Book Profit on HDFC LTD and Buy Kajaria Ceremics, Zensar Tech Stocks Today

HDFC LTD : "NEUTRAL" 23th Jan 2014

HDFC profit growth of 12.1% YoY was inline with street expectation. NBFC reported stable asset quality on sequential basis as well as registered

healthy loan growth. HDFC ltd has well above CAR which would support growth going forward. At the current price of Rs.840, stock is trading at

4.3 tines one year forward book and 26 times of FY14E’s earnings. We value HDFC at Rs.875/ share which is 4.5 times of FY14E’s book and P/E

multiple of 27 times of full year EPS. .......................................................... ( Page :2-4)

23th Jan, 2014

Edition : 190

IEA-Equity

Strategy

Kajaria Ceremics :"Capacity expansion & sustained realisation to drive

growth…""BUY" 23th Jan 2014

At the current CMP of Rs. 311, the stock is trading at a PE of 19x and 14x of FY14E and FY15E. The company can post RoE of 29.2% and 30.0% &

EPS of Rs. 18.3 and Rs. 24.9 FY14E and FY15E. We believe that the current level is also good to enter. We expect Kajaria’s strong earnings growth

and rising market share will trigger re-rating and hence upgrade our price target to Rs 370. We advice those who have already bought into the

counter to hold on for further gains and those wishing to get in can do so with a revised price target of Rs. 350 in mind (12% return) over the

next couple of quarter. ..................................................................... ( Page : 8-10)

Zensar Tech : "Better growth trajectory ahead" "BUY" 23th Jan 2014

Earning numbers below expectation, management confident for growth ahead:For 3QFY14, Zensar Tech reported lower growth than

expectations, Sales declined by 1%(QoQ) because of seasonal and furloughs impacts.Considering healthy order pipeline and its earning visibility

in near future, we maintain “BUY” view on the stock with a target price of Rs 440. At a CMP of Rs 386, stock trades at 5.6x FY15E EPS

................................................................... ( Page : 5-7)

Hindustan Zinc LTD : Good gains ahead "BUY" 21th Jan 2014

Hindustan Zinc’s (HZL) Q3FY14 performance was inline to our estimates on the back of healthy zinc sales volumes and higher metal premiums.

Total operating income for Q3FY14 stood at Rs. 3450.1 crore higher by 8.6% YoY but lower by 3.1% QoQ. Total zinc sales in Q3FY14 came in at

196,000 tonne, up 17% YoY and 2% QoQ . Being an integrated & dominant player in the domestic industry with low cost of production, the

company is poised to benefit in the long run. We reaffirm our positive stance on HZL and assign a BUY rating to the stock with a target price of

Rs. 148/-. .................................................. ( Page : 21- 23)

Witnessed below sales numbers and beats on profitability and Margin expansion;Emami Ltd reported 6.6% (YoY) sales growth, Adversely

impacted by unfavorable season and moderation in the growth of FMCG sector. Overall volume grew by 6%. We retain “Buy” view on the stock

with a target price of Rs 635. At a CMP of Rs 448 , the stock is trading at P/BV of 7.3x on FY15E, respectively.

................................................................................... ( Page : 18-20)

KOTAK BANK "NEUTRAL" 22th Jan 2014

At the current price of Rs.708, bank is trading at 4.5 times of one year forward book and 37.5 times of one year forward earnings which

premium over its peers under our coverage. Bank reported slightly deterioration in asset quality and negative earnings due to muted operating

and financials metrics. We lower our target price to Rs.714 from earlier of Rs.782. We have neutral view on the stock.

...................................................................... ( Page : 13- 17)

RELIANCE : "BUY" 22th Jan 2014

The company for 3QFY14 reported turnover of Rs 103521 Cr up by 10.5% YoY. Refining revenues during the quarter increased to Rs 95432 Cr

up 10.1%YoY however it has witness sequential decline on account lower crude throughput of 17mmt due to maintenance turnaround. The

Capacity utilization stood at 110%.. .................................................. ( Page :11-12)

Emami Ltd : "BUY" 22th Jan 2014

Narnolia Securities Ltd,

India Equity AnalyticsDaliy Fundamental Report on Indian Equities

HDFC LTD

840.5

875

-

4

-

1M 1yr YTD

Absolute 6.6 2.4 2.4

Rel.to Nifty 5.7 -2.1 -2.1

Current 4QFY13 3QFY1

3Promoters - - -

FII 74.3 73.1 73.6

DII 12.9 13.8 13.0

Others 12.9 13.1 13.3

Financials Rs, Cr

2011 2012 2013 2014E 2015E

NII 4483 5212 6179 7053 8193

Total Income 5558 6198 7257 8131 9271

PPP 3890 5746 6718 7562 8530

Net Profit 3535 4123 4848 5438 6194

EPS 24.1 27.9 31.4 35.2 40.1

2

Profit growth in line with street expectation

Margin compression, spread would declined going forward

Net interest margin for the quarter stood at 4% despite of 25 bps reduced home loan

for retail customers during the quarter as against 4.06% in 2QFY14. Spread which is

the difference of interest income and interest expenses, maintained at 2.25%. Going

forward, there would be some pressure in spread as NBFC’s balance sheet keeps

increasing with the support of borrow fund. In rising interest rate and inflationary

pressure era, we expect to come down to 2% in next couple of quarters.

Stable operating cost led operating growth at 12.5% YoY

Other income was Rs.46 cr versus Rs.105 cr in last quarter and Rs.95 cr in previous

quarter. Due to lower support from other income, total revenue grew by 13% YoY to

Rs.1951 cr. Operating expenses increased to Rs.168 cr ( Up by 17% YoY) led

operating profit growth of 12.5% YoY to Rs.1783 cr.

Stable asset quality and balance sheet keep growing

On asset quality side, NBFC’s gross non performing asset stood at 0.77% of loan of

loan portfolio versus 0.79% in previous quarter and in absolute term in amounted to

Rs.1478 cr. Loan book of the company corpus increased by 19.2% YoY to

Rs.192266 cr as on December 2013. The total assets increased to Rs 218286 cr as

against Rs 183770 cr as at December, 2012 registering an increase of 19 per cent.

Market Data

Upside

931/632

BSE Code 500010

NSE Symbol HDFC

52wk Range H/L

Result Updated NEUTRAL

CMP

Target Price

HDFC's profit growth of 12.1% YoY was inline with street expectation. NBFC

reported stable asset quality on sequential basis as well as registered healthy

loan growth. HDFC ltd has well above CAR against requirement which would

support growth going forward. At the current price of Rs.840, stock is trading

at 4.3 tines one year forward book and 26 times of FY14E’s earnings. We value

HDFC at Rs.875/ share which is 4.5 times of FY14E’s book and P/E multiple of

27 times of full year EPS.

