Ambit Insights

AMBIT INSIGHTS
28 May 2015
DAILY
Updates
Large cap stocks under coverage with

more than 10% upside
AIA Engineering (SELL)
BUYs
Slowdown in conversion process can get worse
Lupin
Results Update
Darkest before dawn
Engineers India (SELL)
Has it hit the bottom?
TTK Prestige (UNDER REVIEW)
Positive growth momentum; margin disappoints
Results Expectation
Coal India: (BUY, 13% upside)
Power Grid Corporation: (BUY, 22% upside)
FY16
P/E
2,467
41
23.9
Tech Mahindra
750
37
17.2
Tata Power
101
33
14.7
Tata Motors
600
27
7.2
Cadila Healthcare
Bata India (BUY)
TP Upside
(Rs)
(%)
2,280
23
22.4
Power Grid Corp
174
22
11.6
Bank of Baroda
195
21
7.6
IndusInd Bank
1,030
20
20.7
Torrent Pharma
1,477
19
16.1
Ashok Leyland
84
18
22.3
Axis Bank
665
15
15.9
Coal India
433
13
16.2
HCL Tech
1,100
11
17.3
TCS
2,900
11
22.2
Bharat Electronics
3,672
11
22.1
Maruti Suzuki
4,100
10
20.2
Source: Bloomberg, Ambit Capital research

Note: Large-caps have been defined as stocks with
mcap greater than US$ 2bn
Hindalco: (SELL, 13% downside)

Crompton Greaves: (SELL, 2% downside)
Cummins: (SELL, 40% downside)
Page Industries: (UNDER REVIEW)
Bajaj Electricals: (SELL, 23% downside)
Analyst Notes: Economy: Expect GDP growth in 4QFY15 to record a second

sequential deceleration
Ritika Mankar Mukherjee, CFA, +91 22 3043 3175
The CSO is scheduled to publish 4QFY15 GDP numbers later tomorrow. We expect
GDP growth to be recorded at 7.3% YoY in 4QFY15 thereby marking a second
quarterly sequential deceleration in the GDP growth rate, from 8.2% YoY in 2QFY15
and 7.5% YoY in 3QFY15. The QoQ slowdown is likely to be driven mainly by slower
services sector growth which in turn is likely to be the result of the sharp cut in
Government revenue expenditure growth in 4QFY15. Whilst Industrial sector is likely
to pick-up in 4QFY15 (as suggested by the improved IIP prints), Farm sector growth is
likely to appear stronger owing to the contraction seen in this gauge in 3QFY15.
We expect full year GDP growth in FY15 to close at 7.3% YoY (v/s CSOs est. of 7.4%
YoY) but expect GDP growth to decelerate to 7% YoY in FY16 based on our growing
conviction that the Prime Minister is prioritising a clean-up of the system over pursuit
of near-term GDP growth (refer to our note dated May 19, 2015 for details).
Source: Ambit Capital research
Ambit Capital and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, investors should be aware that Ambit Capital
may have a conflict of interest that could affect the objectivity of this report. Investors should not consider this report as the only factor in making their investment decision.
Please refer to the Disclaimers at the end of this Report.
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AMBIT INSIGHTS
AIA Engineering
Slowdown in conversion process can get worse
AIAs 2HFY15 mining volumes declined 4% YoY due to destocking by the
miners to optimise working capital. The management expects 1HFY16
volumes to be weak due to continued destocking. A leading unlisted global
high chrome grinding media manufacturer stated that conversion process has
slowed down as (a) high chrome grinding media has become 50% more
expensive (vs 40% a year back) than forged steel and (b) miners are reluctant
to increase operating expenditure in current tough environment. As a result,
we cut our FY16/17 mining volume estimates by 15%/12%. Limited growth
opportunities in cement, would lead to moderate 10% YoY FY16 volume
growth, 2% lower than management guidance. We have not changed our
FY16/17 EBITDA margins estimates of 25.3% (26.8% in FY15, management
guidance 22-24%) but see risk to pricing if mining industry further weakens.
Overall, we cut our FY16/17 EPS estimates by 6%/6% resulting in 7% cut to TP
to Rs1,038. Reiterate SELL as current valuation of 22x FY16E EPS is expensive
due to FY15-18E EPS CAGR of moderate 12.3% and decline in RoCE from 22%
in FY15 to 20% in FY18.
SELL
Quick Insight
Analysis
Meeting Note
News Impact
AIA Engineering
SELL
Bloomberg Code:
AIAE IN
CMP (`):
1,014
TP (`):
1,038
Mcap (` bn/US$ mn):
99/1,556
3M ADV (` mn/US$ mn):
117/1.8
Production cut in commodities due to lower prices: Global copper prices have
declined to a five-year low (US$2.72/lb). Thus, leading global miners (BHP Billiton and
Rio Tinto) have cut production in the name of equipment breakdown and
maintenance. A Chile industry group estimates 168 small producers would shut down
production due to the price slump. As per the China Iron & Steel Association, CY15
steel demand would continue to be weak, resulting in lower iron ore demand. During
the previous meltdown in global commodity prices, AIA found it difficult to penetrate
into mining clients; this time around the conversion process to high-chrome grinding
media has slowed down at a considerable pace in last 6-9 months.
Slowdown in conversion process: AIAs mining volumes declined 3.7% YoY in
4QFY15 due to destocking by miners to optimize working capital. The management
expects volumes would be weak for the next six months due to continued destocking
by its mining clients. Further, one of the leading unlisted global high chrome grinding
media manufacturer stated that most of its customers have cut production due to
lower commodity prices (especially iron ore and gold producers). High chrome
grinding media are used for pelletizing iron ore. As a result of lower steel production,
the demand for iron ore pellets and hence high chrome grinding media for iron ore
has declined.
The conversion process from forged steel to high chrome grinding media has slowed
down, as: (a) high chrome chrome grinding media have become less competitive than
forged steel, as the decline in scrap steel prices is higher than the decline in
ferrochrome prices, and (b) miners are reluctant to change operating parameters and
operating costs in a tough environment. We expect in such a scenario it is highly likely
that AIA will not be able to renegotiate pricing and could also witness pricing
pressure.
FY16 volumes sold to be below management guidance: AIA expects to sell 210k
ton volumes in FY16 and ~310k tons in FY18 (i.e additional 125k tons sold over
FY16-18). As per management, there is higher scope of penetration in gold and
copper as compared to platinum and iron ore. We estimate 15% YoY FY16 volume
growth in mining segment. Further, AIA has 90% + market share in high chrome
grinding media in domestic cement industry and 40-45% market share in global
cement industry. Thus, AIA has limited scope to increase market share in the cement
segment. As a result, we estimate 206k tons volumes would be sold in FY16 , up 10%
YoY, lower than management guidance of 210k tons.
Where do we go from here?
We have cut our mining volume estimates for FY16/17 by 15%/12.7% due to
slowdown in conversion process from forged steel to high chrome grinding media. As
a result we have revised downwards our FY16/17 total volumes sold by 9%/8%. We
Ambit Capital Pvt Ltd
Analysts
Tanuj Mukhija, CFA
tanujmukhija@ambitcapital.com
Tel: +91 22 3043 3203
Nitin Bhasin
nitinbhasin@ambitcapital.com
Tel: +91 22 3043 3241

28 May 2015
AMBIT INSIGHTS
expect mining volumes growth would pick-up in FY17 as AIA Engineering is currently
servicing 20 mines and the company has 10-15 mines in the pipeline. We estimate
5.2% realisation CAGR over FY16-18, resulting in revenue CAGR of 17.7% over FY1618. We believe the FY15 EBITDA margin of 26.8% is not sustainable, as the company
saw one-off currency benefits and delay in raw material cost pass-through. We
estimate 25% EBITDA margin over FY15-17 resulting in ~19% EPS CAGR over FY1517. As a result of lower revenues, we have decreased our FY16/17 EPS estimates by
6.5%/5.9% resulting in 7% cut in target price to Rs1,038/share vs Rs1,111 earlier.
Rich valuations despite slowdown in conversion process
Global copper and iron ore miners such as BHP, Rio Tinto and Vale have cut
production (under the pretext of maintenance) due to lower commodity prices. Thus,
the conversion process from high chrome to forged steel has slowed down. The
companys FY16-18E EBITDA margins would be ~150bps lower than the FY15 margin
of 26.8%, as AIA had one-off currency and lower raw material price benefits in
FY15. Despite its high-quality franchise with unique competitive advantages, we
reiterate SELL on AIA Engineering, with a revised TP of Rs1,038/share. Currently
expensive valuation of 22x FY16E EPS has fully factored in FY15-18E revenue/EPS
CAGR of 17.7%/12.3% and decline in RoCE from 22% in FY15 to 20% in FY18.

