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MARKETOUTLOOK

MARCH 2018

IN THIS ISSUE• Yields facing fire on multiple fronts• US Fed outlook• Oil prices trend

Kotak Securities – Private Client Research Please see the Disclosure/Disclaimer on the last page For Private Circulation 2

Monthly Market Strategy March 2018

MONTHLY OUTLOOK FOR MARCH 2018

Domestic markets witnessed huge volatility in the month of February 2018 post Union Budget announcements as concerns started emerging on government’s fiscal imbalances, higher

inflationary pressure as well as rising bond yields. Global markets also witnessed a correction with

pressure coming from rising bond yields.

Going ahead, we believe that volatility may continue to remain throughout the year on concerns

related to higher oil prices, impact of higher MSPs as well as impending elections in three big states,

out of which two are BJP ruled. The focus would also remain on how government manages the fiscal deficit situation. Any shortfall in estimated GST collections or higher inflation is likely to have

an impact on yields moving up further which would adversely impact market valuations. However,

sharp earnings revival, pre-election spend, demand revival as well as infrastructure spending are likely to be positive triggers for the market. Globally, stronger outlook for economic growth in US

raises the likelihood that further gradual policy firming is on the way by US Fed while ECB and Bank

of Japan may continue with their accommodative monetary policy stance for some more time now.

Benchmark indices are currently trading at 17.9x /15.2x on FY19E/20E valuations. Valuations have

come off from the recent highs which makes large caps a preferred play. Mid-caps after witnessing

correction are still trading at higher valuations than large caps so we do not rule out further correction in them, if earnings falter in the coming quarters. However, we would prefer select mid-

caps where strong earnings growth is likely to maintain higher valuations going forward. Key risk

to our recommendation can come from shortfall in earnings, higher interest rates, higher yields, spike in oil prices or decline in liquidity from FIIs and domestic mutual funds. Our preference would

be for companies focused on infrastructure spending (Road, railways, defence), e-way bill

implementation (Logistics, Auto, Building material etc.) consumption revival & financialization of savings (to benefit insurance companies, mutual funds and broking firms).

Market performance – sector wise (February 2018)

Source: Bloomberg

-4.4% -4.3% -4.3%

-3.1%

-1.4%

-5.6%

-7.1%

-8.1%

-5.0%

-4.1%

-1.7%

-2.5%

0.1%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

Teena Virmani

[email protected]

+91 22 6218 6432



Benchmark indices - India

Source: Bloomberg

DOMESTIC MARKETS

Domestic events to watch out for in near to medium term

Volatility may continue to remain throughout the year on concerns related to higher oil prices,

impact of higher MSPs as well as impending elections in three big states, out of which two are BJP ruled. However, sharp earnings revival, pre-election spend, demand revival as well as infrastructure

spending are likely to be positive triggers for the market.

Yields on the rise

10 year G-Sec yields have been on an uptrend owing to increased expected borrowings by the

government, concerns over government’s fiscal imbalances, higher inflationary pressure, tight

money market liquidity as well as low appetite from public sector banks. Income boosting fiscal policy and higher commodity prices will cause domestic inflation to remain elevated. If inflation

moves higher, risk of a RBI rate hike will keep domestic yields at elevated levels.

The domestic bond yields have hardened nearly 100 basis points in last few months and the impact was also reflected due to rising global yields. US yields had spiked to 2.92% during last month

while domestic ten year yield moved up to 7.746% and the spread has remained in the range of

4.5%-4.8%. So far the spread has been protected as both the Indian and US interest rates have gone up. Thus it is not likely to impact FPI flows adversely for the domestic markets.

US 10-year bond yield vs GoI 10-year bond yield (%)

Source: Bloomberg

6000

8000

10000

12000

20,000

24,500

29,000

33,500 Sensex (LHS) Nifty (RHS)

1.0

1.5

2.0

2.5

3.0

6.0

6.5

7.0

7.5

8.0GoI 10 year bond yield (LHS) US 10 year bond yield (RHS)



However, the gap between earnings yield and bond yields have gone down due to higher P/E

multiples and rise in bond yields in last few months, making equities less attractive vis-à-vis bonds. With earnings growth of 25%/ 16% for FY19E/FY20E, we expect earnings yield for equities to

improve.

Yields are likely to ease off a bit as EPFO now needs to allocate higher proportion of portfolio towards sovereign paper. The increase in investment limits for sovereign bonds could also ease the

pressure in the government bond market – for state and long end central government bonds.

Going ahead, the focus would remain on how government manages the fiscal deficit situation. Any shortfall in estimated GST collections or higher inflation is likely to have an impact on yields moving

up further which would adversely impact market valuations. Our currency desk expects 10-year

yield to remain around 7.5-7.95% over next 2-3 months. However, if GST collections start improving in line with government’s assumptions, then yields can start cooling down.

Implementation of E-way bill from March/April

E-way bill is an electronically generated document required for the movement of goods of more than Rs 50,000 from one place to another. Implementation of e-way bill got delayed from 1st Feb

due to technical glitches. Problems like delayed reflection of updated data as well as payments,

delays in process of input credit set offs, inability to upload heavy files of certain formats and lack of provision to modify or revise errors has become a great challenge for businesses.

Lack of implementation of e-way bill has impacted the organized players in terms of volumes as

well as pressure on realization from the unorganized players. With continued evasion of taxes in absence of proper mechanism to check movement of goods, unorganized sector is still able to

maintain lower prices and disturb the supplies in the markets. Once a proper mechanism is in place,

it will be extremely difficult for unorganized players to evade taxes and hence a level playing field will emerge on pricing front.

Government is factoring in 67.3% growth in GST collections to Rs 7.44 trn for FY19 which is

possible only with increased compliance and reduced tax evasion. The government estimated that collections from Central Goods and Services Tax would grow from Rs 2.22 trn this financial year to

Rs 6.04 trn next year. That would mean a 172% increase in tax collections in a period while

collection of tax on the inter-state sale of goods is projected to fall from Rs 1.61 trn this year to a mere Rs 500 bn next financial year. GST cess, is estimated to grow 46.75% from Rs 613.31 bn this

year to Rs 900 bn next year.

This can be achieved once e-way bill gets implemented on a timely basis. Current GST revenues are in the range of Rs 880 bn (for past 7 months) also point towards increased need for compliance

and faster implementation of e-way bill.

We believe that implementation of e-way bill is likely to be positive for organized players in industries like logistics, tiles, paints, plywood, FMCG etc

Bunching up of order inflows from NHAI in near term

NHAI is set to give a good beginning for the ambitious “Bharatmala Pariyojana” approved by the

Government in October 2017. It has invited bids for a length of 10,460 km, costing nearly Rs.1.75 trn till January, 2018, and is all set to achieve a quantum jump in the award of road projects in the

year 2017-18. It plans to award nearly 7000-8000 km of road projects by March, 2018.

