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Crompton Greaves Risk – reward turns favorable; upgrade to BUY
CAPITAL GOODS: Company Update 31 October 2014
PhillipCapital (India) Pvt. Ltd.
Post a ~30% correction since its highs in Sep’14, we believe Crompton offers an attractive entry point for investors. Domestic businesses have started seeing traction in orders (+40% YoY in Q215, albeit of a weak base) while we expect the overseas power subsidiaries to start reporting lower losses from Q315 driven by execution of higher margin automation (smart meters) and offshore substation orders. Monetization of land at Kanjurmarg (we build in Rs10bn by Q415 incl. Rs3bn already sold in Q215) along with listing of the demerged consumer business would be further triggers. Upgrade to BUY and target price of Rs240 (+30% upside) Domestic businesses seeing traction in orders after 5 quarter of continuous de‐growth. Post 5 quarters of de‐growth, the domestic power and industrial business have seen strong order booking in Q215 with a +40% YoY growth in overall order booking to Rs11bn (albeit of a low base). The consumer business has also regained momentum with a +13% YoY growth lead by fans (+13% YoY) and lighting (+7% YoY). Management has highlighted that the pickup in the domestic business is expected to sustain and would result in improved revenues and margins going into FY16 as the revival in the economy gains traction. Overseas power subsidiaries execution and margins seen improving from Q3‐Q415; smart meters a big opportunity for ZIV over next few years. We expect a pickup in margins in the overseas businesses on execution of automation (smart meters) and substation orders won over the past few quarters ; overseas orders are +38% YoY in 1H15. Note that margins on automation products are in the low double digits. Implementation of smart meters by the EU presents a large addressable opportunity for ZIV (20% CAGR expected in industry volumes in EU to 2020); note that ZIV is amongst the five vendors selected to supply smart meters for the Linky projects in France. Lower raw material prices(primarily copper) would further aid in margin expansion since overseas orders are on fixed price contracts. Land monetization at Kanjurmarg could bring in Rs10bn by Mar,’15. Crompton is in the process of monetizing land at Kanjurmarg which totals ~34 acres; of this, ~9 acres of land can only be sold once the existing transformer factory is moved out to Baroda. It has already entered into an agreement to sell 8 acres for Rs3bn in Q215. We build in ~Rs10bn of land sale to happen by Mar, ’15 and would lead to net debt coming down to Rs3.8bn vs. Rs13b in FY14. Note that most of the debt is in the overseas power subsidiaries (Rs26bn). Demerger of the consumer business to unlock value for investors; CGL retaining 25% stake could be to pay off its debt. The board of Crompton Greaves has approved the demerger of the consumer business with CG continuing to hold 25% + 1 share in the demerged entity and balance being distributed to the existing shareholders. In our view, CG has retained this stake to ensure continuity and to use proceeds from its stake in CCPL to repay debt on its books. Note that debt on CG’s books is primarily for the overseas power subs. Valuation and estimates: We roll over our target price to FY17 estimates and use a SOTP valuation to value the company at Rs240, which implies Rs140/share for the consumer business, Rs42 for the domestic power segment and Rs55/share for the industrial business. Key risks to our BUY rating are a sharp slowdown in Europe.
