emerging ideas conference 2015 - systematix...

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Emerging Ideas Conference 2015

Investors are advised to refer through disclosures made at the end of the research report.

2 Systematix Research is also available on Bloomberg SSSL <Go>, Thomson & Reuters Systematix Shares & Stocks (I) Ltd.

Dear Guest,

We at Systematix Institutional Equity organised our Annual Investor Conference on 4th December, 2015 at Sofitel, BKC, Mumbai.

The global markets are passing through a period of high volatility and uncertainty. Besides being a victim of global macroeconomic issues, India specifically is witnessing continued slowdown in Rural consumption and lack of implementation of key infra sector reforms.

However, the strong pickup in Urban consumption (expected to further improve with the implementation of 7th Pay Commission recommendations), coupled with strong growth in Government capex across various key sectors like Railways, Road, Power, Health & Sanitation among others is beginning to reflect in a stronger GDP and IIP data in the recent quarters.

Given the strong fundamental of the economy in the long run, we believe that mid-to-small cap firms, who have continuously exhibited strong business fundamentals, revenue and profit growth, high RoCE, strong management teams and quality balance sheet over the past 3-4 years would be key beneficiaries of this revival in the economy. Our conference’s endeavour was to highlight some of these “Emerging Ideas” across sectors with the belief that the Capital Market will be in a consolidation phase in the near term and a bottom-up approach will be the mantra for investors looking for investible ideas.

In an earnest attempt towards the same, the event showcased 31 High Quality companies, both public and private, represented by their Promoters/MDs/CXOs. These business leaders shared their strategies, vision and industry views during the course of the day through a mix of one-to-one and group sessions. The event was attended by over 80 investors, resulting in over 600 meetings. The huge turnout and positive feedback on the quality of companies showcased reinforces our confidence that we were able to present to investors certain winning ideas/trends, which will successfully outperform the broad markets over the coming years.

We thank you for the active participation and look forward to hosting you in 2016.

Nikhil Khandelwal Jaspreet Singh Arora Pankaj Karde

Managing Director Head of Research Head of Sales

8 December, 2015


Table of Contents

Ahluwalia Contracts India Ltd .............................................................................................................................................. 4

Apar Industries ................................................................................................................................................................... 5

Aramex ............................................................................................................................................................................... 6

Atul Auto ............................................................................................................................................................................ 7

Biological E ......................................................................................................................................................................... 8

Can Fin Homes .................................................................................................................................................................... 9

Cera Sanitaryware. ............................................................................................................................................................ 10

Ericsson India .................................................................................................................................................................... 11

Future Supply Chains Solutions. ......................................................................................................................................... 12

Gear India. ........................................................................................................................................................................ 13

Indo Count Industries Ltd. ................................................................................................................................................. 14

Indoco Remedies. ............................................................................................................................................................. 15

Intellecap Financial Services Private Limited /Arohan Microfinance. ................................................................................... 16

ITD Cementation India. ..................................................................................................................................................... 18

J.Kumar Infraprojects. ....................................................................................................................................................... 19

KPIT Technologies. ............................................................................................................................................................ 20

Leap India Private Limited. ................................................................................................................................................ 21

Mahindra CIE Automotive. ................................................................................................................................................ 22

Majesco. ........................................................................................................................................................................... 23

MT Educare. ..................................................................................................................................................................... 24

Plastiblends India. ............................................................................................................................................................. 25

Prince Pipes & Fittings. ...................................................................................................................................................... 26

Ratnamani Metals & Tubes. .............................................................................................................................................. 27

Shree Baidyanath Ayurved Bhawan (P) Ltd. ....................................................................................................................... 28

Simplex Infrastructure. ...................................................................................................................................................... 29

Siyaram Silk Mills. ............................................................................................................................................................. 30

Sohan Lal Commodity Management. ................................................................................................................................. 31

Sonata Software. .............................................................................................................................................................. 32

Sterlite Technologies. ........................................................................................................................................................ 33

Symbiotec Pharmalab. ...................................................................................................................................................... 34

Thyrocare Technologies .................................................................................................................................................... 35


Ahluwalia Contracts India Key beneficiary of government infrastructure orders rollout

Background: Ahluwalia Contracts India Ltd (ACIL) promoted by Bikramjit Ahluwalia is a Delhi-based EPC player involved in civil construction of residential buildings, commercial complexes, hotels, hospitals, education institutes, metro stations and depots for government and private clients. From being a NCR focused player, ACIL is now present in +16 states and is executing 45 projects in India and offers turnkey solutions in design, civil, RMC, electro-mechanical, plumbing, firefighting and HVAC. Order book as of Sept 30, 2015 is at Rs40bn (3.6x TTM revenue), with the mix improved in favour of better-margin government orders (58% share).

Industry overview: Given the strong thrust on development of social infrastructure, government agencies like NBCC, DDA, CPWD, AIIMS, IITs, IIMs have actively tendered out orders for construction of hospitals, educational institutes and government buildings like police headquarters, income tax offices etc. The order pipeline from private residential sector and industrial segment has reduced due to a cash crunch with developers and subdued capex cycle. Low competitive intensity for composite government EPC orders (three to five players versus 10-12 players in pre-2009) along with better operational efficiencies makes ACIL a key beneficiary of government order roll-out.

Key meeting takeaways:

Order book breakup: residential (43%), institutional (25%), hospitals (14%), infrastructure (11%) and others (7%). 95% orders in the book are with a price escalation clause. Of the Rs7bn slow-moving orders from private sector, legacy orders worth Rs2bn are stalled.

With the government’s vision of ‘Housing for All’ by 2020, tenders for affordable housing are expected in the next year and ACIL with requisite technology and expertise is poised strong to bid for these projects.

The management has guided for order inflows of Rs16bn for FY16 and Rs20bn for FY17 versus Rs13.8bn attained in YTDFY16 with nominal capex outgo.

Operating margins can further improve by 100bps over the next two years due to higher share of government orders, better utilisation of equipment and operational efficiency. The management targets 20-25% sales growth for FY16.

Key financials

YE Mar (Rs mn) FY14 FY15 FY16e FY17e FY18e

Sales 9,603 10,599 12,739 15,919 19,099

EBITDA 417 1,149 1,511 2,095 2,528

PAT 76 641 810 1155 1,392

EPS (Rs) 1.0 10.0 12.0 17.0 21.0

Debt 2,386 1,731 1,401 1,381 1,231

Net worth 2,262 3,377 4,152 5,220 6,460

Operating Cash flow 4 624 392 603 1,029

Free Cash flow (309) 448 192 303 529

EBITDA margin (%) 4.3 10.8 11.9 13.2 13.2

RoE (%) 3.6 22.8 21.5 24.6 23.8

RoCE (%) 6.7 19.9 24.7 31.1 31.9

D/E (x) 1.1 0.5 0.3 0.3 0.2

Source: Company, Systematix Institutional Research

Systematix

Institutional Equities

Sector: Construction Rating: Buy

CMP: Rs264 Target Price: Rs310

Stock Info

Sensex/Nifty 25,638/7,782

Bloomberg AHLU IN

Equity shares (mn) 67

52-wk High/Low Rs300/142

Face value Rs2

M-Cap Rs18bn/$272mn

3-m Avg volume $0.4mn

Shareholding pattern (%)

Sep ’15 Jun ’15 Mar ’15

Promoter 66.9 66.9 66.9

–Pledged - - -

FII 12.5 15.1 15.1

DII 8.2 5.9 5.1

Others 12.4 12.1 13.0

Stock Performance (1-year)

Divyata Dalal [email protected] +91 22 6704 8059

Jaspreet Singh Arora [email protected] +91 22 6704 8062


Apar Industries

Focus on value-added products for power T&D segment

Background: Incorporated in 1958, Apar Industries (Apar) has a diversified portfolio of products, which include conductors, transformer oils, specialty oils, power and optic fibre cables. Its products cater to the demand from PGCIL, SEBs, EPC players and private developers in the power T&D sector. It has footprints in over 100 countries and is globally among the top five producers of aluminum conductors and transformer oils. Apar invested Rs3bn over the last three to four years in R&D and expansion to manufacture value-added products -- high temperature conductors, 765kv and 800kv HVDC transformer oil, specialised industrial oils, elastomeric and e-beam cables.

Industry overview: The recently-launched UDAY initiative by the government aims to provide 24x7 power to all, reduce AT&C losses from 32% in FY14 to 15% in FY19 by focusing on faster completion of delayed transmission lines and improved collection efficiency -- smart metering, installation of distribution conductors. In addition, $50bn investment is expected in the transmission segment in the next five years from PGCIL and private players. Apar, with 23% market share in conductors and 45% in transformer oil, is expected to see a pickup in demand led by the above initiatives.


80% of the current conductor order book of Rs16bn is to be executed by Sept 2016. A new plant at Jasurguda, Odisha (36,000mtpa) will come up by Q3FY17, as the existing capacity of 150,000mtpa is fully utilised.

The order size of high temperature conductors (high efficiency and better margins), has gone up from Rs50mn to Rs500mn (20% EPC component) over the last two years. These are used for re-conducting in metros and Tier 1 cities, where obtaining right of way is a challenge.

The demand for 765kv and 800kv HVDC transformers oil is dependent on the recovery in transmission sector. Competition in 765kv segment is likely to rise with Savita Oil and Raj Oil Lubricants attaining pre-qualification.

Auto lubes and industrial oils are the fastest-growing segments and the EBITDA margin in oil business has improved to Rs6,000/kl v/s Rs2,200/kl led by better product mix (auto lubes and industrial oils) and cost control.

The change in product mix in cables segment to niche elastomeric and optic fibre cables v/s power cables led by increased demand from solar and wind power segments can drive margins to 7% by 4QFY16 v/s 4.8% in 1HFY16.

Key financials

YE Mar (Rs mn) FY11 FY12 FY13 FY14 FY15

Sales 30,330 35,949 46,507 46,316 51,219

EBITDA 2,188 2,155 3,112 2,939 2,520

PAT 953 730 1,094 862 561

EPS (Rs) 29.5 20.3 28.5 22.4 14.6

Debt 6,128 10,104 9,960 7,983 5,020

Net worth 3,514 5,233 6,266 6,962 7,298

Operating Cash flow (4,743) (401) 4,514 (6,051) 2,473

Free Cash flow (4,777) (841) 3,253 (7,003) 1,881

EBITDA margin (%) 7.2 6.0 6.7 6.3 4.9

RoE (%) 30.0 16.7 19.1 13.0 7.9

RoCE (%) 20.6 12.6 17.7 17.9 17.9

D/E (x) 1.7 1.9 1.6 1.1 0.7 Source: Company, Systematix Institutional Research

Systematix




Sector Capital Goods

CMP:Rs461 Not Rated

Stock Info


Bloomberg APR IN

Equity shares (mn) 38.5


Face value Rs10

M-Cap Rs18bn/$273mn



Sep ’15 Jun ’15 Mar ’15

Promoter 62.5 62.5 62.5

–Pledged - - -

FII 6.5 6.3 5.9

DII 8.8 9.2 9.2

Others 22.3 22.1 22.4



Aramex

Dynamic logistics player

Background: Founded in 1982 and headquartered in Dubai, Aramex PJSC is a provider of comprehensive logistics and transportation solutions worldwide. Aramex entered the Indian market in 1997 through a 100% subsidiary - Aramex India Pvt Ltd (Aramex India).

Group with global footprint and focus on emerging markets: Aramex worldwide has ~150mn clients, ~13,000 employees, covers ~72 nationalities with ~354 offices, and operates with partners from the Global Distribution Alliance (GDA), where it does not have a physical presence. The company focuses predominantly on the emerging markets.

Asset light model with strong technology edge: Aramex follows an asset-light model emphasising on outsourcing. It is a leader in technology and automation, with its in-house platform that has Uber-like capability of allocating the best available person for any service request. Delivery time for shipments below the threshold value has been halved to 2-3 days.

Aramex has Pan-India infrastructure and delivery network: The company has a robust presence in India through Aramex India, wherein it provides services in 375 cities, with expansion in coverage from 2,000 zip codes in 2005 to 3,000+ now, and aims at ~6,000 zip codes soon.

Aramex India uses the Hub & Spoke model to service ~80mn packages per year, weighing ~30mn t, using ~3,500 employees.

Diverse service offerings: Like its global parent, Aramex India provides services under key verticals of Express, Freight, Contract logistics and E-commerce logistics as follows:

Express (Documents and Parcel): Provides reliable door-to-door import and export services, including Drop-and-Ship (PO Box) facility -- Indian customers can use the facility to mail across to 14 countries.

