Total Returns 1M Performance Name Price Stock Sector Relative · name price stock sector relative...
Transcript of Total Returns 1M Performance Name Price Stock Sector Relative · name price stock sector relative...
1
05 December 2013
The Indian markets closed lower last month, impacted by speculation
around when the US Federal Reserve could start reducing the level of
QE. Sentiment was, however, supported on hopes that oil prices may
fall after Iran clinched a ‘deal’ with world powers. Foreign institutional
investors invested c.INR 80bn in November 2013 in the local equity
market.
The Indian economy grew a higher-than-expected 4.8% y/y, during Q2-
FY14, aided by an uptick in agriculture, services and construction.
Good monsoon rainfall is expected to have supported the agriculture
sector and the strong growth in services was led by a 10% y/y
expansion in financial services. Both the first phase of state elections
(8 December) and the Reserve Bank of India’s monetary policy
meeting (18 December) will be watched closely by the markets.
After the recent strong performance and with consideration to the
various upcoming events such as the elections, we expect
markets to be more volatile over the next few months. We would
advocate that underweight investors consider using any pullback
to add exposure to appropriate levels. Technical charts and
comments can be found at the rear of the report.
Contents
Outlook for India top picks Pg 1 Sector Review Pg 2 Stock Review
Earnings Release
Technical Commentary
Pg 3
Pg 7
Pg 8
Performance & Valuation Tables Pg 14
Definitions
Disclosure and disclaimer
Pg 16
Pg 17
Sirshendu Basu Chief Investment Strategist
Nishit Sheregar Equity Strategist Shishir Narsinghani Associate Strategist Soumen Das Senior Technical Strategist
Performance of our Top Sector picks
Performance relative to MSCI India Sectors
Data as of 03 December 2013
Source: Bloomberg, Standard Chartered
1M = 30 days rolling month
Top sector picks
Source: Standard Chartered
Total Returns
Name Price Stock Sector Relative
CIPLA 390.6 -5.9% -0.4% -5.4%
LARSEN & TOUBRO 1054.7 8.9% 9.3% -0.3%
TECH MAHINDRA 1690.9 10.7% -0.4% 11.1%
MARUTI SUZUKI IN 1663.3 1.5% -0.2% 1.7%
RELIANCE INDUSTRIES 861.9 -5.8% -4.2% -1.7%
ICICI BANK 1085.4 -4.0% -2.5% -1.5%
ACC 1100.5 -4.3% 0.3% -4.6%
BHARTI AIRTEL 331.0 -9.4% -5.1% -4.4%
ITC 319.2 -2.0% -2.4% 0.4%
INDRAPRASTHA GAS 280.4 0.2% -2.8% 3.0%
Average -1.0% -0.8% -0.2%
MSCI INDIA Index 801.7 -1.4%
1M Performance
India Top10 Ticker Rationale
CIPLA LTD CIPLA IN Focus on geographical expansion through direct presence, is growth and margin positive.
LARSEN & TOUBRO LT IN Strong sales growth, resilient order book and margin expansion are the key drivers.
TECH MAHINDRA TECHM IN Healthy deal pipeline and improved demand outlook are long term positive. Recent up move warrants caution.
MARUTI SUZUKI MSIL IN Strong new product pipeline, export growth and margin expansion are key triggers.
RELIANCE INDS RIL IN Large gas finds and increase in gas pricing are key positives.
ICICI BANK LTD ICICIBC IN High capital adequacy, stable asset quality and traction in retail loan growth are drivers.
ACC LTD ACC IN Demand outlook remains muted, price recovery key to improvement in stock price.
BHARTI AIRTEL BHARTI IN India business continues to gain traction, global business metrics improving.
ITC LTD ITC IN Muted volume growth and likely margin pressure are near term worry.
INDRAPRASTHA GAS IGL IN Volume growth remains strong but costly imported gas can impact margins.
Outlook for India top picks
Tech Mahindra, Indraprastha Gas and Maruti Suzuki were
the best performers over the month, up 11.1%, 3.0% and
1.7% against their respective sectors.
Since inception, the top performers in absolute terms are
Tech Mahindra (c.71%), ITC (c.46%), and Cipla (c.29%).
On a sector agnostic basis, our top picks are Cipla, Bharti
Airtel, ICICI Bank and ITC.
