Click to edit the title text format - Anand Rathi Group · 2016-03-03 · 1) Sectorally well...

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Private & Confidential Private & Confidential

2nd Mar, 2016


Private & Confidential

Suitability

Suitable for Investors looking for….

Investment horizon over three years.

Having high risk appetite.

Can withstand high volatility and price fluctuation on investments.

Higher return with assumed risk within equity asset class.

Average liquidity of investments.



Business Model 1) Market Share 2) Leadership 3) Niche Business Model

Consistency 1) Sales / EBIDTA / PAT growth (3-5 years) 2) Stable or improving margins (3-5 years)

Visibility 1) Earnings outlook over next 3 years 2) Predictable business model

Corporate Governance 1) Management back ground 2) Accounting & Corporate policies

Sector opportunity 1) Sector potential to grow 2) Cyclical / Non

Cyclical 3) Favoring Policies

Diversification 1) Sectorally well diversified basket of 15 stocks 2) 40:60 Large cap and Midcap companies

Exposure 1) Single Stock exposure < 10% 2) Single Sector exposure < 30%

Active Monitoring 1) Tracking news /policy /Quarter Performance 2) Rebalancing recommended list

Stock Selection

Allocation

Investment Philosophy



Why Mid Cap

The table shows outperformance of the Mid Cap and Small Cap Index over the Sensex Index during the Bull Period.

Outperformance of the Mid Cap happens because of better earnings growth in the bull phase.

The P/E for Mid cap and Small Caps also expands as earnings growth is superior v/s Sensex earnings growth.

Going forward Mid Cap and Small Cap are expected to outperform the Large Cap, however one should keep in mind the risk associated with it as we see the higher volatility in it. Therefore we emphasis on stringent stock selection strategy to create alpha over the benchmark.

Today’s Small Cap

Small Cap

are tomorrows Mid cap

Mid Cap

Which may eventually

become Large Cap

Large Cap

Apr-03 Dec-07 CAGR Volatility

Sensex 2960 20287 51.0% 22.0%

BSE Mid Cap 952 9789 64.6% 25.0%

BSE Small Cap 893 13348 78.4% 31.6%

Dec-07 Dec-11 CAGR Volatility

Sensex 20287 15455 -6.6% 31.2%

BSE Mid Cap 9789 5135 -14.9% 40.5%

BSE Small Cap 13348 5550 -19.7% 45.4%

Dec-11 Dec-15 CAGR Volatility

Sensex 15455 26118 14.0% 14.3%

BSE Mid Cap 5135 11143 21.4% 19.2%

BSE Small Cap 5550 11837 20.8% 21.8%

Bull Period

Bear Period

Current Bull period



Why Mid Cap

The above graph represents the P/e difference between the CNXMCAP P/e & NIFTY P/e over the last 12 years. The MidCaps had a great rally when the diff. in P/e reached 6 from Minus 7.7. After Jan 08 crash, this difference has largely remained in the negative territory. We have utilize this as an opportunity.

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Difference between NIFTY MIDCAP 100 P/E and NIFTY 50 P/E



Recommended Aggressive Basket

CMP as on 29th Feb 2016

Inception 18th

Feb 2015

Aggressive

BasketNIFTY 50

NIFTY

MIDCAP 100

28/02/2015 3.1% 1.1% 0.3%

31/03/2015 -3.1% -4.6% -0.9%

30/04/2015 -3.5% -3.6% -2.4%

29/05/2015 5.3% 3.1% 3.9%

30/06/2015 4.9% -0.8% -1.3%

31/07/2015 8.7% 2.0% 5.5%

31/08/2015 -9.6% -6.6% -4.9%

30/09/2015 -1.8% -0.3% -0.6%

30/10/2015 4.3% 1.5% 2.0%

30/11/2015 2.6% -1.6% 0.1%

31/12/2015 1.7% 0.1% 1.1%

29/01/2016 -5.9% -4.8% -6.9%

29/02/2016 -18.9% -7.6% -7.3%

Since Inception -14.6% -20.7% -11.6%

Monthly Returns

Note: Returns shown

are pre cost, including

dividends and adjusted

for gain/loss on the

stock replacement

done.

