DOMESTIC:

Rajesh Exports wins export order worth Rs1,188cr L&T subsidiary bags Rs370mn orders from Oman firm

Gayatri Projects bags Rs340cr road project in Nagaland USFDA nod for eyecare drug BromSite gives boost to

Sun Pharma Orchid Pharma receives EIR from US FDA for

Kancheepuram facility Ricoh India under Sebi lens for irregularities Blue Star to set up 2 units at Rs215cr investment Suzlon bags 105MW wind project order from

Greenko Group Tata Chemicals to shut Haldia fertiliser plant in

September-October TTK Prestige buys UK's Horwood as it expands global

business JP Associates withdraws Rs34,000cr electronic chip

project BHEL bags Rs282cr order from NTPC for 50MW solar

plant in MP Lafarge India sale stuck as CCI role comes under lens in

Compat

ECONOMY:

India-Iran sign agreements on crude oil imports, gas field development

INDUSTRY:

Funding in solar sector drops 59% quarter-over-quarter Government bans manufacture, import of toxic

pollutant PCBs Government tells thermal power plants to reduce

water usage Private equity investment in retail properties may

double to USD80mn in 2016

TM

One Year Sensex Performance

Coverage Universe Valuations

Company CMP Reco. Tgt price Upside Mcap EV/Sales (x) EV/EBITDA (x) PE(x)

(Rs) (Rs) (%) (Rs bn) FY16E FY17E FY16E FY17E FY16E FY17E

Supreme Petrochem Ltd 132 BUY 150 13.7 12.7 17.8 12.1 0.3 0.3 7.9 5.3

Indian Hume Pipe Co. Ltd 339 BUY 475 40.1 8.2 15.7 11.0 8.9 7.9 8.2 6.6

Shanthi Gears Ltd 91 BUY 150 65.4 7.4 65.3 51.4 3.9 4.0 26.3 24.1

Hind Rectifiers Ltd 68 BUY 110 61.4 1.0 56.7 12.9 1.1 0.9 21.6 9.3

KCP Limited 88 BUY 105 19.3 11.4 28.6 20.3 2.1 1.8 12.2 10.3

Navneet Education Ltd 88 BUY 130 47.5 21.0 14.2 12.4 2.1 1.9 8.6 7.6

Harita Seating System Ltd 546 BUY 600 9.9 4.2 43.2 31.7 1.5 1.4 27.0 21.1

Camlin Fine Sciences 99 BUY 140 40.8 9.5 12.2 9.3 1.7 1.4 9.1 7.4

GEE Limited 39 BUY 70 79.9 0.9 16.8 12.1 0.7 0.6 6.5 5.8

Hester Biosciences Ltd 540 BUY 750 39.0 4.6 33.1 27.2 4.8 3.8 16.6 13.5

West Coast Paper Mills Ltd 77 BUY 110 42.7 5.1 14.5 4.0 0.6 0.6 4.0 3.3

Rallis India Limited 189 BUY 260 37.3 36.8 24.1 18.9 2.2 1.9 13.5 11.2

The Hitech Gears Limited 259 BUY 450 73.7 4.9 18.2 13.9 1.0 0.9 7.7 6.6

Bharat Bijlee Limited 947 BUY 1100 16.2 5.4 94.6 43.8 0.9 0.8 31.6 27.0

Castrol India Limited 380 BUY 650 70.9 188.2 28.8 26.8 4.8 4.6 18.3 17.1

Engineers India Limited 173 BUY 325 87.4 58.4 16.6 15.8 1.9 2.8 12.4 19.0

TNPL 232 BUY 350 51.2 16.1 7.4 6.4 1.5 1.4 5.8 5.2

Triveni Turbines Limited 96 BUY 135 40.5 31.7 31.1 26.1 0.4 0.4 2.0 1.7

Rajoo Engineers Limited 16 BUY 24 50.0 0.9 12.5 9.0 0.8 0.6 6.6 5.1

Siemens Limited 1167 BUY 1500 28.6 415.3 44.4 38.2 3.5 3.1 25.8 22.0

Price Performance (%)

