IEA Report 18th April

IEA Report
18th Apr 2017

JYOTHYLAB "Book Profit" 18th Apr 2017
Going forward, management is confident of demand revival as demonetization effect will ease of. As far as margin is concern, the company is
looking to increase prices by 5-7% going ahead which gives us confidence that company may protect margin going forwards. Implementation of
GST may be game changer for Organized FMCG players. It may boost market share of the company in times to come. Lastly, JYOTHYLAB gets large
chunk of its revenue from South market and South market conditions are improving rapidly which is positive for this company. We initiated `BUY
on JYOTHYLAB on 27th Jan2017 at Rs356 with a target price of Rs 410. As company has achieved our target and considering GST related hiccups
going forward, we recommend to `BOOK PROFIT for now. ... ( Page : 2-4)
BAJAJCORP "HOLD" 18th Apr 2017

The companys Q4FY17 result is largely in line to our estimates. Volume growth remained subdued in this quarter but improved after
demonetization QoQ. Based on managements recent commentary, we see pressure in volume of BAJAJ Almond Hair Oil for next 2-3 quarters
considering destocking led by confusion regarding GST. Earlier we were expecting EPS for BAJAJCORP in FY18E and FY19E, Rs 15 and Rs 16
respectively. But after recent managements commentary we have changed over estimates of EPS for FY18E and FY19E by 5% and 8% downward
respectively. Based on change in our EPS estimates we have changed our rating on this stock from `BUY to `HOLD and accordingly we have
lowered our target price from Rs 490 to Rs 455. ........................... ( Page : 5-7)
IOC "HOLD" 18th Apr 2017

Indian Oil Corporation has plans to come up with a 15 MT refinery, with an investment of about Rs 40,000 Cr. at Nagapattinam in Tamil Nadu.
Currently, Nagapattinam has a 1 MT plant operated by IOCs subsidiary Chennai Petroleum Corporation. This will improve the volume of the
company up-to a large extent. IOC has equipped with BS VI standard HSD and BS VI standard motor spirit and by October 2017, a new unit will go
on stream at the refinery, where only BS VI standard HSD and high quality motor spirit will be produced on a mass scale. Recently IOC stock has
rallied and achieved our previous recommended price of Rs. 410, but considering upside potential we recommend HOLD rating in this stock
while revising our target price to Rs. 445. .................. ( Page : 8-10)
BERGEPAINT "BUY" 17th Apr 2017

The implementation of One Rank One Pension (OROP), Seventh Pay Commission, revival of MGNREGA scheme, setting up of smart cities and
strong govt. initiatives on infrastructure development are likely to enhance demand both in rural and urban markets. Governments ambitious plan
``Housing for All by 2022 will be major growth driver for the company. Implementation of GST will boost companys market share going forward.
With the commencement of Assam Plant the company will enjoy a 10 year tax holiday at new plant and will also benefit from VAT exemption for
sales in Assam. Recent MoU with Chugoku Marine Paints of Japan will help to expand companys footprint in industrial paint segment. Thus,
considering strong revival in Urban and rural demand, GST implementation and commencement of Assam Plant, We remain positive on the stock
and recommend "BUY" with the target Price of Rs 267. ............................................................... ( Page : 11-13)
NESTLE "BUY" 13th Apr 2017

Our buy recommendation on NESTLE is based on Maggies market share gain, new product launches and expectation of urban demand recovery
going forward. The companys ROE improved to 31% in CY16 from 20% year ago. We expect ROE to improve further going ahead. Presently we
have positive view on this stock and recommend to `BUY this stock with target price of Rs 7920. ................ ( Page : 14-16)
DHFL "BUY" 12th Apr 2017

DHFL has continuously performed well in its operating parameters with healthy AUM growth and stable assets quality. We expect the AUM growth
of around 20% going forward. Recently huge rate cut by banks has raised the concerns over the margin protection for Housing Finance companies.
However due to strategy of management for efficient liability mix and increasing share of non-core home loan portfolio, we expect DHFL to
maintain its NIM at 3% level. Improving operating efficiency has boosted the bottom line of the company and we expect this trend to continue in
FY18. Also the stake sale deal will further boost the earnings for the company with free from concern of stake dilution for next 2 to 3 years. We
upgrade our target price to Rs 497 (2x FY18E BV) from earlier price of Rs 385. ............................................................... ( Page :17-20)
BAJAJCORP "BUY" 11th Apr 2017

BAJAJCORPs ROE is improving for Last three year and we expect it to improve further. We expect improvement in companys ROE from 41% (FY16)
to 44%, 43% and 44% in FY17E,FY18E and FY19E respectively with 93% dividend payout. BJAJCORP is presently trading at 26 times of FY19E
expected EPS of Rs 16. Considering High ROE , strong balance sheet ,reasonable dividend yield with amble growth drivers going forward we
maintain `BUY with our previous target of Rs 490. ............................................... ( Page : 21-24)
Narnolia Securities Ltd IEA Edition No.- 996
BOOK PROFIT
JYOTHY LABORATORIES LTD 18th April. 2017
Company Update JYOTHYLABs result for Q3FY17 was better than our expectations
CMP 399 considering tough demand environment. Overall volume for this quarter
grew by 3.6% YoY led by proactive measure of the management like
Target Price 410
switching production plans to maximize small skus production, helping
Previous Target Price NA reduce payment burden on retailers etc. Going forward, management is
Upside 3% confident of demand revival as demonetization effect will ease of. As far as
Change from Previous NA margin is concern, the company is looking to increase prices by 5-7% going
ahead which gives us confidence that company may protect margin going
forwards. Implementation of GST may be game changer for Organized
Market Data FMCG players. It may boost market share of the company in times to come.
BSE Code 532926 Lastly, JYOTHYLAB gets large chunk of its revenue from South market and
NSE Symbol JYOTHYLAB South market conditions are improving rapidly which is positive for this
52wk Range H/L company. We initiated `BUY on JYOTHYLAB on 27th Jan2017 at Rs356
427/270
with a target price of Rs 410. As company has achieved our target and
Mkt Capital (Rs Cr) 7,256 considering GST related hiccups going forward, we recommend to
Av. Volume(,000) 172 `BOOK PROFIT for now.
Nifty 9,139 Q3FY17_Result Update
Stock Performance JYOTHYLABs sales for this quarter grew by 3% YoY to Rs400 cr led by
1M 3M 12M 3.6% YoY volume improvement. EBITDA declined by 1.3% led by inflation
in key input prices. Gross margin for this quarter, declined by 293 bps YoY
Absolute 9.0 17.0 31.0
led by increase in major raw material prices. In spite of sharp increase in
Rel.to Nifty 9.0 8.0 12.0 input prices, the company managed other cost items efficiently and
controlled EBITDA margin decline to 55 bps YoY which is commendable.
Share Holding Pattern-% PAT margin improved by 18 bps YoY to 5.4% in Q3FY17. PAT grew by7%
3QFY17 2QFY17 1QFY17 YoY to Rs 22 cr.
Promoters 66.9 66.9 66.9 Concall Highlights:

Public 33.1 33.1 33.2 The company will take Selective price increase (price increase as well as
Others -- -- -- reduction of promotion) in Q4FY17 to achieve desired gross margin levels.
Going forward, the company is looking for 5-7% price hike.
Total 100 100 100
In the month of Jan till date company is witnessing double digit growth.
Expected Tax Rate: Q4FY17: 21%, FY18:21% (MAT credit)
Company Vs NIFTY Approx. 75% of the business in South is back to normal.
North and East are still struggling.
140 JYOTHYLAB NIFTY
From 4QFY17 on wards ad expenses will be back to the normal.
130 Next year ad and promotion expenses will be in the range of 15% of the
120 sales.
Margin will back to the normal going forward.
110
Rs,Cr
100 Financials 2015 2016 2017E 2018E 2019E
90 Sales 1515 1647 1758 1958 2161
80 EBITDA 163 220 261 270 288
Net Profit 121 158 133 147 161
EPS 7 9 7 8 9
Rajeev Anand ROE 16% 19% 15% 16% 18%
rajeev.anand@narnolia.com
Narnolia Securities Ltd 2
Please refer to the Disclaimers at the end of this Report
Overall volume growth(%)
16%
Overall volume growth(%) 14%
14%
12%
10% 10%
10% 9% 9% 9%
8%
8%
6%
6%
4%
4%
2%
0%
3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Net Sales and PAT(in cr.)