28 May 2015
AMBIT INSIGHTS
Change in estimates
Exhibit 1: Key assumptions (Rs mn, unless specified)
Old
Particulars (Rs mn, unless
specified)
Volume (ton)
YoY growth
New
Changes
Comments
FY16E
FY17E
FY16E
FY17E
FY16E
FY17E
227,440
261,519
206,212
240,308
-9.3%
-8.1%
17.8%
15.0%
10.0%
16.5%
143,920
174,010
121,800
151,890
-15.4%
-12.7%
27%
21%
15%
25%
68,820
71,927
69,712
72,836
1.3%
1.3%
4%
5%
4%
4%
14,700
15,582
14,700
15,582
0.0%
0.0%
5%
6%
5%
6%
0.5%
0.3%
0.0%
0.0% We have kept our moderate realization growth estimates

unchanged; though there is a risk to the same given softening
forged media pricing
0.0%
0.0%
-9.0%
-7.9%
Of which:
Mining volumes (tons)
YoY growth
Cement volumes (tons)
YoY growth
Utility volumes
YoY growth
Realization (Rs/kg)
YoY growth
Mining realization
YoY growth
Non-mining realization
YoY growth
Net Sales
YoY growth
Total Expenses
119
125
120
126
4.3%
5.2%
2.6%
5.0%
113.7
121.1
113.7
121.1
6.5%
6.5%
6.5%
6.5%
128.1
133.2
128.1
133.2
3.0%
4.0%
3.0%
4.0%
27,978
33,740
25,469
31,080
22.5%
20.6%
12.7%
22.0%
20,303
24,608
18,429
22,555
-9.2%
-8.3%
Adjusted EBITDA
6,876
8,246
6,242
7,639
-9.2%
-7.4%
Adjusted EBITDA margin
25.3%
25.1%
25.3%
25.3%
0 bps
EBITDA YoY growth
17.3%
19.9%
6.7%
22.4%
740
842
609
753
6,602
7,916
6,153
7,443
-6.8%
45
32
33
20
-27.3%
Taxes
1,967
2,365
1,836
2,227
-6.7%
Reported PAT
4,590
5,518
4,284
5,196
-6.7%
-5.8%
Adjusted PAT
4,582
5,511
4,284
5,196
-6.5%
-5.7%
Reported EPS
48.6
58.4
45.4
55.1
-6.5%
-5.6%
Adjusted EPS
48.6
58.4
45.4
55.1
-6.5%
-5.6%
-6.8%
-5.9%
Depreciation
EBIT
Interest
DPS
Working capital turnover
Net Debt/Equity
CFO
Capex
FCFF
8.4
10.1
7.8
9.5
4.29
4.54
3.42
4.00
-0.32
-0.34
-0.40
-0.38
-17.7%
We have cut our revenue estimates for FY16/17 due to

slowdown in conversion process from forged steel to high
chrome grinding media
We believe AIAs FY15 EBITDA margins are not sustainable as

20 bps AIA benefitted from one-off currency gains and delay in raw
material pass through in FY15.
-10.5%
-6.0%
-37.6% We have revised downwards our EPS estimates in-line with the
-5.8% change in EBITDA estimates
3,379
4,258
4,502
3,745
33.2%
-12.1%
-2,200
-1,600
-2,500
-2,500
13.6%
56.3%
1,179
2,658
2,002
1,245
69.8%
-53.2%
We have revised upwards our EPS estimates in-line with the

change in EBITDA estimates
Source: Company, Ambit Capital research

28 May 2015
AMBIT INSIGHTS
Relative valuation
AIA is a unique industrials company manufacturing high-chrome grinding media.
Globally, there are only two large high-chrome grinding media players namely
Magotteaux and AIA Engineering. Further, as Magotteaux is a subsidiary of Sigdo
Koppers, there is no direct relative valuation comparable for AIA Engineering in the
high-chrome grinding media industry. Thus, we have compared AIA engineering with
domestic industrial companies. AIA is trading at 25.5x FY16E EPS, a 10% premium to
its domestic industrial peers. In our opinion, AIAs premium is justified due to: (1) its
unique product (AIA has more than 90% market share in high-chrome grinding media
for the domestic cement industry), and (2) oligopolistic global industry structure with
several barriers to entry, leading to higher-than-peers EBITDA margins and RoIC.
Exhibit 2: AIA trades at a justified premium to its peers
Mcap
Companies
US$ mn
AIA ENGINEERING LTD
Revenues
(Rs mn)
Revenues
Revenues
FY14 CAGR FY13-15 CAGR FY16-17
EBITDA
PAT
margin (%) margin (%)
PAT
RoE
(%)
RoIC
(%)
FY15
CAGR
FY15
FY13-15
FY15
FY15
FY15
FY16E
FY15
FY16E
PE (x)
EV/EBITDA (x)
1,492
21,077
9.7%
20.2%
27.7
20.4
43%
22.5
18.3
22.2
21.2
15.1
13.7
GRAPHITE INDIA LTD
243
16,876
-6.9%
10.5%
8.1
3.4
-35%
3.3
2.2
27.1
9.3
11.4
7.7
ARRIUM LTD
385
6,211
1.0%
3.9%
5.2
(1.1)
-69%
(1.9)
NA
-2.3
56.7
5.9
5.1
486
20,187
1.2%
15.9%
13.0
6.6
22%
12.1
6.6
23.4
21.2
12.6
9.9
606
11,280
9.1%
26.4%
16.0
9.2
3%
17.6
14.9
37.6
28.6
21.0
16.8
1,146
27,004
9.6%
20.4%
12.7
8.9
20%
15.6
NA
31.2
24.9
19.9
15.7
632
9,164
15.4%
16.0%
14.6
8.8
35%
19.7
18.6
50.1
38.4
30.0
24.5
27.0
28.6
16.6
13.3
CARBORUNDUM
UNIVERSAL LTD
GRINDWELL NORTON
LTD
SKF INDIA LTD
TIMKEN INDIA LTD
Average
Source: Company, Ambit Capital research. Note: (1) Price as of 9 April 2015. (2) SKF and Grindwell Norton are Dec ending companies
Key catalysts for our SELL stance
Lower margins post capacity expansion by AIA: AIA has announced a 180k
tonne capacity expansion even though the conversion process from forged steel to
high-chrome grinding media has slowed down. In a weak demand scenario, AIA
may not be able to take price increases and it may continue to offer penetrative
pricing to gain market share from Magotteaux. As a result, AIAs FY16/17 EBITDA
margins would be 150bps lower than FY15 EBITDA margins post the aggressive
capacity expansions.
Slowdown in penetration of high-chrome grinding media: The conversion

process has slowed down as (a) high chrome grinding media has become 50%
more expensive (vs 40% a year back) than forged steel and (b) miners are
reluctant to increase operating expenditure in current tough environment. Thus we
estimate 206k tons volumes in FY16, lower than management guidance of 210k
tons
Key risks to our SELL stance
Higher-than-expected FY16 volume growth: The mining contracts are large

orders of 6-10k tonnes. AIA has a reached reasonable size (106k tonnes sold in
FY15) for mining applications and has the ability to supply large volumes for
major global miners. The company has 10-15 mines that can be added which
could lead to higher than our estimated volume CAGR of 19.6% over FY15-18.

28 May 2015
AMBIT INSIGHTS
Income statement
Particulars (Rs mn)
Operating Income
FY14
FY15
FY16E
FY17E
FY18E
21,616
22,600
25,469
31,080
36,740
% growth
17.7%
4.6%
12.7%
22.0%
18.2%
EBITDA
5,021
5,848
6,242
7,639
9,046
% growth
61.9%
16.5%
6.7%
22.4%
18.4%
EBITDA margin (%)
24.1%
26.8%
25.3%
25.3%
25.3%
381
697
609
753
847
Net depreciation / amortisation

Other income
334
832
520
557
663
Adjusted PBT
4,599
5,943
6,120
7,423
8,854
Provision for taxation
1,342
1,634
1,836
2,227
2,656
Reported Consolidated PAT
3,517
4,364
4,284
5,196
6,198
37.3
46.3
45.4
55.1
65.7
FY14
FY15
FY16E
FY17E
FY18E
17,466
20,914
24,341
28,498
33,457
900
641
641
141
141
EPS (Adjusted) (Rs.)

Balance sheet
Particulars (Rs mn)
Total Networth
Loans
Sources of funds
18,566
21,802
25,229
28,886
33,844
Net block
3,887
4,881
6,773
8,519
8,472
Investments
5,291
6,370
5,370
5,370
5,370
Cash and bank balances
2,198
1,868
5,073
5,476
9,083
Sundry debtors
4,315
3,938
5,144
6,192
7,219
Inventories
3,508
4,596
3,945
4,705
5,425
Loans and advances
2,121
2,690
2,791
3,321
3,825
12,154
13,139
16,969
19,713
25,575
Current Liabilites
2,490
2,209
2,908
3,559
4,215
Other current liabilities
1,161
1,018
1,356
1,660
1,965
Total Current Assets
Provisions
1,273
1,477
1,472
1,655
1,855
Current liabilities and provisions
4,924
4,705
5,737
6,874
8,036
Net current assets
8,391
9,452
12,589
14,499
19,505
Particulars (Rs mn)
FY14
FY15
FY16E
FY17E
FY18E
PBT
4,599
5,943
6,120
7,423
8,854
506
(1,600)
74
(1,690)
(1,599)
Cash Flow statement
Change in working capital

CFO
4,657
3,139
4,502
3,745
4,813
Purchase of fixed assets
(1,340)
(1,692)
(2,500)
(2,500)
(800)
Investment
(3,216)
(1,079)
1,000
CFI
(4,340)
(2,509)
(402)
(1,965)
(160)
Dividends paid
(445)
(662)
(862)
(857)
(1,039)
CFF
Free cash flow (CFO + Capital
Expenditure)
(911)
(959)
(895)
(1,377)
(1,046)
3,329
1,446
2,002
1,245
4,013