The average length of road projects awarded by NHAI in the last 5 years was 2,860 km, with 4,335 km awarded in 2016-17. Projects for a length of 2,700 km, costing Rs.430 bn have been awarded

by the Authority in 2017-18 as against original target of 10,000 km for the fiscal 2018. This is likely

to result in bunching up of order inflows from NHAI in the month of March. 2018.

Order inflows for most of the construction companies have been healthy in CYTD and is likely to

jump up further with sharp jump in ordering from NHAI. We believe that road EPC/BOT players are

likely to be key beneficiaries of the same and are set to benefit from incremental order inflows with strong balance sheet strength.



GLOBAL MARKETS

Global events to watch out for in near to medium term

Global developments such as the normalization of monetary policies in major developed markets,

commodity price trajectory and global liquidity will affect domestic financial markets. While US Fed

is likely to gradually hike interest rates, the ECB and Bank of Japan are still expanding their balance sheets. Gradual normalization of balance sheet is likely to be seen in next 1-2 years given that the

economies are gradually improving.

US fed rate outlook

The Fed currently has three interest rate hikes forecast for this year and is expected to raise rates at the March meeting. With tax cuts being announced by Trump government, the increased consumer

spending is likely to spur economic growth with an uptick in inflation. A stronger outlook for

economic growth raises the likelihood that further gradual policy firming is on the way.

Along with the Fed outlook and inflation indicators, there is also Treasury supply in the United

States which is likely to creep up the yields which have already shot up in expectations of higher

inflation and Fed rate hikes.

ECB bond buying is still on

Though ECB is still expanding its balance sheet, Euro zone finance ministers chose Spanish Economy

Minister as head of ECB from May. He is from one of the "core" euro zone countries and there is an increasing likelihood that the central bank takes a more "hawkish" stance in the future as

compared to the dovish stance currently and could bring the focus back to interest rates again and

bring in a new rates regime.

The ECB is largely expected to end extraordinary stimulus sooner rather than later, potentially by

the end of 2018, having already cut the programme by half at the start of the year.

BOJ – Balance sheet normalization still far off

In its quarterly outlook, the BOJ noted it would continue with "quantitative and qualitative

monetary easing with yield curve control" for "as long as it is necessary" to achieve its 2 percent

inflation target. The BOJ expects inflation to reach 2 percent by fiscal 2019. BOJ governor also mentioned that the economy was not in a situation for the central bank to consider exiting its ultra-

easy policy.

Inflation in Japan remains slightly above 0 percent even though it’s economy is expanding moderately. With inflation still "well below" a 2 percent target, normalization could remain a

premature suggestion for the BOJ.

Oil prices

Oil prices have come down in last one month as declines were driven by a recovery in the dollar, which potentially hits fuel demand as it makes greenback-denominated oil imports more expensive

for countries using other currencies at home. Crude was also weighed down by demand entering

seasonal lows as the northern hemisphere comes out of winter and by high U.S. exports.

From an indian economic standpoint, we note that a US$1/bbl change in crude oil price impacts

India’s CAD by US$1.5 bn or 6 bps of GDP. India’s macroeconomic outlook had begun to

deteriorate even before the recent surge in crude oil prices, which will exacerbate India’s CAD, fiscal deficit and inflation if crude prices sustain above US$70/bbl.



Brent Crude (US$/bl)

Source: Bloomberg

FIIs turned net sellers in February 2018

FIIs turned sellers for the month as the concerns emerged regarding government’s fiscal imbalances

as well as higher inflationary pressure. There is also a good possibility of an increase in US Federal Reserve rate to counter the rise in inflation. This also resulting in sharp rise in the bond yields

globally, also leading to sell off by FIIs during the month. Mutual funds remained net buyers for the

month having bought stocks worth Rs.11.6 bn (as on 26th February).

For CYTD, FII’s remained net buyers to the tune of Rs.30.9 bn and MFs remained net buyers to the

tune of Rs.206 bn.

FII & Mutual Fund investment (Rs cr)

Source: Bloomberg

20

45

70

95

120

-20,000

-10,000

0

10,000

20,000

30,000

40,000

FII MF



Recommendation

Benchmark indices are currently trading at 17.9x /15.2x on FY19E/20E valuations. Valuations have come off from the recent highs which makes large caps a preferred play. Mid-caps after witnessing

correction are still trading at higher valuations than large caps so we do not rule out further

correction in them, if earnings falter in the coming quarters. However, we would prefer select mid-caps where strong earnings growth is likely to maintain higher valuations going forward. Key risk

to our recommendation can come from shortfall in earnings, higher interest rates, higher yields,

spike in oil prices or decline in liquidity from FIIs and domestic mutual funds. Our preference would be for companies focused on infrastructure spending (Road, railways, defence), e-way bill

implementation (Logistics, Auto, Building material etc), consumption revival & financialization of

savings (to benefit insurance companies, mutual funds and broking firms).

Preferred picks

Domestic Cyclicals / Investment oriented sectors

Sector Stocks

Automobiles Bajaj Auto, Escorts, M&M, Maruti Suzuki, Talbros Automotive

Building Material Asian Granito, Century Plyboards, Shankara Building

Capital Goods, Engineering Cummins India, Engineers India, Genus Power Infra, L&T,

MIRC Electronics, Voltamp.

Cement UltraTech Cement

Construction Dilip Buildcon, Simplex Infrastructures, Sadbhav Engineering,

PNC Infratech, Vascon Engineers

FMCG ITC

Logistics, Transportation Adani Port, Container Corp and VRL Logistics

Metals & Mining Jindal Stainless (Hisar), MOIL ltd

Oil & Gas ONGC, MRPL and Oil India

Others GHCL, Mold-tek Packing Ltd, Dollar Industries, Insecticides India

VIP Industries, Wonderla Holidays

Paints Kansai Nerolac

Shipping Shipping Corporation of India and Cochin Shipyard

Source: Kotak Securities - Private Client Research

Export oriented / Defensive sectors

Sector Stocks

IT NIIT Ltd, Quess Corp

Media DB Corp, Saregama India, TV18 Broadcast

Source: Kotak Securities - Private Client Research



Current Market Price (Rs) 52 Week H/L (Rs) Mkt Cap (Rs mn)

154 193 / 135 379359

Source: Bloomberg

Source: Bloomberg

Financials (Rs mn) FY17 FY18E FY19E

Sales 86,119 105,214 113,782

Growth (%) 18.0 22.2 8.1

EBITDA 17,617 22,391 23,684

EBITDA margin (%) 20.0 21.6 21.1

PBT 20,294 22,276 26,856

Net profit 15,476 15,639 20,491

EPS (Rs) 6.9 7.0 9.2

Growth (%) 17.7 1.1 31.0

CEPS (Rs) 7.8 8.0 10.2

Book value (Rs/share) 44.9 49.0 55.3

Dividend per share (Rs) 2.3 2.5 2.5 Source: Company

ROE (%) 16.3 14.6 17.3

ROCE (%) 15.5 13.9 16.5

Net cash (debt) 97,692 73,523 91,542

Net Working Capital (Days) (152.1) 2.7 3.0

Valuation parameters FY17 FY18E FY19E

P/E (x) 22.3 22.1 16.8

P/BV (x) 3.4 3.1 2.8

EV/Sales (x) 3.3 2.9 2.5

EV/EBITDA (x) 16.0 13.7 12.2

Price Performance (%) 1M 3M 6M

(8.8) (16.9) (10.6)

