india equity analytics for today - buy stocks of tech mahindra with a price target of rs 2330

IEA-Equity

Strategy

23th Dec, 2013

AXIS BANK : "Neutral" 19th Dec 2013

Axis bank is trading at 1.6 times of one year forward book which is almost upper side of bear case valuation band. We are not seeing bank’s

earnings better than expectation as bank’s has significant exposure in riskier sector like infrastructure and power as compare to its peers. We

have taken bank’s valuation multiple in bear case scenario on account of non visibility of ROE improvement and expected muted earnings

growth. We assume loan and deposits growth of 16% and 15% along with margin at 3.5%. Better than expected performance will lead price

performance and valuation multiple............................... ( Page : 11-14)

CMC : "On track to deliver" "BUY" 20th Dec 2013

Considering recent healthy demand environment across the IT space with favorable supply side scenario, we remain confident on the stock for

better earning visibility and stable margin picture. Still, we reiterate our positive stance on the long-term story of CMC due to its focus on high

margin SI and ITES businesses.At a CMP of Rs 1510, stock trades at 14.9X FY14E earnings. We have "BUY" view on the stock and we revise our

target price from Rs1490 to Rs1690.............................. (Page : 6-7)

Tech Mahindra : "On a stronger footing.." "BUY" 23rd Dec 2013

Post merger with Satyam, strong demand traction in Telecom (Non BT) has improved and company's attractive deal win ratios make us

optimistic view on the stock. At a CMP of Rs 1691, relatively the stock is trading at a fair valuation, 12.8x of FY14E earnings (at USD of

Rs60/59.5 for FY14E/FY15E). We maintain “BUY” on the stock with a price target of Rs 2330 (revised from Rs 1875)..................... ( Page : 4-5)

Persistent System : "Persistently innovating.." "REDUCED" 23rd Dec 2013

We had initiated this stock at a CMP of Rs 526(on 16th Feb 2013) and now, it achieved its target of Rs 960. Despite better predictability of

growth and attractive visibility of its expansion in new emerging verticals, we advice to book profit on the stock because of its premium

valuation. However, sentiment could take a knock in the short run, since investors may prefer paying a premium for stocks with better earnings

visibility. Our view could be change with management guidance and post earnings of coming quarter................................................... ( Page : 2-

3)

Godrej Consumer Product : " Strategy Shining" "BUY" 19th Dec 2013

Its strong 20%+ growth in the domestic household insecticides business is the key growth driver. We expect strong momentum to continue in

its international business led by Megasari and consolidation of Darling business. Despite some concerns related to higher leverage, lost

domestic focus and currency risk, we remain confident of achieving the 20%+ sales growth with strong PAT growth for FY14E & beyond.

........................................... ( Page : 15-16)

BANK OF INDIA : "BUY" 18th Dec 2013

Bank of India is trading at 0.5 times of one year forward book which is the lowest in valuation band despite of performing better than

expectation largely due to lower CAR and slower economic growth. With the capital infusion to the tune of Rs.1000 cr and improving sign of

asset quality would re-rate the stock as it did previously in our view. The management guided fresh slippage in line with 2QFY and inch up

higher restructure asset for December quarter. We believe that current level is attractive entry point for the investor with time horizon more

than one year with price target of Rs.235.................................... ( Page : 17- 19)

DIVISLAB : Good Growth Ahead "BUY" 19th Dec 2013

The company posted strong 2QFY4 results with net sales growing to Rs 566 Cr up by 19.7% YoY on the back of good growth coming from all

business segments. The generic API grew by 18% YoY to Rs 261 Cr for the quarter and CRAMS business segment grew by 20% YoY to Rs 271

Cr............................................. ( Page : 8-10)

email: [email protected], website : www.narnolia.com

Narnolia Securities Ltd,

402, 4th floor 7/1, Lords Sinha Road Kolkata 700071, Ph 033-32011233 Toll Free no : 1-800-345-4000

India Equity Analytics

Persistent System.

-

1M 1yr YTD

Absolute 24.1 105.2 91.2

Rel. to Nifty 23 99.4 84.6

Current 1QFY14 4QFY13

Promoters 38.96 38.96 38.96

FII 15.28 14.84 12.39

DII 21.23 19.31 21.59

Others 24.53 26.89 27.06

Financials

2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%

Revenue 432.37 357.29 21.0 326.86 32.3

EBITDA 100.8 76.8 31.3 89.06 13.2

PAT 60.8 57.1 6.5 44.71 36.0

EBITDA Margin 23.3% 21.5% 180bps 27.2% (390bps)

PAT Margin 14.1% 16.0% (190bps) 13.7% 40bps

2

Previous Target Price 890

Upside -

BSE Code 533179

NSE Symbol PERSISTENT

Mkt Capital (Rs Crores)

Change from Previous

Nifty

Share Holding Pattern-%

6274

Stock Performance

Market Data

Clients Metrics: During the quarter, company added 2 clients at 32 under medium

category( >$1mn to $3mn) and 1 client at 16 from large ( > $ 3Mn) . Revenue from top-1

client was improved from 21.2% (1QFY14) to 22.5% . DSO at 62days, almost 12

quarters low.

"Persistently innovating.."

CMP 1007

Target Price 960

Company update Book Profit We had initiated this stock at a CMP of Rs 526(on 16th

Feb 2013) and now, it achieved

its target of Rs 960. Despite better predictability of growth and attractive visibility of

its expansion in new emerging verticals, we advice to book profit on the stock because

of its premium valuation. However, sentiment could take a knock in the short run,

since investors may prefer paying a premium for stocks with better earnings visibility.

4029

Average Daily Volume 12139

Margin ramp up: During the quarter, Its EBITDA margin improved by 180bps to 23.3%,

positively impacted by currency gain(270bps), while during the quarter company wage

hike to its off shore employee at a range of 8-9% was impacted margin by 310 bps

adversely. However, management expects to maintain margin at a range of 24-25% for

FY14E.

Recently , Persistent System reported superlative set of numbers during the 2QFY14

with 21%(QoQ) sales growth in INR term and 8.6%(QoQ) growth in USD term led by

38%(QOQ) growth on the intellectual property (IP) revenues. PAT growth was at 6.5%

(QoQ).

With the potential revenue growth, strong deal pipeline and multi-year relationships

with marquee clientele in the Infrastructure vertical, we expect for better earning

visibility across niche IT players.

Persistent Sytem’s management remains confident of FY14 with deal pipeline being

strong and remains focused on increasing the share of IP-led revenues in its portfolio.

They expect to see more than 15% USD revenue growth for FY14E.

1 year forward P/E-x

Rs, Crore

(Source: Company/Eastwind)

View and Valuation: The company’s focus is shifting greater proportion to IP led services

and company has marquee clientele in cutting-edge technologies around cloud,

mobility, collaboration and analytics; witnessing faster growth. Considering the

company’s premium valuation, we advice “Book Profit” on the stock. At a CMP of Rs

1007, stock trades at 15.9x FY14E earnings. Our view could be change with

management guidance and post earnings of coming quarter.

