India Strategy 4qfy17 20170410 Mosl RP Pg292

April 2017
India Strategy | Get on track please !
India Strategy
Flows
NPAs
Demon impact
Dry private capex
?
GST
Markets at Currency
record Monsoon
high 3 years of
flat
earnings
The Great Divide

Research Team (Gautam.Duggad@MotilalOswal.com)
Contents
India Strategy The Great Divide .............................................................................................. 3-41
4QFY17 Highlights & Ready Reckoner ...................................................................................... 42-55
Sectors & Companies............................................................................................................. 56-289
Automobiles ...............................................56-73 ICICI Bank ........................................................ 135 Tata Steel ........................................................... 211
Amara Raja Batt. .................................................. 60 IDFC Bank .......................................................... 136 Vedanta ............................................................. 212
Ashok Leyland ...................................................... 61 Indian Bank........................................................ 137
Bajaj Auto .......................................................... 62 IndusInd Bank .................................................... 138 Oil & Gas ................................................. 213-228
Bharat Forge ........................................................ 63 Kotak Mahindra Bank ........................................ 139 BPCL ................................................................ 218
Bosch ................................................................... 64 Oriental Bank of Commerce ............................. 140 GAIL ................................................................ 219
CEAT ..................................................................... 65 Punjab National Bank ....................................... 141 Gujarat State Petronet ....................................... 220
Eicher Motors ...................................................... 66 RBL Bank ............................................................ 142 HPCL ............................................................... 221
Escorts ................................................................. 67 State Bank ....................................................... 143 IOC ................................................................. 222
Exide Inds. ............................................................ 68 Union Bank ........................................................ 144 Indraprastha Gas ............................................... 223
Hero Motocorp .................................................... 69 Yes Bank ............................................................ 145 MRPL.................................................................. 224
Mahindra & Mahindra ....................................... 70 Oil India.............................................................. 225
Maruti Suzuki ....................................................... 71 NBFC ....................................................... 146-159 ONGC ............................................................. 226
Tata Motors ....................................................... 72 Bajaj Finance ..................................................... 148 Petronet LNG ..................................................... 227
TVS Motor ............................................................ 73 Bharat Financial ................................................. 149 Reliance Inds. ..................................................... 228
Dewan Housing ................................................. 150
Capital Goods...............................................74-88 GRUH Finance.................................................... 151 Retail ....................................................... 229-233
ABB .................................................................... 77 HDFC ............................................................... 152 Jubilant Foodworks ............................................ 232
Bharat Electronics ................................................ 78 Indiabulls Housing ............................................. 153 Titan Company................................................... 233
BHEL .................................................................. 79 LIC Housing Fin .................................................. 154
CG Consumer Elect............................................... 80 M & M Financial ................................................ 155 Technology .............................................. 234-253
CG Power & Indl. .................................................. 81 Muthoot Finance ............................................... 156 Cyient................................................................. 240
Cummins India ................................................... 82 Repco Home Fin ................................................ 157 HCL Technologies ............................................... 241
GE T&D India ........................................................ 83 Shriram City Union ............................................ 158 Hexaware Tech. ................................................. 242
Havells India ......................................................... 84 Shriram Transport Fin. ....................................... 159 Infosys ............................................................. 243
Larsen & Toubro ................................................ 85 KPIT Tech. .......................................................... 244
Siemens................................................................ 86 Healthcare............................................... 160-179 L&T Infotech ...................................................... 245
Thermax ............................................................ 87 Alembic Pharma ................................................ 162 Mindtree ............................................................ 246
Voltas ................................................................... 88 Alkem Lab .......................................................... 163 MphasiS ............................................................. 247
Ajanta Pharma................................................... 164 NIIT Tech. ........................................................... 248
Cement ...................................................... 89-100 Aurobindo Pharma ............................................ 165 Persistent Systems ............................................. 249
ACC .................................................................... 93 Biocon ............................................................... 166 TCS ..................................................................... 250
Ambuja Cements.................................................. 94 Cadila Health ..................................................... 167 Tech Mahindra ................................................... 251
Dalmia Bharat ...................................................... 95 Cipla ............................................................... 168 Wipro .............................................................. 252
Grasim Industries .............................................. 96 Divis Labs ........................................................... 169 Zensar Tech........................................................ 253
India Cements ...................................................... 97 Dr Reddy' s Labs ............................................. 170
Ramco Cements ................................................... 98 Fortis Health ...................................................... 171 Telecom ................................................... 254-263
Shree Cement ...................................................... 99 Glenmark Pharma.............................................. 172 Bharti Airtel ....................................................... 260
Ultratech Cement............................................... 100 Granules India ................................................... 173 Bharti Infratel..................................................... 261
GSK Pharma ................................................... 174 Idea Cellular ....................................................... 262
Consumer ................................................ 101-121 IPCA Labs. .......................................................... 175 Tata Comm ........................................................ 263
Asian Paints .................................................... 104 Lupin.................................................................. 176
Britannia ............................................................ 105 Sanofi India........................................................ 177 Utilities .................................................... 264-271
Colgate ............................................................... 106 Sun Pharma ....................................................... 178 CESC ................................................................... 267
Dabur ................................................................. 107 Torrent Pharma ................................................. 179 Coal India ........................................................... 268
Emami ................................................................ 108 JSW Energy ........................................................ 269
Godrej Consumer ............................................... 109 Logistics .................................................. 180-184 NTPC .................................................................. 270
GSK Consumer ................................................... 110 Allcargo Logistics ............................................... 182 Power Grid Corp. ............................................... 271
Hind. Unilever .................................................... 111 Concor ............................................................... 183
ITC ...................................................................... 112 Gateway Distriparks .......................................... 184 Others ..................................................... 272-288
Jyothy Labs ......................................................... 113 Arvind ................................................................ 272
Marico ................................................................ 114 Media ..................................................... 185-196 Bata India ........................................................... 273
Nestle ................................................................. 115 D B Corp ............................................................ 189 Coromandel International ................................. 274
P&G Hygiene ...................................................... 116 Dish TV .............................................................. 190 Castrol India ....................................................... 275
Page Industries................................................... 117 HT Media ........................................................... 191 Delta Corp .......................................................... 276
Parag Milk Foods................................................ 118 Jagran Prakashan............................................... 192 Indo Count Inds.................................................. 277
Pidilite Inds. ....................................................... 119 PVR .................................................................... 193 Info Edge ............................................................ 278
United Breweries ............................................... 120 Siti Networks ..................................................... 194 Inox Leisure........................................................ 279
United Spirits ..................................................... 121 Sun TV ............................................................... 195 Interglobe Aviation ............................................ 280
Zee Entertainment ............................................ 196 Just Dial.............................................................. 281
Financials ................................................. 122-145 Kaveri Seed ........................................................ 282
Axis Bank ............................................................ 127 Metals ..................................................... 197-212 Manpasand Beverages ....................................... 283
Bank of Baroda ................................................ 128 Hindalco .......................................................... 204 MCX ................................................................... 284
Bank of India ...................................................... 129 Hindustan Zinc ................................................... 205 Navneet Education ............................................ 285
Canara Bank .................................................... 130 JSPL.................................................................... 206 P I Industries ...................................................... 286
DCB Bank............................................................ 131 JSW Steel ........................................................... 207 S H Kelkar ........................................................... 287
Equitas Holdings................................................. 132 Nalco ................................................................. 208 SRF ..................................................................... 288
Federal Bank ...................................................... 133 NMDC ................................................................ 209 TTK Prestige ....................................................... 289
HDFC Bank ....................................................... 134 SAIL.................................................................... 210
Note: All stock prices and indices for companies as on 5 April 2017, unless otherwise stated
Investors are advised to refer through important disclosures made at the last page of the Research Report.
India Strategy | The Great Divide
India Strategy
BSE Sensex: 29,974 S&P CNX: 9,265
The Great Divide

Earnings to bounce off a low base, but quality of growth weak
Earnings growth at 11-quarter high, but quality remains weak

Continuing the narrative of the previous quarter, earnings in 4QFY17 would be
driven by the low base of a few cyclicals. MOSL universe is expected to post 11-
quarter-high earnings growth of 28%. However, excluding PSU Banks, Metals
and Oil & Gas, MOSL universe PAT is expected to decline 5.9% YoY. Entire YoY
earnings growth of INR224b for MOSL universe in 4QFY17 would be led by PSU
Banks and Metals.
We expect contribution of Global Cyclicals to increase further. Domestic
Cyclicals would account for 90% of 4QFY17 MOSL universe earnings delta;
Defensives would post a 6.5% YoY decline.
We cut our FY18/FY19 Sensex EPS estimates by 4% to INR1,572/INR1,904. We
now expect 1% EPS decline for Sensex in FY17, followed by 20% growth in FY18
on a low base of 2HFY17.
Key sectoral trends/highlights

PSU Banks would benefit from a favorable base (AQR-related provisions),
posting profit of INR34b versus losses of INR146b in the base quarter, and
contribute ~80% of MOSL universe delta PAT.
Metals are expected to post 2.8x jump in PAT to INR91b, the highest in 19
quarters.
4QFY17 would be the first-ever quarter of PAT decline for our Technology
universe.
Autos are expected to post a 32% YoY decline in PAT, led by Tata Motors (-74%
YoY). Excluding this, Autos PAT should grow 2%.
Cement, Telecom, Media, Retail and Utilities would have a lackluster quarter,
with YoY earnings decline.
In BFSI, Private Banks are expected to post 18% YoY PAT growth, led by ICICI
Bank, Kotak, Indus and Yes Bank.
Four key trends to watch out for:

1. Unexpected sharp currency appreciation of 4.5% in 4QFY17, driven by significant
pick-up in FII flows.
2. IT, Pharma, Private Banks and Consumer the primary drivers of earnings
growth for a decade have shown sharp moderation in their earnings
contribution. After growing at 23% CAGR over FY05-15 and seeing their
contribution to MOSL earnings rise 3x from 12% in FY05 to 34% in FY16, these
sectors have posted 6% earnings CAGR over FY15-17E.
3. It would be the first quarter of operating margin decline after eight consecutive
quarters of expansion. Tailwinds of benign commodity costs are now stalled.
4. Big policy reforms are long-term positive, but impacting short-term earnings.
FY16 was marred by asset quality review mandated by the RBI, while 2HFY17
Sources of exhibits in this report include RBI, CMIE, Bloomberg, IMF, Industry, Companies, and MOSL database
April 2017 3
has seen the adverse impact of demonetization on earnings of select consumer-

oriented sectors. FY18 will have some disruption from GST implementation.
Model portfolio changes

Majority changes in our model portfolio are driven by concerns about valuations
and our preference for earnings visibility in an era of multiple policy changes. Our
stance continues to reflect our belief that earnings growth for Defensives will
decelerate and the baton will be passed on to Cyclicals. We have reduced our
weights in Autos and Metals, and increased in Financials, Energy and Consumer.
Summary of the changes in our model portfolio:
Within financials, our overweight is centered on corporate banks where
resolution of asset quality issue can lead to meaningful re-rating in valuations.
We have raised our weight on Yes Bank post the recent capital raise. We are
also including SCUF in our model portfolio, adding to weights in NBFC.
We have reduced our Overweight in Autos. Tata Motors still remains our largest
position within Auto, albeit with a reduced weight. We have replaced Bharat
Forge with Ceat in the model portfolio.
In Consumer, we have increased weights slightly, but still stay underweight
given rich valuations. We are replacing Jubilant Foodworks with Colgate.
Within Energy, we remain positive on OMCs, with IOC as largest position. We
also introduce Petronet LNG in our portfolio by reducing some weights in BPCL.
In Capital Goods, Infra and Cement, we stay overweight on L&T as core play, but
replace Ramco with JK Cement. We are also replacing Shree Cements with BEL.
After the sharp rally in commodity names, we are reducing our weights in
Metals. We remain overweight on Hindalco, even as we shed some weight and
remove NMDC from the portfolio.
We continue with our Underweight stance on Technology, and further reduce
our weights in Tech Mahindra. We have also replaced Bharti Infratel with Bharti
Airtel.
We have increased our weight in Healthcare, and move to modest overweight
position given reasonable valuations. We introduce Ajanta Pharma in the
portfolio.
In Midcaps, we have removed several names owing to the recent rally and
consistent expansion in valuation premium v/s large caps (at 19% now v/s 11%
in December 2016). We have removed Endurance, Alkem Labs, Dish TV, Arvind,
Exide and Muthoot Finance, and replaced them with Navneet, Fortis, Delta
Corp, GDPL, Allcargo and MCX in our model portfolio.
April 2017 4
4QFY17 PREVIEW Dj vu: Few cyclicals drive 4QFY17

Low base to aid 3 year high earnings growth; Defensives to disappoint
As we enter FY18 after an eventful year, the underlying operating backdrop remains
hazy. There are no visible signs of a recovery in earnings, even as 4QFY17
performance may be boosted by the depressed bases for some cyclical sectors. That
aside, the broader earnings picture appears subdued. FY17 began with hopes of an
ever-elusive earnings recovery, backed by expectations of good monsoon, 7th Pay
Commission awards and macro buoyancy. However, continued weakness in private
capex cycle, absence of broader consumption pick-up and sluggish asset quality
trends in financials played a spoilsport. Additionally, events like demonetization
changed the setting mid-way, leading to a flattish earnings performance. As we look
ahead, there are several unknowns emerging on the horizon currency
appreciation, GST implementation and progress of monsoon. While the impact of
currency appreciation is still quantifiable, that of GST implementation and monsoon
on near-term earnings is difficult to predict.
Dj vu: Normalization of earnings in few sectors to drive 4QFY17

The earnings picture in 4QFY17 appears to have an uncanny resemblance to that in
the previous quarter, with select sectors driving the performance led by favorable
bases. The story continues in 4QFY17, with an even more exaggerated base effect
playing out. We expect MOSL universe revenue to grow 14% YoY an 11-quarter
high (revenue was flat YoY in the base). EBITDA growth is estimated at 8.3% YoY, the
lowest in four quarters, underpinned by margins disappointment after eight
consecutive quarters of expansion for MOSL universe (ex-Financials and OMC). PAT
is likely to grow 28% YoY, the highest since 1QFY15 (18% decline in the base). Also,
4QFY17 is estimated to be the third straight quarter of double-digit PAT growth.
However, it is largely led by the depressed bases of PSU Banks (loss of INR146b in
4QFY16), Oil & Gas (PAT down 24%) and Metals (PAT down 19%). Excluding these
sectors, we estimate 4.4% YoY sales growth, 2.5% YoY EBITDA decline and 5.9% YoY
PAT fall for MOSL universe. EBITDA margin for MOSL universe (ex-OMC and
Financials) is likely to contract (by 40bp YoY to 19.8%) for the first time in nine
quarters. PAT margin for MOSL universe (ex-OMC and Financials) too is expected to
see first contraction (by 90bp YoY to 10%) in eight quarters. This would be driven by
300bp/470bp YoY contraction in EBITDA margin of Autos/ IT. Defensives are
estimated to report second consecutive quarter of YoY decline in PAT, while
Domestic Cyclicals should post 138% YoY PAT growth, despite the sluggish
performance of Autos (32% YoY PAT decline; worst in 20 quarters).
Four key trends coming to the fore

Unexpected strong INR gains in 4QFY17: The INR has appreciated 4.5% against the
USD from December 2016 to March 2017, as against consensus of moderate
depreciation. This has been the fastest quarterly currency appreciation since
September 2012. Some factors that drove this appreciation are: 1) strong control of
twin deficits (CAD, FD); 2) strong FII flows of USD11b in 4QFY17 and 3) expectations
of continued reform momentum post the BJPs massive UP election victory. We are
building in forecast of INR68.6 and INR70.9 per USD for FY18 and FY19, respectively.
April 2017 5
Earnings bedrock of yesteryears no longer in the pink of health: The bedrock of

earnings growth over FY05-16 has been sectors like IT, Pharma, Private Banks and
Consumer, which have compounded earnings at 24%, 24%, 27% and 17%,
respectively (cumulative CAGR of 23%), as against 14% CAGR of MOSL universe. The
contribution of IT, Pharma and Private Banks to overall MOSL earnings has gone up
from 12% in FY05 to 34% in FY16. However, over FY15-17E, the growth rates for
these sectors have moderated IT, Pharma, Private Banks and Consumer have
compounded at 6%, 13%, 3% and 8%, respectively (cumulative growth of 6%), as
against 4% for MOSL universe.
Tailwinds from commodity costs deflation are a thing of the past: 4QFY17 will be
characterized by first quarter of operating margin contraction after nearly two
years. Operating margin for MOSL universe (ex- OMCs and Financials) is expected to
contract 40bp to 19.8%. Similarly, PAT margin is expected to contract 100bp to 9.9%
after seven consecutive quarters of expansion.
Policy changes adding to uncertainty: Significant policy reforms like demonetization
and GST, as well as policy changes like ban on liquor and judicial pronouncements
pertaining to BS-III to BS-IV switchover for Autos have added to element of
uncertainty in earnings forecast. The pace, frequency and magnitude of policy
changes are precluding earnings predictability.
Look beyond the base effect; underlying operating metrics weak

4QFY17 earnings growth is expected to be driven by Cyclicals: PSU Banks, Metals
and Oil & Gas are expected to drive more than 100% of YoY earnings delta for MOSL
universe, with PSU Banks alone accounting for 80% of the delta. PSU Banks are
expected to post profit of INR34b v/s loss of INR146b in the base quarter. Similarly
Metals PAT is expected to jump 2.8x to INR91b the highest absolute PAT of Metals
universe in 19 quarters. PAT growth is likely to be 139% YoY (-56% YoY in 4QFY16)
for Domestic Cyclicals and 16% YoY (-11% YoY in 4QFY16) for Global Cyclicals.
However, Defensives are estimated to report a 6% YoY decline in PAT, the lowest in
20 quarters, dragged by Technology and Telecom. MOSL universe (ex-Metals, Oil
and PSBs) PAT is likely to fall 5.8% YoY in 4QFY17, the second consecutive decline
and worst in 20 quarters. We also note that the impact of commodity inflation is
now visible, with operating margin for MOSL universe (ex-OMC and Financials) likely
to contract (by 40bp YoY to 19.8%) for the first time in nine quarters. Even earnings
breadth is expected to weaken: almost half of the universe is expected to report YoY
PAT decline, worst since June 2015. Overall, looking beyond the base effect, the
earnings print and operating metrics for 4QFY17 appear weak.
Snapshot of sector performance:

Autos are expected to be adversely impacted by commodity cost inflation, costs
related to BS-III inventory clearance, sluggish 2W sales and continued margin
headwinds for Tata Motors. Auto aggregate PAT is expected to decline 32% YoY.
Excluding Tata Motors, PAT should grow 2% YoY.
Technology is expected to witness another sluggish quarter, with muted 2%
EBITDA growth and first-ever quarter of YoY decline in PAT.
Cement (-22%), Media (-31%), Retail (-12%) and Telecom (-85%) are the other
sectors expected to report YoY PAT decline.
April 2017 6
Private Banks (18%), Capital Goods (15%), Consumer (5%), NBFC (11%),
Healthcare (6%) and Utilities (1%) are expected to post PAT growth.
Defensives share in MOSL universe earnings would continue declining to 34%
(recent high was 47% in 4QFY16); the share of Global Cyclicals would be 30% in
4QFY17, up from 24% in 2QFY17.
Nifty sales are estimated to grow 12% YoY, the highest in 11 quarters. PAT is
likely to grow 10% YoY, the second consecutive quarter of double-digit growth.
EBITDA is likely to post muted 2.4% YoY growth. Nifty aggregates would be
influenced by Cyclicals excluding PSU Banks and Metals, Nifty sales are
expected to increase by 12% YoY, EBITDA by 3% YoY and PAT by 1% YoY.
Our Sensex EPS estimates are revised downwards by 4% each for FY18/FY19 at
INR1,572/1,904. Among Sensex components, we have cut EPS estimates of
seven companies by >5% and upgraded estimates of RIL by >5%.
Nifty EPS estimates are however largely unchanged for FY18/FY19 to
INR498/599 (from INR497/605) owing to change in composition of Nifty
constituents. BHEL and Idea Cellular were replaced with IOC and Indiabulls
Housing Finance w.e.f. 31 March 2017.This has offset the negative impact of
earnings revision in other constituents in FY18/19. For FY17, Nifty estimates are
revised upwards by 3% to INR 417.
Exhibit 1: Growth bounces back on low base

EBITDA PAT
Sector Sales EBITDA PAT PAT
Margins Margins
Mar- Var % Var % Mar- Var % Var % Mar- Var % Var % PAT Chg bp Chg bp
(Nos of Companies) Sh. %
17 YoY QoQ 17 YoY QoQ 17 YoY QoQ Delta YoY YoY
High growth sectors 5,955 24 13 1,202 22 5 494 142 10 290 48 -32 405
PSU Banks (8) 331 5 6 264 1 -2 34 LP -11 180 3 -341 5,668
Metals (9) 1,325 28 18 253 103 20 91 176 56 58 9 710 369
Private Banks (11) 259 11 3 219 0 -3 102 18 1 15 10 -854 241
Oil & Gas (11) 3,357 28 8 381 25 -3 213 16 -7 29 21 -25 -67
Capital Goods (12) 682 14 43 84 10 84 53 15 124 7 5 -48 11
Med/Low growth sectors 1,458 5 3 463 7 9 268 5 10 13 26 56 -7
Logistics (3) 31 -1 1 5 23 10 3 14 3 0 0 290 110
NBFC (12) 114 11 6 91 12 6 51 11 7 5 5 38 -23
Healthcare (18) 392 8 3 97 12 5 58 6 4 3 6 89 -27
Consumer (18) 420 5 4 94 3 3 65 5 2 3 6 -42 11
Utilities (5) 501 3 2 177 5 17 90 1 25 1 9 53 -42
PAT de-growth sectors 3,151 2 6 571 -12 2 266 -23 -3 -78 26 -274 -266
Technology (15) 902 5 0 209 2 -1 152 -5 -8 -9 15 -72 -194
Retail (2) 37 20 -19 3 24 -20 2 -12 -30 0 0 28 -188
Cement (8) 208 2 11 33 -17 -2 16 -22 -5 -4 2 -368 -228
Others (18) 164 10 9 28 -10 -4 11 -22 -15 -3 1 -371 -291
Media (8) 54 2 -4 16 6 -10 8 -31 -2 -4 1 123 -715
Auto (14) 1,405 2 12 165 -19 20 73 -32 22 -34 7 -298 -255
Telecom (4) 383 -11 -4 116 -22 -8 4 -85 -48 -24 0 -469 -547
MOSL (176) 10,564 13.6 9.4 2,236 8.3 5.1 1,028 27.9 6.2 224 100 -105 109
MOSL Ex Metals, Oil & PSU Bks (148) 5,550 4.4 8.3 1,337 -2.6 6.5 689 -5.9 7.3 -173 -135
Sensex (30) 5,057 8.8 9.4 1,285 0.3 5.0 619 1.4 6.2 -215 -90
Nifty (50) 7,565 11.9 8.9 1,608 2.4 3.7 792 9.9 4.9 -197 -19
*Margins
MOSL Universe headline performance at multi-quarter high
April 2017 7
Exhibit 2: Sales growth for MOSL universe to come in at Exhibit 3: but sales growth for Defensives to moderate
11-quarter high sharply; lowest in multiple quarters
24.9
18.5
22.9
15.9 14.4 13.6
18.9
18.7
12.3
17.7
17.7
9.9 11.3
8.1
15.2
7.6 6.7 11.7
13.1
12.6
4.5
11.7
11.6
2.9
10.9
10.6
0.4
9.4
8.9
8.6
8.0
7.7
5.7
-0.7 -2.2
1.9
-6.2 -7.4
-11.0 -8.0
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17E
Mar-17E
Source: MOSL Source: MOSL
Exhibit 4: 4QFY17 EBITDA margin (ex-OMCs, Financials) at Exhibit 5: PAT growth for MOSL universe will be boosted by
19.8% (-40bp YoY) low base in cyclicals; PSU Banks provide 80% of delta PAT
MOSL Universe EBITDA 96.8
22.4
Margin LPA: 19.5%

21.7
21.6
21.6
21.3
69.5
21.1
20.2
20.0
20.0
19.8
19.8
33.2 21.2 27.9

19.4
18.9
11.9
18.8
18.7
18.7
18.6
21.6
18.4
5.6 5.7 7.8

18.3
18.2
18.1
1.6 0.1 0.3 2.0

20.8
20.8
19.9
20.0
-3.0 -1.2
18.8
19.1
-3.3
4Q 18.4
3Q 18.8
1Q 18.0
3Q 18.6
3Q 18.3
-9.2 -11.8
4Q 18.5
1Q 18.1
-18.4
2Q 18.0
-37.2
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17E
2Q
3Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
1Q
3Q
4Q
2Q
4Q
1Q
2Q
4Q
1Q
2Q
4Q
1Q
2Q
3Q
4QE
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Exhibit 6: Worst PAT performance for Defensives in multiple Exhibit 7: 4QFY17 PAT margin (ex-OMCs, Financials) would
quarters contract 100bp to 9.9%, dragged by Autos, O&G and IT
14.0
MOSL Universe PAT

35.2
12.6
28.5
28.3
Margin LPA: 10.8%

27.6
24.9
23.8
11.8
11.8
11.7
21.1
19.4
11.4
16.2
11.3
11.1
10.4
10.9
10.9
12.5
12.2
9.9
11.3
10.4
10.3
12.5
10.2
10.4
10.1
12.4
9.9
9.9
9.7
9.9
6.0
5.5
12.0
9.6
5.2
11.5
11.3
10.9
10.4
10.6
10.3
10.1
10.1
10.1
10.0
Dec-16 -0.5
9.8
9.6
9.2
9.4
Mar-17E -6.5
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
MOSL Universe PAT to benefit from low base in several sectors

PAT growth for several sectors in MOSL universe to benefit from low base: PSU
Banks and Metals will benefit from a depressed base and drive the bulk of
4QFY17 earnings delta for MOSL universe.
Exhibit 8: Sectoral quarterly PAT trend (INR b)
Sector FY13 FY14 FY15 FY16 FY17
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec MarE
Auto 59 52 50 79 53 74 84 82 93 78 78 61 100 69 84 107 79 85 60 73
Capital Goods 26 28 29 61 14 21 23 53 18 20 21 46 13 15 6 46 15 23 23 53
April 2017 8
Cement 26 20 16 20 19 11 11 18 16 14 9 15 14 16 16 20 25 21 16 16
Consumer 42 42 47 45 47 49 54 50 53 56 60 57 58 58 64 62 65 65 65 65
Financials 171 166 177 191 187 164 170 197 205 191 184 199 198 191 109 -16 171 192 184 185
Private Banks 54 57 67 71 70 72 80 85 82 85 95 100 91 98 106 83 94 94 97 98
PSU Banks 92 83 82 83 87 61 59 73 90 72 54 57 71 54 -39 -146 33 49 38 34
NBFC 25 26 29 37 30 32 32 39 33 34 35 43 36 40 41 46 43 48 47 51
Healthcare 21 28 36 30 32 42 50 43 46 51 34 38 54 52 49 53 57 58 53 55
Logistics 3 3 3 3 3 3 3 3 4 3 4 4 3 3 3 2 3 2 3 3
Media 4 5 5 4 5 5 6 5 5 5 8 6 7 7 8 12 7 8 8 8
Metals 75 54 42 76 60 57 57 71 67 73 61 33 36 51 -8 22 32 29 40 59
Oil & Gas -290 319 186 378 63 169 109 315 160 130 58 242 243 125 185 184 275 205 228 213
Oil & Gas Ex OMCs 116 149 135 108 107 140 146 135 122 126 82 129 139 121 134 131 145 153 150 147
Retail 2 2 2 2 2 2 2 2 2 3 2 2 2 2 3 2 2 2 3 2
Technology 90 93 97 97 106 121 129 134 132 137 144 141 141 152 153 158 153 158 164 150
Telecom 11 9 7 12 15 13 15 24 23 27 28 29 23 26 26 28 27 24 8 4
Utilities 81 63 88 99 76 68 84 99 77 57 73 89 77 68 78 90 78 53 72 90
Others 6 6 5 4 7 6 7 5 9 7 7 6 10 7 7 8 10 9 8 8
MOSL Univ 329 891 7901,100 691 807 8021,102 909 851 772 968 976 840 782 776 998 934 933 982
MOSL Univ Ex Metals, Oil & PSU Bks 451 435 480 564 481 520 578 642 592 576 598 636 626 611 643 716 659 652 626 676
Exhibit 9: Sectoral quarterly PAT growth trend (%)

Sector FY13 FY14 FY15 FY16 FY17
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep DecE MarE
Auto 13 -4 -25 -5 -10 42 69 3 74 5 -7 -25 7 -12 8 75 -21 25 -29 -32
Capital Goods 11 -3 -17 -7 -45 -24 -20 -14 24 -8 -10 -13 -29 -22 -71 0 21 52 297 15
Cement 29 61 -3 -13 -26 -47 -35 -13 -13 28 -11 -13 -16 15 67 30 84 38 4 -22
Consumer 24 15 23 17 14 15 13 13 12 14 11 13 9 5 7 9 13 12 1 5
Financials 38 19 14 4 9 -1 -4 3 10 16 8 1 -4 0 -41 PL -14 0 68 LP
Private Banks 30 27 28 25 29 26 20 20 18 19 19 17 10 14 12 -16 3 -3 -9 18
PSU Banks 48 11 -2 -18 -5 -27 -28 -12 3 18 -7 -23 -21 -25 PL PL -53 -9 LP LP
NBFC 27 30 43 40 19 23 10 6 10 7 11 10 7 16 16 8 21 22 16 11
Health Care 6 27 66 26 51 53 38 46 42 21 -31 -13 17 1 43 38 6 12 8 6
Logistics -1 22 -7 -15 -6 -1 9 22 13 -2 32 20 -9 4 -33 -41 -17 -25 -11 14
Media -2 8 22 25 26 12 18 13 -5 3 33 17 32 43 4 109 2 1 1 -31
Metals -15 -19 -23 6 -20 5 36 -6 11 27 7 -53 -47 -30 PL -35 -11 -43 LP 171
Oil & Gas PL 968 -29 9 LP -47 -42 -16 154 -23 -47 -23 52 -4 221 -24 13 64 23 16
Oil & Gas Ex OMCs -5 -12 15 -8 -8 -6 9 25 14 -10 -44 -4 14 -4 63 2 4 27 12 12
Retail 13 23 25 25 15 3 -12 12 -5 22 7 1 -13 -37 13 -12 35 22 8 -12
Technology 36 35 19 15 17 31 33 38 25 13 11 6 7 11 7 12 9 4 7 -5
Telecom -9 -3 -47 -8 44 41 128 105 48 105 86 17 2 -5 -9 -2 17 -6 -68 -85
Utilities 17 39 32 1 -6 7 -5 0 0 -17 -13 -10 1 19 6 0 1 -22 -7 1
Others -11 -8 -1 -18 15 -2 20 33 20 13 8 6 9 -5 -4 42 10 36 14 7
MOSL Universe -41 68 -4 5 110 -9 2 0 32 5 -4 -12 7 -1 1 -20 2 11 19 27
MOSL Ex Metals, Oil & PSU Banks 20 21 13 7 7 20 20 14 23 11 4 -1 6 6 7 13 5 7 -3 -6
Note: Comparable Universe, excludes Just Dial, Alembic Pharma, Vedanta due to merger, Repco Home Fin, MCX, Alkem Labs, Interglobe
Aviation, CG Consumer Electricals, Parag Milk Foods, Equitas Holding, IDFC Bank, RBL Bank, L&T Infotech, Manpasand and SH Kelkar.
April 2017 9
Exhibit 10: Key Assumptions Commodities bottoming out in 4QFY17

Macro FY16 1QFY17 2QFY17 3QFY17E 4QFY17E FY17E
GDP Growth (%) 7.8 7.2 7.4 7.0 5.75 6.8
IIP Growth (%) 2.4 0.7 -0.9 1.1 2.6 0.9
Inflation CPI-RU (%) 4.9 5.7 5.2 3.8 3.6 4.5
Currency: USD/INR 65.5 66.9 67.0 67.4 67.0 67.1
Oil: Brent (US$/bbl) 47.5 46.0 45.8 50.1 54.1 49.0
Repo Rate (%) 6.9 6.52 6.50 6.25 6.25 6.38
Interest Rate (%): 1Year CP Rate (Avg.) 8.6 8.30 7.85 7.28 7.39 7.70
10Year G Sec (Avg.) 7.7 7.46 7.12 6.57 6.68 6.96
Sectoral FY16 1QFY17E 2QFY17E 3QFY17E 4QFY17E FY17E
Banking: Loan Growth (%) 10.7 8.1 6.6 4.2 5.9 5.9
Auto: CV Volume growth (%) 11.1 9.2 3.1 1.7 3.2 3.0
Car Volume growth (%) 10.6 2.1 18.4 3.5 15.5 9.9
Cement: Volume growth (%) 4.0 5.6 3.3 -1.0 -7.0 0.3
Capital Goods: L&T order Intake (INR b) 1,369 297 311 416 489 1,445
Capital Goods: L&T order Intake (% YoY) -11.9 12.5 8.7 8.1 12.9 5.6
Metal: Steel (USD/Tonne) 494 492 465 503 560 506
Aluminum (USD/Tonne) 1,592 1,570 1,619 1,710 1,720 1,655
Zinc (USD/Tonne) 1,846 1,918 2,252 2,518 2,700 2,347
Oil & Gas: Under Recoveries (INR b) 124.3 24.0 27.8 8.8 13.9 50.5
Singapore GRM (USD/bbl) 7.5 5.0 4.5 6.7 6.5 5.7
Technology: $Revenue growth (%) 6.9 3.6 1.1 -0.1 2.2 7.2
* CV volume for Tata Motors and Ashok Leyland; PV Volume for Maruti Suzuki
Interesting sectoral trends

Key PAT growth sectors
PSU Banks should report PAT of INR34b (v/s loss of INR146b in the base
quarter), contributing 80% of MOSL universe PAT delta in 4QFY17. PNB, BOB
and Canara Bank, which reported losses in the previous quarter, are expected to
report profits in 4QFY17. BOI and OBC are estimated to post losses.
NBFCs are likely to see moderation, posting 11% YoY PAT increase after three
consecutive quarters of 16-20% growth. Bajaj Finance (44%), Dewan Housing
(30%), Indiabulls Housing (26%), LIC Housing Finance (19%), Muthoot Finance
(23%) and Gruh Finance (18%) are expected to deliver strong performance.
Private Banks are expected to report healthy 18% YoY PAT growth the best in
nine quarters. ICICI Bank (+3.3x), RBL (71%), Yes Bank (30%), Kotak (28%) and
IndusInd (23%) are expected to post strong performance, while Axis (-61%) will
have a muted quarter.
Capital Goods sector is expected to post muted performance with flattish PAT
excluding BHEL. BHEL is expected to post 3x jump in PAT YoY, which should aid
sector PAT growth of 15%.
Metals would have a bumper quarter, reporting PAT of INR91b (+2.8x YoY) and
highest absolute PAT in 19 quarters. Hindustan Zinc (+2.7x), Vedanta (+2.1x) and
Tata Steel (+2.1x) are expected to post strong results.
Oil & Gas would report healthy 16% YoY PAT growth fourth consecutive
quarter of double-digit growth. IOCL (+3.3x), Indraprastha Gas (+41%), Gail
(+44%), ONGC (+65%) and Petronet (+66%) are expected to report strong
performance.
April 2017 10
Key PAT de-growth sectors

Autos would report one of the weakest performances, with 32% YoY PAT
decline (worst in 20 quarters).
Eicher, Maruti and Escorts are expected to stand out with 29%, 17% and 69%
growth, respectively.
Excluding Tata Motors (which is expected to post 74% YoY PAT decline), Autos
should post 2% YoY growth.
Cement is expected to post weak performance on account of cost pressures.
EBITDA and PAT for our Cement universe are expected to decline 17% and 22%
YoY, respectively (lowest in 14 quarters).
Technology is expected to report first-ever YoY decline in PAT (-5%), with Wipro
(-15%) and Tech Mahindra (-15%) likely to underperform among Tier I names.
Telecom would report PAT decline (-85% YoY), despite the low base (PAT was
down 2% YoY in 4QFY16). PAT of INR 4.3b for our Telecom universe is the lowest
in multiple quarters.
Exhibit 11: 4QFY17 sectoral sales growth (%): highest in 11 Exhibit 12: 4QFY17 sectoral PAT growth (%): Entirely led by
quarters for MOSL universe cyclicals
28 28 LP
176
20
14 14 28
18 16 15 14 11
8 8 6 5 1 1
5 5 3 2 2 2
-5 -12
-22
-1 -31 -32
-11 -85
MOSL Univ
Banks - PSU
Utilities
Telecom
Metals
NBFC
Health Care
Banks - Pvt
Logistics
Consumer
Sensex
Cap. Goods
Technology
Cement
Auto
Media
Oil & Gas
Retail
MOSL Univ
Utilities
Metals
Health Care
Telecom
Consumer
Cap Goods
Technology
Cement
Auto
Logistics
Media
Oil & Gas
Retail
Financials
Exhibit 13: Weakening earnings breadth; almost half of the universe to report YoY PAT decline
Earnings Gr. >30% >15-30% >0-15% <0% Ex OMCs (%)
24 20 -15 -11 42 22 9 11 18 9 0 8 9 7 -9 -2 -10 6 28
15 26 -8 -15 23 26 24 13 4 11 6 -3 12 17 -7 -3 -10 -2 20
21 24 23 26 27
42 41 32 35 31 30 27 25 24 31 34 31 36
26
35 38 47 36 40 36 33 32 34
42 40 38 39 42 40 37 38
45 45
% of MOSL Universe companies
14
19 24 9 10 18
26 20 18 14 14
9
27
21 13 24 19 13 27 17 22 18 15 18 20 23
11 17 16 19 25
18 22 18 16 17 22 24 25 22
18 22 10 23 16 20
22 21 19
18 17 20 21 14
10
14 24 25 18 22 17 19 16 18
14 20 22 20 23 16 27 14
20 13
51 18 13
44 45 41 43
35 30 38 32 39 35
26 27 32 21 21 24 25 25
28 26 24 26 24 26 25 29 28 28 29 22
19 19 20 18 21 21 20
Dec 07
June 08
June 09
June 10
June 11
June 12
June 13
June 14
June 15
June 16
Mar 08
Sep 08
Dec 08
Mar 09
Sep 09
Dec 09
Mar 10
Sep 10
Dec 10
Mar 11
Sep 11
Dec 11
Mar 12
Sep 12
Dec 12
Mar 13
Sep 13
Dec 13
Mar 14
Sep 14
Dec 14
Mar 15
Sep 15
Dec 15
Mar 16
Sep 16
Dec 16
Mar 17E
PAT Growth Ex OMCs (%)

35% of the companies would grow at >15% YoY, and almost 22% of the Universe would report >30% PAT growth. More than half of the
Universe would report PAT de-growth.
April 2017 11
Four key trends for 4QFY17
1. Unprecedented Currency appreciation in 4QFY17

INR has appreciated 4.5% against USD since Dec16 in three months vs.
consensus expectations of a moderate depreciation.
This has been the fastest currency appreciation in a period of three months
since Sep12 and has implications for the earnings of our IT, Pharma and some
of the global cyclicals.
The enormity of the currency appreciation is underscored by the fact that only
in four previous occasions; the currency has appreciated by more than 4.5% in a
quarter in last 27 years.
Control on twin deficits, strong FII inflows (equity + debt) of 11b USD in 4QFY17
and expectations of continued reform momentum post massive victory of BJP in
UP elections have driven this currency appreciation, in our view.
We are building in currency forecast of INR 68.6 and INR 70.9 per USD for
FY18/FY19.
Exhibit 14: INR appreciated 4.5% in 4QFY17; only in four previous occasions in 27 years has it appreciated more in a quarter
Chg QoQ(%) - (RHS) INR / USD - (LHS)
75 10
65 5
55 0
45 -5
-5.4 -5.6 -5.0 -4.5
-6.4
35 -10
Mar-03
Sep-03
Mar-04
Sep-04
Mar-05
Sep-05
Mar-06
Sep-06
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16
Mar-17
Source: MOSL, Bloomberg
2. Earnings bedrock of yesteryears no longer in the pink of health

The bedrock of earnings growth over FY05-16 has been sectors like IT, Pharma,
Private Banks, and Consumer.
These sectors have compounded earnings at 24%, 24%, 27% and 17% as against
14% CAGR of MOSL universe over FY05-15. Cumulatively, these four sectors
have compounded at a CAGR of 23% over FY05-15.
The contribution of IT, Pharma and Private Banks to overall MOSL earnings has
gone up from 12% in FY05 to 34% in FY16.
However, over FY15-17E, the growth rates for these sectors have moderated -
IT, Pharma, Private Banks, and Consumer have compounded at 6%, 13%, 3% and
8% respectively (cumulative CAGR of 6%) as against 4% of MOSL Universe.
Thus, even as they have outperformed our broader universe earnings growth,
their growth has slowed down sharply vs. the growth they clocked in the earlier
decade.
Over the last 12-18 months the prospects of the earnings growth for these
sectors has been clouded by various headwinds.
April 2017 12
In IT, the growth has slowed down materially owing to structural changes in
business model in favor of digital. Additionally, in the short term the currency
appreciation impact will also hurt IT earnings.
In Pharma the earnings were impacted by regulatory headwinds as sectors finds
itself in the midst of US FDA onslaught. Additionally, the US policy on healthcare
and pricing as well as currency appreciation is also adding to uncertainty.
For Consumer sector, the moderation in consumption growth over the past two
years coupled with rising competitive intensity from new players like Patanjali
has resulted in earnings moderation.
In Private Banks, there has been a clear value migration from large corporate
oriented banks (ICICI, Axis) to Retail banks (HDFC, Kotak, Indusind, Yes). The
share of ICICI + Axis in overall Private Banks earning pool has come down from
68% in FY05 to 33% in FY17 and we expect it to stay there in FY19E.
Exhibit 15: Contribution of select sectors to MOSL earnings has gone up substantially over
FY05-FY16
CAGR Contribution of Tech, Healthcare, Pvt Banks to MOSL earnings (%)
FY05-15: 25%
FY15-17: 6%
34 31
27 29
23
17 17 18 19
14 15 15
12
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E
Source: MOSL
Exhibit 16: Technology sectors profit growth has decelerated sharply

CAGR PAT (INR b) PAT Growth YoY (%)
FY05-15: 24%
FY15-17: 6%
48 48 32
28 27
19 16 18 17 15
12
6 6
63 93 138 163 189 224 262 301 384 505 563 597 634
Source: MOSL
April 2017 13
Exhibit 17: Healthcare profits have also moderated sharply

CAGR
PAT (INR b) PAT Growth YoY (%)
FY05-15: 24%
64
FY15-17: 13%
42
28 30
16 16 19
14 12
5 29 4
0
21 27 45 52 52 66 86 100 119 169 176 201 224
Source: MOSL
Exhibit 18: Even Private Banks earnings growth has come off over FY15-17
CAGR PAT (INR b) PAT Growth YoY (%)
FY05-15: 27%
FY15-17: 3% 46
32 406
45 26 28 28 27 409
20
15
11
34 6
-1 -1
50 63 92 102 130 172 220 280 335 385
Exhibit 19: Value migration from Corporate oriented Private banks to Retail oriented ones
68 Axis + ICICI earnings as % of total private banks earnings pool

61 60 57 55
50 50 49 48 48 48 44
33
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
3. Tailwinds from commodity costs deflation is a thing of past

The earnings performance of corporate India has benefitted immensely from
the commodity cost deflation witnessed over the past two years.
However, as articulated in our earlier India Strategy, we have seen the best of
the margin tailwind benefits from the benign commodity cost environment.
4QFY17 will be characterized by first quarter of operating margin contraction
after eight consecutive quarters of margin expansion.
Operating margin for MOSL (ex- OMCs and Financials) is expected to contract
40bps to 19.8%.
Similarly PAT margins for MOSL (ex- OMCs and Financials) is expected to
contract 100bps to 9.9%, after seven consecutive quarters of expansion.
April 2017 14
Exhibit 20: Operating margins to contract after eight consecutive quarters of

expansion
MOSL Universe EBITDA
22.4
21.7
21.6
21.6
Margin LPA: 19.5%
21.3
21.1
20.0
20.0
20.2
19.8
19.9
19.1
21.6
18.9
18.4
18.8
19.8
18.7
18.3
18.4
20.8
20.8
18.1
20.0
19.4
18.8
18.6
18.6
18.8
18.7
3Q 18.3
4Q 18.5
3Q 18.2
1Q 18.1
3Q 18.0
3Q 18.0
1Q
2Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
4Q
1Q
2Q
4Q
2Q
3Q
4Q
1Q
2Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4QE
Exhibit 21: PAT margins to contract after seven consecutive quarters of expansion
14.0
MOSL Universe
12.6
PAT Margin LPA: 10.8%

11.8
11.3
10.9
11.1
10.9
10.9
10.6
10.4
10.4
12.5
12.4
9.9
9.9
9.9
12.0
11.8
11.4
11.7
11.5
11.3
10.4
10.1
10.3
10.1
10.1
10.4
10.1
10.0
9.8
9.7
9.6
9.4
9.6
9.2
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
1Q
3Q
Exhibit 22: Auto EBITDA margin (%) Exhibit 23: Consumer EBITDA margin Exhibit 24: Cement EBITDA margin
16.9
23.3
26.8
23.1
22.9
22.8
22.7
22.6
22.5
15.3
22.2
14.7
14.5
25.4
25.125.1
14.0
13.9
13.7
21.3
13.5
24.5 24.3
13.1
13.1
20.9
20.7
20.5
12.9
23.923.9
11.8
23.223.523.1
20.0
23.3
11.0
22.9
Jun-14
Jun-15
Jun-16
Jun-14
Jun-15
Jun-16
Jun-14
Jun-15
Jun-16
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17E
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17E
Mar-17E
4. Policy reforms: Long-term positive; impacts earnings in short term

The noticeable feature of the recent past has been big policy changes which
while structurally positive in the long term has impacted earnings in the near
term. Demonetization in FY17 being a case in point.
As we make our estimates, we note that FY18 will be characterized by the
implementation of GST, the most significant taxation reform since
independence.
GST, while a big structural positive, may induce uncertainty and earnings
volatility owing to trade adjustment of the inventory pipeline and potential
April 2017 15
teething troubles in the initial stages of implementation. This could impact our
earnings estimates or FY18.
Apart from these big policy reforms, we also note that several other policy
changes viz. Ban on selling of liquor within 500m of proximity of state and
national highways, judicial pronouncements pertaining to BS-III to BS-IV
switchover for Auto sector have also added to element of uncertainty in
earnings forecast.
Exogenous factors like progress of monsoons bring in their own set of unique
challenges.
Overall, the pace, frequency and magnitude of policy changes have clouded the
earnings predictability at the margin.
Cyclicals driving entire 4QFY17 earnings growth

After witnessing severe stress in 1HFY17, Cyclicals like PSU Banks and Metals are
exhibiting strong recovery, driven by factors such as a depressed base, interest
rate moderation and a recovery in commodity prices. PAT for Cyclicals is likely to
grow 55% YoY in 4QFY17 (33% decline in the base).
More than 100% of YoY delta PAT is contributed by Cyclicals, as Defensives is
expected to post 6.5% YoY PAT decline, worst in 20 quarters, dragged by IT,
Utilities and Consumer.
For Domestic Cyclicals, PAT is likely to grow 139% YoY in 4QFY17 (-56% in
4QFY16), driven by PSU Banks and Capital Goods. For Global Cyclicals, we expect
PAT to grow 16% YoY in 4QFY17 (-11% YoY in 4QFY16), driven by Metals and Oil
& Gas.
Exhibit 25: Cyclicals expected to drive entire earnings growth in 2H

91 65
Contribution to 1HFY17 PAT growth (%) Contribution to 2HFY17 PAT growth (%)
32
15 14 13 12 10 7
6 3 2 1 0 18
6 3 1 1 1 0 0
-1 -3
-11
-24 0 -1 -1 -1 -1
-35 -10 -15
Healthcare
Capital Goods
Healthcare
Utilities
NBFC
Utilities
Capital Goods
Banks-PSU
NBFC
Others
Telecom
Others
Metals
Banks-PSU
Metals
Telecom
Consumer
Consumer
Logistics
Technology
Cement
Logistics
Cement
Banks-Pvt
Media
Banks-Pvt
Technology
Media
Automobiles
Automobiles
Oil & Gas
Retail
Oil & Gas
Retail
April 2017 16
Exhibit 26: Cyclical growth expected to significantly exceed MOSL Universe average growth in 2HFY17
60 1HFY17 PAT growth (%) LP 2HFY17 PAT growth (%)
43 539
30 29
21
14 12 7
7 6 5 4 2
47 25 20 13 5 3 3 1 0
-2
-10 -1 -3 -8 -13 -18 -31
-21 -27 -77
-34
Utilities
Capital Goods
Healthcare
Capital Goods
Healthcare
Telecom
Metals
Banks-PSU
Banks-PSU
Metals
NBFC
Utilities
Telecom
NBFC
Others
Others
Logistics
Cement
Consumer
Consumer
Logistics
Technology
Banks-Pvt
Media
Automobiles
Cement
Banks-Pvt
Technology
Media
Automobiles
MOSL
MOSL
Oil & Gas
Oil & Gas
Retail
Retail
Defensives to drag 4QFY17 earnings

Defensives solely drove MOSL universe PAT growth over FY14-16. Cyclicals (both
domestic and global), on the other hand, were under pressure, resulting in the
share of Defensives in aggregate PAT rising to 36%.
However, we expect Cyclicals to be the key driver of PAT growth in FY18, with
over 87% of the increase in MOSL universe PAT being driven by Cyclicals.
As a result, we expect the share of Cyclicals to increase to 72% by FY19 from
67% in FY17. Key drivers of growth within Cyclicals would be PSU Banks, Autos,
Metals and Cement.
For 4QFY17, Defensives would report 1% YoY and 6.5% YoY decline in EBITDA
and PAT, respectively, the lowest in 20 quarters.
Exhibit 27: PSU Banks to contribute 80% of PAT growth in 4QFY17
58 29 15 7 5 3 3 1 0
180 -0 -3 -4 -4 -9 -24 -34
803
1,028
PSU Banks
Capital Goods
Healthcare
NBFC
Utilities
Metals
Others
Telecom
PVT Banks
Consumer
Logistics
Media
Cement
Technology
Auto
MOSL 4QFY16
MOSL 4QFY17E
Oil & Gas
Retail
PAT (INRb)
PAT (INRb)
Source: MOSL
April 2017 17
Share of defensives comes off further; Global cyclicals contribution keeps inching up
Exhibit 28: PAT share of global cyclicals to see sharp sequential pick-up
100%
Defensives
33 27 24 28
36 39 40 39 38 34
75%
Global cyclicals 30
25 33 40 43 38 34 27
50% 34 26 25 26 23
Domestic cyclicals 34 38 35 35
25%
42 38 35 36 36 38 35
33 34
0%
June-09
June-10
June-11
June-12
June-13
June-14
June-15
June-16
Mar-09
Sep-09
Dec-09
Mar-10
Sep-10
Dec-10
Mar-11
Sep-11
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17E
Defensives includes Consumer, Healthcare, Technology, Telecom and Utilities
Global cyclicals includes Metals, Oil & Gas and JLR
Domestic cyclicals includes Automobiles, Banks, Capital Goods, Cement, Media, NBFCs, Real Estate and Retail
Nifty sales and PAT growth to be 12% and 10%, respectively

Nifty PAT is likely to grow 10% YoY in 4QFY17, marking second consecutive
quarter of double-digit growth. Sales are expected to grow 12% YoY, best in 11
quarters. Nifty EBITDA, however, is likely to post muted 2% growth, lowest in
eight quarters.
The performance of Nifty would be driven by Cyclicals like PSU Banks and
Metals, which are benefiting from the depressed base of 4QFY16 and are
expected to contribute 92% of incremental YoY Nifty PAT for 4QFY17. Excluding
PSU Banks and Metals, Nifty PAT would be up by 1% YoY.
22 Nifty companies (largely from Autos, IT and Pharma sectors) are expected to
post YoY PAT decline.
Exhibit 29: Nifty sales to grow 12% in 4QFY17, best in 11 quarters

37 35
33
30 32 30
26 25 28 26 26 LPA: 14%
23 23 26
19 20 22 18 22 21 21
16 16 15 16 14 14 14 14 15
8 12
8
4 4 4 3 3 5
-1 0
-4 -6 -6 -5
-8 -9
-12
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
April 2017 18
Exhibit 30: 4QFY17 Nifty PAT to grow 10% YoY, second consecutive quarter of double-digit growth
65
38 36
34 29 LPA: 11%
22 21 27 24 24
20 16 16 19 20
13 12 11 19 16 10 12 11
7 10 10
4 5 5 9 9
0 2 4 1 1 0 3
-1 0 -5
-7 -8 -5 -7
-15 -12
-20
Exhibit 31: 4QFY17 Nifty EBIDTA to grow muted 2% YoY, lowest in six quarters
47
35 37
31 LPA: 12%
25 26 29
20 21 20
17 17 17 16 15 18 18 15 13 17
13 10 13 10 11 13 11 6 13 8 9 10
5 6 3 4 5 3 0 3
1 2
-4 -2
-5 -5
-8 -10
Exhibit 32: Nifty sectoral 4QFY17 PAT chg. YoY (%)

LP
284
48
28
16 10 8 8 7
PSU Banks, Metals and
O&G to outperform; Autos,
0 -5 -5
Tech and Cement to -21
underperform -35 -37
-75
Utilities
Healthcare
Nifty
NBFC
Telecom
Banks-PSU
Metals
Consumer
Media
Technology
Cement
Auto
Banks-Pvt
Cap Goods
Oil & Gas
Infra
April 2017 19
Exhibit 33: Nifty companies 4QFY17 performance (INR b)

Company Sales EBITDA PAT PAT Contbn EBITDA margin
Var % Var % Var % Grw. Var
Mar-17 Mar-17 Mar-17 (%) Mar-17
YoY YoY YoY (%) (bp)
High PAT Growth (17) 2,288 19 601 19 242 171 31 214 26 5
Bank of Baroda 34 3 22 -14 5 LP 1 52 65 -1267
Tata Steel 339 15 47 111 16 LP 2 27 14 624
IOC 988 23 78 116 41 228 5 39 8 337
ICICI Bank 54 1 50 -29 23 227 3 22 93 -3863
Tata Power 108 16 12 -33 5 168 1 5 12 -850
State Bank 151 -1 119 -16 22 76 3 14 79 -1379
ONGC 211 31 108 80 45 65 6 25 51 1406
Zee Entertainment 15 0 5 11 4 48 0 2 30 294
GAIL 155 34 18 64 11 44 1 5 12 218
Power Grid Corp. 72 25 64 26 23 43 3 10 89 47
Yes Bank 16 28 15 21 9 30 1 3 93 -550
Eicher Motors 19 24 6 40 5 29 1 1 33 373
Kotak Mahindra Bank 21 13 15 28 9 28 1 3 73 859
Indiabulls Housing 11 9 12 30 9 26 1 2 101 1581
Dr Reddy s Labs 38 0 9 4 5 24 1 1 23 84
IndusInd Bank 16 28 14 19 8 23 1 2 84 -658
Cipla 38 17 7 63 4 20 0 1 19 536
Med/Low PAT Growth (10) 1,342 23 326 6 218 7 28 20 24 -394
Grasim Industries 24 -4 5 12 2 19 0 1 20 299
Asian Paints 38 4 7 3 5 17 1 1 19 -25
Maruti Suzuki 186 22 27 15 18 17 2 4 15 -81
HDFC Bank 85 14 66 16 39 15 5 7 78 106
ITC 99 1 36 0 26 8 3 3 36 -51
Aurobindo Pharma 38 3 9 2 6 4 1 0 23 -24
Reliance Inds. 687 38 107 -1 75 3 9 3 16 -595
HCL Technologies 121 13 26 11 20 2 2 1 22 -34
HDFC 29 16 27 11 20 2 3 1 96 -350
Bharti Infratel 35 10 15 5 7 1 1 0 44 -205
Negative PAT Growth (23) 3,935 5 680 -10 332 -22 42 -133 17 -295
Larsen & Toubro 371 12 44 -9 24 0 3 0 12 -275
Hind. Unilever 81 4 15 -1 11 -1 1 0 18 -99
TCS 300 5 82 4 62 -2 8 -2 27 -49
Hindalco 273 11 32 3 10 -3 1 0 12 -94
NTPC 166 -8 56 5 25 -4 3 -2 34 420
Mahindra & Mahindra 102 0 12 -5 6 -5 1 0 12 -60
Infosys 172 4 47 1 34 -5 4 -2 27 -91
Coal India 228 10 45 -8 40 -6 5 -3 20 -375
Hero MotoCorp 68 -9 12 -6 8 -7 1 -1 18 56
Bosch 28 13 6 13 4 -9 1 -1 22 -3
Bajaj Auto 49 -8 10 -13 8 -11 1 -2 21 -97
Sun Pharma 78 2 25 -2 15 -15 2 -4 32 -124
Tech Mahindra 75 10 12 1 7 -15 1 -2 15 -133
Wipro 136 0 27 -3 19 -15 2 -5 20 -63
Lupin 45 9 11 -13 6 -15 1 -2 25 -613
Ultratech Cement 64 -1 11 -17 6 -16 1 -2 17 -338
Ambuja Cements 26 6 3 -24 2 -26 0 -1 13 -494
BPCL 564 28 22 -35 15 -43 2 -15 4 -382
Bharti Airtel 222 -11 76 -16 7 -55 1 -11 34 -224
Axis Bank 45 0 45 3 8 -61 1 -18 100 294
ACC 31 6 2 -41 1 -68 0 -2 7 -560
Tata Motors 790 -2 71 -37 12 -74 2 -49 9 -507
Adani Ports 20 0 13 5 2 -75 0 -10 66 276
Nifty (50) 7,565 12 1,608 2 792 10 100 100 21 -197
April 2017 20
Intra-sector 4QFY17 earnings divergence (%)

Sector +30% 15-30% 0-15% -Ve earnings Earnings
Sectors
growth growth growth growth growth (%) momentum
HIGH GROWTH SECTORS
INBK: 153,SBIN:
Banks - BOI: Loss,
LP 76,UNBK: 40,
PSU OBC: PL
BOB, CBK & PNB: LP
JSTL: 332,VEDL:
HNDL: -3,
Metals 176 185,NMDC: 64,NACL:
JSP & SAIL: Loss
51,HZ: 35, TATA: LP
YES: 30, IDFCBK: -5,
Banks - FB: 1688,
18 KMB: 28, HDFCB: 15 EQUITAS: -18,
Private ICICIBC: 227,RBK: 72
IIB: 23 DCBB: -21, AXSB: -61
IOCL: 228,PLNG:
Oil & Gas OINL: -2,HPCL: -29,
-266,ONGC: 65,GAIL: RIL: 3
(Ex OMCs) BPCL: -43, MRPL: -67
44,IGL: 41,GUJS: 31
Capital BHEL: 194, KKC: 11, CROMPTON: TMX & VOLT: -5,
15 ABB: 28
Goods GETD: 78,SIEM: 44 7,BHE & LT: 0 HAVL: -23, CRG: -77
MEDIUM/LOW GROWTH SECTORS
GDPL: -21,
Logistics 14 CCRI: 43
AGLL: -33
IHFL: 26, REPCO: 12,SCUF: 10,
BAF: 44,
NBFC 11 MUTH: 23, BHAFIN: 3, MMFS: -25
DEWH: 30
LICHF: 19, GRHF: 18 HDFC & SHTF: 2
GNP: 314, IPCA: 27, SANL: -1,GLXO: -2,
Health GRAN: 10,AJP: 8,ALPM:
6 BIOS: 114, DRRD: 24, DIVI: -10,CDH: -13,
Care 7ARBP: 4
FORH: LP ALKEM: 23, CIPLA: 20 SUNP & LPC: -15,TRP: -36
HUVR: -1,SKB & PG: -2,
JYL: 341, APNT: 17, ITC: 8,PAG: 7,GCPL & BRIT: -3, UNSP: -7,
Consumer 5
NEST: 35 UBBL: 17 MRCP: 6, DABUR: 3 PIDI: -8, CLGT: -17,
HMN: -36, PARAG: -48
NTPC: -4,COAL: -6,
Utilities 1 PWGR: 43 CESC: 0
JSW: -91
PAT DE-GROWTH SECTORS
TCS: -2,ZENT & CYL: -3,
HEXW: 29, MPHL: 3, INFO: -5,PSYS: -13,TECHM &
Technology -5
TELX: 22 HCLT: 2 WPRO: -15, NITEC & LTI: -16,
MTCL: -38,KPIT: -49
Retail -12 TTAN: -9,JUBI: -26
UTCEM: -16,ACEM: -26,

Cement -22 SRCM: 2,GRASIM: 19 TRCL: -27,DBEL: -35,
ACC: -68, ICEM: -89
Z: 48, HTML: 8, DITV: -97,
Media -31 JAGP: 22
PVR: LP SUNTV: 4, DBCL: 1 SITINET: PL
BHFC: -2,MM: -5,
EIM: 29, AMRJ: 11, HMCL & AL: -7,
Autos -32 ESC: 69
MSIL: 17 EXID: 4 BOS:-9,BJAUT: -11,
TVSL:-14,CEAT: -26,TTMT:-74
TCOM IN: -33,

Telecom -85 BHIN: 1
BHARTI: -55, IDEA: PL
April 2017 21
Key Sectoral Highlights - 4QFY17

4QFY17E YoY (%)
Sales EBITDA PAT Margin
SECTOR Key highlights Key stocks to watch
Chg YoY (pp)
Auto 4QFY17 should be a quarter of uncertainty 1.7 -18.9 -31.8 -3.0 Tata Motors (-ve; despite
for auto OEMs, as we see the impact of (a) better JLR volumes, BS-III ban
Supreme Courts verdict on BS-III on 2W/CV impact, lower pre-buying and
players, (b) Gujarat plant commissioning on JLR forex hedge loss to
MSIL, and (c) increase in yields on cash-rich impact overall performance;
players. We believe 2W/3W players would be PAT expected to decline 74%
the worst hit, as the rural segment has still YoY).
not fully recovered from the impact of
demonetization. We expect 2W/3W volumes
to decline by ~2%/16% YoY. Volumes of PVs
are expected to grow by 7% YoY in 4QFY17,
while those of CVs should remain flat (despite
pre-buying).
EBITDA margin for our auto OEM (ex-JLR) Ashok Leyland (-ve; lower
universe is likely to hit an 8-quarter low, than expected pre-buying,
declining 120bp YoY (and 30bp QoQ) to ban on BS-III vehicles and
12.5%. The CV pack (due to uncertainty on aggressive discounts to
impact of BS-III ban and lower-than-expected impact performance; EBITDA
pre-buying), along with MSIL (due to impact margin expected to contract
of commissioning of Gujarat plant) and 110bp, while PAT likely to
BJAUT, is expected to see margin contraction. decline 7% YoY, despite 8%
YoY increase in volume).
Auto aggregate PAT is expected to decline MSIL (+ve; PAT expected to
35% (including JLR). Ex JLR, auto sector PAT is rise 17% YoY, while EBITDA
likely to decline ~20% YoY, led by TTMT margin likely to decline 80bp
standalone and BJAUT. MSIL and EIM, YoY due to impact of Gujarat
however, are expected to partially offset the plant).
decline in overall PAT.
Capital We expect order intake by most companies 13.7 9.5 15.3 -0.5 Execution from LT is likely to
Goods to be flattish in 4QFY17, based on announced show traction in 4QFY17;
orders during the quarter. Industrial capex profit is likely to decline 2%
remains sluggish; roads, rail and power T&D YoY. Operating margins are
remain the only bright spots on the infra side. expected to decline 280bp
YoY to 11.9% given weak
revenue mix as compared to
last year.
Execution is expected to pick up, given faster Bharat Electronics is likely to
clearances, availability of funding and faster report strong revenue
land acquisition clearances. growth of 22% YoY, led by
pick-up in revenue booking
of orders in hand.
Margins to remain stable YoY on account of Havells to report revenue
improvement in operational performance, growth of 8% YoY. We expect
especially for BHEL. net profit to decline 23% YoY
on account of decline in
gross margin, given rise in
raw material price.
Cement All-India production dropped sharply by 14% 2.2 -17.0 -21.7 -3.7 Shree Cement would report
YoY during January-February 2017; however, volume growth, as against
we expect the pace of decline to ease to 4% ex-South players that are
YoY in March, led by a meaningful likely to report volume
improvement in volumes. We expect the decline due to ramp-up of
MOSL cement universe to record volume capacity in eastern
growth of ~2% YoY (+17% QoQ). We expect: operations.
(a) pan-India players to report volume growth
of 0-2% YoY, (b) players with capacity
headroom (SRCM, JKLC) to deliver 5-11% YoY
increase in volumes, (c) moderation in
April 2017 22
4QFY17E YoY (%)

Chg YoY (pp)
volume growth for South-based companies to
5% YoY due to a high base as well as
slowdown in Tamil Nadu and Kerala.
Prices under pressure: Prices declined sharply Shree Cement would report
in January, particularly in the North and volume growth due to ramp
central markets due to weak volumes in up of capacity in the East.
December. However, we note that there
were sharp price hikes in February/March
this year in the North and central markets. In
addition, price hikes have been very strong in
the first week of April across India.
ASP should decline by 3% QoQ in 4QFY17 due
to weak realization in the North and South Ramco Cement would report
markets. We estimate price changes of: (a) modest volume growth on
1% QoQ in North India, (b) 2% QoQ in central YoY basis due to heavy base.
India, (c) -7% QoQ in West India, (d) -2% QoQ It is likely to report QoQ
in East India and (e) -10% QoQ in South India. decline in profitability due to
weak realizations in the
South.
Consumer We expect our Consumer universes revenue 4.5 2.6 5.3 -0.4 We expect ITCs sales to
to grow by 4.5% YoY and PAT to increase by decline 7% YoY (led by 10%
5.3% YoY in 4QFY17. Lingering effects of fall in cigarette volumes) and
demonetization are likely to affect all PAT to decline 6.5%.
companies, particularly those that have HUVRs sales growth is
higher proportion of wholesale trade vis--vis estimated at 1.5% (volume
direct distribution, higher rural sales and decline of 1%), with 100bp
higher sales from the North and East regions. EBITDA margin contraction.
MOSL Consumer universe EBITDA is likely to Barring PAGE, for which we
rise by only 2.6% YoY, with 40bp margin expect 13% PAT growth YoY,
decline. We expect flattish or lower (YoY) none of the other companies
EBITDA margin for most of our coverage is expected to report any
companies due to a combination of weak material growth in PAT.
sales growth and favorable base of 11 out of 18 companies
commodity costs coming off, with many under coverage are actually
commodities actually reporting sharp expected to report YoY
increase YoY. decline in PAT.
PFAD and palm oil prices saw steep YoY
inflation of 28% and 30%, respectively. Ti02
and mentha prices have also increased in
double digits up 13% YoY and 11% YoY,
respectively. Copra, LLP and HDPE prices
were up 49%, 30% and 7% YoY, respectively
in the last reported month. Companies have
started taking selective price hikes/
grammage reduction/ reduction of offers
following increase in raw material (RM) cost.
Moreover adspends are unlikely to decline
steeply enough to protect margins for most
companies.
Majority of new launches are likely to be
postponed to 1QFY18 as a result of the
prevalent weak environment.
Financials
8.0 2.2 LP -4.6
Private Banks Mixed picture expected with sustained 10.6 0.5 17.9 -8.5 Prefer YES and ICICIBC
earnings pressure at corporate lenders like among corporate lenders;
ICICIBC and AXSB (led by asset quality strain) KMB and IIB top picks among
and sustained growth trajectory at lenders retail lenders.
like YES, IIB and RBL. Loan growth is yet to
April 2017 23
4QFY17E YoY (%)

Chg YoY (pp)
normalize post demonetization. While
deposit intake was strong in 3Q, 4Q may see
redemption of CASA deposits. Yields would
be under pressure, led by MCLR cuts.
However, given that NIMs were down in 3Q,
we expect largely stable to improving NIMs in
4Q.
PSU Banks Loan and deposit growth trajectory would 5.0 0.6 LP -3.4 Prefer SBIN, PNB and BOB
remain muted. We expect NIMs to normalize, among PSU banks.
given that margins were impacted by interest
income reversals on SDR/S4A and due to CRR
hike and lower C-D ratios. Provisions are
expected to remain at elevated levels during
the quarter, led by ageing of NPLs and
continued stress additions. Trading gains are
expected to come in significantly lower in 4Q
owing to rise in g-sec yields. Led by weak core
revenue, muted non-core income and
elevated credit costs, earnings would remain
under pressure.
NBFC While demonetization has impacted all 11.5 12.0 10.9 0.4 BAF could report strong
NBFCs, our interaction with managements of results due to robust
HFCs suggests that there has been a visible performance in 2W and CD
pick-up in disbursements. The guidelines for financing segments.
the interest subvention schemes for MIG Repco and SKS could witness
have been released this could provide some subdued performance;
impetus to growth in the medium term. however, we expect a pick-
Vehicle financiers are likely to report up in FY18.
sustained slowdown in disbursements over 1-
2 quarters. However, recoveries have picked
up as collection efficiency is close to pre-
demonetization levels.
We believe there could be pressure in
microfinance, as the worst is yet to come.
Some reports suggest a contagion effect of
lower collections in UP and Maharashtra
spreading to Karnataka. Recently, ICRA
downgraded the outlook for Janalakshmi and
Satin Creditcare, which we believe spells
concerns for the MFI sector as a whole.
Healthcare With respect to the US market, Glenmark 8.1 12.2 6.2 0.9 GNP (+ve; gFTF launch
(GNP) is expected to exhibit strong growth, should help drive growth and
led by Zetia FTF and series of other generic margins).
launches.
Sun should continue to see sequential decline ARBP (+ve; should report
in the US business on the back of competition double-digit growth in the
in key products. Aurobindo (ARBP) should US, despite key launches
report stable US sales on the back of key getting deferred and pricing
launches, including Crestor. pressure).
Healthcare companies should continue to Sun (-ve; should report
witness impact of demonetization (albeit sequential decline in US sales
impact should be lower) in 4QFY17. on the back of competition in
key products).
Logistics EXIM originating container rail volume was -0.5 23.1 13.7 2.9 Concor and GDL would
up ~2% YoY in January-February 2017, report good volume growth
indicating positive volume growth for the on YoY basis due to higher
quarter. We expect overall container rail transhipment volumes.
volumes for 4QFY17 to grow by 2% YoY and
expect margins to remain flat QoQ.
April 2017 24
4QFY17E YoY (%)

Chg YoY (pp)
Media We expect our universe ad revenue to grow 2.0 6.3 -31.1 1.2 Zee Ent: 13%/17%
at a meager ~3% YoY, lower than 7-13% in ad/domestic subscription
the preceding four to five quarters. The CAGR over FY16-19E.
recovery is expected to be slower for print 19% EPS CAGR (adjusted for
companies given higher reliance on preference dividend) over
local/retail advertisers FY16-19.
Within broadcasters, Zees ad growth is
expected to moderate to ~2% YoY after four
quarters of strong ad revenues (ex 3Q). The
sluggish performance is likely to be a function
of (1) slower-than- expected recovery from
demonetization, and (2) one month impact
on ad revenue from sports biz sale to Sony.
Like-to-like ad growth is estimated to be ~4%.
SUN TVs ad recovery too is expected to be
gradual.
Full recovery from demonetization could be
expected by 1QFY18.
DTH companies are expected take a hit in
fresh seeding, as demonetization hangover
continues. This coupled with a seasonally
weak quarter is expected to keep
subscription revenue growth subdued.
ARPU is expected to be flat QoQ for Dish TV
and net additions are estimated at 230k.
One can expect cable companies to step up
their seeding rates from 1H levels, as the
Delhi HC has quashed all stay orders
pertaining to DAS-III implementation. Phase-
III monetization remains a key concern for all
stakeholders. Monetization is expected to
improve in 4QFY17.
Metals Expect across-the-board increase in 27.7 103.3 175.9 7.1 Nalcos EBITDA is likely to
commodity prices. Aluminum/zinc/lead almost double QoQ to
average LME up 8/11/6%. ~INR5b on higher aluminum
and alumina prices, and
alumina volumes.
EBITDA for our coverage universe is expected Tata Steels EBITDA is likely
to increase 17% QoQ (1.7x YoY) on higher to increase 31% QoQ to
realization and volume increase. INR46b on higher margins in
EU and India volumes.
Nalco, Tata Steel and Vedanta should report Vedanta should report 23%
strong performance. QoQ EBITDA increase, led by
strong volume and price
growth in zinc and
aluminum.
Oil & Gas Singapore complex GRM declined to 27.9 25.2 15.7 -0.3 BPCL, HPCL and IOCL (+ve).
USD6.4/bbl in 4QFY17 from USD6.7/bbl in
3QFY17 and USD7.7/bbl in 4QFY16. Reported
refining earnings are likely to decline QoQ, as
inventory gains had boosted 3Q earnings.
April 2017 25
4QFY17E YoY (%)

Chg YoY (pp)
Brent crude price was up 8% QoQ and 57%
YoY to an average of USD54.1/bbl in 4QFY17.
While the rise in oil prices would be beneficial
for upstream companies, we expect
operating cost to be higher. ONGC and Oil
India should see a marginal QoQ increase in
EBITDA.
RIL is likely to be impacted by lower GRM.
Additionally, HDPE and LLDPE delta seem to
have declined 5-10% QoQ.
Excl. OMCs Brent averaged at USD54.1/bbl in Q4FY17 vs 29.8 10.6 -1.8 -2.2 ONGC/OINL (+ve; Oil
USD50.1/bbl in Q3FY17 and USD34.4/bbl in producer countries' efforts to
Q4FY16. cap production could revive
Expect RIL's PAT to be up +11% YoY, led by the oil price realization).
higher petchem volume and largely flat IGL (+ve; Expect double-digit
refining profit benefited by exchange rate. volume growth to continue).
IGL witnessed slowdown in conversion of PLNG (+ve; Capacity
vehicles due to clampdown of authorities on expansion + take-or-pay
spurious kits. We expect flat sequential contracts to boost earnings).
performance for GAIL and GSPL.
Retail For our Retail coverage universe, we expect a 20.2 24.1 -11.5 0.3 We expect Titans jewelry
healthy 20.2% revenue growth but PAT is retail revenue to grow by
expected to decline 11.5% in 4QFY17. EBITDA 26% YoY due to healthy
is likely to increase by 24.1% YoY. conversion from unorganized
The Retail companies under our coverage are to organized, following the
moderating store expansion. Expansion plans lingering effects of
are likely to be a function of pickup in demonetization as well as
consumer sentiment, which is getting low base quarter sales in the
delayed. segment 11% sales decline
YoY in 4QFY16.
Technology The usual seasonality of the fourth quarter, 5.4 2.3 -5.4 -0.7 We expect INFO to guide 7-
compounded with (a) sporadic citation of 9% CC growth for FY18, on
concerns around budget and decision-making the back of a relatively weak
delays, and (b) problems in some key exit in 2H. That implies a
accounts, keeps us from building any CQGR of 2.2-3%. INFO is the
recovery in growth momentum in 4Q or in only remaining company
the immediate future. among the top-tier that is yet
to reward its shareholders
with a buyback, dispensing
some of the idly-lying cash
(apart from WPRO, which
cannot announce a buyback
before June). That could be
likely on April 13, 2017.
With INR appreciating towards the end of the Recovery in Communications
quarter, we expect some margin pressure; witnessed in the past couple
apart from which marins should remain of quarters has taken a
steady across the board. pause, driving our
assumption of marginal
growth at TECHM.
Commentary around
expectations ex-LCC would
be keenly watched.
Positive momentum on deal wins,
improvement in the BFSI environment and
traction in change-the-business spend may
aid gradual improvement in growth through
the course of FY18, rather than a sudden
pick-up.
April 2017 26
4QFY17E YoY (%)

Chg YoY (pp)
Telecom Expect 4QFY17 to reflect continued effect of -10.5 -22.5 -84.9 -4.7
RJio's free usage. We expect revenue de-
growth of 6-7% for Bharti/Idea, with 14-15%
EBITDA decline. Idea is likely to report loss at
nd
the net level for the 2 consecutive quarter.
Bharti (on consolidated basis) is expected to
report 5% revenue de-growth and 190bp
decline in EBITDA margin.
Voice business is expected to de-grow 4-5%,
led by price decline, partly offset by traffic
growth. RJio's free voice usage has led to
unfavorable mix of incoming voice traffic,
which generates a meager INR 0.14/minute.
Additionally, aggressive promotional freebies
by incumbents to match RJio offerings has
also hurt voice pricing.
Data revenues are expected to fall 17-18% for
Bharti/Idea. However, unlike 3Q, when the
impact was shared between pricing and data
traffic, in 4Q, though data pricing would
continue on a downward spiral, data traffic is
expected to grow, led by the promotional
freebies that would party offset the data
pricing.
Utilities PAT growth would be led by PWGR on strong 2.9 4.5 0.6 0.5 Coal India e-auction and ASQ
capitalization momentum over last few realization.
quarters. NTPC's PAT growth would be muted
on lower PLFs and other income. JSW Energy
would see impact of under-utilized capacities.
For Coal India, EBITDA (ex-OBR) is likely to be
muted on wage hike impact.
April 2017 27
EARNINGS FY17-FY19 FY17 marks another year of flattish EPS growth

Earnings growth recovery expectations delayed, again!
FY17 to be fourth consecutive year of flattish Sensex EPS growth: As curtains

come down for FY17, it marks another year of flattish Sensex EPS. The Sensex is
expected to post EPS of INR1,309 for FY17, down 1% YoY and almost at similar
levels in FY13 (INR1,330). FY17 bore the brunt of the Indian governments
demonetization drive as well as continued weak performance of Defensives
(Consumer, IT, Pharma), belying hopes of an ever-elusive earnings recovery.
FY18 starts on high hopes: We expect Sensex EPS to grow 20% to INR1,572 in
FY18 and at a CAGR of 21% over FY17-19. These growth estimates come on a
low base of the last three years, when EPS declined at 1% CAGR (FY14-17E).
Cyclicals are likely to outperform Defensives over FY17-19, with Financials,
Cement, Metals and Autos delivering 32%, 31%, 38% and 40% FY17-19E PAT
CAGR, respectively. Cyclicals would contribute 86% and 77% of MOSL universe
PAT growth in FY18 and FY19, respectively.
Earnings risk emanating from GST could impede recovery: The FY17 earnings
performance was impacted by demonetization. Even as we build in an earnings
recovery for FY18 (led by a low base of 2HFY17 and a pick-up in several cyclical
sectors), we highlight the risks to earnings from GST implementation. GST could
impact the business for two quarters on account of trade inventory adjustments
ahead of implementation and also owing to implementation related hurdles, in
our view. The risks are higher for B2C-oriented sectors like Autos, Consumer,
Consumer Durables, Cement and Midcaps.
Exhibit 34: Recovery in Cyclicals to drive robust 21% CAGR (FY17-19E) in Sensex EPS
EBITDA
Sales Gr. / EBIDTA EBIDTA PAT PAT Gr. / PAT delta
Sector margin
CAGR (%) Margin (%) CAGR (%) (INR B) CAGR (%) Share (%)
change (bp)
(No of Companies) (FY17-19) FY17E (FY17-19) FY17-19 FY17E FY17E FY18E FY19E (FY17-19) FY17-19
High PAT CAGR (>20%) 14 29.4 17 140 1,837 22 36 29 33 74
Financials (36) 15 84.6 12 -506 857 38 38 26 32 34
PSU Banks (9) 14 78.9 10 -544 126 LP 133 39 80 15
Private Banks (13) 18 90.6 12 -769 406 -1 25 26 26 12
NBFC (14) 16 88.7 15 -35 325 12 16 17 17 6
Auto (15) 15 12.8 27 272 301 -13 40 40 40 15
Metals (9) 10 18.4 19 289 232 73 42 33 37 11
Others (28) 20 18.9 27 236 79 9 41 25 33 3
Cement (13) 11 17.9 18 232 101 25 34 27 31 4
Media (10) 15 29.3 22 356 34 0 32 26 29 1
Logistics (3) 9 13.6 15 153 10 -11 36 14 25 0
Healthcare (18) 14 23.8 18 149 224 12 23 22 22 6
Medium PAT CAGR (10-20%) 13 20.7 19 224 689 4 16 17 16 13
Capital Goods (16) 12 10.0 17 105 126 42 18 16 17 2
Retail (2) 17 9.4 18 26 9 13 17 16 16 0
Consumer (18) 13 22.7 15 76 258 6 14 18 16 5
Utilities (5) 13 31.4 21 465 296 -8 17 16 16 6
Low PAT CAGR (up to 10%) 14 24.3 9 -241 1,257 3 8 11 10 14
Technology (15) 10 23.2 9 -27 634 6 9 9 9 6
Oil & Gas (11) 12 13.9 8 -117 906 22 9 8 8 8
Excl. OMCs (8) 20 22.4 10 -349 559 6 20 9 15 9
Telecom (4) 4 32.9 3 -72 64 -37 -95 757 -36 -2
MOSL (203) 13 22.9 13.9 53.9 4,131 15 21 21 21 100
MOSL Excl. OMCs (200) 14 26.2 14.7 38.5 3,783 12 23 22 23 NA
Sensex (30) 15 26.1 13.6 -44.9 1,203 1 20 21 21 NA
Nifty (50) 13 24.1 13.5 15.9 1,553 10 20 20 20 NA
April 17 28
FY17 to be another year of flat Sensex EPS; several sectors to report multi-
year low earnings growth
The 1HFY17 positive narrative for FY17 (normal monsoon, 7th Pay Commission
awards, softening interest rates) was marred by demonetization in 2HFY17.
This is reflected in our earnings estimates for FY17. Post demonetization, we
now expect another flat year of Sensex EPS down 1% YoY v/s 14% YoY growth
prediction we began with.
Several sectors are expected to report multi-year low earnings growth in FY17
Autos, Consumer, Private Banks, Telecom, Technology and Utilities. Technology,
Utilities and Telecom are impacted by sector-specific issues, while deceleration
in earnings growth for Autos, Consumer and Private Banks can be largely
attributed to demonetization.
FY17-19E estimates: Sensex EPS CAGR at 21%

We expect Sensex EPS CAGR of 21% over FY17-19, significantly higher than 3%
CAGR over FY12-17. Cyclicals would drive the performance, in our view.
We estimate Sensex EPS at INR1,309 (1% YoY decline) for FY17, INR1,572 for
FY18 (20% growth) and ~INR1904 for FY19 (21% growth).
Exhibit 35: Sensex EPS expect rebound in FY17-19 with 21% CAGR (v/s 5% CAGR during FY08-17)
FY17-19E: 21%
FY93-FY17: 21% CAGR 1,904
12% CAGR FY08-17: 20%
5% CAGR -1% 1,572
FY01-08: 1,330 1,351 1,324 1,309
21% CAGR 1,111 1,180
1,024
833 820 834
720
540
361 446
216 236 272
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
E
E
Exhibit 36: Nifty EPS expect rebound in FY17-19 with 20% CAGR (v/s 4% CAGR during FY08-17)
FY17-19E:
20% CAGR 20%
20%
FY08-17: 599
4% CAGR 498
6%
FY01-08: 404 413 394 417
349 369
21% CAGR 315
281 251
236 247
169 184
131
73 78 92
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
FY19E
April 17 29
Sensex EPS estimates cut 4%

We have cut our FY18 and FY19 Sensex EPS estimates by 4% each. We now
expect FY17 Sensex EPS to decline 1% YoY.
The lower base of FY17 (especially in 2HFY17 due to demonetization) should aid
a sharp rebound in FY18. In FY18, we build in 20% Sensex EPS growth.
However, we note that visibility of FY18 growth is hazy, given the multiple
moving parts around [1] GST implementation and [2] progress of monsoon.
Exhibit 37: Top Sensex companies EPS upgrade/downgrade since 3QFY17 review (%)
Company FY17 Company FY18
Tata Steel 8.6 Reliance Ind. 5.5
Power Grid 6.8 Adani Ports 3.9
Adani Ports 1.8 Power Grid 3.9
M&M 1.7 HDFC Bank -2.3
Asian Paints 1.3 Hero Moto -2.9
Cipla -1.5 Bajaj Auto -3.6
Hero Moto -1.7 Axis Bank -4.5
Axis Bank -1.8 Sun Pharma -7.3
Bajaj Auto -1.9 Cipla -8.8
Dr Reddys -2.1 Tata Steel -10.1
Bharti -2.5 Dr Reddys -14.3
TCS -2.8 Tata Motors -17.0
ONGC -3.0 SBI -21.7
GAIL -9.2 ONGC -23.4
Tata Motors -9.7 Bharti -35.5
Estimate Nifty PAT CAGR at 20%, sales CAGR at 13% over FY17-19
Around 50% of the Nifty universe is expected to post 20%+ PAT CAGR over FY17-
19.
Only IOCL and Bharti Airtel are expected to report negative PAT CAGR over
FY17-19.
EBITDA margin for the Nifty is expected to contract 20bps YoY to 22.8% for FY18
and expand 40bp to 23.2% in FY19. PAT margin is likely to expand 50bp in FY18
to 11.1% and another 60bp in FY19 to 11.7%.
April 17 30
Exhibit 38: Nifty performance - Expect FY17-19 PAT CAGR at 20%

Sales (INR b) Sales EBIDTA Margin (%) EBITDA PAT (INR b) PAT YoY (%) PAT Contbn to
Company FY17 FY18 FY19 CAGR % FY17 FY18 FY19 CAGR % FY17 FY18 FY19 FY17 FY18 FY19 CAGR % Delta %
High PAT Growth (20%+) 10,653 11,913 13,648 13 23 24 26 19 773 1,124 1,503 0 45 34 39 58
Tata Motors 2,783 3,066 3,812 17 11 13 15 40 39 100 210 -69 156 110 132 14
Bank of Baroda 134 156 188 19 76 74 72 16 17 44 60 LP 152 38 86 3
Axis Bank 179 205 243 17 99 92 90 11 33 57 97 -60 73 70 71 5
State Bank 791 882 1,002 13 76 69 69 8 67 131 181 -45 95 38 64 9
Tata Steel 1,135 1,266 1,296 7 13 14 14 13 18 38 44 146 109 16 56 2
Dr Reddy s Labs 142 164 190 16 19 21 24 31 13 19 25 -42 46 33 39 1
ACC 109 121 135 11 11 13 14 23 6 9 11 -10 38 26 32 0
Eicher Motors 70 90 107 23 32 33 34 27 17 23 28 25 39 23 30 1
Ultratech Cement 235 257 288 11 19 20 22 18 25 33 42 16 32 26 29 1
Bosch 106 130 146 17 17 20 21 30 14 20 23 -5 41 14 27 1
Grasim Industries 375 401 444 9 19 20 22 19 32 40 52 42 26 28 27 2
Cipla 149 172 198 16 18 19 20 21 14 18 23 -5 23 30 26 1
Kotak Mahindra Bank 81 91 110 17 72 76 81 24 48 59 76 39 23 28 25 2
Hindalco 1,018 1,083 1,099 4 13 13 13 6 38 51 57 54 34 12 23 2
GAIL 505 538 621 11 13 15 14 15 37 49 55 61 33 12 22 1
Zee Entertainment 64 74 85 15 30 31 32 19 13 16 20 29 25 19 22 1
Yes Bank 59 73 92 25 96 95 93 23 33 41 50 32 22 22 22 1
Indiabulls Housing 39 47 57 20 119 120 120 21 29 36 43 24 22 22 22 1
Maruti Suzuki 690 824 954 18 15 16 16 22 76 93 113 63 21 22 22 3
IndusInd Bank 60 72 87 21 87 87 87 20 29 35 42 26 21 21 21 1
Ambuja Cements 92 98 110 9 17 17 17 9 10 13 14 14 37 7 21 0
NTPC 825 964 1,107 16 28 31 34 29 98 118 142 -4 20 21 21 4
Mahindra & Mahindra 833 933 1,039 12 13 13 14 13 37 45 54 15 22 19 20 1
Lupin 178 209 236 15 26 27 27 17 28 35 40 22 28 13 20 1
Medium PAT Growth (10-20%) 9,700 11,844 12,973 16 26 25 25 13 1,429 1,662 1,875 5 16 13 15 36
Sun Pharma 309 322 360 8 31 32 33 11 65 78 93 39 20 19 19 2
ONGC 1,422 1,619 1,742 11 39 39 39 11 156 207 221 -10 32 7 19 5
HDFC Bank 326 382 452 18 77 77 78 18 145 170 202 18 18 18 18 5
Larsen & Toubro 1,097 1,258 1,374 12 10 11 11 19 50 59 70 20 19 17 18 2
Aurobindo Pharma 153 181 206 16 24 24 24 17 23 27 32 19 17 16 17 1
Power Grid Corp. 268 319 365 17 89 89 90 17 80 93 108 33 16 17 16 2
ITC 388 435 499 13 37 37 38 15 101 113 133 9 12 18 15 3
Bajaj Auto 218 248 283 14 21 20 21 13 39 45 50 1 16 12 14 1
Asian Paints 152 172 198 14 20 19 19 12 20 22 26 9 10 18 14 0
Coal India 759 838 901 9 15 17 19 22 105 122 137 -26 16 13 14 3
Hind. Unilever 317 345 384 10 18 19 19 13 42 47 54 1 12 15 14 1
Bharti Infratel 134 150 164 10 44 43 43 10 29 31 37 28 8 19 13 1
Wipro 547 581 634 8 20 20 21 11 81 91 104 -9 12 14 13 2
HDFC 100 107 120 10 95 96 96 11 74 82 93 4 11 13 12 2
Reliance Inds. 2,436 3,696 3,990 28 18 13 12 8 294 336 363 7 14 8 11 6
Tech Mahindra 292 325 358 11 15 15 15 11 29 32 36 -7 10 13 11 1
Tata Power 315 342 359 7 18 20 19 10 16 18 19 35 17 4 10 0
HCL Technologies 467 524 584 12 22 22 21 10 81 90 98 43 11 10 10 1
Low PAT Growth (<10%) 9,071 9,462 10,674 8 19 18 18 4 908 895 983 19 -2 10 4 6
ICICI Bank 212 244 279 15 125 94 93 -1 101 104 119 4 3 15 9 1
Infosys 686 747 825 10 27 27 27 9 142 152 167 5 7 10 9 2
TCS 1,183 1,304 1,442 10 27 27 26 8 259 277 296 7 7 7 7 3
Adani Ports 83 94 106 13 65 66 65 12 36 36 41 25 0 14 7 0
Hero MotoCorp 284 310 333 8 17 16 15 3 34 37 38 9 8 2 5 0
BPCL 2,010 1,981 2,225 5 7 7 7 5 81 78 85 1 -4 9 2 0
IOC 3,654 3,836 4,422 10 10 9 9 2 212 191 199 115 -10 4 -3 -1
Bharti Airtel 958 947 1,042 4 37 34 35 2 44 20 38 -7 -54 85 -7 -1
Nifty (PAT free float) 29,424 33,219 37,295 13 23 23 23 13 1,553 1,858 2,234 6 20 20 20 100
April 17 31
NIFTY FY17E NIFTY FY16 2892
3111
April 17
SBI IOC
11471
Tata Motors BOB
64 61 51
ONGC Maruti
Reliance Ind. HCL Tech.
BOB HDFC Bank
HDFC Bank Power Grid 30 24 22 20
42 26 26 24
Axis Bank Reliance Ind.
NTPC Sun Pharma
Tata Steel TCS
TCS GAIL
Maruti Kotak Mah. Bk
Coal India Hindalco
Sun Pharma Tata Steel
Power Grid Grasim
Hindalco L&T
GAIL Yes Bank
20 20 18 16 16 13 13 13 12 12
ITC ITC
Kotak Mah. Bk Adani Ports
19 18 17 14 14 13 11 9 8 8 8 7 7
Infosys Infosys
Wipro Bharti Infratel
L&T IndusInd Bk
HCL Tech. Indiabulls HSG
Exhibit 40: Nifty stock absolute FY18E PAT change (INR b)
Exhibit 39: Nifty stock absolute FY17E PAT change (INR b)
Grasim Lupin
M&M M&M
Ultratech Tata Power
HDFC Aurobindo
Lupin ICICI Bank
Yes Bank Ultratech
Eicher Mot. Eicher Mot.
Indiabulls HSG Zee Ent.
Bajaj Auto HDFC
IndusInd Bk Hero Moto
Bosch Asian Paints
Dr Reddys Ambuja Cem
HUL BPCL
Aurobindo Bajaj Auto
6 6 6 5 5 4 4 3 3 3 3 3 3 2 1 1 1 0
Ambuja Cem HUL

Zee Ent. ACC
11 10 10 9 9 8 8 8 8 8 7 6 6 6 6 6 6 5 4 4 3 3
Cipla Bosch
ICICI Bank Cipla
Tech Mah. Tech Mah.
Tata Power Bharti Airtel
Hero Moto NTPC
ACC Wipro
Bharti Infratel Dr Reddys
Asian Paints ONGC
1 1 1 2 3 4 8 101837
3 3 3 3 2 2 2 0
Adani Ports Coal India

49
BPCL Axis Bank

IOC SBI
-3-21-24
55 86
Bharti Airtel Tata Motors

NIFTY FY18E 3,681 NIFTY FY17E 3,111
32
Markets sprint to record-high finish to FY17

MARKETS & FLOWS
Sharp pick-up in FII flow; sectoral performance trends see reversals
After declining 9% in FY16, the Nifty gained an impressive 19% in FY17 to end at a
record-high of 9,174. Notably, the benchmark delivered three quarters of positive
returns in FY17, with the March quarter delivering the highest QoQ return since June
2014.
Over last 24 months, the index has come back a full circle, crossing 9K after first
touching that level in March 2015. At 22.5x trailing 12-month and 18.1x FY18E P/E,
valuations do not leave much room for upside, unless accompanied by an earnings
recovery, in our view.
In FY17, Brazil (+30%), the UK (+19%) and India (+19%) were the top performers among
the key global markets. MSCI EM and MSCI India both delivered 15% returns in FY17.
However, over last five years, MSCI India has outperformed MSCI EM by 104%.
Sectoral performance trends saw reversals in FY17 v/s FY16. Metals (+57%), PSU Banks
(+54%), Media (+54%), Oil (+48%) and NBFC (+41%) were the top outperformers in
FY17. On the other hand, Technology (-9%) and Telecom (-6%) were the only sectors
with negative returns. Interestingly, Metals, PSU Banks and NBFC were among the
worst performers in FY16. In FY17, mid-caps delivered 35% positive returns, as against
19% by the Nifty.
Market breadth was positive in FY17, with 40 Nifty stocks ending higher. Hindalco
(+122%), IOC (+97%), Yes Bank (+79%), Maruti (+62%) and Indiabulls Hsg. (+54%) were
the top performers on the Nifty. Infosys (-16%), Sun Pharma (-16%), Bharti Infratel (-
15%), Dr Reddys (-13%) and Aurobindo (-9%) were the worst performers.
FII flows recovered strongly to USD8.4b in FY17 (outflow of USD1.5b in FY16). Notably,
FII recorded inflows of USD6.7b in 4QFY17 the highest in last 16 quarters. In their 25
years of investment history in India, FIIs have pumped in USD175.2b in equities, of
which 74% came in the last decade. DII flows were healthy at USD4.5b (USD12.1b in
FY16).
Valuations are at modest premium to their 10-year average. The Nifty trades at a P/E
of 18.3x, above its long-period average of 16.9x. At 2.7x, the Nifty P/B is near its
historical average. RoE is at 15.2%, near its long-term average. Market cap-to-GDP
ratio stands at 80% (FY17E GDP), above its long-term average of 78%.
Exhibit 41: Over FY07-17, Indian markets recorded CAGR of Exhibit 42: Nifty QoQ change (%) highest return since June
9.2% in local currency terms and 4.9% in USD terms 2014
12 24 -36 74 11 -9 7 18 27 -9 19 QoQ Return (%)
15 34 -50 96 12 -21 0 7 22 -14 21
15
14 12
CAGR in INR: 9.2%
Trend in Nifty 10
CAGR in USD: 4.9% 8
9,174
7
8,491
6 5
7,738
4 4 3 4
3
6,704
5,834
5,683
5,296
5,249
4,735
0 0
3,822
-1
3,021
-2 -3
-4 -5 -5
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Jun-12
Jun-14
Jun-15
Jun-16
June-13
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17
Annual Return in INR (%) Annual Return in USD (%)
April 17 33
Equities: Global market performance

In FY17, Brazil (+30%), the UK (+19%) and India (+19%) were the top performers
among the key global markets.
MSCI EM and MSCI India both delivered 15% positive return in FY17. However,
over last five years, MSCI India has outperformed MSCI EM by 104%.
Exhibit 43: World equity indices (FY17) local currency (%) Exhibit 44: World equity indices (FY17) USD (%)
Brazil 30 Brazil 48
UK 19 Russia MICEX 25
India - Nifty 19 India - Nifty 21

S&P 500 15 Taiwan 19
MSCI EM 15 S&P 500 15
China (HSCEI) 14 MSCI EM 15
Japan 13 Japan 14
Taiwan 12 China (HSCEI) 14
South Korea 8 South Korea 11
Russia MICEX 5 UK 3
Exhibit 45: MSCI EM performance at par with MSCI India over Exhibit 46: MSCI India outperformed MSCI EM by 104% in last
12 months five years
MSCI India Rebased MSCI EM Rebased MSCI India Rebased MSCI EM Rebased
122 230
10 Year CAGR: 5 Year CAGR: 207
115 MSCI India: 7.5% MSCI India: 9.8%
114 185
MSCI EM: 0.3% MSCI EM: -1.6%
115
106 140
103
98 95
90 50
Mar-07
Sep-07
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16
Mar-17
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Mar-17
Sep-16
Jan-17
Feb-17
Oct-16
April 2017 34
Sector performance: Trend reversals in FY17 v/s FY16

Metals, PSU Banks, Media, Oil and NBFCs top outperformers for FY17
In the sectoral space, Metals (+57%), PSU Banks (+54%), Media (+54%), Oil
(+48%) and NBFC (+41%) were the top outperformers in FY17. On the other
hand, Technology (-9%) and Telecom (-6%) were the only sectors to deliver
negative returns. Interestingly, Metals, PSU Banks and NBFC were among the
worst performers in FY16.
In FY17, mid-caps delivered 35% positive returns, as against 19% by the Nifty.
PSU Banks, Oil, Utilities, Consumer and Media delivered positive returns in 10 of
the 12 months.
Except Healthcare, Telecom and Technology, all sectors outperformed the
benchmark (Nifty) in FY17.
Exhibit 47: Sectoral performance in FY17 (% return)
57
54 54
48
41
35 30 28 28 27 27
Technology and
22 21 19
Telecom only 1
negative
performers -6 -9
Metal
Utilities
Nifty 50
Healthcare
NBFC
Midcap 100
Telecom
Pvt - Banks
Oil
Cement
Auto
Consumer
Media
Real Estate
Cap Goods
Technology
PSU - Banks
Exhibit 48: Sectoral performanceabsolute and relative to Nifty (%) Metal, PSU Banks, Media, Oil top performers
MoM Abs. Performance (%) FY17 Relative to Nifty MoM Performance (%) FY17
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Chg Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Chg
Sector
16 16 16 16 16 16 16 16 16 17 17 17 (%) 16 16 16 16 16 16 16 16 16 17 17 17 (%)
Metal 6 0 7 10 6 -2 6 3 -5 15 2 -1 57 4 -4 6 6 4 0 6 8 -5 11 -2 -4 38
Banks - PSU 0 3 9 6 9 2 1 0 -6 8 4 8 54 -2 0 8 1 7 4 1 5 -6 4 0 4 36
Media 5 5 2 11 7 2 0 -13 1 7 12 7 54 3 1 0 7 6 4 0 -8 1 3 9 4 36
Oil 2 0 4 9 5 3 8 -3 2 6 5 0 48 1 -4 3 5 3 5 8 2 2 1 2 -3 30
NBFC 1 10 2 11 5 -1 0 -7 -3 7 1 11 41 -1 6 0 6 3 1 0 -3 -2 3 -2 7 22
Nifty
Midcap100 3 1 4 7 4 0 3 -6 -4 7 7 4 35 2 -3 2 3 2 2 3 -2 -3 3 3 1 16
Real Estate 10 5 8 5 -4 -2 3 -18 -1 8 9 7 30 9 1 6 1 -6 0 3 -13 -1 4 5 4 12
Utilities 4 1 7 4 1 -5 1 1 -2 9 1 4 28 3 -3 5 0 -1 -3 1 6 -2 4 -2 0 10
CapGoods 3 10 3 4 -2 -4 2 -6 -3 8 4 7 28 1 6 1 0 -3 -2 2 -1 -2 4 0 4 9
Cement 0 4 8 7 10 -4 0 -11 -5 11 3 5 27 -1 0 6 3 8 -2 0 -6 -5 6 -1 1 8
Banks - Pvt 5 5 0 5 4 -3 1 -5 -2 6 6 3 27 3 1 -1 1 2 -1 1 0 -2 2 2 0 8
Auto 3 5 2 7 4 1 0 -9 1 8 -1 2 22 1 1 0 3 3 3 0 -5 1 3 -5 -1 4
Consumer 0 5 5 3 1 -4 1 -5 1 5 3 5 21 -1 1 4 -1 -1 -2 0 -1 1 1 -1 2 2
Healthcare 3 -2 2 5 -1 0 2 -4 -6 0 4 0 1 1 -6 0 1 -3 2 2 0 -6 -4 0 -4 -17
Telecom 5 -4 2 -1 -8 -8 1 0 -6 19 5 -9 -6 4 -8 0 -5 -10 -6 0 5 -5 15 2 -12 -25
Technology -1 2 -3 -3 -3 -2 -2 -2 3 -6 8 0 -9 -2 -2 -5 -8 -5 0 -2 3 4 -10 5 -3 -28
Nifty Chg 1 4 2 4 2 -2 0 -5 0 5 4 3 19
Source: Company, MOSL
April 2017 35
Biocon 135 Hindalco 122
Sun TV 113 IOC 97
JSPL 101
April 2017
Yes Bank 79
Century Text 99 Maruti 62
Federal Bk 98 Indiabulls Hsg 54
L&T Fin. 94 Tata Steel 51
Tata Comm 90 SBI 51
Aditya Bir. Nuv. 85 IndusInd Bk 46
IGL 78 BPCL 44
CESC 78 Power Grid 42
Engineers India 70 GAIL 41
Reliance Cap 67 Tata Power 40
Canara Bk 64 Zee Ent 38
Tata Chem 60 Adani Ports 37
Exide Inds 60 Grasim Ind. 37
MRF 58 HDFC 36
Voltas 49 HDFC Bank 35
Adani Ent. 47 Eicher Motors 34
Arvind 44 L&T 30
BOI 44 ONGC 29
Godrej Ind. 42 NTPC 29
Midcap 50
37
ITC 28
GMR Infra 37 Kotak Mah.Bk 28
IDFC 35 Reliance Ind. 26
TVS Motor 34 UltraTech 24
M&M Fin. 30 Asian Paints 23
Ajanta Pharma 25 Tata Motors 21
SRF 25 Nifty
19
Dish TV 24 BoB 18
Tata Global 24 ICICI Bank 17
IDFC Bank 23 Bajaj Auto 17
Page Inds 20 Cipla 16
Bharat Forge 19 Axis Bank 10
Apollo Tyres 19 Bosch 10
Union Bank 19 Hero Moto 10
Aurobindo (-9%) were the worst performers.
Castrol 16 HCL Tech 7

Adani Power 15 M&M 6
PC Jeweller 14 ACC 5
Bata India 12 HUL 5
IDBI Bank 8 Ambuja Cem. 2
Breadth positive in FY17; 40 Nifty stocks close higher
Reliance Infra. 7 Coal India 0

IRB Infra 2 Bharti Airtel 0
Amara Raja 1 Lupin -2
Technology and Telecom stocks on Nifty deliver negative returns
Strides Shasun 1 Tech Mah. -3

Reliance Power -3 TCS -3
Exhibit 49: Best and worst Nifty performers for FY17 (%)27 companies on Nifty outperformed the benchmark
JSW Energy -10 Wipro -9

Exhibit 50: Best and worst Nifty Midcap 50 performers for FY17 (%)21 companies outperformed the benchmark
Apollo Hosp -12 Aurobindo -9
Apollo Hospitals (-12%) and JSW Energy (-10%) were the worst performers
Jubilant Food -13 Dr Reddy's -13

(-16%), Sun Pharma (-16%), Bharti Infratel (-15%), Dr Reddys (-13%) and
Rel. Comm-23
Maruti (+62%) and Indiabulls Hsg (+54%) were the top performers. Infosys
Bharti Infratel -15

Wockhardt-26 Sun Pharma -16
Mindtree-31
Among the Nifty components, Hindalco (+122%), IOC (+97%), Yes Bank (+79%),
Infosys -16
36
Century Textiles (+99%) and Federal Bank (+98%) were the top performers.
Mindtree (-31%), Wockhardt (-26%), Reliance Comm. (-23%), Jubilant Food (-13%),
Among the Nifty Midcap 50 stocks, Biocon (+135%), Sun TV (+113%), JSPL (+101%),
Institutional flows: Sharp pick-up in FII flows

4QFY17 FII inflows highest in 16 quarters
FII flows recovered strongly to USD8.4b in FY17 (outflow of USD1.5b in FY16).
Notably, FII inflows of USD6.7b in 4QFY17 were the highest in 16 quarters.
In their 25 years of investment history in India, FIIs have pumped in USD175.2b
in equities, of which 74% came in the last decade.
Exhibit 51: Trend in FII flows in equities (USD b)

Cumulative Flows: USD175.2b
25.0 25.8
23.4
18.1
13.1 13.7
10.9
74% of FII
9.5 9.2 8.5 8.4
5.8
investments in 1.6 1.5 2.0 2.4 1.5 2.4 2.2 1.7
0.5
0.0
equity came in
the last decade -0.2 -1.5
FY93-FY06: USD45.4b FY07-FY17: USD129.8b
-10.4
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
DII flows healthy in FY17
82% of DII equity inflows were received post 8-November
DII flows were healthy at USD4.5b (USD12.1b in FY16). DII recorded inflows of
USD3.7b post 8-November (the day when the Indian government begun its
demonetization drive).
DIIs have invested USD30.3b since FY01, of which 94% have come in the last
decade.
Exhibit 52: Trend in DII flows in equities (USD b)
Cumulative Flows: USD30.3b
17.7
FY01-FY06: USD1.8b 13.1
FY07-FY17: USD28.5b
12.1
6.4
94% of DII 3.2
5.1 4.5
investments in 0.3 0.1
equity came in
the last decade -0.6 -0.8 -0.4 -0.9
-4.1 -3.7
-8.9
-12.7
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
April 2017 37
Valuations inch above long-period averages;

Mid-caps outperform significantly
Valuations of Indian equities remain attractive. The Nifty trades at a P/E of
18.3x, above its long-period average of 16.9x. At 2.7x, Nifty P/B is near its
historical average. RoE stands at 15.2%, near its long-term average.
Market cap-to-GDP ratio of 80% (FY17E GDP) is above its long-term average of
78%.
Exhibit 53: 12-month forward Nifty P/E (x) Exhibit 54: 12-month forward Nifty P/B (x)
25 23.7 4.5
22.5 4.06
21 10 Year 3.8
18.3
Avg: 16.9x 10 Year
17 3.0 Avg: 2.6x 2.7
13 2.3
11.2 1.68
9 1.5
Apr-07
Apr-08
Apr-09
Apr-10
Apr-11
Apr-12
Apr-13
Apr-14
Apr-15
Apr-16
Apr-17
Apr-07
Apr-08
Apr-09
Apr-10
Apr-11
Apr-12
Apr-13
Apr-14
Apr-15
Apr-16
Apr-17
Exhibit 55: 12-month forward Nifty RoE (%) Exhibit 56: Indias market cap to GDP (%)
20.5
Average of
103
95 78% for the
18.5 88
82 83 period 81 80
10 Year 71 69
16.5 64 66
Avg: 15.7% 55
15.2
14.5
13.2
12.5
Apr-07
Apr-08
Apr-09
Apr-10
Apr-11
Apr-12
Apr-13
Apr-14
Apr-15
Apr-16
Apr-17
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
Mid-caps outperform significantly, trade near to Nifty P/E FY17E
In FY17, mid-caps delivered 35% positive returns, as against 19% by the Nifty.
Also, over last five years, mid-caps have outperformed the Nifty by 50%.
Mid-caps now trade at just 1% premium to the Nifty on a P/E basis..
Exhibit 58: Mid-caps outperformed large-caps by 50% in last
Exhibit 57: Midcaps outperformed large caps in FY17 five years
Nifty Rebased Nifty Midcap 100 Rebased Nifty Rebased
235
142 5 Year CAGR: 223
135 195 Nifty: 11.6%
130 Midcap: 17.4% 173
155
118 119
106 115
94 75
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Nov-12
Nov-13
Nov-14
Nov-15
Nov-16
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
April 2017 38
Exhibit 59: Mid-caps v/s Nifty P/E (x) 12-month forward Exhibit 60: Mid-caps trading at 1% premium to Sensex
Midcap PE (x) Nifty PE (x) Midcap Vs Nifty PE Prem/(Disc) (%)
25.0 25
Nifty Avg: 17.5x
21.0 10
Midcap Avg: 16.5x 18.1 Average: -5%
18.3 1
17.0 -5
13.0 -20
9.0 -35
Apr-12
Aug-12
Apr-13
Dec-12
Aug-13
Apr-14
Dec-13
Aug-14
Apr-15
Dec-14
Aug-15
Apr-16
Dec-15
Aug-16
Apr-17
Dec-16
Apr-12
Aug-12
Apr-13
Dec-12
Aug-13
Apr-14
Dec-13
Aug-14
Apr-15
Dec-14
Aug-15
Apr-16
Dec-15
Aug-16
Apr-17
Dec-16
Sector valuations: Room for P/E expansion limited; surprise on earnings
growth crucial for further upside
PSU Banks trades at a 15% discount to historical average P/B. It was the second
best-performing sector in FY17 (+54% return), with large trading gains in 3Q
cushioning elevated stress additions for most PSU banks. However, with interest
rates inching up, trading gains are expected to moderate significantly in
comparison to 3QFY17. Sustained traction in large corporate deleveraging and a
reduction in net slippages are the key catalysts for re-rating.
Metals trade at a P/B of 1.4x, implying a 12% discount to historical average.
EV/EBITDA is at 6.8x, a 7% discount to historical average. The sector was the top
performer for FY17, with 57% positive return. Domestic steel long product prices
were higher, but flat product prices declined due to lower global steel prices.
Technology trades at a P/E of 15.2x, below its historical average (6% discount). It
was the worst performing sector in FY17, with 9% negative return. As the
4QFY17 earnings season gets closer, we note that the sharp INR appreciation
seen over last few weeks has started creating worries around margin sustenance
and consequent impact on earnings, offsetting any fizzing out of immediate
regulatory hurdles in the US.
Exhibit 61: Sector valuations - Snapshot
Relative to Nifty Relative to Nifty
PE (x) PB (x)
P/E (%) P/B (%)
Sector
Prem/Disc Prem/Disc
Current 10 Yr Avg Current 10 Yr Avg Current 10 Yr Avg Current 10 Yr Avg
(%) (%)
Auto 19.2 15.0 27.7 5 -13 3.5 3.0 16.0 29 17
Banks - Private 20.4 16.9 20.7 11 -1 2.7 2.2 22.9 0 -15
Banks - PSU 12.8 5.6 129.8 -30 -60 0.9 1.1 -14.6 -66 -59
NBFC 15.2 12.7 19.2 -17 -25 2.6 2.3 14.6 -4 -13
Capital Goods 30.8 26.7 15.2 68 53 3.2 4.1 -22.4 15 51
Cement 25.5 17.8 43.2 40 4 3.1 2.3 32.0 12 -12
Consumer 36.9 29.6 24.8 102 76 11.0 9.7 13.2 302 279
Healthcare 21.6 22.0 -2.0 18 30 3.9 4.1 -3.2 44 57
Media 27.2 22.5 20.7 49 33 6.1 4.4 39.3 124 68
Metals 13.0 12.2 6.6 -29 -28 1.4 1.6 -11.9 -49 -41
Oil & Gas 12.1 11.9 1.3 -34 -28 1.6 1.7 -0.6 -40 -37
Retail 46.9 32.5 44.2 157 92 9.1 9.2 -1.6 232 256
Technology 15.2 16.1 -5.6 -17 -4 3.6 4.3 -15.3 32 63
Telecom Loss 22.4 - - 42 2.1 2.7 -22.7 -23 4
Utilities 11.5 14.8 -22.5 -37 -10 1.5 1.8 -19.3 -46 -29
April 2017 39
MOSL model SECTOR WEIGHT / BSE MOST

WEIGHT
RELATIVE
EFFECTIVE SECTOR
PORTFOLIO PICKS 100 WEIGHT STANCE
portfolio TO BSE100
Financials 31.6 32.0 0.4 Neutral
Private 19.0 19.0 0.0 Neutral
HDFC Bank 7.2 5.0 -2.2 Buy
ICICI Bank 4.1 5.0 0.9 Buy
Yes Bank 1.3 4.0 2.7 Buy
Axis Bank 2.1 3.0 0.9 Neutral
Federal Bank 0.4 2.0 1.6 Buy
PSU 3.4 6.0 2.6 Overweight
SBI 2.3 4.0 1.7 Buy
PNB 0.3 2.0 1.7 Buy
NBFCs 9.1 7.0 -2.1 Underweight
Max Financial 0.0 3.0 3.0 Buy
Repco Home Fin 0.0 2.0 2.0 Buy
Shriram City Union 0.0 2.0 2.0 Buy
Auto 10.8 11.0 0.2 Neutral
Tata Motors 2.3 4.0 1.7 Buy
Maruti 2.1 3.0 0.9 Buy
M&M 1.5 2.0 0.5 Buy
Ceat 0.0 2.0 2.0 Buy
Consumption / Retail 12.5 10.0 -2.5 Underweight
ITC 5.8 5.0 -0.8 Buy
Colgate 0.3 3.0 2.7 Buy
Britannia 0.5 2.0 1.5 Buy
Technology / Telecom 12.7 9.0 -3.7 Underweight
Infosys 4.9 4.0 -0.9 Buy
Bharti Airtel 1.1 3.0 1.9 Buy
Tech Mahindra 0.7 2.0 1.3 Buy
Energy 10.0 9.0 -1.0 Underweight
IOC 1.0 4.0 3.0 Buy
BPCL 0.8 3.0 2.2 Buy
Petronet LNG 0.0 2.0 2.0 Buy
Cap Goods, Infra & Cement 8.3 9.0 0.7 Neutral
Larsen & Toubro 3.4 5.0 1.6 Buy
JK Cement 0.0 2.0 2.0 Buy
Bharat Electronics 0.0 2.0 2.0 Buy
Health Care 5.5 6.0 0.5 Neutral
Sun Pharma 1.8 2.0 0.2 Buy
Aurobindo 0.5 2.0 1.5 Buy
Ajanta Pharma 0.0 2.0 2.0 Buy
Utilities / Metals 7.0 5.0 -2.0 Underweight
Hindalco 0.6 3.0 2.4 Buy
Power Grid 1.1 2.0 0.9 Buy
Others 1.6 9.0 7.4 Overweight
Manpasand Beverages 0.0 1.0 1.0 Buy
Navneet Education 0.0 1.0 1.0 Buy
Delta Corp 0.0 1.0 1.0 Buy
Gateway Distripak 0.0 1.0 1.0 Buy
Fortis Healthcare 0.0 1.0 1.0 Buy
SH Kelkar 0.0 1.0 1.0 Buy
MCX 0.0 1.0 1.0 Buy
AllCargo 0.0 1.0 1.0 Buy
Dewan Housing 0.0 1.0 1.0 Buy
Cash 0.0 0.0 0.00
Total 100.0 100.0
April 2017 40
THIS PAGE INTENTIONALLY LEFT BLANK
April 2017 41
Sectors & Companies

BSE Sensex: 29,974 S&P CNX: 9,265 April 2017
MOSL Universe:
4QFY17 Highlights
&
Ready Reckoner
Note: In our quarterly performance tables, our four-quarter numbers may not always add up to the full-year
numbers. This is because of differences in classification of account heads in the companys quarterly and annual
results or because of differences in the way we classify account heads as opposed to the company.
All stock prices and indices as on 5 April 2017, unless otherwise stated.
April 2017 42
MOSL Universe: 4QFY17 aggregate performance highlights

Quarterly Performance - MOSL Universe (INR b)
Sector Sales EBITDA PAT
Var Var Var Var Var Var
(Nos of companies) Mar-17 Mar-17 Mar-17
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Auto (14) 1,405 1.7 12.4 165 -18.9 20.0 73 -31.8 22.0
Capital Goods (12) 682 13.7 43.5 84 9.5 83.8 53 15.3 123.6
Cement (8) 208 2.2 11.2 33 -17.0 -2.0 16 -21.7 -4.6
Consumer (18) 420 4.5 4.1 94 2.6 2.9 65 5.3 1.7
Financials (31) 704 8.0 4.6 574 2.2 -1.0 187 LP 0.3
Private Banks (11) 259 10.6 2.9 219 0.5 -2.7 102 17.9 1.5
PSU Banks (8) 331 5.0 5.5 264 0.6 -1.8 34 LP -11.3
NBFC (12) 114 11.5 5.7 91 12.0 6.4 51 10.9 7.1
Healthcare (18) 392 8.1 2.8 97 12.2 5.4 58 6.2 3.8
Logistics (3) 31 -0.5 1.0 5 23.1 10.4 3 13.7 3.5
Media (8) 54 2.0 -4.0 16 6.3 -9.7 8 -31.1 -1.8
Metals (9) 1,325 27.7 18.0 253 103.3 20.1 91 175.9 55.5
Oil & Gas (11) 3,357 27.9 8.3 381 25.2 -2.7 213 15.7 -6.6
Excl. OMCs (8) 1,288 34.0 11.8 260 25.0 2.1 147 12.4 -2.1
Retail (2) 37 20.2 -18.9 3 24.1 -20.5 2 -11.5 -30.4
Technology (15) 902 5.4 0.4 209 2.3 -1.1 152 -5.4 -8.4
Telecom (4) 383 -10.5 -3.7 116 -22.5 -8.5 4 -84.9 -47.7
Utilities (5) 501 2.9 2.2 177 4.5 17.3 90 0.6 24.6
Others (18) 164 10.0 9.4 28 -9.8 -4.3 11 -22.2 -15.3
MOSL (176) 10,564 13.6 9.4 2,236 8.3 5.1 1,028 27.9 6.2
MOSL Excl. Metals, Oil & PSU Bks (148) 5,550 4.4 8.3 1,337 -2.6 6.5 689 -5.9 7.3
Sensex (30) 5,057 8.8 9.4 1,285 0.3 5.0 619 1.4 6.2
Nifty (50) 7,565 11.9 8.9 1,608 2.4 3.7 792 9.9 4.9
Quarter-wise sales growth (% YoY) Quarter-wise net profit growth (% YoY)

13.6% 27.9%
21.2%
8.1%
2.9% 11.9%
2.0%
-2.2%
Jun-16 Sep-16 Dec-16 Mar-17E Jun-16 Sep-16 Dec-16 Mar-17E
Sectoral sales growth - quarter ended Mar-17 (%) Sectoral net profit growth - quarter ended Mar-17 (%)
28 28 LP
20 176
14 14
8 8 5 5 3 2 2 2 28 16 15 14
6 5 1
-1
-11 -5 -12 -22 -31 -32
-85
MOSL Univ
Utilities
Metals
Health Care
Telecom
Consumer
Logistics
Cap Goods
Technology
Cement
Auto
Media
Oil & Gas
Retail
Financials
MOSL Univ
Media
Health Care
Retail
Financials
Oil & Gas
Cap Goods
Cement
Auto
Telecom
Metals
Logistics
Consumer
Utilities
Technology
For Banks: Sales = Net Interest Income, EBITDA = Operating Profits
April 2017 43
Annual performance - MOSL universe (INR Billion)

SECTOR Sales (INR B) Change YoY (%) EBIDTA (INR B) Change YoY (%) PAT (INR B) Change YoY (%)
FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Auto (15) 5,668 6,376 7,561 2.5 12.5 18.6 728 919 1,176 -8.6 26.3 28.0 301 420 590 -12.6 39.6 40.4
Capital Goods (16) 2,214 2,492 2,761 8.9 12.5 10.8 221 273 305 33.7 23.3 11.8 126 148 172 42.0 17.8 15.9
Cement (13) 1,225 1,347 1,510 2.9 9.9 12.1 220 258 306 12.8 17.3 18.6 101 135 173 25.2 34.4 27.5
Consumer (18) 1,647 1,850 2,120 4.6 12.3 14.6 375 423 498 4.7 12.9 17.8 258 295 348 6.4 14.1 18.3
Financials (36) 3,189 3,641 4,241 6.9 14.2 16.5 2,697 2,907 3,371 14.2 7.8 16.0 857 1,179 1,489 37.5 37.6 26.3
Private Banks (13) 1,038 1,209 1,434 13.9 16.5 18.6 940 1,006 1,189 17.9 7.0 18.2 406 510 640 -0.6 25.5 25.6
PSU Banks (9) 1,543 1,735 1,992 1.1 12.5 14.8 1,217 1,284 1,463 12.6 5.6 13.9 126 292 408 LP 132.5 39.5
NBFC (14) 608 698 814 11.7 14.7 16.7 540 617 720 11.9 14.3 16.7 325 377 442 12.3 16.0 17.2
Healthcare (18) 1,518 1,722 1,986 8.7 13.5 15.3 361 423 502 5.8 17.2 18.7 224 275 334 11.8 22.6 21.7
Logistics (3) 128 138 153 -1.9 8.5 10.4 17 21 23 -9.3 20.6 10.4 10 14 16 -11.0 36.2 14.5
Media (10) 248 287 330 7.2 15.6 15.0 73 90 109 9.8 23.7 20.4 34 45 57 -0.5 31.7 25.6
Metals (9) 4,450 5,087 5,421 8.5 14.3 6.6 819 1,022 1,155 62.0 24.7 13.0 232 328 438 72.8 41.7 33.5
Oil & Gas (11) 12719 14405 16094 4.5 13.3 11.7 1,767 1,937 2,048 25.4 9.6 5.7 906 985 1,064 22.2 8.7 8.0
Excl. OMCs (8) 5,182 6,833 7,496 4.7 31.9 9.7 1,160 1,331 1,416 19.1 14.8 6.4 559 671 734 6.5 20.0 9.4
Retail (2) 149 174 202 9.4 17.0 16.0 14 17 20 25.2 18.2 18.0 9 11 12 12.9 16.6 16.2
Technology (15) 3,557 3,902 4,311 12.9 9.7 10.5 825 896 988 9.3 8.7 10.2 634 689 754 6.2 8.8 9.4
Telecom (4) 1,631 1,620 1,766 -1.4 -0.6 9.0 536 504 568 -3.5 -5.9 12.6 64 3 26 -36.8 -95.2 756.8
Utilities (5) 2,076 2,365 2,639 5.1 13.9 11.6 651 803 951 7.3 23.3 18.4 296 346 400 -7.6 16.9 15.5
Others (28) 875 1,071 1,258 9.7 22.4 17.5 165 223 267 5.3 34.8 20.0 79 111 139 9.0 40.8 25.2
MOSL (203) 41294 46479 52354 5.7 12.6 12.6 9468 10714 12286 14.1 13.2 14.7 4131 4985 6013 14.7 20.7 20.6
Excl. OMCs (200) 33757 38907 43756 6.1 15.3 12.5 8861 10108 11654 12.7 14.1 15.3 3783 4670 5683 11.8 23.4 21.7
Sensex (30) 10345 12041 13583 5.1 16.4 12.8 2700 3017 3484 11.8 11.7 15.5 1203 1445 1750 0.8 20.1 21.1
Nifty (50) 13924 15865 17824 7.5 13.9 12.4 3362 3765 4332 8.7 12.0 15.1 1553 1858 2234 9.9 19.7 20.3
For Banks: Sales = Net Interest Income, EBIDTA = Operating Profits; Note: Sensex & Nifty Numbers are Free Float
Valuations - MOSL universe

