Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever

8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever

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Hindustan Unilever

1M 1yr YTD

bsolute 0.23 21.18 21.63

l. to Nifty 3.2 20.33 19.85

Current 2QFY14 1QFY14

omoters 67.25 67.25 52.5

14.83 15.33 20.23

I 3.35 3.03 7.13

hers 14.57 14.39 20.16

Financials

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

Revenue 7037.78 6747.2 4.3 6433.89 9.4

EBITDA 1226.8 1085.31 13.0 1088.99 12.7

PAT 1043.7 888.3 17.5 877.08 19.0

EBITDA Margin 17.4% 16.1% 130bps 16.9% 50bps

PAT Margin 14.8% 13.2% 160bps 13.6% 120bp

500696

are Holding Pattern-%

Increasing competitive intensity, slow consumer demand and expectation of hike

input cost in near term could be major concern for HUL. We expect that these concer

could play out over the next couple of quarters.

Volume growth:Volume growth for the quarter was at 4%, which is slightly lower th

the 5% registered in previous several quarters due to further deterioration in mark

growth rates and higher component of price versus volume in its core soaps a

detergents category.

Segment-wise performance:(a)Soaps and Detergents delivered a healthy performan

The company witnessed a price led growth in this segment during the quarter. Whe

was re-launched with superior formulation at quarter end. It has grown well compar

to preceding last 2 quarters. (b)Household Care delivered another strong quarter w

both Vim and Domex growing in double digits. (3)On Personal Products, Skin Ca

performing well with a revenue growth in mid teens in a slowing market and in spite the delay in the onset of the winter season.

wk Range H/L 725/432

SE Symbol HINDUNILVR

arket Data

E Code

"wait for triggers"

MP 570

rget Price -

Delivered stable set of numbers, still expecting key challenges ahead;

For 3QFY14, despite slow discretionary demand HUL reported inline set of numbe

with 8.5% (YoY) sales growth led by 4% (YOY) volume growth. PAT grew by 19%(YoY

pside -

esult update NEUTRAL

evious Target Price -

ange from Previous -

ock Performance-%

123161

erage Daily Volume 2006314

fty 6153

We do not see any sign of improvement in volume growth in near future. Howev

revival in macro economy and resultant improvement in consumer sentiment wou

play a key triggers for improvement in the volume growth in near term.

BV (x) -1year forward

Rs, Cro

(Source: Company/Eastwin

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

View and Valuation:To continue to deliver strong growth, HUL is likely to continue w

aggressive marketing and offer discounts/price cuts, especially in soaps, detergents a

personal products and the company fights off competition rivals domestic as well

multi-national. we are confident of the medium to long-term growth prospects of t

FMCG sector. At a CMP of Rs 570, stock trades at 29x FY15E P/BV. We have a NEUTRview on the stock.

Product Strategy:The company has launched premium range of hair care product

Toni and Guy. This brands are sold through select top end outlets. However,

operating metrics was challenging given the volatile cost environment, led by the IN

depreciation, and heightened competitive intensity during the quarter.

kt Capital (Rs Cr) Steady margin growth:During the quarter, EBITDA margin inched up by 50bps(YoY)

17% because of stable INR movement against the USD and stable set of RM cost th

same quarter previous year. PAT margin also improved slightly to 17.4% on YoY. Duri

the quarter, company has been efficient to manage cost inflation through judiciopricing and unwinding of promotions.

"NEUTRAL"30th Jan' 14

Narnolia Securities Ltd,


3/26

argin-%

g

(Source: Company/Eastwind)

Volume growth for the quarter was at 4%which is slightly lower than the 5% register

in previous several quarters

EBITDA margin inched up by 50bps(YoY) t

17% because of stable INR movement agaithe USD and stable set of RM cost than sam

quarter previous year.

EBITDA Margin up by 90bps to 13.3% fro

Soap and Detergent, flat margin growth o

Personal Products.




Hindustan Unilever

olume and Pricing growth -%(YoY)


les (cr) and Growth(YoY)-%


3QFY13 2QFY14 3QFY14 3QFY13 2QFY14 3QFY14

aps & Detergents 47.0% 19.9% 6.4% 7.1% 12.4% 14.0% 13.3%

rsonal Products 31.9% 8.5% 11.8% 12.4% 28.3% 22.8% 28.6%

verages 11.8% 18.2% 16.1% 7.2% 17.7% 17.0% 16.2%

ckaged Foods 5.2% 7.7% 8.7% 12.9% -0.7% 3.3% -3.6%

hers 3.8% -33.4% 5.7% -4.7% -6.4% 1.5% -4.9%

Margin-%Revenue Growth-%

% of Salesgments


4/26

)Tax rate is expected to rise by 300-400 bps for FY15.


(Source: Company/Eastwi

inancials

)The management expects to see some cost burden on promotion through mediacause of 12 minutes advertisement cap.

)Rural growth continues to outpace urban growth by 200 bps and there is no clear-cut

gn of uptick in urban demand as per available data from Nielsen.

)Personal products and packaged foods both segments have headroom for growth and

ll remain focus area.

Hindustan Unilever

ey facts from HUL Con-call (attended on 28th Jan, 2014)

)The mgmt stated that FMCG market growth continues to remain soft across the

tegories, with high competitive intensity and uncertain media environment. While, for

edium to long term the mgmt is positive on FMCG sector.


s in Cr, FY10 FY11 FY12 FY13 FY14E FY15E

ales 18025.6 20022.6 23436.3 27004.0 28959.1 31506.

M Cost 6762.8 7796.9 9487.0 10987.8 11873.2 13075.

urchases of stock-in-trade 2173.1 2692.8 2919.5 3125.3 3185.5 3465.7

WIP 75.7 -307.6 95.2 -26.0 -27.9 -30.3

mployee Cost 970.9 1014.9 1200.9 1412.7 1515.0 1648.2

d Spend 2423.0 2797.1 2697.0 3290.0 3619.9 3938.3

ther expenses 2783.2 3317.4 3553.2 4008.9 4054.3 4568.4

otal expenses 15188.7 17311.3 19952.8 22798.7 24219.9 26665.

