Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys

8/13/2019 Investment Funds Advisory Today- Buy Stock of UltraTech Cement Ltd, DB Corp and Infosys

1/25

"BUY" 14th Jan 2014

In view of upcoming general election, we expect government ad spending to go up substantially. Being one of the biggest player, company wi

benefit from this. Considering its long-term growth story with favorable earning scenario and leadership position in key market, we are positiv

on the stock. We initiate BUY view on the stock with the target price of Rs 340. At a CMP of Rs 305, stock trades at 4.3x of FY15E P/BV

............................................... ( Page : 5-6)

UltraTech Cement Ltd : "BUY" 14th Jan 2014

We are expecting 8%-15% Sales growth with ~19% ROE in FY15E.We expect cement demand to pick up from 2HFY14 onwards driven b

governments pre-election spending as well as on account of rural demand pick post the good monsoon witnessed this year. UTCL is a large

cement player in India and we expect it to maintain or increase the same through timely commissioning of capacities, which are expect to come

on stream by FY15E.We value the stock and arrive at the target price of Rs 1846. As from the current level the upside is very limited (10%), so w

recommend investors to "Buy" the stock at lower level dips to get a decent returns over a time horizon of 12-18 month

................................................. ( Page :2-4)

Zensar Tech :"Better growth trajectory" "BUY" 14th Jan 2014

The deal booking and pipeline is good and expects to perform well going forward. It expects double digit growth in the Enterprise Service

business for the FY15E on the back of healthy pipeline. Also, it anticipates good growth from the IMS for the FY'15E. Considering healthy orde

pipeline and its earning visibility in near future, we maintain BUYview on the stock and we revise our target price from Rs 400 to Rs 440. At

CMP of Rs 412, stock trades at 7.2x FY14E EPS . ............................................. ( Page : 7-8)

14th Jan, 201

Edition : 183

IEA-Equity

Strategy

GAIL : "Neutral" 10th Jan 2014

INDUSIND BANK "Neutral" 13th Jan 2014

Despite of reported higher than expected profit we have neutral view on the stock owing to shifting of loan mix from consumer finance to

corporate loan which will lead to margin compression and deterioration in asset quality as per our view. Corporate loans generally are big tick

size in nature and with slowing of economy there are higher chances of these loan slip into NPA than other loan. Moreover retail loans are hig

yield in nature than corporate loan. At current price, we have neutral view on the stock due to trading almost near to our valuation multiple an

anticipating margin compression and higher slippage......................... ( Page : 13-18)

Infosys : "On the way of excitement" "BUY" 13th Jan 2014

Infosys largely reported inline set of sales numbers and beats the street on margin front, In USD term, Sales grew by 1.65%(QoQ) and 0.5%(QoQ

in INR term, led by 0.7% (QoQ) volume growth and 0.7%(QoQ) pricing growth. At a CMP of Rs 3549, it trades at 16.3x FY15E At a CMP of R

3549, it trades at 16.3x FY15E earnings. We retain ourBUYview on the stock with a target price of target price of Rs 3910 (revised from 3620

....................................... ( Page : 9-12)

DB Corp :"On strong footing"

Company registered a turnover of Rs. 26902.25 Cr, up by 19% in H1FY14 compared to corresponding previous year period. There was fall o

10% in operating profits of the company to Rs 2971.72 Cr for H1FY14. The Other income was down 8% to Rs 279.6 Cr while Interest cost gre

99% to Rs 169.36 Cr. .......................................... ( Page : 22-24)

Private Bank Result Preview 3QFY14 : 13th Jan 2014

Broadly banking indices outperform Nifty by 6% in third quarter and most of banking stocks are trading at attractive valuation. Despite of, w

have caution view on account of slowdown in economy, high interest rate and inflationary pressure. High inflation would be risk for th

economy going forward. Any rise in inflation would result of rise in interest rate by RBI in its third quarter monetary policy review on 28t

Jan.2014 which would be negative for banking industry. Most of banking stocks are expected to report moderate revenue and profit growt

owing to multiple headwinds. In private sector banking universe we like HDFC Bank, ICICI bank and DCB. ............................................. ( Page

19-21)

Narnolia Securities Ltd,

India Equity Analytics aliy Fundamental Report on Indian Equities


2/25

UltraTech Cement Ltd.

1675

1846

187510%

-2%

532538

45942

18377

6272

1M 1yr YTD

solute -7.3 -14.8 -10.2

l. to Nifty -9.0 -19.9 -14.3

2QFY14 1QFY14 4QFY13

omoters 62.0 62.0 62.0

20.7 20.7 20.6

4.8 4.6 4.6

hers 12.6 12.7 12.7

Financials : Q2FY14 Y-o-Y % Q-o-Q % Q2FY13 Q1FY1

Net Revenue 4522 -4.3 -9.2 4727 498

EBITDA 679 -34.4 -36.7 1035 107Depriciation 257 10.8 2.0 232 25

Interest Cost 89 48.3 34.8 60 6

Tax 107 -54.1 -56.7 233 24

PAT 264 -52.0 -60.8 550 67(In Cr

side

ange from Previous

MP

Struggle for beter Manufacturing : Financial performance impacted by lower selling price an

subdued demand. The demand remained sluggish due to prolonged monsoon across the country

resulted in reduced offtake by infrastructure and real estate companies. During the quart

,benefit of lower imported coal prices was get cancelled due to sharp depreciation of the rupe

against the dollar. Logistics and raw material costs continued to rise given the high diesel price

However, optimisation of fuel mix i.e use of pet coke helped to lower power and fuel costs to a

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

ock Performance-%

are Holding Pattern-%

yr Forward P/B

Source - Comapany/EastWind Research

Capacity Addition : Meanwhile, UltraTech Cement agreed to purchase debt-laden Jaiprakas

Associates' Gujarat cement unit having a capacity of 4.8 million tonnes for Rs 3,800 crore. Gujara

cement unit comprises of an integrated cement unit at Sewagram and grinding unit at Wankbor

With this acquisition of 4.8 million tonnes per annum, the company's current capacity increases t

59 million tonnes per annum. The transaction implies a valuation of $124 per tonne of cemen

which is lower than the existing benchmark of around $140 per tonne, and is a positive fo

UltraTech.Currently,UltraTechsdebt is around Rs.4,500 crore. After the transaction is completed

the companysnet debt-to-equity ratio will increase to around 0.45 from 0.27. Debt will increas

to 2 times EBIDTA. With projects underway it will stand raised to 70 million tonnes by 2015.

rget Price

evious Target Price

ompany Update Buy

arket Data

The outlook continues to remain challenging. Demand growth in FY14 is likely to be around 5 %

though in the long term growth is likely to be over 8 % - 15% . Government initiatives t

expedite large infrastructure projects have yielded little so far and this is putting pressure o

cement makers, especially those with debt that has become expensive to service due to higinterest rates.We believe that UltraTech will maintain its healthy debt protection metrics

supported by its earnings and cash flows.At present Ultratech is running at 79% of its capacit

utilization.The utilization levels will decline due to stabilization of supply from new capacitie

owing to insufficient demand in the domestic market. UltraTech plans to strengthen its logistic

infrastructure and increase its captive power plant capacity, which will help to reduce it

operational cost.We value the stock at the target price of Rs 1846. From the current level th

upside is very limited (10%), so we recommend investors to "Buy" the stock at dips to get

erage Daily Volume (Nos.)

