Investment Funds Advisory Today- Buy Stock of ACC Ltd, INGVYSYA BANK and neutral view on Bajaj Corp, PNB, Ambuja Cements Ltd

8/13/2019 Investment Funds Advisory Today- Buy Stock of ACC Ltd, INGVYSYA BANK and neutral view on Bajaj Corp, PNB, A…

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ACC Ltd: "BUY" 10th Feb 2014

ACC's EBIDTA declined by 16% to Rs 1848 crore, While y-o-y sales turnover of ACC declined a mere 2% to Rs 10,908.41 crore, as the sale

relaisations remained low and Cost remained stable. Cement sales volumes remained flat for ACC .At current price of Rs 1046, stock is trading

2.6x P/B and 2.8x P/B on CY14 estimates. The valuation looks good from current level, hence we recommend Buy on the stock at CMP Rs.104

for a target price Rs.1257. ..................................................... ( Page : 2-4)

Ambuja Cements Ltd: "Neutral" 10th Feb 2014

For the full year,net profit declined 1% to Rs 1278 crore as against Rs 1293 crore during CY12. Sales declined 6% to Rs 9192 crore as against R

9795 crore in CY12.Flat realisations (Rs 4,177/t,3.5% QoQ) and sluggish volumes spoiled the show(5.3mT, -1.9% YoY) . At current price of Rs 163

stock is trading at 3x P/B on CY14 estimates. We are Neutral on the stock at CMP Rs.163 for a target price Rs.16

........................................................... ( Page : 5-7)

PNB : "Neutral" 10th Feb 2014

Bank’s profit was declined by 42% YoY largely due to higher provisions despite of reporting stable gross NPA. Bank’s operating profit grew b

0.8% indicating stress in its balance sheet. Loan grew by 9.7% lower than industry average whereas deposits de-grew by 20% YoY led 33

declined in wholesale deposits. Asset quality was stable sequentially but most of operating as well as financials parameters are struggling. W

lower our price target to Rs.600 from earlier of 770. We have neutral view on the stock. .................................................................. ( Page : 8

12

Bajaj Corp : "Waiting for Demand Revival" "Neutral" 10th Feb 2014

After witnessing healthy growth in previous 13 quarters, Bajaj Corp disappoints the street with lumpy set of numbers and ramping down i

margin picture, largely impacted by weak consumer discretionary demand. Sales grew by 6.9%(YoY) led by 11% volume growth.Considerin

recent poor demand discretionary environment because of inflationary pressure, we are cautious on the stoc

.................................................................................. ( Page : 13-15)

INGVYSYA BANK : "BUY" 10th Feb 2014

INGVYSYA Bank reported muted growth in profit (3% YoY) largely due to moderate performance all around. Bank’s business grew by sluggis

rate with loan and deposits grew by 8% and 3% YoY respectively. Restructure account as a percentage to total asset increased sequentially t

1.6% from 1.2%. However bank’s CAR and PCR were high at 16.93% and 87.5%, provide strong buffer to the bank in a volatile climate. We valu

bank at Rs.682/share which 1.8 times of FY14E book. ............................................ ( Page : 16-20)

10th Feb, 201

Edition : 202

IEA-Equity

Strategy

Zydus Wellness : "sweeten with sugar free" "BUY" 7th Feb 2014

Inline set of numbers with stable margin;For 3QFY14, Zydus wellness delivered inline set of numbers than street expectation, Because of weaconsumer discretionary demand Sales marginally grew by 2%(YoY). PAT grew by 6% on YoY basis.We retain “Buy” on the stock. Howeve

considering weak consumer descretionery demand we reduced our target price from Rs725 to Rs 610. At a CMP of Rs 504, stock trades at 5

FY15E P/BV. ..................................................... ( Page : 21-23)

LUPIN : Strong Results "BUY" 6th Feb 2014

Lupin posted its 3QFY14 results with net sales at Rs 2983 Cr up 20.8% YoY led by strong sales growth in American as well as Indian markets. The

US formulation business sales including (IP Sales) grew by 31 % YoY to Rs 1356 Cr and it constitutes 45 % of the total sale

........................................................... ( Page :24-25)

Narnolia Securities Ltd,

India Equity Analytics aily Fundamental Report on Indian Equities



ACC Ltd.

1046

1257

112220%

12%

500410

19634

9817

6063

1M 1yr YTD Poor Operational Performance :

solute -3.5 -22.3 -21.0

l. to Nifty -1.9 -24.4 -22.8

Cureent 3QCY13 2QCY13

omoters 50.3 50.3 50.3

20.0 20.9 19.5

12.9 11.9 11.7

hers 16.8 16.9 18.6

Management Quotes :

Financials : Q4CY13 Y-o-Y % Q-o-Q % Q4CY12 Q3CY1

Net Revenue 2792 -12.2 8.6 3180 257

EBITDA 361 -9.3 26.2 398 28Depriciation 153 -3.2 6.3 158 14

Interest Cost 12 -55.6 9.1 27 1

Tax -36 -190.0 -170.6 40 5

PAT 278 16.3 129.8 239 12(In Cr

According to Management the economic environment in the country was sluggish, thu

impacting the demand for cement and concrete. As a result, the company's cemen

volumes remained almost flat. The company appears not enthusiastic for demand growt

going forward. Based on current demand indications, we do not foresee any significan

improvement in the cement.

Source - Comapany/EastWind Research

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

At the operating level, poor volumes down by 1.5% from the year-ago period and wea

realizations pulled down revenue during the quarter. Net consolidated sales fell by 13%

to Rs.2,693.1 crore. Profitability was further hit as costs during the quarter, mainly o

freight and power, rose compared with the year-ago period and the September quarte

as well.

are Holding Pattern-%

During the CY13 Acc suffered through sluggish demand and at the same time wit

increasing cost. Company unable to pass on the cost to the consumer due to lower sale

volume. Sales Volume come to 23.93 Mmt form 24.11 Mmt(down by ~1%). Rising Inpu

Cost mainly due to Raw Material and Freight Cost.Raw material cost increased 5% t

Rs.778/ton from Rs.740/ton and freight cost increased ~5% Rs.961/ton from Rs.920/ton

Other expenses increased ~9% to Rs.975/ton from Rs.894/ton.yr Forward P/B

wk Range H/L 1355/912 Lower Cement Volume Impacted the Bottomline Growth

kt Capital (Rs Crores) What is more worrying for the company is that it sold less cement in 2013 than what

did in 2012. This comes as a major jolt for the cement giant which saw its cement sale

volume dropping to 23.93 million tonne compared with 24.11 million tonne. It not onl

impacted its bottom-line growth but also hit its revenues.

erage Daily Volume (Nos.)

fty

ock Performance-%

arket Data ACC's EBIDTA declined by 16% to Rs 1848 crore, While y-o-y sales turnover of AC

declined a mere 2% to Rs 10,908.41 crore, as the sales relaisations remained low an

Cost remained stable. Cement sales volumes remained flat for ACC .