500 46 50
Sales PAT
450 45
39
400 36 40
350 32 35
300 26 27 26 30
250 22 25
20
200 20
150 15
100 10
50 5
361 401 404 407 385 445 440 434 400
0 0
EBITDA and NPM (%)

20.0%
18.0%
EBITDA % NPM%
18.0%
16.0% 14.4% 14.7%
14.1%
13.2%
14.0% 12.2% 12.7%
12.0% 10.3% 10.1% 10.4%
10.1%
10.0%
8.0%
7.3% 7.4%
8.0% 6.7% 6.4%
4.9% 5.4%
6.0%
4.0%
2.0%
0.0%

Financials Snap Shot
INCOME STATEMENT RATIOS
FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E
Revenue 1647 1758 1958 2161 EPS 8.7 7.4 8.1 8.9
Other Income 15 11 11 11 Book Value 46.7 48.1 49.6 50.7
Total Revenue 1661 1769 1969 2172 DPS 4.8 6.0 6.6 7.8
COGS 799 883 990 1102 Payout (incl. Div. Tax.) 55% 82% 81% 88%
GPM 51.5% 49.8% 49.5% 49.0% Valuation(x)
Other Expenses 461 431 487 537 P/E 36 48 44 40
EBITDA 220 261 270 288 Price / Book Value 6.7 7.4 7.1 7.0
EBITDA Margin (%) 13.4% 14.8% 13.8% 13.3% Dividend Yield (%) 1.5% 1.7% 1.9% 2.2%
Depreciation 31 30 33 33 Profitability Ratios
EBIT 189 231 237 256 RoE 18.7% 15.3% 16.3% 17.5%
Interest 6 61 58 58 RoCE 22.1% 26.3% 26.2% 27.6%
PBT 197 181 190 209 Turnover Ratios
Tax 39 48 44 48 Asset Turnover (x) 0.9 1.0 1.1 1.1
Tax Rate (%) 19.9% 26.6% 23.0% 23.0% Debtors (No. of Days) 21 24 23 22
Reported PAT 158 133 147 161 Inventory (No. of Days) 83 85 83 82
Dividend Paid 87 109 119 141 Creditors (No. of Days) 36 39 36 36
No. of Shares 18 18 18 18 Net Debt/Equity (x) 0.0 0.0 0.0 0.0
BALANCE SHEET CASH FLOW STATEMENT

Share Capital 18 18 18 18 OP/(Loss) before Tax 197 181 190 209
Reserves 828 853 880 899 Depreciation 31 30 33 33
Net Worth 846 871 898 917 Direct Taxes Paid -52 -48 -44 -48
Long term Debt 7 7 7 7 Oper. Prof. bef. WC chang. 240 272 281 299
Short term Debt 0 45 30 15 CF from Op. Activity 191 174 223 257
Deferred Tax 25 25 25 25 Non Current investments 0 0 0 0
Capital Employed 853 878 905 925 Capital expenditure -27 -50 0 0
Net Fixed Assets 1076 1096 1063 1030 CF from Inv. Activity 0 -49 0 0
Capital WIP 6 6 6 6 Repaym. of LT Borrowings 0 0 0 0
Debtors 94 116 123 130 Interest Paid -10 -61 -58 -58
Cash & Bank Balances 61 61 90 131 Divd Paid (incl Tax) -174 -109 -119 -141
Trade payables 161 188 193 213 CF from Fin. Activity -302 -125 -194 -216
Total Provisions 75 80 82 87 Inc/(Dec) in Cash -111 0 29 41
Net Current Assets -411 -341 -294 -252 Add: Opening Balance 218 61 61 90
Total Assets 1767 1817 1843 1882 Closing Balance 107 61 90 131

HOLD
Bajajcorp 18th April. 2017
Company Update Q4FY17 Result Update:

CMP 402 BAJAJCORPs Q3FY17 result is largely in line to our estimates. The
Target Price 455 company reported Sales of Rs 205 cr, declined by 2% YoY(Vs our estimate
Rs204 cr) led by 7% volume growth QoQ and 2%QoQ realization
Previous Target Price 490
growth.PAT for this quarter remained Rs 53 cr, decline by 3% YoY(Vs our
Upside 13% estimates Rs 51 cr).
Change from Previous -7% Gross Margin expansion: Positive surprise came from expansion of gross
margin in Q4FY17. Gross margin expanded by 287 bps YoYto 67.3% from
64.4%. LLP prices remained flat in this quarter whereas refined oil declined
Market Data
by 5% YoY.
BSE Code 533229
NSE Symbol BAJAJCORP EBITDA margin declined: EBITDA margin declined by 381 bps YoY to
52wk Range H/L 436/340 32.4% led by higher employee cost and other expenses. Employee cost
increased by 167 bps YoY led by hiring of competent people for different
Mkt Capital (Rs Cr) 5,929
functional area. Other expense for this quarter increased by 456 bps YoY to
Av. Volume(,000) 126 20.5% led by higher direct distribution expenses. Ad and promotion
Nifty 9,139 expenses have shown increment of 45 bps to 6.9%.
Decline in volume: The overall volume declined by 6.95% YoY led by
Stock Performance 7%YoY decline in the volume of BAJAJ Almond Oil(BAO). However,
companys Overall volume improved after demonetization if we compare
1M 3M 12M
QoQ. It went up by 7.33% QoQ led by better volume growth 5.7% QoQ in
Absolute 9.8 2.3 -2.9 BAO. Nomarks volume also improved by 18% QoQ; after four quarters of
Rel.to Nifty 10.0 -6.3 -21.5 continuous decline. Overall realization in Q4FY17 improved by 2% QoQ on
the back of better realization from Almond Drops Hair Oil, Kailash Parvat
Share Holding Pattern-% Cooling Oil and Nomarks.
4QFY17 3QFY17 2QFY17 Higher provisioning of Tax Rate: Provisioning for Tax has increased by
Promoters 66.9 66.9 66.9 301 bps to 21.3% from 18.2% in Q4FY16.
Public 33.1 33.1 33.1 View and Valuation
Others - - - The companys Q4FY17 result is largely in line to our estimates. Volume
Total 100.0 100.0 100.0 growth remained subdued in this quarter but improved after demonetization
QoQ. Based on managements recent commentary, we see pressure in
volume of BAJAJ Almond Hair Oil for next 2-3 quarters considering
Company Vs NIFTY destocking led by confusion regarding GST. Earlier we were expecting EPS
125 BAJAJCORP NIFTY
for BAJAJCORP in FY18E and FY19E, Rs 15 and Rs 16 respectively. But
120 after recent managements commentary we have changed over estimates of
115 EPS for FY18E and FY19E by 5% and 8% downward respectively. Based
110 on change in our EPS estimates we have changed our rating on this stock
105 from `BUY to `HOLD and accordingly we have lowered our target price
100 from Rs 490 to Rs 455.
95
Rs,Cr
90
Financials FY15 FY16 FY17E FY18E FY19E
85 Sales 826 876 797 803 856
80 EBITDA 239 274 264 242 252
Net Profit 173 196 218 209 218
EPS 12 13 15 14 15
Rajeev Anand ROE 35% 41% 44% 41% 42%
BAJAJCORP
Almond Drop Hair Oil (ADHO) Volume gr % YoY: Quarterly Sales and PAT(in cr)
ADHO (Volume gr%YOY) Sales (in cr) PAT(in cr)

8% 250
6%
6% 208 209 204 205
196 197
200 187
4%
2.20%
1.60%
2% 1% 150
0%
100
2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 58 58
-2% 49 54 52 53
47
-4.30% -4.20% 50
-4%
-6% -7.08% 0
2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17
-8%
Q4FY17 Result Concall Highlights
Demand environment is still subdued.

