Govt.

Market Overview

Monthly Insight Performance

Stock Picks

ACC Ltd. Whirlpool India Ltd. Va Tech Wabag Ltd.| |

Valuation at Glance

Technical View

Market Diary

Mutual Fund Overview

Commodity Monthly Round-up

April, 2016

in Action

Economy Review

Sector Outlook: Cement

World Economic Event Calendar

Real Estate Bill 2016

Inside this issue

27EconomyReview

01 Market Overview

18 Sector Outlook

40Market Diary

13 Valuation at a Glance

34 Technical View

33 Mutual Fund Overview

41Commodity Monthly Round up

44World Economic Event Calender

07Stock PicksACC Ltd.

•Whirlpool India

03

Monthly Insight Performance

15Real EstateBill 2016

APRIL 2016

Disclosure

The Research Analysts and /or Ashika Stock Broking Limited do hereby certify that all the views expressed in this research report accurately reflect their views about the subject issuer(s) or securities. Moreover, they also certify the followings:-

• The Research Analyst or Ashika Stock Broking Limited or his/its Associates or his/its relative, has any financial interest in the subject company (ies) covered in this report. No

• The Research Analyst or Ashika Stock Broking Limited or his/its Associates or his/its relative, have actual/beneficial ownership of 1% or more in the subject company, at the end of the month immediately preceding the date of the publication of the research report. No

Name Designation Email ID Contact No.

Paras Bothra VP Equity Research paras@ashikagroup.com +91 22 6611 1704

Krishna Kumar Agarwal Equity Research Analyst krishna.a@ashikagroup.com +91 33 4036 0646

Partha Mazumder Equity Research Analyst partha.m@ashikagroup.com +91 33 4036 0647

Chanchal Bachhawat Equity Research Analyst chanchal.b@ashikagroup.com +91 22 6611 1712

Tirthankar Das Technical & Derivative Analyst tirthankar.d@ashikagroup.com +91 33 4036 0645

Disclaimer This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ashika Stock Broking Ltd. is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon such. Ashika Stock Broking Ltd. or any of its affiliates or employees shall not be in anyway responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Ashika Stock Broking Ltd., or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.

• The Research Analyst or Ashika Stock Broking Limited or his/its Associates or his/its relatives has any material conflict of interest at the time of publication of the research report. No

• The Research Analyst or Ashika Stock Broking Limited or his/its Associates have received any compensation or compensation for investment banking or merchant banking or brokerage services or for product other than for investment banking or merchant banking or brokerage services from the companies covered in this report in the past 12 months. No

• The Research Analyst or Ashika Stock Broking Limited or his/its Associates have managed or co managed in the previous 12 months any private or public offering of securities for the company (ies) covered in this report. No

• The Research Analyst or Ashika Stock Broking Limited or his/its Associates have received any compensation or other benefits from the company (ies) covered in this report or any third party in connection with the Research Report. No

• The Research Analyst has served as an officer, director or employee of the company (ies) covered in the research report. No

• The Research Analyst or Ashika Stock Broking Limited has been engaged in Market making activity of the company (ies) covered in the research report. No

SEBI Registration No. INH000000206

•Va Tech Wabag

•

1

GOVT. IN ACTION

The only certain thing in the global markets current now is

uncertainty. The rally in the domestic markets after the

budget has been conceived by everyone as an affirmation

to a good Union Budget 2016-17. The budget however

focused on the core rural schemes with special focus to

agriculture, health (mostly insurance) and other social

schemes. Some economists however argued that although

the allocation towards the social sectors has indeed being

increased, the core social sector schemes for instance

elementary primary education has been ignored although

focus has been on higher education. Nevertheless, the

commitment by the government towards the fiscal

consolidation plan and commitment of a 3.5% fiscal deficit

for FY2017 was certainly positive for the global investors,

who are fond of strict discipline. Further, the favorable

capital gains taxation structure remains intact. Besides, the

government estimates for lower borrowing than what

markets perceived was accompanied by a rally in the bond

markets. Not to mention this also raised hopes of a rate cut

by the RBI. However, another way to look at the rally could

have been driven by liquidity, rather than a firm conviction

drawn on underlying fundamentals. With the US Fed

chairman not raising rates in the last policy meet and

rather giving a mellowed stance over the future course of

rate hikes in her recent public address to the Economic

Club of New York, make sure that the cheers will continue

in the markets around the emerging Asia. A dovish stance

from US Fed provides an elbow room to Mr. Rajan to lower

interest rates; however the decision and the assessment

will remain with him for the time being.

The first half of budget session of parliament saw sharp

pol i t ica l exchanges between the Narendra Modi

government and opposition on a range of issues but it also

witnessed passage of some crucial legislations including

the real estate bill and the Aadhaar bill. The Budget

session, which began on February 23, has been on recess

since March 16 and is scheduled to meet again on April 25

and to continue till May 13. The earlier two sessions had

gone without any meaningful businesses being taken up as

the Opposition vehemently disrupted the House raising

issues including the rising intolerance. PRS Legislative

reckoned that there were 12 bills to be considered and

passed, 4 bills, including the Finance Bill, listed to be

introduced, considered and passed, 2 new bills to be

introduced and other 2 to be withdrawn. Before the start of

the budget session, some of the important bills still stuck

were : The Constitution (122nd Amendment) (GST) Bill,

2014, The Real Estate (Regulation and Development) Bill,

2013, The Lokpal and Lokayuktas and other related Law

(Amendment) Bill, 2014, The Anti-Hijacking Bill, 2014, The

Industries (Development and Regulation) Amendment Bill,

2015, The National Waterways Bill, 2015 etc. President

Pranab Mikherjee strongly criticised disruption and

obstruction of Praliament. He called upon all MPs to

discharge their responsibilities in a spirit of cooperation

and mutual accommodation. Probably that worked since

the first half of session saw few adjournments though

opposition and treasury benches sought to score against

each other. The monsoon session and winter session had

seen repeated adjournments by the opposition on a range

of issues and very little business being transacted.

According to PRS Legislative, which tracks work of

parliament, Lok Sabha functioned for 120 percent of its

scheduled time while Rajya Sabha functioned for 97

percent of its scheduled time during the first half of

session. Some of the key bills passed during the first half

of the budget session include the Elect ion Laws

Amendment Bill, 2016, the High Court and Supreme Court

Judges (Salaries and Conditions of Service) Amendment

Bill, the Bureau of Indian standards Bill and the National

Waterways Bill apart from the Aadhar bill, the Real Estate

Bill and the Lok Sabha passing the Mines and Mineral

(Regulation and Development) Bill, 2016.

Thus the positive outcome from the budget session also

had a strong bearing on the Indian markets with the FIIs

pouring in ~Rs 21,000 crore during March alone (till 29th

March 2016) speaks volumes. This also in sharp contrast to

the first two months of calendar year 2016 when they had

sold an aggregate Rs 19,752 (Rs 11,471 crore in January

and Rs 8,281 crore in February) in Indian equity markets.

However, according to the business dailies, foreigners are

estimated to have pumped $36.b billion into the emerging

markets and bonds in March, the highest monthly inflow in

APRIL 2016

MARKET OVERVIEW

2

nearly two years. According to a note by the Institute of

In te rnat iona l F inance , " In the absence of much

improvement in the fundamental economic outlook for

EMs, it appears that March's surge in flows to EMs was

mainly due to a global risk-on shift in investor behavior

and lower mature market interest rates, supported by

surprisingly dovish signals from the (Fed) on March 16,".

Thus the inflow of the hot money could well be a global

phenomenon considering the liquidity injunction by the

European Central Bank (ECB) and the Bank of Japan

together with the loosening of statutory liquidity ratio by

the People's Bank of China. However, Mr. Rajan has

repeatedly been of the view that devaluation of currencies

will only do harm. With easy global liquidity and US Fed

absta ining f rom ra is ing rates , commodit ies have

dramatically rebounded from their lows. Generally,

commodities have an inverse relationship with the interest

rates. However, according to Barclays Plc, commodities

including oil and copper are at risk of steep declines as

recent advances aren't fully grounded in improved

fundamentals and prices may correct as investors rush for

the exits. According to Barclays report, “Investors have

been attracted to commodities as one of the best

performing assets so far in 2016. However, in the absence

of any concerted fundamental improvements, those returns

are unlikely to be repeated in the second quarter, making

c o m m o d i t i e s v u l n e r a b l e t o a w a ve o f i n ve s t o r

liquidation."In fact, the same view is opined by a few

commodity analysts around the world particularly of the

fragile economic condition China is in.

Nevertheless, amid this global uncertain, India is in a

relatively stable position and is expected to continue to

attract FI I f lows over the long term, as economic

fundamentals remain stronger than other emerging market

economies. The fiscal deficit is under check while the

improvement in balance of payment position only

strengthens despite the decline in exports . On a

cumulative basis (9mFY16), CAD narrowed to 1.4% of the

GDP vs. 1.7% last year. However, owing to negative

portfolio flows, the BoP surplus contracted in 9mFY16 to

US$ 14.6bn vs. US$ 31.3 bn YoY. The government has

recently lowered the small savings interest rates and has

politically signaled to lower the interest rates in the

economy. The banks are also due to set the interest rate

for fixed-rate loans of up to three years based on their

Marginal Cost of Funds based Lending Rate (MCLR).

Besides, the government and the RBI together are on the

same path of cleaning the bank's balance sheet and is a

welcome step in the banking sector. However, as always

the future course of actions largely depend on how the

monsoon pans out and the government policies being

drawn up, Rajan's stance on loose monetary policy, how

corporate India successfully deleverages and finally the

banking system starts accelerating with its lending facilities

to corporate India for next leg of capex cycle.

Savings deposit 4.0 4.0

1-year time deposit 8.4 7.1

2-year time deposit 8.4 7.2

3-year time deposit 8.4 7.4

5-year time deposit 8.5 7.9

5-year recurring deposit 8.4 7.4

5-year Senior Citizens Savings Scheme 9.3 8.6

5-year Monthly Income Account Scheme 8.4 7.8

5-year National Savings Certificate 8.5 8.1

Public Provident Fund Scheme 8.7 8.1

Kisan Vikas Patra 8.7 7.8*

Sukanya Samriddhi Account Scheme 9.2 8.6

*will mature in 110 months Source: The Financial Express

Paras Bothra

Vice President - Equity Research

Email - paras@ashikagroup.com

Phone : 022 6611 1704

Rate of interest w.e.f.

April 1,'15 to March 31,'16 April 1,'16 to June 30,'16

19%

4%

77%

Total Call: 186

Target Achieved Exit/Booked Calls OpenMore than 100% Return

50-25% Return

100-50% Return

Less than 25% Return

26%

12%

20%

42%

48Stocks

79Stocks

38Stocks

23Stocks

Success Rate Return Classification

Over the years, Ashika Research based on its rigorous and

co n t i n u o u s a n a l y s i s o n f u n d a m e n t a l b a s i s , h a s

recommended stocks and consistently achieved the target

price recommended. Since January 2012 we have

recommended 188 stocks out of which 145 has achieved

target. Hit Ratio stands at 77%. Out of these 79 stocks

have given a return of more than 100%. During this period

the Nifty has given a return of 46% and a return of 75%

from its peak.

The stocks recommended by us such as Cera Sanitaryware,

Symphony, Srikalahasti Pipes, Aurobindo Pharma, Shree

cement, MRF, Britannia, Torrent Pharma, Wim Plast, Pidilite

Ind, Axiscades Engg, Lupin, Can Fin Homes, Maruti Suzuki,

Glenmark Pharma, Kaveri Seeds, Himatsingka Seide, HPCL,

Gujarat Gas, Relaxo Footwears, Zensar Tech, Hexaware Ltd.,

Havels India, PI Industries, Dabur, UPL, Sharda Motor, VA

Tech Wabag, Emami, Berger Paints, Bajaj Finserv, Zydus

Wellness, Bharti InfraTel, Indusind Bank, Deccan Cements,

Cummins India, Adani Ports, L&T, Prism Cement, MRF Ltd.,

Dr Reddy, Godrej Consumer, Divis Lab, Berger Paints India,

Finolex Ind., Tatamotor - DVR, Pidilite, BPCL, Pidilite Ind.,

Ashok Leyland, Gulshan Polyols, IFB Industries, Motherson

Sumi, Escorts, Castrol India, Rallis India, Info Edge (India),

LIC Housing Fin, AIA Engineering, Zee Entertainment, Indian

Bank, Dr. Reddy Lab, Tech M, Axis Bank, FDC Ltd., Dabur

India, Multibase India, Tata Motors, V-Guard Ind., IPCA Lab,

Magma Fincorp and City Union Bank have generated

exceptional returns (more than 100% returns) for our

investors. A few of them have generated returns in excess

200% for our investors.

We have selected stocks across large cap and mid cap

companies and across variety of sectors. For the period

a n a l y ze d , t h e s t o c k s re co m m e n d e d by u s h ave

outperformed their respective sectoral indices.

GOVT. IN ACTION

3

29/03/2016)

Recommended Stocks

APRIL 2016

MONTHLY INSIGHT PERFORMANCE

4

Mar-16 NTPC Power 126 148 17.5% 130.3 3.4% 127.3

Marico FMCG 236 280 18.6% 252.9 7.2% 240.3

Feb-16 HDFC Banking & Finance 1180 1400 18.6% 1194.0 1.2% 1125.8

HCL Tech IT 866 1020 17.8% 877.0 1.3% 806.8

Hero MotoCorp Auto 2562 2820 10.1% 2914.7 13.8% 2856.9 Target Achieved

Jan-16 Pidilite Ind. Paints & Chemical 551 656 19.1% 648.0 17.6% 595.4

Indraprastha Gas Oil & Gas 525 624 18.9% 608.0 15.8% 543.4

SH Kelkar Personal Prod. 250 310 24.0% 275.8 10.3% 228.3

Texmaco Rail Engg. & Const. 151 183 21.2% 154.9 2.5% 102.3

Dec-15 Wabco India Auto 6280 7200 14.6% 6450.0 2.7% 6074.5

Sanofi India Pharma 4300 5060 17.7% 4525.0 5.2% 4015.3

Garware Wall Ropes Textiles 388 488 25.8% 436.5 12.5% 334.9

Nov-15 Inox Wind Power 397 500 25.9% 411.4 3.6% 251.7

Sterlite Tech Electrical Equip. 94 130 38.3% 108.6 15.5% 91.3

GP Petroleums Oil & Gas 67 156 132.8% 90.2 34.6% 57.1

HCC Construction 26 43 65.4% 28.3 8.8% 19.3

Oct-15 Castrol India Oil & Gas 433 510 17.8% 474.4 9.5% 371.8

Zee Ent. Media 390 464 19.0% 439.4 12.7% 381.9

Syngene Int Pharma 321 385 19.9% 436.0 35.8% 376.9 Target Achieved

Sep-15 Berger India Paints & Chemical 208 247 18.8% 283.7 36.4% 238.8 Target Achieved

Ceat Tyre 1080 1245 15.3% 1319.9 22.2% 1042.8 Target Achieved

Aug-15 Cummins India Electrical Equip. 962 1130 17.5% 1247.7 29.7% 849.0 Target Achieved

Greenply Ind. Plywood 935 1123 20.1% 210.0 -77.5% 175.0

TIME Technoplast Plastic Prod. 66 81 22.7% 69.9 5.9% 47.1

SQS India BFSI IT 680 863 26.9% 1291.0 89.9% 879.3 Target Achieved

Jul-15 Asian Paints Paints & Chemical 760 883 16.2% 926.8 21.9% 856.1 Target Achieved

Idea Cellular Telecom 179 209 16.8% 186.5 4.2% 107.4

Gruh Finance Banking & Finance 261 322 23.4% 279.0 6.9% 238.5

Jun-15 Maruti Suzuki Auto 3774 4367 15.7% 4790.0 26.9% 3730.0 Target Achieved

Whirlpool India Home Appl. 760 879 15.7% 847.0 11.4% 674.7

May-15 Sun pharma Pharma 925 1220 31.9% 1010.0 9.2% 794.4

Tata Motors Auto 515 615 19.4% 531.0 3.1% 372.5

Ultratech Cement 2680 3300 23.1% 3369.0 25.7% 3136.3 Target Achieved

Tata Global FMCG 141 174 23.4% 150.5 6.7% 119.3

Apr-15 Abbott India Pharma 4020 4680 16.4% 6177.7 53.7% 4636.4 Target Achieved

Strides Arcolab Pharma 1153 1340 16.2% 1414.0 22.6% 1027.0 Target Achieved

Elantas Beck India Chemical 1130 1320 16.8% 1605.0 42.0% 1298.0 Target Achieved

Mar-15 MCX Finance 1177 1552 31.9% 1289.9 9.6% 823.1

BEML Electrical Equip. 978 1200 22.7% 1612.0 64.8% 1035.6 Target Achieved

Rolta IT 191 250 30.9% 196.8 3.0% 75.4 Exit

Feb-15 SML Isuzu Auto 979 1222 24.8% 1671.0 70.7% 776.7 Target Achieved

HBL Power Battery 34.9 55 57.6% 64.5 84.8% 36.1 Target Achieved

Mangalam Cement Cement 321 432 34.6% 324.5 1.1% 219.6 Exit

Amrutanjan Health Pharma 449 650 44.8% 564.9 25.8% 410.4

Jan-15 Torrent Pharm Pharma 1096 1338 22.1% 1718.4 56.8% 1340.8 Target Achieved

Emami FMCG 783 924 18.0% 1365.0 74.3% 915.4 Target Achieved

Dewan Housing Finance 397 480 20.9% 569.2 43.4% 185.9 Target Achieved

KPIT Tech IT 200 263 31.5% 232.4 16.2% 141.9 Exit

Dec-14 Bajaj Corp Personal Prod. 327 385 17.7% 522.0 59.6% 372.3 Target Achieved

Alstom India Electrical Equip. 586 725 23.7% 877.0 49.7% 582.7 Target Achieved

Transport Corp Transportation 284 354 24.6% 348.5 22.7% 276.7 Target Achieved

Multibase India Rubber Prod. 164 300 82.9% 342.5 108.8% 187.7 Target Achieved

Albert David Pharma 256 363 41.8% 404.3 57.9% 314.6 Target Achieved

Nov-14 ONGC Oil & Gas 395 516 30.6% 412.5 4.4% 212.3

Cadila Helthcare Pharma 1384 1600 15.6% 2160.0 56.1% 316.4 Target Achieved

Karur Vysys Banks 541 700 29.4% 619.0 14.4% 422.3

JK Lakshmi Cement Cement 348 396 13.8% 429.9 23.5% 327.7 Target Achieved

Diwali Ashok Leyland Auto 44 65 46.2% 108.2 143.3% 106.7 Target Achieved

Pick Karur Vysys Banks 540 700 29.6% 619.0 14.6% 422.3

SKS Microfinance Finance 317 412 30.0% 589.6 86.0% 513.4 Target Achieved

NOCIL Chemical 43 60 38.4% 64.5 48.8% 46.7 Target Achieved

29/03/2016)

