25Sep2014 India Daily

8/11/2019 25Sep2014 India Daily

1/31

Contents

Daily Alerts

Change in Reco

Amara Raja Batteries: Downgrade to SELL

Company alerts

Cummins India: Pricing in transient kicker of shortage-led demand

Sector alerts

Energy: Another delay, hopefully the last one

Metals & Mining: Captive coal blocksa new chapter

Technology: Accenture results - largely neutral for Indian IT

INDIA DAILYSeptember 25, 2014

India 24-Sep 1-day1-m

Sensex 26,745 (0.1) 1.

Nifty 8,002 (0.2) 1.

Global/Regional indices

Dow Jones 17,210 0.9 0.

Nasdaq Composite 4,555 1.0 (0.0

FTSE 6,706 0.5 (1.0

Nikkei 16,318 0.9 4.

Hang Seng 24,048 0.5 (4.4

KOSPI 2,042 0.3 (0.9

Value traded India

Cash (NSE+BSE) 206 20

Derivatives (NSE) 4,349 2,09

Deri. open interest 2,359 2,21

Forex/money market

Change, b

24-Sep 1-day 1-m

Rs/US$ 60.9 8 3

10yr govt bond, % 8.7 2 (4

Net investment (US mn)

23-Sep MTD

FIIs (157) 1,11

MFs 29 15

Top movers

Change, %

Best performers 24-Sep 1-day 1-m

CIPLA IN Equity 600.0 2.7 18.

BHFC IN Equity 794.6 (4.8) 0.

LPC IN Equity 1367.3 0.7 8.

DRRD IN Equity 3229.2 0.9 12.

DIVI IN Equity 1730.5 1.1 9

Worst performers

JPA IN Equity 31.9 (7.9) (38.5

JSP IN Equity 189.5 (10.1) (25.2

GMRI IN Equity 19.3 (11.5) (22.8

UT IN Equity 20.2 (8.2) (10.4

IDBI IN Equity 67.5 (5.5) (14.5


2/31

Earnings upgrades unlikely

We have built in revenue growth of 15% CAGR between FY2015E and FY2017E, which is

based on the following assumptions (1) 15% CAGR in automotive four-wheeler replacement

and four-wheeler OEM volumes and (2) 14% CAGR in industrial revenues over FY2015-17E.

Replacement automotive volumes will likely track the growth of automobile OEM sales over thepast six years as organized players capture the first two replacements of battery, post which

customers tend to shift to unorganized players. In the past six years, automobile OEM volumes

have grown at 12% CAGR and we believe battery industry automotive replacement volumes

will likely grow at a similar rate.

We have also built in EBITDA margin of 17.5% between FY2015E and FY2017E, which is higher

than the companys past five-year average of 16%. We reckon that industrial business margins

could go down from current levels as competition in the industrial business is increasing with

Exide reentering the telecom business, and it will probably pursue business opportunities in the

industrial segment due to likely slowdown in the inverter battery business with improving power

situation. Exide Industries has also indicated that in the longer term it would like to maintain

EBITDA margins in the range of 14-15%; Amara Raja, which has higher EBITDA margin thanExide due to lower overhead costs, will likely trend towards 15% EBITDA margin.

Expensive valuations drive downgrade to SELL (from ADD earlier)

We downgrade the stock to SELL (from ADD earlier) due to expensive valuations. We have kept

our earnings estimates and target price (`550) unchanged. We value the stock at 18X FY2016E

EPS.

Amara Raja Batteries (AMRJ)Automobiles

Downgrade to SELL.We downgrade the stock to SELL (from ADD earlier) due toexpensive valuations and limited probability of improvement in EBIT margin. Our reverse

DCF valuation exercise indicates that the stock is discounting (1) 12% CAGR in salesover the next 15 years, (2) EBIT margin of 14% till perpetuity and (3) terminal growth of5%. We believe the companys EBIT margins have averaged around 12% in the past 15

years and the competitive intensity in the industrial business is increasing, which should

cap the EBIT margin in ~12% range in the longer term. We find the stock expensive;downgrade to SELL (from ADD earlier) with an unchanged target price of`550.

SELL

SEPTEMBER 25, 2014

CHANGE IN RECO.

Coverage view: Attract

Price (`): 630

Target price (`): 550

BSE-30: 26,745

Amara Raja Batteries

Stock data Forecasts/Valuations 2014 2015E 2016E

52-week range (Rs) (high,low) EPS (Rs) 21.5 24.4 29.9

Market Cap. (Rs bn) EPS growth (%) 28.2 13.6 22.5

Shareholding pattern (%) P/E (X) 29.6 26.1 21.3

Promoters 52.1 Sales (Rs bn) 34.4 40.8 47.5

FIIs 16.9 Net profits (Rs bn) 3.7 4.2 5.1

MFs 9.5 EBITDA (Rs bn) 5.6 6.9 8.3

Price performance (%) 1M 3M 12M EV/EBITDA (X) 19.0 15.8 13.1

Absolute 13.8 32.9 109.5 ROE (%) 30.3 27.4 27.2

Rel. to BSE-30 12.3 24.3 55.7 Div. Yield (%) 0.5 0.8 0.9

Company data and v aluation summary

675-288

108.8


3/31

Amara Raja Batteries Automobiles

Exhibit 1: Stock discounts 12% CAGR in revenues over the next 15 years and 5% perpetual growth after FY2030Reverse DCF valuation exercise for Amara Raja Batteries, March fiscal year-ends (`mn)

20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 28 20 29 20 30

Net sales 34,367 40,797 47,494 54,144 60,641 67,918 76,068 188,343 210,944 236,257

EBIT 4,958 5,669 6,808 7,885 8,490 9,509 10,650 26,368 29,532 31,895

EBIT (1-tax) 3,421 3,912 4,698 5,441 5,858 6,561 7,348 18,194 20,377 22,007EBIT margin (%) 14.4 13.9 14.3 14.6 14.0 14.0 14.0 14.0 14.0 13.5

Depreciation (646) (1,196) (1,471) (1,596) (1,663) (1,863) (2,086) (5,166) (5,786) (6,480)

Gross block 9,955 13,955 15,455 16,455 17,326 19,405 21,734 53,812 60,270 67,502

Fixed asset turnover 3.5 2.9 3.1 3.3 3.5 3.5 3.5 3.5 3.5 3.5

Capex (4,000) (1,500) (1,000) (871) (2,079) (2,329) (5,766) (6,457) (7,232)

Working capital 4,124 4,896 5,699 6,497 7,277 8,150 9,128 22,601 25,313 28,351

Change in working capital (772) (804) (798) (780) (873) (978) (2,422) (2,712) (3,038)

FCF 336 3,865 5,239 5,870 5,471 6,128 15,173 16,993 18,218

WACC 12.0

Discounting year 0 1 3 4 5 13 14 15

Discounted FCF 336 3,865 4,677 4,179 3,477 3,477 3,477 3,477 3,328

Sum of cash flows 54,298

Terminal value 49,924

Enterprise value 104,222

Net cash 4,473

Equity value 108,695Share count 171

Eq uit y va lue pe r s h a re 6 36

Source: Kotak Institutional Equities estimates

Exhibit 2: We expect 15% CAGR in replacement four-wheeler battery volumes over FY2015-17EVolume breakdown segment-wise, March fiscal year-ends, 2011-2017E (units)

20 11 20 12 20 13 20 14 20 15 E 20 16 E 20 17E

Vo lume so ld (mn un i t s )

Four-wheeler OEM 1.29 1.52 1.55 1.52 1.56 1.80 2.07Yoy chg (%) 50.0 17.8 2.0 (2.0) 3.0 15.0 15.0

Four-wheeler replacement 1.70 2.00 2.66 3.06 3.52 4.12 4.71

Yoy chg (%) 21.4 17.6 33.0 15.0 15.0 17.0 14.5

T o ta l f o ur -w h e e le r vo lume s 2.9 9 3 .52 4.21 4 .58 5 . 0 8 5 . 9 2 6 .78

Yoy chg (%) 32.3 17.7 19.6 8.7 11.0 16.4 14.7

Re pla ce me n t /O E M (X ) 1.32 1.32 1.72 2 .01 2.25 2.29 2.28

Two-wheeler O EM 0.90 2.20 2.60 3.15

Two-wheeler replacement 1.80 2.00 2.74 3.56 4.63 5.56 6.39

Yoy chg (%) 28.6 11.1 37.0 30.0 30.0 20.0 15.0

T o ta l two -w h e e le r vo lume s 1.8 0 2 .00 2.74 4.46 6 . 8 3 8 .16 9 . 5 4

Yoy chg (%) 28.6 11.1 37.0 62.8 53.1 19.4 17.0

T o ta l a uto mo t ive vo lume s 4.79 5 . 5 2 6 . 9 5 9 . 0 4 11.91 14.07 16.32

Revenue b rea k -up (Rs mn)

Four-wheeler OEM 2,899 3,689 4,064 4,182 4,383 5,128 6,001Four-wheeler replacement 6,002 7,273 10,447 13,215 15,197 17,781 20,359

T o ta l f o ur -w h e e le r 8 ,9 0 1 1 0 , 9 6 2 14,511 17,397 1 9 , 5 8 0 22 ,909 26 ,360

Two-wheeler O EM 549 1,365 1,641 2,023

Two-wheeler replacement 1,480 1,809 2,677 3,653 4,749 5,699 6,554

T o ta l two -w h e e le r 1,48 0 1 , 8 0 9 2,677 4,202 6,114 7,341 8 , 5 7 8

Automotive 10,381 12,771 17,187 21,599 25,695 30,250 34,938



4/31

Automobiles Amara Raja Batteries

Exhibit 3: We expect revenues to grow at 16% CAGR over the next three yearsRevenue breakdown for Amara Raja Batteries by segment, March fiscal year-ends, 2011-17E (` mn)

20 11 20 12 20 13 20 14 20 15 E 20 16 E 20 17E

Revenue ( Rs mn)

Four-wheeler OEM 2,899 3,689 4,064 4,182 4,383 5,128 6,001

Four-wheeler replacement 6,002 7,273 10,447 13,215 15,197 17,781 20,359Two-wheeler O EM 549 1,365 1,641 2,023

Two-wheeler replacement 1,480 1,809 2,677 3,653 4,749 5,699 6,554

Automotive 10,381 12,771 17,187 21,599 25,695 30,250 34,938

Telecom 3,853 4,600 5,520 6,900 8,763 10,077 11,287

UPS 5,085 6,000 6,404 6,035 6,940 7,981 8,939

Railways and othe rs 1,343 1,726 1,899 1,994 2,233 2,568 2,876

Trade auto batteries 17 535 856 800 840 966 1,111

Trade home UPS 48 346 1,092 714 749 824 907

Service and scrap revenue 38 50 152 330 364 400 440

T o ta l r e ve n ue s 20 ,76 5 26 ,029 33,110 38,372 4 5 , 5 8 3 5 3 , 0 6 6 6 0 , 4 9 6

Reven ue mix (%)

Four-wheeler OEM 14 14 12 11 10 10 10

Four-wheeler replacement 29 28 32 34 33 34 34

Two-wheeler O EM

1 3 3 3Two-wheeler replacement 7 7 8 10 10 11 11

Auto mo t ive 5 0 49 5 2 5 6 5 6 5 7 5 8

Telecom 19 18 17 18 19 19 19

UPS 24 23 19 16 15 15 15

Railways and others 6 7 6 5 5 5 5

Trade auto batteries 0 2 3 2 2 2 2

Trade home UPS 0 1 3 2 2 2 1

Service and scrap 0 0 0 1 1 1 1

T o ta l r e ve n ue s 10 0 10 0 10 0 10 0 10 0 10 0 10 0



5/31

Amara Raja Batteries Automobiles

Exhibit 4: We expect earnings to grow at a healthy ~18% CAGR during FY2015-17E, driven by 15% CAGR in net salesAmara Raja Batteries profit and loss, balance sheet and cash flow statement, March fiscal year-ends, 2011-17E (` mn)

20 11 20 12 20 13 20 14 20 15 E 20 16 E 20 17E

P r o f i t m o d e l ( R s m n )

Net sales 17,611 23,645 29,614 34,367 40,797 47,494 54,144

E BIT D A 2,5 46 3,396 4,515 5 , 6 0 3 6 , 8 6 5 8,278 9 , 4 8 0

Other income 96 280 466 455 372 59 0 875

Interest (15) (24) (10) (7)

Depreciation (417) (465) (661) (646) (1,196) (1,471) (1,596)

P r o f it b e f o re t a x 2,210 3,186 4,310 5 , 4 0 6 6 , 0 4 1 7,397 8 , 7 6 0

Tax expense (729) (1,036) (1,351) (1,692) (1,867) (2,286) (2,707)

Ad jus te d n e t pro f it 1,48 1 2 ,151 2 , 8 6 7 3,674 4,174 5,112 6 , 0 5 3

E a rn in g s pe r s h a re (Rs ) 8 .7 12.6 16 .8 21.5 24.4 29 .9 35 .4

B a la n c e s h e e t ( R s m n )