Revival of hair oil market witnessed more on urban than rural. Rural market will yet to pick up.
Witnessed Improvement in market share of BAJAJ Almond Hair Oil. Market share as on Feb17 was 61.3% in value term.
Strain in primary sales volume is due to destocking in the whole sale level as well as in rural market and it will continue in Q1FY18.
Total overall Distribution of Bajaj Almond Hair is 37.19 lakh outlets. The company is targeting to expand direct reach at least 20%
of overall distribution at the first half of the financial year.
50Ml,100ML and200ML is under 50% of sales and still in glass bottles and company was working on making glass cheaper for
one and half year which will be implemented in this year. .
NOMARKS: already started expanding in different markets and it will expand to 4 sates till May-June of this year.
New facility in Guwahati has started functioning and will strengthen distribution of its flagship brand in eastern market.
BAJAJCORP's 47% of sales comes from Wholesales and it will drop to sub 40% in one and half year.
The company is planning to improve market share of BAJAJ Almond Oil in West Bengal and Rajasthan.
Current indirect tax : 18.9%.
Modern trade grew by 24% in this quarter.
Other expenses: Went up due to expenses related to direct distribution.
About The Company
BAJAJ CORP is engaged in the business activity of trading and manufacturing of cosmetics, toiletries and other personal care
products. It is a fast moving consumer goods (FMCG) company. The Company's products include Bajaj Kailash Parbat Thanda Tel,
Bajaj Almond Drops Hair Oil, Bajaj Brahmi Amla Hair Oil, Bajaj Jasmine Hair Oil, Bajaj Nomark Oily Skin Face Wash, Bajaj Nomarks
Herbal Scrub Soap, Bajaj Nomark Oily Skin Cream, Bajaj Nomarks Neem Soap, Bajaj Nomarks Oil Control Soap and others. The
Company has approximately nine Factory, of which four units are situated in Himachal Pradesh , three units are situated in
Uttrakhand for manufacturing of various variants of hair oils and Nomarks and other unit is situated in Guwahati and one unit
Bangladesh.The company reaches consumers through 3.6mn retail outlets serviced by 7707 distributors and 11500 wholesalers.
6
Narnolia Securities Ltd

BAJAJCORP

FY16 FY17 FY18E FY19E FY16 FY17 FY18E FY19E
Revenue 876 797 803 856 EPS 13.3 14.8 14.2 14.8
GPM 66.0% 66.2% 65.0% 64.3% Valuation(x)
EBITDA Margin (%) 31% 33% 30% 29% Dividend Yield (%) 3.0% 2.8% 2.7% 2.8%
EBIT 269 258 236 246 RoE 41% 44% 41% 42%
Interest 0 1 1 1 RoCE 56% 52% 46% 47%
Tax Rate (%) 18% 20% 22% 22% Debtors (No. of Days) 11 12 11 11
No. of Shares 15 15 15 15 Net Debt/Equity (x) 0 0 0 0

FY16 FY17 FY18E FY19E FY16 FY17 FY18E FY19E
Long term Debt 0 0 0 0 Oper. Prof. bef. WC chang. 274 285 275 286
Deferred Tax 1 1 1 1 Capital expenditure -17 -46 21 -7
Capital Employed 481 494 510 524 CF from Inv. Activity 6 -95 40 -37
Net Fixed Assets 97 119 91 92 Divd Paid (incl Tax) -204 -204 -195 -203
Capital WIP 1 0 0 0 CF from Fin. Activity -194 -200 -196 -204
Debtors 25 27 23 25 Inc/(Dec) in Cash 5 -69 70 -17
Cash & Bank Balances 58 12 52 37 Add: Opening Balance 4 58 12 52
Trade payables 44 40 40 43 Closing Balance 9 -11 83 37
Total Provisions 0 0 0 0
Net Current Assets 340 346 383 399
Total Assets 566 590 587 608
7

Hold
INDIAN OIL CORPORATION LTD. 18-Apr-17
Company Update Recently Indian Oil Corporation has confirmed that it has received nod from
CMP 424 National Green Tribunal to carry on its LPG import terminal project at
Puthuvypeen, Kochi. The project work has been stalled since February
Target Price 445
2015 due to protests, alleging that Indian Oil is violating NGT order. This
Previous Target Price 410 project also includes LPG pipeline from the Jetty to Kochi refinery and the
Upside 5% expected cost of the project is around Rs. 2200 Cr. This project will help the
Change from Previous - company to cater the growing demands of LPG by 2020. Further IOCs
management indicated merger with Chennai Petroleum, but refrains from
giving any timeline. Post merger management expects volume growth
Market Data between 3- 4 million tonne for the year.
BSE Code 530965
Q3FY17_Result Update
NSE Symbol IOC
52wk Range H/L 431/196 Profit after tax has increased by 29% to Rs. 3995 Cr in 3QFY17 as
Mkt Capital (Rs Cr) 206,133 compared to Rs. 3096 Cr in the same quarter in FY16.
Av. Volume(,000) 452 Revenue from sale of Petroleum products has increased from Rs. 93261
Nifty 9,139 Cr to Rs. 111212 Cr in 3QFY17.
Revenue from sale of Petrochemicals has increased from Rs. 4205 Cr to
Rs. 4714 Cr in 3QFY17.
Stock Performance
1M 3M 12M Revenue from Other business activities has increased from Rs. 2758 Cr to
Absolute 12.9 104.5 59.4 Rs. 2940 Cr in 3QFY17.
Rel.to Nifty 13.2 85.9 53.9 The effective tax rate for 3QFY17 is 35.5% and the company pays total tax
of Rs. 2196 Cr.
Share Holding Pattern-%

3QFY17 2QFY17 1QFY17 Outlook
Promoters 57.3 58.3 58.3 Indian Oil Corporation has plans to come up with a 15 MT refinery, with an
Public 42.7 41.7 41.7 investment of about Rs 40,000 Cr. at Nagapattinam in Tamil Nadu.
Others Currently, Nagapattinam has a 1 MT plant operated by IOCs subsidiary
Total 100 100 100 Chennai Petroleum Corporation. This will improve the volume of the
company up-to a large extent. IOC has equipped with BS VI standard HSD
and BS VI standard motor spirit and by October 2017, a new unit will go on
Company Vs NIFTY
stream at the refinery, where only BS VI standard HSD and high quality
200 IOC NIFTY motor spirit will be produced on a mass scale. Recently IOC stock has
180 rallied and achieved our previous recommended price of Rs. 410, but
considering upside potential we recommend HOLD rating in this stock
160
while revising our target price to Rs. 445.
140
Rs,Cr
120 Financials 2012 2013 2014 2015 2016
100 Sales 408924 461780 488345 449509 355927
80 EBITDA 19450 13800 17141 10550 23197
Jul-16
Feb-17
Sep-16
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Apr-17
Mar-17
Net Profit 10914 4449 7086 4912 11219

EPS 45 18 29 20 46
Aditya Gupta P/E 5.8 15.4 9.7 18.2 8.5
aditya.gupta@narnolia.com
Recent Events
16 April 2017- NGT has confirmed its order dated August 2, 2016, permitting IndianOil to go ahead with its LPG import terminal
project at Puthuvypeen . IOCL is constructing a LPG Import Terminal of six lakh tonne capacity a year at Kochi in Puthuvypeen SEZ of
Cochin Port Trust
16 April 2017- Petrol price hiked by Rs1.39 per litre, diesel up by Rs1.04
2 March 2017- Indian Oil plans Rs 40K-crore mega refinery at Nagapattinam. Currently, Nagapattinam has a 1-mt plant operated
by Chennai Petroleum Corporation (CPCL), an IOC subsidiary.
27 Dec 2016- IOC's Mathura refinery has despatched BS VI high-speed diesel (HSD) to two auto companies to test viability and
compatibility as part of its efforts to provide cleaner fuel for an eco-friendly environment. Though the government has set a very
stringent target of April 2017 for meeting BS IV and April 2020 for BS VI standard fuel quality, the Mathura refinery has completed the
target ahead of the set deadline
Gross Refining Margin
IOC GRM Singapore GRM
9.1 8.7 8.6 8 8.00 7.70

