Market Strategy - MoneyExcel.com · 2019-07-28 · Market Strategy Diwali Special Please refer to important disclosures at the end of this report. 1 Dear Friends, I wish you all a

Market StrategyDiwali Special

Please refer to important disclosures at the end of this report. 1

Dear Friends,

I wish you all a Happy Diwali and a Prosperous

New Year!

This auspicious occasion reminds us to renew

our spirit of positivity and optimism which

has the power to turn dreams and aspirations

into reality. In fact, to be pessimistic is to bet

against the human spirit and that will always

be a losing bet! So, if aspirations eventually

become reality then what are India's aspirations? I am sure you will all

agree that it is the aspiration to achieve growth and prosperity that

dominates our national psyche. This is not surprising considering we

are ultimately a nation of young people raring to go.

Just imagine that in the past five years alone, 10 crore more people

aged between 18 to 23 years have joined the workforce in India. No

other country can boast of such numbers, not even China! It is inevitable

that our young country is going to assert its aspirations on the global

stage ever more strongly in the coming years. Imagine the pessimism

that prevailed in China during the eighties, and how, almost overnight

the economy changed, recording an 9-10% growth for the next 20 years.

If that is not the power of a nation's aspirations, then what is!

In fact, some powerful forces are already underway in our economy,

not the least of which is the rupee's substantial depreciation. This

depreciation provides powerful stimulation to export growth. Exports

have grown by 15% in the past few months and a continuation of this

trend will raise our GDP growth by a massive 150-200 bps given the

16-17% weightage of value-added exports in our economy. Once this

virtuous cycle is underway, the investment cycle is also likely to revive.

I do believe the government will also rise to the occasion. Why? Because

that is what democratic governments eventually do - they work to enable

the broader aspirations of their nation, in order to survive themselves!

The markets have a tendency to read too much into the day-to-day

gyrations. In fact, if the experience since November 2008 has shown

anything, it is that policymakers and economists globally have figured

out how to manage crises through effective monetary and fiscal stimulus.

The US economy is already recovering and US stock markets are at new

highs. I strongly believe that in the coming months if not days, even our

markets will achieve sustainable new highs!

So this Diwali let’s light up the diya of optimism, shake off all the negativity

and celebrate the good times that are just around the corner!

Best regards,

Dinesh Thakkar

Dinesh Thakkar


October 2013 Please refer to important disclosures at the end of this report. 2

On the road to new highsThe recent positives on growth in exports and the anticipated pick-up in agricultural

production do provide reason for optimism on the macro front. Also, we believe that

the delay in Federal Reserve (Fed)'s tapering of QE3 appears as a window of opportunity

for our economy since it gives us space to continue on the course of corrective policy

action and improve resilience against external headwinds. Swift policy measures have

been taken to attract capital inflows in the economy. Consequently FII investors have

returned in the equity market driven by a) global liquidity continuing to remain benign

for now and b) receding domestic macro risks.

Our current account deficit (CAD) is pegged to moderate considerably led by the

performance of exports as well as compression in imports (particularly gold) and the

concern on financing of the deficit has also materially diminished. Meanwhile, some

near-term concerns continue to persist on account of sluggish pace of growth, rise in

inflation and elections remaining an overhang for substantial revival in investment.

But going forward we do believe that irrespective of the government that comes to

power, the focus would remain on creating employment opportunities and kick-starting

the capex cycle to boost economic recovery.

Sustainable growth in exports to be a good starting point forrecovery

For three successive months in July, August and September 2013 exports have reported

a robust double-digit growth performance. Apart from positively impacting the trade

deficit, we believe that the improvement in exports is likely to be a good starting point

for economic recovery. We maintain that a sustainable growth in exports with a

double-digit run rate can potentially trigger a virtuous growth cycle and add about

150-200bp to GDP growth as investments start picking up.

Overall, real GDP growth is expected to bottom out during FY2014. We believe that

going forward the gradual easing of interest rates in FY2015 would push up

consumption and investment. Coupled with export growth, these factors are likely to

improve economic performance considarably from headline growth prints presently

hovering around the modest 4-5%-levels.

Outlook and Valuation

We expect the Sensex EPS to post a growth of 9.6% for FY2014 and a healthier 15.4%

for FY2015. Attributing a 15x multiple to our Sensex EPS (in line with the 5-year

average), we arrive at a target of 22,600 for the Sensex, implying an upside of 8.8%

from the present levels.

Owing to near-term cyclical headwinds, we recommend a longer investment horizon

for rate-sensitives. We continue to have a positive outlook on export-oriented sectors

owing to signs of recovery in advanced economies and the rupee depreciation on a

yoy basis. So our top recommendations continue to be in the IT and pharmaceuticals

space. We are positive on the metal sector as well. We believe that the recent capacity

additions and meaningful under-utilized capacity in the metal sector are likely to be

employed for sharp increase in exports going ahead aided by improving global

fundamentals. Although expensive, defensives like FMCG stocks are also likely to

continue to outperform in the current environment. We also selectively prefer large

private banks over a medium to long term perspective but overall continue to maintain

a cautious near-term outlook on the banking sector and PSU banks in particular.

Note: Investment period - 12 MonthsBSE Sensex (20,768) and Price as on October 23, 2013

Top PicksCompany CMP (`) TP (`)

Wipro 492 567

ICICI Bank 1,025 1,181

Hindustan Zinc 135 156

Axis Bank 1,210 1,392

Cipla 423 504

Tata Steel 335 390

Cadilla 660 894

United Phosphorus 154 225

Aurobindo Pharma 216 271

Crompton Greaves 98 115



Policymakers to maintain global financial stability

Over the past 5 years, post the Lehman crisis, markets have

gone through various risk-on and risk-off phases in anticipation

of global events. The impact of these uncertainties on markets

has been temporary since policymakers have ultimately managed

to negotiate deals (in many instances at the very last-minute)

and averted any undesirable consequences for the economy and

financial markets.

Even in the event of political stalemates extending past the

deadline (as in the case of raising the US debt ceiling in August

2011 and sequester issue in March 2013) pragmatic resolutions

have been adopted going forth so that the economic recovery

does not get derailed. Time and again we have seen that

policymakers, having learnt from their past mistakes, eventually

take mature decisions to maintain stability and avoid disruptions

in global financial markets.

Delayed tapering gives us a window for positivepolicy action

The Federal Reserve appears to have put off for now the tapering

of its monthly bond purchases. Through its monetary stimulus,

the Fed is injecting liquidity to the tune of USD85bn per month.

In May 2013, the Fed first indicated at a tapering of its asset

purchases following which the INR (similar to the trend in other

emerging markets [EMs]) witnessed about 25% depreciation and

touched a record-low during August 2013.

The postponement of tapering has come as a tailwind for EMs

including India. We believe that the delay in withdrawing the

stimulus by 3-6 months has provided our economy with a window

for policy action to mitigate our external sector vulnerability and

policymakers have also moved in the right direction by taking

steps to narrow the trade gap and augment capital flows.

Going ahead, the tapering itself appears inevitable but we believe

that our economy is now better poised to tackle the eventual

withdrawal of liquidity stimulus. Buoyed by signs of continued

global liquidity since September 2013, FIIs poured in USD3.8bn

in our equity markets. These inflows come on the back of three

Source: SEBI, Angel Research

Exhibit 1: Daily net FII equity inflows in positive territory again

(900)

(600)

(300)

-

300

600

Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13

(USDmn)FII net equity inflows

Source: RBI, Angel Research

Exhibit 2: Trade deficit to improve significantly

(10.6) (10.4) (10.2)

(11.4)(12.0)

(9.0)

(11.3)

(7.3)

(14)

(12)

(10)

(8)

(6)

(4)

(2)

-

(70)

(60)

(50)

(40)

(30)

(20)

(10)

-

3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14E

(% of GDP)(USD bn) Trade deficit as % of GDP (RHS)

Exports have reported a strong double-digit growth for three

straight months in July, August and September 2013. We believe

that a double-digit export growth run rate, given the weightage

of value-added exports in our economy of at least about 16%,

could potentially add 150-200bp to the overall GDP growth.

Also, this would in turn trigger a virtuous GDP upgrade cycle as

investments start picking up.

straight months of net FII equity outflows amounting to USD3.7bn.

Subsequently, the INR has recovered by about 12% from its

record low.

Improved external sector outlook

CAD fundamentals:CAD fundamentals:CAD fundamentals:CAD fundamentals:CAD fundamentals: The recent appreciation in the currency is

supported by global cues as well as our receding external risks.

