June 2017

Investment Strategist
June 2017
GLOBAL & SECTORAL INDICES
Change in the Global Indices

Indices As on 31 May 2017 As on 28 Apr 2017 % Chg
Sensex 31,146 29,918 4.1%
Nifty 9,621 9,304 3.4%
Dow Jones 21,009 20,941 0.3%
Nasdaq 6,199 6,048 2.5%
FTSE 7,520 6,248 20.4%
DAX 12,615 12,438 1.4%
CAC 40 index 5,284 5,267 0.3%
Hang Seng 25,661 24,615 4.2%
China 3,117 3,155 -1.2%
Japan 19,651 16,666 17.9%
Spain 10,880 10,716 1.5%
Italy 20,732 20,609 0.6%
Sectoral Indices
Indices As on 31 May 2017 As on 28 Apr 2017 % Chg
CNX midcap 17,510 18,086 -3.2%
BSE midcap 14,625 14,798 -1.2%
BSE small cap 15,080 15,373 -1.9%
FMCG 25,842 23,675 9.2%
Capital Goods 17,596 17,866 -1.5%
Banking 26,547 25,325 4.8%
PSU 8,677 9,020 -3.8%
Oil & Gas 14,247 14,455 -1.4%
Auto 24,162 22,782 6.1%
Tech 10,230 9,619 6.3%
Healthcare 13,564 15,019 -9.7%
Metal 11,248 11,303 -0.5%
Realty 1,931 1,924 0.4%
Investment Strategist June 2017 2

MONTHLY FUNDAMENTAL OUTLOOK
Market sentiment was Cement, etc) and

buoyed during last month Government spending
by positive developments On a medium to long term basis, we (Roads, Railways &
on GST, early onset of remain positive and expect Defense). The likely
monsoons as well as fundamentally sound stocks to attract favorable resolution of
strong global markets. buying at lower levels. We have a NPAs for banks is also likely
Finalization of GST rate positive bias on sectors which could be to be positive for the
structure and higher banking sector, but we will
probability of the GST favorably impacted by the
watch for finer details. Key
launch meeting the July implementation of GST (Logistics, Auto, risks to our
deadline, augurs well for Media, Building Materials, Cement, etc) recommendation would
the government reform and Government spending (Roads, come from geopolitical
initiatives. Railways & Defense). concerns globally, decline
Going ahead, markets will in foreign inflows, sharp
focus on the policies of currency movements and a
President Trump along with US Fed rate hike spike in oil prices.
decision. Elections in Britain and its impact on
Brexit along with oil price movement are also Domestic events to watch out for
crucial for the markets. Domestically, markets will GST implementation on track for implementation
watch out for the smooth implementation of GST. on 1st July, 2017
Progress and geographical spread of monsoons During last month, the Goods and Services Tax (GST)
will be important for agri-related, cement, Council finalized the most-awaited tax rates for most
automobile and FMCG companies. On the other goods and services. Government has ensured that the
hand, we expect RBI to maintain status quo in its rate structure of GST is non-inflationary. Government is
June meeting, as CPI has cooled off significantly all set to meet the target of GST implementation of 1st
and GDP data has surprised on the downside July, 2017. The Government has also allowed 60%
(though it is lag data). credit for taxes already paid, where GST rate will be
Benchmark indices are currently trading at around 18% or more. Most of the decisions of the GST council
16.5x FY19 consensus estimates, which is higher have been in line with industry / market expectation and
than the long-term average. While consumption is this should lead to an on-time implementation of GST,
supporting growth, private sector capex revival is as the IT infrastructure is also ready. The next meeting
a must for the growth rates to improve. Markets of the Council will discuss and finalise anti-profiteering
have been sustaining at higher levels on the back clauses, which will be keenly watched.
of consistent liquidity flows, especially domestic. Initial challenges in GST implementation include de-
At this juncture, some profit-booking cannot be stocking in trade supply chain, input tax credit and
ruled out. However, on a medium to long term implementation-related initial hurdles. Markets will
basis, we remain positive and expect hope for a smooth transition to the new system, which
fundamentally sound stocks to attract buying at will greatly increase the ease of doing business and will
lower levels. lead to cost savings, especially logistics-related costs.
We have a positive bias on sectors which could be Over a longer term, GST will drive formalization of the
favorably impacted by the implementation of GST economy while enhancing the tax base.
(Logistics, Auto, Media, Building Materials,
Market performance - sector wise (May 2017) Benchmark indices - India

