Conservative Portfolio One Pager Note Q1FY20 One Pager...Larsen & Toubro 1287 1811 Buy Mahindra & Mahindra 533 793 Buy NTPC 119 175 Buy ONGC 122 184 Buy Petronet LNG 239 316 Buy Reliance

Conservative Portfolio

One Pager Note

Q1FY20

August 26, 2019

______________________________________________________________________________

______________________________________________________________________________Page No. 2

Companies CMP Target Price Recomm

Bajaj Auto 2751 3376 Buy

Bata India 1482 1540 Hold

Bharat Electronics 100 145 Buy

Carborundum Universal 271 531 Buy

Cummins India 576 890 Buy

Exide Industries 177 283 Buy

Godrej Agrovet 434 639 Buy

Grasim Industries 720 1408 Buy

GSFC 70 129 Buy

Infosys 802 861 Hold

ITC 236 310 Buy

Jyothy Laboratories 146 228 Buy

KEC International 241 407 Buy

Companies CMP Target Price Recomm

Larsen & Toubro 1287 1811 Buy

Mahindra & Mahindra 533 793 Buy

NTPC 119 175 Buy

ONGC 122 184 Buy

Petronet LNG 239 316 Buy

Reliance Industries 1276 1440 Buy

State Bank of India 271 392 Buy

TCS 2248 2270 Hold

Thyrocare Technologies 448 680 Buy

Ultratech Cement 3861 5401 Buy

UPL Ltd 547 768 Buy

Voltas 613 745 Buy

Note: CMP are as on 23 August 2019, Please refer to Disclaimer and Disclosure on the last slide. Please note that Bank of India, Union Bank of India and Tata Motors are currently

under review, but continue to remain part of conservative portfolio.

______________________________________________________________________________

Quarterly Result Snapshot – Standalone

Rs in Bn Q1FY20 Q1FY19 % YoY

Revenue 77.6 74.6 3.9

EBITDA 12.0 13.4 (10.5)

EBITDAM 15.4% 17.9% (249) bps

PAT 11.3 11.2 0.9

EPS (Rs.) 38.9 38.5

Key Details

52 week H/L(Rs) 3145.6/2400.0

Market Cap (Rs. Bn) 795.9

Book Value (Rs) YTD 837.9

FV (Rs) 10.0

PE (X) (TTM) 17.1

Dividend Yield (%) 2.2

Bajaj Auto CMP: Rs.2751

Page No. 3

Earnings Summary – Standalone

Y/E Sales Growth EBITDA Margin Net Profit EPS Growth P/E Div. Yield

31-Mar Rs Bn (%) Rs Bn (%) Rs Bn Rs % X %

18A 252 15.9 48 19.2 41 140.6 6.3 19.6 2.2

19A 302 19.9 50 16.5 47 161.6 14.9 17.0 2.2

20E 338 11.8 53 15.7 45 155.5 (3.7) 17.7 2.2

21E 388 14.7 62 16.0 52 179.1 15.2 15.4 2.2

Background: Bajaj Auto Limited is an India-based manufacturer of motorcycles, three-wheelers and parts. The Company's vehicles include two-wheelers and

commercial vehicles. The Company's plants include Waluj plant, Chakan plant and Pantnagar plant. The Company's subsidiaries include PT. Bajaj Auto Indonesia

and Bajaj Auto International Holdings BV.

Key highlights of the quarter:

Bajaj Auto reported mixed set of numbers for Q1FY20 which were in line with the market expectation.

Overall volumes grew by 1.7% YoY driven by 5.1% YoY volume growth in Motorcycle segment, however,

commercial vehicle (CV)/three-wheeler (3W) volumes fell by 16.3% YoY.

Bajaj continued to outpace domestic motorcycle industry by registering a positive growth in Q1FY20 vs industry

de-growth, resulting in the overall market share gain from 16.3% in Q1FY19 to to 18.3% in Q1FY20

Bajaj has been able to maintain its dominance in domestic CV/3W segment with overall market share of 57.1%.

The management highlighted that the domestic motorcycle industry continued to witness slowdown. However, it

expects demand to improve in coming times owing to upcoming festive season.

Bajaj plans to launch e-scooter under Urbanite brand in FY20 and is well prepared to handle a shift to only

electric 3W by FY21.

The management highlighted that EBITDA margin has bottomed out and would stabilize in the range of 15-16%.

View: Bajaj Auto continued to gain market share in domestic motorcycle market in a very challenging times. While the

management expects uncertainty in near term, it expects the company to outperform the overall industry growth. On the

margin front, the management highlighted that the margins have bottomed out and would be in the range of 15-16%

going ahead. We have a long-term positive stance on Bajaj Auto considering its focus on increasing market share in

domestic Motorcycle industry, strong R&D capabilities, robust balance sheet with huge cash and cash equivalent of

~Rs.171 bn (as on Jun’19), strong return ratios with ROE of over 20%, ROCE of close to 30% and dividend yield of over

2% for past two years. Currently, we have a Buy rating on the stock with the target price of Rs.3376 at 18x FY21E

EPS of Rs.179.1 and adding Rs.152 per share for 48% stake in KTM AG of Austria (at 18x FY19 Bajaj’s share of

EPS of Rs.12.1 after 30% holding company discount). Any earning/rating revision would depend on the performance

of new launches, improvement in overall EBITDA, rollover to the next financial year and changes in general business

momentum.

Quarterly Result Snapshot

Rs. in Mn. Q1FY20 Q1FY19 % YoY

Revenue 8821 7973 10.6

EBITDA 1583 1318 20.1

EBITDAM 17.9% 16.5% 140 Bps

PAT 1027 825 24.4

EPS (Rs.) 7.9 6.4

Key Details

52 week H/L(Rs) 1492.4/833.5



FV (Rs) 5.0

PE (X) (TTM) 57.7


Bata India CMP: Rs.1482

Page No. 4

Earnings Summary


31-Mar Rs Mn (%) Rs Mn (%) Rs Mn Rs % X %

18A 26293 6.6 3,538 13.5 2,236 17.4 23.9 81.6 0.2

19A 29284 11.4 4773 16.3 3,297 25.7 47.5 55.3 0.3

20E 33455 14.2 5855 17.5 3,873 30.1 17.5 47.1 0.4

21E 37877 13.2 7879 20.8 5,211 40.5 34.5 35.0 0.4______________________________________________________________________________

Background: Bata India Ltd. (BIL) enjoys strong brand equity in India and is the market leader with ~25% share in the organized footwear segment. It has a

strong distribution network of 1,415 (as on 31 March 2019) stores across cities. Company has five state of art manufacturing units with the total capacity to

produce more than 21 mn pieces pairs per annum and sales of over 50 mn pairs of footwear. In terms of sales of the shoes, men’s shoes contribute 50%-55% to

sales while women and kid footwear account for 30%-32% and 7%-8%, respectively.


Bata India Ltd. (Bata) reported results for Q1FY20 which were above market expectations.

The growth in the net sales for the quarter was mainly driven by double digit growth in E-commerce and Non

Retail channel, however, retail sales saw steady growth during the quarter.

Gross margin for the quarter continued to improve in Q1FY20 as well to 54.7% against 53.3% in Q1FY19, on the

back of a better product mix leading to higher Average Selling Price (ASP).

The management commentary highlighted that with campaigns like “Unlimited Casual Collection” and

“#LetsWalkTogther”, Bata has been able to present the renewed brand proposition and connect with the

consumers.

The company continues to follow a strategy which involves innovative campaigns which have helped it to sustain

profitable growth across categories and mindful upgradation of stores to provide world class shopping experience

to its loyal customers while keeping costs under control.

View: Bata continued to improve its profitability in Q1FY20 as well on the back of improved product mix given the new

launches in the premium segment and portfolio refreshes across categories. Company’s plan to introduce new brands

which are more casual and stylish to attract the youth has worked for the company in last few years. Thus, we believe

that with these efforts Bata is moving in right direction for transforming itself from conventional footwear play to fashion

footwear play by shifting its focus towards the fashion conscious youth, working women and children through the

introduction of latest and trendier styles of footwear. Moreover, with the rationalization of size for new stores along with

the mindful upgradation of its stores to provide world class shopping experience to the customers, we believe Bata is

moving in the right direction of generating higher same store sales going ahead. Currently, we have a Hold rating on

the stock with a price target of Rs.1540 which is 38x FY21E EPS of Rs.40.5. Any earnings/target price revision

would depend upon the change in the product mix, any disruption in the competition, scale up on e-com platform and

general changes in the business.

Quarterly Result Snapshot - Standalone


Revenue 21015 21021 0.0

EBITDA 3481 3105 20.1

EBITDAM 17.0% 16.9% 210 Bps

PAT 2048 1797 13.9

EPS (Rs.) 0.84 0.74

Key Details

52 week H/L(Rs) 119.8/72.6



FV (Rs) 1.0

PE (X) (TTM) 12.9


Bharat Electronic CMP: Rs.100

Page No. 5

Earnings Summary - Consolidated



18A 104,008 20.0 20,352 19.6 14,317 5.9 (6.0) 17.0 2.0

19A 121,642 17.0 29,062 23.9 18,864 7.7 31.8 12.9 2.0

20E 138,672 14.0 32,255 23.3 19,840 8.1 5.2 12.3 2.0

21E 156,699 13.0 34,944 22.3 21,464 8.8 8.2 11.3 2.0 ______________________________________________________________________________

Background: Bharat Electronics Ltd. (BEL) was established at Bangalore, India, by the Government of India under the Ministry of Defence in 1954 to meet the

specialised electronic needs of the Indian defence services. Over the years, it has grown into a multi-product, multi-technology, multi-unit company servicing the

needs of customers in diverse fields in India and abroad. BEL’s segments are Radars, Military Communication, Naval Systems, Weapon Systems, Electronic

Warfare, Avionics, C4I Systems, Electro-optics, Tank Electronics, Gun up-grades, Civilian Equipment & Systems and Components amongst many others.


Bharat Electronics Ltd (BEL) reported strong set of results for Q1FY20, where adjusted for one off orders of EVM

machines last year, were better than market expectation.

Total reported income for the quarter was flat at Rs.21 bn. However, adjusting for Electronic Voting Machine

(EVM) and VVPAT related execution; adjusted income would have grown by ~21% YoY.

