Elecon Antique

AMP
ANTIQUES MORNING PRESENTATION
STRICTLY CONFIDENTIAL
15 May 2015
Market Snapshot
Global Indices
Closing
FROM THE RESEARCH DESK
Dow Jones
18,252
1.1
2.4
INDIA STRATEGY
NASDAQ
5,051
1.4
6.6
Well begun is half done!
FTSE
6,973
0.3
6.2
CAC
5,029
1.4
17.7
MANAGEMENT MEET UPDATE
DAX
11,560
1.8
17.9
1,055
(2.5)
33.4
Bovespa
56,657
0.5
13.3
Nikkei
19,570
(1.0)
13.0
Hang Seng
27,287
0.1
15.6
4,378
0.1
35.4
Closing
% Chg
% YTD
27,206
(0.2)
(1.1)
8,224
(0.1)
(0.7)
495
0.6
(0.3)
12,933
1.4
2.8
Elecon Engineering Company Limited

On the path to recovery
Russia
Shanghai Composite
Global News
Encouraging news on the U.S. job market and inflation helped lift U.S. stocks
higher on Thursday, snapping a three-day slump for the Dow Jones industrial
average and the Standard & Poor's 500 index. The Dow jones industrial
average climbed 1.1% to 18,252 while the S&P 500 index gained 1.1% to
2,121.
The Nikkei 225 ended 1% lower to 19,570 as another rise in global bond
yields kept the market on the edge. The broader Topix fell 0.8% to 1,591.
Sector & Corporate News
Indian Indices
Sensex
Nifty
MSCI India
CNX Midcap
Flows (USDm)
Please refer to disclosures at the end of the Research Report
(USDm)
(12)
Locals
FII F&O
Nitesh Estates and Goldman Sachs has announced an agreement to jointly

invest up to USD250m in income producing commercial real estate assets in
India. Along with this joint venture, Goldman Sachs has also provided a
financing commitment of USD37m for Nitesh Estates' acquisition of Koregaon
Park Plaza, a 1m sq ft operational shopping mall and future high-end office
complex development in Pune.
(708)
FIIs
Lupin announced the acquisition of Brazils Medqumica for an undisclosed

amount. The deal will help expand its presence in Latin America.
Essar Ports has taken over Vishakhapatnam Port Trust's (VPT) iron ore
handling complex for 30 years and has also decided to develop three berths
at the port at a cost of INR12bn.
MTD
(17)
Provisional flows
Volumes
% YTD
Prev. Day
FII
Economy: Wholesale Price Index-based inflation for April fell to a new low
of a negative 2.65%, the sixth successive month of deflating prices. The WPI
reading for March was a negative 2.33%.
Hexaware Technologies and Riversand enter into a global partnership to

transform data management for digital businesses.
% Chg
48
USDbn
% Chg
3.0
(13.4)
Stock Fut
Index Fut
18
(261)
0.4
8.6
ADR/GDR Gainers
Last
% Chg
SBI
43.8
3.4
Tata Motors
42.3
1.3
HDFC
57.5
1.2
Dr Reddy
54.9
0.5
ADR/GDR Losers
Last
% Chg
Cash (NSE + BSE)
Net ($ mn)
Open Int (%)
Reliance
27.8
(0.9)
Wipro
11.5
(0.9)
ANTIQUE STOCK BROKING LIMITED
15 May 2015 | 2
Sectoral indices
Delivery Spike
Closing
% Chg
BSE Auto
18,965
0.8
3.4
1.8
BSE Bank
20,823
0.3
(1.0)
(3.0)
BSE Cap Goods
16,134
(0.2)
(2.3)
4.5
BSE Cons dur
10,095
(0.4)
(2.7)
4.4
BSE FMCG
% MTD
% YTD
Company
Adani
Volume
Spike (%)
Chg (%)
957,867
1156%
2.11
2,688,936
222%
(1.28)
Aditya Birla
168,942
150%
2.18
BPCL
864,294
132%
2.83
HCLTech
8,368
0.2
7.7
7.7
Asian Paints
846,052
122%
4.45
BSE IT
11,502
(1.5)
0.9
8.7
HPCL
729,909
63%
2.55
BSE Health
18,140
(1.5)
4.9
23.5
SBI
4,865,853
56%
2.42
9,989
0.8
1.9
(7.1)
TCS
760,994
53%
(0.64)
Bajaj Auto
236,777
45%
1.88
BSE Metal
BSE Oil
9,327
1.0
1.3
(5.7)
BSE Power
2,039
0.7
(2.7)
(2.6)
(7.6)
BSE PSU
7,604
1.2
0.5
BSE Realty
1,562
1.1
(0.7)
0.4
BSE TECK
5,839
(0.3)
0.7
(0.0)
Derivatives Update
Long Build Up
Nifty Outperformers
% MTD
% YTD
Company
Last
% Chg
% Chg OI
ORIENTBANK
214
9.7
36.0
7,926
BANKINDIA
212
3.8
5.0
12,160
Price
% Chg
Asian Paints Ltd
796
4.5
4.5
5.9
Punjab National Bank
151
4.0
(5.7)
(31.3)
ABIRLANUVO
Hindalco Industries Ltd
137
3.0
6.9
(12.8)
Short Build Up
Bharat Petroleum Corp Ltd
757
2.8
(1.1)
17.1
Company
Idea Cellular Ltd
172
2.5
(1.5)
12.1
LUPIN
State Bank Of India
281
2.4
4.2
(9.9)
ADANIPORTS
Tata Steel Ltd
366
1.9
1.7
(8.3)
Nifty Underperformers
371
3.2
4.0
8,514
1,876
2.0
7.1
1,249
Last
% Chg
% Chg OI
OI (in 000)
1,640
(3.1)
13.4
4,556
335
(2.2)
13.3
8,003
LICHSGFIN
414
(1.7)
9.1
11,125
MOTHERSUMI
498
(1.0)
41.5
4,443
Company
Last
% Chg
% Chg OI
OI (in 000)
PNB
149
4.0
(3.0)
26,498
JINDALSTEL
139
3.0
(2.5)
26,919
HINDALCO
138
2.8
(2.9)
23,218
JISLJALEQS
58
2.5
(3.0)
38,180
Company
Last
% Chg
% Chg OI
OI (in 000)
POWERGRID
140
(0.6)
(4.6)
19,846
Short Covering
Price
% Chg
% MTD
% YTD
1,632
(3.4)
(7.9)
14.3
Vedanta Ltd
215
(1.6)
2.3
0.1
Hcl Technologies Ltd
925
(1.3)
5.1
15.9
Lupin Ltd
CANBK
OI (in 000)
Infosys Ltd
1,935
(1.1)
(0.4)
(1.9)
Kotak Mahindra Bank Ltd
1,327
(1.1)
(0.5)
5.0
Wipro Ltd
537
(1.1)
(0.4)
(3.4)
Power Grid Corp Of India Ltd
139
(1.0)
(2.0)
1.0
Profit Booking
Bulk Deals
Date
Security Name
Client Name
Buy/Sell
Qty
Price
14-May-15
Gulf Oil Corp. Ltd.
Hinduja Power Limited
BUY
2,475,000
150.75
14-May-15
Gulf Oil Corp. Ltd.
Bridge India Fund
SELL
1,500,000
150.75
14-May-15
Gulf Oil Corp. Ltd.
Afrin Dia
SELL
975,000
150.75
14-May-15
UFO Moviez India Ltd.
Citigroup Global Markets Mauritius Private Limited
SELL
176,120
605.12
14-May-15
PRAKASHSTL
Pacific Corporate Services Ltd
SELL
325,000
130.18
14-May-15
VIRTUALG
Asia Investment Corporation Mauritius Limited
BUY
2,400,000
14.60
15 May 2015 | 3
Nifty
Nifty P/E
9000
22
8000
20
7000
18
6000
16
5000
14
Nifty P/B
3.5
3.0
2.5
12
4000
M ay-11
M ay-12
M ay-13
M ay-14
M ay-15
2.0
M ay-11
M ay-12
M ay-13
M ay-14
M ay-15
M ay-11
M ay-12
M ay-13
M ay-14
M ay-15
Source: Bloomberg
Sensex
FII Provisional Flows (INRcr)
30000
28000
26000
24000
22000
20000
18000
16000
14000
M ay-11
M ay-12
M ay-13
M ay-14
M ay-15
DII Provisional Flows (INRcr)
6,000
5,000
4,000
3,000
2,000
1,000
0
-1,000
-2,000
-3,000
May-13 Nov-13 May-14 Nov-14 May-15
2,250
1,500
750
0
-750
-1,500
May-13 Nov-13 May-14 Nov-14 May-15
Source: Bloomberg
Economy, Money & Banking

Forex Rate
Last
INR~USD
INR~EUR
INR~GBP
Commodities Update
% Chg
% MTD
% YTD
63.7
0.6
(0.4)
(1.0)
72.7
(1.1)
(2.4)
5.4
100.6
(0.4)
(2.9)
(2.3)
Commodities
Last
% Chg
% MTD
% YTD
Gold ($/Ounce)
1,221
(0.0)
3.1
3.0
Crude Oil ($/Bl)
60
(0.3)
0.1
7.3
Aluminium ($/t)
1,834
(0.7)
(5.1)
0.5
Copper ($/t)
6,406
(0.1)
0.7
0.6
Bond Market
Last
Chg (bps)
MTD (bps)
YTD (bps)
Zinc ($/t)
2,311
(1.5)
(2.4)
6.7
10 Year Bond
7.9
Lead ($/t)
1,955
(2.6)
(8.0)
6.0
Interbank call
7.5
45
(20)
(130)
13,739
(2.0)
(1.3)
(8.9)
INR/USD
Nickel ($/t)
Gold and silver prices
Crude prices
2000
64
63
62
60
1500
61
60
59
58
May-14 Aug-14
40
1000
20
500
0
0
May-11 May-12 May-13 May-14 May-15
Nov-14
Feb-15 May-15
Gold (LHS)
Silver (RHS)
110
100
90
80
70
60
50
40
May-11 May-12 May-13 May-14 May-15
Source: Bloomberg
Inflation vs 10 year yield

11
9
7
5
3
1
-1
-3
Jul-13
Nifty premium/discount
NSE volatility index (%)
25
20
22
19.0
16.9
15.3
15
13.6
20
18
10
5
Dec-13
WPI Inflat ion (%)
Source: Bloomberg
May-14
Oct-14
Mar-15
10 Yr Yield (%)
4.3
0
08-May 11-May 12-May 13-May 14-May
16
14
20-Apr
26-Apr
2-May
8-May
14-May
15 May 2015 | 4
INDIA STRATEGY
Well begun is half done!