Equity Strategy – India Top10 Review
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Industrials (Overweight):
We remain positive on the sector on expectation that the domestic
economic downturn may have bottomed out. The better than expected
Q2 FY14 GDP growth and eight month high HSBC PMI index are
testimony of the same. Furthermore, the sector’s focus on international
growth and reasonable valuations are both positives.
Information Technology (Overweight):
The sector continues to outperform, supported by the continuing
improvement in outlook for economic activity in various key markets.
Visibility of revenue and a strong renewal deal pipeline are also key
supports. After the recent sharp run up, however, we expect the sector
to consolidate and so turn more cautious for the short term.
Financials (Neutral):
We remain watchful on the sector, because we expect another policy
rate hike in December and the pipeline of stressed assets continues to
be high. Furthermore, with slow economic growth, the recovery in loan
growth is expected to be muted. We are looking for opportunities to add
exposure, though asset quality is still a concern.
Consumer Staples (Underweight):
Consumer demand continues to be weak, negatively impacting the
sector. Also, the increase in prices of key inputs and deceleration in
high margin products is likely to affect margins. We consider the sector
to be relatively expensive and are Underweight.
India Sector performance
MSCI India Index
Data as of 03 December 2013
Source: Bloomberg, Standard Chartered
1M = 30 days rolling month
Market is near an all time high
MSCI India Index
Source: Bloomberg, data as on 03 December 2013
MSCI India Sector YTD Performance (USD)
Source: Bloomberg, data as on 03 December 2013
India Sector Views
Blue (Red) indicates upward (downward) revisions, Weights are relative to MSCI India Index. Source: Standard Chartered
Total Returns
MSCI INDIA Index 1 M YTD 1 M YTD
Healthcare -0.4% 24.3% 0.9% 17.6%
Industrials 9.3% -9.0% 10.6% -15.8%
Information Technology -0.4% 52.9% 1.0% 46.1%
Consumer Discretionary -0.2% 8.0% 1.2% 1.3%
Energy -4.2% 0.8% -2.8% -5.9%
Financials -2.5% -10.0% -1.1% -16.7%
Materials 0.3% -8.5% 1.6% -15.2%
Telecommunication Svs -5.1% 32.2% -3.7% 25.5%
Consumer Staples -2.4% 15.7% -1.0% 8.9%
Utilities -2.8% -13.0% -1.4% -19.7%
Index -1.4% 6.7% 0.0% 0.0%
Sector Performance Relative
Performance
India Sectors Weight Rationale
Health Care OW Expansion of geographical footprint and new product launches are the key drivers.
Industrials OW Expected bottoming out of economic downturn, focus on global business and reasonable valuation.
Information Technology OW Recovery of economic growth in US and Europe and expected win of large long term renewal deals are positive.
Consumer Discretionary N Lukewarm festive season demand and continued moderation of growth are concerns; rural demand is the silver lining.
Energy N Government focus on de-bottlenecking the sector is positive.
Financials N Asset quality and muted loan growth are concerns; valuations appear reasonable.
Materials N Improved Q2 FY14 GDP growth is positive, we pin hopes on pre election spending to provide some demand uptick.
Telecommunication Svs N Uptick in business metrics and moderation of regulatory concern warrants rerating of the sector.
Consumer Staples UW Muted demand, margin pressure and high valuation are the key concerns.
Utilities UW Availability of coal is key for revival of the sector.
Sector Review
The MSCI India Index was down 1.4% for the month of
November.
Industrials, Materials and Consumer Discretionary
outperformed, while Telecommunication Services and
Energy underperformed.
Equity Strategy – India Top10 Review
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Healthcare:
Cipla (CIPLA IN) was down 5.9% last month, underperforming the
health care sector. The company is aggressively pursuing
geographical expansion and establishing a direct presence in all its key
overseas markets. Furthermore, to strengthen its domestic business,
the company is looking at product licensing agreements and joint
ventures with global companies. The stock has underperformed the
sector and at current levels we feel it’s a good entry point and
would advocate investors consider adding exposure.
Risks: Setting up overseas business infrastructure could take time.