Order inflows during Q1FY20 stood at Rs.19.9 bn, down by 44.6% YoY. However, order backlog stood at

Rs.517.2 bn at the end of Q1FY20, up by 24.2% YoY. This converts into book to bill ratio of 4.3x FY19 revenue.

Management in its recent commentary has guided for ~13-15% YoY growth in revenue for FY20 with flat EBITDA

margin guidance. On the order inflow, management has guided for ~Rs.130-150 bn order inflow for FY20 led by

orders for Akash Missile System and Phase II of Coastal Surveillance System.

View: BEL is a niche public sector play on defence sector with strong and readily available manufacturing base in the

defense space compared to various other players which are at planning stage of setting up the capacity. The current

order book to bill ratio continues to remain robust at ~4.3x on FY19 revenue basis and expected order inflow for Akash

Missile System in coming quarters is further likely to drive the order inflow and also improves the revenue visibility for

the company. However, the recent announcement of revision of PBT margins from 12.5% to 7.5% on prospective

nomination based defence orders would be structural negative news for Defence sector PSUs as it would remain a

cause of concerns on the future business margins. As a result, management is looking to increase its revenue share

from non-defence but high margin orders in Space Electronics, Solar, Homeland Security, Smart Cards, Telecom,

Railways, Civil Aviation, Software as a Service, Fuel Cells, Li-ion Batteries, etc. We continue to like BEL for a long term

play on defence sector given its strong execution in the past, robust order inflow guidance and strong balance sheet

strength. Currently, we have a Buy rating on the stock with a price target of Rs.145 which is 13.5x FY21E EPS of

Rs.8.8 and adding cash per share of Rs.26. Any revision in target price would depend upon the general business

momentum, changes in order inflow, execution issues and rollover of earnings to next financial year.



Revenue 6714 6343 5.8

EBITDA 952 1075 (11.4)

EBITDAM 14.2% 16.9% (270)Bps

PAT 528 629 (16.1)

EPS (Rs.) 2.8 3.3

Key Details

52 week H/L(Rs) 415.3/266.4



FV (Rs) 1.0

PE (X) (TTM) 21.5


Carborundum Universal CMP: Rs.271

Page No. 6

Earnings Summary



18A 23678 12.1 3986 16.8 2156 11.4 17.1 23.7 1.1

19A 26889 13.6 4383 16.3 2477 13.1 14.9 20.7 1.1

20E 29969 11.5 5322 17.8 2783 14.7 12.4 18.4 1.1

21E 33320 11.2 6120 18.4 3241 17.1 16.5 15.8 1.1______________________________________________________________________________

Background: Carborundum Universal Ltd (CUMI) develops services and solutions for abrasives, electro minerals or ceramics. The Abrasives segment consists of

bonded, coated, processed cloth, polymers, power tools and coolants. The operations are carried out through over 10 manufacturing facilities located pan India,

Russia and other countries. The Ceramics segment consists of super refractories, industrial ceramics, anti-corrosives and bio ceramics. The Electro minerals

segment includes abrasive/refractory grains, micro grits for the photovoltaic industry and captive power generation from hydel power plant.


Carborundum Universal Ltd (CUMI) reported weak set of numbers for Q1FY20, which were lower than market

expectations.

Abrasive segment revenue declined by 1.1% YoY to Rs.2594 mn, mainly on the back of slowdown across

segment, especially auto sector during the quarter.

Ceramic and Refractories segment revenue grew sharply by 13.9% YoY to Rs.1653 mn mainly led by higher

growth for industrial ceramics and Metz cylinder.

Electro minerals (EMD) segment revenue grew by 10.6% YoY to Rs.2642 mn due to sharp growth in Russian

and South African subsidiary, while the domestic (Standalone) sales were down by 2.3% YoY during the quarter.

Management guided that demand momentum is likely to pick up from H2FY20 and for full year maintained the

guidance for revenue of ~Rs.30 bn (implied growth of ~12% YoY over FY19) and EBIT margin in similar range of

FY19.

View: CUMI saw muted performance from the Abrasive segment during Q1FY20 on the back of poor demand scenario

in both domestic as well as international markets. In abrasives, improved demand from end-user industries, market

share gains through shift from unorganized players, better pricing power should drive the overall growth, going ahead.

In ceramics, further traction in metz cylinders along with overall growth in industrial ceramic is likely to drive the revenue

for the ceramic segment. Lastly, in electro minerals, steady revenue growth in Russian subsidiary and plans to divest

loss making South African subsidiary along with expected price hikes going ahead is likely to result in operational

improvement for the segment. With the initial signs of capex recovery visible, we believe CUMI is likely to be the early

beneficial of capex cycle revival in the form of improved free cash flow and return ratios led by improved operating

leverage. We have a Buy rating on the stock with a target price of Rs.531, which is 31x FY21E EPS of Rs.17.1.

Any earnings/target price revision would depend upon a slowdown in industrial activities or new capex announcement,

market‐share loss to competitors, sharp rise in key raw material prices and adverse currency movement.



Revenue 13430 13280 1.1

EBITDA 1514 2147 (29.5)

EBITDAM 11.3% 16.2% (490)Bps

PAT 1415 1830 (22.7)

EPS (Rs.) 5.1 6.6

Key Details

52 week H/L(Rs) 885/554.5


Book Value (Rs) YTD 160

FV (Rs) 2.0

PE (X) (TTM) 22.0


Cummins India CMP: Rs.576

Page No. 7

Earnings Summary



18A 50825 0.1 7324 14.4 6523.5 23.6 -11.2 24.5 2.5

19A 56590 11.3 8641 15.3 7225.7 26.1 10.8 22.1 2.7

20E 62249 10.0 9524 15.3 8060.2 29.1 11.5 19.8 3.0

21E 69719 12.0 10806 15.5 9127.9 33.0 13.2 17.5 3.4______________________________________________________________________________

Background: Cummins in India, a power leader, is a group of complementary business units that design, manufacture, distribute and service engines and related

technologies, including fuel systems, air handling, filtration, emission solutions and electrical power generation systems. Cummins India Ltd., the country’s leading

manufacturer of diesel and natural gas engines is one of the eight legal entities of the Cummins Group in India. Comprising of four business units - Industrial

Engine, Power Generation, Distribution, and Automotive, Cummins India Ltd. is also the largest entity of the Cummins Group in India.


Cummins India Ltd (Cummins) reported muted set of numbers for Q1FY20, which was below market

expectations.

The topline performance was muted as the good domestic performance (up by 16% YoY) was set off by weak

export sales (down by 26% YoY).

In terms of revenues by business segments, the domestic Powergen business revenue grew by 9.2% YoY,

Industrial grew by 37% YoY and Distribution grew by 7.2% YoY.

The management has lowered its overall revenue growth guidance for FY20 as it expects domestic revenue to

grow by 8-10% YoY (from earlier growth guidance of 12-15% YoY) and de-growth of 12-15% YoY in exports (vs

earlier guidance of flat to marginal decline) for FY20.

Management expects the slowdown in order intake is likely to play out further for at least another quarter, but

revival is expected, albeit gradually.

View: Cummins reported muted set of numbers in Q1FY20, but the sharp uptick in the domestic business helped to

offset the poor performance of the exports business. The management expects muted export growth on the back of

subdued markets in Africa and South America markets. However, management expects domestic growth to see good

traction on the back of improving market share with its key user sectors, increased content in railways and marine

business and new product launches for CPCB III norms, BSVI and Gas Gensets. The new avenues of growth for the

company are also being seen in electrification and renewable (fuel cell, gas engines, alternate fuels) fuels space. We

think that with any improvement in global growth along with improving domestic capex related growth, the company is

positioned well to take advantage due to its leadership position. However, the pace of growth remains a key

monitorable. We continue to like the company on the back of negative net debt and healthy ROCE and ROE of 23.6%

and 17.5% respectively for FY19. We have a Buy rating on the stock with a price target of Rs.890 at 27x FY21E

EPS of Rs.33. Any changes in our earnings/price objective would hinge on the pace of economic recovery, changes in

the margin profile and general business momentum.

______________________________________________________________________________



Revenue 27.8 27.7 0.2

EBITDA 4.1 3.9 4.3

EBITDAM 14.7% 14.1% 57 bps

PAT 2.2 2.1 6.8

EPS (Rs.) 2.6 2.5

Key Details

52 week H/L(Rs) 304.7/168.0



FV (Rs) 1.0

PE (X) (TTM) 19.5


Exide Industries CMP: Rs.177

Page No. 8

Earnings Summary



18A 91.9 21.1 12.4 13.5 6.7 7.9 (3.6) 22.5 1.4

19A 105.9 15.3 14.1 13.3 8.4 9.9 26.3 17.8 1.4

20E 116.5 10.0 15.7 13.5 8.6 10.2 2.4 17.4 1.4

21E 130.4 12.0 17.9 13.7 9.8 11.6 13.7 15.3 1.4

Background: Exide Industries Ltd. (Exide) is a manufacturer of lead acid storage batteries for automotive and industrial applications. Exide's business segments

include Storage Batteries & allied products, Solar Lantern & Homelights, and Life Insurance business. The Storage batteries & allied products segment

manufactures lead acid storage batteries and allied products. Life Insurance business is engaged in life insurance business carried by one of its subsidiaries.


Exide Industries Ltd. (Exide) reported muted set of numbers for Q1FY20, which were in-line with the market

expectations.

As per the management, the demand of Automotive Batteries remained under pressure while growth in UPS,

Telecom as well as other Infrastructure segments continued during the quarter.

In Q1FY20, Exide had seen subdued revenue growth owing to slowdown in demand from automobile OEMs

given the recent slowdown in automobile sales especially in passenger vehicle segment.

However, the company holds strong market share in Industrial segments of Solar, Backup Power, Manufacturing

and Project sector, which supported the volume growth during the quarter.

View: Going ahead, demand for batteries from Industrial segment is expected to continue with the expected recovery in

capex cycle over the medium to long term. The company is working on expanding its portfolio for emerging

requirements like electric vehicles (Joint Venture (JV) with Leclanché SA to build lithium-ion batteries), hybrid cars and

start-stop batteries and has recently added e-rickshaw battery and completely sealed and maintenance-free battery in

its portfolio. Given the slowdown in OEM segment, it is focusing on capturing market share from the unorganized

commercial vehicles and tractor battery markets. The company is taking various initiatives like increasing services and

warranty period, increasing dealer margin and increasing customer outlet and introduction of new products in the

aftermarket segment across categories and price points to improve its market share. The lead prices (key raw material)

had been very volatile and would be the key parameter to watch out for in the near term. However, the management is

working on various costs cutting initiatives and improving the product mix to maintain its margins. Currently, we have a

Buy rating on the stock with the target price of Rs.283 at 22x FY21E EPS of Rs.11.6 and adding Rs.28 per share

for the embedded value in Insurance business (as of March 2019). Any earning/rating revision would depend on the

improvement in margin, changes in market share, change in value of Insurance business and changes in general

business momentum.

