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June 2017
GLOBAL & SECTORAL INDICES
Sectoral Indices
Indices As on 31 May 2017 As on 28 Apr 2017 % Chg
CNX midcap 17,510 18,086 -3.2%
BSE midcap 14,625 14,798 -1.2%
BSE small cap 15,080 15,373 -1.9%
FMCG 25,842 23,675 9.2%
Capital Goods 17,596 17,866 -1.5%
Banking 26,547 25,325 4.8%
PSU 8,677 9,020 -3.8%
Oil & Gas 14,247 14,455 -1.4%
Auto 24,162 22,782 6.1%
Tech 10,230 9,619 6.3%
Healthcare 13,564 15,019 -9.7%
Metal 11,248 11,303 -0.5%
Realty 1,931 1,924 0.4%
Monsoon expected to be normal this year cent in the fourth quarter. Investments have been slow-
India heavily depends on the rainfall brought on by ing since the beginning of the year - from 7.4 per cent
southwest monsoon, to irrigate its crops and fulfil other in the first quarter of FY17 to 1.7 per cent in the third
water needs. As indicated by IMD last month, monsoon quarter.
arrived early in Kerala and North East. Normally mon- Framework guidelines under NPA ordinance to be
soon advances northwards in surges, and covers the en- finalized in this month
tire country around July 15. As per both IMD and
Last month, the government gave wide-ranging legisla-
Skymet, monsoon is expected to be normal this season
tive powers to the Reserve Bank to issue directions to
and weak El Nio conditions could likely develop only in
lenders to initiate insolvency proceedings for the recov-
the latter half of the season. If this turns out to be the
ery of bad loans. Out of the total non-performing assets
case, it would be the second successive year of good
of nearly Rs.8trn, nearly Rs.4-5trn are being contributed
monsoon and should lift the consumption demand from
by 40-50 accounts. The Reserve Bank is likely to an-
rural India.
nounce the guidelines to operationalise NPA ordinance
Apart from the Kharif season, the impact of the mon- so as to expedite the recovery of bad loans.
soon is also crucial for Rabi crops as it has an impact on
The framework would include creation of a separate
the ground water and also reservoirs which are critical
cell to identify issues pertaining to non-performing as-
for Rabi crops irrigation. Although, the contribution of
sets (NPAs) or bad loans and have a clause providing
Agriculture in gross domestic product (GDP) has de-
definitive time-frame for the resolution process. Till
clined in recent years, rural incomes continue to remain
now, banks had been reluctant to resolve NPAs through
a strong demand driver for Tractors, 2W, FMCG, Agro-
settlement schemes or sell bad loans with hair cut to
chemicals and Cement sectors.
asset reconstruction companies, due to fear of judicial
RBI expected to maintain status quo on rates investigation. With RBI having more legislative powers,
After GDP growth fell sharply to 6.1% in Q4FY17, Re- the issue to resolve NPAs is expected to be less politi-
serve Bank of India's monetary policy committee (MPC) cized and hence would help in resolving the NPA mess
is expected to keep the repo rate unchanged in its faster.
meeting in June 2017. It is also expected to moderate Lenders including Bank of India, IDBI Bank Ltd., Indian
its neutral stance as investment growth continues to be Overseas Bank and Syndicate Bank have been down-
sluggish and with CPI inflation coming in at a mere graded by international credit assessors. IDBI Bank be-
2.9%. Expectations of a good monsoon and rate struc- came the first lender to fall under the central bank's
ture of GST should also help in keeping inflation rate tightened Prompt Corrective Action (PCA), which could
muted, going ahead. force banks to curb lending or merge with stronger
firms. Dena Bank have also been subjected to PCA and
In April 2017, the MPC had indicated that it expects the
more banks may come under PCA, goings ahead.
CPI inflation to average 4.5% in H1 FY2018, before ris-
ing to 5.0% in H2 FY2018. Given the easing of inflation RBI is expected to come up with clear guidelines this
risks, the MPC may revise its CPI inflation outlook for month on how this framework will work. Once the NPA
FY2018 in the upcoming policy meeting. issue is resolved, public sector banks will be able to
raise further capital which would enhance lending for
Additionally, the MPC may revisit its growth forecast of
private sector investment. Private sector is currently
7.4% for FY2018, following the release of GDP and GVA
reeling under low capacity utilization levels, which
data for FY17 which have surprised on the downside.
would recover once demand starts recovering.
