India Equity Analytics Today: Buy Stock of KPIT Tech

India Equity Analytics
Daily Fundamental Report on Indian Equities
IEA-Equity Strategy 19th Mar, 2014 Edition : 227

19th Mar 2014
KPIT Tech: "On billion dollar journey"
"BUY"
Impressive organic growth despite inorganic thrust (acquired 10 companies in the last 10 yrs), Potential option value from success of its hybrid engine venture Revolo (on trial). KPIT has targeted to reach $1bn sales by 2017. Its differentiated positioning and competitive edge in its focus areas, imperatives to the success of smaller-sized IT vendors impress to investors. ........................................................................ ( Page : 2-3)
ACC Limited :
"BOOK PROFIT"
18th Mar 2014
No doubt the stock's fundamentals are good and also available at a cheaper rate comparing to its early trade . In the previous one month the stock performed well & recover 20-22% from its estimated low of CY2013. We didn't expected this rise to be so fast.The CMP was estimated for a medium term target price looking at its earnings and fundamentals . How ever the target price got achieved few days back. we believe the stock's fundamental is still good and price too cheap also , but for the earning up gradation and revised target price we would like to see the 1st quarter earnings, hence we recommend Book Profit on the stock at a price range between Rs.1253 to Rs.1310. ......................................................................... ( Page : 5-7)
ICICI BANK :
"HOLD"
18th Mar 2014
In our earlier note dated 31st Jan.2014 in which we have given the price target of Rs.1094 lower side of valuation band. Now the stock reached to the level of Rs.1214 but still below of our upper side of valuation band. We value bank in the range of Rs. 836 to Rs.1287 depending upon the fundamental and return ratios. Since our result updated report, the stock has given the return of 24%, now we advice our investor to hold the stock as bank has potential to reached at upper side of valuation band. ........................ ( Page : 8-13)
AXIS BANK :
"BOOK PROFIT"
14th Mar 2014
Recent rally in Axis Bank is fundamentally not justified but is the result of sentiment boost up lead by Modi effect. Opinion poll suggests BJP led NDA would come to power after the general election. NDA prime ministerial candidate Narendra Modi is perceived by foreign investor as a decisive and development making leader. Market participates have hope for revival in economy and business growth opportunity to start again. This would be result of diminishing NPA buffer and profitability boost up. We advice our clients to book part profit. ....................................................................................... ( Page : 14- 16)
Infosys: "Recovery delayed, but not denied"
"BUY"
14th Mar 2014
Addressing an Investor Con Call, Infosys management has expressed its cautious view on earnings outlook as well as clients spending for near term. They indicated that FY14E would be a year of lower earnings than NASSCOM guidance followed by FY13 and FY12. The companys knee jerk has not associated with single factor; these are partly company specific and partly external factors. .......................................................................................................... ( Page : 17 - 18)
V-Guard Industries Ltd: "Colling Gun..."
"BUY"
14th Mar 2014
On recent interview management expect a sales growth of around 10% in 4QFY14 on back of strong sales growth of 12-12.5% in January and February month of 2014. Last financial year for Q4 company had very low margins because of two reasons, higher ad spend and one-off items. As Vguard product portfolio consist of 65-70% summer facing in nature and we believe that the strong summer expectation in 2014 and low base of FY14 would lead a revenue growth of at least 18% in FY14E. ....................................................................... ( Page : 19-21)
TATA STEEL Ltd :
"BUY"
14th Mar 2014
At current market capitalization of Rs. 23444 Crores, the stock is trading at a forward P/B of just 0.9. Tata Steel is a blue chip stock and is available at a very cheap valuation. But if we look at its historical stock performance, in the past three years it had continued to trade between 0.6 to 1.9 P/B range.With the European crisis behind us, US economy getting stronger and better outlook for Indian economy on the expectation of stable government at the Center, We feel Tata Steel share price may have some more price appreciation left given the improvement in financial performance and Outlook. We recommend Buy on the stock at a medium term target price of Rs.401. ............................................................................ ( Page : 22- 23)
Narnolia Securities Ltd,
KPIT Tech.
"On billion dollar journey"
Company update
CMP Target Price Previous Target Price Upside Change from Previous
"BUY"
19th Mar' 14
Buy
160 185 16% -
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 532400 KPIT 189/92 3103 144511 6517
SAP revival and Auto Engineering Services shape; a growth driver in near term, th Key Facts from recent Management Interview to media (on 12 March, 2014) SAP business back to growth trajectory: KPITs revenue has been facing growth related issues on account of deficit in SAP business (contributes 24% of sales). Profitability on SAP business was also a challenge for the company. On 3QFY14 revenues from SAP was down by 10% (QoQ). However, on the back of deal signings and visible deal pipeline, SAP should return into growth path in 4QFY14E and FY15E. Considering healthy demand environment in FY15E, We expect that USD revenue growth in SAP could be in double digits. Expectation of margin improvement: The decline in SAP revenue has impacted the overall margins, and margin was seen almost flat at 15.4% in 2QFY14 and 3QFY14. We expect that profitability from SAP business would support to shape up its margin in next couple of quarters. Even, Utilization rate in SAP has declined to below 90% at onsite and below 70% mark at offshore. This is expected to improve in FY15E. Management expects to see PAT margin at double digit by next couple of quarters. Auto Engineering Services; a growth driver: The global Automotive Industry has witnessed a strong revival. US industry sales in 2013 finished at 15.6 million vehicles, up 7.6% from 2012, and China became the first country in which more than 20-million vehicles were sold in any given year. Considering healthy demand outlook in Auto Industry, KPIT is seeing exports growth above the industry rates, driven by demand for services around safety systems, intelligent driving, hybrid electric cars, fuel efficiency etc. Management expects revenues from Auto Engineering to exceed 30% of the companys revenues, in the next 3 years, as KPIT expected to achieve the mark of USD1b in revenues. Incremental revenue by REVOLO and Systime: As per the management comment, its dream project REVOLO Technology REVOLO would play a key role to report an incremental growth in FY15E. KPITs acquisition Systime from Integrated Enterprise Services (IES) segment would report healthy growth prospects at least over the next couple of years. View and Valuation: Impressive organic growth despite inorganic thrust (acquired 10 companies in the last 10 yrs), Potential option value from success of its hybrid engine venture Revolo (on trial). KPIT has targeted to reach $1bn sales by 2017. Its differentiated positioning and competitive edge in its focus areas, imperatives to the success of smallersized IT vendors impress to investors. We expect that the company would report better earnings with margin ramp up and signing of larger deals in next couple of quarters. Now, we upgrade our view on the stock from Neutral to Buy with a price target of Rs 185. At a CMP of Rs 160, stock trades at 9.5x FY15E EPS. Rs, Crore Financials 3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-% Revenue 677.93 702.76 (3.5) 567.02 19.6 EBITDA 103.5 108.1 (4.3) 94.1 10.0 PAT 66.7 66.7 0.0 48 39.0 EBITDA Margin 15.3% 15.4% (10bps) 16.6% (130bps) PAT Margin 9.8% 9.5% 30bps 8.5% 130bps
Please refer to the Disclaimers at the end of this Report.
Stock Performance
Absolute Rel. to Nifty 1M -4.7 -12 1yr 52.9 41.9 YTD -
Share Holding Pattern-%