E Code

ULTRACEMCOE Symbol

wk Range H/L

kt Capital (Rs Crores)

2066/1404 Q2FY14 Update :Ultratech Cement reported a 52 per cent dip in net profit for the July-Septembe

quarter at Rs 264. Net sales were down 4 per cent at Rs 4,502 crore .Cement and clinker sale

remained unchanged compared with last year at 9.1 million tonnes while white cement and wal

care putty sales were up 15 per cent at 2.75 lakh tonnes (2.39 lakh tonnes). Despite flat cemen

sales, overall cost increased 4 per cent to Rs 4,100 crore (Rs 3,927 crore) on the back of hig

logistics cost.Overal realisation during the quarter was down 5 per cent at Rs 239 per 50 kg ba

compared with Rs 252 in last year.The companyslong-term borrowings stood lower at Rs 3,84

crore (Rs 3,893 crore), while deferred tax liabilities increased 9 per cent to Rs 2,073 crore (R

1,906 crore). EBITDA slipped 34.3 percent on yearly basis to Rs 660 crore and operating prof

margin declined 670 basis points Y-o-Y to 14.7 percent in the quarter.

fty

"BUY"14th Jan' 14


Mar-05

Oct-05

May-06

Dec-06

Jul-07

Feb-08

Sep-08

Apr-09

Nov-09

Jun-10

Jan-11

Aug-11

Mar-12

Oct-12

May-13

Price 1x

2x 3x

4x 5x

6x 7x


3/25

UT LOOK :

FY11 FY12 FY13 FY14E

13798 19232 21319 21267

154 371 304 363

13952 19603 21623 21630

3280 4639 4646 4607

2881 3741 4243 4586

2696 4194 4839 3791

813 963 1023 1110

292 256 252 325

384 948 1179 7751367 2403 2678 1934

13 19 18 11

2.9 3.2 3.4 2.9



L PERFORMANCE

et Revenue from Operation

her Income

tratech's EBIDTA growth has been consistently beats the industry average as well as its peers

C and Abuja cements. In last few years it also led the industry and its peers on PAT growth .It

ats its peers on account of cement realization and volume sales. Additionally Ultratech has

o been increasing the usage of low cost pet coke in its fuel mix there by moderating its cost

essure. Strong Brand premium and operational efficiency drives its industry leading

ofitability . With the overall slow down in demand, Ultratech will continue to loose its market

are in FY14E on capacity delay. Hence, We are expecting 8%-15% Sales growth with ~19% ROE

FY15E.We expect cement demand to pick up from 2HFY14 onwards driven by governments

e-election spending as well as on account of rural demand pick post the good monsoon

tnessed this year. UTCL is a largest cement player in India and we expect it to maintain or

crease the same through timely commissioning of capacities, which are expect to come on

eam by FY15E.We value the stock and arrive at the target price of Rs 1846. As from the

rrent level the upside is very limited (10%), so we recommend investors to "Buy" the stock

lower level dips to get a decent returns over a time horizon of 12-18 months.

tal Income

ompany Description :, -

rth being the largest, contributing 33 per cent to its sales, followed by west (31 per cent),

uth (20 per cent), and east (16 per cent) - thereby insulating it from downtrends in any single

gion. The company has a strong focus on improving operating efficiencies; it has 529

egawatts (MW) of captive power generation capacity, which meets 80 per cent of its power

quirement and also maintains power consumption norms in line with the other players in the

dustry.

n The Expansion Front : Setting up a cement plant with 5.5 MMTPA cement and a 75 mega

att (MW) captive power plant, with an investment of Rs 2,500 crore. The company hasceived approval from Expert Appraisal Committee (EAC), under the Ministry of Environment,

r the proposed facility. The cement plant will be based on the dry process technology for

ment manufacturing with pre-heater and pre-calciner technology and the coal requirement for

e project will be met by importing it from Indonesia and South Africa, as an interim basis.

tcoke will be procured from Reliance Industries Limited, Jamnagar.


AT

OE%

B

wer and fuel

eight and forwarding

ITDA

epriciation

terest Cost

x


(20

-

20.0

40.0

60.0

80.0

100

120

140

160

-

1,000

2,000

3,000

4,000

5,000

6,000

Q1FY11

Q2FY11

Q3FY11

Q4FY11

Q1FY12

Q2FY12

Q3FY12

Q4FY12

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

Q2FY14

Q3FY14E

Q4FY14E

Net Revenue from Operation

Sales Growth

0

10

20

30

40

50

60

FY09 FY10 FY11 FY12 FY13

Capacity Of Cement Production (in MT)

Cement Production

Cement Capacity Utilisation in %

14 15

10

12 1

19

22

13

161

24

27

19

212

-

5

10

15

20

25

30

FY09 FY10 FY11 FY12 FY13

NPM % OPM % EBITDA %


4/25

FY10 FY11 FY12 FY13

124 274 274 274

4495 10373 12550 14955

4620 10647 12824 15230

857 3295 4843 5169750 727 705 1227

32 113 121 135

683 1830 2207 2338

133 473 709 949

8375 21630 24904 29590

6 39 40 62

4953 12265 12729 14254

260 760 1940 3601

146 583 1544 1066

827 2094 2198 2541

210 825 1089 1376

112 190 214 185

219 873 1041 1048

8375 21630 24904 29590

FY10 FY11 FY12 FY13

3.1 2.9 3.2 3.4

88.1 49.9 87.7 97.7

2.9 6.0 5.7 6.5

9.5 13.3 11.5 11.0

1.2 1.5 1.1 1.2

FY10 FY11 FY12 FY13

1673 2195 3482 4122

-79 -197 -96 -4811593 1998 3385 3641

-843 -2240 -3050 -4407

-740 248 -353 715

10 6 -18 -51

et Cash From Operation

sh From Investment

sh from Finance

et Cash Flow during year

sh from Operation

anges In Working Capital

S PERFORMANCE

rading At :

ATIOS

ASH FLOWS

pital work-in-progress

ade payables

ort-term provisions

tal liabilities

tangibles

ngible assets


ng-term loans and advances

ventories

ade receivables

sh and bank balances


are capital

serve & Surplus

tal equity

ng-term borrowingsort-term borrowings

ng-term provisions

editors to Turnover%

ventories to Turnover%

ort-term loans and advances

tal Assets

B

S

ebtor to Turnover%


0

50 0

1000

1500

2000

2500

0

000

000000

000

000

000

000

NIFTY ULTRACEMCO


5/25

DB Corp

302

340

-

13%

-

1M 1yr YTD

bsolute 11.5 25.0 -

l. to Nift 14.0 21.6 -

Current 2QFY14 1QFY14

omoters 74.96 74.97 75.0

17.7 16.5 14.7

I 2.95 4.00 5.34

hers 4.36 4.57 5.02

Financials Rs, Cr

2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%

Revenue 437.98 449.4 -2.5% 378.37 15.8%

EBITDA 112.45 135.38 -17% 81.36 38%

PAT 63.24 77.71 -19% 45.41 39%

EBITDA Margin 25.7% 30.1% (440 bps) 21.5% 420 bp

PAT Margin 14.4% 17.3% (290 bps) 12.00% 220 bp


(Source: Company/Eastwind)

ock Performance

wk Range H/L

ange from Previous

ock Performace with Nifty


25750

fty 6273

Recently, Print media companies decided to hike its cover prices selectively in

mature market to maintain its margin due to increase in news print cost. Goi

forward, improving ad revenue, cost control measures and expanding into new ar

would energize its revenue visibility in near future.