The new GDP estimates showed gross fixed capital for-
mation, which signifies investment, contracting 2.1 per
72 120
67
95
62
57 70
52
45
47
42 20
Global events to watch out for OPEC members market share but may also result in fur-
ther weakening of Brent.
US fed rate hike a possibility in June meeting
FPI flows ...
The Fed held off on raising rates in its previous meeting,
but most investors are expecting the central bank to Foreign portfolio investors (FPIs) have put in close to al-
hike again at its June 14 meeting. Market expectations most Rs.298 bn in equity markets in last one month. Ex-
for a June rate hike are 89%. US Federal Reserve May pectations of faster reform measures including GST
meeting minutes also indicated an unwinding of its mas- implementation and expectations of normal monsoons
sive $4.5 trillion balance sheet likely towards year-end. also drove buying by FIIs. DII flows have kept pace with
More information is expected from the Fed on how it FII flows. Post demonetization, underperformance of
intends to unwind its balance sheet. real physical assets like gold and real estate have sup-
ported the movement of capital towards financial assets
Britain election outcome eyed closely like equities. DIIs bought stocks worth Rs ... bn during
British voters are set to cast their votes in the general the month.
election on June 8. UK Prime Minister Theresa May had For 5MCY17, FIIs were net buyers to the tune of Rs.403
called the snap election in a bid to strengthen her hand bn while Mutual funds were net buyers to the extent
in Brexit negotiations, to win more time to deal with the of Rs.60 bn.
impact of the divorce and to strengthen her grip on the
Conservative Party. If May fails to win an overall major- FII & Mutual Fund investment (Rs Cr)
ity, she would be forced to strike a deal with another FII MF
party to continue governing either as a coalition or a 40,000
minority government. That would raise questions about 30,000
the future of Brexit, Britain's $2.5 trillion economy and
British policy on a range of issues including corporate 20,000
taxation and government spending and borrowing. 10,000
Source: Bloomberg; Note: IIP growth since April 2011 has been recompiled
using new series of WPI
Preferred picks
Domestic Cyclicals / Investment oriented sectors
Sector Stocks
Looking Ahead
Nifty continues to trade with a positive bias and we
have not seen any major signs of reversal yet. The last
few days have been corrective in nature, and Nifty has
formed a putative low of 9560.
Above 9630 Nifty may be propelled up to the levels of
9850-9900 in the near -term.
Source: nseindia.com
We may witness sector based activity in phases. Metals
to gain strength. Capital goods and Banking to remain CE - Call European
positive. Pharma stocks expected to witness recovery. PE - Put European
Negative bias is seen in IT.
Strike Price - Strike price for the contract
Recommendation
Nifty Long Call: Buy 9700 Call option @ 40 with Stop
loss below 20 for a target of 80/100.
Stock Specifics
SECTOR POSITION STOCK/OPTIONS VIEW RATIONALE
Metals BUY TATASTEEL Buy TATASTEEL around 515 with The stock has broken out of a
SL of 498 for a target of 540/550 Symmetrical Triangle pattern.
The prevailing up trend expected
to continue.
Metals BUY HINDZINC Buy HINDZINC around 236-240 Higher bottom seen on monthly
SL 230 TGT 265 performance in the recent past. charts
SIMPLE MOVING AVERAGE (SMA) SIMPLE MOVING AVERAGE (SMA) - BANK NIFTY
20 Days 50 Days 200 Days 20 Days 50 Days 200 Days
9449 9291 8732 22905 22109 20061
On monthly basis, we feel that the market has entered into time based consolidation and till the market is above
9550 it would remain strong or range bound between 9550 and 9710. On the higher, 9690 and 9710 are hurdles
and in case if we see the market is crossing 9710 in a shorter span of time then it would lift indices to new highs
may be in the region of 9900/10,000. Traders should be aggressive to trade long if Nifty crosses 9710. Below 9550,
Nifty has scope to correct further but that looks unlikely in the near term as Metals, Private bank and Real Estate
stocks are attracting funds at each minor decline.
