8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
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8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
2/26
Hindustan Unilever
1M 1yr YTD
bsolute 0.23 21.18 21.63
l. to Nifty 3.2 20.33 19.85
Current 2QFY14 1QFY14
omoters 67.25 67.25 52.5
14.83 15.33 20.23
I 3.35 3.03 7.13
hers 14.57 14.39 20.16
Financials
3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 7037.78 6747.2 4.3 6433.89 9.4
EBITDA 1226.8 1085.31 13.0 1088.99 12.7
PAT 1043.7 888.3 17.5 877.08 19.0
EBITDA Margin 17.4% 16.1% 130bps 16.9% 50bps
PAT Margin 14.8% 13.2% 160bps 13.6% 120bp
500696
are Holding Pattern-%
Increasing competitive intensity, slow consumer demand and expectation of hike
input cost in near term could be major concern for HUL. We expect that these concer
could play out over the next couple of quarters.
Volume growth:Volume growth for the quarter was at 4%, which is slightly lower th
the 5% registered in previous several quarters due to further deterioration in mark
growth rates and higher component of price versus volume in its core soaps a
detergents category.
Segment-wise performance:(a)Soaps and Detergents delivered a healthy performan
The company witnessed a price led growth in this segment during the quarter. Whe
was re-launched with superior formulation at quarter end. It has grown well compar
to preceding last 2 quarters. (b)Household Care delivered another strong quarter w
both Vim and Domex growing in double digits. (3)On Personal Products, Skin Ca
performing well with a revenue growth in mid teens in a slowing market and in spite the delay in the onset of the winter season.
wk Range H/L 725/432
SE Symbol HINDUNILVR
arket Data
E Code
"wait for triggers"
MP 570
rget Price -
Delivered stable set of numbers, still expecting key challenges ahead;
For 3QFY14, despite slow discretionary demand HUL reported inline set of numbe
with 8.5% (YoY) sales growth led by 4% (YOY) volume growth. PAT grew by 19%(YoY
pside -
esult update NEUTRAL
evious Target Price -
ange from Previous -
ock Performance-%
123161
erage Daily Volume 2006314
fty 6153
We do not see any sign of improvement in volume growth in near future. Howev
revival in macro economy and resultant improvement in consumer sentiment wou
play a key triggers for improvement in the volume growth in near term.
BV (x) -1year forward
Rs, Cro
(Source: Company/Eastwin
Please refer to the Disclaimers at the end of this Report.
View and Valuation:To continue to deliver strong growth, HUL is likely to continue w
aggressive marketing and offer discounts/price cuts, especially in soaps, detergents a
personal products and the company fights off competition rivals domestic as well
multi-national. we are confident of the medium to long-term growth prospects of t
FMCG sector. At a CMP of Rs 570, stock trades at 29x FY15E P/BV. We have a NEUTRview on the stock.
Product Strategy:The company has launched premium range of hair care product
Toni and Guy. This brands are sold through select top end outlets. However,
operating metrics was challenging given the volatile cost environment, led by the IN
depreciation, and heightened competitive intensity during the quarter.
kt Capital (Rs Cr) Steady margin growth:During the quarter, EBITDA margin inched up by 50bps(YoY)
17% because of stable INR movement against the USD and stable set of RM cost th
same quarter previous year. PAT margin also improved slightly to 17.4% on YoY. Duri
the quarter, company has been efficient to manage cost inflation through judiciopricing and unwinding of promotions.
"NEUTRAL"30th Jan' 14
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
3/26
argin-%
g
(Source: Company/Eastwind)
Volume growth for the quarter was at 4%which is slightly lower than the 5% register
in previous several quarters
EBITDA margin inched up by 50bps(YoY) t
17% because of stable INR movement agaithe USD and stable set of RM cost than sam
quarter previous year.
EBITDA Margin up by 90bps to 13.3% fro
Soap and Detergent, flat margin growth o
Personal Products.
(Source: Company/Eastwind)
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
Hindustan Unilever
olume and Pricing growth -%(YoY)
(Source: Company/Eastwind)
les (cr) and Growth(YoY)-%
Narnolia Securities Ltd,
3QFY13 2QFY14 3QFY14 3QFY13 2QFY14 3QFY14
aps & Detergents 47.0% 19.9% 6.4% 7.1% 12.4% 14.0% 13.3%
rsonal Products 31.9% 8.5% 11.8% 12.4% 28.3% 22.8% 28.6%
verages 11.8% 18.2% 16.1% 7.2% 17.7% 17.0% 16.2%
ckaged Foods 5.2% 7.7% 8.7% 12.9% -0.7% 3.3% -3.6%
hers 3.8% -33.4% 5.7% -4.7% -6.4% 1.5% -4.9%
Margin-%Revenue Growth-%
% of Salesgments
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
4/26
)Tax rate is expected to rise by 300-400 bps for FY15.
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwi
inancials
)The management expects to see some cost burden on promotion through mediacause of 12 minutes advertisement cap.
)Rural growth continues to outpace urban growth by 200 bps and there is no clear-cut
gn of uptick in urban demand as per available data from Nielsen.
)Personal products and packaged foods both segments have headroom for growth and
ll remain focus area.
Hindustan Unilever
ey facts from HUL Con-call (attended on 28th Jan, 2014)
)The mgmt stated that FMCG market growth continues to remain soft across the
tegories, with high competitive intensity and uncertain media environment. While, for
edium to long term the mgmt is positive on FMCG sector.
Narnolia Securities Ltd,
s in Cr, FY10 FY11 FY12 FY13 FY14E FY15E
ales 18025.6 20022.6 23436.3 27004.0 28959.1 31506.
M Cost 6762.8 7796.9 9487.0 10987.8 11873.2 13075.
urchases of stock-in-trade 2173.1 2692.8 2919.5 3125.3 3185.5 3465.7
WIP 75.7 -307.6 95.2 -26.0 -27.9 -30.3
mployee Cost 970.9 1014.9 1200.9 1412.7 1515.0 1648.2
d Spend 2423.0 2797.1 2697.0 3290.0 3619.9 3938.3
ther expenses 2783.2 3317.4 3553.2 4008.9 4054.3 4568.4
otal expenses 15188.7 17311.3 19952.8 22798.7 24219.9 26665.
BITDA 2836.9 2711.2 3483.6 4205.3 4739.1 4840.9
epreciation and Amortisation 191.9 207.5 211.9 251.3 270.4 294.2
ther Income 82.7 255.2 259.6 532.0 579.2 630.1
BIT 2727.6 2758.9 3531.3 4486.0 5047.9 5176.9
nterest 7.5 1.0 1.7 25.7 25.7 27.0
BT 2720.2 2757.9 3529.7 4460.3 5022.2 5149.9
ax Exp 615.3 650.3 821.5 1226.7 1406.2 1442.0
AT 2104.9 2107.6 2708.1 3233.7 3616.0 3707.9
rowth-% (YoY)
ales -13.4% 11.1% 17.0% 15.2% 7.2% 8.8%
BITDA -4.9% -4.4% 28.5% 20.7% 12.7% 2.1%
AT -16.1% 0.1% 28.5% 19.4% 11.8% 2.5%
xpenses on Sales-%
M Cost 37.5% 38.9% 40.5% 40.7% 41.0% 41.5%
d Spend 13.4% 14.0% 11.5% 12.2% 12.5% 12.5%
mployee Cost 5.4% 5.1% 5.1% 5.2% 5.2% 5.2%
ther expenses 15.4% 16.6% 15.2% 14.8% 14.0% 14.5%
ax rate 22.6% 23.6% 23.3% 27.5% 28.0% 28.0%
Margin-%
BITDA 15.7% 13.5% 14.9% 15.6% 16.4% 15.4%
BIT 15.1% 13.8% 15.1% 16.6% 17.4% 16.4%
AT 11.7% 10.5% 11.6% 12.0% 12.5% 11.8%
aluation:
MP 238.7 284.6 419.0 483.3 570.00 570.00
o of Share 218.2 215.9 218.2 216.2 216.26 216.26
W 2668.9 2735.0 3681.1 2864.8 3571.24 4243.1
PS 9.6 9.8 12.4 15.0 16.72 17.15
VPS 12.2 12.7 16.9 13.3 16.51 19.62
oE-% 78.9% 77.1% 73.6% 112.9% 101.3% 87.4%
/BV 19.5 22.5 24.8 36.5 34.52 29.05
/E 24.7 29.2 33.8 32.3 34.09 33.24
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
5/26
V- Escorts Ltd.
MP 125
rget Price 175
evious 105
side 40%
ange from 67%
E Code 500495
E Symbol
wk Range 48/96
kt Capital 1,505
erage Daily 225,953
fty 6,120
1M 1yr YTD
solute (11.3) 62.7 147.9
l. to Nifty (8.2) 61.0 140.2
3QFY14 2QFY14 1QFY14
omoter's 42.0 42.0 42.0
s 9.4 12.3 12.1
's 2.1 4.7 5.4hers's 46.5 41.0 40.6
esult update
arket Data
In 5QFY13 the company saw revenue growth of 12.8% to Rs 1159.6 crore. This result w
mirrors the pent-up demand for tractor business, partly driven by improved crop cultivat
and production and revival in farm equipment segment. In current quarter 84% ofEsco
revenues come from the sale of tractors, and it saw volumes growth of 11.3% to 19047 in
tractor sales. Company construction equipment business witnessed a flattish of 1.4% to
130.9 crore and stands at 11% of company total revenue during this quarter. Lower invent
levels typical of this quarter, where sales are better than in the preceding quarter, transla
into a 6.1% operating margin, up 100 basis points from the year-ago period. Further
marginal price hike in the latter part of the December quarter also propped up realizatio
More importantly, the improved financial position in the farm segment eased cash flows a
working capital cycles, which in turn trimmed interest costs.
Buy
Industry players expects the year 2013-14 to end with volume growth of around 15%After an all time high sales in Oct 2013, where the industry saw a volume growth of 28.8% Y
Nov'13 volume growth was expected on lower side. While in Dec'13, the industry came ba
strongly with a 21.1% growth. In April-Dec'13 period, the industry saw a healthy 23.8% growth
volume. So while high growth is expected to tilt down in lean season, overall, the industry a
whole is still expected to end the year with a volume growth of about 15% for 2013-14. K
markets that supported the growth in FY'14 are Andhra Pradesh, Madhya Pradesh, Rajasthan a
Chhattisgarh. Some of these markets grew by more than 30% YoY. All macroeconomic fact
such as crop prices, productivity, soil moisture, government focus on rural spending etc
favorin the farm e ui ment business.
Please refer to the Disclaimers at the end of this Report.
"Out Performer."
ESCORTS
are Holding Pattern-%
ock Performance-%
"Buy"30th Jan' 14
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
6/26
netration to high HP Tractors
mpany Outlook
e stock is currently trading at 6.5x FY14E EPS with a negative bias in case of construction equipment
gment due to adverse macroeconomic conditions . At current price of Rs. 117, the stock is trading at
E of 7.1 x for FY13E and 6.5 x the FY14E. Escorts could post EPS of Rs. 12.13 for FY14E and Rs. 12.98
r FY15E. An increase in volumes is an indication of healthy demand. Tractor sales revival has enabled
e company to register strong result. Escorts EBITDA margin and bottom-line exceeded our
pectations. Going forward, we remain positive on thecompanys growth prospects particularly inMP segment. We expect demand to improve further in FY2014E with the economic recovery.
owever, we remain cautious with regards to growth in Construction Equipment segment in near-to-
edium. Thus, We revise our estimates upwards to factor in the strong CY13 tractor volume
rformance. We therefore revised our rating on the stock from "Reduce" to "Buy" and advised to
r investors to enter at current level with Revised price target of Rs. 175
Escorts Ltd.
Please refer to the Disclaimers at the end of this Report.
corts management aims to improve tractor margins from the current ~10% to 15% over the next 1-2
ars led by change in focus to higher HP tractors and by cost rationalization measures. Higher tractor
argins would take Escorts' company level EBITDA margins from ~6% to ~10%, as tractor segment
ntributes 80% to the company's overall sales. Moreover, the management's strategy to focus ongher HP tractors and increase presence in Southern markets will lead to faster-than-market growth.
utlook on Industry
spite being an agricultural nation, Tractors penetration in India is about 5% of total cultivable
nd. Going forward, we expect deeper penetration of Tractors to happen which will continue to
ve strong demand for the sector. The growth in farm incomes will fuel the need for further
echanization, which will tend to accelerate as social welfare programs, urbanization and
ernative occupations move farm labor to other sectors. So the demand for higher HP tractors
l be the future growth within the sector. The proportion of higher power (greater than 50 HP+)
gment has shown increase in total industry volume share by 380 bps from 12.6% in FY'08 to
out 18% in FY'13. For tractor industry more than festive season it is the monsoons that matters
ot. The onset of positive sentiments because of monsoons, the reservoirs are full, the kharif cropwing is more than 1,000 lakh hectors which is almost 6 percent up vis--vis last year. The prices
the crops declared by the government are pretty good and on top of it there are host of
anciers who are financing the tractors and funds are available to prospective buyers and that is
o leading to growth.
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
7/26
aphical representations :
perating profit :
et Profit :
ailling ROE % & Trailling Asset T/O :
urce: Eastwind Research) (Figures in crore)
urce: Eastwind Research) (Figures in crore)
urce: Eastwind Research) (Figures in crore)
Please refer to the Disclaimers at the end of this Report.
Escorts Ltd.
venue from operation :
urce: Eastwind Research) (Figures in crore)
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
8/26
SECTOR ANALYSIS :2 W and 3W 9MFY14 SALES
8
dustry Overview:dia's automobile sales continued to remain on sluggish trajectory as most of the companies reported a decline in sales number due to
owdown in economic activity and increasing fuel prices. However, two-wheeler segments continued to grow at a healthy rate, led by
rong rural demand.The contribution of various segment for the 9MFY14 automobiles sales stands as under :
wo Wheelersor December 2013, overall auto industry volumes were led by the two-wheeler industry (4% YoY growth). Two Wheelers segmen
ntribution has increased to 80.2% of the total auto volume, during first nine months of FY14 from 77% in FY 13.The cumulative volume
r 9MFY14 for 2 Wheelers stands at 12489192 units up 5.3% YoY.
etter monsoon benefitted rural demand, while urban sales remained lackluster, which was higher than offsetting the rural growth. With
e festive season ending early in November 2013 this year, the positive momentum seen October 2013 has cooled off with retail sales
gely lagging wholesales. The two-wheeler segment has again managed to keep its head over water even as all other segments have
own an annual decline with last years' festive season ending later.
ub Segment Motorcycle
e analysis of previous yearssales indicates that the three major players viz Heromoto Corp, Bajaj-Auto,TVS Motors have shown
clining performance along with market share loss to both HMSI and Yamaha. The strong rural demand helps to boost the sales of
mmuter sub segment (100-125 CC) of motorcycles. The following table shows yearly performance of some of major motorcycle
ayers
(Source: Company/Eastwind)
The graph clearly indicates that of total automobiles sold for 9MFY14
the contribution of two wheelers stand at maximum. This trend shows
that slow down in consumer discretionary expenses. The differentia
pricing makes people to spend more towards two wheelers more ove
people look for option which gives them more mileage for every unit o
fuel. As stated earlier there is growth in rural economy and trend is
clearly visible from the sales made by two wheelers in tota
automobiles sold for the period.
ub Segment Scooter
Year Wise Motorcycle SalesYear Wise Motorcycle Market Share
Please refer to the Disclaimers at the end of this Report.
e scooter sub segment grew well led by new launches from Honda (New Activa), Hero (Maestro), TVS (Jupiter) and Suzuki (Swish)
e scooter segment grew at a faster clip of 19% YoY for Apr-Dec'13 period against a flattish (3%) growth in the motorcycle segment.
e faster volume growth of the scooter segment led to a 220bps improvement to 21.2% in its share of the two-wheeler market during
s period. The main drivers for this growth are (a) growing acceptability of gearless scooters, particularly by women, (b) rising
banization and increasing proportion of working women and (d) new launches.
Narnolia Securities Ltd,
ompanies FY12-13 FY11-12 FY10-11
ero MotoCorp 46% 48% 48%
ajaj Auto 31% 32% 32%
VS Motors 6% 7% 8%
MSI 11% 7% 7%
amaha 4% 4% 3%
Companies FY12-13 FY11-12 FY10-11
Hero MotoCorp 5499245 5779621 5040971
Bajaj Auto 3757094 3834405 3387043
TVS Motors 749806 843338 836831
HMSI 1291688 864183 748488
Yamaha 437998 484891 366770
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
9/26
SECTOR ANALYSIS :2 W and 3W 9MFY14 SALES
Please refer to the Disclaimers at the end of this Report.
three wheelers universe for the December 2013 Industry domestic volumes were down 21% to 35249 units led by 27% drop in
ssenger segment. There was a 7% rise in the goods carrier segment in Dec 13. Exports registered 11% rise to 33,044 units. This segm
r 9MFY14 registered domestic sales was 364669 units down by 9 % YoY for the same period last fiscal. The exports have done fairly
r the period with 11 % growth YoY to 33044 units. The three wheeler segment remains flat on YoY to 626749 units for 9MFY14. The t
heelers demand largely driven byexports, while domestic sales remained weak.
ajaj-Auto with 55% market share is the market leader in 3 Wheeler sales in the country. Q1FY14 Domestic 3W sales accounted for 38
e company's total 3W sales. Of the total 3W sales, 15-20% came from new permits, while replacement accounts for the rest. On
mestic 3W front, the outlook remains positive with 20000 permits opening up in Hyderabad (5k already utilized in June-July 2013)
00 permits opening up in Maharashtra in Sept-Oct 2013. Also, its plan to launch a renewed range of 3W (RE Compact) promises to
placement demand.
or TVS, 3W sales stood up by 36.8% YoY to 6,137 units with most of it coming from the overseas markets; 3W share to total sales fo
8% in December and 3.9% YTD, 150bp higher YoY. The Company is expected to benefit from this as 3W forms a high margin produc
e other hand, Mahindra & Mahindra's 3w sales were up 7.6% to 5.6k units. Sales were down 5% on a MoM basis.
e YTD performance of Three wheelers for FY14 is tabulated as under:
hile the macro-economic environment remains challenging, OEMs have pinned hopes on the bevy of launches that might trigg
sponse from customers. Also, the recent cut in the price of petrol might just prove to be a good thing for companies. Additionally, b
op realization due to a good monsoon and hike in MSP is expected to boost the rural income leading to a sales recovery. Over the
rm, easing macro headwinds in terms of lower interest rates and higher economic growth would be the key driver for volume growth
ofitability.
onclusion
ven its low ticket size and high rural share, this segment of the auto industry is sure to pick up momentum in the coming months.
banization, rise in women riders, higher fuel efficiency and improving per capita income, the penetration of scooters will contin
crease and at a pace faster than motorcycles. 2/3 wheeler companies which are the direct beneficiaries of the rural consumption
pected to remain strong given the buoyant prices for food items, strong monsoon and additional benefits of government doll outs
gesse.
uture Outlook (Source: Company/Eas
ontinued
Scooter sales growth has taken-off since FY10 and has consist
outgrown that for the motorcycle segment. An increasing populatio
working women, mainly in urban markets, has led to rapid sales-vo
growth in this segment. On a longer term perspective, scooter ind
volumes are expected to grow at ~20% CAGR over FY14-20, twice
growth rate for motorcycles. Overall two wheeler industry volumes are
to grow at 12% CAGR during this period. The shares of scooters
expected to increase to 37% by 2020, with annual sales of 10.7m
(equal to the current market size of the domestic motorcycle industry).
hree Wheelers (Source: Company/Eastwind)
Narnolia Securities Ltd,
Month 9MFY14 Sales (Volume) 9MFY13 Sales (Volume) Change %
April 69562 61772 12.6%
May 61089 55184 10.7%
une 71889 54274 32.5%
uly 66335 65352 1.5%
August 67141 72122 -6.9%
eptember 80549 78097 3.1%
October 76874 86072 -10.7%
November 65017 80325 -19.1%
December 68293 74596 -8.4%
TD 626749 627794 -0.2%
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
10/26
SHREE CEMENT.
4325
4791
479111%
0%
500387
15502
3875
6136
1M 1yr YTD
solute 0.1 -4.8 -5.1 MAT Credit support the buttom line :
l. to Nifty 0.0 -8.0 -9.2
2QFY14 1QFY14 4QFY13
omoters 64.8 64.8 64.8
8.2 8.2 8.1
5.9 5.7 5.9
hers 21.2 21.3 21.2
Financials : Q2FY14 Y-o-Y % Q-o-Q % Q2FY13 Q1FY1
Revenue 1318 -7.7 5.6 1428 124
EBIDTA 271 -24.7 8.8 360 24Net Profit 115 -46.9 -32.9 217 17
EPS 33 -46.9 -32.9 62 4
EBIDTA% 21 -18.4 3.1 25 2
NPM% 9 -42.5 -36.5 15 1(In Cr
1
Buy
arket Data
erage Daily Volume (Nos.)
Volumes grew by18 % but prices came down by 5%. So the EBITDA margin has h
badly:Shree Cement Ltd has reported a 47% fall in its December quarter net profit o
lower sales as well as 5% degrowth in realization. PAT impacted due to lower othe
income (down by 70% YOY), Depriciation burden on EBIDTA (Depriciation increased 41%YOY). Volumes grew by18 % to3.8mn ton from 3.3mn ton QOQ. Net profit decreased b
47% yoy from Rs.217.44 crore (Rs.62.42 per share) in 2Q13 to Rs.115.49 crore (Rs.33.1
per share) in 2Q14.Total net income from operations stood at Rs.1318.13 crore in 2Q14
a 6% fall yoy from Rs.1401.23 crore in 2Q13.Other income decreased from Rs.30.2 cror
in 2Q13 to Rs.9.9 crore in 2Q14.In the mean time company declares a Rs.10 as interim
dividend/share.
Power Segment: Realization Down By 15% :For power generation the net realization ha
come down from Rs 383 to Rs 334 compared to last year same quarter and in the firs
quarter it was still better at Rs 397.So the power realization is down by 13 percent an
hence sales also have come down by 35 percent to Rs.290 Cr. At the same time 14%
increase in its profitability from power segment to Rs112.56 crore while its cemen
segment reported 79% fall in its profitability to Rs37.65 crore.
side
ange from Previous
MP
rget Price
evious Target Price
esult Update
E Code
SHREECEME Symbol
During the Quarter Company got MAT (minimum alternative tax) credit entitlement o
Rs9.25 crore and deferred tax of Rs1.79 crore. This reduced total tax payable amount t
Rs15.27 crore from Rs26.31 crore.
CompanysEBIDTA/ton decreased 6% to Rs.712 (vs Rs.756 in previous quarter), at th
same time the Expenditure also decreased 9% to Rs.2757 (vs Rs.3025 in Q1).Hence w
believe that company will outperform among its peers ,once Realization get improve.Th
exceptional weakness is there in the cement prices. Volumes have grown by about 1
percent but the prices have come down by 5 percent and naturally the cost increase i
there. So the EBITDA margin has been badly hit .
The 2m-ton Line-IX clinker unit at Ras, Rajasthan, was commissioned inJun13.LineX o
similar capacity along with 25MW of WHRS (at the same location) is expected b
Jun14.Twogrinding units of 2m tons each, at Ras and in Bihar,are being constructed an
expected byJun14.Weexpect Shree to be a 21.5m-tpa company by Jun15.It plans t
foray into high demanding eastern.Total capex for these expansion is Rs.3,000 cror
which is spread over next 2 years.
On the expansion front :
wk Range H/L
kt Capital (Rs Crores)
5210/3413
Please refer to the Disclaimers at the end of this Report.
ock Performance-%
are Holding Pattern-%
yr Forward P/B
Source - Comapany/EastWind Research
fty
"BUY"28th Jan' 14
Narnolia Securities Ltd,
Mar-02
Oct-02
May-03
Dec-03
Jul-04
Feb-05
Sep-05
Apr-06
Nov-06
Jun-07
Jan-08
Aug-08
Mar-09
Oct-09
May-10
Dec-10
Jul-11
Feb-12
Sep-12
Apr-13
Nov-13
PRICE 1.5x2x 2.5x3x 3.5x4x 4.5x
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
11/26
utlook :
FY11 FY12 FY13 FY14E
3454 5898 5590 5798
203 163 188 217
3656 6061 5779 6015
905 1500 1513 1409
602 1006 915 1090
2569 4252 4029 4275
885 1646 1561 1523
676 873 436 470
98 235 193 145-99 69 115 118
365 619 1004 1007
20.8 23.1 26.1 21.1
11
Source - Comapany/EastWind Research
Source - Comapany/EastWind Research
SHREE CEMENT.
L PERFORMANCE
et Revenue from Operation
her Income
tal Income
ompany Description :Shree Cement (SCL) is a cement producer operating in the two
gments cement and power. As of June 30, 2012, the company had a cement capacity
13.5 million tonnes per annum (MTPA) and power capacity of 560 MW. The
mpany's waste heat recovery power plants have a total capacity of 46 MW. The
mpanysbrands include Shree Ultra,Bangur Cement and Rockstrong Cement. It has
anufacturing facilities at Beawar and Ras in Ajmer and Pali district and grinding units
Khushkhera, Suratgarh and Jaipur, respectively, in Rajasthan and Roorkee intarakhand.
anagement Corner : From mid-January there is a big change in demand scenario
cause of the Indian calendar, the prices have improved, the demand has also
proved and they think that January to June some impact of elections will be there -
e-election demand and other things. So margins should be better than 21 percent.
om the view company Operations in the high utilisation North and Central markets,
pacity expansions underway, low gearing and strong RoE are fundamental positives.
e believe although, near term challenges in terms of a slowdown in demand for
ment would remain, strong balance sheet and better efficiency in terms of cost
mains a key positive for this company to overcome challenges.Company Management
bull for the rest two quarters of FY2014 as according to them demand has already
ttom out.We are positive on the stock as it always beats its peers group with lower
perational cost.Shree cement follows a multi brand strategy and sells cement under
e highly recognized brands of Shree Ultra, Bangur and Rockstrong which together
joy the largest market share in high value markets of Rajasthan, Delhi and Haryana.
ter a good monsoon and election ahead we are expecting a good performance from
ree cement for the H2FY14, thus at CMP Rs.4460/- we are bull at a target Price
.4791/-
et tax expense / (benefit)
AT
OE%
wer and fuel
eight and forwarding
penditure
ITDA
epriciation
terest Cost
Narnolia Securities Ltd,
-2
-1
0
10
20
30
40
50
60
1100
1150
1200
1250
1300
1350
1400
1450
1500
Revenue
Growth
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0 NPM % OPM % EBITDA %
0
2
4
6
8
1
1
0
50
100
150
200
250
300
350
400
450
EBIDTA
INTEREST SERVICE COVERAGE
RATIO
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
12/26
FY10 FY11 FY12 FY13
35 35 35 35
1798 1951 2699 3809
1833 1986 2734 3844
1789 1472 818 443318 217 143 534
28 16 17 18
171 185 584 81
472 267 178 87
4906 4940 5973 6160
0 0 0 0
752 1167 1521 1782
967 729 97 133
299 308 205 378
358 404 503 530
82 108 181 315
416 499 459 369
415 429 363 326
4906 4940 5973 6160
FY10 FY11 FY12 FY13
4.4 3.6 3.8 4.2
212.3 118.6 177.5 288.2
2.3 3.1 3.1 5.6
4.7 5.3 9.9 1.4
1.0 1.2 0.9 0.9
Source - Comapany/EastWind Research
S PERFORMANCE
rading At :
ATIOS
ng-term provisions
ade payables
ort-term provisions
tal liabilities
tangibles
pital work-in-progress
ngible assets
SHREE CEMENT.
are capital
serve & Surplus
tal equity
ng-term borrowingsort-term borrowings
ng-term loans and advances
ventories
ade receivables
sh and bank balances
ventories to Turnover%
ort-term loans and advances
tal Assets
B
S
ebtor to Turnover%
editors to Turnover%
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
13/26
80
92121
16
31.5
1M 1yr YTD
bsolute -14.9 -55.2 -55.2
el.to Nifty -12.5 -56.6 -56.6
Current 4QFY13 3QFY1
omoters 58.9 55.2 55.2
I 8.7 8.0 8.1
I 18.5 21.1 22.0
hers 13.9 15.6 14.7
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 4022 5163 4866 5426 6715
Total Income 5393 6461 6343 7745 9034
PPP 3055 3770 3385 4361 5150
Net Profit 1423 1867 1185 1290 1522
EPS 29.9 39.2 23.7 23.7 27.9
kt Capital (Rs Cr)
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
ock Performance
During this quarterbanksasset quality worsen with gross NPA further deteriorat
by 14% QoQ in absolute term while as a percentage to gross advance, this rat
stood at 5.5% versus 5% in previous quarter. Provisions had increased by 19%
sequential basis which led net NPA deterioration to 12% QoQ. In percentage ter
net NPA to net advance stood at 4.1% versus 3.8% in previous quarter. Provisio
coverage ratio (w/o technical write-off) marginally improved to 24.8% from 23.7%
2QFY14. During this quarter, banks sold Rs.389 cr of non- performing assets
asset reconstruction companies. Total outstanding restructure at the end of stood
Rs.12624 cr which is 9.2% of net advance.
2wk Range H/L
hange from Previous
lahabad Bank Vs Nifty
hare Holding Pattern-%
8.26 LAKH
fty 6136
verage Daily Volume
3975
176/65
SE Symbol ALBK
ompany UPDATE BUY
MP
arget Price
Allahab ad reported net prof it grow th of 4.7% YoY to Rs.325 cr largely du
mu ted NII grow th and deter iorated asset quality. Banksoperat ing expens e
were stable in absolu ter term but as cost incom e rat io increased drast ical ly oacco unt of low er revenue grow th. As set quality has deter iorated sequential l
Due to low er corp orate demand, loan grow th remain muted andbankslow
its total bus ines s (Lo an + Depo sit s) gu idan ce to Rs.340,000 cr from earlier
Rs.360,000 cr. We valu e bank at Rs.92/sh are whi ch is 0.4 tim es ofFY14E
boo k value. We are not imp ressio n withbanksfund ament but curren t pr ic
provide 15% upside from o ur target pr ice.
evious Target Price
arket Data
pside
SE Code 532480
ALLAHABAD BANK
Allahabad banksNII grew by 0.4% YoY to Rs.1336 cr versus our expectation
Rs.1422 cr largely due to lower interest income led by lower than expected lo
growth and loan yield as well. Banksdeposits growth was also lower than expectbut cost of deposits was almost same in previous quarter. Therefore interest incom
was lower than interest expenses which cause muted NII growth. During quart
banksother income was Rs.542 cr as against Rs.341 cr in last quarter which help
to report revenue growth of 11% YoY.
CI ratio up drastically in sequential basis but in absolute term it remain
comfortable
Cost to income ratio was higher at 46.3% versus 42.5% in previous quarter large
due to lower revenue growth. In absolute term operating expenses increased
2.2% QoQ and 7.3% YoY on which employee cost and other operating expens
increased by 1% and 22% YoY respectively. With lower operating cost and hisupport from other income, operating profit grew by 17.2% YoY to Rs.1008 cr.
Worsen asset quality led by macro environment
NII growth muted on account of lower loan growth and loan yield
"BUY"28th Jan, 2014
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
14/26
ALLAHABAD BANK
Source:Company/Eastwind
Please refer to the Disclaimers at the end of this Report.
ower business growth target due to absence of corporate loan
ahabad Bankstotal deposits grew by 10% YoY and advance grew by 13% YoY to
s.1875 bn and Rs.1373 bn respectively. Muted growth in loan was on account of lower
orrowing from corporate segment whereas bank reported retail, MSME and priority
ctor registered handsome growth. CASA for the quarter stood at 30.8% versus 31.2%previous quarter. Bank management lower its FY14s total business guidance to
40,000 cr from Rs.360,000 cr earlier. Accordingly we lower our loan and deposits growth
12% and 9% from earlier of 15% each. Credit deposits ratio was stable at 73.2%.
ower profit growth because of muted NII growth and deteriorating asset quality
et profit of Allahabad banksgrew by 4.7% YoY to Rs.325 cr largely due to muted NII
owth and high provision led by deteriorating asset quality. Due to lower demand from
rporate borrowing, banks reduce its business growth target by 5.5% for FY14. Asset
uality pressure would likely to persist in FY14 which would result of lower valuation
ultiple. We lower our book value estimate to Rs. 229.3 from earlier of Rs.254 primarily
ue to equity dilution and lower profit expectation in FY14E.
aluation & View
ahabad reported net profit growth of 4.7% YoY to Rs.325 cr largely due muted NII
owth and deteriorated asset quality. Banks operating expenses were stable in
bsoluter term but as cost income ratio increased drastically on account of lower revenue
owth. Asset quality has deteriorated sequentially. Due to lower corporate demand, loan
owth remain muted and bankslower its total business (Loan + Deposits) guidance to
s.340,000 cr from earlier of Rs.360,000 cr. We value bank at Rs.92/share which is 0.4
mes ofFY14Esbook value. We are not impression with banksfundament but current
ce provide 15% upside from our target price.
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
15/26
ALLAHABAD BANK
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
undamant Through Graph
NII growth muted on account of lower loangrowth and loan yield
With the support from other income and
lower operating expenses, PP grew by 17.2
YoY
Lower profit growth because of muted NII
growth and deteriorating asset quality
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
16/26
ALLAHABAD BANK
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
arterly Performance (Rs Cr) 3QFY14 2QFY14 3QFY13 % YoY % QoQ 3QFY14E Variation
erest/discount on advances / bills 3533 3422 3234 9.2 3.2 3669 -3.7
ome on investments 1161 1131 1161 0.0 2.6 1199 -3.2
erest on balances with Reserve Bank of India 27 28 29 -7.9 -5.1 33 -18.5
hers 42 25 21 102.9 67.8 43 -2.6
al Interest Income 4762 4607 4445 7.1 3.4 4944 -3.7
hers Income 542 696 341 59.2 -22.1 599 -9.4
al Income 5305 5303 4785 10.9 0.0 5542 -4.3
erest Expended 3427 3298 3114 10.0 3.9 3522 -2.7
1336 1309 1330 0.4 2.0 1422 -6.1
her Income 542 696 341 59.2 -22.1 599 -9.4
al Income 1878 2005 1671 12.4 -6.3 2021 -7.1
ployee 569 550 563 1.0 3.4 301 89.3
her Expenses 301 301 247 21.7 0.0 558 -46.1
erating Expenses 870 852 811 7.3 2.2 859 1.3
P( Rs Cr) 1008 1154 860 17.2 -12.6 1162 -13.3visions 555 742 432 28.3 -25.2 699 -20.6
T 453 411 428 5.9 10.1 463 -2.2
128 136 117 9.2 -5.9 139 -8.2
t Profit 325 276 311 4.7 18.0 324 0.4
ance Sheet ( Rs Cr)
t Worth 12410 12085 11572 7.2 2.7 12409 0.0
posits 187478 180396 170649 9.9 3.9 192974 -2.8
ns 137300 131896 121555 13.0 4.1 139757 -1.8
et Quality
PA( Rs Cr) 7,512 6,613 3,532 112.7 13.6 6,997 7.4
A( Rs Cr) 5651 5048 2478 128.1 11.9 5320 6.2
NPA 5.5 5.0 2.9
PA 4.1 3.8 2.0
R(w/o technical write-off)(%) 24.8 23.7 29.8
erating Metrics
dit-Deposits Ratio(%) 73.2 73.1 0.0
st-Income Ratio(%) 46.3 42.5 48.5
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
17/26
nancials & Assumption
ALLAHABAD BANK
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
ncome Statement 2011 2012 2013 2014E 2015E
terest Income 11015 15523 17436 18958 22529
terest Expense 6992 10361 12569 13532 15814II 4022 5163 4866 5426 6715
hange (%) 51.8 28.3 -5.7 11.5 23.8
on Interest Income 1370 1299 1477 2319 2319
otal Income 5393 6461 6343 7745 9034
hange (%) 29.4 19.8 -1.8 22.1 16.6
perating Expenses 2338 2691 2958 3384 3885
re Provision Profits 3055 3770 3385 4361 5150
hange (%) 19.9 23.4 -10.2 28.8 18.1
rovisions 1112 1602 1865 2527 2976
BT 1943 2167 1520 1835 2174AT 1423 1867 1185 1290 1522
hange (%) 18.0 31.2 -36.5 8.8 17.9
alance Sheet
eposits( Rs Cr) 131887 159593 178742 194828 222104
hange (%) 24 21 12 9 14
f which CASA Dep 44156 48668 54930 60397 68852
hange (%) 21 10 13 10 14
orrowings( Rs Cr) 6918 9094 10098 13544 15440
vestments( Rs Cr) 43247 54283 58306 60428 71263
oans( Rs Cr) 93625 111145 129490 145028 165332
hange (%) 31 19 17 12 14
atio
vg. Yield on loans 8.8 10.5 9.8 9.7 10.0
vg. Yield on Investments 6.2 6.8 7.7 7.5 8.0
vg. Cost of Deposit 4.9 6.1 6.7 9.2 9.5vg. Cost of Borrowimgs 7.1 6.8 5.2 7.1 7.1
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
18/26
Persistent System.
BUY Delivered inline set of numbers but better on all aspects than its peers did :
11%
1M 1yr YTD
bsolute 1.1 76.8 85.7
l. to Nifty 3.4 75.8 82.3
Current 2QFY14 1QFY14
omoters 38.96 38.96 38.96
18.26 15.28 14.84
I 18.78 21.23 19.31
hers 24 24.53 26.89
Financials
3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%
Revenue 432.75 432.37 0.1 332.98 30.0
EBITDA 104.3 100.8 3.5 82.4 26.6
PAT 64.2 60.8 5.6 49.5 29.7
EBITDA Margin 24.1% 23.3% 80bps 24.7% (60bps
PAT Margin 14.8% 14.1% 70bps 14.9% (10bps
arket Data
E Code 533179
SE Symbol
Persistent management suggests that deal pipeline are looking strong and seeing goactivity and traction in the market across the board. Its focus on some of new
technologies like cloud, analytics and mobility, M2M, digital transformation a
gaining a lot of traction because of pickup in demand environment. Because of activ
investment in these themes, management is very confident to see healthy growth.
kt Capital (Rs Crores)
wk Range H/L 1058/477
3974
fty
are Holding Pattern-%
6136
Margin ramp up:During the quarter, Its EBITDA margin improved by 80bps to 24.
because of cost rationalization. PAT margin up by 70bps to 14.83%. Howev
management expects to maintain margin at 24-25% for FY14E.
On segmental front: The Companys cash cow segment Infrastructure and Syste
which contributes 69% on sales, was flat than previous quarter and Telecom (18
contribution on sales) was up by 2% sequentially. While, Life Science space (1
contribution on sales) down marginally by 1% (QoQ).
Geography wise revenue: Because of weak seasonality and furloughs impact, No
America and APAC regions were marginally down by 1-2%(QoQ). The companys earn
potential from US is 83% and APAC is 11%. While Europe contributes 6% of sales and h
seen tremendous set of growth at 36% (QoQ) led by a large account execution duri
the quarter.
year forward P/E-x
Rs, Cro
(Source: Company/Eastwi
View and Valuation:Thecompanysfocus is shifting greater proportion to IP led servic
and company has marquee clientele in cutting-edge technologies around clou
mobility, collaboration and analytics; witnessing faster growth. Considering t
companys ability to achieve scale and growth, we upgrade our target price from
960 to Rs 1070 withBUY view on the stock. Recently we had advised to book pro
on the stock at a target price of Rs 960. Post 3rd quarter earnings, we upgrade our E
for FY15E from Rs 76.9 to Rs 79.1. At a CMP of Rs 994, stock trades at 12.6x FY1
earnings.
Clients Metrics:During the quarter, company added 2 clients(Total 34) under mediu
category( >$1mn to $3mn) and no client addition (Total) 16 from large ( > $ 3Mn
Revenue contribution from top-1 client declined from 22.5% (2QFY14) to 19.8% a
contribution from top-5 and Top-10 marginally down. DSO at 63days, almost
quarters low.
erage Daily Volume 12139
Please refer to the Disclaimers at the end of this Report.
ock Performance
PERSISTENT
"Persistently innovating.."
esults update
MP 994
rget Price 1070
For 3QFY14, PersistentSystems sales was almost flat (QoQ) in INR term, while gre
2.2% (QoQ) in USD term impacted by seasonality and furloughs impacts. During t
quarter, volume growth from Offshore increased by 3.8% and Onsite volume growwas flat, sequentially. PAT grew by 5.5% (QoQ)
ange from Previous
evious Target Price 960pside 8%
The management remains confident of FY14 with deal pipeline being strong a
remains focused on increasing the share of IP-led revenues in its portfolio. T
management expects to see more than 15% dollar revenue growth, more th
NASSCOM guidance of 12-14 % for FY14E.
"BUY"28th Jan' 14
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
19/26
Persistent is confident of doing more than 15% revenue growth in$ terms(FY14E).
They expect to maintain margin at 24-25% for FY14E
The company is optimistic to see more deals on SMACS and IP led business.
Services business can continue to keep the growth momentum.
Persistent S stem.
les (INR) and Sales growth-%(QoQ)
On $term, Sales growth was up by 2.
(QoQ) and 0.8% on INR term,
(Source: Company/Eastwind)
Please refer to the Disclaimers at the end of this Report.
ey facts from Concall (attended on 27th Jan,2014)
TheCompanys focus on newer technologies like cloud, analytics, mobility and digital
ansformation are gaining traction.
Expects 20-21% growth in the next year from IP led business, which in turn will help
prove margins going forward.
(Source: Company/Eastwind)
gmental Revenue-%
Persistent's exposure on Infr and System
increased to 69%, growth in Infra sp
indicates more visibility of deal intake in n
future,
(Source: Company/Eastwind)
argin-%
Its EBITDA margin improved by 80bps
24.1% because of cost rationalization.
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
20/26
inancials
Please refer to the Disclaimers at the end of this Report.
Persistent S stem.
(Source: Company/Eastwi
perating Metrics
Narnolia Securities Ltd,
2QFY12 3QFY12 4QFY13 1QFY13 QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14
op1 16.0% 15.9% 17.2% 17.8% 20.7% 21.1% 21.6% 21.2% 22.5% 19.8%
op 5 38.6% 37.0% 36.6% 33.5% 36.3% 37.3% 36.7% 34.7% 36.4% 36.9%
op 10 49.4% 48.3% 48.8% 45.3% 47.0% 49.4% 47.9% 46.0% 47.3% 46.9%
nsite - Linear 12665 12387 12603 12789 12863 12772 14014 14567 14283 14510
ffshore - Linear 3803 3778 3895 3898 3978 4032 4143 4111 4109 4179
eild per Employee(excld- Trainee) 3208 3247 3350 3345 3746 3817 3769 3602 3919 3934
otal Employee 6900 6706 6628 6536 6370 6719 6970 7144 7457 7602
ttrition 17.7% 17.4% 18.3% 18.9% 16.9% 16.0% 14.4% 14.2% 14.0% 13.2%
tilization rate %(xclude IP Led ) 73.8% 74.1% 71.7% 74.1% 75.2% 77.3% 72.5% 70.0% 71.7% 72.9%
lling Rate-USD/ppm
mployee Metrics
ient Concentration
s in Cr, FY10 FY11 FY12 FY13 FY14E FY15E
ales 601.16 775.84 1000.3 1294.5 1666.59 2061.7
mployee Cost 368.74 481.62 599.05 719 899.96 1123.6
ost of technical professionals 0 30.67 41.68 54 91.66 113.39
ther expenses 86.05 105.24 135.2 218 291.65 366.99
otal expenses 454.79 617.53 775.93 990.78 1283.28 1604.0
BITDA 146.37 158.31 224.37 303.72 383.32 457.70
epreciation 33.52 42.39 61.1 78 100.55 93.54
ther Income 11.23 34.44 34.44 34.44 55.00 72.16
BIT 112.85 115.92 163.27 225.44 282.76 364.16
nterest Cost 0 0 0.00 0.03 0.05 0.05
rofit (+)/Loss (-) Before Taxes 124.08 150.36 197.71 259.851 337.71 436.28
rovision for Taxes 9.05 10.62 55.09 75.37 92.03 119.98
et Profit (+)/Loss (-) 115.03 139.74 142.62 184.481 245.69 316.30
rowth-% (YoY)
ales 1.2% 29.1% 28.9% 29.4% 28.7% 23.7%
BITDA 60.2% 8.2% 41.7% 35.4% 26.2% 19.4%
AT 74.1% 21.5% 2.1% 29.4% 33.2% 28.7%
xpenses on Sales-%
mployee Cost 61.3% 62.1% 59.9% 55.5% 54.0% 54.5%
ther expenses 14.3% 13.6% 13.5% 16.9% 17.5% 17.8%
ax rate 7.3% 7.1% 27.9% 29.0% 27.3% 27.5%
Margin-%
BITDA 24.3% 20.4% 22.4% 23.5% 23.0% 22.2%
BIT 18.8% 14.9% 16.3% 17.4% 17.0% 17.7%
AT 19.1% 18.0% 14.3% 14.3% 14.7% 15.3%
aluation:
MP 310 366.7 409.2 541 994 994
o of Share 4 4 4 4 4 4
W 639.0 747.1 840.5 1018.3 1212.5 1477.3
PS 28.8 34.9 35.7 46.1 61.4 79.1
VPS 159.7 186.8 210.1 254.6 303.1 369.3
oE-% 18.0% 18.7% 17.0% 18.1% 20.3% 21.4%
/BV 1.9 2.0 1.9 2.1 3.3 2.7
/E 10.8 10.5 11.5 11.7 16.2 12.6
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
21/26
8482
#####
1M 1yr YTD
bsolute -0.7 -5.4 -5.4
el.to Nifty -0.6 -9.0 -9.0
Current 1QFY14 4QFY1
omoters 69.3 69.3 69.3
I 4.2 3.9 3.2
I 12.4 12.5 13.0hers 14.2 14.3 14.6
Financials Rs, Cr
2011 2012 2013 2014E 2015E
NII 3845 3902 4582 6186 6289
Total Income 4770 4868 5534 7335 7438
PPP 2695 2811 3357 4850 5132
Net Profit 907 1109 618 1585 2101
EPS 16.5 17.7 9.3 23.8 31.6
hange from Previous
CO Bank Vs Nifty
hare Holding Pattern-%
2960821
fty 6154
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
ock Performance
2wk Range H/L
Stable asset quality in sequential basis despite of challenging environment
On delinquencies front, bank reported very stable asset quality in sequential bas
with GNPA deteriorated by 0.3% to Rs.7353 cr versus Rs.7376 cr in challengi
macro environment. In percentage term GPA improved by 25 bps to 5.2% vers
5.5% in previous quarter. Provisions in absolute term declined by 0.7% in sequent
basis which led net NPA improve to 0.3%. In percentage of gross NPA to gro
advance, it stood at 5.2% versus 5.5% in 2QFY14 while net NPA in percentage te
was improved to 3% from 3.1% in previous quarter. Provisions coverage ra
(without technical write-off), was 46.4% as against 46.6% in previous quarter.
Operating expenses increased by 15.5% YoY in which employee cost and oth
operating expenses increased by 12.7% and 21% YoY respectively. Cost incom
ratio declined from 39.2% in 3QFY13 to 35.3% inn3QFY14. With the support fro
healthy NII growth and lower cost income ratio, banksoperating profit grew by 37
YoY to Rs.1137 cr.
Healthy NII growth and controlled cost income ratio led operating profit grow
SE Code
UCO BANK
ompany Update BUY
MP
532205
arget Price
verage Daily Volume
5561
evious Target Price
During quarter, bank reported NII growth of 33% YoY to Rs.1566 cr below of o
expectation of Rs. 1642 cr largely due to higher cost of fund than anticipated whi
led by sequentially declined of low cost deposits(CASA). NII growth of 33% YoY w
much higher than its peers which have delivered result so far. Other income wRs.190 cr versus Rs.209 cr in 2QFY14 and Rs.190 cr in 3QFY14. With the low
support from other income, total revenue growth was 28.5% YoY to Rs.1756 cr.
pside
86.65/46
kt Capital (Rs Cr)
arket Data
SE Symbol UCOBANK
UCO bank repor ted net prof i t growth o f 207% YoY largely due to robu
grow th in NII along with hig her than industry average loan growth . Bank
asset qual it y imp ro ved sequen ti al ly desp it e o f chal le ng in g macenvironment . However banks CASA growth has dec l ined marg ina l ly
sequ ential basis but st i l l at com fortable level. UCOBanksoperat ing as we
as f inancia ls metr ics has been improving c ont inuous ly. We value bank
Rs.84/share which is 0.5 t imes of one year forward book and 3.5 t ime
FY14Es earning.
NII growth of 33% YoY led by higher than industry loan growth and high CD
ratio
"BUY"27h Jan, 2014
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
22/26
UCO BANK
Please refer to the Disclaimers at the end of this Report.
oan and deposits reported higher growth than industry average
n balance sheet growth front, banksadvance grew by 16.5% YoY while deposits grew
y 13.4% YoY led by CASA growth of 23% YoY in absolute term. CASA in percentage of
tal deposits improved to 30.5% versus 19.2% in 3QFY13. Saving deposits and current
eposits increased by 13% and 38% YoY respectively. But in sequential basis, CASAeposits declined to 30.5% from 31.8% and 32.1% in 1QFY14. Credit deposits ratio for
uarter stood at 73.5% as against 71.6% in 3QFY14 and 71.4% in previous quarter. Total
usiness (Deposits +Advance) grew by 14.7% YoY to Rs.3.34 lakh Cr versus Rs.2.91
kh Cr.
arginal expansion of NIM on account of declined loan yield than cost of fund
M improved by 60 bps YoY to 3.06% from 2.42% largely due to lower cost of deposits
hich was lead by low cost franchise network. Cost of deposits stood at 6.27% versus
92% in 3QFY14. Yield on advance (EW calculation) declined from 10.5% to 10% which
as restricted limited NIM growth.
rofit tripled on account of healthy NII growth, lower CI ratio and stable asset
uality
CO Bank reported net profit growth of 207% YoY to Rs.315 cr as against our
xpectation of Rs.338 cr largely due to robust growth in NII, lower cost income ratio,
proving asset quality which led lower provisions and high credit deposits ratio.
aluation & View
CO bank reported net profit growth of 207% YoY largely due to robust growth in NII
ong with higher than industry average loan growth. Banks asset quality improved
quentially despite of challenging macro environment. However banks CASA growth
as declined marginally in sequential basis but still at comfortable level. UCO Banksperating as well as financials metrics has been improving continuously. We value bank
Rs.84/share which is 0.5 times of one year forward book and 3.5 times FY14Es
arning.
Narnolia Securities Ltd,
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
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8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
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UCO BANK
Source: Eastwind/Company
Please refer to the Disclaimers at the end of this Report.
uarterly Performance
Narnolia Securities Ltd,
arterly Result 3QFY14 2QFY14 3QFY13 % YoY % QoQ
erest/discount on advances / bills 3543 3396 3197 10.8 4.3
ome on investments 1138 1026 923 23.3 11.0
erest on balances with Reserve Bank of India 29 8 30 -2.7 243.2
hers 19 14 21 -13.7 31.7
tal Interest Income 4729 4444 4171 13.4 6.4
hers Income 190 209 190 0.4 -9.0
tal Income 4919 4653 4361 12.8 5.7
erest Expended 3163 2875 2994 5.6 10.0
1566 1569 1177 33.0 -0.2
her Income 190 209 190 0.4 -9.0
tal Income 1756 1779 1367 28.5 -1.3
mployee 395 382 351 12.7 3.3
her Expenses 225 230 186 20.9 -2.4
erating Expenses 620 612 536 15.5 1.2
P( Rs Cr) 1137 1166 831 36.8 -2.5
ovisions 812 759 728 11.5 7.0
T 325 408 103 215.1 -20.3
x 10 7 1 1536.5 40.7
t Profit 315 400 102 206.9 -21.4
lance Sheet
t Worth 11085 10770 9399 17.9 2.9
posits 192406 188779 169711 13.4 1.9
tal Liabilities 203491 212416 179110 13.6 -4.2
vances 141457 135233 121455 16.5 4.6
tal Assets 141457 212416 121455 16.5 -33.4
set Quality
NPA 7,353 7,376 6,711 9.6 -0.3
A 4217 4228 3927 7.4 -0.3
GNPA 5.2 5.5 5.5
NPA 3.0 3.1 3.2
PCR(Without technical writeoff) 46.4 46.6 41.5
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
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UCO BANK
Source: Company/Eastwind
Please refer to the Disclaimers at the end of this Report.
Narnolia Securities Ltd,
ncome Statement 2011 2012 2013 2014E 2015E
terest Income 11371 14632 16752 18346 22476
terest Expense 7526 10730 12170 12160 16186
I 3845 3902 4582 6186 6289
hange (%) 65.4 1.5 17.4 35.0 1.7on Interest Income 925 966 952 1149 1149
otal Income 4770 4868 5534 7335 7438
hange (%) 45.0 2.0 13.7 32.5 1.4
perating Expenses 2075 2056 2177 2485 2306
re Provision Profits 2695 2811 3357 4850 5132
hange (%) 58.0 4.3 19.4 44.5 5.8
rovisions 1788 1661 2710 3217 2798
BT 907 1150 647 1634 2334
AT 907 1109 618 1585 2101
hange (%) -10.4 22.3 -44.2 156.4 32.5
alance Sheet
eposits( Rs Cr) 99071 115540 128283 153939 184727
hange (%) 17 11 20 20
f which CASA Dep 32031 34403 55733 67707 81249
hange (%) 6 7 62 21 20
orrowings( Rs Cr) 5475 12901 9492 12315 14777
vestments( Rs Cr) 42927 45771 52245 62692 75231
oans( Rs Cr) 99071 115540 128283 153939 184727
hange (%) 20 17 11 20 20
atio
vg. Yield on loans 8.6 9.9 10.0 9.0 9.0
vg. Yield on Investments 6.6 7.1 7.1 6.8 7.5
vg. Cost of Deposit 4.7 6.5 6.6 7.0 6.4
vg. Cost of Borrowimgs 12.5 6.1 7.0 6.0 6.0
aluation
ook Value 135 137 146 173 185
MP 107 79 50.1 75.25 75.25
/BV 0.8 0.6 0.3 0.4 0.4
8/13/2019 Investment Funds Advisory Today- Buy Stock of Escorts Ltd and Neutral View on Hindustan Unilever
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Narnolia Securities Ltd
402, 4th floor 7/ 1, Lord s Sinha Road Kolkata 700071, Ph
033-32011233 Toll Free no : 1-800-345-4000
email: [email protected],website : www.narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing East wind & information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to changewithout notice. The recipients of this report should rely on their own investigations,
should use their own judgment for taking any investment decisions keeping in mind that
past performance is not necessarily a guide to future performance & that the the value of
any investment or income are subject to market and other risks. Further it will be safe to
assume that NSL and /or its Group or associate Companies, their Directors, affiliates
and/or employees may have interests/ positions, financial or otherwise, individually or
otherwise in the recommended/mentioned securities/mutual funds/ model funds and
other investment products which may be added or disposed including & other mentioned
in this report/message.