E Code

E Symbol ACC

esult Update BUY ACC's sales turnover slipped to Rs 11169 crore in 2013 against Rs 11358 crore in th

previous year. At first glance, consolidated net profit growth of 9% from the year-ag

period looked impressive, given the dull market. But a closer look shows that net prof

for the quarter included a tax write-back. PAT was Rs.1094Cr. As this pat is incomparablwith previous year pat due to additional depreciation charge as extra-ordinary item i

previous year, we adjusted the pat and it reported Rs.1081Cr for Cy13 Down by -19%

from Rs 1339Cr in CY12.

MP

rget Price

evious Target Priceside

ange from Previous

"BUY"10th Feb' 14




utlook

aluation And Recommendation

ompany Description :

CY11 CY12 CY13 CY14E

10237 11358 11169 13027

191 263 219 219

10428 11621 11389 19723

2199 2384 2384 0

1940 2219 2299 0

8316 9162 9540 10942

1921 2197 1848 2084

510 569 584 639

97 115 52 50215 391 132 323

1276 1050 1094 1292

17.7 18.8 13.8 15.3

3

AT

OE% Source - Comapany/EastWind Research

epriciation

terest Costx

wer and fuel

eight and forwarding

penditure

ITDA

L PERFORMANCE

et Revenue from Operation

her Income

tal Income

CC Limited (ACC) is engaged in manufacture of cement & ready mixed concrete. The

ompany has grinding plants in Karnataka and clinkering line in Maharashtra. The

ompany’s subsidiaries include ACC Mineral Resources Limited, Lucky Minmat Limited,

lk Cement Corporation (India) Limited, National Limestone Company Private Limited

d Encore Cement and Additives Private Limited. The Company is subsidiary of Ambujament India Private Limited.

ACC Ltd.

Cement Sales Volume

ompany has made several capacity expansion plans in the region. ACC is replacing the

isting facilities at Jamul, Chhattisgarh with a clinker plant with an annual production

pacity of 2.8 MT and local grinding capacity of 1.1 MT of cement, while a new plant

th annual capacity of 2.7 MT is scheduled to be built in Kharagpur. The capacitypansion plant will increase the company's total cement production capacity to 35 MT

om the existing 30 MT.On a QoQ basis, the EBITDA/tonne improved 10.4% due to an

provement in realisations & comparatively lower increase in total expenditure/tonne,

shows a positive view for the further quarters.onsidering the expansion plans we

pect 4% growth in sales volume and 10% growth in realization for CY14.

Cement Realization

ment prices witnessed an increase during Oct-Nov,13 but also witnessed a sharp fall

ring Dec,13 which has contributed towards lower average realizations for the year for

e company. Further, with a strong balance sheet with zero debt and better dividend

eld of 3%, we continue to remain positive despite near term challenges. We revise our

timates downwards to factor in lower demand growth scenario. At current price of Rs

46, stock is trading at 2.6x P/B and 2.8x P/B on CY14 estimates. The valuation looks

od from current level, hence we recommend Buy on the stock at CMP Rs.1046 for a

rget price Rs.1257.

Cement Realization




CY10 CY11 CY12 CY13

188 188 188 188

6093 6791 7184 7625

6281 6979 7372 7813

510 506 85 014 0 0 0

188 126 157 89

1581 816 661 642

1466 1051 1227 1081

11041 11921 11928 12101

77 48 39 40

5230 6359 5893 6040

1564 370 314 322

283 461 566 880

926 1113 1134 1122

249 266 303 397

1086 1660 681 506

162 279 325 340

11041 11921 11928 12101

CY10 CY11 CY12 CY13

3.2 3.1 3.6 2.7

57.4 68.7 73.8 57.6

3.0 2.6 2.7 3.6

19.1 8.0 5.8 5.7

1.1 1.1 1.0 1.0

19632 20180 26240 20296

18.7 16.5 19.4 19.2

12.7 10.5 11.9 12.52.8 2.5 2.1 2.7

14.6 15.2 16.3 12.3

0.1 0.1 0.0 0.0

1.0 1.3 1.4 1.4

1823 1506 2027 2027

(785) (258) (308) (308)

(641) (768) (1066) (1066)

ading At :

4


sh from Operation

sh From Investment

sh from Finance

OCE%

ebt/Equity

rrent Ratio

E

V/EBIDTAvidend Yield%

editors to Turnover%

ventories to Turnover%

V

ATIOS

B

S

ebtor to Turnover%

ventories

ade receivables

sh and bank balances

ort-term loans and advances

tal Assets

tal liabilities

tangibles

ngible assets

pital work-in-progress

ng-term loans and advances

ng-term borrowingsort-term borrowings

ng-term provisions

ade payables

ort-term provisions

ACC Ltd.

S PERFORMANCE

are capital

serve & Surplus

tal equity




163

165

NA1%

NA

500425

25166

12583

6063

1M 1yr YTD

solute -7.1 -18.6 -19.2 Decline in EBITDA margin

l. to Nifty -5.4 -20.7 -21.0

Cureent 3QCY13 2QCY13

omoters 50.5 50.5 50.6

30.5 30.1 28.7

9.4 9.6 10.2

hers 9.6 9.8 10.5

Key issues to watch out for

1 Volume growth recovery and outlook

2

3

Progress in ongoing mining land acquisition and capex in Nagaur plant of 4.5mt

Financials : Q4CY13 Y-o-Y % Q-o-Q % Q4CY12 Q3CY1

Net Revenue 2209 -5.4 9.5 2335 201

EBITDA 307 -31.8 14.6 450 26Depriciation 123 -33.9 -1.6 186 12

Interest Cost 17 -29.2 -5.6 24 1

Tax -61 -152.6 -192.4 116 6

PAT 317 49.5 91.0 212 16(In Cr

Challenging Outlook

Management views the company was able to keep its production cost flat year-on-yea

and would continue to work on improving operational efficiencies, cost optimization an

continued focus on customer and commercial excellence. Board has recommended a fina

dividend of Rs 2.20 per share and together with the Rs 1.40 per share of interim dividend

the total dividend for the year is Rs 3.60 per share.

yr Forward P/B

Cement pricing outlook and sustainability, considering recent downtrend in Novembe

and December



The company is undertaking expansion at Rabriyawas (Rajasthan 0.8 mTPA) and Sankra(WB, 0.8 mTPA) to be completed by CY14 and CY15 respectively.ock Performance-%

Key concerns for EBITDA margins to decline in CY13 are Lower realizations, Cost push an

no seasonal benefits from operating leverage, Weak rupee push fuel costs higher a

rupee depreciation likely to outweigh lower coal prices (more than 35 percent of tota

requirement comes by import), Higher freight costs and impact of diesel price hike Inche

up power fuel and Freight cost.


212/148

kt Capital (Rs Crores)

erage Daily Volume (Nos.)

fty

ange from Previous Flat realisations (Rs 4,177/t,3.5% QoQ) and sluggish volumes spoiled the show(5.3mT,

1.9% YoY) .

arket Data During the CY13 Ambuja Cement suffered through sluggish demand and at the same tim

with increasing cost. Company unable to pass on the cost to the consumer due to lowe

sales volume. Sales Volume come to 21.6 Mmt form 21.99 Mmt(down by ~2%). Risin

Input Cost mainly due to Raw Material and Freight Cost.Raw material cost increased 63%

to Rs.358/ton from Rs.219/ton and freight cost increased ~5% Rs.1097/ton from

Rs.1046/ton. Other expenses increased 8% to Rs.847/ton from Rs.742/ton.