Equity 6,459 8,235 10,598 13,627 16,824 20,740 25,377

Total borrowings 1,000 85 5 88 1 85 7 84 84 84

Deferred tax liability 205 220 195 301 301 301 301

Current liabilities 3,495 4,206 6,030 6,609 7,876 8,793 9,766

T o ta l lia b ilit ie s 11,15 9 13,515 17,705 21,394 2 5 , 0 8 6 2 9 , 9 1 8 3 5 , 5 2 8

Net fixed assets 3,526 3,861 4,618 7,679 10,483 10,513 9,917

Investments 161 161 161 161 1,161 4,161 7,161

Cash 451 2,292 4,108 2,946 60 4 396 1,461Other current assets 7,021 7,202 8,818 10,609 12,839 14,849 16,989

T o ta l a s s e t s 11,15 9 13,515 17,705 21,394 2 5 , 0 8 6 2 9 , 9 1 8 3 5 , 5 2 8

F r e e c a s h f l o w ( R s m n )

O per atin g cash flo w excl. wo rk in g ca p. ch an ges 1,9 99 2,865 3,448 4,103 4,998 5,992 6,774

Working capital changes (1,138) 120 (94) (1,315) (962) (1,094) (1,167)

Capital expenditure (667) (809) (1,463) (3,731) (4,000) (1,500) (1,000)

Fr e e ca s h f lo w 19 5 2,176 1 , 8 9 2 (943 ) 36 3,399 4 , 6 0 7

Rat ios

EBITDA margin (%) 14.5 14.4 15.2 16.3 16.8 17.4 17.5

PAT margin (%) 8.4 9.1 9.7 10.7 10.2 10.8 11.2

Net debt/equity (X) 0.1 (0.2) (0.3) (0.2) (0.0) (0.0) (0.1)

Book value (Rs/share) 37.8 48.2 62.0 79.8 98.5 121.4 148.6

RoAE (%) 24.9 29.3 30.4 30.3 27.4 27.2 26.3

Ro ACE (%) 21.9 26 .5 28 .8 28 .6 26 .4 27.0 26 .2



6/31

Planned TN power cuts for industries and coal block de-allocation positive for powergen

The Tamil Nadu Generation and Distribution Corporation has announced power cuts for high-

tension industrial and commercial power users for late peak hours and non-peak hours. This is a

2H phenomenon (wind power supply tapers) though becomes relevant for genset companies

due to weak base (power cuts for industries moderated through FY2014). We assume a 2 GW

deficit impact, of which 25% may get captured by genset companies. This yields 5% growthkicker for Cummins powergen sales for FY2015 (~1.5% impact on overall sales).

De-allocation of coal-blocks will have a delayed impact on power supply as these would

continue to operate for the next six months. Subsequent handover to Coal India or reallocation

may disrupt power supply in FY2016. A complete disruption will reduce coal supply for power

generation by 15-20 mn tons, affecting 4 GW of power. We assume 25% of this opportunity

to get captured by genset companies and build in an additional 10% growth kicker in FY2016.

Dealer feedback: demand for standby power remains weak, especially for Cummins

Our discussion with one of the key dealers for Cummins (for West and South India) brings out

focus of Cummins on improving its competitive positioning (longer warranty, better CPCB II-

compliant product). This may hinder growth for Cummins powergen segment in the near term(pricing better for competition), though would eventually help the company garner higher

market share. Near-term outlook for demand for standby power remains weak.

CAT dealer statistics: recovery in core high hp exports for Cummins may not sustain

Caterpillars global dealer sales for electric power (in constant US$ terms) have declined in double

digits in July and August. This hints that the sequential recovery in HHP exports for Cummins in

1QFY15 may not sustain. Low hp exports have more than doubled yoy in 1QFY15, but can only

contribute as much of positive surprise (~30% of sales) over our estimates (35% CAGR).

We build in strong recovery in scale-up of new businesses; retain REDUCE

We revise estimates by 2-5% to`27.5,`31.8 and`39.9 from`27.0,`30.5 and`37.8 forFY2015E-17E on higher estimates for domestic powergen sales growth margin (30-70 bps

increase on correcting commodity prices). We revise TP to`640 from`610.

Cummins India (KKC)Industrials

Pricing in transient kicker of shortage-led demand.The recent announcements ofplanned power cuts for industries in Tamil Nadu and the coal-block de-allocation will

benefit the powergen business for Cummins India in FY2015-16. The impact will bemuted for Cummins overall revenues apart from being transient. Dealer feedback fordomestic standby power demand though remains sedate, especially for Cummins.

Recovery in high hp exports for Cummins may also not sustain, as suggested by weak

Caterpillar global dealer sales. Revise TP to`640 (from`610); retain REDUCE.

REDUCE

SEPTEMBER 25, 2014

UPDATE

Coverage view: Neutra

Price (`): 680

Target price (`): 640

BSE-30: 26,745

Cummins India

Stock data Forecasts/Valuations 2014 2015E 2016E

52-week range (Rs) (high,low) EPS (Rs) 21.3 27.5 31.8

Market Cap. (Rs bn) EPS growth (%) (23.6) 28.9 15.7

Shareholding pattern (%) P/E (X) 31.9 24.7 21.4

Promoters 51.0 Sales (Rs bn) 39.8 47.8 59.4

FIIs 18.0 Net profits (Rs bn) 5.9 7.6 8.8

MFs 10.6 EBITDA (Rs bn) 7.0 8.7 11.5

Price performance (%) 1M 3M 12M EV/EBITDA (X) 26.5 21.3 16.2

Absolute 0.3 4.7 68.6 ROE (%) 23.9 27.9 28.5

Rel. to BSE-30 (0.9) (0.7) 25.6 Div. Yield (%) 1.5 1.9 2.1

Company d ata an d va luat ion summary

720-388

188.4


7/31

Cummins India Industrials

TN power cuts for industries and coal block de-allocation positive for powergen

We highlight the impending industry-focused power cuts in Tamil Nadu from October, as

announced by the state electricity authority (a 20% cut during non-peak hours and 10% of

supply available during peak hours of 6 pm to 10 pm). We note that power cuts to

industries in the South had moderated significantly over FY2014. Likely stiff power cuts in

2H can thus lead to better growth for powergen companies. We note that the wind powertapers off in 2H, leading to the power shortage and the situation will self-correct starting

May.

We put below the trend in scheduled power cuts in the South, which shows the periodicity

in power cuts for South India as well as the weak base of last year (beneficial for Cummins

in 2HFY15).

Exhibit 1: Power cuts had declined substantially in FY2014, making case for growth in 2H as power cuts returnDetails of power cuts (notified and load-shedding) on industries over Apr-2005 to Aug-2014 (MW)

6.5

7.6

10.3

12.4

13.3

12.8

6.7

8.1

0.1

0

2

4

6

8

10

12

14

Apr-05

Apr-07

Apr-09

Apr-11

Jan-11

Au

g-11

O

ct-11

Dec-11

Feb-12

Apr-12

Ju

n-12

Au

g-12

O

ct-12

Feb-13

Apr-13

Ju

n-13

Au

g-13

O

ct-13

Dec-13

Feb-14

Apr-14

Ju

n-14

Au

g-14

(GW)

South

Total

North

Source: CEA, Kotak Institutional Equities

The recent announcement of the Supreme Court on de-allocation of all private sector coal

blocks will also have a bearing on the power situation for the country. We account for the

impact of this development in the note below.

Modest impact for Cummins overall sales

Tamil Nadu power cuts. Based on past history of such shortages in the southern region,

we believe that this can yield an additional power deficit of 2 GW. Assuming 25% of this

demand buys gensets (many would already have, some wil l go for rented gensets), there

may be sales of about 500 MW. This translates into a`1.5 bn opportunity for related

engines and a`0.5 bn opportunity for Cummins. We build in this opportunity for

Cummins (assume 25% revenue growth for FY2015 versus 20% earlier). Overall impact

on Cummins Indias business will be lower at ~1-2% of sales for FY2015.

Coal block de-allocation. De-allocation of coal blocks will take away another 20 mn

tons of coal production or lead to a transient shortfall of about 4 GW. This will start

affecting power supply in FY2016 as the coal blocks that have been de-allocated can

produce for another six months. In FY2016, these blocks will either get reallocated or

given to Coal India. In both the cases, there can be a delay of 6-12 months before

resumption of normal supply. We factor in this benefit for Cummins by building in higher20% revenue growth in FY2016 as well. This will improve sales of Cummins India by 2-

3% in FY2016.


8/31

Industrials Cummins India

Shortage-led demand is mostly out of Cumminss powergen sales

We believe that shortage-led demand has been broadly taken out in FY2012 and FY2014

and that growth from here should follow the pace of capacity additions. There is an upside

risk from shortage-led demand returning on the back of specific bottlenecks as seen in the

recent past.

Cummins management has cited in the past that standby powergen sales should equate to

50% of capacity additions on a steady-state basis. The current share of powergen sales is

close to 65% of thermal capacity additions, implying an adjusted share of close to 50%

(assuming additions beyond thermal and 10% replacement demand).

Exhibit 2: Contribution from shortage-led demand has corrected significantly over the past 2-3 yearsPowergen market as a proportion of total capacity additions in the market, March fiscal year-ends, 2006-14

20 0 6 20 0 7 20 0 8 20 0 9 20 10 20 11 20 12 20 13 20 14

Cummins India powergen sales (Rs mn) 5,813 8,138 10,265 10,022 10,423 13,446 12,532 15,790 10,942

Engine pricing (Rs mn/MW) 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.8 2.9

Impllied Cummins sales (GW) 3.0 4.0 4.8 4.4 4.4 5.4 4.8 5.7 3.8

Impllied market sales (GW) 8.9 11.9 14.3 13.3 13.1 16.1 14.3 17.2 11.3

Annul power capacity addition (GW 2.0 4.5 7.0 3.5 9.6 12.2 20.5 20.6 17.8

P o w e rg e n d e ma n d a s s h a re o f t o ta l ca pa c it y a d d it io n s (%) 445 26 4 20 4 38 4 137 133 70 8 3 6 4

Notes:(a) We assume 5% growth in realization/MW for power gensets with base of Rs2.5 mn/MW in FY2011. (b) We assume static 33% market share of Cummins in powergen market.

Source: CEA, Company, Kotak Institutional Equities estimates

Recovery in core high hp exports may not sustain

Based on Caterpillars dealer statistics, global electric power sales (in constant US$ terms)

have declined further in July 2014 (down 16% yoy) and August 2014 (down 13% yoy). This

hints that the sequential recovery in HHP exports for Cummins in 1QFY15 may not sustain.

Exhibit 3: Sharp double-digit decline over past four monthsYoy growth for CAT Global's electric power dealer sales (%)

(21) (17) (15)

(40)

(20)

0

20

40

60

80

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

(%) 2013 2012 2011 2010 2014

Source: Company, Kotak Institutional Equities

Low hp exports had more than doubled yoy in 1QFY15, but can only contribute as much of

positive surprise (currently ~30% of sales) over our estimates (35% CAGR over FY2014-17E).

CAT dealer statistics


9/31


Exhibit 4: Low hp exports have doubled yoy though still account for 30% of export salesExports break-up for Cummins India, March fiscal year-ends (`mn)

LHP, 522

Mid range,296

Heavy duty,357

HHP, 1,429

Spares, 156

Export sales breakup in 1QFY14 (Rs2,800 mn)

LHP, 1,190

Mid range,460

Heavyduty, 400

HHP, 1,720

Spares, 120

Export sales breakup in 1QFY15 (Rs3,900 mn)


Strengthening competitive positioning further; no recovery visible in demand

Our discussion with one of the key dealers for Cummins (for West and South India) brings

out focus of Cummins on improving its competitive positioning (longer warranty, better

CPCB II-compliant product). This may hinder growth for Cummins powergen segment in

the near term (pricing better for competition), though would eventually help the company

garner higher market share. The sector as a whole though would not be able to grow at a

strong pace as power capacity additions would keep shortage-led demand in check (as seen

in recent months where power demand has grown in double digits with deficit maintained

at sub-4% levels). Entry of Perkins (now expected in Oct 2014) would also contain business

outperformance for Cummins.

CPCB-II Cummins focused on the long term, unlike competition. Cummins India

has taken a large price increase and has introduced electronic engines to comply with

CPCB-II norms (sets base for compliance with next set of emission norms revision also).

The competition has gone for a cheaper option in electronic gas recirculation (EGR). This

may benefit in the short term in terms of better pricing, though would reduce engine life

of their gensets. For its new engines, Cummins has increased warranty to five years from

two years. Cummins has been able to get compliance approval for its key 100 and 125

kVA products in August while some of its competitors still having not got approval fortheir 500 kVA products.