We continue to also like Lupin (LPC IN) as the company is looking at
high-margin branded drugs in the US to drive growth. Furthermore, the
company intends to expand into Latin America, Eastern Europe and
China, and has allocated USD 1bn for inorganic growth. The stock has
outperformed Cipla significantly, so we feel the upside opportunity is
now skewed to Cipla.
Risks: Margins could come under pressure going forward, led by price
cuts and increased competition.
Industrials:
Larsen & Toubro (LT IN) was up 8.9% for the month, performing in-
line with the industrials sector. Management has reiterated its guidance
of 15% y/y sales growth, 20% y/y order inflow growth and margin
expansion target. We believe LT continues to be an excellent play in
the India industrial space, powered by strong execution capabilities and
a large order book.
Risks: Moderating investment cycle continues to be an overhang.
We continue to also like Adani Ports & SEZ (ADSEZ IN) for its best in
class asset base, visibility on cargo traffic and sustained cash flows.
Furthermore, its strategic position, diversified mix of cargo and superior
realizations makes it a preferred port company.
Risks: Rise in consolidated loans and advances.
Performance of our Top Sector picks
Performance relative to MSCI India Sectors
Data as of 03 December 2013
Source: Bloomberg, Standard Chartered
1M = 30 days rolling month
Cipla’s improving return ratios
ROE and ROC (%)
Source: Bloomberg, Company, Standard Chartered
LT still trading below its 10yr median EV/EBITDA
EV/EBITDA
Source: Bloomberg
Total Returns
Name Price Stock Sector Relative
CIPLA 390.6 -5.9% -0.4% -5.4%
LARSEN & TOUBRO 1054.7 8.9% 9.3% -0.3%
TECH MAHINDRA 1690.9 10.7% -0.4% 11.1%
MARUTI SUZUKI IN 1663.3 1.5% -0.2% 1.7%
RELIANCE INDUSTRIES 861.9 -5.8% -4.2% -1.7%
ICICI BANK 1085.4 -4.0% -2.5% -1.5%
ACC 1100.5 -4.3% 0.3% -4.6%
BHARTI AIRTEL 331.0 -9.4% -5.1% -4.4%
ITC 319.2 -2.0% -2.4% 0.4%
INDRAPRASTHA GAS 280.4 0.2% -2.8% 3.0%
Average -1.0% -0.8% -0.2%
MSCI INDIA Index 801.7 -1.4%
1M Performance
Stock Review
Our sector picks performed in-line with their respective
sectors this month, on an equally weighted basis.
Tech Mahindra, Indraprastha Gas and Maruti Suzuki were
the best performers over the month, up 11.1%, 3.0% and
1.7% against their respective sectors.
The top performers (YTD) in absolute terms are Tech
Mahindra (c.82%), Indraprastha Gas (c.15%), and ITC
(c.14%)
On a sector agnostic basis, our top picks are Cipla,
Bharti Airtel, ICICI Bank and ITC.
Equity Strategy – India Top10 Review
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Information Technology:
Tech Mahindra (TECHM IN) was up 10.7% for the month,
outperforming the IT sector. We continue to be constructive on the
company on the back of improving demand and a healthy pipeline of
large deals. However, post the recent sharp run up, c.82% ytd, we
expect the stock price to consolidate in the near term.
Risks: Rising wage cost could impact the margins.
We continue to also like HCL Technologies (HCLT IN), as revenue
visibility remains high, driven by robust deal signings and improved
reliability on margin expansion.
Risks: The company had the highest quarterly annualized attrition
among peers.
Consumer Discretionary:
Maruti Suzuki (MSIL IN) was up 1.5% over the month, outperforming
the consumer discretionary sector. We exercise caution on the sector
due to slowing demand, but continue to like MSIL on the back of its
rich line-up of new product launches, increase in exports volumes and
margin expansion led by rising localization.
Risks: If industry volumes remain weak, the company’s performance
may be impacted. The continuance of large discounts may lead to
margin erosion.
We are cautious on Titan Industries (TTAN IN), as the demand
scenario remains challenging and consumer sentiments remain
subdued.
Risks: Jewellery demand remains weak due to moderating
discretionary spending.
Energy:
Reliance Industries (RIL IN) was down 5.8% over the month,
underperforming the energy sector. A positive government stance on
RIL’s exploration and production efforts, in terms of project approvals
and gas pricing, augurs well for the company. In addition, revised gas
pricing will be key trigger.