Sensex (LHS) Nifty (RHS)
12.0%
30,000 9700
9.0%
6.0%
26,000 7950
3.0%
0.0%
22,000 6200
-3.0%
-6.0%
-9.0% 18,000 4450
-12.0%
14,000 2700
Source: Bloomberg Source: Bloomberg
Investment Strategist June 2017

Monsoon expected to be normal this year cent in the fourth quarter. Investments have been slow-
India heavily depends on the rainfall brought on by ing since the beginning of the year - from 7.4 per cent
southwest monsoon, to irrigate its crops and fulfil other in the first quarter of FY17 to 1.7 per cent in the third
water needs. As indicated by IMD last month, monsoon quarter.
arrived early in Kerala and North East. Normally mon- Framework guidelines under NPA ordinance to be
soon advances northwards in surges, and covers the en- finalized in this month
tire country around July 15. As per both IMD and
Last month, the government gave wide-ranging legisla-
Skymet, monsoon is expected to be normal this season
tive powers to the Reserve Bank to issue directions to
and weak El Nio conditions could likely develop only in
lenders to initiate insolvency proceedings for the recov-
the latter half of the season. If this turns out to be the
ery of bad loans. Out of the total non-performing assets
case, it would be the second successive year of good
of nearly Rs.8trn, nearly Rs.4-5trn are being contributed
monsoon and should lift the consumption demand from
by 40-50 accounts. The Reserve Bank is likely to an-
rural India.
nounce the guidelines to operationalise NPA ordinance
Apart from the Kharif season, the impact of the mon- so as to expedite the recovery of bad loans.
soon is also crucial for Rabi crops as it has an impact on
The framework would include creation of a separate
the ground water and also reservoirs which are critical
cell to identify issues pertaining to non-performing as-
for Rabi crops irrigation. Although, the contribution of
sets (NPAs) or bad loans and have a clause providing
Agriculture in gross domestic product (GDP) has de-
definitive time-frame for the resolution process. Till
clined in recent years, rural incomes continue to remain
now, banks had been reluctant to resolve NPAs through
a strong demand driver for Tractors, 2W, FMCG, Agro-
settlement schemes or sell bad loans with hair cut to
chemicals and Cement sectors.
asset reconstruction companies, due to fear of judicial
RBI expected to maintain status quo on rates investigation. With RBI having more legislative powers,
After GDP growth fell sharply to 6.1% in Q4FY17, Re- the issue to resolve NPAs is expected to be less politi-
serve Bank of India's monetary policy committee (MPC) cized and hence would help in resolving the NPA mess
is expected to keep the repo rate unchanged in its faster.
meeting in June 2017. It is also expected to moderate Lenders including Bank of India, IDBI Bank Ltd., Indian
its neutral stance as investment growth continues to be Overseas Bank and Syndicate Bank have been down-
sluggish and with CPI inflation coming in at a mere graded by international credit assessors. IDBI Bank be-
2.9%. Expectations of a good monsoon and rate struc- came the first lender to fall under the central bank's
ture of GST should also help in keeping inflation rate tightened Prompt Corrective Action (PCA), which could
muted, going ahead. force banks to curb lending or merge with stronger
firms. Dena Bank have also been subjected to PCA and
In April 2017, the MPC had indicated that it expects the
more banks may come under PCA, goings ahead.
CPI inflation to average 4.5% in H1 FY2018, before ris-
ing to 5.0% in H2 FY2018. Given the easing of inflation RBI is expected to come up with clear guidelines this
risks, the MPC may revise its CPI inflation outlook for month on how this framework will work. Once the NPA
FY2018 in the upcoming policy meeting. issue is resolved, public sector banks will be able to
raise further capital which would enhance lending for
Additionally, the MPC may revisit its growth forecast of
private sector investment. Private sector is currently
7.4% for FY2018, following the release of GDP and GVA
reeling under low capacity utilization levels, which
data for FY17 which have surprised on the downside.
would recover once demand starts recovering.
The new GDP estimates showed gross fixed capital for-
mation, which signifies investment, contracting 2.1 per
Rupee/US$ Brent Crude (US$/bl)
72 120
67
95
62
57 70
52
45
47
42 20
Source: Bloomberg Source: Bloomberg

