Financial Advisory Stock for Today- Buy Stocks of Infosys with Target Price Rs.3910

8/13/2019 Financial Advisory Stock for Today- Buy Stocks of Infosys with Target Price Rs.3910

1/26

Company registered a turnover of Rs. 26902.25 Cr, up by 19% in H1FY14 compared to corresponding previous year period. There was fall of

10% in operating profits of the company to Rs 2971.72 Cr for H1FY14. The Other income was down 8% to Rs 279.6 Cr while Interest cost grew99% to Rs 169.36 Cr. .......................................... ( Page : 15-17)

Private Bank Result Preview 3QFY14 : 13th Jan 2014

Broadly banking indices outperform Nifty by 6% in third quarter and most of banking stocks are trading at attractive valuation. Despite of, wehave caution view on account of slowdown in economy, high interest rate and inflationary pressure. High inflation would be risk for theeconomy going forward. Any rise in inflation would result of rise in interest rate by RBI in its third quarter monetary policy review on 28thJan.2014 which would be negative for banking industry. Most of banking stocks are expected to report moderate revenue and profit growthowing to multiple headwinds. In private sector banking universe we like HDFC Bank, ICICI bank and DCB. ............................................. ( Page :12-14)

13th Jan, 2014

Edition : 182

IEA-EquityStrategy

GAIL : "Neutral" 10th Jan 2014

INDUSIND BANK "Neutral" 13th Jan 2014

Despite of reported higher than expected profit we have neutral view on the stock owing to shifting of loan mix from consumer finance tocorporate loan which will lead to margin compression and deterioration in asset quality as per our view. Corporate loans generally are big ticketsize in nature and with slowing of economy there are higher chances of these loan slip into NPA than other loan. Moreover retail loans are highyield in nature than corporate loan. At current price, we have neutral view on the stock due to trading almost near to our valuation multiple andanticipating margin compression and higher slippage. ........................ ( Page : 6-11)

Infosys : "On the way of excitement" BUY 13th Jan 2014

Infosys largely reported inline set of sales numbers and beats the street on margin front, In USD term, Sales grew by 1.65%(QoQ) and 0.5%(QoQ)

in INR term, led by 0.7% (QoQ) volume growth and 0.7%(QoQ) pricing growth. At a CMP of Rs 3549, it trades at 16.3x FY15E At a CMP of Rs3549, it trades at 16.3x FY15E earnings. We retain our BUY view on the stock with a target price of target price of Rs 3910 (revised from 3620)........................................ ( Page : 2-5)

CMC : "Reduced" 9th Jan 2014

We had initiated this stock at a CMP of Rs 1208 (5th June 2013) and now, it achieved its target of Rs1690, we advice to book profit on the stockbecause of its premium valuation at current price. However, sentiment could take a knock in the short run, since investors may prefer paying apremium for stock with better earnings visibility. ....................................... (Page : 18-19)

KPIT Tech: "On billion dollar journey" "Reduced" 8th Jan 2014

For 3QFY14E, Indian IT players would report muted earnings growth because of seasonal weakness like furloughs and holidays impacts, alreadyit is understood fact by consensus. Post result, earning guidance for FY15E and forward looking statement by most of companies would beconsidered as an important fact. Considering recent demand environment scenario and healthy growth outlook of US and Europe, we areexpecting to see positive outlook on the sector for the year 2014 ................................. ( Page : 22-25)

IT Industry: 3QFY14E results preview : "As usual flattish 3rd quarter" 7th Jan 2014

We had initiated this stock at a CMP of Rs 115 (14 Jan 2013) and now, it achieved its target of Rs 177. Despite better expectation of growth and

attractive visibility of its expansion through inorganic initiative and focus into emerging verticals, we advice to book profit on the stock becauseof its premium valuation. However, sentiment could take a knock in the short run, since investors may prefer paying a premium for stock withbetter earnings visibility .......................................... ( Page : 20-21)

Narnolia Securities Ltd,

India Equity Analytics aliy Fundamental Report on Indian Equities


2/26

Infosys

1M 1yr YTDsolute 6.3 52.4 53.1l. to Nifty 3.3 49.1 49.4

Current 1QFY14 4QFY13omoters 15.94 16.04 16.04

39.93 39.55 40.52I 16.16 18.28 17.51hers 27.97 26.13 25.93

Financials3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%

Revenue 13026 12965 0.47 10424 25.0EBITDA 3258.9 2836.9 14.88 2677 21.7PAT 2874.9 2406.9 19.44 2369 21.4EBITDA Margin 25.0% 21.9% 310bps 25.7% (70bps)PAT Margin 22.1% 18.6% 350bps 22.7% (60bps)

evious Target Price 3620side 10%ange from Previous 8%

"On the way of excitement"

MP 3549rget Price 3910

Inl ine sa les and beats the s t reet on margin f ro nt , upgraded earning gu idance; sult update BUY

wk Range H/L 35810/2190kt Capital (Rs Crores)

ock Performance

erage Daily Volume203790

year forward P/E

Rs, Cro

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

E Code 500209E Symbol INFY

are Holding Pattern-%

Earning Guidance: Infosys upgrades its earning guidance from 6-10% to 9-10% to 11.5-12% for FY14E, now nearest to NASSCOM guidance (12-14%). Management is veryconfident to achieve the guidance figure and stated much focused on creating superiorfinancial performance ahead.

1240448fty 6171

arket Data

View and Valuation: Infosys seems to be on its way to rediscovering its past mojo withrevenue momentum kicking, and the NRN invisible hand in play. Furtherannouncement of strategic acquisitions, better utilization of cash balances, better dealwin, consistent client traction and revenue momentum would help the company tobridge the gap with rivals such as TCS.Considering the revised guidance by management and its growth priority than margininching up strategy, we upgraded our EPS from Rs 181/208 to Rs 188/218 forFY14E/15E. At a CMP of Rs 3549, it trades at 16.3x FY15E At a CMP of Rs 3549, it tradesat 16.3x FY15E earnings. We retain our BUY view on the stock with a target price of target price of Rs 3910 (revised from 3620).

Infosys largely reported inline set of sales numbers and beats the street on marginfront, In USD term, Sales grew by 1.65%(QoQ) and 0.5%(QoQ) in INR term, led by 0.7%(QoQ) volume growth and 0.7%(QoQ) pricing growth. However, the good news is thatthe PAT grew by 21% because of cost rationalization, sequentially.

On an ongoing basis, Infosys will retain its revenue acceleration and margin expansion,also operating metrics will turn into greenery from hay. Upgradation of earningguidance by management hinted to join the party to enjoy with 12-14% earningsgrowth for FY14E like its bellwether.Considering the strategy to build clients relation, execution of growth oriented policyand combination of reduced onsite costs and higher utilization would be an optimisticgrowth story despite recent hiccups of top management exit.Healthy Margin growth: During the quarter, its EBIT margin expanded by 310 bps (QoQ)

to 25%. The company's cost cutting measures are yielding the expected gains. This againis in line with what the market was expecting. During the December quarter, Infosysselling and marketing expenses declined by 13.3% compared to the second quarter.Administrative expenses too have declined by 18.4% in dollar terms. Both these havehelped improve operating margins.Steady volume growth: The volume growth in the quarter was weak, 0.7% (QoQ)growth with stable pricing growth of 0.7%(QoQ), but it is also weak for the group and forInfosys. we expect it to be improve in the coming quarters.Healthy deal pipeline: Overall, the company continues to show signs of recovery at theoperational level. The company has added 54 new clients in the quarter and added 15clients where the deal size is over $100 million. This implies that client confidence is

returning.