BITDA 2836.9 2711.2 3483.6 4205.3 4739.1 4840.9

epreciation and Amortisation 191.9 207.5 211.9 251.3 270.4 294.2

ther Income 82.7 255.2 259.6 532.0 579.2 630.1

BIT 2727.6 2758.9 3531.3 4486.0 5047.9 5176.9

nterest 7.5 1.0 1.7 25.7 25.7 27.0

BT 2720.2 2757.9 3529.7 4460.3 5022.2 5149.9

ax Exp 615.3 650.3 821.5 1226.7 1406.2 1442.0

AT 2104.9 2107.6 2708.1 3233.7 3616.0 3707.9

rowth-% (YoY)

ales -13.4% 11.1% 17.0% 15.2% 7.2% 8.8%

BITDA -4.9% -4.4% 28.5% 20.7% 12.7% 2.1%

AT -16.1% 0.1% 28.5% 19.4% 11.8% 2.5%

xpenses on Sales-%

M Cost 37.5% 38.9% 40.5% 40.7% 41.0% 41.5%

d Spend 13.4% 14.0% 11.5% 12.2% 12.5% 12.5%

mployee Cost 5.4% 5.1% 5.1% 5.2% 5.2% 5.2%

ther expenses 15.4% 16.6% 15.2% 14.8% 14.0% 14.5%

ax rate 22.6% 23.6% 23.3% 27.5% 28.0% 28.0%

Margin-%

BITDA 15.7% 13.5% 14.9% 15.6% 16.4% 15.4%

BIT 15.1% 13.8% 15.1% 16.6% 17.4% 16.4%

AT 11.7% 10.5% 11.6% 12.0% 12.5% 11.8%

aluation:

MP 238.7 284.6 419.0 483.3 570.00 570.00

o of Share 218.2 215.9 218.2 216.2 216.26 216.26

W 2668.9 2735.0 3681.1 2864.8 3571.24 4243.1

PS 9.6 9.8 12.4 15.0 16.72 17.15

VPS 12.2 12.7 16.9 13.3 16.51 19.62

oE-% 78.9% 77.1% 73.6% 112.9% 101.3% 87.4%

/BV 19.5 22.5 24.8 36.5 34.52 29.05

/E 24.7 29.2 33.8 32.3 34.09 33.24


5/26

V- Escorts Ltd.

MP 125

rget Price 175

evious 105

side 40%

ange from 67%

E Code 500495

E Symbol

wk Range 48/96

kt Capital 1,505

erage Daily 225,953

fty 6,120

1M 1yr YTD

solute (11.3) 62.7 147.9

l. to Nifty (8.2) 61.0 140.2

3QFY14 2QFY14 1QFY14

omoter's 42.0 42.0 42.0

s 9.4 12.3 12.1

's 2.1 4.7 5.4hers's 46.5 41.0 40.6

esult update

arket Data

In 5QFY13 the company saw revenue growth of 12.8% to Rs 1159.6 crore. This result w

mirrors the pent-up demand for tractor business, partly driven by improved crop cultivat

and production and revival in farm equipment segment. In current quarter 84% ofEsco

revenues come from the sale of tractors, and it saw volumes growth of 11.3% to 19047 in

tractor sales. Company construction equipment business witnessed a flattish of 1.4% to

130.9 crore and stands at 11% of company total revenue during this quarter. Lower invent

levels typical of this quarter, where sales are better than in the preceding quarter, transla

into a 6.1% operating margin, up 100 basis points from the year-ago period. Further

marginal price hike in the latter part of the December quarter also propped up realizatio

More importantly, the improved financial position in the farm segment eased cash flows a

working capital cycles, which in turn trimmed interest costs.

Buy

Industry players expects the year 2013-14 to end with volume growth of around 15%After an all time high sales in Oct 2013, where the industry saw a volume growth of 28.8% Y

Nov'13 volume growth was expected on lower side. While in Dec'13, the industry came ba

strongly with a 21.1% growth. In April-Dec'13 period, the industry saw a healthy 23.8% growth

volume. So while high growth is expected to tilt down in lean season, overall, the industry a

whole is still expected to end the year with a volume growth of about 15% for 2013-14. K

markets that supported the growth in FY'14 are Andhra Pradesh, Madhya Pradesh, Rajasthan a

Chhattisgarh. Some of these markets grew by more than 30% YoY. All macroeconomic fact

such as crop prices, productivity, soil moisture, government focus on rural spending etc

favorin the farm e ui ment business.


"Out Performer."

ESCORTS


ock Performance-%

"Buy"30th Jan' 14



6/26

netration to high HP Tractors

mpany Outlook

e stock is currently trading at 6.5x FY14E EPS with a negative bias in case of construction equipment

gment due to adverse macroeconomic conditions . At current price of Rs. 117, the stock is trading at

E of 7.1 x for FY13E and 6.5 x the FY14E. Escorts could post EPS of Rs. 12.13 for FY14E and Rs. 12.98

r FY15E. An increase in volumes is an indication of healthy demand. Tractor sales revival has enabled

e company to register strong result. Escorts EBITDA margin and bottom-line exceeded our

pectations. Going forward, we remain positive on thecompanys growth prospects particularly inMP segment. We expect demand to improve further in FY2014E with the economic recovery.

owever, we remain cautious with regards to growth in Construction Equipment segment in near-to-

edium. Thus, We revise our estimates upwards to factor in the strong CY13 tractor volume

rformance. We therefore revised our rating on the stock from "Reduce" to "Buy" and advised to

r investors to enter at current level with Revised price target of Rs. 175

Escorts Ltd.


corts management aims to improve tractor margins from the current ~10% to 15% over the next 1-2

ars led by change in focus to higher HP tractors and by cost rationalization measures. Higher tractor

argins would take Escorts' company level EBITDA margins from ~6% to ~10%, as tractor segment

ntributes 80% to the company's overall sales. Moreover, the management's strategy to focus ongher HP tractors and increase presence in Southern markets will lead to faster-than-market growth.

utlook on Industry

spite being an agricultural nation, Tractors penetration in India is about 5% of total cultivable

nd. Going forward, we expect deeper penetration of Tractors to happen which will continue to

ve strong demand for the sector. The growth in farm incomes will fuel the need for further

echanization, which will tend to accelerate as social welfare programs, urbanization and

ernative occupations move farm labor to other sectors. So the demand for higher HP tractors

l be the future growth within the sector. The proportion of higher power (greater than 50 HP+)

gment has shown increase in total industry volume share by 380 bps from 12.6% in FY'08 to

out 18% in FY'13. For tractor industry more than festive season it is the monsoons that matters

ot. The onset of positive sentiments because of monsoons, the reservoirs are full, the kharif cropwing is more than 1,000 lakh hectors which is almost 6 percent up vis--vis last year. The prices

the crops declared by the government are pretty good and on top of it there are host of

anciers who are financing the tractors and funds are available to prospective buyers and that is

o leading to growth.