______________________________________________________________________________

Quarterly Result Snapshot – Consolidated

Rs in Mn Q1FY20 Q1FY19 % YoY

Revenue 17026 14844 14.7

EBITDA 1419 1393 1.9

EBITDAM 8.3% 9.4% (105) bps

PAT 760 802 (5.3)

EPS (Rs.) 4.0 4.2

Key Details

52 week H/L(Rs) 607.0/421.7



FV (Rs) 10.0

PE (X) (TTM) 33.5


Godrej Agrovet CMP: Rs.434

Page No. 9

Earnings Summary – Consolidated



18A 51855 5.6 4430 8.5 2510 13.1 3.3 33.2 1.0

19A 58707 13.2 4558 7.8 3493 18.2 39.2 23.8 1.0

20E 67924 15.7 5502 8.1 3029 15.8 (13.3) 27.5 1.0

21E 80097 17.9 7049 8.8 4087 21.3 35.0 20.4 1.0

Background: Godrej Agrovet Limited (GAVL) is a diversified, Research & Development focused agri- business Company. GAVL holds leading market positions in

the different businesses in which it operates - Animal Feed, Crop Protection, Oil Palm, Dairy and Poultry and Processed Foods. Apart from these businesses,

GAVL has a joint venture with the ACI group of Bangladesh for animal feed business in Bangladesh.


GAVL has seen mixed performance during Q1FY20, where Animal Feed and Dairy business witnessed

improvement, Vegetable Oil and Crop Protection business reported subdued profitability.

On the segmental basis, revenues from Animal Feed division grew by 20.0% YoY, revenues from Crop

Protection division grew by 11.6% YoY and revenues from Dairy division grew by 2.4% YoY, however, revenues

from Vegetable Oil division fell by 13.6% YoY during the quarter.

The management was hopeful on revenue growth in coming quarters, driven by strong traction in animal feed and

domestic crop protection businesses.

Margins in the animal feeds segment impacted by sharp increase in RM prices, which were not fully passed on to

end-consumers

Margins expected to improve in dairy business going ahead due to expectation of rise in milk prices coupled with

rise in sales of value added products (grew by 21% YoY in Q1FY20).

View: GAVL continued to focus on improving its market share across all its business verticals, which are

underpenetrated and are largely catered by unorganized players. GAVL is also working on strategy to increase its

revenue and profitability by extending its product pipeline by introducing innovative and value added products and

expanding its geographical presence across its business divisions. GAVL is also working on improving its balance sheet

performance, which was visible in FY19. GAVL’s working capital requirement has improved from 40 days in FY18 to 28

days in FY19 and its debt profile, where net debt to equity improved to 0.18x in FY19 from 0.22x in FY18. We have a

long-term positive view on the stock considering the strong parentage, leadership position in various divisions, expected

improvement in margins and return ratios, strong and robust balance sheet. Currently, we have a Buy rating on the

stock with the target price of Rs.639 based on a PE multiple of 30x FY21E EPS of Rs.21.3. Any earning/rating

revision would depend on the performance of its sub-divisions, improvement in market share and changes in general

business momentum.

400

450

500

550

600

650

700

750

11/7

/201

7

11/27/20…

12/17/20…

1/6/

2018

1/26

/201

8

2/15

/201

8

3/7/

2018

3/27

/201

8

4/16

/201

8

5/6/

2018

5/26

/201

8

6/15

/201

8

7/5/

2018

7/25

/201

8

8/14

/201

8

9/3/

2018

9/23

/201

8

10/13/20…

11/2

/201

8

Daily closing price from the date of listing of Godrej Agrovet

Source: Bloomberg

Quarterly Result Snapshot- Standalone

Rs. in Bn. Q1FY20 Q1FY19 % YoY

Revenue 50.0 47.9 4.4

EBITDA 8.4 108 (21.8)

EBITDAM 16.9% 22.5% (560)Bps

PAT 4.9 6.4 (23.5)

EPS (Rs.) 7.5 9.8

Key Details

52 week H/L(Rs) 1091.7/680.5



FV (Rs) 2.0

PE (X) (TTM) 12.2


Grasim Industries CMP: Rs.720

Page No. 10

Earnings Summary - Standalone



18A 157.9 52.6 30.8 19.5 20.4 31.0 (7.1) 23.2 0.8

19A 205.5 30.2 40.7 19.8 28.8 43.8 41.3 16.4 0.9

20E 188.7 10.2 47.0 20.8 29.6 45.1 2.8 16.0 1.0

21E 211.5 10.1 53.0 21.3 32.6 49.6 10.1 14.5 1.0 _____________________________________________________________________________

Background: Grasim Industries Ltd. (Grasim) is engaged in two businesses include viscose staple fibre (VSF) and cement. The Company also produces Rayon Grade

Pulp, Caustic Soda and allied chemicals, which are used in the manufacture of VSF. The Company manufactures fibre and pulp, which includes viscose staple fibre and

rayon grade pulp; chemicals, which include caustic soda, epoxy and allied chemicals, and others, which include textiles.


Grasim Industries reported weak set of results for Q1FY20 mainly impacted by poor margins.

In terms of the segmental performance, the VSF segment revenue was up by 1.2% YoY, mainly driven by strong

volume growth of 12.1% YoY which was offset by 9.8% YoY decline in realization mainly due to decline in global fibre

prices. Chemical segment’s revenue decline by 4.8% YoY mainly on the back of 6% YoY decline in realization despite

1.3% YoY growth in volumes.

Management highlighted that global softening in VSF prices was mainly due to capacity over-hang and US-China trade

war leading to decline in China’s sale into US.

On Chemical segment, management highlighted that Chlorine realizations turned negative during Q1FY20 mainly due

to higher supply. Further, management highlighted that recently domestic caustic prices have declined due to demand

slowdown and commissioning of new domestic capacities which has resulted in ~10-15% drop in overall realization vs

Q1FY20 average realization and this is likely to impact margins in Q2FY20 as well.

On VSF expansion, management guided that company is planning to increase its VSF capacity from 549 ktpa to 788

ktpa by FY21 in a phased manner.

View: Grasim is a global leader in viscose staple fibre (VSF) with an aggregate installed capacity of 612,000 ton per annum

(tpa) as on FY19 (including VFY). The company is also the largest producer of Sodium Sulphate, a by-product of VSF, widely

used in the paper and pulp, detergent, glass and textile industries. On VSF business, management highlighted that while the

realization witnessed some pressure during Q1FY20 led by excess capacity and guided that prices are expected to remain

benign going ahead on the back of higher VSF capacity additions expected globally. However, expects profitability to improve

led by reduce prices of raw material and other inputs. Currently, we have a Buy rating on the stock with a price target of

Rs.1408 which is summation of 9xFY21E EPS of Rs.49.6 for Standalone business along with 60.2% company’s stake

in UltraTech Cement valued at Rs.815/share (after providing for 40% holding company discount based on our FY21

target price of Rs.5401 for UltraTech) and 56% company stake in ABCL valued at Rs.147/share (after providing for

40% holding company discount based on current market price). Any revision in the target price would depend upon

change in VSF volumes, realizations, valuation of UltraTech Cement or ABCL, general business momentum and the valuation

of the business which is to be merged.

______________________________________________________________________________



Revenue 17.1 17.7 (3.5)

EBITDA 1.5 1.1 30.1

EBITDAM 8.6% 6.4% 223 bps

PAT 0.6 0.7 (10.5)

EPS (Rs.) 1.6 1.8

Key Details

52 week H/L(Rs) 124.8/68.5



FV (Rs) 2.0

PE (X) (TTM) 5.7


GSFC CMP: Rs.70

Page No. 11




18A 62.7 19.1 5.7 9.0 4.8 11.9 13.4 5.9 3.1

19A 85.7 36.7 7.5 8.7 4.9 12.4 3.8 5.7 3.1

20E 101.8 18.7 8.3 8.2 5.6 14.0 12.7 5.0 3.1

21E 118.6 16.5 9.5 8.0 6.4 16.1 15.2 4.4 3.1

Background: Gujarat State Fertilizers & Chemicals Ltd. (GSFC) operates through two business segments: Fertilizer products and Industrial products. Its Fertilizer

products segment includes Urea, Ammonium Sulphate, Di-ammonium, Phosphate, Ammonium Phosphate Sulphate and traded fertilizer products. Its Industrial

products segment includes Caprolactam, Nylon-6, Nylon Filament Yarn, Nylon Chips, Melamine, Methanol and traded industrial products.


Gujarat State Fertilisers & Chemicals Ltd (GSFC) reported mixed set of results for Q1FY20.

Revenue for Fertilizer segment (77% of the revenue) grew by 3.0 % YoY, while Industrial segment (23% of the

revenue) fell by 20.0% YoY

The management highlighted that the late start of monsoon led to subdued performance in fertilizer segment and

resulted in ~8% YoY decline in volume.

The management has guided for 0.8-1.0 mn metric tons (MMT) of manufacturing fertilizer sales in Q2FY20 vs

~0.5 MMT sales in Q1FY20, despite marginally higher channel inventory.

Industrial segment performance was impacted by low crude oil prices and Ammonia plant shut down at Baroda.

However, Resumption of Ammonia Plant and improvement in utilization in Melamine plant are likely to improve

sales in coming quarters.

View: GSFC is India’s largest producer of the chemical “Caprolactam” and has a leading position in the Complex

Fertilizer segments. The company’s standalone balance sheet continues to remain robust with debt to equity ratio at

0.14x in FY19. The management sounded hopeful of improvement in sales in both the segment. However, expects

some pressure to continue in the Industrial segment in coming quarters as well. However, with the issues related to

Direct Benefit Transfer Scheme getting resolved gradually and also getting faster disbursal of subsidies is likely to help

in reducing the interest burden going ahead. The resumption of Ammonia plant and commissioning of Melamine plant

would be key growth driver for the company going ahead. The management expects that post completion of its capex,

the company would be able to increase the contribution of value-added products and reduce dependence on subsidized

products such as DAP. Currently, we have a Buy rating on the stock with the target price of Rs.129 which is 8x

FY21E EPS of Rs.16.1. Any revision in earnings/rating would depend upon changes in Caprolactam-Benzene spreads,

improvement volume growth, rollover of earnings in the next year and general business momentum.