PE (x) EV / EBIDTA (x) P/BV (x) ROE (%) Div Yield (%) EARN. CAGR
Sector FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY16 (FY17-FY19)
Auto (15) 28.1 20.1 14.3 11.2 8.8 6.4 4.2 3.7 3.1 14.8 18.1 21.4 1.0 40.0
Capital Goods (16) 35.1 29.8 25.7 22.9 18.2 16.2 3.6 3.3 3.0 10.3 11.1 11.8 1.1 16.8
Cement (13) 36.0 26.7 21.0 16.9 14.0 11.4 3.5 3.2 2.9 9.7 11.9 13.6 0.6 30.9
Consumer (18) 42.6 37.4 31.6 28.6 25.2 21.1 12.6 11.1 9.6 29.6 29.6 30.4 1.5 16.2
Financials (36) 23.1 16.8 13.3 2.1 2.0 1.8 9.3 11.7 13.3 1.3 31.9
Private Banks (13) 25.5 20.4 16.2 3.0 2.7 2.4 11.9 13.4 14.9 0.9 25.5
PSU Banks (9) 29.9 12.9 9.2 1.0 0.9 0.8 3.2 7.0 9.2 0.9 80.1
NBFC (14) 17.4 15.0 12.8 3.0 2.7 2.3 17.5 17.9 17.9 2.5 16.6
Healthcare (18) 27.0 22.1 18.1 16.7 13.9 11.3 4.8 4.0 3.4 17.6 18.3 18.9 0.6 22.1
Logistics (3) 30.7 22.5 19.7 16.3 13.3 11.8 2.8 2.6 2.4 9.1 11.5 12.2 1.2 24.8
Media (10) 36.0 27.4 21.8 16.2 12.9 10.4 6.5 5.6 4.8 18.1 20.6 22.1 1.3 28.6
Metals (9) 19.7 13.9 10.4 9.1 7.1 5.9 1.6 1.5 1.3 7.9 10.5 12.7 7.3 37.5
Oil & Gas (11) 13.2 12.1 11.2 6.9 6.0 5.4 1.8 1.6 1.5 13.5 13.5 13.4 2.4 8.4
Excl. OMCs (8) 15.4 12.8 11.7 7.1 5.7 5.0 1.6 1.5 1.4 10.5 11.7 12.0 2.0 14.6
Retail (2) 55.5 47.6 40.9 35.9 30.2 25.3 10.2 9.2 8.1 18.4 19.3 19.7 0.6 16.4
Technology (15) 16.6 15.3 14.0 11.5 10.5 9.3 3.9 3.7 3.2 23.4 24.0 23.1 1.8 9.1
Telecom (4) 39.7 825.9 96.4 7.5 8.0 6.8 2.3 2.3 2.3 5.7 0.3 2.3 0.6 -35.8
Utilities (5) 14.9 12.7 11.0 10.3 8.7 7.5 2.4 2.2 2.0 16.0 17.3 18.3 5.7 16.2
Others (28) 29.9 21.2 17.0 14.4 10.6 8.7 5.2 4.5 4.0 17.3 21.4 23.4 1.8 32.8
MOSL (203) 22.2 18.4 15.3 N.M N.M N.M 2.9 2.6 2.4 13.0 14.4 15.6 1.8 20.7
MOSL Excl. OMCs (200) 23.4 18.9 15.6 N.M N.M N.M 2.9 2.7 2.4 12.4 14.1 15.4 1.8 22.6
Sensex (30) 22.9 19.1 15.7 N.M N.M N.M 3.0 2.7 2.5 13.2 14.4 15.6 1.5 20.6
Nifty (50) 22.2 18.6 15.5 N.M N.M N.M 3.0 2.8 2.5 13.7 14.9 15.9 1.5 20.0
N.M.: Not Meaningful.
April 2017 44
Ready reckoner: Quarterly performance

CMP Sales (INR m) EBITDA (INR m) PAT (INR m)
(INR) Rating Mar-17 Mar-17 Mar-17
Automobiles
Amara Raja Batt. 896 Buy 13,448 15.0 1.2 2,156 13.0 5.7 1,211 11.5 8.0
Ashok Leyland 85 Buy 63,434 6.5 43.2 7,307 -3.0 60.8 4,249 -6.9 128.6
Bajaj Auto 2,761 Buy 49,109 -8.4 -3.1 10,084 -12.6 -3.4 8,419 -11.3 -9.0
Bharat Forge 1,074 Buy 10,798 7.1 14.4 3,091 3.6 18.6 1,614 -1.9 25.5
Bosch 22,905 Neutral 27,895 13.1 4.4 6,219 12.9 133.2 4,290 -9.1 99.8
CEAT 1,337 Buy 16,533 1.5 6.2 1,488 -19.4 -3.1 777 -25.8 -7.3
Eicher Motors 25,677 Buy 18,992 24.0 3.5 6,312 39.6 9.4 4,638 28.9 10.9
Escorts 538 Buy 9,818 22.0 -10.2 815 110.0 -10.9 513 69.3 -6.8
Exide Inds. 228 Buy 19,900 13.0 15.3 3,006 13.4 30.9 1,851 4.2 22.2
Hero Motocorp 3,196 Neutral 68,437 -8.8 7.5 12,128 -5.8 3.6 7,788 -6.7 0.9
Mahindra & Mahindra 1,290 Buy 101,704 0.1 -3.9 12,095 -4.7 -16.6 6,219 -4.8 -21.2
Maruti Suzuki 6,339 Buy 186,402 21.7 10.5 27,209 15.3 9.3 18,231 16.8 4.5
Tata Motors 474 Buy 790,204 -2.1 17.0 71,424 -37.3 38.4 12,025 -74.4 362.6
TVS Motor 450 Buy 28,328 0.6 -5.0 1,895 6.1 -13.3 1,018 -13.5 -23.2
Sector Aggregate 1,405,003 1.7 12.4 165,227 -18.9 20.0 72,842 -31.8 22.0
Capital Goods
ABB 1,323 Neutral 22,068 10.3 -11.4 2,130 35.6 -24.4 1,014 28.4 -30.9
Bharat Electronics 161 Buy 39,066 21.5 87.2 9,829 -1.6 103.6 8,001 -0.2 114.2
BHEL 171 Sell 129,461 29.4 104.7 14,391 295.6 542.9 10,756 194.3 1049.8
CG Consumer Elect. 220 Buy 10,843 8.3 22.0 1,368 7.6 37.8 809 6.6 41.0
CG Power & Indl. 80 Sell 11,575 2.5 -0.2 674 -24.9 -12.1 257 -77.1 -66.0
Cummins India 968 Neutral 12,606 18.8 -7.0 2,093 18.0 -7.6 1,857 11.2 -6.3
GE T&D India 335 Neutral 11,064 13.9 -4.8 1,119 31.7 55.1 531 77.7 19.8
Havells India 469 Neutral 15,896 7.7 5.5 1,819 -17.1 -4.6 1,255 -23.4 -5.3
Larsen & Toubro 1,697 Buy 370,729 11.8 41.0 44,146 -9.1 75.0 23,974 -0.3 146.5
Siemens 1,308 Neutral 26,750 -3.9 16.6 3,450 12.7 47.6 2,552 43.8 59.5
Thermax 987 Sell 12,847 -0.7 57.9 1,234 4.4 53.0 1,063 -4.5 87.6
Voltas 415 Neutral 19,305 2.2 63.5 1,922 3.7 116.0 1,416 -4.6 73.7
Sector Aggregate 682,210 13.7 43.5 84,175 9.5 83.8 53,483 15.3 123.6
Cement
ACC 1,467 Neutral 30,899 5.6 15.8 2,172 -41.2 13.4 749 -67.7 -17.8
Ambuja Cements 239 Buy 25,594 5.8 16.5 3,218 -24.0 9.2 2,122 -26.5 14.3
Dalmia Bharat 2,062 Buy 18,518 -1.5 7.4 3,904 -13.1 -4.0 614 -35.3 72.0
Grasim Industries 1,067 Neutral 23,980 -4.3 -3.9 4,832 12.4 -5.6 2,492 19.5 -24.8
India Cements 163 Neutral 12,544 9.4 -1.1 1,344 -36.4 -28.7 56 -89.0 -84.1
Ramco Cements 671 Buy 9,961 1.8 6.3 2,659 -14.0 -1.1 1,485 -27.3 -0.9
Shree Cement 17,332 Buy 22,138 9.7 20.1 4,340 -14.1 -7.4 2,288 2.4 -3.7
Ultratech Cement 4,071 Buy 63,927 -0.7 15.4 10,601 -17.5 1.5 5,737 -15.8 1.8
Sector Aggregate 207,560 2.2 11.2 33,070 -17.0 -2.0 15,543 -21.7 -4.6
Consumer
Asian Paints 1,080 Neutral 38,177 4.0 -3.0 7,159 2.7 -7.8 4,891 17.2 4.9
Britannia 3,372 Buy 22,657 7.3 0.0 2,575 -4.2 -12.8 1,924 -3.3 -12.7
Colgate 1,001 Buy 10,057 3.5 16.3 2,620 5.0 22.4 1,567 -17.3 24.5
Dabur 284 Neutral 20,242 2.2 9.6 4,092 -0.5 24.5 3,406 2.7 16.0
Emami 1,038 Buy 5,898 -2.1 -18.8 1,787 -2.9 -30.9 992 -35.6 -51.5
Godrej Consumer 1,701 Neutral 24,452 10.7 2.2 5,040 10.8 -0.5 3,401 6.3 -2.5
GSK Consumer 5,181 Neutral 11,283 -1.3 31.1 2,424 -3.5 44.5 1,666 -1.8 22.1
Hind. Unilever 935 Neutral 80,680 4.5 4.7 14,567 -0.9 7.5 11,025 -1.0 19.9
ITC 279 Buy 98,798 1.3 6.8 36,038 -0.1 1.6 25,781 8.4 -2.6
April 2017 45

Jyothy Labs 342 Neutral 5,405 9.6 41.0 765 21.3 51.0 476 341.4 121.5
Marico 298 Buy 13,442 4.4 -4.9 2,146 2.1 -20.4 1,446 6.2 -24.5
Nestle 6,622 Neutral 27,549 20.0 21.8 6,629 28.0 68.5 4,119 35.0 58.8
P&G Hygiene 7,388 Buy 5,927 9.0 -7.9 1,335 0.1 -41.6 947 -2.4 -37.1
Page Industries 14,596 Buy 4,843 13.8 -8.3 977 4.8 -1.4 637 6.9 1.3
Parag Milk Foods 242 Neutral 4,247 2.5 -4.8 231 -42.0 LP 84 -47.6 LP
Pidilite Inds. 714 Neutral 12,406 0.0 -7.0 2,305 -3.3 -20.8 1,417 -8.4 -31.3
United Breweries 762 Buy 11,583 -4.7 13.0 1,249 -1.9 -2.4 612 16.9 26.3
United Spirits 2,028 Buy 22,612 6.4 -9.0 2,475 35.3 -12.8 937 -7.3 -36.6
Healthcare
Alembic Pharma 625 Neutral 7,949 27.1 3.2 1,519 6.8 5.1 970 6.5 12.6
Alkem Lab 2,207 Neutral 14,035 22.8 -5.3 2,492 57.7 -7.1 1,936 22.8 -17.0
Ajanta Pharma 1,723 Buy 4,720 10.9 -11.5 1,595 13.5 -10.4 1,163 8.2 -18.4
Aurobindo Pharma 678 Buy 38,463 2.7 -1.5 8,966 1.6 0.2 5,785 3.7 2.6
Biocon 1,122 Sell 10,017 6.0 -2.7 2,440 31.7 -6.5 1,590 114.3 -7.0
Cadila Health 449 Buy 25,075 2.4 8.5 5,043 -13.3 24.7 3,379 -12.9 20.0
Cipla 593 Neutral 38,060 16.5 4.4 7,191 62.7 6.1 3,661 20.4 -2.3
Divis Labs 632 Neutral 11,030 0.9 14.9 3,836 -3.1 1.6 2,891 -10.3 7.8
Dr Reddy s Labs 2,736 Neutral 37,574 0.0 1.4 8,567 3.9 0.5 4,650 23.6 -1.1
Fortis Health 190 Buy 11,771 8.2 3.9 1,245 LP 10.8 402 LP -21.8
Glenmark Pharma 877 Neutral 30,012 38.0 21.9 9,890 406.8 42.7 6,154 313.7 29.0
Granules India 142 Buy 3,466 -6.9 -3.6 721 -8.0 -5.5 364 9.6 -6.7
GSK Pharma 2,738 Neutral 7,292 6.3 5.8 1,033 -15.3 194.9 881 -1.9 151.3
IPCA Labs. 647 Neutral 7,946 27.2 7.4 1,172 84.6 6.2 515 27.1 13.6
Lupin 1,453 Buy 45,350 8.7 1.2 11,409 -12.6 -6.2 6,345 -15.2 0.2
Sanofi India 4,755 Buy 6,020 10.6 1.7 1,327 2.8 23.7 798 -1.0 58.1
Sun Pharma 691 Buy 78,110 2.3 -1.3 24,815 -1.5 1.2 14,613 -14.7 -0.7
Torrent Pharma 1,477 Buy 14,998 0.1 6.1 3,440 -28.9 8.9 2,294 -35.7 0.2
Logistics
Allcargo Logistics 179 Buy 13,809 -1.2 -1.7 1,106 -9.1 11.4 466 -32.6 -5.2
Concor 1,012 Neutral 13,919 -1.6 4.6 2,952 49.5 13.0 2,016 43.0 8.4
Gateway Distriparks 255 Buy 2,820 9.5 -1.9 569 0.0 -3.0 208 -21.5 -16.1
Sector Aggregate 30,549 -0.5 1.0 4,627 23.1 10.4 2,689 13.7 3.5
Media
D B Corp 391 Buy 5,399 5.0 -13.9 1,197 4.8 -39.6 646 0.5 -45.3
Dish TV 103 Buy 7,540 -5.7 0.8 2,441 -6.4 -2.2 164 -96.6 -38.5
HT Media 85 Neutral 6,718 6.5 3.4 1,037 48.7 -6.2 406 8.0 -55.5
Jagran Prakashan 185 Buy 4,865 10.0 -2.8 1,336 18.8 -13.8 738 21.6 -17.2
PVR 1,520 Buy 4,580 11.0 -14.8 517 11.4 -41.8 12 LP -94.8
Siti Networks 38 Neutral 3,103 -13.0 4.0 693 -27.2 26.0 -299 PL Loss
Sun TV 796 Neutral 6,125 7.3 3.9 4,557 6.8 3.6 2,457 4.1 2.3
Zee Entertainment 543 Buy 15,326 0.1 -6.5 4,589 10.9 -11.0 3,867 48.4 54.2
Sector Aggregate 53,656 2.0 -4.0 16,367 6.3 -9.7 7,990 -31.1 -1.8
Metals
Hindalco 198 Buy 272,750 10.9 10.9 31,821 2.6 7.2 9,995 -2.7 36.4
Hindustan Zinc 291 Neutral 61,059 94.9 22.6 35,844 174.0 28.8 29,026 35.0 25.1
JSPL 124 Buy 63,061 24.1 13.0 15,105 68.5 18.3 -4,363 Loss Loss
April 2017 46

JSW Steel 195 Buy 173,464 62.2 23.8 29,034 59.1 1.3 7,125 332.1 -2.4
Nalco 76 Buy 21,659 15.6 8.9 5,327 123.2 86.8 3,131 50.6 84.3
NMDC 136 Buy 27,475 79.6 10.0 15,873 194.1 11.6 11,271 63.6 9.4
SAIL 65 Sell 131,695 15.8 16.6 276 LP LP -13,199 Loss Loss
Tata Steel 493 Sell 339,226 15.0 21.3 46,526 111.0 31.5 15,805 LP 676.5
Vedanta 273 Neutral 235,086 47.1 21.1 73,560 111.9 22.7 32,207 184.9 72.6
Sector Aggregate 1,325,475 27.7 18.0 253,366 103.3 20.1 90,999 175.9 55.5
Oil & Gas

BPCL 638 Buy 564,232 27.8 5.4 22,404 -34.8 -33.4 14,523 -43.0 -34.4
GAIL 383 Neutral 155,418 33.7 28.4 18,347 64.0 7.8 11,054 43.6 12.5
Gujarat State Petronet 161 Neutral 2,683 16.0 2.1 2,363 15.8 5.8 1,305 30.9 10.1
HPCL 523 Buy 517,206 22.8 6.7 20,843 -19.6 -27.2 11,100 -28.5 -30.2
IOC 381 Buy 987,632 23.4 6.6 77,900 115.6 4.4 40,502 227.8 1.4
Indraprastha Gas 1,014 Neutral 9,196 4.3 -2.5 2,552 32.3 1.5 1,520 41.2 5.0
MRPL 110 Neutral 119,746 28.9 4.4 9,212 -40.0 -19.7 4,427 -67.2 -21.8
Oil India 332 Buy 25,168 32.5 5.9 7,020 11.2 5.6 4,610 -1.7 1.4
ONGC 186 Neutral 210,978 30.7 5.8 107,679 80.4 4.6 45,209 64.6 3.9
Petronet LNG 408 Buy 77,361 27.5 22.8 6,330 41.8 4.3 3,967 65.8 -0.2
Reliance Inds. 1,415 Neutral 687,251 37.6 11.2 106,698 -0.5 0.6 75,184 2.7 -6.3
Sector Aggregate 3,356,871 27.9 8.3 381,349 25.2 -2.7 213,401 15.7 -6.6
Oil & Gas Excl. OMCs 1,287,802 34.0 11.8 260,201 25.0 2.1 147,277 12.4 -2.1
Retail
Jubilant Foodworks 1,094 Neutral 6,693 8.3 1.6 647 -9.2 1.1 206 -26.0 3.1
Titan Company 491 Neutral 30,044 23.3 -22.4 2,667 36.2 -24.4 1,717 -9.4 -33.0
Sector Aggregate 36,737 20.2 -18.9 3,314 24.1 -20.5 1,923 -11.5 -30.4
Technology
Cyient 488 Buy 9,342 14.5 1.9 1,200 12.9 -2.2 816 -3.3 -13.2
HCL Technologies 853 Buy 120,518 12.7 2.0 26,386 10.9 0.4 19,706 2.4 -4.8
Hexaware Tech. 215 Neutral 9,323 13.7 -0.9 1,541 29.1 -5.1 1,086 29.0 -10.7
Infosys 995 Buy 172,489 4.2 -0.1 46,775 0.8 -1.9 34,218 -4.9 -7.7
KPIT Tech. 131 Neutral 8,284 -1.5 -0.3 830 -37.1 -1.9 451 -49.0 -5.0
L&T Infotech 716 Buy 16,605 4.2 -0.4 3,035 -5.3 0.5 2,219 -16.1 -10.5
Mindtree 455 Neutral 12,937 -2.3 -0.1 1,733 -23.3 -0.4 972 -37.7 -5.8
MphasiS 569 Neutral 15,064 -0.6 -1.9 2,315 -1.2 -3.4 1,973 2.7 -3.5
NIIT Tech. 432 Neutral 6,982 2.0 0.9 1,219 -3.3 4.4 667 -15.6 -7.4
Persistent Systems 581 Neutral 7,362 8.7 -1.3 1,116 3.9 -6.0 706 -12.6 -13.8
Tata Elxsi 1,507 Buy 3,380 15.0 9.3 794 18.3 7.5 501 22.0 9.3
TCS 2,403 Neutral 299,935 5.4 0.9 81,880 3.6 -0.5 61,965 -2.3 -8.6
Tech Mahindra 447 Buy 75,399 9.5 -0.2 11,605 0.8 -2.2 7,302 -14.9 -14.7
Wipro 511 Neutral 136,157 -0.1 -0.5 27,160 -3.2 -2.6 18,983 -15.1 -10.0
Zensar Tech 926 Buy 8,037 7.7 1.5 1,176 27.6 7.9 684 -2.7 -15.7
Sector Aggregate 901,814 5.4 0.4 208,767 2.3 -1.1 152,248 -5.4 -8.4
Telecom
Bharti Airtel 345 Buy 222,371 -10.9 -4.7 76,193 -16.4 -10.2 6,772 -54.7 17.3
Bharti Infratel 338 Buy 35,043 10.1 3.0 15,246 5.2 3.0 7,230 0.6 16.5
Idea Cellular 88 Buy 80,803 -14.8 -6.7 18,512 -48.8 -14.5 -9,919 PL Loss
Tata Comm 727 Buy 44,554 -13.4 2.2 6,254 -22.9 9.9 174 -33.4 2248.8
Sector Aggregate 382,772 -10.5 -3.7 116,206 -22.5 -8.5 4,257 -84.9 -47.7
April 2017 47

Utilities
CESC 848 Buy 15,562 5.2 -3.9 5,043 6.0 60.1 2,488 0.3 63.7
Coal India 290 Neutral 227,911 9.8 15.7 45,137 -7.7 43.5 39,953 -5.8 38.5
JSW Energy 67 Buy 19,696 -26.5 3.4 6,529 -42.6 -0.7 290 -90.5 35.6
NTPC 166 Buy 165,615 -7.9 -14.1 56,071 5.1 9.0 24,514 -4.3 9.2
Power Grid Corp. 195 Buy 72,165 25.4 11.0 64,145 26.1 10.2 22,847 42.9 18.4
Others
Arvind 407 Buy 24,889 7.3 6.6 2,987 0.7 26.0 1,287 16.6 66.0
Bata India 565 Buy 5,556 2.0 -13.3 611 10.4 -19.3 348 25.0 -41.4
Castrol India 428 Buy 8,619 1.2 10.6 2,569 2.1 18.7 1,752 1.6 12.4
Coromandel International 315 UR 30,511 1.0 34.4 2,471 23.3 4.2 1,286 38.8 14.7
Delta Corp 203 Buy 1,109 8.0 7.1 360 1.6 15.1 152 -5.6 45.4
Indo Count Inds. 199 Buy 5,460 4.0 8.6 1,174 0.9 15.2 669 1.4 19.1
Info Edge 837 Buy 1,996 -2.2 7.3 541 -13.2 15.0 516 -9.8 9.5
Inox Leisure 294 Sell 2,729 8.6 -8.4 177 17.7 -44.0 -76 PL PL
Interglobe Aviation 1,044 Neutral 49,477 20.9 0.1 10,835 -28.0 -22.5 1,854 -68.0 -61.9
Just Dial 555 Buy 1,931 7.5 7.1 292 -35.2 13.3 244 -31.1 -11.2
Kaveri Seed 555 Buy 482 10.0 -29.0 -29 Loss PL -36 Loss PL
MCX 1,186 Buy 574 3.3 -9.5 128 -6.6 -9.3 296 3.0 -12.8
Manpasand Beverages 717 Buy 3,272 42.0 219.3 605 41.4 195.0 430 68.2 493.8
Navneet Education 153 Buy 2,026 10.0 29.4 243 0.0 19.9 130 7.3 2.9
P I Industries 833 Buy 6,064 3.7 24.3 1,300 21.2 25.8 935 0.1 -0.5
SRF 1,655 Buy 12,354 10.8 9.0 2,533 13.5 9.3 1,161 11.4 7.2
S H Kelkar 298 Buy 2,844 7.0 22.6 483 7.8 22.3 302 16.6 19.0
TTK Prestige 6,066 Neutral 3,714 20.7 -20.5 390 15.6 -29.7 241 11.3 -30.6
PL: Profit to Loss; LP: Loss to Profit; UR: Under Review
April 2017 48

Sector CMP Sales (INR m) Op. Profit (INR m) PAT (INR m)
Financials
Private Banks
Axis Bank 507 Neutral 45,498 -0.1 5.0 45,298 3.0 -2.4 8,341 -61.3 43.9
DCB Bank 171 Neutral 2,096 24.2 0.0 1,184 22.1 8.4 550 -20.9 7.2
Equitas Holdings 170 Buy 2,381 46.2 3.2 899 2.7 -10.1 385 -17.7 -14.3
Federal Bank 91 Buy 8,043 17.3 1.6 4,326 9.6 -8.9 1,834 1687.7 -10.8
HDFC Bank 1,433 Buy 85,213 14.3 2.6 66,473 15.9 0.6 38,972 15.5 0.8
ICICI Bank 285 Buy 54,328 0.5 1.3 50,462 -29.0 -8.6 22,932 226.7 -6.1
IDFC Bank 61 Neutral 5,264 26.3 1.1 4,057 56.2 -14.8 1,575 -4.6 -17.7
IndusInd Bank 1,400 Buy 16,205 27.8 2.7 13,643 18.5 0.1 7,617 22.8 1.5
Kotak Mahindra Bank 888 Buy 21,008 13.1 2.5 15,312 28.2 0.2 8,878 27.6 0.9
RBL Bank 535 Buy 3,457 43.9 7.5 2,610 62.3 11.0 1,446 71.7 12.3
Yes Bank 1,567 Buy 15,952 28.5 5.8 14,870 21.3 2.3 9,148 30.3 3.6
Pvt Banking Sector Aggregate 259,445 10.6 2.9 219,135 0.5 -2.7 101,676 17.9 1.5
PSU Banks
Bank of Baroda 174 Buy 34,445 3.4 9.9 22,242 -13.5 -14.3 5,091 LP 101.5
Bank of India 143 Neutral 29,047 -8.9 1.5 21,376 46.0 -13.1 -863 Loss PL
Canara Bank 311 Neutral 26,676 12.4 10.5 28,217 71.4 42.4 4,584 LP 42.4
Indian Bank 283 Buy 13,532 19.3 8.6 9,634 16.4 -5.7 2,138 153.1 -42.8
Oriental Bank of Commerce 145 Neutral 12,720 -6.0 17.6 11,128 26.6 -13.1 -1,153 PL Loss
Punjab National Bank 151 Buy 39,867 44.0 6.9 32,764 1.5 3.9 607 LP -70.7
State Bank 297 Buy 151,168 -1.1 2.5 119,461 -15.8 -4.8 22,304 76.5 -14.5
Union Bank 158 Neutral 23,388 12.2 9.5 19,063 35.2 3.0 1,342 39.6 29.0
PSU Banking Sector Aggregate 330,843 5.0 5.5 263,885 0.6 -1.8 34,050 LP -11.3
NBFC
Bajaj Finance 1,173 Buy 15,489 39.4 -10.0 8,954 38.7 -13.0 4,548 44.4 -18.2
Bharat Financial 797 Neutral 2,016 21.5 -1.2 1,477 19.0 0.7 870 3.0 -39.1
Dewan Housing 385 Buy 5,268 20.5 2.1 4,240 27.3 1.7 2,472 30.3 1.0
GRUH Finance 394 Neutral 1,844 18.7 21.9 1,585 21.1 22.5 1,038 18.2 62.1
HDFC 1,490 Buy 28,534 15.6 10.8 27,431 11.5 11.8 19,867 2.4 16.8
Indiabulls Housing 986 Buy 11,371 9.4 19.3 11,534 29.6 14.7 8,502 25.9 13.1
LIC Housing Fin 624 Buy 10,324 25.7 12.8 8,955 22.4 10.4 5,328 18.9 6.7
M & M Financial 321 Buy 9,509 -5.0 27.4 5,884 -13.4 49.0 2,794 -24.6 LP
Muthoot Finance 396 Buy 8,071 -6.7 11.2 5,225 -13.6 16.2 3,252 22.6 11.7
Repco Home Fin 718 Buy 957 12.3 5.5 875 10.8 8.0 472 11.8 1.7
Shriram City Union 2,285 Buy 6,817 9.5 -10.6 3,883 13.4 -16.6 612 10.3 -61.2
Shriram Transport Fin. 1,108 Buy 13,691 -5.2 -3.0 10,625 -1.1 -6.8 1,471 2.2 -57.5
NBFC Banking Sec. Aggregate 113,890 11.5 5.7 90,668 12.0 6.4 51,224 10.9 7.1
Sector Aggregate 704,178 8.0 4.6 573,687 2.2 -1.0 186,950 LP 0.3
PL: Profit to Loss; LP: Loss to Profit; UR: Under Review
April 2017 49
Ready reckoner: Full year valuations

Sector / CMP EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
Companies (INR) Rating FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Automobiles
Amara Raja Batt. 896 Buy 29.3 37.3 43.4 30.6 24.0 20.7 17.4 14.2 12.1 21.7 22.9 22.0
Ashok Leyland 85 Buy 4.2 5.2 6.6 20.1 16.4 12.9 10.3 8.8 6.9 20.6 22.3 24.9
Bajaj Auto 2,761 Buy 133.7 154.8 174.0 20.7 17.8 15.9 14.5 12.5 10.6 29.5 30.2 30.0
Bharat Forge 1,074 Buy 25.3 37.2 50.6 42.5 28.9 21.2 19.1 15.2 11.7 15.7 20.5 23.7
Bosch 22,905 Neutral 472.3 667.8 764.1 48.5 34.3 30.0 37.5 25.5 21.2 18.2 24.5 23.4
CEAT 1,337 Buy 89.9 107.6 140.6 14.9 12.4 9.5 9.0 7.5 5.8 16.4 16.9 18.9
Endurance Tech. 778 Buy 22.3 29.4 37.4 34.9 26.4 20.8 15.5 12.6 10.3 19.6 21.6 22.9
Eicher Motors 25,677 Buy 615.4 854.5 1047.6 41.7 30.0 24.5 30.2 22.1 17.9 40.7 40.9 36.7
Escorts 538 Buy 23.2 34.1 43.4 23.2 15.8 12.4 20.3 14.0 11.0 12.1 15.9 17.5
Exide Inds. 228 Buy 8.4 9.8 11.9 27.2 23.3 19.2 14.8 12.6 10.1 14.5 15.0 16.0
Hero Motocorp 3,196 Neutral 172.2 185.1 188.3 18.6 17.3 17.0 12.2 11.3 11.1 39.5 36.2 31.9
Mahindra & Mahindra 1,290 Buy 61.7 75.4 89.5 20.9 17.1 14.4 6.0 5.2 4.5 14.5 13.9 14.7
Maruti Suzuki 6,339 Buy 253.2 307.6 374.1 25.0 20.6 16.9 16.0 12.3 9.8 22.4 23.0 23.1
Tata Motors 474 Buy 11.5 29.4 62.0 41.1 16.1 7.6 6.6 5.0 3.0 4.7 11.2 20.4
TVS Motor 450 Buy 11.2 15.2 21.6 40.1 29.7 20.9 24.4 18.6 13.2 25.1 27.8 31.4
Sector Aggregate 28.1 20.1 14.3 11.2 8.8 6.4 14.8 18.1 21.4
Capital Goods
ABB 1,323 Neutral 18.4 26.1 32.6 71.8 50.7 40.6 36.1 25.6 21.2 11.9 14.4 15.9
Bharat Electronics 161 Buy 6.5 7.3 8.5 25.0 22.1 19.0 17.7 16.0 13.5 20.4 18.8 19.1
BHEL 171 Sell 5.5 5.7 5.8 30.9 29.9 29.5 16.6 13.3 15.1 4.0 4.0 4.0
CG Consumer Elect. 220 Buy 4.6 5.5 6.7 48.3 40.3 32.6 29.3 25.2 20.8 94.3 73.3 66.1
CG Power & Indl. 80 Sell 3.6 3.9 4.5 22.0 20.6 18.0 18.3 13.6 12.4 5.4 5.5 6.0
Cummins India 968 Neutral 26.6 30.5 36.5 36.3 31.8 26.5 32.4 27.1 22.1 22.6 23.2 25.3
GE T&D India 335 Neutral 6.0 11.0 11.4 55.7 30.3 29.5 39.5 17.2 15.4 11.7 20.7 19.2
Havells India 469 Neutral 8.9 12.1 14.1 52.5 38.9 33.2 36.9 24.6 20.7 20.3 24.6 25.1
Inox Wind 183 Neutral 17.5 16.6 17.7 10.5 11.0 10.3 7.0 7.8 7.1 19.2 15.7 14.6
K E C International 219 Buy 10.5 12.3 13.5 20.9 17.9 16.2 10.1 8.8 7.9 16.6 16.8 16.2
Larsen & Toubro 1,697 Buy 53.6 63.6 74.4 31.7 26.7 22.8 21.7 16.7 15.1 10.9 11.9 12.7
Siemens 1,308 Neutral 17.0 25.7 33.5 76.9 50.9 39.0 44.1 33.6 26.1 9.2 11.9 14.2
Solar Inds. 814 Neutral 19.0 22.3 26.5 42.8 36.5 30.7 23.1 19.9 16.9 18.4 18.6 19.0
Thermax 987 Sell 23.5 28.4 31.5 41.9 34.8 31.3 28.1 22.2 19.4 11.6 12.9 13.2
Va Tech Wabag 695 Buy 26.5 34.5 40.3 26.3 20.1 17.2 13.4 10.4 9.0 8.9 16.7 17.3
Voltas 415 Neutral 13.6 14.9 16.9 30.6 27.8 24.6 21.6 22.0 18.9 17.6 17.1 17.1
Cement
ACC 1,467 Neutral 33.7 46.7 58.6 43.5 31.4 25.0 21.9 17.0 14.2 7.5 10.4 13.2
Ambuja Cements 239 Buy 4.9 6.7 7.2 48.8 35.5 33.2 20.4 18.5 16.4 5.0 6.8 7.1
Birla Corporation 748 Buy 21.5 41.2 54.4 34.7 18.1 13.7 15.2 9.9 7.4 6.0 10.9 13.2
Dalmia Bharat 2,062 Buy 30.7 47.5 70.1 67.3 43.4 29.4 14.3 12.0 11.3 6.8 9.8 12.9
Grasim Industries 1,067 Neutral 68.7 86.6 111.1 15.6 12.3 9.6 10.6 8.5 9.5 11.7 13.2 14.8
India Cements 163 Neutral 5.1 8.7 11.9 31.9 18.7 13.7 10.8 9.7 8.5 4.0 6.2 7.7
J K Cements 935 Buy 32.6 37.2 49.3 28.7 25.1 19.0 14.8 12.6 11.2 13.3 13.6 16.0
JK Lakshmi Cem. 458 Buy 5.9 12.2 17.8 77.3 37.4 25.7 18.6 14.7 12.2 5.2 10.5 14.7
Orient Cement 145 Buy -1.8 3.2 5.8 -81.4 45.8 24.8 24.1 13.5 9.5 -3.7 6.6 11.3
Prism Cement 103 Buy -0.6 2.6 4.8 -170.1 39.3 21.4 30.1 17.8 13.0 -3.1 13.1 20.8
Ramco Cements 671 Buy 27.8 30.1 36.2 24.1 22.3 18.5 14.8 13.6 11.3 19.6 18.0 18.5
Shree Cement 17,332 Buy 363.2 480.6 642.3 47.7 36.1 27.0 25.0 20.3 16.2 19.2 21.7 23.5
Ultratech Cement 4,071 Buy 91.6 120.5 151.6 44.4 33.8 26.8 24.1 20.8 16.8 11.5 13.6 15.1
April 2017 50

Consumer
Asian Paints 1,080 Neutral 20.5 22.6 26.7 52.7 47.8 40.5 33.6 31.0 26.4 32.8 31.8 32.4
Britannia 3,372 Buy 72.2 83.3 101.7 46.7 40.5 33.2 34.4 29.4 23.2 43.1 39.2 38.0
Colgate 1,001 Buy 21.7 25.8 31.6 46.2 38.8 31.6 28.0 23.3 19.2 54.9 60.1 68.5
Dabur 284 Neutral 7.3 8.3 9.7 38.9 34.3 29.3 32.0 28.2 24.0 28.3 27.2 27.1
Emami 1,038 Buy 24.5 29.8 36.0 42.4 34.8 28.8 31.1 27.0 22.8 33.8 33.0 33.2
Godrej Consumer 1,701 Neutral 37.1 42.9 49.8 45.8 39.6 34.2 32.8 28.7 25.1 22.5 22.2 21.9
GSK Consumer 5,181 Neutral 153.9 173.1 190.8 33.7 29.9 27.1 22.3 19.4 17.3 24.6 24.0 23.1
Hind. Unilever 935 Neutral 19.3 21.5 24.8 48.6 43.5 37.7 33.7 30.6 26.5 67.6 78.4 92.5
ITC 279 Buy 8.4 9.3 11.0 33.3 29.8 25.3 22.5 20.0 16.6 28.4 27.6 28.7
Jyothy Labs 342 Neutral 8.0 9.0 10.5 42.8 38.0 32.6 24.0 22.0 19.5 16.4 17.1 18.1
Marico 298 Buy 6.1 7.0 8.4 49.0 42.5 35.4 34.2 29.8 24.9 33.3 32.1 34.6
Nestle 6,622 Neutral 118.7 144.0 171.0 55.8 46.0 38.7 34.4 27.4 23.1 38.8 42.3 42.3
P&G Hygiene 7,388 Buy 145.7 167.7 198.8 50.7 44.1 37.2 32.9 28.1 23.4 29.0 28.8 29.5
Page Industries 14,596 Buy 235.6 305.1 388.4 62.0 47.8 37.6 39.5 30.4 24.0 41.3 42.2 43.2
Parag Milk Foods 242 Neutral 0.8 6.9 12.5 298.4 34.8 19.4 27.6 15.1 10.3 1.3 8.2 13.2
Pidilite Inds. 714 Neutral 16.6 18.3 20.5 43.0 39.1 34.8 28.8 25.4 22.2 27.9 25.4 23.4
United Breweries 762 Buy 10.7 14.3 18.4 71.4 53.2 41.5 29.5 26.2 20.6 12.6 15.0 16.8
United Spirits 2,028 Buy 28.6 42.2 58.7 70.8 48.1 34.6 34.1 27.3 21.2 20.8 22.1 23.8
Healthcare
Alembic Pharma 625 Neutral 21.6 28.5 35.8 28.9 22.0 17.5 18.5 14.5 11.4 23.3 25.5 26.0
Alkem Lab 2,207 Neutral 79.3 85.7 100.0 27.8 25.7 22.1 23.4 19.6 15.5 24.4 22.0 21.7
Ajanta Pharma 1,723 Buy 56.0 63.8 79.6 30.7 27.0 21.6 22.3 19.4 15.6 35.9 30.9 29.9
Aurobindo Pharma 678 Buy 40.1 47.0 54.6 16.9 14.4 12.4 11.9 9.8 8.2 28.8 26.0 23.9
Biocon 1,122 Sell 32.2 34.1 42.7 34.9 32.9 26.3 23.0 19.9 15.5 14.3 13.6 15.3
Cadila Health 449 Buy 12.0 17.7 23.0 37.4 25.4 19.5 24.3 16.6 12.9 21.4 26.5 27.9
Cipla 593 Neutral 17.9 22.0 28.5 33.2 27.0 20.8 18.8 15.3 12.3 11.0 12.2 13.8
Divis Labs 632 Neutral 43.0 32.9 38.6 14.7 19.2 16.4 10.1 12.5 10.3 25.4 17.7 18.8
Dr Reddy s Labs 2,736 Neutral 76.1 110.9 147.2 35.9 24.7 18.6 17.5 13.3 9.9 9.8 12.9 15.2
Fortis Health 190 Buy 2.6 3.2 6.5 73.0 59.7 29.2 21.7 11.7 9.0 3.0 3.3 6.1
Glenmark Pharma 877 Neutral 40.6 49.2 60.5 21.6 17.8 14.5 11.2 9.8 9.3 20.1 19.0 19.1
Granules India 142 Buy 6.8 7.7 11.3 20.8 18.4 12.5 12.5 10.6 7.5 18.8 15.8 18.3
GSK Pharma 2,738 Neutral 34.5 55.5 64.4 79.3 49.3 42.5 67.8 41.9 34.3 22.4 43.0 56.9
IPCA Labs. 647 Neutral 15.8 27.9 37.3 40.9 23.2 17.4 17.9 13.6 10.6 8.4 13.5 15.9
Lupin 1,453 Buy 61.4 78.6 88.8 23.6 18.5 16.4 14.7 11.9 10.1 22.8 23.8 22.1
Sanofi India 4,755 Buy 129.0 157.8 189.9 36.9 30.1 25.0 19.3 16.3 13.4 16.2 18.1 19.4
Sun Pharma 691 Buy 27.1 32.5 38.7 25.5 21.2 17.9 15.3 13.5 11.1 19.8 20.9 21.0
Torrent Pharma 1,477 Buy 56.6 76.3 93.4 26.1 19.4 15.8 17.9 13.8 11.0 25.9 29.3 29.6
Logistics
Allcargo Logistics 179 Buy 9.0 10.9 12.3 19.8 16.4 14.5 9.2 7.8 6.7 11.5 14.8 14.8
Concor 1,012 Neutral 29.7 39.9 44.9 34.1 25.4 22.5 20.5 16.4 14.8 8.8 11.2 11.8
Gateway Distriparks 255 Buy 8.3 15.7 20.1 30.7 16.3 12.7 11.7 8.9 7.2 7.2 12.9 15.3
Media
D B Corp 391 Buy 20.4 23.0 26.5 19.1 17.0 14.7 10.7 9.6 8.3 26.2 26.2 26.8
Den Networks 92 Neutral -3.6 2.2 8.5 -25.2 41.7 10.8 13.8 5.4 3.3 -4.1 2.5 8.8
Dish TV 103 Buy 1.4 2.7 4.3 71.6 38.8 24.0 11.5 9.1 7.3 33.6 42.0 43.9
April 2017 51

Hindustan Media 287 Buy 25.2 27.4 30.3 11.4 10.5 9.5 6.4 4.7 3.5 18.5 16.8 15.8
HT Media 85 Neutral 8.0 8.2 8.7 10.6 10.5 9.8 3.2 2.1 1.2 7.7 7.1 7.0
Jagran Prakashan 185 Buy 10.8 12.2 13.9 17.2 15.1 13.2 9.4 8.2 7.1 20.7 20.6 20.4
PVR 1,520 Buy 20.8 35.7 56.8 73.2 42.6 26.7 22.5 15.9 11.9 10.6 16.3 22.0
Siti Networks 38 Neutral -1.8 0.0 1.2 -20.4 - 31.7 18.4 9.9 6.5 -21.7 0.0 11.1
Sun TV 796 Neutral 25.1 29.7 34.5 31.7 26.8 23.0 16.5 13.9 12.2 25.1 27.3 29.0
Zee Entertainment 543 Buy 11.4 17.3 20.6 47.7 31.4 26.3 24.7 20.6 16.8 29.1 30.3 29.4
Metals
Hindalco 198 Buy 16.9 22.6 25.4 11.7 8.8 7.8 6.8 6.0 5.3 15.4 17.5 16.8
Hindustan Zinc 291 Neutral 19.3 25.7 28.0 15.1 11.3 10.4 11.3 7.2 6.3 24.0 31.8 28.2
JSPL 124 Buy -22.3 -17.5 -2.2 -5.6 -7.1 -56.3 12.8 9.7 6.7 -7.5 -4.5 -0.6
JSW Steel 195 Buy 13.6 18.3 20.5 14.4 10.7 9.5 7.9 6.6 5.8 16.2 18.7 17.9
Nalco 76 Buy 3.9 5.3 5.8 19.5 14.2 13.0 9.9 6.0 5.3 7.5 9.6 9.9
NMDC 136 Buy 12.1 12.3 13.0 11.3 11.1 10.5 8.2 7.0 6.6 13.4 15.5 15.1
SAIL 65 Sell -7.4 -12.6 0.4 -8.8 -5.2 175.4 86.1 59.8 10.6 -8.1 -15.4 0.5
Tata Steel 493 Sell 18.9 39.4 45.7 26.2 12.5 10.8 9.2 7.5 6.9 13.6 28.2 26.5
Vedanta 273 Neutral 17.9 28.3 31.4 15.2 9.6 8.7 6.5 4.8 4.2 11.5 17.0 17.2
Oil & Gas

BPCL 638 Buy 55.9 53.7 58.4 11.4 11.9 10.9 7.7 7.3 6.8 27.1 22.7 21.4
GAIL 383 Neutral 21.7 28.9 32.5 17.6 13.2 11.8 10.9 8.5 7.6 13.0 14.0 14.4
Gujarat State Petronet 161 Neutral 8.9 11.0 13.2 18.1 14.6 12.2 10.2 8.1 6.6 12.0 13.5 14.5
HPCL 523 Buy 53.5 44.9 45.8 9.8 11.6 11.4 6.6 6.5 6.6 27.8 20.7 18.6
Indraprastha Gas 1,014 Neutral 43.3 43.8 49.4 23.4 23.1 20.5 13.2 12.5 11.0 22.3 19.7 19.2
IOC 381 Buy 43.7 39.4 41.0 8.7 9.7 9.3 6.0 6.2 5.8 26.0 20.4 18.8
MRPL 110 Neutral 12.2 11.4 12.8 9.0 9.6 8.6 5.6 5.5 4.3 29.6 22.7 21.4
Oil India 332 Buy 28.6 33.1 37.8 11.6 10.0 8.8 8.4 6.9 6.0 9.8 10.8 11.6
ONGC 186 Neutral 12.2 16.1 17.3 15.3 11.5 10.8 5.1 4.6 4.4 8.4 11.1 11.7
Petronet LNG 408 Buy 22.2 26.5 36.2 18.4 15.4 11.3 11.5 9.4 6.5 23.9 24.0 27.2
Reliance Inds. 1,415 Neutral 99.6 113.9 123.2 14.2 12.4 11.5 8.6 6.2 5.0 11.6 12.0 11.7
Oil & Gas Ex OMCs 15.4 12.8 11.7 7.1 5.7 5.0 10.5 11.7 12.0
Retail
Jubilant Foodworks 1,094 Neutral 12.3 21.7 29.1 88.8 50.3 37.6 28.2 19.2 14.6 10.1 19.5 24.9
Titan Company 491 Neutral 9.4 10.4 11.8 52.2 47.1 41.6 37.6 33.3 28.7 21.5 20.6 20.3
Technology
Cyient 488 Buy 30.9 37.6 43.1 15.8 13.0 11.3 9.6 7.8 6.5 14.8 16.0 16.3
HCL Technologies 853 Buy 57.2 64.3 70.3 14.9 13.3 12.1 10.5 9.5 8.4 27.0 27.8 28.1
Hexaware Tech. 215 Neutral 13.7 14.9 16.3 15.7 14.4 13.2 10.6 9.5 8.2 26.5 24.4 22.7
Infosys 995 Buy 62.0 66.6 73.3 16.0 14.9 13.6 10.0 9.1 8.0 23.0 22.1 22.1
KPIT Tech. 131 Neutral 11.5 13.8 15.0 11.4 9.5 8.7 5.3 3.8 2.9 13.7 15.9 14.9
L&T Infotech 716 Buy 53.6 58.0 60.8 13.4 12.3 11.8 9.7 9.2 8.4 41.4 36.6 32.1
Mindtree 455 Neutral 24.9 34.6 39.4 18.3 13.2 11.5 10.8 9.2 7.9 17.0 21.5 21.7
MphasiS 569 Neutral 42.7 43.0 44.9 13.3 13.2 12.7 12.2 11.2 10.0 14.1 14.9 14.7
NIIT Tech. 432 Neutral 36.2 46.8 52.9 11.9 9.2 8.2 4.8 4.0 3.3 13.5 15.9 16.0
Persistent Systems 581 Neutral 37.4 43.4 50.5 15.5 13.4 11.5 8.6 7.1 6.0 16.9 17.9 20.1
TCS 2,403 Neutral 131.3 144.7 154.7 18.3 16.6 15.5 13.6 12.8 11.5 33.0 33.4 33.0
Tata Elxsi 1,507 Buy 59.3 72.1 89.0 25.4 20.9 16.9 15.0 12.1 9.6 42.5 41.3 40.8
Tech Mahindra 447 Buy 32.5 35.7 40.2 13.7 12.5 11.1 9.6 8.4 6.9 20.1 19.5 19.2
Zensar Tech 926 Buy 65.3 81.4 92.0 14.2 11.4 10.1 8.8 7.3 5.9 19.1 20.4 19.7
April 2017 52

Wipro 511 Neutral 33.0 37.5 42.9 15.5 13.6 11.9 10.6 9.4 8.1 16.8 17.2 17.8
Telecom
Bharti Airtel 345 Buy 11.0 5.1 9.4 31.2 67.6 36.5 6.6 7.1 5.9 6.5 2.9 5.2
Bharti Infratel 338 Buy 15.5 16.7 19.9 21.8 20.2 17.0 9.8 8.4 7.1 15.7 15.9 16.7
Idea Cellular 88 Buy -3.0 -15.4 -16.9 -29.7 -5.7 -5.2 8.7 10.8 10.3 -4.2 -25.3 -37.1
Tata Comm 727 Buy 6.2 25.6 44.1 117.3 28.4 16.5 10.0 8.8 6.5 -50.2 924.0 117.3
Utilities
CESC 848 Buy 50.4 74.7 82.2 16.8 11.4 10.3 7.2 6.2 5.8 11.1 15.8 15.2
Coal India 290 Neutral 17.0 19.6 22.1 17.1 14.8 13.1 12.7 10.1 8.8 41.1 47.4 53.2
JSW Energy 67 Buy 3.9 2.3 0.8 17.2 29.1 87.5 7.5 8.4 9.1 7.3 4.3 1.4
NTPC 166 Buy 11.9 14.3 17.3 14.0 11.6 9.6 11.2 9.2 7.3 10.6 11.9 13.3
Power Grid Corp. 195 Buy 15.3 17.7 20.7 12.8 11.0 9.4 9.2 8.0 7.1 17.3 17.5 17.7
Others
Arvind 407 Buy 13.5 21.8 28.6 30.1 18.7 14.2 12.6 9.9 8.1 10.4 14.0 16.3
Bata India 565 Buy 10.9 14.2 17.7 52.0 39.8 32.0 28.9 22.5 17.9 11.3 13.4 15.0
Castrol India 428 Buy 13.6 14.9 15.2 31.4 28.8 28.2 20.3 18.4 18.0 110.9 108.6 100.4
Century Plyboards 259 Buy 7.7 8.6 11.4 33.5 30.0 22.7 21.6 17.3 13.9 28.9 26.5 28.6
Coromandel International 315 UR 15.9 19.6 25.1 19.7 16.0 12.6 10.5 9.1 7.5 18.2 20.1 22.7
Delta Corp 203 Buy 3.3 6.9 7.6 62.2 29.6 26.5 28.4 17.2 12.9 9.0 15.7 17.0
Dynamatic Tech. 2,844 Buy 67.6 112.9 166.7 42.1 25.2 17.1 13.1 10.6 8.5 15.1 20.7 24.3
Eveready Inds. 277 Buy 11.4 13.9 16.9 24.3 20.0 16.4 16.9 14.3 11.8 34.7 33.0 32.4
Indo Count Inds. 199 Buy 13.7 17.5 21.1 14.6 11.4 9.4 8.4 6.9 5.6 33.8 30.8 27.3
Info Edge 837 Buy 16.9 17.9 21.0 49.6 46.7 39.9 42.8 38.2 31.9 11.1 10.9 11.9
Inox Leisure 294 Sell 2.5 8.2 11.5 117.6 36.0 25.5 22.4 13.4 10.5 3.8 11.5 14.3
Interglobe Aviation 1,044 Neutral 39.0 64.7 78.0 26.8 16.1 13.4 7.4 4.7 3.9 72.2 104.1 106.3
Jain Irrigation 102 UR 5.5 7.6 10.0 18.5 13.5 10.2 7.7 6.3 5.4 8.6 11.7 14.8
Just Dial 555 Buy 17.2 18.5 22.1 32.3 30.1 25.1 28.9 30.1 19.5 16.5 15.5 16.2
Kaveri Seed 555 Buy 23.4 28.6 36.1 23.7 19.4 15.4 20.1 15.4 12.0 17.3 19.8 22.9
Kitex Garments 438 Buy 26.0 31.0 36.7 16.8 14.1 11.9 9.4 7.6 5.9 29.9 28.7 27.7
MCX 1,186 Buy 26.3 30.0 42.5 45.0 39.5 27.9 86.6 54.8 30.2 10.6 11.3 15.0
Manpasand Beverages 717 Buy 14.9 23.1 38.3 48.0 31.0 18.7 23.7 17.1 10.0 8.6 9.6 16.3
Monsanto India 2,508 Buy 72.9 89.3 109.3 34.4 28.1 22.9 29.2 23.9 19.5 30.4 35.9 39.6
Navneet Education 153 Buy 6.6 8.6 10.5 23.0 17.8 14.5 14.5 11.1 9.0 26.0 30.0 30.9
P I Industries 833 Buy 30.4 34.8 43.6 27.4 23.9 19.1 21.5 16.6 12.9 30.9 27.9 27.8
Piramal Enterprises 1,960 Buy 74.5 127.1 164.7 26.3 15.4 11.9 15.2 10.2 8.4 10.0 15.7 18.2
S H Kelkar 298 Buy 7.7 10.3 13.3 38.7 28.9 22.5 23.4 18.0 14.0 13.9 16.8 19.1
SRF 1,655 Buy 82.4 99.9 125.1 20.1 16.6 13.2 11.1 9.6 7.7 16.5 17.4 19.1
Symphony 1,521 Sell 27.0 35.1 42.9 56.3 43.3 35.4 42.1 32.4 26.3 56.8 65.0 66.3
TTK Prestige 6,066 Neutral 106.9 137.7 176.0 56.7 44.0 34.5 35.0 26.7 21.6 16.5 19.4 22.2
V-Guard Inds 177 Neutral 3.7 4.6 5.4 47.8 38.6 32.9 32.4 26.3 22.4 29.4 29.1 27.6
Wonderla Holiday 393 Buy 7.0 11.9 16.0 56.2 32.9 24.5 26.1 16.6 12.8 9.5 14.8 17.5
UR: Under Review
April 2017 53

Sector / CMP EPS (INR) PE (x) P/BV (x) ROE (%)
Banks-Private
Axis Bank 507 Neutral 13.8 23.9 40.6 36.7 21.2 12.5 2.2 2.0 1.8 6.2 9.9 15.2
DCB Bank 171 Neutral 7.1 8.6 10.9 24.2 19.9 15.8 2.5 2.2 1.9 10.9 11.8 13.1
Equitas Holdings 170 Buy 5.7 6.2 7.4 29.9 27.5 23.2 2.6 2.3 2.1 10.7 8.9 9.6
Federal Bank 91 Buy 4.4 5.2 6.7 20.7 17.3 13.6 1.8 1.7 1.5 9.0 10.0 11.7
HDFC Bank 1,433 Buy 56.6 66.7 79.0 25.3 21.5 18.1 4.4 3.8 3.3 18.5 18.9 19.3
ICICI Bank 285 Buy 17.3 17.8 20.5 16.5 16.0 13.9 2.0 1.8 1.7 10.5 9.8 10.5
IDFC Bank 61 Neutral 3.0 3.8 4.8 20.5 15.8 12.7 1.4 1.3 1.2 7.1 8.7 10.1
IndusInd Bank 1,400 Buy 48.4 58.7 71.2 28.9 23.9 19.7 4.2 3.7 3.2 15.5 16.4 17.2
J&K Bank 78 Neutral -25.2 13.0 15.4 -3.1 6.0 5.0 0.7 0.7 0.6 -21.1 11.6 12.5
Kotak Mahindra Bank 888 Buy 26.3 32.3 41.3 33.8 27.5 21.5 4.3 3.7 3.2 13.5 14.5 16.0
RBL Bank 535 Buy 12.7 18.5 24.3 42.0 28.9 22.0 4.7 4.1 3.6 12.9 15.2 17.4
South Indian Bank 22 Neutral 2.8 3.1 3.8 7.8 7.0 5.7 0.7 0.7 0.6 9.7 10.0 11.3
Yes Bank 1,567 Buy 79.3 97.0 118.4 19.8 16.2 13.2 4.0 3.3 2.8 22.1 22.6 23.0
Bank Aggregate 25.5 20.4 16.2 3.0 2.7 2.4 11.9 13.4 14.9
Banks-PSU
Bank of Baroda 174 Buy 7.5 19.0 26.1 23.2 9.2 6.7 1.1 1.0 0.9 5.0 11.9 14.8
Bank of India 143 Neutral -5.7 14.5 23.7 -25.2 9.9 6.0 0.6 0.6 0.5 -2.5 6.0 9.2
Canara Bank 311 Neutral 25.2 35.9 57.6 12.3 8.7 5.4 0.6 0.6 0.5 5.2 7.0 10.5
IDBI Bank 77 Neutral 1.5 6.4 8.6 50.4 12.0 9.0 0.7 0.7 0.6 1.4 5.8 7.3
Indian Bank 283 Buy 27.1 30.1 35.9 10.5 9.4 7.9 0.9 0.9 0.8 9.3 9.6 10.6
Oriental Bank of Commerce 145 Neutral 0.3 21.0 26.0 579.2 6.9 5.6 0.4 0.4 0.3 0.1 5.2 6.1
Punjab National Bank 151 Buy 5.3 12.4 16.6 28.6 12.1 9.1 0.8 0.8 0.7 3.0 6.7 8.3
State Bank 297 Buy 8.7 16.9 23.3 34.2 17.5 12.7 1.3 1.2 1.1 3.9 7.3 9.3
Union Bank 158 Neutral 8.5 30.5 45.3 18.7 5.2 3.5 0.5 0.5 0.4 2.8 9.7 13.0
PSU Bank Aggregate 29.9 12.9 9.2 1.0 0.9 0.8 3.2 7.0 9.2
NBFC
Bajaj Finance 1,173 Buy 34.4 47.5 64.0 34.1 24.7 18.3 7.1 5.7 4.5 22.7 25.5 27.3
Bharat Financial 797 Neutral 44.6 42.8 55.1 17.9 18.6 14.5 4.0 3.3 2.7 29.6 19.3 20.4
Dewan Housing 385 Buy 29.6 36.7 42.7 13.0 10.5 9.0 1.5 1.4 1.2 14.4 13.9 14.5
GRUH Finance 394 Neutral 8.0 10.1 12.0 49.3 39.1 32.8 14.2 11.6 9.6 31.4 32.7 32.0
HDFC 1,490 Buy 46.7 51.7 57.3 31.9 28.8 26.0 5.9 5.4 4.5 19.1 18.1 17.1
Indiabulls Housing 986 Buy 69.3 84.4 102.7 14.2 11.7 9.6 3.5 3.1 2.8 25.9 28.3 30.5
LIC Housing Fin 624 Buy 38.3 46.9 55.3 16.3 13.3 11.3 2.9 2.5 2.1 19.5 20.3 20.3
M & M Financial 321 Buy 7.9 10.9 14.1 40.7 29.3 22.8 2.9 2.7 2.6 7.2 9.6 11.6
Muthoot Finance 396 Buy 29.7 34.5 40.0 13.4 11.5 9.9 2.5 2.2 1.9 19.7 20.2 20.6
Power Finance Corp 154 Neutral 25.7 27.2 30.2 6.0 5.7 5.1 1.0 0.9 0.8 17.9 17.0 16.8
Repco Home Fin 718 Buy 28.6 34.0 40.2 25.1 21.1 17.8 4.0 3.4 2.9 17.3 17.5 17.6
Rural Electric. Corp. 184 Neutral 31.4 35.0 40.4 5.9 5.3 4.6 1.1 0.9 0.8 19.9 19.1 19.1
Shriram City Union 2,285 Buy 91.8 134.5 164.6 24.9 17.0 13.9 3.0 2.6 2.3 12.7 16.5 17.5
Shriram Transport Fin. 1,108 Buy 55.3 81.9 100.5 20.0 13.5 11.0 2.2 2.0 1.7 11.7 15.5 16.7
NBFC Aggregate 17.4 15.0 12.8 3.0 2.7 2.3 17.5 17.9 17.9
UR: Under Review
April 2017 54
Sectors & Companies

BSE Sensex: 29,974 S&P CNX: 9,265 April 2017
Note: In our quarterly performance tables, our four-quarter numbers may not always add up to the full-year
numbers. This is because of differences in classification of account heads in the companys quarterly and
annual results or because of differences in the way we classify account heads as opposed to the company.
All stock prices and indices as on 5 April 2017, unless otherwise stated.
April 2017 55
March 2017 March
Results2017
Preview | Sector:
Results Automobiles
Preview | April 2017
Automobiles
Company name Quarter of uncertainty
Amara Raja Batteries 2Ws likely to see decline; CVs to be flat, while PVs relatively well placed
Ashok Leyland
4QFY17 should be a quarter of uncertainty for the auto OEMs, as we see impact of a)
Bajaj Auto
BS3 verdict of the SC on 2W/CV players, b) Gujarat plant commissioning on Maruti and
Bharat Forge
c) increase in yields on cash-rich players.
BOSCH
CEAT We believe 2W/3W players are likely to be the worst hit, as the rural segment has still
Eicher Motors not fully recovered from the impact of demonetization. We estimate 2W/3W volumes
Escort
to decline by ~2%/16% YoY. Volumes of PVs are expected to grow by 7% YoY in
Exide Industries
4QFY17, while those of CVs should remain flat (despite pre-buying).
EBITDA margin for our auto OEM (ex-JLR) universe is likely to hit an 8-quarter low,
Hero MotoCorp
declining 120bp YoY (-30bp QoQ) to 12.5%. The CV pack (due to uncertainty on impact
Mahindra & Mahindra
of BS-III ban and lower-than-expected pre-buying), along with MSIL (due to impact of
Maruti Suzuki
commissioning of Gujarat plant) and BJAUT, is expected to see margin contraction.
Tata Motors
We have lowered our FY17 EPS estimates for AL (-12%), TVSL (-6%), BOS (-3%) and
TVS Motor Company
HMCL (-2%), and increased for EXID (+2%) and MM (+2%).
Our top picks are MSIL and TTMT among large caps, and AMRJ among mid-caps. We
also believe that MM is the best play on a rural market recovery.
2W/3Ws to see decline; CVs to be flat, while PVs relatively well placed
2W sales are expected to decline ~2% in 4QFY17. Sales growth in PVs is expected to
be at 7.5%, while that in UVs is expected to moderate to 6%. PVs were less
impacted, primarily due to waiting periods in many models of OEMs as well as lower
cash component. CV volumes are expected to be flat, with LCVs volumes declining
by 1% and M&HCV volumes growing by ~3%. Many fleet operators have postponed
their purchases (despite shift from BS-III to BS-IV) on account of liquidity crunch post
demonetization and also in anticipation of benefits from the looming GST
implementation.
EBITDA margins at 8-quarter low; to decline 120bp YoY
EBITDA margin for our Auto OEM (ex-JLR) coverage universe is likely to contract
120bp YoY (+90bp QoQ), with BS-III vehicle ban leading to heavy discounts by
2W/CV players and also considering the impact of Gujarat plant commissioning for
MSIL. Also, pre-buying has not been as expected. We expect margins to shrink for
the CV pack, with TTMT S/A (-490bp YoY), AL (-110bp), VECV (-160bp), BJAUT (-
100bp YoY) and MSIL (-80bp YoY) witnessing contraction and EIM (+240bp) seeing
expansion.
Volumes for CVs/2Ws to moderate with BS-IV implementation
We believe volumes are likely to soften, with the apex courts ban on BS-III vehicles
post 31 March 2017 leading to preponement of buying (as many CV/2W players
offered aggressive discounts).
Valuation and view
We are lowering our FY17 EPS estimates for AL (-12%), TVSL (-6%), BOS (-3%) and
HMCL (-2%), while raising our estimates for EXID (+2%) and MM (+2%). Demand
environment and changing competitive landscape would be the key determinants of
the stock performance. Our top picks are Tata Motors, Maruti Suzuki and Amara
Raja. We also believe MM is the best play on a rural market recovery.
Jinesh Gandhi (Jinesh@MotilalOswal.com); +91 22 3982 5416
Jigar Shah (Jigar.Shah@MotilalOswal.com); +91 22 3982 5402
April 2017 56
March 2017 Results Preview | Sector: Automobiles
Exhibit 1: Summary of expected quarterly performance (INR m)

Sector Sales (INR m) EBDITA (INR m) Net Profit (INR m)
CMP Var % Var % Var %
Reco Mar-17 Var % YoY Mar-17 Var % YoY Mar-17 Var % YoY
(INR) QoQ QoQ QoQ
Automobiles
Amara Raja Batt. 896 Buy 13,448 15.0 1.2 2,156 13.0 5.7 1,211 11.5 8.0
Ashok Leyland 85 Buy 63,434 6.5 43.2 7,307 -3.0 60.8 4,249 -6.9 128.6
Bajaj Auto 2,761 Buy 49,109 -8.4 -3.1 10,084 -12.6 -3.4 8,419 -11.3 -9.0
Bharat Forge 1,074 Buy 10,798 7.1 14.4 3,091 3.6 18.6 1,614 -1.9 25.5
Bosch 22,905 Neutral 27,895 13.1 4.4 6,219 12.9 133.2 4,290 -9.1 99.8
CEAT 1,337 Buy 16,533 1.5 6.2 1,488 -19.4 -3.1 777 -25.8 -7.3
Eicher Motors 25,677 Buy 18,992 24.0 3.5 6,312 39.6 9.4 4,638 28.9 10.9
Escorts 538 Buy 9,818 22.0 -10.2 815 110.0 -10.9 513 69.3 -6.8
Exide Inds. 228 Buy 19,900 13.0 15.3 3,006 13.4 30.9 1,851 4.2 22.2
Hero Motocorp 3,196 Neutral 68,437 -8.8 7.5 12,128 -5.8 3.6 7,788 -6.7 0.9
Mahindra & Mahindra 1,290 Buy 101,704 0.1 -3.9 12,095 -4.7 -16.6 6,219 -4.8 -21.2
Maruti Suzuki 6,339 Buy 186,402 21.7 10.5 27,209 15.3 9.3 18,231 16.8 4.5
Tata Motors 474 Buy 790,204 -2.1 17.0 71,424 -37.3 38.4 12,025 -74.4 362.6
TVS Motor 450 Buy 28,328 0.6 -5.0 1,895 6.1 -13.3 1,018 -13.5 -23.2
Sector Aggregate 1,235,411 8.6 -11.2 176,525 2.8 -13.0 84,045 5.6 -14.9
Exhibit 2: Volume snapshot for 4QFY17 ('000 units)

4QFY17 4QFY16 YoY (%) 3QFY17 QoQ (%) FY17 FY16 YoY (%)
Two wheelers 4,640 4,709 -1.5 4,527 2.5 19,884 18,984 4.7
Three wheelers 177 211 -16.1 185 -4.4 800 943 -15.1
Passenger cars 674 627 7.5 694 -3.0 2,680 2,547 5.2
UVs & MPVs 276 260 6.0 264 4.6 1,085 911 19.1
Total PVs 950 887 7.1 958 -0.9 3,765 3,457 8.9
M&HCV 108 105 2.9 78 38.8 344 335 2.4
LCV 125 127 -1.0 114 10.3 470 442 6.3
Total CVs 234 232 0.8 192 21.9 813 777 4.6
Total 6,000 6,039 -0.6 5,862 2.4 25,263 24,161 4.6
Exhibit 3: Trend in segment-wise EBITDA margins (%) Exhibit 4: Commodity prices remain at higher levels
4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17
16.3 17.0 16.2 15.9 16.1

16.1
14.2 14.6 14.3
13.6
9.6
8.1
6.1 6.1
4.1
100
106
137
130
100
103
121
116
129
100
113
113
100
113
113
118
129
99
98
97
2W Cars CVs Steel Lead Alu Rubber
Source: Company, MOSL Source: Company, MOSL
April 2017 57
Exhibit 5: Trend in key currencies v/s INR Exhibit 6: Continued improvement in EBITDA margins (%)
USD GBP JPY Aggregate (excld JLR) Aggregate (incl JLR)
150
17
130
14
110 11
90 8
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-11
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
Source: Bloomberg, MOSL Source: Company, MOSL
Exhibit 7: Revised estimates

EPS (INR) FY17E FY18E
Rev Old Chg (%) Rev Old Chg (%)
Bajaj Auto 133.7 136.2 -1.9 154.8 160.6 -3.6
Hero MotoCorp 172.2 175.2 -1.7 185.1 190.7 -2.9
TVS Motor 11.2 11.9 -5.5 15.2 15.4 -1.6
Maruti * 253.2 252.7 0.2 307.6 313.1 -1.8
M&M * 61.7 60.7 1.7 75.4 75.0 0.6
Tata Motors * # 11.5 13.1 -11.9 29.4 35.8 -17.8
Ashok Leyland 4.2 4.8 -12.2 5.2 6.4 -19.5
Eicher Motors * 615.4 608.7 1.1 854.5 869.5 -1.7
Amara Raja 29.3 29.2 0.2 37.3 37.7 -1.2
Bharat Forge 25.3 25.7 -1.6 37.2 37.5 -0.8
Exide Industries 8.4 8.2 2.0 9.8 9.7 1.2
BOSCH 472.3 489.0 -3.4 667.8 639.6 4.4
* Consolidated Source: Company, MOSL
Volumes ('000 units) EBITDA margins (%) Adj PAT (INR m)

QoQ YoY QoQ QoQ
4QFY17 YoY (%) 4QFY17 4QFY17 YoY (%)
(%) (bp) (bp) (%)
BJAUT 788 -10 -8 20.5 -100 -10 8,419 -11 -9
HMCL 1622 -6 10 16.3 50 -60 7,788 -7 1
TVS Motor 675 2 -6 6.7 30 -60 1,018 -14 -23
MSIL 414 15 7 14.6 -80 -20 18,231 17 5
MM 183 1 -7 11.9 -60 -180 6,219 -5 -21
TTMT (S/A) 149 1 12 3.3 -490 180 -6,816 236 35
TTMT (JLR) 171 6 13 10.7 -550 130 333 41 199
TTMT (Cons) 9.0 -510 140 12,025 -74 363
Ashok Leyland 48 8 45 11.5 -110 130 4,249 -7 129
Eicher (RE) 178 20 3 32.0 240 20 5,467 37 32
Eicher (VECV) 17 11 46 6.4 -160 -50 674 -19 18
Eicher (Consol) 32 240 20 4,638 29 11
Agg. (ex JLR) 4074 -1.9 2.4 12.5 -120 90 43,746 -19.5 11.5
April 2017 58
Exhibit 8: Relative performance Three months (%) Exhibit 9: Relative performance One year (%)
Sensex Index MOSL Automobiles Index
Sensex Index MOSL Automobiles Index
112 130
125
120
106 115
110
105
100 100
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Mar-17
Sep-16
Jan-17
Feb-17
Oct-16
Dec-16
Jan-17
Feb-17
Mar-17
Source: Bloomberg, MOSL Source: Bloomberg, MOSL
Exhibit 10: Comparative valuation

Sector / Companies CMP Reco. EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
(INR) FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Automobiles
Amara Raja Batt. 896 Buy 29.3 37.3 43.4 30.6 24.0 20.7 17.4 14.2 12.1 21.7 22.9 22.0
Ashok Leyland 85 Buy 4.2 5.2 6.6 20.1 16.4 12.9 10.3 8.8 6.9 20.6 22.3 24.9
Bajaj Auto 2,761 Buy 133.7 154.8 174.0 20.7 17.8 15.9 14.5 12.5 10.6 29.5 30.2 30.0
Bharat Forge 1,074 Buy 25.3 37.2 50.6 42.5 28.9 21.2 19.1 15.2 11.7 15.7 20.5 23.7
Bosch 22,905 Neutral 472.3 667.8 764.1 48.5 34.3 30.0 37.5 25.5 21.2 18.2 24.5 23.4
CEAT 1,337 Buy 89.9 107.6 140.6 14.9 12.4 9.5 9.0 7.5 5.8 16.4 16.9 18.9
Endurance Tech. 778 Buy 22.3 29.4 37.4 34.9 26.4 20.8 15.5 12.6 10.3 19.6 21.6 22.9
Eicher Motors 25,677 Buy 615.4 854.5 1047.6 41.7 30.0 24.5 30.2 22.1 17.9 40.7 40.9 36.7
Escorts 538 Buy 23.2 34.1 43.4 23.2 15.8 12.4 20.3 14.0 11.0 12.1 15.9 17.5
Exide Inds. 228 Buy 8.4 9.8 11.9 27.2 23.3 19.2 14.8 12.6 10.1 14.5 15.0 16.0
Hero Motocorp 3,196 Neutral 172.2 185.1 188.3 18.6 17.3 17.0 12.2 11.3 11.1 39.5 36.2 31.9
Mahindra & Mahindra 1,290 Buy 61.7 75.4 89.5 20.9 17.1 14.4 6.0 5.2 4.5 14.5 13.9 14.7
Maruti Suzuki 6,339 Buy 253.2 307.6 374.1 25.0 20.6 16.9 16.0 12.3 9.8 22.4 23.0 23.1
Tata Motors 474 Buy 11.5 29.4 62.0 41.1 16.1 7.6 6.6 5.0 3.0 4.7 11.2 20.4
TVS Motor 450 Buy 11.2 15.2 21.6 40.1 29.7 20.9 24.4 18.6 13.2 25.1 27.8 31.4
Auto Sector Aggregate 28.1 20.1 14.3 11.2 8.8 6.4 14.8 18.1 21.4
April 2017 59
Amara Raja Batteries

Bloomberg AMRJ IN CMP: INR902 TP:INR1,084 (+20%) Buy
Equity Shares (m) 170.8
We expect AMRJs revenue to grow 15% YoY (+1% QoQ) to
M. Cap. (INR b)/(USD b) 153 / 2
INR13.4b. Price hikes of 10% were taken from Nov-16 to Mar-17.
52-Week Range (INR) 1077 / 821
1,6,12 Rel Perf. (%) 2 / -21 / -19
Spot LME lead prices decreased ~4% QoQ in 3QFY17 the impact
is likely to be reflected in 4QFY17.
EBITDA margin is likely to contract ~30bp YoY (+60bp YoY) to 16%.
Financial Snapshot (INR b)
Y/E March 2016 2017E 2018E 2019E
Price increase of 10% in last 5 months to offset the increase in
Sales 46.9 53.4 63.3 73.0
raw material cost.
EBITDA 8.2 8.8 10.6 12.2 We expect PAT to increase ~12% YoY to INR1.2b.
NP 4.9 5.0 6.4 7.4 The stock trades at 24x FY18E and 20.7x FY19E EPS; Maintain Buy.
EPS (INR) 29 29 37 43
EPS Gr. (%) 19.8 2.2 27.3 16.3
BV/Sh. (INR) 123 147 179 215
RoE (%) 25.8 21.7 22.9 22.0
RoCE (%) 24.2 20.6 21.8 21.1 Key issues to watch
Valuations Update on demand environment for OEMs, auto replacement
P/E (x) 31.1 30.4 23.9 20.5 and industrial battery segments.
P/BV (x) 7.2 6.0 5.0 4.1 Outlook for raw material cost trend, recent pricing action and
EV/EBITDA 18.5 17.3 14.1 12.0 currency hedges (if any).
(x)
EV/Sales (x) 3.2 2.8 2.4 2.0 Update on capacity expansion plans across product segments.
Quarterly Performance
Y/E March (INR m) FY16 FY17 FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 11,376 11,511 12,123 11,697 13,208 13,455 13,283 13,448 46,907 53,395
YoY Change (%) 10.5 8.6 13.7 9.7 16.1 16.9 9.6 15.0 11.4 13.8
RM Cost (% of sales) 64.6 64.4 61.8 62.7 66.2 64.3 65.1 65.0 63.2 65.2
Staff Cost (% of sales) 4.9 5.0 5.1 5.3 5.0 5.2 5.4 5.3 4.6 4.7
Other Exp (% of sales) 13.0 13.2 14.2 15.7 11.6 13.5 14.1 13.6 13.3 13.9
EBITDA 1,988 1,999 2,300 1,908 2,273 2,297 2,040 2,156 8,169 8,765
Margins (%) 17.5 17.4 19.0 16.3 17.2 17.1 15.4 16.0 17.4 16.4
Depreciation 328 343 355 372 441 457 469 493 1,399 1,859
Interest 13 13 16 1 14 15 14 16 5 58
Other Income 136 112 114 97 90 120 133 133 457 475
PBT 1,782 1,756 2,043 1,632 1,908 1,945 1,689 1,781 7,222 7,323
Rate (%) 32.1 29.7 33.0 33.5 31.5 29.9 33.7 32.0 32.2 31.7
Adj PAT 1,210 1,234 1,368 1,086 1,307 1,363 1,121 1,211 4,894 5,001
YoY Change (%) 14.2 23.1 33.7 6.2 8.0 10.4 -18.1 11.5 24.8 2.2
E: MOSL Estimates
April 2017 60
Ashok Leyland
Bloomberg AL IN CMP: INR84 TP:INR94 (+12 %) Buy
Volumes grew by 8% YoY (+45% QoQ), as M&HCV and LCV sales
M. Cap. (INR b)/(USD b) 242 / 4
grew 10% and 3% YoY respectively, led by lower than expected
1,6,12 Rel Perf. (%) -7 / -2 / -42
pre buying before BS-IV implementation.
We expect realization to decline by 1.6% YoY (-1.3% QoQ) led by
continuous higher discounts due to lower demand.
Y/E March 2016 2017E 2018E 2019E
Net revenue is likely to grow 6.5% YoY (+43% QoQ), led by growth
Sales 188.2 196.6 217.9 249.2
in volume and decline in realization.
EBITDA 21.7 22.0 24.8 29.9 EBITDA margin is likely to contract 110bp YoY (expand 120bp
NP 11.1 12.0 14.7 18.8 QoQ), driven by higher costs in RM, staff and others YoY.
Adj. EPS (INR) 3.9 4.2 5.2 6.6 EBITDA should decline 3% YoY (+61% QoQ) to ~INR7.3b.
EPS Gr. (%) 375.1 8.3 22.2 27.7 Further, lower other income and higher tax would decline
BV/Sh. (INR) 19.4 21.8 24.5 28.4 adjusted PAT growth by ~7% YoY (+129% QoQ) to INR4.2b.
RoE (%) 20.9 20.6 22.3 24.9 We are reducing EPS estimates of FY18E/FY19E by 19%/20% led
RoCE (%) 12.8 15.0 17.5 20.1 by subdued growth expectations for M&HCV segment in FY18.
Payout (%) 25.6 35.5 38.7 34.1 The stock trades at an EV of 9.7x FY18E and 7.6x FY19E EBITDA.
Valuations Buy.
P/E (x) 21.4 19.8 16.2 12.7
P/BV (x) 4.3 3.8 3.4 2.9
Key issues to watch
EV/EBITDA (x) 11.5 11.1 9.6 7.6 Unsold inventory post ban on sale of BS-III vehicles and impact
Div. Yield (%) 1.2 1.8 2.4 2.7 on financials.
Raw material cost outlook and margin guidance for FY1718.
Capex and investment guidance for FY18.
FY16 FY17E FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Volumes (nos) 28,154 37,369 30,928 43,994 31,163 33,446 32,838 47,621 145,068 32,838
Growth % 41.2 47.3 21.8 28.8 10.7 -10.5 6.2 8.2 3.3 6.2
Realizations (INR '000) 1,379 1,329 1,330 1,354 1,367 1,382 1,349 1,332 1,355 1,386
% change 11.0 4.8 0.5 2.6 -0.9 4.0 1.4 -1.6 0.4 4.9
Net operating revenues 38,831 49,672 41,138 59,553 42,588 46,224 44,309 63,434 196,556 46,272
RM/sales % 68.4 69.7 69.9 71.0 68.7 67.8 70.7 71.3 69.8 68.3
Staff/sales % 8.5 7.6 8.4 5.7 8.4 8.0 8.2 6.1 7.5 7.8
Other exp/sales % 13.0 10.2 10.7 10.7 11.6 12.6 10.9 11.1 11.5 13.0
EBITDA 3,925 6,240 4,493 7,531 4,820 5,365 4,543 7,307 22,035 5,021
EBITDA Margins(%) 10.1 12.6 10.9 12.6 11.3 11.6 10.3 11.5 11.2 10.9
Other Income 78 454 298 320 385 316 235 273 1,210 475
Interest 701 631 603 602 338 339 311 338 1,327 425
PBT before EO Item 1,984 4,754 2,976 6,071 4,154 4,146 2,637 6,026 16,964 3,846
EO Exp/(Inc) 1,570 50 3,793 0 0 0 0 0
Effective Tax Rate (%) 36.3 45.9 27.0 66.2 30.0 29.0 29.5 29.5 29.5 27
Adj. PAT 1,264 2,571 2,174 4,563 2,908 2,944 1,859 4,249 11,959 2,808
Change (%) -364 527 577 93 130 14 -14 -7 1.6 38.1
E: MOSL Estimates
April 2017 61
Bajaj Auto
Bloomberg BJAUT IN CMP: INR2,801 TP:INR3,282 (+17%) Buy
Overall volume declined ~10% YoY (-7.5% QoQ) to 788k units due
M. Cap. (INR b)/(USD b) 799 / 12
to a ~14% YoY decline in domestic volume, while Exports declined
52-Week Range (INR) 3122 / 2350
by ~3% YoY due to the impact of demonetization and transition to
1,6,12 Rel Perf. (%) -6 / -10 / -5
BS-IV from BS-III. Total 2W sales declined by ~7% in 4QFY17, while
3W volumes fell sharply by 28% YoY led by both domestic and
Financial Snapshot (INR b) exports falling by 30% & 25% respectively led by demonetization
Y/E MAR 2016 2017E 2018E 2019E and currency issues in African markets continued.
Sales 225.9 217.8 248.5 282.9 We expect realization to grow by 1.4% YoY (+5% QoQ) led by
EBITDA 47.8 45.2 50.9 58.1 improvement in mix of premium segment motorcycles though
NP 38.1 38.7 44.8 50.4 partly offset by decline in 3Ws segment, as a result net revenues
Adj. EPS (INR) 131.8 133.7 154.8 174.0 are expected to decline by 8% YoY.
EPS Gr. (%) 25.1 1.4 15.9 12.4 EBITDA margin should contract 100bp YoY (-10bp QoQ) to 20.5%
BV/Sh. (INR) 424.8 480.3 545.0 614.6 due to higher commodity prices and staff cost.
RoE (%) 33.2 29.5 30.2 30.0 We expect PAT to decline ~11% YoY (-9% QoQ) to INR8.4b.
RoCE (%) 32.3 28.8 29.4 29.2 We have lowered our total volume estimates by 3.5% and lower
Payout (%) 50.2 58.5 58.2 60.0 USD/INR realization to 67 from 70 in FY18, resulting in EPS cut of
Valuations 4%/5% for FY18E/FY19E respectively.
P/E (x) 21.5 21.2 18.3 16.3 The stock trades at 18.1x FY18E and 16.1x FY19E EPS; maintain Buy.
P/BV (x) 6.7 5.9 5.2 4.6
EV/EBITDA (x) 15.0 15.0 12.9 10.9 Key issues to watch
Div. Yield (%) 1.9 2.3 2.6 3.2 Update on demand of new launches, channel inventory post BS-
III ban; outlook for FY18 based on impact of demonetization.
Outlook for export demand and pricing, especially the Nigerian
market (sharp currency depreciation); outlook for FY18.
Quarterly Performance (INR Million)
FY16 FY17 FY16E FY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Volumes ('000 units) 1,013 1,057 951 872 995 1,032 852 788 3,894 3,666
Growth YoY (%) 2.5 0.1 -3.4 11.5 -1.8 -2.3 -10.5 -9.7 2.2 (5.8)
Realization (INR/unit) 55,273 57,543 58,306 61,467 57,784 58,676 59,495 62,344 58,269 59,412
Growth YoY (%) 4.0 1.9 1.5 1.5 4.5 2.0 2.0 1.4 2.8 2.0
Net Sales 55,993 60,799 55,478 53,627 57,480 60,545 50,669 49,109 226,876 217,802
Change (%) 6.6 2.0 -1.9 13.2 2.7 -0.4 -8.7 -8.4 5.0 -4.0
RM/Sales % 67.4 66.7 66.6 65.9 67.2 67.0 66.8 66.5 66.3 66.9
Staff cost/Sales % 4.3 4.0 4.1 3.8 4.7 4.3 4.8 5.2 4.0 4.7
Oth. Exp./Sales % 8.0 7.7 8.2 8.9 7.7 7.4 7.9 7.8 8.2 7.7
EBITDA 11,402 13,167 11,716 11,534 11,763 12,961 10,439 10,084 48,835 45,247
EBITDA Margins (%) 20.4 21.7 21.1 21.5 20.5 21.4 20.6 20.5 21.5 20.8
Other Income 3,063 2,680 2,425 2,569 2,671 3,420 3,193 2,475 10,736 11,759
Interest 1 3 2 4 2 7 3 -3 11 9
Depreciation 784 780 746 761 775 770 772 778 3,072 3,094
PBT 13,680 15,063 13,392 13,338 13,657 15,605 12,858 11,784 56,488 53,904
Tax 4,106 4,540 3,686 3,844 3,873 4,378 3,612 3,365 17,328 15,228
Effective Tax Rate (%) 30.0 30.1 27.5 28.8 28.4 28.1 28.1 28.6 30.7 28.3
Adj. PAT 9,574 10,524 9,706 9,493 9,784 11,228 9,246 8,419 39,124 38,676
Change (%) 29.4 26.4 12.7 52.7 2.2 6.7 (4.7) (11.3) 28.4 -1.1
April 2017 62
Bharat Forge
Bloomberg BHFC IN CMP: INR1,089 TP: INR1,182 (+9%) Buy
We expect BHFCs shipment tonnage to remain flat YoY to 52,649
M. Cap. (INR b)/(USD b) 250 / 4
tons, which is a an improvement from decline in the previous
1,6,12 Rel Perf. (%) -1 / 10 / 9
quarters as demand for class 8 trucks are showing signs of
improvements along with revival in industrial segments. Net
realization is likely to increase ~7% YoY to ~INR205.1k/ton.
Y/E Mar 2016 2017E 2018E 2019E
As a result net revenue would increase 7% YoY (+14% QoQ) to
76.5 73.8 82.3 95.3
~INR10.8b.
Sales
EBITDA 14.2 13.5 16.5 20.9 EBITDA margin is likely to decline 100bp YoY (+100bp QoQ) to
EPS (INR) 6.6 5.9 8.7 11.8 28.6%.
EPS Gr. (%) 28.1 25.3 37.2 50.6 PAT is likely to decline slightly ~2% YoY (+26% QoQ) to INR1.6b.
BV/Sh. (INR) -10.9 -10.2 47.2 36.2 We have increased our revenue estimate by 4% with better
RoE (%) 153.6 169.2 194.4 233.0 outlook on US class 8 truck market and Oil and Gas rebound,
RoCE (%) 18.7 15.7 20.5 23.7 resulting in EPS increase of 8% for FY19E.
Valuations 12.5 10.8 14.7 18.0 The stock trades at 28x FY18E and 20.6x FY19E EPS; maintain Buy.
P/E (x)
P/BV (x) 37.9 42.2 28.7 21.1
Key issues to watch
EV/EBITDA (x) 6.9 6.3 5.5 4.6
Outlook for US Class 8 Trucks for CY17.
EV/Sales (x) 18.9 19.6 15.6 12.0
Outlook for oil & gas and mining segments, primarily with
Consolidated
regard to price recovery.
Update on ramp-up of new orders under commercial vehicles,
PVs, aerospace and rail.
Quarterly performance (INRMillion)

FY16 FY17 FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Tonnage 51,984 54,559 50,741 52,413 49,098 46,203 47,068 52,649 209,697 195,018
Change (%) 5.8 3.8 -4.8 -7.5 -5.6 -15.3 -7.2 0.5 -0.9 -7.0
Realization (INR '000/ton) 219.1 206.0 208.9 192.3 184.2 192.8 200.5 205.1 205.3 195.8
Change (%) 8.9 -4.9 -7.0 -10.9 -15.9 -6.4 -4.0 6.6 -4.4 -4.6
Net operating income 11,388 11,239 10,598 10,080 9,044 8,909 9,437 10,798 43,054 38,188
Change (%) 15.3 -1.3 -11.5 -17.6 -20.6 -20.7 -11.0 7.1 -11.3
RM/Sales (%) 34.1 36.0 32.9 35.9 34.4 34.4 32.6 34.6 35.5 34.0
Staff Cost (% of Sales) 8.2 8.3 9.0 9.2 10.1 10.1 9.6 9.6 8.6 9.9
Other Exp. (% of Sales) 26.4 27.2 27.1 25.3 28.5 27.6 30.2 27.2 26.1 28.3
EBITDA 3,566 3,204 3,283 2,982 2,444 2,477 2,606 3,091 12,830 10,618
EBITDA Margins (%) 31.3 28.5 31.0 29.6 27.0 27.8 27.6 28.6 29.8 27.8
Non-Operating Income 299 282 251 225 256 309 208 240 999 1,013
Interest 213 222 226 202 170 189 183 174 863 716
Depreciation 749 714 812 644 740 726 739 784 2,614 2,988
PBT 2,904 2,550 2,454 2,361 1,791 1,870 1,892 2,373 10,310 7,926
Adj. PAT 1,960 1,723 1,666 1,645 1,221 1,269 1,286 1,614 7,039 5,390
Change (%) 35.2 -2.9 -15.2 -18.9 -37.7 -26.3 -22.8 -1.9 -117.6 -23.4
April 2017 63
Bosch
Bloomberg BOS IN CMP: INR22,843 TP: INR22,924 (+0.4%) Neutral
Net revenue is likely to grow ~13% YoY (+4.4% QoQ) to INR27.9b
M. Cap. (INR b)/(USD b) 719 / 11
led by pre buying sales before implementation of BS-IV in
52-Week Range (INR) 25650 / 18005
1,6,12 Rel Perf. (%) 4 / -6 / -5
commercial vehicle and higher PV sales.
EBITDA margin is expected to remain flat YoY, led by lower gross
margin due to higher trading content and higher commodity
Y/E Mar FY16 FY17E FY18E FY19E
prices.
Sales 96.6 105.9 129.6 145.9
EBITDA is projected to grow 13% YoY to ~INR6.2b.
EBITDA 18.2 18.1 26.0 30.8 Adjusted PAT is likely to decline 9% YoY to INR4.3b on lower other
NP 15.2 14.4 20.4 23.3 income and higher depreciation.
EPS (INR) 483.3 472.3 667.8 764.1 We have slightly increased our EPS estimate by 4% for FY19. We
EPS Gr. (%) 11.8 -2.3 41.4 14.4 maintain our neutral outlook led by CV cycle reversal in FY18.
BV/Sh. (INR) 2,639.8 2,477.2 2,978.1 3,551.2 The stock trades at 34.1x FY18E and 29.8x FY19E EPS; maintain
RoE (%) 19.4 18.2 24.5 23.4 Neutral.
RoCE (%) 26.5 25.6 34.0 32.1
Valuations Key issues to watch
P/E (x) 47.1 48.2 34.1 29.8 Rollout of BS-IV emission norms and implication on Boschs
P/BV (x) 8.6 9.2 7.6 6.4 revenue.
EV/EBITDA(x) 38.3 36.6 24.9 20.7 Implementation of BS-VI norms for 2-wheelers and underlying
EV/Sales (x) 7.2 6.2 5.0 4.4
opportunity for Bosch.
Consolidated Advancement of BS-VI implementation and its impact on Bosch.
Capex plans for BS VI norms.
Quaterly Performance (INR Million)

Y/E March FY16 FY17 FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 23,012 23,814 24,800 24,672 25,196 26,115 26,720 27,895 96,558 105,926
YoY Change (%) -3.2 -6.8 4.1 3.3 9.5 9.7 7.7 13.1 -0.6 9.7
RM Cost (% of sales) 52.0 50.9 52.6 50.7 51.8 50.5 54.7 51.1 51.5 51.8
Other Expenses (% of sales) 14.6 16.8 20.2 13.1 17.4 18.2 20.8 14.1 16.2 17.4
EBITDA 4,827 4,326 3,535 5,507 4,511 4,694 2,667 6,219 18,177 18,091
Margins (%) 21.0 18.2 14.3 22.3 17.9 18.0 10.0 22.3 18.8 17.1
Depreciation 704 782 1,059 1,177 860 889 1,294 1,382 3,722 4,424
Interest 15 32 42 14 13 10 17 22 99 61
Other Income 1,408 1,872 1,417 1,779 1,789 2,107 1,634 1,312 6,488 6,843
PBT after EO Expense 5,516 5,384 3,850 6,096 5,428 8,710 2,991 6,128 21,035 23,256
Tax 1,740 1,567 1,042 1,375 1,679 1,673 843 1,838 5,721 6,032
Tax Rate (%) 31.5 29.1 27.1 22.6 30.9 19.2 28.2 30.0 27.2 25.9
Reported PAT 3,777 3,817 2,808 4,720 3,749 7,037 2,148 4,290 15,315 17,224
Adj PAT 3,777 3,817 2,808 4,720 3,749 4,768 2,148 4,290 15,176 15,144
YoY Change (%) 23.1 24.6 116.4 64.2 -0.7 24.9 -23.5 -9.1 11.8 -0.2
April 2017 64
Ceat Ltd
Bloomberg CEAT IN CMP: INR1,381 TP: INR1,406 (+2%) Buy
We expect revenue to grow 2% YoY (QoQ up 6%) to INR16.5b in
M. Cap. (INR b)/(USD b) 54 / 1
4QFY17. Revenue growth will be subdued on account of volumes
1,6,12 Rel Perf. (%) 11 / -10 / 7
decline in Truck and Bus segment, and a fall in realizations.
Margins are likely to contract 230bp YoY to 9% on account of
volatility in raw material prices. EBITDA is expected to decline
Financial Snapshot (INR Billion)
Y/E March 2016 2017E 2018E 2019E
19% YoY to INR1,488m.
Sales 63.8 64.5 71.1 79.1
Thus, we estimate adjusted PAT at INR777m, as against PAT of
EBITDA 8.2 6.7 7.8 9.5 INR1,047m in 4QFY16. Buy.
NP 4.5 3.6 4.4 5.7
EPS (INR) 112.3 89.9 107.6 140.6
Key issues to watch for
EPS Gr. (%) 63.5 -20.0 19.8 30.6
Update on capex plans.
BV/Sh(INR) 510.4 588.6 682.0 804.0
Price increase to counter higher raw material costs.
RoE (%) 12.3 15.4 12.8 9.8
Impact of demonetization and Chinese import of tyres.
RoCE (%) 2.7 2.3 2.0 1.7
Valuations
P/E (x) 12.3 15.4 12.8 9.8
EV/EBITDA (x) 7.5 9.3 7.7 6.0
EV/Sales (x) 1.0 1.0 0.9 0.7
Consolidated - Quarterly Earning Model (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 15,798 15,191 15,403 16,289 16,462 15,966 15,572 16,533 62,681 64,533
YoY Change (%) -1.7 -3.9 -0.7 -0.3 4.2 5.1 1.1 1.5 -1.7 3.0
Total Expenditure 13,644 13,358 13,383 14,443 14,608 14,113 14,037 15,045 54,828 57,803
EBITDA 2,154 1,833 2,020 1,846 1,854 1,854 1,535 1,488 7,853 6,731
Margins (%) 13.6 12.1 13.1 11.3 11.3 11.6 9.9 9.0 12.5 10.4
Depreciation 235 228 277 308 302 317 351 360 1,048 1,331
Interest 264 223 193 238 252 162 191 192 919 797
Other Income 81 77 60 74 57 37 57 60 292 210
PBT before EO expense 1,736 1,459 1,610 1,373 1,356 1,411 1,050 996 6,178 4,813
Extra-Ord expense 0 11 0 0 9 0 0 0 11 9
PBT 1,736 1,448 1,610 1,373 1,347 1,411 1,050 996 6,168 4,805
Tax 610 486 478 334 417 430 262 309 1,908 1,418
Rate (%) 35.1 33.6 29.7 24.3 30.9 30.5 25.0 31.0 30.9 29.5
Minority Interest & Profit/
-91 -91 -2 -8 -110 -88 -50 -90 -191 -338
Loss of Asso. Cos.
Reported PAT 1,218 1,053 1,134 1,047 1,041 1,069 838 777 4,451 3,725
Adj PAT 1,218 1,060 1,134 1,047 1,047 1,069 838 777 4,458 3,731
YoY Change (%) 135.6 28.7 27.0 11.5 -14.0 0.9 -26.1 -25.8 40.6 -16.3
Margins (%) 7.7 7.0 7.4 6.4 6.4 6.7 5.4 4.7 7.1 5.8
E: MOSL Estimates
Niket Shah (Niket.Shah@MotilalOswal.com)

Chintan Modi (Chintan.Modi@MotilalOswal.com)
April 2017 65
Eicher Motors
Bloomberg EIM IN CMP: INR25,450 TP: INR28,811 (+13%) Buy
Royal Enfields volumes grew by 20% YoY (+2.5% QoQ) to 173,838
M. Cap. (INR b)/(USD b) 697 / 11
units, insulated by demonetization as it has an average waiting
52-Week Range (INR) 26602 / 18006
1,6,12 Rel Perf. (%) 7 / -8 / 17
period of 2-3 months. Net realization is expected to improve by
1.8% YoY (+0.6 QoQ), supported by price hikes. EBITDA margin
Financial Snapshot (INR b) should expand 240bp YoY to 32% (+50bp QoQ), driven by
FY16 operating leverage.
Y/E Dec FY17E FY18E FY19E
(15m)
Net Income 61.7 70.4 90.5 107.3 VECVs volume increased by ~11% YoY (+46.2% QoQ) due to pre
EBITDA 16.9 22.2 29.6 35.8 buying before BS-IV implementation. Net realization should
Net Profit 13.4 16.7 23.2 28.5 increase by 5% YoY (-6% QoQ) led by favorable mix. Margin is
Adj. EPS (INR) 492.9 615.4 854.5 1,047.6 expected to be at 6.4%, down 160bp YoY (-50bp QoQ).
EPS Gr. (%) 73.7 56.1 38.9 22.6 Consolidated revenue would increase 24% YoY (+3.5% QoQ) to
BV/Sh. (INR) 1,276 1,751 2,430 3,272 INR19b. Consolidated margin is likely to be 33%. Consolidated PAT
RoE (%) 35.8 40.7 40.9 36.7 is estimated to rise 29% YoY (+11% QoQ) to INR4.6b.
RoCE (%) 21.3 27.6 31.0 29.7 The stock trades at 30x FY18E and 24.5x CY18E EPS. Maintain Buy.
Payout (%) 0.4 0.5 0.6 0.7
P/E (x) 52.3 41.9 30.2 24.6
Demand for RE at the retail level to access the impact post BS-III
P/BV (x) 20.2 14.7 10.6 7.9
ban and demonetization on order book.
EV/EBITDA (x) 32.5 26.3 19.8 15.9
Update on current demand trends for commercial vehicles,
Div. Yield (%) 0.4 0.5 0.6 0.7
discount levels and channel inventory post BS-III ban.
Quarterly performance (Consolidated)

FY16 (15m) FY17 FY16 FY17E
Y/E March 1Q 2Q 3Q 4Q * 5Q 1Q 2Q 3Q 4QE (15m)
Net Operating income 25,680 10,959 12,997 12,843 15,322 15,557 17,549 18,348 18,992 61,735 70,445
Growth (%) 33.5 -51.2 -42.9 -44.0 -40.3 42.0 35.0 42.9 24.0 -47.2 42.6
EBITDA 3,660 2,857 3,507 3,577 4,521 4,700 5,422 5,770 6,312 16,897 23,471
EBITDA Margins (%) 14.3 26.1 27.0 27.9 29.5 30.2 30.9 31.4 33.2 27.4 33.3
Recurring PAT 1,953 2,372 2,846 2,787 3,599 3,763 4,132 4,182 4,638 13,375 17,982
Growth (%) 40.3 50.7 72.4 81.3 84.3 58.6 45.2 50.0 28.9 -41.9 68.1
Standalone (Royal Enfield)
Royal Enfield (units) 92,021 106,613 127,611 125,744 148,186 147,483 166,941 173,838 178,228 600,175 666,490
Growth (%) 44.4 43.8 55.7 52.9 61.0 38.3 30.8 38.2 20.3 58.7 38.8
Net Realn (INR/unit) 104,450 102,791 101,852 102,139 104,258 105,603 105,576 105,477 106,100 103,073 105,696
Change - YoY (%) 4.7 2.1 1.7 1.4 -0.2 2.7 3.7 3.3 1.8 2.9 2.5
EBITDA Margins (%) 26.1 26.1 27.2 28.3 29.6 30.8 31.3 31.8 32.0 27.6 31.5
Recurring PAT 2,135 1,988 2,569 2,524 3,977 3,371 3,962 4,152 5,467 13,100 16,952
Growth (%) 32.9 49.2 82.2 103.4 86.3 69.6 54.2 64.5 37.5 288.7 61.8
VECV (derived)
Total CV Volumes 11,020 12,128 11,657 12,687 15,553 16,071 13,408 11,784 17,230 63,045 58,493
Growth (%) 10.4 6.3 20.8 30.1 41.1 32.5 15.0 -7.1 10.8 23.7 16.0
Net Realn (INR '000/unit) 1,458.1 1,472.0 1,529.1 1,569.3 1,427.3 1,331.3 1,470.5 1,599.6 1,497.8 1,526.5 1,466.3
Change - YoY (%) 13.0 12.0 1.5 4.4 -2.1 -9.6 -3.8 1.9 4.9 8.1 -3.9
EBITDA Margins (%) 7.1 8.2 8.0 8.5 8.0 9.1 7.2 6.9 6.4 7.9 7.4
Recurring PAT 436 768 677 890 830 1,082 657 570 674 3,817 2,983
Growth (%) 20.0 69.5 50.3 56.4 90.3 40.9 -3.0 -36.0 -18.7 -40.6 -2.3
E: MOSL Estimates; * Non-IndAS based
April 2017 66
Escorts
Bloomberg ESC IN CMP: INR538 TP: INR608(+13%) Buy
We expect 22% YoY growth in revenue to INR9.8b, led by strong
performance in the tractor division. Construction equipment
1,6,12 Rel Perf. (%) 6 / 27 / 258
division is also expected to perform well along with railways.
EBITDA margin is likely to improve 350bp YoY to 8.3%, translating
into EBITDA growth of 110% YoY to INR815m.
Y/E March 2016 2017E 2018E 2019E
We expect PAT to grow 69% YoY to INR513m. Buy.
Sales 35.4 41.8 47.5 52.5
EBITDA 1.5 3.2 4.5 5.4
NP 0.9 1.9 2.8 3.6
Adj EPS (INR) 11.1 23.2 34.1 43.4
EPS Gr. (%) -16.7 108.9 46.9 27.3
Tractor business outlook for FY18.
BV/Sh. (INR) 184.1 199.9 229.2 266.6
Updates on VRS planned.
RoE (%) 6.1 12.1 15.9 17.5
Outlook for construction equipment business.
RoCE (%) 7.4 10.8 15.4 17.5
Valuations
P/E (x) 47.8 22.9 15.6 12.2
P/BV (x) 2.9 2.7 2.3 2.0
EV/EBITDA (x) 42.2 18.7 12.9 10.1
EV/Sales (x) 1.7 1.4 1.2 1.0
Standalone Quarterly Performance (INR Million)

Y/E March FY16 FY17E FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 9,614 8,180 8,913 8,047 10,514 9,953 10,929 9,818 34,756 41,214
YoY Change (%) -14.8 -17.6 -14.8 -1.6 9.4 21.7 22.6 22.0 -12.8 18.6
EBITDA 576 260 409 388 878 625 915 815 1,634 3,232
Margins (%) 6.0 3.2 4.6 4.8 8.3 6.3 8.4 8.3 4.7 7.8
Depreciation 161 155 142 137 145 163 167 170 594 645
Interest 158 133 103 152 112 96 49 55 546 313
Other Income 118 138 136 187 104 71 79 85 579 339
PBT before EO expense 374 110 301 287 725 437 777 675 1,073 2,614
PBT 374 99 300 155 662 398 448 635 929 2,143
Tax 22 1 42 -9 192 85 221 152 57 651
Rate (%) 6.0 1.5 14.1 -5.7 29.1 21.4 29.2 24.0 6.2 30.4
Reported PAT 352 98 258 164 470 313 227 483 872 1,492
Adj PAT 352 109 259 303 514 343 550 513 1,007 1,820
YoY Change (%) 3.1 -238.3 -27.5 137.7 46.2 215.9 112.5 69.3 34.7 80.8
Margins (%) 3.7 1.3 2.9 3.8 4.9 3.4 5.0 5.2 2.9 4.4
E: MOSL Estimates

April 2017 67
Exide Industries
Bloomberg EXID IN CMP: INR230 TP:INR270 (+17%) Buy
We expect net revenue to grow 13% YoY (+15% QoQ) to INR19.9b
M. Cap. (INR b)/(USD b) 194 / 3
as better replacement demand recovery post demonetization and
1,6,12 Rel Perf. (%) 4 / 11 / 49
higher OEM demand too.
EBITDA margin is likely to remain flat YoY (+180bp QoQ) to 15.1%
as replacement price has been increased by 10% from Nov 16 to
Y/E MARCH 2016 2017E 2018E 2019E
Mar 17 due to increase in Lead prices.
Net Sales 68.4 76.5 86.3 98.8 Lead prices have gone down by ~4% QoQ in 3QFY17, the effect of
EBITDA 10.3 11.4 13.1 15.4 which will be reflected in 4Q raw material costs.
Adj. PAT 6.3 7.1 8.3 10.1 EBITDA is estimated to increase 13.5% YoY (+31% QoQ) to
Adj. EPS (INR) 7.4 8.4 9.8 11.9 ~INR3b.
EPS Gr. (%) 14.8 13.9 16.7 21.5 PAT is likely to increase by 4% YoY (+22% QoQ) to INR1.9b led by
BV/Sh. (INR) 52.2 58.0 65.2 74.6 lower other income, higher depreciation and higher tax rate.
RoE (%) 14.1 14.5 15.0 16.0 The stock trades at 23.3x FY18E and 19.2x FY19E EPS; We have
RoCE (%) 14.6 15.0 15.7 16.8 increased the multiple to 20x from 18x reducing discount to 20%
Payout (%) 32.5 26.2 22.4 18.5 to Amara Raja lead by corrective actions taken by management
Valuations and maintain Buy.
P/E (x) 30.5 26.8 22.9 18.9
Key issues to watch
P/BV (x) 4.3 3.9 3.4 3.0
Update on demand environment for OEMs, auto replacement
EV/EBITDA (x) 16.1 14.5 12.4 9.9
and industrial battery segments post demonetization.
Div. Yield (%) 1.1 1.0 1.0 1.0
Update on market share in autos and non-autos.
Outlook for raw material cost trend, recent pricing action and
currency hedges, if any.
Update on technological upgradation.
Update on capacity expansion plans across product segments.
S/A Quarterly Performance

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 18,064 17,442 15,327 17,605 20,081 19,233 17,253 19,913 68,437 76,480
Growth YoY (%) -5.4 -0.9 -1.5 7.0 11.2 10.3 12.6 13.1 -0.3 11.8
RM(%) 64.2 62.2 59.7 61.0 62.4 61.1 60.0 60.7 61.8 61.1
Employee cost (%) 6.1 6.7 7.6 7.0 6.4 6.8 7.4 6.7 6.8 6.8
Other Exp(%) 15.1 16.5 17.1 17.0 15.5 16.9 19.3 17.5 16.4 17.2
EBITDA 2,655 2,553 2,392 2,652 3,150 2,927 2,296 3,009 10,251 11,382
EBITDA Margin(%) 14.7 14.6 15.6 15.0 15.7 15.2 13.3 15.1 14.9 14.8
Change (%) -8.8 22.9 32.7 11.3 18.6 14.7 -4.0 13.5 12.2 11.0
Non-Operating Income 31 84 75 226 143 190 350 155 416 839
Interest 2 0 1 0 17 6 46 -39 3 30
Depreciation 362 378 400 439 491 506 522 543 1,579 2,061
PBT after EO Exp 2,322 2,259 2,065 2,439 2,784 2,606 2,079 2,661 9,085 10,129
Adj. PAT 1,557 1,551 1,385 1,776 1,961 1,813 1,515 1,853 6,269 7,141
Change (%) -16.0 23.3 42.4 29.1 25.9 16.9 9.4 4.3 14.8 13.9
E: MOSL Estimates
April 2017 68
Hero MotoCorp
Bloomberg HMCL IN CMP: INR3,201 TP:INR3,390 (+6%) Neutral
Sales volume declined ~6% YoY (+10% QoQ) to 1.62m units, led by
M. Cap. (INR b)/(USD b) 638 / 10
gradual recovery post demonetization impact derailed November
52-Week Range (INR) 3740 / 2829
1,6,12 Rel Perf. (%) -6 / -15 / -12
and December sales volumes. Also due to higher inventory at
dealer level of BS-III vehicle post ban by apex court, the focus was
to clear the inventory at dealer level. The retail sale for March
Y/E March 2016 2017E 2018E 2019E
2017 was 15% higher than wholesale for the month.
Sales 284.4 284.0 309.7 333.5
Realization should decline by 3% YoY (-2% QoQ) to
EBITDA 44.6 48.0 50.9 50.7 INR42,198/unit.
NP 31.6 34.4 37.0 37.6 Net revenue is likely to decline 9% YoY (+8% QoQ) to INR68.4b.
Adj. EPS (INR) 158 172 185 188 EBITDA margin is expected to increase by 40bp YoY (-130bp QoQ)
EPS Gr. (%) 26.6 8.8 7.5 1.7 to 16.3% led by benefits of cost reduction initiatives.
BV/Sh. (INR) 398 474 550 630 EBITDA is likely to decline 6% YoY (+4% QoQ) to ~INR11.2b.
RoE (%) 43.6 39.5 36.2 31.9 We expect PAT to decline 7% YoY (+1% QoQ) to INR7.8b.
RoCE (%) 42.9 38.6 35.4 31.3 We have reduced EPS estimate for FY18E/FY19E by 3%/5.5% and
Payout (%) 52.3 53.4 55.9 55.0 at the same time increased the multiple from 16x to 18x. The
Valuations stock trades at 17.3x FY18E and 17x FY19E EPS; maintain Neutral.
P/E (x) 20.3 18.7 17.4 17.1 Key issues to watch
P/BV (x) 8.1 6.8 5.8 5.1 Update on demand environment (especially rural areas) at the
EV/EBITDA (x) 13.4 12.2 11.3 11.2
retail level, channel inventory to access the impact of
Div. Yield (%) 2.2 2.5 2.8 2.8
demonetization.
Guidance on export plans and new launches along with
timelines.
Update on cost saving initiatives.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Total Volumes ('000 nos) 1,646 1,575 1,690 1,722 1,745 1,823 1,473 1,622 6,632 6,664
Growth YoY (%) -4.1 -7.0 2.5 9.3 6.1 15.8 -12.8 -5.8 0.0 0.5
Net Realization 41,960 43,237 42,738 43,595 42,391 42,755 43,202 42,198 42,886 42,623
Growth YoY (%) 2.3 5.8 3.0 1.1 1.0 -1.1 1.1 -3.2 3.1 -0.6
Net Op Revenues 69,048 68,093 72,235 75,052 73,989 77,963 63,646 68,437 284,427 284,035
Change (%) -1.9 -1.5 5.6 10.5 7.2 14.5 -11.9 -8.8 3.1 -0.1
RM Cost (% sales) 69.7 68.5 67.6 66.0 67.1 66.5 64.9 65.3 67.9 66.0
Staff Cost (% sales) 4.5 4.5 4.7 4.7 4.5 4.6 5.9 5.6 4.6 5.1
Other Exp (% sales) 10.7 10.9 12.0 13.4 11.7 11.4 12.3 12.8 11.8 12.0
EBITDA 10,420 10,956 11,308 11,919 12,301 13,689 10,797 11,182 44,603 47,969
EBITDA Margins (%) 15.1 16.1 15.7 15.9 16.6 17.6 17.0 16.3 15.7 16.9
Other Income 1,044 1,115 902 1,168 1,204 1,524 1,319 1,113 4,229 5,160
Interest 12 12 12 12 15 16 15 14 49 60
Depreciation 1,030 1,091 1,139 1,155 1,152 1,193 1,249 1,294 4,414 4,888
PBT 10,422 10,968 11,058 11,920 12,337 14,004 10,853 10,987 44,369 48,181
Adj. PAT 7,475 7,861 7,932 8,347 8,831 10,042 7,720 7,788 31,615 34,382
Growth (%) 32.8 3.0 36.1 32.2 18.1 27.7 -2.7 -6.7 24.4 8.8
E: MOSL Estimates
April 2017 69
Mahindra & Mahindra

Bloomberg MM IN CMP: INR1,288 TP:INR1,573 (+22%) Buy
Overall volumes were up ~1% YoY (-7% QoQ), as a 16% YoY
M. Cap. (INR b)/(USD b) 801 / 12
growth in tractors was offset by 4% YoY decline in the automotive
52-Week Range (INR) 1509 / 1142
1,6,12 Rel Perf. (%) -6 / -14 / -14
segment. UVs (incl pick-ups) declined by 1% due to competition
and benign rural growth.
Financial Snapshot (INR b) MM (including MVML)s realization is expected to decline by ~1%
Y/E March 2016 2017E 2018E 2019E YoY (+4% QoQ), as better product mix due to increase in share of
Sales 408.8 433.7 493.7 564.1 tractors is offset by increase in lower ASP compact UVs.
EBITDA 45.9 48.7 54.6 64.4 As a result revenue is likely to remain flat YoY (-4% QoQ) to
NP (incl. MVML) 32.9 35.6 39.2 45.5 ~INR101.7b.
Adj. EPS (INR) * 55.0 59.5 65.5 76.0 EBITDA margin should decline by 60bpYoY (-180bp QoQ) to
EPS Gr. (%) 4.2 8.1 10.2 16.0
11.9%.
Cons. EPS (INR) 53.6 61.7 75.4 89.5
PAT is projected to decline ~5% YoY (-21% QoQ) to INR6.2b.
BV/Share (INR) 366.3 406.8 445.8 494.8
The stock trades at 19.7x FY18E and 17x FY19E EPS; Maintain Buy.
RoE (%) 15.4 14.5 13.9 14.7
RoCE (%) 12.6 12.1 11.8 12.7
Key issues to watch
Payout (%) 26.3 35.1 39.4 33.7
Valuations
Outlook for UV and tractor businesses for FY18.
P/E (x) 23.2 21.5 19.5 16.8 Product pipeline for FY18.
Cons. P/E (x) 23.8 20.7 16.9 14.3 Update on smaller businesses like two-wheelers, commercial
P/BV (x) 3.5 3.1 2.9 2.6 vehicles, Ssangyong, etc.
EV/EBITDA (x) 16.3 15.3 13.5 11.3
Div. Yield (%) 1.2 1.4 1.6 1.6
* incl. MVML
Quarterly Performance (incl MVML)
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Volumes (nos) 171,925 158,601 193,763 182,093 192,170 185,156 197,565 183,285 707,689 769,617
Growth YoY (%) -8.1 -10.3 11.9 12.6 11.8 16.7 2.0 0.7 1.3 8.8
Net Realization 549,491 554,969 540,062 557,967 547,674 549,363 535,865 554,897 549,064 538,627
Growth YoY (%) 4.8 8.5 1.0 -1.1 -0.3 -1.0 -0.8 -0.6 3.8 -1.9
Net Op. Income 94,471 88,019 104,644 101,602 105,247 101,718 105,868 101,704 388,566 414,537
Growth YoY (%) -3.8 -2.7 13.0 11.4 11.4 15.6 1.2 0.1 5.1 6.7
RM Cost (% of sales) 68.0 67.8 68.4 68.7 68.4 67.1 68.6 69.1 68.2 68.3
Staff (% of sales) 7.0 7.3 6.7 5.6 6.8 7.1 7.2 7.1 6.6 7.1
Oth. Exp. (% of Sales) 10.8 11.9 11.1 13.2 10.7 11.3 10.6 11.2 11.8 11.1
Total Cost 81,021 76,574 90,129 88,908 90,361 87,036 91,374 89,609 336,579 358,380
EBITDA 13,450 11,445 14,515 12,694 14,885 14,682 14,495 12,095 51,988 56,157
EBITDA Margins (%) 14.2 13.0 13.9 12.5 14.1 14.4 13.7 11.9 13.4 13.5
Other income 1,109 4,867 911 1,022 1,296 6,879 921 1,008 7,910 10,103
Interest 562 625 636 507 428 464 591 595 2,329 2,078
Depreciation 2,544 2,711 3,211 4,018 3,484 3,701 3,753 3,857 12,484 14,796
PBT 11,454 12,975 11,580 9,252 13,179 17,397 11,236 8,650 45,144 50,462
Reported PAT 8,299 9,730 8,494 6,572 9,616 12,529 8,011 6,219 32,978 36,374
Adj PAT 8,299 9,730 8,494 6,529 8,952 12,529 7,893 6,219 32,935 35,599
Change (%) -7.4 -0.1 19.2 16.9 7.9 28.8 -7.1 -4.8 4.2 8.1
E: MOSL Estimates
April 2017 70
Maruti Suzuki
Bloomberg MSIL IN
CMP: INR6,285 TP:INR7,299 (+16%) Buy
Volume grew by ~15% YoY (+7% QoQ) in 4QFY17 to ~414,439
M. Cap. (INR b)/(USD b) 1915 / 29
52-Week Range (INR) 6356 / 3419
units, led by continuous better performance from Baleno and
1,6,12 Rel Perf. (%) 4 / 5 / 58 Brezza, with ongoing high waiting period.
Net realization is likely to improve 6% YoY (+3.3% QoQ) to
INR449,769 per unit, boosting net revenue by ~22% YoY (+10.5%
Y/E MARCH 2016 2017E 2018E 2019E QoQ) to INR186.4b. Growth in realization is likely to be driven by
Sales 576.5 682.7 816.1 945.3 improvement in product mix due to compact UV, Vitarra Brezza,
EBITDA 89.0 104.6 130.7 156.0 and premium hatchback, Baleno.
Adj. PAT 53.7 74.5 91.2 111.2 We expect margin to decline 80 bp YoY (-20bp QoQ) to 14.6% led
Con.adj.EPSINR 155.5 253.2 307.6 374.1 by impact of commissioning of Gujarat plant and higher fixed cost
EPS Gr. (%) 23.4 62.8 21.5 21.6 due to same. Higher commodity prices are likely to be offset by
BV/Sh. (INR) 894.0 1,083 1,313 1,597 hike in prices.
RoE (%) 19.9 22.4 23.0 23.1 EBITDA is estimated to grow by 15% YoY (+9% QoQ) at INR27.2b.
RoCE (%) 27.2 30.7 30.9 30.5 We expect PAT to grow ~17% YoY (+5% QoQ) to INR18.2b led by
Payout (%) 23.7 22.2 23.9 22.9 pre- operative expenses of Gujarat plant taken as extraordinary
Valuations item and lower other income due to higher yield.
P/E (x) 40.3 24.7 20.4 16.7 The stock trades at 16.8x FY18E and 14.7x FY19E EPS. Maintain
P/CE (x) 25.2 18.5 15.4 12.9
Buy.
EV/EBITDA (x) 19.3 16.0 12.2 9.7
Key issues to watch
Div. Yield (%) 0.6 0.7 1.0 1.1
Update on demand scenario, channel inventory, discounting
*Consol. & adjusted
trends and new launches.
Gujarat plant product pipeline.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Volumes (nos) 341,329 353,335 374,182 360,354 348,443 418,470 387,251 414,439 1,429,200 1,568,603
Change (%) 13.8 9.8 15.5 3.9 2.1 18.4 3.5 15.0 10.6 9.8
Realizations (INR/car) 391,907 392,013 401,227 425,002 428,202 426,382 435,500 449,769 403,394 435,217
Change (%) 2.8 2.5 3.1 8.1 9.3 8.8 8.5 5.8 4.3 7.9
Net operating revenues 133,769 138,512 150,132 153,151 149,204 178,428 168,648 186,402 576,530 682,682
Change (%) 17.1 12.5 19.1 12.4 11.5 28.8 12.3 21.7 15.4 18.4
RM Cost (% of sales) 67.4 66.9 68.6 65.9 67.9 67.7 69.2 68.8 67.4 68.4
Other Cost (% of sales) 12.9 13.9 13.8 14.7 13.4 12.4 12.4 12.9 13.8 12.7
EBITDA 21,673 22,457 21,452 23,594 22,157 30,374 24,890 27,209 88,962 104,630
EBITDA Margins (%) 16.2 16.2 14.3 15.4 14.9 17.0 14.8 14.6 15.4 15.3
Non-Operating Income 2,065 4,736 2,425 5,384 4,833 8,126 5,919 5,080 14,610 23,958
Interest 190 178 244 203 181 197 290 207 815 875
Depreciation 6,716 6,694 7,221 7,608 6,389 6,300 6,349 6,929 28,239 25,967
PBT 16,832 20,321 16,412 21,167 20,420 32,003 24,170 23,669 74,518 100,262
Adjusted PAT 12,081 14,973 11,830 15,602 14,862 23,980 17,445 18,231 53,654 74,529
Change (%) 58.5 73.6 42.7 21.5 23.0 60.2 47.5 16.8 44.6 38.9
E:MOSL Estimates
April 2017 71
Tata Motors
Bloomberg TTMT IN CMP: INR473 TP:INR609 (+29%) Buy
We expect JLRs (incl JV) volume to be ~6% YoY (+13% QoQ) led by
M. Cap. (INR b)/(USD b) 1608 / 25
phasing out of Discovery volume. Net realization should increase
by ~14% YoY (flat QoQ) led by ramp up of F-Pace and increase in
1,6,12 Rel Perf. (%) -1 / -21 / 7
share of China. EBITDA margin would decline 550bp YoY (+140bp
QoQ) to 10.7% led by GBP650m of forex hedge loss estimated for
Financial Snapshot (INR b) the quarter along with phasing out cost of Discovery. Adjusted
Y/E March 2016 2017E 2018E 2019E PAT likely to decline ~41% YoY (+200% QoQ) to GBP333m.
Net Sales 2,756 2,783 3,066 3,812 S/A volume grew 1.2% YoY (+12% QoQ), led by a 23% rise in PVs
EBITDA 402.4 295.8 406.5 582.5 due to Tiago and newly launched Hexa while CVs declined by ~5%
NP 125.2 39.1 100.0 210.4 due to lower than expected pre buying of BS-III vehicles. Margin
Adj. EPS (INR) 36.9 11.5 29.4 62.0 likely to decline 480bp YoY (+180bp QoQ) to 3.3%, as the share of
EPS Gr. (%) -15.5 -68.8 155.6 110.5 CVs decrease & higher commodity cost. Adjusted PAT is likely to
BV/Sh. (INR) 237.9 248.7 274.9 333.6 be INR-6.8b (vis--vis INR5b in 4QFY16) led by higher interest cost
RoE (%) 18.3 4.7 11.2 20.4 & higher depreciation.
RoCE (%) 14.3 4.4 9.3 15.8 We have reduced EPS estimate of FY18E/FY19E by 18%/12%, led
Payout (%) 0.7 31.4 16.4 7.8 by higher interest cost & depreciation at standalone level, and
Valuations expected moderation in CV growth.
P/E (x) 12.7 40.6 15.9 7.6 The stock trades at 10.7x FY18E and 10.8x FY19E EPS. Buy.
P/BV (x) 2.0 1.9 1.7 1.4 Key issues to watch
EV/EBITDA (x) 4.2 6.1 4.5 2.7 Impact of Brexit on JLR business.
Div. Yield (%) 0.0 0.6 0.9 0.9 Current demand trends for JLR and outlook, particularly in China
and the US.
Update on Chery JV operations and CV business outlook.
Quarterly Performance [Consol]
Y/E March FY16 FY17 FY17E
(Consolidated) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
JLR vols. (incl JV) 114,452 116,745 150,461 162,427 134,334 139,227 152,245 171,471 597,277
JLR Realizations (GBP/unit) 45,206 43,460 42,004 43,991 45,216 47,937 49,935 49,966 48,398
JLR EBITDA (%) 16.4 12.2 14.4 16.2 12.3 10.3 9.3 10.7 10.6
JLR PAT (GBP m) 492 52 414 560 265 245 111 333 943
S/A vol. (units) 117,160 117,439 123,176 146,766 126,839 134,397 132,553 148,533 542,322
S/A Realizations (INR/unit) 795,852 910,574 815,239 856,454 813,594 768,057 771,001 803,228 2
S/A EBITDA (%) 6.1 8.2 6.0 8.1 6.8 3.6 1.5 3.3 3.8
S/A PAT (INR m) 333 351 236 5,014 996 -6,621 -10,451 -6,816 -22,533
Net Op Income 604,009 615,240 705,921 806,844 658,950 659,004 675,313 790,204 2,783,471
Growth (%) -6.6 1.5 0.9 19.4 9.1 7.1 -4.3 -2.1 1.0
EBITDA 110,068 65,189 88,545 113,872 76,220 62,826 51,612 71,424 262,082
EBITDA Margins (%) 18.2 10.6 12.5 14.1 11.6 9.5 7.6 9.0 9.4
Depreciation 37,416 43,618 42,620 44,239 45,508 44,540 42,300 45,440 177,788
Other Income 2,241 2,568 1,928 2,486 1,736 1,794 1,674 2,177 7,381
Interest Expenses 11,496 12,228 11,383 12,552 11,785 10,249 8,707 10,130 40,870
PBT before EO Exp 63,398 11,911 36,470 59,567 20,663 9,831 2,280 18,032 50,805
EO Exp/(Inc) -6,338 33,411 2,332 -6,044 -4,851 -162 -3,706 0 -8,719
PBT after EO Exp 69,736 -21,500 34,138 65,611 25,514 9,993 5,986 18,032 59,525
Tax 16,485 -4,291 6,690 13,546 7,200 4,246 8,670 8,707 28,823
Tax rate (%) 23.6 20.0 19.6 20.6 28.2 42.5 144.8 48.3 48.4
PAT 53,251 -17,209 27,449 52,065 18,314 5,747 -2,684 9,325 30,702
Minority Interest -232 -214 -186 -383 -240 -198 -178 -355 -971
Share in profit of Associate -708 -139 2,078 89 4,290 2,735 3,799 3,055 13,879
Adj PAT 47,470 9,180 31,216 46,975 18,882 8,191 2,599 12,025 39,113
Growth (%) (10.9) (72.0) (19.2) 158.4 (60.2) (10.8) (91.7) (74.4) -68.8
E: MOSL Estimates
April 2017 72
TVS Motor Company

Bloomberg TVSL IN CMP: INR450 TP:INR500 (+11%) Buy
Total volume growth moderated to 2.2% YoY (-6% QoQ) to
M. Cap. (INR b)/(USD b) 214 / 3
674,921 units led by increase in Scooter and Moped volume
1,6,12 Rel Perf. (%) 1 / 12 / 23
partially offset by decline in Motorcycle volumes post
demonetization.
Moped and scooter volume increased by 14% YoY (-5% QoQ) and
Y/E March 2016 2017E 2018E 2019E
13% YoY (+1% QoQ), respectively, while motorcycle volume
Sales 112.4 121.2 142.0 164.6
decline 13% YoY (-13% QoQ) led by benign rural growth.
EBITDA 7.5 8.9 11.4 15.6 Net realization is likely to decline ~2% YoY (+1% QoQ) to
Adj. PAT 4.3 5.3 7.2 10.2 INR41,972 per unit as share of motorcycle decreased. As a result,
EPS (INR) 9.1 11.2 15.2 21.6 net sales would grow marginally by ~1% YoY to ~INR28.3b.
EPS Gr. (%) 24.2 23.4 35.0 42.2 Margin should expand 40bp YoY (-60bp QoQ) to 6.7%, driven by
BV/Sh (INR) 40.8 48.7 60.2 77.0 benefit of operating leverage and better product mix YoY. Also
RoE (%) 24.1 25.1 27.8 31.4 price increase to offset commodity inflation.
RoCE (%) 23.3 25.9 30.3 35.6 We expect PAT to decline ~14% YoY (-23% QoQ) to INR1b led by
Payout (%) 33.7 29.5 23.8 22.3 higher depreciation by 41% YoY and higher tax rate.
Valuations We are increasing multiple from 18x to 20x.
P/E (x) 51.5 41.8 30.9 21.7 The stock trades at 29.7x FY18E and 20.9x FY19E EPS; Buy.
P/BV (x) 11.5 9.6 7.8 6.1
EV/EBITDA (x) 30.6 25.3 19.3 13.7
Key issues to watch
Div. Yield (%) 0.6 0.6 0.6 0.9
Launch of product with BMW tie up
EBITDA margin target of double digits by FY18
S/A Quarterly Performance

Y/E March (INR m) FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE FY16 FY17E
Volumes (units) 638,033 678,749 702,044 660,540 717,964 815,562 718,562 674,921 2,678,338 2,927,009
Growth (%) 9.2 0.4 7.1 9.6 12.5 20.2 2.4 2.2 6.3 9.3
Realization (INR/unit) 40,344 41,803 41,250 42,622 40,127 42,014 41,519 41,972 41,981 41,420
Growth (%) 2.2 5.3 1.9 4.6 (0.5) 0.5 0.7 (1.5) 5.3 (1.3)
Net Sales 25,741 28,374 28,959 28,154 28,809 34,265 29,834 28,328 112,439 121,236
Growth (%) 11.7 5.8 9.2 14.6 11.9 20.8 3.0 0.6 12.0 7.8
RM (% of sales) 73.0 72.1 72.3 70.2 72.6 72.3 72.0 71.2 71.4 72.1
Emp cost ( % of sales) 6.0 5.7 6.1 5.8 6.3 5.8 6.4 6.8 5.9 6.3
Other exp (% of sales) 14.2 14.2 14.4 17.6 14.2 13.8 14.2 15.3 16.0 14.4
EBITDA 1,728 2,270 2,102 1,785 2,004 2,767 2,185 1,895 7,507 8,850
EBITDA Margin(%) 6.7 8.0 7.3 6.3 7.0 8.1 7.3 6.7 6.7 7.3
Interest 130 115 98 131 98 94 115 106 462 414
Depreciation 504 565 621 518 660 724 720 729 1,898 2,833
Other Income 210 195 248 243 362 392 348 309 513 1,411
PBT after EO Exp 1304 1785 1631 1380 1608 2340 1698 1368 5,660 7015
Tax rate (%) 23.2 25.5 26.3 14.7 24.6 24.2 21.9 25.6 23.6 24.0
Adjusted PAT 1,001 1,330 1,202 1,178 1,213 1,774 1,327 1,018 4,321 5,331
Growth (%) 38.4 40.2 33.3 30.1 21.2 33.4 10.4 (13.5) 24.2 23.4
April 2017 73
March
March2017
2015 Results
2016March Preview
Results2017
Preview || Sector:
ResultsSector:
PreviewCapital
Capital Goods
| April
Goods
2017
Technology
Capital Goods
Demonetization weathered; revival underway
Company name
Impending structural reforms to rekindle investment cycle
ABB
Bharat Electronics Domestic capex cycle reviving; exports hamstrung by weak global demand
BHEL The domestic capex cycle appears to have bounced back post demonetization. CMIE
data indicates that new investment proposals by India Inc stood at INR2.6t (+82%
Crompton Greaves
QoQ) for the March quarter against an average of INR2.3t per quarter in the
Crompton Greaves Consumer preceding 10 quarters. Though the near-term outlook remains subdued, policy
Cummins India initiatives and efforts are underway to (i) expedite regulatory approvals, and (ii)
GE T&D establish monetary conditions conducive to industrial revival in the medium term.
Havells India We believe investment revival would be triggered by: (i) sustained recovery in
Larsen & Toubro consumption demand, and thus, capacity utilization, and (ii) investment push by
the public sector, leading to a virtuous cycle of cash flow generation.
Siemens
Simultaneously, sustained progress in reviving stalled projects is imperative to
Thermax attract new investments and stimulate aggregate demand.
Voltas By initiating GST, labor and energy sector reforms, the government has partly
addressed concerns on the pace and extent of reforms. Implementation of
substantive reforms is essential for structured investment growth.
Indian machinery exports have decelerated due to factors such as weak global
demand, geopolitical concerns and sharp currency volatility across several
markets. Also, falling crude prices had an adverse impact on global trade, and
thus, investment demand. Project awards in the Middle East have been muted
in fact, revenue estimates for global industrial players suggest that sluggishness
has continued for around nine quarters.
Equipment manufacturers key beneficiaries of Make in India initiative

Make in India is the central governments initiative to improve the manufacturing
sectors contribution through import substitution and increased exports. The intent
is to ensure that customers in the public and private sectors increasingly procure
locally-manufactured equipment. Power Grid has mandated T&D players to
manufacture certain components in India for orders tendered out in key high-end
technology products such as SVC/STATCOM, GIS, 765KV transformers and reactors,
HTLS conductors, OPGW and HVDC.
In our opinion, successful implementation of this initiative should benefit capital

goods players. Increased imports over the past 5-6 years, particularly from
China/South Korea, have been a critical area of concern across several product
segments, even where domestic manufacturing capabilities and competitiveness
exist. Key beneficiaries include BHEL/Siemens (railways, solar cells, power T&D,
defense, etc), L&T/BHE (defense), ABB/Alstom/CGPower/Siemens (power T&D, etc)
and TMX (industrial products/power BTG).
Ankur Sharma (Ankur.vsharma@MotilalOswal.com); +91 22 3982 5449

Amit Shah (Amit.Shah@MotilalOswal.com); +91 22 3029 5126
April 2017
April 2017 74
March 2017 Results Preview | Sector: Capital Goods
Exhibit 1: Summary of expected quarterly performance

Sector CMP Sales (INR m) EBDITA (INR m) PAT (INR m)
Var % Var % Var % Var % Var % Var %
INR Reco Mar-17 Mar-17 Mar-17
YoY QoQ YoY QoQ YoY QoQ
Capital Goods
ABB 1,323 Neutral 22,068 10.3 -11.4 2,130 35.6 -24.4 1,014 28.4 -30.9
Bharat Electronics 161 Buy 39,066 21.5 87.2 9,829 -1.6 103.6 8,001 -0.2 114.2
BHEL 171 Sell 129,461 29.4 104.7 14,391 295.6 542.9 10,756 194.3 1049.8
CG Consumer Elect. 220 Buy 10,843 8.3 22.0 1,368 7.6 37.8 809 6.6 41.0
CG Power & Indl. 80 Sell 11,575 2.5 -0.2 674 -24.9 -12.1 257 -77.1 -66.0
Cummins India 968 Neutral 12,606 18.8 -7.0 2,093 18.0 -7.6 1,857 11.2 -6.3
GE T&D India 335 Neutral 11,064 13.9 -4.8 1,119 31.7 55.1 531 77.7 19.8
Havells India 469 Neutral 15,896 7.7 5.5 1,819 -17.1 -4.6 1,255 -23.4 -5.3
Larsen & Toubro 1,697 Buy 370,729 11.8 41.0 44,146 -9.1 75.0 23,974 -0.3 146.5
Siemens 1,308 Neutral 26,750 -3.9 16.6 3,450 12.7 47.6 2,552 43.8 59.5
Thermax 987 Sell 12,847 -0.7 57.9 1,234 4.4 53.0 1,063 -4.5 87.6
Voltas 415 Neutral 19,305 2.2 63.5 1,922 3.7 116.0 1,416 -4.6 73.7
Source: MOSL
Ordering activity supported by finalization of base orders

Overall ordering activity has been impacted by delay in finalization of large
orders (>INR15b) and restrained capex activity by the private sector.
Local ordering activity has seen some improvement, led by finalization of base
orders. After remaining subdued for most of 2015, tendering has seen some
improvement since January 2016, mainly supported by central government
activity. Sector-wise, roads, railways, power T&D and defense registered strong
tendering activity (fiscal allocations for roads/railways have been increased).
Overseas project awards, particularly in the Middle East, have started to see
some signs of revival since 4QFY16, despite a sharp decline in crude oil prices.
Growth in large orders is imperative to further boost ordering activity.
Exhibit 3: EBITDA margin under pressure on slower project

Exhibit 2: Constrained growth in revenue execution
Engg Sector (revenue growth %) EBITDA Margin (%) EBITDA Margin (%)
17.9
16.9
17.9
16.3
16.1
16.0
15.5
14.5
16.9
14.0
13.5
13.5
16.3
12.3
16.1
12.1
12.0
12.0
12.0
16.0
11.6
11.6
11.3
11.0
15.5
10.2
10.0
10.0
14.5
9.9
9.2
14.0
8.7
8.6
16.6 8.4
8.3
13.5
13.5
4.1 7.7
2.8 7.2
12.3
12.1
12.0
12.0
12.0
3.1 4.3
11.6
11.6
11.3
11.0
10.2
22.0
12.8
21.7
28.8
16.4
16.8
19.6
18.2
20.9
15.6
15.3
26.3
11.7
10.0
10.0
9.9
9.2
7.5
3.7
6.6
1.3
2.7
2.8
8.5
1.1
9.2
8.7
8.6
8.4
8.3
7.7
7.2
4.3
3QFY13 -5.2
-3.5
-1.0
3QFY15 -0.8
-1.4
1QFY10
3QFY10
1QFY11
3QFY11
1QFY12
3QFY12
1QFY13
3QFY13
1QFY14
3QFY14
1QFY15
3QFY15
1QFY16
3QFY16
1QFY17
3QFY17
1QFY10
3QFY10
1QFY11
3QFY11
1QFY12
3QFY12
1QFY13
1QFY14
3QFY14
1QFY15
1QFY16
3QFY16
1QFY17
3QFY17
Source: MOSL, Company Source: MOSL, Company
April 2017 75
Exhibit 4: Book-to-bill stable at 3x Exhibit 5: Order intake growth remains muted

Order book (INR b) BTB (x) Order intake YoY %
58
56
3.3
3.3
52
3.3
3.2
3.2
3.2
3.1
3.1
3.0
39
2.9
2.6
2.6
31
22
17
15
2.4
2.4
2.3
2.3
2.3
20
2.3
2.2
14
2.2
2.1
6
-20
0
3,263
3,112
3,168
3,127
2,964
2,893
2,958
2,989
3,028
2,943
3,230
3,482
3,594
3,605
3,813
3,717
3,641
3,842
3,839
3,933
3,865
-1
-1
-2
-20
-11
-24
3QFY12 -34
-47
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
1QFY13
3QFY13
1QFY14
3QFY14
1QFY15
3QFY15
1QFY16
3QFY16
1QFY17
3QFY17
Source: MOSL, Company Source: MOSL, Company
Exhibit 6: Relative performance Three-month (%) Exhibit 7: Relative performance One-year (%)
Sensex Index MOSL Capital Goods Index Sensex Index MOSL Capital Goods Index
122 130
116 122
110 114
104 106
98 98
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
Dec-16
Jan-17
Feb-17
Mar-17

Sector / CMP Reco EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
Companies (INR) FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Capital Goods
ABB 1,323 Neutral 18.4 26.1 32.6 71.8 50.7 40.6 36.1 25.6 21.2 11.9 14.4 15.9
Bharat Electronics 161 Buy 6.5 7.3 8.5 25.0 22.1 19.0 17.7 16.0 13.5 20.4 18.8 19.1
BHEL 171 Sell 5.5 5.7 5.8 30.9 29.9 29.5 16.6 13.3 15.1 4.0 4.0 4.0
CG Consumer Elect. 220 Buy 4.6 5.5 6.7 48.3 40.3 32.6 29.3 25.2 20.8 94.3 73.3 66.1
CG Power & Indl. 80 Sell 3.6 3.9 4.5 22.0 20.6 18.0 18.3 13.6 12.4 5.4 5.5 6.0
Cummins India 968 Neutral 26.6 30.5 36.5 36.3 31.8 26.5 32.4 27.1 22.1 22.6 23.2 25.3
GE T&D India 335 Neutral 6.0 11.0 11.4 55.7 30.3 29.5 39.5 17.2 15.4 11.7 20.7 19.2
Havells India 469 Neutral 8.9 12.1 14.1 52.5 38.9 33.2 36.9 24.6 20.7 20.3 24.6 25.1
Inox Wind 183 Neutral 17.5 16.6 17.7 10.5 11.0 10.3 7.0 7.8 7.1 19.2 15.7 14.6
K E C International 219 Buy 10.5 12.3 13.5 20.9 17.9 16.2 10.1 8.8 7.9 16.6 16.8 16.2
Larsen & Toubro 1,697 Buy 53.6 63.6 74.4 31.7 26.7 22.8 21.7 16.7 15.1 10.9 11.9 12.7
Siemens 1,308 Neutral 17.0 25.7 33.5 76.9 50.9 39.0 44.1 33.6 26.1 9.2 11.9 14.2
Solar Inds. 814 Neutral 19.0 22.3 26.5 42.8 36.5 30.7 23.1 19.9 16.9 18.4 18.6 19.0
Thermax 987 Sell 23.5 28.4 31.5 41.9 34.8 31.3 28.1 22.2 19.4 11.6 12.9 13.2
Va Tech Wabag 695 Buy 26.5 34.5 40.3 26.3 20.1 17.2 13.4 10.4 9.0 8.9 16.7 17.3
Voltas 415 Neutral 13.6 14.9 16.9 30.6 27.8 24.6 21.6 22.0 18.9 17.6 17.1 17.1
April 2017 76
ABB
Bloomberg ABB IN
CMP: INR1,323 TP: INR1,190 (-10%) Neutral
M. Cap. (INR b)/(USD b) 280 / 4
ABB has received an order of INR43.5b from PGCIL to set up a
52-Week Range (INR) 1433 / 950 transmission link between Raigarh and Pugular with 800KV HVDC
1,6,12 Rel Perf. (%) 4 / 7 / -17 systems.
ABB continues to focus on increased localization and cost
optimization. Its direct RM costs have declined to 64.5% of revenue
Y/E Dec 2016 2017E 2018E 2019E from a peak of 81% in 4QCY10, well below its internal target of
Net Sales 86.5 100.3 114.2 124.6 65%. This has aided margins, despite negative operating leverage.
EBITDA 7.6 10.9 13.1 15.0 We expect revenue to grow 10% YoY led by execution ramp-up in
Adj PAT 3.8 5.5 6.9 8.1 the project segment. Operating margin is likely to decline 180bp
Adj EPS (INR) 18.4 26.1 32.6 38.3 YoY to 9.7%. Net profit should grow 28% YoY to INR1.01b.
EPS Gr (%) 16.9 41.6 25.0 17.3 Maintain Neutral.
BV/Sh (INR) 154.9 181.0 204.7 232.5
RoE (%) 11.9 14.4 15.9 16.5
RoCE (%) 17.4 22.6 24.6 25.5
Payout (%) 22.7 23.5 23.5 23.5 Key issues to watch
Valuations Management commentary suggests cautious optimism.
P/E (x) 71.8 50.7 40.6 34.6 Continued focus on exports and services to be an important driver
P/BV (x) 8.5 7.3 6.5 5.7 of projected strong double-digit revenue and profit growth.
EV/EBITDA (x) 29.4 22.6 17.2 12.8 Continued preference for cash generation vis--vis profits.
Div. Yield (%) 0.3 0.5 0.6 0.7

Y/E December CY16 CY17 CY16 CY17E
1Q 2Q 3Q 4QE 1Q 2Q 3Q 4QE
Sales 20,003 21,015 20,550 24,915 22,068 24,425 25,077 28,738 85,156 99,078
Change (%) 10.2 8.8 4.4 2.7 10.3 16.2 22.0 15.3 6.2 16.3
EBITDA 1,571 1,701 1,516 2,819 2,130 2,775 2,670 3,277 7,607 10,853
Change (%) 9.4 5.6 -2.7 7.1 35.6 63.2 76.1 16.3 1.9 42.7
As % of Sales 7.9 8.1 7.4 11.3 9.7 11.4 10.6 11.4 8.9 11.0
Depreciation 359 357 406 389 394 394 394 394 1510 1574
Interest 206 180 178 285 242 268 275 315 849 1,099
Other Income 148 44 44 366 653 39 43 45 653 178
PBT 1,154 1,208 976 2,511 2,147 2,153 2,045 2,613 5,901 8,357
Tax 364 434 427 773 520 731 694 885 1,998 2,830
Repoted PAT 710 774 811 1,468 1,014 1,426 1,353 1,735 3,763 5,528
Adj. PAT 790 774 871 1,468 1,014 1,426 1,353 1,735 3,903 5,528
Change (%) 45.5 13.1 48.2 13.4 28.4 84.2 55.4 18.2 16.9 41.6
E: MOSL Estimates,*: As reported by ABB
April 2017 77
Bharat Electronics
Bloomberg BHE IN CMP: INR161 TP: INR180 (+12%) Buy
Bharat Electronics (BHE) has received an offset contract from Elbit
M. Cap. (INR b)/(USD b) 361 / 6
Systems for supply of 10 units of CoMPASS systems for use in the
1,6,12 Rel Perf. (%) 4 / 21 / 16
light combat helicopters being manufactured by HAL.
BHE has launched a remote-controlled weapon system for MBT
Arjun MK II, a weapon control system for 12.7mm gun of MBT
Y/E March 2016 2017E 2018E 2019E Arjun MK II battle tank.
Net Sales 73.0 85.7 97.1 110.5 BHE registered provisional revenue of INR88b in FY17, led by
EBITDA 14.6 17.5 18.9 21.4 execution of key orders in hand, like Akash missile, WLR, hand-held
NP 13.7 15.5 16.3 18.9 thermal device, tactical control radar, etc.
EPS (INR) 5.7 6.5 7.3 8.5
BHE plans to explore opportunities in critical infrastructure
EPS Gr. (%) 17.1 13.7 12.9 16.1
BV/Sh (INR) 36.4 34.0 38.8 44.3
protection, air traffic management radars, intelligent traffic
RoE (%) 15.6 20.4 18.8 19.1 management systems, solar power plants and smart city elements.
RoCE (%) 16.5 19.0 20.1 20.4 BHE has planned capex of INR23b over the next five years toward
Valuations modernization and expansion of existing facilities to support the
P/E (x) 26.6 21.8 20.7 17.8 governments Make in India initiative. Majority of the capex
P/BV (x) 4.2 4.4 3.9 3.4
would be spent on developing BMS test bed, TCS test bed, test bed
EV/EBITDA (x) 19.9 16.4 14.7 12.4
for missile system, etc. Maintain Buy.
Key issues to watch

Revenue growth: Key orders (Akash missile, intake of INR67b in
FY1112) are currently under execution for Army and Air Force.
Operating at 60% capacity utilization; possibility of strong operating
leverage.

Y/E March FY16 FY17 FY16 FY17
1Q 2Q 3Q 4Q 1QE 2Q 3QE 4QE
Sales 10997 14692 15211 32148 8714 17033 20867 39066 72952 85681
Change (%) 8.6 13.5 -5.4 9.8 -20.8 15.9 37.2 21.5 6.6 17.4
EBITDA 78 1807 2773 9988 -467 3349 4828 9829 14582 17538
Change (%) -117 52 0 26 -699 85 74 -2 27 20
As of % Sales 0.7 12.3 18.2 31.1 -5.4 19.7 23.1 25.2 20.0 20.5
Depreciation 408 407 418 468 435 455 455 561 1689 1905
Interest 0 3 1 41 0 3 106 -109 45 0
Other Income 1337 1316 1335 1336 1387 1714 776 916 5322 4794
Exceptional items (reported) 0 0 0 72 0 0 0 0 0 0
PBT 1007 2712 3688 10888 486 4606 5043 10293 18169 20427
Tax 241 654 887 2799 125 1178 1307 2292 4515 4903
Reported PAT 767 2059 2802 8089 361 3427 3735 8001 13654 15525
Change (%) 199.5 40.1 3.1 11.9 -52.9 66.5 33.3 -1.1 17.6 13.7
Adj PAT 767 2059 2802 8017 361 3427 3735 8001 13654 15525
Change (%) 199.5 40.1 3.1 10.9 -52.9 66.5 33.3 -0.2 17.4 13.7
E: MOSL Estimates
April 2017 78
BHEL
Bloomberg BHEL IN CMP: INR171 TP: INR115 (-33%) Sell
We expect revenue to grow 29% YoY. We estimate operating profit
M. Cap. (INR b)/(USD b) 419 / 6
at INR14.4b against INR3.6b in 4QFY16 growth would be driven
1,6,12 Rel Perf. (%) 4 / 19 / 31
by better operating leverage and lower other expenses. We
estimate net profit at INR10.8b against INR3.6b in 4QFY16.
During the quarter, BHEL bagged an order worth INR13.6b for
Y/E March 2016 2017E 2018E 2019E setting up 800KV Raigarh Pugular multi-terminal HVDC link in JV
Net Sales 256.3 315.6 315.5 344.4 with ABB. BHEL will supply converter transformers, shunt reactors,
EBITDA -19.6 18.9 18.8 19.0
filter bank capacitors and instrument transformers.
PAT -9.1 13.6 14.0 14.2
BHEL also secured an EPC order for the installation of solar
photovoltaic rooftop systems totaling to 3.6MW from Surat
EPS (INR) -3.7 5.5 5.7 5.8
Municipal Corporation.
EPS Gr. (%) -163.6 -249.2 3.3 1.3
BHEL is L1 in 6.6GW of orders, of which it expects 5GW of orders to
BV/Sh. INR 135.0 139.3 143.7 148.2
be finalized in FY17.
RoE (%) -2.7 4.0 4.0 4.0
RoCE (%) -4.1 2.5 2.4 2.0
Payout (%) -10.8 20.0 20.0 20.0
Valuations
Key issues to watch
P/E (x) -46.2 30.9 30.0 29.6
Continued constraint on execution due to operational issues.
P/BV (x) 1.3 1.2 1.2 4.0 Trends in provisions, particularly for liquidated damages on
EV/EBITDA (x) -16.3 16.9 13.7 15.5 project completion.
Div Yield (%) 0.2 0.6 0.7 0.7
* Consolidated

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Sales (Net) 43,617 59,380 53,272 100,048 56,225 66,645 63,254 129,461 256,300 315,585
Change (%) -15.0 -3.4 -14.0 -21.1 28.9 12.2 18.7 29.4 -15.1 23.1
EBITDA -2,093 -4,379 -16,120 3,638 710 1,551 2,239 14,391 -19,597 18,891
Change (%) -196.1 -250.2 -648.7 -78.4 -133.9 -135.4 -113.9 295.6 -193.4 -196.4
As a % Sales -4.9 -7.4 -30.3 3.6 1.3 2.3 3.5 11.1 -7.6 6.0
Interest 33 44 52 140 57 50 263 198 268 568
Depreciation 2,425 2,249 2,255 2,428 2,182 2,080 2,088 3,605 9,356 9,955
Other Income 4,924 3,739 1,708 4,139 2,493 1,961 1,358 4,652 14,501 2,899
PBT 373 -2,933 -16,719 5,209 965 1,382 1,245 15,239 -14,721 18,832
Tax 34 -1,125 -5,869 1,555 188 292 310 4,484 -5,633 5,273
Reported PAT 339 -1,808 -10,850 3,596 778 1,090 935 10,756 -9,088 13,559
Change (%) -82.5 -244.8 -610.3 -59.5 129.5 -160.3 -108.6 199.1 -164.0 -249.2
Adj. PAT 339 -1,808 -10,850 3,655 778 1,090 935 10,756 -9,088 13,559
Change (%) -82.5 -244.8 -610.3 -61.7 129.5 -160.3 -108.6 194.3 -163.6 -249.2
E: MOSL Estimates
April 2017 79
CG Power and Industrial

Bloomberg CGPOWER IN CMP: INR80 TP: INR45 (-44%) SELL
During the quarter, CG Power completed the sale of its B2B
automation business comprising of ZIV for an enterprise valuation
1,6,12 Rel Perf. (%) 15 / -4 / 43
of EUR120m to Alfanar Electric Systems, Saudi Arabia.
The management intends to sell the overseas power business on
either geographical basis or product-wise basis.
Y/E March 2016 2017E 2018E 2019E The management intends to monetize ~INR10b of non-core assets,
Net Sales 48.3 50.3 55.1 59.5 including additional land at Kanjurmarg, to lower standalone
EBITDA 2.9 4.0 4.9 5.3
business debt.
Adj PAT 1.3 -0.4 1.4 1.8
We expect standalone revenue to register muted growth of 2% YoY
to INR11.6b during 4QFY17.
EPS(INR) 2.1 -0.5 2.3 2.9
Operating profit is expected to decline 25% YoY to INR674m, led by
EPS Gr. (%) -50.0 -125.0 -537.4 27.5
increase in other expenses. EBIDTA margin is expected to decline
BV/Sh. (INR) 73.3 72.1 71.3 70.5
210bp YoY to 5.8%.
RoE (%) 3.1 3.9 5.9 6.9
We estimate net profit at INR257m against INR1.1b in 4QFY16.
RoCE (%) 5.5 6.1 7.7 7.0
Maintain SELL.
Payout (%) 0.0 -113.8 113.8 113.8
Valuations
P/E (x) 34.6 -151.7 34.7 27.2 Key issues to watch
P/BV (x) 1.0 1.1 1.1 1.1
Lowering debt in demerged business through asset sale.
EV/EBITDA (x) 18.4 12.0 10.2 9.5
Concrete developments on plans to sell international power
Div Yield (%) 0.0 0.7 3.3 3.6
business.
* Consolidated
Quarterly performance (Consol.) (INR Million)

FY16 FY17 FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Sales (Net) 10,275 14,292 11,249 16,699 14,238 13,233 12,441 12,441 48,274 50,273
Change (%) -70.1 -58.3 -53.3 6.0 38.6 -7.4 10.6 -25.5 -65.6 4.1
EBITDA -136 1,295 934 1,548 1,206 844 833 1,107 2,931 4,008
Change (%) -107.9 -23.1 49.0 -48.3 -983.2 -34.8 -10.8 -28.5 -54.4 36.7
Adjusted EBITDA -136 1,295 934 1,548 1,206 844 833 1,107 2,931
As of % Sales (Adj) -1.3 9.1 8.3 9.3 8.5 6.4 6.7 8.9 6.1
Depreciation 603 604 401 728 604 356 341 327 1,717 1,628
Interest 153 169 191 240 306 439 509 508 794 1,763
Other Income 425 178 155 257 176 502 306 316 1,212 1,300
EO Income/(Exp) -11 -1 -1,498 -2,030 0 -573 -717 -349 -1,113
PBT -479 698 -1,001 -1,193 471 -22 -427 937 -1,975 1,918
Tax 166 225 -41 -182 68 78 -117 145 334 173
Effective Tax Rate (%) -34.7 32.2 4.1 15.2 14.3 -356.6 27.4 15.4 -16.9 9.0
Minority interest -8.3 -23.7 -3.1 9.8 3.6 4.1 3.9 -36.9 -25.3 -25.3
Reported PAT -637 497 -957 -1,022 400 -104 -314 829 -2,284 1,769
Adjusted PAT -626 499 540 1,008 400 469 402 1,178 1,323 1,769
Change (%) (197.7) (28.4) (210.4) (63.4) (163.9) (6.0) (25.6) 16.8 (28.1) 33.7
E: MOSL Estimates
April 2017 80
CG Consumer Electricals
Bloomberg CROMPTON IN CMP: INR220 TP: INR221 (0%) Buy
We expect sales to grow 8% YoY, driven by 9% YoY growth in the
M. Cap. (INR b)/(USD b) 138 / 2
consumer durables segment and 6% YoY growth in the lighting
1,6,12 Rel Perf. (%) -
segment.
We expect operating profit of INR1.4b in 4QFY17, an improvement
of 8% YoY, and stable EBITDA margin of 12.6%.
Y/E March 2016 2017E 2018E 2019E Net profit is expected to be INR809m in 4QFY17 as against
Net Sales 18.1 39.8 44.3 49.9 INR759m in 4QFY16, a growth of 6.6% YoY.
EBITDA 2.1 4.9 5.6 6.7
Adj PAT 1.1 2.9 3.4 4.2
EPS (INR) 1.9 4.6 5.5 6.7
EPS Gr. (%) (70.3) 139.7 19.7 23.8
BV/Sh. (INR) 3.6 6.0 8.9 11.6
RoE (%) 52.1 94.3 73.3 66.1
RoCE (%) 27.4 35.1 34.1 35.8
Key issues to watch
Details of segmental sales, as CROMPTON intends to improve
Payout (%) - 40.0 40.0 50.0
sales of premium category products.
Valuations
Ad spends incurred by the company during the quarter, as
P/E (x) 115.7 48.3 40.3 32.6
CROMPTON intends to position itself as an electrical consumer
P/BV (x) 60.3 36.5 24.8 19.0
durables brand as against its current positioning as a fans brand.
EV/EBITDA, x 68.8 29.4 25.4 20.9
Div Yield (%) - 0.8 1.0 1.5
* Consolidated
Quarterly Estimates (Standalone) (INR Million)

FY16 FY17 FY16 FY17
Y/E March 3Q 4Q 1Q 2Q 3Q 4Q
Sales 8,101 10,016 11,208 8,900 8,889 10,843 18,117 39,840
Change (%) 12.0 10.6 9.7 8.3 119.9
EBITDA 828 1,272 1,550 974 993 1,368 2,095 4,885
Change (%) -8.1 2.0 19.9 7.6 133.2
As of % Sales 10.2 12.7 13.8 10.9 11.2 12.6 11.6 12.3
Depreciation 30 33 28 27 26 27 63 109
Interest 158 159 180 161 162 162 318 709
Other Income 1 0 34 42 50 24 39 195
Extra-ordinary Items 0 0 0
PBT 641 1,079 1,376 827 855 1,204 1,753 4,262
Tax 218 321 457 273 281 395 525 1,407
Effective Tax Rate (%) 33.9 29.7 33.2 33.0 32.9 32.8 29.9 33.0
Adjusted PAT 424 759 919 554 574 809 1,228 2,856
Change (%) (51.1) (10.0) 35.4 6.6 (69.4) 132.5
Extra-ordinary Income (net) (11.9) (92.7) - - - - (139.3)
Reported PAT 412 666 919 554 574 809 1,089 2,856
Change (%) (52.4) (21.0) 39.3 21.4 (72.9) 162.3
April 2017 81
Cummins India
Bloomberg KKC IN CMP: INR968 TP: INR990 (+2%) Neutral
We expect revenue to grow 19% YoY, supported by growth in the
M. Cap. (INR b)/(USD b) 268 / 4
industrial (23%) and automotive (12%) segments. Industrial
1,6,12 Rel Perf. (%) 6 / -3 / -5
segment growth would be driven by a pick-up in infrastructure
(roads and metros) and data center segments.
Pick-up in the domestic demand environment and various pricing
Y/E March 2016 2017E 2018E 2019E actions taken by KKC would help it to regain lost market share post
Net Sales 47.0 50.0 56.6 65.5 CPCB-2 compliance.
EBITDA 7.7 7.7 9.2 11.3 Domestic revenue should grow 11% YoY in 4QFY17.
Adj PAT 7.5 7.2 8.4 10.1 We expect export revenue to improve 24% YoY to INR4.1b in
EPS (INR) 27.2 26.0 30.2 36.3
4QFY17 given low base of 4QFY16.
EPS Gr. (%) -4.0 -4.6 16.4 20.0
BV/Sh. (INR) 114.4 124.8 136.9 151.5
EBITDA margin is expected to remain stable YoY at 16.6%; net
RoE (%) 24.9 22.0 23.1 25.2 profit should grow 13% YoY to INR1.9b. Maintain Neutral.
RoCE (%) 25.2 21.9 23.3 25.4
Payout (%) 51.5 51.5 51.5 51.5 Key issues to watch
Valuations
Cost optimization possibilities in power gen business, given
P/E (x) 29.7 31.1 26.8 22.3
increased localization due to a significant decline in imports post
P/BV (x) 7.1 6.5 5.9 5.3
EV/EBITDA, x 28.9 29.0 24.0 19.5 CPCB-2 implementation.
Div Yield (%) 1.7 1.7 1.9 2.3 Performance of export segment, as exports which remained
weak, led by poor demand in LatAm, Europe and China have
shown some signs of picking up from 3QFY17.
Quarterly Performance (Standalone) (INR Million)

FY16 FY17 FY16 FY17
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 13,101 11,946 11,382 10,614 12,590 12,790 13,550 12,606 47,043 51,301
Change (%) 25.3 4.4 5.1 -6.4 -3.9 7.1 19.0 18.8 6.8 9.1
EBITDA 2,217 2,019 1,727 1,773 2,063 1,990 2,265 2,093 7,736 8,176
Change (%) 23.3 6.3 -8.8 0.8 -6.9 -1.4 31.1 18.0 2.2 16.9
As of % Sales 16.9 16.9 15.2 16.7 16.4 15.6 16.7 16.6 16.4 15.9
Depreciation 203 200 201 206 206 209 225 249 810 889
Interest 24 24 24 24 21 43 55 31 96 150
Other Income 595 601 565 513 416 692 461 523 2,279 2,092
PBT 2,585 2,396 2,066 2,056 2,252 2,430 2,446 2,336 9,109 9,229
Tax 472 417 286 386 440 461 466 479 1,561 1,846
Adjusted PAT 2,114 1,980 1,780 1,670 1,812 1,969 1,981 1,857 7,548 7,383
Change (%) (0.3) (2.2) (1.7) (12.3) (14.3) (0.5) 11.3 11.2 (4.0) (2.2)
Extra-ordinary Income (net) - - - - - - - - -
Reported PAT 2,114 1,980 1,780 1,670 1,812 1,969 1,981 1,857 7,548 7,383
Change (%) (0.3) (2.2) (1.7) (12.3) (14.3) (0.5) 11.3 11.2 (4.0) (2.2)
April 2017 82
GE T&D
Bloomberg GETD IN CMP: INR335 TP: INR340 (+1%) Neutral
We expect GETD to register robust revenue growth of 14% YoY to
INR11.1b in 4QFY17. Revenue growth would be driven by
1,6,12 Rel Perf. (%) 10 / -10 / -41
execution of the Champa-Kurukshetra Phase-I project.
We expect operating profit of INR1.1b in 4QFY17 as against
INR850m in 4QFY16. Gross margin is likely to expand 30bp to
Y/E March 2016 2017E 2018E 2019E 32.9% from 32.6% in 4QFY16.
Net Sales 34.1 39.6 45.3 50.2 GETD is expected to book net profit of INR531m as against profit
EBITDA 2.3 2.2 5.0 5.5 of INR299m in 4QFY16. Maintain Neutral.
Adj PAT 0.8 1.5 2.8 2.9
EPS (INR) 3.0 6.0 11.0 11.4
EPS Gr. (%) -35.7 98.6 83.5 3.0
BV/Sh. (INR) 52.1 50.5 56.2 62.1
RoE (%) 5.9 11.7 20.7 19.2
RoCE (%) 10.1 13.8 23.3 22.7
Payout (%) 59.5 40.0 40.0 40.0
Valuations
P/E (x) 110.7 55.7 30.4 29.5
P/BV (x) 6.4 6.6 6.0 5.4
Key issues to watch
EV/EBITDA (x) 38.8 39.6 17.2 15.4
Progress in the Champa-Kurukshetra Phase-I project.
EV/ Sales (x) 2.6 2.2 1.9 1.7
Div Yield (%) 0.5 -0.4 1.3 1.4

FY16 FY17 FY16E FY17E
Sales 7,660 8,729 7,141 9,715 8,546 8,340 11,623 11,064 34,135 39,573
Change (%) 1.2 1.2 1.2 -28.6 11.6 -4.4 62.8 13.9 -7.8 15.9
EBITDA 72 680 -532 850 21 339 722 1,119 2,324 2,202
Change (%) -90.4 -22.4 NA -18.5 -70.3 -50.1 -235.7 31.7 -9.0 -9.0
As of % Sales 0.9 7.8 -7.4 8.7 0.2 4.1 6.2 10.1 6.8 5.6
Depreciation 212 215 215 216 217 220 221 233 873 873
Interest 117 143 168 189 226 239 343 353 589 589
Other Income 412 213 326 64 326 435 522 378 427 427
Extra-ordinary Items 0 0 0 0 2,330 0 0 0 0 0
PBT 155 536 -589 509 -2,425 315 679 912 1,289 1,167
Tax 54 174 -205 210 -455 109 236 382 508 508
Effective Tax Rate (%) 34.7 32.6 NA 41.3 18.8 34.6 34.7 41.8 39.4 43.5
Reported PAT 102 361 -384 299 -1,970 206 443 531 781 659
Change (%) -67.5 1.8 -1,582.6 -44.8 -2,041.0 -43.0 -215.4 77.7 0.0 0.0
Adj PAT 102 361 -384 299 360 206 443 531 781 659
Change (%) -64.4 1.8 NA -44.8 254.6 -43.0 -215.4 77.7 2.0 2.0
E: MOSL Estimates
April 2017 83
Havells India
Bloomberg HAVL IN CMP: INR469 TP: INR425 (-9%) Neutral
During the quarter, Havells acquired the consumer durables
M. Cap. (INR b)/(USD b) 293 / 5
segment of Lloyd Electric and Engineering Limited for an enterprise
1,6,12 Rel Perf. (%) 7 / -1 / 28
value of INR16b on a debt-free, cash-free basis. Lloyds consumer
durables arm has an annual turnover of INR12.4b.
Standalone revenue is expected to register growth of 8% YoY. We
Y/E March 2016 2017E 2018E 2019E expect the cables segment, which contributes 41% of the
Net Sales 77.1 63.1 96.7 112.8 companys revenue, to register 5% YoY growth, led by
EBITDA 8.0 7.9 11.8 14.0 improvement in the prices of the copper (+11% YoY). Electrical
Adj PAT 4.8 5.6 7.5 8.8 consumer durables (+1.2% YoY) and lighting (+2.5% YoY) divisions
Adj EPS (INR) 7.8 8.9 12.1 14.1 are likely to report muted growth.
EPS Gr. (%) -6.0 15.0 35.0 17.0 We expect operating margin to shrink 230bp YoY to 11.4% in
BV/Sh(INR) 41.0 44.1 49.1 56.2 4QFY17, led by increase in staff cost.
RoE (%) 19.0 20.3 24.6 25.1 Net profit is expected to decline 23.5% YoY. Maintain Neutral.
RoCE (%) 20.4 18.1 22.5 24.1
Payout (%) 93.0 65.5 58.2 49.7
P/E (x) 60.4 52.5 38.9 33.2 Commentary on the integration of consumer durables arm of
P/BV (x) 11.4 10.6 9.6 8.3 Lloyd Electric with itself.
EV/EBITDA (x) 34.6 36.9 24.6 20.7 Commentary on the demonetization-led impact on the sales and
Div Yield (%) 0.9 1.1 1.3 1.3 guidance for FY18.

FY16E FY17 FY16 FY17E
Sales 12,523 13,359 13,304 14,754 14,668 14,522 15,060 15,896 54,369 61,308
Change (%) -1.9 -2.1 6.7 9.3 17.1 8.7 13.2 7.7 3.8 12.8
Adj EBITDA 1,620 1,890 1,835 2,196 2,004 2,034 1,907 1,819 7,479 7,861
Change (%) -1.4 2.9 1.1 11.1 23.7 7.6 4.0 -17.1 2.9 5.1
Adj EBITDA margin (%) 13.1 14.2 13.8 14.9 13.7 14.0 12.7 11.4 13.8 12.8
Depreciation 248 261 266 237 280 308 301 370 922 1,259
Interest 30 31 20 48 16 19 15 0 126 50
Other Income 170 98 134 291 307 253 264 323 687 1,147
Extra-ordinary Items
PBT 1,489 1,683 1,699 2,208 2,022 2,030 1,877 1,773 7,119 7,699
Tax 421 488 500 567 567 572 537 518 1,988 2,194
Reported PAT 1,068 1,195 1,199 1,641 1,456 1,458 1,340 1,255 5,130 5,505
Change (%) -0.4 -0.1 3.2 34.7 36.3 22.0 11.8 -23.5 10.3 7.3
Adj PAT 1,085 1,204 1,183 1,637 1,450 1,409 1,325 1,255 5,109 5,585
Change (%) -0.4 -1.0 -0.4 23.6 33.7 17.0 12.0 -23.4 6.0 9.3
April 2017 84
Larsen & Toubro

Bloomberg LT IN CMP: INR1,697 TP: INR1,750 (+3%) Buy
LT announced order intake of INR278b in 4QFY17 compared to
M. Cap. (INR b)/(USD b) 1587 / 24
INR297b in 4QFY16. Order inflow during the quarter has been
52-Week Range (INR) 1700 / 1177
supported by large order finalization (>INR15b).
1,6,12 Rel Perf. (%) 12 / 11 / 22
Large orders worth INR210b were finalized during the quarter, of
which domestic orders were INR105b and the balance were from
overseas. Domestic order wins are supported by order finalization in
Y/E March 2016 2017E 2018E 2019E
the hydrocarbon and buildings and factories segments. Overseas
Sales 1,020 1,097 1,271 1,414
order finalization was supported by the hydrocarbon and power T&D
EBITDA 103.5 111.4 145.2 164.1
segments.
Adj PAT * 41.8 50.1 60.4 74.2
For 4QFY17, we expect revenue growth of 12% YoY to INR371b. We
EPS (INR)* 44.7 53.6 64.6 79.3
expect operating profit to decline 9.1% YoY.
EPS Gr. (%) -5.3 19.8 20.6 22.8
We expect net profit to decline 2% YoY to INR23.9b.
BV/Sh (INR) 470.2 510.1 556.8 615.5 L&T-MHPS Boiler Private Limited has signed a technology license
RoE (%) 9.9 10.9 12.1 13.5 agreement for selective catalytic reduction systems. The technology
RoCE (%) 6.3 7.1 9.4 10.2 licensing agreement is for design, engineering, manufacture,
Payout (%) 28.7 22.1 24.3 22.8 installation, commissioning, and sale of new boilers under BTG, EPC
Valuations or SG packages or standalone SCR systems, and for existing and
P/E (x)* 37.9 31.7 26.3 21.4 under construction boilers on exclusive basis in India. Maintain Buy.
P/BV (x) 3.9 3.6 3.3 3.0
EV/EBITDA (x) 24.6 22.6 17.3 15.1 Key issues to watch
Div Yield (%) 0.8 0.7 0.9 1.1 Net working capital (excluding financial services) at 22% of revenue
*Consolidated in 2QFY17 remains high, given tight liquidity conditions.
Quarterly Performance (Consolidated) (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Sales 200,482 231,235 259,281 331,570 218,738 250,107 262,870 370,729 1,019,641 1,096,844
Change (%) 7.0 9.3 8.7 18.3 9.1 8.2 1.4 11.8 10% 8%
EBITDA 16,411 21,310 21,261 48,592 19,050 22,977 25,227 44,146 103,494 111,400
Change (%) -8.9 8.6 -26.4 34.6 16.1 7.8 18.7 -9.1 -8.7 7.6
Margin (%) 8.2 9.2 8.2 14.7 8.7 9.2 9.6 11.9 10% 10%
Depreciation 4,658 5,286 3,680 8,203 4,648 4,602 7,223 4,654 17,867 21,126
Interest 3,893 4,388 4,043 7,737 3,375 3,517 3,788 3,725 16,405 14,404
Other Income 2,833 3,217 2,410 2,182 3,024 4,813 2,568 2,428 10,032 12,834
Extraordinary Inc/(Exp) 0 457 0 485 0 4,024 0 0 942 0
Reported PBT 10,692 15,310 15,949 34,834 14,052 19,671 16,785 38,196 80,196 88,704
Tax 4,282 5,347 5,124 9,537 5,488 6,807 4,399 10,513 23,782 23,782
Reported PAT 4,190 7,784 7,004 24,536 6,096 14,346 9,725 23,974 42,790 50,117
Change (%) -37.3 -9.7 -19.2 18.6 45.5 84.3 38.9 -2.3 3.8 3.8
Adjusted PAT 4,190 7,327 7,004 24,051 6,096 10,322 9,725 23,974 41,848 50,117
Change (%) -21.0 -15.0 -19.2 22.0 45.5 40.9 38.9 -0.3 7.9 7.9
E: MOSL Estimates
April 2017 85
Siemens
Bloomberg SIEM IN CMP: INR1,308 TP: INR1,340 (2%) Neutral
During the quarter, SIEM in JV with Sumitomo Electric Industries
M. Cap. (INR b)/(USD b) 466 / 7
has been awarded an order from Power Grid to supply HVDC
52-Week Range (INR) 1355 / 1011
1,6,12 Rel Perf. (%) 6 / -2 / -2
transmission system for the Pugalur-Thrissur line. The total order
size is USD520m (INR34.3b), of which SIEMs share is INR16.8b.
SIEM received an order from Delhi Transco to install 220/66/33KV
Y/E September 2015 2016 2017E 2018E GIS substation at RK Puram.
Net Sales 108.1 109.8 130.5 141.0 SIEM has received an order from Sterlite Power Grid Ventures for
EBITDA 9.7 12.5 15.9 18.2 supply of 765/400kv AIS substation at Khandwa (Madhya Pradesh)
Adj PAT 6.1 9.2 11.9 13.6 and an order for 765KV AIS bay extension equipment at Dhule from
Adj EPS (INR) 17.0 25.7 33.5 38.3 Khargone Transmission.
EPS Gr (%) 0.4 51.2 30.4 14.3 We expect SIEM to register YoY revenue decline of 4% to INR26.8b,
BV/Sh. (INR) 184.9 215.4 236.8 216.5 as it sold the healthcare division in 3QFY16. Excluding healthcare,
RoE (%) 9.2 11.9 14.2 16.9 we expect robust revenue growth of 14% YoY, led by strong
RoCE (%) 14.6 17.3 19.9 17.8 performance by the industrial and energy segments.
Payout (%) 30.1 41.3 40.0 30.0 Maintain Neutral.
Valuations
P/E (x) 70.7 46.7 35.8 34.1 Key issues to watch
P/BV (x) 6.5 5.6 5.1 6.0 Raw material imports account for 55% of raw material cost;
EV/EBITDA (x) 40.4 30.7 23.9 20.2 Siemens AGs network comprises 82% of imports; EUR
Div. Yield (%) 2.8 0.9 0.8 1.7 appreciating 4% YoY v/s INR could impact margin profile.

FY16 FY17
Y/E September FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Total Revenues 23,142 27,836 26,204 30,906 22,933 26,750 25,350 34,816 108,088 109,849
Change (%) -12.8 4.9 10.3 -6.3 -0.9 -3.9 -3.3 12.7 1.4 4.5
EBITDA 1,888 3,061 2,338 2,414 2,337 3,450 3,050 3,685 9,731 12,522
As % of Revenues 8.2 11.0 8.9 7.8 10.2 12.9 12.0 10.6 9.0 11.4
Depreciation 586 590 625 462 483 550 625 546 2,263 2,203
interest 9 21 21 21 20 20 20 19 59 79
Other Income 411 270 279 683 623 740 740 739 1,639 2,842
Extra-ordinary Items 0 0 0 22,825 0 0 0 0 22,825 0
PBT 1,705 2,720 1,971 25,439 2,456 3,620 3,145 3,860 31,991 13,239
Non Recurring Expense
Tax 592 946 670 770 856 1,068 928 1,072 2,992 3,924
Reported PAT 1,113 1,774 1,300 24,670 1,600 2,552 2,217 2,787 28,999 9,315
Adjusted PAT 1,113 1,774 1,300 1,845 1,600 2,552 2,217 2,787 6,056 9,157
Change (%) 4.9 14.9 -22.7 7.1 43.8 43.8 70.5 51.1 33.5 51.7
E: MOSL Estimates, Adj EBITDA: Adjusted for change in project revenues and cost estimates
April 2017 86
Thermax
Bloomberg TMX IN CMP: INR987 TP: INR781 (-21%) Sell
During the quarter, Thermax through its step-down subsidiary,
M. Cap. (INR b)/(USD b) 118 / 2
has agreed to acquire 100% stake in Barite Investments, Poland.
1,6,12 Rel Perf. (%) 9 / 2 / 11
The Polish company manufactures boilers and the acquisition
would provide Thermax additional manufacturing capacity and
help advance its business in the Eastern Europe region.
Y/E March 2016 2017E 2018E 2019E
Revenue is likely to register muted decline of 1% YoY, led by
Net Sales 52.6 45.2 48.8 54.9
constrained execution environment prevailing in the energy
EBITDA 4.1 3.8 4.8 5.4
segment and lower order book available for execution. Operating
Adj PAT 2.8 2.8 3.4 3.8
margin is expected to decline 130bp YoY to 12.1%.
EPS (INR) 23.5 23.5 28.4 31.5
Ordering activity remains muted in a weak macro environment.
EPS Gr. (%) 8.2 0.0 20.7 11.1 We believe domestic orders have remained at the base level
BV/Sh. (INR) 197.7 211.3 228.8 248.3 (INR5b-7b per quarter), as the company has not announced any
RoE (%) 12.5 11.6 12.9 13.2 meaningful order during the quarter.
RoCE (%) 11.3 9.9 12.4 12.6 Maintain Sell.
Payout (%) 32.9 36.0 32.8 32.5
Valuations
P/E (X) 41.9 41.9 34.8 31.3
Key issues to watch
P/BV (X) 5.0 4.7 4.3 4.0
Demand environment in domestic and overseas markets.
EV/EBITDA (X) 29.3 30.7 24.2 21.2
Sustainability of margins in energy (9.6% in 3QFY17) and
Div Yield (%) 0.8 0.9 0.9 1.0
environment (13.6% in 3QFY17) segments.

Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Sales 10,173 10,829 10,354 12,932 8,145 8,708 8,136 12,847 44,589 38,389
Change (%) 21.2 -9.1 -9.7 -14.3 -19.9 -19.6 -21.4 -0.7 -5.1 -13.9
EBITDA 788 907 806 1,182 637 773 806 1,234 3,742 3,451
Change (%) 36.5 -25.8 -38.6 -27.3 -19.1 -14.7 0.0 4.4 -20.4 -7.8
As of % Sales 7.7 8.4 7.8 9.1 7.8 8.9 9.9 9.6 8.4 9.0
Depreciation 158 157 160 135 168 166 157 180 609 672
Interest 12 12 12 -1 7 7 6 27 46 46
Other Income 210 195 248 478 211 289 206 422 1,140 1,127
Extra-ordinary Items
PBT 829 933 882 1,526 673 888 850 1,449 4,227 3,860
Tax 271 315 245 413 221 292 283 386 1,252 1,182
Reported PAT 558 618 637 1,113 452 597 566 1,063 2,975 2,678
Change (%) 34.8 (28.2) (16.4) (15.9) (19.0) (3.5) (11.1) (4.5) (11.4) (10.0)
Adj PAT 558 618 637 1,113 452 597 566 1,063 2,975 2,678
Change (%) 34.8 (28.2) (16.4) (15.9) (19.0) (3.5) (11.1) (4.5) (11.4) (10.0)
E: MOSL Estimates
April 2017 87
Voltas
Bloomberg VOLT IN CMP: INR415 TP: INR374 (-10%) Neutral
Unitary cooling division (UCP) is likely to report revenue growth of
M. Cap. (INR b)/(USD b) 137 / 2
8% YoY, given primary channel filling, driven by a strong summer
1,6,12 Rel Perf. (%) 8 / -1 / 31
and LG vacating the fixed-speed air conditioning segment.
We expect revenue growth of 6% YoY in the MEP segment, led by
high base effect (37% YoY growth in 4QFY16). However, the key
Y/E March 2016 2017E 2018E 2019E monitorable would be sustainability of margins in the segment.
Net Sales 58.6 59.3 67.2 75.7 VOLT had booked EBIT margin of 3.9% in 4QFY16 on positive
EBITDA 4.4 5.5 5.3 6.1 closure of certain old projects, provision reversal and higher
Adj PAT 3.9 4.5 4.9 5.6 margin new projects getting executed.
EPS(INR) 11.7 13.6 14.9 16.9
Prevailing weak crude prices have raised apprehensions over the
EPS Gr. (%) 14.0 16.6 9.9 12.8
BV/Sh. (INR) 72.4 82.1 92.8 104.8
pace of order awards and also execution in the Middle East. Even
RoE (%) 15.3 17.6 17.1 17.1 in the domestic market, new project awards remain constrained.
RoCE (%) 14.8 17.0 16.5 16.5 Maintain Neutral.
Payout (%) 28.6 28.6 28.6 28.6
Valuations
P/E (x) 39.9 30.6 27.8 24.7
P/BV (x) 5.7 5.1 4.5 4.0 Key issues to watch
EV/EBITDA (x) 31.6 24.4 24.9 21.5 Impact of LG vacating the fixed-speed air conditioning segment
Div Yield (%) 0.6 0.8 0.9 1.0 on VOLTs market share and sales.
*Consolidated Sustainability of profitability in the MEP segment and also
capital employed in MEP business.

FY16 FY17 FY16 FY17
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Sales 15,585 10,401 12,659 18,888 18,500 9,672 11,805 19,305 58,574 59,282
Change (%) -11.3 5.6 33.1 26.8 18.7 -7.0 -6.7 2.2 13.0 1.2
EBITDA 1,313 645 563 1,853 1,995 687 890 1,922 4,369 5,493
Change (%) -0.4 -17.0 -1.9 29.5 52.0 6.4 58.0 3.7 6.6 25.7
As of % Sales 8.4 6.2 4.4 9.8 10.8 7.1 7.5 10.0 7.5 9.3
Depreciation 59 64 65 80 66 63 60 79 278 268
Interest 34 33 37 59 48 33 22 51 153 154
Other Income 248 477 249 478 357 658 597 339 1,176 1,951
Extra-ordinary Items 0 0 -22 -279 -9 0 0 0 106 0
PBT 1,468 1,025 732 2,471 2,248 1,249 1,405 2,130 5,220 7,023
Tax 452 378 195 664 651 505 437 795 1,599 2,388
Reported PAT 1,025 647 573 1,764 1,576 697 815 1,416 3,620 4,495
Change (%) -7.0 28.9 -46.6 47.9 53.7 7.8 42.2 -19.7 -7.4 24.2
Adj PAT 1,025 647 551 1,485 1,567 697 815 1,416 3,515 4,495
Change (%) -7.9 29.5 -12.3 27.1 52.8 7.8 47.9 -4.6 3.9 27.9
Order Book 40,390 35,990 35,140 39,140 44,170 42,520 41,960 - 39,140
Order Intake 5,940 2,010 4,960 9,590 9,500 3,820 4,500 9,180 22,500
BTB - TTM basis (x) 1.8 1.3 1.3 0.8 1.4 1.1 1.6 1.6 1.4
E: MOSL Estimates
April 2017 88
March 2017 Results Preview | April 2017
Technology
Cement
Company name Profitability impacted by cost push and weak realization
ACC Exit realizations much better than average realizations for 4QFY17
Ambuja Cements
Volume growth trajectory normalizing post demonetization
Dalmia Cement
All-India production dropped sharply by 14% YoY during January-February 2017;
Grasim Industries
however, we expect the pace of decline to ease to 4% YoY in March, led by a
India Cements meaningful improvement in volumes. Consequently, FY17 volumes for all-India
Shree Cement cement could be lower by just ~1% YoY. Region-wise, the north and central markets
Ramco Cement witnessed a sharp improvement in volumes in 4QFY17 (v/s December levels), while
the southern markets saw some slowdown due to water shortage in Tamil Nadu and
UltraTech Cement
Kerala. However, the AP/Telangana markets continue driving demand growth.
We expect the MOSL cement universe to record volume growth of ~2% YoY (+17%
QoQ). We expect: (a) pan-India players to report volume growth of 0-2% YoY, (b)
players with capacity headroom (SRCM, JKLC) to deliver 5-11% YoY increase in
volumes, (c) moderation in volumes growth for south-based companies to 5% YoY
due to a high base as well as slowdown in Tamil Nadu and Kerala.
For 1QFY18, we expect industry volumes to show modest growth YoY due to a
relatively strong base. However, in 2HFY18, we expect volume growth to be strong,
considering the favorable base (2HFY17 volumes estimated to lower by 6% YoY).
Exit prices strong

Prices declined sharply in January, particularly in the north and central markets due
to weak volumes in December. However, we note that there were sharp price hikes
in February/March this year in the north and central markets. In addition, price
hikes have been very strong in the first week of April across India.
ASP should decline by 3% QoQ in 4QFY17 due to weak realization in the north and
south markets. We estimate price changes of: (a) 1% QoQ in north India, (b) 2% QoQ
in central India, (c) -7% QoQ in west India, (d) -2% QoQ in east India and (e) -10%
QoQ in south India.
Profitability likely to be lower

Weaker realizations, coupled with cost push (higher power and fuel prices), should
result in a sequential decline in profitability. The impact would be particularly
pronounced for the players in the south, where price correction has been more
dominant. We estimate EBITDA/ton for the MOSL cement coverage universe at
INR685 (-11% QoQ, -18% YoY).
Abhishek Ghosh (Abhishek.Ghosh@motilaloswal.com); +91 22 3982 5436

April 2017 89
March 2017 Results Preview | Sector: Cement
Top picks: Shree Cement, Ramco Cement and JK Cement

We prefer Shree Cement due to its superior return ratios RoIC in excess of 50%
with 20% EBITDA CAGR over FY17-19. Ramco Cement is likely to generate free
annual cash flows of INR7b-8b, given its strong profitability; it generates free cash
flow yield of 6-7%. JK Cement is a pure play on the expected price improvement in
the north as well as strong improvement in white cement performance (40% market
share in white cement).
Exhibit 1: Expected quarterly performance summary

Sales (INR m) EBDITA (INR m) PAT (INR m)
CMP
Sector Reco. Var % Var % Var % Var % Var % Var %
(INR) Mar-17 Mar-17 Mar-17
Cement
ACC 1,467 Neutral 30,899 5.6 15.8 2,172 -41.2 13.4 749 -67.7 -17.8
Ambuja Cements 239 Buy 25,594 5.8 16.5 3,218 -24.0 9.2 2,122 -26.5 14.3
Dalmia Bharat 2,062 Buy 18,518 -1.5 7.4 3,904 -13.1 -4.0 614 -35.3 72.0
Grasim Industries 1,067 Neutral 23,980 -4.3 -3.9 4,832 12.4 -5.6 2,492 19.5 -24.8
India Cements 163 Neutral 12,544 9.4 -1.1 1,344 -36.4 -28.7 56 -89.0 -84.1
Ramco Cements 671 Buy 9,961 1.8 6.3 2,659 -14.0 -1.1 1,485 -27.3 -0.9
Shree Cement 17,332 Buy 22,138 9.7 20.1 4,340 -14.1 -7.4 2,288 2.4 -3.7
Ultratech Cement 4,071 Buy 63,927 -0.7 15.4 10,601 -17.5 1.5 5,737 -15.8 1.8
Source: MOSL
Exhibit 2: MOSL universe volume at 49.9mt (2% YoY)

Volumes (MT) - RHS Volume growth (%)
9.3
8.9
8.3
16.3
6.3
5.7
5.5
5.1
1.3
3.7
3.2
42
2.5
1.8
1.7
1.6
1.6
1.2
0.4
-1.3
-5.0
39 36 38 42 39 37 38 44 43 39 40 43 40 42 49 47 41 43 50
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17E
Exhibit 4: Pan-India average cement prices (INR/bag) lower

Exhibit 3: Utilizations improves by 300bp QoQ (%) in 4QFY17 due to weak prices in north and south
1QFY17 2QFY17 3QFY17 4QFY17
80
78
78
77
76
76
73
73
72
71
71
71
70
72
70
68
68
67
67
68
66
65
65
65
65
65
65
65
331
329
317
299
298
298
298
297
297
296
293
293
298
291
289
289
288
293
282
287 288
278
283 277
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17E
North East West South Central Average

prices
(INR/bag)
April 2017 90
Exhibit 5: MOSL coverage realization to decline 2% QoQ in Exhibit 6: Profitability to decline 13% QoQ, led by weak
4QFY17 realization and higher cost
Realization (INR/ton) EBITDA (INR/ton)
4,352
4,321
4,294
4,259
4,237
4,236
4,229
4,206
4,200
4,190
4,176
4,147
4,100
1,010
4,028
4,017
4,000
3,989
3,975
3,962
3,946
3,873
3,841
966
948
3,777
3,617
857
3,566
837
808
806
802
793
764
759
3,220
750
747
724
714
698
687
683
667
498
526
571
552
528
578
471
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17E
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17E
Exhibit 7: Relative performance3 months (%) Exhibit 8: Relative performance1 year (%)
Sensex Index MOSL Cement Index Sensex Index MOSL Cement Index
160
122
140
116
110 120
104 100
98 80
Dec-16
Jan-17
Feb-17
Mar-17
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
Source: Bloomberg, MOSL
Exhibit 9: 4QFY17 estimates for MOSL coverage

VOLUME (M TON) REALIZATION (INR/ton) EBITDA (INR/ton)
4QFY17 4QFY17 4QFY17
(%) (%) (INR/T) (INR/T) (INR/T) (INR/T)
ACC 6.5 2.0 19.0 4,297 126 -80 293 -288 -58
Ambuja Cement 6.0 0.6 17.9 4,266 213 -50 536 -173 -43
UltraTech 13.6 -0.3 19.0 3,972 27 -85 771 -148 -132
Birla Corp 2.2 1.9 28.6 4,338 939 24 443 -166 33
India Cement 2.4 -4.4 1.6 5,175 1,735 -159 563 -283 -240
Shree Cement 5.9 11.1 21.2 3,590 245 -109 750 -18 -225
Dalmia Bharat 3.9 1.2 10.3 4,717 -130 -128 994 -163 -147
J K Cements 2.1 -4.1 8.2 4,698 325 97 755 -53 -14
JK Lakshmi Cem. 2.2 0.1 17.2 3,698 287 53 415 28 -34
Madras Cement 2.2 5.9 11.1 4,573 -483 -109 1,222 -271 -117
Orient Paper 1.5 6.0 17.4 3,700 390 68 553 42 204
Prism Cement 1.4 0.4 13.6 4,182 917 60 511 -19 12
Sector Aggregate 49.9 1.7 16.7 4,180 231 -79 661 -147 -102
Source: MOSL
April 2017 91

Companies CMP RECO EPS (INR) PE (x) EV/EBIDTA (x) ROE (%)
Cement
ACC 1,467 Neutral 33.7 46.7 58.6 43.5 31.4 25.0 21.9 17.0 14.2 7.5 10.4 13.2
Ambuja Cements 239 Buy 4.9 6.7 7.2 48.8 35.5 33.2 20.4 18.5 16.4 5.0 6.8 7.1
Birla Corporation 748 Buy 21.5 41.2 54.4 34.7 18.1 13.7 15.2 9.9 7.4 6.0 10.9 13.2
Dalmia Bharat 2,062 Buy 30.7 47.5 70.1 67.3 43.4 29.4 14.3 12.0 11.3 6.8 9.8 12.9
Grasim Industries 1,067 Neutral 68.7 86.6 111.1 15.6 12.3 9.6 10.6 8.5 9.5 11.7 13.2 14.8
India Cements 163 Neutral 5.1 8.7 11.9 31.9 18.7 13.7 10.8 9.7 8.5 4.0 6.2 7.7
J K Cements 935 Buy 32.6 37.2 49.3 28.7 25.1 19.0 14.8 12.6 11.2 13.3 13.6 16.0
JK Lakshmi Cem. 458 Buy 5.9 12.2 17.8 77.3 37.4 25.7 18.6 14.7 12.2 5.2 10.5 14.7
Orient Cement 145 Buy -1.8 3.2 5.8 -81.4 45.8 24.8 24.1 13.5 9.5 -3.7 6.6 11.3
Prism Cement 103 Buy -0.6 2.6 4.8 -170.1 39.3 21.4 30.1 17.8 13.0 -3.1 13.1 20.8
Ramco Cements 671 Buy 27.8 30.1 36.2 24.1 22.3 18.5 14.8 13.6 11.3 19.6 18.0 18.5
Shree Cement 17,332 Buy 363.2 480.6 642.3 47.7 36.1 27.0 25.0 20.3 16.2 19.2 21.7 23.5
Ultratech Cement 4,071 Buy 91.6 120.5 151.6 44.4 33.8 26.8 24.1 20.8 16.8 11.5 13.6 15.1
Source: MOSL
April 2017 92
ACC
Bloomberg ACC IN CMP: INR1,467 TP: INR1,339 (-10%) Neutral
Dispatches in 1QCY17 are estimated at 6.49mt (+2% YoY), led by
M. Cap. (INR b)/(USD b) 276 / 4
52-Week Range (INR) 1738 / 1257
capacity ramp-up at Jamul. Average realizations are expected to be
1,6,12 Rel Perf. (%) 1 / -17 / -15
lower by 2% QoQ (+3% YoY) at INR4,297/ton due to weak
realizations in the east and north markets.
Revenues are expected to increase 6% YoY to INR30.9b. EBITDA
Y/E Dec 2015 2016E 2017E 2018E
margin is expected to be 7.0%, down 0.2pp QoQ (-5.6pp YoY).
Sales 114.3 109 121 135 EBITDA/ton is estimated at INR293 (-INR288 YoY, -INR49 QoQ).
EBITDA 11.7 12 15 18 Pure cement EBITDA/ton is estimated at INR311 (-INR231 QoQ)
NP 6.0 6 9 11 due to weak realization. PAT is likely to decline 68% YoY to
Adj. EPS (INR) 32.0 34 47 59 INR749m.
EPS Gr. (%) -30.3 -10 38 26 The stock trades at 32x CY17E EPS, 17x CY17E EV/EBITDA, and CY17
BV/Sh (INR) 449.3 451 444 442 EV/ton of USD118. Maintain Neutral.
RoE (%) 7.2 7 10 13
RoCE (%) 7.4 8 10 13
Payout (%) 65.1 94 116 103
Valuations Key issues to watch out for:
P/E (x) 41 44 32 25 Cement pricing recovery.
P/BV (x) 3 3 3 3 Volume growth and demand revival.
EV/EBITDA (x) 19 22 17 14
Ramp-up of new plant in east.
EV/Ton (x) 107 118 118 113
Quarterly Performance (Standalone)

Y/E December CY15 CY16 CY17 CY16 CY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Cement Sales (m ton) 5.82 6.20 5.61 5.99 6.36 6.12 5.07 5.45 6.49 22.99 24.02
YoY Change (%) -10.2 -2.4 -0.2 4.0 9.3 -1.3 -9.6 -9.0 2.0 -2.7 4.5
Cement Realization 4,535 4,385 4,438 4,339 4,171 4,267 4,371 4,377 4,297 4,292 4,522
YoY Change (%) 5.5 -1.2 -1.8 -2.3 -8.0 -2.7 -1.5 0.9 3.0 -3.0 5.4
QoQ Change (%) 2.1 -3.3 1.2 -2.2 -3.9 2.3 2.4 0.1 -1.8
Net Sales 28,854 29,612 27,400 28,461 29,274 28,698 24,706 26,686 30,899 109,364 120,676
YoY Change (%) -2.8 -1.6 -0.1 3.0 1.5 -3.1 -9.8 -6.2 5.6 -4.3 10.3
Total Expenditure 24,718 26,817 24,762 26,300 25,578 24,607 22,458 24,771 28,727 97,413 105,363
EBITDA 4,137 2,795 2,638 2,162 3,696 4,092 2,247 1,915 2,172 11,951 15,313
Margins (%) 14.3 9.4 9.6 7.6 12.6 14.3 9.1 7.2 7.0 10.9 12.7
Depreciation 1,698 1,657 1,607 1,559 1,434 1,410 1,529 1,679 1,720 6,052 6,821
Interest 226 143 150 154 164 183 197 185 180 729 700
Other Income 1,141 775 678 2,241 1,121 686 744 795 800 3,346 3,750
PBT before EO Item 3,353 1,771 1,559 2,689 3,220 3,185 1,265 847 1,072 8,517 11,543
EO Income/(Expense) -123 0 0 0 0 0 0 -428 0 -428 0
PBT after EO Item 3,230 1,771 1,559 2,689 3,220 3,185 1,265 419 1,072 8,089 11,543
Tax 824 456 389 255 898 806 424 -64 323 2,065 2,770
Rate (%) 25.5 25.8 24.9 9.5 27.9 25.3 33.5 -15.3 30.1 25.5 24.0
Reported PAT 2,406 1,314 1,170 2,435 2,322 2,378 841 483 749 6,024 8,772
Adjusted PAT 2,497 1,314 1,170 2,435 2,322 2,378 841 911 749 6,452 8,772
Margins (%) 8.7 4.4 4.3 8.6 7.9 8.3 3.4 3.4 2.4 5.9 7.3
YoY Change (%) -5.2 -45.5 -42.9 100.6 -7.0 81.0 -28.1 -62.6 -67.7 -13.4 36.0
E: MOSL Estimates
April 2017 93
Ambuja Cements
Bloomberg ACEM IN CMP: INR239 TP: INR277 (+16%) Buy
Dispatches in 1QCY17 are estimated to increase 1% YoY to 6.00mt.
M. Cap. (INR b)/(USD b) 474 / 7
Average realizations are expected to decline 1% QoQ to
1,6,12 Rel Perf. (%) 2 / -13 / -15
INR4,266/ton. Revenue is estimated at INR25.6b (+6% YoY).
EBITDA margin is expected to be 12.6% (-0.8pp QoQ, -4.9pp YoY).
EBITDA/ton is estimated at ~INR536 (-INR43 QoQ, -INR173 YoY).
Y/E DEC 2015 2016E 2017E 2018E
Adjusted PAT is estimated to decline 27% YoY to INR2.1b due to
weak profitability.
Sales 93.7 91.6 99.7 111.5
EBITDA 14.4 15.8 18.4 20.6
The stock trades at 24x CY17E EPS, 16x CY17E EV/EBITDA, and
NP 8.5 9.7 14.6 15.6 CY17E EV/ton of USD149. Maintain Buy.
Adj. EPS (INR) 5.5 4.9 7.3 7.9
EPS Gr. (%) -35.9 -10.5 50.4 6.8
BV/Sh. (INR) 66.9 97.4 101.2 103.9
RoE (%) 8.3 5.0 7.4 7.7
RoCE (%) 8.9 6.9 7.6 7.9
Payout (%) 44.9 29.6 47.8 65.7
Key issues to watch out for:
Valuations
Volume growth recovery and outlook.
P/E (x) 38.8 35.9 23.9 22.4
Cement pricing outlook and sustainability.
P/BV (x) 3.2 1.8 1.7 1.7
Post-demonetization volume demand.
EV/EBITDA (x) 22.3 20.4 18.5 16.4
EV/Ton (USD) 138 156 149 141
Quarterly Performance (INR m)

Y/E December CY15 CY16 CY17 CY16E CY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1QE
Sales Volume (m ton)* 5.43 5.95 4.90 5.48 5.97 5.85 4.58 5.09 6.00 21.49 22.35
YoY Change (%) -10.4 1.8 1.9 0.8 9.9 -1.7 -6.5 -7.1 0.6 -1.2 4.0
Realization (INR/ton) 4,465 4,190 4,277 4,300 4,053 4,344 4,376 4,316 4,266 4,263 4,388
YoY Change (%) 2.6 -9.5 -6.0 -1.8 -9.2 3.7 2.3 0.4 5.3 -1.0 2.9
QoQ Change (%) 2.0 -6.2 2.1 0.5 -5.7 7.2 0.7 -1.4 -1.2
Net Sales 24,246 24,928 20,952 23,558 24,183 25,412 20,043 21,967 25,594 91,604 98,061
YoY Change (%) -8.1 -7.9 -4.2 -1.0 -0.3 1.9 -4.3 -6.8 5.8 7.7 1.4
EBITDA 4,715 3,661 2,944 3,042 4,235 5,813 2,760 2,947 3,218 15,755 16,743
Margins (%) 19.4 14.7 14.1 12.9 17.5 22.9 13.8 13.4 12.6 17.2 17.1
Depreciation 1,578 1,485 1,553 1,641 1,477 1,511 1,595 1,563 1,500 8,501 6,140
Interest 214 316 207 181 182 205 192 136 170 715 625
Other Income 1,336 1,234 898 1,067 1,415 1,368 2,503 755 1,400 6,837 7,800
PBT before EO Item 4,259 3,094 2,082 2,287 3,992 5,465 3,477 2,003 2,948 13,376 17,778
Rate (%) 25.4 26.8 26.2 36.4 27.7 26.9 20.3 7.3 28.0 27.5 25.0
Reported Profit 3,177 2,264 1,536 1,100 3,038 3,995 2,770 1,759 2,122 9,703 13,334
Adj PAT 3,177 2,264 1,536 1,454 2,885 3,995 2,770 1,856 2,122 9,703 13,334
YoY Change (%) -29.0 -44.6 -35.8 -43.2 -9.2 76.5 80.4 27.7 -26.5 14.4 37.4
E: MOSL Estimates
April 2017 94
Dalmia Cement
Bloomberg DBEL IN CMP: INR2,062 TP: INR2,392(+16%) Buy
4QFY17 cement volumes are estimated to increase 1% YoY to
M. Cap. (INR b)/(USD b) 183 / 3
3.93mt due to a high base. Realizations are estimated to decline 3%
1,6,12 Rel Perf. (%) 6 / 1 / 138
YoY/QoQ to INR4,717/ton.
We estimate cement EBITDA/ton at INR994 (-INR147/ton QoQ) due
to weak realizations. EBITDA margin is expected to contract 3.0pp
Y/E March 2016 2017E 2018E 2019E QoQ to 21%.
Sales 33.7 63.7 70.2 79.3 EBITDA is estimated to decline 13% YoY to INR3.9b, translating into
EBITDA 4.5 15.1 16.8 19.5 PAT decline of 35% YoY to INR614mn.
NP 0.1 1.9 2.7 4.2 The stock trades at 41x FY18E EPS, 12x FY18E EV/EBITDA, and FY18E
Adj EPS(INR) 1.1 21.5 30.7 47.5 EV/ton of USD158. Maintain Buy.
EPS Gr. (%) -209 1,802.4 42.7 55.0
BV/Sh (INR) 378 434 463 508
RoE (%) 0.3 5.5 6.8 9.8
RoCE (%) 25.3 4.9 6.2 7.5
Payout (%) NM 8.1 7.6 4.9
Valuation Key issues to watch out for:
P/E (x) 1,728.2 90.8 63.7 41.1 Volume growth recovery and outlook.
P/BV (x) 5.2 4.5 4.2 3.8 Cement pricing outlook and sustainability.
EV/EBITDA (x) 57.0 16.7 14.6 12.4 Update on restructuring timelines
EV/Ton (USD) 152 166 163 158

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales Dispatches (m ton) 3.1 2.85 2.96 3.88 3.76 3.42 3.56 3.93 12.80 14.67
YoY Change (%) 96.8 95.2 79.6 66.0 21.7 20.0 20.3 1.2 82.4 14.6
Realization (INR/ton) 5,176 4,979 4,998 4,847 4,695 4,897 4,845 4,717 4,974 4,784
YoY Change (%) 17.7 2.5 7.4 -11.8 -9.3 -1.6 -3.1 -2.7 3.7 -3.8
QoQ Change (%) -5.8 -3.8 0.4 -3.0 -3.1 4.3 -1.1 -2.6
Net Sales 15,995 14,190 14,793 18,805 17,654 16,747 17,247 18,518 63,672 70,166
YoY Change (%) 135.0 104.8 94.2 52.7 10.4 18.0 16.6 -1.5 89.2 10.2
EBITDA 3,858 3,116 3,395 4,491 4,963 3,902 4,065 3,904 15,079 16,833
Margins (%) 24.1 22.0 23.0 23.9 28.1 23.3 23.6 21.1 23.7 24.0
Depreciation 1,176 1,544 1,416 1,198 1,338 1,587 1,593 1,517 4,528 6,035
Interest 1,724 1,733 1,731 2,079 2,412 2,291 2,198 2,135 7,256 9,036
Other Income 542 925 581 1,296 887 1,102 858 904 2,349 3,750
PBT after EO Expense 1,500 769 829 2,511 2,100 1,125 1,131 1,156 5,644 5,511
Tax 772 614 385 1,106 911 662 624 445 2,991 2,641
Rate (%) 51.5 79.9 46.4 44.0 43.4 58.9 55.1 38.4 53.0 47.9
PAT Adj for EO items 527 124 299 949 940 311 357 614 1,908 2,561
YoY Change (%) -292.7 -173.3 100.7 78.3 149.8 19.2 -35.3 6,155.0 34.3
E: MOSL Estimates; JPA Bokaro consolidated since 16/Nov/14, *OCL from March-2015
April 2017 95
Grasim Industries
Bloomberg GRASIM IN CMP: INR1067 TP: INR1067 (+0%) Neutral
We expect VSF volumes to decline 4% YoY to 124,406 tons in
M. Cap. (INR b)/(USD b) 498 / 8
4QFY17, while realizations are expected to fall 1% YoY to
1,6,12 Rel Perf. (%) 1 / 2 / 19
INR124,271/ton. Standalone revenues are likely to decline 4% YoY
to INR23.98b.
Standalone EBITDA margin is estimated at 20.1% (+2.9pp YoY, -
Y/E March 2016 2017E 2018E 2019E
0.4pp QoQ).
EBITDA is estimated to increase 12% YoY to INR4.8b, translating
Sales 365.9 375.1 400.9 444.4
into PAT of INR2.5b (+20% YoY).
EBITDA 60.2 69.9 82.1 98.4
The stock trades at 9.6x FY19E consolidated EPS, 9.5x FY19E
Adj. PAT 22.6 32.1 40.4 51.8
EV/EBITDA, and implied cement EV/ton of USD135.
Adj. EPS (INR) 48.3 68.7 86.6 111.1
EPS Gr. (%) 26.8 42.1 26.2 28.2
BV/Sh. (INR) 553.4 616.7 698.4 804.5
RoE (%) 9.2 11.7 13.2 14.8
RoCE (%) 10.0 11.9 13.9 16.2
Payout (%) 11.0 7.7 5.8 4.5
Pick-up in cement demand and pricing thereon.
Valuations
Outlook on VSF business, and strategy to utilize upcoming
P/E (x) 22.1 15.6 12.3 9.6
capacities globally.
P/BV (x) 1.9 1.7 1.5 1.3
EV/EBITDA (x) 12.4 10.6 8.5 9.5
Impact of demonetization on caustic soda demand.
EV/Ton (x) 165 149 140 135

(Standalone) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
VSF Volume (ton) 102,737 113,756 120,700 130,000 121,000 123,994 122,000 124,406 468,000 491,400
YoY Change (%) 18.9 12.7 24.4 9.7 17.8 9.0 1.1 -4.3 16.2 5.0
VSF Realization (INR/ton) 113,309 116,708 126,090 126,090 128,039 130,713 137,438 124,271 121,693 130,093
YoY Change (%) -4.8 -1.4 8.0 13.8 13.0 12.0 9.0 -1.4 5.0 6.9
QoQ Change (%) 2.3 3.0 8.0 0.0 1.5 2.1 5.1 -9.6
Net Sales 19,349 21,197 23,032 25,044 23,959 24,887 24,947 23,980 88,622 97,772
YoY Change (%) 35.9 34.0 49.1 47.2 23.8 17.4 8.3 -4.3 41.7 10.3
EBITDA 2,671 3,354 4,290 4,298 5,078 5,301 5,116 4,832 14,613 20,327
Margins (%) 13.8 15.8 18.6 17.2 21.2 21.3 20.5 20.1 16.5 20.8
Depreciation 945 1,006 1,233 1,287 1,104 1,119 1,106 1,153 4,471 4,481
Interest 409 401 396 268 231 156 107 201 1,474 694
Other Income 131 2,557 668 635 781 3,587 865 766 3,992 6,000
PBT after EO Items 1,447 4,504 3,330 3,086 4,525 7,612 4,769 3,953 12,659 21,151
Tax 535 688 611 1,001 1,317 1,690 1,455 1,461 2,835 5,922
Rate (%) 36.9 15.3 18.3 32.4 29.1 22.2 30.5 37.0 22.4 28.0
Reported PAT 913 3,815 2,719 2,086 3,209 5,923 3,314 2,492 9,825 15,229
Adj. PAT 913 3,815 2,719 2,086 3,209 5,923 3,314 2,492 9,825 15,229
Margins (%) 4.7 18.0 11.8 8.3 13.4 23.8 13.3 10.4 11.1 15.6
YoY Change (%) -13.8 27.5 194.9 359.1 251.6 55.2 21.9 19.5 81.1 55.0
E: MOSL Estimates
April 2017 96
India Cements
Bloomberg ICEM IN
CMP: INR163 TP: INR152 (-7%) Neutral
M. Cap. (INR b)/(USD b) 50 / 1 India Cements volumes are expected to decline 4% YoY to 2.4mt in
52-Week Range (INR) 174 / 83 4QFY17 on account of a high base. We expect realizations to
1,6,12 Rel Perf. (%) -6 / -3 / 73 decline 4% QoQ to INR5,175/ton. Revenue is estimated at INR12.5b
(+9% YoY).
Financial Snapshot (INR Billion) EBITDA is estimated at INR1.34b, and EBITDA margin is likely to
Y/E March 2016E 2017E 2018E 2019E contract 4.2pp QoQ to 10.7%, translating into blended EBITDA/ton
Sales 42.3 50.3 56.4 64.2 of INR563 (-INR240 QoQ). PAT is expected to be INR56m (v/s
EBITDA 7.7 7.5 8.4 9.5 INR512m in 4QFY16).
NP 1.4 1.5 2.4 3.2 Valuations stand at 19x FY18E EPS and 9x FY18E EBITDA. The stock
Adj. EPS (INR) 4.4 5.1 8.7 11.9 trades at EV/ton of USD81/t on FY18E replacement cost. Maintain
EPS Gr. (%) -11,446 16.1 70.8 36.5
Neutral.
BV/Sh (INR) 118.8 122.4 129.1 139.4
RoE (%) 3.9 4.0 6.2 7.7
RoCE (%) 5.9 5.5 6.6 7.4
Payout (%) 25.9 24.2 14.8 0.0
P/E (x) 37.3 32.1 18.8 13.8
Visibility on AP demand recovery.
P/BV (x) 1.4 1.3 1.3 1.2
Demand, especially in south India, post demonetization.
EV/EBITDA(x) 10.2 10.1 8.8 7.6
EV/Ton (USD) 81 81 81 80
Pricing outlook in south India.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
YoY Change (%) -18 -8 -8 19 10 14 21 -4 -4.5 9.3
YoY Change (%) 18.9 19.7 13.3 -5.5 2.5 -5.6 -1.4 13.6 4.1 9.1
QoQ Change (%) 4.7 10.4 -2.8 -15.8 13.5 1.7 1.4 -4.0
Net Sales 10,743 12,258 10,587 11,471 12,025 13,075 12,679 12,544 42,269 50,323
YoY Change (%) -12.4 8.3 2.2 11.9 11.9 6.7 19.8 9.4 -4.4 19.1
EBITDA 1,960 2,296 1,471 2,115 2,014 2,244 1,886 1,344 7,813 7,488
Margins (%) 18.2 18.7 13.9 18.4 16.7 17.2 14.9 10.7 18.5 14.9
Depreciation 554 557 554 522 511 521 516 523 2,180 2,072
Interest 965 985 935 913 825 876 858 821 3,704 3,380
Other Income 44 33 74 70 32 69 31 64 222 196
Extra-Ord expense 107 40 0 0 0 0 0 0 147
PBT 378 748 56 750 710 917 542 63 2,003 2,232
Tax 0 363 24 238 271 293 189 7 625 759
Rate (%) 0.0 48.5 43.6 31.7 38.1 31.9 34.8 11.1 31.2 34.0
Reported PAT 378 385 32 512 440 624 353 56 1,378 1,473
Adj PAT 485 405 32 512 440 624 353 56 1,480 1,473
E: MOSL Estimates
April 2017 97
Ramco Cements
Bloomberg TRCL IN CMP: INR671 TP: INR815 (+22%) Buy
4QFY17 volumes are estimated to grow 6% YoY to 2.2mt on account
M. Cap. (INR b)/(USD b) 160 / 2
52-Week Range (INR)
of high base and growth in the eastern markets. Average realizations
728 / 400
1,6,12 Rel Perf. (%) -2 / 1 / 44
are expected to decline 10% YoY (-2% QoQ) to 4,573/ton due to a fall
in realizations in the southern market.
EBITDA margin is likely to contract 4.9pp QoQ to 26.7%. EBITDA/ton
(ex-windmill) is estimated at INR1,222 (-INR117 QoQ, -INR270 YoY)
Y/E MARCH 2016 2017E 2018E 2019E
due to an increase in power/fuel cost and lower realizations.
Sales 35.9 39.1 42.3 48.3 Interest cost is likely to decline 44% YoY due to debt repayment and
EBITDA 10.5 11.8 12.4 14.3 also re-pricing of debt at a lower rate.
NP 5.6 6.6 7.2 8.6 PAT is estimated to decline 27% YoY to INR1.48b.
Adj EPS (INR) 23.4 27.8 30.1 36.2
The stock trades at 23x FY18E EPS, 13.6x FY18E EBITDA, and FY18E
EPS Gr. (%) 130.3 18.4 8.4 20.3
EV/ton of USD158. Maintain Buy.
BV/Sh. (INR) 129.9 154.2 179.6 211.2
RoE (%) 19.5 19.6 18.0 18.5
RoCE (%) 13.2 13.7 13.8 15.3
Payout (%) 14.9 12.6 15.4 12.8
Valuations
P/E (x) 29.0 24.5 22.6 18.8
P/BV (x) 5.2 4.4 3.8 3.2
EV/EBITDA (x) 17.3 14.9 13.6 11.3 Volume growth recovery and outlook.
EV/Ton (USD) 176 164 158 150 Cement pricing outlook and demand sustainability in south (AP and
Tamil Nadu).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
YoY Change (%) -14.8 -11.9 -5.4 10.9 14.5 18.9 22.3 5.9 -5.6 14.8
YoY Change (%) 17.7 2.9 4.7 -4.8 -12.3 -2.2 -5.7 -9.6 5.0 -7.7
QoQ Change (%) -2.5 -5.8 1.9 1.8 -10.2 5.0 -1.8 -2.3
Net Sales 9,041 8,766 8,128 9,788 9,667 10,124 9,374 9,961 35,872 39,125
YoY Change (%) -2.2 -4.9 3.4 1.8 6.9 15.5 15.3 1.8 -0.2 9.1
EBITDA 2,104 2,840 2,485 3,093 2,988 3,493 2,690 2,659 10,504 11,829
Margins (%) 23.3 32.4 30.6 31.6 30.9 34.5 28.7 26.7 29.3 30.2
Depreciation 667 671 679 652 663 667 661 660 2,670 2,651
Interest 493 456 420 444 291 282 261 248 1,802 1,082
Other Income 452 130 76 389 73 93 273 166 999 604
PBT 1,396 1,842 1,463 2,386 2,106 2,637 2,061 1,917 7,031 8,701
Tax 403 421 279 342 547 567 542 432 1,448 2,088
Rate (%) 28.9 22.8 19.1 14.4 26.0 21.5 26.3 22.6 20.6 24.0
Adj PAT 992 1,421 1,183 2,043 1,559 2,070 1,498 1,485 5,583 6,613
YoY Change (%) 173.7 58.4 415.4 118.7 57.1 45.6 26.6 -27.3 130.4 18.4
Margins (%) 11.0 16.2 14.6 20.9 16.1 20.4 16.0 14.9 15.6 16.9
E: MOSL Estimates
April 2017 98
Shree Cement
Bloomberg SRCM IN CMP: INR17,332 TP: INR20,072(+16%) Buy
We expect 4QFY17 cement volumes to grow 11% YoY to 5.95mt
M. Cap. (INR b)/(USD b) 604 / 9
(including clinker), led by ramp-up of new capacity in the eastern
52-Week Range (INR) 18519/12001
1,6,12 Rel Perf. (%) 5 / -9 / 23
market. Realizations are expected to decline by 3% QoQ to
INR3,590/ton due to lower realizations in the focus markets.
Merchant power sale is expected to be meaningfully lower at 100m
Y/E March 2016 2017E 2018E 2019E
units due to a sharp decline in merchant power rates. Power
Sales 72.9 83.4 101.1 119.9
EBITDA is estimated to be negligible.
EBITDA 16.7 23.7 30.5 36.8 Revenue is estimated at INR22.1b (+10% YoY) and EBITDA at
NP 5.9 13.0 20.3 25.7 INR4.34b, translating into margin of 19.6% (-5.8pp QoQ,). Adjusted
Adj EPS (INR) 168.0 374.6 581.4 737.1 PAT is likely to be INR2.28b (+2.4% YoY).
EPS Gr. (%) 26.1 57.0 55.2 26.8 Valuations stand at 30x FY18E EPS, 18.3x FY18E EBITDA, and FY18E
BV/Share (INR) 1,774 2,013 2,548 3,239 EV/ton of USD277. Maintain Buy.
RoE (%) 10.2 19.8 25.5 25.5
RoCE (%) 10.6 19.4 24.5 24.9
Payout (%) 17.4 36.0 8.0 6.3
Valuation
P/E (x) 70.3 46.9 30.2 23.8
P/BV (x) 8.0 8.7 6.9 5.4 Key issues to watch out for:
EV/EBITDA (x) 27.9 24.4 18.3 14.6
Volume and pricing recovery for north India.
EV/Ton (USD) 267 309 277 199
Update on scale-up of recently commissioned units in east.
New expansion plans.
Quarterly Performance - Shree Cement (S/A) (INR Million)

Y/E June FY16 FY17 FY16 FY17E
1Q 2Q 3Q 1Q 2Q 3Q 4QE
Sales Dispat. (m ton) 4.19 4.70 5.36 5.13 4.57 4.91 5.95 18.59 20.56
YoY Change (%) 7.9 23.3 29.7 18.0 9.2 4.5 11.1 15.0 10.6
Realization (INR/Ton) 3,619 3,449 3,345 3,885 3,965 3,699 3,590 3,463 3,773
YoY Change (%) -0.8 -2.6 -5.4 11.8 9.6 7.2 7.3 -2.4 9.0
QoQ Change (%) 4.1 -4.7 -3.0 16.1 2.1 -6.7 -2.9
Net Sales 17,119 18,030 20,174 21,987 20,068 18,434 22,138 72,517 82,626
YoY Change (%) 6.6 16.9 28.2 27.9 17.2 2.2 9.7 12.6 13.9
EBITDA 4,163 4,586 5,050 7,308 6,563 4,689 4,340 17,315 22,900
Margins (%) 24.3 25.4 25.0 33.2 32.7 25.4 19.6 23.9 27.7
Depreciation 2,448 2,766 3,338 1,540 4,322 3,176 2,994 10,934 12,033
Interest 235 235 286 276 293 411 175 1,019 1,155
Other Income 958 1,017 755 979 1,233 1,356 1,432 3,174 5,000
PBT before EO Exp 2,438 2,602 2,182 6,471 3,180 2,459 2,603 8,536 14,712
PBT 2,438 2,601 2,181 6,471 3,180 2,438 2,603 8,294 14,691
Tax -26 265 -53 1,394 265 83 315 219 2,057
Rate (%) -1.1 10.2 -2.4 21.5 8.3 3.4 12.1 2.6 14.0
Reported PAT 2,464 2,336 2,233 5,077 2,915 2,354 2,288 8,074 12,634
Adj PAT 2,464 2,337 2,234 5,077 2,915 2,375 2,288 8,310 12,652
YoY Change (%) 107.4 147.4 79.3 106.1 18.3 1.6 2.4 79.1 52.3
E:MOSL Estimates ** FY16 is March ending 12 months
April 2017 99
UltraTech Cement
Bloomberg UTCEM IN CMP: INR4,071 TP: INR4,734 (+16%) Buy
4QFY17 cement volumes are estimated to decline 0.3% YoY to
M. Cap. (INR b)/(USD b) 1117 / 17
13.56mt due to a high base. Realizations are estimated to increase
52-Week Range (INR) 4130 / 3050
1,6,12 Rel Perf. (%) 3 / -5 / 11
0.7% YoY (-2.2% QoQ) to INR3,972/ton.
We estimate grey cement EBITDA/ton at INR654 (-INR125/ton QoQ)
due to weak realizations. EBITDA margin is expected to contract
Y/E March 2016 2017E 2018E 2019E 2.3pp QoQ to 16.6%.
Sales 238.4 235.1 257.2 288.4 EBITDA is estimated to decline 17.5% YoY to INR10.6b, translating
EBITDA 43.5 45.7 52.2 63.2 into PAT decline of 16% YoY to INR5.74b.
NP 21.7 25.1 33.0 41.6 The stock trades at 34x FY18E EPS, 20x FY18E EV/EBITDA, and FY18E
Adj EPS (INR) 79.3 91.6 120.5 151.6 EV/ton of USD235. Maintain Buy.
EPS Gr. (%) 7.9 15.6 31.5 25.9
BV/Sh (INR) 755.8 835.8 938.8 1,067.2
RoE (%) 11.0 11.5 13.6 15.1
RoCE (%) 9.3 9.9 11.6 13.0
Payout (%) 13.9 12.7 14.5 15.3
P/E (x) 51.4 44.4 33.8 26.8 Volume growth recovery and outlook.
P/BV (x) 5.4 4.9 4.3 3.8 Cement pricing outlook and sustainability.
EV/EBITDA (x) 25.4 23.8 20.1 15.9 Update on JPA acquisition
EV/Ton (USD) 248 244 235 225

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales (m ton) 12.14 10.80 11.47 13.60 12.91 10.87 11.40 13.56 48.1 48.7
YoY Change (%) 3.8 4.3 4.4 15.2 6.3 0.6 -0.6 -0.3 7.2 1.4
Grey Cement Realn.(INR/ton) * 4,183 4,192 4,056 3,946 4,083 4,160 4,057 3,972 4,138 4,063
YoY Change (%) 2.2 -2.8 -2.1 -9.4 -2.4 -0.8 0.0 0.7 -2.1 -1.8
QoQ Change (%) -4.0 0.2 -3.2 -2.7 3.5 1.9 -2.5 -2.1
Net Sales 59,476 55,270 56,520 64,359 61,823 53,966 55,401 63,927 238,410 235,117
EBITDA 10,939 9,212 10,366 12,850 13,723 10,938 10,445 10,601 43,498 45,707
Margins (%) 18.4 16.7 18.3 20.0 22.2 20.3 18.9 16.6 18.2 19.4
Depreciation 2,852 3,352 3,259 3,493 3,027 3,139 3,156 3,080 12,890 12,402
Interest 1,399 1,319 1,273 1,110 1,525 1,367 1,293 1,225 5,053 5,410
Other Income 1,770 1,945 1,676 1,055 2,006 2,335 1,660 1,500 5,015 7,500
Rate (%) 28.6 29.5 29.7 26.7 30.7 31.4 26.4 26.4 28.9 29.0
Adj PAT 6,040 4,574 5,280 6,814 7,749 6,011 5,634 5,737 21,747 25,131
YoY Change (%) -3.4 11.5 44.9 10.8 28.3 31.4 6.7 -15.8 7.9 15.6
E: MOSL Estimates; * Grey cement realization is our estimate
April 2017 100

March 2017
March 2017 Results
Results Preview
Preview || Consumer
April 2017
Consumer
Another quarter of muted revenue growth
Company name Rising raw material costs likely to hurt margins
Asian Paints
Britannia Industries Subdued quarter with pressure on margins
Colgate We expect our consumer universes revenues to increase 4.5% YoY in 4QFY17, with
Dabur PAT growth of 5.3%. The lingering effects of demonetization are likely to continue
Emami impacting the companies, particularly those with higher proportion of wholesale
Godrej Consumer trade and greater exposure to rural as well as north and east regions. The MOSL
GSK Consumer consumer universes EBITDA is likely to increase by only 2.6% YoY, with 40bp margin
Hindustan Unilever contraction. Barring Nestle, United Spirits and Jyothy Labs, we expect near
ITC
flattish/or a decline in YoY EBITDA margin for all other FMCG companies due to
Jyothy Labs
weak sales growth and favorable base of commodity costs coming off (with prices of
many commodities sharply increasing YoY). Moreover, ad spends are unlikely to
Marico
decline steeply enough to protect margins for most companies. We expect ITCs
Nestle India
sales to increase by 1.3% YoY (with a 4% decline in cigarette volumes) and PAT by
Page Industries
8.4% (mainly due to high 36% tax rate in the base quarter). HUVRs sales growth is
Parag Milk Foods
estimated at 4.5% (volume decline of 0.5%), with 100bp EBITDA margin contraction.
Pidilite Industries
Nine of the 18 companies under our coverage are likely to report a decline in EBITDA
P&GHH
YoY, with five others estimated to report EBITDA growth in the range of 0-5%.
United Breweries
Nestle, United Spirits and Jyothy Labs are likely to report double-digit EBITDA
United Spirits
growth, mainly due to a low margin base. GCPL too is expected to do well as only
half of its business comes from India. Mainly due to lower/higher-than-usual tax
rates in 4QFY16, PAT growth variance may be higher/lower than EBITDA growth for
some companies.
RM costs, promotions and new launches

PFAD and palm oil prices saw steep YoY inflation of 28% and 30%, respectively, on
average in 4QFY17. Ti02/mentha prices increased 13%/11% YoY on average. Copra,
LLP and HDPE prices were up 49%, 30% and 7% YoY, respectively, for the last
reported month. Companies have started taking selective price hikes/grammage
reduction/lessening offers following an increase in raw material costs. Promotion
intensity is reducing sequentially. Majority of new launches are likely to be
postponed to 1QFY18 due to the prevalent weak environment.
Preference for quality and longevity of growth

The consumer sector is characterized by rich near-term valuations, given the
markets continued preference for quality with healthy growth. Our framework for
earnings visibility, longevity of growth and quality management drives our choices in
the sector universe. We continue preferring Britannia, Colgate, Marico, P&G
Hygiene and Emami, notwithstanding the near-term challenges. In the discretionary
pack, while the near-term outlook is highly challenging, we like Page Industries and
United Breweries.
Krishnan Sambamoorthy (Krishnan.Sambamoorthy@MotilalOswal.com)

Vishal Punmiya (Vishal.Punmiya@MotilalOswal.com)
April 2017 101
March 2017 Results Preview | Consumer

Sector Sales (INR M) EBDITA (INR M) PAT (INR M)
CMP Var Var % Var Var % Var Var %
RECO Mar-17 Mar-17 Mar-17
(INR) % YoY QoQ % YoY QoQ % YoY QoQ
Consumer
Asian Paints 1,080 Neutral 38,177 4.0 -3.0 7,159 2.7 -7.8 4,891 17.2 4.9
Britannia 3,372 Buy 22,657 7.3 0.0 2,575 -4.2 -12.8 1,924 -3.3 -12.7
Colgate 1,001 Buy 10,057 3.5 16.3 2,620 5.0 22.4 1,567 -17.3 24.5
Dabur 284 Neutral 20,242 2.2 9.6 4,092 -0.5 24.5 3,406 2.7 16.0
Emami 1,038 Buy 5,898 -2.1 -18.8 1,787 -2.9 -30.9 992 -35.6 -51.5
Godrej Consumer 1,701 Neutral 24,452 10.7 2.2 5,040 10.8 -0.5 3,401 6.3 -2.5
GSK Consumer 5,181 Neutral 11,283 -1.3 31.1 2,424 -3.5 44.5 1,666 -1.8 22.1
Hind. Unilever 935 Neutral 80,680 4.5 4.7 14,567 -0.9 7.5 11,025 -1.0 19.9
ITC 279 Buy 98,798 1.3 6.8 36,038 -0.1 1.6 25,781 8.4 -2.6
Jyothy Labs 342 Neutral 5,405 9.6 41.0 765 21.3 51.0 476 341.4 121.5
Marico 298 Buy 13,442 4.4 -4.9 2,146 2.1 -20.4 1,446 6.2 -24.5
Nestle 6,622 Neutral 27,549 20.0 21.8 6,629 28.0 68.5 4,119 35.0 58.8
P&G Hygiene 7,388 Buy 5,927 9.0 -7.9 1,335 0.1 -41.6 947 -2.4 -37.1
Page Industries 14,596 Buy 4,843 13.8 -8.3 977 4.8 -1.4 637 6.9 1.3
Parag Milk Foods 242 Neutral 4,247 2.5 -4.8 231 -42.0 LP 84 -47.6 LP
Pidilite Inds. 714 Neutral 12,406 0.0 -7.0 2,305 -3.3 -20.8 1,417 -8.4 -31.3
United Breweries 762 Buy 11,583 -4.7 13.0 1,249 -1.9 -2.4 612 16.9 26.3
United Spirits 2,028 Buy 22,612 6.4 -9.0 2,475 35.3 -12.8 937 -7.3 -36.6
Consumer Sector Aggregate 420,256 4.5 4.1 94,414 2.6 2.9 65,330 5.3 1.7
Source: MOSL
Exhibit 2: 4QFY17 volume growth expectations (%)

Quarter Ending 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17E
Asian Paints 12.0 11.0 10.0 3.0 4.0 12.0 7.0 15.0 13.0 11.0 12.0 2.0 3.0
Britannia (Biscuits) 3.0 10.0 6.0 8.0 8.0 10.0 12.0 11.0 10.0 8.0 10.0 2.0 3.0
Colgate (Toothpaste) 7.0 5.0 7.0 5.0 5.0 2.0 3.0 1.0 3.0 5.0 4.0 (12.0) (2.0)
Dabur 9.2 8.3 8.7 7.4 8.1 8.1 5.5 (2.5) 7.0 4.1 4.5 (5.0) 4.0
Emami (10.0) 12.5 11.5 11.0 12.0 15.0 13.5 9.3 18.0 18.0 11.0 0.2 (4.0)
Godrej Consumer
Soaps (4.0) 0.0 2.0 3.0 5.0 DD MSD MSD MSD LDD (MSD) (8.0) 0.0
GSK Consumer 8.0 3.0 2.0 5.0 2.0 2.0 0.0 0.0 0.0 (6.0) (3.0) (17.0) (5.0)
Hindustan Unilever 3.0 5.0 5.0 3.0 6.0 6.0 7.0 6.0 4.0 4.0 (1.0) (4.0) (0.5)
ITC (cigarette) (3.0) (2.5) (4.0) (13.0) (12.0) (17.0) (14.0) (5.0) 0.0 3.0 4.0 (1.0) (4.0)
Marico
Parachute 10.0 6.0 7.0 8.0 5.0 8.0 11.0 4.0 7.0 7.0 (6.0) (1.0) 10.0
Hair Oil 5.0 11.0 13.0 10.0 5.0 14.0 8.0 21.0 15.0 9.0 11.0 (12.0) 5.0
Saffola 11.0 10.0 9.0 3.0 (1.0) 4.0 4.0 17.0 10.0 11.0 8.0 6.0 6.0
Pidilite 12.0 13.0 10.0 7.0 5.5 5.0 3.0 6.0 6.0 9.0 7.8 (1.5) (1.0)
Exhibit 3: Relative performance 3m (%) Exhibit 4: Relative performance 1Yr (%)
Sensex Index MOSL Consumer Index Sensex Index MOSL Consumer Index
116
118
110 113
108
104
103
98 98
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
Dec-16
Jan-17
Feb-17
Mar-17
April 2017 102

Exhibit 5: PFAD prices up 28.3% YoY and 6.6% QoQ Exhibit 6: Palm oil prices rise 29.8% YoY and 6.1% QoQ
Palm Fatty Acid price (INR/MT) Palm Oil (Malaysian Ringgit Per Metric Tonne)
3,500
51,000
Malaysian Ringgit\MT
3,000
42,000
43,702 2,866
33,000 2,500
24,000 2,000
15,000 1,500
Jul-14
Jul-15
Jul-16
Nov-14
Nov-15
Nov-16
Mar-14
Mar-15
Mar-16
Mar-17
Jul-14
Jul-15
Jul-16
Nov-14
Nov-15
Nov-16
Mar-14
Mar-15
Mar-16
Mar-17
Exhibit 7: Mentha prices up 11% YoY and 9% QoQ Exhibit 8: TiO2 prices up 13.1% YoY and 6.0% QoQ
Mentha Oil prices INR / kg TiO2 price (INR/kg)

270
1,250 250
230
1,000 1,080
750 190
500 150
Jun-14
Jun-15
Jun-16
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17
Jul-14
Jul-15
Jul-16
Nov-14
Nov-15
Nov-16
Mar-14
Mar-15
Mar-16
Mar-17

Sector / Companies RECO EPS (INR) PE (x) EV/EBIDTA (x) ROE (%)
FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Consumer
Asian Paints Neutral 20.5 22.6 26.7 52.7 47.8 40.5 33.6 31.0 26.4 32.8 31.8 32.4
Britannia Buy 72.2 83.3 101.7 46.7 40.5 33.2 34.4 29.4 23.2 43.1 39.2 38.0
Colgate Buy 21.7 25.8 31.6 46.2 38.8 31.6 28.0 23.3 19.2 54.9 60.1 68.5
Dabur Neutral 7.3 8.3 9.7 38.9 34.3 29.3 32.0 28.2 24.0 28.3 27.2 27.1
Emami Buy 24.5 29.8 36.0 42.4 34.8 28.8 31.1 27.0 22.8 33.8 33.0 33.2
Godrej Consumer Neutral 37.1 42.9 49.8 45.8 39.6 34.2 32.8 28.7 25.1 22.5 22.2 21.9
GSK Consumer Neutral 153.9 173.1 190.8 33.7 29.9 27.1 22.3 19.4 17.3 24.6 24.0 23.1
Hind. Unilever Neutral 19.3 21.5 24.8 48.6 43.5 37.7 33.7 30.6 26.5 67.6 78.4 92.5
ITC Buy 8.4 9.3 11.0 33.3 29.8 25.3 22.5 20.0 16.6 28.4 27.6 28.7
Jyothy Labs Neutral 8.0 9.0 10.5 42.8 38.0 32.6 24.0 22.0 19.5 16.4 17.1 18.1
Marico Buy 6.1 7.0 8.4 49.0 42.5 35.4 34.2 29.8 24.9 33.3 32.1 34.6
Nestle Neutral 118.7 144.0 171.0 55.8 46.0 38.7 34.4 27.4 23.1 38.8 42.3 42.3
P&G Hygiene Buy 145.7 167.7 198.8 50.7 44.1 37.2 32.9 28.1 23.4 29.0 28.8 29.5
Page Industries Buy 235.6 305.1 388.4 62.0 47.8 37.6 39.5 30.4 24.0 41.3 42.2 43.2
Parag Milk Foods Neutral 0.8 6.9 12.5 298.4 34.8 19.4 27.6 15.1 10.3 1.3 8.2 13.2
Pidilite Inds. Neutral 16.6 18.3 20.5 43.0 39.1 34.8 28.8 25.4 22.2 27.9 25.4 23.4
United Breweries Buy 10.7 14.3 18.4 71.4 53.2 41.5 29.5 26.2 20.6 12.6 15.0 16.8
United Spirits Buy 28.6 42.2 58.7 70.8 48.1 34.6 34.1 27.3 21.2 20.8 22.1 23.8
Consumer Sector Aggregate 42.6 37.4 31.6 28.6 25.2 21.1 29.6 29.6 30.4
Source: MOSL
April 2017 103

Asian Paints
Bloomberg APNT IN CMP: INR1,080 TP: INR1,145 (+6%) Neutral
We expect revenue to grow 4% to INR38.2b in 4QFY17, with ~3%
M. Cap. (INR b)/(USD b) 1036 / 16
rise in domestic decorative volumes.
1,6,12 Rel Perf. (%) 3 / -17 / 4 We note crude prices are up 8% QoQ in 4QFY17. The magnitude of
price movement in crude derivatives is lower vis--vis crude prices.
Financial Snapshot (INR b) Operating margin is however likely to contract 20bp to 18.8% in
Y/E March 2016 2017 2018E 2019E 4QFY17. We estimate 17% PAT growth for 4QFY17, led by a lower
Sales 142.8 151.6 171.6 198.1 tax rate of 25% in 4QFY17 (vs. 35% in 4QFY16).
EBITDA 27.7 30.3 32.6 38.1
Adj. PAT 18.0 19.7 21.7 25.6 The stock trades at 40.5x FY19E EPS of INR26.7; maintain Neutral.
Adj. EPS.INR 18.7 20.5 22.6 26.7
EPS Gr. (%) 26.3 9.5 10.2 18.0
BV/Sh.(INR) 58.4 66.5 75.6 88.9
RoE (%) 34.7 32.8 31.8 32.4
RoCE (%) 30.6 29.5 28.6 29.4
Payout (%) 40.4 48.8 50.9 43.1
Key issues to watch for:
Valuations
Volume growth trends and demand scenario in urban and rural
P/E (x) 57.7 52.7 47.8 40.5
geographies.
P/BV (x) 18.5 16.2 14.3 12.2
EV/EBITDA (x) 36.6 33.4 30.8 26.2
Demand outlook for industrial paints.
Div. Yield (%) 0.8 1.1 1.2 1.2 Outlook for raw materials/pricing actions.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Volume Growth % * 12.0 7.0 15.0 13.0 11.0 12.0 2.0 3.0 11.8 7.0
Net Sales 33,343 34,349 38,356 36,698 36,374 37,633 39,370 38,177 142,811 151,555
Change (%) 9.1 9.6 2.6 4.0 6.1
Raw Material/PM 19,088 19,641 21,719 20,055 19,191 20,876 22,045 21,410 80,497 83,522
Gross Profit 14,254 14,708 16,637 16,643 17,183 16,758 17,325 16,767 62,314 68,033
Gross Margin (%) 42.8 42.8 43.4 45.4 47.2 44.5 44.0 43.9 43.6 44.9
Operating Expenses 7,468 8,628 8,782 9,669 8,981 9,628 9,562 9,608 34,630 37,778
% of Sales 22.4 25.1 22.9 26.3 24.7 25.6 24.3 25.2 24.2 24.9
EBITDA 6,786 6,080 7,855 6,974 8,203 7,130 7,763 7,159 27,685 30,255
Margin (%) 20.4 17.7 20.5 19.0 22.6 18.9 19.7 18.8 19.4 20.0
Change (%) 20.9 17.3 -1.2 2.7 34.5 9.3
Interest 89 92 76 149 64 60 92 136 407 352
Depreciation 663 677 694 721 855 844 855 767 2,756 3,321
Other Income 610 629 420 466 719 791 415 427 2,134 2,352
PBT 6,643 5,940 7,504 6,570 8,003 7,017 7,231 6,683 26,656 28,934
Tax 2,047 1,843 2,274 2,279 2,603 2,207 2,465 1,694 8,444 8,970
PAT before Minority 4,596 4,096 5,231 4,291 5,400 4,810 4,766 4,989 18,213 19,965
Minority Interest 59 59 16 117 50 51 104 97 250 302
Adjusted PAT 4,537 4,037 5,215 4,174 5,351 4,759 4,662 4,891 17,962 19,663
E: MOSL Estimates
April 2017 104

Britannia Industries
Bloomberg BRIT IN CMP: INR3,372 TP: INR4,065 (+21%) Buy
We estimate Britannias (BRIT) sales to grow 7.3% YoY to INR22.7b,
M. Cap. (INR b)/(USD b) 404 / 6
with ~3% base business volume growth.
52-Week Range (INR) 3575 / 2524
1,6,12 Rel Perf. (%) 5 / -9 / 7 Higher wheat and sugar prices YoY will continue to affect margins.
We expect 130bp contraction in operating margin YoY, and EBITDA
Financial Snapshot (INR b) and PAT to decline 4% and 3%, respectively.
Y/E March 2016 2017E 2018E 2019E
Sales 83.3 90.0 102.6 119.6 The stock trades at 33.2x FY19E EPS of INR101.7; maintain Buy.
EBITDA 11.5 11.5 13.2 16.5 Britannia is one of our top picks in the tier-II consumer space.
Adj. PAT 8.4 8.7 10.0 12.2
Adj. EPS. INR 70.1 72.2 83.3 101.7
EPS Gr. (%) 46.3 3.0 15.5 22.0
BV/Sh.(INR) 147.2 188.0 237.5 297.8
RoE (%) 55.9 43.1 39.2 38.0
RoCE (%) 46.0 35.1 32.3 32.0
Payout (%) 28.5 35.0 35.0 35.0
Valuations
P/E (x) 48.1 46.7 40.5 33.2
P/BV (x) 22.9 17.9 14.2 11.3
Volume growth in biscuits.
EV/EBITDA (x) 34.4 34.3 29.4 23.2 Outlook for raw materials.
Div. Yield (%) 0.6 0.7 0.9 1.1 Performance of subsidiaries.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Base business volume growth (%) 9.0 11.0 13.0 10.0 10.0 10.0 2.0 3.0 10.8 6.3
Net Sales 19,411 21,277 21,444 21,121 21,063 23,612 22,648 22,657 83,254 89,979
YoY Change (%) 8.5 11.0 5.6 7.3 7.1 8.1
COGS 11,587 12,717 12,945 12,878 12,879 14,902 14,190 14,410 49,989 56,381
Gross Profit 7,824 8,560 8,499 8,244 8,184 8,709 8,458 8,247 33,265 33,598
Margins (%) 40.3 40.2 39.6 39.0 38.9 36.9 37.3 36.4 40.0 37.3
Other Operating Exp 5,102 5,492 5,554 5,557 5,367 5,578 5,504 5,673 21,718 22,122
% of Sales 26.3 25.8 25.9 26.3 25.5 23.6 24.3 25.0 26.1 24.6
EBITDA 2,722 3,068 2,945 2,687 2,817 3,131 2,954 2,575 11,547 11,477
Margins (%) 14.0 14.4 13.7 12.7 13.4 13.3 13.0 11.4 13.9 12.8
YoY Growth (%) 3.5 2.0 0.3 -4.2 38.2 -8.0
Depreciation 274 272 281 308 279 289 303 318 1,134 1,189
Interest 7 15 12 15 15 15 11 15 49 56
Other Income 401 506 481 578 739 670 561 552 1,962 2,522
PBT 2,842 3,287 3,134 2,942 3,263 3,496 3,201 2,794 12,326 12,753
Tax 906 1,076 1,027 952 1,071 1,156 997 870 3,920 4,094
Rate (%) 31.9 32.7 32.8 32.4 32.8 33.1 31.1 31.1 31.8 32.1
Adjusted PAT 1,936 2,211 2,107 1,990 2,192 2,340 2,204 1,924 8,407 8,660
YoY Change (%) 13.2 5.8 4.6 -3.3 46.4 3.0
E: MOSL Estimates
April 2017 105

Colgate
Bloomberg CLGT IN CMP: INR1,001 TP: INR1,200 (+20%) Buy
We expect Colgates (CLGT) sales to grow 3.5% YoY to INR10.1b, with
M. Cap. (INR b)/(USD b) 272 / 4
a 2% decline in toothpaste volumes.
1,6,12 Rel Perf. (%) 6 / -4 / 0 We estimate gross and EBITDA margin expansion of 160bp and 40bp
Financial Snapshot (INR b) to 59.1% and 25.5%, respectively. Hence, we have modeled EBITDA
Y/E March 2016 2017E 2018E 2019E growth of 5% and adjusted PAT decline of 17.3% for the quarter
Sales 38.0 39.2 44.5 51.3 mainly due to low tax rate base of 15.8% in the base quarter.
EBITDA 9.5 9.6 11.5 13.8
The stock trades at 31.6x FY19E EPS of INR31.6; we have a Buy rating
Adj. PAT 6.2 5.9 7.0 8.6
on the stock.
Adj. EPS (INR) 22.7 21.7 25.8 31.6
EPS Gr. (%) 10.4 -4.4 18.9 22.7
BV/Sh.(INR) 37.5 41.5 44.3 48.1
RoE (%) 68.9 54.9 60.1 68.5
RoCE (%) 68.0 53.8 59.0 67.3
Payout (%) 48.4 70.0 70.0 70.0 Key issues to watch for:
Valuations Volume growth in toothpaste and market share movement.
P/E (x) 44.1 46.2 38.8 31.6
Ad spends and competitive intensity in toothpaste, especially from
P/BV (x) 26.7 24.1 22.6 20.8
Patanjali.
EV/EBITDA (x) 28.4 28.0 23.3 19.2
Div. Yield (%) 1.1 1.5 1.8 2.2

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Toothpaste Volume Gr % 2.0 3.0 1.0 3.0 5.0 4.0 -12.0 -2.0 2.3 -1.3
Net Sales 9,237 9,581 9,484 9,714 10,056 10,483 8,650 10,057 38,016 39,246
YoY Change (%) 8.9 9.4 -8.8 3.5 -3.9 3.2
COGS 3,641 3,658 3,529 4,125 3,818 3,910 3,159 4,117 14,953 15,003
Gross Profit 5,596 5,924 5,955 5,589 6,238 6,574 5,491 5,939 23,063 24,242
Gross Margin (%) 60.6 61.8 62.8 57.5 62.0 62.7 63.5 59.1 60.7 61.8
Other operating Expenses 3,630 3,448 3,653 3,320 4,197 3,909 3,446 3,524 14,051 15,075
% to sales 39.3 36.0 38.5 34.2 41.7 37.3 39.8 35.0 37.0 38.4
Other operating Income 72 67 85 227 76 83 96 204 451 458
EBITDA 2,038 2,543 2,387 2,495 2,117 2,748 2,141 2,620 9,463 9,625
Margins (%) 21.9 26.4 24.9 25.1 20.9 26.0 24.5 25.5 24.6 24.2
YoY Growth (%) 3.9 8.1 -10.3 5.0 15.1 1.7
Depreciation 253 269 295 297 316 333 342 322 1,114 1,313
Interest 0 0 0 0 0 0 0 0 0 0
Financial other Income 81 107 98 51 96 113 109 39 336 357
PBT 1,866 2,380 2,190 2,248 1,897 2,527 1,908 2,337 8,685 8,669
Tax 626 812 724 354 640 714 650 770 2,516 2,774
Rate (%) 33.5 34.1 33.1 15.8 33.7 28.3 34.1 33.0 29.0 32.0
Adj PAT 1,241 1,569 1,466 1,894 1,257 1,813 1,258 1,567 6,169 5,895
YoY Change (%) 1.3 15.6 -14.2 -17.3 10.4 -4.4
E: MOSL Estimates
April 2017 106

Dabur
Bloomberg DABUR IN CMP: INR284 TP: INR310 (+9%) Neutral
We expect sales to grow by 2.2% YoY to INR20.2b, led by ~4%
M. Cap. (INR b)/(USD b) 500 / 8
domestic organic volume growth.
1,6,12 Rel Perf. (%) -2 / -6 / -5 We expect EBITDA margin to contract 60bp YoY to 20.2% in
4QFY17.
Y/E March 2016 2017E 2018E 2019E Hence, we have modeled EBITDA decline of 0.5% YoY, while PAT is
Sales 77.6 77.7 86.4 98.5 likely to grow 2.7% in the quarter.
EBITDA 15.0 14.8 16.5 19.1 The stock trades at 29.3x FY19E EPS of INR9.7; maintain Neutral.
Adj. PAT 12.5 12.8 14.5 17.0
Adj. EPS (INR) 7.1 7.3 8.3 9.7
EPS Gr. (%) 17.2 2.7 13.3 16.9
BV/Sh.(INR) 23.6 28.0 32.8 38.6
RoE (%) 33.3 28.3 27.2 27.1
RoCE (%) 27.7 24.2 23.4 24.1
Payout (%) 28.0 35.0 35.0 35.0
Valuations
P/E (x) 39.9 38.9 34.3 29.3 Domestic volume growth and outlook for rural demand.
P/BV (x) 12.0 10.1 8.6 7.4 Update on project CORE.
EV/EBITDA (x) 32.0 31.9 28.2 23.9 Margin performance in international business.
Div. Yield (%) 0.7 0.9 1.0 1.2 Competitive intensity, especially from Patanjali.
Quarterly Performance (Consolidated) 0% (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Domestic Vol Growth (%) 8.1 5.5 -2.5 7.0 4.1 4.5 -5.0 4.0 4.5 2.0
Net Sales 19,017 19,553 19,675 19,800 19,239 19,757 18,477 20,242 77,616 77,715
YoY Change (%) 1.2 1.0 -6.1 2.2 -0.6 0.1
Total Exp 15,861 15,551 15,942 15,688 15,796 15,730 15,190 16,149 62,614 62,865
EBITDA 3,157 4,001 3,733 4,112 3,443 4,028 3,286 4,092 15,002 14,849
Margins (%) 16.6 20.5 19.0 20.8 17.9 20.4 17.8 20.2 19.3 19.1
YoY Growth (%) 9.1 0.7 -12.0 -0.5 15.8 -1.0
Depreciation 325 328 322 358 343 357 333 378 1,332 1,411
Interest 118 125 110 132 118 166 139 142 485 566
Other Income 531 558 644 578 655 952 883 686 2,352 3,176
PBT 3,244 4,106 3,945 4,201 3,637 4,456 3,697 4,258 15,538 16,048
Tax 620 744 767 868 701 873 753 851 2,999 3,178
Rate (%) 19.1 18.1 19.4 20.7 19.3 19.6 20.4 20.0 19.3 19.8
Adjusted PAT 2,615 3,362 3,176 3,318 2,927 3,572 2,938 3,406 12,512 12,843
YoY Change (%) 12.0 6.2 -7.5 2.7 17.4 2.7
E: MOSL Estimates 22% 12% 4% 27%
April 2017 107

Emami
Bloomberg HMN IN CMP: INR1,038 TP: INR1,295 (+25%) Buy
We project Emamis (HMN) sales to decline 2% YoY to INR5.9b, with
M. Cap. (INR b)/(USD b) 236 / 4
~4% volumes decline.
1,6,12 Rel Perf. (%) -4 / -17 / -9 We expect gross margin to contract 50bp to 63.1% and EBITDA
margin to shrink 30bp to 30.3%. Thus, EBITDA is likely to decline
Financial Snapshot (INR b) 2.9% YoY to INR1.8b.
Y/E March 2016 2017E 2018E 2019E
Sales 23.9 25.4 29.1 33.8
PAT is expected to decline 35.6% YoY to INR1b due to a high tax rate
EBITDA 6.8 7.6 8.6 10.1 of 38.2% (full year tax rate taken at MAT) compared to 5.2% in base
NP 5.7 5.6 6.8 8.2 quarter 4QFY16.
EPS (INR) 25.2 24.5 29.8 36.0 The stock trades at 28.8x FY19E EPS of INR36; maintain Buy.
EPS Gr. (%) 17.7 -2.9 22.0 20.6
BV/Sh. (INR) 61.8 82.8 97.8 118.9
RoE (%) 43.4 33.8 33.0 33.2
RoCE (%) 37.9 31.5 35.0 38.7
Payout (%) 27.9 45.0 40.2 33.3
Valuations
P/E (x) 41.2 42.4 34.8 28.8
P/BV (x) 16.8 12.5 10.6 8.7
Volume growth and broad consumer demand across categories.
EV/EBITDA (x) 35.2 31.1 27.0 22.7 Outlook for mentha oil prices.
Div. Yld (%) 0.8 1.1 1.2 1.2 Competitive intensity, especially from Patanjali.
Quarterly Performance -17% (INR Million)

Y/E MARCH FY16 FY17 FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Domestic volume Growth (%) 15.0 13.5 9.3 18.0 18.0 11.0 0.2 -4.0 14.0 6.5
Net Sales 5,372 5,306 7,249 6,026 6,444 5,846 7,260 5,898 23,937 25,447
YoY Change (%) 19.9 10.2 0.2 -2.1 8.0 6.3
COGS 2,114 1,783 2,417 2,193 2,287 1,929 2,331 2,174 8,513 8,722
Gross Profit 3,258 3,523 4,831 3,833 4,157 3,916 4,928 3,724 15,424 16,725
Gross margin (%) 60.6 66.4 66.6 63.6 64.5 67.0 67.9 63.1 64.4 65.7
Other Expenditure 2,271 2,001 2,337 1,992 2,684 2,164 2,343 1,937 8,580 9,128
% to sales 42.3 37.7 32.2 33.1 41.7 37.0 32.3 32.8 35.8 35.9
EBITDA 987 1,523 2,494 1,841 1,473 1,752 2,585 1,787 6,844 7,597
Margins (%) 18.4 28.7 34.4 30.6 22.9 30.0 35.6 30.3 28.6 29.9
YoY Change 49.2 15.1 3.7 -2.9 26.7 11.0
Depreciation 88 92 99 169 106 111 112 164 450 493
Interest 44 192 172 136 125 160 127 104 543 516
Other Income 187 122 53 88 51 87 82 86 449 305
PBT 1,041 1,361 2,276 1,623 1,292 1,568 2,428 1,605 6,301 6,894
Tax 42 139 320 87 117 230 381 614 459 1,341
Rate (%) 4.0 10.2 14.0 5.4 9.1 14.7 15.7 38.2 7.3 19.5
PAT 996 1,219 1,953 1,541 1,175 1,336 2,046 992 5,841 5,552
YoY Change (%) 18.0 9.6 4.8 -35.6 20.7 -4.9
Amortization 137 620 617 727 609 680 705 606 2,100 2,600
Reported PAT 866 631 1,367 850 596 690 1,377 385 3,741 2,952
E: MOSL Estimates
April 2017 108

Godrej Consumer
Bloomberg GCPL IN CMP: INR1,701 TP: INR1,740 (+2%) Neutral
We expect Godrej Consumers revenue to rise 10.7% YoY to
M. Cap. (INR b)/(USD b) 579 / 9
INR24.5b.
52-Week Range (INR) 1749 / 1286
1,6,12 Rel Perf. (%) 2 / -1 / 5 Demand trends in international business remain weak, primarily
driven by macroeconomic trends.
Y/E March 2016 2017E 2018E 2019E We estimate operating margin to remain flat YoY at 20.6%.
Sales 89.7 93.1 105.1 120.7 We have modeled 10.8% EBITDA growth, and expect PAT to grow
EBITDA 16.2 18.5 21.0 23.8 by 6.3% YoY.
Adj. PAT 11.3 12.6 14.6 16.9
Adj. EPS (INR) 33.2 37.1 42.9 49.8 The stock trades at 34.2x FY19E EPS of INR49.8. We have a Neutral
EPS Gr. (%) 24.4 11.9 15.6 15.9 rating on the stock.
BV/Sh.(INR) 152.2 177.4 208.6 246.6
RoE (%) 23.4 22.5 22.2 21.9
RoCE (%) 16.7 15.4 15.3 15.7
Payout (%) 29.3 31.8 27.5 23.7
Valuations Growth trend in soap volumes.
P/E (x) 51.3 45.8 39.6 34.2 Competitive intensity across categories.
P/BV (x) 11.2 9.6 8.2 6.9 Currency guidance
EV/EBITDA (x) 37.0 32.9 28.7 25.1 Outlook for international business demand outlook in Indonesia
Div. Yield (%) 0.6 0.7 0.7 0.7 and margin guidance for LatAm.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 19,854 21,166 21,971 22,087 21,202 23,563 23,916 24,452 89,678 93,133
YoY Change (%) 6.8 11.3 8.9 10.7 8.8 3.9
EBITDA 3,132 4,072 4,520 4,547 3,775 4,631 5,063 5,040 16,242 18,509
Margins (%) 15.8 19.2 20.6 20.6 17.8 19.7 21.2 20.6 18.1 19.9
YoY Growth (%) 20.5 13.7 12.0 10.8 21.7 14.0
Depreciation 230 235 257 284 327 358 363 339 1,031 1,385
Interest 329 313 296 250 326 350 397 315 1,002 1,388
Other Income 218 220 197 159 166 194 294 178 820 832
PBT 2,806 3,750 4,268 4,228 3,298 4,118 4,474 4,564 15,028 16,567
Tax 636 757 944 1,030 754 907 986 1,270 3,171 3,916
Rate (%) 22.7 20.2 22.1 24.4 22.9 22.0 22.0 27.8 21.1 23.6
Minority Int 5 0 0 0 6 0 0 6 395 12
Adj PAT 2,166 2,993 3,324 3,199 2,538 3,212 3,489 3,401 11,298 12,639
YoY Change (%) 17.2 7.3 5.0 6.3 28.1 11.9
E: MOSL Estimates
April 2017 109

GSK Consumer
Bloomberg SKB IN CMP: INR5,181 TP: INR5,410 (+4%) Neutral
We expect GSK Consumer to report net sales of INR11.3b, down
M. Cap. (INR b)/(USD b) 218 / 3
1.3% YoY, led by a 5% volume decline in HFD. In our view,
52-Week Range (INR) 6584 / 4650
1,6,12 Rel Perf. (%) -4 / -23 / -35
discretionary demand in the core HFD category is yet to witness an
uptrend.
Financial Snapshot (INR b) We estimate EBITDA margin to contract 50bp YoY to 21.5%, and
Y/E December 2016 2017E 2018E 2019E
PAT decline of 1.8% YoY.
Sales 42.0 40.1 45.7 51.2
EBITDA 8.8 8.6 9.7 10.6 The stock trades at 27.1x FY19E EPS of INR190.8. We have a Neutral
Adj. PAT 6.6 6.5 7.3 8.0 rating on the stock.
Adj. EPS (INR) 156.5 153.9 173.1 190.8
EPS Gr. (%) 12.8 -1.7 12.5 10.3
BV/Sh. (INR) 581.5 672.3 770.4 880.4
RoE (%) 28.9 24.6 24.0 23.1
RoCE (%) 28.9 24.6 24.0 23.2
Payout (%) 33.7 35.0 40.0 40.0
Valuations Key issues to watch for:
P/E (x) 33.1 33.7 29.9 27.1 Growth in HFD volume.
P/BV (x) 8.9 7.7 6.7 5.9 Outlook for market growth and raw materials.
EV/EBITDA (x) 20.7 27.2 23.6 21.2 Guidance on price increases
Div. Yield (%) 1.1 1.0 1.2 1.3 Comment on increasing competitive intensity.

Y/E Mar FY16 FY17 FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
HFD Volume Growth (%) 2.0 0.0 0.0 0.0 -6.0 -3.0 -17.0 -5.0 0.5 -7.8
Net Sales 9,955 10,918 9,717 11,430 9,439 10,803 8,604 11,283 42,019 40,128
YoY Change (%) -5.2 -1.1 -11.5 -1.3 -4.5
Total Exp 7,907 8,537 7,865 8,917 7,404 8,351 6,927 8,859 33,226 31,541
EBITDA 2,048 2,381 1,853 2,512 2,035 2,452 1,677 2,424 8,794 8,587
Margins (%) 20.6 21.8 19.1 22.0 21.6 22.7 19.5 21.5 20.9 21.4
YoY Change (%) -0.6 3.0 -9.5 -3.5 -2.3
Depreciation 192 136 138 251 147 148 171 253 718 718
Interest 7 7 7 4 6 6 6 5 24 24
Other Income 549 589 576 207 592 578 559 384 1,921 2,114
PBT 2,398 2,827 2,283 2,465 2,474 2,876 2,059 2,550 9,973 9,959
Tax 838 988 797 768 868 1,039 695 884 3,391 3,486
Rate (%) 34.9 35.0 34.9 31.2 35.1 36.1 33.8 34.7 34.0 35.0
Adj PAT 1,561 1,839 1,487 1,697 1,606 1,837 1,364 1,666 6,582 6,473
YoY Change (%) 2.9 -0.1 -8.3 -1.8 -1.7
E: MOSL Estimates
April 2017 110

Hindustan Unilever
Bloomberg HUVR IN CMP: INR935 TP: INR945 (+1%) Neutral
We expect Hindustan Unilevers revenue to grow by 4.5%, with an
M. Cap. (INR b)/(USD b) 2024 / 31
underlying ~0.5% volume decline.
1,6,12 Rel Perf. (%) 3 / 1 / -13 PFAD prices have gone up by 28% YoY and LAB prices are up 14%
YoY.
Y/E March 2016 2017E 2018E 2019E We expect operating margin to contract 100bp YoY to 18.1% in
Sales 305.0 311.3 338.2 376.9 4QFY17.
EBITDA 57.3 58.5 64.5 74.2 We estimate EBITDA and PAT decline of 1% YoY.
Adj. PAT 41.2 41.7 46.5 53.7 The stock trades at 37.7x FY19E EPS of INR24.8; maintain Neutral.
Adj. EPS (INR) 19.0 19.3 21.5 24.8
EPS Gr. (%) 12.9 1.1 11.7 15.4
BV/Sh.(INR) 29.0 28.0 26.9 26.8
RoE (%) 82.4 67.6 78.4 92.5
RoCE (%) 108.1 88.5 102.0 120.9
Payout (%) 84.0 98.6 95.3 90.7
Valuations
P/E (x) 49.1 48.6 43.5 37.7
Comments on volume growth and consumer demand
P/BV (x) 32.2 33.4 34.8 34.9
EV/EBITDA (x) 34.8 34.1 30.9 26.8
environment.
Div. Yield (%) 1.7 2.0 2.2 2.4
Quarterly performance (INR Million)

Y/E March FY16 FY17 FY16 Ind FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE AS
Volume Growth (%) 6.0 7.0 6.0 4.0 4.0 -1.0 -4.0 -0.5 5.8 -0.5
Net Sales 78,445 77,314 77,640 77,212 81,282 78,427 77,060 80,680 310,610 317,448
YoY Change (%) 3.6 1.4 -0.7 4.5 2.2
COGS 38,976 38,965 37,424 37,688 39,555 39,620 37,446 40,626 153,053 157,247
Gross Profit 39,469 38,349 40,216 39,523 41,727 38,807 39,613 40,054 157,557 160,201
Margin % 50.3 49.6 51.8 51.2 51.3 49.5 51.4 49.6 50.7 50.5
Operating Exp 24,349 24,982 25,914 24,820 25,368 24,760 26,059 25,487 100,065 101,675
% to sales 31.0 32.3 33.4 32.1 31.2 31.6 33.8 31.6 32.2 32.0
EBITDA 15,120 13,366 14,302 14,703 16,359 14,046 13,554 14,567 57,491 58,527
YoY Change (%) 8.2 5.1 -5.2 -0.9 1.8
Margins (%) 19.3 17.3 18.4 19.0 20.1 17.9 17.6 18.1 18.5 18.4
Depreciation 749 761 822 875 933 945 1,002 1,041 3,208 3,921
Interest 47 45 45 16 60 49 46 16 153 170
Other Income 1,230 1,944 1,451 1,014 1,076 2,528 824 1,105 5,638 5,534
PBT 15,554 14,503 14,886 14,826 16,442 15,580 13,331 14,616 59,769 59,970
Tax 4,960 4,560 4,373 4,203 5,411 4,807 4,482 3,591 18,096 18,291
Rate (%) 31.9 31.4 29.4 28.3 32.9 30.9 33.6 24.6 30.3 30.5
Adjusted PAT 10,628 9,902 10,241 11,135 11,277 10,818 9,199 11,025 41,673 41,679
Reported Profit 10,692 9,822 9,717 11,135 11,739 10,956 10,379 11,025 41,673 41,679
YoY Change (%) 9.8 11.5 6.8 (1.0) 0.0
E: MOSL Estimates
April 2017 111

ITC
Bloomberg ITC IN CMP: INR279 TP: INR320 (+15%) Buy
We expect net sales to grow by 1.3% YoY to INR98.8b; with
M. Cap. (INR b)/(USD b) 3367 / 52
cigarette volume declining by 4% YoY (base quarter saw flat
1,6,12 Rel Perf. (%) 3 / 10 / 8
volumes).
We expect cigarette EBIT to grow 1.9% YoY. We have factored in
Financial Snapshot (INR b) EBITDA decline of 0.1% YoY to INR36b for the company.
Y/E March 2016 2017E 2018E 2019E We expect Other FMCG to post revenue growth of ~4% YoY.
Sales 362.2 384.4 430.9 494.4 We estimate PAT growth of 8.4% YoY to INR25.8b higher than
EBITDA 137.2 143.1 159.5 189.5 EBITDA growth mainly due to high tax rate in base quarter 4QFY16.
Adj. PAT 93.1 101.1 112.8 133.2 The stock trades at 25.3x FY19E EPS of INR11; maintain Buy.
Adj. EPS (INR) 7.7 8.4 9.3 11.0
EPS Gr. (%) -3.5 8.6 11.6 18.1
BV/Sh.(INR) 27.3 31.6 36.0 40.8
RoE (%) 29.3 28.4 27.6 28.7
RoCE (%) 27.8 27.3 27.0 28.5
Payout (%) 88.4 64.4 64.4 64.4
Valuations
P/E (x) 36.2 33.3 29.8 25.3 Key issues to watch for:
P/BV (x) 10.2 8.8 7.7 6.8 Trends in cigarette volume.
EV/EBITDA (x) 23.1 22.0 19.5 16.2 Demand outlook for FMCG categories and segmental profitability.
Div. Yield (%) 2.4 1.9 2.2 2.5

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Cigarette Vol Gr (%) -17.0 -14.0 -5.0 0.0 3.0 4.0 -1.0 -4.0 -9.0 0.6
Net Sales 91,600 87,989 88,671 97,567 100,540 96,607 92,484 98,798 365,827 388,429
YoY Change (%) 9.8 9.8 4.3 1.3 0.2 6.2
Total Exp 59,078 54,162 53,924 61,483 65,278 60,307 57,020 62,759 228,647 245,364
EBITDA 32,522 33,827 34,746 36,084 35,262 36,300 35,464 36,038 137,179 143,065
Growth (%) 8.4 7.3 2.1 -0.1 1.4 4.3
Margins (%) 35.5 38.4 39.2 37.0 35.1 37.6 38.3 36.5 37.5 36.8
Depreciation 2,576 2,582 2,619 2,543 2,613 2,684 2,665 3,272 10,319 11,234
Interest 105 103 161 123 101 107 136 234 491 578
Other Income 3,565 3,926 6,490 3,712 4,205 4,754 6,879 3,797 17,693 19,636
PBT 33,407 35,068 38,456 37,131 36,754 38,262 39,542 36,330 144,061 150,888
Tax 11,746 12,443 13,419 13,342 12,907 13,262 13,075 10,549 50,949 49,793
Rate (%) 35.2 35.5 34.9 35.9 35.1 34.7 33.1 29.0 35.4 33.0
Adj PAT 21,661 22,625 25,038 23,789 23,847 25,000 26,467 25,781 93,113 101,095
YoY Change (%) 10.1 10.5 5.7 8.4 -3.5 8.6
E: MOSL Estimates
April 2017 112

Jyothy Labs
Bloomberg JYL IN
CMP: INR342 TP: INR380 (+11%) Neutral
We expect Jyothy Labs net sales to grow 9.6% to INR5.4b.
EBITDA margin is likely to expand by 130bp YoY to 14.1%.
1,6,12 Rel Perf. (%) -10 / -12 / -6
We have factored in EBITDA growth of 21.3% YoY to INR765m.
The stock trades at 19.5x FY19E EV/EBITDA. Speculation around
Financial Snapshot (INR b) Henkel deal (deadline for which has been extended till October 31st)
Y/E March 2016 2017E 2018E 2019E will overshadow fundamentals in FY18, in our view.
Net Sales 16.6 17.8 20.1 23.2
EBITDA 2.2 2.7 2.9 3.3
Adj PAT 0.7 1.4 1.6 1.9
Adj PAT for NCD 0.1 0.8 1.0 1.2
Adj.EPS (INR) 4.1 8.0 9.0 10.5
EPS Gr. (%) -41.7 94.5 12.8 16.5
BV/Sh (INR) 46.7 50.2 54.8 60.8
RoE (%) 9.1 16.4 17.1 18.1
RoCE (%) 7.2 12.9 13.8 14.6
Valuations
P/E (x) 83.3 42.8 38.0 32.6
P/BV (x) 7.3 6.8 6.2 5.6
Update on new launches and innovations.
EV/EBITDA 29.9 24.1 22.0 19.5 Update on Henkel call option.
Dividend Yield (%) 1.2 1.2 1.2 1.2 Pick-up in Henkel brands performance.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,040 3,894 3,711 4,930 4,373 4,148 3,834 5,405 16,575 17,760
YoY Change (%) 8.3 6.5 3.3 9.6 10.1 7.1
Other Operating Income 3.4 6.6 6.3 3.9 3.9 4.2 5.2 8.9 20.2 22.2
Total Sales 4,043 3,900 3,718 4,934 4,377 4,152 3,839 5,414 16,595 17,782
COGS 2,096 2,029 1,914 2,919 2,219 2,132 2,089 3,080 8,958 9,520
Gross Profit 1,947 1,871 1,803 2,015 2,158 2,020 1,750 2,334 7,637 8,262
Margins (%) 48.2 48.0 48.5 40.8 49.3 48.7 45.6 43.1 46.1 46.5
Total Exp 1,366 1,374 1,290 1,381 1,364 1,383 1,243 1,569 5,410 5,559
EBITDA 581 498 513 631 795 637 507 765 2,227 2,703
EBITDA Growth % 36.8 28.0 -1.3 21.3 36.6 21.4
Margins (%) 14.4 12.8 13.8 12.8 18.2 15.3 13.2 14.1 13.4 15.2
Depreciation 69 72 74 100 71 73 73 100 314 317
Interest 164 151 150 153 157 164 144 162 618 628
Other Income 50 35 24 33 29 31 26 31 141 117
PBT 398 310 314 410 596 430 315 534 1,435 1,875
Tax 149 121 121 302 146 119 108 58 693 431
Rate (%) 37.5 39.0 38.6 73.6 24.6 27.7 34.3 10.8 48.3 23.0
Adjusted PAT 258 199 202 108 459 320 215 476 742 1,444
YoY Change (%) 78.2 61.2 6.6 341.4 -39.7 94.5
E: MOSL Estimates
April 2017 113

Marico
Bloomberg MRCO IN CMP: INR298 TP: INR340 (+14%) Buy
We expect sales to grow by 4.4% YoY to INR13.4b, with 7% increase
M. Cap. (INR b)/(USD b) 384 / 6
in domestic volumes. In our opinion, Parachute volumes would
1,6,12 Rel Perf. (%) 3 / -2 / 1
grow in low-double-digit, while Saffola and VAHO volumes would
grow in mid-single-digit (in the base quarter, Saffola and VAHO
Financial Snapshot (INR b) volumes grew by 10% and 15% respectively).
Y/E March 2016 2017E 2018E 2019E We observe that copra prices are up 49% YoY (data available till
Sales 60.1 59.5 67.9 78.1 Feb-2017) and kardi oil prices are up 10% YoY. We are modeling
EBITDA 10.4 11.0 12.5 15.0 300bp YoY gross margin contraction and 40bp EBITDA margin
Adj. PAT 7.2 7.8 9.0 10.9 contraction for 4QFY17.
Adj. EPS (INR) 5.6 6.1 7.0 8.4 PAT is projected to grow by 6.2% YoY to INR1.4b.
EPS Gr. (%) 26.1 8.5 15.3 20.1 The stock trades at 35.4x FY19E EPS of INR8.4; maintain Buy. We
BV/Sh.(INR) 16.3 20.2 23.4 25.3 like MRCOs franchise, portfolio strength, management quality and
RoE (%) 36.9 33.3 32.1 34.6
its multiple growth driver models.
RoCE (%) 31.4 29.4 28.5 30.7
Payout (%) 60.2 49.3 45.6 65.3
Valuations Key issues to watch for:
P/E (x) 53.2 49.0 42.5 35.4
Comments on volume growth trends across key categories.
P/BV (x) 18.3 14.7 12.7 11.8
Outlook for raw materials.
EV/EBITDA (x) 36.5 34.2 29.9 24.9
Margin expansion and guidance for the international business.
Div. Yield (%) 1.1 1.0 1.1 1.8

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Domestic volume growth (%) 6.0 5.5 10.5 8.4 8.0 3.4 -4.0 7.0 7.0 3.6
Net Sales 17,482 14,518 15,285 12,878 17,499 14,390 14,140 13,442 61,224 59,471
YoY Change (%) 0.1 -0.9 -7.5 4.4 7.0 -2.9
COGS 9,662 7,595 7,526 5,993 8,419 6,847 6,859 6,657 30,614 28,783
Gross Profit 7,821 6,922 7,759 6,885 9,079 7,543 7,281 6,785 30,610 30,688
Gross margin (%) 44.7 47.7 50.8 53.5 51.9 52.4 51.5 50.5 50.0 51.6
% to Sales 26.6 32.0 31.9 37.1 30.8 35.1 32.4 34.5 32.8 33.1
EBITDA 3,164 2,271 2,881 2,102 3,695 2,493 2,697 2,146 10,558 11,031
Margins (%) 18.1 15.6 18.9 16.3 21.1 17.3 19.1 16.0 17.2 18.5
YoY Change (%) 16.8 9.8 -6.4 2.1 23.1 4.5
Depreciation 188 221 229 311 208 209 213 334 1,018 964
Interest 45 37 57 68 54 21 44 53 202 171
Other Income 337 193 180 320 319 285 260 304 830 1,168
PBT 3,267 2,206 2,776 2,044 3,753 2,548 2,700 2,063 10,167 11,064
Tax 982 676 717 678 1,072 740 781 615 2,956 3,209
Rate (%) 30.1 30.7 25.8 33.2 28.6 29.1 28.9 29.8 29.1 29.0
Adjusted PAT 2,285 1,530 2,057 1,362 2,679 1,806 1,916 1,446 7,092 7,847
YoY Change (%) 17.2 18.1 -6.8 6.2 23.7 14.6
E: MOSL Estimates
April 2017 114

Nestle India
Bloomberg NEST IN CMP: INR6,622 TP: INR7,010 (+6%) Neutral
We expect Nestle Indias net sales to grow 20% YoY to INR27.5b,
M. Cap. (INR b)/(USD b) 638 / 10
largely owing to some impact of Maggi issue in the base. Maggi re-
52-Week Range (INR) 7390 / 5360
launch has been successful, with several new variants. It has already
1,6,12 Rel Perf. (%) 3 / -8 / -5
clawed back to >60% market share.
Financial Snapshot (INR b) We estimate EBITDA margin to expand by 150bp YoY to 24.1%.
Y/E December 2015 2016E 2017E 2018E EBITDA and PAT are projected to grow by a healthy 28% YoY (to
Sales 81.2 91.6 109.0 125.0 INR6.6b) and 35% YoY (to INR4b), respectively.
EBITDA 15.9 18.0 22.2 25.9 The stock trades at 38.7x CY18E EPS; maintain Neutral.
Adj. PAT 11.6 11.4 13.9 16.5
Adj. EPS (INR) 119.9 118.7 144.0 171.0
EPS Gr. (%) -7.3 -1.0 21.3 18.8
BV/Sh.(INR) 292.3 315.7 365.5 443.5
RoE (%) 40.9 38.8 42.3 42.3
RoCE (%) 40.7 38.6 42.3 42.3
Payout (%) 40.5 53.1 45.1 38.6
Valuations
P/E (x) 55.2 55.8 46.0 38.7
Volume trends and management commentary on demand
P/BV (x) 22.7 21.0 18.1 14.9
EV/EBITDA (x) 38.9 34.2 27.3 22.9
environment.
Div. Yield (%) 0.7 1.0 1.0 1.0 Recovery in sales and market share of Maggi.

Y/E December CY16 CY17 CY16 CY17
1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE
Net Sales 22,957 22,561 23,462 22,613 27,549 27,524 26,746 27,145 91,585 108,965
YoY Change (%) -8.4 16.7 35.1 16.2 20.0 22.0 14.0 20.0 12.7 19.0
COGS 9,851 9,495 9,860 9,591 11,959 11,997 11,507 11,531 38,962 46,994
Gross Profit 13,106 13,066 13,602 13,022 15,590 15,527 15,239 15,614 52,623 61,970
Margin (%) 57.1 57.9 58.0 57.6 56.6 56.4 57.0 57.5 57.5 56.9
Operating Exp 7,927 8,709 9,115 9,087 8,961 9,936 10,659 10,235 34,555 39,791
EBITDA 5,180 4,357 4,487 3,935 6,629 5,591 4,580 5,380 18,068 22,179
Margins (%) 22.6 19.3 19.1 17.4 24.1 20.3 17.1 19.8 19.7 20.4
YoY Growth (%) -13.7 21.0 57.0 12.7 28.0 28.3 2.1 36.7 13.3 22.8
Depreciation 891 889 882 873 959 959 959 959 3,521 3,838
Interest 38 1 1 -5 0 0 0 0 42 0
Other income 416 522 547 654 478 600 629 672 2,127 2,380
PBT 4,666 3,989 4,151 3,721 6,147 5,232 4,250 5,093 16,632 20,721
Tax 1,614 1,136 1,273 1,127 2,029 1,726 1,402 1,681 5,189 6,838
Rate (%) 34.6 28.5 30.7 30.3 33.0 33.0 33.0 33.0 31.2 33.0
Adjusted PAT 3,052 2,853 2,878 2,594 4,119 3,505 2,847 3,412 11,443 13,883
YoY Change (%) -17.6 22.9 74.5 24.3 35.0 22.9 -1.1 31.6 17.2 21.3
E: MOSL Estimates
April 2017 115

Page Industries
Bloomberg PAG IN CMP: INR14,596 TP: INR17,480 (+20%) Buy
We expect Page to report net sales of INR4.8b, up 13.8% YoY, led by
M. Cap. (INR b)/(USD b) 163 / 3
10% volume growth.
52-Week Range (INR) 17351 / 11777
-1 / -14 / 0
We expect EBITDA margin to decline YoY by 170bp to 20.2% (mainly
1,6,12 Rel Perf. (%)
due to mix impact and PAT to post 6.9% YoY growth to INR637m.
Financial Snapshot (INR b) The stock trades at 37.6x FY19E EPS of INR388.4; maintain Buy.
Y/E March 2016 2017E 2018E 2019E
Sales 17.8 21.2 26.3 32.3
EBITDA 3.8 4.1 5.4 6.7
Adj. PAT 2.3 2.6 3.4 4.4
Adj. EPS (INR) 208.6 235.6 305.1 388.4
EPS Gr. % 18.7 12.9 29.5 27.3
FCF to PAT 0.8 0.6 0.6 0.9
BV/Sh.INR 453.0 570.8 723.3 898.1
RoE (%) 46.0 41.3 42.2 43.2
RoCE (%) 42.6 38.6 40.6 44.4 Key issues to watch for:
Payout (%) 49.1 50.0 50.0 55.0 Volume trends and management commentary on demand
Valuations environment.
P/E (x) 70.0 62.0 47.8 37.6 Update on foray into the kidswear segment.
EV/EBITDA (x) 43.3 39.5 30.4 24.0 GST impact.
Quarterly Performance 25% 26% 25% 24% 27% 25% 25% 23% (INR Million)
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,489 4,663 4,432 4,257 5,719 5,378 5,283 4,843 17,840 21,222
YoY Change (%) 27.4 15.3 19.2 13.8 15.6 19.0
COGS 1,783 1,808 1,650 1,673 2,570 2,156 2,131 1,980 6,913 8,837
Gross Profit 2,705 2,855 2,782 2,584 3,149 3,222 3,151 2,862 10,927 12,385
Gross margin (%) 60.3 61.2 62.8 60.7 55.1 59.9 59.7 59.1 61.2 58.4
% to sales 37.9 39.6 44.1 38.8 36.0 39.9 40.9 38.9 40.1 38.9
EBITDA 1,004 1,011 829 933 1,092 1,075 991 977 3,776 4,136
Margins (%) 22.4 21.7 18.7 21.9 19.1 20.0 18.8 20.2 21.2 19.5
YoY Change 8.8 6.3 19.6 4.8 18.5 9.5
Depreciation 56 58 58 66 59 60 62 57 238 239
Interest 50 37 35 31 39 40 45 46 153 170
Other Income 56 9 6 4 59 62 20 29 62 170
PBT 953 926 742 840 1,053 1,037 904 904 3,448 3,897
Tax 327 323 222 244 373 350 275 267 1,116 1,265
Rate (%) 34.3 34.9 29.9 29.1 35.5 33.8 30.4 29.5 32.4 32.5
PAT 626 602 520 596 679 687 629 637 2,332 2,632
YoY Change (%) 8.5 14.0 20.9 6.9 19.0 12.9
E: MOSL Estimates
April 2017 116

Parag Milk Foods

Bloomberg PARAG IN CMP: INR242 TP: INR250 (+3%) Neutral
We expect Parag to report net sales of INR4.2b, up 2.5% YoY, led by
growth in value-added products.
We estimate EBITDA margin to contract 420bp YoY to 5.4% due to
1,6,12 Rel Perf. (%) 4/-28/-
higher milk procurement prices, and a PAT of INR84m.
Financial Snapshot (INR b) The stock trades at 19.4x FY19E EPS of INR12.5. We have a Neutral
Y/E March 2016 2017E 2018E 2019E rating on the stock.
Sales 16.5 17.3 19.9 23.8
EBITDA 1.5 0.8 1.5 2.2
Adj. PAT 0.5 0.1 0.6 1.0
Adj. EPS (INR) 6.7 0.8 6.9 12.5
EPS Gr. % -66.7 -87.9 756.4 79.4
BV/Sh.INR 51.4 81.1 88.1 100.5
RoE (%) 19.5 1.3 8.2 13.2
RoCE (%) 12.4 3.5 7.6 11.3
Valuations
P/E (x) 36.0 298.4 34.8 19.4
P/BV (x) 4.7 3.0 2.7 2.4 Farm gate milk prices and global SMP price movement.
EV/EBITDA (x) 14.1 27.6 15.1 10.3 Execution of value-added products distribution.
EV/Sales (x) 1.3 1.3 1.1 1.0 Competitive intensity.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 3,738 4,696 3,875 4,142 3,835 4,728 4,461 4,247 16,451 17,271
YoY Change (%) 19.6 2.6 0.7 15.1 2.5 13.9 5.0
Gross Profit 959 1,258 1,156 1,303 1,147 1,444 987 1,128 4,676 4,706
Margin (%) 25.7 26.8 29.8 31.4 29.9 30.5 22.1 26.6 28.4 27.2
Total Expenditure 674 844 773 904 817 1,067 1,131 897 3,200 3,912
EBITDA 285 414 383 399 330 377 -145 231 1,476 794
YoY Change (%) 38.1 15.8 -8.9 -137.8 -42.0 37.7 -46.2
Margins (%) 7.6 8.8 9.9 9.6 8.6 8.0 -3.2 5.4 9.0 4.6
Depreciation 90 64 82 97 98 115 109 99 334 420
Interest 112 146 117 120 92 64 89 93 490 338
Other Income 5 -3 10 4 8 23 20 13 16 65
PBT before EO expense 87 201 194 186 147 222 -322 53 668 100
PBT 87 201 194 186 147 222 -322 53 668 100
Tax 17 105 49 25 39 78 -54 -31 195 32
Rate (%) 19.3 51.9 25.1 13.4 26.5 35.4 16.8 -58.7 29.2 32.0
Adj PAT 70 97 145 161 108 143 -268 84 473 68
YoY Change (%) 0.1 54.0 47.8 -284.5 -47.6 46.9 -85.6
Margins (%) 1.9 2.1 3.7 3.9 2.8 3.0 -6.0 2.0 2.9 0.4
E: MOSL Estimates
April 2017 117

P&G Hygiene and Healthcare

Bloomberg PG IN CMP: INR7,388 TP: INR8,790 (+19%) Buy
We expect PGHH to report net sales of INR5.9b, up 9% YoY.
M. Cap. (INR b)/(USD b) 240 / 4
We estimate EBITDA margin to contract 210bp YoY to 27.6%.
52-Week Range (INR) 7611 / 5915
PAT to post 2.4% YoY decline to INR1.5b in 3QFY17 (June ending).
1,6,12 Rel Perf. (%) 1 / -2 / -3
The stock trades at 37.4x FY19E EPS of INR198.8; maintain Buy.
Y/E March 2016 2017E 2018E 2019E
Sales 22.8 24.5 29.2 34.5
EBITDA 6.1 6.8 7.9 9.4
Adj. PAT 4.2 4.7 5.4 6.5
Adj. EPS (INR) 129.9 145.7 167.7 198.8
EPS Growth (%) 22.0 12.1 15.0 18.6
BV/Share (INR) 465.6 539.8 624.8 725.6
RoE (%) 30.8 29.0 28.8 29.5
Segmental growth numbers
RoCE (%) 31.3 29.4 29.1 29.7
Margin performance, given exceptionally high base.
Valuations
P/E (x) 57.2 51.0 44.3 37.4
P/BV (x) 16.0 13.8 11.9 10.2
Standalone - Quarterly Earning Model (INR Million)

Y/E June FY16 FY17 FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
Net Sales 5,387 6,593 5,438 5,336 6,004 6,432 5,927 6,152 22,754 24,515
YoY Change (%) 11.5 -2.4 9.0 15.3 -2.5 7.7
EBITDA 970 2,162 1,334 1,588 1,512 2,286 1,335 1,698 6,053 6,831
Growth 55.9 5.7 0.1 7.0
Margins (%) 18.0 32.8 24.5 29.8 25.2 35.5 22.5 27.6 26.6 27.9
Depreciation 127 142 124 124 127 132 142 202 517 603
Interest 17 28 7 8 4 43 4 4 60 55
Other Income 212 206 236 222 225 208 236 280 876 950
PBT before EO expense 1,038 2,199 1,439 1,677 1,605 2,320 1,425 1,773 6,353 7,122
Extra-Ord expense
PBT 1,038 2,199 1,439 1,677 1,605 2,320 1,425 1,773 6,353 7,122
Tax 343 733 468 585 561 814 477 534 2,129 2,386
Rate (%) 33.0 33.4 32.5 34.9 34.9 35.1 33.5 30.1 33.5 33.5
Reported PAT 696 1,465 971 1,092 1,044 1,506 947 1,238 4,223 4,736
Adj PAT 696 1,465 971 1,092 1,044 1,506 947 1,238 4,223 4,736
YoY Change (%) 61.6 11.7 2.0 50.1 2.8 -2.4 13.4 22.0 12.1
Margins (%) 12.9 22.2 17.9 20.5 17.4 23.4 16.0 20.1 18.6 19.3
E: MOSL Estimates
April 2017 118

Pidilite Industries
Bloomberg PIDI IN CMP: INR714 TP: INR740 (+4%) Neutral
We expect Pidilites (PIDI) revenue to remain flat YoY, led by
M. Cap. (INR b)/(USD b) 366 / 6
flattish volumes in Consumer and Bazaar segment.
1,6,12 Rel Perf. (%) 2 / -9 / 1
EBITDA margin is expected to contract 60bp YoY to 18.6%. Base
quarter 4QFY16 had witnessed 640bp EBITDA margin expansion
Financial Snapshot (INR b) YoY.
Y/E March 2016 2017E 2018E 2019E We expect EBITDA and PAT to decline by 3% and 8% YoY,
Sales 54.1 55.6 63.5 73.6 respectively.
EBITDA 12.2 12.4 13.8 15.5 While we like the business franchise and the long-term growth
Adj. PAT 7.6 8.5 9.4 10.5 prospects, fair valuations at 34.8x FY19E EPS of INR20.5 led us to
Adj. EPS (INR) 14.8 16.6 18.3 20.5 revise our rating post the 3QFY17 result to Neutral from Buy.
EPS Gr. (%) 47.3 12.5 10.1 12.3
BV/Sh.(INR) 54.3 64.5 79.3 96.3
RoE (%) 29.9 27.9 25.4 23.4
RoCE (%) 28.5 26.5 24.3 22.5
Payout (%) 28.5 29.2 16.4 14.6
Valuations
P/E (x) 48.4 43.0 39.1 34.8 Volume growth in Fevicol.
P/BV (x) 13.2 11.1 9.0 7.4 Outlook for VAM prices.
EV/EBITDA (x) 29.5 28.8 25.4 22.2 Outlook for industrial and construction chemical segments.
Div. Yield (%) 0.6 0.7 0.4 0.4 Progress on Elastomer project (if any).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 14,695 13,185 13,382 12,409 15,694 14,177 13,344 12,406 54,138 55,620
YoY Change (%) 9.4 5.1 11.3 18.9 6.8 7.5 -0.3 0.0 11.8 2.7
EBITDA 3,423 3,010 2,933 2,384 3,943 3,225 2,909 2,305 12,183 12,383
Margins (%) 23.3 22.8 21.9 19.2 25.1 22.8 21.8 18.6 22.5 22.3
Depreciation 242 248 248 351 258 303 295 277 1,331 1,133
Interest 39 31 31 35 35 26 30 36 133 127
Other Income 139 216 167 186 241 324 272 191 66 1,028
Extra-Ord expense -9 14 7 35 4 11 43 -54 48 4
PBT 3,290 2,932 2,813 2,150 3,887 3,209 2,814 2,237 10,737 12,147
Tax 948 893 829 637 1,174 912 793 766 3,221 3,645
Rate (%) 28.8 30.5 29.5 29.6 30.2 28.4 28.2 34.2 30.0 30.0
Adj PAT 2,333 2,053 1,992 1,547 2,717 2,309 2,063 1,417 7,564 8,506
YoY Change (%) 35.5 49.6 58.6 83.9 16.4 12.4 3.6 -8.4 45.7 12.5
Margins (%) 15.9 15.6 14.9 12.5 17.3 16.3 15.5 11.4 14.0 15.3
E: MOSL Estimates
April 2017 119

United Breweries
Bloomberg UBBL IN CMP: INR762 TP: INR1,030 (+35%) Buy
We expect United Breweries revenue to decline by 4.7% YoY to
M. Cap. (INR b)/(USD b) 201 / 3
INR11.6b.
1,6,12 Rel Perf. (%) -6 / -26 / -28
We build in EBITDA margin expansion of 30bp YoY to 10.8%, and
1.9% EBITDA decline YoY to INR1.2b.
Financial Snapshot (INR b) We estimate 16.9% PAT growth in 4QFY17, mainly due to low
Y/E March 2016 2017E 2018E 2019E interest costs and higher other income compared to base quarter.
Sales 48.4 47.9 53.2 61.2 The stock trades at 41.5x FY19E EPS of INR18.4. Maintain Buy.
EBITDA 6.9 6.8 7.8 9.7
PAT 3.0 2.8 3.8 4.9
EPS (INR) 11.3 10.7 14.3 18.4
EPS Gr. (%) 14.7 -5.4 34.3 28.2
BV/Sh.(INR) 79.8 89.5 101.3 117.0
RoE (%) 15.1 12.6 15.0 16.8
RoCE (%) 13.4 11.7 13.3 15.1
Valuations
P/E (x) 67.6 71.4 53.2 41.5
Trends in volume growth and margins.
P/BV (x) 9.5 8.5 7.5 6.5
Price trend and outlook for raw materials.
EV/EBITDA (x) 29.9 29.5 26.2 20.6
Comment on highway ban impact on stores with 500m proximity.
EV/Sales (x) 4.2 4.2 3.8 3.3

Y/E March FY16 FY17
Net Sales 14,546 10,723 10,969 12,150 15,642 10,386 10,250 11,583 48,388 47,860
YoY Change (%) 7.5 -3.1 -6.6 -4.7 -1.1
EBITDA 2,484 1,350 1,760 1,273 2,909 1,212 1,280 1,249 6,867 6,649
YoY Change (%) 17.1 -10.3 -27.3 -1.9 -3.2
Margins (%) 17.1 12.6 16.0 10.5 18.6 11.7 12.5 10.8 14.2 13.9
Depreciation 583 598 615 638 637 702 698 600 2,435 2,636
Interest 202 205 184 168 148 141 153 150 759 592
Other Income 167 242 179 273 136 8 330 340 862 814
PBT before EO expense 1,866 789 1,140 739 2,260 376 759 839 4,534 4,234
PBT 1,866 789 1,140 739 2,260 376 759 839 4,534 4,234
Tax 645 268 428 216 790 106 274 226 1,556 1,396
Rate (%) 34.5 33.9 37.5 29.2 34.9 28.1 36.1 27.0 34.3 33.0
Loss of Asso. Cos. 0 0 0 0 0 0 0 0 0 0
Reported PAT 1,221 521 712 524 1,471 270 485 612 2,979 2,838
Adj PAT 1,221 521 712 524 1,471 270 485 612 2,979 2,838
YoY Change (%) 20.4 -48.1 -31.9 16.9 -4.7
Margins (%) 8.4 4.9 6.5 4.3 9.4 2.6 4.7 5.3 6.2 5.9
E: MOSL Estimates
April 2017 120

United Spirits
Bloomberg UNSP IN CMP: INR2,028 TP: INR2,520 (+24%) Buy
We expect United Spirits (UNSP) revenue to grow by 6.4% YoY to
M. Cap. (INR b)/(USD b) 295 / 5
INR22.6b and have built in flat volumes.
52-Week Range (INR) 2729 / 1775
1,6,12 Rel Perf. (%) -15 / -27 / -38
We build in EBITDA margin expansion of 230bp YoY to 10.9% (in the
base quarter, margin stood at a low 8.6%).
Financial Snapshot (INR b) We estimate PAT of INR937m in 4QFY17, a decline YoY mainly due
Y/E March 2016 2017E 2018E 2019E to a higher tax rate compared to the base quarter.
Sales 83.4 88.8 96.1 111.8 Maintain Buy.
EBITDA 8.8 9.6 11.8 15.1
PAT 2.4 4.2 6.1 8.5
EPS (INR) 16.7 28.6 42.2 58.7
EPS Gr. (%) LP 71.2 47.2 39.1
BV/Sh.(INR) 123.1 151.8 191.0 246.8
RoE (%) 19.8 20.8 22.1 23.8
RoCE (%) 8.5 11.5 14.4 17.3
Payout (%) 0.0 0.0 5.9 4.3
Valuations
P/E (x) 121.2 70.8 48.1 34.6 Trends in volume growth, premiumization and margins.
P/BV (x) 16.5 13.4 10.6 8.2 Price trend and outlook for ENA.
EV/EBITDA (x) 34.8 31.1 24.8 19.2 Impact of ban on alcohol in certain states.
Div. Yield (%) 0.0 0.0 0.1 0.1 Comment on highway ban impact on stores with 500m proximity.

Volume Growth % 0.4 -2.3 1.6 -4.0 -0.2 1.0 -5.0 0.0 -1.1 -1.2
Net Sales 18,487 18,923 24,105 21,251 20,273 20,377 24,845 22,612 82,760 88,107
YoY Change (%) 9.7 7.7 3.1 6.4 2.1 6.5
Total Exp 16,773 16,020 21,557 19,421 18,251 18,126 22,007 20,137 74,580 78,521
EBITDA 1,715 2,903 2,548 1,830 2,023 2,251 2,838 2,475 8,180 9,587
Margins (%) 9.3 15.3 10.6 8.6 10.0 11.0 11.4 10.9 9.9 10.9
Depreciation 249 241 254 271 261 332 313 307 1,010 1,212
Interest 1,284 1,100 1,077 1,009 1,030 885 922 917 4,469 3,754
PBT From operations 182 1,562 1,217 550 732 1,034 1,603 1,251 2,701 4,621
Other income 320 293 82 965 346 389 454 402 1,660 1,590
PBT 502 1,855 1,299 1,515 1,078 1,423 2,057 1,653 4,361 6,211
Tax 386 601 506 504 309 445 580 716 1,930 2,050
Rate (%) 76.9 32.4 38.9 33.3 28.6 31.3 28.2 43.3 44.3 33.0
PAT 116 1,254 793 1,010 769 978 1,477 937 2,431 4,161
E: MOSL Estimates
April 2017 121

March 2017 Results Preview | Sector: Financials - Banks
Financials - Banks
Technology
Company name Earnings pressure continues
Axis Bank Loan growth moderate I NIM and fees under pressure I High provisioning
Bank of Baroda
Bank of India
Moderate loan growth, excess liquidity chasing quality credit (pressure on
Canara Bank
NIMs), sharp sequential increase in yields till Mid-March (decline in trading gains
DCB Bank
QoQ) and lack of resolution of NPAs would dent earnings for Financials.
Equitas Holdings
On a sequential basis, we expect profits to decline for PSBs (Public Sector Banks)
Federal Bank
as a whole due to decline in trading gains and higher provisions. YoY growth is
HDFC Bank
expected to be strong, as the base quarter was impacted by RBI AQR. We expect
ICICI Bank
balance sheet clean-up for ICICIBC and AXSB to continue in 4Q, impacting their
IDFC Bank
profitability.
Indian Bank
Mid-sized private banks would continue to outshine peers due to continue
IndusInd Bank market share gains (loan growth of 4-5x system), stable asset quality and stable
Kotak Mahindra Bank to improving margins (sharp fall in bulk deposits). We expect IIB, YES, RBL and
Oriental Bank of Commerce KMB to report a PAT growth of 29% YoY.
Punjab National Bank Last quarter, banks parked excess liquidity (collected due to demonetization) in
RBL Bank G-Sec, and with reversal of yields (+19/19/17bps QoQ for 3/5/10 years), chances
State Bank of India of MTM provision on investment portfolio have increased. Further, banks would
Union Bank of India continue to see ageing-related NPA provisions (RBI AQR led to bulk of NPAs in
Yes Bank 2HFY16). Hence, overall provisions would continue to dent earnings.
We expect pressure on asset quality to continue as (a) expected resolution in
the steel sector is delayed; (b) some large accounts may be recognized as NPA,
and (c) the lag impact of demonetization results in slippages from small value
accounts. RBI AQR in FY16 led to high NPAs, and due to weak recoveries till
date, provision levels are likely to remain elevated (ageing of NPAs).
We expect healthy growth in retail products like housing loans, vehicle loans
(push towards end of the quarter due to BS-III vehicle ruling by the Supreme
Court), and continued traction in unsecured personal loans and credit cards.
The big impact of demonetization would be shift in market share from
unorganized to organized credit. This along with low interest rates and
improvement in resolution process for stress loans would benefit Financials.
We are rolling forward our target price by a quarter. We also adjust cut earnings
estimates to factor in moderation in loan growth and delayed recoveries. Any
concrete announcement related to stress assets resolution by RBI/GOI
announcement will be the key positive. Our top picks amongst corporate
lenders are ICICIBC, SBIN and PNB. Amongst mid-sized banks we like YES and
Equitas.
`
Alpesh Mehta (Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415

Subham Banka (Subham.Banka@MotilalOswal.com); +91 22 3010 2746
April 2017 122
Loan growth at a multi-year low dragged down by corporate loans

Loan growth at the system level is at a multi-year low of ~5%, as (a) demonetization
impacted growth during the busy season, (b) corporate loan growth collapsed (-5%
YoY as of February 2017) due to weak investment sentiments and excess capacity in
place (c) demand for working capital loans was weak due to continued economic
moderation, (d) banks/FIs took a cautious approach to SME/LAP/MFI, etc and weak
resolutions to NPA accounts (e) FCNR (B) deposit-related loans came up for
redemption, and (f) repayments from loans completing the restructuring
moratorium were higher.
Improvement in sentiment (led by improving liquidity at the ground level) and
fiscal/monetary policies hold the key for loan growth improvement. We expect retail
growth to show better traction for private banks sequentially due to pent-up
demand of demonetization period and Supreme Court ruling on BS-III. We expect
mid-sized private banks to grow at 4-5x system growth during the quarter.
Core NIMs under pressure - bulk financiers to benefit in the near term
We expect NII to grow ~5% QoQ (interest reversals on SDR guidelines) and YoY
(lower base due to RBI AQR) for state-owned banks. For private banks we expect NII
to grow 11% YoY (+3% QoQ) amongst these mid-sized private banks are expected
to report 22% YoY growth. Weak loan growth would be the key reason for the
moderate topline growth at the sector level. Sharp reduction in the MCLR rates in
3Q would also impact yields on loans, negating the benefit of high interest income
reversals in 3QFY17 and lower cost of funds. Increasingly, intense competition in the
refinancing market and retail loans should put some pressure on blended yields.
Reduction in cost of funds would marginally negate the impact of pressure on yields.
Profit on sale of investments to decline QoQ
During the quarter, bond yields increased by 39bp till mid-March 2017 however,
declined 22bp thereafter to end the quarter with overall 17bp increase QoQ.
Increase in Yields during large part of the quarter would restrict profit on sale of
investment during the quarter. We expect it to decline significantly QoQ. Banks
parked the excess liquidity received during the demonetization period into G-Sec. in
some cases we expect MTM hit on investment portfolio. During the last quarter,
SBIN had booked gains on life insurance stake sale. MTM/realized losses on equity
exposure (taken via SDRs) would marginally negate gains on the investment
portfolio. CBK booked gains on the stake sale of 13.5% into its Housing finance arm.
Asset quality stress to be elevated
Factors likely to continue weighing on performance include (a) banks clean-up
exercise (expect largely from Restructured Loans and watch list), (b) non-fund-based
exposure turning into NPAs for some stressed corporates, (c) impact on the supply
chain of stressed large corporates, and (d) lack of resolution of large stress/NPA
exposures. Performance of SME and agriculture portfolio would be the key thing to
watch out for considering the lag impact of demonetization and loan
waivers/drought in some large states. .
We factor net slippage ratio of 2.5% (2.4% in 3QFY17) and provision-to-operating
profits of 82% (79% in 3QFY17) for state-owned banks and 33% (37% in 3QFY17) for
private sector banks. Bulk of the slippages happened in 2HFY16 due to RBI AQR and
ageing of NPAs, which would lead to higher provisioning charge.
April 2017 123
Core operating profits under pressure; trading gains key to profitability

Core revenue growth is likely to remain muted YoY, led by moderate balance sheet
growth, stable/declining margins and moderate fee income growth. Pressure on
earnings is likely to increase due to expected decline in non-core revenue and
elevated credit cost. Private sector banks would continue outperforming state-
owned banks. Over the past 2-3 years, Indian banks (mainly state-owned banks)
have sold assets worth ~INR1t to asset reconstruction companies (ARCs). We believe
write-downs and the resultant MTM provisioning (as per RBIs guidelines) would
begin in the ensuing quarters due to delayed resolution. We expect private banks
earnings to growth 18% YoY (+2% QoQ) and state-owned banks earnings to be
INR34b against a loss of INR146b in 4QFY16.
Prefer mid-sized private banks; ICICIBC and SBIN top large-cap picks
Delayed resolution of stress assets, lack of growth capital, and increasing
competition from private banks continue to mar performance of PSBs. In our view,
concrete steps by RBI/GOI to resolve stress loans would be the key to stock
performance for corporate lenders. In the meanwhile, mid-sized private banks with
significant excess capacity in place would continue to report strong core earnings
growth. We expect market share gains to accelerate for them.
We are closely looking at the activities at the ground level / management

commentary for small value delinquencies (expected to hit in 1QFY18) due to
demonetization. We are rolling forward our target price by a quarter. We also cut
earnings estimates to factor in moderation in loan growth and delayed recoveries.
Rather than current quarter earnings, management commentary on business
growth in the ensuing quarters (with more data in place) is important. Our top picks
amongst corporate lenders are ICICIBC, SBIN and PNB. Amongst mid-sized banks
we like YES and Equitas.
Exhibit 1: State-owned banksone-year forward P/BV Exhibit 2: Private sector banksone-year forward P/BV
PSU Banks Sector PB (x) LPA (x) Pvt Banks Sector PB (x) LPA (x)
2.0 1.9 3.5 3.3
2.8
1.4 2.5 2.2
1.1
0.9
0.8 1.5
0.6 0.9
0.2 0.5
Jun-08
Jun-13
Jun-08
Jun-13
Mar-07
Sep-09
Dec-10
Mar-12
Sep-14
Dec-15
Mar-17
Mar-07
Sep-09
Dec-10
Mar-12
Sep-14
Dec-15
Mar-17
April 2017 124

Exhibit 3: Expected quarterly performance (INR m)

Sector Sales EBDITA Net profit
CMP (INR) RECO Mar-17 Var % YoY Var % QoQ Mar-17 Var % YoY Var % QoQ Mar-17 Var % YoY Var % QoQ
Private Banks
Axis Bank 507 Neutral 45,498 -0.1 5.0 45,298 3.0 -2.4 8,341 -61.3 43.9
DCB Bank 171 Neutral 2,096 24.2 0.0 1,184 22.1 8.4 550 -20.9 7.2
Equitas Holdings 170 Buy 2,381 46.2 3.2 899 2.7 -10.1 385 -17.7 -14.3
Federal Bank 91 Buy 8,043 17.3 1.6 4,326 9.6 -8.9 1,834 1687.7 -10.8
HDFC Bank 1,433 Buy 85,213 14.3 2.6 66,473 15.9 0.6 38,972 15.5 0.8
ICICI Bank 285 Buy 54,328 0.5 1.3 50,462 -29.0 -8.6 22,932 226.7 -6.1
IDFC Bank 61 Neutral 5,264 26.3 1.1 4,057 56.2 -14.8 1,575 -4.6 -17.7
IndusInd Bank 1,400 Buy 16,205 27.8 2.7 13,643 18.5 0.1 7,617 22.8 1.5
Kotak Mahindra Bank 888 Buy 21,008 13.1 2.5 15,312 28.2 0.2 8,878 27.6 0.9
RBL Bank 535 Buy 3,457 43.9 7.5 2,610 62.3 11.0 1,446 71.7 12.3
Yes Bank 1,567 Buy 15,952 28.5 5.8 14,870 21.3 2.3 9,148 30.3 3.6
Pvt Banking Sector Aggregate 259,445 10.6 2.9 219,135 0.5 -2.7 101,676 17.9 1.5
PSU Banks
Bank of Baroda 174 Buy 34,445 3.4 9.9 22,242 -13.5 -14.3 5,091 LP 101.5
Bank of India 143 Neutral 29,047 -8.9 1.5 21,376 46.0 -13.1 -863 Loss PL
Canara Bank 311 Neutral 26,676 12.4 10.5 28,217 71.4 42.4 4,584 LP 42.4
Indian Bank 283 Buy 13,532 19.3 8.6 9,634 16.4 -5.7 2,138 153.1 -42.8
Oriental Bank of Commerce 145 Neutral 12,720 -6.0 17.6 11,128 26.6 -13.1 -1,153 PL Loss
Punjab National Bank 151 Buy 39,867 44.0 6.9 32,764 1.5 3.9 607 LP -70.7
State Bank 297 Buy 151,168 -1.1 2.5 119,461 -15.8 -4.8 22,304 76.5 -14.5
Union Bank 158 Neutral 23,388 12.2 9.5 19,063 35.2 3.0 1,342 39.6 29.0
PSU Banking Sector Aggregate 330,843 5.0 5.5 263,885 0.6 -1.8 34,050 LP -11.3
Financials Sector Aggregate 704,178 8.0 4.6 573,687 2.2 -1.0 186,950 LP 0.3
Exhibit 4: Financials - valuations

Sector / Companies CMP EPS (INR) PE (x) PB (x) ROE (%)
(INR) Reco FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Banks-Private
Axis Bank 507 Neutral 13.8 23.9 40.6 36.7 21.2 12.5 2.2 2.0 1.8 6.2 9.9 15.2
DCB Bank 171 Neutral 7.1 8.6 10.9 24.2 19.9 15.8 2.5 2.2 1.9 10.9 11.8 13.1
Equitas Holdings 170 Buy 5.7 6.2 7.4 29.9 27.5 23.2 2.6 2.3 2.1 10.7 8.9 9.6
Federal Bank 91 Buy 4.4 5.2 6.7 20.7 17.3 13.6 1.8 1.7 1.5 9.0 10.0 11.7
HDFC Bank 1,433 Buy 56.6 66.7 79.0 25.3 21.5 18.1 4.4 3.8 3.3 18.5 18.9 19.3
ICICI Bank 285 Buy 17.3 17.8 20.5 16.5 16.0 13.9 2.0 1.8 1.7 10.5 9.8 10.5
IDFC Bank 61 Neutral 3.0 3.8 4.8 20.5 15.8 12.7 1.4 1.3 1.2 7.1 8.7 10.1
IndusInd Bank 1,400 Buy 48.4 58.7 71.2 28.9 23.9 19.7 4.2 3.7 3.2 15.5 16.4 17.2
J&K Bank 78 Neutral -25.2 13.0 15.4 -3.1 6.0 5.0 0.7 0.7 0.6 -21.1 11.6 12.5
Kotak Mahindra Bank 888 Buy 26.3 32.3 41.3 33.8 27.5 21.5 4.3 3.7 3.2 13.5 14.5 16.0
RBL Bank 535 Buy 12.7 18.5 24.3 42.0 28.9 22.0 4.7 4.1 3.6 12.9 15.2 17.4
South Indian Bank 22 Neutral 2.8 3.1 3.8 7.8 7.0 5.7 0.7 0.7 0.6 9.7 10.0 11.3
Yes Bank 1,567 Buy 79.3 97.0 118.4 19.8 16.2 13.2 4.0 3.3 2.8 22.1 22.6 23.0
Private Bank Aggregate 25.5 20.4 16.2 3.0 2.7 2.4 11.9 13.4 14.9
Banks-PSU
Bank of Baroda 174 Buy 7.5 19.0 26.1 23.2 9.2 6.7 1.1 1.0 0.9 5.0 11.9 14.8
Bank of India 143 Neutral -5.7 14.5 23.7 -25.2 9.9 6.0 0.6 0.6 0.5 -2.5 6.0 9.2
Canara Bank 311 Neutral 25.2 35.9 57.6 12.3 8.7 5.4 0.6 0.6 0.5 5.2 7.0 10.5
IDBI Bank 77 Neutral 1.5 6.4 8.6 50.4 12.0 9.0 0.7 0.7 0.6 1.4 5.8 7.3
Indian Bank 283 Buy 27.1 30.1 35.9 10.5 9.4 7.9 0.9 0.9 0.8 9.3 9.6 10.6
Oriental Bank of Commerce 145 Neutral 0.3 21.0 26.0 579.2 6.9 5.6 0.4 0.4 0.3 0.1 5.2 6.1
Punjab National Bank 151 Buy 5.3 12.4 16.6 28.6 12.1 9.1 0.8 0.8 0.7 3.0 6.7 8.3
State Bank 297 Buy 8.7 16.9 23.3 34.2 17.5 12.7 1.3 1.2 1.1 3.9 7.3 9.3
Union Bank 158 Neutral 8.5 30.5 45.3 18.7 5.2 3.5 0.5 0.5 0.4 2.8 9.7 13.0
PSU Bank Aggregate 29.9 12.9 9.2 1.0 0.9 0.8 3.2 7.0 9.2
April 2017 125

96
103
110
117
124
3QFY13 50.3 15.1
5.0
6.4
7.8
9.2
10.6
4QFY12 1.1
April 2017
1QFY13 2.7 Jan-07 4QFY13 53.5 14.0
2QFY13 2.7 1QFY14 54.0 13.5
Dec-16 3QFY13 2.0 Jan-08 2QFY14 56.5 17.5
4QFY13 1.1
3QFY14 57.6 14.5
1QFY14 3.3 Jan-09
2QFY14 1.9 4QFY14 60.1 14.3
Net Slippage Ratio (%)

Jan-10 13.3
Sensex Index
3QFY14 2.1 1QFY15 61.2
Jan-17 4QFY14 1.1 2QFY15 62.7 11.0
Jan-11
Loans (INR t)
1QFY15 1.9 3QFY15 63.2 10.1

2QFY15 2.1
remain elevated (%, annualized)

Jan-12 4QFY15 65.4 9.0
3QFY15 2.6
4QFY15 1.9 1QFY16 66.6 9.9
Jan-13
Feb-17 2QFY16 68.1 9.1
Exhibit 5: Loan growth moderates in 4Q
1QFY16 2.0
2QFY16 2.5 Jan-14 3QFY16 69.9 10.6
3QFY16 8.4 4QFY16 72.5 10.9
Exhibit 11: Relative performance3 months (%)

4QFY16 11.0 Jan-15
Chg YoY (%)
Exhibit 7: 10-year g-sec yields have risen QoQ (%)

1QFY17 72.6 9.4
1QFY17 3.2
MOSL Financials Index

Mar-17 Jan-16 2QFY17 75.7 11.2
2QFY17 2.4
3QFY17 2.4 3QFY17 5.1 73.5
4QFY17E 2.5 Jan-17 4QFY17 4.4 75.7

Exhibit 9: State-owned banks net slippage ratio expected to
Source: MOSL, Company
90
105
120
135
150
40
Q1 2014 1QFY13 3.0 3QFY13
3.6 64.7 11.0
Q2 2014 2QFY13 3.0 4QFY13 69.0
Mar-16 3.7 13.1
3QFY13 3.0 1QFY14
3.7 70.7
PBs
Q3 2014 13.5
Apr-16 2.9
4QFY13 3.8 2QFY14 73.3 14.4
55 55 60
Q4 2014 2.8
May-16 1QFY14 3.8
20 17 11 13 13
3QFY14 75.0 15.9
37
Q1 2015 2QFY14 2.8
Jun-16 3.8 4QFY14 77.4 14.6
2.8
of state-owned banks
Q2 2015 3QFY14
16
PSBs
3.8 1QFY15 79.5 12.4
Jul-16 4QFY14 2.7
Sensex Index
51 59
Q3 2015 3.8 2QFY15 82.9 13.1
Aug-16 1QFY15 2.7
3.9
74
PSU
Q4 2015 2.7 3QFY15 82.8 10.8

Deposits (INR t)
2QFY15 4.1
Sep-16
51
Q1 2016 3QFY15 2.7 4QFY15 85.3 10.7
4.1
Oct-16 2.6 1QFY16 87.1 11.0
62
Q2 2016 4QFY15 4.0
Private
1QFY16 2.6 2QFY16 91.1 10.6
14 17 21 17 24
Nov-16 Q3 2016
130 4.1
Exhibit 6: Deposit growth remains healthy
2QFY16 2.6 3QFY16 91.3 10.2

4.0
Exhibit 12: Relative performance1-year (%)

46
Q4 2016
174
Dec-16 3QFY16 2.4 4QFY16 93.3 9.3

4.0
32
Jan-17 Q1 2017 4QFY16 2.5 1QFY17 96.0 9.7
Exhibit 8: NIMs to pick up marginally for PSBs (%)
4.0
MOSL Financials Index

Chg YoY (%)
2.4
48
Q2 2017 1QFY17 4.0 2QFY17 102.1 12.0
Feb-17
2QFY17 2.5
37
Q3 2017 3.9 3QFY17 105.2 15.2

Mar-17 3QFY17 2.3
3.9 4QFY17 105.4 13.0
79 74 79 82

Q4 2017
33
2.4
Exhibit 10: Provisions to PPoP (%) to remain elevated in case
126
4QFY17E 3.9
December
March
March 2017 2015 Results
2017 Results
Results Preview
Preview
Preview | Sector:
|| Sector:
Sector: Financials
Financials
Financials -- Banks
Banks
Axis Bank
Bloomberg AXSB IN CMP: INR507 TP: INR510 (0%) Neutral
Led by significant NPA addition, FCNR redemption, and increased
M. Cap. (INR b)/(USD b) 1207 / 19
risk aversion, we expect AXSB to report mid-to-high single-digit loan
-5 / -12 / -3
growth. Overall deposit growth would be moderate (8% YoY) owing
1,6,12 Rel Perf. (%)
to partial redemption of CASA deposits accumulated post
Financial Snapshot (INR b) demonetization and large-scale FCNR deposits redeemed in 3Q.
Y/E March 2016 2017E 2018E 2019E Yield on loans would remain under pressure following MCLR cuts/
NII 168.3 179.1 204.9 243.5 aggressive competition in refinance market. Margins in 3Q were
OP 161.0 177.4 188.1 218.4 impacted by ~23bp on account of interest income reversals and we
NP 82.2 32.9 56.8 100.5 expect margins to normalize by ~13bp QoQ to 3.6%.
NIM (%) 3.8 3.7 3.7 3.6 Bulk of the slippages are expected to be arising from the watch-list
EPS (INR) 34.5 13.8 25.5 46.6
(INR127.1b) and the proportion of corporate non-watch-list
EPS Gr. (%) 11.2 -60.0 72.8 76.9
slippages would be a key monitorable. While slippages should
BV/Sh. (INR) 216.8 230.6 251.6 290.0
moderate in 4Q, we expect them to remain at elevated levels (4.5%
ABV/Sh. (INR) 209.9 207.1 227.0 264.4
annualized slippage ratio), leading to higher credit costs.
RoE (%) 17.1 6.2 10.6 17.2
We estimate PAT at INR8.3b (v/s INR5.8b in 3Q), but subdued on a
RoA (%) 1.7 0.6 0.9 1.4
Payout (%) 15.0 0.0 17.6 17.6
YoY basis owing to high NPA provisioning.
Valuations AXSB trades at 1.8x FY19E BV and 12x FY19E EPS. Neutral.
P/E(X) 14.7 36.7 21.2 12.0 Key issues to watch for
P/BV (X) 2.3 2.2 2.0 1.8 Quantum of corporate slippages from non-watch list accounts
P/ABV (X) 2.4 2.4 2.2 1.9 Quantum of loans rescheduled under the 5:25, SDR and S4A
Div. Yield (%) 1.0 0.0 0.7 1.2 schemes.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 40,562 40,621 41,621 45,526 45,169 45,139 43,337 45,498 168,330 179,143
% Change (Y-o-Y) 22.5 15.2 15.9 19.8 11.4 11.1 4.1 -0.1 18.3 6.4
Other Income 22,983 20,414 23,378 26,940 27,383 25,397 34,002 34,361 93,715 121,142
Net Income 63,545 61,035 64,998 72,466 72,552 70,535 77,339 79,859 262,044 300,286
Operating Profit 40,921 36,280 39,851 43,985 44,694 41,002 46,402 45,298 161,036 177,396
% Change (Y-o-Y) 41.3 14.7 20.2 9.6 9.2 13.0 16.4 3.0 20.3 10.2
Other Provisions 11,218 7,072 7,126 11,683 21,172 36,227 37,958 32,592 37,099 127,949
Profit before Tax 29,703 29,208 32,725 32,302 23,522 4,774 8,444 12,706 123,938 49,447
Tax Provisions 9,919 10,051 10,972 10,759 7,967 1,584 2,649 4,366 41,701 16,565
Net Profit 19,784 19,156 21,753 21,543 15,555 3,191 5,796 8,341 82,237 32,882
% Change (Y-o-Y) 18.7 18.9 14.5 -1.2 -21.4 -83.3 -73.4 -61.3 11.8 -60.0
Operating Parameters
NIM (Reported,%) 3.8 3.9 3.8 4.0 3.8 3.6 3.4 3.9
Deposit Growth (%) 13.2 14.2 16.2 11.0 16.3 17.3 9.6 8.0 11.0 8.0
Loan Growth (%) 23.5 23.1 21.0 20.5 21.2 18.5 10.1 5.0 20.5 5.0
CD Ratio (%) 92.5 92.0 93.2 94.6 96.4 92.9 93.6 92.0 94.6 92.0
Asset Quality
OSRL (INR b) 85.2 84.3 77.5 80.7 73.6 67.0 63.4 80.7
OSRL (%) 3.0 2.8 2.5 2.4 2.1 1.9 1.8 2.4
Gross NPA (INR b) 42.5 44.5 57.2 60.9 95.5 163.8 204.7 224.9 60.9 224.9
Gross NPA (on cust. assets, %) 1.4 1.4 1.68 1.7 2.5 4.2 5.2 6.1 1.7 6.1
E: MOSL Estimates
April 2017 127

Bank of Baroda
Bloomberg BOB IN CMP: INR174 TP: INR224 (+29%) Buy
We expect balance sheet consolidation to continue, with 7.5% YoY
M. Cap. (INR b)/(USD b) 403 / 6
decline in loans in absolute terms. Portfolio rebalancing towards
5 / -3 / 0
granular loans and SEB loan conversion could weigh on growth.
1,6,12 Rel Perf. (%)
After several quarters of decline in deposit intake in FY16, deposit
growth has picked up in the previous quarter. We expect BOB to
Y/E March 2016 2017E 2018E 2019E
show 3% QoQ /6% YoY increase in deposits, given the low base.
NII 127.4 133.8 155.7 188.5 We expect margins to improve ~17bp QoQ, since 3QFY17 NIMs
OP 88.2 101.8 115.2 136.3 were impacted by interest income reversals.
NP -54.0 17.4 43.8 60.3 We expect slippages to remain elevated. However, higher
NIM (%) 2.0 2.2 2.4 2.5 recoveries are expected to provide some cushion to asset quality.
EPS (INR) -23.4 7.5 19.0 26.1
We expect only a marginal increase in GNPAs in 4QFY17.
EPS Gr. (%) NA NA 152.0 37.7
BV/Sh. (INR) 146 152.2 166.7 186.8
Muted fee income growth and significantly lower non-core income
ABV/Sh. (INR) 92 98.6 127.9 165.5 could see non-interest income falling from the highs of 2Q.
RoE (%) -15.3 5.0 11.9 14.8 PAT should increase ~100% sequentially, although from a low base;
RoA (%) -0.8 0.3 0.6 0.7 return ratios would still remain sub-optimal.
Div. Payout (%) 0.0 23.2 23.2 23.2 The stock trades at 0.9x FY19E BV and 6.7x FY19 EPS. Buy.
Valuations
P/E(X) NA 23.2 9.2 6.7 Key issues to watch for
P/BV (X) 1.2 1.1 1.0 0.9
Stress addition, mainly from international book.
P/ABV (X) 0.0 1.8 1.4 1.1
Guidance on loan growth, margins and operating expenses.
Div. Yield (%) 0.0 0.9 2.2 3.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) 3.9 -4.6 -17.7 5.0 -2.6 5.6 15.9 3.4 -3.4 5.0
Other Income 9,672 11,440 11,129 17,747 14,444 15,614 17,750 14,542 49,989 62,350
Net Income 44,269 43,885 38,183 51,051 48,155 49,875 49,093 48,987 177,387 196,110
% Change (YoY) -11.2 -2.7 -27.1 -4.5 21.2 15.1 52.3 -13.5 -11.1 15.5
Profit before Tax 16,022 4,453 -44,604 -42,852 6,654 8,944 5,157 7,045 -66,981 27,799
Tax Provisions 5,501 3,208 -11,184 -10,551 2,418 3,422 2,630 1,954 -13,025 10,425
Net Profit 10,522 1,245 -33,420 -32,301 4,236 5,521 2,527 5,091 -53,955 17,375
% Change (YoY) -22.7 -88.7 NA NA -59.7 343.5 NA NA NA NA
NIM (Reported, %) 2.3 2.1 1.7 2.2 2.2 2.3 2.1 2.1
Deposit Growth (%) 7.5 8.0 4.4 -7.0 -5.2 -7.3 0.0 6.0 -7.0 6.0
Loan Growth (%) 7.0 7.6 -2.4 -10.3 -11.2 -14.6 -8.9 -7.5 -10.3 -7.5
CASA Ratio (%) 31.9 32.0 30.0 33.6 33.8 34.2 40.5 26.4 29.4
Asset Quality
OSRL (INR B) 255 229 171 137 142 139 141 137
OSRL (%) 6.3 5.5 4.5 3.6 3.9 3.9 4.0 3.6
Gross NPA (INR B) 173 237 389 405 430 429 426 426 405 426
Gross NPA (%) 4.1 5.6 9.7 10.0 11.2 11.4 11.4 11.3 10.0 11.3
E: MOSL Estimates
April 2017 128

Bank of India
Bloomberg BOI IN CMP: INR143 TP: INR129 (-9%) Neutral
Continued asset quality strain and capital conservation efforts have
M. Cap. (INR b)/(USD b) 151 / 2
led to six consecutive quarters of decline in loan growth. We expect
10 / 13 / 31
4QFY17 loan growth to be flat QoQ (+2% YoY). Deposit growth may
1,6,12 Rel Perf. (%)
decline QoQ due to redemption of CASA intake.
Financial Snapshot (INR b) We expect NIM to remain largely stable QoQ at ~2% (-27bp YoY).
Y/E March 2016 2017E 2018E 2019E Overall NII is expected to de-grow 9%.
NII 117.2 112.6 134.6 165.9
While non-interest income is likely to contribute strongly to total
OP 60.4 87.4 100.3 120.1
income (~35%), it would be lower than in 3QFY17 owing to lower
NP -60.9 -6.0 15.3 25.0
NIM (%) 2.1 2.0 2.2 2.4 trading gains. Fee income is expected to remain muted.
EPS (INR) -74.5 -5.7 14.5 23.7 We expect stress additions to remain high during the quarter
EPS Gr. (%) NM NM NM 63.6 (slippage ratio ~4%), leading to elevated provisioning.
ROE (%) -24.5 -2.5 6.0 9.2 We expect operating profit to decline 13% QoQ (but grow 46% YoY)
ROA (%) -1.0 -0.1 0.2 0.3 as a result of lower non-core income growth.
BV/Sh. (INR) 283 238 249 267
BOI trades at 0.5x FY19E BV and 6x FY19E EPS. Maintain Neutral.
ABV/Sh. (INR) 61 79 130 199
Div. Payout (%) 0.0 0.0 23.2 23.2
Valuations Key issues to watch for
P/E(X) -1.9 -25.2 9.9 6.0 Stress addition trends and outlook for FY18.
P/BV (X) 0.50 0.60 0.57 0.54 Upgrade/recovery trends.
P/ABV (X) 2.35 1.80 1.10 0.72 Quantum of loans rescheduled under the 5:25 scheme.
Div. Yield (%) 0.0 0.0 2.0 3.3 Outlook on balance sheet growth and further capital infusion.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (Y-o-Y) 8.4 -0.4 -2.6 12.0 -4.7 -9.9 5.7 -8.9 3.0 -3.9
Other Income 8,406 7,781 10,473 8,836 12,384 20,106 17,693 15,339 36,525 65,522
Net Income 37,533 37,978 37,553 40,708 40,136 47,304 46,319 44,386 153,772 178,144
% Change (Y-o-Y) -17.3 -31.7 -24.5 2.6 -3.0 70.9 74.5 46.0 -19.4 44.9
Profit before Tax 1,895 -17,791 -21,950 -40,062 -11,163 1,966 1,559 -349 -77,908 -7,988
Tax Provisions 598 -6,529 -6,894 -4,191 -3,750 698 542 513 -17,016 -1,997
Net Profit 1,297 -11,262 -15,056 -35,871 -7,414 1,268 1,017 -863 -60,892 -5,991
% Change (Y-o-Y) -83.9 -243.3 -968.4 NM NM NM NM NM NM NM
NIM (Reported, %) 2.1 2.3 2.0 2.1 2.2 2.2 2.2 2.1
Deposit Growth (%) 1.5 1.3 -0.3 -3.6 -2.0 -3.8 2.6 2.0 -3.6 2.0
Loan Growth (%) 3.5 -1.1 -3.2 -7.2 -1.9 -1.8 -2.6 2.3 -7.2 2.3
CD Ratio (%) 77.7 75.2 75.1 74.3 77.8 76.8 71.3 74.5 74.3 74.5
Tax Rate (%) 31.5 36.7 31.4 10.5 33.6 35.5 34.7 21.8 25.0
Asset Quality
OSRL (INR b) 193.9 193.1 172.7 128.7 119.5 120.1 128.1 128.7
OSRL (%) 4.9 4.9 4.3 3.4 3.1 3.1 3.3 3.4
Gross NPA (INR b) 268.9 298.9 365.2 498.8 518.7 522.6 517.8 525.9 498.8 525.9
Gross NPA (%) 6.8 7.6 9.2 13.1 13.4 13.5 13.4 13.5 13.1 13.5
E: MOSL Estimates
April 2017 129

Canara Bank
Bloomberg CBK IN CMP: INR311 TP: INR310 (0%) Neutral
We expect slippages to remain elevated (3.5% of loans). Continued
M. Cap. (INR b)/(USD b) 169 / 3
fresh slippages and ageing of NPLs are expected to keep credit costs
4 / -11 / 51
high (we factor in 2.4% credit costs in 4QFY17).
1,6,12 Rel Perf. (%)
We expect loan growth to pick up marginally, yet remain muted
Financial Snapshot (INR b) (3/5% QoQ/YoY). Deposit growth is expected to be flat QoQ, but
Y/E March 2016 2017E 2018E 2019E grow 7.5% YoY owing to strong CASA inflows in 3QFY17.
NII 97.6 98.3 107.2 122.7
NIM should increase ~13bp QoQ (+10bp YoY) from a low base,
OP 71.5 87.6 92.1 110.5
leading to 12% NII growth.
NP -28.1 13.7 19.5 31.3
NIM (%) 1.9 1.9 1.9 1.9 Fee income growth is expected to remain muted. Non-core income
EPS (INR) -51.8 25.2 35.9 57.6 is expected to come in strong, considering that the bank had only
EPS Gr. (%) NM NM 42.6 60.4 booked 40% of the available trading gains in 3Q, with the balance
BV/Sh. (INR) 477 497 525 569 likely to be booked in this quarter. Also, CBK had sold 13.5% stake
ABV/Sh. (INR) 227 230 278 356 in CANFIN, which would lead to capital gains of INR7b.
RoE (%) -10.8 5.2 7.0 10.5
We expect PAT growth of 42% QoQ. The banking business trades at
RoA (%) -0.5 0.2 0.3 0.4
Div. Payout (%) 0.0 20.9 23.2 23.2 0.5x FY19E BV and 4.9x FY19E EPS. Maintain Neutral.
Valuations
P/E (x) -5.5 11.3 7.9 4.9
Quantum of loans rescheduled under the 5:25, SDR and S4A
P/BV (x) 0.60 0.57 0.54 0.50
P/ABV (x) 1.25 1.23 1.02 0.80 schemes.
Div. Yield (%) 0.0 1.6 2.5 4.1 Outlook on balance sheet growth.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Interest Income 111,397 112,675 108,821 107,329 102,017 104,054 102,877 107,163 440,221 416,111
Interest Expense 86,232 86,210 86,555 83,592 78,943 79,630 78,739 80,487 342,588 317,799
% Change (Y-o-Y) 3.6 11.8 -6.5 -4.5 -8.3 -7.7 8.4 12.4 1.0 0.7
Other Income 11,130 12,105 11,686 13,832 15,847 17,818 17,917 26,046 48,752 77,628
Net Income 36,295 38,570 33,952 37,570 38,921 42,241 42,055 52,722 146,386 175,939
% Change (Y-o-Y) 11.6 19.6 -13.6 -5.0 -9.2 10.1 27.6 71.4 2.8 22.6
Profit before Tax 6,438 7,318 1,236 -46,850 3,260 5,550 4,968 6,922 -31,858 20,699
Tax Provisions 1,650 2,029 386 -7,795 970 1,981 1,749 2,338 -3,730 7,038
Net Profit 4,788 5,289 850 -39,055 2,290 3,569 3,219 4,584 -28,128 13,661
% Change (Y-o-Y) -40.7 -15.6 -87.0 -737.2 -52.2 -32.5 278.8 NA -204.1 -148.6
NIM (Rep, %) 2.2 2.2 2.2 2.2 2.2 2.2 2.2 2.2
NIM (Cal, %) 2.0 2.1 1.7 1.9 1.9 2.0 1.8 2.0 1.9 1.9
Deposit Growth (%) 10.0 5.2 6.1 1.3 -1.4 -0.2 4.0 7.5 1.3 7.5
Loan Growth (%) 7.0 3.9 6.3 -1.6 -0.9 1.3 -0.1 5.0 -1.6 5.0
CD Ratio (%) 68.7 66.6 67.7 67.7 69.0 67.5 65.0 66.1 67.7 66.1
CASA Ratio (%) 23.2 23.9 24.1 25.7 27.6 27.2 30.1 25.7 29.0
Tax Rate (%) 25.6 27.7 31.2 16.6 29.8 35.7 35.2 33.8 11.7 34.0
Asset Quality
OSRL (INR b) 230.4 228.9 206.1 130.6 133.8 131.5 120.0 130.6
OSRL (%) 7.1 7.1 6.2 4.0 4.2 4.0 3.6 4.0
Gross NPA (INR b) 130.8 140.2 198.1 316.4 323.3 333.2 343.4 356.2 316.4 356.2
Gross NPA (%) 4.0 4.3 5.8 9.4 9.7 9.8 10.0 10.1 9.4 10.1
E: MOSL Estimates
April 2017 130

DCB Bank
Bloomberg DCBB IN CMP: INR171 TP: INR158 (-8%) Neutral
Loan growth (22% YoY) and deposit growth (28% YoY) are expected
to be significantly above industry average. We expect NII to grow
24% YoY, led by strong loan growth, although margins are expected
1,6,12 Rel Perf. (%) 6 / 30 / 90
to contract ~10bp QoQ/YoY owing to pressure on yields.
Non-interest income is expected to grow by ~22% YoY, led by
healthy fee income and trading gains.
Y/E MARCH 2016 2017E 2018E 2019E
NII 6.2 7.9 9.5 11.7 Overall, we expect revenue growth to remain strong at 24% YoY
OP 3.5 4.2 4.9 6.1 and PPP growth to be 22% YoY. We model opex growth of 25% YoY,
NP 1.9 2.0 2.4 3.1 led by branch expansion strategy (300+ targeted by 2Q/3QFY18).
NIM (%) 3.9 4.0 3.9 3.9 Credit costs may be elevated owing to potential stress in the retail
EPS (INR) 6.8 7.1 8.6 10.9 and SME segment (we factor in 2.7% slippage ratio). We expect PBT
EPS Gr. (%) 0.9 3.7 21.4 26.3
growth of 21% YoY.
BV/Sh. (INR) 61.6 68.7 77.3 88.2
DCBB trades at 1.9x FY19E BV and 15.8x FY19E EPS. On the back of
ABV/Sh. (INR) 59.2 65.6 73.9 84.1
RoE (%) 11.8 10.9 11.8 13.1 improved visibility we increase target multiple to 1.8x v/s 1.6x
RoA (%) 1.1 0.9 0.9 1.0 earlier. We also roll forward TP by one quarter. Maintain Neutral.
P/E (x) 25.1 24.2 19.9 15.8 Management commentary on slippages in SME segment.
P/BV (x) 2.8 2.5 2.2 1.9
Update and commentary on balance sheet growth strategy.
P/ABV (X) 2.9 2.6 2.3 2.0
CASA ratio and NIM performance.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (Y-o-Y) 1.0 27.4 31.6 30.1 26.1 26.9 30.5 24.2 21.9 26.9
Other Income 631 487 472 615 601 616 641 750 2,205 2,609
Net Income 2,035 1,987 2,077 2,301 2,372 2,519 2,736 2,845 8,400 10,472
Operating Profit 897 781 843 970 927 1,009 1,093 1,184 3,490 4,213
% Change (Y-o-Y) 10.4 30.5 23.3 42.6 3.4 29.2 29.7 22.1 25.8 20.7
Other Provisions 180 217 210 273 205 265 305 342 879 1,118
Profit before Tax 716 564 633 698 722 744 787 842 2,611 3,095
Tax Provisions 248 195 221 2 252 259 274 292 666 1,077
Net Profit 469 369 412 695 470 485 513 550 1,945 2,018
% Change (Y-o-Y) 5.0 -10.1 -3.1 10.4 0.3 31.3 24.5 -20.9 1.7 3.7
NIM (Reported,%) 3.8 3.8 4.0 3.9 4.1 4.0 4.0 3.9
Deposit Growth (%) 25.8 24.4 18.9 18.4 18.2 30.4 33.8 28.0 18.4 28.0
Loan Growth (%) 25.7 27.2 23.7 23.5 27.9 29.1 24.3 22.0 23.5 22.0
CD Ratio (%) 78.6 82.5 83.3 86.6 85.1 81.6 77.4 82.5 86.6 82.5
Asset Quality
Gross NPA (INR B) 2.1 2.2 2.3 2.0 2.3 2.6 2.3 2.6 2.0 2.6
Gross NPA (%) 2.0 2.0 2.0 1.5 1.7 1.8 1.6 1.6 1.5 1.6
E: MOSL Estimates
April 2017 131

Equitas Holdings
Bloomberg EQUITAS IN CMP: INR170 TP: 220 (+29%) Buy
We expect NII growth of 46% YoY, led by change in balance sheet
profile towards higher proportion of interest-earning assets (loans +
investments) and recalibration in liability side (sufficient availability
1,6,12 Rel Perf. (%) -6/-15/-
of funds). Loan growth is expected to be healthy at ~20% YoY.
NIM is expected to contract ~160bp QoQ due to shift from higher
Y/E March 2016 2017E 2018E 2019E
yielding MFI loans to lower yielding secured products. This would
NII 5.1 8.7 11.1 13.2
OP 3.2 4.3 4.5 5.3 be negated to some extent by a fall in COF, with bank borrowings to
NP 1.7 1.9 2.1 2.5 be grandfathered and largely replaced by bulk deposits.
NIM (%) 11.6 13.8 12.2 10.4 Opex is expected to grow by ~82% YoY (v/s 46% YoY growth in total
EPS (INR) 6.2 5.7 6.2 7.4 income), driven by greater employee and other expenses as a result
EPS Gr. (%) 56.1 -8.2 8.9 18.7 of liability-side branch set-up and hiring.
BV/Sh. (INR) 50 67 73 80
PAR >1 day stands at ~5% of MFI loans. Collection trends in Tamil
ABV/Sh. (INR) 49 65 71 78
RoE (%) 13.3 10.7 8.9 9.6
Nadu, Maharashtra and Karnataka remain a key monitorable. We
RoA (%) 3.0 2.4 1.9 1.7 factor in provisions of INR298m during the quarter.
Div. Payout (%) 0.0 0.0 0.0 0.0 The stock trades at 2.1x FY19E BV. Maintain Buy.
Valuations
P/E(X) 27.5 29.9 27.5 23.2 Key issues to watch for
P/BV (X) 3.4 2.6 2.3 2.1 Update on the transition progress.
P/ABV (X) 3.5 2.6 2.4 2.2 Commentary on growth and asset quality in MFI.
Div. Yield (%) 0.0 0.0 0.0 0.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (Y-o-Y) 62.7 34.8 47.9 46.2 72.3
Other Income 237 114 208 296 230 666 402 428 1,718 1,726
Net Income 1,493 1,602 1,768 1,925 2,273 2,672 2,709 2,808 6,789 10,462
Operating Expenses 745 854 948 1,050 1,134 1,408 1,709 1,909 3,597 6,160
Operating Profit 748 749 820 875 1,139 1,264 1,000 899 3,192 4,302
% Change (Y-o-Y) 52.3 68.8 22.0 2.7 34.8
Other Provisions 165 138 143 146 176 528 294 298 591 1,295
Tax Provisions 207 218 243 261 352 273 256 216 930 1,097
Net Profit 376 393 434 468 612 463 449 385 1,671 1,909
% Change (Y-o-Y) 62.6 17.8 3.6 -17.7 14.2
E: MOSL Estimates
April 2017 132

Federal Bank
Bloomberg FB IN CMP: INR91 TP: INR108 (+19%) Buy
We expect FB to report ~25% YoY (4% QoQ) loan growth, aided by
M. Cap. (INR b)/(USD b) 156 / 2
greater focus on corporate growth. Traction in SME and retail loans
3 / 16 / 87
would be maintained. We expect NIM to contract by 10bp QoQ.
1,6,12 Rel Perf. (%)
Other income growth is likely to moderate to 4% YoY v/s 44% YoY in
3Q owing to lower trading gains in a rising interest rate scenario.
Y/E Mar 2016 2017E 2018E 2019E
Fee income growth would be flat YoY on a high base; however,
NII 25.0 30.1 35.2 42.0
OP 14.2 18.1 21.1 25.7 traction in corporate segment could throw a positive surprise.
NP 4.8 7.6 9.0 11.5 Overall PPoP growth is expected to be muted due to lower share of
NIM (%) 3.2 3.3 3.1 3.0 non-interest income and declining margins.
EPS (INR) 2.8 4.4 5.2 6.7 We expect slippages to remain largely in line with 3Q (at ~2%),
EPS Gr. (%) -52.9 59.1 19.1 27.2
owing to stress in the SME segment. GNPA in % terms is expected
BV/Sh. (INR) 47 50 54 60
to remain largely stable at less than 3%.
ABV/Sh. (INR) 43 47 51 56
ROE (%) 6.0 9.0 10.0 11.7 We expect PAT of INR1.8b v/s INR103m in 4QFY16 and ~INR2b in
ROA (%) 0.5 0.7 0.7 0.7 3QFY17. FB trades at 1.5x FY19E BV and 13.6x FY19E EPS. Buy.
Payout (%) 29.3 23.2 23.2 23.2
Valuations
P/E(X) 32.9 20.7 17.3 13.6
Outlook on asset quality.
P/BV (X) 1.9 1.8 1.7 1.5
P/ABV (X) 2.1 2.0 1.8 1.6 Strategy on balance sheet growth, particularly corporate growth.
Div. Yield (%) 0.8 1.0 1.2 1.5

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) 7.2 0.4 3.2 10.1 14.5 19.4 30.7 17.3 5.2 20.4
Other Income 1,939 1,823 1,828 2,269 2,370 2,616 2,633 2,347 7,864 9,966
Net Income 7,987 7,906 7,885 9,128 9,297 9,878 10,547 10,390 32,906 40,112
% Change (YoY) 4.5 -17.9 -18.1 -15.9 16.0 41.1 45.9 9.6 -12.5 27.0
Other Provisions 1,531 873 751 3,886 1,685 1,684 1,588 1,506 7,041 6,463
Profit before Tax 2,141 2,493 2,504 59 2,574 3,066 3,161 2,820 7,197 11,621
Tax Provisions 727 880 877 -44 901 1,053 1,104 986 2,440 4,044
Net Profit 1,414 1,613 1,627 103 1,673 2,013 2,057 1,834 4,757 7,577
% Change (YoY) -35.8 -32.9 -38.5 -96.3 18.3 24.8 26.4 1,687.7 -52.7 59.3
NIM (Cal, %) 3.2 3.1 3.1 3.4 3.3 3.3 3.3 3.2 3.2 3.3
Deposit Growth (%) 16.7 14.3 14.1 11.8 12.5 17.0 23.3 22.0 11.8 22.0
Loan Growth (%) 10.1 5.0 9.8 13.3 19.3 27.2 32.0 25.0 13.3 25.0
Asset Quality
Gross NPA (INR b) 13.0 15.0 16.8 16.7 17.5 18.2 19.5 20.9 16.7 20.9
Gross NPA (%) 2.6 2.9 3.2 2.8 2.9 2.8 2.8 2.9 2.8 2.9
E: MOSL Estimates
April 2017 133

HDFC Bank
Bloomberg HDFCB IN CMP: INR1,433 TP: INR1,670 (+16%) Buy
Loan growth will be moderate at 12% YoY, in line with the
M. Cap. (INR b)/(USD b) 3663 / 56
moderate growth environment in the system (still ~2x system
52-Week Range (INR) 1478 / 1043
0 / 5 / 15
growth). We expect healthy deposit growth of ~18% YoY led by
1,6,12 Rel Perf. (%)
strong CASA inflows in 3Q, despite USD3b of FCNR (B) redemption
Despite pressure on yields, COF decline would help HDFCB to report
Y/E MARCH 2016 2017E 2018E 2019E
stable NIM QoQ at 4.5%. NII is expected to grow at 14% YoY.
NII 275.9 326.1 382.4 452.3 Opex growth would largely be in line with growth in total income at
OP 213.6 251.0 295.5 351.3 ~16% YoY. Hence, C/I ratio would remain stable QoQ.
NP 123.0 144.6 170.4 201.8 Moderate PPoP growth would lead to 16% YoY PAT growth, lower
NIM (%) 4.7 4.7 4.6 4.5 than the trend rate of 20%. Asset quality trends would remain
EPS (INR) 48.6 56.6 68.3 81.5
stable with GNPAs at ~1%.
EPS Gr. (%) 19.3 16.3 17.9 18.4
BV/Sh. (INR) 287 327.7 380.1 442.6
HDFCB trades at 3.3x FY19E BV and 18.2x FY19E EPS. Comfort on
ABV/Sh. (INR) 284 323.6 373.2 430.8 earnings (~18% CAGR over FY16-19) remains high. Maintain Buy.
RoE (%) 18.3 18.5 19.3 19.8
RoA (%) 1.9 1.9 1.8 1.8
Payout (%) 22.9 23.4 23.4 23.4
Performance in retail loan/SME portfolioespecially in segments
Valuations
P/E(X) 29.6 25.5 21.6 18.2 like CV/CE.
P/BV (X) 5.0 4.4 3.8 3.3 Trends in digital banking/payment industry and various initiatives
P/ABV (X) 5.1 4.5 3.9 3.3 by the bank.
Div. Yield (%) 0.7 0.8 0.9 1.1 Overall B/S growth outlook and economic recovery.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (Y-o-Y) 23.5 21.2 24.0 24.0 21.8 19.6 17.6 14.3 23.2 18.2
Other Income 24,619 25,518 28,722 28,659 28,066 29,010 31,427 34,266 107,517 122,768
Net Income 88,507 92,327 99,407 103,192 105,881 108,945 114,518 119,479 383,432 448,822
% Change (Y-o-Y) 26.2 24.2 20.0 21.5 20.0 19.5 15.2 15.9 22.7 17.5
Tax Provisions 14,262 14,922 17,251 16,982 17,136 18,202 20,281 20,023 63,417 75,642
Net Profit 26,957 28,695 33,568 33,742 32,389 34,553 38,653 38,972 122,962 144,567
% Change (Y-o-Y) 20.7 20.5 20.1 20.2 20.2 20.4 15.1 15.5 20.4 17.6
NIM (Reported,%)* 4.3 4.2 4.3 4.3 4.4 4.2 4.1 4.3
Deposit Growth (%) 30.1 29.7 26.5 21.2 18.5 16.7 21.1 18.0 21.2 18.0
Loan Growth (%) 22.4 27.9 25.7 27.1 23.2 18.1 13.4 12.0 27.1 12.0
CD Ratio (%) 78.9 82.6 83.3 85.0 82.0 83.6 78.0 80.7 85.0 80.7
CASA Ratio (%) 39.6 39.7 40.0 43.2 39.9 40.4 45.4 43.2
Asset Quality
OSRL (INR B) 3.8 4.2 4.4 4.6 4.7 4.9 5.0 4.6 0.0
OSRL (%) 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.0
Gross NPA (INR B) 38.5 38.3 42.6 43.9 49.2 50.7 52.3 54.3 43.9 54.3
Gross NPA (%) 1.0 0.9 1.0 0.9 1.0 1.0 1.1 1.0 0.9 1.0
E: MOSL Estimates; * Reported on total assets; # Cal. on interest earning assets
April 2017 134

ICICI Bank
Bloomberg ICICIBC IN CMP: INR285 TP: INR350 (+23%) Buy
We expect loan growth to improve to 9% YoY (+4% QoQ), led by
M. Cap. (INR b)/(USD b) 1656 / 26
continued growth in retail loans, which have shown a steady pick-
up in the last two years. Corporate loan growth would be moderate
1,6,12 Rel Perf. (%) -1 / 5 / 6 and international loan exposure would continue to decline. Slower
growth coupled with a YoY decline in NIM (due to lower C-D ratio)
Financial Snapshot (INR b) should lead to moderate growth in NII on a YoY basis.
Y/E March 2016 2017E 2018E 2019E Fee income growth would remain muted. We have factored in ~8%
NII 212.2 212.1 244.0 279.2 YoY growth in fee income, led by low corporate fees. Moderate
OP 238.6 264.2 229.5 258.6 trading gains and one-off stake sale in previous quarters would
NP 97.3 100.7 103.7 119.0
reflect in lower overall non-interest income growth on a QoQ/YoY
NIM (%) 3.6 3.2 3.3 3.3
basis. Overall, we expect non-interest income to decline ~30% YoY.
EPS (INR) 16.7 17.3 17.8 21.6
Gross slippages are expected to remain high in 4QFY17, with
EPS Gr (%) -13.2 3.5 3.0 14.8
BV/Sh (INR)* 132.9 145.2 158.0 173.2
slippage ratio estimated at 6.5%. Bulk of the corporate slippages
ABV/Sh (INR)* 117.3 119.1 129.5 148.2 would be from within the watch list. Outstanding watch list (fund-
RoE (%) 11.3 10.5 9.8 10.5 based and non-fund-based) stood at INR275.4b in 3QFY17.
RoA (%) 1.4 1.3 1.2 1.2 We expect PAT to decline 6% QoQ, led by muted total income
Valuations growth. Provisions are expected to remain elevated.
AP/E (x) 13.0 12.4 11.3 9.0 ICICIBC trades at 1.1x FY19E core BV and 9x FY19E EPS. Buy.
AP/BV (x) 1.6 1.5 1.3 1.1 Key issues to watch for
AP/ABV (x) 1.9 1.8 1.6 1.2 Movement of watch list accounts.
Div. Yield (%) 1.8 1.6 1.6 1.9 Plans on monetization of stakes in various ventures.
* BV adj for invt in subsidiaries
Outlook on asset quality and trend on further relapse from RL.
Quantum of loans rescheduled under the 5/25 scheme.
ICICI Bank: Quarterly Performance
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 128,126 130,989 133,461 134,819 133,303 136,394 136,181 135,953 527,394 541,830
% Change (YoY) 13.9 12.8 13.3 6.4 0.8 0.0 -1.6 0.5 11.5 -0.1
Other Income 29,899 30,074 42,169 51,089 34,293 91,197 39,383 36,289 153,231 201,161
Net Income 81,050 82,588 96,698 105,134 85,878 143,730 93,017 90,617 365,471 413,241
% Change (YoY) 11.5 9.8 30.2 30.0 3.5 106.2 -15.8 -29.0 21.0 10.7
Tax Provisions 11,063 11,862 6,976 -5,206 4,679 4,511 3,694 4,886 24,694 17,770
Net Profit 29,762 30,301 30,181 7,019 22,324 31,023 24,418 22,932 97,263 100,696
% Change (YoY) 12.1 11.9 4.5 -76.0 -25.0 2.4 -19.1 226.7 -13.0 3.5
NIM (Reported,%) 3.5 3.5 3.5 3.4 3.2 3.1 3.1 3.5
NIM (Cal, %) 3.7 3.7 3.7 3.5 3.3 3.3 3.3 3.2 3.6 3.3
Deposit Growth (%) 9.6 9.2 14.6 16.6 15.3 16.8 14.2 14.7 16.6 14.7
Loan Growth (%) 15.2 13.3 15.8 12.3 12.4 10.9 5.2 8.9 12.3 8.9
Tax Rate (%) 27.1 28.1 18.8 -287.2 17.3 12.7 13.1 17.6 29.1 29.1
Asset Quality
OSRL (INR b) 126.0 118.7 112.9 85.7 72.4 63.4 64.1 85.7
OSRL (%) 3.2 2.9 2.6 2.0 1.6 1.4 1.4 2.0
Gross NPA (INR b) 151.4 158.6 211.5 262.2 271.9 321.8 377.2 424.2 262.2 424.2
Gross NPA (%) 3.7 3.8 4.7 5.8 5.9 6.8 7.9 8.6 5.8 8.6
E: MOSL Estimates; Note: We have factored in IPRU stake sale gain in 3QFY17 and reversal of contingency provisions in 2QFY17.
April 2017 135

IDFC Bank
Bloomberg IDFCBK IN CMP: INR61 TP: INR63 (+4%) Neutral
We expect moderate loan growth of 6% YoY (+3% QoQ), with
M. Cap. (INR b)/(USD b) 206 / 3
incremental growth to be driven by the retail segment (acquisition
of portfolio for PSL), as the bank is conservative on corporate
1,6,12 Rel Perf. (%) -4 / -27 / 0
growth. During the quarter, the bank has sold a substantial part of
stress loans to ARC, which would also impact reported loan growth.
Y/E March 2H2016 2017E 2018E 2019E Yields are expected to remain under pressure and we expect flat
NII 8.5 20.4 25.0 30.9 margins at ~2% in 4QFY17.
OP 7.4 19.0 21.9 27.1
Non-interest income would be INR2.5b (down 25% QoQ, but up
NP 4.7 10.0 13.0 16.1
83% YoY), led by moderate fee income growth and lower trading
NIM (%) 2.5 2.3 2.3
EPS (INR) 3.0 3.8 4.8 gains than in 3Q.
EPS Gr. (%) 30.1 23.9 Opex is likely to grow 27% YoY, driven by costs associated with
BV/Sh. (INR) 40.2 42.4 45.4 49
expansion of retail and rural banking franchise. Strong total income
ABV/Sh. (INR) 37.8 39.9 42.4 46
growth of 40% YoY would lead to 56% YoY growth in PPoP.
RoE (%) 7.1 8.7 10.1
RoA (%) 1.1 1.0 1.1 Stress additions would keep credit costs elevated and we expect
Payout (%) 20.0 20.0 20.0 20.0 high provisioning at INR1.7b. We expect PAT decline of ~5% YoY.
Valuations
P/E(X) 20.5 15.8 12.7
The stock trades at 1.2x FY19E BV and 12.7x FY19E EPS. Neutral.
P/BV (X) 1.4 1.3 1.2
P/ABV (X) 1.5 1.4 1.3
Div. Yield (%) 1.0 1.3 1.6 Outlook on balance sheet growth and costs.
Retail franchise building plans and update.
Quarterly
(INR Million)
Performance
FY16 FY17E 2HFY16 FY17E
3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 3,863 4,168 4,989 4,956 5,208 5,264 8,031 20,416
% Change (Y-o-Y) 34.8 26.3 NA
Other Income 2,179 1,377 2,128 4,101 3,350 2,520 3,556 12,100
Net Income 6,042 5,545 7,117 9,057 8,558 7,784 11,587 32,516
Operating Expenses 2,153 2,947 2,768 3,234 3,798 3,727 5,100 13,527
Operating Profit 3,889 2,598 4,349 5,823 4,760 4,057 6,487 18,990
% Change (Y-o-Y) 22.4 56.2 NA
Other Provisions 123 119 236 223 2,318 1,701 242 4,478
Profit before Tax 3,766 2,479 4,113 5,600 2,443 2,356 6,246 14,511
Tax Provisions 1,345 829 1,465 1,722 530 781 2,173 4,499
Net Profit 2,422 1,651 2,648 3,878 1,913 1,575 4,072 10,013
% Change (Y-o-Y) NA NA NA NA -21.0 -4.6 NA
NIM (Reported,%) 2.0 2.1 2.4 2.2 2.1
NIM (Cal, %) 2.1 2.3 2.4 2.0 2.0 2.0 2.2 2.5
E: MOSL Estimates
April 2017 136

Indian Bank
Bloomberg INBK IN CMP: INR283 TP: INR331 (+17%) Buy
Net loan growth is expected to be a muted ~4% QoQ (-2% YoY),
M. Cap. (INR b)/(USD b) 136 / 2
after three consecutive quarters of sequential decline. Deposit
-5 / 22 / 156
growth is expected be flat (+1% QoQ, +4% YoY), led by redemption
1,6,12 Rel Perf. (%)
of CASA deposits accumulated in the previous quarter.
Financial Snapshot (INR b) Calculated NIMs are expected to improve ~20bp QoQ (+35bp YoY),
Y/E March 2016 2017E 2018E 2019E as 3QFY17/4QFY16 were impacted by interest income reversals.
NII 44.5 51.1 55.0 65.3
This would drive NII growth of 19% YoY (and 9% QoQ).
OP 30.3 38.9 40.6 46.0
NP 7.1 13.0 14.5 17.3
Fee income would be subdued. Significantly lower trading gains
NIM (%) 2.5 2.7 2.7 2.8 would lead to 5% QoQ decline (but 8% YoY growth) in non-interest
EPS (INR) 14.8 27.1 30.1 35.9 income. We expect slippage ratio to remain elevated at 2.6% and
EPS Gr. (%) -29.2 82.7 11.2 19.4 credit costs to remain high at 1.75% (1.78% in 3QFY17), as INBK
BV/Sh. (INR) 281 301 324 352 looks to improve provision coverage.
ABV/Sh (INR) 202 216 238 270
INBK trades at 0.8x FY19E BV and 7.9x FY19E EPS. Maintain Buy.
RoE (%) 5.5 9.3 9.6 10.6
RoA (%) 0.4 0.6 0.6 0.7
Div. Payout (%) 23.2 23.2 23.2 23.2
Outlook on business growth and asset quality remains the key
Valuations
P/E (x) 19.1 10.5 9.4 7.9 factor to monitor.
P/ BV (x) 1.0 0.9 0.9 0.80 Quantum of loans rescheduled under the 5/25 scheme.
P/ABV (x) 1.4 1.3 1.2 1.05 View on margins with an improvement in liquidity and lower
Div. Yield (%) 0.5 1.9 2.1 2.5 interest rates.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (Y-o-Y) 4.5 -8.2 0.5 2.4 10.4 18.3 12.2 19.3 -0.3 15.0
Other Income 3,756 4,375 4,452 5,294 4,417 5,846 5,997 5,719 17,814 21,979
Net Income 14,959 15,179 15,560 16,640 16,780 18,629 18,463 19,252 62,277 73,124
% Change (Y-o-Y) 11.2 -3.8 -3.5 1.2 27.5 36.8 33.2 16.4 6.9 17.4
Profit before Tax 3,006 5,984 487 138 4,862 5,279 4,809 3,103 9,554 18,054
Tax Provisions 853 2,291 2 -707 1,788 1,228 1,074 965 2,439 5,055
Net Profit 2,153 3,693 485 845 3,074 4,051 3,735 2,138 7,115 12,999
% Change (Y-o-Y) 3.9 17.5 -82.5 -59.0 42.8 9.7 670.4 153.1 -29.2 82.7
NIM (Rep, %) 2.4 2.3 2.3 2.4 2.5 2.6 2.5 2.3
Deposit Growth (%) 12.9 4.7 8.1 5.4 1.1 3.2 5.2 4.0 5.4 4.0
Loan Growth (%) 5.7 5.0 3.7 2.5 1.5 0.2 -0.7 -2.0 2.5 -2.0
CASA Ratio (%) 29.5 29.8 30.7 31.9 32.1 33.6 38.7 31.9 0.0
Asset Quality
OSRL (INR b) 101.1 100.6 88.6 63.7 62.9 64.1 59.5 63.7
OSRL (%) 8.3 8.2 7.2 4.9 5.1 5.2 4.9 4.9
Gross NPA (INR b) 58.2 57.7 70.7 88.3 88.9 91.9 96.8 100.0 88.3 100.0
Gross NPA (%) 4.7 4.6 5.6 6.7 7.0 7.3 7.7 7.7 6.7 7.7
E: MOSL Estimates
April 2017 137

IndusInd Bank
Bloomberg IIB IN CMP: INR1,400 TP: INR1,685 (+20%) Buy
We expect strong loan growth of ~24% in 4QFY17 significantly
M. Cap. (INR b)/(USD b) 833 / 13
ahead of system loan growth. Deposit growth would be strong at
4 / 9 / 27
32% YoY, aided by demonetization in 3Q. Continued market share
1,6,12 Rel Perf. (%)
gains in VF would remain a key factor to monitor.
Financial Snapshot (INR Billion) NIM is likely to decline marginally (by 5bp QoQ), but would remain
Y/E MARCH 2016 2017E 2018E 2019E at 3.8-3.9%. The quantum of CASA retained would be a key factor.
NII 45.2 60.2 71.8 87.4
We expect non-interest income to grow ~20%, supported by
OP 41.4 52.4 62.8 75.9
healthy fee income growth of ~24%. The management expects
NP 22.9 28.8 34.9 42.4
NIM (%) 4.0 4.3 4.3 4.3 stronger contribution of third-party distribution fees owing to
EPS (INR) 38.4 48.4 58.7 71.2 increased inflows into MFs and insurance industry.
EPS Gr. (%) 13.4 25.9 21.3 21.3 Opex growth would remain high at ~30%+ YoY v/s 25% growth in
BV/Sh. (INR) 291 333 383 444.3 total income. Healthy PPP growth (+19% YoY) and controlled credit
ABV/Sh. (INR) 288 328 377 437.1 costs would keep earnings growth strong at 22%+ YoY.
RoE (%) 16.6 15.5 16.4 17.2
IIB trades at 3.2x FY19E BV and 19.7x FY19E EPS, with best-in-class
RoA (%) 1.8 1.9 1.9 1.9
Payout (%) 18.5 14.0 14.0 14.0 RoA of ~1.9% and RoE of 17-18%. Buy.
Valuations
P/E (X) 36.4 28.9 23.9 19.7
Continued CV/CE growth would be the key for CFD growth.
P/BV (X) 4.8 4.2 3.7 3.2
P/ABV (X) 4.9 4.3 3.7 3.2 Corporate asset quality a key monitorable.
Div. Yield (%) 0.3 0.4 0.5 0.6 Traction in the non-vehicle consumer lending portfolio.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 27,235 27,978 29,277 31,317 32,917 34,857 36,993 38,480 115,807 143,247
% Change (YoY) 22.5 31.3 36.2 37.1 38.3 33.4 34.5 27.8 32.1 33.2
Other Income 7,616 7,835 8,390 9,128 9,730 9,704 10,168 11,010 32,970 40,612
Net Income 17,423 18,778 20,124 21,810 23,294 24,307 25,952 27,215 78,135 100,768
% Change (YoY) 23.2 38.9 37.1 35.4 33.7 27.3 28.5 18.5 33.7 26.6
Tax Provisions 2,744 2,884 3,029 3,172 3,419 3,635 3,959 3,879 11,828 14,892
Net Profit 5,250 5,600 5,810 6,204 6,614 7,042 7,506 7,617 22,865 28,779
% Change (YoY) 24.7 30.2 29.9 25.3 26.0 25.7 29.2 22.8 27.5 25.9
NIM (Reported,%) 3.7 3.9 3.9 3.9 4.0 4.0 3.9
NIM (Cal, %) 3.5 3.7 3.7 3.7 3.8 3.8 3.9 3.8 3.7 3.8
Deposit Growth (%) 21.6 22.5 24.6 25.4 31.0 38.9 37.9 32.0 25.4 32.0
Loan Growth (%) 23.1 30.6 28.7 28.5 29.7 26.4 25.1 24.0 28.5 24.0
CD Ratio (%) 93.0 96.8 95.1 95.1 92.1 88.1 86.2 89.3 95.1 89.3
CASA Ratio (%) 34.7 34.7 35.0 35.2 34.4 36.5 37.0 35.2 36.1
Tax Rate (%) 34.3 34.0 34.3 33.8 34.1 34.0 34.5 33.7 34.1 34.1
Asset Quality
OSRL (INR b) 4.6 4.9 4.8 4.7 4.6 4.4 4.7
OSRL (%) 0.6 0.6 0.6 0.5 0.5 0.4 0.5
Gross NPA (INR b) 5.7 6.0 6.8 7.8 8.6 9.0 9.7 10.7 7.8 10.7
Gross NPA (%) 0.8 0.8 0.8 0.9 0.9 0.9 0.9 1.0 0.9 1.0
E: MOSL Estimates; Quarterly calculated margins based on total assets, yearly on interest earning assets
April 2017 138

Kotak Mahindra Bank

Bloomberg KMB IN CMP: INR888 TP: INR1,017 (+15%) Buy
We expect the standalone bank to report 15% loan growth and
M. Cap. (INR b)/(USD b) 1629 / 25
12.5% deposit growth in 4QFY17. NIM is likely to decline ~5bp QoQ,
6 / 7 / 12
but improve 16bp YoY. Overall, we expect NII growth of 13% YoY.
1,6,12 Rel Perf. (%)
CASA retention would be a key driver of NII and NIM.
With strong digital initiatives, fast-paced customer acquisition and
Y/E MARCH 2016 2017E 2018E 2019E merger synergies from eIVBL, fee income would be a key growth
NII 69.0 80.7 90.6 110.3 driver for the bank. We factor in fee income growth of 20% in 4Q
OP 40.4 58.1 69.3 89.2 and expect an improving trend in the coming quarters.
NP 20.9 33.2 40.8 53.4 We expect asset quality to remain stable, with GNPA less than 2.5%
Cons. NP 34.6 48.2 59.2 75.7 and NNPA at 1%, led by high provision coverage ratio.
NIM (%) 4.1 4.4 4.4 4.4
On a reported basis, we expect standalone bank earnings to grow
Cons. EPS (INR) 18.9 26.3 32.3 41.3
EPS Gr. (%) 39.2 22.9 27.8
28% YoY. The stock trades at 3.2x FY19E consolidated BV and 21.5x
Cons. BV. (INR) 182 207 238 278 FY19E consolidated EPS. Maintain Buy.
Cons. RoE (%) 10.9 13.5 14.5 16.0
RoA (%) 1.1 1.6 1.8 2.0 Key issues to watch for
Payout (%) 5.1 5.8 5.8 5.8 Guidance on balance sheet growth.
Valuations Performance on CASA, fees and growth the initial pain of merger
P/E(X) (Cons.) 47.1 33.8 27.5 21.5 is behind now.
P/BV (X) (Cons.) 4.9 4.3 3.7 3.2
Performance of non-banking subsidiaries and their contribution to
Div. Yield (%) 0.0 0.1 0.1 0.1
overall profit.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Kotak Bank (standalone)
% Change (Y-o-Y) 59.5 61.6 66.7 65.4 20.1 18.9 16.1 13.1 63.4 16.9
% Change (Y-o-Y) -10.3 42.4 63.4 38.7 120.3 37.8 26.8 28.2 34.8 43.9
Net Profit 1,898 5,695 6,347 6,958 7,420 8,133 8,798 8,878 20,898 33,228
% Change (Y-o-Y) -55.8 28.1 36.6 32.0 291.0 42.8 38.6 27.6 12.0 59.0
Other Businesses
Kotak Prime 1,190 1,270 1,260 1,300 1,200 1,300 1,330 1,393 5,025 5,223
Kotak Mah. Investments 300 360 390 500 400 530 480 497 1,540 1,907
Kotak Mah. Capital Co 30 70 60 170 230 50 70 74 320 424
Kotak Securities 670 780 550 510 600 960 850 846 2,515 3,256
International subs 250 320 260 220 130 310 220 240 1,050 900
Kotak Mah. AMC & Trustee Co. 200 230 40 250 190 70 160 170 720 590
Kotak Investment Advisors 0 0 -10 50 110 10 0 5 50 125
Kotak OM Life Insurance 660 480 600 770 710 630 680 804 2,510 2,824
Con.adj and MI -30 230 -40 -180 -240 30 80 -190 -19 -320
Conso. PAT 5,168 9,435 9,457 10,548 10,750 12,023 12,668 12,716 34,608 48,156
% Change (Y-o-Y) -25.9 31.5 32.0 15.5 108.0 27.4 33.9 20.6 13.7 39.1
E: MOSL Estimates, Quarterly numbers vary from full year number due to difference in reporting
April 2017 139

Oriental Bank of Commerce

Bloomberg OBC IN CMP: INR145 TP: INR138 (-7%) Neutral
Net Loans are expected to decline 4% YoY, led by continued
balance sheet consolidation. Deposit growth would be muted at
14 / 4 / 42
3.5% YoY. CD ratio is likely to decline ~520bp YoY and ~110bp QoQ.
1,6,12 Rel Perf. (%)
NIM is expected to improve ~30bp QoQ (but fall 22bp YoY) owing
Financial Snapshot (INR b) to one-time interest income reversals on SDR/S4A accounts in 3Q.
Y/E March 2016 2017E 2018E 2019E NII is likely to remain subdued (-6% YoY), led by continued
NII 53.7 48.7 51.9 56.4
moderation in loan growth and YoY decline in NIM.
OP 36.8 42.7 38.2 40.4
Non-interest income is expected to remain subdued, led by lower
NP 1.6 0.1 7.3 9.0
EPS (INR) 4.9 0.3 21.0 26.0 investment gains and muted fee income. Opex is expected to
EPS Growth (%) 0.0 0.0 8,255.1 23.9 decline ~12% YoY (+10% QoQ) due to change in depreciation
BV/Sh. (INR) 418.0 396.9 413.0 432.9 policy by the bank in 3Q.
RoE (%) 1.2 0.1 5.2 6.1 Slippages post AQR have remained at elevated levels, led by the
RoA (%) 0.1 0.0 0.3 0.3 clean-up exercise taken up by the new management, while
Valuations
recoveries have been modest. Hence, we remain cautious on asset
P/E (x) 0.0 579.2 6.9 5.6
P/BV (x) 0.35 0.37 0.35 0.34 quality (~365bp credit costs). We expect a loss of INR1.1b in 4Q.
P/ABV (x) 0.72 1.54 1.11 0.71 The stock trades at 0.3x FY19E BV and 5.6x FY19E EPS. Neutral.