It has been a year since the Narendra Modi-led National Democratic
Alliance (NDA) swept the general elections on the back of high
expectations of reviving growth, generating employment and thwarting
inflation. In this context, we evaluate the Centre's measures since it
assumed power in May last year. While the government has taken
credible and genuine steps to address each of the above issues, the
intended benefits and productivity gains may not flow through
immediately as most measures have a considerable gestation period.
This will lead to disappointments along the way, and any correction,
especially in high quality cyclicals (private banks, largecap industrials),
should be used as a buying opportunity. We also do not concur with the
view that the reforms process has slackened. A detailed list of various
measures undertaken by the government are listed in subsequent pages.
Dhirendra Tiwari
+91 22 4031 3436

dhirendra.tiwari@antiquelimited.com
Dipojjal Saha
+91 22 4031 3417

dipojjal.saha@antiquelimited.com
Higher thrust on infrastructure spending: roads and railways

There has been a considerable thrust on spending on basic infrastructure such as roads and
railways. As per the FY16 Union Budget, the government has allocated INR294bn to the
National Highways Authority of India (NHAI) and INR400bn to the Indian Railways, an
increase to the tune of INR140bn and INR100bn over FY15, respectively. There is also a
considerable traction in awarding of contracts, with the Centre having awarded 3,000 km
worth of road projects in FY15 as against 1,116/1,435 km in FY13/14, respectively. Behind
all the noise over increased spending, there is a pragmatic shift towards fixing the existing
network, as evident from the Railway Budget, where the allocation for increasing the number
of rail tracks has seen a rise of 126% YoY instead of allocation to populist measures such as
introduction of new trains. The Centre has also announced 100% foreign direct investment
(FDI) in rail infrastructure and is also looking at a Model Concession Agreement (MCA) to
attract foreign participation.
Unlocking the coal-power cycle

The biggest policy logjam was in the power sector, linked to availability of fuel (coal and
gas). In this regard, the government has initiated major steps, including the auctioning of
coal mining blocks to ensure fuel availability. About a fifth of India's requirements are
currently met by imports. The objective of this policy is to remove uncertainty regarding coal
supply. Similar to the auctioning of coal mines, the Centre has also decided to auction other
minerals such as iron ore, bauxite and limestone. Along with these steps, there is a general
improvement in the pace of approving clearances, which has resulted in increased coal
production as well.
Defence and Make in India

The Centre has also put in place its 'Make in India' initiative to boost manufacturing growth.
Coupled with the thrust on defence, it is targeting to increase the share of manufacturing in
GDP to 25% by CY22.
Within the defence sector, as our recent interaction with Shri RK Tyagi, former chairman of
Hindustan Aeronautics (HAL) illustrates, there is a clear change in the Centre's policy-making
approach with: i) Clear incentives, ii) Policy support, and iii) Fixation of accountability. The
change in government's approach is a significant positive. The latest acquisition of 36 Rafale
fighter jets is a structural positive change, as the deal has been entered through the governmentto-government (G2G) approach. Tyagi feels the deal will definitely aid Make in India as
remaining orders for over 100 fighter jets are likely to be ordered under the updated offset
clause. The biggest challenge in the defence sector was lack of understanding in drafting
international long-term contracts, leading to litigations and uncertainty. In this regard, we are
given to understand that a new procurement policy is being drafted (please refer our note on
the defence sector titled, "Defence update - Straight from the field marshal", dated May 7).
15 May 2015 | 5
Opening up space for potential long-term gains: financial inclusion and DBT
To achieve the objective of financial inclusion, the Centre launched the Pradhan Mantri Jan
Dhan Yojana (PMJDY) in Aug-14. The key features of this account include accidental and life
insurance, RuPay debit card and no minimum balance. About 153.6m accounts have been
opened with INR160bn as deposits. The ultimate goal is to link all payments (subsidies,
wages under the Mahatma Gandhi National Rural Employment Guarantee Act, pension,
scholarship) through this account. Meanwhile, the Direct Benefit Transfer (DBT) scheme for
LPG has been rolled out successfully, with a penetration of over 80%. The current subsidy
regime is fraught with leakages, and integrating the Aadhar card with DBT and PMJDY is
expected to reduce leakages.
Enhancing the Centre-state relationship

Another thrust area of the government has been its focus on improving the existing Centrestate relationship, through a slew of administrative steps as well as financial transfers
On the administrative side, the Centre has replaced the Planning Commission with Niti Aayog
(National Institution for Transforming India), whose members include the chief ministers of
India's 29 states and seven union territories. The same will be chaired by the prime minister.
The government recently conducted the auctioning of coal mines and is looking to auction
other minerals such as iron ore, bauxite, limestone, etc. One of the key features of these
auctions is that the states will be sole recipients of bidding and royalty payments. Earlier, the
proposed mining royalty contribution to the district mineral foundation (DMF) of 33% has
been increased to 100% of the royalty paid to the state governments, following the passage
of the Mines and Minerals (Development and Regulation) Bill. While a ceiling of 100% has
been specified for mines allotted prior to the amendments to the MMDR Act, state governments
are expected to recover the full amount. Once the leases expire and the mines are re-auctioned,
the amount will be 33% of the royalty payable. This measure would aid in getting states on
board.
On the Goods & Services Tax (GST) too, there is a clause included in the legislation that the
Centre will guarantee any loss to the states on account of its implementation to the tune of
100% over the first three years, 75% for the fourth year and 50% for the fifth year, apart from
making short-term compromises such as allowing a 1% levy on inter-state supply of goods,
akin to Central Sales Tax (CST), which currently stands at 2%. The Centre is also looking to
settle the past dues on CST compensation to the tune of INR340bn in three equal instalments,
of which one instalment has already been paid in FY15.
Commodities: Plain lucky or pragmatic?

It is true that the fall in oil prices have been due to global factors. What this Centre has done
is to use this fall to its advantage. First, it accelerated the process of deregulation by completely
freeing up diesel prices. The big fear here is what will happen once the oil prices start
climbing back to previous level of USD80-100/bbl. So far, we are sanguine that the Centre
will keep deregulation in place, given that there have already been three price hikes and
two cuts reflecting the volatility, as oil prices moved from USD40/bbl to USD65/bbl.
Meanwhile, the sharp fall in oil prices and complete deregulation of diesel has enabled the
Centre to pare down its budgeted oil subsidy bill to INR300bn in FY16 from INR600/
850bn in FY15/14, respectively. Second, the Centre has also steadily hiked the excise
duties to mop up additional revenues. Of the INR10.26/litre excise duty on diesel, INR6 has
now been allocated as road cess versus INR2/litre earlier, sanctioning a higher allocation
towards infrastructure spending.
Roadmap for reforms ahead: The challenges and what to look forward to
While there has been steady progress, there are challenges along the way. As we have
witnessed in the case of recent legislations, the lack of majority in the Rajya Sabha (Upper
House) is holding back the Centre to push through important bills such as GST and the Land
Acquisition Act. GST implementation entails a lengthy legislative procedure, and the recent
decision to refer the bill to yet another select committee will only serve to delay its execution.
The Indian Meteorological Department (IMD) is already predicting higher probability of
below par monsoon. The fear is that it might influence the Centre's decision on minimum
support price (MSP) hikes.
15 May 2015 | 6
And where would we like to see some action? In defence and railways, which are the major
thrust areas for the Centre, procurement policies and concession agreements should be drafted
in as timely and transparent as possible to help kick-start foreign investment in these critical
areas. There have been other laudable launches of schemes such as Clean Ganga, five
ultra mega power projects (UMPPs) in play and plug mode and 100 smart cities, but there
is little in terms of concrete steps or even higher budgetary allocations to help reignite a new
investment cycle per se. The ultimate reflection of the operability of these schemes in our view
will only be visible in the order books of capital goods companies.
We reiterate that with FY16 being a relatively quieter year in terms of events, the focus will be
on implementation and results. However, most of the steps taken so far have large gestation
periods and the intended benefits will take time to flow through to the broader economy.
Thus, there are bound to be disappointments, which also offer an opportunity to buy, as the
ongoing reforms process could well set the stage for multi-level benefits in the long-term.
Steps taken so far

Overall- Bureaucratic changes
The Centre is promoting self-attestation instead of filing affidavits from a gazetted officer
for government-related work
To reduce layers in decision making and increase the accountability of bureaucrats, it

has abolished the Empowered Group of Ministers and Groups of Ministers
Integrating the ministries of coal, power and renewable energy to improve co-ordination
Overall- Approvals/Clearances
Transparency ensured by starting online submission of application for environment and

forest clearances successfully. The portal will enable real-time monitoring of forest clearance
proposals so as to ensure that timelines stipulated for processing of these proposals by
various authorities in the Centre and state governments are adhered to
The role of Project Monitoring Group (PMG) has been expanded to include monitoring of
timelines set for clearances by various ministries
Border roads and all defence infrastructure, within 100 km of the Line of Actual Control,
has been brought under the general approval scheme
Process of granting permission for forest diversion up to 40 hectares for developmental

projects decentralised. About 90% of files for this purpose wont come to the Ministry.
Over 90% of proposals seeking forest clearance will now be finally disposed off by the
Regional Office. Mere 10% of the proposals for forest clearance will come to the Ministry
for decision. The process of granting permission for forest diversion for all linear projects
like road, rail, canals, transmission and pipelines decentralised
A maximum limit of 12 weeks has been set by the Ministry of Home Affairs for providing
security clearances to industrial projects
To fast track the approvals, the Coal Ministry has introduced the Electronic Coal Projects
Monitoring Portal (e-CPMP)
Roads/construction sector
The Cabinet Committee on Economic Affairs (CCEA) approved a comprehensive Exit

Policy framework that now permits concessionaires/developers to divest 100% equity,
two years after completion of construction. This would help unlock equity from completed
projects, making it potentially available for investment into new projects
CCEA has approved a special intervention for the projects that are in the advanced
stage of completion but are stuck due to either lack of additional equity or lenders
inability to disburse further. NHAI has been authorised to provide funds to such projects
from within its overall budget/corpus on a loan basis, at a pre-determined rate of return.
It is expected that ~16 such projects languishing in various part of the country, where the
public is facing difficulty on account of incomplete works, will benefit from this decision
15 May 2015 | 7
CCEA has empowered the Ministry of Road Transport & Highways to amend Model
Concession Agreement (MCA) and decide on the mode of delivery of projects: publicprivate partnership/engineering, procurement and construction, etc
Last year, NHAI had approved premium deferment worth INR70bn for nine projects
The Centre is working on a hybrid model of concession, wherein it is provides upfront

awarding to the tune of 40% of the cost, while the balance 60% would be payable in 10
annuity instalments
Coal and power sector
Conducting e-auction of coal mines will bring about transparency and remove the
uncertainty around coal supply
On the distribution side, the Centre has approved an Integrated Power Development
Scheme (IPDS), with a budgetary support of INR253bn, to strengthen sub-transmission
and distribution networks in urban areas, IT enablement of the distribution sector and
strengthening of the distribution network. It also instituted the Deen Dayal Upadhyaya
Gram Jyoti Yojana (DDUGJY) to strengthen and augment sub-transmission in rural areas
and put in place separate agriculture and non-agriculture feeders
Concepts like coal and gas price pooling, rationalisation of coal linkages, transfer of
coal linkages from plants over 25 years to new super-critical plants etc has been revived
Close inspection of progress is underway to expedite build-out of three critical railway

lines at Jharkhand, Odisha and Chhattisgarh, which could help increase output by 60mtpa
by CY17- 18, ramping up to 200mtpa by CY21-22
Coal India has taken an in-principle decision to purchase 250 additional rakes (worth
INR50bn) to evacuate greater quantities of coal
In order to check pilferage, the Centre has proposed to establish a national coal
dispatching center and radio-frequency identification (RFID) tag for all coal movements
Proposals have been finalised for the next wave of reforms in the power sector through
amendments in the Electricity Act, 2003 and tariff policy. These amendments entail
competition in retail (choice to consumers), strict enforcement of Renewable Purchase
Obligations (RPO) and zero tolerance on grid safety and security
CCEA has also approved a bailout mechanism for gas-based power plants, wherein the
government/distribution companies will procure gas-based power at INR5.5/unit
generated from imported LNG
Manufacturing and exports
Launches the grand Make In India program, focused at increasing the share of
manufacturing in GDP, while generating additional employment opportunities. The various
measures being taken include online application of industrial licensing, extending validity
of the licence to three years, online environmental approvals and excluding major
components defence products' list from industrial licensing
Introduced 'Foreign Trade Policy (FTP), which provides a framework for increasing exports
of goods and services, generation of employment and increasing value addition in the
country in keeping with its Make in India vision
Financial inclusion
Ambitious PMJDY rolled out, including the offer to rollout insurance package and overdraft
facility. Every household is expected to have two accounts
The Centre relaunched the PaHaL (Pratyaksha Hastaantarit Laabh), which is the DBT
scheme for LPG subsidy, in 54 districts on November 15, 2014 and in the rest of the
country on January 1, 2015. It has already achieved a penetration rate of over 80%.
Almost 120m active LPG customers have joined this scheme
Fostering better Centre-state relations
Decentralisation of powers to State Level Environment Impact Assessment Authorities

