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ValueGuideDecember 2017
Intelligent Investing
Stock UpdatesSector Updates
Viewpoints
Regular Features
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Trader’s Edge
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Registered Office: Sharekhan Limited, 10th Floor, Beta Building, Lodha iThink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai – 400042, Maharashtra. Tel: 022 - 61150000. Sharekhan Ltd.: SEBI Regn. Nos.: BSE: INB/INF011073351 / BSE-CD ; NSE: INB/INF/INE231073330 ; MSEI: INB/INF261073333 / INE261073330 ; DP: NSDL-IN-DP-NSDL-233-2003 ; CDSL-IN-DP-CDSL-271-2004 ; PMS-INP000005786 ; Mutual Fund-ARN 20669 ; Research Analyst: INH000000370 ; For any complaints email at [email protected] ; Disclaimer: Client should read the Risk Disclosure Document issued by SEBI & relevant exchanges and the T & C on www.sharekhan.com before investing.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. read more
[email protected] 1800227500
Marketwatch with sectors: Bifurcate stocks according to sectors and track performance easily
Minimum margin display: Say good bye to punching orders repeatedly asrequired margin is now available upfront
Draw on charts: Do free hand drawing or marking on any part of the chart for better analysis
Ichimoku on scanner: The most reliable indicator, Ichimoku is now available on Stock scanner, go ahead make those technical calls!
Net rupee change on HeatMap: You can now get both percentage as well as Net Rupee change on the HeatMap
`%
Dynamic OCF with moneyness filter: With moneyness (ITM, ATM, OTM) filter, option traders can now identify the moneyness of scanned contracts
CONTENTS
3December 2017 Sharekhan ValueGuide3June 2017 Sharekhan ValueGuide
disclaimer
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Registered Office: Sharekhan Limited, 10th Floor, Beta Building, Lodha iThink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai – 400042, Maharashtra. Tel: 022 - 61150000. Sharekhan Ltd.: SEBI Regn. Nos.: BSE: INB/INF011073351 / BSE-CD; NSE: INB/INF/INE231073330 ; MSEI: INB/INF261073333 / INE261073330 ; DP: NSDL-IN-DP-NSDL-233-2003 ; CDSL-IN-DP-CDSL-271-2004; PMS-INP000005786 ; Mutual Fund-ARN 20669 ; Research Analyst: INH000000370; For any complaints email at [email protected] ; Disclaimer: Client should read the Risk Disclosure Document issued by SEBI & relevant exchanges and the T & C on www.sharekhan.com ; Investment in securities market are subject to market risks, read all the related documents carefully before investing.
The Sensex and Nifty
dipped slightly in
November, ending on
a flat note. The markets
were guided by both
positive and negative
cues throughout the
month that determined its ups and downs.
From Sharekhan Desk EQUITY
06
RESEARCH BASED EQUITY PRODUCTS
PMS DESKWealthOptimizer PMS 35
ProPrime - Diversified Equity 36
ProTech - Index Futures Fund 37
ProTech - Trailing Stops 38
FUNDAMENTALS
TECHNICALS DERIVATIVES
Nifty 31 View 32
ADVISORY DISK DERIVATIVES
MID Trades 39 Derivatives Ideas 39
CURRENCY
FUNDAMENTALS USD-INR 33 GBP-INR 33
EUR-INR 33 JPY-INR 33
TECHNICALS
USD-INR 34 GBP-INR 34
EUR-INR 34 JPY-INR 34
MUTUAL FUND DESK
Top MF Picks (equity) 40
Top SIP Fund Picks 41
Top Picks Basket 07
Wealth Creator Portfolio 11
REGULAR FEATURES
Stock Update 12 Report Card 4
Sector Update 29 Earnings Guide 42
TradeTiger better and faster
every quarter
What’s new in the latest version of TradeTiger
Registered Office: Sharekhan Limited, 10th Floor, Beta Building, Lodha iThink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai – 400042, Maharashtra. Tel: 022 - 61150000. Sharekhan Ltd.: SEBI Regn. Nos.: BSE: INB/INF011073351 / BSE-CD ; NSE: INB/INF/INE231073330 ; MSEI: INB/INF261073333 / INE261073330 ; DP: NSDL-IN-DP-NSDL-233-2003 ; CDSL-IN-DP-CDSL-271-2004 ; PMS-INP000005786 ; Mutual Fund-ARN 20669 ; Research Analyst: INH000000370 ; For any complaints email at [email protected] ; Disclaimer: Client should read the Risk Disclosure Document issued by SEBI & relevant exchanges and the T & C on www.sharekhan.com before investing.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. read more
[email protected] 1800227500
Marketwatch with sectors: Bifurcate stocks according to sectors and track performance easily
Minimum margin display: Say good bye to punching orders repeatedly asrequired margin is now available upfront
Draw on charts: Do free hand drawing or marking on any part of the chart for better analysis
Ichimoku on scanner: The most reliable indicator, Ichimoku is now available on Stock scanner, go ahead make those technical calls!
Net rupee change on HeatMap: You can now get both percentage as well as Net Rupee change on the HeatMap
`%
Dynamic OCF with moneyness filter: With moneyness (ITM, ATM, OTM) filter, option traders can now identify the moneyness of scanned contracts
EQUITY FUNDAMENTALSREPORT CARD
4December 2017 Sharekhan ValueGuide
STOCK IDEAS STANDING (AS ON DECEMBER 01, 2017)
COMPANYCURRENT
RECOPRICE AS ON
01-DEC-17PRICE
TARGET
52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX
HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M
Automobiles
Apollo Tyres Hold 244 245 288 172 -0.2 -4.7 1.8 31.4 2.1 -7.6 -4.3 4.9
Ashok Leyland Buy 120 130 134 75 -5.1 6.4 33.7 57.1 -2.9 3.1 25.7 25.5
Bajaj Auto Buy 3217 3625 3374 2551 -0.7 10.3 15.6 21.8 1.6 6.9 8.6 -2.8
Gabriel India Buy 186 222 223 103 -5.5 6.4 44.0 71.6 -3.3 3.1 35.3 37.1
Hero MotoCorp Buy 3604 4200 4200 2957 -5.6 -11.0 -2.7 15.8 -3.5 -13.7 -8.6 -7.6
M&M Buy 1409 1575 1460 1141 4.3 4.6 -0.2 22.6 6.8 1.4 -6.2 -2.1
Maruti Suzuki E Buy 8609 9265 8696 5035 4.5 10.2 21.6 65.5 6.9 6.8 14.3 32.2
Rico Auto Industries Buy 95 117 111 44 -3.5 24.6 75.5 60.8 -1.3 20.8 64.9 28.4
TVS Motor Buy 725 825 748 346 2.5 19.5 36.2 98.3 4.8 15.8 27.9 58.4
BSE Auto Index 24955 25682 19501 -1.6 3.4 4.0 26.2 0.7 0.2 -2.3 0.8
Banks & Finance
Axis Bank Hold 534 ** 566 424 -0.2 5.2 5.8 15.7 2.1 2.0 -0.5 -7.6
Bajaj Finance Buy 1712 2050 1989 761 -5.3 -4.9 29.3 87.7 -3.1 -7.8 21.5 49.9
Bajaj Finserv E Buy 5099 6050 5835 2541 1.5 -7.2 21.3 73.5 3.9 -10.1 14.0 38.6
Bank of Baroda Buy 168 220 207 134 -2.8 21.2 -5.7 4.5 -0.6 17.5 -11.4 -16.6
Bank of India Hold 187 215 217 103 -3.5 30.2 30.2 60.4 -1.3 26.2 22.3 28.1
Capital First Buy 697 880 839 510 -6.5 -4.7 -1.8 26.6 -4.4 -7.6 -7.7 1.1
Federal Bank Buy 109 145 128 62 -10.0 -1.5 -5.8 57.7 -7.9 -4.6 -11.5 25.9
HDFC Buy 1659 1900 1805 1183 -5.4 -5.7 5.7 32.1 -3.3 -8.6 -0.7 5.5
HDFC Bank E Buy 1848 2100 1880 1164 1.5 4.6 14.2 55.4 3.8 1.4 7.3 24.1
ICICI Bank Buy 305 340 332 224 -2.6 2.3 5.7 30.6 -0.4 -0.8 -0.7 4.3
LIC Housing Finance Buy 571 750 794 513 -4.4 -16.2 -22.0 0.9 -2.2 -18.7 -26.7 -19.4
Max Financial Buy 547 660 684 512 -5.4 -10.4 -10.3 0.2 -3.2 -13.1 -15.7 -19.9
PTC India Financial Services Buy 37 45 51 36 -10.1 -0.1 -12.3 -1.3 -8.0 -3.2 -17.6 -21.2
Punjab National Bank Buy 172 240 232 112 -13.8 18.7 12.9 25.8 -11.8 15.1 6.1 0.4
SBI Buy 313 370 352 241 -2.2 12.6 8.8 23.4 0.0 9.1 2.2 -1.4
Union Bank of India Hold 158 210 205 120 -12.1 13.8 0.2 7.0 -10.0 10.3 -5.9 -14.6
Yes Bank Hold 307 350 383 218 -3.7 -13.6 6.2 33.3 -1.5 -16.3 -0.2 6.4
BSE Bank Index 28436 29510 20087 -1.4 2.9 8.2 35.8 0.8 -0.2 1.6 8.5
Consumer goods
Britannia Buy 4806 5500 4927 2773 2.3 13.2 34.0 60.9 4.7 9.8 25.9 28.5
Emami Buy 1304 1355 1339 935 3.5 18.8 17.6 22.4 5.9 15.1 10.5 -2.3
GSK Consumers Hold 6082 6460 6171 4851 15.1 14.0 16.0 19.9 17.8 10.5 9.0 -4.2
Godrej Consumer Products Buy 976 1102 1084 706 0.9 4.9 7.7 31.6 3.3 1.6 1.2 5.1
Hindustan Unilever Hold 1251 1350 1315 782 -0.6 3.5 15.9 49.7 1.7 0.3 8.9 19.6
ITC Hold 255 325 368 222 -5.4 -10.0 -17.6 10.9 -3.2 -12.8 -22.5 -11.4
Jyothy Laboratories Buy 385 ** 443 321 -0.5 -1.2 6.4 10.4 1.8 -4.2 0.0 -11.9
Marico Buy 310 365 349 238 -1.2 -0.7 -1.4 23.2 1.1 -3.7 -7.3 -1.6
Zydus Wellness Hold 926 952 990 809 1.9 7.0 11.5 9.5 4.3 3.7 4.8 -12.6
BSE FMCG Index 10284 10936 7653 -1.1 1.0 1.8 28.9 1.2 -2.1 -4.4 2.9
IT / IT services
Firstsource Solution Hold 41 45 49 30 -2.2 6.8 22.3 11.6 0.1 3.5 14.9 -10.9
HCL Technologies Buy 830 965 944 771 -1.3 -3.9 -3.3 5.3 1.0 -6.8 -9.1 -15.9
Infosys Hold 959 1000 1045 860 3.4 5.7 0.1 1.2 5.8 2.5 -6.0 -19.2
Persistent Systems Hold 654 720 695 558 -0.5 5.2 8.1 9.6 1.8 2.0 1.6 -12.5
Tata Consultancy Services Hold 2630 2700 2777 2146 1.0 7.4 4.7 18.5 3.4 4.1 -1.6 -5.4
Wipro Reduce 289 290 309 223 -1.4 -2.4 7.0 24.1 0.9 -5.4 0.5 -0.9
BSE IT Index 10593 10991 9357 2.3 6.1 4.8 10.2 4.7 2.9 -1.5 -12.0
Capital goods / Power
CESC Buy 996 1165 1080 569 -2.2 -4.2 9.6 69.4 0.1 -7.1 3.0 35.2
Crompton Greaves Hold 84 89 97 56 -3.0 2.7 0.3 9.9 -0.8 -0.5 -5.8 -12.2
Finolex Cable Hold 669 ** 687 395 8.5 23.7 34.3 62.7 11.0 19.9 26.2 29.9
Greaves Cotton Hold 118 137 179 115 -8.9 -24.2 -22.6 -5.5 -6.8 -26.5 -27.3 -24.5
Kalpataru Power Transmission Buy 440 465 475 221 16.3 21.4 27.2 80.6 19.0 17.7 19.5 44.2
KEC International E Buy 315 345 338 130 3.6 1.5 18.6 121.6 6.0 -1.6 11.4 77.0
PTC India Hold 115 130 130 70 -7.6 -0.5 26.3 61.8 -5.5 -3.6 18.7 29.2
Skipper Hold 265 280 293 126 6.2 23.8 34.2 91.9 8.6 20.0 26.1 53.3
Thermax Hold 1102 ** 1148 731 11.0 24.2 12.4 33.7 13.6 20.4 5.6 6.8
NEW
EQUITY FUNDAMENTALS REPORT CARD
5December 2017 Sharekhan ValueGuide
STOCK IDEAS STANDING (AS ON DECEMBER 01, 2017)
COMPANYCURRENT
RECOPRICE AS ON
01-DEC-17PRICE
TARGET
52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX
HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M
Triveni Turbine Hold 134 140 167 112 3.3 1.7 -0.9 17.1 5.7 -1.4 -6.9 -6.5
V-Guard Industries Buy 226 265 241 109 -1.3 21.8 23.7 88.0 1.0 18.1 16.2 50.1
Va Tech Wabag Buy 595 660 750 450 1.4 -2.7 -9.7 18.9 3.7 -5.7 -15.1 -5.0
BSE Power Index 2289 2381 1913 -2.5 1.9 4.4 16.7 -0.2 -1.3 -1.9 -6.8
BSE Capital Goods Index 18343 18889 13268 -0.5 5.4 4.2 31.9 1.8 2.1 -2.1 5.3
Infrastructure / Real estate
Gayatri Projects Buy 214 263 218 117 11.3 20.5 44.6 69.8 13.9 16.9 35.9 35.6
IRB Infra Buy 222 295 273 183 -7.8 1.6 0.9 20.6 -5.7 -1.5 -5.2 -3.7
Jaiprakash Associates Hold 18 ** 30 7 -3.3 -28.0 45.1 128.4 -1.0 -30.3 36.3 82.4
Larsen & Toubro Hold 1212 1350 1275 868 -0.3 6.4 2.6 32.5 2.0 3.1 -3.6 5.8
NBCC Buy 261 310 292 143 -0.9 25.5 35.4 73.4 1.4 21.7 27.2 38.5
Sadbhav Engineering Buy 379 400 397 256 19.9 32.0 20.3 38.0 22.7 28.0 13.1 10.2
CNX Infra Index 3471 3652 2623 -3.9 4.6 8.1 27.2 -1.7 1.4 1.6 1.6
BSE Real estate Index 2397 2481 1196 1.2 9.7 24.7 89.9 3.5 6.4 17.1 51.7
Oil & gas
Oil India Hold 360 390 383 257 -2.7 23.9 20.7 17.1 -0.4 20.1 13.4 -6.5
Reliance E Buy 910 970 960 493 -4.5 13.0 38.0 83.7 -2.2 9.6 29.7 46.7
Selan Exploration Technology Hold 221 ** 270 154 -7.5 8.7 27.7 19.8 -5.4 5.4 20.0 -4.4
BSE Oil and gas Index 15693 16727 11664 -5.2 3.4 12.8 35.8 -3.1 0.3 6.0 8.5
Pharmaceuticals
Aurobindo Pharma Buy 672 905 809 503 -11.5 -11.2 16.5 -9.1 -9.4 -13.9 9.5 -27.4
Cadila Healthcare Hold 426 485 560 329 -14.2 -16.1 -9.6 7.2 -12.3 -18.7 -15.0 -14.4
Cipla Hold 598 685 663 479 -4.6 5.2 16.4 5.6 -2.4 2.0 9.4 -15.6
Divi's Labs Buy 1035 1275 1184 533 12.1 47.0 73.9 -9.0 14.6 42.5 63.4 -27.3
Glenmark Pharmaceuticals Hold 555 730 973 545 -10.8 -8.8 -15.4 -36.5 -8.7 -11.5 -20.5 -49.3
Lupin Hold 814 ** 1574 809 -20.8 -18.2 -28.5 -45.8 -19.0 -20.7 -32.8 -56.7
Sun Pharmaceutical Industries Hold 526 ** 729 433 -4.1 8.9 4.3 -26.6 -1.9 5.6 -2.0 -41.4
Torrent Pharma Hold 1278 1480 1575 1142 -0.6 4.7 6.1 -7.1 1.7 1.5 -0.3 -25.8
BSE Health Care Index 13856 15789 12513 -2.8 3.7 1.5 -11.7 -0.6 0.5 -4.6 -29.5
Building materials
Grasim Buy 1150 1388 1300 667 -7.8 -1.3 21.2 58.7 -5.6 -4.3 13.9 26.7
Shree Cement Hold 17198 19600 20560 13058 -10.8 -3.4 -2.5 15.6 -8.7 -6.3 -8.4 -7.7
The Ramco Cements Hold 694 750 770 500 -3.8 0.2 -3.5 16.4 -1.6 -2.9 -9.3 -7.1
UltraTech Cement Hold 4185 4500 4533 3050 -5.5 4.6 -0.1 17.5 -3.3 1.4 -6.1 -6.2
Discretionary consumption
Arvind Buy 436 500 462 321 8.2 16.8 15.3 24.7 10.7 13.3 8.3 -0.4
Century Plyboards (India) Hold 312 ** 327 154 11.2 23.8 14.5 75.5 13.8 20.0 7.5 40.1
Cox and Kings Buy 254 325 306 164 -3.3 -4.9 11.7 55.6 -1.0 -7.8 4.9 24.2
Info Edge (India) Hold 1290 1300 1348 796 8.0 35.9 42.5 44.1 10.5 31.8 33.8 15.1
Inox Leisure Buy 275 320 309 193 4.4 8.7 -5.3 23.5 6.8 5.4 -11.0 -1.4
KKCL Hold 1870 2035 2009 1575 -0.7 13.2 9.7 5.4 1.6 9.8 3.1 -15.8
Orbit Exports Hold 140 177 184 116 -9.6 -3.4 7.5 8.5 -7.5 -6.4 1.0 -13.4
Relaxo Footwear Buy 603 645 649 391 0.8 18.3 29.3 43.7 3.1 14.6 21.5 14.7
Thomas Cook India Hold 237 260 258 178 -2.2 1.0 14.3 26.5 0.1 -2.1 7.4 1.0
Wonderla Holidays Hold 352 385 405 317 -4.6 1.8 -5.1 5.6 -2.4 -1.3 -10.8 -15.7
Zee Entertainment E Buy 557 610 597 428 3.9 6.3 7.2 22.3 6.3 3.1 0.7 -2.3
Diversified / Miscellaneous
Bajaj Holdings Buy 2890 3595 3025 1743 -1.9 -0.8 41.4 42.9 0.4 -3.8 32.8 14.1
Bharat Electronics E Buy 185 220 193 121 -0.7 4.6 18.2 43.5 1.6 1.4 11.1 14.6
Bharti Airtel Hold 484 600 565 289 -10.2 14.6 32.3 52.5 -8.1 11.1 24.3 21.8
Gateway Distriparks Hold 244 250 292 211 -7.7 11.6 -1.0 9.9 -5.6 8.2 -7.0 -12.2
PI Industries Hold 960 1000 989 674 19.6 31.8 18.9 14.2 22.3 27.8 11.7 -8.8
Ratnamani Metals and Tubes Buy 964 1005 1029 560 5.7 9.9 35.1 70.3 8.1 6.5 26.9 36.0
Supreme Industries Buy 1156 1250 1443 837 0.1 -3.1 1.0 30.9 2.4 -6.1 -5.1 4.5
UPL E Buy 730 980 903 606 -6.7 -12.3 -16.1 13.1 -4.5 -15.0 -21.2 -9.7
BSE500 Index 14338 14741 10617 -1.8 3.7 9.3 30.4 0.5 0.5 2.7 4.1
CNX500 INDEX 9060 9310 6712 -1.8 3.7 9.1 30.3 0.4 0.5 2.5 4.1
CNXMCAP INDEX 19692 20179 13658 0.2 6.7 12.5 35.6 2.5 3.5 5.7 8.2
E In Top Picks basket ** Price target under review
NEW
NEW
6December 2017 Sharekhan ValueGuide
Play after a Pause
The Sensex and Nifty dipped slightly in November, ending on a flat note. The markets were
guided by both positive and negative cues throughout the month that determined its ups and
downs. The markets cheered India’s rise on the World Bank’s Ease of Doing Business Index and
rating upgrade from Moody’s. They also drew confidence from a recovery in core output, Q2
corporate earnings and the cut in GST rates for a slew of goods. However, weak global cues
and rising crude oil prices affected market sentiments as the month progressed. Moreover,
concerns related to rising trade deficit and nervousness ahead of Gujarat state elections also
added to weakness in market sentiments.
Robust Q2 numbers were reported by companies, especially automakers and banks that
lifted profits of Sensex companies by 8.1%. Efforts by PSU banks to raise money riding on the
government’s recapitalisation plan kept markets afloat. In the last two weeks of November, the
rally paused as everyone waited for the three crucial cues: recovery in Q2 GDP, the derivatives
expiry and the Organization of Petroleum Exporting Countries (OPEC) decision on crude oil
supply. However, a selling spree near the F&O expiry and a spike in fiscal deficit to 96.1% of the
budgeted target dragged markets to a poor closing.
November was a weak show after a promising start, but will December turn out to be any
different? Key upcoming events do not indicate a cakewalk for the markets in the month. For
one, they face a change in global monetary policy stance. The Bank of England raised interest
rates for the first time in a decade earlier in November. The US Federal Reserve is likely to follow
suit in December.
A rise in global interest rates will affect the liquidity-led rally Dalal Street and also drag foreign
institutional investors (FII) inflows, crunching funding for Indian corporates, most of which are
already under a debt pile. Bond yields will also shoot up, after having eased slightly in November.
The rupee, which is at 64-65 a dollar will also take a further hit. Higher interest rates in the US
will also make it difficult for India Inc to raise cheap funds overseas.
Another worry is a possible rise in crude oil prices. The OPEC decision to keep supply tight
until the end of 2018 could turn crude oil costlier, thus sparking inflation concerns and dimming
hopes of a rate cut from the RBI. The RBI is likely to hold rates in December, given the outlook
on crude oil prices and the weakness in the rupee.
With the above global cues poised to create enough volatility, the markets will eye some comfort
from the Gujarat state elections as they hope for the incumbents to win. Even if the markets
retreat, such phases are opportunities to invest in quality stocks at better prices.
Fro
m t
he
Ed
ito
r’s
De
skFrom the Editor’s Desk
EQUITY FUNDAMENTALS Sharekhan Top Picks
7December 2017 Sharekhan ValueGuide
Sharekhan Top PicksSharekhan Top Picks is completing nine years of unmatched track record of giving superior returns across market cycles. Most importantly, it has outperformed benchmark indices (Nifty/Sensex and CNX Midcap 100) purely through superior selection of large cap low risk stocks as the portfolio composition has always been skewed towards large-sized quality companies, with a market cap of over Rs. 10,000 crore.
As an investor in Sharekhan Top Picks, we believe that you need to follow the suggested monthly changes or revisions that are published on the last day of the month religiously and in a disciplined manner. To help you harness the true
potential of this superior investment product, Sharekhan Top Picks investment portfolio will soon graduate to our Investment Advisory platform. A team of experienced relationship managers will assist you with suggested revisions, their execution and all other product related clarifications.
This month too, Sharekhan Top Picks has continued to perform better than benchmark indices with gains of over 1.7% whereas Nifty and Sensex ended the month with marginal losses. We believe that the portfolio is quite well balanced and does not require any changes or revisions this month. So, we suggest status quo as of now.
Consistent outperformance (absolute returns; not annualised) (%)(%) 1 month 3 months 6 months 1 year 3 years 5 years
Top Picks 1.7 3.7 15.5 49.5 92.0 248.9Sensex -0.2 4.6 6.6 24.5 15.8 67.6Nifty -1.0 3.3 6.5 24.7 20.0 70.8CNX MIDCAP 100 1.6 8.9 13.7 33.5 61.0 138.1
NameCMP*
(Rs)PER (x) RoE (%) Price
target (Rs)#Upside
(%)FY17 FY18E FY19E FY17 FY18E FY19E
Bajaj Finserv 5,224 36.8 - - 15.4 - - 6,050 16
Bharat Electronics 186 27.0 23.6 20.9 14.9 15.7 16.1 220 18
HDFC Bank 1,857 26.9 22.1 18.2 18.7 19.9 20.7 2,100 13
IndusInd Bank 1,655 34.3 26.8 20.9 16.2 16.5 18.2 1,950 18
Jubilant FoodWorks 1,770 153.9 80.5 60.4 9.2 15.9 18.2 1,914 8
KEC International 324 27.2 19.9 15.5 21.2 23.3 24.2 345 7
Maruti Suzuki 8,602 35.4 30.1 25.1 21.0 20.7 20.5 9,265 8
Power Grid Corp 206 14.5 12.6 10.2 13.8 14.0 15.3 240 17
Reliance Industries 923 18.3 17.3 13.9 11.2 10.5 11.7 970 5
Sundram Fasteners 497 30.7 25.9 22.5 27.6 27.0 26.1 557 12
UPL Limited 733 20.5 18.1 14.6 27.2 25.0 25.4 980 34
ZEE Entertainment 569 44.8 41.2 31.4 18.3 17.4 19.5 610 7
*CMP as on November 30, 2017 # Price target for next 6-12 months
Absolute returns (Top Picks Vs Benchmark indices) (%)
Sharekhan (Top Picks)
Sensex Nifty CNX Mid-cap 100
YTD CY2017 51.6 24.6 25.2 38.7
CY2016 8.8 1.8 3.2 7.1
CY2015 13.9 -5.1 -4.1 6.5
CY2014 63.6 29.9 30.9 55.1
CY2013 12.4 8.5 6.4 -5.6
CY2012 35.1 26.2 29.0 36.0
CY2011 -20.5 -21.2 -21.7 -25.0
CY2010 16.8 11.5 12.9 11.5
CY2009 116.1 76.1 72.0 114.0
Constantly beating Nifty and Sensex (cumulative returns since April 2009)
Please note the returns are based on the assumption that at the beginning of each month an equal amount was invested in each stock of the Top Picks basket
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Sharekhan Sensex Nifty
Sharekhan Top Picks EQUITY FUNDAMENTALS
8December 2017 Sharekhan ValueGuide
Name CMP (Rs.)PER ROE (%) PRICE UPSIDE
FY17 FY18E FY19E FY17 FY18E FY19E TARGET (Rs.) (%)
Bajaj Finserv 5,224 36.8 - - 15.4 - - 6,050 16
Remarks: � Bajaj Finserv (BFS) is the holding company, comprising the lending business and insurance companies.
� Bajaj Finance Limited (BFL), a subsidiary of BFS (55% stake), is the lending arm with a strong and well-diversified loan book with
niche segments. Strong operating performance with a healthy asset quality, achieved on account of robust growth in assets under
management (AUM), indicates the strength of its business model.
