BUY ON DIPS - SMC Trade Online · 2018. 4. 17. · 3 ICICI Pru Life Insurance 56049.05 390.45 505 29 4 Aurobindo Pharma Pharmaceuticals 36551.85 623.85 792 27 5 NHPC Ltd Power Generation

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1

SR. CO_NAME SECTOR MARKETCAP CLOSEPRICE TARGET UPSIDE

NO POTENTIAL

*CMPason16thApril,2018

1 PowerGridCorpn PowerGeneration&Distribution 104134.80 199.05 241 21

2 M&M Automobile 99604.59 801.20 1005 25

3 ICICIPruLife Insurance 56049.05 390.45 505 29

4 AurobindoPharma Pharmaceuticals 36551.85 623.85 792 27

5 NHPCLtd PowerGeneration&Distribution 28161.83 27.45 37 35

6 TheRamcoCement Cement 19691.86 835.90 1037 24

7 ManappuramFin. Finance 10363.19 123.00 151 23

8 Cyient IT-Software 7315.93 649.75 793 22

9 KalpataruPower CapitalGoods-ElectricalEquipment 7201.90 469.30 549 17

10 SwarajEngines CapitalGoods-NonElectricalEquipment 2467.36 2034.65 2440 20

hepastfewmonthshavenotbeenquiterewardingforinvestorsandthedownturninstockpriceshasbeen

Taccompaniedbyasharpincreaseinmarketvolatility.Volatilitycanbescary,butlong-terminvestorsshouldseeit

asafriendthatcreatesopportunity.Marketcorrectiongivesopportunitiestoinvestorstofollow“BuyinDips”

strategy.So,ifinvestorswantsto“buyindip”thentheymaychoosetobuythefollowingstocksinastaggeredmanner,

whenevermarketscorrectsharply.

HappyInvesting

POWERGRIDCORPORATIONOFINDIALIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

PowerGridCorporationofIndiaLimited(PGCIL)isastaterunelectricpower transmission utility company. It currently owns and operatesabout 1, 45,400 ckt kms of transmission lines at 800/765kV, 400kV,220kV&132kVEHVAC&+500kVHVDClevelsand230sub-stations.Alsothetransformationcapacityofabout3,23,215MVAason31stDecember2017. This gigantic transmission network, spread over length andbreadthof thecountry, isconsistentlymaintainedatanavailabilityofover99%.TheGovernmentofIndiaholds56.91%stakeinthefirmasat31stDecember2017.

ItisontracktoachievehugecapexplangoingforwardastotalworkinhandisRs.1.24lakhcrore,includingongoingprojects,newprojectsandTariff Based Competitive Bidding (TBCB) projectsworthRs.1.02 lakhcrore,Rs.4,000croreandRs.18,000crore,respectively.ThusPGCILneedstodoaninvestmentofaroundRs81000croreinnext3-3.5years.

It has been declared as the successful bidder under Tariff basedcompetitivebiddingtoestablishtransmissionsystemfor'NewWR-NR765 kV Inter-Regional Corridor' on build, own operate andmaintain(BOOM)basis.TheLetterofIntent(Lol)hasbeenreceivedon01March,2018.TheTransmissionsystemtraversesinthestateofUttarPradeshandMadhyaPradeshandincludes765kVtransmissionline.

RailwayelectrificationisahugeopportunitywhereinrailwaysexpecttospendaroundRs35000croreforelectrificationof33000routeskmby2022.Lotofordersisexpectedfromrailwaysgoingforwardandpowergridwillplayasignificantroleinhelpingrailwaysachievingthetarget.

WhilePGCILcontinuedtokeepitsthrustontransmissionsegment,itiscontinuously working on the emerging opportunities which includeintrastatetransmission,telecom,opportunitiesininternationalmarket,railwayelectrification,smartcitiesetc.

FordevelopmentofSmartGridinIndia,companyhasundertakenvariousinitiatives and is providing consulting services for projects coveringdistributioninfrastructure,advancedmeteringinfrastructure,intelligentoutage management, power quality management, distributedgeneration,netmeteringetc.

CompanyisintheintegrationofRenewableEnergyResourceswiththegridandisundertakingdevelopmentofGreenEnergyCorridorsaswellas transmission schemes for UltraMega Solar Parks in a numbers ofstates.Inaddition,itisalsoestablishingRenewableEnergyManagementCenters(REMC)incertainrenewablerichstateswhichwouldfacilitateforecastingofrenewableresourcesandefficientmanagementofvariablerenewablegenerationensuringgridstability&security.