(SEIAAs) for granting environment clearance (EC). More powers have been delegated
to SEIAAs to grant EC to various projects
15 May 2015 | 8
Proceeds of e-auction of coal mines to be distributed entirely among states where the
mines are located
Steps to contain inflation
Potatoes and onions brought under the Essential Commodities Act
Banned export of edible oils and reduced import duty to nil for wheat, onion and pulses
Providing states with credit lines for imports of pulses and edible oils
Keeping a close eye on curbing hoarding
Lower increase in MSPs in both Rabi as well as Kharif crops
The Centre had approved sale of ~10MT of food grain in the open market, including the
sale of rice for the first time
Pricing reforms
Complete de-regulation of diesel prices
Increase in railway fares. Passenger fares have been raised up to 10% in all classes, in
addition to 4.2% increase on account of the Fuel Adjustment Component (FAC)
Increasing gas price to USD5.6 from USD4.2 earlier
Increased foreign investments
100% FDI in rail infrastructure has been announced
FDI in insurance hiked to 49% from 24%
FDI limit in defence increased to 49%
Easing FDI norms in construction sector. Minimum investment reduced to USD5m from
USD10m in building homes. Also, the minimum built-up area has been more than halved
to 20,000 sq m
Social sector/labour reforms
Fast tracking labour reforms: With the Centre approving proposals to three labour laws:
the Factories Act, 1948; Apprentices Act, 1961 and Labour Laws (exemption from furnishing
returns and maintaining registers by certain establishments) Act, 1988
Labour inspection will become less tedious and more transparent with a computer assisted
draw being used to pick the firms to be inspected and officials required to submit the
report within 72 hours
Easier movement of accounts in the provident fund scheme by using a universal account
number
Steps taken by the ministry/Centre to speed up the disinvestment process
As per a directive from the Securities and Exchange Board of India (Sebi), all public
sector undertakings (PSUs) would need to comply with the minimum 25% public
shareholding norm
To increase participation, the Cabinet consented for 20% issue size to be reserved for
retail investors under the offer for sale (OFS) route
The Department of Disinvestment has initiated the process of pursuing the Labour Ministry
to ask Employees' Provident Fund Organisation (EPFO) to invest in PSUs proactively
Better supply-side strategy: Speeding up the approval process so that the go-ahead for
disinvestment can be given as soon as the market conditions for that stock is favourable
Lower oil prices and deregulation have helped bring down

diesel under-recoveries
Successive excise duty hikes

2.5
Diesel as % of total under-recoveries
70.0
2.1
Excise duty hike (INR/lt)
15 May 2015 | 9
2.1
2.0
1.6
1.5
1.0
1.0
0.5
0.0
Nov 12, 2014
Dec 2, 2014
Jan 2, 2015
57.2
50.6
50.0
45.6
44.9
44.4
40.0
30.0
20.1
20.0
14.5
10.0
0.0
Jan 16, 2015
Source: Budget documents, Antique
58.6
60.0
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

PMJDY progress
Number of Jan Dhan accounts opened (m)
153.0
Of which, urban accounts
61.3
Of which, rural accounts
91.7
Number of RuPay debit cards (m)
137.2
Total balance in accounts (INRbn)
161.9
Insurance claims received
332
Insurance claims settled
172
Source: PMJDY website
Increased budgetary allocation to infrastructure a positive
NHAI project awards have also picked up speed

7,000
400
NHAI project award (km)
(Budgetary allocation, INR bn)
450
350
300
250
200
150
100
6,000
5,000
4,000
3,000
2,000
50
1,000
0
FY11
FY12
NHAI
FY13
FY14
Indian railw ays
FY15
FY16BE
0
FY11
Source: NHAI, Antique
FY12
FY13
FY14
FY15
FY16e
15 May 2015 | 10
Coal production sees a healthy improvement in recent months

14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
Jul-12
Apr-12
Oct-12
-2.0%
Jan-12
(% yoy, Coal India production, 3 MMA)
16.0%
Source: CSO, Antique
BJP-led NDA still a minority in the Rajya Sabha

Party
Members
Indian National Congress
68
Bharatiya Janata Party (BJP)
47
Samajwadi Party
15
All India Trinamool Congress
12
All India Anna Dravida Munnetra Kazhagam (AIADMK)
11
Bahujan Samaj Party (BSP)
10
Communist Party of India (Marxist)
Biju Janata Dal (BJD)
Telugu Desam Party (TDP)
Nationalist Congress Party (NCP)
Dravida Munnetra Kazhagam (DMK)
Shiv Sena
Shiromani Akali Dal
Others (independents and nominated, etc)
44
Source: Antique
25
23
21
19
17
15
13
11
9
7
5
12 m fw d PE
Source: Bloomberg, Antique
Average
+1sd
-1 sd
May-15
May-14
May-13
May-12
May-11
May-10
May-09
May-08
May-07
May-06
May-05
May-04
May-03
May-02
May-01
May-00
May-99
May-98
May-97
May-96
Average=14.4
May-95
(MSCI India, Fwd PE)
Valuations closer to its long-term average
State-run banks, infrastructure

and policy driven sectors such
as energy were the big
outperformers in the run-up to
the elections
Sectoral performance since elections
Since May 16, 2014, the

biggest outperformers have
been the relatively more riskoff sectors such as healthcare,
IT services, private banks and
automobiles
Midcaps have outperformed
largecaps since elections
showing that bottom up stock
picking has been key
15 May 2015 | 11
Performance (in %) between

Nov'13-May'14
May'14-Dec'14
YTD
Since May 16, 2014
Nifty
16.6
15.0
(0.7)
14.2
Automobiles
18.2
32.6
2.5
35.9
Banks
33.2
26.1
(3.3)
22.0
State-run banks
38.5
23.0
(16.7)
2.5
Infrastructure
20.2
4.1
1.9
6.1
FMCG
6.7
10.9
(1.4)
9.4
Healthcare
4.7
42.2
11.8
59.0
IT
3.3
23.1
(1.1)
21.8
Metals
18.4
(4.2)
(8.0)
(11.9)
Oil and gas
22.4
(9.5)
(3.3)
(12.5)
Real estate
19.0
(2.0)
(0.3)
(2.3)
Midcap
23.5
32.6
2.8
36.3
Source: Bloomberg
India vs peers relative performance

Performance (in %) between
India's big outperformance

came in the run-up to the
general elections
Since May 16, 2014, the
country has been among the
mid-level performers and a
rank underperformer on an
YTD basis
Nov'13-May'14
May'14-Dec'14
YTD
Since May 16, 2014
Nifty
16.6
15.0
(0.7)
14.2
China
(8.7)
59.6
35.4
116.1
Taiwan
5.7
4.7
3.3
8.1
Korea
(1.5)
(4.9)
10.7
5.3
Indonesia
18.2
3.9
0.4
4.3
Brazil
2.8
(7.4)
12.7
4.4
Malaysia
3.9
(6.5)
2.6
(4.0)
South Africa
9.3
1.2
8.4
9.8
(1.4)
3.0
4.4
7.5
Turkey
(1.0)
14.3
1.1
15.5
Russia
(5.9)
0.3
20.2
20.6
Mexico
Source: Bloomberg
Worst performers in BSE100 since elections
Best performers in BSE100 since elections
Stock
Stock
Return since May 16, 2014 (%)
Return since May 16, 2014 (%)
Jaiprakash Associates
(71.4)
Bharat Forge
182.2
Reliance Communications
(49.4)
Ashok Leyland
165.2
Jindal Steel & Power
(48.6)
Bosch
114.1
GMR Infrastructure
(45.5)
UPL
80.9
Cairn India
(40.6)
Cipla
76.7
Reliance Power
(30.9)
Lupin
70.2
Reliance Infrastructure
(30.6)
Glenmark Pharmaceuticals
69.5
Unitech
(26.3)
Maruti Suzuki India
69.4
Adani Power
(26.0)
Siemens
60.6
DLF
(25.2)
Aditya Birla Nuvo
59.0
Bank of India
(24.7)
Axis Bank
58.4
JSW Steel
(23.0)
Sun Pharmaceutical Industries
53.9
Tata Power Company
(19.1)
YES Bank
53.8
Reliance Industries
(18.6)
Cummins India
53.0
Punjab National Bank
(18.0)
Tata Chemicals
52.1
NMDC
(17.9)
ABB India
52.0
Oil & Natural Gas Corporation
(17.7)
Asian Paints
48.5
Tata Steel
(16.9)
Adani Ports & Special Economic Zone
48.4
Steel Authority of India
(14.3)
Hindustan Petroleum Corporation
48.1
IDBI Bank
(12.4)
Nestle India
48.0
Source: Bloomberg, Antique
Current Reco
: Not Rated
CMP
: INR67
15 May 2015 | 12
MANAGEMENT MEET UPDATE
Elecon Engineering Company Limited

On the path to recovery
Deepak Narnolia
+91 22 4031 3414

deepak.narnolia@antiquelimited.com
Dhirendra Tiwari
+91 22 4031 3436

dhirendra.tiwari@antiquelimited.com
Market data
Sensex
27,206
Sector
Industrial
Market Cap (INRbn)
7.3
Market Cap (USDm)
114
O/S Shares (m)
108.9
52-wk HI/LO (INR)
80/40
Avg Daily Vol ('000)
642
Bloomberg
ELCN IN
We met with the management of Elecon Engineering, a pioneer in the

manufacturing of industrial gears and material handling equipments (MHE).
Demand for gearboxes is reflective of growth in the economy and have
significant upside potential in case of an uptick in industrial capex. The
company has doubled capacity, streamlined its manufacturing processes
and restructured the group's structure over the last two years. The
management expects consolidated revenues to grow at 20% CAGR over FY1518, led by higher exports, pick-up in domestic demand and improved
execution. EBITDA margin is likely to be supported by improved capacity
utilisation and cost rationalisation measures undertaken over last two years.
We feel Elecon could be among the biggest beneficiary of a demand revival,
given its niche product portfolio and high correlation of the company's sales
to industrial capex. At the current market price of INR64 per share, the stock
is trading at an EV/EBITDA of 7x, based on FY15 EBITDA, which is fairly
attractive. Its success in improving working capital cycle and debt reduction
can significantly rerate the stock.
Elecon a leading player in gearboxes and material handling equipments:

It is among the leading manufacturers of gearboxes for industrial use and is one of the
top three MHE players in the country. The company has a 30% market share in India and
caters to a wide range of industries. Elecon also holds 60% stake in Elecon EPC, a
prominent player in surface material handling products and projects, which boasts of
being the third largest MHE player in the country. It has a global presence through
Benzlers and Radicon, a prominent global gearbox manufacturer, which it acquired in
CY10. During FY15, it derived 38% of its revenues from gearboxes and a similar proportion
from MHE. Benzlers and Radicon contributed 24% to its revenues.
Largest Asian gearbox player; Product holds 17-18% YoY growth potential
if the economy picks up: At present, the market size of gearboxes in India stands
~INR15bn. As per an industry estimate, the market is expected to grow at 17-18% CAGR
over the next five years, if the economy grows in the 8-9% per annum range. Elecon has
invested INR1,000m to set up a new manufacturing plant, which has almost doubled its
capacity. Its factories are currently operating ~50% capacity utilisation. The management
expects revenues to grow to INR8bn (CAGR: 15%) by FY18, driven by doubling of
exports and pick-up in domestic demand. The business has delivered an EBITDA margin
of 21.2% during FY15, despite ~50% capacity utilisation. The management expects
EBITDA margin in the business to go up in the 25-28% range, if demand picks up.
Among the top three material handling players in India; Management

expects 20% revenue CAGR over FY15-18: Demand in the MHE business is
heavily linked to power generation and mining segments, which contribute ~70% of
segmental revenues. In the last three years, the business has been facing macro headwinds
due to execution hurdles in projects under construction. It has a decent order book of
INR11.6bn, with a book-to-bill ratio of 2.24x, however execution was impacted. The
company expects revenues to grow to INR9bn by FY18, with a CAGR of 20%, from
INR5.2bn during FY15, as demand picks-up and the execution scenario improves. Going
forward, the management expects EBITDA margin to improve to 13-15% from 8-10% at
present. As per the management, enquires in the engineering, procurement and
construction (EPC) business at the beginning of the year were substantial. It sees a positive
year, with sufficient order backlog.
Source: Bloomberg
Valuation
2013
2014
2015
EPS (INR)
1.9
1.3
1.7
P/E (x)
7.3
26.8
39.6
P/BV (x)
1.1
1.3
1.3
EV/EBITDA (x)
4.1
5.9
7.1
Dividend yield (%) 2.8
1.6
1.6
Source: Bloomberg
Returns (%)
Absolute
Relative
1m
3m
6m
12m
(13)
30
23
59
(8)
39
26
40
Source: Bloomberg
Shareholding pattern
Promoters
58%
FII
1%
DII
4%
Others
37%
Source: Bloomberg
Price performance vs Nifty

240
200
160
120
80
May-14 Sep-14 Jan-15 May-15
Elecon Engg
Source: Bloomberg, Indexed to 100
NIFTY
Valuation and outlook

We currently do not have a rating on the stock. However, Elecon could be among the biggest
beneficiaries of a demand revival, given the high correlation of the company's sales to
industrial capex. At the current market price of INR64 per share, the stock is trading at an
EV/EBITDA of 7x, based on FY15 EBITDA, which is fairly attractive. The company's success in
improving working capital cycle and debt reduction can significantly rerate the stock.
15 May 2015 | 13
Elecon a leading player in gearboxes and MHE
The company is among the leading manufacturers of gearboxes for industrial use and is
one of the top three MHE players in the country. In the gearbox business, it has a 30%
market share and caters to a wide range of industries, which include power generation,
metals and mining, sugar, cement, marine etc. Gearboxes are used virtually in every
industry, wherever motion is involved, and is a high-end engineering product with significant
entry barriers. It competes with Siemens Flender, Bonfiglioli, Nord, Shanti Gears etc.
Elecon has an over 40 years experience in gearbox manufacturing.
It also holds 60% stake in Elecon EPC, a prominent player in surface material handling
products and projects, which boasts of being the third largest MHE player in the country.
Wagon tipplers, belt conveyors, stackers, crushers, excavators and a range of bulk material
handling products and systems are the key offering of Elecon EPC. The latter started
operations in 1951 and has set up some of the most prestigious bulk material handling
systems in the country. It has set up the largest belt conveyor system in Asia for Neyveli
Lignite Corporation (NLC), which moves 20,000MT of coal per hour. Key competitors of
Elecon EPC are McNally Bharat, TRF, ThyssenKrupp, FLSmidth, Larsen & Toubro etc.
It has a global presence through Benzlers and Radicon, a prominent global gearbox
manufacturer, which it acquired in CY10. At present, the company derived around onefourth of its consolidated sales from Radicon and Benzlers.
Consolidated revenue split
EBITDA margin range in each business

18-23%
Radicon and
Benzlers (overseas
operations - gear),
23.4
Gear boxes, 38.5
8-10%
2-4%
Gear boxes
Material handling
equipment
Material handling
equipment, 38.1
Source: Company, Antique
Radicon and Benzlers

(overseas operations
- gear)
End market split of the gearbox business
End market split of the MHE business

Others, 10
Pow er, 25
Others, 28
Port, 1
Cement, 17
Marine, 2
Chemicals, 2
Sponge Iron, 2
Steel, 11
Pow er, 56
Steel, 4
Mining, 3
Lift Gears, 5
Plastic and Rubber,
6
Sugar, 9
Mining, 12
Cement, 7
15 May 2015 | 14
Key historical milestones of Elecon

Year
Milestone
1951
Established in Goregaon, Mumbai by Ishwarbhai Patel
1960
Elecon Engineering Company was incorporated as private limited entity
1962
Listed on the Bombay Stock Exchange
Forays into manufacturing of conveying equipment
1963
Forays into bulk material handling plants
1976
Establishes a separate gear division
2010
Acquired Benzlers and Radicon, manufacturers of screw jacks, shaft mounted gearboxes and
industrial reducers
2012
Restructures business by transferring MHE to its subsidiary Elecon EPC and acquires the power
transmission equipment (PTE) business from Prayas Engineering and EMTICI Engineering
Restructuring exercise to streamline business verticals in CY12

The company undertook a restructuring exercise in CY12 to streamline its business operations and
usher clarity in its disclosure. Prior to restructuring the company, it had two promoter group companies
- Pryas Engineering and EMTICI Engineering - in the same business line of gears and MHE. Both
the promoter group companies, via restructuring, transferred the gear as well as material handling
businesses to the listed Elecon Engineering through a share swap deal. In the restructured group,
both the promoter group companies have been winded up after the transfer of respective businesses:
gearboxes and MHE into Elecon Engineering and Elecon EPC.
Pre-restructuring group structure
Public Shareholding
54%
Promoters Holding
Prayas Engineering
Elecon Engineering
MHE
Gears
100%
100%
46%
Others
MHE
EMTICI Engineering
Gears
MHE
Gears
100%
Elecon EPC
MHE: Material Handling Equipment
Post re-structuring group structure
Elecon Engineering Company Ltd. (Gears)

(Standalone listed entity)
Elecon Transmission
Elecon EPC
International(Gears)
60.40% Subsidiary
100% Subsidiary
AB Benzlers
Radicon UK
Radicon US
Material Handling Equipment(MHE)
15 May 2015 | 15
Post restructuring, the group has a clear line of businesses: i) Gearbox manufacturing and
supply business through the standalone entity, ii) Material handling business though Elecon
EPC, in which the standalone entity holds 60% share after the rejig, iii) Elecon Transmission
International (Gears), which was acquired in CY10 and operates overseas.
Elecon is the largest Asian gearbox player; Product holds 17-18% YoY growth potential if the
economy picks up
Pioneer in gear box manufacturing: Elecon is among the pioneers in gearbox

manufacturing in India, with ~30% market share, and is currently the largest player in
Asia. Its key competitors in the product line are Shanti Gear, Siemens Flender, Nord,
Bonfiglioli etc. Gearbox is a high-end precision engineering product, with significant
entry barriers, particularly in larger gearboxes. As per the management, only six companies
have this level of capability globally.
Industry growth expected at 17-18% per annum over the next five years:
At present, the market size of gearboxes in India stands ~INR15bn. As per an industry
estimate, the market is expected to grow at 17-18% CAGR over the next five years, if the
economy grows in the 8-9% per annum range. The market for gearboxes is generally
dividend into two broader categories: i) Standard gears, and ii) Engineered catalogued
gears. These two types of gears currently contribute revenues in the ratio of 45:55.
However, this ratio is likely to revert back to normalised levels of 50:50, if demand picks
up. Generally, catalogued gears have higher margins in comparison to standard gears.
Business has a significant moat, 78% repeat customers: At present, 78% of

gearbox orders are from repeat customers, while ~20% revenues are contributed by the
services business, which is a relatively less cyclical, given the service requirement of customers.
Its prominent customers list includes the Indian Navy, L&T and various industry players. The
Indian Navy contributes ~10% of business revenues.
Capex cycle over, capacity utilisation at only 50%: The company has invested
INR1,000m to set up a new manufacturing plant, which has almost doubled its capacity.
At present, its gearbox factories are operating ~50% capacity utilisation.
Management expects 15% revenue CAGR and EBITDA margin in the 2328% range: During FY15, its gearbox business reported revenues of INR5.3bn. The
management expects revenues to grow to INR8bn (CAGR: 15%) by FY18. Generally,
demand for gearboxes is reflective of growth in the economy. At present, exports contribute
~15% of gearbox revenues, which the management intends to take to ~30%, with
increased focus on Africa and Southeast Asia. Its current order book stands at INR2,340m
(BTB of 0.4x). The business has delivered an EBITDA margin of 21.2% during FY15,
despite ~50% capacity utilisation. The management expects EBITDA margin in the business
to go up in the 25-28% range, if demand picks up. We note that EBITDA margin in the
gearbox business has shown a sustained gradual improvement post the installation of a
new manufacturing facility in FY12. EBITDA margin has improved to 21.2% in FY15 from
15.5% in FY12, despite low capacity utilisation.
15 May 2015 | 16
Standalone financials (INRm)

Year-ended March 31
Net sales
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
5,032
4,565
7,431
8,477
9,750
10,657
11,975
13,317
5,952
5,012
YoY growth (%)
58.7
62.8
14.1
15.0
9.3
12.4
11.2
(55.3)
(15.8)
0.4
EBIDTA
639
1,153
1,366
1,582
1,569
1,881
2,071
1,043
1,002
1,065
Margins (%)
14.0
15.5
16.1
16.2
14.7
15.7
15.5
17.5
20.0
21.2
YoY growth (%)
56.2
80.5
18.5
15.8
(0.8)
19.8
10.1
(49.6)
(4.0)
6.3
94
122
142
221
331
394
424
420
454
516
EBIT
544
1,030
1,224
1,360
1,238
1,487
1,647
623
547
549
Margins (%)
11.9
13.9
14.4
14.0
11.6
12.4
12.4
10.5
10.9
10.9
Depreciation
Other income
Interest
PBDT
83
82
98
96
248
284
74
111
176
227
182
246
335
575
583
568
623
316
333
300
445
867
987
881
903
1,204
1,098
417
390
476
Exceptional income/expenses
(36)
(23)
Profit before tax
410
844
987
881
903
1,204
1,098
151
390
476
Provision for tax
131
295
315
306
241
325
402
65
115
145
Tax rate (%)
32.0
35.0
31.9
34.8
26.7
27.0
36.6
43.4
29.6
30.4
Profit after tax
279
549
672
575
662
879
696
85
274
332
6.1
7.4
7.9
5.9
6.2
7.3
5.2
1.4
5.5
6.6
YoY growth (%)
177.8
96.9
22.4
(14.5)
15.2
32.9
(20.8)
(87.8)
221.8
21.0
Adjusted PAT
243
526
672
575
662
879
696
352
274
332
5.3
7.1
7.9
5.9
6.2
7.3
5.2
5.9
5.5
6.6
510.5
116.2
27.8
(14.5)
15.2
32.9
(20.8)
(49.4)
(22.1)
21.0
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
1,027
1,879
2,367
2,754
3,261
3,946
4,448
4,761
4,917
4,917
2,057
2,837
4,093
5,921
5,216
4,606
4,729
2,112
2,318
2,318
Margins (%)
Margins (%)
YoY growth (%)
(267)
Balance Sheet (INRm)

Year-ended March 31
Networth
Debt
Other long-term liabilities
Capital employed
Fixed assets
Other long-term assets
121
168
171
328
403
1,074
685
451
421
421
3,205
4,883
6,631
9,003
8,879
9,625
9,862
7,325
7,656
7,656
952
1,267
1,931
3,110
3,622
3,719
4,469
4,186
3,805
3,805
63
80
95
109
57
1,824
1,223
618
793
793
Inventory
1,639
1,690
2,526
4,007
3,152
3,144
2,882
1,487
1,213
1,213
Debtors
2,142
3,880
4,923
4,717
5,176
5,476
7,283
1,412
1,686
1,686
247
128
75
611
388
123
116
75
44
44
Cash and bank balance