"BUY"13th Jan' 14



3/26

argin-%

n segmental front: Infosys has reported teen set of growth in all segments;gmental Performance:

Infos s.

venue growth in USD term-(QoQ)

lume and Pricing Growth (QoQ)-%

(Source: Company/Eastwind)


In USD term, Sales grew by 1.65%(QoQ)in USD term and 0.5%(QoQ) in INR term,led by 0.7% volume growth and0.7%(QoQ) pricing growth. Mgt revisedrevenue growth to 11.5%-12% for FY14E.

EBIT margin expanded by 310 bps (QoQ)to 25%. Mgt expects to see margingrowth in near term.




With 0.7% pricing growth, volumegrowth was reported by 0.7%growth(QoQ), impacted by seasonalwave.

On QoQ, Companys margin improved ientire segments .


QoQ YoY QoQ YoYFSI 33.5% 0.8% 24.2% 29.9% 340bps 80bpsanufacturing 22.8% -1.3% 31.3% 24.2% 340bps (50bps)ergy&Utilities 19.1% -0.1% 16.4% 28.8% 30bps (130bps)tai l, Logi s-&Li fe sc- 24.6% 2.1% 27.6% 27.52% 560bps (230bps)

Margin-%Sales contribution-%gments

Sales Growth-%Margin-%


4/26

ilization:

ients Concentration:

tal Clients and Clients Addition:

Infos s.

eography wise revenue contribution-

we expect that growth from Euro as wellas Europe would prove a milestone forthe company ahead because of healthydemand environment and optimistictempo of clients expanding.


n geographical front: During the quarter, company has reported 4% revenue growthom Euro and RoW each, which contributes 25% and 13% of sales. While revenue fromS declined by 2%, it contributes 60% of Sales.

ients MetricsThe company has added 54 new clients inthe quarter and added 15 clients wherethe deal size is over $100 million. Thisimplies that client confidence isreturning.



We expect that Infys improvi

utilization despite higher attritioncompare to its nearest bellwethers isgood sign for its future growth story.

eadcount Metrics: Its attrition increased to 18% from17.3%(2QFY14) on LTM basis, howeveon sequentially basis they have been ableto control its attrition. we hope that thefurther salary hikes across the board willbring down the attrition levels goingforward.


he Company's Utilization is likely to keep inching up, which could lead to marginpansion for a couple of quarters and that is going to be a huge positive for Infosys as ampany.


ients Category 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14p clients 4.1% 4% 3.60% 3.6% 3.9% 4% 3.70%p 5 clients 16.2% 16% 15% 14.7% 14.9% 15% 14%p 10 clients 25.3% 25.40% 23.90% 24.0% 24.0% 24.5% 23.5%

ients, number 3QFY13 4QFY13 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14tive clients,nos 665 694 711 715 776 798 836 873 888w clients 49 52 51 39 89 56 66 68 54

mployee 's 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14tal Employees (Cons-) 151,151 153,761 155,629 156,688 157,263 160,227 158404t additions 1,157 2,610 1,868 1,059 575 2,964 -1823terals hired 5,233 3,656 4,351 3,545 3,008 3,806 3,333 M Attrition (Stand-) 14.9% 15.0% 15.1% 16% 16.9% 17.3% 18.10%


5/26


With 85% of the companys revenues coming from clients based in US and Europe, thempany should hope the current economic recovery in developed countries would helprevenues.

They are seeing confidence coming back from clients metrics. However, they expectheir] budgets only remain stable from last year. Clients are still focused on cost.

The Company is looking to bring in about maximum 6,000 off-campus offers startinge January early February, so there is a lot of activity going on that is bringing people in,gaging and developing.

nancials


Infos s.ey facts from Management Interview;Management upgraded its earning guidance for FY14E from 9-10% to 11.5-12%. Thisidnace means the company only has to achieve flat growth in the fourth quarter to

eet the projection.


s in Cr, FY10 FY11 FY12 FY13 FY14E FY15Eales, INR 22742 27501 33734 40352 50330 59631mployee Cost 12085 14856 18340 22565 28185 33691ther expenses 2792 3677 4671 6254 8556 10734otal Expenses 14877 18533 23011 28819 36741 44425BITDA 7865 8968 10723 11533 13589 15206epreciation 905 854 928 1099 1371 1624ther Income 982 1211 1904 2365 2567 3578BIT 7942 9325 11699 12799 14785 17160nterest Cost 0 0 0 0 0 0BT 7942 9325 11699 12799 14785 17160ax 1681 2490 3367 3370 3992 4633AT 6261 6835 8332 9429 10793 12527rowth-%ales 4.8% 20.9% 22.7% 19.6% 24.7% 18.5%BITDA 9.3% 14.0% 19.6% 7.6% 17.8% 11.9%AT 4.6% 9.2% 21.9% 13.2% 14.5% 16.1%

Margin -%BITDA 34.6% 32.6% 31.8% 28.6% 27.0% 25.5%BIT 34.9% 33.9% 34.7% 31.7% 29.4% 28.8%AT 27.5% 24.9% 24.7% 23.4% 21.4% 21.0%xpenses on Sales-%mployee Cost 53.1% 54.0% 54.4% 55.9% 56.0% 56.5%ther expenses 12.3% 13.4% 13.8% 15.5% 17.0% 18.0%ax rate 21.2% 26.7% 28.8% 26.3% 27.0% 27.0%aluationMP 2615 2765 2865 2400 3549 3549

o of Share 57.4 57.4 57.4 57.4 57.4 57.4W 23049.0 25976.0 31332.0 37994.0 45629.8 54797.5PS 109.1 119.0 145.1 164.2 188.0 218.2VPS 401.7 452.4 545.6 661.7 794.7 954.3oE-% 27.2% 26.3% 26.6% 24.8% 23.7% 22.9%ividen Payout ratio 25.1% 45.9% 24.0% 45.1% 23.0% 19.8%/BV 6.5 6.1 5.3 3.6 4.5 3.7/E 24.0 23.2 19.7 14.6 18.9 16.3


6/26

INDUSIND BANK

402

428-6-

1M 1yr YTDbsolute -9.2 -6.9 -6.9el.to Nifty -7.0 -9.7 -9.7

Current 24QFY1 3QFY1omoters 15.2 15.2 15.3I 41.1 39.9 42.3

I 7.2 7.4 7.0hers 36.4 37.5 35.4

Financials Rs, Cr 2011 2012 2013 2014E 2015E

NII 1376 1704 2233 2787 4053Total Income 2090 2716 3596 4562 5827PPP 1082 1373 1839 2452 2972Net Profit 577 803 1061 1320 1633EPS 12.4 17.2 20.3 25.3 31.1

arket Data

Asset quality witnessed deterioration in sequential basisDuring quarter bank witnessed deterioration in asset quality with GNPA and net NPAin absolute term deteriorated by 14.7% QoQ and 51% QoQ respectively. Freshslippages were 1.4% (annualized) as against 1.1% in last quarter. Bank made lower provisions against loan loss, as the result net NPA as the percentage of net loanreached to 0.3% as against 0.2% in 2QFY14. Provision coverage ratio (withouttechnical write off) declined to 73.6% from 80% in 2QFY14 but still above of regulatory requirement of 70%.


rget Price

ock Performance

wk Range H/L 561/318

SE Code 532187SE Symbol

MP

Operating leverage (Operating expenses to total asset) remained at elevated levelbut cost to income ratio declined on both front i.e. on sequential and yearly basis aswell. During quarter bank reported employee cost growth of 22% and operating costgrowth of 22% YoY to Rs.206 cr and Rs.563 cr respectively. Cost to income ratioimproved by 80 bps sequentially and 280 bps yearly to 46.5%. This led preprovisioning profit growth of 37% YoY.