GOVT. IN ACTION

5

Oct-14 Kesoram Industries Diversified 117 176 50.4% 148.6 27.0% 104.3 Exit

Akzo Nobel Paints & Chemical 1240 1460 17.7% 1551.0 25.1% 1305.2 Target Achieved

IFB Industries Household Appl. 295 380 28.8% 700.0 137.3% 311.6 Target Achieved

Munjal Auto Auto Parts 102 155 52.0% 134.0 31.4% 75.3

Sep-14 Tata Motors Auto 527 598 13.5% 612.4 16.2% 372.5 Target Achieved

Timken India Industrial Prod. 447 545 21.9% 669.0 49.7% 427.5 Target Achieved

KEC International Electrical Equip. 102 130 27.5% 164.8 61.6% 117.4 Target Achieved

Indoco Remedies Pharma 256 327 27.7% 412.2 61.0% 277.0 Target Achieved

Ingersoll-Rand Industrial Prod. 649 785 21.0% 1124.4 73.3% 641.0 Target Achieved

Aug-14 Bodal Chemicals Chemical 60 94 56.7% 76.3 27.2% 67.9 Exit

Som Distilleries Breweries & Dist. 211 269 27.5% 246.0 16.6% 179.8

Sharda Motor Auto Parts 391 536 37.1% 1190.0 204.3% 799.0 Target Achieved

Axiscades Engg IT 106 138 30.2% 396.2 273.8% 272.6 Target Achieved

Visaka Industries Cement Prod. 119 173 45.4% 188.8 58.7% 101.2 Target Achieved

Deccan Cements Cement 270 408 51.1% 772.0 185.9% 573.9 Target Achieved

Gulshan Polyols Chemical 177 274 54.8% 430.0 142.9% 307.9 Target Achieved

Jul-14 Mahindra Lifespace Real Estate 560 710 26.8% 664.4 18.6% 423.0

V-Guard Ind. Industrial Prod. 593 746 25.8% 1198.0 102.0% 860.1 Target Achieved

Astra Microwaves Defence 142 186 31.0% 166.4 17.2% 104.6

Himatsingka Seide Textile 74 95 28.4% 248.4 235.7% 191.1 Target Achieved

Mangalam Cement Cement 221 285 29.0% 351.0 58.8% 219.6 Target Achieved

Jun-14 Coal India Coal 392 500 27.6% 447.1 14.1% 295.2 Target Achieved

Container Corporation Logistics 1180 1500 27.1% 1947.7 65.1% 1192.2 Target Achieved

Balmer Lawrie Logistics 473 700 48.0% 682.0 44.2% 558.9

Can Fin Homes Housing Finance 305 450 47.5% 1130.0 270.5% 1120.0 Target Achieved

Srikalahasti Pipes Iron & Steel Prod. 46 70 52.2% 349.0 658.7% 220.5 Target Achieved

May-14 Bank of Baroda Banking 164.4 201.6 22.6% 228.9 39.2% 140.4 Target Achieved

AIA Engineering Industrial Prod. 606 726 19.8% 1364.2 125.1% 962.5 Target Achieved

MOIL Ltd. Metals & Mining 255 341 33.7% 341.7 34.0% 211.2 Target Achieved

Wim Plast Plastic Prod. 620 800 29.0% 2499.0 303.1% 1668.5 Target Achieved

Apr-14 Engineers India Engg. & Const. 224 270 20.5% 331.7 48.1% 162.1 Target Achieved

Gujarat Gas Gas 263 305 16.0% 862.4 227.9% 534.9 Target Achieved

City Union Bank Banking 52.8 69 30.7% 105.6 99.9% 91.2 Target Achieved

Relaxo Footwears Footwear 297 390 31.3% 960.1 223.3% 367.5 Target Achieved

Mar-14 Motherson Sumi Auto Ancillary 232 285 22.8% 540.8 133.1% 246.5 Target Achieved

PI Industries Agrichem 252 315 25.0% 787.2 212.4% 559.2 Target Achieved

VA Tech Wabag Water Treatment 645 765 18.6% 1945.0 201.6% 526.8 Target Achieved

Feb-14 Bharti InfraTel Telecom - Infra 171 213 24.6% 499.7 192.2% 387.3 Target Achieved

UPL Fertilizer 187 251 34.2% 576.4 208.2% 451.4 Target Achieved

Finolex Ind. Pipes 155 185 19.4% 384.0 147.7% 369.4 Target Achieved

Jan-14 NIIT Tech IT 355 500 40.8% 631.0 77.7% 488.1 Target Achieved

Zensar Tech IT 349 500 43.3% 1121.0 221.2% 903.8 Target Achieved

Bajaj Finserv Banking 726 850 17.1% 2160.0 197.5% 1666.9 Target Achieved

FDC Ltd. Pharma 130 170 30.8% 274.4 111.0% 178.9 Target Achieved

Dec-13 MRF Ltd. Tyre 17350 19430 12.0% 46399.0 167.4% 36915.5 Target Achieved

Info Edge (India) Web Services 446 550 23.3% 1015.0 127.6% 762.8 Target Achieved

Indian Bank Banking 101 120 18.8% 224.3 122.0% 101.0 Target Achieved

Symphony Cons. Durable 405 500 23.5% 3275.0 708.6% 2393.6 Target Achieved

Nov-13 Pidilite Ind. Paints & Chemical 266 350 31.6% 648.0 143.6% 595.4 Target Achieved

Aurobindo Pharma Pharma 216 297 37.5% 1535.0 610.6% 736.5 Target Achieved

Kaveri Seeds Agri Prod. 305 580 90.4% 1075.5 253.1% 378.2 Target Achieved

Speciality Restaurant Restaurants 124 198 59.7% 218.6 76.3% 81.4 Target Achieved

Oct-13 Britannia FMCG 759 845 11.3% 3434.2 352.5% 2583.2 Target Achieved

Glenmark Pharma Pharma 520 610 17.3% 1262.9 142.9% 780.7 Target Achieved

Ultratech Cement Cement 1808 2045 13.1% 3398.0 87.9% 3136.3 Target Achieved

Sep-13 L&T Engg. & Const. 705 810 14.9% 1893.8 168.6% 1194.0 Target Achieved

Tech M IT 1375 1495 8.7% 2995.1 117.8% 467.6 Target Achieved

Indusind Bank Banking & Finance 344 470 36.6% 989.3 187.6% 928.1 Target Achieved

Escorts Auto 82 108 32.5% 188.2 130.9% 137.7 Target Achieved

Aug-13 Hexaware Ltd. IT 107 130 21.5% 335.8 213.8% 259.2 Target Achieved

Godrej Consumer FMCG 815 950 16.6% 1459.0 79.0% 1331.4 Target Achieved

Torrent Pharma Pharma 421 475 12.8% 1718.4 308.2% 1340.8 Target Achieved

29/03/2016)

APRIL 2016

MONTHLY INSIGHT PERFORMANCE

6

Jul-13 TCS Ltd IT 1460 1640 12.3% 2839.7 94.5% 2469.4 Target Achieved

Dabur India FMCG 150 170 13.3% 316.4 110.9% 245.1 Target Achieved

Rallis India Chemical 130 148 13.8% 298.7 129.7% 169.9 Target Achieved

Jun-13 Hero MotoCorp Auto 1736 2020 16.4% 3270.0 88.4% 2856.9 Target Achieved

Divis Lab Pharma 977 1120 14.6% 2484.7 154.3% 977.0 Target Achieved

Corporation Bank Banking & Finance 77 92 19.8% 86.0 12.0% 37.8 Booked

May-13 Maruti Suzuki Auto 1673 1920 14.8% 4790.0 186.3% 3730.0 Target Achieved

Dr. Reddy Lab Pharma 1991 2280 14.5% 4386.6 120.3% 2941.3 Target Achieved

BPCL Oil & Gas 405 460 13.6% 987.0 143.7% 874.0 Target Achieved

Kotak Mahindra Bank Banking & Finance 830 1021 22.9% 1475.3 77.7% 671.5 Target Achieved

Apr-13 L&T Engg. & Const. 683 915 34.0% 1893.8 177.3% 1194.0 Target Achieved

Pidilite Chemical 264 300 13.6% 648.0 145.5% 595.4 Target Achieved

Godrej Consumer FMCG 778 910 17.0% 1459.0 87.5% 1331.4 Target Achieved

Mar-13 ITC FMCG 291 352 21.0% 410.0 40.9% 320.0 Target Achieved

Berger Paints Chemical 95 116 21.6% 283.7 198.6% 238.8 Target Achieved

LIC Housing Fin Banking & Finance 232 284 22.4% 524.0 125.8% 476.9 Target Achieved

Zee Entertainment Media & Ent. 215 265 23.3% 440.7 105.0% 381.9 Target Achieved

Feb-13 Axis Bank Banking & Finance 301 397.8 32.2% 654.9 117.6% 429.5 Target Achieved

Tata Motors Auto 298 379 27.2% 612.4 105.5% 372.5 Target Achieved

Cairn India Oil & Gas 324 410 26.5% 386.0 19.1% 154.6 Booked

Petronet LNG Oil & Gas 152 200 31.6% 272.7 79.4% 244.0 Target Achieved

Jan-13 Adani Ports Others 135 180 33.3% 374.8 177.6% 237.9 Target Achieved

J & K Bank Banking & Finance 130.3 167 28.2% 195.5 50.0% 60.8 Target Achieved

Dec-12 Zee Entertainment Media & Ent 198 235 18.7% 440.7 122.6% 381.9 Target Achieved

Indusind Bank Banking & Finance 416 500 20.2% 989.3 137.8% 928.1 Target Achieved

Nov-12 IPCA Lab Pharma 450 545 21.1% 906.9 101.5% 589.0 Target Achieved

L&T Finance Banking & Finance 55 85 54.5% 97.1 76.5% 62.6 Target Achieved

Zydus Wellness FMCG 445 560 25.8% 1128.9 153.7% 742.2 Target Achieved

Oct-12 Sun TV Media & Ent. 357 446 24.9% 494.9 38.6% 366.9 Target Achieved

Allahabad Bank Banking & Finance 147 180 22.4% 191.1 30.0% 52.7 Target Achieved

Shoppers stop Others 393 465 18.3% 624.4 58.9% 360.0 Target Achieved

Sep-12 Dish TV Media & Ent. 68 92 35.3% 121.7 78.9% 82.2 Target Achieved

Havels India Cons. Durables 111 127.6 15.0% 346.9 212.5% 302.1 Target Achieved

Aug-12 Lupin Pharma 570 672 17.9% 2129.0 273.5% 1401.6 Target Achieved

Bajaj Finserv Banking & Finance 730 877 20.1% 2160.0 195.9% 1666.9 Target Achieved

Jul-12 Uflex Others 112 145 29.5% 201.7 80.1% 164.2 Target Achieved

Cummins India Engg. & Const. 438 513 17.1% 1247.7 184.9% 849.0 Target Achieved

Exide Inds Others 135 165 22.2% 205.2 52.0% 134.6 Target Achieved

Engineers India Engg. & Const. 200 280 40.0% 305.0 52.5% 162.1 Target Achieved

Jun-12 Glenmark Pharma Pharma 350 410 17.1% 1262.9 260.8% 780.7 Target Achieved

Godrej Consumer FMCG 558 675 21.0% 1459.0 161.5% 1331.4 Target Achieved

Cera Sanitaryware Cons. Durables 248 340 37.1% 2960.9 1093.9% 1834.3 Target Achieved

HPCL Oil & Gas 300 365 21.7% 991.0 230.3% 769.4 Target Achieved

May-12 Emami FMCG 457 535 17.1% 1365.0 198.7% 915.4 Target Achieved

Berger Paints India Chemical 114 141 23.7% 283.7 148.8% 238.8 Target Achieved

Graphite India Others 92 110 19.6% 126.4 37.4% 71.2 Target Achieved

Rainbow papers Others 66 85 28.8% 94.4 43.0% 16.8 Target Achieved

Apr-12 Tatamotor - DVR Auto 158 200 26.6% 391.4 147.7% 276.9 Target Achieved

Pidilite Ind Chemical 172 210 22.1% 648.0 276.7% 595.4 Target Achieved

Mar-12 Magma Fincorp Banking & Finance 70 ACCu 141.0 101.4% 74.7 Target Achieved

Torrent Power Power 222 290 30.6% 252.9 13.9% 220.2 Booked

Feb-12 Castrol India Oil & Gas 236 ACCU 544.0 130.5% 371.8 Target Achieved

Prism Cement Cement 48.75 ACCU 133.5 173.7% 79.8 Target Achieved

MRF Auto 9767 ACCU 46399.0 375.1% 36915.5 Target Achieved

Shoppers Stop Others 340 ACCU 624.4 83.6% 360.0 Target Achieved

Allahabad Bank Banking & Finance 200 ACCU 211.3 5.7% 52.7 Target Achieved

Zydus Wellness FMCG 382 ACCU 1128.9 195.5% 742.2 Target Achieved

MRPL Oil & Gas 71 ACCU 83.2 17.2% 64.6 Target Achieved

Akzo Nobal Cons. Durables 857 ACCU 1551.0 81.0% 1305.2 Target Achieved

Maruti Suzuki Auto 1320 ACCU 4790.0 262.9% 3730.0 Target Achieved

M & M Auto 749 ACCU 1442.1 92.5% 1232.3 Target Achieved

Feb-12 Tata Power Power 115 120 4.3% 117.6 2.2% 61.4 Target Achieved

Dr Reddy Pharma 1642 1795 9.3% 4386.6 167.1% 2941.3 Target Achieved

Jan-12 Shree cement Cement 2100 ACCU 13360.0 536.2% 12111.4 Target Achieved

Dabur FMCG 102 125 22.5% 316.4 210.2% 245.1 Target Achieved

GOVT. IN ACTION

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Net Sales 11738.8 11797.2 13307.2 15250.0

Growth (%) 5.3 0.5 12.8 14.6

EBITDA 1513.3 1373.0 1863.0 2485.8

EBITDA Margin (%) 12.9 11.6 14.0 16.3

Net profit 1161.8 711.2 984.7 1433.5

Net Profit Margin (%) 9.9 6.0 7.4 9.4

EPS (Rs) 61.9 31.3 52.5 76.4

Rating: BUY Target: Rs 1580CMP: Rs 1370ACC Ltd.

BSE Code 500410

NSE Code ACC

Bloomberg Code ACC IN

ISIN INE012A01025

Market Cap (Rs. Cr) 25864

Outstanding shares(Cr) 18.8

52-wk Hi/Lo (Rs.) 1676.85 / 1174

Avg. daily volume (1yr. on NSE) 256,045

Face Value(Rs.) 10

Book Value 448.5

Consensus Estimate: Bloomberg

Particulars (in Rs. Cr.) CY14 CY15 CY16E CY17E

Company Information

ACC vs. Nifty

Investment Rationale

Budget 2016 positives for cement sector

Efforts on to improve Margin

Capacity to increase by CY16

The Union Budget 2016-17 turned out to be positive for c e m e n t s e c t o r s a s t h e r e w e r e s o m e p o s i t i v e announcements by f inance minister Arun Jait ley. Government has increased its focus on infrastructure development as well as on the promising new projects of Smart Cities and “Housing for All”. The government has pegged a total outlay of Rs 2,21,246 crore in FY17 for infrastructure sector such as roads and highways, irrigation and push to ‘Housing for all’ scheme. For development of smart city, the government has allocated Rs 7,296 crore towards Urban Rejuvenation Mission (AMRUT and Mission for Development of 100 Smart Cities). Extension of excise duty exemption on concrete mix manufactured at site for use in construction work to ready mix concrete and no change in excise duty structure for cement are also p o s i t i ve fo r t h e c e m e n t s e c t o r. W i t h a l l t h e s e announcement it is expected that cement demand will improve going ahead.

ACC is still one of the higher cost producers due to high fixed costs structure and legacy plants. To improve efficiency and reduce overall cost, the company has adopted a two-pronged approach. One is phasing out of old and inefficient plants and second approach is to reduce dependency on power purchase from outside. ACC’s pet coke usage is likely to be 20% by next year and ~30% in next 2-3 years. Similarly, usage of alternative fuel is expected to rise from the current 2% to 5% over the next 12 months. The 7.7 MW waste heat recovery facility is likely to be commissioned soon. ACC’s efforts towards logistics efficiencies, rise in alternate fuel use, reduction in manpower cost and improving electricity consumption are likely to render some improvement in cost structure. The company is also focusing on increasing the volume of premium products to improve realisation. Further improvement in cost structure would be contingent on synergies from integration of Holcim-Lafarge and ACC-ACEM operations.

The company is replacing existing facilities at Jamul, Chhattisgarh with a clinker plant with capacity of 2.8 MTPA and local grinding capacity of 1.1 MT of cement. At the same time, ACC plans to increase the grinding capacity at Sindhri, Jharkhand by 1.35 MT of cement while a new plant with annual capacity of 2.7 MT is scheduled to be built in Kharagpur. Construction plans at both locations are progressing well. With their commissioning, the company’s

Promoters50.3

FII15.3

DII18.2

Others16.2

Share holding pattern as on Dec 2015 (%)

total cement production capacity is expected to increase to 35 MT by CY16 from the existing 30.5 MT.

ACC is the second-largest pan-India cement manufacturer

with cement production capacity of 30.5 MTPA distributed

across all regions, thereby insulating the company from any

weakness in a particular region. The company has increased

its capacity at 10% CAGR over the past five years. Out of

the total capacity, the company has ~10 MTPA capacity in

the southern region, ~6.2 MTPA capacity in the eastern

region, ~6 MTPA capacity in the northern region, ~4.5 MTPA

capacity in the central region and ~ 4 MTPA capacity in the

western region. ACC’s regional mix is among the most

balanced in the country while its key markets are the south

and eastern regions, which together account for ~54% of

volume sales. ACC’s market share declined slightly in past

five years, but it is expected to increase its market share,

going forward, with stabilisation of new capacity.

ACC reported lower-than-expected Q4CY15 results,

volumes grew 4% YoY to 6 mn tonnes (t ) due to

operational stability in east plants while realisations fell

1.8 YoY and 2.7% QoQ to Rs4,409/t due to weak pricing

across regions. Due to the above factor revenue grew by

3% to Rs. 2912 cr. Total cost/t fell 1.9% YoY to Rs4,387

due to better performance on cost was driven by lower

than expected energy and freight cost but higher raw

material and employee cost increased the operation cost.

With this EBITDA comes in at Rs. 213.8 cr up 17.2% YoY

led to EBITDA margins of 7.5% up 91 bps YoY and

EBITDA/t rose 13% YoY to Rs356. PAT fell 68.6% YoY to Rs.