� The insurance subsidiaries of BFS: Bajaj Allianz General Insurance Co. Limited (BAGIC) and Bajaj Allianz Life Insurance Co. Limited
(BALIC) also have maintained strong operating metrics. India is significantly underpenetrated in the insurance vertical, which will help
private players, including BAGIC and BALIC, to continue gaining market share.
� We believe BFL, BAGIC and BALIC have plenty of headroom to grow and can outperform the industry in terms of growth. Hence, we
find significant long-term value in BFS and expect earnings momentum of its subsidiaries to continue.
Bharat Electronics 186 27.0 23.6 20.9 14.9 15.7 16.1 220 18
Remarks: � Bharat Electronics Limited (BEL), a PSU that manufactures electronic, communication and defence equipment, stands to benefit from
enhanced budgetary outlay for strengthening and modernising India’s security.
� The government’s ‘Make in India’ initiative and rising spends for modernising defence equipment will support earnings growth in the
coming years, as it is the only player with strong research and manufacturing capabilities in the country.
� Current order book of the company at ~Rs. 41,746 crore provides revenue visibility over the next 3-4 years. We expect revenue to
report a CAGR of 16.5% over FY2017-FY2020E, led by strong order wins and an impressive execution rate.
� BEL remains our preferred pick in the defence sector on account of its strong manufacturing and R&D base, good cost control,
growing indigenisation and strong balance sheet with improving return ratios.
HDFC Bank 1,857 26.9 22.1 18.2 18.7 19.9 20.7 2,100 13
Remarks: � HDFC Bank has a pre-eminent presence in the retail banking segment (~50% of loan book) and has been able to maintain strong
and consistent loan book growth, gradually gaining market share. Going forward, economic recovery and improved consumer
sentiments would be positive growth drivers for the bank’s loan growth, which will in turn drive profitability.
� Backed by a current account and savings account (CASA) ratio of over 40% and a high proportion of retail deposits, the bank’s cost
of funds remains among the lowest in the system, helping it maintain higher net interest margin (NIM). In addition, the bank’s loan
book growth is driven by high-yielding retail products such as personal loans, vehicle loans, credit cards and mortgages, mostly to
its own customers (which is also positive for NIM).
� HDFC Bank has been maintaining near impeccable asset quality, with its NPA ratios consistently being among the lowest versus
comparable peers. The bank has been able to maintain robust asset quality, owing to stringent credit appraisal procedures and
negligible exposure to troubled sectors.
� Going ahead, HDFC Bank is well poised to tap the growth opportunities due to strong capital ratios, healthy asset quality and a
steady revival in consumer spending. As lending and transactions through formal routes increase, HDFC Bank would benefit since
it is a leading private sector bank and will likely gain market share in this segment. The bank is expected to maintain healthy RoE
of 18-20% and RoA of 1.8% on a sustainable basis. Therefore, we expect it to maintain the valuation premium that it enjoys vis-à-vis
other private banks.
IndusInd Bank 1,655 34.3 26.8 20.9 16.2 16.5 18.2 1,950 18
Remarks: � IndusInd Bank is among the fastest-growing banks (25%+ CAGR over FY2012-FY2017), with a loan book of ~Rs. 1.23 lakh crore and
1,250 branches across the country. About 55% of the bank’s loan book comprises retail finance, which is a high-yielding category,
and is showing signs of growth.
� Given the aggressive measures taken by the management, the deposit profile has improved considerably (CASA ratio of ~42%).
Going ahead, the bank would follow a differentiated branch expansion strategy (5% branch market share in identified centres) to help
ensure healthy growth in savings accounts and retail deposits.
� IndusInd Bank has maintained its asset quality despite sluggish economic growth and higher proportion of retail finance in its loan
book. The bank’s asset quality is among the best in the industry, with total stressed loans (restructured loans + gross NPAs) forming
less than 1.50% of the loan book.
� A likely revival in the Indian economy will further fuel growth in the bank’s consumer finance division, while strong capital ratios will
support future growth plans. Although demonetisation has raised questions regarding delinquencies in certain lending segments, the
management expects asset quality to remain under control. The stock should continue to trade at a premium valuation, underpinned
by strong loan growth, quality management, high RoAs and healthy asset quality. We have a positive outlook on IndusInd Bank.
EQUITY FUNDAMENTALS Sharekhan Top Picks
9December 2017 Sharekhan ValueGuide
Name CMP (Rs.)PER ROE (%) PRICE UPSIDE
FY17 FY18E FY19E FY17 FY18E FY19E TARGET (Rs.) (%)
Jubilant FoodWorks 1,770 153.9 80.5 60.4 9.2 15.9 18.2 1,914 8
Remarks: � Jubilant FoodWorks Limited (JFL), India’s largest food service company, shifted its focus to customer satisfaction from store additions to improve its store fundamentals over the long run.
� Post the induction of Mr. Pratik Pota as the CEO, the company refreshed its menu by launching new items and improving the quality of its pizzas with better offerings. The company gained good traction and posted same-store-sales growth (SSSG) of 5.5% in Q2FY2018 (6.5% in Q1FY2018), as against a decline in SSSG in earlier quarters.
� Operating profit margin (OPM) improved by 440 bps in Q2FY2018 to 14% (highest in the last 14 quarters). JFL is also focusing on reducing losses of Dunkin Donuts by shutting non-profitable stores and introducing value product portfolio to improve store sales in the coming quarters. We expect standalone OPM to improve to ~14% in FY2020 from 9.7% in FY2017.
� With negative working capital, the company’s balance sheet remained lean amid slowing SSSG and sustained store additions.
� JFL would be one of the key beneficiaries of improvement in the discretionary environment in the domestic market. With a redefined strategy, revenue and earnings of JFL are expected to report CAGRs of 12% and 47%, respectively, over FY2017-FY2020.
KEC International 324 27.2 19.9 15.5 21.2 23.3 24.2 345 7
Remarks: � KEC International (KEC) is a global power transmission infrastructure EPC major. The company is present in verticals such as power transmission and distribution (T&D), cables, railways, water, renewable (solar energy) and civil.
� Globally, the company has powered infrastructure development in more than 61 countries. KEC is a leader in power transmission EPC projects and has more than seven decades of experience.
� Management sounded very confident of delivering growth across all verticals such as T&D, railways, solar and cables. Management is banking on state transmission companies, private sector under tariff-based competitive bidding (TBCB) route and overseas geographies for growth in the T&D segment.
� Management expects the railway business to grow ~80% y-o-y to ~Rs. 800 crore and solar EPC business to grow by over 3x to ~Rs. 500 crore in FY2018. KEC is witnessing improved revenue mix with the execution of extra high voltage (EHV) cables, which have better profitability.
� Over the years, KEC has grown through the organic as well as inorganic route. Going forward, we estimate the company’s OPM to expand to 10% compared to 9.5% currently. Debt/equity (D/E) ratio is expected to improve to 0.6:1 by the end of FY2019E from 1.3:1 in FY2017.
� We expect earnings to report a CAGR of 29% during FY2017E-FY2020E, with strong cash flows and a leaner balance sheet. Thus, we retain our positive outlook on the stock.
Maruti Suzuki 8,602 35.4 30.1 25.1 21.0 20.7 20.5 9,265 8
Remarks: � Maruti Suzuki India Limited (MSIL) is India’s largest passenger vehicle (PV) manufacturer with a strong 47% market share. Over the past two years, the company has been able to gain market share due to new product launches, a vast distribution network (with increased focus on rural markets) and a shift in consumer preference to petrol models from diesel models.
� The recently launched premium hatchback, Baleno, and upgrade of Dzire have received strong response, which will help MSIL to expand its market share in the segment. MSIL is likely to continue outpacing industry growth as four of its models (Baleno, Brezza, Ignis and Dzire), which form 35-40% of its vehicle portfolio, command a waiting period of 3-5 months.
� The parent company of MSIL, Suzuki Motor Corporation, commissioned its Greenfield plant in Gujarat in February 2017. The company is speeding up production at the new Gujarat plant in wake of strong demand for recent launches. MSIL plans to produce 175,000 units in Gujarat in FY2018, as against an earlier guidance of ~130,000 units. Enhanced production in Gujarat will ease capacity constraints and help MSIL to reduce waiting periods for its models. We expect volume growth of MSIL to report a strong 12% CAGR over the next two years, substantially higher than the 8-10% growth expected for the PV industry.
� MSIL has established itself as a leader in all PV categories — namely passenger cars, utility vehicles (UV) and vans (it recently became the leader in the UV space). Given a robust order book for existing models and a strong pipeline of new products, we expect MSIL to continue outpacing industry growth. We maintain our Buy rating on the stock with a revised PT of Rs.9,265.
Power Grid Corp 206 14.5 12.6 10.2 13.8 14.0 15.3 240 17
Remarks: � Power Grid Corporation of India Limited (PGCIL) is India’s largest and the world’s second largest power transmission utility, deriving its revenue post capitalisation of transmission line assets.
� Higher asset capitalisation will boost the regulated equity base of PGCIL, on which it earns fixed returns, driving the company’s earnings growth momentum. We expect the regulated equity base of PGCIL to report a CAGR of 20% and translate into an earnings CAGR of ~18% during FY2017E-FY2019E.
� PGCIL has a very healthy balance sheet, sustainable earnings visibility, positive cash flow from operations and stable return ratios.
� Nevertheless, after the infusion of equity through follow-on public offer in FY2014, PGCIL is now well capitalised to fund its equity side of future capital expenditure. Therefore, we do not see any dilution risk as of now. Stable, low-risk business model and healthy assured returns of PGCIL provide cushion to long-term investors.
� The spate of growth drivers and rub-off from the scheduled initial public offer of a private sector transmission company at a possible lofty valuation should re-rate PGCIL.
Sharekhan Top Picks EQUITY FUNDAMENTALS
10December 2017 Sharekhan ValueGuide
Name CMP (Rs.)PER ROE (%) PRICE UPSIDE
FY17 FY18E FY19E FY17 FY18E FY19E TARGET (Rs.) (%)
Reliance Industries 923 18.3 17.3 13.9 11.2 10.5 11.7 970 5
Remarks: � We expect gross refining margin (GRM) of Reliance Industries Limited (RIL) to remain strong at $11.8/12.5 per bbl in FY2018 and FY2019, given the robust global oil demand growth outlook for 2017 at 1.5 million barrels per day (mbpd), as per International Energy Agency estimate. Moreover, a likely improvement in diesel cracks would help RIL to maintain a premium of $4-5/bbl over Singapore complex GRM. Ethylene margin is also expected to remain firm at $600-650/mt, led by healthy demand and likely delay in the commissioning of incremental capacities in CY2018.
� RIL has commissioned the last crystallisation train (Train 3) of the paraxylene (PX) complex at Jamnagar. With this, PX capacity of RIL has almost doubled to 3.7 million metric tonne (mmt), from 1.9 mmt earlier. RIL has also fully commissioned its ethane import project, and we expect the same to add $270 million to its EBITDA. Moreover, RIL has started operations at Refinery Off Gas Cracker (ROGC), MEG and LLDPE plants; and these units are under the stabilisation phase currently.
� We expect EBITDA/PAT CAGR of 24%/15% over FY2017-FY2019E, driven by the commissioning of core downstream projects in FY2018. Any positive surprise in terms of better-than-expected financials of the telecom business would be an important re-rating trigger for RIL going forward.
Sundram Fasteners 497 30.7 25.9 22.5 27.6 27.0 26.1 557 12
Remarks: � Sundram Fasteners Limited (SFL) is the largest organised domestic player in the fasteners segment, commanding ~35% market share. The company manufactures products for CVs, passenger cars, two-wheelers and tractors. Fasteners constitute ~40% of sales, while motor vehicle parts and accessories contribute the remainder.
� SFL has substantially diversified its product portfolio over the past few years with the introduction of new products. This has helped the company to shield itself from over-dependence on fasteners, besides helping it to increase content per vehicle. This has enabled SFL to significantly move up the value chain.
� With OEM going for modular platforms, there is an increasing demand for specialised fasteners, which provides a huge growth opportunity for SFL. Topline of the company is expected to report a 12% CAGR between FY2017 and FY2020 as against the likely industry growth of ~6% (ex-2wheelers).
� SFL has increased the share of high-value products, which currently contribute to about half of the company’s revenue. In addition to these, around two-thirds of the fasteners segment is specialised fasteners (high-value products). Moreover, performance of the subsidiary has improved remarkably due to better capacity utilisation and productivity. We expect SFL to sustain higher margins and expect 18.3% margin in FY2020 as against 18.1% reported in FY2017.
� A consistently strong performance and improved business prospects give us ample confidence on the future prospects of SFL. We believe sustained higher margins would result in the company’s return ratios remaining in excess of 25% going ahead. We have a positive view on SFL.
UPL Limited 733 20.5 18.1 14.6 27.2 25.0 25.4 980 34
Remarks: � United Phosphorous Limited (UPL) is a global generic crop protection chemicals and seeds company. UPL is the largest producer of agrochemicals in India. The company is among the top five post-patent agrochemical manufacturers in the world. UPL has ~23 manufacturing sites, including nine in India, four in France and two in Spain. The company operates in every continent and has a customer base in 123 countries with its own subsidiary offices.
� UPL has outpaced the global agrochemical industry, growing at ~17% in FY2017 as against a decline of ~2.5% for the industry. Consequently, the company has gained ~1% market share. Moreover, agro-commodity prices are likely to remain low going ahead, which in turn will boost demand for generic products, in which UPL is a major player. A positive outlook for geographies such as India, Europe and Latin America would also drive revenue growth going ahead. Further, several patent expiries of significant agrochemicals (the value of which is pegged at ~$4 billion over the next three years) augur well for UPL to leverage the opportunity.
� Owing to continuous product launches, UPL has managed to increase its innovation rate from 5% in FY2015 to 15% in FY2017 (it was 14% in FY2016). This is also the reason UPL has increased its market share to 4% in 2016 from 3% in 2015 in the global agrochemical market.
� Management has guided for 8-10% growth in revenue and a 50-75 bps expansion in EBITDA margin in FY2018. Management also expects acceleration in growth in H2FY2018 versus H1FY2018, owing to a late-season pick-up in Latin America and a good Rabi season in India. The company expects to keep net working capital at 100 days and the tax rate could beat 18-20%. The company has guided for capex of Rs. 1,100 crore in FY2018.
� We believe management’s guidance for FY2018 topline growth can be comfortably achieved on account of its strong product portfolio, new product introductions and an improved demand outlook.
ZEE Entertainment 569 44.8 41.2 31.4 18.3 17.4 19.5 610 7
Remarks: � Zee Entertainment Enterprises Limited (ZEEL) continues to lead the broadcasting industry in terms of growth in advertising revenue. ZEEL is one of the leading players in television broadcasting with a bouquet of 34+ TV channels across genres.
� ZEEL expects domestic subscriptions growth reaching mid-teens for the coming years. However, the ongoing litigation on TRAI’s tariff order is causing a delay in contract renewal negotiations with distributors.
� ZEEL expects advertisement revenue growth to be in mid-teens during H2FY2018E, as it expects clients across sectors to spend more on advertising. Programming hours in its flagship channel, ZeeTV, are likely to increase to 30 hours by Q3FY2018 and 32 hours by Q4FY2018 from 27.5 hours currently.
� We continue to remain positive on ZEEL, as it is a structural India consumption theme. Moreover, the company continues to invest across the media spectrum, including movies, music, events, digital and international markets, to maintain its high-growth trajectory. We maintain our Buy rating on the stock.
EQUITY FUNDAMENTALS Wealth Creator Portfolio
11December 2017 Sharekhan ValueGuide
Wealth Creator Portfolio November 30, 2017
Objective: To build a balanced and actively managed portfolio of quality companies that will help create meaningful wealth for investors in the multi-year rally expected in the Indian equity market.
In addition to some bottom-up picks, the portfolio contains stocks identified based on three key themes:
� Policy push: Stocks from sectors benefiting from improvement in the policy environment
� Early gainers: Beneficiaries of an economic recovery (stocks from auto, banking & financial services)
� Evergreen: Steady performers that provide stable and consistent returns including urban consumption plays
Portfolio performance review
� Sharekhan Wealth Creator portfolio continued to outperform broader indices in October 2017 with cumulative weighted average return of 53.8% as against 25.8%/29.6% return in the Sensex/Nifty. The return has been double that of benchmark indices and underlines the importance of building a core portfolio on long-term investment themes.
� The Wealth Creator report would be discontinued from next month. The stocks in the portfolio are good for a long-term Buy & Hold strategy. Clients (if any) are following it in its true sense can hold on to the stocks. Moreover, note that we would be rolling out many other investment portfolio products over the course of the next few quarters for investors that would be more actively advised, managed and assisted by central RM teams.
COMPARATIVE RETURNS
Particulars Returns (as on November 30, 2017)
Since inception (August 21, 2014)
Wealth Creator folio (weighted average returns) 53.8
- Large-cap (64%) 51.1
- Mid-cap (36%) 58.6
Sensex 25.8
Nifty 29.6
UPDATE ON WEALTH CREATOR PORTFOLIO
Sr No Scrip WeightsReco price (Rs.)
30-November-2017Price target (Rs.)
March-2020Potential upside
Large-caps (64 weightage; 8 each)
1 Axis Bank 8% 536 1110 107.1
2 Larsen & Toubro 8% 1217 2533 108.2
3 Maruti Suzuki 8% 8602 13550 57.5
4 Britannia 8% 4783 8250 72.5
5 IndusInd Bank 8% 1662 2850 71.5
6 Sun Pharmaceuticals 8% 540 975 80.6
7 Tata Consultancy Services 8% 2634 5100 93.6
8 TVS Motor 8% 719 1350 87.8
Mid-caps (36 weightage; 4 each)
9 Capital First 4% 703 1485 111.1
10 V-Guard Ltd 4% 230 450 95.7
11 Indian Oil Corporation 4% 394 750 90.6
12 KNR Construction 4% 275 475 72.7
13 Network 18 Media 4% 56 105 87.5
14 Gabriel India 4% 185 365 97.4
15 Century Plyboard 4% 317 485 53.2
16 Jubilant Foodworks 4% 1775 3000 69
17 PI Industries 4% 951 1650 73.4
* Pls note we see scope for upward revision in target price (3-year) of some of the stock depending on the extent of economic recovery and will keep updating on the same.
Wealth Creator: Comfortably beats Indices
EQUITY FUNDAMENTALSStock Update
12December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
01-Nov-17 Bharti Airtel Stock Update Hold 1 Rs. 538 Rs. 600 h
Summary
• Bharti Airtel’s consolidated revenue declined by 0.8% q-o-q, broadly in-line with estimates. African business continued to deliver good performance.
• OPM improved for Q2FY2018 despite lower realisations, led by stable margin performance in India business, rationalization of SG&A and network
expenses and better OPM from Africa business.
• Industry consolidation (three players market, with the exit of smaller players) coupled an improvement in pricing scenario (Jio has raised the price
by 15% recently) and bottoming out of competitive intensity augurs well for Bharti.
• We have turned positive on Bharti and increased our target price to Rs. 600 , however given the limited upside from our target price we retain our
Hold rating on the stock.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BhartiAirtel-Nov01_17.pdf
01-Nov-17 Capital First Stock Update Buy 1 Rs. 744 Rs. 880 1
Summary
• Capital First (CAPF) reported impressive operating performance for Q2FY2018.
• CAPF got its business momentum back in Q2FY2018 and witnessed improvement in asset quality.
• We expect CAPF to continue to outperform its peers on loan book growth and profitability metrics.
• We maintain our Buy rating on the stock.
Report link: http://old.sharekhan.com/Upload/NewsLetter/CapitalFirst-Nov01_17.pdf
01-Nov-17 Godrej Consumer Products Stock Update Buy 1 Rs. 967 Rs. 1,102 h
Summary
• During Q2FY2018, Godrej Consumer Products Limited (GCPL) witnessed recovery in volume growth and y-o-y improvement in margins.
• The soap segment posted strong performance; Household insecticide and hair colour segments also witnessed recovery in growth but at a slower
pace.
• We have revised upwards our earnings estimates for FY2018 and FY2019 and maintain our Buy recommendation on the stock with a revised price
target of Rs.1,102.
Report link: http://old.sharekhan.com/Upload/NewsLetter/GCPL-Nov01_17.pdf
01-Nov-17 Hero MotoCorp Stock Update Buy 1 Rs. 3,816 Rs. 4,200 h
Summary
• Operating performance of Hero Motocorp largely in line with expectations, topline rises 7% y-o-y at Rs. 8,362 crore driven by a 11% volume growth
• Hero managed to maintain operating margins y-o-y despite the rising cost pressures.
• OFavourable base benefit in H2FY2018 coupled with improving rural sentiments provides growth visibility
• Hero Motocorp is the best stock to play the rural recovery theme. we maintain our Buy rating on the stock with a revised PT of Rs. 4,200.
Report link: http://old.sharekhan.com/Upload/NewsLetter/HeroMoto-Nov01_17.pdf
01-Nov-17 Info Edge India Stock Update Hold 1 Rs. 1,197 Rs. 1,250 1
Summary
• Stock has recovered from recent lows post a correction in aftermath of its inclusion in the shell company business list.
• Yet, in a ‘no-profit, no loss’ scenario, we recommend that investors exit the stock in view of regulatory and corporate governance risk.
Report link: http://old.sharekhan.com/Upload/NewsLetter/InfoEdge-Nov01_17.pdf
EQUITY FUNDAMENTALS Stock Update
13December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
01-Nov-17 Pincon Spirit Viewpoint Book Out - Rs. 72 - -
Summary
• Stock has recovered from recent lows post a correction in aftermath of its inclusion in the shell company business list.
• Yet, in a ‘no-profit, no loss’ scenario, we recommend that investors exit the stock in view of regulatory and corporate governance risk.
Report link: http://old.sharekhan.com/Upload/NewsLetter/PinconSpirit-Nov01_17.pdf
01-Nov-17 TVS Motor Stock Update Buy 1 Rs. 709 Rs. 825 h
Summary
• Revenues for Q2FY2018 rose 18% y-o-y driven by an impressive 16% y-o-y growth in volumes owing to good festive demand and market share gains.
OPM reached 12-year high of 8.6%, owing to strong operating leverage.
• New products would boost volumes and help TVS outpace the industry.
• Margin improvement to sustain; likely to reach the double-digit mark by FY2019, leading to a 36% earnings CAGR over FY2017 to FY2019.
• We Maintain Buy with a revised PT of Rs. 825.
Report link: http://old.sharekhan.com/Upload/NewsLetter/TVSMotor-Nov01_17.pdf
02-Nov-17 Apollo Tyres Stock Update Hold i Rs. 237 Rs. 245 i
Summary
• Apollo Tyres reported weak operating performance for Q2FY2018.
• Apollo Tyres is likely to face higher raw material (RM) costs in Q4FY2018. This coupled with start up costs at Hungary plant is likely to exert margin
pressure.
• Recent QIP is also likely to result in earnings dilution. We expect subdued 2% net profit growth over FY2017-FY2019.
• Downgrade recommendation on the stock from Buy to Hold with a revised price target of Rs.245.
Report link: http://old.sharekhan.com/Upload/NewsLetter/ApolloTyres-Nov02_17.pdf
02-Nov-17 Divis Laboratories Stock Update Buy h Rs. 1,075 Rs. 1,275 h
Summary
• USFDA has informed Divis Laboratories (Divis) that it will be lifting Import Alert 66-40 and close out the warning letter at unit-2 at Vishakhapatnam.
• This is a big positive for Divis.
• We upgrade our recommendation to buy with a revised price target of Rs.1,275.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Divilab-Nov02_17.pdf
02-Nov-17 Firstsource Solutions Stock Update Hold n Rs. 42 Rs. 45 h
Summary
• During Q2FY2018, Firstsource Solutions Limited (FSL) delivered better-than-expected operating performance against our modest expectations.
• The management expects margin expansion from Q3FY18 onwards, led by improved profitability in ISGN business and divestments in of some part
of domestic business.
• Given the absence of any near-term triggers for re-rating of multiples and seasonality impact in Q3FY2018, we maintain our Hold rating with a
revised price target of Rs. 45.
Report link: http://old.sharekhan.com/Upload/NewsLetter/FSL-Nov02_17.pdf
EQUITY FUNDAMENTALSStock Update
14December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
02-Nov-17 The Ramco Cements Stock Update Hold 1 Rs. 720 Rs. 750 1
Summary
• Operating profit margin (OPM) of The Ramco Cements declines sharply by 644 basis points y-o-y to 28.3% due to a rise in fuel and freight expenses.
• Benefits of strategy to expand capacity would accrue only after 18 months.
• Hike in cement prices, recovery in the cement demand and cost containment measures would be the key monitorable factors for Ramco in H2FY2018.
Report link: http://old.sharekhan.com/Upload/NewsLetter/TheRamcoCem-Nov02_17.pdf
02-Nov-17 Tube Investments of India Ltd. Viewpoint Book Profit - Rs. 265 30% -
Summary
• On anticipated lines, Tube Investments of India Ltd (TIIL) listed two of its demerged entities Tube Investments India Ltd (TIIL; the manufacturing
company), and TI Financial Holdings Ltd (TIFHL; the financial services company)..
• We initiated our Viewpoint idea on TIIL at Rs. 661 in June 23, 2017.
• Post the demerger and subsequent listing of TIIL and TIFHL, on sum-of-the-parts (SoTP) basis, TIIL has exceeded our return expectations. Hence, we
are recommending booking profits in TIIL and TIFHL.
Report link: http://old.sharekhan.com/Upload/NewsLetter/TubeInvest-Nov02_17.pdf
03-Nov-17 BSE Ltd. Viewpoint Positive n Rs. 987 18-20% h
Summary
• Growth across revenue streams drives 22% growth in revenues from continued operations for BSE..
• Long term growth envisaged from diversification initiatives on insurance, mutual fund distribution and international exchange front.
• Continued efforts to diversify revenue streams encourages our positive outlook on the stock of BSE.
• We expect 18-20% upside potential from this stock over next 6 to 9 months.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BSE-Nov03_17.pdf
03-Nov-17 Natco Pharma Viewpoint Positive n Rs. 954 18-20% h
Summary
• Total income declined 8.8% to Rs. 426.7 crore on Q2FY2017’s high base. Profit grew 27.5% to Rs. 84.4 crore.
• Sales of gCopaxone, launched by Mylan Inc (marketing partner of Natco), to drive growth in H2FY2018.
• We maintain a positive rating on the stock with upside of 18-20% in six months.
Report link: http://old.sharekhan.com/Upload/NewsLetter/NatcoPharma-Nov03_17.pdf
03-Nov-17 Union Bank of India Stock Update Hold 1 Rs. 173 Rs. 210 1
Summary
• NII grew marginally by 1.9%, owing to interest reversals, NIMs slipped 22 bps y-o-y.
• Additional provisions of Rs. 1,566 crore drove up total provisions, leading to net loss of Rs.1,530.7 crore.
• Loan growth beat expectations; but a sequential drop in CASA ratio could curb margins.
• Improvement in asset quality and government’s recapitalisation plan are positives; Maintain Hold.