Rs. in Bn. Q1FY20 Q4FY19 % QoQ

Revenue 218 215 1.2

EBITDA 52 52 0.0

EBITDAM 23.6% 23.9% (30) Bps

PAT 38 41 (6.8)

EPS (Rs.) 8.8 9.4

Key Details

52 week H/L(Rs) 810/600.7



FV (Rs) 5.0

PE (X) (TTM) 22.0


Infosys CMP: Rs.802

Page No. 12

Earnings Summary



18A 705 3.0 190 27.0 160 36.9 11.7 21.7 5.4

19A 827 17.2 209 25.3 155 35.7 -3.1 22.4 3.9

20E 909 9.9 218 24.0 164 37.7 5.5 21.2 4.2

21E 1,014 11.6 248 24.5 187 42.9 13.8 18.7 4.8______________________________________________________________________________

Background: Infosys Ltd. (Infosys) is an Information technology services company that provides business consulting, technology, engineering and outsourcing

services. The Company also offers products, platforms and solutions to clients in different industries. Its business solutions include business IT services,

consulting and systems integration services, products, business platforms and solutions, and cloud computing and enterprise mobility.


Infosys Ltd reported strong set of numbers for Q1FY20, which were better than market expectation.

In USD terms revenue grew by 2.3% QoQ at USD 3131 mn and in constant currency terms revenue grew by

2.8% QoQ.

In terms of revenues by geographical segments, North America (61.6% of revenues) grew by 1.9% QoQ, Europe

(23.6% of revenues) declined by 0.5% QoQ, India (2.3% of revenues) grew by 1.2% QoQ and Others (12.5% of

revenues) grew by 1.2% QoQ.

In terms of USD revenues by industry verticals, Financial Services declined by 1.7% QoQ, Manufacturing

declined by 1.8% QoQ, Retail grew by 1.7% QoQ, Energy & Utilities, Resources and Services grew by 4.7%

QoQ and Communication grew by 4.6% QoQ. The company also reported 8.1% QoQ growth in its Digital

business with digital offerings now forming 35.7% of the revenues.

The company ended the quarter with ~Rs.156.4 bn of cash and cash equivalents.

The management raised its revenue growth guidance for FY20 to 8.5-10% YoY in constant currency terms from

earlier guidance of 7.5-9.5% YoY and maintained its EBIT margin guidance steady at 21-23%.

View: The Q1FY20 numbers of Infosys saw broad-based revenue growth across most of its verticals. While the

Financial Services segment continued its growth acceleration aided by Stater acquisition, company is seeing some

challenges in BFSI due to ongoing merger and acquisition situation in some US banks and also in capital market

business in Europe and US. The company’s strategy on improving productivity in the legacy business and trying to grow

newer high margin services business is likely to help it to achieve better growth. The strong deal wins and additional

revenue from the acquisition may lead to improvement in revenue growth in the medium term. The capital allocation

strategy of the company would also help in improving the shareholder value in the medium to long term. Currently, we

have a Hold rating on the stock with a target price of Rs.861 at 19x FY21 EPS of Rs.42.9 and adding Rs.45 cash

per share. Any changes in the price target/valuation multiple would depend on the ability of the company to outperform

its guidance, future margin profile, inorganic initiatives and general business momentum.

______________________________________________________________________________



Revenue 115.0 108.7 5.8

EBITDA 45.7 42.0 8.7

EBITDAM 39.7% 38.6% 105 bps

PAT 31.7 28.2 12.6

EPS (Rs.) 2.6 2.3

Key Details

52 week H/L(Rs) 322.7/234.7



FV (Rs) 1.0

PE (X) (TTM) 22.9


ITC CMP: Rs.236

Page No. 13




18A 406.3 1.3 155.4 38.3 112.2 9.2 9.5 25.7 2.2

19A 450.0 10.8 173.1 38.5 124.6 10.2 10.6 23.2 2.4

20E 501.0 11.3 193.9 38.7 137.5 11.2 10.3 21.0 2.4

21E 561.8 12.1 219.1 39.0 154.4 12.6 12.3 18.7 2.4

Background: ITC Ltd. (ITC) is engaged in fast moving consumer goods (FMCG), hotels, paperboards and specialty papers, packaging, agri-business, and

information technology. ITC has established vital brands like Aashirvaad, Sunfeast, Fabelle, Sunbean, Dark Fantasy, Mom's Magic Bingo!, Yippee!, Candyman,

mint-o, Kitchens of India, Farmland, B Natural, ITC MasterChef in the Branded Foods space; Essenza Di Wills, Fiama, Vivel, Engage, Savlon, Charmis.


ITC reported Q1FY20 results, which were in-line with the market expectations.

On Segmental breakup, revenue from Cigarette business grew by 6.0% YoY, revenue from FMCG business

(non-Cigarette) grew by 6.6% YoY, revenue from Hotels business grew by 14.6% YoY, revenue from Agri-

business grew by 14.6% YoY and revenue from Paperboards, Paper & Packaging business grew by 12.7% YoY

The Company continued to see positive volume growth for fifth consecutive quarter in the cigarette segment,

though at lower pace than previous quarter due to subdued demand environment.

The growth in the FMCG business was led by Atta, Potato Chips, Premium Cream Biscuits and Noodles in the

Branded Packaged Foods business, Liquids (Handwash & Bodywash) in the Personal Care Products Businesses

and Notebooks in the Education & Stationery Products Business.

View: ITC has been able to report volume growth for fifth consecutive quarter after four years of subdued or negative

volume growth in the cigarette segment, which is helping in improving its topline as well bottom line performance. With

subsiding cost pressure in coming quarters and benefits of recent price hikes, margin is also expected to improve going

ahead. In addition, ITC’s other businesses like FMCG and Paperboards is reporting steady numbers. ITC also

continued to enter into new categories in the FMCG business along with entry into new markets in order to bring the

incremental growth. We believe cigarette business may continue to witness improvement going ahead given the

stability starting to emerge post GST implementation, however, if there is any upward revision in GST rates that may

force company to take price hike then the company might start to see pressure on volumes again. However, ITC has

been consolidating its leadership position in the Cigarette segment and continuing to improve its standing in key

competitive markets across the country. Hence, Cigarette segment should continue to perform well over the longer term

on the back of healthy margins and strong brands available at various sizes. We maintain our positive stance on ITC

given the long-term positive benefits of GST and steep valuation discount as compared to its peers. Currently, we

have a Buy rating on the stock with target price of Rs.310. Any earning/rating revision would depend on the

performance of FMCG business, any regulatory changes in Cigarette business and in general business momentum.

______________________________________________________________________________



Revenue 4225 4133 2.2

EBITDA 656 566 15.8

EBITDAM 15.5% 13.7% 182 bps

PAT 392 354 10.9

EPS (Rs.) 1.1 1.0

Key Details

52 week H/L(Rs) 223.4/140.0



FV (Rs) 1.0

PE (X) (TTM) 26.2


Jyothy Labs CMP: Rs.146

Page No. 14




18A 16724 (0.6) 2575 15.4 1789 4.9 (12.4) 29.7 0.7

19A 18136 8.4 2811 15.5 1976 5.4 10.5 26.9 2.1

20E 20488 13.0 3237 15.8 2285 6.3 15.6 23.3 2.1

21E 23583 15.1 3773 16.0 2765 7.6 21.0 19.2 2.1

Background: Jyothy Labs Ltd. (JYL), a fast moving consumer goods (FMCG) company is principally engaged in manufacturing and marketing of fabric whiteners,

soaps, detergents, mosquito repellents, scrubber, bodycare and incense sticks. Jyothy has some of the major brands in the FMCG industry under its product

portfolio offering including Ujala, Maxo, Exo, Henko, Prill, Margo and Neem.


JYL reported decent set of numbers for Q1FY20 on a consolidated basis.

On the segmental basis, revenues from Personal Care segment grew by 13.3% YoY, revenues from Fabric Care

segment grew by 5.4% YoY and revenues from Dishwashing segment grew by 1.1% YoY, however, revenues

from Household Insecticides segment fell by 21.6% YoY during the quarter.

The management has a positive outlook on demand scenario with the expectation of improvement owing to

expectations of normal monsoon going ahead.

The management highlighted that the company has gained market share in some of the brands like Ujala

Supreme, Ujala IDD (detergent) in Kerala, Exo Bar and Pril Liquid.

Owing to weak Q1, the management has reduced its revenue growth guidance to 10-12% YoY for FY20 from

earlier guidance of 12-14% YoY. The management expects softness in crude oil prices and key raw material

prices could see stable margin and expects sustainable margin to be at 15.5%.

View: JYL’s management has highlighted that the demand scenario is expected to be stable and maintained its stance

of focusing on increasing its direct reach and brand building in order to drive the revenue growth going ahead. The

management further stated that the company would continue to focus on innovation, which remains the top priority for

the company. The company would also focus on rolling out its existing products into newer geographies and launching

variants in existing brands. The company would also be working on leveraging modern trade and digital platform and

would continue to spend on social media to drive the revenue growth going ahead. While the management has lowered

its revenue growth guidance to 10-12% YoY and EBITDA margin to 15.5% for FY20, it is hopeful of improvement in

coming quarters owing to expectations of normal monsoon and improvement in dishwash segment. Currently, we have

a Buy rating on the stock with the target price of Rs.228 at 30x PE multiple on FY21E EPS of Rs.7.6. Any revision

in earning/rating would depend on the performance of its power brands, improvement in EBITDA margin and changes in

general business momentum.