Source: Bloomberg, Company, Kotak Securities - Private Client Research Source: Company

Last report at Rs.152 on 5 February 2018

Bharat Electronics Ltd - Buy Analyst: [email protected]

Target Price (Rs)

202

Revenue mix (%)

Potential Upside (%)

30.8%

Price Performance

Share Holding Pattern (%)

Order Backlog (Rs bn)

Promoter

66.7%

FII

8.6%

DII

16.5%

Others

8.1%

0

110

220

330

440

FY14 FY15 FY16 FY17 YTDFY18

Defence88%

Civil ian12%

80

105

130

155

180 Bharat Electronics Nifty

Investment Argument

BEL is a state-owned company primarily engaged in the manufacturing of defence

electronics equipment.

Government's greater emphasis on 'Make in India' initiative in Defence sector

provides a great opportunity for BEL to enhance its indigenization efforts and to

address the opportunities in Indian Defence sector.

In the non defence business, the company is working in strategic areas like

Electronic Fuzes, Homeland Security Solutions, Smart Cities and Cyber security.

Order book of the company stands at Rs 404 bn with substantial share accounted

by the Integrated Air Command and Control System, Weapon locating radar etc.

The company is also expecting large orders from the Long range version of Akash

Missiles (7 squadron)and Long Range SAM for P17A.

We remain positive in view of the healthy order backlog, which provides revenue

visibility of 52 months. The company is not exposed to capex cycles. Moreover,

defence modernization is an irreversible process.

Risks & Concerns

Defence orders tend to get delayed due to number of approvals at various levels.

Company Background

Leader in defence electronics industry in India

Main products include radars, missile systems and telecom equipments. The company also makes AVMs.

Sector Background

Defence production is mainly dominated by the DPSUs and Ordinance factories

board of India. However, in recent years, the government is also encouraging private and foreign participation.




533 599 / 435 72386

Source: Bloomberg

Source: Capitaline

Financials (Rs mn) FY18E FY19E FY20E

Sales 23,200 28,072 34,248

Growth (%) 12.7 21.0 22.0

EBITDA 4,106 5,226 6,253

EBITDA margin (%) 17.7 18.6 18.3

PBT 5,148 6,044 6,810

Net profit 3,418 4,013 4,522

EPS (Rs) 25.1 29.5 33.2

Growth (%) 9.5 17.4 12.7

CEPS (Rs) 28.5 35.3 41.0


Dividend per share (Rs) 6.0 6.0 6.0 Source: Company, Kotak Securities - Private Client Research

ROE (%) 10.6 11.3 11.6

ROCE (%) 10.8 12.0 12.8

Net cash (debt) 27,109 26,342 26,413

Net Working Capital (Days) (97) (94) (97)

Valuation Parameters FY18E FY19E FY20E

P/E (x) 21.2 18.0 16.0

P/BV (x) 2.2 2.0 1.9

EV/Sales (x) 2.3 1.6 1.3

EV/EBITDA (x) 12.8 8.7 7.4


(1.0) (7) 4



Analyst: [email protected]

Target Price (Rs)

730

EBIDTA margin trend for COSH


37.1%

Price Performance


Estimated order book for COSH (Rs mn)

Cochin Shipyard Ltd (COSH) - Buy

Promoter

75.0%

FII

3.5%

DII

10.9%

Others

10.6%

90

95

100

105

110

115

120 Cochin Shipyard Ltd Nifty

Investment Argument

COSH has a diversified order book at Rs 130 bn which we expect to grow at 20% CAGR with orders coming from Navy, Coast guard and commercial

segment.

COSH is one of the yards empanelled with the Indian Navy and the coast guard for orders.

With improvement in commercial shipping segment, we can expect regular

flow of orders from the commercial segment.

Company is building a third dry-dock and an international ship-repair center

which would cater to the future shipbuilding and ship-repair demand

With healthy operational cash flow generation and negative working capital for the company, we estimate the BS of the company to remain strong in

near term.

The stock trades at an attractive valuation of 19x FY19E earnings which is at steep discount to bigger international yards having weak earnings profile.

Risks & Concerns

Delay in execution of large orders

Slower than expected recovery of the commercial shipping segment

Reduced allocation to navy from the defence pie

Company Background Cochin Shipyard (COSH) is a Government promoted Miniratna company,

incorporated on March 29,1972

The company caters to clients engaged in the defence sector in India and clients engaged in the commercial sector worldwide

Sector Background There are three main segments of shipbuilding including defence, commercial

and ship-repair.

Shipbuilding companies primarily operate from countries like China, Japan

and Korea

0

5

10

15

20

FY15 FY16 FY17 FY18E FY19E FY20E

0

50,000

100,000

150,000

200,000

250,000

FY17 FY18E FY19E FY20E FY21E FY22E




946 1059 / 254 129350

Source: Bloomberg

Source: Capitaline


Net sales 70,347 84,417 97,079

Growth (%) 38% 20% 15%

EBITDA 12,655 15,608 17,949

EBITDA margin (%) 18.0% 18.5% 18.5%

PBT 6,295 9,598 11,885

Net profit 5,666 7,678 8,320

EPS (Rs) 41.4 56.1 60.8

Growth (%) 57% 36% 8%

CEPS (Rs) 60.6 77.0 83.8

BV (Rs/share) 176.9 233.0 293.9

DPS(Rs) - - - Source: Company

ROE (%) 26.5 27.4 23.1

ROCE (%) 22.0 25.8 26.5

Net debt (cash) 22,000 15,840 12,010

NWC (Days) 136.6 133.6 133.6


P/E (x) 22.8 16.8 15.5

P/BV (x) 5.3 4.1 3.2

EV/Sales (x) 2.1 1.7 1.5

EV/EBITDA (x) 11.7 9.3 7.9


4.0 (3.0) 56.6




Target Price (Rs)

1217

Dilip Buildcon Ltd - Buy

Order book (%)


28.7%

Price Performance


Order book & Order inflow (Rs mn)

0

100

200

300

400

500Dilip Buildcon Ltd Nifty

Investment Argument

Ordering scenario to improve sharply in coming months: NHAI ordering is likely to be scaled up in H2FY18 with awards of nearly 5000-6500 km expected in next six months with higher share of HAM projects expected in these.