Other assets
Current assets
Creditors
Provisions
Current liabilities
306
396
572
749
547
387
821
3,014
3,083
3,083
4,334
6,093
8,096
10,085
9,263
9,131
11,102
5,988
6,025
6,025
1,528
2,040
2,753
2,817
2,947
3,237
4,548
2,531
2,086
2,086
639
523
748
1,501
1,141
1,812
2,384
937
883
883
2,167
2,562
3,500
4,318
4,088
5,049
6,932
3,468
2 ,968
2 ,968
Net current assets
2,167
3,531
4,596
5,767
5,174
4,082
4,170
2,520
3,057
3,057
Application of funds
3,205
4,883
6,631
9,003
8,879
9,625
9,862
7,325
7,656
7,656
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
1.4
1.5
1.3
1.1
1.2
1.2
1.4
0.8
0.7
0.7
Key ratios
Year-ended March 31
Asset turnover (x)
Net Margin (%)
5.3
7.1
7.9
5.9
6.2
7.3
5.2
5.9
5.5
6.6
RoE (%)
23.7
28.0
28.4
20.9
20.3
22.3
15.6
7.4
5.6
6.7
RoCE (%)
11.5
14.0
13.6
10.5
12.3
13.4
11.1
7.3
6.6
7.1
153.5
167.2
194.6
193.0
163.9
120.7
111.1
150.0
219.5
218.6
Working capital days (x)

Gearbox orders stagnant
Expects 15% revenue CAGR over FY15-18

6,110
8,000
5,140
4,820
2,660
Order book (INRm)
6,083
5,188
5,259
FY14
FY15
2,340
2,060
FY13
15 May 2015 | 17
FY14
FY15
FY13
Order inflow (INRm)
FY18e
Revenues (INRm)
Among the top three material handling players in India; Management expects 20%
revenue CAGR over FY15-18
Elecon EPC is the pioneer in bulk material handling equipments: Elecon

EPC is a pioneer in the bulk material handling business, with a wide range of equipments.
The business vertical provides end-to-end solutions to the core sectors like power, steel,
mining, cement, fertilisers and ports. The company has in-house design and manufacturing
capabilities and executed over 100 turnkey projects till date. NTPC, NMDC etc are
some of its key customers. The business derives ~60-65% of its revenues from state-run
customers, with private customers contributing the balance.
Demand significantly linked to a pick-up in power generation and mining

segments: Demand in the MHE business is heavily linked to power generation and
mining segments, which contribute ~70% of segmental revenues. The business has
significant demand potential from India as well as other emerging economies. Typically,
demand for material handling products and systems is driven by new greenfield capex.
Expect 20% revenue CAGR over FY15-18: In the last three years, the business has
been facing macro headwinds due to execution hurdles in projects under construction.
The entity has a decent order book of INR11.6bn, with a BTB ratio of 2.24x, however
execution was impacted. In the last three years, the management expects a substantial
rebound in revenues as well as profit margin in its EPC business. The company expects
revenues to grow to INR9bn by FY18, with a CAGR of 20%, from INR5.2bn during
FY15, as demand picks-up and the execution scenario improves. The business profit
margin has also been beaten down due to low capacity utilisation. Going forward, the
management expects EBITDA margin to improve to 13-15% from 8-10% at present. As
per the management, enquires in the EPC business at the beginning of the year were
substantial. It sees a positive year, with sufficient order backlog.
Key products
Wagon tipplers
Bucket wheel stackers/reclaimers
Barrel-type blender reclaimers
Fertiliser reclaiming scrapers
Limestone pre-homogenising and blending plants
Single and twin bucket wheel bridge-type reclaimers
15 May 2015 | 18
Expect improvement in revenues, led by a better

macro scenario
EPC order book robust, facing execution hurdles
9,000
16,680
11,540
6,686
11,590
11,080
4,970
5,201
FY14
FY15
4,260
FY13
FY14
FY15
Order book (INR mn)
Order inflow (INRm)
Sopurce: Company, Antique
5,024
FY13
FY18e
Revenues (INRm)
Note: e - Management estimates
Benzelers and Radicon provides a global presence
Benzlers and Radicon a prominent global brand: Elecon acquired Benzlers and
Radicon in Oct-10 from the UK-based engineering company David Brown Gear Systems.
The acquisition is expected to play a major part in strengthening its product development
and engineering capabilities, while widening its customer base in Europe, North America
and Scandinavia. Benzlers and Radicon have over 60 years of experience and a reputation
for being market leaders in the design and manufacture of screw jacks, shaft mounted
gearboxes and industrial reducers. The company comprises of four business units: UK-based
Radicon; Sweden and Europe-based Benzlers and Thailand-based Radicon.
Expect 7% revenue CAGR over FY15-18 and improvement in profitability:

The entities have reported revenues of INR3,200m during FY15. The management expects
revenues to reach INR4,000m by FY18, at 7% CAGR. The entities reported EBITDA
margin in the 2-4% range, which the management expects to push to 7-9% by FY18.
Benzlers and Radicon order inflow steady
Expect 7% revenue CAGR in the business
2,610
2,460
4,000
2,530
2,950
680
530
FY13
Order book (INRm)
3,200
3,200
FY14
FY15
560
FY14
FY15
FY13
Order inflow (INRm)
FY18e
Revenues (INRm)
Management expects consolidated revenues to grow to INR21bn by FY18 from INR13.2bn

in FY15
The management expects consolidated revenues to grow at 15% CAGR to INR21bn over
FY15-18 from INR13.2bn in FY15. Growth would be driven by 20% CAGR in the MHE
business, 15% CAGR in gearboxes, while Benzlers and Radicon is likely to deliver 7%
revenue CAGR over the same period. Elecon expects significant improvement in EBITDA
15 May 2015 | 19
margin over the same period, which would be led by: i) Major cost rationalisation steps
undertaken in the last two-to-three years, and ii) Benefit from capacity utilisation as the
demand scenario improves. At present, on an average, factories are operating ~50%
capacity utilisation. We note that the gearbox business has started to show fruits of lean
manufacturing, as EBITDA margin improved to 21.2% in FY15 from 15.5% in FY12,
while sales have dropped more than half over the same period.
The company's debt levels are relatively high, with a consolidated debt-to-equity ratio of
0.9x at the end of FY15. Its working capital cycle is at elevated levels, with net working
capital days of 181 at the end of FY15. This was due to higher working capital in the
EPC business, as execution hurdles and higher retention money led to pressure on the
balance sheet. However, management maintained that its focus on working capital
reduction, with improved liquidity, would continue. It is also continuously striving to reduce
debt levels. Over the last two years, the company has reduced its debts by INR1,200m
via improved cash flow.
Valuation and outlook

We currently do not have a rating on the stock. However, Elecon could be among the biggest
beneficiaries of a demand revival, given the high correlation of the company's sales to
industrial capex. The company has significantly streamlined the groups structure, which is a
key positive, and meaningfully reduced its debt. At the current market price of INR64 per
share, the stock is trading at an EV/EBITDA of 7x, based on FY15 EBITDA, which is fairly
attractive. The company's success in improving working capital cycle and debt reduction can
significantly rerate the stock.
15 May 2015 | 20
Financials
Cash flow statement (INRm)
Profit and loss account (INRm)

Year ended 31 Mar
2011
2012
2013
2014
2015
Year ended 31 Mar
Net revenues
12,826
16,132
15,268
12,929
13,289
PBT
Total Expense
10,867
13,987
13,105
11,375
11,591
1,959
2,145
2,163
1,554
1,698
EBITDA
2012
2013
2014
2015
1,032
768
294
339
Depreciation & amortisation
486
571
616
716
Interest expense
722
898
797
809
(166)
417
486
571
616
716
Interest / Dividend Recd
1,543
1,659
1,592
937
982
Other Adjustments
Other income
286
80
74
153
166
(Inc)/Dec in working capital
Financial expense
602
722
898
797
809
Tax paid
15
(267)
Depreciation
EBIT
Exceptional items
PBT
CF from operating activities
1,227
1,032
501
294
339
Capital expenditure
Tax Expense
340
426
208
151
168
Net Investments
PAT
887
605
294
143
171
Income from investments
13
(115)
(7)
(10)
Adjustment in reserves
Profit after tax
900
611
179
137
183
Inc/(Dec) in debt
Adjusted PAT
Share in profit from JV

Minority Interest
2011
CF from investing activities
(80)
(74)
(153)
(161)
(548)
(115)
(97)
693
(1,498)
373
(426)
(208)
(151)
(168)
2,266
(90)
1,289
1,806
(1,322)
(1,193)
(289)
41
(25)
(1)
13
(4)
80
74
153
166
(1,267)
(1,120)
(122)
204
(41)
1,122
(78)
(30)
442
(460)
(746)
900
599
393
137
183
Other items
(324)
673
75
(333)
Basic EPS (INR)
9.7
6.6
1.9
1.3
1.7
Dividends & Interest paid
(722)
(898)
(797)
(809)
Diluted EPS (INR)
9.7
6.6
1.9
1.3
1.7
CF from financing activities
(1,918)
Balance sheet (INRm)

Year ended 31 Mar
Shareholder's funds
Minority interest
Debt
Other LT Liabilities
(1,081)
1,339
(1,261)
Net cash flow
(82)
129
(95)
92
Opening balance
271
189
317
223
Closing balance
189
317
222
315
2012
2013
2014
2015
25.8
(5.4)
(15.3)
2.8
9.5
0.8
(28.2)
9.3
(31.7)
(51.4)
(51.5)
20.2
(31.7)
(51.4)
(51.5)
20.2
2011
2012
2013
2014
2015
4,184
4,587
5,378
5,321
5,356
343
350
360
5,787
5,792
6,234
5,774
5,028
Year ended 31 Mar

Revenue
Growth indicators (%)
1,399
1,075
1,748
1,823
1,490
Capital employed
11,369
11,454
13,704
13,268
12,234
Net fixed assets
4,895
5,730
6,353
6,026
5,269
PAT
45
69
71
57
61
EPS
Inventory
3,858
3,608
3,929
3,579
3,463
Debtors
6,000
7,833
8,377
8,531
8,582
271
189
317
223
315
Long term Investments
Cash & cash equivalent

Loans & advances
Other Assets
Current assets
1,872
28
12,028
1,679
89
13,398
2,014
174
14,810
1,915
245
14,493
1,797
156
14,312
EBITDA
Valuation (x)
Year ended 31 Mar
2011
2012
2013
2014
2015
PE
7.0
9.5
7.3
26.8
39.6
P/BV
1.4
1.3
1.1
1.3
1.3
EV/EBITDA
6.0
5.3
4.1
5.9
7.1
0.9
0.7
0.6
0.7
0.9
2.3
2.8
2.8
1.6
1.6
2015
Creditors
3,727
5,090
5,398
4,940
5,153
EV/Sales
Other liabilities & provisions
1,871
2,654
2,132
2,368
2,256
Dividend Yield (%)
Current Liability
5,599
7,744
7,530
7,308
7,408
Net current assets
6,430
5,654
7,280
7,185
6,904
11,369
11,454
13,704
13,268
12,234
Application of funds
Per share data

Year ended 31 Mar
2011
2012
2013
2014
2015
Outstanding shares (m)
92.8
92.8
92.9
108.9
108.9
BVPS
45.1
49.4
57.9
48.8
49.2
CEPS (INR)
14.0
11.8
9.3
7.0
8.1
DPS (INR)
1.5
1.8
1.8
1.0
1.0
2011
Financial ratios
Year ended 31 Mar
2011
2012
2013
2014
RoE (%)
21.5
13.3
3.3
2.6
3.4
RoCE (%)
13.6
14.5
11.6
7.1
8.0
Net Debt/Equity (x)
1.3
1.2
1.1
1.0
0.9
EBIT/Interest (x)
2.6
2.3
1.8
1.2
1.2
Margins (%)
Year ended 31 Mar
2011
2012
2013
2014
2015
EBITDA
15.3
13.3
14.2
12.0
12.8
EBIT
12.0
10.3
10.4
7.3
7.4
7.0
3.8
1.2
1.1
1.4
PAT
Source: Company Antique
15 May 2015 | 21
Valuation Guide
Company
Reco
CMP
TP
(INR)
(INR)
Return
M.Cap
71
84
18
203
M.Cap
(%) (INRbn) ( U S D b n )
Net profit (INRbn)
EPS (INR)
P/E (x)
EV/EBITDA (x)
P/BV (x)
RoE (%) RoCE (%)
Absolute (%)
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FY16
FY16
FY16
1m
12m
3.2
2.3
7.0
12.2
0.8
2.5
4.3
86.8
29.1
16.6
21.0
14.8
9.8
4.5
16.3
13.6
(6)
179
AUTOMOBILES
Ashok Leyland
BUY
Bajaj Auto
HOLD
2,166
2,374
10
627
9.8
30.7
34.3
41.5
106.0 118.6 143.3
20.4
18.3
15.1
14.2
12.6
10.4
5.6
30.7
44.4
Bosch
HOLD
22,794
26,538
16
716
11.2
10.9
19.8
20.9
348.1 630.6 665.2
65.5
36.1
34.3
46.0
26.0
23.5
7.8
21.7
31.7 (14)
112
Eicher Motors
BUY
18,176
17,881
(2)
493
7.7
6.1
12.9
19.3
226.6 478.8 713.1
Exide Industries
HOLD
155
180
16
132
2.1
5.5
6.3
8.0
Hero MotoCorp
BUY
2,538
2,866
13
507
8.0
25.4
29.8
35.6
M&M
BUY
1,227
1,368
12
762
12.0
31.6
37.4
50.0
Maruti Suzuki
BUY
3,647
4,351
19
1,102
17.3
37.1
50.9
68.0
Tata Motors
BUY
517
732
42
1,629
25.6 193.2 209.6 276.9
6.4
7.4
9.4
127.2 149.2 178.2
80.2
38.0
25.5
43.7
21.9
14.2
13.5
35.4
42.9
13
180
24.1
21.0
16.4
16.0
13.9
10.9
3.0
14.0
19.7 (19)
27
19.9
17.0
14.2
15.1
12.4
10.1
6.4
37.6
52.9
(2)
76.1
25.5
21.6
16.1
17.0
14.3
10.8
3.7
17.1
20.6
(2)
13
122.9 168.7 225.1
48.1
56.9
56.9
63.8
29.7
21.6
16.2
16.4
12.4
9.6
3.9
18.1
27.4
(1)
75
91.3
9.1
8.1
5.7
4.2
3.9
3.0
1.6
18.8
20.6
(7)
18
Balkrishna Industries Limited
HOLD
758
673
(11)
73
1.2
4.9
5.7
6.5
50.5
58.7
67.3
15.0
12.9
11.3
9.6
8.1
6.9
2.5
21.7
17.2
32
Ceat Limited
BUY
736
869
18
30
0.5
3.2
3.7
3.9
79.9
92.3
96.5
9.2
8.0
7.6
5.6
5.1
5.0
1.4
18.4
21.8 (21)
87
Apollo Tyres Limited
BUY
174
228
31
88
1.4
10.6
10.6
11.5
20.8
20.9
22.8
8.3
8.3
7.6
4.7
4.6
4.4
1.3
17.2
23.3
(8)
Bharat Forge
BUY
1,294
1,853
43
301
4.7
8.0
12.1
17.3
34.4
52.1
74.1
37.6
24.8
17.5
20.0
14.6
10.7
7.0
31.8
34.4
(1)
188
Motherson Sumi Systems
BUY
496
619
25
437
6.9
7.5
14.0
21.8
8.5
15.9
24.7
58.0
31.2
20.0
14.6
11.1
7.6
10.3
37.1
31.6
(3)
77
218
JK Tyre & Industries Ltd
BUY
121
141
16
27
0.4
3.5
4.3
4.6
15.3
19.1
20.1
7.9
6.3
6.0
5.3
4.9
4.7
1.8
27.9
21.4
(8)
SKF India Ltd
BUY
1,375
1,621
18
73
1.1
2.0
2.3
3.1
38.5
44.3
57.9
35.7
31.1
23.8
24.4
22.6
17.7
4.6
15.6
23.2
(7)
67
Atul Auto
BUY
441
638
45
10
0.2
0.4
0.5
0.6
17.4
21.7
29.0
25.4
20.3
15.2
16.2
12.5
9.5
6.4
31.6
32.5 (22)
141
44.4
FMCG & RETAIL

Hindustan Unliver
HOLD
846
819
-3
1,831
28.8
38.5
52.1
17.8
20.5
24.1
47.6
41.2
35.1
33.1
27.8
23.3
37.6
91.2
95.1 (11)
ITC Ltd
BUY
325
409
26
2,603
40.9
98.6 106.8 121.9
12.4
13.4
15.3
26.2
24.2
21.2
17.1
15.6
13.3
7.4
27.9
68.3
(8)
(11)
47
90.7 116.3 140.1
GCPL
HOLD
1,124
1262
12
383
6.0
27.3
34.2
41.2
41.2
32.8
27.3
29.1
23.3
19.7
7.2
24.2
20.8
(8)
41
Marico
BUY
402
475
18
259
4.1
5.6
7.5
9.0
8.7
11.6
14.0
46.5
34.6
28.8
30.7
23.0
19.4
11.0
34.8
35.4
74
Emami
SELL
1,018
792
-22
231
3.6
4.9
5.7
6.8
21.4
25.1
30.0
47.6
40.6
34.0
41.2
33.0
26.8
15.1
41.2
43.4
(7)
130
Jyothy Labs
BUY
238
310
30
43
0.7
1.5
1.7
2.2
8.0
9.2
11.8
29.9
26.0
20.1
29.1
26.4
20.6
5.9
22.5
21.6 (14)
Amrutanjan
BUY
485
552
14
0.1
0.19
0.26
0.34
12.9
18.1
23.2
37.5
26.9
20.9
23.6
16.5
12.6
6.2
24.8
34.6
(8)
257
19
INDUSTRIALS
ABB
HOLD
1,344
1,280
(5)
285
4.5
2.2
3.5
5.8
10.2
16.3
27.4
132.1
82.4
49.1
51.6
39.3
26.5
9.5
11.9
11.7
(4)
51
Alstom T&D
HOLD
509
432
(15)
130
2.0
1.9
2.7
3.2
7.2
10.5
12.5
70.2
48.7
40.8
33.2
25.5
21.7
7.7
17.0
16.2 (12)
91
BHEL
BUY
230
360
57
563
8.8
13.1
34.5
49.1
5.4
14.1
20.1
42.8
16.3
11.5
22.3
8.5
5.3
1.5
9.8
9.9
(5)
Crompton Greaves
BUY
173
269
56
108
1.7
2.3
5.8
8.6
3.6
9.2
13.7
47.9
18.8
12.6
17.5
11.4
8.1
2.4
12.5
9.4
(2)
(4)
Cummins India
BUY
865
1,201
39
240
3.8
7.9
9.1
11.8
26.6
34.6
44.5
32.5
25.0
19.4
31.1
23.6
17.2
7.2
29.2
25.3
(1)
59
Havells India
HOLD
277
250
(10)
173
2.7
4.0
5.7
6.9
6.4
9.2
11.1
43.5
30.1
24.9
19.8
15.9
13.3
7.9
28.7
32.5
(6)
44
Honeywell Automation
BUY
7,812
8,186
69
1.1
1.6
1.7
2.1
43.5
41.0
33.4
27.6
25.7
19.9
6.4
16.7
16.7
(9)
135
Larsen & Toubro
BUY
1,577
1,952
24
1,467
23.0
48.4
61.2
73.8
52.2
66.1
79.6
30.2
23.9
19.8
20.2
16.4
13.8
3.5
14.8
13.1 (13)
13
Siemens
BUY
1,348
1,440
480
7.5
5.8
9.7
12.8
16.4
27.2
36.0
82.4
49.5
37.4
43.6
28.3
21.9
8.9
18.8
20.4
70
KEC
BUY
104
146
40
27
0.4
1.6
1.7
2.5
2.7
6.5
9.7
38.0
16.0
10.7
8.8
6.6
5.4
1.8
5.3
16.3
(0)
17
Voltas
HOLD
282
245
(13)
93
1.5
1.2
1.6
2.0
9.1
12.3
15.3
31.1
23.0
18.4
26.1
19.7
15.9
0.9
17.1
18.6
(7)
58
514
520
58
0.9
3.5
3.6
4.5
31.3
32.2
40.4
16.4
15.9
12.7
12.4
9.7
7.3
2.8
17.3
23.0
63
(5)
32
179.4 190.7 233.9
(6)
INFORMATION TECHNOLOGY
Cyient
HOLD
HCL Tech
BUY
925
975
1,301
20.4
72.2
75.0
86.0
51.2
53.1
60.9
18.1
17.4
15.2
13.4
12.3
10.2
4.8
27.4
23.8
Hexaware Tech
HOLD
253
270
76
1.2
3.2
4.3
5.1
10.7
14.2
17.0
23.7
17.8
14.9
15.0
12.7
10.7
5.7
31.9
31.1 (24)
78
Infosys Ltd.
BUY
1,935
2,175
12
2,222
107.9 110.1 128.0
17.9
17.6
15.1
12.9
12.1
10.0
3.6
21.7
17.8 (14)
19
KPIT
SELL
103
100
(3)
20
12.2
8.3
13.1
8.4
5.8
5.9
3.8
1.3
9.8
10.3 (43)
(36)
34.9 123.3 125.8 146.3

0.3
2.4
1.5
2.4
12.3
7.9
Mphasis
HOLD
385
410
81
1.3
6.6
7.0
7.8
31.4
33.4
37.2
12.2
11.5
10.3
8.3
7.6
6.6
1.4
12.3
9.7
(0)
(2)
NIIT Tech
BUY
373
435
17
23
0.4
1.1
2.0
2.4
18.8
33.7
39.7
19.9
11.1
9.4
5.9
5.1
4.0
1.6
14.3
14.5
(5)
Persistent Sys
SELL
726
666
(8)
58
0.9
2.9
3.2
3.6
36.3
40.0
44.5
20.0
18.1
16.3
12.8
11.3
8.9
3.9
21.4
16.8
(7)
47
TCS
HOLD
2,499
2,630
4,895
100.4 119.2 138.5
24.9
21.0
18.0
17.9
15.5
13.1
7.4
35.5
32.4
(6)
15
Tech Mahindra
BUY
615
769
25
592
9.3
28.6
34.0
41.7
33.0
39.3
48.1
18.7
15.7
12.8
12.8
10.3
8.4
4.1
26.2
25.3
(7)
34
Wipro
HOLD
537
620
16
1,325
20.8
87.6
91.1 103.3
35.1
36.4
41.3
15.3
14.7
13.0
12.4
11.5
9.7
2.9
20.7
15.4 (14)
UR: Under Review
76.9 221.2 236.4 274.8
2
contd...
15 May 2015 | 22
Valuation Guide
Company
Reco
CMP
TP
(INR)
(INR)
Return
M.Cap
M.Cap
Net profit (INRbn)