Risks: New capacity additions and weakening demand on account of
slowdown in the global economy.
ONGC (ONGC IN) offers an investment opportunity on the back of its
relatively attractive valuation which factors in negatives such as high
subsidies and no hike in gas prices.
Risks: Subsidy burden and regulatory concerns.
TECHM operating metrics improving
Margins (%)
Source: Bloomberg, Standard Chartered
Total sales down 10.7% y/y in November, with exports
down 46.2%
Maruti Suzuki’s monthly sales
Source: Bloomberg, Standard Chartered
RIL revenue outside India increasing as a % of total
Revenue Contribution (%)
Source: Standard Chartered Research estimates
Equity Strategy – India Top10 Review
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Financials:
ICICI Bank (ICICIBC IN) fell 4.0% for the month, underperforming the
financial sector. The growing proportion of retail loans, low exposure to
SMEs, high capital adequacy and stable asset quality are key positives,
in our view.
Risks: The bank’s exposure to the large overleveraged corporate
groups remains a concern.
We maintain our conviction in HDFC Bank (HDFCB IN), as we believe
retail banks will continue to have better earnings visibility. Growth rates
are expected to be higher than average and asset quality is considered
the best of the local banks, so valuations may remain at elevated
levels.
Risks: Uncertain macro environment and high valuations are key
concerns.
Bank of Baroda (BOB IN) is our preferred stock amongst the state
owned banks, although we would exercise caution given the stock has
run up considerably since its lows in August and uncertainty remains
over asset quality.
Risks: Increased concern over asset quality, declining NIMs and
pressure on fee income could weigh on the sentiment in the medium
term.
Materials:
ACC Ltd (ACC IN) was down 4.3% for the month, underperforming the
materials index. While cement demand continues to remain weak, after
some signs of growth in September 2013, cement prices have
witnessed recovery since the end of monsoon.
We are cautious in this space and maintain that the sustainability of
price recovery and improvement in operating performance are critically
dependent on a sustained recovery in demand.
Risks: On the back of challenging macro-economic conditions,
realisations may not improve materially in the medium term.
We are positive on Hindustan Zinc (HZ IN), driven by higher sales
volume, good operating metrics and strong cash flows. Corporate
action is likely to be a near term catalyst for the stock.
Risks: Volatility in commodity prices.
Bank-wise pipeline of stress loans
Gross and Net NPAs as of Sep 2013 (%)
Source: Standard Chartered Research
Cumulative position of CDR referrals continue to rise
Average monthly Corporate Debt Restructuring (CDR)
referrals
Source: Standard Chartered Research
ACC impacted by the current economic slowdown
ACC Sales Growth (%)
Source: Bloomberg, Standard Chartered
Equity Strategy – India Top10 Review
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Telecommunication Services:
Bharti Airtel (BHARTI IN) was down 9.4% for the month,
underperforming the telecom sector. India business fundamentals are
improving and we believe things should incrementally look better in
African markets as well. Furthermore, the sale of the Africa tower
business will be positive. Given the stock’s weak performance and
improving fundamentals we are becoming a little more optimistic. We
would though like to wait for confirmation of this improving trend before
advocating investors consider adding to the name.
Risks: Regulatory concerns and profitability of African business.
We like IDEA Cellular (IDEA IN) because of strong growth in data
volumes and expected pick up in revenues per minute.
Risks: Aggressive bidding in upcoming spectrum auction.
Consumer Staples:
ITC (ITC IN) fell 2.0% for the month, marginally outperforming the
consumer staples sector. We believe the recent stock correction is
because of muted outlook for the sector.
In our opinion, the expectation of a fall in cigarette volume growth
is priced in and the earnings forecasts are fairly modest. Hence we
see this weakness as a buying opportunity.
Risks: Sustained weakness in cigarette volume growth, regulatory
impact and a slowdown in FMCG demand.
Britannia Industries (BRIT IN) is also a preferred pick, given the fact
that it has witnessed strong volume growth at a time when most of its
peers witnessed muted growth. Superior product mix, higher price
realizations and new launch of value added products is expected to
drive revenue growth in the long term.
Risks: Rise in input costs and slowdown in FMCG demand.