Persistent's management suggests that deal pipeline are looking strong and seeing

good activity and traction in the market across the board. Its focus on some of newer

technologies like cloud, analytics and mobility are gaining a lot of traction because of

pickup in demand environment. The emerging themes, (CAMB) Cloud, Analytics,

Mobility, and Big data could also see strong demand traction ahead. Because of

actively investment in these themes, management is very confident to see healthy

growth and also they expressed their confidence to beat the NASSCOM guidance (12-

14% revenue growth for FY14E).

52wk Range H/L 1023/477

Please refer to the Disclaimers at the end of this Report.

"Book Profit"23rd Dec' 13


3

Persistent System.


Financials


Rating and Price Target Chart Updation Detail



Rs, in Cr. FY10 FY11 FY12 FY13 FY14E FY15E

Sales 601.16 775.84 1000.3 1294.5 1657.54 2053.93

Employee Cost 368.74 481.62 599.05 719 895.07 1119.39

Cost of technical professionals 0 30.67 41.68 54 82.88 102.70

Other expenses 86.05 105.24 135.2 218 290.07 379.98

Total expenses 454.79 617.53 775.93 990.78 1268.02 1602.06

EBITDA 146.37 158.31 224.37 303.72 389.52 451.86

Depreciation 33.52 42.39 61.1 78 93.54 84.18

Other Income 11.23 34.44 34.44 34.44 66.30 71.89

EBIT 112.85 115.92 163.27 225.44 295.98 367.68

Interest Cost 0 0 0.00 0.03 0.00 0.00

Profit (+)/Loss (-) Before Taxes 124.08 150.36 197.71 259.851 362.29 439.57

Provision for Taxes 9.05 10.62 55.09 75.37 108.69 131.87

Net Profit (+)/Loss (-) 115.03 139.74 142.62 184.481 253.60 307.70

Growth-% (YoY)

Sales 1.2% 29.1% 28.9% 29.4% 28.0% 23.9%

EBITDA 60.2% 8.2% 41.7% 35.4% 28.3% 16.0%

PAT 74.1% 21.5% 2.1% 29.4% 37.5% 21.3%

Expenses on Sales-%

Employee Cost 61.3% 62.1% 59.9% 55.5% 54.0% 54.5%

Other expenses 14.3% 13.6% 13.5% 16.9% 17.5% 18.5%

Tax rate 7.3% 7.1% 27.9% 29.0% 30.0% 30.0%

Margin-%

EBITDA 24.3% 20.4% 22.4% 23.5% 23.5% 22.0%

EBIT 18.8% 14.9% 16.3% 17.4% 17.9% 17.9%

PAT 19.1% 18.0% 14.3% 14.3% 15.3% 15.0%

Valuation:

CMP 310 366.7 409.2 541 1007 1007

No of Share 4 4 4 4 4.00 4.00

NW 639.0 747.1 840.5 1018.3 1234.4 1504.7

EPS 28.8 34.9 35.7 46.1 63.4 76.9

BVPS 159.7 186.8 210.1 254.6 308.6 376.2

RoE-% 18.0% 18.7% 17.0% 18.1% 20.5% 20.4%

P/BV 1.9 2.0 1.9 2.1 3.3 2.7

P/E 10.8 10.5 11.5 11.7 15.9 13.1

Date Update Detail CMP View Target Price

16-Feb-13 Initiation 526 BUY 580

25-Jun-13 Company Update 499 BUY 580

7-May-13 Result Update 514 BUY 580

31-Jul-13 Result Update 522 BUY 580

18-Sep-13 Company Update 573 BUY 642

26-Sep-13 Company Update 623 BUY 834

9-Oct-13 Company Update 682 BUY 834

22-Oct-13 Result Update 739 BUY 890

13-Dec-13 Company Update 876 BUY 960

23-Dec-13 Company Update 1007 Book Profit

Tech Mahindra

BUY

24%

1M 1yr YTD

Absolute 9.3 99 39.2

Rel. to Nifty 6.8 93 32.7


Promoters 36.46 47.17 47.41

FII 32.59 26.79 27.34

DII 15.13 15.83 16

Others 15.82 10.21 9.25

Financials


Revenue 4771.5 4103.2 16.3 3523.7 35.4

EBITDA 1110.85 864.5 28.5 756.9 46.8

PAT 718.2 686.3 4.6 455.9 57.5

EBITDA Margin 23.3% 21.1% 220bps 21.5% 150bps

PAT Margin 15.1% 16.7% (160bps) 12.9% 220bps

4


Recently, following the footsteps of other larger giants such as TCS and Infy, Tech

Mahindra revealed its earning story better than street expectations for 2QFY14. Sales

grew by 16.3% (QoQ) in INR term led by healthy growth across all segments, verticals

and geographies. In USD term, sales grew 4.7% (QoQ) better than all nearest peers

barring TCS. PAT was up by 4.7% (QoQ) adversely impacted by lower other income and

forex loss of Rs 26 Cr during the quarter. The company had forex gains of Rs 134 Cr in

the June quarter.

Nifty


Upside 26%


"On a stronger footing.."

Company update

CMP 1844

Target Price 2330

Broad-based performance with positive outlook, positive view retained;

The company remains confident on demand and expects client budgets to remain at

the same levels in FY15E. It announced 2 large deals in the enterprise solutions

(previously Mahindra Satyam) and has a healthy deal pipeline.

Market Data

BSE Code 532755

NSE Symbol TECHM


52wk Range H/L 1872/895

42991

Win- Win on all geographies: During the 2QFY14, winning trio was seen across

geographies. US (contributes 33% on sales) grew by 8%, RoW (23% on sales) by 9.4%

(QoQ). While Europe (contributes 44% on sales) was marginally up by 2.4%(QoQ) in USD

term. Post earning management quoted for better outlook in Europe with greater

traction in Australia and Africa in near term.

All-rounder across all verticals: During the quarter, company reported 2.5% growth in

Telecom, 4.7% growth in manufacturing, media including entertainment, BFSI and

others each in USD term. While Retail, Transport and Logistic snapped a larger growth

figure of 22% sequentially. The company is focusing on BFSI, manufacturing and

telecom.

BT on Slide: The management said revenues from British Telecom (BT) continued to

slide. Those were 12% of consolidated revenues in the June quarter. It believes revenues

from BT will be under pressure.

1 year forward P/E-x

Rs, Crore



Post merger with Satyam, strong demand traction in Telecom (Non BT) has improved

and company's attractive deal win ratios make us optimistic view on the stock. At a

CMP of Rs 1691, relatively the stock is trading at a fair valuation, 12.8x of FY14E

earnings (at USD of Rs60/59.5 for FY14E/FY15E). We maintain “BUY” on the stock with

a price target of Rs 2330 (revised from Rs 1875).