7/26

aphical representations :

perating profit :

et Profit :

ailling ROE % & Trailling Asset T/O :

urce: Eastwind Research) (Figures in crore)




Escorts Ltd.

venue from operation :




8/26

SECTOR ANALYSIS :2 W and 3W 9MFY14 SALES

8

dustry Overview:dia's automobile sales continued to remain on sluggish trajectory as most of the companies reported a decline in sales number due to

owdown in economic activity and increasing fuel prices. However, two-wheeler segments continued to grow at a healthy rate, led by

rong rural demand.The contribution of various segment for the 9MFY14 automobiles sales stands as under :

wo Wheelersor December 2013, overall auto industry volumes were led by the two-wheeler industry (4% YoY growth). Two Wheelers segmen

ntribution has increased to 80.2% of the total auto volume, during first nine months of FY14 from 77% in FY 13.The cumulative volume

r 9MFY14 for 2 Wheelers stands at 12489192 units up 5.3% YoY.

etter monsoon benefitted rural demand, while urban sales remained lackluster, which was higher than offsetting the rural growth. With

e festive season ending early in November 2013 this year, the positive momentum seen October 2013 has cooled off with retail sales

gely lagging wholesales. The two-wheeler segment has again managed to keep its head over water even as all other segments have

own an annual decline with last years' festive season ending later.

ub Segment Motorcycle

e analysis of previous yearssales indicates that the three major players viz Heromoto Corp, Bajaj-Auto,TVS Motors have shown

clining performance along with market share loss to both HMSI and Yamaha. The strong rural demand helps to boost the sales of

mmuter sub segment (100-125 CC) of motorcycles. The following table shows yearly performance of some of major motorcycle

ayers


The graph clearly indicates that of total automobiles sold for 9MFY14

the contribution of two wheelers stand at maximum. This trend shows

that slow down in consumer discretionary expenses. The differentia

pricing makes people to spend more towards two wheelers more ove

people look for option which gives them more mileage for every unit o

fuel. As stated earlier there is growth in rural economy and trend is

clearly visible from the sales made by two wheelers in tota

automobiles sold for the period.

ub Segment Scooter

Year Wise Motorcycle SalesYear Wise Motorcycle Market Share


e scooter sub segment grew well led by new launches from Honda (New Activa), Hero (Maestro), TVS (Jupiter) and Suzuki (Swish)

e scooter segment grew at a faster clip of 19% YoY for Apr-Dec'13 period against a flattish (3%) growth in the motorcycle segment.

e faster volume growth of the scooter segment led to a 220bps improvement to 21.2% in its share of the two-wheeler market during

s period. The main drivers for this growth are (a) growing acceptability of gearless scooters, particularly by women, (b) rising

banization and increasing proportion of working women and (d) new launches.


ompanies FY12-13 FY11-12 FY10-11

ero MotoCorp 46% 48% 48%

ajaj Auto 31% 32% 32%

VS Motors 6% 7% 8%

MSI 11% 7% 7%

amaha 4% 4% 3%

Companies FY12-13 FY11-12 FY10-11

Hero MotoCorp 5499245 5779621 5040971

Bajaj Auto 3757094 3834405 3387043

TVS Motors 749806 843338 836831

HMSI 1291688 864183 748488

Yamaha 437998 484891 366770


9/26

SECTOR ANALYSIS :2 W and 3W 9MFY14 SALES


three wheelers universe for the December 2013 Industry domestic volumes were down 21% to 35249 units led by 27% drop in

ssenger segment. There was a 7% rise in the goods carrier segment in Dec 13. Exports registered 11% rise to 33,044 units. This segm

r 9MFY14 registered domestic sales was 364669 units down by 9 % YoY for the same period last fiscal. The exports have done fairly

r the period with 11 % growth YoY to 33044 units. The three wheeler segment remains flat on YoY to 626749 units for 9MFY14. The t

heelers demand largely driven byexports, while domestic sales remained weak.

ajaj-Auto with 55% market share is the market leader in 3 Wheeler sales in the country. Q1FY14 Domestic 3W sales accounted for 38

e company's total 3W sales. Of the total 3W sales, 15-20% came from new permits, while replacement accounts for the rest. On

mestic 3W front, the outlook remains positive with 20000 permits opening up in Hyderabad (5k already utilized in June-July 2013)

00 permits opening up in Maharashtra in Sept-Oct 2013. Also, its plan to launch a renewed range of 3W (RE Compact) promises to

placement demand.

or TVS, 3W sales stood up by 36.8% YoY to 6,137 units with most of it coming from the overseas markets; 3W share to total sales fo

8% in December and 3.9% YTD, 150bp higher YoY. The Company is expected to benefit from this as 3W forms a high margin produc

e other hand, Mahindra & Mahindra's 3w sales were up 7.6% to 5.6k units. Sales were down 5% on a MoM basis.

e YTD performance of Three wheelers for FY14 is tabulated as under:

hile the macro-economic environment remains challenging, OEMs have pinned hopes on the bevy of launches that might trigg

sponse from customers. Also, the recent cut in the price of petrol might just prove to be a good thing for companies. Additionally, b

op realization due to a good monsoon and hike in MSP is expected to boost the rural income leading to a sales recovery. Over the

rm, easing macro headwinds in terms of lower interest rates and higher economic growth would be the key driver for volume growth

ofitability.

onclusion

ven its low ticket size and high rural share, this segment of the auto industry is sure to pick up momentum in the coming months.

banization, rise in women riders, higher fuel efficiency and improving per capita income, the penetration of scooters will contin

crease and at a pace faster than motorcycles. 2/3 wheeler companies which are the direct beneficiaries of the rural consumption

pected to remain strong given the buoyant prices for food items, strong monsoon and additional benefits of government doll outs

gesse.

uture Outlook (Source: Company/Eas

ontinued

Scooter sales growth has taken-off since FY10 and has consist

outgrown that for the motorcycle segment. An increasing populatio

working women, mainly in urban markets, has led to rapid sales-vo

growth in this segment. On a longer term perspective, scooter ind

volumes are expected to grow at ~20% CAGR over FY14-20, twice

growth rate for motorcycles. Overall two wheeler industry volumes are

to grow at 12% CAGR during this period. The shares of scooters

expected to increase to 37% by 2020, with annual sales of 10.7m

(equal to the current market size of the domestic motorcycle industry).

hree Wheelers (Source: Company/Eastwind)


Month 9MFY14 Sales (Volume) 9MFY13 Sales (Volume) Change %

April 69562 61772 12.6%

May 61089 55184 10.7%

une 71889 54274 32.5%

uly 66335 65352 1.5%

August 67141 72122 -6.9%

eptember 80549 78097 3.1%

October 76874 86072 -10.7%

November 65017 80325 -19.1%

December 68293 74596 -8.4%

TD 626749 627794 -0.2%


10/26

SHREE CEMENT.

4325

4791

479111%

0%

500387

15502

3875

6136

1M 1yr YTD

solute 0.1 -4.8 -5.1 MAT Credit support the buttom line :

l. to Nifty 0.0 -8.0 -9.2

2QFY14 1QFY14 4QFY13

omoters 64.8 64.8 64.8

8.2 8.2 8.1

5.9 5.7 5.9

hers 21.2 21.3 21.2

Financials : Q2FY14 Y-o-Y % Q-o-Q % Q2FY13 Q1FY1

Revenue 1318 -7.7 5.6 1428 124

EBIDTA 271 -24.7 8.8 360 24Net Profit 115 -46.9 -32.9 217 17

EPS 33 -46.9 -32.9 62 4

EBIDTA% 21 -18.4 3.1 25 2

NPM% 9 -42.5 -36.5 15 1(In Cr

1

Buy

arket Data

erage Daily Volume (Nos.)