INDUSINDBK

verage Daily Volume22400

evious Target Price

kt Capital (Rs Cr)


Despite of higher profi t we remain have neutral view on the s toc k ow ing to

shif t in g of loan mix from retai l loan to cor porate bankin g. We ant icipate two

thing s-(a) margi n com press ion, (b) higher s l ipp age. Retai l loan general ly have high er yield in nature than corp orate loans. Corpo rate loan has big t ick et s ize

loans and in s lowdown of economy, corpora te loan emerges as b igges t

s l ip page r isk than other loans . At the curr ent pr ice of Rs.405, s toc k is t rading

at 2.4 tim es of one year forw ard boo k. We valu e ban k at Rs.428/share wh ich would be 2.5 times of FY14Es book value.

Better than expected earnings led by higher loan growth and margin

esult update

pside

During quarter Indusind bank reported better than expected earnings largely due tohigher loan growth and margin expansion. In 3QF14, bank reported NII growth of 26.4% YoY supported higher yield on asset to 13.7% and margin expansion of 20

bps YoY. Other income grew by 35% YoY to Rs. 480 cr in which fee incomeregistered growth of 30% and trading, forex and other reported 101% growth in YoYdue to low base.

Declined cost to income ratio boost PPP growth

NEUTRAL

hange from Previous( Rs)

DUSIND Bank Vs Nifty


7.88

fty 6171

"NEUTRAL"13th Jan, 2014



7/26

oderate deposits growth due to muted current and term deposits growthbalance sheet front, bank reported moderate growth 10% YoY in deposits largely duestagnant growth in current account and term deposits. Demand deposits grew by 4%

oY whereas saving deposits grew by 50% YoY. As a percentage of total depositsmand deposits and saving deport were 15.7% and 16.5% versus 16.6% and 12.1% in

QFY13 respectively. CASA ratio was remained flat at 29.6% from 31.4% in 2QFY14 and.7% in 3QFY13. Term deposited reported growth of 4.7% YoY to Rs.382 bn.

an growth higher than industry average and shifting of loan mixoan reported 27.4% YoY growth above industry average of 20% despite of slowdown inonomy. During quarter bank witnessed shifting of loan composition from consumer

nance division to corporate finance which would be result of margin compression and

terioration asset quality. Consumer loan (which is generally high yielding in nature)mposition has changed to 47% of loan advance from 52% in 3QFY13 whereasrporate banking division constitute 53% of loan. Corporate loans are generally in highket size and in slowdown of economy; there is high chances of such loan slip into NPA.

ut this quarter we note that bank is able to improve it yield in both front. Corporate yieldmproved to 11.9% from 11.5% and retail loan improved to 15.6% from 15.5% in

quential basis.

INDUSIND BANK


tter than expected profit on the back of healthy core earnings, lower CI ratio andwer provision

With the support of healthy core earnings, improvement in cost income ratio and lower

ovisions, net profit grew by 30% YoY to Rs. 347 cr as against our expectation of

.303 cr largely due to higher than expected loan growth and operating leverage.

ealthy profit led ROA and ROE to 1.74% and 16.8% respectively.

argin expansion of 10 bps YoY to 3.7%ank reported NIM expansion of 20 bps YoY to 3.7% largely due to improvement in loaneld whereas cost of deposits remained flat. Going forward margin would bempressed due to banks strategy to shift loan mix from consumer to corporate. Loan oneld during quarter was 13.7% versus 13.5% in last quarter while cost of fund by andge stable at 10%.



8/26

ndamenatl Through Graph

INDUSIND BANK

Source: Eastwind/Company


NII profit led by higher loan growth andmargin expansion

Sequentail and yearly improvement of CIratio boosted PPP

Higher core earnings, improvement in CI ratioand lower provisions support profit growthhigher than expecattion



9/26

INDUSIND BANK

ndamenatl Through Graph


luation Band (1yr forward book value)

Loan growth higher than industry average

and moderate growth in deposits led bymuted current deposits and term deposits

Margin expansion of 10 bps on account of

increased in loan yiled and stable cost of fund

Trading at 1.5 times of one year forwardbook which we believe fair looking at indsuryheadwinds and economy




10/26


INDUSIND BANK

uarterly Performance



uarterly Result( Rs. Cr) 3QFY14 2QFY14 3QFY13 % YoY % QoQ terest/discount on advances / bills 1739 1611 1455 19.5 7.9come on investments 368 365 325 13.5 0.8terest on balances with Reserve Bank of India 36 42 21 71.9 -12.9hers 0 0 0 333.3 -13.3

otal Interest Income 2143 2019 1800 19.1 6.2hers Income 480 417 356 35.0 15.2

otal Income 2624 2435 2156 21.7 7.7 terest Expended 1413 1319 1223 15.6 7.2II 730 700 578 26.4 4.3her Income 480 417 356 35.0 15.2

otal Income 1210 1117 934 29.6 8.4mployee 206 202 168 22.1 1.9

her Expenses 357 327 293 21.9 9.3perating Expenses 563 529 461 22.0 6.5PP( Rs Cr) 647 588 472 37.1 10.1ovisions 126 89 79 60.3 42.0

BT 521 499 393 32.5 4.4ax 174 169 126 38.1 3.2et Profit 347 330 267 29.8 5.0

alance Sheet data( Rs. Bn)et Worth 8664 8313 7495 15.6 4.2eposits 56247 53058 51098 10.1 6.0orrowings 14771 13995 6567 124.9 5.5otal Liabilities 81799 77422 67896 20.5 5.7 vestments 20134 19413 17594 14.4 3.7 dvances 52469 48968 42426 23.7 7.1otal Assets 81799 77422 67896 20.5 5.7

sset QualityNPA 626 546 422 48.3 14.7 PA 165 109 125 32.0 51.0

GNPA 1.2 1.1 1.0

NPA 0.3 0.2 0.3


11/26

INDUSIND BANK

nancials & Assuptions




come Statement 2011 2012 2013 2014E 2015erest Income 3589 5359 6983 8308 10419erest Expense 2213 3655 4750 5521 6367