Freight: Provides services through air, ocean, land and multimodal.

Logistics: Complete supply chain and logistics solution, with strategically located centres and state-of-the-art facilities.

E-commerce: Offers customised solutions from order fulfillment to custom clearance to warehousing under two types – (i) REDe (enables to sell online) and (ii) Shop & Ship (virtual address for international shipping; has 0.5mn customers and 2014 GMV of $1bn). The company has a tie-up with Naaptol and HomeShop18 in India.

Focus on B2C: New initiatives focused on B2C are implemented like revamping of website, mobile app, courier app and lockers (to reduce the cost of re-attempting the packages).

Business outlook and future strategy in India: The company’s annual turnover in India is ~Rs4bn. Aramex India intends to enlarge its geographic presence and product offerings, offer additional customised solutions, increase automation and technology, and further implement the Uber model.

Systematix


PRIVATE

Thematic Presentation


Atul Auto

3W charm is here to stay

Background: Incorporated in 1986 and headquartered in Rajkot, Gujarat, Atul Auto is an India-based 3W manufacturer with a domestic market share of ~8%.

Focused 3W play – compelling reason to be bullish on a 3W player: We believe there are meaningful catalysts for the 3W industry to remain relevant in India and low income countries: 1) upfront 30-50% lower capex for cargo or passenger 3W, 2) 15-20% lower operating costs, 3) lower cost of maintenance due to less complicated powertrain and drivetrain and 4) narrow lanes in Indian cities/villages where 3W is most suited compared to similar 4W options.


Global market size for 3W is $3.5bn, with the India market size of $1bn.

Domestic market is 5.5 lakhs, of which 3.5 lakhs is diesel and 2 lakhs is petrol.

Front engine share is 35%, while rear engine share is 65% in the Indian market.

Foray into petrol and alternative fuel segment to bring incremental volume and targets to sell 100k units per year in the next three to five years.

Developed petrol engine on its own as there is no dedicated player like Greaves Cotton as seen in diesel (pays 5% premium to Greaves compared to Piaggio).

Increased infrastructure development and consumption growth from rural and semi-urban towns to contribute to 3W demand meaningfully.

New plant with a total capex of Rs1,500mn, of which Rs400mn has been incurred so far, has the potential to unlock significant demand and growth.

~700 petrol vehicles have been rolled and the feedback has been good so far.

3W demand to stay stable and has little threat from LCV due to i) low costs (acquisition, running and maintenance costs), ii) higher utilisation and iii) better turnaround cycle. 3W (35 KMPL) is more fuel efferent than LCV (22-24 KMPL).

Costs are split across – i) 1/3rd in powerpack which is more or less fixed, ii) 1/3rd in rubber and electrical, and iii) 1/3rd is steel/metals etc which can fluctuate.

Growth is likely to stay in the domestic market and can be explosive if certain measures happen like GST implementation.

Business is mostly cash-and-carry, except in the festival season. Working capital cycle; debtors are ~5-10 days, vendors ~30-60 days and inventory ~12-15 days.

Key financials


Revenue 4,301 4,928 5,515 6,944 8,926

EBITDA 454 579 721 1,003 1,430

PAT 298 406 513 704 999

EPS (Rs) 13.6 18.5 23.4 32.1 45.5

Net worth 945 1,211 1,576 2,095 2,843

Operating Cash flow 240 358 574 764 1,119

Free Cash flow 134 (6) 124 164 719

EBITDA margin (%) 10.6 11.8 13.1 14.4 16.0

RoE (%) 31.5 32.2 32.6 33.6 35.1

RoCE (%) 29.9 32.8 32.2 34.0 36.2

D/E (x) (1.0) (0.5) (0.3) (0.2) (0.5) Source: Company, Systematix Institutional Research

Systematix


Sector: Auto Rating: Buy


Stock Info


Bloomberg ATA IN

Equity shares 21.9mn


Face value Rs5

M-Cap Rs11.4bn/$174mn



Sep ’15 Jun ’15 Mar ’15

Promoter 52.7 52.7 52.7

–Pledged - - -

FII 6.4 6.9 6.0

DII 10.0 9.5 8.5

Others 31.0 30.9 32.8


Priya Ranjan [email protected] +91 22 6704 8067

Bibhishan Jagtap [email protected] +91 22 6704 8068


Biological E

Pioneer in vaccine; formulations encompass segments

Background: Established in 1953, Biological E (BE) is one of the first private sector pharmaceutical companies in India to enter the vaccine business. It supplies more than 60% of its pediatric vaccines to the Government of India and also to some international agencies. Apart from vaccines, the company also has branded formulation business in India. It has two manufacturing facilities at Hyderabad, which are approved by WHO GMP and are in the process of pre-qualification and filing with other regulatory agencies such as the USFDA, MHRA and EMEA. The company supplies several essential and life saving vaccines to United Nations agencies - UNICEF, Pan American Health Organizations and other global markets. Within India, it supplies to central and state government hospitals, public sector undertakings, the Indian armed forces and the domestic retail market. Its vaccine portfolio (WHO prequalified) includes DTwP (Diphtheria, Tetanus, whole-cell Pertusis) – (Hepatitis B)–Hib (Heamophilus influenza type B) – Liquid, DTwP – HepB – Hib (Lyophilized), Tetanus Toxoid, DTwP, Tetanus & diphtheria, Japanese Encephalitis.


Vaccine pipeline - Hexavalent Vaccine (expected launch in FY18-19), Measles (combination vaccines, MMR (expected to go stage III clinical trial by Mar-16), Inactivated Polio Vaccine, Pneumococcal Conjugate Vaccine (animal trial in Jan-16), Typhoid Conjugate Vaccine (animal trial in Jun-16).

Won UNICEF’s bid in FY13-14 for supply of 100mn doses of Pentavalent vaccine each year till FY16-17 at Rs55 each

Recently won a tender for supplying 85mn dosages each year in India at Rs60 each, to start from FY16-17

Has set up a new facility to manufacture Heparin-based products (to be commissioned in 3QFY16)

Biological E recorded a revenue of ~Rs10bn in FY15 and exports account for nearly 70% of the revenue. Of this, 30% was pharma and 70% vaccines. The company posted a strong EBITDA margin of ~47% in FY15.

Key financials

Y/E Mar (Rs mn) FY13 FY14

Sales 4,743 6,976

EBITDA 1,752 3,744

PAT 969 2,378

Debt 899 561

Net worth 1,667 4,032

Operating Cash flow 2,065 2,607

EBITDA margin (%) 37 52

RoE (%) 58.1 59.0

RoCE (%) 61.0 77.3

D/E (x) 0.5 0.1


Systematix


T. Ranvir Singh [email protected] +91 22 6704 8016

PRIVATE


Can Fin Homes

30% CAGR seen over FY15-20; non-housing business share to rise

Background: Can Fin Homes Ltd (CANFIN) is a South India-based (69% of branches and 75% of total business) home financier, focused on Tier I and II cities. It was promoted by Canara Bank in 1987, which owns 43.5% shareholding of CANFIN. The company is India's sixth-largest housing finance player with AUM of Rs97bn. CANFIN's customer profile comprises of low-risk loans to salaried individuals (76% of loans; average ticket size of Rs17 lakhs), while the remaining portion is to commercial/self-employed individuals (average ticket size of Rs 11 lakhs). CANFIN has a pan India network with 112 branches and 26 satellite offices spread across 19 states and union territories.

Strong growth and change in business mix to improve margin: The company expects to post a CAGR of 30% over FY15-20 to achieve its goal of Rs360bn loan book by 2020 (currently at Rs97bn) and plans to add 25-30 branches YoY. The management did not evince any major concern towards competition from new players in HFC business considering its overall market share, customer loyality program and faster loan turnaround time. In the company’s business mix, the non-housing segment is expected to increase to 8% (currently 5%) and in the housing segment, the mix could gradually shift towards the business class consumers contributing ~40% from the current 24%, which would be NIM accretive (50bps additional yield over salaried class). In addition, in the overall liability mix, the increasing share of NCDs and CPs (currently ~38%) is likely to reduce the overall cost of fund and help the company to improve its NIM.

Best asset class: The company has one of the best asset classes in the industry, with GNPAs of 0.17% and NNPAs of 0%. However, the management believes that’s increase in business class loan may raise its GNPAs to ~0.25% in mid-term, however NNPAs would be at 0%.

Healthy CAR with strong return ratios: With a strong CAR of 21%, the management indicates there is no immediate need for capital raising (may raise capital during December 2017). With an expected strong growth and healthy margins, CANFIN expects to improve its overall return ratio (RoE of ~16%) going forward.

Key financials

Y/E Mar (Rs mn) FY11 FY12 FY13 FY14 FY15

Net interest income 771 913 1,097 1,552 2,067

Pre-provision profits 585 683 737 1,069 1,375

PAT 420 438 541 757 862

EPS (Rs) 20.5 21.4 26.4 36.9 32.4

Net worth 3,059 3,419 3,873 4,474 7,715

ROE (%) 13.5 12.6 13.8 16.7 11.2

ROA (%) 1.9 1.8 1.7 1.5 1.2

Gross NPA (%) 1.1 0.7 0.4 0.2 0.2

Net NPA (%) 0 0 0 0 0

CAR (%) 19.1 18.0 15.4 13.8 18.4


Systematix


Sector BFSI

CMP: Rs963 Not Rated

Stock Info


Bloomberg CANF IN



Face value Rs10




Sep ’15 Jun ’15 Mar ’15

Promoter 43.5 43.5 43.5

–Pledged - - -

FII 0.1 0.1 0.1

DII 0.9 0.8 0.7

Others 55.6 55.7 55.7


Ajit Agrawal [email protected] +91 22 6704 8066

mailto:[email protected]


Cera Sanitaryware ‘Value for money’ positioning Background: Cera’s market share in the sanitary ware industry is 23%. Its current product portfolio consists of Sanitary ware (53% of sales), Allied products (12%), Faucets (20%), Tiles (12%) and Wellness (3%). Premium products contribute 15% of sales, 45% in mid-end and 40% in mass category.

Expansion in sanitary ware, faucets: Cera’s expansion in faucets (from 2,500 pieces/day to 7,200) and in sanitary ware (from 2.7m pieces p.a. to 3m) was completed recently. Further expansion to 3.3m pieces is underway and is expected to be completed in 1QFY17. The next leg of expansion in sanitary ware and faucets (another 2,500 pieces/day) will be undertaken in FY17 as utilisation is expected to be +90% by then. Attractive margins in faucets, its size (3x that of sanitary ware of Rs30bn) and high component of the informal segment makes it an attractive category. It contributed 17% share of FY15 sales and is expected to go up in the coming years.

Diversification through tiles: Cera aims to be a ‘Bathroom solutions provider’ and diversified into other categories like tiles, in which it is exploring outsourcing/JV options. It currently sells 90% soluble salt and 10% GVT tiles through outsourcing. It has recently entered into JV (51% stake) in AP with 10,000 sq m/day capacity, which produces 50% soluble salt and 50% GVT/Double charge tiles. Project cost is Rs680mn, with equal contribution from debt and internal accruals. The project can add another 15,000 sq m/day, with less than half the capex. Current tile sales are Rs1.5bn, with a target of Rs5bn in the next 3-5 years.


Well spread geographically, with a focus on Tier 2, 3 towns; numero uno player in Kerala and plans to replicate the success in Karnataka and AP as well.

Positioning of products towards mass/mid-end of the market and positioning of ‘Value for Money’ across all product categories is backed by 1,400 distributors and 14,000 sub dealers.

Brand building expense is 4.5% of turnover.

Majority of premium products are outsourced from China while mid/mass category products are manufactured in-house.

Lot of unorganised capacity absorbed in Swachh Bharat mission thus helping indirectly in minimising competition in the mass market.

With GST implementation, pricing gap between organised and unorganised will go down, currently at 100%, while shifting sales from unorganised (45%) to the organised segment.

Huge opportunity from the replacement market (18% share currently).

