Exports (US $ - Indian Institute of Foreign Trade: Tradewinds...

20.8

4

24.4

9

Feb-16 Feb 17

Exports (US $

Billion)

6.7

5

6.2

5

6Sep-15 43,009 € Aug-17

RBI Repo Rate (%)

9.7

4.8

Aug-16 March 17

Unemployment Rate

(%)

6.1

7.2

FY 2016-17 FY 2017-18

Real GDP(Growth %

YoY)

43.7

9

55.6

2

60.0

8

FY 14-15 FY 15-16 FY 2016-17

FDI (US$ Billion)

The Reserve Bank of

India (RBI) has cut the

repo rate by 25 basis

points each in October

2016 and August 2017

making the rate 6 per

cent which will infuse

liquidity into the

market.

GDP expected to stay

between 6.75 - 7.5% in

FY 2016-17 on the

back of government

spending, thereby

making India an

attractive destination

for investment.

The total FDI

investments India

received during April

2016-March 2017 rose 8

per cent year-on-year to

US$ 60.08 billion.

Unemployment rate

almost HALVED to

4.8% in March 2017

thereby increasing

disposable income,

forecasted to grow

by 7.7% this fiscal.

Total exports grew by

17.48% y-o-y to US$ 24.49

billion in February 2017,

while overall trade deficit

declined by 24 per cent y-o-

y to US$ 41.8 billion in

April-February 2017

ECONOMIC OVERVIEW

Sep-15 Oct-16 Aug-17

8700

10100

Aug-16 42,948 €

NIFTY

30

25

2015-16 2016-17

Corporate Tax Rate

(%)

34.5

72

Expected

revenue

Total planned

Disinvestment

Planned

Disinvestment

(‘000cr)

Nifty and Sensex

reached their all time

highs, with our

market’s growth

highest among

emerging markets

despite the market cap

to GDP ratio being

0.82 showcasing

further potential

The corporate tax rate is

at 25% for companies

with revenues less than

50 cr with plans to

reduce the tax rate

further, making India a

lucrative destination to

invest in. Our IIP is

forecasted to grow by

5.97% this fiscal

GST should help make

India more of a single

market and thus spur

productivity,

investment,

competitiveness, job

creation and incomes,

hence giving an impetus

to the industry in the

long run

The government

plans to divest 15%

in NLC, 10% each

in NTPC, NHPC,

SAIL, PFC, 5% in

REC & 3% in IOC,

the revenue from

which will help the

government spend

on infrastructure and

welfare schemes

Strong structural reforms,

a proactive government,

positive demographics with

increasing urbanisation ,

relative low exposure to

external risks make India

an investor friendly

destination, with India

sure to make a greater

mark on the world stage.

ECONOMIC OVERVIEW

KEY TAKEAWAY

GST Previous

Beauty andPersonal Care

28 26

LPG 5 17

Soap 18 26

Cellphones

18 6Aug- 17

Automobile

Ankit Abhishek

Sagar Dembla

Ambarish Bose

INDUSTRY ANALYSIS

2223

2425

2014 2015 2016 2017

1820 20

22

2014 2015 2016 2017

3.1

3.6 3.63.5

FY14 FY15 FY16 FY17

55 59 64 69

2014 2015 2016E 2017E

KP

I

Automobiles produced in

India (millions)

Automobiles sold in India

(millions)

% share of each segment in total

volume in FY17 Automobiles exported

(millions)

Gross turnover of

manufacturers in

India ($US billion)

High growth rate due to strong export growth and

increasing purchasing power of people.

More focus on using electricity and alternative fuels like

CNG and LPG.

Support from the government in the form of policies and

schemes.Easier raw material procurement due to improved logistic

management and supply chain mechanism after GST.

Disincentivization of getting hybrids as placed at a higher

tax rate bracket (GST 30.3% to 43%)

Fluctuations in steel prices directly influence the

automobile industryDemand for two-wheeler automobiles lowered during

monsoons.

Influenced by government regulations. Rise in prices of

two-wheelers after BS-IV implementation by 5-10 per cent.

STR

ENG

THS

WE

AK

NE

SS

ES

OP

PO

RT

UN

ITIE

S

TH

RE

AT

S

Strategic alliances by foreign OEMs to bring technology

and competitive prices to Indian market

Microcars to be most appealing option in urban cities to

tackle Indian traffic and pollution

Increase in allocation under MNREGA from 38,000 to

48,000 Cr to promote two-wheelers in tier 3 cities

Increased government focus towards infra sector for

heavy duty vehicles

Increase in prices of raw materials like steel,

aluminium, copper, etc.

Promotion of usage of mass conveyance vehicles and

cab services to reduce demand for four-wheelers

Heavy competition from pre-existing players, both

foreign and domestic

Advent of e-vehicle players like Tesla to be a threat to

premium carmakers

15 33

79

Passenger vehicleCommercial vehicleThree wheelerTwo wheeler

SWOT ANALYSIS

EICHER MOTORS

Operates in over 20 countries

Incorporated on 14th October, 1892

Leading player in mid-sized

motorcycle segment

Overseas exports volume crossed

35000 numbers

HIGHLIGHTS

SIDDHARTHA LAL

S SANDILYA

CHAIRMAN

PRATEEK

JALAN

MANVI

SINHA

M J

SUBBAIAH

NO

N-EX

ECUTIV

E

DIR

ECTOR

S

MANAGEMENT

Highest ever sales in 2015 at 5800+

units

PRODUCTSRECENT DEVELOPMENTS

Hit new high of 30162.50 in Nifty 50

index on 27th July, 2017

Cutting bus and truck prices by up to

5%

Eicher Polaris to expand overseas;

started export to Nepal

15553

147618

163171

17341

178345

195686

Total VE sales

Total motorcycle sales

Total sales

SALES VOLUME

Q4 2015-16 Q4 2016-17

15553

22033

13168

9269 20

87

EICHER MOTORS TATA MOTORS

MAHINDRA & MAHINDRA ASHOK LEYLAND

FORCE MOTORS

BSE NSE ISIN

505200 EICHERMOT INE066A01013

SECTOR : Auto - LCVs & HCVs

Growth in

motorcycle sales in

last 5 years

6x

EML continues to be

debt free company

ZERO

MARKET SHARE OF CV (BY VOLUME/ANNUM)

3,8

95

.38

2,1

23

.62

1,2

06

.56

79

4.3

60

2.0

5

MAR '17

MAR '16

DEC '14

DEC '13

DEC '12

377.98

60.33

Mar '17Mar '16Dec '14Dec '13Dec '12

3,541

.73

649.3

9

Mar'17

Mar'16

Dec '14Dec '13Dec '12

1,173.79

7,913.71

Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

1,5

60

.02

14

4.7

6

Profit/Loss From ContinuingOperations

Mar-17 Mar-16 Dec-14

Dec-13 Dec-12

0 200 400 600 800

PEER COMPARISON (OPERATING PROFIT)

Force Motors Tata MotorsAshok Leyland Tata MotorsEicher Motors

BUY

24.6423.25 24.6423.25

5.775.68

Mar '17Mar '16

RATIOS

Inventory Turnover Ratio

Investments Turnover Ratio

Fixed Assets Turnover Ratio

81

.48

58

.11

57

.18

39

.77

Mar '16 Mar '17

RETURNS

Return On Capital Employed(%)

Return On Net Worth(%)Growing reserves show good

health

Ever increasing market cap

Royal Enfield bikes to expand in

tier 2 cities, driving growth

Reduced truck and bus prices to

increase demand

Better exports; Potential in South

Asian and African markets.

Increasing financials compared to

previous year.

0500

10001500200025003000

PER SHARE RETURN

MOTHERSON SUMI SYSTEMS

Operates in 25 countries across six

continents

Incorporated on 1st January, 1986

Largest auto component maker in India

The stock has given 42% returns in a

period of one year, outperforming BSE

Sensex and Auto.

HIGHLIGHTS

VIVEK CHAAND SEHGAL

CHAIRMAN

LAKSH VAAMAN SEHGAL

PANKAJ MITTAL

COO

MANAGEMENT

CLIENTS RECENT DEVELOPMENTS

A healthy order book that stands at

€12.9 billion

37226.7

1773.7

678.3

42765.7

2172.4

706.8

Sales

Net Profit

Cash Flow from Operating Activities

SALIENT NUMBERS

FY 2015-16 FY 2016-17

35.34

63.1

26.6

36.9

INDIAN FOREIGN

INSTITUTION NON-INSTITUTION

SHAREHOLDING PATTERN

BSE NSE ISIN

517334 MOTHERSUMI INE775A01035

SECTOR : Auto Ancillaries

MSS continues to be

almost a debt free

company

0.14Rs.15,400 crore deal with Daimler AG

to supply full range of parts., the

biggest such deal in India

Consistent rise in profit and

decrease in Debt/Equity ratio

over last four quarters.

MAR '16

MAR '15

MAR '14

MAR '13

MAR '12

124.2

65.1

Mar '16Mar '15Mar '14Mar '13Mar '12

100.993.8

Mar'16

Mar'15

Mar'14

Mar'13

Mar'12

3,868.10

5,882.40

Jan-12 Jan-13 Jan-14 Jan-15 Jan-16

71

1.9

31

7.2

Profit/Loss From ContinuingOperations

Mar-16 Mar-15 Mar-14

Mar-13 Mar-12

0 500 1000 1500 2000

PEER COMPARISON (OPERATING PROFIT)

WABCO India Amara RajaExide BoschMSS

BUY

30

.09

34

.99

24

.6

29

.33

Mar '15 Mar '16

RETURNS


Return On Net Worth(%)Capital expenditure of Rs.2000 Cr

planned for FY – 18.

Increased volume and price

movements have been witnessed

based on the

market position and financial

strength. The stock gave 57%

return after dividend split.Mar '13Mar '14Mar '15Mar '16Mar '17

OPERATING PROFIT(In Rs.Cr)

Outstanding results and continuous

increase in significant numbers

such as Price/Earning (P/E) ratio

has made the stock has to gain 23

per cent in the past three months

pushing the FY18 projected price-

earnings multiple to 28, which is

40 per cent higher than the 10-year

average.

0

5

Mar'15 Mar'16

Fixed Asset Turnover Ratio

Fixed Asset Turnover Ratio

Banking, Financial services and Insurance

Jayesh FoglaSiddharth Gandhi Kishan Gupta Anekeet Dogra

PORTER’S FIVE FORCES ANALYSIS

Competitive Rivalry

(High)

At present public

sector banks, led by

SBI & associates,

control 77% of the

banking sector.

Issuing of new

licenses will

increase

competitive rivalry

in rural areas over

medium to long

term.

Threat of New

Entrants

(Low)

High entry barriers,

as RBI control’s the

issuance of licenses.

New licenses may

reduce market share

of pulic sector banks

For deposit substitutes

include investment in

gold,real estate, mutual

funds & equity.

For advances

substitutes include

bonds, IPO/FPO

Largely, customers prefer

banks for its reliability.

Gradually, customers

have hedged inflation by

investing in other riskier

avenues.

Currently 95% of Indian

Population still invests in

Fixed Deposits.

Substitute Products

(Low)

Bargaining Power

of Suppliers

(Medium)

Bargaining Power

of Buyers

(Low)

Nascent Debt market

& volatile stock

market are less

opted.

Banks are an

indispensible source

of funds in India.

Healthy regulatory

oversight & credible

monetary policy by the

RBI have lent strength

& stability.

Increase in working

population & growing

disposable incomes.

OPPORTUNITIES CHALLENGES

The biggest risk to

India's banks is the

rise in bad loans

The issuing of

new licenses will

lead to an

increase in

competitive

rivalry.

2025 EUS$ 28.5 Trillion

EXPECTED CAGR:

34.56%

2016US$ 1.97 Trillion

Growth in Total Asset Base

Industry Analysis

Credit off-take has been surging ahead

over the past decade, aided by strong

economic growth, rising disposable

incomes, increasing & easier access to

credit.

ROBUST DEMAND

• Increase in working population &

growing disposable incomes.

• Housing & Personal finance are

expected to remain key demand

drivers.

INNOVATION IN SERVICES

• Mobile, Internet banking &

extension of facilities at ATM to

improve operational efficiency.

• Vast un-banked population

highlights scope for innovation.