Near-term demand outlook remains weak. On the back of transition issues related to

CPCB-II, there were dealer stock-outs in July, which have incrementally got corrected. The

company has taken higher price increase versus competition for its CPCB II-compliant

engines (provide a better product) and thus may see business go to competition in the

short term. There is limited potential for support from government spending as it

grapples with the situation of droughts announced in certain states. Private sector

sentiment though has changed for the positive post May 2014 and its expected to lead

to demand growth from November-December.

Powergen dealer

feedback


10/31

Industrials Cummins India

Low hp segment premium pricing in price-sensitive segment to limit share gains.

The dealer has recently been given the distributorship of Cummins sub-7.5kVA products.

For the entire LHP segment, Cummins has maintained its premium pricing and thus may

not be able to make strong market share gains in this price-sensitive segment. The dealer

shared the information of having done 5,000-6,000 genset sales in the segment in

FY2014, similar to FY2010 levels.

Distribution business getting impacted by lower usage. The dealer cited potential for

service income to remain weak as the power situation in its territory improves. The dealer

specifically pointed out Maharashtra, where there has been significant decline in usage of

generator sets. We note that the impact of this on Cumminss distribution segment sales

would be limited to the extent of share of power generation (distribution segment sales

get dominated by mining and construction sales).

Perkins entry gets delayed till Oct 2014. Perkins has further delayed the

commissioning of its Aurangabad facility to October 2014 from June 2014 (we note

more-than-a-year delay from original commissioning timeline of June 2013). The

company plans to produce 3,000 units of its 4,000 series engines (23 liter to 61 literengines), eventually ramping up to 5,000 units. At present, Cummins capacity in the

high hp capacity may be in the range of 12,000-15,000 units.

We build strong recovery in scale-up of new businesses; retain REDUCE

We revise estimates by 2-5% to`27.5,`31.8,`39.9 from`27.0,`30.5,`37.8 for FY2015E-

17E on higher estimates for domestic powergen sales growth (5% revision each in FY2015

and FY2016) and margin (30-70 bps increase). We revise TP to`640 from`610.

Exhibit 5: Key estimates for Cummins India, March fiscal year-ends, 2014-17E (`mn)

20 14 20 15 E 20 16 E 20 17E 20 15 E 20 16 E 20 17E 20 15 E 20 16 E 20 17E

Re ve n ue s 39 ,76 7 47,76 4 5 9 ,40 5 73,38 7 47,217 5 8 ,0 9 2 71,8 77 1.2 2.3 2.1

Power generation 10,942 13,678 16,413 18,875 13,130 15,100 17,365 4.2 8.7 8.7

Industrials 5,200 5,460 6,825 8,531 5,460 6,825 8,531 0.0 0.0 0.0

Auto 1,170 1,346 1,615 1,938 1,346 1,615 1,938 0.0 0.0 0.0

Distribution 9,300 10,229 11,764 13,528 10,229 11,764 13,528 0.0 0.0 0.0

Exports 11,979 16,171 21,831 29,472 16,171 21,831 29,472 0.0 0.0 0.0

EBITDA 6,968 8,685 11,457 14,404 8,454 10,906 13,592 2.7 5.1 6.0

E BIT D A ma rg in (%) 17.5 18 .2 19 .3 19 .6 17.9 18 .8 18 .9 (+ 30 b ps ) (+ 5 0 b ps ) (+ 70 b ps )

PAT 6,000 7,426 8,564 10,733 7,290 8,215 10,155 1.9 4.2 5.7

Contribution from JVS (92) 192 248 315 192 248 315 0.0 0.0 0.0

Adjusted PAT 5,908 7,618 8,811 11,048 7,482 8,463 10,470 1.8 4.1 5.5

E P S (Rs ) 21.3 27.5 31.8 39 .9 27.0 30 .5 37.8 1.8 4.1 5 .5

G rowth (% )

Revenues 20.1 24.4 23.5 18.7 23.0 23.7Power generation 25.0 20.0 15.0 20.0 15.0 15.0

Industrials 5.0 25.0 25.0 5.0 25.0 25.0

Auto 15.0 20.0 20.0 15.0 20.0 20.0

Distribution 10.0 15.0 15.0 10.0 15.0 15.0

Exports 35.0 35.0 35.0 35.0 35.0 35.0

EBITDA 24.6 31.9 25.7 21.3 29.0 24.6

PAT 28.9 15.7 25.4 26.6 13.1 23.7

N e w e s t ima te s O ld e s t ima te s % re v is io n

Source: Company, Kotak Institutional Equities estimates


11/31


Exhibit 6: Standalone balance sheet, profit model and cash flow statement of Cummins, March fiscal year-ends, 2010-17E (Rs mn)

20 10 20 11 20 12 20 13 20 14 20 15 E 20 16 E 20 17E

B a l a n c e s h e e t

S h a r e h o ld e r s f un d s 15 ,6 10 1 8 , 0 6 3 20,432 2 3 , 8 6 7 2 5 , 6 5 2 2 8 , 9 8 0 32,819 37,629

Loan funds 86 198 147 150

200

T o t a l s o ur ce o f f un d s 15 ,6 9 6 1 8 , 2 6 1 2 0 , 5 7 9 24,345 26,117 2 8 , 9 8 0 33,019 37,629

Net block 3,337 3,564 4,649 4,934 9,192 12,608 16,068 17,443

N e t f ixe d a s s e t s 3,337 4,210 5,146 6,142 10,149 13,358 16,318 1 7 , 6 9 3

Investments and goodwill 7,329 7,255 5,975 6,276 4,954 5,267 5,267 5,267

Cash balances 559 1,037 2,235 3,547 86 5 60 6 144 1,716

N e t cur re n t a s s e t s e xc lud in g ca s h 4,30 1 5 , 5 7 1 7,153 8 , 3 8 1 10,149 9,748 11,289 1 2 , 9 5 4

T o t a l a pplica t io n o f fun d s 15 ,6 9 6 1 8 , 2 6 1 2 0 , 5 7 9 24,345 26,117 2 8 , 9 8 0 33,019 37,629

P r o f i t m o d e l

T o t a l o pe r a t in g in co me 29 ,0 27 40,425 41,172 4 6 , 0 1 2 3 9 , 7 6 7 47,764 5 9 , 4 0 5 73,387

Total operating costs (23,175) (32,791) (34,200) (37,545) (32,799) (39,079) (47,947) (58,983)

E BIT D A 5 ,8 5 2 7,634 6 , 9 7 2 8 , 4 6 7 6 , 9 6 8 8 , 6 8 5 11,457 14,404

Other operational income 578 914 65 1 922 776 88 0 95 7 1,043

Other income 638 80 4 1,233 1,949 1,777 2,141 1,325 1,436

P BD IT 6 ,48 9 8,438 8 , 2 0 6 10,416 8,745 1 0 , 8 2 6 12,782 1 5 , 8 4 0

Financial charges (21) (48) (54) (46) (42) (11) (11)

Depreciation (361) (366) (420) (473) (528) (791) (1,040) (1,126)Pre-tax profit 6,108 8,024 7,732 9,897 8,175 10,035 11,731 14,703

Taxation (1,670) (2,114) (2,282) (2,872) (2,175) (2,609) (3,167) (3,970)

PAT 4 ,437 5 , 9 1 0 5 , 4 5 0 7,025 6 , 0 0 0 7,426 8 , 5 6 4 10,733

Ad jus t e d P AT 4,49 7 6 , 1 6 6 6,111 7,732 5 , 9 0 8 7,618 8 , 8 1 1 11,048

C a s h f l o w s t a t e m e n t

O pe ra tin g pr ofit b ef or e w or kin g ca pita l ch an ge s 4,8 19 6,324 5,924 7,544 6,570 8,217 9,615 11,870

Ch an ge in wo rkin g capital / o th er ad jus tmen ts 2,238 (1,270) (1,582) (1,229) (1,768) 401 (1,541) (1,665)

Ca s h f lo w f ro m o pe r a t in g a c t iv it e s 7,0 5 6 5 , 0 5 4 4,342 6,315 4 , 8 0 2 8 , 6 1 8 8 , 0 7 4 1 0 , 2 0 5

Fixed assets (607) (1,240) (1,355) (1,469) (4,534) (4,000) (4,000) (2,500)

Investments (3,337) 75 1,279 (300) 1,322 (314)

C as h ( us e d ) / re a lis e d in in v e s tin g a c t iv it ie s ( 3, 9 44 ) ( 1 , 1 6 6 ) ( 7 6 ) ( 1 , 7 6 9 ) (3,212) (4,314) ( 4 , 0 0 0 ) ( 2 , 5 0 0 )

Borrowings (82) 94 67 401 (13) (465) 200 (200)

Dividend paid (2,775) (3,457) (3,544) (4,205) (3,311) (4,098) (4,725) (5,922)

C as h (u s e d ) / re a lis e d in f in a n c in g a c tiv it ie s ( 2, 8 76 ) (3,411) (3 ,531 ) ( 3 , 8 5 1 ) (4,271) ( 4 , 5 6 3 ) ( 4 , 5 3 6 ) (6 ,133 )

Cash generated /utilised 236 478 1,197 1,311 (2,681) (259) (462) 1,572

Cash at beginning of year 323 55 9 1,037 2,235 3,547 86 5 60 6 144Ca s h a t e n d o f ye a r 5 5 9 1,037 2,235 3,546 8 6 5 6 0 6 144 1,716

K e y r a t i o s ( % )

EBITDA margin 22.4 20.9 19.9 22.6 22.0 22.7 21.5 21.6

PAT margin 15.3 14.6 13.2 15.3 15.1 15.5 14.4 14.6

RoE 30.0 35.1 30.7 34.5 24.2 27.2 27.7 30.5

RoCE 26.1 27.7 22.5 28.5 19.9 27.2 26.7 29.6

Net debt / equity (X) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

E P S (Rs ) 16 .2 22.2 22.0 27.9 21.3 27.5 31.8 39 .9



12/31

Government defers decision on gas price hike until mid-November

The government has deferred a decision on raising domestic gas price until November 15,

2014. We note that the Committee of Secretaries (comprising senior bureaucrats from the

power, fertilizer, expenditure and petroleum and natural gas ministries) formed to review thegas pricing formula had already submitted its recommendation on a new mechanism for pricing

of domestic natural gas. Unauthenticated media articles suggest that the committee

recommended an increase in price to around US$6/mn BTU instead of ~US$8/mn BTU as per

the earlier Rangarajan Committee formula. Nevertheless, the CCEA has held back the final

decision until mid-November presumably due to sociopolitical considerations (impending state

elections) or a lack of consensus among the producing and consuming sectors (power and

fertilizer).

Higher gas (and oil) price is essential to incentivize indigenous production

In our view, low natural gas (and crude oil) prices will prevent any meaningful reinvestment in

existing fields and investments in new discovered fields and unexplored regions, which isnecessary to sustain and grow domestic production. Higher natural gas (and crude oil) prices

are essential to sustain the extant production of the upstream companies given (1) rising

operating costs and (2) significant reinvestment in mature fields to simply sustain production;

Exhibit 1 shows that the blended cost of oil and gas production for ONGCs domestic fields has

increased over the past few years while Exhibit 2 shows that domestic capex of ONGC has

increased over the years despite relatively steady production over the same period. In any case,

we believe a comprehensive market-based pricing regime for all forms of energy is ultimately

required to (1) remove inefficiencies in the energy chain, (2) rationalize domestic consumption

and (3) incentivize indigenous production. A market-based pricing regime will adequately

incentivize domestic producers, while taking care of the interests of consumers; a consumer will

end up paying higher prices for energy imports if indigenous production continues to lag

domestic demand as has been the case historically. This situation will continue in the future too.

Clarity on several policies is desirable to enhance energy security in the long term

The government may want to provide clarity on several aspects of the policy framework of the

Indian oil and gas sector(1) pricing mechanism for domestic natural gas, (2) pricing of crude

oil from nominated blocks of ONGC and OIL, (3) royalty calculation for onshore crude oil

production, (4) formal deregulation of diesel prices and further reforms for curtailing subsidies

on LPG/kerosene, (5) policy for extension of PSCs and (6) a framework for new PSCs for NELP X

round. In our view, the government can and should quickly fix these issues over the next few

months in order to focus on the more important aspect of increasing domestic energy

production and enhancing Indias energy security. We believe (1) enhancement of domestic

energy security and (2) acquisition of global energy assets should be the central objectives ofIndias energy policy given Indias deteriorating energy situation (see Exhibit 3).

EnergyIndia

Another delay, hopefully the last one.The government has deferred a decision onrationalization of domestic gas prices until November 15, 2014. In our view, the

government needs to quickly fix the pricing policies for oil and gas as part of a broaderobjective of enhancing Indias energy security. Non-remunerative pricing and policyuncertainties have led to sluggish domestic production, resulting in rising energy deficit

and imports. Indias current energy policies that constrain domestic production and

inadvertently encourage energy imports at global prices should be reviewed.