2

CMP:Rs.199.05 Target:Rs.241.00 UpsidePotential:21%

VALUATION

With the improvement in the capitalization-to-capex ratio, steady

regulatedRoE,webelievethatPGCIL’sfundamentalswouldcontinueto

remainstrongaidedby leastexposuretooperationalrisks.Thus, it is

expectedthatthecompanywouldseegoodgrowthgoingforwardandthe

stockwillseeapricetargetofRs.241in8to10monthstimeframeona

targetP/Eof12.50xandFY19(E)earningsofRs.19.27.

ACTUAL ESTIMATES

FYMar-17 FYMar-18 FYMar-19

REVENUE 25,716.50 29,793.30 34,344.90

EBITDA 22,601.50 26,489.70 30,503.70

EBIT 14,938.70 17,948.30 19,844.70

PRE-TAXPROFIT 9,499.80 11,283.60 12,798.80

NETINCOME 7,520.20 8,706.90 10,076.10

EPS 14.37 16.82 19.27

BVPS 95.20 106.30 119.40

RoE 16.07 16.40 17.00

(Rs.inCr.)FINANCIALPERFORMANCE

Source:Company'sWebsite,Reuters&Capitaline

CurrentMkt.Price(Rs.) 199.05

FaceValue(Rs.) 10.00

52WeekHigh/Low 226.40/189.00

M.Cap(Rs.inCr.) 104134.80

EPS(Rs.) 13.58

P/ERatio(times) 14.66

P/BRatio(times) 2.09

DividendYield(%) 1.26

StockExchange BSE

VALUEPARAMETERS

AsonMar’18 %OfHolding

Foreign 21.23

Institutions 15.85

NonPromoterCorporateHolding 0

Promoters 56.91

Public&Others 6.01

SHAREHOLDINGPATTERN

P/ECHART

MAHINDRA&MAHINDRALIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

Mahindra & Mahindra, Ltd., through its subsidiaries, engages in the

manufacture, distribution, and sale of passenger cars, tractors,multi-

utility vehicles, light commercial vehicles, and threewheelers. It also

designs,develops,manufactures,andmarketsimplementsthatareused

inconjunctionwithtractors.

TostrengthentheUVportfolio,thecompanyhaslaunchedanewavatarof

the Scorpio, its iconic SUV— the 'All Powerful Scorpio'. The new All

PowerfulScorpiocomeswithhigherpower(140bhp)andtorque,new6-

speed transmission, enhanced performance, imposing styling and

luxuriouscomfort.

ItplanstolaunchaMultiPurposeVehicles(MPV)codenamed eU321,

whichisbeingdevelopedatitstechnicalcenterinDetroitandisexpected

tobelaunchedafter12months,vehicleontheTivoliplatform(S221)is

expectedtobelaunchedin2HFY19.2newtractorplatformsareexpected

tobelaunchedduringtheyearunderM&MandSwarajfranchisee,along

withvariantsonNuvoandYuvo.

Thedomestictractorindustrywitnessedagrowthof7.8%withsalesof

1,77,441tractorsinQ3F2018.Thecompany'sdomesticsalesgrewby

6.3%ascomparedtoQ3F2017anditsmarketsharestoodat43.4%.InQ3

FY2018,normalnorth-eastmonsoonsandgoodreservoirlevelshelped

inboosting the rural sentimentanddemand for tractors.Thehealthy

reservoirlevels,goodprogressonrabisowingandincreaseinMSP'sof

Rabicropsshouldhelpthegrowthmomentumtocontinueinthecoming

months.

Total auto sales rose10% to62,077units inMarch2018overMarch

2017.Totaldomesticsalesgrewby10%andtotalexportssurged26%.

Thecompany'stotaltractorsalessurged46%to28,277unitsinMarch

2018 over March 2017. Domestic tractor sales jumped 50% while

exportsdropped3%.Performancewassupportedbybothautomotive

andtractorbusiness.

Thegroupwillsupply150ofthe500electricsedansinthefirstphaseof

the government’s order to procure 10,000 electric vehicles. It will

manufactureallkeycomponentsthatgointoanelectricvehicleitselfas

India’slargestutilityvehiclemakerpreparesforthenexttransitioninthe

automobileindustryamidthegovernment’spushtocutdependenceon

fossilfuels.

3


VALUATION

Company'svolumegrowth isonanuptrend ledby strongdemand in

tractorsandacyclicalrecoveryinlightcommercialvehicles.Apickupin

ruraleconomyislikelyandthisshouldbenefitM&M.Thus,itisexpected

thatthecompanywouldseegoodgrowthgoingforwardandthestock

willseeapricetargetofRs.1005in8to10monthstimeframeonanone

yearaverageP/Eof25.56xandFY19(E)earningsofRs.39.31.