BUSINESS FUNDAMENTALS

• Accounts for over 10% of the

global pharmaceutical

production.

• High net interest margins, along

with low NPA levels, ensure

healthy business fundamentals.

POLICY SUPPORT

• Wide policy support in the form

of private sector participation &

liquidity infusion.

• Healthy regulatory oversight &

credible monetary policy by the

RBI.

0

200

400

600

800

1000

1200

1400

FY17 FY16 FY15 FY14 FY13

CAGR : 12.38% FY17-FY07

Kotak Mahindra Bank

• Profile : Market Cap - ₹173,287 crore

• Bank's segments include Treasury, BMU andCorporate centre, which includes dealing indebt, equity, money market, forex market,derivatives and investments and primarydealership of Government securities andBalance Sheet Management unit (BMU)

• Uday Kotak, 1985

• Presence(National)

• Management

• Mr. Dipak Gupta, Joint Managing Director

• Mr. Uday Kotak, Executive Vice-Chairman and

Managing Director

• Dr. Shankar Acharya, Non-Executive Chairman

• Recent Product - Introducing 811 for the first time inIndia install a bank account. Up to 6% interest p.a.,Zero balance account, open an account in just 5 mins,virtual debit card and scan & pay – Install Kotak. Get811.

• Recent News - Kotak Mahindra Bank reported a 23 per cent year-on-year rise in standalone net profit at Rs. 912.73 crore for the June quarter

• We must never get complacent and always remember that

if we are not paranoid, others will eat our lunch. – Uday

KotakATMs

2163

Shareholders

160K

Institution

₹2.8 Trillion

Card holders

6 Million+

Customer Base

8m

Employees

44K

BSE NSE ISIN

500247 KOTAKBANK INE237A01028

SECTOR : BFSI

Buy

FINANCIALS

• NIM - Net profit margin is twice of peer average

• Lending Growth - As per June quarter KMB has reported its highest loan book growth (18%) in the last five quarters.

• Corporate loans –The corporate loans (1/3rd of total) has 21% y-o-y growth for another quarter.

• NPA - KMB’s non-performing loans remain well below the industry average, helping make the bank one of the top gainers.

• 811- Kotak’s 811 app has helped rein in clients. Reached 60.8 billion rupees ($947.6 million) in mobile transactions in June, a 115 % increase from the year before.

Growth Kotak Peers

Net Profit Margin 22.13 10.8

Cost of funds Ratio 5.58 5.69

OI/TI 34.3 21.16

EPS(MRQ) 23.97% -11.18%

EPS(TTM) 40.67% 5.41%

EPS Growth 16.84% 14.77%

Sales Growth 21.39% 20.52%

Capital Exp. Growth 15.52% 10.4%

Growth Comparison - KMB

NIM of company crossed 10K Crore first time in 5

yrNet profit soared by 30% in FY17 after

increase in current & saving account balances

Kotak Mahindra Bank recorded the highest

ever deposit of 69+ cr. In FY17BPS increased to 209.1 from 181.9 in last year.

HDFC Bank Ltd

• Market Cap (₹ cr): 4,49,657

• HDFC Bank is the largest private sector bank inIndia with a pan-India network of over 4,715branches and nearly 12260 ATMs.

• Established in 1994. Mr Aditya Puri is the MD& CEO of the Bank.

• Presence in India, Bahrain, Hong Kong andDubai.

• Recent Product - HDFC launched ‘Project AI’ underwhich bank would deploy robots at select bankbranches. These robots will offer options such as cashwithdrawal or deposit, forex, fixed deposits and dematservices displaying on the screen to persons cominginto the branch.

• Management

• Mrs Shyamala Gopinath, Chairperson

• Mr Aditya Puri, Managing Director

• Mr Paresh Sukthankar, Deputy ManagingDirector

• Mr Kaizad Bharucha, Executive Director

• Mr Sashidhar Jagdishan, Chief Financial Officer

• Recently HDFC bank reported its results for firstquarter of FY18. The bank reported PAT of ₹ 3893.8 crup 20.2% YoY (down 2.4% QoQ primarily on accountof higher provisioning. Advances for the quarter grew23.4% beating the industry estimates of 20%.

BSE NSE ISIN

500180 HDFCBANK INE040A01026

SECTOR : BFSI

Buy

• Strong growth in bottomline and advances - During the year FY17 HDFC reported Net profit of ₹ 14,550 cr, an increase of 18.3% from FY16. Advances grew by 19.4% to ₹ 554, 568 cr compared to previous year.

• Stable Asset Quality – Asset quality of the bank remains one of the best in the industry with GNPA at 1.05% and NNPA at 0.33%

• Lower COF and improved NIM -Strong growth in low cost CASA deposits helped bank in expanding NIM to 4.3% which remains the best in the industry.

Advances growth trend (Rs in cr)

0

10

20

30

40

50

60

Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17

CASA ratio jumped QoQ (%)

CASA Ratio

Improvement in low cost CASA portions in

deposits has helped in improvement of NIM

margins

Peer comparison – HDFC Bank

400000

420000

440000

460000

480000

500000

520000

540000

560000

580000

Growing advances with stable asset quality

assisted in gaining market share in the total

system credit

51 53 54 55 5349 47 46 45 47

0102030405060

Retail Wholesale

Higher retail book has helped bank

in improving NIM and lower

slippages

Retail book continues to drive

growth (%)

Key Parameters HDFC Peer Avg.

Net Interest Margin (%) 4.3 3.25

Net Profit Margin (%) 20.99 16.38

GNPA(%) 1.05 4.5

NNPA (%) 0.33 2.1

ROE 16.26 10.8

Capital Adequacy Ratio (CAR) (%)

15.00 16.00

(2.00)

(1.00)

-

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

Mon

thly

ret

urn

HDFC Bank S&P BSE Sensex

Comparison with market

In almost every parameter HDFC has better

numbers than its peers which shows its

credibility in the industry

HDFC returns have consistently

outperformed the benchmark sensex

in the last 6 months

4.05%

4.10%

4.15%

4.20%

4.25%

4.30%

4.35%

4.40%

4.45%

4.50%

4.55%

2013 2014 2015 2016 2017

NIM trend for last 5 years

NIM

Bank has been able to maintain healthy

margins relatively stable across interest rate

and economic cycles

FINANCIALS

Infrastructure

Akshay Malik

Kurremula Nithin kumar

Drishti Agrawal

0 0.05 0.1

10TH 5 YEAR …

FY13

FY14

FY15

FY16

FY17

11TH 5 YEAR …

12TH 5 YEAR …

Infrastructure Spending as percent of GDP

Total infrastructure spending is about 10%

of GDP (gross domestic product) during the

12th FYP up from 7.6% during the previous

Plan as it includes power, bridges, dams,

roads and urban infrastructure development.

0%

20%

40%

60%

80%

10th plan 11th plan 12th plan

Rising private investments for Infrastructure

Development

Public Private

Affordable housing has been given infrastructure status through Pradhan Mantri Awas

Yojana . 352 affordable housing projects worth Rs 38,000 crore (US$ 5.9 billion) in 53

cities across 17 states for building over 200,000 houses costing Rs 18 lakh (US$ 27,948)

per house on average.

Lock-in period for long-term capital gains on land and buildings has been reduced from

three to two years. With this tax benefits would be available for more investors and thus

would spur a demand in infra shares.

The Ministry of Shipping plans to undertake development of 37 national waterways,

which would have positive impact on reduction of overall logistics cost. Enhanced

fund allocation on Sagarmala project to R600 crore for 2017-18 from R406 cr in

2016-17.

The Central Electricity Authority expects investment in India's power transmission

sector to reach Rs 2.6 lakh crore during the 13th plan, & enhancement of capacity of

the inter-regional links by 45,700 MW.

Airports Authority of India plans to develop city-side infrastructure at 13 regional

airports, with help from private entities.

Railway expenditure allocation has increased by 8% to Rs 131,000 cr for laying

down 3,500 km of railway lines in 2017-18. Diamond Quadrilateral is a project to

establish high speed rail network in India that will connect the

Delhi, Mumbai, Kolkata and Chennai.

The Real Estate (Regulation and Development) Act, 2016 passed by the Lok

Sabha on 15 Mar aims to protect home-buyers, help boost investments in the real

estate industry (FDI), promote fair play in real estate transactions and ensure timely

execution.

Infrastructure Sector Analysis

Smart Cities Mission is being allocated USD8.29 billion to develop 100 cities allover the country making them citizen friendly and sustainable. It is all aboutoverlaying the city’s infrastructure, water supply, sewage, waste collection, urbanmobility and other service provisions with ICT solutions

GST Effects

• Ease in doing business with removal of cascading effect of taxes and clarity in

classification of works contracts as services and other contracts which do not

result in immovable property would be composite supplies.

• Availability of input tax credits would neutralize the concerns of increased

GST rate of 18%.

• Increase in rate of services and withdrawal of exemptions and concessions for

power projects is expected to have an impact on power companies.

In March 2017, the Ministry of Commerce considered 5 proposals of SEZ

developers, to set up new Special Economic Zones in Karnataka.

The burgeoning real estate industry in India gives a fillip to the demand for

concrete & building construction equipment The residential real estate demand is

driven by

• Rising population and growing urbanisation and rising income levels leading to

higher demand for luxury projects

• Growing demand for affordable housing to meet the demand from lower income

groups

0

2000

4000

6000

8000

10000

12000

NIFTY INFRA NIFTY INDIA

Construction of International North–South Transport Corridor, a 7,200-km-

long Multi-mode network of ship, rail, and road route for moving freight between

India, Russia, Iran, Europe, and Central Asia.

• Positive economic outlook supported by

impressive figures of GDP, LPI and

Housing Data will aid in the growth of

infrastructure companies.

• GST, Affordable Housing Scheme,

Sagarmala Project and other mentioned

factors point towards growth simulation in

Infra sector.

Infrastructure Sector Analysis

Effect of Economic and Industry

Specific Factors on Infrastructure

Companies

Company AnalysisBSE NSE ISIN

512599 Adani Ports and SEZ INE821I01014

SECTOR : Infrastructure

MARKET CAP (RS CR)

= 82,030.40

Adani Ports and SEZ is the seamless

integration of 3 verticals consisting

of Ports, Logistics and Special

Economic Zone.

It is India’s largest port company had a

very modest beginning in 1998 with just

two berths at Mundra, in the Gulf of

Kachchh in Gujarat, India.

The company now has pan India

presence in ten locations with

the flagship Mundra port in the

Gulf of Kachchh, also India’s

largest commercial port.

CEO - Karan Adani

Founder- Gautam Shantilal

Adani, the chairman and founder

of Adani Group (net worth - $6.3

billion as of April 2017)

New Products- Adani Ports is striving

to become Green Port by managing port

operations and services responsibly,

creating safe, secure and eco-friendly

working environment.

Management - Chief Financial

Officer, Co. Secretary & Compl.

Officer, Chief Executive Officer,

Chairman & Managing Director

and 7 directors

Recent News -Adani Ports and Special

Economic Zone has incorporated a

wholly owned subsidiary company Adani

International Terminal Pte on June 30,

2017.

The company has set a target of

exceeding 200 MT of cargo

handling by 2020 at an

investment of Rs 9,000 crore,

but it is likely to achieve it by

2018.

Adani Ports India is setting

up LNG terminals along

India’s eastern and western

water margins as natural

extensions to the port

infrastructure

Presence- operates across eight ports

in India and four International Ports

BUY0

200000

400000

600000

800000

1000000

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Till 28

July

2017

Market Cap (in Millions Rs.)

0

5000

10000

15000

20000

25000

Q1 2017 Q2 2017 Q3 2017 Q4 2017

Revenues (in Millions Rs.)

0

2000

4000

6000

8000

10000

12000

14000

16000

Q1 2017 Q2 2017 Q3 2017 Q4 2017

EBITDA (in Millions Rs.)

050

100150200250300350400450500

31-JAN-17 28-FEB-17 31-MAR-17 30-APR-17 31-MAY-17 30-JUN-17

STOCK PRICE (IN RUPEES) Closing Stock –

28 July 17 - 395.75

This graph shows that Adani

Ports and SEZ is going bullish

again.