BUY CRG IN | CMP RS 180 TARGET RS 240 (+30%) Company Data O/S SHARES (MN) : 627MARKET CAP (RSBN) : 129MARKET CAP (USDBN) : 2.1052 ‐ WK HI/LO (RS) : 231 / 94LIQUIDITY 3M (USDMN) : 18.7FACE VALUE (RS) : 2
Share Holding Pattern, % PROMOTERS : 42.7FII / NRI : 21.0FI / MF : 21.7NON PROMOTER CORP. HOLDINGS : 5.9PUBLIC & OTHERS : 8.2
Price Performance, % 1mth 3mth 1yr
ABS ‐7.5 19.2 113.6REL TO BSE ‐4.9 13.8 85.2
Price Vs. Sensex (Rebased values)
0
40
80
120
160
Apr‐11 Mar‐12 Feb‐13 Jan‐14
Crompton BSE Sensex
Source: PhillipCapital India Research
Other Key Ratios Rs mn FY15E FY16E FY17ENet Sales 145,148 164,940 186,313EBIDTA 7,406 10,645 14,497Net Profit 3,478 6,346 8,553EPS, Rs 5.5 10.1 13.6PER, x 32.4 17.8 13.2EV/EBIDTA, x 15.8 11.1 8.1P/BV, x 0.8 0.7 0.6ROE, % 9.0 14.8 17.6Source: PhillipCapital India Research Est. Ankur Sharma (+ 9122 6667 9759) [email protected] Hrishikesh Bhagat (+ 9122 6667 9986) [email protected]
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31 October 2014 / INDIA EQUITY RESEARCH / CROMPTON GREAVES COMPANY UPDATE
Domestic businesses seeing traction in orders after 5 quarters of continuous de‐growth After 5 quarters of de‐growth, the domestic businesses have seen a strong growth in order booking. The growth in domestic orders in Q215 was contributed by a 37% rise in power orders and 45% rise in industrial orders. Recovery in orders is being witnessed in the domestic industrial segments, primarily railways. We do note that the growth in Q215 has come off a weak base in Q214 but orders were also up 1% on a sequential basis; domestic orders have stabilied in the region of Rs10‐11bn. We expect the momentum in orders and revenues to pick up going into 2H15‐1H16 with a pick up in industrial and transmission capex which would directly benefit Crompton’s businessess. This in turn would result in higher execution and margins for these segments in FY16. Domestic orders seeing strong growth after 5 quarters of de‐growth (Rs bn)
Source: Company, Phillip Capital Exports (primairly in power systems) continue to remain strong with orders growing by 18% YoY to Rs5.8bn in 1H15 (+18% YoY) while sales were up 58% YoY to Rs3.2bn. Note that annual exports are in the region of Rs10‐11bn and primarily to Africa, LATAM and S.E.Asian countries (see table below). We expect exports continue to see very strong traction and support sales growth till we see a resumption of growth in the domestic markets. Country wise exports from standalone entity (Rs mn)
Source: Company, Phillip Capital Consumer segment too is starting to see renewed traction with a +13% YoY growth in Q215 and management expecting this business to get back to its high teen growth rates. Note that post a strong 22% YoY growth in FY13, growth in this segment had declined to 10% in FY14. The growth in this segment is being driven by a renewed focus to increase dealer network and product range in the premium segment.
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31 October 2014 / INDIA EQUITY RESEARCH / CROMPTON GREAVES COMPANY UPDATE
Consumer segment sales (Rs bn) and YoY growth (%)
Source: Company, Phillip Capital
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31 October 2014 / INDIA EQUITY RESEARCH / CROMPTON GREAVES COMPANY UPDATE
Overseas execution and margins seen picking up from Q3‐Q415; smart meters a large opportunity for ZIV over next few years We note that orders in the overseas subsidiaries have been very strong over the past six quarters with 1H15 too witnessing a growth of 38% YoY. We note the sharp increase in automation orders (see table below) over the past few quarters which are short cycle (6‐8 months delivery) and higher margins (low to mid teen margins). As these orders get executed over the next 2 quarters, we expect margins to start seeing a sustained improvement. Table 1. List tof overseas automation and substation orders received by Crompton.