28 May 2015
AMBIT INSIGHTS
Key ratios
Particulars
FY14
FY15E
FY16E
FY17E
FY18E
Net debt/Equity
(0.4)
(0.4)
(0.4)
(0.4)
(0.4)
Working capital turnover (x)
2.3
2.5
3.4
4.0
4.5
Gross block turnover (x)
3.5
3.1
2.7
2.6
2.7
ROCE
20.7
22.0
18.5
19.4
19.9
ROE
20.6
22.5
19.0
19.7
20.1
115.3
80.7
101.5
78.2
82.6
P/E (x)
27.2
21.9
22.3
18.4
15.4
P/B (x)
5.5
4.6
3.9
3.4
2.9
17.7
15.1
13.7
11.1
9.0
Pre-tax CFO/EBITDA
EV/EBITDA (x)

28 May 2015
AMBIT INSIGHTS
Bata India
BUY
Darkest before dawn
Result Update
Batas revenues declined by 1% YoY in 5QFY15 (5% below our estimates) due
to (a) supply chain challenges continuing till Feb15 and (b) continued
weakness in consumer demand. While gross margins expanded by 38bps
YoY, EBITDA margins contracted by 375 bps YoY due to negative operating
leverage around employee costs and rental expenses. Hence there was a 29%
YoY decline in EBITDA (18% lower than our estimates). Adjusted PAT (preexceptionals) was Rs290mn, 27% decline YoY and 10% lower than our
forecasts. Based on our channel checks, we expect 10-11% revenue growth for
Bata from 1QFY16 onwards as supply chain issues are behind us, and the firm
is working on improving its ecommerce capability for the future. We revise
our revenue/ PAT estimates downwards by 1-2% /4-5% respectively for FY1617. We forecast 17% revenue CAGR over FY15-18 resulting in an EPS CAGR of
~29% (FY15-18). We reiterate BUY (TP of Rs 1,170, 13% upside).
Results Overview: Weakness transient and expected
Batas March quarter revenues of Rs4.9bn (5% below of our estimates and 10% below
consensus estimates) declined by 1% YoY, vs 12MCY14 growth of 7% YoY. Gross
margins compressed by 38bps YoY to 54.6% (33bps ahead of our estimates). Higher
employee costs and negative operating leverage especially around rental expenses
led to EBITDA margin compression of 375bps YoY to 9.5% (~150bps below our
estimates) with EBITDA declining by 29% YoY. Higher depreciation and interest charge
led to adjusted PBT decline of ~33% YoY (~14% below our estimates). Adjusted PAT
(pre-exceptionals) was Rs290mn, 27% decline YoY and 10% lower than our forecasts.
Exceptional items to the tune of ~Rs 330 mn included gains from property
development project and write back of provision created for the same project.
Stock Information
Bloomberg Code:
BATA IN
CMP (Rs):
1039
TP (Rs):
1,170
Mcap (Rs bn/US$ mn):
67/1043
3M ADV (Rs mn/US$ mn):
303/4.7
Stock Performance (%)

1M
3M 12M
YTD
Absolute
(15)
(11)
(21)
Rel. to Sensex
(10)
(24)
(21)
Ambit Estimates (Rs mn)

FY15
FY16E
FY17E
27,210
25,376
30,542
EBITDA
3,451
3,350
4,426
EPS (Rs)
32.1
32.7
45.0
Revenues
The weak revenue/ EBITDA growth momentum in this quarter was, we believe, due to
a combination of: (a) supply chain disruption following SAP implementation across all
its stores which lasted till Feb15; (b) weaker-than-expected retail footfalls for the
broader macro; and (c) negative operating leverage given high fixed costs (10%/13%
YoY growth in employee costs/rental expenses respectively).
IT-related issues have been resolved; store inventory levels back to normal
Our channel checks indicate that the drag from poor IT implementation (click here for
details) ended in Feb15 after the firm re-instated the old IT software at its distribution
centers without changing the new SAP software at stores. Thus, store inventory levels
are back to normal, putting an end to loss in sales. Benefits from the new software will
accrue in the future, e.g. access to store-specific MIS to the store manager to better
prepare for future demand
Feedback from our channel checks; New initiatives underway
Our channel checks suggest that Batas new MD of Retail, Mr Nitesh Kumar is very
proactive in resolving store level issues and has a slew of initiatives in the pipeline
which would be introduced over the next 6-18 months. Also at the store level, SSG
has revived to 5-8% YoY in the months of April and May amidst a weak macro
environment for most stores that we had interactions with.
Ecommerce concerns overdone
India is the second-largest geography (after Italy) with the fastest growth profile for
Bata globally and hence the parent firm does NOT want to miss out on the Indian
growth opportunity. Moreover, in e-commerce, Bata India is in the process of: (a)
creating a business unit internally for e-commerce with separate resource allocation
and sales targets; (b) cross-pollinating the thought process adopted in countries like
Indonesia, Thailand and Malaysia. As a result, albeit with a delay, we expect Bata to
execute its planned initiatives around e-commerce, and improve customer connect
over the next 1-2 years.
Analysts
Rakshit Ranjan, CFA
rakshitranjan@ambitcapital.com
Tel: +91 22 3043 3201
Aditya Bagul
adityabagul@ambitcapital.com
Tel: +91 22 3043 3264

28 May 2015
AMBIT INSIGHTS
Sales growth of 10-11% YoY in 1HFY16; 17% FY15-18E sales CAGR
Based on our channel checks we expect Batas revenue growth to revive to ~10-11%
YoY in 1HFY16 amidst a weak macro. After a macro demand revival (likely from
2HFY16 onwards), sales growth will revive to 16-18%, benefitting from: (a)
competitive advantages around retail network size, retail execution, and widened
merchandise; and (b) implementation of initiatives around e-commerce, advert
campaigns and concept store launch for women/kids.
Valuations: Attractive entry point post (>30%) de-rating
As explained above, management has recently introduced measures to (a) address
inefficiencies in supply chain, (b) improve customer connect and (c) enhance its online
presence. With the challenges around supply chain behind now, we expect 10-11%
revenue growth in 1HFY16 amidst a weak macro environment and 17% CAGR over
FY15-18.
With network-size-related expenses of rentals and >50% of employee costs
(equivalent to ~25% of revenues) being relatively fixed in nature, we expect Batas
17% revenue CAGR to translate into EPS CAGR of ~29% in FY15-18. Bata trades at
35x/25x FY16/FY17E P/E, at par with its three-year historical average P/E, and a 20%
unjustified discount to other high-quality consumer discretionary stocks. We revise our
estimates downwards by 1-2% for revenue and 4-5% for PAT over FY16-17. We
reiterate our BUY (TP Rs1,170, 13% upside).
Exhibit 1: Result Snapshot
Mar'15
Mar'14
Dec'14
YoY
QoQ
Ambit
Estimates
Divergence
Net Income
4,913
4,954
5,372
-1%
-9%
5,183
-5%
Raw materials consumed
2,228
2,266
2,397
-2%
-7%
2,368
-6%
Gross Profit
2,685
2,688
2,975
0%
-10%
2,816
-5%
Gross Margin
54.6%
54.3%
55.4%
38
(73)
54.3%
33
634
577
641
10%
-1%
638
-1%
12.9%
11.6%
11.9%
125
96
12.3%
59
783
692
801
13%
-2%
792
-1%
15.9%
14.0%
14.9%
198
103
15.3%
66
799
761
918
5%
-13%
814
-2%
% of NS
16.3%
15.4%
17.1%
90
(83)
15.7%
55
Total Expenses
Rs Mn
Employees cost
% of NS
Rent exp
% of NS
Other expenditure
4,444
4,296
4,758
3%
-7%
4,612
-4%
EBITDA
469
658
614
-29%
-24%
571
-18%
EBITDA Margin %
9.5%
13.3%
11.4%
(375)
(189)
11.0%
(147)
93
73
75
27%
24%
79
17%
562
732
689
-23%
-19%
650
-14%
Add: Other Income

PBDIT
161
136
185
18%
-13%
186
-13%
% of NS
Depreciation
3.3%
2.8%
3.4%
53
(16)
3.6%
(30)
PBIT
400
595
504
-33%
-21%
464
-14%
24%
-39%
64%
PBT
397
593
499
-33%
-20%
462
-14%
% of NS
8.1%
12.0%
9.3%
(388)
(120)
8.9%
(84)
Pretax Extraordinary Items
332
Tax
145
198
149
-27%
-3%
141
2%
(290)
30.6%
(362)
-17%
321
-10%
Interest
27.0%
33.5%
29.9%
(648)
Normalized PAT
290
394
349
-27%
Post Tax Exceptional Items
295
PAT incl Exceptional
584
394
349
48%
67%
Normalized tax rate (%)
Source: Ambit capital research