Utilities:
Indraprastha Gas Ltd (IGL IN) was flat over the month, outperforming
the utilities sector. The company’s margins face pressure as the
proportion of costly imported gas is expected to increase. Further, the
regulator’s proposal to cap gas marketing margin remains an overhang
on the stock.
Risks: Regulatory risk continues to be a major concern.
We continue to also like NTPC (NTPC IN) on the back of improved
visibility on the capacity-addition program and emergence of clarity on
coal-availability issues.
Risks: Rise in imported fuel cost may impact margins.
Bharti Africa business gaining traction
Revenue Contribution to Mobile Services Revenue (%)
Source: Bloomberg, Standard Chartered
Keeping costs under control has aided margins
Britannia EBITDA Margin (%)
Source: Bloomberg, Standard Chartered
Indraprastha Gas operating margins continue to be
stable
Margins (%)
Source: Bloomberg, Company, Standard Chartered
Equity Strategy – India Top10 Review
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Earnings Release:
Tech Mahindra Ltd. (TECHM IN) – Q2 FY14 (7 November 2013)
Vs Consensus – BEAT
Consolidated net profit rose 57.6% y/y to INR 7.2bn.
Revenue rose 35.4% y/y to INR 47.7bn.
EBITDA jumped 28.5% q/q to INR 11.1bn.
Debt was at INR 3.4bn and cash and cash equivalent stood at
INR 32.7bn.
The company reported a net addition of 2,171 employees in
the September quarter—it’s highest in the last eight quarters.
Cipla (CIPLA IN) – Q2 FY14 (13 November 2013)
Vs Consensus – MISS
Income from operations increased 14.6% y/y to INR 25.1bn.
The results include Cipla Medpro South Africa (Medpro),
which became a wholly owned subsidiary of Cipla on 15 July
2013.
Cipla’s Q2 FY14 consolidated net profit fell 28.4% y/y to INR
3.6bn. Consolidated EBITDA fell 16.7% y/y to INR 5.6bn and
operating profit margin declined 850 basis points to 22.5%.
Domestic revenues grew 11.6% y/y to INR 10.4bn and
International business rose 14.9% y/y to INR 12.2bn.
Indraprastha Gas Ltd. (IGL IN) – Q2 FY14 (7 November 2013)
Vs Consensus – IN-LINE
IGL’s standalone sales turnover rose by 18.1% y/y to INR
10.1bn.
Net profit for the quarter declined by 6.5% y/y to INR 0.9bn.
IGL’s operating profit margin narrowed to 20% from 24% y/y,
due to higher quantum of imported gas.
Compressed natural gas (CNG) sales volume increased by
3% and piped natural gas (PNG) sales volumes increased by
10% y/y.
Earnings Release
Source: Bloomberg, Standard Chartered
IGL’s steady operational performance
Revenue and EPS
Source: Bloomberg, Company, Standard Chartered
Name Year QuarterEst.
EPS
Reported
EPSSurprise
CIPLA LTD 2013 Q2FY14 5.3 4.5 (15.05)
TECH MAHINDRA 2013 Q2FY14 31.5 31.0 (1.60)
INDRAPRASTHA GAS 2013 Q2FY14 6.2 6.6 6.95
Equity Strategy – India Top10 Review
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BSE SENSEX – BSE Sensex is trading near its key resistance at 21000. The Sensex is expected to consolidate
within the range of 20000 – 21000 in the near term before resuming its uptrend and it may touch 22500 in the medium term. Long term uptrend would remain intact as long as Sensex stays above 18000.
Source: Metastock, data as on 03 December 2013 _______ 50 EMA _______ 100 EMA
Cipla (CIPLA IN) – Stock is trading near the lower band of the current trading range at INR380. We expect technical
pullback from the current level. Resistance is at INR 428.
Source: Metastock, data as on 03 December 2013 _______ 50 EMA _______ 100 EMA _______ 200 EMA
Technical Commentary
Equity Strategy – India Top10 Review
9
Larsen & Toubro (LT IN) – The stock has seen a sharp up move and has crossed INR 1000 mark. LT is likely to
face strong resistance at INR 1100 and above that at INR 1150. We expect the stock to consolidate within a range of INR 1000 – 1100 in the near term.