Symbol Sector Cost CMP % Gain Loss % Holding Mkt Cap Market Cap % Allocation

TATAMOTORS AUTOMOBILES 341 300 -12.2% 6.6% 91524 Large Cap 36.9%

IGARASHI AUTOMOBILES 317 380 19.9% 9.3% 1544 Mid Cap 63.1%

LT CAPITAL GOODS 1650 1076 -34.8% 5.0% 105984

PRAJIND CAPITAL GOODS 64 72 12.1% 8.7% 1408 Sector % Allocation

WABAG CAPITAL GOODS 813 449 -44.7% 4.3% 2415 AUTOMOBILES 15.9%

SBIN FINANCIALS 184 159 -13.9% 4.9% 140390 CAPITAL GOODS 18.0%

ICICIBANK FINANCIALS 338 190 -43.8% 4.7% 127999 FINANCIALS 16.7%

LICHSGFIN FINANCIALS 462 422 -8.7% 7.1% 22801 OIL & GAS 8.6%

IOC OIL & GAS 427 368 -13.8% 8.6% 94338 PHARMA 7.6%

SYNGENE PHARMA 383 396 3.2% 7.6% 7880 POWER 10.1%

APARINDS POWER 343 416 21.3% 10.1% 1731 TECHNOLOGY 6.6%

NIITTECH TECHNOLOGY 446 420 -5.9% 6.6% 2839 TEXTILES 12.3%

RSWM TEXTILES 305 271 -11.1% 5.9% 634 TRAVEL 4.2%

ARVIND TEXTILES 307 239 -22.3% 6.5% 6816

COX&KINGS TRAVEL 223 147 -33.8% 4.2% 2730

Total 480419 420559 100% Total 100.0%



Tata Motors Ltd.

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NIFTY 50 Tata Motors Ltd.

SECTOR

NSE Symbol BSE Code Bloomberg

TATAMOTORS 500570 TTMT IN

CMP Market Cap (cr) Equity (cr)

317 91524 577

EPS (TTM) BV FV

26.2 292.1 2

P/E P/BV Div Yield

12.1 1.1 0.00

52 Week H 52 Week L Avg Vol ('000)

585.8 265.8 2371.3

Group

Promoter 33.01

Others 66.99

AUTOMOBILES

Share Holding Pattern

Tata Motors Ltd.

FY 13 FY 14 FY 15 FY 16 E FY 17 E

Net Sales 188,793 232,834 262,796 267,021 309,221

EBIDTA 24,596 33,224 39,239 36,911 45,564

EBIDTA Margin 13.0% 14.3% 14.9% 13.8% 14.7%

PAT 9,871 14,104 14,060 11,347 16,465

PAT Margin 5.2% 6.1% 5.4% 4.2% 5.3%

EPS 30.7 43.0 43.0 33.7 48.4

Source: Anand Rathi Research, Bloomberg, Ace equity

Figures INR crore

Tata Motors Limited is a leading global automobile manufacturer with a portfolio that covers a wide range of cars, sports vehicles, buses, trucks and defence vehicles. Company now sell vehicles in more than 50 countries. It has built a strong global network of subsidiaries and associate companies, including Jaguar Land Rover in UK and Tata Daewoo in south korea.

In Q3FY16 consolidated revenues inched up 3% YoY to Rs 722bn while PAT slid 12% to Rs 34.6bn. JLR’s EBITDA margins rose 223bps QoQ (-422bps YoY) to 14.4%, as operating leverage kicked in due to volume growth of 24% QoQ. The company reported a profit of £ 22mn in the China JV during Q3FY16. On Standalone it reported net losses of Rs 2bn, with margins at sliding 5.7%. We continue to believe a turnaround in the India business is imminent as the CV cycle recovers. Company has entered in a phase where YoY volume growth at JLR is accelerating as a combination of both a strong product cycle and a low base, the volume growth likely to be more than 20% in 2HFY16 and FY17.

It is expected to witness better traction from North America and Europe with ongoing healthy volume growth supported by new launches at regular interval which will help in gaining market share across the geographies..Furthermore, an improving local economy and new passenger car launches will likely drive growth in India.

CMP 317



Igarashi Motors India Ltd.

SECTOR


IGARASHI 517380 IGM IN


504 1544 31

EPS (TTM) BV FV

20.3 96.4 10

P/E P/BV Div Yield

24.8 5.2 0.88


773.7 350 25.1

Group

Promoter 85.85

Others 14.15

AUTOMOBILES



FY 13 FY 14 FY 15 FY 16 E FY 17 E

Net Sales 291 361 385 440 515

EBIDTA 54 69 77 99 118

EBIDTA Margin 18.6% 19.1% 19.9% 22.5% 22.8%

PAT 21 46 49 58 70

PAT Margin 7.3% 12.8% 12.7% 13.1% 13.7%

EPS 10.5 15.2 16.0 18.8 23.0


Figures INR crore

Igarashi Motors India Ltd (IMIL) manufacture electric DC motors for automobiles. Globally 70 million cars are built; each car will have about 20(conservatively) small electric motors that make the electric motors market a 1.5 billion in numbers and with developing markets expected to build more cars going forward it is expected to grow to 100 million vehicles per year globally.