28 May 2015
AMBIT INSIGHTS
Balance sheet
Year to December
Total net worth
Deferred tax liability
CY12
CY13
FY15
FY16E
FY17E
6,990
8,399
10,206
11,679
13,586
(444)
(681)
(876)
(876)
(876)
Total liabilities
6,547
7,718
9,330
10,803
12,710
Net block
2,434
2,483
3,087
3,113
3,027
Inventories
4,621
5,827
7,047
6,195
7,291
449
509
584
551
663
Total current assets
8,236
10,419
11,925
13,135
16,306
Creditors
2,941
3,654
4,545
3,924
4,722
Net current assets
3,932
4,998
5,767
7,353
9,346
Total assets
6,547
7,718
9,336
10,947
12,855
CY12
CY13
FY15
FY16E
FY17E
18,425
20,652
26,940
25,125
30,240
Raw materials Cost
8,680
9,488
12,387
11,442
13,684
Employees cost and comm. on sales
2,524
2,775
4,001
3,785
4,349
Debtors
Income statement
Year to December
Net Sales
Rent expenses
2,153
2,619
3,742
3,493
4,075
15,675
17,432
23,584
21,873
25,933
EBITDA
2,750
3,220
3,356
3,252
4,307
EBIT
2,236
2,627
2,564
2,468
3,467
PBT
2,526
2,929
2,979
2,929
4,068
Adjusted PAT
1,721
2,010
2,004
1,992
2,767
Reported PAT / Net profit
1,721
1,909
2,336
1,992
2,767
Year to December
CY12
CY13
FY15
FY16E
FY17E
PBT
2,526
2,829
2,979
2,929
4,068
Total operating expenses
Cash flow statement
Depreciation
514
592
792
784
841
Cash flow from operating activities
1,845
1,825
1,293
3,428
2,840
Cash flow from investing activities (excl FD)
(742)
(667)
(1,118)
(504)
(341)
Cash flow from financing activities
(456)
(462)
(509)
(532)
(872)
647
696
-333
2,392
1,627
1,103
1,158
176
2,923
2,499
CY12
CY13
FY15
FY16E
FY17E
Gross margin (%)
52.9
54.1
54.0
54.5
54.8
EBITDA margin (%)
Net change in cash

Free cash flow
Ratio analysis / Valuation parameters

Year to December
14.9
15.6
12.5
12.9
14.2
Asset turnover excluding cash (x)
3.3
3.3
3.3
2.8
3.5
Working capital turnover (x)
6.4
6.4
6.4
5.6
7.1
3.5
3.5
4.0
3.2
3.5
RoCE (%)
26.8
26.2
21.7
18.3
22.0
ROE (%)
27.1
26.1
21.5
18.2
21.9

28 May 2015
AMBIT INSIGHTS
Engineers India
Has it hit the bottom?
EILs 4QFY15 revenue declined 1% YoY (in-line with our estimate). Despite
521bps YoY decline in consulting EBIT margins, total EBIT margin of 18.2%
was 496bps ahead of our estimate most likely due to one-off claim in the
Chennai refinery project. Importantly, EILs FY15 order inflow increased 106%
YoY to Rs23.8bn resulting in 25% YoY increase in order book to Rs36bn and
2.1x book-to-bill, highest book-to-bill in last four years. Post clarity from
management on domestic order inflows outlook and LSTK EBIT margins we
will revisit our estimates marginally, esp revenues. We may increase FY16/17
LSTK EBIT margins by 50-100bps to 7%. Overall we do not expect significant
change to FY16/17 EPS and TP of Rs210/share. Whilst we reiterate SELL with
target price of Rs210/share, the downside is limited given (a) 22% EPS CAGR
over FY15-18E, (b) 2.5% dividend yield and (c) RoE improvement of 680bps
over FY15-18E to 19.0%. EIL trades at 16x FY16E eps; poor capital allocation
to revive the defunct Ramagundam Fertiliser Plant (JV with NFL) remains a
key risk to its surplus cash and multiples.
4QFY15 performance in-line revenues, EBIT margins higher most likely due
to one-off claims in LSTK segment: Engineers Indias revenues declined 1% YoY,
2% below our estimates, as execution continues to be sluggish for both the segments:
consulting segment revenues declined 3% YoY and LSTK revenues were flat YoY.
Despite 521bps YoY decline in consulting EBIT margins to 23.5%, overall EBIT margins
increased 492bps YoY to 18.2% due to sharp YoY increase in LSTK EBIT margins to
27.2% in 4QFY15 vs 4.1% in 4QFY14. Engineers Indias 5-year average quarterly EBIT
margins is 7.5%. Thus, we believe the sharp rise in 4QFY15 is most likely due to oneoff claims in the Chennai refinery project. Overall, PAT increased 7% YoY lower than
EBIT YoY growth of 35% due to higher tax rate in 4QFY15 of 36% vs 31% in 4QFY14.
SELL
Result Update
Stock Information
Bloomberg Code:
ENGR IN
CMP (Rs):
197
TP (Rs):
210
66/1,045
142/2.2

1M
3M 12M YTD
Absolute
(3)
(31) (14)
Rel. to Sensex
(42) (14)

FY15
Revenues
FY16
FY17
17,412 18,207 21,699
EBITDA
2,243
2,854
3,884
EPS (Rs)
9.3
12.1
14.2
In addition to interim dividend of Rs3/share, Engineers India declared final dividend of

Rs2/share, 2.5% dividend yield for FY15. Despite asset light business model,
Engineers India continues to hold cash and current investments of Rs25.1bn (38% of
market capitalisation); limited reinvestment opportunities and high likelihood of
reinvestment of this cash in RoCE dilutive businesses will keep overall ROCE under
check.
EILs FY15 order book increased 25% YoY to Rs36bn, first YoY increase in five years.
Thus, we expect EILs FY16/17 sales to grow at 10%/33%. Since 4QFY15 revenue was
in-line with our estimates, we may not materially revise our FY16/17 revenue
estimates. Whilst we may increase LSTK segment FY16/17 EBIT margins by ~50100bps from 6% to 6.5%-7% we would not materially change our below-consensus
FY16/17E EBIT margin estimates of 15.7%/17.9%, as the recent consulting projects
won by the company are simple and small-ticket-sized low-margin jobs. In domestic
consulting, project travel cost is 4-5% of the overall project cost. However, the travel
cost in an international consulting project is ~10% of the project cost. Thus, the
international consulting EBIT margins are likely to be lower than domestic consulting
EBIT margins. We believe an increase in the share of international projects would limit
the consulting EBIT margin recovery to 28% and consulting EBIT margins are unlikely
to recover to historical highs of 40%. Thus, we would not materially change our target
price of Rs210/share.
Engineers India has scheduled earnings conference call today at 11:30am IST. Dial-in
details: +91 22 6746 8394. We will revisit our estimates post clarity from the
management regarding domestic order inflow outlook and LSTK margins.
Analysts
Tanuj Mukhija, CFA
Tel: +91 22 3043 3203
Nitin Bhasin
nitinbhasn@ambitcapital.com
Tel: +91 22 3043 3241

28 May 2015
AMBIT INSIGHTS
Reiterate SELL with TP of Rs210/share; however downside limited from CMP
Whilst Engineers India (EIL) would retain its leadership in the hydrocarbon consulting
segment, the weak order pipeline of greenfield refining expansions would likely lead
to moderate annual LSTK order intake of Rs7bn-8.5bn in FY16/17. (For details please
refer to Not out of the woods yet published on 11 September 2014). The higher
share of lower-margin international projects and brownfield projects would lead to
consulting EBIT margin of 25%/27% in FY16/17, lower than the FY09-14 average of
40.2%. Hence, our FY16/17 EBITDA estimates of Rs2.9bn/Rs3.9bn are materially
below consensus estimates. Whilst we reiterate SELL with target price of Rs210/share
the downside is limited given (a) 22% EPS CAGR over FY15-18E, (b) 2.5% dividend
yield and (c) RoE improvement of 680bps over FY15-18E to 19.0%.
Exhibit 1: EILs 4QFY15 standalone quarterly financials (Rs mn unless specified)
Particulars
4QFY15
4QFY14
3QFY15
YoY (%)
Order Book
36,409
31,231
38,794
17%
3,155
1,750
3,099
80%
2.1
1.3
2.3
4,885
4,948
3,983
-1%
23%
5,001
54%
73%
Total operating expense
3,944
4,221
3,625
-7%
9%
4,303
% of sales
80.7%
85.3%
91.0%
942
727
358
30%
163%
698
35%
19.3%
14.7%
9.0%
458bps
1029bps
14.0%
532bps
54
71
54
-25%
0%
37
45%
Order flow
Book to bill (x)
Net total income
EBITDA
EBITDA margin
Depreciation
EBIT
EBIT margin
Other income
Interest
QoQ (%) Ambit estimates
deviation
-6%
35,864
2%
2%
2,919
8%
2.1
-2%
86.0%
888
656
304
35%
192%
661
34%
18.2%
13.3%
7.6%
492bps
1054bps
13.2%
496bps
799
768
617
4%
30%
1,183
-32%
PBT
1,685
1,423
921
18%
83%
1,844
-9%
PBT margin
34.5%
28.8%
23.1%
573bps
1137bps
36.9%
-238bps
611
442
130
38%
371%
644
-5%
36.3%
31.0%
14.1%
(28)
(44)
192
Tax Expenses
Tax rate
34.9%
Current year taxes

Provision for deferred taxes
Adjusted PAT
1,101
1,026
599
7%
84%
1,200
-8%
Adjusted PAT margin
22.5%
20.7%
15.0%
181bps
750bps
24.0%
-145bps
12
(10)
Prior year taxes

Reported PAT
1,089
1,035
599
5%
82%
1,200
-9%
Reported PAT margin
22.3%
20.9%
15.0%
136bps
724bps
24.0%
-171bps
Exhibit 2: EILs 4QFY15 segment-wise quarterly financials (Rs mn unless specified)

Particulars
4QFY15
4QFY14
3QFY15
YoY (%)
QoQ (%) Ambit estimates
deviation
Consultancy and engineering
2,549
2,638
2,345
-3%
9%
2,690
-5%
Lumpsum turnkey projects
2,336
2,311
1,638
1%
43%
2,311
1%
Total Income
4,885
4,948
3,983
-1%
23%
5,001
-2%
Consultancy and engineering
23.5%
28.7%
20.1%
-521bps
336bps
25.0%
-153bps
Lumpsum turnkey projects
27.2%
4.1%
0.3%
2310bps
2690bps
6.0%
2119bps
Total PBIT margin
25.3%
17.2%
12.0%
805bps
1329bps
16.2%
903bps
Revenues
PBIT margins (%)