Source: Metastock, data as on 03 December 2013 _______ 50 EMA _______ 100 EMA _______ 200 EMA
Tech Mahindra (TECHM IN) – The stock is expected to maintain positive momentum and it may touch INR 1850 in
the medium term. Strong support is at INR 1600. .
Source: Metastock, data as on 03 December 2013 _______ 50 EMA
Technical Commentary
Equity Strategy – India Top10 Review
10
Maruti Suzuki (MSIL IN) – The stock is likely to face strong resistance at INR 1730. MSIL continues to consolidate
within a range of INR 1550 - 1730 in the near term before resuming its uptrend. Resistance is at INR 1900.
Source: Metastock, data as on 03 December 2013
Reliance Industries (RIL IN) – The stock continues to trade within a broad range of INR 785 – INR 950 in the
medium term.
Source: Metastock, data as on 03 December 2013 _______ 50 EMA _______ 100 EMA _______ 200 EMA
Technical Commentary
Equity Strategy – India Top10 Review
11
ICICI Bank (ICICIBC IN) – The stock has seen a sharp rebound from key intermediate support at INR 760. We
expect the rally to continue, with key resistance at INR 1230. Stock continues to trade within a broad range of INR 900-1250 in the medium term.
Source: Metastock, data as on 03 December 2013 _______ 50 EMA _______ 100 EMA _______ 200 EMA
ACC Ltd (ACC IN) – The stock has found support at trend line and has seen a pullback. Currently stock is
consolidating within a range of INR 980 – 1180. The medium term uptrend would remain intact as long as the stock stays above INR 920.
Source: Metastock, data as on 03 December 2013 _______ 50 EMA _______ 100 EMA _______ 200 EMA
Technical Commentary
Equity Strategy – India Top10 Review
12
Bharti Airtel (BHARTI IN) – The stock appears to have stabilised around crucial support of INR 280, with higher
highs and higher lows formation which is positive. Current rally may face resistance at INR 380. A breakout above INR 380 can take the stock price to INR 400.
.
Source: Metastock, data as on 03 December 2013 _______ 50 EMA _______ 100 EMA _______ 200 EMA
ITC (ITC IN) – Stock continues to consolidate within a range of INR 309-350 in the near term. Key support is at INR
309 and below that at INR 270. The medium term uptrend would remain intact as long as stock stays above INR309.
Source: Metastock, data as on 03 December 2013
Technical Commentary
Equity Strategy – India Top10 Review
13
IGL (IGL IN) – Stock continues to consolidate within a broad range of INR 250-315 in the medium term.
Source: Metastock, data as on 03 December 2013 _______ 50 EMA _______ 100 EMA _______ 200 EMA
Technical Commentary
Equity Strategy – India Top10 Review
14
Sector Stock Picks
Data as of 03 December 2013
Data as of 03 December 2013
SCB 12m target price: Blue (Red) indicates upward (downward) revisions
Source: Bloomberg, Standard Chartered
Name
Initiation
Date
Stock Price
SCB 12m
Target
1 M ITD YTD
Consensus
Rating
SCB Rating
CIPLA LTD 3/30/2012 390.6 460.0 -5.9% 29.4% -4.9% 4.1 OUTPERFORM
LUPIN LTD 3/30/2012 870.4 685.0 -0.6% 66.1% 43.5% 4.2 OUTPERFORM
LARSEN & TOUBRO 3/30/2012 1054.7 965.0 8.9% 24.1% 1.4% 4.1 OUTPERFORM
ADANI PORTS AND 3/30/2012 158.1 189.0 10.3% 23.7% 19.2% 4.5 OUTPERFORM
TECH MAHINDRA LT 10/3/2012 1690.9 1850.0 10.7% 70.7% 82.0% 4.3 OUTPERFORM