Volumes grew by18 % but prices came down by 5%. So the EBITDA margin has h

badly:Shree Cement Ltd has reported a 47% fall in its December quarter net profit o

lower sales as well as 5% degrowth in realization. PAT impacted due to lower othe

income (down by 70% YOY), Depriciation burden on EBIDTA (Depriciation increased 41%YOY). Volumes grew by18 % to3.8mn ton from 3.3mn ton QOQ. Net profit decreased b

47% yoy from Rs.217.44 crore (Rs.62.42 per share) in 2Q13 to Rs.115.49 crore (Rs.33.1

per share) in 2Q14.Total net income from operations stood at Rs.1318.13 crore in 2Q14

a 6% fall yoy from Rs.1401.23 crore in 2Q13.Other income decreased from Rs.30.2 cror

in 2Q13 to Rs.9.9 crore in 2Q14.In the mean time company declares a Rs.10 as interim

dividend/share.

Power Segment: Realization Down By 15% :For power generation the net realization ha

come down from Rs 383 to Rs 334 compared to last year same quarter and in the firs

quarter it was still better at Rs 397.So the power realization is down by 13 percent an

hence sales also have come down by 35 percent to Rs.290 Cr. At the same time 14%

increase in its profitability from power segment to Rs112.56 crore while its cemen

segment reported 79% fall in its profitability to Rs37.65 crore.

side

ange from Previous

MP

rget Price

evious Target Price

esult Update

E Code

SHREECEME Symbol

During the Quarter Company got MAT (minimum alternative tax) credit entitlement o

Rs9.25 crore and deferred tax of Rs1.79 crore. This reduced total tax payable amount t

Rs15.27 crore from Rs26.31 crore.

CompanysEBIDTA/ton decreased 6% to Rs.712 (vs Rs.756 in previous quarter), at th

same time the Expenditure also decreased 9% to Rs.2757 (vs Rs.3025 in Q1).Hence w

believe that company will outperform among its peers ,once Realization get improve.Th

exceptional weakness is there in the cement prices. Volumes have grown by about 1

percent but the prices have come down by 5 percent and naturally the cost increase i

there. So the EBITDA margin has been badly hit .

The 2m-ton Line-IX clinker unit at Ras, Rajasthan, was commissioned inJun13.LineX o

similar capacity along with 25MW of WHRS (at the same location) is expected b

Jun14.Twogrinding units of 2m tons each, at Ras and in Bihar,are being constructed an

expected byJun14.Weexpect Shree to be a 21.5m-tpa company by Jun15.It plans t

foray into high demanding eastern.Total capex for these expansion is Rs.3,000 cror

which is spread over next 2 years.

On the expansion front :

wk Range H/L

kt Capital (Rs Crores)

5210/3413


ock Performance-%


yr Forward P/B

Source - Comapany/EastWind Research

fty

"BUY"28th Jan' 14


Mar-02

Oct-02

May-03

Dec-03

Jul-04

Feb-05

Sep-05

Apr-06

Nov-06

Jun-07

Jan-08

Aug-08

Mar-09

Oct-09

May-10

Dec-10

Jul-11

Feb-12

Sep-12

Apr-13

Nov-13

PRICE 1.5x2x 2.5x3x 3.5x4x 4.5x


11/26

utlook :

FY11 FY12 FY13 FY14E

3454 5898 5590 5798

203 163 188 217

3656 6061 5779 6015

905 1500 1513 1409

602 1006 915 1090

2569 4252 4029 4275

885 1646 1561 1523

676 873 436 470

98 235 193 145-99 69 115 118

365 619 1004 1007

20.8 23.1 26.1 21.1

11



SHREE CEMENT.

L PERFORMANCE

et Revenue from Operation

her Income

tal Income

ompany Description :Shree Cement (SCL) is a cement producer operating in the two

gments cement and power. As of June 30, 2012, the company had a cement capacity

13.5 million tonnes per annum (MTPA) and power capacity of 560 MW. The

mpany's waste heat recovery power plants have a total capacity of 46 MW. The

mpanysbrands include Shree Ultra,Bangur Cement and Rockstrong Cement. It has

anufacturing facilities at Beawar and Ras in Ajmer and Pali district and grinding units

Khushkhera, Suratgarh and Jaipur, respectively, in Rajasthan and Roorkee intarakhand.

anagement Corner : From mid-January there is a big change in demand scenario

cause of the Indian calendar, the prices have improved, the demand has also

proved and they think that January to June some impact of elections will be there -

e-election demand and other things. So margins should be better than 21 percent.

om the view company Operations in the high utilisation North and Central markets,

pacity expansions underway, low gearing and strong RoE are fundamental positives.

e believe although, near term challenges in terms of a slowdown in demand for

ment would remain, strong balance sheet and better efficiency in terms of cost

mains a key positive for this company to overcome challenges.Company Management

bull for the rest two quarters of FY2014 as according to them demand has already

ttom out.We are positive on the stock as it always beats its peers group with lower

perational cost.Shree cement follows a multi brand strategy and sells cement under

e highly recognized brands of Shree Ultra, Bangur and Rockstrong which together

joy the largest market share in high value markets of Rajasthan, Delhi and Haryana.

ter a good monsoon and election ahead we are expecting a good performance from

ree cement for the H2FY14, thus at CMP Rs.4460/- we are bull at a target Price

.4791/-

et tax expense / (benefit)

AT

OE%

wer and fuel

eight and forwarding

penditure

ITDA

epriciation

terest Cost


-2

-1

0

10

20

30

40

50

60

1100

1150

1200

1250

1300

1350

1400

1450

1500

Revenue

Growth

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0 NPM % OPM % EBITDA %

0

2

4

6

8

1

1

0

50

100

150

200

250

300

350

400

450

EBIDTA

INTEREST SERVICE COVERAGE

RATIO


12/26

FY10 FY11 FY12 FY13

35 35 35 35

1798 1951 2699 3809

1833 1986 2734 3844

1789 1472 818 443318 217 143 534

28 16 17 18

171 185 584 81

472 267 178 87

4906 4940 5973 6160

0 0 0 0

752 1167 1521 1782

967 729 97 133

299 308 205 378

358 404 503 530

82 108 181 315

416 499 459 369

415 429 363 326

4906 4940 5973 6160

FY10 FY11 FY12 FY13

4.4 3.6 3.8 4.2

212.3 118.6 177.5 288.2

2.3 3.1 3.1 5.6

4.7 5.3 9.9 1.4

1.0 1.2 0.9 0.9


S PERFORMANCE

rading At :

ATIOS

ng-term provisions

ade payables

ort-term provisions

tal liabilities

tangibles

pital work-in-progress

ngible assets

SHREE CEMENT.

