV) that had been 35% of Household Insecticide (HI) category in 2007 has grown to 49% today. This

has been driven by new multi-mode LVs such as Activ+ that has helped reduce the efficacy gap. The new Good Knight

Express roll out is to further enhance this role and re-establish differentiation in the LV category. Thus, the muted 8%

growth in GCPL domestic HI segment in Q3FY14 (largely due to seasonal impact) is likely to reverse in Q4FY14. We

expect the roll out to aid double digit growth for HI segment for next few quarters.

Recommend BUY with TP of Rs 835, 16% upside

GCPL’s Q3FY14 result disappointment notwithstanding, we remain optimistic of GCPL delivering a 23% earnings CAGR

over FY14-16E helped by sustained market share gain in key categories and geographies and improved margin

performance in its international business. GCPL has corrected 16% over the last 6 months and underperformed Sensex

by 24%. It trades at 1-yr rolling forward PE of 26x vs. its 3-yr average PE of 27x. We maintain our BUY call on GCPL

with Mar’15 TP of Rs 835. At CMP of Rs 722, the stock trades at 25x FY15E EPS of Rs 28.7.



ESSENCE OF THE WEEK

4. MACRO OVERVIEW

Debt & Money market

10-yr bond yield G-Sec yield curve

7.0

7.5

8.0

8.5

9.0

9.5

May-

13

Jun-

13

Jul-1

3

Jul-1

3

Aug-

13

Sep

-13

Sep

-13

Oct

-13

Nov-

13

Nov-

13

Dec

-13

Jan-

14

Jan-

14

(%)

8.0

8.4

8.8

9.2

9.6

1 2 3 4 5 6 7 8 9 10 11 12 13 14 17 19

(%)

13-Feb-14

week-ago

month-ago

Maturity (Years)

Source: RBI

Interest Rate Indicator CP / CD - Primary Market

Money Market (%) MIFOR (%)

Call Money 6.60-9.20 1 Month 9.16

Notice Money 7.15-9.15 3 Month 9.26

Term Money 8.40-9.75 6 Month 8.85

CBLOs 8.95-9.10 1 Year 8.71

MIBOR (%) Forward Prem. (%)

Overnight 9.12 1 Month 8.90

14 Day 8.81 3 Month 9.00

1 Month 9.08 6 Month 8.53

3 Month 9.63 12 Month 8.14

Source: RBI, NSE, Reuters

CP Issuer Rating Rate (%)

35 Days SIDBI A1+ 8.43

2 Months ABFL A1+ 10.15

1 Year HDFC Ltd A1+ 9.70

CD Issuer Rating Rate (%)

2 Months Allahabad Bank A1+ 9.65

3 Months IOB A1+ 9.70

1 Year OBC A1+ 9.70

Note: The above table shows rates at which leading Companies and Banks are raising short-term debt for different tenor

US Yields Data

US Yield 13th Feb 12th Feb

2 Year 0.31 0.34

5 Year 1.49 1.54

10 Year 2.71 2.74

30 Year 3.67 3.71

Source: Bloomberg



ESSENCE OF THE WEEK

5. MARKET SNAPSHOT

A. Major Nifty stock moves this week

Price and volume performance grid

10

HCL Tech,

Tata Motors,

5

GAIL, Ranbaxy,M&M, Wipro,

NMDC,

DLF, ICICI Bk,

Infosys, L&T,

Reliance Inds,

BPCL, ONGC,

Sun PharmaTCS

0

(5)

ACC, BHEL,

Kotak Bk,

HDFC Bk, ITC,

PNB, BOB,

Coal India,

Lupin, Ultratech,

Tata Power,

IndusInd Bk

Cairn, HUL,

NTPC, JSPL,

Grasim,

JP Associates,

Sesa Sterlite,

Axis Bk

Bajaj Auto,

Hero Motocorp,

Maruti,

Power Grid,

Tata Steel

Asian Paints,

HDFC

Bharti Airtel,

IDFC, SBIDr Reddy's

(10)

Ambuja Cem,

HindalcoCipla

< (30) (15) 0 25 50 >

Average 5d Volume Change (%)

Pri

ce C

ha

ng

e 5

d (

%)

Source: Axis Capital, Bloomberg

Comments

♦ Cipla: Q3 disappointed Street led by higher R&D and front-end cost which was followed by 6-10% EPS cut and

downgrade across the board

Down, but

on low

volumes

Up, on

high

volumes

Down,

on high

volumes

Up, but

on low

volumes



ESSENCE OF THE WEEK

Major Indices: 3 - Best/ worst performing stocks in each index/sector this week

Note: Green and red bars indicate number of stocks that closed in the positive/ negative

Sector

P r ice

5d % B est p er form ing stocks

P r ice

5d %

Avg 5d

vol chg % Worst p er form ing stocks

P r ice

5d %

Avg 5d

vol chg %

Nifty (0) Tata Motors Ltd 8 10 Cipla Ltd/India (10) 269

HCL Technologies Ltd 7 17 Ambuja Cements Ltd (7) (52)

DLF Ltd 5 (3) Hindalco Industries Ltd (6) (40)

CNX Midcap 100 (1) Eicher Motors Ltd 10 374 India Cements Ltd/The (10) 11

Motherson Sumi Systems Ltd 9 (28) Sun TV Network Ltd (9) 16

Amara Raja Batteries Ltd 8 63 Torrent Power Ltd (9) (24)

BSE-Smallcap (1) Piramal Glass Ltd 34 4,257 Ravinay Trading Co Ltd (23) (34)

Banas Finance Ltd 22 (91) KDJ Holidayscapes and Resorts Ltd (22) 1,471

Amtek Auto Ltd 20 464 Infinite Computer Solutions India Ltd (17) 224

BSE Auto 1 Motherson Sumi Systems Ltd 9 (28) Bajaj Auto Ltd (5) (5)

Tata Motors Ltd 8 10 Hero MotoCorp Ltd (3) (14)

Exide Industries Ltd 1 (56) Bosch Ltd (2) (73)

BSE Bankex (1) ICICI Bank Ltd 3 (13) Bank of India (5) (31)

HDFC Bank Ltd (1) (33) Federal Bank Ltd (5) (5)

Kotak Mahindra Bank Ltd (2) (31) Bank of Baroda (4) (32)

BSE Cap Goods 0 VA Tech Wabag Ltd 7 (35) Punj Lloyd Ltd (13) 20

AIA Engineering Ltd 6 (70) IL&FS Transportation Networks Ltd (5) 82

Bharat Electronics Ltd 6 (75) Bharat Heavy Electricals Ltd (5) (32)

BSE FMCG (1) Colgate-Palmolive India Ltd 2 (44) United Spirits Ltd (6) (4)

Godrej Consumer Products Ltd 2 1 Hindustan Unilever Ltd (3) (22)

Nestle India Ltd 1 27 United Breweries Ltd (3) 3

BSE Healthcare (2) Cadila Healthcare Ltd 5 (36) Cipla Ltd/India (10) 269

Ranbaxy Laboratories Ltd 2 (49) Glenmark Pharmaceuticals Ltd (6) (42)

GlaxoSmithKline Pharmaceuticals Ltd 1 (34) Piramal Enterprises Ltd (5) (13)

CNX IT 2 Mindtree Ltd 16 402 Core Education & Technologies Ltd (3) 57

eClerx Services Ltd 8 (14) Oracle Financial Services Software Ltd (2) 105

Rolta India Ltd 7 151 Polaris Financial Technology Ltd (2) (3)

BSE Metal (3) NMDC Ltd 0 (27) Hindalco Industries Ltd (6) (40)

Sesa Sterlite Ltd (0) (18) JSW Steel Ltd (4) (31)

Bhushan Steel Ltd (0) 0 Steel Authority of India Ltd (4) (4)

BSE Oil & Gas 1 Oil & Natural Gas Corp Ltd 3 15 Cairn India Ltd (4) (22)

Oil India Ltd 2 64 Indian Oil Corp Ltd (2) 24

GAIL India Ltd 1 (51) Hindustan Petroleum Corp Ltd (2) (22)