Concerns on India's balance of payment situation have eased

significantly owing to the anticipation of a much lower current

account deficit during FY2014 at about 3.2-3.7% of GDP

compared to 4.8% of GDP in FY2013. This improvement is

expected on the back of growth in exports which is likely to be

supported by the recovering advanced economies like the US,

Japan and to an extent the Eurozone coupled with a weaker INR

on a yoy basis. At the same time, imports are also expected to

be contained led by curbs on gold imports in particular. Aided

by these positives, the estimated trade deficit for 2QFY2014 has

declined dramatically to USD30bn from USD50bn in 1QFY2014.

Source: Ministry of Commerce, Angel Research

Exhibit 3: Double-digit export growth for 3 straight months

1.2

(6.6) (6.1)

(12.2)

(6.5) (7.2)

0.7

(2.5)

0.6 1.22.3

6.6

(0.8)(3.3)

(5.3)

11.613.0

11.2

(15.0)

(10.0)

(5.0)

-

5.0

10.0

15.0

Apr-

12

May-1

2

Jun

-12

Jul-

12

Aug

-12

Sep

-12

Oct

-12

Nov-

12

Dec-1

2

Jan

-13

Feb

-13

Mar-

13

Apr-

13

May-1

3

Jun

-13

Jul-

13

Aug

-13

Sep

-13

(%) Export growth



Source: Ministry of Commerce, RBI, Angel Research

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Apr-

12

May-

12

Jun

-12

Jul-

12

Aug

-12

Sep

-12

Oct

-12

Nov-

12

Dec-1

2

Jan

-13

Feb

-13

Mar-

13

Apr-

13

May-

13

Jun

-13

Jul-

13

Aug

-13

Sep

-13

(USDbn) Non oil, non gold imports Oil imports Gold imports

Exhibit 4: Lower imports led by curbs on gold

FFFFFinancing the CAD:inancing the CAD:inancing the CAD:inancing the CAD:inancing the CAD: We believe that the concerns surrounding

financing of the current account deficit have materially subsided.

This can be attributed to multiple factors like 1) anticipated

improvement in the CAD itself, 2) postponement of Fed's QE3

tapering and 3) policy measures to attract capital flows. In order

to enhance capital inflows in the economy to finance the CAD

gap, the government has liberalized caps on FDI and FII

investment and the Reserve Bank of India (RBI) has taken

measures rendering debt and NRI deposits attractive. The RBI's

measures on attracting banking capital in the economy by

November 2013 are alone expected to bring in additional foreign

exchange in the economy to the tune of ~USD10-15bn.

Better agri production to result in easing of foodinflation going ahead

Good monsoon and the increase in area under sowing of kharif

crop bode well for agricultural production during the kharif

season. In addition, conditions (such as soil moisture and

groundwater levels) are also favorable for robust production in

the rabi season. Overall agricultural production is expected to

be boosted during FY2014. As a result, going forward as

harvesting progresses and the new crop enters the market; we

expect the pressure on food inflation to abate.

The easing of food prices is expected to impact headline CPI

inflation substantially. Owing to the higher (almost 50%)

weightage given to the food basket in the index, the headline

CPI inflation has remained elevated. As food inflation recedes,

the CPI would likely moderate from the sticky near double-digit

Source: Office of Economic Adviser, Angel Research

Exhibit 5: Elevated vegetables and cereal inflationCereals (wt: 3.4) Pulses (wt: 0.7) Fruits (wt: 2.1) Vegetables (wt: 1.7)

(20.0)

-

20.0

40.0

60.0

80.0

100.0

Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13

(%)

levels. Moderation in food inflation is also likely to have a

cascading positive impact on inflationary expectations and can

potentially result in an increase in the saving and investment

rates for the economy.

Source: Office of Economic Adviser, Mospi, Angel Research

Exhibit 6: Trends in WPI and CPI inflationWPI Inflation CPI inflation

6.46

9.84

3.0

5.0

7.0

9.0

11.0

Apr-

12

May-

12

Jun

-12

Jul-

12

Aug

-12

Sep

-12

Oct

-12

Nov-

12

Dec-1

2

Jan

-13

Feb

-13

Mar-

13

Apr-

13

May-

13

Jun

-13

Jul-

13

Aug

-13

Sep

-13

(%)

Boost to investment likely post general elections

The investment outlook continues to remain lackluster owing to

sluggish pace of growth, demand environment and still-high

interest rates coupled with political overhang now. Five states

are headed for polls over the next 2 months and general elections

are slated to happen in the next 4-6 months. However, it is likely

that positive outcomes in the upcoming state elections would

build up expectations of a strong government in the general

elections as well. If and when that does happen, with focus

returning on revival of capex and positive structural reforms in

the economy, we believe that new projects and big-ticket

investments in particular are likely to be boosted going forward.

This is likely to provide a further leg up to the market.

Source: Election Commission of India, Angel Research

Exhibit 7: Upcoming state and general election calendarStateStateStateStateState End of termEnd of termEnd of termEnd of termEnd of term Ruling PRuling PRuling PRuling PRuling Partyartyartyartyarty SeatsSeatsSeatsSeatsSeats SeatsSeatsSeatsSeatsSeats

in Lin Lin Lin Lin L.S.S.S.S.S in R.Sin R.Sin R.Sin R.Sin R.S

Madhya Pradesh Dec-13 NDA/BJP 29 11

Mizoram Dec-13 UPA/Congress 1 1

NCT Delhi Dec-13 UPA/Congress 7 3

Rajasthan Dec-13 UPA/Congress 25 10

Chhattisgarh Jan-14 NDA/BJP 11 5

Sikkim May-14 SDF 1 1

LLLLLok Sabhaok Sabhaok Sabhaok Sabhaok Sabha MayMayMayMayMay-14-14-14-14-14 UPUPUPUPUPA/CongressA/CongressA/CongressA/CongressA/Congress 545545545545545 245245245245245



Outlook and Valuation

We expect the Sensex EPS to post a growth of 9.6% for FY2014

and a healthier 15.4% for FY2015. Attributing a 15x multiple to

our Sensex EPS (in line with the 5-year average), we arrive at a

target of 22,600 for the Sensex, implying an upside of 8.8%

from the present levels.

Owing to near-term cyclical headwinds, we recommend a longer

investment horizon for rate-sensitives. We continue to have a

positive outlook on export-oriented sectors owing to signs of

recovery in advanced economies and the rupee depreciation on

a yoy basis. So our top recommendations continue to be in the

IT and pharmaceuticals space. We are positive on the metal

sector as well. We believe that the recent capacity additions and

meaningful under-utilized capacity in the metal sector are likely

to be employed for sharp increase in exports going ahead aided

by improving global fundamentals. Although expensive,

defensives like FMCG stocks are also likely to continue to

outperform in the current environment. We also selectively prefer

large private banks over a medium to long term perspective but

overall continue to maintain a cautious near-term outlook on

the banking sector and PSU banks in particular.

Source: Angel Research

Exhibit 9: Sensex one-year-forward P/E

5.0

10.0

15.0

20.0

25.0

30.0

Oct-01 Oct-03 Oct-05 Oct-07 Oct-09 Oct-11 Oct-13

Sensex 1 year forward P/E 15 year Avg 5 year Avg

Source: Angel Research

Exhibit 8: Sensex EPS growth over FY2015E

1,192

1,307

1,508

500

700

900

1,100

1,300

1,500

1,700

FY2013 FY2014E FY2015E

(`)

9.6% growth15.4% growth



Top Picks



ICICI Bank's strategic transformation over the past five years has expectedly resultedin a significantly better balance sheet and earnings quality. CASA ratio, which was29% at the end of FY2009, has improved to around 43% as of 1QFY2014.

Apart from the paradigm shift in the deposit mix, the bank has largely exitedunattractive business segments such as small-ticket personal loans in the domesticsegment and most non-India related exposures in its international business, whichhas resulted in a commensurate decline in credit costs for the bank. Even duringFY2013, credit costs for the bank remained under check at 66bp (which was lowerthan the Managements' guidance of 75bp).

The bank's substantial branch expansion (from 1,388 branches at the end of1QFY2009 to 3,350 branches by 1QFY2014) and strong capital adequacy at18.35% (tier-1 at 12.5%) positions the bank to grow its loan book at a faster ratethan the system average as and when business environment turns conducive. Inthe near term, we expect the bank to grow moderately taking into account thecurrent challenging times for the sector.

