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Transcript of India Equity Analytics for today - Buy Stocks of Tech Mahindra with a price target of Rs 2330
8/13/2019 India Equity Analytics for today - Buy Stocks of Tech Mahindra with a price target of Rs 2330
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IEA-Equity
Strategy
23th Dec, 2013
AXIS BANK : "Neutral" 19th Dec 2013
Axis bank is trading at 1.6 times of one year forward book which is almost upper side of bear case valuation band. We are not seeing bank’
earnings better than expectation as bank’s has significant exposure in riskier sector like infrastructure and power as compare to its peers. Wehave taken bank’s valuation multiple in bear case scenario on account of non visibility of ROE improvement and expected muted earning
growth. We assume loan and deposits growth of 16% and 15% along with margin at 3.5%. Better than expected performance will lead price
erformance and valuation multi le............................... Pa e : 11-14
CMC : "On track to deliver" "BUY" 20th Dec 2013
Considering recent healthy demand environment across the IT space with favorable supply side scenario, we remain confident on the stock for
better earning visibility and stable margin picture. Still, we reiterate our positive stance on the long-term story of CMC due to its focus on high
margin SI and ITES businesses.At a CMP of Rs 1510, stock trades at 14.9X FY14E earnings. We have "BUY" view on the stock and we revise ou
target price from Rs1490 to Rs1690.............................. (Page : 6-7)
Tech Mahindra : "On a stronger footing.." "BUY" 23rd Dec 2013
Post merger with Satyam, strong demand traction in Telecom (Non BT) has improved and company's attractive deal win ratios make u
optimistic view on the stock. At a CMP of Rs 1691, relatively the stock is trading at a fair valuation, 12.8x of FY14E earnings (at USD o
Rs60/59.5 for FY14E/FY15E). We maintain “BUY” on the stock with a price target of Rs 2330 (revised from Rs 1875)....... .......... .... ( Page : 4-5)
Persistent System : "Persistently innovating.." "REDUCED" 23rd Dec 2013
We had initiated this stock at a CMP of Rs 526(on 16th Feb 2013) and now, it achieved its target of Rs 960. Despite better predictability o
growth and attractive visibility of its expansion in new emerging verticals, we advice to book profit on the stock because of its premium
valuation. However, sentiment could take a knock in the short run, since investors may prefer paying a premium for stocks with better earnings
visibility. Our view could be change with management guidance and post earnings of coming quarter................................................... ( Page : 2
3)
Godrej Consumer Product : " Strategy Shining" "BUY" 19th Dec 2013
Its strong 20%+ growth in the domestic household insecticides business is the key growth driver. We expect strong momentum to continue in
its international business led by Megasari and consolidation of Darling business. Despite some concerns related to higher leverage, los
domestic focus and currency risk, we remain confident of achieving the 20%+ sales growth with strong PAT growth for FY14E & beyond
...........................................( Page : 15-16)
BANK OF INDIA : "BUY" 18th Dec 2013
Bank of India is trading at 0.5 times of one year forward book which is the lowest in valuation band despite of performing better than
expectation largely due to lower CAR and slower economic growth. With the capital infusion to the tune of Rs.1000 cr and improving sign o
asset quality would re-rate the stock as it did previously in our view. The management guided fresh slippage in line with 2QFY and inch up
higher restructure asset for December quarter. We believe that current level is attractive entry point for the investor with time horizon more
than one year with price target of Rs.235.................................... ( Page : 17- 19)
DIVISLAB : Good Growth Ahead "BUY" 19th Dec 2013
The company posted strong 2QFY4 results with net sales growing to Rs 566 Cr up by 19.7% YoY on the back of good growth coming from a
business segments. The generic API grew by 18% YoY to Rs 261 Cr for the quarter and CRAMS business segment grew by 20% YoY to Rs 271
Cr............................................. ( Page : 8-10)
email: [email protected], website : www.narnolia.com
Narnolia Securities Ltd,
402, 4th floor 7/1, Lords Sinha Road Kolkata 700071, Ph 033-32011233 Toll Free no : 1-800-345-4000
India Equity Analytics
8/13/2019 India Equity Analytics for today - Buy Stocks of Tech Mahindra with a price target of Rs 2330
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Persistent System.
-
1M 1yr YTD
bsolute 24.1 105.2 91.2
l. to Nifty 23 99.4 84.6
Current 1QFY14 4QFY13
omoters 38.96 38.96 38.96
15.28 14.84 12.39
I 21.23 19.31 21.59
hers 24.53 26.89 27.06
Financials
2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%
Revenue 432.37 357.29 21.0 326.86 32.3
EBITDA 100.8 76.8 31.3 89.06 13.2
PAT 60.8 57.1 6.5 44.71 36.0
EBITDA Margin 23.3% 21.5% 180bps 27.2% (390bp
PAT Margin 14.1% 16.0% (190bps) 13.7% 40bps
evious Target Price 890
pside -
E Code 533179
SE Symbol PERSISTENT
kt Capital (Rs Crores)
ange from Previous
fty
are Holding Pattern-%
6274
ock Performance
arket Data
Clients Metrics: During the quarter, company added 2 clients at 32 under mediu
category( >$1mn to $3mn) and 1 client at 16 from large ( > $ 3Mn) . Revenue from top
client was improved from 21.2% (1QFY14) to 22.5% . DSO at 62days, almost
quarters low.
"Persistently innovating.."
MP 1007
rget Price 960
ompany update Book Profit We had initiated this stock at a CMP of Rs 526(on 16th
Feb 2013) and now, it achiev
its target of Rs 960. Despite better predictability of growth and attractive visibility
its expansion in new emerging verticals, we advice to book profit on the stock becau
of its premium valuation. However, sentiment could take a knock in the short ru
since investors may prefer paying a premium for stocks with better earnings visibility
4029
erage Daily Volume 12139
Margin ramp up: During the quarter, Its EBITDA margin improved by 180bps to 23.3
positively impacted by currency gain(270bps), while during the quarter company wa
hike to its off shore employee at a range of 8-9% was impacted margin by 310 b
adversely. However, management expects to maintain margin at a range of 24-25% f
FY14E.
Recently , Persistent System reported superlative set of numbers during the 2QFY
with 21%(QoQ) sales growth in INR term and 8.6%(QoQ) growth in USD term led
38%(QOQ) growth on the intellectual property (IP) revenues. PAT growth was at 6.5(QoQ).
With the potential revenue growth, strong deal pipeline and multi-year relationsh
with marquee clientele in the Infrastructure vertical, we expect for better earni
visibility across niche IT players.
Persistent Sytem’s management remains confident of FY14 with deal pipeline bei
strong and remains focused on increasing the share of IP-led revenues in its portfol
They expect to see more than 15% USD revenue growth for FY14E.
year forward P/E-x
Rs, Cro
(Source: Company/Eastwi
View and Valuation: The company’s focus is shifting greater proportion to IP led servic
and company has marquee clientele in cutting-edge technologies around clou
mobility, collaboration and analytics; witnessing faster growth. Considering t
company’s premium valuation, we advice “Book Profit” on the stock. At a CMP of
1007, stock trades at 15.9x FY14E earnings. Our view could be change w
management guidance and post earnings of coming quarter.