are capital

serve & Surplus

tal equity

ng-term borrowingsort-term borrowings

ng-term loans and advances

ventories

ade receivables

sh and bank balances

ventories to Turnover%

ort-term loans and advances

tal Assets

B

S

ebtor to Turnover%

editors to Turnover%



13/26

80

92121

16

31.5

1M 1yr YTD

bsolute -14.9 -55.2 -55.2

el.to Nifty -12.5 -56.6 -56.6


omoters 58.9 55.2 55.2

I 8.7 8.0 8.1

I 18.5 21.1 22.0

hers 13.9 15.6 14.7

Financials Rs, Cr

2011 2012 2013 2014E 2015E

NII 4022 5163 4866 5426 6715

Total Income 5393 6461 6343 7745 9034

PPP 3055 3770 3385 4361 5150

Net Profit 1423 1867 1185 1290 1522

EPS 29.9 39.2 23.7 23.7 27.9

kt Capital (Rs Cr)



ock Performance

During this quarterbanksasset quality worsen with gross NPA further deteriorat

by 14% QoQ in absolute term while as a percentage to gross advance, this rat

stood at 5.5% versus 5% in previous quarter. Provisions had increased by 19%

sequential basis which led net NPA deterioration to 12% QoQ. In percentage ter

net NPA to net advance stood at 4.1% versus 3.8% in previous quarter. Provisio

coverage ratio (w/o technical write-off) marginally improved to 24.8% from 23.7%

2QFY14. During this quarter, banks sold Rs.389 cr of non- performing assets

asset reconstruction companies. Total outstanding restructure at the end of stood

Rs.12624 cr which is 9.2% of net advance.

2wk Range H/L

hange from Previous

lahabad Bank Vs Nifty

hare Holding Pattern-%

8.26 LAKH

fty 6136

verage Daily Volume

3975

176/65

SE Symbol ALBK

ompany UPDATE BUY

MP

arget Price

Allahab ad reported net prof it grow th of 4.7% YoY to Rs.325 cr largely du

mu ted NII grow th and deter iorated asset quality. Banksoperat ing expens e

were stable in absolu ter term but as cost incom e rat io increased drast ical ly oacco unt of low er revenue grow th. As set quality has deter iorated sequential l

Due to low er corp orate demand, loan grow th remain muted andbankslow

its total bus ines s (Lo an + Depo sit s) gu idan ce to Rs.340,000 cr from earlier

Rs.360,000 cr. We valu e bank at Rs.92/sh are whi ch is 0.4 tim es ofFY14E

boo k value. We are not imp ressio n withbanksfund ament but curren t pr ic

provide 15% upside from o ur target pr ice.

evious Target Price

arket Data

pside

SE Code 532480

ALLAHABAD BANK

Allahabad banksNII grew by 0.4% YoY to Rs.1336 cr versus our expectation

Rs.1422 cr largely due to lower interest income led by lower than expected lo

growth and loan yield as well. Banksdeposits growth was also lower than expectbut cost of deposits was almost same in previous quarter. Therefore interest incom

was lower than interest expenses which cause muted NII growth. During quart

banksother income was Rs.542 cr as against Rs.341 cr in last quarter which help

to report revenue growth of 11% YoY.

CI ratio up drastically in sequential basis but in absolute term it remain

comfortable

Cost to income ratio was higher at 46.3% versus 42.5% in previous quarter large

due to lower revenue growth. In absolute term operating expenses increased

2.2% QoQ and 7.3% YoY on which employee cost and other operating expens

increased by 1% and 22% YoY respectively. With lower operating cost and hisupport from other income, operating profit grew by 17.2% YoY to Rs.1008 cr.

Worsen asset quality led by macro environment

NII growth muted on account of lower loan growth and loan yield

"BUY"28th Jan, 2014



14/26

ALLAHABAD BANK

Source:Company/Eastwind


ower business growth target due to absence of corporate loan

ahabad Bankstotal deposits grew by 10% YoY and advance grew by 13% YoY to

s.1875 bn and Rs.1373 bn respectively. Muted growth in loan was on account of lower

orrowing from corporate segment whereas bank reported retail, MSME and priority

ctor registered handsome growth. CASA for the quarter stood at 30.8% versus 31.2%previous quarter. Bank management lower its FY14s total business guidance to

40,000 cr from Rs.360,000 cr earlier. Accordingly we lower our loan and deposits growth

12% and 9% from earlier of 15% each. Credit deposits ratio was stable at 73.2%.

ower profit growth because of muted NII growth and deteriorating asset quality

et profit of Allahabad banksgrew by 4.7% YoY to Rs.325 cr largely due to muted NII

owth and high provision led by deteriorating asset quality. Due to lower demand from

rporate borrowing, banks reduce its business growth target by 5.5% for FY14. Asset

uality pressure would likely to persist in FY14 which would result of lower valuation

ultiple. We lower our book value estimate to Rs. 229.3 from earlier of Rs.254 primarily

ue to equity dilution and lower profit expectation in FY14E.

aluation & View

ahabad reported net profit growth of 4.7% YoY to Rs.325 cr largely due muted NII

owth and deteriorated asset quality. Banks operating expenses were stable in

bsoluter term but as cost income ratio increased drastically on account of lower revenue

owth. Asset quality has deteriorated sequentially. Due to lower corporate demand, loan

owth remain muted and bankslower its total business (Loan + Deposits) guidance to

s.340,000 cr from earlier of Rs.360,000 cr. We value bank at Rs.92/share which is 0.4

mes ofFY14Esbook value. We are not impression with banksfundament but current

ce provide 15% upside from our target price.



15/26

ALLAHABAD BANK

Source: Eastwind/Company


undamant Through Graph

NII growth muted on account of lower loangrowth and loan yield

With the support from other income and

lower operating expenses, PP grew by 17.2

YoY

Lower profit growth because of muted NII

growth and deteriorating asset quality



16/26

ALLAHABAD BANK




arterly Performance (Rs Cr) 3QFY14 2QFY14 3QFY13 % YoY % QoQ 3QFY14E Variation

erest/discount on advances / bills 3533 3422 3234 9.2 3.2 3669 -3.7

ome on investments 1161 1131 1161 0.0 2.6 1199 -3.2

erest on balances with Reserve Bank of India 27 28 29 -7.9 -5.1 33 -18.5

hers 42 25 21 102.9 67.8 43 -2.6

al Interest Income 4762 4607 4445 7.1 3.4 4944 -3.7

hers Income 542 696 341 59.2 -22.1 599 -9.4

al Income 5305 5303 4785 10.9 0.0 5542 -4.3

erest Expended 3427 3298 3114 10.0 3.9 3522 -2.7

1336 1309 1330 0.4 2.0 1422 -6.1

her Income 542 696 341 59.2 -22.1 599 -9.4

al Income 1878 2005 1671 12.4 -6.3 2021 -7.1

ployee 569 550 563 1.0 3.4 301 89.3

her Expenses 301 301 247 21.7 0.0 558 -46.1

erating Expenses 870 852 811 7.3 2.2 859 1.3

P( Rs Cr) 1008 1154 860 17.2 -12.6 1162 -13.3visions 555 742 432 28.3 -25.2 699 -20.6