The stock is trading at an attractive valuation of 1.5x FY2015E P/ABV. Hence, wewewewewemaintain our Buy view on the stock with a target price of maintain our Buy view on the stock with a target price of maintain our Buy view on the stock with a target price of maintain our Buy view on the stock with a target price of maintain our Buy view on the stock with a target price of `̀̀̀̀1,181, valuing the core1,181, valuing the core1,181, valuing the core1,181, valuing the core1,181, valuing the corebank at 1.7x FY2015E P/ABbank at 1.7x FY2015E P/ABbank at 1.7x FY2015E P/ABbank at 1.7x FY2015E P/ABbank at 1.7x FY2015E P/ABV and assigning a value of V and assigning a value of V and assigning a value of V and assigning a value of V and assigning a value of `̀̀̀̀187 to its subsidiaries.187 to its subsidiaries.187 to its subsidiaries.187 to its subsidiaries.187 to its subsidiaries.

ICICI Bank (CMP: `1,025/ TP: `1,181/ Upside: 15%)

Y/EY/EY/EY/EY/E Op Inc.Op Inc.Op Inc.Op Inc.Op Inc. NIMNIMNIMNIMNIM PPPPPAAAAATTTTT EPSEPSEPSEPSEPS ABABABABABVVVVV RoARoARoARoARoA RoERoERoERoERoE P/EP/EP/EP/EP/E P/ABP/ABP/ABP/ABP/ABVVVVV

MarchMarchMarchMarchMarch ((((( `̀̀̀̀ cr) cr) cr) cr) cr) (%)(%)(%)(%)(%) ((((( `̀̀̀̀ cr) cr) cr) cr) cr) ((((( `̀̀̀̀ ))))) ((((( `̀̀̀̀ ))))) (%)(%)(%)(%)(%) (%)(%)(%)(%)(%) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x)

FY2014E 25,863 3.2 9,624 83.4 632.3 1.6 15.0 12.3 1.6

FY2015E 30,193 3.2 11,187 97.0 695.5 1.6 15.5 10.6 1.5

Wipro has identified four momentum industry verticals: 1) BFSI, 2) energy & utilities,3) retail and 4) lifesciences and healthcare; these verticals account for 65% of thecompany's revenue. The Managements of all its peer companies have indicatedthat IT spend in industry verticals such as retail and energy & utilities is expected togrow higher than the overall industry growth and Wipro's exposure to energy &utilities is ~100% higher than the next largest competitor in this space (Infosys). Weexpect USD and INR revenue CAGR for IT services to be at 9% and 16%, respectivelyover FY2013-15E.

Wipro has operating margin levers such as improving utilization level and increasingoffshore revenue. Wipro's utilization level is currently at at 66.1%, which is nearerto its historic low levels. The company has headroom to improve its utilization by~500bp even if the Management does not want to run a tight ship.

The portfolio of top-10 client accounts has seen a change at Wipro (with only2 hi-tech/telecom clients within the top-10 client roster vs 4-5 clients from thehi-tech/telecom segment earlier). WWWWWe value the stock at 15.5x FY2015E EPS ofe value the stock at 15.5x FY2015E EPS ofe value the stock at 15.5x FY2015E EPS ofe value the stock at 15.5x FY2015E EPS ofe value the stock at 15.5x FY2015E EPS of`̀̀̀̀36.5, which gives us a target price of 36.5, which gives us a target price of 36.5, which gives us a target price of 36.5, which gives us a target price of 36.5, which gives us a target price of `̀̀̀̀567 and recommend it as one of our top567 and recommend it as one of our top567 and recommend it as one of our top567 and recommend it as one of our top567 and recommend it as one of our toppicks with a Buy ratingpicks with a Buy ratingpicks with a Buy ratingpicks with a Buy ratingpicks with a Buy rating.....

Wipro (CMP: `492/ TP: `567/ Upside: 15%)

Y/EY/EY/EY/EY/E SalesSalesSalesSalesSales OPMOPMOPMOPMOPM PPPPPAAAAATTTTT EPSEPSEPSEPSEPS RoERoERoERoERoE P/EP/EP/EP/EP/E P/BP/BP/BP/BP/BVVVVV EV/EBITDEV/EBITDEV/EBITDEV/EBITDEV/EBITDAAAAA EV/SalesEV/SalesEV/SalesEV/SalesEV/Sales

MarchMarchMarchMarchMarch ((((( `̀̀̀̀ cr) cr) cr) cr) cr) (%)(%)(%)(%)(%) ((((( `̀̀̀̀ cr) cr) cr) cr) cr) ((((( `̀̀̀̀ ))))) (((((%%%%%))))) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x)

FY2014E 44,029 22.8 7,781 31.5 22.5 15.6 3.6 10.1 2.3

FY2015E 49,961 23.5 9,020 36.5 21.6 13.5 2.9 8.0 1.9



Axis Bank has aggressively expanded its branch network at around 30% CAGRover the past ten years (~2,250 branches now), which has not only aided the bankin steadily growing its retail liabilities profile (CASA ratio stands at ~43% andshare of domestic CASA & retail deposits to total deposits at 73%), but has also laida strong platform for building up a sustainable retail assets portfolio (share ofretail advances to total advances at 30%).

Axis Bank has been able to sustain its healthy growth on the non-interest incomefront and maintain the fee income contribution at a meaningful 1.9% of total assets.

Axis Bank's tier-I ratio stood at 12.8% as of 2QFY2014, which gives it enough headroomfor credit growth for the next three years. We expect the Management to meet itsguidance of above-industry average loan growth and improve its credit market share.

Notwithstanding moderate concerns on its corporate book asset quality, we expectthe retail business to drive earnings at a healthy CAGR of 19.2% overFY2013-15E. In our view, the current valuations at 1.3x FY2015 ABV are belowour longer term fair value estimates. In the near term, given the weak macroenvironment and cautious outlook for the sector, stocks such as Axis Bank mayundershoot fair value estimates, but from a relative point-of-view compared topeers, it remains one of the preferred banks, in our view, from a medium termperspective. WWWWWe maintain our Buy recommendation, with a target price of e maintain our Buy recommendation, with a target price of e maintain our Buy recommendation, with a target price of e maintain our Buy recommendation, with a target price of e maintain our Buy recommendation, with a target price of `̀̀̀̀1,392.1,392.1,392.1,392.1,392.

Axis Bank (CMP: `1,210/ TP: `1,392/ Upside: 15%)

Y/EY/EY/EY/EY/E Op Inc.Op Inc.Op Inc.Op Inc.Op Inc. NIMNIMNIMNIMNIM PPPPPAAAAATTTTT EPSEPSEPSEPSEPS ABABABABABVVVVV RoARoARoARoARoA RoERoERoERoERoE P/EP/EP/EP/EP/E P/ABP/ABP/ABP/ABP/ABVVVVV

MarchMarchMarchMarchMarch ((((( `̀̀̀̀ cr) cr) cr) cr) cr) (%)(%)(%)(%)(%) ((((( `̀̀̀̀ cr) cr) cr) cr) cr) ((((( `̀̀̀̀ ))))) ((((( `̀̀̀̀ ))))) (%)(%)(%)(%)(%) (%)(%)(%)(%)(%) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x)

FY2014E 19,329 3.4 6,048 129.2 802.5 1.6 17.1 9.4 1.5

FY2015E 22,724 3.4 7,368 157.5 922.0 1.7 18.1 7.7 1.3

For Hindustan Zinc (HZL), we expect zinc-lead/ silver volumes to grow at a CAGRof 5.8%/6.2% over FY2013-15. Also, HZL is expanding its mining capacity at theKayar mine, which has 11mn tonne of high-grade reserves. The company expects toincrease its capacity from 1.0mn tonne to 5.0mn tonne over the coming five years.

At current levels of ~US$1,900/tonne, zinc prices stand near marginal cost ofproduction for several zinc producers globally. Hence, we believe that the probabilityof a further decline in zinc prices from the current levels remains muted. Further, overthe next 3-5 years, several zinc mines are expected to be exhausted; hence, productionis likely to suffer. This should support zinc prices over the medium term in our view.

With net cash of `23,632cr as on September 30, 2013, the company continues toexplore new reserves. Its reserves and resources have increased to 348mn tonne as onMarch 31, 2013, compared to 210mn tonne as on March 31, 2007, indicating thatHZL has added more reserves and resources than it has mined during the same period.

The stock is currently trading at an inexpensive valuation of 4.6x FY2014E and3.6x FY2015E EV/EBITDA. On a P/B basis, the stock trades at 1.5x FY2014E and1.3x FY2015E. W W W W We maintain a Buy on the stock.e maintain a Buy on the stock.e maintain a Buy on the stock.e maintain a Buy on the stock.e maintain a Buy on the stock.