ACTUAL ESTIMATES


REVENUE 43,785.40 47,439.20 53,652.40

EBITDA 4,769.30 6,180.70 7,197.10

EBIT 3,442.10 4,738.30 5,578.50

PRE-TAXPROFIT 4,639.00 5,933.20 6,850.60

NETINCOME 3,407.20 4,108.50 4,684.90

EPS 28.59 33.90 39.31

BVPS 206.65 244.37 273.64

RoE 14.38 14.70 15.22




FaceValue(Rs.) 5.00

52WeekHigh/Low 803.20/612.50


EPS(Rs.) 27.45




StockExchange BSE

VALUEPARAMETERS

AsonDec’17 %OfHolding

Foreign 37.99

Institutions 19.30

Government 0.16

NonPromoterCorporateHolding 6.72

Promoters 20.47

Public&Others 15.37

SHAREHOLDINGPATTERN

P/ECHART

ICICIPRUDENTIALLIFEINSURANCECOMPANY RECOMMENDATION:BUY

INVESTMENTRATIONALE

ICICIPrudentialLifeInsuranceCompanyisthelargestprivatesectorlife

insurerinIndia.ICICIPrudentialisajointventurebetweenICICIBank

andPrudentialCorporationHoldings,apartofthePrudentialGroup,an

international financialservicesgroup.Thecompanyisoneof the first

private sector life insurance companies in India. It commenced

operationsinOctober2000andoffersarangeoflifeinsurance,health

insuranceandpensionproductsandservices.

The company has continued to focus on savings opportunity through

customercentricproductpropositions,superiorcustomerservice,fund

performanceandclaimsmanagement.Protectionisabigfocusareafor

the company, while it has a multi-pronged product and distribution

approachtotapthismarket.

ThecompanyisamongstthelargestfundmanagersinIndiawithanAUM

of Rs 1.38 trillion. Linked funds contribute 71% of AUMwith equity

investmentscomprisingof61%oflinkedAUM.

Thetotalassetsundermanagementofthecompanyincreased22%toRs

138304croreendDecember2017,whichmakesitoneofthelargestfund

managersinIndia.Thecompanyhasadebt-equitymixof52:48.Over

90%ofthedebtinvestmentsareinAAAratedandgovernmentbonds.

Thecompanyiswellcapitalizedforgrowthopportunities.Thesolvency

ratiowasathealthylevelof251.5%endDecember2017,whichismuch

abovetheregulatoryrequirementof150%.

Theweightedreceivedpremium,RWRPsurged26%,comparedwiththe

industrygrowthof25%andtheprivate industrygrowthof33%.The

marketsharestoodat13.1%in9MFY2018.

Superior fund performance is important to improve the value

propositionofsavingproductsandfundsofthecompanyhavecontinued

todelivercompetitivelongtermperformance.

4


VALUATION

According to the management focusing on improving protection

business,persistencyandcosts,thecompanywouldgetgoodgrowthin

comingyears.Thecompanyexpectsstronggrowthopportunitiesforthe

lifeinsurancesector,whileexpectsthelifeinsurancesectortogrowin

linewiththenominalGDPgrowth.Thesolvencyratiocontinuestobe

strongat252%endDecember2017.Thus,itisexpectedthatthestock

willseeapricetargetofRs.505in8to10monthstimeframeonatarget

P/Bvxof9xandFY18BVPSofRs.56.11.

ACTUAL ESTIMATES


Revenue 22,155.30 27,444.10 33,139.90

Ebit 1,784.40 1,802.10 1,990.40

Pre-TaxProfit 1,784.40 1,859.80 2,112.10

NetIncome 1,681.70 1,750.50 1,936.00

EPS 11.72 12.20 13.70

BVPS 44.63 49.64 56.11

RoE 28.67 25.80 24.60





52WeekHigh/Low 507.90/363.00


EPS(Rs.) 10.93



StockExchange BSE

VALUEPARAMETERS


Foreign 7.77

Institutions 3.53


Promoters 80.71

Public&Others 7.59

SHAREHOLDINGPATTERN

P/ECHART

AUROBINDOPHARMALIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

Aurobindo Pharmamanufactures generic pharmaceuticals and active

pharmaceuticalingredients.Thecompany’srobustproductportfoliois

spread over 6 major therapeutic/product areas encompassing

Antibiotics, Anti-Retroviral, CVS, CNS, Gastroenterological, Pain

managementandAnti-Allergic,supportedbyanoutstandingR&Dset-up.