Previous Target Price

Mkt Capital (Rs Cr)

(Source: Company/Eastwind)

Stock Performance

Average Daily Volume

HDFC Ltd’s 3QFY14 result was in line with street expectation as profit grew by 12%

YoY to Rs.1278 cr on standalone basis. Profit of the NBFC grew by 13.4% YoY on

consolidated basis to Rs.1935 cr versus Rs.1706 cr in last quarter. NII grew by

12.8% YoY to Rs.1940 with inclusion of investment sale. Adjusted the same, NII

grew by 17% YoY to Rs.1905 cr versus Rs.1624 cr last quarter corresponding year.

131340

Change from Previous

HDFC Vs Nifty

Share Holding Pattern-%

1.16

Nifty 6338

"NEUTRAL "23th Jan, 2014


3

Quarterly Result

HDFC LTD

Source: Eastwind/Company

Please refer to the Disclaimers at the end of this Report.

NII grew on the back of healthy loan growth

and stable spread

Operating cost stable led PPP growth at 12.5%

YoY

Net profit of Rs.1278 cr was in line with

expectation.


4

HDFC LTD

HDFC Performance vs Nifty with base re-adjustment

Source: Eastwind/Company


Quarterly Performance


Rs Cr 3QFY14 2QFY14 3QFY13 % YoY Gr % QoQ Gr

Income from Operations 5985 5859 5146 16.3 2.2

Profit on Sale of Investments 35 87 96 -64.1 -60.1

Total Income 6020 5946 5242 14.8 1.2

Interest and Other Charges 4080 4046 3521 15.9 0.8

Staff Expenses 71 67 64 10.3 5.4

Provision for Contingencies 25 15 40 -37.5 66.7

Other Expenses 89 95 74 21.1 -6.3

Depreciation 8 9 6 41.8 -12.0

Total Expenditure 4273 4233 3705 15.3 1.0

Profit from Operations before Other Income 1747 1713 1537 13.7 1.9

Other Income 11 8 8 32.8 38.4

Profit Before Tax 1758 1721 1545 13.8 2.1

Tax Expense 480 455 405 18.5 5.5

Net Profit After Tax 1278 1266 1140 12.1 0.9

Zensar Tech

1M 1yr YTD

Absolute 13 32.6 16.5

Rel. to Nifty 12 28.4 12.8


Promoters 48.27 48.35 48.36

FII 11.99 11.68 10.75

DII 0.96 1.26 1.28

Others 38.78 38.71 39.61

Financials3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%

Revenue 592.01 599.7 (1.3) 525.5 12.7

EBITDA 87.26 102.54 (14.9) 70.1 24.5

PAT 50.8 70.6 (28.0) 48.7 4.3

EBITDA Margin 14.7% 17.1% (240bps) 13.3% 140bps

PAT Margin 8.6% 11.8% (320bps) 9.3% (70bps)

5

On segmental growth; The Infrastructure Management(IM) business of the company,

which has been restructured over the last few quarters, has shown a sharp increase in

dollar revenues of over 12% on a sequential quarter basis. The company reported 12

new customer wins in the quarter including over USD27 mn of new business in IM. In

INR term, Application Management Services (contributes 65% of Sales) declined by

4.5%(QoQ) and IM grew by 0.5% (QoQ). While, Products and License business jumped

from Rs50cr (2QFY14) to 70cr.

Mix geographical footing: During the quarter, revenue growth from Europe region was

impressive with 10%(QoQ), while USA and ROW, both were down by 1% impacted by

seasonal impact.Given the order book Enterprise, business expects to grow robustly

going forward.

504067

NSE Symbol ZENSARTECH

Market Data



Healthy order Pipeline: The Quarter has been upbeat with several new client additions,

with the company’s focus on cloud, security and multi-vendor services reaping results.

Recent Management comments also revealed favourable scenario of order booking.

For 3QFY14, Zensar Tech reported lower growth than expectations, Sales declined by

1%(QoQ) because of seasonal and furloughs impacts. PAT was down by 28%(QoQ),

the profit growth has been impacted due to currency fluctuations during the period to

the extent of Rs 19.06 Cr on a YoY basis and Rs 23.02 Cr on a QoQ basis.

Management expects good growth starting from 4QFY14E with its Infrastructure

Management (IM) business gaining momentum. The deal booking and pipeline is good

and expects to perform well going forward. It expects double-digit growth in the

Enterprise Services business for the FY15 on the back of healthy pipeline. In addition, it

anticipates good growth from the IMS for the FY'15.

On Margin front; During the Quarter, its EBITDA margin declined by 240bps to

14.7%and PAT margin down by 320bps to 8.6%. Post earning, management has

expressed its margin at a range of 16-17% and PAT margin could be seen at a double

figure for only organic business.

Upside 14%

View and Valuation: The deal booking and pipeline is good and expects to perform well

going forward. It expects double digit growth in the Enterprise Services business for the

FY15E on the back of healthy pipeline. Also, it anticipates good growth from the IMS for

the FY'15E.

Order pipeline continues to be stable at $ 200 mn mainly on the back of good demand

seen in Mobility, Cloud Computing and social networking side. Considering healthy

order pipeline and its earning visibility in near future, we maintain “BUY” view on the

stock with a target price of Rs 440. At a CMP of Rs 386, stock trades at 5.6x FY15E EPS.

Nifty 6339

1691

430/181

BSE Code

Mkt Capital (Rs Crores)

"Better growth trajectory ahead"

CMP 386

Target Price 440

Result update Buy Earning numbers below expectation, management confident for growth ahead:

400

Stock Performance


Average Daily Volume 20884


1 year forward P/E

Rs, Crore


10%

52wk Range H/L

"BUY"23rd Jan' 14


6




Sales and Sales Growth-%


Zensar Tech


Sales and Sales Growth-%

Margin-%


Revenue Mix-Geographies 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY142

USA 72% 71% 72% 74% 76% 75% 75%

Europe 9% 9% 9% 9% 8% 9% 10%

Africa 8% 9% 9% 9% 9% 10% 9%

Row 11% 11% 10% 8% 7% 6% 6%

Application Management Services 64% 66% 68% 64% 65% 68% 65%

Infrastructure Magt Services 21% 22% 21% 24% 23% 23% 23%

Products and License 15% 12% 11% 12% 12% 9% 12%

Fixed Price 33% 30% 31% 34% 37% 37% 35%

Time & Materials 35% 40% 40% 36% 33% 36% 36%

Support Services 17% 18% 17% 18% 18% 18% 17%

Product Sales 15% 12% 12% 12% 12% 9% 12%

Manufacturing , Retail & Distribution 52% 53% 54% 54% 61% 63% 61%

Insurance, Banking & Finance 20% 21% 20% 19% 20% 20% 21%

Govt , healthcare & Utilities * 7% 11% 11% 10% 2% 2% 2%

Alliance & Others 21% 15% 15% 17% 15% 17% 16%

Revenue Mix-Service Type

Revenue Mix-Project Type

Revenue Mix-Vertical

7



Zensar Tech

Clients/Headcounts Metrics;