Hindustan Zinc (CMP: `135/ TP: `156/ Upside: 16%)



FY2014E 12,964 49.9 6,503 15.2 18.5 8.8 1.5 4.6 2.3

FY2015E 13,537 52.0 7,034 16.6 17.6 8.1 1.3 3.6 1.9



Tata Steel (CMP: `335/ TP: `390/ Upside:16%)

Tata Steel completed its 2.9mn-tonne expansion program at the Jamshedpur plantduring FY2013. We expect this expansion to contribute ~`2,000cr per annum tothe company's consolidated EBITDA as the new plant reaches optimum utilizationover the coming two years.

Tata Steel is in the process of restructuring its European operations. Over the pasttwo quarters, its European operations have shown better-than-expected improvementin operating profit. Going forward, we expect European operations to continue toimprove on the profitability front, which have been dragging down the company'sconsolidated profits in the past.

Tata Steel is setting up a 6mn-tonne integrated steel plant (including cold rollingmill) in two phases of 3mn tonne each for a capex of `34,500cr. Phase 1 of the3mn-tonne plant is expected to be completed by FY2015. This project is expectedto have high returns on invested capital as it would be backed by captive iron ore.

The stock is currently trading at an inexpensive valuation of 5.8x FY2014E and5.2x FY2015E EV/EBITDA. On a P/B basis, the stock trades at 0.9x FY2014E and0.8x FY2015E. WWWWWe maintain a Buy on the stock.e maintain a Buy on the stock.e maintain a Buy on the stock.e maintain a Buy on the stock.e maintain a Buy on the stock.



FY2014E 153,835 9.0 3,325 34.2 9.5 9.8 0.9 5.8 0.5

FY2015E 165,673 9.7 3,846 39.6 10.1 8.5 0.8 5.2 0.5

For Cipla, exports contributed 53% to the total turnover of FY2013, with Africa, USand Latin America constituting more than 60% of total exports. In the US, Cipla hasentered into a partnership with more than 22 players and has a strong productpipeline of ANDAs, of which 47 have been launched, out of the 76 approved. Withthe Medpro acquisition, the company now has a front end in the fast growingAfrican market.

Cipla is one of the largest players in the domestic formulation market, with amarket share of around 5%, contributing 47% to the total turnover in FY2013.Cipla's distribution network in India consists of a field force of around 7,500employees. The company plans to focus on growing its market share and sales byincreasing penetration in the Indian market, especially in rural areas, and plans toexpand its product portfolio by launching biosimilars, particularly relating to theoncology, anti-asthmatic and anti-arthritis categories.

For FY2014, the Management has given a revenue growth guidance of 14-15%(excluding Medpro). We expect the company's net sales to post a 15.5% CAGR to`10,796cr and EPS to record a 12.1% CAGR to `23.9 over FY2013-15E.

Cipla (CMP: `423/ TP: `504/ Upside: 19%)



FY2014E 9,274 23.1 1,685 21.0 17.2 20.2 3.2 15.7 3.4

FY2015E 10,796 23.1 1,916 23.9 16.8 17.8 2.8 13.1 2.8



Cadila (CMP: `660/ TP: `894/ Upside: 35%)

Cadila is the fifth largest player in the domestic market. The company's domestic sales,at `2,987cr in FY2013, accounted for ~48% to its overall top-line. The companyenjoys a leadership position in the CVS, GI, women's healthcare and respiratorysegments, and has a sales force of 4,500 MRs. Going forward, the company expectsthese segments to grow at above-industry rate on the back of new product launchesand field force expansion. While FY2014 sales would be lower, however FY2015 shouldwitness a strong sales growth.

Cadila has a two-fold focus on exports, wherein it is targeting developed as well asemerging markets, which contributed around 53% to its FY2013 top-line. The companyhas developed a formidable presence in the developed markets of US, Europe (Franceand Spain) and Japan. In the US, the company achieved a critical scale of ̀ 1,500cr onthe sales front in FY2013. The company's exports growth to the US market will besubdued in FY2014, on back of lack of new products along with price erosion amongits key products and with just 5-8 approvals. However, in FY2015, the region is expectedto post a growth of 20% on back of 20 approvals.

We expect Cadila's net sales to post a 16.6% CAGR to `8,367cr and EPS to report an18.1% CAGR to `44.7 over FY2013-15E. While the growth momentum has sloweddown, the stock has corrected significantly, making it attractive.



FY2014E 7,123 15.5 765 37.3 22.9 17.7 3.7 14.0 2.2

FY2015E 8,367 15.7 915 44.7 22.9 14.8 3.1 11.7 1.9

United Phosporus (CMP: `154/ TP: `225/ Upside: 46%)

United Phosphorus (UPL) figures among the top five generic agrichemical playersin the world, with a presence across major markets such as the US, EU, LatinAmerica and India.

The global agrichem industry, valued at ~US$45bn (CY2012E), is dominated bythe top six innovators, viz Bayer, Syngenta, Monsanto, BASF, DuPont and Dow,which enjoy a large market share of the patented (28%) and off-patent (32%)market, while in generic, the top-5 companies occupy 61% of market share (of the40% off-patent market). In fact, from an overall market perspective, the top11 players control 84% of the total agrichemical market. This is due to high entrybarriers by way of investments required for product registration and to set upmanufacturing facilities. Thus, one-third of the total pie worth ~US$15bn, which iscontrolled by the top six innovators through proprietary off-patent products, providesa high-growth opportunity for larger integrated generic players such as UPL.Moreover, as we go forward, around US$7bn worth of products would be goingoff-patent in the next 2-3 years, augmenting the overall growth opportunity forgeneric players like UPL.

We estimate UPL to post a 12.0% and 15.0% CAGR in sales and PAT, respectively,over FY2013-15. The stock is trading at an attractive valuation of 6.8x FY2015E EPS.


SeptemberSeptemberSeptemberSeptemberSeptember ((((( `̀̀̀̀ cr) cr) cr) cr) cr) (%)(%)(%)(%)(%) ((((( `̀̀̀̀ cr) cr) cr) cr) cr) ((((( `̀̀̀̀ ))))) (((((%%%%%))))) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x) (x)(x)(x)(x)(x)

FY2014E 10,091 16.5 850 19.2 17.0 8.0 1.3 4.8 0.8

FY2015E 11,302 16.5 998 22.5 17.2 6.8 1.1 4.0 0.7



Crompton Greaves (CG) is among the leading players in the power transmission &distribution equipment business. It is a globally diversified company, deriving morethan 50% of its order backlog from international operations as of FY2013.

The underperformance of the stock in the last few years can be attributed to intensecompetition in the domestic market, slowdown in European market and restructuringof the Belgium plant which led to execution delays and margin contraction. However,we are of the opinion that CG's margins have bottomed out in FY2013 and expectoperating margin to gradually improve over the next 12 months, partly due toexpected recovery of margin in overseas business (aided by cost savings on accountof restructuring of Belgium operations and transfer of orders to Hungary plant).

Given the attractive valuations (stock trading at 0.5x FY2015E EV/Sales comparedto its trading range of 0.5x to 1.5x and median of 0.9x), we maintain our positivestance on the company. We have assigned an EV/Sales multiple of 0.7x to arrive ata target price of `115, implying an upside of 17% from the current levels.

Crompton Greaves (CMP: `98/ TP: `115/ Upside:17%)



FY2014E 13,272 5.7 360 5.6 9.8 17.5 1.6 9.9 0.6

FY2015E 14,982 6.7 514 8.0 12.8 12.3 1.5 7.8 0.5

Aurobindo Pharma (CMP: `216/ TP: `271/ Upside:25%)

Aurobindo Pharma (APL) has increased its filing (ANDAs and dossiers) dramaticallyfrom 313 in FY2008 to 1,647 in FY2013, as it proposes to scale up from SSP andCephs to NPNC products. APL has entered into long-term supply agreements withPfizer (March 2009) and AstraZeneca (September 2010), which provide significantrevenue visibility going ahead. APL is also in discussion with other MNCs for moresupply agreements.

APL's business, excluding the supply agreements, would primarily be driven by theUS and ARV segments on the formulation front. The company has been an aggressivefiler in the US market, with 281 ANDAs filed until 1QFY2014. Amongst peers, APLhas emerged as one of the top ANDA filers. APL expects to file 15-20 ANDAs everyyear going forward.

We estimate net sales to log a 14.9% CAGR to `7,637cr over FY2013-15E on theback of supply agreements in the US and ARV formulation contracts. Even afterfactoring in lower profitability going forward, the stock trades at an attractivevaluation.