6274

Stock Performance

View and Valuation: Recently, company’s management explained its 6-pillar strategy

i.e., selling 6 service lines of IT, infr- management, network management, security

services, value added services and services such as analytics to telcos. Currently, non-IT

services contribute 33% of telecom revenues for the company. Further, it is focusing on

segments that are growing faster such as platforms, enterprise, mobility and NMACS

(networks, mobility, analytics, cloud and security).

Green flag on Margin front: EBITDA margin expanded 222 basis points sequentially to

23.3% aided by a weaker rupee. Despite sweet flavor on margin front, management is

still cautious for coming quarter due to Furloughs .

"BUY"23rd Dec' 13


5

Tech Mahindra.


Operating Metrics

Financials



Client contribution to revenue-% 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14

Customer Active 484.00 475.00 475.00 516.00 567.00 576.00

Top 10 clients 50.0% 51.0% 50.0% 50.0% 49.0% 48.0%

Top 5 clients 40.0% 41.0% 39.0% 37.0% 37.0% 36.0%

Top client 17.0% 14.0% 15.0% 13.0% 12.0% 12.0%

Revenue mix - onsite/offshore (%)

Onsite 48.0% 48.0% 48.0% 48.0% 51.0% 51.0%

Offshore 52.0% 52.0% 52.0% 52.0% 49.0% 49.0%

Employee Metrics

Utilisation % 75.0% 74.0% 76.0% 77.0% 76.0% 75.0%

Attrition % 17.0% 16.0% 16.0% 16.0% 15.0% 16.0%

Rs, Cr FY12 FY13 FY14E FY15E FY16E

Net Sales(mn)-USD 1157 2633 3124.01 3592.61 4023.73

Net Sales 11702.4 14332.0 18744.06 21376.04 24343.54

Employee Cost 6591.9 8099.5 10309.24 11756.82 13388.95

Operation and other expenses 2210.1 2287.3 3373.93 3847.69 4381.84

Subcontracting Cost 948.6 882.0 1405.80 1603.20 1947.48

Total Expenses 9750.6 11268.8 13683.17 15604.51 17770.79

EBITDA 1951.8 3063.2 5060.90 5771.53 6572.76

Depreciation 319.0 389.6 509.54 581.08 661.75

Other Income 501.3 212.2 281.16 213.76 243.44

Extra Ordinery Items 36.9 -160.1 -209.39 -238.79 -121.72

EBIT 1632.80 2673.60 4551.36 5190.45 5911.00

Interest Cost 107.3 92.1 98.04 91.37 86.93

PBT 2063.7 2633.6 4525.09 5074.05 5945.79

Tax 228.9 647.9 1176.5 1319.3 1545.9

PAT 1834.8 1985.7 3348.6 3754.8 4399.9

Growth-%

Sales-USD 2.7% 127.6% 18.6% 15.0% 12.0%

Sales 13.8% 22.5% 30.8% 14.0% 13.9%

EBITDA 11.9% 56.9% 65.2% 14.0% 13.9%

PAT 11.9% 8.2% 68.6% 12.1% 17.2%

Margin -%

EBITDA 16.7% 21.4% 27.0% 27.0% 27.0%

EBIT 14.0% 18.7% 24.3% 24.3% 24.3%

PAT 15.7% 13.9% 17.9% 17.6% 18.1%

Expenses on Sales-%

Employee Cost 56.3% 56.5% 55.0% 55.0% 55.0%

Subcontracting Cost 8.1% 6.2% 7.5% 7.5% 8.0%

Operation and other expenses 18.9% 16.0% 18.0% 18.0% 18.0%

Tax rate 11.1% 24.6% 26.0% 26.0% 26.0%

Valuation

CMP 652.5 1081.7 1844 1844 1844

No of Share 23.2 23.2 23.2 23.2 23.2

NW 4815.8 5529.1 8741.77 12360.68 16624.68

EPS 79.0 85.5 144.1 161.6 189.4

BVPS 207.3 238.0 376.31 532.10 715.66

RoE-% 38.1% 35.9% 38.3% 30.4% 26.5%

Dividen Payout-% 3.2% 3.0% 4.1% 3.6% 3.1%

P/BV 3.1 4.5 4.9 3.5 2.6

P/E 8.3 12.7 12.79 11.41 9.74

CMC

1M 1yr YTD

Absolute 15.0 29.2 54.5

Rel. to Nifty 15.4 24.6 37.1


Promoters 51.12 51.12 51.12

FII 23.32 21.84 19.87

DII 17.83 19.05 20.46

Others 7.73 7.99 8.55

Financials2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%

Revenue 560.75 486.61 15.2 458.64 22.3

EBITDA 88.41 77.04 14.8 76.59 15.4

PAT 67.3 53.12 26.7 49.4 36.2

EBITDA Margin 15.8% 15.8% - 16.7% (90bps)

PAT Margin 12.0% 10.9% 110bps 10.8% (120bps)

6

"On track to deliver"

CMP 1510

Target Price 1690




1560/1107

Company update Buy


Upside 12%

Stock Performance

1 year forward P/E

Rs, Crore



Deal pipeline: The deal pipeline is in line with the last year. It indicated that pursuing

good number of deals in the Developed and as well emerging markets. Considering

current sound demand environment across geographies (like US and Europe) and

verticals Company is more optimistic for clients acquisition and deal executions ahead.

Now, CMC is focusing on new emerging segments like IMS (Infrastructure

Management Services), Cloud, Big data, Mobility and Analytics. Considering its

impressive client as well as market response, company is expecting to quantify into

revenue. Its new and emerging projects like Mining Management System, GPS System

and Port & Cargo Management System would play a major role for generating

revenue.

View and Valuation: CMC expects the growth momentum to improve in the quarters

ahead and the revenue growth to be higher than the NASSCOM guidance in FY14. The

Company remains a strong with excellent earning visibility led by joint effort of market

strategy by TCS (contributes 59% of sales) in its product and solutions. For a long-term

prospect, we remain positive on the stock, taking its earning visibility and healthy

earnings among the mid-cap IT space (over 25% CAGR in earnings over FY2013-15E). At

a CMP of Rs 1510, stock trades at 14.9X FY14E earnings. We have "BUY" view on the

stock and we revise our target price from Rs1490 to Rs1690.

Steady Margin: During the quarter, EBITDA margin was almost unchanged at 15.8% due

to wage hikes (70 bps), but also has positive impact from currency gain (170 bps) which

were reinvested into the business. However, Management is still confident to maintain

the margin in a range of 15-16%.

Nifty 6167

4575

We believe, CMC will continue with its efforts to enhance revenue contribution of high

margin System Integration and ITES segments. Further, its high focus on education

space will also add margin in near term.

Considering recent healthy demand environment across the IT space with favorable

supply side scenario, we remain confident on the stock for better earning visibility and

stable margin picture. Still, we reiterate our positive stance on the long-term story of

CMC due to its focus on high margin SI and ITES businesses.