102.4 cr impacted by 8% YoY increase in depreciation and

18% fall in other income.

Govt. focus on infrastructure development as well as

on the promising new projects of Smart Cities and

“Housing for All”. Any major delay in implementing

above project will have a negative impact on the

company.

Recovery in coal and crude oil prices could put

pressure on the margins of ACC.

Being a pan-India player and having a strong balance sheet,

the company is in a better position to benefit from the

current economic revival. Demand for cement is expected

to pick up over the coming quarters with the government

increasing focus on infrastructure development as well as

on the promising new projects, “Smart Cities” and “Housing

for All”. Govt. concerted efforts to stimulate investment

across several sectors is expected to have a positive impact

Balanced regional mix reduce regional risk

Result Analysis

Key Risk

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Valuation

on the economy which will boost construction and housing

activities in short to medium term. The company is taking

various initiatives towards logistics efficiencies, rise in

alternate fuel use, reduction in manpower cost and

improving electricity consumption to improve efficiency

and reduce overall cost thereby improve overall margins.

Further with a capacity expansion of 2.8 MT in Jamul

(Chhattisgarh), it is expected that CY16 to witness an

improvement in volume growth and realisation which could

lead to increase in revenue. However, valuations are

relatively cheap with EV/EBITDA of 13.5x for CY16 and 9.5x

17E and current EV/ton of US$95. Thus, we recommend our

investors to BUY the scrip with target price of Rs 1580

arrived at EV/ton of USD112 and EV/EBITDA of 10.5x of

CY17E from 12 - 18 months investment horizon.

Sale Volume and realization trend

Total cost and EBITDA per TON

CY14Cement Sales volume (mt)

CY15Net realisation (Rs./t) (RHS)

CY14Total Cost (Rs./t)

CY15EBITDS/tonne (Rs/t) (RHS)

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Net Sales 3228.1 3887.2 4384.8 4989.9

Growth (%) 1.9 20.4 12.8 13.8

EBITDA 211.5 331.3 460.4 543.9

EBITDA Margin (%) 6.6 8.5 10.5 10.9

Net profit 122.9 210.5 289.4 354.3

Net Profit Margin (%) 3.8 5.4 6.6 7.1

EPS (Rs) 9.7 16.6 22.8 27.9

Rating: BUY Target: Rs 810CMP: Rs 680Whirlpool India Ltd.

BSE Code 500238

NSE Code WHIRLPOOL

Bloomberg Code WHIRL IN

ISIN INE716A01013

Market Cap (Rs. Cr) 8512

Outstanding shares(Cr) 12.7

52-wk Hi/Lo (Rs.) 847 / 555.55

Avg. daily volume (1yr. on NSE) 54,520

Face Value(Rs.) 10

Book Value 81.9

Consensus Estimate: Bloomberg

Particulars (in Rs. Cr.) FY14 FY15 FY16E FY17E

Company Information

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Whirlpool vs. Nifty

Investment Rationale

7th pay commission and improving economy to boost

demand for consumer durables

Entering the new horizon of Lifestyle

Whirlpool India ltd (WIL) is well positioned to benefit from

the impending 7th pay commission. It is expected that

slightly over Rs 1 lakh crore of incremental salary in the

hands of government employees and pensioners. It has

broadened its range of SKUs over the past 2-3years across

various products and has recently strengthened it by

adding/planning to add new variants in refrigerators, air

conditioner and washing machine. Historically, WIL and

other white goods players has registered more than 17%

revenue CAGR in FY08-FY10 when 6th pay commission was

implemented. It is believed that this time too, WIL could

see significant pickup in growth in FY17-FY18E. Moreover

the demand for consumer durable products are directly

correlated with country’s economic growth as spurring GDP

growth would result in higher disposable income which

later translates into demand creation for durable and

luxurious products. Now with the implementation of 7th

pay commission it is expected that GDP will improve by

0.2%. The NDA government has been striving hard to

revive the economy by unleashing slew of reforms across

the corners, however still it has not materialized into

growth. But the expectation is country’s economic growth

has hit the trough and the growth revival is just a matter of

time before the reforms start delivering results. WIL

delivered strong growth during economic boom and has

ability to outperform the GDP growth, once the economic

growth improves.

From traditional sales of individual products l ike

refrigerators, washing machines, air-conditioners,

microwaves and other kitchen appliances, Whirlpool is

entering into new ways to capture additional market share

by focusing on built-in kitchen products. Whirlpool has

already opened two such showrooms in Jaipur and Kolkata.

With positive response for built-in kitchen products, it will

further expand its footprint in this segment by incurring

total capital expenditure of Rs.200 Mn to set up 100 such

showrooms across the country and this segment is

expected to generate total revenue of Rs.1000 Mn

between medium to long term time horizon.

Whirlpool India ltd (WIL) is a subsidiary of US based

company Whirlpool Corporation, which is one of the largest

players in global home appliances industry with annual

sales of USD 20 billion and having 70 manufacturing and

technology research centers across the world. The parent

company manufactures appliances for various uses,

including Fabric Care, Cooking, Refrigeration, Dishwashing,

Garage Organization, and Water Filtration. The company

Strong Parentage

GOVT. IN ACTION

9

Promoters75.0

FII6.2

DII8.0

Others10.8

Share holding pattern as on Dec 2015 (%)

markets some of the world’s most recognized appliance

brands, including Whirlpool, Maytag, KitchenAid, Jenn-Air,

Amana, Bauknecht, Brastemp, Consul and Indesit in more

than 170 countries. Thus, WIL’s ability to leverage on its

parent’s products and marketing expertise to launch new

products or undertake innovations on existing products in

the Indian market puts it in a gainful position.

Refrigerator segment account 62% of WIL’s annual revenue

followed by washing machine (21%), Air conditioners (6%),

Microwave ovens (2%) and spares & accessories (4%). WIL

manufactures refrigerators and washing machines in its

Indian manufacturing facilities located at Faridabad,

Pondicherry and Ranjangaon, which accounts more than

80% of revenue. WIL outsources Air Conditioners,

Microwave Ovens and other products from Chinese

manufacturers. In Indian refrigerator market, WIL has

competitive position over the other industry players as WIL

has strong presence in both mass and mid segment

refrigerator category. Indian refrigerator market is estimated

at Rs 130 billion largely dominated by LG, Samsung,

Videocon, Godrej & Whirlpool with combined market share

of more than 80%. LG is the market leader with ~25%

market share followed by Samsung. WIL is largely present

in mass and mid segment category with limited products in

the premium segment. Further, WIL has one of highest

products offering in the refrigerator category with more

than 180 products in its portfolio. The company has strong

presence in the economy segment (direct cool refrigerator)

and this segment contributes about 75% of refrigerator

sales, while industry average is 70%. In frost free

Refrigerator segment, the company has been gaining

market share in past 5 years and reached to ~30% from

10%. In past 3 years, company has been revamping its

product lines and flooded the consumer market with new

launches across the segment. Product innovation and new

launches would aid the company to recoup its lost market

share and simultaneously propel its future earnings growth.

WIL has been aggressively pushing products through trade

channel and has increased trade discounts and rebates

from 11.2% of sales in FY14 to 14.9% of sales in 9MFY16.

The company has also increased the advertisement spend

by 44% YoY in FY15 to Rs. 70.4 cr to drive sales growth.

WIL has been aggressively deploying its resources in

expanding & innovating its product portfolio and

distribution reach. WIL already has vast distribution

network for all its products which company is leveraging

through consistent new product launches in past few years.

WIL has followed a disciplined pricing strategy and solely

focused on new products & marketing innovations,

resulting in sustainable earnings growth. With the new

round of product launches, expanding distribution reach

Refrigerators the top revenue contributor

Aggressive advertisements and Strong distribution

network to drive growth

and aggress ive advert isements expendi ture , the

management is confident of clocking revenue growth of

35% CAGR over FY15-18E.

WIL has reported stellar Q3FY16 result on the back of

volume growth and better product mix. Revenue grew by

10.8% yoy to Rs 760 cr on account of 8% yoy volume

growth. Better sale of profitable products led to better

margin generation and some benefits came from supply

side as well due to softening of commodity prices and

stable currency. That led EBITDA growth of 29.8% yoy to

Rs. 70.6 cr with EBITDA margin improvement of 113 bps

yoy to 8.7%. Higher other income and lower tax expenses

translated into robust PAT growth of 39.2% yoy at Rs 43.9

crore. This commendable performance came amid sluggish

economic growth and weak consumer sentiment. Thus we

believe that once economy improves, WIL could deliver far

superior growth. Moreover, the company is virtually debt

free and has ability to generate strong operating cash flows

over the years. Strong asset returns coupled with negative

working capital ensures strong return ratios and healthy

free cash flow. Given, new launches, product innovations,

expanding distribution network and low penetration, we

believe WIL’s high growth would be sustainable in future

also.

Persistent slowdown in economy could hurt the

demand for consumer durables product which could in

turn impact company’s revenue growth.

As the company imports some of its products, any

volatility in currency could have negative bearing on

its margins.

WIL is expected to achieve robust revenue growth over the

next 2-3 years driven by the 7th pay commission spend

coupled with economy improvement and moderate

recovery in rural demand. Moreover WIL is a subsidiary of

Whirlpool Corporation US, thus backed by strong parentage

and leveraging its parent’s products and marketing

expertise. After posting stellar Q3FY16, management has

set up an ambitious revenue target of 35% CAGR over

FY15-18E and considering its proven track record we

believe, WIL has ability to achieve the target. Given, strong

parentage, improving economic growth, new launches &

product innovations, strong distribution network and

healthy return ratios, the stock justifies its premium

valuation and we believe its long term growth story still

remains intact and the stock has potential to rally further.

At current price, the stock is trading at P/E multiple of

24.2x of FY17E EPS. We advise our investors to BUY the

stock with target price of Rs. 810, valuing at P/E multiple of

29x FY17E EPS.

Strong financials

Key Risks

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Rating: BUY Target: Rs 690CMP: Rs 518VA Tech Wabag Ltd.

Consensus Estimate: Bloomberg

Particulars (in Rs. Cr.) FY14 FY15 FY16E FY17E

Company InformationBSE Code 533269

NSE Code WABAG

Bloomberg Code VATW IN

ISIN INE956G01038

Market Cap (Rs. Cr) 2886

Outstanding shares(Cr) 5.4

52-wk Hi/Lo (Rs.) 847.9 / 408.8

Avg. daily volume (1yr. on NSE) 100,852

Face Value(Rs.) 2

Book Value 165.6

Net Sales 2238.6 2435.2 2805.3 3346.7

Growth (%) 38.4 8.8 15.2 19.3

EBITDA 188.5 209.5 244.1 307.9

EBITDA Margin (%) 8.4 8.6 8.7 9.2

Net profit 109.9 110.1 123.4 167.3

Net Profit Margin (%) 4.9 4.5 4.4 5.0

EPS (Rs) 21.3 20.4 22.7 30.7

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Company Overview

Investment RationaleUnparallel expertise in water and waste water projects

Strong revenue visibility on all time high order book

Incorporated in 1996 and headquartered in Chennai, VA

Tech Wabag Ltd. (VATW) is a multinational player in the

water treatment industry and a leader in the Indian water

technology market, having a market share of around 50%

and is also one of the world’s leading companies in water

treatment. The company offers complete Water and Waste

Water Treatment solutions. They provide services which

span across Municipal Drinking Water, Municipal Sewage,

Industrial Water, Industrial Effluents, Desalination and

Recycle. Its domestic business can be divided into

desalination, Municipal, Industrial and Operation and

Maintenance (O&M). VATW’s operations are stretched

across countries like Austria, Czech Republic, Algeria,

Tunisia, Romania, Turkey and Philippines. The company’s

international operations are conducted through their

subsidiaries. They have two direct subsidiaries and eleven

indirect subsidiaries. Wabag Austria is the holding company

for most of their subsidiaries. Till date, VATW has executed

2,250 projects and is currently executing 72 projects.

VATW is one of the few pureplay water technology

companies in the world that provides turnkey water

treatment solutions across a whole range of water

treatment sub-segments ranging from drinking and

municipal water to industrial wastewater treatment and has

presence in multiple geographies. Competition in the

segment is intense – domestically, from players with a

construction background, and internationally from other

renowned technology owners. However, unlike most EPC

peers VATW has in house technology and engineering

expertise, which gives VATW an edge over its peers

particularly in the domestic market. In the international

market the company faces competition from players like

Veolia and Suez Environment. However, the company

compromises on the margins to penetrate new markets and

gain market share.

Va Tech Wabag has successfully surpassed its own order

intake guidance of Rs 35 – 37 Bn for FY16 and the

cumulative order intake stands at Rs 50 bn, up 68% YoY.

Incidentally, this is the highest order intake clocked by the

Group in a single financial year. Order intake in FY16 alone

provides robust revenue visibility (1.92x TTM sales) which

shows strong confidence of the customers in the group

owing to its strong expertise in the water treatment space.

As of 9MFY16, VATW had a healthy order book position of

Rs 79 bn (including Rs 15 bn of frame work contract).

GOVT. IN ACTION

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Promoters29.0

FII27.4

DII25.0

Others18.7

Share holding pattern as on Dec 2015 (%)

Considering the present orders, the order book is over Rs

95 bn, thus providing a revenue visibility of 3.7 years

(based on TTM sales). As of 9MFY16, India business and

international business orders are nearly symmetrical.

However, EPC orders dominate the order book with a share

of 84% while O&M holds the rest. The management has a

strong focus in the high margin O&M segment and the

proportion of the orders might increase in the future. As of

December 2015, 62% of the order book is accounted by

Municipal orders and the rest by industrial. For India, 55%

of the order book is accounted by municipal orders and in

this segment; Wabag is a major beneficiary of the

government f rom three major schemes ( i ) Ganga

Rejuvenation Plan; (ii) Swachh Bharat Mission and (iii) 100

Smart Cities.

Va Tech Wabag is a technology driven company hence has

an asset light business model and is currently reaping the

benefits of amounts spent on in-house R&D activities and

patents developed by the overseas subsidiary over the

years. This helps the company to take on larger volume of

projects and generate higher ROCE. VATW generally out

source non critical, low value add work while critical

projects are mostly retained in house. This helps the

company to concentrate on critical engineering, design and

technology to provide quality water engineering solutions

leading to efficient execution of projects while outsourcing

helps earn higher return on investments without investing

in capex. Owing to the asset-light business model

approach, the company has maintained its asset turnover

ratio above 2x and ROCEs of ~12% and has every chance

of improving going ahead.

The company has well diversified geographical presence

including the MENA, Central and Eastern Europe, China,

India and South-East Asia which reduces dependence on

single country. Further the company is looking to increase

its efforts across various new geographies in Latin America,

Eastern Europe and Spain to invest and to strengthen its

presence through local tie-ups /JVs in target countries. The

Company is gaining margin on account of better absorption

of overhead and bring it under control. Besides, the

strategy helps in understanding local markets and

assessing and managing country-specific risks. However,

VATW has largely maintained equal contribution of

revenues from domestic and overseas market over the

years.

Overseas business for VATW has generally been a low-

margin business due to fierce competition it faces from

international established players. Over the period, the

international orders have increased from 32% in FY2013

Asset Light Business Model

Diversified geographical presence

Overseas business concerns priced in

to 48% in Q3FY2016. As % of revenues, the share of

international revenues has increased from 46% in FY12 to

64% in FY15 however the segmental margins (PBIT) has

declined from 38% in FY12 to 22% in FY15 which had a

bearing on its overall margin. Further, rising global turmoil

related to commodity melt down and economic issues

together with volatile currency movements impacted the

international performance. Majority of the existing order

book has a strong exposure to oil producing economies

and thus had to bear the brunt of distressed economic

condition. However, execution is expected to pick up in

projects which were awaiting approvals, which will now

move into later stages of execution. Moreover, major

negatives with regard to the international business is

largely been discounted by the market.

Delay in the projects may hamper the results of the

company

Increasing competition

Political Unrest

VA Tech Wabag is a strong player in the world that provides

turnkey water treatment solutions across a whole range of

water treatment sub-segments ranging from drinking and

municipal water to industrial wastewater treatment and has

presence in multiple geographies. Owing to its growing

reputation on account of its strong engineering expertise,

VATW has registered all time high order intake in any

financial year and went past the management guidance.

The strong order intake in FY16 provides a robust revenue

visibility of 1.92x TTM sales. In the domestic market, Wabag

is a major beneficiary of the government from three major

schemes (i) Ganga Rejuvenation Plan; (ii) Swachh Bharat

Mission and (iii) 100 Smart Cities. Ministry of Drinking

Water and Sanitation has raised allocation of funds in FY16

and sends a strong message to the sector. While

internationally, owing to high correlation of its order book

with the oil producing nations, the business had to bear

the brunt. The stock has witnessed steep correction owing

to concerns on the same. However, strong order book,

robust revenue visibility together with its superior

execution skills are key strengths for the company. VATW’s

asset light business model helps to generate higher ROCE

and strong management provides confidence in the stock.

Thus, we recommend our investors to BUY the scrip with

target price of Rs 690 from 12 - 18 months investment

horizon. Currently, the scrip is valued at P/E multiple of

17.1x of FY17E EPS.