FY15
FY16
FY17
EPS (INR)
FY15
FY16
PE (x)
FY17
FY15
FY16
22.6
EV/EBITDA (x)
FY17
FY15
P/BV (x)
FY16
FY17
RoE (%) RoCE (%)
FY16
FY16
Absolute (%)
FY16
1m
12m
MEDIA
Den Networks
BUY
137
220
60
24
0.4
1.1
2.0
1.7
6.1
11.4
9.6
12.0
14.4
22.9
5.3
4.2
1.3
5.9
9.6
14
(25)
Dish TV India
BUY
80
85
85
1.3
(1.1)
0.6
1.6
(1.1)
0.6
1.5
(75.7) 137.4
54.3
13.0
10.4
9.0
(23.4)
nm
1.9
(7)
71
Hathway Cable
HOLD
53
75
42
44
0.7
(2.0)
0.9
2.1
(2.4)
1.0
2.5
(21.6)
50.5
20.8
20.6
8.8
5.8
3.9
5.6
9.9
(6)
Just Dial Ltd
BUY
1,090
1,680
54
77
1.2
1.3
1.2
2.7
18.2
17.5
38.6
59.9
62.4
28.2
38.7
36.0
18.1
10.6
17.0
22.0 (16)
(4)
Sun TV Network
BUY
356
440
24
140
2.2
7.7
8.7
10.2
19.5
22.0
25.8
18.2
16.2
13.8
7.8
6.8
5.7
3.7
23.0
30.7
(9)
(4)
Zee Ent
HOLD
304
355
17
291
4.6
9.4
11.0
13.3
9.8
11.5
13.8
31.0
26.4
21.9
21.5
18.2
15.0
7.7
19.0
26.1 (12)
10
Hindalco Industries
HOLD
137
137
(0)
284
4.5
28.1
46.1
52.4
13.6
22.3
25.4
10.1
6.2
5.4
9.1
6.6
5.8
0.6
10.3
6.7
(3)
Hindustan Zinc
BUY
176
195
11
744
11.7
81.8
77.7
81.2
19.4
18.4
19.2
9.1
9.6
9.2
5.9
5.1
4.4
1.5
16.8
44.1
35
Jindal Steel & Power
HOLD
139
159
15
127
2.0
13.1
5.4
13.6
14.3
5.9
14.9
9.7
23.6
9.3
8.9
8.6
7.2
0.6
2.5
JSW Steel
HOLD
906
1,113
23
219
3.4
21.6
24.4
31.2
89.3 101.1 129.1
10.1
9.0
7.0
6.2
5.8
5.1
0.9
10.2
SAIL
HOLD
67
64
(5)
277
4.3
21.9
25.5
40.8
5.3
6.2
9.9
12.6
10.8
6.8
10.9
9.5
6.9
0.6
5.6
TATA Steel
BUY
366
430
17
356
5.6
20.1
34.5
50.2
20.7
35.5
51.6
17.7
10.3
7.1
7.6
6.8
5.9
0.7
NMDC
BUY
133
173
30
527
8.3
68.7
69.2
71.4
17.3
17.5
18.0
7.7
7.6
7.4
4.1
4.1
4.0
1.5
Nalco
BUY
49
67
35
127
2.0
11.7
12.8
13.6
4.6
5.0
5.3
10.9
10.0
9.3
4.9
4.2
3.3
0.9
METALS & MINING
5.0 (12)
(47)
7.0
(4)
(23)
4.3 (12)
(11)
6.9
3.9
(19)
20.1
33.5
(1)
(16)
9.7
10.1
16
18.3
(8)
46
3.2 (11)
(40)
OIL & GAS

BPCL
BUY
757
1,000
32
547
8.6
35.8
55.9
54.7
54.7
85.3
83.4
13.8
8.9
9.1
7.6
5.5
5.4
1.8
20.4
Cairn India
SELL
202
175
(14)
379
6.0
44.8
31.7
30.1
34.8
16.9
16.0
5.8
12.0
12.6
4.3
7.4
5.7
0.6
5.2
GAIL India
SELL
383
405
486
7.6
33.1
31.7
35.6
26.1
25.0
28.1
14.7
15.3
13.6
11.5
9.4
8.4
1.6
10.6
11.0
(3)
(3)
Gujarat State Petro
BUY
119
150
26
67
1.1
4.6
5.4
5.7
8.2
9.7
10.1
14.5
12.3
11.8
8.6
6.7
6.5
1.6
13.1
16.7
(2)
60
Gujarat Gas Company
BUY
829
915
10
106
1.7
7.1
6.6
8.4
51.6
48.2
61.0
16.1
17.2
13.6
9.5
7.9
6.9
3.9
22.9
20.1
24
112
10.8
(8)
59
HPCL
BUY
599
880
47
203
3.2
20.1
31.7
28.1
59.2
93.5
83.0
10.1
6.4
7.2
7.8
5.3
6.0
1.1
17.1
Indian Oil Corp
BUY
334
475
42
811
12.7
41.0
96.4
95.9
17.3
40.7
40.5
19.3
8.2
8.2
13.2
5.9
6.0
1.0
12.5
Indraprastha Gas
BUY
405
620
53
57
0.9
4.3
4.5
4.9
30.7
32.2
35.1
13.2
12.6
11.5
9.6
9.6
9.4
2.9
19.3
MRPL
BUY
69
70
121
1.9 (22.0)
17.0
16.2
(12.5)
9.7
9.2
(5.5)
7.1
7.5
(10.9)
4.8
4.9
1.9
Oil India
HOLD
488
550
13
294
4.6
37.0
37.6
46.8
61.6
62.5
10.4
7.9
7.8
7.2
6.5
6.0
1.2
ONGC
HOLD
316
335
2,705
42.5 175.8 235.6 249.3
Petronet LNG
HOLD
180
180
135
Reliance Industries
BUY
878
1,050
20
2,842
Chennai Petroleum
BUY
93
185
99
14
0.2
(1.2)
7.6
8.3
28.1
9.6 (11)
22.5
(6)
32
27.3
18.5
(6)
19
15.1
12.5
(11)
(14)
24.2
29.3
31.5
13.1
10.8
10.0
6.8
5.9
5.3
1.7
14.8
17.3
7.4
9.2
6.0
9.9
19.6
30.0
18.2
11.0
13.3
9.7
2.3
7.6
9.0
(4)
26
44.6 235.7 214.8 270.5
72.9
66.4
83.6
12.0
13.2
10.5
11.6
11.8
8.6
1.1
9.1
5.9
(5)
(16)
(8.4)
51.1
55.5
(11.1)
1.8
1.7 (170.4)
3.2
2.7
0.6
35.6
22.9
21
12
15.7
25.9
32.9
43.6
26.5
20.8
26.9
18.1
14.4
4.3
19.1
16.4
(4)
74
130.7 160.5 202.8
26.9
21.9
17.4
17.9
14.9
11.7
5.0
22.9
17.1
(7)
40
69
2.1
6.9
4.5
PHARMACEUTICALS
Cipla
HOLD
686
727
551
8.7
12.6
20.8
26.4
Dr Reddy's
BUY
3,519
4,057
15
599
9.4
22.2
27.3
34.5
Lupin
HOLD
1,632
1,664
734
11.5
23.3
29.3
35.9
52.2
65.5
80.2
31.3
24.9
20.3
19.4
16.1
13.0
6.5
29.2
26.7 (18)
Sun Pharma
BUY
944
1,120
19
2,273
35.7
64.0
87.7 109.3
30.9
35.9
44.0
30.6
26.3
21.5
26.1
18.5
14.5
7.3
28.1
31.0 (18)
Aurobindo
HOLD
1,356
1,173
(13)
396
6.2
17.9
19.7
22.6
61.2
68.1
78.2
22.1
19.9
17.3
15.1
13.4
11.5
5.4
38.8
21.2
Cadila Health
BUY
1,657
2,008
21
339
5.3
11.4
15.3
20.6
55.7
74.8 100.4
29.7
22.2
16.5
20.1
15.3
11.4
6.0
28.1
20.0
(7)
71
Strides
BUY
1,024
1,405
37
61
1.0
1.9
3.7
6.4
31.2
46.8
80.4
32.8
21.9
12.7
23.2
11.4
6.5
4.3
31.4
23.8 (15)
131
Glenmark
BUY
914
994
248
3.9
8.0
11.8
19.6
32.5
39.0
51.9
28.1
23.4
17.6
19.4
14.2
9.0
4.5
22.7
22.6
(0)
54
120
61
Biocon
HOLD
439
463
88
1.4
4.0
4.2
5.2
19.4
20.1
25.4
22.6
21.8
17.3
13.3
11.3
9.4
2.4
11.9
8.2 (10)
(4)
Unichem
HOLD
200
228
14
18
0.3
0.7
0.9
1.5
8.0
10.1
16.3
24.9
19.8
12.3
17.6
12.7
8.4
2.0
10.0
7.9
(6)
(5)
Natco Pharma
BUY
2,127
2,666
25
71
1.1
1.1
2.6
5.2
33.5
77.1 156.6
63.4
27.6
13.6
33.7
17.7
9.2
6.8
24.5
21.3 (11)
180
UTILITIES
CESC
HOLD
543
642
18
72
1.1
3.2
7.9
11.6
24.1
59.4
87.4
22.5
9.1
6.2
10.3
6.0
2.0
1.0
11.3
JSW Energy
HOLD
111
105
(6)
183
2.9
13.9
14.3
14.3
8.5
8.7
8.7
13.1
12.7
12.7
7.2
6.9
6.9
2.1
16.6
8.8 (10)
14.6
(7)
5
86
NTPC
HOLD
139
160
15
1,147
18.0
88.3
93.5 104.0
10.7
11.3
12.6
13.0
12.3
11.0
10.3
10.0
9.4
1.3
10.7
7.6 (12)
11
Power Grid
BUY
139
183
31
729
11.5
51.1
60.6
71.0
9.8
11.6
13.6
14.3
12.0
10.3
11.6
10.2
9.0
1.7
14.1
7.5 (10)
24
PTC India
BUY
68
122
80
20
0.3
1.7
2.1
2.4
5.6
7.1
8.2
12.0
9.5
8.2
9.0
8.7
7.3
9.3
7.6
7.6 (16)
(6)
Tata Power
HOLD
3.1
13.7
14.7
15.6
5.0
5.4
5.8
14.6
13.5
12.8
6.5
6.3
5.9
1.3
10.0
9.4
(8)
(13)
Coal India
BUY
36.7 142.5 160.3 184.0
22.6
25.4
29.1
16.4
14.6
12.7
11.9
10.0
7.9
4.6
31.7
28.9
(6)
UR: Under Review
74
98
33
199
370
436
18
2,338
contd...
15 May 2015 | 23
Valuation Guide
Company
Reco
CMP
TP
(INR)
(INR)
Return
M.Cap
M.Cap
Net profit (INRbn)

FY15
FY16
EPS (INR)
FY17
FY15
FY16
PE (x)
FY17
FY15
FY16
EV/EBITDA (x)
FY17
FY15
FY16
P/BV (x)
FY17
FY16
RoE (%) RoCE (%)

