india daily, august 07, 2018 - kotak securities · the curious case of the indian aviation...

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

Contents

Special Reports

Strategy

Strategy: The curious case of the Indian aviation industry

Daily Alerts

Results

Adani Ports and SEZ: The juggernaut rolls on

Carborundum Universal: Walking a tightrope

Narayana Hrudayalaya: New centers' losses continue to drag EBIDTA

Ujjivan Financial Services: Cost growth follows loan growth

Results, Change in Reco

Max Financial Services: Steady performance

Sector alerts

Consumer Products: Month in review - June 2018: Aggression in detergents; stable otherwise

Media: TV viewership update - Zee leads regional GECs, Sun stabilizes

Technology: Strong bookings for Indian IT - an indicator of growth acceleration?

INDIA DAILY August 7, 2018 India 6-Aug 1-day 1-mo 3-mo

Sensex 37,692 0.4 5.7 7.1

Nifty 11,387 0.2 5.7 6.3

Global/Regional indices

Dow Jones 25,502 0.2 4.3 4.7

Nasdaq Composite 7,860 0.6 2.2 8.2

FTSE 7,664 0.1 0.6 1.3

Nikkei 22,562 0.2 3.6 0.4

Hang Seng 27,820 0.5 (1.8) (7.3)

KOSPI 2,288 0.1 0.7 (7.1)

Value traded – India

Cash (NSE+BSE) 360 346 333

Derivatives (NSE) 5,390 4,566 3,676

Deri. open interest 3,748 3,319 3,556

Forex/money market

Change, basis points

6-Aug 1-day 1-mo 3-mo

Rs/US$ 68.8 1 18 167

10yr govt bond, % 8.1 1 (12) 10

Net investment (US$ mn)

3-Aug MTD CYTD

FIIs 59 (62) (475)

MFs 17 (14) 11,100

Top movers

Change, %

Best performers 6-Aug 1-day 1-mo 3-mo

SBIN IN Equity 309 3.1 19.9 25.2

RIL IN Equity 1,193 1.3 22.0 22.8

DABUR IN Equity 436 (0.2) 17.8 19.6

GCPL IN Equity 1,312 (1.2) 5.0 18.9

INFO IN Equity 1,361 (0.3) 5.9 15.9

Worst performers

AL IN Equity 118 0.0 (10.6) (28.5)

UT IN Equity 4 0.0 0.0 (26.1)

TTMT/A IN Equity 141 (1.4) (10.4) (25.4)

HDIL IN Equity 24 (2.8) 19.8 (24.7)

TTMT IN Equity 254 (1.7) (6.2) (24.2)

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

Sharp deterioration in the financials of the Indian airline companies

The financials of the leading Indian airline companies have deteriorated sharply over the past

two quarters (see Exhibit 1 for key quarterly financials of the listed airline companies for the

past 16-17 quarters) as the companies have struggled to raise prices to match the increase in

input (ATF) costs, which have jumped sharply led by (1) steep increase in global crude oil and

ATF prices and (2) the sharp depreciation in the INR.

Significant erosion in spreads is not very comforting for investors (and passengers)

The spreads (RASK less CASK) of the leading Indian airline companies (Indigo, Jet Airways and

SpiceJet) have collapsed over the past two quarters resulting in very weak financials for the

companies. Exhibit 2 shows the spreads of the listed airline companies for the past several

quarters. JETIN with 14.5% market share based on June 2018 data reported a whopping

`10.4 bn loss in 4QFY18 and it will likely report much higher losses in 1QFY19. Its net debt-to-

EBITDAR ratio (based on FY2018 EBITDAR and capitalization of lease rentals at 7X; 4QFY18

EBITDAR was negative) stood at 9X. Even INDIGO (the leader with 42% market share) was

barely profitable in 1QFY19. Its adjusted EBITDAR was just about sufficient to cover its lease

rentals. 1QFY19 adjusted EBITDAR declined 34% yoy and net income 97%. Air India (third-

largest player with 12% market share) presumably continues to make large losses.

Inability of the industry to raise prices to offset increase in input costs is quite surprising

We are surprised by the continued softness in yields of the listed Indian airline companies (see

Exhibits 3-5 for quarterly RPK and RASK of INDIGO, JETIN and SJET) despite strong growth in

domestic passenger volumes (see Exhibit 6 for the monthly growth in domestic passenger

volumes since January 2015). We note that average monthly volume growth for domestic

passenger traffic has been 21% over January 2015-June 2018 (CAGR of 19%), which is far

ahead of most consumer staple and discretionary products.

Yields have not even tracked inflation, which is quite remarkable

We note that yields of the leading airline companies have continued to languish for the past

few quarters and have not even kept pace with inflation, let alone the sharp increase in input

costs. Increased affordability in real terms may have contributed to the strong growth in

domestic passenger volumes of the past few years. However, we doubt that demand is so

vulnerable to modest changes in prices that airlines are scared to raise prices even modestly to

mitigate the impact of higher input costs.

Strategy India

The curious case of the Indian aviation industry. We are quite puzzled by the

inability of the Indian aviation companies to raise prices at a time of continued strong

growth in domestic passenger traffic. We note that the yields of the leading airline

companies have not even kept pace with inflation over the past two years, let alone the

sharp increase in input costs. The financials of the leading aviation companies have

deteriorated to worrisome levels while the industry grapples with irrational pricing.

INDIA

AUGUST 07, 2018

UPDATE

BSE-30: 37,692

QUICK NUMBERS

Combined EBITDAR

of the three listed

aviation companies

dropped 46%

between 4QFY17

and 4QFY18

INDIGO’s 1QFY19

spread (RASK –

CASK) at -`0.15

19% CAGR in

passenger volume

growth over

January 2015-June

2018

Sanjeev Prasad

Garima Mishra

Anindya Bhowmik

Strategy India

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Exhibit 1: Quarterly profits of airlines have declined sharply 4QFY18 onwards Key quarterly financials of aviation stocks, March fiscal year-ends, 2016-19 (Rs mn)

Source: Companies, Kotak Institutional Equities

Exhibit 2: Spreads (RASK - CASK) have declined sharply in the past few quarters Trend of quarterly spreads of aviation stocks, March fiscal year-ends, 2016-19 (Rs)

Source: Companies, Kotak Institutional Equities

1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19

Interglobe Aviation (Indigo)

Revenues 38,574 38,233 42,115 35,400 42,978 40,907 45,789 41,669 49,865 48,482 57,529 52,910 61,779 57,991 65,120

EBITDAR 12,733 14,030 15,742 8,721 16,699 15,085 15,279 9,677 14,408 13,322 19,507 15,574 19,357 10,821 10,313

EBITDA 7,808 8,554 10,045 2,702 10,136 8,296 8,152 1,956 6,245 5,080 10,970 7,381 9,915 890 (111)

PBT 7,506 8,751 9,229 1,607 9,223 8,177 7,467 1,765 6,021 6,189 11,243 7,645 10,716 1,662 313

PAT 5,296 5,747 6,389 1,132 6,503 5,838 5,918 1,398 4,873 4,403 8,111 5,515 7,620 1,176 278

RASK-CASK (Rs) 0.75 0.79 0.80 0.06 0.75 0.56 0.46 0.01 0.30 0.23 0.61 0.36 0.49 (0.08) (0.15)

Jet Airways

Revenues 46,856 47,723 50,510 50,645 52,201 52,580 54,440 52,856 51,389 54,532 55,111 54,491 56,489 56,266 60,862 59,249

EBITDAR 5,298 3,967 7,202 1,962 8,697 8,815 12,274 14,009 8,378 12,041 8,402 7,076 7,155 8,367 8,648 (1,784)

EBITDA 688 (730) 2,289 (3,406) 3,508 3,547 6,929 8,562 2,893 6,448 2,605 1,170 1,446 2,615 2,811 (7,649)

PBT (2,177) 698 631 (17,290) 2,217 876 4,671 3,972 259 1,031 3,052 6,024 535 496 1,653 (10,360)

PAT (2,177) 698 631 (17,290) 2,217 876 4,671 3,972 259 1,031 3,052 6,024 535 496 1,653 (10,360)

RASK-CASK (Rs) (0.30) (0.53) (0.21) (0.87) (0.07) (0.06) 0.29 0.23 (0.10) 0.22 (0.12) (0.20) (0.17) (0.07) (0.08) (0.92)

SpiceJet

Revenues 16,786 14,499 13,112 7,863 11,063 10,401 14,600 14,750 15,215 14,004 16,424 16,257 18,695 18,143 20,820 20,293

EBITDAR 2,022 (77) 88 428 2,608 1,888 5,267 3,398 4,519 3,180 4,177 3,152 4,593 3,975 5,685 3,676

EBITDA (721) (2,674) (2,063) (726) 1,000 180 2,973 906 1,924 1,116 1,748 634 2,284 1,558 3,022 695

PBT (1,241) (3,104) (2,750) 225 718 290 240 1,079 1,490 589 1,811 416 1,752 1,053 2,400 462

PAT (1,241) (3,104) (2,750) 225 718 290 240 1,079 1,490 589 1,811 416 1,752 1,053 2,400 462

RASK-CASK (Rs) (0.36) (0.78) (0.81) (0.53) 0.16 (0.18) 0.66 0.00 0.33 0.11 0.26 (0.01) 0.34 0.17 0.43 (0.03)

(1.2)

(0.8)

(0.4)

0.0

0.4

0.8

1.2

1Q

FY1

5

2Q

FY1

5

3Q

FY1

5

4Q

FY1

5

1Q

FY1

6

2Q

FY1

6

3Q

FY1

6

4Q

FY1

6

1Q

FY1

7

2Q

FY1

7

3Q

FY1

7

4Q

FY1

7

1Q

FY1

8

2Q

FY1

8

3Q

FY1

8

4Q

FY1

8

1Q

FY1

9

Interglobe Aviation Jet Airways SpiceJet

India Strategy

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 3: INDIGO's yields have remained stagnant for the past nine quarters Quarterly yields and RASK of Interglobe Aviation, March fiscal year-ends, 2017-19

Source: Company, Kotak Institutional Equities

Exhibit 4: JETIN's yields have declined over the past eight quarters Quarterly yields and RASK of Jet Airways, March fiscal year-ends, 2017-18


4.3

3.8 4.0 4.0

4.3 4.2

4.3

3.8 4.1

3.6

3.1

3.5 3.4

3.8

3.5

3.8

3.4 3.7

0

1

2

3

4

5

1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19

Yield (Rs/RPK) RASK (Rs)

6.4 6.7

6.3

5.7 5.9 5.8 5.9 5.6

5.1 5.3 5.2 5.0 4.9 4.8 4.8 4.7

0

1

2

3

4

5

6

7

8

1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18


Strategy India


Exhibit 5: SpiceJet's yields have remained stagnant over the past eight quarters Quarterly yields and RASK of SpiceJet, March fiscal year-ends, 2017-19


Exhibit 6: Average monthly passenger volumes growth has been 21% yoy since January 2015 Domestic passenger volumes and growth, calendar year-ends, 2015-18 (mn, %)

Source: DGCA, Kotak Institutional Equities

4.2

3.9 4.2

4.0

4.4

4.0

4.5 4.2

3.9

3.5 3.8

3.7

4.1

3.8

4.2 3.9

0

1

2

3

4

5

1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18


10

15

20

25

30

4

6

8

10

12

Jan

-15

Mar-

15

May-

15

Jul-1

5

Sep

-15

Nov-

15

Jan

-16

Mar-

16

May-

16

Jul-1

6

Sep

-16

Nov-

16

Jan

-17

Mar-

17

May-

17

Jul-1

7

Sep

-17

Nov-

17

Jan

-18

Mar-

18

May-

18

Passenger volumes (mn, LHS) Yoy growth (%, RHS)


1QFY19: Port volumes/revenues/EBITDA grow a healthy 9%/16%/17% yoy

ADSEZ reported another strong quarter for port operations with related revenues/EBITDA

growing 16/17% yoy. This is a reflection of strong 9% volume growth getting propped up by

FX (-36% US$ denominated) and price increases. The 9% volume growth was much ahead of

the 3% growth for all-India volumes and was driven by container volumes (grew 15% yoy) and

recovery in HMEL crude volumes. The growth was ahead of our estimate of 2% and propped

up by higher coal volumes (Mundra, Goa, Tuna, Dahej). The same more than compensated for

the weakness in Dhamra port where rake availability remains a drag. Reported results were

marred by MTM forex losses, a limited concern given long maturity profile of forex debt and

reasonable cover in the form of US$-denominated revenues.

SEZ business benefitted from the sale of 47 acres of land in YTD-FY2019 versus 83 acres sold in

FY2018. Logistics business suffered on account of limited rake availability, an issue the ADSEZ

aims to address by ordering new rakes on a long-term lease basis.

Retains guidance on business and balance sheet improvement

ADSEZ retained its volume guidance for 200 mn tons of FY2019. Here it is baking in (1) modest

growth in coal volumes beyond that from Mundra power plant, (2) sustained strong growth in

container segment and (3) new contracts at Mundra (~0.8 mn ton) and Dhamra (~0.4 mn ton).

Any shocks against guidance would have a cushion in (1) recent start of Mundra power plant

(4-5 mn ton buffer) and (2) Rs8-10 bn of port development income planned for FY2019. It

reiterated guidance of declining capex and strong Rs17-20 bn of free-cash flow generation for

the year. Growth strategy remains centered on adding high-value cargo and on expanding the

logistics business through an asset-light model.

We use cushion of Mundra power plant volumes to broadly retain estimates

We broadly retain our operational estimates by using the cushion of coal volumes from Mundra

power plant to compensate for slightly lower realizations and deferment of growth in Dhamra

to FY2020. We also defer part of the port development income from FY2019 to FY2020. We

marginally lower our SoTP to Rs460 from Rs470. While treating forex losses on debt as

extraordinary, we do not increase the port-level EBITDA margin from current levels.

Adani Ports and SEZ (ADSEZ) Infrastructure

The juggernaut rolls on. ADSEZ’s diversified port/cargo offering and strong

competitive positioning helped it more the offset the yoy loss of captive coal business

and constraint of rake availability. The start of Mundra power plant provides cushion as

we moderate our expectation of realization growth and defer growth prospects of

Dhamra port by another year. We account for the unhedged nature of foreign debt by

assuming static port EBITDA in spite of growing port volumes. We marginally revise

SoTP to Rs460 (from Rs470 earlier). BUY.

BUY

AUGUST 07, 2018

RESULT

Coverage view: Attractive

Price (`): 397

Target price (`): 460

BSE-30: 37,692

Aditya Mongia

Ajinkya Bhat

Adani Port and SEZ

Stock data Forecasts/Valuations 2018 2019E 2020E

52-week range (Rs) (high,low) EPS (Rs) 18.5 18.7 22.7

Market Cap. (Rs bn) EPS growth (%) (2.1) 1.2 21.1

Shareholding pattern (%) P/E (X) 21.5 21.2 17.5

Promoters 66.3 Sales (Rs bn) 113.2 109.4 133.0

FIIs 18.0 Net profits (Rs bn) 38.3 38.7 46.9

MFs 2.2 EBITDA (Rs bn) 70.6 68.0 80.6

Price performance (%) 1M 3M 12M EV/EBITDA (X) 14.3 14.3 11.9

Absolute 8.6 (2.7) (2.3) ROE (%) 19.8 17.0 17.7

Rel. to BSE-30 2.8 (9.8) (16.2) Div. Yield (%) 0.5 0.5 0.5

Company data and valuation summary

452-347

822.9

Adani Ports and SEZ Infrastructure


1QFY19 results – sustained outperformance on volumes, strong performance in

core port metrics

Note: Exhibit 1– reported financials, Exhibit 2 – adjusted financials

Revenue growth led by volume growth, mix changes and forex. Adani Ports

continued its outperformance to Indian ports in 1QFY19 by reporting total volumes of 48

mn tonnes, up 9.3% yoy, outperforming major ports growth of 4% and all India growth

of 3% led by good growth in three of the group’s large ports (Mundra +5%, Hazira

+14%, and Kattupalli +13%).

The company reported 1QFY19 revenues of Rs24 bn, up 16% yoy on adjusted basis

(adjusted for port development income of Rs6.6 bn in 1QFY18), and 3% above estimates.

Port revenue for the quarter was Rs19.6 bn, up 16% yoy. Revenue growth was higher

than volume growth on account of:

improvement in cargo composition with container volume growth of 16%,

constituting 43% of ADSEZ cargo, up 200 bps from FY2018

increased share of crude in cargo composition to 13%, up 200 bps from FY2018, led

by recovery of 2 mn tonnes of HMEL volumes lost in 1QFY18 on account of refinery

maintenance shutdown

forex effect from 5% depreciation of INR versus US$ in 1QFY19 as 32% of ADSEZ’s

port revenues are dollar denominated (mainly container handling and marine income)

and

marginal price increases (such as increased tariffs in Adani Harbour)

Port EBITDA margin improved 100 bps yoy. As previously guided by the management,

the port EBITDA margin continued to inch up on the back of automation and

mechanization. Port EBITDA for the quarter stood at Rs14 bn, up 17% yoy. Port EBITDA

margin of 70.2% was up 80 bps yoy broadly meeting management’s target of 100 bps

improvement. On an overall basis, reported EBITDA stood at Rs16 bn, up 23% yoy.

Overall EBITDA margin stood at 66%, sharply up over 400 bps yoy on adjusted 1QFY18

financials as explained above. A portion of this was also driven by forex effect on dollar

denominated revenues that directly flows into EBITDA as all the operating expenses of

ADSEZ remain INR denominated.

One-off forex MTM loss booked in the quarter. Recurring PAT for Adani Ports in

1QFY19 stood at Rs10 bn, up 57% yoy as a result of EBITDA growth and higher other

income. The company booked forex MTM loss of Rs3.8 bn in 1QFY19 on

US$ denominated loans as per Ind-AS prescription. Reported PAT of Rs6.9 bn was thus

down 9.2% yoy on reported 1QFY18 financials (including port development income in

1QFY18).

Infrastructure Adani Ports and SEZ


Exhibit 1: Strong performance in core port metrics with 9% volume growth, 16% revenue growth and 80 bps margin improvement Adani Port and SEZ, consolidated - 1QFY19 – reported key numbers (Rs mn)

Source: Company, Kotak Institutional Equities estimates

1QFY19 1QFY19E 1QFY18 4QFY18 vs est. yoy qoq FY2018 FY2017 % change FY2019E FY2018 % change

Net operating income 24,110 23,445 27,451 31,829 2.8 (12.2) (24.2) 113,230 84,394 34 109,427 113,230 (3)

Operating expenses (5,803) (9,292) (9,669) (38) (40) (31,995) (21,679) — (31,995)

Employee costs (1,189) (1,181) (1,196) 1 (1) (4,473) (3,831) — (4,473)

Admin and other exp. (1,234) (1,312) (1,650) (6) (25) (5,307) (4,736) — (5,307)

Total expenditure (8,226) (9,378) (11,785) (12,515) (12) (30) (34) (41,776) (30,247) 38 (41,432) (41,776) (1)

EBITDA 15,884 14,067 15,666 19,314 13 1 (18) 71,454 54,147 32 67,995 71,454 (5)

Other income 2,928 2,547 2,145 3,044 15 37 (4) 10,109 10,401 (3) 10,831 10,109 7

Interest expense (3,206) (3,051) (3,299) (3,296) 5 (3) (3) (12,574) (12,812) (2) (13,293) (12,574) 6

Depreciation (3,225) (3,286) (2,958) (2,989) (2) 9 8 (11,884) (11,602) 2 (14,098) (11,884) 19

PBT 12,381 10,277 11,554 16,073 20 7 (23) 57,106 40,134 42 51,434 57,106 (10)

Tax expense (2,250) (2,569) (3,294) (3,961) (12) (15,442) (2,866) 439 (12,599) (15,442) (18)

PAT 10,131 7,708 8,261 12,112 31 23 (16) 41,664 37,267 12 38,836 41,664 (7)

Extraordinary items (3,158) (632) (2,821) (4,765) 1,655 — (4,765)

Share of minority interest (67) (22) (23) (163) 193 (91) (163)

Reported PAT 6,907 7,607 9,268 (9) (25) 36,736 39,115 (6) 38,745 36,736 5

Other comprehensive income (0) (11) 109 94 84 12 — 94

Total comprehensive income 6,907 7,597 9,377 (9) (26) 36,830 39,199 (6) 38,745 36,830 5

Reported port volume (mn tonnes) 48 45 44 45 7 9 6 180 169 7 196 180 9

Reported port revenue 19,660 16,615 16,980 19,470 18 16 1 73,930 68,800 7 79,563 73,930 8

Reported port EBITDA 13,800 NA 11,790 13,710 17 1 52,070 47,230 10 56,038 52,070 8

Port EBITDA margin (%) 70.2 NA 69.4 70.4 70.4 68.6 70.4 70.4

Key ratios (%)

Operating exp./ sales 24.1 33.9 30.4 28.3 25.7 28.3

Employee costs/ sales 4.9 4.3 3.8 4.0 4.5 4.0

Admin and other exp./ sales 5.1 4.8 5.2 4.7 5.6 4.7

EBITDA margin 65.9 60.0 57.1 60.7 63.1 64.2 62.1 63.1

PBT margin 51.4 43.8 42.1 50.5 50.4 47.6 47.0 50.4

PAT margin 42.0 32.9 30.1 38.1 36.8 44.2 35.5 36.8

Effective tax rate 18.2 25.0 28.5 24.6 27.0 7.1 24.5 27.0

EPS (Rs) 4.9 3.7 4.0 5.8 20.0 18.1 18.7 20.0

% change



Exhibit 2: Revenues grew 16% yoy on adjusted basis led by improved mix, forex effect on dollar denominated revenues and price hikes Adani Port and SEZ, consolidated - 1QFY19 – adjusted key numbers (Rs mn)

Notes:

(a) 1QFY18 numbers have been adjusted to remove port development income from revenue / EBITDA / PBT into extraordinary income.


Exhibit 3: Three large ports of Mundra, Hazira and Kattupalli led to the strong volume growth Quarterly trajectory of volumes of Adani’s port assets, March fiscal year-ends, 1QFY16-1QFY19 (mn tons)


Adjusted

1QFY19 1QFY19E 1QFY18 vs est. yoy adj. FY2018 FY2017 % change FY2019E FY2018 % change

Net operating income 24,110 23,445 20,841 2.8 15.7 113,230 84,394 34.2 109,427 113,230 (3.4)

Operating expenses (5,803) (31,995) (21,679) — (31,995)

Employee costs (1,189) (4,473) (3,831) — (4,473)

Admin and other exp. (1,234) (5,307) (4,736) — (5,307)

Total expenditure (8,226) (9,378) (7,975) (12.3) (41,776) (30,247) 38.1 (41,432) (41,776) (0.8)

EBITDA 15,884 14,067 12,866 12.9 23.5 71,454 54,147 32.0 67,995 71,454 (4.8)

Other income 2,928 2,547 2,145 15.0 10,109 10,401 (2.8) 10,831 10,109 7.1

Interest expense (3,206) (3,051) (3,299) 5.1 (12,574) (12,812) (1.9) (13,293) (12,574) 5.7

Depreciation (3,225) (3,286) (2,958) (1.9) (11,884) (11,602) 2.4 (14,098) (11,884) 18.6

PBT 12,381 10,277 8,754 20.5 41.4 57,106 40,134 42.3 51,434 57,106 (9.9)

Tax expense (2,250) (2,569) (2,316) (12.4) (15,442) (2,866) 438.7 (12,599) (15,442) (18.4)

PAT 10,131 7,708 6,438 31.4 57.4 41,664 37,267 11.8 38,836 41,664 (6.8)

Extraordinary items (3,158) 1,191 (4,765) 1,655 — (4,765)

Share of minority interest (67) (22) (163) 193 (91) (163)

Reported PAT 6,907 7,607 (9.2) 36,736 39,115 (6.1) 38,745 36,736 5.5

Other comprehensive income (0) (11) 94 84 11.6 — 94

Total comprehensive income 6,907 7,597 (9.1) 36,830 39,199 (6.0) 38,745 36,830 5.2

Reported port volume (mn tonnes) 48 45 44 7.0 9.3 180 169 6.5 196 180 8.9

Reported port revenue 19,660 16,615 16,980 18.3 15.8 73,930 68,800 7.5 79,563 73,930 7.6

Reported port EBITDA 13,800 NA 11,790 NA 17.0 52,070 47,230 10.2 56,038 52,070 7.6

Port EBITDA margin (%) 70.2 NA 69.4 70.4 68.6 70.4 70.4

Key ratios (%)

Operating exp./ sales 24.1 28.3 25.7 — 28.3

Employee costs/ sales 4.9 4.0 4.5 — 4.0

Admin and other exp./ sales 5.1 4.7 5.6 — 4.7

EBITDA margin 65.9 60.0 61.7 63.1 64.2 62.1 63.1

PBT margin 51.4 43.8 42.0 50.4 47.6 47.0 50.4

PAT margin 42.0 32.9 30.9 36.8 44.2 35.5 36.8

Effective tax rate 18.2 25.0 26.5 27.0 7.1 24.5 27.0

EPS (Rs) 4.9 3.7 3.1 30.7 56.9 20.0 18.1 18.7 20.0

% change

1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 Yoy (%)

Mundra Port 29.9 27.0 26.1 26.0 28.9 28.3 27.8 28.6 30.2 29.3 32.4 29.8 32.0 5.8

Dahej port 2.5 1.5 2.4 1.8 1.5 2.0 1.1 1.9 1.6 1.7 2.1 1.6 2.2 38.7

Hazira port 2.9 2.9 3.3 3.2 3.4 4.0 3.9 4.0 4.0 4.1 4.3 4.5 4.6 13.4

Dhamra port 3.2 3.8 3.8 3.9 5.4 5.2 5.4 5.5 5.3 5.0 5.4 5.8 4.4 (15.9)

Others 1.0 1.3 2.4 2.7 3.2 3.6 2.8 2.5 2.9 3.0 3.8 3.7 4.9 69.3

Total 39.5 36.5 38.0 37.5 42.4 43.0 41.0 42.3 44.0 43.0 48.0 45.4 48.1 9.3

YoY(%) 16.8 3.8 (2.3) 3.2 7.3 17.9 8.0 12.8 3.8 (0.0) 17.1 7.2 9.3



Exhibit 4: Quarter after quarter, ADSEZ and Mundra continue to demonstrate outperformance to Indian ports Volumes handled at major ports in the country and by ADSEZ, March fiscal year-ends, 4QFY18 and FY2018

Source: Company, Indian Ports Association, Kotak Institutional Equities

1QFY19 earnings call takeaways

Guidance retained for FY2019 and beyond. The management has retained the

guidance of achieving 200 mn tonnes of cargo handling in FY2019 without factoring in

potential coal imports from Mundra power plant of Adani Power. The concerned plant

has however restarted operations and will provide an upside to volume guidance to the

tune of 7-8 mn tonnes. The company has also maintained that ADSEZ will be able to

grow total volumes at 1.5X all India growth and container volumes at 2X all India

container growth. Port EBITDA margin will also continue to improve 100 bps yoy every

year until it caps out at ~73%. Capex guidance for FY2019 is provided at Rs25 bn while

FCF guidance is provided at Rs17.5-20 bn.

Dhamra evacuation issues to get resolved soon. Dhamra port suffered 16% yoy

decline in volumes in 1QFY19 as India Railways diverted rakes to service power sector

pulling down availability to 12.6 rakes for the port (versus 15.2 rakes earlier run rate).

ADSEZ is mitigating it by taking advantage of ‘own your wagon’ scheme and has applied

for 11 rakes. The company has so far received approval to run one rake for Kharagpur

circuit. The permission for the remaining 10 rakes in expected in the next 1-1.5 months

and the company expects all 11 rakes to be pressed into service between January-March

2019 and will incur Rs2 bn of capex in procuring the same.

Adani Logistics will soon get back on track as well. 1QFY19 was not a good quarter

for Adani Logistics with 23% decline on the topline again led by unavailability of rakes for

transportation. The company has placed an order for 10 rakes on a long-term 10-year

leased basis and will place another order for an additional 10 rakes. Once the rakes are

received (two rakes to be received per month starting this month), the logistics arm will

be able to get back on the growth trajectory. The company thus expects 40-45% growth

in FY2020. The company has also formed a 50:50 JV with NYK Auto Logistics and plans

to order three auto rakes in 2QFY19 on leased basis for automobile transportation

through rail.

The expansion of Adani Logistics is also going as per plan. The company has started

construction of private freight terminals at Vadodara and Bangalore expected to be

operational between December-2018 and March-2019. The company is also currently

acquiring land for PFT at Panipat and Nagpur.

Other takeaways.

The management downplayed the forex MTM impact booked in 1QFY19. According

to the company, the MTM loss booked is notional and based on growth projections

1QFY19 1QFY18 % chg. 1QFY19 1QFY18 % chg. FY2018 FY2017 % chg. FY2018 FY2017 % chg.

Kolkata 4 4 2.8 166 156 6.4 17 16 7.0 640 636 0.6

Haldia 11 10 13.5 45 33 36.4 40 34 18.3 156 136 14.7

Paradip 27 24 9.0 3 1 NA 102 89 14.7 7 2 250.0

Visakhapatnam 16 15 7.2 112 90 24.4 65 61 7.0 389 367 6.0

Ennore 9 8 11.9 - - NA 30 30 1.3 - - NA

Chennai 13 13 4.5 412 394 4.6 52 50 3.2 1,549 1,495 3.6

Tuticorin (Chidambarnar) 9 9 (2.6) 183 166 10.2 37 39 (5.2) 698 642 8.7

Cochin 8 7 7.9 139 136 2.2 28 25 12.4 556 491 13.2

New Mangalore 11 10 7.0 33 22 50.0 42 40 5.0 115 95 21.1

Mormugao 5 8 (35.0) 7 7 - 27 33 (19.0) 32 30 6.7

Mumbai 15 16 (4.5) 7 13 (46.2) 63 63 (0.3) 42 42 -

J.N.P.T 17 16 5.8 1,241 1,209 2.6 66 62 6.5 4,833 4,500 7.4

Kandla 29 27 7.1 56 32 NA 110 105 4.4 118 10 NA

Major ports total 174 167 3.9 2,404 2,259 6.4 680 648 4.9 9,135 8,446 8.2

Mundra 32 30 5.8 NA NA NA 180 169 6.5 NA NA NA

Total cargo (MMT) Container ('000 TEUs) Total cargo (MMT) Container ('000 TEUs)



versus forex debt plan, the company will not have any forex loss on debt liability on a

five-year basis. As we understand, it indicates that if forex debt grows significantly

from here on whereas revenues continue to grow year after year (with >30% dollar

denominated revenues), then the natural hedge would be sufficient to discharge dollar

debt liability through dollar earnings over the five year period.

The management has so far not seen any impact of the trade war on its port business.

Exhibit 5: Volumes estimates for Mundra and other related ports, March fiscal year-ends, 2014-21E


Exhibit 6: Decline in share of coal and increase in share of high-value cargo handling (such as

containers and liquids) has been the sustained theme for the past three years Evolution of cargo handling composition for Adani Ports, March fiscal year-ends, 2015-1QFY19 (%)


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

Volumes (mn tons)

Mundra port

Bulk 47 52 46 42 39 35 36 37

Coal 36 39 34 31 27 22 23 24

Other bulk 10 13 11 11 12 13 13 14

Crude / POL / Liquid 23 22 26 28 28 32 35 37

Container ('000 TEUs) 2,642 2,913 3,238 3,459 3,970 4,531 5,147 5,780

Container (mn tons) 35 38 40 46 53 60 69 77

Mundra volumes 105 111 112 116 120 128 140 152

Other port assets

Dahej port 8 12 8 6 7 8 10 11

Hazira port 4 7 12 15 17 19 22 24

Mormugao port — 1 2 2 2 3 4 5

Vizag port — 1 1 1 1 1 1 1

Kandla port — 0 4 4 4 6 7 8

Dhamra port 14 15 15 21 21 22 27 32

Ennore + Kattupalli port — — — 5 7 9 14 16

Vizhingam — — — — — — 3 7

Total of key ports 131 149 153 171 179 196 227 255

47

41

36

35 33 33 333029

32

37

41 41 41 4143

1012 12

10 11 11 1113

14 15 15 14 15 15 15 14

0

5

10

15

20

25

30

35

40

45

50

2015 2016 2017 1QFY18 1HFY18 9MFY18 FY2018 1QFY19

Coal Container Crude Others



Exhibit 7: Adani Ports has consistently increased market share in cargo handling in the past few years Trend in Adani Ports' cargo handling volumes and market share, March fiscal year-ends, 2010-18

Notes:

(1) Acquisition of Kattupalli port drove market share gains in FY2017.

Source: Company, Indian Ports Association, Kotak Institutional Equities

Exhibit 8: Change in estimates for Adani Ports and SEZ, March fiscal year-ends, 2018-21E


40 52 64

82.1

113

144 152 169 180

4.7 5.9

7.0

8.8

11.6

13.7 14.1 14.9 15.2

-

4.0

8.0

12.0

16.0

-

40

80

120

160

200

2010 2011 2012 2013 2014 2015 2016 2017 2018

Adani Ports volumes (LHS, mn tonnes) Market share (RHS, %)

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

Volumes (mn tons)

Mundra volume 116 120 128 140 152 125 138 150 2 1 1

Dahej port 6 7 8 10 11 8 10 11 — — —

Hazira port 15 17 19 22 24 19 22 24 — — —

Mormugao port 2 2 3 4 5 3 4 5 — — —

Vizag port 1 1 1 1 1 — — — NA NA NA

Kandla port 4 4 6 7 8 4 5 6 33 33 33

Dhamra port 21 21 22 27 32 26 31 35 (16) (12) (8)

Ennore + Kattupalli 5 7 9 14 16 11 17 19 (21) (14) (13)

Vizhingam — — — 3 7 — 3 7 NA - -

Consolidated volumes 171 179 196 227 255 198 229 256 (1) (1) (0)

Consolidated financials

Revenues 84,394 113,230 109,427 133,021 148,709 115,134 131,490 151,857 (5) 1 (2)

Port revenues 62,948 69,647 79,563 94,721 111,063 82,944 97,885 113,915 (4) (3) (3)

EBITDA 54,147 70,621 67,995 80,640 86,523 71,862 78,894 86,840 (5) 2 (0)

Port EBITDA 43,506 47,739 56,038 66,636 77,953 58,306 68,480 79,575 (4) (3) (2)

Port EBITDA margin (%) 69 69 70 70 70 70 70 70 13 bps 39 bps 33 bps

Interest expense (11,157) (14,954) (13,293) (13,738) (11,849) (12,204) (12,418) (10,760) 9 11 10

PBT 41,789 53,893 51,434 61,601 75,397 56,044 62,585 76,028 (8) (2) (1)

Net PAT 39,115 38,288 38,745 46,931 60,910 41,435 47,531 61,084 (6) (1) (0)

EPS (Rs) 18.9 18.5 18.7 22.7 29.4 20.0 23.0 29.5 (6) (1) (0)

New estimates Previous estimates % revision



Exhibit 9: We arrive at an SoTP-based target price of Rs459/share for ADSEZ End-Jun-2019E DCF-based SoTP valuation of Adani Ports & SEZ


Entity EV (Rs mn) Net debt Implied equity value Stake (%) Equity Value of stake Value/share Method

Mundra Port (excl. SEZ) 323,754 58,888 264,867 100% 264,867 128 FCFF

SEZ 113,364 — 113,364 100% 113,364 55 FCFF

CT3 (incl. CT-3 extension) 82,641 56,023 26,618 50% 13,309 6 FCFF

CT4 30,532 19,201 11,331 50% 5,665 3 FCFF

Dahej 57,532 1,833 55,700 74% 41,218 20 FCFF

Dhamra 178,629 39,969 138,660 100% 138,660 67 FCFF

Hazira 103,289 11,103 92,186 100% 92,186 45 FCFF

Vizhinjam 30,783 16,485 14,298 100% 14,298 7 FCFF

Kandla 13,223 13,749 (526) 100% (526) (0) FCFF

Murmugao 8,999 4,101 4,898 100% 4,898 2 FCFF

Ennore 14,494 8,181 6,313 100% 6,313 3 FCFF

Kattupalli 31,641 13,654 17,988 97% 17,448 8 FCFF

Adani Logistics 31,652 2,115 29,537 100% 29,537 14 15X EV/EBIDTA

Adani Harbour (marine revenues) 184,597 (24,159) 208,756 100% 208,756 101 15X EV/EBITDA

Total 1,205,132 221,143 983,988 949,992 459



Exhibit 10: Consolidated financials of Adani Ports & SEZ, March fiscal year-ends, 2012-21E (Rs mn)


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

Income statement

Net sales 32,708 35,766 48,240 61,520 71,087 84,394 113,230 109,427 133,021 148,709

Total operating costs (12,056) (12,007) (19,036) (22,497) (24,843) (30,247) (42,608) (41,432) (52,381) (62,185)

EBITDA 20,653 23,760 29,204 39,023 46,243 54,147 70,621 67,995 80,640 86,523

Other income 596 2,644 6,836 6,856 7,327 10,401 10,109 10,831 10,897 18,482

Depreciation (4,630) (4,220) (6,495) (9,117) (10,630) (11,602) (11,884) (14,098) (16,198) (17,759)

Financial charges (4,796) (5,418) (9,768) (11,751) (11,746) (11,157) (14,954) (13,293) (13,738) (11,849)

Pre-tax profit 11,822 16,766 19,777 25,012 31,194 41,789 53,893 51,434 61,601 75,397

Taxation (896) (1,231) (2,367) (12,715) (2,828) (2,866) (15,442) (12,599) (14,325) (13,929)

Adjusted PAT (before exceptional items) 10,927 15,535 17,410 12,297 28,366 38,922 38,451 38,836 47,276 61,468

Extraordinary items 94 697 — — — — (1,552) — — —

Minority interest — — — — 413 100 (163) (91) (345) (558)

Share of profit from associates — — (14) (102) 193 93 — — — —

Reported PAT post-minority interest 11,021 16,232 17,396 12,196 28,972 39,115 36,736 38,745 46,931 60,910

Adjusted EPS (Rs) 5.3 7.5 8.4 5.9 13.7 18.8 18.6 18.8 22.8 29.7

Balance sheet

Shareholders funds 48,385 63,963 87,681 107,679 135,055 175,260 210,688 244,901 286,723 342,740

Share capital 4,035 4,035 4,168 4,168 4,142 4,142 4,142 4,142 4,142 4,142

Reserves and surplus 44,350 59,928 83,513 103,511 130,913 171,118 206,546 240,759 282,581 338,598

Loan funds 175,650 115,858 128,895 177,313 189,535 214,860 214,322 196,244 175,484 184,814

Received/ receivable under LT lease 5,905 5,190 7,336 7,188 — — — 2,990 2,990 2,990

Deferred tax liability (net) 15,179 5,286 6,744 8,590 (12,015) (17,759) (11,681) (11,849) (12,052) (12,270)

Total sources of funds 246,467 191,720 232,093 302,359 313,814 373,754 414,824 433,872 455,075 520,763

Total fixed assets 217,825 146,065 160,893 195,361 236,427 264,023 280,657 296,903 314,483 313,323

Investments 11,823 2,619 1,038 25,997 5,452 26,114 29,039 29,039 29,039 29,039

Cash and bank balance 11,184 8,306 4,694 8,940 12,782 19,768 29,677 44,065 40,578 102,698

Net current assests excl cash 5,635 34,730 65,468 72,061 59,153 63,850 75,451 63,865 70,975 75,703

Total application of funds 246,467 191,720 232,093 302,359 313,814 373,754 414,824 433,872 455,075 520,763

Cash flows

Cash flow from operations 11,997 13,791 11,319 30,651 23,805 40,019 56,081 66,815 59,001 67,648

Cash flow from investing activities (138,760) (46,898) (25,100) (24,931) (41,532) (25,794) (38,458) (19,513) (22,881) 1,882

Free cash flows (33,475) (24,523) 297 18,361 2,703 3,148 29,104 36,471 25,224 51,049

Cash flow from financing activities 129,763 42,111 7,725 (2,366) 21,704 (13,247) (18,890) (32,914) (39,607) (7,411)

Cash generated /utilised 3,000 9,004 (6,056) 3,353 3,978 978 (1,267) 14,388 (3,487) 62,120

Net cash at start of year 748 3,747 7,558 1,502 4,452 8,430 9,502 8,235 22,623 19,136

Net cash at end of year (excl. other cash) 3,747 12,752 1,502 4,855 8,430 9,408 8,235 22,623 19,136 81,256

Growth (%)

Revenue growth 9.4 34.9 27.5 15.6 18.7 34.2 (3.4) 21.6 11.8

EBITDA growth 15.0 22.9 33.6 18.5 17.1 30.4 (3.7) 18.6 7.3

Recurring PAT growth 42.2 12.1 (29.4) 130.7 37.2 (1.2) 1.0 21.7 30.0

Key ratios

EBITDA margin (%) 63.1 66.4 60.5 63.4 65.1 64.2 62.4 62.1 60.6 58.2

Recurring PAT margin (%) 33.4 43.4 36.1 20.0 39.9 46.1 34.0 35.5 35.5 41.3

Effective tax rate (%) 7.6 7.3 12.0 50.8 9.1 6.9 28.7 24.5 23.3 18.5

Net debt to equity (X) 3.4 1.7 1.4 1.6 1.3 1.1 0.9 0.6 0.5 0.2

BVPS (Rs) 24 32 42 52 65 85 102 118 138 165

RoE (%) 24.2 27.7 22.9 12.5 23.9 25.2 19.8 17.0 17.7 19.4

RoCE (%) 8.8 8.3 9.4 5.5 10.5 12.4 14.9 12.7 14.5 14.1


Macro in favor but micro not supportive

CUMI continues to be in a sweet spot in terms of (1) rising domestic consumption-driven demand,

(2) enablers in GST and e-way bill to improve market share and pricing and (3) curbs on new

Chinese capacities for electro-minerals creating scope to push the pricing lever. CUMI is,

however, not being able to fully leverage all these factors given micro practices of (1) down-

trading by customers for abrasives in light of current price increases, (2) unorganized players

finding ways to beat GST and e-way bill and (3) inability of CUMI to push pricing lever in the

electro-minerals segment to protect longstanding relationships with customers. From a macro

perspective, CUMI is still not seeing investment-driven demand for its products in India.

