Market snapshot Today’s top research themevid.investmentguruindia.com/report/2020/March/MrrORNING_INDIA-2… · The December-quarter corporate earnings season was in line with our

18 February 2020

Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Research Team ([email protected])

Equities - India Close Chg .% CYTD.%

Sensex 41,056 -0.5 -0.5 Nifty-50 12,046 -0.6 -1.0 Nifty-M 100 17,825 -0.9 4.2 Equities-Global Close Chg .% CYTD.% S&P 500 3,380 0.0 4.6 Nasdaq 9,731 0.0 8.5 FTSE 100 7,433 0.3 -1.4 DAX 13,784 0.3 4.0 Hang Seng 10,958 0.9 -1.9 Nikkei 225 23,523 -0.7 -0.6 Commodities Close Chg .% CYTD.% Brent (US$/Bbl) 57 0.2 -13.7 Gold ($/OZ) 1,581 -0.2 4.2 Cu (US$/MT) 5,797 0.8 -5.7 Almn (US$/MT) 1,693 -0.2 -5.0 Currency Close Chg .% CYTD.% USD/INR 71.3 -0.1 -0.1 USD/EUR 1.1 0.0 -3.4 USD/JPY 109.9 0.1 1.2 YIELD (%) Close 1MChg CYTDchg 10 Yrs G-Sec 6.4 0.30 -0.2 10 Yrs AAA Corp 7.4 -1.46 -0.2 Flows (USD b) 17-Feb MTD CYTD FIIs -0.05 1.86 3.29 DIIs -0.02 0.19 0.53 Volumes (INRb) 17-Feb MTD* CYTD* Cash 352 413 388 F&O 10,761 16,042 16,509

Note: *Average

Today’s top research theme Market snapshot

Chart of the Day: India Strategy (3QFY20 results review: In-line; BFSI and Consumer lead)

India Strategy | 3QFY20 results review: In-line; BFSI and Consumer lead Nifty EPS estimate cut by 1%/2% for FY20/21 The December-quarter corporate earnings season was in line with our

modest expectations. Corporate tax rate cuts continued supporting earnings growth. BFSI and Consumer drove the earnings, while Metals dragged the aggregates. Commentary from corporates was mixed, and at best indicated a gradual recovery ahead. We continue seeing downside risks to our earnings estimates for FY21.

Nifty sales declined 2% YoY (our estimate: -3%), while EBITDA/PBT/PAT increased 11%/4%/9% YoY (our estimate: 8%/3%/9%). Performance was driven by BFSI, excluding which Nifty PBT was down 5% YoY and PAT was flat YoY (in-line). If BFSI drove the Nifty performance single handedly, global cyclicals like Metals and Oil & Gas dragged it. Ex-Metals and Oil & Gas, Nifty PBT/PAT were up 16%/22% (in-line).

MOFSL Universe sales/EBITDA/PBT/PAT growth stood at (1%)/10%/(1%)/5% YoY v/s our estimate of (3%)/9%/0.4%/9%. Ex-BFSI, MOSL Universe PBT was down 6% YoY (our estimate: -5%) and PAT was flat YoY (our estimate: +3%).

Sales for both the Nifty and the MOFSL Universe declined for the second consecutive quarter since Jun’16, dragged by Auto, Metals O&G and Cement.

Our FY20/21 Nifty EPS estimates have been cut by 1%/2% to INR527/INR679 (prior: INR532/INR693). We expect Nifty EPS to grow 9% in FY20.

Cos/Sector Key Highlights India Strategy 3QFY20 results review: In-line; BFSI and Consumer lead JSW Energy Signs agreement to acquire GMR Kamalanga; Upgrade to Buy Oil & Gas CGD – reiterate regulatory risk Ashok Leyland Below-estimate; Tough 3Q, 1HFY21 outlook weak too due to BS6 SAIL Weak realization impacts profitability Glenmark Pharma India/LATAM drives while US drag earnings Lemon Tree Hotel New hotels drive performance

MOFSL Universe PAT growth at 4.9% YoY – entirely led by BFSI

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Nifty PAT up 8.8% YoY – in-line

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Research covered

18 February 2020 2

RIL to merge its distribution, media business into Network18 Reliance Industries Ltd (RIL) today announced a consolidation of its media and distribution businesses spread across multiple entities into Network18…

SBI Cards’ ₹9,000-crore IPO set for early March launch SBI Cards and Payment Services Ltd, backed by State Bank of India and private equity firm Carlyle Group, is targeting an early-March launch for its ₹9,000-crore initial public offering (IPO), two people aware of the development said…

DHFL receives interest from at least 15 bidders At least 15 suitors have shown interest in acquiring troubled mortgage financier Dewan Housing Finance Corp. Ltd (DHFL) under the bankruptcy process before the deadline for submission of expressions of interest (EoIs)…

Paracetamol prices jump 40% in India after shutdowns in China India is facing the ripple effects of shutdowns in China with prices of paracetamol, the most commonly used analgesic, rising by 40 per cent. The cost of azithromycin, an antibiotic used for treating bacterial infections…

Domestic air passenger traffic increased by 2.2 per cent in January: DGCA The domestic air passenger traffic in January increased by 2.2 per cent to 1.27 crore compared to the same month in 2019, according to data released by aviation regulator DGCA on Monday…

JSW Energy to buy GMR Energy's Kamalanga power plant for Rs 5,321 cr JSW Energy has entered an agreement to buy GMR Energy’s 1,050 mw-Kamalanga power project located in Odisha for a consideration of Rs 5,321 crore, the Sajjan Jindal-led company…

Slowed by the coronavirus, China Inc. struggles to reopen Airbus is slowly restarting its assembly line in China. General Motors began limited production Saturday. Toyota followed Monday morning. Fitfully and painfully — and with some worried prodding from Beijing — China is trying to reopen for business…

Kindly click on textbox for the detailed news link

In the news today

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https://www.livemint.com/companies/news/reliance-industries-to-reduce-holding-in-network18-from-75-to-64-11581958571161.html

https://www.livemint.com/market/ipo/sbi-cards-9-000-crore-ipo-set-for-early-march-launch-11581956522521.html

https://www.livemint.com/companies/news/dhfl-receives-interest-from-at-least-15-bidders-11581961480413.html

https://www.business-standard.com/article/international/coronavirus-paracetamol-prices-jump-40-in-india-after-shutdowns-in-china-120021701464_1.html

https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/domestic-air-passenger-traffic-increased-by-2-2-per-cent-in-january-dgca/articleshow/74176305.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

https://economictimes.indiatimes.com/industry/energy/power/jsw-energy-to-buy-gmr-energys-kamalanga-power-plant-for-rs-5321-cr/articleshow/74175046.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

https://economictimes.indiatimes.com/news/international/business/slowed-by-the-coronavirus-china-inc-struggles-to-reopen/articleshow/74181730.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

18 February 2020 3

India Strategy BSE Sensex: 41,258 S&P CNX: 12,113

3QFY20 results review: In-line; BFSI and Consumer lead Nifty EPS estimate cut by 1%/2% for FY20/21

The December-quarter corporate earnings season was in line with our modest expectations. Corporate tax rate cuts continued supporting earnings growth. BFSI and Consumer drove the earnings, while Metals dragged the aggregates. Commentary from corporates was mixed, and at best indicated a gradual recovery ahead. We continue seeing downside risks to our earnings estimates for FY21.

Nifty sales declined 2% YoY (our estimate: -3%), while EBITDA/PBT/PAT increased 11%/4%/9% YoY (our estimate: 8%/3%/9%). Performance was driven by BFSI, excluding which Nifty PBT was down 5% YoY and PAT was flat YoY (in-line). If BFSI drove the Nifty performance single handedly, global cyclicals like Metals and Oil & Gas dragged it. Ex-Metals and Oil & Gas, Nifty PBT/PAT were up 16%/22% (in-line).

MOFSL Universe sales/EBITDA/PBT/PAT growth stood at (1%)/10%/(1%)/5% YoY v/s our estimate of (3%)/9%/0.4%/9%. Ex-BFSI, MOSL Universe PBT was down 6% YoY (our estimate: -5%) and PAT was flat YoY (our estimate: +3%).

Of the 19 sectors that we track, 2/6/11 delivered PBT that was above/in line/below our estimate. Financials accounted for 101% of incremental profit of MOSL Universe. At the PBT level, the contribution of Financials is even starker.

Sales for both the Nifty and the MOFSL Universe declined for the second consecutive quarter since Jun’16, dragged by Auto, Metals O&G and Cement.

Private Banks posted in-line 30% PBT and 43% PAT growth YoY, but loan growth moderated on the back of the weak economic environment. Our NBFC Universe delivered in-line 7% PBT and 20% PAT growth YoY led by Bajaj Finance.

Consumer and Technology Universe posted in-line PBT growth of 8% and 2% YoY, respectively, while Capital Goods and Cement disappointed with a 12% YoY decline (our estimate: +1.4%) and 4% YoY growth (our estimate: 19%) in PBT. Tax cuts helped Consumer Universe deliver impressive 23% YoY PAT growth.

Auto PBT increased 12% YoY but still missed our estimate of 21% growth. Ex-Tata Motors, Auto PBT declined 14% YoY. Utilities also impressed with 6% YoY PBT growth (our estimate: -11%). PBT for Metals and O&G Universe declined by 61% and 7% YoY, respectively – slightly below our estimate.

One third of the MOSL Universe posted a YoY PAT decline, despite the tax cut cushion. Our FY20/21 Nifty EPS estimates have been cut by 1%/2% to INR527/INR679 (prior:

INR532/INR693). We expect Nifty EPS to grow 9% in FY20. Financials are expected to contribute 126% of incremental Nifty PAT in FY20. Ex-BFSI, we expect Nifty FY20 profit to decline by 2% YoY – lowest in five years.

Direction of earnings revision for the broader markets still remains downward, with 66 companies in MOFSL Universe witnessing an earnings cut of 3%+ and 42 witnessing upgrades of 3%+ for FY21. Given the weak underlying macro and mixed high frequency indicators, there are downside risks to our earnings estimates.

For the MOFSL Universe, at the sectoral level, Retail and Metals have seen marginal earnings upgrade of 1% each, while Oil & Gas, Cement, Capital Goods and Utilities earnings have seen downward revision of 3%, 3%, 2% and 2%, respectively. Technology, Consumer, Private Banks, NBFC, Automobiles and Healthcare estimates remain stable.

Top upgrades (FY20E): Bharti Airtel (loss to profit), UPL (25%), Dr. Reddy’s Lab (7%), Titan (6%), Wipro (6%), Hero Moto (5%) and Tech Mahindra (5%).

Refer our Dec-19 Quarter Preview

http://institution.motilaloswal.com/emailer/Research/3QFY20_REVIEW_STRATEGY-20200217-MOSL-SU-PG044.pdf

http://ftp.motilaloswal.com/emailer/Research/INDIA%20STRATEGY-3QFY20-20200107-MOSL-RP-PG216.pdf

18 February 2020 4

Top downgrades (FY20E): Tata Motors (47%), JSW Steel (20%), Grasim Industries (13%), SBI (12%), GAIL (11%), IOC (8%) and IndusInd Bank (6%).

In-line but narrow and modest show; earnings need to broad base for broader markets to participate: The December-quarter earnings turned out to be in line but still modest/narrow (BFSI driven) and underscored the weak underlying operational trends (Nifty PBT Ex-BFSI declined 5% YoY). The government and RBI measures announced since Aug’19 to revive growth are yet to reflect in macro and micro data. The recent FY21 budget has chosen the path of fiscal prudence over short-term fiscal stimulus. This path, while sound from a long-term perspective, does not offer any near-term respite for growth, in our view. High frequency indicators on both consumption and investments remain weak and have resulted in successive downgrades for FY20 GDP growth estimate. Recent pick-up in inflation and potential bumper Rabi crop offer hope for rural consumption recovery. After the recent rally, the Nifty at 17.8x FY21E earnings is not expensive but discounting the expected sharp earnings recovery, in our view. We expect the markets to remain narrow and concentrated till we see more evidence of broad-basing of earnings.

Top Ideas: Large-caps: ICICI Bank, SBI, Bharti Airtel, L&T, Infosys, HUL, HDFC, UltraTech, Maruti, HCL Tech. Mid-caps: Indian Hotels, ABFRL, TGBL, JK Cement, Crompton Consumer, Alkem , Ashok Leyland, Federal Bank, Jubilant Foodworks, Mindtree.