About the Company:DB Corp, the publisher of Dainik Bhaskar, is a leading publishi

house with its highest readership in the country. It publishes 8 newspapers,

newspaper editions and around 200 sub-editions in 4 languages (Hindi, Gujarati, Engl

and most recently Marathi) in 13 Indian states.

Earning Preview (3QFY14E):DB Corp is like to report 19% (YoY) revenue growth to 366cr led by 18% of revenue growth and 15% of subscription revenue. PAT is expect

to grow by 17% (YoY) to Rs 85Cr. We expect to see EBITDA margin up by 100-150b

(YoY) to 28-28.5% because of benign RM cost.

Key facts to watch out: Commentary on response of new editions (Patna, Akola a

Amravati), new expansion plan, trend of ad revenue from 4 states poll and fro

governments.

Fit well on strong footing: Management is very confident of achieving 17% to 20

growth rate in upcoming quarter. The Company is following principle of launching

least 2 editions in a year and enter into at least one 1 market in every 2 years. Compa

launched Akola edition in July and Amravati edition in August. Recently company h

launched its Patna edition. According to the company, the initial response in Biharquite encouraging and as per booking, record of new subscription makes it no.1 in t

first day of its launch.

Expanding into new exposure: The company has interest in radio under the MY F

brand (94.3), operating in 17 FM radio stations across mini metros and small towns. T

company also has exposure to new media with internet and short messaging servi

(SMS) portals.

View and Valuation: In view of upcoming general election, we expect government

spending to go up substantially. Being one of the biggest player, company will bene

from this. Considering its long-term growth story with favorable earning scenario a

leadership position in key market, we are positive on the stock. We initiateBUY vie

on the stock with the target price of Rs 340. At a CMP of Rs 305, stock trades at 4.3xFY15E P/BV.

"On strong footing"

MP

pside

ompany update BUY

rget Price

Festive season coupled with the recently held state assembly elections in 4 stat

(Rajasthan, M.P, Chhattisgarh, and Delhi) will likely drive revenue growth for pr

media companies. Across the print media players, DB Corp will be one of the stro

beneficiaries for prospect of revenue generation. These 4 states contribute almost 60

of its revenue.

verage Daily Volume

5502

evious Target Price

arket Data

318.65/210

E Code 533151

SE Symbol DBCORP

kt Capital (Rs Cr)

"BUY"14th Jan' 14



6/25

DB Corp


nancials

Source: Com an /Eastwi

evenue Geography-wise Revenue Segments


s,cr FY10 FY11 FY12 FY13 FY14E FY15E

ales 1062.1 1265.18 1451.51 1592.32 1865.97 2182.15

M Cost 327.87 383.91 508.04 544.54 653.09 763.75

WIP -0.0016 -0.06 -0.04 0.03 0.04 0.04

mployee Cost 131.81 184.56 242.93 279.5 335.88 403.70

d Spend 12.98 12.52 15.04 17.21 22.39 28.37

vent Expenses 11.83 16.02 15.04 12.08 18.66 21.82

onsumption of store & spare 51.49 58.7 83.62 94.81 115.69 150.57

istribution expenses 22.81 21.28 24.34 28.01 33.59 41.46

ther expenses 161.24 185.2 216.06 234.07 279.90 329.51

otal expenses 720.0284 862.13 1105.03 1210.25 1459.2 1739.2

BITDA 342.0716 403.05 346.48 382.07 406.7 442.9

epreciation and Amortisation 37.83 43.28 50.57 58.06 64.6 75.6

ther Income 11.15 14.18 24.02 21.34 24.3 28.4

BIT 304.2416 359.77 295.91 324.01 342.1 367.4

nterest 35.69 15.3 9.23 7.99 8.0 5.1

BT 279.7016 358.65 310.7 337.36 358.4 390.7

ax Exp 105.72 99.97 98.32 113.18 120.2 131.1

AT 173.9816 258.68 212.38 224.18 238.2 259.6

rowth-% (YoY)

ales 10.5% 19.1% 14.7% 9.7% 17.2% 16.9%

BITDA 132.2% 17.8% -14.0% 10.3% 6.5% 8.9%

AT 265.4% 48.7% -17.9% 5.6% 6.2% 9.0%

xpenses on Sales-%

M Cost 30.9% 30.3% 35.0% 34.2% 32.0% 34.3%

mployee Cost 12.4% 14.6% 16.7% 17.6% 16.6% 17.0%

ther expenses 15.2% 14.6% 14.9% 14.7% 15.0% 15.1%

ax rate 10.0% 7.9% 6.8% 7.1% 6.4% 6.0%

Margin-%

BITDA 32.2% 31.9% 23.9% 24.0% 21.8% 20.3%

BIT 28.6% 28.4% 20.4% 20.3% 18.3% 16.8%

AT 16.4% 20.4% 14.6% 14.1% 12.8% 11.9%aluation:

MP 239.15 246.25 219.45 212.1 302.0 302.0

o of Share 18.15 18.3 18.3 18.33 18.3 18.3

W 648.7 828.87 927.08 1029.15 1160.1 1301.7

PS 9.59 14.14 11.61 12.23 12.99 14.16

VPS 35.74 45.29 50.66 56.15 63.29 71.02

oE-% 26.8% 31.2% 22.9% 21.8% 20.5% 19.9%

/BV 6.7 5.4 4.3 3.8 4.8 4.3

/E 24.9 17.4 18.9 17.3 23.2 21.3


7/25

Zensar Tech

1M 1yr YTD Key Facts

solute 29.1 49 23.99

l. to Nifty 28.5 43.6 21.42


omoters 48.27 48.35 48.36

11.99 11.68 10.75

0.96 1.26 1.28

hers 38.78 38.71 39.61

Financials2QFY14 1QFY13 (QoQ)-% 2QFY13 (YoY)-%

Revenue 599.7 533.5 12.4 545.05 10.0

EBITDA 102.54 74.1 38.4 81.05 26.5

PAT 70.6 60.9 15.9 32.17 119.5

EBITDA Margin 17.1% 13.9% 320bps 14.9% 220bp

PAT Margin 11.8% 11.4% 40bps 5.9% 590bp

Zensar is on the way to shut down few if its data centre in on site business, a

entering into new emerging space in Social networking, Mobility, Analytics and Clo

because of good demand. We expect that order pipeline could be healthier on t

back of good demand seen in these emerging areas.