Cautious on capex despite high utilization levels across various facilities

CUMI noted high and growing levels of capacity utilization for key facilities such as coated

abrasives, metallized cylinders, select electro-minerals in Russia (silicon carbide) and India

(alumina). CUMI is taking a cautious stance and limiting capacity addition to select product lines

(coated abrasives) and converting underutilized facility of others (using Foskor Zirconia facility

for white fused alumina). Even as CUMI noted the need for capex to develop future products in

material science, it stressed its stance of treading such path too with caution. This stance may

limit capex over the next two years and may lead to capacity constraints in select product lines

beyond FY2021, some of which take >18 months for capacity augmentation.

1QFY19: strong on growth, slightly weak in quality of outperformance

CUMI reported strong 22%/49%/60% yoy growth in revenues/EBITDA/PBT in 1QFY19 with all

segments contributing to the growth. Results were broadly in line with our estimates at an

EBITDA level and an outperformance at the PAT level due to favorable other income,

depreciation and associate income. Revenue growth was propped up by the low base in select

businesses such as abrasives and refractories. Margin also benefitted from the low base of select

business units in Foskor Zirconia (electro-minerals) and JVs (ceramics). Management has

maintained guidance on margin while expecting upside if it is able to take requisite price hikes

through FY2019 (see earnings call takeaways for details). We broadly retain our estimates and

marginally increase target price to `322 (`310 previously) on roll forward to June 2020E. Retain

SELL rating.

Carborundum Universal (CU) Industrials

Walking a tightrope. Even as CUMI is leveraging an improving macro, it continues to

be cautious on capex. Related operating leverage will support strong PAT growth for

the company over the next few years without, hopefully, limiting business growth.

Strong results, though partly low on quality of growth, have started reflecting benefits

of an improving macro, partly limited by delay in GST-led benefits. We retain our

estimates and revise TP to `322 from `310 on roll-forward to June 2020E EPS. Retain

SELL on expensive valuations of 21/19X FY2020/21E EPS.

SELL

AUGUST 07, 2018

RESULT

Coverage view: Neutral

Price (`): 363


BSE-30: 37,692

Aditya Mongia

Ajinkya Bhat

Carborundum Universal



Market Cap. (Rs bn) EPS growth (%) 22.8 25.0 21.4




MFs 21.0 EBITDA (Rs bn) 4.0 4.9 6.0


Absolute 12.0 (3.6) 7.4 ROE (%) 14.6 16.3 17.8



427-312

68.5

Industrials Carborundum Universal


Exhibit 1: Growth in 1QFY19 was broad-based across segments, sub-segments, India and Russia (VAW); GST benefits yet to be seen 1QFY19 results of Carborundum Universal (consolidated), March fiscal year-ends (Rs mn)


Exhibit 2: Yoy margin improvement across all segments was a result of operating leverage benefits and partly a result of price hikes Segmental financials of Carborundum Universal (consolidated), March fiscal year-ends (Rs mn)


1QFY19 1QFY19E 1QFY18 4QFY18 vs est. yoy qoq FY2018 FY2017 Change (%) FY2019E FY2018 Change (%)

Total Income 6,343 6,026 5,195 6,495 5 22 (2) 23,678 21,125 12 27,489 23,678 16

Total Expenditure (5,269) (4,964) (4,472) (5,337) 6 18 (1) (19,691) (17,779) 11 (22,555) (19,691)

Raw materials (2,197) (1,682) (2,257) 31 (3) (8,049) (7,348) 10 (9,306) (8,049)

Employee expense (826) (757) (801) 9 3 (3,109) (2,735) 14 (3,610) (3,109)

Power and fuel (875) (776) (896) 13 (2) (3,275) (2,525) 30 (3,802) (3,275)

Other expenditure (1,371) (1,257) (1,383) 9 (1) (5,258) (5,171) 2 (5,838) (5,258)

EBITDA 1,075 1,062 724 1,158 1 49 (7) 3,986 3,346 19 4,934 3,986 24

EBITDA (%) 16.9 17.6 13.9 17.8 16.8 15.8 6 17.9 16.8

Other income 105 63 105 46 229 228 1 250 229

Depreciation (280) (306) (257) (276) (1,060) (965) 10 (1,197) (1,060)

Interest (19) (21) (21) (24) (86) (181) (52) (102) (86)

PBT 881 797 552 904 10 60 (3) 3,070 2,428 26 3,884 3,070 27

Tax expense (293) (279) (171) (314) (1,020) (781) 31 (1,291) (1,020) 27

PAT 588 519 381 590 13 54 (0) 2,049 1,647 24 2,593 2,049 27

Add: Associates income 65 48 37 39 147 191 211 147

Less: Minority interest 24 37 16 (29) 40 89 (55) 109 40 173

PAT 629 529 402 658 19 57 (4) 2,156 1,749 23 2,695 2,156 25

Margins (%)

RM/sales 34.6 32.4 34.8 34.0 34.8 33.9 34.0

Employee cost/sales 13.0 14.6 12.3 13.1 12.9 13.1 13.1

Power and fuel/sales 13.8 14.9 13.8 13.8 12.0 13.8 13.8

Other expenses/sales 21.6 24.2 21.3 22.2 24.5 21.2 22.2

Tax rate (%) 33.3 34.9 31.0 34.7 33.2 32.2 33.2 33.2

Change (%)

Change Change

1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 1QFY19E vs est. yoy qoq FY2018 FY2017 (%) FY2019E FY2018 (%)

Segment revenues

Abrasives 2,175 2,593 2,703 2,714 2,622 2,371 11 21 (3) 10,250 9,438 8.6 11,617 10,250 13

Ceramics 1,103 1,209 1,220 1,493 1,451 1,324 10 32 (3) 5,012 4,429 13.1 5,927 5,012 18

Electro-minerals 2,021 2,169 2,278 2,366 2,389 2,425 (1) 18 1 8,789 7,241 21.4 10,363 8,789 18

Others 159 147 161 174 167 170 633 625 1.3 748 633 18

Less: intersegment (335) (323) (358) (362) (371) (352) (1,378) (1,241) 11.0 (1,599) (1,378) 16

Total revenues 5,124 5,794 6,004 6,384 6,258 5,938 5 22 (2) 23,306 20,492 13.7 27,056 23,306 16

Segment EBIT

Abrasives 218 365 364 379 317 332 (4) 46 (16) 1,325 1,133 16.9 1,541 1,325 16

Ceramics 155 167 202 234 291 212 37 87 24 759 704 7.7 1,044 759 38

Electro-minerals 279 374 338 279 350 291 20 25 25 1,270 909 39.7 1,706 1,270 34

Others 21 22 21 37 26 17 100 117 71 100

EBIT 673 928 924 928 983 852 15 46 6 3,453 2,863 20.6 4,362 3,453

EBIT (%)

Abrasives 10.0 14.1 13.5 13.9 12.1 14.0 12.9 12.0 13.3 12.9

Ceramics 14.1 13.9 16.6 15.6 20.0 16.0 15.1 15.9 17.6 15.1

Electro-minerals 13.8 17.2 14.8 11.8 14.6 12.0 14.4 12.5 16.5 14.4

Others 13.2 15.2 12.8 21.0 15.4 10.2 15.9 18.8 9.5 15.9

Total EBIT margin (%) 13.1 16.0 15.4 14.5 15.7 14.4 14.8 14.0 16.1 14.8

Change (%)

Carborundum Universal Industrials


Exhibit 3: 1QFY19 results of Carborundum Universal (standalone), March fiscal year-ends (Rs mn)


Exhibit 4: Standalone segmental results for CUMI, March fiscal year-ends (Rs mn)


1QFY19 1QFY18 4QFY18 yoy qoq FY2018 FY2017 Change (%) FY2019E FY2018 Change (%)

Total Income 4,154 3,260 4,493 27 (8) 15,762 14,057 12 18,347 15,762 16

Total Expenditure (3,466) (2,887) (3,676) 20 (6) (13,267) (11,941) 11 (14,859) (13,267) 12

Raw materials (1,707) (1,373) (1,851) 24 (8) (6,643) (5,951) 12 (7,710) (6,643) 16

Employee cost (476) (416) (443) 15 7 (1,742) (1,533) 14 (2,028) (1,742) 16

Power and fuel (445) (377) (465) 18 (4) (1,624) (1,298) 25 (1,890) (1,624) 16

Other expenditure (839) (721) (918) 16 (9) (3,258) (3,159) 3 (3,231) (3,258) (1)

EBITDA 688 373 817 85 (16) 2,495 2,116 18 3,489 2,495 40

EBITDA (%) 16.6 11.4 18.2 15.8 15.1 19.0 15.8

Depreciation (197) (179) (191) 10 3 (739) (669) (835) (739)

Interest (1) (2) (6) (15) (88) (9) (15)

EBIT 491 192 620 1,742 1,359 2,644 1,742

EBIT (%) 12 6 14 11 10 14 11

Other income 96 95 120 310 348 310 310

PBT 586 287 740 105 (21) 2,052 1,707 20 2,955 2,052 44

Exceptional items — — — — — — —

Tax expense (194) (80) (210) (617) (489) (933) (617)

PAT 392 206 529 90 (26) 1,435 1,218 18 2,022 1,435 41

Margins (% of net sales)

RM/sales 41.1 42.1 41.2 42.1 42.3 42.0 42.1

Employee cost/sales 11.5 12.8 9.9 11.1 10.9 11.1 11.1

Power and fuel/sales 10.7 11.6 10.3 10.3 9.2 10.3 10.3

Other expenses/sales 20.2 22.1 20.4 20.7 22.5 17.6 20.7

Change (%)

Change Change

1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 yoy qoq FY2018 FY2017 (%) FY2019E FY2018 (%)

Segment revenues

Abrasives 1,773 2,150 2,241 2,306 2,127 19.9 (7.8) 8,470 7,866 7.7 9,487 8,470 12.0

Ceramics 855 968 1,013 1,178 1,183 38.4 0.4 4,013 3,688 8.8 4,696 4,013 17.0

Electro-minerals 833 972 1,077 1,172 1,071 28.5 (8.7) 4,055 3,191 27.0 5,068 4,055 25.0

Less: intersegment (250) (235) (275) (266) (280) (1,025) (918) 11.6 (1,193) (1,025) 16.4

Total revenues 3,211 3,855 4,056 4,391 4,100 27.7 (6.6) 15,514 13,828 12.2 18,058 15,514 16.4

Segment EBIT

Abrasives 192 336 351 347 287 50.0 (17.1) 1,225 1,047 17.0 1,372 1,225 12.0

Ceramics 90 136 132 184 209 131.8 13.7 542 509 6.5 775 542 43.0

Electro-minerals 20 90 97 119 106 435.4 (11.1) 325 212 53.7 533 325 64.0

EBIT 302 562 579 650 602 99.8 (7.3) 2,092 1,767 18.4 2,680 2,092 28.1

EBIT (%)

Abrasives 10.8 15.6 15.7 15.0 13.5 14.5 13.3 14.5 14.5

Ceramics 10.6 14.0 13.0 15.6 17.7 13.5 13.8 16.5 13.5

Electro-minerals 2.4 9.2 9.0 10.2 9.9 8.0 6.6 10.5 8.0

Change (%)



Exhibit 5: Implied overseas segmental results for CUMI, March fiscal year-ends (Rs mn)


1QFY19 earnings call takeaways

1QFY19 results driven by broad-based volume growth and better utilizations.

The strong revenue growth in 1QFY19 was led by broad-based volume growth across

standalone mass products, industrial ceramics, metallized cylinders, refractories,

engineered ceramics and continued full utilization of VAW plant in Russia for electro-

minerals. The key negative was that the GST benefits through market shift towards

organized players have not materialized yet as expected by the management. Also, there

has been some down-trading in abrasives, i.e. customers have shifted towards cheaper

products, which has partly reduced benefit of price hikes that the company is attempting

to take. Margin performance was led by operating leverage and partly by price hike.

Guidance and outlook. The management has guided `27 bn of revenues in FY2019

and `32 bn in FY2020. EBIT margin guidance across segments is conservative compared

to 1QFY19 performance with abrasives margin at 13-14%, ceramics at 15-16% and

electro-minerals at ~16%. Blended EBIT margin would stand at ~14%. Our assessment is

that the management has provided conservative guidance as the company is facing

resistance from customers on price hikes even as the threat of input cost increase persists.

CUMI will have to take price hikes of 6-8% in abrasives and ceramics and 8-10% in

electro-minerals in the next three quarters (5-6% for FY2019) to pass on cost increase.

The company plans a capex of `1.2 bn in FY2019, majority of which will be spent on

increasing existing capacities or altering the production use. A small part of the capex will

be spent on small projects on newer materials such as Graphene.

Segment-wise outlook is given below.

Abrasives. Segmental growth was driven by volume growth but GST benefits from

market shift to organized players and expected price-stability after e-way bill has not

materialized yet. However, the management mentioned that abrasives usually grow at

1.5X GDP growth rate and will thus continue to grow at 10-11% CAGR in volume

terms even if GST benefits do not materialize. Selling prices have not fully corrected to

reflect the new higher level of input cost (electro-minerals and energy). As the

company attempts to push the prices upwards in the coming quarters, this segment

will report better margin in FY2019.

Change Change

1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 yoy qoq FY2018 FY2017 (%) FY2019E FY2018 (%)

Abrasives 402 443 462 408 496 23.2 21.6 1,779 1,572 13.2 2,131 1,779 19.7

Ceramics 249 241 207 315 268 7.8 (14.8) 999 741 34.7 1,231 999 23.3

Electro-minerals 1,188 1,197 1,201 1,194 1,319 11.0 10.4 4,734 4,050 16.9 5,295 4,734 11.8

Others 159 147 161 174 167 4.8 (4.0) 633 625 1.3 748 633 18.3

Less: intersegment (85) (89) (83) (96) (91) (353) (323) 9.3 (407) (353) 15.2

Total revenues 1,912 1,939 1,948 1,993 2,158 12.8 8.2 7,792 6,664 16.9 8,998 7,792 15.5

Segment EBIT

Abrasives 26 28 13 32 30 15.8 (5.9) 99 86 15.4 169 99 69.9

Ceramics 65 32 71 50 82 25.0 64.0 217 196 11.0 269 217 24.0

Electro-minerals 259 284 241 160 244 (5.9) 52.4 944 697 35.5 1,173 944 24.2

Others 21 22 21 37 26 22.4 (29.6) 100 117 (14.5) 71 100 (29.2)

EBIT 371 367 345 278 381 2.6 37.0 1,361 1,096 24.2 1,682 1,361 23.6

EBIT (%)

Abrasives 6.5 6.4 2.8 7.9 6.1 5.6 5.5 7.9 5.6

Ceramics 26.2 13.1 34.0 15.8 30.4 21.7 26.4 21.9 21.7

Electro-minerals 21.8 23.7 20.1 13.4 18.5 19.9 17.2 22.2 19.9

Others 13.2 15.2 12.8 21.0 15.4 15.9 18.8 9.5 15.9

Change (%)



Ceramics. 1QFY19 witnessed volume growth in all three sub-segments, viz. metallized

cylinders, refractories and engineered ceramics across domestic and export markets.

The ramp-up in metallized cylinder helped margin as well. The company has also

started seeing traction in refractories, albeit from a low base, from carbon black and

glass industries. The company has also received trial orders for its newly launched

product Z450 and ramping up the adoption of this product will be a key focus area.

Electro-minerals. Input costs for bauxite, graphite electrodes and power have already

gone up over the past few quarters but have stabilized at the elevated levels in the

past two quarters. The company is taking negotiated price hikes with customers to

pass on these costs and will continue to do so over the next 2-3 quarters. VAW facility

in Russia is running at full capacity and will continue to do so. The planned capacity

increase of 10,000 tons will be done in the next 18 months in a gradual fashion to

ensure that existing running operations do not get disrupted in the process. Prices are

expected to hold up well as the management does not see a possibility of restarting of

capacities shut down in China. Apart from better utilization due to volume growth, the

company received some margin benefit from good rainfall in Kerala and thus higher

captive power generation.

Capacity utilization. Most of the facilities of the company are operating at very high

capacity utilizations as shown in the exhibit below. Such high utilizations could potentially

restrict business growth and margin benefit from operating leverage. The company is

planning to address the issue by spending the majority portion of the announced `1.2 bn

of capex in FY2019 on capacity augmentation. This includes increasing existing capacities

as well as reconfiguring them to produce other types of products where there is a

capacity shortage. The management is looking to add capacities in coated abrasives,

metallized cylinders (takes 18 months to build), fusion capacity in Cochin facility and may

convert some capacity in Foskor Zirconia that is operating at a low 40% utilization.

Exhibit 6: Details of capacity utilization of CUMI across key products


Focus on new materials to propel the next phase of growth. Newly launched Z450 is

a new material with significant cost benefits, according to the management. The

material, according to the management, has one-third the graphite requirement and half

the power requirement that of traditional zirconia during its production process. It also

offers benefit of lower radioactivity making it fit for use in stringent regulatory

environment of Europe. The company is currently clocking revenues of `280-300 mn per

quarter from Z450 and needs to ramp it up beyond `500 mn per quarter to be profitable.

Segment Product Capacity utilization

Bonded abrasives 65-70%

Coated abrasives 85%+

Metallized cylinder 95%+

Refractories ~70%

Relocated capacity from Thukela 35-40%

Tiles ~70%

Foskor Zirconia 40%

India (Cochin) – alumina 80%+

India (Cochin) – silicon carbide 65%+

VAW (Russia) ~100%

Abrasives

Ceramics

Electrominerals



Another material that the company is focusing on is Graphene. It is touted as the

world’s strongest material and has numerous possibilities and potential applications.

The company will spend ~`150 mn of capex to start a small plant for the material and

will invest further if customer response is positive. The management believes that the next

phase of growth will depend on such new materials. The company will focus on several

such possibilities with small capex and trial/pilot projects in the next few years. Even if one

or two of them pick up pace in terms of applications and customer response, the

potential can be significant. The management, however, stressed scalability and

profitability as the key factors to determine further investments in any new material.

Exhibit 7: We reduce margin estimate for FY2019 despite good margin performance in 1QFY19 because management has guided for

more conservative numbers across all the segments Change in estimates for CUMI consolidated, March fiscal year-ends, 2018-21E (Rs mn)


Exhibit 8: Segmental estimates for CUMI consolidated, March fiscal year-ends, 2012-21E (Rs mn)


New estimates Old estimates Change (%)

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

Revenues (Rs mn) 23,678 27,489 31,664 35,670 27,560 31,700 35,438 (0.3) (0.1) 0.7

EBITDA (Rs mn) 3,986 4,934 5,963 6,801 5,150 6,173 6,971 (4.2) (3.4) (2.4)

EBITDA margin (%) 16.8 17.9 18.8 19.1 18.7 19.5 19.7 -70 bps -60 bps -60 bps

Tax rate (%) 33 33 33 33 35 35 35

PAT (Rs mn) 2,156 2,695 3,272 3,724 2,704 3,249 3,677 (0.3) 0.7 1.3

EPS (Rs) 11.4 14.3 17.3 19.7 14.3 17.2 19.5 (0.3) 0.7 1.3

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

Valuation

BVPS (Rs) 50.3 56.2 58.7 57.8 63.3 73.4 82.8 91.7 102.6 115.0

EPS (Rs) 11.6 4.8 4.9 7.0 7.7 9.3 11.4 14.3 17.3 19.7

P/E (X) 31.1 76.0 74.6 51.5 47.4 39.0 31.7 25.4 20.9 18.4

P/B (X) 7.2 6.4 6.2 6.3 5.7 4.9 4.4 4.0 3.5 3.2

Financials

Revenue 19,685 19,424 20,939 20,187 19,168 20,800 23,305 27,056 31,165 35,108

Yoy growth (%) 23.7 (1.3) 7.8 (3.6) (5.0) 8.5 12.0 16.1 15.2 12.6

EBITDA 3,895 2,372 2,515 2,330 3,013 3,346 3,986 4,934 5,963 6,801

Yoy growth (%) 35.7 (39.1) 6.0 (7.4) 29.3 11.0 19.1 23.8 20.9 14.1

EBITDA margin (%) 19.8 12.2 12.0 11.5 15.7 16.1 17.1 18.2 19.1 19.4

PAT 2,193 898 915 1,326 1,441 1,749 2,156 2,695 3,272 3,724

Yoy growth (%) 28.4 (59.1) 1.9 44.9 8.7 21.3 23.3 25.0 21.4 13.8

Segmental

Abrasives

Revenue 8,843 8,709 9,303 9,294 9,217 9,379 10,250 11,617 13,163 14,911

Yoy growth (%) 20.3 (1.5) 6.8 (0.1) (0.8) 1.8 9.3 13.3 13.3 13.3

EBIT 1,241 836 596 627 831 1,133 1,325 1,541 1,804 2,095

EBIT margin (%) 14.0 9.6 6.4 6.7 9.0 12.1 12.9 13.3 13.7 14.0

Ceramics

Revenue 4,589 5,000 4,761 4,895 4,000 4,514 5,012 5,927 6,920 7,789

Yoy growth (%) 30.3 8.9 (4.8) 2.8 (18.3) 12.8 11.0 18.3 16.8 12.6

EBIT 899 793 592 678 501 704 759 1,044 1,247 1,405

EBIT margin (%) 19.6 15.9 12.4 13.8 12.5 15.6 15.1 17.6 18.0 18.0

Electrominerals

Revenue 6,806 6,273 7,592 6,698 7,486 7,489 8,789 10,363 12,051 13,500

Yoy growth (%) 29.2 (7.8) 21.0 (11.8) 11.8 0.0 17.4 17.9 16.3 12.0

EBIT 1,398 234 784 797 1,270 909 1,270 1,706 2,198 2,464

EBIT margin (%) 20.5 3.7 10.3 11.9 17.0 12.1 14.4 16.5 18.2 18.3



Exhibit 9: Key financials of CUMI (consolidated), March fiscal year-ends, 2012-21E (Rs mn)


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

Profit model (Rs mn)

Net sales 19,950 19,714 21,253 20,502 19,440 21,125 23,678 27,489 31,664 35,670

EBITDA 3,895 2,372 2,515 2,330 3,013 3,346 3,986 4,934 5,963 6,801

Other income 131 129 207 597 295 228 229 250 287 348

Interest (250) (272) (282) (253) (229) (181) (86) (102) (97) (92)

Depreciation (569) (711) (911) (1,004) (868) (965) (1,060) (1,197) (1,354) (1,545)

Profit before tax 3,207 1,518 1,530 1,670 2,211 2,428 3,070 3,884 4,799 5,512

Tax expense (908) (619) (592) (822) (814) (781) (1,020) (1,291) (1,595) (1,832)

Add: share of profits from associates 11 — — — 158 191 147 211 223 237

Less: minority interest (137) (2) (36) (57) (114) (89) (40) (109) (155) (192)

Recurring PAT for equity holders 2,173 896 902 792 1,441 1,749 2,156 2,695 3,272 3,724

Exceptional items 20 2 13 534 — — — — — —

Reported PAT for equity holders 2,193 898 915 1,326 1,441 1,749 2,156 2,695 3,272 3,724

Recurring EPS (Rs) 11.6 4.8 4.9 7.0 7.7 9.3 11.4 14.3 17.3 19.7

Balance sheet (Rs mn)

Equity 9,470 10,592 11,060 10,887 11,923 13,828 15,644 17,340 19,399 21,743

Total borrowings 3,986 4,349 4,563 3,402 3,199 1,559 1,294 1,286 1,278 1,270

Minority interest 775 738 699 578 622 657 615 724 879 1,071

Deferred tax liability 490 503 500 400 408 374 274 154 6 (163)

Total liabilites 14,721 16,182 16,821 15,267 16,151 16,418 17,825 19,503 21,562 23,921

Net fixed assets 7,444 9,275 9,365 8,360 6,222 6,626 6,508 6,510 6,476 6,686

Investments 400 256 373 411 1,471 1,410 1,979 2,429 2,429 2,429

Cash 1,105 856 754 992 1,132 1,261 1,289 1,095 1,924 2,861

Net working capital (ex cash) 5,772 5,796 6,329 5,503 5,830 5,973 6,899 8,318 9,582 10,794

Total assets 14,721 16,182 16,821 15,267 16,151 16,418 17,825 19,503 21,562 23,921

Free cash flow (Rs mn)

Operating cash flow 3,096 1,903 2,035 2,037 2,585 2,725 3,037 3,984 4,731 5,384

Working capital changes (705) 49 (502) 1,221 (808) 228 (907) (1,420) (1,264) (1,212)

Capital expenditure (1,063) (2,088) (780) 142 (843) (1,061) (920) (1,650) (1,320) (1,755)

Free cash flow 842 (143) 819 3,392 935 1,892 1,210 1,365 2,147 2,417

Growth (%)

Revenue growth 24.1 (1.2) 7.8 (3.5) (5.2) 8.7 12.1 16.1 15.2 12.6

EBITDA growth 35.7 (39.1) 6.0 (7.4) 29.3 11.0 19.1 23.8 20.9 14.1

Recurring PAT growth 28.4 (59.1) 1.9 44.9 8.7 21.3 23.3 25.0 21.4 13.8

Ratios

EBITDA margin (%) 19.5 12.0 11.8 11.4 15.5 15.8 16.8 17.9 18.8 19.1

Net debt/equity (X) 0.4 0.4 0.4 0.3 0.3 0.1 0.1 0.1 0.1 0.1

Book value (Rs/share) 50.5 56.5 58.9 57.8 63.3 73.3 82.8 91.7 102.6 115.0

RoAE (%) 27.2 9.0 8.7 7.7 12.2 12.8 13.9 15.7 17.4 17.9

RoACE (%) 18.1 6.9 6.7 6.1 9.8 10.9 12.3 14.3 15.9 16.5


Losses from new centers remain a drag on EBITDA

NARH’s 1QFY19 revenues of `6.5 bn (+25% yoy) missed our estimates by 4% as growth in

mature facilities moderated to 7% yoy (versus KIE estimate of 10%), with Karnataka and East

India growing at a modest pace of 8% and 10% yoy, respectively. While headline revenue

numbers were aided by full-quarter contribution of Cayman hospital, revenue growth at Indian

hospitals was subdued at 11% in 1QFY18. Higher-than-expected losses from new centers

(+`20 mn versus KIE, +`20 mn qoq) along with one-off impact of `50 mn at Cayman led to

EBITDA missing our estimates by 13% (`70 mn in absolute terms). Hospitals commissioned over

the past 12 months (Gurugram, Mumbai and Dharmshila) continue to impact NARH’s

profitability and contributed `195 mn of losses on EBITDA in 1QFY19. Mumbai facility in

particular has not shown any significant signs of ramp-up with losses remaining in the range of

`60-70 mn, 12 months after commissioning. Recently commissioned facility at Gurugram posted

`107 mn of EBITDA loss. 1QFY19 EBITDA margins declined to 7.3% (-80 bps qoq), 70 bps

below our estimates. Excluding Cayman facility and new centers’ EBITDA losses of ~`195 mn in

1QFY19, EBITDA margins were at ~10.7% in the quarter (-70 bps qoq). Net-debt has increased

to `7.9 bn (+300 mn qoq) with net-debt-to-equity now at 0.76X.

Improving maturity mix to drive EBITDA growth over FY2019-21E

While Narayana Hrudayalaya’s flagship facilities continue to grow at a healthy rate and contribute

to the bulk of consolidated EBITDA, ramp-up at recently commissioned pediatric facility at

Mumbai has been slower than expected. Since commissioning (April 2017), the facility has

contributed `358 mn of EBITDA losses with no significant improvement sequentially.

Management’s guidance on ramp-up of this facility remains cautious and we expect Mumbai

hospital to break even by 1HFY20. Moving forward, scale-up of Mumbai, Dharmshila and

Gurugram facilities (where we expect breakeven by 2HFY20) will dictate EBITDA growth over

FY2019-21.

Retain ADD; revise target price to `265

We cut our FY2019-21E EBITDA by 9%/5%/2% on the back of slower-than-expected ramp-up of

new facilities and revise our target price to Rs265 based on 17X FY2020E EBITDA. ADD.

Narayana Hrudayalaya (NARH) Pharmaceuticals

New centers’ losses continue to drag EBIDTA. NARH’s 4QFY18 EBITDA of `474 mn

missed our estimates by 13%, driven by lower revenue growth in mature centers,

higher-than-expected losses from new centers (+`20 mn qoq) and one-off expenses at

Cayman facility. Scale-up of Mumbai facility has been disappointing and management’s

commentary on Mumbai ramp-up remains cautious. Even as flagship facilities continue

to perform well, NARH’s profitability in FY2019-21 will be dictated by ramp-up of

Mumbai, Gurugram and Dharmshila hospitals. We cut our FY2019-21 EBITDA estimates

by 2-9% and revise our target price to `265 (from `275).

ADD

AUGUST 07, 2018

RESULT


Price (`): 251


BSE-30: 37,692

Chirag Talati, CFA

Kumar Gaurav

Narayana Hrudayalaya







MFs 4.3 EBITDA (Rs bn) 2.1 2.5 3.5


Absolute 3.6 (6.4) (16.5) ROE (%) 5.1 5.9 11.0

Rel. to BSE-30 (2.0) (13.3) (28.4) Div. Yield (%) 0.0 0.0 0.0


321-212

51.2

Narayana Hrudayalaya Pharmaceuticals


Exhibit 1: NARH posted revenue growth of 25% yoy NARH, interim results, March fiscal year-ends (Rs mn)


(% chg.)