NIFTY Monthly
NSE Nifty [N59901] 9603.55, 9709.30, 9560.80, 9651.45, 15355641856 0.31% 2515.23
Price PSar(0.02,0.02,0.20) Lnr IRIS 30/04/12 Mon
9500 Op 5296.35
Hi 5378.75
9000 Lo 5154.30
Cl 5248.15
8500 PS 4553.13
8000
7500
7000
6500
6192.35
7 6000
5500
5000
4500
4000
3500
3000
2500
2000
1500
750
ADX(14,14)
+D 19.33
40.00 -D 19.76
AD 11.94
30.00
20.00
10.00
04:JS N 05:J M J A O D 06:F J J A O D 07:F J J A O D 08:F J J A O D 09:F J J A O D 10:F J J A O D 11:F J J A O D 12:F J J A O D 13:F J J A O D 14:F J J A O D 15:F J J A O D 16:F J J A O D 17:F Mon
Nifty : 9621
Stock Weight MCap Current PE (x)
(%) (Rs mn) Price FY17E FY18E Comment
(Rs)
ITC 10 3,342,394 278 32.7 27.8 Reassuring signals from the government, as excise duty hike
well below past five years' average
Discount to average FMCG multiples provides protection
from downsides
FIEM Industries 10 13,438 1,018 28.1 19.3 Two wheeler demand expected to improve in FY18
FIEM's key customers growing at a strong pace augurs
well for the company.
Time Technoplast 9 23,837.4 114 15.8 11.4 Robust earnings growth
Seeing good demand for pipes and packaging materials
Guj. Alkalies & Chem 9 34,296 467 7.2 7.1 Caustic soda prices have risen by ~34% to US$429/tonne in
the last six months. We expect the prices to remain firm for
the next one or two years, which would drive the earnings
for GACL in FY18E & FY19E.return ratios would also remain
strong with RoE of ~24% and net margin of 16% at the end
of FY19E.
Castrol 9 216,766 438 32.1 28.5 We have observed that for Castrol Quarter 2 (April- June)
and Quarter 4 (Oct-Dec) of the calendar year are generally
the best quarters.
The company has gained market share in passenger vehicle
oil segment. New product launches with further boost
lubricant sales.
The company continues its focus on volume growth and
investment behind power brands.
Engineers India 9 112,335 167 29.2 22.2 EIL expected to benefit from recovery in spending by major
hydrocarbon players like HPCL, BPCL and IOC. Company
likely to expand margins in FY17/FY18.
VRL Logistics 9 30,816 338 34.1 23.8 Company would be one of the largest beneficiaries of the
impending GST bill and Motor Vehicle Act
The company has effective practises enabling it to deliver
superior returns over peers
On a low base of FY17, we estimate earnings growth of 43%
and RoCE of 26.1% /RoE of 21% for FY18.
Hindustan Media 9 21,286 290 11.0 10.1 Stock potential beneficiary of UP/ Uttarakhand elections
Robust business at cheap valuations
Shree Cement 9 664,225 19,065 26.0 20.7 Company is likely to benefit from volume expansion as well
as recent cement price hikes taken in its key markets.
Company is likely to take its capacity to almost 39MT by
FY19 which is likely to support its volume growth going
forward
Indo Count Ind 9 40,743 206 15.0 12.7 Indo Count Industries Ltd (ICIL) is a leading player in the
global home textiles and apparel industry, focusing on
bedding products
With high ATO and strong margins, the company is
operating at high RoCE of 43% in FY16, which is best
amongst the peers
Stock is trading at attractive valuations
NIIT Limited 8 13,290 80 23.6 10.7 While 3Q revenue growth has been muted, we expect the
same to bounce back in 4QFY17 and beyond.
Initiatives of the new management have led to consistent
improvement in revenue growth and earlier-than-expected
benefits on margins.
Source : Kotak Securities - Private Client research
Stock Recommendations
Latest Price Price as Latest Upside/ Latest Mkt EPS (Rs) PE (x) RoE (%) P/ABV (x)
Name of the Company Reco ^ as on on latest price (Down- Report Cap
5-Jun Report target^ side) Date (Rs mn) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E
(Rs) (Rs) (Rs) (%)
S
Stock Recommendations
Latest Price Price as Latest Upside/ Latest Mkt EPS (Rs) PE (x) RoE (%) EV/EBIDTA (x)
Name of the Company Reco^ as on on latest price (Down- Report Cap
5-Jun Report target^ side) Date (Rs mn) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E
(Rs) (Rs) (Rs) (%)
Agri-Products
Insecticides (India) Ltd BUY 697 642 721 3.4 31-May-17 14,407 28.1 37.1 24.8 18.8 13.3 15.4 14.4 11.7
Finolex Industries BUY 661 601 676 2.3 30-May-17 81,914 28.4 31.9 23.3 20.7 21.7 16.3 14.7 13.1
Stock Recommendations
Latest Price Price as Latest Upside/ Latest Mkt EPS (Rs) PE (x) RoE (%) EV/EBIDTA (x)
Name of the Company Reco^ as on on latest price (Down- Report Cap
5-Jun Report target^ side) Date (Rs mn) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E
(Rs) (Rs) (Rs) (%)
Building Material
Century Plyboards (India) Ltd BUY 282 241 277 (1.6) 25-May-17 62,634 8.3 10.0 33.9 28.2 28.7 26.1 23.4 17.9
Greenply Industries Ltd ACCUMULATE 267 280 294 10.2 30-May-17 32,203 11.1 12.0 24.0 22.2 19.7 17.3 13.9 13.2
Kajaria Ceramics Ltd ACCUMULATE 705 715 757 7.4 16-May-17 106,583 15.9 21.9 44.3 32.2 24.6 27.1 21.7 17.4
Supreme Industries Ltd REDUCE 1,150 1,085 1,110 (3.5) 02-May-17 146,075 29.9 35.1 38.5 32.8 29.5 29.3 19.6 17.4
Stock Recommendations
Latest Price Price as Latest Upside/ Latest Mkt EPS (Rs) PE (x) RoE (%) EV/EBIDTA (x)
Name of the Company Reco^ as on on latest price (Down- Report Cap
5-Jun Report target^ side) Date (Rs mn) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E
(Rs) (Rs) (Rs) (%)
Building Material
Century Plyboards (India) Ltd BUY 282 241 277 (1.6) 25-May-17 62,634 8.3 10.0 33.9 28.2 28.7 26.1 23.4 17.9
Greenply Industries Ltd ACCUMULATE 267 280 294 10.2 30-May-17 32,203 11.1 12.0 24.0 22.2 19.7 17.3 13.9 13.2
Kajaria Ceramics Ltd ACCUMULATE 705 715 757 7.4 16-May-17 106,583 15.9 21.9 44.3 32.2 24.6 27.1 21.7 17.4
Supreme Industries Ltd REDUCE 1,150 1,085 1,110 (3.5) 02-May-17 146,075 29.9 35.1 38.5 32.8 29.5 29.3 19.6 17.4
Stock Recommendations
Latest Price Price as Latest Upside/ Latest Mkt EPS (Rs) PE (x) RoE (%) EV/EBIDTA (x)
Name of the Company Reco^ as on on latest price (Down- Report Cap
5-Jun Report target^ side) Date (Rs mn) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E
(Rs) (Rs) (Rs) (%)
Information Technology
Cyient Ltd (Infotech) REDUCE 508 503 526 3.5 21-Apr-17 56,455 32.9 39.7 15.4 12.8 18.0 18.7 9.6 7.8
HCL Technologies REDUCE 858 839 879 2.4 12-May-17 1,211,708 59.8 64.0 14.4 13.4 17.8 16.9 10.7 9.6
Infosys Technologies BUY 959 931 1,064 11.0 17-Apr-17 2,193,604 62.8 65.6 15.3 14.6 21.9 22.4 10.7 10.1
KPIT Technologies SELL 112 128 123 10.0 28-Apr-17 21,386 12.4 14.0 9.0 8.0 16.1 15.7 4.7 3.6
Mphasis Ltd SELL 608 583 544 (10.6) 29-May-17 127,002 38.6 44.4 15.8 13.7 13.5 14.8 10.3 9.5
NIIT LTD BUY 86 89 103 19.6 18-May-17 14,181 3.9 7.1 22.1 12.1 2.1 16.2 18.4 11.5
NIIT Technologies ACCUMULATE 556 470 518 (6.8) 08-May-17 32,606 44.9 46.9 12.4 11.9 16.8 16.1 5.5 5.2
Oracle Financial Services Soft SELL 3,685 3,657 3,209 (12.9) 14-Feb-17 308,609 152.0 179.8 24.2 20.5 35.7 36.6 15.4 13.6
Tata Consultancy Services (TCS) REDUCE 2,604 2,309 2,420 (7.1) 19-Apr-17 5,096,972 133.4 143.1 19.5 18.2 32.6 30.9 14.5 12.9
Wipro Technologies REDUCE 556 495 514 (7.5) 26-Apr-17 1,359,387 34.9 36.4 15.9 15.3 18.0 16.9 10.8 10.0
Zensar Technologies REDUCE 869 840 855 (1.6) 27-Apr-17 37,451 55.2 64.4 15.7 13.5 16.3 16.7 8.3 7.4
Logistics
Adani Port & Special Eco Zone BUY 361 306 350 (3.1) 15-Feb-17 728,418 17.5 20.1 20.6 18.0 22.3 20.8 17.1 15.7
Allcargo Global Logistics BUY 175 166 190 8.9 06-Mar-17 43,987 9.7 12.5 18.0 14.0 10.5 12.2 9.5 7.9
Blue Dart Express SELL 4,450 4,675 4,420 (0.7) 09-May-17 105,471 61.3 91.4 72.6 48.7 27.8 31.1 39.0 28.4
Container Corporation of India SELL 1,173 1,020 880 (25.0) 15-Feb-17 285,846 29.4 35.1 39.9 33.4 8.4 9.5 28.1 23.7
Gateway Distriparks Ltd BUY 246 250 295 20.1 19-May-17 26,525 7.5 12.7 32.7 19.3 7.4 11.6 10.9 8.8
Gujarat Pipavav Port Ltd (GPPL) ACCUMULATE 148 164 180 21.9 12-May-17 62,625 5.1 5.7 29.0 25.9 11.6 11.9 14.1 13.3
VRL Logistics Ltd BUY 327 290 340 3.9 27-Feb-17 29,854 9.9 14.2 33.1 23.1 16.4 21.0 12.9 10.0
Media
D B Corp Ltd BUY 372 369 572 53.7 22-May-17 68,373 20.4 23.7 18.2 15.7 24.7 25.5 10.1 8.4
Dish TV India Ltd SELL 84 91 82 (2.1) 25-May-17 89,163 1.0 1.8 83.8 46.6 NM 37.4 9.7 9.0
Entertainment Network (ENIL) REDUCE 860 743 770 (10.5) 25-May-17 41,022 11.4 15.3 75.4 56.2 6.7 8.2 31.4 22.5
HT Media NR 81 - - - - 18,973 NM NM NM NM NM NM NM NM
Hindustan Media Ventures Ltd ACCUMULATE 281 277 307 9.4 22-May-17 20,586 26.4 25.2 10.6 11.1 19.4 15.7 8.8 7.6
Sun TV Network REDUCE 840 809 844 0.5 29-May-17 330,940 26.2 29.5 32.1 28.5 31.5 40.3 18.2 16.2
TV18 Broadcast ACCUMULATE 36 42 47 30.4 24-Apr-17 61,646 0.1 1.3 360.5 27.3 0.5 6.6 206.3 47.3
Zee Entertainment Ent SELL 525 516 470 (10.4) 11-May-17 513,108 10.4 15.4 50.4 34.1 17.4 19.0 25.9 23.2
FUNDAMENTAL STOCK RECOMMENDATION
Stock Recommendations
Latest Price Price as Latest Upside/ Latest Mkt EPS (Rs) PE (x) RoE (%) EV/EBIDTA (x)
Name of the Company Reco^ as on on latest price (Down- Report Cap
5-Jun Report target^ side) Date (Rs mn) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E
(Rs) (Rs) (Rs) (%)
Paints
Asian Paints Ltd REDUCE 1,162 1,165 1,175 1.1 12-May-17 1,114,406 21.0 23.9 55.3 48.6 30.4 27.5 35.0 31.2
Berger Paints ACCUMULATE 256 223 240 (6.3) 14-Feb-17 248,371 4.6 5.4 55.7 47.4 24.8 23.9 33.6 29.9
Kansai Nerolac Paints Ltd ACCUMULATE 414 400 430 4.0 04-May-17 222,877 9.3 10.5 44.5 39.4 25.0 24.4 30.1 26.5
Power
NTPC BUY 163 157 184 13.2 30-May-17 1,340,387 12.3 12.1 13.2 13.4 10.3 10.5 7.5 6.7
Tata Power Company Ltd ACCUMULATE 81 84 89 9.9 22-May-17 192,213 5.9 6.9 13.7 11.7 14.3 12.3 8.6 7.4