Company 1M 3M 12M

Supreme Petrochem Ltd 18% 26% 91%

Indian Hume Pipe Co.Ltd 2% -18% 7%

Shanthi Gears Ltd 9.4% -7% -26%

Hind Rectifiers Ltd 6% -21% -6%

KCP Limited 29% 15% 33%

Navneet Education Ltd 9% 1% -18%

Harita Seating System Ltd 23% 42% 183%

Camlin Fine Sciences 5% 2% 2%

GEE Limited 0% -15% 41%

Hester Biosciences Ltd 18% -2% -25%

West Coast Paper Mills Ltd 19% 9% 41%

Rallis India Limited 17% 12% -17%

The Hitech Gears Limited 5% -13% -18%

Bharat Bijlee Limited 21% 18% 38%

Castrol India Limited 2% -13% -19%

Engineers India Limited 7% -22% -18%

TNPL 11% -5% 71%

Triveni Turbines Limited -3% -5% -27%

Rajoo Engineers Limited 4.0% -19% -6%

Siemens Limited 13% 4% -19%

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The week that went by: The markets started on a strong note for the week. All of the initial losses were wiped with the gain on account of buying in the frontline stocks and expectations of normal monsoons. There is anyways cautiousness in the market ahead of the quarterly results. Positivity was seen in the markets backed by the favourable monsoon predictions for the year. There are indications from the government to boost the crop acreage and production of kharif crops from June. Overall the week was strong on the positive sentiments in the market.

What has the Skymet report to say? As per the recent release from Skymet (private forecaster), above normal rainfall is expected from the month of June through September. (105% of LPA (+/-4%). This is a booster to sentiments after two consecutive years of deficit rains. Skymet said that there is 85% probability of normal-to-excess rainfall in the June-to-September monsoon season this year, with only 5% probability of a drought. The error margin for the forecast is 4%. After back-to-back monsoon failures, farmer distress is at a peak in India, where the majority of fields lack irrigation facilities. India bore the brunt of the 2015-16 El Nino weather phenomenon, with a 14% rainfall deficit in the southwest monsoon last year, after which 11 states declared drought. Monsoon rainfall will be 10% below normal in June, 5% more than normal in July, 8% more than normal in August and 15% more than normal in September, Skymet forecast.

Our comments: The predictions from the Skymet as well as the IMD was a sentiment raiser across the market reflected in the gains during the week.

Result Update Infosys Limited: Q4 and FY16 Infosys declared its fourth quarter results beating the street expectations. Despite seasonal weakness, a marginal uptick in the business momentum and weaker rupee helped Infosys clock a surprisingly higher revenue growth. The rupee revenues came in at Rs16,550cr compared to Rs15,902cr in the previous quarter. In dollar terms the revenue for the quarter increased 1.6% q-o-q to USD2,446mn from USD2,407mn on sequential basis.

The consolidated net profit came in at Rs3,597cr as compared to Rs3,465cr in the previous quarter.

For the full year ended March 31, the company’s net profit was up 9.4% y-o-y at Rs13,491cr, while revenue rose 17.1% to Rs62,441cr.

The company has revised rupee revenue growth guidance upwards to 11.5-13.5% in constant currency, meeting expectations.

For the March quarter, Infosys posted operating margin of 25.5%, an increase of 0.6% sequentially. Net addition of employees stood at 661. The company had 1,94,044 employees as of March 31, 2016. Attrition rate (on a standalone basis) during the quarter stood at 12.6%. Twelve months ago attrition rate stood at 13.4%.

Our comments: The company has reported better than expected results and we recommend to stay invested in the stock.

TM

Positive from Skymet

Good set of numbers

COVERAGE STOCK NEWS

Castrol India Annual report key takeaways: The annual report of Castrol India for 2015 was recently released and was encouraging in terms of business outlook and future growth.

Below are mentioned some of the key highlights of the annual report:

India still is an important market for the lubricant industry worldwide, where the demand is directly impacted by its economic activity. It is evident that the company has been operating in a very challenging environment in 2014. Prices of base-oil which is the basic raw material have declined. India is a base-oil deficit market, which still exposes lubricants businesses to fluctuations in forex due to imports.