28 May 2015
AMBIT INSIGHTS
Balance sheet
Particulars (Rs mn)
Total Networth
FY14
FY15
FY16E
FY17E
FY18E
25,217
26,339
27,769
29,207
30,902
Loans
25,219
26,341
27,771
29,209
30,903
Gross Block
2,801
4,358
4,658
4,983
5,333
Investments
7,317
7,317
7,317
7,317
7,317
18,125
21,312
23,705
25,460
27,814
3,537
3,101
2,993
3,567
4,261
10
11
12
13
13
1,053
1,101
1,196
1,463
1,826
Sources of funds
Cash and bank balances

Sundry debtors
Inventories
Loans and advances
Other Current Assets
Current liabilities and
provisions
Net current assets
3,216
3,489
3,678
4,360
5,276
12,951
15,200
16,422
18,318
21,012
13,055
14,082
15,434
16,812
18,440
2,320
2,329
2,320
2,320
2,320
FY14
FY15
FY16E
FY17E
FY18E
Operating Income
18,465
17,412
18,207
21,699
26,361
Total expenses
Deferred Tax Assets
Income statement
Particulars (Rs mn)
14,592
15,169
15,353
17,815
21,397
EBITDA
3,873
2,243
2,854
3,884
4,965
EBITDA margin
Net depreciation /
amortisation
Other income
21.0%
12.9%
15.7%
17.9%
18.8%
148
202
248
265
284
3,359
2,731
3,417
3,476
3,677
Provision for taxation
2,214
1,630
1,958
2,306
2,716
Adjusted consolidated PAT
4,857
3,140
4,066
4,789
5,642
14.4
9.3
12.1
14.2
16.7
EPS (Adjusted) (Rs.)

Cash flow statement

Particulars (Rs mn)
FY14
FY15E
FY16E
FY17E
FY18E
PBT
7,070
4,770
6,023
7,095
8,358
(1,957)
1,338
(44)
(130)
130
823
1,639
1,103
1,649
2,578
1,673
2,731
2,867
2,951
3,127

CFO
CFI
Dividends paid
(1,183)
(1,011)
(1,595)
(2,439)
(2,873)
CFF
(2,562)
(1,183)
(1,860)
(2,845)
(3,351)
33
1,339
803
1,324
2,228
FY14
FY15
FY16E
FY17E
FY18E
(0.7)
(0.8)
(0.9)
(0.9)
(0.9)
2.4
2.0
2.0
2.3
2.5
Free cash flow
Ratio analysis / Valuation parameters

Particulars
Net debt/Equity
Working capital turnover
(x)
7.7
4.9
4.0
4.5
5.1
ROCE
10.6%
5.2%
6.5%
8.6%
10.5%
ROE
20.2%
12.2%
15.0%
16.8%
18.8%
Dividend yield
3.3%
2.6%
3.7%
4.3%
5.1%
P/E (x)
13.7
21.1
16.3
13.9
11.8
P/B (x)
EV/EBITDA (x)
2.6
2.5
2.4
2.3
2.1
10.6
16.8
12.4
8.7
6.3

28 May 2015
AMBIT INSIGHTS
TTK Prestige
UNDER REVIEW
Positive growth momentum; margin disappoints
Result Update
Revenues for TTK Prestige in 4QFY15 grew 5% YoY amidst a weak macro to Rs
2.8 bn (1%/ 3% below our and consensus estimates). Gross margins (adjusted
for one offs) declined by 230bps YoY due to product mix change in appliances
towards entry level SKUs. As a result, adjusted EBITDA margins were ~130
bps lower YoY. The firm gained or maintained market share across product
categories. Impact of e-commerce sales on inventory de-stocking for the brick
and mortar channel reduced considerably during the quarter and, as per the
management, has bottomed out now. The firms franchisee store channel
reported positive same store sales growth for the first time after seven
quarters. Management suggests that overall revenue growth momentum in
1QFY16 has been better than what it was in 4QFY15. Our stance on the stock
is currently Under Review with our last published target price being Rs 3,890
(4% upside). Based on our last published numbers we expect 38% EPS CAGR
over FY15-18 with ROCE rising to 30% in FY19.
Results review
TTK Prestiges 4QFY15 revenue increased by 5% YoY to Rs2.8bn, 1% lower than our
estimates (and 3% below consensus estimates). This included strong growth of 5-6% in
cookware and appliances while the pressure cooker segments grew by 2% YoY.
Exports revenue at Rs138mn remained flat YoY and contributed to ~5% of total sales.
Gross margins compressed by ~380 bps YoY (290 bps below our estimates) to 41.5%
primarily because of overheads absorption in the stock movement to the tune of Rs
~45mn (impacting gross margin by ~156 bps). Thus the adjusted gross margin at
43.1% compressed by 220 bps YoY (~140 bps lower than our estimates).
Management clarified that the gross margin compression was on account of higher
contribution of entry level products in appliances segment and NOT due to increased
instances of price discounting.
Stock Information
Bloomberg Code:
TTKPT IN
CMP (Rs):
3,750
TP (Rs):
UR
44/684
102/1.6

1M
3M 12M
YTD
Absolute
24
Rel. to Sensex
30
(3)

FY15
FY16
FY17
13,883
16,050
19,608
EBITDA
1,512
2,103
2,804
EPS (Rs)
79.2
119.2
161.8
Revenues
Growth in operating expenses (including employee expenses and other overheads)

was controlled at 6% YoY. Operating expenses included one-time CSR expenses to the
tune of ~Rs 31mn. Excluding this one time CSR expense, operating expenses growth
was restricted to 2% YoY. As a result the adjusted EBITDA margins contracted by ~133
bps YoY (~180 bps below our estimates). Higher depreciation charge and a higher
tax burden (as the firm was unable to avail the tax concessions available from the
manufacturing capacities of the Roorkee plant) led to a PAT decline of ~49% YoY on a
reported basis and 21% YoY on an adjusted basis (25-30% below our and consensus
estimates)
Key takeaways from the conference call
On E-commerce: Management highlighted that in 4QFY15 the firm entered into

agreements with ecommerce aggregators to curtail disruptive discounting and as
a result, avoid its adverse impact on the confidence levels of brick and mortar
channel. The disruptive discounting by ecommerce players led to inventory levels
at dealers stores declining from 6 weeks to 2 weeks during 3QFY15 especially in
Karnataka. While the inventory levels in the brick and mortar channel reduced
substantially during April 2014 to December 2014, the pace of decline moderated
during 4QFY15 and the management believes that the inventory levels would
remain stable going forward from current levels.
Market share remains intact: The management clarified on the call that the
company has gained market share by 100-150 bps YoY across product categories
primarily due to new product launches. Strongest market share gains in 4QFY15
have been in the appliances segment. This is also evidenced in the 35% YoY
decline in branded sales for Butterfly Gandhimathi in 4QFY15.
Analysts
Rakshit Ranjan, CFA
Tel: +91 22 3043 3201
Aditya Bagul
Tel: +91 22 3043 3264
Prestige Smart Kitchen network (570 stores,~20% of the revenues): SSG for
the PSK stores turned positive this quarter after being negative for 7 consecutive
quarters. SSG for PSKs in 4QFY15 was as high as 25% YoY and flat for FY15.

28 May 2015
AMBIT INSIGHTS
Valuations
TTK is likely to continue to build on its strengths around (a) product innovation with
the recent appointment of Mr. Sudeendra Koushik as Head-R&D; (b) distribution
network expansion; and (c) investing in brand recall using its scale advantages vs
peers. Consequently, the firm continues to gain share from peers like Hawkins,
Butterfly, Preethi and Stovekraft.
Our last published TP on the stock was Rs 3,890 (4% upside), however our current
stance is Under Review given only 4% upside vs our last published target price.
Based on our last published numbers, the stock trades at 32x FY16 P/E and is likely to
deliver 38% EPS CAGR over FY15-18 with ROCE rising from ~16% in FY15 to 30% in
FY19.
Exhibit 1: Result Snapshot
Rs Mn
Mar'15
Mar'14
Dec'14
YoY
Net sales
2,862
2,725
3,837
5%
-25%
QoQ Ambit Estimates

2,882
Divergence
-1%
Adjusted COGS*
1,630
1,492
2,179
9%
-25%
1,603
2%
% of NS
56.9%
54.8%
56.8%
218
17
0.56
131
Gross Profit
1,232
1,233
1,659
0%
-26%
1,278
-4%
Gross Margin
43.1%
45.2%
43.2%
(218)
(17)
0.44
(131)
Staff cost
237
215
271
10%
-13%
229
3%
% of NS
8.3%
7.9%
7.1%
40
122
0.08
33
Adjusted Other expenditure**

% of NS
EBITDA
EBITDA margin
Other income
% of NS
736
735
933
0%
-21%
736
0%
25.7%
27.0%
24.3%
(126)
140
0.26
18
260
283
455
-8%
-43%
314
-17%
9.1%
10.4%
11.9%
(133)
(279)
10.9%
(182)
10
10
17
4%
-41%
19%
0.4%
0.4%
0.5%
(0)
(9)
0.3%
PBDIT (Incl OI)
270
293
473
-8%
-43%
322
-16%
PBDIT margin
9.4%
10.8%
12.3%
(133)
(288)
11.2%
(176)
49
38
48
29%
2%
40
21%
1.7%
1.4%
1.2%
31
46
1.4%
31
Depreciation
% of NS
EBIT
EBIT Margin
Interest
% of NS
PBT
Current tax
221
255
425
-13%
-48%
282
-22%
7.7%
9.4%
11.1%
(164)
(334)
10%
(207)
11
13
18
-21%
-41%
12
-14%
0.4%
0.5%
0.5%
(12)
(10)
0.4%
(6)
211
242
407
-13%
-48%
270
-22%
67
61
126
10%
-47%
76
-11%
Tax Rate
32%
25.2%
31.1%
678
91
28.1%
390
PAT
143
181
281
-21%
-49%
194
-26%
Source: Ambit Capital Research, (*)The COGS are adjusted for overhead absorption on inventory(of Rs 45 mn) which is a non-recurring item. (**) The Operating
overheads are adjusted for one time CSR expenses (~Rs 31 mn).