Key Risks

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Valuation

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STOCK PICKS

12

1 ACC 1366.1 25647.0 26.8 18.4 3.0 7.1 13.8 17.0 54.3 1.2

2 Adani Ports 237.9 49257.6 19.5 17.4 4.6 23.7 19.2 1.1 9.8 0.5

3 Ambuja Cements 230.9 35833.3 28.4 20.9 N/A N/A 12.8 2.8 53.8 N/A

4 Apollo Hospitals 1330.5 18510.6 49.1 39.3 5.8 11.1 12.5 5.8 25.7 0.4

5 Ashok Leyland 106.7 30351.3 35.6 22.2 6.7 3.2 N/A 0.5 95.6 0.4

6 Asian Paints 856.1 82116.9 45.1 38.1 17.3 31.8 34.1 6.1 41.9 0.7

7 Aurobindo Pharma 736.5 43097.7 21.1 17.1 8.3 35.4 30.2 2.3 8.3 0.3

8 Axis Bank 429.5 102298.2 12.4 10.3 2.3 17.9 18.6 4.6 17.7 1.1

9 Bajaj Auto 2345.8 67879.7 18.0 16.3 6.1 28.5 30.3 50.0 57.3 2.1

10 Bajaj Finserv 1666.9 26525.6 13.8 11.2 2.4 16.4 16.6 1.8 1.6 0.1

11 Bajaj Holdings 1430.0 15915.0 N/A N/A 1.2 16.0 N/A 32.5 17.8 2.3

12 Bank of Baroda 140.4 32338.9 N/A N/A 0.7 9.8 N/A 3.2 21.8 2.3

13 Bank of India 94.0 7627.9 N/A N/A 0.2 6.4 N/A 5.0 16.5 5.3

14 Bharat Forge 892.0 20764.1 27.3 22.8 6.0 24.9 21.0 7.5 22.8 0.8

15 Bharti Airtel 354.5 141707.8 26.3 23.4 2.2 8.7 8.4 2.2 17.1 N/A

16 Bharti Infratel 387.3 73457.9 31.5 26.9 4.3 11.4 16.1 11.0 104.5 2.8

17 BHEL 111.0 27156.1 47.5 13.0 0.8 4.3 5.0 1.2 19.5 1.0

18 Bosch 20587.2 64641.5 N/A N/A 8.8 N/A N/A N/A N/A N/A

19 BPCL 874.0 63197.6 9.5 9.3 2.8 22.9 22.6 22.5 33.8 2.6

20 Britannia Industries 2583.2 30991.6 36.6 30.5 24.9 67.4 49.7 16.0 27.9 0.6

21 Cairn India 154.6 28976.0 16.8 16.9 0.5 7.7 2.9 9.0 37.7 5.8

22 Canara Bank 180.4 9795.6 N/A N/A 0.3 9.1 N/A 10.5 18.9 5.8

23 Cipla 503.5 40450.4 22.4 18.7 3.7 11.3 16.0 2.0 13.6 0.4

24 Coal India 295.2 186427.5 12.5 11.3 4.6 33.2 37.8 20.7 95.3 7.0

25 Colgate-Palmolive 829.3 22555.8 N/A N/A 29.3 N/A N/A 12.0 58.4 1.4

26 Container Corp. 1192.2 23244.8 25.9 22.9 3.1 14.7 11.8 13.4 24.8 1.1

27 Cummins India 849.0 23532.9 N/A N/A 8.2 N/A N/A 14.0 49.4 1.6

28 Dabur India 245.1 43116.6 34.4 29.8 12.8 35.5 31.9 2.0 33.0 0.8

29 Divis Lab. 977.0 25936.3 24.3 20.3 7.4 26.4 27.7 10.0 31.2 1.0

30 Dr Reddy’s Lab. 2941.3 50159.6 19.6 19.3 5.1 24.7 18.0 20.0 14.6 0.7

31 Eicher Motors 18633.5 50610.7 39.7 30.4 14.6 31.6 36.5 50.0 22.0 0.3

32 Exide Industries 134.6 11436.8 17.0 15.6 3.0 16.8 16.0 2.2 30.4 1.6

33 Federal Bank 47.0 8065.3 N/A N/A 1.0 14.5 N/A 1.1 17.8 2.3

34 GAIL 347.8 44117.6 17.8 12.7 1.3 9.5 9.6 6.0 24.1 1.7

35 GlaxoSmith Consumer 6038.4 25394.6 N/A N/A N/A N/A N/A 55.0 39.6 N/A

36 Glaxosmithk Pharma. 3676.1 31137.7 65.0 50.6 17.0 N/A 33.9 N/A N/A N/A

37 Glenmark Pharma. 780.7 22026.7 26.0 15.7 7.1 15.9 27.2 2.0 11.4 0.3

38 Godrej Consumer 1328.0 45222.9 39.7 33.6 10.5 22.4 24.0 5.5 20.6 0.4

39 Grasim Industries 3767.0 35163.5 15.6 12.0 1.5 7.8 11.0 18.0 9.5 0.5

40 HCL Technologies 806.8 113762.0 15.0 13.2 4.2 29.1 26.9 18.0 32.6 N/A

41 HDFC 1125.8 177850.5 17.3 14.3 N/A N/A 21.0 15.0 27.0 N/A

42 HDFC Bank 1053.8 266359.2 23.2 18.9 4.2 19.9 17.1 8.0 18.8 0.8

43 Hero MotoCorp 2856.9 57047.7 18.3 16.2 8.7 38.9 N/A 60.0 50.7 2.1

44 Hindalco Industries 84.4 17428.5 34.0 12.2 0.5 2.2 3.8 1.0 24.2 1.2

45 Hindustan Unilever 861.2 186341.7 44.4 38.8 46.3 115.4 108.4 15.0 74.4 1.7

46 HPCL 769.4 26054.0 8.5 7.4 1.9 10.7 20.2 24.5 55.4 3.2

47 ICICI Bank 223.4 129890.4 10.0 9.1 1.5 15.2 14.9 5.0 23.7 2.2

GOVT. IN ACTION

13

48 Idea Cellular 107.4 38651.5 12.7 20.6 1.5 14.4 7.1 0.6 6.8 N/A

49 Indiabulls Housing Fin. 614.8 25897.8 10.5 8.8 3.3 30.8 25.6 26.0 47.9 4.2

50 Indian Oil Corporation 394.3 95722.0 8.4 7.8 1.4 7.2 16.3 6.6 34.2 1.7

51 IndusInd Bank 928.1 55217.0 N/A N/A 3.2 15.6 N/A 4.0 11.8 N/A

52 Infosys 1197.3 275899.6 20.4 17.9 4.7 23.6 24.2 29.8 55.2 N/A

53 ITC 320.0 257510.6 25.4 22.5 8.1 32.8 30.5 6.3 51.8 2.0

54 JSW Steel 1232.9 29800.7 328.8 16.5 1.3 8.1 7.8 11.0 15.1 0.9

55 Kotak Mahindra Bank 671.5 123144.5 35.2 25.2 4.7 14.8 14.4 0.5 2.7 0.1

56 Larsen & Toubro 1194.0 111213.9 25.6 20.6 2.7 12.1 11.5 16.3 31.7 1.4

57 LIC Housing Finance 476.9 24064.9 14.7 11.3 3.1 18.0 N/A 5.0 18.1 1.0

58 Lupin 1401.6 63148.0 28.4 19.7 7.1 30.4 26.4 7.5 14.0 0.5

59 M & M Financial 233.5 13277.8 19.2 13.8 2.2 16.2 13.9 4.0 24.9 1.7

60 Mahindra & Mahindra 1232.3 76534.1 19.9 15.5 2.8 12.8 14.6 12.0 23.8 1.0

61 Marico 240.3 31002.8 41.5 35.5 17.0 36.0 34.2 1.3 28.1 0.5

62 Maruti Suzuki 3730.0 112674.3 22.9 18.1 4.6 16.6 20.4 25.0 19.8 0.7

63 Motherson Sumi 246.5 32605.2 25.4 18.8 9.8 27.5 34.8 2.0 30.7 0.8

64 MRF 36915.5 15656.4 7.6 8.1 3.4 22.2 N/A 50.0 2.3 0.1

65 NMDC 98.9 39191.2 10.9 12.0 1.2 20.4 9.9 8.6 53.4 8.6

66 NTPC 127.3 104964.8 11.4 10.5 1.3 11.8 11.2 2.5 20.6 2.0

67 Oil India 312.6 18788.5 7.7 8.2 0.9 12.4 10.0 20.0 46.1 6.4

68 ONGC 212.3 181590.3 10.2 10.1 1.0 10.4 9.2 9.5 44.3 4.5

69 Oracle Financial Serv. 3500.0 29699.7 23.4 19.5 8.6 19.5 30.8 665.0 471.9 19.0

70 Petronet LNG 244.0 18296.3 N/A N/A 3.2 16.5 N/A 2.0 17.0 0.8

71 Power Finance Corp. 165.7 21873.1 N/A N/A 0.7 20.0 N/A 9.1 20.0 5.5

72 Power Grid Corp. 138.2 72274.4 11.6 9.8 1.9 13.8 16.0 2.0 22.2 1.4

73 Punjab National Bank 82.0 16091.7 N/A N/A N/A N/A N/A 3.3 18.0 N/A

74 Reliance Capital 360.9 9117.5 8.5 8.5 0.7 7.8 7.2 9.0 22.7 2.5

75 Reliance Comm. 49.5 12308.0 17.6 16.1 N/A N/A 2.2 0.0 0.0 N/A

76 Reliance Industries 1036.3 335756.8 12.0 11.3 1.4 11.3 11.3 10.0 12.5 1.0

77 Reliance Infrastructure 520.9 13699.1 7.7 6.3 0.5 6.7 7.4 8.0 11.7 1.5

78 Rural Electrification 162.5 16041.3 N/A N/A 0.6 23.3 N/A 10.7 19.8 6.6

79 Shriram Transport Fin. 923.2 20944.7 15.8 12.7 2.3 11.6 15.0 10.0 22.1 1.1

80 Siemens 1061.2 37791.5 50.6 41.3 7.4 N/A 15.0 6.0 30.1 0.6

81 State Bank of India 189.5 147104.6 10.4 8.8 0.8 9.1 8.8 3.5 15.6 N/A

82 Steel Authority of India 42.0 17325.7 N/A N/A 0.4 4.9 -0.8 2.0 38.3 4.8

83 Sun Pharma. 794.4 191173.7 35.2 23.8 6.4 20.6 23.2 3.0 15.9 0.4

84 Sundaram Finance 1270.0 14109.6 22.3 18.7 3.8 16.9 16.6 10.5 20.3 0.8

85 Tata Chemicals 368.8 9394.1 12.6 10.0 1.7 10.7 15.2 10.0 53.4 2.7

86 TCS 2469.4 486577.5 20.2 18.3 7.2 35.1 34.4 39.0 77.9 1.6

87 Tata Global 119.3 7529.4 19.9 17.1 1.3 4.4 7.3 2.3 57.3 1.9

88 Tata Motors 372.5 121611.1 10.8 8.3 2.2 23.0 17.9 0.0 0.0 0.0

89 Tata Power 61.4 16606.4 15.1 12.0 1.3 0.4 9.2 1.3 783.1 2.1

90 Tata Steel 303.9 29510.4 N/A 36.4 N/A N/A 1.7 8.0 N/A N/A

91 Tech Mahindra 467.6 45249.2 14.7 12.9 3.1 20.1 21.0 6.0 21.9 N/A

92 Titan Company 329.8 29274.7 37.0 29.6 9.5 29.1 25.5 2.3 25.0 0.7

93 UltraTech Cement 3136.3 86068.4 37.0 26.9 4.5 11.6 14.1 9.0 11.8 0.3

94 United Breweries 824.7 21804.2 66.6 51.5 11.8 14.8 17.9 1.0 10.3 0.1

95 United Spirits 2557.1 37161.0 91.7 55.5 56.3 -91.4 38.8 0.0 N/A 0.0

96 UPL 451.4 19345.1 15.3 12.6 3.3 20.6 20.0 5.0 18.7 1.1

97 Vedanta 87.7 26000.4 15.4 10.8 0.5 -24.7 4.4 4.1 N/A 4.7

98 Wipro 553.2 136664.5 15.1 13.9 3.0 20.9 20.0 12.0 34.0 N/A

99 Yes Bank 846.4 35584.0 N/A N/A 3.0 21.3 N/A 9.0 18.8 1.1

100 Zee Entertainment 381.9 36679.5 36.5 29.0 10.4 26.6 21.9 2.3 26.0 0.6

#N/A: Not AvailableSource: Bloomberg Consensus as on Mar. 29, 2016

APRIL 2016

VALUATION AT A GLANCE

14

Real Estate Bill2016

Source: KPMG, India Brand Equity Foundation (IBEF)Note: CAGR- Compunded Annual Growth Rate; E- Estimate

FY08 FY09 FY10 FY11 FY13 FY14 FY20E FY28E

Market Size of Real Estate in India (USD Bn)

The Indian Real Estate Bill will bring transparency

and improved corporate governance; positive for the

Indian real estate sector in the long term.

The much awaited Realty Bill was passed by both the

parliamentary houses earlier this month (15th March,

2016). The regulations introduced in the Bill aims to

standardize the realty sector by introducing a regulatory

body which will bring transparency and efficiency in the

real estate sector. This bill would likely give a boost to the

Indian real estate market whose market size is expected to

increase 1.92 times to $180bn by 2020 from $93.8bn in

2014 (according to a KPMG report). Also, the real estate

contribution to India's GDP is estimated to increase to

about 13% by 2028. Increasing share of real estate in the

GDP would be supported by increasing industrial activity,

rising middle class disposable income, and urbanization.

Currently, the rural and urban housing shortage stood at

14.8mn and 18.78mn in 2015. The 2015-2016 Economic

Survey highlighted that real estate and ownership of

dwelling is important and contributes around 8% of India's

gross value added (GVA) (as on 2014-2015) and grew by

9.1%.

Currently the real estate sector in India has been facing a

slowdown on account of delay in handling projects and

illegal practices. There are a large number of unregulated

121.0

Urban-Rural Housing Shortage (Mn)

15

.1

34

18

.4

30

.1

19

.3

26

.7

20

.5

26

21

.7

19

.7

18

.78

14

.8

players who have been unethical with their dealings to the

home buyers. The builders have been stalling the existing

home projects as they used to invest the client's money

into other projects. These practices have taken a drag on

the realty sector which is facing an inventory overhang and

slowdown in construction activity. However, home prices

haven't softened due to large inflow of capital in the

sector. The construction sector has been growing at a slow

pace, recording only 4.6% growth in 2013-14, 4.4% in

2014-15 and 3.7% in 2015-16, led by weakening of both

domestic and global growth.

who will regulate

transactions related to both residential and commercial

projects. The authority will also grade the projects,

thereby helping customers to make better decisions.

RERA is the first organization which will be monitoring

all the realty markets players, which consists of many

unregulated players along with some regulated ones.

Projects with an area>=500 sq feet or with eight flats

will have to be registered with the regulatory authority

as compared to the previous rule of >1000 sq feet or 12

flats. This will lead to higher registrations and greater

The salient features of the Realty Bill are as follows:

• The bill will establish state-level authorities called Real

Estate Regulatory Authorities (RERAs)

• Smaller projects will also have to be registered:

GOVT. IN ACTION

15

transparency which is positive for the sector. The Real

Estate Bill is now applicable for both commercial and

residential real estate projects.

Builders will have to deposit at least

70% of the sale proceeds, including land cost, in an

escrow account to meet construction cost for faster

project execution. However, state governments can alter

the amount of deposit if required. Higher cash deposits

might lead to liquidity crunch for the builders if there

are delays in any projects, especially in the metro cities

like Mumbai, Delhi where the component of land cost is

much higher than the construction cost. Liquidity crunch

can cause some developers to delay new project

launches in the near term.

All

registered projects would require mandatory disclosures

of the details of the project, promoters, land status and

layout plan. In addition to the proforma agreement

disclosure, a detail of real estate agents, contractors,

architects and engineers also needs to be disclosed.

Greater project disclosure to a regulatory body will

prevent frauds in this sector.

Carpet area

will have to be clearly defined to eliminate any scope of

wrongdoings. Many developers have sold homes based

on super area, which is artificially an inflated number in

comparison to what the buyer can actually use. So, now

the home buyer can actually assess the flat on the true

area i.e the carpet area instead of super area

This will prevent the

developers to do any kind of unfavorable adjustments

as they will need to fetch the nod of the majority of the

home buyers.

So far, the

opportunity cost of project delays was borne by the

investor by paying higher interest payments and not the

developer. But now the developers also need to pay

interest on project delays to the buyer to compensate

for their shot comings.This rule will enable the

developers to fast track their projects in order to avoid

interest payments. This is quite positive for the real

estate sector as it will alleviate the pain of home buyers

who have been paying additional interests due to

project delays by the developers.

A Residents' association has to be formed within 3

months of the allotment of a project. Builders will be

• Builders will have to deposit more cash (70%) to meet

construction cost:

• Clearer project details disclosure are required now:

• Carpet area needs to be clearly defined:

• Any post changes in the project plan would require the

consent of 2/3rd of the buyers:

• Developers will be penalized for delaying projects by

paying the same interest as the buyers:

• Structural deficit liability to be extended to five years:

liable for structural defects for five years, instead of two

years suggested earlier. These will likely lead to higher

quality but at a greater maintenance cost.

Promoters may face

imprisonment of up to three years and real estate

agents up to one year for any non-compliance of

appellate tribunals or monetary penalties. Incorrect

disclosures will attract a penalty of 5% of the project

cost; failure to register will attract 10%. This law will

prevent the developers from taking any fraudulent

measures.

Tribunals will have to solve housing cases in 60

days as against 90 days proposed earlier. Regulatory

authorities will have to dispose of complaints within 60

days. This move will lead to faster resolution of

disputes, offering a relief to the home buyers.

on account of higher transparency, greater cash

flow predictability, faster project approvals and shrinkage

of black money activities. Investors have been skeptical to

invest in realty sector for a long time due to lack of

transparency, delayed projects and slowing demand.

Although the new bill may cause a little pain to the

developers due to higher regulatory cost in the near term,

the cost of capital should gradually decline in the long

term on greater standardization. There will also be some

amount of industry consolidation as the unregulated small

players may be forced to exit the business on higher

regulation cost. However, larger players may benefit in the

long term on higher market share. Thus, the above

regulatory changes along with the government plans to

build six crore houses by 2022 under the Housing for All

scheme is positive for the realty sector in the long term.

The government also plans to build 98 smart cities

gradually, with 20 smart cities to be started soon. However,

the implementation of the new realty bill may take some

time to be implemented at the state level as the bills

would have to be passed in their state assembly elections.

The real estate sector is the fourth largest sector in terms

of FDI inflows on account of favorable policies and

attractive investment opportunities. Apart from the recently

passed realty bill, some of the other favorable policies

• Any non- compliance may lead to imprisonment of

promoters and real estate agents:

• Timeline of disputes to be reduced to 60 days from 90

days:

We believe the realty bill will boost the investors'

confidence

Favorable government policies, improved corporate

governance will be the key to gain investor's

confidence and attract investments

APRIL 2016

Real Estate Bill

16

FDI in Construction Development Sector as a percent of India's

Total FDI

7.43%6.53%

11.42%10.71%

9.40% 9.00%

0%

2%

4%

6%

8%

10%

12%

FY11 FY12 FY13 FY14 FY15 FY16

Source: KPMG, India Brand Equity Foundation (IBEF)Construction development sector includes townships, housing, built-up infrastructure and construction development projects. ** Till September 2015

2. Ease in housing finances:

3. Housing For All scheme:

4. REITs in non-residential segment will widen the scope

of the real estate market:

5. Land acquisition Bill:

Real estate prices in India remained sluggish in

2015 but foreign private equity investments have

been picking up:

The government has

liberalized home loans of up to $31,250 for houses and

has also raised the home loan limit from$2488 to

$3317 during 2015-16.

The government plans to build

around 6 crore houses by 2022 under the Housing for

All scheme, of which the rural areas will comprise

around 4 crore houses.

SEBI has released draft

guidelines for investments by Real Estate Investment

Trusts (REITs ) in non-res ident ia l segment and

Infrastructure Investment Trusts. These guidelines will

open the channels of REITs to invest in commercial and

infrastructure sector also.