I 1376 1704 2233 2787 4053hange (%)on Interest Income 714 1012 1363 1775 1775tal Income 2090 2716 3596 4562 5827

hange (%)perating Expenses 1008 1343 1756 2110 2855e Provision Profits 1082 1373 1839 2452 2972hange (%)ovisions 504 180 263 455 535

BT 577 1193 1576 1997 2437AT 577 803 1061 1320 1633hange (%)

alance Sheet 2011 2012 2013 2014E 2015Eeposits( Rs Cr) 34365 42362 54117 62234 74681hange (%) 23 28 15 20

which CASA Dep 9331 11563 15867 20537 22404hange (%) 24 37 29 9orrowings( Rs Cr) 5525 8682 9460 15559 18670vestments( Rs Cr) 13551 14572 19654 23338 28005ans( Rs Cr) 26166 35064 44321 54071 67589

hange (%) 34 26 22 25

atio 2011 2012 2013 2014E 2015Evg. Yield on loans 10.8 12.0 12.7 0.0 12.5vg. Yield on Investments 5.4 7.4 6.5 6.6 6.5vg. Cost of Deposit 5.3 7.3 8.8 8.9 8.5vg. Cost of Borrowimgs 7.0 6.7 7.6 7.5 7.5

aluation 2011 2012 2013 2014E 2015Eook Value 87 101 146 171 195MP 264 321 405 405 405BV 3.0 3.2 2.8 2.4 2.1


12/26


Asset quality pressure continue to persist Asset quality pressure is likely to remain in 3QFY14E due to rising interest rate, highinflation and slower pace of economic growth. Gross slippages are expected to beelevated as per most of banker. We expect restructure asset in private sector bankwould be less as compare to PSBs. With the implementation of FRP (route throughwhich loans lead to investment book), banks are expected to report lower lessrestructure asset as against previous queerer. In worsen macroeconomicenvironment, we expect asset quality to remain at the level of 2QFY14.

Private Bank Result Preview 3QFY14

Revenue growth would be moderate owing to tepid loan growthPerformance of banking sector is likely to remain modest in 3QFY14E as most of private sector banks in our coverage are expected to reported muted net interestincome owing to tepid loan growth and stress in asset quality. However private sector banks are expected to report stable asset quality on sequential basis as compare toPSBs. Loan loss provision are expected to remain high due to higher restructureassets are in pipeline as per some of key bank management. We expect impairmentof asset in private sector banks are less and slippages are expected to remain sameas in 2QFY14. We expect NII to grow by 23.6% YoY in our private bankingcoverage universe. HDFC Bank and DCB are expected to report 34% and 22% YoYin 3QFY14E led by higher than industry loan growth and stable NIM.

Operating leverage high provision dent net profitProfitability of private sector banks are expected to report 11% YoY on the back of loan loss provisions, MTM provisions, cost income ratio and lower core earnings.

HDFC bank and DCB are expected to report 23% YoY and 26% YoY growth in their 3QFY14E while most of large and mid cap banks are expected to report muted profitgrowth. With the flow of FCNR deposits, we expect deposits cost to come down frompresent level but most likely the bank get benefit from 4QFY14 and onwards.

ck Performance During Quarter

fty Vs Bank Nifty during Quarter

oan (Rs tn) and YoY Gr(%)

Muted loan growth reported by systemIn 2QFY14 banking industry experience loan growth of 18% YoY led by transfer of CP/CD borrowings to bank loans while in 3QFY14 loan growth has moderated to15% YoY (as on 13th Dec.2013) due to revival of bond and lower demand of corporate loan led by slowdown in economy. We expect loan growth of 15-20% YoYgrowth in private sector while DCB and HDFC bank are expected to grow by

20%+YoY loan growth.

Deposits growth lead by flow of FCNR depositsDeposits growth in the system registered 17% YoY growth as per RBI date (as on13th Dec.2013) due to flow of FCNR deposits through RBIs special concessionwindow. As per RBI data total fund inflow through FCNR is the tune of US$ 26 bnwhich would help bank to keep cost of deposits low. But we expect bank would getbenefit from 4QFY14 and onwards. We expect lower cost of deposits of deposits inprivate sector banks largely due to strong franchise base network. HDFC bank andICICI bank which have CASA of 40%+ would be benefited more than other banks interm of low cost of fund. Through FCNR deposits we expect Yes Bank would be

leader but actual benefit would come from next quarter.



13/26

oadly banking indices outperform Nifty by 6% in third quarter and most of bankingocks are trading at attractive valuation. Despite of, we have caution view on account of owdown in economy, high interest rate and inflationary pressure. High inflation would be

k for the economy going forward. Any rise in inflation would result of rise in interestte by RBI in its third quarter monetary policy review on 28th Jan.2014 which would begative for banking industry. Most of banking stocks are expected to report moderatevenue and profit growth owing to multiple headwinds. In private sector bankingiverse we like HDFC Bank, ICICI bank and DCB.

xis Bank



utlook

We expect Axis Bank to report 20% YoY loan growth and 12% YoY deposits growth.ost Income ratio is expected to be 42% while loan loss provision was remain same atquential basis. Profitability of bank would be muted on account of non improvement of an yield.

CB

e expect loan and deposits growth of DCB would be higher than industry average.ofitability would be grown on account of stable asset quality. We expect Cost to Incometio at 66% and NIM are expected to compression by >10 bps on sequential basis. Keyonitor able would be CI ratio.

DFC Bank

e expect bank to report loan and deposits growth of 21% and 14% respectively. Assetality would be remained under control and profitability are expected to grow on accountcomfortable core earnings and stable asset quality. Operating leverage is expected toin better position.


Cr 3QFY14E 2QFY14 3QFY13 % YoY Growth % QoQ GrowthI 3006 2937 2495 20.5 2.3

PP 2772 2750 2311 19.9 0.8

et Profit 1333 1362 1296 2.9 -2.1

xis Bank

Cr 3QFY14E 2QFY14 3QFY13 % YoY Growth % QoQ GrowthI 88 91 72 22.2 -3.3

PP 42 40 32 31.3 5.0

et Profit 34 33 27 25.9 3.0

CB

Cr 3QFY14E 2QFY14 3QFY13 % YoY Growth % QoQ GrowthI 5087 4477 3799 33.9 13.6

PP 3695 3387 3024 22.2 9.1

et Profit 2289 1982 1859 23.1 15.5

DFC Bank


14/26

ES Bank

e expect Yes bank to report muted earnings on account of high credit cost andstructure assets. Loan growth and deposits growth are expected to be line with industryerage. We expect NIM compression on account higher cost of fund and lower loaneld. NIM is key monitorable for the quarter.esult Preview ; at a glance



ICI BANK

e expect loan and deposits growth of 15% and 11% YoY for 3QFY14E respectively.evenue growth was due to hike of lending rate and asset quality is expected to beable on sequential basis. Operating leverage and cost of fund would be keyonitorable.

