Security check

Vol. XXXII/22 The success in finding buyers for a stressed asset depends
Dec 18 – 31, 2017
www.capitalmarket.com on the reasons for the distress and the external environment
......................................................................................................................................
The divergence in views on the role of promoters in bidding for their stressed assets
Owner : Capital Market Publishers India Pvt. Ltd.
...................................................................................................................................... means the Insolvency and Bankruptcy Code, 2017, remains a work in progress. The
Managing Director : Ruby Anand
...................................................................................................................................... noisy differences over whether owners should be allowed or debarred from the
Editor : Mohan Sule exercise should not hide the welcome consensus that some companies might be
......................................................................................................................................
beyond repair in their present form. The change in mood is a significant departure
Deputy Editor : Yagnesh Thakkar
...................................................................................................................................... from the earlier practice of consigning sick companies to various boards and bureaus
REGISTERED OFFICE to nurse them back to health. The process went on for years. Financial institutions
401, Swastik Chambers, Sion-Trombay Road, Chembur, Mumbai-400 071.
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continued to carry on the bad loans in the books in the hope of revival. Eventually,
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AHMEDABAD For all the good intentions, the polarizing positions over who should participate
312, Sampada Complex, 3rd flr., Rashmi Society, Mithakhali,
Six-Road Junction, Navrangpura, Ahmedabad-380 009. in the liquidation of non-performing assets have brought to the fore the practical
Tel: 079-2642 1534 / 35, 2656 4727 Fax: 079-2642 1535. problems in implementing IBC. The most buzzing of these is scouting for the right fit.
email: cm-ahmd@capitalmarket.com
Any discussion has to take into account the track record of PSU divestment. Except
BENGALURU for Navratnas, the route of pushing small lots of shares into the market has not met
No.37, 2nd Floor, Dickenson Road, Bengaluru-560 042.
Tel: 080-4151-0674 Fax: 080-4151-0674. with the desired response. Whiff of an impending offer for sale results in a bear assault
email: cm-bglr@capitalmarket.com on the stock. Second, big-ticket investors’ scepticism stems from the reality that the
CHENNAI
government remains in a controlling position. The alternative devised was strategic
No.41, 1 st Flr, Sundareshwarar Street, Mylapore Chennai-600004. sale to get a fair discounting. The approach eventually turned controversial as doubts
Tel: 044-246-12690 / 38, 249-51900 / 01 / 02 Fax: 044-2461-2638
email: cm-chennai@capitalmarket.com were about pricing. There was suspicion of dummy candidates fronting those who
might not want the spotlight or not qualified to bid. The lock-in, being proposed by
DELHI the present dispensation, was flouted in one case. Keeping out defaulting risk-takers
601, 6th Floor, Padma Tower - II, 22, Rajendra Place,
New Delhi - 110 008. Tel: 011 - 2581-1255 / 56 / 57 might prove counterproductive in industries whose fortunes have turned topsy-turvy
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merely because of miscalculations of the potential or cyclical headwinds. The wireless
HYDERABAD space is a glaring example. The rush of players in the initial stages intensified compe-
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Hyderabad-500 029.
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email: cm-hyd@capitalmarket.com vency, belongs to a group that can muster up the financial resources to keep the
KOLKATA venture afloat. Group companies in the financial space have renowned partners and
3A, Shivam building, 3rd Floor, 46E, Rafi Ahmed Kidwai Road, investors. The question is if ADAG wants to do so or move on.
Kolkata-700 016. Tel: 033-400 14462. Fax: 033-2227-3120
email: cm-kolkata@capitalmarket.com The success or failure to find a buyer hinges on industry dynamics. Private equity
is interested in the towers of RCom. Peers are more likely to acquire its spectrum, a
PUNE
C-28, 1st Flr, Shrinath Plaza, Plot no. 559, Bhamburda, Shivaji Nagar, tell-tale sign of consolidation and asset-light model. Efforts to monetize fugitive
Fergusson College Road, Pune-411 005. Tel: 020-2551-1616 / 17. industrialist Vijay Mallya’s properties have been fruitless. Airline operators lease
email: cm-pune@capitalmarket.com
...................................................................................................................................... planes. Human resources and aviation turbine fuel are the major overheads. Even a
Cover Price: Rs 75 successful sale of immovable assets might not be sufficient to recover all the dues if
Annual Subscription (26 issues): India Rs 1,460 the brand is sullied. Extradition and jail time will be a pyrrhic victory for the lenders
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© 2017 Capital Market Publishers India Pvt. Ltd. Sahara owner to compensate the depositors appears to be an easier task as most of the
All rights reserved. Reproduction in whole or in part without unaccounted wealth has been funnelled into businesses that have ground-level visibil-
permission is prohibited. ity such as real estate and hotels. Here, too, getting a good bargain is proving difficult
All possible efforts have been made to present factually correct
data. However, the publication is not responsible, if, despite this, due to the worldwide slowdown till last year. The collapse and resurrection of Satyam
errors may have crept in inadvertently or through oversight. Computer Services hinged on its position as one of the top five tech exporters. M&M
Though all care is taken in arriving at the recommendations
given in this publication, readers are cautioned that prices of bought the firm not for its physical presence. Rather it was the roster of clients that
equity shares and debentures may rise or fall in a manner not
foreseen. Readers are advised to take professional advice
was the attraction for the group with a nascent presence in the sector. The uneven
before investing. enthusiasm for distressed steel assets comes at a time when Tata Steel is deleveraging.
Subject only to Mumbai jurisdiction
...................................................................................................................................... The NDA government’s policy to buy local steel offers a temporary respite for the
Printed and published by Ruby Anand on behalf of Capital Market enhanced capacity of domestic players, who still lag behind China on volumes. There-
Publishers India Pvt. Ltd. Printed at Kala Jyothi Process Pvt Ltd fore, the chances of finding a suitor increases if a company is going down due to
Plot # W 17 & W18, MIDC, Taloja, Navi Mumbai - 410 208 and
published from 401, Swastik Chambers, Umarshi Bappa Chowk, corporate governance missteps rather due to sector disruptions.
Sion-Trombay Road, Chembur, Mumbai 400 071.
MOHAN M SULE
Dec 18 – 31, 2017 CAPITAL MARKET 3
ReadersReact
Prescription for recovery
Banks are saddled with bad
assets worth about Rs 8 lakh
crore (Stocks: ‘Once bitten’,
Nov 20-Dec 03, 2017, 2017).
Of these, a significant quantum
has been accumulated during
good times. Apart from
governance issues and dubious
promoters, weak commodity
cycle is one of the reasons for
the jump in the non-performing
assets in the banking system.
Praveen Baria, e-mail
Almost every company is
making efforts to reduce debt.
Post demonetization, interest
rates have come down. Taking
advantage of the situation,
India Inc is aggressively
refinancing high-cost debt. In
fact, several companies have
saved interest cost through
refinancing. However, debt
reduction is a narrow defini-
tion of restructuring.
Ilesh Tiwari, e-mail
Restructuring also involves de-
mergers of businesses to unlock
value. Standalone businesses
are easy to evaluate as against
grouping of diverse activities.
The several advantages of
demerger include simplification
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4 Dec 18 – 31, 2017 CAPITAL MARKET
of organization structure, better
focus and accountability.
Pancham Gabarda, e-mail
Companies opt for divestment
for improvement in the return
ratios such as return on equity
or capital by exiting loss-making
businesses. Restructuring might
involve divesting low-margin or
non-core businesses. Cash
generated can be deployed into
mainstream businesses rather
than trying to nurture busi-
nesses that were created from
over-optimism in the past.
Exiting from joint ventures (JVs)
is an example of avoiding
providing additional funds.
Nikhil Chawda, e-mail
Buy India
The cutback in oil production
by a section of Opec to
support and boost prices will
be a trigger for the Gulf region
to recover from the slump
(Editorial: ‘Owner’s pride’,
Nov 20-Dec 03, 2017, 2017). It
might even gain its position as
one of the important destina-
tions for exports from the
emerging markets, after the US
and the euro zone. Indian
exporters of manpower,
merchandise and farm products
and services to the region had
to bear the consequences of
soft crude prices. Their
remittances will be valuable
contributors to the reserves.
Devansh Aahir, e-mail
The market is forward-looking.
Projections by multilateral
institutions that the global
economy is set to expand over
the next two years have
supported most prominent
indices’ journey to historic
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highs. The recovery of the US
and euro zone have provided
fuel so far. The unemployment
rate is low in both the
geographies. The US market
crossing new milestones is on
the back of President Donald
Trump’s tax-cut proposals. It
might even have factored in the
productivity gains of the next
couple of years.
Arvind Damsigh, e-mail
The current high valuations
might look reasonable in
retrospect as the world sets to
usher in an era of unprec-
edented prosperity. If the US
Federal Reserve begins
increasing interest rates from
next month, the American
economy can be considered to
be into over-bought territory.
Funds from profit booking are
likely to find their way into
fixed-income products to hedge
against future shocks. Fearing
pull-out by foreign investors,
emerging markets might be
tempted to follow the example
of the Fed.
Uttkarsh Panjwani, e-mail
The US, the euro zone and
Japan have to rely on monetary
policy tinkering to drive or pull
back inflation, now being
considered as an important
indicator of a nation’s dyna-
mism. It should not be high
enough as at to tempt consum-
ers to stash cash in savings
accounts for better returns and
not low enough to discourage
companies from undertaking
expansion. The striking feature
is that while the developed
countries might have to worry
about finding triggers to keep
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growth intact, India should not
have to face such concern.
Subham Palkar, e-mail
Booster dose
Recap bonds might be issued to
public sector banks (PSBs) to
be financed from their deposits
and to financial institutions to
be financed from their excess
funds (PSB recap: ‘Upside and
downside’, Nov 20-Dec 03,
2017, 2017). PSBs’ investment
in bonds effectively converts
their excess liquidity into
equity. The government will
then use the funds raised from
the recap bonds issuance to
invest in PSBs’ equity. The
capital funds will be distributed
among the banks as per their
requirements.
Harish Banda, e-mail
Powerful strides
Although there was a seasonal
drop in new project announce-
ments in Q1, the investment
climate might improve in the
subsequent quarters in view of
the policy initiatives on the
goods and services tax and
foreign direct investment (Capex:
‘High on energy’, Nov 20-Dec
03, 2017, 2017). Based on the
projects sanctioned in preceding
years, the planned capex might
amount to a small improvement
over the previous year.
Rathwa M, e-mail
Uday was introduced to resolve
the financial burden on state
discoms by transferring 75% of
their accumulated losses and
debts to the state in a two-step
phased manner.
Anil Bhamor, e-mail
Send your feedback to
readersreact@capitalmarket.com
Capitaline CSS database gives
extensive data on Commodities,
Sectors and the related Stocks.
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Inside
13 | In Focus
TTM September 2017
Weathering the storm
Stocks
The NextGen

24 | Market Watch
Stocks-Mid caps
Sizzlers and dampeners
08 | Cover Story
Market Report Stocks: Poised to take off
Mix and match
Promoters are likely to deploy funds in their own businesses only
Stocks-Large caps when they are sure of the growth potential
Movers and shakers

69 | Stock Watch 81 | Marked To Market 90 | Capitalaline Corner

Foseco India IPO Performance Multibase India
In fine shape Flying colours Set to multiply

74 | Over The Counter

Buying and Selling
Mcleod Russel 9% stake-sale

77 | IPO Centre
Astron Paper & Board Mill 32 | Corporate Scoreboard
A pricey box 83| Apna Money
61 | Consolidated Scoreboard
Sharing the spoils
78 | Sector Spotlight Mutual Fund scoreboard 63 | Company Index
Gas distribution companies How to split demat shares of 67 | Bulletin
Pipeline to prosperity deceased parent among heirs? 68 | Watch List

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6 Dec 18 – 31, 2017 CAPITAL MARKET

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CoverStory
CoverStory
Stocks
Poised to take off
Promoters are likely to deploy funds in their own businesses only when they
are sure of the growth potential
Capital is essential for business growth.
Additional investment reflects the confi-
dence of the promoters and the manage-
ment in their own businesses. Companies
shying from taking the plunge might face
stagnation and destroy shareholder wealth.
Ultimately, equity is a risk capital and re-
wards the brave.
Investors can narrow the list to com-
panies that have recently completed their
capital expenditure plan from those whose
programs are still at the drawing board or
execution stage to eliminate implementa-
tion risks. Here, finances have been already
arranged and used. With the commission-
ing of the projects, the time to reap the
benefits, too, commences.
Companies gain from capital invest-
ment in the form of increased revenues and
profit. The other benefits might not be very
obvious. These comprise enlarging of mar-
ket share, addition of customers, new
brands, increased dealer and customer reach,
acquiring of technical knowhow, addition
to product portfolio, better integration of
business operations, lower reliance on ex-
ternal sources for raw material, cost sav-
ings, improved utilization of capacities and
faster turnaround. Therefore, this bunch of
companies might be interesting to explore
for investment.
One of the ways to track such compa-
nies is to look at depreciation. A sharp in-
crease is a clear sign of addition to assets.
Apart from tracking reports and company
announcements, year on year change in de-
preciation has been analysed to arrive at
companies that have completed their capi-
tal expenditure in recent times.
A drawback of inorganic growth is the
price tag. The takeover might have taken
place at a significant premium to the pre-
vailing market value. Post acquisitions, busi-
ness operations have to be integrated, hu-
man resources-related issues have to be tack-
led and new structures have to be put in
place. Synergies envisaged have to be real-
ized to the fullest extent. For optimum uti-
8 Dec 18 – 31, 2017 CAPITAL MARKET
Growing confidence
Gulshan Polyols made additions
of Rs 85.4 crore to gross fixed assets
in FY 2017. Capital work in progress
was Rs 96.9 crore
Face Value: Re 1
CMP Rs 80 as on 12 December 2017. One-year return: 2.22%.
S&P BSE Small cap index one-year return: 39.04%
lization of in-house expansion, additional
capacities need to be marketed appropri-
ately by widening dealer network.
Organic or inorganic growth is just half
the work done. The other crucial half is
making the capital work effectively. Next,
the vehicle of financing assumes importance.
For debt-funded transactions, the busi-
nesses should generate sufficient cash to
repay the borrowings. Not only interest,
even the principal needs to be serviced
promptly. The moratorium period provided
by the lenders is crucial. Besides, terms of
borrowings and interest rates need to be as-
sessed. Companies might have gone for
cheaper overseas borrowings. In such cases,
policies to manage foreign exchange volatil-
ity have to be scrutinized. Currency risk
can upset the applecart and put companies
under tremendous stress. Moreover, hedg-
ing comes at a cost.
At present, interest rates are on the
lower side on account of ample liquidity in
the system as demonetisation sucked in
currency in circulation into the banking
system. As a result, the finance cost of com-
panies has declined in recent quarters.
Many have refinanced their debt to lower
the burden on the profit and loss account.
Stocks
Also, large companies have tapped the do-
mestic bond market to borrow at cheaper
rates. One of the key factors to monitor is
cash flow. The cash flow should match or
exceed expectations to discharge borrow-
ing liabilities.
Mega plans are largely executed in
phases. A few companies might be through
with one phase and moving into the sec-
ond, implying incremental funding require-
ments, thereby straining the balance sheet.
Assuming investments are over post
completion of one of the phases might be a
mistake if the next phase witnesses delays
and cost over-runs.
Costs such as employee wages, admin-
istration overheads, selling and marketing
expenses are fixed in nature. Companies need
to attain critical scale to absorb this inelas-
tic pressure. Otherwise, operating profit and
the net profit margins will get squeezed in
the short to medium term.
Also, the return on capital employed
and the return on equity will dwindle for a
brief period. Investors have to bear with
these temporary pain points. Essentially,
investment in such stocks should be made
with a medium- to long-term view. Post
completion of capital projects, risk-averse
investors can even monitor the performance
of such companies for a few quarters and
subsequently make their investment calls.
Thus, growth strategies are based on
multiple assumptions. The projections can
go terribly wrong, upsetting even the basic
calculations. Divergence in targets and
achievement is particularly noticeable in the
commodity space. Commodity cycles are
difficult to predict. A downturn can worsen
a situation instead of boosting the financials
as envisaged when the capital expenditure
plan was put in motion. In such cases, op-
portunities can dissolve into threats.
Fresh capacities can take multiple years
to produce the desired results owing to vari-
ous challenges such as difficulty in gaining
market share, servicing of the financing costs,
changes in market taste or technological ir-
CoverStory
relevance. Companies might have to put in
additional investment to ensure demand.
Investors can look at the past perfor-
mance of the management and promoters to
examine their ability to execute big projects.
The shape of the balance sheet post expan-
sion can provide valuable clues about the
skills of the management to stay fit.
Scrutiny of the industry in which the
company operates can offer guidance on
growth drivers, size of opportunities, chal-
lenges, threats, competition and outlook.
The information can indicate if the expan-
sion plan is aggressive or timid. The indus-
try should be robust to absorb the incre-
mental capacities.
Importantly, economic prosperity is a
pre-requisite for business growth. At the
moment, the macro environment does not
seem to be favourable. Gross domestic prod-
uct grew 5.7% in the first quarter ended June
2017, a 13-quarter low for the economy.
However, in a breather, the economy grew
6.3% in the second quarter of the fiscal year
ending March 2018 (FY 2018), signalling
that the economy might be coming out of
the disruption caused by demonetization and
the goods and services tax.
Capital Market picked companies that
have completed their augmentation, mod-
ernization or diversification in FY 2017, in
the half-year ended September 2017 or the
first half of FY 2018 and FY 2017. These
companies could have opted for green- or
brown-field expansion. Also, acquisitions
in the period were considered (see box:
Making capital go round). The investment
theme presented a set of companies that
recently added to their capabilities, mar-
keting and distribution network and tan-
gible and intangible assets.
FY 2017 was significant for Tata
Metaliks, majority-owned by Tata Steel.
Amalgamation with wholly-owned subsid-
iary was completed. Four major capital
projects were completed. These efforts are
expected to have significant bearing on busi-
ness growth and operational efficiencies in
the coming years.
First, the ductile iron (DI) pipes divi-
sion commissioned a new casting machine
and a finishing line. The expansion will cater
to the demand for smaller diameter DI pipes.
Second, two batteries of a coke-oven plant
of 1.20 lakh tonnes per annum (tpa) were
commissioned on build-own-operate-trans-
fer basis. The cost-optimization initiative is
also a risk-mitigation measure to reduce de-
Dec 18 – 31, 2017 CAPITAL MARKET
Flavour of the season
Kwality began commercial production at
its new unit at the Softa plant in Haryana
in February 2017. The plant is dedicated
to value-added products
Face Value: Re 1
CMP Rs 106 as on 12 December 2017. One-year return: -18.68%.
S&P BSE Mid cap index one-year return: 39.64%
pendency on imported coke as it is prone to
price volatility.
Third, a 10-MW captive power plant
was commissioned. The plant utilizes the
heat from exhaust flue gases from coke ov-
ens. The captive plant will meet a signifi-
cant portion of the power requirement of
the manufacturing operations for pig iron
and DI pipes. The initiative will improve
profitability. Fourth, a 91-day shutdown was
taken of blast furnace No 1 for moderniza-
tion. The merger of Tata Metaliks DI Pipes
will accrue financial, managerial, technical
and other synergies.
Gulshan Polyols executed multiple
capital expenditure programs in potential
areas of growth last fiscal year. Additions of
Rs 85.4 crore to gross fixed assets were made
compared with Rs 26.9 crore in FY 2016.
Capital work in progress stood at Rs 96.9
crore end March 2017.
The Muzaffarnagar facility in Uttar
Pradesh started commercial production in
August 2016 of native starch by using corn
as raw material. The capacity is to process
300 tonnes of corn per day. The product
sells under the brand, Rhino, and has been
accepted as a strengthening agent by paper
mills located nearby. Next, a rice grinding
unit has been set up to produce high fruc-
tose rice syrup at the Muzaffarnagar facil-
ity. The unit in January 2017 began com-
mercial production. Last, the potable alco-
hol plant at Chhindwara in Madhya Pradesh
is expected to be completed in near future.
The business portfolio includes starch
sugars, calcium carbonate; the alcohol busi-
ness; agro-based animal feed and on-site pre-
cipitated calcium carbonate plants. Produc-
Stocks
tion facilities are located in Uttar Pradesh,
Gujarat, Himachal Pradesh, Rajasthan,
Punjab, West Bengal and Madhya Pradesh.
User industries are pharmaceuticals, per-
sonal care, footwear, tyres, rubber and plas-
tics, paints, alcohol, paper, agrochemicals,
food and agro products. Key clients include
Hindustan Unilever, Dabur, Asian Paints
and ITC. Exports go to around 42 coun-
tries. A dividend of 70% including interim
dividend of 40% was paid in FY 2017. Le-
verage remained moderated, with a debt-to-
equity ratio of 0.57 times, end FY 2017.
Kwality began commercial production
at its new unit at the Softa plant in Haryana
in February 2017. The plant is dedicated to
value-added products. The capital cost was
Rs 347 crore. The unit is fully automated
and equipped with modern machinery. It has
milk-handling capacity of 0.9 million liters
per day for value-added products such as
flavored milk, paneer, cheese, ultra-high
treatment (UHT) milk, cream in tetra packs,
table-butter and yoghurts. The cumulative
milk processing capacity has increased to
4.3 million liters per day across six plants.
The focus continues to be on strength-
ening the distribution network and procure-
ment capabilities. The current procurement
network consists of 3.5 lakh farmers across
4,700 villages. The largest procurer in sev-
eral regions of Uttar Pradesh, Haryana, and
Rajasthan has entered into a memorandum
of understanding with Bank of Baroda to
disburse Rs 4000 crore loans at 8.6% inter-
est to one lakh farmers to buy milching ani-
mals, a smart phone and a two-wheeler to
boost direct procurement. The loan facilita-
tor has no financial or contingent liabilities.
Incorporated in 1992, one of the larg-
est private dairy companies in India pro-
duces a range that includes variants of
pouched milk, ghee, cow ghee, Livlite 85%
less cholesterol ghee, UHT milk, UHT
cream, curd, skimmed milk powder, wake
up creamer, flavored milk, chaach, lassi and
other dairy products that are sold to retail
and institutional customers through a wide
distribution network.
Established in 1981, Skipper is one of
the world’s leading manufacturers of trans-
mission and distribution towers and poles.
The maker of engineering products (revenue
contribution 83%) is also manufactures plas-
tic water pipes (revenue contribution 12%).
Infrastructure engineering, procurement and
construction projects (revenue contribution
5%) are also undertaken.
9
CoverStory Stocks

The new plant at Palasbari near
Guwahati in Assam was commissioned in
March 2017. As a result, production capac-
ity of engineering products increased 30,000
tonnes per annum (tpa) and of polymer prod-
ucts including chlorinated polyvinyl chlo-
ride (PVC) and un-plasticized PVC fittings
7,000 tpa. Also, a commissioned 6,000-tpa
polymer pipe manufacturing unit was com-
missioned in Hyderabad to cater to south
India. With the recent expansions, the poly-
mer product segment’s manufacturing capac-
ity increased to 51,000 tpa and that of engi-
neering products to 2.30 lakh tpa. Going
forward, the aim is to double the polymer
capacity to one lakh tpa.
The focus is on being asset light. The
Hyderabad unit operates on this model.
Despite expansion, the debt-to-equity ratio
moderated to 1.04 times in FY 2017 com-
pared with 1.26 times in FY 2016. Power
Grid Corporation of India approved the pole
division last fiscal year. The order book stood
at Rs 2589 crore end March 2017.
Bajaj Finance has significantly
strengthened the distribution reach over the
last two-and-a-half years. The branch count
increased almost three times from 393 end
March 2015, 659 end March 2016, 915 end
March 2017 to 1,031 end September 2017.
Around 54% of the branches are located in
rural areas. Besides, there is presence at vari-
ous points of sales such as consumer du-
rable stores, digital product stores, lifestyle
retail stores, auto dealers, sub-dealerships
and authorized centers. These distribution
points aggregate to around 51,400. Customer
franchise stood at around 23 million.
The subsidiary of Bajaj Finserv is
among the leading diversified consumer,
small and medium enterprise (SME), rural
and commercial lenders. Assets under man-
agement (Rs 72139 crore) remained fairly
well distributed among the consumer
(46.9%), SME (33.4%), commercial
(13.3%) and rural (6.4%) segments end Sep-
tember 2017. Gross non-performing assets
were at 1.68% and net NPAs at 0.51%. Capi-
tal adequacy was 25.42%, with tier I capi-
tal adequacy of 19.86%.
Mobile wallet company One Mobikwik
Systems in August 2017 invested Rs 225
crore in the equity capital and cumulative
compulsorily convertible preference shares.
There are plans to offer its lending products
such as credit card, mortgage loans and per-
sonal loans and insurance products through
the MobiKwik app.
JB Chemicals & Pharmaceuticals
completed capital expenditure projects
worth Rs 175 crore in FY 2017. These were
funded through internal accruals. The
projects included creation of additional ca-
pacity for the formulations business includ-
ing tablets, liquid, ointments, vials, eye
drops and lozenges and active pharmaceuti-
cal ingredients. Also, a new tablets and cap-
sules facility at Panoli, Gujarat was com-
missioned. Interestingly, shares worth Rs
50 crore have been bought back.
Over 600 medical representatives were
added in the last quarter of FY 2017. The

Gaining from capex

Companies’ gain from capital investments comprise enlarging of market share, addition to product portfolio, better integration of business
operations, lower reliance on external sources for raw material, cost savings, improved utilization of capacities and faster turnaround
COMPANY CMP MCAP 52-WEEK MF HOLDING DEBT- YEAR TTM NET SALES TTM APAT P/E P/BV DY
(Rs) (Rs cr) HIGH LOW AS ON (%) EQUITY ENDED (Rs cr) CHG (Rs cr) CHG RATIO (%)
(Rs) (Rs) RATIO (%) (%)
Ajanta Pharma 1279.6 11262.3 1922.0 1106.0 201709 5.09 0.03 201709 2005.3 6.4 483.3 2.2 23.3 6.26 1.02
Amara Raja Batteries 764.0 13049.2 954.6 665.5 201709 10.51 0.03 201709 5597.4 12.0 438.6 -14.5 29.8 4.77 0.56
Apollo Tyres 238.1 13620.5 288.3 171.6 201710 14.43 0.36 201709 13380.5 9.1 752.4 -33.2 18.1 1.49 1.12
Bajaj Finance 1674.9 96560.9 1989.0 762.3 201709 6.14 5.07 201709 11366.3 35.5 2163.7 39.1 52.6 6.85 0.20
Berger Paints India 246.9 23973.7 285.8 189.7 201709 1.51 0.22 201709 4816.3 9.4 438.8 1.2 54.6 12.36 0.71
Cadila Healthcare 419.4 42935.8 558.0 330.0 201709 3.83 0.60 201709 9957.7 9.5 1351.2 -24.0 31.8 5.64 0.76
Dabur India 341.4 60138.3 360.5 258.8 201709 3.17 0.20 201709 7516.6 -5.0 1266.8 -2.6 47.5 11.4 0.79
Gulshan Polyols 78.5 368.3 114.0 71.2 201709 6.61 0.57 201709 557.3 20.5 21.2 -25.4 17.4 1.39 0.89
JB Chemicals & Pharma 292.9 2447.8 367.7 255.0 201709 6.35 0.10 201709 1216.5 2.3 150.0 -22.1 16.6 1.8 0.35
Jubilant Life Sciences 687.0 10943.9 879.1 552.4 201709 4.77 1.33 201709 6164.1 11.1 536.2 21.5 20.4 2.9 0.43
Kokuyo Camlin 120.8 1211.2 134.1 77.1 201709 0 0.45 201709 616.9 0.7 -0.7 PL 0 5.53 0
Kwality 102.5 2439.1 169.1 95.5 201709 0 1.61 201709 6360.0 8.5 128.8 -11.8 12.6 2.2 0.10
Meghmani Organics 101.2 2572.2 129.4 36.3 201709 0 0.64 201709 1556.3 10.6 155.6 23.4 16.5 3.31 0.40
Mold-Tek Packaging 310.4 859.4 350.0 162.0 201709 12.88 0.31 201709 319.3 7.3 24.6 -11.4 35.0 5.3 1.16
Motherson Sumi Systems 356.8 75106.2 373.3 201.8 201709 6.8 1.30 201709 47918.8 21.9 2349.3 21.5 32.0 8.6 0.37
RPG Life Sciences 449.2 742.9 537.5 294.0 201709 0.01 0.23 201709 300.8 1.0 7.1 -73.5 105.0 5.14 0.62
Shree Cement 16999.7 59227.0 20560.0 13161.6 201709 4.03 0.15 201709 8896.7 10.5 1191.6 -29.7 48.3 7.69 0.68
Skipper 258.5 2646.6 292.5 127.8 201709 9.39 1.04 201709 1928.8 23.1 114.4 15.9 23.1 4.79 0.58
Tata Metaliks 799.5 2021.9 853.4 311.0 201709 5.51 3.10 201709 1538.4 20.7 124.1 2.8 16.3 7.67 0.31
Time Technoplast 206.0 4658.6 218.2 85.0 201709 9.05 0.59 201709 2886.5 16.0 157.9 23.6 29.5 3.38 0.26
Wipro 282.3 137386.7 308.4 222.8 201709 1.8 0.27 201709 54801.5 1.4 8654.0 0.3 15.9 2.48 0.64
CMP (current market price) is closing as on 6 December 2017. Consolidated financials considered wherever available. MF : Mutual funds. Debt-to-equity ratio is as of FY 2017. PL : Profit to loss. P/E : Price to
earnings, P/BV : Price to book value. DY : Dividend yield. TTM APAT : Trailing 12-month adjusted profit after tax is for the period ended September 2017.
Source: Capitaline Databases

10 Dec 18 – 31, 2017 CAPITAL MARKET

CoverStory Stocks

Making capital go round

Organic or inorganic growth is just half the work done. The other crucial half is making the capital work effectively.
Next, the vehicle of financing assumes importance

COMPANY HIGHLIGHTS
RPG Life Sciences The pharmaceuticals producer acquired seven brands including key brands Romilast and Sildura from Sun Pharmaceuticals in
FY 2017. Also, set up two new divisions, Urolife catering to the urology therapy and Glodiance’ division catering to the
cosmetic derma therapy. The production facility at Ankleshwar in Gujarat is likely to undergo audit by the US FDA in the
calendar year 2018. The RPG group company is into branded formulation, global generic drugs and synthetic active
pharmaceutical ingredients.
Jubilant Life Sciences Through one of its step-down subsidiaries, the formulations, bulk drugs, intermediates, drug discovery solutions and
radiopharmaceuticals player completed the acquisition of the US radio-pharmacy business of Triad Isotopes Inc in September
2017. Incremental revenues from the business stood at Rs 103 crore in September 2017.
Wipro The IT solutions provider invested over US$ 1 billion in acquisitions over the last two years, with the latest and sizable being
that of Healthplan Services for US$ 460 million in February 2016. Healthplan is a business process service company
operating in the US healthcare market. Completed purchase of Appirio, a cloud application services provider, in FY 2017 and
became among the top cloud application service provider globally. Bought Infoserver, a Brazilian company, in February 2017.
Motherson Sumi Systems The auto component major completed the acquisition of Finland’s PKC Group Plc for Rs 4150 crore in March 2017. The
takeover will help to expand footprints in the American and European commercial vehicle segment. Headquartered in Finland,
PKC is a global tier-I supplier of wiring harness and associated components to original equipment manufacturers in the heavy
and medium commercial vehicles and locomotive segments across North America, Europe, Brazil and China.
Cadila Healthcare The pharmaceuticals producer in January 2017 forayed into specialty pain market in the US with the acquisition of Sentynl
Therapeutics Inc, a specialty pharmaceuticals maker. Bought six trademarks from Organon India and Merck Sharp & Dohme
BV to strengthen presence in the domestic men’s and women’s health, wound management and cardiovascular therapy
markets. Also, bought a few trademarks from the AstraZeneca group in FY 2017 to strengthen presence in the anesthesia,
gynecology and anti-infective therapy areas.
Dabur Among the country’s leading consumer products manufacturer commissioned new manufacturing facility at Tezpur, Assam, in
March 2017 at an investment of Rs 250 crore. The 30-acre modern manufacturing facility produces the entire range of
ayurvedic medicines, health supplements, hair oils, shampoos, toothpastes and skin- and home-care products.
Ajanta Pharma Commenced phase I commercial production at new manufacturing facilities in Guwahati in FY 2017 and Dahej in April 2017.
The construction of phase II is expected to be completed by March 2018. The Dahej unit is approved by the US Food and
Drug Administration, a pre-requisite for exports to the US.
Kokuyo Camlin The stationery maker inaugurated the integrated manufacturing plant at Patalganga in Maharashtra in April 2017. One of the
largest and most advanced stationery plants in the country was established at a cost of Rs 100 crore and is capable of
producing over 200 products including markers, mechanical pencils and crayons. The benefits of the economies of scale will
be visible from the calendar year 2018.
Berger Paints The paint maker completed multiple projects in FY 2017. Commenced production in March 2017 at the facility at Nagaon in
Assam, with capacity of water-based paints of 48,000 kilo liters (kl) per annum, solvent-based paints of 24,000 kl, resin of
14,000 tonnes per annum (tpa) and wall putty of 24,000 tpa. Also, the British paint division commenced production at the
facility at Nalbari near Guwahati, with capacity of 6,600 kl per annum of distemper paint and 7,200 kl of putty. The automative
and general industrial paints unit at Jejuri near Pune, with a capacity of 4,800 kl per annum, commenced production in March
2017. A processing unit at Vallabh Vidya Nagar in Gujarat for processing of automotive paints was also commissioned. An
emulsion unit, with a capacity of 44,160 tpa, is being set up at Rishra in West Bengal. The first phase is likely to go into
commercial in FY 2018.
Amara Raja Batteries Among the leading manufacturers of lead-acid storage batteries for industrial and automotive application in the country
completed a new four-wheeler battery plant at Nunegundlapalle in the Chittor district, adding capacity of 2.25 million units per
annum and, thereby, taking the total capacity to 4.50 million units. Commenced supplies from the plant in FY 2017. Consider-
ing the growth potential, the board approved expansion of the two-wheeler battery capacity to be implemented in four phases
over five years. Post completion of expansion, capacity will reach 25 million units per annum from the current level of 11
million units.
Mold-Tek Packaging The new plant of the manufacturers of rigid plastic packaging containers through injection moulding technology mainly for
paints, lubricants and FMCG industries at Rak, UAE, started operation in November 2016 and reported capacity utilization of
around 25-30%. Capacity utilization is expected to touch 50-55%, the breakeven level, in FY 2018. Several queries have
been received from lubricant, paint and food product manufacturers in the UAE and the Middle East. Expansion is underway at
existing Hyderabad unit at a cost of Rs 25 crore for production of food and FMCG thin wall containers. The capacity is
expected to reach 3,000 tpa by June 2018 compared with the current level of 1,400 tpa.
Source: Companies.

Dec 18 – 31, 2017 CAPITAL MARKET 11

CoverStory
investment in marketing muscles has started
bearing fruits as revenues from chronic prod-
ucts increased 59% in the September 2017
quarter. Though higher employee cost due
to hiring adversely affected profitability,
this investment is expected to increase rev-
enues and profit in medium to long term.
The pharmaceutical manufacturer mar-
kets a diverse range of formulations, herbal
remedies and bulk drugs. There is presence
in the US, Europe, Australia, South Africa,
Russia and the CIS.
Shree Cement completed the expan-
sion of the grinding unit at Aurangabad in
Bihar in FY 2017. The capacity expanded
to 3.6 million tonnes per annum (mtpa) from
two mtpa. Besides, the capacity of existing
units was increased through de-
bottlenecking, process flow improvement,
installation of balancing equipments and
other productivity improvement measures.
As a result, cement capacity was up to 29.3
mtpa end March 2017 compared with 25.6
mtpa a year ago.
Further, work on the clinker expan-
sion project of 2.6 mtpa at Baloda Bazar
in the Raipur district of Chhattisgarh is
expected to be completed by March 2018.
Also, the integrated cement project of
three mtpa at Kodla in the Gulbarga dis-
trict of Karnataka is expected to be com-
pleted by December 2018.
Production increased around 8% to over
20 mt in FY 2017, a record high. The cap-
tive power generation capacity stood at 607
MW. The third largest cement player in the
country commands leadership position
Rajasthan, Delhi and Haryana. Despite con-
sistent capacity additions over the decade,
the debt-to-equity ratio remained moderate
at 0.15 times end March 2017.
Apollo Tyres completed phase I of the
truck and bus radial capacity at the Chennai
plant in FY 2017. The capacity of the unit
increased 50% to 9,000 units per day. Post
completion of phase II, capacity will reach
12,000 units a day. Both the phases involve
capital outlay of Rs 2700 crore. Next, com-
mercial production at the first overseas
green-field plant in Hungary commenced.
There are plans to set up a dedicated
two-wheeler plant in Andhra Pradesh. A
foray was made into the two-wheeler tyre
segment in FY 2016. The branded retail net-
work grew 26% to 290 stores spread across
150 cities end FY 2017. The retail points
contribute around 30% to sales. Also, to
extend the rural reach, two new formats have
12
Looking inward
JB Chemicals & Pharmaceuticals
completed capital expenditure projects
worth Rs 175 crore in FY 2017. These
were funded through internal accruals
Face Value: Rs 2
xxxxx
CMP Rs 298 as on 12 December 2017. One-year return: -13.76%.
S&P BSE Mid cap index one-year return: 39.64%
been introduced: Apollo Vikas Kendre and
Apollo Rural Distributor.
The tyre producer has flagship brands
Apollo and Vredestein. Vredestein has estab-
lished presence in Europe in the passenger-
car tyre segments. There are four plants in
India and one each in Netherlands and Hun-
gary. Imports from China continue to be threat
for tyre manufacturers.
Time Technoplast incurred capital ex-
penditure of Rs 211 crore in FY 2017. The
capacity of the intermediate bulk container
was expanded to 6.90 lakh units in six coun-
tries including India. Also, manufacture of
intermediate bulk container (IBC) started in
Egypt. There are plans to start IBC pro-
duction in Sharjah, Vietnam and Malaysia in
the current fiscal. Multi layer multi-axis-ori-
ented cross-laminated (Mox) film was
launched in Q1 of FY 2018, under the brand
Techpaulin. Currently, distributors are be-
ing appointed and fabrication facilities for
Mox films are being set up at existing loca-
tions. As much 15,000 tonnes of plastic pro-
cessing capacity was added in FY 2017. The
capacity of pipes was expanded to 28,000
tonnes from 12,000 tonnes in March 2016.
Investment plans worth Rs 225-250
crore have been lined up for the current fis-
cal. These include manufacturing of IBC at
three overseas locations, doubling the ca-
pacity of composite cylinders to 14 lakh,
increasing capacity of PE pipes and DWC
pipes, brown-field expansion for existing
products and automation, re-engineering and
de-bottlenecking of existing plants.
Three established business segments
contributed 87% to the revenues in FY 2017.
These are industrial packaging (drums, jerry
Stocks
cans and pails), infrastructure (HDPE pipes,
DWC pipes and energy storage devices) and
technical and lifestyle (turf and matting, dis-
posable bins and auto components).
Meghmani Organics incurred capital
expenditure of around Rs 650 crore over the
last five years to achieve scale and improve
market share. A new pigment plant was com-
missioned at the Dahej Special Economic
Zone and capacities of caustic-chlorine and
caustic potash were expanded.
Subsidiary MFL (57% stake) is plan-
ning capital expenditure plans worth
around Rs 540 crore. Funds will be prima-
rily deployed for setting up a chlo-
romethane plant of 40,000 mtpa and hy-
drogen peroxide project of 25,000 tpa.
Also, there are plans increase the capac-
ity of caustic soda production by 300
tonnes per day and that of the captive
power plant to 90 MW from 60 MW
The diversified chemical manufacturer
commands a share of 14% by capacity
(31,140 tpa) of the global pigments mar-
ket. The agrochemicals product (capacity
of 27,060 tpa) portfolio includes insecti-
cides and herbicides. The fourth largest
caustic-chlorine producer in the country has
a capacity to produce 1.87 lakh tpa of ba-
sic chemicals. Significant revenue comes
from exports: 75% from pigments and 61%
from agrochemicals.
Conclusion
The investment theme of exploring compa-
nies that have committed funds in pursuit
of growth carries lower risk compared with
companies that are in the planning stage or
in the midst of executing projects. Benefits
of capital expenditure are expected to start
accruing in the immediate near future and
gain traction in the quarters and years ahead.
Successful execution of capital expendi-
ture projects and or acquisition is one part
of the story. Investors are required to assess
the credentials of management and promot-
ers, the industry’s growth prospects, past
track record of companies in assuming busi-
ness risk and creating shareholder wealth.
Last, and important, valuations remain el-
evated across industries owing to plenty of
liquidity in the system. Investment in such
stocks can be contemplated based on valua-
tions that investors are comfortable with.
Investors can add these stocks to their
watch-list and monitor valuations before
taking the plunge.
— Venkatesh S
Dec 18 – 31, 2017 CAPITAL MARKET
InFocus
InFocus
TTM September 2017
Weathering the storm
Index constituents that have shown a constant increase in profit
in the last one year are likely to continue their outperformance
With the September 2017 earnings season
behind and the equity market setting sights
on the New Year, the operational perfor-
mances delivered by the local companies
over past year, i.e., trailing 12 months
(TTM) ended September 2017 can be ana-
lyzed on a much wider footing. Capital
Market did a two-way analysis of the com-
panies’ earnings to judge the outperform-
ing candidates. First, sales and operating
profit for TTM ended September 2017 were
compared with TTM ended September
2016 for the Nifty 50 companies. The sec-
ond list is of the companies witnessing a
persistent growth in quarterly net profit in
TTM ended 2017.
Why TTM ended September 2017? The
first major rationale is to assess the impact
of demonetization. On 8 November 2016,
the Union government announced the historic
measure, with profound implications for the
economy. The two largest denomination
notes, Rs 500 and Rs 1000, were withdrawn,
ceasing to be legal tender except for a few
specified purposes. At one fell stroke, 86%
of the cash in circulation was rendered invalid.
These notes were to be deposited in banks
by end December 2016, while restrictions
were also placed on cash withdrawals.
In other words, curbs were placed on
the convertibility of domestic money and
bank deposits. The government noted that
the aim of the action was fourfold: to curb
corruption; counterfeiting; the use of high
denomination notes for terrorist activities;
and especially the accumulation of black
money, generated by income that has not
been declared to the tax authorities. It
followed a series of earlier efforts to curb
such illicit activities.
The Economic Survey of the fiscal year
ended March 2017 (FY2017) noted that
demonetization was an aggregate demand
shock because it reduced the supply of
money and affected private wealth. The
aggregate supply shock was to the extent
that cash is a necessary input for economic
activity. It was an uncertainty shock because
economic agents faced imponderables related
to the impact and duration of the liquidity
Dec 18 – 31, 2017 CAPITAL MARKET
Liquidity-driven
The stock market was buoyant throughout
TTM ended September 2017 on generous
buying by FIIs, soaring global equities
and inflows from domestic funds
10800
10300
9800
Nifty 50
9300
8800 l l l l l l l
A M J J A S O N
* till 8 December 2017
shock as well as further policy responses.
Consumers deferred or reduce discretionary
consumption and firms re-considered
investment plans. The much debated and
talked about exercise clearly took a toll on
the economy and the corporate sector.
The second factor is the alarming slide
in economic growth. India’s economy
extended a slowdown in first half of the
current fiscal year. The domestic growth
crawled further to a three-year low in the
quarter through June. Gross domestic
product (GDP) expanded 5.7% in its slowest
pace since the January-March quarter 2014.
The slowdown was led by the
manufacturing sector, which grew just 1.2%
from a year earlier compared with a 10.7%
growth last year.
Extremely poor credit growth was the
third major challenge for local business.
Bank credit is an important indicator of
economic activity. The high growth
observed in the the calendar years (CYs)
2003-08 period was accompanied by a surge
in monetary aggregates and credit growth,
which usually exceeded the 20 per cent
mark year on year. After being hit sharply
by the global financial crisis and the fiscal
stimuli over the period CYs 2008-10, credit
growth remained at around the 15% mark
till February 2014. Subsequently, it slowed
down further. In FY 2017, gross bank credit
outstanding grew at around 7% on an
average. The current growth of around 4%
is at a multi-decade low.
In July 2017, India launched its keenly
awaited goods and services tax (GST) regime
aimed at unifying the multitude of indirect
taxes and removing domestic barriers to trade.
It is expected that such a simplification and
harmonization of the tax system would
support productivity gains and GDP growth
over the long term.
However, the GST that came into effect
on 1 July was relatively complex, including
multiple tax rates for different goods, ranging
from 0% to 28%, or higher where ‘sin taxes’
are applied, and requires frequent filing in
all states in which a company operates.
However, it was still far simpler than the
previous system, under which each state set
its own sales taxes in addition to the Central
government and imposed border taxes on
goods entering the state. A common market
should significantly ease the movement of
l l * goods and services across the country reduce
D
transactions costs and boost efficiency as
firms will be forced to decide investments,
supply chains and business models on
economic criteria, rather than being
constrained by tax considerations.
These factors are expected to have a
positive impact on factor productivity in
the medium to long term. The efficient new
tax regime has characteristics to underpin
compliance, widen tax base and eventually
enhance tax revenues. Additionally, a wider
indirect tax base should result into a larger
tax base as new indirect taxpayers can also
be potential direct tax payers.
Soaring oil and metal prices turned out to
be yet another important factor for local
companies. The rise in commodity prices was
led by crude oil, which turned around after
witnessing a staggered performance for last
two years. Brent crude oil prices broke above
the key US$50 per barrel mark on a conclusive
basis end CY 2016 and maintained their
buoyant moves throughout the year. The
commodity witnessed hefty gains from June
2017 amid calls of improved global growth,
continued increase in speculative demand and
weakness in US dollar.
Brent crude oil prices averaged around
US$53.80 per barrel, soaring around 8% on
year in the first 11 months of CY 2017. Oil
jumped to its highest level in two-and-a-half
years in November 2017. Base metal prices
also soared with copper jumping to its four-
year highs on the London Metal Exchange,
testing the key US $7000 per tonne mark in
13
InFocus
October 2017. Other metals such as zinc 2017, a constant increase in profit after
Better than the rest
and aluminum also hit multi-year highs. logging in Pat of Rs 413.16 croes in the
For the Nifty 50 companies, pressure The top performers by net profit in TTM ended quarter ended September 2016. It has
on the margin is evident in last 12 months. September 2017 were headed by Yes Bank, maintained a healthy Pat ratio around 23%
The situation is understandable as it was IndusInd Bank, and Eicher Motors and L&T Infotech in both TTM ended September 2017 and
probably the toughest period for them 201709 201706 201703 201612 TTM ended September 2016. Sales
over a decade. The margins dropped Yes Bank 1002.73 965.52 914.12 882.63 surged 28% compared with a year ago.
heavily. Of the 50 companies, 35, IndusInd Bank 880.1 836.55 751.61 750.64 The best-ever net quarterly income from
particularly Sun Pharmaceuticals, Axis Eicher Motors 518.02 459.62 459.44 418.19 operations, at Rs 2167 crore, represented
Bank, Coal India, Lupin and Bosch, L & T Infotech 273 267.2 254.5 248 a growth of 24%. The OP grew 26% to
witnessed a drop in the margin, highlighting Edelweiss.Fin. 209.2 196.32 170.03 155.18 Rs 683 crore and the OPM were at 31.5%.
the severity of the broad business PNB Housing 207.99 184.75 152.4 137.78 L&T Infotech delivered a solid Q2
environment and pressures on operating Vakrangee 189.8 168.03 151.39 131.55 with US dollar revenues of 270.6 million,
performance. The margins of Vednata Future Retail 153.16 147.85 123.05 101.05 translating into industry leading revenue
turned around from -22.67 to 34% on RBL Bank 150.62 141.02 130.13 128.69 growth of 4.4% over the TTM ended
improving metal prices and a revival in PC Jeweller 150.59 135.82 110.05 106.97 June 2017 in US dollars and 3.5% in
production. Its TTM September 2017 City Union Bank 144.76 140.32 128.88 126.62 constant currency. The focus on
Jindal Stain .Hi 91.58 74.38 60.43 55.21
sales soared 34%. End November 2017, delivering profitable growth at tight
Can Fin Homes 74.99 71.22 70.87 59.6
the zinc mining major announced it is execution cost resulted in the net profit
Prakash Inds. 65.83 59.41 34.31 18.11
making a fresh US$200-million investment margins of 14.9%. The margins were at
Himadri Specialt 51.16 50.03 30.4 20.11
in its Namibian operations as a strategy to the higher end of the guidance band and
Phillips Carbon 50.78 48.16 28.25 19.11
make the plant a regional hub for refining Sobha 50.3 47.7 47 39.4
were a sequential improvement despite
the metal. Zee Entertainment also Sonata Software 45.37 43.16 40.43 38.65 absorbing the full impact of wage hikes
witnessed a near doubling in its OPM 8K Miles 41.08 38.09 34.34 26.86 and promotions in Q2.
despite a 1.30% drop in net sales. Tata Mideast Int. Stl 26.26 15.32 3.12 1.87 Edelweiss Financials’s Q2 of FY
Steel, Cipla and UPL also recorded decent Infibeam Incorp. 21.55 19.72 13.58 12.71 2018 was strong. There was all-round
improvement in the margins. Sanwaria Consum. 21.05 18.61 15.3 11.4 growth in Pat as well as assets.
Despite clear evidence of margin Welspun Enterp 17.2 11.41 6.19 3.96 Consolidated Pat expanded 45% to Rs 209
pressure, a downright contraction in sales Geojit Fin. Ser. 16.87 16.22 15.29 14.97 crore. Excluding insurance, Pat grew 41%
was visible in only six counters: Bajaj Auto, TGV Sraac 16.41 9.54 5.94 3.96 to Rs 234 crore. The return on equity
Bharti Airtel, Dr Reddy’s Laboratories, Panama Petrochem 15 14.54 12.58 11.58 excluding insurance stood at 22.2 % in Q2
Hero Motorcorp, Sun Pharma and Tata PAT per quarter in Rs crore. BSE 500 companies with PAT in of FY 2018 as against 19.9% in Q2 of FY
excess of Rs 10 crore in 09FY 2018 and recording an increase
Motors. The drop, a 10.30% slide, was in PAT for every quarter in TTM have been considered
2017. The asset base consists of balance
severe for Bharti, though it managed to hold sheet assets of Rs 47800 crore and assets
on to the margins extremely well. Dr Reddy 1002 crore in Q2 of FY 2018, registering a under management of Rs 1.43 lakh crore,
was a similar story, with a 3% drop in net massive surge compared with Rs 801 crore totaling Rs 1.90 lakh crore, up 65% over
sales accompanied by steady OPM above in Q2 of FY 2017. For the first time ever, TTM ended September 2016. Pat’s CAGR
18%. Probably the worst hit was Sun Pharma, the bank recorded a four-figure Pat, an is 37% for over 26 quarters now, largely driven
with a 10% dip in sales and a massive drop in increase of 25.1% despite fairly high by the credit business over the last few years.
the OPM from 37% to 23%. provision of Rs 447 crore. Net interest In the last few quarters, the franchise
The top performers were headed by income surged 33.5%, net interest margins and advisory business such as wealth
Bajaj Finserve. It benefitted tremendously (NIM) improved 30 basis points (bps) to management and asset management also
because of a diversified focus on consumer 3.7%. The operating profit (OP) was started showing significant growth
finance, small and medium enterprises, “extremely encouraging” because both the momentum. The asset quality of the overall
commercial funding and rural lending and a numerator and denominator gained to 37.6%. credit book continued to remain under
strong distribution network. The debt-free IndusInd Bank’s Pat surged 25% to Rs control, with gross NPAs at 1.74% and net
company recorded surplus funds of Rs. 6.5 880 crore in Q2 of FY 2018 from Rs 704 NPAs at 0.66%. The provision cover
billion end September 2017. Consolidated core in Q2 of FY 2017 on robust growth in including provision on standard assets was
net worth stood at Rs 193 billion and core business. The bank is targeting to double at 86% end September 2017.
consolidated book value per share at Rs the business by FY 2020 by clients, loans PNB Housing registered a double-digit
1211. Other notable names recording and profit. The strategy is aimed at gaining growth in Q2 of FY 2018. Disbursements
impressive surge in sales were Vedanta, Adani market share with profitability. Net interest rose by 45% to Rs 7385 crore. The net
ports, Eicher Motors, Ambuja Cement and income jumped 25%, while core fee growth interest income soared by 69% to Rs 386
Reliance Industries. also came in a healthy 23%. The loan book crore, while Pat increased 51% to Rs 208
Companies witnessing an improvement quality is stabled, with net non-performing crore. For Q2 of the current fiscal year, the
in profit after tax (Pat) for five consecutive assets (NPAs) at 0.44%. spread in loan is 2.42% and the NIM 3.15%.
quarters are standout candidates, too. Eicher Motors reported Pat of Rs H1 also registered a healthy double-digit
Banking major Yes Bank clocked Pat of Rs 518.02 crore in the quarter ended September growth. Net interest income was up 67% at

14 Dec 18 – 31, 2017 CAPITAL MARKET

InFocus
Rs 730 crore and Pat 68% at Rs 393 crore.
Testing times The spread on loans in H1 was 2.29% and
Pressure on the margin of the Nifty 50 companies is evident in the last 12 quarters. the NIM 3.16%. The cost of borrowing
highlighting the severity of the broad business environment dropped 87 basis points to 7.92% in H1 as
NIFTY 50 PBDIT (Rs cr) NET SALES (Rs cr) OPM (%) against 8.79% in H1 of FY 2017.
The capital adequacy ratio stood at
TTM17 TTM16 VAR% TTM17 TTM16 VAR TTM17 TTM16 18.38%, of which Tier-I capital was 13.99%
Adani Ports 7378.89 5919.82 24.65 9891.38 7589.64 30.33 74.60 78.00 and Tier-II capital 4.39% end September
Ambuja Cem. 3716.67 3371.62 10.23 22168.01 17463.20 26.94 16.77 19.31 2017. It continues to look forward to a
Asian Paints 3267.44 3199.75 2.12 15925.89 14747.57 7.99 20.52 21.70 growth through focus network expansion,
Aurobindo Pha 3667.91 3592.52 2.10 15401.85 14534.23 5.97 23.81 24.72 improvement in cost and maintaining robust
Axis Bank 31562.69 34952.17 -9.70 44556.72 43365.30 2.75 70.84 80.60 asset quality at an efficient borrowing mix.
BPCL 12951.79 13302.71 -2.64 221036.61 181635.07 21.69 5.86 7.32 Vakrangee’s net sales stood at Rs
Bajaj Auto 5567.08 6030.22 -7.68 21583.85 22291.02 -3.17 25.79 27.05 1550.79 crore in Q2 of FY2018 as against
Bajaj Fin. 7589.65 5852.57 29.68 11366.32 8389.08 35.49 66.77 69.76 Rs 959.07 crore in the corresponding quarter
Bharti Airtel 32342.10 36299.60 -10.90 89005.30 99223.50 -10.30 36.34 36.58 a year ago, a sharp growth of 61.70%; Total
Bharti Infra. 4394.80 3885.10 13.12 6387.40 5763.40 10.83 68.80 67.41 revenues from Vakrangee Kendra business
Bosch 2473.87 2843.43 -13.00 10608.38 9939.02 6.73 23.32 28.61 stood at Rs 1437.69 crore, a growth of
Cipla 3075.73 2110.44 45.74 14471.23 13550.75 6.79 21.25 15.57 141.32%. The percentage share of total
Coal India 16785.12 21118.56 -20.52 78721.37 73747.76 6.74 21.32 28.64 revenues of the Vakrangee Kendra business
Dr Reddy’s Labs 2578.00 2678.70 -3.76 14122.60 14544.30 -2.90 18.25 18.42 increased to 95.52%.
Eicher Motors 2863.69 2114.54 35.43 7857.75 6105.15 28.71 36.44 34.64 The technology-driven company is
GAIL (India) 7614.13 6945.66 9.62 49400.99 47581.80 3.82 15.41 14.60 focused on building India’s largest network
HDFC 35685.29 33919.27 5.21 60537.78 54913.87 10.24 58.95 61.77 of last-mile retail outlets to deliver real-time
HPCL 12005.12 11211.26 7.08 200624.17 170780.85 17.47 5.98 6.56 banking, insurance, e-governance, e-
HCL Technologies 11995.46 10716.95 11.93 49294.20 43895.19 12.30 24.33 24.41 commerce and logistics services to the
HDFC Bank 61785.98 55079.41 12.18 74059.00 64993.83 13.95 83.43 84.75 unserved and underserved rural, semi-urban
Hero Motocorp 5287.88 5398.63 -2.05 29613.37 29802.39 -0.63 17.86 18.11 and urban markets.
Hind. Unilever 7212.00 6609.64 9.11 32212.00 30874.82 4.33 22.39 21.41 In its latest earnings call, Vakrangee noted
Hindalco Inds. 5745.89 5173.76 11.06 40417.90 33257.64 21.53 14.22 15.56 that low incremental capex and operational
IOCL 32397.66 32734.21 -1.03 389440.30 327239.19 19.01 8.32 10.00 cost, additions of more and more services,
ICICI Bank 41681.55 42679.00 -2.34 54222.81 53797.65 0.79 76.87 79.33 and increasing targets and volume over a
Indiabulls Hous. 11156.88 9138.59 22.09 11540.29 9248.95 24.77 96.68 98.81 period of time will result in further positive
IndusInd Bank 13939.18 11717.40 18.96 15873.20 13083.24 21.32 87.82 89.56 operating leverage. Therefore, the incremental
Infosys 21855.00 21228.00 2.95 69038.00 66544.00 3.75 31.66 31.90 RoCE is expected to further improve.
ITC 16990.71 16152.00 5.19 40350.72 38042.82 6.07 42.11 42.46 Future Retail: The overall sales growth
Kotak Mah Ban 20076.87 18069.84 11.11 23328.83 21466.57 8.68 86.06 84.18 was 13% in H1 of FY 2018 over H1 of FY
Larsen & Toubro 18760.31 16450.14 14.04 113163.33 105049.21 7.72 16.58 15.66 2017 with consistent margins at 25.7% as
Lupin 3875.22 4717.40 -17.85 16247.81 16012.29 1.47 23.85 29.46 against 24.7%. Hypercity Retail (India) was
M&M 6856.29 6123.92 11.96 45931.93 43388.58 5.86 14.93 14.11 acquired from K Raheja Corp on 5 October
Maruti Suzuki 13302.90 11813.70 12.61 73199.30 62029.70 18.01 18.17 19.05 2017. Hypercity has concentrated presence
NTPC 22774.14 21769.86 4.61 79390.66 74144.98 7.07 28.69 29.36 in large urban markets at key locations.
ONGC 39705.49 34137.80 16.31 79766.36 70665.07 12.88 49.78 48.31 RBL Bank’s operating profit was Rs
Power Grid Cor 25426.46 21570.23 17.88 27775.99 23437.78 18.51 91.54 92.03 303.15 crore in Q1 of FY 2018 as against
Reliance Inds. 62076.00 54387.00 14.14 339183.00 268355.00 26.39 18.30 20.27 Rs 219.09 crore in Q2 of FY 2017, an
St Bk of India 155413.75 150192.59 3.48 231990.94 224152.82 3.50 66.99 67.00 increase of 38%. Pat was Rs. 150.62 crore
Sun Pharma. 6274.84 11261.60 -44.28 27265.12 30258.88 -9.89 23.01 37.22
as against Rs 89.89 crore in Q2 FY 2017,
Tata Motors 35267.95 35186.01 0.23 270334.22 276425.78 -2.20 13.05 12.73
an increase of 68%. The gross NPAs
Tata Steel 15842.36 2593.23 510.91 122489.42 100908.06 21.39 12.93 2.57
increased to 1.44% end September 2017 as
TCS 35905.00 35258.00 1.84 119502.00 114402.00 4.46 30.05 30.82
against 1.10% end September 2016. The
Tech Mahindra 5251.68 4978.70 5.48 29994.98 27673.21 8.39 17.51 17.99
net NPAs increased to 0.78% as against
0.55%. The capital adequacy ratio as per
UltraTech Cem. 6173.21 5882.21 4.95 26988.51 25189.10 7.14 22.87 23.35
Basel III capital regulations was 15.95% as
UPL 3534.01 2669.88 32.37 16753.56 14743.93 13.63 21.09 18.11
against 14.55%. The growth in advances
Vedanta 27698.16 -13831.06 -300.26 81801.22 61004.92 34.09 33.86 -22.67
portfolio continued to be robust at 35%.
Wipro 14115.10 13436.60 5.05 54801.50 54058.20 1.37 25.76 24.86
Net advances were Rs 33576.01 crore as
Yes Bank 16791.23 14064.98 19.38 18034.74 14766.55 22.13 93.10 95.25
against Rs 24,875.06 crore, with all-round
Zee Ent 3644.21 1816.98 100.56 6289.37 6374.32 -1.33 57.94 28.50
PBDIT: Profit before depreciation interest and taxes. OPM: Operating profit margin.
growth observed in all business segments.

Dec 18 – 31, 2017 CAPITAL MARKET 15

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InFocus
PC Jewellers: Revenues grew about 12%
from Rs 7232 crore to Rs 8105 crore in FY
2017 over FY 2016, whereas Pat grew about
8%. The performance was in the backdrop of
major transformational changes across economy
and industry including demonetization, levy
of 1% excise duty on jewelry, mandatory Pan
furnishing for the purchase of jewelry worth
more than Rs 2 lakh.
The structural changes will help the
organized players in the longer run. The share
of the organized players had been increasing
in any case as the consumers are preferring
to buy jewelry from a branded showroom
due to assurance of quality, purity and
availability of a wider design range. The
imposition of goods and services tax regime
from 1 July 2017 further shifts the balance
in favor of the organized sectory.
Outlook
The performance of Nifty 50 companies in
TTM ended September 2017 indicates that
Corporate India managed to weather a rough
period fairly well. Despite pressure on the
margins, substantial price increases at retail
levels were not seen though the recent uptick
in retail inflation is an indication that price
pressures are likely to build up in coming
months. Retail inflation measured by year-on-
year change in the consumer price index re-
corded a seven-month high in October. The
Reserve Bank of India’s (RBI) survey of
households showed inflation expectations firm-
ing up in the latest round for both three months
ahead and one year ahead horizons. Farm and
industrial raw material costs rose in October.
Firms responding to the RBI’s Indus-
trial Outlook Survey expect to pass on the
increase in input prices to their output prices.
Turning to other costs, wage growth in the
organized sector edged up, while rural wage
growth weakened, particularly in agriculture,
noted the central bank in its latest monetary
policy statement.
Meanwhile, the growth of real gross
value added accelerated sequentially in Q2
of FY 2018, after five consecutive quarters
of deceleration. It was powered by a sharp
acceleration in industrial activity. However,
activity in the services sector decelerated,
mainly on account of slowdown in financial,
insurance, real estate and professional
services, and in public administration,
defence and other services following the
large front-loading of government
expenditure in Q1. Despite some
improvement, the construction sector
18
The worst seems to be over
For the Nifty 50 companies, pressure on
the margins is evident in last 12
quarters, probably the toughest period
for them over the last one decade
34
33.04
33
32
31.94
31 30.75 30.63
30 29.7
29
28.93
28
201512 201603 201606 201609 201612 201703 201706 201709
OPM (%) Nifty-50 (standalone)
growth remained tepid due to transitory
effects of the Real Estate Regulation and
Development Act, 2017, and GST
implementation. Growth in the trade, hotels,
transport and communication sub group
remained resilient, in spite of some
slowdown in growth in Q2 as compared with
the previous quarter.
On the expenditure side, the growth of
gross fixed capital formation improved for the
second successive quarter. However, growth
in private final consumption expenditure, the
mainstay of aggregate demand, slowed to an
eight-quarter low in Q2.
The weak patch in private consumption
is critical for the domestic companies. This
is an indication of a rather tepid domestic
environment for the local businesses in
coming months. The RBI has cautioned that
moderation in inflation excluding food and
fuel observed in Q1 of FY 2018 has, by and
large, reversed. There is a risk that this
upward trajectory may continue in the near-
term. However, the central bank has also
noted that despite recent increase in prices
of vegetables, some seasonal moderation is
expected in near months as winter arrivals
kick in. Prices of pulses have continued to
show a downward bias.
The GST Council in its last meeting has
brought several retail goods and services to
lower tax brackets, which should translate
into lower retail prices, going forward. On
the positive side, there has been some pick
up in credit growth in recent months.
Recapitalisation of public sector banks may
help improve credit flows further. While
there has been weakness in some
components of the services sector such as
real estate, the Reserve Bank’s survey
indicates that the services and infrastructure
sectors are expecting an improvement in
demand, financial conditions and the overall
business situation in Q4.
Companies that have weathered the last
one year strongly have successfully battled a
sudden squeeze in demand due to recall of 86%
of the currency and have also managed to ride
the supply-side pressures triggered after the
roll-out of the GST. Tepid economic growth,
poor credit offtake and soaring commodity
31.33
prices were other critical headwinds.
29.79
However, the stock market was buoyant
throughout this period thanks to generous
buying by foreign institutional investors,
soaring global equities and a tremendous
amount inflow through the domestic mutual
funds. This might have played a part is
rewarding even the earning laggards over last
few months as local benchmark equity indices
managed to score a series of fresh highs. The
Nifty is up around 27% year to date.
How does it stack up for the investors
from hereon then? Companies that have
managed to do well in operational terms and
showen a constant increase in profit in last
one year are likely to continue their
outperformance in the coming quarters.
Investors should be focusing upon them
despite bloated valuations.
In case a correction takes place in broad
markets around the start of New Year, these
companies should be the preferred ones.
These players seem to be adapting fairly
well to the unwavering shift towards
formalization of the economy.
However, a further spurt in commodity
prices and failure of the local private
consumption cycle to pick up further
from current levels could be the factors to
watch out.
The latest uptick GDP reflects that the
local economy has certainly turned the
corner. A continued and steady improvement
in real economic activity can augur well for
the financial markets. Companies that did
well in last one year could warrant merit by
local investors. The shifting pattern in
institutional forces is also positive for these
stocks. The last one year has witnessed
tremendous inflows in local mutual funds.
Domestic funds recorded total inflows of
Rs 1.69 lakh crore in CY 2017 the highest
so far. Assets under management were Rs
22.79 lakh crore end November 2017.
Companies that encountered powerful
forces like demo, GST and weak economy
would be liked more by the mutual funds
in the next few quarters too.
— Sachin Dabhade
Dec 18 – 31, 2017 CAPITAL MARKET
InFocus
Stocks
The NextGen
Promoters of many companies have passed on the baton
to young blood, who might have different vision for growth
Jeff Bezos emerged as the richest person in
the world in October 2017. He dethroned
Microsoft Chairman Bill Gates in his ascent
on the wealth charts. The first-generation
entrepreneur’s online retail venture Amazon,
started from his garage, is now worth around
US$ 550 billion. Bezos’s holding is about
US$ 90 billion.
The best part about Amazon is its
scalability. No geographical boundaries ap-
ply. Founded in 1994, it reported total in-
come of US$ 136 billion in the calendar year
(CY) 2016 compared with US$ 107 billion
in CY 2015. Net profit was US$ 2.4 billion
as against US$ 596 million in CY 2015 and
loss of US$ 241 million in CY 2014.
There is some scepticism about the
sustainability of Amazon’s business model
and market value. But doubts existed a de-
cade ago as well. However, the uncertainty
makes little difference to Bezos. Ups and
downs in business are something that no
one can escape.
One noticeable fact about Bezos is his
age. He is just 53 years, fairly young to be-
come the richest person in the world. Inter-
estingly, in 1995, Bill Gates was 41 years
when he became the richest person in the
world. He held the position for several con-
secutive years.
The story of Mark Zuckerberg, co-
founder of Facebook, is even more dramatic.
At the age of 33, his net worth is about US$
74 billion. The all-pervasive Facebook ac-
quired another all-pervasive internet prop-
erty Whatsapp in CY 2014 for a stunning
valuation of US$ 22 billion in a cash-and stock
deal, making Whatsapp founders Jan Koum
(age 41) and Brian Acton (age 45) became
billionaires. According to Forbes, Koum’s net
worth is estimated to be around US$ 10 bil-
lion and that of Acton US$ 7 billion.
There are several grand stories like that of
Bezos and Zuckerberg. The era perhaps be-
longs to the young and restless. Investors are
betting on this new generation to create wealth.
India, too, has multiple examples of
young leaders creating significant value in
Dec 18 – 31, 2017 CAPITAL MARKET
Star trek
At the age of 26, Siddhartha Lal started
Eicher Motors in CY 2000 and has built a
fortune on the twin businesses of
motorbikes and commercial vehicles
Face Value: Rs 2
CMP Rs 28610 as on 12 December 2017. One-year return: 28.79%
S&P BSE Sensex one-year return: 25.32%
the last two decades. Eicher Motors is one
such story. Lead by managing director and
CEO Siddhartha Lal, Eicher, is on a dream
run. At the age of 26, Lal assumed responsi-
bilities at the company in CY 2000. He di-
vested several businesses to focus on build-
ing fortunes on the twin businesses of mo-
torbikes and commercial vehicles.
Eicher owns the iconic Royal Enfield
business that is the leader in the premium
segment of the market in the country. The
oldest motorcycle brand is in continuous
production in the world. It has witnessed
significant increase in demand in the domes-
tic market. Efforts are on to replicate the
business model in the global mid-sized mo-
torcycle segment.
VE Commercial Vehicles, Eicher’s joint
venture (JV) with the Volvo group, designs,
manufactures and markets trucks and buses.
The attempt is to modernize commercial
transportation in the country and other de-
veloping markets. Another JV with US-
based Polaris Industries Inc, Eicher Polaris
Pvt Ltd, was formed in CY 2012 to launch
Multix, a multiple purpose vehicle for busi-
nessmen in June 2015.
Eicher reported its highest-ever turnover
of Rs 7033 crore in the financial year ended
March 2017 (FY 2017). The Royal Enfield
models commanded a market share of 95% in
the domestic mid-size motorcycles segment,
with engine capacity between 250cc – 750cc,
in the fiscal year. The good show continues.
The brand registered the best-ever quarterly
sales volumes, with a growth of 21.7% in the
September 2017 quarter over a year ago. Also,
it posted the highest-ever net quarterly in-
come, with a growth of 23.5%.
Planned capital expenditure stands at
Rs 800 crore for the current fiscal year.
Commercial production of Royal Enfield
commenced at its third manufacturing fa-
cility at Vallam Vadagal near Chennai in
August 2017. The total available capacity
of Royal Enfield will reach 8.25 lakh per
annum by March 2018. Peak capacity will
be nine lakh by March 2019, post ramp-
up. As many as 6,66,493 Royal Enfields
were sold last fiscal year.
To establish a global footprint, 30 ex-
clusive stores have been opened in the
US, Colombia, the UK, the UAE, France,
Spain, Indonesia, Thailand, Philippines,
Australia, Portugal, Austria, Malaysia,
Brazil and Vietnam.
Eicher’s stock price has appreciated 613
times since CY 2000. According to Forbes,
the Lal family’s current net worth is about
US$ 7 billion.
Investors can scout for young blood in
their quest for fortune in the stock market.
There are several advantages of this theme.
First, in the Indian context, succession plan-
ning might already be in place. With a major-
ity of businesses owned and managed by the
business families, a smooth transition from
one generation to another is critical. Infight-
ing or disagreements within the promoter
group can distract businesses and destroy
wealth. A significant bandwidth of the man-
agement and promoters can be wasted in suc-
cession battles rather than running businesses.
The business generation of 1990s, the
period when liberalisation kick-started and
transformed the Indian economy, is up for
retirement. Considering the fact, the com-
ing years are crucial for India Inc as a new
generation takes over the reins. Several
companies owned by business families can
be seen preferring young professionals to
run their businesses.
In several organizations, the next gen-
eration is already in place. In a way, this is a
positive as the leadership issues have been
taken care of for the next couple of decades,
19
InFocus
imparting stability to the business. The soft
issue, though not measurable in quantitative
terms, is critical for any business.
Another advantage of young leaders is
that they can bring in fresh perspective. Not
burdened with biases, they might be more
receptive of new ideas and concepts. Young
leaders can usher new business strategies.
This is necessary considering the pace at
which the world at large is moving. A mag-
nificent idea of today becomes redundant a
few months down the line. The new genera-
tion can have a critical look at the existing
businesses and venture into new areas as
well. They might reorient and restructure
existing businesses to turn them around or
improve the performance.
India is one of the youngest countries in
the world. About half of its population is
under the age of 25 years and around two-
third is less than 35 years of age. A new-
generation leadership is better placed to un-
derstand the aspirations of such a young
population and offer products and services
that are relevant to them.
Yet, it is high-risk strategy, considering
the fact that new leaders are untested and
raw. The desired level of information about
them might not be readily available. Analyst
meet, conference calls, media interactions
and annual general meetings might aid in get-
ting to know the young managers.
Investments based on the theme of young
leaders should be with a medium- to long-
term perspective. Exposure for short-term
gains should be avoided. A few of the select
companies might be facing setbacks at the
moment due to company- or industry-spe-
cific reasons. However, again, it is part of
the business. Investors comfortable with
swings should consider such stocks for in-
vestment. Where there are professional man-
agers, there could be sudden exits, resulting
in the collapse of the investment thesis. Such
events are unpredictable.
Capital Market picked companies headed
by young leaders (below 50 years). Equity
is essentially a long-term product. There-
fore, visibility of leadership is critical.
Avenue Supermarts, led by CEO and
Managing Director Neville Noronha, is one
of the largest food and grocery retailers in
the country and owns the D-Mart brand.
Since its sensational listing (100 times over-
subscription and debuting at 100% pre-
mium), the stock is up 3.74 times from its
IPO price of Rs 299.
20
Sparkling show
Godrej Properties, led by Executive
Chairman Pirojsha Godrej, reported the
best-ever half year results for the period
ended September 2017
Face Value: Rs 2
CMP Rs 712 as on 12 December 2017. One-year return: 136.42%
S&P BSE Sensex one-year return: 25.32%
D-Mart offers a range of home and per-
sonal products under one roof. It offers a
wide range of products with a focus on foods,
FMCG and general merchandise & apparel
product categories. D-Mart stores stock
home-utility products including food, toi-
letries, beauty products, garments,
kitchenware, bed and bath linen and home
appliances and others.
The first store was opened in Mumbai in
CY 2002. There were 136 stores, with retail
business area of 4.2 million square feet (sq
ft), across Maharashtra, Gujarat, Andhra
Pradesh, Karnataka, Telangana, Tamil Nadu,
Madhya Pradesh, Rajasthan, NCR,
Chhattisgarh and Punjab end September
2017. Five stores were added in H1 of FY2018.
Real estate developer Godrej Proper-
ties, led by Executive Chairman Pirojsha
Godrej, reported the best-ever half year re-
sults for the period ended September 2017
by business development. Eight new projects
were added in this period. Four new projects,
with saleable area of 12.6 million sq ft, were
added in Q2 of FY2018.
Residential, commercial and township
development is spread across 147 m sq ft
are spread across 12 cities and 64 projects.
Over 15 m sq ft of real estate projects have
been delivered in the last four years. The
focus of the asset-light business model is on
joint development projects. Key ongoing
projects comprise Godrej BKC in Mumbai,
The Trees at Vikhroli in Mumbai, Godrej
Platinum in Bangalore and Godrej Summit
in Gurgaon. The Godrej group has access to
the group’s land bank across the country
including Vikhroli in Mumbai. Mutual funds
owned 2.52% stake end September 2017.
Balance-sheet leverage has moderated to
some extent, with a net debt-to-equity ratio
of 1.51 times (net debt of Rs 3122 crore)
end September 2017 as against a net debt-
to-equity ratio of 1.75 times (net debt of Rs
3,499 crore) end September 2016.
Godrej Consumer Products, another
Godrej group company, is lead by Execu-
tive Chairman Nisaba Godrej, sister of
Pirojsha. The consumer goods company is
present in three emerging markets of Asia,
Africa and Latin America across three cat-
egories of the home- and hair-care and per-
sonal-wash segments as part of the 3x3 ap-
proach for international expansion. Revenues
from international markets accounted for
48% of consolidated revenues in FY 2017.
Africa contributed 44% and Indonesia 33%
to international revenues.
The largest player in the country’s and
the second largest player in Indonesia’s in-
secticides market is also a leading player in
the hair color segment in India and Sub-Sa-
haran Africa and among the leading players
in Latin America. The number two seller by
volumes in the soap category in India is the
largest air-freshener and wet tissue seller in
Indonesia. Flagship brands include Godrej
No 1, Good Knight, Hit, Cinthol and Ezee.
The net debt-to-equity ratio marginally
moderated to 0.68 times end September 2017
from 0.78 times end FY 2017.
Capital First , headed by V
Vaidyanathan, is among the fastest grow-
ing NBFCs, with assets under manage-
ment (AUM) of Rs 22973 crore end Sep-
tember 2017. The specialist in providing
debt financing to self-employed entrepre-
neurs, micro small and medium enter-
prises and consumers offers long-term
loans secured by property and to two-
wheelers and consumer durables.
Of the total AUM, around 93% of the
loan assets are in the consumer and MSME
financing space. There is presence in 228
locations and on cumulative basis financed
over 51 lakh customers. The gross non-per-
forming assets (NPAs) stood at 1.63% and
the net NPA 1% of the advances end Sep-
tember 2017. Capital adequacy remained
healthy at 20.3% end March 2017. Sub-
sidiary Capital First Housing’s AUM
crossed Rs 1329 crore in FY 2017.
The triple A-rated lender has reduced
its dependency on banks for funding to pare
the cost of funds. The share of bank loans
Dec 18 – 31, 2017 CAPITAL MARKET
InFocus

The young and the restless

In several organizations, the next generation is already in place. In a way, this is a positive as the leadership issues have been taken
care of for the next couple of decades, imparting stability to the business

COMPANIES HIGHLIGHTS
Lupin Managed by sister Vinita Gupta (CEO) and brother Nilesh Gupta (Managing Director), the pharmaceutical producer delivers
a wide range of branded and generic formulations, biotechnology products and bulk drugs globally. The focus is on
cardiovascular, diabetology, asthma, pediatric, central nervous system, gastrointestinal, anti-infective and anti-inflamma-
tory drugs. In a big setback, the formulation manufacturing facilities in Goa and at Indore (Pithampur unit II) in Madhya
Pradesh received warning letters from the US Food and Drug Administration in November 2017. As a result, the US
business prospects are likely to be hurt.

Info Edge One of the leading internet-based businesses, with strong balance sheet and track record of profitability, manages a portfolio
of brands across different domains that primarily provide online classified services. Apart from flagship brand Naukri.com
(online recruitment), other brands include 99acres.com (online real estate), jeevansathi.com (online matrimonial) and
shiksha.com (online education information services). Key strategic investments in the internet businesses include
Zomato.com (online restaurant classifieds and food delivery) and policybazaar.com (online insurance). Hitesh Oberoi, co-
promoter, is the managing director and CEO.

Oberoi Realty Managed by Chairman and Managing Director Vikas Oberoi, the Mumbai-centric real estate developer focuses on premium
developments in residential, office space, retail, hospitality and social infrastructure verticals. So far 39 projects across
Mumbai have been successfully delivered. Residential area of around 136.50 lakh square feet is under development
across multiple projects. GlaxoSmithKline Pharmaceuticals’ land, admeasuring 60 acres and located at Thane,
Maharashtra, is being bought for Rs 555 crore.

Reliance Nippon Life Asset Formerly known as Reliance Capital Asset Management, the asset manager of Reliance Mutual Fund has Reliance
Capital and Nippon Life Insurance Company as the promoters, together holding 85.75% equity stake. Nippon Life Insurance
Company is Japan’s leading private life insurer and offers a wide range of financial products. Sundeep Sikka is the
executive director and CEO.

Isgec Heavy Engineering The multi-product provider of engineering solutions mainly serves boilers and power plants, sugar plants and air pollution
control equipment. There is majority stake in joint ventures with Hitachi Zosen Corp of Japan, Amec Foster Wheeler North
America Corp and Titan Metal Fabricators of the US and Redecam of Italy. Aditya Puri is the managing director.

Ajanta Pharma Managed by joint Managing Director Rajesh Agrawal and Managing Director Yogesh Agrawal, the pharmaceutical producer
with over 200 products in India, focuses on cardiology, ophthalmology, dermatology and pain management. At present,
Africa and Asia are the two key markets. The thrust is now on the US market, where there are plans to file 12 to 15
products for regulatory approval in the current fiscal. Already, 15 products have been launched in the US. The phase II of a
new plant at Guwahati in Assam is expected to be commissioned by March 2018.

PI Industries One of the leading agrochemical makers operates three formulation facilities and eight multi-product plants at three
manufacturing locations. There are partnerships with leading global companies to provide solutions across the fields of
research and development, regulatory services, manufacturing services, application development, marketing, distribution
and customer connect initiatives. Mayank Singhal is the managing director and CEO.

Aarti Drugs There is strong presence in the anti-diarrhea and anti-inflammatory therapeutic groups. The product portfolio includes
vitamins, anti-arthritis, anti-fungal, antibiotics, Ace inhibitors, anti-diabetic, anti-cholinergic, sedatives and anti-depressant
drugs. The plan is to focus on the regulated markets. A tie-up has been entered into with a European distributor on profit-
sharing basis to sell finished dosages. Rashesh Gogri is the managing direct.

Syngene International
India’s largest contract research organization provides discovery and development services for novel molecules
across multiple platforms including small molecules, large molecules, antibody-drug conjugates and oligonucleotides.
The infrastructure is spread across 1.3 million square feet. There is a team of about 3,100 scientists. As many as 293
clients including global pharmaceutical companies and industry leaders in segments such as biotechnology, nutrition,
animal health, consumer goods and specialty chemicals were serviced last fiscal. Jonathan Hunt is a whole-time
director and CEO.

Ramkrishna Forgings
Source: Companies
Among the leading forging makers in the country primarily caters to the automotive segment. Supplies have com-
menced to tier-1 customers in the US. Also, inroads have been made into the European market by signing a multiyear
agreement with a leading original equipment manufacturer to supply services to make commercial vehicles. To
strengthen global presence, marketing representatives have been appointed in key markets of Europe and Latin
America. Naresh Jalan is the managing director. .

Dec 18 – 31, 2017 CAPITAL MARKET 21

InFocus

in the overall loan composition declined to
52% end September 2017 compared with
68% a year ago. Non-convertible deben-
tures contributed 43.5% and commercial
paper 4.5%. Key shareholders include
Warburg Pincus, GIC Sovereign Wealth
Fund (Singapore), Government Pension
Fund Global (Norway), Goldman Sachs
Asset Management (US), Birla Asset Man-
agement, HDFC Standard Life Insurance
and HDFC Mutual Fund.
Bajaj Finserv has three diversified fi-
nancial services subsidiaries Bajaj Finance,
Bajaj Allianz General Insurance (Bajaj Gen-
eral) and Bajaj Allianz Life Insurance (Bajaj
Life). Bajaj Finserv is debt-free and has sur-
plus funds of Rs 650 crore. Sanjiv Bajaj is
the managing director.
Bajaj Finance (stake 55.13%) is present
in consumer finance, SME, commercial and
rural lending, with AUM of Rs 72,100 crore.
and net NPA of 0.51% end September 2017.
The leading player in consumer electronics
financing is present in 471 locations, with
over 46,000 active points of sale. Bajaj Gen-
eral (stake 74%) offers a wide range of gen-
eral insurance products across the retail and
corporate segments. The second largest pri-
vate general insurer by gross premium in FY
2017 reported return on equity of 23% in
FY 2017 and 22.5% in FY 2016. Bajaj Life
(stake 74%) is among the top five private
sector life insurers considering new business
in FY 2017. Bajaj Life’s AUM were Rs
51100 crore and net worth Rs 8900 crore
end September 2017. Both the insurance
ventures are highly profitable.
JM Financial is led by Managing Di-
rector Vishal Kampani. The financial ser-
vices provider offers a wide range of capital
market services to companies and individual
clients. Businesses include investment bank-
ing, institutional equity sales, trading, re-
search and broking, private and corporate
wealth management, equity broking, port-
folio management, asset management, com-
modity broking, fixed income broking, non-
banking finance products, private equity and
asset reconstruction.
Fund-based activities contributed 68%
to the overall revenues, while investment
banking, wealth management and securities
business comprised 25% in the September
2017 quarter.
The AUM of the wealth management
business stood at Rs 27289 crore end Sep-
tember 2017, representing growth of 25%.
The securities business covers 176 stocks
and over 200 clients including institutional
investors such as foreign institutional inves-
tors, hedge funds, sovereign funds, domes-
tic mutual funds and insurance companies.
The lending book stood at Rs 6102 crore

The inheritors take charge

India has multiple examples of young leaders creating significant value in the last two decades. With a majority of businesses owned and
managed by the business families, a smooth transition from one generation to another is critical
COMPANY CMP MCAP 52-WEEK MUTUAL FUNDS Debt- TTM NET SALES TTM APAT P/E P/BV DY
(Rs) (Rs cr) HIGH LOW HOLDING EQUITY (Rs cr) (%) (Rs cr) (%) RATIO (%)
(Rs) (Rs) AS ON (%) RATIO
Aarti Drugs 545.1 1300.3 665.0 456.3 201709 3.68 1.25 1166.1 -1.6 73.6 -5.2 17.7 3.01 0.18
Ajanta Pharma 1279.6 11262.3 1922.0 1106.0 201709 5.09 0.03 2005.3 6.4 483.3 2.2 23.3 6.26 1.02
Asian Granito India 490.4 1475.5 532.4 203.9 201709 3.99 0.9 1085.5 5.9 50.5 46.7 29.2 3.46 0.27
Avenue Supermarts 1121.25 69975.47 1289 558.75 201709 3.36 0.5 13556.4 NA 614.35 NA 149.18 12.53 0
Bajaj Finserv 4964.85 79006.54 5835 2541 201709 4.01 2.84 27468.37 37.97 2456.05 18.74 33.21 4.24 0.03
Capital First 681.3 6732.0 839.0 510.8 201709 10.65 6.5 3166.6 34.7 277.4 39.6 24.3 2.78 0
Eicher Motors 28204.8 76820.5 33484.0 20210.0 201709 4.32 0.01 7857.8 28.7 1855.3 31.5 41.4 12.78 0.35
Godrej Consumer Products 1001.6 68242.0 1083.7 706.6 201709 0.59 0.72 9441.8 7.3 1328.0 8.5 51.4 12.78 0.75
Godrej Properties 702.2 15201.1 747.0 286.9 201709 2.52 1.88 1690.5 39.7 207.4 149.0 73.3 7.33 0
Info Edge (India) 1249.0 15176.8 1339.5 796.4 201709 14.41 0 842.2 8.5 227.6 16.2 0.0 9.52 0.24
ISGEC Heavy Engineering 7048.6 5182.8 7249.0 4388.0 201709 4.21 0.45 2812.6 -21.6 166.9 -8.3 23.9 4.13 0.26
JM Financial 142.7 11374.5 191.0 62.6 201709 3.18 2.8 2556.7 46.4 543.5 25.9 20.9 3.22 0.45
Lupin 809.1 36565.9 1572.3 807.0 201709 6.24 0.61 16247.8 1.5 1826.4 -35.2 20.0 2.62 0.93
Marico 306.4 39542.8 347.8 238.6 201709 1.55 0.13 5946.3 -1.0 783.5 -0.9 50.5 14.42 1.14
Mcleod Russel India 207.1 2266.9 248.3 137.2 201709 13.52 0.55 1471.5 0.4 57.7 85.5 46.6 1.39 0.09
Oberoi Realty 466.0 15825.5 529.0 277.3 201709 1.24 0.12 1105.9 -30.1 382.2 -19.0 41.4 2.71 0.43
P I Industries 965.4 13312.9 989.0 674.2 201709 15.46 0.1 2207.7 -2.9 409.6 3.7 29.3 8.18 0.16
Radico Khaitan 273.7 3645.2 309.6 106.0 201709 10.73 0.87 1665.6 -0.5 90.6 8.0 44.6 3.49 0.29
Ramkrishna Forgings 751.7 2449.9 825.0 266.0 201709 13.77 1.83 1092.2 37.5 49.6 140.7 127.1 3.55 0.12
Reliance Nippon Life
Asset Management 254.2 15554.0 298.7 237.3 201711 1.25 0 1322.0 NA 405.0 NA 44.4 6.27 1.59
Syngene International 539.5 10789.0 663.3 430.0 201709 1.44 0.7 1249.7 5.5 291.7 4.1 37.0 7.63 0.19
CMP (current market price) is closing on 6 December 2017. Consolidated financials considered wherever available. FY : Financial year. NA : Not available. P/E : Price to earnings. P/BV : Price to book value.
DY : Dividend yield. TTM APAT : Trailing 12-month adjusted profit after tax. Financial year ended March 2017. TTM ended September 2017.
Source: Capitaline databases

22 Dec 18 – 31, 2017 CAPITAL MARKET

InFocus
end September 2017, excluding short-term
IPO financing.
The assets business comprises mutual
funds (AUM of Rs 13952 crore), private
equity and real estate fund (Rs 597 crore).
The focus of the asset reconstruction busi-
ness (AUM Rs 12469 crore) is resolution
of existing assets and being selective on ac-
quiring new assets.
Marico is among the country’s leading
consumer products companies, operating in
the beauty and wellness space. There is pres-
ence in 25 countries across emerging mar-
kets of Asia and Africa. There are multiple
brands in categories of hair and skin care,
edible oils, health foods, male grooming, and
fabric care. In India, Marico products are
used by one in every three Indian. The house-
hold brands comprise Parachute, Parachute
Advansed, Saffola, Hair & Care, Nihar,
Nihar Naturals, Livon, Set Wet, Mediker and
Revive. The distribution network reaches
every town with population of 10,000.
International brands comprise Para-
chute, HairCode, Fiancée, Caivil, Hercules,
Black Chic, Code 10, Ingwe, X-Men and
Thuan Phat. These are localized considering
lifestyle needs. Around 30% of the revenues
are generated from international markets.
The ambition is to be a leading emerging
market MNC, with a leadership position in
two core categories of nourishment and male
grooming in five chosen markets in Asia and
Africa, by the fiscal year ending March 2022
(FY 2022). The target is to double revenues
from FY 2017. The aim is for volume growth
of 8-10% in the current fiscal, backed by in-
creased investment in core portfolio, new prod-
uct launches, distribution expansion, pricing
and cost management. Professional Saugata
Gupta is the managing director and CEO.
Asian Granito is the fourth largest In-
dian ceramic tile maker and one of the larg-
est manufacturers of polished vitrified and
polished glazed vitrified tiles, wall and floor
tiles, composite marble and quartz stone in
the country. There are eight manufacturing
facilities in Gujarat, with a total capacity of
around one lakh square meters per day in-
cluding outsourcing capacity of around
18,000 square meters per day. The aim is to
increase the capacity of high-margin value-
added products such as double charge tiles
by 50% by FY 2021. Capital expenditure
will be around Rs 35-40 crore. The expan-
sion will give a boost of around Rs 150 crore
to the top-line. Kamlesh Patel is the chair-
Dec 18 – 31, 2017 CAPITAL MARKET
Diversified presence
Bajaj Finserv has three financial
services subsidiaries Bajaj Finance,
Bajaj Allianz General Insurance and
Bajaj Allianz Life Insurance
Face Value: Rs 2
CMP Rs 5106 as on 12 December 2017. One-year return: 71.58%
S&P BSE Sensex one-year return: 25.32%
man and managing director.
The pan India marketing and distribu-
tion network consists of 5,650 dealers and
sub-dealers and 196 showrooms including
16 display centers. The share of retail sales
expected to reach 50% by FY 2020 as against
37% in FY 2017. The target is to reach
towns with population of 20,000. Exports
go to around 53 countries. The plan is to
double exports from Rs 60 crore in FY 2017
to Rs 150 crore over the next two years.
Vision 2021 aims to achieve revenues of Rs
2000 crore, contribution from premium and
value added products of 50% and increase
in the dealership network to over 8,000 and
retail stores to over 500.
From 15 November 2017, the GST rate
on tiles and marble has been reduced to
18% from 28%.
Mcleod Russel India, part of the
Williamson Magor Group, is the world’s larg-
est producer of tea in the private sector, with
tea estates in India, Vietnam, Uganda and
Rwanda. Agregate land under tea plantation
is around 39,603 hectares across 64 tea es-
tates. The cultivator, processor and seller of
bulk teas mainly produces CTC (90%) and
orthodox black teas (10%). Annual output is
around 115 million kilos of tea.
One of the world’s largest tea exporters,
with customers spread across Asia, Europe,
Africa, the Middle East and North America,
operates through various subsidiaries in In-
dia and overseas. Around 79% of the rev-
enues come from Indian operations and 21%
from Africa (Uganda, Rwanda) and Vietnam.
Around 2% of the aggregate bush popu-
lation is uprooted each year and replenished
with fresh planting. At present, over 46%
of the gardens are less than 30 years old,
with significantly higher yields, far better
compared with the industry averages. Mu-
tual funds owned 13.52% stake end Sep-
tember 2017. Aditya Khaitan is vice chair-
man and managing director.
Radico Khaitan is among the oldest
and one of the largest manufacturers of In-
dian-made foreign liquor (IMFL) in India.
The brand portfolio includes After Dark
Whisky, Contessa Rum, Magic Moments
Vodka, Morpheus Brandy, Old Admiral
Brandy and 8PM Whisky. Currently, there
are four millionaire brands: 8PM Whisky,
Contessa Rum, Old Admiral Brandy and
Magic Moments Vodka. Each brand sells
over a million cases per year. Abhishek
Khaitan is the managing director. Mutual
funds owned 10.73% stake.
One of the largest providers of branded
IMFL to the canteen stores department en-
joys the advantage of significant entry bar-
riers in the business. There are three distill-
eries at Rampur in Uttar Pradesh and at
Aurangabad in Maharashtra, a 36% joint
venture. Total owned capacity stood at 157
million liters. As many as 28 contract bot-
tling units are spread across the country.
Exports account for 10% of the revenues.
As part of the business strategy, the
focus is on premium portfolio. Six new pre-
mium brands were launched in the past five
years. Total debt declined to Rs 799 crore
end March 2017 as against Rs 959.7 crore a
year ago. Importantly, the aim is to repay
all long-term borrowings by FY 2019.
Conclusion
In the fast changing word, young leaders can
add significant value to businesses by adopt-
ing new strategies. They provide stability
over the medium to long term.
However, it is difficult to get a sense of
the real decision-makers. The face of a com-
pany might be different from the one who
is calling the shots. Availability of infor-
mation about young leaders is a key bar-
rier. Also, attrition could be an uncertainty
where there are professional managers at
the helm.
The stock market is at historic peak. The
shortlisted stocks might be expensive on
multiple parameters. Investors can keep
these stocks on their radar and take expo-
sure at comfortable valuation.
— Venkatesh S
23
MarketWatch
MarketWatch
Stocks - Mid caps

Sizzlers and dampeners

A software solutions provider soars on order win and launching of a retail outlet boosts
a building products maker but a defence gear supplier slides despite opening a new store
COMPANY (FV) CMP MCAP VARIATION (%) HOLDING(%) RESERVES RATIOS
SECTOR (Rs) (Rs cr) FORTNIGHT 1-YEAR PROMOTERS DOM. FII (Rs cr) DEBT-EQUITY INT COVER P/E
Safari Industries (India) (Rs 2) 562 1250 25 206 58 0 6 96 1 5 122

Plastic products Net profit of the travel goods maker surged 265.6% to Rs 3.51 crore on 19.2% rise in net sales to
Beta: -0.6 Rs 88.16 crore in Q2 September 2017 over Q2 September 2016.

Ramco Systems (Rs 10) 512 1562 20 70 55 9 12 510 0 -11 107

IT - Software The enterprise software solutions provider won an order from Al Jazeera Support Services Company,
Beta: 1.23 a closed joint stock company providing rental manpower needed by the government, business sectors
and individuals, to implement ERP for services suite.

MIRC Electronics (Re 1) 49 1030 12 248 58 0 2 130 1 1 57

Consumer Durables The consumer durables maker’s board approved issue of 1.92-crore equity shares and 1.92-crore
Beta: 1.24 warrants convertible into equity shares on a preferential basis at Rs 37.53 to non-promoters to
augment the long-term working capital and corporate requirement.

Somany Ceramics (Rs 2) 905 3834 8 74 52 18 6 513 1 7 41

Ceramic Products The sanitary-ware maker issued commercial paper of Rs 20 crore dated 7 December 2017 and maturing
Beta: 0.72 on 5 February 2018. The issuance is to reduce high interest bearing cash credit limits and, in turn, bring
down the cost of borrowing.

UFO Moviez India (Rs 10) 503 1389 7 17 28 23 4 551 0 10 24

Media - Print/TV/Radio Consolidated net profit of the media company fell 47.77% to Rs 10.20 crore on 13.04% decline in total
Beta: 0.97 income from operations to Rs 139.18 crore in Q2 September 2017 over Q2 September 2016.

Prime Focus (Re 1) 108 3233 7 52 35 0 10 527 3 1 34

Entertainment The integrated media services company’s board approved preferential issue of share warrants of
Beta: 1.49 Rs 330 crore to a promoter entity and balance Rs 30 crore to a non-promoter investor. The funds will
be used largely for debt reduction. The allotment will total 3.11 crore warrants at a price of Rs 106 per
share, with a right by the warrant holder to subscribe for one ordinary share per warrant on or after 1
April 2018 but not later than 18 months from the date of issue.

Shankara Building Prod (Rs 10) 1734 3961 6 NA 56 9 11 371 1 3 58

Trading The organized retailer of home improvement and building products announced the opening of the
Beta: 0.61 124th store under the Shankara Buildpro brand at Ramnagra, Karnataka. The store of around 4,214
square feet houses a diverse basket of product offerings.

Jet Airways (India) (Rs 10) 678 7700 6 91 51 11 6 -5013 0 1 42

Air Transport Service Net profit of the aviation firm dropped 91% to Rs 49.63 crore despite 3.2% growth in net sales to
Beta: 1.22 Rs 5626.61 crore in Q2 September 2017 over Q2 September 2016.

24 Dec 18 – 31, 2017 CAPITAL MARKET

MarketWatch

COMPANY (FV) CMP MCAP VARIATION (%) HOLDING(%) RESERVES RATIOS

SECTOR (Rs) (Rs cr) FORTNIGHT 1-YEAR PROMOTERS DOM. FII (Rs cr) DEBT-EQUITY INT COVER P/E
Sonata Software (Re 1) 236 2478 4 41 31 2 12 574 0 26 15

IT - Software The IT solutions firm’s wholly owned subsidiary Sonata Europe entered into an agreement to acquire
Beta: 1.34 15% stake in Izara ApS for US$96,000 in cash. The Danish IT consulting company services clients in
the US and Nordic markets.

Bliss GVS Pharma(Re 1) 199 2053 4 18 60 0 7 473 0 10 16

Pharmaceuticals Consolidated net profit of the pharmaceuticals producer surged 88.22% to Rs 39.49 crore on 40.24%
Beta: 0.9 growth in income from operations to Rs 224.43 crore in Q2 September 2017 over Q2 September 2016.

Steel Strips Wheels (Rs 10) 999 1555 3 66 57 3 0 526 2 3 23

Auto Ancillaries The automotive steel wheels maker bagged export order for supply of 18,500 steel wheels for the
Beta: 0.63 European Union caravan market. Total wheel rim sales grew 8% to 12.92 lakh units in November 2017
over November 2016. Net turnover rose 20% to Rs 138.85 crore, driven by growth in the truck segment.

Balaji Amines (Rs 2) 657 2129 3 109 55 1 4 347 0 11 27

Chemicals The Department of Industries, Energy and Labour, Mantralya, Mumbai, conferred mega project status
Beta: 1.05 to the expansion project being under taken by the chemical manufacturer at an outlay of Rs 296 crore
at MIDC Chincholi, Solapur, Maharashtra.

Fiem Industries (Rs 10) 941 1239 3 -11 64 7 15 410 1 3 31

Auto Ancillaries The automotive components maker signed an MoU with Aisan Industry Co., Japan, and Toyota
Beta: 0.55 Tsusho Corporation, Japan, to establish a joint venture in India to manufacture fuel pump module and
IC connector assembly for two-wheelers and three-wheelers. Fuel pump module will become manda-
tory for two- and three-wheelers from April 2020 in the Bharat Stage VI regime.

Cyient (Rs 5) 570 6414 0 13 22 12 50 2061 0 27 17

IT - Software The software solutions provider entered into a non-exclusive business alliance with EA Technology,
Beta: 0.58 an energy technology player headquartered at Chester, UK, to jointly pursue business opportuni-
ties globally by providing asset management and decision-support solutions and services for
electric utilities.

Gayatri Projects (Rs 2) 209 3707 -1 65 47 3 37 725 6 1 0

Construction The infrastructure and construction company’s board approved raising Rs 1000 crore by issuing
Beta: 1.05 equity shares, non-convertible debentures and or any other securities convertible into equity shares,
with or without warrant, through further public offer, qualified institutional placement, preferential
issue, rights issue or through any permissible mode.

Swaraj Engines (Rs 10) 1945 2416 -1 45 51 13 5 271 0 880 32

Capital Goods - Non-Elect Equip The diesel engines maker approved buyback of shares not exceeding Rs 70.73 crore at Rs 2400 per
Beta: 0.4 share. The promoters, Mahindra & Mahindra and Kirloskar Industries, will participate.

Shilpa Medicare (Re 1) 637 5105 -3 -4 55 0 19 908 0 57 43

Pharmaceuticals The bulk drugs manufacturer received ten 483 observations from the US Food & Drug Administration
Beta: 0.73 for its special economic zone formulation facilities at Jadcherla, Telangana near Hyderabad.

Dec 18 – 31, 2017 CAPITAL MARKET 25

MarketWatch

COMPANY (FV) CMP MCAP VARIATION (%) HOLDING(%) RESERVES RATIOS

SECTOR (Rs) (Rs cr) FORTNIGHT 1-YEAR PROMOTERS DOM. FII (Rs cr) DEBT-EQUITY INT COVER P/E

Seven observations are for improvement in procedures and practices and three observations are for
setting of analytical specifications, test procedures and method validation.

Tube Investments of India (Re 1) 258 4834 -3 NA 49 15 12 1169 1 4 31

Miscellaneous The engineering company will acquire 80% stake in Great Cycles and Creative Cycles of Sri Lanka for
Beta: 0 an aggregate US$3.34 million. These two manufacture premium bicycles. The acquisitions is to secure
the backend supply chain in the mass premium and super premium segments for the bicycles division,
TI Cycles of India.

Laurus Labs (Rs 10) 503 5337 -5 NA 31 9 11 1225 1 3 26

Healthcare The pharmaceuticals producer received a maiden tentative approval from the US Food and Drug
Beta: 0.83 Administration for tenofovir disoproxil fumarate tablets 300 milligram (mg), the therapeutically equiva-
lent to Viread tablets 300 mg of Gilead Science and used for treatment of HIV-1 infection in adults and
paediatric patients two years of age and older.

Kiri Industries (Rs 10) 547 1524 -6 98 38 3 13 880 0 15 5

Chemicals Consolidated net profit of the dyes, intermediaries and basic chemicals manufacturer rose 7.6% to
Beta: 1.69 Rs 92.61 crore despite 3.8% decline in net sales to Rs 268.09 crore in Q2 September 2017 over Q2
September 2016.

BEML (Rs 10) 1562 6503 -8 72 54 23 7 2141 0 3 77

Capital Goods - Non-Elect Equip The heavy equipment manufacturer opened spare parts and warehouse office at Pune, Maharashtra,
Beta: 1.45 to enhance presence in Maharashtra but also to reach the doorsteps of customers, i.e., Indian Army.

Suzlon Energy (Rs 2) 14 7331 -8 -6 20 9 12 -7846 0 2 14

Capital Goods - Elect Equip The renewable energy solutions provider announced lifting up of lockout at the Padubidri rotor blade
Beta: 1.6 manufacturing unit at Udipi in Karnataka. The unit, which had remained closed since 14 November
2017, reopened on 7 December 2017.

Suven Life Sciences (Re 1) 186 2369 -8 4 60 6 2 654 0 19 34

Pharmaceuticals The biopharmaceutical secured product patents corresponding to the new chemical entities for treatment
Beta: 1.03 of neurodegenerative diseases through the calendar year (CY) 2034 in Eurasia and CY 2026 in Norway.

Indian Hume Pipe Co (Rs 2) 428 2073 -11 7 70 5 0 390 1 4 26

Construction Net profit of the hume pipes and allied products maker fell 61.4% to Rs 8.32 crore on 50.5% decline
Beta: 1.3 in net sales to Rs 214.17 crore in Q2 September 2017 over Q2 September 2016.

Reliance Comm (Rs 5) 12 2895 -13 -68 53 9 8 27716 2 0 0

Telecomm-Service Fitch Ratings withdrew the C rating of the integrated telecommunications service provider’s long-term
Beta: 1.92 foreign and local currency issuer default ratings and bonds listed on the Singapore stock exchange due
to insolvency cases and slips in interest payments on global bond holdings.
# Mid-cap stocks with market capitalisation above Rs 1000 crore and below Rs 8000 crore. Beta is a measure of a stock’s volatility in relation to the key benchmark index. Higher the beta of the stock, higher will
be the volatility in the stock price and, hence, riskier the investments. The beta of the index or the market is pegged at 1. Interest coverage ratio (ICR) is a measure of a company’s ability to meet its interest
payments on outstanding debt. Higher the ICR, higher is the ability of the company to service its outstanding debt. D/E and ICR are of the latest financial year. P/E is based on EPS for the latest TTM figures
available. Promoters, domestic institutions and FII shareholding is as on 30 September 2017. CMP as on 12 December 2017. Data is on consolidated priority basis.
Compiled by Hitesh Dharawat

26 Dec 18 – 31, 2017 CAPITAL MARKET

MarketWatch
Market Report tion in Prime Minister Narendra Modi’s

Mix and match

home state is a key test for the BJP, ahead
of general elections in 2019. The S&P BSE
Sensex regained the psychological 33,000-
level after falling below that mark.
Downward revision in growth forecast but no cut in lending rates India’s GDP growth recovered to 6.3%
blunt the optimism of BJP win in Gujarat in quarter ended September 2017 from a low
of 5.7% recorded in the previous quarter
Key indices edged lower in a rangebound trade ended June 2017. Quarterly gross value ad-
following global rating agency Fitch Ratings Future tense dition at basic price at constant (2011-12)
cutting India’s gross domestic product (GDP) Fitch Ratings projected India’s GDP prices improved 6.1% in Q2 of the fiscal
growth forecast for the current and next fis- growth forecast for FY 2018 at 6.7%, down ending March 2018 (FY 2018), showing im-
cal years and another rating agency Standard from 6.9% in September, saying in the provement in growth from 5.6% in Q1 of
& Poor’s (S&P) keeping country’s sovereign economy was “weaker than expected” FY 2018. The GDP growth stood at 6% in
rating unchanged. A slight uptick in inflation 10600 April-September 2017 compared with 7.7%
in November and recovery in economy in Q2 10300 in the corresponding period last year.
Nifty 50
compelled the central bank to maintain the 10000 Fitch Ratings revised down India’s GDP
policy rates as expected in the recent meet, 9700 growth forecast for FY 2018 to 6.7% from
while the fiscal deficit at the end of October 9400 its earlier projection of 6.9% in September,
SMA
Days
hitting 96.1% of the budget estimate provided 9100
200 saying that the rebound in the economy was
little room for exuberance. Investors feared 8800 l l l l l l
“weaker than expected”. Fitch also slashed
*
that US Senate’s approval for tax overhaul A S O N D
* 12 Dec
the FY 2019 forecast to 7.3% from 7.4 %.
could boost its economy, resulting in Federal Nifty-200-day simple moving average. S&P’s Ratings Services affirmed its
Reserve hiking rates faster than expected and ‘BBB-’ long-term and ‘A-3’ short-term
triggering a reversal of flow of funds from that the ruling Bharatiya Janata Party (BJP) sovereign credit ratings on India, maintain-
emerging economies like India. will win the critical elections in Gujarat. in ing stable outlook due to the country’s
However, indices managed to cover most tough fight against the Congress. The elec- sound external profile and improved mon-
of the lost ground as pre polls suggested etary credibility.
Inflows and outflows India’s fiscal deficit at the end of
Domestic flavour Net investment in equities and debt by foreign October hit 96.1% of the budget esti-
How the indices moved portfolio investors and mutual funds mate (BE) for FY 2018. In absolute
terms, the fiscal deficit — the differ-
VARI (%) EQUITY FPIs (Rs cr) MFs (Rs cr) ence between expenditure and rev-
NAME 12-DEC-17 PE 15 DAYS YEARLY EQUITY DEBT EQUITY DEBT enues — was Rs 5.25 lakh crore in
29-11-2017 -622.44 127.96 783.76 1303.54 April-October of FY 2018. The defi-
S&P BSE Sensex 33227.99 24.52 -1.16 25.32
30-11-2017 -602.83 -193.4 841.35 3019.21 cit stood at 79.3% of the target in the
S&P BSE 500 14487.93 27.65 -1.05 30.42
01-12-2018 175.04 -101.1 same period a year ago.
S&P BSE 200 4532.53 25.84 -1.04 28.37
04-12-2018 3.85 -8.17 462.6 2734.16 The Central government’s revenue
S&P BSE Mid-Cap 16933.29 44.78 -0.62 36.61 05-12-2018 -1403.1 1149.18 1130.76 3492.08 receipts were at Rs 7.29 lakh crore in
S&P BSE Sml-Cap 18127.92 88.74 -0.47 48.22 06-12-2018 -1123.99 977.15 1019.44 2456.97 the seven months of the current fiscal,
S&P BSE Metal 13678.92 26.11 -3.22 25.69 07-12-2018 -962.82 334.93 784.05 4496.61 working out to 48.1% of the BE of Rs
S&P BSE Power 2274.4 20.68 -3.05 12.52 08-12-2018 43.63 98.84 864.38 3035.22 15.15 lakh crore for the entire year. The
S&P BSE Bankex 28458.26 28.98 -2.83 35.17 Fortnight -4667.7 2486.49 6061.38 20436.69 receipts, comprising taxes and other
S&P BSE Finance 5719.14 28.29 -2.4 38.35 January -1176.6 -2319.19 5233.55 31104.93 items, were at 50.7% of the target in the
S&P BSE Energy 4156.04 15.32 -2.02 40.33 February 9902.18 5960.25 2039.55 38829.55 year-ago period.
S&P BSE Utilities 2190.25 24.26 -1.79 23.39 March 30906 25354.89 4191.55 34894.09 The Union government’s total ex-
S&P BSE Basic Materi 3325.73 32.87 -1.63 39.29 April 2394.49 20363.75 11244.3 55932.89 penditure was Rs 12.92 lakh crore at
S&P BSE Cap Good 18323.47 30.64 -0.91 31.8 May 7711.41 19154.75 9357.67 9514.37 October-end, or 60.2% of the BE. It
S&P BSE Industrials 3698.74 40.28 -0.86 30.04 June 3616.82 25685.11 9106.11 12617.91 was 58.2% of the budget estimate a
S&P BSE Realty 2387.18 68.27 -0.63 84.76 July 5160.71 18867.15 11799.9 40387.5 year ago. Capital expenditure was
August -12769.68 15446.51 17941.1 36466.82 52.6% of the BE in April-October of
S&P BSE Auto 25286.36 28.28 -0.49 25.74
September -11392.27 1348.89 17456.8 31855.24 FY 2018 compared with 50.7% in the
S&P BSE Oil&Gas 15991.61 13.5 -0.37 33.33
October 3055.44 16063.65 9990.5 29088.49 same period of the previous fiscal.
S&P BSE Healthcare14030.85 33.45 -0.04 -9.32
November 19727.65 530.54 12080.1 41978.37 Revenue expenditure, including inter-
S&P BSE IT Sector 10888.45 17.39 0.34 11.4
CY 2017* 53227.1 148814.43 114877.4 378784.1 est payment, was 61.5% of the BE
S&P BSE Tech 6167.37 41.85 0.49 15.28
CY 2016 18752.88 -43400.87 46849.5 330205.6 during April-October 2017-2018. This
S&P BSE FMCG 10517.15 41.85 1.64 31.2
CY 2015 18355.58 46920.71 72197.7 433809.6 compares with 59.2% a year earlier.
S&P BSE Telecom 1579.61 -25.95 1.75 34.42 * till 8 December 2017. Data of 30 Nov. and 1 December is clubbed.
CY: Calendar year. FPIs: foreign portfolio investors. MFs: Mutual funds.
The Nikkei India services Purchas-
S&P BSE Cons Dura 21862.31 45.98 2.54 97.25
ing Managers’ Index (PMI) dipped into

Dec 18 – 31, 2017 CAPITAL MARKET 27

MarketWatch

In the limelight
BSE Large caps BSE Mid-caps BSE Small-caps
VARI (%) VARI (%) VARI (%)
NAME 12-DEC-17 PE 15 DAYS YEARLY NAME 12-DEC-17 PE 15 DAYS YEARLY NAME 12-DEC-17 PE 15 DAYS YEARLY
Gainers Gainers Gainers
Bharti Airtel 523.95 98.27 6.45 59.81 Biocon 519.8 69.48 20.24 66.08 Visagar Polytex* 1.91 38.2 57.85 -4.02
GAIL (India) 491.95 25.78 6.4 52.99 Blue Dart Exp. 4630.75 78.58 12.11 1.07 Chamanlal Setia* 170.5 22.76 51.76 145.32
Maruti Suzuki 9142.75 46.67 5.99 77.67 Gillette India* 6959.85 86.38 10.11 63.31 Adhunik Indus.* 88.6 227.18 41.87 -20.29
Nestle India* 7910.9 68.83 5.53 25.09 Apollo Hospitals 1190.75 75.9 7.77 -2.66 High Ground 18.43 18.85 41.66 -53.52
Bosch 19925.7 47.03 5.06 -4.65 Shriram Trans. 1363.7 24.8 6.9 57.01 Setco Automotive 55.45 0 37.42 53.81
Pidilite Inds. 887.95 54.26 4.52 46.12 Alkem Lab 2100.15 32.97 6.73 28.99 Trigyn Techno. 140.3 11.35 37.01 18.8
Motherson Sumi 376.7 33.76 4.32 76.17 Wockhardt 743.05 0 5.29 8.01 Hinduja Ventures 724.2 0 35.75 37.97
Hind. Unilever 1314.95 78.85 3.71 57.83 Ajanta Pharma 1460.95 26.61 5.25 -20.21 Hind.Natl.Glass 168.25 0 34.44 68.25
Godrej Consumer 1009.85 51.81 2.97 40.15 Havells India 546.75 65.51 4.87 61.14 Ess Dee Alumin. 59.05 0 34.05 15.22
NHPC Ltd 28.65 12.74 2.87 4.95 Rajesh Exports 805.5 18.86 4.8 78.23 Everest Kanto 71.95 0 32.63 117.37
Losers Losers Losers
Rural Elec.Corp. 147.05 4.81 -7.69 11.23 United Breweries 1011.05 116.42 -9.96 21.52 Steel Exchange* 47.2 0 -63.75 -17.7
Power Fin.Corpn. 116.4 15.62 -6.32 -11.62 Bank of India 179.35 0 -9.96 55.08 SRS 1.7 0 -32.81 -70.07
Hero Motocorp 3444.95 21.93 -6.23 7.1 Rel. Comm. 11.63 0 -9.84 -67.69 V B Industries* 120.05 0 -28.09 -66.75
Eicher Motors 28610.1 42 -6.23 28.79 Union Bank (I) 151.05 20.07 -8.59 6.82 Yamini Invest* 11.08 0 -27.58 -60.57
Cadila Health. 414.9 31.44 -5.99 6.18 GE T&D India* 399.95 51.28 -7.88 26.51 63 Moons Tech. 95 18.98 -26.16 27.35
Bharti Infra. 355.35 26.09 -5.92 0.75 LIC Housing Fin. 551.45 14.33 -7.68 -2.45 TV Vision 16.95 7.1 -20.24 -94.04
Punjab Natl.Bank 173.55 31.25 -5.6 32.58 Oberoi Realty 451.85 40.15 -7.65 44.41 Ruchi Soya Inds. 19.15 0 -20.21 -3.04
Hindalco Inds. 237.15 29.37 -5.42 30.34 L&T Fin.Holdings 166.2 24.13 -7.02 91.81 Ushdev Intl. 2.55 0 -17.48 -87.03
Oil India 354.85 11.97 -4.92 6.74 Indian Bank 375.35 12.92 -6.84 55.84 Gitanjali Gems 75.3 4.54 -17.12 24.67
Siemens 1159.3 72.53 -4.58 2.38 Torrent Power 267.05 16.71 -6.51 41.97 Panacea Biotec 233.7 0 -16.52 94.43
* PE on standalone basis, others on consolidated basis, * PE on standalone basis, others on consolidated basis, * P/E on standalone basis, others on consolidated basis,
for TTM based on latest results. for TTM based on latest results for TTM based on latest results

negative territory in November. The season- 6.25%. The decision of the MPC is consis-
Commodity flow ally adjusted business activity index stood tent with a neutral stance of monetary policy
Monthly variation : -0.3% at 48.5 in November, off from 51.7 in Octo- in consonance with the objective of achiev-
Yearly variation : 13.7%
Closing price (12 Dec 2017) : Rs 63.34 ber. A reading above 50 indicates economic ing the medium-term target for consumer
65
expansion, while a reading below 50 points price index (CPI) inflation of 4% within a
toward contraction. band of +/- 2%, while supporting growth.
64 The Nikkei India Manufacturing PMI The Union government on 5 December
rose to 52.6 in November from 50.3 in Oc- 2017 announced incentives worth a total Rs
63 tober, indicating a substantial improvement 8450 crore to boost exports and employ-
Brent crude oil per barrel in USD of operating conditions in India’s manufac- ment in labor-intensive sectors in the mid-
62
turing sector. At the broad market group level, term review of the five-year foreign trade
61 l
growth in consumer and intermediate goods policy that was rolled out in 2015.
l l l l l l l l l l l
13 Nov 27 Nov 12 Dec offset a marginal deterioration in investment Export incentives under merchandise
2017 2017
(+) Appreciation. (-) Depreciation goods category. exports from India (MEIS) have been in-
The output of eight core industries com- creased by 2% across the board for labor-
prising 40.27% of the weight of items in- intensive micro, small and medium enter-
Exchange equation cluded in the Index of industrial production prises sectors leading to additional annual
Monthly variation : -0.8% (IIP) grew 4.7% in October 2017 over Oc- incentive of Rs 4567 crore. The sop is in
Yearly variation : -4.6% tober 2016. The cumulative growth was addition to the already announced increase
Closing price (12 Dec 2017) : Rs 64.48
3.5% in April to October of FY 2018. in MEIS incentives from 2% to 4% for
64.2
On the basis of an assessment of the ready-made garments and made-ups in the
64.4
current and evolving macroeconomic situa- labor-intensive textiles sector with an addi-
64.6
tion, the Reserve Bank of India’s (RBI) tional annual incentive of Rs 2743 crore.
64.8
INR/USD monetary policy committee (MPC) at its Further, incentives under services exports
65.0
meeting on 6 December 2017 decided to keep from the India Scheme have also been in-
65.2
the policy repo rate under the liquidity ad- creased 2% leading to additional annual in-
65.4
justment facility (LAF) unchanged at 6%. centive of Rs 1140 crore.
65.6 l
13 Nov
l l l l l
27 Nov
l l l l l l
12 Dec
Consequently, the reverse repo rate under The Union government has envisaged
2017 2017 the LAF remains at 5.75% and the marginal ushering a gas-based economy by increasing
(+) Appreciation. (-) Depreciation standing facility rate and the bank rate at the share of natural gas in primary energy

28 Dec 18 – 31, 2017 CAPITAL MARKET

MarketWatch

Taking off mix of the country to 15% in coming years.

The thrust will be on enhancing domestic
BSE 500 companies hitting life-time highs in the fortnight ended 12 December 2017 gas production, encouraging the import of
STAKE TTM liquefied natural gas, completion of national
COMPANY ALL-TIME 52-WEEK PROMO. MF FIIs NPM P/E P/BV gas grid and speedier roll-out of the city gas
distribution network in the country.
HIGH-DATE HIGH (Rs) LOW (Rs) (%) (%) (%) (%) The water storage available in 91 major
P I Inds.* 01-12-2017 989 674.15 51.55 16.51 15.46 18.55 28.4 7.94 reservoirs of the country for the week end-
Symphony* 01-12-2017 1650.45 1130 75 7.57 5.49 26.17 75.43 24.43 ing on 30 November 2017 was 98.578 bil-
Minda Inds. 01-12-2017 1320.05 289.75 70.95 7.75 7.34 5.87 42.99 6.71 lion cubic meters (bcm), that is, 62% of to-
Prestige Estates 01-12-2017 346 148 70 26.35 2.59 7.28 30.21 2.44
tal storage capacity of these reservoirs. This
Godrej Propert. 01-12-2017 747 286.9 74.87 8.65 2.52 12.27 74.3 7.43
percentage was at 64 for the week ending on
L & T Infotech 01-12-2017 1023.95 647.1 84.03 5.94 1.38 15.41 16.46 4.93
23 November 2017. The level of water stor-
Titagarh Wagons 01-12-2017 189.5 97.5 45.77 4.26 12.91 0.59 180.98 1.99
age in the week ending on 30 November 2017
Sadbhav Engg.* 01-12-2017 394.8 256 46.76 16.56 25.52 5.93 0 6.67
was 96% of the storage of corresponding
Astral Poly 01-12-2017 852 368 58.5 19.48 5.86 7.74 64.01 10.75
period of last year and 95% of storage of
Time Technoplast 01-12-2017 218.2 85 52.55 19.37 9.05 5.47 28.48 3.27
Endurance Tech. 01-12-2017 1338.3 535 82.5 10.09 4.36 6.03 49.17 8.95
average of last ten years.
Gulf Oil Lubric.* 01-12-2017 1098.5 577 72.88 6.14 6.41 11.44 35.67 11.86
The Union Ministry of Housing & Ur-
Carborundum Uni. 04-12-2017 395 236.35 43.74 4.4 18.58 8.72 38.19 4.92 ban Affairs has approved the construction
Eveready Inds.* 04-12-2017 454.75 190 44.05 17.12 15.11 6.97 33.45 10.83 of 1,12,083 more affordable houses for the
La Opala RG* 04-12-2017 717.1 438 65.02 20.56 1.26 24.19 55.38 7.81 benefit of urban poor under Pradhan Mantri
Cera Sanitary.* 04-12-2017 4300 1880 54.75 7.03 10.14 9.41 48.13 9.07 Awas Yojana (Urban) with an investment of
L&T Technology 04-12-2017 1124.4 671 89.51 3.09 1.06 12.73 23.99 6.03 Rs 8105 crore with Central assistance of Rs
Hexaware Tech. 05-12-2017 349.4 187.5 71.22 11.63 8.47 12.89 19.19 5.34 1681 crore.
Indraprastha Gas* 05-12-2017 336.85 170 45 25.26 9.27 14.77 37.81 7.49 Road construction in the country in the
P & G Hygiene* 06-12-2017 9899.85 6525 70.64 3.83 5.72 18.67 69.91 58.97 first eight months of current fiscal, i.e., April-
Gayatri Projects* 06-12-2017 220.65 118 47.48 36.86 0 4.62 0 7.25 November 2017 period, by the National
Balkrishna Inds* 08-12-2017 2450.2 1013.6 54.37 18.26 12.25 16.87 33.53 6.61 Highways Authority of India, National High-
Britannia Inds. 08-12-2017 4963.7 2776 50.7 17.42 6.39 9.81 64.23 20.29 ways and Infrastructure Development Cor-
Hind. Unilever* 08-12-2017 1330.5 782.95 67.19 13.31 1.69 14.84 78.85 42.2 poration and Ministry of Road Transport
Gillette India* 08-12-2017 7196.9 4025 75 5.09 4.93 15.18 86.38 45.31 & Highway as well as state public works
Ratnamani Metals* 08-12-2017 1055 585 60.09 14.35 4.66 9.86 31.95 3.88 department was 4,944 kilometers (km) about
GAIL (India)* 08-12-2017 500.3 308.18 54.43 15.64 10.24 7.24 25.78 2.14 61% of the 8,142 km of road construction
Bajaj Electrical* 11-12-2017 503.1 203.8 63.25 9.76 4.77 2.53 48.36 5.67 done in FY 2017. The target road construc-
Graphite India* 11-12-2017 683.1 71.2 65.09 4.71 5.97 13.43 184.16 6.87 tion for FY 2018 was 15,000 km.
Nestle India* 11-12-2017 8000 5750 62.76 11.97 1.67 11.55 68.83 22.47 As per preliminary reports received
Tata Global 11-12-2017 299.4 116.5 34.45 15.02 10.36 7.22 36.6 2.74
from the states, the total area sown under
Shriram Trans.* 11-12-2017 1399.5 778 26.08 48.13 4.54 12.59 24.8 2.73
rabi crops as on 8 December 2017 stood
ISGEC Heavy* 11-12-2017 7699 4388 62.27 2.45 4.21 5.93 25.86 4.47
at 442.29 lakh hectares compared with
Pidilite Inds. 11-12-2017 899.9 568.75 69.59 10.92 3.44 14.78 54.26 12.45
448.48 lakh hectares this time in the calen-
Vakrangee 11-12-2017 776.7 260 41.59 21.71 0.05 12.88 61.86 17.31
dar year 2016.
Greenply Inds.* 11-12-2017 348 238.3 51.03 11.52 21.37 8.05 32.44 5.27
Major ports in India recorded a growth
APL Apollo 11-12-2017 2027.8 852 37.47 0 14.43 3.08 30.48 5.95
Biocon 11-12-2017 530 294.03 60.67 15.42 2.1 11.68 69.48 6.58
of 3.46% and together handled 439.66 mil-
M & M Fin. Serv. 11-12-2017 480.9 244.35 51.2 32.03 8.95 5.82 63.21 3.13
lion tonnes of cargo in April to November
K E C Intl. 11-12-2017 354 130.5 50.94 10.28 18.91 4.12 23.85 5.1 2017 as against 424.96 million tonnes handled
Aegis Logistics 12-12-2017 287.15 126.2 60.51 12 2.61 3.54 55.5 9.85 in the corresponding period of previous year.
Finolex Cables* 12-12-2017 721 400 35.86 6.19 18.62 12.52 28.17 5.12 Fitch Ratings in its latest global eco-
Honeywell Auto* 12-12-2017 21899 8250.65 75 0.32 15.31 8.29 82.26 13.64 nomic outlook said that global growth mo-
Motherson Sumi 12-12-2017 385.85 201.83 63.11 19.74 6.8 4.58 33.76 9.08 mentum remains strong and is likely to be
TTK Prestige 12-12-2017 7499.95 5272.2 70.39 13.03 6.58 14.99 52.62 9.24 sustained by an increasingly positive out-
Relaxo Footwear* 12-12-2017 661.9 391.5 74.93 4.38 1.86 7.04 59.81 11.64 look for investment. World growth is now
Maruti Suzuki* 12-12-2017 9214.45 5042.5 56.21 25.29 5.98 10.24 46.67 7.45 estimated at 3.2% this year and indications
Sunteck Realty 12-12-2017 426 99 65.72 18.34 5.6 22.11 37.8 2.47 are that the calendar year (CY) 2018 will be
TVS Motor Co.* 12-12-2017 765.65 346 57.4 20.53 8.09 4.53 84.4 16.3 equally robust with growth to edge up to
T N Newsprint* 12-12-2017 444.5 289.15 35.32 8.67 13.87 0.86 134.58 1.93 3.3% next year.
Century Ply.* 12-12-2017 342 154.5 72 11.37 3.74 9.17 38.83 10.34 The US Senate approved a tax overhaul
PC Jeweller* 12-12-2017 453.35 175.78 60.5 30.97 1.04 5.59 41.67 4.34 on 2 December 2017, moving Republicans
* Results are on standalone basis for others on consolidated basis, for TTM ended 30 September 2017
and President Donald Trump a big step

Dec 18 – 31, 2017 CAPITAL MARKET 29

MarketWatch
closer to their goal of slashing the corporate
tax rate and offering temporary tax-rate cuts Mixed signals Stepping on the gas
for most Americans. The Nikkei India services PMI dipped The US economy’s pace of growth
The Federal Reserve released the Beige into negative territory at 48.5, but increased to 3.3% in Q3 of the CY 2017
Book, a compilation of anecdotes on the US the manufacturing PMI rose to 52.6 in from 3% under the Federal government’s
economy. In the report, the Fed said it de- November over October latest revision to GDP
tected a slight improvement in the outlook 15.5 4300

among contacts in its 12 districts with growth 15.0

4250
remaining at a modest to moderate pace. The 14.5

central bank has also witnessed strengthen- 14.0 4200

India VIX
ing in inflation pressures over the past month 13.5
BSE Dollex 30

with increases passed on the consumers. 13.0

4150

The US economy’s pace of growth was

12.5 l l l l l l l l l l l l 4100 l l l l l l l l l l l l
raised to 3.3% in Q3 of CY 2017 from 3% 13 Nov 27 Nov 12 Dec 13 Nov 27 Nov 12 Dec
2017 2017 2017 2017
under the Federal government’s latest revi- Rise or fall in India VIX depicts increase or decline in volatility Rise or fall in the BSE Dollex 30 depicts firmness or weakness
sion to GDP. Pending-home sales jumped in the near term of the rupee
3.5% in October, but remained 0.6% lower
than a year ago. Growth in China’s manufacturing sec- vices PMI rose to 51.9 in November from
The Conference Board’s consumer-con- tor slowed in November, according to a pri- 51.2 in October, Caixin Media Company and
fidence index jumped to 129.5 in Novem- vate gauge. The Caixin China manufacturing research firm Markit said.
ber, marking a 17-year high. The advanced PMI fell to 50.8 in November, its lowest China’s exports and imports unexpect-
US trade deficit in goods rose 6.5% to level in five months, from 51 in October. edly accelerated in November 2017 in an
US$68.3 billion in October. Separately, home China’s official non-manufacturing PMI, encouraging sign for the world’s second-
prices rose at their fastest pace in more than a measure of activity outside factory gates, biggest economy. Exports rose 12.3% over
three years in September. rose to 54.8 in November from 54.3 in Oc- November 2016, the fastest pace in eight
A survey of purchasing managers tober. The official manufacturing PMI rose months, led by strong sales of electronics
showed that businesses grew in November to 51.8 in November from 51.6 in October. and high-tech goods, while commodity
at the slowest pace in four months. The Activity in China’s service sector ex- purchases helped lift imports. Imports
Markit flash manufacturing PMI fell to 53.8 panded at a faster pace in November, a pri- grew 17.7%.
from 54.6, while the flash services PMI fell vate gauge showed, the latest indication of Japan’s economy grew at a much faster
to 54.3 from 54.6. A reading of 50 or better strength in the sector following official data pace than initially estimated in the July-Sep-
indicates improving conditions. released last week. The Caixin China ser- tember quarter. The nation’s GDP grew at
an annualized pace of 2.5% from the previ-
ous three months.
Global equity markets
The euro zone final November compos-
Returns in local currencies Returns in US dollars ite PMI was reported at 57.5 in November
compared with 56 in October.
COUNTRY INDEX FORT 1 MNTH 3 MNTHS 1 YEAR FORT 1 MNTH 3 MNTHS 1 YEAR UK and European negotiators finally
Australia ASX 200 0.2 -0.6 4.7 7.8 -1.3 -2.5 -1.5 8.8 agreed on three key issues that were block-
Brazil Bovespa -1.9 0.8 1.1 20.2 -4.4 -0.3 -4.3 22.2 ing Brexit talks, paving the way for the next
China Shanghai Composite -1.9 -4.2 -2.3 1.8 -2.2 -3.9 -3.2 6.1 phase of discussion between the two sides.
France CAC 40 0.2 0.3 5.4 13.3 -1.2 0.7 2.2 16.3 After six months of intense talks, a settle-
India BSE Sensex -1.3 -0.2 4.3 24.3 -1.1 0.9 3.3 30.2 ment has been reached on how much the
UK will pay before it leaves the Union, on
India Nifty -1.2 -0.5 2.9 24.3 -1.0 0.6 1.9 30.1
citizens’ rights and on the Irish border. Ne-
Japan Nikkei 225 1.2 0.6 15.8 20.1 -0.6 0.5 12.3 21.8
gotiators are now set to move to phase two
New Zealand NZX 50 Index 1.3 3.3 5.3 19.5 0.7 2.0 0.6 14.6 of Brexit: discussing trade arrangements.
South Korea KOSPI -3.2 -3.1 4.5 21.7 -3.9 -0.6 7.2 30.7
United Kingdom FTSE 100 -0.2 -0.5 -0.6 6.3 0.0 0.7 2.4 13.0 Outlook
Germany DAX 0.7 0.2 8.3 17.4 -0.7 1.1 7.3 31.0 The proceeding of winter session of parlia-
Russia MICEX -2.6 -3.0 4.7 -4.7 -4.3 -3.1 1.6 0.1 ment starting from 15 December, outcome
UAE ADX General -0.2 -2.3 -4.3 -5.3 -0.2 -2.3 -4.3 -5.3
of Gujarat and Himachal assembly elections
in December, macroeconomic data, invest-
Mexico IPC -0.8 -0.9 -6.9 1.4 -3.0 -0.4 -12.6 8.8
ment by foreign portfolio investors, the
Singapore Straits Times -0.5 0.1 4.5 15.8 -1.1 0.7 4.8 22.5 movement of rupee against the dollar and
USA Dow Jones 3.3 3.9 10.6 23.1 3.3 3.9 10.6 23.1 crude oil price movement will dictate trend
USA S&P 500 1.9 2.7 7.1 17.3 1.9 2.7 7.1 17.3 on the bourses in the near term.
As on 8 December 2017. Returns in percentage. — Amit Shenai

30 Dec 18 – 31, 2017 CAPITAL MARKET