28 May 2015
AMBIT INSIGHTS
Balance sheet (based on our last published forecasts)
Year to March (Rs mn)
FY13
FY14
FY15
FY16E
FY17E
FY18E
Net Worth
3,954
5,853
6,460
7,030
7,960
9,325
Total Debt
1,145
258
151
255
310
310
310
310
Others
Current Liabilities
2,656
2,352
2,189
3,282
4,010
4,900
Total Liabilities
7,907
8,718
8,959
10,622
12,280
14,535
Fixed Assets
3,082
3,639
3,629
3,498
3,364
3,228
Investments
90
35
44
44
44
Current Assets
4,825
4,988
5,294
7,081
8,872
11,263
Total Assets
7,907
8,718
8,959
10,622
12,280
14,535
Income statement (based on our last published forecasts)

Net Sales
FY13
FY14
FY15
FY16E
FY17E
FY18E
13,585
12,938
13,883
16,050
19,608
23,960
% Growth
23%
-5%
7%
16%
22%
22%
Gross Profit
5,819
5,596
6,026
7,062
8,588
10,470
EBITDA
2,037
1,583
1,512
2,103
2,804
3,584
PBIT
1,995
1,514
1,373
1,982
2,691
3,507
PBT
1,852
1,429
1,328
1,982
2,691
3,507
PAT
1,331
1,099
928
1,388
1,884
2,455
EPS
117.6
88.4
79.2
119.2
161.8
210.9
17%
-17%
-10%
50%
36%
30%
EPS Growth
Cash flow statement

FY13
FY14
FY15
FY16E
FY17E
FY18E
EBIT
1,995
1,514
1,373
1,982
2,691
3,507
Depreciation
90
148
190
182
184
186
Others
(325)
(471)
(352)
(595)
(807)
(1,052)
(760)
(367)
(469)
639
(468)
(573)
Cash flow from operations
972
831
743
2,208
1,599
2,068
Cash flow from investments
(889)
(734)
(125)
(50)
(50)
(50)
Cash flow from financing
13
(146)
(602)
(817)
(953)
(1,090)
Change in cash
97
(48)
15
1,341
596
928
Free cash flow
49
126
562
2,158
1,549
2,018
Ratio analysis / Valuation parameters (based on our last published forecasts)

FY13
FY14
FY15
FY16E
FY17E
FY18E
Gross margin (%)
42.8%
43.2%
43.4%
44.0%
43.8%
43.7%
EBITDA margin (%)
15.0%
12.2%
10.9%
13.1%
14.3%
15.0%
9.8%
8.5%
6.7%
8.6%
9.6%
10.2%
0.2
(0.0)
(0.0)
(0.2)
(0.3)
(0.3)
RoCE (%)
35.3%
19.5%
15.2%
20.6%
25.1%
28.4%
RoE (%)
39.1%
22.4%
15.1%
20.6%
25.1%
28.4%
31.9
42.4
47.4
31.5
23.2
17.8
Net profit margin (%)

Net debt: equity (x)
P/E (x)
Price/Sales (x)
3.1
3.3
3.1
2.6
2.2
1.8
EV/EBITDA (x)
21.5
27.1
28.3
20.3
15.2
11.9

28 May 2015
AMBIT INSIGHTS
Coal India:
4QFY15 results expectation
(COAL IN, mcap US$37.8bn, BUY, TP Rs433, 13% upside)

Analyst: Parita Ashar, paritaashar@ambitcapital.com, +91 22 3043 3223
Coal India will announce its 4QFY15 results today. Coal India has reported offtake of
~135kt in 4QFY15, up 3.7% YoY and 8.2% QoQ, as 4Q is the seasonally strongest
quarter of the year. We build in e-auction volumes of 18mt in 4QFY15 vs 5.6mt in
3QFY15 and 16.8mt in 4QFY14. Higher e-auction volumes coupled with incentive
payments to be received in 4Q is likely to result in an increase in blended realisation
to Rs1,593/t vs Rs1,399/t in 3QFY15. Stronger volumes, coupled with higher eauction volumes, are likely to increase EBITDA margin to 28.8% from 21.6% in
3QFY15 (30.1% in 4QFY14). Coal India remains our top pick in the Metals & Mining
space given our expectations of recovery in volume growth. We reiterate BUY with a
TP of Rs433, 16% upside. The stock is currently trading at an FY17 P/E of 12.9x vs the
historical average of 12.7x.
Exhibit 1: Results expectations (Rs mn unless specified)
Particulars
Mar'15E
Mar'14
Dec'14
YoY
QoQ
Sales
214,743
199,980
177,629
21
61,901
60,249
38,313
62
28.8%
30.1%
21.6%
-130 bps
726 bps
PBT
79,626
69,016
50,756
15
57
PAT
53,350
44,342
32,625
20
64
EBITDA
EBITDA margin (%)

28 May 2015
AMBIT INSIGHTS
Power Grid Corporation:
(PWGR IN, mcap US$11.8bn, BUY, TP Rs174, 22% upside)

Analyst: Nitin Bhasin, nitinbhasin@ambitcapital.com, +91 22 3043 3241
We expect revenue growth of 22% YoY owing to Rs80bn capitalisation in 4QFY15 (up
33% YoY). Given PGCILs regulated business model, EBITDA growth is directly
correlated to sales growth. Investment of equity proceeds in business operations
would lead to lower other income YoY. Hence, PBT YoY growth of 11% would be
lower than EBITDA YoY growth of 21%. PAT growth at 24% YoY would be higher than
PBT growth due to lower tax rate under new FY14-19 CERC regulations.
Key things to watch out for: (a) List of projects to be capitalized in FY16 (b) Status of
ongoing Biswanath-Chariyali Agra project.
We maintain our BUY stance with target price of Rs174/share given PGCILs regulated
business model, strong balance sheet and near monopoly in the inter-regional
transmission grid.
Exhibit 3: Results expectation (Rs mn, unless specified)
Company name
Mar'15
Mar'14
Dec'14
YoY
QoQ
Sales (Rs mn)
48,687
39,863
43,537
22%
12%
EBITDA (Rs mn)
41,115
34,032
37,697
21%
9%
84.4%
85.4%
86.6%
-92 bps
-214 bps
PBT (Rs mn)
18,743
16,865
15,473
11.1%
21%
PAT (Rs mn)
14,574
11,758
12,290
23.9%
18.6%
EBITDA margin (%)

28 May 2015
AMBIT INSIGHTS
Hindalco:
(HNDL IN, mcap US$4.3bn, SELL, TP Rs116, 13% downside)

Analyst: Parita Ashar, paritaashar@ambitcapital.com, +91 22 3043 3223
Hindalco will announce its 4QFY15 results today. Revenues should decline ~4% QoQ
as xx% decline in aluminium realisations is partially offset by rising volumes from the
Mahan and Aditya smelters. We build in aluminium production of 234kt in 4QFY15
(vs 217kt in 3QFY14) and copper production of 95kt. We expect EBITDA of Rs8.6bn,
down 6% QoQ, mainly due to sequentially lower aluminium prices. PBT and PAT
estimates factor in interest and depreciation costs for the Mahan and Aditya smelter of
~Rs4.5bn. We reiterate our SELL stance on Hindalco and Nalco, driven by our muted
outlook for aluminium prices and premiums (due to global overcapacity and high
inventory). Further, with the de-allocation of captive coal blocks and partial win back
of coal resources at market prices, we expect RoCEs of aluminium smelters to remain
in low single digits. Hindalco trades at 6.6x FY17 EV/EBITDA, a premium to the
historical average of 6.0x.
Exhibit 1: Results expectations (Rs mn unless specified)
Particulars
Sales
Mar'15E
Mar'14
Dec'14
YoY
QoQ
82,421
84,351
86,030
(2)
(4)
EBITDA
8,660
8,441
9,233
(6)
EBITDA margin (%)
10.5%
10.0%
10.7%
50 bps
-23 bps
PBT
2,950
2,019
4,721
46
(38)
PAT
2,301
6,441
3,594
(64)
(36)

28 May 2015
AMBIT INSIGHTS
Crompton Greaves:
(CRG IN, mcap US$1.6bn, SELL, TP Rs164, 2% downside)

Analyst: Bhargav Buddhadev, bhargavbuddhadev@ambitcapital.com, +91 22 3043 3252
Crompton Greaves will announce its 4QFY15 results today. We expect consolidated
revenues to increase 7% YoY to Rs40.3bn led by 9% YoY growth in power systems
driven by a pick-up in execution. For the consumer segment, we expect flattish
revenues given the weak demand environment. We expect EBITDA margin to decline
marginally by 10bps YoY to 4.9% led by higher revenue share of the power business.
Consequently, we expect EBITDA to increase by 4% YoY to Rs2.0bn. Whilst we expect
PBT to decline by 30% YoY to Rs1.2bn due to a higher base of other income in
4QFY14, we expect APAT to increase by 9% YoY to Rs695mn led by a reduction in tax
rate from 53% in 4QFY14 to 42% in 4QFY15. Whilst our revenue estimate is 4%
ahead of consensus, our EBITDA is 4% below consensus estimates.
CRGs consumer franchise is very strong but its overdependence on fans (43% of
consumer revenues) is a cause of concern given the recent entry 7-8 recent players.
We instead prefer Havells franchise given its diversified portfolio and strong
relationships with channel partners. We have concerns on the standalone power and
industrial franchise too, given its weak smart grid and automation franchise, and
given the commoditised nature of its industrial business. A recovery for subsidiaries
looks tough given the weak outlook for the European T&D sector.
At CMP of Rs168/share, the stock is trading at 13.8x FY17 P/E and 2.1x FY17 P/B, in
line with its historical average. Our SOTP value of Rs164/share implies an FY17 P/E of
13.4x. We value the consumer business at Rs88/share (implied FY17 P/E of 18.0x),
the standalone power business at Rs31/share (implied FY17 P/E of 16.7x), the
standalone industrial business at 19/share (implied FY17 P/E of 10.8x) and
international subsidiaries at Rs11/share (43.9x FY17 P/E).
Key things to watch out for: a) management commentary on the demerger of
consumer business, b) losses at subsidiaries, c) order intake growth in the power
business.
The conference call is scheduled at 8:00pm IST today.
Exhibit 1: Result expectations (Rs mn, unless specified)
Particulars
Sales
EBITDA
EBITDA margin (%)
PBT
APAT
Mar'15E
Mar'14
Dec'14
YoY
40,232
37,665
33,332
7%
1,952
1,881
1,518
4%
4.9%
5.0%
4.6%
-10bps
1,188
1,703
817
-30%
695
638
70
9%
QoQ Comment
Led by 9% YoY growth in the power business; for consumer
21% we expect flattish revenues given the weak demand
environment
29% We expect marginal decline in EBITDA margin led by a higher
30bps revenue share of power business
45% Lower PBT is led by higher base of other income in 4QFY14
We expect decline in tax rate from 53% in 4QFY14 to 42% in
897%
4QFY15

28 May 2015
AMBIT INSIGHTS
Cummins:
(KKC IN, mcap US$3.7bn, SELL, TP Rs507, 40% downside)

Cummins India will announce its 4QFY15 results today. We expect revenue to grow by
9% YoY to Rs10.6bn due to: (a) the 15% price hike under the CPCB II norms, (b) lower
base effect, as 4QFY14 revenues declined 14% YoY, and (c) strong growth in exports.
However, we expect the loss of market share to continue for Cummins, as the price
hike of 15% taken by Cummins (cost increase for Cummins is also 15%) is higher than
peers 8-10%. Note that Cummins has been losing market share to its peers such as
Kirloskar Oil Engines and Greaves Cotton, with its domestic genset revenue growth
underperforming its peers by an average of ~23 % percentage points over the past
five quarters.
Consequent to the decline in domestic volumes, we expect unfavourable operating
leverage to kick in and EBITDA margin to decline by 10bps YoY to 17.5%. Therefore,
we expect EBITDA to increase by 9% YoY to Rs1.9bn. However, PBT should increase
12% to Rs2.1bn due to 42% YoY increase in other income driven by a lower base. We
expect PAT to increase 26% YoY to Rs1.8bn due to reduction in tax rate from 24% in
4QFY14 to 17% in 4QFY15, given the higher growth in exports.
Whilst our revenue estimates are 4% below consensus, our EBITDA estimates are inline with consensus estimates.
Cummins is trading at a punchy valuation of 30.0x FY16 P/E, a 70% premium to its
five-year average. We believe the valuations may correct, as its EPS growth gets
lowered to a CAGR of 5% over FY15-17E vs 8% CAGR over FY10-14 and average
RoEs come down to 22% over FY15-17E as compared to 31% over FY10-14. Cummins
traded at such peak valuations (23.0x-25.0x P/E) in December 2010, ahead of its best
year when RoE was 35.1% and EPS growth was 33%. Our TP of Rs507/share implies
FY17 P/E of 18.5x, a 5% premium to five-year average.
Particulars
Mar'15E
Mar14
Dec'14
YoY
10,611
9,716
10,831
9%
-2%
EBITDA
1,862
1,709
1,894
9%
-2%
EBITDA margin (%)
17.5%
17.6%
17.5%
-10bps
0bps
PBT
2,086
1,867
1,996
12%
PAT
1,782
1,418
1,731
26%
Sales
QoQ Comment
We expect Cummins to report single digit revenue growth due to a loss in
market share and a 20% YoY decline in domestic genset industry volumes
Margin to decline marginally
4% Higher growth in PAT is supported by lower tax rate due to higher growth
3% in exports

28 May 2015
AMBIT INSIGHTS
Page Industries:
(PAGE IN, mcap US$2.6bn, UNDER REVIEW)

Analyst: Rakshit Ranjan, CFA, rakshitranjan@ambitcapital.com, +91 22 3043 3201
Page Industries will report its 4QFY15 results today. The company would likely report
sales growth of 31% YoY. This we believe would be driven by: (a) strong underlying
volume growth, (b) price hikes taken on products, (c) increase in the sales mix towards
high-realisation products like leisurewear, and (d) new product launches. Whilst we
expect gross margins to expand by ~35bps YoY, operating leverage around staff
expenses and improvements in the IT platform would result in EBITDA margin
expansion of ~55bps YoY. Thus, EBITDA is likely to increase by 32% YoY. We expect
PAT to increase by 42% YoY due to lower depreciation and interest expenses.
Things to watch out for: a) volume growth across categories in a tough macro
demand environment; b) expansion of the EBO network of stores; c) expected timing
of launch of kids innerwear; and d) benefits of upgrades made to the software used
for supply chain efficiency.
The stock is currently trading at a P/E multiple of 56x/41x FY16/FY17.
Exhibit 1: Results expectations (Rs mn, unless specified)
Page Industries
Mar'15
Mar'14
Dec'14
YoY
3,707
2,828
3,830
31%
804
598
778
34%
3%
21.7%
21.1%
20.3%
55
137
PBT (Rs mn)
722
546
696
32%
4%
PAT (Rs mn)
497
351
447
42%
11%
Sales (Rs mn)

EBITDA (Rs mn)
EBITDA margin (%)
QoQ Comments
Revenue growth intact on the back of new product launches and expanding
-3%
reach. We believe the volume growth to be strong at 20%.
IT improvements and operating leverage benefits leads to marginal EBITDA
margin expansion
PAT growth optically higher due to high tax burden in the base quarter.
Source: Company, Ambit Capital research; Note: * Change in EBITDA margin is in bps

28 May 2015
AMBIT INSIGHTS
Bajaj Electricals:
(BJE IN, mcap US$427mn, SELL, TP Rs202, 23% downside)

Bajaj Electricals will announce its 4QFY15 results today. We expect revenues to
increase by 13% YoY to Rs14.3bn led by 17% YoY increase in E&P revenues which in
turn is driven by 112% YoY increase in opening order book. We expect non-E&P
revenue to increase only 11% YoY despite the low base (non-E&P revenue were flat
YoY in 4QFY14) due to a weak demand environment as well as a loss in market
share.
We expect EBITDA to increase from Rs55mn in 4QFY14 to Rs923mn in 4QFY15 led by
the turnaround of its E&P business. We expect E&P business to register an EBIT profit
of Rs288mn vs a loss of Rs205mn in 4QFY14. Even in the non-E&P business we expect
improvement in EBITDA margin by 250bps YoY to 5.9%. Note that in 4QFY15, EBIT
margin of the non-E&P business had declined 460bps YoY. Consequently we expect
PBT and APAT to turn positive from a loss of Rs146mn and Rs106mn in 4QFY14 to a
profit of Rs638mn and Rs511mn respectively. Our revenue and EBITDA estimates are
6% and 31% ahead of consensus. We believe the divergence is led by our expectation
of the E&P business turning around during the quarter.
Bajajs consumer business is trading at 28.3x FY17 EPS (assuming the E&P business is
valued at Rs14/share, implied 2.8x FY17 P/E), an unjustified premium of 11% to
Havells standalone business, given Bajaj is losing market share. We believe the roll
out of TOC is a risk to BJEs consumer franchise, as it is currently creating disruption in
the channel which in turn is hurting BJEs growth. Hence if the TOC is not rolled out in
a disciplined manner it could annoy the channel which is a big risk for BJE given that
its products are sold as a push from the channel rather than a demand pull from
the customer.
Our SOTP-based target price is Rs202/share which values the consumer business at
Rs188/share (implied FY17 P/E of 21.3x, 17% discount to Havells standalone
business) and the E&P business at Rs14/share (implied FY17 P/E of 2.9x).
Particulars
Mar'15E
Mar'14
Dec'14
YoY
14,349
12,710
12,507
13%
15%
923
55
649
NA%
42% Led by a turnaround of the E&P business.
6.4%
0.4%
5.2%
600bps
PBT
638
(146)
444
NA
44% Trickle down impact of higher EBITDA
PAT
511
(106)
311
NA
65%
Sales
EBITDA
EBITDA margin (%)
QoQ Comment
Revenue growth led by 17% YoY increase in E&P revenues which is driven
by 112% YoY increase in the opening order book
Improvement in EBITDA margin is led by 250bps YoY expansion in Non

120bps E&P and turnaround in E&P; we expect EBIT profit of Rs288mn vs a loss of
Rs205mn in 4QFY14

28 May 2015
AMBIT INSIGHTS
Institutional Equities Team

Saurabh Mukherjea, CFA
CEO, Institutional Equities
(022) 30433174
saurabhmukherjea@ambitcapital.com
Research
Analysts
Industry Sectors
Nitin Bhasin - Head of Research
E&C / Infra / Cement / Industrials
(022) 30433241
Desk-Phone E-mail
nitinbhasin@ambitcapital.com
Aadesh Mehta, CFA
Banking / Financial Services
(022) 30433239
aadeshmehta@ambitcapital.com
Achint Bhagat
Cement / Infrastructure
(022) 30433178
achintbhagat@ambitcapital.com
Aditya Bagul
Consumer
(022) 30433264
Aditya Khemka
Healthcare
(022) 30433272
adityakhemka@ambitcapital.com
Ashvin Shetty, CFA
Automobile
(022) 30433285
ashvinshetty@ambitcapital.com
Bhargav Buddhadev
Power Utilities / Capital Goods
(022) 30433252
bhargavbuddhadev@ambitcapital.com
Deepesh Agarwal
Power Utilities / Capital Goods
(022) 30433275
deepeshagarwal@ambitcapital.com
Gaurav Mehta, CFA
Strategy / Derivatives Research
(022) 30433255
gauravmehta@ambitcapital.com
Karan Khanna
Strategy
(022) 30433251
karankhanna@ambitcapital.com
Krishnan ASV
Real Estate
(022) 30433205
vkrishnan@ambitcapital.com
Pankaj Agarwal, CFA
(022) 30433206
pankajagarwal@ambitcapital.com
Paresh Dave, CFA
Healthcare
(022) 30433212
pareshdave@ambitcapital.com
Parita Ashar
Metals & Mining / Oil & Gas
(022) 30433223
paritaashar@ambitcapital.com
Prashant Mittal, CFA
Derivatives
(022) 30433218
prashantmittal@ambitcapital.com
Rakshit Ranjan, CFA
Consumer / Retail
(022) 30433201
Ravi Singh
(022) 30433181
ravisingh@ambitcapital.com
Ritesh Gupta, CFA
Midcaps Chemical / Retail
(022) 30433242
riteshgupta@ambitcapital.com
Ritesh Vaidya
Consumer
(022) 30433246
riteshvaidya@ambitcapital.com
Ritika Mankar Mukherjee, CFA
Economy / Strategy
(022) 30433175
ritikamankar@ambitcapital.com
Ritu Modi
Automobile
(022) 30433292
ritumodi@ambitcapital.com
Sagar Rastogi
Technology
(022) 30433291
sagarrastogi@ambitcapital.com
Sumit Shekhar
Economy / Strategy
(022) 30433229
sumitshekhar@ambitcapital.com
Sandeep Gupta
Media / Midcaps
(022) 30433211
sandeepgupta@ambitcapital.com
Tanuj Mukhija, CFA
E&C / Infra / Industrials
(022) 30433203
Utsav Mehta, CFA
Technology
(022) 30433209
utsavmehta@ambitcapital.com
Sales
Name
Regions
Sarojini Ramachandran - Head of Sales
UK
Desk-Phone E-mail
Dharmen Shah
India / Asia
(022) 30433289
dharmenshah@ambitcapital.com
Dipti Mehta
India / USA
(022) 30433053
diptimehta@ambitcapital.com
Hitakshi Mehra
India
(022) 30433204
hitakshimehra@ambitcapital.com
Krishnan V
India / Asia
(022) 30433295
krishnanv@ambitcapital.com
Nityam Shah, CFA
USA / Europe
(022) 30433259
nityamshah@ambitcapital.com
Parees Purohit, CFA
UK / USA
(022) 30433169
pareespurohit@ambitcapital.com
Praveena Pattabiraman
India / Asia
(022) 30433268
praveenapattabiraman@ambitcapital.com
Shaleen Silori
India
(022) 30433256
shaleensilori@ambitcapital.com
+44 (0) 20 7614 8374 sarojini@panmure.com
USA / Canada
Ravilochan Pola - CEO
Americas
+1(646) 361 3107
ravipola@ambitpte.com
Production
Sajid Merchant
Production
(022) 30433247
sajidmerchant@ambitcapital.com
Sharoz G Hussain
Production
(022) 30433183
sharozghussain@ambitcapital.com
Joel Pereira
Editor
(022) 30433284
joelpereira@ambitcapital.com
Nikhil Pillai
Database
(022) 30433265
nikhilpillai@ambitcapital.com
E&C = Engineering & Construction

28 May 2015
AMBIT INSIGHTS
Bata india ltd (BATA IN, BUY)
Sep-14
Nov-14
Jan-15
Mar-15
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Sep-14
Nov-14
Jan-15
Mar-15
May-15
May-15
Jul-14
Jul-14
Jul-14
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
1,600
1,400
1,200
1,000
800
600
400
200
0
BATA INDIA LTD

Engineers India Ltd (ENGR IN, SELL)
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
350
300
250
200
150
100
50
0
ENGINEERS INDIA LTD

TTK Prestige Ltd (TTKPT IN, UNDER REVIEW)

5,000
4,000
3,000
2,000
1,000
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
TTK PRESTIGE LTD


28 May 2015
AMBIT INSIGHTS
AIA Engineering Ltd (AIAE IN, SELL)
May-15
Mar-15
Jan-15
Nov-14
Sep-14
Jul-14
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
1,400
1,200
1,000
800
600
400
200
0
AIA ENGINEERING LTD

Power Grid Corp Of India Ltd (PWGR IN, BUY)
May-15
Mar-15
Jan-15
Nov-14
Sep-14
Jul-14
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
180
160
140
120
100
80
60
40
20
0
POWER GRID CORP OF INDIA LTD

Bajaj Electricals Ltd (BJE IN, SELL)
May-15
Mar-15
Jan-15
Nov-14
Sep-14
Jul-14
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
400
350
300
250
200
150
100
50
0
BAJAJ ELECTRICALS LTD


28 May 2015
AMBIT INSIGHTS
Cummins India Ltd (KKC IN, SELL)
1,000
800
600
400
200
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
Jul-14
Sep-14
Nov-14
Jan-15
May-15
May-14
May-14
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
May-12
Jul-12
CUMMINS INDIA LTD

Crompton Greaves Ltd (CRG IN, SELL)

250
200
150
100
50
May-15
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
CROMPTON GREAVES LTD

Page Industries Ltd (PAG IN, UNDER REVIEW)
May-15
Mar-15
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
PAGE INDUSTRIES LTD


28 May 2015
AMBIT INSIGHTS
Hindalco Industries Ltd (HNDL IN, SELL)
250
200
150
100
50
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
Jul-14
Sep-14
Nov-14
Jan-15
Mar-15
May-15
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
HINDALCO INDUSTRIES LTD

Coal India Ltd (COAL IN, BUY)
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
Sep-12
Jul-12
May-12
450
400
350
300
250
200
150
100
50
0
COAL INDIA LTD


28 May 2015
AMBIT INSIGHTS
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>10%
SELL
<10%
NO STANCE
We have forward looking estimates for the stock but we refrain from assigning valuation and recommendation
UNDER REVIEW
We will revisit our recommendation, valuation and estimates on the stock following recent events
We do not have any forward looking estimates, valuation or recommendation for the stock
NOT RATED
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28 May 2015

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AMBIT INSIGHTS

Large cap stocks under coverage with

AIA Engineering (SELL)

Slowdown in conversion process can get worse

Bata India (BUY)

Power Grid Corp

Source: Bloomberg, Ambit Capital research

Hindalco: (SELL, 13% downside)

Analyst Notes: Economy: Expect GDP growth in 4QFY15 to record a second

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

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Mcap (` bn/US$ mn):

3M ADV (` mn/US$ mn):

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Ambit Capital Pvt Ltd

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0.0% We have kept our moderate realization growth estimates

Adjusted EBITDA margin

EBITDA YoY growth

We have cut our revenue estimates for FY16/17 due to

We believe AIAs FY15 EBITDA margins are not sustainable as

We have revised upwards our EPS estimates in-line with the

Source: Company, Ambit Capital research

Ambit Capital Pvt Ltd

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FY14 CAGR FY13-15 CAGR FY16-17

GRAPHITE INDIA LTD

Key catalysts for our SELL stance

Slowdown in penetration of high-chrome grinding media: The conversion

Key risks to our SELL stance

Higher-than-expected FY16 volume growth: The mining contracts are large

Ambit Capital Pvt Ltd

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EBITDA margin (%)

Net depreciation / amortisation

Provision for taxation

Reported Consolidated PAT

EPS (Adjusted) (Rs.)

Cash and bank balances

Loans and advances

Other current liabilities

Total Current Assets

Current liabilities and provisions

Net current assets

Particulars (Rs mn)

Source: Company, Ambit Capital research

Cash Flow statement

Change in working capital

Purchase of fixed assets

Ambit Capital Pvt Ltd

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Working capital turnover (x)

Gross block turnover (x)

Ambit Capital Pvt Ltd

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Darkest before dawn

Mcap (Rs bn/US$ mn):

3M ADV (Rs mn/US$ mn):

Stock Performance (%)

Source: Bloomberg, Ambit Capital research

Ambit Estimates (Rs mn)

Source: Bloomberg, Ambit Capital research

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Raw materials consumed