Y/EY/EY/EY/EY/E SalesSalesSalesSalesSales OPMOPMOPMOPMOPM PPPPPAAAAAT*T*T*T*T* EPS*EPS*EPS*EPS*EPS* RoERoERoERoERoE P/EP/EP/EP/EP/E P/BP/BP/BP/BP/BVVVVV EV/EBITDEV/EBITDEV/EBITDEV/EBITDEV/EBITDAAAAA EV/SalesEV/SalesEV/SalesEV/SalesEV/Sales


FY2014E 6,641 15.9 504 17.3 19.5 12.5 2.0 8.8 1.4

FY2015E 7,637 15.9 601 20.6 18.9 10.5 1.7 7.5 1.2

Note: * Recurring numbers



Stock Watch

Stock WStock WStock WStock WStock Watch |atch |atch |atch |atch | October 2013

13May 2011 Please refer to important disclosures at the end of this report.

Company Name Reco CMP Target Mkt Cap Sales (` cr) OPM (%) EPS (`) PER (x) P/BV (x) RoE (%) EV/Sales (x) (`) Price (`) (` cr) FY14E FY15E FY14E FY15E FY14E FY15E FY14E FY15E FY14E FY15E FY14E FY15E FY14E FY15E

Agri / Agri ChemicalAgri / Agri ChemicalAgri / Agri ChemicalAgri / Agri ChemicalAgri / Agri ChemicalRallis Neutral 158 - 3,074 1,696 1,983 14.9 14.9 7.7 8.8 20.5 18.0 4.3 3.6 22.4 21.9 2.0 1.7United Phosphorus Buy 154 225 6,809 10,091 11,302 16.5 16.5 19.2 22.5 8.0 6.8 1.3 1.1 17.0 17.2 0.8 0.7Auto & Auto AncillaryAuto & Auto AncillaryAuto & Auto AncillaryAuto & Auto AncillaryAuto & Auto AncillaryAmara Raja Batteries Neutral 313 - 5,347 3,474 3,952 15.5 15.5 19.0 21.0 16.5 14.9 4.0 3.3 27.2 24.2 1.6 1.3Apollo Tyres Neutral 69 - 3,465 13,107 14,614 12.0 11.6 13.3 15.1 5.2 4.5 0.9 0.7 18.2 17.7 0.4 0.3Ashok Leyland Accumulate 17 18 4,497 12,945 15,049 6.3 8.2 0.2 1.5 97.2 11.2 1.5 1.4 1.1 9.1 0.5 0.4Automotive Axle# Neutral 243 - 367 700 890 8.7 10.7 11.1 25.8 21.9 9.4 1.4 1.3 6.2 13.8 0.6 0.5Bajaj Auto Accumulate 2,097 2,360 60,682 21,710 24,818 20.5 21.0 124.2 146.6 16.9 14.3 6.1 4.8 40.2 37.4 2.4 2.0Bharat Forge Neutral 278 - 6,475 5,999 6,647 15.2 15.5 15.8 20.7 17.6 13.4 2.6 2.3 15.5 18.1 1.3 1.1Bosch India* Neutral 8,757 - 27,496 9,015 10,851 16.2 17.6 314.1 407.5 27.9 21.5 4.3 3.7 15.6 17.3 2.7 2.2CEAT Accumulate 162 170 581 5,159 5,628 9.3 9.0 43.5 48.6 3.7 3.3 0.6 0.5 18.4 17.5 0.2 0.2Exide Industries Accumulate 126 141 10,710 6,649 7,502 15.6 15.2 7.8 8.5 16.2 14.8 2.7 2.4 18.0 17.1 1.3 1.1FAG Bearings* Neutral 1,302 - 2,164 1,305 1,575 13.8 16.0 70.6 98.4 18.5 13.2 2.2 1.9 12.6 15.4 1.5 1.2Hero Motocorp Neutral 2,088 - 41,689 25,059 28,156 14.2 14.5 104.7 145.5 19.9 14.3 7.3 5.8 39.1 45.1 1.4 1.3JK Tyre Buy 112 152 459 7,376 8,262 10.0 9.8 56.0 60.9 2.0 1.8 0.4 0.3 22.7 20.2 0.4 0.4Mahindra and Mahindra Accumulate 867 996 53,416 41,672 46,910 12.0 12.2 57.6 65.6 15.0 13.2 3.0 2.5 21.3 20.7 1.0 0.9Maruti Neutral 1,528 - 46,156 46,334 53,548 11.2 11.0 93.8 104.5 16.3 14.6 2.2 1.9 14.3 14.0 0.8 0.7Motherson Sumi Neutral 263 - 15,455 29,538 33,091 8.4 8.4 14.7 17.0 17.9 15.4 4.9 3.8 31.6 27.8 0.6 0.5Subros Neutral 24 - 146 1,230 1,398 10.5 10.5 2.3 3.8 10.5 6.4 0.5 0.5 4.8 7.6 0.4 0.3Tata Motors Neutral 375 - 100,920 228,831 261,007 13.5 13.7 38.6 43.6 9.7 8.6 2.4 1.9 28.5 24.9 0.5 0.5TVS Motor Neutral 50 - 2,371 7,639 8,579 6.1 6.2 5.0 6.0 10.0 8.3 1.7 1.5 18.1 18.9 0.2 0.2FFFFFinancialsinancialsinancialsinancialsinancialsAllahabad Bank Neutral 84 - 4,190 6,890 7,567 2.5 2.5 24.9 29.8 3.4 2.8 0.5 0.4 11.3 12.3 - -Andhra Bank Neutral 56 - 3,108 4,792 5,192 2.4 2.4 11.7 15.7 4.7 3.5 0.4 0.4 7.5 9.5 - -Axis Bank Buy 1,210 1,392 56,789 19,329 22,724 3.4 3.4 129.2 157.5 9.4 7.7 1.5 1.3 17.1 18.1 - -Bank of Baroda Neutral 589 - 24,827 16,023 18,071 2.2 2.3 96.0 123.5 6.1 4.8 0.8 0.7 12.1 14.1 - -Bank of India Neutral 186 - 11,072 14,565 16,071 2.3 2.2 53.9 60.9 3.5 3.0 0.5 0.4 13.4 13.6 - -Bank of Maharashtra Neutral 41 - 2,705 4,507 4,763 3.0 2.7 11.6 11.6 3.5 3.5 0.5 0.5 15.6 13.9 - -Canara Bank Neutral 236 - 10,475 11,406 12,404 1.9 1.9 48.7 58.8 4.9 4.0 0.5 0.4 9.1 10.2 - -Central Bank Neutral 54 - 5,651 8,224 9,221 2.3 2.4 5.7 14.6 9.4 3.7 0.7 0.6 5.0 11.8 - -Corporation Bank Neutral 274 - 4,190 5,598 6,036 2.0 2.0 74.7 90.7 3.7 3.0 0.4 0.4 11.4 12.6 - -Dena Bank Neutral 52 - 1,817 3,299 3,515 2.2 2.3 17.0 21.1 3.1 2.5 0.4 0.3 11.5 12.9 - -Federal Bank Neutral 78 - 6,707 2,844 3,235 3.0 2.9 8.6 10.2 9.1 7.7 1.0 0.9 11.0 11.9 - -HDFC Neutral 808 - 125,910 8,679 10,350 3.6 3.6 37.5 44.7 21.5 18.1 4.5 4.0 30.1 30.6 - -HDFC Bank Buy 660 774 157,834 26,708 32,441 4.6 4.7 35.9 45.5 18.4 14.5 3.7 3.1 21.6 23.0 - -ICICI Bank Buy 1,025 1,181 118,268 25,863 30,193 3.2 3.2 83.4 97.0 12.3 10.6 1.6 1.5 15.0 15.5 - -IDBI Bank Neutral 68 - 9,036 9,463 10,530 1.9 2.1 14.4 22.4 4.7 3.0 0.4 0.4 9.5 13.5 - -Indian Bank Neutral 75 - 3,221 5,970 6,371 2.7 2.7 24.7 32.7 3.0 2.3 0.3 0.3 10.2 12.3 - -IOB Neutral 50 - 4,607 7,693 8,416 2.2 2.3 6.7 15.0 7.5 3.3 0.4 0.4 4.9 10.4 - -




J & K Bank Neutral 1,222 - 5,924 3,062 3,397 3.8 3.9 225.6 205.5 5.4 5.9 1.0 0.9 20.7 16.4 - -

LIC Housing Finance Neutral 210 - 10,608 2,001 2,495 2.2 2.3 23.8 28.8 8.8 7.3 1.5 1.3 17.3 18.2 - -

Oriental Bank Neutral 161 - 4,690 6,884 7,416 2.6 2.5 45.5 52.2 3.5 3.1 0.4 0.4 10.5 11.1 - -

