Stock Market Tips Today | Buy Stock Zydus Wellness target price from Rs725 to Rs 610.

"BUY" 6th Feb 2014

For 3QFY14, TECHM witnessed better set of numbers than expectation and other nearest players in IT mid cap space with 2.7% sales growth in

INR term and 4.2% in USD term led by 3.3% volume, sequentially.Post merger with Satyam, strong demand traction in Telecom (Non BT) has

improved and company's attractive deal win ratios make us optimistic view on the stock and we also expect to see some improvement in margin

front. ........................................................... ( Page : 7-9 )

LUPIN : Strong Results "BUY" 6th Feb 2014

Lupin posted its 3QFY14 results with net sales at Rs 2983 Cr up 20.8% YoY led by strong sales growth in American as well as Indian markets. The

US formulation business sales including (IP Sales) grew by 31 % YoY to Rs 1356 Cr and it constitutes 45 % of the total sales.

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

"REDUCE" 6th Feb 2014

At the CMP of Rs.445, the stock P/E ratio is at 20.9x/19.3xFY14-15E respectively. EPS of the company for the earnings for FY14-15E is seen at Rs.

21.3/23.0/respectively. We revised our outlook on stock from hold to sell with a revised price target of Rs. 400 .

................................................... ( Page : 10 - 11)

7th Feb, 2014

Edition : 201

IEA-Equity

Strategy

CUMMINS INDIA: "Margin revive….."

Zydus Wellness : "sweeten with sugar free" "BUY" 7th Feb 2014

Inline set of numbers with stable margin;For 3QFY14, Zydus wellness delivered inline set of numbers than street expectation, Because of weak

consumer discretionary demand Sales marginally grew by 2%(YoY). PAT grew by 6% on YoY basis.We retain “Buy” on the stock. However,

considering weak consumer descretionery demand we reduced our target price from Rs725 to Rs 610. At a CMP of Rs 504, stock trades at 5x

FY15E P/BV. ..................................................... ( Page : 2-4)

Tech Mahindra :"boys to men; on $5bn journey"

"NEUTRAL" 5th Feb 2014

The company registered its 3QFY14 net sales at Rs 687 Cr up by up 29% YoY led by strong growth across its key molecules. There has been

recovery in ex-currency growth from the high single digits witnessed in the past two quarters. …………………. ( Page : 14-15)

DIVISLAB : Strong Results

Prestige Estates: "Volume growth & sustained realization to drive out

performance ""BUY" 6th Feb 2014

At the current CMP of Rs. 145, the stock is trading at a PE of 13.7x FY14E & 11.7x FY15E . The company can post EPS of Rs. 10.3 & Rs. 12.1 in

FY14E & FY15E and RoE of 11.3% & 12.0%. Prestige Estates remains well on track to achieve its sales guidance for FY14 at Rs. 4300 crore as the

management commentary on the result call regarding launches in Q3FY14 as well as through the year remained extremely positive. We maintain

our target price to Rs. 165 and maintain our buy rating on stock . ......................................... ( Page : 12 - 13)

"BUY" 5th Feb 2014

on back of cut down by managemet of FY14E guidence (Sale volume 3.76 mnsft, earlier 4.2 mnsft and Sales value 2200 crore, earlier, 2600 crore)

we cut down our FY14-FY15E earninng estimates by 26%/15%. We expect the sales of the company to grow by 17% & by 20% yoy inFY14E &

FY15E, however operating margin will sustain at 28.0%/28.5% over the same period. At the CMP of Rs. 276 the stock is trading at PE of 11.0x

FY14E & 8.5x FY15E. We maintain our "Buy" rating on stock with revised price target of Rs. 350 per share based on P/BV of 1.5x and 1.3x of

FY14E and FY15E. ........................................ ( Page : 16-17)

Sobha Developers Ltd: "New launches to spur growth"

Narnolia Securities Ltd,

India Equity AnalyticsDaily Fundamental Report on Indian Equities

Zydus Wellness.

Buy

-16%

13282

1M 1yr YTD

Absolute -6.9% 1.5% -4.9%

Rel.to Nifty -4.10% 0% -7.1%

Current 2QFY14 1QFY14

Promoters 72.54 72.54 72.54

FII 8.17 7.91 5.12

DII 8.07 8.39 10.85

Others 11.22 11.16 11.49

Financials

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

Revenue 103.39 103.92 (0.5) 101.77 1.6

EBITDA 26.83 25.51 5.2 26.32 1.9

PAT 27.27 25.7 6.1 22.88 19.2

EBITDA Margin 26.0% 24.5% 150bps 25.9% 10bps

PAT Margin 26.4% 24.7% 130bps 22.5% 390bps

Company’s half of revenue come from Sugar Free and Ever yuth, We expect these two

products continue to generate revenue and some support to over all margins, now

vegetable oil prices are going down.

Due to expected decline in Advertisement cost, softness in Palm Oil, Crude Derivatives

and better realization in Ever Youth could help to improve its margin in next couple of

quarters.

View and Valuation: Taking into consideration of product re-launch, strong distribution

reach under a beneficiary scenario of margin, management is very confident to achieve

revenue at 500cr in FY15E, expecting growth rate by 21.5%. Its large market share and

aggressive promotions in its pillar brand (Sugar Free, Everyuth) would energize its

revenue growth in near future. We retain “Buy” on the stock. However, considering

weak consumer descretionery demand we reduced our target price from Rs725 to Rs

610. At a CMP of Rs 504, stock trades at 5x FY15E P/BV.

Stable margin: During the quarter, its EBITDA margin was flat at 26% on YoY basis;

while, it improved 150bps sequentially because of cost rationalization in RM and Ad

spend. PAT margin up by 390bps to 26.4%, favorably impacted by lower provision for

tax and extra other income.