In Q3FY16 revenue was up by 3.4% YoY at 105.3 cr, EBIDTA up by 4.7% at 24.4 cr, with EBIDTA margin improving to 23.2% as against 22.92% YoY.

IMIL is working with global auto ancillary suppliers. Bosch, Continental, Delphi, Cooper, Magneti Marelli, Pierburg, Visteon are some major customers. Company’s products are distributed widely and presently Europe USA contributes 85% of our revenues. Company is planning to set up distribution network between Europe, America, India and Far East Markets.

IMIL has getting dual benefit against competitors as currency is now in favor of exporters and cheap labour cost also providing labour cost arbitrage to company.

The key growth drivers for IML are: 1) Content per car increasing, 2) Fuel efficiency as well as emission reduction mandates for automakers worldwide and 3) Revenue synergies with new Japanese parent IEW.

CMP 504

80100120140160180200220240260

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NIFTY MIDCAP 100




Larsen & Toubro Ltd.

SECTOR


LT 500510 LT IN


1138 105984 186

EPS (TTM) BV FV

50.5 464.4 2

P/E P/BV Div Yield

22.5 2.5 1.43


1893.8 1016.05 675.7

Group

Promoter 0

Others 100

CAPITAL GOODS



FY 13 FY 14 FY 15 FY 16 E FY 17 E

Net Sales 74,498 85,128 92,005 101,072 113,894

EBIDTA 8,884 9,929 10,755 11,956 14,240

EBIDTA Margin 11.9% 11.7% 11.7% 11.8% 12.5%

PAT 5,252 4,875 4,934 4,408 5,442

PAT Margin 7.1% 5.7% 5.4% 4.4% 4.8%

EPS 56.4 52.9 51.3 47.1 58.2


Figures INR crore

Larsen and Toubro (LT) is India's largest E&C Company. Larsen has made significant investments in defence, shipbuilding and power, over the last 4-5 years. Larsen has also expanded into new geographies like Saudi Arabia and Qatar. Most of these businesses are highly capital intensive, which shall fetch revenues in the coming years.

In Q3FY16 Consolidated operational performance of L&T was lower than expectation impacted by weak execution under the heavy engineering (27% drop YoY) and metallurgical (17% decline YoY), however supported by overseas project execution, power segment grew 21% and infrastructure posted 37% increase in revenue.

The company has a pipeline of Rs 2 lakh crore for 4QFY16. Company expects to reach order inflow equivalent to last year full year numbers. This implies a huge Rs 60,000 crs plus of order inflow for 4QFY16. Orders from defence sector would start trickling down from FY17 and revenues for the same would be booked from FY18.

LTT continues to be the best play in the Indian infrastructure space, given its strong business model, diverse skill sets, strong execution capabilities and relatively healthy/large balance sheet.

CMP 1138

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NIFTY 50




Praj Industries Ltd.

SECTOR


PRAJIND 522205 PRJ IN


79 1408 36

EPS (TTM) BV FV

4.0 37.2 2

P/E P/BV Div Yield

19.5 2.1 2.05


117 57.1 420.8

Group

Promoter 33.9

Others 66.1

CAPITAL GOODS



FY 13 FY 14 FY 15 FY 16 E FY 17 E

Net Sales 949 932 1,012 1,058 1,229

EBIDTA 85 78 84 111 138

EBIDTA Margin 8.9% 8.4% 8.3% 10.5% 11.3%

PAT 72 57 78 69 91

PAT Margin 7.5% 6.1% 7.7% 6.5% 7.4%

EPS 3.8 3.1 4.3 3.8 5.1


Figures INR crore

Praj offers innovative technology solutions and project implementation and management services to the bio‐ethanol industry. It is also involved in two major growth platforms—one focusing on industrial solutions for water & waste water management and critical process equipment & systems and the other on bio‐based products. It has presence in almost 60 countries with 600 references in this business.

Q3FY16 revenue up 32% Y-o-Y, EBIDTA was up 91% with margins improving by 435 bps to 14.2%. PAT for the quarter had double to 25.51 cr

Company’s 9M FY16 order intake was at 832 cr. The order intake domestic market consist of 76% while exports 24%. Segment wise contribution of order is, emerging business – 25%, ethanol – 66% and brewery – 9%. The outstanding order book is quite healthy for the company at 11.12 bn .

Company to benefit from the India ethanol blending program, 4.2% blending achieved against targeted 5%. Positive environment for ethanol with firming up of sugar price and soft loans to improve health of sugar mills.

During the year, company entered into strategic understanding with Gevo to access additional 2nd gen technology (Isobutanol) wise potential in water treatment of mid size plant is 25-45crs.