NEUTR L

SEPTEMBER 25, 2014

UPDATE

BSE-30: 26,745


13/31

Energy India

Exhibit 1: ONGC's cost of production has increased over a period of timeBreakdown of ONGC's costs, March fiscal year-ends, 2000-14 (U$/boe)

-

5

10

15

20

25

30

35

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Lifting costs SG&A Taxes DD&A One-off items(US$/boe)


Exhibit 2: ONGC's standalone capex has increased substantially despite steady production levelsStandalone capex and domestic production of ONGC, March fiscal year-ends, 2000-14 (`bn, mn boe)

-

50

100

150

200

250

300

350

400

-

50

100

150

200

250

300

350

400

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Standalone capex [LHS] Domestic production [RHS](Rs bn) (mn boe)



14/31

India Energy

Exhibit 3: India's dependence on energy imports is expected to double by 2020Energy deficit, March fiscal year-ends, 2010-20E (mtoe)

20 10 20 11 20 12 20 13 20 14 20 15 E 20 16 E 20 17E 20 18 E 20 19 E 20 20 E

E n e r g y d e m a n d

Coal (mn tons) 581 625 69 6 749 818 88 7 95 6 1,029 1,112 1,204 1,304

Natural gas (bcm) 59 65 65 59 54 57 61 68 78 85 89

Petroleum products (mn ton s) 138 142 148 155 158 163 168 175 185 193 200

E lect ric ity (hydro+nuc lear ) (bn kWh) 126 140 163 147 150 159 169 185 199 209 224

T o ta l d e ma n d (mto e ) 49 1 5 22 5 6 4 5 9 1 6 22 6 6 4 70 7 75 7 8 18 8 77 9 38

Ene rgy supp ly

Coal (mn tons) 515 523 536 571 59 4 615 649 680 707 736 766

Natural gas (bcm) 47 52 47 40 35 36 38 41 44 49 50

Crude oil (mn tons) 34 38 38 38 38 38 38 39 39 39 38

E lect ric ity (hydro+nuc lear ) (bn kWh) 126 140 163 147 150 159 169 185 199 209 224

T o ta l s upply (mto e ) 331 34 4 34 9 35 8 36 5 37 6 39 5 41 4 43 1 45 0 46 6

T ota l e n erg y s ho rt fa ll (mto e) 16 0 17 7 21 6 233 25 8 28 9 31 3 34 3 38 7 427 472

Notes:

(a) We assume that natural gas demand will be con strained by supply. We do not assume any incremental demand for gas from the power sector.



15/31

SC recommends de-allocation for all; allows six months relief to adjust to new normal

The Supreme Court has recommended de-allocation of 214 coal blocks, exempting only four

coal blocks allotted to Ultra Mega Power Projects (UMPP) and to state-owned companies such

as NTPC (Pakhri Barwadih) and SAIL (Tasra). As interim relief, the court allowed six months timefor the de-allocation to become effective, by which time the government should be in a position

to transition operations of producing coal blocks to Coal India and eventually look at auctioning

the coal blocks in a transparent bid process. The court also recommended payment of`295/ton

as penalty for the cumulative quantum of coal produced from the blocks. We highlight that the

SC order only deals with cancellation of coal blocks and handover of operational mines to Coal

India from April 1, 2015.

Impact assessmentone-time penalty, interim sourcing and sustainable rise in cost

The impacts for companies come from (1) immediate one-time payment of penalty for

cumulative coal extracted, which could fetch the government`78 bn for 265 mn tons mined,

(2) interim sourcing of coal at an incremental cost from Coal India, based on the notified priceor e-auctionthis would be applicable if the process extends beyond April 2015 and

(3) eventual outcome of the auction process that would determine the sustainable cost of coal

for continuing operations.

Auctioning will determine the cost of coal on a sustained basis

In our view, auctioning of coal blocks will likely solicit aggressive participation from a plethora

of power and steel capacities starved for coal. The floor price that would be bid may be in a

range that would make the effective cost of coal (cost of production + floor price) equivalent to

the notified price of coal (cheapest alternative after captive coal) at the lower end, with a cap

that makes the effective price of coal equivalent to that of imported coal. Alternatively, the

government, in a low-probability scenario, could seek upfront payment for the coal block that

absolves itself of responsibility of monitoring the production profiles of individual blocks.

Jindal Steel and Powerunknowns are declining but uncertainties prevail

Jindal Steel and Power, which enjoyed a higher proportion of coal allocations, has the most to

lose(1) a one-time penalty of ~`27 bn, payable for cumulative coal mined, (2) an earnings hit

in FY2016E probably due to higher cost and constrained availability until coal block auctioning

is complete, and (3) higher sustainable cost of coal, considering the floor price bid in the

auction process.

We assume companies such as JSP will have a higher propensity to bid for captive coal blocks

attached to its end-use projects than peers and accordingly business continuity will be

maintained though with inferior returns.

Metals & MiningIndia

Captive coal blocksa new chapter.The much awaited Supreme Court judgment oncaptive coal block allocations recommended de-allocation of all but four coal blocks.

The apex court also recommended payment of Rs295/ton for the cumulative coal minedso far. As a relief measure, the de-allocation will be applicable from April 1, 2015, bywhich time the government must gear up to work towards auctioning coal blocks and

allowing Coal India to assume operations until such an auction. JSP (REDUCE: TP cut to

`170 from`280) and Hindalco (REDUCE: TP cut to`165 from`180).

C UTIOUS

SEPTEMBER 25, 2014

UPDATE

BSE-30: 26,745


16/31

India Metals & Mining

Auctioning may take longer than expected, meanwhile Coal India may benefit

In our view, the process of auctioning and subsequent resumption of operations may take

time. Coal India may benefit in the interim as it takes on itself the onus of maintaining

production of operating coal blocks.

Auctionsvarious points worth consideringWhile the SC decision paves the way for the auction of coal blocks, several factors are worth

considering.

Benchmark price for auctions.As per the notified auctioning methodology,

consideration is payable through (1) 10% upfront payment based on the NPV of the coal

block and (2) production-based per ton payment on coal mined annually. The intrinsic

value, which forms the floor price, of the coal block is obtained by computing the NPV of

the block using the DCF model. This NPV is then reduced for discounts given by the

government. This NPV number is again reduced by a 10% upfront payment made to the

government. The balance NPV is then annuitized to become the`/ton number to be paid,

based on production.

For calculation of intrinsic value, the earlier regime decided to benchmark the value of

coal blocks to five-year average of global indices, Platts and Argus. These prices are

adjusted by 15% to account for inland freight costs. Media reports indicate questions are

being raised on the benchmarking to global prices as this will result in unrealistic

prices. What pricing methodology is used to arrive at intrinsic value is debatable. This

methodology eliminated the uncertainty in estimated coal reserves and actual production.

The winner in this process is one who agrees to the highest per ton payment to the

government.

A low-probability event is upfront-based auction payment for the coal block that could

also be considered, which absolves of government of responsibility of monitoring theongoing production profiles of individual blocks

Logistics will be an important consideration for auctions. Logistics costs play an

important part in the cost of coal delivered to plants. Competitive bidding would be a

function of the location of a coal block. Gare Palma coal block is close to many new

capacities that are running at sub-optimal utilization due to restricted coal availability.

Land acquisition.Land acquisition from the original leaseholders can be a challenge

given the myriad of issues involved. Changes to legislation may be required to expedite

the process.

End-use of coal blocks.Government may choose to prioritize allocation to a particular

sector. For example, in the recent failed auction for three coal blocks, the government

specified industries that would be eligible to participate.

Financial health of players.Debt/ EBITDA ratios in the industry are stretched including

for most large players. An entire upfront payment-based auction may not be preferred by

most in the industry.


17/31

Metals & Mining India

Impact on companiesnegative for JSP and Hindalco

We have computed the impact at three levels for

One-time payment for coal mined.The SC has asked companies to submit fines before

the end of CY2014. JSP has cumulatively mined about 90 mn tons of coal. The penalty

for JSP is`27 bn or`29/ share. Hindalco has mined about 17 mn tons and will have topay`5 bn or`3/share.

Higher cost for replacement of captive coal.Post March 2015, these companies can

get coal from other sources

In case the coal blocks are not auctioned and are run by Coal India, then through e-

auction or linkage as decided by the government and Coal India and

If the government auctions the coal blocks, then these players will have to bid and win

the coal blocks. We assume (1) that holders of captive coal blocks retain the block in

the auction process and (2) the auction price is paid in the form of per ton

consideration on annual coal production. We peg the incremental cost at`600/ton

(can be substantially higher) which is based on the difference between captive coal

mining cost and Coal Indias linkage price for non -power users.

Changes in our estimates

Exhibits 1 and 5 highlight changes in our JSP and Hindalco estimates. We increase power

and fuel costs to incorporate`600/ton of incremental cost for coal sourced from captive

mines and assume expansion projects to be fully reliant on e-auction and imported coal. We

also incorporate our economists revised forex rate of`60.5/61 for FY2015/16E from

Rs59.5/58. Company-wise impact will be as follows.

Jindal Steel and Power.We cut JSPs consolidated EBITDA estimate over FY2015-17 by 4-

7% led by

7-13% cut in standalone EBITDA. The decline in steel EBITDA is led by (a) increment cost

of`600/ton for coal sourced from captive mines for the Raigarh plant, and (2) higher cost

of coal for Angul steel plant for e-auction/imported coal purchases, and

3% decline in Jindal Powers EBITDA. The impact of`600/ton increase in coal costs has

been partly offset by a 6% increase in our power tariff assumption to Rs3.7/unit.

This results in cut in our JSP EPS estimate over FY2015-17 by 9-20%.

Hindalco. We cut Hindalcos consolidated EBITDA by 1-4%. The impact of higher coal costs

is partly offset by revenue gains from a lower USD-INR rate. Our standalone EBITDA declines

by 7-13% over FY2015-17E, led by (1) a`600/ton increase in coal costs on 2.2 mtpa coal of

Talabira 1, and (2) higher coal costs for Mahan and Aditya smelter from e-auction/imported

coal sourcing. Given the limited e-auction coal availability, we believe Hindalco will have to

source large quantities of imported coal, which will entail higher freight costs due to long

distance. We cut our EPS estimate for HIndalco by 7-14% for FY2015-17E.


18/31


Coal block auctioning methodology

The government notified the coal block auctioning methodology in November 2013 for fully

explored coal blocks. The competitive bidding process follows:

Production linked payment.The bids are invited for production linked payment for per

ton of coal mined. The government sets a floor price and bids are accepted above thefloor price.

Intrinsic value of the coal block.To set the floor, the intrinsic value of the coal block is

computed by net present value method using the DCF model. The net present value is

then reduced for any discounts given by the government. The net present value is further

reduced by 10% upfront payment made to the government. The balance net present

value is then annuitized based on the estimated reserves to arrive at per ton consideration

to be paid on annual coal mined.

For intrinsic value computation, the earlier regime had decided to benchmark the value of

coal blocks to five year average of global indices, Platts and Argus. These prices are

adjusted by 15% to account for inland freight costs.

Upfront payment.The bidder has to make an upfront payment of 10% of the intrinsic

value of the coal block.

Tariff based bidding.In case of tariff-based bidding for power plants, the reserves price

is limited to 10% of the intrinsic value so as to ensure lower power generation costs.

Effectively this translates to 90% discount on the floor price for power firms for tariff

based bidding.