Global events to watch out for OPEC members market share but may also result in fur-
ther weakening of Brent.
US fed rate hike a possibility in June meeting
FPI flows ...
The Fed held off on raising rates in its previous meeting,
but most investors are expecting the central bank to Foreign portfolio investors (FPIs) have put in close to al-
hike again at its June 14 meeting. Market expectations most Rs.298 bn in equity markets in last one month. Ex-
for a June rate hike are 89%. US Federal Reserve May pectations of faster reform measures including GST
meeting minutes also indicated an unwinding of its mas- implementation and expectations of normal monsoons
sive $4.5 trillion balance sheet likely towards year-end. also drove buying by FIIs. DII flows have kept pace with
More information is expected from the Fed on how it FII flows. Post demonetization, underperformance of
intends to unwind its balance sheet. real physical assets like gold and real estate have sup-
ported the movement of capital towards financial assets
Britain election outcome eyed closely like equities. DIIs bought stocks worth Rs ... bn during
British voters are set to cast their votes in the general the month.
election on June 8. UK Prime Minister Theresa May had For 5MCY17, FIIs were net buyers to the tune of Rs.403
called the snap election in a bid to strengthen her hand bn while Mutual funds were net buyers to the extent
in Brexit negotiations, to win more time to deal with the of Rs.60 bn.
impact of the divorce and to strengthen her grip on the
Conservative Party. If May fails to win an overall major- FII & Mutual Fund investment (Rs Cr)
ity, she would be forced to strike a deal with another FII MF
party to continue governing either as a coalition or a 40,000
minority government. That would raise questions about 30,000
the future of Brexit, Britain's $2.5 trillion economy and
British policy on a range of issues including corporate 20,000
taxation and government spending and borrowing. 10,000
The European Central Bank (ECB) is committed to main- 0

taining its massive levels of monetary stimulus, but the -10,000
bank's economists could re-evaluate that stance in
June. The improving outlook in the European economy -20,000
may prompt investors to look for signs that ECB may be
about to start on the road to tighter monetary policy.
Oil Source: Bloomberg
Last month, the Organization of the Petroleum Export-

Recommendation
ing Countries and some non-OPEC producers agreed to
extend a pledge to cut supplies by around 1.8 million Benchmark indices are currently trading at around 16.5x
barrels per day (bpd) until the end of the first quarter of FY19 consensus estimates, which is higher than the
2018. Output from the Organization of the Petroleum long-term average. While consumption is supporting
Exporting Countries (OPEC) rose in May, the first growth, private sector capex revival is a must for the
monthly increase this year. Strong efforts to comply growth rates to improve. Markets have been sustaining
with the deal by many OPEC members have been partly at higher levels on the back of consistent liquidity flows,
undone recently by increases in production by countries especially domestic. At this juncture, some profit-book-
with exemptions, such as Libya and Nigeria. Continued ing cannot be ruled out. However, on a medium to long
increase in Libyan output is not only eating into other term basis, we remain positive and expect fundamen-
tally sound stocks to attract buying at lower levels.
IIP growth (%) We have a positive bias on sectors which could be fa-
vorably impacted by the implementation of GST (Logis-
12.0
tics, Auto, Media, Building Materials, Cement, etc) and
8.0 Government spending (Roads, Railways & Defense). The
likely favorable resolution of NPAs for banks is also
4.0 likely to be positive for the banking sector, but we will
watch for finer details. Key risks to our recommendation
-
would come from geopolitical concerns globally, decline
(4.0) in foreign inflows, sharp currency movements and a
spike in oil prices.
(8.0)
Source: Bloomberg; Note: IIP growth since April 2011 has been recompiled
using new series of WPI

Preferred picks
Domestic Cyclicals / Investment oriented sectors
Sector Stocks
Automobiles Maruti Suzuki, HeroMoto Corp, FIEM Industries