The land acquisition Bill passed

by the government in 2014 aims to speed up the

process for industrial corridors, social infra, rural infra,

housing for the poor and defense capabilities

We believe the above policy measures along with easier

financing terms should boost the real estate market as

India has one of the largest working populations and is

also recording a rise in nuclear families.

As discussed above, real estate prices in

India have not risen much over the last few years on

account of inventory overhang, liquidity crunch of

developers and overall slowdown in demand. However,

according to a report by real estate consultancy Cushman

& Wakefield, total private equity (PE) investments from

foreign funds in Indian real estate increased 33% YoY to

$2.2bn (~ Rs 11,306 crore).Mumbai accounted for about

35% of the total foreign investments as it offers good

growth prospects, followed by Delhi-NCR region which

accounted for 25% of the total investments. Domestic PE

investments mainly (94%) adopted the structured debt

investments while foreign PE investments contained only

18% of structured debt investments. Structured debt

investments offer an attractive investment option for

investors as it is fully secured and guarantees a decent

return. The other regions of India might also witness an

increase in investments as the government has relaxed the

FDI norms and is also focusing on improving the entire

infrastructure of India. These initiatives would also help in

preventing migration to tier 1 city over a course of time

and help in de-stressing the tier 1 cities.

introduced by the government earlier are as follows:

The government has allowed

FDI of up to 100% for townships and settlements

development projects. The government has also

reduced the FDI investment amount to $5 mn from

$10mn

1. Relaxation of FDI norms:

Mumbai32%

Bengaluru28%

Delhi-NCR26%

Chennai7%

Pune5%

Others2%

City-Wise Share of Total Structured Debt Investments

Source: Cushman & Wakefield

The Indian real estate sector is mainly comprised of 5

segments- Residential, Commercial, Retail, Hospitality and

SEZs. The residential space contributes around 80% of the

real estate sector. With the FDI norms getting relaxed to

100% last year, the other segments (especially retail

space) may also attract good investments. India's tourism &

hospitality industry is anticipated to touch $418.9 bn by

2022. The government recent initiative to boost tourism in

the country and depreciation of the rupee offers healthy

growth prospects in the hospitality space. Out of the 416

SEZs approved by the government, only 199 are operating

right now and are mostly in IT space. Thus, the real estate

market in India offers great opportunities in terms of

investments, provided the red tape gets reduced through

favorable government initiatives.

GOVT. IN ACTION

17

CementCement, one of the key industry in eight core sectors has

been consolidating in past two years on the backdrop of

slowing infrastructure spending from Government. Tepid

demand from end users such as construction and

infrastructure sectors put a lid on its utilization, which has

been lowest in a decade. Moreover, aggressive capacity

addition over the years by cement manufacturers amid

sluggish demand, deteriorated the demand supply situation

in the country, resulting in price correction in major regions

of the country. The overall cement manufacturing capacity

in India is estimated at 364 million tonnes (mn tn) with

utilization rate of ~75%, substantially lower from 90-95%

during up cycle. The overall slowdown in the sector was

attributed to sluggish GDP growth in the last two year. Lack

of reforms in infrastructure space and policy paralysis from

Government, have hindered the domestic economic growth.

After the demand boom witnessed during FY06- FY10, it

slowed down and demand growth lagged expectation with

growth lower than India's GDP growth for four out of five

years during FY11-FY15. The slowdown has been attributed

to de growth in housing sector, weak rural income growth,

lower government infrastructure spending coupled with

lower capex. However, with the beginning of 2014, the

expectat ion has bui ld up that the newly elected

government would take bold steps to push the economic

reforms. Though on actual front, government has been

lingering on passing the important reform bills, given their

limited majority in Rajya Sabha. Also Bihar election did not

send positive signal for investors as the outcome of the

election was against the ruling government and that would

delay the passing of reform oriented bills in Upper house.

Expectation of BJP strong initiatives in introducing reform

process at earliest will keep the momentum of the

domestic economy upbeat in coming quarters. It is also

expected that government would be proactive in curbing

fiscal deficit and thus would increase the government

spending towards infrastructure creation. Government's

emphasis on infrastructure spending would increase the

demand for cement in coming years.

Cement demand during FY15 rose marginally by 5.6%

significantly lower than industry expectation, thus signaling

that the sector is not out of woods. Weak demand and

supply overhang led to a h ighly volat i le pr ic ing

environment across the country, although the southern

region was relatively less volatile. However, despite of

strong oppositions from other parties in Parliaments and

Rajya Sabha, the government has been announcing raft of

reform policies to prop up the economic growth.

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

E

Source: Cement Manufactures Association

APRIL 2016

SECTOR OUTLOOK-CEMENT

18

Source RBI

Infrastructure creation is the prime focus area for NDA

government and to support the growth, they announced

massive public spending including investments in road

infrastructure, affordable housing and smart cities. RBI's

continuous effort to tame inflation has been yielded

positive result, thus provided room for the Central Bank to

reduce benchmark interest rate. Though the transmission of

lower interest rates to effective lending rates for borrowers

has not taken place in similar proportion. Thus, the Central

Bank has been trying to create a conducive interest rate

regime to propel the economic growth. Even government

has initiated to increase the money supply into the

economy by increasing the salary for government

e m p l o y e e s . T h e S e v e n t h P a y C o m m i s s i o n h a s

recommended ~23% pay hike for Central government

employees, thus benefiting ~40 lakhs government

employees and ~50 lakhs pension holders. Hence, both

government and RBI has been working together to revive

the economic growth by way of infrastructure creation.

Higher spend on infrastructure segments such as roads

and highways , i r r igat ion : The total out lay for

infrastructure sector is pegged at Rs 2,21,246 crore in

FY17 largely focused on roads and railways. Large

investments in the road sector at Rs 970 bn during

FY17, with the increased allocation for roads and

highways at RS. 550bn (up from RS. 430bn) topped up

by RS. 150bn raised by NHAI by bonds and the

investment in the Rural Sadak Yojna. The government is

planning to develop new Greenfield ports both on the

eastern and western coasts of the country. (Positive for

cement sector)

Push to 'Housing for all' scheme: The government has

announced a 100 per cent deduction for profits to an

undertaking in housing project for flats upto 30 sq.

metres in four metro cities and 60 sq. metres in other

cities, approved during June 2016 to March 2019 and

completed in three years. (Positive for cement sector)

Incremental spend on smart city development: In line

with government's vision to develop smart cities as

satellite towns of larger cities, the government has

allocated Rs 7,296 crore towards Urban Rejuvenation

Union Budget 2016-17- positives for cement sector

Key Announcements/ Proposals

•

•

•

Mission (AMRUT and Mission for Development of 100

Smart Cities). (Positive for cement sector)

Rise in allocation under Pradhan Mantri Gram Sadak

Yojana: The allocation towards the scheme has been

increased to Rs 19,000 crore for FY17. The government

has pledged to connect remaining 65,000 eligible

habitations by 2019. (Positive for cement sector)

Focus on enhancing of the rural income via increased

allocation towards MGNREGA, opening up of the 300

Rurban centers under the Rurban mission. Total rural

sector allocation stands at Rs. 877bn. Budget aims to

double the farmers' income in five years and ministry

allocated Rs. 360bn for the welfare of the farming

sector during FY17. Budget also proposed to spend Rs.

865bn on irrigation projects over next 5 years. (Positive

for cement sector)

The excise duty exemption on Ready Mix Concrete

(RMC) manufactured at site of construction for the use

in construction work at such site. (Positive for cement

sector)

Exemption of service tax: Construction of affordable

houses up to 60 square metres under any scheme of

the Central or State Government including PPP

Schemes will be exempt from service tax. (Positive for

cement sector)

No change in excise duty structure: At present the

excise duty is levied in the form Cement is taxed at

12.5 per cent ad valorem and additionally Rs 125 per

mt, with 30 per cent abatement. Jaitley in his Budget

did not tinker with excise. (Neutral for cement sector)

Clean energy cess on Coal increased from Rs. 200 to Rs.

400per ton. (Negative for cement sector)

No freight hike announcement in the Rail budget.

(Positive for cement sector)

·• While there was no direct announcement, key capex

initiatives made sure that cement and construction

sector could be the big beneficiaries from the budget.

We believe the budget has been very demand oriented

as it has emphasized on two major segments of cement

consumption, i.e. housing and the infrastructure. Thrust

for affordable housing and rural economy should boost

•

•

•

•

•

•

•

Impact on Sector / Specific stocks

GOVT. IN ACTION

19

housing demand, while key announcements on

infrastructure development should aid the growth for

the cement companies.

Increase in cess for coal is a marginal negative for

cement companies - likely to the hit the costs (largely

power and fuel) by ~RS. 30-40/t for the companies

using 100% coal. For companies using lesser coal (and

more petcoke), the impact would be accordingly lower.

No freight hikes during the budget (neither for cement

nor for Coal) came in as a big relief versus past year.

The reduction in the excise duty for RMC is unlikely to

have any significant impact on the sector.

The Mines and Minerals (Development and Regulation)

Amendment Act was passed in the Lok Sabha. The

amendment to the 2015 MMDR Act, when passed by the

Rajya Sabha, will allow for transfer of captive mines in the

country without the need for auction and will unclog a

number of stuck deals in the mining sector, would facilitate

banks and financial institutions to liquidate stressed assets

where a company or its captive mining lease is mortgaged.

The biggest direct beneficiary will be UltraTech Cement, as

it will clear hurdles in completion of acquisitions of JP

Group's plants with aggregate capacity of 22.4mn tonnes.

The other beneficiary will be Birla Corporation as it will

•

•

•

MMDR Act to opens door for M&A in cement sector

smoothen the path to acquire Reliance Cement's plants

with capacity of 5.6mn tonnes. The Ultratech-JayPee and

Birla-Reliance deals, which were worth Rs 5,400 crore and

Rs 4,800 crore respectively, both of which have been stuck

because of the MMDR Act, will likely get a fillip following

the government's decision to move an amendment.

Construction sector is the biggest consumer of cement,

accounting around 68% of total cement consumption,

while infrastructure consumes around 20%. Hence,

construction sector holds the key for the revival of cement

demand. In construction sector, housing is the key

contributor to cement demand and is likely to remain weak

over the next 2-3 years. The demand for residential

properties slowed down in the past few years and unsold

stock of residential homes increased considerably at the

same time. Genuine home buyers moved away from the

housing market because of higher prices and investors also

stayed away because of weakening state of the economy.

As the economic growth picks up and interest rates come

down, the overall sentiment is expected to rise. Credit

growth in the housing segment has been weak since the

past two-three years. After hitting record highs in early

2006 and maintaining a good growth rate up to 2008,

credit growth in housing collapsed in 2009. Since then,

housing credit has grown at a moderate pace and there

Government's programme of “housing for all by

2022'' would drive Demand

APRIL 2016

SECTOR OUTLOOK-CEMENT

20

Source: Union Budget 2016-17

was no uptick as interest rates did not move much and

housing prices failed to decline. With RBI reducing

benchmark interest rate by 125 bps in 2015 and further

rate cut is expected and it can be anticipated that it would

revive home buyers' interest as home loan would be

available at lower rates. Considerable rate cut during 2015

has limited the scope of further rate cut going ahead, given

spike in headline inflation.

Government fiscal stimulus is always requires to boost up

economic activity and the new government has been

following the same path. At the start of 12th Five year plan,

the urban and rural housing shortfall stood at 18.8 million

and 43.7 million units respectively, of which low income

group/ economically weaker sections and below weaker

sections account for 90% of this shortfall and require high

government stimulus support. To address the issue,

government has launched 'Housing for all by 2022' scheme

in June 2015 and which envisages that every citizen would

have their own house with a water connection, toilet

facility and 24x7 electricity supply. Under the scheme,

there would be construction of 110 million housing units,

including the current shortage of about 60 million units.

The key reason for housing shortage is increased

urbanisation and migration from rural areas. The housing

shortage is highest in Uttar Pradesh at 16% followed by

Maharashtra (10%) and West Bengal (7%). The Housing for

all by 2022' scheme aims to provide housing for the

country's entire population, thus would boost cement

demand going ahead.

Infrastructure is the second largest consumer of cement

after Housing & Construction. Large-scale projects consume

a significant quantum of cement and have the capacity to

drive regional demand growth. Metro rail projects in

Chennai and Delhi used to consume a significant quantum

of cement and after completion of these projects, cement

consumption in these regions slowed down considerably.

To kick start the infrastructure activities, government has

increased the investment outlay on various infrastructure

segments like roads and railways substantially with road

segment witnessed a growth of 174% yoy at Rs 852

billion. Further, total planned expenditure on five

infrastructure verticals also increased from 31.7% in FY14

to 49.4% of total expenditure in FY16. In absence of

Infrastructure creation would push cement demand

private participation in infrastructure development like

road segment, government has increased their budgeted

allocation towards the sectors. Currently, the road projects

are majorly awarded on EPC model, instead of awarding in

BOT model. As of August 2015, the government's Project

Monitoring Group (PMG) received proposals for 675

projects with an estimated cost of Rs 28.8 trillion. To speed

up project implementation, government has cleared 291

projects worth of Rs 9.9 trillion, thus showing clear

intentions to revive the infrastructure sector's growth.

Nonetheless, the initiatives announced by the government

during Union budget FY17 would definitely revive private

investments and consumer sentiment. Thus, with the lack

of impetus from housing, the infrastructure sector is

expected to drive the demand for cement going ahead.

Over the period of past two Five Year Plans, the investment

in infrastructure as a percentage of GDP has been on rise. It

has increased from a level of 5% of GDP in the 10th Five

Year Plan to about 7.2% in the 11th Plan. In the 12th Five

Year Plan, GoI has set an ambitious target of increasing the

proportion of infrastructure investment to about 9.1% of

the GDP. This translates into a massive investment to the

tune of about Rs. 51,464 bn during the 12th Five Year Plan

(FY 13-17). The huge investment planned in the 12th Five

Year Plan augurs well for the cement industry. Based on

scheduled completion and the construction intensity of

these projects, it has been estimated that various sub-

sectors under the infrastructure sector will derive a cement

demand of about 125 mn tonnes in next two years.

The eight core sectors which gauge the manufacturing

activities in the country have been slowing down in the

past two years on concern of regulatory hurdles and lack of

capital expenditure from corporate as well as from the

Government. The growth of eight core sectors for YTD FY14

(April to January) slowed down to 2.4% as compared to

6.9% in April-January 2012-13. The eight core sectors have

a combined weight of 37.90% in IIP, hence the growth of

these eight core industries have a major impact on the

growth of Industrial production. Industrial production

growth has been subdued for last few years and even

posted negative growth in past few months. However for

Cement demand from infrastructure space to catch

pace

Core sector growth remains subdued

GOVT. IN ACTION

21

the month of January, Industrial production growth has

improved merely by posting 0.1% growth over the

corresponding year. Mining bans in key mining areas such

as Goa, Karnataka and Odisha, slowdown in capital

expenditure owing to overcapacity and lack of demand and

delayed in clearing projects impacted the growth of the

Industrial production, which gauge the performance of the

industrial productivity. Cement production which has

weight of 2.41% in core sector increased by 1.5% (YoY) in

January, 2014 and it registered a cumulative growth (April

to January) of 3.4% over the corresponding period of

previous year. The cement production has been sluggish for

the last three years as the construction and infrastructure

activities had not picked up during the period. However, it

is now expected that the worst has been over for domestic

economy and a strong rebound in the economic growth is

being expected from investors. Fiscal consolidation,

improvement in current account deficit and giving

clearance to the important projects are the key catalysts for

the economy to revive, going forward.

A highly elevated cement supply growth over an eight-year

period from FY08 to FY15 resulted in a sharp reduction in

capacity utilization rate, which have touched a low of

around 70% in FY15. The excess supply in the sector

resulted in deterioration in return ratios for many cement

players. The anticipation of secular demand growth has led

the capacity addition, which eventually ended with

oversupply situation in the industry. After hitting a high in

FY08, capacity utilization level declined every year for the

New capacity addition has slowed down to improve

utilization

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

10

MF

Y1

6 FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

10

MF

Y1

6

Source: EAIndustry Source: EAIndustry

past seven years and this is the longest streak of lower

capacity utilization rate in the history of cement sector in

India. In fact, cement prices in the most oversupplied

market of South India have been extremely resilient during

the period. While the pace of capacity addition slowed

down in the recent past, the large gap created by excessive

investment and demand slowdown has been gradually

reducing. As per the industry estimates, the demand would

increase by 64 million tonne over the next three years,

while supply is likely to grow by just 21 million tonne, thus

improving the capacity utilization rate. Lower capex by

cement companies also provide room to the manufacturers

to de leverage the balance sheet and improve their cash

flows. CARE Research believes that going forward, the

capacity utilization rate of the industry will improve

gradually given the slowdown in pace of capacity addition

and gradual recovery in cement demand. CARE Research

expects the overall operating rate of the industry to

increase to ~80 % in FY17-18.

Source: Cement Manufactures Association

APRIL 2016

SECTOR OUTLOOK-CEMENT

22

Declining in operating costs to improve margins

Cement sector is a raw material intensive sector with raw

material accounts almost 47-55% of total operating costs,

though depending upon the captive coal blocks, limestone

and power plant. For non integrated cement makers the

cost is relatively high. In past one year, the global

commodity prices have been declining on the backdrop of

growth concern in China, the world's largest consumer of

commodity and deflationary pressure in Europe and Japan.

The prices of Coal the most important ingredient in cement,

have steadily declined over the past one year and are at

multi year low levels owing to weak demand from

developed markets and China. Lower coal prices could ease

operating cost pressure for cement companies as these

companies mostly use thermal coal imported from

Indonesia, South Africa and pet coke from the US gulf

region. International coal prices have come down by 23%

in the past one year. However, the impact of lower

international coal prices was slightly offset by Rupee

depreciation as the prices have come down by only 16%

in rupee terms. Usage of pet coke has been gaining

importance for Indian cement manufactures owing to lower

availability of domestic coal and cost benefits offered by

pet coke. For the Indian cement sector, the usage has

increased to as high as 15% of total coal requirement.

Transportation cost is also high in cement manufacturing

business and hence declining crude oil prices would

substantially ease operating cost pressure for cement

companies. Global crude prices have corrected around

51% in the past one year, whereas domestic retail diesel

prices have declined more than 25%. Diesel costs account

for 40% of total costs of transporters. Despite such a

significant decline in diesel prices, road freight charges

have not declined in a similar proportion. However, it is

expected that the benefit of lower diesel prices is yet to be

passed on to the consumers completely and is likely to

happen shortly as idle truck capacity increases. Thus the

benefit of the lower operating costs would reflect in

healthy margins reported by the cement companies.