Persistent's management suggests that deal pipeline are looking strong and seegood activity and traction in the market across the board. Its focus on some of new
technologies like cloud, analytics and mobility are gaining a lot of traction because
pickup in demand environment. The emerging themes, (CAMB) Cloud, Analyti
Mobility, and Big data could also see strong demand traction ahead. Because
actively investment in these themes, management is very confident to see healt
growth and also they expressed their confidence to beat the NASSCOM guidance (1
14% revenue growth for FY14E).
wk Range H/L 1023/477
Please refer to the Disclaimers at the end of this Report.
"Book Profit"23rd Dec' 13
Narnolia Securities Ltd,
8/13/2019 India Equity Analytics for today - Buy Stocks of Tech Mahindra with a price target of Rs 2330
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Persistent S stem.
(Source: Company/Eastwi
nancials
(Source: Company/Eastwi
ating and Price Target Chart Updation Detail
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
s, in Cr. FY10 FY11 FY12 FY13 FY14E FY15E
ales 601.16 775.84 1000.3 1294.5 1657.54 2053.93
mployee Cost 368.74 481.62 599.05 719 895.07 1119.39
ost of technical professionals 0 30.67 41.68 54 82.88 102.70
ther expenses 86.05 105.24 135.2 218 290.07 379.98otal expenses 454.79 617.53 775.93 990.78 1268.02 1602.0
BITDA 146.37 158.31 224.37 303.72 389.52 451.86
epreciation 33.52 42.39 61.1 78 93.54 84.18
ther Income 11.23 34.44 34.44 34.44 66.30 71.89
BIT 112.85 115.92 163.27 225.44 295.98 367.68
nterest Cost 0 0 0.00 0.03 0.00 0.00
rofit (+)/Loss (-) Before Taxes 124.08 150.36 197.71 259.851 362.29 439.57
rovision for Taxes 9.05 10.62 55.09 75.37 108.69 131.87
et Profit (+)/Loss (-) 115.03 139.74 142.62 184.481 253.60 307.70
rowth-% (YoY)
ales 1.2% 29.1% 28.9% 29.4% 28.0% 23.9%
BITDA 60.2% 8.2% 41.7% 35.4% 28.3% 16.0%
AT 74.1% 21.5% 2.1% 29.4% 37.5% 21.3%xpenses on Sales-%
mployee Cost 61.3% 62.1% 59.9% 55.5% 54.0% 54.5%
ther expenses 14.3% 13.6% 13.5% 16.9% 17.5% 18.5%
ax rate 7.3% 7.1% 27.9% 29.0% 30.0% 30.0%
Margin-%
BITDA 24.3% 20.4% 22.4% 23.5% 23.5% 22.0%
BIT 18.8% 14.9% 16.3% 17.4% 17.9% 17.9%
AT 19.1% 18.0% 14.3% 14.3% 15.3% 15.0%
aluation:
MP 310 366.7 409.2 541 1007 1007
o of Share 4 4 4 4 4.00 4.00
W 639.0 747.1 840.5 1018.3 1234.4 1504.7
PS 28.8 34.9 35.7 46.1 63.4 76.9VPS 159.7 186.8 210.1 254.6 308.6 376.2
oE-% 18.0% 18.7% 17.0% 18.1% 20.5% 20.4%
/BV 1.9 2.0 1.9 2.1 3.3 2.7
/E 10.8 10.5 11.5 11.7 15.9 13.1
Date Update Detail CMP View Target P
16-Feb-13 Initiation 526 BUY 580
25-Jun-13 Company Update 499 BUY 580
7-May-13 Result Update 514 BUY 580
31-Jul-13 Result Update 522 BUY 58018-Sep-13 Company Update 573 BUY 642
26-Sep-13 Company Update 623 BUY 834
9-Oct-13 Company Update 682 BUY 834
22-Oct-13 Result Update 739 BUY 890
13-Dec-13 Company Update 876 BUY 960
23-Dec-13 Company Update 1007 Book Profit
8/13/2019 India Equity Analytics for today - Buy Stocks of Tech Mahindra with a price target of Rs 2330
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Tech Mahindra
BUY
24%
1M 1yr YTD
bsolute 9.3 99 39.2
l. to Nifty 6.8 93 32.7
Current 1QFY14 4QFY13
omoters 36.46 47.17 47.41
32.59 26.79 27.34
I 15.13 15.83 16
hers 15.82 10.21 9.25
Financials
2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%
Revenue 4771.5 4103.2 16.3 3523.7 35.4
EBITDA 1110.85 864.5 28.5 756.9 46.8
PAT 718.2 686.3 4.6 455.9 57.5
EBITDA Margin 23.3% 21.1% 220bps 21.5% 150bp
PAT Margin 15.1% 16.7% (160bps) 12.9% 220bp
evious Target Price 1875
Recently, following the footsteps of other larger giants such as TCS and Infy, Te
Mahindra revealed its earning story better than street expectations for 2QFY14. Sa
grew by 16.3% (QoQ) in INR term led by healthy growth across all segments, vertic
and geographies. In USD term, sales grew 4.7% (QoQ) better than all nearest pee
barring TCS. PAT was up by 4.7% (QoQ) adversely impacted by lower other income a
forex loss of Rs 26 Cr during the quarter. The company had forex gains of Rs 134 Cr
the June quarter.
fty
ange from Previous
pside 26%
erage Daily Volume 191827
"On a stronger footing.."
ompany update
MP 1844
rget Price 2330
Broad-based performance with positive outlook, positive view retained;
The company remains confident on demand and expects client budgets to remain
the same levels in FY15E. It announced 2 large deals in the enterprise solutio
(previously Mahindra Satyam) and has a healthy deal pipeline.
arket Data
E Code 532755
SE Symbol TECHM
kt Capital (Rs Crores)
wk Range H/L 1872/895
42991
Win- Win on all geographies: During the 2QFY14, winning trio was seen acro
geographies. US (contributes 33% on sales) grew by 8%, RoW (23% on sales) by 9.4
(QoQ). While Europe (contributes 44% on sales) was marginally up by 2.4%(QoQ) in U
term. Post earning management quoted for better outlook in Europe with grea
traction in Australia and Africa in near term.
All-rounder across all verticals: During the quarter, company reported 2.5% growth
Telecom, 4.7% growth in manufacturing, media including entertainment, BFSI a
others each in USD term. While Retail, Transport and Logistic snapped a larger grow
figure of 22% sequentially. The company is focusing on BFSI, manufacturing a
telecom.
BT on Slide: The management said revenues from British Telecom (BT) continued
slide. Those were 12% of consolidated revenues in the June quarter. It believes revenu
from BT will be under pressure.year forward P/E-x
Rs, Cro
(Source: Company/Eastwi
Please refer to the Disclaimers at the end of this Report.