The increase in stock price can be

attributed to infrastructure push

by Govt. like ‘Sagarmala’ Project’

and Adani Ports signing up new

deals.

Risk Returns

%

Adani Ports 0.54 8.57

Industry 0.53 10.14

Nifty 0.94 5.26

49.75%

23.52%

3.55%

2.57%1.88%

6.15%

PROMOTERS

FOREIGN INSTITUTIONS

NBFC AND MUTUAL FUNDS

GENERAL PUBLIC

OTHERS

FINANCIAL INSTITUTIONS

FOREIGN PROMOTERS

CENTRAL GOVT

Company Analysis

• Adani Ports is keen to complete

its own 'Sagarmala' dream by

having presence in the three

key states of Maharashtra,

Karnataka and Andhra Pradesh,

apart from setting up trans-

shipment terminals in Southeast

Asia and East Africa.

• Adani Ports signed a MOU

with Malaysia’s MMC Ports to

do feasibility study of Carey

Island Port Project as an

extension of Port Klang.

• Adani Ports and SEZ would

focus on cleaner forms of

energy that will shave operating

costs by as much as 10%-15%.

BSE NSE ISIN

532947 IRB Infrastructure

Developers Ltd

INE821I01014

SECTOR : Infrastructure

MARKET CAP (RS CR)

= 7,941.01

IRB Infrastructure Developers

Limited is a road build–operate–

transfer (BOT) operator.

It has a portfolio of over 20 Road BOT

projects. It has in-house integrated

project execution capabilities in its

business verticals, including

construction, operation and maintenance

of highways.

Its clients include government

agencies, such as National

Highways Authority of India

(NHAI) and state road

development authorities, which

develop highways.

CEO - Ajay Deshmukh

Chairman & MD - Virendra D.

Mhaiskar

Presence- headquartered in

Mumbai,India.

New Products- Includes development

and operation of roadways; Real Estate,

which includes real estate development,

and Others, which includes windmill (sale

of electricity generated by windmill),

hospitality and airport infrastructure

Its construction business

complements its BOT vertical

by executing engineering,

procurement and construction,

and operation and management

(O&M) aspects of BOT

concessions.

Management - Chief Financial

Officer, Chief Executive

Officer, Chairman & Managing

Director and 17 directors.

Recent News - IRB Infrastructure gains

4% on financial closure for Udaipur-

Gujarat road project which it had bagged

this project last year by offering the

premium of Rs 163.80 crore to NHAI.

IRB Infra appointed former

NHAI chief, Rajinder Pal Singh

as board chairman. He had

worked in various areas like

finance, industry, urban

development and infrastructure

development.

Company Analysis

0

20000

40000

60000

80000

100000

Q1

2017

Q2

2017

Q3

2017

Q4

2017

Till 28

July

2017

Market Cap (in Millions Rs.)

0

5000

10000

15000

20000

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018

Revenues (in Millions Rs.)

6500

7000

7500

8000

8500

Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018

EBITDA (in Millions Rs.)

Risk Return

s %

IRB 1.08 7.47

Industry 1.3 5.95

Nifty 0.94 5.26

57.37%26.97%

7.23%

5.07%

2.42% 0.94%

PROMOTERS

FOREIGN INSTITUTIONS

NBFC AND MUTUAL FUNDS

GENERAL PUBLIC

OTHERS

FINANCIAL INSTITUTIONS

0

50

100

150

200

250

300

30-JAN-17 28-FEB-17 31-MAR-17 30-APR-17 31-MAY-17 30-JUN-17

STOCK PRICE (IN RUPEES)Closing Stock –

28 July 17 - 225.75

The Stock graph shows that IRB

is going bullish again.

The increase in stock price can be

attributed to infrastructure push

by Govt. and the successful IPO

of IRB InvIT that would help

them deleverage and improve

appetite for projects. The initial

public offer of IRB InvIT Fund

was oversubscribed 1.26 times.

BUYKey Insights and Deals

• Reached financial closure for Rs

2,088 cr road project which

involved 6 laning of 113.8 km

length of NH-8 stretch between

Udaipur to Guj border.

• Bagged six-laning highway

project in Rajasthan. The

concession period of the project

is 20 years including

construction period of 910 days.

The company will get tolling

rights on the project.

• Bagged Rs 2,100 crore project

from NHAI. The Rs 2,100 crore

project is to be developed on

design, built, finance, operate

and transfer under the National

Highways Development

Programme.

Company Analysis

Manufacturing

Aesha Manish Dave

Ruturaj Solanki

Akash Yadav

Saurabh Rathore

INDUSTRY ANALYSIS 1/2

808.4162.3

104.8

95.678.6

China

Japan

India

United States

Russia

STEEL PRODUCTION

Total finished steel production in India has increased at a CAGR of

4.70 per cent during FY12– 16, with country’s steel production

reaching to 90.98 million tonnes per annum (MTPA) in FY16.

The country became the 3rd largest crude steel producer in 2016

and will become the 2nd largest in 2017, as large public & private

sector players strengthen steel production capacity in view of rising

demand.

Moreover, capacity has increased to 124.77 million tonnes (MT) in

FY171 , which is 2.2 per cent more than FY16, while in the coming

10 years the country is anticipated to produce 300 MT of steel

As of 2017, India is the world’s 2 rd largest producer of crude steel

(up from 8 th in 2003)

Easy availability of low-cost manpower & presence of abundant

iron ore reserves make India competitive in the global set up

WORLD CRUDE STEEL PRODUCTION -2016 (MMT)

STEEL CONSUMPTION

Lower per capita consumption compared to international average

Per capita steel consumption in India, the world's third largest

producer of the metal, stood at 59.4 kg per person in 2014, against a

global average of 216.6 kg

The potential growth of stainless steel in India is enormous

considering the fact that the per capita consumption at 1.9 kg is still

much lower than world average of 6 kg.

India’s comparatively low per capita steel consumption & expected

growth in consumption due to growing infrastructure construction,

automobile and railways sectors has offered scope for growth

The consumption of real steel has grew at a CAGR of 1.87 per cent

during FY08-FY171

52.1 52.4

59.3

66.471

73.5 74.176.99

81.52

61.54

0

10

20

30

40

50

60

70

80

90

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

REAL CONSUMPTION OF STEEL (MILLION TONNES)

INDUSTRY ANALYSIS 2/2

NATIONAL STEEL POLICY 2017

Increase per Capita Steel Consumption to 160 Kgs by 2030-31. To domestically meet entire demand of high grade automotive steel, electrical steel,

special steels and alloys for strategic applications by 2030-31. Increase domestic availability of washed coking coal so as to reduce import

dependence on coking coal from ~85 per cent to ~65 per cent by 2030-31

ANTI-DUMPING MEASURES

Anti-dumping Measures Various trade measures were put in place by the Government in 2016. Anti-dumping duties on China, the United States and

other countries proved to be a significant relief for domestic steel producers. A Minimum Import Price (MIP) imposed on certain steel imports in

February last year for a period of six months was later extended. This restricted low-priced steel imports into India to a very large extent.

Competitive Rivalry

(Medium)

The steel industry is highly concentrated, with the top 5 players accounting for more than 70% of the market share

Steel companies usually compete on the basis of production capacity, economies of scale, access to raw material, etc.

Threat of New Entrants

(Low)

Capital intensive, industry players are large and enjoy economies of scale. Some have their own mines for sourcing key raw materials

Several regulatory clearances required, including environmental, land acquisition, etc.

Low threat of substitutes Aluminium and plastics are being used in few cases in automotive and other consumer durable sectors. However, it still does not pose significant threat to steel

Large integrated companies have their own mines to source key raw materials.

Suppliers of materials are generally from the same industry.

Price is generally market determined

Major steel consumption sectors, such as automobiles, oil & gas, shipping, consumer durables and power generation, enjoy high bargaining power and get favorable bulk deals.

Smaller customers, however, do not enjoy this benefit

Substitute Products

(Low)

Bargaining Power of Suppliers(Medium)

Bargaining Power of

Customers(Medium)

BSE NSE ISIN

500470 TATASTEEL INE081A01012

SECTOR : STEEL - LARGE

MANAGEMENT

Ratan N Tata Chairman Emeritus

Natarajan Chandrasekaran Chairman

T V Narendran Managing Director

Operates in 26 countries

Incorporated on 26Th August, 1907

Second largest steel company in India (measured by

domestic production) with an annual capacity of 9.7

million tonnes

Revenues : ₹117,151 crore(US$18 billion) (2016)

HIGHLIGHTS

Number of employees : 74,000 (2017)

NEWS UPDATES

Tata Steel in long-term tariff contract with Railways-15th July, 2017

Tata Steel commissions solar plant at iron ore mine-11 July 2017

Tata Steel's April-June quarter output at 2.94 MT-03 July 2017

Tata Steel, BFC new ISL entrants-14 June 2017

PRODUCTS

Tata Pipes

Tata Precision Tubes

Tata Shaktee

Tata Steelium

Tata Structura

Tata Tiscon

Tata Wiron

BUYTata Steel is among the top ten global

steel companies with an annual crude

steel capacity of nearly 30 MTPA

It is one of the top steel producing

companies globally with an

annual crude steel capacity of 23.88

MT (in FY17)

Nearly 70 new products launched in

2016-17 financial year.

10.84% of the total market share in

India’s finished steel market and

11.72% of the total market share of

crude steel market.

As on December 7, 2016, Tata Steel

announced its plans to invest

USD1.36 billion during 2017-2027, to

support its steel manufacturing at

Port Talbot, UnitedKingdom.

7.0

6.6

7.9

7.5

8.9

8.5 9

.18

.8

10

9.5


Production Sales

Production and sale of steel (million

tonnes)

CAGR:

82.6per

cent

9.96

33.2

FY16 FY18

Projected crude steel Production

(million tonnes)

9.97MnT

10,896

47,933

9.27MnT

10,102 Cr

38,210 Cr

FY 15-16 FY 16-17

+25%Revenue

from operations

+8%EBITDA

+7%Crude steel production

5.84

6.9 6.9 7 7.1

0.210.75

1.1 0.91.4

0

1

2

3

4

5

6

7

8

2012 2013 2014 2015 2016

Production Sales

Financial growth (USD billion)

PORTFOLIO

PRODUCTS

BSE NSE ISIN

500228 JSWSTEEL INE019A01038

SECTOR : STEEL - LARGE

•HOT ROLLED(HR)

•COLD ROLLED(CR)

•COLOR COATED

PRODUCTS

•GALVANIZED

•GALVALUME

•TMT BARS

•WIRE RODS

Sajjan Jindal

Mr. Seshagiri

Rao

VINOD

NOWAL

JAYANT

ACHARYA

VIJAY

KELKAR

MANAGEMENT

TYPE - PUBLIC COMPANY

FOUNDED- 1982

PARENT- JSW GROUP

HEADQUARTERS-MUMBAI,INDIA

SUBSIDIARIES- ISPAT INDUSTRIES LTD.

REVENUE- ₹556.04 BILLION

(US$8.6 BILLION) (2016-17)

PROFIT- ₹13.34 BILLION

(US$210 MILLION)(2016-17)

EMPLOYEES- 11103

AREA SERVED- WORLDWIDE

FOUNDER- SAJJAN JINDAL

KEY ACHIEVEMENTS

BUYRevenue from operations 32% y-o-y

growth. (Rs. 60,536 cr.)

Board proposed a dividend of 225%

because of generating a high PAT of

Rs.3467cr. during 2016-17 year.

At 15.8 MT ,the crude steel

production was the highest ever and

so were total sales of 14.7MT.

Export presence in over 100 countries

across five continents.

The current installed capacity is 18

MTPA. $11 billion conglomerate, with

presence across India, USA, South

America & Africa.

Production volume grew by 26%, vis-a-

vis the domestic growth of 8.5% and

global growth of 0.8%.

5,2

28

7,2

21

7,1

37

7,5

15

7,6

46

6,1

65

8,4

65

41

9 33

9

33

2

22

1

35

9

53

4

53

2

FY11 FY12 FY13 FY14 FY15 FY16 FY17

Gross Revenue NPAT

Projected crude steel production (million tonnes)

FY17

FY18

CAGR: 197.5

per cent

Net debt to equity improved to 1.85

times from 2.18 times.

Net debt to EBITDA improved to

3.41 times from 6.39 times.