Jan

-09

Se

p-0

9

Ma

y-1

0

Jan

-10

Se

p-1

1

Ma

y-1

2

Jan

-13

Se

p-1

3

Ma

y-1

4

Jan

-15

Se

p-1

5

Source: Indian Oil CorporationSource: Bloomberg

Jan

-14

Ma

r-1

4

Ma

y-1

4

Jul-

14

Se

p-1

4

No

v-1

4

Jan

-15

Ma

y-1

5

Jul-

15

Se

p-1

5

No

v-1

5

Jan

-16

Ma

r-1

6

Source: Bloomberg

Jan

-14

Ma

r-1

4

Ma

y-1

4

Jul-

14

Se

p-1

4

No

v-1

4

Jan

-15

Ma

y-1

5

Jul-

15

Se

p-1

5

No

v-1

5

Jan

-16

Source: Bloomberg

International Coal Price Trend

GOVT. IN ACTION

23

Coal Prices in Rs./1000 Kcal terms

Source: Industry Report

Region-wise Pricing Scenario

North India: Prices jumps in North

Cement prices in the North region have increased by Rs35-

55/bag in last one month. Price in the region is up by

Rs40-85/bag compared to the lows of Jan '16. In Delhi,

trade segment prices have moved from January exit price

of INR220/bag to INR 280-310/bag. The realisation in

Jaipur and Udaipur has increased by Rs15-20 per bag on a

month-on-month (M-o-M) basis. The hikes are significant

and have covered the major declines seen since the peak

of September-15. Product ion cut by the leading

manufacturers alongside some improvement in the demand

have supported the price hikes in the regions. Dealers are

suggesting that prices are likely to remain stable in the

northern region at the current level and demand to remain

subdued.

West India: Prices move up in Gujarat; remain subdued in

the Maharashtra market

Central India: Prices inching up, pressure on demand

continues

The price of cement in the western region has seen a

sudden uptick in March of 2016. Cement prices in Gujarat

increased by Rs30-35/bag in last one month following

improvement in the price trend in the neighboring

Rajasthan market, however, dealers believe that price

increase is not sustainable as demand continues to remain

muted. In Maharashtra however, prices remained subdued,

due to low demand and possibly reflecting the impact of

negative prices trends in AP market. Mumbai and Nagpur

witnessed price decline of Rs20/bag. The price decline at

Rs30/bag is slightly higher in Pune compared to other

cities. This is led by intense competitive pressure, water

scarcity issues and sand availability issue. Going ahead, the

prices in the western region are likely to remain stable on

account of supply constraints. However, no major uptick

has been witnessed on the demand front.

Cement prices in Uttar Pradesh increased between Rs30-

45/bag following the trend in the North region. Prices in

Madhya Pradesh have gone up by Rs20/bag. There have

been some government-led projects in UP which have been

supporting the demand. Dealers suggesting that hike might

reverse due to weak demand. Dealers indicated that similar

hike was undertaken in January and February but was

rolled back. The sand availability issue is still persistent in

the MP market which has been hurting the demand.

Source: Cement Manufactures Association, Industry, News Articles

APRIL 2016

SECTOR OUTLOOK-CEMENT

24

East India: Pricing under pressure with new capacities

addition

South India: Prices relatively stable except Andhra Pradesh

Prices in the East region are under pressure on account of

muted demand and aggressiveness of new entrants in

some cities. There are minor cuts of INR10-30/bag in the

select region during the past month. However, dealers

opined that there is an immense pressure in the region

owing to ramp up of new capacities. Bihar is facing sand

crisis since last month leading to halt in all construction

activities in the state. In the North-east markets, prices for

the local brands have taken a hit, while prices for non-local

brands have remained stable.

In the southern market, demand remains under pressure,

with a delay in the pick-up of infrastructure projects. In

Chennai market, cement prices has maintained at an

elevated level while there is some pickup in dispatches

230

250

270

290

310

330

350

370

North East West South Central National Average

Q4FY15 Q3FY16 Q4FY16 (2M)

post the rains. In the AP market prices further dipped by Rs.

30-40/bag to Rs. 260/bag. Companies have been trying to

take back the prices to Rs. 310-315 levels in AP. There are

very minor cuts of INR 5-10/bag in the Kerala and

Bangalore (Karnataka) market in select pockets.

Source: Industry Report

Comparative Valuations

CompanyCMP(Rs.)

MarketCap

(Rs. Cr.)

P/ERatio

(x)

ROEFY17E

(%)

EV/EBITDA(x)

Cementcapacity(mtpa)

CementEBITDA/

tonne(Rs/t)

EV/Ton(USD)

P/EFY17E

(x)

EV/EBITDAFY17E

(x)

ROE(%)

UltraTech Cement 3151.3 86533.5 37.2 27.1 11.6 14.1 19.5 15.0 66.7 892.0 176.5

Shree Cements 12250.0 42415.4 99.5 28.1 8.5 15.1 29.5 20.2 25.6 852.0 207.9

Ambuja Cements 230.0 35693.6 28.3 20.8 9.9 12.8 17.1 8.6 29.6 660.0 148.7

Grasim Industries 3762.0 35125.2 13.2 10.4 9.4 10.9 7.4 4.6 NA NA 142.7

ACC 1365.0 25613.2 26.8 18.4 7.1 13.8 15.8 10.1 30.6 497.0 109.9

Ramco Cements 400.0 9551.6 20.8 17.9 9.7 16.5 13.2 10.0 13.5 1060.0 125.7

JK Cement 642.0 4509.6 82.2 17.6 8.5 13.5 16.9 10.1 11.6 673.0 100.9

Dalmia Bharat Ent. 801.4 6515.3 59.5 17.7 4.7 11.4 12.9 6.8 21.9 1073.0 87.0

Prism Cement 79.3 3996.7 37.0 20.9 0.2 17.5 19.3 10.1 5.6 453.0 105.0

JK Lakshmi Cement 324.3 3815.5 37.1 24.2 7.8 12.7 16.8 10.2 8.3 401.0 89.6

Orient Cement 145.0 2980.8 15.3 52.5 21.6 17.3 26.7 12.5 7.3 482.0 84.5

Birla Corp 360.0 2771.8 15.8 16.6 6.8 10.0 9.6 6.1 9.3 286.0 33.0

OCL India 455.3 2590.4 13.4 8.7 9.7 19.0 7.4 4.3 6.7 941.0 60.9

India Cements 84.5 2601.8 22.3 11.0 -0.1 6.8 8.0 6.5 15.2 916.0 58.2

Mangalam Cement 215.0 573.2 32.0 20.3 3.5 4.0 12.0 8.9 3.3 137.0 47.4

Source: Bloomberg, Capitaline, Ashika Research

GOVT. IN ACTION

25

Quarterly Average Pricing Trend (Rs./Bag)

Region-wise Industry demand-supply model

All India FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E

Year end capacity (mnt) 326 339 358 377 395 404 414 418

Production (mnt) 234 251 257 269 280 299 321 346

Cement Utilisation (%) 74% 76% 74% 73% 72% 75% 79% 83%

Clinker Utilisation (%) 78% 78% 76% 75% 74% 76% 80% 85%

Cement Consumption (mnt) 231 249 254 267 278 297 319 345

Consumption growth (%) 6.7% 7.6% 2.2% 5.1% 3.9% 7.0% 7.5% 8.0%

Year end capacity (mnt) 68.6 72.3 76.0 85.1 91.9 93.5 99.2 99.2

Production (mnt) 52.4 58.2 60.3 64.2 70.2 75.2 80.8 87.2

Cement Utilisation (%) 76% 83% 81% 80% 79% 81% 84% 88%

Cement Consumption (mnt) 44.2 48.5 50.0 53.3 58 62.1 66.8 72.1

Consumption growth (%) 9.6% 9.9% 3.0% 6.5% 9.0% 7.0% 7.5% 8.0%

Year end capacity (mnt) 39.2 39.2 44.4 47.6 55 62.4 66.6 66.6

Production (mnt) 32.0 34.7 35.3 39.4 45.6 48.8 52.3 52.3

Cement Utilisation (%) 86% 89% 85% 86% 89% 83% 81% 78%

Cement Consumption (mnt) 38.4 42.3 43.1 47.4 52.6 56.3 60.5 65.4

Consumption growth (%) 5.5% 9.9% 2.0% 10.0% 11.0% 7.0% 7.5% 8.0%

Year end capacity (mnt) 130.5 134.5 138.6 138.6 143.2 143.2 143.2 146.5

Production (mnt) 76.3 81.9 84.6 85.5 84.1 91.4 99.9 109.3

Cement Utilisation (%) 61% 62% 62% 62% 60% 64% 70% 75%

Cement Consumption (mnt) 64.3 65.7 67.0 67.0 64 68.5 73.6 79.5

Consumption growth (%) 0.5% 2.3% 2.0% 0.0% -4.5% 7.0% 7.5% 8.0%

Year end capacity (mnt) 49.4 49.4 54.0 56.8 56.8 56.8 56.8 56.8

Production (mnt) 40.3 43.0 44.5 47.3 44.9 46.2 48.2 50.5

Cement Utilisation (%) 83% 87% 86% 85% 79% 81% 85% 89%

Cement Consumption (mnt) 47.6 52.7 53.8 56.7 58.1 62.2 66.9 72.2

Consumption growth (%) 12.6% 10.8% 2.0% 5.5% 2.5% 7.0% 7.5% 8.0%

Year end capacity (mnt) 38.4 44.2 44.2 48.7 48.7 48.7 48.7 48.7

Production (mnt) 32.5 33.5 31.9 33.1 34.6 37 39.8 43

Cement Utilisation (%) 85% 81% 72% 71% 71% 76% 82% 88%

Cement Consumption (mnt) 36.8 39.5 40.3 42.8 44.9 48 51.6 55.8

Consumption growth (%) 8.8% 7.5% 2.0% 6.0% 5.0% 7.0% 7.5% 8.0%

North 49.7 52.4 55.0 61.6 66.6 67.7 71.9 71.9

East 24.5 24.5 27.8 29.8 34.4 39.0 41.6 41.6

South 104.4 107.6 110.9 110.9 114.5 114.5 114.5 117.2

West 35.3 35.3 38.6 40.5 40.5 40.5 40.5 40.5

Central 28.5 32.8 32.8 36.1 36.1 36.1 36.1 36.1

Source: Company data, Economic Adviser of India, Deutsche Bank estimates

North FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E

East FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E

South FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E

West FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E

Central FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E

Clinker Capacity (mnt) FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E

APRIL 2016

SECTOR OUTLOOK-CEMENT

26

The World now takes cognizance of India's strong economic

position and the policies drawn by the government. The

business dailies also exaggerate when a prominent

character in the likes of IMF chief Christine Lagarde state

about India that "It's the world's fastest growing large

economy, on the verge of having its largest, youngest ever

workforce -- and, in a decade's time, set to become the

world's most populous country." Indeed, the statement

issued by IMF chief have taken the population aspect of

India on a positive note much like what economies of scale

means for a company. Although, the debate on population

has always been a touchy affair on everybody's part, the

latest episode of China abolishing its one child policy have

also drawn appreciation for India for not having imposed

one in the first place. Besides, young population of India as

against ageing population of China is one of the criteria for

its outperformance in the future. Yet, when it comes to

parameters based on per capita, India always loiters at the

bottom. The latest Human Development Report 2015 by

United Nations Development Programme (UNDP) is a

testament to that. According to the report, India has been

placed at 130th position among the 188 countries. While

we talk of India surpassing China's growth, the social

parameters of the country are nowhere near China and

even worse than neighboring countr ies Pakistan,

Bangladesh and Nepal on some parameters. That simply

highlights that the economic growth has not been broad

based and inclusive. Besides, this only leads to huge

income inequalities among different income groups and

government's job to eradicate poverty just gets further

complicated.

A good example would be of the recently released World

Happiness Report 2016, published by the Sustainable

Development Solutions Network (SDSN), a global initiative

for the United Nations. According to the report India ranks

118th out of 156 countries in a global list of the happiest

nations, coming below nations like Somalia (76), China (83),

Pakistan (92), Iran (105), Palestinian Territories (108) and

Bangladesh (110). Incidentally, India has slipped one rank

from last year's rank of 117, implying that people of India

have been less happy after Mr. Modi took charge. The

report takes into account GDP per capita, life expectancy,

social support and freedom to make life choices as

indicators of happiness. Needless to say, India ranks

pathetically on all the social parameters. According to the

media articles, the report said that India was among the

group of 10 countries witnessing the largest happiness

declines along with Venezuela, Saudi Arabia, Egypt, Yemen

and Botswana. Economists are of the view that happiness

actually provides a better indication of human welfare than

income, poverty, education etc. Mr. Vijay Kumar, professor

of sociology at CSSS, Jawaharlal Nehru University pointed

out that among all the parameters mentioned above India

has tremendous lack of 'Social Support' and 'Freedom to

Make a Life Choice' adding to its lackluster performance.

He further pointed out that India's population is still

predominantly rural with a strong share of 70% with

nearly 58% households still relying on agriculture (70th

round, NSSSO, 2014). It has been proved through many

research works that poverty lies concentrated in rural India

and thus it's imperative that in order to eradicate poverty,

rural India has to develop faster. However, policymakers

have always turned a blind eye towards agriculture sector

which resulted in dwindling growth and contribution to

GDP. More recently, farmer suicides mark the acute debacle

in the sector. According to Mr. Vijay Kumar, the National

Crime Records Bureau reported 5,650 farmer suicides in

2014. According to him, increasing costs of cultivation,

leading to higher indebtedness, crop failures and inability

to face price rise with greater liberalisation of the

agricultural sector have forced farmers to take this extreme

step. Thus, it is imperative that in order for India to be

happy, rural India needs to be happier.

It's not that the government is not aware of these statistics

and especially so when the finance minister very recently

was quoted by business dailies that "If India is to grow and

get rid of poverty, the agriculture sector has to grow the

fastest. Agriculture is critical to the economy," The views

were expressed by Mr. Jaitley at a seminar on the recently-

announced Pradhan Mantri Fasal Bima Yojana (PMFBY) at

GOVT. IN ACTION

27

Nabard. The finance minster was critical of the two back to

back monsoon failures and the atrocity it enforces on the

farmers. In response, finance minister launched the

"Pradhan Mantri Fasal Bima Yojana" and "Unified Package

Insurance Scheme", two crop insurance schemes. With

these schemes, the government plans to cover 50% of the

farmers in the country, mostly those dependent on rain-fed

agriculture, and this would be a significant step to making

India an "insured and pensioned society", Jaitley said.

PMFBY, he said, will be rolled out in a "mission mode" from

April to cover kharif or summer crop from this year itself.

Besides, he claims that the scheme has the potential to

reduce distress in the farm sector and "end the scar of

farmer suicides" affecting parts of the country. However,

how far or efficiently the schemes will work are anybody's

guess. We have had crop insurance schemes before also,

like the National Agricultural Insurance Scheme (NAIS).

However, according to multiple research works, the

p e r f o r m a n c e o f t h e s c h e m e h a s b e e n g r o s s l y

unsatisfactory. For instance, according to a NIAP (National

Institute of Agricultural Economics and Policy Research)

report titled “Performance of National Agricultural

Insurance Scheme (NAIS)”, the NAIS scheme was grossly

under penetrated. According to another research titled

“AGRICULTURAL INSURANCE IN INDIA-A PERSPECTIVE” by

Dr. A. Amarender Reddy at the Indian Institute of Pulses

Research, Kanpur also found the scheme with low

penetration. Besides, the scheme exclusively insures

farmer's yields against the average yield of the area.

Another research work by S.S. Raju and Ramesh Chand of

National Centre for Agricultural Economics and Policy

Research also blamed the scheme of low coverage and to

have served very limited purpose. According to an article

by financial express, the three existing crop insurance

schemes — National Agricultural Insurance Scheme (NAIS),

the Modified NAIS and the weather-based crop insurance

scheme — have managed to cover only about 40.27 million

hectares, a fifth of the country's total agricultural land.

According to Ramesh Chand, member, Niti Aayog, the sum

insured at present covers only a fifth of the crop acreage

and just 5.5% of the value of total crop output. Farmers at

present pay 3.5% to 8% of the total premium fixed by the

insurers under the existing crop insurance schemes while

the rest is borne by the government. The nature of the

insurance is thus to heavily subsidized by the government

as done by US (>60%) and China (~80%). Some of the

research works mentioned above have highlighted that the

claims on some crops have been more than the premiums

raised, thus making the equations non-viable for the

insurance companies. Thus, the government needs to keep

these things in mind considering the dismal performance

of the earlier schemes. A good crop insurance scheme will

go a long way in lowering the number of farmer deaths in

the country and might as well reduce poverty and help

India improve its rankings in the World happiness Index.

However, having said all that the task is not that simple. As

pointed by the finance minister, a vibrant agricultural and

rural economy will help lakhs of people to come above the

poverty line. However, to achieve that there has to be

investments in the agriculture sector. Sadly, Gross capital

formation towards the sector has actually declined in the

last two years from 18.3% of agri-GDP in 2012-13 to

14.8% in 2014-15 as opined by Mr. Gulati, former

chairman of the Commission for Agricultural Costs and

Prices. Besides, around 80-85% of the investment towards

the sector is attributed from the private sector. It is

generally considered that creation of capital goods is

necessary for raising productivity of existing resources and

realizing the long-term growth potential. Therefore, the

relat ionship between capital formation and thus

agricultural growth and consequently poverty alleviation

are very well documented in itself. According to the

NABARD report, “Public investment reduces rural poverty

through improved growth in agricultural production,

agribusiness, rural non-farm employment and lower food

Source: CSO, Structural Changes within 'Agriculture andAllied (AA)' Sector in India

APRIL 2016

ECONOMY REVIEW

28

prices. While there are often long time lags between

investment and visible impact, investments in agricultural

research, education, and rural infrastructure are often the

most effective in promoting agricultural growth and poverty

reduction.”

The New Climate Economy report titled “India- Pathways to

Sustaining Rapid Development in a New Climate Economy”

raises a lot of issues, some of which is worth mentioning.

Despite India being self sufficient and reducing its

dependence on imports, malnutrition in the country

remains relatively high. Demand for food is likely to both

grow more rapidly and become more diverse with rising

living standards, urbanisation and population growth,

placing more pressure on agricultural supply capacity,

according to the report. One of the ways to increase

production is by means of agricultural productivity growth

which has been modest in India hampered by weak

technical capacity. There are numerous sources of

inefficiency and growing pressure on environmental

sustainability, in particular the water and land resources on

which the sector depends. Agriculture in India is still highly

dependent on rainfall and at the same time sensitive to

weather shocks and existing climatic variability. This is

going to get worse with man-made or induced climatic

changes. Agricultural output (real value added) for India

has however increased by an average 2.7% a year between

1960 and 2012, mostly on account of application of

“Green Revolution” package of high yielding seeds

although lower when compared to international standards.