&K BANK

&K bank is expected to report 17.5% YoY profit growth on account of 20%+loan growthd stable asset quality. We expect little bit higher of gross slippage during the quarter asnk reported higher slippage in previous quarter. NIM would be expanded


15/26

GAIL

1M 1yr YTDbsolute 0.6 -5.6 -5.0l. to Nifty 1.7 -8.7 -20.0

Current 1QFY14 4QFY13omoters 57.3 57.3 57.3I 17 16.7 16.3I 21.6 22 22.2

hers 3.9 3.9 4


Revenue 13944.6 12855.6 8.5 11361.2 22.7EBITDA 1405.5 1136.7 23.6 1380.3 1.8PAT 915.7 606.5 51.0 985.4 -7.1EBITDA Margin 10.1% 8.8% 120bps 12.1% (200bps)PAT Margin 6.6% 4.7% 180bps 8.7% (210bps)

15

yr Price Movement Vs Nifty

Rs, Crore



44,047verage Daily Volume 399457


Ministry of Petroleum and Natural gas has capped subsidy burden of Gail (India) at Rs1400 Cr for FY'14.

Capex incurred during H1FY'13 was Rs 2525 Cr as Rs 1500 Cr on Petrochemical, Rs400 Cr on pipeline expansion, Rs 270 Cr on E&P and Rs 360 Cr towards equity

contribution.

The company has commissioned Kochi pipeline on 25th August 2013.Company has shared Rs 698.68 Cr towards LPG subsidy in the quarter endedSeptember 2013 compared to Rs 785.67 Cr in the corresponding previous year period.

The LPG transmission was 1,428 TMT. The Natural Gas transmission was 97.25MMSCMD, against 107.72 MMSCMD. The Natural Gas stood at 80.33 MMSCMD in1HFY14 as against 81.92 MMSCMD in 1HFY3.

Highlights of Conference Call:

During 1HFY14, Petrochemical Production was 231 TMT, up by 20 % YoY it was 193TMT in 1HFY13.The Petrochemical Sales were 229 TMT, up by 37 % against 167 TMT inthe corresponding period in the previous year. The LPG and Other Liquid Hydrocarbonproduction were 685 TMT, against 684 TMT in 1HFY13.

MP 348rget Price

About The Company

hange from Previous

6168

kt Cap (Rs Crores)

ompany Update Neutral

pside

1HFY14 Production Highlights :

1HFY14 Financial Highlights :

fty

GAIL (India) Limited is a gas utility company. The Company is engaged in transportthrough pipeline; manufacture of basic chemicals, fertilizer and nitrogen compounds,

plastics and synthetic rubber in primary forms; extraction of crude petroleum; extraction of natural gas and electric power generation, transmission and distribution. The companyoperates in five segments viz Gas Transmission Business ,LPG Transmission Business,Gas Trading Business, Petrochemical Business and LPG and Liquid HydrocarbonBusiness.

Company registered a turnover of Rs. 26902.25 Cr, up by 19% in H1FY14 compared tocorresponding previous year period. There was fall of 10% in operating profits of thecompany to Rs 2971.72 Cr for H1FY14. The Other income was down 8% to Rs 279.6 Cr while Interest cost grew 99% to Rs 169.36 Cr, The net profits for H1FY14 was Rs1723.84 Cr down by 19 %in comparison to 2HFY13.

The company during the first half of the current financial year, earned the revenues of Rs.

23,437 Cr from Natural Gas Trading up 24% YoY as compared to corresponding periodof the last year. The revenues from Natural Gas Transmission increased by 9% YoY toRs. 2,066 Cr for H1FY14. The net sales from LPG and Liquid Hydrocarbons businessincreased by 11% YoY to Rs. 2,043 Cr as against Rs. 1,842 Cr for the same period of last year. The net sales from Petrochemicals business increased by 54% to Rs 2,237 Cr for 1HFY14. The revenues from LPG transmission increased by 72% to Rs. 189 Cr in1HFY14.

arket DataSE Code 532155SE Symbol GAILwk Range H/L 395/273

evious Target Price

ock Performance

"NEUTRAL"10th Jan' 14



16/26


ar-term gas supply visibility which may lead to under-utilization of new pipelines

e stock is currently trading at Rs 346 and business outlook going forward ,managementidance does not provide us with much convincing thought .We donot see much upsidesached with the stock in current business scenario. We therefore recommend NEUTRALew on the stock.

ontinuedProjected Capex for FY'14 is Rs 5000 Cr and Rs 3500 Cr in FY'15.

GAIL has shared Rs 698.68 Cr towards LPG subsidy in the quarter ended September 2013mpared to Rs 785.67 crore in the corresponding previous year period

cent EventsAIL management indicated that, MoPNG has in-principle agreed to provisionally cap GAILsY14 subsidy at INR14b, implying 2HFY14 subsidy to be nil. As per our view the final decisionll be post Finance Ministry consent.

ncertainty on under recovery sharingsk & Concern


aphical DipictionQFY14 SEGMENTAL SALES TURNOVER

The company has borrowed Rs 585 Cr during Q2FY'14.Total borrowings stood at Rs 10632 Cr at the end of September 2013 quarter-out of which% loan is foreign currency loan. Almost 90% of foreign currency loan is financially or turally hedged.

The company anticipates increase in gas availability in near future. It expects around 20-25mscmd of gas over a period of 3-4 years including 11-12 mmscmd of gas from domesticurces and 10-15 mmscmd from LNG.

ew and Valuation :

GAIL



17/26


BITDA & OPM%


GAILALES TREND

Sales increased by 22% YoY driven by higherrevenues from the natural gastrading and petrochemical segments

Higher Depcreciation owing to capitalizationof assets with respect to newpipelines and higher interest cost resulted ina NPM decline

(Source: Company/Eastwind)dj PAT & NPM %




18/26

CMC

1M 1yr YTDsolute 15.0 29.2 40.0l. to Nifty 15.4 24.6 35.8


23.32 21.84 19.87I 17.83 19.05 20.46hers 7.73 7.99 8.55


Revenue 560.75 486.61 15.2 458.64 22.3EBITDA 88.41 77.04 14.8 76.59 15.4PAT 67.3 53.12 26.7 49.4 36.2EBITDA Margin 15.8% 15.8% - 16.7% (90bps)PAT Margin 12.0% 10.9% 110bps 10.8% (120bps)

wk Range H/L 1780/1107

Healthy Deal pipeline: The deal pipeline is in line with the last year. It indicated thatpursuing good number of deals in the Developed and as well emerging markets.Considering current sound demand environment across geographies (like US andEurope) and verticals Company is more optimistic for clients acquisition and dealexecutions ahead.


We believe, CMC will continue with its efforts to enhance revenue contribution of highmargin System Integration (SI) and ITES segments. Further, its high focus on educationspace will also add margin in near term. Considering recent healthy demand environment across the IT space with favorable supply side scenario, we remainconfident on the stock for better earning visibility and stable margin picture.

Key things to watch: Outlook for deal pipeline, updates on SMAC(social, mobility,analytics, cloud) and guidance on forward looking statement.

E Code 517326E Symbol CMC

erage Daily Volume 20884

year forward P/E

Rs, Cro



Now, CMC is focusing on new emerging segments like IMS (InfrastructureManagement Services), Cloud, Big data, Mobility and Analytics. Considering its

impressive client as well as market response, company is expecting to quantify intorevenue. Its new and emerging projects like Mining Management System, GPS Systemand Port & Cargo Management System would play a major role for generatingrevenue.View and Valuation: View and Valuation: CMC expects the growth momentum toimprove in the quarters ahead and the revenue growth to be higher than the NASSCOMguidance in FY14. The Company remains a strong with excellent earning visibility led by joint effort of market strategy by TCS (contributes 59% of sales) in its product andsolutions. Considering the companys premium valuation, we advice Book Profitthe stock. At a CMP of Rs 1657, stock trades at 16.3x FY14E earnings. Our view couldbe change with management guidance and post earnings of coming quarter.

"On track to deliver"


We had initiated this stock at a CMP of Rs 1208 (5th June 2013) and now, it achieved its target of Rs1690, we advice to book profit on the stock because of its premiumvaluation at current price. However, sentiment could take a knock in the short run,since investors may prefer paying a premium for stock with better earnings visibility.1729

side -

For 3QFY14E, we expect to see 2-1.5% (QoQ) sales growth in USD term and 1-1.5%(QoQ) in INR term, PAT is expected to decline by 2-3% (QoQ) led by a marginal growth in

the forex loss. We expect 50-100bps improvement in EBITDA margin to 15.5-16%,sequentially.

kt Capital (Rs Crores)

ompany update Book Profit

gh Price (08.01.2014)

arket Data

ock Performance

ange from Previous -

fty 6175

5020

"Book Profit"9th Jan, 2014



19/26

CMC



nancials;

ating and Price Target Chart Updation Detail



Date Update Detail CMP View Ta5-Jun-13 Initiation 1208 BUY 4-Jul-13 Company Update 1315 BUY 18-Jul-13 Result Update 1318 BUY 21-Oct-13 Result Update 1334 BUY 20-Dec-13 Company Update 1510 BUY 9-Jan-14 Company Update 1729Profit Booking 1690

, Cr FY10 FY11 FY12 FY13 FY14E FY15Eet Sales 870.73 1084.40 1469.34 1927.87 2239.31 2600.41rchases of stock-in-trade 99.35 99.28 145.40 188.56 201.54 234.04

mployee Cost 276.16 345.13 440.22 521.65 593.42 702.11bcontracting and outsourcing cost 173.56 262.35 446.11 679.73 794.96 923.15her expenses 159.94 170.17 213.63 222.88 235.13 273.04tal Expenses 709.01 876.93 1245.36 1612.82 1825.04 2132.34

BITDA 161.72 207.47 223.98 315.05 414.27 468.07epreciation 9.85 10.46 21.37 23.20 41.95 60.69her Income 18.75 11.80 17.46 13.17 22.39 26.00

BIT 151.87 197.01 202.61 291.85 372.33 407.38terest Cost 3.17 0.22 0.02 0.18 0.2 0.25

BT 167.45 208.59 220.05 304.84 394.52 433.14x 24.23 32.42 68.59 76.76 86.79 99.62

AT 143.22 176.17 151.46 228.08 307.73 333.52owth-%les -7.4% 24.5% 35.5% 31.2% 16.2% 16.1%

BITDA 27.7% 28.3% 8.0% 40.7% 31.5% 13.0%AT 23.3% 23.0% -14.0% 50.6% 34.9% 8.4%argin -%

BITDA 18.6% 19.1% 15.2% 16.3% 18.5% 18.0%BIT 17.4% 18.2% 13.8% 15.1% 16.6% 15.7%AT 16.4% 16.2% 10.3% 11.8% 13.7% 12.8%xpenses on Sales-%mployee Cost 31.7% 31.8% 30.0% 27.1% 26.5% 27.0%bcontracting Cost 19.9% 24.2% 30.4% 35.3% 35.5% 35.5%x rate 14.5% 15.5% 31.2% 25.2% 22.0% 23.0%luation

MP 1340.0 2079.6 994.8 1410.0 1657 1657o of Share 1.50 1.50 3.00 3.03 3.03 3.03W 510.68 654.02 772.19 946.26 1192.11 1454.91PS 95.48 117.45 50.49 75.27 101.56 110.07VPS 340.45 436.01 257.40 312.30 393.44 480.17oE-% 28.0% 26.9% 19.6% 24.1% 25.8% 22.9%viden Payout ratio 18.6% 19.9% 23.2% 19.4% 20.1% 21.2%BV 3.94 4.77 3.86 4.51 4.21 2.78E 14.03 17.71 19.70 18.73 16.32 15.05


20/26

KPIT Tech.

1M 1yr YTDsolute 24.7 64 57.2l. to Nifty 25.5 61.1 54


36.42 32.79 30.8I 11.12 10.93 11.8

hers 29.59 32.03 33.1


Revenue 702.76 613.21 14.6 567.02 23.9EBITDA 108.1 96.6 11.9 94.1 14.9PAT 66.7 60.1 11.0 48 39.0EBITDA Margin 15.4% 15.8% (40bps) 16.6% (120bpsPAT Margin 9.5% 9.8% (30bps) 8.5% (100bps

are Holding Pattern-% Close to Revolo launch and working on cloud based IB tool: The unit has been in theprocess of conducting trials in 40 vehicles. As per the management, by next year it couldbe a part of revenue. It is also working on cloud based BI tools as well as Analytics toolfor opportunities in warranty management.

6162

For 3QFY14E, we expect to see 4% (QoQ) sales growth in USD term and 2.7% (QoQ) inINR term, PAT is expected to grow by 3-4% (QoQ) led by a marginal growth in the forex.We expect 50-100bps improvement in EBITDA margin to 16-16.5%, sequentially.

Key things to watch: Outlook of deal pipeline, Updates on SAP and Revolo, andacquisition plan.

ock Performance

erage Daily Volume 144511fty

532400E Symbol

arket Data

KPIT

3445kt Capital (Rs Crores)

"On billion dollar journey"


ompany update Book Profit We had initiated this stock at a CMP of Rs 115 (14 Jan 2013) and now, it achieved itstarget of Rs 177. Despite better expectation of growth and attractive visibility of itsexpansion through inorganic initiative and focus into emerging verticals, we advice tobook profit on the stock because of its premium valuation. However, sentiment couldtake a knock in the short run, since investors may prefer paying a premium for stockwith better earnings visibility.

evious Target Price -

sideange from Previous -

The company expects better earnings, confident of generating a positive cash flow forFY14E, after considering the balance payments for existing M&A deals.KPIT s Management is confident to report USD Revenue for FY14 to be in the range of USD 465 Mn to USD 475 Mn, and INR PAT for FY14 to be in the range of INR 2,309 Mn toINR 2,388 Mn. They expect better H2FY14E than H1FY14E. KPIT expects to close somemore deals in next quarter, which will again drive growth and expects the companygrowth to be stronger in the 2H FY14E.

-

ice Performance

Rs, Cro



Robust pipeline of large deals: During the quarter, company closed 2 larges deals in

excess of USD 10 mn 1 in Europe and 1 in the US and have created a robust pipeline of larger deals. We expect this large set of deals would reveal stronger 2HFY14performance with judicious mix of volume and value growth.

We expect KPIT to grow its revenues at a CAGR of 24% over FY12-14E.Considering thecompanys premium valuation, we advice Book Profit on the stock. At a CMP of Rs

180, stock trades at 13.8x FY14E earnings. Our view could be change withmanagement guidance and post earnings of coming quarter.

View and Valuation: Despite all previous ups and down in IT sector, global demandenvironment is on the way of recovery and growth. Impressive organic growth despiteinorganic thrust (acquired 10 companies in the last 10 yrs), Potential option value fromsuccess of its hybrid engine venture Revolo (on trial) . KPIT has targeted to reach USD1billion in revenues by 2017.

wk Range H/L 186/92

E Code

"Book Profit"7th Jan' 14



21/26


nancials


ating and Price Target Chart Updation Detail

KPIT Tech


Date Update Detail CMP View Ta14-Jan-13 Initiation 115 BUY 29-Jan-13 Result Update 116 BUY

3-May-13 Result Update 106 BUY 5-Jul-13 Company Update 120 BUY 25-Jul-13 Result Update 132 BUY 13-Sep-13 Company Update 147 BUY 24-Oct-13 Result Update 144 BUY 22-Nov-13 Company Update 146 BUY 8-Jan-14 Company Update 180Profit Booking 1

, Cr FY10 FY11 FY12 FY13 FY14E FY15Eet Sales-USD 153.76 224.07 306.71 410.46 465.00 558.00et Sales 731.64 987.05 1500.00 2238.63 2790.00 3320.10mployee Cost 265.92 529.95 771.78 1140.79 1422.90 1726.45

her expenses 304.70 308.82 511.97 762.32 906.75 1095.63tal Expenses 570.62 838.77 1283.75 1903.11 2329.65 2822.09

BITDA 161.02 148.28 216.25 335.52 460.35 498.02epreciation 30.80 41.12 44.49 47.16 62.58 88.34her Income 1.20 6.74 13.82 11.74 13.95 16.60tra Ordinery Items -26.45 0.00 10.05 -1.30 -45.17 16.60

BIT 130.22 107.16 171.76 288.36 397.77 409.68erest Cost 2.74 3.78 7.32 13.99 21.37 18.61

BT 102.23 110.12 188.31 284.81 345.17 424.28x 16.91 15.49 43.67 76.55 93.20 116.68

AT 85.32 94.63 144.64 208.26 251.98 307.60AT (excluding EO Items) 111.77 94.63 134.59 209.56 297.15 291.00owth-%

les -7.8% 34.9% 52.0% 49.2% 24.6% 19.0%BITDA -12.2% -7.9% 45.8% 55.2% 37.2% 8.2%AT 129.4% 10.9% 52.8% 44.0% 21.0% 22.1%argin -%

BITDA 22.0% 15.0% 14.4% 15.0% 16.5% 15.0%BIT 17.8% 10.9% 11.5% 12.9% 14.3% 12.3%AT 11.7% 9.6% 9.6% 9.3% 9.0% 9.3%

penses on Sales-%mployee Cost 36.3% 53.7% 51.5% 51.0% 51.0% 52.0%bcontracting Cost 20.8% 14.5% 17.2% 0.0% 0.0% 0.0%x rate 16.5% 14.1% 23.2% 26.9% 27.0% 27.5%luation

MP 115.00 168.05 122.90 99 180 180o of Share 7.90 8.70 17.80 19.28 19.28 19.28W 387.11 603.19 712.55 1036.23 1272.42 1557.46S 10.80 10.88 8.13 10.80 13.07 15.95

VPS 49.00 69.33 40.03 53.75 66.00 80.78oE-% 22.0% 15.7% 20.3% 20.1% 19.8% 19.8%viden Payout ratio 6.4% 6.8% 4.9% 7.9% 6.3% 7.3%BV 2.35 2.42 3.07 1.84 2.73 2.23E 10.65 15.45 15.12 9.17 13.77 11.28


22/26

IT Industry: 3QFY14E results preview

Key facts of 3QFY14E earnings:Seasonal Impacts on (QoQ) earnings, while better on YoY:

Stable Margin and flat currency movement:

New discretionary spending:

Management commentary and forward looking statement:

6.9%

"As usual flattish 3rd quarter"


(Source: Eastwind)

Because of better economic scenario, demand environment expansion has taken place.Now, domestic IT players have been able to retain its market share in US and successfullyimproved its market share in Euro region, at a same point pricing pressure has turned out.During the quarter, most of multimillion-dollar projects have been bagged from Euroregion. During the current fiscal, out of 27 large projects 11 orders deputed from Euro(including UK) region and only 3 from US.

Post revealing 3QFY14E earnings, street will closely watch on the response of its clientsbudgeting cycle to assess the strength of the demand environment and its sustainability.Most of companies will comment on earning guidance, margin outlook and order pipelinefor FY15E. Taking recent attractive supply side scenario, we would like to see hiringguidance and commentary on maintaining utilization rate and attrition rate.

NX IT v/s USD/INR

(Source: Eastwind)


For 3QFY14E, Indian IT players would report muted earnings growth because of seasonalweakness like furloughs and holidays impacts, already it is understood fact byconsensus. However, this quarter would report better earning and margin growth than

same quarters of last year. Because of stable currency movement, margin could be seenflattish or marginally inched up.

ice performance of our coverage:

dex Performance:

Movement of INR-USD and Other Currencies v/s USD

(Source: Eastwind)

Post result, earning guidance for FY15E and forward looking statement by most of companies would be considered as an important fact. Considering recent demandenvironment scenario and healthy growth outlook of US and Europe, we are expectingto see positive outlook on the sector for the year 2014.

For 3QFY14E, we expect to see lower rate of earning growth impacted by furloughs andholidays, already YoY growth would be a favorable. The December quarter hastraditionally been a soft quarter for the IT sector. On USD term, revenue of top-4 ITplayers could be reported at a range of 2-3.3% sequentially. We expect Tier-1 IT to reportconstant-currency revenue growth of 1.4-3% (QoQ).

During the quarter, margin for IT Industry will largely be flattish or see marginal decline onsequential basis. Across the tier-1 IT players, Infosys could improve its margin because of cost rationalization and slow pace of currency benefit TCS will maintain its previousquarters margin picture. While, margin of HCLTech and Mindtree could see some dipbecause of wage hike during the quarter.


1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3Q

Average 44.65 45.73 50.84 50.29 54.09 55.19 54.14 54.17 55.93 62.08 61.97Closing 44.59 48.86 53.08 51.4 56.8 52.85 54.97 54.28 59.54 62.59 61.84

Average 1.41 1.4 1.35 1.31 1.28 1.25 1.3 1.32 1.31 1.33 1.36Closing 1.45 1.36 1.3 1.33 1.26 1.29 132 1.28 1.3 1.35 1.38

Average 1.62 1.61 1.57 1.57 1.57 1.58 1.61 1.55 1.54 1.55 1.61Closing 1.61 1.57 1.55 160 1.56 1.62 1.62 1.52 1.51 1.6 1.66

Average 1.06 1.05 1.01 1.05 1.01 1.04 1.03 1.04 0.99 0.92 0.93Closing 1.07 0.99 1.02 1.03 1.02 1.04 1.03 1.04 0.91 0.93 0.89

INR/USD

EUR - USD

GBP-USD

AUD-USD

59.5%

6.9%

13%

59.5%


23/26


Results preview

Forex loss as a hedging will reduce the net income growth.