BSE Power (3) Crompton Greaves Ltd 3 2 Torrent Power Ltd (9) (24)

Thermax Ltd (0) 50 Adani Power Ltd (7) (48)

JSW Energy Ltd (1) (28) CESC Ltd (6) (23)

BSE PSU (1) Bharat Electronics Ltd 6 (75) United Bank of India (14) 215

Oil & Natural Gas Corp Ltd 3 15 Mangalore Refinery & Petrochemicals Ltd(8) (45)

MOIL Ltd 2 187 Bank Of Maharashtra (7) (38)

BSE Realty 0 DLF Ltd 5 (3) Indiabulls Real Estate Ltd (7) 1

OMAXE Ltd 1 7 DB Realty Ltd (6) (11)

Oberoi Realty Ltd 0 (72) Housing Development & Infrastructure Ltd(5) (24)

16 34

28 72

163 276

5 5

1 11

9 12

3 7

5 11

16 4

1 9

5 5

1 17

13 46

3 10

Source: Bloomberg Note: Average 5d volume change = current 5d average vs. previous 5d average



ESSENCE OF THE WEEK

B. Indian markets

FII net flows in Asian equities Nifty: 50 & 200 DMA

Count ry

(USD mn)

Last

Update

WTD MTD CYTD

India - FI I 13 - Feb (15) (228) (241)

India - DI I 14- Feb (10) 446 206

Indonesia 14-Feb 163 186 383

Philippines 14-Feb 32 (26) (133)

Korea 14-Feb (143) (1,292) (2,434)

Taiwan 14-Feb 198 (2,054) (1,249)

Thailand 13-Feb (72) (488) (904)

Note: WTD/ MTD/ YTD represents the cumulative net

flows since the 1st business day of the week, month &

year

2,400

3,400

4,400

5,400

6,400

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Nifty Index 200DMA 50DMA

Source: Bloomberg, BSE, NSE, SEBI

Volumes: 90 DMA Market delivery: 90 DMA NSE: Adv /Dec ratio

0

5

10

15

20

25

30

35

1

2

3

4

5

Jan-

10

Jul-1

0

Dec-

10

Jun-

11

Jan-

12

Jun-

12

Jan-

13

Jul-1

3

Jan-

14

(USD bn)

Cash Derivatives (RHS)

36

39

42

45

Jan-

10

Jul-1

0

Dec-

10

Jun-

11

Jan-

12

Jun-

12

Jan-

13

Jul-1

3

Jan-

14

(%)

0.0

0.2

0.4

0.6

0.8

1.0

10-Feb 11-Feb 12-Feb 13-Feb 14-Feb

Source: Bloomberg, BSE, NSE, Axis Capital

Sectoral indices: 5-day performance ADR/GDR prices*

(3) (2) (1) 0 1 2 3

BSE Power

BSE Metal

BSE Healthcare

BSE FMCG

BSE PSU

CNX Midcap 100

BSE Smallcap

BSE Bankex

Nifty

Sensex

BSE Cap Goods

BSE Realty

BSE Oil & Gas

BSE Auto

CNX IT (%)

Company name

CMP

(Rs)

5d chg

(% )

P rem /

(Disc) %

Dr Reddys Lab 42.0 (0.6) 0.8

HDFC Bank 32.7 1.7 5.3

ICICI Bank 33.3 4.1 4.3

Infosys 58.4 1.5 (0.8)

ITC 5.1 (2.3) (1.7)

L&T 15.9 1.7 (0.6)

MTNL 0.4 (12.3) (6.9)

Reliance Industries 26.4 1.2 (0.7)

State Bank of India 47.8 (2.5) 0.2

Tata Motors 31.0 7.7 (1.1)

Wipro 12.9 1.7 41.6 Source: Bloomberg * Data as on Thursday



ESSENCE OF THE WEEK

Bulk deals (> Rs 100 mn traded value) Date Company Cl ient Traded Vol

('000)

Traded Value

(Rs mn)

Avg. P r ice

(Rs)

BUY

10-Feb-14 Sterling Holiday Resort Thomas Cook Ins Services India 8,667 848 98

13-Feb-14 Greaves Cotton IDFC Mutual Fund 4,650 270 58

13-Feb-14 Greaves Cotton IDFC Mutual Fund 6,550 380 58

SELL

10-Feb-14 Sterling Holiday Resort Bright Star Investments Pvt 1,700 167 98

10-Feb-14 Sterling Holiday Resort Leena Investments Consultancy LLP 1,883 184 98

13-Feb-14 Greaves Cotton Amansa Holdings Pvt 2,987 173 58

13-Feb-14 Greaves Cotton Amansa Holdings Pvt 4,698 273 58

Buybacks (up to Thursday, 13th Feb)

Scr ip Total B uyback

Val ue

(Rs mn)

B ought

Qty

(Nos)

Incr bought

qty over l ast

week (Nos)

B uyback

Avg Rate

Value

(Rs mn)

Max B uy

back

p r ice

CMP

13/02

B al Qty

(nos mn)

B al Val ue

(Rs mn)

Cairn 57,250 2,886,740 0 323 931 335 324 168.1 56,319

Eclerx 405 37,623 0 813 31 825 1,193 0.5 374

Garware Wall 110 468,518 28,125 52 24 65 55 1.3 86

Guj Apollo 165 223,012 222,057 103 23 125 103 1.1 142

G E Shiping 2,790 1,528,016 1,430 266 407 279 288 8.5 2,383

H T Media 250 1,135,678 0 91 103 110 72 1.3 147

Infinite Computer 300 2,062,315 16,786 107 221 120 120 0.7 79

Jindal Steel & Pow 10,000 19,959,584 25,000 251 5,002 261 234 19.1 4,998

Motilal Oswal Fin 650 7,069,737 18,765 79 562 90 84 1.0 88

Mah Seamless 1,000 1,935,655 30,000 189 366 300 159 2.1 634

Nitin Fire 149 1,074,538 13,096 57 61 67 57 1.3 88

Panama Petrochem 179 553,522 203,143 141 78 160 160 0.6 101

Pennar Inds 100 1,560,390 0 21 33 40 20 1.7 67

S Mobilty 600 10,221,003 200 34 351 75 31 3.3 249 Note: The balance quantity has been arrived at by taking previous closing rate for remaining buyback amount.

Stocks > Rs 100 mn only



ESSENCE OF THE WEEK

C. Deciphering Derivatives

Stocks with highest open interest (value-wise) Co. Name Op en

Interet (mn

shrs)

OI Chg

%

% of

F loat

OI Value

(Rs b n)

CMP

(Rs)

Price Chg

(%)

Trend

MCDOWELL-N 8 6% 9.1 20 2,349 -5% Fresh Short

SBIN 10 5% 5.3 14 1,481 -3% Fresh Short

INFY 3 2% 0.7 12 3,647 2% Fresh Long

RELIANCE 14 0% 0.9 12 822 1% Short Covering

TCS 4 13% 1.0 9 2,169 1% Fresh Long

ICICIBANK 8 -20% 1.3 8 992 3% Short Covering

TATAMOTORS 21 -4% 1.4 8 389 8% Short Covering

HDFCBANK 12 -6% 0.7 8 644 -1% Long Liquidation

LT 7 4% 1.7 7 994 1% Fresh Long

NIFTY 18 7% 110 6,058 -0.3% - Source: Axis Capital

Nifty FII Flow vs. Nifty OI FII flows

(Rs bn) 14/Feb 13/Feb 12/Feb 11/Feb 10/Feb Wkly

Index Fu tu res

- Buy 12.6 11.4 10.7 7.2 8.0 49.9

- Sell 13.8 13.4 9.8 12.5 7.5 57.0

Net (1.1) (2.0) 0.9 (5.3) 0.5 (7.0)

Stock Fu tu res

- Buy 19.0 17.1 18.8 13.1 14.3 82.3

- Sell 18.0 15.5 13.9 10.5 14.2 72.1

Net 1.0 1.6 4.9 2.6 0.1 1.0

Net Fu tu res (0.2) (0.40) 5.80 (2.7) 0.6 3.1

Increase in OI (wow) Decrease in OI (wow) Curr OI OI Chng

Co Name CMP (mn shrs) (mn shrs) OI Value P r ice oi chg %

HINDALCO 100 24.0 5.3 21 (6) 28%

DLF 144 38.5 4.1 16 4 12%

BHEL 148 39.6 2.9 4 (4) 8%

Chng (% )

Current OIOI Change

Co Name CMP (mn shrs) (mn shrs) OI Value P r ice oi chg %

APOLLOTYRE 118 28.1 (3.1) (8) 3 -10%

TATASTEEL 372 12.9 (2.6) (19) (3) -17%

ONGC 276 11.3 (0.9) (5) 2 -7%

Change (% )

OI value breakup Sector watch – PSU Banks

(Rs bn)

Inst rument Total FI I * Local FI I %

Future Index 105 58 47 55

Future stocks 340 149 191 44

Option Index 765 239 527 31

Options Stocks 117 9 108 8

Total 1,327 454 872 34

Local - Other than FIIs

FII OI - single side positions have been considered.

