market snapshot today’s top research...
TRANSCRIPT
8 May 2020
Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Research Team ([email protected])
Equities - India Close Chg .% CYTD.%
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Commodities Close Chg .% CYTD.%
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Gold ($/OZ) 1,716 1.8 13.1
Cu (US$/MT) 5,243 1.5 -14.7
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Currency Close Chg .% CYTD.%
USD/INR 75.8 0.0 6.1
USD/EUR 1.1 0.4 -3.4
USD/JPY 106.3 0.2 -2.1
YIELD (%) Close 1MChg CYTDchg
10 Yrs G-Sec 6.0 0.00 -0.5
10 Yrs AAA Corp 7.4 0.00 -0.2
Flows (USD b) 7-May MTD CYTD
FIIs 2.52 2.35 -6.80
DIIs 0.50 0.20 9.73
Volumes (INRb) 7-May MTD* CYTD*
Cash 786 577 464
F&O 22,799 13,679 14,449
Note: *Average
Today’s top research Idea Market snapshot
Chart of the Day: Automobiles (Dislocated prices reflect near-term disruption)
Automobiles: Dislocated prices reflect near-term disruption While 1QFY21 is expected to be a wash-out, demand recovery should happen
around the festive season (Sep’20 onwards).
We estimate FY21E volumes for 2Ws/PVs/CVs/Tractors to decline
10%/6%/13%/0%. In India, we see limited scope for auto-focused incentives,
and hence, see low probability of 'V' shaped recovery.
Thus, we expect three opportunities to emerge from this adversity: (a)
possible reset of global automotive supply chain, (b) vendor consolidation
and M&As, and (c) shift from public to private transport.
We do see value emerging across our auto coverage universe as reflected by
the substantial moderation in implied terminal growth rates.
We prefer stocks that offer higher visibility of demand recovery, better
competitive positioning, scope of higher operating leverage and strong
balance sheet.
EIM and MSIL are our top large-caps picks. Among mid-caps, we prefer ENDU.
Cos/Sector Key Highlights
Automobiles Dislocated prices reflect near-term disruption
HCL Technologies Good execution; Realistic outlook
Hindalco Novelis’ strong performance continues
RBL Bank Asset quality provides a breather, but credit cost in Retail remains under watch
Cyient Execution challenges remain; Outlook weak
Technology Cognizant’s commentary echoes that of Indian IT
Expert Speak ECONOMY: Insights from interaction with India’s Chief Economic Advisor
Identifying companies with dislocation between business fundamentals and valuations
Source: MOFSL
Research covered
8 May 2020 2
UP govt to exempt businesses from all, but three labour laws, for 3 years The Uttar Pradesh government has approved an ordinance exempting businesses from the purview of almost all labour laws for the next three years in a bid to provide a fillip to investments affected by the novel coronavirus in the state…
US senators ask Trump to suspend H-1B for engineers; ease rules for doctors, nurses to fight Covid-19 Four US Senators have urged President Donald Trump to suspend all non-immigrant work permits for at least a year or till employment levels return to normal. They have also asked for the suspension of the Optional Practical Training (OPT) programme which lets foreign students in science, technology, engineering and mathematics (STEM) work in the United States for up to three years after graduating. In 2019, over 223,000 people had their OPTs approved or extended…
20% of auto retailers open shutters on lockdown relaxation; witness muted walkins and enquiries After a 40-day lockdown and suffering an estimated turnover loss of more than Rs 55,000 crore, the bleeding automotive retail chain is crawling back to work. About 20% of the auto retail network, or 3,500 outlets, opened for business this week, with one-third staff to comply with social-distancing norms.…
Will bring vehicle scrappage policy at the earliest, says Gadkari Road transport and highways minister Nitin Gadkari on Thursday said the ministry is pursuing the long-delayed vehicle scrapping policy to support the domestic automobile industry amid the covid-19 pandemic. “I have been trying to pursue the scrapping policy for the last two years...
Government fast-tracks new definition of MSMEs The government is fast-tracking the move to amend the definition of micro, small and medium enterprises (MSMEs) to allow these entities to grow in size. The plan, which has been in the works for months, is likely to be part of the stimulus package, that is expected to be announced shortly…
SEBI, AMFI plan to deepen debt market The Association of Mutual Funds in India plans to work with capital market regulator SEBI to deepen debt markets to improve investor protection and participation. Last October, SEBI in consultation with AMFI and Mutual Fund Advisory Committee had proposed calibrated reduction in limits for investment in unlisted securities…
New chemical accident rules soon to prevent Vizag like accidents With several industrial accidents in recent past highlighting gaps, the government is in the last leg of finalising the amendment to chemical accident rules to minimise disasters such as the one that happened at Visakhapatnam polymer factory on Thursday…
Kindly click on textbox for the detailed news link
In the news today
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8 May 2020 3
Dislocated prices reflect near-term disruption Expect demand recovery from 3QFY21 driven by festive season While 1QFY21 is expected to be a wash-out, demand recovery should happen around the
festive season (Sep’20 onwards). Thus, we expect three opportunities to emerge from this
adversity: (a) possible reset of global automotive supply chain, (b) vendor consolidation
and M&As, and (c) shift from public to private transport. We do see value emerging across
our auto coverage universe as reflected by the substantial moderation in implied terminal
growth rates. We prefer stocks that offer higher visibility of demand recovery, better
competitive positioning, scope of higher operating leverage and strong balance sheet. EIM
and MSIL are our top large-caps picks. Among mid-caps, we prefer ENDU.
1QFY21 to be a wash-out…
With virtually zero sales in Apr’20 and continued weakness in May-Jun'20, we
expect 1QFY21 to be a complete wash-out. We estimate 1QFY21 volumes for
2Ws/PVs/CVs/tractors to decline 57%/55%/74%/38%.
Cost structure of OEMs is variable cost oriented due to higher outsourcing,
whereas component players have higher fixed cost structure, particularly for
companies with lesser dependence on the replacement market.
In OEMs, TTMT, EIM and AL have higher fixed cost. In components, MSS, MACA,
BOS and BHFC have higher operating leverage.
While balance sheet for auto OEMs (excl. TTMT) is strong with net cash, auto
ancillaries are a mixed bag with MSS, BHFC, CEAT and MACA having net debt.
…production ramp-up to take 3-6 months after lockdown is lifted…
Indian OEMs operate primarily out of nine states, of which Maharashtra, Tamil
Nadu, Haryana, Karnataka and Gujarat are major states. Within these states,
major clusters with developed ecosystems are in Pune, Delhi NCR, Chennai and
Bengaluru. All these major automotive clusters are listed as hotspots (Red
Zone), implying gradual normalization of production.
Import content in the Indian automotive industry should range between 15-20%
for key OEMs. Large part of these imports is from China (~27% of imports), EU
incl. the UK (~23%), South Korea (~10%), Japan (~9%) and the US (~7%).
While China is returning to normalcy in terms of production, we expect impact
on imports from EU and the US to be felt in May-Jun'20.
…while earliest demand recovery expected around festive season (Sep’20)
In our base case, we are expecting 'U' shaped demand recovery for 2Ws and PVs
from Sep-Oct'20 led by festive season demand pick-up. We estimate FY21E
volumes for 2Ws/PVs/CVs/Tractors to decline 10%/6%/13%/0%.
The pace of recovery would depend on several factors such as (a) time taken to
return to normalcy, (b) stimulus from the government, and (c) extent of
job/income losses. In India, we see limited scope for auto-focused incentives, and hence, see low
probability of 'V' shaped recovery.
Sector Update | 7 May 2020
Automobiles
Reverse DCF suggests moderation in implied terminal growth
Implied
Terminal growth (%)
Bajaj Auto 4.1
Hero MotoCorp 4.9
TVS Motor 4.0
Eicher Motors 3.2
Maruti 4.6
M&M (incl MVML) 3.6
Tata Motors -0.8
Ashok Leyland 1.5
Escorts 4.8
Bharat Forge 2.0
Exide Industries 4.1
Amara Raja 6.1
BOSCH 7.9
Endurance Tech 4.1
Motherson Sumi -4.2
CEAT 3.6
65
15
15
2
80
17
China India
Auto Parts Tyres Total
India can gain from de-risking of auto global supply chain from China (Exports, USD b)
“There is a good reason to believe that people
who were availing shared mobility because of
affordability will now avoid public transport
and therefore look to buy a car. But it is important
to keep in mind that affordability will play a big
factor.”
Vikas Jain, AVP, Head
8 May 2020 4
Opportunities in adversity – 3 prospects due to pandemic
Reset of automotive supply chain with de-risking from China: China is one of
the critical suppliers in the global automotive supply chain with exports of
~USD80b (incl. tyres). COVID-19 would further influence the changing geo-
political equations and enhanced focus toward diversifying away from China.
We believe India can benefit from this shift though it needs to be competitive
and requires an enabling policy framework.
M&A opportunities as weaker players exit: History suggests that such a crisis
could provide attractive opportunities, particularly in the component space, as
OEMs would avoid disruption by weeding out weaker suppliers.
Shift from public to private transports: Initial response from countries like
China is changing consumer preference toward private transportation. We
believe this could be a transitory benefit even in India.
Framework for identifying winners
Owing to the several moving parts and uncertainties, we have designed a
framework to identify companies that are relatively better positioned v/s peers.
We evaluate OEMs on four parameters – (a) pace of demand recovery, (b)
competitive intensity, (c) margin drivers, and (d) balance sheet strength – and
MSIL, EIM, BJAUT and ESC appear best positioned on this framework.
For Auto Component players, we include two more parameters – global
exposure and risk of disruption. In the component space, our framework
identifies ENDU and CEAT as better positioned component players.
What are current valuations reflecting?
For all auto companies, FY21 is contributing <5% to the DCF-based fair value.
This compares with 20-58% correction in auto stock prices in CY20YTD.
We do see value emerging as is reflected in the substantially lower embedded
growth expectations with implied terminal growth of <5% for most companies.
When we compare damage to valuations (PB as proxy) as against damage to
business (RoE as proxy), EXID and BOS stand out favorably.
Valuation and view
The COVID-19 pandemic has not only put brakes on the initial signs of recovery
seen in 2Ws/PVs, but has also brought in uncertainty considering the several
unknowns associated with its impact. This potentially deepens the impact of BS6
related price increase on FY21 demand.
Valuations appear attractive across companies, but given the uncertain macro
environment and threat of the possible prolonged impact of Coronavirus, we
prefer stocks offering higher visibility of demand recovery, better competitive
positioning, scope of higher operating leverage and strong balance sheet.
EIM and MSIL are our top large-caps picks. Among mid-caps, we prefer ENDU.
8 May 2020 5
Estimate change TP change Rating change
Bloomberg HCLT IN
Equity Shares (m) 2,721
M.Cap.(INRb)/(USDb) 1388.9 / 18.6
52-Week Range (INR) 624 / 376
1, 6, 12 Rel. Per (%) 9/12/9
12M Avg Val (INR M) 2223
Financials & Valuations (INR b)
Y/E Mar 2020 2021E 2022E
Sales 707 732 831
EBIT Margin (%) 19.6 18.6 19.6
PAT 111 109 130
EPS (INR) 41.0 40.5 48.3
EPS Gr. (%) 11.3 (1.1) 19.1
BV/Sh. (INR) 179 222 264
Ratios
RoE (%) 24.5 20.2 19.8
RoCE (%) 18.7 14.7 15.1
Payout (%) 19.5 19.7 16.6
Valuations
P/E (x) 12.5 12.6 10.6
P/BV (x) 2.9 2.3 1.9
EV/EBITDA (x) 7.7 7.4 5.7
Div Yield (%) 1.6 1.6 1.6
Shareholding pattern (%)
As On Dec-19 Sep-19 Dec-18
Promoter 60.0 60.0 60.0
DII 8.5 8.6 8.2
FII 27.7 28.0 28.3
Others 3.9 3.4 3.5
FII Includes depository receipts
CMP: INR512 TP: INR615 (+20%) Buy
Good execution; Realistic outlook Order book growth was encouraging HCLT’s good execution despite the COVID-19 disruption in Mar’20 was
impressive. Strong growth in Mode-2 (~7% QoQ, CC) and acquired IBM
products reaching anticipated revenue run-rate (USD150-160m) were key
positives. As expected, the company’s near-term outlook was cautious given
the heightened uncertainty around demand, pricing and payment terms due
to COVID-19. However, it is encouraging to note the healthy increase in
order book (+12% YoY) and that supply-side issues are largely under control.