For 2QFY14E earnings, CMC witnessed better Sales and PAT growth with 15% sales

growth driven by the strong growth from the System Integration (29%) coupled with the

good growth from the System Integration (24%) and ITES business (16%) sequentially.

PAT grew by 27%(QoQ) because lower effective tax rate (from 34%, 1QFY14) to 20% of

earning before tax) .

BSE Code 517326

NSE Symbol CMC

Change from Previous 13.4%

Market Data

52wk Range H/L

"BUY"20th Dec' 13


7

CMC

Key facts from recent Concall



Financials;

►CMC continues to target growth ahead of the overall IT industry; the company expects

to grow faster than that in the current financial year

►Expects operating Profit margin between 15 percent and 16 percent for FY14E,

►The Capex expected to be Rs 190 crore (planned is around Rs 230 crore) for FY'14.The

capex will be financed by internal accruals.

►Company’s hiring Plan; a net addition of 400-500 this year

► Notably, it targets revenues of Rs 250-300 crore from Education and Training business

in next two 3-4 years timeline.


Rs, Cr FY10 FY11 FY12 FY13 FY14E FY15E

Net Sales 870.73 1084.40 1469.34 1927.87 2239.31 2600.41

Purchases of stock-in-trade 99.35 99.28 145.40 188.56 201.54 234.04

Employee Cost 276.16 345.13 440.22 521.65 593.42 702.11

Subcontracting and outsourcing cost 173.56 262.35 446.11 679.73 794.96 923.15

Other expenses 159.94 170.17 213.63 222.88 235.13 273.04

Total Expenses 709.01 876.93 1245.36 1612.82 1825.04 2132.34

EBITDA 161.72 207.47 223.98 315.05 414.27 468.07

Depreciation 9.85 10.46 21.37 23.20 41.95 60.69

Other Income 18.75 11.80 17.46 13.17 22.39 26.00

EBIT 151.87 197.01 202.61 291.85 372.33 407.38

Interest Cost 3.17 0.22 0.02 0.18 0.2 0.25

PBT 167.45 208.59 220.05 304.84 394.52 433.14

Tax 24.23 32.42 68.59 76.76 86.79 99.62

PAT 143.22 176.17 151.46 228.08 307.73 333.52

Growth-%

Sales -7.4% 24.5% 35.5% 31.2% 16.2% 16.1%

EBITDA 27.7% 28.3% 8.0% 40.7% 31.5% 13.0%

PAT 23.3% 23.0% -14.0% 50.6% 34.9% 8.4%

Margin -%

EBITDA 18.6% 19.1% 15.2% 16.3% 18.5% 18.0%

EBIT 17.4% 18.2% 13.8% 15.1% 16.6% 15.7%

PAT 16.4% 16.2% 10.3% 11.8% 13.7% 12.8%

Expenses on Sales-%

Employee Cost 31.7% 31.8% 30.0% 27.1% 26.5% 27.0%

Subcontracting Cost 19.9% 24.2% 30.4% 35.3% 35.5% 35.5%

Tax rate 14.5% 15.5% 31.2% 25.2% 22.0% 23.0%

Valuation

CMP 1340.0 2079.6 994.8 1410.0 1510 1510

No of Share 1.50 1.50 3.00 3.03 3.03 3.03

NW 510.68 654.02 772.19 946.26 1192.11 1454.91

EPS 95.48 117.45 50.49 75.27 101.56 110.07

BVPS 340.45 436.01 257.40 312.30 393.44 480.17

RoE-% 28.0% 26.9% 19.6% 24.1% 25.8% 22.9%

Dividen Payout ratio 18.6% 19.9% 23.2% 19.4% 20.1% 21.2%

P/BV 3.94 4.77 3.86 4.51 3.84 2.78

P/E 14.03 17.71 19.70 18.73 14.87 13.72

BUY

1M 1yr YTD

Absolute 2.8 4.4 1.4

Rel. to Nifty 0.1 -1.3 -14.6


3Promoters 52.1 52.2 52.2

FII 15.8 14.9 14.0

DII 12.5 12.5 13.3

Others 19.5 20.5 20.5

Financials Rs, Crore


Revenue 567 517 9.7 474 19.6

EBITDA 249 197 26.4 165 50.9

PAT 205 174 17.8 117 75.2

EBITDA Margin 43.9% 38.1% 580bps 34.8% 910bps

PAT Margin 36.2% 33.7% 250bps 24.7% 1150bps

8

Change from Previous -

NSE Symbol


Stock Performance-%


Mkt Capital (Rs, Cr)

Nifty 6217

The company have one more business segment ‘Nutraceuticals’ relatively smaller and

newer as compared to other business segment can act as growth driver going forward. The

management of the company is quite optimistic for this business segment and has guided

that this business at 40-50% CAGR (albeit on a low base) over the next 2-3 years.

2QFY14 Results Update.The company posted strong 2QFY4 results with net sales growing to Rs 566 Cr up by

19.7% YoY on the back of good growth coming from all business segments. The generic

API grew by 18% YoY to Rs 261 Cr for the quarter and CRAMS business segment grew by

20% YoY to Rs 271 Cr. The company derives almost 45-50% of revenues each from

CRAMS and generic API business while rest comes from ‘Nutraceuticals’.One Year Price vs Nifty


15631

Average Daily Volume 5.43

The operating EBITDA for the quarter came at Rs 250 Cr and OPM at 43.9 %. Company’s

2QFY14 EBITDA margins were higher than 34.8% reported in Q2FY13 on account of

higher gross margins, lower power cost and forex loss in Q2FY13.The RM cost as % of net

sales stands at 50% for the 2QFY14 while employee cost as % of net sales was 10 %.

Company is one of the few CRAMS (Contract Research and Manufacturing Services)

players with a superior business mix comprising high-margin custom synthesis of APIs

(Active Pharma Ingredients) and intermediates for innovator companies. The company

collaborates with innovators throughout the product development cycle. Post

commercialization, company is usually the key supplier of APIs and intermediates for these

products to the innovators. In 2012-13, the company added six products to its custom

synthesis portfolio.The CRAMS business which contributes nearly 45%- 50% of the total revenues have from

Rs 560 Cr in 2009 to Rs 1000 Cr translating CAGR of 15 %.The Generic API business

which contributes another 45-50 % to the total revenues is also well track after witness

some pressure in FY10.As on FY13 this segment contributed Rs 1029 Cr to the total

revenues and this segment to more revenues to the company in the light of upcoming

patent cliff of US and new launches .

14%Upside

DIVISLABGood Growth Ahead

Target Price 1350

Previous Target Price -

Result Update

CMP 1186

About The Company :Divi’s Laboratories Limited is an India-based manufacturer of Active Pharmaceutical

Ingredients (APIs) and Intermediates. Divi is engaged in manufacture of generic APIs,

custom synthesis of active ingredients for innovator companies and other specialty

chemicals like peptides and nutraceuticals.

Investment Rationale :

52wk Range H/L 1189/905

DIVISLAB

Market Data

BSE Code 532488

"BUY"19th Dec' 13


9


DIVISLAB

Continued…The net profits for the 2QFY14 came at Rs 205 Cr and NPM came at 36.2%.The net profits

also include forex gain of Rs 31 Cr. The company reports its forex gain under other

income headings and forex loss under its other expenditure head. The tax rate for the

quarter stands at 22%.

Graphical Depiction

Revenue Break Up: 2QFY14


Company has capitalized Fixed assets to the tune of Rs120 Cr for H1 FY14. The company

will commercialize DSN SEZ by the end of the year and the FDA inspection post that. The

new DSN SEZ contribution will start in Q1 FY15E and full benefits will fructify only from Q2

FY15E.The existing DSN blocks contributed Rs125 Cr revenues in Q2 FY14 as against

Rs70.8 Cr in Q1 FY14.

Management GuidanceThe management of the company after strong 2QFY14results expects that revenue to

grow by 15-20 % (15% guided earlier), with FY15E growth expected above 20%. The

management further indicated that this high level of OPM is not sustainable but reiterated

that 38% levels OPM is quite reachable . On Power shortage ,which declined the OPM in

1QFY14 has been solved and will aid margin expansion going forward. The capex

guidance stands at INR500-600m (apart from INR2b addition from CWIP) and tax rate

guidance remains between 23-24%.

View & ValuationThe company is not only the most profitable company in the CRAMS space, but also

features among the most profitable companies in the Indian healthcare sector with EBIDTA

margin of 35-40% backed by its strong chemistry skills and custom synthesis presence.The

stock is currently trading at CMP of Rs 1186, strong 2QFY14 results ,optimistic

management guidance and better business model in comparison to its peers makes us

confident for the stock. We are positive for the stock and recommend BUY with

target price of Rs 1350.


10

DIVISLAB

Sales and PAT Trend (Rs)


Net sales growing to Rs 566 Cr up by 19.7%

YoY on the back of good growth coming from

all business segments.

2QFY14 EBITDA margins were higher than

34.8% reported in Q2FY13 on account of

higher gross margins, lower power cost and

forex loss in Q2FY13.

OPM %


NPM %

The 2QFY14 PAT also include forex gain of Rs

31 Cr. The company reports its forex gain

under other income headings and forex loss

under its other expenditure head.




AXIS BANK

1286

1325

1247

3

6.3

1M 1yr YTD

Absolute 12.9 -5.2 -5.2

Rel.to Nifty 12.6 -10.9 -10.9


3Promoters 33.9 33.9 33.5

FII 40.7 4094.0 39.6

DII 8.8 8.5 10.0

Others 16.6 16.6 17.0

Financials Rs, Cr

2011 2012 2013 2014E 2015E

NII 6566 8026 9666 12620 14710

Total Income 11238 13513 16217 19715 21804

PPP 6377 7413 9303 11238 12429

Net Profit 3340 4224 5179 6343 6977

EPS 81.4 102.2 110.7 135.2 149.1

11

Mkt Capital (Rs Cr)


Stock Performance

Average Daily Volume

Sequentially stable asset quality help to make lower provision

On asset quality front, Axis bank reported 10 bps deterioration in GNPA on

sequential basis to 1.4%. In absolute term GNPA increased by 10% QoQ and

provision increased by 12% QoQ. This led net NPA increased by 6% sequentially. In

percentage term NPA stood at 0.4%, flat on QoQ basis. Provision coverage ratio

(without technical write off) was improved by 100 bps to 69.3% and PCR at technical

write off was 89%. During quarter bank made loan loss provision of Rs.687 cr versus

Rs.712 cr in 1QFY14 and Rs.509 cr in 2QFY13. On sequential basis risky sector

like power and infrastructure exposure remain flat at 12.64% from 12.67% in

1QFY14.

Declined in cost income ratio led robust growth in operating profit

Operating expenses increased by 12.1% YoY to Rs.1953 cr in which employee cost

and other operating cost increased by 11.4% and 12.5% respectively. Cost income

ratio declined by 440 bps to 41.5% from 44.9% in 2QFY13. Employee cost and other

operating cost as a percentage of total assets remain flat at 0.2% and 0.4%

respectively. With the support of healthy NII, fee income and improvement of cost

income, operating profit grew by 29% YoY and -3.3% in QoQ to Rs.2750 cr.

Sequential declined of operating profit was due to gain of treasury income in

1QFY14 which was absent in 2QFY14.

During 2QFY14, Axis bank reported NII growth of 26.2% YoY largely due to 50 bps

YoY improvement of margin and 577 bps YoY increased of credit deposits ratio and

17% increased in loan growth. Axis bank’s interest earnings assets increased by

20% YoY whereas interest bearing liabilities increased by 13% YoY. Total revenue

of the bank grew by 21.3% YoY to Rs.4703 cr. Non- interest income registered

growth of 14% YoY to Rs.1766 cr.


Axis Bank Vs Nifty


2066127

Nifty 6217

39764

1549/763

NSE Symbol AXISBANK

52wk Range H/L

Healthy NII growth on the back of margin improvement and loan growth

Company Update NEUTRAL

CMP

Target Price

Axis bank is trading at 1.6 times of one year forward book which we believe

that it is higher side of our bear case valuation band. We have neither seen

valuation band expansion nor did earnings lead price performance. Axis bank

has significant exposure in infrastructure and power (12.64% in 2QFY14) as

compare to its peer group. Asset quality pressure may persists in coming

quarters which restrict bank’s valuation multiple in the range of 1.4 to 1.6

times of book in our view. We advice our investors to book part profit at the

current level. Our valuation multiples are based upon bank’s present growth

parameters, better than expected performance and visibility of ROE

improvement will expand valuation and multiples.

Previous Target Price

Market Data

Upside

BSE Code 532215

"NEUTRAL "19th Dec, 2013


12

AXIS BANK


During quarter bank reported 7 bps QoQ declined in NIM to 3.79% led by 500 bps

sequentially declined of credit deposits ratio and almost flat of loan yield on QoQ basis.

Loan yield during the quarter was 10.5% and cost of deposits declined from 7.4% to

7.1% sequentially.

Valuation & View

Healthy NII growth and controlled CI ratio along with stable margin help to boost

up profit

With the support of healthy NII growth and controlled operating expenses led net profit of

26% YoY to Rs.1362 cr from Rs.1081 cr. Consequently ROA improved by 12 bps to 1.6%

and ROE declined to 15.3% from 17.5% in 2QFY13 largely due to operating leveraging.

Modest deposits growth and strong traction in loan growth

On business growth parameters, bank’s total business grew by 12% YoY to Rs.4567 bn

as against Rs.4077 bn. Deposits grew by moderate pace with 8% YoY while current

deposits and saving deposits grew by 9% and 18% respectively taking overall CASA ratio

to 42.9%. Bank’s strategy to focus on retail deposits seem well is shaping as share of

retail deposits in term deposits increased continuously to 45.2% from 40.3% in21QFY13.

Loan grew by 17% YoY to Rs.20130 bn. Incremental loan growth came from retail

advance and SME segment. Share of retail loan increased to 30.2% of overall loan from

25.7% in 2QFY13. Bank’s has decreased in share of risky sector (Power & Infrastructure)

exposure to 12.64% from 13.63% in 2QFY13. Credit deposits ratio improved by 577 bps

YoY to 78.8% implying best utilization of excess liquidity in balance sheet.

Sequential declined of margin owing to flat loan yield

Axis bank delivered good set of numbers during quarter but exposure to stress sector

remain at 12%+ level. Moreover Axis bank has higher exposure in small, medium

enterprises and infra segment in comparison to peers. In challenging macro environment

and tight liquidity situation, Axis bank is more vulnerable among peers. At the current

price of Rs.1286, stock is trading at 1.6 times of one year forward book which is upper

side of bear case valuation band. We advice book part profit at current level. We value

bank at multiple of 1.4 to 1.6 times of one year forward book which implies Rs. price

range of Rs.1247 to Rs.1325.


13

AXIS BANK

Source: Eastwind/Company



Quarterly Result 2QFY14 1QFY14 2QFY13 % YoY Gr % QoQ Gr

Interest/discount on advances / bills 5394 5189 4736 13.9 4.0

Income on investments 2143 2015 1897 13.0 6.3

Interest on balances with Reserve Bank of India 35 34 22 58.9 2.6

Others 37 39 32 14.9 -5.5

Total Interest Income 7609 7278 6687 13.8 4.6

Fee Income 1432 1317 1343 6.6 8.7

Trading Income 5 440 207 -97.6 -98.9

Miscellaneous Income 329 24 0 - 1270.2

Others Income 1766 1781 1551 13.9 -0.9

Total Income 9375 9059 8238 13.8 3.5

Interest Expended 4672 4413 4360 7.2 5.9

NII 2937 2865 2327 26.2 2.5

Other Income 1766 1781 1551 13.9 -0.9

Total Income 4703 4647 3877 21.3 1.2

Employee 644 643 578 11.4 0.1

Other Expenses 1309 1160 1164 12.5 12.9

Operating Expenses 1953 1803 1742 12.1 8.3

PPP( Rs Cr) 2750 2844 2136 28.8 -3.3

Provisions 687 712 509 35.0 -3.5

PBT 2062 2131 1626 26.8 -3.2

Tax 700 722 545 28.4 -3.1

Net Profit 1362 1409 1081 26.0 -3.3

Balance Sheet Date ( Rs Bn)

Net Worth 362 349 252 43.6 3.7

Deposits 2554 2384 2356 8.4 7.1

Loan 2013 1982 1721 16.9 1.6

Asset qualtiy( Rs Cr)

GNPA 2734 2490 2191 24.8 9.8

NPA 838 790 654 28.1 6.1

%GNPA 1.4 1.3 1.3

%NPA 0.4 0.4 0.4

14

FINANCIALS & ASSUPTION

AXIS BANK




Income Statement 2011 2012 2013 2014E 2015EInterest Income 15155 21995 27183 33243 38426

Interest Expense 8589 13969 17516 20622 23716

NII 6566 8026 9666 12620 14710

Change (%) 31.2 22.2 20.4 30.6 16.6

Non Interest Income 4671 5487 6551 7095 7095

Total Income 11238 13513 16217 19715 21804

Change (%) 25.3 20.2 20.0 21.6 10.6

Operating Expenses 4860 6100 6914 8478 9376

Pre Provision Profits 6377 7413 9303 11238 12429

Change (%) 22.4 16.2 25.5 20.8 10.6

Provisions 3033 3189 4124 2176 2461

PBT 3345 4224 5179 9062 9967

PAT 3340 4224 5179 6343 6977

Change (%) 34.8 26.5 22.6 22.5 10.0

Balance SheetDeposits( Rs Cr) 189166 219988 252614 290506 334081

Change (%) 34 16 15 15 15

of which CASA Dep 77758 91412 112100 124917 143655

Change (%) 18 18 23 11 15

Borrowings( Rs Cr) 26268 34072 43951 51266 58956

Investments( Rs Cr) 71788 92921 113738 129873 149354

Loans( Rs Cr) 142408 169760 196966 228481 265037

Change (%) 36 19 16 16 16

Valuation

Book Value 460 549 708 828 957

CMP 1404 1146 1304 1288 1288

P/BV 3.1 2.1 1.8 1.6 1.3

Godrej Consumer Product

840

960

725

14%

32%

▪ Godrej Consumer aims to grow 10 times in the next 10 years.

Key updates;

1M 1yr YTD

Absolute -2.1 17.6 27.0

Rel. to Nifty -4.8 11.5 8.8


Promoters 63.3 63.3 63.5

FII 28.7 28.3 28.2

DII 1.2 1.2 1.2

Others 6.8 7.2 7.1

Financials Rs, Cr


Revenue 1961.7 1724.9 13.7% 1600.32 22.6%

EBITDA 299.8 225.4 33.0% 248.96 20.4%

PAT 195 133 46.6% 159.31 22.4%

EBITDA Margin 15.3% 13.1% 210bps 15.6% (30bps)

PAT Margin 9.9% 7.7% 220bps 10.0% (10bps)

15Please refer to the Disclaimers at the end of this Report.


Stock Performance


1 yr Forward P/B


120012

Nifty 6217


28593

977/693

BSE Code 532424

NSE Symbol

▪ Godrej Consumer's management is hopeful of seeing an uptick in the urban demand

and the rural demand is expected to be strong due to good harvest. We expect 20-22%

(YoY) sales growth for 3QFY14.

" Strategy Shining"

CMP

Upside

Key facts from recent Management Comments:

Target Price

Company update BUY


▪ The company does not see company’s margins coming under pressure going ahead,

due to heavy investments it has made in advertisements. We expect 15-15.5% EBITDA

margin for FY14E and 15.5-16% for FY15E.

GODREJCP

Market Data

52wk Range H/L

View and Valuations: Its strong 20%+ growth in the domestic household insecticides

business is the key growth driver. We expect strong momentum to continue in its

international business led by Megasari and consolidation of Darling business. Despite

some concerns related to higher leverage, lost domestic focus and currency risk, we

remain confident of achieving the 20%+ sales growth with strong PAT growth for FY14E

& beyond. At a CMP of Rs840, stock trades at 5.7x FY15E P/BV. We retain BUY with a

price target of Rs 960.

▪ On International revenue front, Godrej Consumer could see some threads in certain

areas especially Indonesia (18% of sales) and Nigeria (13% of sales), Indonesia is going

into election next year and in Nigeria, there have been wage hikes.

Demand Pickup scenario: On demand side scenario, we expect that the strong

agricultural season leading to strong rural GDP growth would support to improve

demand environment very soon. Considering recent GDP growth and Current Account

Deficit (CAD) numbers, we are expecting that the economy is moving to track and urban

demand will see some picking up.

Strong focus on driving growth with 10x10 strategy: Its strong focus on driving growth

in the domestic and international market by expansion of products and distribution

reach, we expect strong earning in near future. With launching new products in

domestic as well as international mkt, Godrej CP will explore organic & inorganic growth.

Along with its 3x3 strategy, it has 10x10 strategy also, which refers to 10x growth in 10

yrs.

Products strategy: The company continues to gain and enjoy market leader ship position

across all three formats. The company is driving increase in penetration with launch of

"Goodknight Advanced colour play". The company has launched Goodknight aerosol and

coil in Nigeria.

Recent developments: The Company has entered into an agreement on Oct 7, 2013, to

acquire a 30% stake in Bhabani Blunt Hair Dressing Pvt Ltd, a premier hair salon

company with one of the strongest consumer franchises in this space.

Mkt Capital (Rs Cr)

"BUY"19th Dec' 13


16

Godrej Consumer Product

Regionwise margin:

Quaterly snapshot:

-1

-2


Financials and Valuation



Qtrly, 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14

Sales Gr(YoY) 23% 36% 31% 39% 35% 26% 30% 23.9% 22.6%

PAT Gr(YoY) -2.6% 68.3% 36.0% -45.5% 24.7% 3.1% 58.7% 1.8% 22.4%

EBITDA Margin 18.0% 20.1% 18.9% 14.5% 15.6% 16.8% 16.2% 13.1% 15.3%

PAT Margin 12.0% 13.9% 13.5% 12.1% 10.8% 11.3% 13.3% 9.0% 10.9%

Regions 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14

India 18.9% 20.4% 20.2% 15.1% 17.6% 18% 16.7% 15.8% 18.9%

Indonesia 19.4% 20.6% 20.7% 18% 19% 20% 19% 15% 17%

Africa 26.0% 31% 19.3% 19% 16% 20% 7% 13% 14%

Latin America 7.4% 9% 16.3% 3% 4% 8% 9% 3% 7%

Europe 11% 5% 10.5% 13% 9% 5% 13% 9% 10%

Rs, in Cr FY10 FY11 FY12 FY13 FY14E FY15E

Sales 2041.2 3693.6 4866.16 6390.79 7823.32 9198.58

Other Operating Income 2.5 28.11 45.93 16.58 20.30 23.86

Total income from operations 2043.7 3721.71 4912.09 6407.37 7843.62 9222.44

RM Cost 619.59 1458.28 2174.67 2640.31 3176.67 3781.20

Purchases of stock-in-trade 367.16 294.12 356.11 451.03 552.13 649.19

WIP -40.45 -45.22 -212.26 -118.06 -183.50 -224.07

Employee Cost 151.81 284.51 391.91 590.68 723.08 850.19

Ad Spend 132.8 352.85 449.86 660.35 902.02 1014.47

Other expenses 402.98 695.96 850.47 1196.46 1459.0 1689.7

Total expenses 1633.89 3040.5 4010.76 5420.77 6629.4 7760.7

EBITDA 409.81 681.21 901.33 986.6 1214.2 1461.7

Depreciation and Amortisation 23.6 49.92 64.44 77 94.3 102.1

Other Income 44.81 24.13 6.07 67.78 47.8 56.2

Exceptional Item 0 41.14 200.17 96.12 78.4 92.2

EBIT 386.21 631.29 836.89 909.6 1119.9 1359.6

Interest 11.1 43.64 65.84 77.45 61.1 53.2

PBT 419.92 652.92 977.29 996.05 1185.1 1454.9

Tax Exp 80.33 138.21 226.05 179.18 225.17 290.98

PAT 339.59 514.71 751.24 816.87 959.9 1163.9

Growth-% (YoY)

Sales 46.3% 81.0% 31.7% 31.3% 22.4% 17.6%

EBITDA 95.2% 66.2% 32.3% 9.5% 23.1% 20.4%

PAT 97.0% 51.6% 46.0% 8.7% 17.5% 21.3%

Expenses on Sales-%

RM Cost 30.3% 39.2% 44.3% 41.2% 40.5% 41.0%

Ad Spend 6.5% 9.5% 9.2% 10.3% 11.5% 11.0%

Employee Cost 7.4% 7.6% 8.0% 9.2% 9.2% 9.2%

Other expenses 19.7% 18.7% 17.3% 18.7% 18.6% 18.3%

Tax rate 19.1% 21.2% 23.1% 18.0% 19.0% 20.0%

Margin-%

EBITDA 20.1% 18.3% 18.3% 15.4% 15.5% 15.8%

EBIT 18.9% 17.0% 17.0% 14.2% 14.3% 14.7%

PAT 16.6% 13.8% 15.3% 12.7% 12.2% 12.6%

Valuation:

CMP 261.0 365.0 559.0 836.0 840.0 840.0

No of Share 30.8 32.4 34.0 34.0 34.0 34.0

NW 954.7 1725.2 2815.2 3313.0 4073.9 5038.8

EPS 11.0 15.9 22.1 24.0 28.2 34.2

BVPS 31.0 53.2 82.8 97.4 119.7 148.1

RoE-% 35.6% 29.8% 26.7% 24.7% 23.6% 23.1%

Div- Payout-% 30.6% 38.3% 22.6% 23.0% 20.7% 17.1%

P/BV 8.4 6.9 6.8 8.6 7.0 5.7

P/E 23.7 23.0 25.3 34.8 29.8 24.6

BANK OF INDIA

206

235

-

14

-

1M 1yr YTD

Absolute -14.5 -32.2 -32.2

Rel.to Nifty -13.7 -37.1 -37.1


3Promoters 64.1 64.1 64.1

FII 13.2 13.6 13.5

DII 15.3 15.6 16.3

Others 7.4 6.7 6.0

Financials Rs, Cr

2011 2012 2013 2014E 2015E

NII 7878 8313 9024 12110 11804

Total Income 10519 11635 12790 16672 16366

PPP 5398 6694 7458 9670 9492

Net Profit 2542 2678 2749 3533 3269

EPS 46.5 46.7 47.9 61.6 57.0

17

CMP


Upside


BANKINDIA Vs Nifty


2271804

Nifty

NSE Symbol BANKINDIA

Most of banks especially PSUs are beaten down by the market on account of slower

economic growth and stress in asset quality. But Bank of India has witnessed

improvement in asset quality in 2QFY14 as fresh slippages were down by 26%

sequentially and 46% Year-on-year basis. Moreover bank reported reduction to the

tune of Rs.1009 cr versus Rs.1338 cr in 1QFY14. Most of reduction was due to

higher recovery and up-gradation rather than write-off. Write-off came down sharply

from Rs.598 cr 1QFY14 to Rs.120 cr in 2QFY14.

Inch up restructure guidance in 3QFY14

Shown Improving sign of asset quality with higher recovery and up-gradation

rather than write-off


12260

Market Data

Target Price

Despite of improving fundamental from past two quarters, Bank of India is

trading at 0.5 times of one year forward book which is the lowest level in our

valuation parameters. We believe that current level is attractive entry point for

the investor with time horizon more than one year. With the capital infusion of

Rs.1000 cr by GoI and improving sign of asset quality would re-rate the stock

in our view as it previously witnessed i.e. 0.8 to 1.2 times of book. The

management has guided fresh slippage of about Rs.1500 cr and restructures

to the tune of Rs.1000-1200 cr in 3QFY14 which is in line with 2QFY14. We

recommend buy with price target of Rs. 235

Company Update BUY

393/126

BSE Code 532149

52wk Range H/L

6139

Mkt Capital (Rs Cr)



Stock Performance

Capital infusion by GoI raise CAR ratio to 8.1% from 7.75%

Bank has lower CAR to 7.75% at the end of 2QFY14 according to Basel 3 norm.

Now Bank of India has approved to initiate process to raise further capital for issue

of 4.63cr Equity Shares to GoI on Preferential basis at a price of Rs. 215.70 per

share. This capital infusion is taking CAR ratio to 8.1% and government holding rise

to 66.7% from 64.1%. Capital infusion to the tune of Rs.1000 cr diluting our FY14E’s

book value by 40 bps.

As far as restructure loan are concern, bank’s total restructure loan was about 5% of

total loan asset and bank’s management expects Rs.1000-1200 cr of restructure in

December quarter. In 2QFY14, bank sold about Rs.370 cr of bad loan to Asset

Reconstruction Company (ARC) for recovery and during quarters its plan to sell

about Rs.500 cr of bad loan to ARC.

Sequentially improving PCR provide cushion on stress asset

Despite of stable asset quality and lower slippage, Bank of India provided 24% more

provision in sequential basis which improved its provision coverage ratio(Without

technical write off) to 63.3% from 61% in preceding quarter same year. Higher

provision would provide cushion on stress asset without hurting profit going further.

"BUY"18th Dec, 2013


18

BANK OF INDIA



Quarterly Result 2QFY14 1QFY14 2QFY13 % YoY Gr % QoQ Gr

Interest/discount on advances / bills 6631 6190 5881 12.8 7.1

Income on investments 2129 1885 1835 16.0 12.9

Interest on balances with Reserve Bank of India 479 465 289 65.6 2.9

Others 0 0 0 42.9 36.4

Total Interest Income 9239 8541 8005 15.4 8.2

Others Income 1100 1181 894 23.1 -6.8

Total Income 10340 9722 8900 16.2 6.4

Interest on deposits 5966 5401 5154 15.8 10.5

Interest on RBI/Inter bank borrowings 414 296 536 -22.8 40.0

Others 333 308 119 179.8 8.2

Interest Expended 6712 6004 5810 15.5 11.8

NII 2527 2537 2196 15.1 -0.4

Other Income 1100 1181 894 23.1 -6.8

Total Income 3627 3718 3090 17.4 -2.4

Employee 897 963 700 28.2 -6.8

Other Expenses 628 575 536 17.1 9.3

Operating Expenses 1525 1537 1236 23.4 -0.8

PPP( Rs Cr) 2102 2180 1854 13.4 -3.6

Provisions 1232 695 1552 -20.6 77.4

Net Profit 622 964 302 106.0 -35.5

Balance Sheet Data

Equity Capital 597 575 575 3.9 3.9

Reserve & Surplus 25,686 21,774 21,774 18.0 18.0

Deposits 432,282 332,695 332,695 29.9 29.9

Borrowings 41,751 29,434 29,434 41.8 41.8

Other liabilities and provisions 12,727 11,262 11,262 13.0 13.0

Total Liability 513,042 395,739 395,739 29.6 29.6

Cash in hand 24,621 17,080 17,080 44.2 44.2

Cash and balances with reserve bank of india 34,658 19,198 19,198 80.5 80.5

Investment 107,413 90,147 90,147 19.2 19.2

Advance 332,190 256,148 256,148 29.7 29.7

Fixed Assets 2,957 2,839 2,839 4.2 4.2

Others Assets 11,203 10,327 10,327 8.5 8.5

Total Assets 513,042 395,739 395,739 29.6 29.6

Asset Quality

GNPA 9873 8765 8898 11.0 12.6

NPA 6156 5947.3 5,228 17.7 3.5

GNPA(%) 3.0 3.0 3.4

NPA(%) 1.9 2.0 2.0

PCR(%) Without technical write off 37.6 32.1 41.2

19

BANK OF INDIA




Financials & Assuption 2011 2012 2013 2014E 2015EInterest/discount on advances / bills 15570 20241 23139 29515 31171

Income on investments 5195 7142 7261 8828 10152

Interest on balances with Reserve Bank of India 798 834 1257 1889 1889

Others 295 264 251 1 1

Total Interest Income 21858 28481 31909 40233 43213

Others Income 2642 3321 3766 4562 4562

Total Income 24500 31802 35675 44795 47775

Interest on deposits 12218 17957 20238 25422 28709

Interest on RBI/Inter bank borrowings 813 1145 1489 1419 1419

Others 950 1065 1158 1281 1281

Interest Expended 13981 20167 22885 28123 31410

NII 7878 8313 9024 12110 11804

Other Income 2642 3321 3766 4562 4562

Total Income 10519 11635 12790 16672 16366

Employee 3492 3069 3131 4131 4055

Other Expenses 1629 1871 2201 3965 3892

Operating Expenses 5121 4941 5332 7002 6874

PPP( Rs Cr) 5398 6694 7458 9670 9492

Provisions 2909 4016 4709 5254 5406

Net Profit 2542 2678 2749 3533 3269

46.0 5.3 2.7 28.5 -7.5

Key Balance Sheet DataDeposits 299559 318216 381840 434075 503527

Deposits Growth(%) 30 6 20 14 16

Borrowings 22021 32114 35368 36854 37953

Borrowings Growth(%) -2 46 10 4 3

Loan 213708 248833 289367 347241 366720

Loan Growth(%) 26 16 16 20 6

Investment 86677 86754 94613 110351 126904

Investment Growth(%) 27 0 9 17 15

Eastwind CalculationYield on Advances 7.3 8.1 8.0 8.5 8.5

Yield on Investments 6.3 8.7 7.1 8.0 8.0

Yield on Funds 6.5 7.8 7.7 8.4 8.4

Cost of deposits 4.1 5.6 5.2 5.7 5.6

Cost of Borrowings 8.0 6.9 6.8 7.5 7.5

Cost of fund 4.3 5.8 5.3 6.5 6.2

ValuationBook Value 322.7 365.3 416.9 469.4 510.4

P/BV 1.5 1.0 0.7 0.4 0.4

P/E 10.3 7.7 6.3 3.8 4.1

20

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