14 Feb - Open In t Value.

Scr ip t Curr . OI

mn shrs

OI Chg CMP Pr ice

Chg

PNB 4.77 -9% 539 -2%

SBIN 9.65 5% 1,481 -3%

UNIONBANK 12.50 3% 103 -3%

BANKBARODA 3.93 1% 539 -4%

BANKINDIA 10.46 10% 174 -6%

(6)

(4)

(2)

0

2

4

6

8

(1.2)

(0.8)

(0.4)

0.0

0.4

0.8

1.2

1.6

10-Feb 11-Feb 12-Feb 13-Feb 14-Feb

Nif

ty O

I Shrs

(mn)

Nifty OI Shrs (LHS) FII FLOW (RHS) NIFTY

FII F

LOW

(IN

R bn

)

60736 0 75

6058

6005

6065

6100



ESSENCE OF THE WEEK

Nifty Fifty

Nifty Fut. vs. Smart Money (SMR= IV/PCR) Nifty Fut. vs. Implied Volatility

2,000

3,000

4,000

5,000

6,000

7,000

0

50

100

150

200

Jan-

09

May

-09

Sep

-09

Jan-

10

May

-10

Sep

-10

Jan-

11

May

-11

Sep

-11

Jan-

12

May

-12

Sep

-12

Jan-

13

May

-13

Sep

-13

Jan-

14

SMR Nifty Future (RHS)

2,000

3,000

4,000

5,000

6,000

7,000

0

20

40

60

80

100

Jan-

09

May-

09

Sep

-09

Jan-

10

May-

10

Sep

-10

Jan-

11

May-

11

Sep

-11

Jan-

12

May-

12

Sep

-12

Jan-

13

May-

13

Sep

-13

Jan-

14

Implied Volatility Nifty Future (RHS)

Nifty Fut. vs. Put-Call ratio Option distribution

2,000

3,000

4,000

5,000

6,000

7,000

0.0

0.5

1.0

1.5

2.0

2.5

Jan-

09

May-

09

Sep

-09

Jan-

10

May-

10

Sep

-10

Jan-

11

May-

11

Sep

-11

Jan-

12

May-

12

Sep

-12

Jan-

13

May-

13

Sep

-13

Jan-

14

Put call ratio (LHS) Nifty Future (RHS)

(2)

0

2

4

6

8

10

12

CE PE CE PE CE PE CE PE CE PE CE PE CE PE

5800 5900 6000 6100 6200 6300 6400

(mn o

f sh

are

s)

Change OI

OPEN_INT

Vote-on-Account or Interim budget will set tone for the markets next week. Global cues & FII flows will play a major role in determining trend for the near term. Nifty holds on to its strong support of 200 DMA.

Nifty Futures lost 13 points during the week. Major losers were CIPLA, HNDL & ACEM, whereas gainers were TTMT, HCLT & DLFU

Nifty futures witnessed fresh short - intra week high of 6126 and low of 5992, Open Interest wow up by 1.15 mn shares (6.7%) closing at 6058 (-0.28%)

During the week, in Nifty constituents, 2 stocks made new 52 week high (HCLT & DRRD)

Turnover was down wow. Equity Segment average turnover was Rs 112 bn, 11% lower than wow average, while F&O turnover stood at Rs 1,108 bn, 2% lower than wow average

Open interest in 6000 put of 4.34 mn shares added 0.61 mn shares. Put writers were active in 5800 strike as well

6300 call open Interest of 6.34 mn shares added 0.89 mn shares. Call writers were also active in 6000 strike



ESSENCE OF THE WEEK

D. Global sector equity performance

5-day: Best / Worst performing sectors* Note: Best sector = shaded green; Worst sector = shaded red; Sector classification as per GICS MarketsCountry US UK Jap an Brazil Russia India China HK Korea S'Pore TaiwanIndex Dow FTSE Nikkei Boves Micex Sense HSCEI H S I Kosp i Straits TaiexI ndex Val ue 16,028 6,659 14,313 47,813 1,479 20,367 9,934 22,298 1,940 3,039 8,514

Index Per formance 2.6 1.5 1.1 0.2 0.8 (0.0) 3.0 3.1 0.9 0.8 1.5

Automobiles & Components - 2 2 - - 1 4 - 1 - 0

Banks - 0 0 (1) (0) (1) 3 3 (1) 1 1

Capital Goods 3 (3) 2 7 - (1) 2 5 1 2 2

Diversified Financials 3 (1) 1 (4) - - 1 3 1 0 2

Energy 2 2 5 2 1 0 3 3 2 - 1

Food Beverage & Tobacco 2 1 3 0 - (1) 4 7 2 (1) 1

Household & Personal Products 1 2 6 (3) - (3) - (3) 1 - 2

Materials 2 4 2 (0) (1) (2) 2 - 3 - 2

Pharmaceuticals, Biotechnology 3 4 2 - - (1) - - 0 - 3

Software & Services 4 (0) 5 2 - 1 - 5 1 - 1

Telecommunication Services 3 (1) 3 1 (1) (3) 1 1 (3) 2 1

Utilities - 2 2 (0) (2) (2) (2) 3 1 - 1

Develop ed BR IC Asian

Source: Bloomberg, Axis Capital Note: *US, UK, and Brazil performance are with 1-day lag

E. Global equity valuations

Global indices *

Indices

Country

Mcap

Index

valueCY13 CY14 CY13 CY14 CY13 CY14 CY13

Develop ed

US (Dow Jones) 22,112 16,028 14 13 2.6 2.4 18 19 2.4

US (S&P 500) - 1,830 16 14 2.4 2.2 15 16 2.1

UK (FTSE 100) 4,012 6,672 13 12 1.8 1.6 13 13 3.8

Germany (DAX) 2,029 9,677 13 12 1.6 1.5 12 13 2.9

France (CAC) 2,156 4,340 13 12 1.3 1.3 10 11 3.6

Japan (Nikkei 225) 4,394 14,313 19 16 1.5 1.4 8 9 1.7

BR IC

Brazil (IBOV) 882 48,044 10 9 1.0 1.0 11 11 4.3

Russia (Micex) 707 1,495 3 3 0.2 0.2 6 5 9.2

India (Sensex) 1,071 20,367 15 13 2.5 2.1 16 16 1.7

China (HSCEI) 3,478 9,934 7 6 1.0 0.9 15 15 4.8

Asian

HK (H S I) 3,431 22,298 10 9 1.2 1.1 12 13 3.9

Korea (Kospi) 1,152 1,940 9 8 1.0 0.9 10 11 1.4

Singapore (Straits) 558 3,039 13 12 1.2 1.2 9 10 3.5

Taiwan (Taiex) 901 8,514 14 13 1.7 1.6 11 12 3.3

Div Yield (%)PER (x) PBR (x) ROE (%)

Source: Bloomberg *Western market data as on Thursday



ESSENCE OF THE WEEK

F. Global asset class performance*

Equity 5-day performance (%)

Value 1m 12m CYTD

Deve loped

US (Dow Jones) 16,028 (2) 15 (3)