TheCompanyismarketingtheseproductsgloballyinover150countries.

Over the years, the company has enhanced its R&D capabilities and

currentlyhasfiveR&DcentresinHyderabadandtwointheUS.Infiscal

year2016-17,itspent$81milliononR&D,whichis4.3%oftotalsales.

Themanagementofthecompanyhasindicatedofdiversifyingitsproduct

pipelinebyfocusingonR&D,manufacturingandsupplychainsoverthe

nextthreeyears.ThecompanyplanstoincreaseANDAfilingsinoncology,

respiratory,topicalandinjectabledrugsintheUSmarket.Italsoexpects

tolaunchfirstsetofbiosimilarsandvaccinesduringthisperiod.

Moreover, the management of the company expects US growth

momentumtoimprovefromcurrentlevels,aidedbyitsstrongpipeline

and faster ANDA approvals given no pending regulatory issues in its

facilities.

DuringthequarterendedDecember2017,thecompanyfiled2ANDAs

withUSFDA.Ithasreceivedfinalapprovalfor20ANDAsandtentative

approvalfor2ANDAs.Ason31stDec2017,onacumulativebasis,the

company filed465ANDAswithUSFDAandreceivedapproval for351

ANDAsincluding38tentativeapprovals.Tentativeapprovalsinclude11

ANDAsapprovedunderPEPFAR(President'sEmergencyPlanforAIDs

Relief.

Aurobindo has built a new state-of-the-art R&D and Current Good

Manufacturing Practices (cGMP) manufacturing facility for specialty

generics in Durham, North Carolina, essentially for development and

commercializationofgenericpressurizedmetereddoseinhalers(pMDI),

creams,gels,ointmentsandtransdermalpatches.Thisnewsitewillbe

functional inAugust2017, tohouseover50 scientists, including top-

notchpMDIaerosol,topicalandtransdermalR&Dteams,withassociated

analyticalandtestinglabs.

5


VALUATION

Thecompanycontinuestoinvestinenhancingspecialityandcomplex

genericspipeline,forasustainablegrowth.Adiversifiedportfoliowith

limitedproductconcentrationriskisexpectedtohelpthecompanydeal

withpriceerosionchallengesintheUS.Allthekeymarketscontinueto

performwellandhaveshownahealthygrowthtrend.Thus,itisexpected

thatthestockwillseeapricetargetofRs.792in8to10monthstime

frameonaoneyearaverageP/Eof16.77xandFY19 (E) earningsof

Rs.47.2.

ACTUAL ESTIMATES


Revenue 14,844.80 16,658.90 18,336.90

Ebitda 3,434.30 3,948.90 4,209.70

Ebit 3,006.70 3,415.20 3,623.80

Pre-TaxProfit 3,060.80 3,407.10 3,660.90

NetIncome 2,301.70 2,521.20 2,764.00

EPS 39.33 43.15 47.20

BVPS 159.96 199.73 243.70

RoE 27.63 23.80 21.10




FaceValue(Rs.) 1.00

52WeekHigh/Low 808.95/504.00


EPS(Rs.) 41.43




StockExchange BSE

VALUEPARAMETERS


Foreign 19.41

Institutions 15.55


Promoters 51.87

Public&Others 10.32

SHAREHOLDINGPATTERN

P/ECHART

NHPCLIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

NHPC is India's premier hydropower company, with 15% share of

installed hydro-electric capacity in India. Government of India (GoI)

holds73.96%stakeinNHPC(aspertheshareholdingpatternason31st

December2017).

NHPCcurrentlyoperates22powerstationswithatotalinstalledcapacity

of6691MWincluding1520MWthroughNHDCLimited-JVofNHPCwith

GovernmentofMadhyaPradesh.Thecompanycurrentlyhas3projectsof

3130MWcapacityunderconstruction.

TheCompanyisexploringnewopportunitiesfordiversificationtoother

areas of generation of power namely Thermal, Wind, Solar etc.

GovernmentofIndiahassetatargetforcapacityadditionof1,75,000MW

in5years'time.Renewableenergyandpumpedstorageschemeshave

immenseopportunitiesforthedevelopment.

Recently, the third unit (110 MW) of the Kishanganga Hydroelectric

Project(3x110MW)ofNHPCatBandipora,Jammu&Kashmirhasbeen

successfullysynchronisedwiththegridandhasalsoachieveditsrated

fullloadsuccessfully.

The Company possesses rich experience and expertise in

implementation of hydro-electric projects. It has a competent and

committedworkforce. Its executiveshave extensive experience in the

industry with capabilities and expertise in conceptualization,

construction, commissioning and operation of hydro power projects.

