Mid cap & small cap performance

Emkay Global Financial Services Ltd.

Ajay Parmar (Co-Head Investment Banking)

Private & Confidential

Mid-Cap & Small Cap Sector Analysis

2

March 18, 2016

Emkay Universe v/s. Indices

Mid-cap & Small-cap Performances

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Parameters ----> Net Sales

Growth

Ebitda

Growth

EBITDA

Margin

growth

EBIT

margin

growth

Adjusted

PBT

Growth

Adjusted

PAT

Growth

Interest

Cost

Growth

Tax

Growth

Sensex -3.7% 0.5% 76 bps 14 bps -1.9% 1.2% 0.2% -11.3%

NIFTY -2.6% 0.7% 63 bps 5 bps -3.8% -0.9% 4.3% -8.0%

BSE 500 2.1% -1.1% -56 bps -67 bps -5.8% -2.2% 3.1% -13.5%

BSE 200 2.2% -2.3% -83 bps -95 bps -6.2% -1.7% -1.1% -16.3%

BSE100 -2.8% -3.0% -4 bps -61 bps -9.7% -5.3% 7.3% -19.2%

NSE Midcap 22.6% -7.4% -461 bps -364 bps -22.1% -5.1% 7.0% -70.8%

BSE 500 ex-Nifty 7.7% -3.6% -167 bps -128 bps -10.1% -5.0% 2.6% -24.7%

BSE 200 ex-Nifty 12.0% -8.4% -339 bps -265 bps -13.2% -4.1% -5.3% -40.6%

BSE 100 ex-Nifty -3.7% -17.2% -282 bps -332 bps -38.4% -24.8% 12.4% -81.5%

Emkay Universe 0.1% -5.9% -101 bps -133 bps -12.7% -7.0% 7.2% -24.1%

Emkay Large Cap -0.7% -7.7% -121 bps -157 bps -14.2% -8.0% 5.7% -26.8%

Emkay Mid Cap 4.6% 1.3% -52 bps -68 bps -4.3% -4.1% 1.7% -3.9%

Emkay Small Cap 6.4% 23.5% 190 bps 186 bps 26.8% 24.5% 20.0% 27.4%

Emkay Universe ex Top 3 Cos 2.7% -8.4% -196 bps -227 bps -18.3% -16.3% 9.6% -21.3%

Emkay Universe ex Top 5 Cos 2.6% -9.4% -213 bps -244 bps -19.9% -18.0% 9.7% -22.5%

Emkay Universe ex Top 3 and Bottom 3 Cos 5.2% 0.0% -96 bps -128 bps -6.4% -3.4% 10.3% -10.5%

Emkay Universe ex Top 5 and Bottom 5 Cos 7.0% 5.4% -28 bps -71 bps -0.7% 1.3% 11.7% -6.6%

Source: Emkay Research & Exchange website

3yrs comparative Indices performance

Indices Performance

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-20%

0%

20%

40%

60%

80%

100%

120%

Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16

Indices Performances

Sensex BSE Midcap BSE Smallcap BSE500


Indices Performance

BSE 100 BSE 200

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-10%

0%

10%

20%

30%

40%

50%

60%

70%

Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16

BSE Auto BSE Capital Goods

-10%

0%

10%

20%

30%

40%

50%

60%

70%


0%

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40%

60%

80%

100%

120%


-40%

-20%

0%

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40%

60%

80%

100%

120%



Indices Performance

BSE Consumer Durables BSE FMCG

6

BSE Healthcare BSE Information Technology

-40%

-20%

0%

20%

40%

60%

80%

100%

Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-160%

5%

10%

15%

20%

25%

30%

35%

40%

45%


0%

20%

40%

60%

80%

100%

120%

140%

Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16-40%

-20%

0%

20%

40%

60%

80%



Indices Performance

BSE Metal BSE Oil & Gas

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BSE Power BSE Realty

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%


0%

5%

10%

15%

20%

25%

30%

35%

40%


-20%

-10%

0%

10%

20%

30%

40%

50%


-40%

-30%

-20%

-10%

0%

10%

20%



Indices Performance

BSE PSU BSE Telecom

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BSE Technology Nifty

-30%

-20%

-10%

0%

10%

20%

30%

40%

Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-160%

10%

20%

30%

40%

50%

60%

70%


-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%


0%

10%

20%

30%

40%

50%

60%



Top 20 outperformer in last 10 yrs in BSE 100 (initial Mcap below Rs.4,500)

BSE 100 - Top 20 outperformer

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Sr. Company Name CMP (Rs.)

Initial Mcap(Rs. in crs)

Current Mcap(Rs. in crs)

10yrs CAGR Current Value of Rs.10,000 invested in

these companies 10 yrsbefore (Rs.)