3QFY14E earnings preview:Zensar Tech is likely to report 5-6% (QoQ) sales growth l

by healthy growth across all geographies and PAT growth could be seen at 4-5% (QoQ

We expect that EBITDA margin could be down by 100-150bps (QoQ) to 16%.

Key things to watch:Updates on new deal win, revenue traction from all geographiesinorganic initiatives.

424/181

E Code 504067

E Symbol ZENSARTECH

arket Data

ange from Previous

erage Daily Volume 20884


fty 6273

1800

year forward P/E

Rs, Cro


10%

wk Range H/L

ock Performance

MP 412

rget Price 440

ompany update Buy Management expects good growth starting from 4QFY14E with its Infrastructu

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

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

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

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

evious Target Price

(Source: Company/Eastwi

Strong geographical footing:Given the order book Enterprise, business expects to gro

robustly going forward. It consciously slowed down in the Japan market as it is n

profitable and closed one account in Singapore as well. The Chosen markets to perfo

are the Middle East, China and Africa going forward.

Healthy order Pipeline:We are positive on the future prospects on back of the ord

bookings and pipeline. The recent measures like lean execution, improved efficienci

and best practices are targeted at improving the profitability profile of the company

FY14E. Recent Management comments also revealed favourable scenario of ord

booking.Inspirational revenue level of $1bn by FY16:The management has detailed the 4 foc

areas, which are expected to take Zensar to an inspirational revenue level of $1bn

FY16. They will expect to grow its existing US relationships and growing the RIM

business in European nation like UK, Germany and Benelux.

400

side 7%

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

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

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

the FY'15E.

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

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

order pipeline and its earning visibility in near future, we maintainBUY view on t

stock and we revise our target price from Rs 400 to Rs 440. At a CMP of Rs 412, sto

trades at 7.2x FY14E EPS.


"BUY"14th Jan' 14



8/25


nancials;

Zensar Tech

ients/Headcounts Metrics;



1mn+ 47 43 41 40 49 47

5mn+ 6 7 7 8 6 6

10mn+ 1 2 2 2 1 1

20mn+ 1 1 1 1 1 1

op 5 clients 35% 35% 35% 35% 37% 39%

op 10 clients 40% 42% 42% 43% 43% 46%

SO 69 59 56 55 66 61

nsite 69% 72% 70% 69% 68% 67%

ffshore 31% 28% 30% 31% 32% 33%

tilization (Including Trainees) 81% 82% 83% 82% 81% 80%

eadcount 7286 6825 6504 6508 6519 6657

umber of million dollar

ient Contribution to Business

ffort & Utilization

s, Cr FY10 FY11 FY12 FY13 FY14E FY15E

et Sales 497.08 562.56 700.15 2114.52 2403.19 3205.9ther Operating Income 0.00 15.03 12.57 13.95 16.82 22.44

otal income from operations (net) 497.08 577.59 712.72 2128.47 2420.01 3228.4

urchases of stock-in-trade 0.00 0.00 0.00 236.86 269.30 359.27

mployee Cost 393.17 343.12 411.36 1177.83 1258.40 1678.7

ther expenses 0.00 135.71 165.98 418.73 532.40 710.26

otal Expenses 393.17 478.83 577.34 1833.42 2060.11 2748.3

BITDA 103.91 98.76 135.38 295.05 359.90 480.13

epreciation 24.92 25.88 25.05 33.16 38.59 51.48

ther Income 8.15 14.20 27.91 8.66 72.60 80.71

xtra Ordinery Items 0.00 0.00 0.00 0.00 0.00 0.00

BIT 78.99 72.88 110.33 261.89 321.31 428.65

nterest Cost 0.55 0.85 1.03 9.95 9.61 7.69

BT 86.59 86.23 137.21 260.60 384.30 501.67

ax 2.43 -2.24 42.67 86.07 134.50 175.58

AT 84.16 88.47 94.54 174.53 249.79 326.08rowth-%

ales 17.8% 13.2% 24.5% 202.0% 13.7% 33.4%

BITDA 28.7% -5.0% 37.1% 117.9% 22.0% 33.4%

AT 38.9% 5.1% 6.9% 84.6% 43.1% 30.5%

Margin -%

BITDA 20.9% 17.6% 19.3% 14.0% 15.0% 15.0%

BIT 15.9% 13.0% 15.8% 12.4% 13.4% 13.4%

AT 16.9% 15.7% 13.5% 8.3% 10.4% 10.2%

xpenses on Sales-%

mployee Cost 79.1% 59.4% 57.7% 55.3% 52.4% 52.4%

ther expenses 0.0% 23.5% 23.3% 19.7% 11.2% 11.2%

ax rate 2.8% -2.6% 31.1% 33.0% 35.0% 35.0%

aluation

MP 272.10 157.85 180.00 248.58 412.00 412.00

o of Share 2.16 4.34 4.34 4.36 4.37 4.37

W 293.93 366.96 417.42 751.69 958.03 1238.1

PS 38.96 20.38 21.78 40.03 57.16 74.62

VPS 136.08 84.55 96.18 172.41 219.23 283.32

oE-% 28.6% 24.1% 22.6% 23.2% 26.1% 26.3%

ividen Payout ratio 16.4% 19.9% 37.3% 21.9% 17.4% 14.1%

/BV 2.00 1.87 1.87 1.44 1.88 1.45

/E 6.98 7.74 8.26 6.21 7.21 5.52


9/25

Infosys

1M 1yr YTD

solute 6.3 52.4 53.1

l. to Nifty 3.3 49.1 49.4


omoters 15.94 16.04 16.04

39.93 39.55 40.52

16.16 18.28 17.51

hers 27.97 26.13 25.93

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

Revenue 13026 12965 0.47 10424 25.0

EBITDA 3258.9 2836.9 14.88 2677 21.7

PAT 2874.9 2406.9 19.44 2369 21.4

EBITDA Margin 25.0% 21.9% 310bps 25.7% (70bps)

PAT Margin 22.1% 18.6% 350bps 22.7% (60bps)

arket Data

View and Valuation: Infosys seems to be on its way to rediscovering its past mojo w

revenue momentum kicking, and the NRN invisible hand in play. Furth

announcement of strategic acquisitions, better utilization of cash balances, better d

win, consistent client traction and revenue momentum would help the company

bridge the gap with rivals such as TCS.

Considering the revised guidance by management and its growth priority than marg

inching up strategy, we upgraded our EPS from Rs 181/208 to Rs 188/218 f

FY14E/15E. At a CMP of Rs 3549, it trades at 16.3x FY15E At a CMP of Rs 3549, it trad

at 16.3x FY15E earnings. We retain ourBUY view on the stock with a target price

target price of Rs 3910 (revised from 3620).

On an ongoing basis, Infosys will retain its revenue acceleration and margin expansio

also operating metrics will turn into greenery from hay. Upgradation of earni

guidance by management hinted to join the party to enjoy with 12-14% earnin

growth for FY14E like its bellwether.

Considering the strategy to build clients relation, execution of growth oriented pol

and combination of reduced onsite costs and higher utilization would be an optimis

growth story despite recent hiccups of top management exit.

