investment funds advisory today- buy stock of acc ltd, ingvysya bank and neutral view on bajaj corp,...
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8/13/2019 Investment Funds Advisory Today- Buy Stock of ACC Ltd, INGVYSYA BANK and neutral view on Bajaj Corp, PNB, A…
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ACC Ltd: "BUY" 10th Feb 2014
ACC's EBIDTA declined by 16% to Rs 1848 crore, While y-o-y sales turnover of ACC declined a mere 2% to Rs 10,908.41 crore, as the sale
relaisations remained low and Cost remained stable. Cement sales volumes remained flat for ACC .At current price of Rs 1046, stock is trading
2.6x P/B and 2.8x P/B on CY14 estimates. The valuation looks good from current level, hence we recommend Buy on the stock at CMP Rs.104
for a target price Rs.1257. ..................................................... ( Page : 2-4)
Ambuja Cements Ltd: "Neutral" 10th Feb 2014
For the full year,net profit declined 1% to Rs 1278 crore as against Rs 1293 crore during CY12. Sales declined 6% to Rs 9192 crore as against R
9795 crore in CY12.Flat realisations (Rs 4,177/t,3.5% QoQ) and sluggish volumes spoiled the show(5.3mT, -1.9% YoY) . At current price of Rs 163
stock is trading at 3x P/B on CY14 estimates. We are Neutral on the stock at CMP Rs.163 for a target price Rs.16
........................................................... ( Page : 5-7)
PNB : "Neutral" 10th Feb 2014
Bank’s profit was declined by 42% YoY largely due to higher provisions despite of reporting stable gross NPA. Bank’s operating profit grew b
0.8% indicating stress in its balance sheet. Loan grew by 9.7% lower than industry average whereas deposits de-grew by 20% YoY led 33
declined in wholesale deposits. Asset quality was stable sequentially but most of operating as well as financials parameters are struggling. W
lower our price target to Rs.600 from earlier of 770. We have neutral view on the stock. .................................................................. ( Page : 8
12
Bajaj Corp : "Waiting for Demand Revival" "Neutral" 10th Feb 2014
After witnessing healthy growth in previous 13 quarters, Bajaj Corp disappoints the street with lumpy set of numbers and ramping down i
margin picture, largely impacted by weak consumer discretionary demand. Sales grew by 6.9%(YoY) led by 11% volume growth.Considerin
recent poor demand discretionary environment because of inflationary pressure, we are cautious on the stoc
.................................................................................. ( Page : 13-15)
INGVYSYA BANK : "BUY" 10th Feb 2014
INGVYSYA Bank reported muted growth in profit (3% YoY) largely due to moderate performance all around. Bank’s business grew by sluggis
rate with loan and deposits grew by 8% and 3% YoY respectively. Restructure account as a percentage to total asset increased sequentially t
1.6% from 1.2%. However bank’s CAR and PCR were high at 16.93% and 87.5%, provide strong buffer to the bank in a volatile climate. We valu
bank at Rs.682/share which 1.8 times of FY14E book. ............................................ ( Page : 16-20)
10th Feb, 201
Edition : 202
IEA-Equity
Strategy
Zydus Wellness : "sweeten with sugar free" "BUY" 7th Feb 2014
Inline set of numbers with stable margin;For 3QFY14, Zydus wellness delivered inline set of numbers than street expectation, Because of weaconsumer discretionary demand Sales marginally grew by 2%(YoY). PAT grew by 6% on YoY basis.We retain “Buy” on the stock. Howeve
considering weak consumer descretionery demand we reduced our target price from Rs725 to Rs 610. At a CMP of Rs 504, stock trades at 5
FY15E P/BV. ..................................................... ( Page : 21-23)
LUPIN : Strong Results "BUY" 6th Feb 2014
Lupin posted its 3QFY14 results with net sales at Rs 2983 Cr up 20.8% YoY led by strong sales growth in American as well as Indian markets. The
US formulation business sales including (IP Sales) grew by 31 % YoY to Rs 1356 Cr and it constitutes 45 % of the total sale
........................................................... ( Page :24-25)
Narnolia Securities Ltd,
India Equity Analytics aily Fundamental Report on Indian Equities
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ACC Ltd.
1046
1257
112220%
12%
500410
19634
9817
6063
1M 1yr YTD Poor Operational Performance :
solute -3.5 -22.3 -21.0
l. to Nifty -1.9 -24.4 -22.8
Cureent 3QCY13 2QCY13
omoters 50.3 50.3 50.3
20.0 20.9 19.5
12.9 11.9 11.7
hers 16.8 16.9 18.6
Management Quotes :
Financials : Q4CY13 Y-o-Y % Q-o-Q % Q4CY12 Q3CY1
Net Revenue 2792 -12.2 8.6 3180 257
EBITDA 361 -9.3 26.2 398 28Depriciation 153 -3.2 6.3 158 14
Interest Cost 12 -55.6 9.1 27 1
Tax -36 -190.0 -170.6 40 5
PAT 278 16.3 129.8 239 12(In Cr
According to Management the economic environment in the country was sluggish, thu
impacting the demand for cement and concrete. As a result, the company's cemen
volumes remained almost flat. The company appears not enthusiastic for demand growt
going forward. Based on current demand indications, we do not foresee any significan
improvement in the cement.
Source - Comapany/EastWind Research
Please refer to the Disclaimers at the end of this Report.
At the operating level, poor volumes down by 1.5% from the year-ago period and wea
realizations pulled down revenue during the quarter. Net consolidated sales fell by 13%
to Rs.2,693.1 crore. Profitability was further hit as costs during the quarter, mainly o
freight and power, rose compared with the year-ago period and the September quarte
as well.
are Holding Pattern-%
During the CY13 Acc suffered through sluggish demand and at the same time wit
increasing cost. Company unable to pass on the cost to the consumer due to lower sale
volume. Sales Volume come to 23.93 Mmt form 24.11 Mmt(down by ~1%). Rising Inpu
Cost mainly due to Raw Material and Freight Cost.Raw material cost increased 5% t
Rs.778/ton from Rs.740/ton and freight cost increased ~5% Rs.961/ton from Rs.920/ton
Other expenses increased ~9% to Rs.975/ton from Rs.894/ton.yr Forward P/B
wk Range H/L 1355/912 Lower Cement Volume Impacted the Bottomline Growth
kt Capital (Rs Crores) What is more worrying for the company is that it sold less cement in 2013 than what
did in 2012. This comes as a major jolt for the cement giant which saw its cement sale
volume dropping to 23.93 million tonne compared with 24.11 million tonne. It not onl
impacted its bottom-line growth but also hit its revenues.
erage Daily Volume (Nos.)
fty
ock Performance-%
arket Data ACC's EBIDTA declined by 16% to Rs 1848 crore, While y-o-y sales turnover of AC
declined a mere 2% to Rs 10,908.41 crore, as the sales relaisations remained low an
Cost remained stable. Cement sales volumes remained flat for ACC .
E Code
E Symbol ACC
esult Update BUY ACC's sales turnover slipped to Rs 11169 crore in 2013 against Rs 11358 crore in th
previous year. At first glance, consolidated net profit growth of 9% from the year-ag
period looked impressive, given the dull market. But a closer look shows that net prof
for the quarter included a tax write-back. PAT was Rs.1094Cr. As this pat is incomparablwith previous year pat due to additional depreciation charge as extra-ordinary item i
previous year, we adjusted the pat and it reported Rs.1081Cr for Cy13 Down by -19%
from Rs 1339Cr in CY12.
