Date: 16/10/2017

Karnataka Bank Ltd. (KBL), incorporated in 1924, is one of the

oldest private sector banks in India. The bank provides the

entire spectrum of financial services to customer segments

consisting of large and mid-size corporates, MSME, agriculture

and retail businesses. As the name suggests, KBL is a Karnataka

based bank driving major business from the home state on the

back of extensive presence with 62% of branches located in

state. KBL attained a balance sheet size of Rs. 641bn in FY17

with a five year CAGR of 11.5% in total assets & 11.2% in

business size. KBL is likely to emerge far stronger over the next

few years and its business growth is likely to be driven by the

management’s focus on increasing low cost deposits (CASA

deposits), improving C/D ratio and shifting the business mix

toward the retail and SME segments. Under the VISION 2020,

the management has set target to double the bank’s business

size to Rs. 1,800bn by FY20 (Rs. 937.4bn in FY17) with C/D ratio

at 80% and to become the preferred banker of at least 1% of

Indian population. We prefer KBL mainly owing to its

consistence performance & initiatives taken by management

to further improve the business as well as profitability.

Apar Industries Ltd. (Apar) is engaged in the business of

manufacturing conductors, transformers/speciality oils and

power & telecom cables. As of FY17, the company generated

46% of its revenue from conductors while the transformer/

speciality oil segment and cables segments contributed 36%

and 18% respectively. Within the conductor space Apar

demands a market share of 23%, while in the transformer oil

segment it enjoys a market share of 45% making it the fourth

largest transformer oil manufacturer. Apar is one the leading

cable manufacturers and the largest for renewable sector

cables. The company also has presence in auto tubes space

via its licensing agreement with ENI, Italy for its ENI brand.

Over the past five years Apar has delivered a strong financial

performance despite a top line (excluding excise) CAGR of

~1.7%, as its EBITDA and PAT have grown at a CAGR of ~9%

and 15% during the same period. Going forward given the

improving financial conditions of DISCOM’s, Governments

infrastructure push and the capacity expansions undertaken

by the company, we feel that Apar Industries will provide

handsome returns to investors in the future.

Nilkamal Ltd. (Nilkamal) is engaged in the

business of manufacturing of plastic products and

retail sales. The company operates in the

following segments namely; Plastics, Lifestyle

Furniture, Furnishings & Accessories. In addition to

this the company is also engaged in the business

of mattresses and material handling solutions. As

of FY17, the plastics segment contributed ~90% of

its revenue while the Lifestyle Furniture, Furnishing

& Accessories contributed ~10% of its revenue.

Over the FY13-17 period Nilkamal’s revenue,

EBITDA and PAT have grown at a CAGR of 2.7%,

14.0% and 34.8% respectively. While in H1FY18 the

revenues were impacted on the account of

implementation of GST, the H2FY18 is expected to

be a good half for the company. Furthermore the

company’s investment in new products and

value added segments will help them remain

ahead of the curve. In addition to this company’s

plan to expand its mattress footprint in Northern

and Western India during FY18, will also result in

improved financial performance.

SBI Life Insurance Company Ltd. (SLIC) is the India’s largest private life insurer in terms of new business premium (NBP) generated in each fiscal year, since FY10. Among the private life insurers, SLIC has a market share of 20.7% in individual rated premium among

private life insurers in India and 11.2% of the entire life insurance industry in India during FY17. Moreover, the company has also issued the highest number of individual life policies annually among the top five private life insurers in India since FY14. Operationally, the company is better as compared to the only listed peer ICICI Prudential Life Insurance Company Ltd.

Cochin Shipyard Ltd. (CSL) is an India-based ship building company. In addition to shipbuilding and ship repair, the company offers marine engineering training. It has built a variety of vessels ranging from bulk carriers, tankers and passengers ships to offshore support vessels and port crafts. While CSL caters to both defense and commercial clients, its

revenues over the past five fiscals has been dominated by clients from the defense sector (72.67%). This has helped the company report strong numbers despite a decline in the overall shipping industry. CSL is also engaged in building India’s first indigenous aircraft carrier. Going forward we feel that given India’s push towards indigenous defense equipment

PSU’s such as CSL would be the primary benefiters.

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