Financials;


Revenue Mix-Geographies 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY142

$1mn+ 47 43 41 40 49 47 49

$5mn+ 6 7 7 8 6 6 6

$10mn+ 1 2 2 2 1 1 2

$20mn+ 1 1 1 1 1 1 1

top 5 clients 35% 35% 35% 35% 37% 39% 36%

top 10 clients 40% 42% 42% 43% 43% 46% 43%

DSO 69 59 56 55 66 61 59

Onsite 69% 72% 70% 69% 68% 67% 69%

Offshore 31% 28% 30% 31% 32% 33% 31%

Utilization (Including Trainees) 81% 82% 83% 82% 81% 80% 79%

Headcount 7286 6825 6504 6508 6519 6657 6741

Number of million dollar

Effort & Utilization

Client Contribution to Business

Rs, Cr FY10 FY11 FY12 FY13 FY14E FY15E

Net Sales 497.08 562.56 700.15 2114.52 2330.91 3014.78

Other Operating Income 0.00 15.03 12.57 13.95 18.65 24.12

Total income from operations (net) 497.08 577.59 712.72 2128.47 2349.56 3038.90

Purchases of stock-in-trade 0.00 0.00 0.00 236.86 223.21 303.89

Employee Cost 393.17 343.12 411.36 1177.83 1268.76 1641.01

Other expenses 0.00 135.71 165.98 418.73 505.16 653.36

Total Expenses 393.17 478.83 577.34 1833.42 1997.13 2598.26

EBITDA 103.91 98.76 135.38 295.05 352.43 440.64

Depreciation 24.92 25.88 25.05 33.16 39.67 51.31

Other Income 8.15 14.20 27.91 8.66 46.99 75.97

Extra Ordinery Items 0.00 0.00 0.00 0.00 0.00 0.00

EBIT 78.99 72.88 110.33 261.89 312.76 389.33

Interest Cost 0.55 0.85 1.03 9.95 10.81 8.65

PBT 86.59 86.23 137.21 260.60 348.94 456.65

Tax 2.43 -2.24 42.67 86.07 118.64 155.26

PAT 84.16 88.47 94.54 174.53 230.30 301.39

Growth-%

Sales 17.8% 13.2% 24.5% 202.0% 10.2% 29.3%

EBITDA 28.7% -5.0% 37.1% 117.9% 19.4% 25.0%

PAT 38.9% 5.1% 6.9% 84.6% 32.0% 30.9%

Margin -%

EBITDA 20.9% 17.6% 19.3% 14.0% 15.1% 14.6%

EBIT 15.9% 13.0% 15.8% 12.4% 13.4% 12.9%

PAT 16.9% 15.7% 13.5% 8.3% 9.9% 10.0%

Expenses on Sales-%

Employee Cost 79.1% 59.4% 57.7% 55.3% 54.4% 54.4%

Other expenses 0.0% 23.5% 23.3% 19.7% 9.6% 10.1%

Tax rate 2.8% -2.6% 31.1% 33.0% 34.0% 34.0%

Valuation

CMP 272.10 157.85 180.00 248.58 386.00 386.00

No of Share 2.16 4.34 4.34 4.36 4.37 4.37

NW 293.93 366.96 417.42 751.69 938.54 1193.91

EPS 38.96 20.38 21.78 40.03 52.70 68.97

BVPS 136.08 84.55 96.18 172.41 214.77 273.21

RoE-% 28.6% 24.1% 22.6% 23.2% 24.5% 25.2%

Dividen Payout ratio 16.4% 19.9% 37.3% 21.9% 18.9% 15.3%

P/BV 2.00 1.87 1.87 1.44 1.80 1.41

P/E 6.98 7.74 8.26 6.21 7.32 5.60

Kajaria Ceremics Ltd.

BuyCMP 312

Target Price 350

285

Upside 12%

19%

Market DataBSE Code 500233

NSE Symbol

52wk Range

H/LMkt Capital

(Rs Crores)Average Daily

Volume (Nos.)Nifty 6,322

Stock 1M 1yr YTD

Absolute 6.3 35.4 61.8

Rel. to Nifty 5.3 29.8 50.4

Share 2QFY14 1QFY14 4QFY13

Promoters 52.1 53.5 53.5

FII 25.6 18.4 15.6

DII 3.8 3.1 3.2

Others 18.5 25.0 27.6

Valuation :

Financials Rs, Crore

3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%

Revenue 440.4 478.4 -7.9 418.0 5.4

EBITDA 66.5 65.6 1.4 60.7 9.6

PAT 30.0 29.2 3.0 25.0 20.4

EBITDA Margin 15.1% 13.7% 140 bps 14.5% 60 bps

PAT Margin 6.8% 6.1% 70 bps 6.0% 80 bps

8

Despite the slowdown in the overall industrial space, company performed well in 3QFY14

numbers. Company's consolidated revenues increased by 5.4 per cent to Rs 440.4 crore while

net profit witnessed a growth by 17.6 per cent to Rs 30.0 crore on yoy basis for the December

quarter. Company's EBITDA has gone up by 9.5% to Rs 66.4 crore against Rs 60.6 crore in

Q3FY13. The EBITDA margin of the company too has improved by 56 bps and stands at 15.1%

in current quarter. On the basis of the company current quarter sales have been adversely

affected due to production shut down at Gujarat which impact the company revenue by Rs. 20-

25 crore. Kajaria’s thrust on capacity expansion and gaining market share is helping it to post

strong topline growth. Further, KCL has plans to do a capital expenditure of about Rs 425 crore

over the financial year FY13 to FY16. This investment will help company to have revenue of

over Rs 2500 crore by FY16. We are remain bullish on the counter and continue to maintain

our buy rating on stock with an upgraded price target of Rs 350.

Result update

174/320

At the current CMP of Rs. 311, the stock is trading at a PE of 19x and 14x of FY14E and FY15E. The

company can post RoE of 29.2% and 30.0% & EPS of Rs. 18.3 and Rs. 24.9 FY14E and FY15E. We

believe that the current level is also good to enter. We expect Kajaria’s strong earnings growth

and rising market share will trigger re-rating and hence upgrade our price target to Rs 370. We

advice those who have already bought into the counter to hold on for further gains and those

wishing to get in can do so with a revised price target of Rs. 350 in mind (12% return) over the

next couple of quarter.

"Capacity expansion & sustained realisation to drive growth…"

1 yr Forward P/B

The company had taken a price hike in October'13, further recent developments in Morbi are

structural positives Near-term demand trends look reasonable and this category has been

relatively resilient to the general slowdown witnessed in consumption. If recent price increases

stick, margins could expand significantly in the next few quarters. Further, Next year, company

looking at selling almost about 60 million square meters of tiles.