We plan to keenly monitor the impact of strong cloud adoption on the IMS
segment (~37% of revenue) and discretionary spending patterns in ER&D.
Our estimates remain largely the same over FY20-22E. Maintain Buy as we
expect HCLT to better navigate the current crisis and emerge stronger on the
back of expected increase in enterprise demand for digital services.
Minimal impact due to COVID-19 in Mar’20
In 4QFY20, Revenue (USD) / EBIT (INR)/PAT increased 12%/28%/23% YoY
(v/s est. 12%/21%/14% YoY). Organic/Inorganic revenue grew 6%/7.5% (YoY,
CC) in the quarter.
Strong growth in Mode-2 (+7.1% QoQ, CC) aided the company in reporting
industry leading revenue growth during the quarter (0.8% QoQ, CC).
Revenues from Mode-1 and Mode-3 were largely stable.
Across geographies, revenue remained stable despite the COVID-19 crisis.
Americas (+1.3% QoQ, CC) and RoW (+0.9% QoQ, CC) grew while Europe
showed an insignificant decline.
Across service lines, IT and Business services grew 1.6% QoQ, largely driven
by digital offerings. Given constraints like accessibility of labs in a Work from
Home (WFH) situation, ER&D declined 1.8% QoQ.
EBIT margin at 20.9% (expansion of ~60bp QoQ) was ~100bp higher than our
expectations. Key movers were (a) one-off impact in Mode-2, (b) increase in
amortization, (c) currency, and (d) productivity in IT services.
Cautious outlook and commentary
In line with our expectations, the company suspended the practice of
providing revenue growth/EBIT margin guidance amidst the heightened
uncertainty. Management does expect near-term impact due to COVID-19.
The company expects some impact on volume-based billing as few clients
have shut plants and put employees on furlough. Some deferral of
discretionary spends in B2B clients and delay in decision making on new
projects is anticipated.
Management has indicated that order booking in Mar’20 was the strongest
in FY20. Comparatively, order book increased 12% YoY at the beginning of
FY21. Deal pipeline is healthier now (v/s end-Dec’19). Digital and IT Services
continue to see traction in transformation, cloud adoption, workplace,
security, etc.
7 May 2020
4QFY20 Results Update | Sector: Technology
HCL Technologies
8 May 2020 6
HCLT expects ER&D segment to witness a dip in the coming quarters due to
weakness in Auto and Industrial Aero segments.
Management expects the impact of COVID-19 to be relatively lower on the
products and platforms segment (v/s services business).
Industrial, Auto, Aero, Entertainment and non-essential Retail have witnessed
heavy impact due to COVID-19. While BFSI and Telecom verticals saw lower
impact, Technology Services and Life Sciences segments have been fairly
insulated and witnessed strong traction. Management has also indicated that
there are pockets of strong demand in weak verticals and weak demand in
verticals that are perceived to be strong.
Valuation and view – Subdued multiples offer margin of safety
HCLT’s exposure to deeply troubled verticals (e.g. Energy, Travel,
Transportation, Hospitality, Retail, etc.) is lower than peers. In addition, higher
exposure to IMS (~37% of revenue) comprising larger share of non-discretionary
spends offers better resilience to its portfolio in the current context. Besides,
the company has higher exposure to Financial Services, Technology Services and
Manufacturing where we anticipate an uptick in IT spends in a post COVID-19
world.
However, the company’s high exposure to ER&D (~16% of revenue) is a key
monitorable. The discretionary nature of projects and supply-side challenges
make us cautious on this segment. In addition, we would keenly monitor the
impact of strong cloud adoption on IMS (~37% of revenue).
We expect HCLT to better navigate the current crisis and emerge stronger on
back of expected increase in enterprise demand for digital services. Our
confidence partly stems from the historical track record of the company in
adapting to multiple business challenges and technology change cycles. The
stock is currently trading at ~12x on depressed FY21E earnings. Our target price
is based on ~13x FY22E EPS.
Quarterly Performance
(INR b)
Y/E March FY19 FY20 FY19 FY20 Est. Var.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 4QFY20 (% / bp)
Revenue (USD m) 2,055 2,099 2,202 2,278 2,364 2,486 2,543 2,543 8,632 9,936 2,558 -0.6 QoQ (%) 0.8 2.1 4.9 3.5 3.8 5.2 2.3 0.0 10.1 15.1 0.6 -60bp
Revenue (INR b) 139 149 157 160 164 175 181 186 605 707 184 0.9 YoY (%) 14.1 19.5 22.9 21.3 18.5 18.0 15.1 16.3 19.5 16.9 15.2 105bp
GPM (%) 34.4 35.4 35.3 34.8 33.5 36.9 38.4 40.1 35.0 37.3 36.3 381bp SGA (%) 11.1 12.0 12.1 12.3 12.8 13.5 13.7 14.7 11.9 13.7 11.9 280bp
EBIT 27 30 31 30 28 35 37 39 118 138 37 5.8 EBIT Margin (%) 19.7 19.9 19.6 18.9 17.1 20.0 20.2 20.9 19.5 19.6 19.9 97bp
Other income 3 2 1 2 1 0 1 0 8 2 1 -120.4 ETR (%) 20.6 21.2 17.7 19.3 24.0 23.9 18.4 18.2 19.7 20.9 22.0 -377bp
Adjusted PAT 24 25 26 26 22 27 31 32 101 111 29 8.5 QoQ (%) 7.8 5.2 4.2 -2.2 -13.0 19.2 14.4 3.8 -4.3 806bp YoY (%) 10.6 15.4 20.1 15.5 -6.8 5.7 16.1 23.1 15.4 9.7 13.5 967bp EPS 8.6 9.0 9.7 9.5 8.2 9.8 11.3 11.7 36.8 41.0 10.8 8.5
8 May 2020 7
Estimate change
TP change
Rating change Bloomberg HNDL IN
Equity Shares (m) 2,229
M.Cap.(INRb)/(USDb) 264.1 / 3.5
52-Week Range (INR) 221 / 85
1, 6, 12 Rel. Per (%) 8/-20/-24
12M Avg Val (INR M) 1634
Financials & Valuations (INR b)
Y/E MARCH 2020E 2021E 2022E
Sales 1,184.3 1,177.4 1,347.9
EBITDA 142.6 129.1 158.8
Adj. PAT 44.9 21.3 42.8
EBITDA Margin (%) 12.0 11.0 11.8
Cons. Adj. EPS (INR) 20.2 9.6 19.2
EPS Gr. (%) -18.4 -52.6 101.2
BV/Sh. (INR) 185.7 170.0 179.9
Ratios
Net D:E 0.9 1.4 1.3
RoE (%) 11.2 5.4 11.0
RoCE (%) 8.7 6.1 7.9
Payout (%) 9.3 20.8 16.4
Valuations
P/E (x) 5.8 12.3 6.1
P/BV (x) 0.6 0.7 0.7
EV/EBITDA(x) 4.5 6.2 5.0
Div. Yield (%) 1.4 1.4 2.3
Shareholding pattern (%) As On Mar-20 Dec-19 Mar-19
Promoter 34.7 34.7 34.7
DII 26.7 25.3 22.4
FII 18.9 21.0 23.9
Others 19.7 19.1 19.1
FII Includes depository receipts
CMP: INR118 TP: INR179 (+52% ) Buy Novelis’ strong performance continues
Marginal decline in EBITDA despite 7% YoY lower volumes
Hindalco’s (HNDL) subsidiary Novelis’ 4QFY20 results highlight the
company’s strength in its high-margin business with EBITDA/t of USD436/t.
We lower our FY21/FY22E EBITDA estimates by 7%/4% due to lower-than-
expected volumes in Novelis on account of COVID-19. However, we
reiterate our Buy rating given the attractive valuation (5x FY22E EV/EBITDA)
and ~75% EBITDA contribution from the non-LME business (Novelis and
Aleris), which provides more stability to earnings.
EBITDA remains strong despite volume decline
Reported Adj. EBITDA at USD383m was up 7% YoY (+12% QoQ). After adj.
one-time receipt of USD29m from a customer not fulfilling contract
obligations in Europe, adj. EBITDA stood at USD354m (v/s est. USD346m),
down 4% YoY (+3% QoQ).
Volumes declined 7% YoY to 811kt, led by 6-9% decline across geographies,
except in South America (148kt, +6% YoY) due to shutdown taken by auto
customers amid the COVID-19 pandemic.
Adj. EBITDA/t stood at USD436/t (adj. of USD29m one-time benefit), well
within the guided range of USD420-440/t (v/s est. USD415/t).
FCF post capex stood at USD384m, down 6% YoY in FY20 despite an
increase in capex to USD599m (v/s USD351m in FY19) due to an increase in
EBITDA.
Net debt reduced by USD0.29b in FY20 to USD3.15b at end-FY20.
Net debt/EBITDA further reduced to 2.1x (v/s 2.5x last year).
Liquidity profile remained strong at USD2.0b at end-Apr’20.
Demand outlook uncertain
While beverage can demand remains resilient in North America and Europe
due to strong in-house consumption trend, it could get impacted in Asia and
South America due to trade restrictions, lower tourism and decline in
consumer spending. Share of beverage cans increased by 300bp to 66% of
total volumes in FY20.
Demand outlook for auto remains uncertain in North America and Europe
due to the massive unemployment situation owing to the COVID-19
pandemic. Similarly, outlook for aerospace remains bleak due to travel
restrictions globally.
The company is focused on preserving cash and has guided for capex spend
of USD500m in FY21 v/s USD599m in FY20. It is also looking to cut fixed
costs by USD250m in FY21E to reduce costs.
The company has completed Aleris’ acquisition in Apr’20; sale of Duffel
plant to Liberty Group should get completed on approval of Chinese
Authority.
7 May 2020
4QFY20 Results Update | Sector: Metals
Hindalco
8 May 2020 8
Company guided for peak Net Debt/EBITDA of 4.0x post Aleris Acquisition. The
company has guided for Net Debt/EBITDA of 3.0x in two years’ time.
Valuation and view
We remain conservative on profitability and build in lower EBITDA margin of
USD380/t for FY21E and USD400/t for FY22E (v/s USD441/t in FY20). We have also
reduced our volume estimate by 9% in FY21E but expect normalized volumes in
FY22E. We have factored in EBITDA of USD210m/USD250m from Aleris’ operations
and earnings of Lewis Port under continued operations due to lack of clarity on its
profitability. With ~75% EBITDA contribution from non-LME business i.e. conversion
business (Novelis + Aleris), we see lesser volatility in Hindalco’s earnings. The stock
trades at an attractive valuation of 5.0x EV/EBITDA and 6x P/E on FY22E. We value it
at INR179/share based on SOTP. Re-iterate Buy.