Date Key Orders Rs mnDec-13 Smart meter orders from Iberdola 2,000 Apr-14 Order for the construction of 4 GIS substations from Iraq Government 3,600 May-14 Order for supply of 60kv instrument transformers from CAMEG Algeria 320 May-14 Supply HV equipment along with Iberdola for Nairobi Metropolitan ring 900 Jun-14 Order for supply voltage offshore substations as a part of FICG consortium(EUR150mn) for 12,000 Jun-14 Order to supply 750,000 smart meters to Spanish Utility Gas Natural Fenosa 2,400 Jun-14 Order to supply 1mn smart meters to Spanish Utility Iberdoal 2,440
Sep-14 CG selected amongst 6 suppliers by eRDF for manufacture of first 3 million of Linky smart meters - Sep-14 Smart Meter Orders won by ZIV automation 2,630
Source: Company, Phillip Capital Managament has stated that the plants in Belguim and Hungary are near stabilization while the US Systems business (incurred losses in FY14) is at brekeven from June, 14 onwards. In the Canadian plant, 15% of the workforce has been fired and the management continues to look at ways to reduce losses in this unit. The Brazilian plant (loss of Rs0.4bn in FY14) is to be closed down and its backlog of EUR15mn will be liquidated. Overseas order seeing strong traction over the past few quarters (Rs bn)
Source: Company, Phillip Capital
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31 October 2014 / INDIA EQUITY RESEARCH / CROMPTON GREAVES COMPANY UPDATE
Execution starting to improve as a result of strong ordering (EURmn)
Source: Company, Phillip Capital Overseas subsidiaries EBITDA margins to improve from Q3‐Q415 onwards
Source: Company, Phillip Capital Softening copper prices to help overseas margins which are on fixed price contracts
Source: Bloomberg
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31 October 2014 / INDIA EQUITY RESEARCH / CROMPTON GREAVES COMPANY UPDATE
Smart meter orders opens up a big opportunity for ZIV The global smart meter market is estimated to increase from $4bn in CY11 to $20bn in CY18 driven by government policy mandates and fiscal incentives. Key markets for the growth of smart meters include Europe, US, and Eastern Asia (primarily China). There are two main types of smart meters: Automatic meter reading (AMR) and Advanced metering infrastructure (AMI). AMR meters use one‐way communication and primarily act as digital “meter readers,” while AMI meters can use two‐way communication to both transmit usage information and perform observation and maintenance tasks. Smart meter manufacturers often produce both AMI and AMR meters and sell them to multiple types of utility customers. Below, we discuss the keymarket for smart meters in more detail: European Union As per EU regulations, 80% of households need to install smart meters by 2020, subject to positive economic assessment of long term costs and benefits. By 2013, an estimated 61mn meters have been installed in the EU mainly as a result of large rollouts in Italy(100% coverage), Sweden(100% coverage), Finland and Denmark. The smart meter market is expected to grow at a CAGR of 20% over 2014‐2020. EU states which have rolled out/agreed to roll out smart meters (post the recent cost – benefit analysis) include UK, Sweden, Ireland, FInalnd, Norway, Denmark, Netherlands, Spain, Italy, Austria, Slovenia and Estonia. Countries which have decided to not go ahead are Germany, Belguim, Lithuania and Czech Republic. We do note that countries such as Poland, Portugal, Greece, Hungary and Russia have started initial deployment of smart meters in the pilot phase. Key players in this region include Echleon, Elster, Itron, Landis+Gyr and ZIV Systems which have participated in pilot projects and will be part of the EU’s large national rollouts. United Kingdom In 2008, the UK had mandanted that 53mn smart meters be deployed in homes and businesses by 2019 though now this deadline is extended to 2020. The programme is valued at $20bn and present a big opportunity for smart meter providers. France Under the Project Linky, EDF is to install 35mn smart meters in France by 2020. In the first phase, 3mn units are being installed by 2016 and the balance 28mn units being installed by 2020. Itron, Sagecom and Landis+Gyr have got orders for supplying ~1‐1.2mn units each in Phase 1 while ZIV, Elster and MAEC are the other vendors who have been selected by EDF for supplying to the Linky project starting Sep15‐end 2016. In Phase 2, the balance 32mn units would be ordered and installed upto 2020.
Source: Phillip Capital Spain The smart meter rollout is already under way and would gather speed in the coming years with the upgrade of 29mn meters. In mid 2012, annual smart meter shipments in Spain were at 1mn units.
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31 October 2014 / INDIA EQUITY RESEARCH / CROMPTON GREAVES COMPANY UPDATE
United States Smart meter penetration in the US stood at ~23% (Dec,2012) or 38mn units and this is up from 9% in 2010. The largest driver of the smart meter infrastructure rollout has been ARRA which included funding for the Smart Grid Investment Grant. The funding encouraged utilities and muncipalties to start implementing smart meters in their communities.