Report link: http://old.sharekhan.com/Upload/NewsLetter/UBI-Nov03_17.pdf
EQUITY FUNDAMENTALS Stock Update
15December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
06-Nov-17 KEC International Stock Update Buy h Rs. 316 Rs. 345 h
Summary
• While overseas T&D revenue growth was promising; domestic performance was muted by GST.
• Operating profit rose 16% y-o-y, as OPM expanded 120 bps to 10.1%.Management’s efforts to build a high-margin order book boded well for bottomline.
• Better visibility on profitability of T&D and cables businesses, higher credit rating make us upbeat; reiterate Buy.
Report link: http://old.sharekhan.com/Upload/NewsLetter/KEC-Nov06_17.pdf
06-Nov-17 Power Grid Corporation Viewpoint Positive n Rs. 211 10-12% h
Summary
• Higher capitalisation drove up Q2FY2018 adjusted PAT by 14% to Rs. 2,141 crore.
• Steady rise in capitalisation, will help earnings move north in the next couple of years.
• Strong growth visibility and a healthy balance sheet keeps us Positive on PGCIL.
Report link: http://old.sharekhan.com/Upload/NewsLetter/PowerGrid-Nov06_17.pdf
06-Nov-17 Relaxo Footwears Stock Update Buy n Rs. 569 Rs. 645 h
Summary
• Relaxo Footwears Limited (Relaxo) registered strong performance in Q2FY2018 with revenue and PAT growing in double digits.
• GST proving to be beneficial for the organised footwear industry due to the shift in demand from unorganised industry.
• Superior footwear portfolio, distribution expansion and strong brand presence would improve the growth prospect of the company in long run.
• We have revised our estimates upwards for FY2018 and FY2019 by 6% and 3%, respectively, to factor in better volume growth and lower interest
cost in H1FY2018.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Relaxo-Nov06_17.pdf
06-Nov-17 Torrent Pharmaceuticals Stock Update Hold h Rs. 1,306 Rs. 1,480 h
Summary
• Torrent Pharmaceutical numbers have not met expectations. Sales were flat at Rs. 1,429 crore, operating profit declined marginally to Rs. 329 crore,
and adjusted profit for the quarter declined 1.4% to Rs. 204 crore.
• Torrent’s acquisition of Unichem domestic branded business is a strategic fit, but it will weaken core earnings for short term and result in debt
hangover (~75% funding will be via debt i.e. ~ Rs. 2,800 crore increase in debt).
• We have upgraded our rating on Torrent Pharma to ‘Hold’ with a revised price target of Rs. 1,480.
Report link: http://old.sharekhan.com/Upload/NewsLetter/TorrentPharma-Nov06_17.pdf
07-Nov-17 Bharat Forge Viewpoint Positive h Rs. 716 12-15% h
Summary
• Demand trends in domestic and overseas business is encouraging. Domestic demand is propelled by MHCV sales, while Class-8 trucks are boosting
demand internationally.
• Apparent uptick in the construction and mining segment coupled with BFL’s consistent effort to introduce new products in the defence, railways and
aerospace, is gradually turning fruitful.
• We re-initiate our viewpoint coverage on BFL and expect 12-15% upside from the current levels over the next 6-8 months.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BharatForge-Nov07_17.pdf
EQUITY FUNDAMENTALSStock Update
16December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
07-Nov-17 Century Plyboards (India) Stock Update Hold n Rs. 295 Rs. 310 h
Summary
• Strong show by laminates business lifted revenue growth; even as high GST hit plywood business.
• Gross profit margin and OPM contracted 166 bps and 57 bps, respectively, as raw material prices rose.
• Near-term issues on high GST rate and launch of e-way bill mechanism will affect the plywood segment volume and margin.
• Concerns on plywood business make us lower FY2018-FY2019 earnings estimates; we maintain Hold on stock
Report link: http://old.sharekhan.com/Upload/NewsLetter/CenturyPly-Nov07_17.pdf
07-Nov-17 Cipla Stock Update Hold n Rs. 608 Rs. 685 h
Summary
• Focus on operational efficiency, cost control drives up operating by 18.2% y-o-y; OPM rose 156 bps to 19.7%.
• Management has guided for double-digit growth in India and the US led by new product launches, despite a challenging environment.
• Considering positive cues and revised tax guidance we lower our earnings estimates; maintain Hold with revised PT of Rs. 685
Report link: http://old.sharekhan.com/Upload/NewsLetter/Cipla-Nov07_17.pdf
07-Nov-17 Greaves Cotton Stock Update Hold i Rs. 127 Rs. 137 i
Summary
• A drop in the three-wheeler engine business (volumes dipped 4%) and agri segment largely responsible for the subdued topline growth of 3% for
Greaves Cotton Ltd in Q2FY18.
• Structural growth issues in the three-wheeler segment envisaged to be a drag on GCL’s growth over the medium term. The absence of tie ups with
OEMs for an electric three-wheeler is a drag on GCL.
• Further, given the rising input cost pressures and higher taxation, GCL is expected to post flat earnings over the next two years.
• Given the weak Q2FY2018 results coupled with a muted outlook for 3W segment downgrade our recommendation on the stock from “Buy” to “Hold”
with a revised PT of Rs. 137.
Report link: http://old.sharekhan.com/Upload/NewsLetter/GreavesCotton-Nov07_17.pdf
07-Nov-17 Gujarat Gas Limited Viewpoint Positive n Rs. 912 10-12% h
Summary
• Operating profit lagged our and street’s estimates owing to lower gross margin and lower-than-expected gas volume.
• Volume has already recovered above 6mmscmd and is likely to increase further in H2FY2018; a better sourcing mix will also drive gross margin.
• We remain positive on recovery; earnings are likely to clock 63% over FY2017-FY2019E, while RoE likely to double to ~26%. We expect a 10-12%
upside in stock.
Report link: http://old.sharekhan.com/Upload/NewsLetter/GujGas-Nov07_17.pdf
07-Nov-17 Jyothy Laboratories Stock Update Buy n Rs. 336 Rs. 382 i
Summary
• During Q2FY2018, Jyothy Laboratories Ltd (JLL) registered decent performance with ~10% growth in revenues and 162bps y-o-y improvement in
the OPM.
• With pick up in rural demand and trade channels getting back in trade, the management is confident of achieving 14-15% revenue growth (volume
growth of 8-10%) in Q3FY2018.
• Henkel not exercising option of acquiring 26% stake in the company will not have any impact on the business fundamental.
• The stock corrected by 14% and hence provides decent upside from the current level.
Report link: http://old.sharekhan.com/Upload/NewsLetter/JyothyLab-Nov07_17.pdf
EQUITY FUNDAMENTALS Stock Update
17December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
07-Nov-17 Lupin Stock Update Hold n Rs. 860Under Review
i
Summary
• USFDA simultaneously issues warning letters to Goa and Indore plants; while there will be no supply disruption, new product approvals will be
delayed.
• Increase in pressure on the base business.
• We revise our sales and earnings estimates downwards, Maintain Hold. PT under review till further clarity emerges.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Lupin-Nov07_17.pdf
07-Nov-17 Parag Milk Foods Ltd Viewpoint Positive h Rs. 257 20% h
Summary
• Improvement in EBIDTA margins aided by a considerable reduction in advertising spend, freight and octroi expenses leads to good profitability for
Parag Milk Foods in Q2FY18.
• Softening of milk prices along with efforts to build a better revenue mix will continue to improve profitability for the company.
• Focus on enriched revenue mix with the encouraging response to recent product launches.
• We continue to have positive view on the stock with 20% potential return.
Report link: http://old.sharekhan.com/Upload/NewsLetter/ParagMilk-Nov07_17.pdf
07-Nov-17 Punjab National Bank Stock Update Buy n Rs. 191 Rs. 240 n
Summary
• Punjab National Bank (PNB) posts mixed performance in Q2FY18.
• Asset quality improvement encouraging as GNPA ratio and NNPA declined by 35bps and 23bps q-o-q.
• PNB could be a major beneficiary of the recapitalization plan of the Government, stake sale in non-core assets could also help. Maintain our Buy
rating with unchanged price target Rs. 240.
Report link: http://old.sharekhan.com/Upload/NewsLetter/PNB-Nov07_17.pdf
07-Nov-17 Thomas Cook India Stock Update Hold n Rs. 243 Rs. 260 n
Summary
• A mixed performance in Q2FY2018 by Thomas Cook India (TCIL) with revenues growing by 28% but consolidated OPM dipping by 74bps y-o-y.
• The revenues of core travel and related service business grew by 33.6%, but margins saw significant drop during the quarter.
• The travel and related business along with Vacation ownership business is expected to post substantial improvement in profitability in the coming
quarters.
• Any significant improvement in the operating performance would act as a key trigger for the stock.
Report link: http://old.sharekhan.com/Upload/NewsLetter/ThomasCook-Nov07_17.pdf
07-Nov-17 Varun Beverages Viewpoint Positive h Rs. 514 16-18% h
Summary
• A strong alliance with PepsiCo, has resulted in VBL’s strong financial performance with robust double digit growth in revenues and earnings.
• VBL has optimized the opportunity arising from the shift towards healthy beverages and launched a slew of healthy beverages in the recent past.
This rising trend will help it achieve 10-12% volume growth in the coming years.
• Margin improvement, leaner balance sheet and improving return ratios makes us optimistic on the growth prospects of VBL. We have a positive view
on the stock with a potential upside of 16-18%.
Report link: http://old.sharekhan.com/Upload/NewsLetter/VarunBrev-Nov07_17.pdf
EQUITY FUNDAMENTALSStock Update
18December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
08-Nov-17 Finolex Cables Stock Update Hold n Rs. 610 Rs. 630 h
Summary
• Revenue growth was stable, as demand from NOFN drove up communication cable revenue, despite weak performance of electrical cable segment
• Operating margin (OPM) declined 368 bps to 14.1% owing to weak show of electrical cables; inventory issues and non-input tax credit inventory hit
operating performance
• We retain our Hold rating owing to healthy return ratios, a leaner balance sheet and healthy cash flows
Report link: http://old.sharekhan.com/Upload/NewsLetter/FinolexCable-Nov08_17.pdf
08-Nov-17 IRB Infrastructure Developers Stock Update Buy n Rs. 237 Rs. 295 i
Summary
• Consolidated net profit jumped 65% y-o-y, as one project got transferred to InVIT in Q2
• Although order book stands at Rs. 8,189 crore, it is at a three-year low and IRB will have to win new projects
• Near-term order wins remain a key monitorable. Maintain ‘Buy’ with a revised price target of Rs. 295
Report link: http://old.sharekhan.com/Upload/NewsLetter/IRBInfra-Nov08_17.pdf
08-Nov-17 Jamna Auto Industries Viewpoint Book Profit - Rs. 60 - -
Summary
• Since our re-initiation on Jamna Auto in September 2017, the stock has delivered an absolute return of 17%.
• Post the GST rollout, there are uncertainties regarding the extension of fiscal incentives at Pantnagar plant.
• The benefits are unlikely to accrue in near term, thus impacting earnings negatively. Operating margins and net profit likely to take a hit.
• We therefore advise investors to book profits at the current levels.
Report link: http://old.sharekhan.com/Upload/NewsLetter/JamnaAuto-Nov08_17.pdf
09-Nov-17 Arvind Limited Stock Update Buy n Rs. 436 Rs. 500 h
Summary
• Subdued performance of textile business hurt operating performance in Q2
• Demerger of branded & retail business and engineering business to enhance shareholders value
• Valuation of branded & retail business suggests a 12-13% premium and hence price target stands revised at Rs. 500; maintain Buy
Report link: http://old.sharekhan.com/Upload/NewsLetter/Arvind-Nov09_17.pdf
09-Nov-17 Ashok Leyland Stock Update Buy n Rs. 115 Rs. 130 i
Summary
• Topline grew 31% y-o-y led by a strong 24% y-o-y volumes growth. Margins were affected by sales of low-realisation BSIII trucks, and lack of pricing
action.
• Improved volume growth expected in H2FY2018 due to improved fleet operator profitability.
• We expect the company to post 10% CAGR (in volume terms) over FY2017-2019. Due to lower than expected Q2FY2018 results we have reduced
FY18/FY19 estimates. We retain our Buy rating with a revised PT of Rs.130.
Report link: http://old.sharekhan.com/Upload/NewsLetter/AshokLey-Nov09_17.pdf
EQUITY FUNDAMENTALS Stock Update
19December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
09-Nov-17 Gateway Distriparks Stock Update Hold n Rs. 237 Rs. 250 n
Summary
• Consolidated net revenue of Gateway Distriparks grew 5% y-o-y owing to strong rail division revenue growth (up 12.7%). In contrast, revenue of
container freight stations and cold chain divisions declined.
• Increased prices to aid company realisations in November and December.
• We expect the company to continue facing a challenging business environment before showing gradual improvement in its verticals.
• We maintain Hold rating on the stock with unchanged price target of Rs. 250.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Gatewaydist-Nov09_17.pdf
09-Nov-17 Shree Cement Stock Update Hold n Rs. 18,095 Rs. 19,600 n
Summary
• Higher operating expenses in cement division results in a 19.1% decline in EBIDTA/tonne for Shree Cement in Q2FY18. Higher interests and higher
tax rate also brings down net profit by 27% y-o-y.
• Higher input costs a drag on cement division, power division posts dismal performance on account of a sharp decline in volumes.
• The company’s expansion plan to reach 40MT by FY2020 and increasing geographical footprint in the Eastern and Southern region will aid volume
growth, but increased costs and higher tax rate likely to limit earnings capability.
• With a keen watch on the measures taken by the company to contain the rising cost of production, we maintain our Hold rating on the stock with
an unchanged price target.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Shreecement-Nov09_17.pdf
09-Nov-17 Thermax Stock Update Hold n Rs. 980 Rs. 1,090 h
Summary
• Thermax posted slight revenue growth to Rs. 864 crore in Q2FY2018 due to government’s notification on input tax credit under GST.
• Order inflow grew 8% y-o-y driven by orders from cement and refinery sectors.
• Management is confident of maintaining operating profitability near double digits
• We continue to recommend Hold on the stock with revised price target of Rs.1,090.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Thermax-Nov09_17.pdf
09-Nov-17 Triveni Turbine Stock Update Hold i Rs. 134 Rs. 140 i
Summary
• Triveni Turbines reports 9% y-o-y revenue growth in Q2FY18 despite GST disruption.
• Strong growth in order inflow in Q2FY18 on the export front, through domestic front remains subdued. Change in order inflow mix skewed towards
exports will drive profitability ahead.
• Company manages to arrest drop in margins with better cost control and operating efficiencies, despite a difficult H1FY18 owing to GST disruption
and slow domestic orders.
• Continues to remain debt free, free cash flow generation set to strengthen balance sheet further.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Triveni-Nov09_17.pdf
EQUITY FUNDAMENTALSStock Update
20December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
09-Nov-17 Va Tech Wabag Stock Update Buy n Rs. 584 Rs. 660 i
Summary
• Healthy execution of projects in the domestic as well as the international markets leads to a 14% y-o-y growth to Rs. 887 crore.
• Management reiterates order inflow guidance of Rs. 4300-Rs. 4500 crore in FY2018 due to foray in LATAM market.
• Net working capital expected to reduce to 70-75 days post stabilization of GST and impending receivables to flow in by March 2018.
• We retain our Buy rating on VTW with a revised price target (PT) of Rs. 660, given that it’s a quality engineering company with niche expertise,
professional management and a structural growth story in the water treatment industry.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Vatech-Nov09_17.pdf
10-Nov-17 Aurobindo Pharma Stock Update Buy n Rs. 740 Rs. 905 n
Summary
• Aurobindo Pharma’s (Aurobindo) revenue in Q2FY2018 grew 17.5% y-o-y to Rs. 4,435.9 crore.
• Management sounded cautious about near-term performance due to pricing pressure and increased interest burden.
• We maintain our Buy recommendation on the stock with unchanged price target of Rs.905.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Aurobindo-Nov10_17.pdf
10-Nov-17 Bank of India Stock Update Hold n Rs. 196 Rs. 215 h
Summary
• Despite a flattish loan growth, the net interest income of Bank of India rises by 6.9% y-o-y to Rs. 2,908.2 crore while net interest margin remains
stable shows sequential improvement of 16 bps to 2.15%.
• Overall loan portfolio growth remains muted owing to a decline in all segments apart from retail advances. Low cost deposit (CASA) ratio remains
steady at 39.01%.
• Asset quality performance improves with a decline in GNPA ratio and Net NPA ratio by 43bps and 23bps on a sequential basis to 12.62% and 6.47%
respectively.
• We maintain our Hold rating on the stock with a revised price target of Rs. 215.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BOI-Nov10_17.pdf
10-Nov-17 CG Power & Industrial Solutions Stock Update Hold n Rs. 83 Rs. 89 n
Summary
• Q2FY18 marked by rise in revenue from domestic and overseas operations and recovery in margins for the industrial systems business.
• Management confident of high growth in the industrial systems business and stable profitability turnaround from overseas operations.
• Divestment process of Hungarian operations on track, to be completed by end of Q3FY18
• Given the positive outlook by the management on domestic and overseas operations and balance sheet deleverage from divestment, we continue
to maintain Hold with revised PT of Rs. 89.
Report link: http://old.sharekhan.com/Upload/NewsLetter/CGPower-Nov10_17.pdf
10-Nov-17 Mahindra & Mahindra Stock Update Buy n Rs. 1,393 Rs. 1,575 n
Summary
• Mahindra & Mahindra Q2 numbers exceeded expectations led by a robust margin performance. Automotive and farm equipment segment revenues
logged 16% and 30% growth, respectively.
• Management has raised the volume forecast for the tractor industry owing to second consecutive year of normal rainfall and higher minimum
support price (MSP).
• Company has planned new launches and variants in the UV segment. This will enable the company regain market share in UV space.
• We retain Buy rating on the stock with a revised sum-of-the-parts (SOTP) based price target of Rs. 1,575.
Report link: http://old.sharekhan.com/Upload/NewsLetter/MnM-Nov10_17.pdf
EQUITY FUNDAMENTALS Stock Update
21December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
10-Nov-17 Motherson Sumi Systems Viewpoint Positive n Rs. 355 12-15% h
Summary
• Topline of Motherson Sumi Systems jumps sharply by 33% y-o-y on account of PKC acquisition and the execution of strong order book at SMRBPV.
Operating margins on the other hand shrinks by 50 bps y-o-y on account of a higher start up costs at subsidiary.
• Company is aiming to triple its revenues from $6.5 billion as of FY2017 to $18 billion by FY2020.
• We expect topline and earnings to grow at 23% / 25% CAGR over the next 2 years, making it one of the fastest growing auto-ancillary company and
maintain our Positive View on the stock.
• We expect it to generate 12-15% returns over the next 6-8 months.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Mothersonsumi-Nov10_17.pdf
10-Nov-17 PTC India Stock Update Hold n Rs. 120 Rs. 130 n
Summary
• Volumes have grown at a better-than-expected pace; new PPAs will drive volume growth in coming quarters.
• While management has guided for healthy volume growth; a changed sales mix may affect margins
• We fine tune earnings estimates for FY2018 and FY2019; maintain Hold
Report link: http://old.sharekhan.com/Upload/NewsLetter/PTCIndia-Nov10_17.pdf
10-Nov-17 Ratnamani Metals & Tubes Stock Update Buy h Rs. 890 Rs. 1,005 h
Summary
• In Q2FY2018, RMTL delivered stable numbers, with OPM improving 70 bps y-o-y.
• Order book inflows continue to improve to Rs. 2,500 crore currently - grew 3.5x y-o-y and stood at 1.7x of FY2017 revenues. We expect a strong
H2FY2018.
• Given healthy earning visibility (18% earning CAGR over FY2018-FY2020E), we upgrade our rating to Buy from Hold.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Ratnamani-Nov10_17.pdf
10-Nov-17 State Bank of India Stock Update Buy n Rs. 333 Rs. 370 h
Summary
• Operating numbers were modest; NII rose 2.58% y-o-y and 5.57% q-o-q, while NIM grew 9 bps (on comparable basis).
• Asset quality improved sequentially, GNPA and NNPA ratio decline, Slippage ratio drop to 1.85%.
• Retail business growth is a bright spot, growth in CASA base and retail loans are positive.
• Bank recapitalisation plan provides room for an upside; Maintain Buy.
Report link: http://old.sharekhan.com/Upload/NewsLetter/SBI-Nov10_17.pdf
13-Nov-17 Gabriel India Stock Update Buy h Rs.193 Rs. 222 h
Summary
• Gabriel India Limited (GIL) reported better-than-expected Q2FY2018 results on the operating front.
• We expect topline growth to continue and expect a 17% topline CAGR over FY2017-2019.
• The company expects operating margins to reach the double-digit mark in FY2019
• GIL is likely to continue to outgrow the automotive industry in the medium term.
• We upgrade our recommendation to Buy with a price target of Rs.222.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Gabriel-Nov13_17.pdf
EQUITY FUNDAMENTALSStock Update
22December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
13-Nov-17 Granules India Limited Viewpoint Positive h Rs. 123 15-18% h
Summary
• Granules India Limited (Granules) is expected to report strong growth on account of capacity expansion and new product approvals
• We expect improvement in profitability due to better product mix
• We have a positive view on the stock with a potential upside of 15-18% returns from the current level over the next six months
Report link: http://old.sharekhan.com/Upload/NewsLetter/Granules-Nov13_17.pdf
13-Nov-17 Larsen & Toubro Stock Update Hold h Rs. 1,240 Rs. 1,350 h
Summary
• Margin expansion during Q2FY2018 led to improved profitability for Larsen & Toubro (L&T).
• Order inflows drop 8%, lowering order book growth to marginal 2%.
• Management maintains revenue guidance, but drastically tones down order inflow guidance.
• We retain Hold with a revised price target of Rs.1,350.
Report link: http://old.sharekhan.com/Upload/NewsLetter/LT-Nov13_17.pdf
13-Nov-17 Laurus Labs Viewpoint Positive n Rs. 524 15-18% h
Summary
• Laurus is transitioning from an active pharmaceutical ingredients (API) player to an integrated oral solid formulations player.
• It expects the manufacturing of oral solid formulations in anti-retrovirals (ARVs), anti-diabetic and cardio vascular therapeutic areas to start contributing
to earnings from FY2019/FY2020 onwards.
• We expect margins to expand at least 100 basis points (bps) every year, led by a better product mix and improved utilisation levels.
• We see a potential upside of 15-18% in the company’s stock over the next six months.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Laurus-Nov13_17.pdf
13-Nov-17 Oil India Stock Update Hold n Rs. 357 Rs. 390 h
Summary
• Operating profit beat estimates owing to lower-than-expected other expenses
• Robust operating profit, higher other income and lower tax rate also drove up PAT by 43.5% q-o-q to Rs. 646 crore
• Outlook seems better on gradual revival in oil-gas production and higher crude oil prices
• We maintain our ‘Hold’ rating, given OIL share prices have risen 13% in last two months
Report link: http://old.sharekhan.com/Upload/NewsLetter/OilIndia-Nov13_17.pdf
13-Nov-17 SJVN Viewpoint Book Profit - Rs. 36 20% -
Summary
• Incremental capacity addition facing several delays, thus impacting awarding of equipment.
• Proposed CERC regulation on reduction of RoE in draft tariff regulation stand to impact return ratios drastically.
• Buyback on the cards. Process to begin soon.
• We advise investors to book profits with 20% gain at this level.
Report link: http://old.sharekhan.com/Upload/NewsLetter/SJVN-Nov13_17.pdf
EQUITY FUNDAMENTALS Stock Update
23December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
13-Nov-17 Zydus Wellness Stock Update Hold n Rs. 903 Rs. 952 n
Summary
• Strong double digit growth in the key categories helps revenue and PAT of Zydus Wellness to grow by 11% and 13% (on comparable basis).
• Benign input costs aids over 200bps growth in gross margins. Further improvement in gross margins expected by the management in the coming
quarters.
• Further revenue growth expected in the forthcoming quarters on the back of an improving demand environment and resumption of trading across
channels.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Zydus-Nov13_17.pdf
14-Nov-17 Cadila Healthcare Stock Update Hold n Rs. 449 Rs. 485 n
Summary
• Cadila Healthcare (Cadila) reported strong growth of 34.6% in total operating revenue during Q2FY2018.
• Management has guided for product approvals of 40+ ANDAs and expects to launch 20+ products in FY2019.
• We continue to maintain our Hold recommendation on the stock with an unchanged target price (TP) of Rs.485
Report link: http://old.sharekhan.com/Upload/NewsLetter/Cadila-Nov14_17.pdf
14-Nov-17 Kalpataru Power Transmission Stock Update Buy n Rs. 392 Rs. 465 h
Summary
• Rapid growth in the Railways and oil & gas pipeline businesses drove up overall revenue by 10% y-o-y.
• PAT grew 24% to Rs. 71 crore owing to decent operational performance.
• We estimate earnings to clock 28% CAGR over FY2017-2020; RoE is likely to improve as well.
• Thus, we increase our SOTP-based price target to Rs. 465; reiterate ‘Buy’.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Kalpataru-Nov14_17.pdf
14-Nov-17 Max Financial Services Stock Update Buy n Rs. 564 Rs. 660 n
Summary
• Max Financial Services registers growth of 13.3% y-o-y in its gross written premium (GWP) and AUM growth of 20.5% y-o-y.
• Improving operating metrics, business margins expected to improve further in FY18E.
• With a multi-channel distribution model and bancassurance support, MFS is well positioned to benefit from growing opportunities in insurance
market.
• We maintain our Buy rating with unchanged price target of Rs. 660.
Report link: http://old.sharekhan.com/Upload/NewsLetter/MaxFin-Nov14_17.pdf
14-Nov-17 PTC India Financial Services Stock Update Buy n Rs. 37 Rs. 45 n
Summary
• The company posted weak operating performance with net interest income (NII) declining 21.8% y-o-y to Rs. 110.7 crore.
• Provisions during the quarter increased 91.4% y-o-y to Rs. 64.3 crore due to which the net profit for the quarter declined 74.5% y-o-y to Rs. 21.7 crore.
• Marginal 9 bps increase in GNPAs on a sequential basis to 5.92%.
• We maintain our Buy rating with an unchanged price target of Rs. 45.
Report link: http://old.sharekhan.com/Upload/NewsLetter/PFS-Nov14_17.pdf
EQUITY FUNDAMENTALSStock Update
24December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
14-Nov-17 Sadbhav Engineering Stock Update Buy n Rs. 316 Rs. 400 n
Summary
• Strong execution in the transport segment leads to a 12.6% y-o-y growth in the standalone net revenues of Sadbhav Engineering Limited (SEL) to
Rs.693 crore for Q2FY2018.
• Net profit registers 81% y-o-y growth led by improved operating margins, lower interest costs and tax credit..
• Strong order book of Rs.7,715 crore provides strong revenue visibility over the next two years. Project awarding pace to gather momentum in second
half.
• Encouraged by the strong execution momentum along with improvement in operating margins and overall cash flows during FY2018-FY2019, we
maintain our Buy rating with unchanged price target of Rs. 400.