Exhibit 1: Preferred large-cap ideas MCap CMP EPS (INR) EPS CAGR PE (x) PB (x) ROE (%) Company (USDb) (INR) FY19 FY20E FY21E FY19-21, % FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E Hind. Unilever 68.4 2,255 28.9 32.9 38.7 15.7 59.0 68.5 58.2 48.3 61.8 61.3 85.0 91.6 105.7 HDFC 57.9 2,401 44.4 51.0 57.0 13.3 44.3 47.1 42.1 4.4 4.7 4.4 15.3 14.4 14.1 Infosys 50.4 786 35.4 38.6 42.8 9.9 21.0 20.4 18.4 5.0 5.8 5.5 25.0 26.9 30.8 ICICI Bank 49.5 546 5.2 16.8 29.3 137.0 76.3 32.5 18.6 2.4 3.1 2.7 3.2 9.9 15.8 Bharti Airtel 43.2 565 -8.7 0.7 3.9 LP -35.0 844.5 145.7 1.7 3.5 3.4 -5.0 0.5 2.4 State Bank 40.0 320 2.6 23.1 38.1 284.6 124.5 13.8 8.4 1.3 1.2 1.1 0.4 9.2 13.9 Maruti Suzuki 29.3 6,914 247.7 200.0 261.7 2.8 26.9 34.6 26.4 4.4 4.3 3.9 16.3 11.9 14.4 Larsen & Toubro 25.4 1,295 63.5 77.4 93.2 21.2 21.8 16.7 13.9 3.1 2.6 2.3 13.7 15.3 16.3 HCL Technologies 23.7 621 36.8 39.8 45.3 10.9 29.6 15.6 13.7 7.0 3.3 3.0 25.7 23.3 22.8 Ultratech Cement 17.9 4,432 90.3 141.1 185.9 43.5 44.3 31.4 23.8 3.3 3.3 2.9 8.2 11.5 13.6

Source: Company, MOFSL

Exhibit 2: Preferred mid-cap ideas MCap CMP EPS (INR) EPS CAGR PE (x) PB (x) ROE (%) Company (USDb) (INR) FY19 FY20E FY21E FY19-21, % FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E Alkem Lab 4.4 2,649 63.8 93.4 117.4 35.6 27.5 28.4 22.6 3.9 5.0 4.3 14.8 19.0 20.4 Tata Global 3.5 397 7.0 8.1 9.5 16.7 29.0 49.3 41.7 1.7 3.3 2.7 6.1 6.8 8.2 Jubilant Foodworks 3.4 1,813 24.1 27.2 35.2 20.8 59.9 66.6 51.6 15.1 16.2 13.5 25.2 24.4 26.2 Ashok Leyland 3.3 80 6.9 1.7 3.5 -28.9 13.2 46.5 23.0 3.2 3.0 2.9 26.0 6.2 12.7 Aditya Birla Fashion 2.9 266 1.6 2.8 4.4 62.7 134.2 93.5 60.9 11.9 13.5 11.1 10.1 14.9 20.0 CG Consumer Elect. 2.5 282 6.0 7.8 9.8 28.2 37.8 36.3 28.8 12.9 12.3 9.9 34.1 33.9 34.2 Federal Bank 2.4 87 6.3 8.6 10.6 29.8 15.3 10.1 8.2 1.4 1.2 1.1 9.8 12.3 13.6 Mindtree 2.3 960 44.7 37.5 48.8 4.5 21.1 25.6 19.7 4.7 5.0 4.5 24.3 20.2 24.0 Indian Hotels 2.2 134 2.4 3.4 4.4 36.5 65.5 39.7 30.5 4.2 3.4 3.1 6.6 8.9 10.7 J K Cements 1.5 1,425 34.1 62.2 71.6 44.8 25.2 22.9 19.9 2.5 3.5 3.1 11.3 16.6 16.5


18 February 2020 5

BSE SENSEX S&P CNX CMP: INR64 TP: INR78 (+23%) Upgrade to Buy 41,056 12,046

Stock Info Bloomberg JSW IN Equity Shares (m) 1,640 M.Cap.(INRb)/(USDb) 104.4 / 1.5 52-Week Range (INR) 80 / 58 1, 6, 12 Rel. Per (%) -4/-16/-17 12M Avg Val (INR M) 64 Free float (%) 25.1 Financials & Valuations (INR b) Y/E March 2020E 2021E 2022E Net Sales 84.6 115.7 121.1 EBITDA 29.5 38.5 39.1 PAT 6.8 10.1 11.0 EPS (INR) 4.1 6.2 6.7 Gr. (%) -2.4 48.8 8.5 BV/Sh (INR) 75.4 79.6 84.2 RoE (%) 5.6 7.9 8.2 RoCE (%) 7.4 9.3 8.6 P/E (x) 15.4 10.3 9.5 P/BV (x) 0.8 0.8 0.8 RoCE (%) 7.4 9.3 8.6 Payout (%) 48.3 32.5 29.9 Valuations P/E (x) 15.4 10.3 9.5 P/BV (x) 0.8 0.8 0.8 Div. Yield (%) 3.1 3.1 3.1 FCF Yield (%) 26.7 -24.8 32.3 Shareholding pattern (%) As On Dec-19 Sep-19 Dec-18 Promoter 74.9 74.9 75.0 DII 8.8 9.0 8.5 FII 7.2 6.7 6.1 Others 9.1 9.5 10.4

FII Includes depository receipts Stock Performance (1-year)

Signs agreement to acquire GMR Kamalanga Leveraging on its strong balance sheet; Upgrade to Buy JSW Energy (JSWE) has signed a share purchase agreement to acquire GMR

Kamalanga (1,050MW). The deal is valued at a maximum amount of INR53b (implying an EV of INR51m/MW).

We see the transaction as value accretive for JSWE, given the strategic location of the plant, room for merchant volumes, and the company’s ability to reduce interest and O&M costs post acquisition. Moreover, the move lends visibility to JSWE’s capital deployment. We raise our FY21/22 EPS estimates by 15/8% to account for the takeover of Kamalanga from FY21. Upgrade to Buy with a TP of INR78/sh (23% upside).

GMR Kamalanga – asset strategically located near coal belt GMR Kamalanga (3x 350MW) is strategically located in Orissa near the coal

belt region. Accordingly, variable costs are low at just INR1.5-1.6/kWh. In terms of PPA, 84% of the plant’s capacity is tied up under long-term agreements (25 years) with Odisha (263MW), Haryana (334MW) and Bihar (283MW). The balance 170MW is available for sale/merchant.

Given the strategic location of the plant, fuel supply linkages are tied for the entire PPA. Besides, the company has recently secured another 0.4mtpa for part of its balance merchant capacity.

Management expects EBITDA of INR9b in FY21 JSWE expects EBITDA of INR9b for FY21, led by contribution from open

merchant capacity (INR1.25b). The company noted given working capital crunch at the plant, the asset was unable to buy coal/run the untied capacity. Upon takeover, JSWE believes it can easily utilize this capacity for merchant sales (@90% PLF of open capacity and spreads of INR1/kWh). Further, with tie ups under Shakti, a favorable position under Pilot Scheme-II (150MW) and efficiency gains on O&M post takeover, EBITDA can potentially rise to INR1.05b.

The transaction value of INR53b includes contingent payable of INR6.15b. According to JSWE, this largely relates to dispute with a particular contractor. The company’s share of liability arising from this is INR3.15b, while the remaining liability is with the seller. On a conservative basis, JSWE has included the entire amount as consideration for the deal.

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JSW EnergySensex - Rebased

18 February 2020 Company Update | Sector: Utilities

JSW Energy

http://ftp.motilaloswal.com/emailer/Research/JSW-20200218-MOSL-CU-PG010.pdf

18 February 2020 6

Kamalanga to be value accretive; Upgrade to Buy Given the strategic location of the plant, scope to improve efficiencies and

headroom through merchant volumes, we expect the deal to be value accretive (expect IRRs of ~17-18% at debt: equity of 80:20).

Furthermore, the move lends visibility to the company’s capital deployment plan. Balance sheet would remain under check (FY21E net debt: equity of 1.1x) and provide room for acquiring new assets as well (the co. is in discussion for acquiring Ind Barath Utkal – 700MW).

Final approvals would come in place soon and JSWE is hopeful of completing the transaction by the end of the year. Accordingly, we raise our FY21/22 EPS estimates by 15/8% to account for the takeover of Kamalanga from FY21. Upgrade to Buy with a target price of INR78/sh (22% upside).

18 February 2020 7

CGD – reiterate regulatory risk The recent news article about the Petroleum and Natural Gas Regulatory Board

(PNGRB) soon declaring city gas distribution (CGD) network as common carrier (where marketing exclusivity has already expired) echoes the regulatory risk we had highlighted in our earlier note.

It is understood that the regulator will first come up with a public paper announcing the implementation of common carrier and then allow each CGD company to submit views/comments on it.

This move is to avoid the hustle created in the past (IGL’s case in 2012) and ensure firm implementation of the directive within a regulatory framework.

Despite initial attempts by the regulator, we are yet to see a notification on common carrier. However, implementation of the same would intensify competition, lowering volumes and EBITDA/scm for the industry. This in turn could impact RoEs and drive downgrade of valuation multiples for the CGDs.

Path in the formulation In Jun’19, the PNGRB had introduced a concept paper in order to facilitate

competition in GAs where marketing exclusivity has already expired. The concept paper talked about two options: (1) cost of service based on 14%

post-tax RoE and (2) online bidding. In Oct’19, PNGRB conducted an open house for all stakeholders to receive

views/comments on the common carrier concept paper. Open house had (third party) attendance from the Morbi Ceramics Association,

apart from incumbents and other oil & gas companies. However, it remains to be seen that in what form the final notification comes in

and the impact on financials. If we assume that competition takes away 20% of current sales volumes (as

mandated in the PNGRB’s draft), it would result in 200-360bp reduction in RoEs of the incumbents under the aforementioned option 1.

Risk it bears on incumbents Marketing exclusivity has already expired in Delhi (IGL – 1/3), Mumbai and

Thane Urban (MAHGL – 2/3), and for 10 GAs (out of 18) of GUJGA. Also, in the recently concluded 9th and 10th rounds of CGD bidding, IGL/GUJGA

won 4/7 GAs, while MAHGL failed to win any GA. At highest risk from open access would be sales to bulk consumers like State

Transport Corporations, cab aggregators and industrial consumers. LNG procurement is also witnessing innovation with new types of contracts.

With huge LNG supply glut globally and availability of flexible contracts, PNG-industrial/commercial segment is expected to witness fierce competition since there could be significant differences in LNG procurement cost of companies.

Please find links to our earlier reports on: Open Access: CGDs – a difficult terrain ahead CGDs – regulatory risk ahead NGT: Green revolution 2.0 Industrial pollution: Next driver for gas consumption

Sector Update | 17 February 2020

Oil & Gas

https://economictimes.indiatimes.com/industry/energy/oil-gas/plans-redrawn-to-end-city-gas-distributors-monopoly/articleshow/74166973.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

http://institution.motilaloswal.com/emailer/Research/OIL-20190629-MOSL-SU-PG006.pdf

http://ftp.motilaloswal.com/emailer/Research/OIL-20190425-MOSL-SU-PG012.pdf




http://ftp.motilaloswal.com/emailer/Research/OIL-20200217-MOSL-SU-PG004.pdf

18 February 2020 8

Multiple triggers over near-to-medium term Implementation of BS-VI would increase CNG adoption, especially in light

commercial vehicles as the cost differential of diesel vehicles versus petrol/CNG variants is likely to decrease significantly.

The National Green Tribunal (NGT) is taking a serious view on curbing industrial pollution. Our broad calculation in the report suggests that replacement of dirty fuels could easily result in incremental demand of ~100mmscmd for natural gas. However, the benefit to CGDs would be limited as they can only supply to companies that consume ≤50,000scmd.

Valuation and recommendation Our volume growth assumption of ~12%/5%/10% and EBITDA/scm assumption

of INR6.4/INR8.2/INR4.5 for IGL/MAHGL/GUJGA would face serious challenge if competition creeps in.

We reiterate Buy on GUJGA as it is the biggest beneficiary of the NGT thesis (already saw an example at Morbi). Gujarat is facilitated by better availability of gas/pipeline infrastructure and already has a high market share of natural gas in its primary energy mix (~25%). Rajkot, Ankleshwar, Batala, Bhavnagar, Tarapur and Vapi have been categorized as critically and severely polluted areas. Replacement of dirty industrial fuel will drive further volume growth for GUJGA.

Industrial pollution has a limited role to play in both IGL and MAHGL. We maintain Neutral on IGL owing to its expensive valuations. However, IGL

could increase its sales volume to ~1-1.15mmscmd over the next 3-4 years. New areas such as Rewari, Karnal and Muzzafarnagar are likely to add ~0.2mmscmd each. Haryana City Gas sells 0.4mmscmd, of which it sources 0.25mmscmd from IGL with its margins to the company being minimal.

We reiterate Neutral on MAHGL due to concerns about limited growth. The company’s volume growth guidance stands at ~6-7% over the near-to medium term. However, it was able to achieve only marginal volume growth of 3% YoY in 9MFY20. The regulation might also challenge the EBITDA margin (highest among peers) enjoyed by the company.

Risks to our call If the common contract policy is restrictive for a newcomer, it may not attract

significant competition, and thus, not impact volumes, EBITDA/scm or RoEs. EVs are likely to become a significant force in 5-7 years, if not earlier. However,

any development that significantly delays EV adoption may result in sustenance of volume growth in the longer run.