Key financials YE Mar (Rs mn) FY11 FY12 FY13 FY14 FY15

Sales 2,430 3,194 4,879 6,637 8,217 EBITDA 457 534 753 949 1,175 PAT 265 320 462 519 677 EPS (Rs) 21.0 25.3 36.5 41.0 52.0 Debt 379 476 610 483 652

Net worth 1,116 1,392 1,795 2,240 3,517 Operating Cash flow 232 73 394 611 384 Free Cash flow 30 (172) 18 213 (425) EBITDA margin (%) 18.8 16.7 15.4 14.3 14.3 RoE (%) 26.5 25.6 29.0 25.7 23.5

RoCE (%) 26.8 25.1 28.8 30.1 27.7


Systematix


Sector Building Materials

CMP:Rs1,952 Not Rated

Stock Info


Bloomberg CRS IN


52-wk High/Low Rs2,952/1,550

Face value Rs5

M-Cap Rs25bn/$390mn



Sep ’15 Jun ’15 Mar ’15

Promoter 54.7 54.7 54.7

–Pledged - - -

FII 14.7 15.6 18.1

DII 5.4 3.7 3.2

Others 25.2 26.0 24.0





Ericsson India

Benefiting from ‘Digital India’ drive

Background: Ericsson was founded in 1971 and is based in Gurgaon, Haryana. The Indian arm of Ericsson registered a net sales of 3.6bn Swedish Krona (SEK) compared with SEK2bn (Rs15.25bn) a year ago. Ericsson India Pvt Ltd offers telecom solutions in India. It offers telephony, intelligent networks, internet protocol & datacom, telecom integration & services and multimedia communications services. The company's portfolio comprises of mobile and fixed network infrastructure, telecom services, software, broadband and multimedia solutions for operators, enterprises and the media industry.

‘Digital India’ to drive growth: The central government's interest in ‘Digital India’ and smart cities offers enormous business opportunity for the company. Ericsson India had recently announced the setting up of a new unit, 'Industry and Society', that will focus on Digital India, smart cities, public safety, utilities and transport segments. The new unit is expected to account for 20% of the group’s overall business from India by 2020. The company would look at innovative Indian companies for partnerships both in Cloud, connectivity, data analytics and companies with vertical expertise – thus providing an opportunity to various technology players..


Consumer trends: The key trends that are emerging include increased video consumption and mobile payments business that are currently small but growing exponentially. Need for real-time consumption of data and personalisation has been propelled due to growing device affordability and booming m-commerce/online shopping.

Mobile operators: Voice/data grew at 66/6% CAGR during FY11-15 but the average realisations for voice/data were down by 0.2/3.4% respectively. Despite the lower realisations, EBITDA margins have been increasing for the top 3 operators through a focus on capex productivity and opex efficiency. Entry of Reliance Jio would further lead to tariff wars and digital transformation.

Government opportunity: Various initiatives by the government under Digital India and smart cities initiatives would act as multi-billion dollar opportunity in the ICT space. Digital India would lead to a major transformation in infrastructure such as broadband highways, e-kranti, e-governance, electronic delivery of services etc.

Systematix


Rahul Jain [email protected] +91 22 6704 8025

PRIVATE



Future Supply Chain Solutions Ltd

Cost optimisation, clientele to propel growth

Background: Future group had set up a logistics division to provide back-end services to retail front-end operations like BigBazaar, Pantaloon among others. Identifying the business potential, the division was carved out in 2007 and Future Supply Chain Solutions Ltd (FSC) was incorporated in April 2007 as a subsidiary of Future group. In 2009, Fung Capital (Hong Kong) invested in the company for a minority stake, 26%. FSC provides logistics and supply chain solutions across industries in India.

Services offering and clientele-based: The company’s major service offerings include:

a) Contract logistics

b) Express delivery (more than 50kgs)

c) Cold chain transportation and storage

d) E-commerce delivery and fulfillment center

FSC manages 29 warehouses across India, all on lease ranging from 9 to 29 years. The company manages ~6mn sqft of warehouses, of which ~1.5mn sqft is for Future group.

It offers sophisticated 3PL and VAS services and is a leader in technology and automation space within the logistics industry. FSC has a strong Indian presence with ~90 branches and over 1,000+ GPS-enabled dedicated vehicles.

Business diversification: Currently, the Future group accounts for 40% of the business for FSC, which is expected to decline to 30% in a year. The company started e-commerce delivery and fulfillment services last year and currently it offers services in six major cities for leading clients like Snapdeal, Shopclues, Pepperfry and others. FSC plans to add automatised warehousing facilities and grow its e-commerce offering.

Cost optimisation: The company has been at the forefront of technology and cost optimisation within its niche. It has led to significant reduction of Future group’s logistics cost, with a case study being made on the same, whereby Future Group logistics to its % to sales have come down from 5.6% to 1.2% in three years.

Growing clientele list: The company is a leading service provider in India with reputed and large-sized domestic and multinational clients across verticals like Apparels/Fashion, Foods/FMCG, Consumer Appliances, Furniture, Auto and Pharma sectors. FSC’s key clients include Hitachi, Philips, Ford, Maruti, Ranbaxy, Lupin, HCL and Berger. This growing customer list primes FSC for future growth.

Inorganic growth: FSC has acquired Brattle Foods (cold chain transport & warehousing) and its logistic arm Laxman Logistics in Oct 2014 to enhance its offerings.

Financial breakdown: Currently, the revenue split among business segments includes:

o 40% warehousing (all contracts are long-term & none without value added service),

o 40% express transport,

o 5-7% e-commerce, and

o Others including cold chain.

Systematix Institutional Equities

PRIVATE



Gemini Equipment & Rentals (GEAR India)

Multiple gears to accelerate performance

Background: Gemini Equipment and Rentals Pvt Ltd (GEAR), founded in 2007, is engaged in providing Rental, Operations & Maintenance (O&M) and Distribution of construction equipment and Material Handling Equipments (MHE). The company has been in the process of exiting its construction business, and fast expanding its offering across in MHE to diverse industries, including FMCG, manufacturing, automotive and logistics.

GEAR has exclusive collaborations with world’s leading MHE manufacturers for procurement, marketing and distribution of their products in India. The company is funded by financial investors, Berggruen Holdings and Cycladic Capital, who together with the management hold 100% stake in GEAR.

Gear business model can be further split broadly as follows:

a) Long-term rentals and O&M. Procuring assets to service specific large industrial projects being undertaken by its clients and,

b) Sale and O&M. Providing equipment procurement and management services to clients.

Robust industry fundamentals with significant upside potential in India: When compared with global standards, the Indian market is highly under-penetrated for MHE equipment. Greater focus on manufacturing, higher capacity utilisation/expansion, creation of safer workplaces, and implementation of GST etc. would provide further boost to MHE industry.

Strong market positioning with pan-India footprint: GEAR is one of the two organised players in its target segment with a pan-India footprint allowing greater and faster customer reach. The company’s products are critical to the functioning of its end-users’ supply chain. GEAR has branch offices across four cities, support network of 150 site offices and its assets are deployed at 45+ client sites, with current MHE fleet of ~400 equipments.

Strong revenue stream and robust client base: The company enjoys a committed revenue stream, from its prestigious clientele, including Reliance Industries, Aditya Birla Group, Ford, BMW, Michelin, Saint Gobain, Nestle, PepsiCo and others.

Highly credible long-term global OEM relationships: GEAR has forged long-term partnerships with various global brands such as TCM (Japan), STILL (Germany), HELI (China), and Combilift (Ireland), all of which are large global suppliers providing GEAR with the widest range of MHE equipments, thereby providing solutions to its customers.

Business outlook and future strategy: GEAR has been growing its MHE business at a CAGR of over 100% over the past four years and is expected to close FY16 with revenue of ~Rs 300mn (for MHE business) and EBITDA margin of ~55%. It expects to grow at a CAGR of ~30% over the next three years.

It has lined up a capex of Rs1.1bn in the next 2-3 years to ramp up the forklift fleet, and aims to grow its business tenfold in the next five to six years by increasing business across segments and geographies.

Systematix


PRIVATE


Indo Count Industries

Emerging home textile player with asset light model

Background: Indo Count Industries Ltd (ICIL) is one of the largest exporters of cotton bedding from India. It has a presence across the US, Europe and other Asian regions. Currently, the US contributes ~65% of the revenue. Foraying into value-added categories would increase its product profile and alleviate margins levels. The company, having its facility at Kolhapur, broadly operates in two segments -- spinning (10% revenue) and bed linen (90% revenue).

Rs4.75bn expansion plans to complete by FY19: In phase I expansion (Brownfield), it would spend Rs1.75bn to set up a water treatment plant, cut & sew automation and to expand the processing capacity to 90mn mtrs from 68mn mtrs. Phase I funding would be a mix of internal accruals and debt and would be completed by December 2016. Phase II is under active evaluation (outlay of Rs3bn) and would get completed by FY19.

Growth to come from focus on non-US and value-added categories: ICIL is expanding its product portfolio to include three new categories: Fashion/Utility /Institutional Bedding, FY15 revenue was at Rs751mn (5% of home textile revenue), and we expect this to go up to 25% by FY18e. As of FY15, the US contributed 70% of revenue; we expect this to reduce to 50% by FY18e as it is targeting new regions.


The management guided for 20% revenue growth for the next two to three years. Top 10 clients contribute ~45% of revenue.

Due to the increasing demand and rising costs in China, Wal-Mart has increased the sourcing from ICIL.

With the help of strong R&D capabilities, 70% of its sales come from innovative/new products.

Net debt stood at Rs2.6bn (long-term Rs749mn, short-term Rs1.8bn), while the debt/equity stood at 0.5x.

Trans-Pacific-Partnership’s (TPP) impact is not expected in the next four to five years, as the countries in pact are not cotton rich.

Key financials


Sales 14,676 17,169 21,751 26,333 31,689

EBITDA 1,588 2,488 3,654 4,582 5,672

PAT 1,100 1,457 2,504 3,617 4,658

EPS (Rs) 28.9 34.7 59.6 86.2 111.9

Debt 3,958 3,430 2,664 2,972 3,560

Net worth 2,893 4,239 6,722 10,340 14,998

Operating Cash flow (345) 1,315 1,311 1,912 3,019

Free Cash flow (394) 592 890 272 1,178

EBITDA margin (%) 12.9 18.3 20.8 22.4 22.9

RoE (%) 45.5 40.8 45.7 42.4 36.8

RoCE (%) 20.8 28.0 25.5 25.5 23.9

D/E (x) 1.4 0.8 0.4 0.3 0.2



Ankit Gor [email protected] +91 22 6704 8028

Rahul Khandelwal [email protected] +91 22 6704 8003

Sector: Textile Rating: Buy

CMP: Rs980 Target Price: Rs1,210

Stock Info


Bloomberg ICNT IN


52-wk High/Low Rs1,036/255

Face value Rs10




Sep ’15 Jun ’15 Mar ’15

Promoter 59.0 59.0 59.0

–Pledged - - -

FII 8.5 7.0 6.9

DII 1.5 1.8 1.8

Others 31.1 32.3 32.4



Indoco Remedies

US revenue, global tieups, product launches to drive momentum

Background: Indoco Remedies is a Mumbai-based fully integrated pharma company in operation for the past seven decades. It develops and manufactures a wide range of products and services for the Indian and international markets. Indoco ranks at the 31st position in the domestic market, with a market share of 0.67%. Exports contribute 34% of the revenue and bulk of it goes to regulated markets. It has eight manufacturing facilities, aided by a state-of-the-art R&D centre and a CRO facility. The company clocked a revenue and profit CAGR of 15.5% and 13% during the past five years. However, the global tieups and new products launches are likely to propel growth going forward.


• The restructuring of domestic business (contribution ~60%) is complete and it now aims to post a double digit growth in FY16, ~15-18% in FY17 and ~15% in FY18 from the formulation business.

• Field force in India has been increased by ~500 to ~2,800 currently, and it launches 20 products every year.

• US revenue is expected to be Rs1bn in FY16, from Rs650mn in FY15 (contribution ~7%) and is likely to grow in excess of 35% over the next two to three years. It has filed a total of 25 ANDAs with USFDA, including 17 for partners and eight for its own. It is looking to file seven to eight ANDAs every year on its own.

• The company has 23 molecules with the US partner, of which 17 ANDAs have been filed. It has so far launched seven products in the US, including two from partners.

• R&D expenses account for 3% of sales, and it has a staff of 300 people. Indoco has 8-10 products in the R&D pipeline.

• Debt stood at Rs1.12bn, of which Rs710mn was short-term and Rs410mn was long-term.

• It is planning to add one more API facility for which construction is likely to begin soon.

• Capex is likely to be Rs1.2bn in the next 18 months.