Quarterly Performance (Novelis) – USD m
Y/E March FY19 FY20 FY19 FY20
vs Est
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
4QE (%)
Sales (000 tons) 797 807 800 870 830 835 797 811 3,274 3,273 835 -3
Change (YoY %) 1.5 0.6 0.5 8.1 4.1 3.5 -0.4 -6.8 2.7 0.0 -4.1 Net Sales 3,097 3,136 3,009 3,084 2,925 2,851 2,715 2,726 12,326 11,217 2,795 -2
Change (YoY %) 16.0 12.2 -2.5 0.6 -5.6 -9.1 -9.8 -11.6 6.1 -9.0 -9.4 EBITDA (adjusted) 334 355 322 357 368 378 343 354 1,368 1,443 346 2
Change (YoY %) 15.6 17.5 5.6 11.9 10.2 6.5 6.5 -0.8 12.6 5.5 -3.0 EBITDA per ton (USD) 419 440 403 410 443 453 430 436 418 441 415 5
Interest 63 66 64 65 62 58 57 63 258 240 68 -7
Depreciation 86 86 88 90 88 88 91 94 350 361 87 9
PBT (before EO item) 185 203 170 202 218 232 195 197 760 842 192 3
Extra-ordinary Income 5 (23) (55) (51) (28) (60) (39) (113) (124) (240) (30) PBT (after EO item) 190 180 115 151 190 172 156 84 636 602 162 -48
Total Tax 53 64 37 48 63 49 49 21 202 182 50 -58
Reported PAT 137 116 78 103 127 123 107 63 434 420 112 -44
Change (YoY %) 36 -62 -36 -8 -7 6 37 -39 -29 -3 9 Adjusted PAT 132 139 133 154 155 183 146 176 558 660 142 24
8 May 2020 9
Estimate change TP change Rating change Bloomberg RBK IN
Equity Shares (m) 508
M.Cap.(INRb)/(USDb) 65.6 / 0.9
52-Week Range (INR) 717 / 102
1, 6, 12 Rel. Per (%) 6/-36/-63
12M Avg Val (INR M) 3909
Financials & Valuations (INR b)
Y/E March FY20 FY21E FY22E
NII 36.3 41.7 44.8
OP 27.5 29.7 32.1
NP 5.1 5.7 8.3
NIM (%) 4.5 4.8 4.6
EPS (INR) 9.9 11.2 16.4
EPS Gr. (%) -51.1 12.2 47.0 BV/Sh. (INR) 208.0 217.6 231.3
ABV/Sh. (INR) 191.7 193.6 208.8
Ratios
RoE (%) 5.6 5.2 7.3
RoA (%) 0.6 0.6 0.8
Payout (%) 10.0 12.0 14.0
Valuations P/E(X) 13.0 11.6 7.9
P/BV (X) 0.6 0.6 0.6
P/ABV (X) 0.7 0.7 0.6
Div. Yield (%) 0.8 1.0 1.8
Shareholding pattern (%) As On Mar-20 Dec-19 Mar-19
Promoter 0.0 0.0 0.0
DII 30.5 30.2 24.8
FII 25.5 24.3 18.8
Others 44.0 45.5 56.4
FII Includes depository receipts
CMP: INR129 TP: INR180 (+40%) Buy
Asset quality provides a breather, but credit cost in Retail remains under watch Modest business growth; margins expand further RBK reported weak business trends, weighed by decline in wholesale assets
and deposit outflows. Higher provisions impacted earnings, but slippages
moderated on a sequential basis, enabling improvement in the coverage
ratio. Asset quality is expected to remain under watch as 33% of the loan
book availed moratorium, with management guiding for elevated credit
costs in credit cards/MFI/MSME portfolio.
We cut our PAT estimate for FY21/FY22 by 6%/5%, primarily as we factor in
moderation in fee income, led by reduced economic activity / lockdown.
Maintain Buy.
Higher credit cost impacts earnings; ~33% of loan book avails
moratorium 4QFY20 PAT stood at ~INR1.1b (54% YoY decline), affected by higher
provisions of INR6.1b. NII grew 38% YoY to INR10.2b, led by 36bp QoQ
margin expansion to ~4.9%.
Other income increased 22% YoY to INR5.0b, with core fee income growth
of 21% YoY, impacted by lockdown. Overall, PPoP growth remains strong at
37% YoY to INR7.6b. In FY20, NII/PPOP rose at 43%/42% YoY, while PAT
declined 42% YoY, affected by high provisions.
Loan growth moderated to 7% YoY, led by 16% YoY decline in the wholesale
book, whereas retail assets grew at 41% YoY. The share of the non-
wholesale asset book increased ~520bp QoQ to ~56%. Overall, the
Wholesale portfolio is expected to consolidate, while retail assets would
grow 10–15% over FY21E.
Deposits declined 1% YoY (8% QoQ) while the avg. CASA ratio improved
220bp QoQ to come in at 26.4%. Deposit traction, however, improved in
Apr’20 (4% increase over Mar’20 to INR600b).
On the asset quality front, slippages stand at INR7.1b; thus, absolute GNPA
increased 6% QoQ, while NNPA declined 4% QoQ. The GNPA ratio widened
by 29bp QoQ to 3.6%, while the NNPA ratio narrowed 2bp to 2.1%. The
coverage ratio thus improved to 44.3% v/s 38.5% in 3QFY20. Overall, 33% of
the loan book availed moratorium.
Highlights from management commentary
COVID-19 impact: As of 30th Apr’20, moratorium was offered to all
customers in Micro Banking; Credit Cards saw 13% of customers avail
moratorium (24% by value), Retail Assets 46%, and Wholesale 22% (22% by
value). In other words, 33% of the overall loan portfolio availed
moratorium.
Expect the Retail business to grow 12–15%, while the Wholesale portfolio
to consolidate in the near term. Margins are likely to remain flat / decline in
FY21.
7 May 2020
4QFY20 Results Update | Sector: Financials
RBL Bank
8 May 2020 10
Valuation and view RBK’s asset quality would continue to remain under pressure, with concerns leaning
toward Retail as the COVID-19 outbreak would impact delinquency trends in the
portfolios of Credit Cards/MFI and MSME. Around 33% of the loan portfolio availed
moratorium; thus, we expect credit cost trends to remain elevated at 3.6% for
FY21E. Furthermore, the bank’s BBB-/BB-rated exposures to COVID-19-impacted
sectors stood at 5.6%/1.8%. This may pose a risk as the business environment
remains weak, thus prolonging the slippage trend in the Wholesale portfolio. We
revise our TP to INR180 (0.9x FY22E ABV). Maintain Buy.
Quarterly performance (INR m) FY19 FY20 FY19 FY20 FY20E V/s our
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 4QE Est
Net Interest Income 5,527 5,930 6,551 7,387 8,173 8,687 9,227 10,210 25,395 36,296 9,597 6% % Change (Y-o-Y) 46.1 41.1 40.2 47.6 47.9 46.5 40.8 38.2 43.8 42.9 29.9
Other Income 3,260 3,331 3,741 4,092 4,812 4,415 4,870 5,005 14,424 19,103 4,654 8%
Total Income 8,787 9,261 10,291 11,480 12,985 13,102 14,096 15,215 39,818 55,399 14,251 7%
Operating Expenses 4,464 4,770 5,307 5,880 6,797 6,744 6,775 7,567 20,420 27,883 7,154 6%
Operating Profit 4,323 4,491 4,985 5,600 6,188 6,358 7,322 7,648 19,398 27,516 7,097 8% % Change (Y-o-Y) 38.8 48.1 49.5 46.2 43.1 41.6 46.9 36.6 45.7 41.8 26.7 Other Provisions 1,404 1,397 1,607 2,000 2,132 5,333 6,383 6,141 6,407 19,989 6,731 -9%
Profit before Tax 2,920 3,094 3,378 3,600 4,056 1,025 939 1,508 12,992 7,528 366 312% Tax Provisions 1,019 1,048 1,126 1,128 1,386 482 239 364 4,322 2,471 86 323%
Net Profit 1,900 2,045 2,252 2,472 2,671 543 700 1,144 8,670 5,057 280 309% % Change (Y-o-Y) 34.8 35.8 36.2 38.8 40.5 -73.4 -68.9 -53.7 36.5 -41.7 -88.7
Operating Parameters Deposit (INR b) 449.5 477.9 521.9 583.9 608.1 628.3 629.1 578.1 583.9 578.1 581.0 0%
Loan (INR b) 422.0 458.7 498.9 543.1 568.4 584.8 596.4 580.2 543.1 580.2 602.8 -4%
Deposit Growth (%) 26.9 30.7 35.1 33.0 35.3 31.5 20.5 -1.0 33.0 -1.0 -0.5 -50
Loan Growth (%) 35.7 36.6 35.2 34.9 34.7 27.5 19.5 6.8 34.9 6.8 11.0 -417
Asset Quality
Gross NPA (%) 1.4 1.4 1.4 1.4 1.4 2.6 3.3 3.6 1.4 3.6 4.1 -47
Net NPA (%) 0.8 0.7 0.7 0.7 0.7 1.6 2.1 2.1 0.7 2.0 2.4 -34 PCR (%) 47.0 47.5 48.5 50.6 52.9 40.7 38.5 44.3 50.6 44.3 42.6 175
E:MOFSL Estimates
8 May 2020 11
Estimate change TP change Rating change
Bloomberg CYL IN
Equity Shares (m) 113
M.Cap.(INRb)/(USDb) 25.5 / 0.3
52-Week Range (INR) 581 / 200
1, 6, 12 Rel. Per (%) 0/-17/-41
12M Avg Val (INR M) 97
Financials & Valuations (INR b)
Y/E Mar 2020 2021E 2022E
Sales 44.3 36.3 39.8
EBIT Margin (%) 9.2 7.6 9.3
PAT 3.7 2.5 2.0
EPS (INR) 33.8 22.5 27.3
EPS Gr. (%) -22.2 -33.2 21.0
BV/Sh. (INR) 249.6 261.4 275.5
Ratios
RoE (%) 13.5 8.6 9.9
RoCE (%) 13.3 8.9 10.0
Payout (%) 38.5 57.7 47.7
Valuations
P/E (x) 6.9 10.3 8.5
P/BV (x) 0.9 0.9 0.8
EV/EBITDA (x) 3.2 3.8 2.8
Div Yield (%) 5.6 5.6 5.6
Shareholding pattern (%)
As On Mar-20 Dec-19 Mar-19
Promoter 22.9 22.8 22.5
DII 22.1 20.9 21.9
FII 42.2 44.3 44.5
Others 12.9 11.9 11.1
FII Includes depository receipts
CMP: INR232 TP: INR260 (+12%) Neutral
Execution challenges remain; Outlook weak Bleak prospects of re-rating! Cyient’s 4QFY20 revenue and adjusted EBIT margins were disappointing.
Sharper disruption v/s peers (e.g. HCLT’s ER&D portfolio) is also a reflection
of the company’s weak execution capabilities. We anticipate a material
slowdown in key verticals like A&D, Transportation and E&U (contributing
~60% of revenue) over the next 12-18 months. While Communications
(~23% of revenue) may not be heavily impacted by COVID-19, the liquidity
crunch would mean low emphasis on ER&D spends. Supply-side issues in
ER&D are more pronounced than in IT services given the reluctance of
clients to enable Work from Home (WFH) due to concerns around
plagiarism/IP theft.
We have cut our EPS estimate for FY20-22E by 31-33% due to the worse-
than-expected results and commentary. Given the continued execution
challenges at the company, dented visibility on earnings recovery and the
one-off trail, hope of a re-rating may be too optimistic. Our target price of
INR260 is based on ~10x FY22E EPS.
Sharp revenue and margin contraction in services
While DLM reported healthy growth (12.4% QoQ, USD), Services segment
witnessed sharp revenue decline (5.6%). This decline (~USD12m),
management attributed to the COVID-19 disruption, which impacted to (a)
onsite and offshore business, (b) DLM supply chain, (c) semi-conductor
supply chain, and (d) execution challenges in the E&U vertical.
On an adjusted basis, EBIT contracted ~120bp QoQ to 8.4%. Key margin
movers were (a) lower utilization (140bp impact), (b) adverse revenue mix
(70bp impact), (c) volume effect on SG&A and depreciation (120bp impact),
and (d) DLM (110bp impact). The negative impact of these factors was
marginally offset by (a) reduction in SG&A cost (210bp impact) and favorable
currency (+20bp impact).
However, reported EBIT margin during the quarter was 4.3% due to one-
time exceptional items to the tune of INR441m toward impairment of assets
and receivable write-offs. Additional one-off items in other income were
attributed to earn-out reversals and tax provisions.