Capacity expansion :

KCL has plans to do a capital expenditure of about Rs 425 crore over the financial year FY13 to

FY16. This investment will help company to have revenue of over Rs 2500 crore by FY16. In

addition, the Joint Ventures of KCL with the private firms - Jaxx Vitrified and Cosa Ceramics,

having annual capacity of 5.7 million square meters (MSM) and 2.7 MSM respectively, will

increase the KCL's production capacity. Hence, with the increased capacities of its vitrified tiles

and strong demand in the market, we expect KCL to deliver strong growth over the medium

term.

(Consolidated)




KAJARIACER

Growth story :

(Source: Company/ Eastwind Research)

63,000

2,356

"Buy"23rd Jan' 14


Mn sft Crore

9

(Source: Company/Eastwind Research )

Sales Q-o-Q

Sales Volume



Expect 18-20% Revenue growth in FY15 out of

which a volume growth of about 14 percent

and price and value both should add about 4-5

percent.

EBITDA margin to be somewhere around 16%

in FY15, Expecting a growth somewhere

between 50bps to 100bps.

Management Guidence FY15:

Margin % (Q-o-Q)

Sales Value





10




Key Financials


PARTICULAR 2009A 2010A 2011A 2012A 2013A 2014E 2015E

Performance

Revenue 664.9 736.4 952.3 1313.0 1612.0 1934.4 2321.3

Other Income 1.0 0.0 1.1 1.5 3.0 3.0 3.0

Total Income 665.9 736.4 953.4 1314.5 1615.0 1937.4 2324.3

EBITDA 94.9 115.7 147.9 206.8 244.5 285.3 359.8

EBIT 70.0 89.0 118.2 167.5 199.9 238.3 304.8

DEPRICIATION 24.9 26.7 29.7 39.3 44.6 47.0 55.0

INTREST COST 58.2 37.5 30.1 48.5 45.4 44.1 40.0

PBT 12.7 51.4 89.2 120.5 157.6 197.2 267.8

TAX 3.8 15.6 28.5 38.1 49.9 62.4 84.8

Extra Oridiniary Items NA NA NA NA NA NA NA

Reported PAT 8.9 35.8 60.7 82.5 107.7 134.8 183.1

Dividend (INR) 1.7 8.6 17.1 21.4 25.7 29.9 34.2

DPS 0.2 1.2 2.3 2.9 3.5 4.1 4.6

EPS 1.2 4.9 8.2 11.2 14.6 18.3 24.9

Yeild %

EBITDA % 14.3% 15.7% 15.5% 15.7% 15.2% 14.8% 15.5%

NPM % 1.3% 4.9% 6.4% 6.3% 6.7% 7.0% 7.9%

Earning Yeild % 4.4% 7.9% 10.9% 6.6% 7.6% 5.9% 8.0%

Dividend Yeild % 0.9% 1.9% 3.1% 1.7% 1.8% 1.3% 1.5%

ROE % 5.5% 18.9% 27.3% 29.2% 30.2% 29.2% 30.0%

ROCE% 1.8% 7.9% 11.9% 18.1% 20.4% 19.8% 22.0%

Position

Net Worth 162 189 223 282 357 462 611

Total Debt 325 263 288 175 170 220 220

Capital Employed 487 452 510 457 527 682 831

No of Share (Adj) 7 7 7 7 7 7 7

CMP 27 62 76 170 192 311 311

Valuation

Book Value 22.0 25.7 30.2 38.3 48.5 62.7 83.0

P/B 1.2 2.4 2.5 4.4 4.0 4.9 3.7

Int/Coverage 1.2 2.4 3.9 3.5 4.4 5.4 7.6

P/E 23 13 9 15 13 17 12

BUY

1M 1yr YTD

Absolute -3 -4 9

Rel. to Nifty -4 -8 -7


4Promoters 45.3 45.3 45.3

FII 18.3 17.7 17.4

DII 11.5 11.8 11.6

Others 25.0 25.2 25.7

Rs, Crore


Revenue 103521 103758 (0.2) 93886 10.3

EBITDA 7622 9909 (23.1) 8373 -9.0

PAT 5511 5490 0.4 5502 0.2

EBITDA Margin 7.4% 9.6% (220bps) 8.9% (160bps)

PAT Margin 5.3% 5.3% (10bps) 5.9% (50bps)

11

954/765

NSE Symbol RELIANCE

1 Yr Price Movement Vs Nifty


279218


Nifty 6313

Financials


RELIANCEGood Growth Ahead

Stock Performance-%


Mkt Capital (Rs, Cr)

Market Data

The company for 3QFY14 reported turnover of Rs 103521 Cr up by 10.5% YoY. Refining

revenues during the quarter increased to Rs95432 Cr up 10.1%YoY however it has witness

sequential decline on account lower crude throughput of 17mmt due to maintenance

turnaround. The Capacity utilization stood at 110%.The Petrochemical revenues for the

quarter increased by 14.6% YoY to Rs25280 Cr driven by higher prices during the quarter.

The Oil and Gas segment revenue witnessed a fall of 9.8% YoY to Rs1733 Cr on account of

falling gas production from KG- D6.

Upside

Change from Previous -

52wk Range H/L

The stock is trading at Rs 862 and in light of 3QFY14 performance, business outlook and

management commentary we maintain our previous recommendation BUY for the stock

with Target Price Rs 1040.

Better-than-expected performance of the refining segment.

Higher Other Income.

Company’s Q3FY14 EBITDA witnessed a sequential decline of 2.9% to Rs 7622 Cr mainly

on account of fall in petrochemical margin and lower crude throughput at RIL’s refineries.

Petrochemical EBIT for the quarter decreased by 15.2% sequentially to Rs2124 Cr due to

lower volumes in polymers and polyester segments. The refining EBIT for the 3QFY14

came at Rs 3141 Cr down by 13 % YoY while Oil and gas EBIT came at Rs 540 Cr.

RIL’s GRM at US$7.6/bbl was relatively superior to Singapore-Dubai GRM (which has

weakened to US$4.3/bbl in 3QFY14 vs US$5.4/bbl in 2QFY14 and US$6.6/bbl in 3QFY13)

due to the strength in gasoil cracks and the widening light-heavy crude spread.

Other Highlights:

Shale gas: RIL has incurred a cumulative investment of USD6.8bn till date across its three

shale gas JVs in the US. RIL’s share of revenue and EBITDA from the shale gas JVs during

3QFY14 amounted to USD221.3 Mn up 29% YoY and USD174 Mn,respectively.The Shale

Business during 9MFY14 registered turnover USD 627Mn up 47% YoY and EBITDA for the

period stand was USD 462Mn up 40% YoY.