1. Eicher Motors 18,703 742 50,799 53.1% 707,630

2. IndusInd Bank 916 1,396 54,496 34.3% 190,426

3. Lupin 1,749 3,808 78,780 33.8% 184,305

4. Motherson Sumi 242 2,304 31,954 28.7% 124,639

5. Aurobindo Pharma 727 3,246 42,513 28.1% 119,255

6. Divi's Lab. 979 2,193 25,993 27.6% 114,467

7. LIC Housing Fin. 446 1,659 22,502 27.6% 114,158

8. Marico 240 2,946 30,990 25.2% 94,604

9. Yes Bank 804 2,421 33,820 24.5% 89,727

10. Cadila Health. 338 3,773 34,628 23.8% 84,436

11. Godrej Consumer 1,281 3,547 43,626 23.5% 82,769

12. Titan Company 340 3,821 30,185 23.0% 78,996

13. Britannia Inds. 2,719 4,178 32,621 22.8% 77,741

14. United Breweries 802 2,607 21,208 20.9% 66,753

15. Shriram Trans. 909 2,103 20,619 20.6% 65,054

16. Exide Inds. 135 1,916 11,437 18.5% 54,717

17. Glenmark Pharma. 828 3,837 23,363 17.8% 51,253

18. JSW Steel 1,198 3,836 28,956 17.2% 49,014

19. United Spirits 2,547 3,456 37,020 14.3% 38,122

20. Federal Bank 48 1,540 8,311 13.4% 35,189


3 yrs Indices Returns

Indices Returns

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Indices 1 yr 2 yrs 3yrs 5 yrs

Sensex -11.7% 10.3% 31.0% 26.9%

BSE Midcap -3.9% 43.7% 65.7% 48.1%

BSE Smallcap -6.0% 44.8% 76.4% 25.2%

BSE100 -11.9% 13.1% 33.6% 29.5%

BSE200 -11.0% 17.5% 37.7% 32.4%

BSE500 -10.9% 18.7% 39.0% 32.4%

BSE Auto -11.0% 29.0% 71.4% 84.4%

BSE Cap Goods -29.1% 2.1% 36.0% -7.4%

BSE Consumer Durables 7.2% 71.1% 57.4% 79.0%

BSE FMCG -3.5% 7.6% 26.7% 108.6%

BSE Healthcare -9.8% 54.6% 94.7% 158.8%

BSE IT -5.0% 23.2% 57.3% 65.4%

BSE Metal -23.0% -27.6% -16.8% -54.9%

BSE O&G -5.6% -7.3% 5.6% -14.1%

BSE Power -19.9% -1.2% 3.5% -37.2%

BSE Realty -29.5% -20.1% -34.1% -49.8%

BSE PSU -22.4% -7.1% -9.0% -34.1%

BSE Telecom -17.9% 1.5% 24.6% -1.1%

BSE Tech -7.1% 18.5% 49.0% 50.8%

Returns

Indices 1 yr 2 yrs 3yrs 5 yrs

Nifty -11.7% 11.9% 32.0% 28.5%

Nifty Midcap 100 -6.1% 41.7% 64.9% 51.8%

Nifty Smallcap 100 -14.8% 29.7% 52.8% 33.6%

Nifty100 -11.0% 14.9% 35.9% 32.7%

Nifty200 -11.2% 16.8% 37.3% 32.3%

Nifty500 -10.6% 19.4% 40.6% 34.8%

Nifty Auto -11.0% 32.2% 81.6% 98.6%

Nifty Bank -15.1% 21.3% 36.1% 32.1%

Nifty Energy -1.2% -1.9% 8.2% -13.8%

Nifty FMCG -2.7% 6.9% 26.2% 110.4%

Nifty Infra -24.7% -6.5% 10.7% -20.5%

Nifty Media 4.3% 27.3% 39.9% 59.6%

Nifty Pharma -11.4% 49.2% 91.2% 150.9%

Nifty Realty -31.5% -21.7% -33.9% -52.8%

Returns


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� Framework for Fundamental Analysis

Porter’s 5 forces model

Michael Poter’s Model

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Boston Consulting Group Matrix

BCG Model

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Few parameters

Benchmarking

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� Revenue growth

� Market share

� Production costs

� Employee turnover

� Process cycle time

� Margins

� Valuation parameters

� Customer profile

Factors considered for identification

Identification of Company

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� Management

� Industry profile

� Positioning of the Company within the industry

� Sustainable business model

� Competitive strength

� Core values

� Customer satisfaction

� Financials and balance sheet

� Valuations

� Cashflows

� Dividend policy

� Capital allocation

Emkay Evaluation Matrix

Evaluation Matrix

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Parameters Reading Points

Parameters Max Points Weightage Points Earned Weightage % Points Earned

Profitability Profitability 20 31% 7 16% 35%EBITDA Margin 19% 2 Growth 10 15% 10 23% 100%Adj. PAT Margin 10% 2 Leverage & Coverage 15 23% 10 23% 67%RoCE 14% 1 Cash Flow 5 8% 4 9% 80%RoE 18% 2 Corporate Governance 5 8% 5 11% 100%+ EPS in all last 5 yrs. Y √ Others 10 15% 8 18% 80%