Promoters FII DII Others Current 22.53 41.96 6.99 28.52 2QFY14 1QFY14 22.87 24.25 36.42 32.79 11.12 10.93 29.59 32.03
Price Performance
KPIT Tech
Operating Metrics
4QFY12 Client Metrics No. of Customers Added No. of Active Customers Customers with run rate of >$1Mn Client Concentration Top Client Cummins Top 5 Clients Top 10 Clients DSO Employee Metrics Total Employee Onsite Utilization Offshore Utilization 4 169 59 19.5% 33.0% 42.2% 90 7719 94.5% 74.3% 1QFY13 3 172 65 20.6% 36.3% 44.0% 75 7873 94.7% 74.1% 2QFY13 4 176 69 19.7% 35.2% 43.7% 75 8111 94.5% 74.7% 3QFY13 2 178 72 19.1% 36.8% 45.2% 70 8286 92.8% 72.9% 4QFY13 5 183 78 16.6% 35.2% 44.0% 75 8321 94.3% 74.1% 1QFY14 6 189 78 16.8% 38.6% 47.3% 77 8456 94.2% 73.4% 2QFY14 3 192 78 16.5% 38.0% 46.3% 75 8816 92.4% 72.9% 3QFY14 3 195 78 17.9% 38.2% 47.6% 76 9136 88.1% 71.3%
Financials
Rs, Cr Net Sales-USD Net Sales Employee Cost Other expenses Total Expenses EBITDA Depreciation Other Income Extra Ordinery Items EBIT Interest Cost PBT Tax PAT Growth-% Sales-USD Sales-INR EBITDA PAT Margin -% EBITDA EBIT PAT Expenses on Sales-% Employee Cost Other Exp Tax rate Valuation CMP No of Share NW EPS BVPS RoE-% Dividen Payout ratio P/BV P/E FY10 153.76 731.64 265.92 304.70 570.62 161.02 30.80 1.20 -26.45 130.22 2.74 128.68 16.91 111.77 -11.7% -7.8% -12.2% 169.6% 22.0% 17.8% 15.3% 36.3% 41.6% 13.1% 115.00 7.90 387.11 14.15 49.00 28.9% 6.4% 2.35 8.13 FY11 224.07 987.05 529.95 308.82 838.77 148.28 41.12 6.74 0.00 107.16 3.78 110.12 15.49 94.63 45.7% 34.9% -7.9% -15.3% 15.0% 10.9% 9.6% 53.7% 31.3% 14.1% 168.05 8.70 603.19 10.88 69.33 15.7% 6.8% 2.42 15.45 FY12 306.71 1500.00 771.78 511.97 1283.75 216.25 44.49 13.82 10.05 171.76 7.32 178.26 43.67 134.59 36.9% 52.0% 45.8% 42.2% 14.4% 11.5% 9.0% 51.5% 34.1% 24.5% 122.90 17.80 712.55 7.56 40.03 18.9% 4.9% 3.07 16.25 FY13 410.46 2238.63 1140.79 762.32 1903.11 335.52 47.16 11.74 -1.30 288.36 13.99 286.11 76.55 209.56 33.8% 49.2% 55.2% 55.7% 15.0% 12.9% 9.4% 51.0% 34.1% 26.8% 99.0 19.28 1036.23 10.87 53.75 20.2% 7.9% 1.84 9.11 FY14E 445.78 2692.54 1378.58 902.00 2280.58 411.96 54.42 12.12 -21.05 357.54 24.31 345.35 96.70 248.65 8.6% 20.3% 22.8% 18.7% 15.3% 13.3% 9.2% 51.2% 33.5% 28.0% 160.0 19.28 1269.09 12.90 65.82 19.6% 6.3% 2.43 12.41 FY15E 535.96 3215.75 1640.03 1061.20 2701.23 514.52 67.93 24.12 16.08 446.59 24.56 446.15 122.69 323.46 20.2% 19.4% 24.9% 30.1% 16.0% 13.9% 10.1% 51.0% 33.0% 27.5% 160.0 19.28 1570.00 16.78 81.43 20.6% 7.0% 1.96 9.54
(Source: Company/Eastwind)

ACC Ltd.
Result Update
"Book Profit"
18th March' 14
Book Profit
1253 1257 1257 0% 0%
Nearly we saw a upward rally in stocks due to the forecasting of a stable government after election by the market players. The sentimental effect on market is on positive side ,hence the low valued stock like ACC took very less time like one month to come to its near fare value, which we had estimated for a medium term target. No doubt the stock's fundamentals are good and also available at a cheaper rate comparing to its early trade . In the previous one month the stock performed well & recover 20-22% from its estimated low of CY2013. We didn't expected this rise to be so fast.The CMP was estimated for a medium term target price looking at its earnings and fundamentals . How ever the target price got achieved few days back. we believe the stock's fundamental is still good and price too cheap also , but for the earning upgradation and revised target price we would like to see the 1st quarter earnings, hence we recommend Book Profit on the stock at a price range between Rs.1253 to Rs.1310. Holcim eyeing Jaypee Group's cement grinding plant in Panipat Holcim Cements has expressed interest in the grinding unit which has an annual capacity of 1.5 million tonnes per annum and the talks are at a preliminary stage. Holcim wants to expand its presence in North India through this strategic asset and will take a call if this potential deal can be routed through ACC cements.ACC Cements has a cement plant nearby in Himachal Pradesh and if JP's grinding unit is absorbed, it would be beneficial logistically and even in terms of costs. JP Associates looks to exit JV with SAIL JP Associates,looking to sell its entire stake in its cement joint ventures with SAIL to cut down its debt.The company is likely to part with its 74% stake in Bhilai and Bokaro cement plants that together have an installed capacity of 4.3 mtpa. As per the story , the company is eying around Rs. 2900 crore from the deal with cement major ACC.The deal with ACC if it happens would imply enterprise value of USD 147 per MT as against USD 127 per MT it got for Gujarat plant sale. Management Quotes : According to Management the economic environment in the country was sluggish, thus impacting the demand for cement and concrete. As a result, the company's cement volumes remained almost flat. The company appears not enthusiastic for demand growth going forward. Based on current demand indications, we do not foresee any significant improvement in the cement. Financials : Q4CY13 Y-o-Y % Q-o-Q % Q4CY12 Q3CY13 Net Revenue 2792 -12.2 8.6 3180 2570 EBITDA 361 -9.3 26.2 398 286 Depriciation 153 -3.2 6.3 158 144 Interest Cost 12 -55.6 9.1 27 11 Tax -36 -190.0 -170.6 40 51 PAT 278 16.3 129.8 239 121
(In Crs)
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume (Nos.) Nifty 500410 ACC 1355/912 19634 9817 6063
Stock Performance-%
Absolute Rel. to Nifty 1M -3.5 -1.9 1yr -22.3 -24.4 YTD -21.0 -22.8

Promoters FII DII Others Cureent 50.3 20.0 12.9 16.8 3QCY13 2QCY13 50.3 50.3 20.9 19.5 11.9 11.7 16.9 18.6
1 yr Forward P/B
Source - Comapany/EastWind Research