UK (FTSE 100) 6,659 (1) 5 (1)

Germany (DAX) 9,597 1 27 1

France (CAC) 4,313 2 18 1

Japan (Nikkei 225) 14,313 (7) 27 (12)

B RIC

Brazil (IBOV) 47,813 (3) (17) (7)

Russia (Micex) 1,479 2 (2) (1)

India (Sensex) 20,367 (3) 4 (4)

China (HSCEI) 9,934 (2) (16) (8)

Asian

HK (H S I) 22,298 (2) (5) (4)

Korea (Kospi) 1,940 0 (2) (4)

Singapore (Straits) 3,039 (3) (8) (4)

Taiwan (Taiex) 8,514 0 8 (1)

Per formance (% )

(0.0)

0.2

0.8

0.8

0.9

1.1

1.5

1.5

2.6

3.0

3.0

3.1

3.7

(2.0) 0.0 2.0 4.0

India

Brazil

Russia

Singapore

Korea

Japan

Taiwan

UK

US

France

China

HK

Germany

Equity – USD terms 5-day performance – USD terms (%)

Value 1m 12m CYTD

Deve loped

US (Dow Jones) 16,028 (1) 15 (3)

UK (FTSE 100) 11,085 0 12 (1)

Germany (DAX) 13,119 1 26 0

France (CAC) 5,896 1 18 0

Japan (Nikkei 225) 141 (5) 16 (9)

B RIC

Brazil (IBOV) 19,892 (5) (33) (9)

Russia (Micex) 42 (5) (18) (8)

India (Sensex) 329 (4) (9) (4)

China (HSCEI) 1,281 (2) (16) (8)

Asian

HK (H S I) 2,875 (2) (5) (4)

Korea (Kospi) 2 0 0 (4)

Singapore (Straits) 2,410 (2) (10) (4)

Taiwan (Taiex) 281 (1) 5 (3)

Per formance (% )

(0.6)

(0.5)

0.5

1.2

1.4

1.6

2.3

2.6

3.0

3.1

3.4

3.5

(4.0) (2.0) 0.0 2.0 4.0

Brazil

Russia

India

Japan

Singapore

Taiwan

Korea

US

China

HK

UK

France

Germany

USD INR Futures: 1m = 62.46; 3m = 63.32; 5m = 63.71

Source: Bloomberg, Axis Capital Note: *Western markets, Commodity & Currency data as on Thursday; # Indicates the general international value of the USD by averaging exchange rates between USD and 6 major world currencies



ESSENCE OF THE WEEK

Commodity 5-day performance (%)

1yr fwd

Value Value 1m 12m CYTD

Metal s

Aluminium ($/ton) 1,902 1,700 (2) (19) (3)

Copper ($/ton) 7,051 7,143 (3) (13) (3)

Zinc ($/ton) 2,039 2,024 (2) (7) (1)

Lead ($/ton) 2,126 2,103 (2) (12) (4)

China HR Steel ($/ton) 564 (1) (18) (2)

IronOre-Qingdao ($/ton) 143 (6) (18) (6)

Gold ($/t oz) 1,303 1,303 6 (19) 9

Silver ($/t oz) 21 20 4 (31) 8

Platinum ($/t oz) 1,424 1,419 (0) (17) 4

Energy

Coal ($/ton) 80 (2) (8) (4)

Crude Oil ($/bbl) 104 109 2 (9) (2)

Naptha ($/bbl) 101 (2) (10) (6)

Natural Gas ($/MMBtu) 5 27 62 23

Food

Wheat ($/bu) 632 594 2 (23) (2)

Corn ($/bu) 468 441 3 (36) 5

Cotton (c/lb) 79 89 5 6 5

Soybean ($/bu) 1,146 1,331 4 5 5

Sugar (c/lb) 17 16 2 (17) (3)

Per formance (% )

(33.7)

(4.0)

(1.1)

(0.6)

(0.5)

(0.5)

(0.4)

0.2

0.6

1.4

1.7

1.9

2.0

2.0

2.6

3.0

3.6

(45) (30) (15) 0 15

Nat Gas

IronOre

Steel

Corn

Sugar

Copper

Naptha

Lead

Zinc

Soybean

Aluminium

Cotton

Crude Oil

Wheat

Silver

Platinum

Gold

Currency 5-day performance (%)

Value 1m 12m CYTD

Dollar Index# 80.3 (1) (0) 0

Deve loped

Europe 1.4 0 3 (0)

UK 1.7 2 8 1

Japan 102.2 2 (9) 3

B RIC

Brazil 2.4 (2) (18) (1)

Russia 35.2 (5) (14) (6)

India 61.9 (1) (13) (0)

China 6.1 (0) 3 (0)

Asian

HK 7.8 (0) (0) (0)

Korea 1,066 (0) 2 (1)

Singapore 1.3 1 (2) 0

Per formance (% )

(1.4)

(0.7)

(0.5)

(0.1)

(0.0)

0.0

0.3

0.6

0.7

1.2

(2.0) (1.0) 0.0 1.0 2.0

Russia

$ Index#

Brazil

Japan

China

HK

Singapore

India

Europe

Korea

UK

USD INR Futures: 1m = 62.46; 3m = 63.32; 5m = 63.71

Source: Bloomberg, Axis Capital Note: *Western markets, Commodity & Currency data as on Thursday; # Indicates the general international value of the USD by averaging exchange rates between USD and 6 major world currencies



ESSENCE OF THE WEEK

G. Commodity Snapshot

Oil & Gas

Dated Brent Prices Singapore Refining Margin PE & PP Differential to Naphtha

0

5

10

15

20

100

105

110

115

120

Dec-13 Jan-14 Feb-14

(USD/bbl)

Brent - WTI Spread (RHS)

Dated Brent

2

4

6

8


(USD/bbl)

540

570

600

630

Nov-13 Dec-13 Jan-14

(USD/t)

PP-Naphtha PE-Naphtha

Source: Bloomberg

Metals & Others

Aluminum, Zinc and Copper Gold, Silver Spot price Baltic Dry Index

6,900

7,100

7,300

7,500

1,600

1,800

2,000

2,200


(USD/t)

Aluminum ZincCopper (RHS)

19.0

19.4

19.8

20.2

20.6

1,175

1,200

1,225

1,250

1,275


($/troy ounce)

Gold Silver (RHS)

1,000

1,500

2,000

2,500


(Index)

Source: Bloomberg

Crude price remained flat at US$ 109/ bl as weak US economic data (high jobless claims) outweighed

supply disruptions in Libya and Angola

Singapore refining margin remained flat at US$ 6.3/bl as weakness in naphtha cracks was offset by a

recovery in gasoline margins. Naphtha margins weakened as demand for the fuel declined in Asia due to

cracker maintenance. (Source: Plastmart)

PE/PP margin rose as Asiapac naphtha prices weakened on cracker maintenance, while PE/PP prices

remained stable

Non-ferrous metal prices were flat during the week

Gold and silver prices rose 3-4% post comments from the Fed Chairman that work is needed to restore the

labor market. Also, US jobless claims unexpectedly rose last week

Palm oil price has been on uptrend due to seasonally lower output of the tropical oil as well as a dry spell in

soy-growing Brazil that would potentially squeeze global edible oil supplies



ESSENCE OF THE WEEK

SUMMARY OF MAJOR TARGET PRICE UPSIDES

Mcap > USD 2 bn & upsides > 20%Comp any Mcap (USD mn) CMP (Rs) Target Price (Rs) % Up side

Sun TV 2,092 330 465 41

Adani Enterprises 3,808 215 290 35

Reliance Inds 42,737 822 1,100 34

PNB 3,131 537 695 29

NTPC 17,547 132 171 29

United Spirits 5,468 2,337 2,997 28

Bank of Baroda 3,706 536 670 25

IndusInd Bank 3,185 377 465 23

Adani Ports & SEZ 4,899 147 180 22

L & T 14,814 993 1,213 22

HCL Tech 16,854 1,497 1,800 20

Mcap > USD 2 bn & downside > 10%Comp any Mcap (USD mn) CMP (Rs) Target Price (Rs) % Up side