Revenue 24.1 21.0 14.6

EBITDA 2.5 2.2 16.2

EBITDAM 10.4% 10.3% 140 Bps

PAT 0.9 0.8 2.0

EPS (Rs.) 3.45 3.38

Key Details

52 week H/L(Rs) 340.5/230



FV (Rs) 2.0

PE (X) (TTM) 12.4


KEC International CMP: Rs.241

Page No. 15

Earnings Summary



18A 101 17.1 10 10.0 4.6 17.8 50.4 13.5 0.7

19A 110 9.4 11 10.5 4.9 18.9 6.1 12.7 1.0

20E 127 15.0 13 10.5 6.1 23.6 24.9 10.2 1.0

21E 142 12.0 15 10.6 7.0 27.1 14.8 8.9 1.0______________________________________________________________________________

Background: KEC was incorporated in 1945 as Kamani Engineering Corporation by the RPG Group. KEC is a Global Power Transmission Infrastructure major

for Engineering Procurement and Construction (EPC) projects. It has presence in the verticals of Power Transmission & Distribution (T&D), Cables, Railways,

Water, Renewables (Solar Energy) and Civil. Globally, the company has powered infrastructure development in more than 61 countries.


KEC International Ltd (KEC) reported mixed set of results for Q1FY20 where net sales were above market

expectation and net profit was below market expectation.

Consolidated sales for the quarter was mainly driven by Transmission & Distribution (T&D) and Railways

business.

On segmental performance, T&D segment revenue (~52% of total revenue) grew by 29% YoY, SAE Tower

business (~12% of total revenue) grew by 13% YoY, Railways segment revenue (~21% of total revenue) grew by

67% YoY, Cable business revenue (~11% of the total revenue) grew by 2% YoY, Solar business revenue (~1%

of total revenue) came in at Rs.0.34 bn while newly ventured Civil business revenue declined by 45% YoY to

Rs.0.65 bn.

Order inflows declined by 59.4% YoY to Rs.11.2 bn. Order book at the end of Q1FY20 stood at Rs.19.02 bn, up

by 4.5% YoY.

Management has retained its guidance for sales growth of 15-20% YoY, EBITDA margin of 10-10.5% and

15-17% YoY growth in order inflow for FY20.

View: KEC delivered muted PAT growth during Q1FY20 despite strong topline growth mainly on account of increasing

interest cost and working capital days impacting the overall bottom line. While the management has guided that

weakness in T&D ordering was on the back of general elections during Q1FY20, post which the ordering momentum is

likely to see a sharp pick up on the back of huge bid pipeline in the domestic T&D market and expected pickup in the

Brazil and Middle East regions. Moreover, on Railways with ~30000 kms of railway lines yet to be electrified, the

revenue visibility for the railway segment remains strong, given the KEC’s leadership position in the railway overhead

electrification segment. We believe, expected improvement in order inflow, reducing debt profile, diversification of

overall company revenue via both, diversified client base and segment base is likely to drive profitability for the

company in the medium to long term. Currently, we have a Buy rating on the stock with a target price of Rs.407 at

15x FY21E EPS of Rs.27.1. Any earning/target price revision would depend on the ordering and tendering activities by

domestic T&D players, improvement in market share and changes in general business momentum.



Revenue 164.9 141.4 16.7

EBITDA 12.2 11.3 7.6

EBITDAM 7.4% 8.0% (60) Bps

PAT 6.5 8.2 (21.0)

EPS (Rs.) 4.6 5.8

Key Details

52 week H/L(Rs) 1606.7/1183.4

Market Cap (Rs. Bn) 1806


FV (Rs) 2.0

PE (X) (TTM) 20.1


Larsen & Toubro CMP: Rs.1287

Page No. 16




18A 745 13.3 77 10.3 50 35.3 8.7 36.4 1.1

19A 870 16.8 87 10.0 62 44.2 25.1 29.1 1.2

20E 1,000 15.0 102 10.2 76 53.9 21.8 23.9 1.4

21E 1,150 15.0 123 10.7 92 65.8 22.2 19.6 1.6______________________________________________________________________________

Background: Larsen & Toubro Ltd (L&T) is a technology, engineering, construction, manufacturing and financial services company. The Company's segments

include Infrastructure, Power, Heavy Engineering, Defence, Electrical & Automation, Hydrocarbon, IT & Technology Services, Financial Services, Developmental

projects and Others, which include realty and shipbuilding.


Larsen & Toubro (L&T) reported results for Q1FY20 which were below market expectation.

Standalone revenue growth was driven by Infrastructure, Heavy Engineering and Defense segment where

revenue was up by 16.8% YoY, 162.8% YoY and 37.6% YoY respectively.

Order inflows during the quarter was up by 11.2% YoY to Rs.387 bn, despite election period. Order book at the

end of Q1FY20 stood at Rs.2940 bn, up by 9.4% YoY.

The management has retained its FY20 order inflow growth guidance of 10-12% YoY and revenue growth

guidance of 12-15% YoY with flat EBITDA margin guidance (on ex-Services basis).

Working capital increased to 23% in Q1FY20 vs 21% in FY19, due to delayed payments and orders.

The management has guided for potential order pipeline of ~Rs.8400 bn where ~Rs.5400 bn is likely to come

from core Infrastructure segment, ~Rs.500 bn for Power, Rs.1000 bn for Transmission and Distribution segment,

~Rs.1200 bn for Hydrocarbon segment and ~Rs.1650 bn from international orders.

View: L&T is India's largest Engineering & Construction Company. L&T delivered good revenue growth in Q1FY20 led

by execution pick-up in infrastructure and heavy engineering segment on the back of improving public sector capex.

However, order inflow during the quarter was lower than expected with minimum spillover of inflows seen for Q4FY19

orders which were expected to rollover to Q1FY20. L&T is exposed to several levers across business/geographic

segments and has emerged as the Engineering & Construction partner of choice in India, which provides a robust

foundation to capitalize on the next leg of investment cycle. Management guided that incremental order inflow growth

would be supported by pick up in ordering activity in the Metro and Hydrocarbon segment (specially for Refineries in

Middle East region) apart from defence segment. Currently, we have a Buy rating on the stock with a target price

of Rs.1811, valuing Standalone business at 22x FY21E EPS of Rs.65.8 and Subsidiary value of Rs.363/share.

Any revision in the target price would depend upon changes in order inflow, execution, profitability in subsidiaries, and

rollover to the next financial year, management guidance and general business momentum.

______________________________________________________________________________



Revenue 128.1 133.6 (4.1)

EBITDA 17.9 21.1 (15.0)

EBITDAM 14.0% 15.8% (179) bps

PAT 8.9 12.6 (29.0)

EPS (Rs.) 7.2 10.1

Key Details

52 week H/L(Rs) 992.0/502.9



FV (Rs) 5.0

PE (X) (TTM) 12.8


Mahindra & Mahindra CMP: Rs.533

Page No. 17

Earnings Summary – Standalone (Including MVML)



18A 476 15.0 70 14.8 46 37.2 12.5 14.3 1.4

19A 528 11.1 75 14.2 54 43.4 16.8 12.3 1.4

20E 567 7.3 77 13.6 54 43.3 (0.3) 12.3 1.4

21E 617 8.8 85 13.7 57 46.1 6.4 11.6 1.4

Background: Mahindra and Mahindra Ltd (M&M)’s business segments include Automotive Segment that comprises of sale of automobiles, spare parts and

related services and Farm Equipment Segment (FES), which includes sale of tractors, spare parts and related services. Its subsidiaries include Tech Mahindra

Ltd., Mahindra & Mahindra Financial Services Ltd., Mahindra Investments (India) Private Ltd. and Mahindra Investments (International) Private Ltd. etc.


Mahindra & Mahindra Ltd. reported mixed set of numbers for Q1FY20, where topline was largely in-line with

market expectation while bottom line was lower than market expectation.

On the segmental basis, Automotive segment’s revenue fell by 0.6% YoY and FES’ revenue fell by 12.5% YoY.

M&M registered lower decline as compared to industry in both PV and CV segment on the back of new launches,

which helped in gaining market share in Auto segment while maintained market share in Tractor segment.

The management expects improvement in tractor demand in H2FY20 owing to some early green shoots

witnessed in recent past and expects to report 6-8% YoY growth in remaining eight months of FY20.

On the electric vehicles (EV), the management believes that rising government’s focus on EV would be beneficial

for M&M as the company is well ahead of the industry.

View: The management expects some stimulus from the government post the representation made by the auto industry

to help in improving the demand scenario in coming quarters. While the company is ready with gasoline engine for

BS-VI and expects growth to be led by recent launches in automobile segment, inventory levels in line with the industry

in tractor segment would help the company outperform the industry if demand improves given the expectation of

improvement in monsoon rainfall. M&M is also ready with its EV portfolio and expects to get benefited from the

government’s thrust on EV. We remain positive on the medium term potential of the company on the back of new

product launches both in internal combustion engine (ICE) and electric vehicle space that is likely to drive revenue

growth for the company and on healthy return ratios of 15% plus (i.e, RoCE in FY19). However, given the ongoing

slowdown in automobile and tractor segment, the trend of improvement in volumes would be key driver for the company

going ahead. Currently, we have a Buy rating on the stock with the target price of Rs.793 at 13x FY21E EPS of

Rs.46.1 adding Rs.194 as value of subsidiaries at 30% holding company discount. Any earning/target price

revision would depend on the performance of new launches, improvement in market share, any regulatory changes,

changes in the value of subsidiaries, rollover to next financial year and changes in general business momentum.



Revenue 241.9 227.0 6.6

EBITDA 64.5 59.5 8.4

EBITDAM 26.7% 26.2% 40 Bps

PAT 26.0 25.9 0.6

EPS (Rs.) 2.63 2.62

Key Details

52 week H/L(Rs) 146.3/106.8



FV (Rs) 10.0

PE (X) (TTM) 8.3


NTPC CMP: Rs.119

Page No. 18

Earnings Summary



18A 835 6.6 217 26.0 103 10.5 0.6 15.0 3.1

19A 903 8.2 228 25.2 117 11.9 13.6 13.2 3.8

20E 1042 15.3 289 27.7 140 14.1 18.9 11.1 3.2

21E 1149 10.3 324 28.2 164 16.6 17.5 7.2 4.2______________________________________________________________________________

Background: NTPC Ltd. (NTPC) is India’s largest energy conglomerate to accelerate power development in India. NTPC has established itself as the dominant

power major with presence in the entire value chain of the power generation business. From fossil fuels it has forayed into generating electricity via hydro, nuclear

and renewable energy sources. The total installed capacity of the company is ~55.1 GW as on Mar 2019. The company has set a target to have an installed

power generating capacity of 132 GW by the year 2032.


NTPC Ltd reported weak set of results for Q1FY20.