Punjab Natl.Bank Neutral 495 - 17,508 20,563 23,287 3.3 3.3 127.6 156.7 3.9 3.2 0.6 0.5 13.7 15.0 - -

South Ind.Bank Neutral 21 - 2,863 1,790 2,000 2.7 2.7 3.6 4.2 5.9 5.0 0.9 0.8 15.8 16.3 - -

St Bk of India Neutral 1,716 - 117,404 65,495 74,415 3.0 3.0 176.2 224.1 9.7 7.7 1.2 1.1 12.0 13.8 - -

Syndicate Bank Neutral 77 - 4,632 6,694 7,492 2.5 2.5 20.7 22.8 3.7 3.4 0.4 0.4 12.4 12.4 - -

UCO Bank Neutral 69 - 5,174 6,781 7,031 2.7 2.6 13.4 15.7 5.1 4.4 0.8 0.7 13.1 13.8 - -

Union Bank Neutral 120 - 7,170 10,511 11,921 2.4 2.4 31.5 39.5 3.8 3.0 0.5 0.4 11.4 13.1 - -

United Bank Neutral 33 - 1,227 3,407 3,704 2.1 2.3 6.4 12.2 5.1 2.7 0.4 0.3 5.3 9.5 - -

Vijaya Bank Neutral 40 - 1,999 2,691 2,921 1.8 1.8 6.5 8.4 6.3 4.8 0.5 0.5 7.6 9.2 - -

Yes Bank Neutral 374 - 13,484 4,424 5,261 2.8 2.9 43.1 49.4 8.7 7.6 1.9 1.6 24.0 22.7 - -

Capital GoodsCapital GoodsCapital GoodsCapital GoodsCapital Goods

ABB* Sell 626 442 13,267 7,802 8,631 5.3 6.3 9.5 13.4 66.1 46.8 5.0 4.9 7.7 10.6 1.7 1.5

BGR Energy Accumulate 114 124 823 3,541 3,995 12.1 11.0 22.0 24.8 5.2 4.6 0.6 0.6 22.6 20.7 0.5 0.4

BHEL Neutral 143 - 34,891 41,082 38,590 15.0 14.1 16.5 14.3 8.6 9.9 1.6 1.4 19.2 14.9 0.7 0.8

Blue Star Buy 146 208 1,310 2,941 3,099 3.4 4.2 6.0 9.3 24.4 15.7 3.0 2.6 12.9 18.0 0.6 0.5

Crompton Greaves Buy 98 115 6,299 13,272 14,982 5.7 6.7 5.6 8.0 17.5 12.3 1.6 1.5 9.8 12.8 0.6 0.5

Jyoti Structures Neutral 24 - 200 3,312 3,555 9.0 9.0 4.9 7.0 5.0 3.5 0.3 0.3 6.1 8.2 0.3 0.3

KEC International Accumulate 34 36 868 7,709 8,399 6.2 6.9 5.1 7.7 6.6 4.4 0.7 0.6 16.6 16.6 0.3 0.2

Thermax Neutral 612 - 7,298 5,832 6,397 9.1 9.6 28.8 32.9 21.3 18.6 3.5 3.0 17.2 17.3 1.2 1.1

CementCementCementCementCement

ACC Accumulate 1,157 1,225 21,721 11,204 13,094 17.0 19.0 58.8 80.7 19.7 14.3 2.7 2.5 14.4 18.1 1.6 1.3

Ambuja Cements Neutral 197 - 30,385 9,731 11,129 21.7 22.6 8.8 10.6 22.3 18.5 3.2 2.9 14.8 16.5 2.6 2.2

India Cements Neutral 47 - 1,441 4,681 5,252 14.3 14.3 4.8 7.0 9.9 6.7 0.4 0.4 4.2 5.9 0.7 0.6

J K Lakshmi Cement Buy 68 79 801 2,029 2,354 16.5 18.8 9.4 12.4 7.3 5.5 0.6 0.5 8.4 10.3 0.6 1.1

Ramco Cements Neutral 172 - 4,100 3,878 4,499 22.7 23.0 13.2 17.6 13.1 9.8 1.6 1.4 12.5 14.8 1.7 1.4

Shree Cement^ Neutral 4,497 - 15,666 6,359 7,075 25.8 24.9 286.8 322.2 15.7 14.0 3.3 2.8 23.4 21.6 2.0 1.6

UltraTech Cement Neutral 1,935 - 53,054 20,715 23,948 20.7 20.0 85.9 93.5 22.5 20.7 3.1 2.7 14.5 14.0 2.5 2.4

ConstructionConstructionConstructionConstructionConstruction

Ashoka Buildcon Buy 48 60 750 1,912 2,131 21.0 21.5 5.0 5.5 9.5 8.7 0.7 0.6 8.8 7.6 1.7 1.8

Consolidated Co Neutral 5 - 90 1,715 1,824 2.4 6.2 (2.9) (0.4) (1.7) (13.5) 0.2 0.2 - - 0.5 0.5

IRB Infra Buy 79 106 2,636 3,805 4,248 45.1 45.3 15.0 15.8 5.3 5.0 0.7 0.7 14.5 13.9 2.9 3.1

ITNL Buy 110 156 2,139 7,423 7,970 27.5 28.7 30.3 31.9 3.6 3.4 0.5 0.5 15.0 14.0 2.4 2.5

IVRCL Infra Neutral 13 - 410 5,673 5,892 7.8 7.6 (1.7) (2.0) (8.1) (6.8) 0.2 0.2 - - 0.6 0.6




Jaiprakash Asso. Neutral 47 - 10,330 12,946 14,897 24.7 25.5 1.2 2.7 37.9 17.4 0.8 0.7 2.0 4.3 2.7 2.4

Larsen & Toubro Accumulate 947 1,006 87,650 66,667 74,669 10.0 10.0 46.9 52.2 20.2 18.1 2.8 2.5 14.2 14.5 1.4 1.3

Nagarjuna Const. Buy 23 30 584 6,167 6,945 8.0 8.2 2.7 3.6 8.5 6.3 0.2 0.2 2.7 3.6 0.4 0.4

Punj Lloyd Neutral 30 - 983 12,726 14,226 8.2 8.2 0.9 1.0 34.5 29.0 0.3 0.3 1.0 1.2 0.6 0.6

Sadbhav Engg. Buy 65 99 984 2,462 2,731 10.6 10.6 5.3 6.0 12.3 10.8 1.1 1.0 9.2 9.6 0.7 0.6

Simplex Infra Neutral 56 - 275 6,237 6,908 9.1 9.0 9.9 13.9 5.6 4.0 0.2 0.2 3.7 5.0 0.5 0.5

Unity Infra Neutral 23 - 173 2,146 2,339 12.9 13.0 9.3 9.6 2.5 2.4 0.2 0.2 8.0 7.7 0.7 0.7

FMCGFMCGFMCGFMCGFMCG

Asian Paints Neutral 522 - 50,032 12,473 14,581 15.8 16.0 13.2 15.7 39.5 33.3 12.1 9.7 33.7 32.3 3.9 3.3

Britannia Neutral 915 - 10,963 6,470 7,481 7.2 7.3 26.2 31.2 35.0 29.3 13.0 9.9 42.2 38.4 1.7 1.4

Colgate Neutral 1,282 - 17,430 3,588 4,130 18.9 19.4 41.2 48.4 31.1 26.5 27.6 21.4 100.0 91.0 4.7 4.0

Dabur India Neutral 176 - 30,717 7,183 8,297 16.8 16.9 5.3 6.3 32.9 28.0 11.6 9.2 39.2 36.7 4.3 3.7

GlaxoSmith Con* Neutral 4,568 - 19,212 3,617 4,259 16.1 16.4 125.0 152.0 36.5 30.1 11.5 9.2 34.8 34.1 4.8 4.0

Godrej Consumer Neutral 863 - 29,363 7,801 9,017 14.9 15.9 22.9 29.7 37.7 29.1 7.5 6.2 23.0 24.7 3.9 3.3

HUL Neutral 614 - 132,847 28,415 31,962 13.6 13.7 16.6 18.3 36.9 33.6 35.3 25.5 111.7 88.2 4.5 4.0

ITC Neutral 342 - 270,525 35,397 41,311 35.7 35.9 11.3 13.3 30.3 25.6 10.0 8.1 36.1 34.9 7.3 6.2

Marico Neutral 210 - 13,523 5,104 5,876 14.5 14.4 7.4 8.6 28.4 24.3 5.6 4.6 21.7 20.9 2.7 2.3