1QFY19 1QFY19E 1QFY18 4QFY18 1QFY19E 1QFY18 4QFY18 FY2019E

Revenues 6,523 6,795 5,211 6,468 (4) 25 1 28,137

COGS (1,563) (1,692) (1,261) (1,612) (8) 24 (3) (7,034)

Gross profit 4,960 5,103 3,950 4,856 (3) 26 2 21,103

Employee expenses (1,509) (1,472) (1,073) (1,422) 3 41 6 (6,025)

Other expenses (2,977) (3,087) (2,374) (2,911) (4) 25 2 (12,557)

EBITDA 474 545 504 523 (13) (6) (9) 2,520

Depreciation (326) (261) (218) (261) (1,235)

EBIT 148 284 286 262 (48) (48) (43) 1,286

Other income 30 42 52 42 206

Finance costs (172) (205) (103) (205) (549)

Exceptional items — — — 17 —

PBT 6 121 235 100 (95) (97) (94) 943

Tax (30) (42) (100) 6 (29) (311)

Minorities/associates (18) — (25) (25) —

PAT (adjusted) (41) 79 109 98 (153) (138) (142) 632

Number of shares 204 204 204 204 204

EPS (0.2) 0.4 0.5 0.5 (153) (138) (142) 3.1

Effective tax rate 465 35 43 (6) 33

As % of sales

Gross profit 76.0 75.1 75.8 75.1 75.0

Employee cost 23.1 21.7 20.6 22.0 21.4

Other expenses 45.6 45.4 45.6 45.0 44.6

EBITDA margin 7.3 8.0 9.7 8.1 9.0

Segmental

Owned/operated 5,482 4,898 5,356 12 2 23,799

Heart centres 231 261 285 (11) (19) 1,107

Other ancilliary business 58 104 57 (45) 1 205

Cayman 752 770 (2) 3,025

Revenues 6,523 5,211 6,468 25 1 28,137

Geography wise (India)

Karnataka 2,495 2,302 2,517 8 (1) 10,578

East India 1,782 1,616 1,821 10 (2) 8,016

Others 1,206 980 1,071 23 13 5,205

Owned/operated revenues 5,482 4,898 5,409 12 1 23,799

Pharmaceuticals Narayana Hrudayalaya


Exhibit 2: New hospitals contributed Rs195 mn losses to EBITDA in 1QFY19 New hospitals financials, March fiscal year-ends, 2018-1QFY19 (Rs mn)


Exhibit 3: We cut our EBITDA estimates by 2-5% over FY2020-21E Earnings revision table, interim results, March fiscal year-ends, 2019-21E (Rs mn)


2018 4QFY18 1QFY19

New centers revenues

Mumbai 182 77 99

Dharmshila, Delhi 767 209 224

Gurugram 4 4 43

Vaishno Devi 227 40 95

Total new centers 1,180 330 461

Condolidated financials 22,809 6,468 6,523

Revenues excluding new centers 21,629 6,138 6,062

New centers EBITDA

Mumbai (288) (70) (63)

Dharmshila, Delhi (8) (27) (25)

Gurugram (109) (78) (107)

Vaishno Devi — — —

Total new centers (405) (175) (195)

Condolidated financials 2,123 523 474

EBITDA excluding new centers 2,528 698 669

EBITDA margin (%)

Consolidated 9.3 8.1 7.3

Excluding new centers 11.7 11.4 11.0

2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E

Revenues 28,137 32,387 36,648 28,560 32,800 36,874 (1.5) (1.3) (0.6)

EBITDA 2,520 3,540 4,280 2,785 3,729 4,384 (9.5) (5.1) (2.4)

PBT 943 1,917 2,698 1,208 2,106 2,803 (21.9) (9.0) (3.7)

PAT 632 1,284 1,808 810 1,411 1,878 (21.9) (9.0) (3.7)

EPS 3.1 6.3 8.8 4.0 6.9 9.2 (21.9) (9.0) (3.7)

EBITDA margin (%) 9.0 10.9 11.7 9.8 11.4 11.9


Narayana Hrudayalaya Pharmaceuticals


Exhibit 4: We expect NARH to post revenue CAGR of 17% over FY2018-21E NARH cluster-wise revenues, March fiscal year ends, 2016-21E (Rs mn)


2016 2017 2018 2019E 2020E 2021E

Operational beds

Karnataka cluster 2,039 2,049 2,049 2,127 2,177 2,227

East India cluster 1,421 1,548 1,548 1,660 1,660 1,660

Others 1,122 833 1,233 1,400 1,450 1,480

Heart centers 386 386 351 351 351 351

Managed centers 720 720 587 587 587 587

Cayman 106 106 106 106

Total 5,688 5,536 5,768 6,231 6,331 6,411

Occupancy (%)

Karnataka cluster 54.8 53.0 55.0 56.0 58.0 60.0

East India cluster 58.1 57.0 60.0 63.0 65.0 67.0

Others 52.2 47.0 41.9 40.9 46.0 50.0

Heart centers 39.0 40.0 40.0 40.0 40.0 40.0

Managed centers NM NM NM NM NM NM

Cayman 27.0 28.0 30.0 32.0

Total 54.2 52.2 52.4 53.3 55.9 58.2

ARPOB (Rs)



Others 15,068 18,630 23,288 24,918 28,655 31,234

Heart centers 20,456 20,000 20,001 21,601 23,329 25,195

Managed centers NM NM NM NM NM NM

Cayman 273,781 279,257 284,842 290,539

Overall ARPOB 17,534 20,822 21,918 23,134 25,104 26,997

Revenues (Rs mn)



Others 2,423 2,765 4,144 5,205 6,976 8,436

Heart centers 1,113 1,127 1,102 1,107 1,196 1,291

Managed centers 161 376 187 205 226 249

Cayman 596 3,025 3,306 3,597

Total revenues 16,075 18,782 22,809 28,137 32,387 36,648

Revenue growth (%)

Karnataka cluster 11 20 17 9 13 13

East India cluster 33 13 13 14 8 9

Others 16 14 50 26 34 21

Heart centers 1 (2) 0 8 8

Managed centers (50) 10 10 10

Cayman 9 9

Total revenues 18 17 21 23 15 13

Pharmaceuticals Narayana Hrudayalaya


Exhibit 5: We expect NARH to post EBITDA CAGR of 26% over FY2018-21E NARH consolidated income statement, balance sheet, March fiscal year-ends, 2011-21E (Rs mn)


2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E

Net revenues 4,776 6,578 8,393 10,951 13,639 16,138 18,782 22,809 28,137 32,387 36,648

Gross profit 3,249 4,620 6,065 8,138 10,232 12,267 14,423 17,244 21,103 24,290 27,486

EBITDA 557 822 813 1,201 1,292 1,746 2,289 2,123 2,520 3,540 4,280

Depreciation & amortisation (321) (372) (460) (574) (667) (761) (799) (1,000) (1,235) (1,313) (1,391)

EBIT 235 450 353 626 625 985 1,489 1,123 1,286 2,228 2,889

Net interest (27) (63) (15) (60) (332) (148) (43) (279) (342) (310) (191)

Profit before tax 208 387 338 567 294 837 1,446 845 943 1,917 2,698

Tax & deferred tax (72) (129) (100) (213) (175) (301) (524) (290) (311) (633) (890)

Less: minority interest — (0) (7) (22) (24) (4) (1) — — — —

Net income (reported) 136 258 248 317 (109) 212 831 514 632 1,284 1,808

EPS (reported) (Rs) 0.7 1.4 1.3 1.7 (0.5) 1.0 4.1 2.5 3.1 6.3 8.8

Balance sheet

Cash & equivalents 224 192 254 281 296 241 341 353 1,690 1,182 1,275

Debtors 463 672 915 1,342 1,429 1,518 1,569 2,790 3,084 3,549 4,016

Other current assets 400 423 592 766 885 1,101 1,105 1,651 1,817 1,968 2,120

Current assets 1,087 1,287 1,761 2,388 2,610 2,860 3,016 4,793 6,590 6,699 7,411

Fixed assets (incl. goodwill) 5,301 5,782 6,647 7,581 9,281 10,683 11,348 18,830 19,096 19,283 19,392

Other non-current assets 633 761 1,223 1,588 1,758 2,021 2,104 1,733 1,733 1,733 1,733

Total assets 7,021 7,830 9,632 11,557 13,649 15,564 16,468 25,356 27,418 27,715 28,536

Short-term loans — 5 313 522 985 700 369 376 376 376 376

Creditors and other liabilities 964 975 1,262 2,019 1,803 2,702 3,135 4,722 5,152 5,664 6,178

Current liabilities 964 980 1,575 2,542 2,788 3,401 3,504 5,098 5,528 6,040 6,554

Long-term loans 1,042 1,406 2,246 2,808 2,635 1,876 1,798 6,963 7,963 6,463 4,963

Other liabilities (incl. deferred) 205 272 291 376 571 1,524 1,532 2,935 2,935 2,935 2,935

Total liabilities 2,211 2,658 4,112 5,725 5,995 6,801 6,835 14,996 16,426 15,438 14,451

Equity 4,809 5,171 5,520 5,832 7,654 8,763 9,633 10,360 10,992 12,277 14,085

Total equity and liabilities 7,021 7,830 9,632 11,557 13,649 15,564 16,468 25,356 27,418 27,715 28,536

Cash flow

Operating cash flow excl. working capital 472 716 666 1,034 1,161 1,524 2,109 2,088 2,209 2,908 3,390

Working capital (175) (187) (220) 66 (394) 217 84 (265) (30) (105) (105)

Capex (1,066) (947) (1,301) (1,291) (982) (905) (1,350) (5,575) (1,500) (1,500) (1,500)

FCF (769) (418) (855) (191) (214) 836 843 (3,753) 679 1,303 1,784

Ratios (%)

EBITDA margin (%) 11.7 12.5 9.7 11.0 9.5 10.8 12.2 9.3 9.0 10.9 11.7

RoE (%) 2.8 5.0 4.5 5.4 (1.4) 2.4 8.6 5.0 5.7 10.5 12.8

RoCE (%) (post-tax) 2.8 4.7 3.0 4.7 3.8 5.9 8.7 4.3 4.9 8.3 10.7

Net debt/equity (X) 0.2 0.2 0.4 0.5 0.4 0.3 0.2 0.7 0.6 0.5 0.3


Cost pressure lowers earnings

Ujjivan reported PAT of `451 mn in 1QFY19 compared to a loss of `750 mn in 1QFY18 on the

back of strong NII growth and a drop in credit cost. NII increased 61% yoy in 1QFY19 on the

back of robust AUM growth at 21% yoy and lower interest reversals. Provisions dropped 91%

yoy in 1QFY19 (credit cost was down 110 bps qoq and ~910 bps yoy to 0.8%) as net NPLs have

declined to 0.3% of loans. Spike in operating expenses at 38% yoy led to earnings drag in

1QFY19. Focus on business expansion and transition to a bank led to a stiff rise in other

expenses at 55% yoy. Cost-income ratio was high at 72%. AUM growth was led by strong

growth in MSE and housing segments on a low base and revival in microfinance business.

CASA witnessed strong traction (up 73% qoq).

Path to normalized returns contingent on the pace of investments

Asset quality deterioration due to demonetization dealt a triple blow to Ujjivan on growth, on

operating expenses due to transition to SFB and high provisions, we have seen a recovery in

two of three variables. Loan growth at ~20% was a bit disappointing considering that the

business was gaining strong momentum but it is not too worrying either. Net NPLs at 0.3%

suggest that the near term provisioning cost is likely to be quite low even as these businesses

can spring negative surprises in a relatively short period. Hence, the key near-term variable to

monitor is the investment in the business. Cost-income ratio at >70% is uncomfortably high

and the bank is probably looking to frontload investments on branch rollout for FY2019

implying that the glide path to a more sustainable cost-income ratio can be delayed if outcomes

from these investments are not as expected.

Maintain REDUCE; a play on recovery in microfinance appears to be complete

We maintain our REDUCE rating with TP of `420 (unchanged), valuing the bank at ~2.2X book

and 15X FY2020E EPS and RoEs recovering to ~14-15% in the near term. Our hypothesis

remains the same: we would want to remain sanguine of this business and believe that these

businesses should be valued at a higher cost of equity implying a lower multiple till they achieve

scale, mix and possibly a strong liability franchise. Visibility on a lot of these variables is not still

not clear to assign a higher multiple.

Ujjivan Financial Services (UJJIVAN) Banks

Cost growth follows loan growth. Ujjivan reported a marginally weaker-than-

expected performance led by slower-than-expected loan growth (21% yoy), flattish NIM

and importantly, sharp growth in operating costs (38% yoy). Predicting Ujjivan’s

earnings trajectory is likely to be a challenge as it is undergoing a bank transition. Near-

term trigger is contingent on improvement in its cost-income ratio. Maintain REDUCE

and TP `420 (unchanged).

REDUCE

AUGUST 07, 2018

RESULT

Coverage view: Attractive

Price (`): 399


BSE-30: 37,692

QUICK NUMBERS

NII increased 61%

yoy; AUM growth at

21% yoy

GNPL declined 90

bps qoq to 2.7%;

net NPLs at 0.3% of

loans

Maintain REDUCE

with TP at `420

(unchanged)

M B Mahesh CFA

Nischint Chawathe

Dipanjan Ghosh

Shrey Singh

Ujjivan Financial Services



Market Cap. (Rs bn) EPS growth (%) (96.6) 3,033.9 47.3


Promoters 0.0 NII (Rs bn) 7.1 9.6 13.1


MFs 9.4 BVPS 142.0 161.5 186.2

Price performance (%) 1M 3M 12M P/B (X) 2.8 2.5 2.1

Absolute 5.6 (5.0) 24.6 ROE (%) 0.4 12.1 15.8

Rel. to BSE-30 (0.1) (12.0) 6.8 Div. Yield (%) 0.1 0.4 0.7


435-301

48.3

Banks Ujjivan Financial Services


Exhibit 1: Ujjivan – quarterly results March fiscal year-ends, 1QFY18-1QFY19 (` mn)

Source: Company, Kotak Institutional E7quities

1QFY19 1QFY19E 1QFY18 4QFY18 1QFY19E 1QFY18 4QFY18 2019E 2018 (% chg.) 2020E

Income statement (Rs mn)

Interest income 3,842 3,966 2,955 3,642 (3) 30 5 19,328 13,720 41 25,739

Interest expense 1,618 1,602 1,573 1,533 1 3 6 8,552 6,049 41 11,470

Net interest income 2,224 2,363 1,382 2,109 (6) 61 5 10,776 7,671 40 14,269

Other income 775 606 631 967 28 23 (20) 3,312 2,097 58 4,732

Total income 2,999 3,180 2,013 3,076 (6) 49 (3) 14,088 9,768 44 19,001

Operating expenses 2,166 1,862 1,568 1,751 16 38 24 8,085 6,542 24 9,901

Satff cost 1,148 1,034 880 958 11 30 20 4,663 3,666 27 5,630

Depreciation 121 124 78 123 (2) 55 (2) 467 414 13 1,020

Other costs 897 703 610 670 28 47 34 2,955 2,463 20 3,251

Operating profit 833 1,318 445 1,325 (37) 87 (37) 6,003 3,226 86 9,100

Provisions 151 215 1,592 347 (30) (91) (56) 1,325 3,108 (57) 1,735

PBT 682 1,103 (1,147) 978 (38) NM (30) 4,678 118 3,869 7,364

Tax 231 384 (397) 330 (40) NM (30) 1,814 46 3,869 2,856

PAT 451 719 (750) 648 (37) NM (30) 2,864 72 3,869 4,509

Tax rate (%) 34 35 NM 34 39 39 39

Assets under management (Rs mn)

AUM 77,870 80,892 64,593 75,600 (4) 21 3 101,063 75,600 34 130,302

Microfinance 63,380 54,970 63,170 15 0 63,170

Micro individual loan 6,830 7,539 6,880 (9) (1) 6,880

MSE 2,800 831 2,240 237 25 2,240

Housing 4,170 1,258 3,230 231 29 3,230

Disbursement (Rs mn)

Net disbursements 20,910 17,019 22,630 23 (8) 80,535

Microfinance 17,200 15,343 19,100 12 (10) 70,739

Micro individual loan 1,510 1,068 1,740 41 (13) 5,242

MSE 760 307 730 147 4 2,030

Housing 1,080 302 980 258 10 2,444

Borrowings mix (Rs mn)

Net borrowings 39,653 58,879 38,125 (33) 4 38,125

Term loans, CC and OD 9,330 37,179 12,200 (75) (24) 12,200

Refinance 24,103 11,989 19,825 101 22 19,825

Securitization - 3,460 - -

NCD 6,220 6,250 6,100 (0) 2 6,100

Deposits (Rs mn)

Total deposits 37,790 39,866 3,038 37,968 (5) 1,144 (0) 82,275 37,968 117 132,077

CASA 2,390 216 1,380 1,009 73 2,263 1,380 64 4,251

CASA ratio (%) 6.3 5.3 3.7 96 bps 264 bps 2.8 3.6 -88 bps 3.2

Asset quality

Gross NPL (Rs mn) (90 days) 2,102 3,764 2,722 (44) (23) 2,253 2,722 (17) 2,448

Gross NPL (%) 2.7 6.2 3.6 -346 bps -90 bps 2.2 3.6 -142 bps 1.8

Net NPL (Rs mn) (90 days) 234 1,405 529 (83) (56) 169 529 (68) 112

Net NPL (%) 0.3 2.3 0.7 -200 bps -40 bps 0.2 0.70 -53 bps 0.1

PCR (calculated) 88.9 62.7 80.6

Key calculated ratios (%)

Yield on AUM 19.4 19.1 19.5 29 bps -8 bps 20.2 19.5 67 bps 19.9

Cost of borrowings 8.4 9.9 8.5 -146 bps -8 bps 9.1 8.6 45 bps 8.5

NIM 11.6 8.6 11.5 298 bps 8 bps 12.2 11.2 96 bps 12.3

Cost to income 72.2 77.9 56.9 -567 bps 1530 bps 57.4 67.0 -959 bps 52.1

Cost to average AUM 11.3 9.8 9.6 152 bps 173 bps 9.2 10.0 -80 bps 8.6

Credit cost 0.8 9.9 1.9 -913 bps -111 bps 1.5 4.6 -305 bps 1.5

RoA 1.8 (3.5) 2.8 535 bps -95 bps 2.4 0.1 236 bps 2.8

RoE 10.1 (17.5) 15.0 2758 bps -488 bps 15.2 0.4 1475 bps 20.3

Capital adequacy details (%)

CAR 23.8 21.8 23.0 199 bps 80 bps 23.0

Other key parameters (#)

Branches 462 457 464 1 (0)

Employees 12,290 10,653 11,242 15 9 12,928 11,242 15 14,868

(% change)

Ujjivan Financial Services Banks


Robust growth at 19% yoy

Growth momentum maintained. Ujjivan witnessed robust AUM growth at 21% yoy in

1QFY19; a trend similar to previous quarters (growth was tepid in 9MFY18). The pick-up

in pace for AUM is on the back of a revival in microfinance business and strong traction in

new business lines. The MFI segment recorded 15% yoy growth in the current quarter.

While the core MFI portfolio revived its growth pace, new products like MSE and housing

loans witnessed a sharp spike in growth at 2.4X yoy and 2.3X yoy respectively. Micro-

individual loans continued to slide downwards (down 9% yoy) for the fourth consecutive

quarter. Ujjivan is rapidly expanding its MFI portfolio into newer geographies.

Disbursements up 23% yoy in 1QFY19. Microfinance disbursements were modest at

23% yoy in 1QFY19 indicating a strong push to the business as the spillover impact of

demonetization gradually wears away. Average ticket size increased 18% yoy (up 13%

qoq), indicating AUM growth was driven by ticket size increment rather than swift

acquisition of new customers. The bank appears to be comfortable growing its book in

Tamil Nadu (market share gains), Gujarat, Assam and Rajasthan. Disbursements in micro-

individual loans were moderate at 41% yoy in 1QFY19. The two new segments; housing

and MSE witnessed strong growth at 1.5X yoy and 2.6X yoy on a low base. The growth

in average ticket size was high for these two segments at 76% and 70% yoy respectively.

Portfolio re-alignment has kicked off at a slow pace. The share of housing and MSE

loans increased to 9.8% of AUM (up 250 bps qoq and 660 bps yoy) in 1QFY19 from

2.4% in FY2017. Microfinance loans dropped to ~81% (down 370 bps yoy) of AUM mix

from 85% in FY2017 and micro-individual loans dropped to 8.8% from 11.7% yoy.

Going ahead, the share of new segment is expected to increase at a fast pace.

Microfinance however will remain the dominant product in the AUM mix.

Continuous focus on geographic diversification. The share of the top four states

(Karnataka, West Bengal, Tamil Nadu and Maharashtra) in the overall AUM mix dropped

60 bps qoq and 220 bps yoy to 53% in 1QFY19. Within this, the company has dropped

share in all states (yoy basis) except Tamil Nadu, where it continues to expand rapidly

(AUM mix up 60 bps yoy to 15.4%). The company has increased share in newer markets

like Gujarat (up 120 bps yoy), Bihar (up 25 bps yoy), Rajasthan (up 51 bps yoy) and

Madhya Pradesh (up 50 bps yoy). Diversification allows the company to nullify regional

one-off impacts on the MFI portfolio.

Expect ~30% loan CAGR over FY2019-2021E. We expect AUM to grow at ~30%

CAGR over FY2018-2021E to ~`165 bn by FY2021E. Growth will be driven by newer

segments, while growth in microfinance is likely to slow down in the medium term. This

will result in the share of microfinance to reduce to 70% by FY2021E from 84%

currently.



Exhibit 2: Share of non-microfinance loan continues to rise Loan mix, March fiscal year-end, 1QFY18-1QFY19 (%)


Exhibit 3: We expect AUMs of UJFS to grow at ~30% CAGR over FY2019-2021E AUM and loan growth, March fiscal year-ends, 2013-2021E


1QFY18 4QFY18 1QFY19 YoY (%) QoQ (%)

Loan mix (Rs mn)

AUM 64,593 75,600 77,870 21 3

Microfinance 54,970 63,170 63,380 15 0

Micro individual loan 7,539 6,880 6,830 (9) (1)

MSE 831 2,240 2,800 237 25

Housing 1,258 3,230 4,170 231 29

Loan mix (%)

Microfinance 85 84 81 -371 bps -217 bps

Micro individual loan 12 9 9 -290 bps -33 bps

MSE 1 3 4 231 bps 63 bps

Housing 2 4 5 341 bps 108 bps

Disbursement mix (Rs mn)

Total disbursements 17,019 22,630 20,910 23 (8)

Microfinance 15,343 19,100 17,200 12 (10)

Micro individual loan 1,068 1,740 1,510 41 (13)

MSE 307 730 760 147 4

Housing 302 980 1,080 258 10

Disbursements mix (%)

Microfinance 90 84 82 -789 bps -214 bps

Micro individual loan 6 8 7 95 bps -47 bps

MSE 2 3 4 183 bps 41 bps

Housing 2 4 5 339 bps 83 bps

11 16

33

54 61

76

101

130

163

60

44

102

65

13

24

34 29

25

10

30

50

70

90

110

-

45

90

135

180

225

2013

2014

2015

2016

2017

2018E

2019E

2020E

2021E

(%)(Rs bn) AUM (LHS) YoY (RHS)



Exhibit 4: MSE and housing loans increase as a proportion of net

AUM AUM mix, March fiscal year-ends, 1QFY17-1QFY19 (%)


Exhibit 5: Housing loan disbursements gained traction in

1QFY19 Disbursements mix, March fiscal year-ends, 1QFY17-1QFY19 (%)


Exhibit 6: Focus on newer geographies drive growth Geographic mix of AUM, March fiscal year-ends, 1QFY17-1QFY19 (%)


87 86 86 85 85 85 85 84 81

13 13 13 13 12 11 9 9 9

0 0 0 1 1 2 2 3 4

1 1 1 2 2 2 3 45

0

20

40

60

80

100

1Q

FY17

2Q

FY17

3Q

FY17

4Q

FY17

1Q

FY18

2Q

FY18

3Q

FY18

4Q

FY18

1Q

FY19

Microfinance Micro loan MSE Housing Others

89 89 88 87 90 90 88 84 82

11 10 118 6 6 6 8 7

0 1 0 3 2 2 3 3 4

1 1 1 2 2 2 3 45

0

20

40

60

80

100

1Q

FY17

2Q

FY17

3Q

FY17

4Q

FY17

1Q

FY18

2Q

FY18

3Q

FY18

4Q

FY18

1Q

FY19

Microfinance Micro loan MSE Housing Others

1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19

Tamil Nadu 13.2 13.7 13.9 14.4 14.8 15.0 15.2 15.2 15.4

Karnataka 16.0 16.0 15.9 15.4 15.3 14.9 14.7 14.1 13.8

West Bengal 14.6 14.4 14.4 14.6 14.3 14.5 13.9 13.8 13.9

Maharashtra 11.9 11.5 11.3 11.1 11.0 11.0 10.9 10.6 10.0

Gujarat 4.9 5.0 5.1 5.4 5.6 5.8 6.1 6.5 6.8

Bihar 4.6 4.5 4.5 4.6 4.9 5.1 5.0 5.1 5.1

Haryana 5.0 5.0 5.1 4.8 4.7 4.6 4.6 4.7 4.8

Assam 3.4 3.7 3.8 4.0 4.1 4.2 4.1 4.2 4.3

Rajasthan 3.3 3.2 3.3 3.3 3.4 3.4 3.6 3.8 3.9

Uttar Pradesh 5.1 4.9 4.7 4.1 3.9 3.7 3.6 3.4 3.3

Punjab 2.7 2.8 2.9 2.8 2.8 2.9 2.9 3.0 3.0

Orissa 2.6 2.5 2.6 2.8 2.9 2.9 2.8 2.8 2.8

Jharkhand 3.2 3.1 3.1 3.1 3.1 3.0 2.8 2.7 2.7

Kerala 2.4 2.3 2.2 2.2 2.2 2.3 2.3 2.3 2.3

New Delhi 2.1 2.0 2.0 1.9 1.8 1.7 1.9 2.0 2.0

Madhya Pradesh 1.3 1.3 1.4 1.4 1.4 1.5 1.6 1.8 1.9

Tripura 1.2 1.3 1.3 1.3 1.3 1.4 1.3 1.3 1.3

Pondicherry 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.8 0.8

Chhattisgarh 0.4 0.5 0.5 0.5 0.5 0.5 0.6 0.7 0.7

Uttarakhand 0.8 0.8 0.8 0.7 0.6 0.6 0.6 0.5 0.5

Others 0.7 0.7 0.7 0.8 0.7 0.4 0.7 0.7 0.7



Exhibit 7: New businesses to lead growth for Ujjivan AUM mix, March fiscal year-ends, 2013-2021E (` bn)

Note: 1) Individual loans include MSE, micro-individual and other loans.


Exhibit 8: Share of MFI to reach ~70% by FY2021E AUM mix, March fiscal year-ends, 2013-2021E (%)

Note: 1) Individual loans include MSE, micro-individual and other loans.


Asset quality continues to improve

PAR>0 days declined ~70 bps qoq to 3.3% (8.8% of loans in 1QFY18) while PAR >90

showed signs of improvement by ~90 bps qoq to 2.7% largely reflecting write-offs of

provided buckets and better collections across various buckets. The write-offs for the

quarter stood at `560 mn. These are early signs of business stabilizing, in our view. Gross

NPL dropped ~90 bps qoq to 2.7% while net NPL dropped ~40 bps qoq to 0.3%. The

company has stressed on focusing on branches with PAR >5% and forming independent

collection teams (with vintage staff) to improve recoveries.

Reported coverage ratio is at ~88% of NPLs. With steady decline in PAR and higher

provisions we should expect credit cost to normalize in FY2019E. We are building 1.5%

loan-loss provisions over FY2019-2021E.

Exhibit 9: Asset quality continues to improve March fiscal year-end, 2012-1QFY19 (%)


11 15 29

47 54 63 79

99 118

0 1

3

4 6

9

14

21

32

3 1

3

6

10

16

-

40

80

120

160

200

2013

2014

2015

2016

2017

2018E

2019E

2020E

2021E

Microfinance Individual loans Housing

96 93 90 87 89 84 80 76 71

4 7 10 8 10

12 14 16

19

- - - 5 2 4 6 8 9

-

20

40

60

80

100

2013

2014

2015

2016

2017

2018E

2019E

2020E

2021E

Microfinance Individual loans Housing

2012 2013 2014 2015 2016 2017 2018 1QFY19

GNPL 0.91 0.08 0.07 0.07 0.15 3.69 3.60 2.70

Net NPL 0.81 0.08 0.01 0.02 0.04 0.03 0.70 0.30



Exhibit 10: PAR>0 drops 70 bps qoq to 3% PAR, March fiscal year-end, 1QFY18-1QFY19 (%)


Exhibit 11: We expect credit costs to be around 1.5% in FY2019E Gross NPL and credit cost, March fiscal year-end, 2013-2021E (%)


Reported margins flat qoq at 11.6%

Margins (reported) flat qoq. Reported NIM was flat qoq at 11.6%. Calculated cost of

funds saw 8 bps qoq improvements in 1QFY19 though reported marginal cost of debt

increased by ~50 bps in 1QFY19 to 8%. Going ahead as CASA growth picks pace,

borrowing cost is expected to show a declining trend in the medium term. Calculated

yields dropped 12 bps qoq to 19.4% in 1QFY19 driven by a change in the AUM mix

towards a higher share of lower yielding products like MSE and housing loans. Going

ahead as portfolio re-alignment picks pace, yields are expected to witness marginal

compression. We forecast NIM compression of ~100 bps in the medium term.

CASA Gains traction. Share of CASA and retail term deposits increased to ~20% (up

1,000 bps yoy). Growth in CASA has been strong at 73% qoq. Retail term deposits

increased 77% qoq. We forecast CASA to grow at 70% CAGR over FY2019-21E.

Investment in business expansion led to spike in cost ratios in 1QFY19

Cost ratios to remain high in medium term. Cost to income improved significantly in

1QFY19 at 72% (up from 57% in 4QFY18 and down from 78% in 1QFY18). Growth in

operating expenses was high at 38% yoy in 1QFY19 driven by 55% rise in other expenses

and 30% increase in employee expenses. The company added 1,048 (net) employees in

1QFY19. Investment in infrastructure to roll out banking outlets will lead to cost pressure

in the medium term. The company added 88 banking outlets in 1QFY19 (up from 66 in

4QFY18). Ujjivan plans to add 475 new banking outlets in FY2019E (221 asset centres to

be converted in FY2019E). We forecast ~25% CAGR in operating expenses over FY2019-

2021E leading to cost-to-income ratio of 61% by FY2021E.

9.9

8.8

6.7

5.4

4.0 3.3

3.7

6.1 5.5

4.6

3.6 2.7

0.0

2.5

5.0

7.5

10.0

12.5

4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19

PAR>0 PAR>90

0.1 0.1 0.1 0.2 3.6 3.5 2.2 1.8 1.8

0.8 0.6 0.9

0.6

1.3

4.6

1.5 1.5 1.5

0.0

0.9

1.8

2.7

3.6

4.5

5.4

0.0

1.1

2.2

3.3

4.4

5.5

2013

2014

2015

2016

2017

2018E

2019E

2020E

2021E

(%)(%) GNPL (LHS) Credit cost (RHS)



Exhibit 12: CASA growth pick up has been slow Borrowings mix, March fiscal year-ends, 1QFY18-1QFY19 (%)


Exhibit 13: Marginal cost of funds inched up 40 bps qoq in

1QFY19 Funding cost, March fiscal year-ends, 1QFY18-1QFY19 (%)


Exhibit 14: Ujjivan – old and new estimates

Old and new estimates, March fiscal year-ends, 2019-2021E (₹ mn)


55

39 25

17 12

18

21

24 26 31

0

1

1 2 3

0

1

2 4

7

5

9

11 15 17

-9 20

28 22 9 9 9

8 8 12 11 7 0 0

0

20

40

60

80

100

1QFY18 2QFY18 3QFY18 4QFY18 1QFY19

Banks Refinance CASA Retail TD

Bulk TD CD NCDs Others

7.5

7.2 7.4 7.5

8.0

9.8 9.7

9.3

9.0

8.6

6.0

7.0

8.0

9.0

10.0

1QFY18 2QFY18 3QFY18 4QFY18 1QFY19

Borrowing cost (marginal) Cost of funds (average)


2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E

Net interest income 10,279 13,788 16,597 12,117 15,120 17,746 (15) (9) (6)

AUM 99 130 166 101 130 163 (2) 0 2

NIM (%) 9.2 9.6 9.2 10.4 9.5 8.6 -123 bps 14 bps 62 bps

Non-interest income 3,294 4,324 5,380 1,486 1,994 2,587 122 117 108

Operating expenses 9,009 11,069 13,487 8,176 10,048 12,370 10 10 9

Employee expenses 4,815 5,834 6,674 4,661 5,629 6,639 3 4 1

Provision 871 1,602 2,224 1,324 1,733 2,195 (34) (8) 1

PBT 3,693 5,442 6,265 4,103 5,332 5,768 (10) 2 9

PAT 2,261 3,332 3,836 2,673 3,474 3,758 (15) (4) 2



Exhibit 14: Key growth rates and ratios March fiscal year-end, 2016-2021E (%)


2016 2017 2018 2019E 2020E 2021E

Growth in key parameters

Profit and loss statement

Interest income 69.0 31.7 7.0 24.7 30.0 28.1

Interest costs 56.1 28.2 11.5 19.7 23.6 27.8

Net interest income 81.5 39.7 5.2 34.0 34.1 20.4

Other income 55.2 53.0 66.6 57.1 31.3 24.4

Loan origination fees 49.8 9.6 (8.1) 70.9 31.4 29.6

Net total income 77.4 41.5 14.3 39.0 33.4 21.3

Provisioning expenses 20.1 197.2 313.7 (72.0) 83.9 38.9

Net income (post provisions) 81.2 34.7 (14.6) 90.7 30.0 19.6

Operating expneses 49.7 49.3 42.8 37.7 22.9 21.8

Staff expenses 47.9 38.1 35.0 31.3 21.2 14.4

Admin and other operating expenses 56.6 70.1 41.7 50.0 10.0 5.0

Depreciation expenses 19.0 57.4 227.5 20.9 134.1 117.4

PBT before extraordinaties 137.5 18.3 (96.3) 3,033.9 47.3 15.1

Extraordinary income 137.5 18.3 (96.3) 3,033.9 47.3 15.1

PAT 133.8 17.2 (96.5) 3,033.9 47.3 15.1

Balance sheet

Loans and advances 57.3 15.9 28.8 30.4 32.1 27.7

Investments - - NA NA (38.7) (152.7)

Fixed assets 34.7 478.1 41.9 127.0 151.8 143.4

Current assets (19.9) 52.3 (18.8) 10.1 10.6 9.3

Cash and bank balances (23.8) 54.7 (21.9) 10.1 10.7 9.2

Other current assets 39.6 32.7 11.0 10.0 10.0 10.0

Other assets 68.1 1,690.0 (17.9) (95.0) 10.0 10.0

Net deferred tax asets 57.6 95.1 62.4 - - -

Total assets 44.0 48.0 15.7 28.5 26.9 24.9

Liabilities

Borrowings 40.1 43.0 (38.8) (22.0) (20.0) (20.0)

Deposit 90.4 51.0 37.8

Total liabilities 39.8 48.4 19.8 32.3 29.1 26.6

Share capital 17.5 18.0 1.3 - - -

Reserves and surplus 68.6 49.2 0.3 12.3 15.9 15.6

Shareholders funds 62.6 46.5 0.3 11.5 15.0 14.8

Key ratios (reported) (%)

Cost of funds 11.2 10.1 8.6 8.1 7.6 7.6

Yield on loans 22.5 22.4 19.5 18.8 18.6 18.4

Spread 11.2 12.4 10.9 10.7 11.0 10.8

NIM 11.1 12.0 10.4 10.2 10.4 10.5

Cost-income ratio 50.8 53.6 67.0 66.4 61.1 61.4

Operating expense / assets 6.1 6.1 7.0 8.0 7.7 7.5

RoE decomposition (% of assets)

NII 10.3 9.7 8.2 9.2 9.6 9.2

Other income 1.6 1.7 2.2 2.9 3.0 3.0

Fee income 1.4 1.0 0.8 1.2 1.2 1.3

Provisioning expenses 0.5 1.0 3.3 0.8 1.1 1.2

Operating expenses 6.1 6.1 7.0 8.0 7.7 7.5

Staff expenses 3.9 3.6 3.9 4.3 4.1 3.7

RoA pre-tax 5.4 4.3 0.1 3.3 3.8 3.5

Tax rate 34.9 35.5 38.8 38.8 38.8 38.8

RoA 3.5 2.8 0.1 2.0 2.3 2.1

Average assets / average equity 5.2 5.1 5.3 6.0 6.8 7.4

RoE 18.3 14.1 0.4 12.1 15.8 15.8



Exhibit 15: Summarized financial statements March fiscal year-end, 2015-2021E (₹ mn)


2016 2017 2018 2019E 2020E 2021E

Profit and loss statement

Interest income 9,453 12,718 13,720 17,521 22,737 28,035

Interest costs 4,235 5,427 6,049 7,242 8,948 11,438

Net interest income 5,218 7,290 7,671 10,279 13,788 16,597

Other income 823 1,259 2,097 3,294 4,324 5,380

Loan origination fees 708 776 713 1,219 1,602 2,076

Other income 114 483 1,383 2,075 2,722 3,304

Net total income 6,041 8,549 9,768 13,574 18,113 21,977

Provisioning expenses 253 751 3,108 871 1,602 2,224

Net income (post provisions) 5,788 7,798 6,660 12,703 16,511 19,752

Operating expneses 3,068 4,580 6,542 9,009 11,069 13,487

Staff expenses 1,967 2,716 3,666 4,815 5,834 6,674

Admin and other operating expenses 1,022 1,738 2,463 3,694 4,064 4,267

Depreciation expenses 80 126 414 500 1,171 2,546

PBT 2,719 3,217 118 3,693 5,442 6,265

Tax 948 1,141 46 1,432 2,110 2,429

PAT 1,772 2,077 72 2,261 3,332 3,836

Balance sheet

Loans and advances 50,644 58,712 75,600 98,577 130,268 166,299

Investments 1 1 1 14,144 8,670 (4,573)

Fixed assets 242 1,398 1,984 4,503 11,340 27,606

Current assets 5,502 8,383 6,805 7,493 8,290 9,062

Cash and bank balances 4,913 7,601 5,937 6,539 7,239 7,907

Other current assets 589 782 868 955 1,050 1,156

Other assets 884 15,824 12,987 649 714 786

Net deferred tax asets 241 470 763 763 763 763

Total assets 57,273 84,786 98,139 126,129 160,044 199,943

Liabilities

Borrowings 43,989 62,914 38,528 30,052 24,041 19,233

Deposits — 1,064— 37,968 72,274 109,108 150,310

Provisions 616 1,272 2,615 2,615 2,615 2,615

Total liabilities 45,296 67,233 80,525 106,496 137,475 174,040

Share capital 1,012 1,194 1,209 1,209 1,209 1,209

Reserves and surplus 10,966 16,359 16,405 18,424 21,360 24,694

Shareholders funds 11,978 17,553 17,614 19,633 22,569 25,903


Post-overrun VNB margin stable in 1QFY19

Max Life reported VNB margin of 18.1% (up 10 bps yoy) on a post-overrun basis. Pre-overrun

margin was up 130 bps yoy to 23.5% though higher-than-expected business acquisition expenses

offset the same. Typically, lower volumes affects quarterly margin in 1Q—the company reported

20.2% VNB margin in FY2018, up 180 bps. We continue to build in about 20% post-overrun

VNB margin in our forecasts. We find an upside to our FY2019E VNB estimates if (1) expansion

in pre-overrun margin in 1Q continues for the rest of the year and (2) higher overruns in

1QFY19 reduce meaningfully to translate into higher post-overrun margins. However, Max’s

aggressive expansion strategy (discussed later) will put some pressure on margin over the next

few quarters.

Protection business increases further

Increase in protection business was the key driver of Max Life’s pre-overrun VNB margin

expansion. Max Life’s protection business increased to 16% of APE from 13% in 1QFY18; this

compares with 8% in FY2018. Yoy growth was equally driven by individual and group

businesses as (1) individual protection business was up to 9% of APE from 8% in 1QFY18 and

(2) group protection was up to 7% from 6% in 1QFY18. Higher protection business and

increase in share of ULIP (41% of APE from 28% in 1QFY18) led to 14% yoy decline in earnings

to `910 mn. We believe that share of protection business will continue to increase in FY2019E

as well though will be lower than 1QFY19 as savings business picks up in 2H.

Business view positive, downgrade to ADD post the rally

We continue to like the business of Max Life and believe that the company is well-placed to

deliver 15% EVOP growth on the back of 15-18% APE growth, 20% VNB margins translating

into 20% operating RoEV. We continue to value the business at `290 bn, i.e. 2.9X EV or 16X

EVOP FY2020E (TP of Max FS is `650 for 68% stake and 10% holding-company discount).

Renewal of business partnership with Axis Bank is the key monitorable in the stock. The current

market price assumes that Max Life will transfer about 25% stake to Axis (in lieu of its banking

partnership) for generating about 40% business for the company. Fair value estimate of the

stock will be `550 on assuming 20% stake transfer to Axis Bank. Limited upside to this scenario

(20% stake transfer) post the recent rally (up 25% in last one month) prompts us to downgrade

our rating to ADD from BUY.