Post merger with Satyam, strong demand traction in Telecom (Non BT) has improv
and company's attractive deal win ratios make us optimistic view on the stock. A
CMP of Rs 1691, relatively the stock is trading at a fair valuation, 12.8x of FY1
earnings (at USD of Rs60/59.5 for FY14E/FY15E). We maintain “BUY” on the stock wa price target of Rs 2330 (revised from Rs 1875).
are Holding Pattern-%
6274
ock Performance
View and Valuation: Recently, company’s management explained its 6-pillar strate
i.e., selling 6 service lines of IT, infr- management, network management, secur
services, value added services and services such as analytics to telcos. Currently, non
services contribute 33% of telecom revenues for the company. Further, it is focusing
segments that are growing faster such as platforms, enterprise, mobility and NMA
(networks, mobility, analytics, cloud and security).
Green flag on Margin front: EBITDA margin expanded 222 basis points sequentially
23.3% aided by a weaker rupee. Despite sweet flavor on margin front, management
still cautious for coming quarter due to Furloughs .
"BUY"23rd Dec' 13
Narnolia Securities Ltd,
8/13/2019 India Equity Analytics for today - Buy Stocks of Tech Mahindra with a price target of Rs 2330
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Tech Mahindra.
(Source: Company/Eastwi
perating Metrics
nancials
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
ient contribution to revenue-% 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY1
ustomer Active 484.00 475.00 475.00 516.00 567.00 576.00
op 10 clients 50.0% 51.0% 50.0% 50.0% 49.0% 48.0%
op 5 clients 40.0% 41.0% 39.0% 37.0% 37.0% 36.0%op client 17.0% 14.0% 15.0% 13.0% 12.0% 12.0%
evenue mix - onsite/offshore (%)
nsite 48.0% 48.0% 48.0% 48.0% 51.0% 51.0%
ffshore 52.0% 52.0% 52.0% 52.0% 49.0% 49.0%
mployee Metrics
tilisation % 75.0% 74.0% 76.0% 77.0% 76.0% 75.0%
ttrition % 17.0% 16.0% 16.0% 16.0% 15.0% 16.0%
s, Cr FY12 FY13 FY14E FY15E FY16E
et Sales(mn)-USD 1157 2633 3124.01 3592.61 4023.7
et Sales 11702.4 14332.0 18744.06 21376.04 24343.5
mployee Cost 6591.9 8099.5 10309.24 11756.82 13388.9peration and other expenses 2210.1 2287.3 3373.93 3847.69 4381.8
ubcontracting Cost 948.6 882.0 1405.80 1603.20 1947.4
otal Expenses 9750.6 11268.8 13683.17 15604.51 17770.7
BITDA 1951.8 3063.2 5060.90 5771.53 6572.7
epreciation 319.0 389.6 509.54 581.08 661.75
ther Income 501.3 212.2 281.16 213.76 243.44
xtra Ordinery Items 36.9 -160.1 -209.39 -238.79 -121.7
BIT 1632.80 2673.60 4551.36 5190.45 5911.0
nterest Cost 107.3 92.1 98.04 91.37 86.93
BT 2063.7 2633.6 4525.09 5074.05 5945.7
ax 228.9 647.9 1176.5 1319.3 1545.9
AT 1834.8 1985.7 3348.6 3754.8 4399.9
rowth-%
ales-USD 2.7% 127.6% 18.6% 15.0% 12.0%ales 13.8% 22.5% 30.8% 14.0% 13.9%
BITDA 11.9% 56.9% 65.2% 14.0% 13.9%
AT 11.9% 8.2% 68.6% 12.1% 17.2%
Margin -%
BITDA 16.7% 21.4% 27.0% 27.0% 27.0%
BIT 14.0% 18.7% 24.3% 24.3% 24.3%
AT 15.7% 13.9% 17.9% 17.6% 18.1%
xpenses on Sales-%
mployee Cost 56.3% 56.5% 55.0% 55.0% 55.0%
ubcontracting Cost 8.1% 6.2% 7.5% 7.5% 8.0%
peration and other expenses 18.9% 16.0% 18.0% 18.0% 18.0%
ax rate 11.1% 24.6% 26.0% 26.0% 26.0%
aluation
MP 652.5 1081.7 1844 1844 1844o of Share 23.2 23.2 23.2 23.2 23.2
W 4815.8 5529.1 8741.77 12360.68 16624.6
PS 79.0 85.5 144.1 161.6 189.4
VPS 207.3 238.0 376.31 532.10 715.66
oE-% 38.1% 35.9% 38.3% 30.4% 26.5%
ividen Payout-% 3.2% 3.0% 4.1% 3.6% 3.1%
/BV 3.1 4.5 4.9 3.5 2.6
/E 8.3 12.7 12.79 11.41 9.74
8/13/2019 India Equity Analytics for today - Buy Stocks of Tech Mahindra with a price target of Rs 2330
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CMC
1M 1yr YTD
solute 15.0 29.2 54.5
l. to Nifty 15.4 24.6 37.1
Current 4QFY13 3QFY13
omoters 51.12 51.12 51.12
23.32 21.84 19.87
17.83 19.05 20.46
hers 7.73 7.99 8.55
Financials
2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%
Revenue 560.75 486.61 15.2 458.64 22.3
EBITDA 88.41 77.04 14.8 76.59 15.4
PAT 67.3 53.12 26.7 49.4 36.2
EBITDA Margin 15.8% 15.8% - 16.7% (90bps)
PAT Margin 12.0% 10.9% 110bps 10.8% (120bps
"On track to deliver"
MP 1510
rget Price 1690
kt Capital (Rs Crores)
are Holding Pattern-%
erage Daily Volume 20884
1560/1107
ompany update Buy
evious Target Price 1490
side 12%
ock Performance
year forward P/E
Rs, Cro
(Source: Company/Eastwi
Please refer to the Disclaimers at the end of this Report.
Deal pipeline: The deal pipeline is in line with the last year. It indicated that pursu
good number of deals in the Developed and as well emerging markets. Consideri
current sound demand environment across geographies (like US and Europe) a
verticals Company is more optimistic for clients acquisition and deal executions ahead
Now, CMC is focusing on new emerging segments like IMS (Infrastructu
Management Services), Cloud, Big data, Mobility and Analytics. Considering
impressive client as well as market response, company is expecting to quantify inrevenue. Its new and emerging projects like Mining Management System, GPS Syste
and Port & Cargo Management System would play a major role for generati
revenue.
View and Valuation: CMC expects the growth momentum to improve in the quarte
ahead and the revenue growth to be higher than the NASSCOM guidance in FY14. T
Company remains a strong with excellent earning visibility led by joint effort of mark
strategy by TCS (contributes 59% of sales) in its product and solutions. For a long-ter
prospect, we remain positive on the stock, taking its earning visibility and healt
earnings among the mid-cap IT space (over 25% CAGR in earnings over FY2013-15E).
a CMP of Rs 1510, stock trades at 14.9X FY14E earnings. We have "BUY" view on t
stock and we revise our target price from Rs1490 to Rs1690.
Steady Margin: During the quarter, EBITDA margin was almost unchanged at 15.8% dto wage hikes (70 bps), but also has positive impact from currency gain (170 bps) whi
were reinvested into the business. However, Management is still confident to mainta
the margin in a range of 15-16%.
fty 6167
4575
We believe, CMC will continue with its efforts to enhance revenue contribution of hig
margin System Integration and ITES segments. Further, its high focus on educati
space will also add margin in near term.