The revenue for the quarter grew by 6.6% YoY, led by higher tariff (up by 8% YoY) despite 1% YoY decline in

gross generation.

Plant Load Factor (PLF) for coal based units for the quarter stood lower at 73.91% against 77.98% in Q1FY19.

NTPC’s installed capacity (group level) increased to 55,126 MW at the end of Q1FY20 against similar capacity at

the end of Q4FY19 and 53,651 MW at the end of Q1FY19.

Management has guided for capacity addition of ~5.3 GW of new capacity addition in FY20 which is expected to

drive the regulated equity for the company. NTPC has about 20 GW capacity under construction and

commercialization of the same in the next 3-5 years is likely to remain a key positive for the company.

NTPC has entered into a Long Term Fuel Supply Agreements with CIL and SCCL for supply of coal for total

Annual Contract Quantity of ~172 MTPA. Company has also signed MoU with Railways for ensuring smooth coal

transportation.

View: NTPC Ltd is the largest power generating company in India with an installed capacity of ~55.1 GW at the end of

Q1FY20. NTPC’s profitability was marginally impacted in Q1FY20 on YoY basis due to higher depreciation and interest

expense and continuation of fixed cost under recovery as few plants faced coal shortage during the quarter. Going

forward, company expects under-recovery to be lower as government as well as company has taken various steps to

improve the coal availability which is likely to improve the profitability going ahead. We believe NTPC’s capacity addition

momentum to pick up FY20 as many projects are near completion and management has maintained the target to add

~5.2 GW in FY20. With strong pipeline of capacity addition in order to achieve its long term capacity guidance of

132 GW by 2032, growth visibility for the company remains promising. Currently, we have a Buy rating on the stock

with a target price of Rs.194 which is 1.5x FY21E book value of Rs.129/share. Any revision in the target price

would depend upon changes in the capacity addition/execution, PLF and general business momentum.



Revenue 265.5 272.1 (2.4)

EBITDA 151.1 147.3 2.6

EBITDAM 56.9% 54.1% 280 Bps

PAT 59.0 61.4 (3.9)

EPS (Rs.) 4.7 4.8

Key Details

52 week H/L(Rs) 185/115.8



FV (Rs) 5.0

PE (X) (TTM) 4.9


ONGC CMP: Rs.122

Page No. 19




18A 850 9.1 440 51.8 199 15.5 11.4 7.8 6.1

19A 1,097 29.0 595 54.2 267 21.2 36.6 5.7 6.2

20E 1,124 2.5 609 54.2 282 22.4 5.4 5.4 6.2

21E 1,180 5.0 648 54.9 305 24.2 8.2 5.0 6.2______________________________________________________________________________

Background: Oil and Natural Gas Corporation Ltd. (ONGC) is an oil exploration and production company. The Company is the producer of crude oil and natural

gas in India. The company has organized into the geographical and business segments. The geographical segment includes operations in two categories: In India,

which include onshore and offshore, and outside India. The business segment includes exploration & production and refining activities.


ONGC Ltd reported weak set of results for Q1FY20 mainly impacted by lower realization and decline in crude oil

production.

The total crude oil production stood at 5.87 mn metric ton (MMT), down by 5.6% YoY and 0.5% on QoQ basis.

Net Brent crude realization for the quarter came in at USD 66.3/bbl, down by 7.3% YoY. In INR terms it came in

at Rs.4612/bbl, down by 3.8% YoY.

The gas production at 6.4 bn cubic meter (BCM) was up by 3.7% on YoY basis, however, down by 2.1% on QoQ

basis.

The management has maintained its oil production target at 25.34 MT for FY20 (implied growth of 4.5% YoY) and

28.32 BCM for gas production (implied growth of ~10% YoY).

Management continues to maintain their production guidance from the KG basin with gas production expected to

start from FY20 itself and oil production to commence by March 2021.

View: ONGC is in the midst of developing its KG Basin asset, one of its largest single upstream assets with peak

production rate of ~16.56 mmscmd of gas and ~78000 bbl per day of oil. On the ONGC operational front, strong traction

expected in the gas production going ahead led by several ongoing projects is likely to drive growth for the company.

ONGC’s large size in the oil & gas space, strong balance sheet, steady cash flows and consistent dividend payment

track record gives us the comfort. We believe, given the fuel subsidy provision of ~Rs.375 bn for FY20 Budgetary

Estimates which seems to be adequate to manage under-recoveries on domestic LPG and PDS kerosene if oil prices

continue to remain at around USD60-70/bbl levels. This will again improve a case for re-rating for the stock given the

lower to nil probability of the subsidiary burden. Currently, we have a Buy rating on the stock with a price target of

Rs.184 which is 6x FY21E EPS of Rs.24.2 and balance value accruing from ONGC Videsh Ltd and other listed

investment. Any revision in the earnings/target price would depend upon change in the international crude oil prices,

subsidy share, general business momentum and rollover to next financial year..



Revenue 86.1 91.7 (6.1)

EBITDA 10.2 9.3 9.6

EBITDAM 11.9% 10.2% 170 Bps

PAT 5.6 5.9 (4.5)

EPS (Rs.) 3.7 3.9

Key Details

52 week H/L(Rs) 254.7/203.4



FV (Rs) 10.0

PE (X) (TTM) 16.1


Petronet LNG CMP: Rs.239

Page No. 20

Earnings Summary



18A 306 24.3 33 10.8 20.8 13.9 21.8 17.3 1.0

19A 384 25.5 33 8.6 21.6 14.4 3.7 16.6 2.3

20E 424 10.4 40 9.5 25.1 16.7 16.5 14.3 2.3

21E 495 16.6 47 9.6 29.5 19.6 17.3 12.2 2.3______________________________________________________________________________


Petronet LNG Ltd (PLNG) reported results for Q1FY20 which were above the market expectations.

Dahej volumes grew by 1.4% YoY and 9.6% QoQ to 217 tbtu and Kochi volume grew to 9 tbtu from 6.2 tbtu in

Q1FY19, up by 45% YoY.

Dahej terminal utilization level stood at 113.5% for Q1FY20 vs 103.6% in Q4FY19. Utilization for Kochi terminal

stood at 14.1% in Q1FY20 vs 9.7% in Q4FY19.

Management guided that capacity expansion of Dahej terminal from 15 MMT to 17.5 MMT was completed during

Q1FY20 (23 June 2019). It further highlighted that the construction work of the Kochi-Mangalore pipeline is on

track and guided for completion of construction work by October 2019.

View: PLNG remains a structural story of India’s increasing gas demand from key users like power stations, fertilizers

companies, refineries and petrochemical companies, city gas distribution for compressed natural gas (CNG), domestic

purpose usage and steel manufacturers. While the Q1FY20 volume growth was mainly impacted due higher capacity

utilization leaving minimum scope for volume growth, management believes that given the 2.5 MMTPA expansion of the

Dahej terminal, volume growth would be visible in the coming quarters. While the Kochi terminal is currently

underutilized, a slight uptick in the utilization levels for Kochi terminal post commissioning of Kochi-Mangalore pipeline

by October 2019, would result in sharp rise in the earnings for the company given the improving utilization. Moreover,

international expansion plans given the higher free Cash flow generation capability of the company is also likely to work

in favour of the company and this is also likely to improve the growth over the long term. We believe visibility on PLNG’s

medium/long term earnings on the back of huge gas demand-supply gap in India, volume growth via Kochi ramp up and

capacity addition at Dahej along with earnings growth boosted by annual re-gas charge escalation of 5% YoY is likely to

drive the profitability. Currently, we have a Buy rating on the stock with a target price of Rs.316 at 16x FY21E EPS

of Rs.19.6. Any earnings/target price revision would depend upon the fluctuation in LNG prices, any disruption from the

upcoming competition; scale up of existing terminal, any decision by government on re-gas tariffs and general changes

in the business scenario.

Background: Petronet LNG Ltd (PLNG) is engaged in sale of re-gasified liquefied natural gas (RLNG). The company is engaged in the import and re-gasification

of liquefied natural gas (LNG). The Company's terminals include Dahej LNG terminal, Kochi LNG terminal and solid cargo port. The company's Dahej LNG

terminal is LNG receiving and regasification terminal with a nameplate capacity of approximately 17.5 mn metric tons per annum (MMTPA) located in Dahej,

Gujarat and Kochi LNG terminal has nameplate capacity of approximately 5 MMTPA, located at Kochi, Kerala..



Revenue 882.6 911.6 (3.2)

EBITDA 136.4 151.5 (10.0)

EBITDAM 17.9% 16.5% 140 Bps

PAT 90.4 88.2 2.4

EPS (Rs.) 14.3 13.9

Key Details

52 week H/L(Rs) 1417/1017



FV (Rs) 10.0

PE (X) (TTM) 20.1


Reliance Industries CMP: Rs.1276

Page No. 21




18A 2,900 19.8 517 17.8 336 53.0 7.0 24.1 0.4

19A 3,710 27.9 583 15.7 352 55.5 4.6 23.0 0.5

20E 4,278 15.3 727 17.0 437 68.9 24.2 18.5 0.5

21E 4,762 11.3 833 17.5 508 80.2 16.3 15.9 0.5____________________________________________________________________________

Background: Reliance Industries Ltd. (RIL) is a private sector enterprise, with business in the energy and materials value chain. The Company operates in three

segments: petrochemicals, refining and oil & gas. The petrochemicals segment includes production and marketing operations of petrochemical products. The refining

segment includes production and marketing operations of the petroleum products. The oil and gas segment includes exploration, development and production of crude oil

and natural gas.Key highlights of the quarter:

Reliance Industries Ltd (RIL) reported numbers for Q1FY20 where Petrochemical business reported steady set of

numbers while Refining business delivered muted set of numbers for the quarter.

The Refining division’s revenue (~67% of standalone revenue) declined by 5.9% YoY and EBIT margin for the segment

improved by 20 bps YoY to 6.6%. GRM during Q1FY20 stood at USD 8.1/bbl vs USD 10.5/bbl during Q1FY19 and

USD 8.2/bbl in Q4FY19.

The Petrochemical division’s revenue (~32% of standalone revenue) was down by 7.1% YoY and EBIT margin was up

by 380 bps YoY to 23.7%.

The Oil & Gas division’s revenue (~1% of total revenue) declined by 35% YoY and EBIT margin came in at negative

54.7% in Q1FY2 against negative EBIT margin of 32.5% in Q1FY19.