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31 October 2014 / INDIA EQUITY RESEARCH / CROMPTON GREAVES COMPANY UPDATE
Crompton Greaves segment wise breakup of sales and PAT Description FY11 FY12 FY13 FY14 FY15e FY16e FY17eDomestic Consumer sales 20,052 22,335 29,240 31,865 36,530 41,441 47,089 YoY Growth(%) 11% 31% 9% 15% 13% 14%EBIT 2,678 2,575 2,896 3,398 4,077 5,065 6,258 Margin(%) 13.4% 11.5% 10% 11% 11% 12% 13%Tax (803) (772) (869) (1,019) (1,223) (1,520) (1,877) PAT 1,874 1,802 2,027 2,378 2,854 3,546 4,381 EPS 2.9 2.8 3.2 3.8 4.6 5.7 7.0
Domestic Power Sales 25,542 27,474 27,247 28,235 29,469 27,438 29,923 YoY Growth(%) 8% -1% 4% 4% -7% 9%EBIT 4,602 3,198 2,306 2,585 2,698 2,649 3,039 Margin(%) 18.0% 11.6% 8.5% 9.2% 9.2% 9.7% 10.2%Less: Interest in standalone P/L (208) (277) (254) (398) (305) (455) (455) PBT 4,394 2,921 2,052 2,188 2,393 2,195 2,584 Tax (1,318) (876) (616) (656) (718) (658) (775) PAT 3,076 2,045 1,436 1,531 1,675 1,536 1,809 EPS 4.8 3.2 2.2 2.4 2.7 2.5 2.9
Industrial Sales 14,971 18,202 18,346 18,164 18,492 20,341 23,194 YoY Growth(%) 22% 1% -1% 2% 10% 14%EBIT/PBT 2,642 2,103 2,136 1,282 1,601 2,371 3,282 Margin(%) 17.6% 11.6% 11.6% 7.1% 8.7% 11.7% 14.1%Tax (793) (631) (641) (385) (480) (711) (985) PAT 1,849 1,472 1,495 898 1,121 1,660 2,297 EPS 2.9 2.3 2.3 1.4 1.8 2.6 3.7
Power Overseas 39,486 44,474 46,112 56,540 60,657 75,721 86,107 YoY Growth(%) 13% 4% 23% 7% 25% 14%EBIT 3,467 (712) (3,410) (244) (210) 2,635 3,545 Margin(%) 8.8% -1.6% -7.4% -0.4% -0.3% 3.5% 4.1%Interest (136) (290) (701) (969) (1,360) (1,352) (1,359) PBT 3,331 (1,003) (4,111) (1,213) (1,569) 1,283 2,186 Tax (Total less segmental) (186) 458 1,116 (300) 505 (571) (1,012) Rate(%) 5.6% 45.7% 27.2% -24.7% 32.2% 44.5% 46.3%PAT 3,145 (544) (2,995) (1,513) (1,064) 712 1,174 EPS 4.9 (0.8) (4.7) (2.4) (1.7) 1.1 1.9 Unallocable (887) (1,202) (1,371) (1,107) (1,107) (1,107) (1,107) Calculated PAT 9,172 3,655 790 2,507 3,479 6,346 8,554 Consolidated EPS 14.6 5.8 1.3 4.0 5.6 10.1 13.6 SOTP valuation SOTP Valuation FY17 EPS/share Rs/Share CommentsConsumer Segment 7.0 140 20x FY17e EPSDomestic Power 2.9 43 15x FY17e EPSOverseas Power 0.1 2 15x FY17e EPSIndustrial Segment 3.7 55 15x FY17e EPSTotal 13.7 240 Source: Phillip Capital
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31 October 2014 / INDIA EQUITY RESEARCH / CROMPTON GREAVES COMPANY UPDATE
Financials
Income Statement Y/E Mar, Rs mn FY14 FY15E FY16E FY17ENet sales 134,806 145,148 164,940 186,313Growth, % 11 8 14 13Total income 134,806 145,148 164,940 186,313Raw material expenses ‐94,220 ‐101,385 ‐112,982 ‐125,149Employee expenses ‐19,521 ‐21,018 ‐23,884 ‐26,979Other Operating expenses ‐14,245 ‐15,338 ‐17,430 ‐19,688EBITDA (Core) 6,820 7,406 10,645 14,497Growth, % 78.0 8.6 43.7 36.2 Margin, % 5.1 5.1 6.5 7.8 Depreciation ‐2,621 ‐2,382 ‐2,370 ‐2,616EBIT 4,198 5,025 8,275 11,880Growth, % 132.9 19.7 64.7 43.6 Margin, % 3.1 3.5 5.0 6.4 Interest paid ‐1,366 ‐1,665 ‐1,807 ‐1,814Other Non‐Operating Income 2,115 2,058 3,362 3,160Pre‐tax profit 4,797 5,388 