Woprking on cost rationalization: Considering slower demand and high competitive

intensity, company has been able to manage its normal range of margin by reducing

cost. During the quarter, RM cost on sales declined from 30.3%(3QFY13) to 26.7% and

Ad spend down from 15.2% (3QFY13) to 13.8%.

Strong brand value in sugar free products: Over the year, Sugar Free Brand has

successfully captured 92% market Share. Sugar Free product has very strong brand

equity and it is always on the top of the buyers' mind when it comes to the sugar

substitute. Considering the entry of other players in same product, it has rolled out an

aggressive ad campaign and expended this brand on different segments like, Sugar Free

Gold (Aspartame based), Sugar Free Natrura (Sucralose based), Sugar Free Herbvia

(Stevia) and Sugar Free D'lite (Drink).

"sweeten with sugar free"

Result Update

CMP 504

Target Price

Upside 21%

Change from Previous

610

For 3QFY14, Zydus wellness delivered inline set of numbers than street expectation,

Because of weak consumer discretionary demand Sales marginally grew by 2%(YoY).

PAT grew by 6% on YoY basis.Previous Target Price 725

Inline set of numbers with stable margin;

Share Holding Pattern-%

NSE Symbol ZYDUS

1969

52wk Range H/L 749/415

Mkt Capital (Rs Cr)

P/BV(x)-1year forward

Rs, Crore

(Source: Company/Eastwind)

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

Aggressive target on capturing Everyuth market share: Recently, company re launched

its Everyuth brand with innovative packaging, strong distribution network and expensive

media initiatives. The company decided to increase its prices in the range of 10-15% in

Everyuth brand at the time of relauch and extended its everyuth brand to the premium

soap in 3 variants, like Fruit bathing bar, Neem bathing bar and Lemon.

Market Data

BSE Code 531335

Stock Performance

Average Daily Volume

Nifty 6036

"BUY"7th Feb' 14


3


Zydus Wellness.

Sales and its Growth(%)

Sales marginally grew by 2%(YoY).

Focus on expansion of Distribution network: The Company has been increasing its

distribution network to improve its growth of its cash-cow brand. Everyuth scrub and peel-

off are sold through 3.3 to 4.0 lakh retail outlets while Zydus Wellness is sold through 3.4

lakh retail outlets (an increase of 11% YoY). The company targets to increase the

distribution reach by 15-20% per annum.


Margin-%

It expects expansion in gross margin,

which will help it to fund new product

launches.


Expenses-(% of Sales)



4

Zydus Wellness.

Financials and Valuation




Rs in Cr, FY10 FY11 FY12 FY13 FY14E FY15E

Total Sales 267.5 335.5 344.6 410.0 446.9 500.5

Less: Excise Duty 0.0 0.1 9.2 22.9 29.05 32.53

Net Sales 267.5 335.4 335.5 387.1 417.8 467.9

Other Operating Income 0.6 1.0 1.3 0.9 1.6 1.8

Total income from operations 268.1 336.4 336.8 388.0 419.4 469.7

RM Cost 37.5 49.9 94.1 119.1 106.9 124.5

Purchases of stock-in-trade 54.0 74.9 23.7 14.7 22.70 25.42

WIP (5) (5) 4 (10) 16 18

Employee Cost 9.3 18.3 20.6 27.3 31.45 37.58

Ad Spend 61.0 59.2 59.7 69.8 75.5 86.9

Other expenses 44.4 54.5 57.4 70.1 73.39 84.55

Total expenses 201.0 252.1 259.7 291.4 325.91 376.76

EBITDA 67.1 84.2 77.1 96.6 93.47 92.94

Depreciation and Amortisation 1.6 1.5 3.9 4.5 4.7 4.5

Other Income 6.0 7.2 9.0 15.8 20.1 22.5

EBIT 71.4 90.0 82.2 107.9 108.89 111.01

Interest 0.0 0.0 0.0 0.1 0.0 0.0

PBT 69.2 90.0 82.2 107.8 108.9 111.0

Tax Exp 24.0 30.5 13.7 8.8 8.2 8.9

PAT 45.2 59.5 68.6 98.9 100.72 102.13

Growth-% (YoY)

Sales -94.8% 25.5% 0.1% 15.2% 8.1% 12.0%

EBITDA -93.7% 25.6% -8.5% 25.3% -3.2% -0.6%

PAT -93.1% 31.7% 15.3% 44.2% 1.8% 1.4%

Expenses on Sales-%

RM Cost 14.0% 14.8% 28.0% 30.7% 25.5% 26.5%

Ad Spend 22.7% 17.6% 17.7% 18.0% 18.0% 18.5%

Employee Cost 3.5% 5.4% 6.1% 7.0% 7.5% 8.0%

Other expenses 16.6% 16.2% 17.0% 18.1% 17.5% 18.0%

Tax rate 34.7% 33.9% 16.6% 8.2% 7.5% 8.0%

Margin-%

EBITDA 25.0% 25.0% 22.9% 24.9% 22.3% 19.8%

EBIT 26.6% 26.7% 24.4% 27.8% 26.0% 23.6%

PAT 16.9% 17.7% 20.4% 25.5% 24.0% 21.7%

Valuation:

CMP 381.7 597.3 380.4 456.5 504.0 504.0

No of Share 3.9 3.9 3.9 3.9 3.91 3.91

NW 100.6 141.9 186.9 256.5 329.8 399.9

EPS 11.6 15.2 17.5 25.3 25.76 26.12

BVPS 25.7 36.3 47.8 65.6 84.4 102.3

RoE-% 44.9% 41.9% 36.7% 38.6% 30.5% 25.5%

P/BV 14.8 16.5 8.0 7.0 6.0 4.9

P/E 33.0 39.3 21.7 18.0 19.57 19.30

BUY

1M 1yr YTD

Absolute -2 53.4 48.3

Rel. to Nifty 1 52.8 35.9


4Promoters 46.8 46.8 46.8

FII 31.9 31.5 30.7

DII 11.3 12.1 12.4

Others 10.0 9.7 10.1

Financials Rs, Crore


Revenue 3022 2668 13.3 2501 20.8

EBITDA 773 660 17.1 606 27.6

PAT 484 417 16.1 342 41.5

EBITDA Margin 25.6% 24.7% 80bps 24.2% 130bps

PAT Margin 16.0% 15.6% 40bps 13.7% 230bps

5

The company at its CMP of Rs 915 is trading at 23 times of one year forward FY14 EPS of

Rs 39.In the light of strong results ,management commentary and strong business

outlook going forward we maintain BUY for the stock with Target price 1000.

951/569

NSE Symbol LUPIN

Market Data

BSE Code

View & Valuation

Recent Developments

Company filed 5 ANDA approvals in the quarter .Cumulative ANDA filings with US FDA now

stands at 186 with the company having received 96 approvals till date. The company

received 5 approvals from European regulatory authorities in the quarter.

Company acquired Nanomi B.V of Netherlands and with this acquisition company has

forayed into technology intensive complex injectables space. As per management with the

use of Nanomi’s proprietary technology platform, Lupin would be able to make significant in

roads into the niche area of complex injectables.

500257

52wk Range H/L

Strong Results

1000

9%

Result Update

CMP 915

Target Price

Upside


Previous Target Price

One Year Price vs Nifty


41,018

Average Daily Volume 395892

Nifty 6022

> Capital Expenditure was Rs 104.1 Cr in the quarter


Stock Performance-%


Balance Sheet Highlights

> Operating WC increased to Rs 2769.5 Cr as on 31st

Dec 2013 as against Rs 2674.3 Cr as

on September 2013.The working capital number of days stood at 94 days as on 31St

Dec

2013.

Mkt Capital (Rs, Cr)

LUPIN

Lupin posted its 3QFY14 results with net sales at Rs 2983 Cr up 20.8% YoY led by strong

sales growth in American as well as Indian markets. The US formulation business sales

including (IP Sales) grew by 31 % YoY to Rs 1356 Cr and it constitutes 45 % of the total

sales. The Indian formulation business grew by 14% YoY to Rs 650 Cr and it contributed

22% of the company’s overall revenue for the quarter .The business from other geographies

viz Japan and South Africa also have grown well with registering growth of 10% and 18%

respectively.API (Active Pharmaceutical Ingredient) net sales grew by 26% to Rs 297.3 Cr

during the quarter as compared to Rs 235.3 Cr for 3QFY13 and contributed 10% of

company’s consolidated revenues.

The operating EBITDA for the quarter came at Rs 773 Cr and OPM at 25.6%.The material

cost during the quarter decreased by 30bps to Rs 1121 Cr and this constitutes 37.6%

of net sales. The manufacturing and other expenses decreased by 90 bps to Rs 749 Cr for

the quarter while employ cost deceased by 30 bps to Rs 387 Cr. The revenue expenditure

on R&D stands at Rs 271 Cr which is 9.1 % of the 3QFY14 sales.

The net profits for the quarter came at Rs 484 Cr and NPM at 15.8 % .The overall impact of

Forex on net profits was a loss of Rs 68.8 Cr of which Rs 25.5 Cr forex gain is reflected in

other income while the corresponding forex loss is captured across various other P&L

Lines.

"BUY"06th Feb' 14


6

OPM %


NPM %



The material cost during the quarter

decreased by 30bps to Rs 1121 Cr and this

constitutes 37.6% of net sales.

The overall impact of Forex on net profits

was a loss of Rs 68.8 Cr of which Rs 25.5 Cr

forex gain is reflected in other income while

the corresponding forex loss is captured

across various other P&L Lines.

LUPIN

Sales and PAT Trend (Rs)


Company posted its 3QFY14 results with net

sales at Rs 2983 Cr up 20.8% YoY led by

strong sales growth in American as well as

Indian markets.


Tech Mahindra

BUY

14%

1M 1yr YTD

Absolute 0.12 89.77 51.9

Rel.to Nifty 3.26 88.67 51.8


Promoters 36.34 36.46 47.17

FII 40.42 32.59 26.79

DII 9.08 15.13 15.83

Others 14.16 15.82 10.21

Financials


Revenue 4898.6 4771.5 2.7 3799.1 28.9

EBITDA 1136.3 1110.85 2.3 795.7 42.8

PAT 674.3 718.2 (6.1) 626.4 7.6

EBITDA Margin 23.2% 23.3% (10bps) 20.9% 230bps

PAT Margin 13.8% 15.1% (130bps) 16.5% (170bps)

7


Employee Metrics: The Total headcount for the year is at 87399 with QoQ net addition

of 2165 as on 31st December 2013.The attrition has been slightly inching up in the last 3

quarters. However, wage hike could counter this.

1 year forward P/E-x View and Valuation: Management is pitching an aspiration goal of USD 5bn revenue by

2015(CAGR at 24% for FY13-16E) through organic and inorganic initiatives and looking

for USD 0.5bn to USD 0.8bn as acquisition target going forward. Company is focussed

on its 6-pillar strategy i.e., selling 6 service lines of IT, infr- management, network

management, security services, value added services and services such as analytics to

telcos. On emerging space, mobility and digital would emerge as bigger bang for the

buck.

Post merger with Satyam, strong demand traction in Telecom (Non BT) has improved

and company's attractive deal win ratios make us optimistic view on the stock and we

also expect to see some improvement in margin front. At a CMP of Rs 1838, relatively

the stock is trading at a fair valuation, 12.2x of FY15E earnings . We maintain “BUY” on

the stock with a price target of Rs 2130.