Order intake during the quarter was healthy at USD255m.
Weak outlook on both revenue and margins The company expects a sequential revenue decline of 15-20% in Jun’20.
Subsequently, it expects a recovery on the back of (a) field work restrictions
being eased, and (b) anticipated recovery in Communications and E&U.
Management expects field work restrictions to impact near-term prospects
(1HFY21) in verticals like Communications, Energy & Utilities and Geospatial.
Cyient anticipates some of these verticals to recover over 2HFY21 as
lockdown/field work restrictions ease out.
Commentary around key verticals like Aerospace, Defense and
Transportation is downbeat. Given the expected drop in volumes of fleet
delivery by Aero OEMs and the resultant ripple effect, management expects
this vertical to remain weak over the next 12-24 months.
8 May 2020
4QFY20 Results Update | Sector: Technology
Cyient
8 May 2020 12
Margins are expected to take a hit in 1QFY21 due to low volumes. However, the
company remains focused on cost optimization in several areas, including sub-
contractor expenses, reduced travel, facilities’ costs, deferral of wage hikes to
2HFY21, etc. Management expects EBIT margins to bounce back to 4QFY20 level
by 2QFY21.
Valuation and view – Multiples should remain subdued Given the COVID-19 situation, ER&D activity in key verticals (e.g. Aerospace &
Defense, Transportation, Energy & Utilities; ~60% of revenue) should witness a
material slowdown over the next 12-18 months.
While Communications vertical (~23% of revenue) may not be heavily impacted
by COVID-19, global telcos have been under significant pressure to optimize
costs given the current liquidity crunch. In conjunction with the lockdown led
logistical challenges related to field work etc., this vertical too may not fire on
ER&D activity over the next 12-18 months.
Unlike IT services, note that clients in ER&D are more reluctant toward the WFH
option given the risks of potential plagiarism, IP theft etc. Besides, relatively
discretionary nature of the ER&D work makes it more vulnerable to ramp-downs
and budget cuts.
Accordingly we expect strong headwinds to both revenue and profitability of
Cyient over FY20-22E. We have cut our EPS estimates over the same horizon by
31-33% post a worse-than-anticipated result and commentary.
The stock is currently trading at ~10x on FY21E EPS. Given the continued
execution challenges at the company, dented visibility on earnings recovery and
the one-off trail, prospects for a re-rating are bleak, at best. Our target price of
INR260 is based on ~10x FY22E EPS.
Quarterly Performance (INR M)
Y/E March FY19 FY20 FY19 FY20 Est. Var. (% / bp) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 4QFY20
Revenue (USD m) 161 169 165 165 157 164 155 149 660 625 150 -0.7
QoQ (%) -2.5 5.0 -2.2 0.1 -5.2 4.9 -5.5 -3.9 8.6 -5.3 -3.2 -69bp
Revenue (INR m) 10,800 11,870 11,876 11,629 10,890 11,589 11,060 10,736 46,175 44,275 10,820 -0.8
YoY (%) 19.1 23.0 20.8 9.5 0.8 -2.4 -6.9 -7.7 17.9 -4.1 -7.0 -72bp
GPM (%) 34.3 34.5 35.0 35.3 34.4 34.4 36.0 33.5 34.8 34.6 34.5 -97bp
SGA (%) 22.1 20.8 20.3 20.2 21.2 20.6 22.1 20.6 20.8 21.1 21.8 -122bp
EBITDA 1,316 1,627 1,749 1,752 1,445 1,599 1,533 1,382 6,444 5,959 1,366 1.2 EBITDA Margin (%) 12.2 13.7 14.7 15.1 13.3 13.8 13.9 12.9 14.0 13.5 12.6 25bp
Adjusted EBIT 1,031 1,339 1,470 1,490 1,003 1,111 1,063 905 5,330 4,082 963 -6.0
Adjusted EBIT Margin. % 9.5 11.3 12.4 12.8 9.2 9.6 9.6 8.4 11.5 9.2 8.9 -457bp
Reported EBIT 1,031 1,339 1,470 1,378 1,003 1,111 1,063 464 5,218 3,641 963 -51.8
Reported EBIT Margin. % 9.5 11.3 12.4 11.8 9.2 9.6 9.6 4.3 11.3 8.2 8.9 -457bp
Other income 88 471 -283 702 149 144 369 72 978 734 461 -84.4
ETR (%) 27.2 29.8 22.4 14.5 22.0 22.4 23.3 21.3 22.6 22.3 23.0
Adjusted PAT 825 1,272 921 1,881 904 986 1,083 754 4,899 3,727 982 -23.2
Adjusted PAT margin (%) 7.6 10.7 7.8 16.2 8.3 8.5 9.8 7.0 10.6 8.4 9.1 -205bp
Reported PAT 825 1,272 921 1,770 904 986 1,083 451 4,788 3,424 982 -54.1 Reported PAT margin (%) 7.6 10.7 7.8 15.2 8.3 8.5 9.8 4.2 10.4 7.7 9.1 -487bp
QoQ (%) -30.1 54.2 -27.6 104.2 -51.9 9.1 9.8 -58.4 -9.3 -4903bp
YoY (%) -5.8 14.0 5.1 59.3 9.6 -22.5 17.6 -76.0 22.4 -23.9 -44.5 -3150bp
EPS (INR) 7.3 11.2 8.1 16.7 8.2 9.0 9.8 4.1 43.3 31.1 8.9 -54.1
8 May 2020 13
Cognizant’s commentary echoes that of Indian IT
Anticipates pressure on projects, with long payback periods
Barring the revenue/margin impact related to an idiosyncratic event
(ransomware attack), Cognizant’s commentary was broadly in-line with that of
Indian IT.
Management indicated it is yet to see stabilization in any vertical, even over
April–May. The company expects the client’s focus in the near term to be only
on critical systems, infrastructure, or shorter payback projects. Discretionary
spends (or longer payback projects) are expected to be challenged.
Across verticals, Cognizant foresees a heavy impact on Travel, Hospitality, Retail,
Automotive, Media, and Entertainment, while anticipating a broader slowdown
in other industries as well.
The company is witnessing traction in areas such as cloud, data modernization,
core modernization, e-commerce, shift to SaaS, and digital engineering.
Cognizant hinted at certain client requests for price concessions and furloughs.
Besides this, the company expects payment terms to extend significantly.
Whenever recovery happens, Cognizant expects economies such as the US and
larger companies to recover faster than others.
Robust increase in order bookings, similar to Indian IT companies
The company witnessed strong business momentum over Jan–Feb before the
COVID-19 outbreak impacted core geographies materially.
It is unsurprising to note that order booking in the quarter came in strong (+33%
YoY) and broad based across verticals and geographies. The company’s qualified
deal pipeline increased 12% YoY.
Notably, even Indian companies witnessed strong deal activity during the
quarter despite the COVID-19 disruption. For instance, TCS’ deal win TCV
increased ~44% YoY (ex-Phoenix deal) during the quarter.
Large deal signings of Infosys (including the new deal run-rate) were also
decent. HCLT indicated that Mar’20 witnessed the highest order-booking in
FY20.
We understand most of these would have been signed before the COVID-19
disruption began. Accordingly, we cannot rule out the risk of
cancellations/ramp-downs for some portion of the book of business, given the
situation.
Expect near-term uncertainty; Prefer TCS, Infosys, HCLT, LTI, MTCL, PSYS While we expect supply-side uncertainties to ease out over 1QFY21, uncertainty
surrounding demand, pricing, and receivables should continue in the near term,
given the constantly evolving nature of the COVID-19 crisis.
Negative news flow around the sector may likely continue given the seriousness
of the COVID-19 situation in geographies such as the US, UK, EU, and India.
Sector Update | 8 May 2020
Technology
8 May 2020 14
Despite these uncertainties, we continue to prefer TCS, Infosys, and HCLT
among the large-caps and LTI, MTCL, and PSYS among the Tier-II.
This is attributable to their historical track record of adapting to multiple
business challenges / technology change cycles. We expect Persistent Systems
to be a likely candidate for turnaround.
Moreover, recent commentary on Indian IT and even client enterprises offers us
some comfort on the new business wins, ramp-ups, supply-side aspects, cost
optimization, and margin management capabilities of these companies.
8 May 2020 15
Insights from interaction with India’s Chief Economic Advisor With the Indian Government (GoI) resorting to strict measures to contain the COVID-19
pandemic in the country, we interacted with Dr. Krishnamurthy Subramanian, the Chief
Economic Advisor to the Government of India. Key insights highlighted below:
Post COVID-19, India could see V-shaped recovery with FY21 GDP growth of 1.5-2%.
GoI taking responsible decisions as far as announcing a stimulus package is concerned.
GoI currently focused on bringing about structural changes as the time is opportune.
Spanish flu of 1918 suggests a V-shaped recovery is possible
‘R0’ (the ‘R Naught’ parameter that captures the number of people likely to get infected)
is similar in both pandemics – the Spanish flu as well as the COVID-19 pandemic. During
the Spanish flu, R0 was at 2.3 while for COVID-19, it is at 2.4. Moreover, while magnitude
of the Spanish flu pandemic was far higher (v/s the COVID-19 outbreak), economies still
managed a V-shaped recovery. Additionally, during the Spanish flu, one-third of the
global population was affected with mortality rate of 10%. Comparatively, COVID-19 has
impacted less than 1% of the global population so far with current mortality rate at 3.4%.
Thus, Dr. Subramanian reasons that post COVID-19 India could witness a V-shaped
recovery with GDP growth of 1.5-2% for FY21.
India should not be compared with other nations
According to Dr. Subramanian, actual fiscal stimulus given by countries such as the US and the UK is far less than
what is being discussed. In fact, Dr Subramanian stated that the average fiscal stimulus by all countries in the same
sovereign-rating category as India amounts to ~2% of GDP. Moreover, he believes that all nations cannot be
compared and viewed in the same basket as countries are split by way of ratings (done by rating agencies). Thus,
governments need to take care of these ratings too. The GoI, according to Dr. Subramanian, is taking responsible
decisions as far as announcing a stimulus package is concerned.
Indian government focused on long-term growth
While in the short run, a trade-off between flattening the pandemic curve and letting the economy get impacted
exists, it does not exist in the long term as focus is on sustainability and growth. The government is carefully
examining the debt to GDP ratio and overall debt sustainability (Nominal Interest rate minus Nominal growth rate).
Additionally, the government’s decision to include sovereign bonds in global indices is also expected to reduce bond
yields. More importantly, Dr. Subramanian believes that the government is currently focused on bringing about
structural changes – related to labor reforms, power sector reforms, etc. – due to the time being opportune.
Moreover, it is trying to save as many lives as possible by containing the number of infections and also by helping
vulnerable sections of the society.
Government already identified possible industries’ shift from China to India before COVID-19
The Indian government had already gauged the opportunity of industries shifting from China to India before the
COVID-19 pandemic. Moreover, a chapter called ‘Creating jobs and growth by specializing to exports in network
products’ was included in the Economic Survey 2019-20, which recognized industries that can be set up in India. The
government is estimating creation of 35m/80m jobs by FY25/FY30 owing to this opportunity.
7 May 2020 Economy
Expert Speak
Dr. Krishnamurthy
Subramanian, Chief Economic Advisor,
Government of India Dr. Subramanian was
officially appointed to the position of Chief Economic Advisor on 7th Dec’18. He has been aboard expert
committees of the Securities and Exchange Board of
India (SEBI) and the Reserve Bank of India (RBI). Dr.
Subramanian has been a part of major economic and corporate reforms in India. He also currently teaches at the India School of Business
(ISB).
8 May 2020 16
HPCL : NO NOTIONAL LOSS TO CUSTOMER FOLLOWING EXCISE DUTY HIKE ON PETROL, DIESEL; MK Surana, Chairman and MD Pump prices have not changed since March 15, 2020. Before that prices were
continuously brought down. During the lockdown, there was substantial
volatility in the market and crude prices were going up and down, which is not
good, especially when there was not much of an off-take from the petrol pumps,
so the prices were held [left unchanged].