CMP 79

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NIFTY MIDCAP 100




VA Tech Wabag Ltd.

SECTOR


WABAG 533269 VATW IN


443 2415 11

EPS (TTM) BV FV

17.3 173.5 2

P/E P/BV Div Yield

25.7 2.6 0.90


972.5 408.8 23.3

Group

Promoter 28.95

Others 71.05

CAPITAL GOODS


VA Tech Wabag Ltd.

FY 13 FY 14 FY 15 FY 16 E FY 17 E

Net Sales 1,619 2,239 2,435 2,669 2,954

EBIDTA 154 189 209 216 251

EBIDTA Margin 9.5% 8.4% 8.6% 8.1% 8.5%

PAT 90 114 110 111 144

PAT Margin 5.5% 5.1% 4.5% 4.2% 4.9%

EPS 17.0 21.3 20.3 20.4 26.4


Figures INR crore

VA Tech Wabag Limited (WABAG) is an Indian Multinational with European parentage offering world class services into high growth water markets with a respectable market share.

The company also offers leading European technologies in emerging markets at viable prices and with evolving global mercantilism and virtual water trade, global water equipment market is more than half trillion dollar opportunity already.

In Q3FY16 consolidated revenue grew marginally by 1.8% YoY to Rs 6.3 bn. Its standalone revenues grew 26.3% YoY to Rs 3.7 bn. India business continues to perform better due to increased focus on projects execution while its overseas business grew marginally due to factors like currency volatility, Nepal project and many other projects at engineering completion stage. Consolidated EBIDTA margin was up at 7.3% against 6.8% YoY.

The outstanding order book (excluding framework orders) stood at 64.1 bnas against Rs 52.8 bn in same quarter previous year, a growth of ~21%. Its framework contracts stood at Rs 15.4 bn during the current quarter.

We believe Wabag being a leader in its segment stands to benefit from various water based projects like Namami Gange, Swacch Bharat & Smart Cities which are currently pegged in upwards of Rs 2,000 billion.

CMP 443

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NIFTY MIDCAP 100

VA Tech Wabag Ltd.



Syngene International Ltd.

SECTOR


SYNGENE 539268 SYNG IN


394 7880 200

EPS (TTM) BV FV

8.8 50.3 10

P/E P/BV Div Yield

45.0 7.8 1.45


436 295 63.3

Group

Promoter 74.55

Others 25.45

PHARMA



FY 13 FY 14 FY 15 FY 16 E FY 17 E

Net Sales 550 700 860 1,100 1,409

EBIDTA 164 214 281 348 445

EBIDTA Margin 29.8% 30.5% 32.7% 31.7% 31.6%

PAT 98 134 175 211 274

PAT Margin 17.7% 19.1% 20.4% 19.2% 19.5%

EPS 5.3 7.2 8.8 10.6 13.8


Figures INR crore

Pharmaceutical companies have been facing stiff issues relating to patent cliff and rising R&D costs. There is a large opportunity awaiting the global CRO and CRAMS sectors where companies like Syngene, an integrated end–to-end discovery & development service provider for novel molecular entities (NMEs) across the range of industrial sectors likely to benefit the most.

In Q3FY16 revenue grew by 23% y-o-y to Rs. 275 cr. EBITDA grew by 22% at Rs. 88.7 cr y-o-y, with margins maintained at 32.2%. PAT grew by 31% at Rs. 58.8 cr y-o-y on account of better EBITDA growth coupled with lower finance cost. The company cleared a USFDA audit for its clinical development facility.

Syngene client base has increased from 103 in FY12 to 221 in FY15 across sectors. It enjoys multiyear, multi disciplinary partnership with some of the most respected research focused companies like Bristol-Myers Squibb Co., Abbott laboratories (Singapore) Pte. Ltd. and Baxter International Inc., among others.

Company to benefit from (1) Large and growing addressable market 2) Flexible Business Models 3)Customer engagement with dedicated center model and tailored service offering 4) Moving from CRO to CRAMS with commercial manufacturing 5) World Class Infrastructure and Qualified Pool of Scientists 6) Attractive Blue Chip Customer Base..

CMP 394

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NIFTY MIDCAP 100




State Bank Of India

SECTOR


SBIN 500112 SBIN IN


181 140390 776

EPS (TTM) BV FV

20.2 234.3 1

P/E P/BV Div Yield

9.0 0.8 1.94


315 148.25 3966.1

Group

Promoter 61.37

Others 38.63

FINANCIALS


The banking sector has been under pressure due to change in base rate methodology and margin impact, asset quality trends, efficacy of 5/25 refinancing and continued sluggishness in credit growth etc.