Net profit margin increased to

+6.83% from -9.53%.

-4,000.00

-2,000.00

0.00

2,000.00

4,000.00


PROFIT/LOSS

6369cr

FY 15-16 FY 16-17

+28%Crude steel production

+10%Total Assets

+81%Operating

EBITDA

+39%Revenue from

operations

73,507cr

80,911 cr

15.8MnT

11.6MnT

56,913cr

11,543cr

40,857cr

Metal, mining, and chemical

Yogesh Gidwani

Snehal Hursad

Madhuri Bhagwat

Chemical industry turnover in Rs. million

Export of chemicals amounts to USD

1.21 billion, about 16.8 per cent of export

share of India.

U.S.A 34%

China 22%

Indonesia 17%

Malaysia 14%

Brazil 13%

India Exports

Indian scenario

• 3rd largest producer in Asia and 7th largest by

output in the world.

• 1.3% of International chemical trade.

• 32 largest companies generating 42%

of industry turnover

• 16% of the world’s production of dyestuff and dye

intermediates

Prospects

• Promising prospects for the industry derive largely

from population growth, the rapid expansion of

the Indian middle class and rising purchasing

power

• The growth of plastic in primary forms and

synthetic rubber is set to give a positive push to

the industry. The Swachh Bharat programme is

expected to have a major impact on demand for

plastic in primary forms

2016USD 139 billion

2017Expected growth 11%

USD 224 billion

2020Speciality chemicals

market to reach USD 70 billion

Chemical industry

2%

Others98%

Percentage of GDP

Products are covered under

chemical industry

20132.8%

20236-7%

Global speciality chemical industry

Macro analysis – The chemical industry

Impact of GST

• Integration of chemicals market by decimating the

tax complications

• Lowering of the cascading effect of multiple

taxations

FDI under automatic route

0

100000

200000

300000

400000

500000

600000

700000

800000

2010 2011 2012 2013 2014 2015

Industrial Gases

Dyes and Pigments

Bases, Gases, andOtherInorganic Compounds

Hydrocarbons,Oxygen-functionCompounds andOtherOrganic Chemicals

Chemical Industry OutlookIndia’s Chemical Industry (2013-16)

• 2.11 per cent of national GDP

• 3rd largest chemical industry in Asia

• Covers more than 70,000 commercial products

• Government allows 100 per cent FDI

• Heavy growth prospects in domestic markets

139226

403

2016 2020 2025

Market Size (in billion USD)

Expected Growth of Indian Chemical

Industry Growth Drivers of Indian Chemical Industry

• Rise in GDP & purchasing power

• Low-cost Manufacturing

• Govt. Policy support & increase

in investment initiatives

• World class engineering & strong R&D capabilities

• Big Infrastructural Investment

9170 9396 9440 9628 9632 9884

6740


Total production of major chemicals (000’ MT)

22.4326.45 26.44 26.97

13.58


CAGR

4.71%Chemical exports of India (USD billion)

CAGR 4.71%

Supportive Govt. Policies

• Excise duty reduced from 14% to 10%

• Strong laws on anti-dumping to further

promote the industry

• Policies to set up Integrated Petroleum

Chemicals & Petrochemicals Investment

Regions (PCPIR)

• Manufacturing of most chemical

products is de-licensed

Competitive Rivalry

(Medium)

• Highly fragmented with

rivalry amongst Companies

• Stiff competition from foreign

competitors as well owing to

100 % FDI

• International companies may

dump chemicals at low price

Threat of New Entrants

(High)

• Huge capital

requirements & patent

protection are significant

barriers

• Other barriers include -

R&D & personnel

requirements

Substitute Products

(Low)

• Buyers tend to have

specific chemical

requirements

• No direct substitutes for

a specific chemical

requirement

Bargaining Power of

Suppliers (High)

• Small chemical companies rely

on supplies from larger plants,

or petrochemical units

• Inputs for a chemical plant

• cannot be easily substituted

Bargaining Power of

Customers (Medium)

• Customers have multiple

sources of supply

• Chemical companies are

bound by long-term contracts

• Niche specialty chemicals

have some pricing power

Porter’s Five Forces Analysis

Pondy Oxides & Chemicals• CMP: Rs. 435.85

• Market Cap: Rs. 243.03 Cr

• Incorporated on 21st March 1995

• Key People: Chairman- Anil Kumar Bansal, Managing Director- Ashish Bansal

• Presence : National

• Product range: PVC Stabilisers, Metallic Oxides

Scrip Details:

BVPS 61.22

52 Week H/L 123.80 / 548.90

Div (%) 20

P/B 7.12

FVPS (Rs) 10

Shareholding Pattern (%)

Promoters 51.01

Public (FII+DII) 48.99

Other 0.00

Total 100.0

Key Risks:

• Cyclicality in end-user industries- POCL’s

growth prospects are heavily linked to the

overall macro economic situation

• Stricter pollution control norms

• Thin margins if employee or fuel costs

increase

• Client concentration: Amara Raja Batteries

accounts for 30-40% of domestic sales,

which is effectively 17-18% of POCL’s

total sales

2.58 2.48 2.52

12.03

18.16

March2012

March2013

March2014

March2015

March2016

Earnings per share (Rs)

8.89 7.64 7.48

19.15

28.25

March2012

March2013

March2014

March2015

March2016

Return on Equity (%)

18.1312.47

30.9

-16.8

24.59

March2012

March2013

March2014

March2015

March2016

Net Sales Growth (%)

3.11

6.93 7.12

10.77

Jun 2016 Sep 2016 Dec 2016 Mar 2017

Net Profit (Rs. Cr)

148.08

186.3

222.59 215.93

Jun 2016 Sep 2016 Dec 2016 Mar 2017

Net Sales (Rs. Cr)

• According to the "India

Automotive Battery Market

Forecast & Opportunities, 2018",

the Indian automotive battery

market is projected to grow at a

CAGR of approximately 13%

during 2013-18, in value terms

• The demand for industrial batteries

will remain strong given the

world-wide impetus on solar

energy. Also, the back-up power

demand in India could grow on

power supply bottlenecks and

increasing industrialization

• POCL’s products - lead and zinc

ingots - are primarily used in the

manufacture of lead acid batteries

i.e. automotive and industrial

batteries.

• Battery replacement demand to

grow at a robust pace

• Expected fall in crude oil prices to

aid margin expansion

• Export focus to reap long term

benefits

• POCL has moved to sourcing

based on flexible pricing thereby

cushioning itself from volatility in

lead prices leading to stable

margins

BUY

Snapshot:

Latest Equity (Rs. In Millions) 55.76

EV/EBITDA (TTM) 5.81

Market Cap/Sales(TTM) 0.30

Dividend Yield (%) 0.69

ROCE (%) 22.26

Total Debt/Equity(x) 2.07

113.76

187.48

255.67309.45 287.63

406.34

Mar'11 Mar'12 Mar'13 Mar'14 Mar'15 Mar'16

Imports

Total Outflow (Rs. Cr)

126.73

180.08

140.61

213.66

127.23 137.11

Mar'11 Mar'12 Mar'13 Mar'14 Mar'15 Mar'16

Total Inflow (Rs. Cr)

Exports

POCL vs. Industry Average

POCL Ind. Avg

Quick Ratio (TTM) 0.7 0.4

Debt to Equity (TTM) 2.07 0.08

PE (TTM) 17.9 8.70

Price to Book (TTM) 3.68 4.45

Mar-17 Mar-16 % Var

Sales 215.93 141.33 52.79

Other Income -1.51 0.29 P to L

PBIDT 20.01 8.47 136.28

Interest 2.41 2.25 7.08

PBDT 18.10 6.22 190.84

Depreciation 1.22 1.23 -0.33

PBT 16.87 5.00 237.75

TAX 6.10 2.07 195.16

Deferred Tax -0.08 0.06 P to L

PAT 10.77 2.93 267.81

0

5

10

15

20

25

Dividend %

Dividend History

0

1,00,000

2,00,000

3,00,000

4,00,000

5,00,000

6,00,000

2010 2011 2012 2013 2014 2015

Production

Value added

Profit

Number of Enterprises

Number of Employees

Macro analysis – Mining and metals industry

Mining and metals industry in Rs. million

India: Global position in mineral production

Impact of currency depreciation

• Rupee’s depreciation - positive for the Indian mining sector. Most of the mining companies in

India are net exporters and would experience a positive impact on bottom lines.

• Hikes in export duty, and restriction on mining and blanket bans have prevented the government

from earning forex revenue on exports.

Coal

Largest producer of coal

Operational mines in 2016

Largest estimated coal reserves

Steel Iron ore

Expected production in

tonnes by 2016

Largest iron ore producer

Of world’s deposits

Largest steel producer in 2016

201690 million

tonnes

201588 million

tonnes

Bauxite

Largest bauxite reserves

• Contraction of CAGR of 3.2% expected.

• “Housing for All by Year 2022”, to boost

residential sector, thus indicating boom in

metals and mining.

Impact of GST

• Will bring the required amount of transparency

• Tax incidence expected to increase marginally under GST regime

and by more than 20% post GST regime

Mineral Rank

Coal 3

Chromite 3

Iron ore 4

Bauxite 6

Manganese Ore 5

201588 million tonnes

201690 million tonnes

Metals and Mining Industry OutlookAdvantage India

1. C

om

petitive A

dvan

tage2

. Gro

wth

Drive

rs3

. Op

po

rtun

ities

•Strategic location. Hence easy to export to developed countries as well as fast developing Asian markets•88 Varied types of minerals produced-metallic, non metallic, fuel related, minor.

•High Demand: Contributors are rising power, cement, infrastructure, & cement production,•Innovative Assistance: Support to global projects from Indian Companies and betterment of research and development facilities.•Policy Support: 100% FDI; Privatization of coal blocks; relaxed customs; tax incentives.

•2016 Coal Production:593mil Tonnes. 2021 target Production: 1.2bil Tonnes•High amount of coal Reserves.

Bargaining Power of Suppliers (LOW-Moderate)

Threat of New Entrants(LOW)Competitive

Rivalry(LOW)

Bargaining Power of Customers (LOW)

Threat of Substitute Products (LOW)

020406080

100

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Exports

Imports

Financial Years

Val

ue

in U

SD

Bill

ion

s

Exports versus Imports

ChinaUSAIndiaAustraliaIndonesiaRest of the World

Shares in global coal production. India= 7.4%

•Imports falling because of the rising local production•Exports falling because of high domestic demand.

Recent Trends

Captive Mining for Coal

Overseas Ventures

Focus on Domestic market

Longer duration leases.

Sector: Mining & Minerals

Pro

file

Pro

du

cts

Man

age

me

nt

•Market Cap: 1,345.68 crore.•Manufacturer and exporter of customized manganese alloys.•Founders: Mr. S.C. Agarwalla and Mr. B.K. Agarwalla

•Ferro Manganese•Silicon Manganese•Ferro Silicon

•Chairman and MD: Mr. S.C. Agarwalla•CEO: Mr. Subodh Agarwalla•President and CFO: Mr. SudhanshuAgarwalla

Ne

ws

The company also operates three wind turbine generators (one in Maharashtra and two in Rajasthan) with a cumulative capacity of 3.8 MW.

Customers

•Usha Martin•Jindal Stainless• SKP Group

Script:•CMP: 462.25•Face Value: Rs. 10•52 week H/L: 201-543.90•Book Vakue: Rs. 200.79•Price/Book: 2.30•Dividend Yield: 0.43%

Company Stats:•Current Ratio: 1.45•Quick Ratio: 1.12•Debt to Equity Ratio: 0.25•Inventory turnover Ratio: 2.70•Asset turnover ratio: 2.70

Shareholding:Promoter: 70.69%FII+DII: 29.31%

Total Share Capital: 29.11Equity Share Capital: 29.11Reserves: 365.56Net Worth: 394.67Crore

0

50

100

150

200

250

300

350

400

450

2011 2012 2013 2014 2015 2016

Net Worth (in crores) CAGR:

Company Analysis

1,345 CRMarket Capital

493.64 CRTotal Assets

BSE NSE ISIN

590078 MAITHANALL INE683C01011

0

10

20

30

40

50

60

2011 2012 2013 2014 2015 2016

EPS (Rs.)