GlaxoSmithKline Pharma 4,102 3,009 1,773 (41)

BHEL 5,847 148 89 (40)

Siemens 3,038 530 434 (18)

Colgate Palmolive 2,895 1,322 1,175 (11)

Source: Axis Capital


ESSENCE OF THE WEEK


6. AXIS CAPITAL: VALUATION & RECOMMENDATION Mcap CMP VoI (Rs)* TP Upside

Sector/ Company (USD mn) (Rs) FY14 (Rs) (% ) FY13 FY14E FY15E FY13 FY14E FY15E FY13 FY14E FY15E FY13 FY14E FY15E FY13 FY14E FY15E FY13 FY14E FY15E

Autos - - - 18 15 12 4.6 3.8 3.1 10 8 6 29 28 29 1.3 1.3 1.5

Amara Raja Batteries 1,045 380 0 402 6 18 23 27 21 17 14 6.1 4.7 3.6 14 10 9 32 31 29 0.5 0.7 0.9

Ashok Leyland 668 16 0 12 (23) 1 (2) 1 29 - 21 1.3 1.5 1.5 10 38 9 5 (14) 7 3.8 1.5 2.0

Bajaj Auto 8,571 1,840 0 2,119 15 106 117 138 17 16 13 6.7 5.5 4.5 13 10 8 44 39 37 2.4 2.7 3.0

Bharat Forge 1,328 354 0 327 (8) 9 19 27 40 18 13 3.7 3.5 2.9 14 9 7 9 20 24 1.0 1.0 1.1

Eicher Motors 2,110 4,848 0 5,529 14 120 127 237 40 38 20 7.5 6.3 5.1 23 18 11 20 18 28 0.4 0.6 0.9

Exide Inds 1,453 106 0 104 (2) 6 5 6 17 20 17 2.6 2.4 2.2 11 11 10 16 13 14 1.5 1.3 1.6

Hero MotoCorp 6,226 1,937 0 1,786 (8) 109 108 135 18 18 14 7.7 6.9 5.8 10 9 8 47 41 44 3.1 3.5 3.6

Mah & Mah 8,949 903 127 894 (1) 50 58 62 16 13 13 3.3 2.7 2.4 10 9 8 23 22 20 1.4 1.6 1.7

Maruti Suzuki 7,991 1,643 0 1,670 2 95 99 123 17 17 13 2.7 2.3 2.0 9 8 6 17 15 16 0.4 0.5 0.6

Motherson Sumi 3,202 226 0 227 1 8 9 15 28 25 15 8.7 6.8 5.0 15 9 6 34 31 40 0.6 0.8 1.4

Tata Motors 18,376 388 22 446 15 29 45 56 13 8 7 3.3 2.4 1.8 6 4 3 27 32 30 0.5 0.4 0.3

TVS Motor 613 80 0 71 (11) 4 5 7 21 15 11 3.1 2.7 2.3 10 8 6 15 19 23 1.6 1.8 2.3

B anking & Fin Serv 13 12 10 2.6 2.2 1.9 - - - 18 16 17 2.1 2.3 2.6

Axis Bank 8,331 1,103 0 NR - 698 - - 10 - - 1.6 - - - - - 19 - - 1.6 - -

Bajaj Finance 1,186 1,469 0 1,750 19 670 799 953 12 10 8 2.2 1.8 1.5 - - - 22 20 20 1.0 1.2 1.4

Bajaj Finserv 1,740 679 0 797 17 463 - - 7 - - 1.5 - - - - - 24 - - 0.2 - -

Bank of Baroda 3,706 536 0 670 25 665 700 767 5 5 4 0.8 0.8 0.7 - - - 16 14 15 4.0 4.8 5.6

Bank of India 1,796 174 0 190 9 311 331 367 4 4 3 0.6 0.5 0.5 - - - 13 12 13 5.8 6.3 7.5

Canara Bank 1,581 213 0 250 17 436 441 501 3 4 2 0.5 0.5 0.4 - - - 13 10 15 6.1 6.6 8.0

Cholamandalam Invst 543 236 0 281 19 136 149 176 11 9 7 1.7 1.6 1.3 - - - 18 17 19 1.4 1.6 2.1

HDFC Bank 24,756 642 0 735 15 151 178 214 23 18 14 4.3 3.6 3.0 - - - 20 22 22 0.9 1.0 1.2

HDFC 19,372 772 296 860 11 108 126 147 15 14 12 4.4 3.8 3.2 - - - 22 20 21 1.6 1.8 2.1

ICICI Bank 18,373 988 289 1,185 20 453 500 560 10 8 7 1.5 1.4 1.2 - - - 13 14 15 2.0 2.2 2.6

IDFC 2,327 95 18 98 3 76 82 89 7 6 6 1.0 0.9 0.9 - - - 14 14 13 2.7 3.1 3.6

IndusInd Bank 3,185 377 0 465 23 137 159 185 19 15 12 2.7 2.4 2.0 - - - 18 17 18 0.8 0.9 1.0

ING Vysya 1,690 557 0 640 15 290 368 402 14 15 12 1.9 1.5 1.4 - - - 15 12 12 1.0 1.1 1.3

Kotak Mahindra Bank 8,002 646 112 646 0 114 143 162 31 29 25 4.7 3.7 3.3 - - - 16 14 13 0.1 0.1 0.1

LIC Housing 1,615 199 0 261 31 125 142 163 10 8 7 1.6 1.4 1.2 - - - 17 18 19 1.9 2.2 2.8

Div Y ie ld (% )

Adj B V (INR)

FDEPS (Rs) PE (x) PB (x) EV/EB ITDA (x) RoE (% )

continued…


ESSENCE OF THE WEEK


Mcap CMP VoI (Rs)* TP Upside


B anking & Fin Serv 13 12 10 2.6 2.2 1.9 - - - 18 16 17 2.1 2.3 2.6

L&T Finance Holdings 1,935 70 0 66 (6) 30 32 36 24 22 14 2.3 2.2 2.0 - - - 10 10 14 1.1 1.3 1.4

Magma Fincorp 202 66 0 79 20 67 67 72 9 8 7 1.0 1.0 0.9 - - - 11 10 11 1.2 1.2 1.2

Oriental Bank 792 164 0 150 (9) 349 345 367 4 5 4 0.5 0.5 0.4 - - - 11 8 10 5.6 6.1 7.3

Power Finance 3,102 146 0 175 20 164 197 226 4 3 3 0.9 0.7 0.6 - - - 22 23 21 4.8 8.2 8.2

PNB 3,131 537 0 695 29 753 731 868 4 6 4 0.7 0.7 0.6 - - - 16 11 13 5.0 5.0 5.0

Reliance Capital 1,245 315 0 427 36 480 492 511 10 11 10 0.7 0.6 0.6 - - - 7 6 6 4.1 4.1 4.1

Rural Electrification 3,043 191 0 218 14 164 196 225 5 4 4 1.2 1.0 0.8 - - - 26 26 24 4.3 5.5 6.5

SBI 17,728 1,475 330 1,425 (3) 1,112 1,113 1,218 6 8 6 1.0 1.0 0.9 - - - 15 10 11 2.8 2.8 3.1

Shriram City Union Fin 926 970 0 1,079 11 384 461 540 12 11 10 2.5 2.1 1.8 - - - 23 20 19 1.0 0.9 1.0

Shriram Transport 2,031 556 0 576 4 306 346 392 9 10 9 1.8 1.6 1.4 - - - 21 17 16 1.5 1.4 1.6

South India Bank 431 20 0 23 15 20 22 25 5 5 5 1.0 0.9 0.8 - - - 21 17 17 3.4 3.4 3.7

Union Bank 1,041 103 0 127 24 227 229 254 3 4 3 0.5 0.4 0.4 - - - 15 9 12 7.8 7.8 9.8

Yes Bank 1,744 300 0 359 19 162 198 239 8 7 6 1.9 1.5 1.3 - - - 25 25 22 2.0 2.0 2.3