Strong order book and superior execution skill provides healthy revenue visibility: Current order book of company stands at Rs 142 bn with government projects contributing to 84% of the total order book. Current order book provides a revenue visibility for 2.5 years

Stake sale in BOT assets transforms company to a pure EPC company: Dilip Buildcon (DBL) has signed a term sheet with the Chahatwal Group Trust (Shrem Group) to divest its entire stake in 24 road BOT assets for a consideration of Rs16bn (1.05x P/BV).

Strong operating cash flows to sustain investments in upcoming projects: With strong operating margins of more than 18% and improvement expected in net working capital, we expect company to generate sufficient cash flows to sustain investments in the upcoming projects.

Lower borrowings and refinancing of interest rates to be witnessed in coming quarters: Refinancing of interest rates is likely to be witnessed in the coming quarters for the company. Debt reduction by Rs 6 bn and interest rate reduction by 100 bps is expected in next 1 year.

Risks & Concerns Lower than expected order inflow Slow pace of execution Asset heavy model to impact earnings in a downcycle

Company Background Dilip Buildcon Limited (DBL) is one of the leading private sector road-focused Engineering Procurement Construction (EPC) contractors in the country.

Sector Background Road sector presents an opportunity worth Rs 7 trn to be awarded over next 4-5 years. Sector is likely to witness incremental awards in EPC and HAM segment with continued focus of government on ramping up the award and construction.

Promoter

75%

FII

11%

MFs

5%

Others

9%

Roads,

highways,

bridges81%

Irrigation

1%

Urban

development

2%

Mining

16%

0

100000

200000

300000

400000

500000

FY14 FY15 FY16 FY17 FY18E FY19E FY20E

Closing Order book Order inflow




457 515 / 263 25919

Source: Bloomberg

Source: Capitaline


Net sales 10,052 11,558 13,267

Growth (%) 12.0 15.0 14.8

EBITDA 1,313 1,617 1,932

EBITDA margin (%) 13.1 14.0 14.6

PBT 1,060 1,381 1,679

Net profit 690 899 1,094

EPS (Rs) 12.2 15.9 19.3

Growth (%) 51.8 30.3 21.6

CEPS (Rs) 14.5 18.4 22.1

BV (Rs/share) 61.5 75.4 92.3

DPS(Rs) 1.5 2.0 2.4 Source: Company

ROE (%) 26.1 23.2 23.0

ROCE (%) 23.5 24.7 28.1

Net cash (debt) 320 (505) (248)

NWC (Days) 122 122 125


P/E (x) 37.5 28.8 23.7

P/BV (x) 7.4 6.1 5.0

EV/Sales (x) 2.5 2.3 2.0

EV/EBITDA (x) 19.5 16.3 13.5


2.3 (0.7) (4.2)




Target Price (Rs)

560

Dollar Industries Ltd - Buy

Increase in MBOs


22.5%

Price Performance


Indian Innerwear Industries (Rs bn)

90

110

130

150

170

190Dollar Industries Ltd Nifty

Investment Argument

After establishing strong position in economy and mid-premium segment with 78% revenue contribution from these, Dollar Industries Ltd (DIL) is focusing on premium and super premium category with its own brand Force NXT and JV with Pepe Jeans for

innerwear segment.

DIL is focused on increasing its distribution across region and is focusing to increase penetration in south which has low contribution of 8% to its revenue.

The company would be able to grow its business without any major capex for the next three years in existing line of business.

Implementation of GST would be a major positive for organized players as they will become more competitive

Risks & Concerns

Volatility in the raw material prices

Huge investment in JV

Competition from peers

Company Background

Dollar Industries Limited (DIL) in last 40 years of its journey, has created substantial presence in India under umbrella brand ‘Dollar’ with sub brands Big Boss, Missy,

Champion, Ultra, etc and umbrella brand ‘Force’ with sub brands Force NXT and Force Go Wear. The company has largely been present in economy and midpremium segment with

34% and 44% revenue contribution. The company’s manufacturing facilities are located at Kolkata, Tirupur, Delhi and Ludhiana. The company is managed by Mr. Vinod Kumar Gupta, Mr. Binay Kumar Gupta, Mr. Krishan Kumar Gupta and Mr. Bajrang Kumar Gupta

along with a team of professionals.

Sector Background

The size of Indian innerwear industry is ~Rs 200 bn and grew at 11% CAGR during FY10-

15. As per industry estimates, the industry is expected to reach Rs.595 bn market by 2023, entailing 13% CAGR. 50% of Industry is catered by unorganized players. The men's

innerwear market, contributes 40% and is characterized by the presence of numerous Indian and international brands. The economy segment contributes around 56% to the menswear market, while the mid-price segment makes up 30%, the remaining 14%

comes from premium and super premium segments. Premium and super premium segments is expected to grow at faster pace.

178

322

595

0

200

400

600

800

2013 2018 2023

70000

75000

80000

64000

68000

72000

76000

80000

84000

FY15 FY16 FY17

Promoter

55%

FII

3%

MFs

7%

Others

35%




393 465 / 227 28566

Source: Bloomberg

Source: Company

Financials (RS mn) FY18 FY19E FY20E

Sales 14,855 16,605 18,620

Growth (%) 9.6 11.8 12.1

EBITDA 1,485 1,910 2,327

EBITDA margin (%) 10.0 11.5 12.5

PBT 1,265 1,685 2,232

Net profit 949 1,263 1,674

EPS (Rs) 13.1 17.4 23.0

Growth (%) 1.4 33.1 32.5

CEPS (Rs) 15.3 19.8 25.4


Dividend per share (Rs) 1.1 1.2 1.3 Source: chemicals.nic.in, Company

ROE (%) 28.6 29.2 29.4

ROCE (%) 20.2 23.0 24.1

Net cash (debt) (763) (244) 344

Net Working Capital (Days) 22 29 41

Valuation Parameters FY18 FY19E FY20E

P/E (x) 30.1 22.6 17.1

P/BV (x) 7.6 5.8 4.4

EV/Sales (x) 2.0 1.7 1.5

EV/EBITDA (x) 19.7 15.1 12.1


(4.9) (9.9) 29.4

Source: Bloomberg, Company, Kotak Securities - Private Client Research Source: Company, Kotak Securities - Private Client Research

Revenu trend


34.9%

Price Performance


Revenue Mix FY17 (%)


Eveready Industries Ltd - Buy Analyst: [email protected]

Target Price (Rs)

530

Promoter

44%

FII

16%

DII

19%

Others

21%

50

100

150

200

250 Eveready Industries Nifty

Investment Argument

Sustained market leadership position with over 55% market share in batteries segment. Dominant player with over 70% market share in organized flashlight market

EIIL is all set to transform into a prominent player in Indian lighting and small

appliances industry on back of its strong household ‘Eveready’ brand

Extensive distribution network with further expanding reach through electrical outlets and e-commerce medium

High growth in revenue/PAT to flow into FY19/FY20; recovery in operating margins likely to aid to free cash flow generation

Risks & Concerns

Delays in establishing efficient distribution network in consumer apliances segment could pose threat to our investment thesis

Fluctuation in input price (mainly Zinc) in battery segment can likely have a diminishing effect on company’s margins

Company’s core battery business faces severe disruption from unorganized players and cheap Chinese imports

Company Background

EIIL became part of the Williamson Magor Group in 1993.