Key financials


Sales 4,811 5,688 6,308 7,326 8,570

EBITDA 677 846 926 1,204 1,655

PAT 511 463 427 580 828

EPS (Rs) 5.5 5.0 4.6 6.3 9.0

Debt 994 1,142 1,204 920 966

Net worth 3,502 3,800 4,142 4,572 5,188

Operating Cash flow 192 781 548 1,025 1,292

Free Cash flow (684) 295 61 616 445

EBITDA margin (%) 14.1 14.9 14.7 16.4 19.3

RoE (%) 14.6 12.2 10.3 12.7 16.0

RoCE (%) 11.4 12.5 12.1 15.4 18.4

D/E (x) 0.2 0.3 0.3 0.2 0.2


Systematix


Sector Pharma


Stock Info


Bloomberg INDR IN



Face value Rs2




Sep ’15 Jun ’15 Mar ’15

Promoter 59.3 59.3 59.3

–Pledged - - -

FII 8.7 8.7 8.3

DII 10.7 10.6 10.9

Others 21.4 21.5 21.6




Intellecap Financial Services Pvt Ltd

Shaping up and nurturing social capital

Background: Intellecap Financial Services Private Ltd provides a broad range of Consulting, Research and Investment Banking Services to investors and enterprises dedicated to social and environment space. Its major focus is on sectors like Financial Services, Clean Energy, Water and Sanitation, Agriculture and Rural Business, Healthcare and Education and Vocational Training. In addition to advisory services, Intellecap has also invested in several initiatives and companies that address specific challenges and gaps impacting investors, enterprises and other stakeholders working within the Base of the Economic Pyramid (BOP) space.

Its group companies are IntelleGrow, Arohan and IntelleCash.

IntelleGrow

Founded in 2012, IntelleGrow provides tailor-made financing to the needs of small and growing innovative enterprises which are under-served with limited operational and financial track record using a ‘venture debt’ approach. The MSME lending business has an addressable market potential of $165bn, with a gap of $49bn, of which 61% of the gap is working capital need. The company’s loan ticket size ranges from Rs5mn to Rs100mn. The company sources its funding requirement from various international foundations (Michael and Susan Dell, Shell etc) and money market operation. On the asset side, it has disbursed loans worth Rs2.5bn (cumulative) to ~200 companies till 1HFY16, with an outstanding loan portfolio of Rs1.36bn.

IntelleGrow’s growth trends and current status:

In the period Apr-Nov 2015, 37 sanctions were done (57% new cases) totaling Rs900mn, of which Rs660mn has been disbursed; sourced 168 clients that got processed through the credit funnel. 28% of the rejects were enterprises sourced too early in the revenue cycle, to be able to service debt.

Revenue profile set to improve with debt syndication gaining traction – first set of NCD CLO with Symbiotics of $10mn in the final stage (expected by Dec 2015); Rs1mn income already booked from a domestic deal, more in the pipeline.

Arohan

Arohan is one of the largest micro finance institutions (acquired by Intellecap group in September 2012) based out of Eastern India. It provides financial inclusion services to poor households in 5 low income states of India. The company played a pioneering role in introducing individual lending to micro-entrepreneurs in urban areas and currently offers innovative micro pensions and insurance products to its customers. It is predominant in Bihar, Assam, Jharkhand, Odisha and West Bengal, with a total customer base of 4.5 lakh and Rs5bn of AUM. The company possesses a bank loan rating of BBB+ by CARE and MFI grading of MFI 2+ by CARE and is Client Protection Principles (CPP) certified by the SMART campaign (1 of 7 MFIs in India and 32 globally).

Products and services: Few key products and services are Saral (loans for women up to Rs50k), Bazaar (loans for men and women bazaar traders up to Rs50k), Pension (NPS Lite – government backed), Direct bank loans of up to Rs50k and Pragati (micro business loans from Rs50k-500k).


PRIVATE


Key financial highlights:

First MFI to successfully grow inorganically and register a CAGR of 100% over the last three years. It serves nearly 4.5 lakh customers with over Rs5bn AUM as of Nov 2015.

Arohan has plans to increase its AUM 15x by FY24 (40% implied CAGR). It expects to grow at 50% over FY16-18, with a revenue CAGR of 51% over the same time.

Currently, fee income contributes 22% of total revenue, which is expected to increase to 29% and 35% by FY20 and FY24 respectively.

Backed by strong growth, Arohan expects return ratios to improve to an average RoE/RoA of 30%/6% by FY24, from the current 19%/4%.

The company’s current leverage ratio is at 3.8x, which it expects to hover around 4.2x till FY22, before declining to 3.5x in FY24.

IntelleCash

IntelleCash is a non-banking finance company (NBFC) launched by Intellecap in 2008, which leverages the technology and electronic payment infrastructure to provide working capital finance to MSMEs in a cost efficient manner. IntelleCash has provided wholesale lending and capacity building services to MFIs in India, Africa and South Asia. The company’s loan ticket ranges from Rs5lakh to Rs50lakh and has incubated 31 MFIs till date, which includes successful Small Finance Bank applicants such as Utkarsh and Suryoday.

The company has innovative and secured product line through which it addresses the working needs of MSMEs.

Key financial highlights:

The company has disbursed Rs57mn till date, with a gross outstanding portfolio of Rs43mn. The average ticket size of the loan stands at Rs1.6mn, with an average tenure of 10 months.

The company anticipates a strong loan growth with a CAGR of more than ~100% over FY16-24 (although on a lower base), wherein it expects revenue CAGR of ~125% over the same time.

It expects RoE and RoA to improve to 30% and 9% respectively by FY24, from the current level of -10% each.

It expects the leverage ratio to be 3.4x by FY17 and 2.5x by FY24, from nil currently.

Gross yield currently at 42% is expected to be ~35% by FY20 and +30% by FY24.

On Sept 14, 2012, IntelleCash had taken a majority stake in Arohan Financial Services (Arohan) which is Eastern India’s micro finance company and plans to consolidate the two business entities.

Other points: The current shareholding structure does not give Intellecap 100% holding in the group companies. The management, along with investors, has agreed to do a restructuring which will allow Intellecap to own 100% in all three group companies going forward.


ITD Cementation

Margin expansion, lean balance sheet to generate cash flows Background: ITD Cementation India Ltd (ITD Cem), a subsidiary of Thailand-based Italian-Thai Development Public Co Ltd (ITD), is involved in civil engineering and construction of infrastructure projects across India. Current order book is at Rs60bn (3.4x CY14 revenue) comprising 53% from marine orders where ITD Cem has developed core expertise and dominant market share. Urban infrastructure (11%), hydro/dams/tunnels/irrigation (16%), transportation (10%), specialist works (3%) and others (7%) comprise of the remaining order book. ITD Cem obtained technological knowhow and experience from the parent by executing projects in JV for metros, airports, micro tunneling, water and sewage. Going forward, ITD Cem would bid for projects on its own. JV’s income in revenue is now at 10% v/s 20-25% 3-4 years back.

Industry overview: Given the government’s thrust on developing infrastructure, upcoming projects in marine, metros, affordable housing, smart cities, airports and selective power plants can result in strong growth in order inflows. ITD Cem has submitted bids for Ahmedabad metros and plans to submit Rs12bn bid for underground tunneling in Lucknow metro. The management expects tenders for renovation/construction of 5-6 small airports to come up by Jun 2016.


ITD Cem is L1 in orders worth Rs24bn. Mumbai Metro 3 package of Rs12bn (share in the consortium of ITD Cem-CEC-Tata Projects) is yet to be awarded. Other L1 orders include Rs12bn for Udangudi water platform, conveyor belt.

Order book breakup client-wise - 57% private, 23% govt and 20% from PSUs. Legacy orders of Rs6bn (-ve EBITDA) is expected to be completed by Jun 2016.

The company has not decided to bid for NHAI road projects. A claim of Rs1bn on AP irrigation project is expected to be settled by Mar 2016 without writeoff.

Capex of Rs150-200mn is sufficient to execute the current order book. Additional capex will be required if the order pipeline translates into large order wins in CY16.

Net working capital is at 20% of sales and the management expects to generate positive operating cash flows in CY15.

On a 15-20% revenue growth target for the next 2-3 years, management expects EBITDA margin to improve to 8-8.5% in CY16 v/s 6.3% in 9MCY16. Operating cash flows will meet the working capital requirements and can lead to a reduction in consolidated debt from Rs6.5bn (1.4x D/E) at present.

Key financials

YE Mar (Rs mn) CY10 CY11 CY12 CY13 CY14

Sales 14,622 17,122 16,400 15,841 17,189

EBITDA 1,404 1,665 1,875 1,625 911

PAT 94 226 220 93 (761)

EPS (Rs) 0.8 19.6 19.1 8.1 (5)

Debt 5,468 6,517 7,837 7,695 7,653

Net worth 3,613 3,812 4,005 4,084 5,678

Operating Cash flow 372 (407) (890) 416 (851)

Free Cash flow (359) (1,132) (1,306) 107 (2,361)

EBITDA margin (%) 9.6 9.7 11.4 10.3 5.3

RoE (%) 2.6 6.1 5.6 2.3 (15.6)

RoCE (%) 11.2 12.9 12.5 10.2 3.9



Sector Construction

CMP: Rs98 Not Rated

Stock Info Sensex/Nifty 25,638/7,782

Bloomberg ITCE IN



Face value Rs1

M-Cap Rs15bn/$234mn



Sep ’15 Jun ’15 Mar ’15

Promoter 51.6 51.6 51.6

–Pledged - - -

FII 3.5 3.5 3.4

DII 24.3 23.9 24.0

Others 20.6 20.9 20.9





J Kumar Infraprojects

Poised for growth

Background: J Kumar Infraprojects Ltd (JKIL), incorporated in 1999, is predominantly a Maharashtra focused EPC player and has established a track record in construction of flyovers, metros, roads, bridges, tunnels, skywalks, ROBs/RUBs etc. It expanded operations in Western India namely Delhi, Rajasthan and Gujarat in 2010. The current order book of Rs40bn (3.1x FY15 revenue) comprises 77% orders from Maharashtra and 23% from rest of Western India. The company, with its core expertise in transportation engineering, has steadily doubled the order book from Rs20bn in 2010-12 to Rs40bn in 2014-15. In addition, JKIL is L1 in orders worth Rs3.5bn and is the selected lowest financial bidder for two continuous underground package of Rs52bn in Mumbai Metro 3.

Industry overview: Considering the growing needs of transportation in Mumbai and other Tier 1 cities of Maharashtra, there is a strong push from both the Centre and state governments to develop urban infrastructure. Projects worth Rs800bn are in the pipeline and will come up for bidding on EPC basis. These include 1) Rs300bn for Mumbai-Nagpur expressway, 2) Rs100bn for coastal road, 3) Rs250-300bn for Metro line 2, 4 and 5 in Mumbai and 4) Rs100bn for Mumbai Trans-Harbour Link and Rs40-50bn for flyovers in Mumbai and Thane. JKIL with its geographical concentration, core capabilities and lower D/E ratio (0.6x) has a competitive edge to bid for these projects.


JKIL is yet to receive LoA for 2 packages of Mumbai Metro 3. As per the contract, 2 of the 5 TBMs required for execution of a project has to be new.

Management targets total capex of Rs2bn in FY17 and FY18, of which Rs1bn will be for procurement of TBMs and remaining for other equipments.

Rs4bn raised through QIP will be utilised to meet capex and working capital.

With its own fleet of machinery, no sub-contracting and geographical concentration, JKIL has been able to attain EBITDA margin of 17-18% on a consistent basis. Management has guided for a revenue growth of 10-15% and 15-20% for FY16 and FY17 respectively.

Key financials


Sales 9,492 9,316 10,007 11,868 13,432

EBITDA 1,434 1,500 1,674 2,058 2,506

PAT 739 681 758 841 944

EPS (Rs) 26.6 24.5 27.3 30.2 29.3

Debt 1,674 1,706 2,363 5,571 5,334

Net worth 3,782 4,390 5,034 5,753 7,891

Operating Cash flow (222) 1,193 715 (717) (233)

Free Cash flow (1,089) 676 (564) (2,970) (632)

EBITDA margin (%) 15.1 16.1 16.7 17.3 18.7

RoE (%) 21.7 16.7 16.1 15.6 13.8

RoCE (%) 28.0 22.6 21.0 18.2 16.4

D/E (x) 0.4 0.4 0.5 1.0 0.7


Systematix


Sector Construction


Stock Info


Bloomberg JKIL IN



Face value Rs10

M-Cap Rs28bn/$434mn



Sep ’15 Jun ’15 Mar ’15

Promoter 51.0 51.0 51.0

–Pledged - - -

FII 21.3 21.7 21.0

DII 9.7 10.4 10.3

Others 18.0 16.9 17.7





KPIT Technologies

Fear psychosis endured, new era unfolds

Background: KPIT is one of the largest third-party IT outsourcer to global automotive companies, serving 17 of the top 20 global auto OEMs. It is focused on co-innovating domain intensive technology solutions for manufacturing corporations and helps clients improve efficiencies and integrate business processes. It posted $0.5bn in sales, with a total headcount of ~11,000 associates.