MP
rget Price
evious Target Priceside
ange from Previous
"BUY"10th Feb' 14
Narnolia Securities Ltd,
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utlook
aluation And Recommendation
ompany Description :
CY11 CY12 CY13 CY14E
10237 11358 11169 13027
191 263 219 219
10428 11621 11389 19723
2199 2384 2384 0
1940 2219 2299 0
8316 9162 9540 10942
1921 2197 1848 2084
510 569 584 639
97 115 52 50215 391 132 323
1276 1050 1094 1292
17.7 18.8 13.8 15.3
3
AT
OE% Source - Comapany/EastWind Research
epriciation
terest Costx
wer and fuel
eight and forwarding
penditure
ITDA
L PERFORMANCE
et Revenue from Operation
her Income
tal Income
CC Limited (ACC) is engaged in manufacture of cement & ready mixed concrete. The
ompany has grinding plants in Karnataka and clinkering line in Maharashtra. The
ompany’s subsidiaries include ACC Mineral Resources Limited, Lucky Minmat Limited,
lk Cement Corporation (India) Limited, National Limestone Company Private Limited
d Encore Cement and Additives Private Limited. The Company is subsidiary of Ambujament India Private Limited.
ACC Ltd.
Cement Sales Volume
ompany has made several capacity expansion plans in the region. ACC is replacing the
isting facilities at Jamul, Chhattisgarh with a clinker plant with an annual production
pacity of 2.8 MT and local grinding capacity of 1.1 MT of cement, while a new plant
th annual capacity of 2.7 MT is scheduled to be built in Kharagpur. The capacitypansion plant will increase the company's total cement production capacity to 35 MT
om the existing 30 MT.On a QoQ basis, the EBITDA/tonne improved 10.4% due to an
provement in realisations & comparatively lower increase in total expenditure/tonne,
shows a positive view for the further quarters.onsidering the expansion plans we
pect 4% growth in sales volume and 10% growth in realization for CY14.
Cement Realization
ment prices witnessed an increase during Oct-Nov,13 but also witnessed a sharp fall
ring Dec,13 which has contributed towards lower average realizations for the year for
e company. Further, with a strong balance sheet with zero debt and better dividend
eld of 3%, we continue to remain positive despite near term challenges. We revise our
timates downwards to factor in lower demand growth scenario. At current price of Rs
46, stock is trading at 2.6x P/B and 2.8x P/B on CY14 estimates. The valuation looks
od from current level, hence we recommend Buy on the stock at CMP Rs.1046 for a
rget price Rs.1257.
Cement Realization
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CY10 CY11 CY12 CY13
188 188 188 188
6093 6791 7184 7625
6281 6979 7372 7813
510 506 85 014 0 0 0
188 126 157 89
1581 816 661 642
1466 1051 1227 1081
11041 11921 11928 12101
77 48 39 40
5230 6359 5893 6040
1564 370 314 322
283 461 566 880
926 1113 1134 1122
249 266 303 397
1086 1660 681 506
162 279 325 340
11041 11921 11928 12101
CY10 CY11 CY12 CY13
3.2 3.1 3.6 2.7
57.4 68.7 73.8 57.6
3.0 2.6 2.7 3.6
19.1 8.0 5.8 5.7
1.1 1.1 1.0 1.0
19632 20180 26240 20296
18.7 16.5 19.4 19.2
12.7 10.5 11.9 12.52.8 2.5 2.1 2.7
14.6 15.2 16.3 12.3
0.1 0.1 0.0 0.0
1.0 1.3 1.4 1.4
1823 1506 2027 2027
(785) (258) (308) (308)
(641) (768) (1066) (1066)
ading At :
4
Source - Comapany/EastWind Research
sh from Operation
sh From Investment
sh from Finance
OCE%
ebt/Equity
rrent Ratio
E
V/EBIDTAvidend Yield%
editors to Turnover%
ventories to Turnover%
V
ATIOS
B
S
ebtor to Turnover%
ventories
ade receivables
sh and bank balances
ort-term loans and advances
tal Assets
tal liabilities
tangibles
ngible assets
pital work-in-progress
ng-term loans and advances
ng-term borrowingsort-term borrowings
ng-term provisions
ade payables
ort-term provisions
ACC Ltd.
S PERFORMANCE
are capital
serve & Surplus
tal equity
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of ACC Ltd, INGVYSYA BANK and neutral view on Bajaj Corp, PNB, A…
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163
165
NA1%
NA
500425
25166
12583
6063
1M 1yr YTD
solute -7.1 -18.6 -19.2 Decline in EBITDA margin
l. to Nifty -5.4 -20.7 -21.0
Cureent 3QCY13 2QCY13
omoters 50.5 50.5 50.6
30.5 30.1 28.7
9.4 9.6 10.2
hers 9.6 9.8 10.5
Key issues to watch out for
1 Volume growth recovery and outlook
2
3
Progress in ongoing mining land acquisition and capex in Nagaur plant of 4.5mt
Financials : Q4CY13 Y-o-Y % Q-o-Q % Q4CY12 Q3CY1
Net Revenue 2209 -5.4 9.5 2335 201
EBITDA 307 -31.8 14.6 450 26Depriciation 123 -33.9 -1.6 186 12
Interest Cost 17 -29.2 -5.6 24 1
Tax -61 -152.6 -192.4 116 6
PAT 317 49.5 91.0 212 16(In Cr
Challenging Outlook
Management views the company was able to keep its production cost flat year-on-yea
and would continue to work on improving operational efficiencies, cost optimization an
continued focus on customer and commercial excellence. Board has recommended a fina
dividend of Rs 2.20 per share and together with the Rs 1.40 per share of interim dividend
the total dividend for the year is Rs 3.60 per share.
yr Forward P/B
Cement pricing outlook and sustainability, considering recent downtrend in Novembe
and December
Source - Comapany/EastWind Research
Please refer to the Disclaimers at the end of this Report.
The company is undertaking expansion at Rabriyawas (Rajasthan 0.8 mTPA) and Sankra(WB, 0.8 mTPA) to be completed by CY14 and CY15 respectively.ock Performance-%
Key concerns for EBITDA margins to decline in CY13 are Lower realizations, Cost push an
no seasonal benefits from operating leverage, Weak rupee push fuel costs higher a
rupee depreciation likely to outweigh lower coal prices (more than 35 percent of tota
requirement comes by import), Higher freight costs and impact of diesel price hike Inche
up power fuel and Freight cost.
are Holding Pattern-%
212/148
kt Capital (Rs Crores)
erage Daily Volume (Nos.)
fty
ange from Previous Flat realisations (Rs 4,177/t,3.5% QoQ) and sluggish volumes spoiled the show(5.3mT,
1.9% YoY) .
arket Data During the CY13 Ambuja Cement suffered through sluggish demand and at the same tim
with increasing cost. Company unable to pass on the cost to the consumer due to lowe
sales volume. Sales Volume come to 21.6 Mmt form 21.99 Mmt(down by ~2%). Risin
Input Cost mainly due to Raw Material and Freight Cost.Raw material cost increased 63%
to Rs.358/ton from Rs.219/ton and freight cost increased ~5% Rs.1097/ton from
Rs.1046/ton. Other expenses increased 8% to Rs.847/ton from Rs.742/ton.
E Code
E Symbol AMBUJACEM
wk Range H/L
Ambuja Cements Ltd.
esult Update Neutral Net profit of Ambuja Cements decline 49% to Rs 317 crore in Q4CY13 as against Rs 21
crore during Q4CY12. Sales declined 5% to Rs 2191 crore Q4CY13 as against Rs 231
crore during Q4CY12. For the full year,net profit declined 1% to Rs 1278 crore as again
Rs 1293 crore during CY12. Sales declined 6% to Rs 9192 crore as against Rs 9795 crore iCY12.