SBIN’s 3QFY16 PAT was INR11.2b led by weak core PPoP growth (-6% YoY) and high credit costs (2.2% v/s 1.2% 2Q) – 56% related to RBI asset quality review (AQR). Led by AQR, NNPA increased ~75bp QoQ Gross slippages were INR207b (6.7% of loans, annualized) v/s INR58.8b (1.9%) in 2QFY16.

Management expects similar level of stress to persist in 4Q. Fresh restructured loans were INR13b (0.4%) and 5:25 refinancing during 3Q was INR5.1b (v/s INR39.6b in 2Q). SBIN invoked SDR on 17 accounts amounting to ~INR165b. Reported NIM were down 26bp QoQ (2.77%) partly led by higher slippages (~10bp impact) and base rate cut (35bp cut in Oct-15). Overall NII de-grew by 1% YoY (-4.5% QoQ). Fee growth continues to remain moderate (+7% YoY).

We belive most of the negative have been already factored in the price after a recent correction . Gradual recovery in credit growth and in asset quality to drive the modest improvement in Core sector growth. Perception of default risk would persist untill asset quality consistently improves for the sector.

CMP 181

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NIFTY 50

State Bank Of India

State Bank Of India (Standalone)

FY 13 FY 14 FY 15 FY 16 E FY 17 E

NET INT Income 44,293 49,282 55,015 55,796 60,670

TOTAL Income 60,366 67,835 77,591 82,277 90,710

Operating EXP 29,284 35,726 38,678 12,627 13,992

PAT 14,105 10,891 13,102 13,118 15,803

NIM % 3.3% 3.2% 3.2% 2.70% 2.60%

EPS 21.0 15.7 17.6 16.9 20.4

BV 177 188 206 223 243


Figures INR crore



ICICI Bank

SECTOR


ICICIBANK 532174 ICICIBC IN


220 127999 1163

EPS (TTM) BV FV

20.6 154.1 2

P/E P/BV Div Yield

10.7 1.4 2.27


362 180.75 3961.3

Group

Promoter 0

Others 100

FINANCIALS


ICICI Bank reported a 33% QoQ rise in gross NPLs for 3Q FY16, largely due to the RBI’s asset quality review undertaken during the quarter (around two-thirds of the fresh NPLs were on account of the review). As part of the review, the bank had to treat a large steel account as an NPL, which led to the rise in NPLs. The stock has de-rated significantly on the back of this .We believe that the bank should be able to absorb the provisioning on the legacy project loan exposure within ~100bp credit costs over the next 8-10 quarters.

ICICI has de-risked the front book significantly; the quality of the retail book has been resilient as the bank has focused on secured retail loans in the last three to four years and has significantly cut down on risky retail loans.

Focus on transactional services within corporate banking and on better leverage of its retail customer base to drive fee-income growth. Even with increasing credit costs, we foresee ROEs rising continuously through to FY18.

We believe the bank’s strong capital base is a significant advantage over competitors (especially PSUs), as they may have to forsake growth to preserve capital. Also substantial branch expansion over the past 4 to 5 years and strong capital position has positioned it to grow better than the average industry growth, as and when business environment turns conducive.

CMP 220

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NIFTY 50 ICICI Bank Ltd.

ICICI Bank Ltd. (Standalone)

FY 13 FY 14 FY 15 FY 16 E FY 17 E

NET INT Income 13,866 16,476 19,040 21,275 23,859

TOTAL Income 22,212 26,903 31,216 36,847 37,567

Operating EXP 9,013 10,309 11,496 12,913 14,729

PAT 8,326 9,811 11,175 12,494 13,425

NIM % 3.0% 3.2% 3.3% 3.30% 3.30%

EPS 14.4 16.9 19.0 21.5 23.1

BV 115 126 138 154 170


Figures INR crore



LIC Housing Finance Ltd.

SECTOR


LICHSGFIN 500253 LICHF IN


452 22801 101

EPS (TTM) BV FV

31.5 179.0 2

P/E P/BV Div Yield

14.3 2.5 1.11


523.95 388.65 335.8

Group

Promoter 40.31

Others 59.69

FINANCIALS



FY 13 FY 14 FY 15 FY 16 E FY 17 E

NET INT Income 1,535 1,916 2,237 3,001 3,612

TOTAL Income 1,651 2,160 2,489 3,230 3,886

Operating EXP 282 313 379 459 539

PAT 1,023 1,317 1,386 1,715 2,144

NIM % 2.2% 2.3% 2.3% 2.3% 2.3%

EPS 20.3 26.1 27.5 34.0 42.5

BV 130 150 155 182 216


Figures INR crore

LIC Housing Finance (LICHF) is a proxy player of India Housing Sector Growth with a consistent performer on all fronts and operates on a distribution network business model.