Retail business: Revenues grew to Rs3927Cr in the third quarter compared to Rs 2839 Cr

for the same period last fiscal translating growth of 38% YoY. The Retail business reported

an EBITDA of Rs1bn during the quarter. The company added 27 new stores in 3QFY14,

taking the total number of stores to 1,577.

The company’s outstanding cash on the standalone balance sheet as at end-3QFY14 was

at USD14.4bn and outstanding debt was at USD13.2bn

View and Valuation:

Result Update

CMP 862

Result Highlights :

BSE Code 500325

Target Price 1040

Previous Target Price -

21%

"BUY"22th Jan' 14


12

EBITDA & OPM %


PAT & NPM %



Yearly decline in EBITDA reflects lower

refining margin and lower crude throughput

Growth in PAT due to strong financial

performance of the refining segment and

higher-thanexpected other income


RELIANCE

Sales Trend (Rs/Bn)

Sales was flat on sequential basis.


KOTAK BANK

702

714

782

2

-9

1M 1yr YTD

Absolute -3.6 12.4 12.4

Rel.to Nifty -4.1 7.8 7.8


3Promoters 43.7 43.7 43.8

FII 31.8 31.1 31.2

DII 1.7 2.3 2.2

Others 22.9 22.9 22.9

Financials Rs, Cr

2011 2012 2013 2014E 2015E

NII 2098 2512 3206 3682 3762

Total Income 781 977 1161 1412 1412

PPP 1325 1655 2157 2585 2536

Net Profit 818 1085 1361 1450 1601

EPS 11.1 14.6 17.7 18.9 20.8

13


KOTAK Bank Vs Nifty


1.12 lakhs

Nifty 6314



Stock Performance

Average Daily Volume

54341

Kotak Mahindra Bank reported moderate growth in core banking business with NII

grew by 10.9% YoY to Rs.913 cr. Muted revenue growth was driven by lower loan

growth, flat to negative non interest income, declined credit deposits ratio and NIM

compression. Non- interest income reported flat to negative numbers to Rs.300 cr

from Rs.305 cr in 3QFY13. Fee income registered growth of 6% YoY to Rs.226 cr

from Rs.213 cr in corresponding quarter last year and treasury income reported

128% YoY growth to Rs.144 cr versus Rs.63 cr in 3QFY13.

Cost Income ratio increased led flat growth in operating profit

Result update NEUTRAL

CMP

Target Price

At the current price of Rs.708, bank is trading at 4.5 times of one year forward

book and 37.5 times of one year forward earnings which premium over its

peers under our coverage. Bank reported slightly deterioration in asset quality

and negative earnings due to muted operating and financials metrics. We

lower our target price to Rs.714 from earlier of Rs.782. We have neutral view

on the stock.


Operating expenses increased by 13.1% to Rs.628 cr from Rs.555 cr in last year

same quarter in which employee cost decreased by 5% YoY while other operating

cost increased by 33% YoY. Operating profit reported growth of 2.1% YoY to Rs.585

cr largely due to lower other income. Cost income increased to 51.8% in 3QFY14

versus 49.2% in 3QFY13 and 50.3% in 2QFY14.

Sequentially asset quality deteriorated

In 3QFY14, bank’s asset quality deteriorated by 7% on sequential basis in absolute

term while as a percentage to gross advance, it stood at 2% (slightly deteriorated by

4 bps). During quarter bank had made provisions of Rs.70 cr versus Rs.72 cr in

previous year in which loan loss provisions were Rs. 25.44 cr and investment

provisions to the tune of Rs. 43.3cr. As the result, net NPA increased by 20% QoQ

while as a percentage to net advance, this ratio stood at 1.1% versus 1% in previous

quarter. Provisions coverage ratio (without technical write off) declined by 590 bps on

sequential basis to 45.7%.

Market Data

Upside

804/588

BSE Code 500247

NSE Symbol KOTAKBANK

52wk Range H/L

Mkt Capital (Rs Cr)

Muted revenue growth driven moderate NII growth negative non Interest

Income

"NEUTRAL"22th Jan, 2014


14


Profit declined due to lower NII Growth, flat to negative other income growth along

with muted performance in operating and financials metrics

Valuation Band

Valuation &view

At the current price of Rs.708, bank is trading at 4.5 times of one year forward book and

37.5 times of one year forward earnings which premium over its peers under our

coverage. Bank reported slightly deterioration in asset quality and negative earnings due

to muted operating and financials metrics. We lower our target price to Rs.714 from

earlier of Rs.782. We have neutral view on the stock.

KOTAK BANK

Kotak bank reported net profit de-growth of 6% YoY to Rs.340 cr largely due to lower

loan growth, declined in credit deposits ratio, moderate NII growth , lower other income

along with higher cost income ratio. Consequently ROA declined to 1.6% from 1.8% in

3QFY14 and ROE declined to 11.4% from 16.1%. On consolidated level, bank’s profit

grew by 2.4% YoY to Rs.591.25 cr. Consolidated profit come from Kotak Mahindra Prime,

Kotak Securities, Kotak Mahindra Capital, Kotak Mahindra Old Mutual Life Insurance and

other businesses.

Loan & deposits growth muted on YoY basis, saving deposits grew on the back of

lucrative interest rate

Loan increased by 5.8% YoY to Rs.53149 cr from Rs.50245 cr in corresponding quarter

last year led by retail and corporate loan growth of 6% and 5% respectively. Deposits

grew by 6% YoY led by saving deposits growth of 37.6% YoY largely due to bank’s

lucrative interest rate on saving deposits. Demand deposits and term deposits registered

growth of 6.1% and 0.6% respectively. CASA ratio, in absolute term grew by 22% YoY

while in percentage to total deposits, it stood at 29.7% versus 25.9% in last quarter.


15

Fundamental through graph

Muted growth in NII was on account of

moderate growth in operating as well as

financials metrics

Lower non interest income and higher

operating cost led operating growth of 2.1%

YoY

Profit declined by 6% YoY due to lower NII

growth, flat non interest income, higher

operating cost and higher provsions on yealry

basis.