Commentary strong: The management believes that its efforts toward four-pronged action plan for profitability/predictability/people/growth have yielded the desired result ahead of schedule, as is evident from the 2Q financials. The company is witnessing improved outlook in Automobiles, Utilities and Manufacturing segment and Engineering/SAP/Digital in terms of SBUs. It is confident on better business traction and further potential up-move in its profitability but has maintained its annual revenue/PAT outlook for the year. The only concern remains on the ramp-up on ITS deal and the company has maintained its strong 80%+ market share, but spending by the state government may get delayed and spill over to FY17.

View: We believe 1HFY16 performance provides enough confidence both on revenue momentum pickup and also on further margin recovery on TMF basis, as the wage hike impact gets normalised and utilisation scales up (target for 75% from current levels of 70%). We prefer KPIT among the mid-tier IT stocks, given the strong growth potential, visible business recovery, likely monetisation of IP portfolio and attractive valuations. We expect revenue/EPS CAGR of 11%/18% over FY15-17e and have a target price of Rs205, valued at 12x FY17e.


Expect marginal revenue/earnings growth for FY16 in $ terms. Growth rates to improve and align to industry-leading rate in FY17.

Efficiency efforts are leading to improving margins in SAP vertical. Will take another year for it to achieve average company-level profitability in the vertical. New clients’ momentum remains strong in the vertical.

In Enterprise SBU, the revenue mix is changing from implementation business to more of migration, Cloud, support and maintenance services. Share of implementation revenue to decline from the current levels of 70% to 30% over the next 6 quarters.

It is looking to launch ‘Revolo’ for commercial vehicles to be used for public transportation and has undergone 8-10 field trials.

Key financials

YE Mar (Rs mn) FY13 FY14 FY15 FY16e FY17e

Sales 22,386 26,940 29,899 32,390 37,030

EBITDA 3,641 4,183 3,244 4,298 5,437

PAT 1,990 2,489 2,369 2,686 3,303 EPS (Rs) 11.2 12.9 12.3 13.9 17.1

Debt 1,872 4390 4335 3885 3435

Net worth 10,538 12,751 14,904 17,374 20,418

Operating Cash flow 1,203 1,030 4,447 2,862 3,262

Free Cash flow 587 468 3,541 1,162 1,494 EBITDA margin (%) 16.3 15.5 10.8 13.3 14.7

RoE (%) 22.5 21.4 17.1 16.6 17.5

RoCE (%) 28.4 24.7 13.2 17.8 20.3

D/E (x) 0.0 0.2 0.2 0.1 0.0


Systematix


Sector: IT Services Rating: Buy

CMP: Rs156 Target Price: 205

Stock Info


Bloomberg KPIT IN



Face value Rs10




Sep ’15 Jun ’15 Mar ’15

Promoter 22.3 21.7 21.7

–Pledged 3.7 3.5 4.1

FII 30.1 29.2 31.2

DII 5.6 7.7 11.2

Others 42.0 41.4 36.0




Leap India Pvt Ltd

Focus on customised pallets to reap benefits

Background: Established in 2013, Leap India Pvt Ltd (LEAP) provides returnable and customised packaging solutions used for storing and moving products across the supply chain. The company provides rental and pooling solutions mainly for a) Wooden Pallets - for industries such as FMCG, Retail and Drum usage and b) Foldable Large Containers (FLCs) - for Automotive industry.

In December 2014, Mayfield Fund, a US-based investor, invested ~$4.1mn for a minority stake in the company. Since then, LEAP has also raised ~Rs165mn of debt.

Proven execution with reputed clients: LEAP has highly-reputed and leading industry players as its customers, across white goods manufacturers, cola giants, global food conglomerates, auto components majors, etc. Its existing major customers include Mahale Behr, LG Electronics, Lucas TVS, Borgwarner, Mondelez, among others.

Palletisation and pooling services player: LEAP enjoys a duopoly market situation in India. It has been increasingly spreading its business post its equity funding, and it raised capacity from 18,000 pallets to ~135,000 pallets and added ~5,000 FLCs.

Currently, the company has 96% utilisation rate for its pallets. LEAP has a strong presence across India for manufacturing, service and repair tie-ups which enables it to service customers faster and at significantly lower costs.

Focus on efficiency and customised industry requirements as key USPs: The company had been agile to adapt to the diverse requirements of Indian logistics industry, thereby providing customised pallets of high quality and durability.

Strong IT infrastructure and capability: Introduction of ‘my Leap’, an integrated Cloud-based user-friendly real-time pallet monitoring and tracking software has lead to greater efficiency, convenience and reliability for both the company and its clients.

Experienced and driven management team. The company is led by Sunu Matthew who has 18+ years of experience across different verticals of this industry and has worked with global majors. He is assisted by a dedicated team of highly experienced people, which has grown from 25 in Dec 2014 to ~90 now.

Business opportunity: As there is no organised competitor besides CHEP and due to significant demand for customised pallets, a great opportunity exists for LEAP.

The company is targeting international players in sectors of FMCG, Beverages, Automotive and retailers. LEAP plans to expand to 19 states in India. It is targeting to have a pool of ~270,000 pallets and ~5,500+ FLCs by FY15-16-end, and aims to increase to ~21mn pallets and ~14,500 FLCs by FY18-19.

Financials: For the year-ending March 2017, LEAP expects revenue of ~Rs400+mn, with ~40% EBITDA margin and PAT margin of ~10%. The company is expected to grow exponentially to ~Rs2bn by FY19, with 51% EBITDA margin.


PRIVATE


Mahindra CIE

Growth focus on Asia

Background: Mahindra CIE Automotive (MCIE) is an emerging global multi-product automotive component player, which has been formed by the alliance of CIE Automotive and M&M’s auto ancillaries’ entities. It has presence in India and Europe, with the key current and future product lines of the new entity being 1) forging, 2) stamping, 3) gears, 4) composites, 5) casting, and 6) plastic/painting and aluminum.

Optional value and triggers aplenty: Our calculation suggests that the merger of rest of CIE forging plants, which are outside MCIE’s fold (Brazil, China and Mexico) can add 10-15% to our estimated EV of MCIE based on the merger multiples scenarios and will be a option value in the mid-term. We expect MCIE to achieve key covenants like net debt/equity of <2x by FY16e, which will unveil inorganic growth in India/Asia.


Guided by four internal targets - EBIT should be 9-10%, net debt <2x EBITDA, RoNA>20%, FCF >50% EBITDA. Company’s focus in Europe would be on margins (profitable product portfolio) rather than volume growth. Margin benefit of Jeco plant closure will be felt in CY16. Early focus on financial consolidation.

Indian units have enough capacity to cater to the next couple of year’s growth. Significant efforts are on to improve processes, reduce wastage and rejection rates in India. It is seeing some breakthrough with OEMs like Ford, GM and Renault for their upcoming models. Key issue for MCIE has been only 15% share of Western OEMs in India where CIE has strong relationship. The management thinks it is difficult to crack OEMs like Maruti Suzuki, Hyundai and Honda as they have a very strong supplier base in India. MCIE has a strong order book from Tata Motors and M&M and would participate in most of the new product development. Will gradually move to products from processes in stamping to improve margins/return. Looking to venture into plastic products.

No major capex for the next two years, only maintenance capex (Rs2.5-3.0bn).

Net debt as of now would be Rs14,000mn (net D/E 1.5x), of which Rs3,00mn is the India currency debt and rest is euro debt in European operating subsidiaries.

MCIE would move from financial year to calendar year from Dec-2015 onwards.

Key financials

YE Mar (Rs mn) FY15 FY16e FY17e FY18e

Revenue 55,699 59,056 66,923 80,142

EBITDA 5,328 6,893 9,716 12,165

PAT (782) 3,306 5,239 6,655

EPS (Rs) 8.6 10.2 16.2 20.6

Debt 15,183 12,783 12,033 14,533

Net worth 19,020 22,326 26,809 31,953

Operating Cash flow (3,156) 6,009 8,415 10,184

Free Cash flow (6,754) 2,981 3,415 184

EBITDA margin (%) 10.0 12.2 15.1 15.7

RoE (%) 14.7 14.9 19.7 20.9

RoCE (%) 9.3 12.7 18.1 19.4

D/E (x) 0.8 0.5 0.3 0.3


Systematix


Sector: Auto Ancillary Rating: Buy


Stock Info


Bloomberg MACA IN

Equity shares 322.9 mn


Face value Rs10

M-Cap Rs82.7bn/$1.2bn



Sep ’15 Jun ’15 Mar ’15

Promoter 74.8 74.8 74.8

–Pledged - - -

FII 5.6 5.0 4.9

DII 6.6 6.8 6.5

Others 12.9 13.2 13.0


Priya Ranjan [email protected] +91 22 6704 8067

Bibhishan Jagtap [email protected] +91 22 6704 8068


Majesco

Pure-play focus to benefit

Background: Majesco is a global provider of software, consulting and services for insurance business transformation. It has enabled over 142 transformations for its customers across insurance segment (Property and casualty, Life, Annuity and Group) through its wide array of offerings that include software products, consulting and IT Services. The company was demerged from Mastek earlier this year and the entire international insurance product and solutions business was hived off and transferred to Majesco.

Integration completed: The company is now through with its integration process on acquired entities – Agile Technologies and Cover-All Technologies – that contributes ~$8.2mn or ~30% of the quarterly revenue run rate of the company. However, the operations are still under investments and thus are loss-making at the moment.

New client partner sales strategy: The company has added five client partners on LTM basis, wherein these domain specialist consultants, specialised in Insurance and access at CXO levels on the client side, are helping in faster and smoother deal closures. The payments to partners are entire linked to the success and profitability of the deal, thus ensuring complete alignment to goals. The company intends to add similar relationship in its top 15 focus accounts – accounts that can get scaled to $20mn+.


Demerger has helped to improve the brand image and it is visible in inquiries. It also helped to attract talent as Majesco is a pure product-based company now and listed in the US.

The company witnessed 1H organic growth of 13.5% (inorganic growth of 40%). Expects to double revenue by FY18.

Gross margin is currently 44% and is expected to improve to 46%. EBITDA margin to be in 12-14% (targeted).

There are 2,500 P&C companies in the US and Majesco is currently serving only ~100. Thus, it has huge scope for further client addition.

Many companies still use old legacy program or home grown software which are not cost effective, and thus is dragging their profitability. But a technology change is visible in the space across the industry as the legacy system is getting difficult to maintain. CIOs are now more focused on technological transformation that is helping in revenue build-up.

Key financials YE Mar (Rs mn) 1QFY16 2QFY16

Sales 1,502 1,874 EBITDA 27 (27)

PAT 15 (6)

EPS (Rs) 0.7 (0.3)

Debt 265 303

Net worth 2,492 2,577 Operating Cash flow - - Free Cash flow - -

EBITDA margin (%) 1.8 (1.5)

RoE (%) 0.6 (0.2)

RoCE (%) 1.0 (0.9)

D/E (x) 0.1 0.1 Source: Company, Systematix Institutional Research

* The company was demerged from Mastek, effective 1QFY16

Systematix


Sector IT Software


Stock Info


Bloomberg MJCO IN



Face value Rs5

M-Cap Rs15.1bn/ $232mn



Sep ’15 Jun ’15 Mar ’15

Promoter 50.4 50.4 NA

–Pledged - - NA

FII 4.9 9.8 NA

DII 11.3 6.7 NA

Others 33.3 33.1 NA

Stock Performance (Since Aug 15)*

* The company was demerged from Mastek, effective 1QFY16



MT Educare

Firing on all cylinders Background: MT Educare (MTEL), established in 1988, is a leading informal and vocational education services provider under the brand name of Mahesh Tutorials. It operates under three broad business verticals – School, Science and Commerce. It has diversified product offerings catering to the needs of students from Standard VIII to those appearing for Engineering and Medical Entrance Exams (including IIT Entrance), CA course and MBA aspirants. MTEL services ~90,000 students through its large pool of faculty strength of ~1,250+ members in its wide network of 149 coaching centres spread across 10 states/union territories.