Their skills, industry knowledge and operating experience provides

significantcompetitiveadvantagetothecompany.

NHPCisactivelyexploringopportunitiesforthedevelopmentofpumped

storage schemes in potential rich states likeMaharashtra, Karnataka,

Odishaetc.TheCompanyhasidentifiedsomeprojectsinMaharashtra

and Karnataka and is under discussion with respective state

governments for DPR preparation and subsequent development of

pumpedstorageprojects.

6


VALUATION

TheCompanyhastakensomeeffectivestepsforitscapacityadditionto

meet the annual demand for power and growth. It has adopted new

technologies in the areas of Electrical and Civil Engineering for

improvementinplanningandinvestigation,whichwillreducedelaysin

constructionandproblemsofsiltation.Thus,itisexpectedthatthestock

willseeapricetargetofRs.37in8to10monthstimeframeonatarget

P/Eof13xandFY19(E)earningsofRs.2.85.

ACTUAL ESTIMATES


Revenue 8,416.50 8,484.90 10,319.00

Ebitda 4,843.30 4,387.50 5,428.80

Ebit 3,381.60 3,622.60 4,605.10

Pre-TaxProfit 3,814.70 3,218.30 4,065.90

NetIncome 3,029.40 2,750.30 2,993.70

EPS 2.74 2.68 2.85

BVPS 28.28 27.81 28.59

RoE 7.62 9.80 10.50





52WeekHigh/Low 34.50/25.55


EPS(Rs.) 2.25




StockExchange BSE

VALUEPARAMETERS


Foreign 4.64

Institutions 10.73


Promoters 73.96

Public&Others 5.70

SHAREHOLDINGPATTERN

P/ECHART

THERAMCOCEMENTLIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

The Ramco Cements Limited, formerly Madras Cements Limited,

manufacturescement,ready-mixconcreteanddrymortarproducts.Itis

also engaged in the sale of surplus electricity generated from its

windmillsandthermalpowerplants.

The company’s strategy to grow in outside Southernmarkets started

paying-offandcommissioningof3MNTnewsatellitecapacityinnext18

monthswillfurthersaidtoimprovevolumesandprofitability.Moreover,

visible change in fuel-mix and12MWCPP (Captive PowerPlant)will

improveitsoperatingsynergyfurther.

The principal product of the Company is Portland cement, which is

manufacturedinovereightproductionfacilitiesthatincludeintegrated

cement plants and grinding unitswith a total production capacity of

approximately 16.45 million tons per annum. Its Cement Plants are

locatedinTamilNadu,AndhraPradeshandKarnataka.

67%of current order book is frompublic sector andbalance 33% is

privatesector.TheorderbooksizeisaboutRs.10000croreoutofwhich,

metroprojects,bothundergroundandelevated,contributenearly70per

cent.

Thecompanyisdoingitseffortstowardsdebtreductionsincelastyear

which has resulted in lower finance cost thereby improving its

profitability.Moreover, themanagementof thecompanyexpects25%

revenuegrowthfromcurrentlevelduringcomingquarters.

Onthedevelopmentfront,thecompanyislookingtoincreaseitsmarket

shareineasternregioni.e.OdishaandBengalthroughexpansionofnew

andimprovedcapacities.ItincludesdoublinggrindingcapacityinBengal

to2milliontonnesandsettingupagreenfield1milliontonnegrinding

capacityinOdisha.

7


VALUATION

Strong balance sheet, low debt and optimize operating capacity and

managementfocustoincreasemarketsharewouldgivestrongbasefor

the growth of the company. Moreover, Government’s policies are

expected to give a big push to development of Roads and Highways,

Flyovers&Bridges,RailwayProjects,developmentofSmartCities,etc.

areexpectedtoboostdemandforcementindustry.Thus,itisexpected

thatthestockwillseeapricetargetofRs.1037in8to10monthstime

frameonanexpectedP/Eof34xandFY19(E)earningsofRs.30.50.

ACTUAL ESTIMATES


REVENUE 3,949.50 4,314.80 4,873.20

EBITDA 1,219.20 1,065.00 1,218.20

EBIT 953.70 804.50 968.50

PRE-TAXPROFIT 850.20 774.90 979.80

NETINCOME 649.30 587.30 731.20

EPS 27.00 24.80 30.50

BVPS 157.64 173.80 202.39

RoE 19.00 14.80 16.00




FaceValue(Rs.) 1.00

52WeekHigh/Low 839.95/649.00


EPS(Rs.) 28.11




StockExchange BSE

VALUEPARAMETERS


Foreign 13.50

Institutions 20.35

Govt.holding 3.40

Promoters 42.75

Public&Others 13.54

SHAREHOLDINGPATTERN

P/ECHART

MANAPPURAMFINANCELIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

ManappuramFinance is oneof India's leading gold loannon-banking

financialcompanies(NBFCs).

TheconsolidatedAssetunderManagement(AUM)ofthecompanyhas

increased7%qoqand1%yoytoRs14650croreendsDecember2017.

Themanagementofthecompanyhasindicatedgoldloangrowthof15%

andoverallgrowthof20%incomingyears.Theproportionofnon-gold

loanbookisexpectedtoincreaseconsiderablyto40%withthedeclinein

NPAsasaresultof improvingrecoveries.Further, ithasre-aligned its

traditionallongtenuregoldloansintoseveralshortertenureproducts

whichwouldresultinlesserNPAriskaswellasprovideinsulationfrom

goldcommodityprices.

Thecompanyhasimprovedassetqualityonstandalonebasis,showing

decline inGNPAratio to0.7%andNNPAratio to0.4%endDecember

2017.

Onthedevelopmentfrontandtopreventtheover-concentrationongold

loans, thecompanysinceFY15alsoventuredintothreenewbusiness

segments–microfinance,housingloansandcommercialvehicleloans.

Thisnewbusinesseshavesincedonewellwiththeircontributionsuchas

non-goldloanbookhasgainedfurthershareto22.6%ofoverallloansend

December2017from21.7%endSeptember2017.

Asirvad Microfinance has emerged as the fifth largest microfinance

companyinIndia.ItsAUMincreased7.5%qoqand28%yoytoRs2112

croreendDecember2017.Thecompanyhasrecordedmarginalprofitof

Rs 36 lakh in Q3FY2018 against losses in the previous quarter. The

customerbaseof themicrofinance company stoodat13.95 lakh.The

branch network has 830 branches with employee base of 4093

employees,spreadacross19statesendDecember2017.Thecompany

expects tomaintain stronggrowthmomentum,while its team iswell

prepared.

8


VALUATION

The company is witnessing healthy financial growth across all the

business segments. Diversification efforts paid off as growth in the

overallbusinessiswellsupportedbytherobustgrowthwitnessedinthe

newbusinesses.Accordingtothemanagement, itexpects tomaintain

stronggrowthmomentuminallthreenewbusinesssegmentsaswellas

gold loansegment.Thus, it isexpected that thestockwill seeaprice

targetofRs.151in8to10monthstimeframeonacurrentP/Bvof2.86x

andFY19BVPSofRs.52.90.

ACTUAL ESTIMATES


NII 2,004.50 2,144.80 2,426.30

EBITDA 378.10 1,194.60 1,261.10

EBIT 1,170.50 1,230.50 1,399.90

PRE-TAXPROFIT 1,114.90 1,097.50 1,304.10

NETINCOME 726.00 721.60 814.60

EPS 8.63 8.60 9.70

BVPA 39.32 45.40 52.90

RoE 24.01 19.75 21.60




FaceValue(Rs.) 2.00

52WeekHigh/Low 126.40/81.50


EPS(Rs.) 8.18




StockExchange BSE

VALUEPARAMETERS


Foreign 1.22

Institutions 42.65

GovtHolding 0.03

NonPromoterCorp.Hold. 2.56

Promoters 34.66

Public&Others 18.89

SHAREHOLDINGPATTERN

P/ECHART

CYIENTLIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

Cyient Limited, formerly Infotech Enterprises Limited, is engaged in

providing software-enabled engineering and geographic information

system(GIS)services.TheCompany'sbusinesssegmentsincludeData&

Network Operations (DNO); Engineering, Manufacturing, Industrial

Products(EMI),andProductRealisation(PR).

Itemploysnearly14,000peopleacross48developmentfacilitiesinIndia

aswellasNorthAmerica,EuropeandtheAsia-Pacific.

The management expects to start realizing significant revenue

contribution from strategy execution in coming quarters. The strong

outlook is backed by a strong pipeline and order backlog. The

managementexpectsadoubledigitgrowthinservicesbusinesswhile

DLM (Design LedManufacturing) businesswould growat least 20%.

Cyient isprogressingwellonanotheryearofwell-roundedgrowth in

revenue,profit and cash.DuringQ3FY18, it haswell roundedgrowth

acrossallbusinessunitsandgeographies,6outof8BU’sgrowthisin

doubledigitsinYoYterms.

Its Aerospace and Defense Business Unit has witnessed a growth of

12.7%yearonyearand4.1%quarteronquarter.Themanagementofthe

companycontinuestoseestrongdemandforDesign-Buildprojectsand

also expects its growth to be driven by Avionics, Aftermarket,

ManufacturingrelatedServicesandDefense.

TheCommunicationsindustryiswitnessingincreaseddemandforhigh-

speedinfrastructureaswellasfiberdeploymentacrossAustralia,New

Zealand,andtheU.S.ThegrowthmomentumofCommunicationsdivision

will continue in coming quarters, as the management sees growth

opportunities from fiber roll-outprograms, and small cell design and

deploymentinAustraliaandNorthAmerica.

Recently, the company and Israel-based BlueBird Aero Systems

announcedajointventuretoofferfield-provenUAV(unmannedaerial

vehicle) systems to Indian defence and police forces. BlueBird Aero

Systems is a leader in design, development, andproductionofmicro,

mini, and small tactical Unmanned Aerial Systems (UAS). The joint

venture, named Cyient Solutions & Systems Private Limited, has 51

percentand49percentshareholdingbyCyientandBlueBirdrespectively.

9


VALUATION

Thecompanyisoptimisticaboutthefutureandwouldcontinuetoinvest

in digitalization, including IoT, digital manufacturing, engineering

analytics,andmobility.Asperthemanagement,keyindustrydriversfor

growth are Communications, Transportation, Semiconductor, and

Manufacturing.Withahealthypipelineandorderbacklog,itexpectsto

delivera strong financialperformance throughout theyear, thus, it is

expectedthatthestockwillseeapricetargetofRs.858in8to10months

timeframeonancurrentP/Exof19.4andFY19EPSofRs.40.89.

ACTUAL ESTIMATES


Revenue 3,585.80 3,918.60 4,464.30

Ebitda 570.40 552.70 652.90

Ebit 475.10 446.10 543.40

Pre-TaxProfit 457.90 550.90 624.80

NetIncome 369.90 415.60 464.90

EPS 32.85 37.05 40.86

BVPS 188.09 208.90 233.20

RoE 18.74 18.60 18.30




FaceValue(Rs.) 5.00

52WeekHigh/Low 698.00/475.20


EPS(Rs.) 33.49




StockExchange BSE

VALUEPARAMETERS


Foreign 45.84

Institutions 18.93


Promoters 22.18

Public&Others 6.34

SHAREHOLDINGPATTERN

P/ECHART

KALPATARUPOWERTRANSMISSIONLIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

KalpataruPowerTransmissionLimited(KPTL)isprimarilyengagedin

the business of Engineering, Procurement and Construction (EPC)

relatingtoinfrastructurecomprisingpowertransmission&distribution,

railwaytracklaying&electrification,oil&gaspipeLinesLaying,etc.

ForFY19,themanagementofthecompanyexpectsatleast15%revenue

growthgivenstrongorderbookandEBIDTAmarginofaround11%.Debt

toremainaroundRs700-800crorerange. It's currentorderbookisin

therangeofRs12,000croreplusandoutofthisaround45percentof

ordersarefrominternationalgeographies.

ForJMCProjects,asubsidiaryofKPTL,thecompanyhasanorderbookof

aroundRs7500crorewitharound62%fromfactoriesandbuildings,6%

is from industrial, 17% from infrastructure segment and 7% is

internationalwhilerestfromothersectors.

The company has a global footprint in over 50 odd countries on

transmissionprojects.Itwouldcontinuetoexpandthatglobalfootprint

withthesupportfromEximBankofIndiaandopportunitiescomingfrom

the internationalmarket. The company is currently executing several

contractsinIndia,Africa,MiddleEast,CIS,SAARCandFarEast.

Over the past decade, it continued capital investments in both

transmission and other infrastructure sectors, but have managed to

maintain debt levels at the lowest in the industry. Its credit rating

continuestobegoodandenjoystrongsupportofbankers,duetoyearsof

buildingrelationshipsoftrust.

Netprofitofthecompanyrose31.66%toRs75.23croreon25.59%risein

netsalestoRs1417.37croreinQ3December2017overQ3December

2016.Onmarginfront,thecompanyexpectsmarginsofaround10%for

FY18.

10


VALUATION

Companycontinue to focuson improvingprofitability,ordervisibility

andreturnratiosasaresultofimprovedmarginsandunlockingofcapital

from non-core assets. Its diversification focus has led to success in

securing significant orders in the non-T&D business, with healthy

margins.Thus,itisexpectedthatthestockwillseeapricetargetofRs.549

in8to10monthstimeframeonaoneyearaverageP/Eof21.77xand

FY19(E)earningsofRs.25.20.

ACTUAL ESTIMATES


REVENUE 4,838.10 5,604.00 6,595.40

EBITDA 529.10 617.90 730.10

EBIT 451.40 572.10 661.60

PRE-TAXPROFIT 402.60 486.50 583.90

NETINCOME 269.10 325.00 387.00

EPS 17.54 21.20 25.20

BVPS 161.52 180.15 202.55

RoE 11.47 12.20 13.35




FaceValue(Rs.) 2.00

52WeekHigh/Low 535.95/322.60


EPS(Rs.) 19.99




StockExchange BSE

VALUEPARAMETERS


Foreign 5.19

Institutions 22.20

Government 0.06

NonPromoterCorporateHolding 0

Promoters 59.32

Public&Others 13.22

SHAREHOLDINGPATTERN

P/ECHART

SWARAJENGINESLIMITED RECOMMENDATION:BUY

INVESTMENTRATIONALE

SwarajEnginesLimited(SEL)isengagedinmanufacturingenginesfor

fitment into Swaraj tractors, which is manufactured by Mahindra &

MahindraLtd. (M&M)at itsSwarajDivision. It isalsosupplyinghigh-

technology engine components to SML Isuzu Ltd. for assembly of

commercial vehicle engines. Its business activities relate to diesel

engines, diesel engine components and spare parts. Till date, it has

suppliedapproximately720,000enginesforfitmentintoSwarajtractors.

Thecompanyhascompletedthecapacityenhancementprojectwhichhas

increased its capacity to 120000 p.a from 105000 p.a. This capacity

expansionhasbeenfullyfinancedthroughtheinternalresources.

The company has been a direct beneficiary of consistent industry

outperformancebySwarajtractorsandcontinuedmarketsharegainby

swarajtractorstranslatedthecompany’sstrongfinancialgrowthaswell

assubstantialincreaseinmarketshare.

On the development front, the company undertakes continuous

innovation and technologyup gradation tomeet the changing engine

requirementsattheSwarajdivisionatM&M.Itisalsodevelopingengines

inthe>50HPsegmentthatwillfurtherhelpaugmentsalesatSEL.Allthe

expensesfortheaforesaiddevelopmentwereundertakenfrominternal

accruals.

DuringQ3FY18,thecompanyhasreporteda18%increaseinnetsalesfor

Dec17quartertoRs183.26crore.Company'senginesaleswitnesseda

growthof14.7%YoYandstoodat21971unitsforDec17quarterandPAT

forquarterendedDec17stoodatRs17.23croreascomparedtoPATofRs

15.30croreforDec16quarter.

Increase current tractor penetration level, agri-mechanization,

generating ruralemploymentopportunities throughvarious schemes,

scarcityoffarmlabourespeciallyduringthesowingseason,shortened

replacement cycle, healthy credit availability, momentum in

infrastructural projects etc. would be the positive drivers for tractor

industryinlongterm.

11


VALUATION

Themanagementofthecompanyexpectsgoodgrowthfordemandof

domestictractorduetoGovernment’scontinuedthrustonagriandrural

sector, whichwould help the company to increasemarket share and

financialgrowthofthecompany.Thecentralgovernmenthastimeand

again reiterated its aim to double farm income by 2022, which has

envisagedtobeattainedthroughbetterproductivityandenhancedfarm

realizations.SELisaleadingsupplierofenginesforthetractorstomarket

leaderi.e.M&M.Thecompanyisoneofthekeyplayerstobenefitfrom

thistransition.Thus,itisexpectedthatthestockwillseeapricetargetof

Rs.2511 in8 to10months time frameona twoyearaverageP/Exof

30.92xandFY19EPSofRs.78.9.

ACTUAL ESTIMATES


Revenue 683.30 771.30 882.30

Ebitda 121.60 125.00 147.70

Ebit 105.30 122.00 132.40

Pre-TaxProfit 105.50 125.50 146.90

NetIncome 68.83 81.80 96.70

EPS 55.38 67.30 78.90

BVPS 228.16 203.50 220.45

RoE 25.18 30.85 34.00





52WeekHigh/Low 2545.00/1470.00


EPS(Rs.) 63.92




StockExchange BSE

VALUEPARAMETERS


Foreign 2.51

Institutions 13.05


Promoters 50.74

Public&Others 33.70

SHAREHOLDINGPATTERN

P/ECHART

E-mail: [email protected] Research also available on Reuters

SMC Research Desk

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