Reliance Jio (RJio) standalone revenue grew by 44% YoY and EBIDTA grew by 49% YoY with EBITDA margin of

40.1% in Q1FY20 vs 39% in Q4FY19. RJio’s subscriber base at the end of Q1FY20 stood at 331.3 mn, with net

additions of 24.6 mn subscriber during Q1FY20. ARPU stood at Rs.122 vs Rs.126.2 in Q4FY19.

Reliance retail business revenue grew by 47.5% YoY and EBIDTA grew by 69.9% YoY with EBITDA margin of 5.4% in

Q1FY20 vs 4.7% in Q1FY19.

View: RIL continues to be on track to improve the profitability on the back of improved performance for the Petrochemical

business despite muted performance for the Refining business. Strong ramp up in RJIO paid subscriber base during last few

quarters along with recent announcement to buy stakes in Multi Service operators (MSOs) companies Hathway and Den has

raised the revenue visibility for the telecom venture going ahead. Also, de-merger of asset heavy Fibre and Tower business

via InvITs, also works in favour of the company in reducing the overall debt. Although Refining margins have come off slightly

in the last few quarters, we believe benefits of Petcoke Gasification plant is likely to be seen in coming quarters. Also, revised

IMO regulation from 1 January 2020 is also likely to improve demand for Middle distillates like diesel and thereby likely to

benefit complex refinery like Reliance Industries. Currently, we have a Buy rating on the stock with a target price of

Rs.1440. Any changes in the estimates/target price would depend upon trend in crude price, currency movement, gas price &

GRM and changes in capex and general business momentum.

______________________________________________________________________________



NII 229.4 218.0 5.2

PPOP 132.5 119.7 10.6

NIM 2.81% 2.80% 1 bps

PAT 23.1 (48.8) -

EPS (Rs.) 2.6 (5.5)

Key Details

52 week H/L(Rs) 373.7/247.7



FV (Rs) 1.0

PE (X) (TTM) 26.0


State Bank of India CMP: Rs.271

Page No. 22

Background: State Bank of India (SBI) is India’s largest commercial bank in terms of assets, deposits, profits, branches, number of customers and employees,

enjoying the continuing faith of millions of customers across the social spectrum. Its banking activities include Personal Banking, Agricultural/Rural, NRI Services,

International Banking, Corporate Banking and Services.


SBI reported 5.2% YoY growth in net interest income (NII) and non-interest income grew by 20.0% YoY in

Q1FY20.

Overall net interest margin (NIM) grew by 1bps YoY to 2.8% while domestic NIM grew by 6 bps YoY to 3.1%

Pre-provisioning profits (PPOP) grew by 10.6% YoY, supported by a fall of 5.3% YoY in operating expenses

PAT for the quarter stood at Rs.23.12 bn as compared to a loss of Rs.48.76 bn in Q1FY19

Deposits growth stood at 7.3% YoY for the quarter, driven by ~7% YoY growth in term deposits while the

Advances grew by 13.8% YoY mainly driven by retail loan growth of ~19% YoY.

Current account and Savings account (CASA) deposits, which is 43.6% of deposits, grew by ~7% YoY.

Absolute gross non-performing assets (NPA) fell by 20.8% YoY, while net NPA fell by 33.9% YoY

While GNPA and NNPA ratio fell by 316 bps YoY and 222 bps YoY to 7.53% and 3.07%, respectively, however,

both the ratios remained largely flat on sequential basis.

View: We have a Buy rating on the stock with the target of Rs.392 based on PBV multiple of 2x on FY21E core

adjusted book value of Rs.179 adding Rs.34 per share value from Subsidiaries. Any revision in book value/rating

would depend on changes in the NPA profile, Capital dilution and momentum in the NPA resolution process.

PE (X)

FY19 FY20E FY21E

279.5 24.2 19.8

Adjusted BV (X)

FY19 FY20E FY21E

174 177 179

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Daily closing price for last 3 years of St Bk of India

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Rs. in Bn. Q1FY20 Q4FY19 % QoQ

Revenue 381.7 380.1 0.4

EBITDA 100.4 102.9 (2.5)

EBITDAM 26.3% 27.1% (80) Bps

PAT 81.3 83.5 (2.6)

EPS (Rs.) 21.7 22.2

Key Details

52 week H/L(Rs) 2290.7/1784



FV (Rs) 1.0

PE (X) (TTM) 26.1


TCS CMP: Rs.2248

Page No. 23

Earnings Summary



18A 1231 4.4 325 26.4 258 67.5 -1.8 33.3 1.1

19A 1465 19.0 397 27.1 317 84.5 22.7 26.6 1.3

20E 1640 12.0 435 26.5 349 93.1 10.2 24.2 1.7

21E 1829 11.5 485 26.5 389 103.8 11.5 21.7 2.1______________________________________________________________________________

Background: Tata Consultancy Services Ltd. (TCS) is an information technology (IT) services, consulting and business solutions organization. TCS offers a

consulting-led, integrated portfolio of IT, Business Process Services (BPS), infrastructure, engineering and assurance services.


Tata Consultancy Services Ltd (TCS) came in with mixed set of results for Q1FY20.

In USD terms revenue grew by 1.6% QoQ to USD 5.49 bn and 2.3% QoQ in constant currency terms in Q1FY20.

In terms of revenues by geographical segments, revenues from North America business (50.6% of total revenue)

rose by 1.4% QoQ, Latin America (1.8% of total revenue) declined by 8.5% QoQ, European (14.3% of total

revenue) grew 3.1% QoQ, UK (15.8% of total revenue) grew by 1% QoQ, India business (6% of total revenue)

grew by 5.1% QoQ and Asia Pacific region revenue (9.4% of total revenue) rose by 0.6% on QoQ basis.

In terms of USD revenues by industry verticals, BFSI grew by 1.3% QoQ, Retail & Distribution grew by 1% QoQ,

Communications grew by 3.1% QoQ, Manufacturing revenues grew by 3.7% QoQ and Life sciences &

Healthcare business grew by 4.3% QoQ. The revenues from Digital practice formed 32.2% of the total revenues

(vs 31% in Q4FY19) and grew by 5.6% QoQ.

The company had 4,36,641 employees at the end of the quarter, up by 12,365 QoQ which is highest ever net

addition in the last 5 years.

The management continues to remain confident about the medium to long term demand outlook for the company

and is confident of achieving the double digit constant currency revenue growth for FY20.

View: TCS came in with mixed set of numbers for Q1FY20, mainly due to one-time slow down seen in the Retail

segment. The management commentary suggested that large part of the weakness is behind and the deal pipeline was

looking strong. The adoption of new technologies in the Digital, Automation, Analytics, Cloud migration, Micro services,

Cyber security, Intelligent automation etc. are likely to drive the incremental growth in the company. With signs of rising

discretionary spends on digital side, we think that IT sector can see improved performance over the next few years. The

steady performance in the BFSI space seems to be a testimony of the same. With the strong deal-flow, impressive

traction in digital business, rising non-linearity in earnings and currency tailwinds, TCS is likely to deliver a double-digit

revenue growth in FY20 and beyond. Currently, we have a Hold rating on the stock with a target price of Rs.2270

on 21x FY21E EPS of Rs.103.8 and adding Rs.92 cash per share. Further any change in the rating would depend on

the earnings growth trajectory compared to the peers and overall business growth momentum.

______________________________________________________________________________



Revenue 1097 972 12.9

EBITDA 456 412 10.7

EBITDAM 41.6% 42.4% (84) bps

PAT 275 234 17.2

EPS (Rs.) 5.2 4.4

Key Details

52 week H/L(Rs) 697.0/406.7



FV (Rs) 10.0

PE (X) (TTM) 26.5


Thyrocare Technologies CMP: Rs.448

Page No. 24




18A 3563 17.1 1447 40.6 955 17.4 32.7 25.8 2.2

19A 4029 13.1 1542 38.3 845 15.8 (8.7) 28.2 4.5

20E 4701 16.7 1740 37.0 968 18.3 15.8 24.4 4.5

21E 5662 20.4 2112 37.3 1196 22.7 23.5 19.7 4.5

Background: Thyrocare Technologies Ltd (Thyrocare) is India's first fully automated diagnostic laboratory with a focus on providing quality at affordable costs to

laboratories and hospitals in India and other countries. Thyrocare operates with a Centralized Processing Laboratory (CPL) in Mumbai - India for esoteric tests;

and Regional Processing Laboratory (RPL) in major metro cities of India and other parts of Asia.


Thyrocare Technologies Ltd. reported mixed set of numbers for Q1FY20.

Consolidated revenue growth of 12.9% YoY was driven by 12.5% YoY growth in revenue from diagnostic

services and 19.0% YoY revenue growth in imaging services (Nueclear Healthcare)

Thyrocare’s Q1FY20 performance was impacted due to slowdown in discretionary spending and delay in orders.

While the Q2FY20 may also see some weakness owing to logistical issues due to floods in many parts of India,

the management is hopeful of recovering the business in coming quarters and expects to register 13-14% YoY

growth in volume on full year basis.

On Nueclear business, the management highlighted that the company is awaiting valuation report. Post this

report, in the board meet final decision would be taken selling it to the promoter Dr. Velumani.

View: We are long-term positive on the stock given the current structural drivers like low spending on Preventive and

Wellness healthcare and rising urbanization, sedentary lifestyle, and peaking stress levels leading to lifestyle diseases

such as cancer, obesity, heart disease, diabetes, among others. With bulk of the market in the pathology segment being

unorganised, there is significant headroom for the organised sector to grow although the management expects it at a

slower pace. Thyrocare being a pan India player with the clear focus on expanding its network in diagnostic, it is well

placed to grab this opportunity. Moreover, strong brand, lower pricing model, expanding the number of diagnostic tests

centers and expanding the platforms also puts Thyrocare in a favorable position. Thyrocare’s well established brand

image, huge opportunity size, robust return ratios and cash rich balance sheet supports our long term view. Currently,

we have a Buy rating on the stock with the target price of Rs.680 based on a PE multiple of 30x FY21E EPS of

Rs.22.7. Any earning/rating revision would depend on the performance of its sub-segments, impact of its new strategy,

change in regulation, delay in expansion plans, monetization of Nueclear business and changes in general business

momentum.