Considering recent healthy demand environment across the IT space with favorab
supply side scenario, we remain confident on the stock for better earning visibility a
stable margin picture. Still, we reiterate our positive stance on the long-term story
CMC due to its focus on high margin SI and ITES businesses.
For 2QFY14E earnings, CMC witnessed better Sales and PAT growth with 15% sal
growth driven by the strong growth from the System Integration (29%) coupled with t
good growth from the System Integration (24%) and ITES business (16%) sequentia
PAT grew by 27%(QoQ) because lower effective tax rate (from 34%, 1QFY14) to 20%
earning before tax) .
E Code 517326
E Symbol CMC
ange from Previous 13.4%
arket Data
wk Range H/L
"BUY"20th Dec' 13
Narnolia Securities Ltd,
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CMC
ey facts from recent Concall
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwi
nancials;
CMC continues to target growth ahead of the overall IT industry; the company expects
grow faster than that in the current financial year
Expects operating Profit margin between 15 percent and 16 percent for FY14E,
The Capex expected to be Rs 190 crore (planned is around Rs 230 crore) for FY'14.Thepex will be financed by internal accruals.
Company’s hiring Plan; a net addition of 400-500 this year
Notably, it targets revenues of Rs 250-300 crore from Education and Training business
next two 3-4 years timeline.
Narnolia Securities Ltd,
s, Cr FY10 FY11 FY12 FY13 FY14E FY15E
et Sales 870.73 1084.40 1469.34 1927.87 2239.31 2600.4
urchases of stock-in-trade 99.35 99.28 145.40 188.56 201.54 234.04
mployee Cost 276.16 345.13 440.22 521.65 593.42 702.11
ubcontracting and outsourcing cost 173.56 262.35 446.11 679.73 794.96 923.15ther expenses 159.94 170.17 213.63 222.88 235.13 273.04
otal Expenses 709.01 876.93 1245.36 1612.82 1825.04 2132.3
BITDA 161.72 207.47 223.98 315.05 414.27 468.07
epreciation 9.85 10.46 21.37 23.20 41.95 60.69
ther Income 18.75 11.80 17.46 13.17 22.39 26.00
BIT 151.87 197.01 202.61 291.85 372.33 407.38
nterest Cost 3.17 0.22 0.02 0.18 0.2 0.25
BT 167.45 208.59 220.05 304.84 394.52 433.14
ax 24.23 32.42 68.59 76.76 86.79 99.62
AT 143.22 176.17 151.46 228.08 307.73 333.52
rowth-%
ales -7.4% 24.5% 35.5% 31.2% 16.2% 16.1%
BITDA 27.7% 28.3% 8.0% 40.7% 31.5% 13.0%
AT 23.3% 23.0% -14.0% 50.6% 34.9% 8.4%
Margin -%
BITDA 18.6% 19.1% 15.2% 16.3% 18.5% 18.0%
BIT 17.4% 18.2% 13.8% 15.1% 16.6% 15.7%
AT 16.4% 16.2% 10.3% 11.8% 13.7% 12.8%
xpenses on Sales-%
mployee Cost 31.7% 31.8% 30.0% 27.1% 26.5% 27.0%
ubcontracting Cost 19.9% 24.2% 30.4% 35.3% 35.5% 35.5%
ax rate 14.5% 15.5% 31.2% 25.2% 22.0% 23.0%
aluation
MP 1340.0 2079.6 994.8 1410.0 1510 1510
o of Share 1.50 1.50 3.00 3.03 3.03 3.03W 510.68 654.02 772.19 946.26 1192.11 1454.9
PS 95.48 117.45 50.49 75.27 101.56 110.07
VPS 340.45 436.01 257.40 312.30 393.44 480.17
oE-% 28.0% 26.9% 19.6% 24.1% 25.8% 22.9%
ividen Payout ratio 18.6% 19.9% 23.2% 19.4% 20.1% 21.2%
/BV 3.94 4.77 3.86 4.51 3.84 2.78
/E 14.03 17.71 19.70 18.73 14.87 13.72
8/13/2019 India Equity Analytics for today - Buy Stocks of Tech Mahindra with a price target of Rs 2330
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BUY
1M 1yr YTD
bsolute 2.8 4.4 1.4
el. to Nifty 0.1 -1.3 -14.6
Current 1QFY14 4QFY1
omoters 52.1 52.2 52.2
15.8 14.9 14.0
I 12.5 12.5 13.3
hers 19.5 20.5 20.5
Financials Rs, Cro
2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%
Revenue 567 517 9.7 474 19.6
EBITDA 249 197 26.4 165 50.9
PAT 205 174 17.8 117 75.2
EBITDA Margin 43.9% 38.1% 580bps 34.8% 910bps
PAT Margin 36.2% 33.7% 250bps 24.7% 1150bp
hange from Previous -
SE Symbol
Please refer to the Disclaimers at the end of this Report.
ock Performance-%
hare Holding Pattern-%
kt Capital (Rs, Cr)
fty 6217
The company have one more business segment ‘Nutraceuticals’ relatively smaller a
newer as compared to other business segment can act as growth driver going forward. T
management of the company is quite optimistic for this business segment and has guid
that this business at 40-50% CAGR (albeit on a low base) over the next 2-3 years.
2QFY14 Results Update.
The company posted strong 2QFY4 results with net sales growing to Rs 566 Cr up
19.7% YoY on the back of good growth coming from all business segments. The gene API grew by 18% YoY to Rs 261 Cr for the quarter and CRAMS business segment grew
20% YoY to Rs 271 Cr. The company derives almost 45-50% of revenues each fro
CRAMS and generic API business while rest comes from ‘Nutraceuticals’.ne Year Price vs Nifty
(Source: Company/Eastwi
15631
verage Daily Volume 5.43
The operating EBITDA for the quarter came at Rs 250 Cr and OPM at 43.9 %. Compan
2QFY14 EBITDA margins were higher than 34.8% reported in Q2FY13 on account
higher gross margins, lower power cost and forex loss in Q2FY13.The RM cost as % of n
sales stands at 50% for the 2QFY14 while employee cost as % of net sales was 10 %.
Company is one of the few CRAMS (Contract Research and Manufacturing Service
players with a superior business mix comprising high-margin custom synthesis of AP
(Active Pharma Ingredients) and intermediates for innovator companies. The compa
collaborates with innovators throughout the product development cycle. P
commercialization, company is usually the key supplier of APIs and intermediates for the
products to the innovators. In 2012-13, the company added six products to its custo
synthesis portfolio.The CRAMS business which contributes nearly 45%- 50% of the total revenues have fro
Rs 560 Cr in 2009 to Rs 1000 Cr translating CAGR of 15 %.The Generic API busine
which contributes another 45-50 % to the total revenues is also well track after witnesome pressure in FY10.As on FY13 this segment contributed Rs 1029 Cr to the to
revenues and this segment to more revenues to the company in the light of upcom
patent cliff of US and new launches .