Max Financial Services (MAXF) NBFCs

Steady performance. Max Life reported steady business performance in 1QFY19 with

(1) 17% APE growth, (2) stable (18%) VNB margin and (3) 15% operating RoEV. The

share of protection business increased to 16% of APE, up 300 bps yoy though it is yet

to translate into higher post-overrun VNB margins. Post the recent rally (up 25% in last

one month), we revise rating on Max FS to ADD from BUY; TP of `650 (unchanged).

ADD

AUGUST 07, 2018

RESULT, CHANGE IN RECO.


Price (`): 522


BSE-30: 37,692

QUICK NUMBERS

APE up 17% yoy

Share of protection

business increased

to 16% of APE from

13% yoy

Post-overrun VNB

margin of 18.1%,

up 10 bps yoy

Nischint Chawathe

M B Mahesh CFA

Dipanjan Ghosh

Max Financial Services







MFs 27.8 EBITDA (Rs bn) 1.2 1.7 1.7


Absolute 25.3 2.7 (14.1) ROE (%) 6.5 8.3 8.0



653-403

140.2

NBFCs Max Financial Services


Investing in propriety business

Max Life has added 47 branches over the last one year. The company proposes to add 145

new branches in FY2018 and make capital investment of `2.5 bn in the business. While

agents increased 5% yoy to 55,610, the company proposes to add about 36,000 agents per

year over the next three years. In 1QFY19, share of proprietary channels increased by 100

bps to 36% while Axis Bank was 52%, up 300 bps yoy. Max’s new business plan envisages

increase in share of propriety channels to about 40% and contribution of Axis Bank to

about 40% over the medium term.

Other highlights of the quarter

Max reported 15% operating RoEV. EV was up just 2% qoq to `76.45 bn due to MTM

losses following rise in interest rates.

Persistency was stable in almost all buckets with 83rd

month persistency at 83%.

Policyholder expenses to gross premium ratio was down 165 bps yoy to 17.3%.

Sum assured in force was up 28% yoy. Solvency ratio was down to 262% from 295% in

1QFY18 and 275% in 4QFY18.

Exhibit 1: Max Life - quarterly summary March fiscal year-ends, 1QFY18-1QFY19 (Rs mn)


% change

1QFY19 1QFY18 4QFY18 1QFY18 4QFY18 FY2018

Key items (Rs bn)

PBT 0.9 1.1 2.3 (14) (60) 6.2

AUM 539 459 522 18 3 522

Debt 421 NA 407 407

Equity 119 NA 115 115

Key ratios (%)

Expense to premium 17 19 10 13

Solvency ratio 262 295 275 275

Channel wise wise break-up of individual adjusted premium (Rs mn)

Proprietary 1,876 1,603 2,865 17 (35) 8,681

Axis bank 2,719 2,244 8,463 21 (68) 18,969

Other banks 680 687 1,741 (1) (61) 4,180

Others 47 46 134 4 (65) 322

Total 5,270 4,580 13,390 15 (61) 32,150

Share of total (%)

Proprietary 36 35 21 27

Axis bank 52 49 63 59

Other banks 13 15 13 13

Others 1 1 1 1

Max Financial Services NBFCs


Exhibit 2: Share of ULIP has seen sharp increase in the past five quarters Product mix based on total APE, March fiscal year-ends, 2016-1QFY19 (% of total)


Exhibit 3: Max Life trades at lower valuation compared to peers March fiscal year-ends, 2017-2021E


Exhibit 4: Max FS has corrected in recent months Rolling Price/EV and Price/NBV, August 2009 onwards

Source: Company, Bloomberg, Kotak Institutional Equities estimates

57 5443

38

34

47

43

4 9

99

8 5

27 3041 41

0

20

40

60

80

100

2016 2017 2018 1QFY19

PAR Individual protection Group protection Non-par savings ULIP

TP Price

Market

cap. EVOP (Rs bn) Embedded value (Rs bn) VNB margin (%) Price/EV (X) Price/EVOP (X) Operating RoEV (%)

EVOP

(Rs

bn)

Rating (Rs) (Rs) (Rs bn) 2017 2018 2019E 2020E 2021E 2017 2018 2019E 2020E 2021E 2017 2018 2019E 2020E 2021E 2017 2018 2019E 2020E 2021E 2017 2018 2019E 2020E 2021E 2017 2018E 2019E 2020E 2021E

HDFC Life SELL 405 485 977 22 27 33 40 49 125 152 185 226 274 22 23 24 24 24 7.8 6.4 5.3 4.3 3.6 44.0 36.5 29.3 24.2 20.1 22 22 22 22 21

ICICI Prudential Life BUY 500 413 593 23 37 34 40 48 161 188 214 246 285 10 17 17 18 19 3.7 3.2 2.8 2.4 2.1 25.8 16.1 17.7 14.8 12.4 17 23 18 19 19

Max Life ADD 650 522 140 11 14 15 18 20 66 75 87 101 116 19 20 20 20 20 3.2 2.8 2.4 2.1 1.8 18.7 15.4 13.6 11.9 10.3 20 21 20 20 20

SBI Life ADD 785 687 687 29 30 35 43 53 165 191 223 264 315 15 16 17 17 18 4.2 3.6 3.1 2.6 2.2 23.8 23.2 19.4 15.8 13.0 23 18 19 20 20

(15)

0

15

30

45

60

0

1

2

3

4

5

Aug-0

9

Dec

-09

Apr-

10

Aug-1

0

Dec

-10

Apr-

11

Aug-1

1

Dec

-11

Apr-

12

Aug-1

2

Dec

-12

Apr-

13

Aug-1

3

Dec

-13

Apr-

14

Aug-1

4

Dec

-14

Apr-

15

Aug-1

5

Dec

-15

Apr-

16

Aug-1

6

Dec

-16

Apr-

17

Aug-1

7

Dec

-17

Apr-

18

Aug-1

8Rolling P/EV (X) (LHS) Rolling NBV multiple (X) (RHS)



Exhibit 5: Sensitivity of Max FS’s shareholding in Max Life

Source: Kotak Institutional Equities estimates

Exhibit 6: 20.4% operating RoEV for Max Life in FY2021E RoEV movement for Max Life, March fiscal year-ends, 2015-2021E (Rs bn)


Exhibit 7: We expect Max Life to deliver medium-term margin of ~20% NBAP margins, March fiscal year-ends, 2015-2021E (Rs bn)


Current Stake (%)

Stake placed to the bank stake 10 20 25 30

Max FS's effective stake 68% 62% 56% 54% 52%

Fair value per share (Rs) 664 603 544 523 503

Note:

(1) We use 10% holding company discount.

2015 2016 2017 2018 2019E 2020E 2021E

Opening embedded value (EV) 44.4 52.3 56.2 65.9 75.1 86.9 100.5

NBV (before over-run) 4.6 3.9 5.0 6.6 7.7 8.8 10.1

Acquisition expense overrun

Expected return in force 4.0 5.1 5.3 6.4 7.3 8.5 9.8

Operating variance 1.2

Investment varinace 2.5 — 1.7 (0.5) 0.5 0.5 0.5

Dividend payout (4.0) (4.4) (3.2) (3.9) (4.0) (4.5) (5.0)

Closing EV 52.8 56.2 65.9 75.1 86.9 100.5 116.3

EVOP 9.8 8.9 11.2 13.6 15.3 17.6 20.2

RoEV (%) 18.9 7.4 17.3 13.9 15.8 15.6 15.7

Operating RoEV (%) 22.1 17.0 19.9 20.6 20.4 20.2 20.1

2015 2016 2017 2018 2019E 2020E 2021E

APE 19.7 21.1 26.4 32.5 38.3 44.1 50.7

NBV 4.6 3.9 5.0 6.6 7.7 8.8 10.1

VNB margins pre overrun (%) 23.4 18.4 18.9 20.2 20.0 20.0 20.0

NBV post overrun 4.2 3.8 5.0 6.6 7.7 8.8 10.1

VNB margins post overrun (%) 21.5 17.9 18.9 20.2 20.0 20.0 20.0

Max Financial Services NBFCs


Exhibit 8: A balanced product mix for Max Life Contribution of various products to new business premium, March fiscal year-ends, 2012-2018 (% of total)


2012 2013 2014 2015 2016 2017 2018

Bajaj Life

Unit linked policies 12 12 10 24 29 62 64

Participating policies 60 49 51 21 19 20 20

Non participating policies 28 39 38 54 52 18 17

Birla SL

Unit linked policies 59 43 45 35 48 38 NA

Participating policies 0 2 14 16 13 11 NA

Non participating policies 41 55 41 49 38 51 NA

ICICI Prudential Life




HDFC Life




Max Life




SBI Life




Kotak Life






Exhibit 9: High contribution of bancassurance for Max Life Contribution of various channels to new business premium, March fiscal year-ends, 2012-2018 (% of total)


Exhibit 10: Max Life's persistency has been strong Persistency of Max Life across buckets, March fiscal year-ends, 2010-1QFY19 (%)

Source: Company

2012 2013 2014 2015 2016 2017 2018

Bajaj Life

Agency 66 76 84 92 90 90 79

Bankassurance 10 7 8 1 2 2 5

Corporate agents 19 13 5 1 1 1 1

Others 5 4 3 7 7 7 14

Birla SL

Agency 70 66 65 67 81 75 69

Bankassurance 14 17 20 19 9 9 19


Others — — 12 12 5 10 11

HDFC Life

Agency 20 16 16 16 13 15 13

Bankassurance 64 72 70 67 68 61 59


Others 4 5 7 14 16 19 23

ICICI Prudential Life

Agency 44 34 28 25 23 23 26

Bankassurance 38 45 54 58 57 57 53


Others 7.5 7 8 13 16 16 19

Max Life

Agency 37 35 31 29 28 25 24

Bankassurance 40 48 51 57 59 62 64


Others 9 7 8 8 9 10 10

SBI Life

Agency 52 53 50 46 38 34 31

Bankassurance 44 44 47 52 61 65 67


Others 2 3 2 1 1 1 1

2010 2011 2012 2013 2014 2015 2016 2017 2018 1QFY19

13th month NA 70 75 76 76 78 79 80 80 83

25th month 67 60 62 64 66 64 67 67 72 72

37th month 50 49 42 46 53 60 58 58 62 64

49th month 45 40 39 32 38 49 56 56 57 57

61st month 60 39 31 26 23 32 43 43 53 54


Promotional activity rises at the premium end of detergents; stable across all other categories

Please refer to Exhibits 2 and 3 for pricing and promotional activity, respectively.

Soaps/detergents. We witnessed increase in promotional activity in premium variants of

detergent powder as HUVR responded to P&G’s promotions. Surf has matched Ariel’s offer

of 20-50% extra grammage in front load and top load detergent powders (Exhibit 3).

Additionally, HUVR has cut price of the flagship variant of Surf Excel (quick wash) by 11%.

Henko has also responded with price cut of 14-19% in select variants. Promotional activity is

restricted to the top end of the segment. We witnessed modest price increase in few SKUs of

Rin, Tide and Wheel. Promotional activity was stable in soaps segment. In the liquid dish

wash category, Pril and Vim are offering 33% extra volumes on select SKUs.

Personal care items. (1) Hair oils – pricing was largely stable across the board (copra prices

trended down again in June 2018 by 7% after 5% drop in May) and promotional activity

was negligible. Marico has increased price of Parachute Jasmine by 12% and Dabur has

increased price of Dabur Amla hair oil by 13%, (2) shampoos – we have not witnessed any

price intervention or incremental promotions in shampoos, (3) oral care – we witnessed price

cuts in the naturals segment – Colgate has cut price of Swarna Vedshakti toothpaste by 10%

and HUVR has cut prices of Ayush toothpastes by more than 16-17%. Pricing is steady

otherwise except for 10% increase in Colgate Maxfresh.

Food/beverage items. (1) Biscuits – promotional activity has settled at minimal levels after

downward trend over the past 2-3 months. There are a very few SKUs that carry extra

grammage. Pricing was broadly stable across the board, (2) chocolates – we observed cuts in

extra grammage across the board, (3) edible oils – we witnessed 3-6% increase in price by

Marico and Fortune, and (4) others – Nestle has increased price of smaller SKUs of Maggi by

5-10% and Dabur has taken modest price increase in Honey and Chyawanprash.

RM trends– a mixed bag across oil-based inputs and agri-inputs

Refer to Exhibit 4 for detailed RM inflation impact.

Agri-inputs. Agri commodities remained mixed during the month with India tea prices

seeing a sharp increase (up 5% mom). Sugar prices rose the most (up 17% mom) after

declining for many straight months – still down 12% yoy. This increase was on the back of

the central government’s decision to keep the quantity of sugar sold by mills at lower than

normal month limits. Liquid milk and barley saw some increases of 3% and 1%, respectively.

Global coffee prices were down 1-3% mom.

Oil commodities basket. Prices for oil basket remained mix – prices eased for copra (down

7% mom), followed by mentha oil (down 4% mom), PFAD (down 4% mom) and Kardi oil

(down 2% mom). Rice bran oil prices rose during the month (up 4% mom), followed by LLP,

Sunflower oil and Linseed oil (all up 2% mom). However, we do note that prices of most of

the oil commodities are still meaningfully up on a yoy basis (up 17-49% yoy).

Consumer Products India

Month in review – June 2018: Aggression in detergents; stable otherwise. The

KIE consumer universe outperformed the broader markets, delivering 7% returns over

the last month. RM trends were mixed for both agri-commodities and oil basket. On the

in-market activity front, we witnessed modest price increase and easing of promotions

with the exception of higher promotional activity at the premium end of detergent

powders; Surf has matched Ariel’s promotional activity. Price cut in herbal toothpaste

by HUVR and Colgate was another interesting observation. We retain our ‘tread

selectively’ stance; top picks: ITC, JUBI, NEST, BRIT and CLGT.

Promotional activity up in detergents. Pricing increases gradual not yet visible in the

trade as during this month..

CAUTIOUS

AUGUST 07, 2018

UPDATE

BSE-30: 37,692

Rohit Chordia

Jaykumar Doshi

Aniket Sethi

India Consumer Products


Other commodities. Other commodities posted mixed trends – price increases were

seen for LAB (up 7% mom), Turpentine oil (up 11% mom), Styrene (up 3% mom) and

Vinyl Acetate – China (up 7% mom). Some deflationary pressure was seen in caustic soda

(down 9% mom), soda ash (down 6% mom) and TiO2 Anatese (down 5% mom).

Who benefits? (1) Drop in copra prices should benefit Marico and Dabur, (2) lower

coffee prices should benefit TGBL and Nestle, and (3) continual decline in PFAD prices

should benefit HUL, GCPL and Jyothy Labs.

Who gets impacted? (1) Increase in in sugar and domestic liquid milk prices could hurt

companies such as Britannia, Nestle, and GSK-CH – even as both the commodities are still

down on a yoy basis, and (2) crude oil inflation will impact all FMCG companies with a

lag due to higher packaging costs.

Sector (KIE consumer universe) marginally underperforms broader markets

Our overall consumer coverage marginally outperformed the broader markets over the past

month posting just 7% return (up 4%, ex-ITC) versus the broader market’s 6%. Key stocks

that outperformed were – ITC (up 15%), Dabur (up 15%), Asian Paints (up 9%) and HUL

(up 7%). Key underperformers were TGBL (down 16%), SHKL (down 13%), Jyothy (down

8%) and UNSP (down 6%).

On a 12-month basis, the sector outperformed the broader markets posting 33% absolute

return (40% ex-ITC) versus 16% return for the broader markets. We retain our ‘tread

selectively’ stance; preferred picks – ITC, JUBI, NEST, BRIT and CLGT.

Other newsflow

RP-Sanjiv Goenka eyes non-food FMCG acquisitions. Sanjiv Goenka-led RP-Sanjiv

Goenka (RP-SG) Group is looking at multiple acquisitions in FMCG space beyond foods.

Mr Goenka, the chairman of the group, has said that the group is looking at several

organic and inorganic opportunities in the FMCG space, which have a solid national

presence.

Mitsui & Co has partnered Japanese consumer firm Kao Corporation to enter baby

diaper market in India. Mitsui & Co has partnered Japanese consumer firm Kao

Corporation to enter baby diaper market in India with its brand – Merries. It is the leading

premium brand in Japan in terms of sales value share.

Grofers to enter FMCG segment. Grofers plans to enter the FMCG segment and is

targeting overall revenue of Rs25 bn by FY2019. The company has launched seven new

brands under two categories Budget and Popular G-Brands. The company has now

expanded its food and non-food products count to 250 and they are prices at an approximate

discount of 5-50% compared to market prices for popular brands in these categories.

CCL plans to launch ready-to-drink coffee. CCL Products – Hyderabad-based instant

coffee major – plans to introduce 3-in-one sachets that will contain instant coffee, spray

dried milk powder and sugar, and the customer would have to just add water to drink it.

They are also looking to offer different flavors such as cappuccino, vanilla, hazelnut and

are also looking to offer sugar-free and non-dairy cream variants.

Patanjali plans to enter frozen vegetables, Khadi market. Patanjali is planning to

foray into the Khadi and frozen vegetables market with an investment of Rs100 bn. It has

already initiated a pilot launch in some states and now plans to introduce frozen

vegetables like peas, carrots and cauliflower. As per media reports, they plan to launch

apparels by Diwali this year with nearly 100 exclusive retail outlets.

PepsiCo reduces salt in snacks and has also resized its packaging. PepsiCo India has

resized its packaging for its Lay’s and Kurkure brands to reduce its carbon footprint

significantly. The company has also reduced sodium content in tow of its best-selling variants.



Starbucks introduces smooth coffee innovation Nitro Cold Brew in India. Starbucks

has introduced Nitro Cold Brew coffee in India. In this, after handcrafting the cold brew

recipe, the cold brew is allowed to mix with nitrogen to deliver a super-smooth, naturally-

sweet coffee and a velvety, creamy texture. It is currently introduced in just five Starbucks

stores in India.

Exhibit 1: A snapshot of new launches and key new promotional campaigns




Exhibit 2: KIE Consumer Pricing monitor

Source: Kotak Institutional Equities

MRP (Rs)

Category/Brand/SKU Company Jun-18 Norm Wt Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 1M 3M 6M 1Y

Soaps

Dove Moisturising Cream 3*100gm HUVR 172 100g 57 57 57 57 57 57 57 57 57 57 57 57 — — — (5)

Dove Moisturising Cream 75gm HUVR 49 100g 65 65 65 65 65 65 65 65 65 65 65 65 — — — —

Hamam 150gm HUVR 43 100g 32 31 31 31 31 31 31 31 30 30 30 29 (4) (4) (8) (10)

Lifebuoy Total 125gm HUVR 28 100g 23 22 22 22 22 22 22 22 22 22 22 22 — 4 4 (3)

Lifebuoy Total 3*100gm HUVR 65 100g 22 22 22 22 22 22 22 24 24 24 24 24 — — 11 9

Lux Creamy White 125gm HUVR 50 100g 40 40 40 40 40 40 40 40 40 40 40 40 — — — —

Pears Pure Gentle 3*125gm HUVR 164 100g 44 44 44 44 44 44 44 44 44 44 44 44 — — — (6)

Vivel Satin Soft 100gm ITC 27 100g 25 25 25 25 25 25 25 25 27 27 27 27 — — 8 8

Vivel Satin Soft 3*100gm ITC 73 100g 24 24 24 24 24 24 24 24 24 24 24 24 — — 1 1

Fiama Di Wills Soap Mild Dew 125gm ITC 62 100g 50 50 50 50 50 48 48 50 50 50 50 50 — — 3 —

Fiama Di Wills Mild Dew (3+1)*115gm ITC 180 100g 40 40 40 40 40 39 39 40 40 40 39 39 — (3) — (3)

Cinthol Original 4*100gm GCPL 135 100g 34 34 34 34 34 34 34 34 33 33 34 34 — 2 — —

Cinthol Soap Lime Fresh 4*75gm GCPL 76 100g 24 24 24 24 24 24 24 25 25 25 25 25 — — 6 6

Godrej No 1 Lime & Aloevera (3+1) *100gm GCPL 72 100g 18 18 18 18 18 18 18 18 18 18 18 18 — 1 1 1

Godrej No 1 Saffron & Milk Cream (3+1) *150gm GCPL 98 100g 18 18 18 18 18 18 18 18 18 18 16 16 — (9) (9) (14)

Ayush Purifying Turmeric Soap - 100 g HUVR 30 100g 30 30 —

Dettol soap Original 125 g Reckitt B. 51 100g 41 41 —

Santoor soap Sandal & Turmeric 4*100 g Wipro Cons 104 100g 26 26 —

Patanjali soap Neem Kanti 75 g Patanjali 15 100g 20 20 —

Margo soap Original neem 2*100 gm Jyothy Labs 48 100g 24 24 —

Shower Gels/Facewash/Handwash/Bodywash

Facewashes

Pears Pure & Gentle 60gm HUVR 125 100g 200 200 200 200 200 200 200 192 192 192 208 208 — 9 4 14

Lakme Blush and Glow Strawberry gel 50ml HUVR 99 100ml 198 198 198 198 198 198 198 198 198 198 198 198 — — — —

Lakme Face Clnsr Deep Pore Cleanser 120ml HUVR 230 100ml 158 158 158 158 158 158 158 158 158 158 192 192 — 21 21 21

Dove Beauty Moisture 50gm HUVR 125 100g 210 210 210 210 210 210 210 240 240 240 250 250 — 4 19 19

Ponds Face Wash Daily 100G HUVR 140 100g 119 119 119 119 119 119 119 119 119 119 140 140 — 17 17 30

Fair & Lovely Fairness 50gm HUVR 55 100g 110 110 110 110 110 110 110 110 110 110 110 110 — — — —

Olay Cleanser Total Effects Anti Ageing 100gm P&G 269 100g 260 260 260 260 260 260 260 269 269 269 269 269 — — 3 3

Himalaya Face Wash - Purifying Neem 100 ml Himalaya 117 100ml 117 117 —

Clean & Clear Natural Bright 100ml J&J 110 100ml 110 110 —

Garnier- Power White, Double Action 100ml L'Oreal 180 100ml 180 180 —

Handwash

Lifebuoy Total 10 Pump 190ml HUVR 82 100ml 38 38 38 38 38 38 38 36 36 36 36 43 19 19 13 13

Dettol - Germ Protection, Original Pump 200ml Reckitt B. 87 100ml 44 44 —

Godrej Protekt Masterblaster Pump 300ml GCPL 89 100ml 30 30 —

Savlon Double Strength Pump 220ml ITC 80 100ml 34 36 8

Lifebuoy Total 10 Refill 750ml HUVR 174 100ml 23 23 —

Dettol - Germ Protection, Original Refill 750ml Reckitt B. 99 100ml 13 13 —

Godrej Protekt Masterblaster Refill 750ml GCPL 99 100ml 15 13 (14)

Savlon Double Strength Pump Refill 750ml ITC 169 100ml 23 23 —

Bodywash/ Shower Gels

Palmolive Absolute Relaxing 250ml Colgate P. 180 100ml 68 68 76 76 76 76 76 76 76 76 72 72 — (5) (5) 6

Fiama Di Wills Lemongrass & Jojoba (Clr Sprng) 250ml ITC 199 100ml 80 80 80 80 80 80 80 80 80 80 80 80 — — (0) (0)

Lux Velvet Touch Moisturising 235ml HUVR 99 100ml 60 60 60 60 41 41 41 41 41 41 42 42 — 2 2 (30)

Pears Pure & Gentle 250M HUVR 180 100ml 74 74 74 74 74 74 74 74 74 74 72 72 — (3) (3) (3)

Cinthol Play Refreshing 200ml GCPL 150 100ml 60 60 60 60 60 60 60 60 75 75 75 75 — — 25 25

Dove Deeply Nourishing 190ml HUVR 99 100ml 52 52 —

Nivea - Lemon & Oil 250ml Nivea 199 100ml 80 80 —

Detergents

Detergent Bars

Wheel Active 120gm HUVR 5 100g 4 4 4 4 4 4 4 4 4 4 4 4 — — 8 8

Rin Advance 75gm HUVR 5 100g 6 6 6 6 6 6 6 7 7 7 7 7 — — 7 7

Rin Advance 145gm HUVR 10 100g 6 6 6 6 6 6 6 7 7 7 7 7 — 3 14 14

Rin Advance 250gm HUVR 16 100g 6 6 6 6 6 6 6 6 6 6 6 6 — — 2 (10)

Surf Excel Bar 100gm HUVR 10 100g 10 10 10 10 10 10 10 10 10 10 10 10 — — 5 5

Surf Excel 250gm HUVR 26 100g 10 10 10 10 10 10 10 10 10 10 10 10 — — 4 (4)

Surf Excel Det Bar 400gm HUVR 50 100g 12 12 12 12 12 12 12 12 13 13 13 13 — — 4 4

Tide 120gm P&G 10 100g 8 8 8 8 8 8 8 8 8 8 8 8 — — — —

Tide 70gm P&G 6 100g 9 9 9 9 9 9 9 9 9 9 9 9 — — — —

Tide 4*250gm P&G 78 100g 8 8 8 8 8 8 8 8 8 8 8 8 — — — —

Sunlight 150gm HUVR 20 100g 13 13 —

Normalised price in Rs (adjusted for grammage changes) CIange (%)



Exhibit 2: KIE Consumer Pricing monitor (continued)


MRP (Rs)

Category/Brand/SKU Jun-18 Norm Wt Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 1M 3M 6M 1Y

Detergent Powders

Wheel Active Lemon & Jasmine 1Kg HUVR 50 100g 5 5 5 5 5 5 5 5 5 5 5 5 2 2 4 (4)

Ghadi detergent 3Kg Ghari 156 100g 5 5 (4)

Rin Advance 1Kg HUVR 74 100g 8 8 8 8 7 7 7 7 7 7 7 7 — 3 6 (5)

Rin Advance 4Kg HUVR 325 100g 7 7 7 7 7 7 7 7 7 7 8 8 3 20 20 (11)

Tide Plus 1Kg P&G 98 100g 10 10 10 10 10 10 10 9 9 9 9 10 4 4 (1) 2

Surf Excel Easy Wash 1.5Kg HUVR 168 100g 12 12 12 12 12 11 11 11 11 11 11 11 — — 4 (10)

Henko Stain Champion 1Kg Jyothy Labs 112 100g 13 13 13 13 13 13 13 10 11 11 11 11 — — (11) (11)

Surf Excel Quickwash 1Kg HUVR 170 100g 20 20 20 20 19 19 19 19 19 19 19 17 (11) (8) (8) (15)

Ariel Complete 1Kg P&G 249 100g 20 20 20 21 21 21 21 22 22 22 22 25 16 16 21 25

Rin Matic 1Kg HUVR 115 100g 12 12 12 12 12 12 12 11 11 11 12 12 — 5 — —

Henko Lintelligent Matic - Top Load 1Kg Jyothy Labs 192 100g 19 19 —

Henko Lintelligent Matic - Front Load 1Kg Jyothy Labs 212 100g 21 21 —

Surf Excel Matic Top Load 1Kg HUVR 225 100g 19 19 19 19 19 19 19 21 22 22 22 23 5 5 22 22

Surf Excel Matic Front Load 1Kg HUVR 250 100g 24 24 24 24 24 23 23 23 24 24 25 25 — 6 11 3

Ariel Matic Top Load 1.2Kg P&G 249 100g 24 24 24 24 24 24 24 24 25 25 21 21 — (17) (14) (14)

Ariel Matic Front Load 1.2Kg P&G 265 100g 22 22 —

Liquid detergents/Fabric Conditioners/Dishwash/ Floor Cleaners

Fabric Conditioners/Liquid detergents

Surf Excel Liquid Matic Top Load 1L HUVR 199 100ml 20 20 —

Surf Excel Liquid Matic Front Load 1L HUVR 225 100ml 23 23 —

Ariel Matic Liquid Detergent 750ml P&G 260 100ml 35 35 —

Ujala Supreme 250ml Jyothy Labs 65 100ml 26 26 —

Comfort Fabric Conditioner Anti Bacterial 200ml HUVR 55 100ml 28 28 28 28 28 25 25 25 25 25 25 25 — — — (9)

Ala Liquid Bleach Fabric Whitener 200ml HUVR 25 100ml 14 14 14 14 14 14 14 13 13 13 13 13 — — (7) (7)

Ezee Detergent Liquid 500gm GCPL 90 100g 18 18 18 18 18 18 18 18 18 18 18 18 — — — —

Surf Det Liquid Excel Gentle Wash 200ml HUVR 62 100ml 31 31 31 31 31 31 31 31 31 31 31 31 — — — —

Dishwashing Bar/Gels/Powder

Vim Drop Dishwash Green Lime 500ml HUVR 110 100ml 24 24 24 24 24 24 24 22 22 22 22 22 — — (8) (8)

Pril Dishwash Liquid - Lime Green 500ml Jyothy Labs 115 100ml 23 23 —

Dettol Kitchen Dish and Slab Gel, Lemon Splash 400ml Reckitt B. 119 100ml 30 30 —

Giffy Dishwash Liquid - Green Lime & Active salt 500ml Wipro Cons 99 100ml 23 20 (14)

Vim Utensil Bar 300gm HUVR 20 100g 9 9 9 9 9 9 9 9 9 9 7 7 — (26) (26) (26)

Pril Dishwash Bar - Lime 360gm Jyothy Labs 99 100g 9 9 (3)

Exo Dish Wash Bar- Touch & Shine 700gm Jyothy Labs 60 100g 9 9 —

Floor Cleaners/Other Cleaners

Harpic toilet cleaner Original 1L Reckitt B. 156 100ml 16 16 (4)

Domex Floor Cleaner Thick 500ml HUVR 85 100ml 16 16 16 16 16 16 16 16 17 17 17 17 — — 8 9

Sanifresh Toilet Cleaner Shine 1L Dabur 136 100ml 11 11 12 12 12 12 12 13 13 13 14 14 — 6 10 19

Oral Care

Toothpaste

Colgate Cdc 150gm Colgate P. 62 100g 41 41 41 41 41 41 41 41 41 41 41 41 — — — (7)

Colgate Cibaca 175gm Colgate P. 46 100g 26 26 26 26 26 26 26 26 26 26 26 26 — — — (8)

Colgate Active Salt 100gm Colgate P. 49 100g 49 49 49 49 49 49 49 49 49 49 49 49 — — — (11)

Colgate Herbal 200G Colgate P. 93 100g 44 44 44 44 44 44 44 44 44 44 44 47 6 6 6 (2)

Colgate Maxfresh Blue 150gm Colgate P. 88 100g 59 59 59 59 59 59 59 59 59 59 53 59 10 — — (7)

Colgate Sensitive Pro Relief 70gm Colgate P. 111 100g 164 164 164 164 164 164 164 164 159 159 159 159 — — (3) (3)

Colgate Sensitive 80gm Colgate P. 99 100g 124 124 124 124 124 124 124 124 124 124 124 124 — — — (10)

Colgate Total Adv Health 140gm Colgate P. 85 100g 77 77 77 77 77 77 77 71 71 71 71 71 — — (8) (8)

Colgate Toothpaste Strawberry Barbie 80gm Colgate P. 79 100g 106 106 106 106 106 106 106 99 99 99 99 99 — — (7) (7)

Pepsodent 2 In 1 150gm HUVR 94 100g 63 63 63 63 63 63 63 63 63 63 63 63 — — — —

Pepsodent Germicheck 200gm HUVR 80 100g 43 43 43 43 43 43 43 40 40 40 40 40 — — (7) (7)

Pepsodent Gum Care 140gm HUVR 98 100g 73 70 70 70 70 70 70 70 70 70 70 70 — — — (4)

Pepsodent Exp Prot Complete 150gm HUVR 114 100g 76 73 73 73 73 73 73 76 76 76 76 76 — — 4 —

Close Up Red 150gm HUVR 80 100g 58 57 57 57 57 57 57 57 53 53 53 53 — — (7) (8)

Babool 180gm Dabur 41 100g 26 26 26 26 26 26 26 24 23 23 23 23 — — (11) (11)

Dabur Red 200gm Dabur 92 100g 46 46 46 46 46 46 46 43 43 43 46 46 — 7 — —

Meswak 200gm Dabur 94 100g 48 48 48 48 48 45 45 45 45 45 47 47 — 4 4 (1)

Sensodyne Fresh Gel 70gm GSK CH 99 100g 143 143 143 143 143 143 143 141 141 141 141 141 — — (1) (1)

Sensodyne Toothpaste Rapid Relief 80gm GSK CH 140 100g 188 188 188 188 188 188 188 175 175 175 175 175 — — (7) (7)

Lever Ayush Anti-cavity clove oil 150gm HUVR 75 100g 60 50 (17)

Colgate Swarna Vedshakti Natural 200gm Colgate P. 89 100g 50 45 (10)

Patanjali Dant Kanti 200gm Patanjali 75 100g 38 38 —

Vicco Vajradanti 200gm Vicco 100 100g 50 50 —

Himalaya complete care 100gm Himalaya 50 100g 50 50 —

Toothpowders

Colgate 200gm Colgate P. 69 100g 35 35 35 35 35 35 35 35 35 35 35 35 — — (1) (1)

Dabur Lal Dant Manjan 100gm Dabur 57 100g 38 38 38 38 38 38 38 38 38 38 38 38 — — — —

Mouthwashes

Colgate Plax Complete Care 250ml Colgate P. 150 100ml 40 40 40 40 40 40 40 46 42 42 42 60 43 43 52 52

Colgate Plax Freshmint 250ml Colgate P. 105 100ml 40 40 40 40 40 40 40 46 42 42 42 42 — — 6 6






MRP (Rs)


Shampoo bottles

Clear Active Care Anti Dandruff 80ml HUVR 65 100ml 74 74 75 75 75 75 75 75 81 81 81 81 — — 8 10

Clinic Plus Anti Dandruff 80ml HUVR 45 100ml 59 59 59 56 56 56 56 56 56 56 56 56 — — — (4)

Dove Dandruff Care 80ml HUVR 68 100ml 73 73 75 75 75 75 75 85 85 85 85 85 — — 13 17

Patanjali Kesh Kanti Anti-Dandruff 200ml Patanjali 110 100ml 55 55 —

Pure Derm Dandruff Protect 80ml HUVR 65 100ml 81 81 —

Tresemme Hair Fall Defense 190ml HUVR 105 100ml 62 62 67 67 67 67 67 73 73 73 55 55 — (24) (17) (11)

Head & Shoulders Anti Hair Fall 170ml P&G 145 100ml 79 79 88 88 97 97 97 81 81 81 81 81 — — (17) 1

Pantene Hair Fall Control 340ml P&G 220 100ml 61 61 67 67 67 67 67 67 64 64 65 65 — 1 (3) 6

Pure Derm Anti Hairfall 180ml HUVR 135 100ml 75 75

Clinic Plus Shmp Strong & Long 80ml HUVR 45 100ml 59 59 59 56 56 56 56 50 50 50 50 50 — — (11) (15)

Dove Daily Shine 80ml HUVR 62 100ml 75 75 78 78 78 78 78 78 78 78 78 78 — — — 3

Sunsilk Black Shine 80ml HUVR 50 100ml 60 60 63 63 63 63 63 63 63 63 63 63 — — — 4

Head & Shoulders Smooth & Silky 180ml P&G 145 100ml 79 79 88 88 97 97 97 88 81 81 81 81 — — (17) 1

Pantene Long Black 180ml P&G 120 100ml 61 61 67 67 67 67 67 67 67 67 67 67 — — — 9

Dabur Shmp Vatika Black Shine Amla 180ml Dabur 93 100ml 62 62 62 62 62 62 62 62 62 52 52 52 — (17) (17) (17)

Loreal Paris Total Repair 5 175ml L'oreal 135 100ml 77 77 —

Himalaya Protein- Gentle Daily Care 200ml Himalaya 128 100ml 64 64 —

Patanjali Kesh Kanti Natural Cleanser 200ml Patanjali 75 100ml 38 38 —

Skin Creams/Lotions/Talcs

Face Creams/Fairness Creams/Facial Cleanser

Fair & Lovely Advanced Multi Vitamin 50gm HUVR 93 100g 186 186 186 192 192 192 192 186 186 186 186 186 — — (3) —

DABUR Gulabari Premium Rose water 120ml Dabur 199 100g 35 35 35 35 35 35 35 35 35 35 35 38 7 7 7 7

Nivea Crème 100ml Nivea 45 100ml 135 135 —

Nivea Soft Light Moisturiser 100ml Nivea 135 100ml 150 150 —

Ponds Light Light Moisturiser 150ml HUVR 150 100ml 133 133 —

Fair & Handsome Whitening Cream, Laser 12 15g Emami 50 100g 333 333 —

Anti-Ageing/Special Creams

Ponds Age Miracle Day Cream 50gm HUVR 649 100g 1,150 1,150 1,150 1,150 1,150 1,150 1,150 1,150 1,150 1,298 1,298 1,298 — 13 13 13

Olay Age Protect Anti Ageing Cream 40gm Olay 349 100g 725 725 725 725 725 725 725 823 873 873 873 873 — — 20 20

Olay Skin Total Effect Normal Cream 50gm Olay 849 100g 1,598 1,598 1,598 1,598 1,598 1,598 1,598 1,698 1,698 1,698 1,698 1,698 — — 6 6

Body Lotions

Lakme Peach Milk Moisture 200ml HUVR 310 100ml 140 140 155 155 155 155 155 155 155 155 155 155 — — — 11

Dove Go Fresh Normal Skin 400ml HUVR 399 100ml 88 88 93 93 93 93 93 100 100 100 100 100 — — 8 14

Ponds Drm Flower 100ml HUVR 81 100ml 73 73 81 81 81 81 81 81 81 81 81 81 — — — 11