Exhibit 1: Jindal Steel and Power (consolidated), change in estimates, March fiscal year-ends, 2015-17E (`mn)

20 15 E 20 16 E 20 17E 20 15 E 20 16 E 20 17E 20 15 E 20 16 E 20 17E

Cons o l i da t e d

Net sales 272,685 318,904 349,389 268,366 30 9,219 341,8 11 1.6 3.1 2.2

EBITDA 75,892 87,258 95,150 79,403 92,130 101,773 (4.4) (5.3) (6.5)

E P S (Rs ) 20 .3 21.3 26.4 22.4 25.8 32.9 (9 .4 ) (17.1) (19 .7)

S t a n d a l o n e b u s in e s s

Net sales 189,146 218,172 239,868 187,514 214,341 238,909 0.9 1.8 0.4

EBITDA 49,911 50,244 54,652 53,751 55,735 62,589 (7.1) (9.9) (12.7)

P r e -e xce pt io n P AT 13,6 8 9 8 ,19 9 9 , 0 0 3 15 ,6 5 7 12,378 15 ,5 6 3 (12.6) (33.8) (42.1)

J i nda l P ow e r

Net sales 32,632 47,637 53,938 31,568 45,371 51,376 3.4 5.0 5.0EBITDA 17,336 27,114 29,374 17,822 28,080 30,204 (2.7) (3.4) (2.7)

P r o f it a f t e r t a x 7,48 9 13,270 16 ,425 7,76 0 14,0 23 17,148 (3.5) (5.4) (4.2)

O l d e s t im a t e se v is e d e s t ima te s % ch a n g e



19/31


Exhibit 2: Jindal Steel and Power, Key assumptions, March fiscal year ends (2012-17E)

20 12 20 13 20 14 20 15 E 20 16 E 20 17E

T o ta l s te e l s ale s (t o ns ) 2,6 40 ,75 5 2 ,877 ,198 2,819,146 3 ,995 ,442 4 ,751 ,086 5 ,0 5 4 ,5 2 7

Iron ore pellets (tons) 2,028,330 2,112,158 1,895,306 1,942,662 2,646,665 3,744,998

Power sales (mn units) 1,473 2,280 1,836 2,335 2,313 2,223

R e v e n u e s ( R s m n )

Sponge iron 1,815 598 1,003 2,786 1,460

Pig iron 1,995 714 111 9 1

Mild and finished steel sales 103,534 123,195 123,736 170,888 197,083 214,255

Iron ore pellets 18,981 20,223 17,120 16,576 21,260 30,083

Power 5,879 8,970 6,893 8,172 8,097 7,781

Others 10,534 14,583 14,220 15,642 15,642 15,642

T o ta l 147,418 1 6 8 , 8 5 8 1 6 2 ,0 9 2 212,301 244 ,880 269 ,232

Rea l iz a t i on (R s / ton )

Sponge iron 20,899 19,532 18,057 17,391 17,935

Pig iron 21,119 25,527 24,597 24,525 24,456 25,000

Mild / finished steel 37,810 38,617 39,160 38,587 38,102 38,315

Mild / finished steel 789 710 648 638 625 628

Iron ore pellets 8,464 8,479 8,048 7,602 7,157 7,157

Power (Rs/ unit) 4.0 3.9 3.8 3.5 3.5 3.5

Re /U S r a te 47.9 54 .4 6 0 . 5 6 0 . 5 61 .0 61 .0

S t a n d a l o n e E B I T D A ( Rs m n )

Iron ore 2,120 195

Pellets 17,168 17,910 6,440 5,735 6,634 9,388

Steel business 19,834 22,316 29,498 40,207 39,908 41,707

Power 3,683 5,367 3,771 3,969 3,701 3,557

T o ta l 42,8 0 6 45 ,788 39 ,709 49 ,911 50 ,244 5 4 ,6 5 2


Exhibit 3: Jindal Steel and Power, SOTP-based valuation, March 2016E basis (`mn)

(Rs mn ) (Rs /s ha re )

Steel business + Shadeed EBITDA 60,401

Assigned multiple (X) 6

S t e e l b us in es s e n te rpr is e va lue (In clud es ca pt ive po we r ) 36 0,5 93 39 4

Less: Debt of steel business (including subsid iaries) 314,616 344

S t e e l b us in e s s e q uit y va lue (A) 45 ,9 77 5 0

P o w e r b u s i n e s s

Equity value of Tamnar I and Tamnar II 147

P o w e r b us in e s s e q uit y va lue (B) 134,0 9 7 147

Other investments 2,229 2

Less: Penalty to be paid as per SC order for coal mined (26,550) (29)

Ar r ive d ma rk e t ca pit a liza t io n (A) + (B) 15 5 ,75 4 170

T a rg e t pr ice (Rs /s h a re ) 170



20/31


Exhibit 4: Jindal Steel & Power (consolidated), profit model, balance sheet and cash flow model, March fiscal year-ends, 2012-17E (`mn)

20 12 20 13 20 14 20 15 E 20 16 E 20 17E


Net sales 182,086 198,068 200,040 272,685 318,904 349,389

E BIT D A 6 7,9 32 6 5 , 6 8 5 5 7 , 6 7 1 7 5 , 8 9 2 8 7 , 2 5 8 9 5 , 1 5 0

Other income 1,419 1,364 656 1,359 2,513 3,695

Interest (3,600) (7,582) (14,915) (23,244) (29,672) (30,544)

Depreciaiton (13,865) (15,392) (18,292) (27,978) (31,973) (34,259)

Exceptional items (5,741) (26,550)

P r o f it b e f o r e ta x 5 1,8 8 6 38,335 25,120 (521 ) 28,128 34,043

Taxes (11,863) (9,218) (6,182) (7,184) (8,148) (9,303)

N e t pr o f it 40 ,0 23 29,116 18 ,938 (7 ,705 ) 1 9 , 9 8 0 24,740

Share in profit/(loss) of associates 200 402 26 26 26 26

Minority interest (574) (417) 140 (269) (476) (590)

P ro f it a ft er t ax a n d min o r it y in t er es t 39 ,6 49 2 9 , 1 0 1 1 9 , 1 0 4 (7 ,949 ) 1 9 , 5 2 9 24,176

Ad jus t e d P AT 39 ,6 49 33,462 1 9 , 1 0 4 1 8 , 6 0 1 1 9 , 5 2 9 24,176

E a rn in g s pe r s h a r e (Rs ) 42.4 35 .8 20 .9 20 .3 21.3 26 .4


Equity 181,111 212,523 226,105 216,449 234,265 256,728

Deferred tax liability 11,920 13,365 14,727 13,199 13,514 13,993

Total Borrowings 170,908 246,182 363,682 420,189 442,245 447,160

Current liabilities 83,066 93,084 125,405 104,880 106,778 108,609

Minority interest 3,071 5,573 10,802 11,074 11,550 12,140

T o t a l lia b ilit ie s 45 0 ,0 75 570 ,726 740,721 7 6 5 , 7 9 1 8 0 8 , 3 5 3 8 3 8 , 6 3 0

Net fixed assets 301,460 385,049 522,072 535,157 543,184 548,925

Goodwill 918 1,543 5,930 5,930 5,930 5,930

Investments 3,776 8,089 3,418 3,444 3,469 3,495

Cash 1,492 2,001 10,153 28,931 53,805 69,043

Other current assets 142,430 174,045 199,148 192,329 201,964 211,237

T o t a l a s s e t s 45 0 ,0 75 570 ,726 740,721 7 6 5 , 7 9 1 8 0 8 , 3 5 3 8 3 8 , 6 3 0


O peratin g cas h flo w excl. wo rkin g capital 5 9,6 02 58,430 50,074 41,993 81,939 90,022

Working capital changes (23,398) (23,207) 12,816 (13,706) (7,737) (7,442)

Capital expenditure (64,332) (93,466) (141,525) (41,063) (40,000) (40,000)

Fr e e ca s h f lo w (28 ,128 ) (58 ,243 ) ( 7 8 , 6 3 6 ) (12,777) 34,202 42 ,580

Ra t i o s

Debt/equity 1.0 1.2 1.7 2.0 2.0 1.8

Net debt/equity 0.9 1.1 1.6 1.8 1.7 1.5

RoAE (%) 24.8 14.9 8.9 8 .6 8 .9 10.1

Ro ACE (%) 13.3 8 .5 5 .7 5 .6 6 .1 6 .7



21/31


Exhibit 5: Hindalco, change in estimates, March fiscal year ends, 2015-17E (`mn)

Re v is e d e s t ima te s O ld e s t ima te s Ch a n g e (%)

20 15 E 20 16 E 20 17E 20 15 E 20 16 E 20 17E 20 15 E 20 16 E 20 17E

H inda l co

Alumin ium meta l s ales (to ns ) 8 00 ,0 00 1,050,000 1,250,225 800,000 1,050 ,000 1,250 ,225 Alumin ium price (US$/ton) 2,350 2,350 2,400 2,350 2,350 2,400

Net revenues 333,937 375,180 401,540 331,111 361,256 386,797 0.9 3.9 3.8

EBITDA 43,189 55,468 61,897 49,724 60,335 66,644 (13.1) (8.1) (7.1)

PAT 17,124 17,303 21,871 22,624 22,535 26,041 (24.3) (23.2) (16.0)

Nove l i s

Sh ipmen ts (to ns ) (in ld g. In go ts ) 3,18 5 3,403 3,600 3,185 3,403 3,600

Net revenues 696,047 763,703 822,589 684,542 726,144 782,134 1.7 5.2 5.2

Adjusted EBITDA 63,638 70,223 77,507 62,586 66,770 73,695 1.7 5.2 5.2

Adjusted EBITDA (US$ mn) 1,052 1,151 1,271 1,052 1,151 1,271

C ons o l i da te d

Net revenues 1,065,042 1,174,107 1,259 ,35 3 1,05 0,380 1,121,629 1,203,160 1.4 4.7 4.7

EBITDA 109,281 128,356 141,837 114,740 129,688 142,703 (4.8) (1.0) (0.6)

PAT 33,651 34,341 42,078 38,907 38,661 45,104 (13.5) (11.2) (6.7)

EPS (Rs) 16.3 16.6 20.4 18.8 18.7 21.8 (13.5) (11.2) (6.7)

IN R:U S D 6 0 .5 61.0 61.0 5 9 . 5 5 8 . 0 5 8 . 0 1.7 5 .2 5 .2


Exhibit 6: Hindalco Industries, key assumptions, March fiscal-year ends, FY2012-17E (`mn)

20 12 20 13 20 14E 20 15 E 20 16 E 20 17E

H i nda l co

Alumin ium price s - all in (U S$/to n) 2,39 1 2,154 2,030 2,350 2,350 2,400

Metal sales volume (tons) 574,310 541,531 586,835 800,000 1,050,000 1,250,225

Blended realization (Rs/ton) 135,275 139,664 149,341 162,560 158,733 160,194Copper

Price (US$/ton) 8,485 7,852 7,115 7,150 7,150 7,150

Co pper cath od e vo lumes (to ns ) 18 3,5 01 165,512 179,571 179,571 179,571 179,571

Copper rods volumes (tons) 145,034 147,935 147,935 147,935 147,935 147,935

S t a n d a lo n e E BIT D A (Rs mn ) 31,0 48 22,0 37 24,919 43,189 5 5 , 4 6 8 6 1 , 8 9 7

Nove l i s

Average realization (US$/ton) 3,898 3,522 3,373 3,612 3,679 3,746

Conversion premium (US$/ton) 1,582 1,544 1,595 1,662 1,679 1,696

Shipments ('000 tons) 2,838 2,786 2,895 3,185 3,403 3,600

EBITDA/ton (US$/ton) 371 320 274 327 337 352

EBITDA (US$ mn) 893 891 793 1,041 1,147 1,266

E BIT D A - a d jus t e d (U S mn ) 1,0 5 3 9 6 1 8 8 5 1 , 0 5 2 1,151 1,271

EBITDA (Rs mn) 42,775 48,479 47,937 62,991 69,969 77,223

IN R: U S D 47.9 54 . 4 6 0 . 5 6 0 . 5 61 . 0 61.0

Source: Companies, Kotak Institutional Equities estimates


22/31


Exhibit 7: Hindalco Industries, valuation, March 2016E basis (`mn)

Multiple

(X ) (Rs mn ) (Rs /s h a r e )

Hindalco EBITDA 55,468 6.0 333,363 161

Novelis EBITDA 69,969 6.5 454,797 220ABML EBITDA (proportionate stake) 979 6.0 5,873 3

T o ta l E n te rpr is e Va lue 79 4,0 34 38 5

Add: Listed investments (20% discount to market price) 53,402 26

Less: Net debt 502,389 502,389 243

Less: Penalty to be paid as per SC order for coal mined (5,163) (3)

Ar r ive d ma rk e t capita liza t io n 339 ,8 8 5 16 5

T a rg e t pr ice (Rs ) 16 5

Value



23/31


Exhibit 8: Hindalco (consolidated), profit model, balance sheet and cash flow model, March fiscal year-ends, 2012-17E (`mn)

20 12 20 13 20 14 20 15 E 20 16 E 20 17E


Net sales 808,214 801,928 876,955 1,065,042 1,174,107 1,259,353

E BIT D A 8 1,8 9 4 7 8 , 3 6 8 8 2 , 8 6 3 1 0 9 , 2 8 1 1 2 8 , 3 5 6 141 ,837

Other income 7,831 10,122 10,172 8,169 3,709 4,384

Interest (17,580) (20,791) (27,016) (36,953) (44,176) (44,606)

Depreciation (28,696) (28,611) (35,528) (39,349) (43,500) (45,428)

P r o f it b e fo r e t a x 43,449 3 9 , 0 8 8 3 0 , 4 9 1 41,148 44 ,389 5 6 , 1 8 6

Exceptional item (3,960) (5,163)

Taxes (7,862) (8,857) (5,249) (8,736) (11,374) (15,517)

P r o f it a f t e r t a x 35 ,5 8 7 30 ,231 21 ,282 27,249 33 ,015 4 0 , 6 6 9

Minority interest (2,113) 196 (200) 558 630 700

Share in profit/(loss) of associates 496 (158) 66 8 68 2 695 709

Re po r t e d n e t in co me 33,9 6 9 3 0 , 2 6 9 21 ,750 2 8 , 4 8 9 34,341 42 ,078

Ad jus t e d n e t in co me 33,9 6 9 3 0 , 2 6 9 25 ,710 3 3 , 6 5 1 34,341 42 ,078