Rs, Crore


US revenue at nascent stage: During the quarter, revenue from US increased by 10%,

while revenue from Europe and RoW declined by 3.6% and 1.8% on QoQ basis. US

contribute 47%, Europe 31% and RoW 22% on sales. Post earning management quoted

for better outlook in Asian markets with greater traction in Australia and Africa in near

term.

Stock Performance

Best performance across all verticals: During the quarter, Except Technology, Media

and Entertainment all verticals reported good growth. BFSI was up by 14% and Telecom,

Manufacturing, retail and others reported 2.7% growth each in INR term. While,

Technology, Media and Entertainment dipped by 6%, sequentially. The company is

focusing on BFSI, manufacturing and telecom.


The company remains confident on better demand and expects healthy client budgets

in FY15E. The number of large deals in the pipeline is 6-8 at any point of time in the

past few quarters, but the decision-making is unpredictable to tell about the future

deal wins in the near term.

Market Data

BSE Code 532755

NSE Symbol

EBITDA margin at steady mark: During the quarter, its EBITDA margin was unchanged at

23.2% on Sequential basis, while improved 230bps on YoY basis. Management is very

confident to retain same level of margin picture in near future despite salary hike at a

rate of 7-8% in next quarter.

Mkt Capital (Rs Crores) 42876

Average Daily Volume 191827

Nifty 6022

TECHM

52wk Range H/L 1906/895

"boys to men; on $5bn journey"

Result update Broad-based performance with positive outlook, positive view retained;

CMP 1838 For 3QFY14, TECHM witnessed better set of numbers than expectation and other

nearest players in IT mid cap space with 2.7% sales growth in INR term and 4.2% in

USD term led by 3.3% volume, sequentially. Net profit increased to Rs 1,001cr from Rs

718.4cr including exceptional gains. After excluding that, net profit stood at Rs 663.22

cr for the quarter.

Target Price 2130

Previous Target Price 1875

Upside 16%


"BUY"6th Feb' 14


8

(6) Cash utilization only for acquisition and investment in emerging space.


Key Facts from Cnference Call (attended on 4th Feb 2014)

(1)The Company aspires revenues of USD 5 billion by 2015. This expects to be through

organic and inorganic initiatives (looking for USD 0.5 billion to 0.8 billion as acquisition

targets) going forward.

(2) Year 2014 would be better year than FY13, demand environment and Order pipeline is

looking good. They are more focus for mobility and digital projects.

(3) Despite salary hike in 4Q, margin would be on place. Wage hike in 4Q could impact

200bps in margin front, but management is confident to mitigate.

(4)Expecting utilisation rate to 77% from 75%(3QFY14) in near term.

(5)The tax rate expected to be 26% for the FY'14.


Tech Mahindra.

Sales (USD) and Sales growth-%(QoQ)

On $term, Sales growth was up by 4.4%

(QoQ) and 2.7% on INR term,


Margin-%


Employee Metrics-%

Attrition increased at 17%. still, lower than

other peers


9

Financials



Tech Mahindra.

Operating Metrics


Client contribution to revenue-% 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14

Customer Active 484.00 475.00 475.00 516.00 567.00 576.00 605

Top 10 clients 50.0% 51.0% 50.0% 50.0% 49.0% 48.0% 49%

Top 5 clients 40.0% 41.0% 39.0% 37.0% 37.0% 36.0% 37%

Top client 17.0% 14.0% 15.0% 13.0% 12.0% 12.0% 12.0%

Revenue mix - onsite/offshore (%)