Cement - - - 13 19 16 2.5 2.3 2.0 9 11 9 20 12 13 0.8 0.8 0.9

Dalmia Bharat 211 161 0 208 29 24 (5) 12 7 - 14 0.4 0.4 0.4 5 7 5 7 (1) 3 1.1 1.4 1.5

Grasim Inds 3,646 2,467 417 2,641 7 284 210 226 7 10 9 1.2 1.1 1.0 7 9 7 14 10 10 0.9 0.9 1.0

India Cement 243 49 0 63 28 7 4 7 7 12 7 0.4 0.4 0.4 5 6 5 6 3 6 4.9 4.9 5.4

Ramco Cement 643 168 0 192 14 18 10 16 10 16 11 1.7 1.6 1.4 6 8 6 19 10 14 1.8 2.3 2.5

Shree Cement 2,384 4,251 0 3,890 (8) 286 208 252 15 20 17 3.9 3.3 2.9 9 11 8 30 17 18 0.5 0.7 0.8

UltraTech Cem 7,351 1,665 0 1,616 (3) 100 68 81 17 25 21 3.0 2.7 2.4 10 12 10 20 12 12 0.5 0.5 0.6

Engineer ing - - - 21 29 19 3.1 2.8 2.6 13 16 12 18 13 13 1.8 1.7 1.7

ABB 1,973 578 0 346 (40) 8 8 14 73 71 42 4.7 4.5 4.2 31 27 19 7 7 10 0.5 0.5 0.5

AIA Engg 853 562 0 479 (15) 22 30 34 25 18 16 3.7 3.2 2.7 17 12 10 16 19 18 0.7 0.7 0.7

Alstom T&D 738 179 0 197 10 4 5 8 50 38 23 4.7 3.5 3.3 17 14 11 10 11 15 1.2 1.1 1.1

Bharat Electronics 1,239 962 0 995 3 111 85 83 9 11 12 1.2 1.1 1.1 4 5 6 15 10 9 2.7 2.8 2.8

BHEL 5,847 148 0 89 (40) 27 15 9 5 10 17 1.3 1.2 1.1 3 7 10 25 12 7 4.0 3.6 2.8

Carborundum Universal 393 130 0 119 (9) 5 5 9 27 25 14 2.3 2.3 2.1 12 11 7 9 9 15 1.0 1.5 1.5

Crompton Greaves 1,232 122 0 82 (33) 3 4 7 46 32 18 2.2 2.1 2.0 17 14 10 5 7 11 1.0 1.0 1.0

Cummins 1,956 438 28 521 19 23 21 25 18 19 17 5.1 4.6 4.1 13 16 13 28 23 24 2.9 2.7 2.9

L & T 14,814 993 255 1,213 22 49 50 58 16 15 13 3.1 2.8 2.5 14 13 11 17 15 15 1.2 1.3 1.4

Siemens 3,038 530 0 434 (18) 24 4 11 22 125 47 4.6 4.7 4.5 16 46 23 21 4 10 1.3 1.3 1.3

TD Power Systems 129 241 0 167 (31) 13 10 14 19 24 17 1.6 1.5 1.4 11 14 9 9 6 9 0.8 0.8 0.8

Thermax 1,195 623 0 596 (4) 27 27 33 23 23 19 4.0 3.5 3.1 14 16 12 18 16 18 1.1 1.1 1.4

VA Tech Wabag 256 599 87 608 1 34 40 46 14 13 11 2.2 2.0 1.8 9 8 7 13 14 15 1.9 2.0 2.0

Voltas 633 119 0 119 0 3 6 9 39 18 14 2.4 2.2 2.0 16 14 10 6 13 15 1.3 1.3 1.3

FDEPS (Rs) PE (x) PB (x) EV/EB ITDA (x) RoE (% ) Div Y ie ld (% )

Adj B V (INR)

continued…


ESSENCE OF THE WEEK


Mcap CMP VoI (Rs)* TP Up side


FMCG - - - 36 38 30 18.8 15.2 13.0 27 23 19 49 51 48 1.6 1.6 1.9

Asian Paints 7,293 472 0 450 (5) 12 12 14 41 38 33 13.4 11.5 9.9 25 22 19 36 32 32 1.0 1.2 1.4

Britannia Inds 1,743 903 0 UR - - - - - - - - - - - - - - - - - - -

Colgate Palmolive 2,895 1,322 0 1,175 (11) 36 36 42 36 36 32 36.7 36.8 36.2 26 26 23 107 101 115 2.1 2.3 2.6

Dabur 4,862 173 0 200 15 4 5 6 39 33 28 14.2 11.5 9.4 29 25 20 40 38 37 0.9 1.2 1.4

Emami 1,590 435 0 535 23 14 17 20 31 25 22 12.7 11.1 9.1 27 21 18 43 47 45 1.2 2.0 2.2

Godrej Consumer 4,048 739 0 835 13 20 23 29 37 32 26 7.6 6.5 5.6 26 22 18 22 22 23 0.7 0.9 1.1

Hindustan Unilever 19,496 560 0 565 1 15 17 18 37 33 31 45.3 33.8 27.9 29 26 22 106 119 99 2.9 2.0 2.2

ITC 40,877 320 0 371 16 9 11 13 33 29 25 11.3 9.7 8.5 23 20 16 36 36 36 1.6 1.9 2.3

Marico 2,233 215 0 250 16 6 7 8 38 29 26 7.0 5.9 5.0 23 19 16 23 22 21 0.5 0.6 0.7

Jyothy Lab 591 203 0 260 28 4 6 9 53 36 24 5.1 3.9 3.6 33 23 19 10 13 16 0.8 0.8 1.1

Nestle 7,877 5,075 0 UR - - - - - - - - - - - - - - - - - - -

Tata Global Beverages 1,399 141 0 153 9 6 7 8 22 21 18 1.8 1.7 1.6 13 14 12 9 9 9 1.5 1.7 1.8

United Breweries 3,405 800 0 861 8 7 8 11 123 105 71 14.0 13.0 11.5 47 39 32 12 13 17 0.1 0.1 0.1

United Spirits 5,468 2,337 0 2,997 28 (8) 24 61 - 96 38 6.1 4.3 3.9 39 29 20 (2) 6 11 0.1 0.1 0.1

Infrast ructu re - - - 20 14 12 2.6 2.2 2.0 15 12 9 15 14 16 1.0 2.0 2.7

Adani Enterprises 3,808 215 0 290 35 10 12 26 22 18 8 1.1 1.1 1.0 15 10 7 5 6 13 0.8 1.1 1.6

Adani Ports & SEZ 4,899 147 0 180 22 7 9 9 20 17 16 4.6 3.7 3.3 17 14 11 26 25 22 0.8 2.4 3.2

Essar Ports 361 52 0 96 83 7 8 9 7 7 6 0.8 0.7 0.7 7 7 5 13 11 12 0.9 4.4 5.0

ITNL 335 107 0 150 40 27 14 17 4 8 6 0.6 0.6 0.5 9 10 9 16 8 9 3.7 4.7 5.1

JP Associates 1,397 39 3 45 15 2 (1) 2 20 - 16 0.7 0.7 0.6 11 10 6 3 (2) 4 1.5 1.5 3.0

IT Services - - - 27 21 17 8.1 6.4 5.1 20 15 12 33 33 33 1.1 1.5 1.8

CMC 698 1,431 0 1,355 (5) 76 88 113 19 16 13 4.6 3.9 3.2 13 12 9 27 26 27 1.2 1.5 2.0

HCL Tech 16,854 1,497 0 1,800 20 57 86 100 26 17 15 7.4 5.5 4.2 17 11 9 32 36 32 0.8 0.9 1.1

Info Edge 958 545 0 585 7 12 12 14 45 45 38 8.9 7.7 6.6 38 33 26 21 18 19 0.2 0.4 0.4

Infosys Tech 33,700 3,646 0 4,200 15 165 185 233 22 20 16 5.5 4.6 3.9 16 13 10 27 25 27 1.2 1.5 1.9

Just Dial 1,663 1,479 0 1,220 (17) 10 16 22 149 90 66 24.5 19.2 14.9 97 69 47 26 24 25 - - -