The Williamson Magor Group, gradually progressed to become the world's largest tea producer (McLeod Russel India Limited) and diversified into consumer goods, engineering and construction, emerging as a multi-business enterprise with a turnover of Rs. 50 Bn.

Sector Background

The Indian market for dry cell batteries is estimated at c. Rs 16 Bn by value and 2.7 billion pieces by volume

EIIL has a dominant position in Indian flashlight market, estimated at c. Rs 5.7 Bn

Consumer appliances segment has grown at an annual average of c.15% over the last decade and is expected to maintain this growth rate going ahead.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

0.0

5.0

10.0

15.0

20.0

FY16 FY17 FY18E FY19E FY20E

Revenues (Rs bn LHS) Asset Turnover x (RHS)

Batteries

60%Flashlight

15%

Lighting &

Electricals

20%

Small Home

Appliances

5%




8873 10000 / 5800 2680402

Source: Bloomberg

Source: Bloomberg

Financia ls (Rs Mn) FY18E FY19E FY20E

Sales 806,714 926,954 1,048,820

Growth (%) 18.6 14.9 13.1

EBITDA 125,406 144,216 173,628

EBITDA margin (%) 15.5 15.6 16.6

PBT 117,188 147,029 179,141

Net profit 81,446 106,596 129,877

EPS (Rs) 269.6 352.9 429.9

Growth (%) 11.0 30.9 21.8

CEPS (Rs) 361.0 450.8 539.8

BV (Rs/share) 1,376.6 1,639.1 1,978.7

Dividend / share (Rs) 75.0 75.0 75.0 Source: Company

ROE (%) 20.9 23.4 23.8

ROCE (%) 29.6 31.7 32.3

Net cash (debt) 302,987 382,612 489,702

NW Capital (Days) (17.2) (17.2) (17.1)

Valuat ion Parameters FY18E FY19E FY20E

P/E (x) 32.9 25.1 20.6

P/BV (x) 6.4 5.4 4.5

EV/Sales (x) 2.9 2.5 2.1

EV/EBITDA (x) 19.0 15.9 12.6


(6.7) 3.2 15.2


Last report at Rs.9278 on 29 January 2018

Maruti Suzuki India Ltd - Buy Analyst: [email protected]

Target Price (Rs)

10749

Market Share (%)


21.1%

Price Performance

Share Holding Pat t ern (%)

Sales Volumes (Unit s)

Promoter

56.2%FII

25.8%

DII

11.0%

Others

7.0%

0

300,000

600,000

900,000

1,200,000

1,500,000

1,800,000

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

45.9 46.5

44.7 45.3

38.4

40.1

42.1

45.0

46.8

47.4

35

40

45

50

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

50

100

150

200

250

300 Maruti Suzuki India Ltd Nifty

Investment Argument

We expect MSIL's volumes to grow at a strong pace aided by expected, recovery in rural areas, continued robust demand for recently launched

products (Baleno, Brezza), expansion of Nexa network and demand in favor

of petrol run vehicle. Furthermore facelifts, upgrades and variants of existing models will also drive sales for the company.

MSIL’s market share in the domestic passenger car market stands increased

from 47.4% in FY17 to 50.1% in FY18 (April-January). With strong presence in rural areas and dominance in the entry level car

segment, MSIL will be the key beneficiary of rural demand recovery.

In recent years, the company made substantial strides in the premium car segment. MSIL has big opportunity to gain market share in the premium

segment. Focus on premium products and scaling-up of distribution network

will translate into share of premium products in MSIL's product mix increase in a meaningful way

We expect MSIL's EBITDA margin to stay healthy.

Risks & Concerns Lower than anticipated growth will jeopardize our revenue and profit

estimates.

MSIL benefits from yen depreciation. Any unfavorable movement of yen can have significant impact on the company's profitability.

Company Background

MSIL, India's largest passenger car company, is a subsidiary of Suzuki Motor Corporation of Japan. Formed as a government owned company (Maruti

Udyog Limited), it entered into a JV with Suzuki Motor Corporation. Over the

years the company has been one the most successful player in the Indian car market.

Sector Background

India’s passenger vehicle industry sold ~3.8mn vehicles in FY17. While 80% of sales happened in the domestic market, balance 20% were exported. Top

five players account for ~82% of domestic industry sales volumes.




93 119 / 72 15546

Source: Bloomberg

Source: Capitaline


Sales 8,561 9,476 10,635

Growth (%) 1.1 10.7 12.2

EBITDA 736 1,086 1,255

EBITDA margin (%) 8.6 11.5 11.8

PBT 214 427 596

PAT 41 256 406

Sh of pft - NIIT Tech 643 769 905

Net profit 683 1,026 1,311

EPS (Rs) 4.1 6.2 7.9

Growth (%) 69.6 51.2 27.4

Book Value (Rs / Share) 52.9 57.0 62.9

Dividend per Share (Rs) 2.0 2.0 2.0

ROE (%) 1.5 7.8 9.9 Source: Company

ROCE (%) 4.9 11.0 12.4

Net cash (debt) 385 819 1679

Net working capital (Days) -7.7 -1.5 3.8


P/E (x) 22.8 15.1 11.8

P/BV (x) 1.8 1.6 1.5

EV/Sales (x) 1.9 1.6 1.3

EV/EBITDA (x) 21.7 13.9 11.3


(8.8) (5.7) (1.9)


Share of non-IT revenues in Skills & Career business (%)


27.5%

Price Performance


Revenue Breakup (%)

Last report at Rs.109 on 25 January 2018


Target Price (Rs)

119

NIIT Ltd - Accumulate

Promoter

31.8%

FII

17.3%

DII

10.6%

Others

40.3%

0

10

20

30

40

50

60

70

FY14 FY15 FY16 FY17

70

90

110

130

150NIIT Ltd Nifty

Investment Argument

NIIT is, by far, the leader in domestic Skills / Career learning businesses. It is also a significant player in global Managed Training Services business.

The recent performance of NIIT inspires optimism. The initiatives taken by the new

management have led to consistent improvement in revenue growth and earlier-than-expected benefits on margins over the past six – seven quarters.

Company reported strong Q3FY18 numbers in a seasonally weak quarter driven

by strong traction in CLS business.Revenue visibility too improved to USD 199mn.IP led asset light school business remains strong and reported growth of

16% YoY.

NIIT Ltd holds 24% stake in NIIT Technologies. If monetized, it can bring in

sizeable cash into the company. We are optimistic about the medium term growth in CLS as well as on the S&C

business.