Report link: http://old.sharekhan.com/Upload/NewsLetter/SadbhavEngg-Nov14_17.pdf
14-Nov-17 Sun Pharmaceutical Industries Stock Update Hold n Rs. 526UNDER REVIEW
i
Summary
• Sales and operating profit of Sun Pharma declined 19.5% and 56.6%, respectively.
• Re-inspection of Halol plant and audit of Baska plant keenly eyed.
• We have downgraded our earnings estimates by 18% each for FY2018, FY2019 and FY2020, respectively.
• We maintain our Hold recommendation on the stock (as Halol resolution could act as positive trigger); however, due to lack of clarity in near term
we have put our price target under review.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Sunpharma-Nov14_17.pdf
15-Nov-17 AIA Engineering Viewpoint Positive n Rs. 1,377 10% h
Summary
• Input cost pressures and a strong rupee hurt margins; volumes drove up revenue by 5.6% y-o-y.
• Poor operational performance dragged bottomline by 23% y-o-y to Rs. 87 crore.
• New market forays, delayed executions have trimmed volume guidance; management expects incremental mining volumes to rise.
• Stock is trading a premium; steady earnings visibility and healthy cash flows warrant positive view.
Report link: http://old.sharekhan.com/Upload/NewsLetter/AIAEng-Nov15_17.pdf
15-Nov-17 Bata India Limited Viewpoint Positive n Rs. 740 10-12% h
Summary
• Bata India Limited (Bata) registered strong PAT growth of 24% in Q2FY2018, driven by 121bps margin improvement as same-store-sales growth
(SSSG) revived to 5% in Q2FY2018.
• Premiumisation and improvement in store optimisation remain the key earnings growth strategy going ahead.
• We maintain our Positive view on the stock with 10-12% upside.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BataIndia-Nov15_17.pdf
15-Nov-17 Britannia Industries Stock Update Buy n Rs. 4,744 Rs. 5,500 h
Summary
• Britannia’s registered volume led growth of 7% in Q2FY2018, operating efficiencies led to margin expansion of 104bps to 14.8%.
• The new product addition in biscuits and adjacent categories along with expansion in new geographies and enhancing domestic distribution reach
will remain the key revenue drivers in near to medium term.
• Declining input prices and operating efficiencies are likely to drive margins in the coming quarters.
• Maintain Buy with revised price target of Rs. 5,500.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Britannia-Nov15_17.pdf
EQUITY FUNDAMENTALS Stock Update
25December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
15-Nov-17 Grasim Industries Stock Update Buy h Rs. 1,180 Rs. 1,388 h
Summary
• Q2FY2018 results of Grasim Industries reflect merger and restructuring of business entities and hence comparable with preview quarters.
• Robust earnings growth outlook for standalone business.
• Improving growth outlook for UltraTech while AB Capital to maintain a strong growth momentum given its leading position.
• We upgrade our rating to Buy with a revised PT of Rs.1,388.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Grasim-Nov15_17.pdf
15-Nov-17 NBCC Stock Update Buy n Rs. 265 Rs. 310 h
Summary
• NBCC reported margin expansion despite a decline in its topline during Q2FY2018.
• Execution of large ticket orders is expected to drive earnings.
• We reiterate our Buy recommendation on the stock with a revised price target of Rs.310.
Report link: http://old.sharekhan.com/Upload/NewsLetter/NBCC-Nov15_17.pdf
15-Nov-17 Sundram Fasteners Viewpoint Positive n Rs. 472 15-18% h
Summary
• Sundram Fasteners (SFL) reported a 10% y-o-y topline growth to Rs. 814 crowing to increasing share of high value products and improved offtake
from OEMs. While operating results were in line, Net profit growth missed estimates due to higher than expected interest expenses.
• New product introductions have enabled SFL to diversify its product offering and reduce dependence on traditional fasteners, thus helping outpace
industry growth.
• Performance of subsidiaries that have staged a turnaround reporting a profit of Rs. 23 cr in FY2017 as against a loss in FY2016, is expected to
improve further.
• Double-digit topline growth and sustained higher margin trajectory expected to boost SFL’s overall performance. We thus reiterate our positive view
on the stock and expect it to generate 15-18% returns over the next 6-8 months.
Report link: http://old.sharekhan.com/Upload/NewsLetter/SundramFast-Nov15_17.pdf
16-Nov-17 Bank of Baroda Stock Update Buy n Rs. 183 Rs. 220 h
Summary
• Bank of Baroda (BoB) posted strong results on the operating front during Q2FY2018 with net interest income increasing by 8.6% y-o-y.
• BoB witnessed strong traction in its advances portfolio.
• Overall asset quality improved during the quarter.
• Overall performance of the bank was encouraging, especially on the growth front with improved asset quality performance.
• We maintain our Buy recommendation with a revised price target of Rs.220.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BoB-Nov16_17.pdf
16-Nov-17 Cox & Kings Stock Update Buy n Rs. 250 Rs. 325 n
Summary
• Cox & Kings posted steady performance in a tough domestic and global environment with revenues growing by ~12% and OPM (excluding forex
gain/loss) at 44.7%.
• Meininger business will post strong growth on back of capacity addition, while the education business will see recovery in profitability.
• The management has maintained its thrust on reducing debt by Rs. 200-400 crore in the current fiscal.
• We have fine-tuned our earnings estimates for FY2018 and FY2019 to factor in better than expected performance.
Report link: http://old.sharekhan.com/Upload/NewsLetter/CoxKings-Nov16_17.pdf
EQUITY FUNDAMENTALSStock Update
26December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
16-Nov-17 Wonderla Holidays Stock Update Hold i Rs. 368 Rs. 385 i
Summary
• Q2FY2018 performance of Wonderla Holidays Limited (WHL) was affected by higher GST rate, which affected footfalls and consequently resulted
in flat revenue and lower PAT.
• Bangalore and Kochi parks to remain under pressure in the coming quarters as price hikes will take some time to get absorbed in the market.
• Downgraded to Hold as revival in footfalls will take some time; price target revised to Rs. 385.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Wonderla-Nov16_17.pdf
17-Nov-17 Gayatri Projects Stock Update Buy h Rs. 204 Rs. 263 h
Summary
• Gayatri Projects Limited (GPL) witnessed healthy operational performance during Q2FY2018, which led to higher standalone net profit.
• The company expects strong revenue booking over the next 3-4 years with stable operating margin.
• GPL is now focusing on maximising long-term PPAs post full commissioning of its power assets.
• We upgrade to Buy with a revised price target of Rs.263.
Report link: http://old.sharekhan.com/Upload/NewsLetter/GayatriProject-Nov17_17.pdf
17-Nov-17 Godrej Agrovet Viewpoint Positive h Rs. 538 15-18% h
Summary
• Godrej Agrovet Limited (GAVL) posted muted performance in Q2FY2018 owing to lower commodity prices affected sales realisation. However, PAT
increased by 3.8% y-o-y.
• Crop protection business to benefit from the government’s initiative and lower penetration of agrochemical in the coming years.
• Oil palm and dairy businesses to maintain the strong growth momentum. Better revenue mix will help in improving margins.
• We maintain our positive view with a potential upside of 15-18%.
Report link: http://old.sharekhan.com/Upload/NewsLetter/GodrejAgrovet-Nov17_17.pdf
20-Nov-17 Godrej Industries Viewpoint Positive n Rs. 570 12-15% h
Summary
• The consolidated Q2FY2018 performance of Godrej Industries Ltd (GIL) was boosted by strong performance in its real estate business.
• The real estate business will continue to outperform, while Godrej Agrovet is expected to post recovery in performance in H2FY2018.
• Investment in Godrej Consumer Products Ltd (GCPL) will enhance the overall value of the company.
• Maintain positive view on the stock with 12-15% upside.
Report link: http://old.sharekhan.com/Upload/NewsLetter/GodrejInd-Nov20_17.pdf
20-Nov-17 Kaveri Seed Limited Viewpoint Positive h Rs. 542 18% h
Summary
• Product diversification strategy of Kaveri Seed Limited (KSL) playing out well. Dependence of the company on cotton to reduce. The company is
focusing on increasing non-cotton seeds mix to 60-65% over the next 3-5 years.
• Return ratios of KSL are expected to improve significantly from current levels, led by 15.6% earnings CAGR over FY2018-FY2020E. Further, strong
FCF augurs well for higher shareholders’ payout.
• Reasonable valuation, re-initiate viewpoint with upside potential of 18% over the next 6-8 months.
Report link: http://old.sharekhan.com/Upload/NewsLetter/KaveriSeeds-Nov20_17.pdf
EQUITY FUNDAMENTALS Stock Update
27December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
22-Nov-17 CESC Stock Update Buy n Rs. 1,034 Rs. 1,165 n
Summary
• During Q2FY2018, CESC reported 10% y-o-y growth in its total revenue to Rs.2,097 crore, driven by growth in volume and realisation.
• Signing of PPA in Chandrapur on the anvil, which will reduce losses.
• Spencer’s Retail reported positive EBITDA during the quarter and is expected to be PAT-level positive by the end of 2018.
• We continue to maintain our Buy rating on the stock with an unchanged price target (PT) of Rs.1,165.
Report link: http://old.sharekhan.com/Upload/NewsLetter/CESC-Nov22_17.pdf
24-Nov-17 PNB Housing Finance Viewpoint Positive h Rs. 1,375 18-20% h
Summary
• PNB Housing Finance (PNBHF) is one of the fastest growing HFCs with strong asset quality and improving return ratios.
• PNBHF has strong access to diversified and cost-effective funding sources.
• PNBHF has a strong distribution network with deep penetration of key Indian urban centres.
• We are Positive on the stock with 18% to 20% upside potential.
Report link: http://old.sharekhan.com/Upload/NewsLetter/PNBHousingFin-Nov24_17.pdf
24-Nov-17 Skipper Stock Update Hold n Rs. 263 Rs. 280 h
Summary
• A 28% growth in the engineering segment drives topline growth of 32% y-o-y to Rs. 519 crore in Q2FY18. Significant growth in earnings despite
higher interest, depreciation and tax outflow.
• Approval of JV with Israel based drip irrigation specialists Metzerplas, to enable Skipper to enter drip irrigation business in India which is an area of
focus for Indian Government. Further its entry into the field of solar mounting structure will help the company gain from the government’s push to
solar energy sector.
• Strong order book of Rs. 2,580 crore at end of Q2FY2018 provides a revenue visibility of 1.8x of its FY2017 revenues of the engineering segment.
• Strong earnings visibility, a leaner balance sheet and steady cash flows encourage our positive outlook on the stock.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Skipper-Nov24_17.pdf
27-Nov-17 McLeod Russel Viewpoint Positive h Rs. 211 18-20% h
Summary
• Declining trend in global tea production to boost tea prices in India over the next couple of years.
• Rising tea prices will likely propel margins of McLeod Russel.
• McLeod Russel has a strong balance sheet despite being in a commoditised business.
• We re-initiate coverage with a positive stance and expect 18-20% upside from here.
Report link: http://old.sharekhan.com/Upload/NewsLetter/McLeod-Nov27_17.pdf
28-Nov-17 Balkrishna Industries Viewpoint Book Profit - Rs. 2,110 - -
Summary
• Balakrishna Industries has delivered handsome 35% return since our re-initiation viewpoint dated August 30, 2017 and an impressive 15% return
since our recent viewpoint note dated November 9 2017.
• Key positive triggers including demand revival, favorable forex realisations, expected improvement in capacity utilization and benefits due to
backward integration initiatives are largely factored in the stock price.
• At the CMP the stock is trading at 20.6x its FY19 earnings, which is higher than the historical long term average. We recommend investors to book
Profit at current levels.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BalkrishnaInd-Nov28_17.pdf
EQUITY FUNDAMENTALSStock Update
28December 2017 Sharekhan ValueGuide
Date Company Report TypeRecommendation
Reco PricePrice Target/ Upside (%)
Latest Chg Latest Chg
28-Nov-17 Glenmark Pharmaceuticals Stock Update Hold n Rs. 571 Rs. 730 n
Summary
• The Baddi plant of Glenmark Pharmaceuticals Limited (Glenmark) receives Form 483 with seven observations.
• The development is sentimentally negative at the moment.
• We maintain our earnings estimates and Hold recommendation on the stock with an unchanged price target (PT) of Rs. 730
• We currently have a cautious stance on the pharma sector.
Report link: http://old.sharekhan.com/Upload/NewsLetter/GlenmarkPharma-Nov28_17.pdf
29-Nov-17 Bajaj Corp Viewpoint Book Profit - Rs. 489 - -
Summary
• The stock price of Bajaj Corp has appreciated by 18% since our upgradation on the stock in the last viewpoint (dated – October 13, 2017).
• The current valuation of ~27x its FY2019E earnings has priced in all the positive factors related to future growth prospects.
• We advise investors to book profits in the recent rally and wait for a better entry opportunity.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BajajCorp-Nov29_17.pdf
29-Nov-17 Gulf Oil Lubricants India Viewpoint Book Profit - Rs. 972 - -
Summary
• Gulf Oil Lubricants India has rallied 24% since the initiation of our view point (published on June 19, 2017) driven by consistent double-digit volume
growth and sharp margin expansion in Q2FY2018.
• We believe the current valuation of 25.8x FY2019E earnings per share (EPS) largely factors in the improved earnings outlook and therefore, we
advise investors to book profit at the current level and wait for better entry point for fresh investment.
Report link: http://old.sharekhan.com/Upload/NewsLetter/GulfOil-Nov29_17.pdf
30-Nov-17 Petronet LNG Viewpoint Positive h Rs. 251 14-15% h
Summary
• Regulatory tailwinds likely to keep Dahej terminal utilisation robust.
• Robust volume growth outlook to result in sustainable earnings growth.
• Risk reward favourable at the current juncture.
• We upgrade our view to Positive with 14-15% upside potential from here.
Report link: http://old.sharekhan.com/Upload/NewsLetter/PetronetLNG-Nov30_17.pdf
30-Nov-17 V Guard Industries Stock Update Buy n Rs. 230 Rs. 265 h
Summary
• Post impressive Q2FY18 performance on the back of good topline growth, V Guard expected to continue on the growth trajectory aided by good
pricing power to combat commodity price inflation and a favourable revenue mix.
• Expansion of retail network and active hunt for inorganic growth opportunities to aid revenue growth in the foreseeable future
• The management has guided for 11-12% topline growth for FY2018 due to the restatement of topline in the GST regime and an expansion in operating
margins due to favourable product mix and better fixed cost absorption
• We continue to assign premium valuation to V-Guard on back of de-leveraged balance sheet, better margin profile, high return ratios and prudent
working capital management. We retain Buy rating on the stock with a revised PT of Rs. 265.
Report link: http://old.sharekhan.com/Upload/NewsLetter/V-guard-Nov30_17.pdf
EQUITY FUNDAMENTALS SECTOR UPDATE
29December 2017 Sharekhan ValueGuide
Date Sector Report TypeSector View
Latest Chg
17-Nov-17 Q2FY2018 IT results review Sector Update Neutral n
Summary
• The quarter gone by was a mixed bag for the IT sector, with resilient margin performance despite absence of rupee benefits, though organic
revenue growth remained muted.
• BFS and retail verticals are still facing headwinds, while other verticals performed well. Europe continued to surprise positively, US was lagging
behind.
• H2 is seasonally weak, hence we do not expect any material revenue acceleration in the next two quarters, though some beaten down pockets
could surprise positively due to low base.
• We are still not constructive on the sector due to lack of growth triggers. We have a Neutral stance on the sector.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q2FY2018_IT_review-Nov17_17.pdf
20-Nov-17 Q2FY2018 Oil & Gas results review Sector Update Positive n
Summary
• Higher oil prices led to inventory gains for oil marketing companies (OMCs).
• However, core gross refining margin (GRM) disappointed with discount of $1.5-2.7/bbl to Singapore Complex GRM.
• Upstream PSUs benefit from higher oil/gas sales volume and realisation, and lower exploration write offs.
• Mid-stream and city gas distribution (CGD) reported strong numbers led by robust volume growth.
• Rising oil price dampens outlook for refiners but bodes well for upstream PSUs and city gas distribution players. Mid-stream may see softening in
volume as gas offtake from power sector reduces.
• Preferred picks: Reliance Industries and Gujarat Gas.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q2FY2018_OilGas_review-Nov20_17.pdf
21-Nov-17 Q2FY2018 Banking and NBFC results review Sector Update Positive h
Summary
• PSU Banks (PSBs) witnessed better-than-expected Q2FY2018 after several unremarkable quarters.
• Private banks (PBs) outperformed PSBs on most business aspects.
• NBFCs gained traction in advances book.
• We expect PBs with a strong franchise to report strong performance with better earnings visibility and growth prospects. Large PSBs with stronger
management and better franchise should benefit with infusions of growth capital. We believe low interest rates and better technological push will
drive growth for retail financing NBFCs and well-run HFCs.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q2FY2018_Banking_review-Nov21_17.pdf
21-Nov-17 Q2FY2018 Auto results review Sector Update Positive n
Summary
• Q2FY2018 topline grows by double digits, led by healthy volume growth and price hikes.
• Margin pressure continues given hardening raw-material costs, however operating leverage and price hikes offset raw-material costs to a large
extent; Earnings growth turned positive.
• Given the improving economic growth, strong rural sentiments we expect double digit revenue growth to sustain in H2FY2018.
• Our preferred picks are Maruti Suzuki, Hero MotoCorp, Sundram Fasteners and Motherson Sumi Systems.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q2FY2018_Auto_review-Nov21_17.pdf
EQUITY FUNDAMENTALSSECTOR UPDATE
30December 2017 Sharekhan ValueGuide
Date Sector Report TypeSector View
Latest Chg
21-Nov-17 Q2FY2018 Consumer goods and services results review Sector Update Positive n
Summary
• Consumer goods companies’ sales recovered as traders got back in trade post GST implementation.
• Stable raw material prices and operating efficiencies helped boost companies’ margin by 100-400 bps.
• Performance is likely to revive in H2FY2018, on better rural demand as lower GST rates on essential items allow companies to cut prices.
• Preferred picks: Britannia, Marico, Emami, Godrej Consumer Products (GCPL) and Jubilant Foodworks.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q2FY2018_ConsumerGoods_review-Nov21_17.pdf
22-Nov-17 Q2FY2018 Capital Goods & Engineering results review Sector Update Neutral n
Summary
• Overseas operations drive revenue growth and order inflow for Q2FY2018, domestic revenues yet to recover from GST led disruption.
• Rising input costs may put profitability of CG companies under pressure, preparedness in terms of stringent cost control measures can soften impact
on margins.
• Companies with a higher sensitivity to overseas business likely to emerge winners.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q2FY2018_CapitalGoods_review-Nov22_17.pdf
22-Nov-17 Q2FY2018 Pharma results review Sector Update Cautious n
Summary
• Aggregate revenue and operating profit for companies that we cover fell by 0.8% and 19.7%, respectively.
• Strong rupee and USFDA ploy to ensure more players for off-patent products will affect companies’ US business.
• Thus, we advise caution and selectively prefer companies with relatively healthy product pipelines and a presence in complex generics.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q2FY2018_Pharma_review-Nov22_17.pdf
22-Nov-17 Q2FY2018 Consumer Discretionary results review Sector Update Positive n
Summary
• Most branded apparel and retail companies reported decent revenue growth in Q2FY2018.
• Higher raw material costs, rupee appreciation and GST disruption affected the operating profit margins of most companies under our coverage.
• H2FY2018 is expected to be better than H1FY2018 owing to positive consumer sentiments and upcoming wedding and festival season.
• We are positive on companies with steady revenue-growth prospects and where revenue traction is anticipated due to GST implementation.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q2FY2018_ConsumerDiscre_review-Nov22_17.pdf
22-Nov-17 Q2FY2018 Cement results review Sector Update Neutral n
Summary
• Higher operating expenses eat into revenue growth, led by rise in demand and realisation.
• Near-term pain to continue as demand continues to remain muted with flat realisation y-o-y and a rise in power and fuel cost.
• Cement companies are fairly valued, await for better entry points.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q2FY2018_Cement_review-Nov22_17.pdf
EQUITY TECHNICALS TREND & VIEW
31December 2017 Sharekhan ValueGuide
Nifty in consolidation mode
Daily view on Nifty
� After retracing 78.6% of the previous fall, The index has completed the pullback and has started the next leg on the downside.
� In the near term, the index has major resistance at 10410–10490.
� In case of any rally in Nifty, a rise towards the resistance levels can be considered as a selling opportunity.
� On the way down, the index is likely to drift lower towards 10094. If it manages to break below 10094, then we may see the correction extending towards 9994.
� The momentum indicator on the daily chart has turned bearish.
� Crucial resistance level for the index will be at 10410 and 10490, while support will be at 10094 and 9994.
� The index is in a correction mode and has retraced 50% of the October rally up till now and can extend up to 61.8% retracement level (9994).
� From the Elliot Wave perspective, the index is in wave (II) of wave (V).
� The index is approaching its major support, i.e. 20-week simple moving average (WSMA).
� Dips towards the support level of 10094–9994 shall be considered as a buying opportunity.
� The momentum indicator on the weekly chart has turned bearish.
� Crucial support will be at 9994 and 9685, whereas crucial resistance will be at 10650 and 10960.
� On the monthly chart, the index is making higher top higher bottom, indicating uptrend in the long term.
� From a long-term perspective, the index continues to trade in a rising channel.
� The index is likely to head higher towards 10960–11335 in the coming months.
� From Elliot Wave perspective, the index is currently in wave (V) of (5) of larger degree wave (3).
� The long-term uptrend in the index is likely to continue as long as it is trading above the low of wave (IV), i.e. 9685.
� The momentum indicator on the monthly chart is in bullish mode.
� Crucial support will be at 9685 and resistance will be at 10960-11335.
Weekly view on Nifty
Monthly view on Nifty
Trend Trend reversal Support Resistance Target
Up 9685 9685 10960 10960
EQUITY DERIVATIVESMONTHLY VIEW
32December 2017 Sharekhan ValueGuide
Nifty near crucial levels of 10000
Nifty started December 2017 series on a subdued note and
moved southward and made low of 10050, however 10000
proved to be a strong support, as 10000 pe has Highest
OI, Markets bounced from those levels. Rollover in the
next series is on the lower side at around 63% compared
to its Six-month average of 69%, indicating majority of the
long position in Index has been closed ahead of eventful
December series.
STOCK FUTURES (SHAREKHAN SCRIP CODE)
OPEN INTEREST (Rs. Cr)
AXISBANK 2,497
HDFCBANK 3,360
INFY 3,151
RELIANCE 3,773
TATAMOTORS 2,821
Top 5 stock futures with the highest OI in current series
View for December series:
On the options front, in December 2017 series, 10000 PE
stands with the highest number of shares in OI, followed
by 9800 strike price. Whereas, on the call side, 10500 CE
stands with the highest number of shares in OI, followed by
10400 strike price.
Options data suggests Nifty may trade between 10000 on
the lower side and 10500 on the higher side. If 10000 level
is broken, we might see a correction till 9700 levels. On
the higher side, we may find resistance at 10500 as it has
sizeable OI.
Low rollover suggests that traders have closed their long
positions, signaling a sign of caution ahead of major market-
moving events such as RBI policy, U.S. Federal Reserve
rate review and Gujarat state election results, slated for
December 6, 2017, December 13, 2017, and December 18,
2017, respectively. Traders should remain cautious on Nifty
and Bank Nifty ahead of the multiple key events lined up in
December and trade with proper stop loss.
Rollover highlights:-
• Nifty futures started December 2017 series with 1.83
crore shares vs. 2.31 crore shares in open interest (OI).
• December series started with Rs. 1,31,012 crore vs. Rs.
1,08,332 crore in stock futures; Rs. 18,598 crore vs. Rs.
23,964 crore in Nifty futures; Rs. 1,35,202 crore vs. Rs.
1,44,293 crore in index options; and Rs. 16,310 crore vs.
Rs.10,817 crore in stock options.
• Nifty rollover in December series was at 63%, lower
than its six-month average of 69%.
• Market-wide rollover was 86% vs. 85.45%.
MARKET WIDE VS NIFTY ROLLOVER ACTIVITY:
74.09
%
72.97
%
68.41
%
57.96
%
69.87
%
72.69
%
63.00
%
82.56
%
83.82
%
79.66
%
83.94
%
84.89
%
85.68
%
86.00
%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
June July Aug Sep Oct Nov Dec
Nifty Banknifty
CURRENCY FUNDAMENTALS MONTHLY VIEW
33December 2017 Sharekhan ValueGuide
Currencies: Euro advances on solid economic data from Euro AreaKey points
Bank of England increased its interest rate to 0.5% from 0.25% in its policy meet
India CPI rose to 3.58% in October 2017 from 3.28% in September 2017
US non-farm payrolls increased by 2,61,000 in October 2017 from 18K in September 2017
US Preliminary GDP showed that the economy expanded by 3.3% in Q3 CY17
CURRENCY LEVELS IN NOVEMBER 2017 (IN Rs.)
Currency High Low Close Monthly chg (%)
USDINR 65.54 64.27 64.46 -0.44
EURINR 77.34 74.95 76.32 1.31
GBPINR 87.05 84.24 86.62 1.22
JPYINR 58.31 56.54 0.57 0.46
November 2017 contract price movement November 2017 contract price movement
USD-INR: CMP Rs. 64.46The Indian Rupee appreciated by 0.44% in the previous month on the back of weakness in the US dollar and positive market sentiments after Moody’s Investor Service upgrade of India’s sovereign rating to Baa2 from Baa3. Outlook on the rating is stable. However, a sharp gain was prevented as traders remained cautious ahead of an OPEC meeting and as US Federal Reserve policymakers signaled one more rate hike before the year end. Rising geopolitical tensions are damaging the rupee.
Outlook: The Indian Rupee is expected to trade with a negative bias on the back of strong dollar and rise in geopolitical tensions. The demand for the US Dollar is likely to go up on expectations of a rate hike in December and the passage of US tax bill. Further, OPEC and non-OPEC producers led by Russia agreed to extend Oil output cuts until December 2018. Traders are worried that a rise in crude oil prices will stoke inflation and prevent the central bank from slashing interest rates in future. Traders will remain cautious ahead of macroeconomic data and Bi-Monthly Monetary policy. The rupee is overvalued as per the real effective exchange rate (REER), based on a basket of currencies of 36 trading partners,. The expected trading range in near term is 63.80-65.50.
EUR-INR: CMP Rs. 76.32The Euro appreciated by 2.22% in the previous month on the back of weakness in dollar and solid economic data from Euro Area. Strong data from Euro Area signaled economic recovery. Further, political uncertainty in Germany eased after Merkel’s conservative party agreed to pursue a grand coalition with Social democrats.
Outlook: The Euro is expected to trade with a positive bias on upbeat economic data from the Euro Area. Further, political uncertainty in Germany has eased. However, sharp gains may be capped on a strong dollar and a divergence in monetary policy. The European Central Bank is expected to keep its base interest rates unchanged, whereas the US Federal Reserve is likely to increase its interest rate. The expected trading range in near term is 74.90-77.90.