We expect revenue growth of 2.2% in USD term for3rd qtr FY14E, sequentially.



We expect company is likely to report 3.5% (QoQ) revenue growth in USD term. On aconstant currency basis, the growth will be 3% QoQ.Margins are likely to decline marginally because of Flattish currency movement

ey things to watch - Comments onlume, demand environment, deal

osures from US, pricing, and scretionary spends.

Margin is expected to remain stable and benefits from cost optimisation initiatives are

offset by the negative impact of the rupee appreciation by 1.2% during the quarter.

We expect Infosys to increase their FY2014 guidance to at least 12% from 9-10% earlieThe company needs a quarterly run rate of average 2% for the next two quarters toachieve 12% for FY14E.

reet would like to see some upadation in given revenue guidanceom 9-10% to 12% for FY14E.

The company had guided a strong 3QFY14 USD revenue growth guidance of 1.8-3.6% QoQ for IT services .We expect IT services revenue growth to be closer to the higher end of thisrange and to be 3% QoQ in USD terms.The large deals won in the previous quarter are ramping up as expected and companycould reveal its orders pipeline.

Key things to watch 4th quartervenue guidance, margin commentary,visibility of growth/hiring in software

services.


TCSRs, Cr 3QFY13 2QFY14 3QFY14E (QoQ)-% (YoY)-%

Sales 16069.93 20977.24 21606.56 3.0% 34.5%EBITDA 4660.49 6632.95 6300.3 -5.0% 35.2%PAT 3549.6 4633.33 5096.66 10.0% 43.6%EBITDA Margin 29.0% 31.6% 31.0% (60bps) 200bpsPAT Margin 22.1% 22.1% 23.6% 150bps 150bps

WIPRORs, Cr 3QFY13 2QFY14 3QFY14E (QoQ)-% (YoY)-%Sales 9587.5 10990.7 11342.40 3.2% 18.3%EBITDA 2050.2 2503.8 2552.04 1.9% 24.5%PAT 1598.1 1932 1984.16 2.7% 24.2%EBITDA Margin 21.4% 22.8% 22.5% (30bps) 10bpsPAT Margin 16.7% 17.6% 17.5% (10bps) 80bps

INFYRs, Cr 3QFY13 2QFY14 3QFY14E (QoQ)-% (YoY)-%

Sales 10424 12965 13069.1 0.8% 25.4%EBIT 2677 3346.9 3424.1 2.3% 27.9%PAT 2369 2407 2695.8 12.0% 13.8%EBITDA Margin 25.7% 25.8% 26.2% 40bps 50bpsPAT Margin 22.7% 18.6% 20.6% 200bps (190bps)


24/26




Expect revenue growth of 3% in $-term QoQ and margins to be down by 50-100bps whichis largely attributable to the wage hikes effective from October 1, 2013 for someemployees..

ey things to watch - outlook for cing/volumes and deal ramp up and al re bid, margin commentary,sibility of growth/hiring in softwarervices.

We expect revenue growth guidance of 2.5% in USD term and and full integration of Complex IT.Expect margins to be don by 50-100bps (QoQ) - wage hikes deferred to 4QFY14

ey things to watch Outlook for deal

peline, outlook on BT/AT&T (theggest clients), updates on SMAC(social,obility, analytics, cloud) and mments on synergies

We expect revenue growth guidance of 1.5% in USD term and expect margin ramp up by40bps.

ey things to watch Outlook for deal peline, updates on SMAC(social,obility, analytics, cloud) and guidanceforward looking statement.

Expect 3% US$ revenue growth. Hexaware discontinued quarterly guidance since theprevious quarter.Expect 30-50bps decline in margin.

ey things to watch: Key stance onvidend policy, deal wins and revenueowth momentum and outlook for der win.


HCLTECHRs, Cr 2QFY13 1QFY14 2QFY14E (QoQ)-% (YoY)-%

Sales 6273.8 7961 8160.03 2.5% 30.1%EBITDA 1416.6 2093 2080.81 -0.6% 46.9%PAT 974.3 1416 1472.64 4.0% 51.1%EBITDA Margin 22.6% 26.3% 25.5% (80bps) 290bpsPAT Margin 15.5% 17.8% 18.0% 20bps 250bps

TECHMRs, Cr 3QFY13 2QFY14 3QFY14E (QoQ)-% (YoY)-%

Sales 3523.7 4771.5 4819.22 1.0% 36.8%EBITDA 756.9 1110.85 1084.32 -2.4% 43.3%PAT 455.9 718.2 754.11 5.0% 65.4%EBITDA Margin 21.5% 23.3% 22.5% (80bps) 100bpsPAT Margin 12.9% 15.1% 15.6% 50bps 270bps

CMCRs, Cr 3QFY13 2QFY14 3QFY14E (QoQ)-% (YoY)-%

Sales 492.97 560.75 566.36 1.0% 14.9%

EBITDA 83.2 88.41 87.79 -0.7% 5.5%PAT 61.07 67.3 65.62 -2.5% 7.4%EBITDA Margin 16.9% 15.8% 15.5% (30bps) (140bps)PAT Margin 12.4% 12.0% 11.6% (40bps) (80bps)

HEXAWARERs, Cr 4QCY12 3QCY13 4QCY13E (QoQ)-% (YoY)-%

Sales 507.52 621.1 629.17 1.3% 24.0%

EBITDA 109.02 147.74 147.86 0.1% 35.6%PAT 66.20 98.7 103.64 5.0% 56.5%EBITDA Margin 21.5% 23.8% 23.5% (30bps) 200bpsPAT Margin 13.0% 15.9% 16.5% 60bps 350bps


25/26


26/26

N arno li a Securitie s Ltd

402, 4th floor 7/ 1, Lord s Sinh a Road Kolkat a 700071, Ph033-32011233 Toll Free no : 1-800-345-4000

ema il: resear ch@nar nolia.com ,website : www.narnolia.com

Risk Disclosure & Disclaimer: This report/message is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxationadvice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting anyaction based upon it. This report/message is not for public distribution and has beenfurnished to you solely for your information and should not be reproduced orredistributed to any other person in any from. The report/message is based upon publiclyavailable information, findings of our research wing East wind & information that weconsider reliable, but we do not represent that it is accurate or complete and we do not

provide any express or implied warranty of any kind, and also these are subject to changewithout notice. The recipients of this report should rely on their own investigations,should use their own judgment for taking any investment decisions keeping in mind thatpast performance is not necessarily a guide to future performance & that the the value of any investment or income are subject to market and other risks. Further it will be safe toassume that NSL and /or its Group or associate Companies, their Directors, affiliatesand/or employees may have interests/ positions, financial or otherwise, individually orotherwise in the recommended/mentioned securities/mutual funds/ model funds andother investment products which may be added or disposed including & other mentionedin this report/message.

Documents

Financial Advisory Stock for Today- Buy Stocks of Infosys with Target Price Rs.3910