MP
rget Price
evious Target Priceside
"Neutral"10th Feb' 14
Narnolia Securities Ltd,
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R Ton Analysis 4QCY13 4QCY12 YOY% 3QCY13 QOQ%
5 5 -2 5 8
4177 4332 -4 4126 1
406 266 53 415 -2
946 1015 -7 934 11093 1079 1 1073 2
226 254 -11 266 -15
924 884 5 890 4
aluation and Recommendation
ompany Description :
ading At :
CY10 CY11 CY12 CY13
7390 8571 9795 9192
248 248 349 391
7638 8819 10144 9583
1697 2003 2334 2066
352 1939 2300 2370
5568 6594 7322 7549
1822 1977 2473 1643
387 446 569 494
49 53 78 67398 474 604 220
1262 1228 1293 1278
16.9 15.5 17.9 13.2
6
AT
OE% Source - Comapany/EastWind Research
epriciation
terest Costx
wer and fuel
eight and forwarding
penditure
ITDA
L PERFORMANCE
et Revenue from Operation
her Income Source - Comapany/EastWind Research
tal Income
mbuja Cements Ltd. (ACL) is a cement manufacturing company in India. The Company
s five integrated cement manufacturing plants and eight cement grinding units. The
ompany is engaged in manufacturing of Portland cement. The Company manufactures
rtland Pozollana cement and ordinary Portland cement. The Company operates in
mentitious Materials segment . Source - Comapany/EastWind Research
mployee(Rs/T)
hers(Rs/T)
dia average cement price is still down 0.5 percent Y-o-Y, making Q3CY13 the third
nsecutive quarter of Y-o-Y decline. On a QoQ basis, the EBITDA/tonne improved 6%
e to an improvement in realisations & comparatively lower increase in total
penditure/tonne. The outlook continues to remain challenging due to difficult macro-
onomic condition and resultant subdued cement demand. At current price of Rs 163,
ock is trading at 3x P/B on CY14 estimates. We are Neutral on the stock at CMP
.163 for a target price Rs.165.
Source - Comapany/EastWind Research
Ambu a Cements Ltd.
olumes mT
alization(Rs/T)
&M Cost(Rs/T)
&F Cost(Rs/T)eight Cost(Rs/T)
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CY10 CY11 CY12 CY13
306 307 308 309
7021 7758 8489 9153
7327 8065 8797 9462
65 51 39 330 8 10 1
17 19 22 26
1109 961 949 980
1079 1173 1421 1076
10320 11577 12457 12957
16 42 47 6798
5616 6223 5904 0
931 488 524 0
299 504 641 307
902 928 987 936
128 248 221 235
1648 2073 2260 2345
142 238 251 271
10320 11577 12457 12957
CY10 CY11 CY12 CY13
3.0 3.0 3.5 3.0
8.1 8.2 10.2 8.1
1.7 2.9 2.3 2.6
15.0 11.2 9.7 10.7
1.2 1.1 1.0 1.0
20301 21829 28780 25865
17.7 19.0 19.7 22.5
11.1 11.0 11.6 15.71.8 2.1 1.8 2.0
15.6 14.2 16.7 12.4
0.0 0.0 0.0 0.0
1.4 1.5 1.7 1.9
1896 1554 1900 0
(527) (445) (388) 0
(474) (473) (509) 0
7
Source - Comapany/EastWind Research
sh from Operation
sh From Investment
sh from Finance
OCE%
ebt/Equity
rrent Ratio Source - Comapany/EastWind Research
E
V/EBIDTAvidend Yield%
editors to Turnover%
ventories to Turnover%
V
ATIOS
B
S
ebtor to Turnover%
ventories
ade receivables
sh and bank balances
ort-term loans and advances
tal Assets
tal liabilities
tangibles
ngible assets
pital work-in-progress
ng-term loans and advances
ng-term borrowingsort-term borrowings
ng-term provisions
ade payables
ort-term provisions
Ambu a Cements Ltd.
S PERFORMANCE
are capital
serve & Surplus
tal equity
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of ACC Ltd, INGVYSYA BANK and neutral view on Bajaj Corp, PNB, A…
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556
600770
8
-22.1
1M 1yr YTD
bsolute -8.9 -36.8 -36.8
el.to Nifty -7.1 -38.6 -38.6
Current 4QFY13 3QFY1
omoters 58.9 57.9 57.9
I 17.5 17.9 18.0
I 18.5 18.4 19.1hers 5.1 5.9 5.1
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 11807 13414 14857 16536 17691
Total Income 15420 17617 19072 20775 21930
PPP 9056 10614 10907 11155 12500
Net Profit 4433 4884 4748 3408 5209
EPS 140.6 144.0 134.3 94.1 143.9
esult update NEUTRAL
MP
PNB
Higher operating cost led 0.8% YoY growth in operating profit
Bank’s prof i t was decl ined by 42% YoY largely due to h igher provis ion
desp ite of report ing stable gross NPA. Bank’s op erating pr ofi t grew by 0.8
ind icati ng stres s in its balan ce sheet. Lo an grew by 9.7% low er than ind us t
averag e wh ereas depos its de-grew by 20% YoY led 33% dec lin ed in wh oles a
depos its. Asset quality was stable sequential ly but mo st of operat ing as we
as financials p arameters are strug gling . We lower our pr ice target to Rs.6
f rom ear l ier of 770. We have neutral view o n the stoc k.
Sluggish growth registered in NII due to muted loan growth
During quarter bank’s NII grew by 13.1% YoY to Rs.4221 cr versus our expectati
of Rs.4201 cr. Despite of muted loan and deposits growth along with lower cre
deposits ratio, bank NII grew on account of higher interest income than intere
expenses. During quarter, bank’s wholesale deposits de-grew by 33% YoY whi
was partly upset by foreign currency borrowing and CASA deposits which escalatedown overall interest expenses. Other income was Rs.938 Cr versus Rs.971 cr
last quarter and Rs.899 Cr in previous quarter helped total revenue growth to 9.7
YoY.
arket Data
pside
890/402
SE Code 532461
arget Priceevious Target Price
Operating expenses increased by 21.5% YoY in which employee cost and oth
operating expenses increased by 25% and 14% YoY respectively. Cost to incom
ratio increased to 47.6% from 43% in last quarter. Operating leverage for the quart
stood at 0.47% versus 0.43% in last quarter. Due to higher operating cost an
sluggish revenue growth, operating profit increased mere by 0.8% YoY.
verage Daily Volume
19646
SE Symbol PNB
kt Capital (Rs Cr)
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
ock Performance
2wk Range H/L
Stable asset quality and lower slippage surprise us positively
On asset quality front, bank reported stability as GNPA increased by 0.4% QoQ
absolute term whereas in percentage to gross advance, it stood at 5.09% (5.27%
2QFY14). Fresh slippages were surprised us positively and was 1.4% (annualize
versus 3% in previous quarter. Provisions were increased by 8.6% QoQ taking n
NPA declined to 5.5% on sequential basis. In percentage to net advances,
improved to 2.79% from 3.06% in 2QFY14. With the support from higher provisio
despite of stable gross NPA, provision coverage ratio increased to 45.3% from 42
in previous quarter.
hange from Previous
NB Vs Nifty
hare Holding Pattern-%
7.4 cr
fty 6063
"NEUTRAL"10h Feb2014
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PNB
Please refer to the Disclaimers at the end of this Report.