Risks & Concerns

A slower-than-expected recovery in the global economy could impact revenue growth of NIIT.

Steep rupee appreciation v/s major global currencies may impact the financials of

NIIT.

Company Background

NIIT Ltd is in the business of providing training with a whole gamut of content,

delivery and educational platforms to corporates, individuals and schools. The

company has three main business segments — corporate learning group (CLG), skills & careers group (SCG) and school learning group (SLG). The company’s

learning and talent development solutions have received widespread recognition

globally. It has been ranked among the top 20 training outsourcing companies for

the 8th consecutive year by Training Industry Inc.

Sector Background

Indian companies provide services to several Fortune 500 companies.

Banking & Financial services sector accounts for the largest revenue share and USA is the largest geography for the industry

0

10

20

30

40

50

FY14 FY15 FY16 FY17



Talbros Automotive Components Ltd - Buy


288 354 / 122 3555

Source: Bloomberg

Source: Bloomberg


Sales 3,833 4,525 5,093

Growth (%) (10.5) 18.1 12.6

EBITDA 391 473 582

EBITDA margin (%) 10.2 10.5 11.4

PBT 179 225 329

Net profit 179 249 343

Adjusted EPS (Rs) 14.5 20.1 27.8

Growth (%) 13.8 38.9 37.9

CEPS (Rs) 25.9 32.3 40.8

BV (Rs/share) 126.5 144.8 170.8

Dividend / share (Rs) 1.5 1.5 1.5 Source: Company, Kotak Securities - Private Client Research;

ROE (%) 12.0 14.8 17.6 * as per Indian GAAP till FY17, Ind As from FY18 onwards

ROCE (%) 11.0 12.8 15.0

Net cash (debt) (1,063) (1,058) (867)

NW Capital (Days) 95.2 96.9 94.7


P/E (x) 19.9 14.3 10.4

P/BV (x) 2.3 2.0 1.7

EV/Sales (x) 1.2 1.0 0.9

EV/EBITDA (x) 11.8 9.8 7.6


(2.1) 1.8 48.6




Target Price (Rs)

389

EBITDA margin (%)


35.1%

Stock Performance


Revenues (Rs mn)

Promoter

56.7%

DII

2.0%

Others

41.3%

0

1,000

2,000

3,000

4,000

5,000

6,000

FY13 FY14 FY15 FY16 FY17 FY18E* FY19E* FY20E*

Gasket

57%

Forging

19%

Nippon

Leakless

Talbros JV10%

Magneti

Marelli Talbros

JV10%

Talbros

Marugo

Rubber JV4%

70

120

170

220

270

320

370 Talbros Automotive Components Ltd Nifty

Investment Argument

Company enjoys market leadership position in the two-wheeler and the commercial vehicle segment. In the passenger vehicle segment. Company believes that post coated gasket and heat shields can help them make inroad in the passenger vehicle segment.

Forging business, that accounts for 19% of consolidated revenues is witnessing high growth. TBA received a large order of Rs1.75bn (spanning over 7 years) from BMW. Company is adding two more presses and the same is expected to be operational by January 2018.

TBA has three joint ventures (accounting for ~24% of consolidated revenues). Strong volume growth from Honda two-wheeler, Hero MotoCorp and Maruti Suzuki and new order wins is expected to drive revenue.

Operating leverage from expected robust growth in revenues, substitution of imported raw material, foray into high margin products and internal efficiencies is expected to help the company expand margins in the coming years.

Risks & Concerns

Slowdown in domestic automobile demand

Introduction of electric vehicle

Company Background

Talbros Automotive Components Ltd (TBA) was established in the year 1956 and is into manufacturing of gaskets & heat shields, forgings, suspension systems, anti-vibration components and hoses. TBA is a market leader in the gasket business.

Sector Background

Auto ancillary sector will be the key beneficiary of expected revival in the domestic automobile demand.




63 67 / 33 107405

Source: Bloomberg

Source: Bloomberg

Financia ls (Rs mn) FY18E FY19E FY20E

Sales 10,271 12,087 14,039

Growth (%) 4.9 17.7 16.1

EBITDA 554 1,866 3,277

EBITDA margin (%) 5.4 15.4 23.3

PBT 655 2,775 5,369

Net profit 750 2,549 4,584

EPS (Rs) 0.4 1.5 2.7

Growth (%) 293.0 240.1 79.7

CEPS (Rs) 0.8 1.9 3.1


Dividend per share (Rs) - - - Source: BARC, Note: Imp. Stands for impressions in the headline above

ROE (%) 2.2 7.2 11.8

ROCE (%) 2.2 7.3 11.8

Net cash (debt) (2,207) (247) 3,689

Net Working Capital (Days) 129 138 144


P/E (x) 143.1 42.1 23.4

P/BV (x) 3.1 2.9 2.6

EV/Sales (x) NM NM NM

EV/EBITDA (x) NM NM NM


1.3 11.6 64.2

Source: Bloomberg, Company, Kotak Securities - Private Client Research Source: Kotak Securities - Private Client Researh

Business Viewership t rending st rong (imp, '000)


27.7%

Price Performance


Top 10 Hindi GEC (Urban) Week 7, 2018 (Imp., mn)


TV18 Broadcast Ltd - Buy Analyst: [email protected]

Target Price (Rs)

80

Promoter

61.8%FII

11.2%

DII

5.5%

Others

21.6%

60

90

120

150

180 TV18 Broadcast Ltd Nifty

Investment Argument

TV18 owns one of the most attractive bouquets in the Indian TV Broadcasting industry (business news operations, Hindi/ English/ Regional news operations,

51% ownership in entertainment/ infotainment operations via JVs).

Strong performance in entertainment channels’ ratings points to stable/ high earnings growth: Colors, the flagship channel of Viacom18, has emerged as

the #1 Hindi GEC in several weeks of 2016-18; Hindi movie channel has also

been able to register top 5 rankings, regional channels too bringing in strong performance. IPO pipeline being strong is a positive signal for business news

performance. Additionally, medium-term earnings of news channels shall

benefit from election advertising. We expect strong earnings growth ahead, with EBITDA rising ~6X through FY18-FY20E.

The uncertainty about 4QFY18 results has reduced following the release and

success of “Padmavat”, and mid-quarter launch of the company’s Tamil GEC.

Valuations are reasonable, at 22X FY20E PER (c.23% discount to Zee

Entertainment). Our price target implies PER of 30X FY20E.

Risks & Concerns

Ratings performance of key channels is the key risk. Regulatory risks around

tariff order.

Company Background

TV18 Broadcast is amongst the largest TV broadcasting companies in India, with presence in news as well as entertainment.

Sector Background

Indian TV Broadcasting is a Rs 540 Bn industry, with Rs 175 Bn in advertising

revenues. The sector is positively exposed to digital addressability, which

should bring benefits to broadcasters/ platform providers.