T 453 411 428 5.9 10.1 463 -2.2

128 136 117 9.2 -5.9 139 -8.2

t Profit 325 276 311 4.7 18.0 324 0.4

ance Sheet ( Rs Cr)

t Worth 12410 12085 11572 7.2 2.7 12409 0.0

posits 187478 180396 170649 9.9 3.9 192974 -2.8

ns 137300 131896 121555 13.0 4.1 139757 -1.8

et Quality

PA( Rs Cr) 7,512 6,613 3,532 112.7 13.6 6,997 7.4

A( Rs Cr) 5651 5048 2478 128.1 11.9 5320 6.2

NPA 5.5 5.0 2.9

PA 4.1 3.8 2.0

R(w/o technical write-off)(%) 24.8 23.7 29.8

erating Metrics

dit-Deposits Ratio(%) 73.2 73.1 0.0

st-Income Ratio(%) 46.3 42.5 48.5


17/26

nancials & Assumption

ALLAHABAD BANK




ncome Statement 2011 2012 2013 2014E 2015E

terest Income 11015 15523 17436 18958 22529

terest Expense 6992 10361 12569 13532 15814II 4022 5163 4866 5426 6715

hange (%) 51.8 28.3 -5.7 11.5 23.8

on Interest Income 1370 1299 1477 2319 2319

otal Income 5393 6461 6343 7745 9034

hange (%) 29.4 19.8 -1.8 22.1 16.6

perating Expenses 2338 2691 2958 3384 3885

re Provision Profits 3055 3770 3385 4361 5150

hange (%) 19.9 23.4 -10.2 28.8 18.1

rovisions 1112 1602 1865 2527 2976

BT 1943 2167 1520 1835 2174AT 1423 1867 1185 1290 1522

hange (%) 18.0 31.2 -36.5 8.8 17.9

alance Sheet

eposits( Rs Cr) 131887 159593 178742 194828 222104

hange (%) 24 21 12 9 14

f which CASA Dep 44156 48668 54930 60397 68852

hange (%) 21 10 13 10 14

orrowings( Rs Cr) 6918 9094 10098 13544 15440

vestments( Rs Cr) 43247 54283 58306 60428 71263

oans( Rs Cr) 93625 111145 129490 145028 165332

hange (%) 31 19 17 12 14

atio

vg. Yield on loans 8.8 10.5 9.8 9.7 10.0

vg. Yield on Investments 6.2 6.8 7.7 7.5 8.0

vg. Cost of Deposit 4.9 6.1 6.7 9.2 9.5vg. Cost of Borrowimgs 7.1 6.8 5.2 7.1 7.1


18/26

Persistent System.

BUY Delivered inline set of numbers but better on all aspects than its peers did :

11%

1M 1yr YTD

bsolute 1.1 76.8 85.7

l. to Nifty 3.4 75.8 82.3


omoters 38.96 38.96 38.96

18.26 15.28 14.84

I 18.78 21.23 19.31

hers 24 24.53 26.89

Financials

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

Revenue 432.75 432.37 0.1 332.98 30.0

EBITDA 104.3 100.8 3.5 82.4 26.6

PAT 64.2 60.8 5.6 49.5 29.7

EBITDA Margin 24.1% 23.3% 80bps 24.7% (60bps

PAT Margin 14.8% 14.1% 70bps 14.9% (10bps

arket Data

E Code 533179

SE Symbol

Persistent management suggests that deal pipeline are looking strong and seeing goactivity and traction in the market across the board. Its focus on some of new

technologies like cloud, analytics and mobility, M2M, digital transformation a

gaining a lot of traction because of pickup in demand environment. Because of activ

investment in these themes, management is very confident to see healthy growth.

kt Capital (Rs Crores)

wk Range H/L 1058/477

3974

fty


6136

Margin ramp up:During the quarter, Its EBITDA margin improved by 80bps to 24.

because of cost rationalization. PAT margin up by 70bps to 14.83%. Howev

management expects to maintain margin at 24-25% for FY14E.

On segmental front: The Companys cash cow segment Infrastructure and Syste

which contributes 69% on sales, was flat than previous quarter and Telecom (18

contribution on sales) was up by 2% sequentially. While, Life Science space (1

contribution on sales) down marginally by 1% (QoQ).

Geography wise revenue: Because of weak seasonality and furloughs impact, No

America and APAC regions were marginally down by 1-2%(QoQ). The companys earn

potential from US is 83% and APAC is 11%. While Europe contributes 6% of sales and h

seen tremendous set of growth at 36% (QoQ) led by a large account execution duri

the quarter.

year forward P/E-x

Rs, Cro


View and Valuation:Thecompanysfocus is shifting greater proportion to IP led servic

and company has marquee clientele in cutting-edge technologies around clou

mobility, collaboration and analytics; witnessing faster growth. Considering t

companys ability to achieve scale and growth, we upgrade our target price from

960 to Rs 1070 withBUY view on the stock. Recently we had advised to book pro

on the stock at a target price of Rs 960. Post 3rd quarter earnings, we upgrade our E

for FY15E from Rs 76.9 to Rs 79.1. At a CMP of Rs 994, stock trades at 12.6x FY1

earnings.

Clients Metrics:During the quarter, company added 2 clients(Total 34) under mediu

category( >$1mn to $3mn) and no client addition (Total) 16 from large ( > $ 3Mn

Revenue contribution from top-1 client declined from 22.5% (2QFY14) to 19.8% a

contribution from top-5 and Top-10 marginally down. DSO at 63days, almost

quarters low.

erage Daily Volume 12139


ock Performance

PERSISTENT

"Persistently innovating.."

esults update

MP 994

rget Price 1070

For 3QFY14, PersistentSystems sales was almost flat (QoQ) in INR term, while gre

2.2% (QoQ) in USD term impacted by seasonality and furloughs impacts. During t

quarter, volume growth from Offshore increased by 3.8% and Onsite volume growwas flat, sequentially. PAT grew by 5.5% (QoQ)

ange from Previous

evious Target Price 960pside 8%

The management remains confident of FY14 with deal pipeline being strong a

remains focused on increasing the share of IP-led revenues in its portfolio. T

management expects to see more than 15% dollar revenue growth, more th

NASSCOM guidance of 12-14 % for FY14E.

"BUY"28th Jan' 14



19/26

Persistent is confident of doing more than 15% revenue growth in$ terms(FY14E).

They expect to maintain margin at 24-25% for FY14E

The company is optimistic to see more deals on SMACS and IP led business.

Services business can continue to keep the growth momentum.