Dividend paid in all last 5 yrs. Y √ Total Points 65 100% 44 100% 68%

Growth Positive Negative

Net Sales (Last 5 Yrs.) 39% 5 No. of Ticks 8 4Adj. EPS (Last 5 Yrs.) 36% 5

Leverage & Coverage

D / E 1.1x 3Gross Debt / EBITDA 3.6x 2EBIT / Interest Expense 4.5x 5

Cash Flow

+ FCF N XCFO / Adj. PAT 47% 4

Corporate Governance

No. of Independent Directors 71% 5Chairman - Executive Y √Criminal Cases Against Promoter N √Change in Depreciation Accounting Policy N √Disclosure on Derivative Contracts N XCapitalization of R&D Costs Y X

Others

Dividend Payout Ratio 14% 3Promoter Holding 60% √FII Holding Y √Promoter Pledge 0% 5Capital raised in last 5 yrs. Y XInterest in Unrelated Businesses N √

Scorecard

Listed companies match our criteria (Rs. cr)

Companies fit our criteria (screener)

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Sr. Company Mcap Net Sales 3yrs CAGR RONW (%) ROCE (%) D/E Div. Pay. EBITDA (%)

1 TCS 463,395 94,648 24.6% 40.19 51.4 0.0 77.9% 31.0

2 Infosys 266,492 53,319 16.5% 25.98 36.14 - 41.3% 30.0

3 Sun Pharma.Inds. 199,325 27,433 50.7% 24.86 22.87 0.3 15.9% 28.3

4 HCL Technologies 114,869 36,701 20.8% 33.36 39.02 0.0 32.6% 26.8

5 Tech Mahindra 47,049 22,621 60.3% 24.81 27.85 0.1 22.0% 18.1

6 Godrej Consumer 43,944 8,276 19.4% 24.15 20.57 0.6 20.6% 18.2

7 Zee Entertainmen 37,091 4,884 17.1% 27.34 27.11 - 22.1% 28.2

8 Cadila Health. 34,480 8,651 18.0% 30.85 22.71 0.7 21.4% 26.3

9 Pidilite Inds. 30,514 4,844 15.7% 24.08 31.65 0.0 29.0% 23.7

10 Divi's Lab. 25,862 3,115 18.7% 26.37 33 0.0 31.2% 41.1

11 GlaxoSmith C H L 24,807 4,308 15.9% 29.73 41.29 - 39.6% 26.9

12 Emami 21,355 2,217 15.1% 50.04 57.72 0.0 32.7% 27.5

13 Torrent Pharma. 21,262 4,653 20.0% 34.19 25.69 0.9 25.4% 49.1

14 P & G Hygiene 19,963 2,334 21.6% 31.02 45.27 - 28.4% 21.7

15 UPL 18,696 12,089 16.4% 21 20.56 0.6 18.7% 19.7

16 Amara Raja Batt. 15,407 4,211 21.2% 26.83 36.92 0.1 15.0% 18.8

17 CRISIL 12,756 1,253 15.8% 35.25 47.54 - 26.6% 31.2

18 Page Industries 12,717 1,543 30.4% 58.01 54.51 0.5 41.0% 22.0

19 Ajanta Pharma 11,972 1,481 29.8% 43.2 55.98 0.1 17.0% 35.3

20 Mindtree 11,017 3,562 23.0% 29.36 37.25 - 26.6% 20.1



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Sr. Company Mcap Net Sales 3yrs CAGR RONW (%) ROCE (%) D/E Div. Pay.(%) EBITDA (%)

21 AIA Engg. 8,737 2,184 15.5% 22.55 29.67 0.1 17.5% 32.5

22 Symphony 8,413 579 22.7% 37.25 50.23 - 42.2% 34.4

23 Syngene Intl. 7,811 860 27.3% 23.27 21.61 0.2 65.0% 34.0

24 Kajaria Ceramics 7,472 2,187 18.5% 29.11 33.91 0.4 18.1% 19.0

25 Tata Elxsi 5,956 849 16.4% 39.3 58.24 - 33.6% 24.5

26 Bajaj Corp 5,609 826 20.4% 40.65 51.54 - 98.2% 29.1

27 Persistent Sys 5,226 1,891 23.7% 22.12 29.05 - 27.5% 22.3

28 eClerx Services 5,209 942 25.8% 35.23 44.5 - 46.3% 38.9

29 La Opala RG 3,222 223 24.8% 29.48 36.67 0.1 17.3% 34.8

30 Kaveri Seed Co. 2,682 1,161 46.1% 47.36 48.31 - 17.2% 24.1

31 CCL Products 2,579 881 20.6% 24.27 22.76 0.7 21.2% 22.1

32 Vinati Organics 2,118 772 19.9% 31.12 37.74 0.3 15.6% 37.2

33 Wonderla Holiday 2,044 182 17.1% 20 27.36 0.1 16.7% 55.3

34 Sharda Cropchem 1,989 1,061 20.0% 20.32 28.66 0.1 18.3% 18.6

35 Navneet Educat. 1,940 994 16.4% 25.52 29.95 0.4 40.2% 26.5

36 Mayur Uniquote 1,876 506 16.8% 34.29 36.12 0.2 21.4% 26.8

37 Caplin Point Lab 1,523 252 32.9% 53.09 67.12 0.0 18.4% 23.3

38 Poly Medicure 1,300 390 21.6% 26.76 29.47 0.4 17.7% 22.8

39 Wim Plast 1,033 366 22.0% 23.36 32.65 - 15.6% 19.6

40 SQS India BFSI 965 214 20.8% 20.61 29.08 0.1 116.7% 22.9



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Sr. Company Mcap Net Sales 3yrs CAGR RONW (%) ROCE (%) D/E Div. Pay.(%) EBITDA (%)

41 Astra Microwave 891 634 46.3% 23.55 28.87 0.3 15.6% 24.7

42 R Systems Intl. 762 649 16.6% 27.36 38.04 0.0 95.5% 26.1

43 MT Educare 641 254 21.8% 24.45 35.04 0.0 35.5% 29.0

44 Alkyl Amines 630 476 18.3% 27.44 24.91 0.9 18.1% 18.6

45 Arrow Coated 596 49 129.8% 59.93 76.53 - 15.7% 82.9

46 Control Print 471 113 19.3% 20.5 27.57 0.1 20.9% 28.6

47 Stovec Inds. 439 102 19.4% 21.37 30.62 - 27.9% 25.3

48 Orbit Exports 373 158 15.7% 32.33 31.95 0.5 23.3% 33.7

49 Cupid 369 44 19.6% 36.02 48.5 0.1 21.7% 41.8

Criteria for Screener:

1. 3 yrs CAGR more than 15%

2. 9 months EBITDA (9mFY16) margin should be more than 18%

3. ROE & ROCE (FY15) should be more than 20%

4. Dividend Payout (FY15) more than 15%

5. Leverage (FY15) less than 1.00x

6. Market Capitalisation (latest) of more than Rs.300cr+

Thank You

DISCLAIMER: Emkay Global Financial Services Limited and its affiliates are a full-service, brokerage, investment banking, investment management, and financing group. We along withour affiliates are participants in virtually all securities trading markets in India. Our research professionals provide important input into our investment banking and other businessselection processes. Investors may assume that Emkay Global Financial Services Limited and/or its affiliates may seek investment banking or other business from the company orcompanies that are the subject of this material and that the research professionals who were involved in preparing this material may participate in the solicitation of such business. Oursalespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinionsexpressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewingthese materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additionally, other important informationregarding our relationships with the company or companies that are the subject of this material is provided herein. This report is not directed to, or intended for distribution to or use by,any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contraryto law or regulation or which would subject Emkay Global Financial Limited or its group companies to any registration or licensing requirement within such jurisdiction. Specifically, thisdocument does not constitute an offer to or solicitation to any U.S. person for the purchase or sale of any financial instrument or as an official confirmation of any transaction to any U.S.person unless otherwise stated, this message should not be construed as official confirmation of any transaction. No part of this document may be distributed in Canada or used byprivate customers in United Kingdom. All material presented in this report, unless specifically indicated otherwise, is under copyright to Emkay. None of the material, nor its content, norany copy of it, may be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of Emkay. All trademarks, service marksand logos used in this report are trademarks or registered trademarks of Emkay or its Group Companies. The information contained herein is not intended for publication or distributionor circulation in any manner whatsoever and any unauthorized reading, dissemination, distribution or copying of this communication is prohibited unless otherwise expressly authorized.Please ensure that you have read “Risk Disclosure Document for Capital Market and Derivatives Segments” as prescribed by Securities and Exchange Board of India before investing inIndian Securities Market. In so far as this report includes current or historic information, it is believed to be reliable, although its accuracy and completeness cannot be guaranteed.

Emkay Global Financial Services Ltd.

7th Floor, The Ruby, Senapati Bapat Marg, Dadar - West, Mumbai - 400028. India

Tel: +91 22 66121212 Fax: +91 22 66121299 Web: www.emkayglobal.com

Mid cap & small cap performance

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