Fully d ilut e d E P S (Rs ) 16 .5 14.7 12.5 16 .3 16 .6 20 .4


Equity 319,113 353,302 405,992 432,003 463,867 503,467

Deferred tax liability 36,050 34,677 31,889 31,889 31,889 31,889

Total Borrowings 410,165 569,507 647,558 647,613 628,054 583,654

Current liabilities 231,604 232,461 276,713 302,241 322,778 325,029

Minority interest 17,091 17,593 17,806 17,248 16,618 15,918

T o ta l lia b ilit ie s 1,0 14,0 23 1,20 7,5 40 1,379 ,9 5 7 1,430 ,9 9 4 1,46 3,20 6 1,45 9 ,9 5 7

Net fixed assets 242,338 264,158 481,442 620,898 726,737 710,532

Capital work in progress 227,981 338,311 230,593 125,863 10,924 10,000

Goodwill 110,665 118,397 130,192 130,192 130,192 130,192

Investments 105,510 124,476 129,611 130,293 130,988 131,697

Cash 32,960 37,695 50,213 30,724 53,595 45,065

Other current assets 294,569 324,504 357,767 392,886 410,631 432,332

Deferred tax 139 139 139 139

T o ta l a s s e t s 1,0 14,0 23 1,20 7,5 40 1,379 ,9 5 7 1,430 ,9 9 4 1,46 3,20 6 1,45 9 ,9 5 7


O peratin g cas h flo w excl. wo rkin g capital 45 ,8 73 29,618 21,950 63,592 72,806 81,714

Working capital changes (9,322) (38,740) 9,623 (9,590) 2,791 (19,450)

Capital expenditure (143,641) (119,218) (94,236) (74,075) (34,400) (28,300)

F re e ca s h f lo w (10 7,0 9 0 ) (128 ,339 ) ( 6 2 , 6 6 2 ) (20 ,073 ) 41 ,198 3 3 , 9 6 4

Ra t io s

EBITDA margin (%) 10.1 9.8 9.4 10.3 10.9 11.3

EBIT margin (%) 6.6 6.2 5.4 6.6 7.2 7.7

Debt/equity (X) 1.3 1.6 1.6 1.5 1.4 1.2

Net debt/equity (X) 1.0 1.3 1.3 1.3 1.1 0.9

Net debt/EBITDA (X) 3.9 5.9 6.4 5.0 4.0 3.3

RoAE (%) 11.1 9.0 6.8 8.0 7.7 8.7

Ro ACE (%) 6 .5 4.7 4.0 5 .3 6 .2 6 .7



24/31

Accenture 4QFY14growth powered by outsourcing business

Accenture reported a solid 4QFY14 (Aug 2014 quarter) with revenue growth of 8% in c/c,

ahead of consensus estimates. The outsourcing business grew 13% yoy and powered growth.

Consulting business grew 4%. Growth was strong across all operating groups (verticals) exceptresources. From a geographical standpoint, US grew at a robust 10% and EMEA grew 9% in

c/c. Bookings of US$8.3 bn declined yoy but were in line with the management guidance. Net

hiring of 12,353 people was strong, taking the total headcount to 305,882, of which 67% are

in the global delivery network.

Accentures digital business continues to lead the industry with close to US$5 bn of revenues in

FY2014, resource base of 27,000 people and healthy double-digit revenue growth.

FY2015 revenue growth outlook of 4-7%; outsourcing to be key growth driver

Accenture has guided 4-7% revenue growth for FY2015. Management indicated a greater comfort

of delivering growth in the upper half of the range. Acquisitions will likely contribute 1% to

FY2015 growth as compared to 2% in FY2014. Management indicated bulk of the growth will be

driven by the outsourcing segment, where it has guided for high-single-digit to low-double-digit

growth. The company expects consulting growth to be broadly similar to FY2014 growth of 3%.

The company expects FY2015E bookings to be largely stable and in the range of US$34-36 bn.

Read-through for Indian IT is neutral

Accentures result read-through is always tricky and open to multiple interpretations. A strong

outsourcing-led growth quarter by Accenture can be viewed as aggressive turf protection/market

share gain (negative for Indian IT) or strong demand environment (positive for Indian IT).

Accentures growth in the outsourcing business in the recent quarter is comparable to other Tier-1

IT, except TCS and CTSH. We believe that Accentures growth in the outsourcing segment, on

margin, reflects share gains. While the market may be large enough to absorb al l players for now,

this once again reaffirms our long-held view of increasing competitive intensity in the global IT

services sector.

Accentures FY2015 consulting revenue growth outlook is similar to actuals of FY2014, i.e. 3%

growth. Accentures consulting business outlook is a good barometer for discretionary spending

though the correlation has reduced due to (1) offshore players that are chipping away at small

consulting assignments and (2) Accentures ERP-heavy portfolio is under increased pressure from

as-a-service models in the market. A higher consulting growth outlook would have given greater

comfort on discretionary spending.

Continued market share gains and large deals in traditional services continue to power Indian IT

growth. We maintain our positive view and retain Infosys, Wipro and Tech Mahindra as our toppicks.

TechnologyIndia

Accenture resultslargely neutral for Indian IT.Accenture reported a solid 4QFY14(Aug 2014 quarter) with revenue growth ahead of consensus expectations. Growth was

driven by outsourcing segment that grew 13% yoy in c/c while consulting revenues grew4% in c/c. Management guidance of 4-7% for FY2015 (Aug year-end) assumes bulk ofthe growth will be led by outsourcing segment. A stronger outlook for consulting

business could have been a positive read-through for Indian IT. Strong large cost takeout

deal wins and pipeline keep powering Indian IT growth and underpin our positive view.

C UTIOUS

SEPTEMBER 24, 2014

UPDATE

BSE-30: 26,745


25/31

Technology India

Exhibit 1: Accenture interim results, August fiscal year-ends (US$ mn)

4Q FY13 3Q FY14 4Q FY14 % q o q % yo y

Re ve n ue s 7,0 8 7 7,736 7,777 0 .5 9 .7

Cost of revenues 4,737 5,199 5,309 2.1 12.1

SG&A expenses 1,366 1,358 1,389 2.3 1.7E BIT 9 8 4 1,179 1,079 (8 .4 ) 9 .7

Other income (19) (3) 9

P BT 9 6 5 1,176 1 ,0 8 8 (7 .5 ) 12.8

Provision for taxes 238 294 328

P AT 727 8 8 2 76 0 (13.8) 4. 5

Minority interest 56 64 59 (8.3) 5.0

P AT a f te r min o r it y in te r e s t 6 71 8 17 70 1 (14.2) 4. 5

Ma rg in s (% )

EBIT 13.9 15.2 13.9

Net income 10.3 11.4 9.8


Exhibit 2: Valuation summary of key Indian technology companies

24- S e p-14 P E R (X ) E V/E BIT D A (X ) E V /S a le s (X )

Co mpa n y P r ice (Rs ) Ra t in g (Rs m) (U S m) 20 14 20 15 E 20 16 E 20 14 20 15 E 20 16 E 20 14 20 15 E 20 16 E 20 14 20 15 E 20 16 E

HCL Technologies 1,709 REDUCE 1,210,255 19,852 89.8 102.3 110.0 19.0 16.7 15.5 12.9 11.5 10.3 3.4 2.9 2.4

Hexaware Techn ologies 18 9 SELL 57,152 937 12.6 10.6 12.3 15.0 17.9 15.4 9.9 12.0 10.3 2.2 2.1 1.9

Infosys 3,645 ADD 2,082,639 34,163 186.3 211.4 242.2 19.6 17.2 15.1 13.4 11.9 9.9 3.6 3.3 2.9

Mindtree 1,199 ADD 100,682 1,652 53.7 63.3 73.8 22.3 18.9 16.2 16.3 13.6 11.4 3.3 2.7 2.3

Mphasis 444 SELL 93,263 1,530 14.7 35.0 36.8 12.6 12.7 12.1 8.9 9.0 8.4 1.5 1.5 1.4

TCS 2,643 ADD 5,176,844 84,919 97.6 113.0 129.9 27.1 23.4 20.3 19.8 17.4 14.8 6.1 5.1 4.3

Tech Mahindra 2,485 ADD 592,610 9,721 128.0 142.1 166.9 19.4 17.5 14.9 13.3 12.4 10.3 3.0 2.5 2.1

Wipro 593 ADD 1,459,943 23,948 31.7 35.8 40.8 18.7 16.5 14.5 13.1 10.9 9.2 3.1 2.6 2.3

Techno logy Caut ious 10 773 389 176 722 22.5 19.6 17.2 15.9 13.9 11.8 4 .3 3.7 3.1

K IE un ive r se 67 715 488 1 110 773 18.7 16.2 13.8 11.4 9.8 8.3 1 .6 1.4 1.3

T a r g e t O /S s h a re s E P S g ro w t h (%) N e t P ro f it (Rs mn ) E BIT D A (Rs mn ) S a le s (Rs mn )

Co mpa n y P r ice (Rs ) (mn ) 20 14 20 15 E 20 16 E 20 14 20 15 E 20 16 E 20 14 20 15 E 20 16 E 20 14 20 15 E 20 16 E

HCL Technologies 1,600 708 57.8 13.9 7.6 63,418 72,410 78,349 86,667 93,018 99,014 329,180 370,305 420,208

Hexaware Technologies 145 302 14.5 (16.4) 16.5 3,792 3,189 3,714 5,124 4,444 5,094 22,854 25,086 28,272

Infosys 4,100 571 13.0 13.5 14.5 108,670 120,804 138,374 136,340 149,024 175,559 501,330 535,383 606,367Mindtree 1,180 84 31.4 18.0 16.5 4,508 5,320 6,198 6,100 7,180 8,392 30,316 35,970 41,744

Mphasis 400 210 (58.4) 138.0 5.2 3,091 7,355 7,738 4,397 10,037 10,384 25,939 61,423 64,121

TCS 2,800 1,959 37.4 15.7 15.0 191,166 221,242 254,492 251,322 282,883 328,712 818,094 964,766 1,121,376

Tech Mahindra 2,650 238 25.6 11.0 17.4 26,821 30,471 35,788 41,836 44,592 52,454 188,313 219,446 253,235

Wipro 65 0 2,463 27.1 13.1 13.9 77,966 88,215 100,461 102,241 115,949 131,322 437,628 479,442 533,465

T e chnology 29.6 14.5 13.9 479 432 549 006 625 114 634 027 707 128 810 932 2 353 654 2 691 821 3 068 788

K IE un ive r se 6.3 15.7 16.7

Notes:

(a) HCL Technologies' fiscal year ends in June.

(b) Hexaware Techno logies' fiscal year ends in December.

(c) Mphasis has changed its accounting year to March from October. Period end ing Mar 2014 is for 5 months . We have annualized financials for computing ratios.

M k t ca p. E P S (Rs )



26/31

IndiaDailySummary-Septem

ber2

Kotak Institutional Equities: Valuation summary of KIE Universe stocks

P r i ce (Rs )

Ta rge t

pr ice Ups id e Mkt cap.

O/S

s h a r e s EPS (Rs ) EPS g r o wth (%) PER (X) EV/EBITD A (X) Ro E (%)

ADVT-

3mo

Co mpan y Ra t in g 24- Sep-14 (Rs ) (%) (Rs mn ) (US mn ) (mn ) 20 14 2 0 15 E 20 16 E 20 14 20 15 E 20 16 E 20 14 20 15 E 2 016 E 20 14 2 0 15 E 20 16 E 20 14 20 15 E 20 16 E 20 14 20 15 E 20 16 E 20 14 20 15 E 20 16 E (US mn )

Automobi l e s

Amara Raja Batter ies SELL 630 550 (12.7) 107,561 1,766 171 21.5 24.4 29.9 28.2 13.6 22.5 29.3 25.8 21.0 18.8 15.6 13.0 7.9 6.4 5.2 0.5 0.8 1.0 30.3 27.4 27.2 2.9

Apollo Tyres BUY 191 200 4.5 96,483 1,584 504 19.9 21.2 22.0 63.7 6.8 3.7 9.6 9.0 8.7 5.6 5.4 5.5 1.9 1.6 1.3 0.4 0.4 0.4 26.4 21.1 18.1 17.9

Ashok Leyland SELL 39 34 (12.1) 110,213 1,810 2,848 (1.8) (0.5) 1.2 (430.4) 72.8 350.2 (21.6) (79.4) 31.7 92.8 23.0 12.3 2.3 2.0 2.0 1.4 0.8 (3.7) 8.5 12.3

Bajaj Auto ADD 2,365 2,550 7.8 684,417 11,239 289 112.1 12 0. 8 13 9. 9 6.6 7.8 15.8 21.1 19.6 16.9 15.2 15.2 13.2 7.0 5.9 5.0 2.1 2.0 2.4 36.5 32.7 31.9 14.1

Bharat Forge SELL 795 620 (22.0) 188,559 3,096 237 22.0 27.7 34.8 110.7 26.1 25.6 36.2 28.7 22.8 20.3 14.7 12.1 7.0 5.9 4.9 0.4 0.6 0.8 21.0 22.4 23.4 13.2