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Daily closing price for last 3 years of Thyrocare Tech

Source: Bloomberg



Revenue 97.9 85.3 14.8

EBITDA 25.2 16.2 55.0

EBITDAM 25.7% 19.0% 670 Bps

PAT 11.6 5.9 94.7

EPS (Rs.) 42.4 21.8

Key Details

52 week H/L(Rs) 4903.9/3263.7



FV (Rs) 10.0

PE (X) (TTM) 35.2


UltraTech Cement CMP: Rs.3861

Page No. 25




18A 294 22.9 59 20.0 24 86.8 (9.6) 44.5 0.3

19A 357 21.6 65 18.3 25 89.4 3.0 43.2 0.3

20E 434 21.5 91 21.0 36 130.5 45.9 29.6 0.3

21E 495 14.2 112 22.7 48 173.9 33.3 22.2 0.3______________________________________________________________________________

Background: Ultratech Cement Ltd. (UltraTech) is a pan India cement manufacturer and is the largest manufacturer of grey cement, Ready Mix Concrete (RMC)

and white cement in India. It is also one of the leading cement producers globally. The company has an installed capacity of 94.8 Mn Tons Per Annum (MTPA) at

the end of FY19.


Ultratech Cement Ltd reported results for Q1FY20 which were above market expectation.

Revenue for the quarter increased by 14.8% YoY, mainly driven by sharp rise in realization during the quarter .

On per ton analysis, cement sales volumes increased by 2.1% YoY to 17.9 mn ton (MT). The blended

realizations were up by 12.5% YoY to Rs.5484/ton and overall cement cost per ton increased by 2.7% YoY to

Rs.4056/ton. As a result, EBITDA/ton increased sharply by 51.8% YoY to Rs.1409/ton.

On the demand front, management highlighted that all India cement demand de-grew by 3-4% YoY during

Q1FY20. Overall management expects all India cement demand to grow by ~6% YoY in FY20.

On the pricing, management guided that July prices are ~3% lower than Q1FY20 prices and expects prices to

sustain in H2FY20.

View: UltraTech Cement, with pan India presence, is the largest cement manufacturing company in India with total

capacity of ~94.8 MTPA at the end of FY19. Over the years, the company has managed to report higher EBITDA/ton

compared to its peers due to strong brand, pan India presence and strong operating efficiency. On the long term,

management expects cement demand in the country to grow at a faster pace as compared to capacity additions, which

is expected to drive utilization and hence profitability for the company. The government has also announced many new

infrastructure projects in roads (Bharatmala), ports (Sagarmala), metros etc, which may continue to drive the cement

demand in FY20 and beyond. Moreover, expected revival of real estate sector due to pick up in affordable housing

projects is further likely to drive cement demand in the country. We believe, with the recent price uptick seen in cement

prices and expected sustenance of the same going ahead is likely to drive the profitability for the company. Moreover,

sharp ramp up of the acquired assets of Binani Cement (~6.5 MTPA in India) and expected completion of acquisition of

Century Textile’s cement assets (13.4 MTPA) is likely to drive the volume as well as profitability given the expected

synergies between the acquired assets. Currently, we have a Buy rating on the stock with a target price of

Rs.5401 at 15x FY21E EV/EBITDA multiple. Any revision in earnings/target price would depend upon changes in

volumes growth, blended realization, EBITDA/ton, rollover of financial year and general business momentum.

______________________________________________________________________________



Revenue 79.1 41.3 91.2

EBITDA 12.5 8.5 47.1

EBITDAM 15.8% 20.5% (473) bps

PAT 1.9 5.1 (63.7)

EPS (Rs.) 2.4 6.7

Key Details

52 week H/L(Rs) 709.3/388.1



FV (Rs) 2.0

PE (X) (TTM) 30.7


UPL CMP: Rs.547

Page No. 26




18A 173.8 6.5 35.2 20.2 20.2 39.8 16.4 13.8 1.5

19A 218.4 25.7 41.1 18.8 14.5 18.9 (52.4) 28.9 1.5

20E 361.7 65.6 76.1 21.0 34.3 44.9 137.1 12.2 1.5

21E 397.9 10.0 85.7 21.5 45.1 59.1 31.5 9.3 1.5

Background: UPL is a leading global producer of crop protection products, intermediates, speciality chemicals and other industrial chemicals. Being the largest

manufacture of agrochemicals in India, UPL offers a wide range of products that includes Insecticides, Fungicides, Herbicides, Fumigants, PGR and Rodenticides.

It operates in every continent and have a customer base in 123 countries UPL ranks amongst the top 5 post patent agrochemical industries in the world.


UPL Ltd reported mixed set of numbers for Q1FY20, however, the numbers are not comparable due to Arysta

acquisition.

On like to like basis (i.e, including Arysta in Q1FY19 and in Q1FY20), the company reported an overall volume

growth of ~5% YoY in Q1FY20 while average realization was up by ~1% YoY

On geographical revenue breakup, India (~15% of consolidated revenue) fell by ~8% YoY, Latin America (~30%

of consolidated revenue) grew by ~25% YoY, North America (~15% of consolidated revenue) grew by ~6% YoY,

Europe (~21% of consolidated revenue) fell by ~3% YoY and Rest of World (~19% of consolidated revenue)

grew by ~7% YoY

The management has also maintained its guidance of 8-10% YoY revenue growth and 16-18% YoY EBITDA

growth on a consolidated base of UPL and Arysta together.

UPL is targeting to reduce its debt by USD 500 mn by end of FY20, which would help in reducing its debt levels.

View: UPL is a leading global generic player in the Agrochemical Industry and ranked among the top-5 post patent

agrochemical manufacturers in the world after the acquisition of Arysta. The acquisition has provided access to high

growing segments, more balanced geographical revenue mix and synergy benefit. UPL’s leadership position in key pest

resistance products and its cost advantage is helping the company to outperform the industry in key markets and gain

market share. Going ahead, the overall volume growth is expected to improve on the back of increased focus on

1) product portfolio expansion, 2) sustainable technology, 3) untapped markets like Africa & China and 4) synergy

benefit of consolidation of seeds business of Advanta and agrochemical business of Arysta. Despite challenging

environment globally, the company was managed to gain market share and has maintained its full year guidance of

8-10% YoY revenue growth and 16-20% YoY EBITDA growth on consolidated entity. Currently, we have a Buy rating

on the stock with the target price of Rs.768, which is 13x FY21E EPS of Rs.59.1. Any revision in the earning/rating

would depend upon the change in the product launching strategy, volume growth, forex impact, management guidance,

accrual of synergy benefits, debt levels and general business momentum.



Revenue 26540 21481 23.6

EBITDA 2912 2432 19.7

EBITDAM 11.0% 11.3% (30) Bps

PAT 1960 1839 6.6

EPS (Rs.) 5.9 5.6

Key Details

52 week H/L(Rs) 662.2/471



FV (Rs) 1.0

PE (X) (TTM) 38.6


Voltas CMP: Rs.613

Page No. 27

Earnings Summary



18A 64,044 6.2 6,626 10.3 5,720 17.3 10.7 35.4 0.6

19A 71,241 11.2 6,117 8.6 5,161 15.6 -9.8 39.3 0.7

20E 80,980 13.7 7,855 9.7 6,736 20.4 30.5 30.1 0.7

21E 92,451 14.2 9,892 10.7 8,214 24.8 21.9 24.7 0.7 ____________________________________________________________________________

Background: Voltas Ltd. (Voltas) is India's one of largest air conditioning company. Voltas Ltd. offers engineering solutions for a wide spectrum of industries in

areas such as heating, ventilation and air conditioning, refrigeration, electro-mechanical projects, textile machinery, mining and construction equipment, water

management & treatment, cold chain solutions, building management systems, and indoor air quality.


Voltas Ltd reported strong set of numbers for Q1FY20, which was above market expectations.

Consolidated revenue for the quarter increased sharply during Q1FY20, led by strong revenue performance in

Unitary Cooling Product (UCP) business.

On the segmental front, Electro Mechanical Projects (EMP) segment revenue (31.1% of the total revenue)

declined by 4.9% YoY and EBIT margin declined to 8% in Q1FY20 against 10.2% in Q1FY19

Unitary Cooling Product (UCP) segment’s revenue (66.1% to the total revenue) grew by 46.8% YoY, mainly on

the back of hotter summers and delayed onset of monsoon. EBIT margin for segment improved to 13.1% in

Q1FY20 vs 12.5% in Q1FY19.

Engineering Product segment revenue declined by 4.1% YoY at Rs.740 mn mainly due to poor demand from

textile sector and weakness seen in the domestic construction and mining industry.

On “Voltas – Beko”, management guided that initial sales and enquiries are encouraging and expects to bridge

the product gap once the direct cool refrigerator facility in Sanand becomes operational by December 2019.

View: Voltas Ltd is one of India’s leading engineering solution providers. While, the sales for the UCP segment

bounced back sharply during Q1FY20 due to low channel inventory, extended summer season and delayed monsoon.

While, the Room Air Conditioner (RAC) market grew by ~36% YoY during Q1FY20, Voltas grew by ~46% YoY during

the quarter and thereby increasing its market share to 24.1%. We believe existing dealer and channel network in the AC

segment along with newly introduced exclusive Voltas showroom exhibiting RAC and Voltas Beko products would help

the company for growth into other durable goods as well. On the EMP, management has guided that EBIT margin for

the EMP segment is likely to remain steady at over 7-7.5% as slow moving orders move out of the backlog and newer

projects with better profitability come into execution. Currently, we have a Buy rating on the stock with a target

price of Rs.745 at 30x FY21E EPS of Rs.24.8. Any change in earnings/price target would depend upon the order

inflow/execution in domestic and international markets, margin improvement; scale up of the new JV, general business

momentum and rollover to the next financial year.

Page No. 28

Disclaimer & Disclosures

______________________________________________________________________________

Rating Expected to

Buy Appreciate more than 10% over 12-18 month period

Hold Appreciate below 10% over 12-18 months period

Under Review Rating under Review

Exit Exited out of model portfolio

Rating Interpretation

Disclaimer: Disclosure:

We, (Nilesh Jethani), (PGP in Global Financial Markets) and (Nishant Sharma), (PGDM in Finance), authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about

the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s)

or view(s) in this report.

Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the

subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest.

Any holding in stock – No

HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475.

Disclaimer:

This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from

sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to

change without notice. This document is for information purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as an offer or

solicitation of an offer, to buy or sell any securities or other financial instruments.

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