ACC Ltd.
Outlook Company has made several capacity expansion plans in the region. ACC is replacing the existing facilities at Jamul, Chhattisgarh with a clinker plant with an annual production capacity of 2.8 MT and local grinding capacity of 1.1 MT of cement, while a new plant with annual capacity of 2.7 MT is scheduled to be built in Kharagpur. The capacity expansion plant will increase the company's total cement production capacity to 35 MT from the existing 30 MT.On a QoQ basis, the EBITDA/tonne improved 10.4% due to an improvement in realisations & comparatively lower increase in total expenditure/tonne, it shows a positive view for the further quarters.onsidering the expansion plans we expect 4% growth in sales volume and 10% growth in realization for CY14. Valuation And Recommendation Cement prices witnessed an increase during Oct-Nov,13 but also witnessed a sharp fall during Dec,13 which has contributed towards lower average realizations for the year for the company.Further,with a strong balance sheet with zero debt and better dividend yield of 3%,we continue to remain positive despite near term challenges.We revise our estimates downwards to factor in lower demand growth scenario. At current price of Rs 1253, stock is trading at 2.8x P/B and 2.8x P/B on CY14 estimates.Valuation looks good for this company,but we would like to see the 1st quarter for earning upgrading hence we recommend Book Profit on the stock at a price range between 1253 to 1310. Company Description : ACC Limited (ACC) is engaged in manufacture of cement & ready mixed concrete. The Company has grinding plants in Karnataka and clinkering line in Maharashtra. The Companys subsidiaries include ACC Mineral Resources Limited, Lucky Minmat Limited, Bulk Cement Corporation (India) Limited, National Limestone Company Private Limited and Encore Cement and Additives Private Limited. The Company is subsidiary of Ambuja Cement India Private Limited. P/L PERFORMANCE CY11 CY12 CY13 CY14E Net Revenue from Operation 10237 11358 11169 13027 Other Income 191 263 219 219 Total Income 10428 11621 11389 19723 Power and fuel 2199 2384 2384 0 Freight and forwarding 1940 2219 2299 0 Expenditure 8316 9162 9540 10942 EBITDA 1921 2197 1848 2084 Depriciation 510 569 584 639 Interest Cost 97 115 52 50 Tax 215 391 132 323 PAT 1276 1050 1094 1292 ROE% 17.7 18.8 13.8 15.3
Cement Sales Volume
Cement Realization Cement Realization Cement Realization Cement Realization
Per Ton Analysis Per Ton Analysis
Margin Gap Margin Gap

5
ACC Ltd.
B/S PERFORMANCE Total equity Long-term borrowings Short-term borrowings Long-term provisions Trade payables Short-term provisions Total liabilities Intangibles Tangible assets Capital work-in-progress Long-term loans and advances Inventories Trade receivables Cash and bank balances Short-term loans and advances Total Assets RATIOS P/B EPS Debtor to Turnover% Creditors to Turnover% EV P/E EV/EBIDTA Dividend Yield% ROCE% Debt/Equity Current Ratio CY10 6281 510 14 188 1581 1466 11041 77 5230 1564 283 926 249 1086 162 11041 CY10 3.2 57.4 3.0 19.1 19632 18.7 12.7 2.8 14.6 0.1 1.0 CY11 6979 506 0 126 816 1051 11921 48 6359 370 461 1113 266 1660 279 11921 CY11 3.1 68.7 2.6 8.0 20180 16.5 10.5 2.5 15.2 0.1 1.3 CY12 7372 85 0 157 661 1227 11928 39 5893 314 566 1134 303 681 325 11928 CY12 3.6 73.8 2.7 5.8 26240 19.4 11.9 2.1 16.3 0.0 1.4 CY13 7813 0 0 89 642 1081 12101 40 6040 322 880 1122 397 506 340 12101 CY13 2.7 57.6 3.6 5.7 20296 19.2 12.5 2.7 12.3 0.0 1.4
Trading At :

6
ICICI BANK
Company Update CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Cr) Average Daily Volume Nifty Stock Performance
Absolute Rel.to Nifty 1M 23.7 15.3 1yr 7.4 -2.0 YTD 7.4 -2.0
"HOLD"
18th March 2014
HOLD 1214 1287 1094 6 18
In our earlier note dated 31st Jan.2014 in which we have given the price target of Rs.1094 lower side of valuation band. Now the stock reached to the level of Rs.1214 but still below of our upper side of valuation band. We value bank in the range of Rs. 836 to Rs.1287 depending upon the fundamental and return ratios. Since our result updated report, the stock has given the return of 24%, now we advice our investor to hold the stock as bank has potential to reached at upper side of valuation band. Strong operating performance led by healthy balance sheet growth ICICI Bank reported revenue growth of 23.5% YoY led by strong operating performance and healthy non interest income. Strong growth in NII was led by margin expansion on year on year basis which further led by strong growth in loan and higher deposits base. Banks loan grew by 16% YoY supported by retail and oversea loan while deposits grew by 11%. Credit deposits for the quarter was 102% largely liquidity came from borrowing fund but strong base of CASA kept cost of fund under control. Operating cost increased by 15.7% YoY but CI ratio remained under control. Operating leverage increased sequentially due to higher expansion towards branch expansion. Overall it remained in the range of 0.40% to 0.45%. Asset quality continued to be concern, impairment asset were higher at QoQ, Management remained cautious on asset quality On asset quality front, bank saw some deterioration as impaired assets (GNPA + Restructure Asset) to loan increased from 5.3% to 5.7% sequentially. According to banks management it would remain at elevated level going forward. However bank has lower exposure towards corporate segment where slippage risk is relatively high in current scenario. Total loan in corporate debt restructure was to tune of 30 bn(0.9% of loan). However GNPA showed some strength sequentially and was improved slightly to 3.07% from 3.10% while net NPA stood at 0.94% versus 0.85% due to lower loan loss provision made. But provision coverage ratio remained at 70% level, so nothing to worry about.
532174 ICICIBANK 758 140141 3.58 lakh
Share Holding Pattern-% Current 4QFY13 3QFY1 3 Promoters 66.7 64.1 64.1 FII 11.0 13.2 13.6
DII Others 15.4 6.9 15.3 7.4 15.6 6.7
ICICI Bank Vs Nifty
Financials
NII Total Income PPP Net Profit EPS 2011 10739 42252 10950 6093 52.9 2012 10734 18237 10386 6465 56.0
Rs, Cr 2013 2014E 2015E 13866 17734 21111 22212 27035 30413 13199 16762 18856 8325 10658 11955 72.2 92.3 103.6 (Source: Company/Eastwind)
7

ICICI BANK
Margin expansion led by stable NIM and healthy loan growth ICICI bank NIM was stable at 3.32% sequentially led by stable NIM and retail loan. Banks CASA was strong at 43%+ on which current account growth of 13.2% and saving account growth of 17.5% ahead of private sector banks. Overall CASA reported 16% YoY growth and in percentage to total deposits, it stood at 42.9% at the end of 3QFY14. Banks loan grew by 16% YoY led by retail loan which grew by 22% YoY and share in retail loan increased from 35% to 37% at the end of December quarter. Loan growth from oversea branches was also supportive, registered growth of 24% YoY. Share of oversea loan composition was 28% at the end of quarter, an increase of 200 bps YoY.
Growth of CASA trend