6.7 6.6 6.6 6.2 5.8 6.3 6.3 6.70
5.4 4.7 10.80 5.00 5.10
4.3 9.98
8.80
6.60 7.36
5.20 6.20 4.80 2.30
6.00
4.30
2.40 1.70 2.20 3.00
0.90
(2.00)
(4.80)
(7.70)
Business Model
Indian Oil Corporation Limited is an India-based oil company. The
Companys segments include Sale of Petroleum Products, Sale of
Petrochemicals and Other businesses, which consist of sale of
gas, explosives and cryogenics, wind mill and solar power
generation and oil and gas exploration activities.The Companys
subsidiaries include Indian Oil (Mauritius) Ltd, IOC Middle East
FZE, IOC Sweden AB, IOCL (USA) INC., Chennai Petroleum
Corporation Ltd and Lanka IOC PLC.It is the largest refining and
marketing company in India. It operates 8 refineries (incl BRPL)
with a capacity of 54.2mmtpa and has a 52% stake in CPCL
(11.5mmt refining capacity). The company controls a refining
capacity of 65.7 mmtpa. It has a pipeline network of >10,300km
(62mmtpa capacity), has 22,372 petrol/diesel outlets and has
interests in petrochemicals and upstream oil and gas. IOC is a
Public Sector Company with 78.9% Government stake.

FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16
Net Revenue 461780 488345 449509 355927 EPS 18.32 29.19 20.23 46.21
Other Income 3512 3442 4204 2246 Book Value 260 280 283 313
Total Revenue 465291 491787 453713 358173 DPS 5 6 9 12
GPM 10% 11% 11% 19% Valuation(x)
EBITDA Margin (%) 3% 4% 2% 7% Dividend Yield (%) 2% 2% 2% 3%
EBIT 8108 10781 5331 17278 RoE 7% 10% 7% 15%
Interest 7119 5908 4175 3630 RoCE 9% 10% 5% 16%
Tax 877 3,011 2,143 5,653 Asset Turnover (x) 4.92 4.42 3.84 2.77

FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16
Reserves and surplus 60608 65485 66404 73566 Depreciation 5710 6369 5190 5865
Shareholders' funds 63036 67913 68832.3 75994 Direct Taxes Paid 1169 1896 2344 3250
Long term Debt 35865 36796 30367 42367 OP before Wc 14961 20649 13425 26295
Total Borrowings 88933 58154 50850 71622 CF from Op. Activity 9340 24204 45976 27020
Non Current liabilities 18206 20592 22814 30112 Current investments 784 1120 587 629
Long term provisions 421 443 476 2476 Capex -4178 -8865 -4627 -4183
Short term Provisions 21913 26661 27601 29633 CF from Inv. Activity -9294 -18594 -10177 -13805
Current liabilities 72430 88071 82870 83614 Repayment of Debt 3958 14543 1268 -3309
Total liabilities 241725 266679 233743 241984 Interest Paid -7824 -6872 -5188 -4661
Non Current Investments 3694 8566 8761 8667 CF from Fin. Activity 352 -3125 -38283 -12426
Other non Current assets 1282 1353 202 146 Inc/(Dec) in Cash 398 2485 -2483 789
Current assets 137383 141166 101086 94474 Add: Opening Balance 822 1220 3705 1225
Total Assets 241725 266679 233743 241984 Closing Balance 1220 3705 1221 2014

INDUSTRY - CHEMICAL
BSE Code - 509480
NSE Code - BERGEPAINT
17-Apr-17 NIFTY - 9151
Comapany Data Key Highlights of the report:

CMP 236
Target Price 267 Despite demonetization and price dip effects, the decorative segment
Previous Target Price registered a double digit volume growth (10%). Many new products were
Upside
launched which witnessed good growth amid demonetisation.
Change from Previous Margins are expected to recover as the company took 3% price hike in
52wk Range H/L 277/174 decorative business with effect from Mar 1, 2017.
Mkt Capital (Rs Cr) 22,925 Recently, the company commences operations at Assam plant. With the
Av. Volume (,000) 745 commencement of Assam Plan tax rate will decline. The company will enjoy a
10 year tax holiday at new plant and will also benefit from VAT exemption for
Share Holding Pattern %
sales in Assam.
4QFY17 3QFY17 2QFY17
Promoters 74.99 74.99 74.99 With the Commencement of Assam Plant and other key benficiaries (Urban
Public 25.01 25.01 25.01 recovery, GDP revival, GST, increased infrastructure spending) We
Others recommend "BUY" on the stock with the target price of Rs 267.
Total 100.0 100.0 100.0
Financials/Valuation FY12 FY13 FY14 FY15 FY16
Net Sales 2,948 3,346 3,870 4,322 4,634
ROE %
EBITDA 303 371 431 511 655
25 EBIT 256 314 361 418 555

26
PAT 180 218 249 265 370
24 23 23
22 EPS (Rs) 5 6 7 4 5
22 21 ROE (%) 23 23 22 21 25
ROCE (%) 15 15 14 14 20
20
BV 98 92 88 85 99
18 P/B (X) 5 7 7 12 12
FY12 FY13 FY14 FY15 FY16 P/E (x) 20 31 32 55 46
Stock Performance % Recent Development :

1Mn 3Mn 1Yr
Absolute 2.1 6.1 30.9 BERGEPAINT commences operations at Assam plant :
Rel.to Nifty 2.1 2.2 15.3 The company has commenced commercial operations of their integrated paint
170 BERGEPAINT NIFTY
and putty plant at Nagaon in Assam. The plant has an annual capacity of
48,000 kilolitres per annum of water based paints and 24 kilolitres of solvent
150
based paints. It would also manufacture 14,000 mt of resin and 24,000 mt of
130 wall putty With this, Company will have two plants in Assam, the other one
110 being at Nalbari.
90
70
BERGEPAINT signs MoU with Chugoku Marine Paints :
The company has entered into an MoU with Chugoku Marine Paints of Japan
50
for cooperation and collaboration in the field of marine and related industrial
Jul-16
Apr-16
Feb-17
Apr-17
Sep-16
Mar-17
Jan-17
Dec-16
Jun-16
Aug-16
Oct-16
May-16
Nov-16
paints. The plan is to establish a joint venture company. The MoU also allows
for joint efforts in marketing, supply, purchasing marine related industrial
BINEETA KUMARI paints.
bineeta.kumari@narnolia.com
Quarterly Performance
Other expenses Financials 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY % QoQ% FY15 FY16 YoY %
saw one-time Net Sales 1,235 1,139 1,246 1,271 1,297 5% 2% 4,322 4,634 7%
hit, which put Other Income 7 11 10 18 8 9% -56% 36 34 -4%
pressure on
COGS 643 575 621 644 684 6% 6% 2,531 2,573 2%
margins though
will not be Employee Cost 71 69 75 76 80 12% 5% 253 281 11%
impacted going Other Expenses 210 225 227 248 227 8% -8% 1,027 1,125 10%
forward. EBITDA 192 156 195 179 184 -4% 3% 511 655 28%
Depreciation 25 24 26 27 27 7% 0% 93 100 8%
Interest 6 5 3 5 4 -23% -13% 50 29 -42%
PBT 168 138 176 165 160 -5% -3% 404 561 39%
Tax 56 47 59 73 52 -7% -28% 139 191 37%
PAT 112 93 120 137 110 -2% -20% 265 370 40%
Volume Growth Remained Healthy despite challenges.