Multi-pronged growth strategy: The company has devised a multi-pronged growth strategy to tap opportunities across the spectrum of education in a steady and cost effective way. It is focusing on nation-wide common entrance and professional exams such as CA, IIT JEE, CAT, CMAT, CBSE etc. The market for these exams are relatively organised and the opportunities are immense MTEL is also focusing on systemic diversification both in vertical and geographies. From being a Mumbai-based private tuition company 10 years ago, it now has about 1/3

rd of its revenue from non-Mumbai

markets, with 50 centres outside Mumbai. It has devised an asset light strategy both through college tie-ups in new markets to sell test-prep in college campuses, as well as building content that can grow in revenue in a very asset light way.


It has created an unique product, ‘Robomate’, which gives access to digital content of the classroom teaching through a mobile app.

MTEL is also introducing tablet-based Flipped classroom teaching methodology from the current fiscal for its school division.

It is witnessing strong traction for its acquired brand in IIT – ‘Lakshya’ with admissions in Maharashtra up from 330 in 2013 to 1,000+ in the current fiscal.

Currently, it has ~30,000 students served under the ‘Robomate’ brand. The only challenges remain in longer-but-reliable receivable cycle from schools and teacher attrition that is being addressed by higher pay and ESOPs.

Key financials


Sales 1,139 1,365 1,676 1,988 2,192

EBITDA 215 279 342 452 516

PAT 83 138 184 220 279

EPS (Rs) 2.3 3.8 4.3 5.2 6.5

Debt 45 - - 19.3 49.5

Net worth 478 578 1022 1139 1258

Operating Cash flow 150 126 269 145 140

Free Cash flow 44 (96) 280 (62) (98)

EBITDA margin (%) 18.8 20.4 20.4 22.7 23.6

RoE (%) 18.6 26.1 23.0 20.4 23.2

RoCE (%) 26.9 33.6 29.6 28.7 33.5

D/E (x) 0.0 - - 0.0 0.0



Sector IT



Bloomberg MTEL IN



Face value Rs10

M-Cap Rs6.1bn/$93.3mn



Sep ’15 Jun ’15 Mar ’15

Promoter 42.8 21.7 21.7

–Pledged 2.6 2.6 2.2

FII 23.8 21.8 21.2

DII 1.1 1.3 1.7

Others 32.3 34.1 34.3




Plastiblends India

Capacity expansion to spur growth

Background: Plastiblends India Ltd is India’s largest producer and exporter of colour and additive masterbatches (MB) and thermoplastic compound for the plastic processing industry. With facilities located at Daman and Uttarakhand, it has annual manufacturing capacity of over 75,000tpa. It has strong global aspirations and already made its presence felt in European, African, Latam and Asian markets.

Capacity expansion to serve increasing demand: It has planned Greenfield expansion near Surat. The addition would be 100,000tpa, with a total outlay of Rs1.5bn in three phases – phase I of 30,000mt would be completed by Apr 2016 with an outlay of Rs650mn and expansion would be funded via internal accruals and debt.

Diverse clientele, focus more on export market: It supplies products (>750 varieties) to across industries (FMCG, Agri, Electronics and Telecommunication, Textile and Auto). It also has a strong presence in the overseas markets; current revenue from exports is ~30% and PIL is focusing to bring it to 50% in two to three years.


India’s MB industry size by volume in FY15 was 200,000tpa and it is expected to reach 350,000tpa by FY20.

Top 10 customers contribute <10% of the revenue and the single-largest customer gives a revenue of Rs50mn. It also supplies additive MB to Reliance Industries.

To increase exports to 50% from current 30%, it focusing more on the US and Latam markets. Recently, it made inroads into Turkey’s market.

It has the largest MB capacity in India, while the second-largest are Poddar Pigments (20,000tpa) and Clariant Chemicals (20,000tpa).

MB imports from China posses quality and consistency concerns. Organised players’ secondary option is Chinese MB.

Poddar Pigment is mainly focused on the textile industry (fibre and filaments), where PIL is aiming to expand now.

Key financials


Sales 2,769 3,411 4,090 4,658 4,944

EBITDA 305 325 329 507 527

PAT 180 167 154 271 300

EPS (Rs) 13.7 12.3 11.2 20.1 22.0

Debt 474 493 575 311 203

Net worth 953 1,068 1,168 1,367 1,576

Operating Cash flow (131) 106 41 372 367

Free Cash flow (99) 34 (37) 331 169

EBITDA margin (%) 10.2 8.9 7.9 10.2 10.0

RoE (%) 20.9 16.5 13.8 21.5 20.4

RoCE (%) 20.5 18.0 16.4 25.4 24.9

D/E (x) 0.4 0.5 0.5 0.4 0.2


Systematix


Sector Plastic - Masterbatches


Stock Info


Bloomberg PBL IN



Face value Rs5




Sep ’15 Jun ’15 Mar ’15

Promoter 62.1 61.7 61.8

–Pledged - - -

FII 1.8 1.8 1.8

DII 0.05 0.07 0.07

Others 36.0 36.3 36.4





Prince Pipes and Fittings Pvt Ltd

A robust growth story

Background: Established in 1970, Prince Piping Systems Ltd (PPSL) is promoted by Jayant Chheda and is one of India’s leading player in the Rs100bn PVC pipes and fitting industry. Currently, the company has five plants in South, West and North India (165,000mtpa).

Capacity break-up: Pipes capacity: Dadra – 65,000mtpa, Kohlapur – 19,000mtpa and Chennai – 38,000mtpa. Fittings capacity: Athal – 15,000mtpa and Haridwar – 28,000 mtpa.

Diverse product offerings: The company’s product offerings include plumbing systems, agricultural systems, rain water harvesting, bore well systems, valves & taps, faucets and solvent cement. Its product portfolio caters mainly to above-the-ground products such as hot & cold water supply and soil & drainage systems. It distributes products through a network of more than 2,500 exclusive dealer-partner channels and a retailer base of more than 10,000.

Technology partnership to increase presence and revenue: The company has tied up with the world’s leading engineered polymer solutions brand ‘Trelleborg’ to enhance the plumbing market. To cater to increasing demand, the group has come up with an exclusive venture in the Eastern market (UltraFit SWR Systems) with Forsheda Seals. The operations will include the supply of latest version of pipes and fittings, keeping in view the national perspective of the market.

Setting up plant at West Bengal: The company will undertake a Greenfield expansion at West Bengal to expand its reach, with a total outlay of ~Rs1bn. This facility would be operational by FY17. Current revenue from the Eastern region is ~6% of total sales and this is expected to grow after the expansion.


FY15 revenue of Rs10bn and is expected to reach Rs12.5bn in FY16, with OPM of ~10%.

70% of the revenue comes from piping and 30% from the fittings business.

Industry-wise revenue break-up: 43% from plumbing, 36% from agriculture and 21% from sewerage.

Region-wise revenue break-up: North 35%, South 33%, West 26% and 6% in East.

The company is planning to expand into the high-growth Oriented Polyvinyl Chloride (OPVC) segment, which will help it tap the high water pressure segment up to 25 bar. The only hurdle is fittings not being available with OPVCs.

The current capacity utilisation is at 65%, which is at par with industry.

Management’s target is to clock revenue of Rs20bn by FY20.

Systematix




PRIVATE


Ratnamani Metals and Tubes

Multifaceted niche offering

Background: Ratnamani is the largest manufacturer and exporter of high-end applications: Stainless Steel (SS) seamless tubes/pipes and Stainless Steel welded tubes/pipes. It is also one of the leading manufacturer and exporter of Carbon Steel (CS) welded pipes, and 3 layer PE and fusion bonded epoxy coated pipes. Industrial steel pipes business is divided into two segments: SS pipes (>40% market share) and CS pipes. RMT is present in a diverse range of industries, including Chemical, Petrochemical, Refinery, Fertiliser, Thermal Power, Oil & Gas and Water Distribution.

Leader in SS tubes in India: It is the largest maker of stainless steel tubes and pipes, with a market share of >50% in critical application products. World-over, it is one of the few manufacturers of welded cold-drawn and seamless duplex stainless steel tubes used in critical applications in power (nuclear and thermal) and petrochemical industries. RMT is the sixth-largest maker of CS pipes and tubes in India.

Future demand scenario looks bright: The global pipe demand is expected to reach $420bn in the next two to three years from ~911 projects across the globe (~79 in Asia) – source Simdex. It is well poised to fulfill the demand from customers with a SS pipe capacity of 28,000tpa and a carbon steel pipe capacity of 350,000tpa.


In 2QFY16, it bagged an order from L&T to supply CS pipes worth Rs5bn and the order will executed by June 2017.

Capex: Hot extrusion facility for bigger dia seamless SS pipes and matching cold finishing capacities (work already started, expected to be over fully by 2019-20). Total expected capex of Rs4bn.

O&G segment to remain slow, water segment is gaining traction. Huge orders are expected from Telengana, MP, TN and Gujarat for water management.

Recently, it bagged a RIL order (Rs750mn) of 490kms ethylene pipeline, and this would be the first ethylene pipeline in India.

Key financials


Sales 8,137 12,217 12,011 13,530 16,768

EBITDA 1,722 2,153 2,561 2,704 3,259

PAT 832 1,114 1,360 1,428 1,734

EPS (Rs) 17.5 23.5 28.6 29.8 36.0

Debt 2,553 2,898 1,355 811 388

Net worth 4,370 5,325 6,467 7,665 9,094

Operating Cash flow 919 861 2,359 1,595 1,485

Free Cash flow 543 105 1,765 736 853

EBITDA margin (%) 19.6 16.7 20.1 18.8 18.4

RoE (%) 20.8 23.0 23.1 20.2 19.1

RoCE (%) 19.2 22.8 26.6 27.6 28.6

D/E (x) 0.7 0.6 0.4 0.2 0.0


Systematix


Sector Steel Pipes


Stock Info


Bloomberg RMT IN



Face value Rs2




Sep ’15 Jun ’15 Mar ’15

Promoter 60.3 60.0 59.9

–Pledged - - -

FII 12.5 12.5 12.3

DII 1.0 0.6 0.5

Others 26.2 26.8 27.2





Shree Baidyanath Ayurved Bhawan (P) Ltd

Sidhayu to boost overall growth

Background: Established in 1917, Shree Baidyanath Ayurved Bhawan (P) Ltd (SBAB) has become one of India’s most respected company in re-establishing the ancient knowledge of ayurveda with modern research and manufacturing techniques. With over 700 ayurvedic products manufactured across 10 centers, SBAB manufactures the largest range of ayurvedic products in the world. It distributes its products through distributors (+10,000) and exclusive showrooms (+3,500) across the world to countries like US, UK, Italy, Germany. With an increasing focus on natural products by consumers, SBAB is well placed to encash this opportunity.

Production facilities are best-in-class for quality ayurvedic products: The company manufactures over 700 formulations to meet the ever-increasing demands for Baidyanath products. State-of-the-art technology, a well-trained manpower and standard practices ensure that its products deliver the goodness of ayurveda.

New initiatives: The company in the recent past launched its products under a new brand “Sidhayu”. The new business would mainly focus on lifestyle element products.

Key points on “Sidhayu”

Current revenue is Rs7.5bn of which Rs1bn comes from allied businesses and Rs750mn from Ayurvedic products sale.

PAN India licences, few in European nations and in the process of getting licences in other countries too.

All current sales are from the domestic market, with only Rs30-40mn from Romania.

Products are mostly OTC, with few pharma products.

In the pharma segment, it has a presence in three states -- Maharashtra (mainly Vidharbha), MP and Chhattisgarh.

The products of both Baidyanath and Sidhayu are non-competing in nature. Sidhayu’s strategy is to focus on a product that can be a big winner for the overall growth of the company, than diversify into many products. The key diseases that Baidyanath is currently focusing on are Piles, Constipation, Pain management, Ayurvedic pediatric medicines

Key financials

YE Mar (Rs mn) FY11 FY12 FY13 FY14

Sales 3,240 3,514 3,796 4,176

EBITDA 234 251 250 230

PAT 100 101 108 101

Debt 530 83 41 82

Net worth 976 1075 1180 1254

Operating Cash flow (16) 198 327 185

EBITDA margin (%) 7 7 7 6

RoE (%) 10.2 9.4 9.1 8

RoCE (%) 13.2 18.4 17.5 14.5

D/E (x) 0.5 0.1 - 0.1



PRIVATE




Simplex Infrastructures

Focus on working capital recovery

Background: Simplex Infrastructures Ltd (Simplex) promoted by the Mundhra family and with more than nine decades of experience in civil construction, has successfully executed 2,800 projects in India and abroad across verticals of piling, industrial, building & housing, power generation and transmission, marine, urban infrastructure, roads and railways. Order book as of Sept 2016 at Rs149bn (2.5x TTM revenue) is diversified across 211 contracts. 83% of the orders are from domestic market and 17% from overseas geographies. In terms of asset ownership, Simplex has restricted to small stakes in a road project (Rs650mn) and a transmission line project (Rs300mn).