Nestle* Neutral 5,592 - 53,917 9,330 10,860 21.8 21.9 122.6 149.2 45.6 37.5 22.3 16.3 56.1 50.3 5.8 4.9

Tata Global Neutral 159 - 9,817 8,070 8,958 9.8 9.9 7.2 8.3 21.9 19.2 2.4 2.3 8.9 9.5 1.2 1.1

ITITITITIT

HCL Tech^ Accumulate 1,105 1,220 77,177 33,138 36,758 25.2 23.7 81.5 87.0 13.6 12.7 4.1 3.2 30.2 25.5 2.1 1.8

Hexaware* Neutral 132 - 3,962 2,302 2,650 22.9 21.5 12.9 13.9 10.3 9.5 2.7 2.3 26.5 24.5 1.6 1.3

Infosys Neutral 3,324 - 190,885 49,988 55,817 26.7 27.2 179.9 216.2 18.5 15.4 3.8 3.2 21.1 20.9 3.2 2.7

Infotech Enterprises Accumulate 222 240 2,484 2,135 2,344 18.5 18.2 22.8 25.3 9.8 8.8 1.6 1.3 16.2 15.3 0.8 0.6

KPIT Cummins Accumulate 144 155 2,777 2,804 3,226 17.6 16.3 14.6 15.6 9.9 9.2 1.9 1.6 21.4 18.6 0.9 0.7

Mindtree Accumulate 1,377 1,500 5,724 3,011 3,485 20.3 20.8 112.8 128.2 12.2 10.7 3.2 2.4 26.5 23.2 1.6 1.3

Mphasis& Neutral 441 - 9,257 6,938 7,373 18.8 18.3 42.8 46.4 10.3 9.5 1.6 1.4 15.7 14.7 0.8 0.7

NIIT Neutral 20 - 333 1,023 1,113 6.5 7.1 1.9 3.8 10.8 5.3 0.5 0.5 4.7 9.0 0.1 0.0

Persistent Neutral 759 - 3,034 1,671 1,934 25.1 25.8 59.9 72.1 12.7 10.5 2.4 2.0 19.3 19.1 1.4 1.1

TCS Buy 2,060 2,500 403,586 81,883 95,264 31.4 31.1 97.4 115.8 21.1 17.8 7.2 5.6 34.2 31.5 4.7 4.0

Tech Mahindra Neutral 1,550 - 36,021 18,125 20,053 22.7 21.6 117.1 121.9 13.2 12.7 3.9 3.0 29.4 23.8 1.7 1.4

Wipro Buy 492 567 121,333 44,029 49,961 22.8 23.5 31.5 36.5 15.6 13.5 3.6 2.9 22.5 21.6 2.3 1.9

MediaMediaMediaMediaMedia

D B Corp Accumulate 256 289 4,700 1,797 1,996 25.1 26.5 14.6 17.3 17.5 14.8 4.6 3.9 24.0 24.2 2.5 2.2

HT Media Buy 96 114 2,246 2,195 2,360 14.5 15.1 7.7 8.5 12.5 11.2 1.4 1.3 10.7 10.8 0.7 0.5

Jagran Prakashan Buy 86 108 2,869 1,683 1,845 21.0 22.3 6.1 7.2 14.3 12.1 2.8 2.5 19.9 21.8 1.8 1.6

PVR Neutral 516 - 2,049 1,359 1,540 17.3 17.4 17.2 21.5 29.9 23.9 3.0 2.8 10.3 12.0 1.9 1.7

Sun TV Network Neutral 426 - 16,796 2,287 2,551 69.7 71.1 20.0 23.8 21.3 17.9 5.3 4.6 26.4 27.8 7.0 6.1



MetalMetalMetalMetalMetalBhushan Steel Reduce 478 419 10,825 12,640 15,667 28.5 31.5 25.9 38.6 18.5 12.4 1.1 1.0 6.1 8.5 2.7 2.2Coal India Neutral 289 - 182,575 70,160 74,065 30.4 26.1 26.1 26.7 11.1 10.8 2.8 2.4 32.6 30.8 1.7 1.6Electrosteel Castings Neutral 14 - 471 1,976 2,017 11.8 12.7 0.1 1.2 225.8 11.9 0.1 0.1 0.1 1.9 0.7 0.1GMDC Accumulate 106 115 3,385 1,701 1,985 47.8 48.8 17.4 20.6 6.1 5.2 1.2 1.0 20.7 20.9 1.5 1.1Hind. Zinc Buy 135 156 56,831 12,964 13,537 49.9 52.0 15.2 16.6 8.8 8.1 1.5 1.3 18.5 17.6 2.3 1.9Hindalco Neutral 116 - 23,887 95,465 100,859 8.4 8.9 13.1 15.4 8.8 7.5 0.6 0.6 7.0 7.7 0.7 0.7JSW Steel Neutral 841 - 20,324 45,022 48,140 16.0 15.9 68.5 76.9 12.3 10.9 1.1 1.0 9.3 9.7 0.9 0.9MOIL Neutral 232 - 3,900 956 982 42.3 44.3 25.3 26.2 9.2 8.9 1.3 1.2 14.6 13.7 1.4 1.5Monnet Ispat Neutral 135 - 861 2,199 2,575 21.5 22.8 30.7 38.6 4.4 3.5 0.3 0.3 7.7 8.9 1.5 1.1Nalco Neutral 36 - 9,265 7,270 7,521 13.6 13.8 2.8 2.9 13.0 12.4 0.8 0.7 5.9 6.0 0.7 0.6NMDC Accumulate 136 148 54,039 10,992 11,837 67.5 65.5 15.9 16.6 8.6 8.2 1.8 1.6 21.8 20.5 2.9 2.6SAIL Neutral 61 - 25,297 44,060 54,227 9.2 10.9 5.3 6.8 11.6 9.0 0.6 0.6 5.2 6.5 0.8 0.7Sesa Sterlite Neutral 199 - 58,864 68,100 73,838 34.9 34.9 28.4 33.6 7.0 5.9 0.6 0.5 10.9 9.3 1.4 1.2Tata Steel Buy 335 390 32,541 153,835 165,673 9.0 9.7 34.2 39.6 9.8 8.5 0.9 0.8 9.5 10.1 0.5 0.5Sarda Neutral 110 - 395 1,323 1,398 17.2 17.9 25.3 27.7 4.3 4.0 0.4 0.4 9.5 9.5 0.6 0.6Prakash Industries Neutral 38 - 508 2,486 2,637 15.2 15.0 13.7 14.2 2.8 2.7 0.2 0.2 9.1 8.7 0.4 0.4Godawari Power Neutral 87 - 286 2,171 2,317 14.9 15.8 36.4 46.6 2.4 1.9 0.3 0.2 11.6 13.0 0.5 0.5Oil & GasOil & GasOil & GasOil & GasOil & GasCairn India Buy 321 380 61,387 19,470 19,621 73.0 63.4 63.4 61.9 5.1 5.2 1.1 0.9 23.1 19.0 2.0 1.6GAIL Neutral 346 - 43,921 49,700 48,822 16.0 16.6 32.9 33.4 10.5 10.4 1.6 1.4 15.9 14.4 0.3 0.2ONGC Buy 282 350 241,008 164,816 196,050 33.7 36.6 30.0 38.7 9.4 7.3 1.4 1.3 16.0 18.5 1.2 0.9Reliance Industries Neutral 896 - 289,438 464,837 495,385 6.9 7.1 72.0 80.0 12.4 11.2 1.3 1.2 11.2 11.3 0.6 0.6Gujarat Gas* Neutral 272 - 3,493 3,270 3,414 12.8 12.6 22.6 23.1 12.0 11.8 3.2 2.9 28.2 25.6 0.9 0.8Indraprastha Gas Neutral 289 - 4,051 3,656 4,456 21.5 18.6 25.7 26.8 11.3 10.8 2.3 2.0 22.1 19.6 1.1 0.9Petronet LNG Neutral 127 - 9,559 37,686 44,414 4.4 4.4 11.4 13.2 11.2 9.7 1.9 1.6 17.8 17.9 0.3 0.3Gujarat State Petronet Buy 58 67 3,244 1,002 1,021 91.4 91.5 8.2 8.4 7.0 6.9 0.9 0.9 14.3 13.0 2.7 2.6PharmaceuticalsPharmaceuticalsPharmaceuticalsPharmaceuticalsPharmaceuticalsAlembic Pharma Neutral 181 - 3,417 1,736 2,008 17.1 18.9 10.5 13.8 17.3 13.1 5.3 4.0 34.4 34.7 2.0 1.7Aurobindo Pharma Buy 216 271 6,302 6,641 7,637 15.9 15.9 17.3 20.6 12.5 10.5 2.0 1.7 19.5 18.9 1.4 1.2Aventis* Neutral 2,399 - 5,524 1,682 1,917 15.6 15.6 91.9 101.7 26.1 23.6 3.7 3.6 15.6 17.1 2.8 2.2Cadila Healthcare Buy 660 894 13,505 7,123 8,367 15.5 15.7 37.3 44.7 17.7 14.8 3.7 3.1 22.9 22.9 2.2 1.9Cipla Buy 423 504 33,992 9,274 10,796 23.1 23.1 21.0 23.8 20.2 17.8 3.2 2.8 17.2 16.8 3.4 2.8Dr Reddy's Accumulate 2,399 2,540 40,783 13,377 15,350 20.4 20.1 112.1 126.6 21.4 18.9 4.6 3.8 23.5 21.8 3.1 2.7Dishman Pharma Buy 61 73 492 1,394 1,534 22.5 22.4 14.8 16.6 4.1 3.7 0.4 0.4 10.8 11.0 1.0 0.8GSK Pharma* Neutral 2,477 - 20,977 2,744 2,964 22.0 23.4 59.2 66.6 41.8 37.2 10.4 10.0 24.9 27.5 6.8 6.3Indoco Remedies Neutral 78 - 720 747 906 15.3 15.3 5.9 7.6 13.2 10.3 1.6 1.4 12.5 14.4 1.2 1.0Ipca labs Accumulate 664 724 8,381 3,296 4,087 20.5 21.7 36.8 48.3 18.1 13.8 4.3 3.3 26.5 27.3 2.7 2.2Lupin Neutral 910 - 40,781 11,576 13,855 22.0 22.0 35.8 43.0 25.4 21.2 6.2 4.9 27.1 25.8 3.6 2.9Ranbaxy* Neutral 387 - 16,365 10,400 11,331 6.6 8.4 11.4 15.2 33.9 25.4 3.6 3.1 11.1 13.1 1.7 1.5Sun Pharma Neutral 623 - 128,988 13,509 15,846 41.0 41.0 16.5 19.9 37.7 31.3 7.6 6.3 22.0 22.0 9.0 7.5