-

150

300

450

Colors STAR

Bharat

STAR

Plus

Zee TV Sony

Ent.

Sony

SAB

Sony

Pal

Zee

Anmol

Star

Utsav

Rishtey

0

250

500

750

1000




330 356 / 218 1225745

Source: Bloomberg

Source: Bloomberg

Financia ls (Rs mn) FY18E FY19E FY20E

Sales 887,311 1,066,977 1,173,696

Growth (%) 22.9 20.2 10.0

EBITDA 242,584 331,852 374,377

EBITDA margin (%) 27.3 31.1 31.9

PBT 159,443 253,276 299,795

Net profit 84,261 144,257 171,400

EPS (Rs) 22.7 38.8 46.1

Growth (%) 15.2 70.9 18.8

CEPS (Rs) 38.8 55.4 64.5

BV (Rs/share) 176.4 196.1 223.9

Dividend per share (Rs) 6.7 11.5 13.8 Source: Company, Kotak Securities - Private Client Research

ROE (%) 13.4 20.9 22.0

ROCE (%) 8.6 12.8 13.5

Net cash (debt) (194,788) (142,586) (16,885)


P/E (x) 14.5 8.5 7.2

P/BV (x) 1.9 1.7 1.5

EV/Sales (x) 1.6 1.3 1.2

EV/EBITDA (x) 5.8 4.3 4.0


(3.1) 11.6 6.7


Vedanta Ltd - Buy Analyst: [email protected]

Target Price (Rs)

445

FCF to remain st rong (Rs Mn)


35.0%

Price Performance


Higher zinc and aluminium vo lume to drive earnings

Promoter

50.14%

FII

17.82%

DII

13.28%

Others

18.76%

50

150

250

350

450 Vedanta Ltd Nifty

Investment Argument We expect zinc earnings to improve on the back of increase in zinc volume to 1.6

mn tons in FY2020E from 1.1 mn tons in FY2018E led by commissioning of

underground mines in India and the Gamsberg project in South Africa. Beyond

FY2020E, Zinc India will see its output rise by another 25% (to 1.5 mtpa) from its

next phase of expansion.

We expect strong earnings growth from aluminum operations led by (1) volumes

increasing by 32% over the next two years to 2.06 mn tons (in FY2020E).

Aluminum EBITDA (Balco & Jharsuguda) to increase to Rs59.8 bn, Rs66.5 bn in

FY2019E, FY2020E from Rs22.6 bn in FY2018E.

The management has guided for a sharp increase in oil and gas gross production

volumes to 220-250 kb/d in FY2019 and 275-300 kb/d in FY2020E from 185 kb/d

currently. Cairn is planning to incur gross capex of US$1.1 bn on projects, which

will yield estimated ultimate recovery of 218 mn boe. The company expects these

projects to generate an IRR over 20% even at Dated Brent crude price of

US$40/bbl.

The company will generate strong free cash flows on the back of higher metal

volumes and deleveraging is expected to play out despite healthy dividend and

capex.

Vedanta’s key business segments of zinc and aluminum will see strong growth in earnings led by higher volumes and strong pricing outlook.

Risks & Concerns

Any volatility in metal and oil and gas prices can affect the company’s earnings

going ahead. Delay in capacity ramp up can be a concern for the company. Company Background

Vedanta Ltd. is the Indian subsidiary of Vedanta Resources Plc., a London-listed company. Vedanta is a diversified natural resources company, whose business primarily involves producing oil and gas, zinc-lead-silver, copper, iron ore, aluminum and commercial power. The company has a presence across India, South Africa, Namibia, Australia and Ireland. The merger of Cairn India and Vedanta has recently become effective. This merger consolidates Vedanta’s position as one of the world’s largest diversified natural resources companies, with world-class, low cost assets in metals and mining and oil and gas

0

50,000

100,000

150,000

200,000


0

500,000

1,000,000

1,500,000

2,000,000

2,500,000


Zinc (tonnes) Aluminium (tonnes)

FEBRUARY 2, 2018

PRIVATE CLIENT RESEARCH 1-MONTH PORTFOLIO

1- MONTH PORTFOLIO – FEBRUARY 2018

NIFTY: 11017 This was the portfolio which we had recommended for February 2018. The recommendation in this portfolio now stands closed. Stock M Cap Current (Rs mn) Price PE (x) Comment (Rs) FY18E FY19E

ITC 3,354,417 279 29.7 26.3 Reassuring signals from the government, as excise duty hike well below past five years' average Discount to average FMCG multiples provides protection from downsides

ONGC 2,443,403 190 10.8 9.2 Higher crude oil price, weak currency, expected higher

domestic gas price and increase in production are

key triggers for the stock

Dilip Buildcon 129,658 948 23.2 17.3 Well positioned to benefit from upcoming road projects Efficient player with timely execution, strong margins and strong balance sheet available at attractive valuations

Maharashtra Seamless 34,237 511 18.4 13.2 We believe that MSL valuations can get rerated on back of 1) recovery in demand for seamless pipes in the domestic/international market and 2) imposition of anti dumping duty on Chinese imports would lead to demand shifting towards domestic industry and 3) limited competition from domestic players who are struggling with their highly leveraged balance sheets

Dollar Industries 24,438 431 36.5 29.1 The demand scenario has improved post GST and is getting back to normal. The company is exploring option to grow in women innerwear segment through inorganic route.

MoIL 63,574 239 14.3 12.3 The largest producer of manganese ore in India, accounting for ~50% of the total domestic production. A debt free company with a robust balance sheet and a healthy liquidity position.

VRL Logistics Ltd 38,942 427 31.2 25.1 VRL is a niche player in the transport industry The GST Act and Motor Vehicle Act is expected to improve business prospects of the company with full benefits accruing from FY19E.

L&T 2,004,767 1,433 27.2 23.6 Order intake which was sluggish in earlier quarters bounced back strongly by 38% y-o-y Given the strong recovery in overall performance in Q3FY18, we believe that the company can achieve its revenue, margin and order intake guidances for FY18.

Saregama India 11,240 646 41.7 25.1 Sales of Carvaan in 2QFY18, point to strong revenue growth in near-term; B2B growth to strengthen on cheaper data/ higher consumption of online music High near-term valuations sustainable given 100%+ CAGR in earnings over FY17-FY20E

Talbros Automotive 3,593 291 22.0 14.5 Expected strong growth in automobile demand, new products/ technology introduction, new order wins and focus on exports is expected to drive company’s revenue growth. EBITDA margin is expected to witness gradual improvement

Source : Kotak Securities - Private Client research

MARCH 1, 2018

PRIVATE CLIENT RESEARCH 1-MONTH PORTFOLIO

1- MONTH PORTFOLIO – MARCH 2018

NIFTY: 10493

We expect the following stocks in 1 month portfolio to outperform the benchmark index Nifty in the month of March 2018. We rate these stocks as “Short Term Buys” with a time frame of 1 month.