0

500

1000

1500

2011 2012 2013 2014 2015 2016

Net Sales Net Sales (Crores)CAGR= 13.62%

0

200

400

600

800

1000

1200

2011 2012 2013 2014 2015 2016

Expenses (Crores) CAGR= 14.82%

0

50

100

150

2011 2012 2013 2014 2015 2016

EBITDA (in crores) CAGR= 2.92%

0

50

100

150

2011 2012 2013 2014 2015 2016

PBT (in Crores) CAGR= 0%

0

2

4

6

8

2011 2012 2013 2014 2015 2016

Dividends (in crores) CAGR= 14.86%

CAGR= -11.51% Peers:•20 MicronsMkt Cap: 135.85cr; Earnings/share: 2.65•Ashapura Mine: Mkt cap: 482.77cr; Earnings/share: 7.44•Ferro AlloysMkt Cap:170.08cr; Earnings/ Share:-0.22•Indian Metals:Mkt Cap: 1410.9cr; Earnings/Share: 92.61

Recommendation: BUY•MAL currently trades at a higher Price/Book ratio than its peers.•MAL has a successful operating model with relatively high net profit margin and asset returns.•Its YOY change in revenues and earnings is better than its peers.•In first 3 quarters of 2015-16, most alloy companies reported losses and some companies even discontinued operations. MAL was one exception which reported a PAT of RS. 32.7cr.•Compared to its peers, MAL has had faster growth rate previously and a current P/E ratio that suggests faster growth in future.

BUY/SELL

Pharmaceuticals

Faraz Ahmed

Urvashi Pande

Aakash Prasad

SWOT AnalysisPESTEL Analysis

Weakness

• Low investment in R&D

• Poor all round

infrastructure is another

challenge.

• Delays in clinical trial

approvals.

Opportunities

• Global sales contribution of biologics

in pharma is expected to increase

from 24% in 2015 to 27% in 2020.

• Patented products, consumer

healthcare, biologics and public

health- offer significant potential.

These opportunities account for USD

5 billion.Threats

• FDA- From 2008 to 2015, the

US has issued around 50

warning letters to Indian

companies, 40% of which led to

import alerts.

• Imports increased moderately by

less than 4% in value terms

Strength

• Largest provider of generic

medicines globally, with a 20%

share in supplies by volume.

• Producer of some of the cheapest

drugs in the world(labour costs

are 50 to 55% cheaper than in

the West)

• Medical Tourism is projected

to grow at 20-25% over the

next 5 years.

• Reduction in the overall

transaction costs with

the withdrawal of CST

• GST- Help pharmaceutical

companies

in rationalising their supply

chain and would also enable a

flow of seamless tax credit

Political

Economic

Technological

Legal

• Make in India programme

• Department of

Pharmaceuticals plan to

launch a venture capital fund

of Rs 1,000 crore

• 50% public funding in the

pharmaceuticals sector.

070

140210280350

9 10 11 12 13 14 15

medical tourist

• Building new

technologies like

Precision medicine

and 3 D Printing

• Reliance and

expansion of

automated IT system

in pharma sector

• started focusing on

the location- based

capabilities and wide

scale use of smart

phones

• The 2005

Amendment to

the Patents Act, 1970

reintroduced product

patents for

pharmaceuticals.

• Clinical trials with

compliance to GCP

helps to ensure that

clinical research

participants are not

exposed to undue

risk and the data

generated are valid

and accurate

Industry Analysis

Environmental

• Disposal are

posing a bigger than

previously anticipated

threat.

• Climatic conditions

and demographic

variation might

impact the drug

market

Social

• Poor health insurance

coverage.

•Almost 47 percent of

older Indians have at

least one chronic

disease.

0

20

40

60

1975

women

1975

men

2014

women

2014

men

Obesity trends in India

obesity

Sun Pharma- Largest Indian pharma company in the

US & 5th largest globally.

Sun Pharma’s R&D spending is 9.1 per cent of the

total sales in the March quarter of FY16, which grew

at a rate of 23 per cent YoY, in comparison with March

quarter of FY15.

R&D which focuses on

identifying disease

target, drug research

and development

Obtaining

Regulatory approvals

Supply chain and

manufacturing

Marketing, sales and

Distribution

Post-market

surveillance and

pharmaco-vigilance

Pharma Value Chain

Top 5 players in the market

• Ranbaxy and Sun pharma- Deal valued at US$4

billion is one of the biggest Merger and

Acquisition transactions in India.

• US-based Abbott Laboratories acquired the

domestic formulations business of Primal Heath

care at a consideration of $3.72 billion

Mergers and Acquisitions

In terms of

revenue share

generic drugs

form the largest

segment of the

Indian pharma

sector in terms of

volume is the

largest provider of

generic medicines

Phase 1(Before 1970)

Phase II (1970-1990)Phase III (1990-2010)

Phase IV(after 2010)

Government control and drug

phase

• 1970- Patent act passed; export

initiatives taken.

• 1990-00-Liberalised market;

foreign operations; Amendment

Act 2005

• 2010- NPPP; Increased patent

filing

• 2010-15- Health policy draft;

100% FDIRevenue share of generic,

OTC and patented drugs

70

21

9

Generic drugsOTC medicinePatent drugs

14%

14%

15%17%

40%

Cipla Lupin Piramal Enter

Cadila health Sun Pharma

1,32,153.78

55,824.6850,664.53

48,011.48

45,481.64

42,420.82

40,821.28

Market Share (In Crore rupees)

Sun Pharma Cadila Health

Piramal Enter Lupin

Cipla Aurobindo Pharm

Dr Reddys Labs

61439.9

31303.7

18913

Formulations Revenue (Rs million)

Emerging markets Europe US

Aurobindo Pharmaceuticals

0100200300400500600700800900

Aurobindo Pharmaceuticals

• Exports to over 125 countries

across the globe with more

than 70 per cent of its revenues

derived out of international

operations.

• Founded in 1986 by Mr. P.V.

Ramaprasad Reddy and Mr. K.

Nityananda Reddy.

• Aurobindo Pharma became a

public company in 1992 and

listed its shares in the Indian

stock exchanges in 1995.

• Market Cap - 42,420 crore.• On May 29, 2017, Aurobindo Pharma Ltd reported 4th quarter

2017 earnings of 9.10 per share.

• Aurobindo Pharma Limited had revenues for the full year 2017

of 148.45bn. This was 8.75% above the prior year's results.

• Aurobindo Pharma Limited had 4th quarter 2017 revenues of

35.82bn.

• Obtained the approval of the US Food & Drug Administration

(USFDA) to manufacture and market its product, Meropenem

injection 500 mg/vial and 1g/ vial. March 2017.

Consolidated

Revenue

International- 87%

Domestic- 13%

Formulation

Revenue

US -55%

Europe - 28%

EA & ARVs - 17%

Manufacturing

Facility

India- 18

US- 3

Brazil- 1

Employees- 15000+

Management-

• N Govindarajan- CEO & MD

• Mr.K.Ragunathan-Non-

Executive Chairman

79%

21%

Revenue Break-up(RS million)

Formulations

API

REVENUE CAGR-

33.4%

Between 2012-13 &

2015-16

RETURN ON

EQUITY-32.2%

Between 2012-13 &

2015-16

RETURN ON CAPITAL

EMPLOYED-26.2%

Between 2012-13 & 2015-16

• Successfully completed the

USFDA audit in its key plants.

Revenue from the plant

currently stands at 88 mill $ and

is expected to reach 160 mill $

till the end of next year. This

move will increase the

international presence of ARBP,

amidst an unstable market.

BSE-727.20 NSE-731.05

0

800

1600

2400

3200

4000

2012 2013 2014 2015 2016

OPERATING PROFIT (IN RP. CRORES) AND OPM

STANDALONE PROFIT

CONS OP PROFIT

-500

0

500

1000

1500

2000

2500

3000

MAR`12MAR`13MAR`14MAR`15MAR`16

EBITDA, PBT, PAT (RS IN CRORE)

EBITDA PBT PAT

0

10

20

30

Mar '16 Mar '15 Mar '14 Mar '13

Profitability Ratios

Operating Profit Margin(%)

Net Profit Margin(%)


Financial Statistics

0

5000

10000

15000

MAR`12MAR`13MAR`14MAR`15MAR`16

NET SALES (IN

CRORES)

STANDALONE CONSOLIDATED

BUY

0

20

40

60

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1

FY1

2

FY1

3

FY1

4

FY1

5

FY1

6

FY1

7

FY1

8e

FY1

9e

EPS GROWTH

EPS(INR)

• We expect ARBP’s share price to remain range bound in the near term as it has moved up ~50% in less than two months. However, the key catalysts in 2HFY18 will help drive growth in the medium term. We have increased our target multiple due to enhanced visibility of growth.

• Only ARBP has received approval by now for production of Renvela. Ranvela will drive atleast >12-13% of FY18E PAT for ARBP.

• PAT has tripled in the past 4 years.(495 cr in Mar` 13 to 1700 cr in Mar` 17).

• Expected increment in PAT for 2018 is 16.08%.

-500

0

500

1000

1500

2000

MAR `

12

MAR `

13

MAR `

14

MAR `

15

MAR `

16

EQUITY DIVIDEND (%) AND NET PROFIT (RS IN CRORE)

EQUITY DIVIDEND NET PROFIT

Net Sales have seen a dramatic

uprise. From march 2012 to march

2016, sales have 4627 cr to 13896 cr.

ARBP has always kept a healthy

operating profit margin. In march

2016, it had 26.71% opm, 17.67 %

npm and 24.37% roce.

The standalone operating profit Has

seen an uprise from 573.5 cr

to2449.04 in a 4 year span from

2012 to 2016.

EBITDA has increased from 272.7 cr

to 2632.36 cr. PAT has reached

1619.67 cr and PBT has reached

2140.37 cr.

EPS is on a growth spree. From

FY11 to FY 17, EPS grew at 27%

CAGR, and is expected to grow at

13% CAGR in the next 2 years.

Net Profit has increased from 495 cr

in march 2012 to 1619.67 cr in

march 2016. At this rate it is

expected to cross 2000 cr by 2018

0

100

200

300

400

500

600

700

800Sun Pharma

Acquired 85.1 %

stakes in Russian

company Biosintez for

US $ 24 million in 2016

Sun Pharmaceuticals

1,32,153.78

55,824.68

50,664.53

48,011.48

45,481.64

42,420.82

40,821.28

Market Share (In Crore rupees)

Sun Pharma Cadila Health Piramal Enter

Lupin Cipla Aurobindo Pharm

Dr Reddys Labs

• It has 26 manufacturing facilities

across four continents and

employs more than 14,000 people

• More than 72 per cent of its sales

come from international markets

• Sun Pharma was set up in 1983,

with a compact Sun Pharma

manufacturing facility for tablets

and capsules

• Launches it’s IPO in 1993 and it’s

research unit became the first

pure research company to be

listed on Indian Stock Exchange

• Sun Pharma’s US$ 4 billion

acquisition of Ranbaxy in 2014

creates world’s fifth largest

pharma company

Management-

• Dilip Shanghvi-Managing

Director

• Israel Markov - Chairman

• In March 2017, Sun Pharma Ltd reported 1st quarter

2017 earnings of 0.40 per share.

• Its revenues increased from 3302.9 crore in FY11 to

8046.28 crore in FY16 which is over 143 %.

• Sun Pharma’s overseas arm Taro reported 26% decline in

its revenue from a year ago and 11% fall quarter-on-

quarter (q-o-q) to $196 million. Net profit fell 28% year-

on-year, while it was down 41% q-o-q.

Formulation Revenue

• While some of the facilities of Sun Pharmaceutical are still under import alert, some plants of Sun have received warning letters. The FDA does not give new drug approvals from facilities that receive a warning letter. Halol, which accounts for more than 50% of Sun’s US sales is grappling with USFDA norms

Among top

five Indian

pharma

companies

Strong

presence in

generics

market

Over half the

sales from

North

America

Market

capitalisatio

n of USD

1321.6

crore

Revenue base of

USD 2.1 billion

Acquired Novartis AG, to

distribute its cancer drug

Odomzo for around US$

175 million

Entered into a

distribution agreement

with Mitsubishi Tanabe

Pharma Corporation to

market 14 prescription

brands in Japan

Aggressive Expansion

BSE-524.25 NSE-523.55

The standalone operating profit has

seen an downfall from 1758.62 cr to

-434.95 cr in a 4 year span from

2012 to 2016.