Industry overview: Given the strong push from the government for infrastructure development, traction has improved for tenders in power transmission, railways, water & sewage and urban infra projects. The bid pipeline of Rs361bn is equally spread between domestic and foreign orders, and segment-wise, power comprises 27%, followed by roads at 11% and railways at 25%.


YTDFY16 order accretion is at Rs19bn and L1 in orders worth Rs34.3bn.

The net exposure to debtors is at Rs32bn, spread across 509 clients, of which only 2 clients have outstanding above Rs1bn.

Simplex has recovered Rs3.4bn from old debtors YTD and expects to recover an additional Rs2bn by Mar 2016. Led by payment delays, the working capital cycle has risen to 210 days in 1HFY16 v/s 126 days in FY11.

Management targets to recover debtors of Rs5bn/Rs7bn in FY16/17 respectively, which in turn can lead to reduction in working capital to 120 days by FY18.

Standalone debt is at Rs32.2bn and expects to reduce it by Rs20bn by FY18. Average cost of debt is expected to reduce by 50bps by FY16e from 11% at present.

Inspite of an improvement in business prospects, the consistent revenue growth of 15-20% over the next 2-3 years is contingent on an improvement in payment cycle, which in management’s view is 9-12 months away.

Management expects the operating margin to remain stable at 11%; business traction is improving in the overseas markets.

Key financials


Sales 46,723 58,976 58,208 54,993 55,412

EBITDA 4,593 4,587 4,681 5,705 5,881

PAT 1,232 892 598 606 624

EPS (Rs) 24.8 18.0 12.0 12.2 12.6

Debt 16,607 20,939 26,556 29,074 31,952

Net worth 10,777 12,004 12,840 13,978 14,422

Operating Cash flow (922) (1,865) (4,447) (1,751) (2,734)

Free Cash flow (3,294) (4,743) (5,078) (2,891) (3,141)

EBITDA margin (%) 9.8 7.8 8.0 10.4 10.6

RoE (%) 12 7.8 4.8 4.5 4.4

RoCE (%) 11.4 10.8 8.8 8.5 8.2

D/E (x) 1.5 1.7 2.1 2.1 2.2


Systematix




Sector Construction


Stock Info


Bloomberg SINF IN



Face value Rs2

M-Cap Rs16bn/$246mn



Sep ’15 Jun ’15 Mar ’15

Promoter 55.9 55.9 56.4

–Pledged - - -

FII 6.1 5.8 5.6

DII 23.8 24.2 24.4

Others 14.2 14.0 13.6



Siyaram Silk Mills

Slow and steadily leads the race Background: Siyaram Silk Mills (SML) is one of the largest and oldest producers of blended high fashion suiting, shirting fabric, apparels, furnishing fabrics. SML has a strong brand presence across the country, with over 1,600 dealers and 500 agents supplying to ~40,000 outlets.

Entry into women’s clothing: It has recently launched the brand ‘Siya’- its women clothing. Roping in celebrities like Parineeti Chopra and Karishma Kapoor to endorse the brand, SML expects to post sales of Rs2bn (Rs500mn in FY15) in the coming years.

JV with Italian brand Cadini: To expand the premium products offerings, it has bought ownership rights to manufacture and market Cadini brand in India and Sri Lanka. The company expects this brand to contribute Rs1bn by FY17.

Strong presence in Tier II/III cities: Reducing its dependence on the competitive market in Tier I cities like Mumbai and Delhi, SML’s management has increased its focus on venturing further into Tier II and III cities. Currently, 70% of its sales are in Tier II cities and below, showcasing the brand value and recognition in these cities.


Festive season was not good across the states, high hopes from impending wedding season.

Capex: Rs2bn for two years -- Rs500mn for readymade, Rs1bn processing and Rs250mn for maintenance.

Debt as of Sept 30, 2015 stands at Rs3bn, of which Rs700mn is long-term and remaining is working capital loan.

Exports stand at Rs1.25bn in FY15; growing at 10-15% in the last few years. Margin profile is very much similar to the domestic market.

Advertising and branding expenses to remain at 4-5% of sales.

FY15 revenue breakup: 74% fabric, 18% readymade, 3% yarn, 3% Siya and 2% furnishing.

Key financials


Sales 10,174 11,121 12,924 16,102 19,019

EBITDA 1,188 1,275 1,288 1,559 1,904

PAT 575 567 550 636 788

EPS (Rs) 60.3 59.3 57.4 66.5 82.0

Debt 2,658 2,374 2,782 3,140 3,094

Net worth 2,199 2,671 3,141 3,696 4,350

Operating Cash flow (232) 609 681 655 596

Free Cash flow (740) 314 (292) 77 357

EBITDA margin (%) 11.7 11.4 9.9 9.7 10.0

RoE (%) 29.5 23.3 18.9 18.6 19.6

RoCE (%) 22.6 20.3 18.6 19.0 20.0

D/E (x) 1.2 1.0 0.9 0.9 0.8



Sector Textile

CMP: Rs1,072 Not Rated


Bloomberg SIYA IN



Face value Rs10

M-Cap Rs10bn/$136mn



Sep ’15 Jun ’15 Mar ’15

Promoter 67.1 67.1 67.1

–Pledged - - -

FII 0.7 0.8 0.9

DII 6.3 5.8 5.7

Others 25.9 26.2 26.2





Sohan Lal Commodity Management Driving infra and capital efficiency in agri sector

Background: Sohan Lal Commodity Management Pvt Ltd (SLCM) is an ISO certified agri-logistics company, with a presence in India and Myanmar, offering end-to-end solutions across the entire agri value chain to customers.

The company has a network of over 800 warehouses, presence in more than 20 states across the country, with expertise in handling over 363 commodities of more than Rs9,000mn. Its customers include farmers, processors, traders, commodity exchanges and the government.

SLCM’s business

The company has three verticals: a) Warehousing and inventory management, b) Agri Financing through ‘Kissandhan’ NBFC and c) Procurement.

SLCM operates on an asset light model and has access to more than 950 mandis of ~1,100 active mandis in the country.

It is the only warehousing company in India accredited with more than one commodity stock exchange (MCA, ACE and NMCE).

The group has also been licensed by the Directorate of Plant Protection, Quarantine & Storage, Ministry of Agriculture & Cooperation, Government of India to carry out fumigation services.

At the procurement side, SLCM is expected to grow volume at a CAGR of ~38% from FY15-18 and also is looking to enhance market share in management & procurement of cotton in the next three years.

On the Agri Financing side, the company is expecting to leverage its first-mover advantage to maintain the leadership position in India.

Shareholding & subsidiaries

The company has three subsidiaries -- North End Foods Marketing Pvt Ltd (procurement arm), Kissandhan (agri-financing) and SLCM Ltd (Myanmar operations).

Consolidated financials

SLCM had a total revenue of Rs580mn in FY15, with net revenue, EBITDA and PAT CAGR over FY11-15 being at 35%, 60% and 58% respectively.

Of the total revenue, Warehousing contributes to 29%, Procurement 51% and rest by NBFC and others.

The company aims to grow procurement volume at a CAGR of ~38% from FY15-18 and warehousing volume at a CAGR of ~68% over FY14-18.

SLCM aims to implement the cross-geographical procurement model with the expansion of operations in Myanmar and entering a new market -- Malawi.


PRIVATE


Sonata Software

Operating matrix improves

Background: Sonata Software (SSL) is a three-decade old company that transformed from a captive IT division of a chemical company to a global services partner of choice for its Fortune 500 clients across Travel, Retail & CPG, and ISV (Independent Software vendors) verticals. It has three key business offerings – Product engineering, Enterprise IT and Technology Infrastructure. It is $250mn+ in sales with a total headcount of ~3,000 associates.

Balanced business mix: SSL provides product engineering and enterprise IT solutions to its international clients accounting for 43% of the company’s revenue. However, the margins in this segment are strong and accounts for 79% of total company’s profit. SSL offers outsourced product development and value-added-services to ISVs. It currently has two key solutions – Rezopia (Travel SAAS) and Halosys (enterprise mobility tool). The other segment is wherein the company provides IT infrastructure consulting, licensing and deployment services in the domestic market. This business accounts for 57% of the revenue but mere 20% of the total profit for the company. It has tied up with several leading technology providers such as Microsoft, SAP, Oracle, Appcelerator and helps customers in their end-to-end customised, engineering and implementation of the same. This business has thin margins of 2-3% but high RoE of 35%+.

Commentary on outlook strong: The high base effect of 1HFY15 has led to a bit underperformance in 1HFY16. It also had a client specific issue, wherein the change in the CEO impacted growth. Rest of the portfolio looks good, barring the client. It expects flat growth in 3Q and a gradual pick-up in momentum from 4Q onwards. Also, expects revenue to double by FY20. Travel is seeing more traction in Europe and the Middle East, while Retail is doing well across geographies. The current level of OPM of 26% is not sustainable and may get normalised at ~22% over the next few quarters.


In Infrastructure business, revenue is not the parameter of growth.

It is a negative working capital business with no bad debt in the business.

Analytics account for 7% of revenue; Digital component including other peripherals contributes ~26% of total revenue. The company is bullish on Halosys and expects to gain traction in the region.

Key financials


Sales 2,523 2,254 2,328 3,337 4,669

EBITDA 739 311 335 764 1,602

PAT 619 149 158 538 1,175

EPS (Rs) 5.6 1.3 1.2 4.5 9.8

Debt 0 0 168 57 53

Net worth 3,139 2,987 3,097 3,193 3,573

Operating Cash flow 452 72 222 583 834

Free Cash flow (220) (62) 77 (383) (681)

EBITDA margin (%) 29.3 13.8 14.4 22.9 34.3

RoE (%) 20.4 4.9 5.2 17.1 34.7

RoCE (%) 21.2 6.5 7.5 21.2 44.9

D/E (x) - - 0.0 0.0 0.0


Systematix


Sector IT Services

CMP: Rs169 Not rated

Stock Info


Bloomberg SSOF IN



Face value Rs1




Sep ’15 Jun ’15 Mar ’15

Promoter 32.4 32.4 32.4

–Pledged 1.8 1.8 1.8

FII 11.1 9.9 8.2

DII 0.7 0.5 0.3

Others 55.8 57.3 59.2




Sterlite Technologies

Focus returns to telecom business Background: Sterlite Technologies is a leading fiber optic cable manufacturer in India. In the last five years, it also ventured into power conductor manufacturing and power distribution business but is now hiving off the same from the company. The power business is now getting spun off and would go private, which would mean a shareholder can exit this business at Rs22 per share on mirror shareholding basis or can hold the equity in the non-listed entity. The balance sheet is divided on the basis of gross assets deployed.

Telecom business: The residual business that would continue to remain listed is only focused on Telecom and has three segments -- Cable (Fiber and Cable), Project services (System integration) and Telecom IT Services. The latter segment is recently created through the acquisition of a company called Elitecore - an end-to-end network player that offers operations/business support services company- for Rs1.8bn at 1.2x of sales, 10x EV/EBITDA, NP of Rs100mn in September 2015.

Project services: It bagged a large Rs16bn order from BSNL for end-to-end deployment, including design, engineering, implementation and maintenance of a part of network for spectrum (NFS) project to be executed by Dec 2016. The opportunity is huge in the segment and would yield 10%+ OPM, with expected collection period of ~120 days. We believe this business could be a game changer for the company as it has very high capital conversion factor of 3, compared to 0.5x in the case of fiber cable business.


With the integration of Elitecore, the company is looking to establish itself as an end-to-end product and services provider for the telecom sector.

Earlier, with only fiber/cables as a product, the company was just catering to 6% of the telco’s capex. But with new offerings, it is hopeful to grow the segment revenue to Rs3bn and net profit to Rs500mn by FY18.

The telecom sector is growing at a rapid pace with growing usage of data. It is a supplier of both optic fiber and cables to all telcos. Ex: Recent announced capex program of Rs600bn by Bharti Airtel.