Source: Company, Angel Research, Note: *December year end; #September year end; &October year end; ^June year end; Price as on October 23, 2013; Sesa Goa's numbers reflect the standalone Sesa Goa business only. We will revise our numbersonce the consolidated entity Sesa- Sterlite is formed


PPPPPowerowerowerowerower

GIPCL Accumulate 59 65 894 1,444 1,482 33.4 33.0 13.5 14.6 4.4 4.0 0.5 0.5 12.1 11.9 0.7 0.5

NTPC Accumulate 145 163 119,889 75,343 81,947 23.5 23.9 12.7 13.7 11.4 10.6 1.4 1.3 12.3 12.4 2.3 2.2

Real EstateReal EstateReal EstateReal EstateReal Estate

DLF Accumulate 159 179 28,255 8,293 9,622 36.5 36.1 5.7 6.7 27.8 23.5 1.0 1.0 3.7 4.1 5.5 4.6

MLIFE Accumulate 421 483 1,718 888 1,002 27.0 29.9 33.9 42.1 12.4 10.0 1.2 1.1 9.9 11.2 2.5 2.3

TTTTTelecomelecomelecomelecomelecom

Bharti Airtel Neutral 348 - 139,070 83,396 91,749 31.8 32.7 9.1 13.7 38.3 25.5 2.5 2.3 6.7 9.3 2.4 2.1

Idea Cellular Neutral 176 - 58,230 26,557 29,210 30.6 29.7 5.3 6.5 33.0 26.9 3.6 3.2 10.8 11.7 2.6 2.2

Rcom Neutral 153 - 31,580 22,026 23,613 30.6 30.8 2.9 5.2 52.4 29.3 0.9 0.9 1.8 3.1 3.1 2.8

OthersOthersOthersOthersOthers

Abbott India* Buy 1,343 1,628 2,855 1,788 1,996 12.5 12.7 71.7 81.4 18.7 16.5 3.8 3.3 21.7 21.2 1.4 1.2

Bajaj Electricals Accumulate 165 184 1,643 3,885 4,472 4.0 5.8 6.8 15.4 24.4 10.7 2.1 1.9 8.8 17.3 0.4 0.4

Cera Sanitaryware Neutral 601 - 760 631 797 14.5 13.7 42.6 51.1 14.1 11.8 3.4 2.7 26.5 25.3 1.2 1.0

Cravatex Buy 220 307 57 248 284 6.5 7.2 27.1 38.2 8.1 5.8 1.3 1.1 15.7 18.5 0.4 0.3

Finolex Cables Accumulate 60 68 923 2,563 2,899 9.8 9.8 10.1 11.3 6.0 5.3 0.9 0.7 14.3 13.8 0.3 0.2

Force Motors Buy 298 349 389 2,046 2,426 3.6 4.3 28.0 43.6 10.7 6.8 0.3 0.3 3.1 4.6 0.2 0.2

Goodyear India* Neutral 339 - 782 1,458 1,542 8.3 9.0 32.3 37.0 10.5 9.1 1.9 1.6 19.5 19.3 0.3 0.3

Hitachi Buy 116 153 316 1,080 1,199 8.9 9.1 18.3 19.1 6.4 6.1 1.1 1.0 19.2 17.0 0.4 0.4

Honeywell Automation* Neutral 2,511 - 2,220 1,842 2,131 7.7 7.8 111.1 130.9 22.6 19.2 2.8 2.5 13.3 13.9 1.1 0.9

HSIL Buy 83 117 546 2,042 2,363 14.6 14.8 12.3 16.5 6.7 5.0 0.5 0.5 7.5 9.4 0.7 0.6

IFB Agro Accumulate 140 156 126 491 642 12.3 13.8 35.0 50.9 4.0 2.7 0.7 0.5 18.2 21.6 0.2 0.1

ITD Cementation Buy 166 194 191 1,365 1,502 10.9 11.2 18.2 28.0 9.1 5.9 0.5 0.4 5.1 7.4 0.6 0.5

Jyothy Laboratories Neutral 191 - 3,169 1,244 1,523 14.1 14.2 5.9 10.0 32.2 19.2 3.9 3.4 12.7 18.8 2.9 2.3

MRF Neutral 15,655 - 6,640 11,799 12,587 14.1 13.5 1,792.0 1,802.0 8.7 8.7 1.8 1.5 23.5 19.2 0.7 0.6

Page Industries Neutral 4,465 - 4,980 1,059 1,296 19.5 19.8 124.9 155.6 35.7 28.7 17.7 13.0 56.3 52.2 4.8 3.9

Relaxo Footwears Accumulate 911 981 1,093 1,196 1,401 11.9 12.6 55.6 75.4 16.4 12.1 3.9 3.0 27.1 28.1 1.1 0.9

Siyaram Silk Mills Neutral 218 - 204 1,158 1,322 10.6 11.0 60.5 75.9 3.6 2.9 0.6 0.5 16.8 18.1 0.4 0.4

Styrolution ABS India* Buy 390 492 685 1,007 1,108 8.4 8.7 30.3 35.1 12.9 11.1 1.4 1.3 11.6 12.2 0.7 0.6

TAJ GVK Buy 56 108 350 300 319 35.8 36.2 7.9 9.1 7.1 6.1 0.9 0.8 13.9 14.4 1.5 1.2

Tata Sponge Iron Buy 312 371 480 814 849 17.0 17.6 64.6 69.2 4.8 4.5 0.7 0.6 14.5 13.8 0.2 0.0

TTK Healthcare Buy 523 614 406 416 475 4.8 6.5 16.3 25.2 32.1 20.8 4.0 3.5 12.6 18.0 0.9 0.7

Tree House Buy 238 297 856 153 194 53.0 52.8 12.4 15.6 19.2 15.2 2.3 2.0 11.8 13.1 5.8 4.4

TVS Srichakra Neutral 230 - 176 1,591 1,720 6.1 6.4 30.5 38.3 7.6 6.0 1.0 0.9 13.5 15.5 0.3 0.3

United Spirits Neutral 2,698 - 39,208 12,294 14,162 12.0 12.0 42.1 67.7 64.1 39.9 4.5 4.1 9.1 10.7 3.5 3.0

Vesuvius India* Buy 372 439 755 600 638 20.1 19.4 35.7 36.5 10.4 10.2 1.9 1.6 19.4 17.1 1.0 0.9



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Yaresh Kothari Analyst (Automobile) [email protected]

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