Total assets have increased from

7918.42 crores in Mrach 2012 to

27146.75 crores in March 2016

with declining asset turnover ratio

Net Sales have seen a dramatic

rise. From march 2012 to march

2016, sales have increased from

4015.56cr to 7614.64 cr.

Financial StatisticsSELL

• Morgan Stanley has

slashed the target price

on the stocks by 32%

• Sun is facing a

confluence of challenges

– lack of new approvals

owing to Halol, rising

cost structure from

specialty build-out/R&D,

and erosion in the US

business.

• Challenges in the US will

persist in FY18 due to

pricing pressure,

increased competition for

Taro and no meaningful

launches in nearby

future.

• Earnings before interest,

tax, depreciation and

amortization (Ebitda) fell

43% from the same

quarter last year and 21%

from the previous quarter

• Ebitda margin shrunk

1,618 basis points on

year

EBITDA has decreased from

1801.98 cr to -73.29 cr. PAT has

reached -1073.36 cr and PBT has

reached -1067.91 cr.

From FY11 to FY 16, EPS grew by

56.8 % from 12.5 to 19.6

Net Profit has increased from 2587

cr in march 2012 to 4716 cr in

march 2016.

-5000

0

5000

10000

2012 2013 2014 2015 2016

Operating Profit

Standalone Profit Cons Op Profit

0

5

10

15

20

25

Earnings per Share(Rs)

0

1000

2000

3000

4000

5000

Net Profit (Rs Crore)

-3000

-2000

-1000

0

1000

2000

3000

2012 2013 2014 2015 2016

Net Sales(in crores)

-4000

-3000

-2000

-1000

0

1000

2000

3000

2012 2013 2014 2015 2016

EBITDA,PBT AND PAT(in crores)

EBITDA PBT PAT

0

1

0

50000

2012 2013 2014 2015 2016

Total Assets, Asset Turnover Ratio

TOTAL ASSETSASSETS TURNOVER RATIO

Technology media and telecom

V S N Seetha Lakshmi

Siddharth Agarwal

Sameer Khan

MEDIA

0

500

1000

1500

2000

2500

3000

3500

4000

4500FY

08

FY0

9

FY1

0

FY1

1

FY1

2

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3

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4

FY1

5

FY1

6

FY1

7

FY1

8

FY1

9

FY2

0

USD

Mill

ion

Years

0

50

100

150

200

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300

350

2008 2020

USD

Mill

ion

Years

0

50

100

150

200

250

300

350

2008 2020

TELECOMMUNICATIONU

SD M

illio

n

Years

FDI inflows into the entertainment sector during April 2000 to March 2017 rose up to USD 6.49 billion

Total Spending increased from $7.8 to $8.1 mn

Total Revenue expected to increased by 5.5% in 2017

0

200

400

600

800

1000

1200

1400

FY0

7

FY0

8

FY0

9

FY1

0

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1

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3

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4

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5

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6

FY1

7

USD

Mill

ion

Years

0

5

10

15

20

25

30

35

2016 2020

USD

Mill

ion

Years

0

20

40

60

80

100

120

Wired Segment Wirless SegmentYears

USD

Mill

ion

Cumulative FDI inflow into the telecom sector totaled to USD 23.94 billion till March 2017

Total Revenue expected to increased by 50% by 2020

Wireless segment accounted for around 2.4% of the total telecom segment

LETSEP

8.2% of

GDP

40 lakh

people

employed

12.7%

Rs.3000 crore

Optical Fiber

Cable

18%

The burden will be on the

customers as the cost will be

transferred to customers

Improved the payment terms for spectrum auctions by including upfront and payment and payment in installments

Sharing of active telecomoperations like antenna and feeders between operators

With the new services provided by Jio, there has been increase in the telecommunication revenue

Tele- Density ( total connection per 100 individual)

17.9 in FY07 to 92.59 in FY17

Indian Literacy rate has increased by 10% due to expansion in mobile network across India

The mobile data user in the country has increased to 420 million by June 2017 with rural India growing at a much higher rate then the rural India.

India has become the top country in mobile data usage with users consuming more than 100 crore gigabyte of data per month and is expected to increase in future.

Twitter Seva

online communication platform for resolution of user complain in postal and telecom sectors .

25000 public Wi-Fi hotspots

Block level infrastructure telecom sector help.(GOVERNMENT OF INDIA)

Corporate Tax Rate34.6% as compared to the world average of 22.5% as per the data from August 2016. (TAX FOUNDATION.ORG)

With increase in print media , that is digital , there is an afforestationas less numbers of trees are cut

With increase in number of telecom towers, there is more exposure of radiation as a result of which number of cancer patient is increasing

Noise level in and around the mobile tower operators are more then the specified level

Recently Internet Service Providers passed a law stating net neutrality as illegal because the customer has the right to visit any website

TRAI decided to impose a fine of Rs.3050 crore on India’s top three telecom providers for deliberately blocking calls from Jio as they were in non compliance of the terms and conditions of the license.

TRAI rejected the proposal to sought a floor price for voice and data services ,

Bharti Airtel

• Market Capitalization :-Rs165,132.60 crore

• Airtel is an Indian global Telecommunication service company

• Present in India , Pakistan Bangladesh and Srilanka.

• With over 3.5 lac biometric devices, biggest digital transaction platforms in the country.

• Overall ,the only company currently with 2G, 3G and 4G services in all 22 circles.

HIGHLIGHTS

SUNIL MITTAL

SHISHIR

PRIYADARSHI

VK

VISHWANATHAN

DINESH

MITTAL

CRAIG

EHRLICH

MANAGEMENT

DRIVING TRENDS

• The number of internet users in India stood at 432 Mn as of Dec 2016.

• Smartphone shipments grew 14.8% Y-o-Y to 27 Mn in first quarter of 2017 as per IDC.

• With Govt. of India’s ‘Make in India’ programme, mobile production in India has already crossed the 100 Mn mark and is set to touch 500 Mn in the next two years.

• By 2020, India is set to become the world’s youngest country with 64% of its population in working age group

RE

CE

NT

•Airtel invested and upgraded more than 70% of our broadband customers to 40-100 mbps speeds through the new V-Fibertechnology.•Airtel became the first company to launch 3G (2100Mhz + 2100Mhz) dual carrier implementation achieving a speed of 42 Mbps in DL, RJ, BH, TNC & JK. •The First to successfully launch Payments Bank – in line with the Government’s vision of financial inclusion.

ZERO

0 5000 10000 15000 20000

Gross Revenue

EBITDA before exceptional

Items

Cash Profit from Operations

Earnings before Taxation

Net Income

Sales Volume

FY 2015-16(USD Million) FY 2016-17(USD Million)

Bharti Airtel Ltd , 22.1

Vodafone India Ltd , 17.3

Idea Cellular Ltd , 14.1 Bharat Sanchar

Nigam Ltd , 10.7Reliance

Communications Ltd , 8.5

Other , 27.2

0

5

10

15

20

25

30

Company Shares

SEL

L

• India’s No. 1 Telco's net profit

of Rs 373 crore for the three

months ended March — its

smallest in four years —was

sharply lower that the average

estimates

• Revenue fell over 12% to Rs

21,935 crore from a year earlier

as data and voice rates fell

• FY2017 India revenue growth

of 3.6% to Rs 73,422 crore was

“muted” compared with the

double-digit growth seen in

preceding years.

• With the launch of Jio Phone, a

featured phone specifically

targeted to VOLTE, problems

have increased for Airtel

• The Company’s consolidated

net debt as on March 31, 2017

increased by USD 1,490 Mn to

USD 14,094 Mn as compared to

last year

• With Reliance Jio offering free

4G mobile handset with a

amount of Rs. 1500 which will

be returned back after 3 years,

will lead to decrease in the

number of consumer base for

Airtel.

23500

24000

24500

25000

25500

26000

26500

27000

27500

28000

2015-2016 2016-2017

GROSS REVENUE

0

1000

2000

3000

4000

5000

6000

7000

8000

2015-2016 2016-2017

EBIT VALUES

0

200

400

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1000

1200

1400

2012-13 2013-14 2014-15 2015-16 2016-17

CUSTOMER BASE

0

2

4

6

8

10

12

14

2014-15 2015-16 2016-17

DTH SUBSCRIBER BASE

19 20 21 22 23 24 25

FY2016

FY2017

NON WIRELESS REVENUE SHARE

30 31 32 33 34

FY2016

FY2017

INCREASING REVENUE MARKET

SHARE

PVR CINEMAS

587 screens at 128 properties

in 51 Cities(18 States And 1

Union Territory) pan India.

Began its operations in 1997

Entered the billion dollar cap in

FY17 with market cap Rs.6261

Cr

HIGHLIGHTS

AJAY BIJLI

CHAIRMAN & MD

SANJEEV KUMAR

JOINT MD

GAUTAM DUTTA

CEO

MANAGEMENT

IMPACT OF GST RECENT

DEVELOPMENTS

•EBITDA rose to 376 Cr with

5% and Revenue with 14% to

Rs.2182Cr

1687.91

114.4

331.94

1,979.35

92.92

324.92

Sales

Net Profit

Cash Flow from Operating Activities

SALIENT NUMBERS

FY 2015-16 FY 2016-17

20.15

68.74

11.11

INDIAN INSTITUTION NON-INSTITUTION

SHAREHOLDING PATTERN

BSE NSE ISIN

532689 PVR INE191H01014

SECTOR : Media & Entertainment

•Consistent rise in profit and

decrease in Debt/Equity

ratio(0.76) over last four

quarters.

The Most Premium Film

And Retail Entertainment

Company

•4DX screens in Bengaluru,

Mumbai India's first virtual reality

lounge at PVR ECX, Mall of India,

Noida.

Movie Tickets taxed at

28%, F&B at higher

rate of 21% in

Maharashtra/Delhi

Other regions have an

adverse impact due to the

hike in tax rate

ITC(input tax credit)

offsets the hike on

tax(F&B, Movie Cost)

through rental

payments and security

costs

BUY

.

0

500

1000

1500

2000

2500

CAGR-28%

REVENUE

0100200300400

EBITDA

0

200

400

600

800

1000

1200

1400

1600

1800

Au

g'1

6

Sep

'16

Oct

'16

No

v'1

6

De

c'1

6

Jan

'17

Feb

'17

Mar

'17

Ap

r'1

7

May

'17

Jun

'17

Jul'1

7

Variation in Stock Price

40.8750.72

15.79

145.35152.09

020406080

100120140160

EV/EBITDA

19.8 20

3.28

14 13.8

Mar'17 Mar'16 Mar'15 Mar'14 Mar'13

EPS

10.7

8

12.5

9.5

11.5

0

2

4

6

8

10

12

14

FY14FY15FY16FY17FY18E

421464

516579

634

0

100

200

300

400

500

600

700

FY14FY15FY16FY17FY18E

• Overall revenue of INR 6.4 billion

in Q1 FY18 marking a YoY

growth of 13.2 %.

• EBITDA margins declined to

17.6% in Q1 FY18

Adjusted PAT stood at INR 445mn in

Q1 FY18 as against INR 444mn in

Q1 FY17

• Expected revenue CAGR of 18 %

and PAT CAGR of 49 % over

FY17 -19

• This shows a ‘Buy’

recommendation of the stock as it

has room for growth and growth

drivers are in expansion into south

region, uptrend in advertisement

revenue

• The factors which drive the growth

of PVR are its aggressive screen

additions, increase in RoCE and

spend per head of the consumers.

Also, the ITC(Input Tax Credit) comes

as a benefit to the entertainment

industry, offsetting the tax rate in F&B

in regions other than Maharashtra and

Delhi.mkkk

0

5

10

15

20

25

0

20

40

60

80

100

Spends per Head(SPH) in Rs.

Operating Profit(crore)

ROCE(%) PVR Most Aggressive

screen addition

Aviation

Neha Surya

Manas Dimri

Ananya Utkarsh

100% FDI in

Maintenance Repair

and Operation(MRO)

units to enhance the

MRO activities

generating large scale

employment for Indian

youths.