Valuation snapshot

Company CMP (INR)

TP (INR)

(%) Upside

Absolute Perf. (%) EPS (INR) P/E (x) EV/EBITDA (x) ROE (%) 3M 6M 12M YTD FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E

Gujarat Gas 286 340 19 48 55 139 20 6.2 16.5 13.5 45.8 17.3 21.1 22.8 13.6 12.4 21.1 43.0 27.0 Indraprastha Gas 468 518 11 11 43 66 9 11.2 16.8 17.6 41.6 27.8 26.6 26.8 20.9 18.4 20.6 25.6 22.4 Mahanagar Gas 1,133 1,125 -1 13 41 31 7 55.3 82.0 70.1 20.5 13.8 16.2 11.9 9.6 10.1 24.3 30.8 22.7


8.4 6.3

4.4

IGL MAHGL GUJGA

CMP implied terminal growth rate (%)


18 February 2020 9

Estimate changes CMP: INR 82 TP: INR95 (+16%) Buy TP change Rating change

Bloomberg AL IN Equity Shares (m) 2,927 M.Cap.(INRb)/(USDb) 239.4 / 3.4 52-Week Range (INR) 98 / 57 1, 6, 12 Rel. Per (%) -1/21/-13 12M Avg Val (INR M) 2145

Financials & Valuations (INR b) Y/E March 2020E 2021E 2022E Sales 175.4 214.3 256.7 EBITDA 10.7 18.8 27.5 Adj. PAT 3.0 8.8 14.7 Adj. EPS (INR) 1.0 3.0 5.0 EPS Gr. (%) -85.3 194.0 66.8 BV/Sh. (INR) 26.5 26.8 28.8 Ratios RoE (%) 3.7 11.2 18.0 ROCE (%) 3.9 9.8 15.5 Payout (%) 221.1 75.2 50.1 Valuations P/E (x) 78.9 26.8 16.1 P/BV (x) 3.0 3.0 2.8 EV/EBITDA (x) 23.0 13.0 8.8 Div. Yield (%) 2.8 2.8 3.1 FCF Yield (%) -3.1 4.9 7.0

Shareholding pattern (%) As On Dec-19 Sep-19 Dec-18 Promoter 51.1 51.1 51.1 DII 12.4 13.1 9.2 FII 19.2 17.1 21.9 Others 17.3 18.8 17.8 FII Includes depository receipts

Below-estimate; Tough 3Q, 1HFY21 outlook weak too due to BS6 Focus on cost and cash flow in a tough operating environment The third quarter turned out to be more challenging than expected. While

the 1HFY21 outlook is weak given BS6 transition-related challenges, AL’s focus on adding new revenue and profit pool bodes well for a stronger recovery from 2HFY21.

We cut our EPS estimate by 41%/14% for FY20/21 to factor in the weak demand scenario and RM cost inflation. However, we maintain Buy on the back of the prospects of a strong recovery 2HFY21 onward.

Adverse mix, op. deleverage lead to fifth straight quarter of PAT decline Revenue/EBITDA/PAT declined by ~36.5%/65%/92% YoY to

~INR40.2b/INR2.3b/INR293m for 3QFY20 and by 33%/54%/74% YoY for 9MFY20.

Volumes declined ~29% YoY (+8% QoQ) to ~31.2k units, led by M&HCV (-39% YoY) and LCV (-6% YoY).

Net realization was down 11% YoY (-5.2% QoQ) at INR1,287k (our estimate: INR1,344k), reflecting the adverse mix and higher discounts.

Gross margin shrank ~340bp YoY (-450bp QoQ) to 26.5% (our estimate: 30.8%), primarily due to the impact of inventory reduction and adverse mix.

EBITDA margin shrank ~470bp YoY (-20bp QoQ) to 5.6% (our estimate: 6.3%) also due to operating deleverage. Contraction in EBITDA margins would have been higher but for the significant decline in staff cost (-45% YoY, -37% QoQ) as AL reversed 1HFY20 provisioning for variable pay.

AL granted ~70.1m ESOPs to new CEO (Mr Vipin Sondhi). ESOPs are exercisable at INR82.9/option at end of fourth and sixth year (50% each).

Highlights from the management commentary FY21 outlook: While 1QFY21 is likely to be tough and 2Q flattish, AL is

preparing for growth in 2HFY21. Exports are likely to grow 20% led by a revival in Bangladesh, SL and African market (new tender coming in). We build in volume growth of ~11% in M&HCV and ~40% in LCV in FY21.

Focus on inventory reduction continued in 3QFY20. Total inventory (AL + dealer) reduced from ~27.5k units (Jun’19) to ~8k units (Dec’19) and further to ~6.5k units (Jan’20).

Cost-cutting program K54-2 is on track to deliver savings of ~INR5b in FY20. For FY21, it is targeting savings of INR6-6.5b.

Capex: 9MFY20 capex at ~INR9.6b. FY20 guidance at INR12-13b. It would continue focusing on controlling capex with maintenance capex of INR4-5b per annum in M&HCV and growth investments in LCV.

Valuation & view Valuations at 13x/8.8x FY21/22E EV/EBITDA are at early recovery cycle and

do not fully reflect for AL’s focus on adding new revenue and profit pool. Maintain Buy with a TP of ~INR95 (INR11/share of HLFL + 10x Dec’21E

EV/EBITDA compared to ~11x 10-year median EV/EBITDA).

17 February 2020 3QFY20 Results Update | Sector: Automobile

Ashok Leyland

http://ftp.motilaloswal.com/emailer/Research/AL-20200217-MOSL-RU-PG010.pdf

18 February 2020 10

Quarterly Performance (S/A) FY19 FY20E FY19 FY20E FY20

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE 3QE Net operating revenues 62,627 76,211 63,252 88,459 56,839 39,295 40,157 39,107 2,90,550 1,75,397 41,950 Change (%) 47.1 25.4 -12.0 0.7 -9.2 -48.4 -36.5 -55.8 10.2 -39.6 -33.7 RM/sales % 68.9 72.1 70.1 72.7 69.9 69.0 73.5 73.7 71.2 71.4 69.3 Staff/sales % 8.0 6.9 7.9 6.5 8.8 11.0 6.8 10.2 7.2 9.2 10.5 Other exp/sales % 12.4 10.1 11.7 9.7 11.8 14.1 14.1 14.0 10.8 13.3 14.0 EBITDA 6,716 8,290 6,496 9,854 5,370 2,286 2,252 802 31,357 10,708 2,627 EBITDA Margins(%) 10.7 10.9 10.3 11.1 9.4 5.8 5.6 2.0 10.8 6.1 6.3 Interest 142 204 192 166 126 301 337 337 704 1,100 250 Other Income 525 276 208 91 211 455 223 236 1,099 1,125 200 Depreciation 1,525 1,481 1,607 1,598 1,646 1,600 1,575 1,645 6,210 6,466 1,660 PBT after EO 5,360 6,708 4,836 8,065 3,607 191 542 -944 24,968 3,396 917 Effective Tax Rate (%) 21.3 21.3 21.2 19.0 36.2 -103.5 48.8 37.4 20.6 30.0 30.0 Adj PAT 4,358 5,430 3,857 6,623 2,443 842 293 -591 20,268 2,987 642 Change (%) 262.2 62.5 -20.8 -11.3 -43.9 -84.5 -92.4 -108.9 16.4 -85.3 -83.4

Key Performance Indicators M&HCV 30,647 38,387 29,805 44,019 26,719 16,815 18,122 19,036 142,858 98,734 18122

Dom. M&HCV Mkt sh (%) 30.2 35.0 31.9 37.0 34.1 30.5 30.3 33.8 LCV 11,481 13,572 13,953 15,502 12,889 12,123 13,083 10,893 54,508 52,573 13083

Dom. LCV Mkt sh (%) 8.3 8.9 9.6 9.1 10.0 10.2 9.3 9.0 Total Volumes (nos) 42,128 51,959 43,758 59,521 39,608 28,938 31,205 29,930 197,366 129,681 31205

AL's CV Market Sh (%) 16.9 18.6 17.3 19.8 10.7 16.1 15.3 17 Realizations (INR '000) 1,487 1,467 1,446 1,486 1,435 1,358 1,287 1,307 1,472 1,353 1344

Growth % -0.5 -1.1 -6.3 -0.5 -3.5 -7.4 -11.0 -12.1 8.8 -4.2 -7 Cost Break-up

RM Cost (% of sales) 68.9 72.1 70.1 72.7 69.9 69.0 73.5 73.7 71.4 69.3 69.3 Staff Cost (% of sales) 8.0 6.9 7.9 6.5 8.8 11.0 6.8 10.2 9.2 10.5 10.5 Other Cost (% of sales) 12.4 10.1 11.7 9.7 11.8 14.1 14.1 14.0 13.3 14.0 14.0

Gross Margin (%) 31.1 27.9 29.9 27.3 30.1 31.0 26.5 26.3 28.8 28.6 30.8 EBITDA Margins (%) 10.7 10.9 10.3 11.1 9.4 5.8 5.6 2.0 10.8 6.1 6.3 EBIT Margins (%) 8.3 8.9 7.7 9.3 6.6 1.7 1.7 -2.2 8.7 2.4 2.3 E:MOFSL Estimates

18 February 2020 11

ESTIMATE CHANGE CMP: INR43 TP: INR43 (+1%) Neutral TP change Rating change Bloomberg SAIL IN Equity Shares (m) 4,130 M.Cap.(INRb)/(USDb) 176.6 / 2.5 52-Week Range (INR) 60 / 30 1, 6, 12 Rel. Per (%) -14/23/-19 12M Avg Val (INR M) 1244 Free float (%) 25.0

Financials & Valuations (INR b) Y/E MARCH 2020E 2021E 2022E Sales 631.5 665.3 706.4 EBITDA 58.2 86.7 101.4 Adj. PAT -2.0 12.4 22.2 EBITDA Margin (%) 9.2 13.0 14.3 Cons. Adj. EPS (INR) -0.5 3.0 5.4 EPS Gr. (%) -107.7 -723.5 79.1 BV/Sh. (INR) 95.0 97.6 102.5 Ratios Net D:E 1.1 1.1 1.0 RoE (%) -0.5 3.1 5.4 RoCE (%) 3.4 6.4 8.0 Valuations P/E (x) -89.3 14.3 8.0 P/BV (x) 0.5 0.4 0.4 EV/EBITDA(x) 10.6 7.1 5.9 FCF Yield (%) 21.9 19.9 25.7


Weak realization impacts profitability Better steel prices to drive margin improvement SAIL’s third quarter result reflects the challenges faced by industry, with

EBITDA/ton down 69% YoY at INR2,439 due to a sharp decline in steel prices. Prices have recovered in the past three months, strengthening the margin

outlook. We estimate EBITDA/t to improve to ~INR5,000 in 4QFY20. There is no change to our FY20/21 EBITDA estimates and we maintain Neutral.

Lower realizations seep in impacting margins Revenue was up 17% QoQ at INR165b (our estimate: INR137b) due to higher

sales volumes (+30% QoQ to 4.1mt v/s our estimate of 3.2mt) helped by increased exports. Crude steel production, however, was up only 3.4% QoQ at 4.0mt, implying significant inventory dilution in the quarter.

EBITDA was down 14% QoQ at INR9.9b (our estimate: INR11.4b) due to a 10% QoQ decline in realization to INR40,443/t (our estimate: INR43,015). As a result, EBITDA/t declined 34% QoQ to INR2,439.

PBT loss stood at INR5.9b and PAT loss at INR4.3b (our estimate: loss of INR3.7b).

Steel demand and prices improve in 4QFY20 Steel demand has improved since November, supporting price hikes. SAIL’s

net steel realization (NSR) stood at INR35,310/t in 3QFY20 (v/s INR37,382/t in 2QFY20) and higher at INR37,700/t in Feb’20.

All plants of SAIL incurred EBIT loss in 9MFY20 but are making profits now. Finished steel inventory is down to 1.3mt from peak of 2mt in Sep’19. In

FY21, SAIL is targeting sales volume of 16mt. Coking coal cost is not expected to decline in 4QFY20 as price has moved up

to USD150/t now, which will reflect in P&L with a two-month lag. Planned iron ore sale is going slow due to delay in state approvals. Debt/ EBITDA is >8x currently and the focus is on deleveraging. Gross debt

has reduced by INR7b from the peak level of INR513b in Oct’19. Capex to be INR40b each in FY20 and FY21. Indian Railways (IR) has had budgetary constraints, resulting in higher

receivables of INR37b v/s normal level of INR8-10b.

Valuation and view We expect sales volume CAGR of 6% over FY20-22 as demand improves and

capacity ramps up. Employee cost remains under control. Headcount has been declining led by natural attrition and VRS.

Operating leverage benefits from higher volumes and better steel prices are likely to lead to improved margins.

However, leverage remains elevated at ~8x net debt/EBITDA, which is a key concern and exposes the company to any volatility in steel prices.

We value the stock at 6.5x FY21E EV/EVITDA at INR43/sh. Maintain Neutral.