ICICI BANK
ICICI Bank NIM remain healthy
NIM was stable at sequnetial basis led by strong loan growth and CASA base
Healthy loan growth led by retail and oversea loan growth Loan Composition (Rs Cr) 3QFY13 Domestic Corporate 98074 Retails Business 100081 Overseas Branches 73699 SME 14912 % of loan Domestic Corporate 34.2 Retails Business 34.9 Overseas Branches 25.7 SME 5.2
2QFY14 103598 115039 84531 14618 32.6 36.2 26.6 4.6
3QFY14 104779 122076 91474 14303 31.5 36.7 27.5 4.3
YoY Gr. 6.8 22.0 24.1 -4.1
QoQ Gr. 1.1 6.1 8.2 -2.2
Non Interest Income ICICI Banks total income grew by 23.5% YoY was due to non interest income growth of 26.5% YoY in fee income registered growth of 12.8% YoY. Dividend and other income growth was higher at 85% owing to higher dividend income from life insurance subsidiary whereas treasury income grew by 78% YoY. Overall healthy growth in non interest income was due to bank saw reversal of M2M provisions on bond and equity portfolio.
Non Interest Income Core fee income Dividend & Other Income Treasury Income
Composition of non interest income to total revenue
3QFY13 17.71 1.93 2.51
2QFY14 19.94 2.51 -0.79
3QFY14 19.97 3.57 4.47
YoY Gr. 12.8 85.0 78.1
QoQ Gr. 0.2 42.2 -
Rs. Cr NII Other Income Total Income % of Other Income to NII
1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 1991 2204 2312 2510 2411 2506 2712 3105 3193 3371 3499 3803 3820 4044 4256 1681 1578 1749 1641 1643 1740 1892 2228 1880 2043 2215 2208 2484 2166 2801 3672 3782 4061 4150 4054 4246 4604 5333 5073 5414 5714 6011 6305 6210 7057 84.4 71.6 75.6 65.4 68.1 69.4 69.8 71.8 58.9 60.6 63.3 58.1 65.0 53.6 65.8
Source: Company/Eastwind
ICICI BANK
Operating Expenses and Employee Cost Total expenses increased by 15.7% YoY in which employee cost and other operating cost were increased by 6% and 23% YoY respectively. Cost to income ratio was remained flat at 37.1% sequentially while operating leverage (operating cost to total asset) increased slightly from 0.41% to 0.46% but remained under control. This was due to branch expansion.
Sequentailly cost to income ratio remained satble. Management guided CI ratio would be below of 40% in FY14.
Operating leverage increased sequentially but remained under control. The rise of operating leverage was due to increased expansion towards branch expansion.
Operating leverage remain ed stable but sequentially up led by higher operating expansion largely due to branch expansion cost
Asset quality remain under pressure Bank reported deterioration in asset quality (GNPA) in sequential basis by 3.7% in absoluter term. In percentage to gross advance, GNPA stood at 3.07% versus 3.1% in previous quarter (marginally improved).
10
ICICI BANK
Provisions were declined by 0.6% QoQ taking net NPA increased by 15.3% QoQ. In percentage to net advance, this ratio stood at 0.94% versus 0.85% in previous quarter. Lower provisions made PCR to 70.1% versus 73.1% in previous quarter. Banks impair asset (GNPA+ Restructure asset) were 5.7% of advance at the end of quarter from 5.3% in previous quarter and 5% in last quarter. Bank management guided asset quality stress would remain at elevated level. According to the company, corporate debt restructure pipeline presently is Rs.30 bn which is 0.9% of loan.
Asset quality remained concern. Management expects it to remained elevated level going forward. Outstanding CDR at 0.9% of loan
Valuation & View At the current price of Rs.1214, bank is trading at 1.8 times of FY14E book value. We value bank in the range of Rs.836 to Rs.1287 depending upon fundamental and return ratio. Our base case assumption was deposits growth of 12%, loan growth of 17% in FY14 and margin at current level. Improvement and deterioration from base and bull case would driven the price movement in either side. We advance our clients to hold the stock as bank has potential to reach upper side of value band.
Valuation Band
1 Yr forward P/BV 1 Yr forward P/E
11
ICICI BANK
Financials & Assuption
Quarterly Result Interest/discount on advances / bills Income on investments Interest on balances with Reserve Bank of India Others Total Interest Income Others Income Total Income Interest on deposits Interest on RBI/Inter bank borrowings Others Interest Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions PBT Tax Net Profit
2011
19098 9181 469 1334 30081 31513 61595 11315 1683 6345 19343 10739 31513 42252 4393 26910 31302 10950 4631 0 0 6093
2012
22130 9684 491 1238 33543 7503 41045 14304 1469 7035 22808 10734 7503 18237 3515 4335 7850 10386 1583 8803 2338 6465
2013
27341 11009 543 1182 40076 8346 48421 16889 2087 7234 26209 13866 8346 22212 3893 5120 9013 13199 1803 11397 3071 8325
2014E
31646 11785 184 946 44561 9302 53863 18217 0 10146 27812 16749 9302 26051 4451 5441 9892 16159 2592 13567 4071 9496
2015E
34992 13220 184 946 49342 9302 58644 20402 0 11364 28840 20502 9302 29804 5096 6229 11325 18478 2853 15626 4688 10938
Balance Sheet DEPOSITS Deposits Growth Borrowings Borrowings Growth(%) Investment Growth(%) Advances Growth(%)
259106 7.3 125839 8.8 209653 12.5 256019 13.4
255500 -1.4 140165 11.4 159560 -23.9 253728 -0.9
292,614 14.5 145,341 3.7 171,394 7.4 290,249 14.4
321,875 10.0 158,535 9.1 187,360 9.3 339,592 17.0
360,500 12.0 177,560 12.0 209,843 12.0 380,343 12.0
Eastwind Calculation
Yield on Advances Yield on Investments Cost of deposits Cost of Borrowings Cost of fund 7.5 4.7 4.4 6.4 5.0 8.7 6.4 5.6 6.1 5.8 9.4 6.7 5.8 6.4 6.0 9.3 6.3 5.7 6.4 0.0 9.2 6.3 8.0 6.4 5.9
Valuation
Book Value P/BV P/E 480 2.3 5.5 524 1.7 7.3 578 1.5 9.4 643 1.6 9.2 682 1.5 10.6
12
AXIS BANK
Company Updated CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol
Mkt Capital (Rs Cr) Average Daily Volume Nifty
BOOK PART PROFIT
"BOOK PART PROFIT "

14th March, 2014
1385 1340 1220 -3 10
532215 AXISBANK 64823 26.18 cr 6493
In last one month, Axis Bank has outperformed Bank Nifty and CNX Nifty by 6% and 18% respectively and is now trading at more than 1.7 times of FY14E book value which is above of our upper side of valuation band. We value bank in the range of 1.5 to 1.7 times of book lower than its peers group largely due to some exposure in stress sector specially in infra and power companies where slippage risk are relatively high. We value bank in the range of Rs.1220 to Rs.1340 per share that implying book value multiple of 1.5 to 1.7 based on current fundamental and return ratios. The rise of stock price is supported by opinion poll result which suggests BJP led NDA would come in power. NDA prime ministry candidate Narendra Modi is perceived by foreign investor as a decisive and development making leader and would rescue economy. Domestic equity market boost-up by economy revival sentiment We believe market sentiment in recent days are boosted up on the hope that BJP led NDA would come to power after the general election and revive economy. The domestic equity market is supported by opinion poll result which suggests BJP led NDA coming to power after the forthcoming election. Over the last few months, the estimated numbers of seat, the NDA may win has increased from 165-175 to 220230 seats. The prime ministerial candidate of NPA Narendra Modi is known for his development in Gujarat. Domestic as well as foreign investors are in hope that Indian economy would come at track and business opportunity would start again. Banking
Stock Performance 1M Absolute 25.2 Rel.to Nifty 17.9
1yr -1.9 -11.1
YTD -1.9 -11.1

Promoters FII DII Others 33.9 43.2 9.7 13.2 33.9 43.4 4.9 17.8 33.9 40.7 8.8 16.6
Axis Bank Vs Nifty
stocks are rallied more than other sectors in hoping of reducing fresh NPA creation. Key positive trigger Axis banks low cost deposits CASA has grown faster than peers like ICICI bank and is stable at 43% at the end of 3QFY14. Banks management expects it to reach at 46% in FY15E which would help to keep cost of deposits under control and hence margin expansion. In loan growth parameter, Axis bank expects loan growth higher than industry growth by 2%. Incremental loan growth would come from SME and retail sector while corporate loan book is expected to remain sluggish. Banks capital adequacy ratio is close to 17% in which tier -1 capital of 12.5% much healthier than peers indicating no need to raise money for long tenure in near term. ROA at pre provisioning profit is at 3% indicating strong capability to delivered profit once asset quality issue resolve. Key negative trigger Stress loan (GNPA+ Restructure asset) is remained at 3.7% of advances but it might go up as bank has significant exposure in power (5.54%) and Infrastructure (7.33%) where slippage risk is relatively high in present economy scenario. Provision coverage ratio reported by bank is 78% with technical write off which would provides some cushion on earnings. Axis bank still have 46% of loan exposure in large corporate where profitability uncertain due to ongoing recession. Therefore on asset quality front, bank would still have to face tough time as per our view. Rs, Cr Financials 2011 2012 2013 2014E 2015E NII 6566 8026 9666 12224 14775 Total Income 11238 13513 16217 19146 21697 PPP 6377 7413 9303 11206 12367 Net Profit 3340 4224 5179 5826 6934 EPS 81.4 102.2 110.7 124.2 148.2 (Source: Company/Eastwind) 13 Narnolia Securities Ltd,
AXIS BANK
Quarterly Result
Quarterly Result Interest/discount on advances / bills Income on investments Interest on balances with Reserve Bank of India Others Total Interest Income Others Income Total Income Interest Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions PBT Tax Net Profit Balance Sheet Date Net Worth Deposits Loan Asset qualtiy( Rs Cr) GNPA NPA %GNPA %NPA
3QFY14 5557 2110 49 73 7789 1644 4628 4805 2984 1644 4628 655 1358 2013 2615 202 2413 808 1604
2QFY14 5394 2143 35 37 7609 1766 4703 4672 2937 1766 4703 644 1309 1953 2750 687 2062 700 1362
3QFY13 % YoY Gr % QoQ Gr 3QFY14E Variation 4907 13.3 3.0 5748 3.4 2014 4.8 -1.5 2235 5.9 25 97.7 39.4 35 -29.2 19 277.1 95.6 38 -47.4 6965 11.8 2.4 8056 3.4 1615 1.8 -6.9 1774 7.9 4110 12.6 -1.6 4780 3.3 4470 7.5 2.8 5049 5.1 2495 19.6 1.6 3006 0.8 1615 1.8 -6.9 1774 7.9 4110 12.6 -1.6 4780 3.3 615 6.5 1.7 0 1134 19.8 3.8 0 1749 15.1 3.1 2008 -0.3 2362 10.7 -4.9 2772 6.0 387 -47.7 -70.5 752 271.4 1975 22.2 17.0 2020 -16.3 628 28.8 15.5 687 -15.0 1347 19.1 17.7 1333 -16.9
37649 36224 27027 262398 255365 244501 211467 201303 179504
39.3 7.3 17.8
3.9 2.8 5.0
37558 272935 214892
-0.2 4.0 1.6
3008 1003 1.4 0.5
2734 838 1.4 0.4
2275 679 1.3 0.4
32.2 47.8
10.0 19.7
Source: Eastwind/Company
14
AXIS BANK
FINANCIALS & ASSUPTION
Income Statement
Interest Income Interest Expense NII Change (%) Non Interest Income Total Income Change (%) Operating Expenses Pre Provision Profits Change (%) Provisions PBT PAT Change (%)
2011
15155 8589 6566 31.2 4671 11238 25.3 4860 6377 22.4 3033 3345 3340 34.8
2012
21995 13969 8026 22.2 5487 13513 20.2 6100 7413 16.2 3189 4224 4224 26.5
2013
27183 17516 9666 20.4 6551 16217 20.0 6914 9303 25.5 4124 5179 5179 22.6
2014E
31198 18974 12224 26.5 6922 19146 18.1 7940 11206 20.5 2402 8804 5826 12.5
2015E
38490 23716 14775 20.9 6922 21697 13.3 9330 12367 10.4 2461 9906 6934 19.0
Balance Sheet
Deposits( Rs Cr) Change (%) of which CASA Dep Change (%) Borrowings( Rs Cr) Investments( Rs Cr) Loans( Rs Cr) Change (%) 189166 34 77758 18 26268 71788 142408 36 219988 16 91412 18 34072 92921 169760 19 252614 15 112100 23 43951 113738 196966 16 290506 15 124917 11 51266 129873 228481 16 334081 15 143655 15 58956 149354 265037 16
Valuation Book Value CMP P/BV
460 1404 3.1
549 1146 2.1
708 1304 1.8
813 1174 1.4
942 1174 1.2
Source: Eastwind/Company
15
Infosys
"Recovery delayed, but not denied"
Company update
"BUY"
14th March' 14
BUY
3358 3760 3910 12% -4%
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 500209 INFY 3847/2190 192799 1240448 6493
Stock Performance
Absolute Rel. to Nifty 1M 4.5 0.8 1yr 30.4 21.6 YTD 53.1 49.4
A gloomy outlook by Infosys; however, the best is yet to come. Addressing an Investor Con Call, Infosys management has expressed its cautious view on earnings outlook as well as clients spending for near term. They indicated that FY14E would be a year of lower earnings than NASSCOM guidance followed by FY13 and FY12. The companys knee jerk has not associated with single factor; these are partly company specific and partly external factors. We expect, this adverse scenario would impact its earnings growth for next couple of quarters. Key facts from Investors Con Call The company might only be able to meet the lower end of its annual revenue growth guidance of 11.5-12% for FY14E, and they are expecting weakness in client spending throughout the current quarter (4QFY14E). Slowdown in client sentiment in 4QFY14E could be remain continue in the next couple of the quarters of the next financial year. We expect that 1HFY15E could be a part of worrisome. Reasons behind the weak outlooks: (1) Poor response from Retail and CPG verticals: In the retail segment (contributes 25% of sales) a sluggish sales over the last 2 months, severe winter, and aggressive discounts by retailers have led to lesser profitability. In addition, this has led to capping of additional spending in CY14. Some retail clients have specific issues leading to categorization of spends. We expect this is not specific for Infosys, it could be viral for the Industry growth. (2) Portfolio related concern in Manufacturing: Recently, Manufacturing segment (contributes 22% of sales) has adversely impacted by the reduced PC sales and capex spending in networking and this will have an impact on revenue growth in this segment. Revenue contribution from manufacturing segments stands larger than other peers. (3) Challenges with skill mis-matches: Infosys CEO anticipated order cancellation from some of its clients because of its skill mis-match issue. Infosys has also seen some challenges with skill mis-matches between clients needs and what company could have provided; this has led to slowdown in ramp-ups. Impact on Estimates: We expect that the recent developments of Infosys could adversely impact our sales guidance by 2-3% and earnings growth guidance by 3-4% for FY15E. We downgrade our revenue growth guidance from 16.5% to 13.7%. View and Valuation: Infosys seems to be on its way to rediscovering its past mojo with revenue momentum kicking, and the NRN invisible hand in play. Further announcement of strategic acquisitions, better utilization of cash balances, better deal win, consistent client traction and revenue momentum would help the company to bridge the gap with rivals such as TCS. At a CMP of Rs 3358, it trades at 16x FY15E earnings. We retain our BUY view on the stock with a target price of target price of Rs 3760 (revised from 3910).

Promoters FII DII Others Current 15.94 40.65 15.35 28.06 2QFY14 1QFY14 15.94 16.04 39.93 39.55 16.16 18.28 27.97 26.13
1 year forward P/E
Financials
Revenue EBITDA PAT EBITDA Margin PAT Margin 3QFY14 13026 3258.9 2874.9 25.0% 22.1% 2QFY14 12965 2836.9 2406.9 21.9% 18.6%
(QoQ)-% 0.47 14.88 19.44 310bps 350bps
3QFY13 10424 2677 2369 25.7% 22.7%

Rs, Crore (YoY)-% 25.0 21.7 21.4 (70bps) (60bps) 16
Infosys.
Why the best is yet to come? Recent weak guidance given by Infosys management is not an episode of close out. The company is working on various strategies to rediscovering its past sparkle days with revenue momentum kicking. Already, company has initiated to work closely with clients and focused on building relationship for deal intake. To maintain margin stability and increase productivity, company is working efficiently on cost optimization initiative. However, the management indicated that early signs of sales effectiveness initiative would start showing from 1HFY15E. We believe that strong demand environment across the industry would offer Infosys breathing space to tide over reorganization-related challenges. Its strategies on sales effectiveness and cost optimization initiative could turn the growth story as before. Now, we are waiting for next earning outlook and guidance by management for FY15E.
Financials
Rs in Cr,
Sa l es , INR Empl oyee Cos t Other expens es Total Expens es EBITDA Depreci ati on Other Income EBIT Interes t Cos t PBT Tax PAT Growth-% Sa l es EBITDA PAT Margin -% EBITDA EBIT PAT Expenses on Sales-% Empl oyee Cos t Other expens es Tax rate Valuation CMP No of Share NW EPS BVPS RoE-% Di vi den Payout rati o P/BV P/E 2615.1 57.4 23049.0 109.1 401.7 27.2% 25.1% 6.5 24.0 2765.1 57.4 25976.0 119.0 452.4 26.3% 45.9% 6.1 23.2 2865.0 57.4 31332.0 145.1 545.6 26.6% 24.0% 5.3 19.7 2400.0 57.4 37994.0 164.2 661.7 24.8% 45.1% 3.6 14.6 3358.0 57.4 45642.7 188.2 794.9 23.7% 22.9% 3358.0 57.4 54345.7 210.1 946.5 22.2% 20.6% 53.1% 12.3% 21.2% 54.0% 13.4% 26.7% 54.4% 13.8% 28.8% 55.9% 15.5% 26.3% 56.5% 16.0% 28.0% 56.5% 16.5% 28.0% 34.6% 34.9% 27.5% 32.6% 33.9% 24.9% 31.8% 34.7% 24.7% 28.6% 31.7% 23.4% 27.5% 29.9% 21.5% 27.0% 29.3% 21.1% 4.8% 9.3% 4.6% 20.9% 14.0% 9.2% 22.7% 19.6% 21.9% 19.6% 7.6% 13.2% 24.4% 19.7% 14.6% 13.9% 11.9% 11.6%
FY10
22742 12085 2792 14877 7865 905 982 7942 0 7942 1681 6261
FY11
27501 14856 3677 18533 8968 854 1211 9325 0 9325 2490 6835
FY12
33734 18340 4671 23011 10723 928 1904 11699 0 11699 3367 8332
FY13
40352 22565 6254 28819 11533 1099 2365 12799 0 12799 3370 9429
FY14E
50217.7 28373.0 8034.8 36407.8 13809.9 1367.7 2566.1 15008.3 0.0 15008.3 4202.3 10806.0
FY15E
57222.3 32330.6 9441.7 41772.3 15450.0 1558.5 2861.1 16752.7 0.0 16752.7 4690.7 12061.9
4.2 3.5 (Source: Company/Eastwind) 17.8 16.0

17
VCompany update
V-Guard Industries Ltd.

"Colling Gun..."
Buy
453 525 475 14% 10%
"Buy"
4th Mar' 14
Key Points :
On recent interview management expect a sales growth of around 10% in 4QFY14 on back of strong sales growth of 12-12.5% in January and February month of 2014. Last financial year for Q4 company had very low margins because of two reasons, higher ad spend and one-off items. From that level, we expect there would been improvement this quarter and margin would be somewhere around 8.51%. Company expect the ad spends in the current quarter are likely to be Rs. 11-12 crore (2.85% of expected revenue in 4QFY14E), compared to 14 crore (3.7% of 4QFY13 revenue) which should in our view aid in the margin expansion in current quarter. The El Nio visibility in 2014 would be the another factor for the revenue growth of companies like Vgaurd. As Vguard product portfolio consist of 65-70% summer facing in nature and we believe that the strong summer expectation in 2014 and low base of FY14 would lead a revenue growth of at least 18% in FY14E. Forecast updates strengthen El Nino fears In its update on Thursday, the Australian Bureau of Meteorology said factors that lead to an El Nino were now increasingly visible. "The tropical Pacific Ocean subsurface has warmed substantially over the past few weeks Indian Met officials are treating the reports with caution, saying that though chances of an El Nino developing around mid-2014 are growing, predictions made at this stage suffer from low accuracy. US agency NOAA's Climate Prediction Center, which updated its forecast on Wednesday, said temperature anomalies associated with El Nino had strongly increased since the end of January. Further, NOAA said there was a 50% chance of El Nino developing during the summer or autumn this year.
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 532953 V-GUARD 390/570 1,349 59,460 6,493
Stock Performance-%
Absolute Rel. to Nifty 1M (4.5) (5.6) 1yr (9.0) (13.6) YTD 5.0 (6.7)

Promoters FII DII Others 3QFY14 65.5 18.5 2.2 13.8 2QFY14 65.5 17.4 2.5 14.5 1QFY14 65.5 14.5 3.5 16.4
1 yr Forward P/B
About El Nino El Nino 'the boy' in Spanish is an unusual warming of sea surface waters in eastern and central equatorial Pacific associated with changes in wind patterns that impact weather in many parts of the world. It generally has an adverse effect on the Indian monsoon.
(Source: Times of India/ Eastwind Research)

18

Strong Balance Sheet Total Debt has been reduced significantly as on 3Q FY14 to Rs. 117.7 crore, compared to Rs. 157 crore as on 3Q FY13. Working capital loan reduced to Rs. 77.1 vrore from 134.0 crore and whereas term loan icreased to Rs. 40.6 crore from 22.9 crore. Working capital cycle on a TTM basis improves by 9 days to 76 days. Mainly Led by 15 days reduction in debtors. Management has also guided for improvement in net working capital cycle by 5- 10 days every year going forward. This will further improve its ROCE and ROE going forward. Strong cash generation in 9M. FY14 Cash from operations at Rs. 90 crore in 9M FY14 as compared to Rs. 14.5 crore for full year FY13
Revenue Q-o-Q
Business segments, market size and existing competition in segment

Industry Size V-Guard (crore) (Share FY13)
Sta bi l i s ers PVC Ca bl es LT Power Ca bl es Motor Pumps Wa ter Hea ters Fa ns UPS Di gi ta l UPS Sol a r Wa ter Hea ter 2100 7000 6000 2000 800 5000 3500 5500 300 201 289 64 152 72 57 42 73 26
Production Model
100% In-Hous e 100% In-Hous e 90% Outs ourced 90% Outs ourced 90% Outs ourced Ha vel l s , Fi nol ex Ha vel l s , Fi nol ex
Key Players
100% Outs ourced Bl uebi rd, Ca pri , Logi cs ta t, Premi um, everes t
Crompton Grea ves , Ki rl os ka r, CRI, Texmo A.O.Smi th,Ra col d,Ba ja j,Venus ,Crompton Crompton,Ba ja j El ectri ca l s ,Ha vel l s , Ori ent
(Source: Company/ Eastwind Research)
100% Outs ourced Numeri c,APC,Emers on 100% Outs ourced Mi crotek, Lumi nous , Su-Ka m 100% In-Hous e Ta ta BP-Sol a r
EBITDA % and PAT % Q-o-Q
Outlook / Valuation We expect margin to expand in 4QFY14E on back of lowered ad spends and non hoping of oneoff items which hit the p/l in past year of same quarter. However we restrict our EBITDA expectation for FY14E to 8.9% against management guidance of 9-9.5% due to significant reduction in copper prices both in dollar terms as well as in rupee terms as company value its inventory on mark-to-market basis but apart from that there are no other issues we could see. The El Nio visibility in 2014 would be the another factor for the revenue growth of companies like Vgaurd. As Vguard product portfolio consist of 65-70% summer facing in nature and we believe that the strong summer expectation in 2014 and low base of FY14 would lead a revenue growth of at least 18% in FY14E. At the current CMP of Rs. 452, the stock is trading at a PE of 17.0x and 13.4x of FY14E and FY15E. The company can post RoE of 24.0% and 24.1% & EPS of Rs. 26.4 and Rs. 33.6 FY14E and FY15E. We believe that from current level the growth would pick pace expected acceleration of growth momentum, given the strong outlook of summer going forward. We revised our rating to Buy from Hold with a revised price target of Rs. 525.

19

Key financials
PARTICULAR Performance Revenue Other Income Total Income EBITDA EBIT DEPRICIATION INTREST COST PBT TAX Extra Oridiniary Items Reported PAT Dividend (INR) DPS EPS Yeild % EBITDA % NPM % Earning Yeild % Dividend Yeild % ROE % ROCE% Position Net Worth Total Debt Capital Employed No of Share (Adj) CMP Valuation Book Value P/B Int/Coverage P/E 47.4 1.9 8.4 10.4 57.6 2.9 5.7 12.9 70.6 2.6 4.9 10.9 87.6 5.0 4.9 20.7 109.9 4.1 5.6 17.1 139.5 3.2 9.4 13.5 141 81 222 3 89 172 139 311 3 168 211 109 320 3 186 261 165 427 3 435 328 125 453 3 452 416 115 531 3 452 11.1% 5.6% 9.6% 4.0% 18.0% 13.8% 10.1% 5.4% 7.8% 2.4% 22.7% 16.2% 9.4% 5.1% 9.2% 2.2% 24.1% 21.2% 8.1% 4.6% 4.8% 0.9% 24.1% 19.4% 8.9% 5.2% 5.8% 0.9% 24.0% 22.1% 9.0% 5.7% 7.4% 0.9% 24.1% 21.7% 454 1 456 50 43 7 5 40 14 NA 25 10 3.5 8.5 727 2 728 73 65 8 11 55 16 NA 39 12 4.1 13.1 994 2 996 94 84 10 17 69 18 NA 51 12 4.1 17.0 1360 4 1364 110 99 11 20 82 19 NA 63 12 4.1 21.1 1523 5 1528 136 119 12 21 102 27 NA 79 12 4.1 26.4 1752 6 1758 158 141 15 15 132 33 NA 100 12 4.0 33.6 2010A 2011A 2012A 2013A 2014E 2015E

20
TATA STEEL Ltd.

Result Update
"BUY"
14th March' 14
BUY
336 401 440 19% -9%
Tata Steel is a blue chip stock and is available at a very cheap valuation. With the European crisis behind us, US economy getting stronger and better outlook for Indian economy on the expectation of stable government at the Center, We feel Tata Steel may have price appreciation. valuing the financial performance We recommend Buy on the stock at a medium term target price of Rs.401. The consolidated EBITDA of Tata Steel came in at Rs. 4006.5 crore (EBITDA margin of 10.9%) , primarily on the back of operational efficiencies realized at its European division while the ensuing consolidated PAT came in at Rs. 503.2 crore. The company incurred capex to the tune of Rs.3900 crore in Q3FY14 and Rs.12300 crore in 9MFY14 wherein majority of capex has been incurred for Kalinganagar project. Tata Steel reported a good set of Q3FY14 numbers, and positively surprised by the EBITDA/tonne of Tata Steel Europe (TSE). The company reported a consolidated net income from operations of Rs. 36735.8 crore for the quarter, higher by 0.2% QoQ and 14.4% YoY.In Q3FY14, Tata Steel Indias Steel deliveries stood at 2.1 MT while TSE deliveries stood at 3.2 MT and South East Asia at 1.09MT. In Q3FY14, TSI reported EBITDA of Rs.2936 crore while TSE reported an EBITDA of Rs.860 crore. On a consolidated basis, consolidated steel sales stood at 6.4 MT. EBITDA/tonne of Indian operations came in at Rs. 14183/tonne while that of European operations came in at US$ 43/tonne
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume (Nos.) Nifty 500470 TATASTEEL 435/195 32710 22897 6493
Stock Performance-%
Absolute Rel. to Nifty 1M -9.3 -16.4 1yr -4.5 -14.7 YTD -3.0 -14.2

3QFY14 Promoters FII DII Others 31.4 16.1 25.4 27.2 2QFY14 1QFY14 31.4 13.6 26.1 29.0 31.4 13.2 26.3 29.2
1 yr Forward P/B
Critical Debt Level On the back of a consistent operational improvement at the companys European operations We are positive on the stock in long run .However, on the back of ongoing capacity expansion, the gross debt is expected to increase from 66074 crore (FY13) to 76919 crore (FY14E) and 77543 crore (FY15E). Odisha Project could provide further upside in long-term: The Company aims to make value added steel products at the new facility in Odisha (3mtpa) where the blended realizations could be potentially higher than existing products by 2015. We believe timely clearance for expansion of iron ore mine is critical for the plant. The company's Odisha plant is highly automated and will require fewer employees/ton compared to its Jamshedpur facility. In our view, unlike Karnataka and Goa, Odisha is very critical for the Indian steel industry. We estimate Odisha iron ore production in FY13 stood at 62MT (accounting for ~45% of Indias production). Financials : Q3FY14 Y-o-Y % Q-o-Q % Q3FY13 Q2FY14 Net Revenue 36736 14.4 0.2 32107 36645 Depriciation 1522 4.0 5.4 1463 1444 Interest Cost 1108 7.3 3.9 1032 1067 EBIDTA% 10.9 290bps 80bps 7.0 10.1 OPM% 6.8 430bps 70bps 2.4 6.1 NPM% 1.4 370bps (110bps) -2.3 2.5
(In Crs)

21
TATA STEEL
Business Outlook TATA Steel India The ministry of coal deallocated two of TATA coal blocks at pachmo and Kotre Basantpur. Tata steel appealed in the high court for this concern and waiting for the hearing of high courts hearing on 26th march. Sentiment has improved; though sectors like construction and auto continue to be under pressure. Rupee depreciation is helping to restore balance in the market Tata Steel Europe Liquid steel production improved further 1% QoQ to 3.91m tons. Sales volumes however declined 8% QoQ (+5.6% YoY) to 3.19m tons due to seasonal factors leading to increase in inventories by 300kt to 2.6m tons. Operating leverage helping EBIDTA margin to improve.(EBIDTA /ton increased 72% to Rs.273.) EU steel demand expected to show signs of gradual recovery in Q4 (+3.3%) from a low base and could translate into a recovery in end user sectors in 2014. TSE will ramp up production from currently operating facilities. TSE expects to liquidate inventories in 4QFY14 leading to sales volumes surpassing production. South East Asia Operation Construction sector outlook remains positive in the region, hence showing a positive signal for steel. The political uncertainty still continues in Thailand with no clear solution at sight. However, the business is focusing on customer relationships and service levels to drive performance. Recommendation At current market capitalization of Rs. 23444 Crores, the stock is trading at a forward P/B of just 0.9. Tata Steel is a blue chip stock and is available at a very cheap valuation. But if we look at its historical stock performance, in the past three years it had continued to trade between 0.6 to 1.9 P/B range. After bottoming out in August 2013 at a stock price of just under Rs. 200, Tata Steel stock have more than doubled in the past few months. Since January 2014, the stock had corrected slightly but still it is available at a low P/B (very much closer to the lower end of its P/B range). With the European crisis behind us, US economy getting stronger and better outlook for Indian economy on the expectation of stable government at the Center, We feel Tata Steel share price may have some more price appreciation left given the improvement in financial performance and Outlook. We recommend Buy on the stock at a medium term target price of Rs.401.
Indian Turnover and Realization Indian Turnover and Realization Indian Turnover and Realization
Indian Steel Deliveries Indian Steel Deliveries
Europe Turnover and Realization
Europian Steel Deliveries
Southeast Asia Turnover and Realization
Southeast Asia Steel Deliveries

22
TATA STEEL
Financials
Global Up & Downs China's industrial output rose 8.6% in the first two months of 2014 from a year earlier, the National Bureau of Statistics said on Thursday, missing market expectations for a 9.5% rise.
One year Stock Performance
One year LME Steel Price
23
N arnolia Securities Ltd

402, 4th floor 7/ 1, Lord s Sinha Road Kolkata 700071, Ph 033-32011233 Toll Free no : 1-800-345-4000 em ail: research@narnolia.com , w ebsite : w w w .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 change without 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.

India Equity Analytics Today: Buy Stock of KPIT Tech

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India Equity Analytics Today: Buy Stock of KPIT Tech

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India Equity Analytics

Daily Fundamental Report on Indian Equities

IEA-Equity Strategy 19th Mar, 2014 Edition : 227

KPIT Tech: "On billion dollar journey"

18th Mar 2014

18th Mar 2014

14th Mar 2014

Infosys: "Recovery delayed, but not denied"

14th Mar 2014

V-Guard Industries Ltd: "Colling Gun..."

14th Mar 2014

TATA STEEL Ltd :

14th Mar 2014

Share Holding Pattern-%

Narnolia Securities Ltd,

Share Holding Pattern-%

Source - Comapany/EastWind Research

Narnolia Securities Ltd,

Cement Sales Volume

Cement Realization Cement Realization Cement Realization Cement Realization

Per Ton Analysis Per Ton Analysis

Margin Gap Margin Gap

Source - Comapany/EastWind Research

Source - Comapany/EastWind Research

HOLD 1214 1287 1094 6 18

532174 ICICIBANK 758 140141 3.58 lakh

ICICI Bank Vs Nifty

Narnolia Securities Ltd,

Growth of CASA trend

Narnolia Securities Ltd,

2QFY14 103598 115039 84531 14618 32.6 36.2 26.6 4.6

3QFY14 104779 122076 91474 14303 31.5 36.7 27.5 4.3

YoY Gr. 6.8 22.0 24.1 -4.1

QoQ Gr. 1.1 6.1 8.2 -2.2

3QFY13 17.71 1.93 2.51

2QFY14 19.94 2.51 -0.79

3QFY14 19.97 3.57 4.47

YoY Gr. 12.8 85.0 78.1

QoQ Gr. 0.2 42.2 -

Rs. Cr NII Other Income Total Income % of Other Income to NII

259106 7.3 125839 8.8 209653 12.5 256019 13.4

255500 -1.4 140165 11.4 159560 -23.9 253728 -0.9

292,614 14.5 145,341 3.7 171,394 7.4 290,249 14.4

321,875 10.0 158,535 9.1 187,360 9.3 339,592 17.0

360,500 12.0 177,560 12.0 209,843 12.0 380,343 12.0

"BOOK PART PROFIT "

1385 1340 1220 -3 10

532215 AXISBANK 64823 26.18 cr 6493

Stock Performance 1M Absolute 25.2 Rel.to Nifty 17.9

1yr -1.9 -11.1

YTD -1.9 -11.1

Share Holding Pattern-%

Axis Bank Vs Nifty

37649 36224 27027 262398 255365 244501 211467 201303 179504

39.3 7.3 17.8

3.9 2.8 5.0

37558 272935 214892

-0.2 4.0 1.6

3008 1003 1.4 0.5

2734 838 1.4 0.4

2275 679 1.3 0.4

Valuation Book Value CMP P/BV

460 1404 3.1

549 1146 2.1