Onsite 48.0% 48.0% 48.0% 48.0% 51.0% 51.0% 52%

Offshore 52.0% 52.0% 52.0% 52.0% 49.0% 49.0% 48%

Employee Metrics

Utilisation % 75.0% 74.0% 76.0% 77.0% 76.0% 75.0% 75.0%

Attrition % 17.0% 16.0% 16.0% 16.0% 15.0% 16.0% 17.0%

Rs, Cr FY12 FY13 FY14E FY15E FY16E

Net Sales(mn)-USD 1157 2633 3099.98 3595.98 4099.42

Net Sales 11702.4 14332.0 18817.38 21396.09 24801.49

Employee Cost 6591.9 8099.5 9709.77 11061.78 12896.77

Operation and other expenses 2210.1 2287.3 3198.95 3530.36 4216.25

Subcontracting Cost 948.6 882.0 1599.48 1711.69 1984.12

Total Expenses 9750.6 11268.8 14508.2 16303.8 19097.1

EBITDA 1951.8 3063.2 4309.18 5092.27 5704.34

Depreciation 319.0 389.6 511.53 581.63 674.20

Other Income 501.3 212.2 254.03 320.94 372.02

EBIT 1632.80 2673.60 3797.65 4510.64 5030.14

Interest Cost 107.3 92.1 93.14 86.80 82.58

PBT 2026.8 2793.7 3958.5 4744.8 5319.6

Tax 228.9 647.9 1078.7 1257.4 1383.1

PAT 1797.9 2145.8 2879.8 3487.4 3936.5

Growth-%

Sales-USD 2.7% 127.6% 17.7% 16.0% 14.0%

Sales 13.8% 22.5% 31.3% 13.7% 15.9%

EBITDA 11.9% 56.9% 40.7% 18.2% 12.0%

PAT 9.6% 19.4% 34.2% 21.1% 12.9%

Margin -%

EBITDA 16.7% 21.4% 22.9% 23.8% 23.0%

EBIT 14.0% 18.7% 20.2% 21.1% 20.3%

PAT 15.4% 15.0% 15.3% 16.3% 15.9%

Expenses on Sales-%

Employee Cost 56.3% 56.5% 51.6% 51.7% 52.0%

Subcontracting Cost 8.1% 6.2% 8.5% 8.0% 8.0%

Operation and other expenses 18.9% 16.0% 17.0% 16.5% 17.0%

Tax rate 11.3% 23.2% 27.3% 26.5% 26.0%

Valuation

CMP 652.5 1081.7 1838.0 1838.0 1838.0

No of Share 23.2 23.2 23.2 23.2 23.2

NW 4815.8 5529.1 8273.0 11624.6 15425.2

EPS 77.4 92.4 124.0 150.1 169.5

BVPS 207.3 238.0 356.1 500.4 664.0

RoE-% 37.3% 38.8% 34.8% 30.0% 25.5%

Dividen Payout-% 3.3% 2.8% 4.7% 3.9% 3.5%

P/BV 3.1 4.5 5.2 3.7 2.8

P/E 8.4 11.7 14.8 12.2 10.8

CUM CUMMINS INDIA Ltd.

445

400

510

-10%

-22%

500480

12334

83995

6022

1M 1yr YTD

Absolute -3 -11 -10

Rel. to Nifty (0) (12) (16)

4QFY14 3QFY14 2QFY14

Promoters 51.0 51.0 51.0

FII 17.0 15.5 16.2

DII 18.2 19.8 19.5

Others 13.8 13.7 13.3

Valuations



Revenue 1023.0 932.7 9.7 1089.5 -6.1

EBITDA 197.6 152.6 29.4 208.6 -5.3

PAT 147.2 144.8 1.7 234.1 -37.1

EBITDA Margin 19.3% 16.4% (290)bps 19.1% 20 bps

PAT Margin 14.1% 14.6% (50)bps 20.3% (620)bps

10

Strong operating performance, but weak below the line;

CMP

Target Price

BSE Code

Result update ReduceCummins has registered 6% fall in revenue to Rs 1023.01 crore. But the operating margin has

expanded by modest 20 bps to 19.3% and that has marginally limited the impact at operating

level restricting the de-growth at operating profit to 5% to Rs 197.56 crore. Eventually the net

profit was lower by 37% to Rs 147.23 crore. The sharp fall in bottom-line came on escalated

based as the bottom-line of corresponding previous period is boosted by an EO income of Rs

47.50 crore compared to nil in Q3FY14. But for lower other income, absence of any EO item

and higher tax incidence the fall in bottom-line would have not been this steeper. downgrade

to SELL after KKC’s recent un and maintain our business view on (1) lack of growth in powergen

after a sharp decline, (2) weak nearterm exports outlook, (3) potential margin risk and (4)

limited upside from a cyclical upturn.




Stock Performance-%


1 yr Forward P/B

At the CMP of Rs.445, the stock P/E ratio is at 20.9x/19.3xFY14-15E respectively. EPS of the

company for the earnings for FY14-15E is seen at Rs. 21.3/23.0/respectively. We revised our

outlook on stock from hold to sell with a revised price target of Rs. 400

• The Value of production for the quarter was lower by 3% to Rs 1001.97 crore. However the

operating sales (excluding other operating income) was down by 7% to Rs 1000.57 crore.

Subdued revenue growth seems largely on account of dip in demand for power gen-sets as there

is considerable improvement in power situation in South Indian States, which hitherto drove the

demand for this segment. Moreover lower realization on exports with new prices being relatively

lower than corresponding previous period.

• Operating margin expanded by 20 bps to 19.3% and this is largely on account of pruning of

costs. Cost of traded goods as % to sales was lower by 200 bps to 4%. But all cost heads have

seen an increase with material cost (excluding cost of traded goods) was higher by 80 bps to

56.1%, the staff cost was up by 50 bps to 8.5% and the other expenses was up by 130 bps to

12.1%.

• Other income was lower by 64% to Rs 23.63 crore. The interest cost was up by 14% (to Rs 0.97

crore) and the depreciation cost was up by 13% to Rs 13.31 crore on the back of capacity

augmentation programme. Thus the PBT (before EO) was down by 21% to Rs 206.91 crore.

• EO for the quarter was nil compared to Rs 47.50 crore in the corresponding previous period.

Thus on escalated base the PBT (after EO) was lower by 33% to Rs 206.91 crore. Taxation in

absolute terms was lower by 21% to Rs 59.68 crore and the effective tax rate was higher at

28.8% compared to 24.4% in the corresponding previous period. Thus the net profit was down by

"Margin revive….."

CUMMINSIND

396/550

Average Daily Volume (Nos.)

NSE Symbol

52wk Range H/L

Mkt Capital (Rs Crores)

Nifty

Result Highlights;

Upside


Market Data

"Reduce"6th Feb' 14


11

Ammount in crores (Source: Company/Eastwind)


CUMMINS INDIA Ltd.

Key financials :