Net sales grew by 5% YoY to Rs 1297 Cr against Rs 1235 Cr in 3QFY16. Decorative segment show
reasonable growth despite demonetization and price dip.
Volume growth stood in double digits (10%) led by improvement in product mix, strong monsoon, and
new product launch.
Reported PAT for the quarter stood at Rs110 Cr (-2% YoY) against Rs 112 Cr in 3QFY16.
Sales Growth % Volume growth %

12% 11% 16%
11% 14%
14%
10% 14%
10% 9% 12%
12% 11% 10% 10%
8% 10%
10%
6% 6%
6% 5% 8%
6%
4%
4%
2%
2%
0% 0%
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Margin Performance
Margin % 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(+/-) QoQ(+/-) FY15 FY16 YoY(+/-)
Gross Margin 48% 50% 50% 49% 47% -1% -2% 41% 44% 3%
EBITDA Margin 16% 14% 16% 14% 14% -1% 0% 12% 14% 2%
PAT Margin 9% 8% 10% 11% 8% -1% -2% 6% 8% 2%
Gross margin down 65 bps impacted by increase in input cost while EBITDA margin was down by 137
bps due to high employee costs (12% YoY) and one time hit of other expenses (8% YoY).
To offset the impact of increase in input cost the company have initiated 3% hike in decorative prices.
The impact of rising crude prices was lower in Decorative segment due to increase in no. of share of
water based paint rather than solvent based paint.
PAT margin down by 100bps YoY due to lower gross margin.

EBITDA (Rs/Cr) EBIDTAM % PAT (Rs/Cr) PATM%
250 16% 16% 16% 160 12%
11%
16% 140 10%
9% 10%
200 15% 8%
120 8%
8%
14% 14% 15% 7% 8%
150 100
14% 14%
13% 13% 80 6%
14% 137
195
192
100
184
179
60 112 120
156
110
154
13% 4%
149
89 93
13% 40 77
50
2%
12% 20
- 12% 0 0%
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Concall Highlights:
Volume growth stood in double digits (10%).
Expects demand to improve going forward.
Confident of volume growth to in the range of 1.5-1.6x to GDP growth.
Tier 1 and 2 cities were impacted more than tier 3 for the company. Tier 3 was better because
favourable monsoon has started showing results.
Growth will be driven by semi urban and rural markets, expansion of distribution network,
innovations and new product launches.
Both in standalone and JV (joint venture) businesses the company added new clients in auto
segment. More clients are expected to be added in the JV.
Berger signed an MoU with Promat (USD3bn company of Belgium) for co-operation in the field
of fire protection and high performance insulation coating in India, Nepal and Bangladesh,
which entails production, distribution and supply of specialised fire resistant coatings. The
segment is very small in the overall industrial business of the company.
Expects both gross and EBITDA margins to be stable.

FY17 capex guidance of Rs 150Cr.
View & Valuation
The implementation of One Rank One Pension (OROP), Seventh Pay Commission, revival of
MGNREGA scheme, setting up of smart cities and strong govt. initiatives on infrastructure
development are likely to enhance demand both in rural and urban markets. Governments
ambitious plan ``Housing for All by 2022 will be major growth driver for the company.
Implementation of GST will boost companys market share going forward. With the
commencement of Assam Plant the company will enjoy a 10 year tax holiday at new plant
and will also benefit from VAT exemption for sales in Assam. Recent MoU with Chugoku
Marine Paints of Japan will help to expand companys footprint in industrial paint segment.
Thus, considering strong revival in Urban and rural demand, GST implementation and
commencement of Assam Plant, We remain positive on the stock and recommend "BUY"
with the target Price of Rs 267.

Na
BUY
NESTLE INDIA LTD 13th April. 2017
Company Update Smart bounce back by Maggie shows strong brand value:
CMP 6518
Target Price 7920 Nestle came out with bang after Maggie fiasco which shook it two years
ago. Due to Maggie ban, contribution in Revenue from Prepared dishes and
cooking aids went down from 29% in CY14 to 16% in CY15, a decline of
Upside 22% 56% YoY. Nestle relaunched Maggie on 9 nov., 2015 and within 53 days of
Change from Previous 3% relaunch , it regained market share of 33% which shows strong brand
power. Presently, Maggies market share has reached to 60% versus peak
market share of 75% which is commendable. It shows new managements
Market Data
aggression and focus towards NESTLEs future growth. Going forward we
BSE Code 500790 expect brand Maggie to consolidate further with more market share gain.
NSE Symbol NESTLEIND
52wk Range H/L 7930/5490 New product launches, the key of future growth:
Mkt Capital (Rs Cr) 62,844 After Maggie fiasco, companys new management has become more
Av. Volume(,000) 31 aggressive in launching new products. The company has launched more
Nifty 9,203 than 25 products in last few quarters. NESTLE has strong backing of its
parent with more than 2000 products globally .Going forward, it has plans to
Stock Performance launch more new products from its parents global product portfolio.
1M 3M 12M According to management, new products are doing well.
Absolute 6.9 11.8 12.0 Historically NESTLE has strong pricing power:
Rel.to Nifty 3.5 0.4 -10.4
As in most the FMCG categories input prices have bottomed out and have
started moving up. Hence going forward we expect growth for FMCG will be
pricing led. NESTLE has strong premium product portfolio and strong
3QFY17 2QFY17 1QFY17
pricing power. Hence going forward we expect strong growth for NESLE.
Promoters 62.8 62.8 62.8
Public 37.2 37.2 37.2
Others - - - Urban demand recovery led growth going forward:
Total 100 100 100
For last four years urban demand is struggling due to higher inflation and
lower economic activities which is one of the causes of companys dismal
Company Vs NIFTY performance. As NESTLEs most of the sales comes from urban areas,
130 NESTLEIND NIFTY approx. 75%, hence any recovery in urban demand will be huge positive for
125 the company. We expect better demand scenario for urban market going
120 ahead led by declining inflation and interest rate scenario.
115
110
105
Rs,Cr
100
95 Financials 4QCY16 3QCY16 (QoQ)-% 4QCY15 (YoY)-%
90 Sales 2286 2363 -3% 1959 17%
85
80 EBITDA 403 447 -10% 353 14%
Net Profit 164 269 -39% 183 -10%
EBITDA% 18% 19% (129 Bps) 18% (37 Bps)
Rajeev Anand PAT% 7% 11% (421 Bps) 9% (216 Bps)
Segmental Revenue (%):
Milk products and nutrition Beverages

Prepared dishes and cooking aids Chocolate and confectionery
120%
100%
16% 16% 15% 14% 14% 14% 12% 13%
80% 16%
23% 25% 27% 28% 28% 29% 29%
60% 16%
18% 16% 14% 14% 13% 14% 13%
40%
55%
20% 43% 43% 44% 44% 45% 43% 45%
0%
2008 2009 2010 2011 2012 2013 2014 2015
EBITDA Margin and NPM:
EBITDA margin% NPM %
25% 23%
22% 22%
21%
19% 19% 19%
20% 18% 18%
15%
15% 13%
12% 12% 12%
11%
10%
9%
10% 7% 7%
5%
0% -3%
-5%
KEY RISKS:
Any sharp increase in milk and other key input prices will be margin dilutive for the company. Delay in
urban demand recovery will be another risk to our recommendation.
View and Valuation
Our buy recommendation on NESTLE is based on Maggies market share gain, new product launches
and expectation of urban demand recovery going forward. The companys ROE improved to 31% in
CY16 from 20% year ago. We expect ROE to improve further going ahead. Presently we have positive
view on this stock and recommend to `BUY this stock with target price of Rs 7920.