Building Material Century Ply, Kajaria Ceramics
Capital Goods, Engineering Cummins India, Greaves Cotton, ABB, Engineers India, Time Technoplast
Cement Ultratech Cement, Shree Cement, India Cement
Construction IRB Infra, NCC, PNC Infratech
FMCG ITC
Logistics, Transportation Adani Ports, Allcargo, VRL Logisstics
Oil & Gas Petronet LNG, Castrol India, GSPL
Others Aksharchem, Mold-Tek Packaging, Gujarat Alkalies, Indo Count Industries
Paints Asian Paints, Kansai Nerolac
Source: Kotak Securities - Private Client Research
Export oriented / Defensive sectors

Sector Stocks
IT Infosys, NIIT Ltd

Media DB Corp

MONTHLY DERIVATIVE OUTLOOK
Looking Back Nifty Options Concentration

After making a low of 9431 in the last week of May, Nifty options concentration seen at 9700CE and 9500PE
Nifty rallied close to 300 points and made an all-time
high of 9709. External factors combined with positive Nifty Options Concentration
results in sectors pushed the index to all time high lev-
els. Stocks gained significantly with Banking, FMCG and
Auto stocks outperforming, while Pharma and IT were
the laggards.
Looking Ahead
Nifty continues to trade with a positive bias and we
have not seen any major signs of reversal yet. The last
few days have been corrective in nature, and Nifty has
formed a putative low of 9560.
Above 9630 Nifty may be propelled up to the levels of
9850-9900 in the near -term.
Source: nseindia.com
We may witness sector based activity in phases. Metals
to gain strength. Capital goods and Banking to remain CE - Call European
positive. Pharma stocks expected to witness recovery. PE - Put European
Negative bias is seen in IT.
Strike Price - Strike price for the contract
Recommendation
Nifty Long Call: Buy 9700 Call option @ 40 with Stop
loss below 20 for a target of 80/100.
Stock Specifics
SECTOR POSITION STOCK/OPTIONS VIEW RATIONALE
Metals BUY TATASTEEL Buy TATASTEEL around 515 with The stock has broken out of a
SL of 498 for a target of 540/550 Symmetrical Triangle pattern.
The prevailing up trend expected
to continue.
Metals BUY HINDZINC Buy HINDZINC around 236-240 Higher bottom seen on monthly
SL 230 TGT 265 performance in the recent past. charts
For queries and feedback you can e-mail us at ksderivative.desk@kotak.com

MONTHLY TECHNICAL OUTLOOK
MONTHLY SNAPSHOT TREND WATCH
Monthly Open : 9340

Nifty Short Term Trend
Up (Down below 9650 on a closing basis)
Monthly High : 9650
Nifty Medium Term Trend
Monthly Low : 9270
Up (Down below 8700 on a closing basis)
Monthly Close : 9621
Nifty Long Term Trend
Change : Gain of 3.41% Up (Down below 7900 on a weekly closing basis)
NIFTY : 9657 BANK NIFTY: 23745
Range : 9640-9690 Range : 23670-23860
Resistance : 9675-9690-9710-9735-9750 Resistance : 23860-23950-24030-24090
Support : 9640-9630-9610-9570-9550 Support : 23670-23610-23530-23470
SIMPLE MOVING AVERAGE (SMA) SIMPLE MOVING AVERAGE (SMA) - BANK NIFTY
20 Days 50 Days 200 Days 20 Days 50 Days 200 Days
9449 9291 8732 22905 22109 20061
On monthly basis, we feel that the market has entered into time based consolidation and till the market is above
9550 it would remain strong or range bound between 9550 and 9710. On the higher, 9690 and 9710 are hurdles
and in case if we see the market is crossing 9710 in a shorter span of time then it would lift indices to new highs
may be in the region of 9900/10,000. Traders should be aggressive to trade long if Nifty crosses 9710. Below 9550,
Nifty has scope to correct further but that looks unlikely in the near term as Metals, Private bank and Real Estate
stocks are attracting funds at each minor decline.
NIFTY Monthly
NSE Nifty [N59901] 9603.55, 9709.30, 9560.80, 9651.45, 15355641856 0.31% 2515.23
Price PSar(0.02,0.02,0.20) Lnr IRIS 30/04/12 Mon
9500 Op 5296.35
Hi 5378.75
9000 Lo 5154.30
Cl 5248.15
8500 PS 4553.13
8000
7500
7000
6500
6192.35
7 6000
5500
5000
4500
4000
3500
3000
2500
2000
Source : www.SpiderSoftwareIndia.Com 1500