Persistent S stem.

les (INR) and Sales growth-%(QoQ)

On $term, Sales growth was up by 2.

(QoQ) and 0.8% on INR term,



ey facts from Concall (attended on 27th Jan,2014)

TheCompanys focus on newer technologies like cloud, analytics, mobility and digital

ansformation are gaining traction.

Expects 20-21% growth in the next year from IP led business, which in turn will help

prove margins going forward.


gmental Revenue-%

Persistent's exposure on Infr and System

increased to 69%, growth in Infra sp

indicates more visibility of deal intake in n

future,


argin-%

Its EBITDA margin improved by 80bps

24.1% because of cost rationalization.



20/26

inancials


Persistent S stem.


perating Metrics


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

op1 16.0% 15.9% 17.2% 17.8% 20.7% 21.1% 21.6% 21.2% 22.5% 19.8%

op 5 38.6% 37.0% 36.6% 33.5% 36.3% 37.3% 36.7% 34.7% 36.4% 36.9%

op 10 49.4% 48.3% 48.8% 45.3% 47.0% 49.4% 47.9% 46.0% 47.3% 46.9%

nsite - Linear 12665 12387 12603 12789 12863 12772 14014 14567 14283 14510

ffshore - Linear 3803 3778 3895 3898 3978 4032 4143 4111 4109 4179

eild per Employee(excld- Trainee) 3208 3247 3350 3345 3746 3817 3769 3602 3919 3934

otal Employee 6900 6706 6628 6536 6370 6719 6970 7144 7457 7602

ttrition 17.7% 17.4% 18.3% 18.9% 16.9% 16.0% 14.4% 14.2% 14.0% 13.2%

tilization rate %(xclude IP Led ) 73.8% 74.1% 71.7% 74.1% 75.2% 77.3% 72.5% 70.0% 71.7% 72.9%

lling Rate-USD/ppm

mployee Metrics

ient Concentration

s in Cr, FY10 FY11 FY12 FY13 FY14E FY15E

ales 601.16 775.84 1000.3 1294.5 1666.59 2061.7

mployee Cost 368.74 481.62 599.05 719 899.96 1123.6

ost of technical professionals 0 30.67 41.68 54 91.66 113.39

ther expenses 86.05 105.24 135.2 218 291.65 366.99

otal expenses 454.79 617.53 775.93 990.78 1283.28 1604.0

BITDA 146.37 158.31 224.37 303.72 383.32 457.70

epreciation 33.52 42.39 61.1 78 100.55 93.54

ther Income 11.23 34.44 34.44 34.44 55.00 72.16

BIT 112.85 115.92 163.27 225.44 282.76 364.16

nterest Cost 0 0 0.00 0.03 0.05 0.05

rofit (+)/Loss (-) Before Taxes 124.08 150.36 197.71 259.851 337.71 436.28

rovision for Taxes 9.05 10.62 55.09 75.37 92.03 119.98

et Profit (+)/Loss (-) 115.03 139.74 142.62 184.481 245.69 316.30

rowth-% (YoY)

ales 1.2% 29.1% 28.9% 29.4% 28.7% 23.7%

BITDA 60.2% 8.2% 41.7% 35.4% 26.2% 19.4%

AT 74.1% 21.5% 2.1% 29.4% 33.2% 28.7%

xpenses on Sales-%

mployee Cost 61.3% 62.1% 59.9% 55.5% 54.0% 54.5%

ther expenses 14.3% 13.6% 13.5% 16.9% 17.5% 17.8%

ax rate 7.3% 7.1% 27.9% 29.0% 27.3% 27.5%

Margin-%

BITDA 24.3% 20.4% 22.4% 23.5% 23.0% 22.2%

BIT 18.8% 14.9% 16.3% 17.4% 17.0% 17.7%

AT 19.1% 18.0% 14.3% 14.3% 14.7% 15.3%

aluation:

MP 310 366.7 409.2 541 994 994

o of Share 4 4 4 4 4 4

W 639.0 747.1 840.5 1018.3 1212.5 1477.3

PS 28.8 34.9 35.7 46.1 61.4 79.1

VPS 159.7 186.8 210.1 254.6 303.1 369.3

oE-% 18.0% 18.7% 17.0% 18.1% 20.3% 21.4%

/BV 1.9 2.0 1.9 2.1 3.3 2.7

/E 10.8 10.5 11.5 11.7 16.2 12.6


21/26

8482

#####

1M 1yr YTD

bsolute -0.7 -5.4 -5.4

el.to Nifty -0.6 -9.0 -9.0


omoters 69.3 69.3 69.3

I 4.2 3.9 3.2

I 12.4 12.5 13.0hers 14.2 14.3 14.6

Financials Rs, Cr

2011 2012 2013 2014E 2015E

NII 3845 3902 4582 6186 6289

Total Income 4770 4868 5534 7335 7438

PPP 2695 2811 3357 4850 5132

Net Profit 907 1109 618 1585 2101

EPS 16.5 17.7 9.3 23.8 31.6

hange from Previous

CO Bank Vs Nifty

hare Holding Pattern-%

2960821

fty 6154



ock Performance

2wk Range H/L

Stable asset quality in sequential basis despite of challenging environment

On delinquencies front, bank reported very stable asset quality in sequential bas

with GNPA deteriorated by 0.3% to Rs.7353 cr versus Rs.7376 cr in challengi

macro environment. In percentage term GPA improved by 25 bps to 5.2% vers

5.5% in previous quarter. Provisions in absolute term declined by 0.7% in sequent

basis which led net NPA improve to 0.3%. In percentage of gross NPA to gro

advance, it stood at 5.2% versus 5.5% in 2QFY14 while net NPA in percentage te

was improved to 3% from 3.1% in previous quarter. Provisions coverage ra

(without technical write-off), was 46.4% as against 46.6% in previous quarter.

Operating expenses increased by 15.5% YoY in which employee cost and oth

operating expenses increased by 12.7% and 21% YoY respectively. Cost incom

ratio declined from 39.2% in 3QFY13 to 35.3% inn3QFY14. With the support fro

healthy NII growth and lower cost income ratio, banksoperating profit grew by 37

YoY to Rs.1137 cr.

Healthy NII growth and controlled cost income ratio led operating profit grow

SE Code

UCO BANK

ompany Update BUY

MP

532205

arget Price

verage Daily Volume

5561

evious Target Price

During quarter, bank reported NII growth of 33% YoY to Rs.1566 cr below of o

expectation of Rs. 1642 cr largely due to higher cost of fund than anticipated whi

led by sequentially declined of low cost deposits(CASA). NII growth of 33% YoY w

much higher than its peers which have delivered result so far. Other income wRs.190 cr versus Rs.209 cr in 2QFY14 and Rs.190 cr in 3QFY14. With the low

support from other income, total revenue growth was 28.5% YoY to Rs.1756 cr.

pside

86.65/46

kt Capital (Rs Cr)

arket Data

SE Symbol UCOBANK

UCO bank repor ted net prof i t growth o f 207% YoY largely due to robu

grow th in NII along with hig her than industry average loan growth . Bank

asset qual it y imp ro ved sequen ti al ly desp it e o f chal le ng in g macenvironment . However banks CASA growth has dec l ined marg ina l ly

sequ ential basis but st i l l at com fortable level. UCOBanksoperat ing as we

as f inancia ls metr ics has been improving c ont inuous ly. We value bank

Rs.84/share which is 0.5 t imes of one year forward book and 3.5 t ime

FY14Es earning.