Eicher Motors SELL 11,571 8,300 (28.3) 312,870 5,138 27 145.7 2 65 .7 39 6.7 21.3 82.4 49.3 79.4 43.6 29.2 41.9 24.4 16.2 15.2 11.6 8.5 0.3 0.2 0.3 19.2 28.1 31.9 8.2

Exide Industries REDUCE 170 160 (5.7) 144,203 2,368 850 5.7 7.2 8.7 (6.8) 25.3 21.6 29.6 23.6 19.4 17.5 14.7 12.4 3.9 3.5 3.2 1.4 1.5 1.5 13.6 15.6 17.1 9.4

Hero Motocorp ADD 2,943 3,200 8.7 587,767 9,652 200 10 5 .6 1 34 .8 189.5 (0.4) 27.7 40.5 27.9 21.8 15.5 20.1 15.4 10.6 10.7 8.9 7.2 2.2 2.3 3.2 39.7 44.6 51.6 18.8

Mahindra & Mahindra REDUCE 1,357 1,310 (3.5) 762,910 12,528 562 68.5 58.9 65.6 8.7 (14.1) 11.4 19.8 23.1 20.7 14.8 15.3 13.9 4.3 4.1 3.7 1.4 0.6 0.9 23.2 9.4 12.6 27.9

Maruti Suzuki BUY 3,072 3,400 10.7 9 27,930 15,238 302 92.8 114.4 183.2 17.1 23.4 60.1 33.1 26.8 16.8 20.0 16.3 10.2 4.3 3.8 3.2 0.4 0.4 0.7 13.8 15.0 20.5 17.0

Motherson Sumi Systems ADD 407 375 (7.9) 359,106 5,897 882 8.7 11.2 18.0 72.1 29.6 60.5 46.9 36.2 22.6 14.8 12.1 7.7 12.1 8.8 6.0 0.6 0.8 1.3 34.2 27.0 30.3 13.5

Tata Motors BUY 513 590 14.9 1,652,043 27,128 3,218 46.5 48.1 62.0 51.4 3.4 28.8 11.0 10.7 8.3 5.6 5.0 4.3 2.5 2.0 1.6 0.4 28.7 21.1 21.9 50.8

WABCO India ADD 3,657 4,000 9.4 69,365 1,139 19 61.9 77.7 133.0 (10.2) 25.4 71.2 59.0 47.1 27.5 40.8 29.6 17.5 9.2 7.9 6.6 0.1 0.3 0.9 16.7 18.1 26.1 0.6

Auto mo b ile s At tr act ive 6 ,0 0 3,426 9 8 ,5 8 2 24.4 9. 0 32.0 19.9 18.2 1 3.8 10 .6 9 .2 7.3 4.2 3.5 2.9 0. 9 0. 7 1.0 21.0 19.2 21.0 206.1

Banks /F i nanc i a l I ns t i tut i ons

Axis Bank ADD 397 430 8.3 932,642 15,315 2,349 26.5 29.7 34.5 19.6 12.3 16.1 15.0 13.4 11.5

2.5 2.2 1.9 1.0 1.3 1.5 17.4 17.0 17.2 28.7Bajaj Finserv BUY 1,044 1,175 12.6 1 66,082 2,727 159 96.4 102.3 111.1 (6.6) 6.1 8.6 10.8 10.2 9.4 1.8 1.7 1.4 1.3 1.3 1.3 17.9 17.0 16.3 1.5

Bank of Baroda ADD 906 1,050 15.9 390,020 6,405 431 105.4 118.2 138.3 (0.6) 12.1 17.0 8.6 7.7 6.5 1.3 1.1 1.0 2.4 2.7 3.1 13.8 13.8 14.5 20.6

Bank of India ADD 264 320 21.4 169,560 2,784 643 42.4 61.9 66.7 (7.9) 45.7 7.8 6.2 4.3 4.0 0.8 0.7 0.6 1.9 2.8 3.0 11.2 14.3 13.6 18.4

Cholamandalam ADD 476 420 (11.8) 68,192 1,120 143 25.6 29.8 36.5 19.7 16.2 22.8 18.6 16.0 13.0 3.2 2.8 2.1 0.8 1.0 1.3 17.3 17.5 18.3 0.3

City Union Bank ADD 82 90 9.7 48,355 794 589 6.4 7.0 8.1 (5.8) 9.2 16.4 12.8 11.8 10.1 2.5 1.9 1.6 1.1 1.3 1.5 18.9 17.4 16.5 1.0

DCB Bank BUY 85 100 17.7 2 1,265 349 250 6.0 6.9 7.9 48.2 13.5 15.1 14.0 12.4 10.8 2.0 1.8 1.5 14.8 14.5 14.4 1.8

Federal Bank BUY 127 145 14.5 108,325 1,779 855 9.8 12.2 14.7 0.1 24.6 19.9 12.9 10.4 8.6 1.6 1.4 1.3 1.6 2.0 2.4 12.6 14.2 15.2 10.4

HDFC ADD 1,055 1,060 0.5 1,645,859 27,027 1,561 34.9 40.8 47.4 11.3 16.8 16.3 30.2 25.9 22.2 5.9 5.3 4.7 1.3 1.6 1.9 20.6 21.0 22.8 50.2

HDFC Bank REDUCE 855 800 (6.5) 2 ,052,268 33,700 2,399 35.3 42.9 51.1 25.0 21.5 18.9 24.2 19.9 16.8 4.8 4.1 3.4 0.8 1.0 1.2 21.3 21.7 21.8 27.1

ICICI Bank BUY 1,516 1,660 9.5 1,751,510 28,762 1,155 84.9 92.5 107.0 17.7 8.9 15.7 17.9 16.4 14.2 2.5 2.3 2.0 1.5 1.8 2.1 14.0 13.9 14.7 64.6

IIFL Holdings BUY 149 175 17.7 4 4,045 723 296 9.4 13.0 16.1 1.6 38.4 24.2 15.9 11.5 9.2 2.0 1.8 1.6 2.0 2.2 2.8 14.0 17.2 18.8 0.6

IndusInd Bank ADD 623 650 4.4 327,316 5,375 526 26.8 32.2 38.7 32.0 20.1 20.3 23.2 19.3 16.1 3.8 3.3 2.8 0.6 0.7 0.8 18.0 18.3 18.6 8.4

ING Vysya Bank BUY 609 720 18.3 114,987 1,888 189 34.8 42.3 51.6 (12.0) 21.4 22.1 17.5 14.4 11.8 1.7 1.6 1.4 1.0 1.2 1.5 11.4 11.0 12.2 1.7

J&K Bank REDUCE 145 140 (3.3) 70,217 1,153 485 24.4 21.0 21.7 12.1 (13.7) 3.3 5.9 6.9 6.7 1.2 1.2 1.0 3.5 3.0 3.1 22.3 16.7 15.3 3.0

Karur Vysya Bank BUY 521 580 11.4 6 2,774 1,031 121 40.1 54.0 66.7 (21.9) 34.8 23.5 13.0 9.6 7.8 1.9 1.5 1.3 2.2 2.6 3.2 13.4 16.8 17.1 1.5

LIC Housing Finance BUY 309 375 21.4 1 55,979 2,561 505 26.1 30.5 35.2 28.8 16.7 15.7 11.8 10.1 8.8 2.1 1.8 1.6 1.5 1.7 2.0 18.8 18.9 18.8 16.5

L&T Finance Holdings SELL 69 60 (13.0) 118,573 1,947 1,718 3.5 5.8 5.4 (18.5) 68.9 (8.3) 19.9 11.8 12.9 2.0 2.1 1.9 1.1 2.3 1.3 10.5 18.3 15.2 5.7

Magma Fincorp BUY 117 125 6.5 2 2,306 366 190 7.2 9.4 10.9 15.6 30.9 16.6 16.4 12.5 10.7 1.5 1.4 1.2 1.0 1.3 1.5 9.7 11.1 12.2 0.7

Mah in dra & Mah ind ra Fin an cial SELL 274 240 (12.4) 154,434 2,536 564 15.7 16.9 20.7 0.4 7.3 22.7 17.4 16.2 13.2 3.1 2.8 2.4 1.4 1.4 1.8 18.6 17.5 18.8 7.5

Muthoot Finance BUY 196 250 27.3 77,983 1,281 397 21.0 20.3 23.7 (22.3) (3.1) 16.4 9.4 9.7 8.3 1.8 1.5 1.3 2.9 3.1 3.6 19.0 17.1 17.1 1.4

Oriental Bank of Commerce ADD 254 330 29.9 7 6,162 1,251 300 38.0 48.9 56.4 (16.5) 28.7 15.3 6.7 5.2 4.5 0.7 0.7 0.6 3.0 3.9 4.4 8.7 10.5 11.2 8.6

PFC ADD 236 330 39.6 311,956 5,123 1,319 41.1 43.7 43.5 22.6 6.4 (0.4) 5.8 5.4 5.4 1.2 1.2 1.1 3.8 4.1 4.0 21.1 19.5 17.0 20.8

Punjab National Bank REDUCE 927 960 3.5 335,675 5,512 362 92.3 1 45 .5 16 6.1 (31.3) 57.6 14.1 10.0 6.4 5.6 1.2 1.1 0.9 1.1 1.7 1.9 10.2 14.3 14.4 16.1

Rural Electrification Corp. ADD 249 365 46.7 245,712 4,035 987 47.4 50.5 50.9 22.7 6.4 0.8 5.2 4.9 4.9 1.2 1.1 1.0 3.8 4.0 4.4 24.6 21.9 18.8 13.7

Sh rir am Cit y U nio n Fin an ce RE DU CE 1,6 49 1,550 (6.0) 108,369 1,780 66 86.2 91.4 115.8 6.2 6.1 26.7 19.1 18.0 14.2 3.7 2.6 2.2 0.5 0.6 0.8 19.8 16.9 16.8 0.6

Shriram Transport REDUCE 943 840 (11.0) 2 10,521 3,457 223 56.7 69.2 85.8 (7.1) 22.1 24.1 16.7 13.6 11.0 2.6 2.3 2.0 0.8 1.0 1.3 16.3 17.3 18.5 9.4

SKS Microfinance ADD 291 305 4.8 3 6,644 602 126 6.5 13.0 19.8 123.6 101.5 52.1 45.0 22.3 14.7 6.4 3.6 2.9 16.5 22.2 21.8 8.8

State Bank of India ADD 2,486 2,800 12.6 1,856,234 30,481 747 145.9 1 95 .0 227.4 (29.3) 33.7 16.6 17.0 12.7 10.9 2.0 1.8 1.6 1.2 1.2 1.3 10.0 11.7 12.4 81.5

Union Bank ADD 205 220 7.2 129,370 2,124 630 26.7 40.5 46.1 (25.7) 51.6 13.6 7.7 5.1 4.5

0.9 0.8 0.7 1.9 2.9 3.3 10.3 14.1 14.2 17.5

Yes Bank ADD 568 575 1.2 2 35,410 3,866 414 44.9 42.2 45.5 23.7 (5.9) 7.9 12.7 13.5 12.5 3.3 2.1 1.8 1.2 1.3 1.4 25.0 18.8 15.4 33.0

Ban ks /Fin an cia l In s t it ut io n sAt tr act ive 12,429 ,5 28 20 4,10 6 2.1 19.4 14.5 14.9 12.4 10.9 2.3 2.0 1.8 1.4 1.6 1.8 15.3 16.4 16.5 529.3

P ric e/ BV (X ) D iv id en d yie ld ( %)

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Cement

ACC SELL 1,430 1,250 (12.6) 268,706 4,412 188 46.0 48.7 64.7 (37.6) 5.8 33.0 31.1 29.4 22.1 17.8 16.1 11.6 3.2 3.1 2.8 2.5 1.6 1.6 11.6 11.3 13.8 8.1

Ambuja Cements SELL 212 195 (8.0) 322,820 5,301 1,522 6.8 9.7 11.2 (34.6) 44.0 15.6 31.4 21.8 18.8 17.9 12.7 10.7 3.2 3.0 2.8 1.3 1.5 1.6 10.5 14.2 15.2 8.1

Grasim Industries ADD 3,617 3,500 (3.2) 332,227 5,456 92 214.4 2 09 .2 244.3 (21.3) (2.4) 16.8 16.9 17.3 14.8 9.1 8.7 6.8 1.6 1.5 1.3 0.9 0.9 0.9 9.6 8.7 9.4 5.3

India Cements REDUCE 116 100 (13.6) 35,571 584 307 (2.3) 3.7 7.0 (133.4) 265.4 86.1 (51.3) 31.0 16.7 10.3 7.6 6.3 0.9 0.8 0.8 2.3 2.3 2.3 (1.8) 3.0 5.5 4.9

Shree Cement SELL 8,413 5,8 00 (31.1) 293,107 4,813 35 235.9 324.9 393.1 (18.2) 37.7 21.0 35.7 25.9 21.4 20.9 15.9 12.6 6.6 5.4 4.4 0.2 0.2 0.2 20.1 23.0 22.5 2.4