Vol Cr
Qt 1167.33
2250
1500
750
ADX(14,14)
+D 19.33
40.00 -D 19.76
AD 11.94
30.00
20.00
10.00
04:JS N 05:J M J A O D 06:F J J A O D 07:F J J A O D 08:F J J A O D 09:F J J A O D 10:F J J A O D 11:F J J A O D 12:F J J A O D 13:F J J A O D 14:F J J A O D 15:F J J A O D 16:F J J A O D 17:F Mon

ONE MONTH PORTFOLIO - JUNE 2017
Nifty : 9621
Stock Weight MCap Current PE (x)
(%) (Rs mn) Price FY17E FY18E Comment
(Rs)
ITC 10 3,342,394 278 32.7 27.8 Reassuring signals from the government, as excise duty hike
well below past five years' average
Discount to average FMCG multiples provides protection
from downsides
FIEM Industries 10 13,438 1,018 28.1 19.3 Two wheeler demand expected to improve in FY18
FIEM's key customers growing at a strong pace augurs
well for the company.
Time Technoplast 9 23,837.4 114 15.8 11.4 Robust earnings growth
Seeing good demand for pipes and packaging materials
Guj. Alkalies & Chem 9 34,296 467 7.2 7.1 Caustic soda prices have risen by ~34% to US$429/tonne in
the last six months. We expect the prices to remain firm for
the next one or two years, which would drive the earnings
for GACL in FY18E & FY19E.return ratios would also remain
strong with RoE of ~24% and net margin of 16% at the end
of FY19E.
Castrol 9 216,766 438 32.1 28.5 We have observed that for Castrol Quarter 2 (April- June)
and Quarter 4 (Oct-Dec) of the calendar year are generally
the best quarters.
The company has gained market share in passenger vehicle
oil segment. New product launches with further boost
lubricant sales.
The company continues its focus on volume growth and
investment behind power brands.
Engineers India 9 112,335 167 29.2 22.2 EIL expected to benefit from recovery in spending by major
hydrocarbon players like HPCL, BPCL and IOC. Company
likely to expand margins in FY17/FY18.
VRL Logistics 9 30,816 338 34.1 23.8 Company would be one of the largest beneficiaries of the
impending GST bill and Motor Vehicle Act
The company has effective practises enabling it to deliver
superior returns over peers
On a low base of FY17, we estimate earnings growth of 43%
and RoCE of 26.1% /RoE of 21% for FY18.
Hindustan Media 9 21,286 290 11.0 10.1 Stock potential beneficiary of UP/ Uttarakhand elections
Robust business at cheap valuations
Shree Cement 9 664,225 19,065 26.0 20.7 Company is likely to benefit from volume expansion as well
as recent cement price hikes taken in its key markets.
Company is likely to take its capacity to almost 39MT by
FY19 which is likely to support its volume growth going
forward
Indo Count Ind 9 40,743 206 15.0 12.7 Indo Count Industries Ltd (ICIL) is a leading player in the
global home textiles and apparel industry, focusing on
bedding products
With high ATO and strong margins, the company is
operating at high RoCE of 43% in FY16, which is best
amongst the peers
Stock is trading at attractive valuations
NIIT Limited 8 13,290 80 23.6 10.7 While 3Q revenue growth has been muted, we expect the
same to bounce back in 4QFY17 and beyond.
Initiatives of the new management have led to consistent
improvement in revenue growth and earlier-than-expected
benefits on margins.
Source : Kotak Securities - Private Client research

FUNDAMENTAL STOCK RECOMMENDATION
Stock Recommendations
Latest Price Price as Latest Upside/ Latest Mkt EPS (Rs) PE (x) RoE (%) P/ABV (x)
Name of the Company Reco ^ as on on latest price (Down- Report Cap
5-Jun Report target^ side) Date (Rs mn) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E
(Rs) (Rs) (Rs) (%)
The Pitch Report