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

Performance

Revenue 2845 4043 4117 4589 4120 4532

Other Income 122 80 123 207 207 207

Total Income 2966 4123 4241 4796 4327 4739

EBITDA 527 763 697 835 680 759

EBIT 491 727 655 788 628 697

DEPRICIATION 36 37 42 47 52 62

INTREST COST 2 5 5 5 5 5

PBT 611 802 773 990 830 899

TAX 167 211 233 287 241 261

Extra Oridiniary Items 0 0 51 62 0 0

Reported PAT 444 591 591 765 589 638

Dividend (INR) 311 345 354 421 421 487

DPS 11.2 12.5 12.8 15.2 15.2 17.6

EPS 16.0 21.3 21.3 27.6 21.3 23.0

Yeild %

EBITDA % 18.5% 18.9% 16.9% 18.2% 16.5% 16.8%

NPM % 15.0% 14.3% 13.9% 15.9% 13.6% 13.5%

Earning Yeild % 4.4% 4.4% 4.3% 6.0% 4.8% 5.2%

Dividend Yeild % 3.1% 2.5% 2.6% 3.3% 3.4% 3.9%

ROE % 28.4% 32.7% 28.9% 32.0% 23.1% 23.6%

ROCE% 28.6% 33.0% 29.2% 32.2% 23.2% 23.8%

Position

Net Worth 1561 1806 2043 2387 2555 2706

Total Debt 0 0 0 0 0 0

Capital Employed 1561 1806 2043 2387 2555 2706

No of Share (Adj) 28 28 28 28 28 28

CMP 367 489 497 456 445 445

Valuation

Book Value 56.3 65.2 73.7 86.1 92.2 97.6

P/B 6.5 7.5 6.7 5.3 4.8 4.6

Int/Coverage 239.6 153.0 121.1 170.9 136.2 151.2

P/E 22.9 22.9 23.3 16.5 20.9 19.3

V- Prestige Estates Projects Ltd.

CMP 145

Target Price 165

195

Upside 14%

0%

BSE Code 533274

NSE Symbol

4,947

161,912

Nifty 6,022

1M 1yr YTD

Absolute (10.1) (21.5) (13.1)

Rel. to Nifty (7.1) (21.9) (19.1)


Promoters 75.0 75.0 75.0

FII 17.4 17.4 17.2

DII 6.3 6.3 6.1

Others 1.3 1.3 1.7

Valuation:



Revenue 430.5 475.3 -9.4% 492.1 -12.5%

EBITDA 131.9 118.7 11.1% 142.4 -7.4%

PAT 80.6 77.6 3.8% 92.1 -12.5%

EBITDA Margin 30.6% 25.0% 560 bps 28.9% 170 bps

PAT Margin 17.5% 15.4% 210 bps 18.0% (50) bps

12


Management Guidence FY14E

Company will exceed its presales guidance. Company has already done sales to the extent of Rs

1,200 crore plus and now it is just a question of production and these numbers getting

recognised because company need to touch the trigger of 30 percent to recognise these

numbers. During the year, company has made Rs 3,700 crore and guidance was Rs 4,300 crore.

On his outlook for the company's business, Prestige Estates Projects, says there is no slowdown

in the Bangalore market and aims to concentrate on the phase 2 and 3 of its Lakeside Habitat

project newt quarter

1 yr Forward P/B

At the current CMP of Rs. 145, the stock is trading at a PE of 13.7x FY14E & 11.7x FY15E . The

company can post EPS of Rs. 10.3 & Rs. 12.1 in FY14E & FY15E and RoE of 11.3% & 12.0%.

Prestige Estates remains well on track to achieve its sales guidance for FY14 at Rs. 4300 crore as

the management commentary on the result call regarding launches in Q3FY14 as well as through

the year remained extremely positive. We maintain our target price to Rs. 165 and maintain our

buy rating on stock

(Source: Company/ Eastwind Research) (Standalone)

52wk Range H/L 102/195 Result Highlights 3QFY14

Mkt Capital (Rs Crores) Prestige Estates Projects said it sold 1,204 residential units and 0.026 million square feet (Mnsft)

of commercial space, aggregating to 2.075 Mnsft, amounting to Rs 1262 crore of sales in Q3

December 2013. Of the above, Prestige share is 904 units -1.55 Mnsft amounting to Rs 940.20

crore of sales, up by 24.69% from that of Q3 December 2012.In Q3 December 2012, the company

had sold 682 units aggregating 1.44 Mnsft of residential and commercial space, amounting to Rs

754 crore of sales - Prestige share. (Overall sales of 1.69 Mnsft of area amounting to Rs 873.90

crore). Collections rose 16.69% to Rs 592.30 crore in Q3 December 2013 over Q3 December 2012

- Prestige share. (Overall collections for the Q3 December 2013 - Rs 713.30 crore). In Q3

December 2013, the company launched the first phase of its largest residential project- Prestige

Lakeside Habitat in Bangalore aggregating to 2.79 million square feet of total developable area.

The project is spread across 102 acres in area and consists of apartments and villas with total

developable area of 8.40 Mnsft.

Average Daily Volume

Stock Performance-%


"Volume growth & sustained realization to drive out performance……."

Result update Buy Prestige Estates posted muted revenue recognition trajectory, degrowing 12.5% yoy to Rs.

430.5 crore. On a sequential basis, the decline was 9.4%. EBITDA margins expanded by 570bps

qoq to 30.6%. PAT surged by 3.8% QoQ to Rs. 80.6 crore, increased by 12.5% yoy.. Volumes for

the quarter stood at 2.075 mn sft, to Rs. 1262 crore on the back of three new residential

launches in Bengaluru to the tune of 4.09 mn sft. Prestige Estates remains well on track to

achieve its sales guidance for FY14 at Rs. 4300 crore as the management commentary on the

result call regarding launches in Q2FY14 as well as through the year remained extremely

positive. We maintain our target price to Rs. 165 and maintain our buy rating on stock.



Market Data

PRESTIGE

"Buy"6th Feb' 14


13


(Ammount in crore) (Source: Company/Eastwind)

Prestige Estates Projects Ltd.