The report also emphasizes on the impact of agricultural

public expenditure on agricultural productivity and

sustainability in India. The report emphasizes that public

spending in India on agricultural R&D, education and

extension services was an even more miniscule 0.7% of

agricultural GDP. On the other hand, input subsidies are a

major form of public expenditure on agriculture totaling ~

8.9% of agricultural GDP.

New Climate Economy report further stresses that

Economic returns to subsidies had fallen quite sharply by

the 1990s. The below figures clearly highlights that a

rupee spent on fertiliser, power and credit subsidies

generated less than Re 1 of additional GDP. On the contrary

a rupee spent on Agricultural R&D resulted in additional Rs

7 GDP. Irrigation investment, Education investment and

Road investment also had a higher benefit-cost ratio.

Besides, it has been further proven that public R&D

spending and investment were also much more powerful

than subsidies for the purpose of rural poverty reduction.

These results clearly show the need for diversion of public

investment on agriculture from low yielding subsidies

(currently the largest item of spending) towards high-

yielding agricultural R&D (currently one of the smallest).

Thus, it is apparent that public investment in agriculture

can be the only hope in lifting people from poverty.

Source: New Climate Economy report, World Resources Institute

Source: New Climate Economy report, World Resources Institute

According to the IDFC India Rural Development Report

2013-14, 6.84% of the rural population was categorised as

“very poor” in 2011-12, down from 16.3% in 2004-05.

Chhattisgarh had the highest percentage of “very poor”

across major states — 15.32% — followed by Madhya

Pradesh (15.04%), Odisha (11.46%), Bihar (10.45%) and

Jharkhand (9.23%). In 2004-05, the bottom five states

were Odisha (34.3%), Chhattisgarh (24.5%), Bihar (23.5%),

Madhya Pradesh (23%), Maharashtra (22.5%). However, the

GOVT. IN ACTION

29

report also finds that the rate of reduction of rural poverty

per annum nationally accelerated to 2.3% during 2004-11

as compared to 0.8% in the decade spanning 1993-2004.

Poverty declined at a faster pace in poorer states like

Odisha, Bihar, Madhya Pradesh and Uttar Pradesh during

2004-11 as compared to the decade preceding it. Thus,

although the developments are taking place, however the

pace needs to pick up. For instance in 2000s, when the

strong economic growth contributed to an unprecedented

fall in poverty. According to New Climate Economy report,

poverty headcount rate (using the national poverty line) fell

from 37% in 2004-05 to 22% in 2011-12. Moreover, the

average annual pace of decline in the poverty rate during

this period was 2.2%, three times faster than it was

between 1993-94 and 2004-05. Besides, the report states

that accelerated decline in poverty occurred in both rural

and urban areas. In fact, the decline in rural areas – where

four-fifths of the poor live – was indeed even more rapid

than in urban areas. For the first time there was also a large

decline in the absolute number of poor.

Source: Anand et al., 2014, New Climate Economy report, World Resources Institute

Source: Anand et al., 2014, New Climate Economy report, World Resources Institute

Percentage of rural population living in extreme poverty

2004-05 2011-12

33.7

Odisha 34.3 Chhattisgarh

31.3

Chhattisgarh 24.5 Madhya Pradesh

30.8

Bihar 23.5 Odisha

29.6

Madhya Pradesh 23.0 Bihar

27.8

Maharashtra 22.5 Jharkhand

25.5

Jharkhand 19.4 Uttar Pradesh

24.5

Gujarat 17.3 Assam

23.8

Uttar Pradesh 15.9 Maharashtra

21.8 West Bengal 13.5 North-east excl. Assam

20.4 Tamil Nadu 12.4 West Bengal

22.8 All-India 16.3 All-India

Source: IDFC India Rural Development Report 2013-14

15.32

15.04

11.46

10.45

9.23

8.85

8.22

6.68

5.64

5.31

6.84

1993–94

Maharashtra

Jharkhand

Odisha

Bihar

Karnataka

Tamil Nadu

Uttar Pradesh

Madhya Pradesh

Chhattisgarh

Andhra Pradesh

All-India

However, despite the different governments in between,

the policies drawn towards the poor and the reserved

category – SC/ST have certainly been bearing fruits. If the

different Expert Groups (EGs) of the erstwhile Planning

Commission of India are to be ignored, then we can safely

draw the calculation that the poverty rate across India has

been witnessing a decline even among the SC/ST

categor ies . The authors of the IDFC Ind ia Rura l

Development Report 2013-14 have themselves calculated

and the facts have corroborated with the disputed

Tendulkar Method. The accompanying graphs depict the

story that the poverty ratio has declined across rural as

well as urban, across states and among different social

groups. There has also been a decline in the very poor

across India too.

Period

1993–

2004–

2011–

Source: IDFC India Rural Development Report 2013-14

Percentage and Number of Poor Estimated by Tendulkar Method using Mixed Reference Period (MRP)

Source: IDFC India Rural Development Report 2013-14

APRIL 2016

ECONOMY REVIEW

30

Poverty Ratio (percentage) Number of Poor (million)

Rural

Urban

Total Rural Urban Total

94 50.1

31.8

45.3 328.6 74.5 403.7

05 41.8 25.7 37.2 326.3 80.8 407.1

12 25.7 13.7

21.9 216.5 52.8 269.3

Source: IDFC India Rural Development Report 2013-14

Source: IDFC India Rural Development Report 2013-14

Higher spend by the government or higher budget

allocation towards social sectors like health; education and

rural infrastructure possess that strong muscle power to

transform rural India. In fact, that should have been the

policy considering that majority of the population is in the

rural India. The Union budget 2016-17 has been prepared

keeping in mind the rural and the agricultural sector. The

budget speech had mention of rural, agricultural and social

sector schemes and higher allocation and new health

schemes. However, research fellows at the Centre for Policy

Research have been left dispirited particularly with the fact

that although there have been focus towards skills,

employment and entrepreneurship, there has been lower

than expected allocation towards education. According to

Yamini Aiyar, senior research fellow at the Centre for Policy

Research and director of the Accountability Initiative, while

there has been increased allocation towards social sector,

these are by no means significant—particularly for core

social sector programmes. According to her “the Sarva

Shiksha Abhiyan budget increased by 2% from 2015-16

(revised estimates) while the Mid-Day Meal scheme budget

increased by 5%. The National Health Mission budget

increased by 2%, while the Mahatma Gandhi National

Rural Employment Guarantee Scheme, which according to

the finance minister had received its highest allocation yet

in this budget, increased by 4% from the previous years.

Swachh Bharat Mission (SBM), the flagship programme on

rural sanitation, saw one of the biggest jumps at 38%.

However, this jump is in part due to lower revised

estimates.”

(Figures in RS ‘000 crores)

2

5

3

11

33

148

67

2

5

2

4

4

38

-10

Sarva Shiksha Abhiyan

Midday Meal Scheme

National Health Mission

MNREGA

Pradhan Mantri GramSadak Yojana

Swachh Bharat Mission

Integrated ChildDevelopment Scheme

22000

9236.4

18875

34699

14291

3625

8371.77

22015.42

9236.4

19135.37

36967

18297

6525

15502.27

22500

9700

19437

38500

19000

9000

14000

Note:NHM does not include the new component that has been added in2016-17 to make it comparable; ICDS includes only core-ICDS.Source: The Wire, Author’s Calculations

Scheme% change

over2015-16

RE

2015-16BE

2015-16RE

2016-17BE

% changeOver

2015-15BE

Kiran Bhatty, a Senior Fellow at the Centre for Policy

Research, New Delhi and a Founder Member of the Forum

for Deliberation on Education also made a point of giving

primary education a greater emphasis. However, the

budget gave it a miss and rather emphasized on higher

education. The budgetary allocation for school education is

up by a meager Rs. 1367.5 crores from the revised

estimate (RE) of 2015-16 while in reality the ministry of

human resources development asked for a raise of Rs. 21,

640 crores in 2016-17.

GOVT. IN ACTION

31

Budgetary Allocations for Education (in Rs '000 crores)

Total Education 69,074.8 67,585.8 72,394 [92,666.7]

School Education 42,219.5 42,186.5 43,554 [63,826.7]

SSA 22,000.0 22,015.4 22,500.0

[figs in brackets shows demand for grants]

Source: Vol II of Expenditure Budget, 2016-17, The Wire

Yamini Aiyar however made a fair point that post

recommendations of Fourteenth Finance Commission (FFC),

much of the expenditure on social sector programs is now

expected to be incurred at the state level, through the

untied funds devolved to states. In this year's Budget,

states are expected to receive 13% more than the previous

year's RE. Presumably, the expectation is that the states

will spend this money on social programs, if they wish to

significantly enhance expenditure. In fact, the same view

has been shared by the recently released Delhi state

budget where education, health and transport sectors got a

lion's share of the total allocation. Education has been

[2015 16] BE Total [2015 16] RE [2016 17] BETotal - - Total -

allocated Rs 4,645 crore (23% of Plan outlay) which

incidentally is the highest share among all expenditure

heads. Transport & Road Infrastructure has received Rs

3943 crore or 19% of Plan Outlay. Reiterating its focus on

healthcare and ensuring that medical facilities are easily

accessible to all, the Delhi government has allocated Rs

3,200 crore to the sector in the 2016-17 budget, 15.53%

allocation from Plan Outlay. Thus, clearly the numbers

speak for it and it is probably the beginning and more

states to follow and thus help in true upliftment of the

poor.

Source: Business Standard

APRIL 2016

ECONOMY REVIEW

32

NAV (Rs.) 35.49Inception Date June 25, 2007Fund size(in Rs cr) # 9,193.0Fund Manager Chirag SetalvadEntry load N.AExit Load 1.00%Benchmark NIFTY MIDCAP 100Min Investment Rs.5000Min SIP Investment Rs. 500# as on February 29, 2016

Beta 0.87

Standard deviation (%) 16.69

Sharpe Ratio 1.05

Alpha 7.97

R Squared 87.97

Expense ratio (%) 2.29

Portfolio Turnover ratio (%) 18.00

Avg Market cap (Rs in cr) $ 9,146

$ as on February 29, 2016

Stocks % of Net assetsBajaj Finance 3.40Torrent Pharma 2.22HPCL 2.22Aurobindo Pharm 2.21Divis Labs 2.20Voltas 2.18Cholamandalam 2.07JagranPrakashan 2.01Axis Bank 1.84Carborundum 1.83

Equity Debt Cash & Equiv.95.14% 0.00% 4.86%

Apr-15 Birla Sun Life Top 100 Fund (G) -6%

May-15 SBI Blue Chip Fund (G) -1%

Jun-15 Kotak Opportunities Fund - Regular Plan (G) -6%

Jul-15 Franklin India Bluechip Fund (G) -5%

Aug-15 UTI Mid Cap Fund (G) -10%

Sep-15 Birla Sun Life Frontline Equity Fund (G) -1%

Oct-15 HDFC Equity Fund (G) -8%

Nov-15 ICICI Prudential Focused Bluechip Equity (G) -8%

Dec-15 HDFC Top 200 Fund (G) -7%

Jan-16 Mirae Asset Emerging Bluechip Fund (G) -7%

Feb-16 Franklin India Opportunities Fund (G) 2%

Mar-16 Birla Sun Life Top 100 Fund (G) 8%

1 month 3 month 6 month 1 year 3 years 5 years Since InceptionFund (%) 9.54 –7.04 –4.3 –1.83 27.19 19.33 15.6NIFTY 50 (%) 7.99 –6.79 –2.3 –2.4 18.87 9.59 —

Important Information

Key Ratios

Top Ten Holdings

Asset Allocation

Month ofRecomm

Performance of the Fund

33

HDFC Mid-Cap Opportunities Fund (G)

Mid Cap

Fund Objective:

Fund Commentary:

The scheme's objective is to provide long-

term capital appreciation by investing predominantly in

equity and equity-related instruments from mid and small

cap segment. HDFC Mid Cap Opportunities fund has

54.12% exposure to mid size companies, 32.07%

exposure in small size companies. The Scheme may also

invest a certain portion of its corpus in debt and money

market securities.

The scheme provides a heavily

diversified portfolio. The average allocation to a stock is

only 3 per cent, resulting in a portfolio of 67 stocks. Mid-

cap stocks get 58 per cent allocation while the rest is in

small-caps. While the portfolio focuses primarily on a buy

and hold strategy at most times, but it balances the same

with a rational approach to selling when the valuations

become too demanding even in the face of reasonable

growth prospects in the long run. The fund also takes

tactical calls to shift up to 25 per cent to large caps in

dicey market conditions. The fund has outperformed its

category five years of the past six, including during the

crash of 2008 and the market slowdown in 2011. Thus the

scheme has managed to outperform its peers in every

market condition over the years

% SECTOR ALLOCATION

Recommended in the past Return tilldate (%)

GOVT. IN ACTION

APRIL 2016

TECHNICAL REVIEW

Key takeaways from March 2016:

•

•

•

•

•

•

•

Consumer price index-based (CPI-based) inflation

softened to 5.18% in February from 5.69% a month

ago.

WPI remained in the negative zone for 16 months in a

row, touching -0.91% in February, against -0.90% in

the previous month.

IIP shrank 1.5%, against a 1.2% in the previous month.

India's manufacturing PMI rose to 52.3 in February

from 51.7 in January.

India's trade deficit narrowed in February to its lowest

since September 2013 to $6.54 billion compared with

$7.64 billion a month ago.

ECB decided to cut interest rate in its recently

concluded meet

International rating agency, Fitch, upheld India's growth

forecast at 7.5 percent for the financial year 2015-16

and projecting the GDP growth of 7.7 per cent in the

Fy2017

Classical theory of Technical Analysis

Indian equity market started the month on a positive note

and ended the month with a gain of 8.91%. Firm global

cues and favorable domestic factors lead the Index to rally.

Other correlated factors like that of Crude oil prices and

Indian rupee acted as a catalyst for the market to head

higher. FII too changed stance and had been slowly

slipping back towards the buy side. Volume too had been

on a rising spree. Advance decline ratio remained clearly in

favour of the bulls.

On the technical front Nifty had been gradually heading

higher with its consecutive higher high formation in both

daily and weekly chart. Since March 2015 onward market

had been in a corrective mode which has further resulted

in for Nifty to trade amidst the downward sloping channel

line. Now after registering low of 6825, Nifty has taken

support from the lower panel of the downward sloping

channel line, Nifty then onward witnessed gradual uptrend.

It seems that the market might face severe resistance from

the upper panel of the pattern around 7840. However

decisive close above it might alter the medium term trend

back to positive.

The long term trend line since 2003 onward encompassing

2008-09 and 2013 though is breached and hence the

broader term trend continues to remain negative as long as

Nifty sustain below the crucial resistance level of 7800.

Though in the short term Nifty is on the verge of a

breakout from downward sloping channel line hence onus

are higher for an upside breakout. Hence present set up

indicates of a bullish outlook however the new trading

range of 7500-7800 need to be breached to extend

momentum.

To sum up according to classical theory of Technical

Analysis the short term trend in the market has changed to

positive though long term outlook remains vague, however

it seems that market might have absorbed the global

volatility and presently awaiting fresh impetus from the

domestic front to head higher.

34

Modern approach in Technical Analysis

On the oscillator front in daily time frame Nifty is presently

in overbought price region while in weekly time frame RSI

still in neutral price territory indicating room for further

upside in the market. Hence due to confluence in both the

time frame market ease likely to remain volatile in the

forthcoming month. Other oscillator like ADX has resided

below the 20 level mark in daily time frame while

conversely in weekly time frame it is above the 20 level

mark but slowly subsiding lower. Hence divergent situation

again exist. MACD in weekly time frame has provided a buy

crossover after a prolonged period. To sum up in the

forthcoming month the Index is likely to remain volatile

due to contradictory viewpoints in different time frames.

Nifty in both daily and weekly time frame took support

from the lower panel of the Bollinger band and provided

the necessary pullback. The upper band of the channel in

daily time frame is presently burning resistance around

7885 while in weekly time frame Nifty has scaled the mid

band in weekly time frame. Hence it seems that immediate

base for the market is created around 7500 while the

upper range for the Index can stretch till 7800-8000 in

medium term perspective.

Continuous decline since March 2015 onward has lead the

Index to drip lower below all the crucial short and long

term averages in both the time frames. However recent

pullback in the market has lead the Index to scale some of

its averages. Immediate resistance from moving averages is

seen around 7950-7975 which coincides with the 200 dma

in daily and 50 dma in weekly chart respectively. Hence

Nifty is now at a very crucial juncture cause inability to

breach past the 7950 trend deciding level would maintain

a negative outlook in the market while surpassing the said

level would indicate that the long term trend in the market

has changed to positive.

GOVT. IN ACTION

35

36

APRIL 2016

TECHNICAL REVIEW

Indian VIX

Gann Theory of Time cycle

Fall in Indian VIX signaled a fall in volatility in the market

with the fading of event risk from the market after the all

important budget session in the parliament. A close

observation of the Indian VIX reveals that the Index is a

mean reverting one where it is now near to its historical

level of 15-16. On the technical parlance not much

inference can be drawn from the present setup and as the

broader trend continues to remain negative with its

consecutive lower low formation in daily and weekly

chart. Fading of event risk in the form of Budget did

cooled-off the Index. Hence to sum up in the forthcoming

month the volatility in the Indian equity market is likely to

diminish further and a narrow rangebound action in Nifty

can be seen from here onwards.

The rally since December 2011 onward if considered as the

beginning of an impulse wave then Nifty presently is

trading at its 5th wave. Previously impulse wave 1 took 17

months in the making. Hence forth if wave 5 unfolds into

an equidistance of wave 1 then the recent rally in the

market might extend further till June 2018. Nifty had been

trading within the 61.8% angle of inclination since

December 2011 onward, further rally has resulted in to

form bullish channel formation in weekly chart, target of

which stands around 8100-8200, and According to W.D.

Gann the said angle signifies 3 unit of price & 1 unit of

time. So the said target of 8100 might be achieved within

5-6 months. However the theory of 8-year bear cycle need

to paid equal importance. This theory of 8-year bear cycle

indicates that after every 8 year markets witness a major

correction which is in the range of 20-60% The theory can

be aptly applied in Indian markets as well as we witnessed

a hefty correction in the year 1992 followed by a major

correction in the year 2000, then in the year 2008 and now

the year 2016 is the next in the eight year cycle.