CY13 CY14 CY15 CY16 CY13 CY14 CY15 CY16
Revenue 9062 9806 8123 9159 EPS 116 123 58 96
Other Income 83 87 110 149 Book Value 246 294 292 313
Total Revenue 9145 9894 8233 9309 DPS 57 74 50 51
GPM% 54.5% 53.9% 57.3% 57.6% Valuation(x)
EBITDA 1968 2057 1555 1807 Price / Book Value 22 17 20 21
EBITDA Margin (%) 21.6% 20.9% 19.0% 19.6% Dividend Yield (%) 1.1% 1.5% 0.9% 0.8%
EBIT 1638 1719 1208 1453 RoE 47% 42% 20% 31%
Interest 37 14 3 4 RoCE 46% 60% 43% 48%
Tax Rate (%) 33.4% 33.2% 30.8% 35.8% Debtors (No. of Days) 6 4 3 4
No. of Shares 10 10 10 10 Net Debt/Equity (x) 0.5 0.0 0.0 0.0

CY13 CY14 CY15 CY16 CY13 CY14 CY15 CY16
Share Capital 96 96 96 96 OP/(Loss) before Tax 1,678 1,774 814 1,409
Net Worth 2369 2837 2818 3014 Direct Taxes Paid (486) (589) (342) (515)
Long term Debt 1189 15 17 33 (Inc)/Dec in Wkg Cap 92 (202) 179 (361)
Short term Debt 0 4 1 0 CF from Op. Activity 1,796 1,644 1,098 1,161
Deferred Tax 53 7 0 0 Non Current investments (224) (4) - (133)
Capital Employed 3558 2853 2835 3047 Capital expenditure (345) (189) (151) (143)
Net Fixed Assets 3664 3421 3129 2918 CF from Inv. Activity (470) (432) (70) (586)
Capital WIP 295 245 0 0 Interest Paid (36) (15) (3) (4)
Debtors 84 99 78 98 Divd Paid (incl Tax) (546) (713) (493) (492)
Cash & Bank Balances 749 446 500 880 CF from Fin. Activity (580) (1,635) (498) (50)
Trade payables 633 729 744 799 Inc/(Dec) in Cash 775 (423) 529 525
Provisions 1407 1602 1862 2293 Add: Opening Balance 591 1,366 943 500
Net Current Assets 955 608 1004 1646 Closing Balance 1,366 446 1,472 1,025
Total Assets 6314 5820 6080 6806

BUY
DEWAN HOUSING FINANCE CORPORATION LTD. 11-Apr-17
Result Update Stake sale in DHFL Pramerica Life Insurance (DPLI) completed.
CMP 393 Stake sale in DHFL Pramerica Life Insurance (DPLI) has been completed at
Target Price 497 the higher valuation range of Rs 2000 Cr. Earlier DHFL entered into an
agreement with its promoter to sell its 100% of share held in DHFL Pramerica
Life Insurance (DPLI) (equivalent to 50% of the paid-up capital of DPLI) to its
Upside 26% wholly owned subsidiary DHFL Investment Ltd (DIL). Investment of DHFL in
Change from Previous 29% DPLI was mere Rs 31 Cr. To fund this transaction, DIL will issue compulsorily
convertible debentures (CCDs) to the promoters entity (Wadhawan Global
Capital). Due to this deal we factor 25% increase in networth. With strong
Market Data
capitalization and focus on affordable segment we expect 20% growth in
BSE Code 511072 AUM going forward.
NSE Symbol
DHFL
52wk Range H/L 395/182
3Q FY17 Result Highlight
Mkt Capital (Rs Cr) 10159
Av. Volume (,000) 281 DHFL posted 3Q FY17 PAT at Rs 244 Cr up 31% YoY owing to better NIMs
Nifty 8898 which improved by 11 bps YoY and was stable QoQ. NII growth was strong
at 21% YoY. Operating expenses were under control and grew by just 9%
YoY. C/I ratio improved to 26.5% against 29.5% a year back. AUM grew by
Stock Performance
19% YoY despite the challenging times during demonetization. Disbursement
1Month 1Year YTD
was muted to 10% growth YoY, however considering demonetization impact
Absolute 14.5 109.6 57.3 we had anticipated it even lower. Assets quality was stable with GNPA at 95
Rel.to Nifty 12.8 87.2 44.3 bps sequentially.
AUM Growth Impressive Despite Demonetization, Assets Quality Stable.

3QFY17 2QFY17 1QFY17 AUM of DHFL grew with healthy rate of 19% YoY despite the demonetization.
Promoters 39.3 39.3 34.9 This strong growth was mainly contributed by project loan which grew by 85%
YoY while Core home loan book grew by 11% YoY. The share of project loan
Public 60.7 60.7 65.1
in total portfolio increased to 12.5% against 8% a year back. Disbursements
Others - - -
grew by 10% YoY in 3Q FY17 despite demonetization. The management
Total 100 100 100 highlighted that the disbursements were down 12% MoM in November 2016
but recovered to pre-demonetization levels in December 2016. Management
Company Vs NIFTY is confident of continuing the same growth level going forward. Assets quality
180
was stable with GNPA at 95 Bps and provision coverage ratio at 101.5%
DHFL NIFTY
170 which resulted in almost nil NNPA.
160
150 Improving Margins and Cost Efficiency.
140
NIM of DHFL improved by 11 bps YoY to 3.06% backed by decline in cost of
130
120 fund by 50 bps. Change in liability mix with reduction in bank rate has
110 supported this decline in cost of fund.
100 Operating Expenses grew by 9% YoY led lower other expenses. Employee
90
80
expenses grew by 18% YoY. Thus the C/I ratio improved to 26.5% against
29.5% a year back. This decline in cost to income ratio has helped the
company to achieve the pre-provisioning profit of 27% YoY. C/I Ratio at
26.5% is still very high from its industry peers, so a lot of scope to improve
DEEPAK KUMAR further.
Deepak.kumar@narnolia.com

DHFL
Concall Highlights
>> Management is confident to protect the NIM going forward.

>> Project loan will continue to grow going forward. Share of project financing is expected to increase to 14-15%
over the next few quarters due to the strong pipeline.
>> Targeting the C/I ratio at 21%.
>> Collection dropped to 12% in the month of November. Collection for December month was as per pre-
demonetization period.
>> Yield on LAP-13.55%-13.75%. Yield on Project loan is 15.45%-16.2%. Yield on SME is >13%.
>> Will not raise equity in 2 to 3 years.
>> Disbursements were up 10% YoY primarily driven by home loans and LAP (up 15% YoY). Disbursements in
project financing were flat-to-marginally-negative on a YoY basis.
>> Not utilized the RBI dispensation scheme.
View & Valuation

DHFL has continuously performed well in its operating parameters with healthy AUM growth and stable assets
quality. We expect the AUM growth of around 20% going forward. Recently huge rate cut by banks has raised the
concerns over the margin protection for Housing Finance companies. However due to strategy of management for
efficient liability mix and increasing share of non-core home loan portfolio, we expect DHFL to maintain its NIM at 3%
level. Improving operating efficiency has boosted the bottom line of the company and we expect this trend to
continue in FY18. Also the stake sale deal will further boost the earnings for the company with free from concern of
stake dilution for next 2 to 3 years. We upgrade our target price to Rs 497 (2x FY18E BV) from earlier price of Rs
385.
Quarterly Performance (Rs in Cr)

Financials 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Interest Income 1,488 1,541 1,633 1,762 1,845 1,914 1,932 2,122 2,315
NII 355 365 399 405 425 436 456 491 514
Net Total Income 393 407 419 454 466 488 484 536 565
Operating Expense 126 121 126 132 137 155 136 140 150
PPP 267 286 293 322 328 333 348 396 416
Provisions 25 35 32 45 48 50 45 45 45
PBT 242 251 261 277 280 283 303 351 371
Net Profit 160 162 173 180 186 190 201 232 244
Profitability Metrix 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Yield% (Cal.) 11.67 11.25 11.18 11.48 11.46 11.30 10.92 11.53 12.06
Cost of Fund% (Cal.) 10.05 9.90 9.69 9.92 9.75 9.77 9.45 9.18 9.29
Spread% (Cal) 2.82 2.57 2.78 2.88 3.05 2.91 2.87 2.35 2.77
NIM% 2.77 2.89 2.96 2.86 2.87 2.96 2.91 3.05 3.07
C/I Ratio 32.18 29.73 29.97 29.03 29.46 31.76 28.11 26.09 26.48