E Code

E Symbol AMBUJACEM

wk Range H/L

Ambuja Cements Ltd.

esult Update Neutral Net profit of Ambuja Cements decline 49% to Rs 317 crore in Q4CY13 as against Rs 21

crore during Q4CY12. Sales declined 5% to Rs 2191 crore Q4CY13 as against Rs 231

crore during Q4CY12. For the full year,net profit declined 1% to Rs 1278 crore as again

Rs 1293 crore during CY12. Sales declined 6% to Rs 9192 crore as against Rs 9795 crore iCY12.

MP

rget Price

evious Target Priceside

"Neutral"10th Feb' 14




R Ton Analysis 4QCY13 4QCY12 YOY% 3QCY13 QOQ%

5 5 -2 5 8

4177 4332 -4 4126 1

406 266 53 415 -2

946 1015 -7 934 11093 1079 1 1073 2

226 254 -11 266 -15

924 884 5 890 4

aluation and Recommendation

ompany Description :

ading At :

CY10 CY11 CY12 CY13

7390 8571 9795 9192

248 248 349 391

7638 8819 10144 9583

1697 2003 2334 2066

352 1939 2300 2370

5568 6594 7322 7549

1822 1977 2473 1643

387 446 569 494

49 53 78 67398 474 604 220

1262 1228 1293 1278

16.9 15.5 17.9 13.2

6

AT

OE% Source - Comapany/EastWind Research

epriciation

terest Costx

wer and fuel

eight and forwarding

penditure

ITDA

L PERFORMANCE

et Revenue from Operation

her Income Source - Comapany/EastWind Research

tal Income

mbuja Cements Ltd. (ACL) is a cement manufacturing company in India. The Company

s five integrated cement manufacturing plants and eight cement grinding units. The

ompany is engaged in manufacturing of Portland cement. The Company manufactures

rtland Pozollana cement and ordinary Portland cement. The Company operates in

mentitious Materials segment . Source - Comapany/EastWind Research

mployee(Rs/T)

hers(Rs/T)

dia average cement price is still down 0.5 percent Y-o-Y, making Q3CY13 the third

nsecutive quarter of Y-o-Y decline. On a QoQ basis, the EBITDA/tonne improved 6%

e to an improvement in realisations & comparatively lower increase in total

penditure/tonne. The outlook continues to remain challenging due to difficult macro-

onomic condition and resultant subdued cement demand. At current price of Rs 163,

ock is trading at 3x P/B on CY14 estimates. We are Neutral on the stock at CMP

.163 for a target price Rs.165.


Ambu a Cements Ltd.

olumes mT

alization(Rs/T)

&M Cost(Rs/T)

&F Cost(Rs/T)eight Cost(Rs/T)




CY10 CY11 CY12 CY13

306 307 308 309

7021 7758 8489 9153

7327 8065 8797 9462

65 51 39 330 8 10 1

17 19 22 26

1109 961 949 980

1079 1173 1421 1076

10320 11577 12457 12957

16 42 47 6798

5616 6223 5904 0

931 488 524 0

299 504 641 307

902 928 987 936

128 248 221 235

1648 2073 2260 2345

142 238 251 271

10320 11577 12457 12957

CY10 CY11 CY12 CY13

3.0 3.0 3.5 3.0

8.1 8.2 10.2 8.1

1.7 2.9 2.3 2.6

15.0 11.2 9.7 10.7

1.2 1.1 1.0 1.0

20301 21829 28780 25865

17.7 19.0 19.7 22.5

11.1 11.0 11.6 15.71.8 2.1 1.8 2.0

15.6 14.2 16.7 12.4

0.0 0.0 0.0 0.0

1.4 1.5 1.7 1.9

1896 1554 1900 0

(527) (445) (388) 0

(474) (473) (509) 0

7


sh from Operation

sh From Investment

sh from Finance

OCE%

ebt/Equity

rrent Ratio Source - Comapany/EastWind Research

E

V/EBIDTAvidend Yield%

editors to Turnover%

ventories to Turnover%

V

ATIOS

B

S

ebtor to Turnover%

ventories

ade receivables

sh and bank balances

ort-term loans and advances

tal Assets

tal liabilities

tangibles

ngible assets

pital work-in-progress

ng-term loans and advances

ng-term borrowingsort-term borrowings

ng-term provisions

ade payables

ort-term provisions

Ambu a Cements Ltd.

S PERFORMANCE

are capital

serve & Surplus

tal equity




556

600770

8

-22.1

1M 1yr YTD

bsolute -8.9 -36.8 -36.8

el.to Nifty -7.1 -38.6 -38.6

Current 4QFY13 3QFY1

omoters 58.9 57.9 57.9

I 17.5 17.9 18.0

I 18.5 18.4 19.1hers 5.1 5.9 5.1

Financials Rs, Cr

2011 2012 2013 2014E 2015E

NII 11807 13414 14857 16536 17691

Total Income 15420 17617 19072 20775 21930

PPP 9056 10614 10907 11155 12500

Net Profit 4433 4884 4748 3408 5209

EPS 140.6 144.0 134.3 94.1 143.9

esult update NEUTRAL

MP

PNB

Higher operating cost led 0.8% YoY growth in operating profit

Bank’s prof i t was decl ined by 42% YoY largely due to h igher provis ion

desp ite of report ing stable gross NPA. Bank’s op erating pr ofi t grew by 0.8

ind icati ng stres s in its balan ce sheet. Lo an grew by 9.7% low er than ind us t

averag e wh ereas depos its de-grew by 20% YoY led 33% dec lin ed in wh oles a

depos its. Asset quality was stable sequential ly but mo st of operat ing as we

as financials p arameters are strug gling . We lower our pr ice target to Rs.6

f rom ear l ier of 770. We have neutral view o n the stoc k.

Sluggish growth registered in NII due to muted loan growth

During quarter bank’s NII grew by 13.1% YoY to Rs.4221 cr versus our expectati

of Rs.4201 cr. Despite of muted loan and deposits growth along with lower cre

deposits ratio, bank NII grew on account of higher interest income than intere

expenses. During quarter, bank’s wholesale deposits de-grew by 33% YoY whi

was partly upset by foreign currency borrowing and CASA deposits which escalatedown overall interest expenses. Other income was Rs.938 Cr versus Rs.971 cr

last quarter and Rs.899 Cr in previous quarter helped total revenue growth to 9.7

YoY.

arket Data

pside

890/402

SE Code 532461

arget Priceevious Target Price

Operating expenses increased by 21.5% YoY in which employee cost and oth

operating expenses increased by 25% and 14% YoY respectively. Cost to incom

ratio increased to 47.6% from 43% in last quarter. Operating leverage for the quart

stood at 0.47% versus 0.43% in last quarter. Due to higher operating cost an

sluggish revenue growth, operating profit increased mere by 0.8% YoY.

verage Daily Volume

19646

SE Symbol PNB

kt Capital (Rs Cr)