As far as excise duty is concerned, it is the government’s prerogative to decide
the taxes and duties. As of now, there is no change in the pump pricing. It is also
a fact that over a period, the price of fuel has come down and the impact of the
reduced prices will absorb this excise duty, so it may not actually impact
companies to that an extent.
It will be incorrect to say that there is a notional loss to the customer.
In conversation
8 May 2020 17
COMPANIES PIVOT TO GRAB CONSUMER WALLET SHARE DURING PANDEMIC In a conference call with the media on 23 April, Sanjiv Puri, chairman, ITC Ltd,
said the company had launched a surface disinfectant spray under its brand
Savlon, with the help of its scientists despite the lockdown. With heightened
demand for hygiene and safety products against the backdrop of the covid-19
outbreak, ITC also quickly converted its state-of-the art premium perfume
factory in Manpura, Himachal Pradesh, into a sanitizer unit and ramped up
capacity in existing units. On the same day, Schindler India, a provider of
escalators and elevators, announced the introduction of handrail sanitization
solutions to prevent the spread of viruses and bacteria. A company handout said
that it uses germicidal UVC light to irradiate the handrails, which “damages"
microbes and viruses. Additionally, with LED lighting technology, handrails are
disinfected in an efficient and environmentally-friendly manner. With the virus
outbreak, companies—both multinationals and homegrown, big and small—are
doing their bit to anticipate and match consumer requirements at a time when
the world’s biggest lockdown has disrupted production, supply chains and retail
sales of almost all products except those falling in the essential goods category.
While manufacturers of consumer goods have been quick to tweak their
facilities to launch new products, companies in the services sector have pivoted
to offering a range of new services that weren’t their core.
From the think tank
8 May 2020 18
CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%)
Company Reco (INR) (INR) Downside FY19 FY20E FY21E FY19 FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E
Automobiles
Amara Raja Buy 557 630 13 28.3 37.7 34.6 2.6 33.3 -8.3 14.8 16.1 2.5 2.3 18.1 14.8
Ashok Ley. Buy 46 70 52 6.9 1.1 0.9 16.4 -84.2 -18.0 42.3 51.6 1.6 1.6 3.8 3.1
Bajaj Auto Neutral 2406 2382 -1 165.4 178.2 167.2 9.3 7.7 -6.2 13.5 14.4 3.1 2.9 23.3 20.6
Bharat Forge Buy 278 342 23 22.2 15.2 12.8 20.3 -31.6 -15.8 18.3 21.8 2.3 2.2 12.7 10.2
Bosch Neutral 9882 10607 7 542.4 403.1 350.6 15.5 -25.7 -13.0 24.5 28.2 3.9 3.5 14.3 13.0
CEAT Buy 748 903 21 66.9 47.6 51.9 4.6 -29.0 9.1 15.7 14.4 1.0 1.0 6.8 7.0
Eicher Mot. Buy 14004 17200 23 813.9 703 680 1.8 -13.6 -3.3 19.9 20.6 3.7 3.2 19.8 16.6
Endurance Tech. Buy 607 810 33 36.2 39.7 32.7 24.5 9.8 -17.8 15.3 18.6 2.9 2.6 20.3 14.7
Escorts Neutral 750 654 -13 53.2 53.5 50.1 34.7 0.4 -6.3 14.0 15.0 2.1 1.6 16.4 13.1
Exide Ind Buy 147 177 20 9.1 9.6 9.2 10.6 5.8 -3.9 15.3 16.0 1.9 1.8 12.6 11.3
Hero Moto Neutral 1998 2072 4 169.5 154.1 126.0 -8.5 -9.1 -18.2 13.0 15.9 2.9 2.9 23.2 18.2
M&M Buy 401 513 28 42.7 33.2 33.8 4.1 -22.3 1.9 12.1 14.4 1.3 0.6 10.1 9.0
Mahindra CIE Buy 104 116 12 14.1 9.4 3.2 44.7 -33.2 -66.0 11.0 32.4 0.8 0.8 8.0 2.6
Maruti Suzuki Buy 4749 6280 32 247.7 191.8 166.9 -7.1 -22.6 -13.0 24.8 28.5 2.9 2.8 11.5 9.6
Motherson Sumi Buy 75 84 12 5.1 3.7 3.1 -5.2 -27.1 -17.2 20.2 24.4 2.0 1.9 10.1 7.8
Tata Motors Buy 83 90 9 -4.4 -14.9 -23.3 -119.0 Loss Loss NM NM 0.5 0.6 -9.0 -15.4
TVS Motor Neutral 321 297 -7 14.1 12.8 11.5 1.1 -9.2 -10.1 25.1 27.9 4.1 3.8 17.2 14.0
Aggregate -31.4 -25.9 111.3 32.3 15.3 2.0 1.9 6.2 12.2
Banks - Private
AU Small Finance Buy 443 675 52 13.2 22.6 21.7 28.9 71 -4.3 19.6 20.5 3.1 2.7 18.0 14.2
Axis Bank Buy 397 620 56 18.2 6.0 26.0 1,538.1 -67 331.5 65.9 15.3 1.3 1.2 2.1 8.3
Bandhan Bank Buy 252 350 39 16.4 22.3 20.1 39.1 37 -10.0 11.3 12.5 2.6 2.2 23.2 19.1
DCB Bank Neutral 69 105 53 10.5 10.9 10.3 32.0 3.7 -5.1 6.3 6.6 0.6 0.6 11.1 9.6
Equitas Hold. Buy 50 85 69 5.2 8.0 8.6 1,186.6 54.6 7.7 6.3 5.8 0.6 0.6 10.6 10.4
Federal Bank Buy 43 75 74 6.3 8.2 7.1 32.2 31.0 -13.7 5.2 6.1 0.6 0.6 11.8 9.4
HDFC Bank Buy 925 1200 30 39.6 48.0 55.2 16.9 21.2 14.9 19.3 16.8 3.0 2.6 16.4 16.5
ICICI Bank Buy 337 540 60 5.2 14.6 20.7 -52.8 178.6 41.9 23.1 16.3 1.9 1.8 8.7 11.5
IndusInd Buy 454 700 54 54.9 68.8 71.0 -8.8 25.3 3.2 6.6 6.4 0.9 0.8 14.7 13.3
Kotak Mah. Bk Neutral 1200 1450 21 37.7 45.4 50.5 16.0 20.4 11.2 26.4 23.8 3.5 3.0 13.7 13.2
RBL Bank Buy 129 180 40 20.3 9.9 11.2 34.3 -51.3 13.1 13.0 11.6 0.6 0.6 5.6 5.2
Aggregate 27.4 26.9 26.0 16.5 13.1 2.1 1.9 12.8 14.3
Banks - PSU
BOB Buy 43 70 65 1.6 -3.3 6.6 -116.7 PL LP NM 6.4 0.3 0.3 -2.0 4.4
PNB Neutral 30 35 18 -27.1 -5.8 3.4 -46.1 Loss LP NM 8.6 0.4 0.3 -6.4 4.0
SBI Buy 171 300 76 2.6 18.7 22.2 -148.2 627 18.3 9.1 7.7 0.6 0.6 7.4 8.1
Aggregate LP 105 46 8 5.2 0.5 0.5 6.6 8.9
NBFCs
Aditya Birla Cap Buy 44 125 185 4.0 4.3 5.1 25.7 8.3 20.2 10.2 8.5 1.0 0.9 10.2 10.8
Bajaj Fin. Neutral 2061 2625 27 69.3 94.1 79.2 59.6 35.8 -15.8 21.9 26.0 3.7 3.3 21.3 13.5
Chol.Inv.&Fn Buy 149 225 51 15.2 16.8 15.6 29.1 10.8 -7.1 8.8 9.5 1.4 1.3 18.9 14.1
HDFC Buy 1704 2050 20 44.4 50.4 52.5 28.7 13.6 4.2 33.8 32.4 3.3 3.1 14.2 13.1
HDFC Life Insur. Neutral 494 525 6 6.3 6.4 6.4 14.6 1.3 -0.4 77.0 77.3 4.8 4.0 12.9 21.4
ICICI Pru Life Buy 398 430 8 8.0 7.4 7.9 -29.5 -6.3 6.4 53.4 50.2 2.5 2.2 6.5 14.3
IIFL Wealth Mgt Buy 890 1525 71 44.2 32.2 42.8 -4.1 -27.3 33.0 27.7 20.8 2.5 2.4 9.3 11.9
L&T Fin Holdings Buy 58 75 29 11.2 11.4 10.3 74.3 2.1 -9.2 5.1 5.6 0.8 0.7 16.1 13.1
LIC Hsg Fin Buy 260 350 35 48.1 49.7 45.6 21.4 3.2 -8.3 5.2 5.7 0.7 0.7 14.6 12.0
MAS Financial Buy 562 690 23 27.8 29.9 30.8 47.1 7.6 2.8 18.8 18.3 3.2 2.8 18.1 16.2
M&M Fin. Buy 171 200 17 25.3 17.1 10.3 53.9 -32.3 -40.1 10.0 16.6 0.9 0.9 9.7 5.5
Muthoot Fin Neutral 820 765 -7 49.2 75.0 80.0 10.8 52.3 6.7 10.9 10.3 2.9 2.4 29.3 25.8
PNB Housing Neutral 178 190 7 71.1 67.5 50.9 40.9 -5.1 -24.6 2.6 3.5 0.4 0.3 14.1 9.6
Repco Home Buy 123 150 22 37.5 48.9 44.8 16.7 30.5 -8.5 2.5 2.8 0.4 0.4 18.3 14.4
SCUF Buy 716 950 33 149.8 168.6 134.0 48.7 12.5 -20.5 4.2 5.3 0.6 0.6 16.1 11.4
Shriram Trans. Buy 755 975 29 113.0 128.9 75.0 4.2 14.1 -41.8 5.9 10.1 0.9 0.9 17.3 9.0
Aggregate 14.5 -5.6 23.0 17.8 14.5 2.1 1.9 12.0 13.3
Valuation snapshot
Click excel icon for detailed
valuation guide
8 May 2020 19
CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%)
Company Reco (INR) (INR) Downside FY19 FY20E FY21E FY19 FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E
Capital Goods
ABB Buy 860 1255 46 12.0 16.6 15.7 12.7 38.1 -5.4 51.9 54.8 5.2 4.8 10.0 8.8
Bharat Elec. Buy 63 86 37 7.9 6.5 7.2 37.7 -17.9 10.3 9.6 8.7 1.5 1.4 15.9 16.1
BHEL Neutral 23 22 -5 3.5 1.9 1.9 58.9 -44.4 -1.1 11.9 12.0 0.3 0.3 2.1 2.1