Apart from wide marketing network comprising Direct Selling Agents (DSAs), Home Loan Agents (HLAs) and Customer Relationship Associates (CRAs), a wholly owned subsidiary LICHF Financial Services (LICHFLFS) also distributes the company’s product.

In Q3FY16 LICHF reported 22% YoY growth in net earnings. NII growth stood at 36% YoY adversely impacted by rising trend in prepayments. Incremental spread however improved further to 2.1% vs portfolio spread of 1.57%. Asset quality reported stable trends with Net NPLs increasing by modest 3% QoQ thus leading to 164bp QoQ decline in coverage ratio to 45%.

Going forward, the key to margin improvement is (a) higher incremental spreads (b) Replacement of high cost bank borrowing with lower cost NCDs and (c) increase in the share of LAP and corporate loan portfolio.

Increase in demand in rural expected backed by housing for all scheme of government. Its end user segment demand to pick up further.

CMP 452

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Feb

-16

NIFTY 50




Indian Oil Corporation Ltd

SECTOR


IOC 530965 IOCL IN


389 94338 2428

EPS (TTM) BV FV

63.6 315.6 10

P/E P/BV Div Yield

6.1 1.2 1.70


465.9 323.4 396.2

Group

Promoter 58.57

Others 41.43

OIL & GAS


Indian Oil Corporation Ltd.

FY 13 FY 14 FY 15 FY 16 E FY 17 E

Net Sales 462,084 488,793 450,079 382,834 419,371

EBIDTA 13,773 17,039 9,183 23,214 25,560

EBIDTA Margin 3.0% 3.5% 2.0% 6.1% 6.1%

PAT 3,627 6,967 4,872 11,062 12,353

PAT Margin 0.8% 1.4% 1.1% 2.9% 2.9%

EPS 18.3 29.2 20.2 45.4 50.7


Figures INR crore

IOC has the most diversified business model, while its annuity pipeline business contributes ~20% to EBITDA, ~8% comes from the growing petchem and ~50% from the buzzing marketing business. With diesel accounting for ~50% of volumes, IOC is well placed to gain from marketing margin expansion.

IOC bottom line would get a boost of 20-30% after its 15 million tonne per annum (mtpa) greenfield project in Odisha is fully commissioned by FY18. This (Paradip) refinery would contribute nearly 20-30% to the company’s profit and would offer one of the best refiining margins, hgher by $6-7 a barrel over the average refining margin $10-12. The refinery puts IOC in advantage as it is is equipped to produce low emission BS IV compliant motor fuel , as country goes for stricter regulation on pollution front. It can also produce BS VI compliant automobile fuel with the addition of few equipment putting on advantageous situation with government setting deadline for switching over BS VI norms by 2020.

With the fall in Crude prices, the GRM’s are likley to improve. There could be inventory loss due to fall in crude , however once the crude stabilizes and starts to reverse we could see the improvement in profitability of the company.

CMP 389

80

90

100

110

120

130

140

150

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec

-15

Jan

-16

Feb

-16

NIFTY 50

Indian Oil Corporation Ltd.



Apar Industries Ltd.

SECTOR


APARINDS 532259 APR IN


450 1731 38

EPS (TTM) BV FV

33.5 190.6 10

P/E P/BV Div Yield

13.4 2.4 0.78


541.95 321 16.9

Group

Promoter 58.21

Others 41.79

POWER



FY 13 FY 14 FY 15 FY 16 E FY 17 E

Net Sales 4,651 4,632 5,122 5,469 6,063

EBIDTA 318 307 264 281 402

EBIDTA Margin 6.8% 6.6% 5.1% 5.1% 6.6%

PAT 110 90 49 88 169

PAT Margin 2.4% 1.9% 1.0% 1.6% 2.8%

EPS 28.5 23.3 12.9 22.8 49.9


Figures INR crore

Transformer Oil: We believe new government is serious as far as power sector and going ahead atleast three-four years we can witness tremendous growth from transformer oil segments because of replacement and new additional demand. Conductor segment: The Company pioneered in aluminum alloy rod and conductors in India that are used in overhead power transmission and distribution and at present commands a market share of 23% in India.

In Q3FY16 revenue declined by 9% at Rs. 1186cr. The conductor segment & oil segment posted 17% & 13% revenue decline on y-o-y basis affected by lower commodity prices. However, cable segment posted strong revenue growth of 47% y-o-y basis. Consolidated EBITDA grew 45% y-o-y to Rs82 cr, driven by improved profitability in speciality oils and cables segment. EBITDA margin increased by 260bps y-o-y to 7%. Adjusting for a one-time gain of Rs 43 cr on sale of treasury shares, consolidated PAT stood at Rs 24.9 cr

Key Triggers: 1) Increased activity in domestic conductor tendering seen, will improve H2FY16-17. 2) The government’s initiatives like the UDAY scheme to turnaround and revive the power discoms and an improvement in power T&D sector 3) Substantial increase in capacity addition of Solar & Wind Power expected which will boost demand for Elastomeric- E beam cables.

CMP 450

8090

100110120130140150160170

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec

-15

Jan

-16

Feb

-16

NIFTY MIDCAP 100




NIIT Technologies Ltd.

SECTOR


NIITTECH 532541 NITEC IN


464 2839 61

EPS (TTM) BV FV

26.6 191.6 10

P/E P/BV Div Yield

17.4 2.4 2.05


631 325.55 73.1

Group

Promoter 30.83

Others 69.17

TECHNOLOGY



FY 13 FY 14 FY 15 FY 16 E FY 17 E

Net Sales 2,021 2,305 2,372 5,469 6,063

EBIDTA 333 354 336 281 402

EBIDTA Margin 16.5% 15.4% 14.2% 5.1% 6.6%

PAT 218 238 122 88 169

PAT Margin 10.8% 10.3% 5.1% 1.6% 2.8%

EPS 35.4 38.0 18.7 22.8 49.9


Figures INR crore

NIIT Technologies is a global IT solutions organization with over 9000 professionals addressing the requirements of clients across the Americas, Europe, Middle East, Asia and Australia. The Company has built a robust portfolio of marquee customers in key verticals such as Travel and Transportation, Banking and Financial Services, Insurance, Manufacturing, Media and the Government.

In Q3FY16 it posted 1.2% qoq decline in US$ revenue [likely constant currency (CC) decline of 0.4-0.5%]. EBIT margin (ex-forex) was up 59bp qoq. 3Q order intake of US$123m (much higher than the US$80m in 2Q) was the highest in the past six quarters, led by a large deal win worth US$34m from UK-based Ofcom. It also won five digital deals (digital contributed 15% of total revenue in 3Q). It is still chasing many deals worth >US$20m each and the renewal of deals signed earlier. Hence, we expect intake to be healthy in 4Q.

Post the induction of Mr. Sudhir Chaturvedi, NIIT Tech has restructured its business and will focus on a four-point agenda to drive future growth. The four key points are: 1) scaling & growing US business 2) carved out IMS as a separate unit for large deal wins 3) continued focus on maintaining leadership position in Travel and Transportation vertical and 4) greater emphasis on digital services.

CMP 464

80

100

120

140

160

180

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec

-15

Jan

-16

Feb

-16

NIFTY MIDCAP 100




Arvind Ltd.

SECTOR


ARVIND 500101 ARVND IN


264 6816 258

EPS (TTM) BV FV

11.6 99.8 10

P/E P/BV Div Yield

22.7 2.6 0.97


365.7 216.3 264.1

Group

Promoter 43.78

Others 56.22

TEXTILES


Arvind Ltd.

FY 13 FY 14 FY 15 FY 16 E FY 17 E

Net Sales 5,388 6,948 7,815 8,936 10,300

EBIDTA 687 934 1,004 1,214 1,411

EBIDTA Margin 12.8% 13.4% 12.9% 13.6% 13.7%

PAT 248 353 338 458 558

PAT Margin 4.6% 5.1% 4.3% 5.1% 5.4%

EPS 9.6 13.7 13.2 17.9 21.8


Figures INR crore

Arvind offers a good mix of export and domestic consumption growth. Its textiles business will benefit from a recovery in the developed markets and improving competitiveness, while its brands and expanding retail network will benefit from secular growth in India’s organized apparel market.

In Q3FY16 Arvind has reported a modest growth in revenue at 4%, EBIDTA was lower by 3% led by fall in margin by 86bps to 13.02%. PAT was lower by 6%. Textile growth was flat due to lower denim volumes, However, Brand and Retail has registered a growth of 12%

The management has guided for 4QFY16 blended revenue growth of 9-10%, led by 28-29% growth in brands and retail business and 2-3% growth in textiles business. They expect textiles to grow by 7-8% and brands and retail to grow by 18-20% in FY17. Brands in 4-5 years should garner 16-17% margins with specialty retail garnering 10-12%.

Brands and retail on secular growth Arvind’s leading position in menswear and its track record of growing licensed brands like Arrow and Tommy Hilfiger etc. will enable it to exploit opportunities in the branded apparel space.

With focus on more value-accretive brands and retail business by change in revenue mix, capex intensity in the business will reduce going forward. This will further aide in improvement in margins .