UltraTech Cement SELL 2,631 2,000 (24.0) 721,719 11,851 274 74.8 78.4 98.9 (26.2) 4.8 26.2 35.2 33.6 26.6 19.8 17.8 13.1 3.7 3.3 2.9 0.4 0.4 0.4 12.7 11.9 13.4 12.7

Cemen t Caut io us 1,9 74,15 0 32,418 (29 .5 ) 15.7 22.7 29.6 25.6 20 .9 15 .3 13.2 10 .2 2.9 2.7 2.4 0. 9 0. 8 0. 9 9. 9 10.4 11.7 41.5

Consumer products

Asian Paints SELL 638 575 (9.9) 6 11,826 10,047 959 12.8 15.3 17.7 10.3 19.7 15.2 49.8 41.6 36.1 30.0 25.3 21.8 14.3 12.2 10.4 0.8 1.0 1.2 33.1 33.5 33.0 10.3

Bajaj Corp. ADD 261 300 15.0 38,468 632 148 12.0 13.9 15.9 6.8 15.1 14.5 21.7 18.8 16.4 20.1 17.2 14.4 7.4 6.3 5.4 2.5 2.5 2.9 33.2 31.4 30.8 0.5

Br itannia Industries BUY 1,392 1,460 4.9 166,928 2,741 120 33.0 40.2 49.9 51.8 21.9 24.2 42.2 34.6 27.9 26.4 21.2 17.3 20.9 14.1 11.0 0.9 1.1 1.4 58.3 48.6 44.4 3.1

Colgate-Palmolive ( India) ADD 1,651 1,730 4.8 224,545 3,687 136 36.1 40.9 48.0 (1.2) 13.5 17.3 45.8 40.3 34.4 33.4 26.8 22.2 38.6 36.4 34.1 1.6 1.9 2.3 90.1 90.2 99.7 4.5

Dabur India ADD 225 245 8.9 392,181 6,440 1,744 5.2 6.2 7.3 19.0 17.8 18.6 42.9 36.4 30.7 35.0 29.6 24.7 14.8 11.9 9.8 0.8 1.1 1.2 38.5 36.1 34.9 7.0

Glax oSmit hKlin e Co ns ume r RE DU CE 5 ,29 1 5,300 0.2 222,530 3,654 42 160.4 140.3 163.4 54.5 (12.6) 16.5 33.0 37.7 32.4 29.7 35.1 28.8 12.9 10.8 9.1 0.9 0.9 1.1 42.5 29.8 29.3 0.9

Go dr ej Co ns ume r Pr od uc ts RE DU CE 1,0 24 880 (14.1) 348,621 5,725 340 22.1 25.6 31.0 9.3 15.5 21.2 46.2 40.0 33.0 32.3 27.6 22.8 8.7 7.4 6.4 0.5 0.6 0.8 21.3 21.3 22.2 2.2Hindustan Unilever REDUCE 764 715 (6.4) 1,652,519 27,136 2,163 16.4 18.8 21.0 8.4 14.1 12.1 46.5 40.7 36.3 36.4 30.8 26.6 53.0 46.7 39.4 1.7 1.8 2.0 119.5 116.3 112.9 13.1

ITC ADD 377 390 3.4 3,053,758 50,146 8,096 10.8 12.0 13.9 15.7 11.2 15.6 35.0 31.4 27.2 25.3 21.9 18.5 11.1 10.1 9.0 1.6 2.0 2.2 35.6 35.1 36.9 38.4

Jubilant Foodworks SELL 1,234 1,080 (12.5) 81,844 1,344 66 18.0 21.8 30.6 (9.9) 21.2 40.4 68.7 56.7 40.4 32.7 27.7 20.0 14.9 11.8 9.3 0.2 24.1 23.2 26.0 5.6

Jyothy Laboratories REDUCE 241 220 (8.7) 4 3,627 716 181 4.7 10.5 11.7 21.4 123.4 10.8 51.1 22.9 20.7 31.8 22.8 17.7 5.9 5.1 4.4 1.2 1.2 1.5 12.4 23.9 22.7 1.4

Marico ADD 279 295 5.6 180,185 2,959 645 8.1 9.2 10.5 43.3 13.6 14.3 34.7 30.5 26.7 24.8 20.7 17.7 12.9 10.0 8.0 1.4 0.9 1.2 38.2 33.6 31.0 2.3

Nestle India SELL 6,130 5,300 (13.5) 591,045 9,706 96 114.4 122.4 146.2 3.3 7.0 19.4 53.6 50.1 41.9 29.8 27.8 23.8 22.9 18.4 15.1 0.8 0.8 1.0 56.4 46.5 44.2 2.5

Page Industr ies SELL 7,924 6,6 00 (16 .7) 8 8,378 1,451 11 137.3 1 80 .6 223.2 36.1 31.5 23.6 57.7 43.9 35.5 35.8 27.6 22.4 29.6 22.0 16.4 0.8 1.0 1.1 61.2 59.2 54.0 1.1

Speciality Restaurants BUY 147 160 9.0 6,894 113 47 4.0 3.2 5.3 (19.3) (19.3) 63.1 36.5 45.2 27.7 19.9 20.7 12.9 2.3 2.2 2.1 0.7 0.9 1.0 6.4 4.9 7.5 0.2

Tata Global Beverages REDUCE 165 155 (5.9) 103,979 1,707 631 6.0 6.5 7.5 (1.0) 8.0 15.9 27.4 25.4 21.9 14.8 13.6 11.8 1.5 1.5 1.4 1.3 1.4 1.5 7.0 6.9 7.6 9.2

Titan Company REDUCE 393 340 (13.5) 349,033 5,731 888 8.4 9.7 10.7 3.1 15.4 9.7 46.7 40.4 36.9 33.3 27.3 23.7 13.8 11.2 9.6 0.5 0.7 1.0 33.3 30.7 28.1 6.9

United Breweries SELL 707 650 (8.0) 186,842 3,068 264 8.5 9.5 12.8 31.3 11.1 34.9 82.7 74.4 55.2 33.6 29.9 24.9 10.9 10.1 8.8 0.1 0.2 0.3 13.8 13.8 16.7 2.0

United Spirits BUY 2,390 3,200 33.9 347,384 5,704 145 (8.9) 34.0 69.1 (197.5) 480.9 103.0 (267.4) 70.2 34.6 43.0 28.8 19.6 11.5 11.7 9.0 - 0.1 0.3 (3.3) 16.5 29.5 31.2

Co n sumer pro d uct s N eutr a l 8 ,6 9 0 ,5 8 5 142,70 8 13.2 16.5 18.2 42.9 36.9 31.2 2 9 .4 25 .2 21.1 13.3 11.8 10.3 1.2 1.4 1.6 31.1 32.0 32.9 142.3

E n e r g y

Aban Offshore RS 644 36,257 595 56 83.9 91.2 98.3 117.2 8.7 7.8 7.7 7.1 6.6 8.2 7.0 6.7 0.9 0.7 0.6 0.6 0.8 0.9 10.0 10.0 9.4 21.9

Bharat Petroleum ADD 642 770 19.9 464,398 7,626 723 56.2 50.7 52.3 53.7 (9.8) 3.2 11.4 12.7 12.3 7.7 8.4 7.5 2.3 2.0 1.8 2.6 2.4 2.4 19.9 15.9 14.8 17.8

Cairn india REDUCE 315 340 8.1 589,436 9,679 1,874 65.2 56.4 52.0 4.4 (13.4) (7.8) 4.8 5.6 6.0 3.7 4.2 4.2 1.0 0.9 0.8 4.1 3.9 3.8 23.4 14.7 14.6 12.7

Castrol India SELL 426 260 (38.9) 210,559 3,458 495 10.0 9.6 10.2 10.3 (3.9) 6.7 42.7 44.4 41.6 29.8 29.5 27.6 30.1 44.4 42.1 1.6 1.8 1.9 76.9 80.8 103.7 3.1

GAIL (India) BUY 443 520 17.5 561,493 9,220 1,268 32.6 34.7 41.3 (9.4) 6.2 19.2 13.6 12.8 10.7 9.0 8.5 6.6 1.9 1.7 1.5 2.3 2.4 3.0 13.9 13.3 14.2 10.7

GSPL ADD 93 95 1.9 5 2,475 862 563 7.4 7.5 8.5 (22.1) 1.0 13.6 12.5 12.4 10.9 6.5 6.4 5.8 1.4 1.3 1.2 1.1 1.6 2.7 11.9 10.8 11.2 3.0

Hindustan Petroleum REDUCE 479 500 4.4 1 62,386 2,667 339 51.1 44.5 51.7 106.4 (13.0) 16.3 9.4 10.8 9.3 8.5 7.2 5.9 0.9 0.8 0.8 3.2 2.8 3.3 9.1 7.2 7.9 15.5

Indian Oil Corporation ADD 356 430 20.9 863,258 14,176 2,428 23.2 33.4 37.6 38.1 43.8 12.6 15.3 10.6 9.5 9.8 7.0 5.1 1.3 1.2 1.1 2.4 3.2 3.6 8.1 10.8 11.1 6.8

Oil India BUY 610 720 18.1 366,425 6,017 601 49.6 58.4 73.1 (16.9) 17.8 25.1 12.3 10.4 8.3 5.8 4.3 3.3 1.7 1.5 1.4 3.5 4.3 5.4 12.5 13.5 15.5 4.7

Oil & Natural Gas Corporat ion ADD 414 465 12.4 3,539,419 58,121 8,556 31.2 37.1 45.6 6.2 18.9 23.2 13.3 11.2 9.1 6.0 4.6 3.7 1.7 1.5 1.4 2.3 3.0 3.9 12.7 13.4 14.9 41.1

Petronet LNG REDUCE 198 180 (9.0) 148,313 2,435 750 9.5 8.8 11.1 (38.1) (7.1) 25.7 20.8 22.4 17.8 11.4 11.9 10.2 2.7 2.4 2.2 1.0 1.1 1.6 13.2 10.8 12.1 6.0

Reliance Industries ADD 965 1,130 17.1 2,834,352 46,543 2,937 68.0 74.9 79.7 4.6 10.1 6.5 14.2 12.9 12.1 10.6 9.8 8.7 1.4 1.2 1.1 1.0 1.1 1.1 11.0 11.0 10.7 54.7

En e rg y Attr act ive 9 ,8 28 ,76 9 16 1,39 9 7.4 9. 9 12.8 12.0 11.0 9. 7 7.7 6. 5 5. 4 1.5 1.4 1.2 2.1 2.4 2.9 12.6 12.6 12.9 198.1

Di v idend y i e l d (%)

Source: Company, Bloomberg, Kotak Institutional Equities estimates


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Indus tr i a l s

ABB SELL 1,165 750 (35.6) 246,853 4,054 212 8.3 15.6 25.1 25.5 86.6 61.1 139.6 74.8 46.4 65.8 44.0 30.4 9.2 8.5 7.3 0.3 0.3 0.3 6.7 11.8 16.9 2.0

Bharat Heavy Electricals SELL 212 160 (24.4) 518,035 8,507 2,448 14.1 11.6 13.7 (47.7) (18.2) 18.7 15.0 18.3 15.4 11.1 11.9 8.9 1.6 1.5 1.4 1.4 1.2 1.4 10.9 8.3 9.2 23.8

Crompton Greaves BUY 206 220 6.6 129,299 2,123 627 4.1 6.1 10.9 215.8 46.7 80.4 50.0 34.1 18.9 20.5 15.3 10.5 3.5 3.3 2.9 0.6 0.8 1.0 7.2 10.0 16.3 18.5

Cummins India REDUCE 680 615 (9.5) 1 88,371 3,093 277 21.3 27.0 30.5 (23.6) 26.6 13.1 31.9 25.2 22.3 29.8 24.2 18.5 7.3 6.5 5.8 1.5 1.8 2.1 24.2 26.7 26.7 3.1

Kalpataru Po wer Tran smiss io n AD D 15 4 200 30.1 23,585 387 153 8.1 10.9 11.0 (7.9) 34.8 1.3 19.0 14.1 13.9 8.4 7.1 5.9 1.1 1.1 1.0 1.0 1.0 1.0 6.0 6.8 6.8 0.8

KEC Internat ional ADD 103 125 21.7 2 6,412 434 257 3.3 6.7 10.4 30.4 102.5 54.9 31.1 15.3 9.9 9.4 7.4 6.0 2.1 1.7 1.5 0.6 1.5 2.3 6.9 12.4 16.4 1.0

Larsen & Toubro ADD 1,464 1,675 14.4 1,356,982 22,283 927 49.2 47.7 71.2 (6.1) (3.1) 49.2 29.8 30.7 20.6 19.7 17.7 13.8 3.5 3.3 2.9 0.9 0.9 1.2 12.6 11.0 14.7 53.2

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25Sep2014 India Daily

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Transcript of 25Sep2014 India Daily