14%pside
DIVISLABGood Growth Ahead
arget Price 1350
evious Target Price -
esult UpdateMP 1186
About The Company :
Divi’s Laboratories Limited is an India-based manufacturer of Active Pharmaceuti
Ingredients (APIs) and Intermediates. Divi is engaged in manufacture of generic AP
custom synthesis of active ingredients for innovator companies and other specia
chemicals like peptides and nutraceuticals.
Investment Rationale :
wk Range H/L 1189/905
DIVISLAB
arket DataSE Code 532488
"BUY"19th Dec' 13
Narnolia Securities Ltd,
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Please refer to the Disclaimers at the end of this Report.
DIVISLAB
ontinued…
e net profits for the 2QFY14 came at Rs 205 Cr and NPM came at 36.2%.The net profits
so include forex gain of Rs 31 Cr. The company reports its forex gain under other
come headings and forex loss under its other expenditure head. The tax rate for the
arter stands at 22%.
aphical Depiction
evenue Break Up: 2QFY14
(Source: Company/Eastwind)
ompany has capitalized Fixed assets to the tune of Rs120 Cr for H1 FY14. The company
l commercialize DSN SEZ by the end of the year and the FDA inspection post that. The
w DSN SEZ contribution will start in Q1 FY15E and full benefits will fructify only from Q2
Y15E.The existing DSN blocks contributed Rs125 Cr revenues in Q2 FY14 as against
s70.8 Cr in Q1 FY14.
anagement Guidance
e management of the company after strong 2QFY14results expects that revenue to
ow by 15-20 % (15% guided earlier), with FY15E growth expected above 20%. The
anagement further indicated that this high level of OPM is not sustainable but reiterated
at 38% levels OPM is quite reachable . On Power shortage ,which declined the OPM in
QFY14 has been solved and will aid margin expansion going forward. The capex
idance stands at INR500-600m (apart from INR2b addition from CWIP) and tax rateidance remains between 23-24%.
ew & Valuation
he company is not only the most profitable company in the CRAMS space, but also
atures among the most profitable companies in the Indian healthcare sector with EBIDTA
argin of 35-40% backed by its strong chemistry skills and custom synthesis presence.The
ock is currently trading at CMP of Rs 1186, strong 2QFY14 results ,optimistic
anagement guidance and better business model in comparison to its peers makes us
nfident for the stock. We are positive for the stock and recommend BUY with
rget price of Rs 1350.
Narnolia Securities Ltd,
8/13/2019 India Equity Analytics for today - Buy Stocks of Tech Mahindra with a price target of Rs 2330
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DIVISLAB
les and PAT Trend (Rs)
(Source: Company/Eastwind)
Net sales growing to Rs 566 Cr up by 19.YoY on the back of good growth coming fr
all business segments.
2QFY14 EBITDA margins were higher th
34.8% reported in Q2FY13 on account
higher gross margins, lower power cost a
forex loss in Q2FY13.
PM %
(Source: Company/Eastwind)
PM %
The 2QFY14 PAT also include forex gain of
31 Cr. The company reports its forex g
under other income headings and forex l
under its other expenditure head.
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
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AXIS BANK
1286
13251247
3
6.3
1M 1yr YTD
bsolute 12.9 -5.2 -5.2
el.to Nifty 12.6 -10.9 -10.9
Current 4QFY13 3QFY1
omoters 33.9 33.9 33.5
I 40.7 4094.0 39.6I 8.8 8.5 10.0
hers 16.6 16.6 17.0
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 6566 8026 9666 12620 14710
Total Income 11238 13513 16217 19715 21804
PPP 6377 7413 9303 11238 12429
Net Profit 3340 4224 5179 6343 6977
EPS 81.4 102.2 110.7 135.2 149.1
kt Capital (Rs Cr)
(Source: Company/Eastwind)
ock Performance
verage Daily Volume
Sequentially stable asset quality help to make lower provision
On asset quality front, Axis bank reported 10 bps deterioration in GNPA
sequential basis to 1.4%. In absolute term GNPA increased by 10% QoQ a
provision increased by 12% QoQ. This led net NPA increased by 6% sequentially.
percentage term NPA stood at 0.4%, flat on QoQ basis. Provision coverage ra
(without technical write off) was improved by 100 bps to 69.3% and PCR at technic
write off was 89%. During quarter bank made loan loss provision of Rs.687 cr vers
Rs.712 cr in 1QFY14 and Rs.509 cr in 2QFY13. On sequential basis risky seclike power and infrastructure exposure remain flat at 12.64% from 12.67%
1QFY14.
Declined in cost income ratio led robust growth in operating profit
Operating expenses increased by 12.1% YoY to Rs.1953 cr in which employee co
and other operating cost increased by 11.4% and 12.5% respectively. Cost incom
ratio declined by 440 bps to 41.5% from 44.9% in 2QFY13. Employee cost and oth
operating cost as a percentage of total assets remain flat at 0.2% and 0.4
respectively. With the support of healthy NII, fee income and improvement of coincome, operating profit grew by 29% YoY and -3.3% in QoQ to Rs.2750
Sequential declined of operating profit was due to gain of treasury income
1QFY14 which was absent in 2QFY14.
During 2QFY14, Axis bank reported NII growth of 26.2% YoY largely due to 50 b
YoY improvement of margin and 577 bps YoY increased of credit deposits ratio a
17% increased in loan growth. Axis bank’s interest earnings assets increased
20% YoY whereas interest bearing liabilities increased by 13% YoY. Total reven
of the bank grew by 21.3% YoY to Rs.4703 cr. Non- interest income register
growth of 14% YoY to Rs.1766 cr.
hange from Previous
xis Bank Vs Nifty
hare Holding Pattern-%
2066127
fty 6217
39764
1549/763
SE Symbol AXISBANK
2wk Range H/L
Healthy NII growth o n the back of m argin improvem ent and loan growth
ompany Update NEUTRAL
MP
arget Price
Ax is bank is tradi ng at 1.6 tim es of one year forw ard boo k whic h we believ
that it is high er sid e of our bear cas e valu ation ban d. We hav e neith er see
valuat ion band expansion nor did earnings lead price performanc e. Axi s ban
has sig nif ican t expos ure in infrastru cture and po wer (12.64% in 2QFY14) a
com pare to its peer group. Ass et qual ity pressure may persists in com in
quar ters which rest r ic t bank’s valuat ion m ult iple in th e range of 1.4 to 1
tim es of bo ok in our view. We adv ice our inves tor s to bo ok part profit at th
curren t level. Our valuat ion mult iples are based upon bank’s present grow
pa rameter s , be tt er than expec ted pe rf o rmance and v i s ib i li ty o f RO
improv ement wi l l expand valuat ion and mult ip les.
evious Target Price
arket Data
pside
SE Code 532215
"NEUTRAL "19th Dec, 2013
Narnolia Securities Ltd,
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AXIS BANK
Please refer to the Disclaimers at the end of this Report.
uring quarter bank reported 7 bps QoQ declined in NIM to 3.79% led by 500 bps
quentially declined of credit deposits ratio and almost flat of loan yield on QoQ basis.
oan yield during the quarter was 10.5% and cost of deposits declined from 7.4% to
1% sequentially.