DHFL
(Rs in Cr)
Assets Quality 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
GNPA% 0.77 0.84 0.8 0.81 0.84 0.93 0.98 0.96 0.95
NNPA% 0 0 0 0 0 0 0 0 0
PCR% 108.2 100.2 106.9 111 110.79 101.74 99.3 99.6 101.5

AUM 52,637 56,884 60,002 62,837 65,962 69,524 72,012 75,223 78,296
On- Book 47,776 51,040 53,796 56,312 58,992 61,775 63,647 65,346 68,961
Off- Book 4,861 5,845 6,206 6,525 6,970 7,749 8,365 9,877 9,335
AUM MIX %
Disbursement Growth% YoY
Housing LAP/LRF Project Others
120 35%
32%
30% 31% 31%
100 6 8 9 10 12 13
17 16 16 16 25% 24%
26%
80 16 16 22%
20%
60 18%
15%
14%
76 74 12%
40 72 72 70 69 10% 10%
20 5%
0%
0
2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
NIM% Borrowing Mix %

3.10 Bank Money Market NHB Others
3.05 3.07
3.00
2.96 2.96 100 12 12 14 10 13
2.90 2.89 2.91
2.86 2.87 80
32 33 32 43
2.80 42
2.77 60
2.70 40
53 53 52 44
2.60 42
20
-
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17

DHFL

INCOME STATEMENT (Consolidated) RATIOS
FY13 FY14 FY15 FY16 Spreads Analysis (%) FY13 FY14 FY15 FY16
Interest Income 3,883 4,776 5,839 7,159 Yield on Loan Portfolio % 13.7 13.1 12.9 12.7
Interest Expenses 3,119 3,783 4,460 5,490 Cost Of Borrowing % 10.7 10.6 10.4 9.8
Net Interest Income 764 993 1,380 1,669 Spread % 3.0 2.5 2.5 2.9
Other Income 257 194 142 157 Profitability Ratios (%)
Total Net Income 1,021 1,187 1,522 1,827 NIM % 2.7 2.7 2.9 3.0
Employee Benefits Expense 141 176 196 228 ROA % 1.5 1.3 1.3 1.2
Other Expenses 216 195 252 298 ROE % 14.1 15.5 15.1 15.1
Total Oper. Expenses 365 382 474 550 EPS (Rs) 17.6 20.6 21.3 25.0
Pre Provisioning Profit 656 805 1,048 1,277 Cost to Income Ratio % 35.8 32.2 31.1 30.1
Provisions / Write offs (Net) 45 70 105 175 Asset-Liability Profile
Profit Before Tax 611 735 943 1,102 Loans/Borrowings (X) 1.1 1.0 1.0 1.0
Total Tax 159 206 322 373 Debt/Equity (x) 8.5 9.5 8.7 10.3
Profit After Tax 452 529 621 729 PCR % Specific 113 104 100 102
Gross NPAs (Rs cr) 263 394 473 568
Gross NPAs % 0.7 0.8 0.8 0.9
Net NPAs (Rs cr) 43 93 72 50
CRAR % 19.0 16.5 17.6 17.0
Loan Mix %
BALANCE SHEET Housing Loan 83 78 75 72
FY13 FY14 FY15 FY16 LAP 11 16 18 16
Share Capital 128 128 146 292 Project 6 6 6 10
Reserves 3,109 3,447 4,490 4,725 Others - - 1 2
Net Worth 3,237 3,575 4,636 5,017 Total AUM (Rs in Cr) 36,117 44,822 56,884 69,524
Long term Debt 26,565 32,295 36,889 45,119 Borrowing Mix %
Short term Debt 876 1,595 3,637 6,437 NCD 11 20 28 33
Total Borrowing 27,441 33,890 40,526 51,556 Bank 71 68 58 53
Long Term Provision 264 331 430 583 Others 18 12 14 14
Other Liability 4,862 6,063 9,046 10,697 Resource Mobilization (Rs in Cr)
32,058 39,487 48,921 61,104
Total Liability 35,803 43,859 54,638 67,853
Fixed Assets 438 988 985 781 About the Company
Non-current investments 191 307 611 720 DHFL was founded in 1984 and is promoted by Wadhawan
Current investments 85 269 396 173 Group. Focused on low and medium income group it operates
Loans/Advances 34,222 41,016 51,511 62,295 mainly in tier 1 and tier 2 cities with its presence in 363 cities. It
Cash & Bank Balances 513 983 676 3,408 has total AUM of Rs 783 Billion .
Other Assets 356 297 460 476 Chairman & MD Kapil Wadhawan
Total Assets 35,803 43,859 54,638 67,853 CEO Harsil Mehta
20

BUY
BAJAJ CORP LTD. 11th April. 2017
Company Update GST, a game changer:

CMP 411 GST may be the game changer for the well established FMCG players.
Target Price 490 BAJAJCORP deals in Hair oil and In Hair oil segment approx. 50% of market is
dominated by unorganized players. Going forward we expect BAJAJCORP to gain
market share led by lower price differential with unorganized players. This shift of
Upside 19% market share will happen gradually which will lead to growth for BAJAJCORP for
Change from Previous NA coming 5-7 years.
Strong brand presence and RoE:

Market Data
BSE Code 533229 The Companys flagship brad Bajaj Almond Drop hair oil has strong presence in the
NSE Symbol BAJAJCORP light hair oil market with approx. 60% of market share. In last eight years, it has
continuously gained market share which shows strength of the brand. On the other
52wk Range H/L 438/340
hand, BJAJCORP has one of the best RoE among our horizon companies after
Mkt Capital (Rs Cr) 6,065 HINDUNILVR and COLPAL. We expect improvement in companys RoE from 41%
Av. Volume(,000) 105 (FY16) to 44%,43% and 44% in FY17E,FY18E and FY19E respectively.
Nifty 9,181
Healthy Dividend Yield Gives holding comfort:
Stock Performance
1M 3M 12M The Company is giving dividend regularly and, at the present price, its dividend
Absolute 13.0 10.0 9.3 yield is approx. 2.8% which is positive for long term investment. It gives cash
Rel.to Nifty 10.1 -1.5 -12.4 flows to the investor at regular period and a reason to hold company for long
term.
Robust plan for Exports:
3QFY17 2QFY17 1QFY17 BAJAJCORPs International business grew by 72% YoY in Q3FY17 and
Promoters 66.9 66.9 66.9 contributed more than 5% in this quarter. Company has robust plans for exports
and Planning for entering in larger market Russia, Indonesia and Egypt going
Public 33.1 33.1 33.1
ahead.
Others - - -
Total 100.0 100.0 100.0 Outlook
BAJAJCORPs ROE is improving for Last three year and we expect it to
Company Vs NIFTY improve further. We expect improvement in companys ROE from 41% (FY16) to
125
44%, 43% and 44% in FY17E,FY18E and FY19E respectively with 93% dividend
BAJAJCORP NIFTY
120 payout. BJAJCORP is presently trading at 26 times of FY19E expected EPS of Rs
115 16. Considering High ROE , strong balance sheet ,reasonable dividend yield with
110 amble growth drivers going forward we maintain `BUY with our previous target of
105 Rs 490.
100
Rs,Cr
95
Financials FY15 FY16 FY17E FY18E FY19E
90
85 Sales 826 876 792 780 844
80 EBITDA 239 274 265 242 259
Net Profit 173 196 220 220 235
EPS 12 13 15 15 16
Rajeev Anand ROE 35% 41% 44% 43% 44%
BAJAJCORP
ROE and P/E: Dividend Yield:

35 50% 3.20%
ROE P/E Dividend Yield
2.80%
29 29 2.70%
30 27 27 45%
25
2.20%
25 23 40% 1.73%
1.70% 1.46%
20 35% 1.12%
1.20% 0.99%
0.78%
15 30% 0.65%
0.70%
0.34%
10 25% 0.20%
29% 35% 41% 44% 43% 44%

5 20%
FY14 FY15 FY16 FY17E FY18E FY19E
Q3FY17 Result Concall Highlights
The company has to increase direct reach but it will not cost much.
Due to demonetization, whole sale trade is impacted and there is no sign of it coming back in near term.
Management is looking for acquisition but Target Company is still not in the view.
27% rise in modern trade volume in this quarter. Modern trade contributed 5.2% of the total sales in Q3FY17.
Contribution from rural remained 42.5% in this quarter and in pre demonetization it was 43.6%.
New product launch will happen in 1QFY18.
Announced temporary incentive to channel partners.
Canteen trade reduced by13.5% in this quarter.
The company has reserve of LLP till March 2018. It can go beyond this if volume will remain like that.
LLP prices remained Rs46/kg for this quarter and presently, it is trading at Rs 54/kg.
Volume growth in light hair oil 2.1%
International business grew by 72% YoY in this quarter and contributed more than 5% in this quarter.
Plans for entering in larger market Russia, Indonesia and Egypt is under way.
About The Company
BAJAJ CORP is engaged in the business activity of trading and manufacturing of cosmetics, toiletries and other personal care
products. It is a fast moving consumer goods (FMCG) company. The Company's products include Bajaj Kailash Parbat Thanda Tel,
Bajaj Almond Drops Hair Oil, Bajaj Brahmi Amla Hair Oil, Bajaj Jasmine Hair Oil, Bajaj Nomark Oily Skin Face Wash, Bajaj Nomarks
Herbal Scrub Soap, Bajaj Nomark Oily Skin Cream, Bajaj Nomarks Neem Soap, Bajaj Nomarks Oil Control Soap and others. The
Company has approximately nine Factory, of which four units are situated in Himachal Pradesh , three units are situated in
Uttrakhand for manufacturing of various variants of hair oils and Nomarks and other unit is situated in Guwahati and one unit
Bangladesh.The company reaches consumers through 3.6mn retail outlets serviced by 7707 distributors and 11500 wholesalers.

BAJAJCORP
Almond Drops Hair Oil (ADHO) Volume Gr(%)YOY

8%
6%
ADHO Volume Gr(%)YOY
6%
4%
2%
2%
2% 1%
0%
-2%
-4% -4%
-4%
-6%
Net Sales and PAT (in cr.)

250
Net Sales(in cr) PAT(in cr)

200
150
209
208
204
197
196
100
187
54 52 58 58
47 49
50
0
Prices of Light Liquid Paraffin(LLP) and Refined Oil
110 Light Liquid Paraffin(LLP) price(Rs/Kg) Refined Oil price(Rs/kg)

93.76
90 86.21 83.97
82.02
73.15 75.97
70
59.51 58.82
54.7
50 46.41 43.91 46.37
30
10
-10 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 3QFY17

BAJAJCORP

Revenue 876 792 780 844 EPS 13.3 14.9 14.9 15.9
GPM 66.0% 65.5% 64.1% 63.8% Valuation(x)
EBITDA Margin (%) 31% 33% 31% 31% Dividend Yield (%) 3.0% 2.8% 2.8% 3.0%
EBIT 269 259 236 253 RoE 41% 44% 43% 44%
Interest 0 1 1 1 RoCE 56% 52% 46% 48%

Long term Debt 0 0 0 0 Oper. Prof. bef. WC change 274 287 275 293
Deferred Tax 1 1 1 1 Capital expenditure -17 -18 -7 -7
Capital Employed 481 497 513 531 CF from Inv. Activity 6 -29 -27 -37
Capital WIP 1 1 1 1 CF from Fin. Activity -194 -200 -205 -218
Debtors 25 26 23 25 Inc/(Dec) in Cash 5 -7 1 -14
Cash & Bank Balances 58 51 52 37 Add: Opening Balance 4 58 51 52
Trade payables 44 39 39 42 Closing Balance 9 51 52 37
Total Provisions 0 0 0 0
Net Current Assets 340 367 383 399
Total Assets 566 580 595 617

201 | 2nd Floor | Marble Arch Building | 236B-AJC Bose Road |
Kolkata-700 020 , Ph : 033-40501500
email: narnolia@narnolia.com, website
: www.narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing East wind & information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to change
without notice. The recipients of this report should rely on their own investigations,
should use their own judgment for taking any investment decisions keeping in mind that
past performance is not necessarily a guide to future performance & that the the value of
any investment or income are subject to market and other risks. Further it will be safe to
assume that NSL and /or its Group or associate Companies, their Directors, affiliates
and/or employees may have interests/ positions, financial or otherwise, individually or
otherwise in the recommended/mentioned securities/mutual funds/ model funds and
other investment products which may be added or disposed including & other mentioned
in this report/message.

IEA Report 18th April

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IEA Report 18th April

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IEA Report

18th Apr 2017

BAJAJCORP "HOLD" 18th Apr 2017

IOC "HOLD" 18th Apr 2017

BERGEPAINT "BUY" 17th Apr 2017

NESTLE "BUY" 13th Apr 2017

DHFL "BUY" 12th Apr 2017

BAJAJCORP "BUY" 11th Apr 2017

Promoters 66.9 66.9 66.9 Concall Highlights:

Net Sales and PAT(in cr.)

EBITDA and NPM (%)

Narnolia Securities Ltd 3

Please refer to the Disclaimers at the end of this Report

BALANCE SHEET CASH FLOW STATEMENT

Narnolia Securities Ltd 4

Please refer to the Disclaimers at the end of this Report

Company Update Q4FY17 Result Update:

ADHO (Volume gr%YOY) Sales (in cr) PAT(in cr)

Q4FY17 Result Concall Highlights

Demand environment is still subdued.

Please refer to the Disclaimers at the end of this Report

Financials Snap Shot

BALANCE SHEET CASH FLOW STATEMENT

Please refer to the Disclaimers at the end of this Report

Share Holding Pattern-%

Net Profit 10914 4449 7086 4912 11219

IOC GRM Singapore GRM

9.1 8.7 8.6 8 8.00 7.70

Narnolia Securities Ltd 9

BALANCE SHEET CASH FLOW STATEMENT

Narnolia Securities Ltd 10

Please refer to the Disclaimers at the end of this Report

Comapany Data Key Highlights of the report:

25 EBIT 256 314 361 418 555

Stock Performance % Recent Development :

Volume Growth Remained Healthy despite challenges.

Sales Growth % Volume growth %

Please refer to the Disclaimers at the end of this Report

Expects both gross and EBITDA margins to be stable.

View & Valuation

Please refer to the Disclaimers at the end of this Report

Milk products and nutrition Beverages

EBITDA Margin and NPM:

EBITDA margin% NPM %

View and Valuation

Narnolia Securities Ltd 15

Please refer to the Disclaimers at the end of this Report

BALANCE SHEET CASH FLOW STATEMENT

Narnolia Securities Ltd 16

Please refer to the Disclaimers at the end of this Report

AUM Growth Impressive Despite Demonetization, Assets Quality Stable.

Narnolia Securities Ltd 17

>> Management is confident to protect the NIM going forward.

View & Valuation

Quarterly Performance (Rs in Cr)

Narnolia Securities Ltd 18

Please refer to the Disclaimers at the end of this Report

3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17

NIM% Borrowing Mix %

Narnolia Securities Ltd 19

Please refer to the Disclaimers at the end of this Report

Financials Snap Shot

Please refer to the Disclaimers at the end of this Report

Company Update GST, a game changer: