An equity research newsletter from the house of Smart VERC www.smartverc.com Vol.XIV No.

42

Subscriber copy, not for resale 23 Oct 13 - 29 Oct 13

TURNAROUND STOCK

Honeywell Automation India Ltd.

Incorporated in January 1984, Honeywell Automation India Ltd (HAIL) is a market leader in Electronics - Instrumentation and NSE Symbol - HONAUT Process Control BSE Ticker - 517174 equipment industry. Face Value - ` 10.00 HAIL is leading proBook Value - ` 797.68 vider of Integrated Current Price - ` 2485.50 automation and softTarget - ` 3600 ware solution. With Holding period 18 months over 2800+ employees. HAIL is headStop Loss - ` 2100 quartered in Pune Promoter stake 75.00% with 8 offices all over Pledged % NIL India. It supplies industrial automation and control solutions to the petrochemicals, refining, oil and gas, mining, metal and power industries. The companys main products are distributed control systems, building control systems and smart transmitters. Honeywell is the market leader today in most of the business areas it operates in. The company is setting up an industrial Unit for manufacture of Solar Water Heaters and other products at Gujarat Savli GIDC. It has very strong Promoters, technically as well as financially. Promoters hold major chunk of the stake, 75%.
12/08 Sales Other Income Interest Depreciation Tax Net Profit Equity EPS CPS Dividend 12/09 12/10

3500 3000

2500 2000
1-Sep-12 to 23-Oct-13

1500

Despite slowdown in the user industries, it has managed to report decent CAGR in Revenue of 14.29% over last 4 years. Interestingly the company has maintained Dividend @ Rs 10 / year for the last 7 years in a row. The company has tiny Equity capital of just Rs 8.84 crs and Sales to Equity is highly lucrative at 188 times ! Promoter stake has declined from 80% till Nov.12 to 75% due to Offer for Sale by Promoters @ Rs 2150 / share in Dec.12. With Reserves at 80 times Equity, there is strong possibility of Bonus in near future. Stock suits Investors who believe in long term steady returns.
12/11 12/12 06/12* 06/13*

973.04 1.33 -0.72 -8.52 -35.82 81.85 8.84 92.59 102.23

100%

1175.32 4.16 -0.61 -11.86 -49.19 132.80 8.84 150.23 163.64

100%

1355.79 7.97 -0.08 -12.90 -33.85 105.05 8.84 118.83 133.43

100%

1619.06 10.30 -0.85 -14.81 -38.56 107.14 8.84 121.20 137.95

100%

1660.73 11.19 -0.34 -13.99 -34.15 85.17 8.84 96.35 112.17

100%
` crs

386.62 6.35 -0.06 -3.42 -4.82 11.75 8.84 53.17# 68.64

-

433.80 6.09 -0.10 -3.48 -10.89 28.06 8.84 126.97# 142.71

-

* - 3 months,

# - Annualised

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SMART WATCH
Stock

SMART ADVICE, SMART RETURNS

Advise Date 31-Oct-12 14-Nov-12 02-Jan-13 09-Jan-13 05-Jun-13 14-Aug-13 18-Sep-13 Advise Price 219.50 11.75 617.90 32.30 71.80 130.00 139.00 Current Price 314.30 17.06 916.70 55.25 90.75 160.60 176.10

Axis Bank For the second Quarter it has reported more than 35% increase under 'Provisions and Contingencies' Infotech Enterprises The company hopes for better Revenues growth in second half. Larsen and Toubro This revenue growth is in line with our plans as revenues have improved than the first quarter. They (revenues) would gather momentum in the next two quarters to fulfill our guidance of 15% revenue growth over the year - Shankar Raman, Chief Financial Officer The company attributed decline in profit margins to increase in staff costs, Rs 200 crore forex provisioning and under recovery in the power business. Second quarter Order inflows jumped 27%. International orders contributed to 43% of the quarters inflows. Pending Order Book has reached to Rs 1,76,036 crore. Bajaj Finance Limited For the second quarter Total income jumped 31%, Net profit up by 30%, Loan losses and Provisions down by 2%, Customers acquired up by 20%, Net NPA stood at 0.26%. Capital adequacy ratio (including Tier-II capital) stood at 20.9%. DCB Bank Branch expansion and growth is likely to pick up in the coming quarters. So far NP As are in control. The environment is challenging so we need to be careful and cautious. - Murali M. Natrajan, Managing Director & CEO During second quarter Net profit jumped 50% to Rs 33 crores. TCS We continue to see a robust demand pipeline across markets and a unique opportunity to strategically partner and participate with clients as they remagine their future in multiple dimensions. - Natarajan Chandrasekaran, Chief Executive Officer (CEO) and Managing Director Strong volumes, Currency tailwinds and firm execution helped us post industry- leading operating margins in this quarter. Our ability to manage operations with as provide superior shareholder returns Rajesh Gopinathan, Chief Financial Officer NIIT Technologies We experienced robust growth in the U.S with business expanding by 15% sequentially during the quarter. - Arvind Thakur, CEO & Joint MD (Continued on page 4)

Amara Raja Batteries Maral Overseas Ltd Lupin Ltd. Suven Life Sciences Nahar Spinning Mills P.I. Industries Alembic Pharma

MARKET MY BEAT
Why the stock markets are rejoicing CAD The problem has got postponed, due to shifting of QE3 tapering to later dates. Easing monetary measures by RBI. All the leading banks have reduced lending rates. Rising Rupee High GDP growth of 7.8% in China.

Uncertainties State Elections Union Elections 2014

SMART PORTFOLIO CROSSES Rs 15 Lacs Value of Rs 1.00 lacs invested in Smart Portfolio V/s BSE Sensitive Index
24 21
Smart Portfolio

18 15 12
BSE Sensex

Rs in Lacs

9 6 3 0
30-May-01 to 23-Oct-13

For finer details about our products, services and offers, visit us at www.smartverc.com

Smart Gains

23 Oct 13 - 29 Oct 13

SMART PORTFOLIO
Stock Qty. Avg. Cost (Rs) Cur. Tot. Amt WeighPrice (Rs) tage (Rs) Sector Expected Gains Holding Period Risk Qty- ` 1

Lac portfolio
Low Low Medium Medium Low Medium Low Low Low Low Medium Low Low Low Medium Low Low Low Medium Low Low Medium 4 29 11 29 14 15 37 7 66 44 88 7 18 81 19 73 51 22 2 10 15 9

Aditya Birla Nuvo Alembic Pharma Atul Ltd. Aurobindo Pharma Century Textile Deepak Nitrite Fortis Healthcare HDFC Bank Igarashi Motors Ion Exchange Jain Irrigation Larsen & Toubro Mah. & Mah. Fin. Nahar Spinning NIIT Tech. Onward Tech. Patel Engg. Pidilite Ind. TCS TTK Healthcare Vardhman Textiles YES Bank Cash Total

50 400 150 400 200 200 500 100 900 600 1200 90 250 1000 250 1000 700 300 25 150 200 125

1067 138 366 165 263 265 107 660 52 101 67 825 134 96 283 42 78 255 1932 513 312 309

1226 183 357 222 281 240 101 664 67 95 65 933 271 90 276 48 43 267 2075 531 354 377

61310 73080 53580 88720 56260 47980 50725 66395 60300 56730 78060 83970 67750 90000 69000 47600 29890 80100 51873 79650 70800 47081 116415 1527269

4.01% 4.79% 3.51% 5.81% 3.68% 3.14% 3.32% 4.35% 3.95% 3.71% 5.50% 4.44% 5.89% 4.52% 3.12% 5.24% 3.40% 5.22% 4.64% 3.08% 7.62% 100%

Diversified Pharma Agro Chem. Pharma Diversified Chemicals Healthcare Banking Auto parts Misc. Cap. Goods Finance Textile Infotech Infotech Chemicals Infotech FMCG Textile Banking

30% 50% 40% 80% 50% 40% 200% 30% 50% 30% 200% 50% 50% 60% 50% 40% 300% 30% 30% 150% 40% 50%

12 mths 12 mths 15 mths 18 mths 12 mths 15 mths 36 mths 15 mths 12 mths 9 mths 24 mths 18 mths 15 mths 15 mths 15 mths 12 mths 36 mths 12 mths 15 mths 36 mths 12 mths 12 mths

5.11% Polymer Prod.

1.96% Construction

Attention new Subscribers : Smart Portfolio started on 30-05-01 with a notional sum of Rs 1 lacs has grown to ` 15.27Lacs, versus ` 5.68 Lacs if it had been invested in BSE Sensitive Index. Those who wish to join, may buy all the stocks in proportion to weights assigned, as indicated in the last column in above Table. Smart Portfolio Changes
Scrip
Dewan Hous. Fin. Yes Bank TTK Healthcare Net Cash Flow Old Cash New Cash

Buy / Sell
Sell Sell Buy

Qty.
500 75 50

Current Cash Flow Price

151.30 378.80 531.75 + + -

Rationale

Sector Qty- ` 1 Lac

portfolio
Finance Finance FMCG 33 5 3

75,650 To reduce Finance sector weightage. Stock price is up 40% in last 15 days 28,410 To reduce Finance sector weightage. Stock price is up 29% in last 3 weeks 26,587.5 To increase stock weightage. 77,472.5 - (1) - (2) (1) + (2)

+ 38,942.35 +1,16,414.85

Note : 1. Socks advised for Buy/Sell, are to be executed at ruling prices. Variation of +/- 3% will hardly impact returns 2. Buy/Sell advice is based purely on the valuation of the stock and has no bearing on past stock price behavior. 3. Due to changing stock prices, the number of shares for Rs 1 lacs portfolio may vary from issue to issue.

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Smart Gains

23 Oct 13 - 29 Oct 13

SMART PENDULUM
(Continued from page 2) Order intake during second quarter stood at USD 84 million, leading to USD 248 million worth of orders executable over the next 12 months. Consolidated Revenues rose 17.4%, while Profit After Tax jumped 44.7%.

Greed

Fear

RECOMMENDATIONS REVIEW
Change in Fair Value : No Index BSE Sensex NSE Nifty Fair Value 18,100 5,325 Current Value 20,789 6,186

Accelya Kale Advice Price / Date Target Price Rs 620 / 09-10-2013 Rs 800 in 6-9 months

Second quarter results declared so far are much better than expectations, but the remaining ones may not be so good.

Stock has gained to 10% to Rs 688 (22-10-2013) in 14 days. Short term investors may sell. Quarterly results expected today.

VUCA world or a VUCA quarter volatility, uncertainty, complex and ambiguous In My Lifetime, I ve never seen such a volatile quarter. Slowing economy followed by a crashing INR touching a new low at Rs 68 and recovering back equally faster to 62 levels..All in all, a true VUCA quarter for a diversified global manufacturing company like Sintex. Challenging times. - Dinesh Patel, Chairman, Sintex Industries

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Disclaimer-Recommendations given in this advice letter are based on the opinion of our analysts. Smart-verc will not be responsible/liable for any loss arising out of investments based on its recommendations. Though every care has been taken to ensure correctness, we will not be responsible for any inadvertent errors/omissions. Stop Loss advised in this service is useful for short / medium term investors only. Smart-verc team members may or may not hold stocks covered. All disputes subject to Bhopal jurisdiction. All the stock rates / indices on 23-Oct-13, unless specified. Any hold advice appearing in this newsletter, is as good as a buy recommendation for fresh investors.

Smart Gains

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