rofit declined due to lower NII growth, higher operating expenses and provisions
NB delivered muted set of numbers with net profit declined by 42% YoY largely due to
gher provisions and contingencies which was up by almost 100% YoY. With the higher
ovisions, we could not anticipate bank’s deteriorating asset quality. Sequentially bank
ported improvement in asset quality and in fresh slippage front it surprises us positively.
aluation & Viewank’s profit was declined by 42% YoY largely due to higher provisions despite of
porting stable gross NPA. Bank’s operating profit grew by 0.8% indicating stress in its
alance sheet. Loan grew by 9.7% lower than industry average whereas deposits de-
ew by 20% YoY led 33% declined in wholesale deposits. Asset quality was stable
quentially but most of operating as well as financials parameters are struggling. We
wer our price target to Rs.600 from earlier of 770. We have neutral view on the stock.
eposits de-grew by 20% YoY led by 33% YoY de-growth in wholesale deposits
eposits of the bank was declined by 20% due to 33% negative growth in term deposits.
urrent deposits and saving deposits grew by 7% and 14% YoY respectively taking
verall CASA ratio to 38.3% from 27% in last quarter. Loan grew by 9.7% YoY in whichSME and retail advances registered growth of 21.6% and 17.5% YoY respectively.
orporate loan grew by 7.3% YoY whereas retail advances, housing and car/vehicle
ans grew at a healthy pace of 16.7% and 16.3% yoy, respectively. Overseas loan grew
y 15.9% YoY and it constitute 10% bank’s total loan book. Management guided loan
owth would be 14-15% in FY14.
argin expansion sequentially
et interest margin of bank expand by 10 bps QoQ due to lower cost of fund than yield
n loan. Cost of fund declined by 25 bps due to higher share of CASA franchise. Yield on
an remained at 10.1% whereas yield on investment declined to 7.3% from 7.7%
quentially. Management guided NIM for FY14 would be 3.25% to 3.5%. This could be
ossible because of low cost franchise network.
Narnolia Securities Ltd,
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PNB
Please refer to the Disclaimers at the end of this Report.
hart Focus
Sluggish growth registered in NII due tomuted loan growth
Higher operating cost led 0.8% YoY growth
operating profit
Profit declined due to lower NII growth,
higher operating expenses and provisions
Narnolia Securities Ltd,
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PNB
Source : Eastwind/ Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
arterly Result 3QFY14 2QFY13 3QFY13 % YoY Gr % QoQ Gr 3QFY14E Variation(
erest/discount on advances / bills 8246 8023 7891 4.5 2.8 8361 -1.4
ome on investments 2599 2568 2518 3.2 1.2 2649 -1.9
erest on balances with Reserve Bank of India 95 101 113 -16.0 -5.9 90 5.8
hers 44 41 27 62.5 5.5 27 63.9
al Interest Income 10984 10734 10548 4.1 2.3 11127 -1.3
hers Income 938 899 971 -3.3 4.3 1121 -16.3
al Income 10045 9834 11519 -12.8 2.1 10006 0.4
erest on deposits 6315 6335 6407 -1.4 -0.3
erest on RBI/Inter bank borrowings 178 116 112 58.9 53.4
hers 270 267 296 -8.8 1.1
erest Expended 6763 6718 6815 -0.8 0.7 6926 -2.4
4221 4016 3733 13.1 5.1 4201 0.5
her Income 938 899 971 -3.3 4.3 1121 -16.3
al Income 5160 4915 4704 9.7 5.0 5322 -3.0
ployee 1758 1659 1407 24.9 6.0 1714 2.6
her Expenses 699 721 614 13.8 -3.1 734 -4.8
erating Expenses 2457 2380 2022 21.5 3.2 2448 0.4
P( Rs Cr) 2702 2535 2682 0.8 6.6 2874 -6.0
visions 1590 1899 802 98.4 -16.3 2007 -20.8
T 1112 636 1880 -40.8 74.9 867 28.3
357 131 575 -37.9 173.3 260 37.2
t Profit 755 505 1306 -42.1 49.4 607 24.5
ance Sheet Date
uity Capital 362 353 362 353 2.4
erve & Surplus 34972 34152 34972 34759 0.6
posits 420647 405699 420647 426195 -1.3
rowings 49163 40888 49163 42711 15.1
estment 143368 134125 143368 141287 1.5
vance 326133 313852 326133 334443 -2.5
et Quality
PA 16595 16526 13990
A 9084 9609 7586
PA(%) 5.09 5.27 4.60
A(%) 2.79 3.06 2.60R(%) Without technical write off 45.3 41.9 45.8
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PNB
nancial & Assuption
Source : Eastwind/ Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
ncome Statement 2011 2012 2013 2014E 2015E
terest Income 26986 36476 41893 43513 49565
terest Expense 15179 23062 27037 26977 31875
II 11807 13414 14857 16536 17691
hange (%) 39.3 13.6 10.8 11.3 7.0
on Interest Income 3613 4203 4216 4240 4240
otal Income 15420 17617 19072 20775 21930
hange (%) 27.6 14.2 8.3 8.9 5.6
perating Expenses 6364 7003 8165 9621 9430
re Provision Profits 9056 10614 10907 11155 12500
hange (%) 23.6 17.2 2.8 2.3 12.1
rovisions 4622 3577 4386 6253 5059
BT 4433 7037 6522 4902 7442
AT 4433 4884 4748 3408 5209
hange (%) 13.5 10.2 -2.8 -28.2 52.8
alance Sheet
eposits( Rs Cr) 312899 379588 391560 450294 517838
hange (%) 25 21 3 15 15
f which CASA Dep 120325 134129 153344 139752 153766
hange (%) 18 11 14 -9 10
orrowings( Rs Cr) 31590 37264 39621 47857 44728
vestments( Rs Cr) 95162 122703 129896 143572 149094
oans( Rs Cr) 242107 293775 308725 339598 356578
hange (%) 30 21 5 10 5
atio
vg. Yield on loans 8.7 9.7 10.3 9.6 10.5
vg. Yield on Investments 6.0 6.4 7.4 7.2 7.8
vg. Cost of Deposit 4.4 5.6 6.5 6.4 6.6
vg. Cost of Borrowimgs 4.4 4.5 3.9 4.0 4.1
aluation
ook Value 682 820 924 1000 1107
MP 1220 926 759 543 543/BV 1.8 1.1 0.8 0.5 0.5
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Bajaj Corp
1M 1yr YTD
solute -4.1 -10.9 -22.9
l. to Nifty -2 -12.6 -22.2
Current 2QFY14 1QFY14
omoters 75 75 75
12.87 13.28 12.08
2.08 2.29 2.5
hers 10.05 9.43 10.42
Financials Rs, Cr
3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 158.2 158.25 0.0% 148.06 6.8%
EBITDA 42.8 42.9 -0.2% 43.2 -0.9%
PAT 38.38 40.03 -4.1% 42.4 -9.5%
EBITDA Margin 27.1% 27.1% - 29.2% (210bp
PAT Margin 24.3% 25.3% (100bps) 28.6% (430bp
Softness in RM cost: During the quarter average price of LLP decreased to Rs 75.85/
from Rs 78.63/Kg in corresponding quarter of previous year. Prices of Refined
decreased from Rs 79.71/Kg in Q3FY13 to Rs 76.16/Kg in Q3FY14.
yr Forward P/B No marks on No Marks Brand: First time, new acquired (from Ozone Ayurvedics) a
acne No Marks brand added Rs 6cr revenue during the quarter with 54% marg
However, this revenue was reported for only 1.5months without any effort of promoti
activities. Management expects to see better numbers in near future and also envisag
for promotional activities through Advertisement and expansion of channel
distributions.
View and Valuation: Company is well placed in the fast growing light hair oil segme
led by steady volume growth, better pricing strategy and sustained market leadersh
position. Considering recent poor demand discretionary environment because
inflationary pressure, we are cautious on the stock. Hence, we downgrade our vie
from“ Buy” to "Neutral" on the stock. At a CMP of Rs 208, stock trades at P/BV of 4FY15E.
(Source: Company/Eastwin
Please refer to the Disclaimers at the end of this Report.
ock Performance Mix performance across segments: Its flagship brand Bajaj Almond Drops Hair
(contributes 94% of sales) marginally grew by 3.5%. During the quarter, its market sha
expanded to 60% and this brand has created a unique positioning for itself throu
initiatives like product differentiation (Almond based), focused marketing, uniq
packaging.
are Holding Pattern-% Strong distribution network: The Company reaches consumers through 2.62mn ret
outlets serviced by 6889 distributors and 15,122 wholesalers. It is panning out acro
1.6mn retail outlet in rural area and 1.04mn retail outlet s in urban area. Howeve
management is confident to see healthy distribution reach.
wk Range H/L 287/198 Margin declined: Despite softening in LLP prices and lower exposure of Ad spend duri
the quarter, EBITDA margin declined by 210bps(YoY) to 27% and PAT margin drastica
down by 430bps(YoY) to 24.2%. However, company has been efficient to maintain
EBITDA margin above the mark of 27% and PAT margin at 24%. Still, sitting on attract
margin pictures than its nearest peers.
kt Capital (Rs Crores) 3071
erage Daily Volume 37072
fty 6063
arket Data The strong earnings visibility and robust cash generation ability of the company ma
Bajaj Corp one of the better picks in the FMCG .The management expects to increa
Almond Drops Hair Oil volume mkt- share to 65% v/s 55% by FY16E.
E Code 533229
E Symbol BAJAJCORP
-
side -
ange from Previous -
" Waiting for Demand Revival"
esults update Neutral Bajaj Corp reported below numbers than street:
MP 208 After witnessing healthy growth in previous 13 quarters, Bajaj Corp disappoints t
street with lumpy set of numbers and ramping down in margin picture, large
impacted by weak consumer discretionary demand. Sales grew by 6.9%(YoY) led
11% volume growth consolidated with 11.9%(YoY) rural growth and 11.7%(YoY) urb
growth in value term. PAT was seen on reverse mood and they reported 9.5% decli
on YoY basis.
rget Price
evious Target Price
"NEUTRAL"10th Feb' 14
Narnolia Securities Ltd,
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xpenses on Sales
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
argin-%
Still company has been efficient to maint
its EBITDA and PAT margin over 23% mark
(Source: Company/Eastwind)
ales Mix-Brands
The management expects to increase Almo
Drops Hair Oil volume mkt- share to 65%
55% by FY16E.
(Source: Company/Eastwind)
Ba a Cor
les and Sales Growth(%)
sales grew by 7%(YoY) led by 11% ove
volume growth
(Source: Company/Eastwind)
Narnolia Securities Ltd,
nds 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY14 1QFY14 2QFY14 3QFY142
aj Almond Drop s Hai r Oi l 93.6% 94. 5% 94.1% 93.8% 96. 0% 97.0% 94.7% 95.0% 96.2% 94.0%
aj Kai lash Parbat Thanda Te l 3.1% 2.1% 2.8% 3.9% 1.1% 0.1% 3.5% 2.5% 2.0% 0.2%
aj Brahmi Amla Hair Oil 2.1% 2.3% 2.0% 1.5% 2.1% 2.0% 1.2% 1.1% 1.2% 1.3%
aj Aml a Shikakai Hair Oil 0.4% 0.4% 0.4% 0.2% 0.3% 0.2% 0.1% 0.1% 0.1% 0.2%
ers+Nomarks 0.5% 0.5% 0.4% 0.3% 0.5% 0.4% 0.5% 0.3% 0.3% 4.3%
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(Source: Company/Eastwi
Please refer to the Disclaimers at the end of this Report.
) NOMARKS is majorly sold through chemist shops. The mgmt said that NOMARKS will
e boost in sales once its sales is pushed in general stores also.
) Tax rate at 20% in near term.
) On the full year basis, the mgmt assigned Rs 28.6 crore as amortization cost related to
OMARKS brand. In next four years (FY14-17), total acquisition cost of Rs 140.9 crore will
amortized
nancials
Ba a Cor
y take-aways from Conference Call (attended on 7th Feb 2014)
)Management is not thinking of any price hike as the company still has inventory of low
st LLP. The mgmt expects LLP to come down with appreciation in Rupee and crude oil
cline (after improvement in Syria situation.
) The mgmt said that it is now more focused on volume growth, as there is no issue withargin.
Narnolia Securities Ltd,
s in Cr, FY10 FY11 FY12 FY13 FY14E FY15E
ales 294.6 358.7 473.3 606.7 692.6 792.5
M Cost 116.8 156.6 194.4 237.4 214.7 261.5urchases of stock-in-trade 0 0.0 34.4 24.4 58.9 67.4
WIP 0 0.0 -9.0 -2.8 -1.4 -1.6
mployee Cost 14 16.3 22.9 29.2 36.4 43.6
d Spend 37.3 40.5 64.7 71.2 51.9 71.3
ther expenses 29.4 37.3 49.3 74.2 145.4 150.6
otal expenses 197.3 250.6 356.8 433.7 505.9 592.8
BITDA 97.3 108.1 116.5 173.1 186.6 199.7
epreciation and Amortisation 0.8 1.8 2.6 3.3 3.8 5.3
ther Income 5.1 17.8 37.4 40.1 42.6 47.6
BIT 101.6 124.0 151.3 209.8 225.4 242.0
nterest 0.0 0.0 0.1 0.1 7.0 7.0
BT 101.6 124.0 151.2 209.8 218.4 235.0
ax Exp 17.6 21.0 31.1 42.2 42.6 47.0
AT 83.9 103.1 120.1 167.6 175.8 188.0
rowth-% (YoY)
ales 97.4% 21.8% 32.0% 28.2% 14.1% 14.4%
BITDA 82.5% 11.1% 7.8% 48.5% 7.8% 7.0%
AT 78.6% 22.8% 16.5% 39.6% 4.9% 6.9%
xpenses on Sales-%
M Cost 39.6% 43.7% 41.1% 39.1% 31.0% 33.0%
d Spend 12.7% 11.3% 13.7% 11.7% 7.5% 9.0%
mployee Cost 4.7% 4.5% 4.8% 4.8% 5.3% 5.5%
ther expenses 10.0% 10.4% 10.4% 12.2% 21.0% 19.0%
ax rate 17.4% 16.9% 20.6% 20.1% 19.5% 20.0%
Margin-%
BITDA 33.0% 30.1% 24.6% 28.5% 27.0% 25.2%
BIT 34.5% 34.6% 32.0% 34.6% 32.5% 30.5%
AT 28.5% 28.7% 25.4% 27.6% 25.4% 23.7%
aluation:
MP 132.0 100.1 115.7 275.0 208.0 208.0
o of Share 14.8 14.8 14.8 14.8 14.8 14.8
W 27.9 376.3 427.8 483.8 547.4 623.3
PS 5.7 7.0 8.1 11.4 11.9 12.7
VPS 1.9 25.5 29.0 32.8 37.1 42.3
oE-% 300.7% 27.4% 28.1% 34.6% 32.1% 30.2%
/BV 69.8 3.9 4.0 8.4 5.6 4.9
/E 23.2 14.3 14.2 24.2 17.5 16.3
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538
682677
27
0.7
1M 1yr YTD
bsolute -8.8 -8.5 -8.5
el.to Nifty -7.0 -10.3 -10.3
Current 4QFY13 3QFY1
omoters 43.2 43.4 43.6
I 28.8 28.9 28.6
I 14.4 13.6 14.8hers 13.6 14.1 13.1
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 1007 1208 1539 1696 2058
Total Income 1661 1878 2266 2555 2916
PPP 635 768 993 1167 1283
Net Profit 319 456 613 701 739
EPS 26.3 30.4 39.6 37.1 39.2
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
Operating leverage (Operating cost to total assets) remained stable at 0.6% whi
indicated stable cost management. In absolute term, operating expenses increas
by 9% YoY in which employee cost and other operating cost increased by 12% a
5% YoY respectively. Cost to income ratio increased by 117 bps YoY to 56.5% fro
55.3%. Operating profit increased by 4% YoY to Rs.274 cr.
hare Holding Pattern-%
Improvement in asset quality
Sequentially bank reported improvement in asset quality with GNPA stood at 1.71
versus 1.75% in percentage to gross advances. In absolute term GNPA increas
by 2% QoQ while loan loss provision was remain same as in previous quarter. Th
had resulted of increased net NPA by 17% sequentially in absoluter term and as
percentage to net advance, it stood at 0.21% versus 0.19% in 2QFY1
Consequently provisions coverage ratio declined to 87.5% from 89.1% in previo
quarter. Bank’s outstanding restructure account increased in sequential basis
1.6% versus 1.2% to total advances.
GVYSYA Bank Vs Nifty
fty 6063
ock Performance
Operating expenses higher and operating leverage remain stable
2wk Range H/L 667/405
kt Capital (Rs Cr) 10164
verage Daily Volume 19.97lakhs
hange from Previous
arket Data NII growth of 3% YoY due to lower interest income
SE Code 531807 During quarter, bank reported NII growth of 3% YoY largely due to lower intere
income and higher cost of deposits. Term deposits have been continuously declini
from past three quarters whereas borrowing as a percentage of NDTL (net dema
time liability) increased sequentially to 18.1% from 14.1%. During quarter wholesa
deposits are offset by foreign currency borrowings. This had increased cost of fu
despite of CASA growth. Other income was Rs.215 Cr versus Rs.187 cr in la
quarter and Rs.185 cr in previous quarter. With the support from other income, to
revenue grew by 7% YoY to Rs.631 cr.
SE Symbol INGVYSYABK
INGVYSYA BANK
esult update BUY INGVYSYA Bank reported mu ted grow th in prof it (3% YoY) largely due
mo derate perform ance all around . Bank’s busines s grew by sluggis h rate wi
loan and depos its grew by 8% and 3% YoY respectively . Restruc ture accouas a percentage to total asset increased sequential ly to 1.6% from 1.2
However bank’s CAR and PCR were high at 16.93% and 87.5%, pro vid e stron
bu ffer to the bank in a vo latile clim ate. We value bank at Rs.682/sh are wh ic
1.8 t imes of boo k.
MP
arget Priceevious Target Price
pside
"BUY"10h Feb2014
Narnolia Securities Ltd,
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Please refer to the Disclaimers at the end of this Report.
M squeeze by 11 bps QoQ to 3.35% as compare to 3.45% in previous quarter largely
n account of restructure few account as the part of corporate debt restructure which
sulted interest reversal of Rs.25.7 cr. Adjusting for the interest reversal, NIM was higher
3.55% in the current quarter. Capital adequacy ratio of the bank stands at 16.93% in
hich tier 1 capital of 14.4%, according to basel-3 norms.
rofit lower on account of muted performance all around
gvysya Bank reported net profit growth of 3% YoY to Rs.167 cr versus our expectation
Rs.173 cr. Lower profit growth was largely due to muted growth at NII level led by
wer loan and deposits growth. Operating expenses were by and large stable and
provement in asset quality provided some cushion to profit. Tax rate was higher at
3.4% versus 31.7% in previous quarter and 32% in 3QFY13.
aluation & View
GVYSYA Bank reported muted growth in profit (3% YoY) largely due to moderate
erformance all around. Bank’s business grew by sluggish rate with loan and depositsew by 8% and 3% YoY respectively. Restructure account as a percentage to total asset
creased sequentially to 1.6% from 1.2%. However bank’s CAR and PCR were high at
6.93% and 87.5%, provide strong buffer to the bank in a volatile climate. We value bank
Rs.682/share which 1.8 times of book.
aluation Band
INGVYSYA BANK
usiness growth sluggish, wholesale deposits replace by foreign currency
orrowings
n business growth parameters, bank reported muted growth in deposits which grew by
% in which CASA deposits grew by 13% YoY. Term deposits de-grew by 1% YoY and -
% QoQ to Rs.254 bn. During quarter bank’s wholesale deposits replace by foreignrrency borrowings under RBI’s special concession window. CASA in percentage term
ood at 34.7% versus 31.7% in 3QFY13 and 32.5% in previous quarter. Loan grew by
% YoY led by SME loan growth of 25% YoY followed by agriculture loan (56% YoY).
redit deposits ratio improved to 87.4% versus 84% in last quarter and 82% in previous
uarter.
M narrow on account of reversal of interest income
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Profit lower on account of muted
performance all around
Please refer to the Disclaimers at the end of this Report.
INGVYSYA BANK
hart Focus
NII lower on account of sluggish interestincome
Operating expenses higher and operating
leverage remain stable
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INGVYSYA BANK
Source : Eastwind/ Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
arterly Performance 3QFY14 2QFY13 3QFY13 % Chg(YoY) % Chg(QoQ) 3QFY14E Varaition(%)
rest/discount on advances / bills 936 961 906 3.3 -2.5 975 -3.9
ome on investments 336 353 332 1.2 -4.9 390 -14.0rest on balances with Reserve Bank of India 0 0 0 266.7 -51.1 0
ers 1 3 1 50.8 -70.6 0
al Interest Income 1273 1317 1239 2.8 -3.3 1365 -6.7
ers Income 215 185 187 15.0 16.2 215 0.0
al Income 1488 1502 1425 4.4 -0.9 1580 -5.8
rest Expended 857 877 836 2.5 -2.3 968 -11.4
416 440 403 3.3 -5.5 397 4.7
er Income 215 185 187 15.0 16.2 215 0.0
al Income 631 625 590 7.0 0.9 612 3.1
ployee 214 207 191 12.2 3.7 202 6.2
er Expenses 142 142 135 5.1 0.1 135 5.4
erating Expenses 356 349 326 9.2 2.2 337 5.9
( Rs Cr) 274 276 263 4.2 -0.7 275 -0.4
visions 23 18 25 -6.5 27.3 17 35.7
84 82 76 9.9 2.4 85 -1.6
Profit 167 176 162 3.1 -5.1 173 -3.4
balance sheet data (Rs Cr)ances 34048 32856 31599 7.8 3.6 33903 0.4
osits 38956 40030 37691 3.4 -2.7 43989 -11.4
A(%) 34.7 32.5 31.7
et Quality
ss NPLs (Rs Cr) 583 574 571
ss NPLs (%) 1.7 1.7 1.8
NPLs (Rs Cr) 73 62 16
NPLs (%) 0.21 0.19 0.05
vision Coverage (%) 87.5 89.1 97.2
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INGVYSYA BANK
nancial & Assuption
Source : Eastwind/ Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
L 2011 2012 2013 2014E 2015Eerest/discount on advances / bills 2033 2868 3550 3824 4501
come on investments 646 982 1307 1476 1616
erest on balances with Reserve Bank of India 2 1 2 1 1
hers 13 7 3 13 13
tal Interest Income 2694 3857 4862 5314 6132
hers Income 655 670 727 858 858
tal Income 3349 4527 5588 6172 6990
erest on deposits 1357 2153 2579 2619 3038
erest on RBI/Inter bank borrowings 48 247 393 923 1033
hers 283 249 351 0 0
erest Expended 1688 2648 3323 3618 4074
1007 1208 1539 1696 2058
Growth(%) 21.3 20.1 27.3 10.3 21.3
her Income 655 670 727 858 858
tal Income 1661 1878 2266 2555 2916
mployee 606 651 751 819 964
her Expenses 420 459 522 569 670
perating Expenses 1026 1110 1273 1388 1633
P( Rs Cr) 635 768 993 1167 1283
ovisions 317 312 380 127 181
t Profit 319 456 613 701 739
31.6 43.2 34.3 14.4 5.4
ey Balance sheet data
posits 30194 35195 41334 45467 50923
posits Growth(%) 16.7 16.6 17.4 10.0 12.0
rrowings 4147 5696 6511 8024 8986
rrowings Growth(%) 13.0 37.4 14.3 23.2 12.0
an 23602 28721 31772 34949 40192
an Growth(%) 27.5 21.7 10.6 10.0 15.0
vestments 11021 12715 18278 20327 22766vestments Growth(%) 5.2 15.4 43.7 11.2 12.0
stwind Calculation
eld on Advances 8.6 10.0 11.2 10.9 11.2
eld on Investments 5.9 7.7 7.1 7.3 7.1
eld on Funds 7.3 8.8 9.3 9.6 9.7
st of deposits 4.5 6.1 6.2 5.8 6.0
st of Borrowings 8.0 8.7 11.4 11.4 11.5
st of fund 4.9 6.5 6.9 6.8 6.8
aluation
ok Value 217 265 299 379 418
BV 1.5 1.3 1.9 1.4 1.3E 12.2 11.7 14.1 14.5 13.7
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Zydus Wellness.
Buy
-16%
13282
1M 1yr YTD
bsolute -6.9% 1.5% -4.9%
l.to Nifty -4.10% 0% -7.1%
Current 2QFY14 1QFY14
omoters 72.54 72.54 72.54
8.17 7.91 5.12
I 8.07 8.39 10.85
hers 11.22 11.16 11.49
Financials
3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 103.39 103.92 (0.5) 101.77 1.6
EBITDA 26.83 25.51 5.2 26.32 1.9
PAT 27.27 25.7 6.1 22.88 19.2
EBITDA Margin 26.0% 24.5% 150bps 25.9% 10bps
PAT Margin 26.4% 24.7% 130bps 22.5% 390bp
arket Data
E Code 531335
ock Performance
verage Daily Volume
fty 6036
BV(x)-1year forward
Rs, Cro
(Source: Company/Eastwi
Please refer to the Disclaimers at the end of this Report.
Aggressive target on capturing Everyuth market share: Recently, company re launch
its Everyuth brand with innovative packaging, strong distribution network and expensmedia initiatives. The company decided to increase its prices in the range of 10-15%
Everyuth brand at the time of relauch and extended its everyuth brand to the premiu
soap in 3 variants, like Fruit bathing bar, Neem bathing bar and Lemon.
are Holding Pattern-%
SE Symbol ZYDUS
1969
wk Range H/L 749/415
kt Capital (Rs Cr)
pside 21%
ange from Previous
"sweeten with sugar free"
esult Update
MP 504
rget Price 610
For 3QFY14, Zydus wellness delivered inline set of numbers than street expectatio
Because of weak consumer discretionary demand Sales marginally grew by 2%(Yo
PAT grew by 6% on YoY basis.evious Target Price 725
Inline set of numbers with stable margin;
Company’s half of revenue come from Sugar Free and Ever yuth, We expect these tw
products continue to generate revenue and some support to over all margins, no
vegetable oil prices are going down.
Due to expected decline in Advertisement cost, softness in Palm Oil, Crude Derivativ
and better realization in Ever Youth could help to improve its margin in next couple
quarters.
View and Valuation: Taking into consideration of product re-launch, strong distributi
reach under a beneficiary scenario of margin, management is very confident to achie
revenue at 500cr in FY15E, expecting growth rate by 21.5%. Its large market share a
aggressive promotions in its pillar brand (Sugar Free, Everyuth) would energize
revenue growth in near future. We retain “Buy” on the stock. However, consideri
weak consumer descretionery demand we reduced our target price from Rs725 to
610. At a CMP of Rs 504, stock trades at 5x FY15E P/BV.
Stable margin: During the quarter, its EBITDA margin was flat at 26% on YoY bas
while, it improved 150bps sequentially because of cost rationalization in RM and A
spend. PAT margin up by 390bps to 26.4%, favorably impacted by lower provision
tax and extra other income.
Woprking on cost rationalization: Considering slower demand and high competit
intensity, company has been able to manage its normal range of margin by reduci
cost. During the quarter, RM cost on sales declined from 30.3%(3QFY13) to 26.7% a
Ad spend down from 15.2% (3QFY13) to 13.8%.
Strong brand value in sugar free products: Over the year, Sugar Free Brand h
successfully captured 92% market Share. Sugar Free product has very strong bra
equity and it is always on the top of the buyers' mind when it comes to the sug
substitute. Considering the entry of other players in same product, it has rolled out
aggressive ad campaign and expended this brand on different segments like, Sugar Fr
Gold (Aspartame based), Sugar Free Natrura (Sucralose based), Sugar Free Herb
(Stevia) and Sugar Free D'lite (Drink).
"BUY"7th Feb' 14
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ocus on expansion of Distribution network: The Company has been increasing its
stribution network to improve its growth of its cash-cow brand. Everyuth scrub and peel
f are sold through 3.3 to 4.0 lakh retail outlets while Zydus Wellness is sold through 3.4
kh retail outlets (an increase of 11% YoY). The company targets to increase the
stribution reach by 15-20% per annum.
Please refer to the Disclaimers at the end of this Report.
argin-%
It expects expansion in gross marginwhich will help it to fund new produc
launches.
(Source: Company/Eastwind)
xpenses-(% of Sales)
(Source: Company/Eastwind)
(Source: Company/Eastwind)
Zydus Wellness.
ales and its Growth(%)
Sales marginally grew by 2%(YoY).
Narnolia Securities Ltd,
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(Source: Company/Eastwi
Please refer to the Disclaimers at the end of this Report.
Zydus Wellness.
nancials and Valuation
Narnolia Securities Ltd,
s in Cr, FY10 FY11 FY12 FY13 FY14E FY15E
otal Sales 267.5 335.5 344.6 410.0 446.9 500.5
ess: Excise Duty 0.0 0.1 9.2 22.9 29.05 32.53
et Sales 267.5 335.4 335.5 387.1 417.8 467.9ther Operating Income 0.6 1.0 1.3 0.9 1.6 1.8
otal income from operations 268.1 336.4 336.8 388.0 419.4 469.7
M Cost 37.5 49.9 94.1 119.1 106.9 124.5
urchases of stock-in-trade 54.0 74.9 23.7 14.7 22.70 25.42
WIP (5) (5) 4 (10) 16 18
mployee Cost 9.3 18.3 20.6 27.3 31.45 37.58
d Spend 61.0 59.2 59.7 69.8 75.5 86.9
ther expenses 44.4 54.5 57.4 70.1 73.39 84.55
otal expenses 201.0 252.1 259.7 291.4 325.91 376.76
BITDA 67.1 84.2 77.1 96.6 93.47 92.94
epreciation and Amortisation 1.6 1.5 3.9 4.5 4.7 4.5
ther Income 6.0 7.2 9.0 15.8 20.1 22.5BIT 71.4 90.0 82.2 107.9 108.89 111.01
nterest 0.0 0.0 0.0 0.1 0.0 0.0
BT 69.2 90.0 82.2 107.8 108.9 111.0
ax Exp 24.0 30.5 13.7 8.8 8.2 8.9
AT 45.2 59.5 68.6 98.9 100.72 102.13
rowth-% (YoY)
ales -94.8% 25.5% 0.1% 15.2% 8.1% 12.0%
BITDA -93.7% 25.6% -8.5% 25.3% -3.2% -0.6%
AT -93.1% 31.7% 15.3% 44.2% 1.8% 1.4%
xpenses on Sales-%
M Cost 14.0% 14.8% 28.0% 30.7% 25.5% 26.5%
d Spend 22.7% 17.6% 17.7% 18.0% 18.0% 18.5%
mployee Cost 3.5% 5.4% 6.1% 7.0% 7.5% 8.0%
ther expenses 16.6% 16.2% 17.0% 18.1% 17.5% 18.0%
ax rate 34.7% 33.9% 16.6% 8.2% 7.5% 8.0%
Margin-%
BITDA 25.0% 25.0% 22.9% 24.9% 22.3% 19.8%
BIT 26.6% 26.7% 24.4% 27.8% 26.0% 23.6%
AT 16.9% 17.7% 20.4% 25.5% 24.0% 21.7%
aluation:
MP 381.7 597.3 380.4 456.5 504.0 504.0
o of Share 3.9 3.9 3.9 3.9 3.91 3.91
W 100.6 141.9 186.9 256.5 329.8 399.9
PS 11.6 15.2 17.5 25.3 25.76 26.12
VPS 25.7 36.3 47.8 65.6 84.4 102.3
oE-% 44.9% 41.9% 36.7% 38.6% 30.5% 25.5%
/BV 14.8 16.5 8.0 7.0 6.0 4.9
/E 33.0 39.3 21.7 18.0 19.57 19.30
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BUY
1M 1yr YTD
bsolute -2 53.4 48.3
el. to Nifty 1 52.8 35.9
Current 2QFY14 1QFY1
omoters 46.8 46.8 46.8
31.9 31.5 30.7
I 11.3 12.1 12.4
hers 10.0 9.7 10.1
Financials Rs, Cro3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 3022 2668 13.3 2501 20.8
EBITDA 773 660 17.1 606 27.6
PAT 484 417 16.1 342 41.5
EBITDA Margin 25.6% 24.7% 80bps 24.2% 130bps
PAT Margin 16.0% 15.6% 40bps 13.7% 230bps
The operating EBITDA for the quarter came at Rs 773 Cr and OPM at 25.6%.The mater
cost during the quarter decreased by 30bps to Rs 1121 Cr and this constitutes 37.6
of net sales. The manufacturing and other expenses decreased by 90 bps to Rs 749 Cr
the quarter while employ cost deceased by 30 bps to Rs 387 Cr. The revenue expenditu
on R&D stands at Rs 271 Cr which is 9.1 % of the 3QFY14 sales.
The net profits for the quarter came at Rs 484 Cr and NPM at 15.8 % .The overall impact
Forex on net profits was a loss of Rs 68.8 Cr of which Rs 25.5 Cr forex gain is reflected
other income while the corresponding forex loss is captured across various other P
Lines.
ne Year Price vs Nifty
(Source: Company/Eastwi
41,018
verage Daily Volume 395892
fty 6022
> Capital Expenditure was Rs 104.1 Cr in the quarter
Please refer to the Disclaimers at the end of this Report.
ock Performance-%
hare Holding Pattern-%
Strong Results
1000
9%
esult Update
MP 915
arget Price
pside
hange from Previous
evious Target Price
LUPIN
The company at its CMP of Rs 915 is trading at 23 times of one year forward FY14 EPS
Rs 39.In the light of strong results ,management commentary and strong busine
outlook going forward we maintain BUY for the stock with Target price 1000.
951/569
SE Symbol LUPIN
arket DataSE Code
View & Valuation
Recent Developments
Company filed 5 ANDA approvals in the quarter .Cumulative ANDA filings with US FDA no
stands at 186 with the company having received 96 approvals till date. The compareceived 5 approvals from European regulatory authorities in the quarter.
Company acquired Nanomi B.V of Netherlands and with this acquisition company h
forayed into technology intensive complex injectables space. As per management with t
use of Nanomi’s proprietary technology platform, Lupin would be able to make significant
roads into the niche area of complex injectables.
500257
wk Range H/L
Balance Sheet Highlights
> Operating WC increased to Rs 2769.5 Cr as on 31st
Dec 2013 as against Rs 2674.3 Cr
on September 2013.The working capital number of days stood at 94 days as on 31St
D
2013.
kt Capital (Rs, Cr)
Lupin posted its 3QFY14 results with net sales at Rs 2983 Cr up 20.8% YoY led by stro
sales growth in American as well as Indian markets. The US formulation business sal
including (IP Sales) grew by 31 % YoY to Rs 1356 Cr and it constitutes 45 % of the to
sales. The Indian formulation business grew by 14% YoY to Rs 650 Cr and it contribut
22% of the company’s overall revenue for the quarter .The business from other geograph
viz Japan and South Africa also have grown well with registering growth of 10% and 18
respectively.API (Active Pharmaceutical Ingredient) net sales grew by 26% to Rs 297.3
during the quarter as compared to Rs 235.3 Cr for 3QFY13 and contributed 10%
company’s consolidated revenues.
"BUY"06th Feb' 14
Narnolia Securities Ltd,
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LUPIN
les and PAT Trend (Rs)
(Source: Company/Eastwind)
Company posted its 3QFY14 results withsales at Rs 2983 Cr up 20.8% YoY led
strong sales growth in American as well
Indian markets.
PM %
(Source: Company/Eastwind)
PM %
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
The material cost during the quar
decreased by 30bps to Rs 1121 Cr and t
constitutes 37.6% of net sales.
The overall impact of Forex on net pro
was a loss of Rs 68.8 Cr of which Rs 25.5
forex gain is reflected in other income wh
the corresponding forex loss is captu
across various other P&L Lines.
Narnolia Securities Ltd,
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Narnolia Securities Ltd
402, 4th floor 7/ 1, Lord s Sinha Road Kolkata 700071, Ph
033-32011233 Toll Free no : 1-800-345-4000
email: [email protected],website : www.narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing “East wind” & information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to changewithout notice. The recipients of this report should rely on their own investigations,
should use their own judgment for taking any investment decisions keeping in mind that
past performance is not necessarily a guide to future performance & that the the value of
any investment or income are subject to market and other risks. Further it will be safe to
assume that NSL and /or its Group or associate Companies, their Directors, affiliates
and/or employees may have interests/ positions, financial or otherwise, individually or
otherwise in the recommended/mentioned securities/mutual funds/ model funds and
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