Mindtree 1,127 1,682 0 1,484 (12) 82 110 148 21 15 11 5.3 4.2 3.2 14 11 8 30 31 32 0.7 1.1 1.2

Mphasis 1,304 385 0 413 7 38 38 38 10 10 10 1.8 1.6 1.5 9 9 8 19 16 15 4.4 4.5 4.5

Oracle Financials 4,180 3,086 0 2,951 (4) 128 163 184 24 19 17 3.5 3.0 2.5 17 14 11 16 17 16 - - -

Persistent Systems 636 988 0 1,140 15 47 63 81 21 16 12 3.9 3.3 2.8 12 9 7 20 23 25 0.9 1.4 1.8

Redington 436 68 0 95 40 8 8 10 8 8 7 1.7 1.4 1.2 7 7 6 22 19 18 0.6 0.7 0.8

TCS 68,305 2,166 0 2,350 8 71 93 118 30 23 18 11.0 8.5 6.7 23 16 13 41 41 41 1.2 1.8 2.2

Tech Mahindra 6,881 1,833 0 2,000 9 99 124 143 18 15 13 5.7 4.0 3.1 13 9 8 36 32 27 0.1 0.1 0.1

Wipro 22,387 564 0 585 4 25 31 37 23 18 15 5.2 4.4 3.6 19 15 12 23 26 26 1.2 1.4 1.6

FDEPS (Rs) PE (x) EV/EB ITDA (x) RoE (% ) Div Y ie ld (% )PB (x)

continued…


ESSENCE OF THE WEEK




Logist ics - - - 14 14 12 2.2 2.0 1.8 10 10 8 16 15 15 2.0 2.0 2.2

Container Corp 2,258 719 0 750 4 50 51 58 14 14 12 2.2 2.0 1.8 11 10 8 16 15 15 1.6 1.7 1.9

Gateway Distriparks 231 132 0 155 17 12 12 15 11 11 9 1.8 1.7 1.5 7 6 5 17 16 18 5.3 5.3 5.3

Media - - - 33 49 22 4.9 6.0 4.6 18 15 11 27 26 19 1.3 1.5 1.3

DB Corp 896 303 0 345 14 12 16 19 26 19 16 5.4 4.8 4.2 15 11 9 22 27 28 1.8 2.4 2.8

Dish TV 784 46 0 75 64 (1) (1) 1 - - 38 - - - 11 10 7 101 57 (59) - - -

Hathway Cable 623 255 0 275 8 2 1 11 155 444 23 4.4 3.5 3.0 17 15 8 3 1 14 - - -

HT Media 271 72 0 86 20 7 7 9 10 10 8 1.1 0.9 0.8 5 4 3 11 10 10 0.6 0.6 0.6

Jagran Prakashan 467 87 0 116 33 8 7 8 11 12 11 3.0 2.6 2.3 11 9 7 30 23 23 2.3 3.4 3.4

Sun TV 2,092 330 0 465 41 18 18 21 18 18 16 4.7 4.3 3.9 9 8 7 27 25 26 2.9 3.0 3.5

Zee Ent 4,037 261 16 285 9 7 9 10 34 28 25 6.4 9.5 6.7 27 21 16 19 26 30 0.8 0.8 -

Metal s / Mining - - - 12 9 8 2.4 2.1 1.8 5 5 4 28 24 23 3.8 3.7 3.9

Coal India 26,493 261 0 278 7 27 27 29 10 10 9 3.2 2.8 2.5 5 5 4 37 32 30 5.3 5.1 5.3

Hindalco Inds 3,324 100 26 115 15 16 12 13 5 6 6 1.2 1.0 0.9 9 8 6 18 14 13 1.4 1.3 1.3

Hindustan Zinc 8,451 124 0 148 19 16 17 20 8 7 6 1.6 1.4 1.2 5 4 3 23 21 20 2.5 2.8 3.2

JSW Steel 3,247 834 0 850 2 82 89 112 10 9 7 1.0 1.0 0.9 8 7 6 10 11 13 1.4 1.4 1.4

NMDC 9,274 145 0 160 10 16 16 17 9 9 9 2.1 1.9 1.7 5 5 5 25 22 21 4.8 4.8 4.8

Sesa Sterlite 9,053 190 0 178 (6) 24 22 28 8 9 7 2.3 1.8 1.4 5 5 4 32 23 24 1.5 1.3 1.7

Tata Steel 5,801 371 0 360 (3) 7 29 34 52 13 11 1.6 1.5 1.4 7 6 6 3 12 13 3.2 2.7 3.2

Oil & Gas - - - 11 10 8 1.5 1.4 1.2 8 7 6 16 14 16 1.7 1.5 1.6

BPCL 4,138 356 0 UR - - - - - - - - - - - - - - - - - - -

Cairn 9,911 322 0 385 19 63 57 66 5 6 5 1.3 1.1 0.9 4 4 3 25 21 20 3.6 3.0 3.5

GAIL 7,353 360 0 360 (0) 34 35 35 10 10 10 1.9 1.7 1.5 7 8 7 19 17 16 2.7 2.8 2.8

GSPL 500 55 0 69 25 10 8 7 6 7 8 1.1 0.9 0.9 3 5 5 20 14 12 1.8 1.8 1.8

Gujarat Gas 475 230 0 270 17 22 29 30 10 8 8 3.1 2.2 1.8 8 4 5 33 32 26 3.0 2.4 3.0

HPCL 1,287 236 0 UR - - - - - - - - - - - - - - - - - - -

Indian Oil 9,392 240 0 UR - - - - - - - - - - - - - - - - - - -

Indraprastha Gas 577 256 0 330 29 25 26 29 10 10 9 2.4 2.0 1.7 5 5 4 26 22 21 2.1 2.0 2.0

Oil India 4,419 457 0 UR - - - - - - - - - - - - - - - - - - -

ONGC 37,985 276 0 UR - - - - - - - - - - - - - - - - - - -

Petronet LNG 1,394 116 0 140 21 15 9 10 8 12 11 1.9 1.7 1.6 5 7 6 29 15 15 2.2 1.2 2.3

Reliance Inds 42,737 822 0 1,100 34 65 71 93 13 12 9 1.5 1.3 1.2 9 8 6 12 12 14 1.0 0.9 0.9


continued…


ESSENCE OF THE WEEK




Pharmaceu t ical s - - - 30 24 19 7.4 6.2 4.9 20 16 13 27 29 30 0.7 0.7 0.8

Aurobindo Pharma 2,300 490 0 470 (4) 15 39 43 33 12 11 5.5 3.9 2.7 20 10 9 17 36 28 0.3 0.3 0.4

Biocon 1,377 428 0 417 (3) 15 21 26 28 21 16 3.2 2.9 2.5 16 13 11 12 15 16 1.8 1.2 1.2

Cadila Healthcare 3,122 947 0 995 5 32 40 50 30 24 19 6.4 5.3 4.3 19 17 13 23 24 25 0.8 0.8 0.8

Cipla 4,826 373 0 436 17 19 18 22 20 21 17 3.3 2.9 2.6 14 14 12 18 15 16 0.6 0.6 0.7

Divi's Lab 2,920 1,366 0 1,516 11 46 63 76 30 22 18 7.1 6.0 5.1 22 17 14 26 30 31 1.1 1.8 2.2

Dr Reddys Lab 7,062 2,580 0 3,000 16 96 130 150 27 20 17 6.0 4.6 3.8 17 12 10 25 26 24 0.6 0.3 1.0

GlaxoSmithKline Pharma 4,102 3,009 0 1,773 (41) 78 75 89 39 40 34 12.7 11.9 10.6 29 32 26 34 30 33 1.7 1.7 1.7

Glenmark Pharma 2,314 530 0 625 18 26 29 39 20 18 14 5.2 4.1 3.2 15 12 9 28 25 26 0.4 0.4 0.4

Jubilant Life Sciences 302 118 0 164 39 24 21 27 5 6 4 0.8 0.7 0.6 5 6 5 16 12 15 2.6 2.6 2.6