The South Indian Bank BUY 29 26 33 16.8 18-May-17 51,357 2.2 2.5 13.0 11.4 9.0 10.5 1.3 1.2
S
Latest Price Price as Latest Upside/ Latest Mkt EPS (Rs) PE (x) RoE (%) EV/EBIDTA (x)
Name of the Company Reco^ as on on latest price (Down- Report Cap
(Rs) (Rs) (Rs) (%)
Agri-Products
Insecticides (India) Ltd BUY 697 642 721 3.4 31-May-17 14,407 28.1 37.1 24.8 18.8 13.3 15.4 14.4 11.7
Finolex Industries BUY 661 601 676 2.3 30-May-17 81,914 28.4 31.9 23.3 20.7 21.7 16.3 14.7 13.1
Auto & Auto Ancillary

Apollo Tyres ACCUMULATE 248 246 261 5.2 08-May-17 125,093 21.6 24.2 11.5 10.3 16.3 15.8 7.6 7.0
Ashok Leyland ACCUMULATE 93 92 98 5.4 30-Jan-17 264,678 4.2 5.5 22.1 16.9 20.2 22.4 12.7 10.0
Bajaj Auto Ltd ACCUMULATE 2,898 2,973 3,124 7.8 22-May-17 838,797 132.3 149.4 21.9 19.4 26.1 23.7 16.2 14.0
Eicher Motors Ltd # ACCUMULATE 29,326 25,833 27,203 (7.2) 08-May-17 791,789 573.3 760.3 51.2 38.6 51.0 43.0 34.2 25.5
Escorts Ltd ACCUMULATE 745 671 710 (4.7) 30-May-17 91,144 2.0 5.0 372.6 149.1 1.5 3.6 8.4 4.2
FIEM Industries Ltd BUY 882 847 1,254 42.1 14-Mar-17 11,646 36.2 52.7 24.4 16.7 13.6 15.2 9.5 7.8
Gabriel India Ltd BUY 138 130 149 8.1 17-May-17 19,843 5.7 7.4 24.2 18.6 20.0 21.6 13.2 10.5
Hero MotoCorp Ltd ACCUMULATE 3,835 3,462 3,691 (3.8) 12-May-17 766,990 169.1 197.7 22.7 19.4 37.4 36.3 15.7 13.2
Mahindra & Mahindra ACCUMULATE 1,423 1,278 1,410 (0.9) 13-Feb-17 876,845 62.4 63.7 22.8 22.3 15.2 14.9 17.6 15.0
Maruti Suzuki India Ltd ACCUMULATE 7,126 6,374 6,753 (5.2) 28-Apr-17 2,151,961 242.9 278.7 29.3 25.6 23.2 22.9 19.0 16.5
Motherson Sumi Systems Ltd REDUCE 455 424 439 (3.4) 22-May-17 601,502 11.8 15.5 38.5 29.3 27.5 23.6 14.7 10.3
Tata Motors BUY 478 451 539 12.7 24-May-17 1,517,648 22.0 38.9 21.7 12.3 10.7 20.4 5.2 4.3
TVS Motors SELL 542 503 448 (17.4) 28-Apr-17 257,694 11.7 17.2 46.4 31.5 25.7 30.1 30.7 20.7
(Rs) (Rs) (Rs) (%)
Building Material
Century Plyboards (India) Ltd BUY 282 241 277 (1.6) 25-May-17 62,634 8.3 10.0 33.9 28.2 28.7 26.1 23.4 17.9
Greenply Industries Ltd ACCUMULATE 267 280 294 10.2 30-May-17 32,203 11.1 12.0 24.0 22.2 19.7 17.3 13.9 13.2
Kajaria Ceramics Ltd ACCUMULATE 705 715 757 7.4 16-May-17 106,583 15.9 21.9 44.3 32.2 24.6 27.1 21.7 17.4
Supreme Industries Ltd REDUCE 1,150 1,085 1,110 (3.5) 02-May-17 146,075 29.9 35.1 38.5 32.8 29.5 29.3 19.6 17.4
Capital Goods & Engineering

ABB Ltd * ACCUMULATE 1,437 1,538 1,621 12.8 10-May-17 304,515 26.0 43.8 55.3 32.8 15.6 22.4 30.9 19.7
AIA Engineering SELL 1,452 1,430 1,160 (20.1) 30-May-17 136,479 48.4 54.8 30.0 26.5 18.6 18.3 19.9 18.0
Bajaj Electricals Ltd ACCUMULATE 358 263 290 (18.9) 10-Feb-17 35,331 11.0 16.1 32.5 22.2 13.7 17.9 13.0 10.1
Bharat Electronics ACCUMULATE 170 153 166 (2.4) 31-Mar-17 408,120 7.4 8.2 23.0 20.7 17.3 16.5 17.8 15.9
BHEL REDUCE 140 150 155 10.9 30-May-17 341,968 2.0 5.0 69.9 28.0 1.5 3.6 19.0 8.4
Blue Star Ltd ACCUMULATE 643 676 727 13.2 12-May-17 57,761 13.1 21.8 49.0 29.5 13.4 20.2 29.3 19.6
Carborundum Universal Ltd BUY 298 294 338 13.4 11-May-17 55,754 8.8 13.6 33.9 21.9 12.2 17.1 16.0 11.7
C G Power & Insustrial Solution SELL 85 94 84 (0.7) 29-May-17 54,247 1.7 3.3 49.7 25.6 2.4 4.5 8.3 8.0
Cummins India ACCUMULATE 933 980 1,018 9.1 22-May-17 258,544 26.5 29.8 35.2 31.3 22.2 22.7 31.9 29.8
Elgi Equipment Ltd SELL 212 206 142 (33.1) 17-May-17 33,536 4.7 6.0 45.2 35.4 13.1 15.2 25.4 20.5
Engineers India Ltd BUY 159 162 195 22.8 24-May-17 107,065 4.8 5.2 33.1 30.5 12.0 12.5 25.9 23.9
Greaves Cotton REDUCE 159 174 176 10.7 05-May-17 38,832 7.3 8.8 21.8 18.1 20.5 23.5 13.7 10.6
Havells India Ltd SELL 486 514 460 (5.3) 12-May-17 303,190 9.6 13.3 50.6 36.5 29.0 32.7 35.1 24.2
Larsen & Toubro ACCUMULATE 1,805 1,788 1,911 5.9 30-May-17 1,682,167 63.5 68.3 28.4 26.4 13.6 13.3 22.3 19.6
Praj Industries Ltd REDUCE 76 78 81 6.4 26-May-17 13,470 2.5 3.0 30.4 25.4 6.7 7.9 16.6 13.2
Siemens India * * SELL 1,384 1,421 1,170 (15.5) 16-May-17 458,203 25.2 33.5 54.9 41.3 12.9 15.4 36.2 28.4
Thermax SELL 985 1,012 951 (3.5) 01-Jun-17 117,215 20.2 28.1 48.8 35.1 7.1 10.0 24.2 22.8
Time Technoplast Ltd BUY 164 152 178 8.5 05-Jun-17 34,297 7.1 10.2 23.1 16.1 11.6 14.0 10.2 8.7
Va Tech Wabag Ltd ACCUMULATE 678 677 711 4.8 29-May-17 35,945 18.9 33.3 35.9 20.4 9.9 15.8 11.8 10.9
Voltamp Ltd BUY 1,258 1,295 1,452 15.4 17-May-17 12,704 67.0 81.0 18.8 15.5 14.0 15.0 18.3 15.7
Voltas Ltd ACCUMULATE 495 476 506 2.2 26-May-17 163,581 15.4 18.6 32.1 26.6 19.6 20.3 26.2 22.4
(Rs) (Rs) (Rs) (%)
Building Material
Century Plyboards (India) Ltd BUY 282 241 277 (1.6) 25-May-17 62,634 8.3 10.0 33.9 28.2 28.7 26.1 23.4 17.9
Greenply Industries Ltd ACCUMULATE 267 280 294 10.2 30-May-17 32,203 11.1 12.0 24.0 22.2 19.7 17.3 13.9 13.2
Kajaria Ceramics Ltd ACCUMULATE 705 715 757 7.4 16-May-17 106,583 15.9 21.9 44.3 32.2 24.6 27.1 21.7 17.4
Supreme Industries Ltd REDUCE 1,150 1,085 1,110 (3.5) 02-May-17 146,075 29.9 35.1 38.5 32.8 29.5 29.3 19.6 17.4
Capital Goods & Engineering