Outlook on asset quality,
Quantum of loans rescheduled under the 5:25 scheme.
Balance sheet growth and traction in focus loan segments.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) 6.9 11.0 0.9 4.3 -9.3 -4.9 -17.4 -6.0 5.7 -9.3
Other Income 4,539 4,246 3,945 4,933 6,138 5,834 9,774 6,945 17,663 28,690
Net Income 17,824 18,076 17,038 18,469 18,184 18,991 20,594 19,665 71,408 77,433
% Change (YoY) -8.5 16.1 -24.5 -27.7 -12.2 -3.7 67.0 26.6 -12.9 15.9
Profit before Tax 4,668 4,231 -4,167 -1,474 1,667 1,813 -470 -2,836 3,258 174
Tax Provisions 2,090 1,218 80 -1,690 660 280 830 -1,684 1,698 87
Net Profit 2,578 3,013 -4,247 216 1,007 1,533 -1,300 -1,153 1,561 87
% Change (YoY) -29.3 3.4 NM NM -60.9 -49.1 NM -633.1 -68.6 -94.4
NIM (Rep, %) 2.7 2.8 2.6 2.7 2.4 2.7 2.1 2.7
NIM (Cal,%) 2.5 2.7 2.5 2.5 2.2 2.5 2.0 2.3 2.6 2.3
Deposit Growth (%) 5.0 6.9 4.4 2.4 4.4 1.2 2.0 3.5 2.4 3.5
Loan Growth (%) 8.3 7.0 7.9 3.7 4.0 -1.0 -2.7 -1.9 3.7 -1.9
Asset Quality
OSRL (INR b) 147.9 140.6 133.0 95.4 95.4 76.2 66.4 95.4
OSRL (%) 9.9 9.4 8.7 6.2 6.1 5.1 4.5 6.2
Gross NPA (INR b) 85.8 85.6 118.2 147.0 172.1 183.8 204.9 226.9 147.0 226.9
Gross NPA (%) 5.9 5.7 7.8 9.6 11.5 12.4 13.8 15.1 9.6 15.1
E: MOSL Estimates
April 2017 140

Punjab National Bank

Bloomberg PNB IN CMP: INR151 TP: INR186 (+23%) Buy
In line with industry trend, we expect muted loan growth (-2.5%
M. Cap. (INR b)/(USD b) 322 / 5
YoY / +4% QoQ). Deposits should grow 10%+ YoY, reflecting large
4 / -1 / 62
CASA inflows in 3Q post demonetization. However, 4Q might see
1,6,12 Rel Perf. (%)
some CASA outflow.
Financial Snapshot (INR b) NII is likely to show strong growth (+44% YoY) owing to ~10bp QoQ
Y/E March 2016 2017E 2018E 2019E and ~65bp YoY improvement in NIMs 3QFY17 and 4QFY16 were
NII 153.1 153.0 173.2 198.3
affected by interest income reversals.
OP 122.2 130.2 145.1 160.8
Fee income growth is likely to be moderate and trail balance sheet
NP -39.7 11.2 26.5 35.2
NIM (%) 2.6 2.4 2.5 2.6 growth (+3% YoY); overall non-interest income is likely to grow just
EPS (INR) -20.2 5.3 12.4 16.6 2% YoY (and decline QoQ) owing to sharp fall in trading gains.
EPS Gr. (%) NM NM 135.6 33.0 Stress addition is likely to be elevated but recoveries could surprise
BV/Sh. (INR) 180 181 191 205 positively, with intense efforts. We expect credit cost to be high at
ABV/Sh. (INR) 54 74 100 141 ~300bp in an effort to shore up coverage ratio (37% in 3QFY17).
RoE (%) -10.9 3.0 6.7 8.3
Resolutions in key accounts remain a key trigger. The stock trades
RoA (%) -0.6 0.2 0.4 0.4
Valuations at 0.7x FY19E BV and 9.1x FY19E EPS. Maintain Buy.
P/E(X) -7.5 28.6 12.1 9.1
P/BV (X) 0.8 0.8 0.8 0.7 Key issues to watch for
P/ABV (X) 2.80 2.04 1.52 1.07 Outlook on asset quality, as net stressed loans remain one of the
Div. Yield (%) 0.0 0.5 1.2 1.6 highest in the industry.
Capital raising plans via fresh issue and sale of non-core assets.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) -6.3 4.1 -2.7 -27.0 -9.8 -10.2 -9.4 44.0 -7.5 -0.1
Other Income 13,974 13,569 16,706 24,522 23,551 23,879 25,135 24,975 68,770 97,539
Net Income 54,998 56,789 57,902 52,199 60,541 62,678 62,443 64,841 221,888 250,503
% Change (YoY) 0.2 2.2 6.1 0.8 4.6 12.7 8.1 1.5 2.2 6.6
Profit before Tax 13,207 10,564 -8,577 -72,574 5,362 7,783 2,187 1,692 -57,379 17,025
Tax Provisions 6,000 4,354 -9,087 -18,902 2,299 2,289 116 1,085 -17,635 5,788
Net Profit 7,207 6,210 510 -53,671 3,064 5,494 2,072 607 -39,744 11,236
% Change (YoY) -48.7 7.9 -93.4NM -57.5 -11.5 306.2NM NM NM
NIM (Rep, %) 2.9 3.0 2.8 1.8 2.5 2.5 2.3 2.6
Deposit Growth (%) 16.4 14.0 13.3 10.3 7.0 6.5 11.6 10.0 10.3 10.0
Loan Growth (%) 9.6 6.7 8.4 8.4 2.8 3.4 -1.8 -2.5 8.4 -2.5
CD Ratio (%) 73.6 70.6 71.6 74.6 70.7 68.5 63.0 66.1 74.6 66.1
Dom. CASA Ratio (%) 38.9 40.2 40.4 41.6 41.4 42.1 47.1 41.6
Tax Rate (%) 45.4 41.2 105.9 26.0 42.9 29.4 5.3 64.1 30.7 34.0
Asset Quality
OSRL (INR B) 399.7 382.6 350.0 201.4 189.1 180.9 172.2 201.4
OSRL (%) 10.5 10.0 8.9 4.9 4.8 4.6 4.5 4.9
Gross NPA (INR B) 254 249 343 558 567 565 556 555 558 555
Gross NPA (%) 6.5 6.4 8.5 12.9 13.8 13.6 13.7 13.1 12.9 13.1
E: MOSL Estimates
April 2017 141

RBL Bank
Bloomberg RBK IN CMP: INR535 Under Review
Loan growth (+10% QoQ) and deposit growth (+38% YoY) would be
M. Cap. (INR b)/(USD b) 193 / 3
significantly above industry average.
We expect NII to grow 44% QoQ, led by strong loan growth and
1,6,12 Rel Perf. (%) 13/69/-
stable NIMs, and helped by strong CASA inflows and fall in bulk
deposit rates.
Y/E MARCH 2016 2017E 2018E 2019E
Overall non-interest income is expected to grow by ~44% YoY, led
NII 8.2 12.1 15.8 20.8 by strong growth in fee income and digital initiatives. We expect
OP 5.4 9.0 12.4 16.6 opex growth of 31%, led by continued capacity expansion.
NP 2.9 4.6 6.7 8.8 However, opex is expected to trail total income growth of 44%,
NIM (%) 2.7 3.0 3.1 3.2 driving 62% YoY increase in PPoP.
EPS (INR) 9.0 12.7 18.5 24.3
Asset quality is expected to remain largely stable in 4QFY17, though
EPS Gr. (%) 27.6 41.3 45.4 31.2
BV/Sh. (INR) 92.0 114.7 129.6 149.2
some stress could materialize, particularly in the MFI segment.
ABV/Sh. (INR) 89.5 114.1 128.8 148.1 Credit costs would largely be under control.
RoE (%) 11.2 12.9 15.2 17.4 We expect PAT growth of 12% QoQ and 72% YoY. RBK trades at 3.6x
RoA (%) 0.9 1.1 1.2 1.3 FY19E BV and 22x FY19E EPS. We await management commentary
Valuations on asset quality and growth outlook, and change our rating to
P/E(X) 59.4 42.0 28.9 22.0
Under Review.
P/BV (X) 5.8 4.7 4.1 3.6
P/ABV (X) 6.0 4.7 4.2 3.6 Key issues to watch for
Div. Yield (%) 0.3 0.4 0.6 0.7 Management commentary on slippages in SME segment.
Update and commentary on balance sheet growth strategy.
CASA ratio and traction on NIMs.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 6,049 6,644 7,131 7,619 8,637 9,019 9,612 10,861 27,443 38,129
% Change (Y-o-Y) 46.8 59.5 44.6 43.9 47.2 48.3
Other Income 1,259 1,123 1,096 1,427 1,675 1,691 1,823 2,052 4,905 7,241
Net Income 2,926 3,022 3,321 3,829 4,122 4,721 5,038 5,509 13,097 19,390
% Change (Y-o-Y) 65.3 81.3 57.6 62.3 50.6 65.9
Other Provisions 227 223 316 379 426 781 362 430 1,144 1,998
Profit before Tax 889 986 1,176 1,230 1,419 1,410 1,989 2,180 4,280 6,998
Tax Provisions 286 316 366 388 445 512 703 734 1,355 2,393
Net Profit 603 669 811 842 973 899 1,287 1,446 2,925 4,605
% Change (Y-o-Y) 61.4 34.3 58.8 71.7 41.2 57.4
NIM (Reported,%) 3.0 3.0 3.2 3.2 2.8 3.4 3.4 3.1 3.3
Deposit Growth (%) 37.8 43.9 38.0 42.4 38.0
Loan Growth (%) 44.0 46.3 40.0 46.9 40.0
CD Ratio (%) 85.2 87.8 87.2 86.3 89.0 89.2 88.5 87.2 88.5
Tax Rate (%) 32.2 32.1 31.1 31.5 31.4 36.3 35.3 33.7 31.7 34.2
Asset Quality
Gross NPA (INR b) 1.6 2.0 2.1 2.5 2.7 2.9 3.3 2.1 3.3
Gross NPA (%) 0.9 1.1 0.98 1.1 1.1 1.1 1.1 1.0 1.10
E: MOSL Estimates
April 2017 142

State Bank of India

Bloomberg SBIN IN CMP: INR297 TP: INR340 (+15%) Buy
We expect loan growth to be moderate at 2.5% YoY, with
M. Cap. (INR b)/(USD b) 2303 / 35
incremental growth driven primarily by the retail segment. Deposit
growth is expected to be strong at 13.5% YoY, led by impressive
1,6,12 Rel Perf. (%) 8 / 8 / 40
CASA mobilization in 3Q.
Financial Snapshot (INR b) NIM would remain largely stable QoQ at 2.7%. Strong MCLR cuts
Y/E March 2016 2017E 2018E 2019E and lowering of base rate are set to put downward pressure on
NII 569 589.1 657.5 747.4 yields, with CASA retention key to maintaining NIM.
OP 433 467.7 481.7 553.7 Stress additions would remain largely in line with 3QFY17. RBI
NP 100 99.0 113.0 155.4
resolution with respect to large accounts is key to asset quality.
NIM (%) 3.0 2.8 2.7 2.8
We expect non-interest income to decline 4% YoY, owing to one-off
EPS (INR) 15.7 8.7 18.0 24.2
EPS Gr. (%) -30.8 -44.8 107.1 34.2
repatriation gains in 4QFY16 and lower investment gains. Fee
Cons. BV (INR) 222 229.1 243.7 263.3 income growth would remain muted and cost pressure would
Cons. ABV (INR) 159 144.7 170.1 214.1 remain high (+14% YoY). Trading gains would decline QoQ, as SBIN
RoE (%) 7.6 6.9 7.5 9.6 had booked gains on stake sale of insurance venture in 3Q.
RoA (%) 0.5 0.4 0.4 0.5 We expect credit cost to remain elevated, led by continued stress
Div. Payout (%) 20.1 19.0 18.8 18.8 additions and focus on shoring up PCR. The stock trades at 0.9x
Valuations FY19E consolidated BV and 10.1x FY19E consolidated EPS. Buy.
Cons. P/E (x) 18.2 28.1 13.5 10.1
Cons. P/BV (x) 1.3 1.1 1.0 0.9 Key issues to watch for
Cons P/ABV (x) 1.8 1.7 1.4 1.1 Performance and guidance on asset quality.
Div. Yield (%) 0.9 0.5 1.0 1.3
Growth outlook and key focus segments for growth.
Outlook and update on non-core stake sales and ABs merger.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 396,429 406,576 406,440 428,313 417,186 424,815 439,256 442,681 1,636,853 1,723,938
Interest Expense 259,109 264,050 269,470 275,406 272,812 278,814 291,741 291,513 1,068,035 1,134,879
% Change (YoY) 3.6 7.4 -0.6 3.9 5.1 2.4 7.7 -1.1 3.4 3.6
Other Income 50,880 61,973 60,870 106,956 72,101 82,614 96,619 102,908 281,584 354,243
Net Income 188,200 204,498 197,840 259,864 216,474 228,616 244,135 254,077 850,402 943,301
% Change (YoY) 4.7 21.9 3.3 11.2 20.1 9.3 30.7 -15.8 9.4 8.1
Tax Provisions 15,099 20,262 5,332 -2,460 11,198 7,893 9,904 8,555 38,234 37,551
Net Profit 36,924 38,791 11,153 12,638 25,210 25,383 26,100 22,304 99,507 98,997
% Change (YoY) 10.3 25.1 -61.7 -66.2 -31.7 -34.6 134.0 76.5 -24.0 -0.5
NIM (Reported, %) 3.0 3.0 2.8 3.1 2.8 2.8 2.8 3.0
NIM (Cal, %) 3.0 3.0 2.8 3.0 2.9 2.9 2.7 2.7 3.0 2.8
Deposit Growth (%) 13.7 10.9 10.7 9.8 10.5 13.8 22.1 13.5 9.8 13.5
Loan Growth (%) 6.8 10.5 12.9 12.6 10.7 7.2 4.1 2.5 12.6 2.5
CASA Ratio (%) 41.7 42.2 42.7 43.8 42.8 42.7 46.6 43.8
Tax Rate (%) 34.3 32.3 32.3 -24.2 23.7 27.5 27.7 26.0 27.8 27.5
Asset Quality
OSRL (INR B) 560 535 486 391 366 366 346 391
OSRL (%) 4.4 4.0 3.5 2.7 2.6 2.6 2.4 2.7
Gross NPA (INR B) 564 568 728 982 1,015 1,058 1,082 1,097 982 1,097
Gross NPA (%) 4.3 4.2 5.1 6.5 6.9 7.1 7.2 7.1 6.5 7.1
E: MOSL Estimates
April 2017 143

Union Bank of India

Bloomberg UNBK IN CMP: INR158 TP: INR174 (+10%) Neutral
Muted growth environment, capital constraint and low risk
M. Cap. (INR b)/(USD b) 109 / 2
appetite would lead to moderate, yet in line with system loan
5 / -2 / 2
growth of 6% YoY/QoQ. Deposit growth is expected to be healthy
1,6,12 Rel Perf. (%)
at ~10% YoY.
NIM is expected to improve by 18bp QoQ on account of lower
Y/E March 2016 2017E 2018E 2019E
NII 83.1 88.6 99.6 113 interest income reversals as well as benefit of lower cost of funds.
OP 56.4 72.0 78.2 90.1 Hence, NII growth is expected to be healthy at ~12% YoY.
NP 13.5 5.8 21.0 31.2 Other income is likely to grow ~40% YoY, although trading gains
NIM (%) 2.3 2.3 2.3 2.3 would be lower than in 3QFY17. Opex growth of 9% would trail
EPS (INR) 19.7 8.5 30.5 45.3
total income growth of 21%, driving strong PPoP growth of 35%.
EPS Gr. (%) -29.6 -57.0 261.3 48.5
Slippages are expected to moderate, but remain at elevated
BV/Sh. (INR) 293.9 301.3 328.3 368
ABV/Sh. (INR) 151.1 104.6 114.3 165 levels at 4.6%. Muted recoveries would keep net slippages high.
RoE (%) 7.0 2.8 9.7 13.0 As a result, credit costs are expected to remain elevated at 2.4%
RoA (%) 0.3 0.1 0.4 0.6 (similar to previous quarter).
Div. Payout (%) 11.5 11.6 11.6 11.6 Overall, we expect PAT growth of ~40% YoY. The stock trades at
Valuations
0.4x FY19E BV and 3.5x FY19E EPS. Maintain Neutral .
P/E(X) 8.0 18.7 5.2 3.5
P/BV (X) 0.54 0.52 0.48 0.43
P/ABV (X) 1.0 1.5 1.4 0.96 Performance on asset qualityslippage from restructured loans,
Div. Yield (%) 1.2 0.5 1.9 2.9 going forward.
Quantum of loans rescheduled under the 5:25 scheme.
Trends and efforts to improve CASA ratio and NIM.
Update and trends on balance sheet growth.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) 0.6 0.8 -5.9 -1.7 -1.3 8.4 7.0 12.2 -1.5 6.5
Other Income 7,832 9,595 8,927 9,964 10,399 11,394 13,397 13,898 36,317 49,088
Net Income 29,134 30,612 28,892 30,811 31,421 34,169 34,763 37,286 119,448 137,639
% Change (YoY) 8.5 5.8 -9.0 -14.7 9.2 29.0 38.8 35.2 -3.1 27.6
Profit before Tax 8,458 9,782 965 -1,551 2,721 1,994 1,811 1,896 17,654 8,423
Tax Provisions 3,270 3,200 180 -2,512 1,058 227 771 554 4,138 2,611
Net Profit 5,188 6,582 785 961 1,663 1,767 1,040 1,342 13,516 5,812
% Change (YoY) -21.9 77.3 -74.0 -78.3 -67.9 -73.2 32.4 39.6 -24.1 -57.0
NIM (Reported,%) 2.4 2.3 2.2 2.3 2.3 2.3 2.0 2.3
Deposit Growth (%) 10.0 10.2 4.6 8.2 3.5 9.3 16.0 10.0 8.2 10.0
Loan Growth (%) 6.0 3.3 5.0 4.6 3.5 7.7 3.5 4.0 4.6 4.0
CD Ratio (%) 75.8 74.5 77.5 78.0 75.8 73.4 69.2 73.8 78.0 73.8
CASA Ratio (%) 28.3 31.5 31.5 36.8
Asset Quality
OSRL (INR b) 141.3 139.1 136.2 85.7 72.5 56.4 55.2 85.7 0.0
OSRL (%) 5.5 5.5 5.2 3.1 2.7 2.0 2.0 3.1 0.0
Gross NPA (INR b) 141.4 155.4 185.0 241.7 272.8 298.6 324.0 347.0 241.7 347.0
Gross NPA (%) 5.5 6.1 7.1 8.7 10.2 10.7 11.7 11.8 8.7 11.8
E: MOSL Estimates
April 2017 144

Yes Bank
Bloomberg YES IN CMP: INR1,567 TP: INR2110 (+35%) Buy
We expect loan growth to be significantly ahead of system
M. Cap. (INR b)/(USD b) 659.8 / 9.7
average at 25% YoY (nearly 5x industry growth rate) on the back
of refinancing opportunities and strong growth in retail banking.
1,6,12 Rel Perf. (%) 5/16/68
We expect NIM to remain largely stable with falling yields
Y/E March 2016 2017E 2018E 2019E
negated by lower cost of funds on account of CASA inflows post
NII 45.7 58.6 76.3 96.3 demonetization and re-pricing of bulk deposits. Consequently, NII
OP 43.0 56.3 73.3 92.2 growth is expected to be healthy at 28% YoY, one of the best
NP 25.4 33.3 43.4 54.6 among peers.
NIM (%) 3.4 3.6 3.8 3.8 Non-interest income growth is likely to be ~23% YoY, led by
EPS (INR) 60.4 73.5 95.7 120.3
strong growth from third-party distribution, continued
EPS Gr. (%) 25.8 21.6 30.3 25.7
BV/Sh. (INR) 327.8 469.3 545.5 641.2
momentum in financial advisory and higher trading gains.
ABV/Sh. (INR) 323.4 463.6 539.3 632.1 Led by aggressive franchise expansion, we expect opex growth to
RoE (%) 19.9 19.0 18.9 20.3 remain high (33%+ YoY).
RoA (%) 1.7 1.8 1.9 2.0 Asset quality performance so far has been significantly better
Valuations than industry; we expect this trend to continue. YES trades at 2.4x
P/E(X) 25.9 21.3 16.4 13.0
FY19E BV and 13x FY19E EPS. Return ratios also remain strong
P/BV (X) 4.8 3.3 2.9 2.4
(RoA of 1.8% and RoE of 20%+). Maintain Top Pick .
P/ABV (X) 4.8 3.4 2.9 2.5
Div. Yield (%) 0.6 0.8 1.1 1.3 Key issues to watch for
Implementation of retail strategy on assets and liabilities sides.
Performance on asset quality and quantum of loans rescheduled
under 5:25 scheme/sale to ARCs.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (Y-o-Y) 42.2 29.4 27.3 27.1 24.2 30.5 30.3 27.8 30.9 28.3
Other Income 5,452 6,181 7,461 8,028 9,005 8,879 9,984 9,890 27,121 37,758
Net Income 16,050 17,266 19,030 20,443 22,171 23,340 25,059 25,762 72,789 96,332
% Change (Y-o-Y) 43.7 24.7 33.2 30.7 43.9 36.0 26.5 21.3 32.4 30.9
Other Provisions 980 1,039 1,479 1,865 2,066 1,617 1,154 1,022 5,363 5,859
Tax Provisions 2,591 3,048 3,260 3,369 3,683 4,228 4,558 4,666 12,268 17,135
Net Profit 5,512 6,104 6,757 7,021 7,318 8,015 8,826 9,177 25,394 33,336
% Change (Y-o-Y) 27.7 26.5 25.1 27.4 32.8 31.3 30.6 30.7 26.6 31.3
NIM (Cal, %) 3.5 3.6 3.6 3.6 3.5 3.7 3.7 3.7 3.6 3.7
Deposit Growth (%) 25.2 24.0 23.1 22.5 28.6 28.9 30.5 23.0 22.5 23.0
Loan Growth (%) 35.1 29.0 26.7 30.0 33.0 37.7 38.8 25.0 30.0 25.0
Customer assets growth (%) 26.3 23.6 19.5 23.4 29.9 36.2 35.2 23.4
Asset Quality
Gross NPA (INR B) 3.7 4.9 5.6 7.5 8.4 9.2 10.1 11.7 7.5 11.7
Gross NPA (%) 0.5 0.6 0.7 0.8 0.8 0.8 0.9 0.9 0.8 0.9
E: MOSL Estimates
April 2017 145

Financials - NBFCs
Company name Divergent performance
Recovery in growth/asset quality; MFI segment remains a concern
Bajaj Finance
Bharat Financial Inclusion We expect NBFCs under our coverage to report PAT growth of 11% YoY in 4QFY17.
While there has been some pick-up in February/March due to various reasons (lifting
Dewan Housing
of cash withdrawal limits by the RBI, pre-buying of vehicles due to BS-III/IV norms,
GRUH Finance
pent-up demand), we expect disbursement recovery to continue.
HDFC We expect the true impact of demonetization on asset quality to be felt in 4QFY17/
Indiabulls Housing 1QFY18 for accounts that turned overdue in November/December, the
LIC Housing Fin 90dpd/120dpd would fall in 1HCY17. In our view, HFCs are best placed on asset
quality. There could be some pain in vehicle finance and MSME/LAP segments, though
M & M Financial
collection efficiency is picking up.
Muthoot Finance We would closely look at the margin performance of HFCs, considering the sharp
Repco Home Fin MCLR cuts and the significant proportion of incremental funding from bonds. We
Shriram City Union Fin expect sequential decline in incremental spreads for HFCs.
Within our NBFC coverage universe, BAF is likely to post 40%+ PAT growth, driven by
Shriram Transport Fin.
strong performance in CDs and 2W financing. Among HFCs, DEWH and IHFL are likely
to post earnings growth of 25%+ YoY, which is commendable. Repco Home Finance
and Bharat Financial Inclusion could report subdued performance.
Housing finance companies: Barring Repco Home Finance, all HFCs under our
coverage are likely to post AUM growth in line with past trends. Loan growth in
Repco is likely to slow down due to the regulatory environment in Tamil Nadu;
however, with the recent Madras High Court order, growth should pick up in FY18.
Continued reduction in cost of funds remains a key positive. HFCs with large share of
bank borrowings, such as Repco, should start to witness the benefit of the MCLR
cuts by banks announced in January. Commentary on recent interest subvention
schemes would be the key thing to look out for in the affordable housing finance
segment. Players with a high share of self-employed customers and LAP/builder
loans are likely to witness slowdown in disbursements. Asset quality performance in
these players is a key thing to watch out for.
Asset finance companies: We expect divergent performance among asset

financiers. Bajaj Finance is likely to report strong AUM as well as PAT growth due to
strong performance in the 2W and consumer durables segments. We expect growth
for vehicle finance players like SHTF and MMFS to pick up sequentially. Additionally,
SHTF and SCUF would have to migrate to 120dpd NPA recognition, which would
have 100-150bp impact on GNPL.
Microfinance companies: As guided by the management, BHAFIN is likely to report

AUM growth of ~3% QoQ. Margins should improve YoY given the recent equity
capital infusion. However, the key thing to look out for is the collection efficiency
trend in key states like Maharashtra, TN, UP and Karnataka. Also, the quantum of
write-offs/provisions in the quarter is a key monitorable.
Alpesh Mehta (Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415
Piran Engineer (Piran.Engineer@MotilalOswal.com); +91 22 3980 4393
April 2017 146
March 2017 Results Preview | Sector: Financials
Exhibit 1: Expected quarterly performance summary (INR m)

Sector Net Interest Income Operating Profit Net Profit
CMP Var % Var % Var % Var % Var % Var %
Reco Mar-17 Mar-17 Mar-17
(INR) YoY QoQ YoY QoQ YoY QoQ
NBFC
Bajaj Finance 1,173 Buy 15,489 39.4 -10.0 8,954 38.7 -13.0 4,548 44.4 -18.2
Bharat Financial 797 Neutral 2,016 21.5 -1.2 1,477 19.0 0.7 870 3.0 -39.1
Dewan Housing 385 Buy 5,268 20.5 2.1 4,240 27.3 1.7 2,472 30.3 1.0
GRUH Finance 394 Neutral 1,844 18.7 21.9 1,585 21.1 22.5 1,038 18.2 62.1
HDFC 1,490 Buy 28,534 15.6 10.8 27,431 11.5 11.8 19,867 2.4 16.8
Indiabulls Housing 986 Buy 11,371 9.4 19.3 11,534 29.6 14.7 8,502 25.9 13.1
LIC Housing Fin 624 Buy 10,324 25.7 12.8 8,955 22.4 10.4 5,328 18.9 6.7
M & M Financial 321 Buy 9,509 -5.0 27.4 5,884 -13.4 49.0 2,794 -24.6 LP
Muthoot Finance 396 Buy 8,071 -6.7 11.2 5,225 -13.6 16.2 3,252 22.6 11.7
Repco Home Fin 718 Buy 957 12.3 5.5 875 10.8 8.0 472 11.8 1.7
Shriram City Union 2,285 Buy 6,817 9.5 -10.6 3,883 13.4 -16.6 612 10.3 -61.2
Shriram Transport Fin. 1,108 Buy 13,691 -5.2 -3.0 10,625 -1.1 -6.8 1,471 2.2 -57.5
NBFC Banking Sector 113,890 11.5 5.7 90,668 12.0 6.4 51,224 10.9 7.1
Source: MOSL
Exhibit 2: Relative performance3 months (%) Exhibit 3: Relative performance1-year (%)
Sensex Index MOSL Financials Index Sensex Index MOSL Financials Index
122 160
116 140
110 120
104 100
98 80
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
Dec-16
Jan-17
Feb-17
Mar-17

Sector / Companies CMP EPS (INR) PE (x) PB (x) RoE (%)
(INR) Reco FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
NBFC
Bajaj Finance 1,173 Buy 34.4 47.5 64.0 34.1 24.7 18.3 7.1 5.7 4.5 22.7 25.5 27.3
Bharat Financial 797 Neutral 44.6 42.8 55.1 17.9 18.6 14.5 4.0 3.3 2.7 29.6 19.3 20.4
Dewan Housing 385 Buy 29.6 36.7 42.7 13.0 10.5 9.0 1.5 1.4 1.2 14.4 13.9 14.5
GRUH Finance 394 Neutral 8.0 10.1 12.0 49.3 39.1 32.8 14.2 11.6 9.6 31.4 32.7 32.0
HDFC 1,490 Buy 46.7 51.7 57.3 31.9 28.8 26.0 5.9 5.4 4.5 19.1 18.1 17.1
Indiabulls Housing 986 Buy 69.3 84.4 102.7 14.2 11.7 9.6 3.5 3.1 2.8 25.9 28.3 30.5
LIC Housing Fin 624 Buy 38.3 46.9 55.3 16.3 13.3 11.3 2.9 2.5 2.1 19.5 20.3 20.3
M & M Financial 321 Buy 7.9 10.9 14.1 40.7 29.3 22.8 2.9 2.7 2.6 7.2 9.6 11.6
Muthoot Finance 396 Buy 29.7 34.5 40.0 13.4 11.5 9.9 2.5 2.2 1.9 19.7 20.2 20.6
Power Finance Corp 154 Neutral 25.7 27.2 30.2 6.0 5.7 5.1 1.0 0.9 0.8 17.9 17.0 16.8
Repco Home Fin 718 Buy 28.6 34.0 40.2 25.1 21.1 17.8 4.0 3.4 2.9 17.3 17.5 17.6
Rural Electric. Corp. 184 Neutral 31.4 35.0 40.4 5.9 5.3 4.6 1.1 0.9 0.8 19.9 19.1 19.1
Shriram City Union 2,285 Buy 91.8 134.5 164.6 24.9 17.0 13.9 3.0 2.6 2.3 12.7 16.5 17.5
Shriram Transport Fin. 1,108 Buy 55.3 81.9 100.5 20.0 13.5 11.0 2.2 2.0 1.7 11.7 15.5 16.7
NBFC Aggregate 14 17.4 15.0 12.8 3.0 2.7 2.3 17.5 17.9 17.9
Source: MOSL
April 2017 147

Bajaj Finance
Bloomberg BAF IN CMP: INR1,173 TP: INR1,448 (+23%) Buy
We expect AUM growth of 36.5% YoY and 4.8% QoQ in 4QFY17,
M. Cap. (INR b)/(USD b) 628 / 10
driven by strong growth in consumer and commercial lending.
1,6,12 Rel Perf. (%) 8 / 3 / 51
Management commentary on 2W and CD financing is sanguine.
NII should grow 39% YoY; margins are likely to improve marginally
on a YoY basis.
Y/E March 2016 2017E 2018E 2019E We expect 50bp C/I ratio improvement on a YoY basis to 43.4%
NII 40.3 54.3 73.8 97.7 Asset quality is likely to remain stable. As of December 2016, GNPAs
PPP 25.1 35.5 49.1 65.6 were at 1.47% and NNPAs at 0.39%.
PAT 12.8 18.4 25.4 34.3 We expect provisions of INR2b as against INR1.8b in 3QFY17 and
EPS (INR) 24 34.4 47.5 64.0
INR1.6b in 4QFY16.
EPS Gr. (%) 33 44.1 38.0 34.8
BV/Sh. (INR) 137 166.2 206.7 261.3 Net profit is likely to grow 44% YoY to INR4.5b.
RoA on AUM (%) 3.2 3.4 3.6 3.7 The stock trades at 5.7x FY18E and 4.5x FY19E BV. We are increasing
RoE (%) 21.1 22.7 25.5 27.3 our target price to INR1,448 on account of greater earnings visibility.
Payout (%) 12.7 14.0 14.0 14.0 Maintain Buy.
Valuations
P/E (x) 49.1 34.1 24.7 18.3 Key issues to watch for
P/BV (x) 8.6 7.1 5.7 4.5 Commentary on business growth momentum due to the impact of
Div. Yield (%) 0.2 0.2 0.3 0.4
demonetization.
Guidance on margins due to changing product mix.
Asset quality trends, especially in LAP and 2W/3W businesses.
Performance of businesses such as rural SME lending, lifestyle
financing and e-commerce financing.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Income from operations 15,716 15,921 19,717 18,212 21,659 21,802 25,271 24,266 69,566 92,998
Other Operating Income 746 878 897 957 1,205 1,668 1,749 1,707 3,477 6,329
Operating Income 16,462 16,799 20,614 19,168 22,864 23,470 27,020 25,973 73,043 99,327
YoY Growth (%) 32.4 36.3 39.6 34.1 38.9 39.7 31.1 35.5 35.7 36.0
Interest expenses 6,771 6,947 7,493 8,058 8,833 9,562 9,802 10,484 29,269 38,681
Net Income 9,692 9,853 13,121 11,110 14,031 13,909 17,218 15,489 43,775 60,646
YoY Growth (%) 30.3 43.3 48.4 35.9 44.8 41.2 31.2 39.4 39.7 38.5
Other income 96 206 83 406 147 190 271 337 792 945
Total Income 9,788 10,059 13,203 11,516 14,178 14,098 17,489 15,826 44,566 61,591
YoY Growth (%) 30.3 49.1 54.0 40.9 58.1 40.8 33.5 38.7 42.4 42.4
Provisions and Cont. 1,033 1,368 1,462 1,565 1,797 1,691 1,797 2,021 5,429 7,306
Tax Provisions 1,468 1,486 2,167 1,740 2,275 2,185 2,944 2,385 6,861 9,789
Net Profit 2,756 2,794 4,085 3,150 4,240 4,078 5,557 4,548 12,785 18,422
YoY Growth (%) 30.4 41.7 58.1 36.4 53.8 45.9 36.0 44.4 42.4 44.1
Loan Growth (%) 32.0 35.6 41.0 36.5 39.5 37.8 32.6 36.5 38.8 33.5
Borrowings Growth (%) 34.7 30.0 37.2 38.7 40.5 43.4 30.2 37.4 38.7 37.4
Cost to Income Ratio (%) 46.3 43.9 41.6 43.9 41.4 43.6 41.1 43.4 44.5 43.0
Tax Rate (%) 34.8 34.7 34.7 35.6 34.9 34.9 34.6 34.4 34.1 35.1
E: MOSL Estimates
April 2017 148

Bharat Financial Inclusion

Bloomberg BHAFIN IN CMP: INR797 TP: INR859 (+8%) Neutral
BFIs GLP growth is likely to slow down to 15% YoY and 3% QoQ.
M. Cap. (INR b)/(USD b) 106/1.6
Net interest income is likely to grow 24% YoY to INR2.93b, with
1,6,12 Rel Perf. (%) -7/-19/21
slight improvement in margins.
Cost-to-income ratio is expected to increase 200bp YoY, but remain
largely stable on a sequential basis at 49.6%
Financial Snapshot (INR m)
Y/E March 2016 2017E 2018E 2019E Asset quality is expected to deteriorate QoQ; GNPL ratio is likely to
NII 5,796 8,151 10,437 14,583 be around 5% (at 60dpd).
PPP 4,325 6,003 7,666 11,053 We factor in provisions of INR608m, as against INR38m in 3QFY17
PAT 3,030 6,116 5,864 7,555 and INR139m in 4QFY16.
EPS (INR) 23.8 44.6 42.8 55.1 Net profit is likely to grow 3% YoY to INR870m.
BV/Share (INR) 108.6 200.3 243.0 298.2 The stock trades at 3.3x FY18E and 2.7x FY19E BV. Maintain
RoA on AUM (%) 5.1 7.0 4.6 4.2
Neutral.
RoE (%) 24.9 29.6 19.3 20.4
Valuations
P/E (x) 33.5 17.9 18.6 14.5
Management commentary on growth trends/demand for loans.
P/BV (x) 7.3 4.0 3.3 2.7
Management commentary on performance in key states like UP,
Maharashtra and Karnataka.
Guidance on C/I ratio.
Movement in borrowing costs and margins.
Asset quality trends and collection efficiency in UP and
Maharashtra.

Y/E March FY16 FY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE FY16 FY17
Other Income 236 249 268 297 348 382 407 428 1,049 1,566
Total income 2,409 2,913 3,073 3,298 3,690 4,074 4,089 4,253 11,691 16,106
Y-o-Y Growth (%) 58.6 53.2 66.6 66.9 53.2 39.9 33.1 61.0 61.5 37.8
Other income 418 330 362 406 452 422 460 485 1,515 1,818
Net Income 1,819 2,073 2,107 2,362 2,780 2,921 2,906 2,928 8,361 11,535
Y-o-Y Growth (%) 50.1 54.8 64.3 67.8 52.9 40.9 37.9 24.0 59.6 38.0
Operating Expenses 952 974 989 1,121 1,269 1,372 1,440 1,451 4,036 5,533
Provisions 72 88 87 139 120 90 38 608 386 856
Profit before tax 795 1,012 1,031 1,102 1,391 1,459 1,428 869 3,939 5,147
Y-o-Y Growth (%) 61.2 78.2 151.1 137.2 74.9 44.2 38.5 -21.1 103.5 30.7
Tax Provisions 183 233 236 257 -969 0 0 0 909 -969
Net Profit 611 779 795 845 2,359 1,459 1,428 870 3,030 6,116
Y-o-Y Growth (%) 24.0 37.2 93.6 108.4 285.8 87.4 79.6 3.0 61.4 101.9
E: MOSt Estimates
April 2017 149

Dewan Housing Finance

Bloomberg DEWH IN
CMP: INR385 TP: INR500 (+30%) Buy
M. Cap. (INR b)/(USD b) 115 / 2
Business witnessed a gradual pick-up in the quarter, with growth
being modest in January, but picking up in February and March.
1,6,12 Rel Perf. (%) 15 / 24 / 82 We expect 11% YoY and 23% QoQ growth in disbursements. As a
result, AUM growth is expected remain stable at 19% YoY.
Financial Snapshot (INR m)
DEWH completed the sale of its stake in the life insurance JV to its
Y/E March 2016 2017E 2018E 2019E wholly-owned subsidiary.
NII 14.8 17.9 22.0 26.3 Calculated margins are likely to decline marginally on a sequential
PPP 12.8 15.9 19.8 23.7 basis to 2.97%.
Adj. PAT 7.3 9.3 11.5 13.4
Calculated cost-to-income ratio would remain stable at ~27%.
EPS (INR) 25.0 29.6 36.7 42.7
EPS Gr. (%) 17.2 18.4 24.1 16.4
Asset quality is likely to remain stable, with GNPAs of 0.95%. We
BV (INR) 172 251 278 311 factor in provisions of INR500m for 4QFY17.
RoAA (%) 1.2 1.3 1.4 1.3 Net profit is likely to grow 30% YoY to INR2.47b.
RoE (%) 15.1 14.4 13.9 14.5 The stock trades at 1.3x FY18E and 1.2x FY19E BV. Maintain Buy.
Payout (%) 46.1 23.2 23.2 23.2
Valuations
P/BV (x) 2.2 1.5 1.4 1.2 Business growth trends and momentum, and management
P/ABV (x) 2.3 1.5 1.4 1.2 commentary on the same.
Div. Yield (%) 5.2 1.5 1.9 2.2 Management views on margins due to change in liability mix.
Asset quality trends in non-retail and LAP segments.
Guidance on cost structure, going forward.
DEWH: Quarterly performance (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 16,331 17,640 18,461 19,159 19,318 21,230 23,160 23,696 71,590 87,404
Interest Expenses 12,343 13,575 14,197 14,786 14,754 16,307 18,001 18,428 54,900 67,490
YoY Growth (%) 21.6 22.5 20.2 19.7 14.5 21.1 21.0 20.5 21.0 19.3
Fees and other income 201 477 392 507 275 447 505 545 1,577 1,773
Net Income 4,189 4,542 4,656 4,880 4,840 5,371 5,664 5,813 18,267 21,687
YoY Growth (%) 17.7 22.5 18.5 19.9 15.5 18.3 21.6 19.1 19.7 18.7
YoY Growth (%) 15.6 7.6 8.5 28.1 8.4 6.1 9.1 1.5 14.8 6.1
Operating Profits 2,934 3,223 3,285 3,330 3,479 3,972 4,167 4,240 12,772 15,858
YoY Growth (%) 18.6 30.0 23.3 16.4 18.6 23.2 26.9 27.3 21.9 24.2
Provisions 320 450 480 500 450 450 450 500 1,750 1,850
Tax Provisions 881 970 946 934 1,015 1,196 1,269 1,268 3,730 4,749
Profit after tax 1,733 1,804 1,859 1,897 2,014 2,326 2,448 2,472 7,292 9,259
YoY Growth (%) 17.8 18.5 16.5 16.9 16.2 29.0 31.7 30.3 17.4 27.0
Loan growth (%) 25.7 25.9 23.5 21.0 18.3 16.0 16.9 17.9 20.9 16.9
Borrowings growth (%) 26.3 29.0 30.2 24.9 20.4 38.5 28.0 11.5 52.4 45.7
Tax Rate (%) 33.7 35.0 33.7 33.0 33.5 34.0 34.2 33.9 33.8 33.9
E: MOSL Estimates
April 2017 150

Gruh Finance
Bloomberg GRHF IN
We expect loan growth to moderate to 18% YoY from 19% YoY in
M. Cap. (INR b)/(USD b) 143 / 2
3QFY17.
1,6,12 Rel Perf. (%) 1 / 7 / 37
Margins are likely to remain largely unchanged on a YoY basis.
NII is likely to grow 19% YoY to INR1.8b.
Operating expenses are likely to grow 6% YoY, resulting in 14.3%
Y/E March 2016 2017E 2018E 2019E C/I ratio compared to 14.5% in 3QFY17.
NII 4.2 5.4 6.4 7.6 We expect asset quality to remain stable. GRUH took an INR327m
PPP 3.8 4.9 5.9 7.0 provision charge in 3QFY17 and reduced net NPLs to zero. We
PAT 2.4 2.9 3.7 4.4 expect provisions of INR77m for the quarter.
EPS (INR) 6.7 8.0 10.1 12.0
Net profit is likely to grow 18% YoY to INR1.04b.
EPS Gr. (%) 19.4 19.1 26.1 19.3
BV/Sh. (INR) 23.0 27.8 33.8 41.0 The stock trades at 11.8x FY18E and 9.7x FY19E BV. Maintain
ABV/Sh. (INR) 23.0 27.8 33.8 41.1 Neutral.
RoA (%) 2.4 2.3 2.5 2.4
RoE (%) 31.5 31.4 32.7 32.0
Payout (%) 34.3 34.0 34.0 34.0
Valuations Business outlook; loan growth in various geographies.
P/E (x) 58.8 49.4 39.2 32.8 Movement in borrowing costs and margins.
P/BV (x) 17.2 14.2 11.6 9.6 Outlook on asset quality.
Div. Yield (%) 0.6 0.7 0.9 1.0 Managements outlook on developments in the affordable
housing space.
Commentary on government schemes in the affordable housing
space.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total income 2,967 3,118 3,236 3,705 3,463 3,674 3,810 4,210 12,754 15,158
Y-o-Y Growth (%) 22.8 21.0 19.3 21.5 16.7 17.8 17.8 13.6 20.3 18.9
Net Income 1,066 1,131 1,202 1,554 1,222 1,323 1,513 1,844 4,680 5,903
Operating Expenses 196 257 205 245 201 273 219 260 844 954
Operating Profit 869 874 997 1,309 1,021 1,050 1,294 1,585 3,836 4,949
Y-o-Y Growth (%) 18.6 22.7 21.8 22.8 17.5 20.1 29.8 21.1 20.4 29.0
Provisions and Cont. 121 72 178 61 125 91 327 77 219 621
Profit before Tax 749 803 818 1,248 896 958 967 1,508 3,617 4,328
Tax Provisions 246 286 281 370 294 339 326 470 1,181 1,428
Net Profit 503 517 537 878 601 619 640 1,038 2,436 2,900
Y-o-Y Growth (%) 9.0 8.3 7.8 10.6 19.6 19.9 19.2 18.2 19.5 19.1
Int Exp/ Int Earned (%) 64.1 63.7 62.9 58.1 64.7 64.0 60.3 56.2 63.3 61.1
Tax Rate (%) 32.8 35.6 34.4 29.6 32.8 35.4 33.8 31.2 32.7 33.0
E: MOSL Estimates
April 2017 151

HDFC
Bloomberg HDFC IN
CMP: INR1,490 TP: INR1,752 (+18%) Buy
We estimate AUM growth of 16%, marginally below the growth in
M. Cap. (INR b)/(USD b) 2346 / 36
the prior quarter. We expect growth to be driven by the retail
52-Week Range (INR) 1536 / 1060
1,6,12 Rel Perf. (%) 5 / -1 / 15
segment.
With largely stable margins, NII is expected to grow 17% YoY
Cost-to-income ratio will remain largely stable. We expect 14%
YoY opex growth.
Y/E March 2016 2017E 2018E 2019E
NII 87.0 99.6 106.5 119.9
Asset quality has remained healthy over past several quarters,
PAT 70.9 73.9 81.7 92.6 and the trend is likely to continue. Asset quality in the corporate
Adj. EPS (INR) 32.6 36.0 38.4 43.2 loan book would be a key monitorable.
EPS Gr. (%) 2.7 10.6 6.5 12.6 We estimate provisions of INR1,180m, as against INR1,170m in
BV/Sh. (INR) 227.8 250.7 276.4 333.5 3QFY17 and INR950m in 4QFY17 (excluding special provision).
ABV/Sh. (INR) 176.6 199.6 225.3 283.5 We expect 2% YoY PAT growth in 4QFY17 (adjusted for one-offs).
RoAA (%) 2.6 2.4 2.3 2.4
The stock trades at 4x FY18E AP/ABV and 2.9x FY19E AP/ABV
Core RoE (%) 20.0 19.1 18.1 17.1
Payout (%) 43.9 43.5 43.5 43.5 (price adjusted for value of other businesses and book value
Valuation adjusted for investments made in those businesses). Buy.
AP/E (x) 31.9 27.2 21.6 16.9
P/BV (x) 6.5 5.9 5.4 4.5
AP/ABV (x) 5.9 4.9 3.7 2.6
Div. Yield (%) 1.1 1.2 1.3 1.4 Key issues to watch for
Loan growth and uptick in corporate loans.
Impact of demonetization on real estate demand.
Movement in spreads and margins (on individual loans) and
asset quality trends.
HDFC: Quarterly Performance (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
YoY Change (%) 16.8 6.8 8.2 4.8 9.3 14.5 18.0 15.6 8.8 14.5
Gross fee income 1,755 1,760 1,810 2,902 1,913 1,985 1,944 1,966 8,183 7,809
Core Income 22,140 21,815 23,631 27,595 24,204 24,958 27,699 30,500 95,137 107,360
YoY Change (%) 16.8 6.5 9.8 8.0 9.3 14.4 17.2 10.5 10.1 12.8
% of core income 9.2 8.6 8.5 6.1 9.4 8.2 7.7 6.3 8.0 7.8
Comission expenses 978 1,053 1,087 1,304 1,369 1,344 1,011 1,139 4,422 4,864
% of core income 4.4 4.8 4.6 4.7 5.7 5.4 3.6 3.7 4.6 4.5
Core Operating profits 19,133 18,890 20,543 24,603 20,561 21,565 24,546 27,431 83,126 94,103
YoY Change (%) 16.5 6.5 9.1 7.4 7.5 14.2 19.5 11.5 9.7 13.2
Provisions 500 520 680 950 650 950 1,170 1,180 2,650 3,950
Core PBT 18,633 18,370 19,863 23,653 19,911 20,615 23,376 26,251 80,476 90,153
YoY Change (%) 16.0 5.6 8.1 5.5 6.9 12.2 17.7 11.0 8.5 12.0
Profit on Sale of Inv. 230 480 569 15,199 9,216 281 34 489 16,478 10,020
Dividend income 548 4,248 1,356 1,917 510 4,560 1,788 2,235 8,113 9,093
PBT 19,520 23,236 21,905 36,421 26,997 25,575 25,312 29,147 101,081 107,031
Provision for Tax 5,910 7,193 6,700 10,350 8,290 7,310 8,300 9,280 30,150 33,180
PAT 13,610 16,043 15,205 26,071 18,707 18,265 17,012 19,867 70,931 73,851
YoY Change (%) 1.2 18.2 6.7 40.0 37.5 13.9 11.9 -23.8 18.4 4.1
E: MOSL Estimates
April 2017 152

Indiabulls Housing
Bloomberg IHFL IN CMP: INR986 TP: INR1,150 (+17%) Buy
We expect strong loan growth to continue, driven by retail home
M. Cap. (INR b)/(USD b) 415 / 6
loans. We estimate 8% QoQ and 28% YoY loan growth.
1,6,12 Rel Perf. (%) 13 / 8 / 40 Margins are expected to remain largely stable. Net income should
grow 27% YoY.
Financial Snapshot (INR b) Expenses are likely to grow 22% YoY, resulting in modest decline in
Y/E March 2016 2017E 2018E 2019E cost-income ratio.
Net Fin inc 28.7 39.3 46.5 56.6
PPP 36.4 46.6 55.7 68.2
Asset quality is expected to remain stable. In 3QFY17, GNPAs were
EPS (INR) 55.7 69.3 84.4 102.7 at 0.85% and NNPAs at 0.36%.
EPS Gr. (%) 4.1 24.4 21.9 21.7 PAT is likely to grow 26% YoY to INR8.6b during the quarter.
BV/Sh. (INR) 254 281 316 358
RoA on AUM (%) 3.3 3.1 2.9 2.7
The stock trades at 3.1x FY18E and 2.7x FY19E BV. Maintain Buy.
RoE (%) 27.1 25.9 28.3 30.5
Payout (%) 76.0 52.5 50.0 50.0
Valuations
P/E (x) 17.7 14.2 11.7 9.6 AUM growth trend and growth guidance post demonetization.
P/BV (x) 3.9 3.5 3.1 2.8 Movement in incremental spreads and margins, especially given
P/ABV (x) 3.9 3.5 3.1 2.8 the sharp home loan rate cuts.
Div. Yield (%) 4.6 3.7 4.3 5.2 Asset quality trends in the corporate and loans against property
segments.

Y/E March FY16 FY17
Other Income 1,960 2,607 2,326 2,463 2,255 3,651 4,186 4,990 9,356 15,083
Total income 20,249 22,457 23,077 26,472 25,975 28,749 30,045 33,018 92,256 117,787
Y-o-Y Growth (%) 27.4 31.7 24.2 24.7 28.3 28.0 30.2 24.7 26.8 27.7
Net Income 8,859 10,007 10,820 12,855 11,866 12,470 13,716 16,361 42,541 54,413
Y-o-Y Growth (%) 26.6 33.4 30.2 22.3 33.9 24.6 26.8 27.3 27.7 27.9
Profit before tax 6,922 7,413 8,055 8,898 8,750 9,212 10,058 11,534 31,289 39,554
Y-o-Y Growth (%) 29.2 31.1 29.5 18.7 26.4 24.3 24.9 29.6 26.5 26.4
Tax Provisions 1,810 1,858 2,010 2,083 2,401 2,352 2,555 2,976 7,761 10,284
Net Profit 5,113 5,555 6,045 6,815 6,349 6,861 7,502 8,558 23,528 29,270
Minority Int 0 0 -21 -60 -49 -18 13 -56 -81 -110
Net Profit after MI 5,113 5,555 6,024 6,754 6,301 6,843 7,515 8,502 23,447 29,160
Y-o-Y Growth (%) 20.7 23.9 26.0 22.6 23.2 23.2 24.7 25.9 23.3 24.4
E: MOSL Estimates
April 2017 153

LIC Housing Finance

Bloomberg LICHF IN CMP: INR624 TP: INR723 (+16%) Buy
LICHF is likely to report strong earnings growth of 28% YoY, led by
M. Cap. (INR b)/(USD b) 315 / 5
stable loan growth and improvement in spreads.
1,6,12 Rel Perf. (%) 8 / -1 / 13
Margins are likely to improve ~20bp YoY, driven by significantly
lower cost of funds due to falling bond yields.
We expect loan growth of 15% YoY, driven primarily by the LAP
Y/E March 2016 2017E 2018E 2019E segment. The share of builder loans is likely to remain around 3%
NII 29.4 36.4 41.7 48.8 of overall book. Growth in the retail home loan book would be
PPP 27.1 32.4 37.4 44.0 the key monitorable.
Adj. PAT 16.6 19.3 23.7 27.9 Operating expenses would grow 17% YoY, resulting in 40bp YoY
Adj. EPS (INR) 32.9 38.3 46.9 55.3
improvement in C/I ratio to 17.4%.
EPS Gr. (%) 23.3 16.5 22.3 17.9
BV/Sh (INR) 181.1 211.8 249.4 293.7 Asset quality is likely to remain stable. We model provisions of
RoAA (%) 1.5 1.5 1.6 1.6 INR780m, as against INR453m in 3QFY17.
Payout (%) 19.4 19.7 19.7 19.7
P/E (x) 19.0 16.3 13.3 11.3 Trend in incremental spreads, given stable share of LAP and
P/BV (x) 3.4 2.9 2.5 2.1
lower cost of funds.
Div. Yield (%) 0.9 1.0 1.3 1.5
Performance of corporate loan book and loans against property.
Management commentary on increasing competitive intensity
and margin trends.
LICHF: Quarterly Performance (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 29,174 30,260 31,018 32,057 33,263 34,283 35,125 36,117 122,508 138,788
YoY Growth (%) 30.2 34.8 36.2 26.4 25.1 20.8 22.6 25.7 31.6 23.6
Fees and other income 481 634 549 683 535 616 362 484 2,346 1,997
Net Income 7,069 7,803 8,018 8,897 8,780 9,273 9,516 10,808 31,787 38,377
YoY Growth (%) 24.6 31.3 30.0 25.3 24.2 18.8 18.7 21.5 27.7 20.7
Operating Expenses 835 1,060 1,214 1,578 1,382 1,364 1,407 1,852 4,687 6,004
YoY Growth (%) 25.3 35.4 28.8 27.0 18.7 17.3 19.2 22.4 29.1 19.5
Provisions and Cont. 443 301 344 376 1,165 303 453 780 1,465 2,700
Tax Provisions 1,969 2,325 2,271 2,463 2,156 2,659 2,663 2,848 9,028 10,326
Net Profit 3,821 4,117 4,189 4,480 4,078 4,948 4,993 5,328 16,608 19,346
YoY Growth (%) 18.6 20.6 21.7 18.5 6.7 20.2 19.2 18.9 19.8 16.5
Loan Growth (%) 17.9 17.0 15.2 15.5 15.4 14.9 15.3 14.8 15.5 14.8
Borrowings Growth (%) 17.8 15.2 14.6 14.9 15.7 14.2 15.0 13.9 14.9 13.9
Tax Rate (%) 34.0 36.1 35.2 35.5 34.6 35.0 34.8 34.8 35.2 34.8
E: MOSL Estimates
April 2017 154

Mahindra Financial Services

Bloomberg MMFS IN CMP: INR321 TP: INR380 (+18%) Buy
There has been some recovery after demonetization, especially in
M. Cap. (INR b)/(USD b) 181 / 3
cars and UV segments. Overdue collections have also improved.
1,6,12 Rel Perf. (%) 7 / -22 / 14
MMFS AUM is likely to grow 15% YoY and 1.5% QoQ. NII is likely
to decline 5% YoY due to the strong base in 4QFY16.
Costs are expected to increase marginally on a sequential basis.
Y/E March 2016 2017E 2018E 2019E We expect 39.5% C/I ratio in 4Q v/s 48% in the prior quarter.
NII 32.1 31.6 36.0 40.8 Asset quality is expected to improve sequentially. We expect
PPP 20.9 17.9 20.3 23.0 GNPL ratio to moderate to 9.4% v/s 11.1% in the prior quarter.
PAT 6.7 4.5 6.2 7.9 MMFS took a significant provision charge (INR4,190m) in 3QFY17.
EPS (INR) 11.9 7.9 10.9 14.1
As a result, we expect incremental provisioning to be lower,
BV/Sh.(INR) 107.8 111.3 117.1 125.5
ABV/Sh (INR) 92.5 91.3 94.0 100.7
especially due to improvements in asset quality. We factor in
RoA on AUM (%) 1.9 1.1 1.3 1.5 INR1,571b provisions in 4QFY17.
RoE (%) 11.4 7.2 9.6 11.6 The stock trades at 3.4x FY18E and 3.2x FY19E BV. We upgrade
Payout (%) 47.2 56.2 46.8 41.0 our estimates and TP given stronger performance. Maintain Buy.
Valuations
P/BV (x) 3.0 2.9 2.7 2.6 Management commentary on performance of rural areas.
P/ABV (x) 3.5 3.5 3.4 3.2 Commentary on pick-up in the CV cycle.
Div. Yield (%) 1.2 1.2 1.4 1.5
Asset quality trend in the wake of good monsoon.
Margin and growth trends.
Performance of subsidiaries.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Other Income 76 183 85 176 93 241 130 211 519 675
Total income 13,684 14,383 14,087 16,897 13,757 15,157 15,035 17,172 59,051 61,120
YoY Growth (%) 6.7 5.1 0.9 9.9 0.5 5.4 6.7 1.6 5.7 3.5
Net Income 7,239 7,841 7,391 10,186 6,847 8,071 7,593 9,721 32,658 32,232
YoY Growth (%) -0.2 0.7 -6.8 5.7 -22.1 -10.5 -11.2 -13.4 0.3 -14.1
Provisions 3,228 2,772 3,406 1,089 2,245 3,042 4,190 1,571 10,495 11,049
Profit before Tax 1,376 2,261 1,039 5,706 1,341 1,462 -241 4,313 10,383 6,876
Tax Provisions 486 799 367 2,003 472 514 -85 1,519 3,656 2,420
Net Profit 890 1,462 672 3,703 870 948 -156 2,794 6,727 4,456
YoY Growth (%) -42.6 -29.4 -50.8 11.1 -2.2 -35.1 -123.3 -24.6 -19.1 -33.8
Provisions/Operating Profits (%) 70.1 55.1 76.6 16.0 62.6 67.5 106.1 26.7 50.3 61.6
Tax Rate (%) 35.3 35.3 35.3 35.1 35.2 35.2 35.2 35.2 35.2 35.2
E: MOSL Estimates
April 2017 155

Muthoot Finance
Bloomberg MUTH IN CMP: INR396 TP: INR465 (+18%) Buy
AUM is expected to grow 13% YoY and 2.6% QoQ to INR277b.
M. Cap. (INR b)/(USD b) 158 / 2
Calculated margins are likely to improve sequentially to ~12% led
1,6,12 Rel Perf. (%) 10 / 8 / 102
by better auction realization and decline in funding costs.
However, due to high base, NII is expected to decline 3%YoY to
INR14b.
Y/E March 2016 2017E 2018E 2019E Asset quality is likely to improve marginally with GNPL of 2.75% in
NII 25.4 30.0 34.6 39.3 4QFY17 v/s 2.92% in 3QFY17.
PPP 14.8 18.9 21.9 25.1 We estimate provisions of INR339m, as against INR39m in 3QFY17
PAT 8.1 11.8 13.8 16.0 and INR1,299m in 4QFY16.
EPS (INR) 20.3 29.7 34.5 40.0 PAT is expected to grow 23% YoY and 12% QoQ to INR3.3b
BV/Sh.(INR) 140.8 159.7 181.7 207.2
The stock trades at 2.2x FY18E and 1.9x FY19E BV. Maintain Buy.
RoA on AUM (%) 3.4 4.5 4.6 4.7
RoE (%) 15.1 19.7 20.2 20.6
Div. Yld. (%) 1.5 2.2 2.6 3.0
P/BV (x) 2.8 2.5 2.2 1.9 Management commentary on business growth and steps taken to
sustain AUM growth in the wake of demonetization.
Plan of branch expansion.
Movement in yields and margins, with declining cost of funds.
Progress in gold auctions.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Other operating income 145 136 148 179 252 320 184 201 607 957
Total Operating income 11,401 11,361 11,383 14,469 12,964 13,817 13,409 14,027 48,614 54,216
YoY Growth (%) 4.8 7.4 6.6 31.5 13.7 21.6 17.8 -3.1 12.7 11.5
Other income 26 38 29 43 44 45 56 41 136 186
Total Income 11,426 11,400 11,412 14,513 13,008 13,862 13,464 14,068 48,750 54,403
YoY Growth (%) 4.6 7.4 6.7 31.7 13.8 21.6 18.0 -3.1 12.7 11.6
Net Income 5,756 5,747 5,796 8,874 7,437 7,925 7,494 8,313 26,173 31,170
YoY Growth (%) 4.6 7.2 23.3 116.9 50.1 69.5 51.2 -13.6 38.9 28.0
Provisions 106 146 74 1,299 176 171 39 339 1,624 724
Tax Provisions 1,003 939 1,032 2,098 1,534 1,657 1,545 1,635 5,072 6,371
Net Profit 1,832 1,745 1,867 2,652 2,703 2,967 2,911 3,252 8,097 11,833
YoY Growth (%) 1.7 2.2 20.9 60.6 47.6 70.0 55.9 22.6 20.7 46.2
E: MOSL Estimates
April 2017 156

Repco Home Finance

Bloomberg REPCO IN
We expect loan growth to slow down to 16% YoY, driven by 30%+
52-Week Range (INR) 891 / 500 YoY decline in disbursements. However, we believe growth will
1,6,12 Rel Perf. (%) 8 / -20 / -6 pick up in FY18 with the recent government schemes and the
Madras High Court order.
Calculated margins are likely to be decline marginally YoY on
Y/E March 2016 2017E 2018E 2019E account of yield pressure.
NII 3.0 3.6 4.3 5.1 C/I ratio is expected to decline 50bp YoY to 15.7%.
PPP 2.7 3.3 3.8 4.6 GNPL is expected to increase sharply, as the company used the RBI
PAT 1.5 1.8 2.1 2.5 dispensation in 3QFY17. Hence, provisions are expected to be
EPS (INR) 24.0 28.6 34.0 40.2
INR160m v/s INR96m in 3QFY17 and INR140m in 3QFY16.
BV/Sh. (INR) 152.7 178.8 209.8 246.6
RoAA (%) 2.2 2.1 2.1 2.1 PAT is likely to grow 12% YoY to INR472m.
Payout (%) 9.0 8.7 8.7 8.7
Valuation Key issues to watch for
P/E (x) 29.9 25.1 21.1 17.8 Business outlook, loan growth, and share of home loans and LAP.
P/BV (x) 4.7 4.0 3.4 2.9 Repayment trends on account of high share of self-employed
Div. Yield (%) 0.3 0.3 0.4 0.4
customers.
Asset quality trends in the LAP segment.
REPCO: Quarterly performance (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 1,935 2,084 2,191 2,312 2,389 2,500 2,589 2,674 8,521 10,152
Net Interest Income 664 740 781 852 840 903 907 957 3,036 3,606
YoY Growth (%) 25.2 24.7 32.8 28.7 26.5 22.1 16.2 12.3 27.7 18.8
Other income 66 80 63 91 80 98 67 81 300 326
Total Income 730 820 843 943 920 1,000 974 1,038 3,336 3,932
YoY Growth (%) 24.7 28.4 32.4 26.2 26.0 22.0 15.5 10.1 27.7 17.9
Operating Expenses 154 175 160 153 149 163 163 163 643 638
YoY Growth (%) 37.0 36.8 13.0 -7.1 -3.5 -6.8 1.9 6.3 17.5 -0.8
Operating Profits 576 644 683 790 771 837 811 875 2,693 3,294
YoY Growth (%) 21.8 26.3 37.9 35.7 33.9 29.9 18.7 10.8 30.4 22.3
Provisions 113 47 92 140 179 127 96 161 392 563
Tax Provisions 161 207 205 228 196 253 250 243 800 942
Profit after tax 302 391 386 422 395 457 464 472 1,501 1,789
YoY Growth (%) 21.8 21.2 25.5 21.3 30.8 17.0 20.4 11.8 21.9 19.2
Tax Rate (%) 34.7 34.6 34.7 35.0 33.2 35.7 35.0 34.5 34.8 34.5
E: MOSL Estimates
April 2017 157

Shriram City Union Finance

Bloomberg SCUF IN CMP: INR2,285 TP: INR2,689 (+18%) Buy
SCUFs AUM is expected to grow 2% QoQ and 17% YoY to
M. Cap. (INR b)/(USD b) 148 / 2.2
INR229b, driven by 4% YoY growth in disbursements. There was a
52-Week Range (INR) 2650 / 1480
1,6,12 Rel Perf. (%) 17 / -3 / 33
visible pick-up in growth in February and March, post the lifting of
the cash withdrawal limits by the RBI.
Margins are expected to decline slightly due to the impact of
Y/E March 2016 2017E 2018E 2019E interest reversals. Hence, NII growth is expected to be ~10% YoY.
NII 23.9 28.7 33.8 40.1 Slower growth in operating expenses (5% YoY) is expected to
PPP 13.6 17.2 20.3 24.2 drive 13% YoY PPoP growth.
PAT 5.3 6.1 8.9 10.9 We expect GNPL ratio to increase to 7.5%, driven by migration to
EPS (INR) 80 92 134 165
120dpd NPA recognition. We factor in provisions of INR2.95b, as
EPS Gr. (%) -5 14 46 22
BV/Sh. (INR) 685 757 870 1008 against INR2.24b in 3QFY17 and INR2.56b in 4QFY16.
RoA (%) 3.0 3.0 3.7 3.9 The stock trades at 2.6x FY18E and 2.3x FY19E consolidated BV.
RoE (%) 12.3 12.7 16.5 17.5 Maintain Buy.
Payout (%) 23 21 16 16
P/E (x) 28.4 24.9 17.0 13.9 Trends in asset quality in each segment.
P/BV (x) 3.3 3.0 2.6 2.3
Business growth and momentum, and management
Div. Yield (%) 0.7 0.7 0.8 1.0
commentary on the same.
Performance of the housing finance subsidiary.
Quarterly Performance INR m

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 9,129 9,455 10,008 9,757 10,535 11,153 11,557 10,857 37,723 44,103
Y-o-Y Growth (%) 14.6 18.0 13.2 10.8 19.7 22.1 17.7 9.5 14.2 20.0
Fees and Other Income 42 5 3 163 15 3 6 176 250 200
Net Operating Income 5,772 6,024 6,480 6,386 6,878 7,354 7,630 6,993 24,139 28,856
Y-o-Y Growth (%) 12.6 13.5 11.9 11.9 19.2 22.1 17.8 9.5 12.6 19.5
Y-o-Y Growth (%) 9.9 10.8 15.5 3.4 21.3 29.3 19.5 13.4 9.2 26.1
Provisions 1,167 1,179 1,257 2,561 1,356 1,390 2,242 2,945 5,577 7,932
Profit before Tax 2,244 2,321 2,639 864 2,784 3,135 2,412 938 8,068 9,269
Tax Provisions 767 798 896 309 966 1,090 835 326 2,771 3,216
Net Profit 1,477 1,523 1,743 555 1,818 2,045 1,577 612 5,298 6,052
Y-o-Y Growth (%) 15.6 10.5 13.9 -60.3 23.1 34.3 -9.5 10.3 -5.1 14.2
Int Exp/ Int Earned (%) 37.2 36.3 35.3 36.2 34.9 34.1 34.0 37.2 36.7 35.0
Tax Rate (%) 34.2 34.4 34.0 35.8 34.7 34.8 34.6 34.8 34.3 34.7
E: MOSL Estimates; * Quaterly nos and full year nos will not tally due to different way of reporting financial nos
April 2017 158

Shriram Transport Finance

Bloomberg SHTF IN CMP: INR1,108 TP: INR1,289 (+16%) Buy
SHTFs AUM is expected to continue to slow down to 11% YoY and
M. Cap. (INR b)/(USD b) 251 / 4
6% QoQ, driven by 21% YoY decline in disbursements (4QFY16
1,6,12 Rel Perf. (%) 17 / -16 / -1
was a high base).
Calculated margins on AUMs would decline QoQ, given higher
share of newer vehicles and impact of interest reversals. As a
Y/E March 2016 2017E 2018E 2019E result, we expect 5% YoY decline in NII.
Net Inc. 50.7 54.8 62.8 69.7 GNPLs would increase from 7.3% in 3Q (excluding RBI
PPP 38.4 42.8 49.2 54.3 dispensation) to 8.3% in 4Q. Consequently, PCR is expected to
PAT 11.8 12.5 18.3 22.4
drop from 75% to 61% in 4QFY17.
Cons.PAT 12.1 12.5 18.6 22.8
We factor in provisions of INR8.2b, as against INR6.1b in 3QFY17.
EPS (INR) 51.9 55.1 80.8 98.8
Cons. EPS (INR) 53.3 55.3 81.9 100.5 The stock trades at 2x FY18E and 1.7x FY19E consolidated BV.
BV/Sh (INR) 447 491 554 632.0 Maintain Buy.
Cons. BV (INR) 450 493 558 637.1
RoA on AUM (%) 2.1 2.0 2.7 3.0 Key issues to watch for
RoE (%) 12.2 11.7 15.5 16.7 Business growth and momentum, and management
Payout (%) 22.3 21.2 21.2 21.2
Valuations
commentary on the same.
P/Cons. EPS (x) 20.8 20.0 13.5 11.0 Movement in borrowing costs and margins.
P/Cons. BV (x) 2.5 2.2 2.0 1.7 Asset quality trends, given impact of demonetization.
Div. Yield (%) 0.9 0.9 1.3 1.6 Recoveries in equipment financing portfolio.
SHTF: Quaterly Performance (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 22,015 22,402 23,677 27,207 24,764 24,626 24,438 24,308 95,300 98,136
YoY Growth (%) 39.3 31.3 24.5 34.3 15.5 8.9 1.5 -13.8 32.0 2.0
Securitisation income 1,313 1,586 1,768 1,705 1,876 2,262 2,508 2,717 6,171 9,362
Net Income (Incl. Securitization) 11,356 11,929 13,205 14,438 13,474 13,530 14,121 13,691 50,727 54,816
YoY Growth (%) 17.4 18.4 25.4 33.0 18.6 13.4 6.9 -5.2 23.3 8.1
Fees and Other Income 162 211 191 197 167 169 183 175 762 647
Net Operating Income 11,519 12,140 13,396 14,635 13,641 13,699 14,304 13,866 51,489 55,463
YoY Growth (%) 16.2 18.6 25.5 32.9 18.4 12.8 6.8 -5.3 23.1 7.7
YoY Growth (%) 16.4 19.3 26.8 33.9 19.6 15.6 12.7 -1.1 23.7 11.6
Provisions 3,823 3,997 4,400 8,567 4,603 4,621 6,105 8,363 20,586 23,692
Tax Provisions 1,579 1,761 1,959 733 1,956 2,063 1,834 791 6,032 6,644
Net Profit 3,211 3,381 3,751 1,439 3,741 3,877 3,460 1,471 11,782 12,502
YoY Growth (%) 4.8 11.9 20.1 -54.6 16.5 14.7 -7.8 2.2 -4.8 6.1
AUM Growth (%) 11.3 13.8 16.6 23.1 23.6 19.1 14.6 11.0 23.1 11.0
Securitization Inc. / Net Inc. (%) 11.4 13.1 13.2 11.7 13.7 16.5 17.5 19.6 12.0 16.9
Tax Rate (%) 33.0 34.3 34.3 33.7 34.3 34.7 34.6 35.0 33.9 34.7
E: MOSL Estimates; * Quarterly nos and full year nos will not tally due to different way of reporting financial nos
April 2017 159

March 2017 Results Preview | Sector: Healthcare
Healthcare
Company name Pricing pressure in the US to keep growth under check
Ajanta Pharma
Alembic Pharmaceuticals We expect our pharma universe to report low double digit EBITDA growth in
Alkem Labs 4QFY17, largely led by pricing pressure and higher R&D expenditure. Also,
Aurobindo Pharma increased US regulatory scrutiny is resulting in higher remediation expenses and
Biocon de-risking of key products. This, in turn, should weigh down on operating
Cadila Healthcare margins for our coverage universe.
Cipla
Glenmark is expected to exhibit strong growth in the US, led by Zetia FTF and a
Divi's Laboratories
series of other generic launches. Aurobindo should report stable US sales, driven
Dr Reddy s Labs
by key launches (including Crestor). On the other hand, Sun and Lupin should
Fortis Healthcare
Glenmark Pharma
continue witnessing a sequential decline in the US business on the back of
Granules India competition in key products.
GSK Pharma After a strong 1HFY17, the domestic pharma business is expected to face
Ipca Laboratories headwinds from seasonal weakness and demonetization. Although the chronic
Lupin business may benefit at the margin due to demonetization, the acute segment
Ranbaxy Labs may be see some impact in the near term.
Sanofi India Among MNCs, Sanofi is likely to report better numbers, while GSK should face
Sun Pharma some pressure from the ongoing supply issues.
Torrent Pharmaceuticals
The pace of approvals has picked up at the US FDA. However, the lack of key
approvals, higher R&D spends and regulatory concerns in the domestic/US
markets are likely to keep growth under check.
We maintain our top picks Aurobindo, Sun Pharma, Fortis and Granules.

Sector CMP Sales (INR m) EBITDA (INR m) Net Profit (INR m)
(INR) Reco Mar-17 % YoY % QoQ Mar-17 % YoY %QoQ Mar-17 % YoY %QoQ
Alembic Pharma 625 Neutral 7,949 27.1 3.2 1,519 6.8 5.1 970 6.5 12.6
Alkem Lab 2,207 Neutral 14,035 22.8 -5.3 2,492 57.7 -7.1 1,936 22.8 -17.0
Ajanta Pharma 1,723 Buy 4,720 10.9 -11.5 1,595 13.5 -10.4 1,163 8.2 -18.4
Aurobindo Pharma 678 Buy 38,463 2.7 -1.5 8,966 1.6 0.2 5,785 3.7 2.6
Biocon 1,122 Sell 10,017 6.0 -2.7 2,440 31.7 -6.5 1,590 114.3 -7.0
Cadila Health 449 Buy 25,075 2.4 8.5 5,043 -13.3 24.7 3,379 -12.9 20.0
Cipla 593 Neutral 38,060 16.5 4.4 7,191 62.7 6.1 3,661 20.4 -2.3
Divis Labs 632 Neutral 11,030 0.9 14.9 3,836 -3.1 1.6 2,891 -10.3 7.8
Dr Reddy s Labs 2,736 Neutral 37,574 0.0 1.4 8,567 3.9 0.5 4,650 23.6 -1.1
Fortis Health 190 Buy 11,771 8.2 3.9 1,245 LP 10.8 402 LP -21.8
Glenmark Pharma 877 Neutral 30,012 38.0 21.9 9,890 406.8 42.7 6,154 313.7 29.0
Granules India 142 Buy 3,466 -6.9 -3.6 721 -8.0 -5.5 364 9.6 -6.7
GSK Pharma 2,738 Neutral 7,292 6.3 5.8 1,033 -15.3 194.9 881 -1.9 151.3
IPCA Labs. 647 Neutral 7,946 27.2 7.4 1,172 84.6 6.2 515 27.1 13.6
Lupin 1,453 Buy 45,350 8.7 1.2 11,409 -12.6 -6.2 6,345 -15.2 0.2
Sanofi India 4,755 Buy 6,020 10.6 1.7 1,327 2.8 23.7 798 -1.0 58.1
Sun Pharma 691 Buy 78,110 2.3 -1.3 24,815 -1.5 1.2 14,613 -14.7 -0.7
Torrent Pharma 1,477 Buy 14,998 0.1 6.1 3,440 -28.9 8.9 2,294 -35.7 0.2
Kumar Saurabh (Kumar.Saurabh@MotilalOswal.com); +91 22 6129 1519

April 2017 160
March
March2017 Results
2017 Preview
Results | Sector:
Preview Healthcare
| Sector: Cement
Exhibit 2: 4QFY17 Aggregates

Healthcare Universe YoY Growth (%) EBITDA Margin (%) PAT margin (%)
Sales EBITDA Adj PAT 17-Mar 16-Mar CHG (BPS) 17-Mar 16-Mar CHG (BPS)
MNC Pharma 8.2 -6.0 -1.4 17.7 20.4 -268 12.6 13.9 -123
Big 5 Generics 5.2 2.0 -5.3 25.7 26.5 -81 14.8 16.4 -163
CRAMS -1.1 -3.9 -8.4 31.4 32.4 -93 22.4 24.2 -180
Second Tier generics 16.1 41.5 31.9 24.0 19.7 432 15.7 13.8 188
Sector Aggregate 8.1 10.3 3.7 25.1 24.6 51 15.3 15.9 -65
USD/INR remained largely stable during the quarter

The average rate of the INR against the USD has appreciated by ~0.73% YoY over
the past year (67.00 in 4QFY17 v/s 67.49 last year).
USD/INR, has shown an upward trajectory with the INR appreciating by 2.97%
over the last month of the 4Q. Any further appreciation in INR could have a
significant MTM impact for companies.
Brexit was expected to have a negative impact on companies from 2QFY17.
However, we note that most Indian companies have limited exposure to the UK
market (<1-2% of sales). Also, post the Brexit vote, it is still unclear whether or
not Indian companies will have to conduct separate trials for approval in the UK
and other EU markets. Separate trials would mean additional cost for companies
(however, this is not expected to happen at least for next two years).
Exhibit 1: Relative performance3 months (%) Exhibit 2: Relative performance1 year (%)
Sensex Index MOSL Health care Index Sensex Index MOSL Health care Index
114 120
110 110
106 100
102 90
98 80
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
Dec-16
Jan-17
Feb-17
Mar-17

Sector / Companies CMP Reco. EPS (INR) PE (x) EV/EBITDA (x) RoE (%)
Healthcare
Alembic Pharma 625 Neutral 21.6 28.5 35.8 28.9 22.0 17.5 18.5 14.5 11.4 23.3 25.5 26.0
Alkem Lab 2,207 Neutral 79.3 85.7 100.0 27.8 25.7 22.1 23.4 19.6 15.5 24.4 22.0 21.7
Ajanta Pharma 1,723 Buy 56.0 63.8 79.6 30.7 27.0 21.6 22.3 19.4 15.6 35.9 30.9 29.9
Aurobindo Pharma 678 Buy 40.1 47.0 54.6 16.9 14.4 12.4 11.9 9.8 8.2 28.8 26.0 23.9
Biocon 1,122 Sell 32.2 34.1 42.7 34.9 32.9 26.3 23.0 19.9 15.5 14.3 13.6 15.3
Cadila Health 449 Buy 12.0 17.7 23.0 37.4 25.4 19.5 24.3 16.6 12.9 21.4 26.5 27.9
Cipla 593 Neutral 17.9 22.0 28.5 33.2 27.0 20.8 18.8 15.3 12.3 11.0 12.2 13.8
Divis Labs 632 Neutral 43.0 32.9 38.6 14.7 19.2 16.4 10.1 12.5 10.3 25.4 17.7 18.8
Dr Reddy s Labs 2,736 Neutral 76.1 110.9 147.2 35.9 24.7 18.6 17.5 13.3 9.9 9.8 12.9 15.2
Fortis Health 190 Buy 2.6 3.2 6.5 73.0 59.7 29.2 21.7 11.7 9.0 3.0 3.3 6.1
Glenmark Pharma 877 Neutral 40.6 49.2 60.5 21.6 17.8 14.5 11.2 9.8 9.3 20.1 19.0 19.1
Granules India 142 Buy 6.8 7.7 11.3 20.8 18.4 12.5 12.5 10.6 7.5 18.8 15.8 18.3
GSK Pharma 2,738 Neutral 34.5 55.5 64.4 79.3 49.3 42.5 67.8 41.9 34.3 22.4 43.0 56.9
IPCA Labs. 647 Neutral 15.8 27.9 37.3 40.9 23.2 17.4 17.9 13.6 10.6 8.4 13.5 15.9
Lupin 1,453 Buy 61.4 78.6 88.8 23.6 18.5 16.4 14.7 11.9 10.1 22.8 23.8 22.1
Sanofi India 4,755 Buy 129.0 157.8 189.9 36.9 30.1 25.0 19.3 16.3 13.4 16.2 18.1 19.4
Sun Pharma 691 Buy 27.1 32.5 38.7 25.5 21.2 17.9 15.3 13.5 11.1 19.8 20.9 21.0
Torrent Pharma 1,477 Buy 56.6 76.3 93.4 26.1 19.4 15.8 17.9 13.8 11.0 25.9 29.3 29.6
April 2017 161

Ajanta Pharma
Bloomberg AJP IN CMP: INR1,723 TP:INR2,028 (+18%) Buy
We expect Ajanta Pharma (AJP) to post 10.9% YoY sales growth to
M. Cap. (INR b)/(USD b) 152 / 2
INR4.7b in 4QFY17.
52-Week Range (INR) 2150 / 1351
-4 / -20 / 1
We expect US sales to maintain momentum in terms of YoY growth
1,6,12 Rel Perf. (%)
rate, with revenues of INR528m compared to INR50m in 4QFY16.
We expect domestic formulation sales to grow 16% YoY, led by
Y/E MARCH 2016 2017E 2018E 2019E
superior YoY growth in the cardiology and dermatology segments.
Sales 17.4 20.1 22.6 27.5
We expect emerging market sales to decline 11.9% to INR2.6b,
EBITDA 6.0 6.8 7.7 9.4 partly on higher base of past year and currency headwinds in Asia.
NP 4.2 5.0 5.6 7.0 We expect 77bp expansion in EBITDA margin on a superior product
EPS (INR) 47.1 56.0 63.8 79.6 mix. R&D spend as % of sales stood at 8.5% in 4QFY16. We expect it
EPS Gro. (%) 27.3 18.9 13.8 24.9 to remain at 7.5% of net sales for the quarter.
BV/Sh. (INR) 132.5 179.5 233.0 299.9 We expect PAT to come in at INR1.1b, up 8.2% YoY.
RoE (%) 41.4 35.9 30.9 29.9 The stock trades at 222.5x FY19E EPS. We maintain Buy, with a
RoCE (%) 38.6 34.0 29.6 28.9 target price of INR2,028 (25x FY19E EPS).
Valuations
P/E (x) 37.1 31.2 27.4 22.0
P/BV (x) 13.2 9.8 7.5 5.8
EV/EBITDA (x) 26.0 22.7 19.8 15.9
Key issues to watch out
EV/Sales (x) 8.9 7.7 6.7 5.4
Growth in sales from US and domestic formulation market.
Dividend Yield 0.5 0.5 0.5 0.7 Outlook on future ANDA launches/filings.
(%)
Quarterly performance (INR million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 3,914 4,417 4,766 4,257 4,759 5,158 5,331 4,720 17,354 19,969
YoY Change (%) 21.6 18.8 16.9 14.4 21.6 16.8 11.8 10.9 17.8 15.1
EBITDA 1,225 1,539 1,636 1,406 1,666 1,732 1,780 1,595 5,806 6,642
Margins (%) 31.3 34.8 34.3 33.0 35.0 33.6 33.4 33.8 33.5 33.3
Depreciation 103 110 117 121 130 140 153 146 451 569
Interest 12 11 15 11 10 8 8 10 49 36
Other Income 80 62 23 50 55 67 192 71 214 384
PBT 1,190 1,480 1,526 1,324 1,580 1,651 1,811 1,510 5,521 6,421
Tax 330 446 387 249 385 345 385 347 1,412 1,461
Rate (%) 27.7 30.1 25.3 18.8 24.3 20.9 21.2 23.0 25.6 22.8
0 0 0 0 0 0 0 0 0 0
Loss of Asso. Cos.
Reported PAT 860 1,034 1,139 1,075 1,196 1,307 1,426 1,163 4,109 4,960
Adj PAT 860 1,034 1,139 1,075 1,196 1,307 1,426 1,163 4,109 4,960
YoY Change (%) 44.2 24.6 22.4 45.0 39.0 26.3 25.2 8.2 32.6 20.7
Margins (%) 22.0 23.4 23.9 25.3 25.1 25.3 26.7 24.6 23.7 24.8
E: MOSL Estimates
April 2017 162

Alembic Pharma
Bloomberg ALPM IN CMP: INR625 TP:INR630(+1%) Neutral
In 4Q FY17, we expect Alembic Pharma (ALPM) to post 27.1% YoY
M. Cap. (INR b)/(USD b) 118 / 2
growth in reported sales to INR7.9b. International business is
1,6,12 Rel Perf. (%) 0 / -14 / -14
expected to remain flat QoQ owing to lower contribution from
gAbilify partially offset by new launches including Pristiq generic
launch. India business is expected to witness recovery in growth
Y/E MARCH 2016 2017E 2018E 2019E
post muted performance in 3Q due to demonetisation.
Sales 31.5 31.6 37.4 43.7
Reported EBITDA is likely to increase 6.8% YoY to INR1.5b, with
EBITDA 10.0 6.3 8.0 10.1
EBITDA margin contracting 360bp YoY, primarily on account of
NP 4.9 4.1 5.4 6.8
lower gAbilify sales in 3QFY17 numbers.
EPS (INR) 38.2 21.6 28.5 35.8
We expect reported PAT to increase 6.5% YoY to INR970m, in line
EPS Gro. (%) 154.6 -43.3 31.6 25.6 with operational performance.
BV/Sh. (INR) 84.9 100.5 123.0 152.8 We believe intensifying competition in gAbilify, high R&D expense
RoE (%) 39.6 23.3 25.5 26.0 and rise in depreciation due to planned capex of INR15b over next
RoCE (%) 50.6 22.0 24.4 25.2 2-3 years, should keep profit growth under check. We maintain our
Valuations Neutral rating with a target price of INR630 @20x 1HFY19E EPS.
P/E (x) 16.4 28.9 22.0 17.5
P/BV (x) 7.4 6.2 5.1 4.1 Key issues to watch out
EV/EBITDA (x) 11.4 18.5 14.5 11.4 Contribution of Chronic portfolio and growth strategy.
EV/Sales (x) 3.6 3.7 3.1 2.6 Performance of US operations amid market pressure.
D. Yield (%) 0.6 0.8 0.8 0.8 Outlook on future ANDA launches/filings.
Quarterly performance (Consolidated) (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 5,833 10,033 9,210 6,256 7,270 8,716 7,699 7,949 31,453 31,634
YoY Change (%) 18.0 83.7 80.3 24.7 24.6 -13.1 -16.4 27.1 68.8 0.6
EBITDA 1,021 3,748 3,839 1,423 1,559 1,771 1,446 1,519 10,025 6,295
Margins (%) 17.5 37.4 41.7 22.7 21.4 20.3 18.8 19.1 31.9 19.9
Depreciation 129 133 217 244 194 206 211 240 722 851
Interest 6 7 10 13 11 10 8 8 37 37
Other Income 0 10 28 26 14 12 10 -4 91 32
PBT 886 3,618 3,640 1,192 1,369 1,567 1,237 1,266 9,357 5,439
Tax 188 737 951 286 333 332 393 300 1,986 1,360
Rate (%) 21.2 20.4 26.1 24.0 24.3 21.2 31.8 23.7 21.2 25.0
Loss of Asso. Cos. 1 -1 -1 -5 16 49 -17 -5 6 -2
Reported PAT 698 2,882 2,690 911 1,020 1,187 861 970 7,365 4,080
Adj PAT 698 2,882 2,690 911 1,020 1,187 861 970 7,365 4,080
YoY Change (%) 7.9 273.1 280.7 29.5 46.2 -58.8 -68.0 6.5 212.8 -44.6
Margins (%) 12.0 28.7 29.2 14.6 14.0 13.6 11.2 12.2 23.4 12.9
E: MOSL Estimates
April 2017 163

Alkem Labs
Bloomberg ALKEM IN CMP: INR2,207 TP: INR1,850 (-16%) Neutral
After growing strongly (~20% YoY) in 9M FY17, we expect
M. Cap. (INR b)/(USD b) 264 / 4
revenues to decline QoQ. The slowing pace of growth can be
52-Week Range (INR) 2238 / 1175
attributed to seasonal weakness and demonetization. Additionally,
1,6,12 Rel Perf. (%) -1 / 26 / 45
we expect revenues to be weighed down by NPPA-led downward
price erosions.
EBITDA margin is expected to increase 390bp YoY and decline
Y/E March 2016 2017E 2018E 2019E
30bp QoQ on the back of high base effect, seasonality factor and
Sales 49.9 60.0 69.1 81.7
demonetisation.
EBITDA 8.5 11.0 12.7 15.5
NP 7.7 9.5 10.3 12.0
We expect adj PAT to grow ~23% YoY, while tax rate is expected to
EPS (INR) 64.7 79.3 85.7 100.0
inch up to ~23% from mid-single-digit in 9MFY17.
EPS Gro. (%) 67.4 22.5 8.1 16.7
ALKEM's US business could potentially double from ~USD150m in
BV/Sh. (INR) 293.0 356.4 422.8 500.3
FY16 to ~USD300m over next 3-4 years, driven by a strong pipeline
RoE (%) 23.8 24.4 22.0 21.7
of ~50 pending ANDAs.
RoCE (%) 17.6 22.5 20.4 25.2
We continue believing that ALKEM is the best way to play the
Valuations
domestic growth story (>70% of revenue and >85% of EBIDTA
P/E (x) 34.1 27.8 25.7 22.1
came from India in FY17). Our TP if INR1,850 is based on
P/BV (x) 7.5 6.2 5.2 4.4
20x1HFY19E PER. Neutral.
EV/EBITDA (x) 30.9 23.7 20.0 15.8
Impact of demonetization.
Update on visibility of approval post EIR at Ankleshwar facility.
Pick-up in chronic business.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 12,075 13,820 12,747 11,426 14,808 16,383 14,819 14,035 49,915 60,046
YoY Change (%) 29.0 25.3 22.6 18.6 16.3 22.8 31.7 20.3
EBITDA 2,062 2,556 2,354 1,580 2,711 3,105 2,681 2,492 8,482 10,988
Margins (%) 17.1 18.5 18.5 13.8 18.3 19.0 18.1 17.8 17.0 18.3
Depreciation 206 259 244 260 230 255 264 255 1,006 1,003
Net Other Income 251 502 161 319 181 219 137 362 975 899
PBT before EO Exp 2,107 2,798 2,270 1,639 2,663 3,069 2,554 2,598 8,451 10,884
EO Exp/(Inc) 0 0
PBT 2,107 2,798 2,270 1,639 2,663 3,069 2,554 2,598 8,451 10,884
Tax 68 81 345 1,066 230 187 192 589 1,606 1,197
Rate (%) 3.2 2.9 15.2 65.0 8.6 6.1 7.5 22.7 19.0 11.0
PAT (pre Minority Interest) 2,039 2,717 1,925 573 2,433 2,882 2,363 2,010 6,845 9,687
Reported PAT 2,011 2,670 1,889 567 2,388 2,828 2,334 1,936 6,731 9,487
YoY Change (%) 17.0 -56 0 0
Adj Net Profit 2,011 2,670 1,872 1,577 2,388 2,828 2,334 1,936 6,731 9,487
YoY Change (%) 17.0 21.4 18.7 5.9 24.7 22.8 45.5 40.9
April 2017 164

Aurobindo Pharma
Bloomberg ARBP IN CMP: INR678 TP:INR915 (+35%) Buy
We expect Aurobindo (ARBP) to post 2.7% YoY sales growth to
M. Cap. (INR b)/(USD b) 397 / 6
INR38.5b in 4QFY17, aided by sustained traction in the US.
1,6,12 Rel Perf. (%) -3 / -28 / -30
We expect US business (~56% of formulation sales) to grow ~9% YoY
in 4Q. Europe and RoW sales are expected to exhibit modest 3% YoY
growth, while API sales are estimated to grow ~3% YoY in 4Q.
EBITDA margin is likely to be at the same level YoY at ~23.3%
Y/E MARCH 2016 2017E 2018E 2019E (decrease 20bps sequentially). Overall EBITDA is estimated to
Sales 139.0 152.9 181.0 205.6 increase marginally by ~2% to INR9b. We expect adj. PAT at INR5.8b,
EBITDA 32.1 36.1 43.1 49.3 compared to INR5.6b in the corresponding quarter last year.
NP 19.8 23.5 27.5 32.0 At its CMP, ARBP trades at 14x FY18E, at >20% discount to its peers.
EPS (INR) 33.9 40.1 47.0 54.6 The valuation gap is expected to narrow down on account of the
EPS Gro. (%) 25.5 18.5 17.0 16.3
companys increasing profitability, strong earnings growth trajectory
BV/Sh. (INR) 120.6 158.2 202.7 254.8
RoE (%) 32.5 28.8 26.0 23.9
(17% CAGR till FY19E) and improving free cash flow. ARBP remains
RoCE (%) 20.8 19.7 19.9 19.5 one of our top picks in the sector with a target price of INR915 @
Valuations 18x 1HFY19E PER.
P/E (x) 20.0 16.9 14.4 12.4
EV/EBITDA (x) 13.2 11.7 9.6 8.0 Debt reduction during the quarter.
EV/Sales (x) 3.0 2.8 2.3 1.9 Outlook on US business (~35-40 launches expected over next 12
Dividend Yield 0.2 0.3 0.3 0.4 months).
(%)
Profitability of acquired Actavis business in Europe.
Quarterly Performance Consolidated (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 32,989 33,651 34,955 37,468 37,666 37,755 39,062 38,463 138,961 152,944
YoY Change (%) 13.3 16.8 10.4 18.5 14.2 12.2 11.7 2.7 14.6 10.1
EBITDA 7,251 7,791 8,230 8,824 8,890 9,292 8,949 8,966 32,056 36,095
Margins (%) 22.0 23.2 23.5 23.5 23.6 24.6 22.9 23.3 23.1 23.6
Depreciation 890 926 995 1,113 1,062 1,102 1,111 1,093 3,926 4,368
Interest 208 241 227 251 206 175 143 291 927 815
Other Income 294 122 69 206 159 83 79 229 3,137 3,496
Extra-Ord expense 106 439 -129 -46 -70 -202 -158 0 660 -430
PBT 6,340 6,306 7,206 7,711 7,850 8,300 7,932 7,811 29,680 34,837
Tax 1,634 1,767 1,860 2,097 2,008 2,240 2,177 2,026 7,444 8,451
Rate (%) 25.8 28.0 25.8 27.2 25.6 27.0 27.4 25.9 25.1 24.3
Minority Interest -19 4 -3 -14 -8 3 -31 -14 -39 -50
Reported PAT 4,725 4,536 5,350 5,629 5,850 6,057 5,786 5,799 22,275 26,436
Adj PAT 4,784 4,856 5,251 5,582 5,789 5,912 5,640 5,785 20,304 23,174
YoY Change (%) 15.8 20.9 32.3 38.7 21.0 21.8 7.4 3.7 36.6 14.1
Margins (%) 14.5 14.4 15.0 14.9 15.4 15.7 14.4 15.0 14.6 15.2
E: MOSL Estimates
April 2017 165

Biocon
Bloomberg BIOS IN CMP: INR1122 TP: INR800 (-29%) Sell
Biocons revenue is likely to increase 6% YoY to INR10b, driven by
M. Cap. (INR b)/(USD b) 224 / 3
muted growth in CRO division, 13% growth in bio-pharma sales and
licensing income at INR67m.
1,6,12 Rel Perf. (%) 1 / 11 / 92
EBITDA is expected to increase 32% YoY to INR2.4b, with EBITDA
margins at 24.6%.
Financial Snapshot (INR Billion) We expect PAT to decline to INR1.6b, primarily owing to one time
Y/E MARCH 2016 2017E 2018E 2019E gain in 4Q FY16. The key thing to watch would be the impact of fire
Sales 34.5 40.8 49.5 61.7 at the R&D center of Syngene.
EBITDA 7.9 10.2 11.9 15.1 Key growth drivers for FY17E/18E will be 1) commercialization and
NP 4.6 6.7 7.1 8.9 ramp-up of the insulin plant in Malaysia, 2) ramp-up in CRO
EPS (INR) 23.2 33.5 35.6 44.5 division, 3) contribution from API/immuno-suppressants supplies to
EPS Gro. (%) 15.5 44.1 6.2 25.0 partners and 4) branded formulations in India. However, capex for
BV/Sh. (INR) 202.7 226.4 251.6 283.0 long-term initiatives is likely to exert pressure on profitability and
RoE (%) 11.5 14.8 14.1 15.7 return ratios in the near term.
RoCE (%) 15.9 10.0 10.1 14.6 The recent run-up in the stock price primarily on the back of
Valuations positive developments in the Biosimilars portfolio. Although the
P/E (x) 48.3 33.5 31.6 25.2 progress is impressive, we believe there are still uncertainties that
P/BV (x) 5.5 5.0 4.5 4.0 cap the upside potential. In the near term, commissioning of the
EV/EBITDA (x) 28.7 22.3 19.3 15.0 Malaysia plant would exert pressure on profits. We maintain Sell
Div. Yield (%) 0.4 0.7 0.8 1.0 with a TP of INR800 @ 20x 1HFY19E EPS
Update on Middle-East problems.
Progress on Rh-Insulin/Glargine in Europe/US and other out-
licensing opportunities.
Quarterly Performance Consolidated (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 8,105 7,860 8,282 9,450 9,814 9,400 10,290 11,286 34,507 40,790
YoY Change (%) 12.8 4.9 8.8 13.8 21.1 19.6 24.2 19.4 12.8 18.2
EBITDA 1,978 1,590 1,799 1,852 2,538 2,250 2,610 2,772 7,853 10,170
Margins (%) 24.4 20.2 21.7 19.6 25.9 23.9 25.4 24.6 22.8 24.9
Depreciation 591 610 621 647 661 680 710 714 2,423 2,765
Interest 44 30 15 166 57 70 90 35 102 252
Other Income 304 -750 289 3,014 502 520 630 548 1,192 2,200
PBT 1,647 200 1,452 4,053 2,322 2,020 2,440 2,571 6,520 9,353
Tax 376 290 241 591 552 420 550 536 1,131 2,058
Rate (%) 22.8 145.0 16.6 14.6 23.8 20.8 22.5 20.8 17.3 22.0
Adj PAT 1,238 970 1,030 742 1,466 1,470 1,710 1,849 4,646 6,695
YoY Change (%) 20.2 -4.9 13.4 -63.2 34.6 51.5 66.0 -44.0 -7.0 44.1
Margins (%) 15.3 12.3 12.4 7.9 17.0 15.6 16.6 16.4 13.5 16.4
E: MOSL Estimates; Note - Quarterly nos will not add up to full-year nos due to restatements
April 2017 166

Cadila Healthcare
Bloomberg CDH IN
CMP: INR449 TP:INR510(+14%) Buy
459 / 7 Cadila Healthcare's (CDH) 4QFY17 revenue is likely to grow 2.4% YoY
M. Cap. (INR b)/(USD b)
52-Week Range (INR) 460 / 305 to INR25b, driven by muted growth in the US formulations business.
1,6,12 Rel Perf. (%) 0 / 9 / 21 US sales growth is expected to pick-up going forward post recent
clearance of Moraiya facility.
Financial Snapshot (INR Billion) Overall export formulations are expected to grow 2% YoY to
Y/E MARCH 2016 2017E 2018E 2019E INR12.4b, while domestic formulation is likely to grow 15% YoY to
Sales 97.5 94.6 117.4 141.7 INR10.9b.
EBITDA 23.0 19.5 28.2 35.4 We expect EBITDA to decline 13% YoY to INR5b and the margin to
NP 15.8 12.3 18.1 23.6 contract 360bp. Adj. PAT is also likely to decline ~13% YoY to
EPS (INR) 15.4 12.0 17.7 23.0 INR3.4b.
EPS Gro. (%) 37.7 -22.2 47.2 30.4 We believe CDH has made investments in the right areas, and will
BV/Sh. (INR) 52.3 59.9 73.2 91.9 start accruing benefits over next 2-3 years. We expect sharp ramp-
RoE (%) 32.8 21.4 26.5 27.9 up in the US business post successful remediation of Moraiya
RoCE (%) 23.3 14.9 18.3 20.6 warning letter. We expect strong EPS growth from FY17-19E (38%
Valuations CAGR) on the back of Moraiya resolution and strong launch pipeline
P/E (x) 29.1 37.4 25.4 19.5
in US, with better return ratios over next two years.
P/BV (x) 8.6 7.5 6.1 4.9
Moraiya resolution is a significant positive for CDH as all the key
EV/EBITDA (x) 20.5 24.3 16.6 12.9
oral, injectable and transdermal fillings are from this facility. We
Div. Yield(%) 0.0 0.0 0.0 0.0
maintain our Buy Rating with a target price of INR510 @22x FY19E
PER.

Outlook for recovery in domestic formulations.
Progress on improvement in balance sheet.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 23,159 23,308 24,284 24,491 22,871 23,531 23,111 25,075 95,242 94,588
YoY Change (%) 23.7 10.6 10.9 7.0 -1.2 1.0 -4.8 2.4 12.9 -0.7
EBITDA 5,111 5,907 5,787 5,814 5,239 5,160 4,043 5,043 20,695 19,485
Margins (%) 22.1 25.3 23.8 23.7 22.9 21.9 17.5 20.1 21.7 20.6
Depreciation 691 725 770 783 843 864 898 891 3,022 3,496
Interest 119 130 126 100 140 187 66 236 463 629
Other Income 240 200 255 241 153 236 166 237 918 792
PBQ before EO Income 4,541 5,252 5,146 5,172 4,409 4,345 3,245 4,152 18,128 16,151
EO Exp/(Inc) -506 -155 9 -8 2 0 0 0 -660 0
PBQ after EO Income 5,047 5,407 5,137 5,180 4,407 4,345 3,245 4,152 18,788 16,151
Tax 577 736 1,149 1,259 966 1,068 504 902 4,298 3,440
Rate (%) 11.4 13.6 22.4 24.3 21.9 24.6 15.5 21.7 22.9 21.3
Min. Int/Adj on Consol -132 -79 92 34 -121 -99 -76 -129 300 -425
Adj PAT 4,096 4,595 3,903 3,881 3,564 3,376 2,817 3,379 14,350 13,136
YoY Change (%) 103.2 64.6 38.6 -15.7 -13.0 -26.5 -27.8 -12.9 22.4 -8.5
Margins (%) 17.7 19.7 16.1 15.8 15.6 14.3 12.2 13.5 15.1 13.9
E: MOSL Estimates
April 2017 167

Cipla
Bloomberg CIPLA IN CMP: INR593 TP: INR550 (-7%) Neutral
We expect Ciplas revenues to grow 16.5% YoY to INR38b in 4QFY17.
M. Cap. (INR b)/(USD b) 476 / 7
Export formulation business is expected to grow at robust pace of
~20% YoY on the back of recent launches Domestic business is also
1,6,12 Rel Perf. (%) -3 / -6 / -3
expected to grow at low teens growth YoY driven by traction in
Respiratory business. Impact of demonetization will be the key to
Financial Snapshot (INR Billion) watch. Export API sales are expected to report 12% YoY growth to
Y/E MARCH 2016 2017E 2018E 2019E INR2.4b.
Sales 136.8 148.5 171.8 198.2 EBITDA is likely to grow 63% YoY to INR7.2b, with margin expansion
EBITDA 25.0 26.9 32.5 39.4 of 540bp to 18.9%, on back of lower raw material cost (as % of sales)
NP 15.1 14.3 17.6 22.9 by 540bps and staff cost (as % of sales) lower by 280bps. We expect
EPS (INR) 18.8 17.9 22.0 28.5 reported PAT to increase 20.4% YoY to INR3.7b.
EPS Gro. (%) 34.0 -5.1 22.9 29.9 We see limited downside in the stock from current levels. Maintain
BV/Sh. (INR) 147.4 161.6 180.5 206.0 Neutral with a TP of INR550 @20x 1HFY19E PER. Our target multiple
RoE (%) 12.8 11.0 12.2 13.8 of 20x (in line with peers) is based on normalization of margins at
RoCE (%) 10.6 8.9 9.7 11.4 >18% and impressive ramp up of own US business. Having said that,
Valuations Invagen is yet to exhibit meaningful growth. We believe Cipla is well
P/E (x) 31.5 33.2 27.0 20.8 poised to deliver robust growth in the US due to a significant pick up
P/BV (x) 4.0 3.7 3.3 2.9 in the filling quality/rate and a lower base
EV/EBITDA (x) 20.8 19.1 15.6 12.5
Div. Yield (%) 0.3 0.4 0.4 0.4
Launch of combination inhaler in UK market (USD450m market
size).
Margin improvement in Medpro operations (acquired in July
2014).
Sustained strong growth in domestic formulations (38% of sales).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 38,385 34,551 31,066 32,665 36,500 37,510 36,472 38,060 136,666 148,542
YoY Change (%) 41.1 24.9 12.3 5.6 -4.9 8.6 17.4 16.5 20.5 8.7
EBITDA 10,545 7,860 5,294 4,421 6,112 6,807 6,776 7,191 28,120 26,886
Margins (%) 27.5 22.7 17.0 13.5 16.7 18.1 18.6 18.9 20.6 18.1
Depreciation 1,494 1,584 1,375 1,414 2,038 2,292 2,577 2,323 5,867 9,230
Interest 639 636 230 368 315 352 593 557 1,872 1,817
Other Income 505 308 51 547 252 272 1,535 441 1,411 2,500
PBT after EO expense 8,917 5,948 3,741 3,186 4,011 4,436 5,141 4,751 21,792 18,339
Tax 2,418 401 120 -39 553 719 1,283 1,021 2,899 3,576
Rate (%) 27.1 6.7 3.2 -1.2 13.8 16.2 25.0 21.5 13.3 19.5
Minority Interest 7.4 117.0 174.2 185.4 67.6 173.6 109.8 69.0 484.0 420.0
Reported PAT 6,492 5,430 3,447 3,040 3,391 3,543 3,748 3,661 18,409 14,343
YoY Change (%) 120.4 81.8 5.1 17.1 -47.8 -34.7 8.7 20.4 55.9 -22.1
Margins (%) 16.9 15.7 11.1 9.3 9.3 9.4 10.3 9.6 13.5 9.7
April 2017 168

Divis Laboratories
Bloomberg DIVI IN CMP: INR632 TP:INR600 (-5%) Neutral
Divis Laboratories (DIVI) is likely to register marginal growth of 0.9%
M. Cap. (INR b)/(USD b) 168 / 3
YoY in 4QFY17 revenue to INR11b on the back higher base effect.
Adjusted EBITDA is likely to decline ~3% YoY to INR3.8b, as margins
1,6,12 Rel Perf. (%) -20 / -57 / -58
are expected to contract 140bps to 34.8%.
PAT is expected to decline 10.3% YoY to INR2.9b due to increase in
Financial Snapshot (INR Billion) depreciation.
Y/E MARCH 2016 2017E 2018E 2019E Management expects FY17 revenue to grow at low-to-mid-teens,
Sales 37.7 40.6 37.2 43.5 with EBITDA margin sustaining at 37%.
EBITDA 14.1 15.3 12.1 14.6 We expect the stock to remain range bound till further clarity
NP 11.1 11.4 8.7 10.3 emerges on the 483 observations. We maintain Neutral with a
EPS (INR) 41.9 43.0 32.9 38.6 target price of INR600. On a going concern basis also large capex
EPS Gro. (%) 30.6 2.7 -23.6 17.5 addition and delay in commencement of facility would keep growth
BV/Sh. (INR) 161.5 177.1 195.2 216.4 under check till FY19. However strong balance sheet (net cash
RoE (%) 28.6 25.4 17.7 18.8 surplus) and high return ratios (RoE at ~29%) provide valuation
RoCE (%) 28.4 25.3 17.6 18.7 cushion
Valuations The stock trades at 14.8x FY18E earnings. Maintain Neutral.
P/E (x) 15.1 14.7 19.2 16.4
EV/EBITDA (x) 11.9 10.7 13.2 10.8 Clarity on Unit 2 483s.
Div. Yield (%) 2.5 2.5 2.0 2.3 Ramp-up at Vizag SEZ.
Outlook for growth beyond FY18.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Op Revenue 8,069 9,619 8,518 10,934 10,060 9,918 9,600 11,030 37,690 40,608
YoY Change (%) 26.1 15.9 8.1 34.2 24.7 3.1 12.7 0.9 21.5 7.7
EBITDA 3,000 3,736 3,212 3,960 4,016 3,680 3,777 3,836 14,064 15,309
Margins (%) 37.2 38.8 37.7 36.2 39.9 37.1 39.3 34.8 37.3 37.7
Depreciation 289 301 299 292 301 308 310 905 1,182 1,824
Interest 2 3 2 15 4 4 4 10 23 22
Other Income 360 321 163 193 184 226 215 586 922 1,212
PBT before EO Income 3,069 3,752 3,074 3,845 3,896 3,595 3,678 3,507 13,781 14,676
EO Income 0 0 0 0 0 0 0 0 0 0
PBT 3,069 3,752 3,074 3,845 3,896 3,595 3,678 3,507 13,781 14,676
Tax 617 795 608 623 878 565 996 617 2,662 3,082
Deferred Tax 0 0 0 0 0 0 0 0 21 0
Rate (%) 20.1 21.2 19.8 16.2 22.5 15.7 27.1 17.6 19.5 22.2
Adj PAT 2,452 2,957 2,466 3,222 3,018 3,030 2,683 2,891 11,098 11,418
YoY Change (%) 46.0 28.8 11.8 40.8 23.1 2.5 8.8 -10.3 30.6 2.9
Margins (%) 30.4 30.7 28.9 29.5 30.0 30.5 27.9 26.2 29.4 28.1
Reported PAT 2,452 2,957 2,466 3,222 3,018 2,239 2,683 2,891 11,098 10,802
E: MOSL Estimates; Quarterly numbers are standalone
April 2017 169

Dr Reddys Labs
Bloomberg DRRD IN CMP: INR2,736 TP:INR3,050 (+11%) Neutral
Dr Reddys Lab is expected to report flattish growth in 4QFY17 YoY,
M. Cap. (INR b)/(USD b) 467 / 7
with revenue at INR37.6b.
52-Week Range (INR) 3689 / 2560
-9 / -19 / -29
US business is likely to decline 17% YoY to INR15.6b, while Russia
1,6,12 Rel Perf. (%)
and CIS region sales are expected to decline in single-digits due to
currency devaluation. However, India business is expected to report
Y/E MARCH 2016 2017E 2018E 2019E
robust growth in 4QFY17
EBITDA is expected to marginally increase ~4% YoY to INR8.6b and
Sales 154.7 142.3 163.6 190.4
EBITDA 39.1 26.3 34.3 45.3
the margin to increase 80bp YoY to 22.8%.
NP 22.6 13.0 18.9 25.1 PAT is expected to increase 23.6% YoY to INR4.7b, on back of lower
EPS (INR) 132.3 76.1 110.9 147.2 tax rate of 22.2% as against 70% in 3QFY16.
EPS Gro. (%) 1.7 -42.5 45.7 32.7 Though long term fundamentals remain intact, the stock would be
BV/Sh. (INR) 752 808 905 1,033 range bound in the near term due to regulator concerns. We value
RoE (%) 18.8 9.8 12.9 15.2 DRRD at 21x 1HFY19E EPS (in-line with sector average), given its
RoCE (%) 13.9 7.2 10.1 12.7 robust balance sheet, expectation of US FDA resolution over the
Valuations next six months and rich product pipeline, We maintain Neutral;
P/E (x) 20.7 35.9 24.7 18.6 our target price is INR3,050.
P/BV (x) 3.6 3.4 3.0 2.6
EV/EBITDA (x) 11.7 17.5 13.3 9.9
Dividend Yield 0.6 0.4 0.6 0.8
Update on USFDA resolution of warning letters for Srikakulam,
(%) Duvvada and Miryalaguda API plants.
FY18 outlook for both generics and PSAI businesses.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 37,578 39,890 39,679 37,562 32,345 35,857 37,065 37,574 154,708 142,273
YoY Change (%) 6.8 11.2 3.2 -3.0 -13.9 -10.1 -6.6 0.0 4.4 -8.0
EBITDA 9,855 11,404 10,033 8,249 3,773 6,023 8,526 8,567 39,088 26,321
Margins (%) 26.2 28.6 25.3 22.0 11.7 16.8 23.0 22.8 25.3 18.5
Amortization 2,268 2,466 2,577 3,032 2,681 2,914 2,924 2,863 10,343 11,382
Other Income 390 160 124 -2,732 615 726 320 275 -1,605 1,926
Tax 1,721 1,879 1,788 1,739 444 885 1,221 1,329 7,127 3,879
Rate (%) 21.6 20.7 23.6 70.0 26.0 23.1 20.6 22.2 26.3 23.0
Reported PAT 6,256 7,219 5,792 745 1,263 2,950 4,701 4,650 20,012 12,985
Adjusted PAT 6,256 7,219 5,792 3,762 1,263 3,244 4,701 4,650 20,012 12,985
YoY Change (%) 13.7 25.7 0.8 -27.5 -79.8 -55.1 -18.8 23.6 -9.8 -35.1
Margins (%) 16.6 18.1 14.6 10.0 3.9 9.0 12.7 12.4 12.9 9.1
E - MOSL Estimates
April 2017 170

Fortis Healthcare
Bloomberg FORH IN CMP: INR190 TP:INR240 (+26%) Buy
We Fortis to deliver high single digit revenue growth on the back of
steady growth in core businesses (Hospitals & Diagnostics) partially
-2 / 3 / -14
impacted by demonetization effect.
1,6,12 Rel Perf. (%)
EBITDA margins will continue to expand sequentially despite
seasonality impact on the back of better efficiency coupled with
Y/E MARCH 2016 2017E 2018E 2019E
reducing impact of demonetization.
Sales 42.7 46.3 52.5 59.6
We expect hospital EBITDA to grow more than 10x by FY19E (from
EBITDA 2.2 4.0 6.5 8.1 FY16 base) on the back of lower base, coupled with strong high
NP -0.9 1.2 1.5 3.0 teen growth in EBITDAC, relatively flattish BT cost (at normalized
EPS (INR) -1.9 2.6 3.2 6.5 level) and FHTL transaction.
EPS Gro. (%) -58.3 -196.1 -265.7 149.9 We expect EBITDA margins for the diagnostics business to improve
BV/Sh. (INR) 86.3 88.9 104.2 110.6 by ~200bp by FY19E on the back of deeper penetration in existing
RoE (%) -2.2 3.0 3.3 6.1 markets, rationalization of low-margin centers, growth in samples
RoCE (%) 1.1 4.4 3.9 5.3 tested and higher share from the O&M model.
Valuations Currently FORH is trading at >30% discount to peers. We argue for a
P/E (x) -99.0 73.0 59.7 29.2 multiple re-rating in the stock on the back of multifold increase in
P/BV (x) 2.2 2.1 1.8 1.7 hospital business EBITDA, SRL demerger, asset light expansion
EV/EBITDA (x) 44.1 27.3 15.1 11.8 strategy and FHTL transaction. FORH remains our top pick in the
EV/Sales (x) 2.2 2.4 1.9 1.6
healthcare delivery space with TP of INR240.
Di. Yield (%) 0.0 0.0 0.0 0.0
SRL Demerger.
Possibility of capital infusion and usage of capital.
PAT breakeven of hospitals business.

Net Sales 10,343 10,785 10,411 10,883 11,212 11,957 11,334 11,771 42,422 46,274
YoY Change (%) 1.3 4.6 1.6 2.3 8.4 10.9 8.9 8.2 2.5 9.1
EBITDA 485 659 138 -288 626 990 1,123 1,245 993 3,983
Margins (%) 4.7 6.1 1.3 -2.7 5.6 8.3 9.9 10.6 2.3 8.6
Depreciation 533 469 549 714 476 517 599 628 2,264 2,220
Interest 342 295 290 366 420 461 748 772 1,293 2,400
Other Income 1,271 823 127 461 330 380 589 501 2,682 1,800
PBT before EO expense 882 718 -574 -908 61 393 365 345 118 1,163
Extra-Ord expense 0 279 0 0 0 -9 -4,194 0 279 -4,203
PBT 882 439 -574 -908 61 402 4,559 345 -161 5,366
Tax 96 2 103 118 29 242 190 89 319 550
Rate (%) 10.9 0.5 -17.9 -13.0 47.3 60.2 4.2 25.8 -198.3 10.2
Loss of Asso. Cos. -146 -115 -124 -117 -130 -154 -165 -146 -503 -594
Reported PAT 932 552 -552 -909 162 314 4,533 402 22 5,411
Adj PAT 932 830 -552 -909 162 310 514 402 855 1,638
YoY Change (%) -303.4 -242.8 148.0 418.3 -82.6 -62.6 -193.1 -144.3 -159.5 91.6
Margins (%) 9.0 7.7 -5.3 -8.3 1.4 2.6 4.5 3.4 2.0 3.5
E: MOSL Estimates
April 2017 171

Glenmark Pharma
Bloomberg GNP IN
CMP: INR877 TP:INR990 (+13%) Neutral
238 / 4
We expect Glenmark Pharmaceuticals (GNP) to report robust 38%
52-Week Range (INR) 993 / 729 YoY growth in overall revenues to INR30b, driven by buoyant
1,6,12 Rel Perf. (%) -7 / -12 / -9 performance in the US and India market.
The India branded business is likely to grow 15% YoY, while the US
Financial Snapshot (INR Billion) generic segment is expected to driven strong growth, primarily
Y/E MAR 2016 2017E 2018E 2019E aided by the gZetia launch. LatAm business is expected to show
Sales 75.9 95.2 108.3 124.2 stable growth as the currency headwinds are behind us. We also do
EBITDA 13.7 24.0 26.5 27.1 not factor any out-licensing income in our 4QFY17 assumptions.
NP 7.0 11.5 13.9 17.1 EBITDA is likely to increase 407% YoY to INR9.9b. We expect
EPS (INR) 24.9 40.6 49.2 60.5 margins to increase to 33% on the back of Zetia launch in Dec-16.
EPS Gro. (%) 42.0 63.4 21.1 23.0 Adjusted PAT is expected at INR6.2b, up 313.7.9% YoY, aided by
BV/Sh. (INR) 151.3 202.2 259.5 316.4 lower tax expenses.
RoE (%) 16.4 20.1 19.0 19.1 FY17/18 should be one of the best years for Glenmark in terms of
RoCE (%) 12.7 20.7 19.0 17.1 growth due to gZetia exclusivity and other key launches lined up in
Valuations the US. Having said that, weak cash flow conversion and high net
P/E (x) 35.3 21.6 17.8 14.5 debt remain key concern for GNP. Maintain Neutral with a TP of
P/BV (x) 5.8 4.3 3.4 2.8
INR990 @ 18x 1HFY19E EPS. Any big in-licensing deal in the
EV/EBITDA (x) 19.7 11.2 9.8 9.3
innovation business could act as a positive catalyst.
D. Yield (%) 0.2 0.3 0.3 0.3

New ANDA filings in complex category.
Update on free-cash generation and debt repayment schedule.
Progress of NCE/NBE pipeline and potential out-licensing
prospects.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues (Core) 16,258 18,440 17,245 21,740 18,832 21,732 24,630 30,012 75,909 95,206
YoY Change (%) 10.0 10.3 1.9 24.0 15.8 17.9 42.8 38.0 15.1 25.4
EBITDA 3,374 3,713 3,379 1,952 3,192 3,978 6,929 9,890 14,326 24,941
Margins (%) 20.8 20.1 19.6 9.0 17.0 18.3 28.1 33.0 18.9 26.2
Depreciation 654 634 559 584 642 770 625 798 2,691 2,836
Interest 419 426 469 475 430 629 617 653 1,789 2,329
Other Income 273 314 340 1,189 1,358 491 866 285 787 3,000
PBT before EO Expense 2,574 2,967 2,692 2,082 3,477 3,070 6,553 8,724 10,632 22,777
Extra-Ord Expense 0 0 0 0 0 0 0 0 0 0
Tax 745 962 992 594 1,209 876 1,782 2,571 3,028 6,438
Rate (%) 28.9 32.4 36.9 28.5 34.8 28.5 27.2 29.5 28.5 28.3
Reported PAT (incl one-offs) 1,829 2,004 1,699 1,487 2,268 2,193 4,771 6,154 7,604 16,338
Reported PAT (excl MI) 1,829 2,004 1,699 1,487 2,268 2,193 4,771 6,154 7,604 16,338
YoY Change (%) -1.1 21.4 48.1 1,301.5 24.0 9.4 180.8 313.7 60.0 114.9
Margins (%) 11.2 10.9 9.9 6.8 12.0 10.1 19.4 20.5 10.0 17.2
E: MOSL Estimates
April 2017 172

Granules India
Bloomberg GRAN IN CMP: INR142 TP:INR160(+13%) Buy
We expect Granules India sales to decline 6.9% YoY to INR3.5B. We
expect one month of disruption in EU formulations sales due to
6 / 10 / 0
remediation measures taken at Gagilapur formulations plant.
1,6,12 Rel Perf. (%)
EBIDTA is also expected to decline 8% YoY to INR721m with slight
decline in margin of 20bps to 20.8%, primarily owing to lower raw
Y/E MARCH 2016 2017E 2018E 2019E
material costs and better business mix.
Sales 14.3 14.2 17.0 24.3
However, we expect to increase ~40% YoY to INR364m on back of
EBITDA 2.8 2.9 3.5 5.2 profit from minority interest and lower tax rate at 30.8% as against
NP 1.2 1.6 1.9 2.8 36.7% in 4QFY16.
EPS (INR) 5.5 6.8 7.7 11.3 GR trades at 12.5x FY19E EPS. We believe the stock has the
EPS Gro. (%) 22.8 24.4 13.3 47.1 potential to deliver >50% return over next 12-18 months, led by
BV/Sh. (INR) 30.7 43.1 57.7 66.3 multiple re-rating (to >15x forward earnings) and strong EPS CAGR
RoE (%) 21.6 18.8 15.8 18.3 of ~30%. Out TP is based on16x 1HFY19E PER.
RoCE (%) 14.0 11.2 9.3 11.4
Valuations
P/E (x) 25.9 20.8 18.4 12.5
Contribution of Auctus portfolio and outlook on ANDA filings.
P/BV (x) 4.6 3.3 2.5 2.1
Performance of Omnichem JV operations.
EV/EBITDA (x) 11.0 11.3 9.6 6.8
Outlook for growth beyond FY18E.
Di. Yield (%) 2.1 2.3 2.0 1.5

Net Sales 3,226 3,529 3,449 3,723 3,498 3,638 3,595 3,466 14,295 14,197
YoY Change (%) 3.7 14.7 7.9 5.0 8.4 3.1 4.2 -6.9 11.2 -0.7
EBITDA 627 685 677 783 685 742 763 721 2,725 2,910
Margins (%) 19.4 19.4 19.6 21.0 19.6 20.4 21.2 20.8 19.1 20.5
Depreciation 139 144 167 174 163 185 187 220 643 755
Interest 81 88 114 99 79 83 84 100 399 346
Other Income 14 10 26 14 30 39 43 28 77 140
Tax 133 144 151 193 154 156 176 132 617 618
Rate (%) 31.6 31.1 35.7 36.7 32.5 30.4 32.9 30.8 35.1 31.7
Loss of Asso. Cos. 2 -4 0 0 -71 -51 -31 -67 2 -220
Reported PAT 285 323 272 332 390 408 390 364 1,140 1,551
Adj PAT 285 323 272 332 390 408 390 364 1,140 1,551
YoY Change (%) 24.8 46.2 15.2 48.2 36.5 43.1 43.5 33.9 36.9 36.0
Margins (%) 8.8 9.1 7.9 8.9 11.1 11.2 10.8 10.5 8.0 10.9
E: MOSL Estimates
April 2017 173

GSK Pharma
Bloomberg GLXO IN
CMP: INR2,738 TP:INR2,700(-1%) Neutral
In 4QFY17, we expect GlaxoSmithKline Pharmaceuticals (GLXO) to
M. Cap. (INR b)/(USD b) 232 / 4
3838 / 2600
report modest 6.3% YoY increase in revenues to INR7.3b.
52-Week Range (INR)
1,6,12 Rel Perf. (%) -3 / -11 / -46 EBITDA is expected to decline 15% YoY to INR1b, with the margin
contracting 360bp YoY to 14.2%.
Decline in EBITDA margin will impact Adj. PAT, which is expected to
Y/E MARCH 2016 2017E 2018E 2019E decline ~2% YoY to INR881m. Growth and profitability are expected
Sales 27.4 28.9 32.5 36.4 to gradually improve with volume ramp-up in key NLEM products.
EBITDA 4.5 3.3 5.4 6.7 We believe GLXO has strong parent support, superior brand
NP 3.7 2.9 4.7 5.5 portfolio (competitive advantage), high payout ratio (>100%) and
EPS (INR) 44.2 34.5 55.5 64.4 industry leading return ratios (RoCE of ~50%). However, current
EPS Gro. (%) -29.2 -21.9 60.9 15.9 valuations at 49x FY18E is on the higher side of historical P/E.
BV/Sh. (INR) 200.2 154.3 129.3 113.2 Maintain Neutral with TP of INR2,700 @ 45x 1HFY19E PER.
RoE (%) 22.1 22.4 43.0 56.9
RoCE (%) 21.2 19.5 39.1 53.0
Valuations
P/E (x) 62.0 79.3 49.3 42.5
P/BV (x) 13.7 17.8 21.2 24.2
EV/EBITDA (x) 48.4 67.8 41.9 34.3
D. Yield (%) 2.4 2.6 2.6 2.6 New product introductions in FY17-18E.
Market performance of products impacted by DPCO 2013.
Quarterly Performance (Consolidated)

Net Sales 6,219 7,000 7,287 6,861 6,852 7,829 6,893 7,292 27,411 28,866
YoY Change (%) -5.1 -5.3 12.8 11.8 10.2 11.8 -5.4 6.3 N/A 5.3
EBITDA 1,036 1,105 1,027 1,220 702 1,245 350 1,033 4,516 3,330
Margins (%) 16.7 15.8 14.1 17.8 10.2 15.9 5.1 14.2 16.5 11.5
Depreciation 49 53 78 67 54 66 66 74 248 259
Other Income 463 489 334 310 441 343 319 394 1,500 1,497
PBT before EO Expense 1,450 1,541 1,282 1,463 1,090 1,522 603 1,353 5,769 4,568
Tax 493 507 450 565 386 536 252 471 2,026 1,644
Rate (%) 34.0 32.9 35.1 38.6 35.4 35.2 41.8 34.8 35.1 36.0
Adjusted PAT 957 1,034 832 898 705 987 351 881 3,742 2,924
YoY Change (%) -2.7 -19.6 -8.9 -17.3 -26.4 -4.5 -57.8 -1.9 -29.2 -21.9
Margins (%) 15.4 14.8 11.4 13.1 10.3 12.6 5.1 12.1 13.7 10.1
Extra-Ord Expense 24 78 33 -18 -2 -179 0 135 111
Reported PAT 933 956 799 898 723 988 530 881 3,607 2,812
E: MOSL Estimates
April 2017 174

Ipca Laboratories
Bloomberg IPCA IN CMP: INR647 TP:INR540 (-17%) Neutral
We expect Ipca Laboratories (IPCA) to witness 27.2% YoY growth in
overall revenues to INR7.9b, aided by recovery in domestic
14 / -2 / -4
business. US business will continue to deliver muted performance
1,6,12 Rel Perf. (%)
due to import alert on key plants.
EBITDA is likely to grow 84.6% YoY to INR1.2b, with margin
Y/E MARCH 2016 2017E 2018E 2019E
improving 460bp YoY to 14.7% in 4QFY17. However, profitability is
32.5 37.9 44.3
still lower due to negative operating leverage (US import alerts and
Sales 28.9
EBITDA 3.4 4.8 6.3 8.0 weak traction in institutional business).
NP 1.3 2.0 3.5 4.7 We expect reported PAT to improve to INR515m, growth of 27.1%
EPS (INR) 10.5 15.8 27.9 37.3 YoY with taxes at 28.6% in 4QFY17.
EPS Gro. (%) -46.9 50.4 76.6 33.3 At CMP, the stock trades at 40.9x FY17E and 23.2x FY18E EPS, which
BV/Sh. (INR) 181.0 194.4 218.2 249.8 is at a discount to three year average P/E. Despite the stocks
RoE (%) 5.9 8.4 13.5 15.9 attractive valuations, we believe regulator overhang will keep
RoCE (%) 5.5 7.3 11.6 13.7 multiples under check over near term. Maintain Neutral with a TP
Valuations of INR540 (16x 1HFY19E, marking discount of 20% to peers)
P/E (x) 61.5 40.9 23.2 17.4
P/BV (x) 3.6 3.3 3.0 2.6
EV/EBITDA (x) 15.1 11.9 11.9 0.0
D. Yield (%) 0.0 0.4 0.7 0.9 Key issues to watch out
Update on resolution of USFDA regulatory issues.
Outlook for institutional tender business.
Impact of emerging market currency weakness.