Key financials :

(Source: Eastwind Research) (Figures in crore)


PARTICULAR 2011A 2012A 2013A 2014E 2015E

Performance

Revenue 1543 1052 1948 2532 3038

Other Income 68 34 64 64 64

Total Income 1611 1086 2011 2595 3102

EBITDA 442 331 579 696 805

EBIT 381 270 511 621 722

DEPRICIATION 61 61 68 75 83

INTREST COST 123 119 149 163 163

PBT 326 185 426 522 623

TAX 91 63 131 161 199

Reported PAT 235 122 294 361 423

Dividend 39 39 39 39 39

EPS 7.2 3.7 8.4 10.3 12.1

DPS 1.2 1.2 1.1 1.1 1.1

Yeild %

EBITDA % 28.6% 31.4% 29.7% 27.5% 26.5%

NPM % 14.6% 11.3% 14.6% 13.9% 13.7%

Earning Yeild % 5.7% 3.7% 5.2% 7.3% 8.6%

Dividend Yeild % 1.0% 1.2% 0.7% 0.8% 0.8%

ROE % 11.1% 5.7% 10.7% 11.8% 12.0%

ROCE% 6.5% 3.0% 5.7% 6.6% 7.4%

Position

Net Worth 2114 2151 2743 3065 3531

Total Debt 1505 1864 2420 2420 2200

Capital Employed 3619 4015 5163 5485 5731

No of Share 33 33 35 35 35

CMP 125 100 163 141 141

Valuation

Book Value 64.4 65.6 78.4 87.6 100.9

P/B 1.9 1.5 2.1 1.6 1.4

Int/Coverage 3.1 2.3 3.4 3.8 4.4

P/E 17.5 26.8 19.4 13.7 11.7

1M 1yr YTD

Absolute 7.6 26.2 15.5

Rel. to Nifty 11 26.17 3.5


4Promoters 52.1 52.1 52.2

FII 16.3 15.8 14.8

DII 13.2 12.5 12.5

Others 18.5 19.5 20.5



Revenue 689 567 21.5 534 29.0

EBITDA 287 249 15.3 182 57.7

PAT 218 205 6.3 143 52.4

EBITDA Margin 41.7% 43.9% (230bps) 34.1% 760bps

PAT Margin 31.6% 36.2% (450bps) 26.8% 490bps

14

DIVISLABStrong Results

Target Price 1420

The operating EBITDA for the quarter under review came at Rs 288 Cr and OPM at

41.7%.The operating margins improve by almost 760bps on the back of improvement in

company’s operating metrics, currency benefits and lower power cost . The RM cost to

sales for the quarter came at 36% while it was 49 % for the same time last fiscal. The

employ cost as percentage of sales also showed improvement of 100 bps on yearly basis.

The company has cut down its other expenses for the quarter to Rs 88 and it stands at 13

% of the net sales from 8% a year ago.

6%

Result Update NEUTRAL

1350

CMP 1337

The company registered its 3QFY14 net sales at Rs 687 Cr up by up 29% YoY led by strong

growth across its key molecules. There has been recovery in ex-currency growth from the

high single digits witnessed in the past two quarters.

Market Data

BSE Code

One Year Price vs Nifty


17842

Average Daily Volume 5.43

Nifty 6000

The stock at CPM of Rs 1337 is trading at 22.05 x of one year forward FY14E EPS of Rs

61.The stock has achieved our recommended Target price of Rs 1350 and therefore

we change our view to Neutral from BUY. The strong 3QFY14 results ,improvement in

operating metrics, Currency movement are few factor which still provide some upsides. We

have slightly revised our target price upwards to Rs 1420 based on our analysis.

> Carotenoid sales for 9MFY14 are at Rs 910 Mn and expected to reach Rs1.5 Bn for

FY2015.

>The company expects the inspection (by regulatory/customers) for the 3 additional units at

DSN SEZ in 4QFY14. Sales from these units are expected to ramp up in 2QFY15.

> There has been reduction in power and fuel cost since August 2013 with 160 bps decline

on a sequential basis.

>CWIP is at Rs1.8 Bn at the end of 9MFY14. There has been a sharp increase in

receivables at Rs 7.1 Bn – 108 days versus 86 days in FY2013. Inventory days have

improved to 140 days in 9MFY14 versus 161 days in 1HFY14.

View & Valuation

The profits after tax came at Rs 218 Cr and NPM at 31.7 %.The other income for the

quarter came at Rs 8 Cr verses 22 Cr for the same time last fiscal. The tax rate for the

quarter was lower on yearly basis at 20 %.Forex Loss for the current quarter amounted to

Rs 5 Cr while there was a forex gain of Rs 16 Cr during the corresponding quarter last year.


Stock Performance-%


Mkt Capital (Rs, Cr)

52wk Range H/L 1390/905

NSE Symbol DIVISLAB

> Sales from DSN SEZ (all 5 units) are at of Rs 3.3 Bn for 9MFY14 (versus Rs 2.2 Bn in

FY2013). The company has total investments of Rs 6.0 Bn in the DSN SEZ and expects the

asset turnover to be 1.8-2.0 times.

Key takeaways from management interaction

532488

Upside

Change from Previous 5%


"NEUTRAL"05th Feb' 14


15

Net sales at Rs 687 Cr up by up 29% YoY led

by strong growth across its key molecules.

Operating margins improve by almost 800bps

on the back of improvement in company’s

operating metrics, currency benefits and

lower power cost .

OPM %


NPM %



The tax rate for the quarter was lower on

yearly basis at 20 %.Forex Loss for the current

quarter amounted to Rs 5 Cr

DIVISLAB

Sales and PAT Trend (Rs)



Sobha Developers Ltd.

Buy276

350

460

27%

-24%

532784

SOBHA

282/472

3052

105448

6002

1M 1yr YTD

Absolute -17 -36 -21

Rel. to Nifty (14) -35 (27)


Promoters 60.6 60.6 60.6

FII 32.7 33.2 33.5

DII 2.9 2.6 2.8

Others 3.9 3.7 3.1



Revenue 544.3 540.8 0.6 429.8 26.6

EBITDA 149.0 143.3 4.0 137.4 8.4

PAT 58.3 56.6 3.0 52.6 10.8

EBITDA Margin 27.4% 26.5% 90 bps 32.0% (460) bps

PAT Margin 10.7% 10.8% (10) bps 12.2% (150) bps

16

"New launches to spur growth….."