aluation & View
ealthy NII growth and controlled CI ratio along with stable margin help to boost
p profit
ith the support of healthy NII growth and controlled operating expenses led net profit of
6% YoY to Rs.1362 cr from Rs.1081 cr. Consequently ROA improved by 12 bps to 1.6%
nd ROE declined to 15.3% from 17.5% in 2QFY13 largely due to operating leveraging.
odest deposits growth and strong traction in loan growth
n business growth parameters, bank’s total business grew by 12% YoY to Rs.4567 bn
against Rs.4077 bn. Deposits grew by moderate pace with 8% YoY while current
eposits and saving deposits grew by 9% and 18% respectively taking overall CASA ratio
42.9%. Bank’s strategy to focus on retail deposits seem well is shaping as share of
tail deposits in term deposits increased continuously to 45.2% from 40.3% in21QFY13.
oan grew by 17% YoY to Rs.20130 bn. Incremental loan growth came from retail
vance and SME segment. Share of retail loan increased to 30.2% of overall loan from
5.7% in 2QFY13. Bank’s has decreased in share of risky sector (Power & Infrastructure)
xposure to 12.64% from 13.63% in 2QFY13. Credit deposits ratio improved by 577 bps
oY to 78.8% implying best utilization of excess liquidity in balance sheet.
equential declined of margin owing to flat loan yield
xis bank delivered good set of numbers during quarter but exposure to stress sector
main at 12%+ level. Moreover Axis bank has higher exposure in small, medium
nterprises and infra segment in comparison to peers. In challenging macro environment
nd tight liquidity situation, Axis bank is more vulnerable among peers. At the current
ce of Rs.1286, stock is trading at 1.6 times of one year forward book which is upper
de of bear case valuation band. We advice book part profit at current level. We value
ank at multiple of 1.4 to 1.6 times of one year forward book which implies Rs. price
nge of Rs.1247 to Rs.1325.
Narnolia Securities Ltd,
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AXIS BANK
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
uarterly Result 2QFY14 1QFY14 2QFY13 % YoY Gr % QoQ Gr
erest/discount on advances / bills 5394 5189 4736 13.9 4.0
come on investments 2143 2015 1897 13.0 6.3
erest on balances with Reserve Bank of India 35 34 22 58.9 2.6
hers 37 39 32 14.9 -5.5
tal Interest Income 7609 7278 6687 13.8 4.6
e Income 1432 1317 1343 6.6 8.7
ading Income 5 440 207 -97.6 -98.9
scellaneous Income 329 24 0 - 1270.2
hers Income 1766 1781 1551 13.9 -0.9
tal Income 9375 9059 8238 13.8 3.5
erest Expended 4672 4413 4360 7.2 5.9
2937 2865 2327 26.2 2.5
her Income 1766 1781 1551 13.9 -0.9
tal Income 4703 4647 3877 21.3 1.2
mployee 644 643 578 11.4 0.1
her Expenses 1309 1160 1164 12.5 12.9
erating Expenses 1953 1803 1742 12.1 8.3
P( Rs Cr) 2750 2844 2136 28.8 -3.3
ovisions 687 712 509 35.0 -3.5
T 2062 2131 1626 26.8 -3.2
x 700 722 545 28.4 -3.1
t Profit 1362 1409 1081 26.0 -3.3
lance Sheet Date ( Rs Bn)
t Worth 362 349 252 43.6 3.7
posits 2554 2384 2356 8.4 7.1
an 2013 1982 1721 16.9 1.6
set qualtiy( Rs Cr)
NPA 2734 2490 2191 24.8 9.8
A 838 790 654 28.1 6.1
GNPA 1.4 1.3 1.3
NPA 0.4 0.4 0.4
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NANCIALS & ASSUPTION
AXIS BANK
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
ncome Statement 2011 2012 2013 2014E 2015E
terest Income 15155 21995 27183 33243 38426
terest Expense 8589 13969 17516 20622 23716II 6566 8026 9666 12620 14710
hange (%) 31.2 22.2 20.4 30.6 16.6
on Interest Income 4671 5487 6551 7095 7095
otal Income 11238 13513 16217 19715 21804
hange (%) 25.3 20.2 20.0 21.6 10.6
perating Expenses 4860 6100 6914 8478 9376
re Provision Profits 6377 7413 9303 11238 12429
hange (%) 22.4 16.2 25.5 20.8 10.6
rovisions 3033 3189 4124 2176 2461
BT 3345 4224 5179 9062 9967AT 3340 4224 5179 6343 6977
hange (%) 34.8 26.5 22.6 22.5 10.0
alance Sheet
eposits( Rs Cr) 189166 219988 252614 290506 334081
hange (%) 34 16 15 15 15
f which CASA Dep 77758 91412 112100 124917 143655
hange (%) 18 18 23 11 15
orrowings( Rs Cr) 26268 34072 43951 51266 58956
vestments( Rs Cr) 71788 92921 113738 129873 149354
oans( Rs Cr) 142408 169760 196966 228481 265037
hange (%) 36 19 16 16 16
aluation
ook Value 460 549 708 828 957
MP 1404 1146 1304 1288 1288
/BV 3.1 2.1 1.8 1.6 1.3
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Godrej Consumer Product
840
960725
14%
32%
▪ Godrej Consumer aims to grow 10 times in the next 10 years.
Key updates;
1M 1yr YTD
solute -2.1 17.6 27.0
l. to Nifty -4.8 11.5 8.8
Current 1QFY14 4QFY13
omoters 63.3 63.3 63.5
28.7 28.3 28.2
1.2 1.2 1.2
hers 6.8 7.2 7.1
Financials Rs,
2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%
Revenue 1961.7 1724.9 13.7% 1600.32 22.6%
EBITDA 299.8 225.4 33.0% 248.96 20.4%
PAT 195 133 46.6% 159.31 22.4%
EBITDA Margin 15.3% 13.1% 210bps 15.6% (30bps
PAT Margin 9.9% 7.7% 220bps 10.0% (10bps
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwin
ock Performance
ange from Previous
yr Forward P/B
are Holding Pattern-%
120012
fty 6217
erage Daily Volume
28593
977/693
E Code 532424
SE Symbol
▪ Godrej Consumer's management is hopeful of seeing an uptick in the urban dema
and the rural demand is expected to be strong due to good harvest. We expect 20-22(YoY) sales growth for 3QFY14.
" Strategy Shining"
MP
pside
Key fac ts f rom recent Management Comments :
rget Price
ompany update BUY
evious Target Price
▪ The company does not see company’s margins coming under pressure going ahea
due to heavy investments it has made in advertisements. We expect 15-15.5% EBIT
margin for FY14E and 15.5-16% for FY15E.
GODREJCP
arket Data
wk Range H/L
View and Valuations: Its strong 20%+ growth in the domestic household insecticid
business is the key growth driver. We expect strong momentum to continue in
international business led by Megasari and consolidation of Darling business. Desp
some concerns related to higher leverage, lost domestic focus and currency risk, w
remain confident of achieving the 20%+ sales growth with strong PAT growth for FY1
& beyond. At a CMP of Rs840, stock trades at 5.7x FY15E P/BV. We retain BUY with
price target of Rs 960.
▪ On International revenue front, Godrej Consumer could see some threads in cert
areas especially Indonesia (18% of sales) and Nigeria (13% of sales), Indonesia is goi
into election next year and in Nigeria, there have been wage hikes.
Demand Pickup scenario: On demand side scenario, we expect that the stro
agricultural season leading to strong rural GDP growth would support to impro
demand environment very soon. Considering recent GDP growth and Current Accou
Deficit (CAD) numbers, we are expecting that the economy is moving to track and urb
demand will see some picking up.
Strong focus on driving growth with 10x10 strategy: Its strong focus on driving grow
in the domestic and international market by expansion of products and distribut
reach, we expect strong earning in near future. With launching new products
domestic as well as international mkt, Godrej CP will explore organic & inorganic grow
Along with its 3x3 strategy, it has 10x10 strategy also, which refers to 10x growth in
yrs.
Products strategy: The company continues to gain and enjoy market leader ship positi
across all three formats. The company is driving increase in penetration with launch
"Goodknight Advanced colour play". The company has launched Goodknight aerosol acoil in Nigeria.
Recent developments: The Company has entered into an agreement on Oct 7, 2013,
acquire a 30% stake in Bhabani Blunt Hair Dressing Pvt Ltd, a premier hair sa
company with one of the strongest consumer franchises in this space.
kt Capital (Rs Cr)
"BUY"19th Dec' 13
Narnolia Securities Ltd,
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Godrej Consumer Product
egionwise margin:
uaterly snapshot:
Please refer to the Disclaimers at the end of this Report.
nancials and Valuation
(Source: Company/Eastwind)
Narnolia Securities Ltd,
trly, 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY1
ales Gr(YoY) 23% 36% 31% 39% 35% 26% 30% 23.9% 22.6%
AT Gr(YoY) -2.6% 68.3% 36.0% -45.5% 24.7% 3.1% 58.7% 1.8% 22.4%
BITDA Margin 18.0% 20.1% 18.9% 14.5% 15.6% 16.8% 16.2% 13.1% 15.3%
AT Margin 12.0% 13.9% 13.5% 12.1% 10.8% 11.3% 13.3% 9.0% 10.9%
egions 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY1
dia 18.9% 20.4% 20.2% 15.1% 17.6% 18% 16.7% 15.8% 18.9%
donesia 19.4% 20.6% 20.7% 18% 19% 20% 19% 15% 17%
frica 26.0% 31% 19.3% 19% 16% 20% 7% 13% 14%
tin America 7.4% 9% 16.3% 3% 4% 8% 9% 3% 7%
urope 11% 5% 10.5% 13% 9% 5% 13% 9% 10%
s, in Cr FY10 FY11 FY12 FY13 FY14E FY15E
ales 2041.2 3693.6 4866.16 6390.79 7823.32 9198.58
ther Operating Income 2.5 28.11 45.93 16.58 20.30 23.86
otal income from operations 2043.7 3721.71 4912.09 6407.37 7843.62 9222.44
M Cost 619.59 1458.28 2174.67 2640.31 3176.67 3781.20
urchases of stock-in-trade 367.16 294.12 356.11 451.03 552.13 649.19
WIP -40.45 -45.22 -212.26 -118.06 -183.50 -224.07
mployee Cost 151.81 284.51 391.91 590.68 723.08 850.19
d Spend 132.8 352.85 449.86 660.35 902.02 1014.47
ther expenses 402.98 695.96 850.47 1196.46 1459.0 1689.7
otal expenses 1633.89 3040.5 4010.76 5420.77 6629.4 7760.7
BITDA 409.81 681.21 901.33 986.6 1214.2 1461.7
epreciation and Amortisation 23.6 49.92 64.44 77 94.3 102.1
ther Income 44.81 24.13 6.07 67.78 47.8 56.2
xceptional Item 0 41.14 200.17 96.12 78.4 92.2
BIT 386.21 631.29 836.89 909.6 1119.9 1359.6
nterest 11.1 43.64 65.84 77.45 61.1 53.2
BT 419.92 652.92 977.29 996.05 1185.1 1454.9
ax Exp 80.33 138.21 226.05 179.18 225.17 290.98
AT 339.59 514.71 751.24 816.87 959.9 1163.9
rowth-% (YoY)
ales 46.3% 81.0% 31.7% 31.3% 22.4% 17.6%
BITDA 95.2% 66.2% 32.3% 9.5% 23.1% 20.4%
AT 97.0% 51.6% 46.0% 8.7% 17.5% 21.3%
xpenses on Sales-%
M Cost 30.3% 39.2% 44.3% 41.2% 40.5% 41.0%
d Spend 6.5% 9.5% 9.2% 10.3% 11.5% 11.0%
mployee Cost 7.4% 7.6% 8.0% 9.2% 9.2% 9.2%
ther expenses 19.7% 18.7% 17.3% 18.7% 18.6% 18.3%
ax rate 19.1% 21.2% 23.1% 18.0% 19.0% 20.0%
Margin-%
BITDA 20.1% 18.3% 18.3% 15.4% 15.5% 15.8%
BIT 18.9% 17.0% 17.0% 14.2% 14.3% 14.7%
AT 16.6% 13.8% 15.3% 12.7% 12.2% 12.6%
aluation:MP 261.0 365.0 559.0 836.0 840.0 840.0
o of Share 30.8 32.4 34.0 34.0 34.0 34.0
W 954.7 1725.2 2815.2 3313.0 4073.9 5038.8
PS 11.0 15.9 22.1 24.0 28.2 34.2
VPS 31.0 53.2 82.8 97.4 119.7 148.1
oE-% 35.6% 29.8% 26.7% 24.7% 23.6% 23.1%
iv- Payout-% 30.6% 38.3% 22.6% 23.0% 20.7% 17.1%
/BV 8.4 6.9 6.8 8.6 7.0 5.7
/E 23.7 23.0 25.3 34.8 29.8 24.6
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BANK OF INDIA
206
235-
14
-
1M 1yr YTD
bsolute -14.5 -32.2 -32.2
el.to Nifty -13.7 -37.1 -37.1
Current 1QFY14 4QFY1
omoters 64.1 64.1 64.1
I 13.2 13.6 13.5
I 15.3 15.6 16.3
hers 7.4 6.7 6.0
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 7878 8313 9024 12110 11804
Total Income 10519 11635 12790 16672 16366
PPP 5398 6694 7458 9670 9492
Net Profit 2542 2678 2749 3533 3269
EPS 46.5 46.7 47.9 61.6 57.0
MP
evious Target Price
pside
hange from Previous
ANKINDIA Vs Nifty
hare Holding Pattern-%
2271804
fty
SE Symbol BANKINDIA
Most of banks especially PSUs are beaten down by the market on account of slow
economic growth and stress in asset quality. But Bank of India has witness
improvement in asset quality in 2QFY14 as fresh slippages were down by 26sequentially and 46% Year-on-year basis. Moreover bank reported reduction to t
tune of Rs.1009 cr versus Rs.1338 cr in 1QFY14. Most of reduction was due
higher recovery and up-gradation rather than write-off. Write-off came down sharp
from Rs.598 cr 1QFY14 to Rs.120 cr in 2QFY14.
Inch up restructure guidance in 3QFY14
Shown Improving sign of asset quality with higher recovery and up-gradati
rather than write-off
verage Daily Volume
12260
arket Data
arget Price
Despite of improv ing fund amental from past two quarters, Bank of India
tradi ng at 0.5 tim es of on e year forw ard boo k whi ch is the lowes t level in o
valuat ion param eters. We believe that current level is attract ive entry poi nt fthe investor wi th t ime horizon more than one year. With the capital infusion
Rs.1000 cr by GoI and imp rov ing sig n of asset quality wo uld re-rate the sto c
in our view as i t p reviously w itnessed i .e. 0.8 to 1.2 t imes of book. Th
manag ement has guid ed fresh slippage of about Rs.1500 cr and restructu re
to the tun e of Rs.1000-1200 cr in 3QFY14 wh ich i s in line wit h 2QFY14. W
recomm end buy with pr ice target of Rs. 235
ompany Update BUY
393/126
SE Code 532149
2wk Range H/L
6139
kt Capital (Rs Cr)
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
ock Performance
Capital infusion by GoI raise CAR ratio to 8.1% from 7.75%
Bank has lower CAR to 7.75% at the end of 2QFY14 according to Basel 3 nor
Now Bank of India has approved to initiate process to raise further capital for iss
of 4.63cr Equity Shares to GoI on Preferential basis at a price of Rs. 215.70 p
share. This capital infusion is taking CAR ratio to 8.1% and government holding ri
to 66.7% from 64.1%. Capital infusion to the tune of Rs.1000 cr diluting our FY14E
book value by 40 bps.
As far as restructure loan are concern, bank’s total restructure loan was about 5%
total loan asset and bank’s management expects Rs.1000-1200 cr of restructure
December quarter. In 2QFY14, bank sold about Rs.370 cr of bad loan to Ass
Reconstruction Company (ARC) for recovery and during quarters its plan to s
about Rs.500 cr of bad loan to ARC.
Sequentially improving PCR provide cushion on stress asset
Despite of stable asset quality and lower slippage, Bank of India provided 24% mo
provision in sequential basis which improved its provision coverage ratio(Witho
technical write off) to 63.3% from 61% in preceding quarter same year. High
provision would provide cushion on stress asset without hurting profit going further.
"BUY"18th Dec, 2013
Narnolia Securities Ltd,
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BANK OF INDIA
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
arterly Result 2QFY14 1QFY14 2QFY13 % YoY Gr % QoQ Gr
erest/discount on advances / bills 6631 6190 5881 12.8 7.1
ome on investments 2129 1885 1835 16.0 12.9
erest on balances with Reserve Bank of India 479 465 289 65.6 2.9
hers 0 0 0 42.9 36.4
tal Interest Income 9239 8541 8005 15.4 8.2
hers Income 1100 1181 894 23.1 -6.8
tal Income 10340 9722 8900 16.2 6.4
erest on deposits 5966 5401 5154 15.8 10.5
erest on RBI/Inter bank borrowings 414 296 536 -22.8 40.0
hers 333 308 119 179.8 8.2
erest Expended 6712 6004 5810 15.5 11.8
2527 2537 2196 15.1 -0.4
her Income 1100 1181 894 23.1 -6.8
tal Income 3627 3718 3090 17.4 -2.4
ployee 897 963 700 28.2 -6.8
her Expenses 628 575 536 17.1 9.3
erating Expenses 1525 1537 1236 23.4 -0.8
P( Rs Cr) 2102 2180 1854 13.4 -3.6
ovisions 1232 695 1552 -20.6 77.4
t Profit 622 964 302 106.0 -35.5
ance Sheet Data
uity Capital 597 575 575 3.9 3.9
serve & Surplus 25,686 21,774 21,774 18.0 18.0
posits 432,282 332,695 332,695 29.9 29.9
rrowings 41,751 29,434 29,434 41.8 41.8
her liabilities and provisions 12,727 11,262 11,262 13.0 13.0
tal Liability 513,042 395,739 395,739 29.6 29.6
sh in hand 24,621 17,080 17,080 44.2 44.2
sh and balances with reserve bank of india 34,658 19,198 19,198 80.5 80.5
estment 107,413 90,147 90,147 19.2 19.2
vance 332,190 256,148 256,148 29.7 29.7
ed Assets 2,957 2,839 2,839 4.2 4.2
hers Assets 11,203 10,327 10,327 8.5 8.5
tal Assets 513,042 395,739 395,739 29.6 29.6
set Quality
PA 9873 8765 8898 11.0 12.6
A 6156 5947.3 5,228 17.7 3.5
PA(%) 3.0 3.0 3.4A(%) 1.9 2.0 2.0
R(%) Without technical write off 37.6 32.1 41.2
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BANK OF INDIA
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
nancials & Assuption 2011 2012 2013 2014E 2015E
erest/discount on advances / bills 15570 20241 23139 29515 31171
come on investments 5195 7142 7261 8828 10152
erest on balances with Reserve Bank of India 798 834 1257 1889 1889
hers 295 264 251 1 1tal Interest Income 21858 28481 31909 40233 43213
hers Income 2642 3321 3766 4562 4562
tal Income 24500 31802 35675 44795 47775
erest on deposits 12218 17957 20238 25422 28709
erest on RBI/Inter bank borrowings 813 1145 1489 1419 1419
hers 950 1065 1158 1281 1281
erest Expended 13981 20167 22885 28123 31410
7878 8313 9024 12110 11804
her Income 2642 3321 3766 4562 4562
tal Income 10519 11635 12790 16672 16366
mployee 3492 3069 3131 4131 4055
her Expenses 1629 1871 2201 3965 3892erating Expenses 5121 4941 5332 7002 6874
P( Rs Cr) 5398 6694 7458 9670 9492
ovisions 2909 4016 4709 5254 5406
t Profit 2542 2678 2749 3533 3269
46.0 5.3 2.7 28.5 -7.5
y Balance Sheet Data
posits 299559 318216 381840 434075 503527
posits Growth(%) 30 6 20 14 16
rrowings 22021 32114 35368 36854 37953
rrowings Growth(%) -2 46 10 4 3
an 213708 248833 289367 347241 366720
an Growth(%) 26 16 16 20 6
vestment 86677 86754 94613 110351 126904
vestment Growth(%) 27 0 9 17 15
stwind Calculation
eld on Advances 7.3 8.1 8.0 8.5 8.5
eld on Investments 6.3 8.7 7.1 8.0 8.0
eld on Funds 6.5 7.8 7.7 8.4 8.4
st of deposits 4.1 5.6 5.2 5.7 5.6
st of Borrowings 8.0 6.9 6.8 7.5 7.5
st of fund 4.3 5.8 5.3 6.5 6.2
aluation
ok Value 322.7 365.3 416.9 469.4 510.4
BV 1.5 1.0 0.7 0.4 0.4
E 10.3 7.7 6.3 3.8 4.1
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