NII growth of 33% YoY led by higher than industry loan growth and high CD

ratio

"BUY"27h Jan, 2014



22/26

UCO BANK


oan and deposits reported higher growth than industry average

n balance sheet growth front, banksadvance grew by 16.5% YoY while deposits grew

y 13.4% YoY led by CASA growth of 23% YoY in absolute term. CASA in percentage of

tal deposits improved to 30.5% versus 19.2% in 3QFY13. Saving deposits and current

eposits increased by 13% and 38% YoY respectively. But in sequential basis, CASAeposits declined to 30.5% from 31.8% and 32.1% in 1QFY14. Credit deposits ratio for

uarter stood at 73.5% as against 71.6% in 3QFY14 and 71.4% in previous quarter. Total

usiness (Deposits +Advance) grew by 14.7% YoY to Rs.3.34 lakh Cr versus Rs.2.91

kh Cr.

arginal expansion of NIM on account of declined loan yield than cost of fund

M improved by 60 bps YoY to 3.06% from 2.42% largely due to lower cost of deposits

hich was lead by low cost franchise network. Cost of deposits stood at 6.27% versus

92% in 3QFY14. Yield on advance (EW calculation) declined from 10.5% to 10% which

as restricted limited NIM growth.

rofit tripled on account of healthy NII growth, lower CI ratio and stable asset

uality

CO Bank reported net profit growth of 207% YoY to Rs.315 cr as against our

xpectation of Rs.338 cr largely due to robust growth in NII, lower cost income ratio,

proving asset quality which led lower provisions and high credit deposits ratio.

aluation & View

CO bank reported net profit growth of 207% YoY largely due to robust growth in NII

ong with higher than industry average loan growth. Banks asset quality improved

quentially despite of challenging macro environment. However banks CASA growth

as declined marginally in sequential basis but still at comfortable level. UCO Banksperating as well as financials metrics has been improving continuously. We value bank

Rs.84/share which is 0.5 times of one year forward book and 3.5 times FY14Es

arning.



23/26


24/26

UCO BANK



uarterly Performance


arterly Result 3QFY14 2QFY14 3QFY13 % YoY % QoQ

erest/discount on advances / bills 3543 3396 3197 10.8 4.3

ome on investments 1138 1026 923 23.3 11.0

erest on balances with Reserve Bank of India 29 8 30 -2.7 243.2

hers 19 14 21 -13.7 31.7

tal Interest Income 4729 4444 4171 13.4 6.4

hers Income 190 209 190 0.4 -9.0

tal Income 4919 4653 4361 12.8 5.7

erest Expended 3163 2875 2994 5.6 10.0

1566 1569 1177 33.0 -0.2

her Income 190 209 190 0.4 -9.0

tal Income 1756 1779 1367 28.5 -1.3

mployee 395 382 351 12.7 3.3

her Expenses 225 230 186 20.9 -2.4

erating Expenses 620 612 536 15.5 1.2

P( Rs Cr) 1137 1166 831 36.8 -2.5

ovisions 812 759 728 11.5 7.0

T 325 408 103 215.1 -20.3

x 10 7 1 1536.5 40.7

t Profit 315 400 102 206.9 -21.4

lance Sheet

t Worth 11085 10770 9399 17.9 2.9

posits 192406 188779 169711 13.4 1.9

tal Liabilities 203491 212416 179110 13.6 -4.2

vances 141457 135233 121455 16.5 4.6

tal Assets 141457 212416 121455 16.5 -33.4

set Quality

NPA 7,353 7,376 6,711 9.6 -0.3

A 4217 4228 3927 7.4 -0.3

GNPA 5.2 5.5 5.5

NPA 3.0 3.1 3.2

PCR(Without technical writeoff) 46.4 46.6 41.5


25/26

UCO BANK

Source: Company/Eastwind



ncome Statement 2011 2012 2013 2014E 2015E

terest Income 11371 14632 16752 18346 22476

terest Expense 7526 10730 12170 12160 16186

I 3845 3902 4582 6186 6289

hange (%) 65.4 1.5 17.4 35.0 1.7on Interest Income 925 966 952 1149 1149

otal Income 4770 4868 5534 7335 7438

hange (%) 45.0 2.0 13.7 32.5 1.4

perating Expenses 2075 2056 2177 2485 2306

re Provision Profits 2695 2811 3357 4850 5132

hange (%) 58.0 4.3 19.4 44.5 5.8

rovisions 1788 1661 2710 3217 2798

BT 907 1150 647 1634 2334

AT 907 1109 618 1585 2101

hange (%) -10.4 22.3 -44.2 156.4 32.5

alance Sheet

eposits( Rs Cr) 99071 115540 128283 153939 184727

hange (%) 17 11 20 20

f which CASA Dep 32031 34403 55733 67707 81249

hange (%) 6 7 62 21 20

orrowings( Rs Cr) 5475 12901 9492 12315 14777

vestments( Rs Cr) 42927 45771 52245 62692 75231

oans( Rs Cr) 99071 115540 128283 153939 184727

hange (%) 20 17 11 20 20

atio

vg. Yield on loans 8.6 9.9 10.0 9.0 9.0

vg. Yield on Investments 6.6 7.1 7.1 6.8 7.5

vg. Cost of Deposit 4.7 6.5 6.6 7.0 6.4

vg. Cost of Borrowimgs 12.5 6.1 7.0 6.0 6.0

aluation

ook Value 135 137 146 173 185

MP 107 79 50.1 75.25 75.25

/BV 0.8 0.6 0.3 0.4 0.4


26/26

Narnolia Securities Ltd

402, 4th floor 7/ 1, Lord s Sinha Road Kolkata 700071, Ph

033-32011233 Toll Free no : 1-800-345-4000

email: [email protected],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 taxation

advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any

action based upon it. This report/message is not for public distribution and has been

furnished to you solely for your information and should not be reproduced or

redistributed to any other person in any from. The report/message is based upon publicly

available information, findings of our research wing East wind & information that we

consider 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 that

past 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 to

assume that NSL and /or its Group or associate Companies, their Directors, affiliates

and/or employees may have interests/ positions, financial or otherwise, individually or

otherwise in the recommended/mentioned securities/mutual funds/ model funds and

other investment products which may be added or disposed including & other mentioned

in this report/message.

Documents

Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever