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New Releases: Govt weighs doubling of protected areas Idea Cellular board okays INR 35bn QIP

GAIL to buy coal-bed Sector Update: Banking & Financials: Writing on the wall Page 4
methane gas from Quarterly Results Sugar prices firm up after govt hikes import duty Tata Power to raise INR 35bn via NCD
Sun Pharmaceuticals: Halol clearance priced in Page 6 India reviews anti-dumping duty on steel wheels Piramal Finance to invest INR 30bn in affordable housing
Essar Indian Hotels: Domestic business shows traction Page 10
Page 14
Tata Steel top bidder for Bhushan Power Adani looking for foreign coal mines
CESC: In-line profit
Prestige Estates Projects: Investing for growth Page 22 Bharti Airtel’s Africa unit eyes IPO to unlock value Page 2 Mahindra Susten’s scraps solar project Page 3
CG Power and Industrial Solutions: Pickup from FY19 Page 26 Yes Bank lists USD 600mn MTN bond
Page 2 Dhanuka Agritech: Margin shrinks on higher RM cost Page 32

15 February 2018

Railways initiates recruitment process to hire 89,000 employees Market Monitor


National carrier Indian Railways has notification, in Group D, vacancies are applications is 12 March. Similarly, 26,502 Global Indices
begun the process of launching one of its open for candidates who have passed vacancies for the posts of assistant loco Va lu e % ch a n g e PE
biggest recruitment drives, to hire 89,000 Classes X or have an ITI (industrial training pilots and technicians under Group C will Sensex 34,156 (0.4) 22.3
Group C and D employees, including institute) diploma. Those who make it will be filled. A senior railway official on Nifty 10,501 (0.4) 21.2
assistant loco pilots, technicians, get a monthly salary of INR 18,000 per condition of anonymity said, “Most of the S&P 500 2,699 1.3 17.3
FTSE 100 7,214 0.6 13.7
gangmen, switchmen, trackmen, month and allowances as per Seventh recruitment is for the safety category and
HangSeng 30,906 1.3 12.1
cabinmen, welders, helpers and porters, Central Pay Commission (Level 1). The as per our estimates this additional Nikkei 225 21,439 1.3 17.3
reports LiveMint. In a tweet on recruitment will be done through the recruitment will cost around INR 30-40bn
15 February 2018 8:00 AM
Wednesday, railway minister Piyush Goyal Railway Recruitment Cell. The jobs are annually to the railway exchequer.” He
announced the railway recruitment drive, open to those in the age group of 18-31 added that the Union Budget 2018-19 Source: Bloomberg
saying there were Group D openings for years with age relaxations for different has provisions for this expenditure.
FII & DII activities
62,907 jobs. According to a railways quotas. The last date for submission of
40
Wind power tariff stays INR 2.44 per kilowatt hour (kWh) each to low solar tariff of INR 2.44 per unit
20

(INR bn)
win contracts for 499.80MW, 400MW, registered in May.
low at INR 2.44/unit 300MW and 200MW, respectively. Adani 0
India’s wind power tariffs remained near a Green Energy (MP), Saudi Arabia’s Alfanar Electric cab firms seeks (20)
record low in an auction conducted by and Betam Wind Energy bid INR 2.45 per allies for charging infra (40)
the state-run Solar Energy Corporation of unit to win contracts for 250MW, 300MW 7-Feb 8-Feb 9-Feb 12-Feb 14-Feb
Bengaluru-based Lithium Urban
India (SECI) which ended on 13 February, and 50.2MW, respectively. The latest FII DII
Technologies, the country’s first provider Source: NSE
a person aware of the development said, auction underscores growing investor of electric cab service for corporate clients,
reports LiveMint. Bidders quoted wind interest in wind energy projects as costs of Rupee /Commodities/Metals (USD)
is scouting for a partner to set up
power tariffs as low as INR 2.44 per unit turbine generators decline amid a charging infrastructure for e-vehicles, Valu e Ch an g e % ch an g e
for 2 GW of wind power contracts, the favorable policy environment. Wind reports ET. “We are in talks with key USD-INR 64.086 (0.226) 0.353
person said, requesting anonymity, power tariffs had plummeted to a record players to partner with. We can partner Oil (NYMEX) 61.160 0.560 0.924
adding that this was India’s largest wind low INR 2.43 per kWh at an auction with anyone who has solutions to provide Gold 1,353.530 2.865 0.212
capacity auction. Torrent Power, ReNew conducted by state-run Gujarat Urja Vikas for charging,” Sanjay Krishnan, cofounder Natural Gas 2.614 0.027 1.044
Power Ventures, Green Infra Wind Energy Nigam in December, beating the record of Lithium, told ET at the Auto Expo in
and Inox Wind Infrastructure Services bid Source: Bloomberg

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Impact
Greater Noida. Krishnan said Lithium has signed an by more than 25% in the last two months and the ex-mill price development, Tata Steel has offered to pay INR 170bn upfront
agreement with the government to provide 60 electric was ruling at around INR 3,100 till about a week ago. Retail to financial creditors against JSW’s INR 110bn, reports
chargers across the Delhi-NCR region for public use, for which prices are likely to inch up to INR 44-45 a kg, up from the Business Standard. The finals bids were placed on February 9
it will get financial assistance from the government. The current levels of INR 41 a kg. Sugar prices, which were on a and sent to the legal team for scrutiny. SBI caps will now
company now wants to add to this infrastructure and is declining trend since the beginning of the marketing year on evaluate the bids. Around 13 companies had submitted
working on partnerships with private players for it, he said. October 1, started firming up with the government asking expressions of interest. Some did not qualify and only five
sugar mills to offload only 17% of their January stocks by were provided access to the virtual data room. The liquidation
Govt weighs doubling of protected February end and another 17% of February stocks by the end value of Bhushan Power was estimated to be around INR
areas of March. This apart, the government has also increased 90bn and the fair value around INR 250bn. Bhushan Power
India’s environment ministry is considering doubling the import duty on sugar to 100% from 50%. was one of the few companies where lenders had pressed for
number of protected areas such as national parks and wildlife a fair value much before the insolvency regulator made it
sanctuaries from the current 729 over the next few years,
India reviews anti-dumping duty on mandatory. The committee of creditors is likely to be guided
reports LiveMint. At present protected areas, including steel wheels by an average of the liquidation value and the fair value.
national parks, wildlife sanctuaries, and conservation and India has started a probe to review whether the existing anti-
community reserves, cover 4.9% or 162,072 sqkm of India’s dumping duty on flat base steel wheels imported from China
Bharti Airtel’s Africa unit eyes IPO to
geographical area. Conservationists like Manoj Misra are, should continue, keeping in mind interest of domestic unlock value
however, skeptical about the government’s ability to double manufacturers, reports Business Line. The Directorate General Bharti Airtel’s Netherlands-based international holding
these areas as it has taken several decades for the existing of Anti-Dumping and Allied Duties (DGAD), an investigation company for its Africa operations is exploring an initial public
protected areas to be secured. “The problem is mindset ... arm of the commerce ministry, would also examine whether offer (IPO) in a move aimed at unlocking value of its African
policymakers are only interested in diversion of areas for so- the expiry of the duty is likely to lead to continuation or telecom assets amid a revival in the Sunil Mittal-led carrier’s
called developmental projects. Protected areas are just a recurrence of dumping and hurt the domestic industry. business fortunes in the continent, reports ET. “The board of
hindrance. Doubling of protected areas is not a problem Kalyani Maxion Wheels and Wheels India have filed an directors of Bharti Airtel International (Netherlands) BV (BAIN
provided policymakers are genuinely serious about it, but application seeking review and continuation of the existing BV) on February 12, 2018, has authorized its management to
even then it will take many years,” said Misra, convener of anti-dumping duties on import of the wheels. The DGAD, in a initiate non-binding exploratory discussions with various
Yamuna Jiye Abhiyaan, a non-governmental organization notification, said it “hereby initiates investigation to review the banks/intermediaries to evaluate the possibility/feasibility of
working for the rejuvenation of the Yamuna. need for continued imposition of the duties in force”. It said listing its shares on an internationally recognized stock
the present investigation is for sunset review of existing anti- exchange,” said Bharti Airtel in exchange filings to BSE and
Sugar prices firm up after govt hikes dumping duty. The authority has considered the period of NSE. Netherlands-based BAIN B.V. is a wholly-owned arm of
import duty October 2016 to September 2017 as the period of Bharti Airtel and also the international holding company of
Sugar prices have firmed up by nearly 15% in the past one investigation. It would also consider the data of 2014–17 for Bharti’s telecom operations in 14 African markets -- Nigeria,
week on the back of the Centre’s move to impose the probe. In 2013, the finance minister had imposed the duty Chad, Congo Brazzaville, Democratic Republic of Congo,
stockholding limit on mills, reports Business Line. The move for five years. The duty was up to USD 613 per tonne on Gabon, Madagascar, Niger, Kenya, Malawi, Seychelles,
coupled with the government’s decision to increase the import of the product from China. Tanzania, Uganda, Zambia and Rwanda.
import duty on sugar to 100 per cent from 50 per cent has
helped strengthen sugar prices, sources said. According to OP
Tata Steel top bidder for Bhushan GAIL to buy coal-bed methane gas
Dhanuka, CMD, Riga Sugar, and past President of the Indian Power from Essar
Sugar Mills Association (ISMA), the ex-mill prices are currently Tata Steel seems to be emerging the highest bidder for State-run GAIL (India) has won a contract for buying coal-bed
ruling around INR 3,550 a quintal. Sugar prices had declined Bhushan Power and Steel. According to sources close to the methane (CBM) gas produced from Essar Oil’s Raniganj block

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Impact
in West Bengal, reports Business Standard. The gas will be committee to evaluate and recommend to the board the that fit the bill, it may tap into its investment partnership with
supplied based on the three-month daily average price of routes for issuing further equity. Subsequently at a meeting on Ivanhoé Cambridge, a real estate subsidiary of Caisse de dépôt
Brent crude oil, which works out to around USD 8 per mn 30 January, shareholders of the company had approved the et placement du Québec (CDPQ), Canada’s second largest
British thermal unit (mBtU) now. Based on current prices, the proposal to raise the funds through a qualified institutional pension fund.
15-year contract will be around INR 7bn on an annual basis. placement. The controlling shareholders of Idea Cellular—Birla
This comes a few months after Reliance Industries (RIL), which TMT, Elaine Investments, Oriana Investments—have recently Adani looking for foreign coal mines
began commercial production of CBM from its two blocks in invested INR 32.50bn to strengthen its balance sheet amid Indian resources conglomerate Adani Enterprises is looking to
Madhya Pradesh, started buying CBM at around USD 7.8 intense competition and before a planned merger with buy coal mines in countries such as Indonesia, a company
mBtu. Essar’s price is more than double the price of domestic Vodafone India. Following the QIP, their stake in India’s third- executive told Reuters on Wednesday, despite its struggles to
natural gas set by the government till March 2018, which is largest telecom operator will rise to 47.2% from 42.4% now. develop a controversial coal project in Australia, reports
USD 2.89 per mBtu. LiveMint. The company already owns a coal mine in
Tata Power to raise INR 35bn via NCD Indonesia, but has been unable to secure financing for the
Yes Bank lists USD 600mn MTN bond The board of Tata Power gave its nod to raise funds up to INR long-delayed Carmichael mine in Australia amid numerous
Yes Bank today said it has listed USD 600mn bond issued 35bn through non convertible debentures (NCD), reports court challenges from environmental groups concerned
under its maiden USD 1bn MTN program, on Global Securities Moneycontrol.com. "In a meeting today, the Board has about climate change and potential damage to the Great
Market (GSM) of India INX, reports Business Line. India INX is approved issuance in one or more tranches, of non- Barrier Reef. “We have a mine in Indonesia, and we are
the country’s first international exchange, located at cumulative, redeemable, taxable, listed, rated securities in the looking for more options there,” Rajendra Singh, COO of
International Financial Services Centre, GIFT City in Gujarat. form of NCD up to an aggregate amount not exceeding INR Adani’s coal trading business, said on the sidelines of the
The MTN (medium term note) bonds issuance received an 35bn on private placement basis to eligible investors Coaltrans India conference in the coastal town of Bambolim in
overwhelming response from international investors and saw permitted to invest in the NCDs under applicable laws," the Goa. “We’re also keeping our eyes open for options in other
a final order book, at a spread of 130bp, being oversubscribed company said in a BSE filing. areas like south African countries, countries like Russia. We are
by over 1.83x from over 90 accounts, Yes Bank said in a not eyeing for specific grades, we are looking for viable
statement. The bond is also listed on London Stock Exchange Piramal Finance to invest INR 30bn in options. We mainly look at reserves, production costs and
International Securities Market (LSE ISM) and Singapore affordable housing logistics.”
Exchange Securities Trading (SGX), it said. Piramal Finance, a unit of Piramal Enterprises, said it will focus
on investments in affordable and mid-income housing
Mahindra Susten’s scraps solar project
Idea Cellular board okays INR 35bn projects across major cities with an initial investment pipeline Mahindra Susten’s landmark storage-cum-solar power project
QIP of INR 30bn, reports LiveMint. The company said it has set up in the Andaman and Nicobar islands has been scrapped,
Idea Cellular’s board on Wednesday approved a proposal to a dedicated team for this purpose. Piramal intends to scale it reports Business Line. Mahindra Susten had last year won the
sell shares via a qualified institutional placement (QIP) to raise up and invest around USD 2bn in such projects by 2020. It will bid to set up the 28-MWh project for NLC (formerly Neyveli
as much as INR 35bn, reports LiveMint. “The board has offer both pure and preferred equity capital to top developers Lignite Corporation). MD at NLC India, Sarat Kumar Acharya,
authorized the committee of directors to decide on the timing, who are looking to buy or develop land and need early-stage said, “there has been a change in requirement and we will be
price and exact quantum of equity shares to be issued,” the growth capital. It may also pursue an opportunistic acquisition going for a fresh tender accordingly.” NLC India will now call
company said in a filing to stock exchanges. On 4 January, of land on its own and invite developers to participate on a for bids for a smaller 8 MWh project. Bids for two other
Idea Cellular’s board had granted in-principle approval for sale joint development basis. Khushru Jijina, MD of Piramal projects of 1 MWh each have already been called by the
of further equity of up to INR 35bn and had set up a Finance and Piramal Housing Finance, said for certain projects Military Engineering Services in the Union Territory.

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India | Banking & Financials 14 February 2018
Sector Update

Banking & Financials


Writing on the wall Banks’ standard stressed loans
Proportion of CDR/SDR/S4A/5:25 (%)
Likely impact of revised guidelines on stressed loans resolution
Axis Bank 1.66
The RBI’s latest guidelines convey a clear message that bankers and ICICI Bank 2.55
borrowers can no longer stymie the reclassification of loans by utilizing
Global Markets Research

YES Bank 0.41


or misusing norms. While in the short run, the impact on banks’
Bank of Baroda 1.65
(corporate-led balance sheets) profitability would be reasonably high,
State Bank of India 2.76
in the longer term, they would bring about higher transparency. And,
Union Bank of India 3.78
it would be of particular importance for minority shareholders. The
regulator also stated the likelihood of punitive charges, including Source: Company Elara Securities Research

action against errant bankers’ ever-greening and/or delaying Tier I


reclassification of corporate loan accounts. Also, previous (%) FY16 FY17 FY18E
dispensations (CDR, SDR, S4A & 5:25) apart from JLF (as an institution) Axis Bank 12.5 11.9 12.6
have been withdrawn and discontinued. ICICI Bank 13.1 14.4 13.6
YES Bank 10.7 13.3 12.6
Under the new guidelines, reaching consensus among banks for
Bank of Baroda 10.8 9.9 11.8
restructuring could be an issue (as experienced in the past in JLF
Punjab National Bank 8.4 9.3 10.7
meetings). But, if the banks fail to restructure within 180 days, the loan
State Bank of India 9.9 10.1 9.9
account would be referred to Insolvency & Bankruptcy Code (IBC) for
Union Bank of India 8.1 9.1 8
resolution, and this clause would act as a big deterrent.
Source: Company Elara Securities Estimate
New guidelines: further push towards merger
PPoP - Avr Assets
The new guidelines would strain banks’ profitability, and, (%) FY16 FY17 FY18E
consequently, impact core capital. And, the smaller banks’ inability to Axis Bank 3.3 3.1 2.5
raise equity capital from the secondary markets would force them ICICI Bank 3.5 3.5 2.8
towards implicitly directed merger. The announcement and YES Bank 2.9 3.1 3
implementation of prompt corrective action (PCA) recently were the Bank of Baroda 1.3 1.6 1.5
initial steps in this direction. Punjab National Bank 1.9 2.1 2
State Bank of India 2 1.9 1.8
Credit demand in corporate credit: big question mark
Union Bank of India 1.4 1.7 1.7
With the implementation of new guidelines, corporate and key
Source: Company Elara Securities Estimate
financiers of corporate loans would be under considerable stress. In
PCR (Excl. write-offs)
the short term, corporate credit would weaken further, with a likely
(%) FY16 FY17 FY18E
rise in bank reclassification, and, consequently, its inability to raise debt
Axis Bank 58.6 59.5 52
funds. Also, corporate would have to raise fresh funds at higher
ICICI Bank 50.6 40.2 42.7
interest rates (200-300bp). We believe corporate credit demand will
YES Bank 62 46.9 50.1
drift further, but credit substitutes’ demand (from high-rated
Bank of Baroda 52.1 57.7 60.1
borrowers) may rise due to interest rate differential.
Punjab National Bank 36.5 40.9 41.8
MSME asset class would be under further stress State Bank of India 43.8 45.5 48.8

Empirical evidence and logic indicate vendors to large corporate may Union Bank of India 42 44.1 50.7

not be comfortable in a situation where large corporate are reeling Source: Company Elara Securities Estimate

under strain. Therefore, we expect MSME (in direct association with


domestic large corporate) to witness lower credit needs, and,
consequently, credit demand may contract from the segment.

Rakesh Kumar • rakesh.kumar@elaracapital.com • +91 22 6164 8559


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Banking & Financials

Enhanced competition in retail loans In this prevailing situation, among PSB, we are more
Fewer avenues of credit deployment would lead to comfortable with SBI since the probability of a merger
increased competition in the retail segment. As a result, with other PSB is remote. In case of Bank of Baroda,
pricing pressure in private banks and NBFC retail books Punjab National Bank and Canara Bank, the probability is
would get reflected in credit yields. And, with a time lag, much higher. Banks with higher core profitability (PPoP –
we may witness asset quality issues in PSB retail loans, as Average Assets), core capital and provision cover would
retail lending has not been their forte. be better positioned. Among private banks, we prefer
HDFC Bank and IndusInd Bank on a relative basis, while
credit demand scenario would be tepid in case of Axis
Bank and ICICI Bank.

2 Elara Securities (India) Private Limited


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India | Pharmaceuticals 14 February 2018
Quarterly Update/Target price change

Sun Pharmaceuticals
Halol clearance priced in Rating: Reduce
In-line EBITDA aided by lower other expenses Target Price: INR 550
Downside: 4%
Sun Pharma (SUNP IN) reported in-line operating performance, with
CMP: INR 574 (as on 14 February 2018)
an EBITDA of INR 14.5bn, down 41% YoY. Ex-Taro, US sales was higher
Global Markets Research

by 24% QoQ at USD 188mn vs estimates of USD 170mn, aided by new Key data*
launches (gCoreg CR) and deferment of sales from Q2. Taro sales Bloomberg /Reuters Code SUNP IN/SUN.BO
declined 4% QoQ at USD 155mn vs estimates of USD 165mn. India Current /Dil. Shares O/S (mn) 2,399/2,399
sales grew by 6% YoY vs our estimates of 10%. Further, RoW + EM sales Mkt Cap (INR bn/USD mn) 1,378/21,504
grew by 4% YoY, below our estimates. GM shrank 330bp QoQ to Daily Volume (3M NSE Avg) 5,167,349
68.2% on account of lower Taro margin and India sales QoQ; Face Value (INR) 1
however, other expenses were down sharply by 13% YoY and 17% 1 USD = INR 64.1
Note: *as on 14 February 2018; Source: Bloomberg
QoQ. The tax rate was higher at 20% while minority interest was lower
due to lower profitability in Taro. As a result, PAT of INR 8.8bn was in
Price & Volume
line with our estimate. There were one-time tax expenses of INR 5.1bn
800 50
on change in US tax laws. Reported PAT came in at INR 3.7bn.
40
700
Key conference call highlights
30
Other expenses were lower aided by currency benefits and cost 600
20
rationalization measures. The change in copayment program for 500
10
Absorica will result in better profitability. R&D expenses were lower
aided by reduction in clinical costs related to Tildra, which has been 400 0
Feb-17 Jun-17 Oct-17 Feb-18
filed. PDUFA date for Tildra is due on March 2018. Sun continues to Vol. in mn (RHS) Sun Pharma (LHS)
scout for M&A in Ophthalmology and dermatology therapies. Source: Bloomberg
Management expects Q4FY18 sales at the same level as Q3, indicating
Shareholding (%) Q4FY17 Q1FY18 Q2FY18 Q3FY18
a higher decline in FY18 vs earlier guidance while EBITDA margin
Promoter 54.4 54.4 54.4 54.4
guidance remains unchanged at 20-22%. Odomzo has also been Institutional Investors 33.5 32.6 32.1 32.1
introduced in Germany, its first launch in the EU market. Other Investors 5.1 5.7 5.9 6.0
General Public 7.1 7.3 7.6 7.5
Valuation: retain Reduce with a revised TP of INR 550
Source: BSE
Given the sharp decline in the US base business in 9M, we are cautious
Price performance (%) 3M 6M 12M
on Sun’s recovery in US generics. While Halol clearance may expedite
Sun Pharma 9.2 21.8 (11.5)
approval process, the quality of approvals needs to be monitored.
Nifty 2.7 8.1 19.3
While the potential of Sun’s specialty growth model has been a
Relative performance 6.5 13.7 (30.8)
compelling story, the benefits of that will be visible from FY20. At the Source: Bloomberg
CMP, the stock is trading at rich valuations of 24x FY20E P/E. The Halol
clearance along with Tildra approval are near-term monitorable. We
retain Reduce with a new TP of INR 550 from INR 506 as we roll
forward to FY20.

YE Marcch (INR mn) Q33FY18 Q33FY17 YoY (%) Q22FY18 QoQ (%) FY18E FY17 YoY (%)
Net Sales 66,532 79,127 (15.9) 66,503 0.0 263,268 315,784 (16.6)
EBITDA 14,534 24,531 (40.8) 13,756 5.7 54,646 100,893 (45.8)
EBITDA Margins (%) 21.8 31.0 20.7 20.8 31.9
Other Income 1,292 1,222 5.8 2,548 (49.3) 6,618 6,232 6.2
Interest 953 1,665 (42.7) 1,574 (39.4) 4,500 3,998
Depreciation 3,393 3,068 10.6 3,587 (5.4) 13,441 12,648 6.3
PBT 11,479 21,020 (45.4) 11,144 3.0 43,323 90,479 (52.1)
Tax 2,357 3,729 (36.8) 1,114 111.6 7,124 12,116 (41.2)
Tax Rate (%) 20.5 17.7 10.0 16.4 13.4
PAT 9,123 17,291 (47.2) 10,030 (9.0) 36,199 78,363
Minority Interest 338 2,573 908 3,254 8,719
Net Income 8,784 14,718 (40.3) 9,121 (3.7) 32,945 69,644 (52.7)
NPM (%) 13.2 18.6 13.7 12.5 22.1

Key Financials
YE Revenue YoY EBITDA EBITDA Adj PAT YoY Fully DEPS RoE RoCE P/E EV/EBITDA
March (INR mn) (%) (INR mn) Margin (%) (INR mn) (%) (INR) (%) (%) (x) (x)
FY17 315,784 10.9 100,893 31.9 69,644 33.1 28.9 18.0 17.9 19.8 13.2
FY18E 263,268 (16.6) 54,646 20.8 32,945 (52.7) 13.7 8.2 8.0 41.9 24.3
FY19E 297,959 13.2 71,827 24.1 47,861 45.3 19.9 11.5 11.0 28.9 18.1
FY20E 328,844 10.4 82,506 25.1 57,549 20.2 23.9 12.7 12.0 24.0 15.3
Note: pricing as on 14 February 2018; Source: Company, Elara Securities Estimate
Param Desai • param.desai@elaracapital.com • +91 22 6164 8528
Aarti GMT.
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Distribution (India)
Prohibited. Private Limited
Sun Pharmaceuticals

Consolidated Financials (YE March)


Income Statement (INR mn) FY17 FY18E FY19E FY20E Revenue & margin growth trend
Net Revenues 315,784 263,268 297,959 328,844 400,000 31.9 33
EBITDA 100,893 54,646 71,827 82,506
Add:- Non operating Income 1,308 (100) 900 1,100 300,000
28

(INR mn)
OPBIDTA 102,201 54,546 72,727 83,606 25.1
24.1

(%)
Less :- Depreciation & Amortization 12,648 13,441 14,113 14,819 200,000

EBIT 89,553 41,106 58,614 68,787 20.8 23


100,000
Less:- Interest Expenses (925) (2,218) (3,022) (4,028)
PBT 90,479 43,323 61,636 72,815 0 18
Less :- Taxes 12,116 7,124 9,469 11,022 FY17 FY18E FY19E FY20E
Adjusted PAT 78,363 36,199 52,167 61,793 Net Revenues (LHS) EBITDA Margin (RHS)
Add/Less: - Extra-ordinaries - 14,635 - -
Source: Company, Elara Securities Estimate
Reported PAT 78,363 21,564 52,167 61,793
Add/Less: - Minority Interest (8,719) (3,254) (4,306) (4,243)
Reported PAT 69,644 32,945 47,861 57,549
Balance Sheet (INR mn) FY17 FY18E FY19E FY20E
Adjusted profit growth trend
Share Capital 2,399 2,399 2,399 2,399 100,000 80
Reserves 363,997 353,593 384,560 425,216 75,000 45.3 60
33.1
Borrowings 80,910 80,910 80,910 80,910 50,000 20.2 40

(INR mn)
Deferred Tax (Net) (21,780) (21,780) (21,780) (21,780) 25,000 20

(%)
Minority Interests 37,909 41,163 45,469 49,712 0 0
Total Liabilities 463,435 456,285 491,558 536,457 (25,000) (20)
Gross Block 189,302 198,302 207,303 216,304 (50,000) (40)
(75,000) (52.7) (60)
Less:- Accumulated Depreciation (67,913) (81,353) (95,466) (110,285)
FY17 FY18E FY19E FY20E
Net Block 121,390 116,949 111,837 106,019
Add:- Capital work in progress 28,014 28,014 28,014 28,014 Adjusted PAT (LHS) PAT Growth (RHS)

Investments - - - - Source: Company, Elara Securities Estimate


Net Working Capital 188,831 186,122 226,507 277,223
Other Assets 125,201 125,201 125,201 125,201
Total Assets 463,435 456,285 491,558 536,457 Return ratios
Cash Flow Statement (INR mn) FY17 FY18E FY19E FY20E
20 18.0
Cash profit adjusted for non cash items 91,010 49,640 66,280 76,611
Add/Less : Working Capital Changes (6,139) 17,016 (10,004) (9,128) 17.9 12.7
15 11.5
Operating Cash Flow 84,871 66,656 56,276 67,483
Less:- Capex 36,936 9,000 9,001 9,001 10 8.2
12.0
11.0
Free Cash Flow 47,935 57,656 47,275 58,482
5 8.0
Financing Cash Flow (13,525) (14,079) (16,894) (16,894)
Investing Cash Flow (14,818) (24,140) - -
0
Net change in Cash 19,592 19,438 30,381 41,588 FY17 FY18E FY19E FY20E
Ratio Analysis FY17 FY18E FY19E FY20E ROE (%) ROCE (%)
Income Statement Ratios (%)
Revenue Growth 10.9 (16.6) 13.2 10.4 Source: Company, Elara Securities Estimate

EBITDA Growth 23.7 (45.8) 31.4 14.9


PAT Growth 33.1 (52.7) 45.3 20.2
EBITDA Margin 31.9 20.8 24.1 25.1
Net Margin 22.1 12.5 16.1 17.5
Return & Liquidity Ratios
Net Debt/Equity (x) (0.2) (0.2) (0.2) (0.3)
ROE (%) 18.0 8.2 11.5 12.7
ROCE (%) 17.9 8.0 11.0 12.0
Per Share data & Valuation Ratios
Diluted EPS (INR/Share) 28.9 13.7 19.9 23.9
EPS Growth (%) 33.1 (52.7) 45.3 20.2
DPS (INR/Share) 4.0 5.0 6.0 6.0
P/E Ratio (x) 19.8 41.9 28.9 24.0
EV/EBITDA (x) 13.2 24.3 18.1 15.3
EV/Sales (x) 4.2 5.0 4.4 3.8
Price/Book (x) 3.4 3.5 3.2 2.9
Dividend Yield (%) 0.8 1.0 1.2 1.2
Note: pricing as on 14 February 2018; Source: Company, Elara Securities Estimate

2 Elara Securities (India) Private Limited


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Sun Pharmaceuticals

Exhibit 1: Segment-wise breakdown


(INR mn) Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 % YoY % QoQ
Domestic 20,090 19,694 19,160 17,610 22,210 20,850 5.9 (6.1)
Exports 53,836 53,394 44,995 40,874 39,557 41,220 (22.8) 4.2
US 37,144 34,193 25,545 22,646 19,862 21,242 (37.9) 6.9
EM 11,411 11,599 12,127 10,804 12,582 12,212 5.3 (2.9)
RoW 5,281 7,603 7,323 7,424 7,113 7,766 2.2 9.2
Bulk 3,669 3,657 3,950 3,089 3,883 3,698 1.1 (4.8)
Others 45 88 138 95 251 215 144.5 (14.5)

Pharmaceuticals
Total 77,640 76,832 68,244 61,669 65,901 65,982 (14.1) 0.1
Source: Company, Elara Securities Research

Exhibit 2: Change in estimates


Earlier Revised % Change
(INR mn) FY18E FY19E FY20E
E FY18E FY19E FY20E FY18E FY19E FY20E
Sales 270,652 305,245 335,852 263,268 297,959 328,844 (2.7) (2.4) (2.1)
EBITDA 55,310 72,571 83,075 54,646 71,827 82,506 (1.2) (1.0) (0.7)
PAT 33,560 47,993 57,104 32,945 47,861 57,549 (1.8) (0.3) 0.8
EPS (INR) 13.9 19.9 23.7 13.7 19.9 23.9 (1.8) (0.3) 0.8
TP (INR) 506 550 8.7
Source: Elara Securities Estimate

Elara Securities (India) Private Limited 3


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Sun Pharmaceuticals

Coverage History
1,400
AC

1,200 15

1,000 14
13 16 19
11 12 20 21
800 17
18 23
10
6 9 24
600 4 5 7 26
1 3 22 25
8 27
2
400

200
Jul-13

Jul-14
Jan-13
Mar-13

Mar-15

Jul-15

Jul-16

Jul-17
Nov-13
Jan-14
Mar-14

Nov-14
Jan-15

Nov-15
Jan-16
Mar-16

Jan-17
Mar-17
Nov-16

Nov-17
Jan-18
May-13

Sep-13

May-14

Sep-14

May-15

Sep-15

May-16

Sep-16

May-17

Sep-17
Not Covered Covered

Date Rating Target Price Closing Price Date Rating Target Price Closing Price
1 29-May-2013 Accumulate INR 1,180 INR 1,066 21 4-Oct-2016# Accumulate INR 830 INR 764
2 12-Jun-2013 Accumulate INR 1,110 INR 981 22 10-Nov-2016 Buy INR 856 INR 666
3 08-Aug-2013 Accumulate INR 592 INR 506* 23 14-Feb-2017 Buy INR 838 INR 649
4 26-Sep-2013 Accumulate INR 622 INR 582 24 26-May-2017 Reduce INR 564 INR 569
5 14-Nov-2013 Accumulate INR 648 INR 598 25 11-Aug-2017 Reduce INR 456 INR 450
6 13-Feb-2014 Accumulate INR 686 INR 615 26 14-Nov-2017 Reduce INR 506 INR 526
7 13-Mar-2014 Buy INR 686 INR 573 27 14-Feb-2018 Reduce INR 550 INR 574
8 25-Mar-2014 Accumulate INR 675 INR 579
9 30-May-2014 Accumulate INR 692 INR 611
10 27-Jun-2014 Accumulate INR 748 INR 660
11 12-Aug-2014 Accumulate INR 835 INR 785
12 10-Nov-2014 Accumulate INR 972 INR 911
13 13-Nov-2014 Accumulate INR 976 INR 908
14 13-Feb-2015 Accumulate INR 1,004 INR 941
15 8-Apr-2015 Accumulate INR 1,081 INR 1,150
16 1-Jun-2015 Accumulate INR 1,002 INR 878
17 4-Jun-2015 Buy INR 1,010 INR 832
18 11-Jan-2016 Buy INR 878 INR 782
19 12-Feb-2016 Accumulate INR 970 INR 847
20 31-May-2016 Accumulate INR 876 INR 763
* 1:1 bonus issue on 30 July 2013; # Analyst Change

Guide to Research Rating


BUY Absolute Return >+20%
ACCUMULATE Absolute Return +5% to +20%
REDUCE Absolute Return -5% to +5%
SELL Absolute Return < -5%

4 Elara Securities (India) Private Limited


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India | Hospitality 14 February 2018

Quarterly Update/Target price change

Indian Hotels
Domestic business shows traction Rating: Accumulate
Good overall operational performance on back of tourism growth Target Price: INR 163
Upside: 18%
Indian Hotels (IH IN) standalone sales for Q3FY18 came in at INR
CMP: INR 138 (as on 12 February 2018)
7.6bn, up by 8.8% YoY, owing to strong demand from corporate as
Global Markets Research

well as the leisure segments. EBITDA at INR 2.30mn was up 10% YoY, Key data*
aided by EBITDA margin expansion of 28bp YoY to 30.2% on Bloomberg /Reuters Code IH IN/IHTL.BO
operating leverage. IHCL reported a PAT of INR 924mn vs PAT of INR Current /Dil. Shares O/S (mn) 1,189/1,189
921mn in Q3FY17. Current year’s exceptional income of INR 187mn Mkt Cap (INRbn/USD mn) 177/2,749
was on account of the change in fair value on cross currency swap Daily Volume (3M NSE Avg) 1,381,785
derivative contracts and long-term borrowings. Consolidated sales was Face Value (INR) 1
1 USD = INR 64.3
up 6% YoY at INR 11.9bn. EBITDA at INR 2.8bn was up by 5% YoY,
Note: *as on 12 February 2018; Source: Bloomberg
with margin of 23.4%, down 16bp. Reported PAT was at INR 1.12bn in
Q3FY18 vs a PAT of INR 1.00bn in Q3FY17, owing to better Price & volume
performance of subsidiaries.
170 10,000
Room demand-supply mismatch to trigger growth 150 8,000

In our view, the domestic business will continue to deliver healthy 130 6,000
performance, backed by a favorable macro environment and demand- 110 4,000
supply mismatch in the overall premium hotel market. During the year, 90 2,000
the company opened six hotels with a total of 443 rooms under the 70 0
Ginger brand. Renovation of several landmark hotels, including the Feb-17 Jun-17 Oct-17 Feb-18

iconic flagship hotel, Taj Mahal Palace, Mumbai, Taj Lands’ End, Vol. in '000 (RHS) Indian Hotels (LHS)
Mumbai, Taj Bengal Kolkata, has been completed. IHCL’s continued Source: Bloomberg

focus on investment in asset-light businesses and deleveraging Shareholding (%) Q4FY17 Q1FY18 Q2FY18 Q3FY18
balance sheet would drive overall performance in the near term. Promoter 38.7 38.7 38.7 39.1
Institutional Investors 39.9 40.9 40.8 40.3
Valuation: reiterate Accumulate with a revised TP of INR 163
Other Investors 7.8 7.4 7.6 8.1
The demand-supply mismatch of premium hotels and increasing General Public 13.6 13.1 12.9 12.5
operating efficiency would improve profitability and return ratios. We Source: BSE
believe improvement in operations will bring about better earnings Price performance (%) 3M 6M 12M
visibility. We reiterate Accumulate with a new TP of INR 163 from INR Sensex 3.0 9.9 21.1
Indian Hotels 23.3 20.5 25.4
169 based on 21x (unchanged) FY20E EV/EBITDA and 13x
EIH 19.0 37.0 71.1
(unchanged) FY20E EV/EBITDA for Taj GVK.
Source: Bloomberg

Standalone YE March (INR mn) Q3FY18 Q3FY17 YoY (%


%) Q2FY18 QoQ (%)
Net Sales 7,600 6,984 8.8 5,100 49.0
Operating Expenses 5,295 4,885 8.4 4,428 19.6
% of Sales 70 70 -28bps 87 N.M
EBITDA 2,305 2,099 9.8 672 243.0
EBITDA Margins (%) 30.3 30.1 28bps 13.2 N.M
Other Income (Net) 152 82 85 111 36.8
Interest 577 495 16.6 506 13.9
Depreciation 386 371 4.1 360 7.3
PBT 1,494 1,315 N.M (83) N.M
Exceptional item 189 88 (313)
Extra ordinary items - - N.M - N.M
PBT & after extra ordinary items 1,683 1,404 N.M (396) N.M
Tax 759 482 N.M 192 N.M
Effective Tax Rate (%) 45 34 1073bps (48) N.M
Reported PAT 924 921 0.3 (204) N.M
Key Financials
YE Revenue YoY EBITDA EBITDA Adj PAT YoY Fully DEPS RoE RoCE P/E EV/EBITDA
March (INR mn) (%) (INR mn) margin (%) (INR mn) (%) (INR) (%) (%) (x) (x)
FY17 40,103 (0.3) 6,097 15.2 (748) N.A (0.8) (2.9) 6.0 (182.4) 28.7
FY18E 43,326 8.0 6,463 14.9 1,587 (312.0) 1.6 4.7 6.8 86.0 28.8
FY19E 47,923 10.6 8,447 17.6 2,711 70.8 2.7 6.3 9.6 50.4 22.1
FY20E 43,326 (9.6) 6,463 14.9 1,587 (41.5) (312.0) 6.8 11.1 28.8 4.3
Note: pricing as on 12 February 2018; Source: Company, Elara Securities Estimate

Rahul Veera•rahul.veera@elaracapital.com• +91 226164 8529


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Elara
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Distribution (India)
Prohibited. Private Limited
Indian Hotels

Consolidated Financials (YE March)


Income Statement (INR mn) FY17 FY18E FY19E FY20E Revenue & margin growth trend
Net Revenues 40,103 43,326 47,923 52,774
55,000 18.9 20
EBITDA 6,097 6,463 8,447 9,987
Less :- Depreciation & Amortization 2,994 3,008 3,208 3,458 50,000 17.6
18
EBIT 3,103 3,456 5,239 6,529

(INR mn)
45,000
Add:- Non operating Income 549 549 549 549 15.2

(%)
14.9 16
Less:- Interest Expenses 3,238 1,361 1,271 1,271 40,000
Add/Less: - Extra-ordinaries (108) - - - 14
PBT 306 2,645 4,518 5,808 35,000
Less :- Taxes 1,137 1,058 1,807 2,323 30,000 12
Less Minority Interest - - - - FY17 FY18E FY19E FY20E
Add Share of Profits from Associates 376 - - -
Net Revenues (LHS) EBITDA Margin (RHS)
Add: Share in Profit from JV
Adjusted PAT (748) 1,587 2,711 3,485 Source: Company, Elara Securities Estimate
Reported PAT (456) 1,587 2,711 3,485
Balance Sheet (INR mn) FY17 FY18E FY19E FY20E
Share Capital 989 1,187 1,187 1,187
Warrants - - - -
Adjusted profit and net margin trend
Reserves 24,188 40,577 43,287 46,772 4,000 6.6 8
Preference shares - - - - 5.7
3,000 6
Minority Interest 7,378 7,378 7,378 7,378
Compulsory Convertible Debentures - - - -

(INR mn)
2,000 4

(%)
Borrowings 33,830 15,119 14,119 14,119 3.7
Deferred Tax (Net) 2,820 2,820 2,820 2,820 1,000 2
Total Liabilities 69,205 67,081 68,792 72,276 0 0
Gross Block 57,923 60,150 64,150 69,150
(1,000) (1.9) (2)
Less:- Accumulated Depreciation 5,325 8,333 11,540 14,998 FY17 FY18E FY19E FY20E
Net Block 52,598 51,818 52,610 54,153
Add:- Capital work in progress 2,227 4,000 5,000 6,000 Adjusted PAT (LHS) Net Margin (RHS)
Investments 12,437 12,437 12,437 12,437
Source: Company, Elara Securities Estimate
Goodwill on Consolidation 5,556 5,556 5,556 5,556
Cash & bank balances 2,471 125 (942) (143)
Net Working Capital (3,613) (6,730) (6,811) (5,869)
Other Assets Return ratios
Total Assets 69,205 67,081 68,792 72,276
Cash Flow Statement (INR mn) FY17 FY18E FY19E FY20E 15
11.1
Cash profit adjusted for non cash items 5,944 5,955 7,189 8,213 9.6
10 6.8
Add/Less : Working Capital Changes (599) 771 (985) (143) 6.0
Operating Cash Flow 5,345 6,726 6,204 8,069
5 7.5
Less:- Capex (3,940) (4,000) (5,000) (6,000) 6.3
4.7
Free Cash Flow 1,406 2,726 1,204 2,069
0
Financing Cash Flow (13,814) (5,072) (2,271) (1,271)
Investing Cash Flow 12,495 1,000 1,000 (6,000)
(5) (2.9)
Net change in Cash 87 (1,346) (67) (5,201) FY17 FY18E FY19E FY20E
Ratio Analysis FY17 FY18E FY19E FY20E
ROE (%) ROCE (%)
Income Statement Ratios (%)
Revenue Growth (0.3) 8.0 10.6 10.1 Source: Company, Elara Securities Estimate
EBITDA Growth 10.4 6.0 30.7 18.2
PAT Growth (37.9) (312.0) 70.8 28.5
EBITDA Margin 15.2 14.9 17.6 18.9
Net Margin (1.9) 3.7 5.7 6.6
Return & Liquidity Ratios
Net Debt/Equity (x) 1.2 0.4 0.3 0.3
ROE (%) (2.9) 4.7 6.3 7.5
ROCE (%) 6.0 6.8 9.6 11.1
Per Share data & Valuation Ratios
Diluted EPS (INR/Share) (0.76) 1.60 2.74 3.52
EPS Growth (%) (37.9) (312.0) 70.8 28.5
DPS (Rs/Share) - - - -
P/E Ratio (x) (182.4) 86.0 50.4 39.2
EV/EBITDA (x) 28.7 28.8 22.1 18.1
EV/Sales (x) 4.4 4.3 3.9 3.4
EV/Room -Owned (INR mn) 19.2 20.0 19.7 19.1
Price/Book (x) 4.4 2.7 2.5 2.3
Dividend Yield (%) - - - -
Note: pricing as on 12 February 2018; Source: Company, Elara Securities Estimate

2 Elara Securities (India) Private Limited


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Indian Hotels

Exhibit 1: Financial snapshot (consolidated)


YE March (INR mn) Q3FY18 Q3FY17 YoY (%
%) Q2FY18 QoQ (%
%)
Net Sales 11,972 11,321 5.8 8,517 40.6
Operating Expenses 9,168 8,651 6.0 7,971 15.0
% of Sales 77 76 16bps 94 N.M
EBITDA 2,805 2,670 5.0 546 413.8
EBITDA Margins (%) 23.4 23.6 (16)bps 6 N.M
Other Income (Net) 199 135 48 125 58.8
Interest 760 740 2.6 716 6.1
Depreciation 742 691 7.3 705 5.3
PBT 1,502 1,373 9.3 (875) (271.7)
Exceptional Item 187 89 24
PBT & after extra ordinary items 1,689 1,462 15.5 (725) (332.9)

Hospitality
Tax 819 564 45.2 (214) (481.8)
Effective Tax Rate (%) 55 41 32.8 25 N.M
Reported PAT 871 898 (3.1) (511) N.M
Add Share of Profits from Associates/JV 255 107 139.2 (89)
Total PAT 1,126 1,005 12.0 (599)
Source: Company, Elara Securities Research

Exhibit 2: Consolidated - key ratios (% of net sales)


YE March (INR mn) Q3FY18 Q3FY17 YoY chg (bps) Q2FY18 QoQ chg (bps)
Employee cost 28.9 30.0 (111)bps 38 N.M
Food & Beverages Consumed 9.3 8.9 36bps 10 N.M
Other Operating Expenses 38.4 37.4 91bps 46 N.M
EBITDA Margin 23.4 23.6 (16)bps 6.4 N.M
NPM 8 8 N.M (7) N.M
Source: Company, Elara Securities Research

Exhibit 3: Valuation
FY20E
IHCL-Ex-Taj GVK
EV/EBIDTA
EBIDTA (INR mn) 9,987
Target EV/EBITDA (x) 21
Target EV (INR mn) 209,718
Taj GVK
EBIDTA (INR mn)-(25.52% of Taj GVK) 226
Target EV/EBITDA (x) 13
Target EV (INR mn) 2,941
Total EV 212,659
Target Mcap (INR mn) 193,893
Target price (INR) 163
CMP (INR) 138
Upside (%) 18
Note: as on 12 February 2018; Source: Elara Securities Estimate

Exhibit 4: Change in estimates


(INR mn) Earlier Current % variation
FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
Net sales 44,296 48,733 53,218 43,326 47,923 52,774 (2.2) (1.7) (0.8)
EBITDA 7,194 8,480 10,010 6,463 8,447 9,987 (10.2) (0.4) (0.2)
PAT 2,015 2,758 3,609 1,587 2,711 3,485 (21.2) (1.7) (3.4)
Target Price (INR) 169 163 (3.3)
Source: Elara Securities Estimate

Elara Securities (India) Private Limited 3


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Indian Hotels

Coverage History
190

170 AC
26
150
23
20 24
130 27
16 25
15 21 22
110 1 2 17
14 19
90 3 18
4
5 7 8
70 6 9 1213
11
10
50

30
Jul-10

Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17
Jan-10

Oct-10
Jan-11

Oct-11
Jan-12

Oct-12
Jan-13

Oct-13
Jan-14

Oct-14
Jan-15

Oct-15
Jan-16

Oct-16
Jan-17

Oct-17
Jan-18
Apr-10

Apr-11

Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17
Not Covered Covered
AC= Analyst change

Date Rating Target Price Closing Price Date Rating Target Price Closing Price
1 17-Mar-2010 Buy INR140 INR98.5 22 6-Feb-2017 Buy INR141 INR112
2 27-May-2010 Buy INR120 INR96 23 26-May-2017 Reduce INR137 INR137
3 25-May-2011 Buy INR101 INR78 24 4-Aug-2017 Accumulate INR150 INR128
4 28-Oct-2011 Accumulate INR83 INR70 25 13-Nov-2017 Accumulate INR135 INR115
5 25-Jan-2012 Accumulate INR70 INR64 26 17-Jan-2018 Accumulate INR169 INR148
6 31-May-2012 Reduce INR58 INR56 27 12-Feb-2018 Accumulate INR163 INR138
7 06-Nov-2012 Reduce INR60 INR63
8 11-Feb-2013 Accumulate INR69 INR62
9 31-May-2013 Accumulate INR56 INR51
10 12-Aug-2013 Buy INR55 INR43
11 08-Nov-2013 Accumulate INR59 INR51
12 18-Dec-2013 Accumulate INR69 INR59
13 11-Feb-2014 Buy INR77 INR60
14 30-May-2014 Accumulate INR100 INR90
15 14-Nov-2014 Accumulate INR115 INR107
16 05-Feb-2015 Accumulate INR138 INR123
17 29-May-2015 Buy INR132 INR102
18 18-Jan-2016 Buy INR154 INR108
19 19-May-2016 Buy INR158 INR113
20 15-Jul-2016 Buy INR183 INR133
21 4-Nov-2016 Buy INR180 INR113

Guide to Research Rating


BUY Absolute Return >+20%
ACCUMULATE Absolute Return +5% to +20%
REDUCE Absolute Return -5% to +5%
SELL Absolute Return < -5%

4 Elara Securities (India) Private Limited


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India | Utilities 14 February 2018
Quarterly Update/Target price change

CESC
In-line profit Rating: Sell
Parent generation rises 16%, sales up 12% YoY Target Price: INR 910
Downside: 12%
During Q3, CESC (CESC IN) own generation volume (parent) linked to
CMP: INR 1,036 (as on 12 February 2018)
the Kolkata circle (52% of SOTP) grew 16% YoY, (the highest growth in
Global Markets Research

the past 30 quarters) at 1.4bn units with a 55% PLF, up 750bp. While Key data*
sales from Haldia (11% of SOTP, ran at 87% PLF) fell 10% and met 36% Bloomberg /Reuters Code CESC IN/CESC.BO
of Kolkata demand, external procurement increased 2% on higher Current /Dil. Shares O/S (mn) 133/133
tariff. Sales volume was up 12% to 2.3bn units. While Titagarh remains Mkt Cap (INR bn/USD mn) 137/2,135
Daily Volume (3M NSE Avg) 505,054
shut, Budge Budge operated at 78% PLF, up 1,290 bp, and Southern
Face Value (INR) 10
plant operated at 24% PLF. T&D loss remains flat QoQ at 10.8%.
1 USD = INR 64.3
Retail: sales continues to fall for fourth successive quarter Note: *as on 12 February 2018; Source: Bloomberg

Spencer’s Retail (13% of SOTP) added one super store and SAS in Q3,
Price & Volume
taking total to 126. Retail space stood at 1.18mn sqft, down 1% QoQ,
1,250 10
but is expected to add about 40,000 sqft in Q4FY18. For the fourth
1,150 8
straight quarter, average sales fell 6% YoY to INR 1,607 sqft/month
with same store sales down 4% YoY. This is due to destocking across 1,050 6

categories, due to GST implementation and maintenance shutdown at 950 4


two hypermarkets (largest store opened in late December post 850 2
renovation). EBITDA fell 9% to INR 110 sqft/month. 750 0
Feb-17 Jun-17 Oct-17 Feb-18
In-line results Vol. in mn (RHS) CESC (LHS)
Overall revenue was up 5% to INR 17.1bn, 8% above estimates, led by Source: Bloomberg
a 12% rise in sales volume, but tariff fell 6% to INR 7.3/kWh. While fuel Shareholding (%) Q4FY17 Q1FY18 Q2FY18 Q3FY18
cost was up 4% to INR 2.3/kWh, other expenses dipped 12% to INR Promoter 49.9 49.9 49.9 49.9
1.7bn. Hence, EBITDA was flat YoY to INR 3.1bn, 4% below estimates. Institutional Investors 41.4 40.9 38.6 38.8
Other income was up 43%, but interest cost was higher by 12%. Other Investors 5.5 5.5 6.8 6.1

Accordingly, net profit was up just 1% to INR 1.5bn (in line). General Public 3.2 3.7 4.7 5.1
Source: BSE
Valuation: retain Sell with a new TP of INR 910
Price performance (%) 3M 6M 12M
We cut our EPS by 5% in FY19E primarily on continuing loss at the Sensex 2.3 6.9 20.0
Chandrapur plant). Accordingly, we lower our TP to INR 910 from INR CESC (0.4) 5.0 21.7
920 based on a DCF method with 13.5% COE, retail asset with 16% BSE Power (2.5) (2.4) 0.6

COE (implied value/sales at 0.7 FY19E). We reiterate Sell as the stock BSE Midcap 0.3 9.8 23.2

trades at 1.1x FY19E P/BV. Watch for turnaround at Chandrapur Source: Bloomberg

(pushed to FY20E), retail business, demerger and listing of four entities.

YE March (INR mn) Q3


3FY18
8 Q3
3FY17
7 YoY (%) Q2
2FY18
8 QoQ (%)
Net Sales 17,060 16,200 5.3 20,880 (18.3)
EBITDA 3,140 3,150 (0.3) 5,050 (37.8)
EBITDA Margins (%)* 18.4 19.4 (103.9) 24.2 (578.0)
Other Income 430 300 43.3 350 22.9
Interest 1,210 1080 12.0 1260 (4.0)
Depreciation 1,090 980 11.2 1,080 0.9
PBT 1,270 1,390 (8.6) 3,060 (58.5)
Adjusted PAT 1,540 1,520 1.3 2,470 (37.7)
Reported PAT 1,540 1,520 1.3 2,470 (37.7)
EPS (INR) 11.6 11.4 1.3 18.5 (37.7)
*Change is in bp; Source: Company, Elara Securities Estimate

Key Financials
YE Revenue YoY EBITDA EBITDA Adj PAT YoY Fully DEPS RoE RoCE P/E P/BV
March (INR mn) (%) (INR mn) growth (%) (INR mn) (%) (INR) (%) (%) (x) (x)
FY17 134,904 13.7 26,987 (7.8) 5,402 (18.8) 41 5.1 8.7 25.5 1.3
FY18E 165,119 22.4 37,280 38.1 11,009 103.8 83 9.9 10.2 12.5 1.2
FY19E 170,360 3.2 39,731 6.6 13,947 26.7 105 11.5 10.9 9.9 1.1
FY20E 176,234 3.4 41,462 4.4 15,975 14.5 120 11.9 11.4 8.6 1.0
Note: pricing as on 12 February 2018; Source: Company, Elara Securities Estimate

Deepak Agrawala • deepak.agrawala@elaracapital.com • +91 22 6164 8523


Harshit04:48:26
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CESC

Consolidated Financials (YE March)


Income Statement (INR mn) FY17 FY18E FY19E FY20E
Revenue & margin growth trend
Net Revenues 134,904 165,119 170,360 176,234
EBITDA 26,987 37,280 39,731 41,462 200,000 23.3 23.5 24
Add:- Non operating Income 7,118 3,384 3,246 3,215 22.6
175,000
OPBIDTA 34,105 40,663 42,977 44,677
22

(INR mn)
Less :- Depreciation & Amortization 8,164 9,788 9,980 10,182 150,000

(%)
EBIT 25,941 30,875 32,996 34,495 20.0
125,000
Less:- Interest Expenses 14,972 14,322 12,942 11,407 20
PBT 10,969 16,553 20,054 23,088 100,000
Less :- Taxes 3,803 3,961 4,290 5,098
75,000 18
Less: - Minority interest 1,194 1,583 1,817 2,015 FY17 FY18E FY19E FY20E
Adjusted PAT 5,402 11,009 13,947 15,975 Net Revenues (LHS) EBITDA Margin (RHS)
Add/Less: - Extra-ordinaries 1,511 - - -
Reported PAT 6,913 11,009 13,947 15,975 Source: Company, Elara Securities Estimate
Balance Sheet (INR mn) FY17 FY18E FY19E FY20E
Share Capital 1,332 1,332 1,332 1,332
Reserves 104,895 114,098 126,075 139,992 Adjusted profit growth trend
Net worth 106,227 115,430 127,407 141,324
Minority Interest 12,100 13,683 15,500 17,515 20,000 103.8 125
Borrowings 139,943 128,652 113,691 97,853 15,000 100
Other liabilities 45,666 44,657 45,091 45,640 75

(INR mn)
10,000
Total Liabilities 303,936 302,422 301,689 302,331

(%)
26.7 50
Gross Block 287,748 305,635 312,827 320,094 5,000 14.5
25
Less:- Accumulated Depreciation 21,486 31,274 41,254 51,437 0 0
Net Block 266,262 274,361 271,572 268,657
(5,000) (18.8) (25)
Add:- Capital work in progress 3,919 3,843 3,918 3,874
FY17 FY18E FY19E FY20E
Investments 11,095 11,095 11,095 11,095
Net Working Capital ex Cash 2,524 (6,015) (4,211) (2,386) Adjusted PAT (LHS) PAT Growth (RHS)
Cash 16,061 15,061 15,238 17,014
Source: Company, Elara Securities Estimate
Other Assets 4,076 4,076 4,076 4,076
Total Assets 303,936 302,422 301,689 302,331
Cash Flow Statement (INR mn) FY17 FY18E FY19E FY20E
Cash profit adjusted for non cash items 35,960 40,493 42,798 44,490 Return ratios
Add/Less : Working Capital Changes 30,093 49,032 40,994 42,665 14 11.9
11.5
Operating Cash Flow 26,475 45,072 36,704 37,566 12 10.2
Less:- Capex (14,720) 17,812 7,266 7,223 10 8.7
10.9 11.4
Free Cash Flow 41,194 27,259 29,438 30,343 8 9.9
Investing Cash Flow 14,862 17,812 7,266 7,223 6
Financing Cash Flow (7,592) (28,259) (29,261) (28,567) 4
Net change in Cash 4,021 (999) 177 1,776 5.1
2
Ratio Analysis FY17 FY18E FY19E FY20E 0
Income Statement Ratios (%) FY17 FY18E FY19E FY20E
Revenue Growth 13.7 22.4 3.2 3.4 ROE (%) ROCE (%)
EBITDA Growth (7.8) 38.1 6.6 4.4
PAT Growth (18.8) 103.8 26.7 14.5 Source: Company, Elara Securities Estimate
EBITDA Margin 20.0 22.6 23.3 23.5
Company Overview
Net Margin 4.0 6.7 8.2 9.1
Return & Liquidity Ratios CESC (CESC IN), a part of RPG group, is a diversified
company with businesses across power
Net Debt/Equity (x) 1.0 0.9 0.7 0.5
(generation, transmission & distribution), retail and
ROE (%) 5.1 9.9 11.5 11.9
information technology. It is an integrated player
ROCE (%) 8.7 10.2 10.9 11.4 involved in generation (1,125MW), transmission &
Per Share data & Valuation Ratios distribution of power in Kolkata. It also owns two
Diluted EPS (INR/Share) 40.6 82.6 104.7 119.9 coal-fired plants of 600MW each at Chandrapur
EPS Growth (%) (18.8) 103.8 26.7 14.5 and Haldia. The company owns 160MW wind,
DPS (INR/Share) 10.0 10.5 11.5 12.0 27MW of solar and 40MW of washery coal reject-
P/E Ratio (x) 25.5 12.5 9.9 8.6 based power plants. In the retail division, it owns
EV/EBITDA (x) 9.7 6.7 6.0 5.3 124 stores (38 hypermarkets, 19 super stores and
EV/Sales (x) 1.9 1.5 1.4 1.2 67 small stores) across five regions, with more than
Price/Book (x) 1.3 1.2 1.1 1.0 1,186,000 sqft of retail space. CESC also owns
Dividend Yield (%) 1.0 1.0 1.1 1.2 54.9% in FirstSource Solutions (FSOL IN) among the
top three BPO companies in India. It has
Note: pricing as on 12 February 2018; Source: Company, Elara Securities Estimate
announced demerger of the company into four
different entities in May 2017: CESC (distribution),
CESC Genco (generation), Spencer’s Retail and
CESC Ventures.
2 Elara Securities (India) Private Limited
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CESC

Chandrapur volume up 29% Exhibit 2: Power – operational performance


The 600MW Chandrapur project continues to benefit Q3FY18 Q3FY17 YoY (%) Q2FY18 QoQ (%)

from long-term supply of 187MW during Q2FY18 (vs Capacity (MW) 2,548 2,478 2.8 2,548 -
34MW to Noida Power from mid-November 2016). PLF (%)* 54.6 47.1 750.0 70.0 (1,540.0)
Accordingly, PLF improved to 37% (+830bp YoY), leading Generation
1,357 1,170 16.0 1,738 (21.9)
to a 29% rise in sales volume to 455MU. While there will (mn units)**

be a rebidding for the PPA with BEST, the company is Sales (mn units) 2,345 2,090 12.2 2,759 (15.0)

expected to commence the sale of power in the short Sales (mn units) - Haldia
844 934 (9.7) 1,071 (21.2)
to parent
term to the Maharashtra distribution utility at ~INR Sales (mn units) -
494 385 28.3 572 (13.6)
2.8/kWh, which would help arrest loss (Elara: INR 1.8bn Chandrapur
Average realization
in FY18E, turning profitable in FY20). Uttar Pradesh 7.3 7.8 (6.1) 7.6 (3.9)
(INR/kWh)
electricity regulator has rejected PPA to procure 200MW Note: *change in bp; **includes generation from Budge Budge, Southern
and Titagarh plants; Source: Company, Elara Securities Research
from the Chandrapur plant to Noida Power for the long

Utilities
term. Exhibit 3: Performance of FirstSource Solutions
(INR mn) Q3FY18 Q3FY17 YoY (%) Q2FY18 QoQ (%)
FirstSource: sharp uptick in profit, +45% QoQ
Net sales 8,872 8,854 0.2 8,730 1.6
FirstSource Solutions, IT subsidiary with a 54.9% stake,
reported an overall revenue of INR 8.9bn, up 2% QoQ. Operating expenses 7,711 7,782 (0.9) 7,633 1.0

Healthcare segment revenue was up 6% QoQ to INR EBITDA 1,161 1,072 8.4 1,097 5.9
3.2bn (37% of Q3FY18 sales); the BFSI segment was up EBITDA margin (%)* 13.1 12.1 98.5 12.6 52.6
2% QoQ to INR 2.5bn (29% share), but telecom & media
Adjusted PAT 996 698 42.7 688 44.8
segment sales declined 3% QoQ to INR 3bn (33% share).
NPM (%)* 11.2 7.9 334.0 7.9 334.5
Segment-wise, the customer management segment
(55% share) revenue jumped 3% YoY to INR 4.8bn. A 1% Employee count (no) 19,226 25,992 (26.0) 19,194 0.2

QoQ rise in operating expenses helped EBITDA margin Cost/employee 1.3 0.9 35.7 1.1 17.1
to expand by 53bp QoQ to 13.1%, with an EBITDA of Note: *change in bp; Source: Company, Elara Securities Research
INR 1.2bn. Net profit jumps 45% to INR 996mn, owing to
Exhibit 4: Sales mix of FirstSource Solutions
deferred tax credit of INR 240mn on account of
YoY QoQ
reduction in US tax rate from 34% to 21%. Employee (INR mn) Q2FY18 Q3FY17 Q2FY18
(b
bp chg) (b
bp chg)
count remains flat QoQ at 19,226. Geographical mix

Key upside risks: a faster recovery in retail, tie-up of US & Canada 54.0 56.2 (220) 52.2 180

balance power capacity on PPA of the Chandrapur plant, UK 45.0 37.6 740 45.2 (20)
a cut in regulated ROE and tighter norms. Watch for
India 1.0 6.2 (520) 2.6 (160)
timelines for demerger into four entities and the
Industry mix
regulator’s decision to allow recovery of levy of INR 10bn
paid as per the SC order on coal block deallocation. Telecom & media 33.3 32.9 40 34.7 (140)

Healthcare 37.4 35.6 180 36.0 140


Exhibit 1: Performance of the retail division
Q3FY18 Q3FY17 YoY (%) Q2FY18 QoQ (%) BFSI 29.3 31.2 (190) 29.2 10

Average sales Segment-wise mix


1,607 1,714 (6.2) 1,507 6.6
(INR/sq ft/month)
Customer
Same store sales 54.5 50.5 398 53.7 78
1,697 1,763 (3.7) 1,588 6.9 Management
(INR/sq ft/month)
Healthcare 35.5 33.0 245 33.6 189
Same store EBITDA
na 133 nm 105 (100.0)
(INR/sq ft/month)
Collections 10.0 10.8 (81) 10.1 (5)
EBITDA
110 121 (9.1) 100 10.0
(INR/sq ft/month) Domestic business 0.0 5.6 (562) 2.6 (262)
Retail area ('000 sq ft) 1,180 1,188 (0.7) 1,186 (0.5) Source: Company, Elara Securities Research

No of stores 126 124 1.6 124 1.6

Source: Company, Elara Securities Research

Elara Securities (India) Private Limited 3

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CESC

Exhibit 5: Trend in sales volume for the Kolkata circle Exhibit 9: Average tariff realized
3,000 100 10 1.5

2,700 90 8 1.3
80
(mn units)

(INRkWh)

(INRkWh)
2,400 6 1.1

(%)
70
2,100 4 0.9
60
1,800 50 2 0.7

1,500 40 0 0.5
Q1FY15
Q2FY15
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18

Q1FY15
Q2FY15
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Sales volume (LHS) PLF : parent (RHS) Average tariff (LHS) Net profit (RHS)

Source: Company, Elara Securities Research Source: Company, Elara Securities Research

Exhibit 6: Number of retail stores is up to 126 Exhibit 10: No of hypermarket stores is flat QoQ
130 1.20 40 0.95

1.15 38 0.90
125
(Nos)

(Mn sq ft)

(Mn sq ft)
(Nos)
36 0.85
1.10
34 0.80
120
1.05 32 0.75

115 1.00 30 Q1FY15 0.70


Q2FY15
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q1FY15
Q2FY15
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18

No. of stores (LHS) Area (RHS) No. of Hyperstores (LHS) Area (RHS)

Source: Company, Elara Securities Research Source: Company, Elara Securities Research

Exhibit 7: Retail area mix as per store format Exhibit 11: Improving SSS revenue and SSS EBITDA
100 1,800 125
1,700 110
80

(INR/sf/month)
1,600
(INR/sf/month)

60 95
(%)

1,500
40 80
1,400
20 1,300 65
0 1,200 50
Q1FY15
Q2FY15
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18

Q1FY15
Q2FY15
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18

Hypers Supers Small Stores Average Sales (LHS) EBTIDA (RHS)


Source: Company, Elara Securities Research Source: Company, Elara Securities Research

Exhibit 8: Employees dip on sale of domestic business Exhibit 12: PLF of various plants
30,000 10 100
25,000 5
80
0
(Nos)

20,000
(mn units)

(5) 60
(%)

15,000 (10)
(15) 40
10,000
(20)
5,000 20
(25)
0 (30) 0
Q1FY15
Q2FY15
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q1FY15
Q2FY15
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18

Employee count (LHS) % Change YoY (RHS) Parent Haldia Chandrapur


Source: Company, Elara Securities Research Source: Company, Elara Securities Research

4 Elara Securities (India) Private Limited


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CESC

Exhibit 13: Change in estimates


Earlier Revised % Change
(INR mn)
FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
Sales (including trading) 166,990 173,839 179,017 165,119 170,360 176,234 (1.1) (2.0) (1.6)
EBITDA 37,108 40,622 42,043 37,280 39,731 41,462 0.5 (2.2) (1.4)
Net profit 11,058 14,700 16,382 11,009 13,947 15,975 (0.4) (5.1) (2.5)
EPS (INR) 83.0 110.3 123.0 82.6 104.7 119.9 (0.4) (5.1) (2.5)
Target price (INR) 920 910 (1.1)
Source: Elara Securities Estimate

Exhibit 14: SOTP valuation for CESC


Equity value (INR CESC' share Per share value
Assets % Stake Methodology
mn) (INR mn) (INR)

Utilities
Power (A) 100 66,293 66,293 498 NPV @ 13.5% CoE
Kolkata system 100 14,363 14,363 108 NPV @ 13.5% CoE
Haldia IPP 100 214 214 2 NPV @ 14.5% CoE
Chandrapur IPP 68 5,311 3,602 27 NPV @ 13.5% CoE
Crescent plant 1,643 2,464 18 1.5x FY18 book value
Surya Vidyut (wind) + solar 100 6,374 6,374 48 NPV @ 13.0% CoE
Sub--Total (A) 93,310 700
Other businesses (B)
Retail 100 17,064 17,064 128 NPV @ 16% CoE
Mall 100 1,935 1,935 15 NPV @ 16% CoE
Investments in FirstSource 55 27,384 14,944 112 7x December 2019E P/E
Sub--Total (B) 33,943 255
Total (A) + (B) 127,252 955
Less: Holding co. discount @ 5% 6,363 48
Total value 120,890 907
TP (rounded off) 910
Source: Elara Securities Estimate

Exhibit 15: Installed capacity of CESC Exhibit 16: Sales volume mix over the years
3,000 15,000
2,500
12,000
(mn units)

2,000
(MW)

1,500 9,000

1,000 6,000
500
3,000
0
FY14 FY15 FY16 FY17 FY18E FY19E FY20E
0
Budge Budge Southern Titagarh FY14 FY15 FY16 FY17 FY18E FY19E FY20E
New Cossipore Chandrapur Haldia
Wind Solar Crescent Kolkatta discom Chandrapur Solar + Wind Short-term

Source: Company, Elara Securities Estimate Source: Company, Elara Securities Estimate

Elara Securities (India) Private Limited 5

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CESC

Exhibit 17: Generating capacity


(MW) Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Dec-17
Parent c 1,225 1,225 1,225 1,125 1,125 1,125 1,125
Budge Budge 750 750 750 750 750 750 750
Southern 135 135 135 135 135 135 135
Titagarh 240 240 240 240 240 240 240
New Cossipore 100 100 - - - -
Haldia IPP - - - 600 600 600 600
Chandrapur IPP - - 300 600 600 600 600
Crescent Power - - - 40 40 40 40
Wind IPP - 24 24 50 50 146 156
Jaisalmer, Rajasthan - 24 24 24 24 24 24
Surendra Nagar, Gujarat 26 26 26 26
Mandsaur, MP 36 36
Rojmal, Gujarat 70 70
Solar PV - 9 9 9 27 27 27
Kutch, Gujarat - 9 9 9 9 9 9
Tamil Nadu 18 18 18
Total 1,225 1,258 1,558 2,424 2,442 2,538 2,548
Source: Company, Elara Securities Research

Exhibit 18: Kolkata T&D Network


Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17
Substation
220 / 132 / 33 kV SS MVA 640 800 800 1,120 1,120 1,120
132 / 33 kV SS MVA 2,057 2,307 2,532 2,532 2,757 2,957
Distribution SS No. 98 99 105 108 113 114
Distribution SS MVA 2,976 3,134 3,338 3,454 3,642 3,700
LT SS - AC No. 6,990 7,343 7,692 7,906 8,039 8,145
LT SS - AC MVA 2,316 2,440 2,568 2,650 2,704 2,741
Distribution network
220 kV UG ckm 7 13 26 35 40 43
220 kV OH ckm 172 172 219 221 221 221
132 kV UG ckm 254 263 268 278 284 294
132 kV OH ckm 81 81 81 81 81 81
33 kV UG ckm 1,211 1,251 1,320 1,387 1,435 1,471
33 kV OH ckm 92 92 92 92 92 92
20 kV UG ckm 50 50 50 50 50 50
HT Distribution
11 & 6 kV UG ckm 5,335 5,695 6,047 6,259 4,394 6,521
11 & 6 kV OH ckm 87 87 87 87 87 87
3.3 kV UG ckm 21 21 21 21 21 21
LT Distribution
UG ckm 6,643 6,956 7,250 7,443 7,546 7,647
OH ckm 4,731 4,857 5,019 5,111 5,280 5,338
HT Capacitor
132 / 33 kV MVAR NA 547 597 627 627 627
6 / 11 kV MVAR NA 249 263 268 268 268
Source: Company, Elara Securities Research

6 Elara Securities (India) Private Limited


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CESC

Exhibit 19: Retail business


Store locations (area '000 sq ft) Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Jun-17 Sep-17 Dec-17
East India 182 182 308 306 316 344 344 358 386
WB 182 182 308 306 316 344 344 358 386
West India 115 60 60 24 24 24 24 24 24
Maharashtra 91 36 36 - - - - - -
Gujarat 24 24 24 24 24 24 24 24 24
North India 240 238 310 341 322 351 351 341 341
East UP 114 114 114 114 114 151 151 151 151
NCR 126 124 196 227 208 200 200 190 190
Punjab - - - - - - - - -
South India 1 161 115 109 89 69 103 103 101 67
Kerala 30 17 17 17 17 17 17 17 17

Utilities
TN 131 98 92 72 52 86 86 84 50
Trichy - - - - - - - - -
South India 2 311 282 289 291 353 353 363 362 362
Bangalore 62 48 41 41 29 14 13 13 13
Coastal AP 96 93 93 99 108 108 121 121 121
Hyderabad 153 141 155 151 216 231 229 228 228
Total 1,009 877 1,076 1,051 1,084 1,176 1,185 1,186 1,180

Store format (area '000 sq ft)


Hypers 606 577 800 781 839 895 891 880 871
Supers 97 93 93 92 87 129 142 156 160
Small Stores 306 207 183 177 157 152 152 150 150
Total 1,009 877 1,076 1,050 1,083 1,176 1,185 1,186 1,181

Store format (no of stores)


Hypers 26 25 34 34 36 39 38 38 38
Supers 15 14 13 13 12 17 18 19 20
Small Stores 141 92 81 76 70 68 68 67 67
SAS Stores - - - - - - - - 1
Total 182 131 128 123 118 118 124 124 126
Source: Company, Elara Securities Research

Elara Securities (India) Private Limited 7

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CESC

Coverage History
1,350
20
1,150
17 19
950 18
16
7
750 9
8
15
6 10
550 5
3 4 11 12 14
2
13
350 1

150
Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17
Jan-12

Oct-12

Jan-13

Oct-13

Jan-14

Oct-14

Jan-15

Oct-15

Jan-16

Oct-16

Jan-17

Oct-17

Jan-18
Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17
Not Covered Covered

Date Rating Target Price Closing Price


1 23-Aug-2013 Buy INR 460 INR 294
2 14-Nov-2013 Buy INR 490 INR 397
3 7-Feb-2014 Accumulate INR 500 INR 448
4 21-Apr-2014 Reduce INR 500 INR 509
5 7-May-2014 Accumulate INR 500 INR 452
6 30-May-2014 Reduce INR 550 INR 577
7 14-Nov-2014 Sell INR 660 INR 757
8 08-Dec-2014 Reduce INR 660 INR 666
9 13-Feb-2015 Reduce INR 680 INR 696
10 17-Apr-2015 Accumulate INR 680 INR 586
11 4-Aug-2015 Accumulate INR 650 INR 575
12 17-Nov-2015 Buy INR 660 INR 542
13 10-Feb-2016 Buy INR 615 INR 440
14 20-May-2016 Accumulate INR 630 INR 555
15 15-Dec-2016 Accumulate INR 700 INR 627
16 14-Feb-2017 Sell INR 790 INR 857
17 17-Aug-2017 Sell INR 850 INR 954
18 8-Nov-2017 Sell INR 900 INR 991
19 4-Dec-2017 Sell INR 920 INR 995
20 12-Feb-2018 Sell INR 910 INR 1,036

Guide to Research Rating


BUY Absolute Return >+20%
ACCUMULATE Absolute Return +5% to +20%
REDUCE Absolute Return -5% to +5%
SELL Absolute Return < -5%

8 Elara Securities (India) Private Limited


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India | Real Estate 14 February 2018
Quarterly Update

Prestige Estates Projects


Investing for growth Rating: Accumulate
Strong collections; net debt continues to rise on stake buyout Target Price: INR 350
Upside: 13%
Prestige Estates Projects (PEPL IN) consolidated revenue came lower at
INR12.7bn, up 3.1% YoY, on lower revenue recognition from its CMP: INR 311 (as on 12 February 2018)
Global Markets Research

Key data
ongoing projects. In Q3, three new projects crossed revenue
Bloomberg /Reuters Code PEPL IN/PREG.BO
threshold, contributing ~INR 3.3bn to revenue. OPM contracted
Current /Dil. Shares O/S (mn) 375/375
200bp OoQ to 20%. EBITDA was at INR 2.5bn, up 6.5% YoY. Pre-sales Mkt Cap (INR bn/USD mn) 117/1,819
was flat QoQ and up 51% YoY to INR 5.2bn, one-third of which came Daily Volume (3M NSE Avg) 502,614
from unsold inventory from its already completed projects. Q3 was Face Value (INR) 10
another quarter of zero new launches. However, collections remain 1 USD = INR 64.3
healthy at INR 9.5bn, up 16% YoY. Although the company is likely to Note: * as on 12 February 2018; Source: Bloomberg
miss annual pre-sales guidance of INR 35bn (INR 21bn reported as on
9MFY18), Q4 is expected to be better, given aggressive new launches. Price & volume
Net debt increased by INR 2bn to INR 58bn to fund stake acquisitions. 400 5.0
350 4.0
Conference call Highlights 300
3.0
Rental income was up 21% YoY and 9% QoQ to INR 1.64bn from the 250
2.0
commercial and retail segments. The company guided exit rental 200
guidance of INR 8.7bn by end-FY19. Prestige has guided for three new 150 1.0

launches in Q4. It has announced a new JV platform for its residential 100 0.0
Feb-17 May-17 Aug-17 Nov-17 Feb-18
projects with PE fund, HDFC Capital Advisors, to explore mid-income
and affordable housing segment pan-India. The JV is expected to raise Vol. in mn (RHS) Prestige Estates (LHS)

~INR 25bn via a mix of debt (60%) and equity (40%). In Q3, Prestige Source: Bloomberg

has bought CapitaLand stake for INR 3.4bn, which will result in Shareholding (%) Q4FY17 Q1FY18 Q2FY18 Q3FY18
additional INR 750mn of retail rental income pa. It also bought out PE Promoter 70.0 70.0 70.0 70.0
investor & landowner stake in Bangalore project for INR 3.2bn. Institutional Investors 28.8 28.8 29.0 28.8
Other Investors 0.6 0.5 0.5 0.5
Valuation: recommend Accumulate with a TP of INR 350 General Public 0.6 0.7 0.6 0.7
While 9MFY18 has been disappointing for new launches and net debt Source: BSE
is likely to remain elevated near term due to stake buyouts, we remain Price performance (%) 3M 6M 12M
positive on medium-term outlook. The likely pickup in pre-sales (10- Sensex 3.0 9.9 21.1
15mn sqft of new launches over 18-24 months) and growing annuity Prestige Estates Projects 8.6 22.5 71.3
income along with steady collections provides comfort. At an EV of Oberoi Realty (3.0) 26.1 35.6
INR 174bn, Prestige offers compelling value, given high visibility of Source: Bloomberg
annuity income (~INR 9bn in FY19E). Adjusted for value of these assets
(9% cap rate), the development business and forthcoming leased
portfolio are attractively valued at INR 74bn. We recommend
Accumulate with a price target of INR 350 based on 1x our one-year
forward NAV.
Y/E Mar (INR mn) Q3FY18 Q3FY17 YoY(%) Q2FY18 QoQ (%) FY18E FY17 YoY(%))
Net Sales 12,723 12,341 3.1 10,981 15.9 51,022 47,745 6.9
EBITDA 2,543 2,387 6.5 2,413 5.4 10,385 9,198 12.9
EBITDA Margins (%) 20.0 19.3 22.0 20.4 19.3
Other Income 179 195 NA 148 20.9 800 872 (8.3)
Interest 867 730 18.8 874 (0.8) 3,376 3,160 6.8
Depreciation 405 439 (7.8) 379 6.9 1,592 1,637 (2.8)
PBT 1,450 1,413 2.6 1,308 10.9 6,217 5,273 17.9
Tax 468 448 4.5 447 4.7 2,132 1,600 33.3
Tax Rate (%) 32.3 30.6 34.2 34.3 30.3
PAT 982 965 1.8 861 14.1 4,085 3,673 11.2
Minority Int/Others (88) (295) (52) (498) (974)
Net Income 894 670 33.5 809 10.5 3,586 2,699 32.9
NPM (%) 7.7 7.9 7.8 8.0 7.7

Key Financials
YE Revenue YoY EBITDA EBITDA Adj PAT YoY Fully DEPS RoE RoCCE P/E EV/EBITDA
March (INR mn) (%) (INR mn) margin (%) (INR mn) (%) (INR) (%) (%) (x) (x)
FY17 47,745 (13.7) 9,198 19.3 2,578 (57.7) 6.9 5.7 7.3 45.2 18.6
FY18E 51,022 6.9 10,385 20.4 3,586 39.1 9.6 7.5 8.0 32.5 17.0
FY19E 51,336 0.6 11,544 22.5 4,033 12.5 10.8 7.9 8.4 28.9 15.4
FY20E 53,170 3.6 12,104 22.8 4,102 1.7 10.9 7.6 8.3 28.4 14.8
Note: pricing as on 14 February 2018; Source: Company, Elara Securities Estimate
Param Desai • param.desai@elaracapital.com • +91 22 6164 8528
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Distribution (India)
Prohibited. Private Limited
Prestige Estates Projects

Financials (YE March)


Income Statement (INR mn) FY17 FY18E FY19E FY20E Revenue & margin growth trend
Net Revenues (LHS) 47,745 51,022 51,336 53,170 54,000 24
22.5 22.8
EBITDA 9,198 10,385 11,544 12,104
52,000
Add:- Non operating Income 872 800 850 1,000 22
20.4

(INR mn)
OPBIDTA 10,070 11,185 12,394 13,104 50,000
19.3

(%)
Less :- Depreciation & Amortization 1,637 1,592 1,782 1,972 20
48,000
EBIT 8,433 9,593 10,612 11,132
18
Less:- Interest Expenses 3,160 3,376 3,696 3,870 46,000
PBT 5,273 6,217 6,916 7,262 44,000 16
Less :- Taxes 1,600 2,132 2,351 2,469 FY17 FY18E FY19E FY20E
Adju
usted PAT (LHS) 3,673 4,085 4,564 4,793 Net Revenues (LHS) EBITDA Margin (RHS)
Add/Less: - Extra-ordinaries - - - -
Source: Company, Elara Securities Estimate
Reported PAT 3,673 4,085 4,564 4,793
Add/Less: - Minority Interest (974) (498) (531) (691)
Reported PAT 2,699 3,586 4,033 4,102
Balance Sheet (INR mn) FY17 FY18E FY19E FY20E
Adjusted profit trend
Share Capital 3,750 3,750 3,750 3,750 6,000 120
Reserves 40,890 43,606 46,769 50,001 4,000 80
Borrowings 56,508 59,898 63,298 65,698 39.1

(INR mn)
2,000 12.5 40
Deferred Tax (Net) 1,110 1,110 1,110 1,110 1.7

(%)
Minority Interests 2,114 2,114 2,114 2,114 0 0
Total Liabilities 104,372 110,478 117,042 122,673
(2,000) (40)
Gross Block 42,558 44,393 49,393 54,393 (57.7)
Less:- Accumulated Depreciation (9,451) (11,043) (12,825) (14,797) (4,000) (80)
FY17 FY18E FY19E FY20E
Net Block 33,107 33,350 36,568 39,596
Adjusted PAT (LHS) PAT Growth (RHS)
Add:- Capital work in progress 17,952 23,064 25,064 26,064
Investments 3,551 3,551 3,551 3,551 Source: Company, Elara Securities Estimate
Net Working Capital 46,646 47,398 48,743 50,347
Other Assets 3,116 3,116 3,116 3,116
Total Assets 104,372 110,478 117,042 122,673 Return ratios
Cash Flow Statement (INR mn) FY17 FY18E FY19E FY20E
9 8.4 8.3
Cash profit adjusted for non cash items 5,310 5,677 6,346 6,765 8.0
Add/Less : Working Capital Changes (1,601) (2,066) (95) (292) 8 7.3

Operating Cash Flow 3,709 3,610 6,251 6,473 7 7.9


7.5 7.6
Less:- Capex 8,848 6,947 7,000 6,000
6
Free Cash Flow (5,139) (3,336) (749) 473
Financing Cash Flow 3,137 2,520 2,530 1,530 5 5.7
Investing Cash Flow 1,678 - - - 4
Net chhange in Cash (324) (817) 1,781 2,003 FY17 FY18E FY19E FY20E
Ratio Analysis FY17 FY18E FY19E FY20E ROE (%) ROCE (%)
Income Statement Ratios (%)
Source: Company, Elara Securities Estimate
Revenue Growth (13.7) 6.9 0.6 3.6
EBITDA Growth (13.7) 12.9 11.2 4.9
PAT Growth (RHS) (57.7) 39.1 12.5 1.7
EBITDA Margin (RHS) 19.3 20.4 22.5 22.8
Net Margin 7.7 8.0 8.9 9.0
Return & Liquidity Ratios
Net Debt/Equity (x) 1.1 1.2 1.1 1.1
ROE (%) 5.7 7.5 7.9 7.6
ROCE (%) 7.3 8.0 8.4 8.3
Per Share data & Valuation Ratios
Diluted EPS (INR/Share) 6.9 9.6 10.8 10.9
EPS Growth (%) (57.7) 39.1 12.5 1.7
DPS (INR/Share) 2.3 2.3 2.3 2.3
P/E Ratio (x) 45.2 32.5 28.9 28.4
EV/EBITDA (x) 18.6 17.0 15.4 14.8
EV/Sales (x) 3.6 3.5 3.5 3.4
Price/Book (x) 2.5 2.4 2.2 2.1
Dividend Yield (%) 0.7 0.7 0.7 0.7
Note: pricing as on 12 February 2018; Source: Company, Elara Securities Estimate

2 Elara Securities (India) Private Limited


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Prestige Estates Projects

Exhibit 1: Pre-sales trend Exhibit 2: Strong collections


7,500 12,500

6,000 10,000
(INR mn)

(INR mn)
4,500 7,500

3,000 5,000

1,500 2,500

0 0
Q1FY17

Q2FY17

Q3FY17

Q4FY17

Q1FY18

Q2FY18

Q3FY18

Q1FY17

Q2FY17

Q3FY17

Q4FY17

Q1FY18

Q2FY18

Q3FY18

Real Estate
Source: Company, Elara Securities Research Source: Company, Elara Securities Research

Exhibit 3: Rental income trend Exhibit 4: Net D/E remains elevated on stake buyouts
2,000 60,000 1.21 1.24
58,000 1.19
1,600 1.20
56,000 1.15
(INR mn)

(INR mn)

54,000 1.13 1.13 1.16


1,200

(x)
1.11 1.11
52,000 1.12
800 50,000
1.08
48,000
400
46,000 1.04
Q1FY17

Q2FY17

Q3FY17

Q4FY17

Q1FY18

Q2FY18

Q3FY18
0
Q1FY17

Q2FY17

Q3FY17

Q4FY17

Q1FY18

Q2FY18

Q3FY18

Net Debt (LHS) Debt/Equity ratio (RHS)

Source: Company, Elara Securities Research Source: Company, Elara Securities Research

Elara Securities (India) Private Limited 3


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Prestige Estates Projects

Coverage History
400

350

1
300

250

200

150

100
May-17

Dec-17
Aug-17

Feb-18
Mar-17

Jul-17

Sep-17
Jun-17

Oct-17

Jan-18
Apr-17

Nov-17
Not Covered Covered

Date Rating Target Price Closing Price


1 12-Feb-2018 Accumulate INR 350 INR 311

Guide to Research Rating


BUY Absolute Return >+20%
ACCUMULATE Absolute Return +5% to +20%
REDUCE Absolute Return -5% to +5%
SELL Absolute Return < -5%

4 Elara Securities (India) Private Limited


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India | Capital Goods 14 February 2018
Quarterly Update

CG Power and Industrial


Pickup from FY19 Rating: Accumulate
Hungary unit sale to close by March 2018 Target Price: INR 100
Upside: 12%
The sale of the Hungary unit (excluding switchgears) of CG Power and
CMP: INR 89 (as on 14 February 2018)
Industrial Solutions (CGPOWER IN) has been pushed by a quarter and
Global Markets Research

is now expected to close by March 2018, says management. While in- Key data*
principal approval from lenders has been obtained, a final approval is Bloomberg /Reuters Code CGPOWER IN/CGPO.BO
awaited as debt of EUR 30mn will be taken over by the buyer, Ganz Current /Dil. Shares O/S (mn) 627/627
Villamossagi Zrt. & Alester Holdings. The company continues to Mkt Cap (INR bn/USD mn) 56/875
provide for loss at this unit of INR 950mn in Q3 and expects a similar Daily Vol. (3M NSE Avg.) 3,423,269
run-rate in Q4. Hungary switchgears division will need additional Face Value (INR) 2
1 USD = INR 64.1
write-down of EUR 10mn as it also gets closed post the transaction.
Note: *as on 14 February 2018; Source: Bloomberg
Consolidated gross debt is expected to rise to INR 25bn in FY18 (+67%
HoH). Management says Belgium and Ireland operations turned Price & volume
EBITDA positive and will turn to profit once the EU economy recovers.
105 20
Industrials systems does well on inflows and margin 95
15
In Q3FY18, industrial systems (IS) segment inflows were up 41% YoY to
85
INR 8.9bn (9MFY18: +19%), driven by railways. It also received an 10
75
order of INR 1.1bn for energy-efficient motors from EESL, executable
5
by Q2FY19 in February 2018. Parent IS revenue (46% of FY18E 65

revenue) was up 11% YoY to INR 5.8bn, led by railways and low 55 0
voltage motors. Although IS EBIT margin fell 100bp YoY to 9.4% in Feb-17 Jun-17 Oct-17 Feb-18

Q3FY18 but gained 120bp QoQ, management expects 10%+ margin Vol. in mn (RHS) CG Power (LHS)

in Q4. Railways is expected to contribute one-third of total revenue in Source: Bloomberg

FY18 (vs one-fourth in FY17), says management. Shareholding (%) Q4FY17 Q1FY18 Q2FY18 Q3FY18
Promoter 34.4 34.4 34.4 34.4
Overall inflows up 24%, book-to-bill at 0.8x
Institutional Investors 51.7 52.5 52.1 51.5
During Q3, order inflows (parent) surged 24% YoY to a four-year high Other Investors 3.1 3.0 3.3 4.0
of INR 15.2bn (9MFY18: +12%). Domestic orderbook was up 6% QoQ General Public 10.8 10.0 10.2 10.1

to INR 37.8bn (IS: +26% to INR 11.8bn, PS: -1% to INR 26bn). Book-to- Source: BSE

bill ratio was 0.8x FY18E sales. Orderbook rose 1% QoQ to INR 45.1bn. Price performance (%) 3M 6M 12M
Sensex 3.4 9.4 20.5
Valuation: reiterate Accumulate with a TP of INR 100
CG Power 9.2 9.8 35.0
We raise our consolidated EPS by 11% in FY18E primarily on higher BSETCG Index 6.4 15.9 27.4
margin in the parent but lower by 6% in FY19E on higher interest BSEMDCAP Index 2.1 14.6 25.8
outgo owing to higher debt. Our earnings exclude losses from Source: Bloomberg
discontinued businesses in FY18. We reiterate Accumulate with a TP of
INR 100 on 20x December 2019E P/E, in line with a five-year average
P/E. We expect an earnings CAGR of 22% over FY17-20E and an
average ROE and ROCE of 6.0% and 5.5%, respectively, over FY18-20E.

Consolidated - YE March (INR mn) Q3FY18 Q3FY17 YoY (%) Q2FY18 QoQ (%)
Net Sales 15,161 13,187 15.0 15,576 (2.7)
EBITDA 1,271 1,269 0.2 1,319 (3.6)
Other Income 10 60 (83.6) 300 (96.7)
Interest 566 511 10.8 569 (0.5)
Depreciation 383 324 18.4 382 0.3
EO Income/(Exp) - (34) - (279) (100.0)
PBT 332 460 (27.8) 389 (14.7)
Tax Rate (%) (0.5) -17.4 55.5
Reported PAT 868 537 61.7 (378) (329.6)
Adjusted PAT (286) (210) 36.0 (4,419) (93.5)
Note: *revised Q2FY17 financials

Key Financials
YE Net Sales YoY EBITDA YoY Adj PAT YoY DEPS P/BV RoE RoCE P/E EV/EBITDA
March (INR m) % (INR mn) % (INR mn) % (INR) (x) (%) (%) (x) (x)
FY17 57,127 8.4 4,702 28.1 1,827 40.8 2.9 1.4 4.4 5.9 30.5 13.4
FY18E 61,597 7.8 4,462 (5.1) 1,543 (15.5) 2.5 1.5 4.2 4.9 36.1 14.9
FY19E 69,702 13.2 5,412 21.3 2,282 47.9 3.6 1.4 5.7 5.1 24.4 11.6
FY20E 80,941 16.1 6,745 24.6 3,351 46.8 5.3 1.3 7.7 6.4 16.6 8.9
Note: pricing as on 12 February 2018; Source: Company, Elara Securities Estimate
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Elara Securities (India) Private Limited
CG Power and Industrial

Financials (YE March)


Income Statement (INR m) FY17 FY18E FY19E FY20E
Net Revenues 57,127 61,597 69,702 80,941 Revenue & margin growth trend
EBITDA 4,702 4,462 5,412 6,745
100,000 10
Add:- Non operating Income 687 545 562 580
EO income/(exp) as reported (727) (6,392) 0 0 8.2 8.3
80,000 7.8
OPBIDTA 4,662 (1,384) 5,974 7,326 7.2 8

(INR mn)
Less: Depreciation 1,500 1,527 1,526 1,593 60,000

(%)
EBIT 3,162 (2,911) 4,448 5,733 40,000
Less: Interest Expenses 1,880 1,317 1,206 957 6
PBT 1,282 (4,229) 3,242 4,776 20,000
Tax 166 649 997 1,462
Tax Rate (%) 13 (15) 31 31 0 4
FY17 FY18E FY19E FY20E
Minority Int (16) 29 37 37
Reported PAT 1,100 (4,849) 2,282 3,351 Net Revenues (LHS) EBITDA Margin (RHS)
Extra-ordinary inc/(exp) (727) (6,392) 0 0
Adj PAT 1,827 1,543 2,282 3,351 Source: Company, Elara Securities Estimate
NPM (%) 3 3 3 4
Balance Sheet (INR m) FY17 FY18E FY19E FY20E Adjusted profit growth trend
Share Capital 1,254 1,254 1,254 1,254 4,000 60
47.9 46.8
Reserves 39,857 35,579 39,055 42,003 40.8
3,000 50
Net Worth 41,111 36,833 40,308 43,256
40
Borrowings 15,019 23,265 18,943 16,839 2,000

(INR mn)
30
Deferred Tax Liability 2,357 2,149 2,149 2,149

(%)
Minority Interest 0 29 29 29 1,000 20
Capital Employed 58,487 62,276 61,430 62,273 0 10
Gross Fixed Assets 30,772 27,355 28,527 29,450 0
(1,000) (15.5)
Less: Accumulated Depreciation 13,726 15,047 16,573 18,165 (10)
Net Fixed Assets 17,046 12,308 11,955 11,284 (2,000) (20)
Capital WIP 615 443 393 343 FY17 FY18E FY19E FY20E
Investments 2,091 1,084 1,334 1,584 Adj PAT (LHS) PAT Growth (RHS)
Net Working capital 20,881 34,244 34,091 35,129
Cash & Bank Balance 7,607 14,197 13,657 13,933 Source: Company, Elara Securities Estimate
Application of Funds 58,487 62,276 61,430 62,273
Cash Flow Statement (INR m) FY17 FY18E FY19E FY20E Return ratios
Cash Profit before non cash items 6,147 4,151 4,977 5,863 10
(Inc)/Dec in WC 13,872 (13,363) 153 (1,038) 7.7
CF from Operations 20,019 (9,212) 5,130 4,826 8
EO Income (727) (6,392) 0 0 5.7
6 4.4
CF from Oper. incl. EO Items 19,292 (15,604) 5,130 4,826 5.9 4.2 6.4
Capex 8,563 2,647 (1,123) (873) 4 4.9 5.1
Free Cash Flow 27,855 (12,957) 4,007 3,953
Financing Cash Flow (5,198) 7,529 (4,297) (3,427) 2
Investing Cash Flow (5,527) 1,743 (250) (250)
Inc/Dec of Cash 17,130 (3,686) (540) 276 0
Add: Beginning Balance 8,984 7,607 14,197 13,657 FY17 FY18E FY19E FY20E
Closing Balance 26,115 3,921 13,657 13,933 RoE (%) RoCE (%)
Ratios FY17 FY18E FY19E FY20E
Profitability Ratios (%) Source: Company, Elara Securities Estimate
Revenue Growth 8.4 7.8 13.2 16.1 Company Background
EBITDA Growth 28.1 (5.1) 21.3 24.6
PAT Growth 40.8 (15.5) 47.9 46.8 CG Power and Industrial Solutions (CGPOWER IN),
EBITDA Margin 8.2 7.2 7.8 8.3 established in 1937, has been a pioneer and leader
Net Margin 3.2 2.5 3.3 4.1
in electrical energy equipment in India and a
Per Share data and valuation ratios (%)
EPS (INR) 2.9 2.5 3.6 5.3 leading engineering corporation in the world. The
DPS (INR) 0.6 0.5 0.6 0.6 company’s primary two segments are power
Book Value (INR) 65.6 58.8 64.3 69.0 systems and industrial systems. Power systems
P/E (x) 30.5 36.1 24.4 16.6 include transformers, switchgears, turnkey projects
EV/EBITDA (x) 13.4 14.9 11.6 8.9 and power control systems like SCADA. Industrial
EV/Sales (x) 1.1 1.1 0.9 0.7
systems include electric motors, alternators, drives
Price/Book (x) 1.4 1.5 1.4 1.3
Dividend Yield (%) 0.7 0.6 0.7 0.7 and traction electronics. The company has
Return and Liquidity Ratios (%) manufacturing bases in India, Hungary, Sweden
Net Debt/Equity 0.2 0.2 0.1 0.1 and Indonesia.
RoE (%) 4.4 4.2 5.7 7.7
RoCE (%) 5.9 4.9 5.1 6.4
Turnover Ratios
Debtors (Days) 120 113 106 102
Inventory (Days) 56 53 57 57
Creditors. (Days) 88 77 80 81
Asset Turnover (x) 1.0 1.0 1.1 1.3
Note: pricing as on 12 February 2018; Source: Company, Elara Securities Estimate

2 Elara Securities (India) Private Limited


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CG Power and Industrial

Power systems: muted performance Exhibit 1: Elara assumptions


Power systems (PS) segment inflows grew by 6% to INR Assumptions FY18E FY19E FY20E
6.4bn (9MFY18 up 3%). PS business (54%) revenue fell by Parent
6% to INR 6bn, owing to price pressure in power Revenue growth (%)
transformers. The company is selective in picking orders. Power systems - 12.0 15.0
Early signs of recovery are visible in cement and Industrial systems 12.0 20.0 22.0
fertilisers. The company expects distribution transformer EBIT margin (%)
growth would be supported by solar. Within Power systems 6.5 7.0 7.3
switchgears, the medium-voltage segment is likely to see Industrial systems 8.0 9.5 9.8
a pickup, owing to modernization of assets by state Overseas
utilities. EBIT margin fell by 280bp YoY to 7.3%. Revenue growth (%) (11.9) 2.0 5.0

Capital Goods
EBITDA margin (%) 10.0 11.0 12.0
Indonesia: strong inflows and order book Source: Elara Securities Estimate
The Indonesian unit received an order for power
Key downside risks include a delay in sale of its Hungary
transformers from PT PLN (Persero), a state utility, for
business unit, sharp rise in commodity prices and slower
USD 55mn in Q4FY18. This helped orderbook to reach
capex recovery in India.
INR 11bn, giving revenue visibility of 12-15 months. The
company is also seeing inquires from the Middle East,
and Africa in addition to their existing Southeast Asia
markets. Indonesian unit revenue (excluding the forex
affect) grew by 25% YoY to EUR 32mn in Q3FY18, with a
14% EBITDA margin. Subsidiaries revenue jumped by
33% YoY in Q3 (9MFY18 down 2%). EBIT margin
declined 900bp YoY to 7%, owing to higher losses in the
industrial segment.
Q3FY18 profit better than estimate

In Q3FY18, the parent company’s net revenue grew by


11% YoY to INR 12bn (9MFY18 up 11%), 7% below our
estimates. Although RM/sales was marginally up to
72.9%, a 18% rise in operating cost led to an EBITDA
growth of 4% to INR 871mn, 10% above our estimate.
However, EBITDA margin contracted 50bp YoY to 7.4%.
Other income fell by 22% and interest cost rise by 14%,
owing to a rise in debt by INR 1.2bn to cover operating
cost of loss-making subsidiaries. Lower tax rate of 10%
led to adjusted net profit from continued operations to
be flat YoY to INR 518mn, well above our estimates.

Consolidated revenue grew by 15% to INR 15.2bn, with


flat EBITDA of INR 1.3bn and margin at 8.4%, down
120bp, which we expect to go up owing to better Q4.
Provisions of INR 1.2bn from discontinued operations led
to a loss of INR 286mn in Q3FY18 vs loss of INR 210mn
in Q3FY17. Recurring profit from continued operations
was at INR 868mn vs profit of INR 537mn in Q3FY17, in-
line with our estimates.

Elara Securities (India) Private Limited 3


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CG Power and Industrial

Exhibit 2: Quarterly performance


(INR mn) Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18
8
Quarterly performance (consolidated)
Sales (net) 13,187 17,101 14,364 15,576 15,161
YoY (%) 7.7 2.4 (5.7) 18.4 15.0
Operating expenses 11,918 15,919 13,913 14,257 13,890
% of sales 90.4 93.1 96.9 91.5 91.6
EBITDA 1,269 1,181 451 1,319 1,271
EBITDA margin (%) 9.6 6.9 3.1 8.5 8.4
Other income 60 232 118 300 10
Interest 511 625 537 569 566
Depreciation 324 438 361 382 383
EO income/(expenses) (34) (693) 0 (279) 0
PBT 460 (342) (328) 389 332
Tax (80) (31) 146 216 (2)
Tax rate (%) (17.4) 9.0 (44.4) 55.5 (0.5)
Minority interest/share of associates 3 6 7 551 (534)
Reported PAT 537 (318) (481) (378) 868
Adjusted PAT (210) (3,747) (860) (4,419) (286)
NPM (%) (1.6) (21.9) (6.0) (28.4) (1.9)
Consolidated – segment-w
wise
Revenue
Power division 8,326 10,578 8,003 9,598 8,613
Industrial division 5,770 6,462 6,324 5,935 6,507
Others 32 63 40 45 40
Total 14,128 17,104 14,367 15,577 15,159
Less: inter segment - - 3 1 0
Net sales 14,128 17,104 14,364 15,576 15,159
EBIT margin (%)
Power division 12.8 8.6 5.1 11.4 8.8
Industrial division 8.9 4.5 1.9 7.1 6.8
Others 15.2 (4.7) 13.6 30.0 29.8
Total 11.2 7.0 3.8 9.8 8.0
Quarterly performance (standalone)
Sales 10,649 12,845 12,607 12,085 11,794
YoY % 7.7 13.7 11.7 11.4 10.8
Operating expenses 9,811 12,031 11,954 11,314 10,923
EBITDA 838 814 653 771 871
EBITDA margin (%) 7.9 6.3 5.2 6.4 7.4
Other income 585 350 428 615 454
Interest 471 558 525 541 536
Depreciation 235 217 229 265 262
Exceptional items (14) (46) (359) (579) (998)
PBT 717 388 327 579 527
Tax (103) (101) 142 (2) 10
Tax rate (%) (14.4) (26.0) 43.4 (0.3) 1.8
Reported PAT 460 (90) 310 392 92
Adj PAT 521 457 185 281 518
NPM (%) 4.9 3.6 1.5 2.3 4.4
Order inflows and orderbook
Order inflows 12,210 11,550 16,370 13,000 15,160
Orderbook 35,600 44,465 48,710 44,870 45,120
Source: Company, Elara Securities Research

4 Elara Securities (India) Private Limited


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CG Power and Industrial

Exhibit 3: Change in estimates


Earlier Revised % Change
(INR mn) FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
Standalone
Sales 51,926 59,467 69,796 50,108 57,983 68,636 (3.5) (2.5) (1.7)
EBITDA 3,304 4,011 5,264 3,313 4,123 5,269 0.3 2.8 0.1
Margin (%) 6.4 6.7 7.5 6.6 7.1 7.7
Net Profit 1,326 2,001 2,887 1,483 1,922 2,853 11.9 (4.0) (1.2)
EPS (INR) 2.1 3.2 4.6 2.4 3.1 4.6 11.9 (4.0) (1.2)

Capital Goods
Consolidated
Sales 61,759 70,087 81,266 61,597 69,702 80,941 (0.3) (0.5) (0.4)
EBITDA 4,385 5,286 6,640 4,462 5,412 6,745 1.8 2.4 1.6
Margin (%) 7.1 7.5 8.2 7.2 7.8 8.3
Net Profit 1,390 2,434 3,401 1,543 2,282 3,351 11.1 (6.2) (1.5)
EPS (INR) 2.2 3.9 5.4 2.5 3.6 5.3 11.1 (6.2) (1.5)
Source: Elara Securities Estimate

Elara Securities (India) Private Limited 5


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CG Power and Industrial

Coverage History
110
100
90 12 14

80 4
5 13
2 3 8
70 7 9
60
50 1 6

40 11
10
30
20
Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17
Jan-12

Oct-12

Jan-13

Oct-13

Jan-14

Oct-14

Jan-15

Oct-15

Jan-16

Oct-16

Jan-17

Oct-17

Jan-18
Apr-12

Apr-13

Apr-14

Apr-15

Apr-16

Apr-17
Not Covered Covered

Date Rating Target Price Closing Price


1 03-Feb-2014 Accumulate INR 125 INR 112
2 21-Apr-2014 Sell INR 125 INR 186
3 30-May-2014 Sell INR 160 INR 183
4 07-Aug-2014 Sell INR 180 INR 198
5 17-Oct-2014 Sell INR 175 INR 191
6 4-Feb-2015 Buy INR 210 INR 168
7 29-May-2015 Buy INR 215 INR 168
8 24-Jul-2015 Accumulate INR 205 INR 182
9 4-Nov-2015 Accumulate INR 200 INR 174
10 3-Feb-2016 Accumulate INR 150 INR 131
11 3-Mar-2016 Accumulate INR 49* INR 44*
12 18-Aug-2017 Accumulate INR 90 INR 82
13 14-Nov-2017 Accumulate INR 95 INR 82
14 19-Dec-2017 Accumulate INR 100 INR 89
*Price post demerger

Guide to Research Rating


BUY Absolute Return >+20%
ACCUMULATE Absolute Return +5% to +20%
REDUCE Absolute Return -5% to +5%
SELL Absolute Return < -5%

6 Elara Securities (India) Private Limited


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India | Crop Protection 14 February 2018
Quarterly Update

Dhanuka Agritech
Margin shrinks on higher RM cost Rating: Accumulate
RM cost continues to drag margin for second quarter in a row Target Price: INR 761
Upside: 13%
Dhanuka Agritech (DAGRI IN) revenue improved by 4.6% YoY to INR
CMP: INR 675 (as on 14 February 2018)
2,245mn, slightly below our estimates of INR 2,288mn. Volume grew
Global Markets Research

by 7% in Q3FY18 and 9% in 9MFY18. Gross margin contracted by Key data*


134bp YoY to 43.3%, owing to increased RM cost. EBITDA fell by 9% Bloomberg /Reuters Code DAGRI IN/DHNP.BO
YoY to INR 353mn vs our estimate of INR 389mn, due to operating Current /Dil. Shares O/S (mn) 50/50
leverage. EBITDA margin declined 237bp at 15.9%, led by higher RM Mkt Cap (INR bn/USD mn) 33/517
cost. Adjusted PAT improved 6% YoY to INR 286mn vs our estimate of Daily Vol. (3M NSE Avg.) 28,784
INR 269mn, primarily on account of lower tax outgo. Revenue share of Face Value (INR) 2
1 USD = INR 64.1
herbicides was 24% while insecticides, fungicides and others were
Note: *as on 14 February 2018; Source: Bloomberg
43%, 19% and 14%, respectively, in Q3FY18. South India contributed
49% to overall sales, followed by West India 24%, North India at 16% Price & volume
and East India at 11%.
1,000 0.6
Recent product launches to aid future growth 900
0.4
The recent rainfall in South India has helped to increase moisture 800
content in the soil, owing to which the ongoing Rabi season is 700
0.2
expected to be better. Management maintains guidance of 10% 600
revenue growth for FY18 and expects FY19 growth to be 15%. While 500 0.0
products like Cover Liquid and Cover granules continue to grow, Feb-17 Jun-17 Oct-17 Feb-18
Targa Super was stagnated. During Q3, the company launched new Vol. in mn (RHS) Dhanuka Agritech (LHS)
brands, Cello soil conditioner, Fenox, a wheat herbicide, and Spectrum Source: Bloomberg

a combination fungicide. For FY19, product launches will include a rice Shareholding (%) Q4FY17 Q1FY18 Q2FY18 Q3FY18
herbicide and a grape fungicide. Promoter 75.0 75.0 75.0 75.0
Institutional Investors 9.3 11.0 10.9 11.2
Valuation: recommend Accumulate with a TP of INR 761
Other Investors 5.7 5.1 4.9 3.4
We expect an earnings CAGR of ~15% over FY18-20E, led by the General Public 10.0 8.9 9.2 10.4
higher contribution of in-licensing products and new product Source: BSE
launches. We expect capex of INR 150mn over FY18-19E. We rollover Price performance (%) 3M 6M 12M
to FY20 and we reiterate our Accumulate rating with a target price of Sensex 3.4 9.4 20.5
INR 761 based on 25x FY20E P/E. The stock is currently trading at 21x Dhanuka Agritech 2.4 (10.5) (12.0)
FY19E P/E. Rallis India 1.8 1.2 (2.6)
PI Industries 1.5 17.9 (6.8)
Source: Bloomberg

YE
E March (INR mn) Q3FY18 Q3FY17 YoY (%) Q2FY18 QoQ (%) Q3FY18E YoY (%)
Net Sales 2,215 2,118 4.6 3,480 (36.4) 2,288 (3.2)
Operating Expenses 1,862 1,730 7.6 2,731 (31.8) 1,899 (1.9)
% of Sales 84 82 237bps 78 NM 83 106bps
EBITDA 353 388 (9.0) 749 (52.9) 389 (9.2)
EBITDA Margins (%) 15.9 18.3 (237)bps 21.5 NM 17.0 (106)bps
Other Income (Net) 46 28 63.1 25 86.1 25 85.2
Interest 3 2 11.8 3 2.7 3 2.4
Depreciation 36 38 (3.7) 36 1.5 38 (4.6)
PBT 361 376 (4.2) 736 (51.0) 373 (3.4)
Tax 75 107 (30.5) 208 (64.1) 105 (28.6)
Effective Tax Rate (%) 21 29 NM 28 NM 28 NM
Adjusted PAT 286 269 6.3 528 (45.9) 269 6.4
NPM (%) 12.9 13 21bps 15 NM 12 116bps
No. of equity shares 98 100 98 98
Adj. EPS 3 3 8.4 5 (45.9) 3 6.4

Key Financials
YE Revenue YoY EBITDA EBITDA Adj PAT YoY Fully DEPS RoE RoCE P/E EV/EBITDA
March (INR mn) (%) (INR mn) margin (%) (INR mn) (%) (INR) (%) (%) (x) (x)
FY17 8,732 5.4 1,690 19.3 1,194 11.3 24.3 23.9 28.5 26.7 19.3
FY18E 9,460 8.3 1,637 17.3 1,141 -4.4 23.3 20.2 24.5 27.9 19.5
FY19E 10,642 12.5 1,884 17.7 1,308 14.6 26.7 19.7 24.3 24.4 16.6
FY20E 11,699 9.9 2,141 18.3 1,496 14.4 30.5 19.0 23.7 21.3 14.2
Note: pricing as on 14 February 2018; Source: Company, Elara Securities Estimate

Rahul Veera • rahul.veera@elaracapital.com • +91 22 6164 8529


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Dhanuka Agritech

Standalone Financials (YE March)


Income Statement (INR mn) FY17 FY18E FY19E FY20E Revenue & margin growth trend
Net Revenues 8,732 9,460 10,642 11,699
14,000 19.3 20
EBITDA 1,690 1,637 1,884 2,141
12,000
Add:- Non operating Income 152 140 155 180 19
10,000 18.3

(INR mn)
OPBIDTA 1,842 1,777 2,039 2,321 8,000 17.7

(%)
Less :- Depreciation & Amortization 148 145 156 167 17.3 18
6,000
EBIT 1,693 1,631 1,883 2,154 4,000 17
Less:- Interest Expenses 11 12 14 17 2,000
PBT 1,682 1,619 1,869 2,137 0 16
Less :- Taxes 488 478 561 641 FY17 FY18E FY19E FY20E
Adjusted PAT 1,194 1,141 1,308 1,496 Revenues (LHS) EBITDA Margin (RHS)
Add/Less: - Extra-ordinaries - - - -
Source: Company, Elara Securities Estimate
Reported PAT 1,194 1,141 1,308 1,496
Balance Sheet (INR mn) FY17 FY18E FY19E FY20E
Share Capital 98 98 98 98
Adjusted profit growth trend
Reserves 5,100 6,014 7,094 8,419
Borrowings 79 95 106 129 2,000 20
14.6 14.4
Non current liabilities 242 242 242 242 1,500 11.3 15
Deferred Tax (Net) 116 116 116 116
1,000 10

(INR mn)
Total Liabilities 5,635 6,564 7,656 9,003

(%)
500 5
Gross Block - 2,074 2,224 2,384
0 0
Less:- Accumulated Depreciation 546 691 847 1,014
(500) (5)
Net Block (546) 1,383 1,377 1,371 (4.4)
(1,000) (10)
Add:- Capital work in progress 4 100 100 101
Investments 642 642 642 642 FY17 FY18E FY19E FY20E
Adj PAT (LHS) PAT Growth (RHS)
Cash & bank balances 43 761 1,313 2,211
Net Working Capital 3,350 4,179 5,277 6,630 Source: Company, Elara Securities Estimate
Long term loans and advances 260 260 260 260
Total Assets 3,710 6,564 7,656 9,003
Cash Flow Statement (INR mn) FY17 FY18E FY19E FY20E Return ratios
Cash profit adjusted for non cash items 1,269 1,299 1,478 1,680
30 28.5
Add/Less : Working Capital Changes (638) (111) (546) (455)
24.5 24.3 23.7
Operating Cash Flow 631 1,188 932 1,224 25
Less:- Capex (199) (246) (150) (161)
23.9
Free Cash Flow 432 943 782 1,063 20
Financing Cash Flow (809) (225) (230) (166) 20.2 19.7 19.0
15
Investing Cash Flow 398 - - -
Net change in Cash 22 718 552 898 10
Ratio Analysis FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E
Income Statement Ratios (%) ROE (%) ROCE (%)
Revenue Growth 5.4 8.3 12.5 9.9
Source: Company, Elara Securities Estimate
EBITDA Growth 20.8 (3.1) 15.1 13.7
PAT Growth 11.3 (4.4) 14.6 14.4
EBITDA Margin 19.3 17.3 17.7 18.3
Net Margin 13.7 12.1 12.3 12.8
Return & Liquidity Ratios (%)
Net Debt/Equity (x) (0.1) (0.2) (0.3) (0.3)
ROE (%) 23.9 20.2 19.7 19.0
ROCE (%) 28.5 24.5 24.3 23.7
Per Share data & Valuation Ratios
Diluted EPS (INR) 24.3 23.3 26.7 30.5
EPS Growth (%) 11.3 (4.4) 14.6 14.4
DPS (INR) - 4.0 4.0 3.0
P/E Ratio (x) 26.7 27.9 24.4 21.3
EV/EBITDA (x) 19.3 19.5 16.6 14.2
EV/Sales (x) 3.7 3.4 2.9 2.6
Price/Book (x) 6.1 5.2 4.4 3.7
Dividend Yield (%) - 0.6 0.6 0.5
Note: pricing as on 14 February 2018; Source: Company, Elara Securities Estimate

2 Elara Securities (India) Private Limited


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Dhanuka Agritech

Exhibit 1: Key ratios (% of net sales)


YE March Q3FY18 Q3FY17 YoY bp chg Q2FY18 QoQ bp chg Q3FY18E YoY bp chg
Raw Material Cost 56.7 55.4 135 59.0 (226) 59.0 (229)
Staff Costs 12.4 11.4 96 8.0 439 12.0 37
Other Expenses 15.0 14.9 6 11.5 346 12.0 299
Effective Tax rate 20.7 28.5 (784) 28.3 (755) 28.0 (730)

Gross Margin 43.3 44.6 (135) 41.0 226 44.6 (135)


OPM 15.9 18.3 (237) 21.5 (559) 18.3 (237)
NPM 12.9 12.7 21 15.2 (227) 12.7 21
Source: Company, Elara Securities Research

Crop Protection
Exhibit 2: Segment-wise revenue mix (%) Exhibit 3: Region-wise revenue mix (%)
Q3FY18 Other
Q3FY18
14% Herbicide West North
24% 24% 16%

Fungicide
19%
East
11%

South
Insecticide 49%
43%
Source: Company, Elara Securities Research Source: Company, Elara Securities Research

Exhibit 4: Valuation matrix


P/E-based FY20E

EPS (INR) 30.5

Target P/E (x) 25

Target price (INR) 761

Upside (%) 12.8

Source: Elara Securities Estimate

Exhibit 5: Change in estimates


(INR mn) Old Estimates New Estimates New Change (%)
FY18E FY19E FY18E FY19E FY20E FY18E FY19E
Net Sales 9,490 10,345 9,460 10,642 11,699 (0.3) 2.9
EBITDA 1,765 1,924 1,637 1,884 2,141 (7.3) (2.1)
Adjusted PAT 1,232 1,334 1,141 1,308 1,496 (7.4) (1.9)
Source: Elara Securities Estimate

Elara Securities (India) Private Limited 3


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Dhanuka Agritech

Coverage History
1000
AC
10
900

800
9
8 11
700 4
600
2 3
500 5 7
1
400 6
300

200

100
Oct-13

Dec-13

Feb-14

Aug-14

Dec-14

Feb-15

Aug-15

Dec-15

Feb-16

Aug-16

Dec-16

Feb-17

Aug-17

Dec-17

Feb-18
Jul-13

Oct-14

Oct-15

Oct-16

Oct-17
Apr-14

Apr-15

Apr-16

Apr-17
Jun-14

Jun-15

Jun-16

Jun-17
Not Covered Covered

Date Rating Target Price Closing Price


1 31-Jul-2014 Accumulate INR 464 INR422
2 07-Nov-2014 Accumulate INR 544 INR 518
3 06-Feb-2015 Buy INR 610 INR 509
4 29-May-2015 Accumulate INR 753 INR 654
5 13-Aug-2015 Buy INR 669 INR 547
6 5-Nov-2015 Buy INR 635 INR 415
7 9-Feb-2016 Buy INR 742 INR 530
8 12-Aug-2016 Buy INR 823 INR 682
9 10-Nov-2016 Buy INR 887 INR 727
10 19-May-2017 Accumulate INR 877 INR 831
11 13-Nov-2017 Accumulate INR 761 INR 651
AC = Analyst change

Guide to Research Rating


BUY Absolute Return >+20%
ACCUMULATE Absolute Return +5% to +20%
REDUCE Absolute Return -5% to +5%
SELL Absolute Return < -5%

4 Elara Securities (India) Private Limited


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Event Calendar: February 2018
Monday Tuesday Wednesday Thursday Friday
12 India: IIP Monthly for December, 13 India: Public Holiday 14 India: WPI Monthly for January 15 US: Initial Jobless Claims, 16
CPI Monthly for January UK: CPI US: CPI Industrial Production
NHPC, CG Power, GAIL, Motherson Sumi, CRISIL, DLF, Eurozone: Industrial Production
Sadbhav Engineering Kolte-Patil Developers, Prabhat NESTLE, Prism Cement, Apollo
Fin Cables, Bank of India, Dairy Hospitals, GRASIM, Repco Home
Britannia, Finolex, Minda, Chambal Fertilizers, GMR Infra, Finance, Sun Pharma, Dhanuka
Suprajit Engineering, Aban ITDC, NBCC, Phoenix Agritech, JET Airways, KNR
Offshore, GSFC, Hathway, Jyoti International, Walchandnagar, Construction
Structures, PFC, GSK Consumer, All Cargo, Gabriel India, Indian Tata Power, Ballarpur Industries,
JK Tyre, TNPL Overseas Bank, ITDC, Snowman Cox & Kings, Godrej, NDTV, DB
Logistics, Unitech Realty, Gujarat NRE Coke, HDIL,
NCC, Steel Strip Wheels

19 20 Ambuja Cements 21 22 Sanofi India 23 Eurozone: Industrial Production


Mahindra CIE Merck
US: Initial Jobless Claims

26 27 28 India: Fiscal Deficit

Quarterly Results: Covered Not Covered

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Coverage Universe

CMP Mkt Cap TP Net Sales (INR mn) EBIDTA (INR mn) Adj PAT (INR mn) BVPS (INR) ROE (%)
Name of company Rating
(INR) (INR mn) (INR) FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E
Automobiles
Bajaj Auto 3,110 899,859 2,844 Sell 217,667 250,600 271,773 302,805 44,224 47,721 52,730 59,393 38,276 42,210 45,787 50,521 481 549 626 720 29 28 27 26
Hero Motocorp 3,596 718,156 4,340 Accumulate 284,751 317,672 363,312 395,740 46,349 54,004 59,527 64,039 33,772 38,900 43,697 46,936 506 593 691 793 36 35 34 32
TVS Motors
M t 652 309 638
309,638 801 A
Accumulate
l t 121 353
121,353 151 905
151,905 180 764
180,764 215 292
215,292 8 571
8,571 12 512
12,512 18 653
18,653 24 337
24,337 5 581
5,581 7 381
7,381 11 337
11,337 15 309
15,309 51 54 73 100 26 30 38 37
Maruti Suzuki 9,002 2,719,204 10,944 Accumulate 680,348 790,913 901,108 1,020,202 103,530 122,476 148,263 174,265 73,377 80,881 102,866 122,445 1,198 1,399 1,668 1,989 19 18 19 19
Mahindra & Mahindra 747 928,603 917 Buy 437,854 473,835 529,426 590,139 47,693 59,279 68,331 77,443 34,072 39,593 44,254 48,982 207 228 252 280 14 15 15 15
Tata Motors 377 1,196,078 411 Reduce 2,696,925 3,000,735 3,200,135 3,501,165 295,888 315,966 373,759 438,593 63,399 62,068 87,235 104,977 278 303 338 379 9 7 9 10
Ashok Leyland 138 402,623 165 Buy 200,187 249,886 291,554 345,965 22,025 25,842 31,875 38,464 15,585 14,237 18,142 22,425 21 24 29 35 27 22 23 24
Eicher Motors 28,028 763,380 34,637 Accumulate 155,870 191,813 233,007 282,146 28,808 36,687 46,801 57,019 16,096 21,006 26,452 30,876 1,675 2,202 2,870 3,652 40 40 38 35
Ramkrishna Forgings 811 26,432 990 Buy 8,755 14,097 16,313 19,048 1,645 2,768 3,286 3,956 190 955 1,369 1,812 145 231 269 320 4 15 17 19
Motherson Sumi 357 752,050 385 Accumulate 424,614 569,614 644,887 729,530 42,405 58,200 73,216 89,390 15,543 22,807 29,190 36,370 30 32 39 49 25 24 25 26
Amara Raja Batteries 839 143,329 895 Accumulate 53,171 59,666 67,468 75,874 8,499 9,051 10,596 12,319 4,785 4,965 5,766 6,736 147 169 194 225 21 18 19 19
Exide Industries 213 180,625 278 Buy 76,424 92,264 108,202 123,842 10,965 12,468 14,575 17,302 6,936 7,373 8,547 10,056 57 63 70 79 15 14 15 16
Apollo Tyres 274 156,742 355 Buy 131,800 150,732 166,225 183,036 18,464 16,286 21,901 25,465 10,993 7,412 10,965 13,080 143 165 182 202 16 9 11 12
CEAT 1,621 65,586 1,765 Accumulate 57,017 61,754 70,772 78,549 6,600 6,319 9,436 11,129 3,760 2,962 4,339 5,100 574 638 731 841 18 12 16 16
MRF 72,329 306,758 80,543 Accumulate 132,233 148,680 166,256 180,597 25,635 23,343 31,921 36,300 14,286 11,917 18,475 21,350 21,844 24,743 29,277 34,525 16 12 16 16
Aviation
Indigo 1,275 489,980 1,802 Buy 185,805 240,490 302,178 352,199 52,687 75,405 98,636 112,534 16,592 29,905 42,031 46,001 105 110 110 118 59 77 106 111
SpiceJet 145 86,950 203 Buy 61,913 81,170 104,871 132,080 15,039 21,040 28,168 35,965 4,307 7,955 10,328 12,525 (10) 3 20 41 (33) (101) 835 99
Jet Airways 803 91,270 610 Accumulate 225,994 246,973 271,092 286,372 36,792 45,518 50,231 53,128 3,907 6,037 4,298 4,739 (431) (378) (340) (299) (8) (13) (11) (13)
Banking Net Income Pre-provision operating profit
Axis Bank 544 1,394,813 477 Sell 297,844 301,120 333,854 367,419 175,845 162,254 175,377 187,009 36,793 37,930 70,028 81,285 233 277 287 317 7 6 10 10
Bank of Baroda 166 382,030 174 Buy 202,715 207,832 233,623 258,377 109,751 110,413 126,235 140,463 13,831 26,133 55,986 70,230 159 194 184 205 4 6 12 14
City Union Bank 165 109,473 190 Accumulate 16,827 19,952 21,803 23,884 9,937 12,219 13,122 14,119 5,028 5,916 7,380 8,583 59 61 70 81 15 16 17 17
Federal Bank 95 187,374 121 Reduce 41,344 45,794 54,511 63,088 19,249 21,564 26,935 31,465 8,308 10,076 14,449 17,633 52 63 68 75 10 10 11 13
HDFC Bank 1,883 4,881,248 1,990 Reduce 454,357 545,855 642,092 780,552 257,324 320,248 379,362 466,197 145,496 172,603 219,402 275,747 352 386 519 598 18 18 18 18
ICICI Bank 319 2,048,853 337 Reduce 412,418 380,148 427,455 478,821 264,867 224,085 255,768 288,247 98,011 72,864 115,055 142,969 166 163 176 192 10 7 11 12
IndusInd Bank 1,694 1,016,609 1,947 Accumulate 113,395 151,024 182,542 221,109 60,032 79,583 93,644 110,887 31,576 43,758 53,747 65,747 339 392 458 540 16 19 18 19
Jammu & Kashmir Bank 70 39,064
39 064 83 Buy 30,048
30 048 34,754
34 754 38,883
38 883 44,910
44 910 12,943
12 943 15,130
15 130 17,373
17 373 20,633
20 633 (16,323)
(16 323) 2,754
2 754 4,631
4 631 6,577
6 577 104 102 105 113 (29) 5 8 10
Karur Vysya Bank 113 82,124 103 Sell 28,559 31,019 36,343 31,019 15,710 16,439 19,993 23,516 6,060 4,795 11,069 13,582 83 96 96 108 13 9 17 18
Kotak Mahindra Bank 1,042 1,985,840 686 Sell 116,033 133,086 159,901 191,364 59,848 70,496 86,992 109,208 34,115 39,061 50,524 65,562 150 197 221 254 13 12 13 14
Punjab National Bank 146 353,772 184 Accumulate 239,445 262,050 286,022 325,753 145,652 148,328 160,954 187,932 13,248 21,327 55,579 74,965 186 189 202 226 4 5 11 13
South Indian Bank 28 50,195 33 Accumulate 23,910 28,227 31,014 33,883 12,146 15,429 16,552 17,765 3,925 3,047 7,682 8,785 31 27 30 34 9 6 14 14
State Bank of India 276 2,384,173 314 Accumulate 1,183,763 1,198,524 1,298,246 1,426,445 595,717 610,956 674,935 751,663 (13,828) 31,945 141,175 247,458 201 226 240 262 (1) 2 7 11
Syndicate Bank 63 65,602 102 Accumulate 97,334 98,013 105,270 116,981 42,332 43,890 47,579 53,485 3,589 1,721 17,940 26,202 148 160 139 157 3 1 11 14
Union Bank of India 121 103,717 124 Reduce 138,679 146,478 155,756 172,811 74,301 79,070 79,964 89,326 5,552 (27,432) 5,953 35,639 305 281 286 248 2 (12) 2 12
Yes Bank 320 737,087 439 Buyy 99,541 130,133 165,785 209,007 58,375 77,979 99,510 126,788 33,301 41,425 57,637 76,145 104 110 131 157 19 18 21 23
Diversified Financials Net Income Pre-provision operating profit
Can Fin Homes 520 69,220 602 Buy 4,690 5,763 6,779 8,424 3,891 4,912 5,743 7,153 2,352 3,035 3,463 4,335 78 98 139 163 24 26 22 21
HDFC 1,814 2,898,559 1,911 Accumulate 99,540 111,471 128,496 150,513 114,264 171,026 142,514 166,548 74,424 117,880 96,313 112,587 229 275 308 348 21 20 21 22
Gruh Finance 521 190,672 559 Reduce 5,678 7,006 8,251 10,124 4,742 5,948 6,988 8,608 2,967 3,562 4,380 5,415 27 33 40 49 33 33 33 33
JM Financial 157 131,827 199 Buy 15,773 20,200 24,525 29,367 10,120 12,582 15,575 18,904 4,702 5,419 6,689 7,977 42 48 55 64 15 15 16 17
PNB Housing Finance 1,254 208,816 1,759 Buy 12,642 19,351 25,710 32,421 9,069 14,602 19,709 24,991 5,237 8,294 11,493 14,504 330 369 424 494 14 14 18 19
Repco Home Finance 600 37,537 758 Accumulate 3,682 4,312 4,958 5,855 3,320 3,864 4,450 5,252 1,823 2,109 2,614 3,112 181 211 249 294 17 17 18 18
Branded Apparels
Aditya Birla Fashion & Retail 157 121,502
2 02 187
8 Buy 66,029
029 73,536
3 3 8
86,775 101,042
0 0 2 4,375
3 4,386
38 6,824
82 8 830
8,830 535
3 61 8 0
860 1,787
8 12
2 12
2 14 16 6 1 9 16
Arvind 396 102,490 504 Buy 92,355 104,958 118,079 134,545 9,434 9,185 12,887 17,205 3,543 3,243 5,018 7,735 144 150 165 190 11 9 12 17
Raymond 974 59,806 1,238 Accumulate 53,913 59,283 66,042 74,713 3,172 4,079 5,423 6,677 761 978 1,942 2,833 286 300 325 364 4 6 10 14
Kewal Kiran Clothing 1,563 19,268 2,210 Buy 4,924 5,400 6,120 7,072 996 1,385 1,620 1,895 853 1,092 1,252 1,439 290 354 428 515 26 27 26 25
Capital Goods
ABB India 1,566 331,849 1,420 Sell 90,873 112,818 133,789 147,917 7,361 9,170 11,798 13,309 4,200 5,589 7,530 8,594 170 191 221 256 12 15 17 17
BEML 1,321 55,012 2,000 Buy 24,988 35,847 44,500 52,330 1,456 2,495 3,342 4,134 844 1,633 2,315 2,946 522 549 587 633 4 7 10 12
CG Power and Industrial 89 56,062 100 Accumulate 57,127 61,759 70,087 81,266 4,702 4,385 5,286 6,640 1,827 1,390 2,434 3,401 66 57 63 67 4 4 6 8
Crompton Greaves Consumer 235 147 483
147,483 285 Accumulate 39 759
39,759 43 544
43,544 50 574
50,574 57 571
57,571 4 962
4,962 5 447
5,447 6 365
6,365 7 114
7,114 2 992
2,992 3 317
3,317 4 041
4,041 4 797
4,797 9 12 17 22 78 51 45 40
Cummins 840 232,973 850 Reduce 50,773 51,695 60,069 69,725 8,018 7,524 9,260 10,831 7,346 6,878 8,341 9,750 135 143 153 167 20 18 20 22
Havells India 514 321,576 590 Accumulate 61,353 84,607 101,057 114,427 8,241 9,988 12,006 13,766 5,390 6,558 8,165 9,618 52 58 66 75 19 19 21 22
Inox Wind 133 29,582 160 Buy 34,150 10,233 47,804 61,050 5,416 464 5,965 7,378 2,738 (651) 3,266 4,289 99 91 97 104 14 NM 16 19
KEC International 390 100,303 420 Accumulate 85,844 97,764 115,279 128,849 8,179 9,706 11,413 12,638 2,872 4,184 4,936 5,591 67 81 99 119 19 22 21 20
KEI Industries 386 30,251 425 Accumulate 26,691 33,084 38,892 42,197 2,743 3,382 4,093 4,511 917 1,322 1,691 1,889 61 77 97 120 22 25 25 22
Siemens 1,273 453,323 1,245 Reduce 110,148 129,439 154,157 173,142 10,512 12,821 14,950 16,768 7,034 9,318 10,790 11,977 216 230 246 264 10 12 13 13
Suzlon Energy 13 71,019 20 Buy 127,143 91,027 170,254 164,188 22,024 12,037 23,244 21,912 5,425 (3,264) 8,867 8,620 nm nm nm nm 39 21 43 34
Thermax 1,198 142,725 980 Sell 43,863 46,819 57,833 61,983 4,330 4,700 6,157 6,541 1,966 3,274 4,300 4,587 213 229 255 282 8 12 15 14
V-Guard Industries 228 96,901 235 Reduce 21,506 24,088 27,707 31,170 2,150 2,411 3,070 3,535 1,518 1,768 2,284 2,636 15 18 22 27 27 25 27 25
Voltas 602 199,110 485 Sell 60,328 64,849 75,646 83,649 5,791 6,292 7,027 7,805 5,082 5,355 5,994 6,579 99 112 126 142 17 15 15 15

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Coverage Universe

CMP Mkt Cap TP Net Sales (INR mn) EBIDTA (INR mn) Adj PAT (INR mn) BVPS (INR) ROE (%)
Name of company Rating
(INR) (INR mn) (INR) FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E
Cement
ACC^ 1,626 305,295 1,878 Accumulate 109,364 128,838 140,667 162,244 11,951 15,213 20,847 26,738 6,452 8,813 12,475 17,029 461 498 534 593 7 10 13 16
Ambuja^ 254 504,652 300 Accumulate 200,940 231,869 263,885 304,589 28,693 37,073 47,987 58,473 14,499 23,542 31,291 39,766 98 57 64 74 8 12 21 23
Bi l C
Birla Corporation
ti 996 76 670
76,670 1 229
1,229 B
Buy 43 477
43,477 55 409
55,409 62 338
62,338 69 743
69,743 6 229
6,229 7 609
7,609 10 472
10,472 12 583
12,583 2 259
2,259 1 445
1,445 3 656
3,656 5 248
5,248 429 440 480 541 7 4 10 13
Heidelberg Cement 162 36,666 207 Buy 17,175 19,334 22,549 25,814 2,789 3,323 4,786 6,419 762 1,465 2,671 3,960 43 47 57 72 8 15 23 27
India Cements 159 49,058 179 Accumulate 51,625 52,880 57,332 64,786 8,882 7,309 8,756 9,939 1,576 1,018 2,237 3,970 168 202 207 226 3 2 4 5
JK Lakshmi 424 49,904 610 Buy 29,104 35,734 41,663 50,869 3,654 5,128 7,770 12,424 820 1,644 3,388 6,949 119 132 159 214 6 11 20 32
JK Cement 1,030 71,990 1,213 Accumulate 37,964 44,782 51,381 58,662 7,343 7,892 10,662 13,606 2,789 3,320 5,346 6,853 274 312 379 468 14 16 22 23
Orient Cement 149 30,607 164 Accumulate 18,751 23,678 27,739 31,456 1,781 3,508 5,200 6,187 (432) 795 2,518 2,785 48 51 62 75 (4) 8 22 20
Prism Cement 138 69,614 119 Accumulate 50,113 57,433 66,762 75,677 3,555 4,603 7,231 9,964 142 1,324 2,919 4,950 20 21 26 36 (0) 11 23 31
Shree Cement 16,700 581,782 20,645 Accumulate 84,292 102,027 122,937 153,746 23,672 28,501 35,234 48,303 13,391 14,762 18,683 26,958 2,210 2480 2823 3317 18.4 18.1 20.2 25.2
UltraTech 4,176 1,146,512 5,042 Accumulate 253,749 317,683 383,573 465,221 52,123 64,096 78,203 101,896 27,135 27,669 37,400 55,996 889 978 1,103 1,296 12 11 13 17
Crop Protection
Dhanuka Agritech 675 33,140 761 Accumulate 8,732 9,490 10,345 11,798 1,690 1,765 1,924 2,230 1,194 1,232 1,334 1,543 106 126 149 177 24 22 20 19
PI Industries 840 115,780 906 Accumulate 22,765 24,253 28,036 32,410 5,505 5,408 6,392 7,487 4,574 4,164 4,626 5,419 117 142 171 204 33 23 21 21
Rallis India 233 45,224 283 Accumulate 16,783 19,133 22,385 25,967 2,634 2,919 3,525 4,253 1,390 1,943 2,279 2,747 57 62 68 74 14 17 18 20
UPL 723 367,547 914 Accumulate 163,118 181,021 203,037 228,583 29,852 33,851 38,171 43,888 17,273 20,151 23,040 26,549 144 176 214 257 26 25 23 22
Insecticides India 803 16,596 919 Accumulate 11,074 11,689 12,883 14,196 1,139 1,601 1,804 2,016 581 888 1,026 1,163 222 265 314 369 13 17 17 16
Dairy
Heritage Foods 701 32,511 870 Buy 22,734 24,238 28,606 33,877 1,366 1,094 1,792 2,251 668 490 927 1,203 66 73 90 112 25 15 25 26
Prabhat Dairy 184 18,016 160 Buy 14,099 15,931 18,003 20,343 1,268 1,523 1,839 2,231 280 493 677 909 70 75 82 90 4 7 9 11
Parag Milk 296 24,873 289 Reduce 17,307 18,580 20,772 23,271 1,082 1,811 1,991 2,086 172 823 944 1,024 78 88 99 112 6 12 12 12
FMCG
ITC 267 3,249,046 325 Accumulate 428,036 447,523 495,081 543,184 154,359 162,048 185,524 214,032 104,772 110,164 126,595 144,582 38 40 42 46 24 23 26 27
Hindustan Uniliver 1,349 2,920,747 1,520 Accumulate 357,590 390,952 434,813 487,925 63,400 78,144 87,729 102,965 45,320 54,037 61,464 73,086 31 35 41 51 68 76 75 73
Nestle 7,260 699,988 9,475 Buy 92,238 104,895 118,582 132,988 19,255 22,958 27,408 31,800 10,923 13,219 16,119 18,984 313 329 340 352 37 43 50 57
GCPL 1,028 700,066 992 Reduce 96,088 105,621 118,071 132,240 19,131 22,613 25,278 28,311 13,068 15,244 17,156 19,938 71 85 101 122 30 29 27 26
Marico 314 404,657 330 Accumulate 59,359 67,542 76,681 87,582 11,593 12,018 14,265 17,079 8,120 8,509 10,160 12,228 16 18 20 23 40 39 43 44
Colgate 1,093
1 093 297,362
297 362 1,060
1 060 Reduce 45,202
45 202 51,713
51 713 58,056
58 056 66,384
66 384 9,448
9 448 11,149
11 149 12,194
12 194 13,816
13 816 5,774
5 774 6,790
6 790 7,403
7 403 8,261
8 261 47 58 70 84 50 48 42 39
Emami 1,080 245,091 1,056 Sell 25,326 25,579 29,416 33,829 7,415 7,412 8,509 9,768 5,493 5,584 6,860 7,997 77 84 97 115 33 30 33 33
Jyothy Lab 359 65,346 360 Reduce 17,492 18,891 20,780 22,858 2,545 2,795 3,179 3,496 1,429 1,726 2,052 2,306 60 63 66 70 14 15 18 19
Bajaj Corp 490 72,341 510 Reduce 7,969 8,588 9,798 11,174 2,636 2,553 2,946 3,394 2,329 2,150 2,325 2,501 33 35 36 38 48 43 44 46
Footwear
Mirza International 137 16,494 213 Buy 9,363 10,456 11,110 11,718 1,611 1,861 2,044 2,215 712 839 923 1,009 42 47 53 59 15 16 15 15
Healthcare
Apollo Hospitals 1,192 165,809 1,363 Buy 72,549 84,169 97,947 113,522 7,286 7,872 10,100 12,531 2,210 1,409 2,731 3,714 279 289 309 336 6 4 7 8
Fortis Healthcare 142 73,881
, 216 Buyy 45,737
, 49,741
, 55,159
, 60,959
, 3,529
, 4,784
, 6,323
, 7,192
, 4,233
, 1,105
, 1,769
, 2,290
, 96 97 100 105 ((0)) 2 3 4
HealthCare Global Enterprises 318 27,584 385 Buy 7,001 8,259 9,550 10,795 1,050 1,179 1,478 1,849 230 114 256 474 50 56 59 65 5 3 5 8
Narayana Hrudayalaya 306 62,545 360 Buy 18,782 22,696 27,256 30,006 2,289 2,308 2,938 3,680 857 662 1,019 1,486 47 51 56 63 9 7 9 12
Hospitality
Indian Hotels 136 173,383 163 Accumulate 40,103 43,326 47,923 52,774 6,097 6,463 8,447 9,987 (748) 1,587 2,711 3,485 21 35 37 40 (3) 5 6 8
IT Services
Tata Consultancy Services 2,912 5,574,023 3,100 Accumulate 1,179,660 1,223,532 1,345,001 1,489,711 323,110 324,806 374,228 410,602 262,890 256,434 296,751 334,407 448 426 522 633 33 30 33 30
Infosys 1,098 2,397,587 1,060 Reduce 684,850 703,207 750,888 824,179 186,050 188,497 185,693 195,157 143,552 158,305 135,919 144,270 302 278 305 330 22 25 21 21
Wipro 293 1,325,398 365 Accumulate 554,179 545,658 590,361 663,340 113,283 109,968 134,925 152,429 84,895 83,296 102,485 121,985 116 108 129 154 17 17 19 19
HCL Technologies 938 1,305,645 1,150 Buy 467,220 504,628 555,770 616,237 103,090 114,172 129,357 144,697 84,590 86,882 94,589 108,549 237 287 326 369 28 24 22 22
Tech Mahindra 612 598,935 490 Sell 291,408 307,012 332,924 367,067 41,843 46,617 48,065 49,043 28,387 34,498 31,976 33,734 188 199 226 254 18 20 17 16
Cyient 624 70,256 700 Buy 36,065 39,254 44,900 50,847 4,892 5,605 7,038 8,293 3,742 4,227 4,905 5,868 188 197 224 256 18 20 21 22
L&T Technology Services 1,460 149,611 1,170 Accumulate 32,483 36,849 43,724 50,672 5,847 5,811 8,048 9,296 4,249 4,715 6,120 7,246 146 181 242 313 33 28 29 26
Internet
Info Edge 1,250 151,946 1,560 Accumulate 8,021 9,105 10,093 11,657 2,275 3,230 3,546 4,355 2,044 2,560 2,934 3,690 164 181 200 225 11 13 13 14
JustDial 465 31,328 280 Sell 7,186 7,806 8,131 8,006 1,096 1,811 1,910 1,494 1,213 1,666 1,525 1,381 130 137 157 173 15 18 15 12
Infrastructure
Ashoka Buildcon 238 44 560
44,560 235 Accumulate 29 518
29,518 34 883
34,883 36 888
36,888 38 829
38,829 8 946
8,946 10 340
10,340 10 726
10,726 11 403
11,403 (1 254)
(1,254) 182 400 599 89 89 91 93 (7) 1 2 4
KNR Constructions 321 45,173 277 Accumulate 15,411 18,502 20,298 22,569 2,296 3,053 3,035 3,374 1,681 2,202 1,979 2,179 64 79 92 107 21 22 16 16
NCC 126 75,772 116 Buy 78,921 78,832 89,810 100,633 6,852 7,140 8,352 9,605 2,758 2,537 2,497 2,967 62 65 69 73 8 7 7 7
PSP Projects 513 18,461 622 Buy 4,008 6,458 9,867 13,269 658 807 1,268 1,745 413 540 825 1,110 30 82 64 92 48 27 31 40
Sadbhav Engineering 395 67,762 388 Buy 33,203 38,144 40,065 42,530 3,556 4,237 4,591 4,939 1,878 1,936 2,156 2,407 97 107 119 132 13 12 12 12
Simplex Infrastructure 600 29,683 442 Sell 55,765 58,917 61,704 64,840 6,887 7,148 7,386 7,791 1,203 1,194 1,138 1,374 306 312 335 362 8 8 7 8
Jewellery Retailers
Titan 814 722,392 889 Accumulate 129,789 157,845 179,862 207,389 11,555 15,828 19,832 24,560 6,973 11,235 16,316 23,836 48 57 71 93 18 24 29 33
Metals
APL Apollo Tubes 2,055 48,755 2,569 Accumulate 45,450 52,320 63,134 75,623 3,244 3,700 4,549 5,598 1,459 1,679 2,268 3,061 305 359 433 531 23 21 24 27
Coal India 307 1,905,364 348 Accumulate 782,206 846,379 953,274 1,000,932 149,121 164,499 227,298 235,207 104,046 126,902 162,555 169,848 40 37 40 45 29 54 68 65

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Coverage Universe

CMP Mkt Cap TP Net Sales (INR mn) EBIDTA (INR mn) Adj PAT (INR mn) BVPS (INR) ROE (%)
Name of company Rating
(INR) (INR mn) (INR) FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E FY17 FY18E FY19E FY20E
GMDC 149 47,318 159 Buy 15,367 19,117 21,504 24,055 4,196 5,451 6,133 6,122 3,233 3,889 4,593 4,804 125 134 144 234 8 9 10 10
Hindalco Industries 243 546,195 363 Buy 1,001,838 1,210,784 1,262,315 1,306,739 124,359 152,163 160,596 167,061 19,572 49,720 62,879 67,801 207 240 271 302 5 10 11 11
Hindustan Zinc 309 1,306,046 376 Buy 172,730 233,719 247,014 274,234 97,390 124,252 137,582 152,518 103,900 95,622 133,877 147,355 73 89 109 131 31 28 32 29
JSW Steel
St l 309 747 163
747,163 351 B
Buy 556 046
556,046 705 604
705,604 762 275
762,275 794 126
794,126 121 742
121,742 130 122
130,122 150 958
150,958 163 196
163,196 35 231
35,231 44 920
44,920 49 506
49,506 55 970
55,970 91 105 125 149 18 19 18 17
NMDC 134 422,854 159 Buy 86,722 113,602 126,226 143,654 41,199 61,896 70,755 83,452 31,693 41,322 46,244 54,125 77 85 95 106 12 16 16 17
SAIL 94 386,411 114 Buy 444,524 568,805 686,711 800,625 380 42,063 81,409 116,366 (28,332) (8,914) 19,463 48,034 87 84 90 104 (8) (3) 5 12
Vedanta 316 1,173,704 326 Buy 728,048 872,547 896,066 969,587 220,784 277,436 274,975 315,987 38,688 76,512 90,575 151,113 143 166 215 290 14 18 20 21
Tata Steel 708 725,226 849 Buy 1,122,994 1,269,799 1,309,862 1,334,382 170,078 212,244 219,770 231,862 985 70,089 79,609 93,854 330 474 512 549 0 18 15 15
Oil & Gas
Bharat Petroleum 460 998,055 496 Reduce 2,012,507 2,458,195 2,846,106 2,865,913 135,125 134,444 136,213 142,984 85,636 82,625 77,900 79,544 142 165 184 203 29 25 21 19
Chennai Petroleum 381 56,735 507 Accumulate 276,915 313,735 351,859 355,327 18,764 21,576 20,284 21,218 10,298 9,713 10,405 11,224 285 332 378 427 27 21 20 19
Deep Industries 203 6,499 463 Buy 2,774 4,323 5,372 5,405 1,556 2,377 2,887 2,903 740 1,138 1,503 1,572 118 152 196 242 27 26 26 21
GAIL 467 789,669 645 Buy 526,134 625,468 745,338 871,469 63,152 81,982 87,940 100,125 38,166 49,848 55,169 63,697 199 216 237 263 12 14 14 15
Gujarat State Petronet 203 114,481 302 Buy 10,430 12,721 14,449 15,608 9,037 11,652 13,057 13,976 4,968 6,789 7,264 7,754 80 90 101 113 12 14 14 13
Gujarat Gas 858 118,155 1,115 Buy 50,926 57,184 70,697 84,868 7,433 9,963 13,491 15,654 2,206 3,327 5,651 7,104 121 141 179 227 13 17 23 23
Hindustan Petroleum 383 583,091 406 Reduce 1,870,237 2,198,751 2,489,148 2,510,192 105,771 84,252 101,941 115,101 62,088 51,519 53,483 59,865 136 160 189 168 32 23 20 22
Indian Oil Corporation 377 1,832,376 509 Buy 3,553,101 4,297,603 4,872,419 4,895,088 406,371 389,397 420,137 426,677 248,234 222,127 234,731 243,074 182 207 233 258 30 24 22 20
Indraprastha Gas 308 215,425 400 Buy 38,148 48,212 60,451 71,667 9,638 12,046 15,344 18,026 5,711 7,080 9,212 11,329 42 51 63 78 20 20 21 21
Mahanagar Gas 1,044 103,094 1,263 Accumulate 20,340 28,774 31,810 35,363 6,442 8,478 8,972 9,734 3,934 5,376 5,662 6,180 186 202 218 235 21 27 26 27
MRPL 120 210,312 148 Buy 432,079 475,794 505,857 546,063 47,060 48,419 44,296 47,197 36,437 27,479 24,132 24,858 58 69 80 91 25 25 17 17
Oil India 359 255,675 413 Accumulate 95,104 107,097 117,426 118,834 31,048 36,859 42,358 42,592 27,004 26,707 31,443 32,616 363 376 392 408 10 9 10 10
ONGC 186 2,383,773 238 Buy 1,305,394 1,478,624 1,653,718 1,764,571 470,565 568,686 621,393 658,220 214,783 244,685 297,495 314,272 161 172 184 197 11 12 13 13
Petronet LNG 252 378,075 293 Accumulate 246,160 352,214 389,721 438,767 25,923 32,302 36,624 41,370 17,057 20,931 24,303 28,023 54 65 72 79 24 24 24 25
Reliance Industries 932 5,905,943 1,053 Accumulate 3,053,820 3,738,483 4,572,272 5,050,919 461,940 645,205 706,425 833,252 299,410 361,888 390,525 473,804 449 506 556 619 7 9 10 11
Pipes
Srikalahasthi Pipes 373 17,397 533 Buy 11,779 13,298 15,143 2,369 3,171 3,713 1,402 1,863 2,356 205 244 296 19 21 22
Pharmaceuticals
Aurobindo Pharma 602 352,760 872 Buy 150,925 165,335 175,975 192,101 34,369 39,489 40,738 44,545 22,422 25,123 26,507 28,978 160 199 241 287 28 24 21 19
Cadila healthcare 420 429,562
429 562 468 Accumulate 94,295
94 295 119,496
119 496 129,225
129 225 139,823
139 823 19,036
19 036 28,086
28 086 31,816
31 816 34,331
34 331 14,833
14 833 17,165
17 165 20,425
20 425 21,867
21 867 68 80 95 112 23 22 23 21
Cipla 616 495,998 652 Accumulate 146,302 154,394 173,983 196,384 24,758 30,857 37,679 44,796 11,364 16,580 20,033 25,081 156 174 195 223 9 12 13 15
Dr. Reddy's 2,183 362,054 2,657 Accumulate 141,961 143,569 160,755 182,830 24,721 24,398 32,372 39,247 12,571 10,320 17,064 21,524 739 776 853 957 10 9 13 15
Glenmark 530 149,676 560 Reduce 91,857 91,876 98,279 111,009 21,017 16,865 17,076 20,136 11,088 8,501 8,649 10,768 159 186 212 246 29 18 15 17
IPCA lab 639 80,610 737 Buy 32,106 31,919 36,591 42,407 4,274 4,595 6,772 8,511 2,028 2,514 3,896 5,166 195 213 240 276 8 10 14 16
Lupin 828 374,123 830 Reduce 174,943 158,534 174,659 200,034 46,491 30,132 33,696 42,724 27,124 13,517 16,111 22,320 299 315 335 369 22 10 11 14
Sanofi India* 4,871 112,182 5,600 Buy 23,686 24,612 26,997 29,782 5,281 5,321 5,943 6,655 2,970 3,319 3,723 4,284 755 811 877 957 18 18 19 20
Strides Shasun 723 64,743 1,025 Buy 34,834 30,269 36,712 42,489 6,428 4,261 7,054 8,380 3,503 1,405 4,068 5,103 305 306 340 385 13 4 13 15
Sun ppharma 574 1,378,249 506 Reduce 315,784 270,652 305,245 335,852 100,893 55,310 72,571 83,075 69,644 24,055 47,993 57,104 168 170 185 204 18 8 11 12
Torrent Pharma 1,429 241,859 1,650 Accumulate 58,563 59,904 77,892 89,725 13,767 13,810 20,141 24,238 9,330 6,374 9,577 12,687 257 281 321 378 24 14 19 22
Rating
CRISIL^ 1,999 143,352 2,083 Accumulate 15,493 16,760 18,810 21,331 4,461 4,867 5,565 6,371 2,944 3,258 3,841 4,460 133 144 156 171 33 33 36 38
CARE Rating 1,401 41,265 1,712 Accumulate 2,874 3,086 3,425 3,906 1,826 1,962 2,178 2,484 1,474 1,571 1,746 1,978 168 174 193 213 33 31 32 33
ICRA Rating 3,974 39,358 3,660 Sell 3,330 3,236 3,645 4,192 1,026 1,149 1,321 1,552 758 902 1,037 1,218 472 575 636 706 16 17 17 18
Real Estate
Godrej Properties 828 179,212 700 Sell 15,829 17,960 20,637 23,384 2,504 1,486 3,206 4,420 1,821 1,428 1,999 2,844 93 98 108 123 11 6 11 15
Oberoi Realty 472 160,241 553 Accumulate 11,137 12,549 28,385 40,743 5,702 6,649 14,769 21,510 3,756 4,188 9,592 14,065 168 171 195 233 7 7 15 19
P ti E
Prestige Estates
t t P Projects
j t 313 117 263
117,263 350 A
Accumulate
l t 47 745
47,745 51 022
51,022 51 336
51,336 53 170
53,170 9 198
9,198 10 385
10,385 11 544
11,544 12 104
12,104 3 673
3,673 4 085
4,085 4 564
4,564 4 793
4,793 119 126 135 143 6 8 8 8
Utilities
CESC 1,026 136,023 910 Sell 134,904 165,119 170,360 176,234 26,987 37,280 39,731 41,462 5,402 11,009 13,947 15,975 799 868 958 1,063 5 10 12 12
JSW Energy 82 134,567 61 Sell 82,634 98,634 102,756 107,444 33,243 31,060 34,064 34,036 6,291 6,964 9,784 9,926 63 66 70 74 6 7 9 8
NHPC 29 294,955 30 Accumulate 85,511 95,951 110,658 121,095 49,232 57,574 66,054 71,272 20,519 27,080 29,486 32,533 28 27 28 29 9 10 11 11
NTPC 163 1,343,598 200 Accumulate 799,759 848,815 981,960 1,118,846 193,908 233,628 277,192 332,659 94,887 103,797 127,378 154,774 119 125 133 145 10 10 12 14
Power Grid Corporation 195 1,022,514 243 Buy 257,165 296,451 336,954 382,712 226,015 257,759 292,725 332,092 73,996 85,692 98,380 111,605 95 107 120 135 16 16 17 17
PTC India 102 30,282 135 Accumulate 140,748 169,902 189,779 208,337 3,083 2,804 3,583 3,797 2,817 2,720 3,019 3,128 104 109 115 120 9 9 9 9
Reliance Power 46 128,755 55 Buy 103,207 102,391 98,300 98,180 44,719 46,496 43,362 42,402 9,349 12,965 12,359 13,085 76 80 83 85 4 6 5 6
SJVN 37 152,228 36 Reduce 25,332 25,226 25,376 25,629 20,437 19,667 19,540 19,500 13,379 13,293 13,455 13,056 28 28 29 30 12 12 11 11
Telecommunication
Bharti Airtel 435 1,738,070 630 Buy 954,683 845,538 907,141 1,022,781 353,297 308,627 353,508 421,626 37,998 5,254 26,077 60,558 186 197 203 219 6 1 4 8
Textiles
Trident 77 39,264 112 Buy 45,736 50,093 65,030 8,882 9,682 13,674 3,366 2,884 5,860 54 59 68 13 10 18
Tours & Travels
Mahindra Holidays 316 42,062 376 Accumulate 22,822 23,653 25,757 28,178 3,219 3,483 3,719 4,019 1,486 1,593 1,656 1,823 45 60 73 86 27 23 19 17
Travel Support Services
I i l
BLS International 197 20 219
20,219 315 B
Buy 6 350
6,350 7 915
7,915 8 494
8,494 10 715
10,715 822 1 741
1,741 1 869
1,869 2 357
2,357 498 1 113
1,113 1 184
1,184 1 570
1,570 16 26 37 51 35 51 37 35
Note: CMP as on 14 February 2018; Numbers updated as on 14 February 2018; 4.00 pm; # Consolidated financials; ^ YE Dec; $ YE June; UR: Under Review; NR: Not Rated; Source: Company, Elara Securities Estimates

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Any clarifications / queries on the proposal as well as any future communication regarding the proposal should be addressed to Elara Securities (India) Private Limited.
Elara Securities (India) Private Limited was incorporated in July 2007 as a subsidiary of Elara Capital (India) Private Limited.

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Elara Securities (India) Private Limited is a SEBI registered Stock Broker in the Capital Market and Futures & Options Segments of National Stock Exchange of India Limited (NSE) and in the Capital Market Segment of
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Elara Securities (India) Private Limited’s business, amongst other things, is to undertake all associated activities relating to its broking business.
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Team - Institutional Equities
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