9,799 13,195Tax provided ‐2,361 ‐1,916 ‐3,460 ‐4,649Net Profit 2,436 3,471 6,339 8,546Growth, % 7 7 7 7Net Profit (adjusted) 2,443 3,478 6,346 8,553Wtd avg shares (m) 188.9 42.4 82.4 34.8 Balance Sheet Y/E Mar, Rs mn FY14 FY15E FY16E FY17ECash & bank 8,150 22,042 20,716 20,932Debtors 35,913 38,668 43,940 49,634Inventory 16,714 17,996 20,450 23,100Loans & advances 8,392 9,036 10,268 11,599Other current assets 0 0 0 0Total current assets 69,168 87,742 95,374 105,265Investments 2,989 2,989 2,989 2,989Gross fixed assets 59,232 52,880 58,680 64,480Less: Depreciation ‐26,825 ‐29,207 ‐31,577 ‐34,193Add: Capital WIP 2,184 2,184 2,184 2,184Net fixed assets 34,591 25,857 29,287 32,471Total assets 110,158 119,998 131,060 144,135 Current liabilities 45,723 49,230 55,943 63,193Provisions 4,064 4,064 4,064 4,064Total current liabilities 49,787 53,295 60,008 67,257Non‐current liabilities 23,809 27,809 27,909 28,009Total liabilities 73,595 81,103 87,916 95,265Paid‐up capital 1,254 1,254 1,254 1,254Reserves & surplus 35,192 37,518 41,760 47,479Shareholders’ equity 36,563 38,895 43,145 48,870Total equity & liabilities 110,159 119,998 131,061 144,135 Source: Company, PhillipCapital India Research Estimates
Cash Flow Y/E Mar, Rs mn FY14 FY15E FY16E FY17EPre‐tax profit 4,797 5,388 9,799 13,195Depreciation 2,621 2,382 2,370 2,616Chg in working capital ‐3,092 ‐1,173 ‐2,246 ‐2,425Total tax paid ‐2,211 ‐1,916 ‐3,460 ‐4,649Cash flow from operating activities 2,115 4,680 6,463 8,738Capital expenditure ‐6,549 6,352 ‐5,800 ‐5,800Chg in investments 4,919 0 0 0Cash flow from investing activities ‐1,630 6,352 ‐5,800 ‐5,800Free cash flow 484 11,032 663 2,938Equity raised/(repaid) 3,415 4,000 100 100Debt raised/(repaid) ‐810 ‐1,153 ‐2,103 ‐2,835Dividend (incl. tax) ‐774 0 0 0Other financing activities 1,832 2,861 ‐1,990 ‐2,721Cash flow from financing activities 2,316 13,893 ‐1,327 216Net chg in cash 4,797 5,388 9,799 13,195 Valuation Ratios & Per Share Data FY14 FY15E FY16E FY17EPer Share data EPS (INR) 3.9 5.5 10.1 13.6 Growth, % 195.7 42.4 82.4 34.8 Book NAV/share (INR) 58.2 61.9 68.6 77.8 FDEPS (INR) 3.9 5.5 10.1 13.6 CEPS (INR) 8.1 9.3 13.9 17.8 CFPS (INR) 0.2 4.2 5.0 8.9 DPS (INR) 1.1 1.6 2.9 3.9 Return ratios Return on assets (%) 3.1 3.9 6.0 7.0 Return on equity (%) 6.7 9.0 14.8 17.6 Return on capital employed (%) 5.3 6.7 10.3 12.4 Turnover ratios Asset turnover (x) 2.9 3.1 3.7 3.7 Sales/Total assets (x) 1.3 1.3 1.3 1.4 Sales/Net FA (x) 4.1 4.8 6.0 6.0 Working capital/Sales (x) 0.1 0.1 0.1 0.1 Working capital days 41.4 41.4 41.4 41.4 Liquidity ratios Current ratio (x) 1.5 1.8 1.7 1.7 Quick ratio (x) 1.1 1.4 1.3 1.3 Interest cover (x) 3.1 3.0 4.6 6.5 Dividend cover (x) 3.5 3.5 3.5 3.5 Total debt/Equity (%) 60.2 66.9 60.5 53.6 Net debt/Equity (%) 37.8 10.0 12.4 10.7 Valuation PER (x) 46.2 32.4 17.8 13.2 Price/Book (x) 3.1 2.9 2.6 2.3 Yield (%) 0.6 0.9 1.6 EV/Net sales (x) 0.9 0.8 0.7 0.6 EV/EBITDA (x) 18.6 15.8 11.1 8.1 EV/EBIT (x) 30.2 23.2 14.3 9.9
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31 October 2014 / INDIA EQUITY RESEARCH / CROMPTON GREAVES COMPANY UPDATE
Recommendation Chart
B (TP 290)
N (TP 260)
N (TP 160)
N (TP 150) N (TP 140)
B (TP 174)
B (TP 145)
N (TP 130)N (TP 105)
S (TP 100)
N (TP 100)
N (TP 110) N (TP 85)
N (TP 90)
N (TP 90)
S (TP 140)N (TP 200)
0
50
100
150
200
250
300
350
1/3/2011 8/8/2011 3/16/2012 10/19/2012 5/29/2013 1/3/2014 8/12/2014
Source: PhillipCapital India Research
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31 October 2014 / INDIA EQUITY RESEARCH / CUMMINS INDIA COMPANY UPDATE
Management
(91 22) 2300 2999(91 22) 6667 9735
Research Engineering, Capital Goods Pharma
Dhawal Doshi (9122) 6667 9769 Ankur Sharma (9122) 6667 9759 Surya Patra (9122) 6667 9768Priya Ranjan (9122) 6667 9965 Hrishikesh Bhagat (9122) 6667 9986
Retail, Real EstateInfrastructure & IT Services Abhishek Ranganathan, CFA (9122) 6667 9952
Manish Agarwalla (9122) 6667 9962 Vibhor Singhal (9122) 6667 9949 Neha Garg (9122) 6667 9996Pradeep Agrawal (9122) 6667 9953 Varun Vijayan (9122) 6667 9992Paresh Jain (9122) 6667 9948 Technicals
Midcap Subodh Gupta, CMT (9122) 6667 9762Consumer, Media, Telecom Vikram Suryavanshi (9122) 6667 9951Naveen Kulkarni, CFA, FRM (9122) 6667 9947 Production ManagerVivekanand Subbaraman (9122) 6667 9766 Metals Ganesh Deorukhkar (9122) 6667 9966Manish Pushkar, CFA (9122) 6667 9764 Dhawal Doshi (9122) 6667 9769
Database ManagerCement Oil&Gas, Agri Inputs Vishal Randive (9122) 6667 9944Vaibhav Agarwal (9122) 6667 9967 Gauri Anand (9122) 6667 9943
Deepak Pareek (9122) 6667 9950 Sr. Manager – Equities SupportEconomics Rosie Ferns (9122) 6667 9971Anjali Verma (9122) 6667 9969Sales & Distribution Kinshuk Bharti Tiwari (9122) 6667 9946 Dipesh Sohani (9122) 6667 9756 Zarine Damania (9122) 6667 9976Ashvin Patil (9122) 6667 9991 Sales TraderShubhangi Agrawal (9122) 6667 9964 Dilesh Doshi (9122) 6667 9747 Kishor Binwal (9122) 6667 9989 Suniil Pandit (9122) 6667 9745Sidharth Agrawal (9122) 6667 9934 ExecutionBhavin Shah (9122) 6667 9974 Mayur Shah (9122) 6667 9945
Corporate Communications
Vineet Bhatnagar (Managing Director)Jignesh Shah (Head – Equity Derivatives)
Automobiles
Banking, NBFCs
Contact Information (Regional Member Companies)
SINGAPORE Phillip Securities Pte Ltd
250 North Bridge Road, #06‐00 Raffles City Tower, Singapore 179101
Tel : (65) 6533 6001 Fax: (65) 6535 3834 www.phillip.com.sg
MALAYSIA Phillip Capital Management Sdn Bhd B‐3‐6 Block B Level 3, Megan Avenue II,
No. 12, Jalan Yap Kwan Seng, 50450 Kuala Lumpur Tel (60) 3 2162 8841 Fax (60) 3 2166 5099
www.poems.com.my
HONG KONG Phillip Securities (HK) Ltd
11/F United Centre 95 Queensway Hong Kong Tel (852) 2277 6600 Fax: (852) 2868 5307
www.phillip.com.hk
JAPAN Phillip Securities Japan, Ltd
4‐2 Nihonbashi Kabutocho, Chuo‐ku Tokyo 103‐0026
Tel: (81) 3 3666 2101 Fax: (81) 3 3664 0141 www.phillip.co.jp
INDONESIA PT Phillip Securities Indonesia
ANZ Tower Level 23B, Jl Jend Sudirman Kav 33A, Jakarta 10220, Indonesia
Tel (62) 21 5790 0800 Fax: (62) 21 5790 0809 www.phillip.co.id
CHINA Phillip Financial Advisory (Shanghai) Co. Ltd.
No 550 Yan An East Road, Ocean Tower Unit 2318 Shanghai 200 001
Tel (86) 21 5169 9200 Fax: (86) 21 6351 2940 www.phillip.com.cn
THAILAND Phillip Securities (Thailand) Public Co. Ltd.
15th Floor, Vorawat Building, 849 Silom Road, Silom, Bangrak, Bangkok 10500 Thailand
Tel (66) 2 2268 0999 Fax: (66) 2 2268 0921 www.phillip.co.th
FRANCE King & Shaxson Capital Ltd.
3rd Floor, 35 Rue de la Bienfaisance 75008 Paris France
Tel (33) 1 4563 3100 Fax : (33) 1 4563 6017 www.kingandshaxson.com
UNITED KINGDOM King & Shaxson Ltd.
6th Floor, Candlewick House, 120 Cannon Street London, EC4N 6AS
Tel (44) 20 7929 5300 Fax: (44) 20 7283 6835 www.kingandshaxson.com
UNITED STATES Phillip Futures Inc.
141 W Jackson Blvd Ste 3050 The Chicago Board of Trade Building
Chicago, IL 60604 USA Tel (1) 312 356 9000 Fax: (1) 312 356 9005
AUSTRALIA PhillipCapital Australia
Level 37, 530 Collins Street Melbourne, Victoria 3000, Australia
Tel: (61) 3 9629 8380 Fax: (61) 3 9614 8309 www.phillipcapital.com.au
SRI LANKA Asha Phillip Securities Limited
Level 4, Millennium House, 46/58 Navam Mawatha, Colombo 2, Sri Lanka
Tel: (94) 11 2429 100 Fax: (94) 11 2429 199 www.ashaphillip.net/home.htm
INDIA PhillipCapital (India) Private Limited
No. 1, 18th Floor, Urmi Estate, 95 Ganpatrao Kadam Marg, Lower Parel West, Mumbai 400013 Tel: (9122) 2300 2999 Fax: (9122) 6667 9955 www.phillipcapital.in
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31 October 2014 / INDIA EQUITY RESEARCH / CUMMINS INDIA COMPANY UPDATE
Disclosures and Disclaimers PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives and Private Client Group. This report has been prepared by Institutional Equities Group. The views and opinions expressed in this document may or may not match or may be contrary at times with the views, estimates, rating, target price of the other equity research groups of PhillipCapital (India) Pvt. Ltd. This report is issued by PhillipCapital (India) Pvt. Ltd. which is regulated by SEBI. PhillipCapital (India) Pvt. Ltd. is a subsidiary of Phillip (Mauritius) Pvt. Ltd. References to "PCIPL" in this report shall mean PhillipCapital (India) Pvt. Ltd unless otherwise stated. This report is prepared and distributed by PCIPL for information purposes only and neither the information contained herein nor any opinion expressed should be construed or deemed to be construed as solicitation or as offering advice for the purposes of the purchase or sale of any security, investment or derivatives. The information and opinions contained in the Report were considered by PCIPL to be valid when published. The report also contains information provided to PCIPL by third parties. The source of such information will usually be disclosed in the report. Whilst PCIPL has taken all reasonable steps to ensure that this information is correct, PCIPL does not offer any warranty as to the accuracy or completeness of such information. Any person placing reliance on the report to undertake trading does so entirely at his or her own risk and PCIPL does not accept any liability as a result. Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily an indication to future performance. This report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors must undertake independent analysis with their own legal, tax and financial advisors and reach their own regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. In no circumstances it be used or considered as an offer to sell or a solicitation of any offer to buy or sell the Securities mentioned in it. The information contained in the research reports may have been taken from trade and statistical services and other sources, which we believe are reliable. PhillipCapital (India) Pvt. 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