Vaseline Healthy White 100ml HUVR 99 100ml 95 95 95 95 95 95 95 99 99 99 99 99 — — 4 4

Talcs

Navratna Cool, Active Deo 100gm Emami 68 100g 68 68

AXE Talc Dark Temptation 100gm HUVR 63 100g 65 65 65 65 65 65 65 65 63 63 63 63 — — (3) (3)

Ponds Talc Dream Flower Pink 100gm HUVR 78 100g 76 76 76 76 76 76 76 76 76 76 76 78 3 3 3 3

Cinthol Talc Original 100gm GCPL 55 100g 55 55 55 55 55 55 55 55 55 55 55 55 — — — —

Deodorants

Deodorants

Axe Dark Temptation 150ml HUVR 190 100ml 133 133 133 133 133 127 127 127 127 127 127 127 — — — (5)

Axe Deo Pulse 150ml HUVR 190 100ml 133 133 133 133 133 133 133 127 127 127 127 127 — — (5) (5)

Cinthol Deo Spray Dive 150ml GCPL 195 100ml 130 130 130 130 130 130 130 130 130 130 130 130 — — — —

Set Wet Deospray Rave 150ml Marico 149 100ml 133 133 133 127 99 99 99 99 99 99 99 99 — — — (25)

Fogg Fresh Spicy Block 150ml Vini 275 100ml 183 183

Engage Deo Spray - Urge 150ml ITC 190 100ml 130 127

Wild Stone Deo Red 150ml McNROE 199 100ml 133 133

Air Fresheners

Aer Freshner Car Cool Surf Blue Bx 45ml GCPL 379 100ml 582 582 582 582 582 582 582 632 632 632 842 842 — 33 45 45

Aer Freshner Cool Surf Blue Cn 300ml GCPL 149 100ml 47 47 47 47 47 47 47 50 50 50 50 50 — — 6 6

Godrej aer Pocket Bathroom Fragrance 10gm GCPL 50 50 50 —

Odonil Zipper Bathroom Air Freshener 10gm Dabur 45 45 45 —

Odonil Room Spray Home Freshener 200gm Dabur 140 100g 70 70 —

Home Insecticides

Coils/Machine/Mats

Good Knight Mosquto Coil Low Smoke 12Hrs - 10 Coils GCPL 33 32 32 32 32 32 32 32 33 33 33 33 33 — — 3 3

Goodknight Machine Activ Combi GCPL 85 99 99 99 99 99 99 99 85 85 85 85 85 — — (14) (14)

Goodknight Mat Silver Power 30P GCPL 54 54 54 54 54 54 54 54 54 54 54 54 54 — — — —

Mortein PowerGard 12 Hrs 10 Coils Reckitt B. 32 32 32 —

Good knight Activ + Liquid Refill - Lavender 45 ml (45 nights) GCPL 72 72 72 —

All Out Floral Refill - Power Plus 45 ml (45 nights) SC Johnson 72 72 72 —

Maxo Mosquito Repellent liquid 45 ml (45 nights) Jyothy Labs 67 67 67 —

Sprays/Aerosols

Hit Spray Cockroach Champion 320ml GCPL 155 100ml 43 43 43 43 43 43 43 47 47 47 47 48 4 4 12 12

Creams/Lotions

Good Knight Cool Gel 50gm GCPL 75 150 150 —

Odomos Mosquito Cream Natural 50gm Dabur 47 100g 94 94 94 94 94 94 94 94 94 94 94 94 — — — —

Hair Oils

Coconut Oils

Parachute coconut oil 100ml Marico 39 100ml 32 32 32 36 36 36 36 39 39 39 39 39 — — 8 22

Parachute coconut oil 250ml Marico 105 100ml 33 33 33 36 36 36 36 42 42 42 42 42 — — 18 27

Dabur Vatika hair oil 75ml Dabur 42 100ml 44 44 44 44 44 44 44 56 56 56 56 56 — — 27 27

Dabur Anmol Gold 175ml Dabur 58 100ml 33 33 —

Patanjali Coconut Oil 200ml Patanjali 72 100ml 36 36 —

Perfumed Hair Oils

Parachute Advansed hot oil 190ml Marico 110 100ml 58 58 58 58 58 58 58 58 58 58 58 58 — — — —

Parachute Advansed 80ml Marico 45 100ml 60 60 60 60 60 60 60 60 60 60 60 60 — — — —

Parachute Jasmine 200ml Marico 92 100ml 43 41 41 41 41 41 41 41 41 41 41 46 12 12 12 8

Hair & Care 100ml Marico 55 100ml 60 55 55 55 55 55 55 55 55 55 55 55 — — — 10

Shanti Badam Amla 175ml Marico 49 100ml 28 25 25 25 25 25 25 26 26 26 26 26 — — 4 (8)

Dabur Amla hair oil 100ml Dabur 44 100ml 42 42 42 42 42 42 42 44 44 44 43 49 13 10 17 16

Dabur Hair Oil Almond Damage Free100ml Dabur 60 100ml 60 60 57 57 57 57 57 60 60 60 60 60 — — 5 —

Bajaj Almond hair oil 100ml Bajaj Corp 60 100ml 60 60 60 60 60 60 60 60 60 60 60 60 — — — —

Navratna Cooling oil 100ml Emami 70 100ml 67 67 67 67 67 67 67 70 70 70 70 70 — — 4 4

Patanjali Kesh Kanti 120ml Patanjali 130 100ml 108 108 —

Bajaj Coco Jasmine 180ml Bajaj Corp 75 100ml 42 42 —






MRP (Rs)


Edible Oils

Saffola Kardi Oil - 1L Marico 195 100ml 20 20 20 20 20 20 20 20 20 20 20 20 — — — —

Saffola Tasty Blend - 1L Marico 135 100ml 14 13 13 13 13 13 13 13 13 13 13 14 4 4 4 (4)

Saffola Gold - 1L Marico 159 100ml 16 15 15 15 15 15 15 15 15 15 15 16 6 6 6 3

Saffola Active - 1L Marico 130 100ml 14 13 13 13 13 13 13 13 13 13 13 13 — — — (4)

Sundrop Heart - 1L Marico 206 100ml 21 21 21 21 21 21 21 21 21 21 21 21 — — — (2)

Sundrop Nutrilite - 1L Marico 132 100ml 14 13 13 13 13 13 13 13 13 13 13 13 — — — (2)

Sundrop Superlite Advanced -1L Marico 191 100ml 16 16 16 16 16 16 16 16 16 16 16 16 — — — (2)

Sundrop Goldlite -1L Marico 137 100ml 14 14 14 14 14 14 14 14 14 14 14 14 — — — (2)

Fortune Vivo- 1L Adani Wilmar 150 100ml 15 15 3

Emami Rice bran oil- 1L Emami 92 100ml 9 9 —

Tea/ Coffee

Tea

Red Label ctc 1kg HUVR 410 100g 41 41 41 41 41 41 41 41 41 41 41 41 — — — —

Society Tea 1kg Amar Tea 415 100g — — — — — — — — — — 42 42 —

Red Label Natural Care Box 500gm HUVR 250 100g 48 48 48 48 48 48 48 48 48 48 50 50 — 4 4 4

Tajmahal Ctc Box 250gm HUVR 140 100g 53 53 53 53 53 53 53 56 56 56 56 56 — — 6 6

Agni Ctc Leaves 1kg TGBL 200 100g 23 23 23 23 20 20 20 20 20 20 20 20 — — — (14)

Tata Ctc Gold 1kg TGBL 420 100g 42 42 42 42 42 42 42 42 42 42 42 42 — — — —

Wagh Bakri Leaf Tea - Premium 1kg Wagh Bakri 410 100g — — — — — — — — — — 41 41

Tea Bags/ Green Tea

Taj Mahal Tea Darjeeling Green Bag 10P HUVR 60 60 60 60 60 60 60 60 60 60 60 60 60 — — — —

Taj Mahal Tea Masala Flavoured Bags 10P HUVR 55 55 55 55 55 55 55 55 55 55 55 55 55 — — — —

Tata Tetly Tea Bag 25P TGBL 50 50 50 50 50 50 50 50 50 50 50 50 50 — — — —

Tata Tetly Tea Bag Grn Regular 10P TGBL 60 60 60 60 60 60 60 60 60 60 60 60 60 — — — —

Tata Tetley Green Tea Bag 30P TGBL 140 160 160 160 160 160 160 160 160 140 140 140 140 — — (13) (13)

Lipton Tea Bag Clear Green Jasmine 10P HUVR 60 55 55 55 55 55 55 55 55 60 60 60 60 — — 9 9

Iced Tea

Lipton Instant Mix Ice Tea Lemon Pp 500gm HUVR 130 100g 52 52 52 52 52 52 52 52 52 52 52 52 — — — —

Nestea Ice Tea Lemon 500gm Nestle 165 100g 28 28 28 28 28 28 28 33 33 33 33 33 — — 18 18

Coffee

Bru Gold Jar 100gm HUVR 245 100g 265 265 265 265 265 245 245 245 245 245 245 245 — — — (8)

Bru Instant Jar 100gm HUVR 165 100g 170 170 170 170 170 165 165 165 165 165 165 165 — — — (3)

Nescafe Classic Box 200gm Nestle 440 100g 238 238 238 238 220 220 220 220 220 220 220 220 — — — (7)

Nescafe Classic 50gm Nestle 130 100g 290 290 290 290 260 260 260 260 260 260 260 260 — — — (10)

Sunrise Premium Jar 50gm Nestle 80 100g 200 200 200 200 200 200 200 200 160 160 160 160 — — (20) (20)

Dairy

Milk/Condensed Milk/ Milk Powder

Nestle Condmilk Milkmaid 400gm Nestle 113 100g 30 30 30 30 30 28 28 28 28 28 28 28 — — — (5)

Nestle Milk Slim 1L Nestle 80 100ml 8 8 8 8 8 8 8 8 8 8 8 8 — — — —

Nestle Milk Toned A+ 1L Nestle 75 100ml 8 8 8 8 8 8 8 8 8 8 8 8 — — — —

Britannia Milk 1L Britannia 75 100ml 8 8 8 8 8 8 8 8 8 8 8 8 — — — —

Britannia Milk Slimz 1L Britannia 69 100ml 7 7 7 7 7 7 7 7 7 7 7 7 — — — —

Amul Taaza 1L Amul 60 100ml 6 6 6 6 6 6 6 6 6 6 6 6 (3) (3) — —

Amul Gold 1L Amul 64 100ml 6 6 6 6 6 6 6 7 7 7 7 6 (3) (3) — —

Amul Lite 1L Amul 72 100ml 6 6 6 6 6 6 6 7 7 7 7 7 — — 24 24

Everyday Milkpow Dairy Whitner Pouch 400gm Nestle 169 100g 45 45 45 45 45 45 45 42 42 42 42 42 — — (5) (5)

Yoghurt/Dahi

Nestle Dahi Slim 200gm Nestle 35 100g 15 15 15 15 15 15 15 18 18 18 18 18 — — 17 17

Britannia Dahi Daily Fresh 150gm Britannia 20 100g 13 13 13 13 13 13 13 13 13 13 13 13 — — — —

Britannia Dahi Low Fat 200gm Britannia 30 100g 15 15 15 15 15 15 15 15 15 15 15 15 — — — —

Butter/Cheese

Britannia Cheese Block 400gm Britannia 250 100g — — — — — — — — — — 63 63 —

Britannia Cheese Spread Classic 180gm Britannia 85 100g 45 45 45 45 45 45 45 47 47 47 47 47 — — 5 5

Amul Butter 500gm Amul 225 100g 43 43 43 43 43 43 43 45 45 45 45 45 — — 5 5

Amul Lite Butter 500gm Amul 145 100g 31 31 31 31 31 31 31 29 29 29 29 29 — — (6) (6)

Nutrilite Butter 500gm Zydus Cadila 180 100g 32 32 32 32 32 32 32 34 34 34 36 36 — 6 13 13

Amul cheese slice plain 200 gm Amul 118 59 59 —

Go cheese slice 200 gm Parag milk foods 125 63 63 —

Britannia cheese slice 200 gm Britannia 145 73 73 —

Cakes/ Desert Mixes

Britannia Cake Fruity Fun 60gm Britannia 15 100g 19 19 19 19 19 19 19 19 20 20 25 25 — 25 33 33

Health Drinks/ Juices/ Health Supplements/ OTCs

Health Drinks

Horlicks Chocolate Jar 500gm GSK CH 209 100g 47 47 47 47 43 43 43 43 42 42 42 42 — — (3) (11)

Horlicks Protein+ Chocolate, 400gm Jar GSK CH 495 100g 124 124 —

Horlicks Standard Jar 500gm GSK CH 228 100g 49 49 49 49 46 46 46 46 46 46 46 46 — — — (7)

Bournvita Chocolate 500gm Jar Mondelez 215 100g 43 43 —

Complan Chocolate 450gm Jar Kraft Heinz 270 100g 57 60 6

Horlicks Mother's Vanilla Rf 450G GSK CH 499 100g 95 95 95 95 91 91 91 101 101 101 101 111 9 9 22 17

Horlicks Womens Chocolate Jar 330gm GSK CH 285 100g 91 91 91 91 86 86 86 71 71 71 71 71 — — (18) (21)

Boost Jar 450gm GSK CH 223 100g 48 48 48 48 42 42 42 50 50 50 50 50 — — 18 3

Horlicks Growth+ Vanilla, 400gm Jar GSK CH 520 100g 130 130 —

Protinex- Chocolate 400gm Danone 520 100g 130 130 —

Pediasure- Complete & Balanced 400gm Abbott 520 100g 130 130 —

Juices

Real fruit power Orange 1L (Conc + added sugar) Dabur 99 100ml 10 10 10 10 10 10 10 10 10 10 10 10 — — — —

Real Activ 100% Orange 1L (from Conc | No added sugar) Dabur 120 100ml 11 11 11 11 11 11 11 12 12 12 12 12 — — 14 14

Tropicana- Orange, 1 L (Conc + added sugar) Pepsi Co. 99 100ml 10 10 —

Tropicana 100% Orange 1L (from Conc; no added sugar) Pepsi Co. 130 100ml 13 13 —

B Natural Juice- Orange 1L (No Conc; incl added sugar) ITC 99 100ml 10 10 —

B Natural 100% pomegranate 1L (No Conc; no added sugar) ITC 199 100ml 20 20 —

Real Fruit power pomegranate 1L (Conc + added sugar) Dabur 109 100ml 11 11 —

Paper Boat drink- Aamras 1L Hector Bev. 99 100ml 10 10 —

Health Supplements/OTCs

Dabur Chyawanprash 1kg Dabur 310 100g 30 30 30 30 30 30 30 30 30 30 30 31 5 5 5 5

Dabur Digestive Hajmola Regular 120 P Dabur 30 28 30 30 30 30 30 30 30 30 30 30 30 — — — 7

Dabur Glucose-D Jar 1kg Dabur 185 100g 17 17 17 17 17 17 17 17 19 19 19 19 — — 9 9

Dabur Honey 500gm Dabur 195 100g 40 40 40 40 40 40 40 29 29 29 29 30 3 3 (25) (25)

Patanjali Honey 500gm Patanjali 135 100g 27 27 —






MRP (Rs)


Biscuits/Atta

CreamBiscuits

Sunfeast Dark Fantasy Chocolate 100gm ITC 30 100g 25 25 25 25 25 25 25 30 30 30 30 30 — — 20 20

Britannia Cream Jim Jam 150gm Britannia 30 100g 20 20 20 20 20 20 20 20 20 20 20 20 — — — —

Britannia Cream Pure magic vanilla 150gm Britannia 30 100g 20 20 20 20 20 20 20 25 30 30 30 30 — — 50 50

Britannia Cream Treat Bourbon 150gm Britannia 28 100g 18 18 18 18 18 19 19 19 19 19 19 19 — — — 4

Sunfeast Cream Bourbon 150gm ITC 26 100g 17 17 17 17 17 17 17 13 17 17 17 17 — — 4 4

Parle Cream Hide & Seek Bourbon 100gm Parle products 25 100g 17 17 17 17 17 17 17 17 17 17 25 25 — 50 50 50

Parle Crm Bis Bourbon Kream 150gm Parle products 25 100g 13 13 13 13 13 13 13 17 17 17 17 17 —

Oreo Choco Creme Biscuits 120gm Mondelez 29 100g 25 24 (3)

Britannia Tiger Cream Biscuits - Chocolate 43gm Britannia 5 100g 12 12 —

Sunfeast Special-bounce Cream Biscuits 83gm ITC 10 100g 12 12 —

Cookies/Healthy biscuits

Sunfeast Mom's Magic Cookie Butter 150gm ITC 20 100g 10 10 10 10 10 10 10 13 13 13 13 13 — — 33 33

Britannia Good Day Butter 150gm Britannia 22 100g 13 13 13 13 13 13 13 13 13 13 15 15 — 10 10 10

Britannia Cookies Good Day Cashew 100gm Britannia 20 100g 15 15 15 15 15 15 15 20 20 20 20 20 — — 33 33

Britannia NutriChoice Digestive 100gm Britannia 20 100g 16 16 16 16 16 16 16 19 19 19 20 20 — 5 25 25

Sunfeast Farmlite - Oats & Almonds 75gm ITC 25 100g 33 33

Marie/Glucose/Salted/Nice Biscuits

Sunfeast Marie Light 100gm ITC 10 100g 9 9 9 9 9 9 9 12 12 12 12 12 — — 29 29

Britannia Vita Marie Gold 150gm Britannia 20 100g 13 13 13 13 13 13 13 13 13 13 13 13 — — — —

Parle Makesmith Marie 100gm Parle products 10 100g 10 10 10 10 10 10 10 10 11 11 11 11 — — 11 11

Sunfeast Bisccuits Glucose 80gm ITC 5 100g 6 6 6 6 6 6 6 6 6 6 6 6 — — — —

Britannia Tiger 125gm Britannia 10 100g 8 8 8 8 8 8 8 8 8 8 8 8 (1) (1) 6 6

Parle Glucose 144gm Parle products 10 100g 7 7 7 7 7 7 7 7 7 7 7 7 — — — —

Sunfeast Snacky Salted 80gm ITC 10 100g 16 16 16 16 16 16 16 16 16 16 16 16 — — — —

Parle Salted Krackjack 80gm Parle products 10 100g 13 13 13 13 13 13 13 13 13 13 13 13 — — 6 6

Parle Salted Monaco Classic 80gm Parle products 10 100g 13 13 13 13 13 13 13 13 13 13 13 13 — — 6 6

Britannia 50-50 Maska Chaska 55gm Britannia 10 100g 18 18 18 18 18 18 18 20 20 20 20 20 — — 10 10

Sunfeast Plain Nice 150gm ITC 20 100g 13 13 13 13 13 13 13 13 13 13 13 13 — — — —

Britannia Nice Time 150gm Britannia 25 100g 15 15 15 15 15 15 15 15 17 17 17 17 — — 14 14

Breakfast snacks

Marico Saffola Oats 1Kg Marico 185 100g 18 18 18 18 18 18 18 18 18 18 19 19 — 3 3 3

Kelloggs Corn Flakes Original 475gm Kelloggs 175 100g 37 37 —

Bagrrys Muesli - Crunchy 500gm Bagrrys India 290 100g 61 61 —

Quaker Oats 1kg Pepsi Co. 186 100g 19 19 —

Atta

Aashirvaad Atta Multigrain 5kg ITC 285 100g 5 5 5 6 6 6 6 6 6 6 6 6 4 4 4 8

Aashirvaad Atta Whole Wheat 5kg ITC 225 100g 4 4 4 5 5 5 5 5 5 5 5 5 — — — 2

Soups/Sauces/Spreads

Ketchup/Sauces/Spreads

Maggi Ketchup Tomato 1kg Nestle 147 100g 15 15 15 15 15 15 15 15 15 15 15 15 — — — (2)

Maggi Sauce Tomato 1kg Nestle 142 100g 15 14 14 14 14 14 14 14 14 14 14 14 — — — (2)

Kissan Ketchup Fresh Tomato Bt 1kg HUVR 130 100g 13 13 13 13 13 13 13 13 13 13 13 13 — — 4 (12)

Kissan Sauce no onion no garlic 1K HUVR 147 100g 13 13 13 13 13 13 13 15 15 15 15 15 — — 18 —

Spreads/Jams

Nutella Hazelnut Spread with Cocoa 160gm Jar Ferrero 200 125 125 —

Kissan Jam Mixed Fruit 200gm HUVR 60 100g 30 30 30 30 30 30 30 30 30 30 30 30 — — — —

Sundrop Peanut Butter Creamy 508gm Jar Agro tech 215 40 42 5

Soups

Maggi Rich Tomato 45gm Nestle 45 100g 83 83 83 83 83 83 83 83 83 83 100 100 — 20 20 20

Knorr Classic Thick Tomato 61gm HUVR 55 100g 100 100 100 100 100 100 100 100 90 90 90 90 — — (10) (10)

Maggi Sweet Corn Vegetable 45gm Nestle 45 100g 125 125 125 125 125 125 125 125 125 125 100 100 — (20) (20) (20)

Knorr Sweet Corn Vegetable 44gm HUVR 55 100g 117 117 117 117 117 117 117 117 125 125 125 125 — — 7 7

Chocolate bars

Nestle Kit Kat 76.8gm Nestle 60 100g 78 78 78 78 78 78 78 78 78 78 78 78 — — — —

Nestle Munch Home Pk 72gm Nestle 60 100g 55 55 55 55 55 55 55 87 83 83 83 83 — — 51 51

Nestle Milk 19.8gm Nestle 10 100g 56 56 56 56 56 56 56 51 51 51 51 51 — — (9) (9)

Nestle Bar One 22gm Nestle 10 100g 45 45 45 45 45 45 45 45 45 45 45 45 — — — —

Nestle Munch crunchiest ever 20.1g Nestle 10 100g 58 58 58 58 58 58 58 58 58 58 50 50 — (14) (14) (14)

Cadbury Dairy Milk 12gm Mondelez 10 100g 83 76 (9)

Cadbury Dairy Milk 60gm Mondelez 65 100g 108 108 —

Cadbury 5 Star 19.5gm Mondelez 10 100g 51 51 —

Cadbury Perk 28gm Mondelez 10 100g 36 36 —

Kinder Joy 20gm Ferrero 40 100g 185 200 8

Ferrero Rocher 16pcs 200gm box Ferrero 475 100g 220 238 8

Noodles

Noodles

Maggi Masala 70gm Nestle 12 100g 17 17 17 17 16 16 16 16 16 16 16 17 9 9 9 —

Maggi Masala 140gm Nestle 23 100g 16 17 17 17 17 16 16 16 16 16 16 16 5 5 5 —

Maggi Masala 280gm Nestle 44 100g 16 16 16 16 16 16 16 16 16 16 16 16 — — — (2)

Maggi oats noodles 300gm Nestle 95 100g — — 32 32

Maggi Chicken 284gm Nestle 55 100g 21 21 21 21 21 19 19 19 19 19 19 19 — — — (8)

Maggi Cuppa Mania Yo Masala 70gm Nestle 40 100g 64 64 64 64 64 64 64 57 57 57 57 57 — — (11) (11)

Maggi Atta masala 300gm Nestle 75 100g 24 24 24 24 24 24 24 23 23 23 25 25 — 7 3 3

Sunfeast Yippee Classic Masala 70gm ITC 10 100g 14 14

Sunfeast Yippee Magic Masala 70gm ITC 10 100g 13 13 13 13 13 13 13 13 13 13 14 14 — 7 7 7

Sunfeast Yippee Mood Masala 70gm ITC 15 100g 21 21

Knorr Soupy Mast Masala Pp 75gm HUVR 15 100g 21 21 21 21 21 21 21 17 17 17 20 20 — 17 (7) (7)

Baby Food

Cerelac Babycereal Rice S1 300gm Nestle 170 100g 57 56 56 56 56 56 56 57 57 57 57 57 — — 1 (1)

Cerelac Babycereal Wheat S1 300gm Nestle 169 100g 56 55 55 55 55 55 55 56 56 56 56 56 — — 3 1

Cerelac Babycereal Mltgrn 5 Fruit 300G Nestle 239 100g 79 77 77 77 77 77 77 80 80 80 80 80 — — 4 1

Cerelac Babycereal Multigrain Dal Veg 300gm Nestle 230 100g 77 75 75 75 75 75 75 77 77 77 77 77 — — 2 —

Cerelac Babycereal Mixed Fruit 300G Nestle 229 100g 73 72 72 72 72 72 72 76 76 76 76 76 — — 6 4

Lactogen Babycereal Nan 1 Frml 400gm Nestle 540 100g 135 135 135 135 135 135 135 135 135 135 135 135 — — — —

Lactogen Babycereal No1 Rf 400G Nestle 302 100g 76 76 76 76 76 76 76 76 76 76 76 76 — — — 1

Farex Milk Cereal Wheat Apple S1 300g Danone 200 100g 67 67 —

Farex Milk Cereal Rice S1 300g Danone 175 100g 58 58 —






MRP (Rs)


Soft drinks (excl. juices)

Soft drinks (excl. juices)

Pepsi bottle 750ml Pepsi Co 40 100ml 5 5 —

Pepsi bottle 2.25L Pepsi Co 90 100ml 4 4 —

Coca Cola bottle 750ml Coca-Cola 40 100ml 5 5 —

Coca Cola bottle 1.75L Coca-Cola 75 100ml 4 4 —

Thums up bottle 750ml Coca-Cola 40 100ml 5 5 —

Sprite bottle 750ml Coca-Cola 40 100ml 5 5 —

Sprite bottle 1.75L Coca-Cola 75 100ml 4 4 —

Maaza bottle 600ml Coca-Cola 37 100ml 6 6 —

Tropicana Mango Slice 600ml Pepsi Co 37 100ml 6 6 —

Frooti bottle 300ml Parle Agro 20 100ml 7 7 —

7 Up Nimbooz 350ml Pepsi Co 25 100ml 7 7 —

Mens Grooming

Mens Grooming

Gillette Vector Plus Razor P&G 60 60 60 —

Gillette Vector Plus Cartridge pack (6 pcs) P&G 150 1 pc 25 25 —

Gillette Mach 3 Razor P&G 180 180 180 —

Gillette Mach 3 Cartridge pack (4 pcs) P&G 449 1 pc 119 119 —

Gillette Fusion Razor P&G 350 350 350 —

Gillette Fusion Cartridge pack (4 pcs) P&G 900 1 pc 225 225 —

Gillette Foam - Classic Regular 418gm P&G 199 100g 55 55 —

Godrej Shaving Cream Lime Fresh 60 gm GCPL 65 100g 108 108 —

Feminine hygiene

Feminine hygiene

Whisper Sanitary Pads- Ultra Clean XL+ Wings (15 pcs) P&G 165 1 pc 11 11 —

Stayfree SPs- Dry-Max All Night Ultra Xl Wings (14 pcs) J&J 175 1 pc 13 13 —

Sofy Sanitary Pads - Body Fit Antibacteria, XL (15 pcs) Unicharm 125 1 pc 8 8 —

Carefree Sanitary Pads - Regular (10pcs) J&J 70 1 pc 8 7 (7)

Baby Diapers

Baby Diapers

Pampers Diaper Pants - L (48 pcs) P&G 674 1 pc 14 14 —

Mamypoko Diaper Pants- L (46 pcs) Unicharm 699 1 pc 15 15 —

Huggies Diaper Pants- L (48 pcs) HUVR 699 1 pc 15 15 —

Paints

Premium/Luxury products

Royale Play Dune (Interior Luxury texture finish) 1L Asian Paints 1,088 1L 1,088 1,088 —

Royale Aspira (Interior Luxury plain finish) 1L Asian Paints 595 1L 595 595 —

Apcolite Premium Emulsion (Interior premium) Asian Paints 269 1L 269 269 —

Apex Ultima (Exterior premium) 1L Asian Paints 356 1L 356 356 —

Silk luxury (Interior) 1L Berger 454 1L 454 454 —

Easy Clean (Interior) 1L Berger 364 1L 364 364 —

WeatherCoat Anti Dust (Exterior premium) 1L Berger 297 1L 297 297 —

Dulux Weathershield Max (Exterior premium) 1L Akzo N. 304 1L 304 304 —

Dulux Super Clean 3 in 1 (Interior premium) Akzo N. 277 1L 277 277 —

Economy

Tractor Emulsion (Interior economy) Asian Paints 134 1L 134 134 —

Ace Advanced (Exterior economy) Asian Paints 161 1L 161 161 —

Tractor Uno (Interior Distemper) 1Kg Asian Paints 64 1Kg 64 64 —

TruCare Wall primer (Interior economy) Asian Paints 105 1L 105 105 —

TruCare Wall primer (Exterior economy) Asian Paints 148 1L 148 148 —

Acrylic Wall Putty Asian Paints 70 1Kg 70 70 —

Bison Acrylic Emulsion (Interior economy) Berger 134 1L 134 134 —

Dulux Promise Interior (Interior economy) Akzo N. 107 1L 107 107 —




Exhibit 3: Ongoing promotional activity across FMCG categories in July, 2018


SKU Original Offer Eff change (%) Promotional offer

Soaps

Dove soap 75gm 49 49 (25.0) Free 33% extra

Pears soap 125gm 67 67 (16.7) Free 20% extra

Pears soap 75gm 39 39 (25.0) Free 33% extra

Detergents/Dishwash

Surf Excel matic Top load detergent powder 4Kg 898 898 (33.3) Free 50% extra

Surf Excel matic Front load detergent powder 4Kg 998 998 (33.3) Free 50% extra

Ariel Excel matic Top load detergent powder 4Kg 898 898 (33.3) Free 50% extra

Ariel Excel matic Front load detergent powder 4Kg 998 998 (33.3) Free 50% extra

Surf Excel matic Top load detergent powder 2Kg 449 449 Free Surf Excel Liquid Detergent - Matic, Top Load 500 ml worth Rs99

Surf Excel matic Front load detergent powder 2Kg 480 480 Free Surf Excel Liquid Detergent - Matic, Front Load 500 ml worth Rs115

Ariel Excel matic Top load detergent powder 1Kg 249 249 (16.7) Free 20% extra

Ariel Excel matic Front load detergent powder 1Kg 265 265 (16.7) Free 20% extra

Surf Excel Quick wash detergent powder 1Kg 190 170 (10.5) Price off Rs20; 10.5% discount

Surf Excel Quick wash detergent powder 2Kg 380 340 (10.5) Price off Rs40; 10.5% discount

Ariel Complete detergent powder 1Kg 249 249 (33.3) Free 50% extra

Ariel Complete detergent powder 2Kg 498 498 (33.3) Free 50% extra

Henko Lintelligent Matic - Top Load detergent powder 1Kg 222 192 (13.5) Price off Rs30; 13.5% discount

Henko Stain Champion 1Kg 138 112 (18.8) Price off Rs26; 18.8% discount

Henko Stain Champion 3Kg 381 381 (25.0) Free 33% extra

Other home & personal care items

Dove Shampoo - Oxygen Moisture shampoo 180ml 187 145 (22.5) Price off Rs42; 22.5% discount

Dove Nourishing Oil Care Shampoo 180ml 150 105 (30.0) Price off Rs45; 30% discount

Dove Nourishing Daily Shine Shampoo 180ml 130 105 (19.2) Price off Rs25; 19% discount

Nivea Extra Whitening body lotion 200ml 259 259 Free 60ml of Nivea crème worth Rs85

Nivea Whitening Cool body lotion 200ml 260 260 Free 3x50gm Nivea soft soap worth Rs90

Nivea Aloe Hydration body lotion 200ml 210 210 Free 50ml Nivea Total face cleanup worth Rs120

Harpic Power plus Original - toiler cleaner 500ml 80 80 (23.1) Free 30% extra

Himalaya anti-dandruff shampoo 400ml 216 216 (20.0) Free 100ml extra

Clinic Plus shampoo 340ml 165 165 Free Clinic Plus shampoo 80ml

Sensodyne Deep clean toothpaste 100gm 110 110 (28.6) Free 40% extra

Dabur Amla hair oil 450ml 199 199 (9.1) Free 10% extra

Hair & Care Fruit Oils - Green 100ml 55 55 (16.7) Free 20% extra

Vim liquid dishwash 750ml 155 155 (25.0) Free 33% extra

Pril liquid dishwash 750ml 155 155 (25.0) Free 33% extra

Biscuits/Cakes

Parle Krackjack 75.6gm 10 10 (20.0) Free 25gm extra

Britannia Marie Gold 68gm 10 10 (23.6) Free 30% extra

Parle Premium Rusk (Real Elaichi) 200gm 30 30 Free Krackjack worth Rs5

Parle G Gold 90gm 10 10 (20.0) Free 25% extra

Parle H&S butter cookies 66.7gm 10 10 (20.0) Free 25% extra

Parle Top biscuits 75gm 10 10 (16.7) Free 20% extra

Sunfeast Mom's Magic Cashew & Almond 100gm 20 20 (16.7) Free 20% extra

Notes:

(1) Highlighted offers are new promotions launched in July.

MRP (Rs)



Exhibit 4: Monthly raw material trends for June 2018


Inflationary = +3%

Deflationary = -3%

No Commodity Unit Current MoM 3M 6M YoY MoM 3M 6M YoY Companies impacted

Agri Commodities

1 Tea - India Avg. Rs/Kg 144 5 41 6 6 5 41 6 6 HUL, TGBL

2 Tea - World Avg. USD/MT 2,980 — 8 (3) (7) 0 12 3 (2) HUL, TGBL

3 Tea - Mombassa/Kenya USD/Kg 3 — (7) (7) (13) 0 (3) (2) (9) HUL, TGBL

4 Coffee Arabica - Intl. US cents/Pound 140 (1) (0) (1) (3) (1) 4 4 2 HUL, Nestle, TGBL

5 Coffee Robusta - Intl. US cents/Pound 89 (3) (3) (3) (15) (3) 1 2 (10) HUL, Nestle, TGBL

6 Sugar - domestic Rs/Quintal 3,419 17 2 (7) (12) 17 2 (7) (12) HUL, Nestle, GSKCHL, ITC, Dabur, Britannia

7 Wheat Rs/Quintal 1,750 (0) (1) (2) 1 (0) (1) (2) 1 ITC, Nestle, GSKCHL, Britannia

8 Barley Rs/Quintal 1,502 1 6 (1) 4 1 6 (1) 4 GSKCHL

9 Maize (corn) USD/MT 179 — 4 20 13 0 9 27 19 Colgate, HUL, Dabur (Sorbitol)

10 Liquid Milk - domestic Rs/Ltr 35 3 — 6 (22) 3 — 6 (22) Nestle, GSKCHL, Jubilant Foodworks, Britannia

11 Milk Powder - domestic Rs/Kg 253 — 1 1 (14) — 1 1 (14) Nestle, GSKCHL, Britannia

12 Cocoa Bean USD/MT 2,960 — 7 39 32 0 11 46 39 Nestle

Oil Commodities

13 Crude Oil - Brent USD/Barrel 75 (2) 13 17 60 (2) 18 24 69 HUL, GCPL, Jyothy Labs, Asian Paints, Pidilite

14 Palm oil Rs/MT 64,538 (1) 0 14 29 (1) 0 14 29 HUL, GCPL, Jyothy Labs

15 PFAD USD/MT 492 (4) (18) (19) (20) (3) (15) (14) (16) HUL, GCPL, Jyothy Labs

16 Light liquid paraffin (LLP) Rs/Ltr 48 2 2 (0) 17 2 2 (0) 17 Marico, Dabur, Bajaj Corp

17 Copra Rs/Quintal 12,150 (7) (4) (14) 34 (7) (4) (14) 34 Marico, Dabur

18 Coconut oil Rs/Quintal 17,139 (5) (1) (10) 35 (5) (1) (10) 35 Marico, Dabur

19 Rice Bran oil Rs/10Kg 678 4 9 16 27 4 9 16 27 Marico

20 Kardi oil/ Safflower oil Rs/MT 1,288 (2) (2) (9) 23 (2) (2) (9) 23 Marico

21 Sunflower oil Rs/MT 71,881 2 1 8 22 2 1 8 22 Marico

22 Groundnut oil Rs/MT 82,071 (2) (4) (12) (12) (2) (4) (12) (12) Marico, Dabur

23 Linseed oil Rs/MT 80,810 2 (5) 5 4 2 (5) 5 4 Marico, Dabur, Bajaj Corp, Asian Paints

24 Castor oil Rs/MT 84,529 0 (3) (11) (11) 0 (3) (11) (11) Marico, Dabur, Bajaj Corp, Asian Paints

25 Mentha oil Rs/Kg 1,494 (4) 0 (18) 49 (4) 0 (18) 49 Emami, Colgate, HUL, Dabur

Chemicals/Paints/Other Commodities

26 Caustic soda Rs/ 50Kg 2,224 (9) (8) (7) (5) (9) (8) (7) (5) HUL, GCPL, Jyothy Labs

27 Soda ash Rs/ 50Kg 1,176 (6) (7) 1 (7) (6) (7) 1 (7) HUL, GCPL, Jyothy Labs

28 LAB Rs/Kg 113 7 7 9 18 7— 7 9 18 HUL, Jyothy Labs

29 HDPE - domestic Rs/Kg 127 — 8 26 24 — 8 26 24 All companies

30 PAN Rs/Kg 80 — 14 14 (11) — 14 14 (11) Asian Paints

31 PENTA Rs/Kg 115 — — — — — — — — Asian Paints

32 Tio2 Anatese Rs/Kg 175 (5) (5) (5) — (5) (5) (5) — Asian Paints

33 Tio2 Rutile Rs/Kg 215 — 2 2 — — 2 2 — Asian Paints

34 Tio2 Dupont Rs/Kg 263 3 7 11 (6) 3 7 11 (6) Asian Paints

35 Turpentine oil Rs/Ltr 104 11 28 41 33 11 28 41 33 Asian Paints

36 Formaldehyde Rs/Kg 26 — 4 13 13 — 4 13 13 Asian Paints

37 Acrylic acid Rs/Kg 125 — — 23 19 — — 23 19 Asian Paints

38 Vinyl Acetate - Domestic Rs/Kg 106 (1) 39 16 17 (1) 39 16 17 Asian Paints

39 Vinyl Acetate - China US$/MT 1,352 7 6 25 58 7 11 32 66 Pidilite, Asian Paints

40 Styrene - domestic Rs/Kg 101 3 1 (5) (16) 3 1 (5) (16) Asian Paints

41 Gold Rs/10gm 30,661 (1) 1 7 6 (1) 1 7 6 Titan, Jewellery companies

42 Diamond price index USD/Carrat 120 — 1 3 2 0 5 9 8 Titan, Jewellery companies

% chg - local currency % chg - currency Adj.



Exhibit 5: KIE Consumer universe valuation summary

Source: Bloomberg, Company, Kotak Institutional Equities estimates

TP 4-Aug-18 EPS Sales

Company Rating (Rs) Price (Rs) (Rs bn) (US$ m) 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E

Consumer Products

Asian Paints REDUCE 1,325 1,412 (6) 1,354 19,915 20.5 27.1 32.6 2.9 32.1 20.3 68.8 52.1 43.3 26.0 18.0

Bajaj Corp ADD 470 416 13 61 903 14.3 15.4 17.0 (9.4) 7.8 10.3 29.1 27.0 24.5 9.1 12.6

Britannia Industries ADD 6,000 6,393 (6) 767 11,281 83.7 104.1 126.5 13.5 24.4 21.5 76.4 61.4 50.5 22.9 15.4

Coffee day Enterprises REDUCE 340 263 30 54 795 3.4 8.6 13.7 53.0 149.7 59.4 76.5 30.6 19.2 99.5 12.0

Colgate-Palmolive (India) ADD 1,250 1,123 11 305 4,492 23.8 27.3 31.5 15.2 14.7 15.6 47.2 41.2 35.6 15.1 10.4

Dabur India REDUCE 390 437 (11) 770 11,318 7.8 9.1 10.3 7.2 17.3 12.9 56.2 47.9 42.4 15.1 13.4

GlaxoSmithKline Consumer ADD 6,750 6,794 (1) 286 4,202 166.5 188.6 211.1 6.6 13.3 11.9 40.8 36.0 32.2 12.6 10.8

Godrej Consumer Products SELL 1,100 1,330 (17) 906 13,322 21.4 25.4 28.8 11.6 18.8 13.7 62.3 52.4 46.1 16.2 11.8

Hindustan Unilever REDUCE 1,570 1,763 (11) 3,816 56,110 24.5 29.3 33.1 24.8 19.5 13.2 72.0 60.3 53.2 16.3 12.2

ITC ADD 330 304 9 3,715 54,634 8.9 9.6 10.8 7.8 8.2 12.3 34.1 31.5 28.1 10.2 8.0

Jubilant Foodworks BUY 1,650 1,452 14 191 2,815 14.6 25.3 34.7 191.7 73.6 37.5 99.7 57.4 41.8 54.5 18.0

Jyothy Laboratories ADD 240 221 9 80 1,180 4.4 5.6 6.6 (26.4) 27.6 16.7 50.1 39.2 33.6 22.0 14.3

Manpasand Beverages SELL 132 140 nm 16 235 8.7 11.5 16.6 36.9 32.5 44.0 16.1 12.1 8.4 38.1 36.6

Marico ADD 375 353 6 455 6,690 6.3 6.8 8.2 2.0 8.1 20.0 55.9 51.7 43.0 13.9 14.2

Nestle India ADD 11,000 10,313 7 994 14,624 127.1 168.3 190.8 21.1 32.5 13.4 81.2 61.3 54.1 22.5 11.9

Page Industries SELL 21,000 29,974 (30) 334 4,916 311.1 392.4 482.1 30.3 26.1 22.9 96.4 76.4 62.2 24.5 19.8

Pidilite Industries REDUCE 1,080 1,109 568 8,359 18.0 21.1 25.7 7.5 16.8 21.8 61.5 52.6 43.2 19.3 16.6

S H Kelkar BUY 315 195 61 28 415 7.4 8.3 10.6 2.1 11.8 28.4 26.4 23.6 18.4 19.8 13.2

Tata Global Beverages REDUCE 250 235 7 148 2,178 7.3 7.9 9.3 20.7 7.7 17.0 31.9 29.6 25.3 12.3 5.5

Titan Co. SELL 840 919 (9) 816 12,001 12.5 16.1 19.6 45.3 28.1 21.8 73.3 57.3 47.0 24.9 20.1

United Breweries SELL 1,000 1,133 (12) 300 4,405 14.9 19.4 23.9 71.6 29.7 23.4 75.8 58.5 47.4 26.5 13.7

United Spirits REDUCE 590 615 (4) 447 6,568 7.6 10.2 13.4 39.1 34.7 30.9 80.8 60.0 45.8 32.8 10.6

Varun Beverages ADD 750 726 3 132 1,947 11.5 16.8 21.8 378.1 45.5 29.8 63.0 43.3 33.3 37.4 20.8

KIE universe 16,545 243,305 12.6 17.7 16.0 54.7 46.5 40.1 15.1 13.1

KIE universe (ex-ITC) 12,697 186,724 15.2 23.0 17.8 65.8 53.5 45.4 19.0 14.3

1-mo 3-mo 6-mo 1-yr 2018E 2019E 2020E 2018E 2019E 2020E 2018E 2019E 2020E 2019E 2020E

Asian Paints 9 17 24 23 42.1 32.6 27.0 8.0 6.8 5.7 0.5 1.0 1.8 0.8 1.1

Bajaj Corp 4 (10) (15) (1) 23.0 21.6 18.4 7.0 6.3 5.6 2.8 3.3 4.0 3.1 3.4

Britannia Industries 3 20 35 65 50.5 39.7 32.6 7.7 6.6 5.6 0.8 1.1 1.5 0.5 0.7

Coffee day (1) (23) (16) 8 13.1 11.5 9.7 2.1 1.9 1.8 2.7 2.2 1.7 — —

Colgate-Palmolive (India) (2) 3 1 5 27.0 23.7 20.6 7.2 6.6 5.8 1.6 2.7 2.7 1.4 1.7

Dabur India 15 20 29 45 49.6 42.9 37.0 10.0 8.8 7.7 1.2 1.7 1.9 0.9 1.0

GlaxoSmithKline Consumer 6 13 3 25 28.3 24.3 20.9 5.8 5.2 4.6 2.3 2.2 2.4 1.3 1.5

Godrej Consumer Products 6 19 26 37 45.1 38.1 33.1 9.5 8.4 7.5 2.4 2.0 2.1 0.6 0.7

Hindustan Unilever 7 21 28 51 51.6 41.7 36.6 10.9 9.6 8.6 1.4 1.6 1.8 1.2 1.4

ITC 15 7 10 8 23.0 20.9 18.5 8.7 8.1 7.4 2.9 2.6 3.0 1.9 2.2

Jubilant Foodworks 1 14 45 131 42.6 29.5 22.8 6.2 5.3 4.5 0.0 1.3 2.0 0.1 0.2

Jyothy Laboratories (8) 17 21 13 32.5 26.5 22.5 4.8 4.1 3.6 3.0 2.1 2.8 0.5 0.7

Manpasand Beverages (15) (64) (63) (65) 6.4 4.4 3.3 1.2 0.9 0.7 (10.8) 1.1 9.5 0.5 1.1

Marico 3 13 16 8 39.7 35.9 29.6 7.1 6.2 5.4 0.9 1.9 2.4 1.3 1.6

Nestle India 5 13 45 53 44.4 34.5 30.4 9.6 8.5 7.6 1.7 2.1 2.3 1.1 1.3

Page Industries 6 29 49 83 61.4 48.5 39.9 13.0 10.8 9.0 1.1 1.0 1.2 0.6 0.7

Pidilite Industries 4 2 28 37 41.5 35.3 29.2 9.2 7.7 6.6 0.8 1.0 1.5 0.6 0.7

S H Kelkar (13) (20) (34) (27) 18.4 15.4 12.0 2.9 2.6 2.3 (1.1) 0.4 2.4 0.9 1.0

Tata Global Beverages (16) (18) (15) 41 16.8 16.2 14.3 2.1 1.9 1.8 0.0 2.5 2.8 1.3 1.5

Titan Co. 3 (4) 12 65 49.3 38.0 30.3 5.0 4.1 3.5 (0.5) 1.1 1.0 0.5 0.6

United Breweries (3) (0) (1) 41 33.5 27.8 24.1 5.4 4.6 4.0 0.6 1.3 1.8 0.3 0.3

United Spirits (6) (12) (3) 18 46.4 34.8 28.2 5.8 5.1 4.5 2.7 1.4 1.7 - 0.3

Varun Beverages (3) 7 8 46 19.3 15.5 13.3 4.0 3.1 2.7 (3.1) 0.7 1.8 - -

KIE FMCG universe 7 12 20 33 36.0 30.4 26.1 7.9 7.0 6.1 1.5 1.8 2.1 0.9 1.1

KIE universe (ex-ITC) 4 12 21 40 42.6 34.7 29.5 7.8 6.7 5.9 1.1 1.5 1.9 0.8 1.0

Sensex 6 7 7 16

Dividend yield (%)

CAGR - (2018-20E), %

Mkt cap. EPS Growth, % PER (X)

EV/Sales (X) FCF yield (%)Price performance (%)

Upside /

(downside)

(%)

EPS (Rs)

EV/EBITDA (X)



Exhibit 6: P/E multiples are fairly high for the earnings profile One year forward PE (based on consensus estimates)

Source: Bloomberg, Company, Kotak Institutional Equities

Exhibit 7: P/E multiples are fairly high for the earnings profile One year forward PE (based on consensus estimates)


Exhibit 8: Consumer sector P/E rich at ~40X One year forward P/ E based on consensus estimates (X)


Exhibit 9: Consumer sector (ex-ITC) is trading at ~50X One year forward P/E based on consensus estimates (X)


10

20

30

40

50

60

70

80

Jul-08

Jul-09

Jul-10

Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17

Jul-18

Nestle Dabur Asian Paints

ITC HUL GCPL

-

10

20

30

40

50

60

70

Jul-08

Jul-09

Jul-10

Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17

Jul-18

Marico TitanColgate GSK Consumer

5

10

15

20

25

30

35

40

45

Jul-98

Jul-00

Jul-02

Jul-04

Jul-06

Jul-08

Jul-10

Jul-12

Jul-14

Jul-16

Jul-18

5

10

15

20

25

30

35

40

45

50

55

Jul-98

Jul-00

Jul-02

Jul-04

Jul-06

Jul-08

Jul-10

Jul-12

Jul-14

Jul-16

Jul-18



Exhibit 10: Most FMCG stocks are trading at premium to their 5-year historical average barring ITC and GSK-CH One year forward PE based on consensus estimates (X)


Exhibit 11: Relative valuation (to Sensex) One year forward Premium to Sensex based on consensus estimates (X)


HUL ITC Nestle Colgate GSKCHL APNT GCPL Marico Dabur Titan TGBL Britannia Pidilite Sector

Average P/E (X)

3-Yr 44.0 28.0 54.1 41.2 34.7 47.7 38.9 42.0 37.7 43.0 22.3 43.5 39.9 36.3

5-Yr 42.2 28.6 53.8 40.0 34.7 44.0 36.3 36.9 35.8 41.2 24.7 36.3 36.8 35.2

10-Yr 34.5 26.1 44.6 33.3 29.1 34.6 30.0 30.5 30.3 33.0 22.4 30.4 28.4 30.0

Current P/E 55.6 26.6 59.6 39.2 32.5 52.0 48.4 44.8 40.6 49.2 27.8 58.8 48.7 39.8

Current Prem/Disct to Avg (%)

Prem/Disc to 3-Yr Avg 26 (5) 10 (5) (6) 9 25 7 8 14 25 35 22 10


Prem/Disc to 10-Yr Avg 61 2 34 18 12 50 61 47 34 49 25 94 71 33

5-year P/E variables (X)

Median 42.3 28.2 51.4 40.6 34.5 44.2 35.2 38.3 36.6 41.2 26.2 38.1 35.8 36.0

Average 42.2 28.6 53.8 40.0 34.7 44.0 36.3 36.9 35.8 41.2 24.7 36.3 36.8 35.2

STD 5.5 2.0 8.9 4.0 3.1 6.1 4.4 7.6 3.7 8.9 5.0 10.8 5.9 2.9

Max 55.6 33.2 75.5 46.3 40.2 56.5 48.4 48.1 41.5 58.5 33.9 58.8 51.7 39.8

+1 STD 5.5 2.0 8.9 4.0 3.1 6.1 4.4 7.6 3.7 8.9 5.0 10.8 5.9 2.9

Min 32.2 24.9 39.4 32.0 28.0 32.1 29.3 23.3 28.9 24.6 15.6 18.2 24.0 29.2

-1 STD 36.6 26.6 45.0 36.0 31.6 37.9 32.0 29.3 32.1 32.2 19.7 25.5 30.8 32.3

Difference versus current P/E (%)

Median 31 (6) 16 (3) (6) 18 37 17 11 19 6 54 36 11

Average P/E 32 (7) 11 (2) (6) 18 33 21 13 20 13 62 32 13

Max - (20) (21) (15) (19) (8) - (7) (2) (16) (18) - (6) -

+1 STD 16 (13) (5) (11) (14) 4 19 1 3 (2) (6) 25 14 5

Min 73 7 51 23 16 62 65 92 40 100 78 223 103 36

-1 STD 52 (0) 33 9 3 37 51 53 26 53 41 131 58 23

HUL ITC Nestle Colgate GSKCHL APNT GCPL Marico Dabur Titan TGBL Britannia Pidilite Sector

Average Relative P/E (X)

3-Yr 2.2 1.4 2.7 2.1 1.7 2.4 1.9 2.1 1.9 2.2 1.1 2.2 2.0 1.8

5-Yr 2.2 1.5 2.8 2.1 1.8 2.3 1.9 1.9 1.8 2.1 1.3 1.8 1.9 1.8

10-Yr 2.0 1.5 2.5 1.9 1.7 1.9 1.7 1.7 1.7 1.9 1.3 1.7 1.6 1.7

Current Relative P/E 2.8 1.3 3.0 1.9 1.6 2.6 2.4 2.2 2.0 2.4 1.4 2.9 2.4 1.9

Current Prem/Disct to Avg (%)



Prem/Disc to 10-Yr Avg 41 (13) 17 3 (3) 33 41 29 17 32 8 70 52 13

5-year relative P/E variable (X)

Median 2.2 1.4 2.8 2.0 1.7 2.2 1.9 2.0 1.8 2.1 1.3 1.9 1.8 1.7

Average 2.2 1.5 2.8 2.1 1.8 2.3 1.9 1.9 1.8 2.1 1.3 1.8 1.9 1.8

STD 0.2 0.2 0.4 0.2 0.2 0.2 0.2 0.3 0.2 0.3 0.3 0.5 0.2 0.1

Max 2.8 2.1 3.5 2.4 2.3 2.8 2.6 2.3 2.2 2.9 1.9 2.9 2.6 2.2

+1 STD 2.4 1.7 3.1 2.2 2.0 2.5 2.1 2.2 2.0 2.4 1.6 2.3 2.1 1.9

Min 1.8 1.3 2.2 1.8 1.3 1.8 1.4 1.3 1.6 1.5 0.8 1.0 1.5 1.6

-1 STD 1.9 1.3 2.4 1.9 1.6 2.0 1.6 1.6 1.7 1.8 1.0 1.4 1.6 1.7

Difference versus current relative P/E (%)

Median 27 (9) 7 (5) (7) 15 27 11 9 17 5 53 32 10

Average P/E 28 (11) 7 (5) (10) 15 28 18 10 17 8 59 29 8

Max - (36) (15) (20) (29) (7) (6) (4) (7) (17) (28) - (6) (12)

+1 STD 15 (21) (5) (12) (20) 4 14 2 1 1 (13) 26 14 1

Min 55 5 35 10 21 41 68 68 28 63 73 195 66 20

-1 STD 43 2 23 3 4 28 48 41 20 39 42 114 47 15


Zee network emerges as the new regional leader

Zee network’s weighted viewership share in July 2018 was stable at 27.5%. The key highlight

was Zee network surpassing Star to become #1 player in the regional GEC market led by

(1) continued strength of Zee Tamil notwithstanding Star’s Bigg Boss 2, (3) Zee Bangla

surpassing Star Jalsha to become #1 Bangla GEC with 44% viewership share, (3) Zee Kannada

gaining 200 bps narrowing gap with the #1 player Colors Kannada. Zee can gain viewership

share further as it plans to launch a Malayalam GEC sometime in this quarter. In addition to

remarkable share gains in the regional GEC space, Zee is also steadily augmenting its overall

regional movie channel portfolio; Zee’s Telugu movie channel launched in 2QFY17 is a close

#2/#3 channel in the market. We expect Zee to launch Kannada and/or Tamil movie channels in

the foreseeable future. Expect viewership gains to continue to drive ad revenue growth

outperformance.

Sun network—Sun TV’s viewership share stabilizes

Flagship channel Sun TV’s viewership share in Tamil GECs stabilized at 46.5% in July 2018.

Even as it is about 400 bps lower on yoy basis, it has not declined on sequential basis which

suggests no incremental impact of Star Vijay’s Bigg Boss 2 (launched on June 17). We note that

Star Vijay has also not got much boost from Bigg Boss this year; the channel is doing well but

its high-impact reality show Bigg Boss’ viewership is tracking below expectations. Among other

regional markets, (1) Sun’s Kannada GEC is holding well, (2) viewership share of Sun’s Telugu

and Malayalam GECs is stable on a sequential basis but down 400-500 on yoy basis. Overall,

stable viewership trends on a sequential basis are comforting and we do not see any

incremental risks to our ad growth forecast of 12-13% for FY2019-20E that adequately factors

in viewership share loss so far.

TV ad spends buoyant; Expect Sun TV stock to recover a bit after a sharp correction

Our industry interactions indicate that TV industry ad spends growth continues to be buoyant

(say 15%+) led by FMCG category. We expect Zee to continue to deliver strong ad growth

outperformance for the rest of the year as benefits of viewership share gains accrue with a lag.

Sun’s stock has corrected sharply over the past three months due to (1) 400 bps qoq loss of

viewership share of Sun TV in 1Q and (2) fear of further share loss in 2Q in view of Star’s Bigg

Boss 2. With the latter risk not materializing so far and Sun TV’s viewership share stabilizing, we

expect the stock to recover by 8-10% from current levels. Our cautious stance on Sun

(downgraded to REDUCE in February 2018) was on account of (1) rising competitive intensity in

TN and share loss of Sun TV, that can drag ad growth in FY2020E, (2) valuations and

expectations were priced for perfection, and (3) underinvestment in digital. Stock performance

beyond the near-term trade will be a function of progress on domestic subscription growth and

execution on strategic initiatives (such as the launch of a second Tamil GEC and foray in

Bangla/Marathi market in FY2019). We have an ADD rating on Zee with TP of `600 and

REDUCE on Sun with TP of `925.

Media India

TV viewership update—Zee leads regional GECs, Sun stabilizes. Zee network has

emerged as the #1 network in the regional GEC space surpassing Star. Sun network’s

viewership share was broadly steady across markets. TV industry ad spends remain

buoyant. Zee is on track to deliver outperformance over industry ad growth in FY2019E.

Sun’s stock can partially recover after sharp correction as the flagship channel’s

viewership is holding well (better than expectations). Stock performance beyond the

near-term trade will be a function of progress on domestic subscription growth and

execution on strategic initiatives (new channel launches).

ATTRACTIVE

AUGUST 07, 2018

UPDATE

BSE-30: 37,692

Jaykumar Doshi

India Media


We track weighted viewership share of Zee and Sun network

Ad revenue growth of Zee and Sun in any quarter is a function of viewership share gain/loss

across genres and ad market size of each genre. Ad rates/GRP vary significantly across

genres. In order to accurately assess ad growth outlook versus industry growth rates, we

track weighted viewership share of each network; it factors in viewership share in key genres

and ad market size of genres. This metric is a lead indicator of ad revenue growth (ad

revenues lag viewership trends by 1-2 months).

Exhibit 1: Viewership share gains (yoy basis) will continue to aid Zee's ad revenue growth outperformance Weighted viewership share of Zee network in Hindi and regional genres

Notes: (1) Above market share working is based on Zee network's quarterly viewership share in its key genres (Hindi GEC, Hindi movies, Hindi FTA

GEC+movies and regional GECs) and it uses ad market size of respective genre as weight. (2) The above calculation does not cover English, music, regional movies and niche genres that collectively account for less than 10-12% of Zee's

domestic ad revenues. Zee's domestic/international ad revenue is 94%/6%.

Source: BARC ratings data, Kotak Institutional Equities

23.6

24.724.3 24.0

24.9

26.7 26.726.3

27.927.5

20

22

24

26

28

30

1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 Jul-18

Zee's weighted viewership share in Hindi + regional genres (%)

Media India


Exhibit 2: Sun network's weighted viewership share stabilizes in Jul-18 on sequential basis but was down on yoy comparison Weighted viewership share of Sun network in regional GECs (south)

Notes: (1) Above market share working is based on Sun network's quarterly viewership share in regional GECs (South) and it uses ad market size of

respective regional GE genre as weight. (2) The above calculation does not cover regional movies, regional music, regional news, regional comedy and regional kids genres that collectively

account for about 30-35% of Sun's ad revenues. It only covers four regional GECs of Sun (Sun TV, Gemini TV, Udaya TV and Surya TV) that account for 65-70% of Sun’s ad revenues.


Exhibit 3: Zee network surpasses Star in terms of viewership share in the regional GEC market Weighted viewership share of Zee, Star and Sun network in regional GECs

Notes: (1) Above market share working covers regional GECs in seven key regional markets (Tamil, Telugu, Bangla, Marathi, Kannada, Malayalam and

Oriya). We have used regional GEC ad market size of market as weight and computed weighted viewership share of Zee, Star and Sun in the regional GEC space.

(2) The above calculation does not cover regional movies, regional music, regional news, and regional comedy and regional kids.


39.7 39.839.2

38.6

37.0

34.3

35.5

34.2

31.831.1

30

32

34

36

38

40

42


Sun's weighted viewership share in South regional GECs (%)

22.1

28.8

26.0

28.0

27.2

21.3

20

22

24

26

28

30

32


Zee network Star network Sun network

India Media


Exhibit 4: Hindi genre—BARC ratings market share, 02-Apr-16 to 27-Jul-18 (Week 14, 2016 to Week 30, 2018) (%)

Notes:

(1) Top 5-8 channels (relevant channels) in each genre are considered for market share calculation. (2) Life Ok was rebranded as Star Bharat (Free-to-Air channel) on 28th August 2017. We have split its ratings in 50:50 (Paid/FTA) ratio for market share calculation of Paid and FTA Hindi GEC groups starting 28th Aug 2017.


1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 Jul-17 Jun-18 Jul-18

Hindi GEC (Urban + Rural)- Viewership share in the top 7 channels (%)

Star Plus 21.0 21.9 20.8 21.7 21.5 18.9 16.3 15.9 17.6 19.8 17.8 17.3

Colors (TV18) 20.7 17.6 20.8 20.1 17.3 18.1 19.9 19.1 17.9 17.1 20.2 19.2

Zee TV 17.5 18.0 14.9 15.0 17.4 20.1 20.9 19.1 21.2 20.4 21.2 20.4

Sony TV 10.1 11.9 13.3 13.3 12.3 13.8 13.4 14.9 13.0 12.5 12.1 14.3

Sony SAB 11.4 11.4 11.9 12.1 14.5 12.3 12.5 13.2 13.9 12.5 13.5 14.3

&TV (Zee) 5.3 6.0 6.0 5.9 5.4 6.4 6.0 5.6 5.0 6.3 4.9 4.9

Life Ok (Star Bharat) 14.0 13.1 12.3 11.9 11.6 10.5 11.0 12.2 11.4 11.4 10.3 9.7

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Zee Network 22.8 24.1 20.8 20.9 22.8 26.4 26.9 24.7 26.2 26.7 26.1 25.3

Hindi movies (Urban + Rural)- Viewership share in the top 6 channels (%)

Sony Max 26.0 25.8 26.7 25.6 27.2 26.8 28.2 27.6 27.9 26.6 27.6 28.7

Star Gold 21.7 21.2 18.1 20.2 20.2 20.2 19.1 19.9 19.8 20.5 20.2 19.8

Zee Cinema 22.2 22.0 23.7 22.0 22.1 20.8 20.7 20.3 20.8 20.7 21.4 21.4

Movies OK 11.7 11.5 11.5 11.3 10.8 12.0 11.7 11.3 11.2 12.0 10.7 10.8

& Pictures 10.9 11.3 11.9 12.3 11.5 11.4 11.3 11.2 11.8 11.5 11.7 10.8

Sony Max 2 7.6 8.1 8.1 8.5 8.2 8.8 9.1 9.6 8.5 8.6 8.4 8.5

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Zee Network 33.1 33.4 35.6 34.4 33.7 32.2 32.0 31.5 32.5 32.2 33.1 32.2

FTA Hindi GEC (Urban + Rural)- Viewership share in the top 8 channels (%)

Star Bharat 4.1 10.9 10.7 8.9 0.0 8.7 9.1

Zee Anmol 21.8 24.5 22.0 19.0 19.7 25.0 21.1 21.5 23.3 23.5 23.8 21.5

Sony PAL 22.8 20.5 21.6 21.3 23.9 19.3 18.6 19.2 18.2 21.3 18.8 18.0

Colors Rishtey 17.2 15.5 19.6 21.5 21.2 18.3 13.5 13.2 17.1 22.8 15.0 13.9

Star Utsav 21.6 24.5 19.1 18.8 15.4 10.7 15.7 16.6 14.9 11.1 15.4 17.6

Zee Big Magic 8.4 7.0 8.9 7.6 7.9 7.9 7.0 7.1 8.1 8.3 8.4 7.6

Dangal TV 2.8 3.3 3.7 4.5 4.9 8.1 9.2 9.6 7.9 7.4 8.4 10.5

DD National 5.4 4.8 5.0 7.3 6.9 6.5 4.0 2.2 1.6 5.5 1.6 1.7

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Zee Network 30.2 31.4 30.9 26.7 27.6 32.9 28.1 28.6 31.5 31.8 32.2 29.1

FTA Hindi movies (Urban + Rural)- Viewership share in the top 4 channels (%)

Sony Wah 18.6 41.9 35.2 32.0 29.9 29.7 27.2 29.2 29.2 28.2 29.3 30.1

Rishtey Cineplex 41.8 24.3 20.9 21.9 24.5 26.0 27.2 27.3 26.0 27.8 25.6 23.9

Zee Anmol Cinema 0.0 9.0 23.1 24.0 23.8 21.7 22.6 21.9 21.4 22.0 20.9 20.1

Star Utsav movies 39.6 24.7 20.8 22.1 21.8 22.7 23.0 21.5 23.4 22.1 24.2 26.0

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Media India


Exhibit 5: Regional genres (South)—BARC ratings market share, 02-Apr-16 to 27-Jul-18 (Week 14, 2016 to Week 30, 2018) (%)

Notes:

(1) Top 5-7 channels (relevant channels) in each genre are considered for market share calculation. (2) Colors Tamil's viewership share was 4.5% in the month of March 2018 (Channel ratings were released starting March)



Tamil GEC (Urban + Rural)- Viewership share in the top 6 channels (%)

Sun TV 65.7 61.5 62.3 61.7 57.5 50.5 52.8 50.7 46.8 51.9 45.5 46.5

STAR V ijay 12.2 12.9 10.7 12.6 16.9 24.6 21.9 20.5 21.4 23.4 22.1 22.2

Zee Tamil 8.4 12.4 14.0 13.4 13.6 14.3 15.6 18.1 20.1 13.8 21.4 21.0

Polimer 5.5 4.9 4.5 4.7 4.8 3.8 3.7 3.3 3.1 3.9 2.8 2.6

Kalaignar TV 4.6 3.6 3.5 3.3 3.1 2.9 3.5 3.4 2.5 2.7 2.3 2.0

Jaya TV 3.6 4.7 5.0 4.2 4.0 3.9 2.5 2.4 2.2 4.3 2.2 2.3

Colors Tamil 1.5 3.8 0.0 3.6 3.4

Total of top 7 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Telugu GEC (Urban + Rural)- Viewership share in the top 4 channels (%)

Zee Telugu 27.9 24.5 22.8 24.0 24.3 22.9 24.6 24.0 26.8 22.1 27.8 26.2

Star Maa TV 24.4 22.1 22.5 23.0 22.2 27.7 24.5 25.7 27.8 27.7 28.4 29.9

Gemini TV (Sun) 21.8 28.3 30.1 29.3 29.4 25.6 24.4 24.8 22.4 26.1 21.4 21.0

ETV Telugu 25.9 25.1 24.6 23.7 24.1 23.8 26.4 25.6 23.0 24.1 22.4 22.9

Total of Top 4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Kannada GEC (Urban + Rural)- Viewership share in the top 5 channels (%)

Colors Kannada 35.5 36.2 35.2 34.2 34.4 35.0 34.8 35.0 33.9 31.5 33.3 33.2

Colors Super 0.0 2.8 4.5 6.5 8.0 8.4 11.4 10.3 8.0 8.6 7.6 8.8

Zee Kannada 23.4 22.4 24.5 24.8 25.6 24.5 22.3 24.7 25.0 25.9 26.3 28.2

Udaya TV (Sun) 20.2 18.8 12.8 13.0 13.6 16.4 18.7 18.0 18.8 15.6 18.5 17.8

Star Suvarna 20.9 19.8 23.0 21.6 18.3 15.6 12.8 12.0 14.4 18.3 14.2 12.0

Total of Top 5 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Malayalam GEC (Urban + Rural)- Viewership share in the top 4 channels (%)

Star Asianet 57.2 52.9 55.3 56.8 54.9 51.9 43.7 48.1 52.8 53.7 52.3 53.9

Surya TV (Sun) 12.3 17.4 15.5 14.5 15.5 20.1 20.3 18.4 16.6 18.7 15.4 16.3

Mazhavil Manorama 18.7 16.8 15.5 15.7 18.2 16.7 21.3 16.9 15.5 16.4 16.0 14.5

Flowers TV 11.8 12.8 13.7 12.9 11.4 11.3 14.8 16.6 15.1 11.2 16.3 15.4

Total of Top 4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Telugu movie channels (Urban + Rural)- Viewership share in the top 4 channels (%)

Gemini movies (Sun) 48.3 47.0 42.2 41.0 35.6 32.2 31.9 33.1 28.4 33.8 30.9 31.8

Zee Cinemalu 0.0 3.3 14.2 17.2 18.9 21.7 21.8 23.1 26.0 21.8 26.5 25.1

Star MAA movies 35.3 32.3 26.2 25.3 29.2 32.4 30.2 28.3 31.8 30.3 28.0 26.4

ETV cinema 16.4 17.4 17.4 16.6 16.2 13.6 16.1 15.5 13.7 14.1 14.6 16.7

Total of Top 4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Malayalam movie channels (Urban + Rural)- Viewership share in the top 2 channels (%)

Star Asianet movies 54.0 51.1 56.1 51.0 49.2 51.3 50.4 55.3 53.9 48.3 50.8 56.5

Surya movies (Sun) 46.0 48.9 43.9 49.0 50.8 48.7 49.6 44.7 46.1 51.7 49.2 43.5

Total of Top 2 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Tamil movie channel (Urban + Rural)- (GVMs)

KTV (Sun) 273 265 278 268 316 332 337 294 275 329 272 307

Kannada movie channel (Urban + Rural)- (GVMs)

Udaya movies (Sun) 172 156 151 170 190 193 186 191 185 207 190 222

India Media


Exhibit 6: Regional genres—BARC ratings market share, 02-Apr-16 to 27-Jul-18 (Week 14, 2016 to Week 30, 2018) (%)

Source: BARC data, Kotak Institutional Equities


Marathi GEC (Urban + Rural)- Viewership share in the top 6 channels (%)

Zee Marathi 42.5 46.2 51.3 54.4 54.4 51.5 50.8 45.5 47.7 49.7 46.6 44.6

Colors Marathi 29.7 23.5 19.6 17.6 16.0 15.1 16.0 19.1 18.6 15.8 19.4 20.6

Star Pravah 9.0 10.1 10.0 11.4 13.4 14.1 16.3 18.4 17.2 13.6 16.7 17.6

Zee Yuva 0.0 1.7 6.6 5.4 7.2 10.1 8.2 8.5 8.8 11.7 9.1 8.7

Fakt Marathi 8.5 9.5 7.1 6.2 5.3 5.8 4.6 4.8 4.6 5.7 5.0 5.4

Maiboli 10.4 9.0 5.4 5.0 3.8 3.5 4.2 3.8 3.2 3.5 3.2 3.1

Total of top 6 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Bangla GEC (Urban + Rural)- Viewership share in the top 4 channels (%)

Star Jalsha 50.4 51.4 55.2 57.1 55.7 57.1 55.3 47.7 44.8 56.2 43.0 41.9

Zee Bangla 36.1 37.3 34.7 33.8 32.1 31.7 31.7 38.8 41.0 31.7 42.9 44.1

Colors Bangla 7.1 5.0 5.1 4.2 5.1 6.1 8.2 9.3 8.3 6.3 7.7 8.3

Sony Aath 6.5 6.3 4.9 4.9 7.0 5.2 4.8 4.3 5.8 5.8 6.4 5.7

Total of Top 4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Oriya GEC (Urban + Rural)- Viewership share in the top 4 channels (%)

Sarthak TV 52.8 53.3 55.1 50.1 48.4 51.3 49.2 45.2 47.0 52.3 46.0 46.8

Tarang TV 32.1 31.4 26.4 31.2 35.3 34.0 37.4 41.1 37.8 32.4 39.6 37.3

Odisha TV 7.6 9.9 10.7 11.0 8.4 8.7 7.8 7.4 8.2 9.5 7.1 10.2

Colors Oriya 7.4 5.5 7.7 7.7 7.9 6.1 5.6 6.4 7.1 5.8 7.3 5.7

Total of Top 4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0


Strong bookings/net new deal wins across companies

While performance of Tier-1 companies has been relatively muted with the exception of TCS,

commentary on deal wins and bookings has been positive. Sample the comments of each of

the companies from the earnings call.

Wipro. “…On the order book side, we are seeing a robust demand environment and given

the propositions and the investments that we have made in digital cloud, cyber security and

so on, our ability to capture this demand has been very high, compared to the same quarter

last year, our order book has become much better in terms of growth, it is in the double-

digit growth compared to last year same quarter.”

HCLT. “...We also had the highest ever booking in this quarter led by next-gen infrastructure

services and a variety of our Mode 2 services, primarily driven around cloud native and our

digital offerings. The highest ever booking is significantly higher than the bookings that we

did in the quarter when we also mentioned that it was the highest ever booking quarter…”

Infosys. “…With the large deal wins and some of the traction we are seeing in large

accounts both in Financial Services and across the company, we remain positive with respect

to what we see in the demand environment…”

TCS. “… robust contract signings quarter after quarter, giving us good visibility into the

medium-term.’

These statements indicate strong deal momentum and potential acceleration of demand round

the corner for the entire pack. While this is possible, a deeper understanding is required of

bookings/TCVs and translation of the same into revenues. This is all the more important in the

current environment where companies are facing heightened deflationary pressures from new

technologies, productivity expectations of the clients and vendor consolidation within Tier-1.

No standard definition of bookings

The definition of revenues is standard and defined by accounting standards. However, there is

no standard definition of bookings. Some companies include only new deals in bookings, some

include only deals signed above a particular value, etc. The following dynamics are important to

understand and derive meaningful insights from bookings numbers and consequent translation

into revenue and growth numbers.

Renewals versus new and tenure extension. The composition of bookings split between

renewals and new business is important to assess growth. Conversion of an existing T&M

relationship into multiyear service contract may provide a strong boost to bookings/TCVs but

may add little to annual revenues. In fact, annual revenues from the contract may be even

lower before conversion to multiyear deal since the client would demand productivity from

year 1. In many situations, tenure extensions can lead to increase in total contract value

(TCV) but does little for annual contract value (ACV).

Technology India

Strong bookings for Indian IT —an indicator of growth acceleration? Even as growth

for large companies with the exception of TCS was muted, the commentary on deal

wins/TCV/bookings was optimistic. Is the bookings number an indicator for material

acceleration in growth ahead? We think the answer is not straightforward and depends

on the extent of leakages in traditional business, defense of share against consolidation

decisions and new wins. Order bookings portray only a part of the picture. Finally, the

definition of revenues is standard, for bookings it is not.

CAUTIOUS

AUGUST 07, 2018

UPDATE

BSE-30: 37,692

Kawaljeet Saluja

Jaykumar Doshi

India Technology


Duration of bookings. The nature of bookings can have bearing on revenues. Run-the-

business services contracts are longer tenured and typically done through fixed price

contracts, which lend certain predictability to revenues. A high composition of bookings

weighed towards such services flows in revenues consistently but over a longer period of

time. On the other hand, contract duration for services coming out of discretionary

spends of clients (application development, consulting and system integration) have deal

values that are lower but get executed immediately. Hence, composition of bookings

between run-the-business or discretionary spending-led services has implications for pace

of translation of bookings into revenues.

Estimation of bookings from T&M contracts. TCV of time and material contracts is

based on – (1) estimated value of MSA in case the engagement value over the MSA

duration is mentioned in it or (2) aggregating the value of individual statement of works

(SOW) signed. The quantum of work is not cast in stone in such contracts and does not

carry any penalty clause in case of shortfall. Order book in such cases may not fully

translate into revenues.

Order cancellations. While bookings/TCV gets captured in the numbers, what happens

in case of bankruptcy of a client or cancellation of project? This immediately impacts

revenues or impacts the bookings of the year/quarter in which such an order was won.

The order book will show a nice growth quarter on quarter and year on year but the

backlog of order to be executed declines and so does revenues in such a case.

Consolidation decisions. Clients have historically consolidated vendors to drive better

synergies, lower costs and release bandwidth that can get clogged in vendor

management. Let’s say there are three vendors working on various programs for a client.

The client decides to consolidate these programs through multi-year fixed price route

with a single vendor. The wining vendor ends up reporting a huge order booking.

However, the cumulative value of deal by the winning vendor will be lower than the pre-

consolidation revenues when aggregated for each vendor individually. Further, the

vendors that lose out of the consolidation decision will not likely report negative order

booking in such an event. Effectively bookings are designed to capture only new wins but

not the change in backlog of order book.

The way forward—trends useful over a period of time

A single bookings number for one quarter may not provide much insight on revenue growth

potential. However, bookings data disclosed consistently over a period of time can provide

more meaningful analysis of trends on growth rates using book to bill ratio and patterns

around it. A few points again worth noting.

The predictive power of magnitude of acceleration in growth based on order bookings is

low; however, it is possible to derive direction of growth. HCLT consistently called out

quarters where net new order wins were over US$1 bn from Dec 2012 –Jun 2014.

However, continued deceleration in revenue growth in FY2013 and FY2014 against the

backdrop of strong order bookings surprised many. Eventually the company discontinued

disclosure of new wins and instead started off with annual revenue and margin guidance

in FY2017. Tech Mahindra (TM) has consistently disclosed net new TCV wins every

quarter. Bookings have been consistent for TM at around ~US$300 mn on quarterly basis

though growth has been highly volatile. Infosys’ growth rates slowed down at the time

when it had the highest deal wins on ttm basis (Exhibit 2).

Technology India


The challenge of estimation from T&M contracts. Indian IT’s engagement model with

clients broadly comprises two elements—(1) time and material projects and (2) fixed

price/element-based projects. Revenue flow from the latter is clearly defined and carries

certain elements of predictability. Run-the-business has increasingly moved to fixed price

contracts. However, estimating revenue flow from most time and material contracts is

challenging noting that the flexible nature of resourcing and lack of compensation clause

in case of shortfall or cancellations. In the normal case, bookings data and book to bill

ratio would have sufficed but not for IT services industry, which makes disclosure of order

backlog all the more important.

Order backlog. Movements in contract values due to renewal cycle, deflationary

pressure at the time of renewals and loss of revenues due to vendor consolidation is best

captured through change in order backlog. Disclosure of order bookings combined with

order backlog and ideally execution of order backlog over the immediate 12 months will

help in assessing health of the business in a far better manner. We understand that

estimating order backlog will be difficult for time and material contracts where order

execution cycle is extremely short; in such a case disclosure of split of bookings between

long tenured outsourcing contracts and short duration contracts would help in assessing

the health of business.

Indian IT has made a good beginning by providing qualitative commentary on the order

booking and in certain cases quantitative data as well. However, more details on total value

of booking, execution timeframe and annual contract value will provide further insights into

the health of the business.

Exhibit 1: Definition of bookings/TCVs of companies


Definition of/ commentary on bookings

Infosys Contracts that are signed on the dotted line on value and above US$50 mn in size

TCS Value of business signed during the quarter

Wipro Not disclosed; management provides qualitative color on order booking on the earnings call

HCLT Net new contracts

Tech M Net new contracts

India Technology


Exhibit 2: TTM TCVs and revenue addition of Infosys


Exhibit 3: TTM TCVs and revenue growth of Infosys


1,915

2,298

3,047

3,860 3,981 4,205

3,907

3,486 3,334

2,858 2,973 3,072

3,531

123

191 189

287

245

195

144 123

150 141

204

236

180

0

50

100

150

200

250

300

350

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Jun-1

5

Sep

-15

Dec-

15

Mar-

16

Jun-1

6

Sep

-16

Dec-

16

Mar-

17

Jun-1

7

Sep

-17

Dec-

17

Mar-

18

Jun-1

8

Large deals' TCV (LHS, TTM US$ mn) Incremental revenues (RHS, US$ mn yoy ))

1,915

2,298

3,047 3,860

3,981 4,205

3,907

3,486 3,334

2,858 2,973 3,072

3,531 10.9

14.2

12.5

15.0

12.1

8.9

7.3

5.3

2.7 2.2

5.8 6.4 6.0

0

2

4

6

8

10

12

14

16

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Jun-1

5

Sep

-15

Dec-

15

Mar-

16

Jun-1

6

Sep

-16

Dec-

16

Mar-

17

Jun-1

7

Sep

-17

Dec-

17

Mar-

18

Jun-1

8

Large deals' TCV (LHS, TTM US$ mn) Revenue growth (RHS, yoy c/c %)

Technology India


Exhibit 4: Kotak Institutional Equities: valuation summary of key Indian technology companies


06-Aug-18 EPS (Rs) P/E (X) EV/EBITDA (X) RoE (%)

Company Price (Rs) Rating (Rs m) (US$ m) 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E

HCL Technologies 957 REDUCE 1,331,837 19,357 62.3 70.3 73.8 15.4 13.6 13.0 10.8 8.9 8.1 24.8 24.2 21.8

Hexaware Technologies 467 SELL 138,597 2,014 16.5 19.6 23.1 28.2 23.8 20.2 20.3 17.8 14.1 26.6 27.4 27.8

Infosys 1,361 ADD 2,971,833 43,194 64.6 70.9 78.3 21.1 19.2 17.4 14.6 13.1 11.8 21.8 23.0 23.5

L&T Infotech 1,735 ADD 300,057 4,361 63.5 82.9 93.7 27.3 20.9 18.5 24.0 16.0 13.4 31.8 33.5 30.7

Mindtree 954 ADD 156,532 2,275 34.5 43.1 53.3 27.6 22.1 17.9 20.0 13.8 11.1 21.4 23.9 25.2

Mphasis 1,175 SELL 227,165 3,302 43.9 51.9 56.2 26.8 22.6 20.9 19.5 15.8 14.1 14.6 17.4 17.1

TCS 1,976 REDUCE 7,566,605 109,976 67.5 81.8 89.0 29.3 24.2 22.2 21.8 17.7 16.3 29.4 33.4 33.8

Tech Mahindra 667 ADD 588,782 8,558 42.6 46.2 54.6 15.6 14.4 12.2 11.5 8.6 7.0 21.5 20.2 20.5

Wipro 277 REDUCE 1,251,796 18,194 16.9 18.9 21.7 16.3 14.6 12.8 10.3 9.1 8.0 16.0 16.4 16.8

Technology 14,533,204 211,231 22.7 20.1 18.3 16.5 13.8 12.4 23.7 23.8 24.1

KIE universe 113,157,539 1,644,311 27.6 21.8 17.4 12.9 10.9 9.7 11.2 12.9 14.6

Target O/S shares EPS CAGR (%) Sales (Rs mn)

Company Price (Rs) (mn) 2017-20E 2018E 2019E 2020E 2018E 2019E 2020E 2018E 2019E 2020E 2018E 2019E 2020E

HCL Technologies 1,025 1,409 7.7 5.3 12.8 5.0 87,783 96,614 100,229 114,392 135,929 143,647 505,700 592,117 648,011

Hexaware Technologies 435 302 18.9 20.2 18.4 18.0 4,994 5,914 6,978 6,554 7,400 9,170 39,420 46,640 54,894

Infosys 1,400 2,175 7.6 3.0 9.7 10.4 145,960 154,135 170,196 190,100 209,914 230,484 705,220 804,826 885,245

L&T Infotech 2,000 175 18.9 13.9 30.5 13.0 11,120 14,530 16,422 11,876 17,572 20,324 73,065 92,890 106,897

Mindtree 1,115 165 28.6 37.8 24.9 23.6 5,701 7,083 8,757 7,405 10,562 12,849 54,628 68,525 78,031

Mphasis 760 193 13.6 14.4 18.3 8.2 8,477 10,028 10,853 10,596 12,901 14,170 65,459 76,151 84,791

TCS 1,790 3,829 10.1 1.1 21.2 8.8 258,260 309,420 333,970 325,160 397,227 432,018 1,231,040 1,447,885 1,590,149

Tech Mahindra 785 891 19.4 33.1 8.3 18.2 38,000 41,180 49,101 47,170 60,420 70,144 307,730 348,702 380,933

Wipro 295 4,507 7.4 (3.1) 11.8 14.6 80,081 85,332 97,779 105,277 112,513 124,723 546,359 584,322 623,734

Technology 1.6 13.1 9.7 640,376 724,235 794,282 818,530 964,437 1,057,529 3,528,621 4,062,060 4,452,685

KIE universe (5.1) 26.6 26.6

Notes:

(a) Hexaware Technologies is December year-ending.

Mkt cap.

EPS growth (%) Net Profit (Rs mn) EBITDA (Rs mn)


KO

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June 2018: Results calendar

Source: NSE, Kotak Institutional Equities

Mon Tue Wed Thu Fri Sat Sun

6-Aug 7-Aug 8-Aug 9-Aug 10-Aug 11-Aug 12-Aug

Adani Port and SEZ Adani Transmission BPCL 3M India Alkem Laboratories Amara Raja Batteries

Adani Pow er AU Small Finance Cipla AIA Engineering Apollo Hospitals Balkrishna Industries

Arvind Edelw eiss Financial Services City Union Bank Aurobindo Pharma Bosch Coal India

Britannia Industries GlaxoSmithkline Consumer HPCL Bharat Forge Dhanuka Agritech Dalmia Bharat

Gatew ay Distriparks Kalpataru Pow er Transmission Indian Bank Coffee Day Enterprises DLF India Cements

Max Financial Services Mahindra & Mahindra Lupin Cummins India Dr Lal Pathlabs IOCL

Punjab National Bank Motherson Sumi Systems Natco Pharma Eicher Motors Endurance Technologies MRPL

Ujjivan Financial Services Mphasis National Aluminium Co. Engineers India GAIL (India) NBCC

Punjab National Bank NMDC Future Retail Glenmark Pharmaceuticals

Sobha PNB Housing Finance Godrej Agrovet Hindalco Industries

SRF Siemens Gujarat Pipavav Port Indian Hotels Co.

TVS Motor Thermax HCG Indraprastha Gas

Jindal Steel and Pow er NHPC

Kaveri Seed PC Jew eller

MRF State Bank of India

Page Industries Sun TV Netw ork

S H Kelkar and Company Timken

Tata Communications Union Bank

Varun Beverages United Brew eries

Whirlpool Vakrangee

Voltas


Ashoka Buildcon Brigade Enterprises

Cadila Healthcare Dilip Buildcon

Dew an Housing Finance GMR Infrastructure

Godrej Industries Grasim Industries

Oil India Rajesh Exports

Oracle Financial Services Sun Pharmaceuticals

Sadbhav Engineering

Sunteck Realty

Tata Chemicals

Tata Steel


Magma Fincorp P&G Hygiene Britannia Industries

Gillette India


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Kotak Institutional Equities: Valuation summary of KIE Universe stocks


Target O/S ADVT

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

Company Rating 6-Aug-18 (Rs) (%) (Rs bn) (US$ bn) (mn) 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E 2018 2019E 2020E (US$ mn)

Automobiles

Amara Raja Batteries REDUCE 832 780 (6.3) 142 2.1 171 28 33 39 (1.6) 21.2 15.5 30.2 24.9 21.5 16.0 13.3 11.4 4.8 4.2 3.6 17.0 18.0 18.0 0.5 0.6 0.7 5.8

Apollo Tyres BUY 276 340 23.2 158 2.3 541 13 20 25 (38.0) 46.9 25.7 20.6 14.0 11.2 11.5 8.4 7.1 1.5 1.5 1.3 8.5 11.0 12.5 1.0 1.1 1.1 11.0

Ashok Leyland BUY 118 160 35.3 347 5.0 2,926 5.4 6.2 8.9 8.0 15.3 43.2 22.0 19.1 13.3 12.7 9.7 7.0 4.8 4.2 3.5 23.7 23.4 28.4 2.1 1.6 2.3 47.3

Bajaj Auto SELL 2,688 2,500 (7.0) 778 11.3 289 140 148 161 6.0 5.4 9.0 19.2 18.2 16.7 13.0 12.5 11.1 4.1 3.6 3.3 22.9 21.2 20.7 2.2 2.2 2.4 31.6

Balkrishna Industries REDUCE 1,231 1,260 2.3 238 3.5 193 37 50 63 4.8 34.8 25.0 32.9 24.4 19.5 17.5 13.4 10.7 5.8 4.8 4.0 19.0 21.6 22.2 0.4 0.5 0.5 8.2

Bharat Forge SELL 647 600 (7.3) 301 4.4 466 16 23 27 10.1 43.0 16.8 40.0 28.0 23.9 19.1 15.8 13.6 6.5 5.6 4.7 17.3 21.5 21.4 0.7 0.8 0.8 11.0

CEAT ADD 1,381 1,500 8.6 56 0.8 40 65 99 108 (29.5) 53.7 8.3 21.3 13.9 12.8 10.4 8.8 7.6 2.1 1.9 1.7 10.4 14.4 13.8 0.8 0.7 0.7 13.9

Eicher Motors SELL 27,038 26,000 (3.8) 737 10.7 27 792 995 1,200 29.3 25.5 20.6 34.1 27.2 22.5 24.5 19.7 16.0 13.7 9.9 7.4 46.4 42.3 37.5 0.1 0.1 0.1 19.2

Escorts BUY 880 1,200 36.4 75 1.6 89 39 59 71 71.3 52.3 19.9 22.7 14.9 12.4 12.9 9.0 7.4 3.1 2.6 2.2 13.5 17.6 18.0 0.5 1.0 1.2 16.7

Exide Industries SELL 277 235 (15.3) 236 3.4 850 8 10 11 0.6 25.3 11.0 33.8 27.0 24.3 18.9 15.4 13.7 4.4 4.0 3.6 13.5 15.4 15.5 0.9 1.1 1.3 9.3

Hero Motocorp SELL 3,297 3,000 (9.0) 658 9.6 200 185 183 204 9.5 (0.9) 11.4 17.8 18.0 16.1 11.0 10.7 9.4 5.6 5.0 4.4 33.8 29.3 29.1 2.6 2.8 3.1 22.2

Mahindra CIE Automotive ADD 256 290 13.4 97 1.4 378 10 14 16 107.0 45.0 12.7 26.6 18.4 16.3 13.1 9.2 8.1 2.6 2.3 2.0 10.4 13.2 13.1 — — — 3.0

Mahindra & Mahindra BUY 932 1,015 8.9 1,159 16.8 1,138 38 44 50 22.0 15.6 14.8 24.6 21.2 18.5 16.2 13.8 11.9 3.5 3.1 2.7 15.1 15.4 15.7 0.8 0.9 1.1 31.8

Maruti Suzuki ADD 9,286 10,000 7.7 2,805 40.8 302 256 323 393 5.1 26.4 21.8 36.3 28.7 23.6 20.3 16.6 13.1 6.7 5.8 4.9 19.8 21.6 22.5 0.9 0.9 1.1 64.2

Motherson Sumi Systems SELL 314 265 (15.7) 661 9.6 2,105 8 11 14 6.1 37.7 21.7 38.4 27.9 22.9 14.4 11.1 9.2 6.7 5.7 4.9 19.0 22.1 22.9 0.7 0.9 1.0 13.8

MRF REDUCE 76,948 76,000 (1.2) 326 4.7 4 2,669 3,896 4,447 (23.9) 46.0 14.1 28.8 19.7 17.3 13.1 9.7 8.3 3.4 2.9 2.5 12.3 15.7 15.4 0.1 0.1 0.1 7.0

Schaeffler India BUY 5,259 6,000 14.1 87 1.3 17 143 156 199 22.0 9.0 27.3 36.7 33.7 26.5 21.6 20.5 15.6 5.2 4.6 4.1 15.0 14.5 16.4 0.3 0.6 0.8 0.6

SKF ADD 1,715 1,800 5.0 88 1.3 51 58 69 82 24.6 19.7 18.5 29.7 24.8 21.0 18.4 15.9 13.1 4.8 4.2 3.6 16.1 16.7 17.1 0.6 0.7 0.8 0.4

Tata Motors BUY 254 425 67.3 863 11.7 3,396 20 22 36 (28.0) 10.7 62.7 12.7 11.5 7.1 3.8 3.5 2.9 0.9 0.8 0.7 8.8 7.6 11.2 — — — 59.1

Timken SELL 733 660 (10.0) 50 0.7 68 14 19 25 (5.3) 42.3 27.5 54.2 38.1 29.9 30.2 21.1 16.8 7.1 6.0 5.1 13.9 17.1 18.5 0.1 0.1 0.1 0.3

TVS Motor SELL 528 410 (22.3) 251 3.6 475 14 18 22 18.7 26.8 21.8 37.9 29.9 24.5 23.1 17.4 14.5 8.7 7.3 6.2 25.1 26.7 27.3 0.6 1.0 1.2 12.2

WABCO India SELL 6,698 6,350 (5.2) 127 1.8 19 144 169 222 27.8 17.8 31.3 46.6 39.5 30.1 30.2 25.7 19.5 8.3 7.0 5.7 19.5 19.2 20.9 0.1 0.2 0.2 0.5

Automobiles Neutral 10,241 148 (0.9) 19.6 25.7 26.2 21.9 17.4 11.6 9.8 8.1 3.7 3.3 2.9 14.2 15.1 16.6 0.9 0.9 1.1 389.2

Banks

Axis Bank ADD 597 600 0.5 1,533 22.3 2,567 1 18 40 (92.6) 1,577.6 122.3 555.6 33.1 14.9 — — — 2.9 2.6 2.2 0.5 7.1 14.1 0.8 0.5 1.0 53.3

Bank of Baroda NR 151 — — 399 5.8 2,652 (9) 21 26 (253.2) 323.7 26.4 (16.4) 7.3 5.8 — — — 1.6 1.3 1.0 (5.8) 12.7 14.0 — — — 33.8

Canara Bank ADD 294 300 1.9 216 3.1 733 (58) (5) 51 (406.6) 91.6 1,147.0 (5.1) (60.8) 5.8 — — — 1.8 1.8 1.0 (12.2) (1.0) 10.1 — — — 28.9

City Union Bank ADD 170 190 11.5 125 1.8 665 9 10 12 6.4 16.2 13.0 19.1 16.5 14.6 — — — 2.9 2.6 2.2 15.3 15.5 15.5 0.2 1.1 1.2 1.8

DCB Bank ADD 168 205 22.1 52 0.8 308 8 10 12 13.8 28.2 21.0 21.1 16.4 13.6 — — — 2.1 1.9 1.7 10.9 11.7 12.7 — 0.6 0.7 4.5

Equitas Holdings BUY 147 190 29.2 50 0.7 340 0.9 4.4 8.4 (80.3) 378.4 89.9 158.5 33.1 17.5 — — — 2.3 2.1 1.9 1.4 6.4 11.2 — — — 4.8

Federal Bank BUY 89 130 46.6 176 2.6 1,972 4.4 5.7 7.9 (9.3) 29.5 39.5 20.3 15.7 11.2 — — — 1.6 1.4 1.3 8.2 8.8 11.4 1.1 1.5 2.0 20.2

HDFC Bank REDUCE 2,114 2,000 (5.4) 5,644 82.0 2,595 67 77 93 18.7 14.1 21.1 31.4 27.5 22.7 — — — 5.2 4.0 3.5 17.9 16.5 16.2 0.6 0.7 0.8 85.5

ICICI Bank BUY 315 400 26.9 2,027 29.5 6,429 11 8 26 (31.1) (19.6) 209.1 29.9 37.2 12.0 — — — 2.4 2.1 1.8 6.6 5.1 14.5 0.5 0.5 1.7 92.0

IDFC Bank NR 42 — — 141 2.1 3,404 2.5 1.2 2.9 (16.0) (52.7) 146.7 16.4 34.8 14.1 — — — 0.9 0.9 0.9 5.7 2.6 6.3 1.2 0.6 1.4 9.3

IndusInd Bank REDUCE 2,000 1,900 (5.0) 1,201 17.5 600 60 71 87 25.3 17.5 23.6 33.3 28.3 22.9 — — — 5.2 4.2 3.7 17.1 17.6 16.8 — 0.4 0.5 31.6

J&K Bank BUY 57 100 75.9 32 0.5 557 4 7 11 111.6 82.4 63.8 15.6 8.6 5.2 — — — 0.7 0.7 0.6 3.4 5.9 9.1 — 2.3 3.8 0.4

Karur Vysya Bank ADD 105 110 5.1 76 1.1 727 5 3 13 (52.2) (32.3) 306.7 22.0 32.5 8.0 — — — 1.5 1.5 1.3 6.1 3.7 14.1 0.6 0.8 3.1 1.9

Punjab National Bank ADD 90 90 (0.1) 249 3.6 2,761 (44) (39) 9 (814.7) 13.4 124.1 (2.0) (2.3) 9.7 — — — 5.3 (4.1) (15.3) (32.4) (31.3) 8.2 — (9.3) 2.2 34.4

RBL Bank SELL 566 475 (16.0) 239 3.5 420 15 22 29 27.3 48.1 31.5 37.4 25.2 19.2 — — — 3.7 3.3 2.9 11.5 13.3 15.5 0.4 0.6 0.8 12.4

State Bank of India BUY 309 370 19.9 2,753 40.0 8,925 (7) 18 37 (155.8) NM 106.1 NM 17.1 8.3 — — — 2.5 1.9 1.4 (3.2) 7.1 13.2 — 0.1 0.1 81.5

Ujjivan Financial Services REDUCE 399 420 5.1 48 0.7 121 1 19 28 (96.6) 3,033.9 47.3 669.3 21.4 14.5 — — — 2.8 2.5 2.1 0.4 12.1 15.8 0.1 0.4 0.7 6.6

Union Bank ADD 91 130 43.5 106 1.5 1,169 (45) 1 24 (655.5) 101.4 3,896.2 (2.0) 148.0 3.7 — — — 1.5 1.4 0.9 (23.6) 0.3 11.8 — 0.1 4.0 9.7

YES Bank SELL 378 335 (11.4) 872 12.7 2,303 18 20 22 25.7 8.1 9.5 20.6 19.0 17.4 — — — 3.5 3.1 2.7 17.7 16.6 15.9 0.6 0.9 1.0 57.3

Banks Attractive 15,937 232 (89.4) 927.9 115.7 294.1 28.6 13.3 2.1 1.9 1.7 0.7 6.7 12.9 0.4 0.4 0.9 570.0

Dividend yield (%)P/B (X) RoE (%)


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NBFCs

Bajaj Finance SELL 2,696 2,000 (25.8) 1,558 22.6 575 43 68 90 29.2 56.6 31.9 62.1 39.7 30.1 — — — 9.8 8.1 6.5 19.7 22.4 24.0 0.1 0.3 0.3 56.0

Bajaj Finserv REDUCE 6,919 6,100 (11.8) 1,101 16.0 159 176 245 307 10.3 39.7 25.2 39.4 28.2 22.5 — — — 5.5 4.5 3.8 15.6 17.5 18.1 0.2 0.2 0.2 18.7

Bharat Financial Inclusion NA 1,209 — — 169 2.5 139 33 43 54 55.5 31.1 27.2 37.0 28.2 22.2 — — — 5.6 4.6 3.7 16.7 17.9 18.5 — — — 10.1

Cholamandalam REDUCE 1,431 1,500 4.8 224 3.3 156 62 90 110 35.5 44.8 22.1 23.0 15.9 13.0 — — — 4.6 3.7 3.0 20.6 24.5 24.3 0.5 0.8 0.9 7.8

HDFC ADD 1,979 2,075 4.8 3,346 48.6 1,676 75 56 67 52.1 (25.8) 19.0 26.3 35.4 29.7 — — — 5.2 4.5 4.1 23.9 13.8 14.5 1.0 1.1 1.3 71.4

HDFC Standard Life Insurance SELL 485 405 (16.6) 977 14.2 2,007 6 6 7 24.4 14.8 10.9 87.8 76.4 68.9 — — — 22.7 20.2 18.1 27.3 28.0 27.7 0.3 0.3 0.4 11.5

ICICI Lombard SELL 778 620 (20.3) 353 5.1 454 19 26 32 22.0 37.1 21.5 41.0 29.9 24.6 — — — 7.8 6.5 5.5 20.8 23.8 24.2 0.5 0.8 0.9 2.2

ICICI Prudential Life BUY 413 500 21.0 593 8.6 1,436 11 12 13 (3.7) 10.1 7.0 36.6 33.3 31.1 — — — 9.0 7.4 6.2 25.0 24.5 21.8 1.4 0.5 0.5 10.4

IIFL Holdings SELL 697 625 (10.3) 222 3.2 319 29 38 45 32.4 31.5 18.6 24.4 18.6 15.6 — — — 4.4 3.3 2.9 19.0 20.5 20.0 0.9 1.2 1.4 1.5

L&T Finance Holdings ADD 180 190 5.6 359 5.2 1,996 7 13 14 23.7 70.9 12.3 24.5 14.3 12.8 — — — 2.8 2.6 2.2 14.2 18.9 18.8 1.0 1.1 1.4 12.8

LIC Housing Finance BUY 553 610 10.4 279 4.1 505 44 50 58 3.2 13.8 17.5 12.7 11.1 9.5 — — — 2.1 1.8 1.5 14.5 14.3 14.4 1.2 1.4 1.6 12.2

Magma Fincorp BUY 149 200 34.6 40 0.6 237 10 12 15 1,014.5 24.6 25.8 15.3 12.3 9.8 — — — 1.5 1.5 1.3 10.2 12.9 14.1 0.5 1.2 1.5 1.6

Mahindra & Mahindra Financial REDUCE 498 500 0.4 308 4.5 614 15 23 28 105.0 58.4 23.2 34.3 21.7 17.6 — — — 3.5 3.1 2.8 11.3 14.3 15.8 0.8 1.3 1.6 10.6

Max Financial Services ADD 522 650 24.4 140 2.0 268 5 6 6 (20.4) 36.9 1.8 114.0 83.3 81.8 — — — — — — 6.5 8.3 8.0 — 0.4 0.4 4.6

Muthoot Finance ADD 425 480 12.9 170 2.5 400 43 38 40 45.6 (10.8) 4.0 9.9 11.1 10.7 — — — 2.2 1.9 1.7 24.1 18.4 16.9 2.3 2.1 2.2 4.8

PNB Housing Finance REDUCE 1,316 1,375 4.5 220 3.2 167 50 61 77 57.8 23.0 25.3 26.4 21.5 17.2 — — — 3.5 3.2 2.8 14.0 15.2 16.8 0.7 0.3 0.3 9.9

SBI Life Insurance ADD 687 785 14.3 687 10.0 1,000 12 15 18 20.8 26.0 22.9 59.5 47.2 38.4 — — — 10.7 9.0 7.5 19.4 20.6 21.3 0.3 0.3 0.4 3.9

Shriram City Union Finance ADD 1,920 2,250 17.2 127 1.8 66 101 141 174 19.6 40.4 22.7 19.1 13.6 11.1 — — — 2.4 2.2 1.9 12.5 15.8 16.9 0.9 0.9 1.1 1.3

Shriram Transport ADD 1,424 1,550 8.9 323 4.7 227 69 114 130 24.7 64.4 14.3 20.6 12.5 11.0 — — — 2.7 2.2 1.9 13.1 18.3 17.5 0.8 1.1 1.3 30.6

NBFCs Neutral 11,196 163 36.9 14.8 19.6 32.7 28.5 23.8 5.5 4.6 4.0 16.8 16.1 16.8 0.6 0.7 0.8 570.0

Cement

ACC SELL 1,524 1,270 (16.7) 286 4.2 188 49 62 70 32.7 27.0 13.8 31.3 24.6 21.6 16.7 13.6 11.7 3.1 2.8 2.6 10.1 11.9 12.5 1.1 1.1 1.1 15.2

Ambuja Cements REDUCE 229 210 (8.1) 454 6.6 1,986 8 9 11 29.7 14.5 23.2 30.4 26.5 21.5 10.1 9.0 7.4 2.2 2.1 2.0 7.4 8.1 9.5 1.6 1.6 1.6 11.7

Dalmia Bharat ADD 2,643 2,900 9.7 236 3.4 89 60 98 128 55.4 62.6 30.3 43.8 26.9 20.7 13.5 10.3 8.4 3.9 3.4 2.9 9.7 13.4 15.2 0.1 0.1 0.1 5.0

Grasim Industries BUY 999 1,275 27.6 657 9.6 657 47 52 69 (30.1) 9.1 32.8 21.1 19.3 14.5 12.1 7.4 6.8 1.1 1.1 1.0 7.0 5.8 7.2 0.6 0.6 0.6 13.9

India Cements REDUCE 118 135 14.5 36 0.5 308 3 5 9 (42.5) 56.2 84.4 36.1 23.1 12.5 9.8 8.4 6.7 0.7 0.7 0.7 2.0 3.0 5.3 0.8 0.8 0.8 7.7

J K Cement ADD 763 890 16.6 53 0.8 70 43 45 79 59.3 3.7 75.4 17.7 17.0 9.7 9.7 10.1 8.3 2.7 2.4 2.0 16.2 15.0 22.3 1.0 1.0 1.0 0.6

JK Lakshmi Cement ADD 321 370 15.2 38 0.5 118 4 11 28 (35.7) 153.5 147.9 71.9 28.4 11.4 13.4 9.9 6.4 2.6 2.4 2.0 3.7 8.9 19.5 0.6 0.6 0.6 0.4

Orient Cement ADD 120 145 20.6 25 0.4 205 2 7 11 237.8 212.9 58.7 55.7 17.8 11.2 12.1 8.2 6.3 2.4 2.2 1.9 4.4 12.9 18.2 0.6 1.2 1.7 0.2

Shree Cement SELL 17,458 12,500 (28.4) 608 8.8 35 397 421 630 3.4 6.0 49.7 43.9 41.5 27.7 23.6 19.3 14.5 6.8 6.0 5.0 16.7 15.4 19.7 0.3 0.3 0.3 5.3

UltraTech Cement SELL 4,178 2,950 (29.4) 1,147 16.7 275 88 126 162 (7.8) 42.7 28.9 47.4 33.2 25.8 23.4 17.3 14.3 4.4 3.9 3.5 9.7 12.6 14.3 0.2 0.2 0.2 19.1

Cement Cautious 3,541 51 6.5 23.6 33.7 34.2 27.7 20.7 15.3 10.9 9.2 2.6 2.4 2.2 7.5 8.6 10.5 0.6 0.6 0.6 79.2



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Consumer products

Asian Paints REDUCE 1,397 1,325 (5.2) 1,340 19.5 959 21 27 33 2.9 32.1 20.3 68.1 51.5 42.9 41.6 32.3 26.7 15.9 13.9 12.1 24.6 28.8 30.3 0.6 0.9 1.1 21.5

Bajaj Corp. ADD 416 470 12.9 61 0.9 148 14 15 17 (9.4) 7.8 10.3 29.1 27.0 24.5 23.0 21.6 18.4 12.5 12.6 12.5 42.8 46.3 51.2 2.9 3.1 3.4 0.4

Britannia Industries ADD 6,327 6,000 (5.2) 760 11.0 120 84 104 126 13.5 24.4 21.5 75.6 60.8 50.0 50.0 39.3 32.3 22.3 17.7 14.3 32.9 32.4 31.6 0.4 0.6 0.7 10.3

Coffee Day Enterprises REDUCE 259 340 31.5 55 0.8 211 3 8 13 49.1 149.7 59.4 77.4 31.0 19.4 13.2 — — 2.3 2.1 1.9 3.1 7.2 10.4 — — — 0.9

Colgate-Palmolive (India) ADD 1,125 1,250 11.2 306 4.4 272 24 27 32 15.2 14.7 15.6 47.3 41.2 35.7 27.1 23.7 20.6 20.1 20.2 17.2 46.2 48.8 52.2 2.1 1.4 1.7 8.2

Dabur India REDUCE 436 390 (10.6) 770 11.2 1,762 8 9 10 7.2 17.3 12.9 56.1 47.8 42.4 47.6 40.0 34.6 13.5 13.5 11.7 25.9 28.1 29.6 1.7 0.9 1.0 13.4

GlaxoSmithKline Consumer ADD 6,738 6,750 0.2 283 4.1 42 166 189 211 6.6 13.3 11.9 40.5 35.7 31.9 28.0 24.1 20.7 8.1 7.4 6.8 21.2 21.7 22.2 1.1 1.3 1.6 2.1

Godrej Consumer Products SELL 1,312 1,100 (16.2) 894 13.0 681 21 25 29 11.5 18.8 13.7 61.5 51.7 45.5 43.5 36.7 31.9 14.3 12.2 10.5 25.2 25.4 24.8 0.5 0.6 0.7 9.9

Hindustan Unilever REDUCE 1,731 1,570 (9.3) 3,746 54.4 2,160 25 29 33 25.0 19.5 13.2 70.5 59.0 52.2 50.6 40.9 36.0 52.8 46.2 39.2 78.1 83.5 81.4 1.2 1.2 1.4 35.2

ITC ADD 302 330 9.3 3,687 53.6 12,275 9 10 11 7.8 8.2 12.3 33.8 31.3 27.9 22.2 20.2 17.9 7.2 6.8 6.4 19.4 20.4 22.2 1.7 1.9 2.2 48.7

Jubilant Foodworks BUY 1,493 1,650 10.5 197 2.9 132 15 25 35 191.7 73.6 37.5 102.6 59.1 43.0 43.9 29.6 22.4 20.4 14.7 11.2 21.7 28.9 29.5 0.1 0.1 0.2 40.6

Jyothy Laboratories ADD 223 240 7.4 81 1.2 364 4 6 7 (26.4) 27.6 16.7 50.7 39.7 34.0 31.1 26.5 22.5 7.1 6.1 5.3 14.4 16.6 16.8 0.2 0.4 0.7 1.6

Marico ADD 363 375 3.3 469 6.8 1,291 6 7 8 7.4 8.9 20.0 57.9 53.2 44.3 40.8 36.9 30.5 18.4 17.4 16.2 33.2 33.7 37.9 1.1 1.3 1.5 10.1

Nestle India ADD 10,535 11,000 4.4 1,016 14.8 96 127 171 197 21.1 34.2 15.7 82.9 61.8 53.4 45.6 35.4 30.5 29.7 27.3 25.0 36.6 46.1 49.0 0.8 1.1 1.3 8.5

Page Industries SELL 29,368 21,000 (28.5) 328 4.8 11 311 392 482 32.5 26.1 22.9 94.4 74.8 60.9 60.2 47.6 39.1 38.7 30.2 24.1 45.9 45.3 44.0 0.4 0.6 0.7 8.1

Pidilite Industries REDUCE 1,100 1,080 (1.8) 558 8.1 508 18 21 26 7.5 16.8 21.8 61.0 52.2 42.9 40.8 34.7 28.6 15.6 13.2 11.1 26.0 27.4 28.2 0.5 0.6 0.8 13.7

S H Kelkar and Company BUY 198 315 59.1 29 0.4 145 7 8 11 2.1 11.8 28.4 26.8 23.9 18.6 18.7 15.6 12.2 3.3 3.0 2.7 12.8 13.3 15.3 0.9 0.9 1.0 0.4

Tata Global Beverages REDUCE 240 250 4.4 151 2.2 631 7 8 9 20.7 7.7 17.0 32.6 30.3 25.9 17.1 16.6 14.6 2.1 2.1 2.0 7.0 7.0 7.9 1.0 1.3 1.5 13.7

Titan Company SELL 902 840 (6.8) 800 11.6 888 13 16 20 43.3 25.6 21.8 70.5 56.2 46.1 48.3 37.3 29.7 15.7 13.3 11.1 24.3 25.6 26.3 0.4 0.5 0.6 37.6

United Breweries SELL 1,162 1,000 (13.9) 307 4.5 264 15 19 24 71.6 29.7 23.4 77.9 60.0 48.7 34.3 28.5 24.7 11.4 9.8 8.4 15.7 17.6 18.6 0.2 0.2 0.3 10.7

United Spirits REDUCE 601 590 (1.9) 437 6.3 727 8 10 13 39.1 34.7 30.9 79.0 58.7 44.8 45.5 34.1 27.6 17.4 12.0 8.8 24.9 24.2 22.7 — — 0.3 18.5

Varun Beverages ADD 729 750 2.9 133 1.9 183 12 17 22 377.8 45.4 29.8 63.3 43.5 33.5 19.3 15.6 13.4 7.5 6.5 5.5 12.1 16.0 17.7 — — 0.1 1.7

Consumer products Cautious 16,409 238 14.5 17.6 16.0 54.4 46.2 39.9 35.5 29.8 25.6 13.4 12.1 10.8 24.6 26.1 27.1 1.0 1.1 1.3 315.6

Energy

BPCL REDUCE 401 390 (2.7) 870 12.6 1,967 40 39 41 (1.5) (3.6) 5.3 10.0 10.3 9.8 8.0 7.6 7.0 2.3 2.1 1.9 24.8 21.1 20.0 5.2 3.9 4.1 31.7

Castrol India SELL 162 155 (4.1) 160 2.3 989 7 7 8 3.3 2.9 10.1 23.5 22.9 20.8 14.7 14.3 12.9 15.7 15.0 14.7 67.9 67.1 71.5 2.9 3.4 3.9 4.3

GAIL (India) BUY 376 410 8.9 849 12.3 2,255 20 25 27 21.8 23.2 8.3 18.4 15.0 13.8 11.5 9.6 8.8 2.1 1.9 1.8 11.7 13.5 13.5 1.9 2.3 2.4 22.4

GSPL SELL 200 175 (12.5) 113 1.6 564 12 11 11 34.5 (6.5) (0.5) 16.9 18.1 18.1 8.7 6.9 6.9 2.2 2.0 1.9 14.0 11.7 10.7 0.9 0.8 0.8 1.6

HPCL REDUCE 294 320 8.8 448 6.5 1,524 42 32 33 (3.2) (23.4) 3.4 7.1 9.2 8.9 6.1 7.9 8.0 1.9 1.7 1.5 28.7 19.3 18.2 5.8 4.4 4.6 29.4

Indraprastha Gas SELL 305 240 (21.2) 213 3.1 700 10 12 13 19.0 16.5 12.0 29.5 25.4 22.6 18.7 16.2 14.4 6.1 5.2 4.6 22.4 22.2 21.5 0.7 0.8 1.0 11.8

IOCL REDUCE 168 160 (4.8) 1,633 23.7 9,479 21 17 18 (24.8) (17.9) 7.4 8.2 10.0 9.3 4.8 5.5 5.1 1.4 1.3 1.3 18.5 14.0 14.0 6.8 4.0 4.3 25.4

Mahanagar Gas ADD 968 965 (0.3) 96 1.4 99 48 56 60 21.5 16.0 7.6 20.0 17.2 16.0 12.1 10.1 9.2 4.6 4.0 3.6 24.3 24.8 23.5 2.0 2.3 2.5 5.0

ONGC ADD 169 200 18.2 2,172 31.6 12,833 17 20 20 3.1 16.8 0.3 9.7 8.3 8.3 5.2 4.0 3.8 1.0 0.9 0.9 9.9 11.2 10.6 3.9 4.0 4.1 18.6

Oil India SELL 214 220 2.9 243 3.5 1,135 25 24 24 22.6 (1.3) (0.7) 8.7 8.8 8.8 6.7 6.1 6.0 0.9 0.8 0.8 9.8 9.7 9.2 4.8 5.1 5.1 3.1

Petronet LNG BUY 229 280 22.5 343 5.0 1,500 14 16 18 22.1 16.7 13.1 16.5 14.1 12.5 10.9 9.4 8.0 3.5 3.1 2.7 23.3 23.3 23.2 2.0 2.5 3.2 12.8

Reliance Industries SELL 1,193 985 (17.4) 7,058 102.6 5,922 59 69 78 16.9 17.6 12.4 20.2 17.2 15.3 14.7 11.7 10.0 2.4 2.1 1.9 11.6 12.2 12.1 0.5 0.5 0.6 120.1

Energy Attractive 14,196 206 1.0 6.0 7.2 13.8 13.0 12.1 8.9 7.8 7.1 1.8 1.7 1.5 13.3 12.9 12.6 2.4 2.0 2.2 286.3



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Target O/S ADVT

Price (Rs) price Upside shares 3mo


Industrials

ABB SELL 1,195 1,020 (14.6) 253 3.7 212 20 26 29 12.1 30.1 14.2 60.3 46.3 40.6 33.2 27.1 24.3 7.0 6.4 5.8 12.2 14.5 15.1 0.3 0.8 0.8 1.2

BHEL REDUCE 75 78 3.9 276 4.0 3,671 2.2 2.6 5.0 62.7 16.5 95.3 34.2 29.3 15.0 8.4 8.0 4.2 0.8 0.8 0.8 2.5 2.9 5.6 2.4 2.8 5.5 10.2

Carborundum Universal SELL 363 322 (11.2) 69 1.0 189 11 14 17 22.8 25.0 21.4 31.8 25.4 20.9 17.2 13.9 11.4 4.4 4.0 3.5 14.6 16.3 17.8 0.5 1.2 1.4 0.4

CG Power and Industrial BUY 62 65 5.3 39 0.6 627 0.8 3.1 4.3 (72.2) 275.7 40.5 75.6 20.1 14.3 11.1 8.3 6.8 1.4 1.5 1.5 1.5 7.3 10.4 — — — 7.5

Crompton Greaves Consumer SELL 258 215 (16.7) 162 2.4 627 5.2 6.2 7.5 13.3 19.5 20.7 49.9 41.8 34.6 30.6 26.0 22.1 20.5 14.2 11.0 49.5 40.4 35.8 0.6 0.8 1.0 2.7

Cummins India REDUCE 696 680 (2.3) 193 2.8 277 24 28 32 (7.8) 16.1 13.9 28.7 24.8 21.7 25.4 21.8 18.0 4.8 4.5 4.2 17.4 18.9 20.1 2.2 2.1 2.4 3.8

Havells India SELL 658 485 (26.3) 411 6.0 625 11 14 17 16.6 26.6 20.5 59.4 46.9 38.9 38.0 30.0 24.5 11.0 9.7 8.5 19.8 22.0 23.2 0.5 0.7 0.9 13.1

Kalpataru Power Transmission BUY 384 530 38.1 59 0.9 153 19 24 34 36.5 24.3 39.8 19.8 15.9 11.4 8.4 7.0 5.6 2.2 2.0 1.7 11.7 13.1 16.1 0.7 0.7 0.7 0.6

KEC International BUY 324 410 26.7 83 1.2 257 18 21 27 51.1 16.9 29.7 18.1 15.5 11.9 9.8 8.6 7.0 4.2 3.4 2.7 25.7 24.1 25.2 0.6 0.7 0.9 3.0

L&T BUY 1,290 1,600 24.0 1,809 26.3 1,401 52 63 70 22.4 21.7 10.9 25.0 20.5 18.5 20.7 16.3 15.7 3.6 3.3 3.0 15.0 16.8 16.8 1.2 1.8 2.0 43.5

Siemens SELL 1,021 975 (4.5) 363 5.3 356 24 30 37 22.5 23.0 23.2 42.2 34.3 27.8 24.0 19.2 15.4 4.5 4.2 3.9 10.9 12.6 14.5 1.0 1.2 1.5 3.5

Thermax REDUCE 1,165 1,065 (8.6) 139 2.0 113 21 30 42 (3.6) 44.2 42.8 56.5 39.2 27.4 34.4 24.5 17.5 4.8 4.5 4.0 8.8 11.8 15.3 0.5 0.7 0.8 0.7

Voltas SELL 578 525 (9.2) 191 2.8 331 17 19 22 12.6 8.3 15.6 33.4 30.8 26.7 27.8 23.6 19.6 4.9 4.4 3.9 15.9 15.0 15.5 0.7 0.7 0.9 14.0

Industrials Neutral 4,046 59 19.8 22.5 20.5 31.5 25.7 21.3 20.6 16.7 14.6 3.4 3.2 2.9 10.8 12.4 13.8 1.1 1.4 1.8 104.0

Infrastructure

Adani Ports and SEZ BUY 397 460 15.8 823 12.0 2,071 18 19 23 (2.1) 1.2 21.1 21.5 21.2 17.5 14.3 14.3 11.9 3.9 3.4 2.9 19.8 17.0 17.7 0.5 0.5 0.5 24.0

Ashoka Buildcon BUY 148 210 42.3 41 0.6 282 8 8 9 34.6 0.5 5.2 17.5 17.4 16.6 14.1 12.0 10.6 2.2 1.9 1.7 13.0 11.4 10.7 0.7 1.1 0.8 0.7

Container Corp. SELL 639 635 (0.6) 311 4.5 487 18 21 25 7.1 17.4 20.9 36.2 30.8 25.5 23.9 19.0 15.0 3.3 3.1 2.8 9.4 10.3 11.6 2.7 1.4 1.6 8.0

Dilip Buildcon BUY 893 1,220 36.6 122 1.8 137 46 54 69 76.5 16.1 28.0 19.2 16.6 12.9 10.6 7.7 6.4 5.0 3.8 2.9 29.5 25.9 25.4 — — — 8.5

Gateway Distriparks BUY 178 250 40.6 19 0.3 109 8 7 8 11.2 (5.8) 15.2 23.4 24.8 21.5 22.2 11.1 9.2 1.9 3.3 2.9 8.2 9.8 14.5 3.9 — 1.7 0.8

Gujarat Pipavav Port BUY 115 170 47.6 56 0.8 483 4.1 5.9 7.2 (20.6) 43.7 22.5 28.1 19.5 15.9 13.7 11.4 9.0 2.8 2.7 2.6 9.8 14.0 16.8 3.0 4.2 5.1 0.8

IRB Infrastructure BUY 204 320 56.8 72 1.0 351 23 31 33 10.8 36.8 7.1 9.0 6.6 6.2 7.1 6.7 7.2 1.3 1.1 0.9 14.5 17.6 16.3 1.1 1.5 2.0 6.9

Mahindra Logistics REDUCE 580 565 (2.6) 41 0.6 71 10 15 21 16.2 50.7 39.3 59.1 39.2 28.2 34.1 21.9 15.9 9.8 8.1 6.6 18.2 22.7 25.8 — — — 0.8

Sadbhav Engineering BUY 286 440 53.8 49 0.7 172 13 18 18 17.4 38.4 2.2 22.2 16.1 15.7 15.4 12.3 9.5 2.6 2.3 2.0 12.5 15.2 13.7 — — — 0.8

Infrastructure Attractive 1,535 22 5.9 11.4 18.8 22.2 19.9 16.7 13.6 12.2 10.4 3.3 3.0 2.6 15.1 14.8 15.3 1.0 0.8 0.9 51.4

Internet

Info Edge ADD 1,398 1,425 1.9 170 2.5 122 23 26 33 33.3 14.9 27.5 62.1 54.1 42.4 52.1 40.7 30.8 8.1 6.4 5.8 13.4 13.2 14.3 0.4 0.6 0.6 2.4

Just Dial ADD 564 610 8.2 38 0.6 67 21 26 30 21.7 23.0 15.0 26.5 21.6 18.8 15.7 12.1 9.8 3.9 3.3 2.9 15.2 16.7 16.6 — 0.5 0.5 49.9

Internet Cautious 208 3 28.0 17.6 23.0 50.0 42.5 34.6 39.1 30.9 24.3 6.8 5.5 4.9 13.5 12.9 14.2 0.3 0.6 0.6 52.3

Media

DB Corp. REDUCE 235 270 14.8 43 0.6 184 18 20 23 (14.1) 14.9 12.3 13.3 11.6 10.3 7.0 6.3 5.5 2.6 2.3 2.3 19.9 20.7 22.3 5.5 7.2 9.0 0.6

DishTV ADD 68 90 31.9 126 1.8 1,925 (0.4) 1.8 3.4 (143.0) 514.6 88.2 NM 37.3 19.8 11.2 5.9 4.7 2.0 1.9 1.7 (2.3) 5.1 8.9 — — — 7.7

Jagran Prakashan REDUCE 122 131 7.5 36 0.5 311 10 11 12 (9.3) 10.0 13.6 12.6 11.5 10.1 5.1 5.0 4.3 1.8 1.9 1.8 14.3 15.9 18.2 2.5 4.1 6.2 0.5

PVR BUY 1,202 1,360 13.1 56 0.8 47 27 38 50 25.5 41.2 32.3 44.8 31.7 24.0 15.2 12.3 10.4 5.2 4.6 3.9 12.3 15.3 17.6 0.2 0.3 0.4 9.9

Sun TV Network REDUCE 808 925 14.5 318 4.6 394 29 35 39 10.2 20.7 10.9 28.0 23.2 21.0 18.8 15.8 13.8 6.9 6.2 5.6 26.3 28.1 27.9 1.2 2.2 2.5 21.6

Zee Entertainment Enterprises ADD 523 600 14.7 502 7.3 960 15 17 20 7.8 11.3 17.0 34.8 31.3 26.7 22.6 19.4 16.5 6.6 5.9 5.2 20.3 19.9 20.6 0.5 0.9 1.1 18.0

Media Attractive 1,082 16 (1.8) 28.7 21.0 33.4 25.9 21.4 16.0 12.3 10.5 4.6 4.2 3.8 13.7 16.3 17.7 0.9 1.5 1.8 58.3

Dividend yield (%)P/B (X) RoE (%)Mkt cap. EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X)


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Metals & Mining

Coal India ADD 283 326 15.3 1,756 25.5 6,207 11 27 28 (24.2) 138.2 3.0 25.0 10.5 10.2 18.8 6.8 6.4 7.3 6.6 6.9 26.7 66.1 66.4 5.8 7.1 8.8 14.3

Hindalco Industries BUY 216 305 41.1 485 7.1 2,229 22 27 31 155.4 23.9 13.6 9.9 8.0 7.0 6.3 5.3 4.6 0.9 0.8 0.7 9.7 10.5 10.7 0.6 0.6 0.6 35.0

Hindustan Zinc ADD 286 290 1.4 1,208 17.6 4,225 22 22 26 9.3 3.7 14.7 13.3 12.8 11.2 8.2 7.4 6.1 3.4 2.9 2.5 27.2 24.4 24.2 2.8 2.8 2.8 8.1

Jindal Steel and Power REDUCE 207 255 23.1 201 2.9 968 (8) 8 18 59.3 194.2 129.1 (24.4) 25.9 11.3 9.6 6.9 5.9 0.7 0.7 0.6 (2.7) 2.6 5.7 — — — 30.2

JSW Steel ADD 337 350 3.9 814 11.8 2,417 27 30 27 83.9 10.2 (8.7) 12.6 11.4 12.5 8.1 7.1 7.8 2.8 2.3 2.0 24.8 22.4 17.3 1.0 1.0 1.0 20.5

National Aluminium Co. ADD 66 85 27.9 128 1.9 1,933 4 7 7 12.7 63.0 11.1 16.1 9.9 8.9 6.7 4.5 4.1 1.2 1.2 1.2 7.7 12.4 13.6 8.6 8.3 8.3 9.4

NMDC REDUCE 107 125 16.4 340 4.9 3,164 12 10 10 43.3 (16.5) 3.6 9.2 11.0 10.6 5.0 6.7 6.4 1.4 1.3 1.3 15.8 12.5 12.4 5.1 5.1 5.1 4.0

Tata Steel ADD 553 700 26.5 632 9.2 1,205 67 69 82 62.6 3.1 18.4 8.2 8 6.7 6.2 6.1 6.2 1.1 1.0 0.9 17.2 13.1 13.9 1.7 1.8 1.8 70.3

Vedanta BUY 224 370 64.9 834 12.1 3,717 22 32 39 9.6 49.1 19.7 10.4 7.0 5.8 5.7 4.6 3.8 1.3 1.2 1.1 12.9 18.0 19.4 3.6 4.3 5.2 52.5

Metals & Mining Attractive 6,399 93 32.3 37.2 11.2 13.5 9.9 8.9 7.6 6.1 5.6 1.9 1.7 1.6 14.3 17.6 17.9 3.4 3.8 4.4 244.3

Pharmaceutical

Apollo Hospitals ADD 981 1,090 11.1 137 2.0 139 8 19 26 (46.9) 124.3 38.0 116.3 51.8 37.5 21.2 18.0 15.2 4.2 4.0 3.7 3.4 7.9 10.2 0.2 0.5 0.7 7.6

Aster DM Healthcare BUY 171 240 40.5 86 1.3 505 3 5 7 163.1 64.2 59.2 62.0 37.8 23.7 17.2 12.8 10.2 3.0 2.8 2.6 5.9 7.8 11.4 - - - 0.4

Aurobindo Pharma ADD 625 640 2.5 366 5.3 584 42 45 51 6.0 7.0 13.5 14.9 14.0 12.3 10.4 9.7 8.4 3.1 2.6 2.2 23.2 20.3 17.9 0.7 0.8 1.0 20.6

Biocon SELL 574 330 (42.5) 344 5.0 601 6 8 15 (39.2) 35.9 75.7 92.6 68.1 38.8 41.5 29.6 19.8 6.1 5.7 5.1 6.9 8.7 13.9 0.2 0.5 0.9 22.9

Cipla BUY 637 650 2.0 513 7.5 805 18 24 32 40.2 36.3 35.1 36.4 26.7 19.8 18.9 14.7 11.5 3.5 3.2 2.8 10.2 12.5 15.2 0.6 0.8 1.1 24.2

Dr Lal Pathlabs REDUCE 927 865 (6.6) 77 1.1 83 20 25 29 7.0 20.8 18.5 45.3 37.5 31.7 27.5 23.1 19.3 9.8 8.2 6.8 23.5 23.7 23.4 0.5 0.5 0.6 1.5

Dr Reddy's Laboratories REDUCE 2,234 2,150 (3.8) 371 5.4 166 59 89 118 (18.5) 50.2 32.8 37.8 25.2 19.0 17.5 12.7 9.0 2.9 2.7 2.4 7.8 11.1 12.6 1.1 0.6 0.8 35.9

HCG REDUCE 288 305 6.1 25 0.4 85 2 3 5 (40.0) 120.9 57.3 183.8 83.2 52.9 24.2 18.8 16.0 4.7 4.5 4.1 2.8 5.5 8.1 — — — 0.2

Laurus Labs ADD 437 500 14.4 46 0.7 106 16 16 29 (11.9) 2.4 79.9 27.6 26.9 15.0 13.6 12.5 8.7 3.1 2.8 2.4 11.9 10.9 17.1 — — — 0.4

Lupin REDUCE 872 800 (8.2) 394 5.7 450 38 36 48 (32.9) (5.1) 33.7 22.9 24.1 18.0 14.0 12.1 9.6 2.9 2.6 2.3 12.6 11.4 13.7 1.0 0.6 0.8 36.2

Narayana Hrudayalaya ADD 251 265 5.8 51 0.7 204 3 3 6 (38.1) 23.0 103.2 99.6 81.0 39.9 27.4 23.0 16.1 4.9 4.7 4.2 5.1 5.9 11.0 — — — 0.4

Sun Pharmaceuticals REDUCE 576 500 (13.1) 1,381 20.1 2,406 15 17 24 (47.5) 12.0 42.0 37.9 33.9 23.8 22.5 18.4 13.6 3.6 3.3 3.0 9.8 10.2 13.1 0.3 0.6 0.8 52.9

Torrent Pharmaceuticals NR 1,651 — — 279 4.1 169 40 47 61 (27.4) 18.0 29.6 41.2 34.9 26.9 22.8 15.3 13.1 6.0 5.3 4.6 15.1 15.3 17.2 0.9 0.7 0.9 5.8

Pharmaceuticals Neutral 4,071 59 (25.8) 17.5 34.9 34.2 29.1 21.6 18.7 15.2 11.8 3.7 3.3 2.9 10.7 11.4 13.6 0.5 0.6 0.8 209.0

Real Estate

Brigade Enterprises BUY 195 340 74.3 27 0.4 136 11 9 9 (17.7) (15.1) (1.6) 17.6 20.7 21.1 10.9 11.1 10.9 1.2 1.1 1.1 7.6 5.5 5.2 1.3 1.3 1.3 0.3

DLF RS 189 — — 338 4.9 1,784 19.6 6.5 3.9 403.9 (66.9) (39.6) 9.7 29.2 48.3 28.8 12.5 12.4 1.0 0.9 0.9 11.7 3.2 1.9 1.1 1.1 1.1 16.4

Godrej Properties SELL 717 400 (44.2) 164 2.4 216 10.9 13.3 15.8 13.5 22.1 19.1 66.0 54.1 45.4 (4,399.2) 318.0 165.6 6.9 4.6 4.2 11.1 10.5 9.7 — — — 2.8

Oberoi Realty BUY 481 560 16.4 175 2.5 340 13 62 44 14.0 385.4 (28.0) 37.8 7.8 10.8 28.3 10.7 13.5 2.7 1.8 1.5 7.3 27.4 15.2 0.4 0.4 0.4 2.5

Prestige Estates Projects ADD 254 315 24.0 95 1.4 375 13 10 10 24.3 (24.2) 8.4 20.2 26.7 24.6 14.3 14.9 15.0 2.0 1.9 1.8 10.3 7.3 7.5 0.6 0.6 0.6 1.1

Sobha REDUCE 485 510 5.3 46 0.7 95 22 20 23 30.9 (7.5) 14.8 22.2 24.0 20.9 13.3 13.5 12.7 1.7 1.6 1.5 7.6 6.8 7.4 1.4 1.4 1.4 1.5

Sunteck Realty REDUCE 436 330 (24.3) 64 0.9 140 15 18 20 4.8 20.2 6.9 28.5 23.7 22.2 18.3 19.9 18.4 2.3 2.1 2.0 9.7 9.4 9.2 0.3 0.2 0.2 1.6

Real Estate Neutral 909 13 139.3 (13.5) (20.4) 17.4 20.2 25.3 25.0 14.8 15.2 1.6 1.5 1.4 9.3 7.3 5.5 0.7 0.7 0.7 26.2

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Technology

HCL Technologies REDUCE 957 1,025 7.2 1,332 19.4 1,409 62 70 74 5.3 12.8 5.0 15.4 13.6 13.0 10.8 8.9 8.1 3.7 3.0 2.7 24.8 24.2 21.8 0.9 0.9 3.2 33.3

Hexaware Technologies SELL 467 435 (6.8) 139 2.0 302 17 20 23 20.2 18.4 18.0 28.2 23.8 20.2 20.3 17.8 14.1 7.0 6.1 5.2 26.6 27.4 27.8 0.9 1.7 1.7 15.1

Infosys ADD 1,361 1,400 2.9 2,972 43.2 2,175 65 71 78 3.0 9.7 10.4 21.1 19.2 17.4 14.6 13.1 11.8 4.6 4.3 3.9 21.8 23.0 23.5 2.0 3.2 2.9 79.1

L&T Infotech ADD 1,735 2,000 15.3 300 4.4 175 64 83 94 13.9 30.5 13.0 27.3 20.9 18.5 24.0 16.0 13.4 7.9 6.3 5.2 31.8 33.5 30.7 1.0 1.4 1.5 4.4

Mindtree ADD 954 1,115 16.8 157 2.3 165 35 43 53 37.8 24.9 23.6 27.6 22.1 17.9 20.0 13.8 11.1 5.7 4.9 4.2 21.4 23.9 25.2 1.2 1.4 1.7 25.4

Mphasis SELL 1,175 760 (35.3) 227 3.3 193 44 52 56 14.4 18.3 8.2 26.8 22.6 20.9 19.5 15.8 14.1 4.1 3.8 3.4 14.6 17.4 17.1 1.7 1.7 1.7 11.4

TCS REDUCE 1,976 1,790 (9.4) 7,567 110.0 3,829 67 82 89 1.1 21.2 8.8 29.3 24.2 22.2 21.8 17.7 16.3 8.7 7.6 7.5 29.4 33.4 33.8 1.3 2.1 3.6 98.1

Tech Mahindra ADD 667 785 17.7 589 8.6 891 43 46 55 33.1 8.3 18.2 15.6 14.4 12.2 11.5 8.6 7.0 3.2 2.7 2.3 21.5 20.2 20.5 2.2 1.4 1.5 35.9

Wipro REDUCE 277 295 6.6 1,252 18.2 4,507 17 19 22 (3.1) 11.8 14.6 16.3 14.6 12.8 10.3 9.1 8.0 2.6 2.2 2.1 16.0 16.4 16.8 0.4 0.5 3.6 12.7

Technology Cautious 14,533 211 1.6 13.1 9.7 22.7 20.1 18.3 16.5 13.8 12.4 5.4 4.8 4.4 23.7 23.8 24.1 1.3 2.0 3.2 315.2

Telecom

Bharti Airtel ADD 386 445 15.2 1,544 22.4 3,997 5 (6) (4) (42.9) (221.5) 28.8 81.6 (67.1) (94.4) 8.5 9.9 8.3 2.2 2.3 2.4 2.8 (3.4) (2.5) 1.4 0.3 (0.2) 31.6

Bharti Infratel REDUCE 287 285 (0.7) 531 7.7 1,850 14 13 12 (7.4) (4.8) (8.5) 20.9 21.9 24.0 7.6 8.2 8.6 3.1 3.3 3.3 15.7 14.6 13.7 5.0 3.7 3.4 12.3

IDEA REDUCE 55 45 (18.0) 239 3.5 4,359 (10) (17) (17) (656.8) (75.6) (2.4) (5.7) (3.3) (3.2) 12.3 35.2 29.8 0.9 1.1 1.7 (16.0) (29.7) (41.1) — — — 17.3

Tata Communications ADD 581 725 24.7 166 2.4 285 2 4 8 (84.3) 121.9 117.7 353 159.1 73.1 10.7 9.5 8.4 33.2 26.8 19.3 4.5 18.6 30.7 1.1 1.1 1.3 4.3

Telecom Cautious 2,480 36 (94.7) (2,354.7) 5.7 788.4 (35.0) (37.1) 9.0 11.1 9.7 2.2 2.4 2.6 0.3 (6.8) (7.0) 1.9 0.9 0.6 65.5

Utilities

CESC BUY 937 1,180 25.8 124 1.8 133 87 115 128 67.1 31.7 11.6 10.8 8.2 7.3 7.7 5.8 5.1 0.8 0.8 0.7 7.9 10.0 10.4 1.3 1.4 1.4 5.9

JSW Energy REDUCE 68 70 2.9 112 1.6 1,640 3.1 5.1 6.5 (19.2) 65.9 26.8 22.2 13.4 10.5 7.0 5.7 4.8 1.0 0.9 0.9 4.7 7.2 8.5 - - - 1.7

NHPC ADD 24 30 24.0 248 3.6 10,260 2.4 3.1 3.2 (17.3) 26.9 1.8 9.9 7.8 7.7 9.2 7.2 7.0 0.8 0.8 0.8 8.5 10.4 10.2 5.8 7.2 7.3 2.0

NTPC BUY 157 190 21.4 1,291 18.8 8,245 11 15 16 (7.6) 30.9 4.4 13.7 10.5 10.1 11.1 8.6 8.0 1.3 1.2 1.1 9.5 11.6 11.3 3.6 2.9 3.0 14.1

Power Grid BUY 189 250 32.0 991 14.4 5,232 16 19 21 9.6 19.3 13.6 12.0 10.1 8.9 8.5 7.2 6.6 1.8 1.6 1.5 15.8 17.1 17.5 2.8 3.3 3.8 30.9

Reliance Power SELL 34 43 26.7 95 1.4 2,805 3.5 5.1 5.2 (16.4) 45.6 2.7 9.8 6.7 6.5 7.9 6.8 6.6 0.4 0.4 0.4 4.5 6.1 5.9 — — — 4.1

Tata Power BUY 72 90 25.3 194 2.8 2,705 5.3 6.0 7.0 (9.6) 12.7 15.6 13.4 11.9 10.3 10.2 10.6 10.2 1.3 1.2 1.0 10.7 10.1 10.6 — — — 5.1

Utilities Attractive 3,056 44 (2.4) 26.8 8.6 12.6 10.0 9.2 9.4 7.8 7.2 1.2 1.1 1.0 9.7 11.4 11.4 2.9 2.9 3.1 63.8

P/B (X) RoE (%) Dividend yield (%)Mkt cap. EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X)


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Others

Astral Poly Technik SELL 1,064 640 (39.8) 127 1.9 120 15 19 25 20.8 30.2 28.8 72.6 55.8 43.3 40.8 30.0 23.8 12.5 9.8 8.1 18.8 19.8 20.5 0.1 0.1 0.1 1.1

Avenue Supermarts SELL 1,636 860 (47.4) 1,021 14.8 624 13 16 20 47.9 28.6 26.4 130.1 101.2 80.0 76.2 58.4 45.8 22.0 18.1 14.7 18.5 19.6 20.3 — — — —

Bayer Cropscience REDUCE 4,500 4,100 (8.9) 178 2.6 34 88 106 130 6.4 20.5 23.1 51.4 42.6 34.6 42.4 31.3 25.5 8.7 7.5 6.4 15.7 18.9 20.0 0.4 0.5 0.6 0.5

Dhanuka Agritech ADD 605 690 14.0 30 0.4 49 26 28 32 7.7 8.9 15.4 23.5 21.6 18.7 17.3 14.9 12.5 4.7 4.0 3.5 21.9 20.1 20.0 0.9 1.0 1.1 0.2

Godrej Agrovet ADD 657 650 (1.1) 126 1.8 189 12 16 20 6.9 39.8 24.6 57.1 40.8 32.8 29.3 22.6 18.3 7.4 6.4 5.4 14.7 16.9 17.9 0.3 0.4 0.5 1.4

Godrej Industries RS 629 — — 212 3.1 336 15 16 20 6.8 8.9 24.2 43.2 39.6 31.9 38.1 32.3 35.2 5.8 5.2 4.5 14.4 13.9 15.1 0.3 0.3 0.3 4.7

InterGlobe Aviation BUY 1,066 1,220 14.4 410 6.0 383 61 50 83 32.1 (17.9) 65.3 17.5 21.3 12.9 10.1 12.2 6.9 5.8 4.7 3.5 42.9 24.1 31.1 0.6 0.5 0.8 25.1

Kaveri Seed SELL 609 470 (22.8) 40 0.6 66 32 31 33 18.4 (3.7) 6.1 19.0 19.8 18.6 16.2 16.8 15.2 5.2 4.4 3.8 23.6 24.0 21.9 1.0 1.3 1.6 5.1

PI Industries BUY 763 900 17.9 105 1.5 138 27 33 41 (20.0) 25.0 23.2 28.7 23.0 18.6 21.2 16.6 13.2 5.5 4.6 3.8 20.7 21.7 22.1 0.4 0.5 0.6 1.4

Rallis India ADD 205 220 7.3 40 0.6 195 9 10 12 (1.5) 17.2 19.4 23.8 20.3 17.0 14.8 13.3 11.3 3.3 3.1 2.8 14.6 15.8 17.1 1.6 1.8 1.9 0.8

SIS REDUCE 1,047 1,130 7.9 77 1.1 73 22 33 40 43.3 48.5 21.1 46.7 31.4 25.9 25.1 19.7 16.5 7.4 6.2 5.1 20.1 21.8 21.7 0.2 0.3 0.3 0.7

SRF BUY 1,792 2,110 17.7 103 1.5 57 80 92 123 (10.4) 14.4 33.6 22.3 19.5 14.6 13.5 10.7 8.7 2.9 2.6 2.2 13.7 14.0 16.4 0.7 0.7 0.8 11.2

Tata Chemicals ADD 693 760 9.7 177 2.6 255 51 46 52 6.5 (11.2) 13.6 13.5 15.2 13.4 7.4 6.3 5.3 1.6 1.5 1.4 13.8 10.0 10.5 3.2 2.2 2.5 7.6

TeamLease Services SELL 2,632 1,785 (32.2) 45 0.7 17 43 58 75 28.0 34.2 29.0 61.0 45.5 35.3 63.4 46.1 35.0 10.2 8.3 6.7 18.2 20.1 21.1 — — — 1.6

UPL ADD 657 660 0.5 334 4.9 507 43 49 55 20.9 14.0 12.1 15.3 13.4 12.0 10.5 9.1 7.7 3.6 3.0 2.5 26.4 24.6 22.9 1.2 1.5 1.7 22.4

Vardhman Textiles ADD 1,225 1,400 14.3 70 1.0 56 103 130 140 (8.0) 26.4 7.4 11.9 9.4 8.8 10.0 7.4 6.6 1.4 1.3 1.1 12.7 14.3 13.8 1.2 1.6 2.4 1.0

Whirlpool SELL 1,773 1,240 (30.0) 225 3.3 127 28 37 45 13.0 33.9 22.5 64.1 47.9 39.1 38.2 29.5 23.9 12.5 10.4 8.6 21.4 23.7 24.1 0.2 0.4 0.5 1.1

Others 3,319 48 16.1 7.7 26.4 32.2 29.9 23.7 20.9 18.3 14.6 5.9 5.0 4.3 18.3 16.9 18.1 0.5 0.5 0.7 85.9

KIE universe 113,158 1,644 (5.2) 26.6 25.5 27.7 21.8 17.4 12.9 10.9 9.7 3.1 2.8 2.5 11.2 12.9 14.6 1.3 1.3 1.7

KIE universe (ex-energy) 98,961 1,438 (7.1) 33.6 30.4 32.3 24.2 18.6 14.4 12.0 10.6 3.5 3.1 2.8 10.7 12.9 15.2 1.1 1.2 1.6

Notes:

(a) We have used adjusted book values for banking companies.

(b) 2018 means calendar year 2017, similarly for 2019 and 2020 for these particular companies.

(c) Exchange rate (Rs/US$)= 68.80

Mkt cap. EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%)

Disclo

sure

s

Disclosures

Ratings and other definitions/identifiers

Definitions of ratings

BUY. We expect this stock to deliver more than 15% returns over the next 12 months.

ADD. We expect this stock to deliver 5-15% returns over the next 12 months.

REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.

SELL. We expect this stock to deliver <-5% returns over the next 12 months.

Our target prices are also on a 12-month horizon basis.

Other definitions

Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the following

designations: Attractive, Neutral, Cautious.

Other ratings/identifiers

NR = Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s)

and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction

involving this company and in certain other circumstances.

CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.

NC = Not Covered. Kotak Securities does not cover this company.

RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient

fundamental basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock

and should not be relied upon.

NA = Not Available or Not Applicable. The information is not available for display or is not applicable.

NM = Not Meaningful. The information is not meaningful and is therefore excluded.

Kotak Institutional Equities Research coverage universe

Distribution of ratings/investment banking relationships

Source: Kotak Institutional Equities As of June 30, 2018

Percentage of companies covered by Kotak Institutional

Equities, within the specified category.

* The above categories are defined as follows: Buy = We

expect this stock to deliver more than 15% returns over

the next 12 months; Add = We expect this stock to

deliver 5-15% returns over the next 12 months; Reduce

= We expect this stock to deliver -5-+5% returns over

the next 12 months; Sell = We expect this stock to deliver

less than -5% returns over the next 12 months. Our

target prices are also on a 12-month horizon basis.

These ratings are used illustratively to comply with

applicable regulations. As of 31/03/2018 Kotak

Institutional Equities Investment Research had

investment ratings on 207 equity securities.

Percentage of companies within each category for

which Kotak Institutional Equities and or its affiliates has

provided investment banking services within the

previous 12 months.

21.4%

31.3%

25.4%21.9%

2.0%5.0% 4.5%

0.5%

0%

10%

20%

30%

40%

50%

60%

70%

BUY ADD REDUCE SELL

Corporate Office Overseas Affiliates

Kotak Securities Ltd.

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155-157 Minories

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Tel: +44-20-7977-6900

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28th Floor, New York

NY 10017, USA

Tel:+1 212 600 8856

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This report is distributed in Singapore by Kotak Mahindra (UK) Limited (Singapore Branch) to institutional investors, accredited investors or expert investors only as defined under the Securities and Futures Act. Recipients of this analysis / report are to contact Kotak Mahindra (UK) Limited (Singapore Branch) (16 Raffles Quay, #35-02/03, Hong Leong Building, Singapore 048581) in respect of any matters arising from, or in connection with, this analysis / report. Kotak Mahindra (UK) Limited (Singapore Branch) is regulated by the Monetary Authority of Singapore. Kotak Securities Limited and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We along with our affiliates are leading underwriter of securities and participants in virtually all securities trading markets in India. We and our affiliates have investment banking and other business relationships with a significant percentage of the companies covered by our Investment Research Department. Our research professionals provide important input into our investment banking and other business selection processes. Investors should assume that Kotak Securities Limited and/or its affiliates are seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may participate in the solicitation of such business. Our research professionals are paid in part based on the profitability of Kotak Securities Limited, which include earnings from investment banking and other business. 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This report has been prepared by the Institutional Equities Research Group of Kotak Securities Limited. The views and opinions expressed in this document may or may not match or may be contrary with the views, estimates, rating, target price of the Private Client Group. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additionally, other important information regarding our relationships with the company or companies that are the subject of this material is provided herein. This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. We are not soliciting any action based on this material. It is for the general information of clients of Kotak Securities Limited. 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Kotak Securities Limited is a corporate trading and clearing member of BSE Limited (BSE), National Stock Exchange of India Limited (NSE), MSEI a. Our businesses include stock broking, services rendered in connection with distribution of primary market issues and financial products like mutual funds and fixed deposits, depository services and Portfolio Management. Kotak Securities Limited is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Kotak Securities Limited is also registered with Insurance Regulatory and Development Authority as Corporate Agent for Kotak Mahindra Old Mutual Life Insurance Limited and is also a Mutual Fund Advisor registered with Association of Mutual Funds in India (AMFI). Kotak Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered in last five years. However SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor penalty on KSL for certain operational deviations. We have not been debarred from doing business by any Stock Exchange / SEBI or any other authorities; nor has our certificate of registration been cancelled by SEBI at any point of time. We offer our research services to primarily institutional investors and their employees, directors, fund managers, advisors who are registered with us Details of Associates are available on our website i.e. www.kotak.com Research Analyst has served as an officer, director or employee of subject company(ies): No We or our associates may have received compensation from the subject company(ies) in the past 12 months. We or our associates have managed or co-managed public offering of securities for the subject company(ies) in the past 12 months. YES We or our associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months. We or our associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company(ies) in the past 12 months. We or our associates may have received compensation or other benefits from the subject company(ies) or third party in connection with the research report. Our associates may have financial interest in the subject company(ies). 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A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose a company from the list on the browser and select the"three years" icon in the price chart). Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051, Telephone No.: +22 43360000, Fax No.: +22 67132430. Website: www.kotak.com / www.kotaksecurities.com. Correspondence Address: Infinity IT Park, Bldg. No 21, Opp. Film City Road, A K Vaidya Marg, Malad (East), Mumbai 400097. Telephone No: 42856825. SEBI Registration No: NSE INB/INF/INE 230808130, BSE INB 010808153/INF 011133230, MSE INE 260808130/INB 260808135/INF 260808135, AMFI ARN 0164, PMS INP000000258 and Research Analyst INH000000586. NSDL/CDSL: IN-DP-NSDL-23-97. Compliance Officer Details: Mr. Manoj Agarwal. Call: 022 - 4285 8484, or Email: [email protected]. 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