17 February 2020 3QFY20 Results Update | Sector: Metals

SAIL

http://ftp.motilaloswal.com/emailer/Research/SAIL-20200217-MOSL-RU-PG008.pdf

18 February 2020 12

Quarterly Performance (Standalone) – INR million Y/E March FY19 FY20 FY19 FY20E FY20E vs Est 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE 3QE (%) Sales (m tons) 3.3 3.5 3.2 4.1 3.2 3.1 4.1 4.2 14.1 14.7 3.2 28

Change (YoY %) 8.0 -1.8 -14.1 10.4 -0.7 -9.4 26.4 1.6 0.2 4.1 -1.1 Realization (INR per ton) 48,631 48,109 48,921 44,788 45,614 44,878 40,443 41,943 47,444 42,967 43,015 -6

Change (QoQ %) 6.8 -1.1 1.7 -8.4 1.8 -1.6 -9.9 3.7 -4.2 Change (YoY %) 27.2 25.1 20.4 -1.6 -6.2 -6.7 -17.3 -6.4 16.1 -9.4 -12.1

Net Sales 159,072 167,180 158,358 185,063 148,200 141,274 165,413 176,162 669,673 631,049 137,647 20 Change (%) 37.4 22.8 3.3 8.6 -6.8 -15.5 4.5 -4.8 16.3 -5.8 -13.1 NSR to RM Spread (INR/t) 28,993 26,401 29,602 22,151 24,841 24,712 18,495 21,489 26,492 22,088 23,313 -21 EBITDA 25,764 23,650 25,782 22,145 15,819 11,597 9,976 20,495 97,341 57,887 11,464 -13 EBITDA per ton (INR) 7,877 6,806 7,965 5,359 4,869 3,684 2,439 4,880 6,896 3,941 3,582 -32 Interest 7,554 7,711 8,251 8,034 7,884 9,404 8,494 8,704 31,549 34,485 8,264 3 Depreciation 8,136 8,261 8,547 8,903 8,725 9,011 9,263 9,460 33,847 36,458 9,211 1 Other Income 978 1,143 747 2,461 1,828 1,587 1,866 1,550 5,328 6,833 1,051 78 PBT (after EO Inc.) 8,278 8,480 9,498 7,123 1,039 -5,230 -5,914 3,881 33,379 -6,224 -4,961 Total Tax 2,874 2,943 3,334 2,439 351 -1,802 -1,618 1,009 11,591 -3,464 -1,240

% Tax 34.7 34.7 35.1 34.2 33.8 34.5 27.4 26.0 34.7 55.6 25.0 Reported PAT 5,404 5,537 6,163 4,684 688 -3,428 -4,296 2,872 21,789 -2,761 -3,721 Adjusted PAT 7,215 5,760 6,314 5,043 688 -3,428 -4,296 2,872 24,330 -2,761 -3,721

Change (YoY %) na na 322.4 -25.1 -90.5 -159.5 -168.0 -43.0 na -111.3 -158.9

Quarterly per ton trend 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 Avg. Rev. (INR/ton) 37,423 38,467 40,646 45,519 48,631 48,109 48,921 44,788 45,614 43,515 40,443 Volumes (m tons) Sales 3.0 3.5 3.8 3.7 3.3 3.5 3.2 4.1 3.2 3.1 4.1 Prodn. (net of interplant transfer) 3.0 3.4 3.4 3.4 3.4 3.4 3.6 3.9 3.4 3.3 3.7 Expenditure (INR m) Inc(-)/Dec in stock & captive cons. -992 3,518 7,738 1,091 -12,793 426 -21,273 6,474 -13,786 -10,341 19,396 Consumption of Raw Materials 62,087 62,651 67,185 74,866 77,031 75,009 83,810 87,060 81,277 73,822 70,372 Staff cost 19,078 22,179 20,773 20,650 22,229 21,602 21,397 23,075 20,461 19,591 20,244 Others 36,414 40,395 42,819 43,344 36,861 39,319 36,860 47,357 36,084 35,182 46,000 EBITDA 260 10,242 15,501 25,996 25,764 23,650 25,782 22,145 15,819 11,597 9,976 Costs per ton of production (INR) Inc(-)/Dec in stock & captive cons. 322 1,023 2,285 322 -3,733 127 -5,888 1,647 -4,015 -3,087 5,303 Consumption of Raw Materials 22,062 18,225 19,843 22,062 22,478 22,391 23,197 22,147 23,669 22,042 19,240 Staff cost 6,085 6,452 6,135 6,085 6,486 6,448 5,922 5,870 5,959 5,849 5,535 Others 12,773 11,751 12,646 12,773 10,756 11,737 10,202 12,047 10,508 10,505 12,577 Gross Margins per ton of sales 25,226 19,776 20,773 25,226 28,993 26,401 29,602 22,151 24,841 23,349 18,495 Conversion cost per ton of prodn. 18,858 18,203 18,782 18,858 17,242 18,185 16,124 17,917 16,467 16,354 18,111 EBITDA per ton of sales 6,945 2,893 4,112 6,945 7,877 6,806 7,965 5,359 4,869 3,684 2,439

Source: MOFSL, Company

18 February 2020 13

Estimate change TP change Rating change Bloomberg GNP IN

Equity Shares (m) 282

M.Cap.(INRb)/(USDb) 87.6 / 1.2

52-Week Range (INR) 667 / 267

1, 6, 12 Rel. Per (%) -12/-25/-60

12M Avg Val (INR M) 697

Financials & Valuations (INR b) Y/E MARCH 2020E 2021E 2022E Sales 103.7 113.2 124.5 EBITDA 14.6 16.6 18.7 Adj. PAT 7.0 8.0 9.1 EBIT Margin (%) 10.2 11.0 11.5 Cons. Adj. EPS (INR) 24.8 28.4 32.4 EPS Gr. (%) -4.2 14.5 13.9 BV/Sh. (INR) 221.3 246.1 274.9 Ratios Net D:E 0.6 0.5 0.4 RoE (%) 11.8 12.2 12.4 RoCE (%) 10.9 11.5 11.5 Payout (%) 13.7 12.7 11.2 Valuations P/E (x) 12.5 10.9 9.6 EV/EBITDA (x) 8.2 7.3 6.4 Div. Yield (%) 1.0 1.0 1.0 FCF Yield (%) 2.1 4.6 6.5 EV/Sales (x) 1.2 1.1 1.0


CMP: INR310 TP: INR330 (+6%) Neutral

India/LATAM drives while US drag earnings Margins at record low, expect gradual recovery Healthy traction in existing products and addition of in-licensed products

facilitated robust growth in India/LATAM. However, the benefit was more than offset by intensified competition in key products in US generics.

We maintain our EPS estimate for FY20/21/22. While the US generics business has a strong ANDA pipeline and the DF/Europe/API outlook remains promising, the return ratios are yet to improve meaningfully. Maintain Neutral.

Price erosion in US base business impacts performance Sales were up 5.1% YoY at INR26.4b (in-line), led by India (+18.2% YoY to

INR7.9b; 30% of sales) and LATAM (+54.1% YoY to INR1.6b; 6% of sales) as well as API segment (+9.6% YoY to INR2.6b; 10% of sales).

RoW (12% of sales) was muted with 0.4% YoY growth to INR3.4b. Europe sales declined 4% YoY to INR3.1b (12% of sales) and US sales were

down 6.5% YoY at INR8b (USD112.7m; 30% of sales). Gross margin shrank 80bp YoY to 64.9%. EBITDA margin contracted at a higher rate of 250bp YoY to 13% (our

estimate: 14.7%), led by lower gross margin and higher staff cost/other expenses (+110bp/+70bpYoY).

EBITDA declined ~12% YoY to INR3.4b (our estimate: INR3.9b). Adj. PAT came in line at INR1.8b (-17% YoY). Highlights from management commentary GNP expects 10-15 ANDA approvals annually. Gross debt stands at INR46.8b and net debt at INR36.5b as of Dec’19. MR strength is at 3,800 and will remain in this range over 12-15 months. Capex is estimated at INR7-8b for FY21. API has potential to deliver 13-15% CAGR over the next 3-5 years. India biz growth is expected to be 10-15% over the next 12-15 months. Valuation and view We expect 8% earnings CAGR over FY19-22, led by sales CAGR of 13.5% in

India and 10% in API/LATAM/Europe. We continue valuing GNP at 12x 12M forward earnings to arrive at a price target of INR330 (prior: INR341). Maintain Neutral on limited upside from current levels.

17 February 2020 3QFY20 Results Update | Sector: Healthcare

Glenmark Pharma

http://ftp.motilaloswal.com/emailer/Research/GNP-20200217-MOSL-RU-PG010.pdf

18 February 2020 14

Quarterly performance (Consolidated) (INR M) Y/E March FY19 FY20E FY19 FY20E Estimate 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE 3QE % Var Net Revenues (Core) 21,294 25,399 25,098 25,261 22,836 27,637 26,386 26,830 97,051 1,03,690 26,418 -0.1 YoY Change (%) -8.6 14.2 15.6 12.4 7.2 8.8 5.1 6.2 8.2 6.8 5.3 EBITDA 3,106 3,986 3,894 3,517 3,276 3,991 3,431 3,861 14,504 14,559 3,883 -11.6 YoY Change (%) -42.9 12.2 34.0 19.2 5.5 0.1 -11.9 9.8 -2.3 0.4 0 Depreciation 794 825 831 810 907 942 1,060 1,065 3,259 3,974 950 EBIT 2,312 3,162 3,063 2,707 2,369 3,049 2,371 2,796 11,245 10,585 2,933 YoY Change (%) -50.4 12.9 42.4 22.3 2.4 -3.6 -22.6 3.3 -4.9 -5.9 -4.2 Interest 790 851 885 819 930 898 961 910 3,346 3,698 910 Other Income 495 563 663 384 409 541 1,019 530 2,105 2,500 480 PBT before EO Expense 2,017 2,874 2,840 2,272 1,848 2,693 2,430 2,416 10,004 9,387 2,503 -2.9 One-off loss/(gain) -1,250 -2,922 1,300 -130 250 -780 -280 0 -3,002 -810 0 PBT after EO Expense 3,267 5,796 1,540 2,402 1,598 3,473 2,710 2,416 13,006 10,197 2,503 8.2 Tax 937 1,656 377 786 506 918 801 549 3,756 2,774 651 Rate (%) 28.7 28.6 24.5 32.7 31.6 26.4 29.6 22.7 28.9 27.2 26.0 Reported PAT 2,330 4,140 1,163 1,616 1,093 2,555 1,908 1,867 9,250 7,424 1,853 3.0 Adj PAT (excl one-offs) 1,442 2,065 2,145 1,659 1,359 1,993 1,786 1,867 7,312 7,004 1,853 -3.6 YoY Change (%) -56.7 -3.5 104.8 9.4 -5.8 -3.5 -16.8 12.6 -9.0 -4.2 -13.6 Margins (%) 6.8 8.1 8.5 6.6 5.9 7.2 6.8 7.0 7.5 6.8 7.0 Key performance Indicators (Consolidated) Y/E March FY19 FY20E FY19 FY20E 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE India formulations 6,633 7,784 6,675 6,678 7,522 8,964 7,888 7,839 27,770 32,213 YoY Change (%) 7.6 9.5 15.4 9.7 13.4 15.2 18.2 17.4 10.4 16.0 US 7,037 8,102 8,557 7,696 7,309 8,478 7,998 7,720 31,393 31,818 YoY Change (%) (32.7) 11.4 16.3 10.0 3.9 4.6 (6.5) 0.3 (2.1) 1.4 ROW 2,454 3,051 3,401 3,853 2,587 3,488 3,414 3,526 12,759 13,015 YoY Change (%) 8.4 21.0 5.6 29.1 5.4 14.3 0.4 (8.5) 16.1 2.0 Europe 2,198 2,608 3,217 3,184 2,429 2,851 3,089 3,175 11,207 11,543 YoY Change (%) 35.6 30.4 43.2 (0.2) 10.5 9.3 (4.0) (0.3) 23.7 3.0 Latin America 976 985 1,014 1,204 811 1,212 1,563 1,261 4,180 4,848 YoY Change (%) 15.5 (5.9) 12.9 (5.7) (16.9) 23.1 54.1 4.8 2.8 16.0 API 2,100 2,512 2,392 2,488 2,306 2,698 2,622 2,627 9,493 10,253 YoY Change (%) 2.6 6.2 3.3 21.4 9.8 7.4 9.6 5.6 8.1 8.0 Cost Break-up

RM Cost (% of Sales) 35.6 34.7 34.3 34.1 35.5 35.7 35.1 35.9 34.6 35.6 Staff Cost (% of Sales) 21.3 23.9 20.0 19.6 21.3 24.8 21.1 21.3 21.2 22.2 R&D Expenses(% of Sales) 11.5 12.0 13.7 15.8 12.9 12.8 13.3 12.9 13.4 13.0 Other Cost (% of Sales) 17.0 13.8 16.3 16.6 15.9 12.2 17.4 15.5 15.8 15.2

Gross Margins(%) 64.4 65.3 65.7 65.9 64.5 64.3 64.9 64.1 65.4 64.5 EBITDA Margins(%) 14.6 15.7 15.5 13.9 14.3 14.4 13.0 14.4 16.5 14.9 EBIT Margins(%) 10.9 12.4 12.2 10.7 10.4 11.0 9.0 10.4 11.6 10.2

18 February 2020 15

Estimate change TP change Rating change Bloomberg LEMONTRE IN

Equity Shares (m) 786

M.Cap.(INRb)/(USDb) 47.1 / 0.7

52-Week Range (INR) 91 / 48

1, 6, 12 Rel. Per (%) 8/1/-32

12M Avg Val (INR M) 88

Financials & Valuations (INR b) Y/E Mar 2020E 2021E 2022E Sales 7.2 9.7 11.3 EBITDA 2.6 3.9 4.8 PAT 0.2 0.7 1.3 EBITDA (%) 35.9 40.4 41.9 EPS (INR) 0.3 0.9 1.6 EPS Gr. (%) (58.9) 238.7 73.6 BV/Sh. (INR) 16.9 17.8 19.4 Ratios Net D/E 1.5 1.6 1.4 RoE (%) 2.0 5.4 8.8 RoCE (%) 4.5 5.4 6.6 Payout (%) - - - Valuations P/E (x) 215.7 63.7 36.7 EV/EBITDA (x) 27.7 18.6 15.3 Div Yield (%) - - - FCF Yield (%) (24.4) 0.4 3.9


CMP: INR60 TP: INR72 (+21%) Buy

New hotels drive performance In-line EBITDA; revenue below estimate LEMONTRE reported a strong performance at its existing hotels, where

RevPAR growth of 7.5% YoY led to a 19% YoY increase in EBITDA. Consol. EBITDA performance was mainly driven by new hotels (absent in the base quarter) as they formed 46% of incremental EBITDA.

For FY20, we cut our revenue estimate by 6% (to factor in the 16% miss to our estimate in 3QFY20) but maintain our EBITDA estimate. For FY21/22, our estimates remain unchanged.

Same hotels exhibit strong EBITDA growth Revenue increased 39% YoY to INR1,996m (our estimate: INR2,362m), led by

inventory addition (absent in base quarter), contribution from ‘Keys Hotels’ acquisition, and ARR growth. Reported EBITDA grew 66% YoY to INR812m (our estimate: INR829m), while like-to-like EBITDA (adj. for Ind-AS 116) grew 48% YoY to INR725m. Adj. PAT declined 2% YoY to INR122m. For 9MFY20, revenue/like-to-like EBITDA/PAT growth stood at 24%/25%/(59%).

ARR was up 4% YoY at INR4,644 in 3QFY20; occupancy declined by ~150bp YoY to 71.3%. However, on a same-hotel basis, ARR grew 5.4% YoY with occupancy up ~150bp YoY at 76.2%, translating to RevPAR growth of 7.5% YoY. On a same-hotel basis, revenue/LTL EBITDA was up 6%/19% YoY, which, in our view, is impressive.

Of incremental EBITDA generated in the quarter (v/s last year), 46% was contributed by new hotels, which cumulatively garnered revenue of INR339m (v/s INR16m in 3QFY19). EBITDA from the said hotels was at INR114m (v/s INR6m in 3QFY19), which is expected to improve as their operations stabilize.

Keys Hotels generated revenue of INR158m with EBITDA of INR34m. It will likely drive growth in FY21 as corporate expenses there are expected to reduce significantly from Apr’20.

Highlights from management commentary Demand from large corporates and SMEs has been impacted, but the same

is more than compensated by the retail segment. Retail share was at 39% v/s 36% in 3QFY19. Cancellations were witnessed due to coronavirus outbreak, but the same was offset by higher domestic demand.

The company has taken a price hike of 3-4% for large corporates, 5-6% for SMEs and 8-10% for retail.

Hyderabad has seen a significant improvement in leasing and supply of office buildings. ARR of LEMONTRE’s hotels in Hyderabad grew 18% YoY in 3QFY20 and the company holds a bullish view on the market for the next four years.

Valuation and view Stabilization of recently launched hotels in Pune, Mumbai, Chandigarh,

Udaipur and Dehradun is likely to drive operating profit in the near term. For FY21/22, we largely maintain our revenue/EBITDA/PAT estimates. We

expect revenue/EBITDA CAGR of 26%/36% over FY20-22. We value the stock at 18x FY22E EV/EBITDA and arrive at a target price of INR72. Maintain Buy.

17 February 2020 3QFY20 Results Update | Sector: Hotels

Lemon Tree Hotels

http://ftp.motilaloswal.com/emailer/Research/LEMONTRE-20200217-MOSL-RU-PG010.pdf

18 February 2020 16

Reported Cons. Quarterly Perf. (INR Million) Y/E March FY19 FY20 FY19 FY20E FY20 Var 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE 3QE (%) Gross Sales 1,269 1,287 1,434 1,505 1,409 1,528 1,996 2,263 5,495 7,196 2,362 -16 YoY Change (%) 17.2 15.3 8.3 14.0 11.0 18.7 39.2 50.3 13.5 30.9 64.8 Total Expenditure 921 927 943 1,016 962 1,043 1,184 1,421 3,807 4,610 1,533 EBITDA 348 360 490 489 448 484 812 842 1,688 2,586 829 -2 Margins (%) 27.4 28.0 34.2 32.5 31.8 31.7 40.7 37.2 30.7 35.9 35.1 Depreciation 131 132 135 143 172 196 227 250 541 844 300 Interest 197 198 214 238 309 325 452 450 847 1,536 400 Other Income 19 59 27 40 21 9 32 45 145 107 39 PBT before EO expense 40 89 168 148 -12 -27 165 187 445 313 168 Extra-Ord expense 0 0 0 0 0 0 0 0 0 0 0

PBT 40 89 168 148 -12 -27 165 187 445 313 168 Tax 20 28 34 -194 7 1 46 52 -111 105 38 Rate (%) 51.4 31.8 20.5 -131.0 -59.7 -2.2 27.6 28.0 -25.0 33.7 22.5 MI & P/L of Asso. Cos. -4 4 9 18 -2 -6 -3 1 27 -10 18 Reported PAT 23 57 125 325 -17 -22 122 134 529 217 112 Adj PAT 23 57 125 325 -17 -22 122 134 529 217 112 9 YoY Change (%) -196.7 -228.3 38.1 185.5 NA NA -2.1 -58.9 272.6 -58.9 -9.9 Margins (%) 1.8 4.4 8.7 21.6 -1.2 -1.4 6.1 5.9 9.6 3.0 4.8

Key Performance Indicators

Y/E March FY19 FY20 FY19 FY20E 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE

Occupancy (%) 76.8 78.3 72.8 77.6 77.5 74.8 71.3 76.3 ARR (INR) 3,899 3,939 4,465 4,405 4,002 4,133 4,644 4,180 Change (%) 15.5 8.6 4.8 4.0 2.6 4.9 4.0 RevPAR (%) 2,955 3,083 3,249 3,416 3,103 3,090 3,311 3,190 Change (%) 17.7 11.8 (0.1) 4.4 5.0 0.2 1.9 Cost Break-up

F&B Cost (% of sales) 9.4 9.2 8.8 8.9 8.8 8.7 8.4 9.0 9.1 8.7 Staff Cost (% of sales) 23.0 23.0 20.9 21.1 23.9 24.0 21.1 18.6 21.9 21.5 Rent (% of sales) 5.8 5.7 5.3 4.6 1.2 1.4 1.1 1.2 5.3 1.2 Power and fuel (% of sales) 10.7 10.5 9.0 8.4 10.5 10.5 8.0 8.5 9.6 9.2 Other Cost (% of sales) 23.7 23.6 21.8 24.5 23.8 23.8 20.8 25.5 23.4 23.5

Gross Margins (%) 90.6 90.8 91.2 91.1 91.2 91.3 91.6 91.0 90.9 91.3 EBITDA Margins (%) 27.4 28.0 34.2 32.5 31.8 31.7 40.7 37.2 30.7 35.9 EBIT Margins (%) 17.1 17.7 24.8 23.0 19.6 18.9 29.3 26.2 20.9 24.2

18 February 2020 17

1. PAGE INDUSTRIES CFO: HAVE A TARGET OF REACHING 1000+ EBOS (CURRENTLY AT 720); FY21 SHOULD BE BETTER THAN FY20; Chandrasekhar K, CFO

A double digit growth is something we always plan for. So yes the FY21 should be better than FY20. But I am not too sure whether it will be 10% growth for everyone. Have to wait and watch in Q4 for demand patterns.

Revenue has grown by 7% both in Q3 and for nine months. Our expectation was much higher. If we had volume growth in the mid teens, all of these expenses would have been fully absorbed and we would have been able to achieve the margins.

Have 720 exclusive business outlets. Have a target of reaching the EBOs to a 1,000 plus, which will possibly happen in FY21.

(Regarding kids clothing portfolio) The acceptance has been pretty good. Have grown almost 45% this year and we have also created a separate channel for kids. That means, right from the country level to the field, we have a 100-plus-strong sales force. We also appointed Jockey Junior’s specific channel partners in 50 cities and this is only the phase one. We are also planning to open exclusive Jockey Junior EBOs in the coming quarter.

The penetration into the premium market is of the order of 20% in premium men innerwear. We have a penetration of close to 6% to 8% in the women’s market as well as in the Athleisure which is the active wear segment.

India is the fastest growing swimming market and therefore we are present in 1,300 plus retail outlets and about 44 EBOs.

At present, we are in a sluggish phase as far as demand is concerned. Whenever demand returns, we will be back to the margins that we have been delivering. Looking at FY21 with much more planning and optimism than we have it now. There is a temporary dip in PAT and that is because of the investment we have made in sales, marketing, in people and technology.

2. AXIS BANK: MARKET OPPORTUNITY IS HUGE; CAN DELIVER

GROWTH ACROSS ALL BUSINESSES; Amitabh Chaudhry, MD and CEO

The economic activity will take some time to pick up. Government has taken a lot of measures. Finance minister recently talked about some greenshoots but it will take time to go to a point where all can start saying that the growth is coming back.

Corporate cleansing process is not over. Bank has aspiration of reaching 18% ROE in 3 years and reduce cost to income

ratio to 2%. Average utilization in SME segment has come down. Bank has not stopped funding the buying of BSIV vehicles. Bank has 4.5-5% of market share in advances and deposits. Current contract with max life insurance is till March 2021. Bulk of stress is expected to come down if there is no further surprise.

In conversation

https://www.cnbctv18.com/finance/market-opportunity-is-huge-can-deliver-growth-across-all-businesses-says-axis-banks-amitabh-chaudhry-5295751.htm

https://economictimes.indiatimes.com/markets/expert-view/we-are-our-own-competition-optimistic-about-fy21-chandrasekhar-k-page-industries/articleshow/74129673.cms

18 February 2020 18

1. OPPORTUNITIES FOR INDIA IN THE ASIAN CENTURY India is at an inflection point. Its recent period of significant growth—faster than

the global average—has stalled in the face of global headwinds against trade, volatile commodity markets, stagnant private investment, weaker domestic consumption and constrained government spending in the wake of recent fiscal and monetary reforms. At the same time, Asia is becoming the world’s powerhouse and economic center. New research from the McKinsey Global Institute finds that Asia could generate more than half of the world’s GDP by 2040 as cross-border flows shift toward the region, which is rapidly integrating; with 60% of goods traded, 56% of greenfield foreign direct investment (FDI) and 74% of journeys by Asian air travelers taking place within the region. This research identifies 4 distinct sub-Asias—diverse groups of economies with characteristics that complement each other, which are fast becoming increasingly interconnected. As a result, dynamic new flows and networks are appearing, redefining globalization as we know it. The new era will be one of regionalization, and Asia is taking a lead. Historically, India—and other countries in ‘Frontier Asia’ (Bangladesh, Sri Lanka, Kazakhstan, Uzbekistan, etc)—have had relatively low levels of integration when compared with the rest of the region; only around 31% of their flows are intra-regional. Yet, how they now respond to these shifting flows, and the opportunities they present, could be key in defining and delivering its next chapter of growth.

2. MONETARY POLICY’S BLINKERED VIEW OF CREDIT The RBI’s frequent shifts in policy relating to bank lending rates over the last 25

years — starting with the PLR in 1994, the BPLR (2003), Base Rate (2010), the MCLR (2016), and now, external benchmarking — reflect policy rate uncertainty. Leaving aside the market rates, even banks’ lending rates remain at variance with monetary policy intents. Growing financial sector instability/vulnerability, growth uncertainty, credit-constrained MSMEs, low farm prices, surplus liquidity with banks as against unprecedented liquidity constraint with businesses and a high level of cash in the economy despite digitisation reflect poor monetary policy outcomes. How did we get to such adverse conditions? Why is the financial sector more vulnerable now than ever before, despite the experience/expertise gained by the RBI over the last 25 years, the advent of monetary-model based policy analysis and economic forecasting, and Big Data analytics? One of the key reasons lies in the bank-centric monetary policy framework. It misses out on the systemic role of the trade credit channel in defining monetary policy transmission (MPT). A guesstimate of working capital requirement based on the turnover of 94.3 lakh firms which filed income tax/service tax returns for FY14, the outstanding working capital of banks and miniscule bank working capital flows to the unorganised sector show that banks meet less than one-third of the aggregate working capital needs of businesses. A monetary policy architecture which built on a narrow, bank-centric base cannot be stable and sound.

From the think tank

https://www.thehindubusinessline.com/opinion/monetary-policys-blinkered-view-of-credit/article29912266.ece

https://www.livemint.com/opinion/online-views/opportunities-for-india-in-the-asian-century-11573207796266.html

18 February 2020 19

3. AMERICA’S WAR ON CHINESE TECHNOLOGY The worst foreign-policy decision by the United States of the last generation –

and perhaps longer – was the “war of choice” that it launched in Iraq in 2003 for the stated purpose of eliminating weapons of mass destruction that did not, in fact, exist. Understanding the illogic behind that disastrous decision has never been more relevant, because it is being used to justify a similarly misguided US policy today. The decision to invade Iraq followed the illogic of then-US Vice President Richard Cheney, who declared that even if the risk of WMDs falling into terrorist hands was tiny – say, 1% – we should act as if that scenario would certainly occur. Such reasoning is guaranteed to lead to wrong decisions more often than not. Yet the US and some of its allies are now using the Cheney Doctrine to attack Chinese technology. The US government argues that because we can’t know with certainty that Chinese technologies are safe, we should act as if they are certainly dangerous and bar them. Proper decision-making applies probability estimates to alternative actions. A generation ago, US policymakers should have considered not only the (alleged) 1% risk of WMDs falling into terrorist hands, but also the 99% risk of a war based on flawed premises. By focusing only on the 1% risk, Cheney (and many others) distracted the public’s attention from the much greater likelihood that the Iraq War lacked justification and that it would gravely destabilize the Middle East and global politics.

https://www.project-syndicate.org/commentary/cheney-doctrine-us-war-on-chinese-technology-by-jeffrey-d-sachs

18 February 2020 20

CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY19 FY20E FY21E FY19 FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E Automobiles Amara Raja Buy 764 885 16 28.3 39.0 39.4 2.6 37.8 1.1 19.6 19.4 3.4 3.1 18.7 16.7 Ashok Ley. Buy 82 95 16 6.9 1.0 3.0 16.4 -85.5 200.0 78.9 26.8 3.0 3.0 3.7 11.2 Bajaj Auto Neutral 3075 3400 11 165.4 179.5 192.0 9.3 8.5 6.9 17.1 16.0 3.6 3.3 22.5 21.5 Bharat Forge Buy 486 581 20 22.2 16.0 20.4 20.3 -27.9 27.5 30.4 23.8 3.9 3.6 13.3 15.6 Bosch Neutral 14860 15150 2 542.4 418.3 470.9 15.5 -22.9 12.6 35.5 31.6 5.8 5.1 14.8 17.2 CEAT Buy 1017 1250 23 66.9 55.7 71.5 4.6 -16.8 28.3 18.3 14.2 1.4 1.3 7.9 9.4 Eicher Mot. Buy 18527 25350 37 813.9 745 880 1.8 -8.5 18.2 24.9 21.1 4.8 4.0 20.8 20.8 Endurance Tech. Buy 1053 1261 20 36.2 41.4 46.2 24.5 14.4 11.6 25.4 22.8 5.0 4.3 21.0 20.3 Escorts Neutral 886 782 -12 53.2 57.4 64.3 34.7 7.8 12.1 15.4 13.8 2.5 2.1 17.5 16.8 Exide Ind Buy 177 222 25 9.1 10.1 10.4 10.6 11.8 2.2 17.5 17.1 2.3 2.1 13.2 12.4 Hero Moto Neutral 2284 2690 18 169.5 157.9 171.9 -8.5 -6.8 8.8 14.5 13.3 3.3 3.0 23.7 23.9 M&M Buy 523 686 31 42.7 35.4 42.1 4.1 -17.1 18.9 14.8 12.4 1.7 1.5 11.1 10.4 Mahindra CIE Buy 165 198 20 14.5 11.4 14.6 48.6 -21.2 27.5 14.4 11.3 1.3 1.2 9.6 11.0 Maruti Suzuki Buy 6904 8000 16 247.7 200.0 261.7 -7.1 -19.2 30.8 34.5 26.4 4.2 3.9 11.9 14.4 Motherson Sumi Buy 123 146 19 5.1 4.2 6.1 -5.2 -18.6 46.6 29.6 20.2 3.2 2.9 11.2 15.0 Tata Motors Buy 169 228 35 -4.4 0.5 10.9 PL LP 2,171.0 353.0 15.5 0.9 0.9 0.3 5.9 TVS Motor Neutral 430 460 7 14.1 13.3 17.4 1.1 -5.6 31.0 32.3 24.7 5.4 4.7 17.8 20.4 Aggregate -21.1 -9.4 33.1 25.8 19.4 2.8 2.6 10.9 13.3 Banks - Private AU Small Finance Buy 1139 1100 -3 13.2 25.4 34.4 28.9 92 35.7 44.9 33.1 7.9 6.4 20.0 21.3 Axis Bank Buy 738 835 13 18.2 18.1 43.3 1,538.1 -1 139.2 40.8 17.0 2.4 2.1 6.4 13.3 DCB Bank Neutral 169 200 18 10.5 12.2 16.4 32.0 15.7 35.0 13.9 10.3 1.6 1.4 12.3 14.6 Equitas Hold. Buy 106 135 27 5.2 8.6 12.9 1,186.6 66.8 49.5 12.3 8.2 1.3 1.2 11.4 15.0 Federal Bank Buy 84 115 36 6.3 8.6 10.6 32.2 37.2 22.7 9.8 8.0 1.1 1.0 12.3 13.6 HDFC Bank Buy 1217 1500 23 39.6 49.5 62.9 16.9 24.9 27.1 24.6 19.3 3.9 3.3 16.9 18.6 ICICI Bank Buy 542 650 20 5.2 16.8 29.3 -52.8 221.7 74.6 32.2 18.5 3.1 2.7 9.9 15.8 IndusInd Buy 1173 1720 47 54.9 85.8 115.4 -8.8 56.3 34.5 13.7 10.2 2.2 1.8 17.8 19.9 Kotak Mah. Bk Neutral 1691 1625 -4 37.7 47.0 55.2 16.0 24.6 17.4 36.0 30.6 4.8 4.2 14.3 14.6 RBL Bank Buy 306 415 35 20.3 9.7 22.3 34.3 -52.3 130.6 31.6 13.7 1.4 1.3 5.4 10.1 South Indian Buy 10 15 53 1.4 1.9 2.5 -26.2 39.8 32.8 5.1 3.9 0.3 0.3 6.4 8.0 Aggregate 16.7 42.6 46.7 27.8 18.9 3.4 3.0 12.3 15.6 Banks - PSU BOB Buy 82 115 40 1.6 -2.0 13.8 LP PL LP NM 6.0 0.6 0.5 -1.2 8.9 BOI Neutral 61 75 23 -24.6 -10.3 5.7 Loss Loss LP NM 10.7 0.4 0.4 -6.3 3.6 Canara Neutral 175 240 37 4.7 15.1 28.0 LP 222.6 85.8 11.6 6.2 0.5 0.4 3.4 6.5 Indian Bk Neutral 82 120 47 6.7 23.2 31.3 -74.4 246.8 34.7 3.5 2.6 0.3 0.2 7.3 9.9 PNB Neutral 52 65 25 -27.1 -5.3 7.2 Loss Loss LP NM 7.2 0.6 0.6 -5.8 8.0 SBI Buy 314 425 35 2.6 23.1 38.1 LP 797 64.8 13.6 8.2 1.2 1.0 9.2 13.9 Union Bk Neutral 47 54 15 -20.1 0.0 4.5 Loss LP ###### 1,207.3 10.5 0.4 0.4 0.0 4.3 Aggregate Loss LP 217 24 7.6 0.8 0.7 3.3 9.5 NBFCs Aditya Birla Cap Buy 87 125 44 4.0 4.3 5.1 25.7 8.3 20.2 20.3 16.9 2.0 1.7 10.2 10.8 Bajaj Fin. Neutral 4776 4850 2 69.3 101.0 136.9 59.6 45.8 35.6 47.3 34.9 8.5 7.0 22.7 22.1 Cholaman.Inv.&Fn Buy 331 390 18 15.2 18.2 21.6 29.1 19.8 18.9 18.2 15.3 3.5 2.9 21.2 20.9

HDFC Buy 2349 2875 22 44.4 51.0 57.0 28.7 14.9 11.8 46.1 41.2 4.6 4.3 14.4 14.1 HDFC Life Insur. Neutral 566 600 6 6.3 6.8 8.1 14.6 7.9 17.8 82.7 70.2 5.2 4.4 20.1 18.5 ICICI Pru Life Buy 474 565 19 8.0 8.2 9.4 -29.5 3.6 14.1 57.5 50.4 2.7 2.3 16.8 17.0 IIFL Wealth Mgt Buy 1556 1525 -2 44.2 32.2 42.8 -4.1 -27.3 33.0 48.4 36.4 4.4 4.3 9.3 11.9

Indostar Capital Under Review 283 - 26.1 15.2 25.3 2.5 -41.6 65.8 18.6 11.2 0.8 0.8 4.6 7.1

L&T Fin Holdings Buy 124 145 17 11.2 12.0 13.9 74.3 7.4 15.6 10.3 9.0 1.6 1.4 16.8 17.0 LIC Hsg Fin Buy 380 530 40 48.1 52.3 58.9 21.4 8.7 12.6 7.3 6.4 1.0 0.9 15.3 15.3 MAS Financial Buy 983 1200 22 27.8 36.6 43.7 47.1 31.7 19.3 26.8 22.5 5.1 4.4 21.8 21.9

Valuation snapshot Click excel icon

for detailed valuation guide

http://institution.motilaloswal.com/emailer/Research/MOST%20VALUATION%20GUIDE_New.zip

18 February 2020 21

CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY19 FY20E FY21E FY19 FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E M&M Fin. Buy 375 420 12 25.3 21.7 29.8 53.9 -14.2 36.9 17.3 12.6 2.0 1.8 12.2 15.0 Muthoot Fin Neutral 874 800 -8 49.2 73.3 80.8 10.8 48.9 10.2 11.9 10.8 3.1 2.6 28.7 26.1 PNB Housing Neutral 414 563 36 71.1 71.4 74.1 40.9 0.3 3.9 5.8 5.6 0.8 0.7 15.2 13.9 Repco Home Buy 300 390 30 37.5 49.5 52.0 16.7 32.1 4.9 6.1 5.8 1.0 0.9 18.5 16.5 Shriram City Union Buy 1470 1600 9 149.9 172.6 185.2 48.7 15.2 7.3 8.5 7.9 1.3 1.1 16.5 15.4

Shriram Trans. Buy 1279 1385 8 113.0 133.8 140.7 4.2 18.4 5.2 9.6 9.1 1.6 1.4 17.9 16.2 Aggregate 31.8 20.9 16.1 26.1 22.5 3.8 3.4 14.7 15.1 Capital Goods ABB Buy 1223 1455 19 12.0 16.6 24.0 12.7 38.1 45.0 73.8 50.9 7.4 6.6 10.0 13.0 Bharat Elec. Buy 81 115 42 7.9 5.9 7.2 37.7 -24.9 21.4 13.6 11.2 2.0 1.8 14.7 16.3 BHEL Neutral 35 40 15 3.5 3.1 2.7 58.9 -11.9 -13.2 11.3 13.0 0.4 0.4 3.4 2.9 Blue Star Neutral 852 855 0 19.5 23.1 32.9 34.7 18.5 42.6 36.9 25.9 7.9 6.4 21.4 24.8 CG Cons. Elec. Buy 291 305 5 6.0 7.8 9.8 15.5 30.3 26.1 37.4 29.7 12.7 10.2 33.9 34.2 Cummins Neutral 537 670 25 26.1 24.4 26.6 10.8 -6.5 9.3 22.0 20.1 3.4 3.2 15.4 15.8 Engineers India Buy 82 130 59 5.9 6.7 8.4 -8.4 15.0 25.0 12.1 9.7 2.3 2.2 17.9 21.4 Havells Neutral 602 660 10 12.7 13.3 15.1 12.9 5.4 13.0 45.2 40.0 7.9 7.0 17.5 17.5 K E C Intl Buy 339 430 27 18.9 24.3 28.7 6.1 28.4 18.2 14.0 11.8 2.9 2.4 21.0 20.3 L&T Buy 1281 1680 31 63.5 77.4 93.2 22.8 21.9 20.5 16.5 13.7 2.6 2.3 15.3 16.3 Siemens Neutral 1383 1685 22 25.1 30.5 38.4 27.1 21.6 25.8 45.3 36.0 5.4 4.9 12.0 13.6 Thermax Neutral 989 1200 21 27.2 28.7 37.3 32.4 5.6 29.9 34.5 26.5 3.4 3.1 10.0 11.8 Voltas Buy 695 785 13 15.7 18.2 24.6 -9.1 15.7 35.2 38.2 28.3 5.1 4.5 13.4 16.1 Aggregate 16.1 13.7 19.3 22.8 19.1 2.8 2.5 12.3 13.3 Cement Ambuja Cem. Neutral 204 220 8 6.1 7.2 7.6 -3.2 18.2 5.4 28.3 26.9 1.8 1.7 6.6 6.6 ACC Buy 1423 1790 26 53.5 72.3 75.7 9.9 35.1 4.7 19.7 18.8 2.3 2.1 12.3 11.7 Birla Corp. Buy 747 950 27 33.2 63.1 71.9 53.6 90.0 13.9 11.8 10.4 1.2 1.1 10.4 10.8 Dalmia Bhar. Buy 863 1070 24 15.8 15.4 26.7 4.3 -2.3 73.1 55.9 32.3 1.5 1.5 2.8 4.7 Grasim Inds. Neutral 737 775 5 66.1 35.8 46.6 39.7 -45.8 30.0 20.6 15.8 1.1 1.1 3.4 2.8 India Cem Neutral 73 80 9 2.3 4.2 4.8 -31.0 88.0 13.6 17.3 15.2 0.4 0.4 2.5 2.8 J K Cements Buy 1414 1660 17 34.1 62.2 71.6 -19.8 82.4 15.0 22.7 19.8 3.5 3.0 16.6 16.5 JK Lakshmi Ce Buy 330 435 32 6.8 22.0 24.5 -8.7 225.0 11.4 15.0 13.5 2.2 1.9 15.9 15.4 Ramco Cem Neutral 788 770 -2 21.9 26.0 28.1 -8.7 19.0 8.0 30.3 28.0 3.7 3.3 13.0 12.6 Shree Cem Neutral 24031 22810 -5 324.1 448.8 591.8 -18.2 38.5 31.9 53.5 40.6 6.5 5.7 14.1 15.0 Ultratech Buy 4451 5440 22 90.3 141.1 185.9 1.0 56.2 31.8 31.5 23.9 3.3 2.9 11.5 13.6 Aggregate 9.8 12.4 23.8 28.8 23.3 2.4 2.2 8.4 9.6 Consumer Asian Paints Sell 1881 1608 -15 23.1 29.7 32.6 9.1 28.8 9.7 63.4 57.7 17.0 15.2 28.3 27.7 Britannia Neutral 3085 3340 8 48.1 58.1 65.1 15.1 20.7 12.1 53.1 47.4 16.2 15.8 31.6 33.8 Colgate Buy 1333 1733 30 27.4 29.3 33.0 8.8 7.0 12.7 45.5 40.3 26.2 28.3 56.3 67.5 Dabur Neutral 501 480 -4 8.5 9.2 10.3 9.5 8.0 12.5 54.5 48.5 13.9 12.8 27.0 27.4 Emami Buy 284 355 25 12.2 12.6 14.2 0.2 3.3 12.9 22.7 20.1 5.6 5.5 25.9 27.5 Godrej Cons. Neutral 626 766 22 15.1 15.1 16.9 7.2 0.1 12.0 41.4 37.0 8.4 8.3 20.8 22.5 GSK Cons. Neutral 9688 9480 -2 216.1 279.5 313.0 29.8 29.3 12.0 34.7 30.9 8.7 7.7 26.8 26.4 HUL Buy 2251 2490 11 28.9 32.9 38.7 18.2 13.7 17.7 68.4 58.1 61.7 61.2 91.6 105.7 ITC Neutral 205 253 24 10.2 12.6 12.9 14.8 24.3 2.2 16.2 15.8 4.0 3.7 25.6 24.2 Jyothy Lab Neutral 130 158 22 5.4 4.8 5.5 10.5 -10.4 15.1 26.9 23.3 3.5 3.5 13.2 15.0 Marico Neutral 297 332 12 7.2 8.1 8.2 14.3 12.5 1.5 36.6 36.0 10.3 9.0 31.2 26.7 Nestle Neutral 16575 15550 -6 178.6 206.8 238.8 27.5 15.8 15.5 80.1 69.4 82.7 73.2 71.2 111.9 Page Inds Neutral 22519 22250 -1 353.2 352.0 422.2 13.5 -0.3 19.9 64.0 53.3 28.7 26.0 44.9 48.7 Pidilite Ind. Neutral 1578 1430 -9 18.6 25.3 27.8 -2.0 36.5 9.6 62.3 56.8 15.8 13.3 27.9 25.4 P&G Hygiene Neutral 11416 10950 -4 129.6 137.7 180.0 12.5 6.2 30.8 82.9 63.4 35.4 30.1 45.7 51.4 Tata Global Buy 381 439 15 7.0 8.1 9.5 -14.6 15.2 18.2 47.3 40.0 3.2 2.6 6.8 8.2 United Brew Neutral 1274 1364 7 21.3 18.0 25.9 42.8 -15.3 43.7 70.6 49.2 9.4 8.0 14.1 17.6 United Spirits Buy 701 801 14 9.3 12.0 15.6 38.1 28.4 30.4 58.6 44.9 13.3 10.3 22.7 22.9




18 February 2020 22

CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY19 FY20E FY21E FY19 FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E Aggregate 14.8 18.2 10.8 42.6 38.5 12.3 11.0 28.9 28.5 Healthcare Alembic Phar Neutral 644 640 -1 31.0 43.5 34.0 41.6 40.1 -21.7 14.8 18.9 3.6 3.1 26.5 17.3 Alkem Lab Buy 2585 2950 14 63.8 93.4 117.4 8.4 46.4 25.6 27.7 22.0 4.9 4.2 19.0 20.4 Ajanta Pharma Buy 1356 1435 6 44.4 51.5 60.7 -16.1 15.8 18.1 26.4 22.3 4.6 3.9 18.7 18.9 Aurobindo Buy 493 645 31 43.2 46.6 63.1 1.1 8.0 35.4 10.6 7.8 1.8 1.4 18.0 20.3 Biocon Neutral 303 300 -1 6.2 7.3 9.9 99.6 18.4 35.5 41.4 30.5 5.4 4.8 13.7 16.6 Cadila Buy 267 317 19 18.3 14.6 17.4 4.3 -20.0 19.2 18.3 15.3 2.4 2.2 11.5 15.1 Cipla Neutral 432 490 14 18.7 21.1 24.5 -3.1 12.6 16.0 20.5 17.7 2.1 1.9 10.1 10.6 Divis Lab Neutral 2159 1845 -15 50.0 51.9 65.8 55.0 3.8 26.6 41.6 32.8 7.1 6.1 18.4 20.0 Dr Reddy’s Neutral 3294 3100 -6 105.2 119.1 144.2 62.6 13.3 21.1 27.6 22.8 3.5 3.1 13.4 14.5 Glenmark Neutral 310 330 6 25.9 24.8 28.4 -9.0 -4.3 14.5 12.5 10.9 1.4 1.3 11.8 12.2 GSK Pharma Neutral 1316 1490 13 24.6 28.3 34.2 25.2 14.9 21.2 46.6 38.4 12.2 11.0 26.1 28.7 IPCA Labs Buy 1361 1660 22 36.3 51.5 63.1 91.3 42.0 22.5 26.4 21.6 4.7 3.9 19.1 19.8 Jubilant Life Buy 513 685 33 57.5 59.3 66.4 26.1 3.2 11.9 8.7 7.7 1.4 1.2 17.7 17.0 Laurus Labs Buy 439 520 19 10.4 19.8 26.0 -34.5 90.6 31.6 22.2 16.9 2.6 2.3 12.6 14.5 Lupin Buy 712 840 18 23.3 22.6 35.6 -27.1 -3.1 57.5 31.5 20.0 3.1 2.8 8.5 14.8 Strides Pharma Buy 505 550 9 6.9 26.6 38.2 -39.2 288.5 43.7 19.0 13.2 1.6 1.4 8.6 11.3 Sun Pharma Buy 409 510 25 15.1 17.6 21.2 12.2 16.6 20.4 23.2 19.3 2.2 2.0 9.8 10.9 Torrent Pharma Neutral 2146 1930 -10 42.7 57.3 73.8 -7.1 34.2 28.7 37.4 29.1 6.8 5.9 19.2 21.7 Aggregate 11.4 12.4 23.6 24.4 19.7 3.2 2.8 13.0 14.2 Infrastructure Ashoka Buildcon Buy 99 150 51 11.5 11.6 12.4 35.8 1.4 6.3 8.5 8.0 1.1 1.0 13.8 13.0 IRB Infra Neutral 97 92 -5 24.2 19.7 7.1 1.2 -18.5 -63.9 4.9 13.6 0.5 0.5 10.5 3.6 KNR Constructions Buy 282 374 32 17.7 17.1 20.1 -8.2 -3.8 17.5 16.5 14.1 2.4 2.1 15.6 15.7

Sadbhav Engineering Buy 97 150 54 10.8 6.1 11.7 -15.7 -43.7 90.9 15.9 8.3 0.8 0.5 5.0 7.6

Aggregate 8.8 10.7 0.9 0.7 10.3 7.0 Logistics Allcargo Logistics Buy 110 130 18 9.7 9.5 11.3 33.6 -2.1 18.9 11.6 9.8 1.2 1.1 11.0 11.6 Concor Buy 551 660 20 19.9 16.5 19.1 14.9 -17.2 15.5 33.4 28.9 3.2 3.0 9.6 10.7 Aggregate 18.5 -13.6 13.8 28.3 24.9 2.7 2.5 9.5 10.2 Media D B Corp Neutral 124 160 29 15.7 17.3 17.7 -11.1 10.7 2.1 7.2 7.0 1.2 1.1 16.2 15.7 Ent.Network Buy 220 311 41 10.9 13.1 24.2 60.2 20.0 85.1 16.9 9.1 1.1 1.0 6.5 11.0 Jagran Prak. Neutral 68 76 11 8.8 11.8 11.5 -8.7 34.1 -2.8 5.8 6.0 1.0 0.9 17.6 15.4 Music Broadcast Buy 27 42 56 2.2 2.1 2.4 22.9 -5.1 14.9 12.7 11.1 1.1 1.0 7.7 8.5 PVR Buy 2089 2250 8 37.9 49.4 65.0 41.9 30.5 31.6 42.3 32.1 6.0 5.1 16.3 17.0 Sun TV Buy 474 580 22 35.4 36.5 40.3 27.6 3.2 10.3 13.0 11.8 3.0 2.5 24.5 23.3 Zee Ent. Neutral 239 300 25 16.4 16.9 19.4 12.7 3.0 14.7 14.2 12.3 2.3 2.0 18.1 17.0 Aggregate 1.5 16.5 2.3 13.2 12.9 2.1 2.2 16.0 16.9 Metals Hindalco Buy 190 240 26 24.7 19.5 22.2 30.9 -21.0 13.9 9.7 8.6 1.0 0.9 10.8 11.3 Hind. Zinc Neutral 189 225 19 18.8 17.0 16.8 -10.8 -9.6 -1.5 11.1 11.3 2.1 1.9 20.1 17.8 JSPL Buy 191 210 10 3.3 -3.8 8.3 LP PL LP NM 23.0 0.6 0.6 -1.1 2.5 JSW Steel Buy 288 320 11 31.8 19.3 29.8 32.4 -39.4 54.4 14.9 9.7 1.8 1.6 12.7 17.4 Nalco Buy 40 48 19 9.2 0.2 2.7 79.9 -97.4 1,050.2 171.3 14.9 0.7 0.7 0.4 4.9 NMDC Buy 106 147 38 15.6 16.0 17.3 19.2 2.8 7.6 6.6 6.2 1.1 1.0 18.0 17.6 SAIL Neutral 43 43 1 6.3 -0.5 3.0 2,344.1 PL LP NM 14.3 0.4 0.4 -0.5 3.1 Vedanta Neutral 142 142 0 18.1 14.6 13.0 -11.0 -19.4 -10.7 9.7 10.9 0.8 0.8 8.6 7.4 Tata Steel Neutral 437 450 3 88.6 48.2 58.7 27.3 -45.6 21.8 9.1 7.4 0.7 0.7 8.5 9.6 Aggregate 22.0 -33.6 22.6 11.8 9.7 1.0 0.9 8.2 9.4 Oil & Gas Aegis Logistics Buy 253 245 -3 6.6 4.6 11.6 11.9 -31.0 153.9 55.3 21.8 5.8 4.8 10.8 24.1




18 February 2020 23

CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY19 FY20E FY21E FY19 FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E BPCL Neutral 461 522 13 43.4 30.9 46.3 -12.9 -28.7 49.7 14.9 10.0 2.1 1.9 15.0 20.2 Castrol India Buy 155 186 20 7.2 8.4 8.7 2.4 16.8 4.3 18.6 17.8 11.2 10.2 65.3 60.1 GAIL Buy 118 150 27 14.0 10.4 12.6 38.4 -26.1 21.4 11.4 9.4 1.2 1.1 10.5 12.1 Gujarat Gas Buy 286 340 19 6.2 16.5 13.5 46.9 164.7 -18.2 17.3 21.1 6.4 5.2 43.0 27.0 Gujarat St. Pet. Buy 241 288 19 14.1 20.2 18.4 18.9 43.7 -9.0 11.9 13.1 2.0 1.8 18.3 14.4 HPCL Buy 230 340 48 43.9 26.1 44.3 -7.3 -40.4 69.4 8.8 5.2 1.1 1.0 12.6 19.6 IOC Buy 112 176 57 18.8 8.8 18.6 -23.7 -53.3 111.8 12.7 6.0 0.9 0.8 7.0 14.1 IGL Neutral 468 518 11 11.2 16.8 17.6 19.1 49.6 4.8 27.8 26.6 6.5 5.5 25.6 22.4 Mahanagar Gas Neutral 1133 1125 -1 55.3 82.0 70.1 14.3 48.3 -14.5 13.8 16.2 3.9 3.4 30.8 22.7 MRPL Neutral 41 46 12 1.9 -6.8 5.7 -84.8 PL LP NM 7.2 0.8 0.7 -11.8 10.0 Oil India Buy 130 180 39 32.0 21.0 23.6 35.6 -34.3 12.5 6.2 5.5 0.5 0.5 8.4 9.0 ONGC Buy 100 150 50 27.1 21.1 26.4 34.4 -22.3 25.3 4.7 3.8 0.5 0.5 12.0 13.8 PLNG Buy 256 350 37 14.4 20.1 21.1 3.7 39.6 5.1 12.8 12.1 3.5 3.2 28.6 27.7 Reliance Ind. Buy 1478 1820 23 67.2 78.1 105.2 10.4 16.2 34.7 18.9 14.0 2.0 1.8 11.4 13.7 Aggregate 6.0 -14.4 39.3 14.5 10.4 1.6 1.4 10.8 13.6 Retail Avenue Supermarts Sell 2341 1700 -27 14.5 21.6 28.8 11.9 49.4 33.3 108.3 81.2 21.1 16.7 21.5 22.9

Aditya Birla Fashion Buy 265 300 13 1.6 2.8 4.4 156.7 72.4 53.5 93.3 60.8 13.5 11.0 14.9 20.0

Future Lifestyle Buy 394 460 17 8.6 6.9 8.4 30.1 -20.4 22.6 57.4 46.8 3.4 3.2 6.4 7.0 Future Retail Buy 376 450 20 14.6 14.1 16.3 19.1 -3.4 15.8 26.7 23.0 2.9 2.6 13.6 11.8 Jubilant Food. Buy 1833 2020 10 24.1 27.2 35.2 62.0 12.9 29.3 67.4 52.1 16.4 13.7 24.4 26.2 Shoppers Stop Neutral 382 425 11 7.8 -0.3 9.2 -36.3 PL LP NM 41.6 3.5 3.2 -0.3 8.1 Titan Company Neutral 1316 1320 0 15.7 18.3 22.7 24.0 16.6 24.5 72.1 57.9 19.1 16.2 26.6 30.3 Trent Buy 750 700 -7 2.9 4.5 7.9 11.6 55.7 73.3 164.8 95.1 9.0 8.2 7.3 9.7 V-Mart Retail Neutral 2194 2650 21 39.5 52.1 62.1 -8.0 32.0 19.2 42.1 35.3 7.9 6.4 20.7 20.1 Aggregate 21.6 19.9 30.8 79.3 60.6 12.7 10.8 16.0 17.9 Technology Cyient Neutral 445 470 6 43.4 35.9 40.7 13.4 -17.3 13.4 12.4 10.9 1.8 1.6 14.3 15.0 HCL Tech. Buy 613 720 17 36.8 39.8 45.3 17.6 8.2 13.8 15.4 13.5 3.3 2.9 23.3 22.8 Hexaware Neutral 372 400 7 19.3 21.2 24.4 16.5 9.8 15.1 17.5 15.2 4.1 3.5 24.8 24.6 Infosys Buy 789 870 10 35.4 38.6 42.8 9.3 9.1 10.8 20.4 18.5 5.9 5.5 26.9 30.8 L & T Infotech Buy 1990 2260 14 86.6 86.4 106.7 30.6 -0.2 23.5 23.0 18.7 5.8 4.7 27.6 27.6 Mindtree Buy 982 1100 12 44.7 37.5 48.8 55.5 -16.2 30.2 26.2 20.1 5.1 4.6 20.2 24.0 Mphasis Neutral 918 980 7 56.1 59.5 63.8 27.4 6.1 7.3 15.4 14.4 3.3 2.9 22.1 22.6 NIIT Tech Neutral 1823 1900 4 66.2 74.2 88.4 45.3 12.1 19.1 24.6 20.6 4.9 4.2 21.1 22.0 Persistent Sys Buy 700 830 19 44.0 44.3 48.1 8.9 0.7 8.5 15.8 14.6 2.3 2.1 14.6 15.1 TCS Neutral 2203 2320 5 83.5 86.4 95.2 26.4 3.6 10.2 25.5 23.1 9.3 8.9 36.0 39.5 Tech Mah Buy 833 920 10 48.2 49.8 57.2 12.8 3.4 14.8 16.7 14.6 3.5 3.1 21.3 22.7 Wipro Neutral 244 250 3 14.8 17.5 18.3 10.1 18.1 5.1 14.0 13.3 2.6 2.5 18.0 19.1 Zensar Tech Neutral 143 180 26 14.4 10.5 9.9 40.4 -27.1 -5.4 13.7 14.5 1.5 1.4 11.6 10.0 Aggregate 14.7 2.9 10.8 21.6 19.5 5.8 5.3 26.7 27.4 Telecom Bharti Airtel Buy 565 650 15 -8.7 0.7 3.9 PL LP 479.7 844.4 145.7 3.5 3.4 0.5 2.4 Bharti Infratel Neutral 235 260 11 13.6 18.3 17.0 -0.3 34.2 -6.7 12.9 13.8 3.0 3.0 23.1 21.5 Vodafone Idea Buy 3 0 -100 -18.5 -7.1 -5.8 Loss Loss Loss NM NM 0.5 7.0 -52.7 -171.0 Tata Comm Neutral 387 490 26 -2.2 11.9 25.5 PL LP 114.8 32.6 15.2 74.9 12.6 -1,974 142.3 Aggregate Loss Loss Loss -23 -34.9 3.1 3.5 -13.6 -10.0 Utiltites Coal India Buy 168 258 54 28.3 26.4 24.9 47.9 -6.7 -5.8 6.4 6.7 3.3 2.9 52.5 43.1 CESC Buy 702 970 38 88.9 95.4 97.6 43.1 7.3 2.3 7.4 7.2 0.9 0.9 13.4 12.5 JSW Energy Buy 64 78 23 4.2 4.1 6.2 40.2 -3.3 51.2 15.4 10.3 0.8 0.8 5.6 7.9 NHPC Neutral 22 25 14 2.6 2.9 2.9 5.9 13.1 -1.4 7.5 7.6 0.7 0.7 9.3 8.8 NTPC Buy 110 154 40 11.6 12.9 14.8 30.3 11.7 14.5 8.5 7.4 0.9 0.9 11.3 12.1




18 February 2020 24

CMP TP % Upside EPS (INR) EPS Gr. YoY (%) P/E (x) P/B (x) ROE (%) Company Reco (INR) (INR) Downside FY19 FY20E FY21E FY19 FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E Power Grid Buy 184 229 25 19.2 20.5 22.6 16.0 6.7 10.5 9.0 8.1 1.5 1.4 17.3 17.4 Torrent Power Buy 330 350 6 18.7 30.5 27.9 -4.6 62.9 -8.5 10.8 11.8 1.6 1.4 15.3 12.7 Tata Power Neutral 52 66 28 2.1 3.9 4.7 -60.5 84.9 21.1 13.2 10.9 0.8 0.8 6.2 7.2 Aggregate 30.9 3.0 4.8 8.0 7.7 1.3 1.2 16.7 16.2 Others Brigade Enterpr. Buy 228 280 23 11.7 10.1 8.7 63.2 -14.4 -13.2 22.7 26.1 2.0 1.9 9.1 7.4 BSE Buy 507 720 42 38.1 24.9 30.4 -12.4 -34.7 22.5 20.4 16.6 1.1 1.1 5.4 6.8 Coromandel Intl Buy 624 736 18 25.2 35.5 39.2 6.5 41.0 10.4 17.6 15.9 4.4 3.6 27.6 24.9 Delta Corp Buy 156 235 51 7.2 8.1 9.4 23.8 12.9 16.1 19.3 16.6 2.0 1.8 10.8 11.3 Indian Hotels Buy 132 190 44 2.4 3.4 4.4 257.4 43.0 30.3 39.0 29.9 3.4 3.1 8.9 10.7 Interglobe Neutral 1456 1617 11 4.1 32.1 66.9 -93.0 691 108 45 21.8 7.1 5.7 16.6 29.0 Info Edge Neutral 2821 2570 -9 23.0 21.8 37.2 54.2 -5.0 70.6 129.3 75.8 13.7 12.1 14.6 17.1 Gateway Distr. Buy 123 160 30 9.8 10.2 9.0 121.8 4.6 -11.8 12.0 13.6 1.0 0.9 8.2 6.9 Godrej Agrovet Buy 537 649 21 12.5 13.8 20.7 10.9 10.4 49.5 38.8 25.9 5.7 5.0 15.4 20.4 Kaveri Seed Buy 472 570 21 34.4 40.0 38.1 7.7 16.0 -4.7 11.8 12.4 3.1 3.0 25.2 24.6 Lemon Tree Hotel Buy 60 72 21 0.7 0.3 0.9 271.9 -62.6 266.0 215.7 63.7 3.6 3.4 2.0 5.4

MCX Buy 1267 1470 16 28.7 42.4 40.6 35.2 47.7 -4.1 29.9 31.2 4.7 4.4 16.5 14.6 Navneet Education Buy 89 139 57 6.7 8.8 9.9 22.5 31.4 13.3 10.1 8.9 2.1 1.8 23.0 21.8

Oberoi Realty Buy 503 630 25 22.5 16.5 23.4 78.1 -26.4 41.7 30.5 21.5 2.1 2.0 7.2 9.5 Phoenix Mills Buy 864 1015 17 25.0 23.8 25.5 57.8 -4.9 7.4 36.4 33.9 3.5 3.2 10.0 9.9 Quess Corp Neutral 589 590 0 17.5 19.6 24.7 -19.8 11.9 25.9 30.1 23.9 2.2 2.0 10.0 11.3 PI Inds. Buy 1542 1800 17 29.7 35.5 50.9 11.6 19.2 43.4 43.5 30.3 8.0 6.5 19.8 23.7 SRF Buy 4152 4321 4 113.7 158.6 179.6 60.0 39.4 13.3 26.2 23.1 4.9 4.1 20.4 19.4 S H Kelkar Buy 117 162 39 6.1 5.6 9.0 -13.4 -7.8 59.9 20.7 12.9 2.0 1.8 9.4 14.6 Tata Chemicals Buy 752 911 21 42.9 32.7 39.8 -10.8 -23.8 21.9 23.0 18.9 1.5 1.4 8.5 9.8 Team Lease Serv. Buy 2361 3280 39 57.6 54.1 69.4 33.5 -6.0 28.4 43.6 34.0 6.4 5.4 15.8 17.2 Trident Buy 6 8 34 0.8 1.0 1.0 71.2 14.7 2.7 5.9 5.8 0.9 0.8 15.4 14.6 UPL Neutral 595 613 3 27.3 39.3 41.7 -5.7 44.0 6.1 15.1 14.3 2.8 2.5 19.6 18.6




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N O T E S

18 February 2020 26

Explanation of Investment Rating Investment Rating Expected return (over 12-month) BUY >=15% SELL < - 10% NEUTRAL > - 10 % to 15% UNDER REVIEW Rating may undergo a change NOT RATED We have forward looking estimates for the stock but we refrain from assigning recommendation *In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend. Disclosures: The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations). Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOFSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products. Details of associate entities of Motilal Oswal Financial Services Limited are available on the website at http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx MOFSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOFSL and/or its associates and/or Research Analyst may have actual/beneficial ownership of 1% or more securities in the subject company in the past 12 months. MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report. Research Analyst may have served as director/officer, etc. in the subject company in the past 12 months. MOFSL and/or its associates may have received any compensation from the subject company in the past 12 months. In the past 12 months , MOFSL or any of its associates may have: a) managed or co-managed public offering of securities from subject company of this research report, b) received compensation for investment banking or merchant banking or brokerage services from subject company of this research report, c) received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report. d) Subject Company may have been a client of MOFSL or its associates in the past 12 months. MOFSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOFSL has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report. MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not considered in above disclosures. Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not considered in above disclosures. Terms & Conditions: This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as customers by virtue of their receiving this report. Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

Disclosure of Interest Statement Companies where there is interest Analyst ownership of the stock No A graph of daily closing prices of securities is available at www.nseindia.com, www.bseindia.com. Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have expressed their views. Regional Disclosures (outside India) This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions. For Hong Kong: This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Financial Services Limited(SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong. For U.S: Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOFSL, including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement. The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account. For Singapore: In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services license and an exempt financial adviser in Singapore, as per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL. Disclaimer: The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website www.motilaloswal.com. CIN No.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579 ;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: [email protected], Contact No.:022-71881085.* MOFSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law Tribunal, Mumbai Ben

http://www.motilaloswal.com/

http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf

https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx

http://www.nseindia.com/

http://www.bseindia.com/

http://www.motilaloswal.com/

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