Stock M Cap Current (Rs mn) Price PE (x) Comment

(Rs) FY18E FY19E

ITC 3,186,095 265 29.1 25.5 Reassuring signals from the government, as excise duty hikewell below past five years' average

Discount to average FMCG multiples provides protectionfrom downsides

ONGC 2,412,604 188 9.9 9.0 Higher crude oil price, weak currency, expected higher

domestic gas price and increase in production are the

key triggers for the stock

Dilip Buildcon 129,111 940 23.1 17.2 Well positioned to benefit from upcoming road projects Efficient player with timely execution, strong margins and

strong balance sheet available at attractive valuations

Maharashtra Seamless 31,155 467 16.7 12.0 We believe that MSL valuations can get rerated on back of1) recovery in demand for seamless pipes in thedomestic/international market and 2) imposition of antidumping duty on Chinese imports would lead to demandshifting towards domestic industry and 3) limitedcompetition from domestic players who are struggling withtheir highly leveraged balance sheets

Dollar Industries 25,912 457 37.5 28.7 The demand scenario has improved post GST and is gettingback to normal.

The company is exploring option to grow in womeninnerwear segment through inorganic route.

MoIL 60,116 221 14.5 13.5 The largest producer of manganese ore in India, accountingfor ~50% of the total domestic production.A debt free company with a robust balance sheet and ahealthy liquidity position.

Adani Port and SEZ (APZ) 841,313 409 23.0 19.1 APZ has port assets in all coastal states, catering to allsegments with a gross capacity of ~300 mn tonnes

We estimate the company to report 11 % volume CAGRover FY17 to FY20E, sustain the current level of EBIDTAmargin and further improve its balance – sheet

Stock available at inexpensive valuation

Bharat Electronics Ltd 378,994 154 22.0 16.7 Strong order book

Government focus on defence and large defence orders in

pipeline

Saregama India 12,250 704 45.4 27.4 Sales of Carvaan in 2QFY18, point to strong revenue growthin near-term; B2B growth to strengthen on cheaper data/higher consumption of online music

High near-term valuations sustainable given 100%+ CAGRin earnings over FY17-FY20E

Talbros Automotive 3,556 290 19.9 14.3 Expected strong growth in automobile demand, newproducts/ technology introduction, new order wins andfocus on exports is expected to drive company’s revenuegrowth.

EBITDA margin is expected to witness gradual improvement

Source : Kotak Securities - Private Client research



ONE MONTH MODEL PORTFOLIO PERFORMANCE

PF returns vs Nifty Returns and outperformance of portfolio vis-à-vis Nifty

Graph 1 depicts the monthly returns of the portfolio vs monthly returns of Nifty and its outperformance

PF monthly performance vs Nifty monthly performance

Source: Kotak Securities – Private Client Research, NSE

Graph 2 depicts the performance of monthly, 3 monthly, 6 monthly and yearly basis and

corresponding outperformance. 3 monthly PF returns are calculated by adding the returns of last

three months, 6 monthly PF returns are calculated by adding the returns of last six months, 1 yearly PF returns are calculated by adding the returns of last 12 months. Nifty returns for the same periods

have been calculated by using the actual opening and closing value for the said period such as

monthly, 3 monthly, 6 monthly and yearly.

PF performance vs Nifty performance

Source: Kotak Securities – Private Client Research, NSE

-7.7

-0.8

5.7

1.971.03

5.2

-2.8

-0.1

1.661

-0.1

8.7

0.16

5.95

2.93

-0.8

-4.65

-0.48

4.583.73 3.31

1.42

3.41

-1.04

5.84

-1.58 -1.30

5.58

-1.16

2.98

4.71

-0.35

-8.00

-6.00

-4.00

-2.00

0.00

2.00

4.00

6.00

-12

-8

-4

0

4

8

12

One M PF Nifty returns Outperformance

-0.8

8.1

16.8

22.8

-0.4

2.6

5.8

18.2

-0.4

5.5

11.0

4.7

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

One month 3 month 6 month 1 year

PF

Nifty

Outperformance



RATING SCALE Definitions of ratings

BUY – We expect the stock to deliver more than 12% returns over the next 12 months

ACCUMULATE – We expect the stock to deliver 5% - 12% returns over the next 12 months

REDUCE – We expect the stock to deliver 0% - 5% returns over the next 12 months

SELL – We expect the stock to deliver negative returns over the next 12 months

NR – Not Rated. Kotak Securities is not assigning any rating or price target to the stock. The report has been prepared for

information purposes only.

RS – Rating Suspended. Kotak Securities has suspended the investment rating and price target for this stock, either because there

is not a Sufficient fundamental basis for determining, or there are legal, regulatory or policy constraints around publishing,

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.

NOTE – Our target prices are with a 9-month perspective. Returns stated in the rating scale are our internal benchmark.

Rating scale for 1 month portfolio

Benchmark – Nifty

Time horizon – 1 month

Short term buys – Stocks expected to outperform the benchmark Nifty in the said time horizon

FUNDAMENTAL RESEARCH TEAM

Sanjeev Zarbade Ruchir Khare Amit Agarwal Nipun Gupta

Capital Goods, Engineering Capital Goods, Engineering Logistics, Paints, Transportation Information Technology

[email protected] [email protected] [email protected] [email protected] +91 22 6218 6424 +91 22 6218 6431 +91 22 6218 6439 +91 22 6218 6433

Teena Virmani Ritwik Rai Jatin Damania K. Kathirvelu

Construction, Cement FMCG, Media Metals & Mining Production

[email protected] [email protected] [email protected] [email protected]+91 22 6218 6432 +91 22 6218 6426 +91 22 6218 6440 +91 22 6218 6427

Arun Agarwal Sumit Pokharna Pankaj Kumar

Auto & Auto Ancillary Oil and Gas Midcap

[email protected] [email protected] [email protected] +91 22 6218 6443 +91 22 6218 6438 +91 22 6218 6434

TECHNICAL RESEARCH TEAM

Shrikant Chouhan Amol Athawale

[email protected] [email protected] 91 22 6218 5408 +91 20 6620 3350

DERIVATIVES RESEARCH TEAM

Sahaj Agrawal Malay Gandhi Prashanth Lalu Prasenjit Biswas, CMT [email protected] [email protected] [email protected] [email protected]

+91 79 6607 2231 +91 22 6218 6420 +91 22 6218 5497 +91 33 6625 9810

mailto:[email protected]


















Disclosure/Disclaimer Kotak Securities Limited established in 1994, is a subsidiary of Kotak Mahindra Bank Limited. Kotak Securities is one of India's largest brokerage and distribution house.

Kotak Securities Limited is a corporate trading and clearing member of Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited (NSE), Metropolitan Stock

Exchange of India Limited (MSE). 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.

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