Key financials


Sales 22,626 27,275 33,537 27,263 30,301

EBITDA 2,816 2,232 2,873 2,712 3,860

PAT 1,405 438 475 502 842

EPS (Rs) 3.9 1.1 1.2 1.2 2.0

Debt 6,198 6,645 10,689 13,131 16,927

Net worth 10,359 11,489 11,830 12,183 12,427

Operating Cash flow 738 3,381 2,788 2,626 2,552

Free Cash flow 1,936 (167) 2,614 798 1,959

EBITDA margin (%) 12.2 8.0 8.3 9.5 11.6

RoE (%) 14.4 4.0 4.1 4.2 6.1

RoCE (%) 15.2 8.5 9.7 7.0 9.7

D/E (x) - - 0.1 0.4 0.7


Systematix


Sector Telecom Equipment


Stock Info


Bloomberg SOTL IN


52-wk High/Low Rs109/48.5

Face value Rs2

M-Cap Rs41.7bn/ $641mn



Sep ’15 Jun ’15 Mar ’15

Promoter 54.8 54.8 54.8

–Pledged - - -

FII 3.8 2.9 2.9

DII 11.2 10.3 9.3

Others 30.2 32.0 32.9




Symbiotec Pharmalab

Focus on cortico-steriod, s-hormone for global play

Background: Incorporated in 2002, Symbiotec Pharmalab is a leader in the development and manufacturing of cortico-steroids and steroid-hormone and other active pharmaceutical ingredients for the pharmaceutical companies in India and abroad. The company has two manufacturing units -- at Rau and Pithampur, Indore. Symbiotec’s manufacturing facilities are certified by USFDA, EUGMP and WHO-GMP. The company has recently commissioned large-scale fermentation (30,000 ltrs/day at SEZ) and chemical synthesis plants, which will help it scale up revenue. Symbiotec is also increasing its focus on the regulated markets like the US and the EU through exclusive tieups with generic pharmaceutical companies and third party distributors for key products.

Financials: In FY15, Symbiotec recorded a revenue of Rs4.48bn, posting a growth of 37% yoy. Over the last four years, the company has witnessed a strong revenue growth of over 30%. Steroids and hormones businesses contribute 83% and 17% respectively. Overseas business contributes 50% of the revenue.


It has made significant investments (Rs1.5bn with a payback of 3.5 years) in backward integration to manufacture all intermediates, benefits of which will start from the next fiscal.

New capital received of Rs1.10bn from financial investors to go towards forward integration through formulations initiative in the segments of topical, injectable, oral solids (including some hormonal pills). 15 formulations are planned for the next five years. Integrations will help improve margins by 7-8%.

Top 15 consumers contribute 65%, GSK being the largest. GSK had its own manufacturing but closed it and is now procuring from Symbiotec and is planning to procure for its global operations.

The company is focused on the regulated markets of US and Europe. This year itself, the EU business has almost doubled. It has 20-22 filings in US and Europe, which will drive growth on approvals.

Key financials

YE Mar (Rs mn) FY13 FY14

Sales 2,332 3,267

EBITDA 348 437

PAT 77 180

EPS (Rs) 12.1 19.1

Debt 36 255

Net worth 972 2,139

Operating Cash flow 188.4 322

EBITDA margin (%) 14.8 13.4

RoE (%) 7.9 8.4

RoCE (%) 30.4 15.9

D/E (x) - 0.1


Systematix



PRIVATE


Thyrocare Technologies

On the runway of growth flight

Background: Established in 1995, Thyrocare is India's first fully automated diagnostic laboratory and currently has a strong presence in more than 2,000 cities and towns across India and globally. It has a fully automated diagnostic laboratory setup covering over 200,000sqft floor space and can process over 40,000 specimens and over 200,000 clinical chemistry investigations per night. It has a centralised processing laboratory (CPL) in Mumbai for all the esoteric tests and a regional processing laboratory in major metro cities of India and other parts of Asia. It is one of the first Indian diagnostic laboratories to obtain international quality accreditations like ISO 9001-2000 rating as early as 2001, which is now escalated to ISO 9001:2008; National Accreditation Board for Testing and Calibration Laboratories in 2005 and College of American Pathologists certification in 2007. Through its subsidiary (Nuclear Healthcare Group), the company also provides nuclear medicine diagnostic solutions and Positron Emission Tomography-Computed Tomography fusion imaging clinical services to cancer patients. The diagnostic industry in India is expected to grow to $17bn by 2021 (from current $3.4bn in 2011).


The overall healthcare industry is expected to see pricing pressure, which will also impact the diagnostic industry; hence resource optimization would be key to success

Thyrocare’s business model is built on a lean cost structure and volume play, which helps it to survive competition

The contribution of thyroid segments to decline from ~32% in FY12 to 20% in FY16 and ~8% in FY20, while the contribution of non-thyroid will rise from 24% in FY12 to 32% in FY20, and the contribution from preventive healthcare will increase from 40% in FY12 to 60% in FY20

It is planning to open 50 new labs in FY16 and 300 labs in FY17. Each lab is expected to have an investment of ~Rs100mn.

Key financials

YE Mar (Rs mn) FY13 FY14

Sales 1,343 1,499

EBITDA 812 749

PAT 566 457

EPS (Rs) 45.9 36.8

Debt 317 315

Net worth 1,606 2,063

Operating Cash flow 459 463

EBITDA margin (%) 53.4 48.0

RoE (%) 35.2 22.1

RoCE (%) 40.5 28.8

D/E (x) 0.2 0.2



Systematix


PRIVATE



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DISCLOSURES/ APPENDIX

I. ANALYST CERTIFICATION

We, analyst(s) hereby certify (1) that the views expressed in this presentation accurately reflect the personal views of the analysts(s) about any or all of the subject securities or issuers as referred in this presentation, (2) No part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this presentation by Systematix Shares & Stocks (I) Limited or its Group/associates companies. (3) has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations.

Disclosure of Interest Statement Update

Analyst(s) holding in the stock No

Served as an officer, director or employee No

II. ISSUER SPECIFIC REGULATORY DISCLOSURES, Unless specifically mentioned in Point No. 9 below:

1. The Research Analyst(s), Systematix Shares & Stocks(I) Limited (SSSIL), Associate of Analyst or his relative does not have any financial interest in the company(ies) covered in this report.

2. The Research Analyst, SSSIL or its associates or relatives of the Research Analyst affiliates collectively do not hold more than 1% of the securities of the company (ies) covered in this report as of the end of the month immediately preceding the distribution of the research report.

3. The Research Analyst, his associate, his relative and SSSIL do not have any other material conflict of interest at the time of publication of this research report.

4. The Research Analyst, SSSIL and its associates have not received compensation for investment banking or merchant banking or brokerage services or for any other products or services from the company(ies) covered in this report, in the past twelve months.

5. The Research Analyst, SSSIL or its associates have not managed or co-managed in the previous twelve months, a private or public offering of securities for the company (ies) covered in this report.

6. SSSIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party, in connection with the research report.

7. The Research Analyst has not served as an Officer, Director or employee of the company (ies) covered in the Research report.

8. The Research Analyst and SSSIL has not been engaged in market making activity for the company(ies) covered in the Research report.

9. Details SSSIL, Research Analyst and its associates pertaining to the companies covered in the Research report:

Sr. No.

Particulars Yes / No.

1 Whether compensation has been received from the company(ies) covered in the Research report in the past 12 months for investment banking transaction by SSSIL

No

2 Whether Research Analyst, SSSIL or its associates or relatives of the Research Analyst affiliates collectively hold more than 1% of the company(ies) covered in the Research report

No

3 Whether compensation has been received by SSSIL or its associates from the company(ies) covered in the Research report No

4 SSSIL or its affiliates have managed or co-managed in the previous twelve months a private or public offering of securities for the company(ies) covered in the Research report No

5 Research Analyst, his associate, SSSIL or its associates have received compensation for investment banking or merchant banking or brokerage services or for any other products or services from the company(ies) covered in the Research report, in the last twelve month

No

10. There are no material disciplinary action that been taken by any regulatory authority impacting equity research analysis activities.

STOCK RATINGS

BUY (B): The stock's total return is expected to exceed 20% over the next 12 months. ACCUMULATE (A): The stock's total return is expected to be within 10-20% over the next 12 months. HOLD (H): The stock's total return is expected to be within 0-10% over the next 12 months. SELL (S): The stock's total return is expected to give negative returns over the next 12 months. NOT RATED (NR): The analyst has no recommendation on the stock under review

INDUSTRY VIEWS

ATTRACTIVE (AT): Fundamentals/Valuations of the sector are expected to be attractive over the next 12-18 months. NEUTRAL (NL): Fundamentals/Valuations of the sector are expected to neither improve nor deteriorate over the next 12-18 months. CAUTIOUS (CS): Fundamentals/Valuations of the sector are expected to deteriorate over the next 12-18 months. III. DISCLAIMER

The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy completeness or correctness.

This document is for information purposes only. This report is based on information that we consider reliable, but we do not represent that it is accurate or complete, and one should exercise due caution while acting on it. Descriptions of any company or companies or their securities mentioned herein are not complete and this document is not, and should not be construed as an offer or solicitation of an offer to buy or sell any securities or other financial instruments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. All opinions, projections and estimates constitute the judgment of the author as on the date of the report and these, plus any other information contained in the report, are subject to change without notice. Prices and availability of financial instruments also are subject to change without notice. This report is intended for distribution to institutional investors.


This report is not directed to or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject to SSSIL or its affiliates to any registration or licensing requirement within such jurisdiction. If this report is inadvertently send or has reached any individual in such country, especially, USA, the same may be ignored and brought to the attention of the sender. Neither this document nor any copy of it may be taken or transmitted into the United State (to U.S.Persons), Canada, or Japan or distributed, directly or indirectly, in the United States or Canada or distributed or redistributed in Japan or to any resident thereof. Any unauthorized use, duplication, redistribution or disclosure of this report including, but not limited to, redistribution by electronic mail, posting of the report on a website or page, and/or providing to a third party a link , is prohibited by law and will result in prosecution. The information contained in the Report is intended solely for the recipient and may not be further distributed by the recipient to any third party.

SSSIL generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, SSSIL generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein. Our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. The views expressed in this research report reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The compensation of the analyst who prepared this document is determined exclusively by SSSIL however, compensation may relate to the revenues of the Systematix Group as a whole, of which investment banking, sales and trading are a part. Research analysts and sales persons of SSSIL may provide important inputs to its affiliated company(ies).

Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or price, or the income derived from them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies effectively assume currency risk. SSSIL, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this report including but not restricted to fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc

SSSIL and its affiliates, officers, directors, and employees subject to the information given in the disclosures may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation (financial interest) or act as a market maker in the financial instruments of the company (ies) discussed herein or act as advisor or lender / borrower to such company (ies) or have other potential material conflict of interest with respect to any recommendation and related information and opinions. The views expressed are those of the analyst and the Company may or may not subscribe to the views expressed therein.

SSSIL, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall SSSIL, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. The Company accepts no liability whatsoever for the actions of third parties. The Report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the Report refers to website material of the Company, the Company has not reviewed the linked site. Accessing such website or following such link through the report or the website of the Company shall be at your own risk and the Company shall have no liability arising out of, or in connection with, any such referenced website

SSSIL shall not be liable for any delay or any other interruption which may occur in presenting the data due to any technical glitch to present the data. In no event shall the SSSIL be liable for any damages, including without limitation, direct or indirect, special, incidental, or consequential damages, losses or expenses arising in connection with the data presented by SSSIL through this presentation.

Neither SSSIL, nor any of its other group companies or associates, shall be responsible for any decisions taken on the basis of this report. Investors are advised to consult their Investment and Tax consultants before taking any investment decisions based on this report.

Systematix Shares & Stocks (I) Ltd.CIN : U65993MH1995PLC268414 BSE SEBI Reg. No.: INB/F011132736 (Member Code: 182) | NSE SEBI Reg. No.: INB/F/E231132730 (Member Code: 11327) | MCX-SX SEBI Reg. No.: INB/F261132733 (Member Code: 17560) | Depository Participant: IN-DP-CDSL-246-2004 (DP Id: 34600) | PMS : INP000002692 | AMFI : ARN - 64917|Research Analyst : INH200000840 Regd. office address: 2nd floor, J. K. SomaniBldg, British Hotel Lane, Fort, Mumbai - 400001 Corporate office address: A 603-606 , The Capital, BKC, Bandra (E), Mumbai, India - 400051