KOTAK BANK



16

KOTAK BANK

Source: Eastwind/ Company


Quarterly Performance


Quarterly Result( Rs Cr) 3QFY14 2QFY13 3QFY13 % YoY Gr % QoQ Gr

Interest/discount on advances / bills 1702 1644 1597 6.5 3.5

Income on investments 484 510 492 -1.6 -5.0

Interest on balances with Reserve Bank of India 6 7 5 21.3 -11.7

Others 0 11 0 82.6 -96.3

Total Interest Income 2192 2172 2095 4.7 0.9

Others Income 300 297 305 -1.7 0.9

Total Income 2492 2469 2399 3.9 0.9

Interest Expended 1280 1248 1272 0.6 2.5

NII 913 924 823 10.9 -1.2

Other Income 300 297 305 -1.7 0.9

Total Income 1212 1221 1128 7.5 -0.7

Employee 277 265 292 -4.9 4.8

Other Expenses 350 350 264 32.9 0.1

Operating Expenses 628 615 555 13.1 2.1

PPP( Rs Cr) 585 607 573 2.1 -3.6

Provisions 70 72 42 64.6 -3.5

PBT 515 534 530 -2.9 -3.6

Tax 175 182 169 3.8 -3.7

Net Profit 340 353 362 -6.0 -3.6

Balalce Sheet( Rs Cr)

Net Worth 11896 11569 8992 32.3 2.8

Deposits 54671 52642 51524 6.1 3.9

Borrowings 13673 14523 18566 -26.4 -5.9

Total Liabilities 84297 82185 82428 2.3 2.6

Investment 23615 22528 26587 -11.2 4.8

Advances 53149 50609 50245 5.8 5.0

Total Assets 84297 82185 82428 2.3 2.6

Asset Quality

GNPA 1076.2 1005.9 740.0

NPA 584.5 486.9 322.7

GNPA 2.02 1.99 1.47

NPA 1.10 0.96 0.64

PCR(w/o technical write-off) 46 52 56

17

Financials & Assumption

KOTAK BANK

Source: Eastwind/ Company



Rs Cr 2011 2012 2013 2014E 2015EInterest/discount on advances / bills 3214 4867 6146 6751 8141

Income on investments 957 1306 1870 2079 2006

Interest on balances with Reserve Bank of India 17 4 24 27 7

Others 1 2 2 20 20

Total Interest Income 4190 6180 8042 8877 10173

Others Income 781 977 1161 1412 1412

Total Income 4970 7158 9203 10290 11586

Interest on deposits 1498 2504 3346 3926 4515

Interest on RBI/Inter bank borrowings 349 775 1055 0 0

Others 246 389 435 1071 2583

Interest Expended 2092 3668 4837 5195 6411

NII 2098 2512 3206 3682 3762

Other Income 781 977 1161 1412 1412

Total Income 2878 3490 4366 5095 5175

Employee 784 902 1075 1129 1188

Other Expenses 769 932 1135 1380 1451

Operating Expenses 1553 1835 2210 2509 2639

PPP( Rs Cr) 1325 1655 2157 2585 2536

Provisions 507 570 796 389 249

Net Profit 818 1085 1361 1450 1601

Deposits 29261 38537 51029 58683 67486

Deposits Growth(%) 22.5 31.7 32.4 15.0 15.0

Borrowings 11724 16596 20411 14671 35387

Borrowings Growth(%) 90.9 41.6 23.0 -28.1 141.2

Loan 29329 39079 48469 55739 64100

Loan Growth(%) 41.2 33.2 24.0 15.0 15.0

Investment 17121 21567 28873 25718 30862

Investment Growth(%) 36.8 26.0 33.9 -10.9 20.0

Eastwind CalculationYield on Advances 11.0 12.5 12.7 12.7 12.7

Yield on Investments 5.6 6.1 6.5 8.1 6.5

Yield on Funds 8.6 9.8 9.9 4.5 4.0

Cost of deposits 5.1 6.5 6.6 6.7 9.5

Cost of Borrowings 5.1 7.0 7.3 7.3 7.3

Cost of fund 5.1 6.7 6.8 7.1 6.2

ValuationBook Value 93 108 123 159 179

P/BV 4.9 5.0 5.3 4.5 4.0

P/E 41.2 37.0 36.9 37.5 34.0

Emami Ltd

BUY

1M 1yr YTD

Absolute -3.3 15.2 15.3

Rel. to Nifty -3.9 11.1 10.8


Promoters 72.74 72.74 72.74

FII 16.69 16.68 15.46

DII 2.02 2.18 3.27

Others 8.55 8.4 8.53

Financials Rs, Cr


Revenue 584.7 406.7 43.8% 548.65 6.6%

EBITDA 176.8 87.4 102.3% 136.9 29.1%

PAT 150.7 80 88.4% 114.9 31.2%

EBITDA Margin 30.2% 21.5% 870bps 25.0% 520bps

PAT Margin 25.8% 19.7% 610bps 20.9% 490bps

18

1 yr Forward P/B



Product expansion: The company has launched Boroplus face-wash last month and

there will be new launches in Q4 also. The mgmt said that for next 2 – 3 years it has

strong pipeline of products to be launch.

Nifty 6314


Stock Performance

Margin Picked up: The OPM has increased by 520 bps to 30.2 % due to fall in RM cost by

60 bps to 28.1%, purchases of finished goods by 400bps to 4.6% and ASP cost by 160 bps

to 15% of adjusted net sales. The mgmt said that the prices are likely to remain stable

for the remainder of the fiscal year. The company has covered the Menthol prices for

the whole year.

View and Valuation: Considering Emami’s focus on increasing rural penetration,

effective cost management, continuous strengthening of its brand equity and new

product funnel strongly in next 2- 3 years. The company's efforts are continue to

strengthen its market share in most of the categories it is present, we are positive on

the stock. We retain “Buy” view on the stock with a target price of Rs 635. At a CMP of

Rs 448 , the stock is trading at P/BV of 7.3x on FY15E, respectively.

Volume and Value growth: The volume of Navratna oil grew by 1%, Fair and Handsome

was 2% and Balm volume grew by 4%. While, Boroplus volume decline by 4% on YoY

basis impacted by unfavourable winter season. The value growth for , Fair and

Handsome was 12%, Navratna oil was 6% while Balm was at 3%. While, Boroplus

decline by 3% on YoY basis.

Distribution Reach: Although rural continues to grow ahead of urban markets, the

growth for Emami from rural area was at 13% and urban growth was flat on YoY basis.

The company, which gets majority of its rural revenues from Uttar Pradesh, Bihar and

West Bengal, is looking beyond these markets for its future growth. The company's

direct outlet reach is 6 lakh. The company has added 20000 outlets in Q2 and expects to

add 75000 – 100000 in FY14E.

52wk Range H/L 539/368

Mkt Capital (Rs Crores) 10275


BSE Code 531162

NSE Symbol EMAMI

Market Data We expect revenue growth could be seen better in 4QFY14 as the weather related

headwinds for cooling oils is behind us and pricing on balms stabilize.

As the company has already forward contracted menthol for the year, menthol prices

continue to trend lower and price hikes for the year have been taken place. Margin

expansion visibility remains high going forward.

"The niche advantage."

Results updateCMP 448

Target Price 635

For 3QFY14, Emami Ltd reported 6.6% (YoY) sales growth, Adversely impacted by

unfavorable season and moderation in the growth of FMCG sector. Overall volume

grew by 6%. International Business has performed well with 37% sales growth led by

aggressive growth in GCC and SAARC. PAT up by 31%(YoY) due to judicious mix of

benign RM cost and price hike on some selective brands. its market share increased

across all brands during the quarter.