Lupin 6,504 901 0 971 8 31 40 49 29 22 19 7.8 5.9 4.6 18 14 12 30 30 28 0.4 0.4 0.4

Ranbaxy Lab 2,367 347 0 350 1 33 6 70 10 61 5 3.6 4.2 2.3 8 21 4 40 6 61 0.7 0.7 0.7

Sun Pharma 20,303 609 0 700 15 18 27 30 35 23 20 9.1 7.8 5.8 24 17 14 29 37 33 0.4 0.5 0.5

Power U t i l i t ies - - - 11 13 10 1.4 1.3 1.2 11 9 9 11 8 11 3.5 3.1 3.3

Adani Power 1,521 33 0 21 (36) (9) (9) (1) - - - 1.8 2.2 2.3 47 15 8 (43) (60) (5) - - -

JSW Energy 1,181 45 0 60 34 7 7 5 7 6 9 1.2 1.1 1.0 6 5 5 19 18 12 4.5 4.7 3.5

JP Power Ventures 641 14 0 16 18 1 0 3 10 68 4 0.6 0.6 0.5 13 14 6 7 1 14 - - -

Jindal Steel & Power 3,543 235 0 UR - 37 28 27 6 8 9 1.0 0.9 0.8 7 8 6 18 12 10 0.7 0.5 0.5

NHPC 3,584 18 0 19 5 2 2 2 11 10 10 0.8 0.8 0.8 9 8 8 7 8 8 3.9 3.7 3.9

NTPC 17,547 132 0 171 29 13 12 12 10 11 11 1.4 1.3 1.2 9 9 10 14 11 11 4.3 3.8 4.0

Power Grid 8,013 95 0 96 1 8 8 10 12 12 10 1.7 1.4 1.3 11 10 10 15 14 14 3.0 2.6 3.1

Tata Power 2,821 74 16 84 14 4 2 4 15 25 16 1.6 1.3 1.3 9 8 7 8 5 6 1.6 1.0 1.5

Real Estate - - - 32 27 13 1.2 1.1 1.0 26 13 9 6 7 10 1.8 1.3 2.2

DLF 4,142 144 0 168 16 4 4 8 34 38 17 0.9 0.8 0.8 19 14 12 3 2 5 2.0 1.1 2.3

Godrej Properties 501 156 0 204 31 7 8 10 22 21 15 2.2 1.4 1.3 16 16 12 10 8 9 - - -

Jaypee Infratech 416 19 0 27 45 5 3 4 4 6 5 0.4 0.4 0.4 7 6 5 12 7 8 5.4 5.4 5.4

Oberoi Realty 977 185 0 264 43 15 9 23 12 21 8 1.5 1.4 1.2 8 14 6 13 7 16 0.7 0.4 1.0

Phoenix Mills 494 212 0 286 35 6 12 27 36 18 8 1.7 1.6 1.4 21 9 5 5 9 19 1.0 1.8 2.6

Prestige Estates 758 134 0 177 32 8 10 12 16 13 11 1.7 1.6 1.4 12 11 8 12 12 14 0.8 1.2 1.5

Puravankara Projects 223 58 0 109 86 11 8 13 5 8 5 0.7 0.6 0.6 5 5 4 14 9 13 5.9 4.2 7.6

Sobha Developers 428 271 0 330 22 22 21 31 12 13 9 1.2 1.2 1.0 7 7 6 11 9 12 1.3 1.2 1.8

Sunteck Realty 244 241 0 391 62 1 49 54 243 5 4 3.1 2.1 1.4 366 4 4 1 52 39 0.1 0.1 0.1


continued…


ESSENCE OF THE WEEK




Retai l - - - 47 313 53 13.6 9.9 8.2 31 30 22 35 28 27 0.2 0.2 0.4

Bata India 1,054 1,019 0 1,218 20 27 31 37 38 33 28 9.3 7.8 6.6 23 20 16 27 26 26 0.6 0.6 1.2

Future Retail 297 83 0 107 30 - (1) 0 - - 178 - 0.6 0.6 - 7 8 - - 0 - - -

Page Industries 1,011 5,631 0 6,200 10 101 136 173 56 41 33 29.4 21.6 16.2 36 26 21 59 60 57 0.9 1.0 1.3

Shopper's Stop 506 378 0 368 (3) (1) 0 4 - 3,350 105 6.3 6.2 6.0 36 31 21 (2) 0 6 - - -

Titan Inds 3,310 232 0 217 (6) 8 8 8 28 29 27 10.5 8.6 7.2 19 21 18 42 32 29 - - -

Westlife Devlp 879 351 0 405 15 2 1 3 158 387 130 20.8 8.9 8.4 84 93 53 24 3 7 - - -

Te l ecom ** - - - 32 27 19 1.9 1.8 1.7 8 7 6 6 8 9 2.0 2.7 3.2

Bharti Airtel 19,640 305 0 UR - - - - - - - - - - - - - - - - - - -

Bharti Infratel 5,230 172 0 200 16 5 8 9 32 23 19 1.9 1.8 1.7 8 7 6 6 8 9 2.0 2.6 3.2

OnMobile Global 59 32 0 39 22 4 0 5 9 393 7 0.4 0.4 0.4 1 2 1 5 0 6 4.5 5.4 6.0

Misce l l aneous - - - - - - - - - - - - - - - - - -

Apollo Hospitals 2,044 912 0 960 5 21 24 29 43 38 31 4.6 4.2 3.8 22 19 16 11 12 13 0.6 0.6 0.6

Coromandel Intl 914 200 0 250 25 15 14 22 13 14 9 2.6 1.8 1.6 10 8 6 19 15 19 2.2 1.9 2.8

Cox & Kings 306 139 0 UR - - - - - - - - - - - - - - - - - - -

EID Parry 337 119 0 210 76 4 (2) 6 32 - 19 1.6 1.7 1.7 16 122 19 5 (3) 9 4.8 2.4 4.8

Finolex Industries 348 174 0 204 17 11 13 16 16 13 11 3.0 2.7 2.5 11 8 7 20 21 24 3.2 3.7 4.6

Fortis Healthcare 725 97 0 94 (3) (12) (4) 1 - - 81 0.9 1.0 1.0 33 21 21 (12) (4) 1 - - -

Godrej Industries 1,456 270 0 350 30 7 10 15 40 26 19 2.9 2.7 2.4 32 24 18 8 11 14 0.6 0.7 0.9

Havells India 1,548 770 0 805 5 31 38 49 25 20 16 6.7 5.3 4.2 15 13 10 32 29 30 1.0 1.1 1.3

Jain Irrigation 422 59 0 78 32 2 3 5 24 20 11 1.2 1.2 1.1 9 8 7 6 6 10 - - -

MCX Ltd 402 490 0 UR - - - - - - - - - - - - - - - - - - -

Supreme Ind 878 429 0 419 (2) 23 24 30 19 18 14 6.2 5.2 4.2 11 10 8 37 32 32 1.6 2.0 2.2

Tube Invst 534 178 0 217 22 6 6 8 31 30 21 2.8 2.7 2.5 16 14 11 9 9 12 1.1 1.1 1.7

UPL 1,278 185 0 231 25 18 20 26 10 9 7 1.8 1.5 1.3 6 5 4 18 18 20 1.3 1.6 1.9

Whirlpool of India 371 182 0 203 12 10 9 13 18 19 14 3.8 3.2 2.6 9 9 7 24 18 20 - - -

Note

1) * EPS & BV are for core business while target price includes value of investments

2) ** Telecom company valuations include tower valuations

Source: Axis Capital, Bloomberg

RoE (% ) Div Y ie ld (% )FDEPS (Rs) PE (x) PB (x) EV/EB ITDA (x)


ESSENCE OF THE WEEK


Notes


ESSENCE OF THE WEEK


This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Nothing in this document should be construed as investment or financial advice, and nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of

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Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies

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the accuracy, completeness or fairness of the information and opinions contained in this document

The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views

expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this

statement as may be required from time to time without any prior approval

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axis capital- essence of the week - 14 feb 2014

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