The annual

compounded increase

in inbound and

outbound

international traffic

has been 4.8% and

2.4% for domestic

traffic.

Fall in average fare by

18% in 2016 over 2015

has made air travel

affordable for average

household income leading

to unprecedented capacity

enhancement in aviation

system

Upcoming technology

like block chain will

help in identity

management, tokenising

frequent flyer programs,

tokenising e-tickets and

item custody change

tracking .

The Indian aviation sector

is likely to see

investments totaling USD

15 billion during 2016-

2020 of which USD 10

billion is expected to

come from the private

sector.

0.00%5.00%10.00%15.00%

Economy class

Business class

Impact of GST

Rate of GST

Rate of Service Tax

Aviation Industry

INR 330 Billion

$49.07 Fuel/barrel 0 1 2 3 4

ConsolidatedDeficit of the

states

2016 2015

0 5 10

Growth Rate ofAviation Sector

2016 2015

Competitive Rivalry

Threat Of New Entrants

Bargaining Power Of Suppliers

Bargaining Power Of Buyers

Threat Of Substitutes

International

Passenger Traffic

will continue to

grow at 8% rate

2006-16 : Domestic

Passenger Traffic

grew at 11.8%

Aviation industry

supports 9 million

jobs in the country

Porter’s 5 forces

analysis

5

4

11

2Scale 1-5(Low-high)

Source: http://dgca.gov.in/reports/rep-ind.htmwww.motilaloswal.com/researchwww.ibef.org/

Travel and tourism in

India is expected to

grow at a CAGR of

6.75% per annum

between 2016-2025

Per capita Income

has grown 8-9%

over the span of 5

years.

Economic

Growth Drivers

Of The Industry

Technology

Advancements –

Low Cost Carriers,

Modern Airports

3rd Largest domestic

passenger market in

2016 with 100million

passengers

4th Largest total

passenger market in

2016 with 335 million

passengers

Overview of the Industry

0 50 100

Indigo

Jet

Air India

Spicejet

GoAir

Others

Passengers Carried

http://dgca.gov.in/reports/rep-ind.htm

http://www.motilaloswal.com/research

http://www.ibef.org/

India's domestic air

passenger growth

slipped to ~15% YoY in

Mar-17, after 20% YoY

growth for 16

consecutive months.

While Mar-17 ASK

growth stood at 16.2%

YoY, RPKs increased

14.7% YoY

Domestic Passenger

Growth(YoY %)

Industry Load Factor(in

%)

In FY16, domestic freight

traffic stood at 1.04

million tonnes, while

international freight

traffic was at 1.65

million tonnes.

Freight Traffic(in

million tonnes)

SWOT Analysis Of Airport

Authority of India

Source: http://dgca.gov.inhttps://www.internationalairportreview.com/news

The service tax rates

would go up to 17-

18%, which is a 9-

12% increase in the

cost of air travel for

passengers.

The works contract would

be taxed as a service rather

than a cascading VAT and

service tax which is a

welcome move for the MRO

sector.

Impact of GST

• Large land holdings

• Expertise in providing air

navigation services

• Experienced man power

• Stagnant growth of cargo

business

• Man power shortage and

training

• Limited focus on marketing

• Adoption of state of art

technology

• International consulting

opportunities

• Enhancing non

aeronautical services

• Competition from other

airport developers

• Stricter environment and

safety norms

• Obligation to implement

RCs

Strengths Weaknesses

Opportunities Threats

http://dgca.gov.in/

https://www.internationalairportreview.com/news

Stock has gone up around

10x since management

changed hands with more

runway for growth.

New promoter, Ajay Singh,

is close to the ruling party

and has their backing. Will

make it easier to get

regulatory clearances. Being

close to the power center

helps.

With fall in User Development

Fee(UDF) in Delhi Airport,

flying to get cheaper and benefit

SpiceJet which has Delhi as its

hub.

SpiceJet is a genuine turnaround

story. It was on the verge of being

closed down when the management

and promoters changed in January

2015.

Boasts of a load factor of 94.3%

which is the highest in the

industry. Planes are being sweat

to the maximum possible level.

Asset Utilization is to the fullest.

Holdings

Promoters Individuals Institutions

FII Govt. Others

Ajay Singh

CEO

Ajay Singh

Managing

Director

Chandan Sand

Secretary

SPICEJETBSE

Code: 500285 | ISIN: INE285B01017 | Sector: Airlines

BUYLow P/E of 17.72

compared to peers

which are in the 20s. At

the same time has a

EV/EBITDA of 8.48

showing good prospects

in the market

Valuations

EBITDA Margin

saw an increase

from 7.39% in

FY14 to 16.18% in

FY15 to 21.48% in

FY16

Increasing EBITDA Margins

Profit Growth of 31.09% CAGR

over 5 years and Sales Growth

of 25.82% CAGR over 10 years.

Phenomenal return on capital

employed of 68.28% last year.

Rising Profitability and Sales

Interest Outgo has seen a

decrease of 60% over past 2

years. Strong focus on debt

reduction. Promoter cutting

the flab from the

organization.

Debt Reduction

As can be seen from the graph, the new

management has been able to bring the

airline back to profitability in the last 2

years.

Falling crude prices, which contribute

upto 45% of an airlines costs, helped.

With new Boeing planes being

inducted, fuel savings will further

increase by upto 12-15%.

Management Actions and Fleet Increase

0

10

20

30

SpiceJet Jet Airways Indigo

P/E Ratio

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

FY14 FY15 FY16

EBITDA Margin

-20,000 0 20,000 40,000 60,000 80,000

FY2013

FY2014

FY2015

FY2016

FY2017

NET PROFIT EBITDAR NET REVENUE

0

100

200

300

400


Other Earnings

-30

-20

-10

0

10

FY14 FY15 FY16 FY17

EPS

0

1000

2000

3000

4000

FY13 FY14 FY15 FY16

Aircraft Fuel Expenses

Analysis and Recommendation

India’s largest airline based on

fleet size, passengers carried

and market share which stands

at 41.2%.

With its corporate headquarters

based in Gurgaon and Delhi as its

hub, the airline stands to gain

massively from User Development

Fee rate cut at Delhi airport.

Promoters Rahul Bhatia and

Rakesh Gangwal are old hands

in the US Aviation Industry

having worked for United

Airlines and US Airways,

bringing valuable knowledge and

experience

Revenue increasing at 25% CAGR

over 5 years and profit showing

38% CAGR over 3 years.

Unbelievable Return on Equity of

180% for previous 3 years.

Very well capitalized with

current ratio increasing from

1.02 in FY14 to 1.07 in FY15 to

1.41 in FY16. Quick Ratio

improved from 1 in FY14 to 1.03

in FY15 to 1.37 in FY15.

Aditya Ghosh

CEODevadas Mallya Mangalore

Chairman & Managing

Director

Sanjay Gupta

Secretary0 0.5 1 1.5

Current Ratio

Quick Ratio

FY16 FY15 FY14

INDIGO

Holdings

Promoters Individuals Institutions

FII Govt. Others

NSE Symbol: INDIGO | BSE

Code: 539448 | ISIN: INE646L01027 | Sector: Airlines

BUY0 10000 20000

FY2013

FY2014

FY2015

FY2016

NetProfit

Sales

7.39

16.18

21.48

4.26 9.312.32

0

10

20

30

FY2014 FY2015 FY2016

EBITDA MarginNet Profit Margin

• Cutting costs and increasing

margins and profitability.

• Benefited from falling crude oil

prices.

• Unique business model - one

type of plane

• Buys in bulk and hence

manages to snag a hefty

discount.

• Reduces the time spent on

maintenance and cleaning

by the cockpit crew

• Allowing faster

turnaround

Indigo, as the largest player

in the market has been able

to capture a significant share

of this growing pie.

Market Growth

Registered a CAGR of

29.8% in seat kilometres

from FY14-15 to FY15-16

The number of passengers

catered to have been

growing close to 20% an

annum for the past 2 years in

the airline industry.

Business Model Business Model

Increase in Passengers

Ordered the latest generation

Airbus A320neo (New Engine

Option).

Provide upto 15% fuel savings

and thus lower costs

Latest Additions

0

500

1000

1500

2000

Mar'13Mar'14Mar'15Mar'16

Equity Share Dividend

010203040506070

Basic EPS

0

5000

10000

15000


Total Assets

Analysis and Recommendation

Information Technology

Gaurav Yadav

Dinesh M

Rashi Jaiswal

IT & ITES – Industry Analysis

Sector revenue rose to US$155 billion in 2016 from

US$146.5 billion in 2015

Exports grew by 9% in 2015-16 compared to 14% growth

in FY15 and are expected to grow by 7-8% in FY18.

Domestic is projected to experience sharper growth of 10-

11% in FY18

The revenue from IT is steeply declining from FY15 and is

expected to become 5.3% in FY17.

Major chunk of revenues is coming from IT services and

BPM.

IT in India includes: IT Services + Business Process

Outsourcing

Currently focuses on low cost solution to services

business in global IT

56%23%

21%

Percentage of Revenue

IT Services

BPM

SoftwareProducts

There is steeply declining in IT services revenue over the

year due to worldwide digital disruption .

IT industry is moving towards Large scale automation.

Almost all the major players are investing heavily and

automating their end-to-end processes

Infosys’s Mana, Wipro’s Holmes and TCS Ignio have

replaced IT head count .

Cost cut on Employee Wages resulting in non-linear growth

in future.

TCS is the market leader accounting to 10.4% of the

IT& ITES sector revenue in FY2016, followed by Infosys,

HCL, Wipro

Top 5 firms contribute to 25% of sector revenue.

Cloud service market slated to grow 35% to reach

US$1.3 billion according to Gartner.

SMAC collectively offers $1 trillion opportunity

Indian Healthcare IT market is expected to grow 1.5

times in 2020.

India is increasingly becoming preferred location for

data centers.

IT industry focus IT Key Players

IT Revenue

Automation in IT Future Prospects : Cloud, SMAC,

E-Commerce

0

50

100

150

200


Export

Domestic

Revenue Share

Trends

BSE NSE ISIN

500209 INFY INE009A01021

Infosys

Company ProfileDiversified Revenue Streams

Founded : 7 July 1981

Presence : National/International

Functions : Business consulting,

Information technology and

outsourcing services

“We must bring iautomation into everything we

do. In addition to doing our job, we must work

on building a tool that helps us do the job

faster/better/cheaper.” -CEO & MD, Vishal

Sikka

10%

90%

Percentage Revenue in New Tech

New Tech

Existing Tech

Projected

growth rate

of new

tech

8%

2017 2018

Next Gen

Mar 2015

Jun 2015

Nov 2015

Aug 2015

2016

Panaya, Inc., a leading provider of automation technology

Skava, a leading provider of digital experience solutions

Noah-Consulting IT consulting for oil and gas

AiKiDo, NextGen Design thinking IT platefrom

Invested in UNSILO A Danish artificial intelligence startup

Recent Moves

27.09

10.96

22.53

16.39

12.32

7.48 3.22

Revenue Sector WiseFinancial services

Manufacturing

Energy communication &servicesRetail

Health

Hi Tech

Other

Infosys – Company Analysis

Analysis

Buy- 70.6%Hold-19.6%Sell- 9.8%

0

2000

4000

6000

8000

10000

12000

14000

16000

2013 2014 2015 2016 2017

Net Profit (Crores)

0 5 10 15 20

Mean

P/E

EV/EBITD

A

EV/EBIT Infosys

Industry

950

1000

1050

1100

C U R R E N T P R I C E T A R G E T P R I C E

TARGET PRICE • Infosys have already moved to cloud

and digital services

• Infosys Pay in America is already

higher than the average of all IT

companies. The company have also

taken measures to reduce the impact.

• Infosys currently have 32% of local

hire the company also started

recruitment of 200000 US citizens.