FY16
Absolute (%)
FY16
1m
12m
OTHERS
Supreme Industries
HOLD
Cera Sanitaryware
SELL
666
655
(2)
85
1.3
2.7
3.6
4.5
25.6
34.1
38.4
26.0
19.5
17.3
14.7
11.8
9.9
5.9
29.9
31.7
(8)
50
2,135
1,847
(13)
28
0.4
0.7
0.9
1.1
52.0
65.9
84.0
41.0
32.4
25.4
23.9
19.1
15.2
6.6
22.1
28.1 (25)
88
Kajaria Ceramics
Finolex Industries
BUY
766
906
18
61
1.0
1.7
2.2
2.8
21.4
27.5
35.3
35.9
27.9
21.7
18.1
14.1
11.5
6.7
24.8
32.3
(1)
56
HOLD
264
325
23
33
0.5
0.7
2.0
2.7
5.9
16.3
21.7
45.1
16.3
12.2
17.3
9.3
7.4
4.2
9.6
10.7
(8)
16
Astral Poly Technik Limited
BUY
413
524
27
49
0.8
1.1
1.8
2.5
10.6
16.0
21.8
39.0
25.9
19.0
22.9
16.4
12.4
6.2
25.8
30.3 (17)
53
HSIL
BUY
375
524
40
27
0.4
0.8
1.3
1.8
12.0
20.1
27.0
31.4
18.7
13.9
11.0
8.7
7.2
2.1
11.7
15.0 (18)
98
Somany Ceramics Limited
BUY
405
401
-1
16
0.2
0.5
0.7
0.9
13.1
17.8
22.3
30.9
22.8
18.2
15.0
11.9
10.1
4.8
23.0
23.2 (10)
102
Greenply Industries
BUY
1,014
1,448
43
24
0.4
1.0
1.5
1.9
42.6
60.6
80.5
23.8
16.7
12.6
13.4
10.3
7.8
4.1
27.2
23.6
160
Return
M.Cap
M.Cap
(2)
UR: Under Review
Company
Reco
CMP
TP
(INR)
(INR)
Net profit (INRbn)

FY15
FY16
FY17
ABVS (INR)
FY15
FY16
P/AdjBV (x)
NNPA Ratio (%)
P/E (x) RoE (%) RoA (%)
FY17
FY15
FY16
FY17
FY15
FY16
FY17
FY16
FY16
FY16
Absolute (%)
1m
12m
FINANCIALS
Axis Bank
BUY
556
646
16
1319
20.7
75.3
89.4 114.6
186.3 217.8 259.6
3.0
2.6
2.1
0.4
0.4
0.3
14.6
18.5
1.8
(2)
70
Bank of Baroda
BUY
165
216
31
364
5.7
34.5
58.5
144.9 165.0 191.0
1.1
1.0
0.9
2.0
1.8
1.6
6.1
14.2
0.7
(6)
(14)
Bank of India
BUY
211
337
60
140
2.2
19.6
35.4
52.7
312.3 361.9 446.1
0.7
0.6
0.5
4.1
3.9
3.5
3.8
10.7
0.5
(5)
(23)
Canara Bank
BUY
370
515
39
176
2.8
28.5
55.0
80.4
468.3 571.4 707.9
0.8
0.6
0.5
2.1
1.8
1.7
3.1
16.0
1.0
(7)
11
City Union Bank
HOLD
101
110
60
0.9
3.9
4.7
5.7
2.5
2.2
1.8
1.0
0.7
0.5
12.8
16.9
1.7
56
Federal Bank
BUY
137
175
28
117
1.8
10
12
14
HDFC Bank
BUY
991
1,350
36
2485
39.0 102.7 138.5 167.4
ICICI Bank
BUY
315
397
26
1827
28.7 107.4 132.1 161.9
134.6 150.8 170.9
2.3
2.1
1.8
1.1
IndusInd Bank
HOLD
817
916
12
432
6.8
17.9
24.6
30.7
192.6 231.6 278.7
4.2
3.5
2.9
0.4
Karur Vysya Bank
BUY
470
687
46
57
0.9
4.6
5.5
7.4
335.0 379.9 448.8
1.4
1.2
1.0
0.8
172.6 199.1 235.8
75.8
Kotak Mahindra
HOLD
1,327
1,280
(4)
1209
19.0
18.7
22.7
30.4
Lakshmi Vilas Bank
BUY
105
132
26
19
0.3
1.3
1.9
2.9
PNB
BUY
151
189
25
279
4.4
30.6
42.6
SBI
BUY
281
375
33
2126
South Indian Bank
BUY
24
36
48
33
0.5
2.6
5.1
6.7
Union Bank
BUY
163
237
46
103
1.6
15.9
33.8
39.7
46.6
55.1
88.1
99.8 114.6
1.6
1.4
1.2
0.6
0.5
0.3
9.8
14.5
1.3
31
246.4 291.8 347.5
4.0
3.4
2.9
0.2
0.2
0.2
17.5
20.9
2.2
(5)
28
1.1
1.1
13.8
14.5
1.8
(1)
12
0.3
0.3
18.1
21.0
2.0 (14)
52
0.8
0.4
10.4
12.1
1.0 (14)
20
54
7.7
6.7
5.6
0.9
1.0
1.0
45.1
15.3
1.9
(8)
87.6 103.2
1.4
1.2
1.0
1.9
1.2
0.9
10.1
10.9
0.7
(1)
57
60.0
144.6 157.2 193.3
1.0
1.0
0.8
4.0
4.2
3.3
6.6
10.4
0.7
(9)
(10)
33.4 123.8 212.7 285.1
137.3 160.5 190.5
23
75.2
2.0
1.8
1.5
2.3
2.0
1.8
9.9
15.5
1.0
(2)
33.9
1.0
0.8
0.7
1.0
0.5
0.3
6.4
12.6
0.8
(5)
(1)
46.2
210.9 252.7 309.0
0.8
0.6
0.5
2.7
2.4
2.1
3.0
17.2
0.8
(1)
(3)
24.9
29.1
YES Bank
BUY
839
985
17
351
5.5
20.1
27.0
34.0
268.7 323.5 393.1
3.1
2.6
2.1
0.1
0.1
0.0
13.0
21.7
1.8
(0)
61
Bajaj Auto Fin
BUY
4,385
4,250
(3)
220
3.5
8.9
11.3
13.6
957.4 1155.4 1393.5
4.6
3.8
3.1
0.2
0.3
0.3
19.3
21.5
3.1
(2)
143
201.4 228.5 261.2
Chola Invst & Fin.
HOLD
575
598
83
1.3
4.3
5.3
6.4
Gruh Finance
BUY
234
300
28
85
1.3
2.0
2.6
3.3
2.9
2.5
2.2
1.4
1.5
1.5
16.8
16.0
1.9
(2)
98
31.2
11.4
9.3
7.5
32.3
31.7
2.5
(9)
39
HDFC
HOLD
1,210
1,243
1905
29.9
59.4
73.6
88.1
200.4 227.8 265.3
6.0
5.3
4.6
0.2
0.2
0.2
25.7
21.7
2.7
(7)
36
36
20.5
25.2
LIC Housing Fin
BUY
412
503
22
208
3.3
14.5
18.4
21.5
141.1 166.7 191.7
2.9
2.5
2.1
0.4
0.4
11.3
19.2
1.4 (11)
M&M Fin.
HOLD
274
293
156
2.4
7.0
10.1
11.4
86.3 101.3 121.2
3.2
2.7
2.3
3.0
2.5
2.5
15.2
16.1
2.7
10
Manappuram
BUY
35
46
33
29
0.5
2.8
3.5
4.1
31.3
36.9
1.1
1.0
0.9
0.4
0.4
0.4
8.3
12.9
3.1
(0)
44
Muthoot Finance
BUY
191
251
31
76
1.2
6.7
7.6
8.7
124.0 135.5 148.6
1.5
1.4
1.3
0.9
0.9
1.0
10.0
14.8
3.1
(4)
PFC
BUY
270
406
50
357
5.6
63.8
72.9
84.9
249.4 290.6 338.5
1.1
0.9
0.8
1.0
1.1
0.9
4.8
20.9
3.1
(6)
16
Repco Home Fin.
BUY
611
727
19
38
0.6
1.3
1.7
2.2
129.5 151.8 180.5
4.7
4.0
3.4
0.7
0.7
0.7
22.5
19.3
2.4
(9)
53
33.7
REC
BUY
299
422
41
295
4.6
54.3
63.3
73.4
254.2 302.0 358.4
1.2
1.0
0.8
0.3
0.5
0.5
4.6
23.6
3.5 (12)
11
Shriram Transport
BUY
818
1,206
48
185
2.9
10.3
16.2
19.6
405.3 461.6 548.3
2.0
1.8
1.5
(0.8)
(0.5)
(1.1)
11.1
16.5
2.5 (29)
SKS Microfinance
BUY
456
535
17
58
0.9
1.9
2.2
3.0
82.6 100.4 124.0
5.5
4.5
3.7
0.1
0.2
0.3
25.6
19.4
4.8 (10)
87
PTC Financial
BUY
54
76
40
31
0.5
3.0
4.4
5.1
29.2
40.3
1.9
1.5
1.3
6.9
24.4
3.5 (10)
179
Shriram City Union
BUY
1,788
2,469
38
118
1.9
5.6
6.8
8.0
622.4 715.4 823.9
2.9
2.5
2.2
0.7
17.9
15.5
3.6
UR: Under Review
35.1
(6)
30
Events Calendar
15 May 2015 | 24
May 2015
Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Sun
11 May
12 May
13 May
14 May
15 May
16 May
17 May
24 May
Cadila Healthcare
JSW Steel
Ambrutanjan
18 May
19 May
20 May
21 May
22 May
23 May
Somany Ceramics
Tata Power
Repco Home Fin
Bajaj Finance
Tata Steel
Bharat Forge
Bajaj Auto
Voltas
CESC
Zee Entertainment
Mphasis
Ceat
GSPL
State Bank of India
ITC
MRPL
Chennai Petro
City Union Bank
Natco Pharma
25 May
26 May
27 May
28 May
29 May
Jyothy Labs
Greenply Ind
Tech Mahindra
Dish TV
HPCL
BHEL
ONGC
BPCL
REC
M&M
Tata Motors
PTC
30 May
31 May
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ANTIQUES MORNING PRESENTATION

FROM THE RESEARCH DESK

Well begun is half done!

MANAGEMENT MEET UPDATE

Elecon Engineering Company Limited

Sector & Corporate News

Please refer to disclosures at the end of the Research Report

Nitesh Estates and Goldman Sachs has announced an agreement to jointly

Lupin announced the acquisition of Brazils Medqumica for an undisclosed

Hexaware Technologies and Riversand enter into a global partnership to

Cash (NSE + BSE)

ANTIQUE STOCK BROKING LIMITED

FROM THE RESEARCH DESK

BSE Cap Goods

BSE Cons dur

Asian Paints Ltd

Punjab National Bank

Hindalco Industries Ltd

Bharat Petroleum Corp Ltd

Idea Cellular Ltd

State Bank Of India

Tata Steel Ltd

Hcl Technologies Ltd

Kotak Mahindra Bank Ltd

Power Grid Corp Of India Ltd

Gulf Oil Corp. Ltd.

Hinduja Power Limited

Gulf Oil Corp. Ltd.

Bridge India Fund

Gulf Oil Corp. Ltd.

UFO Moviez India Ltd.

Citigroup Global Markets Mauritius Private Limited

Pacific Corporate Services Ltd

Asia Investment Corporation Mauritius Limited

ANTIQUE STOCK BROKING LIMITED

FROM THE RESEARCH DESK

FII Provisional Flows (INRcr)

DII Provisional Flows (INRcr)

Economy, Money & Banking

Crude Oil ($/Bl)

Gold and silver prices

Inflation vs 10 year yield

NSE volatility index (%)

ANTIQUE STOCK BROKING LIMITED

FROM THE RESEARCH DESK

Well begun is half done!

+91 22 4031 3436

+91 22 4031 3417

Higher thrust on infrastructure spending: roads and railways

Unlocking the coal-power cycle

Defence and Make in India

ANTIQUE STOCK BROKING LIMITED

FROM THE RESEARCH DESK

Enhancing the Centre-state relationship

Commodities: Plain lucky or pragmatic?

ANTIQUE STOCK BROKING LIMITED

FROM THE RESEARCH DESK

Steps taken so far

To reduce layers in decision making and increase the accountability of bureaucrats, it

Transparency ensured by starting online submission of application for environment and

Process of granting permission for forest diversion up to 40 hectares for developmental

The Cabinet Committee on Economic Affairs (CCEA) approved a comprehensive Exit

ANTIQUE STOCK BROKING LIMITED