Upside


Result updateCMP

Target Price


Average Daily Volume (Nos.)

NSE Symbol

52wk Range H/L

Mkt Capital (Rs Crores)

Lowered FY14E sales volume & revenue Guidence

Despite of week volume numbers in NCR & Chennai Sobha reported its Q3FY14 numbers with a

topline that was inline street expectations at Rs. 544.3 crore. EBITDA for the quarter stood at

Rs. 149.0 crore, growing 8.4% yoy. The EBITDA margin were down 460 bps, yoy and stands at

27.4% during the quarter mainly on account of higher proportion of contractual projects

segment (this segment fetches about 20 per cent margins compared with property

development business’ 35 per cent and increase in input costs. However managemnet assures

that goinf forward margins should be around 28 percent and at profit before tax (PBT) and

profit after tax (PAT) level we are at 10 percent to 11 percent level. We maintain our "Buy"

rating on stock, however on back of cut down by managemet of FY14E guidence (Sale volume

3.76 mnsft, earlier 4.2 mnsft and Sales value 2200 crore, earlier, 2600 crore) we cut down our

FY14-FY15E earninng estimates by 26%/15% and also reduce our price target to Rs. 350

Market DataBSE Code


Stock Performance-%


1 yr Forward P/B

Valuations;

on back of cut down by managemet of FY14E guidence (Sale volume 3.76 mnsft, earlier 4.2 mnsft

and Sales value 2200 crore, earlier, 2600 crore) we cut down our FY14-FY15E earninng estimates

by 26%/15%. We expect the sales of the company to grow by 17% & by 20% yoy inFY14E &

FY15E, however operating margin will sustain at 28.0%/28.5% over the same period. At the CMP

of Rs. 276 the stock is trading at PE of 11.0x FY14E & 8.5x FY15E. We maintain our "Buy" rating

on stock with revised price target of Rs. 350 per share based on P/BV of 1.5x and 1.3x of FY14E

and FY15E.


Sobha had at the begning of the fiscal set guidence of new sales area of 4.20 mnsft at Rs. 2600

crore for the current fiscal. At the close of 3 quarters of FY14, the company has registered a new

sales area of 2.66 mnsft valued at 1737 crore. However, post 3QFY14 result, management had

lowered his sales volume and booking guidence to 3.76 mnsft and Rs. 2200 crore largely

attributed to delay in approvels

Growth story remain intact;

The firm had launched two new projects: 0.66 mnsft of developable area and 0.46 mnsft of

saleable area in 3QFY14 and six new projects: 3.38 mnsft of developable area and 2.01 mnsft of

saleable area in 9MFY14. In CY14, the firm has plans to launch 11 mnsft, and out of which 3

mnsft in 4QFY14 especially in the Rs7.5-15mn price bracket that continues to see stable demand

as a result we able to belive that company will able to achive is revised sales volume guidence for

FY14E.

Nifty

"Buy"5th Feb' 14


17

Ammount in crores (Source: Company/Eastwind)

SOBHA DEVELOPERS Ltd.

Key financials :



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

Performance

Revenue 1130 1394 1408 1865 2180 2616

Other Income 4 5 6 6 6 6

Total Income 1134 1400 1414 1870 2186 2622

EBITDA 264 360 467 548 610 746

EBIT 231 332 428 489 542 674

DEPRICIATION 32 28 39 59 68 72

INTREST COST 69 86 117 171 175 200

PBT 166 251 318 324 373 479

TAX 27 67 108 107 126 162

Extra Oridiniary Items NA NA NA NA NA NA

Reported PAT 139 185 210 217 247 317

Dividend (INR) 25 29 49 69 69 69

DPS 2.4 3.0 5.0 7.0 7.0 7.0

EPS 13.6 18.8 21.4 22.1 25.2 32.3

Yeild %

EBITDA % 23.3% 25.8% 33.1% 29.4% 28.0% 28.5%

NPM % 12.2% 13.2% 14.9% 11.6% 11.3% 12.1%

Earning Yeild % 5.0% 6.9% 6.5% 6.3% 9.1% 11.7%

Dividend Yeild % 0.9% 1.1% 1.5% 2.0% 2.5% 2.5%

ROE % 8.1% 10.0% 10.5% 10.2% 10.7% 12.4%

ROCE% 6.5% 8.7% 10.1% 11.1% 11.1% 11.8%

Narnolia Securities Ltd402, 4th floor 7/ 1, Lords Sinha Road Kolkata 700071, Ph

033-32011233 Toll Free no : 1-800-345-4000

email: [email protected],

website : www.narnolia.com

Risk Disclosure & Disclaimer: This report/message is for the personal information of

the authorized recipient and does not construe to be any investment, legal or taxation

advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any

action based upon it. This report/message is not for public distribution and has been

furnished to you solely for your information and should not be reproduced or

redistributed to any other person in any from. The report/message is based upon publicly

available information, findings of our research wing “East wind” & information that we

consider reliable, but we do not represent that it is accurate or complete and we do not

provide any express or implied warranty of any kind, and also these are subject to change

without notice. The recipients of this report should rely on their own investigations,

should use their own judgment for taking any investment decisions keeping in mind that

past performance is not necessarily a guide to future performance & that the the value of

any investment or income are subject to market and other risks. Further it will be safe to

assume that NSL and /or its Group or associate Companies, their Directors, affiliates

and/or employees may have interests/ positions, financial or otherwise, individually or

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Stock Market Tips Today | Buy Stock Zydus Wellness target price from Rs725 to Rs 610.

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Transcript of Stock Market Tips Today | Buy Stock Zydus Wellness target price from Rs725 to Rs 610.