In the automotive sector, sales of commercial vehicles, heavy commercial Vehicle, passenger car sales and two-wheeler sales have increased by 7%, 30%, 8% and 0.7% respectively while sales of light commercial vehicles and tractors declined by 5% and 18% respectively. Gearless scooters seem to be gaining popularity with consumers and with better and normal rainfall expected in the coming year, the sales of two wheelers and scooters should pick in the rural areas, which will be a big booster for the company. Globally, the shipping industry is still passing through one of its worst phases and this also affects the marine segment of lubricants of the company.

The Castrol brand has continued to be a pioneer with respect to catering to demands of various OEMs and has continued its close association with partners, like Maruti Suzuki, Volkswagen, Tata Motors, Ford and JCB. As far as marketing is concerned the company has been taking various steps via television advertisements, online campaigns and digital contests. The company has been constantly expanding its service network to provide consumers with easy access to servicing. The Company has delivered a significant volume growth in the Maruti Suzuki network via acquisition and gaining share in existing accounts. Major milestone achieved during the year was the renewal of the ISO 14001, 9001:2008 and TS16949 certifications for the India Technology Centre.

The Company delivered a Gross Profit growth of 17% in 2015 over 2014. The Profit After Tax (PAT) has increased by Rs1,407mn and is at Rs6,153mn compared to 2014.

With its strong brands, stable relationships with key stakeholders, commitment of its staff and foreseeing growth in the Indian economy, the company is poised to grow and sustain its strong performance during the year 2016. Some of the key factors which favour the industry and the company as a whole are the GDP at 7.3% and inflation rate at 5.8% through the year and improving Index of Industrial Production (IIP). Rolling out of GST will be a great relief for the company. Concepts like make in India favours the company. The economy needs to be monitored for revival signs in some key sectors which are currently underperforming. Many factors related to economy, India’s growth, Castrol’s value purchase model, cost management, value-based inventory management still favour and support the investment rational of the company on a whole and investors are yet to see better days to come.

We are still positive stance on the company and maintain a BUY on the stock with a target price of Rs650.

TM

STOCKS NEWS ANALYSIS

Encouraging outlook for Castrol

India-Iran sign agreements on crude oil imports, gas field development Eyeing to step up energy partnership in the post-sanctions period, India and Iran have signed an agreement that involves crude oil imports, petrochemical complexes and gas fields development besides the announcement of USD20bn billion for strategic Chabahar Port. Pradhan who met his Iranian counterpart Bijan Zanganeh in Tehran also discussed on increasing India's import of Iranian oil from its current 350,000 barrels a day.

Our Comments: As per government sources there was interest indicated in Iran's oil, gas and petrochemical projects as well.

India Inc. buys back shares worth Rs1,700cr in FY16 Indian firms bought back shares worth over Rs1,700cr from public in 2015-16, achieving 97% of the target. According to a report by Prime Database,15 buyback offers were concluded last fiscal with a total acquired sum of Rs1,713cr, while the amount on offer was Rs1,763cr. The largest buyback completed was by Bayer Cropscience for Rs506cr.

Our Comments: Of the 15 offers, 11 were through the tender offer and the remaining four were via the stock exchange mechanism route. In comparison, as many as 20 buyback offers were completed in financial year 2014-15 with a total acquired amount of Rs1,909cr. The companies had targeted to repurchase shares to the tune of Rs6,816cr during the period.

Indian Railways Rs8lakh crore infrastructure development plan to be rolled out soon After a long spell of underinvestment, Indian Railways is firming up a plan for infrastructure development with an ambitious target of pumping in more than Rs8lakhcrore over the next four years. The massive investment plan would involve high-speed rail connectivity, station redevelopment and capacity augmentation across the country.

Our Comments: As per the plan, while part of the funding will come from the capital expenditure provided for in the Rail Budget, a major chunk is expected to come from outside the budget through PPP and multilateral funding.

India remains a bright spot in IMF’s global economic forecast India continues to remain a bright spot in the otherwise bleak global economic forecast of the International Monetary Fund (IMF). India will be the fastest growing major economy in 2016-17 growing at 7.5%, ahead of China, at a time when global growth is facing increasing downside risks, as per the World Economic outlook released by the IMF.

Our Comments: IMF said global growth will strengthen from 2017 aided by the gradual increase in the global weight of fast-growing countries such as China and India.

TM

KEY NEWS ANALYSIS

Agreements on crude oil imports

Buy back of shares in FY16

Indian railways to get a booster

India in the bright spot

Funding in solar sector drops 59% q-o-q Total corporate funding, including venture capital funding, public market and debt financing, in the solar sector in Q1-2016 dropped to USD2.8bn compared to USD6.9bn in Q4-2015, a decline of about 59% quarter-over-quarter. Y-o-Y, total corporate funding was down compared to USD6.4bn in 64 deals in Q1-2015.

Our Comments: Solar public companies in general have had a difficult time raising capital at depressed market valuations. Yield cos, which accounted for significant financial activity in the debt and public markets last year, have faded this quarter. However, on the bright side, venture capitalist funding held up well, securitization deal activity picked up, residential and commercial funds raised a billion dollars in Q1.

Government bans manufacture, import of toxic pollutant PCBs The Centre has banned the manufacture and import of toxic pollutant Polychlorinated Biphenyls (PCBs) and directed complete prohibition on its use in any form by end of 2025. The Ministry has notified the 'Regulation of Polychlorinated Biphenyls Order, 2016' which also bans import of equipment containing PCBs. That apart, the import, export or trade of PCBs contaminated equipment will be regulated as per the provisions of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008.

Our Comments: The government's decision is in line with the Stockholm Convention, under which signatory countries are to prohibit or take necessary legal and administrative measures to eliminate the production and use of PCBs. India signed it in May 2002.

Private equity investment in retail properties may double to USD80mn in 2016 Private equity investment in retail properties is likely to double to USD80mn this calendar year mainly on account of liberalisation of FDI policy. The retail sector can look forward to a more cheerful 2016, given some good initiatives taken by the government. PE investment has been largely confined to a few retail players in India. In 2015, PE investment into retail properties alone was USD39mn and in 2016, it is expected to be in the range of USD75-80mn. Already, the FDI inflow in retail trading increased between October 2014 and September 2015 to USD70.75mn.

Our Comments: Economic stability, liberalisation of the FDI policy and improvement in the consumer sentiment will help global brands witness a very conducive environment for investment into Indian retail as well as in retail real estate sectors.

States to put 100 more mines on auction by year-end As per the Steel minister, States will offer 100 additional mines bearing minerals such as iron ore, bauxite and limestone for auction by 2016-end. The Minister said that states have so far put 43 mines on the block, of which six have been auctioned and the total revenue expected from the sale is Rs18,146cr. Apart from these, 43 more would be auctioned.

Our Comments: This should benefit the overall mining industry

TM

KEY NEWS ANALYSIS

Solar projects funding drops

Ban on PCBs

Positive for the miners

PE investments into retail

Rajesh Exports wins export order worth Rs1,188cr Rajesh Exports bagged an export order worth Rs1,188cr of designer range of gold and diamond-studded jewellery and medallions from the UAE. The company said that the order will be executed from its manufacturing facility in Bengaluru and is to be completed by June 30.

Our Comments: The order should be a reliever for the company as the strike of the jewellers would anyways affect the performance of the company.

L&T subsidiary bags Rs370mn orders from Oman firm L&T Hydrocarbon Engineering (LTHE), a wholly-owned subsidiary of L&T, has won two orders valued approximately Rs370mn from Petroleum Development Oman LLC (PDO). The new order includes engineering, procurement and construction of Saih Nahaydah Depletion Compression Phase-2 (SNDC2) and Kauther Depletion Compression Phase 2 (KDC2) project. LTHE has already

executed three projects for Petroleum Development Oman. Our Comments: The orders should boost the working of the company and is a good sipping candidate from investment point of view.

Gayatri Projects bags Rs340cr road project in Nagaland Gayatri Projects has secured a Rs340cr contract for four-laning of a highway from Dimapur to Kohima in the North East state of Nagaland from the National Highways and Infrastructure Development Corporation Ltd ( NHIDCL) and the

Ministry of Road Transport and Highways ( MoRTH) Our Comments: The company said the projects is for four-laning of existing Dimapur-Kohima road design of 152.90km excluding Dimapur and Kohima bypass, in the state of Nagaland through an engineering, procurement and construction (EPC)

contract.

USFDA nod for eyecare drug BromSite gives boost to Sun Pharma Sun Pharmaceutical Industries received USFDA approval for BromSite, used to relieve post-operative inflammation and prevention of eye pain in patients undergoing cataract surgery, a significant boost to the company's strategy of stepping up its specialty branded drugs play in the world's biggest pharmaceuticals market. The approval opens access to a USD400mn market

growing at 8% as of January. Our Comments: The product will be commercialized through New Jersey-based Sun Ophthalmics, a division that Sun formed recently to route its specialty branded offerings in eye care. The company said in a release that it aims to provide products that enhance treatment options and deliver them through a concierge level approach to customer care.

Orchid Pharma receives EIR from USFDA for Kancheepuram facility Orchid Pharma Ltd has announced that it has received the Establishment inspection report (EIR) from USFDA based on the successful inspection closure for the API manufacturing facility located at Alathur, Kancheepuram District, India. The facility was inspected by USFDA in the month of August 2015.

Our Comments: The above approval would be a booster for the API manufacturing of the company.

TM

STOCKS NEWS ANALYSIS

Reliever after the jeweler strikes

Order for L&T

Gayatri road project order

USFDA approval booster for Sun

Orchid receives EIR from USFDA

Ricoh India under Sebi lens for irregularities Ricoh India is under regulatory glare amid allegations of financial irregularities that recently led to its top officials stepping down. SEBI is looking into complaints including the lag in announcement of results by the company and the reasons that caused the delay. Sources said PwC had complained to the board of Ricoh India that some of the officials were not sharing information and co-operating with them. Following this, the board asked the top officials to go on leave.

Our Comments: In response to a detailed questionnaire, a Ricoh India spokesperson said that their auditor BSR consultant had highlighted certain areas to be reviewed further by a separate agency. In order to do that the company had appointed an independent agency to work with the Audit Committee to complete the review.

Blue Star to set up 2 units at Rs215cr investment Blue Star is planning to set up two units at an investment of Rs215cr in Jammu and Andhra Pradesh. With the help of these two units, the company is looking forward to manufacture air conditioners, deep freezers and water coolers. Our Comments: The company targets 12% room AC sales in the current fiscal. As per estimates, the annual demand for room ACs is 40 lakh pieces in the country and this demand is expected to rise by 20% in the current fiscal.

Suzlon bags 105 MW wind project order from Greenko Group Suzlon Group announced its maiden order win of 105 MW from Greenko Group with over 1 GW of operating assets. According to the statement, Suzlon will provide 50 units of S97 120m 2,100 kW wind turbine generators with hybrid tower totalling 105 MW capacity. The project will be located in Andhra Pradesh and will be progressively commissioned by January 2017.

Our Comments: It is a clear indication of the traction in overseas IPPs' engagement with sustainable renewable technologies like wind energy as indicated by the management of Suzlon.

Tata Chemicals to shut Haldia fertiliser plant in September-October Tata Chemicals said its fertiliser plant at Haldia will be shut for about five weeks in September-October due to interruption of ammonia supply. The company has signed an MoU with Sanjana Cryogenics Storage Ltd (SCSL), its Ammonia Terminal Operator, for rerouting a portion of the ammonia pipeline that runs from the Haldia Dock to the Ammonia Storage tank. This has been done at the directive of Kolkata Port Trust for facilitating the setting up of a Multi-Modal Terminal Hub at Haldia by Inland Waterways Authority of India.

Our Comments: This pipeline rerouting activity is likely to cause a shutdown of operations by about 5 weeks in September-October, 2016 due to interruption of ammonia supply to the TCL-Haldia phosphatic fertiliser plant.

JP Associates withdraws Rs34,000cr electronic chip project JP Associates has pulled out of the project to set up an electronic chip plant that entailed an investment of about Rs34,000cr. As per the company it is not commercially viable to set up this plant at present. The plant was one of the two approved by the Cabinet in February 2014. The debt-laden Jaiprakash Associates Ltd had partner with IBM and Israel's Tower Semiconductor for setting up the plant.

Our Comments: The call was taken by the company based on the non-viability currently of the project.

TM

STOCKS NEWS ANALYSIS

Blue star investment

Ricoh in for some trouble

Suzlon receives wind project order

Tata chemicals plant shutdown

JP withdraws from electronic chip project

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TM