CMP 264

80859095

100105110115120125

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec

-15

Jan

-16

Feb

-16

NIFTY MIDCAP 100

Arvind Ltd.



RSWM Ltd.

SECTOR


RSWM 500350 RJS IN


274 634 23

EPS (TTM) BV FV

42.9 218.9 10

P/E P/BV Div Yield

6.4 1.3 3.65


411.05 206 21.7

Group

Promoter 51.44

Others 48.56

TEXTILES


RSWM Ltd.

FY 13 FY 14 FY 15 FY 16 E FY 17 E

Net Sales 2,656 3,131 3,003 3,214 3,535

EBIDTA 332 386 346 391 453

EBIDTA Margin 12.5% 12.3% 11.5% 12.2% 12.8%

PAT 73 102 85 120 146

PAT Margin 2.8% 3.3% 2.8% 3.7% 4.1%

EPS 31.0 43.5 36.7 51.8 63.0


Figures INR crore

RSWM specializes in manufacturing of quality yarn with focus on making value - added blended variants. Among India's largest polyester yarn manufactures, making it a preferred partner of downstream users. Ability to customize blends, shades & batch size.

It has 11 states - of - the- art manufacturing facilities in Rajasthan & TN. It markets its product within India (67%) & globally (33%) in 78 countries. One of its leading brand `Mayur Suitings' enjoys high brand equity in its target segment in the country. Has strong clientele base includes names like Raymonds, Welspun India, Siyarams', Raid & Taylor, etc.

In Q3 FY16, total income grew marginally by 2% at Rs. 756 cr y-o-y basis on account of uptick seen in yarn division. at Rs. 665 cr, Fabric division remained Flat at 115 cr. EBITDA grew by 4% at Rs. 90 cr, however PAT grew by 23.5% at Rs. 21 cr on y-o-y basis. EBITDAM and PATM expanded by 30 and 50 basis points at 12% and 2.8% respectively. Margins improved mainly due to decline in cost of materials by 5.6%.

In last 3 years company added 67032 spindles, 960 rotors & 50 looms. Invested Rs. 443 crs in last 3years and now they will consolidate operation over 18-24m & repay Rs. 375cr debt to strength B/S. Strong balance sheet makes it possible to mobilize adequate funds at reasonable cost.

CMP 274

80

100

120

140

160

180

200

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec

-15

Jan

-16

Feb

-16

NIFTY MIDCAP 100

RSWM Ltd.



Cox & Kings (India) Ltd.

SECTOR


COX&KINGS 533144 COXK IN


161 2730 85

EPS (TTM) BV FV

25.0 180.3 5

P/E P/BV Div Yield

6.4 0.9 0.62


341 140.1 145.9

Group

Promoter 48.73

Others 51.27

TRAVEL



FY 13 FY 14 FY 15 FY 16 E FY 17 E

Net Sales 1,809 2,308 2,569 2,621 2,883

EBIDTA 718 890 1,011 997 1,132

EBIDTA Margin 39.7% 38.6% 39.3% 38.1% 39.3%

PAT 152 449 90 399 504

PAT Margin 8.4% 19.5% 3.5% 15.2% 17.5%

EPS 18.2 28.1 5.4 23.9 30.2


Figures INR crore

A Diversified, Multinational Travel Conglomerate: Cox & Kings Ltd (C&K) is a premium brand established in 23 countries including India, U. K., USA, UAE, Australia and Japan among others. The company's business can be broadly categorized as Leisure India, Leisure International, Education and Meininger.

In Q3FY16 Consolidated (Excluding Camping Div.) Net Sales grew by 10% to Rs 511.9 cr. EBITDA (excl. forex gain /loss) decreased by 27% yoy to Rs 115.9 cr PAT stood at Rs.106.7 cr aided by exceptional item gain. Leisure International impact by Paris attacks, severe weather conditions in the U.K. and higher brand spend at Superbreak and Laterooms. Education segment revenues on constant currency basis fell by 5% yoy. Meininger business saw 5% euro terms growth yoy on account of higher bed occupancy.

Consumer services, travel and education will be the most sought-after avenues of personal investment considering the New age consumer.

C&K is looking to add around 721 beds in current year which will be ready for operation in FY17 and 781 beds in FY17 to be ready for operation in FY18 in Education segment.

We expect future business growth to be driven mainly by Education and Meininger. Increasing shift towards B2C in the leisure segment would drive growth.

CMP 161

50

60

70

80

90

100

110

120

Feb

-15

Mar

-15

Ap

r-1

5

May

-15

Jun

-15

Jul-

15

Au

g-1

5

Sep

-15

Oct

-15

No

v-1

5

Dec

-15

Jan

-16

Feb

-16

NIFTY MIDCAP 100




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2014

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Continued…

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