Real Estate
Phoenix Mills Ltd BUY 435 411 477 9.7 12-May-17 63,010 12.5 17.6 34.8 24.7 9.8 12.6 11.6 9.8
FUNDAMENTAL STOCK RECOMMENDATION
Stock Recommendations
Latest Price Price as Latest Upside/ Latest Mkt EPS (Rs) PE (x) RoE (%) EV/EBIDTA (x)
Name of the Company Reco^ as on on latest price (Down- Report Cap
5-Jun Report target^ side) Date (Rs mn) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E
(Rs) (Rs) (Rs) (%)
Shipping
GE Shipping Company SELL 405 428 360 (11.1) 08-May-17 61,537 51.1 60.1 7.9 6.7 8.4 9.2 5.2 4.7
Reliance Defence & Engg Ltd SELL 56 59 48 (14.7) 13-Feb-17 38,880 NM NM NM NM NM NM NM NM
Shipping Corporation of India SELL 75 66 54 (28.0) 13-Feb-17 31,784 2.8 3.1 26.8 24.2 1.8 2.0 10.0 4.3
Others
Aksharchem India Ltd BUY 755 780 960 27.1 30-May-17 5,520 71.0 73.6 10.6 10.3 38.8 29.3 7.1 6.9
Bodal Chemicals Ltd BUY 165 158 210 26.9 29-May-17 18,051 11.3 13.8 14.6 12.0 34.4 31.1 8.1 6.7
Gujarat Alkalies & Chemicals BUY 407 431 590 44.9 18-Apr-17 29,888 49.0 64.7 8.3 6.3 13.6 15.5 5.6 4.8
Indo Count Industries Ltd BUY 182 198 225 23.6 17-May-17 35,937 11.8 16.3 15.4 11.2 30.4 31.5 8.9 7.1
Mirza International Ltd ACCUMULATE 143 147 161 12.8 01-Jun-17 17,124 5.9 8.0 24.2 17.8 15.0 17.8 11.4 9.0
Mold-Tek Packing Ltd ACCUMULATE 275 287 304 10.5 31-May-17 7,620 8.8 12.3 31.3 22.4 15.8 18.9 15.9 12.8
Current Market Price (Rs) Target Price (Rs) Potential Upside (%) 52 Week H/L (Rs) Mkt Cap (Rs mn)
361 425 17.7% 376 / 195 723264
COMPANY BACKGROUND
APZ has entered into an agreem ent with GMB to build, operate and
maintain the port for a period of 30 years till 2031 extendable by another
20 years. Promoter
The port is into providing cargo handling services for bulk, crude and FII 56.3%
container cargo. 23.9%
SECTOR BACKGROUND
Demand for port infrastructure is driven by the 3Cs: coal, containers and
crude. Source: Bloomberg
0
PRICE PERFORMANCE (%) 1M 3M 6M
FY15 FY16 FY17 FY18E FY19E
7.4 15.3 37.7
Source: Bloomberg, Company, Kotak Securities - Private Client Research Source: Company, Kotak Securities - Private Client Research
Current Market Price (Rs) Target Price (Rs) Potential Upside (%) 52 Week H/L (Rs) Mkt Cap (Rs mn)
165 210 27.3% 172 / 93 18002
0
PRICE PERFORMANCE (%) 1M 3M 6M FY15 FY16 FY17E FY18E FY19E
(2.1) 15.0 27.7
Source: Bloomberg, Company, Kotak Securities - Private Client Research Source: Company, Kotak Securities - Private Client Research
Current Market Price (Rs) Target Price (Rs) Potential Upside (%) 52 Week H/L (Rs) Mkt Cap (Rs mn)
159 195 22.6% 176 / 93 107166
Current Market Price (Rs) Target Price (Rs) Potential Upside (%) 52 Week H/L (Rs) Mkt Cap (Rs mn)
882 1254 42.2% 1510 / 778 11642
12.5
VALUATION PARAMETERS FY17E FY18E FY19E
P/E (x) 24.7 17.4 12.7
12.0
P/BV (x) 2.7 2.4 2.1
EV/Sales (x) 1.2 1.0 0.8
EV/EBITDA (x) 10.1 7.8 6.2 11.5
Current Market Price (Rs) Target Price (Rs) Potential Upside (%) 52 Week H/L (Rs) Mkt Cap (Rs mn)
179 182 1.7% 204 / 119 100419
Current Market Price (Rs) Target Price (Rs) Potential Upside (%) 52 Week H/L (Rs) Mkt Cap (Rs mn)