GBP-INR: CMP Rs. 86.62The British pound appreciated 1.82% in October as the US Dollar weakened and as the Bank of England raised interest rates for the first time in a decade. Further, the Pound gained strength on reports that British and EU negotiators have reached a deal over Brexit. However, a sharp gain was capped as the autumn forecast statement showed that the Office for Budget Responsibility (OBR) slashed its growth forecast. Real UK GDP growth is expected to slow to 1.5% in 2017 compared to 2.0% as expected in March and to 1.4% in 2018.
Outlook: The pound is expected to trade with negative bias on the back of a strong US dollar and as traders will remain cautious ahead of progress in Brexit negotiations. The Bank of England is likely to keep its monetary policy unchanged. Further, the OBR has slashed its growth forecast. However, a sharp downside may be prevented as manufacturing PMI data showed that the activity in the sector has improved. Manufacturing activity expanded consecutively for 16 months. The GDP-INR pair is expected to trade at 84.90 – 87.70 in the near term.
JPY-INR: CMP Rs. 57.39The yen appreciated by the 0.97% on the back of weakness in the US Dollar and as safe haven demand improved on rising geopolitical tensions after North Korea fired a ballistic missile from an area near Pyongyang. Political uncertainty in the Middle East, the US, the UK and the Euro Zone also helped the yen appreciate. However, a sharp gain was prevented on divergence in monetary policy.
Outlook: The yen is expected to trade with a negative bias on the back of a strong US Dollar and a divergence in US monetary policy. The Bank of Japan is likely to keep its monetary policy unchanged, whereas US Federal Reserve is forecasted to increase its rate. Batch of mixed economic data from Japan will hurt the yen. However, a sharp downside may be prevented as demand for safe heaven may increase on rising geopolitical tension. The yen is expected to trade at 56.30-58.30.
CMP as on November 30, 2017
56.5
56.7
56.9
57.1
57.3
57.5
57.7
57.9
58.1
58.3
64.2
64.4
64.6
64.8
65
65.2
65.4
65.6
06-N
ov-1
7
08-N
ov-1
7
10-N
ov-1
7
12-N
ov-1
7
14-N
ov-1
7
16-N
ov-1
7
18-N
ov-1
7
20-N
ov-1
7
22-N
ov-1
7
24-N
ov-1
7
26-N
ov-1
7
28-N
ov-1
7
30-N
ov-1
7
USDINR JPYINR
84.2
84.7
85.2
85.7
86.2
86.7
74.9
75.4
75.9
76.4
76.9
06-N
ov-1
7
08-N
ov-1
7
10-N
ov-1
7
12-N
ov-1
7
14-N
ov-1
7
16-N
ov-1
7
18-N
ov-1
7
20-N
ov-1
7
22-N
ov-1
7
24-N
ov-1
7
26-N
ov-1
7
28-N
ov-1
7
30-N
ov-1
7
EURINR GBPINR
CURRENCY TECHNICALSTREND & VIEW
34December 2017 Sharekhan ValueGuide
USDINR: Upside potential l After a significant multi month decline the USDINR, had
witnessed a sharp recovery in the month of September
l Over the last couple of months, however, it is trading with a downward bias.
l Nevertheless, the recent fall is representative of a corrective structure, which means that another leg of the pullback is pending.
l Also, the Monthly chart shows that the currency pair found support near the junction of 40 MEMA & monthly lower Bollinger Band, is a strong support zone.
l The weekly momentum indicator is in a bullish mode, whereas the monthly momentum indicator has completed the correction cycle.
EURINR: Aiming higher
l After rallying for six consecutive months, the EURINR had taken a pause in the month of October.
l In the month gone by, however, it seems to have started the next leg up.
l Multiple parameters provided support to the currency pair near the 75 mark.
l Channel study shows that EURINR has broken out from a falling channel, retested it & is now heading towards the upper end of the larger rising channel.
l Once the currency pair manages to take off 77.88-78.22 band, it can pick up momentum on the way up
GBPINR: Bulls look determined
l In terms of Fibonacci retracement, the GBPINR had retraced 61.8% of the multi month rally, which proved to be a crucial support
l Thereon, the bulls seem to be pushing the currency pair higher.
l Consequently it has surpassed the key short term as well as medium term moving averages
l Momentum indicators on various time frames are in favor of the bulls.
l Once the hurdle zone of 88.30-88.44 is taken off, the GBPINR will be poised for significant upside.
JPYINR: In a narrow range l JPYINR has been trading in range bound manner for
last several months.
l On the downside, the 61.8% retracement mark & the weekly lower Bollinger Band are providing support to the price action, whereas on the higher side, the key monthly moving averages & the weekly upper Bollinger Band are acting as tough barriers.
l In terms of patterns, JPYINR seems to be forming an Ending Diagonal the last leg of which is pending on the downside
l Thus the retest of the recent lows looks likely before the currency pair completes a base formation
Currency View Reversal Supports Resistances Target
USD-INR Up 63.56 64.32/63.77 65.54/66.53 66.85
GBP-INR Up 84.87 86.48/85.13 88.44/90.21 92.20
EUR-INR Up 74.84 75.98/75.26 77.38/78.22 81.40
JYP-INR Down 58.20 57/56.72 57.60/58 56.25
2014 M A M J J A S O N D 2015 M A M J J A S O N D 2016 M A M J J A S O N D 2017 A M J J A S O N D 2018 A M J J A
58.0
58.5
59.0
59.5
60.0
60.5
61.0
61.5
62.0
62.5
63.0
63.5
64.0
64.5
65.0
65.5
66.0
66.5
67.0
67.5
68.0
68.5
69.0
69.5
0.0%
23.6%
38.2%
50.0%
61.8%
100.0%
0.0%
23.6%
38.2%
50.0%
61.8%
78.6%
100.0%
68.80USDINR - INDIAN RUPEE (64.7100, 64.8225, 64.2700, 64.4800, -0.18999)
-0.5
0.0
0.5
MACD (-0.03293)
2015 M A M J J A S O N D 2016 M A M J J A S O N D 2017 M A M J J A S O N D 2018 M A M J J
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
1080.0%
23.6%
38.2%
50.0%
61.8%
0.0%
23.6%
38.2%
50.0%
61.8%
100.0%
GBPINR (86.2370, 87.3300, 85.1300, 87.2090, +0.97200)
-3
-2
-1
0
1MACD (0.71595)
N D 2015 M A M J J A S O N D 2016 M A M J J A S O N D 2017 M A M J J A S O N D 2018 M A M J J A
63.5
64.0
64.5
65.0
65.5
66.0
66.5
67.0
67.568.0
68.569.069.5
70.070.571.071.572.072.573.073.574.074.575.075.576.076.577.077.578.078.579.079.580.080.581.081.582.082.583.0
0.0%
23.6%
38.2%
50.0%
61.8%
78.6%
100.0%
EURINR (77.1580, 77.3110, 75.9890, 76.7440, -0.40700)
-5
0
5KST (1.00834)
M A M J J A S O N D 2016 M A M J J A S O N D 2017 M A M J J A S O N D 2018 M A
48.549.049.550.050.551.051.552.052.553.053.554.054.555.055.556.056.557.057.558.058.559.059.560.060.561.061.562.062.563.063.564.064.565.065.566.066.567.067.568.068.569.069.570.070.571.0
0.0%
23.6%
38.2%
50.0%
61.8%
78.6%
100.0%
JPYINR (58.0208, 58.1927, 57.2342, 57.2901, -0.67870)
-5
0
5
KST (-0.52047)
PMS DESK WEALTHOPTIMIZER
35December 2017 Sharekhan ValueGuide
Strategy
How the product works
Key product specifications
WEALTHOPTIMIZER PMS
The Indian equity market presents an excellent opportunity for the long-term investors. Sharekhan offers you solutions to meet your financial objectives. WealthOptimizer is a portfolio management product that involves enhancing wealth over the long term. The goal is to not only outperform the market but also generate superior returns.
• To invest in the most undervalued stocks of growing companies on the basis of reported financial performance
• Fundamental analysis is performed on more than 5,000 companies
• Stocks with sound fundamentals are picked, subject to strategy conditions
• Top 10 stocks are selected each day based on the maximum scope to grow
• No particular sector forms more than 20% of the client’s portfolio
• Fundamentals of stocks held are reviewed every quarter based on quarterly results
• Automated decision making system for transparent and disciplined investing
• Minimum investment amount: Rs25 lakh
• Recommended investment duration: Two years or more
Phone: 022-6750 2152 / 2261 / 2363 / 2104 • E-mail: [email protected]
Disclaimer: Product is offered by Sharekhan Ltd (Registered Portfolio Manager with SEBI Regn. Nos. INP000000662 CIN No. U99999MH1995PLC087498) and having registered office at 10th Floor, Beta Building, Lodha iThink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai -400042, Maharashtra. Tel: 022-61150000. Email: [email protected], [email protected]. This information does not purport to be an invitation or an offer for services, client is required to take independent advise before opting for any service. Securities investments are subject to market and other risks and client should refer to the risk disclosure document carefully. Past performance is no indication of future results. Future performance may vary. Detailed disclaimers and risk disclosure document is available on our website www.sharekhan.com, please acquaint yourself with these before investing.
PMS DESKPMS FUNDS
36December 2017 Sharekhan ValueGuide
Portfolio Management ServiceWe are pleased to introduce you to Sharekhan Portfolio Management Service (PMS) in which we completely manage your investment portfolio so that you stop worrying about the market volatility and focus your energy on things that you like to do!
We have a wide range of strategies that you can choose from. Our strategies are based on fundamental research and technical analysis.
We have the following strategies on offer:
ProPrime (based on fundamental research)
Diversified Equity
ProTech (based on technical analysis)
Index Futures Fund Trailing Stops
PROPRIME - DIVERSIFIED EQUITY
OVERVIEW
The ProPrime—Diversified Equity PMS strategy is suitable for long-term investors
looking to create an equity portfolio through disciplined investments that will lead to a
growth in the portfolio’s value with medium to high risk
Product performance as on November 30, 2017
(In %)DE
StrategySensex Nifty
Nifty 500
1 Month -0.3 -0.2 -1.1 0.0
3 Month 5.2 4.5 3.1 5.3
6 Month 10.7 6.4 6.3 9.6
1 Year 29.3 24.4 24.3 29.3
2 Year 38.2 26.8 28.9 36.9
3 Year 34.1 15.5 19.1 32.3
*Note : Net of Quarterly AMC Fees
Disclaimer: Returns are based on a client’s returns since inception and may be different from those depicted in the risk disclosure document.
Top 10 stocks
Arvind
Bajaj Finserv
Biocon
Britannia Industries
HDFC Bank
Indusind Bank
Larsen & Toubro
Maruti Suzuki India
Reliance Industries
Zee Entertainment Enterprises
INVESTMENT STRATEGY
Disciplined investment decisions are taken in specific stocks based on thorough fundamental research.
Investments are made primarily in the Nifty Fifty or the BSE 100 scrips.
Attempts to have an exposure of minimum of 70% in the Nifty Fifty stocks and that of minimum of 90% in the BSE 100 stocks.
Endeavours to create a core portfolio of blue-chip companies with a proven track record and have partial exposure to quality companies in the mid-cap space
PRICING
Minimum investment of Rs25 lakh
Charges
¾ 2% per annum; AMC fee charged every quarter
¾ 0.5% brokerage
¾ 20% profit sharing after the 12% hurdle is crossed at the end of every fiscal
FUND OBJECTIVE A good return on money through long-term investing in quality companies
PMS DESK PMS FUNDS
37December 2017 Sharekhan ValueGuide
PROTECH - INDEX FUTURES FUND
OVERVIEW
The ProTech–Index Futures Fund PMS strategy is suitable for long-term investors
who desire to profit from both bullish and bearish market conditions. The strategy
involves going long (buying) or going short (selling without holding) on Nifty futures by
predicting the market direction based on a back-tested automated model.
Product performance as on November 30, 2017
(In %)NT
StrategySensex Nifty
1 Month -3.07 -0.19 -1.05
3 Months -2.81 4.47 3.11
Fy 16-17 -14.88 16.88 18.55
Fy 15-16 11.28 -9.36 -8.86
Fy 14-15 -3.41 24.89 26.65
Fy 13-14 8.79 18.85 17.98
Fy 12-13 3.65 8.23 7.31
Fy 11-12 13.10 -10.50 -9.20
Fy 10-11 9.20 10.90 11.10
Fy 09-10 14.70 80.50 73.80
Since Inception* 154.00 227.42 238.45
Best Month 28.90 28.26 28.07
Worst Month -17.10 -23.89 -26.41
Best Quarter 33.30 49.29 42.04
Worst Quarter -17.73 -24.98 -24.53
*01-Feb-2006
INVESTMENT STRATEGY
The strategy has the potential to generate profits irrespective of the market
direction by going long or short on Nifty futures.
An automated basic back-testing model is used to predict the market direction for
the Nifty which then decides the strategy to be deployed in terms of going long
or short.
The portfolio is not leveraged, ie its exposure never exceeds its value.
PRICING
Minimum investment of Rs. 25 lakh
Charges
¾ AMC fees: 0%
¾ Brokerage: 0.05%
¾ Profit sharing: Flat 20% charged on a quarterly basis
FUND MANAGER’S VIEW
Rangebound moves this month, with the Nifty moving both up and down with no progress caused
a few loss making trading signals. The 3% drawdown this month is associated with this. Next, we
should expect a trending move soon in either direction that should make up for the pullback.
After almost a year of trending moves in the Nifty, we are recently seeing big rangebound moves
that are pulling back the returns. Such moves often occur before a market trend reversal and
eventually the next trend in the market makes it up for the price paid during the rangebound
trading. This looks like one of those events.
Fund Manager: Rohit Srivastava
Disclaimer: Returns are based on a client’s returns since inception and may be different from those depicted in the risk disclosure document.
FUND OBJECTIVE
Absolute returns irrespective of market conditions.
Investments in
Nifty Index
PMS DESKPMS FUNDS
38December 2017 Sharekhan ValueGuide
PROTECH - TRAILING STOPS
OVERVIEW
Our ProTech–Trailing Stops PMS strategy is ideal for Traders and Investors looking for Regular Income from trading and desire to make profits in both bullish and bearish market conditions. It is designed to payout book profits on monthly basis.*
It is also for those investors who are looking for better income than Fixed Income or Deposits. This strategy involves going Long (buying) or Short (selling without holding) on stock futures.
* Terms and conditions apply
Product performance as on November 30, 2017
(In %)TS
StrategySensex Nifty
1 Month -1.43 -0.19 -1.05
3 Months -9.32 4.47 3.11
Fy 16-17 3.79 16.88 18.55
Fy 15-16 -0.56 -9.36 -8.86
Fy 14-15 -3.69 24.89 26.65
Fy 13-14 -1.06 18.85 17.98
Fy 12-13 14.89 8.23 7.31
Fy 11-12 29.00 -6.10 -4.60
Fy 10-11
Fy 09-10
Since Inception* 31.39 78.91 84.23
Best Month 9.10 11.25 12.43
Worst Month -6.49 -8.93 -9.28
Best Quarter 10.18 13.52 13.53
Worst Quarter -8.20 -12.69 -12.47
*09th May 2011
INVESTMENT STRATEGY
This strategy spots the winning trades based on technical analysis vs time frame-based portfolios, basically the momentum calls.
A risk model has been developed for stock portfolio allocation that reduces the risk and portfolio volatility through staggered building of positions.
It is non-leveraged—the exposure will never exceed the value of the portfolio.
PRICING
Minimum investment of Rs25 lakh
Charges
¾ AMC fees: 0%
¾ Brokerage: 0.05%
¾ Profit sharing: Flat 20% charged on a quarterly basis
FUND MANAGER’S VIEW
Our positioning for TS has been to hold on to the short positions that we started to build over the last few months. There is a clear divergence in the stocks versus the market since June however it has still not resulted in a final market top and broad based selling. This has become the primary reason for the recent drawdown in returns for the product. Waiting for the rotation to end and a more trending move in prices and market segments is what it has been about. When most of the market moves in one direction it is easier to deliver a positive outcome. After almost a year of trending moves in the Nifty we are recently see big range bound moves that are pulling back the returns. Such moves often occur before a market trend reversal and eventually the next trend in the market makes it up for the price paid during the range bound trading. This looks like one of those events.
Fund Manager: Rohit Srivastava
Disclaimer: Returns are based on a client’s returns since inception and may be different from those depicted in the risk disclosure document.
FUND OBJECTIVE
Absolute returns irrespective of market conditions.
Investments in
Nifty Index
Stock futures
ADVISORY DESK MONTHLY PERFORMANCE
39December 2017 Sharekhan ValueGuide
Advisory Products and ServicesThe Advisory Desk is a central desk consisting of a Mumbai-based expert
team that runs various sample model portfolios (for illustrative purposes
only) for clients of all profiles, be they traders or investors.
These products are different from Sharekhan research-based technical
and fundamental offerings as these essentially try to capture the trading
opportunities in stocks where momentum is expected before or after
some event including the announcement of results or where some news/
event is probable.
Advisory products are ideal for those who do not have time to either
monitor the market tick by tick or shift through pages of research for data
or pour over complex charts to catch a trend. However, all these products
require perfect discipline and money management.
For investors
Report Card
PORTFOLIO DOCTOR
It is a service under which the Portfolio Doctor reviews an existing portfolio based on various parameters and suggests changes to
improve its performance. To avail of this service please write to the Portfolio Doctor at [email protected].
NEW ALPHA DELIVERY PICKS
This is a long only, cash market delivery product where stock ideas will be rolled out based on short-term triggers with proper fundamental rationale. Recently we revised certain features of Alpha Delivery Picks to incorporate ideas from both the Fundamental research desk and the Market analysis team. The time frame of the stock ideas in New Alpha Delivery Picks will be a maximum of two months. Stop loss will be 5-10% and profit potential will be 10-20%. We will report the old series’ performance data separately. For more details please write to us at [email protected]
SHAREKHAN PRE-MARKET ACTION
These ideas are put out in Sharekhan Pre-market Action report along
with stop loss and targets valid for a day. There is a market watch list
of stocks with positive and negative bias for intra-day traders. For more
details please write to us at [email protected].
MID DERIVATIVE CALLS
These calls are based on the analysis of open interest, implied volatility
and put-call ratio in the derivative market. It is a leveraged product and
ideal for aggressive traders. These calls have pre-defined stop loss,
targets, time frame and quantity to execute. For details of the product
please write to us at [email protected].
MID performance*
Product New Alpha Delivery Picks
Month November 2017 FY2017-18
No. of calls 11 75*
Open 7 7
Profit booked 3 37
Stop loss hit 7 31
Strike rate (%) 27 54
New Alpha Delivery Picks Rules
Ideas Ideas based on Stock Ideas, Viewpoints, Stock Updates, Market analysis
Weightage (%) 7
Stop Loss (%) Maximum 10, minimum 5
Profit Potential (%) Maximum 20, minimum 10
Time Frame Maximum 2 months
Trail Stop loss5% trailing Stop loss on 5% rise in stock price
Exit RulesA) Pre defined / Trail stop loss is hit
B) Unexpected event/news/ outcome
C) Time frame
PerformanceReporting
Daily
MID Derivative Calls performance*
Ticket size (Rs) 100,000
Month November 2017 FY2017-18
No. of calls 92 437
Profit booked 38 244
Stop loss hit 54 193
Strike rate (%) 41 56
For traders
* we had 8 open calls in April (not considered)
MUTUAL FUNDS DESKMF PICKS
40December 2017 Sharekhan ValueGuide
Data as on November 01, 2017
Scheme name NAV (Rs) Returns (%)Absolute 6
monthsCompound annualised
1 yr 3 yrs 5 yrs Since inceptionLarge Cap Funds
IDFC Classic Equity Fund - Reg - Growth 45 11.3 24.0 15.8 16.9 13.1
Aditya Birla Sun Life Top 100 Fund - Growth 58 11.3 21.2 12.8 19.2 15.8
ICICI Prudential Focused Bluechip Equity Fund - Growth 40 14.3 24.5 12.3 18.1 15.9
Franklin India Bluechip - Growth 460 9.9 18.8 11.4 15.6 21.7
BNP Paribas Equity Fund - Growth 85 9.3 19.1 11.0 18.2 17.7
Indices
S&P BSE Sensex 33600 12.1 20.5 6.4 12.6 16.1
Mid & Small Cap Funds
Reliance Small Cap Fund - Growth 43 15.4 33.4 23.7 32.2 22.7
Kotak Emerging Equity Scheme - Reg - Growth 40 8.6 20.8 21.2 25.6 13.9
Aditya Birla Sun Life Mid Cap Fund - Growth 324 10.6 22.7 20.6 23.9 25.9
DSP BlackRock Small and Midcap Fund - Reg - Growth 56 7.7 20.4 20.6 24.3 16.9
HDFC Mid-Cap Opportunities Fund - Growth 57 9.1 21.9 19.8 26.4 18.2
Indices
BSE MID CAP 16,647 12.3 23.9 19.1 20.2 22.1
Multi Cap Funds
SBI Magnum Multi Cap Fund - Growth 47 12.7 22.5 17.8 21.8 13.7
DSP BlackRock Opportunities Fund - Reg - Growth 222 12.0 23.8 17.6 21.5 19.4
Aditya Birla Sun Life Equity Fund - Growth 718 11.8 19.7 17.2 22.6 24.9
BNP Paribas Dividend Yield Fund - Growth 51 17.2 30.4 16.9 21.1 14.3
Kotak Select Focus Fund - Reg - Growth 33 10.1 23.4 16.6 21.9 15.9
Indices
BSE 500 14,609 12.4 23.2 11.3 15.3 15.4
Tax-saving Funds (ELSS)
Aditya Birla Sun Life Tax Relief 96 - Growth 31 14.5 24.8 18.4 22.5 12.3
IDFC Tax Advantage (ELSS) Fund - Reg - Growth 56 16.6 31.3 18.1 22.0 21.5
DSP BlackRock Tax Saver Fund - Growth 47 10.4 20.6 16.4 21.7 15.4
Reliance Tax Saver (ELSS) Fund - Growth 66 17.3 29.0 14.1 23.2 16.9
Franklin India Taxshield - Growth 548 9.1 17.0 13.1 19.3 24.1
Indices
Nifty 500 9,235 12.2 23.1 11.4 15.6 10.0
Thematic Funds
DSP BlackRock Natural Resources & New Energy Fund - Reg - Gth 37 20.2 44.2 25.8 23.5 14.9
L&T Infrastructure Fund - Reg - Growth 18 20.6 43.0 22.7 23.6 6.1
ICICI Prudential Banking and Financial Services Fund - Retail - Growth 62 12.8 31.4 22.4 24.7 21.9
Franklin Build India Fund - Growth 43 14.3 27.9 19.0 27.8 19.5
Aditya Birla Sun Life Special Situations Fund - Growth 26 16.3 21.1 18.1 22.1 10.2
Indices
Nifty 50 10,441 12.0 21.0 7.8 13.1 14.2
Balanced Funds
HDFC Balanced Fund - Growth 148 10.2 19.3 14.2 19.2 17.0
ICICI Prudential Balanced - Growth 129 11.3 20.4 14.1 19.6 15.3
Aditya Birla Sun Life Balanced 95 - Growth 759 9.1 16.7 13.9 18.2 21.0
SBI Magnum Balanced Fund - Growth 125 13.1 15.7 13.4 18.7 16.4
Franklin India Balanced Fund - Growth 115 8.6 13.6 12.3 17.2 14.6
Indices
Crisil Balanced Fund Index -- 9.5 16.2 8.8 12.0 12.8
Sharekhan top mutual fund picks (equity) November 10, 2017
Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at Sharekhan first understand the individual’s investment objectives and risk-taking capacity, and then recommend a suitable portfolio. So, we suggest that you get in touch with our Mutual Fund
Advisor before investing in the best funds.n
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the mutual funds mentioned in the article.
BNP Paribas Mutual Fund Equity schemes
Scheme name NAV (Rs) Returns (%)
Absolute 6 months
Compound annualised
1 yr 3 yrs 5 yrs Since inception
BNP Paribas Mid Cap Fund - Growth 37 14.9 27.7 20.2 26.5 12.0
BNP Paribas Dividend Yield Fund - Growth 51 17.2 30.4 16.9 21.1 14.3
BNP Paribas Long Term Equity Fund - Growth 39 14.0 22.8 13.1 19.9 12.1
BNP Paribas Equity Fund - Growth 85 9.3 19.1 11.0 18.2 17.7
MUTUAL FUNDS DESK MF PICKS
41December 2017 Sharekhan ValueGuide
Sharekhan top sip fund picks November 10, 2017
Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at Sharekhan first understand the individual’s investment objectives and risk-taking capacity, and then recommend a suitable portfolio. So, we suggest that you get in touch with our Mutual Fund Advisor before investing in the best funds.n
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the mutual funds mentioned in the article.
Data as on November 01, 2017
Investment period 1 year 3 years 5 years
Total amount invested (Rs) 12,000 36,000 60,000
Funds would have grown to (Rs) NAV Present value (Rs)
Avg annual return (%)
Present value (Rs)
Avg annual return (%)
Present value (Rs)
Avg annual return (%)
Large-Cap Funds
IDFC Classic Equity Fund - Reg - Growth 45 13,708 15.6 48,008 10.4 94,597 9.7
ICICI Prudential Focused Bluechip Equity Fund - Growth 40 13,758 16.1 46,638 9.3 93,895 9.5
Aditya Birla Sun Life Top 100 Fund - Growth 58 13,514 13.8 45,799 8.6 94,906 9.8
Franklin India Bluechip - Growth 460 13,346 12.3 44,312 7.4 88,429 8.2
BNP Paribas Equity Fund - Growth 85 13,513 13.8 43,752 6.9 90,113 8.6
BSE Sensex 33600 13,433 13.1 43,247 6.5 81,098 6.3
Mid & Small Cap Funds
Reliance Small Cap Fund - Growth 43 14,581 23.6 54,651 15.4 1,41,980 19.2
DSP BlackRock Small and Midcap Fund - Reg - Growth 56 13,589 14.5 49,406 11.4 1,15,135 14.2
Aditya Birla Sun Life Mid Cap Fund - Growth 324 13,875 17.1 49,330 11.4 1,13,069 13.8
Kotak Emerging Equity Scheme - Reg - Growth 40 13,636 14.9 49,205 11.3 1,18,916 14.9
HDFC Mid-Cap Opportunities Fund - Growth 57 13,631 14.9 49,145 11.2 1,15,284 14.2
BSE Midcap 16647 13,975 18.1 49,808 11.8 1,07,569 12.6
Multi-Cap Funds
Aditya Birla Sun Life Advantage Fund - Growth 441 13,919 17.5 49,206 11.3 1,10,023 13.1
DSP BlackRock Opportunities Fund - Reg - Growth 222 13,767 16.1 49,026 11.2 1,03,691 11.8
SBI Magnum Multi Cap Fund - Growth 47 13,719 15.7 47,666 10.1 1,04,225 11.9
Kotak Select Focus Fund - Reg - Growth 33 13,576 14.4 47,636 10.1 1,03,234 11.7
Franklin India High Growth Companies Fund - Growth 40 13,811 16.6 46,795 9.4 1,06,397 12.4
BSE 500 14609 13,696 15.5 45,925 8.7 89,902 8.6
Tax-saving funds (ELSS)
IDFC Tax Advantage (ELSS) Fund - Reg - Growth 56 14,245 20.5 48,926 11.1 1,03,821 11.8
Reliance Tax Saver (ELSS) Fund - Growth 66 14,214 20.3 48,678 10.9 1,09,709 13.1
DSP BlackRock Tax Saver Fund - Growth 47 13,562 14.3 47,849 10.2 1,02,661 11.5
Aditya Birla Sun Life Tax Relief 96 - Growth 31 14,025 18.5 47,786 10.2 1,05,001 12.1
Franklin India Taxshield - Growth 548 13,275 11.6 44,109 7.2 94,420 9.7
Nifty 50 10441 13,479 13.5 43,904 7.0 83,160 6.9
BNP Paribas Mutual Fund Equity schemes
Funds would have grown to (Rs) CategoryPresent value
(Rs)
Compoundedannualised
return (%)
Present value (Rs)
Compounded annualised
return (%)
Present value (Rs)
Compounded annualised
return (%)
BNP Paribas Mid Cap Fund - Growth Mid Cap 14,440 22.3 49,979 11.9 1,15,510 14.3
BNP Paribas Dividend Yield Fund - Growth Multi Cap 14,450 22.4 49,321 11.4 1,03,948 11.8
BNP Paribas Long Term Equity Fund - Growth ELSS 14,002 18.3 45,429 8.3 95,923 10.0
BNP Paribas Equity Fund - Growth Large Cap 13,513 13.8 43,752 6.9 90,113 8.6
42December 2017 Sharekhan ValueGuide
EQUITY FUNDAMENTALSEARNINGS GUIDE
Sharekhan Earnings Guide Prices as on December 01, 2017
CompanyCMP (Rs)
Sales Net profit EPS (%) EPSgrowth
FY19/FY17
PE (x) RoCE (%) RoNW (%)DPSRs.
DivYld(%) FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY18E FY19E FY18E FY19E
Automobiles
Apollo Tyres 244 13,180.0 14,565.0 16,585.0 1,099.3 720.9 1,001.1 21.6 12.6 17.5 -10% 11.3 19.4 14.0 8.5 10.7 9.1 11.4 3.0 1.2
Ashok Leyland 120 19,930.0 24,008.4 26,755.9 1,582.7 1,415.5 1,710.4 5.4 4.8 5.9 5% 22.2 25.0 20.3 21.1 24.1 21.3 23.6 1.6 1.3
Bajaj Auto 3,217 21,766.7 24,930.2 27,921.9 3,827.6 4,176.7 4,732.1 132.3 144.4 163.6 11% 24.3 22.3 19.7 29.7 30.7 22.0 22.3 55.0 1.7
Gabriel India 186 1,529.1 1,820.2 2,089.9 83.2 98.1 120.8 5.8 6.8 8.4 20% 32.1 27.4 22.1 25.9 27.4 18.9 20.0 1.3 0.7
Hero Motocorp 3,604 28,475.0 31,091.4 35,155.9 3,377.1 3,744.2 4,187.6 169.1 187.5 209.7 11% 21.3 19.2 17.2 44.9 43.6 32.4 31.2 85.0 2.4
M&M 1,409 41,895.4 46,243.8 50,496.8 3,580.7 4,021.2 4,493.2 57.7 64.7 72.3 12% 24.4 21.8 19.5 17.3 17.8 14.3 14.4 13.0 0.9
Maruti Suzuki 8,609 68,035.0 80,273.0 91,564.0 7,338.0 8,639.0 10,366.0 242.9 286.0 343.2 19% 35.4 30.1 25.1 27.5 27.7 20.7 20.5 75.0 0.9
Rico Auto Industries 95 1,079.2 1,191.9 1,355.6 49.5 60.9 79.2 3.7 4.5 5.9 27% 26.0 21.2 16.1 12.3 14.3 10.8 12.7 0.8 0.8
TVS Motor 725 12,135.3 14,615.1 17,176.3 615.1 760.7 1,135.1 12.9 16.0 23.9 36% 56.0 45.3 30.3 27.2 35.2 26.3 31.2 2.5 0.3
Banks & Financials
Axis (UTI) Bank 534 29,784.4 30,493.4 34,638.6 3,679.3 5,033.9 7,513.0 15.4 21.0 31.4 43% 34.8 25.4 17.0 - - 8.7 11.9 5.0 0.9
Bajaj Finance 1,712 5,468.6 7,360.1 9,802.9 1,836.4 2,549.9 3,328.3 33.6 44.2 57.7 31% 51.0 38.7 29.6 - - 23.3 24.2 3.6 0.2
Bajaj Finserv 5,099 - - - - - - - - - - - - - - - - - 1.8 0.0
Bank of Baroda 168 20,271.5 19,929.3 23,692.8 1,383.1 1,479.0 3,354.1 6.0 6.4 14.5 56% 28.0 26.2 11.5 - - 3.6 7.8 1.2 0.7
Bank of India 187 18,598.4 18,012.2 19,337.1 (1,558.3) 621.6 1,616.0 -14.8 5.8 15.1 - - 32.3 12.4 - - 1.9 4.8 0.0 0.0
Capital First 697 1,228.2 1,807.4 2,582.9 239.0 338.0 481.2 24.5 34.7 49.4 42% 28.4 20.1 14.1 - - 13.8 17.1 2.6 0.4
Federal Bank 109 4,134.4 4,774.9 5,633.0 830.8 965.5 1,340.7 4.3 5.0 6.9 27% 25.3 21.7 15.7 - - 8.2 10.5 0.8 0.7
HDFC 1,659 9,509.6 10,574.1 12,054.9 7,442.6 8,233.9 9,212.7 46.8 51.7 57.8 11% 35.4 32.1 28.7 - - 18.1 17.9 15.0 0.9
HDFC Bank 1,848 45,435.7 54,144.5 65,445.4 14,549.6 17,676.4 21,533.4 56.8 69.0 84.0 22% 32.6 26.8 22.0 - - 18.7 19.9 11.0 0.6
ICICI Bank 305 41,241.8 39,729.7 45,846.5 9,801.1 9,569.0 12,258.6 16.8 14.9 21.0 12% 18.1 20.5 14.5 - - 9.4 11.5 0.0 0.0
LIC Hsg. Fin. 571 3,755.5 4,352.8 5,112.3 1,931.1 2,315.5 2,755.7 38.2 45.9 54.6 19% 14.9 12.5 10.5 - - 19.3 19.6 6.2 1.1
Max Financial 547 - - - - - - - - - - - - - - - - - - 0.0
PTC India Fin. Ser. 37 483.4 540.0 661.1 345.3 354.3 444.8 5.4 5.5 6.9 13% 6.8 6.6 5.3 - - 14.0 15.8 1.5 4.1
PNB 172 23,944.5 25,477.7 28,989.8 1,324.8 1,714.5 3,248.5 6.2 8.1 15.3 57% 27.5 21.3 11.2 - - 3.8 6.9 1.0 0.6
SBI 313 97,320.7 108,920.7 124,937.1 10,484.1 14,102.8 17,871.7 13.1 17.7 22.4 31% 23.8 17.7 14.0 - - 7.3 8.7 2.6 0.8
Union Bank of India 158 13,868.0 15,194.8 16,394.4 555.2 (1,112.7) 1,956.2 8.1 -16.2 28.5 88% 19.6 - 5.6 - - - 8.2 0.0 0.0
Yes Bank 307 9,954.1 12,824.1 16,815.8 3,330.1 4,103.8 5,571.2 78.9 18.0 24.4 -44% 3.9 17.1 12.6 - - 17.4 20.4 2.0 0.7
Consumer Goods
Britannia 4,806 9,324.1 10,212.9 11,659.2 884.5 1,009.4 1,243.3 73.7 84.1 103.6 19% 65.2 57.1 46.4 52.0 47.1 33.8 33.7 22.0 0.5
Emami 1,304 2,532.6 2,728.4 3,269.5 549.8 625.2 809.1 24.2 27.5 35.6 21% 53.9 47.4 36.6 35.8 43.8 33.6 37.5 7.0 0.5
GSK Consumer 6,082 4,421.1 4,497.1 5,166.9 656.7 697.5 798.5 156.1 165.8 189.9 10% 39.0 36.7 32.0 32.0 32.7 21.1 21.6 70.0 1.2
GCPL 976 9,608.8 10,380.9 12,207.8 1,307.1 1,469.8 1,831.9 19.1 21.6 26.9 19% 51.1 45.2 36.3 17.9 21.5 24.8 25.1 15.0 1.5
Hindustan Unilever 1,251 34,487.0 37,434.4 42,349.3 4,249.0 5,126.2 6,181.3 19.7 23.7 28.6 20% 63.5 52.8 43.7 101.7 102.5 74.3 74.9 17.0 1.4
ITC 255 55,448.5 64,374.6 74,619.4 10,200.9 11,471.4 13,762.4 8.4 9.4 11.3 16% 30.4 27.1 22.6 31.5 35.7 24.8 27.8 4.8 1.9
Jyothy Laboratories 385 1,749.1 1,865.4 2,206.9 204.1 254.8 247.9 11.3 14.0 13.6 10% 34.1 27.5 28.3 17.6 22.1 21.6 18.3 6.0 1.6
Marico 310 5,935.9 6,449.9 7,515.6 811.0 868.3 1,091.0 6.3 6.7 8.5 16% 49.3 46.3 36.5 44.7 49.7 35.1 37.8 3.5 1.1
Zydus Wellness 926 462.6 493.2 577.0 111.3 118.6 144.0 28.5 30.4 36.8 14% 32.5 30.4 25.2 20.8 22.0 19.2 19.8 6.5 0.7
IT / IT services
FSL 41 3,555.6 3,528.3 3,800.2 280.0 294.7 347.9 4.2 4.4 5.2 11% 9.7 9.3 7.9 11.8 12.9 13.3 13.7 0.0 0.0
HCL Technologies 830 46,722.0 50,401.4 56,438.0 8,456.0 8,816.0 9,957.9 60.7 63.3 71.5 9% 13.7 13.1 11.6 29.4 29.2 24.4 23.9 24.0 2.9
Infosys 959 68,484.0 70,344.2 77,173.0 14,357.0 14,619.9 15,933.8 62.8 64.0 69.7 5% 15.3 15.0 13.8 27.9 27.6 20.1 19.9 25.8 2.7
Persistent Systems 654 2,878.4 3,062.6 3,443.9 312.9 334.4 369.0 39.1 41.8 46.1 9% 16.7 15.7 14.2 21.8 21.2 16.5 16.1 9.0 1.4
TCS 2,630 117,966.0 122,172.7 134,690.2 26,289.0 25,773.0 28,848.3 137.3 134.6 150.7 5% 19.2 19.5 17.5 32.0 30.9 24.9 23.9 47.0 1.8
Wipro 289 55,040.2 54,922.4 58,277.7 8,489.5 8,945.2 9,687.4 17.5 18.4 19.9 7% 16.5 15.7 14.5 12.1 11.8 14.9 14.1 3.0 1.0
Cap goods / Power
CESC 996 7,410.0 8,211.0 8,799.0 862.0 935.0 1,018.0 64.7 70.2 76.4 9% 15.4 14.2 13.0 5.6 5.8 6.9 7.3 10.0 1.0
Crompton Greaves 84 6,119.8 6,073.7 6,890.9 182.7 173.1 266.3 2.9 2.8 4.2 21% 28.8 30.4 19.8 8.0 9.8 4.1 6.0 0.0 0.0
Finolex Cables 669 2,444.9 2,919.7 3,129.2 316.0 353.6 378.8 20.7 23.1 24.8 9% 32.4 28.9 27.0 23.8 22.2 17.5 16.3 3.0 0.4
Greaves Cotton 118 1,634.3 1,726.4 1,815.3 174.7 167.2 175.6 7.2 6.8 7.2 0% 16.3 17.3 16.3 25.1 25.5 17.4 17.7 5.5 4.7
Kalpataru Power 440 4,894.1 5,544.9 6,498.3 269.1 323.8 382.0 17.5 21.1 24.9 19% 25.1 20.8 17.7 18.1 19.2 12.4 13.1 2.0 0.5
KEC International 315 8,584.4 9,611.7 10,927.0 305.0 419.7 536.8 11.9 16.3 20.9 32% 26.4 19.3 15.1 21.3 24.3 23.3 24.2 1.6 0.5
PTC India 115 14,074.8 17,401.3 20,948.9 286.1 333.0 380.9 9.7 11.2 12.9 15% 11.9 10.2 8.9 16.3 17.3 10.1 10.7 3.0 2.6
43December 2017 Sharekhan ValueGuide
EQUITY FUNDAMENTALS EARNINGS GUIDE
CompanyCMP (Rs)
Sales Net profit EPS (%) EPSgrowth
FY19/FY17
PE (x) RoCE (%) RoNW (%)DPSRs.
DivYld(%) FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY18E FY19E FY18E FY19E
Skipper 265 1,703.0 2,069.0 2,434.0 98.0 115.0 146.0 9.6 11.3 14.2 22% 27.6 23.5 18.7 23.5 24.9 21.3 22.4 1.6 0.6
Thermax 1,102 3,763.7 3,931.8 4,448.5 278.0 293.6 332.1 23.3 24.6 27.9 9% 47.3 44.7 39.5 17.0 18.1 11.7 12.2 6.0 0.5
Triveni Turbine 134 745.0 778.7 893.2 124.0 118.0 139.1 3.8 3.6 4.2 5% 35.2 37.4 31.7 38.8 40.6 27.3 28.5 1.2 0.9
V-Guard Industries 226 2,150.6 2,414.7 2,825.3 151.8 191.0 249.0 3.6 4.5 5.9 28% 63.2 50.2 38.3 36.3 38.1 26.9 28.3 0.7 0.3
Va Tech Wabag 595 3,207.9 3,702.0 4,164.5 102.4 162.5 189.4 18.8 29.8 34.7 36% 31.7 20.0 17.1 23.6 23.3 14.9 15.0 4.0 0.7
Infra / Real Estate
Gayatri Projects 214 2,115.4 2,720.7 3,305.6 89.8 99.0 154.3 5.1 5.6 8.7 31% 42.2 38.3 24.6 12.8 14.4 10.4 14.5 0.5 0.2
IRB Infra 222 5,845.9 5,667.8 6,112.3 715.5 1,123.1 1,212.5 20.4 32.0 34.5 30% 10.9 6.9 6.4 15.4 16.6 19.5 18.0 5.0 2.3
Jaiprakash Asso 18 6,219.3 - - (4,841.9) - - -19.9 - - - - - - - - - - 0.0 0.0
Larsen & Toubro 1,212 110,011.0 124,457.2 138,676.6 5,920.0 7,138.8 8,942.8 42.3 51.0 63.9 23% 28.6 23.8 19.0 11.6 12.8 13.7 15.6 14.0 1.2
NBCC 261 6,279.0 8,510.0 16,243.0 351.1 445.5 837.1 3.9 4.9 9.3 54% 66.8 52.6 28.0 40.2 62.8 25.4 40.0 1.6 0.6
Sadbhav Eng. 379 3,320.3 3,805.8 4,261.7 187.8 233.9 241.2 10.9 13.6 14.1 13% 34.6 27.9 26.9 12.0 10.8 13.2 12.1 0.7 0.2
Oil & gas
Oil India 360 9,510.0 11,006.0 11,692.0 2,210.0 2,643.0 2,678.0 29.2 34.9 35.4 10% 12.3 10.3 10.2 10.7 10.6 8.9 8.7 16.4 4.6
Reliance 910 305,382.0 340,333.0 373,876.0 29,833.0 31,546.0 39,290.0 50.4 53.3 66.4 15% 18.1 17.1 13.7 9.3 10.4 10.5 11.7 5.5 0.6
Selan Exp 221 55.8 55.9 62.6 8.7 11.5 13.5 5.3 7.0 8.2 25% 41.9 31.6 27.0 5.0 5.8 4.1 4.7 5.0 2.3
Pharmaceuticals
Aurobindo Pharma 672 15,089.9 18,030.2 21,516.5 2,289.6 2,718.2 3,533.4 39.1 46.4 60.3 24% 17.2 14.5 11.1 28.7 31.2 25.5 25.8 2.5 0.4
Cadila Healthcare 426 9,429.2 11,332.1 13,518.6 1,487.3 1,517.8 2,111.1 14.5 14.8 20.6 19% 29.3 28.7 20.7 14.8 20.6 18.8 21.8 3.2 0.8
Cipla 598 14,630.2 16,727.6 19,451.7 1,006.4 1,849.9 2,579.2 16.3 23.0 32.1 40% 36.6 26.0 18.7 13.2 16.5 13.5 16.1 2.0 0.3
Divi's Labs 1,035 4,106.3 3,853.2 4,515.9 1,060.4 900.2 1,192.9 39.9 33.9 44.9 6% 25.9 30.5 23.0 23.7 26.0 18.1 20.9 10.0 1.0
Glenmark Pharma 555 9,185.7 9,501.5 10,607.7 1,274.7 1,104.1 1,371.0 45.2 39.1 48.6 4% 12.3 14.2 11.4 17.7 19.2 20.0 20.1 2.0 0.4
Lupin 814 17,494.3 16,060.8 16,945.9 2,713.4 1,724.1 1,838.5 60.1 38.2 40.7 -18% 13.6 21.3 20.0 10.3 10.4 11.0 10.5 7.5 0.9
Sun Pharma 526 31,578.4 28,350.8 30,629.8 6,964.4 3,517.0 4,760.5 29.0 14.7 19.8 -17% 18.1 35.9 26.5 10.5 12.7 8.9 11.0 3.5 0.7
Torrent Pharma 1,278 5,713.0 6,265.9 8,460.0 934.0 908.5 1,097.5 55.2 53.7 64.8 8% 23.2 23.8 19.7 17.8 17.9 17.6 16.9 14.0 1.1
Building Materials
Grasim* 1,150 10,345.7 16,098.2 18,731.7 1,560.0 1,992.4 2,297.3 23.7 30.3 35.0 21% 48.5 37.9 32.9 6.0 4.6 4.5 4.9 22.5 2.0
Shree Cement 17,198 8,429.2 9,882.6 11,871.9 1,339.9 1,401.5 1,894.6 384.6 402.3 543.8 19% 44.7 42.8 31.6 15.7 18.0 16.8 19.3 116.0 0.7
The Ramco Cements 694 3,949.5 4,257.0 4,707.0 649.3 687.0 804.0 27.3 29.2 34.1 12% 25.4 23.8 20.3 12.3 13.3 17.4 17.7 3.0 0.4
UltraTech Cement 4,185 23,891.0 28,253.0 34,553.0 2,641.0 2,442.0 3,156.0 96.4 89.1 115.2 9% 43.4 47.0 36.3 8.7 9.1 9.8 11.5 9.5 0.2
Discretionary
Arvind 436 9,235.5 10,512.5 12,604.1 332.7 323.7 619.1 12.9 12.5 24.0 36% 33.8 34.9 18.2 8.9 14.6 8.8 15.1 2.4 0.6
Century Ply (I) 312 1,818.7 2,077.1 2,520.7 178.4 160.9 255.0 8.0 7.2 11.5 20% 38.9 43.1 27.2 14.9 18.3 21.0 26.8 1.0 0.3
Cox and Kings 254 2,179.4 2,385.6 2,863.0 327.8 437.7 524.8 19.4 25.8 31.0 26% 13.1 9.8 8.2 13.9 16.7 19.9 21.7 1.0 0.4
Info Edge (India) 1,290 802.1 922.3 1,069.3 208.4 282.3 319.9 17.2 23.4 26.5 24% 75.0 55.1 48.7 17.6 17.6 12.6 12.7 4.5 0.3
Inox Leisure 275 1,220.7 1,448.8 1,648.8 30.6 87.6 114.8 3.3 9.5 12.5 95% 83.3 28.9 22.0 15.8 17.8 13.7 15.2 0.0 0.0
KKCL 1,870 492.4 502.5 577.3 85.3 85.1 100.3 69.2 69.0 81.4 8% 27.0 27.1 23.0 20.3 21.7 22.5 23.7 19.0 1.0
Orbit Exports 140 130.5 146.2 175.4 20.1 22.7 29.6 7.1 8.1 10.6 22% 19.7 17.2 13.2 22.6 25.3 16.5 18.7 2.6 1.9
Relaxo Footwears 603 1,739.8 2,022.1 2,364.9 123.0 153.8 191.5 10.2 12.8 16.0 25% 59.1 47.1 37.7 26.0 23.4 17.2 14.7 1.0 0.2
Thomas Cook India 237 8,588.0 10,437.3 12,661.8 77.5 136.2 256.9 2.1 3.7 7.0 83% 113.0 64.1 33.9 13.5 24.4 8.6 14.6 0.4 0.2
Wonderla Holidays 352 270.4 305.2 375.3 33.7 46.7 62.5 6.0 8.3 11.1 36% 58.7 42.4 31.7 15.8 18.3 10.7 13.6 1.0 0.3
ZEEL 557 6,434.2 6,675.0 7,812.9 1,218.7 1,368.2 1,798.2 12.7 14.3 18.7 21% 43.8 38.9 29.8 22.0 25.4 17.9 20.0 2.5 0.4
Diversified / Miscellaneous
Bajaj Holdings 2,890 842.0 - - 2,473.2 - - 222.2 - - - 13.0 - - - - - - 32.5 1.1
Bharat Electronics 185 9,140.4 10,785.6 12,533.3 1,547.6 1,773.0 1,986.6 6.9 7.9 8.9 14% 26.7 23.4 20.7 20.7 21.2 15.7 16.1 2.3 1.2
Bharti Airtel 484 95,468.3 87,811.5 97,199.8 4,969.5 1,902.0 3,895.6 12.4 4.8 9.7 -12% 39.0 100.9 49.9 7.7 9.0 3.2 5.6 1.4 0.3
Gateway Distriparks 244 393.4 422.0 471.9 74.1 84.7 99.4 6.8 7.8 9.1 16% 35.9 31.4 26.7 8.3 9.8 8.4 10.2 7.0 2.9
PI Industries 960 2,276.8 2,418.6 2,823.7 459.4 428.2 518.0 33.4 31.1 37.6 6% 28.8 30.9 25.5 22.7 23.2 23.8 23.7 4.0 0.4
Ratnamani Metals 964 1,476.2 1,714.6 2,031.5 144.5 173.9 207.5 31.1 37.5 44.7 20% 31.0 25.7 21.6 19.2 20.3 14.2 15.0 5.5 0.6
Supreme Industries 1,156 4,462.3 4,987.0 5,846.8 376.7 375.3 488.2 29.7 29.6 38.4 14% 38.9 39.0 30.1 23.9 29.0 19.4 21.6 15.0 1.3
UPL 730 16,312.0 18,071.1 20,337.7 1,806.1 2,046.7 2,533.1 35.8 40.5 50.2 18% 20.4 18.0 14.6 17.6 18.7 25.0 25.4 7.0 1.0
Note: Crompton Greaves is in the process of selling its overseas power system business by Q4FY2016. Hence, we have not estimated the FY2017 numbers Aurobindo Pharma post 1:1 bonusDivis Labs post 1:1 bonusCadila Healthcare post stock split from Rs 5 to Rs 1Godrej Consumer Products post 1:1 bonusGrasim*- Changed reporting to standalone financial numbers
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Remarks
Automobiles
Apollo Tyres Apollo Tyres (ATL) is the market leader in truck and bus tyre segments with a 28% market share in India. The company had invested $600 million in the past to set up a greenfield facility in Hungary and Rs. 4,000 crore for the expansion of capacity at its Chennai facility. The expanded capacities are likely to come on stream by the end of FY2018. For Q2FY2018, ATL reported a weak operating performance with OPMs shrinking 370 bps y-o-y due to a surge in raw material (RM) prices. Further, higher start-up costs at the new Hungary plant impacted margins. As per the management, the company is facing capacity constraints at its European operations while the Hungary plant is still in a ramp-up stage. Further, the capacity constraints are likely to persist for the next two quarters before the Hungary plant fully gears up. RM prices for Apollo Tyres have been inching up. While rubber prices have been flat, crude prices have risen 15-20% in the last three months. According to the management, Apollo Tyres is likely to face higher RM costs in Q4FY2018, which is likely to exert margin pressure. Therefore, ATL is likely to report a 12% topline compound annual growth rate (CAGR) over FY2017-FY2019, led by robust domestic demand and ramp-up in Europe. However, higher RM prices and start-up costs at Hungary plant would result in a drop in margin.. We expect subdued 2% net profit growth over FY2017-FY2019. Consequently, we downgrade our recommendation on the stock from Buy to Hold with a revised price target (PT) of Rs. 245.
Ashok Leyland Ashok Leyland Limited (ALL), the second largest commercial vehicle (CV) manufacturer in India, is a pure play on CV. The CV industry is poised for healthy growth in FY2018. Increased freight rates and faster turnaround time for trucks, post GST implementation have improved the profitability for fleet operators and is likely to drive demand for the MHCV industry. Also, a favorable low base in Q3FY2018, on account of demonetisation, will aid growth for the MHCV industry. We expect ALL’s volumes to pick up in H2FY2018 and expect 9% volume growth in H2FY2018. Going ahead, with the product mix expected to improve and a price hike effective from Nov 2017, the margins could improve. Additionally, with the upcycle in MHCV industry, we expect the benefits of operating leverage to kick in which would aid margin growth ahead. We expect ALL margins to improve from 10.1% in Q2FY2018 to 10.8% in FY2019. We retain our Buy rating on the stock with a revised PT of Rs. 130.
Bajaj Auto Bajaj Auto (BAL) is a leading motorcycle and three-wheeler (3W) manufacturer with a significant presence in the export markets. In the domestic market, it is a leader in the premium motorcycle segment. After two consecutive years of volume decline, Bajaj Auto has recently seen recovery in export volumes. With stabilising crude prices, better availability of USD and a low base, BAL reported 9% volume growth in exports in H1FY2018 as against an 11% CAGR drop over FY2015-FY2017. In addition, BAL is tapping new geographies for export. With improved volume outlook of existing overseas markets coupled with tapping of new markets, the management has raised its export guidance upwards to 1.7 million units for FY2018 as against 1.6 million units guided earlier. Moreover, the outlook for domestic markets is also encouraging given improved industry demand scenario and a favourable base effect for H2FY2018. This, coupled with new launches, will aid volume growth further. We expect BAL’s domestic volumes to grow 28% y-o-y in H2FY2018. Further, a favourable product mix and price hikes would mitigate the likely increase in cost. We maintain our Buy recommendation on the stock with a revised PT of Rs. 3,625.