Blue Star Neutral 495 515 4 19.5 20.2 15.2 34.7 3.7 -24.4 24.5 32.5 5.0 4.7 20.5 14.6
CG Cons. Elec. Buy 207 270 30 6.0 7.5 7.7 15.5 24.9 3.6 27.8 26.9 9.1 7.6 32.8 28.3
Cummins Neutral 360 360 0 26.1 22.9 17.3 10.8 -12.0 -24.4 15.7 20.8 2.3 2.2 14.5 10.5
Engineers India Buy 63 100 58 5.9 6.7 7.6 -8.4 14.5 12.7 9.5 8.4 1.8 1.7 17.9 19.3
Havells Neutral 487 590 21 12.7 12.3 11.0 12.9 -3.0 -10.6 39.7 44.4 6.4 5.9 16.2 13.3
K E C Intl Buy 198 255 29 18.9 23.1 24.0 6.1 22.3 3.6 8.6 8.3 1.7 1.5 20.2 17.7
L&T Buy 823 1200 46 63.5 70.5 61.6 22.8 11.0 -12.6 11.7 13.4 1.7 1.6 14.0 11.0
Siemens Neutral 1055 1450 37 25.1 30.5 29.4 27.1 21.6 -3.6 34.6 35.8 4.2 3.8 12.0 10.7
Thermax Neutral 701 865 23 27.2 24.9 29.1 32.4 -8.4 17.0 28.2 24.1 2.5 2.3 8.8 9.6
Voltas Buy 442 620 40 15.7 15.4 14.8 -9.1 -1.8 -3.7 28.6 29.8 3.3 3.1 11.5 10.3
Aggregate 4.1 -7.9 31.8 18.8 14.2 1.8 1.7 9.8 11.8
Cement
Ambuja Cem. Neutral 169 190 13 6.1 7.7 5.1 -3.2 26.4 -33.2 21.9 32.8 1.5 1.5 7.1 4.5
ACC Buy 1152 1430 24 53.5 72.3 40.6 9.9 35.1 -43.8 15.9 28.4 1.9 1.8 12.3 6.5
Birla Corp. Buy 374 735 97 33.2 61.8 40.5 53.6 86.2 -34.5 6.0 9.2 0.6 0.6 10.2 6.2
Dalmia Bhar. Buy 509 685 35 15.8 11.4 -15.3 4.3 -27.5 PL 44.5 NM 0.9 0.9 2.1 -2.8
Grasim Inds. Neutral 485 575 18 66.1 35.8 46.6 39.7 -45.8 30.0 13.5 10.4 0.7 0.7 3.2 1.4
India Cem Neutral 99 96 -3 2.3 3.6 2.1 -31.0 61.1 -41.9 27.3 47.0 0.6 0.6 2.1 1.2
J K Cements Buy 1089 1355 24 34.1 59.0 35.9 -19.8 72.8 -39.1 18.5 30.3 2.8 2.6 15.9 8.9
JK Lakshmi Ce Buy 194 320 65 6.8 22.1 9.8 -8.7 227.6 -55.6 8.8 19.8 1.3 1.2 16.0 6.5
Ramco Cem Neutral 529 560 6 21.9 23.8 15.1 -8.7 8.7 -36.4 22.2 35.0 2.5 2.4 11.9 7.0
Shree Cem Neutral 18389 19300 5 324.1 407.7 284.3 -18.2 25.8 -30.3 45.1 64.7 5.0 4.8 12.9 7.6
Ultratech Buy 3252 4160 28 90.3 132.6 98.5 1.0 46.8 -25.7 24.5 33.0 2.4 2.3 10.8 7.4
Aggregate 8.3 -24.4 61.8 29.2 18.0 1.7 1.6 5.9 9.0
Consumer
Asian Paints Sell 1594 1380 -13 23.1 29.7 27.3 9.1 29.0 -8.2 53.6 58.4 14.4 13.4 28.3 23.8
Britannia Neutral 2915 3010 3 48.1 57.4 58.0 15.1 19.3 1.0 50.8 50.2 15.4 15.0 31.3 30.2
Colgate Buy 1301 1620 24 27.4 29.1 30.7 8.8 6.3 5.3 44.7 42.4 25.6 27.5 55.9 62.4
Dabur Neutral 442 450 2 8.5 9.0 9.5 9.5 5.6 6.2 49.2 46.3 12.3 11.4 26.4 25.4
Emami Buy 177 270 53 12.2 12.5 12.4 0.2 3.1 -0.7 14.1 14.2 3.5 3.5 25.9 24.5
Godrej Cons. Neutral 487 622 28 15.1 14.3 14.8 7.2 -5.5 3.9 34.1 32.9 6.6 6.7 19.7 20.2
GSK Cons. Neutral 10754 10874 1 216.1 277.0 290.9 29.8 28.2 5.0 38.8 37.0 9.7 8.7 26.6 24.7
HUL Buy 1993 2420 21 28.1 31.2 32.7 14.7 11.1 4.7 63.8 60.9 53.6 53.4 86.0 87.7
ITC Neutral 161 192 19 10.2 12.8 12.8 14.8 25.5 0.6 12.6 12.5 3.2 3.0 26.1 24.7
Jyothy Lab Neutral 109 122 12 5.4 4.7 4.8 10.5 -12.9 3.2 23.2 22.5 3.0 3.0 12.9 13.2
Marico Buy 299 350 17 7.2 8.1 8.1 13.8 13.4 -0.7 36.7 37.0 12.8 9.9 34.9 30.1
Nestle Neutral 17133 15115 -12 178.6 206.8 226.9 27.5 15.8 9.7 82.8 75.5 85.5 79.9 71.2 109.4
Page Inds Neutral 17040 17565 3 353.2 334.5 326.8 13.5 -5.3 -2.3 50.9 52.1 21.9 20.2 42.9 38.7
Pidilite Ind. Neutral 1352 1365 1 18.6 25.3 23.1 -2.0 36.2 -8.5 53.5 58.5 13.5 11.9 27.8 21.6
P&G Hygiene Neutral 10163 9808 -3 129.6 132.6 141.7 12.5 2.3 6.8 76.6 71.7 31.6 27.8 44.2 41.3
Tata Consumer Buy 342 417 22 7.0 8.0 9.1 -14.6 14.2 14.1 42.8 37.5 2.8 2.3 6.8 7.9
United Brew Neutral 874 1003 15 21.3 16.3 17.4 42.8 -23.4 6.8 53.6 50.2 6.5 5.9 12.8 12.3
United Spirits Buy 505 663 31 9.3 11.4 12.0 38.1 22.9 4.5 44.1 42.2 9.7 7.9 21.9 18.6
Aggregate 17.4 2.4 14.4 37.3 32.6 10.0 9.4 26.7 28.8
Healthcare
Alembic Phar Neutral 801 705 -12 31.1 45.9 37.9 41.8 47.7 -17.4 17.5 21.1 4.7 4.1 30.1 21.4
Alkem Lab Buy 2560 3135 22 63.8 92.3 109.9 8.4 44.6 19.1 27.7 23.3 4.9 4.2 18.8 19.3
Ajanta Pharma Buy 1465 1635 12 44.4 50.6 60.6 -16.1 13.9 19.7 28.9 24.2 4.9 4.2 18.4 18.9
Aurobindo Buy 648 745 15 43.2 46.3 51.0 1.1 7.3 10.0 14.0 12.7 2.3 2.0 17.9 16.7
Biocon Neutral 350 320 -8 6.2 7.2 9.9 99.6 16.9 36.2 48.3 35.5 6.2 5.5 13.5 16.5
Cadila Buy 322 410 27 18.3 14.6 17.6 4.3 -20.2 20.3 22.0 18.3 2.9 2.6 11.4 15.1
Valuation snapshot
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valuation guide
8 May 2020 20
CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%)
Company Reco (INR) (INR) Downside FY19 FY20E FY21E FY19 FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E
Cipla Neutral 589 550 -7 18.7 20.7 26.0 -3.1 10.6 25.7 28.5 22.6 2.8 2.5 9.9 11.2
Divis Lab Neutral 2258 2215 -2 50.0 51.3 65.7 55.0 2.5 28.1 44.0 34.4 7.5 6.4 18.2 20.0
Dr Reddy’s Neutral 3834 3490 -9 105.2 123.6 150.7 62.6 17.5 21.9 31.0 25.5 4.1 3.6 13.9 15.1
Glenmark Neutral 336 295 -12 25.9 23.6 26.4 -9.0 -9.0 12.2 14.3 12.7 1.5 1.4 11.3 11.4
GSK Pharma Neutral 1451 1320 -9 24.6 27.0 33.7 25.2 9.6 24.9 53.8 43.1 13.6 12.3 25.2 28.7
IPCA Labs Buy 1549 1855 20 36.3 54.5 70.7 91.3 50.2 29.6 28.4 21.9 5.3 4.4 20.1 21.8
Jubilant Life Buy 383 415 8 56.9 58.0 57.4 26.7 1.9 -1.1 6.6 6.7 1.1 0.9 17.4 14.9
Laurus Labs Buy 489 615 26 10.4 24.1 29.3 -34.5 132.6 21.6 20.3 16.7 2.8 2.5 15.1 15.8
Lupin Buy 814 940 16 23.3 23.0 34.5 -27.1 -1.5 50.3 35.4 23.6 3.5 3.3 8.6 14.4
Strides Pharma Buy 426 405 -5 6.9 26.0 37.3 -39.2 279.4 43.4 16.4 11.4 1.4 1.4 8.7 12.2
Sun Pharma Buy 452 535 18 15.1 17.6 21.2 12.2 16.6 20.4 25.7 21.3 2.4 2.2 9.8 10.8
Torrent Pharma Neutral 2356 2215 -6 42.7 57.9 76.8 -7.1 35.6 32.7 40.7 30.7 7.4 6.4 19.4 22.5
Aggregate 12.7 20.7 14.1 22.6 19.8 3.2 2.8 13.9 14.1
Infrastructure
Ashoka Buildcon Buy 60 92 54 11.5 10.8 6.0 35.8 -5.7 -44.2 5.5 9.9 0.7 0.6 12.9 6.6
IRB Infra Neutral 65 80 24 24.2 19.7 7.1 1.2 -18.5 -63.9 3.3 9.1 0.3 0.3 10.5 3.6
KNR Constructions
Buy 195 270 38 17.7 15.3 15.9 -8.2 -13.7 3.6 12.7 12.3 1.7 1.5 14.1 12.8
Aggregate 10.4 8.4 0.6 0.5 5.6 6.5
Media
PVR Buy 911 1605 76 37.9 21.9 10.2 41.9 -42.2 -53.5 41.6 89.4 2.8 2.8 7.6 3.1
Sun TV Buy 383 436 14 35.4 36.6 34.9 27.6 3.5 -4.6 10.5 11.0 2.4 2.1 24.6 20.5
Zee Ent. Neutral 147 165 12 16.4 16.9 19.4 12.7 2.9 14.7 8.7 7.6 1.4 1.2 18.1 17.0
Aggregate 4.0 0.2 18.4 10.3 8.7 1.6 1.4 16.1 16.6
Metals
Hindalco Buy 118 179 52 24.7 20.2 9.6 30.9 -18.3 -52.5 5.8 12.3 0.6 0.7 11.2 5.4
Hind. Zinc Neutral 176 190 8 18.8 16.4 13.6 -10.8 -12.7 -17.2 10.7 12.9 1.8 1.9 18.7 14.4
JSPL Buy 91 150 65 3.3 -6.5 8.3 -138.7 PL LP NM 10.9 0.3 0.3 -2.0 2.6
JSW Steel Buy 172 213 24 31.8 15.7 2.7 32.4 -50.8 -83.1 11.0 64.9 1.1 1.1 10.3 1.7
Nalco Buy 29 41 42 9.2 0.3 0.3 79.9 -96.8 -9.9 97.7 108.4 0.6 0.6 0.6 0.5
NMDC Buy 73 140 92 15.6 15.6 14.2 19.2 -0.3 -8.4 4.7 5.1 0.8 0.7 17.5 14.6
SAIL Neutral 28 29 2 6.3 -0.7 -4.4 2,344.1 PL Loss NM NM 0.3 0.3 -0.7 -4.8
Vedanta Neutral 79 85 8 18.1 13.1 4.7 -11.0 -27.7 -64.2 6.0 16.7 0.5 0.5 7.7 3.0
Tata Steel Neutral 276 322 17 88.6 33.6 -16.6 27.3 -62.0 PL 8.2 NM 0.5 0.5 6.0 -3.0
Aggregate -41.9 -57.1 195.4 21.0 7.1 0.7 0.7 3.2 9.2
Oil & Gas
Aegis Logistics Buy 169 237 40 6.6 4.2 10.5 11.9 -36.6 149.6 40.3 16.1 3.9 3.3 10.0 22.1
BPCL Neutral 330 491 49 43.4 17.0 33.6 -12.9 -60.8 98.1 19.4 9.8 1.6 1.4 8.4 15.4
Castrol India Buy 123 200 62 7.2 8.4 9.6 2.4 16.8 14.6 14.7 12.9 8.9 8.0 65.3 65.7
GAIL Buy 92 140 53 14.0 10.4 9.8 38.4 -25.6 -6.3 8.8 9.4 0.9 0.9 10.6 9.5
Gujarat Gas Buy 234 340 45 6.2 17.1 12.3 46.9 173.4 -28.2 13.7 19.1 5.2 4.3 44.2 24.5
Gujarat St. Pet. Buy 196 290 48 14.1 19.6 17.1 18.9 39.3 -13.0 10.0 11.5 1.6 1.5 17.7 13.5
HPCL Buy 201 326 62 43.9 9.5 37.4 -7.3 -78.4 294.0 21.2 5.4 1.0 0.9 4.7 17.4
IOC Buy 76 168 122 18.8 3.3 12.5 -23.7 -82.2 273.8 22.7 6.1 0.6 0.6 2.7 9.8
IGL Neutral 468 515 10 11.2 17.2 16.4 19.1 53.3 -4.7 27.2 28.5 6.4 5.5 26.2 20.7
Mahanagar Gas Neutral 873 1115 28 55.3 82.4 64.3 14.3 49.0 -22.0 10.6 13.6 3.0 2.7 31.0 20.9
MRPL Neutral 30 49 61 1.9 -13.3 5.5 -84.8 PL LP NM 5.6 0.6 0.6 -24.4 10.9
Oil India Buy 91 127 40 32.0 17.5 10.4 35.6 -45.3 -40.6 5.2 8.8 0.4 0.3 7.0 4.0
ONGC Buy 76 105 39 27.1 17.1 11.3 34.4 -37.0 -33.9 4.4 6.7 0.4 0.4 9.8 6.2
PLNG Buy 227 333 46 14.4 21.0 19.1 3.7 45.8 -8.9 10.9 11.9 3.1 2.9 29.9 25.1
Reliance Ind. Buy 1507 1618 7 62.8 68.1 66.4 10.4 8.4 -2.5 22.1 22.7 2.1 1.9 10.3 8.9
Aggregate -30.6 10.4 47.7 14.6 9.9 1.3 1.2 8.9 12.0
Retail
Avenue Supermarts
Sell 2198 1750 -20 14.5 22.1 25.2 11.9 52.6 14.1 99.6 87.3 19.7 16.1 21.9 20.3
Valuation snapshot
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valuation guide
8 May 2020 21
CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%)
Company Reco (INR) (INR) Downside FY19 FY20E FY21E FY19 FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E
Aditya Birla Fashion
Buy 111 240 116 1.6 2.0 1.2 156.7 20.1 -38.7 56.1 91.5 5.9 5.6 10.6 6.3
Future Lifestyle Under Review
149 - 8.6 5.5 -1.5 30.1 -35.6 PL 26.8 NM 1.3 1.3 5.2 -1.3
Future Retail Under Review
77 - 14.6 10.7 3.7 19.1 -27.0 -65.2 7.2 20.7 0.6 0.6 10.4 2.9
Jubilant Food. Buy 1544 1715 11 24.1 24.8 24.2 62.0 2.9 -2.2 62.3 63.7 14.1 12.8 22.7 20.1
Shoppers Stop Neutral 165 260 58 7.8 -1.8 0.6 -36.3 PL LP NM 270.1 1.5 1.5 -1.7 0.6
Titan Company Neutral 849 1085 28 15.7 16.8 17.0 24.0 7.4 1.1 50.5 49.9 12.5 11.0 24.7 23.4
Trent Buy 465 575 24 2.9 2.6 2.4 11.6 -10.1 -6.7 177.2 190.1 5.8 5.6 4.3 3.2
V-Mart Retail Buy 1651 2060 25 39.5 44.0 33.5 -8.0 11.4 -23.8 37.5 49.2 6.1 5.4 17.7 11.7
Aggregate 7.2 -8.2 57.7 70.6 44.8 8.5 7.4 12.1 16.6
Technology
Cyient Neutral 232 260 12 43.4 33.8 22.5 13.4 28.3 50.2 6.9 10.3 0.9 0.9 13.5 8.6
HCL Tech. Buy 512 615 20 36.8 41.0 40.5 17.6 -10.3 1.2 12.5 12.6 2.9 2.3 24.5 20.2
Hexaware Neutral 244 306 25 19.3 21.8 18.4 17.6 12.6 -15.6 11.2 13.3 2.7 2.3 24.9 18.8
Infosys Buy 665 775 17 37.1 39.0 36.8 3.9 5.3 -5.7 17.0 18.1 4.6 3.9 25.3 21.8
L & T Infotech Buy 1593 1783 12 86.6 84.2 92.4 30.6 -2.8 9.7 18.9 17.2 4.7 4.0 27.2 24.9
Mindtree Buy 878 960 9 45.8 38.3 45.1 33.6 -16.4 17.8 22.9 19.5 4.6 4.0 20.0 20.4
Mphasis Neutral 755 682 -10 56.1 58.5 52.2 27.4 4.2 -10.8 12.9 14.5 2.7 2.5 21.7 18.9
NIIT Tech Neutral 1374 1370 0 66.2 73.5 71.0 45.3 11.0 -3.3 18.7 19.3 3.6 3.2 20.5 17.5
Persistent Sys Buy 528 730 38 44.0 44.4 45.5 8.9 0.9 2.4 11.9 11.6 1.7 1.6 14.3 13.1
TCS Neutral 1891 1900 0 83.1 86.2 82.3 23.3 3.7 -4.5 21.9 23.0 8.2 7.1 36.4 33.1
Tech Mah Neutral 516 590 14 48.8 45.9 34.4 14.2 -5.9 -25.1 11.2 15.0 2.2 1.9 18.5 12.7
Wipro Neutral 184 188 2 15.3 16.6 15.4 21.6 8.5 -7.3 11.1 11.9 1.9 1.7 17.5 15.0
Zensar Tech Neutral 84 99 19 14.4 11.5 8.8 40.4 -19.7 -23.6 7.2 9.5 0.9 0.8 12.7 8.9
Aggregate 2.7 -5.6 18.3 18.7 15.8 4.1 3.6 21.8 22.8
Telecom
Bharti Airtel Buy 528 620 17 -8.7 -7.3 3.7 -350.3 Loss LP NM 141.1 3.4 3.4 -5.1 2.4
Bharti Infratel Neutral 173 170 -2 13.6 17.0 15.6 -0.3 25.0 -8.4 10.2 11.1 2.2 2.3 21.7 20.2
Vodafone Idea 4 -18.5 -7.2 -5.2 93.3 Loss Loss NM NM 0.7 4.0 -53.4 -143.0
Tata Comm Neutral 404 375 -7 -2.2 11.9 25.5 -288.6 LP 114.8 34.0 15.8 78.0 13.2 -1,974 142.3
Aggregate Loss Loss Loss -38 -46.5 3.4 3.8 -9.0 -8.2
Utiltites
Coal India Buy 131 202 54 28.3 23.2 18.0 47.9 -18.1 -22.6 5.6 7.3 2.5 2.2 44.5 30.3
CESC Buy 637 761 20 88.9 94.2 84.5 43.1 6.0 -10.3 6.8 7.5 0.9 0.8 13.3 10.9
JSW Energy Buy 40 65 61 4.2 4.1 3.6 40.2 -2.9 -11.7 9.8 11.1 0.5 0.5 5.6 4.8
NHPC Neutral 20 23 13 2.6 3.0 2.9 5.9 17.0 -3.9 6.7 7.0 0.6 0.6 9.6 8.8
NTPC Buy 91 148 64 11.6 13.2 14.5 30.3 13.7 10.3 6.9 6.2 0.8 0.7 11.4 11.8
Power Grid Buy 162 225 39 19.2 20.4 22.1 16.0 6.5 7.9 7.9 7.3 1.3 1.2 17.3 17.0
Torrent Power Buy 323 342 6 18.7 23.8 25.8 -4.6 27.0 8.5 13.6 12.5 1.6 1.4 12.1 12.0
Tata Power Neutral 29 58 100 2.1 3.8 4.1 -60.5 77.8 9.1 7.7 7.1 0.5 0.4 6.0 6.4
Aggregate -1.0 -3.2 25.4 7.2 5.7 1.0 0.9 14.3 16.5
Others
Brigade Enterpr. Buy 110 231 110 11.7 8.1 6.0 63.2 -31.2 -25.9 13.6 18.4 1.0 0.9 7.4 5.2
BSE Buy 386 647 68 38.1 24.9 30.4 -12.4 -34.7 22.5 15.5 12.7 0.8 0.9 5.4 6.8
Concor Buy 359 518 44 19.9 16.4 14.4 14.9 -17.7 -12.5 21.9 25.0 2.1 2.0 9.6 8.1
Coromandel Intl Buy 609 719 18 25.4 34.9 38.3 7.6 37.0 9.8 17.5 15.9 4.3 3.6 27.2 24.5
Essel Propack Buy 175 210 20 6.0 7.2 9.0 7.3 20.6 23.9 24.2 19.5 3.6 3.1 15.6 17.1
Indian Hotels Buy 70 106 52 2.4 2.6 -3.3 257.4 10.7 PL 26.8 NM 1.8 2.0 7.0 -9.1
Interglobe Neutral 915 1300 42 4.1 -5.2 -75.1 -93.0 PL Loss NM NM 5.2 7.6 -2.9 -50.7
Info Edge Neutral 2593 2400 -7 23.0 20.3 25.9 54.2 -11.5 27.5 127.7 100.1 12.7 11.8 13.9 12.3
Godrej Agrovet Buy 401 423 6 12.5 11.4 10.5 10.9 -8.7 -7.8 35.0 38.0 4.4 4.2 12.9 11.2
Kaveri Seed Buy 368 427 16 34.4 38.4 34.0 7.7 11.5 -11.4 9.6 10.8 2.5 2.4 24.3 22.5
Lemon Tree Hotel Buy 17 23 36 0.7 0.0 -2.0 271.9 -98.8 PL 2,059.5 NM 1.0 1.2 0.1 -12.8
MCX Buy 1107 1400 26 28.7 46.7 44.0 35.2 63.0 -5.7 23.7 25.1 4.1 3.8 18.2 15.7
Valuation snapshot
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valuation guide
8 May 2020 22
CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%)
Company Reco (INR) (INR) Downside FY19 FY20E FY21E FY19 FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E
Oberoi Realty Buy 339 535 58 22.5 16.0 16.2 78.1 -29.0 1.3 21.2 21.0 1.4 1.4 7.0 6.7
Phoenix Mills Buy 542 808 49 25.0 22.6 17.1 57.8 -9.3 -24.3 23.9 31.6 2.2 2.1 9.6 6.8
Quess Corp Neutral 186 410 120 17.5 17.8 21.0 -19.8 1.5 17.9 10.5 8.9 0.7 0.6 9.1 9.8
PI Inds. Buy 1532 1680 10 29.7 35.7 48.0 11.6 19.9 34.5 42.9 31.9 7.9 6.6 19.9 22.5
SRF Buy 3595 4236 18 113.7 158.0 158.7 60.0 38.9 0.4 22.8 22.7 4.2 3.7 20.4 17.3
S H Kelkar Buy 55 119 115 6.1 5.2 7.4 -13.4 -14.3 41.3 10.5 7.5 0.9 0.9 8.8 12.2
Tata Chemicals Buy 286 296 3 42.9 32.4 35.1 -10.8 -24.6 8.3 8.8 8.2 0.6 0.5 8.5 9.0
Team Lease Serv. Buy 1565 2300 47 57.3 50.8 47.1 33.4 -11.4 -7.4 30.8 33.3 4.3 3.8 14.9 12.1
Trident Buy 5 6 17 0.9 0.8 0.7 87.3 -11.1 -16.7 6.0 7.2 0.7 0.7 12.7 10.0
UPL Neutral 368 366 -1 31.6 39.3 39.3 9.2 24.2 -0.1 9.4 9.4 1.8 1.5 19.6 17.5
Valuation snapshot
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8 May 2020 23
Index 1 Day (%) 1M (%) 12M (%) Index 1 Day (%) 1M (%) 12M (%)