234 295 26.1% 273 / 177 77772
SECTOR BACKGROUND
NHAI has ramped up the awarding process and along with MoRTH, it is FII Promoter
likely to achieve healthy growth in order awards as compared to FY16. 27.8% 57.4%
Further inflow in EPC and BOT segment is expected in coming quarters
Source: Bloomberg
Current Market Price (Rs) Target Price (Rs) Potential Upside (%) 52 Week H/L (Rs) Mkt Cap (Rs mn)
317 342 7.9% 320 / 222 3679419
Current Market Price (Rs) Target Price (Rs) Potential Upside (%) 52 Week H/L (Rs) Mkt Cap (Rs mn)
705 757 7.4% 790 / 437 106568
SECTOR BACKGROUND
Consumption of tiles has grown at a CAGR of 12% between 2007-13
and has been led by increasing consumerism and urbanization FII
Strong GDP growth, im provem ent in real estate demand and 24.4%
replacement dem and is likely to drive demand growth going forward
Source: Bloomberg
Current Market Price (Rs) Target Price (Rs) Potential Upside (%) 52 Week H/L (Rs) Mkt Cap (Rs mn)
18635 22716 21.9% 20560 / 12477 649243
Current Market Price (Rs) Target Price (Rs) Potential Upside (%) 52 Week H/L (Rs) Mkt Cap (Rs mn)
164 178 8.5% 177 / 48 34276
Source: Bloomberg
COMPANY BACKGROUND
The key product categories for the company are Industrial
packaging products, lifestyle products (door mats, chairs, Share holding (%)
syringes), technical products (automotive components),
Others
infrastructure products (pipes and monolithic construction) and
8%
new products (composite cylinders). The largest segment is the DII
industrial packaging accounting for 74% of revenues. 8%
Diversified product portfolio of plastic products.
Company has eight manufacturing units in overseas locations
FII
SECTOR BACKGROUND 31%
Promoter
Major demand drivers are chemical industries. 53%
Large number of unorganized players
Source: Bloomberg
Revenue trend Rs bn
FINANCIALS (RS MN) FY16 FY17E FY18E
Sales 24,606 26,895 30,929 35
Growth (%) (0.6) 9.9 15.0 30
EBITDA 3,365 3,997 4,485 25
EBITDA margin (%) 13.7 14.9 14.5
20
PBT 1,436 2,037 2,541
15
Net profit 1,268 1,518 1,883
10
EPS (Rs) 5.1 7.2 9.0
Growth (%) (2.7) 41.5 24.0 5
CEPS (Rs) 9.8 12.4 14.7 0
Book value (Rs/share) 53.8 67.9 76.4 FY14 FY15 FY16 FY17E FY18E
Dividend per share (Rs) 0.6 0.6 0.6 Source: Company, Kotak Securities - Private Client Research
ROE (%) 9.8 11.8 12.4
ROCE (%) 9.4 10.9 11.2 Revenue mix (%)
Net cash (debt) (6,698) (5,089) (5,118)
Net Working Capital (Days) 83.8 79.8 80.9 Composite Others
Cylinder 14.0%
VALUATION PARAMETERS FY16 FY17E FY18E 2.0%
Lifestyle
P/E (x) 32.1 22.7 18.3 5.0%
P/BV (x) 3.1 2.4 2.1
EV/Sales (x) 1.7 1.5 1.3 Auto
EV/EBITDA (x) 12.2 9.8 8.8 components
5.0%
Packaging
PRICE PERFORMANCE (%) 1M 3M 6M 74.0%
24.4 33.9 68.3
Source: Bloomberg, Company, Kotak Securities - Private Client Research Source: Company
Fundamental Desk
Sanjeev Zarbade Ritwik Rai Pankaj Kumar
Capital Goods, Engineering FMCG, Media Midcap
Technical Desk
Shrikant Chouhan Amol Athawale
Derivatives Desk
Sahaj Agrawal Malay Gandhi Prashanth Lalu Prasenjit Biswas
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