(Source: Company/Eastwind)

ock Performance

2wk Range H/L

Stable asset quality and lower slippage surprise us positively

On asset quality front, bank reported stability as GNPA increased by 0.4% QoQ

absolute term whereas in percentage to gross advance, it stood at 5.09% (5.27%

2QFY14). Fresh slippages were surprised us positively and was 1.4% (annualize

versus 3% in previous quarter. Provisions were increased by 8.6% QoQ taking n

NPA declined to 5.5% on sequential basis. In percentage to net advances,

improved to 2.79% from 3.06% in 2QFY14. With the support from higher provisio

despite of stable gross NPA, provision coverage ratio increased to 45.3% from 42

in previous quarter.

hange from Previous

NB Vs Nifty

hare Holding Pattern-%

7.4 cr

fty 6063

"NEUTRAL"10h Feb2014




PNB


rofit declined due to lower NII growth, higher operating expenses and provisions

NB delivered muted set of numbers with net profit declined by 42% YoY largely due to

gher provisions and contingencies which was up by almost 100% YoY. With the higher

ovisions, we could not anticipate bank’s deteriorating asset quality. Sequentially bank

ported improvement in asset quality and in fresh slippage front it surprises us positively.

aluation & Viewank’s profit was declined by 42% YoY largely due to higher provisions despite of

porting stable gross NPA. Bank’s operating profit grew by 0.8% indicating stress in its

alance sheet. Loan grew by 9.7% lower than industry average whereas deposits de-

ew by 20% YoY led 33% declined in wholesale deposits. Asset quality was stable

quentially but most of operating as well as financials parameters are struggling. We

wer our price target to Rs.600 from earlier of 770. We have neutral view on the stock.

eposits de-grew by 20% YoY led by 33% YoY de-growth in wholesale deposits

eposits of the bank was declined by 20% due to 33% negative growth in term deposits.

urrent deposits and saving deposits grew by 7% and 14% YoY respectively taking

verall CASA ratio to 38.3% from 27% in last quarter. Loan grew by 9.7% YoY in whichSME and retail advances registered growth of 21.6% and 17.5% YoY respectively.

orporate loan grew by 7.3% YoY whereas retail advances, housing and car/vehicle

ans grew at a healthy pace of 16.7% and 16.3% yoy, respectively. Overseas loan grew

y 15.9% YoY and it constitute 10% bank’s total loan book. Management guided loan

owth would be 14-15% in FY14.

argin expansion sequentially

et interest margin of bank expand by 10 bps QoQ due to lower cost of fund than yield

n loan. Cost of fund declined by 25 bps due to higher share of CASA franchise. Yield on

an remained at 10.1% whereas yield on investment declined to 7.3% from 7.7%

quentially. Management guided NIM for FY14 would be 3.25% to 3.5%. This could be

ossible because of low cost franchise network.




PNB


hart Focus

Sluggish growth registered in NII due tomuted loan growth

Higher operating cost led 0.8% YoY growth

operating profit

Profit declined due to lower NII growth,

higher operating expenses and provisions




PNB

Source : Eastwind/ Company



arterly Result 3QFY14 2QFY13 3QFY13 % YoY Gr % QoQ Gr 3QFY14E Variation(

erest/discount on advances / bills 8246 8023 7891 4.5 2.8 8361 -1.4

ome on investments 2599 2568 2518 3.2 1.2 2649 -1.9

erest on balances with Reserve Bank of India 95 101 113 -16.0 -5.9 90 5.8

hers 44 41 27 62.5 5.5 27 63.9

al Interest Income 10984 10734 10548 4.1 2.3 11127 -1.3

hers Income 938 899 971 -3.3 4.3 1121 -16.3

al Income 10045 9834 11519 -12.8 2.1 10006 0.4

erest on deposits 6315 6335 6407 -1.4 -0.3

erest on RBI/Inter bank borrowings 178 116 112 58.9 53.4

hers 270 267 296 -8.8 1.1

erest Expended 6763 6718 6815 -0.8 0.7 6926 -2.4

4221 4016 3733 13.1 5.1 4201 0.5

her Income 938 899 971 -3.3 4.3 1121 -16.3

al Income 5160 4915 4704 9.7 5.0 5322 -3.0

ployee 1758 1659 1407 24.9 6.0 1714 2.6

her Expenses 699 721 614 13.8 -3.1 734 -4.8

erating Expenses 2457 2380 2022 21.5 3.2 2448 0.4

P( Rs Cr) 2702 2535 2682 0.8 6.6 2874 -6.0

visions 1590 1899 802 98.4 -16.3 2007 -20.8

T 1112 636 1880 -40.8 74.9 867 28.3

357 131 575 -37.9 173.3 260 37.2

t Profit 755 505 1306 -42.1 49.4 607 24.5

ance Sheet Date

uity Capital 362 353 362 353 2.4

erve & Surplus 34972 34152 34972 34759 0.6

posits 420647 405699 420647 426195 -1.3

rowings 49163 40888 49163 42711 15.1

estment 143368 134125 143368 141287 1.5

vance 326133 313852 326133 334443 -2.5

et Quality

PA 16595 16526 13990

A 9084 9609 7586

PA(%) 5.09 5.27 4.60

A(%) 2.79 3.06 2.60R(%) Without technical write off 45.3 41.9 45.8



PNB

nancial & Assuption




ncome Statement 2011 2012 2013 2014E 2015E

terest Income 26986 36476 41893 43513 49565

terest Expense 15179 23062 27037 26977 31875

II 11807 13414 14857 16536 17691

hange (%) 39.3 13.6 10.8 11.3 7.0

on Interest Income 3613 4203 4216 4240 4240

otal Income 15420 17617 19072 20775 21930

hange (%) 27.6 14.2 8.3 8.9 5.6

perating Expenses 6364 7003 8165 9621 9430

re Provision Profits 9056 10614 10907 11155 12500

hange (%) 23.6 17.2 2.8 2.3 12.1

rovisions 4622 3577 4386 6253 5059

BT 4433 7037 6522 4902 7442

AT 4433 4884 4748 3408 5209

hange (%) 13.5 10.2 -2.8 -28.2 52.8

alance Sheet

eposits( Rs Cr) 312899 379588 391560 450294 517838

hange (%) 25 21 3 15 15

f which CASA Dep 120325 134129 153344 139752 153766

hange (%) 18 11 14 -9 10

orrowings( Rs Cr) 31590 37264 39621 47857 44728

vestments( Rs Cr) 95162 122703 129896 143572 149094

oans( Rs Cr) 242107 293775 308725 339598 356578

hange (%) 30 21 5 10 5

atio

vg. Yield on loans 8.7 9.7 10.3 9.6 10.5

vg. Yield on Investments 6.0 6.4 7.4 7.2 7.8

vg. Cost of Deposit 4.4 5.6 6.5 6.4 6.6

vg. Cost of Borrowimgs 4.4 4.5 3.9 4.0 4.1

aluation

ook Value 682 820 924 1000 1107

MP 1220 926 759 543 543/BV 1.8 1.1 0.8 0.5 0.5



Bajaj Corp

1M 1yr YTD

solute -4.1 -10.9 -22.9

l. to Nifty -2 -12.6 -22.2


omoters 75 75 75

12.87 13.28 12.08

2.08 2.29 2.5

hers 10.05 9.43 10.42

Financials Rs, Cr

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

Revenue 158.2 158.25 0.0% 148.06 6.8%

EBITDA 42.8 42.9 -0.2% 43.2 -0.9%

PAT 38.38 40.03 -4.1% 42.4 -9.5%

EBITDA Margin 27.1% 27.1% - 29.2% (210bp

PAT Margin 24.3% 25.3% (100bps) 28.6% (430bp

Softness in RM cost: During the quarter average price of LLP decreased to Rs 75.85/

from Rs 78.63/Kg in corresponding quarter of previous year. Prices of Refined

decreased from Rs 79.71/Kg in Q3FY13 to Rs 76.16/Kg in Q3FY14.

yr Forward P/B No marks on No Marks Brand: First time, new acquired (from Ozone Ayurvedics) a

acne No Marks brand added Rs 6cr revenue during the quarter with 54% marg

However, this revenue was reported for only 1.5months without any effort of promoti

activities. Management expects to see better numbers in near future and also envisag

for promotional activities through Advertisement and expansion of channel

distributions.

View and Valuation: Company is well placed in the fast growing light hair oil segme

led by steady volume growth, better pricing strategy and sustained market leadersh

position. Considering recent poor demand discretionary environment because

inflationary pressure, we are cautious on the stock. Hence, we downgrade our vie

from“ Buy” to "Neutral" on the stock. At a CMP of Rs 208, stock trades at P/BV of 4FY15E.

(Source: Company/Eastwin


ock Performance Mix performance across segments: Its flagship brand Bajaj Almond Drops Hair

(contributes 94% of sales) marginally grew by 3.5%. During the quarter, its market sha

expanded to 60% and this brand has created a unique positioning for itself throu

initiatives like product differentiation (Almond based), focused marketing, uniq

packaging.

are Holding Pattern-% Strong distribution network: The Company reaches consumers through 2.62mn ret

outlets serviced by 6889 distributors and 15,122 wholesalers. It is panning out acro

1.6mn retail outlet in rural area and 1.04mn retail outlet s in urban area. Howeve

management is confident to see healthy distribution reach.

wk Range H/L 287/198 Margin declined: Despite softening in LLP prices and lower exposure of Ad spend duri

the quarter, EBITDA margin declined by 210bps(YoY) to 27% and PAT margin drastica

down by 430bps(YoY) to 24.2%. However, company has been efficient to maintain

EBITDA margin above the mark of 27% and PAT margin at 24%. Still, sitting on attract

margin pictures than its nearest peers.

kt Capital (Rs Crores) 3071

erage Daily Volume 37072

fty 6063

arket Data The strong earnings visibility and robust cash generation ability of the company ma

Bajaj Corp one of the better picks in the FMCG .The management expects to increa

Almond Drops Hair Oil volume mkt- share to 65% v/s 55% by FY16E.

E Code 533229

E Symbol BAJAJCORP

-

side -

ange from Previous -

" Waiting for Demand Revival"

esults update Neutral Bajaj Corp reported below numbers than street:

MP 208 After witnessing healthy growth in previous 13 quarters, Bajaj Corp disappoints t

street with lumpy set of numbers and ramping down in margin picture, large

impacted by weak consumer discretionary demand. Sales grew by 6.9%(YoY) led

11% volume growth consolidated with 11.9%(YoY) rural growth and 11.7%(YoY) urb

growth in value term. PAT was seen on reverse mood and they reported 9.5% decli

on YoY basis.

rget Price

evious Target Price

"NEUTRAL"10th Feb' 14




xpenses on Sales



argin-%

Still company has been efficient to maint

its EBITDA and PAT margin over 23% mark


ales Mix-Brands

The management expects to increase Almo

Drops Hair Oil volume mkt- share to 65%

55% by FY16E.


Ba a Cor

les and Sales Growth(%)

sales grew by 7%(YoY) led by 11% ove

volume growth



nds 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY14 1QFY14 2QFY14 3QFY142

aj Almond Drop s Hai r Oi l 93.6% 94. 5% 94.1% 93.8% 96. 0% 97.0% 94.7% 95.0% 96.2% 94.0%

aj Kai lash Parbat Thanda Te l 3.1% 2.1% 2.8% 3.9% 1.1% 0.1% 3.5% 2.5% 2.0% 0.2%

aj Brahmi Amla Hair Oil 2.1% 2.3% 2.0% 1.5% 2.1% 2.0% 1.2% 1.1% 1.2% 1.3%

aj Aml a Shikakai Hair Oil 0.4% 0.4% 0.4% 0.2% 0.3% 0.2% 0.1% 0.1% 0.1% 0.2%

ers+Nomarks 0.5% 0.5% 0.4% 0.3% 0.5% 0.4% 0.5% 0.3% 0.3% 4.3%



(Source: Company/Eastwi


) NOMARKS is majorly sold through chemist shops. The mgmt said that NOMARKS will

e boost in sales once its sales is pushed in general stores also.

) Tax rate at 20% in near term.

) On the full year basis, the mgmt assigned Rs 28.6 crore as amortization cost related to

OMARKS brand. In next four years (FY14-17), total acquisition cost of Rs 140.9 crore will

amortized

nancials

Ba a Cor

y take-aways from Conference Call (attended on 7th Feb 2014)

)Management is not thinking of any price hike as the company still has inventory of low

st LLP. The mgmt expects LLP to come down with appreciation in Rupee and crude oil

cline (after improvement in Syria situation.

) The mgmt said that it is now more focused on volume growth, as there is no issue withargin.


s in Cr, FY10 FY11 FY12 FY13 FY14E FY15E

ales 294.6 358.7 473.3 606.7 692.6 792.5

M Cost 116.8 156.6 194.4 237.4 214.7 261.5urchases of stock-in-trade 0 0.0 34.4 24.4 58.9 67.4

WIP 0 0.0 -9.0 -2.8 -1.4 -1.6

mployee Cost 14 16.3 22.9 29.2 36.4 43.6

d Spend 37.3 40.5 64.7 71.2 51.9 71.3

ther expenses 29.4 37.3 49.3 74.2 145.4 150.6

otal expenses 197.3 250.6 356.8 433.7 505.9 592.8

BITDA 97.3 108.1 116.5 173.1 186.6 199.7

epreciation and Amortisation 0.8 1.8 2.6 3.3 3.8 5.3

ther Income 5.1 17.8 37.4 40.1 42.6 47.6

BIT 101.6 124.0 151.3 209.8 225.4 242.0

nterest 0.0 0.0 0.1 0.1 7.0 7.0

BT 101.6 124.0 151.2 209.8 218.4 235.0

ax Exp 17.6 21.0 31.1 42.2 42.6 47.0

AT 83.9 103.1 120.1 167.6 175.8 188.0

rowth-% (YoY)

ales 97.4% 21.8% 32.0% 28.2% 14.1% 14.4%

BITDA 82.5% 11.1% 7.8% 48.5% 7.8% 7.0%

AT 78.6% 22.8% 16.5% 39.6% 4.9% 6.9%

xpenses on Sales-%

M Cost 39.6% 43.7% 41.1% 39.1% 31.0% 33.0%

d Spend 12.7% 11.3% 13.7% 11.7% 7.5% 9.0%

mployee Cost 4.7% 4.5% 4.8% 4.8% 5.3% 5.5%

ther expenses 10.0% 10.4% 10.4% 12.2% 21.0% 19.0%

ax rate 17.4% 16.9% 20.6% 20.1% 19.5% 20.0%

Margin-%

BITDA 33.0% 30.1% 24.6% 28.5% 27.0% 25.2%

BIT 34.5% 34.6% 32.0% 34.6% 32.5% 30.5%

AT 28.5% 28.7% 25.4% 27.6% 25.4% 23.7%

aluation:

MP 132.0 100.1 115.7 275.0 208.0 208.0

o of Share 14.8 14.8 14.8 14.8 14.8 14.8

W 27.9 376.3 427.8 483.8 547.4 623.3

PS 5.7 7.0 8.1 11.4 11.9 12.7

VPS 1.9 25.5 29.0 32.8 37.1 42.3

oE-% 300.7% 27.4% 28.1% 34.6% 32.1% 30.2%

/BV 69.8 3.9 4.0 8.4 5.6 4.9

/E 23.2 14.3 14.2 24.2 17.5 16.3



538

682677

27

0.7

1M 1yr YTD

bsolute -8.8 -8.5 -8.5

el.to Nifty -7.0 -10.3 -10.3


omoters 43.2 43.4 43.6

I 28.8 28.9 28.6

I 14.4 13.6 14.8hers 13.6 14.1 13.1

Financials Rs, Cr

2011 2012 2013 2014E 2015E

NII 1007 1208 1539 1696 2058

Total Income 1661 1878 2266 2555 2916

PPP 635 768 993 1167 1283

Net Profit 319 456 613 701 739

EPS 26.3 30.4 39.6 37.1 39.2



Operating leverage (Operating cost to total assets) remained stable at 0.6% whi

indicated stable cost management. In absolute term, operating expenses increas

by 9% YoY in which employee cost and other operating cost increased by 12% a

5% YoY respectively. Cost to income ratio increased by 117 bps YoY to 56.5% fro

55.3%. Operating profit increased by 4% YoY to Rs.274 cr.


Improvement in asset quality

Sequentially bank reported improvement in asset quality with GNPA stood at 1.71

versus 1.75% in percentage to gross advances. In absolute term GNPA increas

by 2% QoQ while loan loss provision was remain same as in previous quarter. Th

had resulted of increased net NPA by 17% sequentially in absoluter term and as

percentage to net advance, it stood at 0.21% versus 0.19% in 2QFY1

Consequently provisions coverage ratio declined to 87.5% from 89.1% in previo

quarter. Bank’s outstanding restructure account increased in sequential basis

1.6% versus 1.2% to total advances.

GVYSYA Bank Vs Nifty

fty 6063

ock Performance

Operating expenses higher and operating leverage remain stable

2wk Range H/L 667/405

kt Capital (Rs Cr) 10164

verage Daily Volume 19.97lakhs

hange from Previous

arket Data NII growth of 3% YoY due to lower interest income

SE Code 531807 During quarter, bank reported NII growth of 3% YoY largely due to lower intere

income and higher cost of deposits. Term deposits have been continuously declini

from past three quarters whereas borrowing as a percentage of NDTL (net dema

time liability) increased sequentially to 18.1% from 14.1%. During quarter wholesa

deposits are offset by foreign currency borrowings. This had increased cost of fu

despite of CASA growth. Other income was Rs.215 Cr versus Rs.187 cr in la

quarter and Rs.185 cr in previous quarter. With the support from other income, to

revenue grew by 7% YoY to Rs.631 cr.

SE Symbol INGVYSYABK

INGVYSYA BANK

esult update BUY INGVYSYA Bank reported mu ted grow th in prof it (3% YoY) largely due

mo derate perform ance all around . Bank’s busines s grew by sluggis h rate wi

loan and depos its grew by 8% and 3% YoY respectively . Restruc ture accouas a percentage to total asset increased sequential ly to 1.6% from 1.2

However bank’s CAR and PCR were high at 16.93% and 87.5%, pro vid e stron

bu ffer to the bank in a vo latile clim ate. We value bank at Rs.682/sh are wh ic

1.8 t imes of boo k.

MP

arget Priceevious Target Price

pside

"BUY"10h Feb2014





M squeeze by 11 bps QoQ to 3.35% as compare to 3.45% in previous quarter largely

n account of restructure few account as the part of corporate debt restructure which

sulted interest reversal of Rs.25.7 cr. Adjusting for the interest reversal, NIM was higher

3.55% in the current quarter. Capital adequacy ratio of the bank stands at 16.93% in

hich tier 1 capital of 14.4%, according to basel-3 norms.

rofit lower on account of muted performance all around

gvysya Bank reported net profit growth of 3% YoY to Rs.167 cr versus our expectation

Rs.173 cr. Lower profit growth was largely due to muted growth at NII level led by

wer loan and deposits growth. Operating expenses were by and large stable and

provement in asset quality provided some cushion to profit. Tax rate was higher at

3.4% versus 31.7% in previous quarter and 32% in 3QFY13.

aluation & View

GVYSYA Bank reported muted growth in profit (3% YoY) largely due to moderate

erformance all around. Bank’s business grew by sluggish rate with loan and depositsew by 8% and 3% YoY respectively. Restructure account as a percentage to total asset

creased sequentially to 1.6% from 1.2%. However bank’s CAR and PCR were high at

6.93% and 87.5%, provide strong buffer to the bank in a volatile climate. We value bank

Rs.682/share which 1.8 times of book.

aluation Band

INGVYSYA BANK

usiness growth sluggish, wholesale deposits replace by foreign currency

orrowings

n business growth parameters, bank reported muted growth in deposits which grew by

% in which CASA deposits grew by 13% YoY. Term deposits de-grew by 1% YoY and -

% QoQ to Rs.254 bn. During quarter bank’s wholesale deposits replace by foreignrrency borrowings under RBI’s special concession window. CASA in percentage term

ood at 34.7% versus 31.7% in 3QFY13 and 32.5% in previous quarter. Loan grew by

% YoY led by SME loan growth of 25% YoY followed by agriculture loan (56% YoY).

redit deposits ratio improved to 87.4% versus 84% in last quarter and 82% in previous

uarter.

M narrow on account of reversal of interest income




Profit lower on account of muted

performance all around


INGVYSYA BANK

hart Focus

NII lower on account of sluggish interestincome

Operating expenses higher and operating

leverage remain stable




INGVYSYA BANK




arterly Performance 3QFY14 2QFY13 3QFY13 % Chg(YoY) % Chg(QoQ) 3QFY14E Varaition(%)

rest/discount on advances / bills 936 961 906 3.3 -2.5 975 -3.9

ome on investments 336 353 332 1.2 -4.9 390 -14.0rest on balances with Reserve Bank of India 0 0 0 266.7 -51.1 0

ers 1 3 1 50.8 -70.6 0

al Interest Income 1273 1317 1239 2.8 -3.3 1365 -6.7

ers Income 215 185 187 15.0 16.2 215 0.0

al Income 1488 1502 1425 4.4 -0.9 1580 -5.8

rest Expended 857 877 836 2.5 -2.3 968 -11.4

416 440 403 3.3 -5.5 397 4.7

er Income 215 185 187 15.0 16.2 215 0.0

al Income 631 625 590 7.0 0.9 612 3.1

ployee 214 207 191 12.2 3.7 202 6.2

er Expenses 142 142 135 5.1 0.1 135 5.4

erating Expenses 356 349 326 9.2 2.2 337 5.9

( Rs Cr) 274 276 263 4.2 -0.7 275 -0.4

visions 23 18 25 -6.5 27.3 17 35.7

84 82 76 9.9 2.4 85 -1.6

Profit 167 176 162 3.1 -5.1 173 -3.4

balance sheet data (Rs Cr)ances 34048 32856 31599 7.8 3.6 33903 0.4

osits 38956 40030 37691 3.4 -2.7 43989 -11.4

A(%) 34.7 32.5 31.7

et Quality

ss NPLs (Rs Cr) 583 574 571

ss NPLs (%) 1.7 1.7 1.8

NPLs (Rs Cr) 73 62 16

NPLs (%) 0.21 0.19 0.05

vision Coverage (%) 87.5 89.1 97.2



INGVYSYA BANK

nancial & Assuption




L 2011 2012 2013 2014E 2015Eerest/discount on advances / bills 2033 2868 3550 3824 4501

come on investments 646 982 1307 1476 1616

erest on balances with Reserve Bank of India 2 1 2 1 1

hers 13 7 3 13 13

tal Interest Income 2694 3857 4862 5314 6132

hers Income 655 670 727 858 858

tal Income 3349 4527 5588 6172 6990

erest on deposits 1357 2153 2579 2619 3038

erest on RBI/Inter bank borrowings 48 247 393 923 1033

hers 283 249 351 0 0

erest Expended 1688 2648 3323 3618 4074

1007 1208 1539 1696 2058

Growth(%) 21.3 20.1 27.3 10.3 21.3

her Income 655 670 727 858 858

tal Income 1661 1878 2266 2555 2916

mployee 606 651 751 819 964

her Expenses 420 459 522 569 670

perating Expenses 1026 1110 1273 1388 1633

P( Rs Cr) 635 768 993 1167 1283

ovisions 317 312 380 127 181

t Profit 319 456 613 701 739

31.6 43.2 34.3 14.4 5.4

ey Balance sheet data

posits 30194 35195 41334 45467 50923

posits Growth(%) 16.7 16.6 17.4 10.0 12.0

rrowings 4147 5696 6511 8024 8986

rrowings Growth(%) 13.0 37.4 14.3 23.2 12.0

an 23602 28721 31772 34949 40192

an Growth(%) 27.5 21.7 10.6 10.0 15.0

vestments 11021 12715 18278 20327 22766vestments Growth(%) 5.2 15.4 43.7 11.2 12.0

stwind Calculation

eld on Advances 8.6 10.0 11.2 10.9 11.2

eld on Investments 5.9 7.7 7.1 7.3 7.1

eld on Funds 7.3 8.8 9.3 9.6 9.7

st of deposits 4.5 6.1 6.2 5.8 6.0

st of Borrowings 8.0 8.7 11.4 11.4 11.5

st of fund 4.9 6.5 6.9 6.8 6.8

aluation

ok Value 217 265 299 379 418

BV 1.5 1.3 1.9 1.4 1.3E 12.2 11.7 14.1 14.5 13.7



Zydus Wellness.

Buy

-16%

13282

1M 1yr YTD

bsolute -6.9% 1.5% -4.9%

l.to Nifty -4.10% 0% -7.1%


omoters 72.54 72.54 72.54

8.17 7.91 5.12

I 8.07 8.39 10.85

hers 11.22 11.16 11.49

Financials

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

Revenue 103.39 103.92 (0.5) 101.77 1.6

EBITDA 26.83 25.51 5.2 26.32 1.9

PAT 27.27 25.7 6.1 22.88 19.2

EBITDA Margin 26.0% 24.5% 150bps 25.9% 10bps

PAT Margin 26.4% 24.7% 130bps 22.5% 390bp

arket Data

E Code 531335

ock Performance

verage Daily Volume

fty 6036

BV(x)-1year forward

Rs, Cro



Aggressive target on capturing Everyuth market share: Recently, company re launch

its Everyuth brand with innovative packaging, strong distribution network and expensmedia initiatives. The company decided to increase its prices in the range of 10-15%

Everyuth brand at the time of relauch and extended its everyuth brand to the premiu

soap in 3 variants, like Fruit bathing bar, Neem bathing bar and Lemon.


SE Symbol ZYDUS

1969

wk Range H/L 749/415

kt Capital (Rs Cr)

pside 21%

ange from Previous

"sweeten with sugar free"

esult Update

MP 504

rget Price 610

For 3QFY14, Zydus wellness delivered inline set of numbers than street expectatio

Because of weak consumer discretionary demand Sales marginally grew by 2%(Yo

PAT grew by 6% on YoY basis.evious Target Price 725

Inline set of numbers with stable margin;

Company’s half of revenue come from Sugar Free and Ever yuth, We expect these tw

products continue to generate revenue and some support to over all margins, no

vegetable oil prices are going down.

Due to expected decline in Advertisement cost, softness in Palm Oil, Crude Derivativ

and better realization in Ever Youth could help to improve its margin in next couple

quarters.

View and Valuation: Taking into consideration of product re-launch, strong distributi

reach under a beneficiary scenario of margin, management is very confident to achie

revenue at 500cr in FY15E, expecting growth rate by 21.5%. Its large market share a

aggressive promotions in its pillar brand (Sugar Free, Everyuth) would energize

revenue growth in near future. We retain “Buy” on the stock. However, consideri

weak consumer descretionery demand we reduced our target price from Rs725 to

610. At a CMP of Rs 504, stock trades at 5x FY15E P/BV.

Stable margin: During the quarter, its EBITDA margin was flat at 26% on YoY bas

while, it improved 150bps sequentially because of cost rationalization in RM and A

spend. PAT margin up by 390bps to 26.4%, favorably impacted by lower provision

tax and extra other income.

Woprking on cost rationalization: Considering slower demand and high competit

intensity, company has been able to manage its normal range of margin by reduci

cost. During the quarter, RM cost on sales declined from 30.3%(3QFY13) to 26.7% a

Ad spend down from 15.2% (3QFY13) to 13.8%.

Strong brand value in sugar free products: Over the year, Sugar Free Brand h

successfully captured 92% market Share. Sugar Free product has very strong bra

equity and it is always on the top of the buyers' mind when it comes to the sug

substitute. Considering the entry of other players in same product, it has rolled out

aggressive ad campaign and expended this brand on different segments like, Sugar Fr

Gold (Aspartame based), Sugar Free Natrura (Sucralose based), Sugar Free Herb

(Stevia) and Sugar Free D'lite (Drink).

"BUY"7th Feb' 14




ocus on expansion of Distribution network: The Company has been increasing its

stribution network to improve its growth of its cash-cow brand. Everyuth scrub and peel

f are sold through 3.3 to 4.0 lakh retail outlets while Zydus Wellness is sold through 3.4

kh retail outlets (an increase of 11% YoY). The company targets to increase the

stribution reach by 15-20% per annum.


argin-%

It expects expansion in gross marginwhich will help it to fund new produc

launches.


xpenses-(% of Sales)



Zydus Wellness.

ales and its Growth(%)

Sales marginally grew by 2%(YoY).






Zydus Wellness.

nancials and Valuation


s in Cr, FY10 FY11 FY12 FY13 FY14E FY15E

otal Sales 267.5 335.5 344.6 410.0 446.9 500.5

ess: Excise Duty 0.0 0.1 9.2 22.9 29.05 32.53

et Sales 267.5 335.4 335.5 387.1 417.8 467.9ther Operating Income 0.6 1.0 1.3 0.9 1.6 1.8

otal income from operations 268.1 336.4 336.8 388.0 419.4 469.7

M Cost 37.5 49.9 94.1 119.1 106.9 124.5

urchases of stock-in-trade 54.0 74.9 23.7 14.7 22.70 25.42

WIP (5) (5) 4 (10) 16 18

mployee Cost 9.3 18.3 20.6 27.3 31.45 37.58

d Spend 61.0 59.2 59.7 69.8 75.5 86.9

ther expenses 44.4 54.5 57.4 70.1 73.39 84.55

otal expenses 201.0 252.1 259.7 291.4 325.91 376.76

BITDA 67.1 84.2 77.1 96.6 93.47 92.94

epreciation and Amortisation 1.6 1.5 3.9 4.5 4.7 4.5

ther Income 6.0 7.2 9.0 15.8 20.1 22.5BIT 71.4 90.0 82.2 107.9 108.89 111.01

nterest 0.0 0.0 0.0 0.1 0.0 0.0

BT 69.2 90.0 82.2 107.8 108.9 111.0

ax Exp 24.0 30.5 13.7 8.8 8.2 8.9

AT 45.2 59.5 68.6 98.9 100.72 102.13

rowth-% (YoY)

ales -94.8% 25.5% 0.1% 15.2% 8.1% 12.0%

BITDA -93.7% 25.6% -8.5% 25.3% -3.2% -0.6%

AT -93.1% 31.7% 15.3% 44.2% 1.8% 1.4%

xpenses on Sales-%

M Cost 14.0% 14.8% 28.0% 30.7% 25.5% 26.5%

d Spend 22.7% 17.6% 17.7% 18.0% 18.0% 18.5%

mployee Cost 3.5% 5.4% 6.1% 7.0% 7.5% 8.0%

ther expenses 16.6% 16.2% 17.0% 18.1% 17.5% 18.0%

ax rate 34.7% 33.9% 16.6% 8.2% 7.5% 8.0%

Margin-%

BITDA 25.0% 25.0% 22.9% 24.9% 22.3% 19.8%

BIT 26.6% 26.7% 24.4% 27.8% 26.0% 23.6%

AT 16.9% 17.7% 20.4% 25.5% 24.0% 21.7%

aluation:

MP 381.7 597.3 380.4 456.5 504.0 504.0

o of Share 3.9 3.9 3.9 3.9 3.91 3.91

W 100.6 141.9 186.9 256.5 329.8 399.9

PS 11.6 15.2 17.5 25.3 25.76 26.12

VPS 25.7 36.3 47.8 65.6 84.4 102.3

oE-% 44.9% 41.9% 36.7% 38.6% 30.5% 25.5%

/BV 14.8 16.5 8.0 7.0 6.0 4.9

/E 33.0 39.3 21.7 18.0 19.57 19.30



BUY

1M 1yr YTD

bsolute -2 53.4 48.3

el. to Nifty 1 52.8 35.9


omoters 46.8 46.8 46.8

31.9 31.5 30.7

I 11.3 12.1 12.4

hers 10.0 9.7 10.1

Financials Rs, Cro3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-%

Revenue 3022 2668 13.3 2501 20.8

EBITDA 773 660 17.1 606 27.6

PAT 484 417 16.1 342 41.5

EBITDA Margin 25.6% 24.7% 80bps 24.2% 130bps

PAT Margin 16.0% 15.6% 40bps 13.7% 230bps

The operating EBITDA for the quarter came at Rs 773 Cr and OPM at 25.6%.The mater

cost during the quarter decreased by 30bps to Rs 1121 Cr and this constitutes 37.6

of net sales. The manufacturing and other expenses decreased by 90 bps to Rs 749 Cr

the quarter while employ cost deceased by 30 bps to Rs 387 Cr. The revenue expenditu

on R&D stands at Rs 271 Cr which is 9.1 % of the 3QFY14 sales.

The net profits for the quarter came at Rs 484 Cr and NPM at 15.8 % .The overall impact

Forex on net profits was a loss of Rs 68.8 Cr of which Rs 25.5 Cr forex gain is reflected

other income while the corresponding forex loss is captured across various other P

Lines.

ne Year Price vs Nifty


41,018

verage Daily Volume 395892

fty 6022

> Capital Expenditure was Rs 104.1 Cr in the quarter


ock Performance-%


Strong Results

1000

9%

esult Update

MP 915

arget Price

pside

hange from Previous

evious Target Price

LUPIN

The company at its CMP of Rs 915 is trading at 23 times of one year forward FY14 EPS

Rs 39.In the light of strong results ,management commentary and strong busine

outlook going forward we maintain BUY for the stock with Target price 1000.

951/569

SE Symbol LUPIN

arket DataSE Code

View & Valuation

Recent Developments

Company filed 5 ANDA approvals in the quarter .Cumulative ANDA filings with US FDA no

stands at 186 with the company having received 96 approvals till date. The compareceived 5 approvals from European regulatory authorities in the quarter.

Company acquired Nanomi B.V of Netherlands and with this acquisition company h

forayed into technology intensive complex injectables space. As per management with t

use of Nanomi’s proprietary technology platform, Lupin would be able to make significant

roads into the niche area of complex injectables.

500257

wk Range H/L

Balance Sheet Highlights

> Operating WC increased to Rs 2769.5 Cr as on 31st

Dec 2013 as against Rs 2674.3 Cr

on September 2013.The working capital number of days stood at 94 days as on 31St

D

2013.

kt Capital (Rs, Cr)

Lupin posted its 3QFY14 results with net sales at Rs 2983 Cr up 20.8% YoY led by stro

sales growth in American as well as Indian markets. The US formulation business sal

including (IP Sales) grew by 31 % YoY to Rs 1356 Cr and it constitutes 45 % of the to

sales. The Indian formulation business grew by 14% YoY to Rs 650 Cr and it contribut

22% of the company’s overall revenue for the quarter .The business from other geograph

viz Japan and South Africa also have grown well with registering growth of 10% and 18

respectively.API (Active Pharmaceutical Ingredient) net sales grew by 26% to Rs 297.3

during the quarter as compared to Rs 235.3 Cr for 3QFY13 and contributed 10%

company’s consolidated revenues.

"BUY"06th Feb' 14




LUPIN

les and PAT Trend (Rs)


Company posted its 3QFY14 results withsales at Rs 2983 Cr up 20.8% YoY led

strong sales growth in American as well

Indian markets.

PM %


PM %



The material cost during the quar

decreased by 30bps to Rs 1121 Cr and t

constitutes 37.6% of net sales.

The overall impact of Forex on net pro

was a loss of Rs 68.8 Cr of which Rs 25.5

forex gain is reflected in other income wh

the corresponding forex loss is captu

across various other P&L Lines.




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

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

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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

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

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