Retracement principle

Future Projection – April 2016

In order to identify the crucial trend deciding level for the

market three different time frames are being identified

which are as follows. The first being the entire correction

since January 2008 onward till November 2008, the

second being the gradual upscale for the Index since

December 2011till the high registered in March 2015 and

the last being the corrective decline since March 2015 till

date. Retracement level from all the time frame conjoins

around singular points against which the trading range for

the market can be identified. The projected retracement

from the historical correction of 2008 indicates that the

immediate base for Nifty is stranded till 7270 while the

retracement level of the second and third set of the period

coincides around 7950-8000. Hence it can be concluded

that Nifty presently is at a crucial juncture and sustaining

above 7250-7270 would continue to maintain a positive

outlook in the market

A newer impulse wave were in the making since August

2013, according to the assumption the rally since 5118

constituted the beginning while the high earmarked on

March 2015 ended a 5-wave sequence. Since March 2015

corrective wave takes on its sequence and hence possible

outcomes may be as such. First being the correction since

March 2015 might be the beginning of the larger corrective

wave A-B-C where the low of 7240 ended its final

corrective wave 'C' with i-ii-iii-iv-v as sub division and

decisive close above the 61.8% retracement level at 7965

would indicate as an end of corrective decline for the

market. Further according to the theory of equality wave 'A'

equals wave 'C' and hence maximum downside in the

market is limited till 7200. Now Nifty is in a phase where a

new set of impulse wave might be in the making

considering the crucial support level of 6800 holds.

37

10 Year Bond Yield India: The Indian benchmark 10-year

bond yield declined almost to a five-month low on hopes

of a possible rate cut by the Reserve Bank of India next

month. The recently released data on retail inflation, which

GOVT. IN ACTION

Nymex Crude: A rally of almost 60% since February low

aided by the weakness in US Dollar and the uncertainty

over Federal Reserve decision on hike of interest rates

more than once a year. Crude oil prices are now at testing

times as it slowly approaches the 200dma. Historically oil

prices has failed to surpass the long and reliably known

technical tool of 200dma last year both in June as well as

in October. A break beyond the 200 dma would change the

tone of risk. Since falling below the 200 dma back in July

2014, oil has been in an outright bear trend. A short-term

moving average and 21dma, currently at $36.11 is a

hopeful support which further coincides with recent low on

March 15.Recently, whenever price of crude oil drops or

rebounds, the stock market follows closely behind. This

strong positive correlation between oil and the S&P 500 is

likely to continue in the short term. If the price of crude

rebounds, the stock market is also likely to rebound, as the

credit contagion disappears. But in the long run, this close

partnership won’t last. Lower crude oil prices is likely to act

positively as an inverse relation exist between the Indian

equity market with that of crude oil prices as lower oil

prices helps our domestic economy to put a check in trade

balance and narrow down the current account deficit.

Inter-market analysis

U.S Market

DJIA too ended the month of March on a positive note with

its consecutive higher high formation in both daily and

weekly time frame. The Index pans out to be taking on the

structure of a triangle. The triangle pattern would suggest

we are in the final stages of the 4th leg of the 5 legged

triangle. According to the triangle pattern, DJIA would need

to hold below 17,977 for a sell off towards 16,500. Around

16,500 is where the triangle would terminate and lead to

another actionary move higher. Hence bulls need to

proceed with extra caution over the next few trading

s e ss i o n w h i l e t h e b e a rs n e e d t o w a i t fo r s o m e

confirmation.

eased to 5.18 percent in February, also raised expectations

of a policy rate cut. Bonds further rose after the RBI said it

will purchase bonds up to Rs 15,000 crore through an open

market operation (OMO). Hence the recent set of macro

data and the general budget which reinforces of fiscal

consolidation has paved the way for imminent easing of 25

bps in policy rates. On the technical front bond yield is in

severe downtrend and is likely to drift lower.

The dominant factor influencing currency

markets in 2016 has been the US dollar; the dollar index

has declined 3 per cent since the beginning of the year.

The decision of the US Federal Reserve to go slow with rate

hikes eased risk aversion in the market, which was lending

strength to the dollar all through 2015. At its recent

meeting, the Fed indicated that only two more rate hikes

are possible this year, against the four expected in

December 2015. The rupee has been one of the best

performing currencies in Asia in the current financial year

despite global uncertainties, the resolve shown by Prime

Minister Narendra Modi in seeking to narrow the fiscal

deficit to a nine-year low has boost investor confidence

and will probably support capital inflows. The rupee is

l ikely to hold in a range as investor appetite for

developing-nation securities is pressured by the Federal

Reserve's policy tightening and yuan weakness. On the

technical front fresh break down from the upward sloping

channel line is likely to witness further slide in rupee

however due to oversold reading in oscillator might lead

the currency to trade amidst the broader range of 65.50-67.50

Indian Rupee:

Positives:

•

•

•

•

•

•

Negatives:

•

•

•

•

• Nifty on the verge of providing breakout from downward

sloping channel

• On the oscillator front Nifty is in neutral territory in

both daily and weekly time frame.

• Mid band of the Bollinger band in daily and weekly

chart coincides around 7450-7500

Nifty is above the short term averages of 21 & 50.

Indian VIX continues to dip indicating strength in the

underlying move.

Recent pullback was after taking support from 61.8%

Gann angle.

Immediate base for the market is at 7250-7270 through

retracement principle.

According to Elliot wave theory a new impulse wave

might be in the making.

Indian Rupee provided break down from rising upward

rising channel line.

Ever reliable 200dma is likely to slot resistance around

7900.

8-year bear cycle theory indicates off an upcoming

major correction in the market.

Bullish Triangle formation in DJIA indicating an

intermediate correction might be underway.

Crude oil price is likely to face resistance from its

200dma

To sum up Indian equity market since the budget low of

6825 has surged by almost 13%. The pace and intensity of

the pullback was taken by surprise for most investors,

Banking stocks were in limelight on rate cut hopes.

Favorable global cues and IMF's projection of a robust

growth rate for India, led to smart rally. Strengthening

Indian Rupee and recovery in the crude oil prices were the

other impetus for the market to head higher. Reforms took

the front seat with the smooth passage of the Real Estate

Bill bringing more transparency to the sector and

unshackling the oil & gas sector with a new exploration

regime that allows a higher price of gas for new deep-sea

fields. Some support also came from the international

APRIL 2016

TECHNICAL REVIEW

38

rating agency, Fitch, where they upheld India's growth

forecast at 7.5 percent for the financial year 2015-16 and

projecting the GDP growth of 7.7 per cent in the FY2017.

On the economic data front CPI and WPI softened to

5.18% and -0.91% respectively while IIP shrank to 1.5%

which has been giving head room for rate cut by RBI in

upcoming meet. However trade deficit narrowing to its

lowest level and Fitch's growth forecast of 7.5% were the

other barometer to indicate of a revival in Indian economy.

Sharp up-moves in indices generally happens in depressed

markets and are also a sign of ample liquidity. On the

global front ECB decided to cut interest rate in its recently

concluded meet in a bid to boost inflation and revive the

economy meanwhile Bank of Japan (BOJ) though

maintained status quo by holding interest rate at -0.1%, in

all likelihood BOJ may bring the rate down to -0.5%,

Federal Reserve policy makers kept key interest rates

unchanged and scaled down its forecast for the number of

rate increases to two in 2016 from an earlier projection of

four. While Iran had been repeatedly ignoring plea from the

OPEC members to cut crude oil production in order to

boost prices hence the oversupply in crude oil is likely to

remain and therefore global stocks market would continue

to remain under pressure. Hence in the forthcoming month

the trend in global markets, investment by foreign portfolio

investors (FPIs), the movement of rupee against the dollar,

outcome from the RBI meet and crude oil price movement

will dictate trend of the market. On the technical front Nifty

after witnessing four consecutive week of rally ended with

a lower high forming small body candle pattern, which

indicates a temporary halt to the ongoing strong upward

momentum. Presently the Index is consolidating around the

previous crucial support zone which now has changed role

and converted itself into new resistance zone. Hence going

ahead the zone 7610-7730 will act as strong hurdle for the

market. Firstly the 7610 happens to be the swing low of

November 2015, secondly 7730 happens to be the 61.8%

retracement of the upmove considering low as 6862 and

high as 9119. If Index is able to provide a decisive close

above the said resistance zone then momentum in the

market is likely to garner further strength and higher level

of 8100-8200 can be seen. On the oscillator front RSI in

both daily and weekly time frame is presently trading in

neutral price region quoting at 60 and indicates room for

further upside for the market. To add further Nifty is on the

verge of providing a breakout from the downward sloping

channel line and awaiting confirmation on technical

parlance, if the pattern materializes then Nifty might shift

to a new orbit altogether. The all important and reliable

200dma is distance away which is currently placed near

7780 levels further the Index is well placed above its 21 &

50-DEMA hence it can be concluded that markets are likely

to trade with positive bias. Going ahead in the forthcoming

month as the short term trend is in favour of the bulls and

as long as key support level of 7400 is intact buy on dip

should be the preferred approach. The derivative data too

depicts the same where additions were seen in 7800 and

above strikes of calls. Similarly Put strikes saw upward shift

with addition in 7600 and 7700 strike and unwinding in

7500 and below strikes.

GOVT. IN ACTION

39

29.02.2016 29.03.2016 29.02.2016 29.03.2016

1 CAIRN 117.95 154.50 30.99%

2 RELINFRA 409.85 520.00 26.88%

3 TATAMOTORS 299.70 371.65 24.01%

4 VEDL 70.60 87.45 23.87%

5 BOSCHLTD 16736.50 20560.00 22.85%

6 YESBANK 689.00 846.00 22.79%

7 AMBUJACEM 187.95 230.75 22.77%

8 HINDALCO 68.75 84.20 22.47%

9 TATASTEEL 249.10 304.25 22.14%

10 NMDC 81.40 99.20 21.87%

11 BHEL 90.85 110.70 21.85%

12 ADANIPORTS 196.70 238.55 21.28%

13 SAIL 34.90 41.95 20.20%

14 BHARATFORG 746.40 891.60 19.45%

15 SBIN 158.75 189.30 19.24%

16 GLAXO 3157.40 3744.00 18.58%

17 UPL 381.65 451.90 18.41%

18 ICICIBANK 190.05 224.00 17.86%

19 TATACHEM 316.05 370.50 17.23%

20 ABIRLANUVO 712.35 830.95 16.65%

1 CROMPGREAV 129.90 47.90 -63.13%

2 LUPIN 1754.55 1404.95 -19.93%

3 APOLLOHOSP 1463.85 1332.50 -8.97%

4 SUNPHARMA 853.90 793.15 -7.11%

5 BRITANNIA 2756.25 2588.40 -6.09%

6 COALINDIA 311.00 294.80 -5.21%

7 RCOM 51.75 49.35 -4.64%

8 MCDOWELL-N 2650.65 2542.90 -4.07%

9 DRREDDY 3036.25 2938.00 -3.24%

10 CIPLA 514.15 502.65 -2.24%

11 EICHERMOT 18900.60 18607.50 -1.55%

12 HCLTECH 813.25 807.00 -0.77%

13 M&M 1228.10 1231.00 0.24%

14 COLPAL 820.40 829.00 1.05%

15 OIL 309.25 313.25 1.29%

16 ASIANPAINT 846.10 858.00 1.41%

17 FEDERALBNK 46.25 47.00 1.62%

18 PETRONET 235.10 240.35 2.23%

19 ZEEL 372.35 381.10 2.35%

20 DIVISLAB 950.55 975.00 2.57%

Indices Performance 29.02.2016 –29.03.2016

Source: BSE

APRIL 2016

MARKET DIARY

40

“Good, better, best. Never let it rest. Till your Good is better and better is best”

- St Jerome

Weekly Chart: WTI Future

CRUDE OIL

One of the most interesting commodities of 2016 is off

course crude oil. In the month of January we have seen

record lows and at one point of time it was assumed that it

would break $20 per barrel floor anticipated by Goldman

Sachs. The picture turned opposite from the month of

February when we witnessed a series of green days in the

crude oil chart and during the last week of March we got a

high around $42.

As the Brent front-month futures contract stabilizes either

side of the $40 per barrel level, and WTI lurks within that

range too, a comment by the International Energy Agency

that the “oil price may have bottomed out” has triggered a

lot of market interest. In its monthly oil forecast for March,

the IEA, which advises on energy policy matters of

industrialized nations, noted that non-OPEC oil production

would fall by 750,000 barrels per day (bpd) in 2016,

compared with its previous estimate of 600,000 bpd.

Specifically, US production is forecast to decline by

530,000 bpd this year. OPEC's crude oil production eased

by 90,000 bpd in February to 32.61 million bpd as losses

from Iraq, Nigeria and the United Arab Emirates partly

offset a rise in flows from post-sanctions Iran.

From the demand side, China which accounts for one third

of the total global oil demand is still struggling with its

economy but the problem area is different. China is trying

hard to curb carbon footprint by introducing many counter

measures; starting from the lottery system in license

allocation to introduction of hybrid vehicles. Analysts at

Deutsche Bank believe the Chinese oil demand growth, the

largest single contributor to global oil demand growth, may

begin to flatten more quickly than some long-term

projections indicate. Oil demand growth from the

GOVT. IN ACTION

41

Weekly Chart: Crude Oil MCX

passenger vehicle sector, which has made up 66% of

Chinese total oil demand growth since 2010, may slow in

the medium-term and then begin to decline by 2024

(Source: Deutsche Bank). Factoring in pure fuel efficiency

gains alone in China, and all else remaining equal,

Deutsche Bank noted that reduced Chinese demand growth

could result in global oil demand growth falling from its

2000-2016 trend of 1.1 million bpd on an annualized basis

to only 800,000 bpd year-on-year by 2024.

Just before the Good Friday holiday season, profit booking

in the oil market induced good selling pressure and market

dropped below $39 but a late rally helped it to regain

some lost ground and the daily candle chart gave us a

Hammer which indicates abatement of selling pressure and

also some kind of trend reversal. But again in longer time

frame chart, we have a shooting star like candle though not

perfect but it's better to cautious and if we break below

$38.33 in WTI future then a pullback towards $35 is a

much possible outcome.

Long term oscillators are turning neutral after months of

being in bear grip. It's better to wait for perfect opportunity

if there is at all, any pullback towards $35 which is surely a

good chance to enter into the market with long term view

and considering stop near $27.80. For momentum trader

the opportunity will arrive if we can able to trade above

$42.50 then putting stop at $39 we can target near $48.

Technical Analysis

towards bullish sentiment. IF we just consider the weekly

chart (without taking Rupee Effect), not much bearish

features can be seen into it and any pullback is indicating

opportunity to go long. The overall target for this market is

around 3100-3150. Our advice for MCX crude is to avoid

shorts and try to be at long side of the market. If there is

any pullbacks then try to enter within 2400-2500 range

and put a stop at 2240.

The most extreme speculative positioning, judging from the

futures market is the long yen position. The bulls added

another 3.4k contracts, lifting the gross long position to

82.8k contracts. The record was set in 2008 at 94.7k

contracts. The gross short position was trimmed by 4.5k

contracts, leaving 29.5k. It is the smallest gross short

position since before Abe was elected as Prime Minister in

2012. The net long yen speculative position rose to 53.3k

contracts. The record was also set in 2008 at 65.9k

contracts.

From economic context, as the Fed looks to be raising the

rate the Bank of Japan is coming under increasing pressure

to loosen monetary policy further, as recent Japanese data

has proven disappointing. March's Japanese Manufacturing

P M I p rovo ke d p a r t i c u l a r co n ce r n , a s t h e s e c t o r

unexpectedly slid into contraction territory by slowing from

50.1 to 49.1. Such a weak showing does not bode well for

the domestic economy.

In MCX the picture is more of a same but more tilted

YEN

APRIL 2016

COMMODITY MONTHLY ROUND-UP

42

43

Major data in the coming weeks for the Japanese Yen

includes February's Industrial Production and the Tankan

Large Manufacturers Outlook for the first quarter. Sustained

signs of stress within the Japanese economy are expected

to weaken the Yen, by increasing the likelihood that the

BoJ will be prompted to move further into negative interest

rates in the near future. Nevertheless, if global safe-haven

demand remains heightened then the Yen could well

receive a renewed boost, particularly if the week's US data

fails to produce bullish results.

After falling from the solid support line of 115.30, markets

for the last six weeks struggling much to decide the further

Technical Analysis

course of action. It is now mostly limited within 114 to 111

level. But as it breaks a long term trend support, as per the

technical analysis it's time to sell out the pair. For long

term traders it's better to go short at 113-113.50 level and

put the stop of the short trade around 117.60 which is the

high if the break down candle. Initial target for the short

trade is around 107 which is the significant swing high of

previous peak and also above 200 Weekly SMA. In support

to our short advice we can indicate the Head & Shoulder

Pattern that can be seen in weekly chart and after break

down the pattern target is also near 107. Weekly

Stochastic is under bear grip and indicating more weakness

to come.

GOVT. IN ACTION

AP

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APRIL 2016

WORLD ECONOMIC EVENT CALENDAR - APRIL 2016

44

Sector Deals Executed

Real Estate

Housing Finance Company

Inventory Discounting

Term Loan & Working Capital

Infrastructure

For Debt Fund Raising:Mr. Anirudh Sarvaiya - Sr. ManagerACL - anirudh.s@ashikagroup.com

Mr. Aagam Vakharia - Sr. ManagerACL - aagam.v@ashikagroup.com

For Mergers & Acquisition:

For Equity Capital Markets:

Mr. Mihir Mehta – Sr. ManagerACL - mihir.m@ashikagroup.com

Mr. Niraj Kothari – AVPACL - nirajkothari@ashikagroup.com

For any valuable input or otherdiscussion & business opportunityplease send a mail to:

Mr. Vaibhav Jain – PresidentACL - vaibhav@ashikagroup.com

Services at Ashika Capital Limited (ACL)

• Issue Management

• Open Offer

• Overseas Listing

• Underwriting

• IPO / FPO

• Right Issue

• Qualified Institutional

Placement

• Takeover

• Buyback

• Delisting

Capital Markets Fund Raising

• Private Equity

• Debt Syndication

• Pipe

• Project Finance

• Team Loan

• Working Capital Loan

• Acquisition Funding

• Construction Finance

• Venture / Growth Capital

Advisory

• M & A

• Corporate Restructing

• Business Valuation

• Management Buy-outs /

Buy-ins

• Leveraged Buy-outs

• Joint Ventures

• Strategic Partnership

• Spin-Offs

• Divestment

• Capital Restructing

• Finance Restructing

• Espo Valuation

• Fairness Opinion

• Merger / Acquisition / Disposal

Deals Executed

Facility

Debt

Debt

Debt Bill Discounting

Head Of?ceTrinity

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Phone: 033-40102500

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Group Companies

(RBI Registered NBFC)

CIN No. L67120WB1994PLC062159

Ashika Global Securities Pvt. Ltd.

(RBI Registered NBFC)

CIN No. U65929WB1995PTC069046

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CIN No. U30009WB2000PLC091674

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(Member : NSE, BSE, MCX-SX, Depository

participant of CDSL/NSDL)

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(Member : NCDEX, MCX, NMCE, ICEX,

NSPOT & ACE)

CIN No. U51909WB2003PTC096985

Ashika Credit Capital Ltd.

SN

EH

A A

RT

S

98

30

09

03

20

•