HCL TECH 10/3/2012 1118.4 1390.0 1.6% 88.4% 82.1% 4.3 OUTPERFORM
MARUTI SUZUKI IN 3/4/2013 1663.3 2046.0 1.5% 19.6% 12.1% 4.2 OUTPERFORM
TITAN INDS LTD 8/3/2012 225.4 226.0 -12.7% -0.5% -19.0% 2.9 IN-LINE
RELIANCE INDS 3/30/2012 861.9 907.0 -5.8% 17.5% 3.0% 4.1 IN-LINE
OIL & NATURAL GA 4/4/2013 292.4 430.0 2.5% -4.8% 11.7% 4.6 OUTPERFORM
ICICI BANK LTD 3/30/2012 1085.4 1105.0 -4.0% 26.6% -2.8% 4.5 OUTPERFORM
HDFC BANK LTD 8/3/2012 655.8 740.0 -3.3% 12.4% -1.7% 4.0 OUTPERFORM
BANK OF BARODA 3/30/2012 648.1 550.0 -3.1% -13.7% -22.3% 3.4 IN-LINE
ACC LTD 3/30/2012 1100.5 1179.0 -4.3% -16.2% -21.7% 3.3 IN-LINE
HINDUSTAN ZINC 3/30/2012 125.0 172.0 -8.3% -1.3% -5.3% 4.6 OUTPERFORM
BHARTI AIRTEL 3/30/2012 331.0 404.0 -9.4% -1.3% 5.2% 4.2 OUTPERFORM
IDEA CELLULAR 3/30/2012 175.4 196.0 4.1% 77.9% 69.4% 3.9 OUTPERFORM
ITC LTD 3/30/2012 319.2 350.0 -2.0% 45.5% 13.8% 4.3 OUTPERFORM
BRITANNIA INDS 9/5/2013 905.2 980.0 -4.2% 20.7% 82.6% 4.1 OUTPERFORM
INDRAPRASTHA GAS 3/30/2012 280.4 430.0 0.2% -22.9% 15.4% 4.1 OUTPERFORM
NTPC LTD 4/4/2013 145.7 200.0 0.5% 2.2% -2.2% 4.5 OUTPERFORM
Name Sector
12m
Fwd P/E
ROE 5yr
AV
Div Yield
Div
Payout
Beta
Expected
DVD
Ex-Date
Expected
Reporting Date
CIPLA LTD Health Care 18.1 18.1 0.5 10.4 0.5 8/5/2014 5/29/2014
LUPIN LTD Health Care 20.6 30.6 0.5 13.6 0.6 7/29/2014 1/31/2014
LARSEN & TOUBRO Industrials 17.9 23.0 1.2 21.9 1.5 8/14/2014 5/22/2014
ADANI PORTS AND Industrials 15.1 22.9 0.6 13.0 0.8 - 1/28/2014
TECH MAHINDRA LT Information Technology 12.9 34.0 0.3 5.0 0.6 7/31/2014 2/6/2014
HCL TECH Information Technology 13.4 27.3 0.5 20.4 0.7 1/24/2014 1/17/2014
MARUTI SUZUKI IN Consumer Discretionary 15.5 16.2 0.5 9.8 1.1 8/13/2014 4/25/2014
TITAN INDS LTD Consumer Discretionary 22.1 42.2 0.9 25.7 0.9 7/18/2014 5/2/2014
RELIANCE INDS Energy 11.0 14.1 1.0 14.7 1.1 5/12/2014 4/16/2014
OIL & NATURAL GA Energy 8.2 20.6 3.2 33.6 1.2 - 5/29/2014
ICICI BANK LTD Financials 9.5 11.3 1.8 24.0 1.5 5/29/2014 1/31/2014
HDFC BANK LTD Financials 15.7 17.9 0.8 19.1 1.1 6/12/2014 4/23/2014
BANK OF BARODA Financials - 20.3 3.3 22.1 1.4 6/24/2014 5/13/2014
ACC LTD Materials 16.7 21.2 2.7 53.2 0.9 3/21/2014 2/7/2014
HINDUSTAN ZINC Materials - 23.2 2.5 19.0 0.9 5/9/2014 1/17/2014
BHARTI AIRTEL Telecommunication Services 23.6 16.5 0.3 16.7 1.0 5/23/2014 1/31/2014
IDEA CELLULAR Telecommunication Services 23.5 7.8 0.2 9.8 0.7 - 1/29/2014
ITC LTD Consumer Staples 25.4 31.5 1.6 54.5 0.8 6/9/2014 5/16/2014
BRITANNIA INDS Consumer Staples 25.5 38.8 0.9 39.2 0.6 - 5/23/2014
INDRAPRASTHA GAS Utilities - 27.6 2.0 21.7 0.8 - 2/11/2014
NTPC LTD Utilities 10.7 14.7 3.9 37.7 0.9 1/30/2014 5/9/2014
Performance & Valuation Tables
Equity Strategy – India Top10 Review
15
MSCI India Sectors
Data as of 03 December 2013
Source: Bloomberg, Standard Chartered
MSCI INDIA Index
1M YTD
Rel to
Index
YTD%
Trailing
P/E
12m
Fwd P/E
Trailing
P/B
EV/
EBITDA
DVD
Yield%
DVD
Payout %
Health Care -0.4% 24.3% 17.6% 41.4 20.9 4.4 19.2 0.6 25.7
Industrials 9.3% -9.0% -15.8% 17.6 14.9 2.1 11.2 1.3 22.2
Information Technology -0.4% 52.9% 46.1% 20.0 16.4 5.2 14.3 1.2 23.8
Consumer Discretionary -0.2% 8.0% 1.3% 15.3 10.9 3.5 8.5 1.5 22.9
Energy -4.2% 0.8% -5.9% 10.0 9.5 1.5 6.7 2.1 21.7
Financials -2.5% -10.0% -16.7% 14.5 13.3 2.3 - 1.4 20.4