Consolidated 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues (Core) 7,580 7,468 6,841 6,246 8,422 8,720 7,398 7,946 28,850 32,486
YoY Change (%) -19.0 -4.3 -7.6 -0.5 11.1 16.8 8.1 27.2 -8.2 12.6
EBITDA 822 841 892 635 1,285 1,280 1,104 1,172 3,417 4,841
Margins (%) 10.8 11.3 13.0 10.2 15.3 14.7 14.9 14.7 11.8 14.9
Depreciation 421 369 448 392 422 429 432 426 1,722 1,708
Interest 55 73 91 81 65 68 57 105 316 294
Other Income 41 56 50 87 49 62 59 80 169 250
PBT before EO Expense 388 455 403 249 847 845 675 721 1,548 3,089
Extra-Ord Expense 116 236 9 28 81 -78 39 0 116 236
PBT after EO Expense 271 218 394 221 766 923 636 721 1,432 2,852
Tax 82 95 162 -156 290 374 222 206 186 1,092
Rate (%) 21.3 20.9 40.3 -62.7 34.2 44.2 32.9 28.6 12.0 35.4
Reported PAT 189 123 232 377 476 549 414 515 1,246 1,760
Adj PAT 305 360 241 405 557 471 453 515 1,362 1,996
YoY Change (%) -79.0 -41.3 -54.3 -375.5 82.5 31.1 88.4 27.1 -51.1 41.3
Margins (%) 2.5 1.7 3.4 6.0 5.6 6.3 5.6 6.5 4.3 5.4
E: MOSL Estimates
April 2017 175

Lupin
Bloomberg LPC IN
CMP: INR1,453 TP:INR1,850 (+27%) Buy
650 / 10
We expect Lupin's (LPC) 3QFY17 revenue to grow 8.7% YoY to
1750 / 1384 IN45.4b, aided by buoyant performance in US generic segment
52-Week Range (INR)
1,6,12 Rel Perf. (%) -5 / -9 / -21 (gGlumetza and gFortamet sales, consolidation of Gavis financials).
India business is expected to exhibit 13% YoY growth to INR9.8b.
Japan sales are expected to improve 20.3% YoY to INR4.5b in
Y/E MARCH 2016 2017E 2018E 2019E 3QFY17, aided by currency tailwinds.
Sales 142.1 177.8 209.2 236.1 EBITDA is estimated to decline 13% YoY to INR11.4b, with EBITDA
EBITDA 37.5 46.9 56.1 63.7 margin at 25.2%.
NP 22.7 27.7 35.4 40.0 Reported PAT is likely to decline 15.2% YoY to IN6.3b, even though
EPS (INR) 50.4 61.4 78.6 88.8 tax rate is expected to decline to 28.3% as against35.8% in 3QFY16
EPS Gro. (%) -5.7 21.9 27.9 13.1 which is offset by decline in EBITDA margins by 610bps.
BV/Sh. (INR) 243.8 295.5 363.6 441.9 Glumetza/Fortamet continues to be the key contributors to profits.
RoE (%) 22.9 22.8 23.8 22.1 Glumetza may continue to see limited competition in near term.
RoCE (%) 16.8 15.3 16.7 16.3 Along with this, strong pipeline and ramp-up of Metergen sales can
Valuations help drive US business over near term. Maintain Buy with TP of
P/E (x) 28.8 23.6 18.5 16.4 INR1,850 @ 22x 1HFY19E PER.
P/BV (x) 6.0 4.9 4.0 3.3
EV/EBITDA (x) 19.0 14.7 11.9 10.1 Key issues to watch out
D. Yield (%) 0.5 0.6 0.6 0.6 Gavis sales ramp-up.
Outlook on future ANDA launches and Gavis integration.
Impact of new competition in Glumetza and Fortamet.
Outlook on inorganic growth initiatives.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 31,561 33,297 35,558 41,707 44,677 42,905 44,828 45,350 142,085 177,761
YoY Change (%) -5.5 4.9 11.9 35.5 41.6 28.9 26.1 8.7 11.3 25.1
EBITDA 8,248 6,626 8,772 13,050 13,080 10,281 12,158 11,409 37,534 46,929
Margins (%) 26.1 19.9 24.7 31.3 29.3 24.0 27.1 25.2 26.4 26.4
Depreciation 1,014 1,155 1,114 1,487 2,027 2,112 2,309 1,874 4,635 8,322
Interest 70 241 92 213 320 263 459 382 446 1,424
Other Income 757 578 653 349 826 271 1,036 167 1,877 2,300
PBT 7,921 5,809 8,219 11,699 11,560 8,177 10,426 9,319 34,330 39,483
Tax 2,258 1,591 2,909 4,188 2,734 1,589 4,095 2,637 11,536 11,055
Rate (%) 28.5 27.4 35.4 35.8 23.7 19.4 39.3 28.3 33.6 28.0
Minority Interest -3 27 13 51 6 8 24 337 88 375
Recurring PAT 5,686 4,198 5,298 7,479 8,820 6,622 6,331 6,345 22,707 28,053
YoY Change (%) -9.0 -33.4 -11.9 36.7 55.1 58.0 19.5 -15.2 -5.5 23.5
Margins (%) 18.0 12.6 14.9 17.9 19.7 15.4 14.1 14.0 16.0 15.8
E: MOSL estimates; Quarterly nos will not add up to full year nos due to restatement of past quarters
April 2017 176

Sanofi India
Bloomberg SANL IN CMP: INR4,755 TP:INR5,000 (+5%) Buy
We expect Sanofi India's (SANL) revenue to grow 9.8% YoY in
M. Cap. (INR b)/(USD b) 110 / 2
4QCY17 to INR6.5b. High growth of brands like Lantus, Allegra,
52-Week Range (INR) 4930 / 4005
7 / 7 / -7
Amaryl M, Enterogermina, Avila, Vaxlgrip and Cardace, and new
1,6,12 Rel Perf. (%)
product launches should drive SANLs revenue growth.
EBITDA is also likely to grow 50% YoY to INR1.6b during this quarter.
Y/E Dec 2015 2016 2017E 2018E
We expect PAT to increase 89% YoY to INR956m.
Sales 21.9 23.7 26.1 29.5
We have modeled 12% sales growth, 17% EBIDTA growth and 25%
EBITDA 4.6 5.3 6.1 7.2 earnings growth over CY16-18. We maintain our Buy rating. Our
Net Profit 2.4 3.0 3.6 4.4 target price is INR5,000 @ 28x 1HCY18E EPS.
Adj. EPS (INR) 103.2 129.0 157.8 189.9
EPS Gr. (%) 20.6 25.0 22.4 20.4
BV/Sh. (INR) 725.2 796.2 872.8 981.5
RoE (%) 14.2 16.2 18.1 19.4
RoCE (%) 16.1 16.2 18.1 19.7 Key issues to watch out
Payout (%) 41.6 45.0 51.5 42.8 Amortization of goodwill and brands acquired from Universal
Valuations Medicare.
P/E (x) 46.1 36.9 30.1 25.0
Clarity on nature of reversal of recently withdrawn NPPA
P/BV (x) 6.6 6.0 5.4 4.8
guidelines.
EV/EBITDA (x) 22.6 19.3 16.3 13.4
Div. Yield (%) 1.1 1.1 1.5 1.5
Y/E December CY16E CY17E CY17E CY18E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 5,444 6,080 6,242 5,920 6,020 6,675 6,869 6,501 26,065 29,469
YoY Change (%) 11.4 10.6 6.6 4.1 -1.0 6.9 16.0 9.8 10.0 13.1
EBITDA 1,291 1,458 1,447 1,073 1,327 1,561 1,597 1,612 6,097 7,184
Margins (%) 23.7 24.0 23.2 18.1 22.0 23.4 23.2 24.8 23.4 24.4
Depreciation 301 300 300 412 325 325 325 330 1,305 1,413
Interest 1 7 3 4 4 4 4 3 15 15
Other Income 256 164 148 152 200 200 200 213 813 974
PBT before EO Items 1,245 1,315 1,292 809 1,198 1,432 1,468 1,493 5,591 6,729
Extra-Ord Expense 0 0 0 0 0 0 0 0 0 0
PBT after EO Items 1,245 1,315 1,292 809 1,198 1,432 1,468 1,493 5,591 6,729
Tax 439 462 486 304 400 500 520 537 1,957 2,355
Effective tax Rate (%) 35.3 35.1 37.6 37.6 33.4 34.9 35.4 36.0 35.0 35.0
Reported PAT 806 853 806 505 798 932 948 956 3,634 4,374
Adj PAT 806 853 806 505 798 932 948 956 3,634 4,374
YoY Change (%) 66.5 32.9 11.2 -28.3 -6.4 15.6 87.7 89.4 22.4 20.4
Margins (%) 14.8 14.0 12.9 8.5 13.3 14.0 13.8 14.7 13.9 14.8
E: MOSL Estimates
April 2017 177

Sun Pharma
Bloomberg SUNP IN
CMP: INR691 TP:INR850 (+23%) Buy
Sun Pharmaceuticals (SUNP) is likely to register subdued 2.3% YoY
M. Cap. (INR b)/(USD b) 1657 / 26
855 / 572
growth in revenues to INR78.1b, primarily on the back of
52-Week Range (INR)
-3 / -15 / -34
competition in key products and few new launches.
1,6,12 Rel Perf. (%)
India business is expected to grow 9% YoY, while the US business is
likely to report 11.1% YoY jump in revenues.
Y/E MARCH 2016 2017E 2018E 2019E
We expect margin to decline by ~125bps YoY to 31.8% which will
Sales 277.4 309.3 322.0 360.3 impact the EBITDA. Overall EBITDA is expected to decline 2% YoY to
EBITDA 79.6 97.2 104.3 120.5 INR24.8b.
NP 47.1 72.0 78.3 93.0 PAT is expected to decline 14.7% YoY to INR14.6b due to increase in
EPS (INR) 19.6 29.9 32.5 38.7 depreciation by 19% YoY and higher tax rate at 18.6% as against 8%
EPS Gro. (%) -0.7 53.0 8.7 18.8 in 4QFY16.
BV/Sh. (INR) 130.5 142.9 168.4 200.0 We believe the current stock price does not reflect key positive like
RoE (%) 16.5 19.8 20.9 21.0 RBXY integration benefit, Halo/Mohali plant resolution and
RoCE (%) 18.7 21.9 22.3 22.8 investments in specialty business. We see the current weakness in
Valuations the stock as an opportunity to buy the stock. SUNP remains an
P/E (x) 35.3 25.5 21.2 17.9 attractive Indian play on specialty business in the US. We maintain
P/BV (x) 5.3 4.8 4.1 3.5 Buy rating with a TP of INR850, based on 22x 1HFY19E.
EV/EBITDA (x) 20.0 15.4 13.6 11.2
D.Yield (%) 0.0 0.9 0.9 0.9 Key issues to watch out
Update on resolution of USFDA warning letter and 483
observations on Halol.
Turnaround of Ranbaxys business.
Outlook on competitive landscape for Taros products.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 67,615 68,733 70,821 76,342 82,430 82,651 79,127 78,110 282,697 322,318
YoY Change (%) 6.6 -14.5 2.2 24.0 21.9 20.2 11.7 2.3 3.0 14.0
EBITDA 17,678 18,729 21,690 25,203 29,210 31,677 24,531 24,815 84,816 110,233
Margins (%) 26.1 27.2 30.6 33.0 35.4 38.3 31.0 31.8 30.0 34.2
Depreciation 2,402 2,584 2,508 2,643 3,160 3,038 3,068 3,134 10,135 12,400
Net Other Income 296 -429 1,022 -1,235 225 657 -443 562 -177 1,000
PBT before EO Exp 15,573 15,716 20,205 21,325 26,275 29,295 21,020 22,242 74,505 98,833
EO Exp/(Inc) 6,852 0 0 0 0 0 0 0 0 0
PBT 8,721 15,716 20,205 21,325 26,275 29,295 21,020 22,242 74,505 98,833
Tax 1,128 2,946 2,020 1,706 3,527 4,417 3,729 4,140 9,349 15,813
Rate (%) 7.2 18.7 10.0 8.0 13.4 15.1 17.7 18.6 12.5 16.0
PAT (pre Minority Interest) 7,593 12,769 18,185 19,619 22,748 24,879 17,291 18,102 65,156 83,020
Minority Interest 2,034 2,481 4,019 2,482 2,411 2,528 2,573 3,489 11,145 11,000
Reported PAT 5,559 10,288 14,166 17,137 20,337 22,351 14,718 14,613 54,011 72,020
YoY Change (%) -53.9 -49.8 258.3 93.0 265.8 117.3 3.9 -14.7 19.0 33.3
E: MOSL Estimates; * Quarterly no. dont match with annual no. because of reinstatement of financials
April 2017 178

Torrent Pharmaceuticals
Bloomberg TRP IN CMP: INR1,477 TP:INR1,700 (+15%) Buy
We expect Torrent Pharmaceuticals (TRP) to post 2.5% YoY decline
M. Cap. (INR b)/(USD b) 250 / 4
in 4QFY17 reported sales to INR15b. US business is expected to
52-Week Range (INR) 1768 / 1186
6 / -17 / -15
decline owing to lower contribution from gAbilify, while India
1,6,12 Rel Perf. (%)
business is expected to witness low teens growth with successful
integration of Elders portfolio.
Y/E MARCH 2016 2017E 2018E 2019E
Reported EBITDA is likely to decline 29% YoY to INR3.4b, with
66.8 59.5 69.1 80.1
EBITDA margin contracting 930bp YoY, primarily on account of
Sales
EBITDA 27.2 14.3 18.0 21.6 lower gAbilify sales in 4QFY17 numbers.
NP 10.1 9.6 12.9 15.8 We expect reported PAT to decrease 34.1% YoY to INR2.3b, in line
EPS (INR) 59.7 56.6 76.3 93.4 with operational performance.
EPS Gro. (%) 78.9 -5.3 34.9 22.4 Strong domestic market franchise, coupled with investment in US
BV/Sh. (INR) 200.3 236.4 285.2 344.8 business (R&D as % of sales doubled in FY17), should help drive
RoE (%) 34.4 25.9 29.3 29.6 growth. Maintain Buy with a TP of INR1,700 @ 20x 1HFY19E PER.
RoCE (%) 40.7 18.2 24.9 27.2
Valuations
P/E (x) 24.7 26.1 19.4 15.8
EV/EBITDA (x) 9.6 17.9 13.8 11.0 Contribution of Elder Pharma portfolio and growth strategy.
D. Yield (%) 2.4 1.1 1.5 1.9 Performance of Brazilian operations amid market pressure.
Outlook on future ANDA launches.
Quarterly performance (Consolidated) (INR Million)

INR m 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 19,470 16,570 15,390 14,990 15,070 14,060 14,130 14,998 66,760 59,458
YoY Change (%) 74.8 36.2 31.8 29.9 -22.6 -27.8 -8.2 -2.5 43.5 -10.9
EBITDA 9,090 7,170 6,130 4,840 4,370 3,300 3,160 3,440 27,201 14,270
Margins (%) 46.7 43.3 39.8 32.3 29.0 23.5 22.4 22.9 40.7 24.0
Depreciation 590 590 610 650 680 690 730 728 2,460 2,828
Interest 580 480 420 380 490 510 480 429 1,859 1,909
Other Income 670 710 510 240 260 430 500 410 2,156 1,600
PBT before EO Expense 8,590 6,810 5,610 4,050 3,460 2,530 2,450 2,693 25,039 11,133
Extra-Ord Expense 0 0 1,930 0 0 0 0 0 0 0
Tax 4,100 1,720 200 480 540 460 160 399 6,414 1,559
Rate (%) 47.7 25.3 3.6 11.9 15.6 18.2 6.5 14.8 25.6 14.0
Reported PAT 4,490 5,090 3,480 3,570 2,920 2,070 2,290 2,294 18,625 9,574
YoY Change (%) 75.4 157.1 108.4 174.6 -35.0 -53.9 -34.2 -34.1 148.0 -48.6
Margins (%) 23.1 30.7 22.6 23.8 19.4 14.7 16.2 15.3 27.9 16.1
E: MOSL Estimates
April 2017 179

MarchMarch
2017 Results Preview
2017 Results | Sector:
Preview Logistics
| April 2017
Logistics
Company name EXIM container volumes to recover
Allcargo Domestic container volumes up 24% YoY
Concor
EXIM originating container rail volume grew ~2% YoY in January-February 2017,
Gateway Distriparks
indicating positive volume growth for the quarter.
Margins are unlikely to improve meaningfully, given increased competitive intensity.
Sequential improvement in earnings for CCRI would be due to low base in 4QFY16.
GDPLs earnings are likely to face downward pressure.
EXIM originating container volumes to grow ~2% YoY

EXIM originating volume by rail is likely to improve by ~2% in 4QFY17. During
January-February 2017, EXIM container volumes were up ~2% YoY.
CCRI is likely to report EXIM volume growth of 12% YoY for 4QFY17, led by
recovery in industry EXIM volumes.
GDPL is likely to report ~10% YoY volume growth in the rail segment, led by
ramp up of Faridabad terminal.
Margins likely to be flattish sequentially

We expect CCRI to report flat margins QoQ, as higher volumes would be offset
by rate rationalization in select routes by key players.
GDPL should see some sequential improvement in rail profitability, led by higher
proportion of double-stacking.
AGLL is likely to see marginal improvement in margins, led by profitability
improvement in MTO segment.
Lower leads to hurt margins

Lead distance for EXIM trade by rail has declined by ~5% YoY (January-February
2017) due to higher container movement from the Mundra and Pipavav ports
than from JNPT.

Sector Sales (INR m) EBDITA (INR m) PAT (INR m)
Reco. Mar-17 Mar-17 Mar-17
Logistics
Allcargo Logistics 179 Buy 13,809 -1.2 -1.7 1,106 -9.1 11.4 466 -32.6 -5.2
Concor 1,012 Neutral 13,919 -1.6 4.6 2,952 49.5 13.0 2,016 43.0 8.4
Gateway Distriparks 255 Buy 2,820 9.5 -1.9 569 0.0 -3.0 208 -21.5 -16.1
Logistics Sector Aggregate 30,549 -0.5 1.0 4,627 23.1 10.4 2,689 13.7 3.5
Source: MOSL
Abhishek Ghosh (Abhishek.Ghosh@MotilalOswal.com); +91 22 3982 5436

Abhinil Dahiwale (Abhinil.Dahiwale@motilaloswal.com); +91 22 3980 4309
April 2017 180
March 2017 Results Preview | Sector: Logistics
Expect EXIM originating rail volumes to grow by ~2% YoY

Exhibit 1: EXIM volumes up 2% YoY in January-February Exhibit 2: Domestic volumes up 24% YoY in January-
2017 February 2017
EXIM tonnes originating (million) YoY (%) Domestic tonnes originating (million) YoY (%)
24 27
10 13 6 14 9
21
4
(1) 3 3 6 4
(6) (9) (4) (4) (4) (2)
(2) (2) (5) (6) (8) (2) 0 4 4
(12) (5) (10)(9) (6) (8)
(16)
(19) (15)(18)(17)(11)(20)(11) (18)(20)(16)
0.77
0.80
0.83
0.79
0.71
0.71
0.71
0.66
0.76
0.75
0.75
0.82
0.63
0.64
0.70
0.73
0.74
0.74
0.88
0.75
0.83
0.95
0.91
2.9
3.1
3.2
3.1
3.1
3.2
3.2
2.8
3.3
3.2
2.8
3.2
3.2
3.5
3.0
3.2
3.2
3.1
2.9
3.0
3.2
3.2
2.9
Jul-15
Jul-16
Jul-15
Jul-16
Jun-15
Jun-16
Nov-15
Nov-16
Jun-15
Jun-16
Nov-15
Nov-16
Apr-15
May-15
Apr-16
May-16
Aug-15
Dec-15
Aug-16
Dec-16
Apr-15
May-15
Apr-16
May-16
Aug-15
Dec-15
Aug-16
Dec-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Jan-17
Feb-17
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Jan-17
Feb-17
Oct-15
Oct-16
Oct-15
Oct-16
Source: Indian Rail, MOSL Source: Indian Rail, MOSL
Exhibit 3: EXIM lead distance declined YoY in January- Exhibit 4: Domestic lead distance flat YoY for January-
February 2017 February 2017
EXIM average lead (kms) YoY (%) Domestic average lead (kms) YoY (%)
(0) (2) (0) (3) (2) (2) 1 4 6 3 3 5
(4) (5) (4) (3) (2) (3) (7) 2 0
(7) (6) (7) (7) (5) (8) (6) (7) (8) (4) (4) (5) (3) (2) 1 (4) (4) (6)
(8) (6)(10)(7) (7) (10)(11)
1,362
1,381
1,364
1,375
1,369
1,382
1,418
1,295
1,287
1,368
1,388
1,452
1,446
1,419
1,334
1,390
1,393
1,386
1,359
1,337
1,354
1,312
1,304
948
907
921
923
932
926
917
927
908
910
913
930
882
857
890
861
864
860
871
856
851
844
836
Jul-15
Jul-16
Jul-15
Jul-16
Jun-15
Jun-16
Nov-15
Nov-16
Jun-15
Jun-16
Nov-15
Nov-16
Apr-15
May-15
Apr-16
May-16
Aug-15
Dec-15
Aug-16
Dec-16
Apr-15
May-15
Apr-16
May-16
Sep-16
Jan-17
Feb-17
Aug-15
Dec-15
Aug-16
Dec-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Jan-17
Feb-17
Oct-15
Oct-16
Oct-15
Oct-16
Source: Indian Rail, MOSL Source: Indian Rail, MOSL
Exhibit 5: Indias EXIM trade grew ~8% YoY in January-

February 2017 (imports up 16% YoY, exports up 11% YoY) Exhibit 6: IIP was up ~3% YoY in January 2017
Export - YoY (%) Import - YoY (%) IIP - YoY (%)
30%
9.9
20%
10% 5.7
4.3 3.7
0% 2.8 2.5 2.5 1.9 2.2 2.7
-10% 6.3
4.8 3.0 4.2 -0.9 -1.3 -0.7
-20% 1.3
-30% 0.3 0.6 -0.1
-3.3 -1.6
-2.6 -1.9
-40%
Jul-15
Jul-16
Nov-15
Nov-16
May-15
May-16
Jan-15
Mar-15
Sep-15
Jan-16
Mar-16
Sep-16
Jan-17
Jul-15
Jul-16
Nov-15
Nov-16
May-15
May-16
Jan-15
Mar-15
Sep-15
Jan-16
Mar-16
Sep-16
Jan-17
Source: CEIC, MOSL Source: CEIC, MOSL
April 2017 181

Allcargo
Bloomberg AGLL IN CMP: INR179 TP: INR203 (+14%) Buy
We expect AGLL to report EBITDA of INR1.1b (-9% YoY, +11% QoQ)
and PAT of INR466m (-33% YoY, -5% QoQ), led by lower volume
1,6,12 Rel Perf. (%) 3 / -8 / -5
growth.
We estimate MTO volumes at 122k TEU (-8% QoQ, +9% YoY) and
Financial snapshot (INR b)
CFS volumes at 81k TEU (-5% QoQ, +8% YoY).
Y/E March 2016 2017E 2018E 2019E We estimate 5% EBITDA CAGR and 10% PAT CAGR over FY16-18,
Sales 56.6 56.5 60.8 65.5 and expect return ratios to improve from ~13% to ~17%, driven by
EBITDA 5.2 4.7 5.0 5.3 margin expansion and reduction in capex intensity in the business.
NP 2.7 2.3 2.8 3.1 The stock trades at 14.5x FY19E EPS of INR12.3. Maintain Buy.
EPS (INR) 10.8 9.0 10.9 12.3
EPS Growth (%) 17.2 (13.8) 20.8 13.0
BV/Share (INR) 87.5 69.7 78.2 87.9
RoE (%) 13.2 11.5 14.8 14.8
RoCE (%) 11.2 9.4 11.9 12.4
Valuations
P/BV (x) 2.0 2.6 2.3 2.0 (a) Volume data, and (b) set up of logistics park in Jhajjar.
EV/EBITDA (x) 9.4 9.5 8.1 7.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 14,764 14,534 13,261 13,976 13,937 14,084 14,052 13,809 56,535 55,882
YoY Change (%) 11.8 -0.6 -7.4 -1.2 -5.6 -3.1 6.0 -1.2 0.4 -1.2
EBITDA 1,411 1,340 1,168 1,216 1,297 1,261 993 1,106 5,135 4,656
Margins (%) 9.6 9.2 8.8 8.7 9.3 9.0 7.1 8.0 9.1 8.3
Depreciation 362 556 497 359 436 434 407 474 1,774 1,750
Interest 106 102 112 95 75 75 78 75 416 303
Other Income 67 70 133 122 111 80 246 56 391 492
PBT before EO expense 1,009 752 692 884 897 832 754 614 3,337 3,095
PBT 960 737 633 878 880 822 691 614 3,208 3,006
Tax 190 131 102 169 256 178 211 160 592 805
Rate (%) 19.8 17.8 16.1 19.3 29.1 21.7 30.6 26.0 18.5 26.8
Reported PAT 770 606 531 709 624 643 480 454 2,616 2,201
Min. Interest & P& L of Asso. Cos. -4 13 -18 -27 -14 1 12 12 -36 11
Adj PAT 751 603 544 691 610 644 492 466 2,589 2,212
YoY Change (%) 45.7 -16.9 -31.4 22.5 -18.7 6.9 -9.6 -32.6 -0.3 -14.5
Margins (%) 5.1 4.1 4.1 4.9 4.4 4.6 3.5 3.4 4.6 4.0
E: MOSL Estimates
April 2017 182

Concor
Bloomberg CCRI IN CMP: INR1,012 TP: INR1,042(+3%) Neutral
We expect CCRI to report net sales of INR13.9b (-2% YoY, +5%
M. Cap. (INR b)/(USD b) 247 / 4
QoQ), led by (a) realization decline of 11% YoY (flat QoQ), and (b)
1,6,12 Rel Perf. (%) -2 / -16 / -19
volume growth of 11% YoY (+4% QoQ).
We expect EXIM volumes to improve 12% YoY and expect domestic
Financial snapshot (INR b) volumes to grow 3% YoY.
Y/E March 2016 2017E 2018E 2019E We estimate EBITDA at INR2.9b (+50% YoY, +13% QoQ) and PAT at
Sales 63.1 59.8 65.0 73.0
INR2.1b (+43% YoY, +8% QoQ).
EBITDA 11.6 10.5 13.0 14.4
The stock trades at 17x/15.3x FY18E/FY19E EV/EBITDA. CCRI
NP 7.9 7.2 9.7 10.9
remains a direct play on the upcoming dedicated freight corridor
EPS (INR) 40.6 29.7 39.9 44.9
(DFC) project, which will multiply its asset turnover and
EPS Gr. (%) -24.9 -7.5 34.4 12.5
significantly improve profitability. Neutral.
BV/Sh (INR) 409.4 344.9 368.7 395.4
RoE (%) 10.2 8.8 11.2 11.8
RoCE (%) 9.8 8.3 10.5 11.1
Payout (%) 40.0 40.5 40.5 40.5
P/E (x) 28.3 34.1 25.4 22.5 EXIM and domestic volumes, and realizations.
P/BV (x) 2.8 2.9 2.7 2.6 Progress on MMLPs and DFC projects.
EV/EBITDA (x) 17.1 21.2 17.0 15.3
Div. Yield (%) 1.2 1.0 1.3 1.5
Container Corporation (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 14,209 15,019 14,046 14,152 13,392 13,786 13,304 13,919 57,426 54,402
YoY Change (%) 11.9 10.9 -3.3 -6.2 -5.7 -8.2 -5.3 -1.6 15.2 -5.3
Terminal & Service Charges 8,963 9,456 8,848 9,180 8,493 8,497 8,111 8,487 68,844 33,587
As a % of revenue 63.1 63.0 63.0 64.9 63.4 61.6 61.0 61.0 119.9 61.7
Employee Expenses 373 369 396 401 380 405 414 415 3,118 1,614
Other Expenses 1,994 2,034 2,001 2,596 1,901 2,597 2,167 2,065 17,421 8,730
EBITDA 2,878 3,161 2,800 1,975 2,619 2,288 2,612 2,952 10,813 10,471
Margins (%) 20.3 21.0 19.9 14.0 19.6 16.6 19.6 21.2 18.8 19.2
YoY Change (%) -3.6 1.1 -23.7 -40.1 -9.0 -27.6 -6.7 49.5 -3.2
Depreciation 907 876 876 988 841 873 927 897 4,027 3,539
Interest 0 0 0 0 0 3 1 0 0 0
Other Income 798 858 813 978 692 763 845 798 3,447 3,098
PBT 2,770 3,137 2,737 1,965 2,470 2,175 2,529 2,853 10,232 10,024
Tax 701 808 676 555 685 596 669 837 2,740 2,787
Rate (%) 25.3 25.8 24.7 28.3 27.7 27.4 26.4 29.3 26.8 27.8
Adj PAT 2,069 2,335 2,061 1,409 1,785 1,578 1,860 2,016 7,492 7,241
YoY Change (%) -21.0 21.7 -31.5 -51.9 -13.7 -32.4 -9.7 43.0 -23.9 -3.3
Margins (%) 14.6 15.5 14.7 10.0 13.3 11.4 14.0 14.5 13.0 13.3
April 2017 183

Gateway Distriparks
Bloomberg GDPL IN CMP: INR255 TP: INR314 (+23%) Buy
We expect GDPL to report net sales of INR2.8b (+10% YoY, -2%
QoQ), led by increased volumes in Rail and CFS businesses.
1,6,12 Rel Perf. (%) -2 / -9 / -28
We estimate EBITDA at INR569m (flat YoY, -3% QoQ) and EBITDA
margin at 20.2%. We estimate adjusted PAT at INR209m (-12% YoY,
Financial snapshot (INR b) -19% QoQ).
Y/E March 2016 2017E 2018E 2019E The stock trades at 14.1/11.6x FY18E/FY19E adjusted EV/EBITDA.
Sales 10.5 11.3 12.6 14.4 GDPL remains a direct play on the upcoming dedicated freight
EBITDA 2.5 2.3 2.9 3.5 corridor project, which will multiply its asset turnover and
NP 1.2 0.9 1.7 2.2 significantly improve profitability. Buy.
EPS (INR) 11.4 8.3 15.7 20.1
EPS (INR)* 8.7 6.5 11.7 14.3
EPS Gr. (%)* -31.3 -24.8 79.6 22.4
RoE (%) 10.1 7.2 12.9 15.3
RoCE (%) 7.5 7.1 10.8 12.8
Payout (%) 81.7 63.0 45.1 45.4
Valuations
P/E (x) 22.4 30.7 16.3 12.7
Adj. P/E (x) Volume growth, realization and per TEU profitability.
29.4 39.1 21.8 17.8
EV/EBITDA (x) 11.8 13.0 9.9 8.0
EV/EBITDA (x)* 16.6 18.4 14.1 11.6
Div. Yield (%) 2.7 1.7 2.3 3.0
* Adjusted for Blackstones stake

(Consolidated) 1Q 2Q 3Q 4Q 1Q* 2Q* 3Q* 4QE
Net Sales 2,628 2,595 2,671 2,575 2,782 2,857 2,876 2,820 10,470 11,335
YoY Change (%) -6.1 -11.3 -2.4 -2.9 5.9 10.1 7.7 9.5 -5.8 8.3
EBITDA 690 641 619 569 555 581 587 569 2,518 2,292
Margins (%) 26.3 24.7 23.2 22.1 19.9 20.3 20.4 20.2 24.1 20.2
YoY Change (%) -8 -25 -28 -28 -20 -9 -5 0 -23 -9
Depreciation 201 202 202 200 195 194 192 207 805 787
Interest 51 50 46 38 51 88 74 81 184 295
Other Income 57 48 47 13 40 80 83 65 165 267
PBT 495 437 418 345 349 379 403 346 1,695 1,477
Tax 296 141 126 108 124 127 146 137 671 534
Rate (%) 59.8 32.2 30.1 31.4 35.6 33.6 36.2 39.5 39.6 36.2
PAT before minority / profit of assoc. 199 297 292 237 225 252 257 209 1,024 943
YoY Change (%) -48.0 -38.0 -44.5 -46.0 13.0 -15.0 -11.9 -11.6 -43.9 -7.9
Margins (%) 7.6 11.4 10.9 9.2 8.1 8.8 8.9 7.4 9.8 8.3
E: MOSL Estimates, *1QFY17 and 2QFY17,3QFY17 is addition of Rail and CFS details as provided and not actual consolidated number
April 2017 184

March 2017 Results Preview | Sector: Media
Media
Company name Demonetization hangover receding, albeit gradually
D B Corp Adjusted aggregate earnings to grow 12% YoY
Dish TV India
Hathway Cable & Datacom Expect subdued ad revenue growth: We expect ad revenue for our Media universe
HT Media to grow at a meager ~3% YoY, lower than the 7-13% growth in the preceding 4-5
Jagran Prakashan quarters (ex 3Q). The demonetization hangover is expected to recede slower-than-
PVR earlier expected. The recovery would be slower for Print companies, given higher
Sun TV
reliance on local/retail advertisers, who are most impacted by the cash squeeze.
Zees ad growth is expected to moderate to ~2% YoY after four quarters of strong ad
Zee Entertainment
revenues (ex 3Q). The sluggish performance is expected to be a function of (1)
slower-than- expected recovery from demonetization, and (2) one month impact on
ad revenue from sale of sports business to Sony. Like-to-like ad growth is estimated
to be ~4%. Sun TVs ad recovery too is expected to be gradual. Recovery is expected
to be even slower for niche channels and publishers. Our industry interactions
suggest that a full recovery is likely by 1QFY18.
Expect adjusted aggregate Media universe earnings to grow 12% YoY: While
aggregate earnings are expected to decline 27%, adjusted aggregate Media sector
earnings (adjusted for a one-time deferred tax reversal of INR4b by Dish TV in
4QFY16) are expected to grow 12% YoY, largely driven by broadcasters. Print
earnings are likely to remain flat YoY and distribution platforms should see a decline
in profitability, largely contributed by Dish TV. Zee/Sun TV are expected to clock
earnings growth of 48%/4% YoY. Within the print pack, earnings of DB Corp, Jagran
and HT Media are expected to grow 1%, 8% and 6%, respectively. The hangover of
demonetization is likely to partially impact gains from the UP elections for JAGP and
smaller rivals, HT Media and HMVL. Dish TV too is expected to see an impact on
profitability, as 4Q is a seasonally weak quarter and recovery from the impact of
demonetization has been slower than expected, especially on box deployment.
Expect monetization to improve over the next two quarters for Pay TV operators;
increased activity likely toward phase-III seeding: We expect monetization for Pay
TV operators to improve over the next two quarters, as all stay orders on DAS-III
implementation have been lifted by the Delhi High Court. This should drive
increased MSO share in digital cable revenue, the key to improve economics of
MSOs as well as pricing for broadcasters and DTH operators. However, with phase-
I/II monetization remaining sub-par, we expect MSOs to be more cautious in phase-
III markets. We expect subscriber additions of 230k for Dish TV and model 0.6m
gross additions for the quarter.
Digitization upside, ad growth revival remain key themes: Subscriber-level ARPU
increases in phase-I/II markets and phase-III digitization are key growth triggers.
MSOs are likely to witness profitability improvement, as they continue to drive
monetization efforts in phase-I/II/III. FMCG-led ad spend outlook remains weak;
however, any revival in the same coupled with renewed spends by Telecom and
Auto over the next two quarters could keep ad growth healthy. Broadcasters as well
as print companies would be the key beneficiaries of the same, in our view.
Jay Gandhi (Jay.Gandhi@MotilalOswal.com); +91 22 3089 6693

April 2017 185
Media coverage: Quarterly snapshot

4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17E YoY (%) QoQ (%)
Advertisement Revenue (INR b) 22.0 23.9 24.0 27.0 24.3 26.0 25.7 26.7 25.0 3 -7
ZEEL 6.7 7.8 8.3 9.2 8.6 9.1 9.6 9.6 8.8 2 -8
Sun TV 3.3 3.5 3.3 3.3 3.1 3.4 3.4 3.0 3.2 1 5
Dish TV NM NM NM NM NM NM NM NM NM NM NM
DB Corp 3.2 3.1 3.1 3.9 3.2 3.7 3.3 4.0 3.2 2 -19
Jagran Prakashan 2.9 3.3 3.2 3.7 3.3 3.5 3.4 3.8 3.5 5 -9
Hathway cable and Datacom NM NM NM NM NM NM NM NM NM NM NM
HT Media 4.4 4.4 4.5 5.1 4.4 4.5 4.3 4.7 4.5 3 -4
HMVL 1.5 1.7 1.7 1.8 1.7 1.8 1.7 1.7 1.8 7 7
Subscription Revenue (INR b)
ZEEL 5.1 4.6 4.8 5.2 5.9 5.3 5.8 5.9 5.6 -6 -5
Sun TV 2.3 2.3 2.3 2.4 2.5 2.7 2.7 2.8 2.9 16 4
Dish TV 6.8 6.8 6.9 7.1 7.4 7.3 7.3 6.9 7.0 -6 1
DB Corp 1.0 1.0 1.1 3.9 3.2 3.7 3.3 4.0 3.2 2 -19
Jagran Prakashan 1.0 1.0 1.0 1.0 1.1 1.1 1.1 1.1 1.1 6 2
Hathway Cable and Datacom 1.2 0.9 0.9 1.0 1.2 1.1 1.1 1.1 1.2 4 5
HT Media 0.7 0.7 0.8 0.8 0.8 0.8 0.8 0.8 0.8 3 0
HMVL 0.5 0.5 0.5 0.5 0.5 0.6 0.5 0.6 0.6 4 -1
Total Revenue (INR b)
ZEEL 13.5 13.4 13.8 15.9 15.3 15.7 17.0 16.4 15.3 0 -6
Sun TV 5.5 6.9 5.7 5.7 5.7 7.6 6.3 5.9 6.1 7 4
Dish TV 7.5 7.4 7.5 7.7 8.0 7.8 7.8 7.5 7.5 -6 1
DB Corp 4.9 4.7 4.8 5.9 5.1 5.7 5.3 6.3 5.4 5 -14
Hathway cable and Datacom 2.7 2.6 2.7 2.8 3.4 3.0 3.2 3.4 3.5 4 5
HT Media 5.8 5.9 6.0 6.8 6.3 6.1 6.0 6.5 6.7 6 3
HMVL 2.0 2.2 2.3 2.4 2.3 2.4 2.3 2.3 2.4 6 5
EBITDA (INR b)
ZEEL 2.7 3.1 3.6 4.3 4.1 4.5 4.9 5.2 4.6 11 -11
Sun TV 4.2 4.1 4.3 4.4 4.3 4.4 4.7 4.4 4.6 7 4
Dish TV 2.2 2.4 2.6 2.7 2.6 2.6 2.6 2.5 2.4 -6 -2
DB Corp 1.2 1.2 1.1 1.87 1.1 1.8 1.5 2.0 1.2 5 -40
Hathway cable and Datacom 0.3 0.4 0.5 0.4 0.8 0.4 0.5 0.7 0.7 -8 12
HT Media 0.5 0.6 0.7 1.2 0.7 0.6 0.5 1.1 1.0 47 -7
HMVL 0.4 0.5 0.5 0.6 0.5 0.6 0.5 0.4 0.5 6 32
EBITDA Margin (%)
ZEEL 20.1 23.2 26.0 27.1 27.0 28.8 28.9 31.5 29.9 294bps -153bps
Sun TV 77.2 59.2 76.1 76.3 74.7 57.4 74.6 74.6 74.4 -34bps -19bps
Dish TV 29.4 32.1 33.9 34.4 32.6 34.0 33.9 33.4 32.4 -27bps -98bps
DB Corp 24.6 25.7 23.6 31.9 22.2 31.8 28.5 31.6 22.2 -3bps -944bps
Jagran Prakashan 24.8 28.0 28.0 29.9 25.6 27.7 21.5 33.9 27.4 172bps -650bps
Hathway cable and Datacom 11.5 15.9 16.9 14.9 23.5 14.7 16.6 19.3 20.7 -279bps 141bps
HT Media 8.4 9.7 11.0 17.4 11.1 10.5 8.4 17.0 15.4 438bps -157bps
HMVL 22.0 24.4 23.1 25.0 22.5 23.8 22.0 17.8 22.4 -10bps 459bps
Adj. PAT (INR b)
ZEEL 2.31 2.44 2.85 2.31 2.61 2.17 2.38 2.51 3.87 48 54
Sun TV 2.03 1.97 2.18 2.16 2.36 2.33 2.70 2.40 2.46 4 2
Dish TV 0.35 0.54 0.87 0.68 4.83 0.41 0.70 0.27 0.16 -97 -38
DB Corp 0.64 0.66 0.60 1.07 0.64 1.04 0.89 1.18 0.65 1 -45
Hathway cable and Datacom -0.8 -0.4 -0.3 -0.4 -0.5 -0.5 -0.4 -0.4 -0.3 -37 -35
HT Media 0.39 0.25 0.37 0.69 0.38 0.22 0.31 0.91 0.40 6 -56
HMVL 0.39 0.42 0.45 0.47 0.47 0.49 0.55 0.44 0.38 -19 -13
April 2017 186

Exhibit 2: 4QFY17 estimated ad revenue growth (YoY, %)
3
2
2
1
ZEEL HMVL Jagran HT Media Sun TV DB Corp

Exhibit 3: 4QFY17 estimated subscription/circulation growth (YoY, %)
16
6
3
2
-6
-6
DB Corp Sun TV Dish TV HT Media JAGP ZEEL

Exhibit 4: Media universe quarterly PAT (INR b)
11.6
8.2 8.7 8.5

7.4 7.7 7.9
6.7 7.0
5.8 5.9 5.6 5.3 5.8
4.9 5.0 4.9
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17E

Exhibit 5: Newsprint prices moderating
Newsprint price - INR (RHS) Newsprint price - USD 800

43,000
36,000 650
29,000 500
22,000 350
15,000 200
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-08
Dec-08
Mar-09
Sep-09
Dec-09
Mar-10
Sep-10
Dec-10
Mar-11
Sep-11
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17
April 2017 187


Sales (INR m) EBITDA (INR m) Net Profit (INR m)
CMP
Sector RECO Var % Var % Var % Var % Var % Var %
(INR) Mar-17 Dec-16 Mar-17
Media
D B Corp 391 Buy 5,570 8.3 -11.2 1,279 12.1 -35.5 700 8.9 -40.7
Dish TV 103 Buy 7,540 -5.7 0.8 2,441 -6.4 -2.2 164 -96.6 -38.5
HT Media 85 Neutral 6,718 6.5 3.4 1,037 48.7 -6.2 406 8.0 -55.5
Jagran Prakashan 185 Buy 4,865 10.0 -2.8 1,336 18.8 -13.8 738 21.6 -17.2
PVR 1,520 Buy 4,580 11.0 -14.8 517 11.4 -41.8 12 LP -94.8
Siti Networks 38 Neutral 3,103 -13.0 4.0 693 -27.2 26.0 -299 PL Loss
Sun TV 796 Neutral 6,125 7.3 3.9 4,557 6.8 3.6 2,457 4.1 2.3
Zee Entertainment 543 Buy 15,326 0.1 -6.5 4,589 10.9 -11.0 3,867 48.4 54.2
Media Sector Aggregate 53,826 2.4 -3.7 16,449 6.9 -9.3 8,044 -30.6 -1.1
Source: MOSL
Exhibit 2: Relative Performance-3m (%) Exhibit 3: Relative Performance-1 Yr (%)
Sensex Index MOSL Media Index Sensex Index MOSL Media Index
130
150
122
135
114
120
106 105
98 90
Dec-16
Jan-17
Feb-17
Mar-17
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
Exhibit 4: Comparative valuations

Sector / Companies RECO EPS (INR) PE (x) EV/EBIDTA (x) ROE (%)
Media
D B Corp Buy 20.4 23.0 26.5 19.1 17.0 14.7 10.7 9.6 8.3 26.2 26.2 26.8
Den Networks Neutral -3.6 2.2 8.5 -25.2 41.7 10.8 13.8 5.4 3.3 -4.1 2.5 8.8
Dish TV Buy 1.4 2.7 4.3 71.6 38.8 24.0 11.5 9.1 7.3 33.6 42.0 43.9
Hindustan Media Buy 25.2 27.4 30.3 11.4 10.5 9.5 6.4 4.7 3.5 18.5 16.8 15.8
HT Media Neutral 8.0 8.2 8.7 10.6 10.5 9.8 3.2 2.1 1.2 7.7 7.1 7.0
Jagran Prakashan Buy 10.8 12.2 13.9 17.2 15.1 13.2 9.4 8.2 7.1 20.7 20.6 20.4
PVR Buy 20.8 35.7 56.8 73.2 42.6 26.7 22.5 15.9 11.9 10.6 16.3 22.0
Siti Networks Neutral -1.8 0.0 1.2 -20.4 - 31.7 18.4 9.9 6.5 -21.7 0.0 11.1
Sun TV Neutral 25.1 29.7 34.5 31.7 26.8 23.0 16.5 13.9 12.2 25.1 27.3 29.0
Zee Entertainment Buy 11.4 17.3 20.6 47.7 31.4 26.3 24.7 20.6 16.8 29.1 30.3 29.4
Media Sector Aggregate 36.0 27.4 21.8 16.2 12.9 10.4 18.1 20.6 22.1
Source: MOSL
April 2017 188

D B Corp
Bloomberg DBCL IN CMP: INR391 TP: INR450 (+15%) Buy
While the demonetization hangover is expected to continue on
Print media companies, given that they derive~55% of ad revenues
1,6,12 Rel Perf. (%) -1 / -7 / 8
from local advertisers that have been most impacted.
Despite low base, we expect weak 2% YoY ad growth (~INR3.24b)
for DBCL in 4QFY17. Circulation revenue is likely to grow 9% YoY to
Y/E MARCH 2016 2017E 2018E 2019E
INR1.24b.
Net Sales
DBCLs aggregate revenue is likely to grow 5% YoY to INR5.4b, as
20.5 22.7 25.1 27.9
EBITDA 5.4 6.5 7.1 7.9
print ad revenue, which accounts for ~65% of overall revenue,
Adj. Net Profit 3.0 3.8 4.2 4.9
remains under pressure.
Adj. EPS (INR) 16.2 20.4 23.0 26.5 Raw material cost is expected to increase 5% YoY, largely led by
Adj. EPS Gr. (%) -7.4 26.0 12.6 15.3 escalation in newsprint prices.
BV/Sh (INR) 73.3 82.5 92.8 104.8 We expect EBITDA margin to remain flat YoY at 22.2%.
RoE (%) 22.6 26.2 26.2 26.8 We estimate net profit at INR646m, flat YoY.
RoCE (%) 20.0 23.4 23.7 24.5 We revise our target price to INR450 (17x FY19E EPS). The stock
Div. Payout (%) 81.5 55.0 55.0 55.0 trades at 16.7x FY18E and 14.5x FY19E EPS. Buy.
Valuations
P/E (x) 24.1 19.1 17.0 14.7
P/BV (x) 5.3 4.7 4.2 3.7
Key things to watch for
EV/EBITDA (x) 13.4 10.8 9.6 8.3
YoY ad growth (flat)
Div. Yield (%) 2.8 2.4 2.7 3.1
EBITDA margin (we expect 22%).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 4,734 4,781 5,859 5,143 5,704 5,287 6,273 5,399 20,516 22,663
YoY (%) -3.2 -0.4 5.6 5.9 20.5 10.6 7.1 5.0 1.9 10.5
EBITDA 1,218 1,127 1,868 1,142 1,812 1,505 1,982 1,197 5,355 6,497
YoY (%) -9.5 -8.7 1.2 -4.4 48.7 33.6 6.1 4.8 -5.6 21.3
EBITDA margin (%) 25.7 23.6 31.9 22.2 31.8 28.5 31.6 22.2 26.1 28.7
Depreciation 208 215 233 222 211 216 218 218 878 863
Interest 21 27 19 24 34 6 30 26 92 96
Other Income 68 53 37 122 41 41 36 58 281 177
PBT 1,057 938 1,654 1,017 1,608 1,325 1,771 1,011 4,666 5,715
Tax 393 337 585 375 568 440 590 365 1,690 1,963
Adj PAT 665 601 1,068 642 1,040 885 1,181 646 2,976 3,752
YoY (%) -16.0 -11.8 1.6 0.4 56.5 47.3 10.6 0.5 -7.3 26.1
April 2017 189

Dish TV India
Bloomberg DITV IN CMP: INR103 TP: INR115 (+12%) Buy
We expect DITVs revenue to largely be flat QoQ at INR7.54b.
M. Cap. (INR b)/(USD b) 110 / 2
Subscription revenue is expected to increase 1% QoQ to INR7b, as
1,6,12 Rel Perf. (%) 5/0/2
demonetization continues to impact fresh set-top box seeding.
We expect gross additions of 0.65m and net additions of 0.23m.
ARPU is expected to be flat QoQ at INR151 per subscriber per
Y/E March 2016 2017E 2018E 2019E
month, as 4Q is typically a seasonally weak quarter, given fewer
Net Sales
days in February. Also, the recovery from demonetization has been
30.6 30.6 34.3 38.9
EBITDA 10.2 10.2 12.3 14.8
slower than earlier expected.
Adj. NP 6.9 1.5 2.8 4.6 EBITDA margin is expected to dip 100bp QoQ to 32.4%.
Adj. EPS (INR) 6.5 1.4 2.7 4.3 We expect net profit of INR164b in 4QFY17.
Adj. EPS Gr.(%) NA -77.8 84.7 61.8 The stock trades at EV/EBITDA of 9x FY18E and 7.2x FY19E. Buy.
BV/Sh (INR) 3.6 5.0 7.7 12.0
RoE (%) NA 34 42 44
RoCE (%) 12.7 10.5 12.1 15.4
Div. Payout(%) NA NA NA NA
Valuations
P/E (x) Key things to watch for
16 71 38 24
P/BV (x) Quarterly gross adds (we expect 0.65m).
NA 20.5 13.4 8.6
EV/EBITDA (x) 11.4 11.3 9.0 7.2
ARPU (we expect INR151).
EV/Sub (INR) 8,083 7,423 6,382 5,684 EBIDTA margin (we expect 32.4%).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 7,367 7,524 7,715 7,994 7,786 7,793 7,480 7,540 30,599 30,599
YoY Change (%) 15.0 11.9 8.1 5.9 5.7 3.6 -3.0 -5.7 10.0 0.0
Operating expenses 4,998 4,974 5,060 5,385 5,140 5,151 4,985 5,100 20,350 20,375
EBITDA 2,368 2,550 2,655 2,609 2,646 2,642 2,495 2,441 10,249 10,224
YoY Change (%) 50.8 57.1 38.8 17.6 11.7 3.6 -6.1 -6.4 39.4 -0.2
EBITDA margin (%) 32.1 33.9 34.4 32.6 34.0 33.9 33.4 32.4 33.5 33.4
Depreciation 1,598 1,330 1,463 1,516 1,613 1,635 1,656 1,657 5,907 6,560
Interest 480 548 549 512 521 554 591 532 2,087 2,198
Other Income 252 197 42 218 119 111 181 149 640 560
PBT 542 870 686 799 631 565 429 401 2,895 2,026
Tax -4,029 223 -136 163 237 -4,029 486
Effective Tax Rate (%) (504.2) 35.3 (24.1) 37.9 59.2 24.0
Net profit 542 870 686 4,828 409 701 266 164 6,924 1,540
Net Subs (m) 13.3 13.7 14.0 14.5 14.9 15.2 15.3 15.6 14.5 15.6
ARPU (INR/month) 173 171 172 174 165 162 152 151 172 158
April 2017 190

HT Media
Bloomberg HTML IN CMP: INR85 TP: INR90 (+6%) Neutral
We expect revenue to grow 6% YoY to INR6.6b.
Print ad revenue is likely to grow at a weak 3% YoY to INR4.47b,
1,6,12 Rel Perf. (%) -1 / -9 / -9
despite the UP elections, as slow recovery from demonetization is
expected to partially take away election-led gains.
Languishing English print ad growth is expected to remain flat YoY,
Y/E MARCH 2016 2017E 2018E 2019E
given the low base.
Net Sales
Hindi ad revenue is expected to grow 7% YoY to INR1.8b.
25.0 25.3 27.7 29.7
EBITDA 3.1 3.2 3.6 3.7
Radio ad revenue growth is expected to remain strong at 30%+ YoY
Adj. NP 1.7 1.8 1.8 1.9 (INR405m).
Adj. EPS (INR) 7.3 7.9 7.9 8.2 We expect circulation revenue to increase 3% YoY to INR0.78b.
Adj. EPS Gr. (%) -16.2 8.5 -0.4 4.6 EBITDA margin is expected to expand by 440bp YoY to 15.4%.
BV/Sh (INR) 99.2 109.4 119.0 129.3 Adjusted net profit is likely to remain flat YoY to INR0.4b, primarily
RoE (%) 7.7 7.6 6.9 6.6 led by higher interest outgo related to new radio licenses and
RoCE (%) 8.7 9.0 8.3 8.4 higher tax outgo.
Div. Payout (%) 4.3 4.3 4.3 4.3 The stock trades at 10.8x FY18E and 10.3x FY19E EPS. We revise
Valuations our target price to INR90 (11x FY19E EPS). Neutral.
P/E (x) 11.7 10.8 10.8 10.3
P/BV (x)
0.9 0.8 0.7 0.7
EV/EBITDA (x)* 5.6 4.5 3.4 2.6
YoY English ad growth (we expect flat ad growth).
Div. Yield (%) 0.4 0.4 0.4 0.4
Hindi ad growth (we expect 7% YoY de-growth).
* Proportionate EBITDA margin (we expect 15.4%).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue 5,872 6,011 6,811 6,310 6,147 6,022 6,499 6,663 25,004 25,330
YoY (%) 7.5 7.2 12.5 9.4 4.7 0.2 -4.6 5.6 9.2 1.3
EBITDA 568 659 1,186 697 643 505 1,105 1,028 3,111 3,280
YoY (%) -8.3 -8.5 37.7 44.4 13.1 -23.4 -6.9 47.4 15.9 5.4
EBITDA margin (%) 9.7 11.0 17.4 11.1 10.5 8.4 17.0 15.4 12.4 12.9
Depreciation 228 269 247 271 295 304 312 326 1,015 1,237
Interest 94 123 209 202 247 245 241 293 628 1,026
Other Income 281 457 271 535 478 780 549 300 1,543 2,107
Extra-ordinary exps 0 0 0 0 0 0 0 0 0 0
PBT 527 724 1,001 759 579 736 1,100 709 3,011 3,123
Tax 171 208 193 263 186 224 36 209 834 655
PAT 356 516 809 497 392 512 1,064 500 2,178 2,468
Reported PAT 249 368 688 376 224 309 914 400 1,682 1,847
Adj PAT 249 368 688 376 224 309 914 400 1,682 1,847
YoY (%) -23.8 -16.0 -11.7 -4.2 -10.1 -16.1 32.8 6.4 -6.5 9.9
April 2017 191

Jagran Prakashan
Bloomberg JAGP IN CMP: INR185 TP: INR225 (+22%) Buy
We expect advertising revenue (Print+Radio) to grow 6% YoY to
INR4.13b.
1,6,12 Rel Perf. (%) -7 / -16 / -4
Print ad revenue is expected to grow 5% YoY to INR3.48b. We
expect circulation revenue to grow 6% YoY to INR1.12b.
We estimate Radio revenue at INR0.64b and EBITDA at INR0.18b.
Y/E March 2016 2017E 2018E 2019E
Aggregate revenue is expected to grow 8% YoY to INR5.74b.
Net Sales 21.1 22.9 25.4 28.3 We estimate EBITDA at INR1.57b and EBITDA margin at 27.4%.
EBITDA 6.0 6.3 7.1 8.0 Adjusted earnings are expected at INR0.86b, up 8% YoY.
Adj. NP 3.4 3.5 4.0 4.5 We revise our TP to INR225 (16x FY19E EPS). The stock trades at
Adj. EPS (INR) 10.5 10.8 12.2 13.9 15.4x FY18E and 13.5x FY19E EPS. Buy.
Adj.EPS Gr (%) 44.6 2.7 13.8 14.0
BV/Sh (INR) 49.3 55.4 63.5 73.4
RoE (%) 24.7 20.7 20.6 20.4
RoCE (%) 24.8 16.6 16.9 17.1
Div. Payout (%) 40.5 38.1 33.5 29.4
Valuations
P/E (x) 17.6 17.2 15.1 13.2
P/BV (x) 3.7 3.3 2.9 2.5 Key things to watch for
EV/EBITDA (x) 10.3 9.3 8.1 7.0 YoY Print ad growth (we expect 5%).
Div. Yield (%) 1.9 1.9 1.9 1.9 YoY ad growth (Print+Radio) (we expect ~6%).
EBITDA margin (we expect 27.4%).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 4,750 5,064 5,764 5,295 5,580 4,590 6,121 5,739 21,065 22,882
YoY (%) 7.9 16.1 22.5 25.3 17.5 -9.4 6.2 8.4
EBITDA 1,341 1,416 1,721 1,358 1,546 1,213 2,072 1,570 5,896 6,291
YoY (%) 25.3 33.2 29.9 29.5 15.3 -14.3 20.4 15.7 30.9 6.7
EBITDA margin (%) 28.2 28.0 29.9 25.6 27.7 26.4 33.9 27.4 28.0 27.5
Depreciation 231 287 284 242 244 209 208 247 1,044 1,112
Interest 186 81 172 143 139 91 50 52 523 432
Other Income 195 -6 64 148 89 164 81 52 345 386
Exceptional item 51 -145 0 0 0 0 0 0 -95 0
PBT 1,068 1,186 1,329 1,120 1,252 1,077 1,895 1,323 4,769 5,133
Tax 348 327 396 319 407 351 482 463 1,390 1,642
Reported net profit 721 859 933 802 840 726 1,413 860 3,378 3,490
YoY (%) 30.8 51.8 40.8 -38.2 8.9 1.7 51.4 7.4 44.5 6.3
April 2017 192

PVR
Bloomberg PVRL IN CMP: INR1,520 TP: INR1,667(+10%) Buy
We expect 11% revenue growth to INR4.6b in 4QFY17; EBITDA is
expected to increase 11.4% to INR517m, while margins are
1,6,12 Rel Perf. (%) 12 / 19 / 85
expected to remain flattish at 11.3%.
We expect PAT of INR12m as against loss of INR66m in 4QFY16.
Y/E March 2016 2017E 2018E 2019E
Sales 18.7 21.2 26.0 32.8
EBITDA 3.3 3.5 4.8 6.2
Footfalls, occupancy rate during the quarter.
NP 1.2 1.0 1.7 2.7
ATP and SPH growth.
Adj EPS (INR) 25.5 20.8 35.7 56.8 Content pipeline ahead.
EPS Gr. (%) 664.3 -18.7 71.8 59.2
BV/Sh. (INR) 186.2 204.3 234.6 283.0
RoE (%) 18.7 10.6 16.3 22.0
RoCE (%) 14.5 9.1 12.3 17.7
Valuations
P/E (x) 60.7 74.6 43.4 27.3
P/BV (x) 8.3 7.6 6.6 5.5
EV/EBITDA (x) 23.5 22.6 15.9 11.9
Div yield(%) 0.2 0.3 0.5 0.8

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,860 4,746 5,005 4,126 5,702 5,542 5,377 4,580 18,736 21,199
YoY Change (%) 34.2 18.6 19.1 37.7 17.3 16.8 7.4 11.0 26.8 13.1
EBITDA 1,107 875 826 465 1,167 930 890 517 3,272 3,498
Margins (%) 22.8 18.4 16.5 11.3 20.5 16.8 16.5 11.3 17.5 16.5
Depreciation 267 273 278 359 331 346 345 410 1,176 1,427
Interest 218 206 192 223 192 193 204 185 839 774
Other Income 25 114 89 65 63 49 21 55 293 188
PBT before EO expense 647 510 445 -52 707 440 363 -23 1,550 1,484
PBT 615 491 434 -81 681 440 363 -23 1,458 1,458
Tax 175 184 131 22 249 149 127 -35 512.0 488.5
Rate (%) 28.5 37.5 30.1 -27.1 36.6 33.8 35.1 155.5 35.1 33.5
Reported PAT 435 307 302 -104 428 291 239 12 943 970
Adj PAT 458 319 312 -66 444 291 239 12 1,248 987
YoY Change (%) 468.0 233.6 -4.3 -70.1 -3.0 -8.7 -23.5 NM 744.2 -20.9
Margins (%) 9.0 6.5 6.0 -2.5 7.5 5.3 4.4 0.3 5.0 4.6
E: MOSL Estimates

April 2017 193
March 2017
March 2017 Results
Results Preview
Preview || Sector:
Sector: Media
Media
SITI Network
Bloomberg SITINET IN CMP: INR38 TP: INR40 (+5%) Buy
We expect reported revenue to grow 4% QoQ to INR3.1b.
Cable subscription revenue is expected to grow 6% QoQ to
1,6,12 Rel Perf. (%) -4 / -1 / -13
~INR1.56b, as monetization in phase-III gradually picks up.
Activation revenue is expected to grow 16% QoQ to INR0.54b in
4QFY17, as seeding picks up post a subdued 9 months. We have
Y/E March 2016 2017E 2018E 2019E
factored in set-top box seeding of ~0.8m for 4Q.
Net Sales Carriage revenue is expected to decline 10% QoQ to INR0.65b in
11.9 11.8 14.9 18.7
EBITDA 3.0 2.1 4.1 6.3
4Q, as the base included a few one-off carriage receivables.
EBITDA# 0.9 0.4 3.3 5.6 EBITDA is expected to grow 22% QoQ to INR0.69b, primarily led by
Adj. NP 0.0 -1.6 0.0 1.1 higher subscription, activation and broadband revenue. On an ex-
Adj. EPS (INR) 0.0 -1.8 0.0 1.2 activation basis, EBITDA is expected to improve to INR151m in 4Q
Adj. EPS Gr. (%) NM NM NM NM from INR82m in 3QFY17.
BV/Sh (INR) 9.1 8.5 10.0 11.4 We expect net loss of INR316m v/s net loss of ~INR335m in 3Q.
RoE (%) 0.1 -21.7 0.0 11.1 The stock trades at attributable EV/EBITDA (ex-activation) of 6.7x
RoCE (%) 6.4 -3.7 4.6 10.1 FY18E. Maintain Buy with a DCF-based target price of INR45.
Valuation
P/E (x) NM NM NM 31.7
EV/EBITDA (x)* 13.7 20.0 10.7 7.1 Key things to watch for
EV/ EBITDA 47.9 112.2 13.4 8.0 Subscription revenue growth (6% QoQ).
(x)*
EV/Sub (INR)* 3,342 3,498 3,615 3,668 Activation revenue (we expect INR0.76b).
* Based on attributable EBITDA and subs post EBITDA margin (we expect 28.6%).
minority stake; # (ex-activation)
Quarterly Performance (Consolidated, INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 2,297 2,339 3,440 3,567 2,820 2,890 2,985 3,103 11,890 11,796
YoY (%) 9.9 6.7 55.2 39.3 22.7 23.6 -13.2 -13.0
Operating Expenses 1,953 1,943 2,486 2,614 2,395 2,416 2,434 2,410 8900 9,656
EBITDA 344 395 954 952 425 473 550 693 2,990 2,140
YoY (%) 0.5 -4.0 97.8 913.1 23.5 19.7 -42.4 -27.2
EBITDA margin (%) 15.0 16.9 27.7 26.7 15.1 16.4 18.4 22.3 25.1 18.1
Depreciation 358 367 391 515 547 572 625 657 1,632 2,401
Interest 344 348 351 351 297 280 360 356 1,378 1,293
Other Income 24 87 49 81 49 24 71 50 240 194
PBT -334 -233 262 167 -370 -355 -364 -269 220 -1,361
Tax 5 35 2 89 65 22 -30 47 131 105
Effective Tax Rate (%) -1.6 -14.9 0.8 53.1 -17.7 -6.1 8.1 -17.4 59.6 -7.7
Reported Net Profit -367 -315 147 241 -536 -469 -263 -299 -16 -1,570
April 2017 194

Sun TV
Bloomberg SUNTV IN CMP: INR796 TP: INR800 (+1%) Neutral
We expect Sun TVs revenue to grow 7% YoY to INR6.13b.
M. Cap. (INR b)/(USD b) 314 / 5
Advertising and broadcasting revenue is expected to grow at a
1,6,12 Rel Perf. (%) 6 / 45 / 101
weak 1% YoY to INR3.16b, as recovery from demonetization and
improvement in ad monetization in non-Tamil markets is expected
to be gradual. The newly-commissioned show, Nandini in Tamil has
Y/E March 2016 2017E 2018E 2019E
gained decent traction in viewership share. Monetization of the
Net Sales
same could be with a lag.
24.0 25.9 30.0 33.6
EBITDA 17.0 18.0 21.1 24.0
We expect domestic subscription revenue to grow 4% QoQ to
Adj. Net Profit 8.3 9.9 11.7 13.6
INR2.52b.
Adj. EPS (INR) 21.0 25.1 29.7 34.5 Sun TVs EBITDA/EBIT is estimated to grow ~7%/8% YoY to
Adj. EPS Gr. (%) 12.3 19.6 18.5 16.1 INR4.55b/INR3.75b. PAT is expected to grow 4% YoY to INR2.46b.
BV/Sh (INR) 92.1 99.9 108.8 119.1 The stock trades at 20.6x FY17E and 17.3x FY18E EPS. Neutral
RoE (%) 23.3 25.1 27.3 29.0
RoCE (%) 24.0 26.0 28.4 30.2
Div. Payout (%) 59.3 59.8 60.5 60.8
Valuations
P/E (x) 37.9 31.7 26.8 23.0 Key things to watch for
P/BV (x) 8.6 8.0 7.3 6.7 YoY ad growth (we expect 1%).
EV/EBITDA (x) 17.7 16.5 13.9 12.2 QoQ domestic subscription growth (we expect 4%).
Div. Yield (%) 1.6 1.9 2.3 2.6
Quarterly Performance (Standalone) * (INR Million)

Revenue 6,911 5,681 5,741 5,707 7,608 6,255 5,894 6,125 24,040 25,882
YoY (%) 9.1 11.6 3.9 4.0 10.1 10.1 2.7 7.3 7.2 7.7
EBITDA 4,092 4,322 4,373 4,266 4,364 4,663 4,397 4,557 17,031 17,982
YoY (%) 11.3 9.2 2.2 0.8 6.7 7.9 0.6 6.8 5.5 5.6
As of % Sales 59.2 76.1 76.2 74.7 57.4 74.6 74.6 74.4 70.8 69.5
Depreciation and Amortization 1,302 1,176 1,348 1,007 1,008 1,030 1,107 1,030 4,835 4,175
Interest 8 1 5 8 1 2 7 11 21 21
Other Income 222 204 289 223 216 488 389 223 911 1,315
PBT 3,003 3,349 3,309 3,475 3,571 4,119 3,673 3,740 13,086 15,102
Tax 1,031 1,166 1,146 1,294 1,240 1,415 1,272 1,283 4,633 5,210
Reported PAT 1,973 2,184 2,163 2,180 2,331 2,704 2,401 2,457 8,453 9,892
Extraordnary Item 180
Adj PAT 1,973 2,184 2,163 2,360 2,331 2,704 2,401 2,457 8,680 6,707
YoY (%) 19.1 41.4 1.0 16.3 18.1 23.8 11.0 4.1 17.7 -22.7
April 2017 195

Zee Entertainment
Bloomberg Z IN CMP: INR543 TP: INR610 (+12%) Buy
We expect advertising revenue to grow 2% YoY to INR8.81b, which
M. Cap. (INR b)/(USD b) 522 / 8
factors in the impact of only two months of sports business
1,6,12 Rel Perf. (%) 4 / -10 / 21
absence (sports business sold to Sony).
Zee introduced two new shows each on its flagship Zee TV and
&TV, and consequently increased its original programming hours.
Y/E MARCH 2016 2017E 2018E 2019E
This can be seen in the consistent increase in viewership of Zee TV
Net Sales 58.3 64.4 74.0 85.5 over the last three months (~25% increase in impressions from
EBITDA 15.0 19.2 22.8 27.2 January to March). The regional portfolio too, especially the Tamil
Adj. NP 10.2 13.2 16.5 19.7 offering, has held up its viewership share.
Adj. EPS (INR) 10.6 11.4 17.3 20.6 Subscription revenue is likely to decline 6% YoY to INR5.61b.
Adj. EPS Gr. (%) 3.9 7.5 52.0 19.2 (Domestic subscription expected to decline 3% YoY to INR4.54b).
EPS ex-&TV (INR) 11.8 12.1 18.4 21.0 Only two months of sports-led subscription income would be
RoE (%) 27.0 29.1 30.3 29.4 booked in 4Q. Also, base quarter includes some catch up revenue.
RoCE (%) 17.7 19.3 23.2 24.6 Total revenue is expected to remain flat YoY (INR15.3b).
Div. Payout (%) 21.3 19.8 18.8 19.9 We expect EBITDA margin to be up 290bp YoY at 29.9%.
Valuations Adjusted PAT is expected to grow ~48% YoY to INR3.87b.
P/E (x) 51.3 47.7 31.4 26.3 Our revised TP is INR610 (29x FY19E EPS (ex-&TV) plus INR19/share
P/E ex-&TV (x) 46.0 45.0 29.4 25.8 towards &TV DCF less INR19/share towards preference share
EV/EBITDA (x) 35.0 25.7 21.4 17.2
liability). The stock trades at 31.4 FY18E and 26.3x FY18E EPS. Buy.
Div. Yield (%) 0.4 0.4 0.6 0.8
YoY ad growth (we expect 2%).
YoY domestic subscription (we expect 6% decline).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Advertsing Revenue 7,799 8,290 9,237 8,645 9,120 9,592 9,554 8,818 34,037 37,083
Subscription Revenue 4,625 4,791 5,218 5,944 5,282 5,833 5,935 5,614 20,578 22,664
Other Sales and Services 974 705 1,399 727 1,315 1,529 902 894 3,640 4,641
Net Sales 13,399 13,786 15,854 15,316 15,716 16,954 16,391 15,326 58,255 64,388
Change (%) 23.4 23.3 16.3 13.7 17.3 23.0 3.4 0.1 19.3 10.5
Prog, Transmission & Direct Exp 6,108 6,032 6,999 6,881 6,575 7,688 7,035 6,542 25,969 27,841
Staff Cost 1,380 1,197 1,253 1,297 1,499 1,533 1,419 1,332 5,209 5,784
Selling and Other Exp 2,799 2,971 3,308 3,002 3,110 2,841 2,780 2,863 12,084 11,594
EBITDA 3,112 3,586 4,295 4,136 4,532 4,892 5,158 4,589 14,992 19,169
Change (%) 0.7 11.9 21.5 52.7 45.6 36.4 20.1 10.9 22.5 27.9
EBITDA margin (%) 23.2 26.0 27.1 27.0 28.8 28.9 31.5 29.9 25.7 29.8
Depreciation 168 198 204 273 251 336 249 261 840 1,098
Finance cost 15 21 106 42 75 86 90 90 123 341
Other Income 680 589 295 458 734 432 525 525 2,016 2,216
Fair Value through P&L -362 -1,132 -829 -714 300 -2,375
PBT 3,609 3,626 3,917 4,278 3,807 4,074 4,630 5,062 15,714 17,572
Tax 1,185 1,123 1,602 1,618 1,626 1,634 2,081 1,156 5,528 6,496
PAT 2,423 2,504 2,316 2,658 2,181 2,440 2,549 3,907 10,186 11,076
Minority Interest/Associates -15 -11 7 53 12 56 41 40 22 149
Adj PAT after Minority Interest 2,438 2,846 2,309 2,605 2,170 2,384 2,508 3,867 10,495 10,927
Change (%) 15.8 25.0 -25.2 12.9 -11.0 -16.2 8.6 48.4 7.4 4.1
Sports EBITDA 15 22 -150 -236 171 -168 77 0 -349 80
Non-Sports EBITDA 3,097 3,564 4,445 4,372 4,361 5,060 5,081 4,589 15,341 19,089
April 2017 196

Metals
Company name Metals 4QFY17 preview
Hindalco Another strong quarter as prices/volumes increase
Hindustan Zinc Nalco, Tata Steel and Vedanta lead the pack
Jindal Steel & Power
Another strong quarter driven by higher prices and volumes
JSW Steel
Our metals coverage universe is expected to report another strong quarter, with the
Nalco
companies benefiting from higher commodity prices and volume growth. Retail flat
NMDC steel prices were up ~8% QoQ or INR3,000 per ton in 4QFY17, driven by higher exit
SAIL prices in 3Q. Flat steel product prices increased by ~INR2,000/t at the beginning of
Tata Steel the quarter, but lost momentum in the subsequent months due to weak domestic
Vedanta demand and lower input product prices. Long steel product prices recovered from
the impact of demonetization. Realized price for steel mills would be lower due to
discounts and higher share of exports. Among base metals, aluminum LME was up
8% QoQ to USD1,848/t, primarily led by higher input cost of coal and alumina for
Chinese smelters. Spot premiums also moved up, leading to an all-in aluminum
increase of 12% QoQ to USD1,951/t. Alumina price average was up ~12% QoQ to
USD341/t. Zinc LME increased 11% QoQ to USD2,777/t, led by favorable supply
dynamics. Silver prices were unchanged QoQ at INR41,447/kg. Sales volume for our
coverage universe: (a) steel up 8% QoQ/YoY led by an increase in exports and (b)
aluminum up 20% QoQ led by ramp-up at Vedantas smelters.
Nalco, Tata Steel and Vedanta to outperform

We estimate EBITDA for our metals coverage universe to increase 17% QoQ (1.7x
YoY), led by higher realization and volumes. Nalco, Tata Steel and Vedanta are likely
to outperform. Nalcos EBITDA is estimated to almost double QoQ to INR5.3b on
account of higher LME aluminum/alumina prices and increased alumina volumes.
Ramp-up of the smelter should lead to ~2% QoQ increase in aluminum volumes,
with strong growth potential as the ramp-up gathers pace in FY18.
Vedanta benefits from higher prices/volumes across businesses

Vedantas EBITDA is estimated to increase 23% QoQ/+2x YoY to INR73b, led by
strong volume- and price-led growth in zinc, aluminum and crude oil. Zinc business
profitability is likely to be boosted by 11% higher mine output and LME gains.
Aluminum volumes are expected to increase 15% QoQ. LME gains are expected to
be partially offset by an increase in cost of alumina. Crude oil volumes should
increase 3% QoQ (to 119kbpd) on a weaker base. Hindalcos standalone EBITDA is
estimated to increase 7% QoQ to INR32b, with the benefit of higher aluminum
prices offset by increased alumina transfer price from Utkal. Utkal EBITDA, however,
is estimated to more than double QoQ to ~INR4b.
Price gains offset by cost increase for steel companies; Tata Steel to outperform
The increase in domestic steel prices would be offset by higher input product prices
and costs associated with higher exports. As a result, we estimate margins for
domestic mills to be broadly flat QoQ. Tata Steel is expected to outperform with an
EBITDA +91
Sanjay Jain (SanjayJain@motilaloswal.com); increase of 5412
22 3982 31% QoQ to INR46b, driven by a recovery in margins at Europe
Dhruv Muchhal (Dhruv.Muchhal@MotilalOswal.com); +91 22 3027 8033
April 2017 197
March 2017 Results Preview | Sector: Metals
from USD38/t QoQ to USD58/t. Tata Steels 3Q was also impacted by ~INR3b of FX
adjustment. JSW Steels EBITDA is estimated to be broadly flat QoQ at INR29b, as
margins are expected to be lower QoQ (to INR6,945/t) due to higher coking and iron
ore cost and certain one-time by-product sales benefit in the previous quarter. JSPs
EBITDA is estimated to increase 3% QoQ to ~INR58b.
Revising aluminum LME estimate; TP for HZL and VEDL revised to factor in
dividend payment
We revise our USD/INR estimate from 70 to 68.6/70.9 for FY18/19. LME aluminum is
revised from USD1,700/t to USD1,750/t, led by strong cost support. Tata Steels
target price is upgraded by 12% to INR440/share on currency and margin upgrade in
EU maintain Sell. Hindustan Zinc and Vedantas target price is cut to factor in
dividend payment. Our revised TPs are presented in Exhibit 15, Exhibit 16 and
Exhibit 17.

Sector Sales (INR m) EBDITA (INR m) Net Profit (INR m)
Reco Mar-17 Mar-17 Mar-17
Metals
Hindalco 198 Buy 272,750 10.9 10.9 31,821 2.6 7.2 9,995 -2.7 36.4
Hindustan Zinc 291 Neutral 61,059 94.9 22.6 35,844 174.0 28.8 29,026 35.0 25.1
JSPL 124 Buy 63,061 24.1 13.0 15,105 68.5 18.3 -4,363 Loss Loss
JSW Steel 195 Buy 173,464 62.2 23.8 29,034 59.1 1.3 7,125 332.1 -2.4
Nalco 76 Buy 21,659 15.6 8.9 5,327 123.2 86.8 3,131 50.6 84.3
NMDC 136 Buy 27,475 79.6 10.0 15,873 194.1 11.6 11,271 63.6 9.4
SAIL 65 Sell 131,695 15.8 16.6 276 LP LP -13,199 Loss Loss
Vedanta 493 Sell 339,226 15.0 21.3 46,526 111.0 31.5 15,805 LP 676.5
Tata Steel 273 Neutral 235,086 47.1 21.1 73,560 111.9 22.7 32,207 184.9 72.6
Metals Sector Aggregate 1,325,475 27.7 18.0 253,366 103.3 20.1 90,999 175.9 55.5

Sector / Companies CMP RECO EPS (INR) PE (x) PB (x) EV/EBIDTA (x) ROE (%)
(INR) FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Metals
Hindalco 198 Buy 16.9 22.6 25.4 11.7 8.8 7.8 1.7 1.4 1.2 15.4 17.5 16.8 41.5 33.6 12.4
Hindustan Zinc 291 Neutral 19.3 25.7 28.0 15.1 11.3 10.4 4.0 3.3 2.7 24.0 31.8 28.2 -2.4 33.1 8.9
JSPL 124 Buy -22.3 -17.5 -2.2 -5.6 -7.1 -56.3 0.3 0.3 0.3 -7.5 -4.5 -0.6 Loss Loss Loss
JSW Steel 195 Buy 13.6 18.3 20.5 14.4 10.7 9.5 2.2 1.9 1.6 16.2 18.7 17.9 LP 34.7 12.3
Nalco 76 Buy 3.9 5.3 5.8 19.5 14.2 13.0 1.4 1.3 1.2 7.5 9.6 9.9 44.2 37.2 9.0
NMDC 136 Buy 12.1 12.3 13.0 11.3 11.1 10.5 1.8 1.7 1.6 13.4 15.5 15.1 44.3 1.8 5.9
SAIL 65 Sell -7.4 -12.6 0.4 -8.8 -5.2 175.4 0.7 0.9 0.9 -8.1 -15.4 0.5 Loss Loss LP
Tata Steel 493 Sell 18.9 48.6 55.1 26.2 10.1 9.0 4.0 3.0 2.4 13.6 33.7 29.5 145.6 157.9 13.3
Vedanta 273 Neutral 17.9 28.3 31.4 15.2 9.6 8.7 1.7 1.6 1.4 11.5 17.0 17.2 66.3 58.1 11.1
Sector Aggregate 9 19.7 13.5 10.2 1.6 1.5 1.3 7.9 10.7 12.9 72.8 45.5 32.6
Source: MOSL
April 2017 198

Exhibit 3: India import parity HRC prices

Spot Quaterly average
42,000
Domestic HRC steel price Avg. is up
HRC Mumbai (INR/t)

39,000
average is higher by INR3041 QoQ
36,000
INR3,000/t QoQ.
33,000
30,000
27,000
24,000
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Feb-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
Exhibit 4: China steel spreads with raw material
HRC Rebar
315
Chinese steel mills product
spreads have improved on 270
rise in steel prices 225
180
135
90
Jun-13
Jun-14
Jun-15
Jun-16
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17
Exhibit 5: Domestic steel demand growth trailing 12-month (YoY %)
Domestic steel
Cons. (mt) Trailing 12m Growth (%)
consumption grew by a 10.0
8.1
modest ~3.7% YoY for
7.4
7.4
7.3
7.3
7.3
7.3
7.2
7.2
7.1
7.1
7.1
7.0
6.9
6.9
6.9
6.9
6.9
6.8
6.7
6.7
6.7
6.7
6.7
6.6
6.6
6.6
6.6
6.5
6.5
8.0
6.3
6.3
6.3
6.2
6.2
6.1
5.9
5.9
5.9
5.9
trailing 12M for February 5.8

5.7
5.6
5.5
5.4
5.1
5.1
6.0
2017
4.0
2.0 3.7
0.0
-2.0
Jun-13
Jun-14
Jun-15
Apr-13
Jun-16
Aug-13
Apr-14
Dec-13
Apr-15
Feb-14
Aug-14
Dec-14
Apr-16
Feb-15
Aug-15
Dec-15
Feb-16
Aug-16
Dec-16
Oct-13
Feb-17
Oct-14
Oct-15
Oct-16
However, domestic mills Exhibit 6: India net steel imports kt

benefit from import Net steel imports (kt)
1,000 825
substitution and increase in
800
exports. India has turned
600 475
into a net exporter of steel 355
400
200
0
-200
-400
Jun-12
Jun-13
Jun-14
Apr-12
Jun-15
Apr-13
Jun-16
Feb-12
Aug-12
Dec-12
Apr-14
Feb-13
Aug-13
Dec-13
Feb-14
Aug-14
Apr-15
Dec-14
Feb-15
Aug-15
Apr-16
Dec-15
Oct-12
Feb-16
Aug-16
Dec-16
Oct-13
Feb-17
Oct-14
Oct-15
Oct-16
April 2017 199

Exhibit 7: India steel sales volumes (mt)

Tata Steel SAIL JSW Steel JSP
11.7
10.8 10.9 10.8
8.8 8.7 9.4 8.8 9.0 9.1
8.5
3.3 3.8 3.6 3.9
3.1 3.0 3.1 3.1 3.1 2.6 3.3
3.8 3.6 3.3 3.5
2.9 2.9 3.2 2.7 2.7 2.9 2.8
2.1 2.1 2.4 2.1 2.3 2.3 2.7 2.2 2.6 3.0 3.2
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
Exhibit 8: India steel EBITDA/ton (INR)

Average Tata Steel SAIL JSW Steel JSP
20,000
15,000
10,000
5,000
-5,000
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
Exhibit 9: India steel realization (INR/ton)

Average Tata Steel SAIL JSW Steel JSP
55
Realization (000' INR/T)
50
45
40
35
30
25
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
April 2017 200

Exhibit 10: Quarterly average aluminum prices USD/ton

Aluminum Premium Aluminum total price Alumina
Quarter
Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY
4QFY17E 1,848 8% 22% 103 40% -8% 1,951 9% 20% 341 12% 56%
3QFY17 1,710 6% 14% 73 -3% -21% 1,783 5% 12% 305 30% 31%
2QFY17 1,620 3% 2% 76 -24% -25% 1,696 1% 0% 235 -7% -20%
1QFY17 1,570 4% -11% 100 -10% -50% 1,672 3% -15% 253 15% -25%
4QFY16 1,516 1% -16% 111 20% -70% 1,627 2% -25% 219 -6% -36%
3QFY16 1,495 -6% -24% 93 -8% -78% 1,588 -6% -33% 233 -20% -34%
2QFY16 1,591 -10% -20% 100 -49% -75% 1,692 -14% -29% 293 -13% -9%
1QFY16 1,765 -2% -2% 198 -48% -47% 1,963 -10% -10% 336 -2% 6%
4QFY15 1,800 -8% 5% 377 -9% 20% 2,177 -9% 8% 343 -3% 4%
3QFY15 1,966 -1% 11% 414 3% 68% 2,380 0% 18% 355 11% 10%
2QFY15 1,987 11% 12% 404 8% 63% 2,391 10% 18% 322 2% 1%
1QFY15 1,798 5% -2% 374 19% 52% 2,172 7% 4% 317 -3% -3%
4QFY14 1,708 -3% -15% 313 27% 29% 2,022 0% -10% 328 2% -4%
3QFY14 1,768 -1% -11% 246 -1% 1% 2,015 -1% -10% 323 1% -1%
2QFY14 1,780 -3% -7% 248 1% -1% 2,029 -2% -6% 318 -3% 1%
1QFY14 1,834 -8% -7% 246 2% 2,081 -7% 327 -4% 3%
Exhibit 11: Global aluminum production trend Exhibit 12: China aluminum production trend
Production YoY Production YoY
5,400 23.0 2.9 50
YoY growth (%)

4,800 14.0 2.6 40
YoY growth (%)
'000 tons
m tons
2.3 30
4,200 5.0
2.0 20
3,600 -4.0
1.7 10
3,000 -13.0 1.4 0
Jul-15
Jul-16
Apr-15
Apr-16
Jan-15
Jan-16
Jan-17
Oct-15
Oct-16
Jul-15
Jul-16
Apr-15
Apr-16
Jan-15
Jan-16
Jan-17
Oct-14
Oct-15
Oct-16
Source: MOSL, Company, Bloomberg Source: MOSL, Company, Bloomberg
Exhibit 13: LME aluminum and inventories

Inventories (RHS) Spot
2,000 3.5
1,850 3.1
USD/t
m tons
1,700 2.6
1,550 2.2
1,400 1.7
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
April 2017 201

Exhibit 14: Other base metals quarterly average prices USD/ton

Zinc Copper Lead Silver (Rs/kg)
Quarter
Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY
4QFY17E 2,777 11% 65% 5,831 10% 25% 2,276 6% 31% 41,447 0% 16%
3QFY17 2,513 12% 56% 5,277 11% 8% 2,149 15% 28% 41,273 -10% 19%
2QFY17 2,253 17% 22% 4,772 1% -9% 1,873 9% 9% 45,851 15% 32%
1QFY17 1,875 19% -14% 4,726 1% -22% 1,718 -1% -12% 39,726 12% 7%
4QFY16 1,581 -2% -24% 4,672 -4% -20% 1,744 4% -3% 35,595 2% -4%
3QFY16 1,616 -15% -28% 4,892 -7% -26% 1,681 -2% -16% 34,804 0% -5%
2QFY16 1,892 -13% -18% 5,259 -13% -25% 1,714 -12% -21% 34,651 -7% -19%
1QFY16 2,183 5% 5% 6,043 4% -11% 1,942 8% -7% 37,194 0% -11%
4QFY15 2,083 -7% 3% 5,818 -12% -17% 1,806 -10% -14% 37,167 1% -17%
3QFY15 2,235 -3% 17% 6,624 -5% -7% 2,000 -8% -5% 36,694 -14% -20%
2QFY15 2,311 11% 24% 6,995 3% -1% 2,181 4% 4% 42,691 2% -7%
1QFY15 2,073 2% 13% 6,787 -4% -5% 2,095 0% 2% 41,862 -7% -7%
4QFY14 2,029 6% 0% 7,040 -2% -11% 2,105 0% -8% 44,935 -3% -20%
3QFY14 1,906 3% -2% 7,153 1% -10% 2,111 0% -4% 46,099 0% -23%
2QFY14 1,859 1% -1% 7,073 -1% -8% 2,101 2% 6% 46,077 3% -17%
1QFY14 1,840 -9% -5% 7,147 -10% -9% 2,053 -11% 4% 44,837 -20% -18%
4QFY13 2,032 4% 0% 7,931 0% -5% 2,301 5% 10% 55,927 -7% 1%
3QFY13 1,946 3% 3% 7,908 3% 6% 2,198 11% 11% 59,949 8% 11%
2QFY13 1,885 -2% -15% 7,705 -2% -14% 1,974 0% -20% 55,755 2% -5%
1QFY13 1,927 -5% -14% 7,869 -5% -14% 1,973 -6% -23% 54,406 -2% -5%
Exhibit 15: Earnings and TP change Steel and Iron ore

EBITDA (INR b) Adj. PAT (INR b) TP
Comments
4QFY17E FY17E FY18E 4QFY17E FY17E FY18E
Old 45 143 169 14 19 44 394
Higher volumes. USDINR for FY18
Tata Steel New 47 144 173 16 20 49 440
from 70 to 68.6
Change 2% 1% 2% 10% 8% 11% 12%
Old 29 120 138 7 33 46 226
JSW Steel New 29 120 137 7 33 44 222
Change 0% -1% 0% -4% -2%
Old 2 5 7 -12 -31 -54 30
Lower-than-expected steel price
SAIL New 0 3 8 -13 -32 -53 30
increase
Change -82% -27% 6% 10% 4% -1% 0%
Old 14 45 61 -6 -22 -16 180
JSP New 15 46 61 -4 -20 -16 181
Change 10% 3% 0% -24% -6% 0% 1%
Old 16 47 58 11 36 39 179
NMDC New 16 47 57 11 36 39 178
Change 0% 0% 0% 0% 0% 0% 0%
Exhibit 16: Earnings and TP change Aluminum

EBITDA Adj. PAT
TP
(INR b) (INR b) Comments
Old 13 48 53 4 14 24
Hindalco
New 13 48 53 4 14 24
(Standalone)
Change -2% -1% 1% -5% -2% 1%
Old 32 130 143 10 36 51 234
Hindalco
New 32 132 142 10 38 51 235
(Consol)
Change -2% 2% -1% -3% 7% 0% 0%
Old 4 11 18 2.5 7 10 83
Nalco New 5 12 18 3.1 8 10 83 Higher LME and alumina
Change 20% 8% 0% 24% 9% 0% 0%
April 2017 202

Exhibit 17: Earnings and TP change Others

EBITDA (INR b) Adj. PAT (INR b) TP
Comments
Old 39 99 145 31 84 119 307
USDINR from 70 to 68.6 for FY18,
HZL New 28 96 141 23 82 109 268
higher CoP and lower other income
Change -28% -3% -3% -25% -2% -9% -13%
Old 80 221 290 36 70 116 279 USDINR from 70 to 68.6 for FY18,
VEDL New 74 215 280 32 70 105 250 higher zinc/aluminum CoP and lower
Change -8% -3% -3% -11% -1% -9% -10% other income
Exhibit 18: Relative performance three-month (%) Exhibit 19: Relative performance one-year (%)
Sensex Index MOSL Metals Index
Sensex Index MOSL Metals Index
124 180
160
118
140
112
120
106 100
100 80
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
Dec-16
Jan-17
Feb-17
Mar-17
April 2017 203

Hindalco
Bloomberg HNDL IN CMP:INR198 TP:INR235 (+19%) Buy
Standalone: We estimate standalone EBITDA to increase by 9%
M. Cap. (INR b)/(USD b) 409 / 6
QoQ (+11% YoY) to INR12.8b, led by higher aluminum and copper
-4 / 20 / 113
volumes. LME gains are offset by an increase in alumina prices,
1,6,12 Rel Perf. (%)
which is captured at its Utkal subsidiary. We estimate Utkals
EBITDA to increase from INR1.4b in 3QFY17 to INR4b in 4Q on
Y/E March 2016 2017E 2018E 2019E
higher alumina transfer price. Aluminum segment EBITDA is
Sales 1,000.5 1,018 1,083 1,099
estimated to increase by 7% QoQ to INR9.1b on ~6% QoQ volume
EBITDA 106.1 132.1 142.1 147.5
increase to 330kt. Copper volumes are estimated to increase by
NP 24.7 38.0 50.7 57.0
13% QoQ to 110kt, driving a similar increase in copper EBITDA to
Adj. EPS (INR) 12.0 16.9 22.6 25.4
EPS Gr(%) -11.5 41.5 33.6 12.4
INR3.7b.
BV/Sh. (INR) 101.8 118.6 139.7 163.7 Novelis: We estimate Novelis to report adjusted EBITDA of
RoE (%) 11.6 15.4 17.5 16.8 USD273m, up 7% QoQ. Adj. EBITDA/t is estimated at USD350 (v/s.
RoCE (%) 5.9 8.1 8.7 9.0 USD340 in 3QFY17). Volumes are estimated to decline 1% YoY to
Payout (%) 13.7 9.7 7.2 6.4 780kt.
Valuations
P/BV 1.9 1.7 1.4 1.2 Lower margins in aluminum.
EV/EBITDA (x) 9.0 7.0 6.2 5.5 Foreign exchange rate impact at Novelis.
Div. Yield (%) 0.7 0.7 0.7 0.7

Alumina (Production, kt) 660 628 704 703 708 726 744 710 2,298 2,888
Aluminium (sales, kt) 248 277 292 329 291 320 310 330 1,146 1,251
Copper (sales, kt) 96 104 87 97 62 102 97 110 384 371
Avg LME Aluminium (USD/T) 1,765 1,593 1,495 1,516 1,570 1,619 1,710 1,763 1,592 1,665
Net Sales 85,753 89,246 81,503 86,675 75,973 90,123 93,136 108,613 343,177 367,845
Change (YoY %) 7.2 4.3 -5.3 -7.5 -11.4 1.0 14.3 25.3 -0.6 7.2
EBITDA 8,773 6,028 6,716 11,664 11,325 11,564 11,852 12,891 33,182 47,632
Change (YoY %) 17.2 -32.8 -27.3 37.6 29.1 91.8 76.5 10.5 -2.9 43.6
EBITDA - Aluminium 5,088 2,275 2,988 7,642 8,488 7,905 8,557 9,154 17,992 34,105
EBITDA-Copper 3,686 3,753 3,728 4,023 2,837 3,659 3,295 3,737 15,190 13,528
Interest 6,017 6,160 5,824 5,747 5,996 5,943 5,879 5,976 23,748 23,793
Depreciation 3,320 2,958 3,080 3,412 3,382 3,516 3,580 3,562 12,770 14,039
Other Income 1,944 4,175 2,501 2,041 2,184 3,364 2,200 2,304 10,662 10,052
PBT (before EO item) 1,381 1,086 313 4,547 4,131 5,469 4,593 5,658 7,326 19,851
Extra-ordinary Income -2 857 855
PBT (after EO item) 1,381 1,086 313 4,547 4,129 6,326 4,593 5,658 7,326 20,706
Total Tax 309 53 -92 983 1,189 1,929 1,390 1,338 1,254 5,845
% Tax 22.4 4.9 -29.3 21.6 28.8 35.3 30.2 23.7 17.1 28.2
Reported PAT 1,072 1,033 405 3,563 2,941 4,397 3,204 4,319 6,073 14,861
Adjusted PAT 1,145 900 259 3,769 2,965 3,925 3,204 4,061 6,073 14,248
Utkal EBITDA 826 2,440 163 317 950 1,700 1,400 3,998 7,140 8,048
Consolidated Financials
Net Sales 250,505 247,542 233,588 246,016 226,771 245,276 245,998 272,750 1,000,538 1,017,761
EBITDA 22,977 22,004 23,034 31,025 29,916 30,289 29,675 31,821 106,053 132,109
Consolidated adj. PAT 3,471 5,801 4,367 10,272 7,538 9,235 7,330 9,995 24,717 37,965
April 2017 204

Hindustan Zinc
Bloomberg HZ IN CMP:INR291 TP: INR268 (-8%) Neutral
We expect HZLs EBITDA to increase 29% QoQ (+2x YoY) to
M. Cap. (INR b)/(USD b) 1231 / 19
INR35.8b on higher prices and volumes. Zinc LME is up 10% QoQ
1,6,12 Rel Perf. (%) -11 / 9 / 35
to USD2,777/t, while lead LME is up 6% QoQ to USD2,276/t. Mine
production is estimated to increase by 11% QoQ to 305kt. Refined
Financial Snapshot (INR Billion) zinc sales volumes, however, are estimated to be flat QoQ at
Y/E March 2016 2017E 2018E 2019E 210kt as company sold concentrates. We expect ~25kt of
Sales 142.3 171.4 234.2 249.1
concentrate sales during the quarter.
EBITDA 67.8 95.8 141.4 150.4
NP 83.6 81.6 108.6 118.3 We estimate PAT to increase 25% QoQ to INR29b.
Adj. EPS (INR) 19.8 19.3 25.7 28.0
EPS Gr(%) 2.1 -2.4 33.1 8.9 Key issues to watch for:
BV/Sh. (INR) 88.5 72.3 89.5 109.1 Decline in global zinc prices.
RoE (%) 20.7 24.0 31.8 28.2
Production issues.
RoCE (%) 20.6 28.3 37.2 33.5
Payout (%) 164.9 183.8 32.9 30.2
Valuations
P/E (x) 14.7 15.1 11.3 10.4
P/BV (x) 3.3 4.0 3.3 2.7
EV/EBITDA (x) 12.9 11.3 7.2 6.3
Div. Yield (%) 9.6 10.1 2.4 2.4

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Production (integrated only)
Zn refined (000 tons) 187 211 206 154 102 149 205 210 758 666
Pb refined (000 tons) 27 39 35 38 25 31 39 42 139 137
Silver (tons) 86 110 116 127 95 111 127 146 439 479
Zinc LME (USD/t) 2,190 1,898 1,616 1,680 1,918 2,252 2,518 2,777 1,846 2,366
Net Sales 36,302 40,333 34,306 31,324 25,306 35,257 49,799 61,059 142,264 171,421
Change (YoY %) 20.7 34.1 -9.8 -18.7 -30.3 -12.6 45.2 94.9 -3.8 20.5
EBITDA 19,655 20,245 14,783 13,081 11,309 20,767 27,834 35,844 67,763 95,753
As % of Net Sales 54.1 50.2 43.1 41.8 44.7 58.9 55.9 58.7 47.6 55.9
Interest 16 12 51 90 712 712 451 90 169 1,965
Depreciation 1,729 1,750 1,716 1,930 3,644 4,317 4,589 3,644 6,716 16,194
Other Income 5,637 8,689 5,547 7,422 6,101 7,702 5,882 4,632 27,294 24,316
PBT (after EO item) 21,785 27,171 18,562 18,487 13,059 23,440 28,676 36,742 86,416 101,910
Total Tax 1,287 5,715 449 -3,013 2,680 4,421 5,477 7,716 4,438 20,293
% Tax 5.9 21.0 2.4 -16.3 20.5 18.9 19.1 21.0 5.1 19.9
Reported PAT 20,498 21,456 18,114 21,500 10,379 19,019 23,199 29,026 81,978 81,617
Adjusted PAT 22,155 21,456 18,114 21,495 10,375 19,019 23,199 29,026 83,644 81,617
Change (YoY %) 37.0 32.6 -17.1 -9.7 -53.2 -11.4 28.1 35.0 2.1 -2.4
April 2017 205

Jindal Steel & Power

Bloomberg JSP IN CMP: INR124 TP: 181 (+46%) Buy
Standalone: We expect standalone EBITDA to increase 23% QoQ
M. Cap. (INR b)/(USD b) 114 / 2
(44% YoY) to INR9.7b on higher steel volumes. Standalone steel
1,6,12 Rel Perf. (%) -5 / 43 / 86
sales volumes are up 24% QoQ/3% YoY to 1,040kt.
Jindal Power: We expect Jindal Power EBITDA of INR2.3b.
EBITDA/kWh is estimated at INR0.9 due to a weak merchant
Y/E March 2016 2017E 2018E 2019E market.
Sales 194.7 214.4 254.2 313.4 Overseas: Overseas EBITDA is estimated to increase by 10% QoQ
EBITDA 34.4 46.2 60.9 78.3 to INR5.4b on higher volumes at Oman and benefit of higher
Adj. PAT -16.7 -20.5 -16.0 -2.0 prices and volumes at coal mines.
Adj. EPS (INR) -18.2 -22.3 -17.5 -2.2
EPS Gr(%) -363.0 22.8 -21.8 -87.4 Key issues to watch for:
BV/Sh. (INR) 198.4 397.3 379.4 376.7 Progress on restructuring of SEBs.
RoE (%) -8.5 -7.5 -4.5 -0.6 Chinese steel imports.
RoCE (%) 1.2 0.8 1.8 3.7
Payout (%) 0.0 0.0 0.0 0.0
Valuations
P/E (x) -6.8 -5.5 -7.0 -55.8
P/BV 0.6 0.3 0.3 0.3
EV/EBITDA (x) 16.8 12.8 9.7 6.7
Div. Yield (%) 0.0 0.0 0.0 0.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 47,527 50,402 45,949 50,796 46,962 48,609 55,812 63,061 194,673 214,444
Change (YoY %) -4.5 -6.2 -11.0 7.9 -1.2 -3.6 21.5 24.1 -3.7 10.2
EBITDA 10,176 9,765 5,504 8,965 9,841 8,484 12,767 15,105 34,410 46,197
Change (YoY %) -37.5 -40.5 -61.4 13.5 -3.3 -13.1 132.0 68.5 -37.2 34.3
As % of Net Sales 21.4 19.4 12.0 17.6 21.0 17.5 22.9 24.0 17.7 21.5
Interest 8,516 7,647 8,061 8,584 8,529 8,716 8,353 8,493 32,808 34,090
Depreciation 7,466 5,005 6,378 9,346 9,171 9,986 10,274 11,045 28,194 40,477
Other Income 750 354 50 1,047 312 7 3 3 2,200 324
PBT (before EO item) -5,055 -2,532 -8,885 -7,918 -7,548 -10,211 -5,856 -4,430 -24,391 -28,046
Extra-ordinary Income 0 -4,394 910 1,126 -6,257 0 0 0 -2,358 -6,257
PBT (after EO item) -5,055 -6,927 -7,976 -6,792 -13,805 -10,211 -5,856 -4,430 -26,750 -34,303
Total Tax -1,501 19 -2,120 -3,161 -1,410 -2,739 -1,306 13 -6,763 -5,441
% Tax 29.7 -0.3 26.6 46.5 10.2 26.8 22.3 -0.3 25.3 15.9
Reported PAT -3,555 -6,945 -5,855 -3,631 -12,395 -7,473 -4,551 -4,443 -19,987 -28,862
MI - Loss/(Profit) -137 -832 -105 93 -1,560 -2 -458 -60 -980 -2,079
Associate 26 -66 16 11 14 11 18 20 -14 63
Adjusted PAT -3,393 -1,785 -6,645 -4,840 -4,564 -7,460 -4,074 -4,363 -16,662 -20,462
Change (YoY %) -181.1 -140.4 -381.1 4.6 34.5 317.8 -38.7 -9.8 -363.0 22.8
April 2017 206

JSW Steel
Bloomberg JSTL IN CMP: INR195 TP: INR222 (+14%) Buy
Consolidated EBITDA is estimated to be broadly flat QoQ at
M. Cap. (INR b)/(USD b) 472 / 7
INR29b. Standalone steel sales volumes would increase by 8%
1,6,12 Rel Perf. (%) 2 / 3 / 35
QoQ (20% YoY) to 3,940kt. Steel realization is estimated to
increase by 5% QoQ to INR38,252/t. However, higher coking coal
and iron ore cost would offset the volume and price gains.
Y/E March 2016 2017E 2018E 2019E 3QFY17 also included certain one-offs pertaining to by-product
Sales 418.8 562.9 636.6 654.5 sales which would impact the QoQ performance. We estimate
EBITDA 60.7 120.0 136.6 144.1 standalone EBITDA/t of INR6,945/t, down from INR7,717/t in 3Q.
Adj. PAT -0.1 32.8 44.2 49.6
Adj. EPS (INR) 0.0 13.6 18.3 20.5 Key issues to watch for:
EPS Gr(%) -100.5 34.7 12.3 Steel price hikes and impact of coking coal.
BV/Sh. (INR) 77.5 89.7 105.4 123.4 Domestic steel demand growth.
RoE (%) 0.0 16.2 18.7 17.9
RoCE (%) 2.7 7.8 8.8 8.8
Payout (%) -36.6 10.9 8.2 7.2
Valuation
P/E (x) 14.4 10.7 9.5
P/BV 2.5 2.2 1.8 1.6
EV/EBITDA (x) 16.1 7.9 6.6 5.8
Div. Yield (%) 0.6 0.6 0.6 0.6

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 115,762 109,069 86,983 106,975 117,080 132,278 140,126 173,464 418,789 562,948
Change (YoY %) -12.7 -21.5 -34.2 -15.1 1.1 21.3 61.1 62.2 -20.9 34.4
EBITDA 16,273 17,293 8,918 18,246 32,694 29,586 28,669 29,034 60,730 119,983
Change (YoY %) -37.7 -38.5 -61.2 8.4 100.9 71.1 221.5 59.1 -35.4 97.6
Interest 8,222 8,363 8,107 8,335 9,358 9,646 9,201 10,139 33,027 38,345
Depreciation 9,385 6,822 7,734 7,938 8,315 8,915 9,146 9,236 31,879 35,612
Other Income 258 390 226 808 334 296 333 836 1,682 1,798
PBT (before EO Item) -1,077 2,498 -6,696 2,781 15,356 11,320 10,655 10,494 -2,494 47,825
EO Items -7 -14 -21,221 -11 0 0 0 0 -21,254 0
PBT (after EO Item) -1,084 2,483 -27,917 2,770 15,356 11,320 10,655 10,494 -23,748 47,825
Total Tax 166 1,424 -18,100 1,270 4,507 4,734 3,511 4,048 -15,241 16,799
% Tax -15.3 57.3 64.8 45.8 29.4 41.8 32.9 38.6 64.2 35.1
Reported PAT -1,250 1,060 -9,817 1,500 10,848 6,587 7,145 6,447 -8,508 31,026
MI (Profit)/Loss 199 132 610 10 112 -117 13 -117 950 -110
Share of P/(L) of Ass. -17 -22 -26 203 130 795 143 795 138 1,864
Pref. Dividend 70 70 70 70 0 0 0 0 279 0
Adjusted PAT -1,135 1,105 -1,701 1,649 11,090 7,265 7,300 7,125 -84 32,780
Change (YoY %) -117.5 -85.2 -152.8 161.4 -1,076.8 557.5 -529.2 332.1 -100.5 -38,911.3
April 2017 207

Nalco
Bloomberg NACL IN CMP: INR76 TP: INR83 (+9%) Buy
We estimate EBITDA to more than double QoQ to INR5.3b on
M. Cap. (INR b)/(USD b) 147 / 2
higher aluminum/alumina realization and higher alumina
1,6,12 Rel Perf. (%) -7 / 51 / 78
volumes.
LME aluminum is up 8% QoQ to USD1,848/t. Alumina realization
is estimated to increase 22% QoQ to USD330/t.
Y/E March 2016 2017E 2018E 2019E Aluminum sales volume is estimated to increase marginally QoQ
Sales 68.2 75.5 82.4 84.3 to 101kt.
EBITDA 9.4 11.8 18.4 19.5 Alumina sales volumes are estimated to increase by 17% QoQ to
NP 7.0 7.5 10.3 11.3 363kt on inventory sales.
Adj. EPS (INR) 2.7 3.9 5.3 5.8
EPS Gr(%) -43.4 44.2 37.2 9.0 Key issues to watch for:
BV/Sh. (INR) 50.1 53.9 57.1 60.9 Availability of coal for captive power plant.
RoE (%) 5.4 7.5 9.6 9.9 LME price trend, utilization of smelter.
RoCE (%) 7.5 8.5 12.9 13.4
Payout (%) 74.0 54.0 39.3 36.1
Valuations
P/E (x) 28.1 19.5 14.2 13.0
P/BV 1.5 1.4 1.3 1.2
EV/EBITDA (x) 14.7 9.9 6.0 5.3
Div. Yield (%) 2.3 2.3 2.3 2.3

Aluminium Prod. ('000 tons) 86 94 96 96 94 94 99 101 372 388
Alumina Sales ('000 tons) 220 315 285 375 291 290 311 363 1,195 1,255
Avg LME Aluminium (USD/ton) 1,769 1,593 1,495 1,517 1,570 1,619 1,710 1,848 1,593 1,687
NSR premiums (USD/ton) 349 300 261 224 290 132 155 166 283 186
Alumina NSR (USD/ton) 306 308 263 239 257 266 272 330 299 258
Net Sales 14,913 18,151 16,353 18,744 15,490 18,461 19,881 21,659 68,160 75,491
Change (YoY %) -11.2 -9.0 -14.2 4.1 3.9 1.7 21.6 15.6 -7.7 10.8
EBITDA 2,237 3,393 1,363 2,387 1,946 1,723 2,852 5,327 9,380 11,848
Change (QoQ %)
Change (YoY %) -19.1 -28.5 -74.1 -44.2 -13.0 -49.2 109.2 123.2 -45.0 26.3
As % of Net Sales 15.0 18.7 8.3 12.7 12.6 9.3 14.3 24.6 13.8 15.7
Interest 12 0 0 0 5 6 6 0 12 17
Depreciation 990 1,073 1,046 1,132 1,188 1,353 1,177 1,366 4,241 5,084
Other Income 1,308 1,260 1,240 1,558 1,336 1,369 759 689 5,366 4,152
PBT (before EO Item) 2,543 3,581 1,558 2,812 2,089 1,733 2,428 4,649 10,493 10,899
Extra-ordinary Income 0 0 535 0 0 0 -371 0 535
PBT (after EO Item) 2,543 3,581 2,092 2,812 2,089 1,733 2,057 4,649 11,028 10,899
Total Tax 908 1,319 757 733 739 521 618 1,517 3,718 3,395
% Tax 35.7 36.8 36.2 26.1 35.4 30.1 30.0 32.6 33.7 31.1
Reported PAT 1,634 2,261 1,335 2,079 1,350 1,212 1,439 3,131 7,310 7,504
Adjusted PAT 1,634 2,261 994 2,079 1,350 1,212 1,699 3,131 6,956 7,504
April 2017 208

NMDC
Bloomberg NMDC IN CMP: INR136 TP: INR178 (31%) Buy
NMDCs EBITDA is estimated to increase 12% QoQ to INR15.9b on
M. Cap. (INR b)/(USD b) 430 / 7
higher realization.
1,6,12 Rel Perf. (%) -11 / 16 / 19
Iron ore sales volumes are estimated to increase by 1% QoQ (19%
YoY) to 10mt, aided by an increase in domestic demand.
Domestic iron ore realization would be up 8% QoQ to INR2,606/t
Y/E March 2016 2017E 2018E 2019E on price hikes taken amid an increase in international iron ore
Sales 64.6 87.1 99.1 104.3 prices and strong domestic demand.
EBITDA 32.3 46.5 57.5 60.7 Adj. PAT is estimated to increase 9% QoQ to INR11.3b.
Adj. PAT 33.2 38.2 38.9 41.1
Adj. EPS (INR) 8.4 12.1 12.3 13.0 Key issues to watch for:
EPS Gr(%) -49.7 44.3 1.8 5.9 Increase in global iron ore prices.
BV/Sh. (INR) 75.9 76.0 81.1 86.9 Stronger-than-expected iron ore demand.
RoE (%) 15.9 13.4 15.5 15.1
RoCE (%) 15.6 12.4 14.6 14.2
Payout (%) 177.0 59.7 58.6 55.4
Valuation
P/E (x) 16.3 11.3 11.1 10.5
P/BV 1.8 1.8 1.7 1.6
EV/EBITDA 12.6 8.2 7.0 6.6
(x)
Div. Yield (%) 8.1 4.4 4.4 4.4

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Production (m tons) 6.0 6.4 7.4 8.8 7.6 6.3 9.7 10.1 28.8 36.0
Sales (m tons) 6.7 6.4 7.2 8.5 7.8 8.0 10.1 10.1 28.8 36.0
Avg Dom. NSR (USD/t) 45 39 31 25 32 31 35 39 34 35
Avg Dom. NSR (INR/t) 2,786 2,409 2,054 1,658 2,160 2,093 2,403 2,606 2,201 2,338
Net Sales 18,557 15,528 15,172 15,299 17,207 17,392 24,979 27,475 64,556 87,051
EBITDA 11,027 9,395 6,441 5,398 8,164 8,258 14,226 15,873 32,260 46,521
EBITDA per ton (USD) 27 24 14 9 16 15 21 23 17 19
EBITDA per ton (INR/t) 1,655 1,457 892 634 1,050 1,030 1,415 1,570 1,119 1,294
Interest 0 0 0 654 81 15 53 0 149
Depreciation 401 506 523 647 560 544 551 572 2,078 2,227
Other Income 4,887 4,264 4,212 4,380 3,452 2,735 1,559 1,299 17,744 9,044
PBT (before EO Item) 15,513 13,153 10,130 8,476 10,975 10,434 15,180 16,600 47,927 53,190
Extra-ordinary item 0 -154 -23 -1,672 0 0 -5,972 0 -1,848 -5,972
PBT (after EO Item) 15,513 12,999 10,107 6,804 10,975 10,434 9,208 16,600 46,079 47,217
Total Tax 5,412 4,525 3,557 1,275 3,862 2,727 3,257 5,312 14,769 15,157
% Tax 34.9 34.8 35.2 18.7 35.2 26.1 35.4 32.0 32.1 32.1
Reported PAT 10,101 8,474 6,550 5,529 7,113 7,708 5,952 11,288 31,309 32,061
Adjusted PAT 10,101 8,574 6,565 6,888 7,452 7,085 10,308 11,271 32,565 36,116
April 2017 209

SAIL
Bloomberg SAIL IN CMP: INR65 TP: 30 (-54%) Sell
We estimate SAIL will just manage to break-even at EBITDA due
M. Cap. (INR b)/(USD b) 270 / 4
to higher coking coal cost. The price hikes in January were offset
1,6,12 Rel Perf. (%) 1 / 28 / 34
by decline in February and March. While higher share of exports
implies costs would be higher and realization lower than the
trend in the domestic market. We estimate EBITDA of INR0.3b in
Y/E March 2016 2017E 2018E 2019E
4QFY17.
Sales 395.0 453.6 542.4 652.2 We estimate steel sales volumes to increase 6% QoQ to 3.5mt in
EBITDA -28.6 8.3 12.5 71.9 4QFY17, led by an increase in exports.
NP -37.0 -30.7 -51.9 1.5 PAT loss is estimated at INR13.2b.
Adj. EPS (INR) -9.0 -7.4 -12.6 0.4
EPS Gr(%) -271.5 -17.0 68.8 -103.0 Key issues to watch for:
BV/Sh. (INR) 95.5 87.7 75.2 75.5 Commissioning of ISP and Bhilai capacity expansion.
RoE (%) -8.8 -8.1 -15.4 0.5
RoCE (%) -6.0 -2.3 -2.7 4.3
Payout (%)
Valuation
P/E (x) -7.3 -8.7 -5.2 174.2
P/BV 0.7 0.7 0.9 0.9
EV/EBITDA (x) -21.8 85.9 59.6 10.5
Div. Yield (%)

Production (m tons) 3.1 2.7 3.0 3.6 3.4 3.5 3.3 3.7 12.4 13.9
Change (YoY %) 4.5 -18.3 -4.6 5.0 10.1 30.6 9.2 2.5 -3.4 12.1
Sales (m tons) 2.7 2.7 2.9 3.8 2.8 3.6 3.3 3.5 12.1 13.2
Change (YoY %) -2.3 -6.7 1.4 19.3 4.1 31.4 13.8 -6.9 3.3 9.2
Realization (INR per ton) 35,313 33,797 30,825 30,163 32,993 31,182 34,237 37,520 32,290 34,013
Change (YoY %) -14.2 -15.1 -20.6 -17.7 -6.6 -7.7 11.1 24.4 -17.3 5.3
Net Sales 95,028 92,569 89,391 113,716 92,381 112,256 112,982 131,695 390,704 449,314
Change (%) -16.2 -20.7 -19.5 -1.8 -2.8 21.3 26.4 15.8 -14.5 15.0
EBITDA -817 -7,685 -13,815 -11,235 2,338 1,114 -428 276 -33,551 3,301
Change (YoY %) -107.2 -157.5 -214.4 -220.8 -386.2 -114.5 -96.9 -102.5 -172.9 -109.8
EBITDA per ton (INR) -303 -2,806 -4,764 -2,980 835 310 -130 79 -2,773 250
EBITDA per ton (USD) -5 -43 -72 -44 12 5 -2 1 -42 4
Interest 4,430 4,674 5,242 6,121 5,941 6,028 6,108 6,814 20,468 24,890
Depreciation 4,261 4,358 4,591 7,786 6,002 6,659 6,699 7,625 20,995 26,986
Other Income 1,743 1,306 1,046 1,735 893 682 688 557 5,830 2,819
PBT (after EO Inc.) -7,765 -15,410 -22,603 -23,406 -9,254 -12,531 -12,536 -13,607 -69,184 -47,927
Total Tax -4,549 -7,651 -7,315 -11,097 -3,899 -5,215 -4,587 -408 -30,612 -14,109
% Tax 58.6 49.6 32.4 47.4 42.1 41.6 36.6 3.0 44.2 29.4
Reported PAT -3,216 -7,760 -15,287 -12,309 -5,355 -7,316 -7,948 -13,199 -38,572 -33,818
Adjusted PAT -3,216 -7,760 -15,287 -12,309 -5,042 -6,358 -7,956 -13,199 -38,572 -32,286
Change (YoY %) -160.7 -219.5 -465.4 -468.3 56.8 -18.1 -48.0 7.2 -301.4 -16.3
April 2017 210

Tata Steel
Bloomberg TATA IN CMP: INR492 TP: 440 (-11%) Sell
India: We estimate Tata Steels standalone EBITDA to increase 6%
M. Cap. (INR b)/(USD b) 479 / 7
QoQ to INR35.7b on higher volumes. The increase in realization of
1,6,12 Rel Perf. (%) -4 / 20 / 38
~7% QoQ would be largely offset by higher coking coal cost. The
benefit of higher realization in the ferro chrome business would
be offset by delayed impact of royalty. Volumes would increase
Y/E March 2016 2017E 2018E 2019E 6% QoQ (17% YoY) to 3,177kt on Kalinganagar ramp-up.
Sales 1,172 1,135 1,266 1,296 Standalone EBITDA/t is estimated at INR11,239, broadly flat QoQ.
EBITDA 76 144 173 183 Europe: EU steel margin is estimated to expand from USD38/t in
Adj. PAT 7 18 47 54 3QFY17 to USD58/t on higher steel spreads. Q3 also had the
Adj. EPS (INR) 7.7 18.9 48.6 55.1 impact of maintenance shutdown. Volumes are estimated at
EPS Gr(%) 168.6 145.6 157.9 13.3 2.6mt. EBITDA is estimated at INR10.3b, up from INR6.1b in 3Q.
BV/Sh. (INR) 152 125 164 209 Consolidated EBITDA is estimated at INR46b, an increase of 31%
RoE (%) 4.6 13.6 33.7 29.5 QoQ on higher margins in EU. 3Q also had an FX impact of INR3b,
RoCE (%) 5.4 7.7 9.5 9.8 which is aiding QoQ improvement in EBITDA. PAT is estimated at
Payout (%) -28.6 -63.8 18.5 16.4 INR15.8b.
Valuation
P/E (x) 65.4 26.6 10.3 9.1
Key issues to watch out:
P/BV 3.3 4.0 3.1 2.4
Imports from China and global iron ore prices.
EV/EBITDA (x) 16.6 9.2 7.6 6.9
Div. Yield (%) 1.6 1.6 1.6 1.6

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales (k tons) 6,330 6,290 6,370 6,940 5,410 5,650 6,110 6,506 25,930 23,676
Change (YoY %) -2.0 -3.2 1.1 -1.7 -14.5 -10.2 -4.1 -6.3 -1.5 -8.7
Avg Realization (INR/tss) 47,868 46,589 44,017 42,518 46,635 46,674 45,755 52,143 45,180 47,931
Net Sales 303,003 293,047 280,390 295,076 252,298 263,710 279,565 339,226 1,171,516 1,134,799
Change (YoY %) -16.8 -18.1 -16.6 -12.4 -16.7 -10.0 -0.3 15.0 -16.0 -3.1
EBITDA 27,742 18,305 7,757 22,052 32,420 29,700 35,393 46,526 75,857 144,039
Change (YoY %) -35.1 -52.9 -74.8 42.9 16.9 62.3 356.3 111.0 -27.9 53.7
(% of Net Sales) 9.2 6.2 2.8 7.5 12.8 11.3 12.7 13.7 6.5 12.7
EBITDA(USD/tss) 69 45 18 47 89 78 86 107 45 91
Interest 10,980 10,487 9,641 10,178 10,707 13,511 13,874 13,083 41,286 51,175
Depreciation 13,465 13,708 11,327 12,319 12,417 14,677 13,797 14,263 50,818 55,154
Other Income 7,622 29,382 962 1,291 1,367 1,084 1,301 1,298 39,257 5,051
PBT (before EO Inc.) 10,919 23,491 -12,249 847 10,662 2,597 9,022 20,479 23,008 42,760
EO Income(exp) 1,584 -5,637 -7,118 -28,578 -35,231 634 284 -39,749 -34,313
PBT (after EO Inc.) 12,503 17,854 -19,367 -27,731 -24,568 3,230 9,306 20,479 -16,740 8,446
Total Tax 5,154 2,402 2,434 5,060 7,405 3,634 6,984 4,669 15,050 22,691
% Tax 47.2 10.2 -19.9 597.4 69.4 139.9 77.4 22.8 65.4 53.1
Reported PAT 7,349 15,452 -21,801 -32,791 -31,973 -403 2,321 15,810 -31,790 -14,245
Minority Interests -68 8 -310 -720 2 -1,089 2
Share of asso. PAT 212 -157 219 -67 142 -91 -3 -3 207 46
Adj. PAT (after MI & asso) 6,045 20,925 -14,155 -3,560 3,400 -1,127 2,035 15,805 9,256 20,113
April 2017 211

Vedanta
Bloomberg VEDL IN CMP:INR272 TP: INR250 (-8%) Neutral
We estimate VEDLs EBITDA to increase 23% QoQ to INR73.5b on
M. Cap. (INR b)/(USD b) 1014 / 16
higher prices and volumes in zinc, aluminum and crude oil.
1,6,12 Rel Perf. (%) -2 / 36 / 197
Ex-Cairn and HZL, we estimate EBITDA to increase by 16% QoQ to
INR24.6b, driven by an increase in aluminum volumes and higher
LME. LME gains are partially offset by higher alumina cost. Iron
Y/E March 2016 2017E 2018E 2019E ore EBITDA is estimated to be broadly flat QoQ at INR4.9b. Iron
Sales 644.3 732.2 889.6 967.4 ore volumes are benefiting from the increase in mining limit at
EBITDA * 110.4 177.2 224.9 240.8 Goa and sale of inventory.
NP 31.9 66.5 105.2 116.9 HZL EBITDA is estimated to increase by 29% QoQ to INR35.8b on
Adj. EPS (INR) 10.8 17.9 28.3 31.4 higher zinc/lead prices.
EPS Gr (%) -37.3 -10.8 162.9 75.7 Cairn India EBITDA is estimated to increase by 21% QoQ to
BV/Sh. (INR) 151.8 159.3 174.3 191.9 INR13.1b on higher oil realization and as volumes improve post
RoE (%) 7.9 11.5 17.0 17.2 maintenance shutdown in 3Q.
RoCE (%) 7.4 12.1 15.3 15.5
Payout (%) 48.9 127.1 18.6 16.7 Key issues to watch for:
Valuation Progress on ramp-up of 1.25mtpa smelter.
P/E (x) 25.3 15.2 9.6 8.7
Movement in base metal prices.
P/BV 1.6 1.6 1.4 1.3
EV/EBITDA, x* 10.8 7.9 6.0 5.2
Div. Yield (%) 1.7 7.2 1.7 1.7
Quarterly Performance INR Million

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 170,169 165,609 148,766 159,793 144,371 158,596 194,171 235,086 644,336 732,224
Change (YoY %) -0.2 -15.3 -22.6 -10.3 -15.2 -4.2 30.5 47.1 -12.5 13.6
EBITDA 45,353 38,601 29,057 34,720 34,396 46,674 59,964 73,560 147,731 214,594
As % of Net Sales 26.7 23.3 19.5 21.7 23.8 29.4 30.9 31.3 22.9 29.3
Interest 13,578 14,181 13,906 15,380 13,931 14,503 15,082 14,531 57,045 58,046
D&A 17,175 16,602 17,704 15,629 14,920 15,289 15,203 16,842 67,109 62,254
Other Income 11,480 12,152 7,154 13,757 10,935 12,521 9,160 10,957 44,543 43,573
PBT (before EO item) 26,080 19,969 4,602 17,468 16,480 29,403 38,840 53,143 68,119 137,867
PBT (after EO item) 21,937 19,969 6,602 -105,655 16,480 29,403 38,840 53,143 -57,147 137,867
Total Tax 3,525 2,040 1,606 -2,841 4,914 6,623 8,968 10,378 4,330 30,883
% Tax 16.1 10.2 24.3 2.7 29.8 22.5 23.1 19.5 -7.6 22.4
Reported PAT 18,412 17,929 4,996 -102,814 11,567 22,780 29,872 42,766 -61,477 106,984
Minority interest 8,459 9,587 4,819 9,004 5,417 10,259 11,209 10,558 31,869 37,442
Adjusted PAT 14,096 8,342 -1,823 11,305 6,150 12,521 18,663 32,207 31,920 69,541
Change (YoY %) -29.6 -51.2 -111.5 54.7 -56.4 50.1 nm 184.9 -47.1 117.9
April 2017 212

March 2017 Results Preview | Sector: Oil & Gas
Oil & Gas

Company name Crude prices spiked YoY/QoQ; GRMs down YoY/QoQ
BPCL Marginal inventory loss during the quarter
GAIL
Singapore complex GRM declined to USD6.4/bbl in 4QFY17 from USD6.7/bbl in
Gujarat State Petronet
3QFY17 and USD7.7/bbl in 4QFY16. Reported refining earnings are likely to decline
HPCL
QoQ, as inventory gains had boosted 3Q earnings.
Indraprastha Gas Brent crude price was up 8% QoQ and 57% YoY to an average of USD54.1/bbl in
IOC 4QFY17. While the rise in oil prices would be beneficial for upstream companies, we
MRPL expect operating cost to be higher. ONGC and Oil India should see a marginal QoQ
Oil India increase in EBITDA.
ONGC RIL is likely to be impacted by lower GRM. Additionally, HDPE and LLDPE delta seem to
Petronet LNG have declined 5-10% QoQ.
Reliance Industries Brent up 8% QoQ and 57% YoY; upstream subsidy nil in 4QFY17
While crude prices spiked in 4QFY17, led by OPEC efforts to cut production,
average for the quarter was up 8% QoQ at ~USD54.1/bbl. We expect minor
inventory losses for OMCs during the quarter.
We do not build any net under-recovery either for the OMCs or for the
upstream companies.
GRM at USD6.4/bbl, down from USD6.7/bbl in 3QFY17

The regional benchmark Reuters Singapore GRM was down 17% YoY, led by
decline in gasoline cracks to USD12.5/bbl.
PE, PP and PVC delta declined sequentially. However, POY and PSF spreads
increased significantly during the quarter. RIL is expected to benefit from YoY
strengthening.

Sales (INR m) EBDITA (INR m) PAT (INR m)
Sector CMP Var % Var % Var % Var % Var % Var %
Oil & Gas
BPCL 638 Buy 564,232 27.8 5.4 22,404 -34.8 -33.4 14,523 -43.0 -34.4
GAIL 383 Neutral 155,418 33.7 28.4 18,347 64.0 7.8 11,054 43.6 12.5
Gujarat State Petronet 161 Neutral 2,683 16.0 2.1 2,363 15.8 5.8 1,305 30.9 10.1
HPCL 523 Buy 517,206 22.8 6.7 20,843 -19.6 -27.2 11,100 -28.5 -30.2
IOC 381 Buy 987,632 23.4 6.6 77,900 115.6 4.4 40,502 227.8 1.4
Indraprastha Gas 1,014 Neutral 9,196 4.3 -2.5 2,552 32.3 1.5 1,520 41.2 5.0
MRPL 110 Neutral 119,746 28.9 4.4 9,212 -40.0 -19.7 4,427 -67.2 -21.8
Oil India 332 Buy 25,168 32.5 5.9 7,020 11.2 5.6 4,610 -1.7 1.4
ONGC 186 Neutral 210,978 30.7 5.8 107,679 80.4 4.6 45,209 64.6 3.9
Petronet LNG 408 Buy 77,361 27.5 22.8 6,330 41.8 4.3 3,967 65.8 -0.2
Reliance Inds. 1,415 Neutral 687,251 37.6 11.2 106,698 -0.5 0.6 75,184 2.7 -6.3
Sector Aggregate 3,356,871 27.9 8.3 381,349 25.2 -2.7 213,401 15.7 -6.6
Excl. OMCs 1,287,802 34.0 11.8 260,201 25.0 2.1 147,277 12.4 -2.1
Source: MOSL
Swarnendu Bhushan (Swarnendu.Bhushan@MotilalOswal.com); +91 22 6129 1529

Abhinil Dahiwale (Abhinil.Dahiwale@motilaloswal.com); +91 22 3980 4309
April 2017 213
Auto fuel marketing margins down YoY

OMCs gross margins for auto fuels have declined YoY during the quarter. Gross
margins stood at INR3.12/liter in 4QFY17 v/s INR3.24/liter in 4QFY16 for petrol
and at INR2.59/liter in 4QFY17 v/s INR3.07/liter in 4QFY16 for diesel.
The gross marketing margins are higher than INR2.3/liter during the regulation
era. We expect marketing margins to remain higher than regulated era margins.
Valuation and view

Against the backdrop of a lower oil price regime, auto fuel pricing freedom and
broadly stable marketing margins, we retain OMCs (IOCL/HPCL/BPCL) as our top
picks.
RIL is expected to report a decline in its GRM in the quarter, led by narrowing
light-heavy differential and decline in benchmark Singapore complex GRM. We
believe that while core earnings growth would be significant, telecom losses
would cap consolidated earnings and return ratios.
Although volume growth would continue for CGD players, we might see margin
compression in the industrial segment due to increase in LNG prices. Cut in APM
price is negative for ONGC/OINL; however, OPEC and non-OPEC efforts to cut oil
production should revive realizations, benefitting ONGC/OINL.
Exhibit 2: Relative performance - 3m (%) Exhibit 3: Relative performance - 1Yr (%)

Sensex Index MOSL Oil & Gas Index
Sensex Index MOSL Oil & Gas Index
150
112
140
109 130
120
106 110
100
103
90
100 80
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
Dec-16
Jan-17
Feb-17
Mar-17
Exhibit 4: Comparative valuations

CMP EPS (INR) PE (x) P/BV (x) RoE (%)
Sector / Companies Reco
Oil & Gas
BPCL 638 Buy 55.9 53.7 58.4 11.4 11.9 10.9 2.9 2.5 2.2 27.1 22.7 21.4
GAIL 383 Neutral 21.7 28.9 32.5 17.6 13.2 11.8 1.9 1.8 1.6 13.0 14.0 14.4
Gujarat State Petronet 161 Neutral 8.9 11.0 13.2 18.1 14.6 12.2 2.1 1.9 1.7 12.0 13.5 14.5
HPCL 523 Buy 53.5 44.9 45.8 9.8 11.6 11.4 2.6 2.3 2.0 27.8 20.7 18.6
Indraprastha Gas 1,014 Neutral 43.3 43.8 49.4 23.4 23.1 20.5 4.9 4.2 3.7 22.3 19.7 19.2
IOC 381 Buy 43.7 39.4 41.0 8.7 9.7 9.3 2.1 1.9 1.7 26.0 20.4 18.8
MRPL 110 Neutral 12.2 11.4 12.8 9.0 9.6 8.6 2.4 2.0 1.7 29.6 22.7 21.4
Oil India 332 Buy 28.6 33.1 37.8 11.6 10.0 8.8 1.1 1.1 1.0 9.8 10.8 11.6
ONGC 186 Neutral 12.2 16.1 17.3 15.3 11.5 10.8 1.3 1.3 1.3 8.4 11.1 11.7
Petronet LNG 408 Buy 22.2 26.5 36.2 18.4 15.4 11.3 4.0 3.4 2.8 23.9 24.0 27.2
Reliance Inds. 1,415 Neutral 99.6 113.9 123.2 14.2 12.4 11.5 1.6 1.4 1.3 11.6 12.0 11.7
Ex OMCs 15.4 12.8 11.7 1.6 1.5 1.4 10.5 11.7 12.0
Source: MOSL
April 2017 214

On QoQ basis, Brent up 8%, GRM down 4%, light/heavy spreads rise
Exhibit 5: Brent crude price was up 8% QoQ and 57% YoY to Exhibit 6: Premium of Brent over WTI increased YoY/QoQ to
an average of USD54.1/bbl in 4QFY17 USD2.3/bbl in 4QFY17
Brent Crude Price (USD/bbl) Brent less WTI (USD/bbl)
140 24
105 16
70 8
35 0
0 (8)
2QFY05
3QFY06
4QFY07
1QFY09
2QFY10
3QFY11
4QFY12
1QFY14
2QFY15
3QFY16
4QFY17
2QFY05
3QFY06
4QFY07
1QFY09
2QFY10
3QFY11
4QFY12
1QFY14
2QFY15
3QFY16
4QFY17
Exhibit 7: Reuters Singapore GRM declined 4% QoQ and 17%

YoY to an average of USD6.4/bbl in 4QFY17 Exhibit 8: YoY GRM decline led by lower gasoline cracks
Reuters Singapore GRM (USD/bbl) 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17
20
10
8 10
6 0
4
(10)
2
(20)
0
Gasoline
LPG
Fuel Oil
Diesel
Jet/Kero
Naphtha
2QFY05
3QFY06
4QFY07
1QFY09
2QFY10
3QFY11
4QFY12
1QFY14
2QFY15
3QFY16
4QFY17
Source: Bloomberg, MOSL Source: Reuters, MOSL
Exhibit 9: Crude differentials declined in 4QFY17 (USD/bbl) Our key assumptions

In USD/bbl Brent - Dubai Arab L-H Our crude price assumptions are USD49/bbl for
9
FY17, USD55/bbl for FY18 and USD60/bbl over
long term.
7
We expect the regional benchmark Singapore
5
Reuters GRM to remain in the USD5-6/bbl range
3
for the near term, with downward bias.
1
(1)
2QFY05
3QFY06
4QFY07
1QFY09
2QFY10
3QFY11
4QFY12
1QFY14
2QFY15
3QFY16
4QFY17
April 2017 215

Exhibit 10: Polymer spreads declined QoQ

(INR/kg) RIL Basic prices (INR/kg) Simple Spreads Int. Spreads
PE PP PVC POY PSF Naphtha PE PP PVC POY PSF
3QFY14 107.6 109.8 72.3 103.4 106.0 59.3 48.4 50.6 13.1 56.3 58.9
4QFY14 112.3 113.0 74.3 97.9 100.9 58.4 53.9 54.6 15.9 51.4 54.4
1QFY15 109.0 107.7 77.0 97.7 97.6 57.6 51.4 50.1 19.5 51.8 51.7
2QFY15 113.0 110.3 79.4 102.9 103.6 55.9 57.1 54.4 23.5 58.5 59.2
3QFY15 109.3 107.0 70.0 92.7 92.4 40.2 69.1 66.8 29.8 61.0 60.7
4QFY15 90.7 84.3 63.7 80.6 79.8 30.5 60.1 53.8 33.2 56.6 55.8
1QFY16 102.3 100.3 70.1 84.8 84.0 35.6 66.7 64.7 34.5 56.8 56.0
2QFY16 95.8 85.8 65.5 79.0 80.5 29.4 66.4 56.4 36.1 56.1 57.5
3QFY16 88.8 76.7 65.0 73.0 77.5 29.2 59.6 47.6 35.8 50.2 54.7
4QFY16 85.6 70.4 62.3 71.5 74.0 22.8 62.8 47.6 39.5 53.8 56.3
1QFY17 92.4 81.5 68.1 74.4 79.7 27.4 65.0 54.1 40.7 53.1 58.3
2QFY17 91.4 83.9 69.2 74.1 79.3 26.0 65.5 57.9 43.3 53.9 59.2
3QFY17 88.8 82.7 70.8 74.1 79.3 27.1 63.7 55.6 43.7 53.0 58.2
4QFY17 89.1 87.4 75.9 83.0 89.5 33.5 55.6 53.8 42.4 56.7 63.2
QoQ (%) 0.4% 5.6% 7.3% 12.0% 12.8% 23.7% -12.7% -3.2% -3.0% 7.0% 8.5%
YoY (%) 4.1% 24.1% 21.9% 16.1% 20.9% 46.6% -11.4% 13.2% 7.5% 5.4% 12.3%
Exhibit 11: Polymer spreads declined (INR/kg): PE , PP, PVC Exhibit 12: POY spreads up 7% QoQ; PSF spreads up 8.5%
spreads change -12.7%/-3.2%/-3% QoQ QoQ (INR/kg)
PE PP PVC POY PSF
80 80
60
60
40
40
20
0 20
2QFY11
4QFY11
2QFY12
4QFY12
2QFY13
4QFY13
2QFY14
4QFY14
2QFY15
4QFY15
2QFY16
4QFY16
2QFY17
4QFY17
2QFY11
4QFY11
2QFY12
4QFY12
2QFY13
4QFY13
2QFY14
4QFY14
2QFY15
4QFY15
2QFY16
4QFY16
2QFY17
4QFY17
Source: Bloomberg, Company, MOSL Source: Bloomberg, Company
Exhibit 13: We model nil subsidy for OMCs in FY17, FY18 and FY19
(INR b) FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E
Fx Rate (INR/USD) 46.0 47.5 45.6 47.9 54.5 60.6 61.1 65.5 67.1 68.5 70.0
Brent (USD/bbl) 85 70 86 114 111 108 86 48 49 55 60
Product-wise Gross Under recoveries (INRb)
Petrol 52 52 27 0 0 0 0 0 0 0 0
Diesel 523 93 348 819 915 628 109 0 0 0 0
Kerosene 282 174 200 278 296 306 248 116 91 145 170
LPG 176 143 205 284 399 465 366 161 142 212 311
Total 1,033 461 780 1,385 1,610 1,399 723 276 233 356 480
Sharing of Gross Under recoveries (INR b)
Government 713 260 410 829 1,000 707 273 263 233 356 480
Upstream 329 145 303 552 600 671 428 13 0 0 0
OMC's (9) 56 67 0 10 21 22 0 0 0 0
Total 1033 461 780 1,385 1,610 1,399 723 276 233 356 480
Sharing of Gross Under recoveries (%)
Government 69 56 53 60 62 51 38 95 100 100 100
Upstream 32 31 39 40 37 48 59 5 0 0 0
OMC's (1) 12 9 0 1 2 3 0 0 0 0
Total 100 100 100 100 100 100 100 100 100 100 100
*LPG includes DBTL component Source: Company, MOSL
April 2017 216

Exhibit 14: Petrol-diesel price difference (INR/liter) Exhibit 15: Diesel in over-recovery zone post deregulation
35 Diesel (under)/over recovery (INR/ltr)
3
Petrol - Diesel price
difference (INR/ltr)
25 2
1
15
0
5 (1)
Jun-15
Jun-16
Nov-15
Nov-16
May-15
May-16
Dec-14
Aug-15
Feb-15
Mar-15
Sep-15
Dec-15
Aug-16
Jan-16
Mar-16
Sep-16
Dec-16
Feb-17
Mar-17
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Dec-10
Mar-11
Sep-11
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Source: PPAC, MoPNG, MOSL Source: PPAC, MoPNG, MOSL
Exhibit 16: With almost nil subsidy, model ONGCs net Exhibit 17: Expect higher LNG volumes in 4QFY17 (mmscmd)
realization for 4QFY17 at USD55/bbl and lower production in RILs KG-D6
Net Realization Subsidy Burden Gross Realization RIL KG-D6 PLNG GAIL India GSPL
104
97 95 96 101 103
114
96 95 97 91
110
110
110
109
109
108
107
94 86 87 90
103
102
75 75
61
76
46 44 48 43 46 50
59 5 64
38 36 43
63
40
62
63
62
63
62
64
56
55 0 55
52 0 52
49 2 51
61
63
74
48 0 48
29
46 0 46
25 26 27
44 0 44
24 24 25 24 25
35 0 35
24 23
40
20 21 22 23
56
51
48
47
47
47
46
45
12 14 13 13 12 12 12 11 11 10
41
40
36
33
9 8 8 8
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
FY13 FY14 FY15 FY16 FY17

Exhibit 18: Expect RILs GRM at USD10.2/bbl in 4QFY17 (USD/bbl)

Singapore GRM Premium / (Disc)
11.5
11.5
10.8
10.8
10.6
10.4
10.2
10.1
10.1
10.1
9.6
9.5
9.3
8.7
8.4
8.3
7.7
7.6
7.6
7.3
0.4 1.4 1.5 2.4 3.5 3.0

3.1 3.1 2.9 4.3 6.5 5.0 4.1 3.8
1.0 1.9
2.3 3.3 3.5 1.0
9.1 8.7 8.6 8.0 8.0 7.8
6.6 6.5 6.5 5.4 6.2 5.8 6.3 6.3 6.7 6.4
4.3 4.8 5.0 5.1
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY13 FY14 FY15 FY16 FY17
April 2017 217

BPCL
Bloomberg BPCL IN
M. Cap. (INR b)/(USD b) 922 / 14
We expect OMCs (IOCL, BPCL, HPCL) core earnings to decline
52-Week Range (INR) 735 / 440 YoY/QoQ, led by lower refining and marketing margins in 4QFY17.
1,6,12 Rel Perf. (%) -3 / -8 / 23 We model nil subsidy sharing for OMCs; the subsidy in 4QFY17
would entirely be borne by the government.
Financial snapshot (INR b) We peg BPCLs refinery throughput at 6.4mmt for 4QFY17 v/s
Y/E March 2016 2017E 2018E 2019E 6.2mmt in 4QFY16 and 6.8mmt in 3QFY17.
Sales 1884.5 2010.5 1980.6 2224.9 We model GRM of USD5.5/bbl (inclusive of inventory gain/loss) for
EBITDA 142.1 140.6 148.4 154.8 BPCL during 4QFY17.
Adj. PAT 79.8 80.8 77.6 84.5
We expect BPCL to report EBITDA of INR22.4b (-33% QoQ, -35%
Adj. EPS (INR) 55.2 55.9 53.7 58.4
YoY) in 4QFY17.
EPS Gr.% 104.1 68.1 -2.8 4.6
BV/Sh.INR 193.8 218.6 253.9 292.6
We estimate PAT at INR14.5b (-34% QoQ, -43% YoY) for 4QFY17.
RoE (%) 31.6 27.1 22.7 21.4 BPCL trades at 10.9x FY19E EPS of INR58.4 and 2.2x FY19E BV
RoCE (%) 18.8 16.3 14.9 15.1 (adjusted for investments), with ~3% dividend yield. Buy.
Payout*(%) 33.0 55.6 34.2 33.7
Valuation Key issues to watch for
P/E (x) 11.6 11.4 11.9 10.9 (a) Inventory and forex change impact, (b) GRM, (c) Kochi refinery
P/BV (x) 3.3 2.9 2.5 2.2
expansion, and (d) update on Mozambique/Brazil E&P blocks.
EV/EBITDA (x) 8.0 8.3 7.9 7.3
Div. Yld (%) 2.4 4.2 2.5 2.6
*Based on standalone
Standalone - Quarterly Earnings Model (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 519,167 464,227 466,131 441,455 468,902 446,464 535,427 564,232 1,890,981 2,015,025
YoY Change (%) -22.2 -25.1 -19.5 -14.0 -9.7 -3.8 14.9 27.8 -20.5 6.6
Total Expenditure 481,481 451,415 442,500 407,075 430,195 433,114 501,785 541,828 1,782,471 1,906,921
EBITDA 37,686 12,813 23,631 34,380 38,707 13,351 33,642 22,404 108,510 108,104
Margins (%) 7.3 2.8 5.1 7.8 8.3 3.0 6.3 4.0 5.7 5.4
Depreciation 5,372 4,172 4,564 4,435 4,315 4,524 4,836 4,900 18,543 18,575
Interest 1,147 1,074 975 2,433 1,111 1,024 1,349 1,482 5,629 4,966
Other Income 3,794 7,373 3,545 7,461 4,134 10,687 4,024 5,761 22,174 24,605
PBT 34,962 14,940 21,637 34,973 37,415 18,489 32,968 21,783 106,512 109,168
Tax 11,200 4,760 6,751 9,482 11,210 5,437 9,771 7,260 32,193 33,679
Rate (%) 32.0 31.9 31.2 27.1 30.0 29.4 29.6 33.3 30.2 30.9
Reported PAT 23,762 10,180 14,886 25,491 26,205 13,052 21,710 14,523 74,319 75,489
Adj PAT 23,762 10,180 14,886 25,491 26,205 13,052 22,151 14,523 74,319 75,489
YoY Change (%) 95.4 119.3 170.1 -10.6 10.3 28.2 48.8 -43.0 46.2 1.6
Margins (%) 4.6 2.2 3.2 5.8 5.6 2.9 4.1 2.6 3.9 3.7
Key Assumptions
Refining throughput (mmt) 6.1 6.0 5.9 6.2 6.2 6.4 6.8 6.4 24.1 25.8
GRM (USD/bbl) 8.6 3.9 7.7 6.3 6.1 3.1 5.9 5.5 6.6 5.2
Mktg.sales volume excld
9.0 8.5 9.3 9.8 9.7 8.9 9.8 9.5 36.5 37.9
exports (mmt)
Mktg. GM per litre (INR/litre) 4.6 3.2 3.4 5.2 4.6 3.3 4.2 3.2 4.6 3.5
E: MOSL Estimates
April 2017 218

GAIL
Bloomberg GAIL IN
M. Cap. (INR b)/(USD b) 648 / 10
We expect GAIL to report a PAT of INR11b (+44% YoY and +12%
52-Week Range (INR) 401 / 251 QoQ). We model nil subsidy sharing for GAIL in 4QFY17 (v/s nil in
1,6,12 Rel Perf. (%) -6 / 21 / 29 4QFY16 and 3QFY17).
We estimate EBITDA at INR18.3b in 4QFY17 v/s INR11.2b in 4QFY16
Financial snapshot (INR b) and INR17b in 3QFY17.
Y/E March 2016 2017E 2018E 2019E We model Brent crude price of USD49/bbl for FY17, USD55/bbl for
Sales 515.9 504.8 538.3 620.6 FY18 and USD60/bbl for the long term.
EBITDA 39.5 66.2 81.9 87.6 Segmental EBIT (pre-subsidy) is expected to be INR17.7b, up 51%
Adj. PAT 22.8 36.7 48.9 55.0
YoY, led by turnaround in petchem division profitability and likely
Adj. EPS (INR) 13.5 21.7 28.9 32.5
higher gas transmission profitability.
EPS Gr. (%) -23.9 61.1 33.2 12.4
BV/Sh.(INR) 180.6 197.2 215.5 236.0
GAIL trades at 11.8x FY19E EPS of INR32.5. Maintain Neutral.
RoE (%) 7.6 13.0 14.0 14.4
RoCE (%) 6.4 9.7 11.5 12.0 Key issues to watch for
Payout (%) 36.8 32.5 36.8 36.8 (a) Petchem profitability, (b) profitability in gas trading business,
Valuations (c) progress of pipeline projects, (d) pending tariff revisions for key
P/E (x) 28.4 17.6 13.2 11.8 pipelines, and (e) visibility on placement of US contracts.
P/BV (x) 2.1 1.9 1.8 1.6
EV/EBITDA (x) 11.6 9.6 7.5 6.6

Div. Yield (%) 1.1 1.7 2.3 2.6

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 125,191 140,880 133,572 116,272 106,866 118,582 121,079 155,418 515,914 501,945
Change (%) -6.4 -0.3 -10.8 -18.5 -14.6 -15.8 -9.4 33.7 -9.1 -2.7
EBITDA 9,976 7,675 11,008 11,186 15,732 15,155 17,015 18,347 39,845 66,248
% of Net Sales 8.0 5.4 8.2 9.6 14.7 12.8 14.1 11.8 7.7 13.2
Depreciation 3,077 3,227 3,356 3,497 3,354 3,563 3,579 3,657 13,158 14,153
Interest 1,636 1,635 1,524 1,546 1,774 1,198 1,601 1,191 6,341 5,765
Other Income 1,248 3,787 3,102 3,256 1,362 3,361 3,002 3,000 11,394 10,725
Extraordinary item* 0 0 0 0 4,893 0 0 0 0 4,893
PBT 6,511 6,599 9,230 9,399 16,858 13,755 14,836 16,499 31,740 61,948
Tax 2,270 2,194 2,472 1,699 3,506 4,508 5,007 5,445 8,636 18,466
Rate (%) 34.9 33.2 26.8 18.1 20.8 32.8 33.7 33.0 27.2 29.8
PAT 4,241 4,405 6,758 7,700 13,352 9,247 9,829 11,054 23,105 43,482
Adj PAT 4,241 4,405 6,758 7,700 8,459 9,247 9,829 11,054 23,105 38,589
Change (%) -31.7 -66.2 20.8 50.8 99.4 109.9 45.4 43.6 -22.8 67.0
EPS (INR) 2.5 2.6 4.0 4.5 5.0 5.5 5.8 6.5 13.6 22.8
Key Assumptions
Gas Trans. volume (mmsmd) 87 90 97 95 96 101 103 104 92 101
Petchem sales ('000MT) 50 84 84 116 110 136 146 170 334 562
E: MOSL Estimates
April 2017 219

Gujarat State Petronet

Bloomberg GUJS IN CMP: INR161 TP: INR162 (+1%) Neutral
We expect GUJS to report net sales of INR2.7b and PAT of INR1.3b
(+31% QoQ, +10% YoY).
1,6,12 Rel Perf. (%) -5 / -5 / -3
We model transmission volume at 27mmscmd (+11% YoY, +3%
QoQ) and transmission tariff at INR1,080/mscm (+5% YoY, -1%
QoQ).
Y/E March 2016 2017E 2018E 2019E
GUJS had won the bids for three cross-country pipelines (Mehsana-
Sales 9.9 10.5 12.6 14.4
Bhatinda, Bhatinda-Srinagar, Mallavaram-Bhilwara). We await
EBITDA 8.6 9.2 11.1 12.6 clarity on the current status, timelines and other details regarding
Adj. PAT 4.4 5.0 6.2 7.4 these pipelines.
Adj. EPS (INR) 7.9 8.9 11.0 13.2 We build gas transmission volumes of 25.8mmscmd for FY17 and
EPS Gr. (%) 23.9 12.5 24.0 19.5 28/32mmscmd for FY18/19 and model tariff at INR1,082/mscm for
BV/Sh.(INR) 70 77.4 85.9 96.2 FY17 and INR1,200/mscm for FY18/19. The stock trades at 12.2x
RoE (%) 11.7 12.0 13.5 14.5 FY19E EPS of INR13.2. Maintain Neutral.
RoCE (%) 9.7 10.0 11.3 12.2
Payout (%) 22.2 22.4 22.3 22.2 Key issues to watch for
Valuations Transmission volumes and tariffs.
P/E (x) 20.3 18.1 14.6 12.2 Progress on clearances of the three pipelines.
P/BV (x) 2.3 2.1 1.9 1.7
EV/EBITDA (x) 11.3 10.2 8.1 6.6
Div. Yield (%) 0.9 1.1 1.3 1.6

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 2,557 2,526 2,475 2,313 2,579 2,564 2,627 2,683 9,870 10,453
Change (%) 11.0 -28.0 1.9 -2.1 0.9 1.5 6.1 16.0 -6.9 5.9
Employee Costs 74 113 89 71 79 77 144 81 347 380
Operating expenses 193 121 243 130 117 175 185 169 687 646
Other Expenditure 53 52 57 69 52 67 64 70 231 254
EBITDA 2,237 2,240 2,086 2,042 2,330 2,245 2,234 2,363 8,605 9,173
% of Net Sales 87.5 88.7 84.3 88.3 90.4 87.6 85.1 88.1 87.2 87.8
% Change 11.9 -30.7 2.7 3.5 4.2 0.2 7.1 15.8 -6.8 6.6
Depreciation 434 464 472 473 430 436 465 457 1,843 1,788
Interest 207 213 184 168 167 148 165 151 773 631
Other Income 143 122 288 137 147 304 218 231 690 900
PBT 1,738 1,685 1,718 1,538 1,881 1,965 1,822 1,987 6,679 7,654
Tax 610 600 483 541 668 666 636 682 2,234 2,653
Rate (%) 35.1 35.6 28.1 35.2 35.5 33.9 34.9 34.3 33.4 34.7
PAT 1,128 1,085 1,235 997 1,213 1,298 1,186 1,305 4,445 5,001
Adj. PAT 1,128 1,085 1,235 997 1,213 1,298 1,186 1,305 4,445 5,001
Change (%) 33 -2 39 35 8 20 -4 31 24 13
EPS (INR) 2.0 1.9 2.2 1.8 2.2 2.3 2.1 2.3 7.9 8.9
Transmission Vol. (mmscmd) 24.2 24.3 25.1 24.4 25.1 24.6 26.2 27.0 24.5 25.8
Implied adj. tariff (INR/mscm) 1,126 1,068 1,054 1,028 1,073 1,079 1,095 1,080 1,069 1,082
E: MOSL Estimates
April 2017 220

HPCL
Bloomberg HPCL IN
M. Cap. (INR b)/(USD b) 531 / 8
52-Week Range (INR) 584 / 259 YoY/QoQ, led by lower refining and marketing margins during
1,6,12 Rel Perf. (%) -4 / 14 / 76 4QFY17.
We model nil subsidy sharing for OMCs; the subsidy in 4QFY17
Financial snapshot (INR b) would entirely be borne by the government.
Y/E MARCH 2016 2017E 2018E 2019E We peg HPCLs refinery throughput at 4.3mmt for 4QFY17 v/s
Sales 1,793 1,873 1,755 1,952 4.7mmt in 4QFY16 and 4.7mmt in 3QFY17.
EBITDA 76.2 99.9 94.7 98.9 We model GRM of USD5.6/bbl (inclusive of inventory gain/loss) for
Adj. PAT 38.6 54.5 45.7 46.6 HPCL during 4QFY17.
Adj. EPS (INR) 38.0 53.5 44.9 45.8
We expect HPCL to report EBITDA of INR20.4b (-29% QoQ, -21%
EPS Gr. (%) 41.3 41.0 (16.1) 1.9
YoY) in 4QFY17.
BV/Sh.(INR) 182.1 202.7 231.8 261.5
RoE (%) 22.4 27.8 20.7 18.6
We estimate PAT at INR10.8b (-32% QoQ, -30% YoY) for 4QFY17.
RoCE (%) 13.0 14.7 10.7 9.5 HPCL trades at 11.4x FY19E EPS of INR45.8 and 2x FY19E BV
Payout (%) 36.4 58.5 35.2 35.2 (adjusted for investments), with ~3% dividend yield. Buy.
Valuations
P/BV (x) 2.9 2.6 2.3 2.0 (a) GRM,
EV/EBITDA (x) 8.9 7.7 7.7 7.7
(b) impact of forex and inventory change, and
Div. Yield (%) 2.2 5.1 2.6 2.6
(c) Bhatinda refinery profits.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 517,204 420,036 429,376 421,260 447,793 420,306 484,856 517,206 1,787,875 1,870,160
YoY Change (%) -12.6 -18.7 -15.9 -5.4 -13.4 0.1 12.9 22.8 -13.4 4.6
EBITDA 29,802 -1,265 21,711 25,921 35,653 11,890 28,636 20,843 76,168 97,022
Margins (%) 5.8 -0.3 5.1 6.2 8.0 2.8 5.9 4.0 4.3 5.2
Depreciation 7,508 5,428 6,960 6,754 6,108 6,160 6,336 6,817 26,649 25,420
Interest 1,227 1,650 1,639 1,913 1,395 1,164 530 700 6,430 3,789
Other Income 3,138 3,640 2,725 4,771 3,368 6,188 2,276 3,324 14,274 15,155
PBT 24,204 -4,704 15,838 22,025 31,518 10,755 24,046 16,650 57,363 82,968
Tax 8,324 -1,499 5,425 6,495 10,534 3,741 8,143 5,549 18,746 27,968
Rate (%) 34 32 34 29 33 35 34 33 33 34
Adj PAT 15,880 -3,205 10,413 15,529 20,984 7,013 15,903 11,100 38,617 55,000
YoY Change (%) 3,349.3 -137.7 -420.0 -28.2 32.1 -318.8 52.7 -28.5 41.3 42.4
Margins (%) 3.1 -0.8 2.4 3.7 4.7 1.7 3.3 2.1 2.2 2.9
Key Assumptions
GRM (USD/bbl) 8.6 2.7 7.9 7.5 6.8 3.2 6.4 5.6 6.7 5.5
Marketing sales volume incl
8.6 7.8 8.7 9.1 8.9 8.0 9.3 8.9 34.1 35.0
exports (mmt)
Marketing GM per litre
4.5 1.9 3.1 5.1 4.7 3.5 3.9 3.5 3.7 3.9
(INR/litre)
E: MOSL Estimates
April 2017 221

Indraprastha Gas
Bloomberg IGL IN CMP: INR1,014 TP: INR1,023 (+1%) Neutral
We expect IGL to report volumes of 4.68mmscmd and assume
M. Cap. (INR b)/(USD b) 142 / 2
EBITDA/scm at INR6.0 during 4QFY17.
1,6,12 Rel Perf. (%) -7 / 16 / 60
We expect 4QFY17 CNG volumes at 3.51mmscmd (+11% YoY, flat
QoQ) and PNG volumes at 1.17mmscmd (+24% YoY, +3% QoQ). We
model total volumes of 4.56/5.07/5.54mmscmd in FY17/FY18/FY19.
Y/E MARCH 2016 2017E 2018E 2019E
We expect IGL to report EBITDA of INR2.5b (+32% YoY, +2% QoQ)
Sales 36.7 37.2 43.6 48.4
for 4QFY17.
EBITDA 7.6 10.2 10.4 11.4 We expect profitability to improve YoY and remain flat QoQ, driven
Adj. PAT 4.2 6.1 6.1 6.9 by price hike taken during Dec-16 and flat gas cost.
Adj. EPS (INR) 29.7 43.3 43.8 49.4 We expect IGL to report PAT of INR1.5b (+41% YoY, +5% QoQ)
EPS Gr. (%) -4.9 45.5 1.2 12.8 The stock trades at 20.5x FY19E EPS of INR49.4. Neutral.
BV/Sh.(INR) 172.6 205.3 238.6 276.3
RoE (%) 18.4 22.3 19.7 19.2 Key issues to watch for
RoCE (%) 17.1 21.6 18.7 18.4 (a) Likely increase in volumes following lower gas prices, and
Payout (%) 20.2 18.5 20.6 20.2 (b) EBITDA margin.
Valuation
P/E (x) 34.1 23.4 23.1 20.5
P/BV (x) 5.9 4.9 4.2 3.7
EV/EBITDA (x) 18.1 13.2 12.5 11.0
Div. Yield (%) 0.6 0.8 0.9 1.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 8,994 9,658 9,269 8,816 8,970 9,624 9,429 9,196 36,737 37,220
Change (%) 3.7 1.8 -1.5 -3.4 -0.3 -0.3 1.7 4.3 0.1 1.3
EBITDA 1,938 1,880 1,850 1,929 2,570 2,575 2,515 2,552 7,597 10,213
EBITDA (Rs/scm) 5.6 5.0 5.0 5.2 6.5 6.1 5.9 6.0 5.2 5.1
% of Net Sales 21.5 19.5 20.0 21.9 28.7 26.8 26.7 27.8 20.7 27.4
% Change -6.3 -12.4 -1.9 12.2 32.7 37.0 35.9 32.3 -2.9 34.4
Depreciation 386 395 399 398 466 483 479 478 1,577 1,905
Interest 36 27 18 10 0 0 0 0 91 0
Other Income 79.1 99.2 135.1 106.1 106.5 251.4 190.8 176.3 419.5 725.0
PBT after EO 1,596 1,557 1,569 1,627 2,211 2,177 2,144 2,251 6,349 8,783
Tax 577 542 517 551 731 735 696 731 2,187 2,893
Rate (%) 36.2 34.8 33.0 33.9 33.1 33.8 32.5 32.5 34.4 32.9
PAT 1,018 1,016 1,051 1,076 1,480 1,442 1,448 1,520 4,162 5,890
EPS (INR) 7.3 7.3 7.5 7.7 10.6 11.1 10.3 10.9 29.7 42.9
Gas Volumes (mmscmd)
CNG 2.97 3.10 3.07 3.15 3.31 3.47 3.48 3.51 3.07 3.44
PNG 0.87 0.98 0.94 0.95 1.02 1.11 1.13 1.17 0.93 1.11
Total 3.84 4.08 4.01 4.10 4.34 4.58 4.61 4.68 4.01 4.55
YoY Change (%)
CNG 4.7 2.9 4.1 7.1 11.7 11.9 13.2 11.2 4.7 12.0
PNG (4.8) 4.7 5.1 7.7 17.7 13.3 20.1 23.7 3.1 18.7
Total 2.3 3.3 4.3 7.2 13.0 12.3 14.8 14.1 4.3 13.6
E: MOSL Estimates
April 2017 222

IOC
Bloomberg IOCL IN CMP: INR381 TP: INR441 (+16%) Buy
M. Cap. (INR b)/(USD b) 1852 / 29
YoY/QoQ, led by lower refining and marketing margins during
1,6,12 Rel Perf. (%) -2 / 18 / 70
4QFY17.
We model nil subsidy sharing for OMCs; the subsidy in 4QFY17
would entirely be borne by the government.
Y/E MARCH 2016 2017E 2018E 2019E
We peg IOCLs refinery throughput at 16.3mmt for 4QFY17 v/s
Sales 3544.3 3654.2 3835.8 4421.6
15mmt in 4QFY16 and 16.4mmt in 3QFY17 higher due to
EBITDA 217.0 366.4 362.6 378.3 contribution from Paradip refinery.
Adj. PAT 98.5 212.1 191.1 199.3 We model GRM of USD6/bbl (inclusive of inventory gain/loss) for
Adj. EPS (INR) 20.3 43.7 39.4 41.0 IOCL during 4QFY17.
EPS Gr. (%) 203.8 115.2 -9.9 4.3 We expect IOCL to report EBITDA of INR77.9b (+4% QoQ, +116%
BV/Sh.(INR) 156.5 179.8 205.2 230.3 YoY) in 4QFY17.
RoE (%) 13.6 26.0 20.4 18.8 We estimate PAT at INR40.5b (+1% QoQ, +228% YoY) in 4QFY17.
RoCE (%) 10.3 18.2 14.6 14.0 IOCL trades at 9.3x FY19E EPS of INR41 and at 1.7x FY19E BV.
Payout (%) 36.4 34.5 34.8 34.7 Dividend yield is ~4%. Buy.
Valuations
P/BV (x) 2.4 2.1 1.9 1.7 (a) Update on Paradip refinery, (b) GRM, (c) capex plans, and (d)
EV/EBITDA (x) 10.8 6.5 6.6 6.2
forex/inventory changes.
Div. Yield (%) 1.8 3.4 3.1 3.2

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 1,010,089 851,148 823,899 800,189 856,553 800,435 926,329 987,632 3,485,325 3,570,949
YoY Change (%) -19.0 -23.5 -22.9 -14.4 -15.2 -6.0 12.4 23.4 -20.1 2.5
EBITDA 98,027 4,249 50,691 36,136 132,581 54,456 74,648 77,900 189,103 339,586
Margins (%) 9.7 0.5 6.2 4.5 15.5 6.8 8.1 7.9 5.4 9.5
Depreciation 11,435 11,286 11,913 14,114 14,350 15,048 15,541 16,000 48,748 60,939
Interest 5,922 7,293 6,406 10,682 6,800 6,147 9,967 10,000 30,303 32,914
Other Income 6,604 8,465 9,343 10,881 8,957 11,807 12,767 8,849 35,293 42,380
PBT 91,999 -1,604 46,446 22,146 120,388 45,069 61,907 60,749 158,988 288,113
Tax 27,642 1,688 15,487 9,789 37,698 13,850 21,958 20,248 54,606 93,754
Rate (%) 30.0 -105.2 33.3 44.2 31.3 30.7 35.5 33.3 34.3 32.5
Reported PAT 64,357 -3,292 30,960 12,356 82,690 31,219 39,949 40,502 104,382 194,359
Adj PAT 64,357 -3,292 26,228 12,356 82,690 31,219 39,949 40,502 95,425 194,359
YoY Change (%) 155.1 -63.4 -199.5 -80.3 28.5 -1,048.4 52.3 227.8 128.7 103.7
Margins (%) 6.4 -0.4 3.2 1.5 9.7 3.9 4.3 4.1 2.7 5.4
Key Assumptions
GRM (USD/bbl) 10.8 0.8 6.0 3.0 10.0 4.3 7.7 6.0 5.1 7.0
Mktg. sales volume incl
19.4 18.1 19.1 20.5 20.4 18.5 20.1 20.6 77.1 79.6
exports (mmt)
Blended gross marketing
3.4 3.4 3.5 3.4 3.4 3.5 3.5 3.3 3.4 3.4
margin (INR/lit)
E: MOSL Estimates
April 2017 223

MRPL
Bloomberg MRPL IN CMP: INR110 TP: INR114 (+4%) Neutral
We expect MRPL to report EBITDA of INR9.2b (v/s INR11.5b in
M. Cap. (INR b)/(USD b) 192 / 3
3QFY17). We estimate adjusted PAT at INR4.4b (v/s INR5.6b in
1,6,12 Rel Perf. (%) 0 / 16 / 45
3QFY17).
Regional benchmark Reuters Singapore GRM is down 17% YoY and
5% QoQ to USD6.4/bbl. We model MRPLs GRM at USD6.07/bbl v/s
Y/E MARCH 2016 2017E 2018E 2019E
USD5.1/bbl in 3QFY17 and USD9.01/bbl in 4QFY16.
Sales 396.3 418.5 498.6 551.8
We expect refinery throughput at 4mmt v/s 4.4mmt in 4QFY16 and
EBITDA 29.6 40.8 40.7 42.8 4.2mmt in 3QFY17.
Adj. PAT 12.9 21.4 20.1 22.4 For MRPL, we model GRM of ~USD6.5bbl for FY18/FY19. The stock
Adj. EPS (INR) 7.4 12.2 11.4 12.8 trades at 8.6x FY19E EPS of INR12.8, and at an EV of 4.6x FY19E
EPS Gr. (%) NA 61.4 (6.4) 11.5 EBITDA. Neutral.
BV/Sh.(INR) 36.6 46.0 54.8 64.5
RoE (%) 22.1 29.6 22.7 21.4 Key issues to watch for
RoCE (%) 14.3 17.8 15.4 16.2 (a) GRM, (b) forex fluctuations, and (c) inventory changes.
Payout (%) - 23.4 23.4 23.4 Updates on foray into petrol and diesel marketing.
Valuation Payment of outstanding dues to Iran.
P/E (x) 14.6 9.0 9.6 8.6
P/BV (x) 2.9 2.4 2.0 1.7
EV/EBITDA (x) 4.0 5.9 5.8 4.6
Div. Yield (%) - 2.2 2.1 2.3

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 113,148 102,211 88,187 92,929 84,288 99,690 114,753 119,746 396,474 418,476
YoY Change (%) -28.1 -35.8 -40.1 -17.6 -25.5 -2.5 30.1 28.9 -31.2 5.5
EBITDA 7,194 -9,142 4,466 15,364 12,212 7,855 11,476 9,212 17,881 40,754
Margins (%) 6.4 -8.9 5.1 16.5 14.5 7.9 10.0 7.7 4.5 9.7
Depreciation 1,482 1,593 1,596 2,452 1,707 1,681 1,702 1,814 7,122 6,903
Interest 1,223 1,627 1,555 1,462 1,465 1,115 1,395 1,433 5,867 5,409
Other Income 2,140 2,402 1,636 2,394 2,295 926 636 675 8,572 4,532
PBT before EO expense 6,629 -9,961 2,951 13,845 11,335 5,984 9,015 6,640 13,464 32,974
Extra-Ord expense 1,542 205 6 77 0 0 0 0 1,830 0
PBT 5,087 -10,166 2,945 13,768 11,335 5,984 9,015 6,640 11,634 32,974
Tax 1,032 -1,032 0 343 4,155 1,826 3,355 2,213 343 11,548
Rate (%) 20 10 0 2 37 31 37 33 3 35
Reported PAT 4,055 -9,134 2,945 13,424 7,181 4,159 5,660 4,427 11,291 21,426
Adj PAT 5,284 -8,950 2,951 13,499 7,181 4,159 5,660 4,427 13,067 21,426
YoY Change (%) -1,563.8 -8.2 -115.6 15.4 35.9 -146.5 91.8 -67.2 -175.2 64.0
Margins (%) 4.7 -8.8 3.3 14.5 8.5 4.2 4.9 3.7 3.3 5.1
Key Assumptions
Core GRM (USD/bbl) 5.1 5.3 8.4 9.0 5.3 5.5 5.1 6.1 6.9 5.5
E: MOSL Estimates
April 2017 224

Oil India
Bloomberg OINL IN CMP: INR332 TP: INR382 (+15%) Buy
We expect OINL to report adjusted PAT of INR5.7b (v/s INR8.5b in
M. Cap. (INR b)/(USD b) 266 / 4
4QFY16 and INR5.7b in 3QFY17).
1,6,12 Rel Perf. (%) -4 / 1 / 20
We estimate EBITDA at INR7b (up 10% YoY and 5% QoQ). We
estimate gross and net realization at USD52.8/bbl, with no subsidy
sharing burden.
Y/E MARCH 2016 2017E 2018E 2019E
Our Brent price assumption is USD55/60/bbl for FY18/19.
Sales 92.7 92.7 106.7 118.2
The stock trades at 8.8x FY19E EPS of INR37.8. We remain positive
EBITDA 31.1 31.9 39.1 45.3 on OINL due to attractive valuations and high dividend yield of
Adj. PAT 23.0 22.9 26.5 30.3 ~4%. Buy.
Adj. EPS (INR) 28.7 28.6 33.1 37.8
EPS Gr. (%) -8.3 -0.5 15.6 14.5 Key issues to watch for
BV/Sh.(INR) 282.7 297.9 315.4 335.5 (a) Subsidy sharing, (b) DD&A charges, and (c) oil & gas
RoE (%) 10.4 9.8 10.8 11.6 production volumes.
RoCE (%) 8.2 7.0 8.0 8.7
Payout (%) 50.3 46.9 46.9 46.9
Valuations
P/E (x) 11.5 11.6 10.0 8.8
P/BV (x) 1.2 1.1 1.1 1.0
EV/EBITDA 8.6 8.4 6.9 6.0
(x)
Div. Yield (%) 3.6 3.3 3.9 4.5
Quarterly Performance (INR Billion)

Y/E March FY16 FY17
FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 27.5 24.0 22.2 19.0 21.3 22.4 23.8 25.2 92.7 92.7
Change (%) 9.4 15.2 7.6 -26.2 -22.4 -6.5 7.1 32.5 0.4 0.0
EBITDA 10.8 7.7 6.2 6.3 7.8 7.5 6.6 7.0 31.1 28.9
% of Net Sales 39.4 32.1 28.0 33.2 36.3 33.3 28.0 27.9 33.5 31.2
Change (%) -2.7 10.4 19.6 -7.6 -28.5 -2.9 7.1 11.2 3.1 -7.0
D,D&A 1.9 2.2 2.4 3.1 2.3 2.5 2.8 2.3 9.6 9.9
Interest 0.8 0.9 1.0 0.9 1.0 1.0 1.0 0.9 3.6 3.9
OI (incl. Oper. other inc) 4.1 5.6 3.7 5.4 3.3 4.8 3.2 3.1 18.8 14.4
PBT before exceptionals 12.2 10.2 6.5 7.8 7.7 8.8 6.1 6.9 36.7 29.5
Exceptional item 0.0 0.0 0.0 2.2 0.0 0.0 0.0 0.0 2.2 0.0
PBT after exceptionals 12.2 10.2 6.5 5.6 7.7 8.8 6.1 6.9 34.6 29.5
Tax 4.5 3.4 2.7 0.9 2.8 2.9 1.5 2.3 11.5 9.5
Rate (%) 36.7 33.8 41.2 11.7 36.2 33.7 25.1 33.0 31.4 32.4
PAT 7.8 6.7 3.8 4.7 4.9 5.8 4.5 4.6 23.0 19.9
Change (%) -9.0 10.9 -23.2 -14.9 -36.2 -14.0 18.8 -1.7 -8.3 -13.5
Adj. EPS (INR) 9.7 8.4 4.8 8.5 6.2 7.2 5.7 5.8 31.4 24.8
Key Assumptions (USD/bbl)
Exchange rate (INR/USD) 63.5 65.0 65.9 67.5 66.9 67.0 67.4 67.2 65.5 67.1
Gas Price (USD/bbl) 4.7 4.7 4.2 4.2 3.4 3.4 2.6 2.6 4.4 3.0
Gross Oil Realization 61.9 48.7 42.0 32.6 43.1 44.6 49.2 52.8 46.3 47.4
Subsidy 4.4 2.3 - - - - - - 1.7 -
Net Oil Realization 57.4 46.4 42.0 32.6 43.1 44.6 49.2 52.8 44.6 47.4
Subsidy (INR b) 1.7 0.8 - (1.0) - - - - 1.6 -
April 2017 225

ONGC
Bloomberg ONGC IN CMP: INR186 TP:INR172 (-8%) Neutral
We expect ONGC to report adjusted PAT of INR45b in 4QFY17 (v/s
M. Cap. (INR b)/(USD b) 2390 / 37
INR43.5b in 3QFY17 and INR27.5b in 4QFY16).
1,6,12 Rel Perf. (%) -7 / -1 / 15
We estimate EBITDA at INR107.7b (v/s INR103b in 3QFY17 and
INR59.6b in 4QFY16).
We estimate gross and net realization at USD55.1/bbl, as we
Y/E March 2016 2017E 2018E 2019E
expect the entire subsidy to be borne by the government.
Sales 1293.0 1422.2 1619.4 1741.9
We may see one-time royalty hit of INR25b during the quarter.
EBITDA 451.6 549.1 635.8 678.1 The stock trades at 10.8x FY19E consolidated EPS of INR17.3, with
Adj. PAT 174.5 156.5 207.2 221.5 implied dividend yield of 3-4%. Neutral.
Adj. EPS 13.6 12.2 16.1 17.3
(INR)
EPS Gr. (%) -5.0 -10.3 32.4 6.9 Key issues to watch for
BV/Sh.(INR) 144.0 145.1 146.7 148.4 (a) Subsidy sharing, (b) DD&A charges, (c) oil & gas production
RoE (%) 9.6 8.4 11.1 11.7 volumes, and (d) development plan for KG Basin.
RoCE (%) 8.8 7.5 9.3 9.7
Payout (%) 54.1 90.4 90.4 90.4
Valuation
P/E (x) 13.7 15.3 11.5 10.8
P/BV (x) 1.3 1.3 1.3 1.3
EV/EBITDA 3.8 3.8 3.5 3.3
(x)
Div. Yield (%) 4.6 7.6 10.0 10.7

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 226,958 205,632 183,969 161,401 176,704 182,866 199,338 210,978 777,961 769,886
YoY Change (%) 4.4 1.0 -1.7 -24.2 -22.1 -11.1 8.4 30.7 -5.3 -1.0
EBITDA 119,990 103,914 86,402 59,675 92,761 95,391 102,898 107,679 369,981 398,729
Margins (%) 52.9 50.5 47.0 37.0 52.5 52.2 51.6 51.0 47.6 51.8
Depreciation 45,807 46,074 39,532 41,019 36,997 34,529 47,039 47,000 172,431 165,566
Interest 31 0 0 73 2,920 3,034 3,062 3,000 104 12,016
Other Income 9,356 12,541 9,627 20,886 10,668 12,920 9,727 10,132 52,409 43,447
Extra-Ord expense 0 0 39,944 -24,002 0 0 0 0 15,942 0
PBT 83,509 70,380 16,553 63,471 63,512 70,748 62,524 67,810 233,913 264,595
Tax 28,910 21,960 3,687 19,310 21,186 20,999 19,001 22,601 73,867 83,787
Rate (%) 34.6 31.2 22.3 30.4 33.4 29.7 30.4 33.3 31.6 31.7
Reported PAT 54,599 48,420 12,866 44,161 42,325 49,749 43,523 45,209 160,046 180,807
Adj PAT 54,599 48,420 43,913 27,461 42,325 49,749 43,523 45,209 170,954 180,807
YoY Change (%) 14.2 -11.1 23.0 -30.2 -22.5 2.7 -0.9 64.6 -3.6 5.8
Margins (%) 24.1 23.5 23.9 17.0 24.0 27.2 21.8 21.4 22.0 23.5
Key Assumptions (USD/bbl)
Fx rate (INR/USD) 63.7 65.0 66.0 67.3 66.9 67.0 67.4 67.2 65.5 67.1
Gross Oil Realization 63.8 51.2 44.3 34.9 46.1 47.9 50.1 55.1 48.6 49.8
Subsidy 4.9 2.4 0.0 0.0 0.0 0.0 0.0 0.0 1.8 0.0
Net Oil Realization 58.9 48.8 44.3 34.9 46.1 47.9 50.1 55.1 46.7 49.8
Subsidy (INR b) 11.3 6.0 0.0 0.0 0.0 0.0 0.0 0.0 17.3 0.0
E: MOSL Estimates
April 2017 226

Petronet LNG
Bloomberg PLNG IN CMP: INR408 TP: INR454 (+11%) Buy
We expect PLNG to report PAT of INR3.9b (+66% YoY, flat QoQ) and
M. Cap. (INR b)/(USD b) 306 / 5
EBITDA of INR6.3b (+42% YoY, +4% QoQ) for 4QFY17.
1,6,12 Rel Perf. (%) 0 / 4 / 47
We model Dahej LNG volumes at 3.7mmt with 98% utilization in
4QFY17.
Dahej terminal utilization is at ~98% and long-term growth would
Y/E March 2016 2017E 2018E 2019E
depend on Dahejs ramp-up and Kochi terminals pipeline
Sales 271.3 259.9 318.0 410.6
connectivity.
EBITDA 15.9 26.1 30.1 40.4 As against 15mmt capacity, PLNG has ~16mmt long-term take-or-
Adj. PAT 8.4 16.7 19.9 27.1 pay contracts.
Adj. EPS (INR) 11.2 22.2 26.5 36.2 The stock trades at 11.3x FY19E EPS of INR36.2. Maintain Buy.
EPS Gr. (%) 12.2 98.1 19.2 36.5
BV/Sh.(INR) 85.0 101.0 120.1 146.1 Key issues to watch for
RoE (%) 14.0 23.9 24.0 27.2 (a) Utilization at Dahej terminal, (b) progress on Kochi-Mangalore
RoCE (%) 11.0 17.9 20.2 25.5 pipeline, (c) spot volumes and marketing margin on spot volumes.
Payout (%) 24.0 28.1 28.1 28.1 Petronet LNGs earnings are largely protected due to take-or-pay
Valuation contracts with off-takers.
P/E (x) 33.4 18.4 15.4 11.3
P/BV (x) 4.4 4.0 3.4 2.8
EV/EBITDA (x) 1.1 1.2 0.9 0.6
Div. Yield (%) 0.7 1.3 1.6 2.1

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 83,772 75,450 51,460 60,653 53,373 66,144 62,993 77,361 271,334 259,871
YoY Change (%) -17.6 -31.3 -54.0 -15.3 -36.3 -12.3 22.4 27.5 -31.3 -4.2
EBITDA 3,611 4,668 3,158 4,466 6,425 7,264 6,071 6,330 15,903 26,090
Margins (%) 4.3 6.2 6.1 7.4 12.0 11.0 9.6 8.2 5.9 10.0
Depreciation 801 808 807 800 806 860 1,009 1,042 3,216 3,717
Interest 612 612 588 576 556 554 517 399 2,387 2,026
Other Income 333 360 584 427 494 915 550 778 1,704 2,737
PBT 2,531 3,608 2,348 3,517 5,556 6,765 5,095 5,667 12,004 23,084
Tax 780 1,120 564 1,124 1,777 2,170 1,121 1,700 3,588 6,768
Rate (%) 31 31 24 32 32 32 22 30 30 29
PAT 1,751 2,488 1,784 2,393 3,779 4,596 3,975 3,967 8,416 16,316
YoY Change (%) 11.8 -5.3 9.9 42.1 115.8 84.7 122.8 65.8 12.2 93.9
Margins (%) 2.1 3.3 3.5 3.9 7.1 6.9 6.3 5.1 3.1 6.3
Key Assumptions
Regas volume (tbtu) 35.3 72.1 79.5 26.5 50.1 60.7 75.3 75.3 213.4 261.4
Sales volume (tbtu) 92.6 84.5 63.0 127.0 118.1 128.2 116.1 116.8 367.1 479.1
E: MOSL Estimates
April 2017 227

Reliance Industries
Bloomberg RIL IN CMP: INR1,415 TP: INR1,259 (-11%) Neutral
We expect RIL to report GRM of USD10.2/bbl v/s USD10.8/bbl in
M. Cap. (INR b)/(USD b) 4584 / 71
3QFY17 and USD10.8/bbl in 4QFY16.
1,6,12 Rel Perf. (%) 8 / 24 / 17
RILs refining segment profit is likely to remain subdued due to
decline in GRMs. Petchem profitability is expected to increase YoY,
led by improved deltas.
Y/E March 2016 2017E 2018E 2019E
We expect RIL to report EBITDA of INR106.7b v/s INR106.2b in
Net Sales 2,331.6 2,436.0 3,696.1 3,989.7 3QFY17 and INR95.1b in 4QFY16.
EBITDA 401.4 426.5 482.1 497.7 We expect RIL to report standalone PAT of INR75b (+3% YoY).
Net Profit 274.2 293.5 335.8 363.3 Reported consolidated numbers would include shale gas business,
Adj. EPS 93.0 99.6 113.9 123.2 but with a one-quarter lag.
(INR) RIL trades at 11.5x FY19E adjusted EPS of INR123. RIL's new
EPS Gr. (%) 20.5 7.1 14.4 8.2
BV/Sh. (INR) 814.7 900.0 997.5 1,103.0 refining/petchem projects are likely to add to earnings from
RoE (%) 12.0 11.6 12.0 11.7 2HFY18/FY19, but Telecom business would be a drag on
RoCE (%) 8.9 9.2 10.1 10.3 profitability. Maintain Neutral.
Payout (%) 13.5 14.4 14.4 14.4
P/E (x) 11.5 14.2 12.4 11.5 GRM.
P/BV (x) 1.3 1.6 1.4 1.3 Petchem margins.
EV/EBITDA 1.8 11.2 8.5 7.3
(x)
Progress on core expansions.
EV/Sales (x) 10.3 2.0 1.1 0.9
Update on Telecom venture.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 658,170 608,170 565,670 499,570 534,960 595,770 618,060 687,251 2,331,580 2,436,041
YoY Change (%) -31.7 -37.0 -29.5 -10.9 -18.7 -2.0 9.3 37.6 -29.1 4.5
EBITDA 93,070 98,330 102,720 107,270 108,170 105,550 106,040 106,698 401,390 426,458
Margins (%) 14.1 16.2 18.2 21.5 20.2 17.7 17.2 15.5 17.2 17.5
Depreciation 22,650 23,720 24,050 25,240 19,500 20,290 20,770 22,000 95,660 82,560
Interest 5,970 6,940 6,090 5,540 9,240 6,330 9,310 10,820 24,540 35,700
Other Income 18,180 16,170 22,890 18,580 20,330 22,800 30,250 25,703 75,820 99,083
PBT 82,630 83,840 95,470 95,070 99,760 101,730 106,210 99,581 357,010 407,281
Tax 19,450 18,230 23,290 21,870 24,280 24,690 25,990 24,397 82,840 99,357
Rate (%) 24 22 24 23 24 24 24 25 23 24
Adj PAT 63,180 65,610 72,180 73,200 75,480 77,040 80,220 75,184 274,170 307,924
YoY Change (%) 11.8 14.2 41.9 17.3 19.5 17.4 11.1 2.7 20.7 12.3
Margins (%) 9.6 10.8 12.8 14.7 14.1 12.9 13.0 10.9 11.8 12.6
Key Assumptions
GRM (USD/bbl) 10.4 10.6 11.5 10.8 11.5 10.1 10.8 10.2 10.8 10.6
Petchem EBITDA/tonne
273.2 259.9 260.8 271.6 303.8 314.4 329.4 300.0 266.3 311.9
(USD/MT)
Petchem volumes (mmt) 1.9 2.1 2.1 2.1 1.9 2.1 2.0 2.1 8.2 8.0
April 2017 228

March 20172017
March Results Preview
Results | Sector:
Preview | AprilRetail
2017
Retail
Company name Contrasting fortunes for companies under coverage
Jubilant Foodworks Sales likely to be anemic for Jubilant, healthy for Titan
Titan Company
Retail coverage to grow sales at 20.2%
We expect our retail coverage universe to report healthy 20.2% revenue growth in
4QFY17, but PAT is expected to decline 11.5%. EBITDA is likely to increase by 24.1%
YoY. We expect Titans jewelry retail revenue to grow 26% YoY, led by benefits from
shift in trade from unorganized to organized (following demonetization) and low
base quarter segment sales (-11% YoY in 4QFY16). Watches segment sales via trade
channel (50% of watches segment sales) have recovered, while retail segment
reported high-single-digit sales growth. For Titan, EBITDA growth is likely at 36%, but
extremely low tax rate of 7.6% in the base quarter means that PAT is likely to
decline YoY. We expect Jubilant Foodworks sales to increase 8%, with same-store
sales (SSS) growing 2% due to continued slowdown in discretionary consumption
and lingering impact of demonetization on delivery sales (which management had
mentioned is likely to continue, possibly until 1QFY18). With SSS growth far below
cost increases, 4QFY17 is likely to be another quarter of EBITDA and PAT decline
(9.2% and 26%, respectively) for Jubilant Foodworks.
Store expansion subdued

Retail companies under our coverage are moderating store expansion. Titan added
only 16 Tanishq stores (adding 60ksf) in FY17, while Jubilant has likely added 27
stores in 4QFY17. Expansion plans are likely to be a function of pick-up in consumer
sentiment, which is getting delayed.
No preferred pick in the sector, given weak discretionary environment, steep

valuations
Discretionary demand remains sluggish with no recovery in sight. Competition is
also a worry for JUBI in a period of slowdown. We like JUBIs business model (decent
RoEs even in slowdown and strong potential earnings growth on recovery);
however, poor medium-term visibility with possible worsening of consumer
sentiment makes us wary of turning constructive. The share price correction has
been concurrent with a steep cut in earnings estimates as a result of delayed
recovery, which means that valuations still remain expensive at 37.9x FY19E EPS.
Similarly, while TTANs franchise, management quality and long-term opportunity in
jewelry segment offer comfort, we believe the company continues to face demand
headwinds and valuations of 41.6x FY19E EPS are extremely expensive.

Sector Sales (INR m) EBDITA (INR m) PAT (INR m)
Retail
Jubilant Foodworks 1,094 Neutral 6,693 8.3 1.6 647 -9.2 1.1 206 -26.0 3.1
Titan Company 491 Neutral 30,044 23.3 -22.4 2,667 36.2 -24.4 1,717 -9.4 -33.0
Retail Sector Aggregate 36,737 20.2 -18.9 3,314 24.1 -20.5 1,923 -11.5 -30.4
April 2017 229

March 2017 Results Preview | Sector: Retail
Exhibit 2: Tanishqs LTL sales grew 15% in 3QFY17 Exhibit 3: Titan: Jewelry grammage grew 4% in 3QFY17
Jewelry volume growth (%)
Tanishq- LTL Growth (%)
75
68 67
29 30 28
15 25
10 8 6 3 4 12 9 15
(12) 6 4
(2)
(4)
(7) (15) (13) (8) (5)
(25) (40) (21) (24) (11)(10)(10) (32)
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
Exhibit 4: Gold prices rose 3.9% YoY in 4QFY17
Gold price YoY (%)

20.4%
13.0%
8.0% 10.2%
4.3% 3.5% 3.9%
-2.1% -0.1% -2.9%

-6.3% -4.1% -4.9% -5.7% -6.8%
-10.2%
-12.8%
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
Exhibit 5: Jubilant Foodworks SSS to grow by 2% in 4QFY17 Exhibit 6: Dominos is expected to add 27 stores in 4QFY17
SSS Growth (%) Dominos stores
1107
1081
1049
1026
990
950
911
876
838
16.1
797
761
7.7
6.3
6.6
1.9
6.6
4.6
3.2
2.0
2.9
4.2
726
679
632
602
576
552
515
489
465
439
-3.3
-2.6
-3.4
-2.4
-5.3
-3.2
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
April 2017 230

Exhibit 7: Relative performance three months (%) Exhibit 8: Relative performance one-year (%)
Sensex Index MOSL Retail Index
Sensex Index MOSL Retail Index
140 130
120
130
110
120
100
110 90
100 80
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
Dec-16
Jan-17
Feb-17
Mar-17

Sector / Companies CMP Reco EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
Retail
Jubilant Foodworks 1,094 Neutral 12.3 21.7 29.1 88.8 50.3 37.6 8.9 9.8 9.3 10.1 19.5 24.9
Titan Company 491 Neutral 9.4 10.4 11.8 52.2 47.1 41.6 10.5 9.1 7.9 21.5 20.6 20.3
April 2017 231

Jubilant Foodworks
Bloomberg JUBI IN CMP: INR1,094 TP: INR1,110 (+1%) Neutral
We expect JUBIs revenue to grow by 8% YoY. 4QFY17 SSSG is
likely to be ~2%. Discretionary spending has still not recovered
1,6,12 Rel Perf. (%) 0 / 4 / -31
fully post demonetization. Commodity inflation continues.
We expect EBITDA margin to contract 190bp YoY to 9.7%, and
EBITDA to decline by 9.2% YoY to INR647m.
Y/E March 2016 2017E 2018E 2019E
We estimate PAT to decline by 26% to INR206m.
Sales 24.4 26.0 31.7 38.3
The stock trades at 37.6x FY19E EPS of INR29.1. Maintain Neutral.
EBITDA 2.6 2.5 3.7 4.7
Adj. PAT 1.0 0.8 1.4 1.9 Key issues to watch for:
Adj. EPS (INR) 15.0 12.3 21.7 29.1 Demand outlook for QSR and Pizza space, as well as
EPS Gr. (%) -11.7 -17.6 76.4 34.0 competition.
BV/Sh.(INR) 111.3 122.5 111.5 117.2 Performance of Dunkin Donuts and margin guidance.
RoE (%) 13.4 10.1 19.5 24.9 Changes in expansion and capex strategy (if any).
RoCE (%) 14.1 10.5 18.5 25.4
Payout (%) 16.7 20.3 69.0 68.6
Valuations
P/E (x) 73.2 88.8 50.3 37.6
P/BV (x) 9.8 8.9 9.8 9.3
EV/EBITDA (x) 26.8 28.2 19.2 14.6
Div. Yield (%) 0.2 0.2 1.4 1.8

Y/E March FY16 FY17 Consol. Consol.
No of Stores 911 950 990 1026 1049 1081 1107 1134 1026 1134
LTL Growth (%) 4.6 3.2 2.0 2.9 -3.2 4.2 -3.3 2.0 3.2 0.0
Net Sales 5,707 5,875 6,339 6,180 6,089 6,655 6,588 6,693 24,383 26,026
YoY Change (%) 14.4 14.0 6.7 13.3 3.9 8.3 17.5 6.7
Gross Profit 4,320 4,474 4,880 4,728 4,675 4,979 4,938 4,991 18,583 19,582
Gross Margin (%) 75.7 76.1 77.0 76.5 76.8 74.8 74.9 74.6 76.2 75.2
Other Expenses 3,647 3,870 4,153 4,015 4,098 4,336 4,297 4,343 15,943 17,074
EBITDA 673 604 727 713 577 643 641 647 2,640 2,508
EBITDA Growth % -14.2 6.4 -11.9 -9.2 0.4 -5.0
Margins (%) 11.8 10.3 11.5 11.5 9.5 9.7 9.7 9.7 10.8 9.6
Depreciation 292 307 316 328 326 366 381 412 1,282 1,485
Other Income 29 29 26 29 31 43 35 52 110 161
PBT 411 326 437 415 282 320 295 288 1,467 1,184
Tax 135 107 144 136 92 104 95 82 483 373
Rate (%) 32.9 33.0 32.9 32.9 32.7 32.5 32.2 28.5 32.9 31.5
Adjusted PAT 276 219 293 278 190 216 200 206 984 811
YoY Change (%) -31.1 -1.3 -31.9 -26.0 -20.2 -17.6
E: MOSL Estimates
April 2017 232

Titan Company
Bloomberg TTAN IN CMP: INR491 TP: INR485 (-1%) Neutral
We expect TTANs revenue to increase 23.3% to INR30b.
M. Cap. (INR b)/(USD b) 436 / 7
52-Week Range (INR) 495 / 296 2HFY17 was much better than the company had expected despite
1,6,12 Rel Perf. (%) 8 / 15 / 22 demonetization, as consumer demand recovered significantly and
sales were healthy across divisions.
Jewelry division had a very good quarter, led by studded jewelry
Y/E March 2016 2017E 2018E 2019E
activation and favorable base. Tanishq saw retail growth that was
Sales 111.8 122.9 142.6 164.0
40% higher than the companys expectation at the beginning of
EBITDA 8.6 11.6 13.0 14.9
4QFY17.
Adj. PAT 7.1 8.4 9.3 10.5
Adj. EPS (INR) 8.0 9.4 10.4 11.8 During the quarter, TTAN added only 7 Tanishq stores (28ksf).
EPS Gr. (%) -13.4 17.1 10.8 13.5
We factor in EBITDA growth of 36% in 4QFY17, with underlying
BV/Sh.(INR) 40.4 47.0 54.1 62.2
margin expansion of 90bp to 8.9%. PAT is expected to decline by
RoE (%) 21.3 21.5 20.6 20.3
RoCE (%) 21.8 21.6 20.5 20.2
9.4% YoY due to a higher tax rate.
Payout (%) 30.0 30.0 30.0 30.0 The stock trades at 41.6x FY19E EPS of INR11.8; maintain Neutral.
Valuation
P/BV (x) 12.2 10.5 9.1 7.9 Comments on consumer demand for Jewelry and Watches.
EV/EBITDA (x) 50.6 37.6 33.3 28.7 Expansion initiatives.
Div. Yield (%) 0.5 0.6 0.6 0.7 Update on the new Golden Harvest Scheme.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 26,868 26,547 33,984 24,372 27,825 26,364 38,713 30,044 111,770 122,947
YoY Change (%) -7.1 -25.5 17.3 -1.5 3.6 -0.7 13.9 23.3 -5.5 10.0
Total Exp 24,872 24,717 31,037 22,414 25,067 23,760 35,186 27,378 103,179 111,390
EBITDA 1,996 1,830 2,811 1,958 2,759 2,604 3,528 2,667 8,591 11,557
EBITDA Growth % -27.3 -39.9 11.7 -21.2 38.2 42.3 25.5 36.2 -20.4 34.5
Margins (%) 7.4 6.9 8.3 8.0 9.9 9.9 9.1 8.9 7.7 9.4
Depreciation 227 240 248 254 261 260 269 279 971 1,068
Interest 118 87 114 104 88 117 84 113 423 402
Other Income 395 326 440 452 297 277 335 448 1,612 1,356
PBT 2,045 1,829 2,889 2,052 2,706 2,504 3,509 2,724 8,809 11,444
Tax 530 365 627 156 471 667 946 1,007 1,678 3,090
Rate (%) 25.9 20.0 21.7 7.6 17.4 26.6 27.0 37.0 19.0 27.0
Adjusted PAT 1,516 1,464 2,261 1,896 2,236 1,837 2,563 1,717 7,131 8,354
YoY Change (%) -14.5 -39.0 18.6 -11.9 47.5 25.5 13.4 -9.4 -13.4 17.1
E: MOSL Estimates
April 2017 233

March
March 2017 2017
Results Results|Preview
Preview | April 2017
Sector: Technology
Technology
Company Name Can growth recover next fiscal?
Cyient Amid some H-1B reprieve and BFSI hopes, INR appreciates
HCL Tech
Hexaware Keeping 4Q expectations in check amid limited signs of momentum pick-up
Infosys The usual seasonality of the fourth quarter, compounded with (a) sporadic citation
KPIT Tech
of concerns around budget and decision-making delays, and (b) problems in some
L&T Infotech
key accounts, keeps us from building any recovery in growth momentum in 4Q or in
Mindtree
the immediate future. Yet, there are a few potential positives to note:
Overall positive messaging in terms of deal wins, BFSI environment and client
Mphasis
NIIT Tech
conversations, especially by tier-I IT.
Likely postponement of any developments around H-1B visas, with fresh
Persistent
TCS
applications being accepted for the next year, starting early April. That said,
TechM
recent overrule of programming jobs automatic qualification under specialty
occupation may not have a substantive impact, but does call for more scrutiny
Wipro
Zensar
going forward.
Traction in change-the-business side of the business, which has been the key
additive factor for revenue growth, though not enough on current base.
These may aid gradual improvement in growth through the course of FY18
rather than a sudden pick-up in growth.
Building 0-2% CC sequential organic growth; expect higher revenue growth to be

aided by acquisitions
We are modeling (on organic basis) 0-2% QoQ CC growth across our coverage
universe. Contribution from acquisitions should help HCLT inch this to 3.4% QoQ
CC. Among tier-I, last quarter, TCS cited expectation of sustained momentum in
4Q, driving our estimate of 2% QoQ CC; for INFO, we expect growth to be at the
midpoint of its guided band (1% QoQ CC). Recovery in Communications
witnessed in the past couple of quarters has taken a pause, driving our
assumption of marginal growth at TECHM. WPRO should be helped by full-
quarter revenue from Appirio acquisition.
Among tier-II, we expect steady growth for LTI, ZENT and CYL. For MTCL (1.5%
QoQ CC) and HEXW (0.5% QoQ CC), growth is likely to remain relatively soft.
Revenue would be flat for PSYS due to seasonal weakness in its IBM IoT deal.
Margins are likely to remain steady across the board, with some hit for the
sector coming from currency movement, and from acquisition in the case of
WPRO. Note that TECHM has deferred its wage hike earlier a January 1 cycle
to the next fiscal.
Will INFO announce a buyback? Will top-end of guidance be in double digits?

We expect INFO to guide 7-9% CC growth for FY18, on the back of a relatively
weak exit in 2H. That implies a CQGR of 2.2-3%. INFO is the only remaining
company among the top-tier that is yet to reward its shareholders with a
buyback, dispensing some of the idly-lying cash (apart from WPRO, which
cannot announce a buyback before June). That could be likely on April 13, 2017.
Ashish Chopra (Ashish.Chopra@MotilalOswal.com); +91 22 3982 5424

Sagar Lele (Sagar.Lele@MotilalOswal.com); +91 22 3982 5585
April 2017 234
March 2017 Results Preview | Sector: Technology
Watch out for the performance in top clients at INFO following a shocker in 3Q,
over which the management alleviated investor concerns by terming it as a one-
off without any significant concerns on the same.
Watch out for guidance from HCLT and outlook from TCS too. Double-digit
growth at HCLT looks more-or-less in the bag, given healthy traction in IMS and
contribution from acquisitions. At TCS, while the commentary has remained
very positive, it remains to be seen in revenue growth. Our estimate of 9.5% CC
growth in FY18 implies a CC CQGR of 2.5% in FY18.
Healthcare exposure will hurt WPRO and we expect guidance of 1.5% to 2.5%
QoQ CC for 1QFY18.
Recent trend in INR may spell a fresh challenge for the industry
The INR has marched since the turn of the year to close below INR65/USD,
compared to last quarters close at ~INR68/USD. Were this to sustain, expect
another round of moderation in earnings estimates, this time led by currency.
Top-tier IT has seen stock returns over last five years being led by earnings
growth rather than P/E multiple expansion (ex-HCL Tech), and that has in turn
been boosted by INR depreciation. The impact of INR64.5-65/USD on earnings is
not yet factored in estimates, in our view. Various industry participants have
already shared expectations of moderate wage hikes next year, which was
before the recent trend in INR.
The range of margin movements QoQ is -30bp to -65bp across tier-I and -80bp
to +80bp across tier-II. PSYS could suffer from seasonal revenue decline in its
Alliance segment, most of which should flow to EBITDA.
Currency and lack of growth visibility keeps valuations on edge
Revenue growth for the industry still remains a challenge, with little, if any, clear
signs of acceleration after a tepid 2016. There is hope from deregulation in the
US and a new taxation regime, but there remain counterbalancing forces on the
other hand, mainly from potential moves on Trump tax / H-1B immigration.
Add to that, we see a gradual uptick in costs, impacting earnings in varying
degrees across tier-I and tier-II IT for a couple of years (150-200bp potential
negative impact on profitability that would need to be offset), as the model of
operating at onsite changes. The business model changes at onsite have been
underway for a while, and the higher costs have more-or-less been absorbed so
far. But the recent direction of the INR v/s the USD might just end up being an
additional headwind to thwart any assumptions of sanguine performance
around profitability.
We believe tier-I companies (INFO, TCS, WPRO, HCLT) would be better placed to
adapt to these changes, given their brand to attract talent, wider reach and war-
chest to absorb shocks on a higher margin base. Absolute numbers in the US are
a single-digit percentage of the overall workforce. Our pecking order in the
group is INFO and HCLT, followed by TCS and WPRO. Notwithstanding the
regulatory developments, we see greater comfort in the earnings performance
at TECHM, with gradual recovery in Telecom and levers to improve margins. In
tier-II, we prefer CYL, ZENT and LTI. We see gradual recovery at MTCL, but
current valuations factor more than that, in our view.
April 2017 235

Exhibit 1: Double-digit organic USD revenue growth (YoY) seen only in HCLT amongst tier-I
Revenue (USD m) Revenue (INR b)
Company 4QFY17E 4QFY16 YoY (%) 3QFY17 QoQ (%) 4QFY17E 4QFY16 YoY (%) 3QFY17 QoQ (%)
TCS 4,504 4,207 7.0 4,387 2.7 300 284 5.4 297 0.9
Infosys 2,590 2,446 5.9 2,551 1.5 172 166 4.2 173 (0.1)
Wipro 1,944 1,882 3.3 1,903 2.2 136 136 (0.1) 137 (0.5)
HCLT 1,810 1,587 14.0 1,745 3.7 121 107 12.7 118 2.0
TECHM 1,132 1,023 10.7 1,116 1.4 75 69 9.5 76 (0.2)
Aggregate 11,979 11,145 7.5 11,702 2.4 804 762 5.6 801 0.5
EBITDA Margin (%) PAT (INR b)
Company 4QFY17E 4QFY16 YoY (bp) 3QFY17 QoQ (bp) 4QFY17E 4QFY16 YoY (%) 3QFY17 QoQ (%)
TCS 27.3 27.8 (50) 27.7 (40) 62 63 (2.3) 68 (8.6)
Infosys 27.1 28.0 (90) 27.6 (50) 34 36 (4.9) 37 (7.7)
Wipro 19.9 20.6 (60) 20.4 (40) 19 22 (15.1) 21 (10.0)
HCLT 21.9 22.2 (30) 22.2 (40) 20 19 2.4 21 (4.8)
TECHM 15.4 16.9 (150) 15.7 (31) 7 9 (18.6) 9 (14.7)
Aggregate 24.1 24.8 (70) 24.5 (39) 142 150 (5.2) 155 (8.4)
Exhibit 2: PAT decline across the sector can be attributed to translation losses
Revenue (USD m) Revenue (INR b)
Company 4QFY17E 4QFY16 YoY (%) 3QFY17 QoQ (%) 4QFY17E 4QFY16 YoY (%) 3QFY17 QoQ (%)
Persistent Systems 111 100 10.1 110 0.5 7.4 6.8 8.7 7.5 (1.3)
Hexaware 140 122 15.0 139 0.8 9.3 8.2 13.7 9.4 (0.9)
KPIT Tech. 124 124 0.2 123 1.2 8.3 8.4 (1.5) 8.3 (0.3)
Mindtree 194 196 (0.7) 192 1.1 12.9 13.2 (2.3) 13.0 (0.1)
Mphasis 227 225 0.8 225 1.1 15.1 15.2 (0.7) 15.4 (1.9)
Cyient 140 121 16.0 136 3.3 9.3 8.2 14.5 9.2 1.9
NIIT Tech 105 102 3.2 103 2.2 7.0 6.8 2.0 6.9 0.9
Zensar 121 111 9.2 118 2.7 8.0 7.5 7.7 7.9 1.5
LTI 249 230 8.5 245 1.7 16.6 15.9 4.2 16.7 (0.4)
Aggregate 1,415 1,330 6.4 1,390 1.8 93.9 90.2 4.1 94.2 (0.2)
EBITDA margin (%) PAT (INR b)
Company 4QFY17E 4QFY16 YoY (bp) 3QFY17 QoQ (bp) 4QFY17E 4QFY16 YoY (%) 3QFY17 QoQ (%)
Persistent Systems 15.2 15.9 (70) 15.9 (80) 0.7 0.8 (12.6) 0.8 (13.8)
Hexaware 16.5 14.6 200 17.3 (70) 1.1 0.8 29.0 1.2 (10.7)
KPIT Tech. 10.0 15.7 (570) 10.2 (20) 0.1 0.1 (0.5) 0.1 (5.0)
Mindtree 13.4 17.1 (370) 13.4 - 1.0 1.6 (37.7) 1.0 (5.8)
Mphasis 15.4 15.4 (10) 15.6 (20) 2.0 1.9 5.8 2.0 (3.5)
Cyient 12.8 13.0 (20) 13.4 (50) 0.8 0.8 (3.3) 0.9 (13.2)
NIIT Tech 17.5 18.4 (100) 16.9 60 0.7 0.8 (15.6) 0.7 2.1
Zensar 14.6 12.4 230 13.8 90 0.7 0.7 (2.7) 0.8 (15.7)
LTI 18.3 20.1 (180) 18.1 20 2.2 2.6 (16.1) 2.5 (10.5)
Aggregate 15.2 16.4 (130) 15.4 (20) 9.3 10.2 (9.2) 10.1 (8.7)
April 2017 236

Exhibit 3: Seasonal weakness dampens revenue growth (QoQ, CC %)
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17E

6.0
5.4
4.4
3.5 3.9
3.1 3.4 3.2
2.7 2.9 2.8 3.0
2.1 2.0 2.0 1.9 1.7 2.0 1.7
1.5 1.3
1.0 1.0 0.9 0.6 0.8
0.2 0.3 0.4
-0.3
TCS INFO WPRO HCLT TECHM
Exhibit 4: YoY traction seen picking up only at HCLT, led by Volvo IT acquisition and IBM partnerships (YoY, CC, %)
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17
15.8
12.0
10.3
10.8
14.0
12.4
15.0
12.0
15.8
13.6
11.4
13.1
14.1
16.1
22.6
18.9
14.7
10.6
10.1
9.8
9.9
6.8
8.4
8.3
8.9
7.4
6.4
8.3
8.4
6.0
7.6
9.5
7.2
6.3
5.1
9.2
8.1
5.9
6.0
6.2
TCS INFO WPRO HCLT TECHM
Exhibit 5: HCLT to outperform peers organically in 4Q (Revenue growth, QoQ, USD, %)
8.8 TCS Infosys Wipro HCL Tech Tech Mahindra
6.8
4.8 3.7
2.7 2.2
2.8 1.5 1.4
0.8
-1.2 -0.7
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17
Exhibit 6: Incremental revenue higher for all other than TECHM; cross-currency tailwinds this quarter
TCS Infosys Wipro HCL Tech Tech Mahindra Cross currency impact on USD revenues (bp)
180 Incremental revenue (USD m) 70 70 70

60 60
50
40 40 40
120 30 30
20
60
0 (40)
(50)
-60
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
NITEC
TCS
MPHL
KPIT
CYL
INFO
MTCL
PSYS
TECHM
WPRO
LTI
HEXW
ZENT
HCLT
April 2017 237

Exhibit 7: Margins lower across the board in YoY terms (EBITDA margin, %)
TCS Infosys HCL Tech Wipro Tech Mahindra

30 27.3
27.1
26
22 21.9
19.9
18
15.4
14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
Exhibit 8: Sequential improvement seen in some mid-caps due to company-specific
dynamics (Revenue growth, QoQ, USD, %)
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17
4.6
3.5
2.7 3.3 2.7
1.1 2.2 2.3
1.7
0.5 1.2 1.1 1.3
0.2
-0.4 -0.4 -0.5 -0.6
Persistent Hexaware KPIT Tech. Mindtree Mphasis Cyient NIIT Tech Zensar LTI
Systems
Exhibit 9: 4QFY17 currency highlights (INR)

Rates (INR) Change (QoQ)
USD EUR GBP AUD USD EUR GBP AUD
Average 67.00 71.3 82.9 50.7 -0.7% -1.9% -1.0% 0.4%
Closing 64.84 69.3 80.9 49.6 -4.5% -3.4% -3.2% 1.0%
Exhibit 10: 4QFY17 currency highlights (in USD)

Rates (USD) Change (QoQ)
EUR GBP AUD EUR GBP AUD
Average 1.07 1.24 0.76 -1.2% -0.2% 1.2%
Closing 1.07 1.25 0.76 1.6% 1.1% 6.1%
Exhibit 11: Cross currencies: Assumed rates v/s actual

Guided at EUR GBP AUD INR/USD
Infosys 1.10 1.51 0.73 nm
Wipro 1.04 1.23 0.74 67.73
Actual (Average) 1.07 1.24 0.76 67.00
Change (%) EUR GBP AUD INR/USD

Infosys -3.1% -17.9% 3.9% nm
Wipro 2.4% 0.7% 2.4% -1.1%
April 2017 238

Exhibit 12: Relative performance3m (%) Exhibit 13: Relative performance1Yr (%)
Sensex Index MOSL Technology Index Sensex Index MOSL Technology Index
125
120
115
110
100 105
90 95
80 85
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
Dec-16
Jan-17
Feb-17
Mar-17

Company MCap Rating TP Upside EPS (INR) P/E (x) RoE (%) FY17-19E CAGR (%)
USD b (INR) (%) FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E USD rev. EPS
TCS 71.5 Neutral 2,550 4.9 131.3 144.7 154.7 18.5 16.8 15.7 33.0 33.4 33.0 9.1 8.5
Infosys 34.8 Buy 1,250 22.4 62.0 66.6 73.3 16.5 15.3 13.9 23.0 22.1 22.1 8.5 8.7
Wipro 18.9 Neutral 540 4.9 33.0 37.5 42.9 15.6 13.7 12.0 16.8 17.2 17.8 7.2 14.0
HCL Tech 18.4 Buy 1,000 14.5 57.2 64.3 70.3 15.3 13.6 12.4 27.0 27.8 28.1 10.6 10.8
TechM 6.8 Buy 550 19.6 32.5 35.7 40.2 14.2 12.9 11.4 20.1 19.5 19.2 9.6 11.2
Mphasis 1.8 Neutral 550 -4.8 42.7 43.0 44.9 13.5 13.4 12.9 14.1 14.9 14.7 8.4 2.6
L&T Infotech 1.9 Buy 800 12.5 53.6 58.0 60.8 13.3 12.3 11.7 41.4 36.6 32.1 8.3 6.5
Mindtree 0.6 Neutral 530 17.3 24.9 34.6 39.4 18.2 13.1 11.5 17.0 21.5 21.7 9.3 25.9
KPIT Tech 0.4 Neutral 150 15.4 11.5 13.8 15.0 11.3 9.4 8.6 13.7 15.9 14.9 6.8 14.4
Cyient 0.8 Buy 600 27.9 30.9 37.6 43.1 15.2 12.5 10.9 14.8 16.0 16.3 12.0 18.0
Hexaware 1.0 Neutral 220 2.3 13.7 14.9 16.3 15.7 14.4 13.2 26.5 24.4 22.7 10.1 9.0
NIIT Tech 0.4 Neutral 470 7.8 36.2 46.8 52.9 12.0 9.3 8.2 13.5 15.9 16.0 8.1 20.9
Persistent 0.7 Neutral 730 22.5 37.4 43.4 50.5 15.9 13.7 11.8 16.9 17.9 20.1 11.0 16.2
Zensar 0.6 Buy 1,200 29.7 65.3 81.4 92.0 14.2 11.4 10.0 19.1 20.4 19.7 12.7 18.7
Source: MOSL
April 2017 239

Cyient
Bloomberg CYL IN CMP: INR467 TP: INR600 (+28%) Buy
We expect CYLs USD revenue to grow 3.3% QoQ in 4QFY17 (+2.7%
M. Cap. (INR b)/(USD b) 52 / 1.0
QoQ in CC).
In the core services business, CYLs revenue is expected to increase
1,6,12 Rel Perf. (%) -4 / -9 / -18
by 1.9% QoQ. Revenue growth is expected to pick up post the
seasonal weakness witnessed in the previous quarter.
We expect USD17m in revenue in Rangsons, which would imply
Y/E June 2016 2017E 2018E 2019E
Sales 31.0 36.0 40.8 46.2
annual revenue of USD55m; +42% YoY, short of the 50% guidance
EBITDA 4.2 4.8 5.7 6.4
by ~USD3m.
PAT 3.3 3.5 4.2 4.8 Margins are expected to decline by 60bp QoQ to 12.8% because of
EPS (INR) 30.7 30.9 37.6 43.1 INR depreciation and higher incremental revenue from lower-
EPS Gr. (%) (1.9) 0.7 21.6 14.6 margin Rangsons.
BV/Sh. (INR) 186.6 208.3 234.6 264.7 While we expect margins in the services business to decline by 50bp
RoE (%) 16.5 14.8 16.0 16.3 to 14.3%, we anticipate flat margins in Rangsons at 2%.
RoCE (%) 15.1 14.0 15.0 15.4 PAT estimate for the quarter is INR816m, -13.2% QoQ. Lower other
Payout (%) 22.8 30.0 30.0 30.0 income is a function of translation losses in 4Q.
Valuation The stock trades at 12.5x FY18E and 10.9x FY19E EPS. Maintain Buy.
P/BV (x) 2.5 2.3 2.0 1.8
Update on problem verticals like Semiconductor and Energy.
EV/EBITDA (x) 10.8 9.2 7.4 6.2
Outlook for Rangsons for FY18 and progress on synergy through
Div yld (%) 1.5 2.0 2.4 2.8
DLM.
Margin trajectory going ahead.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 114 118 118 121 125 137 136 140 472 537
QoQ (%) -2.6 3.6 0.0 2.1 3.1 9.5 -0.5 3.3 5.6 13.8
Revenue (INR m) 7,263 7,717 7,818 8,158 8,349 9,136 9,171 9,342 30,955 35,998
YoY (%) 16.8 14.8 9.8 11.7 15.0 18.4 17.3 14.5 13.1 16.3
GPM (%) 35.4 36.6 34.4 34.2 35.0 34.4 34.0 33.3 35.1 34.1
SGA (%) 22.7 21.6 20.3 21.1 22.0 20.4 20.6 20.4 21.4 20.8
EBITDA 918 1,164 1,102 1,063 1,090 1,283 1,228 1,200 4,247 4,801
EBITDA Margin (%) 12.6 15.1 14.1 13.0 13.1 14.0 13.4 12.8 13.7 13.3
EBIT Margin (%) 10.1 12.6 11.3 9.4 10.4 11.5 10.7 10.7 10.8 10.8
Other income 298 299 246 222 116 184 309 50 1,065 659
ETR (%) 28.7 23.5 20.8 20.4 25.5 22.6 25.8 23.5 23.4 24.3
PAT 748 985 869 844 740 973 940 816 3,446 3,470
QoQ (%) -20.3 31.7 -11.8 -2.8 -12.3 31.5 -3.4 -13.2
YoY (%) 9.2 9.2 -13.9 -10.1 -1.1 -1.2 8.3 -3.3 -1.9 0.7
EPS (INR) 6.7 8.8 7.7 7.5 6.6 8.7 8.4 7.3 30.7 30.9
Headcount 11,507 11,311 11,481 11,569 12,297 12,797 12,747 12,877 11,569 12,877
Util incl. trainees (%) 75.4 76.1 76.7 73.3 75.5 77.2 74.8 76.4
Attrition (%) 18.8 21.6 20.6 18.4 19.9 22.7 22.6
Offshore rev. (%) 44.7 44.6 43.3 41.0 42.9 42.4 42.6 43.5
E: MOSL Estimates
April 2017 240

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March 2017 Results
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Sector: Technology
Technology
HCL Technologies
Bloomberg HCLT IN CMP: INR865 TP:INR1,000 (+16%) Buy
We expect HCLTs USD revenue to grow 3.7% QoQ in 4QFY17 and
M. Cap. (INR b)/(USD b) 1222 / 19
3.4% QoQ on a constant currency basis.
It is expected to be divided as follows: Organic: 1.5pp, new IBM
1,6,12 Rel Perf. (%) -2 / 0 / -18
partnership: 0.6pp (USD10m), and Butler: 1.3pp (USD23m).
We expect momentum to continue in the IMS business. Deal
signings over the last many quarters and growth so far provide
Y/E JUNE 2016 2017E 2018E 2019E
Sales
visibility and confidence in execution of its 12-14% revenue growth
311.4 467.2 523.9 583.9
EBITDA
guidance.
68.2 103.0 113.2 124.9
PAT EBIT margins are likely to decline by 20bp to 20.2% because of
56.7 81.0 89.7 98.2
EPS (INR) 40.1 57.2 64.3 70.3
continued investments in the business, integration of lower margin
EPS Gr. (%) -20.3 42.5 12.4 9.3 businesses and increased depreciation, led by amortization of
BV/Sh. (INR) 200.2 227.8 233.1 264.7 investments made in the IBM partnerships.
RoE (%) 21.5 27.0 27.8 28.1 With this, we expect 20.3% EBIT margin for FY17 towards the
RoCE (%) 19.9 25.2 25.5 26.1 higher-end of the 19.5-20.5% guidance range.
Payout (%) 42.4 42.0 43.6 45.5 PAT estimate for the quarter is INR19.7b, -4.8% QoQ, on the back of
Valuation lower margins and lower other income.
P/E (x) 21.7 15.2 13.6 12.4 The stock trades at 13.6x FY18E and 12.4x FY19E EPS. Maintain Buy.
P/BV (x) 4.4 3.8 3.7 3.3
EV/EBITDA 12.2 10.6 9.7 8.5
(x) Key issues to watch for
Div yld (%) 2.0 2.8 3.2 3.7
Commentary on performance expectations for FY18.
Deal signings.
Organic growth in IMS and traction in Engineering.
HCL Tech Quarterly Performance (US GAAP, INR Million)

Y/E June FY15 FY16* FY17 FY16* FY17E
4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q
Revenue (USD m) 1,538 1,545 1,566 1,587 1,691 1,722 1,745 1,810 4,698 6,968
QoQ (%) 3.2 0.5 1.4 1.3 6.5 1.9 1.4 3.7 7.1 11.7
Revenue (INR m) 97,770 100,970 103,410 106,980 113,360 115,190 118,140 120,518 311,360 467,208
YoY (%) 16.1 15.6 11.4 15.4 15.9 14.1 14.2 12.7 14.6 14.2
GPM (%) 34.2 34.4 34.6 34.9 34.4 33.6 33.9 33.4 34.6 33.8
SGA (%) 12.8 12.5 13.0 12.7 12.1 11.8 11.7 11.5 12.7 11.8
EBITDA (INRm) 21,000 22,110 22,250 23,790 25,210 25,110 26,280 26,386 68,150 102,986
EBITDA Margin (%) 21.5 21.9 21.5 22.2 22.2 21.8 22.2 21.9 21.9 22.0
EBIT Margin (%) 20.2 20.6 20.0 20.8 20.6 20.1 20.4 20.2 20.5 20.3
Other income 2,120 2,410 3,550 2,000 2,530 2,350 2,310 713 7,960 7,903
ETR (%) 18.6 21.3 20.9 20.5 21.0 21.1 21.5 21.5 20.9 21.3
PAT before EOI 17,820 18,230 19,190 19,250 20,430 20,150 20,710 19,706 56,670 80,996
QoQ (%) 5.8 2.3 5.3 0.3 6.1 -1.4 2.8 -4.8
YoY (%) -2.9 6.1 -0.2 14.3 14.6 10.5 7.9 2.4 4.0 8.7
EPS 12.6 12.9 13.6 13.6 14.5 14.3 14.7 13.8 40.1 57.2
Headcount 106,107 105,571 103,696 104,896 107,968 109,795 111,092 114,742 104,896 114,742
Util excl. trainees (%) 83.5 83.6 84.7 85.6 85.8 85.3 84.6 84.9 81.8 83.0
Attrition (%) 16.5 16.3 16.7 17.3 17.8 18.6 17.9
Fixed Price (%) 56.1 56.2 57.0 56.8 60.9 61.3 63.2
E: MOSL Estimates
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March 2017 Results
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Sector: Technology
Technology
Hexaware Technologies
Bloomberg HEXW IN CMP: INR215 TP: INR220 (+2%) Neutral
We expect USD revenue to grow 0.8% QoQ to USD140m (0.5% QoQ
CC).
Although QoQ growth is expected to be soft, the quarter would
1,6,12 Rel Perf. (%) -7 / 7 / -35
strike 15% YoY growth, signifying strong momentum in the
business.
EBITDA margins have been steady over the last two quarters
Y/E DEC 2015 2016 2017E 2018E
Sales
despite wage hike, resulting out of strong volume growth and
31.2 35.3 39.0 43.4
EBITDA improvement in operational efficiencies.
5.4 5.7 6.4 7.1
PAT 3.9 4.2 4.5 5.0
However, in 1Q, we expect EBITDA margins to decline by 80bp QoQ
EPS (INR) 12.9 13.7 14.9 16.3 to 16.5%, as utilization gets aligned to comfortable levels, and
EPS Gr. 22.1 5.8 8.9 9.1 because of INR appreciation against the USD.
(%)
BV/Sh. Our PAT estimate for the quarter is INR1,086m, down 10.7% from
47.4 56.3 66.3 77.3
(INR) the previous quarter, on the back of lower other income led by
RoE (%) 28.9 26.5 24.4 22.7
RoCE (%) 27.7 24.2 22.8 21.7 translation losses.
Payout (%) 64.5 38.6 25.8 23.6 The stock trades at 14.4x CY17E and 13.2x CY18E earnings. Neutral.
Valuation
P/E (x) 16.6 15.7 14.4 13.2
P/BV (x) 4.5 3.8 3.2 2.8 Large deal pipeline and traction post the increased S&M spend.
EV/EBITDA 11.0 10.2 9.2 8.0 Commentary on sustenance of revenue growth.
(x) Health of top customers and outlook over CY17E.
Div yld (%) 4.0 2.6 1.9 1.9
Quarterly Performance (Indian GAAP) (INR m)

Y/E Dec CY16 CY17 CY15 CY16E
1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE
Revenue (USD m) 121.7 129.7 135.2 138.9 140.0 144.3 146.9 148.1 525 579
QoQ (%) -1.9 6.6 4.2 2.7 0.8 3.1 1.8 0.8 8.2 10.3
Revenue (INR m) 8,202 8,697 9,041 9,409 9,323 9,670 9,915 10,069 35,349 38,977
YoY (%) 15.0 12.6 10.5 14.8 13.7 11.2 9.7 7.0 13.2 10.3
GPM (%) 33.6 34.6 35.4 34.6 33.8 34.2 34.1 32.3 34.6 33.6
SGA (%) 19.0 19.0 18.0 17.3 17.3 17.3 17.3 17.3 18.3 17.3
EBITDA 1,194 1,353 1,576 1,624 1,541 1,631 1,670 1,515 5,747 6,357
EBITDA Margin 14.6 15.6 17.4 17.3 16.5 16.9 16.8 15.0 16.3 16.3
EBIT Margin (%) 12.9 14.0 15.9 15.8 15.0 15.3 15.3 13.5 14.7 14.8
Other income 55 132 67 140 70 112 107 93 394 382
ETR (%) 24.2 25.8 25.8 25.1 26.0 26.0 26.0 26.0 25.3 26.0
PAT 842 999 1,114 1,216 1,086 1,180 1,202 1,074 4,171 4,543
QoQ (%) -15.3 18.6 11.5 9.2 -10.7 8.6 1.9 -10.6
YoY (%) 1.0 1.0 -0.1 22.3 29.0 18.1 7.9 -11.6 6.1 8.9
EPS (INR) 2.8 3.3 3.7 4.0 3.6 3.9 3.9 3.5 13.7 14.9
Headcount 11,599 11,875 11,859 12,115 12,390 12,820 13,095 13,536 12,115 13,536
Utilization (%) 69.6 70.0 74.1 78.6 77.0 77.0 77.0 74.0 73.8 77.3
Attrition (%) 16.0 16.6 16.5 16.1
Offshore rev. (%) 36.9 36.1 34.4 35.5 35.1 35.3 35.6 34.5 35.7 35.1
E: MOSL Estimates
April 2017 242

March 2017
March 2017 Results
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Preview || Sector:
Sector: Technology
Technology
Infosys
Bloomberg INFO IN CMP: INR1,009 TP: INR1,250 (+24%) Buy
In 3Q, INFO narrowed its guidance band to 8.4-8.8% YoY CC,
M. Cap. (INR b)/(USD b) 2307 / 35
implying 4Q revenue growth of 0.3-1.8% QoQ (mid-point of 0.1%).
In CC terms, our revenue growth estimate is 1% QoQ on the back of
1,6,12 Rel Perf. (%) -6 / -9 / -37
improvement in top clients after the sharp fall seen in 3Q and the
RBS ramp-down being behind. Cross-currency tailwinds of 50bp
would result in USD revenue growth of 1.5%.
Y/E MAR 2016 2017E 2018E 2019E
Given the lower exit rate for FY17 and expected conservatism in
Sales 624.4 686.1 747.4 825.1
EBITDA
initial guidance to avoid three revisions like the previous year, we
170.8 186.2 200.2 220.8
PAT 134.9 141.8 152.2 167.5
expect INFO to guide for 7-9% YoY CC growth for FY18. This would
EPS (INR)* 59.0 62.0 66.6 73.3 result in a CQGR ask rate of 2.2-3%.
EPS Gr. (%) 9.4 5.1 7.4 10.0 We expect EBITDA margin to decline by 50bp QoQ to 27.1%, led by
BV/Sh. (INR) 270.3 300.7 331.0 365.5 INR appreciation and the absence of certain tailwinds that INFO
RoE (%) 24.7 23.0 22.1 22.1 benefited from in the previous quarter (higher leave utilization,
RoCE (%) 23.2 21.7 21.1 21.0 lapse of leaves and lower leave liabilities).
Payout (%) 41.9 50.0 45.1 46.4 Our PAT estimate is INR34.2b, -7.7% QoQ led by lower profitability
Valuations and translation losses.
P/E (x) 17.4 16.5 15.4 14.0 The stock trades at 15.4x FY18E and 14x FY19E earnings. Buy.
P/BV (x) 3.8 3.4 3.1 2.8
EV/EBITDA (x) 11.7 10.4 9.4 8.3 Key issues to watch for
Div Yield (%) 2.4 3.0 2.9 3.3 TCV of deal wins during the quarter.
Commentary around contribution of newly launched services.
Commentary around macro, verticals, margins and pricing.
Quarterly Performance (IFRS) (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 2,256 2,392 2,407 2,446 2,501 2,587 2,551 2,590 9,501 10,229
QoQ (%) 4.5 6.0 0.6 1.6 2.2 3.4 -1.4 1.5 9.1 7.7
Revenue (INR m) 143,540 156,350 159,020 165,500 167,820 173,100 172,730 172,489 624,410 686,139
YoY (%) 12.4 17.2 15.3 23.4 16.9 10.7 8.6 4.2 17.1 9.9
GPM (%) 38.6 40.1 39.5 40.5 38.7 39.1 39.7 38.9 39.7 39.1
SGA (%) 12.4 12.3 12.3 12.5 12.2 11.8 12.2 11.8 12.4 12.0
EBITDA 37,600 43,510 43,280 46,390 44,470 47,330 47,670 46,775 170,790 186,245
EBITDA Margin (%) 26.2 27.8 27.2 28.0 26.5 27.3 27.6 27.1 27.4 27.1
EBIT Margin (%) 24.0 25.5 24.9 25.5 24.1 24.9 25.1 24.6 25.0 24.7
Other income 7,580 7,930 8,020 7,720 7,530 7,600 8,200 5,745 31,250 29,075
ETR (%) 27.9 29.0 27.2 27.9 28.4 28.8 28.1 29.0 28.0 28.6
PAT 30,300 33,980 34,650 35,970 34,360 36,060 37,080 34,218 134,930 141,768
QoQ (%) -2.2 12.1 2.0 3.8 -4.5 4.9 2.8 -7.7
YoY (%) 5.0 9.8 6.6 16.1 13.4 6.1 7.0 -4.9 9.4 5.1
EPS (INR) 13.3 14.9 15.2 15.7 15.0 15.8 16.2 15.0 59.0 62.0
Headcount 179,523 187,976 193,383 194,044 197,050 199,829 199,763 205,370 194,044 205,370
Attrition (%) 19.2 19.9 18.1 17.3 21.0 20.0 18.4
Offshore rev. (%) (IT 43.9 43.9 43.5 43.5 43.0 43.0 43.5
Fixed Price (%) 42.4 44.0 44.6 45.1 45.7 47.1 49.5
E: MOSL Estimates
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March 2017 Results
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Sector: Technology
Technology
KPIT Technologies
Bloomberg KPIT IN CMP: INR130 TP: INR150 (+16%) Neutral
Revenue performance has been lumpy for KPIT, with guidance of a
M.Cap. (INR b) /(USD b) 26.2/0.4
better 2H compared to 1H.
52-Week Range (INR) 197/121
1, 6, 12 Rel. Per (%) -7/-5/-32
However, the impact of seasonal weakness and pressure in ERP
implementation continue weighing on overall performance.
Expect revenue of US124m, 1.2% QoQ growth in USD terms and
Y/E MAR 2016 2017E 2018E 2019E
0.8% QoQ CC.
Sales 32.2 32.9 35.2 38.4
While the companys drive has been to increase profitability,
EBITDA 4.4 3.4 4.2 4.7 excessive fresher hiring led to operational inefficiencies, negatively
PAT 3.0 2.0 2.8 3.0 impacting profitability. We expect margins to be subdued till there
EPS (INR) 14.1 11.5 13.8 15.0 is a sustained uptick in revenue growth momentum, which remains
EPS Gr. (%) 19.0 -18.4 19.8 9.2 elusive.
BV/Sh. (INR) 69.0 79.6 93.4 108.4 Our PAT estimate is INR451m, -5% QoQ because of the
RoE (%) 21.0 13.7 15.9 14.9 compounding of lower margins and translation losses.
RoCE (%) 24.3 15.8 17.8 17.3 KPIT trades at 9.5x FY18E and 8.7x FY19E earnings. Maintain
Payout (%) 10.6 17.4 14.5 13.3 Neutral.
Valuations
P/E (x) 9.3 11.4 9.5 8.7
Growth in IES, Engineering Services and top client.
P/BV (x) 1.9 1.6 1.4 1.2
Margin performance and guidance.
EV/EBITDA (x) 5.1 5.9 4.3 3.4
Commentary on deal wins across segments.
Div yld (%) 1.1 1.5 1.5 1.5
Plan to recoup revenue growth and profitability.
Quarterly Performance (Indian GAAP) (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 118 125 123 124 120 123 123 124 490 490
QoQ (%) -3.3 5.3 -1.0 0.7 -3.5 3.0 -0.4 1.2 0.3 0.0
Revenue (INR m) 7,583 8,123 8,130 8,407 8,032 8,310 8,307 8,284 32,243 32,933
YoY (%) 9.9 7.2 4.3 10.2 5.9 2.3 2.2 -1.5 7.8 2.1
GPM (%) 28.2 32.1 32.9 35.3 28.9 29.5 29.0 28.9 32.2 29.1
SGA (%) 18.7 18.1 18.3 19.1 18.3 18.5 18.8 18.9 18.6 18.6
EBITDA 718 1,139 1,186 1,359 855 914 846 830 4,353 3,446
EBITDA Margin (%) 9.5 14.0 14.6 16.2 10.7 11.0 10.2 10.0 13.5 10.5
EBIT Margin (%) 7.3 11.9 12.3 13.6 8.3 8.6 7.9 7.6 11.4 8.1
Other income 106 86 36 20 116 49 29 20 248 214
Interest 47 44 35 25 56 14 66 63 152 199
ETR (%) 27.9 25.4 26.5 13.4 24.3 25.1 23.1 23.1 22.8 24.0
PAT 444 751 735 885 551 562 475 451 2,815 2,039
QoQ (%) -11.8 69.1 -2.1 20.4 -37.8 2.0 -15.5 -5.0
YoY (%) -12.6 6.3 12.5 75.7 24.0 -25.2 -35.4 -49.0 18.7 -27.6
EPS (INR) 2.2 3.8 3.7 4.4 2.8 2.8 3.7 2.3 14.1 11.5
Headcount 10,839 10,659 10,559 10,910 11,288 11,666 11,881 11,770 10,910 11,770
Offshore rev. (%) 44.7 44.9 41.2 42.1 41.5 43.3 43.6 43.8 43.2 43.1
Fixed Price (%) 26.2 27.1 29.1 26.4 28.5 28.0 33.7
E: MOSL Estimates
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March 2017 Results
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Preview || Sector:
Sector: Technology
Technology
L&T Infotech
Bloomberg LTI IN CMP: INR711 TP: INR800 (+12%) Buy
LTI saw revenue growth of 3.8% QoQ CC despite 3Q being a
M. Cap. (INR b)/(USD b) 123 / 2
seasonally weak quarter. This was largely attributed to the ramp-up
of deals won earlier during the year.
1,6,12 Rel Perf. (%) -1/-11/-
Led by the higher base, and expectations of new ramp-ups
beginning in FY18, we expect CC growth of 1.3% QoQ. A 40bp
Y/E MARCH 2016 2017E 2018E 2019E
tailwind during the quarter would result in 1.7% USD revenue
Sales
growth.
58.5 64.8 70.7 77.6
EBITDA 10.4 12.1 12.5 13.3
Expect 20bp expansion in EBITDA margin to 18.3% as 3Q was
PAT 9.2 9.4 10.2 10.6
negatively impacted by seasonality and increased share of India in
EPS (INR) 52.4 53.6 58.0 60.8 the overall portfolio. This would be partly offset by INR appreciation
EPS Gr. (%) 21.5 2.3 8.2 4.8 and continued investments in the business.
BV/Sh. (INR) 115.6 143.5 173.7 205.3 Our PAT estimate for the quarter is INR2.2b, which implies 10.5%
RoE (%) 45.3 41.4 36.6 32.1 QoQ decline, largely led by translation losses offsetting hedge gains
RoCE (%) 39.9 44.3 36.4 33.7 and resulting in lower other income.
Payout (%) 59.6 40.0 40.0 40.0 The stock trades at 12.3x FY18E and 11.7x FY19E earnings. Neutral.
Valuation
P/E (x) Key issues to watch for
13.6 13.3 12.3 11.7
P/BV (x) 6.2 5.0 4.1 3.5
Deal wins and ramp-up schedule for FY18.
EV/EBITDA 11.9 9.9 9.4 8.6 Margin trajectory, going forward, given the increased
(x) investments.
Div Yld (%) 4.4 3.0 3.3 3.4
Growth in Digital.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 209 224 225 230 231 240 245 249 887 965
QoQ (%) 0.0 7.3 0.5 2.1 0.6 3.7 2.3 1.7 9.5 8.8
Revenue (INR m) 13,332 14,682 14,870 15,939 15,550 16,020 16,667 16,605 58,471 64,842
YoY (%) 14.5 18.7 12.4 20.5 16.6 9.1 12.1 4.2 17.5 10.9
GPM (%) 34.0 34.5 36.4 35.0 35.3 35.4 34.3 34.3 33.5 34.8
SGA (%) 18.5 17.9 16.8 14.9 15.7 16.4 16.2 16.0 15.8 16.1
EBITDA 2,068 2,431 2,914 3,204 3,050 3,044 3,018 3,035 10,359 12,147
EBITDA Margin (%) 15.5 16.6 19.6 20.1 19.6 19.0 18.1 18.3 17.7 18.7
EBIT Margin (%) 12.2 13.6 16.7 17.4 16.9 16.1 15.3 15.3 14.7 15.9
Other income 512 532 285 500 372 365 598 261 2,802 1,596
ETR (%) 18.2 24.4 18.8 19.2 21.2 21.0 21.2 21.0 19.7 21.1
PAT 1,746 1,917 2,245 2,644 2,359 2,326 2,480 2,219 9,171 9,384
QoQ (%) -21.2 9.8 17.1 17.8 -10.8 -1.4 6.6 -10.5
YoY (%) 7.5 7.2 12.5 19.4 35.1 21.3 10.5 -16.1 21.5 2.3
EPS (INR) 10.0 11.0 12.8 15.1 13.5 13.3 14.2 12.7 52.4 53.6
Headcount 20,331 22,689 22,477 20,072 19,292 21,074 21,976 22,246 20,072 22,246
Util incl. trainees (%) 73.8 72.8 74.0 75.9 77.4 78.7 78.1 76.0 73.8 77.5
Attrition (%) 20.1 19.7 18.5 18.4 19.5 18.5 18.1
Offshore rev. (%) 51.9 51.7 51.3 52.4 51.9 51.2 52.3 52.7 49.7 52.0
E: MOSL Estimates
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March 2017 Results
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Preview || Sector:
Sector: Technology
Technology
MindTree
Bloomberg MTCL IN CMP: INR452 TP: INR530 (+17%) Neutral
MTCLs performance has been impacted since the last couple of
quarters because of softness in top accounts, project cancellations,
delays in decision making and deterioration in the performance of
1,6,12 Rel Perf. (%) -5 / -14 / -51
acquisitions.
These factors are expected to play on performance in 4Q as well,
Y/E MARCH 2016 2017E 2018E 2019E
restricting signs of a revival. While we expect 1.5% QoQ CC growth,
Sales 46.9 52.1 57.1 63.7
we expect a headwind of 40bp due to cross-currency headwinds,
EBITDA 8.3 7.0 8.1 9.1 resulting in 1.1% QoQ growth.
PAT 6.0 4.2 5.8 6.6 Note, for MTCL, rates at the beginning of the month are considered
EPS (INR) 35.9 24.9 34.6 39.4 while billing, resulting in a headwind versus a tailwind for peers.
EPS Gr. (%) 14.2 -30.6 39.0 14.0 Although margins have bottomed out, we dont see a material pick-
BV/Sh. (INR) 142.4 151.0 171.1 192.4 up till organic growth momentum increases or acquisitions turn
RoE (%) 27.4 17.0 21.5 21.7 around. We assume flat EBITDA margins in 4Q at 13.4%.
RoCE (%) 30.6 19.5 21.1 21.0 Our PAT estimate for the quarter is INR972m, which implies 5.8%
Payout (%) 29.3 48.2 34.7 38.0 QoQ decline.
Valuation The stock trades at 13.1x FY18E and 11.5x FY19E earnings. Neutral.
P/E (x) 12.6 18.2 13.1 11.5
P/BV (x) 3.2 3.0 2.6 2.4
Update on top clients, pricing pressure and outlook.
EV/EBITDA (x) 8.6 10.0 8.5 7.3
Margin trajectory, going forward, given the increased investments
Div Yld (%) 2.3 2.6 2.6 3.3
and revenue growth issues.
Deal wins during the quarter and growth in Digital.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 154 180 184 195 199 193 192 194 715 778
QoQ (%) 4.4 16.9 2.3 5.7 2.1 -3.0 -0.4 1.1 22.5 8.8
Revenue (INR m) 9,775 11,693 12,145 13,203 13,276 12,954 12,953 12,937 46,896 52,120
YoY (%) 15.9 31.6 33.2 43.8 35.8 10.8 6.7 -2.0 31.7 11.1
GPM (%) 41.1 41.3 40.3 38.0 37.0 34.2 34.1 34.1 40.2 34.9
SGA (%) 24.0 22.8 22.6 21.3 22.3 21.7 20.7 20.7 22.5 21.3
EBITDA 1,672 2,164 2,147 2,206 1,951 1,621 1,740 1,733 8,299 7,045
EBITDA Margin (%) 17.1 18.5 17.7 16.7 14.7 12.5 13.4 13.4 17.7 13.5
EBIT Margin (%) 13.6 15.8 14.8 13.1 10.8 8.6 9.5 9.4 14.8 9.6
Other income 321 195 147 42 198 170 144 65 810 577
ETR (%) 22.4 22.5 22.6 25.0 24.2 26.0 25.2 24.0 22.4 24.8
PAT 1,283 1,582 1,509 1,330 1,235 948 1,031 972 6,033 4,186
QoQ (%) -0.3 23.3 -4.6 -11.9 -7.1 -23.2 8.8 -5.8
YoY (%) -0.9 15.1 7.2 3.3 -3.7 -40.1 -31.7 -27.0 12.5 -30.6
EPS (INR) 7.6 9.4 9.0 7.9 7.4 5.6 6.1 5.8 35.9 24.9
Headcount 14,427 15,582 16,243 16,623 16,110 16,219 16,099 16,249 16,623 16,249
Util incl. trainees (%) 70.3 71.4 68.5 69.4 71.4 71.4 71.3 72.0 69.9 71.5
Attrition (%) 18.4 17.1 16.0 15.7 16.5 16.4 16.1
Offshore rev. (%) 51.9 47.6 45.5 42.4 40.5 40.8 39.8 40.1 46.6 40.3
Fixed Price (%) 48.9 49.7 50.0 47.7 48.7 50.6 52.5
E: MOSL Estimates
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March 2017 Results
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Sector: Technology
Technology
Mphasis
Bloomberg MPHL IN CMP: INR578 TP: INR550 (-5%) Neutral
In 3QFY17, HP channel revenue grew for the second consecutive
M. Cap. (INR b)/(USD b) 120 / 2
time in 20 quarters. This is expected to remain stable with the
renewed MSA coming into effect, after the completion of the
1,6,12 Rel Perf. (%) -7 / -2 / 6
transaction between HPE and Blackstone.
We expect revenue growth of 1.1% QoQ (0.7% QoQ CC), driven by
Y/E MAR 2016 2017E 2018E 2019E
stability in HP channel and Digital Risk and continued traction in the
Sales 60.9 60.8 65.7 72.3 Direct International business.
EBITDA 9.0 9.6 10.2 11.2 Margins are likely to be stable (+20bp QoQ), as wage hike pressures
PAT 7.2 8.2 8.3 8.7 are now behind, and there is stability seen in the HP channel.
EPS (INR) 34.5 42.7 43.0 44.9 MPHL had raised its EBIT margin guidance by 100bp at the end of
EPS Gr. (%) 6.8 23.9 0.8 4.4
BV/Sh. (INR)
4QFY16 to 14-16% for FY17, and expressed confidence in achieving
299.4 280.1 296.7 315.3
RoE (%) 12.3 14.1 14.9 14.7 the higher end of the range. Looking at the traction so far, this
RoCE (%) 11.2 13.1 14.2 14.3 seems achievable.
Payout (%) 58.0 124.2 51.1 49.0 Our PAT estimate is INR1.97b (-3.5% QoQ).
Valuations
The stock trades at 12.2x FY17E and 9.5x FY18E EPS. Neutral.
P/E (x) 16.8 13.6 13.5 12.9
P/BV (x) 1.9 2.1 2.0 1.8 Key issues to watch for
EV/EBITDA(x) 10.8 9.9 9.0 8.0 Outlook for Digital Risk given an interest rate cycle reversal.
Div yld (%) 3.5 9.1 3.8 3.8 Strategy changes and roadmap under the new leadership.
Performance in Direct International business, and outlook for the
year.

Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17
Revenue (USD m) 234 237 229 225 224 224 225 227 926 900
QoQ (%) 1.7 1.2 -3.4 -1.7 -0.3 -0.2 0.2 1.1 -2.2 -2.7
Revenue (INR m) 14,945 15,575 15,167 15,160 15,167 15,176 15,361 15,064 60,879 60,768
YoY (%) 0.3 6.3 7.5 6.1 1.5 -2.6 1.3 -0.6 5.1 -0.2
GPM (%) 26.2 26.9 25.6 27.9 28.1 28.1 27.8 27.1 26.6 27.8
SGA (%) 11.9 11.9 11.3 12.2 12.0 11.8 12.3 11.7 11.8 12.0
EBITDA 2,115 2,345 2,166 2,344 2,445 2,463 2,396 2,315 8,970 9,619
EBITDA Margin (%) 14.1 15.1 14.3 15.7 16.1 16.2 15.6 15.4 14.7 15.8
EBIT Margin (%) 12.7 13.9 13.2 14.5 15.2 15.3 14.7 14.5 13.5 14.9
Other income 440 492 456 490 572 711 617 566 1,954 2,466
ETR (%) 29.2 26.4 27.7 31.1 27.7 27.5 28.5 27.5 27.1 27.8
PAT 1,658 1,900 1,736 1,920 2,043 2,166 2,044 1,973 7,242 8,226
QoQ (%) -6.7 14.6 -8.6 10.6 6.4 6.0 -5.6 -3.5
YoY (%) -5.1 18.6 5.1 8.0 23.2 14.0 17.7 2.7 6.9 13.6
EPS (INR) 8.3 9.0 8.3 9.2 9.7 10.3 9.7 10.2 34.5 40.0
Headcount 34,159 24,169 23,563 22,324 22,374 22,284 22,018 21,529 22,324 21,529
Net Additions 100 -9990 -606 -1239 50 -90 -266 -489 -11735 -795
HP Channel rev. (%) 28.8 26.5 24.2 24.3 23.4 23.9 24.0
Fixed Price (%) 12.3 14.0 19.2 21.1 19.8 19.1 20.6
E: MOSL Estimates
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March 2017 Results
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Preview || Sector:
Sector: Technology
Technology
Persistent Systems
Bloomberg PSYS IN CMP: INR596 TP: INR730 (+23%) Neutral
Revenue growth is expected to be led by the Enterprise segment,
whereas revenue from the IBM Watson deal would decline, as 3Q is
the strongest quarter for IBM seasonally.
1,6,12 Rel Perf. (%) -12 / -21 / -41
Growth in ISVs is likely to continue following the same trajectory as
earlier. Aided by these factors, we expect 4QFY17 revenue to grow
Y/E MARCH 2016 2017E 2018E 2019E 0.3% QoQ CC to USD110.5m.
Sales 23.1 28.9 32.5 36.4 Cross-currency movements are likely to result in a tailwind of 20bp
EBITDA 4.2 4.5 5.3 6.2 during the quarter, leading to 0.5% USD growth.
Adj. PAT 3.0 3.0 3.5 4.0 EBITDA margins are expected to decline, as revenue from the IBM
Adj. EPS (INR) 37.2 37.4 43.4 50.5 Watson IoT deal would decline during the quarter. This is likely to
EPS Gr. (%) 2.3 0.6 16.0 16.4
result in a 70bp reduction in EBITDA margins to 15.2%.
BV/Sh.(INR) 211.0 244.4 254.2 264.6
RoE (%) 19.5 16.9 17.9 20.1 Our PAT estimate for the quarter is INR706m, down 14% QoQ
RoCE (%) 18.9 16.7 15.3 17.1 owing to lower other income. Translation losses due to the USD
Valuations closing at INR65/USD would lead to pressure on PAT.
P/E (x) 16.0 15.9 13.7 11.8 The stock trades at 13.7x FY18E and 11.8x FY19E earnings. Neutral.
P/BV (x) 2.8 2.4 2.3 2.3
EV/EBITDA (x) 9.3 8.6 7.0 5.9 Key issues to watch for
Div. Yield (%) 1.8 2.0 2.0 2.0 Performance and outlook for top clients in ISV (ex-IBM).
Commentary on traction with Enterprise customers and potential
of winning large deals.
Outlook on sustainable profit margins in the near to medium
term.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Revenue (USD m) 78.6 83.0 89.7 100.4 104.8 105.2 110.0 110.5 352 431
QoQ (%) -1.8 5.5 8.1 12.0 4.3 0.4 4.6 0.5 14.0 22.4
Revenue (INR m) 5,004 5,427 5,921 6,771 7,018 7,040 7,455 7,362 23,123 28,875
QoQ (%) 0.6 8.5 9.1 14.4 3.6 0.3 5.9 -1.3
YoY (%) 15.0 16.9 19.7 36.1 40.2 29.7 25.9 8.7 22.3 24.9
GPM (%) 39.7 38.9 38.8 35.7 34.7 35.5 36.3 35.0 38.1 35.4
SGA (%) 20.4 20.2 20.1 19.8 19.6 19.8 20.4 19.4 20.1 19.9
EBITDA 969 1,018 1,110 1,074 1,058 1,108 1,187 1,116 4,171 4,467
EBITDA Margin (%) 19.4 18.7 18.8 15.9 15.1 15.7 15.9 15.2 18.0 15.5
EBIT Margin (%) 14.8 14.4 14.6 12.1 10.2 10.5 10.7 9.8 13.9 10.3
Other income 198 182 160 210 253 243 318 217 750 1,031
ETR (%) 28.5 25.5 24.4 21.4 24.3 25.3 26.7 25.0 24.8 25.4
PAT 672 718 775 808 733 735 819 706 2,974 2,993
QoQ (%) -11.6 6.9 7.8 4.3 -9.3 0.3 11.4 -13.8
YoY (%) -2.3 0.7 4.1 6.3 9.0 2.3 5.7 -12.6 2.3 0.6
EPS (INR) 8.4 9.0 9.7 10.1 9.2 9.2 10.2 8.8 37.2 37.4
Headcount 8,454 8,545 8,966 9,264 9,389 9,305 9,229 9,271 9,264 9,271
Attrition (%) 16.4 17.1 17.1 16.4 16.7 15.9 15.8
IP rev. proportion (%) 18.4 16.2 20.1 28.2 28.2 27.8 28.4 29.0 21.1 28.4
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March 2017 Results
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Preview || Sector:
Sector: Technology
Technology
NIIT Technologies
Bloomberg NITEC IN CMP: INR 436 TP: INR470 (+8%) Neutral
We expect revenue growth for NITEC to pick up in 4Q (2% QoQ CC),
led by stability in top clients and ramp-up of new deals won earlier
in the year.
1,6,12 Rel Perf. (%) 1 / -4 / -32
However, bookings using the start date of the month would result
in 50bp of a headwind on account of cross-currency movement,
Y/E MARCH 2016 2017E 2018E 2019E which has been a tailwind for peers.
Sales 26.8 27.5 29.3 31.9 We expect EBITDA margin to expand by 60bp QoQ to 17.5%, aided
EBITDA 4.7 4.5 5.0 5.5 by higher international revenue and increased traction in Digital.
PAT 2.8 2.6 2.9 3.3 Our PAT estimate is INR667m, down 7.4% QoQ, driven by lower
EPS (INR) 45.7 36.2 46.8 52.9
other income, led by translation losses.
EPS Gr. (%) 143.7 -20.9 29.3 13.1
BV/Sh. (INR) 259.8 278.0 311.6 350.1 The stock trades at 9.3x FY18E and 8.2x FY19E earnings. Neutral.
RoE (%) 19.0 13.5 15.9 16.0
RoCE (%) 18.6 15.3 14.9 14.8
Valuations Traction in the international business.
P/E (x) 9.5 12.1 9.3 8.2 Demand environment and update on ramp-up delays.
P/BV (x) 1.7 1.6 1.4 1.2
Deal wins.
EV/EBITDA (x) 4.9 5.0 4.3 3.5
Div Yld (%) 2.3 2.5 2.5 2.7

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Revenue (USD m) Ex. forex 98 104 103 102 99 103 103 104 406 409
QoQ (%) 5.9 6.2 -0.9 -1.2 -2.5 4.2 -0.6 1.5 8.6 1.4
Revenue (INR m) 6,411 6,779 6,787 6,847 6,692 6,913 6,922 6,982 26,824 28,506
YoY (%) 11.0 15.2 14.0 12.0 4.4 2.0 2.0 2.0 338.9 344.6
GPM (%) 36.4 37.2 37.3 37.1 35.3 35.3 36.2 36.8 37.0 36.6
SGA (%) 20.1 19.6 19.1 18.7 20.0 19.0 19.3 19.3 19.5 19.4
EBITDA 1,043 1,194 1,235 1,261 1,023 1,122 1,168 1,219 4,733 4,532
EBITDA Margin (%) 16.3 17.6 18.2 18.4 15.3 16.2 16.9 17.5 17.6 17.3
EBIT Margin (%) 12.0 13.7 14.2 14.2 10.9 12.0 12.7 13.2 13.5 13.2
Other income 79 13 52 39 71 27 45 21 183 234
ETR (%) 25.9 22.9 20.9 18.2 10.3 24.2 24.2 24.2 21.8 21.4
Minority Interest 40.0 43.0 48.0 39.0 46.0 54.0 48.0 48.0 170.0 208.0
PAT 587 683 741 790 720 720 720 667 2,801 2,578
QoQ (%) -433.5 16.4 8.5 6.6 -8.9 0.0 0.0 -7.4 145.9 -8.0
YoY (%) 35.6 70.8 53.7 -548.9 22.7 5.4 -2.8 -15.6
EPS (INR) 9.6 11.2 12.1 12.9 5.1 9.7 10.6 10.8 45.8 42.0
Headcount 9,228 9,592 9,517 9,476 9,022 8,868 8,809 8,979 9,476 9,318
Attrition (%) 14.3 13.7 13.6 13.6 13.4 12.9 12.9
Offshore rev. (%) 39.0 41.0 41.0 39.0 39.0 39.0 40.0 40.0 38.5
Fixed Price (%) 42.0 41.0 43.0 46.0 46.0 46.0 48.0
April 2017 249

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March 2017 Results
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Sector: Technology
Technology
TCS
Bloomberg TCS IN CMP: INR2,431 TP: INR2,550 (+5%) Neutral
Revenue growth for TCS in 3Q was 2% QoQ CC, which included a
M. Cap. (INR b)/(USD b) 4755 / 73
tailwind of ~USD27m from a deferment of revenue in an India-based
52-Week Range (INR) 2740 / 2055
contract.
1,6,12 Rel Perf. (%) -7 / -5 / -22
We expect momentum to continue in 4Q, and hence, expect 2% QoQ
CC growth.
However, cross-currency movement would provide a tailwind of
Y/E MAR 2016 2017E 2018E 2019E
Sales
70bp, resulting in revenue of USD4,504m, a growth of 2.7%.
1,086.5 1,183.2 1,303.9 1,442.2
EBITDA Our EBIT margin estimate for 4Q stands at 25.6% QoQ (-40bp QoQ),
306.8 323.7 348.8 379.5
PAT below the lower end of the guided range of 26-28%. There is a
242.1 258.8 277.0 296.2
EPS (INR) 123.2 131.3 144.7 154.7
possibility of TCS margins being lower than the range for FY17, lest
EPS Gr. (%) 11.5 6.6 10.2 6.9 there is a material beat on profitability in 4Q.
BV/Sh. (INR) 371.4 423.8 417.1 494.0 Our PAT estimate stands at INR62b (-8.6% QoQ). The decline is led
RoE (%) 37.1 33.0 33.4 33.0 by lower other income, resulting out of a translation loss, led by
RoCE (%) 36.8 31.9 28.7 26.2 USD/INR appreciation on a closing basis.
Payout (%) 35.2 35.4 93.9 39.3 The stock trades at 16.7x FY18E and 15.6x FY19E earnings. Neutral.
Valuation
P/E (x) Key issues to watch for
19.6 18.4 16.7 15.6
P/BV (x) Outlook on revenue from TCS Japan and Diligenta.
6.5 5.7 5.8 4.9
EV/EBITDA (x) 14.6 13.7 12.9 11.6
Traction in new Digital initiatives (automation/solutions).
Div. yield (%) 1.8 1.9 5.6 2.5 Outlook for BFSI vertical going ahead.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 4,036 4,156 4,145 4,207 4,362 4,374 4,387 4,504 16,544 17,627
QoQ (%) 3.5 3.0 -0.3 1.5 3.7 0.3 0.3 2.7 7.1 6.5
Revenue (INR m) 256,681 271,655 273,640 284,486 293,050 292,840 297,350 299,935 1,086,462 1,183,175
YoY (%) 16.1 14.1 11.7 17.5 14.2 7.8 8.7 5.4 14.8 8.9
GPM (%) 44.9 45.5 45.6 44.8 43.9 44.8 44.5 44.4 45.2 44.4
SGA (%) 16.8 16.7 17.3 17.0 17.1 17.1 16.8 17.1 17.0 17.0
EBITDA 72,019 78,224 77,469 79,068 78,380 81,110 82,290 81,880 306,780 323,660
EBITDA Margin (%) 28.1 28.8 28.3 27.8 26.7 27.7 27.7 27.3 28.2 27.4
EBIT Margin (%) 26.3 27.1 26.6 26.1 25.1 26.0 26.0 25.6 26.5 25.7
Other income 7,707 6,751 6,990 9,050 9,630 10,520 11,850 4,614 30,498 36,614
ETR (%) 23.2 24.1 23.2 23.7 24.0 23.8 23.6 23.5 23.6 23.7
PAT 57,086 60,553 61,095 63,412 63,179 65,860 67,780 61,965 242,146 258,784
QoQ (%) -3.3 6.1 0.9 3.8 -0.4 4.2 2.9 -8.6
YoY (%) 12.9 14.5 12.2 7.4 10.7 8.8 10.9 -2.3 11.6 6.9
EPS (INR) 29.1 30.8 31.0 32.3 32.1 33.4 34.4 31.4 123.2 131.3
Headcount 324,935 335,620 344,691 353,843 362,079 371,519 378,497 385,749 353,843 385,749
CC QoQ rev gr (%) 3.4 3.9 0.5 2.1 3.1 1.0 2.0 2.0 11.8 8.4
Attrition (%) 15.9 16.2 15.9 15.5 13.6 12.9 12.2
E: MOSL Estimates
April 2017 250

March 2017
March 2017 Results
Results Preview
Preview || Sector:
Sector: Technology
Technology
Tech Mahindra
Bloomberg TECHM IN CMP: INR460 TP: INR550 (+20%) Buy
We expect 0.8% QoQ CC growth in TECHM in 4QFY17. Our
M. Cap. (INR b)/(USD b) 446 / 7
expectations are led by 0.6% growth in Telecom and 0.9% in
Enterprise.
1,6,12 Rel Perf. (%) -14 / 1 / -22
The seasonal strength in Comviva is expected to be offset by the
pressure in LCC, resulting in subdued performance in Telecom.
Organic CC growth in Enterprise exceeded 4% QoQ in 3Q, and thats
Y/E MARCH 2016 2017E 2018E 2019E
Sales
likely to moderate growth in the current quarter. Cross-currency
264.9 291.9 324.9 358.4
EBITDA
tailwinds of 60bp are likely to result in USD revenue growth of 1.4%.
43.4 44.5 48.9 54.7
Adj. PAT 31.2 29.8 31.7 35.7
We expect EBITDA margin to decline by 30bp to 15.4%. The benefits
Adj. EPS (INR) 35.1 33.6 35.7 40.2 of higher profitability in Comviva are expected to be offset by INR
EPS Gr. (%) 18.4 -4.2 6.2 12.7 appreciation during the quarter.
BV/Sh.(INR) 165.6 175.1 197.2 227.7 Expect PAT to decline 14.7% QoQ to INR7.3b, led by lower other
RoE (%) 23.4 20.1 19.5 19.2 income.
RoCE (%) 20.1 16.6 16.6 16.7 The stock trades at 12.9x FY18E and 11.4x FY19E earnings. Buy.
Valuation
Performance of the Telecom segment.
P/E (x) 13.1 13.7 12.9 11.4
Comments on profitability including LCC.
P/BV (x) 2.8 2.6 2.3 2.0
TCV of deal wins in the Enterprise segment.
EV/EBITDA (x) 8.3 8.8 7.6 6.2
Div. Yield (%) 2.6 2.6 2.6 1.9

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 989 1,011 1,015 1,023 1,032 1,072 1,116 1,132 4,037 4,352
QoQ (%) 0.5 2.2 0.4 0.8 0.9 4.0 4.1 1.4 10.2 7.8
Revenue (INR m) 62,938 66,155 67,011 68,837 69,209 71,674 75,575 75,399 264,941 291,857
YoY (%) 22.9 20.5 16.5 12.5 10.0 8.3 12.8 9.5 17.9 10.2
GPM (%) 29.4 32.0 31.3 30.6 29.5 30.6 30.7 30.9 30.8 30.5
SGA (%) 15.0 15.4 14.3 13.8 14.6 15.7 15.0 15.5 14.5 15.2
EBITDA 9,050 11,010 11,358 11,510 10,290 10,701 11,865 11,605 43,426 44,461
EBITDA Margin (%) 14.4 16.6 16.9 16.7 14.9 14.9 15.7 15.4 16.4 15.2
EBIT Margin (%) 11.6 13.7 14.4 13.6 12.0 11.5 12.4 12.0 13.5 12.0
Other income 1,244 1,658 639 1,603 1,519 1,387 1,552 864 5,322 5,323
Interest expense 215 173 244 340 274 345 349 392 961 1,360
ETR (%) 25.6 24.8 23.2 17.0 25.9 30.8 20.2 22.5 21.4 24.7
PAT excl. BT amort & EOI 6,225 7,855 7,592 8,581 6,561 6,447 8,560 7,302 31,180 28,870
QoQ (%) 31.9 26.2 -3.3 13.0 -23.5 -1.7 32.8 -14.7
YoY (%) -1.3 9.2 -2.3 81.8 5.4 -17.9 12.8 -14.9 20.0 -7.4
EPS (INR) 7.6 8.8 8.5 10.1 7.4 7.3 9.6 8.2 35.1 33.5
Headcount 103,673 105,235 107,137 105,432 107,216 111,743 117,095 114,549 103,673 105,235
Attrition (%) 19.0 20.0 20.0 21.0 21.0 19.0 18.0
Offshore rev. (%) 39.0 38.3 37.3 36.8 36.6 36.5 36.1 35.8 37.8 36.3
E: MOSL Estimates
April 2017 251

March 2017
March 2017 Results
Results Preview
Preview || Sector:
Sector: Technology
Technology
Wipro
Bloomberg WPRO IN CMP: INR515 TP: INR540 (+5%) Neutral
In the previous quarter, Wipro had guided 1-2% QoQ CC growth for
M. Cap. (INR b)/(USD b) 1251 / 19
4Q. However, this would include ~7 weeks of additional revenue
from the integration of Appirio (~1.5%). Excluding this, the guidance
1,6,12 Rel Perf. (%) -1 / 0 / -30
of organic growth is -0.5% to +0.5% QoQ CC.
Financial Snapshot (INR b) We expect organic growth to be flat in 4Q, Appirio is likely to add
Y/E MAR 2016 2017E 2018E 2019E 1.5pp and cross-currency tailwinds to add 0.7pp, resulting in 2.2%
Sales 512.4 546.7 580.6 633.8 USD revenue growth.
EBITDA 108.1 108.1 118.9 133.9 We expect EBIT margin in IT Services to decline by 65bp because of
PAT 88.9 81.3 90.8 103.9
flattish organic revenue, the integration of lower margin Appirio
EPS (INR) 36.1 33.0 37.5 42.9
and INR depreciation during the quarter.
EPS Gr. (%) 2.9 -8.6 13.6 14.3
BV/Sh. (INR) 189.7 204.1 229.3 254.1 We expect overall EBIT margins to decline by 20bp, led by improved
RoE (%) 20.3 16.8 17.2 17.8 profitability in the Products business.
RoCE (%) 16.7 13.6 13.9 14.9 Our PAT estimate is INR19b, -10% QoQ on account of lower other
Payout (%) 16.6 29.8 34.7 35.0 income, resulting from translation losses.
Valuations
The stock trades at 13.8x FY18E and 12x FY19E earnings. Neutral.
P/E (x) 14.3 15.6 13.8 12.0
EV/EBITDA (x) 10.6 10.7 9.3 8.0 Revenue growth guidance for 1QFY18.
Div Yld (%) 1.2 1.9 2.5 2.9 Commentary on the Healthcare vertical.
Commentary on large deal wins and ramp-up schedule.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Revenue (USD m) 1,794 1,832 1,838 1,882 1,931 1,916 1,903 1,944 7,346 7,694
QoQ (%) 1.1 2.1 0.3 2.4 2.6 -0.8 -0.7 2.2 3.7 4.7
Revenue (INR m) 122,376 125,135 128,605 136,324 135,992 137,657 136,878 136,157 512,440 546,684
QoQ (%) 0.8 2.3 2.8 6.0 -0.2 1.2 -0.6 -0.5
YoY (%) 9.9 7.1 7.2 12.3 11.1 10.0 6.4 -0.1 9.1 6.7
GPM (%) 30.7 31.4 29.8 29.7 29.1 28.9 29.4 29.5 30.4 29.3
SGA (%) 12.2 12.4 12.0 12.3 13.0 13.2 13.0 13.3 12.2 13.1
IT Serv. EBIT (%) 21.0 20.7 20.2 20.1 17.8 17.8 18.3 17.7 20.5 17.9
EBIT Margin (%) 18.5 19.0 17.9 17.4 16.1 15.8 16.4 16.2 18.2 16.1
Other income 5,286 5,138 5,715 5,426 4,848 4,958 5,120 2,493 21,565 17,419
ETR (%) 21.2 22.4 21.8 22.7 22.9 22.2 23.3 22.5 22.1 22.7
PAT 21,877 22,354 22,341 22,350 20,518 20,672 21,094 18,983 88,922 81,267
QoQ (%) -3.8 2.2 -0.1 0.0 -8.2 0.8 2.0 -10.0
YoY (%) 4.0 7.2 1.9 -1.8 -6.2 -7.5 -5.6 -15.1 2.7 -8.6
EPS (INR) 8.9 9.1 9.1 9.1 8.3 8.5 8.7 7.8 36.1 33.0
Headcount 161,789 168,396 170,664 172,912 173,863 174,238 179,129 182,764 172,912 182,764
Attrition (%) 16.4 16.4 16.3 16.1 16.5 16.6 16.3
Offshore rev. (%) 45.4 46.1 46.2 45.8 45.6 46.1 46.5 46.3 45.9 46.1
Fixed Price (%) 54.5 53.4 55.9 56.9 56 56.4 57.7
E: MOSL Estimates
April 2017 252

March 2017
March 2017 Results
Results Preview
Preview || Sector:
Sector: Technology
Technology
Zensar Technologies
Bloomberg ZENT IN CMP: INR925 TP: INR1,200 (+30%) Buy
We expect revenue of USD121m, representing growth of 2.7% QoQ.
This would translate into 2% QoQ CC growth. 5% appreciation in
USD/ZAR would result in a cross-currency tailwind of 70bp for ZENT.
1,6,12 Rel Perf. (%) -3 / -14 / -24
The quarter will also include about one month of revenue from the
Financial Snapshot (INR b) acquisition of Foolproof. Organic revenue growth is likely to be
Y/E MAR 2016 2017E 2018E 2019E 1.2% QoQ CC.
Sales 29.6 31.4 35.9 40.7 With the pruning of non-core/low-yield business, we expect EBITDA
EBITDA 4.3 4.4 5.2 6.0 margins to expand 80bp QoQ to 14.6%. Seasonality and
PAT 3.1 2.9 3.7 4.2 investments in the business had resulted in 30bp decline in margins
EPS (INR) 68.2 65.3 81.4 92.0
in the previous quarter.
EPS Gr. (%) 17.0 -4.8 24.6 13.1
BV/Sh. (INR) 314.4 367.4 431.7 502.4 Our PAT estimate is INR684m, -15.7% QoQ on account of a decline
RoE (%) 24.0 19.1 20.4 19.7 in other income (translation losses).
RoCE (%) 28.5 25.0 25.4 25.2 The stock trades at 11.4x FY18E and 10x FY19E earnings. Buy.
Payout (%) 17.6 18.1 18.0 19.8
P/E (x) 13.6 14.2 11.4 10.0 Traction in Digital, large deals and other new initiatives.
P/BV (x) 2.9 2.5 2.1 1.8 Margin outlook, given the need for reinvestment.
EV/EBITDA (x) 9.3 8.7 7.2 5.8 Progress on restructuring.
Div Yld (%) 1.3 1.3 1.6 2.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Revenue (USD m) 111 116 115 111 114 116 118 121 453 468
QoQ (%) 5.1 4.8 -1.4 -3.7 3.1 1.8 1.3 2.7 5.4 3.4
Revenue (INR m) 7,046 7,564 7,568 7,464 7,624 7,767 7,922 8,037 29,643 31,350
YoY (%) 16.5 16.8 5.5 13.5 8.2 2.7 4.7 7.7 12.8 5.8
GPM (%) 31.7 32.1 30.6 30.8 29.1 29.7 30.0 30.6 31.3 29.9
SGA (%) 16.4 16.6 16.2 18.5 15.3 15.6 16.2 16.0 16.9 15.8
EBITDA 1,080 1,171 1,089 922 1,053 1,092 1,090 1,176 4,262 4,412
EBITDA Margin (%) 15.3 15.5 14.4 12.4 13.8 14.1 13.8 14.6 14.4 14.1
EBIT Margin (%) 13.8 14.0 12.9 10.7 12.5 12.5 12.4 13.2 12.8 12.7
Other income 148 229 95 116 169 37 183 -75 588 313
ETR (%) 29.8 26.9 30.4 21.1 30.5 28.2 29.1 28.0 27.3 29.0
PAT 762 913 715 703 763 687 811 684 3,094 2,945
QoQ (%) 6.2 19.8 -21.7 -1.7 8.5 -10.0 18.1 -15.7
YoY (%) 36.3 35.7 2.9 -2.1 0.1 -24.8 13.4 -2.7 17.0 -4.8
EPS (INR) 17.6 20.6 15.8 15.5 16.9 15.2 18.0 15.2 68.2 65.3
Headcount 7,895 8,050 8,192 8,256 8,238 8,316 8,564 8,564 8,256 8,564
Utilization (%) 79.0 80.0 82.0 81.0 79.8 80.1 79.5 80.0 80.5 79.9
Offshore rev. (%) 35.0 37.0 34.0 36.0 31.2 33.8 33.5 33.6 35.5 33.0
E: MOSL Estimates
April 2017 253

March 2017 Results Preview | Sector: Telecom
Telecom
Company name Hyperactive market conditions continue
Bharti Airtel
RJios subscriber growth impact incumbent earnings
Bharti Infratel RJios promotional free usage continues to hurt incumbents

RJio's Happy New Year offer in 4QFY17 continued to impact the overall telecom
Idea Cellular market, as consumers shifted to its promotional free usage. With an estimated 75m-
80m subscribers on RJios platform in 4QFY17 against ~50m subscribers in 3QFY17,
Tata Comm the impact has amplified. We expect ~7% QoQ decline in wireless revenue for Bharti
and Idea (down 12% YoY for Bharti and 15% YoY for Idea) and ~15% QoQ decline in
EBITDA (down 24% YoY for Bharti and 49% YoY for Idea).
Expect India wireless revenue to decline 7% QoQ

We expect Bhartis India wireless revenue to decline 6.7% QoQ and 11.9% YoY to
INR129.1b. On a consolidated basis, Bhartis revenue should drop 4.7% QoQ to
INR222.4b, with softening in the home and enterprise business, merger of South
East Asia business and unfavorable currency movement. Idea too should see a
revenue decline of 6.9% QoQ and 14.9% YoY to INR80.7b. Bharti Infratel, however, is
likely to witness a healthy quarter, with sustainable tenancy growth after a weak
1HFY17 on the back of accelerated capex from RJio and deployment of recently-
acquired spectrum by incumbent telcos. We expect Bharti Infratels revenue to grow
3% QoQ and 10.1% YoY to INR35b.
Voice revenue to decline 4-5% QoQ: Like in 3QFY17, the voice business is likely
to see a sharp decline, as subscribers shift outgoing voice usage toward RJio. We
expect Bhartis India voice business to decline 3.9% to INR93.3b, while Idea
should see a decline of 4.7% to INR58.8b. The impact of the shift in outgoing
minutes towards RJios free usage is seen in revenue per minute (RPM) instead
of voice minutes, as RJios promotional offer has reduced Bharti and Ideas
outgoing traffic but increased incoming traffic. Given that there is a paltry
INR0.14/minute interconnect charge on incoming traffic compared to
~INR0.60/min charge on outgoing traffic, we expect Bharti and Ideas voice RPM
to decline 8-9% QoQ, while voice traffic should grow 4-6% QoQ. Also, telcos are
rationalizing high-ARPU subscriber plans to match RJios pricing, which is
increasing traffic while hurting RPM.
Data revenue to decline 17-18%: The incumbent telcos aim to arrest the shift in
traffic to RJio through promotional data offering; this is likely to impact their
data revenue significantly. We expect Bhartis India data revenue to fall 17% to
INR25.6b and Ideas data revenue to decline 18% to INR14.3b. Unlike 3QFY17,
when the decline in data revenue was shared between pricing and traffic, telcos
have aggressively matched RJios pricing in 4QFY17; hence, we expect positive
data traffic growth. However, the decline in data pricing would more than offset
the traffic growth.
Aliasgar Shakir (Aliasgar.Shakir@MotilalOswal.com); +91 22 3982 5423

Jay Gandhi (Jay.Gandhi@MotilalOswal.com); +91 22 3089 6693
April 2017 254
EBITDA margin shrinking: With revenue declining for the second consecutive
quarter, we expect telcos to cut discretionary expenses to curtail the impact on
EBITDA. However, the increase in network cost led by data network rollout should
continue to hurt earnings. In 4QFY17, Ideas EBITDA is likely to decline 15% QoQ
(49% YoY) to INR18.5b against a drop of 24% QoQ in 3QFY17. This implies a decline
of 210bp QoQ (1,530bp YoY) in EBITDA margin against a decline of 550bp on QoQ in
3QFY17. Bhartis EBITDA is expected to drop 15% QoQ (24% YoY) to INR44.8b
against a drop of 16% QoQ in 3QFY17. This implies a decline of 320bp QoQ (530bp
YoY) in EBITDA margin against a decline of 440bp QoQ in 3QFY17.
Bhartis Africa business to decline on unfavorable currency; EBITDA margin to

expand 20bp: Bhartis Africa revenue is likely to decline 2% in USD terms to
USD901m on the back of depreciating African currency. In INR terms, revenue
should decline 3.2% to INR51.8b owing to appreciation of the INR against the USD.
On the positive side, we expect Africa EBITDA margin to expand 20bp to 23.9% due
to cost-rationalization measures. This should reduce the impact on EBITDA, which
we expect would decline 2.4% QoQ (13.5% YoY) to INR12.4b.
Bharti Infratel to witness sustainable tenancy growth

After a healthy tenancy addition of 6,139 on consolidated basis in 3QFY17, we
expect robust tenancy addition of 6,044 in 4QFY17. This is far higher than the weak
tenancy addition of sub-2,000 in 1HFY17. Accelerated data network rollout across
incumbents and RJio (including the deployment of spectrum acquired in the recent
auction) has led to the robust tenancy addition in 2HFY17. We expect revenue to
grow 3% QoQ (10.1% YoY) to INR35b on the back of healthy rental revenue growth.
Ex-energy EBITDA margin is expected to remain flat despite the healthy tenancy
addition at 65.7%, with revised agreements hurting tenancy rates (down 0.2% QoQ).
This should translate into sequentially flat consolidated EBITDA margin at 43.5%. Ex-
energy EBITDA margin should expand 10bp QoQ to 7.1%.
Tata Communications to see healthy organic growth on normalized basis

Tata Communications is likely to report weak core revenue (excluding Neotel) and
EBITDA growth in 4QFY17. The decline owing to the sale of India and Singapore data
center business and African subsidiary, Neotel would be partially offset by 3.5%
organic growth in data revenue and recovery of ATM business after the impact of
demonetization in 3QFY17. We expect core revenue to grow 1% QoQ (decline 7%
YoY) to INR44.6b in 4QFY17 on data revenue growth of 1.9% QoQ and voice revenue
decline of 1% QoQ. Core EBITDA margin should expand 60bp QoQ to 14%, led by
70bp gain in data EBITDA margin to 19%.
Our view
We expect Bharti and Ideas EBITDA to decline 15-16% in 4QFY17. The industry faces
a hyper-competitive scenario led by RJios free offering. Bharti Infratel should
benefit from sustainable tenancy growth, led by the capex-intensive phase in the
telecom market. Tata Communications should see clean-up after the sale of data
center and Neotel, with healthy organic growth.
April 2017 255

Expected quarterly performance summary

Sector Sales (INR m) EBDITA (INR m) PAT (INR M)
Telecom
Bharti Airtel 345 Buy 222,371 -10.9 -4.7 76,193 -16.4 -10.2 6,772 -54.7 17.3
Bharti Infratel 338 Buy 35,043 10.1 3.0 15,246 5.2 3.0 7,230 0.6 16.5
Idea Cellular 88 Buy 80,803 -14.8 -6.7 18,512 -48.8 -14.5 -9,919 PL Loss
Tata Comm 727 Buy 44,554 -13.4 2.2 6,254 -22.9 9.9 174 -33.4 2248.8
Sector Aggregate 382,772 -10.5 -3.7 116,206 -22.5 -8.5 4,257 -84.9 -47.7
Exhibit 1: Wireless subscriber net additions (m)
Wireless Subsriber net additions

29 28
21 21
10 8 8 9 8 7 6 7 9 7
5 6 5 7 5 4 6 6 5 7 3 2 5 2 5 4
1 3 3 2 1 1
-1
-6 -3 -5
Jul-14
Jul-15
Jul-16
Jun-14
Jun-15
Jun-16
Nov-15
Nov-16
Nov-13
Nov-14
Apr-16
May-16
Apr-14
May-14
Apr-15
May-15
Aug-15
Dec-15
Aug-16
Dec-16
Dec-13
Aug-14
Dec-14
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Sep-13
Jan-14
Feb-14
Mar-14
Sep-14
Jan-15
Feb-15
Mar-15
Oct-15
Oct-16
Oct-13
Oct-14
Source: TRAI, MOSL
Exhibit 2: QoQ wireless traffic growth (%)
Bharti (India) Idea RCOM Vodafone - India

12
8
4
0
-4
-8
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17E
Exhibit 3: Trend in wireless RPM (INR)

Bharti (India) Idea RCOM Vodafone - India
62.0
54.0
46.0
38.0
30.0
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17E
April 2017 256

Exhibit 4: Aggregate India wireless revenue growth (QoQ, %)
Aggregate India wireless revenue growth (QoQ, %)

5.7 5.7
4.8
3.4 3.8
3.1 2.5
1.1 1.8 1.7 1.2
-1.2 -1.1
-1.9 -2.4
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Exhibit 5: Relative Performance-3m (%) Exhibit 6: Relative Performance-1 Yr (%)

Sensex Index MOSL Telecom Index
Sensex Index MOSL Telecom Index
114 125
110 115
106 105
102 95
98 85 Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16
Dec-16
Jan-17
Feb-17
Mar-17
April 2017 257

Exhibit 7: Wireless KPIs

FY14 FY15 FY16 FY17 YoY QoQ
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE (%) (%)
EOP Wireless SUBS (m)
Bharti (India) 199 206 209 212 217 226 231 235 243 251 256 260 266 272 8.2 2.3
Idea 129 136 139 144 151 158 162 167 172 175 176 179 185 189 8.0 2.0
RCOM 118 112 110 111 107 111 111 112 102 104 99 100
Vodafone - India 160 167 170 174 179 184 185 188 194 198 199 201
AV. Wireless Subs (m)
Bharti (India) 196 202 207 211 214 222 228 233 239 247 253 258 263 269 8.7 2.3
Idea 128 133 138 142 148 155 160 165 170 174 176 178 182 187 7.8 2.8
RCOM 117 115 111 111 109 109 111 112 107 103 102 100
Vodafone - India 158 164 169 172 177 182 185 187 191 196 199 200
ARPU (INR/month)
Bharti (India) 195 196 202 198 202 198 198 193 192 194 196 188 172 157 -19.2 -8.9
Idea 170 174 181 176 180 179 180 173 174 179 180 173 156 142 -20.9 -9.5
RCOM 125 128 135 136 141 144 137 134 138 152 144 148
Vodafone - India 193 192 193 187 189 184 184 178 175 177 176 171
MOU/Sub
Bharti (India) 434 437 435 418 416 418 424 404 405 415 414 406 419 432 4.2 3.3
Idea 376 397 401 384 388 400 408 383 387 387 379 368 385 389 0.5 1.0
RCOM 288 296 311 307 315 330 316 307 313 329 328 347
Vodafone - India 334 335 336 321 319 321 327 316 316 317 314 306
Revenue per min (p)
Bharti (India) 44.8 44.9 46.5 47.2 48.6 47.5 46.8 47.6 47.5 46.8 47.3 46.3 41.1 36.3 -22.5 -11.7
Idea 45.3 43.7 45.1 45.8 46.3 44.9 44.2 44.7 44.4 46.4 47.7 47.0 40.7 36.4 -21.5 -10.5
RCOM 43.5 43.1 43.5 44.2 44.7 43.7 44.3 43.7 44 46.3 45.2 44.6 39.9
Vodafone - India 57.7 57.3 57.4 58.2 59.3 57.4 56.2 56.2 55.3 55.8 56.2 55.3 51.5
Wireless traffic (B min)
Bharti (India) 255 265 271 264 267 278 290 282 290 308 315 313 330 349 13.2 5.6
Idea 145 157 165 162 171 185 196 189 196 202 199 196 210 218 8.0 4.0
RCOM 102 102 103 102 103 108 105 103 100 102 100 97.9 102.2
Vodafone - India 158 164 170 166 169 174 181 177 181 186 187 184 189
April 2017 258

Exhibit 8: Quarterly Financials (pro-forma)

FY14 FY15 FY16 FY17 YoY QoQ
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE (%) (%)
Revenue (INR b)
Bharti (ex-Africa) 147.1 151.6 159.9 159.5 163.9 168.0 174.3 174.7 177.3 185.1 193.0 193.5 179.8 170.6 -7.9 -5.1
Bharti (consolidated) 219.4 222.2 229.6 228.5 232.2 230.2 235.9 237.5 239.8 249.6 255.5 246.5 233.4 222.4 -10.9 -4.7
Idea 66.1 70.4 75.6 75.7 80.2 84.2 87.9 86.9 90.1 94.8 94.9 93.0 86.6 80.8 -14.8 -6.7
RCOM 54.0 56.7 55.2 54.0 54.7 57.0 55.4 53.6 53.0 59.2 53.6 51.0 48.2
Vodafone - India 91.1 94.2 97.1 96.5 99.9 100.1 101.7 99.5 100.0 104.0 105.0 102.5 96.0
EBITDA (INR b)
Bharti (ex-Africa) 52.1 54.8 59.8 60.6 62.8 68.0 69.6 69.6 70.8 76.8 81.5 81.8 72.1 63.8 -16.9 -11.5
Bharti (consolidated) 70.7 72.7 76.8 76.9 77.7 80.9 82.2 82.3 84.1 91.1 95.5 94.4 84.8 76.2 -16.4 -10.2
Idea 20.6 22.3 25.0 24.9 27.5 30.6 29.8 30.6 31.3 36.2 30.7 28.4 21.7 18.5 -48.8 -14.5
RCOM 18.5 18.5 18.6 18.3 18.5 19.8 18.8 17.8 18.0 19.6 15.6 16.8 11.1
EBITDA Margin (%)
Bharti (ex-Africa) 35.4 36.2 37.4 38.0 38.3 40.5 39.9 39.8 39.9 41.5 42.2 42.3 40.1 37.4 -409bp -270bp
Bharti (consolidated) 32.2 32.7 33.4 33.7 33.5 35.1 34.9 34.7 35.1 36.5 37.4 38.3 36.3 34.3 -224bp -208bp
Idea 31.1 31.7 33.1 32.9 34.3 36.4 33.9 35.2 34.7 38.1 32.4 30.5 25.0 22.9 -1522bp -209bp
RCOM 34.2 32.7 33.7 33.8 33.8 34.7 33.8 33.3 34.0 33.1 29.1 33.0 22.9
PAT (INR b)
Bharti (consolidated) 6.1 9.6 11.1 13.8 14.4 12.6 21.1 15.4 11.1 13.2 14.6 14.6 5.0 6.8 -48.7 34.4
Idea 4.7 5.9 7.3 7.6 7.7 9.4 8.5 8.1 7.6 5.8 2.2 0.9 -3.8 -9.9 -272.3 158.4
RCOM 1.5 2.0 1.6 2.1 2.3 0.1 1.9 1.6 2.0 1.5 0.9 0.4 -5.3
EPS (INR)
Bharti 1.5 2.4 2.8 3.5 3.6 3.1 5.3 3.8 2.8 3.3 3.7 3.7 1.3 1.7 -48.7 34.4
Idea 1.4 1.8 2.1 2.1 2.1 2.6 2.4 2.2 2.1 1.6 0.6 0.3 -1.1 -2.8 -272.3 158.4
RCOM 0.7 1.0 0.8 0.9 1.0 0.0 0.8 0.7 0.8 0.6 0.4 0.2 -2.2
Comparative valuation
Sector / CMP Reco EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
Companies (INR) FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Telecom
Bharti Airtel 345 Buy 11.0 5.1 9.4 31.2 67.6 36.5 6.6 7.1 5.9 6.5 2.9 5.2
Bharti Infratel 338 Buy 15.5 16.7 19.9 21.8 20.2 17.0 9.8 8.4 7.1 15.7 15.9 16.7
Idea Cellular 88 Buy -3.0 -15.4 -16.9 -29.7 -5.7 -5.2 8.7 10.8 10.3 -4.2 -25.3 -37.1
Tata Comm 727 Buy 6.2 25.6 44.1 117.3 28.4 16.5 10.0 8.8 6.5 -50.2 924.0 117.3
April 2017 259

March
March 2017
2017 Results
Results Preview
Preview || Sector:
Sector: Telecom
Telecom
Bharti Airtel
Bloomberg BHARTI IN CMP: INR344 TP: INR410 (+19%) Buy
We expect consolidated revenue to decline 4.7% QoQ (and 10.9%
M. Cap. (INR b)/(USD b) 1378 / 21
YoY) to INR222.4b, impacted by RJios free offer. We expect India
wireless revenue to decline 6.7% QoQ (and 11.9% YoY) to
1,6,12 Rel Perf. (%) -7 / 1 / -16
INR129.1b and Africa revenue to decline 1.9% QoQ to ~USD901b.
Financial Snapshot (INR Billion) Consolidated EBITDA margin is likely to decline 190bp QoQ to
Y/E March 2016 2017 2018E 2019E 34.3%, led by 330bp contraction in India wireless margin to
Net Sales 965.3 957.7 946.5 1,041.6 34.7%, partly offset by 20bp expansion in Africa EBITDA margin to
EBITDA 340.1 350.9 325.5 367.5 23.9%.
NP 47.5 44.1 20.4 37.7 Consolidated net profit of INR6.8b is expected to grow 34% QoQ
EPS (INR) 11.9 11.0 5.1 9.4 (but decline 49% YoY).
EPS Gr. (%) 72.5 -21.0 -57.1 -14.4
We expect India wireless ARPU to decline 8.9% QoQ (and 19.3%
BV/Sh. (INR) 164.2 172.8 176.3 184.1
YoY) to INR156.7, with voice ARPU shrinking 6% QoQ and data
RoE (%) 7.4 6.5 2.9 5.2
ARPU declining 13% QoQ.
RoCE (%) 5.9 5.3 4.1 4.8
Bharti trades at proportionate EV/EBITDA of 6.9x FY17E and 7.4x
Div. Pay. (%) 11.9 15.9 32.1 17.3
FY18E. Maintain Buy.
Valuations
P/E (x) 28.8 31.0 67.1 36.2
Key monitorables
P/BV (x) 2.1 2.0 1.9 1.9
Consolidated revenue (expect 4.7% decline QoQ).
EV/EBITDA (x) 6.7 6.9 7.4 6.2
India wireless revenue (expected to decline 6.7% YoY).
Div. Yield (%) 0.4 0.4 0.4 0.4
Consolidated EBITDA margin (expected at 34.3%, -190bp QoQ).
India wireless EBITDA margin (expected at 34.7%, -330bp QoQ).
Consolidated - Quarterly Earning Model (INR M)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Revenue 236,709 238,357 240,659 249,596 255,465 246,515 233,357 222,371 965,321 957,708
YoY Change (%) 3.1 4.3 3.7 8.4 7.9 3.4 -3.0 -10.9 334.1 NA
EBITDA 82,243 82,343 84,137 91,122 95,480 94,402 84,815 76,193 340,062 350,890
Margins (%) 34.7 34.5 35.0 36.5 37.4 38.3 36.3 34.3 35.2 36.6
Depreciation 40,404 42,390 43,541 48,163 50,402 49,560 48,350 50,204 174,498 198,516
Interest 19,206 18,752 14,167 17,010 19,399 19,057 19,356 16,480 68,865 74,292
Other Income 2,419 1,929 3,037 3,129 2,787 1,568 3,487 3,504 9,501 11,346
Extra-Ord expense -21,384 -6,761 3,405 2,999 3,536 66 2,040 0 -14,505 5,642
PBT 46,435 29,890 26,060 26,079 24,930 27,287 18,556 13,013 120,705 83,786
Tax 21,827 13,394 13,523 10,789 10,089 11,136 11,841 5,335 59,368 38,401
Rate (%) 47.0 44.8 51.9 41.4 40.5 40.8 63.8 41.0 49.2 45.8
MI & Profit/Loss of Asso. Cos. 3,478 1,133 1,457 2,095 222 1,544 1,678 906 6,495 4,350
Reported PAT 21,130 15,363 11,080 13,195 14,619 14,607 5,037 6,772 54,842 41,035
Mobile ARPU (INR/month) 198.2 192.6 192.0 194.2 195.7 187.9 172.0 156.7 192.9 177.2
QoQ Growth (%) -0.1 -2.8 -0.3 1.1 0.8 -4.0 -8.4 -8.9 -2.6 -8.1
Mobile MOU/sub/month 345.0 333.7 325.8 321.3 310.1 329.3 329.3 322.1 342.7 311.5
QoQ Growth (%) -1.7 -3.3 -2.4 -1.4 -3.5 6.2 0.0 -2.2 -1.1 -9.1
Mobile Traffic (B Min) 9,097 9,480 10,066 10,102 9,427 8,819 8,819 8,850 38,746 35,914
QoQ Growth (%) 4.4 4.2 6.2 0.4 -6.7 -6.4 0.0 0.4 8.2 -7.3
Mobile RPM (INR) 0.57 0.58 0.59 0.60 0.6 0.6 0.5 0.5 0.6 0.6
QoQ Growth (%) 1.7 0.4 2.1 2.5 4.5 -9.6 -8.4 -6.9 -1.5 1.1
April 2017 260

March
March 2017
2017 Results
Results Preview
Preview || Sector:
Sector: Telecom
Telecom
Bharti Infratel
Bloomberg BHIN IN CMP: INR338 TP: INR435 (+29%) Buy
We expect consolidated revenue to grow 10.1% YoY (and 3%
M. Cap. (INR b)/(USD b) 641 / 10
QoQ) to INR35b.
Consolidated rental revenue is likely to be INR21.8b, up 2.8% QoQ
1,6,12 Rel Perf. (%) 6 / -16 / -30
and 7.1% YoY. We expect energy and other reimbursements to
grow 3.4% QoQ.
We expect consolidated EBITDA to improve 3% QoQ to INR15.2b.
Y/E March 2016 2017 2018E 2019E
EBITDA margin is likely to remain flat at 43.5% despite the healthy
Net Sales 123.3 134.1 149.7 163.6
EBITDA 54.1 58.5 64.9 71.1
tenancy addition owing to pressure on rental rates from revised
NP 22.5 28.7 31.0 36.8 agreements.
EPS (INR) 11.8 15.5 16.7 19.9 We expect PAT to grow 16.5% QoQ to INR7.2b.
EPS Gr. (%) 48.1 47.9 41.3 28.1 Bharti Infratel trades at an attractive EV/EBITDA of 9.6x FY17E
BV/Sh. (INR) 96.7 96.8 108.6 123.5 and 8.2x FY18E. Maintain Buy.
RoE (%) 12.7 15.7 15.9 16.7
RoCE (%) 11.2 12.7 13.0 12.9
Payout (%) 39.0 29.9 27.7 23.3
Key monitorables
Valuations
Consolidated co-location additions (we expect a steady ~6,100 in
P/E (x) 26.3 20.1 18.6 15.7
line with the high tenancy addition in 3QFY17).
P/BV (x) 3.2 3.2 2.9 2.5
EV/EBITDA 10.6 9.6 8.2 7.0
Consolidated revenue per sharing operator (expected to decline
Div. Yld (%) 1.3 1.2 1.2 1.2 0.2% QoQ due to tenancy renewal risks).
Consol. Quarterly Performance (INR Million)

Revenue from operations 30,031 30,410 31,056 31,817 32,106 32,919 34,007 35,043 123,314 134,075
YoY Change (%) 5.6 3.8 5.3 8.0 6.9 8.3 9.5 10.1 5.7 8.7
EBITDA 12,896 13,095 13,623 14,495 13,947 14,498 14,801 15,246 54,109 58,492
Margins (%) 42.9 43.1 43.9 45.6 43.4 44.0 43.5 43.5 43.9 43.6
Depreciation 5,450 5,562 5,526 5,697 5,648 5,629 5,664 5,654 22,235 22,595
Interest 566 -1,675 292 -1,029 -1,281 -2,472 -947 -1,363 -1,847 -6,063
Other Income 564 564 487 433 352 333 357 0 2,048 1,042
PBT 7,444 9,772 8,292 10,260 9,932 11,674 10,441 10,955 35,769 43,002
Tax 3,020 3,855 3,342 3,076 2,369 3,936 4,237 3,725 13,293 14,267
Rate (%) 40.6 39.4 40.3 30.0 23.9 33.7 40.6 34.0 37.2 33.2
Reported PAT 4,424 5,917 4,950 7,184 7,563 7,738 6,204 7,230 22,476 28,735
Adj PAT 4,424 5,917 4,950 7,184 7,563 7,738 6,204 7,230 22,476 28,735
YoY Change (%) -4.4 27.2 -2.3 28.9 71.0 30.8 25.3 0.6 12.8 27.8
Margins (%) 14.7 19.5 15.9 22.6 23.6 23.5 18.2 20.6 18.2 21.4
April 2017 261

March
March 2017
2017 Results
Results Preview
Preview || Sector:
Sector: Telecom
Telecom
Idea Cellular
Bloomberg IDEA IN CMP: INR88 TP: INR120 (+36%) Buy
We expect consolidated revenue to decline 6.9% QoQ (and 14.9%
M. Cap. (INR b)/(USD b) 316 / 5
YoY) to INR80.7b.
Voice RPM is likely to drop 8% on increased promotional offers to
1,6,12 Rel Perf. (%) -25 / 3 / -40
match RJios price plans and unfavorable mix of
Financial Snapshot (INR Million)
incoming/outgoing minutes due to RJios free offering.
Y/E March 2016 2017 2018E 2019E Voice traffic is likely to grow 3.6% QoQ (8.1% YoY). MoU per
Net Sales 359.8 355.3 336.8 360.0 subscriber per month should grow 1% QoQ (flat YoY) to 389.
EBITDA 130.3 99.3 83.5 90.5 EBITDA margin is expected to contract ~210bp QoQ/1,530bp YoY
NP 30.8 -10.6 -55.6 -60.8 to 22.9% due to weak revenue and increased network cost.
EPS (INR) 8.6 -3.0 -15.4 -16.9 We expect Idea to continue to report net loss at INR10b against
EPS Gr. (%) 56.5 -133.3 -280.4 471.2 INR3.8b in 3QFY17 and INR5.8b in 4QFY16.
BV/Sh. (INR) 71.6 68.6 53.2 37.8 Idea trades at an EV/EBITDA of 8.8x FY17E and 11x FY18E.
RoE (%) 12.6 -4.2 -25.3 -37.1
RoCE (%) 7.1 2.6 -1.1 -1.0
Payout (%) 8.4 0.0 0.0 0.0
Key monitorables
Valuations
Voice RPM trajectory (we expect RPM to decline 8% QoQ); voice
P/E (x) 10.2 -29.7 -5.7 -5.2
traffic (we expect 3.6% QoQ growth).
P/BV (x) 1.2 1.3 1.6 2.3
Data revenue performance (we expect 18% decline QoQ).
EV/EBITDA,x 5.5 8.9 11.0 10.4
EBITDA margin (we expect ~210bp contraction QoQ).
Div. Yield (%) 0.7 0.0 0.0 0.0
Consolidated - Quarterly performacne (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Revenue 87,915 86,891 90,097 94,839 94,866 93,002 86,627 80,803 359,809 355,299
YoY Change (%) 16.3 14.8 12.4 12.6 7.9 7.0 -3.9 -14.8 14.0 -1.3
EBITDA 29,793 30,570 31,285 36,160 30,742 28,401 21,655 18,512 130,300 99,310
Margins (%) 33.9 35.2 34.7 38.1 32.4 30.5 25.0 22.9 36.2 28.0
Depreciation 14,117 15,381 16,231 19,737 19,192 19,543 19,653 20,070 66,508 78,457
Share in Profits from Associates 927 1,035 1,057 1,143 1,166 4,402
Interest 3,240 2,726 3,349 7,678 9,224 8,753 9,232 9,528 16,545 36,737
PBT before EO expense 13,364 12,464 11,705 8,745 3,362 1,162 -6,087 -9,919 47,247 -11,482
PBT 13,364 12,464 11,705 8,745 3,362 1,162 -6,087 -9,919 47,247 -11,482
Tax 4,816 4,371 4,063 2,989 1,158 247 -2,248 0 16,447 -843
Rate (%) 36.0 35.1 34.7 34.2 34.4 21.3 36.9 0.0 34.8 7.3
Reported PAT 8,548 8,093 7,642 5,756 2,204 915 -3,839 -9,919 30,799 -10,638
Margins (%) 9.7 9.3 8.5 6.1 2.3 1.0 -4.4 -12.3 8.6 -3.0
April 2017 262

March
March 2017
2017 Results
Results Preview
Preview || Sector:
Sector: Telecom
Telecom
Tata Communications
Bloomberg TCOM IN CMP: INR727 TP: INR811 (+12%) Buy
Tata Communications core revenue is expected to grow by a
M. Cap. (INR b)/(USD b) 207 / 3
meager 1% to INR44.6b.
Data revenue should grow 1.9% to INR28.2b, adjusting for the
1,6,12 Rel Perf. (%) -6 / 13 / 68
impact of sale of data center business.
Financial Snapshot (INR Million) Core EBITDA is likely to grow 6% to INR6.3b on the back of 60bp
Y/E March 2016 2017 2018E 2019E improvement in EBITDA margin to 14%.
Sales 205.5 183.6 187.4 201.0 Data segment is expected to grow 5% to INR5.3b, led by 70bp
EBITDA 31.0 27.2 30.2 38.6 improvement in data EBITDA margin to 19%.
NP 0.4 1.8 7.3 12.6 The stock trades at an EV/EBITDA of 10.7x FY17E and 9.4x FY18E.
EPS (Rs) 1.6 6.2 25.6 44.1
EPS Gr. (%) 1,986.6 298.9 312.8 72.6
BV/Sh (INR) -14.7 -10.0 15.6 59.7
RoE (%) -91.6 -50.2 924.0 117.3 Key monitorables
RoCE (%) 0.9 2.9 8.7 12.9 Data revenue performance (we expect 5% QoQ growth).
RoIC (%) 1.0 3.8 14.1 23.3 Data EBITDA margin (we expect ~70bp QoQ improvement).
Valuations
P/E (x) 471.5 118.2 28.6 16.6
P/BV (x) -49.9 -73.1 47.1 12.3
EV/EBITDA 10.7 10.7 9.4 7.0
(x)
EV/Sales (x) 1.6 1.6 1.5 1.3
Cons. Quarterly Performance (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 51,796 51,301 50,995 51,452 50,317 45,091 43,601 44,554 205,539 183,563
YoY Change (%) 1.3 1.2 3.8 6.9 -2.9 -12.1 -14.5 -13.4 3.2 -10.7
EBITDA 7,291 7,720 7,598 8,109 8,627 6,625 5,691 6,254 30,978 27,197
Margins (%) 14.1 15.0 14.9 15.8 17.1 14.7 13.1 14.0 15.1 14.8
Depreciation 4,888 5,694 5,908 7,259 5,378 4,644 4,677 4,669 22,166 19,368
Interest 1,966 1,756 1,730 1,689 1,721 960 999 1,749 7,191 5,429
Other Income 930 791 108 1,028 608 728 909 428 2,958 2,673
PBT before EO expense 1,367 1,061 69 190 2,136 1,750 924 264 4,578 5,073
Extra-Ord expense 0 0 0 1,928 920 0 0 0 1,928 920
PBT 1,367 1,061 69 -1,738 1,216 1,750 924 264 2,650 4,153
Tax 931 998 -154 695 793 899 923 87 2,386 2,701
Rate (%) 68.1 94.1 -224.1 -40.0 65.2 51.4 99.9 33.0 90.0 65.0
MI & Profit/Loss of Asso. Cos. 3 3 3 5 6 6 -7 3 14 8
Reported PAT 433 60 219 -2,438 418 845 7 174 250 1,444
Adj PAT 433 60 219 261 738 845 7 174 443 1,766
YoY Change (%) -302.5 -93.5 -79.8 -78.8 70.5 1,303.7 -96.6 -33.4 1,986.6 298.9
Margins (%) 0.8 0.1 0.4 0.5 1.5 1.9 0.0 0.4 0.2 1.0
April 2017 263

March
March 2017
2017 Results
Results Preview
Preview | Utilities
| April 2016
Utilities
Company name
Utilities 4QFY17 preview
Coal India
Power Grid to outperform led by strong capitalization momentum
NTPC
Power Grid Corporation Within our utility sector coverage universe, we expect Power Grid to report strong
set of numbers, while other companies at best would report muted profit growth.
Power Grid is likely to meet its full-year capitalization guidance of INR280b with the
commissioning of the Champa-Kurukshetra HDVC transmission line.
NTPCs PAT is estimated to decline ~4% YoY to INR24.5b due to lower other income,
impact of change in measurement of GCV and lower incentive income. NTPCs
consolidated commercial capacity increased 1.1GW QoQ to 47GW by end-FY17. PLFs
of JSW Energys Vijaynagar plant have improved QoQ led by short-term PPA with
Karnataka, but the gains are likely to be offset by higher fuel cost and lower hydro
generation. CESCs PAT is estimated to be broadly flat YoY at INR2.5b, with gains
from higher regulated equity base offset by the impact from negative bid for the
captive coal block.
Coal India is estimated to disappoint, with EBITDA (ex-OBR) decline of ~3% YoY to
INR60b on account of higher cost. Realization is estimated to increase 6% YoY to
INR1,511/t, while volumes are likely to grow 4% YoY to 150.9mt. Provisioning for
wage hike should impact profitability.
RE share in generation increasing: Conventional electricity generation for

11MFY17 increased 4.6% YoY to 1,052bkwh. However, installed capacity rose 6.1%
YoY to 264GW. Resultantly, PLFs for 11MFY17 were down 55bp YoY to 49.6%.
Including RE generation, Indias electricity generation increased by 5.8% YoY. The
share of RE in Indias electricity mix rose from 5.7% YoY to 6.8% in 11MFY17. In
terms of incremental generation, RE represented ~25% of generation.
ST prices remain low: Short-term (ST) prices on IEX were up 7% QoQ to

INR2.53/kWh. IEX day-ahead volumes were down 6% YoY to 9.5bu in 4QFY17.
Growth was led by the southern region.

Sector Sales (INR M) EBDITA (INR M) Net Profit (INR M)
Utilities
CESC 848 Buy 15,562 5.2 -3.9 5,043 6.0 60.1 2,488 0.3 63.7
Coal India 290 Neutral 227,911 9.8 15.7 45,137 -7.7 43.5 39,953 -5.8 38.5
JSW Energy 67 Buy 19,696 -26.5 3.4 6,529 -42.6 -0.7 290 -90.5 35.6
NTPC 166 Buy 165,615 -7.9 -14.1 56,071 5.1 9.0 24,514 -4.3 9.2
Power Grid Corp. 195 Buy 72,165 25.4 11.0 64,145 26.1 10.2 22,847 42.9 18.4
Utilities Sector Aggregate 500,949 2.9 2.2 176,925 4.5 17.3 90,091 0.6 24.6
Sanjay Jain (SanjayJain@MotilalOswal.com); +91 22 3982 5412
Dhruv Muchhal (Dhruv.Muchhal@MotilalOswal.com); +91 22 3027 8033
April 2017 264
March 2017 Results Preview | Utilities
YTD February conventional Exhibit 2: Power generation - BU

power generation up 4.6% Conventional generation - BU change yoy - %
100
YoY
88
99
99
98
97
97
96
96
95
95
95
94
94
94
93
92
92
90
90
90
89
89
89
89
89
87
87
86
86
86
82
86
85
85
85
84
84
83
81
79
79
79
78
77
77
76
16
14 15
13
12 12 1213 12 12
10 9 10
86 8 9
7 6 7 7 6
6 5 5 6 6 6 5
4 4 5 4 4
3 3 2
1 2 1 2
0 1 0 1 0
Jun-13 -1
Jun-14
Jun-15
Apr-13
Jun-16
Aug-13
Apr-14
Dec-13
Apr-15
Feb-14
Aug-14
Dec-14
Feb-15
Aug-15
Apr-16
Dec-15
Feb-16
Aug-16
Dec-16
Oct-13
Feb-17
Oct-14
Oct-15
Oct-16
Source: MOSL, CEA
PLF was +55/-182bp YoY in Exhibit 3: NTPC coal-based power plants monthly PLF (%)
Jan/Feb.
NTPC coal-based monthly PLF - %
89.6
88.9
87.4
87.2
85.3
83.9
83.1
82.5
82.2
81.7
81.7
81.6
81.5
81.5
81.3
80.9
80.4
80.3
79.4
79.4
79.1
79.0
78.5
78.2
78.0
77.8
77.7
77.1
76.7
76.5
76.2
75.7
74.0
73.7
73.6
72.3
72.3
69.8
Jul-14
Jul-15
Jul-16
Nov-14
Nov-15
Nov-16
May-14
May-15
May-16
Jan-14
Mar-14
Sep-14
Jan-15
Mar-15
Sep-15
Jan-16
Mar-16
Sep-16
Jan-17
Source: MOSL, CEA
Exhibit 4: NTPC commercialized and commissioned capacity (MW)
Commercialized Commissioned 2470
1565
1160 1255
1105 1105
675 800 525 800
565 650 660
500 450
500
99 110 2020 15 0 0 0
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
Source: MOSL, Company Data
April 2017 265

Exhibit 5: NTPC regulated equity INR b
Regulated Equity 447

414 420 423 425
389 394
352 352 352 366 369 369
326 326 326
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17
Exhibit 6: Power Grid capex and capitalization (INR b)

Capitalized Capex
172
120
99
71 68 64 67 68
58 50 51 51 51 50 56 53 53 58
49 47 49 45 45
25
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
3Q17
4Q17E
Source: MOSL, Company Data
Exhibit 7: Relative performance3m (%) Exhibit 8: Relative performance1Yr (%)

Sensex Index MOSL Utilities Index Sensex Index MOSL Utilities Index
114 140
110
120
106
100
102
98 80
Dec-16
Jan-17
Feb-17
Mar-17
Jul-16
Jun-16
Nov-16
Apr-16
May-16
Aug-16
Dec-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Oct-16

Companies RECO EPS (INR) PE (x) EV/EBIDTA (x) ROE (%)
Utilities
CESC Buy 50.4 74.7 82.2 16.8 11.4 10.3 7.2 6.2 5.8 11.1 15.8 15.2
Coal India Neutral 17.0 19.6 22.1 17.1 14.8 13.1 12.7 10.1 8.8 41.1 47.4 53.2
JSW Energy Buy 3.9 2.3 0.8 17.2 29.1 87.5 7.5 8.4 9.1 7.3 4.3 1.4
NTPC Buy 11.9 14.3 17.3 14.0 11.6 9.6 11.2 9.2 7.3 10.6 11.9 13.3
Power Grid Corp. Buy 15.3 17.7 20.7 12.8 11.0 9.4 9.2 8.0 7.1 17.3 17.5 17.7
Utilities Sector Aggregate 14.9 12.7 11.0 10.3 8.7 7.5 16.0 17.3 18.3
April 2017 266

CESC
Bloomberg CESC IN
We estimate CESCs PAT to be broadly flat YoY at INR2.5b, as
M. Cap. (INR b)/(USD b) 113 / 2
steady increase in capitalization is offset by impact of negative bid
-1 / 32 / 59
on the captive coal block.
1,6,12 Rel Perf. (%)
Sales volume growth is estimated at 11% YoY to 2,284MU.
Y/E MARCH 2016 2017E 2018E 2019E
Sales 119.0 139.8 153.8 162.4
EBITDA 28.5 34.5 38.3 39.6
NP 3.7 6.7 10.0 10.9
EPS (INR) 27.8 50.4 74.7 82.2
EPS Gr. (%) 86.6 81.3 48.2 10.0
BV/Sh. (INR ) 470.5 441.4 504.1 574.3
RoE (%) 6.0 11.1 15.8 15.2
RoCE (%) 9.1 10.2 11.4 11.4
Payout (%) 36.0 19.8 13.4 12.2
VALUATION
P/BV (x) 1.0 1.9 1.7 1.5 Performance of Spencer.
EV/EBITDA (x) 7.2 7.5 6.6 6.2 Commissioning of full 187MW PPA with Noida.
Div. Yield (%) 2.1 1.2 1.2 1.2
Quarterly Performance Standalone (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 17,040 17,720 15,380 14,790 20,120 20,160 16,200 15,562 64,340 70,712
Change (%) -8.5 6.7 23.1 4.4 18.1 13.8 5.3 5.2 4.9 9.9
EBITDA 3,860 4,380 2,980 4,760 5,110 5,910 3,150 5,043 15,980 19,213
Change (%) 2.1 3.5 -0.3 5.5 32.4 34.9 5.7 6.0 3.2 20.2
As of % Sales 22.7 24.7 19.4 32.2 25.4 29.3 19.4 32.4 24.8 27.2
Depreciation 910 900 890 990 960 990 980 897 3,690 3,827
Interest 1,200 1,160 1,050 1,120 1,150 1,160 1,080 1,364 4,530 4,754
Other Income 250 250 430 300 260 320 300 416 1,230 1,296
Regulatory (inc)/exp 0 0 0 0 620 600 -960 0 0 260
PBT 2,000 2,570 1,470 2,950 2,640 3,480 2,350 3,198 8,990 11,668
Tax 480 620 350 470 900 1,060 830 711 1,920 3,501
Reported PAT 1,520 1,950 1,120 2,480 1,740 2,420 1,520 2,488 7,070 8,168
Adjusted PAT 1,520 1,950 1,120 2,480 1,740 2,420 1,520 2,488 7,070 8,168
Change (%) 0.7 1.6 0.9 -12.6 14.5 24.1 35.7 0.3 -3.9 15.5
E: MOSL Estimates
April 2017 267

Coal India
Bloomberg COAL IN
CMP: INR290 TP: INR307 (+6%) Neutral
We estimate Coal Indias EBITDA (ex-OBR) to decline 3% YoY to
M. Cap. (INR b)/(USD b) 1800 / 28
INR60b as cost is expected to rise on wage hike provisioning. We
-14 / -16 / -15
estimate blended realization to increase 6% YoY to INR1,511/t on
1,6,12 Rel Perf. (%)
higher e-auction and washed coal prices.
Financial Snapshot (INR Million) Dispatches are up 4% YoY to 150.9mt. FSA volumes are estimated
Y/E March 2016 2017E 2018E 2019E to decline 5% YoY to 113.5mt on weak power sector demand. E-
Sales 756.4 759.4 838.2 900.8 auction volumes are up ~56% YoY to ~31mt.
EBITDA 187.5 141.5 187.3 213.1 FSA realizations are estimated to increase 3% YoY to INR1,392/t
EPS Gr. (%) 4.0 -24.8 15.5 12.6 on price hikes by BCCL.
BV/Sh. (INR) 53.6 41.4 41.4 41.5 E-auction realization is estimated to increase 10% QoQ to
RoE (%) 42.2 41.1 47.4 53.2 INR1,1723/t on higher international coal prices driving demand
RoCE (%) 40.0 38.1 51.3 57.6
for COALs higher-grade coal.
Payout (%) 145.5 143.0 99.6 99.6
PAT is estimated to decline 6% YoY to INR39.9b.
Valuations
P/BV (x) 5.3 6.8 6.8 6.8
EV/EBITDA (x) 6.2 8.6 6.8 6.1
E-auction volumes and realization.
Div. Yield (%) 9.7 7.0 5.8 6.5
Global coal prices.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 189,558 169,576 189,715 207,595 177,961 156,450 197,045 227,911 756,443 759,366
Change (%) 6.5 8.2 6.8 -0.1 -6.1 -7.7 3.9 9.8 5.0 0.4
Cash EBITDA (OBR adj.) 50,911 25,171 49,337 62,100 38,621 3,176 39,571 60,154 187,519 141,521
As of % Sales 26.9 14.8 26.0 29.9 21.7 2.0 20.1 26.4 24.8 18.6
Depreciation 5,575 5,864 6,279 6,946 6,672 6,921 7,011 6,978 24,664 27,580
OBR 7,091 410 7,419 13,195 2,331 1,425 8,124 15,017 28,114 26,896
Interest 40 15 30 121 890 970 1,107 574 207 3,540
Other Income 20,095 19,636 19,819 21,393 17,564 19,800 18,268 18,228 80,943 73,862
PBT 58,072 38,766 55,766 63,287 46,293 13,661 41,598 55,814 215,891 157,366
Tax 20,429 13,328 18,584 20,807 15,641 7,660 12,754 15,861 73,148 51,915
Reported PAT 37,643 25,438 37,182 42,479 30,653 6,001 28,845 39,953 142,743 105,451
Adjusted PAT 37,869 25,190 36,845 42,424 30,653 6,001 28,845 39,953 142,329 105,451
Change (%) -5.7 15.2 12.4 0.4 -19.1 -76.2 -21.7 -5.8 3.7 -25.9
E: MOSL Estimates
April 2017 268

JSW Energy
Bloomberg JSW IN
We estimate JSW Energys EBITDA to decline marginally QoQ to
M. Cap. (INR b)/(USD b) 109 / 2
INR6.5b. While Vijaynagars PLF improved on short-term PPA with
3 / -17 / -19
Karnataka, the higher cost on account of an increase in thermal
1,6,12 Rel Perf. (%)
coal prices offset the benefit.
Financial Snapshot (INR Million) Vijaynagars PLF is estimated to improve to 68% v/s 53% in 3QFY17
Y/E March 2016 2017E 2018E 2019E and 99% in 4QFY16.
Sales 996.9 837.1 901.6 1,037.3 Imported coal price average is estimated to increase by ~USD8/t
EBITDA 41.4 33.9 32.3 33.3 QoQ to USD80/t.
NP 12.5 6.3 3.8 1.2
EPS (INR) 7.6 3.9 2.3 0.8
EPS Gr. (%) -10.0 -49.1 -40.8 -66.7
BV/Sh. (INR ) 52.0 53.6 53.6 52.1
RoE (%) 15.5 7.3 4.3 1.4
RoCE (%) 12.5 9.2 8.4 7.7
Payout (%) 26.3 51.7 87.4 262.5
Valuation
P/BV (x) 1.3 1.3 1.3 1.3 International coal prices.
EV/EBITDA (x) 6.8 7.5 8.4 9.2 Short-term power market prices.
Div. Yield (%) 2.9 3.0 3.0 3.0
Consolidated performance (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 21,070 25,314 26,491 26,814 24,500 20,470 19,043 19,696 99,690 83,709
YoY Change (%) -17.6 12.4 11.3 22.5 16.3 -19.1 -28.1 -26.5 6.3 -16.0
EBITDA 8,173 9,983 11,913 11,378 11,173 9,627 6,575 6,529 41,446 33,904
Margins (%) 38.8 39.4 45.0 42.4 45.6 47.0 34.5 33.1 41.6 40.5
Depreciation 1,984 2,240 2,650 2,627 2,398 2,471 2,444 2,487 9,502 9,800
Interest 2,640 3,511 4,491 4,389 4,293 4,356 4,229 4,030 15,032 16,908
Other Income 691 898 264 247 416 516 505 559 2,100 1,997
PBT before EO expense 4,239 5,129 5,035 4,610 4,899 3,316 407 571 19,013 9,193
Extra-Ord expense 0 -1,500 0 0 0 0 0 0 -1,500 0
PBT 4,239 6,629 5,035 4,610 4,899 3,316 407 571 20,513 9,193
Tax 1,155 1,537 1,816 1,543 1,248 1,167 249 -90 6,051 2,574
Rate (%) 27.2 23.2 36.1 33.5 25.5 35.2 61.2 -15.7 29.5 28.0
Loss of Asso. Cos. 310 172 12 12 -14 -25 -56 370 507 276
Reported PAT 2,775 4,920 3,206 3,054 3,665 2,174 214 290 13,955 6,343
Adj PAT 2,775 3,767 3,206 3,054 3,665 2,174 214 290 12,897 6,343
YoY Change (%) -15.2 16.4 -19.0 -5.9 32.1 -42.3 -93.3 -90.5 -6.0 -50.8
E: MOSL Estimates
April 2017 269

NTPC
Bloomberg NTPC IN
We estimate adjusted PAT to decline ~4% YoY to INR24.5b on
M. Cap. (INR b)/(USD b) 1372 / 21
impact of GCV due to change in measurement methodology and
3 / 3 / 11
lower PLF incentives.
1,6,12 Rel Perf. (%)
It has commercialized 660MW of Mouda Unit-II in 4Q; however,
Financial Snapshot (INR Million) being back-ended, the contribution to PAT would be insignificant.
Y/E MARCH 2016 2017E 2018E 2019E Commercial capacity is 47GW by end of FY17, while installed
Sales 787.1 825.4 963.5 1,107.2 capacity is 50.4GW. NTPC has commissioned 2.4GW capacity
EBITDA 191.6 230.7 300.4 381.4 4QFY17.
NP 101.6 97.9 117.9 142.4 NTPC shifted to coal sampling at wagon from at secondary
EPS (INR) 12.3 11.9 14.3 17.3 crusher. The impact of this change will be a key variable to watch
EPS Gr. (%) 1.7 -3.6 20.4 20.8 for.
BV/Sh. (INR ) 108.2 115.3 124.2 135.4
RoE (%) 11.9 10.6 11.9 13.3
RoCE (%) 7.3 6.9 8.1 9.5
Payout (%) 27.2 33.7 31.5 28.9
Valuations
P/E (x) 10.5 14.0 11.6 9.6
P/BV (x) 1.2 1.4 1.3 1.2
EV/EBITDA (x) 11.1 11.2 9.2 7.3 PLF for coal-based projects and generation loss.
Div. Yield (%) 2.4 2.7 3.0 3.6 Core RoE and incentives.
Impact of shift in GCV determination.
Quarterly Performance (standalone)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 170,187 177,229 173,175 179,901 187,354 192,415 192,875 165,615 700,492 738,258
Change (%) -5.9 6.9 -7.6 -6.4 10.1 8.6 11.4 -7.9
EBITDA 33,718 38,550 45,277 53,355 50,874 52,393 51,428 56,071 170,900 210,767
Other income 3,046 4,510 3,405 5,706 2,810 3,471 3,586 5,303 16,667 15,170
PBT 17,076 21,686 26,113 35,712 30,761 32,580 30,819 30,719 100,587 124,879
Tax -4,278 -7,297 1,184 8,548 7,066 7,621 6,131 6,205 -1,842 27,023
PAT 21,354 28,983 24,929 27,164 23,695 24,960 24,687 24,514 102,429 97,856
Change (%) -3.0 39.9 -18.9 -7.7 11.0 -13.9 -1.0 -9.8 -0.5 -4.5
Adj. PAT 21,330 22,165 20,691 25,603 24,047 23,410 22,448 24,514 89,789 94,418
Change (%) 9.6 24.2 -10.1 -6.3 12.7 5.6 8.5 -4.3 5.2
A. Generation 18,742 19,364 18,197 21,355 21,850 20,991 19,906 20,281 77,658 83,028
Core RoE (%) 20.3 20.4 18.6 21.1 21.0 19.9 18.8 18.6 19.8 19.3
a. Base RoE - 15.5% 14,305 14,690 15,168 15,656 16,166 16,337 16,428 16,893 59,819 65,824
b. PLF incentive 780 890 -17 1,052 1,530 0 0 864 2,705 2,394
c. Others 3,657 3,784 3,046 4,647 4,154 4,654 3,478 2,524 15,134 14,810
B. Other income 2,588 2,801 2,493 4,248 2,197 2,419 2,542 4,232 12,132 11,391
Key metrics
Regulated Equity 369,160 389,020 393,853 414,204 420,146 423,072 424,822 447,085 414,204 447,085
Commercial capacity (MW) 43,143 43,943 44,443 45,103 45,878 45,928 45,928 47,033 45,103 47,033
Coal-based PLF (%) 77.6 77.3 78.2 81.3 81.4 74.7 77.2 0.0 78.6
E: MOSL Estimates 50
April 2017 270

Power Grid Corporation

Bloomberg PWGR IN
We estimate regulated equity base to increase 7% QoQ/17% YoY
M. Cap. (INR b)/(USD b) 1019 / 16
to INR456b. We expect capitalization of INR120b in 4Q, driven by
-2 / 2 / 20
commissioning of Champa-Kurukshetra HDVC line. PGCIL is likely to
1,6,12 Rel Perf. (%)
achieve its full-year capitalization guidance of INR280b.
Y/E MARCH 2016 2017E 2018E 2019E We estimate PAT of INR22.8b with the increase driven by growth
Sales 213.5 267.7 319.2 365.1 in regulated equity.
EBITDA 186.1 237.5 285.2 326.9
NP 60.2 79.8 92.8 108.1
EPS (INR) 11.5 15.3 17.7 20.7
EPS Gr. (%) 18.2 32.6 16.3 16.5
BV/Sh. (INR ) 82.1 94.4 108.4 124.6
RoE (%) 14.8 17.3 17.5 17.7
RoCE (%) 6.6 7.8 8.3 8.8
Payout (%) 24.1 19.9 21.3 21.6
Valuation
P/BV (x) 1.7 2.1 1.8 1.6 Capitalization/capex guidance for FY18.
EV/EBITDA (x) 9.6 9.2 8.0 7.1 Details on competitively bid projects.
Div. Yield (%) 1.7 1.3 1.6 1.9 Development on green energy projects, state JVs, etc.
Quarterly Performance INR million

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 47,170 49,046 53,596 57,536 60,691 62,296 65,010 72,165 207,348 260,161
Change (%) 19.8 18.1 23.1 23.4 28.7 27.0 21.3 25.4 21.2 25.5
EBITDA 41,369 43,051 47,486 50,874 53,675 55,788 58,220 64,145 182,781 231,828
Change (%) 22.8 21.1 27.0 26.6 29.7 29.6 22.6 26.1 24.5 26.8
As of % Sales 87.7 87.8 88.6 88.4 88.4 89.6 89.6 88.9 88.2 89.1
Depreciation 13,695 14,481 15,805 17,847 17,573 18,769 19,653 21,110 61,828 77,104
Interest 11,091 11,490 12,875 14,773 15,178 15,876 16,426 16,829 50,230 64,309
Other Income 710 1,224 1,452 2,079 1,902 2,507 2,866 2,206 5,464 9,480
PBT 17,293 18,304 20,259 20,332 22,827 23,650 25,006 28,412 76,188 99,894
Tax 3,628 3,823 4,127 4,341 4,819 4,888 5,706 5,565 15,920 20,978
Reported PAT 13,665 14,480 16,131 15,991 18,008 18,762 19,300 22,847 60,267 78,916
Adjusted PAT 13,665 14,480 16,131 15,991 18,008 18,762 19,300 22,847 60,267 78,916
Change (%) 14.7 19.7 28.8 13.2 31.8 29.6 19.6 42.9 19.0 30.9
E: MOSL Estimates
April 2017 271

March 2017 Results Preview | Sector: Textiles
Arvind
Bloomberg ARVND IN CMP: INR407 TP: INR430 (+6%) Buy
We expect Brand and Retail to maintain margins at ~25% in
M. Cap. (INR b)/(USD b) 105 / 2
4QFY17, while Textile is expected to see some impact due to an
1,6,12 Rel Perf. (%) 1 / 9 / 36
increase in cotton prices. Additionally, exports are expected to see
some impact due to appreciation of INR against USD.
Financial Snapshot (INR Billion) We expect ARVNDs revenue to grow 7.3% YoY (7% QoQ) to
Y/E March 2016 2017E 2018E 2019E INR24.9b in 4QFY17, driven by the Brand and Retail segments.
Sales 84.5 92.6 109.6 127.4
We expect EBITDA margin to contract 80bp YoY (+190bp QoQ) to
EBITDA 10.7 10.1 12.7 15.3
12%, and estimate EBITDA of INR2.98b, which is expected to remain
NP 3.6 3.5 5.6 7.4
flat. Consequently, we expect adjusted PAT to grow 17% to
EPS (INR) 14.0 13.5 21.8 28.6
INR1.3b. Buy.
EPS Gr. (%) 6.3 -3.7 61.0 31.4
BV/Sh. (INR) 112.8 147.6 164.5 187.1
RoE (%) 12.9 10.4 14.0 16.3
RoCE (%) 10.5 9.1 11.3 13.2
Div Payout (%) 20.5 31.6 22.7 21.4 Key things to watch for
Valuations Impact of cotton price on the Textile business.
P/E (x) 28.8 29.9 18.6 14.1 Performance of newly acquired brands and newer formats.
P/BV (x) 3.6 2.7 2.5 2.2
EV/EBITDA (x) 12.7 12.5 9.9 8.1
Div Yield (%) 0.6 0.9 1.0 1.2

Net Sales 17,868 19,571 20,338 23,196 21,041 23,311 23,355 24,889 80,973 92,599
YoY Change (%) 0.8 -0.4 -1.9 13.7 17.8 19.1 14.8 7.3 3.1 14.4
EBITDA 2,077 2,277 2,578 2,967 2,415 2,323 2,370 2,987 9,899 10,093
Margins (%) 11.6 11.6 12.7 12.8 11.5 10.0 10.1 12.0 12.2 10.9
Depreciation 586 572 617 664 691 719 734 750 2,440 2,885
Interest 959 906 821 945 891 731 676 670 3,631 2,971
Other Income 270 196 187 208 196 221 109 250 861 778
PBT before EO expense 802 994 1,327 1,566 1,029 1,094 1,070 1,817 4,689 5,016
Extra-Ord expense -29 56 -22 0 -2 -63 -38 0 80 99
PBT 773 1,050 1,304 1,566 1,027 1,031 1,032 1,817 4,609 4,917
Tax 233 358 389 458 317 270 280 599 1,437 1,475
Rate (%) 30.2 34.1 29.8 29.2 30.9 26.1 27.1 33.0 31.2 30.0
MI & Profit/Loss of Asso. Cos. -12 -15 11 5 -24 45 4 -70 -11 52
Reported PAT 552 707 905 1,103 734 717 748 1,287 3,161 3,493
Adj PAT 572 670 920 1,104 735 763 776 1,287 3,684 3,563
YoY Change (%) -36.9 -30.1 -17.1 47.0 28.5 13.9 -15.7 16.6 -3.7 -3.3
Margins (%) 3.1 3.6 4.4 4.8 3.5 3.1 3.2 5.2 3.9 3.8
E: MOSL Estimates

April 2017 272
March 2017 Results Preview | Sector: Consumer
Bata India
Bloomberg BATA IN CMP: INR565 Under Review
We expect revenue to grow 2% YoY (-13% QoQ) to INR5.5b in
4QFY17. In our view, despite demonetization, the launch of new
1,6,12 Rel Perf. (%) 10 / 9 / -10
designs and the focus on ladies/kids footwear are expected to drive
revenues.
Financial Snapshot (INR Billion) EBITDA is likely to improve 11% to INR540m, with the margin
Y/E March 2016 2017E 2018E 2019E contracting 340bp to 9.5%.
Sales 24.3 24.5 27.6 31.3
On a high base, adjusted PAT is expected to de-grow 30% YoY to
EBITDA 2.7 2.7 3.2 3.9
INR314m.
NP 1.4 1.7 2.0 2.5
EPS (INR) 11.2 13.5 15.6 19.3
EPS Gr. (%) -31.2 20.2 16.0 24.0
BV/Sh.(INR) 92.0 101.9 113.8 129.0
RoE (%) 13.1 13.9 14.5 15.9
RoCE (%) 13.2 14.0 14.6 16.0
SSS growth during the quarter.
Payout (%) 25.4 19.6 23.2 21.8
Share of accessories in total revenue.
Valuations
Impact on margins due to promotional campaigns.
P/E (x) 49.9 41.5 35.8 28.9
P/BV (x) 6.1 5.5 4.9 4.3
New store additions.
EV/EBITDA (x) 25.3 24.7 20.9 16.6
Dividend yield 0.6 0.4 0.5 0.6

Net Sales 6,849 5,747 6,255 5,447 6,746 5,837 6,408 5,556 24,298 24,543
YoY Change (%) 10.1 4.9 16.4 10.9 -1.5 1.6 2.5 2.0 NM 1.0
EBITDA 834 480 782 553 820 535 757 611 2,650 2,724
Margins (%) 12.2 8.4 12.5 10.2 12.2 9.2 11.8 11.0 10.9 11.1
Depreciation 194 192 195 206 162 160 162 180 788 657
Interest 5 6 2 3 7 13 5 3 16 28
Other Income 78 97 89 104 110 141 190 100 368 541
PBT 1,143 697 674 447 761 504 563 528 1,467 2,364
Tax 240 154 226 169 257 158 186 180 789 780
Rate (%) 33.7 40.6 33.5 37.7 33.8 31.3 23.8 34.0 35.7 33.0
Reported PAT 902 543 448 279 504 346 377 349 2,185 1,584
Adj PAT 473 226 448 279 504 346 594 349 1,439 1,729
YoY Change (%) -22.3 -42.1 28.2 10.5 6.6 53.2 32.5 25.1 315.9 20
Margins (%) 6.9 3.9 7.2 5.1 7.5 5.9 9.3 6.3 5.9 7.0
E: MOSL Estimates

April 2017 273
March 2017 Results Preview | Sector: Fertilizers
Coromandel International
Bloomberg CRIN IN CMP: INR315 Under Review
We expect revenue to remain flat YoY at INR30.5b in 4QFY17,
mainly due to a decline in realizations.
1,6,12 Rel Perf. (%) -7 / 17 / 44 Margins are likely to expand 150bp YoY to 8.1%. EBITDA should
grow 23% YoY to INR2.47b.
We expect adjusted PAT to grow 39% YoY to INR1,286m.
Y/E March 2016 2017E 2018E 2019E
Sales 115.2 109.6 121.9 134.4
EBITDA 7.7 9.6 10.0 11.8
NP 3.4 4.6 5.3 6.9
EPS (INR) 11.8 16.0 18.3 23.6
EPS Gr. (%) -14.9 35.1 14.8 28.6
BV/Sh. (INR) 83.2 92.0 101.9 115.3
RoE (%) 14.9 18.2 18.9 21.7
RoCE (%) 10.8 13.5 14.6 17.9
Valuations
P/E (x) 26.7 19.8 17.2 13.4
P/BV (x) 3.8 3.4 3.1 2.7
Performance of exports in the non-subsidy business.
EV/EBITDA (x) 14.5 10.7 9.9 8.2 Update on subsidy clearance.
EV/Sales (x) 1.0 0.9 0.8 0.7 Water resovior leves in South.

Net Sales 22,041 36,003 27,555 30,209 20,595 35,752 22,708 30,511 115,807 109,623
YoY Change (%) 17.2 3.9 -7.0 0.8 -6.6 -0.7 -17.6 1.0 2.4 -5.3
EBITDA 929 3,072 1,395 2,004 886 3,846 2,372 2,471 7,401 9,592
Margins (%) 4.2 8.5 5.1 6.6 4.3 10.8 10.4 8.1 6.4 8.8
Depreciation 261 281 246 275 244 254 256 280 1,062 1,039
Interest 599 498 544 567 651 586 529 470 2,209 2,238
Other Income 156 247 144 116 125 177 118 198 663 623
PBT before EO expense 225 2,540 749 1,278 117 3,183 1,705 1,919 4,793 6,939
Extra-Ord expense 0 0 -250 0 0 0 0 0 -250 0
PBT 225 2,540 999 1,278 117 3,183 1,705 1,919 5,043 6,939
Tax 72 844 453 351 38 1,054 583 633 1,720 2,290
Rate (%) 32.0 33.2 45.3 27.5 32.1 33.1 34.2 33.0 34.1 33.0
Minority Interest & Profit/Loss of Asso. Cos. 11 1 0 0 5 -4 0 0 12 11
Reported PAT 142 1,695 547 927 75 2,134 1,122 1,286 3,311 4,638
Adj PAT 142 1,695 410 927 75 2,134 1,122 1,286 3,146 4,638
YoY Change (%) -56.2 -5.8 -66.8 35.0 -47.4 25.9 173.5 38.8 -22.1 47.4
Margins (%) 0.6 4.7 1.5 3.1 0.4 6.0 4.9 4.2 2.7 4.2
E: MOSL Estimates

April 2017 274
Castrol (India)
Bloomberg CSTRL IN CMP: INR428 TP: INR532 (+24%) Buy
We expect revenue to remain flat YoY (and grow +10% QoQ) at
M. Cap. (INR b)/(USD b) 212 / 3
INR8.5b led by volume growth of ~1% YoY and realization at
1 / -18 / -6
INR169/liter (flat YoY, +2% QoQ).
1,6,12 Rel Perf. (%)
We expect CSTRL to report EBITDA of INR2.3b (-7% YoY, +8% QoQ).
Financial Snapshot (INR b) EBITDA margin would be 27.4%, lower than 29.5% in 1QCY16.
Y/E Dec 2015 2016 2017E 2018E
We estimate net profit at INR1.6b (-7% YoY, +2% QoQ).
Sales 33.0 33.6 36.0 38.5
EBITDA 9.3 9.9 10.8 11.0 The stock trades at 28.8x CY17E and 28.2x CY18E EPS. Buy.
Adj. PAT 6.4 6.7 7.4 7.5
Adj. EPS (INR) 12.8 13.6 14.9 15.2
EPS Gr. (%) 33.8 6.3 9.0 2.3
BV/Sh.(INR) 11.6 13.0 14.4 15.9
RoE (%) 118.4 110.9 108.6 100.4
RoCE (%) 118.5 111.1 108.8 100.5
Payout (%) 87.1 90.3 90.3 90.3
P/E (x) 33.3 31.4 28.8 28.2 (a) Volume growth.
P/BV (x) 36.8 33.0 29.7 26.9 (b) Operating margin expansion.
EV/EBITDA (x) 22.1 20.3 18.4 18.0 (c) Launch of new products.
Div. Yield (%) 2.1 2.4 2.6 2.7 (d) Competitive pressure from other players.

Y/E December CY16 CY17E CY16 CY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net Sales 8,521 9,679 7,589 7,791 8,535 9,288 8,807 9,335 33,580 35,964
YoY Change (%) 7.1 5.2 -2.8 -1.2 0.2 -4.0 16.0 19.8 2.2 7.1
EBITDA 2,516 3,144 2,101 2,164 2,335 3,038 2,497 2,963 9,925 10,832
YoY Change (%) 34.3 15.2 -1.2 3.4 -7.2 -3.4 18.8 36.9 12.5 9.1
Margins (%) 29.5 32.5 27.7 27.8 27.4 32.7 28.3 31.7 29.6 30.1
Depreciation 86 149 107 108 125 125 125 129 450 504
Interest 4 7 1 3 4 4 3 4 15 15
Other Income 223 202 183 389 250 250 250 252 997 1,002
PBT 2,649 3,190 2,176 2,442 2,456 3,159 2,619 3,083 10,457 11,316
Tax 925 1,121 778 884 859 1,106 890 1,105 3,708 3,960
Rate (%) 35 35 36 36 35 35 34 36 35 35
PAT 1,724 2,069 1,398 1,558 1,596 2,053 1,728 1,977 6,749 7,355
YoY Change (%) 48.4 12.1 -2.4 10.7 -7.4 -0.8 23.6 26.9 15.4 9.0
Margins (%) 20.2 21.4 18.4 20.0 18.7 22.1 19.6 21.2 20.1 20.5
E: MOSL Estimates
Swarnendu Bhushan (Swarnendu.Bhushan@MotilalOswal.com)

Abhinil Dahiwale (Abhinil.Dahiwale@motilaloswal.com)
April 2017 275
March 2017 Results Preview | Sector: Others
Delta Corp
Bloomberg DELTA IN CMP: INR203 TP: INR229 (+13%) Buy
We expect revenue to increase 8% YoY to INR1,109m, driven by the
casino business in Goa and the commencement of Sikkim casino.
1,6,12 Rel Perf. (%) 28 / 8 / 170
We expect that the impact of demonetization would have
continued till January 2017.
Financial Snapshot (INR Billion) EBITDA margins are likely to contract 200bp to 32.5%, largely on
Y/E March 2016 2017E 2018E 2019E account of lower revenue growth.
Sales 3.8 4.6 6.7 8.4
Net profit is likely to decline 5% YoY to INR152m, mainly due to
EBITDA 1.2 1.7 2.7 3.5
contraction in EBITDA margin. Buy.
Adj. PAT 0.4 0.8 1.6 2.0
Adj. EPS (INR) 1.5 3.3 6.9 7.6
EPS Gr. (%) -341.6 110.7 110.3 11.4
BV/Sh.(INR) 34.8 37.5 50.0 46.4
RoE (%) 4.6 9.0 15.7 17.0
RoCE (%) 5.5 9.4 14.9 16.5
Payout (%) 13.0 19.6 21.1 20.5
Valuations
P/E (x) 119.6 56.8 27.0 24.2
P/BV (x) 5.3 4.9 3.7 4.0
Increase in visitations in Goa and ramp-up of Sikkim casino.
EV/EBITDA (x) 33.6 24.3 14.7 11.0 Expansion plans and integration of online business.
Div. Yield (%) 0.1 0.3 0.6 0.7 Update on approval of Daman casino.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net Sales 807 934 1,001 1,027 1,087 1,343 1,036 1,109 3,779 4,578
YoY Change (%) 44.9 22.9 23.7 17.5 34.6 43.8 3.4 8.0 26.0 21.1
Total Expenditure 584 622 673 672 671 776 723 749 2,549 2,918
EBITDA 224 311 328 355 415 567 313 360 1,229 1,659
Margins (%) 27.7 33.4 32.8 34.5 38.2 42.2 30.2 32.5 32.5 36.3
Depreciation 87 89 94 101 91 93 89 91 382 365
Interest 119 114 98 83 87 87 82 70 414 326
Other Income 12 4 4 37 9 11 11 10 58 41
PBT before EO expense 30 113 140 208 246 399 152 209 491 1,009
Extra-Ord expense 0 2 50 -157 -46 2 5 0 -104 38
PBT 29 111 90 365 292 397 147 209 595 971

Tax 34 67 21 80 85 91 40 52 200 268
Rate (%) 114.7 60.2 23.2 22.0 29.2 22.9 27.2 25.0 33.7 27.6
Minority Interest & Profit/Loss of Asso. Cos. -11 -10 -8 1 4 -16 6 5 -32 -1
Reported PAT 6 54 77 283 202 322 101 152 426 704
Adj PAT 6 54 115 161 170 323 105 152 357 732
YoY Change (%) -103.3 NM NM NM 2,539.9 494.1 -9.4 -5.6 -341.6 105.0
Margins (%) 0.8 5.8 11.5 15.7 15.6 24.1 10.1 13.7 9.4 16.0
E: MOSL Estimates

April 2017 276
March 2017 Results Preview | Sector: Textiles
Indo Count Industries

Bloomberg ICNT IN CMP: INR199 TP: INR232 (+17%) Buy
We expect revenue to grow 4% YoY (9% QoQ) to INR5.5b in
4QFY17.
1,6,12 Rel Perf. (%) 18 / 29 / -20 We estimate 70bp contraction in margin YoY to 21.5%, and flattish
EBITDA growth to INR1.17b.
PAT is also expected to largely remain flat YoY at INR669m, v/s
Y/E March 2016 2017E 2018E 2019E
INR660m in 4QFY16. Buy.
Sales 22.1 22.8 25.5 28.7
EBITDA 4.7 4.8 5.7 6.6
NP 2.6 2.7 3.5 4.2
EPS (INR) 13.4 13.7 17.5 21.1
EPS Gr. (%) 61.6 2.0 28.2 20.5
BV/Sh. (INR) 33.3 47.7 66.2 88.7
RoE (%) 48.9 33.8 30.8 27.3
RoCE (%) 33.3 28.4 29.2 26.8
Valuations Key things to watch for
P/E (x) 14.8 14.5 11.3 9.4
Any addition of clients and geographies, and ramp-up there.
P/BV (x) 5.9 4.1 3.0 2.2
Progress on the brands business.
EV/EBITDA (x) 7.1 6.6 5.4 4.3
Foreign exchange gains and losses.
EV/Sales (x) 1.5 1.4 1.2 1.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,579 5,765 5,009 5,250 4,926 5,763 5,029 5,460 22,128 22,814
YoY Change (%) 44.9 20.4 16.9 15.0 7.6 0.0 0.4 4.0 24.2 3.1
EBITDA 1,012 1,052 1,151 1,163 1,103 1,164 1,020 1,174 4,735 4,768
Margins (%) 22.1 18.2 23.0 22.2 22.4 20.2 20.3 21.5 21.4 20.9
Depreciation 67 69 72 51 80 73 79 80 188 357
Interest 146 156 94 119 98 116 91 80 549 380
Other Income 0 0 0 0 0 0 0 0 0 0
PBT 798 828 985 993 924 975 849 1,014 3,998 4,031
Tax 277 311 213 333 321 348 287 345 1,351 1,330
Rate (%) 34.6 37.6 21.6 33.5 34.8 35.7 33.8 34.0 33.8 33.0
Reported PAT 522 516 773 660 603 627 562 669 2,647 2,701
Adj PAT 522 516 773 660 603 627 562 669 2,647 2,701
YoY Change (%) 109.4 21.5 77.1 44.5 15.6 21.5 -27.3 1.4 61.6 2.0
Margins (%) 11.4 9.0 15.4 12.6 12.2 10.9 11.2 12.3 12.0 11.8
E: MOSL Estimates

April 2017 277
Info Edge
Bloomberg INFOE IN CMP: INR837 TP: 1,000 (+19%) Buy
We expect standalone revenue to decline 2.2% YoY to INR2b.
M. Cap. (INR b)/(USD b) 102 / 2
Recruitment segment (~75% of business) is estimated to decline
-4 / -17 / -12
1.9% YoY to INR1.46b.
1,6,12 Rel Perf. (%)
We estimate real estate portal 99acres.coms revenue at INR317m
(flat YoY) and that of matrimonial portal Jeevansathi.com at
Y/E March 2016 2017E 2018E 2019E
INR155m (up 15% YoY).
Sales 7.2 7.9 8.9 10.1
Revenue growth in Naukri.com has been under pressure because of
EBITDA 1.6 2.2 2.4 2.8 demonetization, early signs of a slowdown in IT hiring and a policy
PAT 1.4 2.2 2.2 2.6 change in the sales incentive structure. 99acres.com continues to
EPS (INR) 13.0 16.9 17.9 21.0 be impacted by the slowdown in the real estate market.
EPS Gr. (%) -5.3 30.1 6.2 17.1 Our EBITDA margins estimate for the quarter stands at 27.1%
BV/Sh. (INR) 145.3 159.4 169.6 182.3 compared to 25.3% in the previous quarter, and 30.5% in 4QFY16.
RoE (%) 9.2 11.1 10.9 11.9 Consequently, we expect PAT of INR516m (down 9.8% YoY).
RoCE (%) 9.2 11.1 10.9 11.9
Payout (%) 37.0 38.6 42.8 39.4
Valuation
Impact of consolidation in the real estate segment, and outlook on
P/E (x) 61.6 47.4 44.6 38.1
ad spends given state of competitive dynamics
EV/EBITDA (x) 50.7 36.7 32.7 27.2
Traction in the recruitment business from segments other than IT
Commentary around monetization in Zomato.com.
Quarterly Performance (Standalone) (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Revenues 1,747 1,741 1,734 2,042 1,976 2,100 1,861 1,996 7,235 7,933
YoY (%) 20.6 18.0 19.0 18.0 13.1 20.6 7.3 -2.2 18.3 9.7
Salary costs 792 753 804 890 963 915 938 961 3,205 3,777
Ad and 461 375 271 212 258 221 184 220 1,318 883
Other Expenses 261 280 274 318 277 269 268 275 1,131 1,089
Operating Profit 234 334 385 623 478 695 471 541 1,580 2,184
Margins (%) 13.4 19.2 22.2 30.5 24.2 33.1 25.3 27.1 21.8 27.5
Other Income 193 195 216 203 243 248 250 250 827 992
Depreciation 45 50 54 60 60 62 63 65 210 249
PBT bef. Extra- 382 478 546 767 661 881 658 727 2,197 2,927
Provision for Tax 95 138 169 195 217 254 187 211 621 869
ETR (%) 24.9 29.0 31.0 25.4 32.9 28.8 28.4 29.0 28.3 29.7
PAT bef. 286 339 377 572 444 627 471 516 1,576 2,058
EOI 0 0 -160 0 0 174 0 0 -160 174
Adjusted PAT 286 339 218 572 444 801 471 516 1,417 2,232
YoY (%) -29.3 0.0 -44.8 -30.9 54.9 136.0 116.7 -9.8 -28.0 57.6
EPS (INR) 2.4 2.8 1.8 4.7 3.6 5.1 3.9 4.3 11.7 16.9
E: MOSL Estimates

April 2017 278
Inox Leisure
Bloomberg INOL IN CMP: INR294 TP: INR230 (-22%) Sell
We expect revenue to grow 9% YoY to INR2.7b in 4QFY17.
52-Week Range (INR) 305 / 191 Margins are likely to improve by 50bp YoY to 6.5%. We expect
1,6,12 Rel Perf. (%) 21 / 4 / 29 EBITDA to improve by 18% to INR177m.
We expect loss of INR76m, as against profit of INR161m in 4QFY16.
Maintain Sell.
Y/E March 2016 2017E 2018E 2019E
Sales 11.6 12.2 14.5 17.2
EBITDA 1.9 1.7 2.4 2.8
NP 0.8 0.4 0.8 1.0
EPS (INR) 8.4 4.1 8.6 10.9
EPS Gr. (%) 284.0 -51.2 108.3 27.0
BV/Sh. (INR) 61.4 65.4 73.6 84.0
RoE (%) 14.9 6.2 11.8 13.2
RoCE (%) 13.2 6.6 10.4 11.6
Valuations
Footfalls during the quarter and pick-up post demonization.
P/E (x) 35.2 118.9 36.4 25.8
Number of screen additions.
P/BV (x) 4.8 4.7 4.1 3.6
Pick up in ad revenue.
EV/EBITDA (x) 13.8 19.5 11.6 9.1
Consolidated Quarterly performance (INR Million)

Y/E Mar FY16 FY17 FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 3,025 3,078 2,979 2,513 3,369 2,974 2,980 2,729 11,595 12,054
YoY Change (%) 30.2 15.7 -0.9 15.4 11.4 -3.4 0.0 8.6 14.0 18.5
EBITDA 645 565 534 151 621 272 317 177 1,895 1,382
Margins (%) 21.3 18.4 17.9 6.0 18.4 9.1 10.6 6.5 16.3 11.5
Depreciation 197 197 197 207 203 208 214 255 798 865
Interest 62 62 61 59 58 58 65 75 244 259
Other Income 15 20 18 16 25 21 22 15 68 84
PBT before EO expense 400 327 293 -100 385 27 60 -138 921 343
Extra-Ord expense 0 0 -50 0 0 0 0 0 -50 0
PBT 400 327 244 -100 385 27 60 -138 871 343
Tax 148 115 73 -262 136 11 23 -62 74 113
Rate (%) 36.9 35.0 29.9 N.M 35.2 41.7 38.8 N.M 8.5 33.0
Reported PAT 253 213 171 161 250 17 37 -76 797 230
Adj PAT 253 213 205 161 250 17 37 -76 843 230
YoY Change (%) 452.0 302.5 43.6 N.M -1.3 -92.1 -82.2 N.M 305.6 -72.8
Margins (%) 8.4 6.9 6.9 6.4 7.4 0.6 1.2 -2.8 7.3 1.9
E: MOSL Estimates

April 2017 279
March 2017 Results Preview | Sector: Aviation
InterGlobe Aviation
Bloomberg INDIGO IN
360.4
CMP: INR1044 TP: INR1,092 (+5%) Neutral
Equity Shares (m)
376 / 6 We expect INDIGO to report revenue of INR49.5b in 4QFY17 (+21%
52-Week Range (INR) 1095 / 790 YoY, flat QoQ) and EBITDAR of INR10.8b (-28% YoY, -22% QoQ).
1,6,12 Rel Perf. (%) 18 / 4 / -13 We model ticket yield at INR3.35 (-8% YoY, -4% QoQ) and RPK at
12.7b (+32% YoY). Any deviation in yield would have a meaningful
Financial Snapshot (INR Billion) impact on our estimates.
Y/E March 2016 2017E 2018E 2019E We model ATF at INR55.4/liter (+38% YoY, +10% QoQ) for 4QFY17
Sales 161.4 186.4 258.5 314.0 and expect INDIGO to report net profit of INR1.8b.
EBITDA 30.1 18.6 34.4 37.8 We model INDIGOs fleet at 133 aircraft as at end-4QFY17 (v/s 107
NP 19.9 14.0 23.3 28.1 aircraft as at end-FY16), and at 133/154/174 aircraft by end-
EPS (INR) 55.2 39.0 64.7 78.0 FY17/FY18/FY19.
EPS Gr. (%) 52.1 -29.4 66.0 20.6
We model ASK at 54.9b/68.1b/82.4b in FY17/FY18/FY19 v/s 42.8b
BV/Sh (INR) 50.9 57.0 67.2 79.5 in FY16, and RPK at 46.8b/57.7b/70b in FY17/FY18/FY19 v/s 35.9b
RoE (%) 176.5 72.2 104.1 106.3 in FY16, driven by an increase in fleet size.
RoCE (%) 42.9 33.6 51.4 70.2
The stock trades at 16.1x/13.4x FY18E/FY19E reported EPS of
Payout (%) 93.4 84.3 84.3 84.3
INR64.7/INR8 and at an EV of 8.6x/8.1x FY18E/FY19E adjusted
Valuations
EBITDAR. Maintain Neutral.
P/E (x) 18.9 26.8 16.1 13.4
Adj.EV/EBITDAR(x) 9.8 11.9 8.6 8.1 Induction of new aircraft in the fleet.
Div. Yield (%) 4.1 2.6 4.3 5.2 Fuel costs and their impact on yields.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 42,115 35,399 42,978 40,907 45,789 41,669 49,431 49,477 161,399 186,366
YoY Change (%) NA NA NA 7.0 8.7 17.7 15.0 20.9 15.9 15.5
Fuel cost 13,477 12,421 11,659 10,236 13,674 15,524 16,712 19,967 47,793 65,877
Employee cost 3,825 4,472 4,670 4,932 4,789 5,080 5,273 5,430 17,899 20,573
Other expenses 9,072 9,809 9,989 10,689 12,046 11,388 13,471 13,245 39,560 50,150
EBITDAR 15,741 8,697 16,660 15,049 15,279 9,677 13,975 10,835 56,147 49,765
Margins (%) 37 25 39 37 33 23 28 22 35 27
Net Rentals 6,017 6,324 6,782 6,999 7,127 7,721 8,164 8,192 26,122 31,204
EBITDA 9,724 2,373 9,878 8,050 8,152 1,956 5,811 2,642 30,025 18,561
Margins (%) 23.1 6.7 23.0 19.7 17.8 4.7 11.8 5.3 18.6 10.0
Depreciation 1,200 1,283 1,307 1,242 1,148 1,189 1,184 1,184 5,031 4,705
Interest 328 382 340 269 1,163 610 759 703 1,319 3,234
Other Income 1,057 891 1,097 1,569 1,626 1,608 2,153 1,652 4,614 7,039
PBT 9,253 1,599 9,329 8,108 7,467 1,765 6,022 2,408 28,290 17,662
Tax 2,762 473 2,756 2,315 1,549 367 1,149 554 8,306 3,619
Rate (%) 29.9 29.5 29.5 28.6 20.7 20.8 19.1 23.0 29.4 20.5
Reported PAT 6,491 1,127 6,573 5,793 5,918 1,398 4,873 1,854 19,983 14,043
EPS 18.0 3.1 18.2 16.1 16.4 3.9 13.5 5.1 55.5 39.0
YoY Change (%) 23.7 0.3 -8.8 24.1 -25.9 -68.0 53.2 -29.7
E: MOSL Estimates
Swarnendu Bhushan (Swarnendu.Bhushan@MotilalOswal.com);

Abhinil Dahiwale (Abhinil.Dahiwale@motilaloswal.com)
April 2017 280
Just Dial
Bloomberg JUST IN CMP: INR555 Under Review
JD Omni has temporarily shut down, while paid campaign additions
are expected to be impacted by demonetization. Advertisement
1,6,12 Rel Perf. (%) -2 / 22 / -45
campaigns are expected to start from 4QFY17.
We expect revenue growth of 7.5% YoY to INR1.9b in 4QFY17.
We expect EBITDA margin to contract 1000bp YoY to 15.1%.
Y/E March 2016 2017E 2018E 2019E
Consequently, we estimate EBITDA to de-grow 35% to INR292m.
Sales 6.9 7.3 8.4 9.6
EBITDA 1.7 1.1 1.0 1.4 PAT should decline by 31% to INR244m, as against INR353m in
NP 1.4 1.2 1.3 1.5 4QFY16.
EPS (INR) 20.4 17.2 18.5 22.1
EPS Growth (%) 3.7 -15.9 7.5 19.8
BV/Sh (INR) 96.7 111.5 127.1 146.3
RoE (%) 21.1 16.5 15.5 16.2
RoCE (%) 21.1 16.5 15.5 16.2
Payout (%) 6.9 7.3 8.4 9.6
Valuations
Performance of Search Plus.
P/E (x) 25.8 30.7 28.5 23.8
Addition of paid campaigns, impact of demonetization on those.
P/BV (x) 5.5 4.7 4.1 3.6
EV/EBITDA (x) 18.1 28.2 29.3 19.0
Promotional campaigns.
Div Yield (%) 0.0 0.5 0.6 0.6 Employee addition.
Consolidated - Quarterly Earning Model (INR million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 1,660 1,639 1,661 1,796 1,763 1,803 1,803 1,931 6,908 7,298
YoY Change (%) 23.0 11.2 7.6 14.9 6.2 10.0 8.5 7.5 17.1 5.6
EBITDA 452 317 315 450 293 224 257 292 1,706 1,051
Margins (%) 27.2 19.3 19.0 25.1 16.6 12.4 14.3 15.1 24.7 14.4
Depreciation 67 79 81 84 90 102 107 108 311 405
Interest 0 0 0 0 0 0 0 0 0 0
Other Income 137 264 131 155 287 260 197 180 585 924
PBT 521 501 366 521 490 383 348 364 1,980 1,570
Tax 161 97 108 168 100 86 73 120 561 377
Rate (%) 31 19 29 32 20 23 21.1 33 28.4 24.0
Minority Interest & Profit/Loss of Asso. Cos. 0 0 0 0 0 0 0 0 0 0
Reported PAT 361 405 259 353 389 296 274 244 1,419 1,193
Adj PAT 361 405 259 353 389 296 274 244 1,419 1,193
YoY Adj PAT Change (%) 28.2 28.6 -19.6 -25.1 8.0 -26.8 6.2 -31.1 2.8 -15.9
Margins (%) 21.7 24.7 15.6 19.7 22.1 16.4 15.2 12.6 20.5 16.3
E: MOSL Estimates

April 2017 281
March 2017 Results Preview | Sector: Agri
Kaveri Seed
Bloomberg KSCL IN CMP: INR555 TP: INR649 (+17%) Buy
We expect revenue to grow 10% YoY to INR482m. Cotton revenue
is expected to be strong in FY18 due to increase in cotton prices.
1,6,12 Rel Perf. (%) 9 / 29 / 27 We expect EBITDA loss at INR29m v/s loss of INR47m in 4QFY16.
We expect adjusted PAT loss of INR36m in 4QFY17, as against loss
of INR75m in the year-ago period. Buy.
Y/E March 2016 2017E 2018E 2019E
Sales 8.9 6.8 8.4 10.1
EBITDA 1.9 1.6 2.1 2.6
NP 1.7 1.6 2.0 2.5
EPS (INR) 24.9 23.4 28.6 36.1
EPS Gr. (%) -42.9 -6.1 21.9 26.3
BV/Sh (INR) 131.3 139.1 149.7 165.4
RoE (%) 20.7 17.3 19.8 22.9
RoCE (%) 22.2 19.3 21.4 24.8
Payout (%) 8.9 6.8 8.4 10.1
Valuations
Inventory and guidance for FY18.
P/E (x) 22.0 23.5 19.3 15.3
Impact on cotton acreages due to reduced sowing.
P/BV (x) 4.2 4.0 3.7 3.3
Cotton yields.
EV/EBITDA (x) 20.1 22.9 17.6 13.7
Div Yield (%) 1.8 2.4 2.7 3.1
Any write-offs.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 5,394 663 698 438 4,940 678 679 482 7,193 6,793
YoY Change (%) -34.8 -67.5 -23.1 9.7 -8.4 2.2 -2.7 10.0 -38.1 -5.6
Total Expenditure 3,137 1,109 535 486 3,357 644 644 511 5,267 5,176
EBITDA 2,256 -446 163 -47 1,583 34 34 -29 1,925 1,617
Margins (%) 41.8 -67.3 23.3 -10.8 32.0 5.0 5.0 -6.0 26.8 23.8
Depreciation 52 53 76 75 78 72 69 75 255 293
Interest 0 1 0 1 0 0 0 0 2 2
Other Income 21 29 24 57 54 170 101 64 131 390
PBT before EO expense 2,225 -470 111 -66 1,559 132 66 -40 1,799 1,712
PBT 2,225 -470 111 -66 1,559 132 66 -40 1,799 1,712
Tax 34 11 -7 12 15 54 30 -4 50 94
Rate (%) 1.5 -2.4 -6.0 -17.7 1.0 41.1 45.9 10.0 2.8 5.5
Minority Interest & Profit/Loss of Asso. Cos. 0 0 0 -3 0 0 0 0
Reported PAT 2,191 -482 117 -75 1,544 77 36 -36 1,749 1,618
Adj PAT 2,191 -482 117 -75 1,544 77 36 -36 1,749 1,618
YoY Change (%) -5.1 NM -67.2 NM -29.6 NM -69.7 NM -41.9 -7.5
Margins (%) 40.6 -72.7 16.8 -17.0 31.3 11.4 5.2 -7.5 24.3 23.8
E: MOSL Estimates

April 2017 282
March 2017 Results Preview | Sector: Commercial vehicles
Manpasand Beverages
Equity Shares (m) 57.1 CMP: INR717 TP: INR843 (+18%) Buy
We expect revenue to grow 42% YoY to INR3,272m in 4QFY17, with
traction in Fruits Up, especially post commissioning of Ambala
1,6,12 Rel Perf. (%) -7 / -12 / 37
Plant.
Margins are likely to remain flattish at 18.5%. EBITDA is expected to
Financial Snapshot (INR Billion) grow 41% YoY to INR605m.
Y/E March 2016 2017 2018E 2019E
Out of the four new plants where capex is planned, three are on
Sales 5.6 7.7 11.9 20.0
schedule expected timelines are: Gujarat Dec 2017, Varanasi
EBITDA 1.1 1.5 2.3 4.0
and South Mar 2018. The 4th plant in Orissa is expected to
NP 0.5 0.9 1.3 2.2
Adj EPS (INR) 10.1 14.9 23.1 38.3
commission post 2HFY18.
EPS Gr. (%) 26.7 47.6 55.0 65.7 We estimate PAT at INR430m, as against INR256m in 4QFY16,
BV/Sh. (INR) 120.2 204.6 221.9 248.8 growth of 68%. Buy.
RoE (%) 11.4 8.6 9.6 16.3
RoCE (%) 12.2 9.7 10.8 18.3
Valuations
P/E (x) 72.1 48.8 31.5 19.0
Update on capex plans post fund raising.
P/BV (x) 6.1 3.6 3.3 2.9
Update on advertisement campaigns and plans ahead.
EV/EBITDA (x) 32.2 24.2 17.3 10.2
EV/Sales (x) 6.4 4.7 3.4 2.0
Fruits Up performance and outlook for 4QFY17.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 1,453 762 918 2,304 2,293 1,025 1,025 3,272 5,437 7,614
YoY Change (%) 15.1 23.1 79.8 91.0 57.9 34.6 11.6 42.0 51.1 40.1
Total Expenditure 1,114 602 741 1,876 1,841 803 819 2,666 4,333 6,129
EBITDA 339 159 177 428 453 222 205 605 1,103 1,485
Margins (%) 23.3 20.9 19.3 18.6 19.7 21.7 20.0 18.5 20.3 19.5
Depreciation 123 135 153 160 149 171 177 200 571 697
Interest 41 10 3 3 1 8 2 0 57 11
Other Income 1 35 35 21 17 17 60 75 91 169
PBT 175 49 56 287 320 61 86 480 566 947
Tax 18 6 7 31 33 7 13 50 62 104
Rate (%) 10.3 11.4 12.7 10.8 10.4 10.8 15.6 10.5 10.9 11.0
Reported PAT 157 43 49 256 286 54 72 430 505 843
Adj PAT 157 43 49 256 286 54 72 430 505 843
YoY Change (%) 9.4 388.6 -287.6 47.6 82.5 24.5 49.0 68.2 68.4 67.0
Margins (%) 10.8 5.7 5.3 11.1 12.5 5.3 7.1 13.1 9.3 11.1
E: MOSL Estimates

April 2017 283
MCX
Bloomberg MCX IN CMP: INR1,186 TP: 1,400 (+18%) Buy
Total volumes at MCX traded during the quarter stood at INR12.4t,
down 10.3% QoQ and up 16.5% YoY.
Volumes at MCX have been severely impacted post
1,6,12 Rel Perf. (%) 2 / -16 / 23
demonetization. Gold volumes in 4QFY17 are down 10.9% QoQ and
51.3% YoY.
Financial Snapshot (INR Billion) However, MCX had taken a 25% price hike last quarter. This drives
Y/E MAR 2016 2017E 2018E 2019E our revenue growth estimate of -9.5% QoQ/+3.3% YoY.
Sales 2.1 2.4 2.8 3.7 Our EBIT margin estimate for the quarter is 14.4%, down 70bp QoQ
EBITDA 0.6 0.6 1.0 1.8 and compares with 14.8% in 4QFY16.
PAT 0.4 1.3 1.6 2.2 There were several one-off costs in 3Q, which we expect to be
EPS (INR) 23.4 26.3 30.0 42.5 absent in 4Q; leading to some support on margins despite the
EPS Gr. (%) -5.0 12.7 13.9 41.9 volume decline.
BV/Sh. (INR) 236.1 257.8 273.0 294.7 One-off costs of ~INR50m in 3Q included three quarters charge on
RoE (%) 3.5 10.6 11.3 15.0 variable compensation for employees, revamp of website, shift of
RoCE (%) 8.8 10.4 11.1 14.8 premises and one-time audit undertaken on the advice of SEBI.
Payout (%) 0.0 69.0 80.6 56.8 Our PAT estimate is INR296m, down 12.8% QoQ and up 3.0% YoY.
Valuation
P/E (x) 50.9 45.2 39.7 28.0
P/BV (x) 5.0 4.6 4.4 4.0 Any move to enter the commodities space by potential
EV/EBITDA (x) 85.8 75.2 49.2 26.5 competitors like NSE
Expectations of volume revival
Pace of reforms under SEBI

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Sales 518 563 498 556 582 596 634 574 2,135 2,386
Q-o-Q Gr. (%) -1.8 8.8 -11.6 11.6 16.9 7.1 6.5 -9.5 4.8 11.8
Staff Costs 90 109 100 106 143 144 198 163 406 647
Other expenses 282 318 264 313 265 257 296 284 986 1,058
Depreciation 63 65 64 54 49 42 45 45 246 182
EBIT 83 71 70 82 125 152 96 83 498 499
Margins (%) 16.1 12.7 14.0 14.8 21.5 25.6 15.1 14.4 23.3 20.9
Other Income 300 338 276 278 356 359 363 313 1,191 1,390
PBT bef. Exceptional 382 409 346 360 480 511 459 395 1,689 1,888
Tax 131 99 110 72 152 134 119 99 413 505
Rate (%) 34.3 24.2 31.8 20.1 31.7 26.3 26.0 25.0 24.4 26.7
PAT 251 310 236 287 328 376 339 296 1,277 1,383
Q-o-Q Gr. (%) -49.0 23.5 -24.0 21.8 14.1 14.8 -9.9 -12.8 2.1 230.7
EPS (INR) 4.9 6.1 3.5 5.3 6.5 7.4 6.7 5.8 25.0 27.1
Total volumes (INR t) 13.6 14.8 13.0 14.9 16.0 16.4 13.9 12.4 56.3 58.7
Q-o-Q Gr. (%) -3.5 9.2 -12.0 14.3 7.3 2.3 -15.2 -10.3
Y-o-Y Gr. (%) 15.4 18.5 -3.3 5.9 17.7 10.3 6.4 -16.5 8.7 4.1
E: MOSL Estimates

April 2017 284
Navneet Education
Bloomberg NELI IN CMP: INR168 TP: INR210 (+25%) Buy
We expect 10% revenue growth to INR2.03b in 4QFY17, and EBITDA
to remain flat at INR243m with 120bp YoY contraction in margins to
12%.
1,6,12 Rel Perf. (%) 12 / 59 / 83
Typically, 1Q is the largest quarter for Navneet as schools of SSC
Financial Snapshot (INR Billion) boards open in 1Q. Thus, in 4Q revenue is largely driven by the
Y/E March 2016 2017E 2018E 2019E stationary division.
Sales 9.5 10.9 13.7 16.1
We expect adjusted PAT to increase by 7% to INR130m in 4QFY17.
EBITDA 2.1 2.5 3.3 4.0
Buy.
NP 1.0 1.6 2.0 2.5
Adj. EPS (INR) 4.3 6.6 8.6 10.5
Adj. EPS Gr. (%) -20.7 53.2 29.3 22.6
BV/Sh(INR) 24.5 26.2 31.0 37.1
RoE (%) 18.3 26.0 30.0 30.9
RoCE (%) 18.4 21.1 23.7 25.8
Valuations
P/E (x) 38.3 25.0 19.3 15.8
P/BV (x) 6.8 6.3 5.3 4.5
EV/EBITDA (x) 19.3 15.8 12.1 9.9 Update on Britannica acquisition.
EV/Sales (x) 4.2 3.7 2.9 2.4 Outlook for FY18 considering syllabus change.


1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 5,161 1,174 1,129 1,842 5,605 1,714 1,566 2,026 9,498 10,894
YoY Change (%) 4.5 -20.6 -16.0 0.4 8.6 46.0 38.6 10.0 -3.0 14.7
EBITDA 1,580 117 121 243 1,802 298 203 243 2,055 2,538
Margins (%) 30.6 10.0 10.7 13.2 32.1 17.4 13.0 12.0 21.6 23.3
Depreciation 62 65 68 72 60 62 65 80 288 266
Interest 30 0 0 4 23 0 1 6 36 34
Other Income 17 100 51 27 23 45 55 40 176 147
PBT before EO expense 1,505 152 104 194 1,743 281 193 197 1,908 2,386
PBT 1,505 152 104 194 1,743 281 193 197 1,908 2,386
Tax 521 43 28 73 607 95 66 67 666 833
Rate (%) 34.7 28.1 27.4 37.4 34.8 33.9 34.3 34.0 34.9 34.9
Reported PAT 983 109 75 121 1,136 186 126 130 1,242 1,553
Adj PAT 983 109 75 121 1,136 186 126 130 1,242 1,553
YoY Change (%) 9.4 -8.5 -36.6 -22.5 15.5 69.8 68.3 7.3 -4.7 25.0
Margins (%) 19.1 9.3 6.7 6.6 20.3 10.8 8.1 6.4 13.1 14.3
E: MOSL Estimates

April 2017 285
March 2017 Results Preview | Sector: Agri
PI Industries
Bloomberg PI IN CMP: INR833 TP: INR1046 (+25%) Buy
We expect revenue to grow 4% YoY to INR6b, with slowdown in
M. Cap. (INR b)/(USD b) 114 / 2
CSM business on account of pain in global agri-chem.
1,6,12 Rel Perf. (%) -2 / -6 / 28 We estimate 310bp margin expansion to 21.4%, and expect EBITDA
to grow 22% YoY to INR1.28b.
We estimate adjusted PAT at INR935m, as against INR934m in
Y/E March 2016 2017E 2018E 2019E
4QFY16. Buy.
Sales 21.0 23.5 28.5 34.0
EBITDA 4.3 5.3 6.7 8.3
NP 3.0 4.1 4.8 6.0
EPS (INR) 22.1 30.4 34.8 43.6
EPS Gr. (%) 22.8 37.4 14.6 25.2
BV/Sh. (INR) 85.8 110.7 138.8 174.4
RoE (%) 29.2 30.9 27.9 27.8
RoCE (%) 26.8 29.6 27.7 27.8
Valuations
CSM growth and order book.
P/E (x) 37.7 27.5 24.0 19.1
Agrochemical business updates for FY18.
P/BV (x) 9.7 7.5 6.0 4.8
EV/EBITDA (x) 27.6 22.5 17.4 13.6
EV/Sales (x) 5.7 5.1 4.1 3.3

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 5,921 4,768 5,110 5,848 6,834 5,719 4,879 6,064 21,647 23,496
YoY Change (%) 25.7 11.8 1.2 8.9 15.4 20.0 -4.5 3.7 11.6 8.5
EBITDA 1,344 835 1,031 1,073 1,656 1,279 1,034 1,300 4,283 5,269
Margins (%) 22.7 17.5 20.2 18.3 24.2 22.4 21.2 21.4 19.8 22.4
Depreciation 115 117 137 170 178 181 183 195 538 737
Interest 27 15 27 26 16 13 12 12 96 53
Other Income 86 89 80 70 113 134 133 90 325 469
PBT before EO expense 1,288 792 947 947 1,575 1,219 973 1,183 3,974 4,949
Extra-Ord expense 0 0 0 -20 0 0 0 0 -20 0
PBT 1,288 792 947 967 1,575 1,219 973 1,183 3,994 4,949
Tax 429 223 238 14 306 205 33 248 904 792
Rate (%) 33.3 28.1 25.2 1.4 19.4 16.8 3.4 21.0 22.6 16.0
Reported PAT 859 570 708 953 1,269 1,014 940 935 3,090 4,157
Adj PAT 859 570 708 934 1,269 1,014 940 935 3,075 4,157
YoY Change (%) 24.4 25.2 19.9 64.0 47.7 77.9 32.7 0.1 33.3 35.2
Margins (%) 14.5 12.0 13.9 16.0 18.6 17.7 19.3 15.4 14.2 17.7
E: MOSL Estimates

April 2017 286
March 2017 Results Preview | Sector: Commercial vehicles
SH Kelkar
Equity Shares (m) 144.6 CMP: INR298 TP: INR371 (+24%) Buy
We expect revenue to grow 7% YoY to INR2.8b in 4QFY17, with
some impact of demonetization on customers, which is expected to
1,6,12 Rel Perf. (%) -1 / -8 / 10
lead to lower new launches.
Margins are likely to remain flattish at 17%. EBITDA is expected to
Financial Snapshot (INR Billion) grow 8% YoY at INR483m.
Y/E March 2016 2017 2018E 2019E
We estimate PAT at INR302m, as against INR260m in 4QFY16,
Sales 9.3 10.2 12.2 14.3
growth of 17%. Buy.
EBITDA 1.5 1.8 2.3 2.9
NP 0.8 1.1 1.5 1.9
Adj EPS (INR) 5.5 7.5 10.2 13.1
EPS Gr. (%) 4.2 36.0 34.8 28.7
BV/Sh. (INR) 52.7 57.8 64.7 73.5
RoE (%) 12.6 13.6 16.6 18.9
RoCE (%) 16.9 19.9 25.0 28.7
P/E (x) 54.3 39.9 29.6 23.0 Growth in HTT, which was acquired in flavor business.
P/BV (x) 5.7 5.2 4.7 4.1 Management commentary on new client acquisition, and shift of
EV/EBITDA (x) 28.1 24.3 18.6 14.5 production from the Netherlands to Vapi.
EV/Sales (x) 4.7 4.3 3.5 3.0

Y/E March FY16 FY17 FY17E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 2,211 2,082 2,295 2,658 2,559 2,453 2,319 2,844 10,174
YoY Change (%) - - 17.2 12.8 15.7 17.8 1.1 7.0 10.0
Total Expenditure 1,807 1,827 1,887 2,210 2,085 2,036 1,924 2,360 8,405
EBITDA 404 255 407 448 473 416 395 483 1,768
Margins (%) 18.3 12.3 17.7 16.9 18.5 17.0 17.1 17.0 17.4
Depreciation 74 74 72 77 44 49 48 50 191
Interest 72 73 44 14 19 22 2 2 45
Other Income 19 23 18 50 32 29 19 20 100
PBT before EO expense 278 131 310 407 442 375 364 451 1,632
Extra-Ord expense 0 0 0 0 0 0 0 0 0
PBT 278 131 310 407 442 375 364 451 1,632
Tax 83 61 92 147 167 132 110 149 557
Rate (%) 29.8 46.4 29.6 36.2 37.7 35.1 30.2 33.0 34.1
Minority Interest & Profit/Loss of Asso. Cos. 0 0 0 0 0 0 0 0 0
Reported PAT 195 70 218 260 275 243 254 302 1,075
Adj PAT 195 70 218 260 275 243 254 302 1,075
YoY Change (%) - - 378.3 24.0 41.3 246.0 16.5 16.6 44.7
Margins (%) 8.8 3.4 9.5 9.8 10.8 9.9 11.0 10.6 10.6
E: MOSL Estimates

April 2017 287
March 2017 Results Preview | Sector: Diversified
SRF
Bloomberg SRF IN CMP: INR1,655 TP: INR1,825 (+10%) Buy
Equity Shares (m) 57.4 Flouro chemicals (refrigerants) business is expected to post a strong
quarter backed by exports business. We expect company to achieve
52-Week Range (INR) 1970 / 1166
9000t for full-year FY17.
1,6,12 Rel Perf. (%) 1 / -20 / 14
Specialty chemicals continue to remain under pain in 4QFY17. We
Financial Snapshot (INR Billion) reiterate that structurally there are no issues with the company.
Y/E March 2016 2017E 2018E 2019E
We expect SRFs revenue to grow 11% YoY to INR12.3b, and EBITDA
Sales 46.0 47.3 55.2 63.8
to increase 13% YoY to INR2.5b. We expect EBITDA margin to
EBITDA 9.6 10.0 11.6 13.8
NP 4.2 4.7 5.7 7.3
improve 50bp YoY to 20.5%, and adjusted PAT to grow 11% YoY to
EPS (INR) 73.7 82.4 99.9 125.1
INR1.16b. Buy.
EPS Gr. (%) 39.7 11.8 21.3 25.3
BV/Sh. (INR) 456.8 523.8 603.4 705.4
RoE (%) 17.0 16.5 17.4 19.1
RoCE (%) 19.4 18.4 20.8 24.5
Valuations Key things to watch for
P/E (x) 22.4 20.0 16.5 13.2 Growth in chemicals segment (particularly specialty chemicals).
P/BV (x) 3.6 3.1 2.7 2.3 Client additions and capex plans in specialty chemicals.
EV/EBITDA (x) 11.6 11.2 9.7 7.8 Margins in technical textile and packaging segment.
EV/Sales (x) 2.4 2.4 2.0 1.7

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 12,214 11,628 10,956 11,150 12,192 11,438 11,330 12,354 45,948 47,307
YoY Change (%) 5.7 -2 -2 3 0 -2 3.4 11 1.2 3.0
Total Expenditure 9,547 9,144 8,619 8,918 9,352 9,112 9,014 9,822 36,228.1 37,348.8
EBITDA 2,667 2,484 2,337 2,232 2,841 2,326 2,317 2,533 9,720 9,958
Margins (%) 21.8 21.4 21.3 20.0 23.3 20.3 20.4 20.5 21.2 21.1
Depreciation 725 733 714 725 734 735 744 755 2,897 2,970
Interest 344 334 312 315 282 242 270 280 1,304 1,066
Other Income 45 68 48 106 55 70 61 71 268 259
Extra-Ord expense -8 103 65 -57 -63 -72 45 0 103 -90
PBT 1,652 1,382 1,293 1,356 1,943 1,491 1,319 1,569 5,683 6,272
Tax 522 361 325 268 501 298 271 408 1,476 1,474
Rate (%) 31.6 26.1 25.1 19.8 25.8 20.0 20.6 26.0 26.0 23.5
Reported PAT 1,129 1,021 969 1,088 1,442 1,193 1,048 1,161 4,207 4,798
Adj PAT 1,124 1,097 1,017 1,042 1,395 1,135 1,083 1,161 4,284 4,729
YoY Change (%) 21.3 34 32 80 24 3 6.4 11 41.5 10.4
Margins (%) 9.2 9.4 9.3 9.3 11.4 9.9 9.6 9.4 9.3 10.0
E: MOSL Estimates

April 2017 288
March 2017 Results Preview | Sector: Consumer
TTK Prestige
Bloomberg TTKPT IN CMP: INR6,066 TP: INR5281 (-15%) Neutral
We expect revenue to bounce back and grow by 21% YoY to
INR3.7b in 4QFY17, including revenue from Horwood acquisition.
52-Week Range (INR) 6550 / 4212
1,6,12 Rel Perf. (%) 6 / 8 / 20
The impact of demonetization is behind us, and TTK is expected to
see gradual revenue pick up.
Financial Snapshot (INR Billion) We expect EBITDA margin to contract 50bp YoY to 10.5%.
Y/E March 2016 2017E 2018E 2019E Consequently, we expect EBITDA to increase 15% YoY to INR390m.
Sales 15.3 17.2 20.0 22.6
Thus, we expect adjusted PAT to grow by 11% to INR241m. Neutral.
EBITDA 1.8 2.0 2.6 3.2
NP 1.2 1.2 1.6 2.1
EPS (Rs) 100.7 106.9 137.7 176.0
EPS Gr. (%) 29.6 6.1 28.8 27.8
Sales 620.3 674.2 745.7 843.5
RoE (%) 17.2 16.5 19.4 22.2
RoCE (%) 17.3 16.1 18.5 21.9
Performance of the appliances division post demonetization.
Valuations
Outlook on exports and recent acquisition of Horwood
P/E (x) 61.3 57.8 44.9 35.1
Homeware.
P/BV (x) 10.0 9.2 8.3 7.3
EV/EBITDA (x) 39.3 36.0 27.4 22.2
EV/Sales (x) 4.7 4.2 3.6 3.2
Quarterly Earning Model (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 3,404 4,099 4,372 3,077 3,790 5,011 4,675 3,714 14,953 17,184
YoY Change (%) 1.2 7.3 13.9 7.5 11.3 22.2 6.9 20.7 7.7 14.9
EBITDA 378 524 580 338 470 621 555 390 1,820 2,028
Margins (%) 11.1 12.8 13.3 11.0 12.4 12.4 11.9 10.5 12.2 11.8
Depreciation 47 49 52 62 56 55 58 60 209 229
Interest 6 7 5 2 23 22 15 18 20 79
Other Income 28 24 21 30 18 17 18 25 103 76
PBT 317 492 544 303 327 561 500 337 1,656 1,714
Tax 97 152 172 87 109 172 154 96 508 524
Rate (%) 30.6 30.8 31.7 28.6 33.4 30.6 30.8 28.6 30.7 30.6
Reported PAT 220 340 372 216 217 389 347 241 1,148 1,189
Adj PAT 246 340 372 216 272 389 347 241 1,174 1,246
YoY Change (%) -7.4 21.7 32.6 131.2 10.8 14.3 -6.9 11.3 29.6 6.1
Margins (%) 7.2 8.3 8.5 7.0 7.2 7.8 7.4 6.5 7.9 7.3
E: MOSL Estimates

April 2017 289
Motilal Oswal India Strategy Gallery
NOTES
April 2017 291

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April 2017

India Strategy | Get on track please !

The Great Divide

The Great Divide

Earnings growth at 11-quarter high, but quality remains weak

Key sectoral trends/highlights

Four key trends to watch out for:

has seen the adverse impact of demonetization on earnings of select consumer-

Model portfolio changes

4QFY17 PREVIEW Dj vu: Few cyclicals drive 4QFY17

Dj vu: Normalization of earnings in few sectors to drive 4QFY17

Four key trends coming to the fore

Earnings bedrock of yesteryears no longer in the pink of health: The bedrock of

Look beyond the base effect; underlying operating metrics weak

Snapshot of sector performance:

Exhibit 1: Growth bounces back on low base

MOSL Universe headline performance at multi-quarter high

Margin LPA: 19.5%

33.2 21.2 27.9

5.6 5.7 7.8

1.6 0.1 0.3 2.0

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

MOSL Universe PAT

Margin LPA: 10.8%

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Source: MOSL Source: MOSL

MOSL Universe PAT to benefit from low base in several sectors

Exhibit 9: Sectoral quarterly PAT growth trend (%)

Exhibit 10: Key Assumptions Commodities bottoming out in 4QFY17

Interesting sectoral trends

Key PAT de-growth sectors

PAT Growth Ex OMCs (%)

Four key trends for 4QFY17

1. Unprecedented Currency appreciation in 4QFY17

2. Earnings bedrock of yesteryears no longer in the pink of health

Exhibit 16: Technology sectors profit growth has decelerated sharply

Exhibit 17: Healthcare profits have also moderated sharply

21 27 45 52 52 66 86 100 119 169 176 201 224

68 Axis + ICICI earnings as % of total private banks earnings pool

3. Tailwinds from commodity costs deflation is a thing of past

Exhibit 20: Operating margins to contract after eight consecutive quarters of

PAT Margin LPA: 10.8%

Source: MOSL, Bloomberg

4. Policy reforms: Long-term positive; impacts earnings in short term

Cyclicals driving entire 4QFY17 earnings growth

Exhibit 25: Cyclicals expected to drive entire earnings growth in 2H

Oil & Gas

Source: MOSL Source: MOSL

Defensives to drag 4QFY17 earnings

Exhibit 27: PSU Banks to contribute 80% of PAT growth in 4QFY17

Nifty sales and PAT growth to be 12% and 10%, respectively

Exhibit 29: Nifty sales to grow 12% in 4QFY17, best in 11 quarters

Exhibit 32: Nifty sectoral 4QFY17 PAT chg. YoY (%)

Exhibit 33: Nifty companies 4QFY17 performance (INR b)

Intra-sector 4QFY17 earnings divergence (%)

Retail -12 TTAN: -9,JUBI: -26

UTCEM: -16,ACEM: -26,

TCOM IN: -33,

Key Sectoral Highlights - 4QFY17

4QFY17E YoY (%)

8.0 2.2 LP -4.6

4QFY17E YoY (%)

4QFY17E YoY (%)