Gabriel India Gabriel India (GIL) is one of India’s leading manufacturers of shock absorbers and front forks with a diversified customer base. The overall demand situation for the passenger segment (2W and passenger cars) has improved significantly, as key concerns around GST rollout have been addressed. The transitory impact of new emission norms (for 2W) has also been put behind. OEM is the key segment for GIL, forming about 85% of overall revenue and the company has secured increased share of business with its clients in the 2W OEM segment. Given the strong outlook for automotive OEM production and success of GIL in enhancing share of business with OEM, we expect topline growth to continue with a 17% topline CAGR in the next two years. A robust topline growth of GIL is likely to provide benefits of operating leverage, resulting in margin improvement. Moreover, focus on cost-control initiatives and productivity improvement will further aid margin expansion. We have factored margin expansion of 30 bps and 40 bps, respectively, for FY2018E and FY2019E. We upgrade our recommendation on the stock from Hold to Buy with a price target of Rs. 222.
Hero MotoCorp Hero MotoCorp (HMCL) is the largest two-wheeler manufacturer in the world with sales of over 6.6 million vehicles in FY2017 and a domestic market share of 39%. Driven by positive rural sentiments on account of the second consecutive year of normal monsoon and higher minimum support price (MSP), the outlook for the domestic 2W industry is encouraging. Further, H2FY2018 is likely to witness a favourable base as H2FY2017 was impacted by demonetisation, which dented Hero’s sales significantly. In addition, Hero has lined up a slew of new launches in the scooters and premium motorcycle segment in the later part of FY2018. We have factored a 9% CAGR in domestic volumes for FY2017- 2019. Given the results, which were in line with our expectations on the operating front, we have broadly retained our earnings estimates for both FY2018 and FY2019. We maintain Buy rating on the stock with a revised PT of Rs 4,200.
M&M M&M is a leading maker of tractors and utility vehicles (UV) in India. M&M’s tractor volumes grew impressively, by 23%, for FY2017. Farm incomes have improved given the second consecutive year of normal rainfall and higher crop minimum support price (MSP). M&M has raised the volume forecast for the tractor industry from 10-12% to 12-14% for FY2018. We expect M&M’s tractor volume for FY2018 to grow 15%. Also the auto segment volumes are expected to grow in double digits over the next two years on the back of 3 new launches. The new launches and refreshes will enable the company to regain market share in UV space. Further, with rollout of GST, the hub-and-spoke model will gain traction, leading to strong demand for LCV segment. We retain Buy rating on the stock with a revised sum-of-the-parts (SOTP) based price target of Rs. 1,575.
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Maruti Suzuki Maruti Suzuki India Limited (MSIL) is India’s largest passenger vehicle (PV) maker with a strong 47% market share, as of FY2017. It has been able to gain market share over the last two years on the back of a diverse product portfolio, a large distribution network with an increased focus on rural markets and a shift in consumer preference to petrol models from diesel. Demand for PVs is expected to be encouraging, owing to improved rural demand and a gradual pick-up in economic growth post the successful implementation of GST. Market leader MSIL is likely to continue outpacing industry growth as four of its models (Baleno, Brezza, Ignis and Dzire), which form 35-40% of the vehicle portfolio, command a waiting period of 3-5 months. Further, to curtail the waiting period for its cars, Maruti has fast-tracked production at its new Gujarat plant and aims to manufacture 20,000-22,000 units per month by Q4FY2018 as against 11,000 units per month now. The total output from the Gujarat plant is estimated to be ~175,000 units in FY2018. We expect MSIL volume growth to clock a strong 12% CAGR over the next two years, which is substantially higher than the PV industry. Given a robust order book for existing models and a strong new product pipeline, we expect MSIL to continue outpacing industry growth. MSIL remains among our top picks in the automotive space. We retain our Buy rating on the stock with a revised PT of Rs. 9,265.
Rico Auto. Rico Auto (Rico) is one of the largest producers of high-pressure non-ferrous die castings for the auto sector. Significant cash inflow due to stake sale in a joint venture company has enabled it to deleverage its balance sheet. Additionally, a lower interest burden will result in earnings growth and free cash flow. The demand outlook for the passenger segment (two-wheelers and PVs) has improved as the key concerns are behind us. Going ahead, given the favourable base for H2FY2018 coupled with positive rural sentiments and improving economic scenario, demand for PVs and two-wheelers is likely to grow in strong double digits for H2FY2018, thus benefiting the existing OEM business of Rico. Rico is expanding capacity in the alloy wheel segment. Overall, we expect the topline to grow by 18% in H2FY2018 as against 8% in H1FY2018. Further, foray into new businesses (aftermarkets and defence) is currently in a ramp up phase and is expected to gather pace in the medium term. This would substantially boost overall topline growth, thereby enabling Rico to outpace the industry. We maintain our Buy recommendation on the stock with a price target of Rs. 117.
TVS Motor TVS Motor (TVSM) is the fourth largest 2W manufacturer in the country with a strong presence in the scooter segment. Over the past couple of years, the scooter segment’s growth has surpassed that of the motorcycle segment’s. Currently, it contributes ~30% to the company’s total 2W volumes. Upbeat rural sentiments on back of a normal monsoon for the second consecutive year, coupled with a favourable base effect in H2FY2018 (industry volumes had dipped 3% in H2FY2017 on account of demonetisation) are likely to drive volume growth for the two-wheeler industry. TVS is aiming to outpace the industry growth for FY2018 on the back of planned new product launches and an improved distribution reach. Further an arrangement with a global partner for supply of bikes for its global markets is progressing well and TVS has guided for a run rate of 2,000-2,500 bikes per month. We have factored in a CAGR of 15% in volume over the next two years as against the expected industry growth of ~10%. TVS is well poised to outpace industry growth. Moreover, the realisation per vehicle would improve as share of high value non-moped segment rises. Further, TVS’ margin is likely to reach double-digit mark by FY2019, leading to a strong 36% earnings CAGR over FY2017-19. We retain a Buy rating on the stock and revise our PT to Rs. 825.
Banks & Finance
Axis Bank Axis Bank is the third-largest private sector bank, which continues to grow faster than the industry and has diversified its book in favour of the retail segment (~40% of loans in retail segment). The bank’s liability profile has improved significantly, which would help sustain the margins at healthy levels. We expect the earnings growth to remain reasonably strong driven by healthy operating performance. Though asset quality pressures have emerged as pain points due to exposure in the infrastructure and steel sectors, we expect the stress to persist in the near term.
Bajaj Finance Bajaj Finance, owned by Bajaj Finserv, is a fast growing, well-diversified leading NBFC in the country. It has assets spread across products, viz loans for consumer durables, two-wheelers and three-wheelers, loans to small & medium enterprises (SME), mortgage loans and commercial loans. Apart from its strong loan growth, the asset quality and provisioning for Bajaj Finance remain among the best in the system. Given the strong growth rate, high margins and return ratios, its premium valuations within the NBFC space are justified.
Bajaj Finserv Bajaj Finserv is a financial conglomerate that has presence in the financing business (vehicle finance, consumer finance and distribution) and is among the top players in the life insurance and general insurance segments. Its consumer finance (Bajaj Finance) and general insurance businesses continue to report a robust performance, while the life insurance business is showing signs of an uptick after being affected by a change in regulations.
Bank of Baroda Bank of Baroda is among the top public sector banks (PSBs) having a sizeable overseas presence (over 100 offices in 24 countries) and a strong network of over 5,000 branches across the country. It has a stronghold in western and eastern India. Its performance metrics remain better than that of the other PSBs and asset quality has deteriorated in-line with the RBI’s directive to clean the balance sheet.
Bank of India Bank of India has a network of over 4,800 branches, spread across the country and abroad, along with a diversified product and services portfolio, and steadily growing assets. The operating performance and earnings have eroded significantly due to margin deterioration and a sharp rise in NPAs. Given the rise in the number of incremental stressed loans and the relatively weaker capital position, its valuations may remain subdued.
Capital First Capital First (erstwhile Future Capital Holdings) had been acquired by global private equity firm, Warburg Pincus (with a 36% stake). The present management has taken several initiatives to tap the high-growth retail product segments, like gold loans, loan against property and loan against shares. It has a strong capital adequacy ratio (CAR) and sound asset quality. Its loan book is expected to sustain 25-30% growth over the next three years. As a result of several initiatives taken in the recent past, the operating leverage will play out and may lead to significant pick-up in profitability over the medium term.
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Federal Bank Federal Bank is among the better-performing old private sector banks in India with a strong presence in south India, especially Kerala. Under the new management, the bank has taken several initiatives, which will improve the quality of its earnings and asset book. The asset quality has shown stress in the past few quarters. We however expect a gradual improvement in the NPAs and the operating performance. The valuations seem attractive over the medium-to-long term.
HDFC HDFC is among the top mortgage lenders in the country providing housing loans to individuals, corporates and developers. It has interests in banking, asset management and insurance through its key subsidiaries. As these subsidiaries are growing faster than HDFC, the value contributed by them would be significantly higher going forward. Due to a dominant market share and consistent return ratios, it should continue to command a premium over the other NBFCs. Any unlocking of value from its insurance business will be positive for the stock.
HDFC Bank HDFC Bank is among the top performing banks in the country having deep roots in the retail segments. Despite the general slowdown in credit growth, the bank continues to report a strong growth in advances from retail products. Its relatively high margins (compared with its peers), strong branch network and better asset quality make HDFC Bank a safe bet with a scope for expansion in its valuations.
ICICI Bank ICICI Bank is India’s largest private sector bank with a network of over 4,850 branches. The bank has made inroads into retail loans (~45% of the book) and significantly improved its liability franchisee. The operating profit improved significantly though its exposure to some troubled sectors (infrastructure, steel, etc.) has increased pressure on the asset quality. However, a healthy growth in the operating income and proceeds from monetisation of its stake in various subsidiaries will help the bank to deal with its NPA challenges.
LIC Housing LIC Housing Finance is one of the largest mortgage financiers in India with a market share of 11% and loan book of over Rs. 1,00,000 crore. It is promoted by Life Insurance Corporation of India, which is among the most trusted brands in the country. With over 200 branches, 1,241 direct sales agents, 6,535 home loan agents and 782 customer relationship associates, the company has among the strongest distribution structures in India to support business expansion. Going ahead, a revival in the economy and moderation in borrowing rates could be key triggers for the stock. Therefore, considering stable RoE of ~20%, sound asset quality and healthy growth outlook, the company’s fundamentals are strong.
PNB Punjab National Bank has strong liability mixes in the banking space, with low-cost deposits constituting over 44% of its total deposits. This helps the bank maintain one of the highest margins among PSBs. However, in view of the weakness in the economy and relatively higher exposure to troubled sectors, the asset quality stress has increased and NPA issues are likely to persist over the next few quarters.
PFS PTC India Financial Services, owned by PTC India, is focused on providing financial solutions to projects in the energy value chain. Given the robust lending opportunities in the renewable energy segment and the likely reforms in the thermal power segment, the loan growth is expected to remain strong over the next 2-3 years. The proceeds from exits in investments would add to the profitability. The asset quality, despite some deterioration, is manageable.
SBI State Bank of India is the largest bank of India with loan assets of over Rs. 14 lakh crore. The successful merger of the associate banks and value unlocking from insurance business could provide further upside for the bank. While the bank is favourably placed in terms of liability base and the operating profit is also better than peers, asset quality has emerged as a key pain point which will affect earnings growth. PSU bank recapitalisation plan by the government could benefit the bank to make up for the capital requirements in order to promote growth.
Union Bank of India Union Bank of India has a strong branch network and an all-India presence. The bank aspires to become the largest retail and MSME bank. Hence, it has ramped up its manpower and infrastructure to ramp up retail, SME lending. The bank’s asset quality challenges have come to the fore (mainly from the corporate portfolio) whereas low tier-1 CAR also remains an area of concern.
Yes Bank Yes Bank, a new generation private bank, started its operations in November 2004 and has emerged as one of the top performing banks. It follows a unique business model based on knowledge banking, which offers product depth and a sustainable competitive edge over established banking players. The bank is suitably poised to ride the recovery in the economy and the retail deposit franchise is showing a sharp improvement, which will support margins in the medium- to-long term.
Consumer goods
Britannia Britannia is the second largest player in the Indian biscuit market with ~30% market share. Under a new leadership, Britannia has been able to leverage and monetise its strong brand and premium positioning in the biscuits and snacks segments. The company is well placed to sustain its higher-than-industry growth rate with an improving distribution reach, deepening penetration in rural India, enhanced international business, entry into newer categories and focus on cost efficiency. Britannia’s management is confident of regaining double-digit growth at standalone level in the coming quarters.
Emami Emami is one of the largest players in the domestic FMCG market with a strong presence in the under-penetrated categories such as cooling oil, antiseptic cream, balm and men’s fairness cream. The recently acquired Kesh King brand has improved the product and margin profile of the company. The management expects volume growth to recover to 14-15% in the short to medium term, as most of its products are in low-penetrated categories, and also hopes to enhance the company’s direct distribution reach to about eight lakh outlets by end of FY2018. Boroplus cream, Kesh King and Zandu range of healthcare products will be some of the key volume drivers going ahead. On the international front, the MENAP region is expected to see a recovery in the revenue performance.
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GSK Consumer GSK Consumer Healthcare is a leading player in the malted food drinks (MFD) segment with ~70% share in the domestic market. GSK Consumer posted decent performance in Q2FY2018 with improvement in volume growth and uptick in margins. We expect increasing penetration of low-cost packs of Horlicks-based brand in rural markets/small towns; catering to premium and super premium health food drink (HFD) category through relevant launches and sustained investment behind brands; and improving penetration in northern and western parts of India to drive long-term growth for the company. We maintain our Hold recommendation on the stock and will keenly monitor the performance in the coming quarters.
GCPL Godrej Consumer Products Limited (GCPL) is a major player in personal wash, hair colour and household insecticide market segments in India. The recent acquisitions, i.e. Strength of Nature, Darling Group, Tura, Megasari and Latin American companies, have helped the company expand its geographic footprint and improve growth prospects. GCPL’s strategy of sustained new product additions and enhancing its distribution reach in the domestic market bodes well for the company to achieve double-digit revenue growth and stable OPM. Further, the company’s international business is expected to post a better performance, underpinned by the revival in Indonesia and expectations of strong revenue growth and improvement in profitability in Africa. The recent correction in the stock price provides limited downside risk. Hence, we recommend a Buy on the stock with the price target of Rs. 1,102.
HUL Hindustan Unilever is India’s largest FMCG company. The company saw strong improvement in Q2FY2018 on the back of re-stocking by various trade channels. Moreover, the company’s distributors are explaining small retailers about the GST impact so that they can get back in trade. This should aid HUL in recovering sales in early H2FY2018. Additionally, the second consecutive year of better monsoon should drive rural consumption, thus resulting in better revenue growth in the coming quarter. Further, the company is banking on operating efficiencies through various initiatives and cost- saving activities at supply- chain/distribution level to see gradual improvement in OPM.
ITC ITC has a strategy of effectively utilising the excess cash generated from its cash cow, the cigarette business, to strengthen and enhance its other non-cigarette businesses. The recent cess hike on cigarettes will keep cigarette sales volume under pressure in the near term. The non-cigarette FMCG business would see better growth in the coming years, with an expected pick-up in rural demand. This, however, will not add substantially to the company’s profitability. Hence, in view of near-term concern on cigarette business, we have a Hold recommendation on the stock.
Jyothy Labs Jyothy Laboratories Limited (JLL) is the market leader in the fabric whitener segment in India. With a pickup in rural demand and trade channels getting back in trade, the management is confident of achieving 14-15% revenue growth in Q3FY2018. The volume growth is expected to recover to 8-10% in H2FY2018. Henkel’s not exercising option of acquiring 26% stake in the company will not have any impact on existing licensing agreement between JLL and Henkel for brand – Pril and Fa. Thus the business fundamentals will remain intact.
Marico Marico is among India’s leading FMCG companies. Its core brands, Parachute and Saffola, have a strong footing in the market. It follows a three-pronged strategy, which hinges on expansion of its existing brands, launch of new product categories (especially in the beauty and wellness space) and growth through acquisitions. Marico is one of the strongest players in the domestic branded hair oil and edible oil markets, with a leadership position in both the categories. We believe Marico would maintain strong growth momentum post normalisation in the domestic market. Sustained new product launches and increased distribution reach would improve growth prospects in the long run.
Zydus Wellness Zydus Wellness has small product portfolio, consisting of just three brands (Nutralite, Sugar Free and Everyuth) that cater to a niche category. Zydus Wellness has a strong portfolio of leading brands under its portfolio, which are largely placed in low penetrated categories. Hence, most of the brands are likely to clock double digit revenue growth in a stable market environment. The sustenance of double digit revenues and margin expansion will be key re-rating trigger for the stock. We will keenly monitor the performance in the coming quarters. We maintain our Hold recommendation on the stock with an unchanged price target of Rs. 952.
IT/IT services
Firstsource Firstsource Solutions Limited (FSL) is a specialised BPO service provider. The management remained cautious on the demand trajectory for FY2018 due to a sharp deterioration in its mortgage business, and softness in the collection business. Overall, FSL foresees industry level growth of 6-8% in constant currency (CC) terms in FY2018 and its OPM improving by 50-60 bps on a CC basis for FY2018. The health of its balance sheet is improving gradually, as the company is reducing its debt burden consistently through internal accruals. We expect the ongoing macro overhang to restrict the stock’s outperformance in the near-to-medium term.
HCL Tech HCL Technologies has a leadership position in engineering and research and development (ERD) and infrastructure management services (IMS) space, that together account for ~58% of the company’s total revenue. The management expects higher acceleration of revenues due to a healthy order book and strong pipeline in the Mode 2 (Digital, Next Gen & Cloud) and Mode 3 services (Product & Platform). However, it foresees a slowdown in IMS services (38.6% of total revenues) to continue for the near-term owing to ongoing delays in the decision-making process for technological spending by clients. The company has not shied away from taking the inorganic route to strengthen its offerings. Additionally, the management has made investments in digital technologies (DRYiCE), which will catapult the company to the next level of growth during the ongoing digital transition. We remain positive on the company in view of its large order wins, aggressive bets in ERD space, accelerated pace of investments in products segment and superior earnings visibility.
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Infosys Infosys is India’s premier IT and ITeS company that provides business consulting, technology, engineering and outsourcing services. After the appointment of Mr. Nandan Nilekani as the non-executive chairman of the board, we see some respite in the ongoing tussle between founder and board. Infosys has anounced the appointment of Salil Parekh as CEO & MD of the company for five years effective January 2, 2018. He has rich experience in the consulting / IT outsourcing business and has managed similar assignments in the past. This event is positive as it puts an end to uncertainty over leadership. However, we are concerned about steady execution under new management and the digital transformations strategy. Hence, we await for the commentary on the strategy for Infosys from the new CEO. Thus, we maintain over Hold rating on the stock.
Persistent Persistent Systems has proven expertise and a strong presence in newer technologies, strength to improve its IP base and a decent margin profile, which sets it apart from the other mid-cap IT companies. PSL is focusing on the development of Internet of Things (IoT) products and platforms, as it sees significant traction from Industrial Machinery, SmartCity, Healthcare and Smart Agriculture verticals. Further, led by the alliance with IBM to build IoT solutions for IBM’s Watson platform and re-sell agreement with IBM, we expect the revenue momentum to accelerate in FY2019 and margin improvement in coming quarters on the back of the initiatives taken by the company.
TCS Tata Consultancy Services is among the pioneers of the IT services outsourcing business in India and is the largest IT service firm in the country. Digital revenue grew 29% y-o-y to $3 billion in FY2017, and the management expects it to grow much faster in the coming years. Given the macro headwinds, ongoing industry transition, and modest earnings growth over FY2017-2019E, we do not see enough merits for an upgrade in TCS on a longer term basis. Our preference in TCS is due to its diversified portfolio and its headstart in the digital space.
Wipro Wipro is among the top five IT companies in India but in the last few years it has been lagging industry growth. We believe, that owing to weakness in verticals like healthcare and telecom, it is unlikely to show material improvement in FY2018 earnings. The management is hopeful that the company will deliver industry-level revenue growth by Q4FY2018. Further, the management has given an ambitious target of $15 billion revenues and 23% margin by 2020. We see new CEO Abid Ali Neemuchwala’s target as an uphill task looking at the current growth trajectory. We remain skeptical, as anecdotal evidence on Wipro over the past 2-3 years does not inspire confidence.
Capital goods/Power
BHEL Bharat Heavy Electricals (BHEL), India’s biggest power equipment manufacturer, has been the prime beneficiary of the multi-fold increase in the investments made in the domestic power sector over the last few years. However, the order inflow has been showing signs of slowing down which would remain a major concern for the company. Hence, on weak order outlook and slower execution we close our call and recommend booking out on the stock.
CESC CESC is the power distributor in Kolkata and Howrah (backed by 1,225MW of power generation capacity) which is a strong cash generating business. Further, 600MW of regulated generation capacity (to serve Kolkata distribution) has come on stream recently in Haldia. Moreover, its 600MW thermal power project at Chandrapur has signed PPA and started operating. The losses in the retail business have been coming down gradually over the past and it is expected to break-even soon. The BPO subsidiary, Firstsource, is performing well, in line with expectations. However, the recent diversification into unrelated businesses like IPL franchisee would hurt its valuations. CESC has announced the demerger of its business into four verticals, namely power distribution, power generation, retail and IT outsourcing. The restructuring looks beneficial for minority shareholders optically. However, we await clarity on the financials of the demerged companies.
Crompton Greaves Crompton Greaves’ key businesses - Industrial and Power Systems - are going through a rough patch and are potential beneficiaries of the upcoming investment cycle revival. Also, the company is looking to unlock value by selling its international subsidiaries.
Finolex Cables Finolex Cables, a leading manufacturer of power and communications cables, is set to benefit from an improving demand environment in its core business of cables. It is leveraging its brand strength to build a high-margin consumer product business. It has recently launched fans and switch gears. Further, it is planning to launch water heaters soon. The addition of new products in its product portfolio could prove to be the next growth driver. We anticipate a healthy earnings growth, return ratios in high teens and superior cash flows, which bode well for the stock. Therefore, we remain positive on the stock.
Greaves Cotton Greaves Cotton (GCL) is a mid-sized and well-diversified engineering company. Its core competencies are in diesel/ petrol engines, power gensets, agro engines, pump sets (engine segment). GCL is aiming to strengthen its presence in the aftermarket segment by introducing new products and also ramping up its multi brand aftermarket division. However the 3W engine business (contributing about 40% of GCL topline) is expected to remain muted in the medium term. Structural shift from the 3W segment in favour of LCV will lead to a flattish to low single digit growth for 3W industry in the medium term. Also, adoption of electric 3W led by government policy support will also impact GCL prospects as GCL has not tied up with any OEM so far and electric vehicles are not its core competence. We expect 3W business to continue to be a drag and expect a modest 5% overall topline CAGR over the next two years. GCL 3W business is likely to largely offset the growth in aftermarket and agri segments. We downgrade our recommendation on the stock from “Buy” to “Hold” with a revised PT of Rs. 137.
Kalpataru Kalpataru Power Transmission is a leading EPC player in the power transmission & distribution space in India. Opportunities in this space are likely to grow significantly, thereby providing healthy growth visibility. The OPM of the standalone business is likely to remain around 10%, while the OPM of JMC Projects (a subsidiary) is showing signs of improvement. We see some value-unlocking potential from the sale of assets or listing of new business in future. We remain positive on the stock.
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KEC KEC International is a global power transmission infrastructure EPC major. It has presence in the verticals of power T&D, cables, railways, water, renewable (solar energy) and civil. Globally, the company has powered infrastructure development in more than 61 countries. KEC is a leader in power transmission EPC projects and has more than seven decades of experience. Over the years, it has grown through the organic as well as inorganic route. We estimate the company’s OPM to improve to ~ 10% and D-E ratio to improve to 0.6:1 by the end of FY2019E. We retain our positive outlook on the stock.
PTC India PTC India is a leading power trading company in India with a market share of 35-40% in the short-term trading market. Over the last few years, the company has made substantial investments in areas like power generation projects and power project financing, which will start contributing to its earnings. We retain our positive stance on expected healthy volume uptick, with an increasing share of long-term contract business.
Skipper Skipper is uniquely placed to exploit the growing opportunities in two lucrative segments: power (transmission tower manufacturing and EPC projects) and water (PVC pipes). It had a comfortable order book of Rs. 2,640 crore at the end of Q1FY2018 in the transmission business, which looks promising given the huge investments proposal by the government in the power T&D segment over the next five years. It has expanded the PVC capacity manifold (4x) and aspires to turn into a national player from a regional player.
Thermax The energy and environment businesses of Thermax are direct beneficiaries of the continuous rise in India Inc’s capex. Thermax group’s order book stands at around its consolidated revenues. However, the company has shown an ability to maintain double-digit margins in a tough macroeconomic environment. We retain Hold on the stock due to its rich valuation.
Triveni Turbines Triveni Turbines (TTL) is a market leader in 0-30MW steam turbine segment. TTL is at an inflection point with a strong ramp-up in the after-market segment and overseas business while the domestic market is showing distinct signs of a pick-up. The company has also formed a JV with GE for steam turbines of 30-100MW range which is likely to grow multi- fold in the next 4-5 years. TTL is virtually a debt-free company with a limited capex requirement and an efficient working capital cycle, reflected in very healthy return ratios. Further, boosted by the expected uptick in the domestic capex cycle, the company’s earnings are likely to grow by 15-16% per annum over the next two years.
V-Guard V-Guard Industries is an established brand in the electrical and household goods space, particularly in south India. Over the years, it has successfully ramped up its operations and network to become a multi-product company. The company has a strong presence in the south region. It is also aggressively expanding in non-south markets and is particularly focusing on the tier-II and III cities where there is a lot of pent-up demand for its products. We remain positive.
Va Tech Wabag VA Tech Wabag (VTW) is one of the world’s leading companies in the water treatment field with eight decades of plant- building experience. Given the rising scarcity of fresh water availability, we expect flow of huge investments in water segment both globally and domestically. With rising urbanisation and industrialisation in India, we expect substantial investments in this space. Given the large opportunity ahead and inherent strengths of VTW, like professional management, niche technical expertise and global presence, we remain positive on the stock.
Infrastructure/Real estate
Gayatri Proj Gayatri Projects is a Hyderabad-based infrastructure company with a very strong presence in irrigation, road and industrial construction businesses. The order book stands at Rs. 11,933 crore, which is 5.6x. its FY2017 revenue. Further, the company expects to sustain a 30%+ topline growth over the next 3-4 years with OPM around 15%. It has completed its power and road BOT portfolio and plans to unlock value by offloading stake to private equity. The company has the potential to transform itself into a bigger entity.
IRB Infra IRB Infrastructure Developers is the largest toll road BOT player in India and the second largest BOT operator in the country with all its projects being toll based. It has an integrated business model with an in-house construction arm which provides a competitive advantage in bidding for the larger projects and captures the entire value from the BOT asset. Further, it has a profitable portfolio as majority of its operational projects have become debt-free and has presence in high-growth corridors, which provides it a healthy cash flow. Thus, it is well poised to benefit from the huge opportunity in the road development projects on the back of its proven execution capability and the scale of its operations.
Jaiprakash Asso Jaiprakash Associates has been facing earnings pressure across business verticals. Further, it has just concluded its cement asset sale worth Rs. 16,000 crore and transferred 1,000 acres worth Rs. 13,000 crore to an SPV, which will reduce its debt burden. Going ahead, the company will be focusing primarily on EPC business and balance portfolio of business verticals and aim to reduce its debt further. The current business restructuring has led to a cautious view on the stock.
L&T Larsen & Toubro, being the largest engineering and construction company in India, is a direct beneficiary of the domestic infrastructure capex cycle. Further, backed by its sound execution track record and healthy order book, the company is expected to perform well. Monetisation of the non-core businesses will continue for some time, leaving scope for further value unlocking. Measures planned by the company to improve its return ratios augur well. Hence, we remain positive on the stock.
NBCC NBCC (India), a Navratna public sector enterprise is notified as a Public Works Organisation (PWO), which gives it a unique eligibility to bag orders on a nominated basis from government departments and PSUs. NBCC has already amassed a huge order book, which gives it a strong revenue visibility for the next five years. Moreover, future prospects look much brighter given the opportunities from multiple areas, like redevelopment of old government colonies in Delhi, Rajasthan & Odisha, development of government lands, Smart Cities, ‘Housing for All 2022’ and ‘Amrut’. Considering the huge competitive advantage, a unique business model, high return ratios and healthy cash flows, we remain positive on the stock.
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Sadbhav Eng SEL is engaged in 1) EPC business for transport, mining and irrigation sectors, and 2) Development of Roads & Highways on BOT basis through SIPL. SEL has a healthy order book of Rs. 7,715 crore (2.8x its FY2017 revenue, with a presence in 11 states. The company has robust in-house integrated execution capabilities with qualified human resource and owned equipment. We expect SEL to benefit from an improvement in order execution, enhanced order inflows (particularly from the transport segment) and resolution of working capital issues, resulting in a sturdier balance sheet. Further, the improving outlook for the Indian road sector and limited competitive intensity augur well for SEL since it is present in both, asset creation and EPC verticals.
Oil & Gas
Oil India Oil India has several hydrocarbon discoveries across reserves in Rajasthan and the north-eastern region of India. The company holds 2P (proved and probable) reserves of 79 mmt for oil and 124 mmtoe for gas. Its reserve- replacement ratio is also healthy. The recent increase in the oil price and gradual revival in production has improved the earnings outlook. Operational performance of the company is healthy and the stock offers high dividend yield.
Reliance Industries Reliance Industries has one of the largest and complex refining businesses in India and enjoys a substantially higher refining margin over the benchmark GRM. The company is expanding capacity in its highly efficient petrochemical business. We expect the GRM to remain healthy and the petrochem margin to be maintained in the medium term on an uptick in the domestic demand. Capex in downstream business (incremental capacity in the petchem business and petcoke gasification in refining) would be the key earnings driver in the coming years. Large investment in Reliance Jio could add value in the long term.
Selan Exploration Selan Exploration Technology is an oil E&P company with five oil fields in the oil-rich Cambay basin of Gujarat. The initiatives to monetise the oil reserves in its Bakrol and Lohar oil fields will improve production. However, challenges related to monetisation of its large hydrocarbon reserve base and near term production ramp-up issues are likely to be an overhang on the stock in the near to medium term.
Pharmaceuticals
Aurobindo Pharma Aurobindo Pharma is set to post a healthy growth on the back of a ramp-up in the US and European markets, thanks to a strong product pipeline built over a period and focus on niche segments like injectibles, hormones, penems and sterile products. The expected increase in the export-led business and a favourable tilt in the revenue mix are likely to boost the margin, resulting in a faster growth in the earnings as compared to the revenues. Pricing pressure, USFDA inspections and an appreciating rupee warrant a caution in the near term. The management has guided for the launch of over 25 products (more approvals of complex products) in the coming years, which will help Aurobindo to achieve higher growth and mitigate the increasing pricing pressure in the US market.
Cadila The USFDA inspected Cadila Healthcare’s Moraiya facility and gave a clearance without any Form 483 observations. This cleared the big overhang on the growth prospects of the company’s US business (which was affected due to delayed product approvals by the USFDA), as the pace of approval will improve going ahead. We feel that several high-value products like generic Toprol XL, Lialda, Transdermal, Respiratory products, etc. would receive approval in the near-to-medium term. This would be a key catalyst for growth and margin expansion over FY2018-2019. However, an appreciating rupee coupled with double-digit pricing pressure in the U.S. business (10-12% for FY2018 and 8-10% in FY2019) warrant caution for the near term. In addition, increased tax rate guidance from earlier 12-15% to 22-25% for FY2018 and 22% for FY2019-FY2020 is expected to significantly affect profitability.
Cipla Cipla has brought about a paradigm shift in its business strategy. The Cipla management sounded confident of ramping up their USA and EU businesses with new product launches, and expects benefits from cost- control initiatives to drive the company’s earnings from FY2018 onwards. The management maintains a guidance of double-digit growth in the US and India businesses despite a challenging environment on the back of new product launches planned for FY2018 and FY2019 (one niche product every quarter). Cipla has an exhaustive pipeline of inhalers and complex generics, which have a huge market size. These opportunities will escalate growth in revenue and will boost the topline in long run. The company has recently received establishment inspection reports (EIRs) for Indore, Goa and InvaGen plants.
Divis Labs Successful resolution of an import alert and warning letter in a short span is a big positive for Divis. Hence, we expect the business to improve from H2FY2018 and resume normalcy from FY2019 as business from non-exempted products will resume, two blocks at Unit-1 will be commercialised and a new plant at Vizag is likely to be completed in FY2019. Hence, we have upgraded our recommendation to Buy with a revised PT of Rs. 1, 275 as successful resolution of import alert and warning letter in a short span of time restores the confidence in the company and its management.
Glenmark Pharma The finished dosage facility of Glenmark Pharmaceuticals Limited (Glenmark) at Baddi underwent U.S. FDA audit from November 6-11, 2017, and received Form 483 with seven observations. The development is sentimentally negative at the moment, as we feel there is no data integrity-related observation or a repeat one. Hence, there are lower chances of escalation of Form 483 to a Warning Letter/Import Alert. The company is in the process of providing a comprehensive response to the observations and would be replying to the FDA shortly (outcome of which shall be closely monitored). However, we remain cautioned as pricing pressure in the U.S. base business, limited visibility of margin expansion, increasing capex and R&D cost and lower-than-expected debt reduction remain key overhangs on the stock in the near term. Timely monetisation of key products and a big licensing deal in the R&D business (GBR-830 reported positive data in phase 2a) will be key positive triggers to watch out for.
Lupin The US Food & Drug Administration (USFDA) has issued a combined warning letter (on November 6, 2017) to Lupin’s two formulation manufacturing facilities at Goa and Indore (Pithampur unit -2). The development is a setback to Lupin as its key plants have been issued a warning letter together. While there will not be any disruption of existing product supplies
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from both locations, there will be a delay in new product approvals from the mentioned sites, which shall significantly pressurize the existing base business in the US (owing to increased completion in the existing products and increased pricing pressure due to channel consolidation). Both sites put together would account for over 50% sales from US. We maintain our Hold rating on the stock, yet, we advise investors to avoid bottom fishing and await more clarity on the development. We are putting the price target (PT) under review till further clarity emerges.
Sun Pharma Remediation at the Halol plant has been completed and the management now awaits re-inspection (till then no new product approval will be received). Currently, the company’s facility at Baska (situated close to Halol) underwent an USFDA audit, the outcome of which shall also be watched and will weigh on the stock in the near term. The management has confirmed site transfer of some new drug applications (NDA) and some key products to mitigate the delayed approvals risk. The management call post Q2FY2018 results highlighted the withdrawal of ~15 ANDAs from the USFDA (due to low commercial viability on account of increased competition, as per management clarification). Approval of Tildrakizumab will be another key monitorable in the near term (possibility of delay in approval will be a negative). Although the management has maintained its guidance for high single-digit degrowth in sales and EBIDTA margins of 21-22%, for FY2018, they also hinted towards increasing tax rate over next three years (from 15% to 20% over FY2018-FY2020). We maintain our Hold recommendation on the stock (as Halol resolution could act as positive trigger); however, due to lack of clarity in near term we have put our price target under review.
Torrent Pharma Torrent Pharma announced its acquisition of Unichem Laboratories’ domestic branded business (Rs. 841.5 crore sales in FY2017) along with a manufacturing facility in Sikkim and ~ 3,000 employees for a consideration of Rs. 3,600 crore (4.3x sales). The management expects the deal to be cash accretive for the first year and EPS accretive from the third year of operations, which will depend on the company’s ability to ramp up the acquired business. Hence, we feel that though the deal is a strategic fit, it will weaken core earnings for short term and result in debt hangover (~75% funding will be via debt i.e. ~ Rs 2,800 crore increase in debt). We upgraded our rating to ‘hold’ with a revised price target of Rs. 1,480 as we feel that the acquisition may prove to be a prudent step as it helps reduce dependence on US market.
Building materials
Grasim Grasim is better placed compared with other large players in the cement space owing to its strong balance sheet, comfortable debt/ equity ratio, attractive valuation and diversified business. The full ramp-up of the Vilayat plant (increasing capacity to 804,000 tonnes) is likely to aid VSF volumes going ahead, though prices may soften in the near term. Further, the merger of Aditya Birla Chemicals India Ltd (ABCIL) and expansion in the caustic soda division are likely to maintain a strong performance in the chemical division. On the cement front, the company expects demand to pick up in the near term while slow execution of government projects and surplus inventory remain areas of concern
The Ramco Cements The Ramco Cements, one of the most cost-efficient cement producers in India, will benefit from capacity addition carried out ahead of its peers in the southern region. The company is mulling over the expansion of its satellite grinding capacity from 4 mtpa to 7.1 mtpa at a cost of Rs. 1,095 crore. The expansion aims to strengthen reach in Andhra Pradesh, West Bengal and North Eastern states. The company has reaped the benefits through cost-saving measures, besides constantly reducing debt, which has led to improved profitability. In a nutshell, better volumes, cost efficiencies and reducing leverage have yielded benefits.
Shree Cement Shree Cement’s expansion plan to reach 40 mtpa by FY2020 (currently 27.2 mtpa) and increasing geographical footprint in the eastern and southern regions is likely to aid better volume growth going ahead. Pricing discipline in the cement business should help improve realisations over FY2018 to FY2020. However, the increased cost structure (power and freight cost) affecting operating margins and higher effective tax rate is likely to limit net earnings growth in the near term.
UltraTech Cement UltraTech Cement is India’s largest cement company. Its capacity is expected to reach 95.4 mtpa by the end of FY2019. We expect UltraTech to report industry-leading volume growth on the back of timely capacity expansion (acquisition of Jaypee Group’s cement assets) and likely revival in demand (with the start of affordable housing projects and enhanced spending on infrastructure development). However, the rise in the cost of Petcoke and Diesel along with integration of Jaypee Group’s cement asset integration pose a near term risk to operating margin.
Discretionary consumption
Arvind Arvind is one of the India’s leading vertically integrated textile companies with an experience of more than eight decades in the industry. The company has switched itself into branded retail space by enhancing its branded portfolio. Arvind is a licensee for marketing various marquee global brands in India like Arrow, US Polo, Tommy Hilfiger, and Calvin Klein. It also operates specialty retail stores under the licensee brands like GAP, The Children’s Place, Aeropostale and Sephora. The company is also present in the retail space through Unlimited and The Arvind stores. The management proposes to demerge its branded & retail and the engineering businesses as both these have matured enough to enhance their growth prospects in the coming years. Moreover, listing these businesses as separate entities will help create value for the businesses, as a separate leadership and development of best strategies for the business will enhance focus.
Century Plyboards Century Plyboards is a leading player in the organised plywood industry with a market share of 25%. A strong growth in the sector, Century’s premium positioning and brand equity strength and the successful rollout of GST would enable it clock revenue CAGR of 17.7% over FY2017-2019E. On the back of a revenue growth and better absorption of fixed costs, earnings are likely to grow at 19.6% CAGR over FY2017-2019E. We believe that the structural growth triggers for Century Plyboards are becoming visible due to: 1) The implementation of GST (expected to result in a shift of market share to the organised players from the unorganised players, as they lose the cost advantage); 2) the government’s relentless focus on affordable housing; 3) The MDF unit getting operational in tandem with GST implementation.
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Cox & Kings Cox & Kings is an integrated player in the tourism & travel industry, with a strong presence in the global leisure travel segment and the education tourism segment in Europe. It has a 30% market share in the global outbound tourism market. Domestic leisure travel and Meininger Hotels have maintained strong revenue growth momentum while the international leisure travel business is in the mode of recovery. Operating performance of the education travel business is expected to revive in the coming quarters. Reduction in debt continues to reduce stress on the balance sheet and makes it a better play in the travel and tourism space Hence, we maintain our Buy recommendation on the stock with the unchanged price target of Rs. 325.
Info Edge (India) Info Edge is India’s premier online classified company in the recruitment, matrimony, real estate, education and related service sectors. Naukri.com is a quality play and is directly related to the GDP growth and internet/ mobile penetration. Further, prevailing lower competitive intensity in the real estate space is positive in terms of profitability. We continue to derive comfort on Info Edge’s business strength, with leading market share in key businesses. We expect its earnings trajectory to catch up, as macro headwinds subside.
INOX Leisure INOX Leisure (ILL), India’s second largest multiplex operator with 120 properties and 481 screens across 58 cities (accounting for about 20% of the multiplex screens in India) is scripting a blockbuster growth story through a mix of inorganic and organic expansion plans. The ILL mega show is supported by an improving content quality in the Indian mainstream and regional cinema with its movies regularly hitting the Rs. 100-crore or Rs. 200-crore box-office collection mark. FY2017 was a difficult year for Inox and the management expects FY2018 to be a better year, underpinned by a strong content pipeline, GST implementation and improvement in other operating metrics. We continue to remain positive on ILL from a long-term perspective, given its pan-India growth plans, healthy balance sheet (lower financial leverage) and potential benefits from the GST rollout.
KKCL Kewal Kiran Clothing Ltd (KKCL) is a branded apparel play with four brands in its kitty. Killer, its flagship denim brand, has created a niche space in the minds of consumers. Q1FY2018 was dull because of inventory de-stocking by various trade channels. The management is confident of regaining growth in H2FY2018 as consumer demand is expected to improve on account of stable inflation and better macro environment. In view of near-term GST headwinds and slow recovery in discretionary categories we maintain our Hold recommendation on the stock.
Orbit Exports Orbit Exports (Orbit) is a leading manufacturer and exporter of novelty fabrics, exporting its products to over 32 countries. It is a recognised star export house and operates in the niche area of high-end fancy fabrics, which are mainly used by designers in women’s fashion apparels. The Orbit management indicated that the Latin American business has started recovering and a good performance can be expected in the coming quarters. The Middle East business is however expected to remain under pressure. The high-margin Ribbons & Made-ups business is expected to grow in strong double digits. Overall, the management is confident of growing in mid-to-high teens in the short to medium term. Further, Orbit has one of the better balance sheets in the textiles industry and we expect it to improve further in the coming years. However, in view of near-term concerns in export markets, we maintain our ‘Hold’ rating on the stock.
Relaxo Footwear Relaxo Footwear is present in the fast-growing footwear category, where it caters to customers with its four top-of- the-mind-recall brands, viz, Hawaii, Sparx, Flite and Schoolmate. It has emerged as an attractive investment opportunity owing to its growing scale, strong brand positioning and healthy financial performance. Relaxo has a superior portfolio of footwear brands and its relentless focus on driving sales through the expansion of distribution and improving the brand presence augurs well for the company to achieve good growth in the backdrop of better demand environment. Moreover, GST implementation will be a key growth lever for Relaxo, as a large part of the Indian footwear market is unorganised (~60%).
Thomas Cook (I) Thomas Cook India Limited (TCIL), owned by value investor Prem Watsa, is an integrated leisure travel and human service management company in India. FY2017 was a year of integration for TCIL’s travel and HR businesses. With recent acquisitions in the domestic and international markets, the travel & related business and HR business would remain key growth drivers in the near term. The foreign exchange business will continue to compliment the travel and travel related services businesses in the long run. We maintain our Hold recommendation on the stock.
Wonderla Holidays Wonderla Holidays Ltd (WHL) is the largest amusement park company in India with over a decade of successful and profitable operations. It owns and operates two amusement parks under the brand name Wonderla in Kochi and Bengaluru and came up with a third park in Hyderabad in Q1FY2017. The setting up of a new park in Chennai will make WHL one of the strongest players in South India We expect footfalls at Bangalore and Kochi parks to remain under pressure in the coming quarters, as price hikes will take some time to get absorbed in the market. The increase in tax under GST will put a toll on average ticket revenue and consequently overall revenue growth of the company in the near term. Thus, in view of near-term headwinds on footfalls, we have downgraded our rating on the stock to Hold from Buy earlier.
Zee Entertainment Zee Entertainment Enterprises (ZEEL), part of the Essel group, is one of India’s leading television media and entertainment companies. It has a bouquet of more than 40 channels across Hindi, regional, sports and lifestyle genres. ZEEL continues to outperform the broadcasting advertising market and expects to continue the momentum with an improvement in the macro economy. ZEEL’s advertising growth could be impacted in the near-term led by GST implementation, as the largest ad revenue sources are currently turned tightfisted on ad spends. We expect growth in the ad spends to bounce back to earlier level from Q3FY2018. Given ZEEL’s consistent focus on the five key pillars to drive growth, we believe that successful execution of this strategy will have a material impact on sustainable growth going forward. We continue to see ZEEL as the prime beneficiary of macro revival and digitisation.
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Diversified/Miscellaneous
Bajaj Holdings Bajaj Holdings & Investment (BHIL, erstwhile Bajaj Auto) was demerged in December 2007, whereby its manufacturing business was transferred to the new Bajaj Auto Ltd (BAL) and its strategic business consisting of the wind farm and financial services businesses was vested with Bajaj FinServ (BFS). All the businesses and properties, assets, investments and liabilities of erstwhile Bajaj Auto, other than the manufacturing and strategic ones, now remain with BHIL. BHIL is a primary investment company focused on new business opportunities. Given the strategic nature of BHIL’s investments (namely BAL and BFL), we have given a holding company discount of 50%to BHIL’s equity investments. The liquid investments and investments in other group companies have been valued at cost. Further, the price target (PT) for BFS has been revised upwards to Rs.6,050, while that for BAL has been revised upwards to Rs.3,625 as business has exhibited traction and is likely to improve further. Consequently, we have maintained our Buy recommendation for BHIL with a revised PT of Rs. 3,595.
BEL Bharat Electronics, a PSU manufacturing electronic, communication and defense equipment, stands to benefit from the enhanced budgetary outlay for strengthening and modernising the country’s security equipment. The “Make in India” initiative of the government will support the earnings growth in the coming years, as it is the only player with strong research and manufacturing units across the country. The company’s current order book of around Rs. 41,746 crore provides revenue visibility for the next 3-4 years.
Bharti Airtel Bharti Airtel is the leader in the Indian mobile telephony space. With Reliance Jio’s shift from free to deep discounted price, Airtel has also rolled out its aggressive pricing strategy accordingly to counter Reliance Jio’s offerings and is able maintain its market share. Going forward, from a long-term perspective, explosive growth in the data segment, strong network, acquisitions (Tata Tele, Telenor) and reach will help Bharti emerge stronger. However in the near term, intensifying competitive intensity in the sector would continue to impact the company’s earnings performance. Given the limited upside from our target price, we retain our Hold rating on the stock.
GDL With its dominant presence in the container freight station (CFS) segment the rail freight and cold chain businesses, Gateway Distriparks has evolved as an integrated logistic player. Its CFS business is a cash cow while its investments in the rail freight and cold storage businesses have started bearing fruits. It is one of the largest players in the CFS business and has also evolved as the largest player in the rail freight business as well as the cold storage businesses. The proposed capex for all the three segments will strengthen its presence in each of the segments and increase its pan-India presence going forward.
Max India Max India has demerged into three different entities of which Max Financial Services will hold Max Life Insurance (new Max IndiWa will hold Max Healthcare, Max Bupa Health Insurance and Antara businesses). Max Life Insurance (held by Max Financial Services) is among the leading private sector insurers, has gained the critical mass and enjoys the best operating parameters in the industry. As the insurance sector is showing signs of stabilisation, the company’s favorable product mix and a strong distribution channel will result in healthy growth in the premiums and profits.
PI Industries PI Industries (PI), a leading agro-chemical company, has a differentiated business model with focus on the fast-growing custom synthesis and manufacturing (CSM) business, which contributes 60% of its revenues. PII is gradually ramping up production at Jambusar facility. The company has introduced three new products (one maize herbicide and two rice fungicides) during 1HFY2018 and has lined up two new product launches during 2HFY2018. Further, utilisation of the new plant at Jambusar (phase 3) is likely to ramp up over the next 2-3 quarters. The company is well-placed in the domestic market, led by a robust domestic portfolio with focus on in-licensing and specialty products. Its CSM business was muted in the last two years, led by weakness in the global agrochemical market. The stock price of PI has appreciated by 16.5% since our Q2FY2018 update on October 30, 2017. With the recent run up in the stock price, the valuation currently stands at 25.5 times of its FY2019E earning, which is in-line with its historical premium valuations. We are positive on long-term perspectives of the company such as the introduction of new products in domestic market, entry into pharma and revival in CSM business. We believe that the stock is fairly valued at this price, therefore revising our recommendation to Hold with revised PT of Rs.1,000 (rolling it over to FY2020 earnings).
Ratnamani Metals Ratnamani Metals & Tubes (RMTL) is the largest stainless steel tube and pipe makers in India. Despite a challenging business environment due to increasing competition, we remain positive on RMTL on the back of its strong balance sheet, the company’s ability to generate superior return ratios in the coming years and expansion of Seamless SS tube capacity in the next few years. Further, the management has maintained a strong outlook on the potential opportunities in the oil & gas sector, city gas distribution projects, cross-country pipelines and inter-linking of rivers across India.
Supreme Industries Supreme Industries is a leading manufacturer of plastic products with a significant presence across piping, packaging, industrial and consumer segments. We remain positive on its new launches of value-added products and capacity expansion plans, which are largely funded by its robust internal accruals. The company enjoys superior return ratios with low gearing levels. With diversified products, an extensive distribution network, improved capital structure and government thrust’s on better infrastructure, Supreme has emerged as one of the best proxy play on the increasing use of plastic consumption in India. Hence, we remain positive on the stock.
UPL UPL is a leading global producer of crop protection products, intermediates, specialty chemicals and other industrial chemicals. It has presence across agricultural inputs segment ranging from seeds to crop protection products and post- harvest activities. It has also started to focus on premium products in agro-chemicals. UPL has outpaced the global agrochemical industry, growing at ~17% for FY2017 as against a decline of ~2.5% for the industry. Consequently, the company has gained ~1% market share. Moreover, agro-commodity prices are likely to remain lower going ahead, which in turn will boost the demand for generic products, in which UPL is a major player. A positive outlook for geographies such as India, Europe and Latin America would also drive revenue growth going ahead. Further, several patent expiry of significant agrochemicals, the value of which is pegged at ~$4 billion over the next three years, augurs well for UPL to leverage the opportunity. We expect UPL’s topline to clock a 12% CAGR over the next two years. Considering the benefits of operating leverage and a better product mix, the OPM is expected to improve by 100 bps in FY2018. We retain our buy recommendation on stock with a PT of Rs. 980.
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Registered Office: Sharekhan Limited, 10th Floor, Beta Building, Lodha iThink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai – 400042, Maharashtra. Tel: 022 - 61150000. Sharekhan Ltd.: SEBI Regn. Nos.: BSE: INB/INF011073351 / BSE-CD; NSE: INB/INF/INE231073330 ; MSEI: INB/INF261073333 / INE261073330 ; DP: NSDL-IN-DP-NSDL-233-2003 ; CDSL-IN-DP-CDSL-271-2004; PMS-INP000005786 ; Mutual Fund-ARN 20669 ; Research Analyst: INH000000370; For any complaints email at [email protected] ; Disclaimer: Client should read the Risk Disclosure Document issued by SEBI & relevant exchanges and the T & C on www.sharekhan.com before investing.
Registered Office: Sharekhan Limited, 10th Floor, Beta Building, Lodha iThink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai – 400042, Maharashtra. Tel: 022 - 61150000. Sharekhan Ltd.: SEBI Regn. Nos.: BSE: INB/INF011073351 / BSE-CD; NSE: INB/INF/INE231073330 ; MSEI: INB/INF261073333 / INE261073330 ; DP: NSDL-IN-DP-NSDL-233-2003 ; CDSL-IN-DP-CDSL-271-2004; PMS-INP000005786 ; Mutual Fund-ARN 20669 ; Research Analyst: INH000000370; For any complaints email at [email protected] ; Disclaimer: Client should read the Risk Disclosure Document issued by SEBI & relevant exchanges and the T & C on www.sharekhan.com before investing.
Distributors of IPOs & Mutual Funds Discliamer. This document has been prepared by Sharekhan Ltd. (SHAREKHAN) and is intended for use only by the person or entity to which it is addressed to. This Document may contain confidential and/or privileged material and is not for any type of circulation and any review, retransmission, or any other use is strictly prohibited. This document does not constitute an offer to sell or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is obtained from publicly available data or other sources believed to be reliable and SHAREKHAN has not independently verified the accuracy and completeness of the said data and hence it should not be relied upon as such. While we would endeavour to update the information herein on reasonable basis, SHAREKHAN, its subsidiaries and associated companies, their directors and employees (“SHAREKHAN and affiliates”) are under no obligation to update or keep the information current. Also, there may be regulatory, compliance, or other reasons that may prevent SHAREKHAN and affiliates from doing so. This document is prepared for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information and should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. Recipient of this report should also be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. We do not undertake to advise you as to any change of our views. Affiliates of Sharekhan may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Without limiting any of the foregoing, in no event shall SHAREKHAN, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. The analyst certifies that all of the views expressed in this document accurately reflect his or her personal views about the subject company or companies and its or their securities and do not necessarily reflect those of SHAREKHAN.
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Disclaimer: This document has been prepared by Sharekhan.com India Pvt. Ltd. and is intended for use only by the person or entity to which it is addressed to. This Document may contain confidential and/or privileged material and is not for any type of circulation and any review, retransmission, or any other use is strictly prohibited. This document does not constitute an offer to sell or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Though disseminated to all customers who are due to receive the same, not all customers may receive this report at the same time. Sharekhan.com will not treat recipients as customers by virtue of their receiving this report. This document is prepared for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Recipients of this report should also be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. This Document is subject to changes without prior notice. The user assumes the entire risk of any use made of this information. The investment discussed or views expressed may not be suitable for all investors. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment.
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Sharekhan.com India Private Limited, C-428, Phoenix House, Phoenix Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai-400013. Tel: 022-66101266
*Conditions apply. Log on to www.sharekhan.com/IgniteDisclaimer.html
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