Sensex -0.8 4.6 -17.9 Nifty 500 -0.7 5.2 -20.4
Nifty-50 -0.8 4.6 -20.0 Nifty Midcap 100 -0.5 7.6 -25.1
Nifty Next 50 -1.1 4.9 -15.8 Nifty Smallcap 100 0.5 9.1 -37.8
Nifty 100 -0.8 4.7 -19.5 Nifty Midcap 150 -0.5 7.8 -20.0
Nifty 200 -0.8 5.0 -20.1 Nifty Smallcap 250 0.2 7.2 -33.4 Company 1 Day (%) 1M (%) 12M (%) Company 1 Day (%) 1M (%) 12M (%)
Automobiles -0.6 11.5 -32.7 Capital Goods -1.5 2.9 -37.4
Amara Raja Batt. -0.9 11.3 -13.3 ABB -1.2 -8.0 -35.1
Ashok Leyland -3.0 15.8 -46.2 Bharat Elec. -1.6 -9.1 -27.6
Bajaj Auto -2.6 5.6 -20.7 BHEL 0.4 8.5 -63.8
Bharat Forge -2.4 27.2 -40.2 Blue Star -2.7 7.6 -32.8
Bosch 0.1 6.7 -44.5 CG Cons. Elec. -0.5 -1.5 -6.9 CEAT 0.3 3.1 -27.8 Cummins -2.6 25.0 -48.9
Eicher Motors 1.0 7.3 -31.0 Engineers India 0.0 4.4 -41.4
Endurance Tech. -0.2 2.3 -47.2 Havells -4.2 -2.7 -34.5
Escorts 4.8 13.0 15.6 K E C Intl -4.9 25.1 -32.7
Exide Inds. -0.2 5.0 -30.8 L&T -1.8 2.6 -39.8
Hero Motocorp -1.5 12.8 -21.0 Siemens 0.5 -5.3 -5.9
M & M 3.4 24.7 -37.0 Thermax -1.8 -3.6 -26.5 Mahindra CIE -5.0 37.2 -53.2 Voltas -3.4 -9.0 -26.5
Maruti Suzuki -1.9 4.4 -29.1 Cement -0.8 7.4 -28.7
Motherson Sumi -2.1 33.2 -43.0 Ambuja Cem. 0.4 5.9 -22.8
Tata Motors -0.7 22.5 -56.8 ACC -2.7 14.0 -28.1
TVS Motor Co. -0.8 20.8 -33.6 Birla Corp. -1.6 -10.8 -32.5
Banks-Private -0.9 5.1 -35.2 Dalmia Bhar. -1.0 9.8 -54.8
AU Small Fin. Bank -5.0 -7.6 -30.7 Grasim Inds. 0.6 -6.1 -44.3 Axis Bank 2.3 2.2 -46.5 India Cem -0.5 -3.8 -3.4
Bandhan Bank 1.3 50.7 -57.3 J K Cements -0.7 12.6 28.3
DCB Bank 0.5 -16.6 -67.8 JK Lakshmi Ce -1.4 7.0 -46.7
Equitas Holdings -1.3 34.4 -60.6 Ramco Cem -0.2 8.8 -29.6
Federal Bank -1.5 1.1 -56.3 Shree Cem -1.9 10.6 -6.8
HDFC Bank -2.3 3.2 -20.5 Ultratech -2.3 -0.7 -28.2
ICICI Bank -1.4 3.3 -12.8 Consumer -1.4 -8.7 -11.2 IndusInd Bank 6.6 18.1 -70.1 Asian Paints -1.0 -1.9 14.9
Kotak Mah. Bank -3.7 0.2 -14.7 Britannia -2.4 2.8 9.9
RBL Bank -2.5 10.9 -80.6 Colgate -2.8 -1.3 12.2
Banks-PSU 0.1 -5.3 -59.9 Dabur -3.0 -7.6 17.7
BOB 0.5 -11.6 -62.2 Emami -2.0 -14.8 -53.0
PNB 1.0 -0.8 -64.6 Godrej Cons. -4.1 -12.9 -23.6
SBI -0.2 -8.4 -44.2 GSK Cons. 0.0 1.5 53.1 NBFCs -1.6 3.2 -22.5 HUL -0.9 -18.5 17.5
Aditya Birla Cap -1.1 -2.7 -56.0 ITC -1.7 -11.3 -46.7
Bajaj Fin. -2.2 -8.5 -31.7 Jyothy Lab 1.4 13.2 -35.8
Cholaman.Inv.&Fn -1.1 13.8 -43.0 Marico -1.5 5.4 -16.7
HDFC -1.7 9.6 -13.4 Nestle -1.0 0.6 63.6
HDFC Life Insur. 0.7 5.1 20.9 Page Inds -0.3 2.0 -22.0
L&T Fin.Holdings -1.5 8.4 -52.3 Pidilite Ind. -5.5 4.3 14.8 LIC Hsg Fin -1.0 20.4 -45.2 P&G Hygiene 0.3 -2.8 -1.4
M&M Fin. -1.0 20.0 -55.7 Tata Consumer 1.9 20.1 71.1
Muthoot Fin 0.9 21.1 44.7 United Brew -2.5 -5.1 -36.4
MAS Financial Serv. -0.8 6.6 -1.7 United Spirits 2.2 -1.1 -3.5
ICICI Pru Life 0.8 11.4 9.0 Healthcare -0.9 12.6 0.0
IIFL Wealth Mgt 0.0 -11.2 Alembic Phar 2.8 31.3 45.4
PNB Housing 3.1 6.0 -74.6 Alkem Lab -2.2 10.2 51.5 Company 1 Day (%) 1M (%) 12M (%) Ajanta Pharma 1.1 9.3 39.3
Repco Home 3.3 11.8 -69.8 Aurobindo -2.0 45.5 -15.8
Shriram City Union 0.5 -3.6 -54.0 Biocon -1.0 9.9 26.8
Shriram Trans. -3.4 40.6 -26.2 Cadila -1.5 2.9 7.5
Note: Sectoral performance are of NSE/BSE Indices
Index and MOFSL Universe stock performance
8 May 2020 24
Company 1 Day (%) 1M (%) 12M (%) Company 1 Day (%) 1M (%) 12M (%)
Cipla -0.4 19.8 5.5 HCL Tech. -1.5 13.3 -9.2
Divis Lab -1.5 9.3 33.7 Hexaware -3.6 3.6 -29.3
Dr Reddy’s -0.6 7.0 30.3 Infosys -0.2 3.7 -8.1
Glenmark 0.3 47.4 -47.0 L&T Infotech 4.0 16.5 -7.1
GSK Pharma -0.8 16.4 13.4 Mindtree -3.2 19.3 -10.3 IPCA Labs -0.1 1.6 62.6 Mphasis 1.6 12.7 -21.7
Jubilant Life 4.6 30.0 -39.8 NIIT Tech -3.3 24.6 9.4
Laurus Labs -3.4 24.0 26.6 Persistent Sys 4.7 3.9 -15.0
Lupin -1.6 16.2 -4.8 TCS -0.7 6.5 -12.0
Strides Pharma 3.1 33.8 -12.9 Tech Mah 1.7 -5.6 -36.6
Sun Pharma -0.5 8.4 1.2 Wipro -1.6 -4.1 -37.3
Torrent Pharma 1.5 -0.2 38.3 Zensar Tech 1.3 -7.7 -65.5 Infrastructure -0.5 9.5 -13.9 Telecom -2.1 12.5 17.0
Ashoka Buildcon 0.6 53.0 -49.5 Bharti Airtel -3.3 12.3 62.7
IRB Infra.Devl. 0.6 21.3 -45.1 Bharti Infra. 7.4 8.4 -35.3
KNR Construct. -0.5 8.6 -16.5 Idea Cellular -2.8 29.2 -73.1
Media 0.0 5.0 -50.9 Tata Comm -5.0 71.3 17.3
PVR 1.6 -9.3 -48.9 Utiltites -2.5 4.8 -26.3
Sun TV 1.7 28.6 -30.4 Coal India -2.2 -6.7 -47.5 Zee Ent. -3.6 4.5 -60.1 CESC -1.7 41.5 -6.8
Metals -0.1 3.6 -43.1 JSW Energy 1.1 -5.3 -41.4
Hindalco -0.9 12.3 -41.4 NHPC Ltd 0.0 -4.2 -12.3
Hind. Zinc 4.1 7.2 -34.2 NTPC -4.5 11.0 -32.4
JSPL 1.6 11.6 -46.4 Power Grid -2.3 2.3 -15.6
JSW Steel 4.0 8.8 -40.3 Tata Power 0.0 -13.8 -55.0
Nalco -0.9 -1.5 -42.8 Torrent Power -1.8 10.5 26.6 NMDC -0.1 -7.4 -24.4 Others
SAIL 0.2 16.2 -46.4 Brigade Enterpr. -1.9 -19.8 -28.2
Vedanta -1.1 17.8 -51.9 BSE 1.3 26.2 -39.4
Tata Steel -0.6 -0.1 -48.0 Coromandel Intl 0.7 20.4 44.7
Oil & Gas -1.0 6.9 -23.9 Concor 2.3 8.9 -26.7
Aegis Logistics 0.4 17.7 -13.3 Essel Propack 0.4 6.9 31.6
BPCL -4.1 -6.2 -12.8 Godrej Agrovet 0.9 11.0 -22.6 Castrol India 3.5 15.8 -17.2 Indian Hotels -2.2 -5.3 -53.6
GAIL -3.3 8.3 -46.3 Interglobe -2.3 -6.7 -41.9
Gujarat Gas -0.5 1.3 44.8 Info Edge -2.0 10.8 32.5
Gujarat St. Pet. 0.6 6.8 7.4 Kaveri Seed -0.9 18.7 -17.6
HPCL -0.7 0.4 -29.3 Lemon Tree Hotel 4.6 -6.6 -76.8
IOC -1.0 -8.7 -50.6 MCX 1.9 10.1 31.6
IGL 0.2 7.5 51.7 Oberoi Realty 0.4 5.7 -34.8 Mahanagar Gas -2.4 1.5 -7.7 Phoenix Mills 1.6 7.0 -12.4
MRPL -1.6 24.5 -55.6 PI Inds. -0.7 16.3 48.3
Oil India -1.6 1.8 -49.7 Quess Corp -3.7 -13.5 -72.0
ONGC -4.5 3.6 -55.9 SRF -1.5 24.6 43.7
PLNG -2.6 13.6 -4.4 S H Kelkar -2.7 -26.7 -62.4
Reliance Ind. 3.1 24.9 12.1 Tata Chemicals -1.5 24.8 9.0
Aditya Bir. Fas. 0.4 -25.8 -46.7 Team Lease Serv. 0.2 1.1 -46.7 Retail Trident -1.5 11.1 -29.2
Avenue Super. 1.3 0.3 75.2 UPL -2.9 13.7 -42.0
Future Lifestyle 5.0 46.7 -69.4
Future Retail 5.0 13.6 -81.3
Jubilant Food -0.8 9.3 20.3
Shoppers St. 1.4 -15.3 -63.1
Titan Co. -3.2 -10.3 -21.8 Trent -1.1 1.9 25.5
V-Mart Retail 0.1 -1.5 -38.2
Technology -0.8 5.6 -17.6
Cyient -1.4 4.1 -59.2
Index and MOFSL Universe stock performance
8 May 2020 25
N O T E S
8 May 2020 26
Explanation of Investment Rating
Investment Rating Expected return (over 12-month)
BUY >=15%
SELL < - 10%
NEUTRAL > - 10 % to 15%
UNDER REVIEW Rating may undergo a change
NOT RATED We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
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of the information. The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website www.motilaloswal.com. CIN No.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.Registration Nos.: Motilal Oswal Financial Services Limited
(MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579 ;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate
Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: [email protected], Contact No.:022-71881085.* MOFSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated
July 30, 2018 issued by Hon'ble National Company Law Tribunal, Mumbai Ben