Materials 0.3% -8.5% -15.2% 25.9 10.7 1.2 11.2 1.2 34.1
Telecommunication Svs -5.1% 32.2% 25.5% 43.1 23.2 1.9 8.7 0.2 10.1
Consumer Staples -2.4% 15.7% 8.9% 37.7 30.7 9.4 25.8 1.3 48.6
Utilities -2.8% -13.0% -19.7% 11.6 10.0 1.2 8.8 2.7 31.1
Index -1.4% 6.7% 0.0% 17.5 14.1 2.6 11.2 1.4 24.2
Equity Strategy – India Top10 Review
16
Consensus rating: A rating provided by Bloomberg that reflects
the aggregation of all brokers rating for a particular stock. 1 is a
Sell, whilst 5 is a Strong Buy.
YTD: Year to date.
ITD: Inception to date.
PT: Price Targets (SCB uses an investment horizon of 12 months
for its price targets).
RSI: Relative Strength Index.
Relative Volatility index: A measure of the standard deviation of
the daily price change.
MA: Moving Average.
Basket average performance: Basket average is the un-
weighted performance of the shortlisted stocks
Consensus estimates: An aggregation of revenue and earning
estimates of brokers complied by Bloomberg / Newswire18.
P/E: Price/Earnings ratio. The Trailing P/E refers to 12m of trailing
earnings, whilst the forward refers to 12m forecast earnings,
against current price.
EV/EBITDA: Enterprise value/Earnings before Interest, Tax and
Depreciation Amortisation.
PAT: Profit after tax.
ROE and ROA: Return on Equity and Return on Assets (book
value).
Dividend Yield: Dividend paid/ current price.
Beta: Correlation between a stock and the market. Is based on
two years of weekly data, but modified by the assumption that a
security's beta moves toward the market average over time.
P/E bands: 10-year price series with 0.5 and 1 Standard
deviation bands from Median Forward PE. Dotted lines are the
Forward 'target' prices derived from forward EPS estimates and
median 10 yr Forward P/E (Forward PE*EPS).
DEMA: Daily exponential moving average.
WEMA: Weekly exponential moving average.
MSCI: Morgan Stanley Composite Index. We have compared
stock and sector performance with MSCI India sectoral indices.
CASA: Current account and savings account.
NIM: Net interest margin.
NPA: Non performing asset.
Definitions
Equity Strategy – India Top10 Review
17
ure Appendix
DISCLOSURE
SCB and/or its affiliates have received compensation for the provision of investment banking or financial advisory
services within the past one year for the following companies: Tata Motors Ltd., Reliance Industries Ltd., Bank of Baroda,
HDFC Bank Ltd., ICICI Bank, Hindustan Zinc Ltd. and Bharti Airtel Ltd.
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Equity Strategy – India Top10 Review
18
such securities or related investments, or may be the only market maker in relation to such investments, or provide, or
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Investment Strategy Disclaimer:
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does not represent the views of the Standard Chartered Group, particularly those of the Global Research function. This
document is not independent of Standard Chartered Group’s own trading strategies or positions. Therefore, it is possible,
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Trading recommendations based on quantitative analysis are based on index / stock’s momentum, price movement,
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