32%

55%

35%35%

46%

Local hires as % of overall USA employeed(2016)

Infosys

HCL

TCS

Wipro

TechM

BUY

65,000

70,000

75,000

80,000

85,000

Infosys HCL TCS Wipro TechM

Avg salary offered onsite in USD (2017)

BSE NSE ISIN

532281 HCLTECH INE860A01027

Company Profile Diversified Revenue Streams

Founded : 11 Aug 1976

Presence : National/International

Functions : IT consulting, enterprise transformation, remote infrastructure management, engineering and R&D

“The younger you are , the more courage and

audacity you will have to set long term goals and

be there to personally work towards your vision”

–Founder & Chairman

New Tech Growth

Operating Cash Flow/Net Income at 104%

Partnership with IBM by investing $140 Mn

Return on Equity at 27%

Buyback entailed 3.5cr equity shares at price of 1000 rupees per share

HCL’s Mode 1-2-3 strategy to future proof our customers' business

HCL RECENT UPDATES

9.30%

18.20%

11.80%22.50%

16%

3.40%

Growth Sector Wise

Financial Services

Manufacturing

Healthcare

Public services

Retail

TMT

12

86

35

1

0

5

10

15

$5 Mn+ $10Mn+ $20Mn+ $40Mn+ $50Mn+ $100Mn+

Client Addition YoY FY16-17

Growth in Mode 2-3$200Mn acquisition of Geometric to strengthen R & D

$85Mn acquisition of Butler America Aerospace tech services

HCL

HCL– Company Analysis

Analysis

Buy- 70.6%Hold-19.6%Sell- 9.8%

• HCL Pay in America is already

higher than the proposed bill rates

Hence new US regulations will not

affect HCL

• HCL currently have 55% of local hire

hence it satisy minimum criteria of

50% local hiring

• Mode 2-3 has shown growth of

30.9% which shows HCL’s innovative

technology solutions.

0 10 20

Mean P/E

EV/EBITDA

EV/EBIT

HCL

Industry

860

880

900

920

940

960

980

current price target price

Target Price

983513159

1954224224

27294

0

5000

10000

15000

20000

25000

30000

FY 11-12

FY 12-13

FY 13-14

FY 14-15

FY 15-16

Networth Cr32%

55%

35%

35%

46%

Local hires as % of overall USA employeed(2016)

Infosys

HCL

TCS

Wipro

TechM

BUY

65,000

70,000

75,000

80,000

85,000

Infosys HCL TCS Wipro TechM

Avg salary offered onsite in USD (2017)

FMCG

Utkarsh Tyagi

Stuti Uppal

Rattanjyot Singh Ahuja

Urban/Rural Industry break up (2016)

• Urban segment is the largest contributor to the

overall revenue generated by the FMCG sector

in India

• Semi-urban and rural segments are growing at a

rapid pace

40

60

RURAL URBAN

USD 49 Billion

0

20

40

60

80

100

120

REVENUE

Trends in FMCG revenues over the years (USD

billion)

0 50 100 150

2009

2010

2011

2012

2013

2015

2016

2025E

RURAL FMCG MARKET (USD BILLION)

• Low penetration levels in rural market offers

room for growth

• Disposable income in rural India has increased

due to the direct cash transfer scheme

Growing demand

• Rising incomes

• Growing youth population

• 1st time modern trade shoppers spend

tripled to USD 1 billion in 2015

• Brand consciousness

• Faster growth (modern trade in Tier 2/3

cities

USD 60

billion

USD 180

billion3

Higher investment

• USD 743.72 million is the expenditure

to be incurred by Patanjali I various

food parks in Maharashtra, Madhya

Pradesh, Assam, Andhra Pradesh and

Uttar Pradesh

• USD 254.5 million is the investment

by Wipro to diversify and expand its

product range in energy drinks,

detergents and fabric conditioners

Policy Support

• 100% single brand retail

• 51% multi brand retail

• 40% is the reach of initiatives like Food

Security Bill and direct cash transfer

• USD 100 million is the minimum

capitalization for foreign FMCG companies to

invest in India

49

103.7

0

20

40

60

80

100

120

2016 2020F

FMCG Market Share

FMCGMarketShare

INDUSTRY ANALYSIS

Competitive

RivalrySupplier

Power

Threat of new entry

Huge investments

in setting up

distribution

network and

promoting brands

Highly fragmented

industry as more

MNCs are entering.

Competitive Rivalry

Private label

brands by retailers

are priced at a

discount to other

players

Highly fragmented

industry.

Supplier Power

Big FMCG

companies are able

to dictate the prices

through local

sourcing from a

fragmented group

of key commodity

suppliers Threat of substitution

Presence of multiple brands

Narrow product differentiation under

many brands

Price war

Buyer Power

Low switching cost

induces the

customers’ product

shift

Influence of

marketing

strategies

Porter’s Five Forces

Threat

of a

new

entry

Threat

from

subs.

SWOT Analysis

Weakness

Lower scope of investing

in technology and

achieving economies of

scale, especially in small

sectors

Low exports levels

Counterfeit Products.

Opportunities

GUntapped rural markets

Rising income levels

Large domestic market.

Export potential

High consumer goods pending

Strength

Low operational costs

Presence of established

distribution networks in both

urban and rural areas

Presence of well-known brands

in FMCG sector

Threats

Removal of import restrictions

resulting in replacing of

domestic brands

Slowdown in rural demand

Tax and regulatory structure

Manpasand Beverages

Profile: Market Cap: ₹ 4,618.21 Cr.

A customer centric approach, value for money offerings, strong

focus on affordable price points, innovation and research, brand

building, aggressive production capacity expansions and strong

distribution strategies are the company’s major strengths.

N

E

W

P

R

O

D

U

C

T

S

Management: Dhirendra Singh, Chairman and Managing

Director

Recent News: Manpasand Beverages made it to Forbes Asia’s

latest ‘Best under a Billion’ list of top 200 publicly traded

companies in the Asia Pacific region.

The Way Ahead: The company has tied up with leading food

and restaurant chains including Havmor, Barista, Baskin

Robbins, METRO Cash & Carry along with 2,000 modern

retail-format stores and is in advanced talks for tie-ups with

many multinational food chains and retailers

• Manpasand Beverages PAT up 47.6% in Q4 FY 2015-16

• Earnings Per Share (EPS) for Q4FY16 was at Rs. 5.14

• For the year ended 31st March 2016, company has reported a

net profit of 5,056 lacs against a net profit 0f 2,995 lacs in the

previous year, which shows a growth of 68.8%.

• Net sales of 55,670 lacs in FY 2015-16 is higher by 54.7%

compared to 35,975 lacs in the previous fiscal.

• The company has become debt free after pre-paying all of it’s

outstanding borrowings from the IPO proceeds.

• Manpasand Beverages is proud to be associated with Red

Cross Society to prevent Thalassemia and Sickle Cell Anaemia

BSE NSE ISIN

539207 MANPASAND INE122R01018

Sector: FMCG

BUY

• Current ratio of 1.73

means that the

company would be

able to pay it’s short

term debts.

• Negative “net cash

used in investing

activities” means that

the company has been

investing in expansion.

• Positive “net cash flow

from operating

activities” means that

the company has been

investing in expansion.

• FMCG sector for

health beverages is

under an expansion

and experiencing good

growth.

• The company is

focusing on expanding

its product and

distribution channel to

reach its existing core

business and also new

opportunities.

0

20000

40000

60000

80000

2011-12 2012-13 2013-14 2014-15 2015-16

Shareholder's funds (Rs. in lacs)

0

50

100

150

200

250

300

Jun

-14

Au

g-1

4

Oct

-14

Dec

-14

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

Dec

-15

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

Dec

-16

Feb

-17

Revenue (in Rs. crores)

-100% -50% 0% 50% 100%

CMP (Rs.)

Div. Yld. (%)

Sales Qtr (Rs. Cr.)

Peer Comparison

Manpasand Beverages Orient Beverages

Unno Industries Transglobe Foods

ANS Industries

0

5

10

15

20


Dividend Payout (in %)

-10

0

10

20

30

40

Jun

-14

Au

g-1

4

Oct

-14

Dec

-14

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

Dec

-15

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

Dec

-16

Feb

-17

Net Profit (in Rs. crores)

F

I

N

A

N

C

I

A

L

S

0

0.2

0.4

0.6

0.8

1

2011-12 2012-13 2013-14 2014-15 2015-16

Debt- Equity Ratio

0

50

100

150

200

250

300

Jun

-14

Au

g-1

4

Oct

-14

Dec

-14

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

Dec

-15

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

Dec

-16

Feb

-17


-100% -50% 0% 50% 100%

CMP (Rs.)

Div. Yld. (%)

Sales Qtr (Rs. Cr.)

Peer Comparison

Manpasand Beverages Orient Beverages

Unno Industries Transglobe Foods

ANS Industries

-10

0

10

20

30

40

Jun

-14

Au

g-1

4

Oct

-14

Dec

-14

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

Dec

-15

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

Dec

-16

Feb

-17


F

I

N

A

N

C

I

A

L

S

0

0.2

0.4

0.6

0.8

1

2011-12 2012-13 2013-14 2014-15 2015-16

Debt- Equity Ratio

JYOTHY LABORATORIES LTD.

Profile: Market Cap: ₹ 6,805.87 Cr.

Jyothy Laboratories began its journey in 1983 with a single product – Ujala Supreme – in the fabric whitener

category. Over the years, the Company invested in market and product research to diversify into various

household product categories such as insecticides, fabric stiffeners and soap, leading to the launch of

successful products like Ujala, Maxo and Exo

CEO: S. Raghunandan Rao

Presence(National/International) :

National

Management: M P Ramachandran, Chairman and Managing Director

New Products:

1. Household Insecticide.

2. Surface Cleaner.

3. Air care Products.

Recent News:

• Henkel bids for 27% ownership in

Jyothy

The Way Ahead: The company expects a

positive impact of the implementation of GST

on the consumption sector, the unorganized

sector vacating market share in favour of the

organized FMCG industry. For frontline

players like Jyothy, consumption tailwinds will

not only be reflected in organic sectoral growth

but also increase market share transfer to the

organized sector of which it expects to emerge

as an important beneficiary.

77.%

Market share of Ujala,

powerbrandof Jyothy

8.3%

Growth by value for

Margo, the premium

category soap

15.5%

Growth for Pril, that is

now available as ‘superior

degreaser’ bar with its own

scrubber

41.6%

Growth of Maxo ‘Fits All

Machines’ vaporizer, making it

fastest growngbrand in

insecticide

10.7%

Growth rate of Exo, fastest

growing superbrand of

Jyothy

BSE NSE ISIN

532926 JYOTHYLAB INE668

Sector: FMCG

Strengths

1. Ujala Supreme, the brand

starter, still the core product of

the company.

2. Holds 80% of the market share.

3. Undisputed market leader and

commands a strong market

share.

Weaknesses

1. Overdependence on a

single product, even

with the launch of Exo

and Maxo.

2. Product portfolio is too

concentrated in

comparison to other

companies.

Opportunities

1. Ventured into Fabric Spa business,

which is an untapped market..

Threats

• The aerosol segment is having stiff

competition.

• Even though Jyothy has a diversified

portfolio, the margins are not very

good.

BUY

• Company’s operating

income is increasing

and it is investing

aggressively in

expansion in untapped

sectors.

• CAGR of 21.3% and

263% growth in

revenues from 2011-16

shows the company is

on a growth spurt.

• Henkel is acquiring

26% in Jyothy

Laboratories, which

will give the company a

peek into the German

market and get

expertise from Henkel.

• Net profit margin of

11.7% (FY2016- 17)

was among the best in

the country’s FMCG

industry as our net

profit increased

substantially during the

year under report.

F

I

N

A

N

C

I

A

L

S

-100% -50% 0% 50% 100%

CMP (Rs.)

Mar Cap (Rs. Cr.)

NP Qtr (Rs. Cr.)

Sales Qtr (Rs. Cr.)

CMP / BV

Peer Comparison

Jyothy Lab. Pee Cee Cosma Hipolin

Yuvraaj Hygiene Farmax India Ess Dee Alumin

0

100

200

300

400

500

Jun

-14

Au

g-1

4

Oct

-14

Dec

-14

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

Dec

-15

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

Dec

-16

Feb

-17


020406080

100120

Jun

-14

Au

g-1

4

Oct

-14

Dec

-14

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

Dec

-15

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

Dec

-16

Feb

-17


0

10

20

30

40

50


Return on Equity (Rs. Cr.)

0

5

10

15


Earning Per Share (Rs. Cr.)

0

200

400

600

800


Equity Dividend (%)

Exports (US $ - Indian Institute of Foreign Trade: Tradewinds...

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