Witnessed below sales numbers and beats on profitability and Margin expansion;

Previous Target Price 500

Upside 42%

Change from Previous 27%

"BUY"22nd Jan' 14


19

Emami Ltd

Sales and Sales Growth(%)

Sales for3QFY14E increased by 6.6%(YoY).

Overall volume grew by 5%. However, the

company continues to successfully

strengthen its market share in most of the

categories it is present.



Ad spends: The ad spends in 3QFY14 have declined by 360bps YoY to 15% as a percentage

of sales. The ad spends, as a percentage of sales, are expected to be in the range of 17-

18% in 4QFY14 and FY15.

Tax: The effective tax rate was flat at 17% on YoY basis.and Company expects to see

samr range of tax rate for FY15E

The OPM has increased by 520 bps to 30.2 %

due to fall in RM cost by 60 bps to 28.1%,

Margin-%


Expenses on Sales

Management is focussed to reduce its Ad

revenue as before.




20

▪ The company has already taken price hikes and no further hikes are expected in FY14E.

Total annualized price hike for FY14 is 4% YoY.

Emami Ltd

Key facts from Conference Call (Attended on 21st Jan 2013)

▪ The management expects sales growth of 15%, consolidated with 3.4% growth from

new launches and 12% from existing brands while PAT guidance also continues to stand at

15% aided by strong gross margin expansion on the back of lower Mentha Oil prices.

▪ The mgmt has guided for a capex of Rs 70 – 75 crore each during FY14 and FY15. ASP for

FY14 will be 16% - 17%. And 18% for FY15%.

▪ The management expects 25% growth from International business considering political

uncertianty in Bangladesh for FY15E.

▪ Emami has a good cash balance of Rs5bn which it expects to utilize for acquisition.



Financials


Rs in Cr, FY10 FY11 FY12 FY13 FY14E FY15E

Sales 1037.98 1247.08 1453.51 1699.09 1886.97 2177.55

Raw Materials Cost 380.53 346.76 415.12 539.83 566.09 675.04

Purchases of stock-in-trade 0 204.9 189.13 182.14 141.52 174.20

WIP 0 -28.48 22.17 -6.52 22.64 21.78

Employee Cost 57.91 72.87 92.31 115.55 141.52 174.20

Advertisement and Publicity 194.42 219.41 228.99 279 311.35 348.41

Other expenses 158.66 178.17 209.02 241.82 283.05 332.08

Total expenses 791.52 993.63 1156.74 1351.82 1466.18 1725.71

EBITDA 246.46 253.45 296.77 347.27 420.79 451.84

Depreciation and Amortisation 117.52 116.09 120.89 124 103.61 119.57

Other Income 7 33.1 54.12 56 56.61 65.33

Exceptional Items 89.97 113.9 84.15 96 94.35 119.77

EBIT 128.94 137.36 175.88 223.2 317.18 332.28

Interest 20.98 15.23 15.21 6.6 6.86 5.14

PBT 204.93 269.13 298.94 368.69 461.28 512.22

Tax Exp 35.21 40.41 40.12 54 76.11 87.08

PAT 169.72 228.72 258.82 314.68 385.17 425.15

Growth-% (YoY)

Sales 35.5% 20.1% 16.6% 16.9% 11.1% 15.4%

EBITDA 91.0% 2.8% 17.1% 17.0% 21.2% 7.4%

PAT 85.0% 34.8% 13.2% 21.6% 22.4% 10.4%

Expenses on Sales-%

RM Cost 36.7% 27.8% 28.6% 31.8% 30.0% 31.0%

Ad Spend 18.7% 17.6% 15.8% 16.4% 16.5% 16.0%

Employee Cost 5.6% 5.8% 6.4% 6.8% 7.5% 8.0%

Other expenses 15.3% 14.3% 14.4% 14.2% 15.0% 15.3%

Tax rate 17.2% 15.0% 13.4% 14.6% 16.5% 17.0%

Margin-%

EBITDA 23.7% 20.3% 20.4% 20.4% 22.3% 20.8%

EBIT 12.4% 11.0% 12.1% 13.1% 16.8% 15.3%

PAT 16.4% 18.3% 17.8% 18.5% 20.4% 19.5%

Valuation:

CMP 197.70 249.40 260.80 397.40 448.00 448.00

No of Share 15.13 15.13 15.13 15.13 22.70 22.70

NW 625.42 689.85 706.63 777.47 1069.71 1388.64

EPS 11.22 15.12 17.11 20.80 16.97 18.73

BVPS 41.34 45.59 46.70 51.39 47.13 61.18

RoE-% 27.1% 33.2% 36.6% 40.5% 36.0% 30.6%

Dividend payout-% 23.4% 23.2% 23.8% 44.6% 24.1% 25.0%

P/BV 4.78 5.47 5.58 7.73 9.51 7.32

P/E 17.62 16.50 15.25 19.11 26.40 23.92

Hindustan Zinc LTD.

135

148

143

10%

3%

500188

56133 Q3FY14 Performance :5613

6291

1M 1yr YTD

Absolute 4.3 -1.7 -3.4

Rel. to Nifty 0.0 9.2 11.3

3QFY14 2QFY14 1QFY14

Promoters 64.9 64.9 64.9

FII 1.8 1.8 1.5

DII 31.4 31.4 31.5

Others 1.8 1.8 2.1

Investment Concern

Financials : Q3FY14 Y-o-Y % Q-o-Q % Q3FY13 Q2FY14

Net Revenue 3450 8.6 -9.8 3178 3826

EBITDA 1824 22.1 -3.1 1494 1883

Depriciation 210 18.6 12.9 177 186

Tax 305 50.2 20.1 203 254

PAT 1723 6.8 5.1 1613 1640(In Crs)

21

Good gains ahead

The attorney-general’s clearance for the Centre’s proposal to divest its residual stake in

Hindustan Zinc Ltd (HZL) lifted the Street’s mood. As the government holds 29.5 per cent

(minority) stake in HZL, the attorney-general said HZL was no longer a public sector

company. With the majority 64.92 per cent stake with Vedanta, the group will be eyeing

the government’s stake as well as the remaining 5.58 per cent owned by others.

HZL’s revenues are directly linked with the global market for products essentially, Zinc

and Lead which are priced with reference to LME prices and Silver to LBMA (London

Bullion Metal Association) prices.

A reason to wait and watch , is since the government is looking at auction, how much will

Vedanta be able to garner and what price it is willing to pay is not known. In the past it

has said it wanted majority control when Vedanta had earlier offered Rs 149 a share (13.7

per cent more than the current price). If this is any benchmark, investors stand to gain.

CMP

Disruptions in mining due to equipment failures, unexpected maintenance problems ,

non-availability of raw materials of appropriate price, quantity and quality for our energy

requirements, disruptions to or increased cost of transport services or strikes and

industrial actions or disputes.Lower than expected demand by galvanizing industries for

zinc and industrial batteries, car batteries industries for lead would affect the company

estimates.


Stock Performance-%


1 yr Forward P/B

Source - Comapany/EastWind Research

Hindustan Zinc’s (HZL) Q3FY14 performance was inline to our estimates on the back of

healthy zinc sales volumes and higher metal premiums. Total operating income for

Q3FY14 stood at Rs. 3450.1 crore higher by 8.6% YoY but lower by 3.1% QoQ. Total zinc

sales in Q3FY14 came in at 196,000 tonne, up 17% YoY and 2% QoQ . The company

realised premium on metal sales amounting to ~US$241/tonne for zinc (Zn) &

~US$305/tonne for lead (Pb) . Lead sales volume for the quarter stood at 23500 tonnes

(lower by 24% QoQ and 22% YoY), while silver sales volumes stood at 78500 kg (lower by

31% YoY and 14% QoQ) . EBITDA came in at Rs.1823.8 crore and inline to our estimate of

Rs. 1829.6 crore. Subsequently, net profit stood at Rs. 1722.7 crore . Being an integrated

& dominant player in the domestic industry with low cost of production, the company is

poised to benefit in the long run. We reaffirm our positive stance on HZL and assign a

BUY rating to the stock with a target price of Rs. 148/-.

Nifty

Target Price

BUY

Market Data

Average Daily Volume (Nos.)

BSE Code

HINDZINCNSE Symbol

52wk Range H/L

Mkt Capital (Rs Crores)

143/94

Upside


Result Update


"BUY"21st Jan' 14


0

50

100

150

200

250

300

350

400

450

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

Jul-0

9

Jan-

10

Jul-1

0

Jan-

11

Jul-1

1

Jan-

12

Jul-1

2

Jan-

13

Jul-1

3

Jan-

14

Lower Production Guideline LME Price/Ton

From the Management Corner :

Outlook and valuation: LME Price/Ton

LME Price/Ton

FY11 FY12 FY13 FY14E

9912 11405 12700 13577

979 1543 2032 1787

10891 12948 14732 15364

1023 1228 1070 1291

492 568 696 707

4417 5336 6218 6484

5496 6069 6482 7093

475 611 647 718

19 14 29 37

1059 1419 921 1097

4900 5526 6899 6967

22.0 21.0 21.0 19.0

22





PAT

ROE%

Hindustan Zinc LTD.

P/L PERFORMANCE

Net Revenue from Operation

Other Income

Total Income

Expenditure

EBITDA

Interest Cost

Net tax expense / (benefit)

Depriciation

HZL has marginally downward revised its mined metal production guidance for FY14

from 950,000 tonnes earlier to 900,000 tonnes. This reflects slower-than-expected

ramp up of underground mining projects and some changes in mining sequence

wherein preference has been given to primary mine development during this period.

With a cash-rich balance sheet and strong visibility over production growth of zinc, lead

and silver over FY2013-15, we are positive on HZL.The Rampura Agucha underground

mine project is operational via ramps (tunnel driven downward from the surface) and

commercial production already ramp up in Q3 and will in Q4 of FY14 . The Kayad mine

project will also commence commercial production in the current fiscal year. A cash-rich

balance sheet, low cost of production and inexpensive valuations make HZL an

attractive bet at the current price levels.HZL’s integrated business model ensures steady

cash flow, which reiterates our positive stance on the company.we Valuing the stock at

this level, we recommend BUY rating on HZL with a target price of Rs.143-148 for FY14.

Volatile Desel Price and high Sulphuric acid price affecting the company,s PAT

adversly.Company is tracking on 95% capacity utilization.Captive plants enjoy the lower

Tax rate and company enjoys zero tax from tax free geographycal areas. Smelting Plants

are improvised and management is confident that the smelting plants will maintain

their stance for the coming quarters also.

Power, fuel & water

Repairs


0200400600800

10001200140016001800

Jan

-13

Fe

b-1

3

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-

13

Au

g-1

3

Se

p-1

3

Oct

-13

No

v-1

3

De

c-1

3

Silver(rs/ounce)

020000400006000080000

100000120000140000160000

Jan

-13

Fe

b-1

3

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-

13

Au

g-1

3

Se

p-1

3

Oct

-13

No

v-1

3

De

c-1

3

Lead

90000

95000

100000

105000

110000

115000

120000

125000

Jan

-13

Fe

b-1

3

Ma

r-1

3

Ap

r-1

3

Ma

y-1

3

Jun

-13

Jul-

13

Au

g-1

3

Se

p-1

3

Oct

-13

No

v-1

3

De

c-1

3

Zinc

FY10 FY11 FY12 FY13

423 845 845 845

17701 21688 26036 31431

18124 22533 26881 32276

0 0 0 0

60 0 0 0

0 0 0 0

478 475 410 484

340 567 504 825

20238 25053 29485 35465

109 109 47 10

6071 7145 8466 8474

1113 875 445 1082

361 594 876 1898

452 762 798 1111

152 209 332 403

928 5633 5255 6942

96 158 233 373

20238 25053 29485 35465

FY10 FY11 FY12 FY13

3.2 2.2 2.1 1.7

95.6 11.6 13.1 16.3

1.9 2.1 2.9 3.2

6.0 4.8 3.6 3.8

0.6 0.8 0.7 0.9

FY10 FY11 FY12 FY13

4001 4483 4553 4935

77 -212 -61 -183

4077 4272 4492 4752

-3881 -3658 -3499 -3234

-187 -363 -1242 -1257

8 250 -248 262

23

Cash from Operation

Changes In Working Capital

Net Cash From Operation


Trading At :

Cash From Investment

Cash from Finance

Net Cash Flow during year


ZinC Productions:


EBIDTA & Margin :

RATIOS

CASH FLOWS


P/B

EPS

Debtor to Turnover%

Creditors to Turnover%

Inventories to Turnover%

Hindustan Zinc LTD.

Long-term provisions

B/S PERFORMANCE

Share capital

Short-term loans and advances

Total Assets

Long-term loans and advances

Inventories

Trade receivables

Cash and bank balances

Capital work-in-progress

Reserve & Surplus

Total equity

Intangibles

Tangible assets

Long-term borrowings

Short-term borrowings

Trade payables

Short-term provisions

Total liabilities


0

20

40

60

80

100

120

140

160

0

1000

2000

3000

4000

5000

6000

7000 NIFTY HINDZINC

43 43 41

49

42

49 47

0

10

20

30

40

50

60

0

500

1000

1500

2000

2500EBIDTA

EBIDTA %

0

50000

100000

150000

200000

250000

Zinc Production (tons)

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

0

500

1000

1500

2000

2500

3000

3500

4000

4500 NetRevenuefromOperation

RevenueGrowth

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email: [email protected],

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