Healthy Margin growth:During the quarter, its EBIT margin expanded by 310 bps (Qo

to 25%. The company's cost cutting measures are yielding the expected gains. This agais in line with what the market was expecting. During the December quarter, Infos

selling and marketing expenses declined by 13.3% compared to the second quart

Administrative expenses too have declined by 18.4% in dollar terms. Both these ha

helped improve operating margins.

Steady volume growth: The volume growth in the quarter was weak, 0.7% (Qo

growth with stable pricing growth of 0.7%(QoQ), but it is also weak for the group and f

Infosys. we expect it to be improve in the coming quarters.

Healthy deal pipeline:Overall, the company continues to show signs of recovery at t

operational level. The company has added 54 new clients in the quarter and added

clients where the deal size is over $100 million. This implies that client confidence

returning.

year forward P/E

Rs, Cro


E Code 500209

E Symbol INFY


Earning Guidance: Infosys upgrades its earning guidance from 6-10% to 9-10% to 11

12% for FY14E, now nearest to NASSCOM guidance (12-14%). Management is ve

confident to achieve the guidance figure and stated much focused on creating super

financial performance ahead.

1240448

fty 6171

wk Range H/L 35810/2190


ock Performance

erage Daily Volume

203790

"On the way of excitement"

MP 3549

rget Price 3910

Inl ine sales and beats the street on margin fro nt, upgraded earning gu idance;esult update BUY

Infosys largely reported inline set of sales numbers and beats the street on marg

front, In USD term, Sales grew by 1.65%(QoQ) and 0.5%(QoQ) in INR term, led by 0.7

(QoQ) volume growth and 0.7%(QoQ) pricing growth. However, the good news is th

the PAT grew by 21% because of cost rationalization, sequentially.

evious Target Price 3620

side 10%

ange from Previous 8%

"BUY"13th Jan' 14



10/25

argin-%

n segmental front: Infosys has reported teen set of growth in all segments;




With 0.7% pricing growth, volum

growth was reported by 0.

growth(QoQ), impacted by seaso

wave.

On QoQ,Companys margin improved

entire segments .

olume and Pricing Growth (QoQ)-%



In USD term, Sales grew by 1.65%(Qo

in USD term and 0.5%(QoQ) in INR ter

led by 0.7% volume growth a

0.7%(QoQ) pricing growth. Mgt revis

revenue growth to 11.5%-12% for FY14

EBIT margin expanded by 310 bps (Qo

to 25%. Mgt expects to see margrowth in near term.

gmental Performance:

Infos s.

evenue growth in USD term-(QoQ)


QoQ YoY QoQ YoY

SI 33.5% 0.8% 24.2% 29.9% 340bps 80bps

anufacturing 22.8% -1.3% 31.3% 24.2% 340bps (50bps)

ergy&Utilities 19.1% -0.1% 16.4% 28.8% 30bps (130bps)

tail, Logis-&Life sc- 24.6% 2.1% 27.6% 27.52% 560bps (230bps)

Margin-%Sales contribution-%gments

Sales Growth-%Margin-%


11/25

ilization:


e Company's Utilization is likely to keep inching up, which could lead to margin

pansion for a couple of quarters and that is going to be a huge positive for Infosys as a

mpany.



We expect that Infys improv

utilization despite higher attriticompare to its nearest bellwethers

good sign for its future growth story.

eadcount Metrics: Its attrition increased to 18% fro

17.3%(2QFY14) on LTM basis, howev

on sequentially basis they have been a

to control its attrition. we hope that t

further salary hikes across the board w

bring down the attrition levels go

forward.

ents Concentration:

tal Clients and Clients Addition:

Infos s.

eography wise revenue contribution-

we expect that growth from Euro as w

as Europe would prove a milestone

the company ahead because of healt

demand environment and optimis

tempo of clients expanding.


n geographical front: During the quarter, company has reported 4% revenue growth

om Euro and RoW each, which contributes 25% and 13% of sales. While revenue from

S declined by 2%, it contributes 60% of Sales.

ents MetricsThe company has added 54 new clients

the quarter and added 15 clients whe

the deal size is over $100 million. T

implies that client confidence

returning.


ents Category 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14

p clients 4.1% 4% 3.60% 3.6% 3.9% 4% 3.70%

p 5 clients 16.2% 16% 15% 14.7% 14.9% 15% 14%

p 10 clients 25.3% 25.40% 23.90% 24.0% 24.0% 24.5% 23.5%

ents, number 3QFY13 4QFY13 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14

tive clients,nos 665 694 711 715 776 798 836 873 888

ew clients 49 52 51 39 89 56 66 68 54

mployee's 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14

tal Employees (Cons-) 151,151 153,761 155,629 156,688 157,263 160,227 158404

et additions 1,157 2,610 1,868 1,059 575 2,964 -1823

terals hired 5,233 3,656 4,351 3,545 3,008 3,806 3,333

M Attrition (Stand-) 14.9% 15.0% 15.1% 16% 16.9% 17.3% 18.10%


12/25

Infos s.

ey facts from Management Interview;

Management upgraded its earning guidance for FY14E from 9-10% to 11.5-12%. This

idnace means the company only has to achieve flat growth in the fourth quarter to

eet the projection.


With 85% of the companysrevenues coming from clients based in US and Europe, the

mpany should hope the current economic recovery in developed countries would help

revenues.

They are seeing confidence coming back from clients metrics. However, they expect

heir] budgets only remain stable from last year. Clients are still focused on cost.

The Company is looking to bring in about maximum 6,000 off-campus offers starting

te January early February, so there is a lot of activity going on that is bringing people in,

gaging and developing.

nancials



Rs in Cr, FY10 FY11 FY12 FY13 FY14E FY15E

Sales, INR 22742 27501 33734 40352 50330 59631

Employee Cost 12085 14856 18340 22565 28185 33691

Other expenses 2792 3677 4671 6254 8556 10734

Total Expenses 14877 18533 23011 28819 36741 44425

EBITDA 7865 8968 10723 11533 13589 15206

Depreciation 905 854 928 1099 1371 1624

Other Income 982 1211 1904 2365 2567 3578

EBIT 7942 9325 11699 12799 14785 17160

nterest Cost 0 0 0 0 0 0

PBT 7942 9325 11699 12799 14785 17160

Tax 1681 2490 3367 3370 3992 4633

PAT 6261 6835 8332 9429 10793 12527

Growth-%

Sales 4.8% 20.9% 22.7% 19.6% 24.7% 18.5%

EBITDA 9.3% 14.0% 19.6% 7.6% 17.8% 11.9%

PAT 4.6% 9.2% 21.9% 13.2% 14.5% 16.1%

Margin -%

EBITDA 34.6% 32.6% 31.8% 28.6% 27.0% 25.5%

EBIT 34.9% 33.9% 34.7% 31.7% 29.4% 28.8%

PAT 27.5% 24.9% 24.7% 23.4% 21.4% 21.0%

Expenses on Sales-%

Employee Cost 53.1% 54.0% 54.4% 55.9% 56.0% 56.5%

Other expenses 12.3% 13.4% 13.8% 15.5% 17.0% 18.0%

Tax rate 21.2% 26.7% 28.8% 26.3% 27.0% 27.0%

Valuation

CMP 2615 2765 2865 2400 3549 3549

No of Share 57.4 57.4 57.4 57.4 57.4 57.4NW 23049.0 25976.0 31332.0 37994.0 45629.8 54797.5

EPS 109.1 119.0 145.1 164.2 188.0 218.2

BVPS 401.7 452.4 545.6 661.7 794.7 954.3

RoE-% 27.2% 26.3% 26.6% 24.8% 23.7% 22.9%

Dividen Payout ratio 25.1% 45.9% 24.0% 45.1% 23.0% 19.8%

P/BV 6.5 6.1 5.3 3.6 4.5 3.7

P/E 24.0 23.2 19.7 14.6 18.9 16.3


13/25

INDUSIND BANK

402

428-

6

-

1M 1yr YTD

bsolute -9.2 -6.9 -6.9

el.to Nifty -7.0 -9.7 -9.7


omoters 15.2 15.2 15.3

I 41.1 39.9 42.3

I 7.2 7.4 7.0hers 36.4 37.5 35.4

Financials Rs, Cr2011 2012 2013 2014E 2015E

NII 1376 1704 2233 2787 4053

Total Income 2090 2716 3596 4562 5827

PPP 1082 1373 1839 2452 2972

Net Profit 577 803 1061 1320 1633

EPS 12.4 17.2 20.3 25.3 31.1

hange from Previous( Rs)

DUSIND Bank Vs Nifty

hare Holding Pattern-%

7.88

fty 6171


Despite of higher prof it we remain have neutral view on the stoc k ow ing

shif t in g of loan mix from retai l loan to cor porate bankin g. We anticipate tw

thing s-(a) margi n com press ion, (b) higher slipp age. Retail loan generally hahigh er yield in nature than corp orate loans. Corpo rate loan has big tick et siz

loans and in slowdown of economy, corporate loan emerges as bigge

slip page risk than other loans . At the curr ent pr ice of Rs.405, stoc k is tradin

at 2.4 tim es of one year forw ard boo k. We valu e ban k at Rs.428/share wh ic

would be 2.5 times of FY14Es book value.

Better than expected earnings led by higher loan growth and margin

esult update

pside

During quarter Indusind bank reported better than expected earnings largely due

higher loan growth and margin expansion. In 3QF14, bank reported NII growth

26.4% YoY supported higher yield on asset to 13.7% and margin expansion of

bps YoY. Other income grew by 35% YoY to Rs. 480 cr in which fee incomregistered growth of 30% and trading, forex and other reported 101% growth in Y

due to low base.

Declined cost to income ratio boost PPP growth

NEUTRAL

MP

evious Target Price

arket Data

Asset quality witnessed deterioration in sequential basis

During quarter bank witnessed deterioration in asset quality with GNPA and net NPin absolute term deteriorated by 14.7% QoQ and 51% QoQ respectively. Freslippages were 1.4% (annualized) as against 1.1% in last quarter. Bank made low

provisions against loan loss, as the result net NPA as the percentage of net loareached to 0.3% as against 0.2% in 2QFY14. Provision coverage ratio (witho

technical write off) declined to 73.6% from 80% in 2QFY14 but still above regulatory requirement of 70%.


arget Price

ock Performance

2wk Range H/L 561/318

SE Code 532187

SE Symbol

Operating leverage (Operating expenses to total asset) remained at elevated lev

but cost to income ratio declined on both front i.e. on sequential and yearly basis

well. During quarter bank reported employee cost growth of 22% and operating co

growth of 22% YoY to Rs.206 cr and Rs.563 cr respectively. Cost to income ra

improved by 80 bps sequentially and 280 bps yearly to 46.5%. This led p

provisioning profit growth of 37% YoY.

INDUSINDBK

verage Daily Volume

22400kt Capital (Rs Cr)

"NEUTRAL"13th Jan, 2014



14/25


etter than expected profit on the back of healthy core earnings, lower CI ratio and

wer provision

With the support of healthy core earnings, improvement in cost income ratio and lower

ovisions, net profit grew by 30% YoY to Rs. 347 cr as against our expectation of

s.303 cr largely due to higher than expected loan growth and operating leverage.

ealthy profit led ROA and ROE to 1.74% and 16.8% respectively.

argin expansion of 10 bps YoY to 3.7%

ank reported NIM expansion of 20 bps YoY to 3.7% largely due to improvement in loan

eld whereas cost of deposits remained flat. Going forward margin would be

mpressed due to banksstrategy to shift loan mix from consumer to corporate. Loan on

eld during quarter was 13.7% versus 13.5% in last quarter while cost of fund by and

rge stable at 10%.

oderate deposits growth due to muted current and term deposits growth

balance sheet front, bank reported moderate growth 10% YoY in deposits largely due

stagnant growth in current account and term deposits. Demand deposits grew by 4%

oY whereas saving deposits grew by 50% YoY. As a percentage of total deposits

emand deposits and saving deport were 15.7% and 16.5% versus 16.6% and 12.1% in

QFY13 respectively. CASA ratio was remained flat at 29.6% from 31.4% in 2QFY14 and

8.7% in 3QFY13. Term deposited reported growth of 4.7% YoY to Rs.382 bn.

oan growth higher than industry average and shifting of loan mix

oan reported 27.4% YoY growth above industry average of 20% despite of slowdown in

conomy. During quarter bank witnessed shifting of loan composition from consumer

ance division to corporate finance which would be result of margin compression and

eterioration asset quality. Consumer loan (which is generally high yielding in nature)omposition has changed to 47% of loan advance from 52% in 3QFY13 whereas

rporate banking division constitute 53% of loan. Corporate loans are generally in high

ket size and in slowdown of economy; there is high chances of such loan slip into NPA.

ut this quarter we note that bank is able to improve it yield in both front. Corporate yield

proved to 11.9% from 11.5% and retail loan improved to 15.6% from 15.5% in

quential basis.

INDUSIND BANK



15/25

undamenatl Through Graph

INDUSIND BANK

Source: Eastwind/Company


NII profit led by higher loan growth a

margin expansion

Sequentail and yearly improvement of

ratio boosted PPP

Higher core earnings, improvement in CI ra

and lower provisions support profit growth

higher than expecattion



16/25

aluation Band (1yr forward book value)

Loan growth higher than industry avera

and moderate growth in deposits ledmuted current deposits and term deposits

Margin expansion of 10 bps on account

increased in loan yiled and stable cost of fu

Trading at 1.5 times of one year forw

book which we believe fair looking at inds

headwinds and economy


INDUSIND BANK

undamenatl Through Graph




17/25


INDUSIND BANK

uarterly Performance



arterly Result( Rs. Cr) 3QFY14 2QFY14 3QFY13 % YoY % QoQ

erest/discount on advances / bills 1739 1611 1455 19.5 7.9

come on investments 368 365 325 13.5 0.8

erest on balances with Reserve Bank of India 36 42 21 71.9 -12.9

hers 0 0 0 333.3 -13.3

tal Interest Income 2143 2019 1800 19.1 6.2

hers Income 480 417 356 35.0 15.2

tal Income 2624 2435 2156 21.7 7.7

erest Expended 1413 1319 1223 15.6 7.2

730 700 578 26.4 4.3

her Income 480 417 356 35.0 15.2

tal Income 1210 1117 934 29.6 8.4

mployee 206 202 168 22.1 1.9

her Expenses 357 327 293 21.9 9.3erating Expenses 563 529 461 22.0 6.5

P( Rs Cr) 647 588 472 37.1 10.1

ovisions 126 89 79 60.3 42.0

T 521 499 393 32.5 4.4

x 174 169 126 38.1 3.2

t Profit 347 330 267 29.8 5.0

lance Sheet data( Rs. Bn)

t Worth 8664 8313 7495 15.6 4.2

posits 56247 53058 51098 10.1 6.0

rrowings 14771 13995 6567 124.9 5.5

tal Liabilities 81799 77422 67896 20.5 5.7

vestments 20134 19413 17594 14.4 3.7

vances 52469 48968 42426 23.7 7.1

tal Assets 81799 77422 67896 20.5 5.7

set Quality

NPA 626 546 422 48.3 14.7

A 165 109 125 32.0 51.0

GNPA 1.2 1.1 1.0

NPA 0.3 0.2 0.3


18/25

INDUSIND BANK

nancials & Assuptions




come Statement 2011 2012 2013 2014E 2015

terest Income 3589 5359 6983 8308 10419

terest Expense 2213 3655 4750 5521 6367

I 1376 1704 2233 2787 4053

hange (%)

on Interest Income 714 1012 1363 1775 1775

otal Income 2090 2716 3596 4562 5827

hange (%)

perating Expenses 1008 1343 1756 2110 2855

e Provision Profits 1082 1373 1839 2452 2972

hange (%)

ovisions 504 180 263 455 535

BT 577 1193 1576 1997 2437

AT 577 803 1061 1320 1633

hange (%)

alance Sheet 2011 2012 2013 2014E 2015E

eposits( Rs Cr) 34365 42362 54117 62234 74681

hange (%) 23 28 15 20

which CASA Dep 9331 11563 15867 20537 22404

hange (%) 24 37 29 9

orrowings( Rs Cr) 5525 8682 9460 15559 18670

vestments( Rs Cr) 13551 14572 19654 23338 28005

ans( Rs Cr) 26166 35064 44321 54071 67589

hange (%) 34 26 22 25

atio 2011 2012 2013 2014E 2015E

vg. Yield on loans 10.8 12.0 12.7 0.0 12.5

vg. Yield on Investments 5.4 7.4 6.5 6.6 6.5

vg. Cost of Deposit 5.3 7.3 8.8 8.9 8.5

vg. Cost of Borrowimgs 7.0 6.7 7.6 7.5 7.5

aluation 2011 2012 2013 2014E 2015E

ook Value 87 101 146 171 195

MP 264 321 405 405 405

BV 3.0 3.2 2.8 2.4 2.1


19/25

Private Bank Result Preview 3QFY14

Revenue growth would be moderate owing to tepid loan growth

Performance of banking sector is likely to remain modest in 3QFY14E as most

private sector banks in our coverage are expected to reported muted net intere

income owing to tepid loan growth and stress in asset quality. However private sect

banks are expected to report stable asset quality on sequential basis as compare

PSBs. Loan loss provision are expected to remain high due to higher restructu

assets are in pipeline as per some of key bank management. We expect impairme

of asset in private sector banks are less and slippages are expected to remain sam

as in 2QFY14. We expect NII to grow by 23.6% YoY in our private banki

coverage universe. HDFC Bank and DCB are expected to report 34% and 22% Yo

in 3QFY14E led by higher than industry loan growth and stable NIM.

ock Performance During Quarter

Operating leverage high provision dent net profit

Profitability of private sector banks are expected to report 11% YoY on the back

loan loss provisions, MTM provisions, cost income ratio and lower core earning

HDFC bank and DCB are expected to report 23% YoY and 26% YoY growth in th3QFY14E while most of large and mid cap banks are expected to report muted pro

growth. With the flow of FCNR deposits, we expect deposits cost to come down fro

present level but most likely the bank get benefit from 4QFY14 and onwards.


Asset quality pressure continue to persist

Asset quality pressure is likely to remain in 3QFY14E due to rising interest rate, hi

inflation and slower pace of economic growth. Gross slippages are expected to

elevated as per most of banker. We expect restructure asset in private sector ba

would be less as compare to PSBs. With the implementation of FRP (route throu

which loans lead to investment book), banks are expected to report lower le

restructure asset as against previous queerer. In worsen macroeconom

environment, we expect asset quality to remain at the level of 2QFY14.

fty Vs Bank Nifty during Quarter

oan (Rs tn) and YoY Gr(%)

Muted loan growth reported by system

In 2QFY14 banking industry experience loan growth of 18% YoY led by transfer

CP/CD borrowings to bank loans while in 3QFY14 loan growth has moderated

15% YoY (as on 13th Dec.2013) due to revival of bond and lower demand

corporate loan led by slowdown in economy. We expect loan growth of 15-20% Y

growth in private sector while DCB and HDFC bank are expected to grow

20%+YoY loan growth.

Deposits growth lead by flow of FCNR deposits

Deposits growth in the system registered 17% YoY growth as per RBI date (as

13th Dec.2013) due to flow of FCNR deposits through RBIs special concessi

window. As per RBI data total fund inflow through FCNR is the tune of US$ 26

which would help bank to keep cost of deposits low. But we expect bank would g

benefit from 4QFY14 and onwards. We expect lower cost of deposits of deposits

private sector banks largely due to strong franchise base network. HDFC bank a

ICICI bank which have CASA of 40%+ would be benefited more than other banks

term of low cost of fund. Through FCNR deposits we expect Yes Bank would

leader but actual benefit would come from next quarter.



20/25

utlook

We expect Axis Bank to report 20% YoY loan growth and 12% YoY deposits growth.

ost Income ratio is expected to be 42% while loan loss provision was remain same at

quential basis. Profitability of bank would be muted on account of non improvement of

an yield.

CB

e expect loan and deposits growth of DCB would be higher than industry average.

ofitability would be grown on account of stable asset quality. We expect Cost to Income

tio at 66% and NIM are expected to compression by >10 bps on sequential basis. Key

onitor able would be CI ratio.

DFC Bank

e expect bank to report loan and deposits growth of 21% and 14% respectively. Asset

ality would be remained under control and profitability are expected to grow on account

comfortable core earnings and stable asset quality. Operating leverage is expected to

e in better position.

oadly banking indices outperform Nifty by 6% in third quarter and most of banking

ocks are trading at attractive valuation. Despite of, we have caution view on account of

owdown in economy, high interest rate and inflationary pressure. High inflation would be

k for the economy going forward. Any rise in inflation would result of rise in interestte by RBI in its third quarter monetary policy review on 28th Jan.2014 which would be

egative for banking industry. Most of banking stocks are expected to report moderate

venue and profit growth owing to multiple headwinds. In private sector banking

iverse we like HDFC Bank, ICICI bank and DCB.

xis Bank




Cr 3QFY14E 2QFY14 3QFY13 % YoY Growth % QoQ Growth

I 3006 2937 2495 20.5 2.3

PP 2772 2750 2311 19.9 0.8

et Profit 1333 1362 1296 2.9 -2.1

xis Bank


I 88 91 72 22.2 -3.3

PP 42 40 32 31.3 5.0

et Profit 34 33 27 25.9 3.0

CB


I 5087 4477 3799 33.9 13.6

PP 3695 3387 3024 22.2 9.1

et Profit 2289 1982 1859 23.1 15.5

DFC Bank


21/25

ES Bank

e expect Yes bank to report muted earnings on account of high credit cost andstructure assets. Loan growth and deposits growth are expected to be line with industry

verage. We expect NIM compression on account higher cost of fund and lower loan

eld. NIM is key monitorable for the quarter.

esult Preview ; at a glance



ICI BANK

e expect loan and deposits growth of 15% and 11% YoY for 3QFY14E respectively.

evenue growth was due to hike of lending rate and asset quality is expected to be

able on sequential basis. Operating leverage and cost of fund would be key

onitorable.

&K BANK

&K bank is expected to report 17.5% YoY profit growth on account of 20%+loan growthd stable asset quality. We expect little bit higher of gross slippage during the quarter as

ank reported higher slippage in previous quarter. NIM would be expanded


22/25

GAIL

1M 1yr YTD

bsolute 0.6 -5.6 -5.0

l. to Nifty 1.7 -8.7 -20.0


omoters 57.3 57.3 57.3

17 16.7 16.3

I 21.6 22 22.2

hers 3.9 3.9 4

Financials

2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-%

Revenue 13944.6 12855.6 8.5 11361.2 22.7

EBITDA 1405.5 1136.7 23.6 1380.3 1.8

PAT 915.7 606.5 51.0 985.4 -7.1

EBITDA Margin 10.1% 8.8% 120bps 12.1% (200bps)

PAT Margin 6.6% 4.7% 180bps 8.7% (210bps)

22

1HFY14 Financial Highlights :

fty

GAIL (India) Limited is a gas utility company. The Company is engaged in transportthrough pipeline; manufacture of basic chemicals, fertilizer and nitrogen compounds,

plastics and synthetic rubber in primary forms; extraction of crude petroleum; extraction ofnatural gas and electric power generation, transmission and distribution. The companyoperates in five segments viz Gas Transmission Business ,LPG Transmission Business,Gas Trading Business, Petrochemical Business and LPG and Liquid HydrocarbonBusiness.

Company registered a turnover of Rs. 26902.25 Cr, up by 19% in H1FY14 compared tocorresponding previous year period. There was fall of 10% in operating profits of thecompany to Rs 2971.72 Cr for H1FY14. The Other income was down 8% to Rs 279.6 Crwhile Interest cost grew 99% to Rs 169.36 Cr, The net profits for H1FY14 was Rs1723.84 Cr down by 19 %in comparison to 2HFY13.

The company during the first half of the current financial year, earned the revenues of Rs.

23,437 Cr from Natural Gas Trading up 24% YoY as compared to corresponding periodof the last year. The revenues from Natural Gas Transmission increased by 9% YoY toRs. 2,066 Cr for H1FY14. The net sales from LPG and Liquid Hydrocarbons businessincreased by 11% YoY to Rs. 2,043 Cr as against Rs. 1,842 Cr for the same period oflast year. The net sales from Petrochemicals business increased by 54% to Rs 2,237 Crfor 1HFY14. The revenues from LPG transmission increased by 72% to Rs. 189 Cr in1HFY14.

arket Data

E Code 532155

SE Symbol GAIL

wk Range H/L 395/273

evious Target Price

ange from Previous

6168

kt Cap (Rs Crores)

ompany Update Neutral

pside

MP 348

rget Price

About The Company

44,047

erage Daily Volume 399457


Ministryof Petroleum and Natural gas has capped subsidy burden of Gail (India) at Rs1400 Cr for FY'14.

The company has commissioned Kochi pipeline on 25th August 2013.

Company has shared Rs 698.68 Cr towards LPG subsidy in the quarter endedSeptember 2013 compared to Rs 785.67 Cr in the corresponding previous year period.

The LPG transmission was 1,428 TMT. The Natural Gas transmission was 97.25MMSCMD, against 107.72 MMSCMD. The Natural Gas stood at 80.33 MMSCMD in1HFY14 as against 81.92 MMSCMD in 1HFY3.

Highlights of Conference Call:

During 1HFY14, Petrochemical Production was 231 TMT, up by 20 % YoY it was 193TMT in 1HFY13.The Petrochemical Sales were 229 TMT, up by 37 % against 167 TMT inthe corresponding period in the previous year. The LPG and Other Liquid Hydrocarbonproduction were 685 TMT, against 684 TMT in 1HFY13.

1HFY14 Production Highlights :

ock Performance

yr Price Movement Vs Nifty

Rs, Crore



Capexincurred during H1FY'13 was Rs 2525 Cr as Rs 1500 Cr on Petrochemical, Rs400 Cr on pipeline expansion, Rs 270 Cr on E&P and Rs 360 Cr towards equity

contribution.

"NEUTRAL"10th Jan' 14



23/25

GAIL

ontinued

Projected Capex for FY'14 is Rs 5000 Cr and Rs 3500 Cr in FY'15.

GAILhas shared Rs 698.68 Cr towards LPG subsidy in the quarter ended September 2013mpared to Rs 785.67 crore in the corresponding previous year period

ecent Events

AIL management indicated that, MoPNG has in-principle agreed to provisionally cap GAILs

Y14 subsidy at INR14b, implying 2HFY14 subsidy to be nil. As per our view the final decisionl be post Finance Ministry consent.

ncertainty on under recovery sharingsk & Concern


aphical Dipiction

QFY14 SEGMENTAL SALES TURNOVER

The company has borrowed Rs 585 Cr during Q2FY'14.

Total borrowings stood at Rs 10632 Cr at the end of September 2013 quarter-out of which% loan is foreign currency loan. Almost 90% of foreign currency loan is financially orturally hedged.

The company anticipates increase in gas availability in near future. It expects around 20-25mscmd of gas over a period of 3-4 years including 11-12 mmscmd of gas from domesticurces and 10-15 mmscmd from LNG.

ew and Valuation :


ear-term gas supply visibility which may lead to under-utilization of new pipelines

e stock is currently trading at Rs 346 and business outlook going forward ,managementidance does not provide us with much convincing thought .We donot see much upsides

ached with the stock in current business scenario. We therefore recommend NEUTRAL

ew on the stock.



24/25


BITDA & OPM%


GAIL

ALES TREND

Sales increased by 22% YoY driven by hig

revenues from the natural gas

trading and petrochemical segments

Higher Depcreciation owing to capitalizat

of assets with respect to new

pipelines and higher interest cost resulted

a NPM decline


dj PAT & NPM %




25/25

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