ABB Ltd * ACCUMULATE 1,437 1,538 1,621 12.8 10-May-17 304,515 26.0 43.8 55.3 32.8 15.6 22.4 30.9 19.7
AIA Engineering SELL 1,452 1,430 1,160 (20.1) 30-May-17 136,479 48.4 54.8 30.0 26.5 18.6 18.3 19.9 18.0
Bajaj Electricals Ltd ACCUMULATE 358 263 290 (18.9) 10-Feb-17 35,331 11.0 16.1 32.5 22.2 13.7 17.9 13.0 10.1
Bharat Electronics ACCUMULATE 170 153 166 (2.4) 31-Mar-17 408,120 7.4 8.2 23.0 20.7 17.3 16.5 17.8 15.9
BHEL REDUCE 140 150 155 10.9 30-May-17 341,968 2.0 5.0 69.9 28.0 1.5 3.6 19.0 8.4
Blue Star Ltd ACCUMULATE 643 676 727 13.2 12-May-17 57,761 13.1 21.8 49.0 29.5 13.4 20.2 29.3 19.6
Carborundum Universal Ltd BUY 298 294 338 13.4 11-May-17 55,754 8.8 13.6 33.9 21.9 12.2 17.1 16.0 11.7
C G Power & Insustrial Solution SELL 85 94 84 (0.7) 29-May-17 54,247 1.7 3.3 49.7 25.6 2.4 4.5 8.3 8.0
Cummins India ACCUMULATE 933 980 1,018 9.1 22-May-17 258,544 26.5 29.8 35.2 31.3 22.2 22.7 31.9 29.8
Elgi Equipment Ltd SELL 212 206 142 (33.1) 17-May-17 33,536 4.7 6.0 45.2 35.4 13.1 15.2 25.4 20.5
Engineers India Ltd BUY 159 162 195 22.8 24-May-17 107,065 4.8 5.2 33.1 30.5 12.0 12.5 25.9 23.9
Greaves Cotton REDUCE 159 174 176 10.7 05-May-17 38,832 7.3 8.8 21.8 18.1 20.5 23.5 13.7 10.6
Havells India Ltd SELL 486 514 460 (5.3) 12-May-17 303,190 9.6 13.3 50.6 36.5 29.0 32.7 35.1 24.2
Larsen & Toubro ACCUMULATE 1,805 1,788 1,911 5.9 30-May-17 1,682,167 63.5 68.3 28.4 26.4 13.6 13.3 22.3 19.6
Praj Industries Ltd REDUCE 76 78 81 6.4 26-May-17 13,470 2.5 3.0 30.4 25.4 6.7 7.9 16.6 13.2
Siemens India * * SELL 1,384 1,421 1,170 (15.5) 16-May-17 458,203 25.2 33.5 54.9 41.3 12.9 15.4 36.2 28.4
Thermax SELL 985 1,012 951 (3.5) 01-Jun-17 117,215 20.2 28.1 48.8 35.1 7.1 10.0 24.2 22.8
Time Technoplast Ltd BUY 164 152 178 8.5 05-Jun-17 34,297 7.1 10.2 23.1 16.1 11.6 14.0 10.2 8.7
Va Tech Wabag Ltd ACCUMULATE 678 677 711 4.8 29-May-17 35,945 18.9 33.3 35.9 20.4 9.9 15.8 11.8 10.9
Voltamp Ltd BUY 1,258 1,295 1,452 15.4 17-May-17 12,704 67.0 81.0 18.8 15.5 14.0 15.0 18.3 15.7
Voltas Ltd ACCUMULATE 495 476 506 2.2 26-May-17 163,581 15.4 18.6 32.1 26.6 19.6 20.3 26.2 22.4
(Rs) (Rs) (Rs) (%)
Information Technology
Cyient Ltd (Infotech) REDUCE 508 503 526 3.5 21-Apr-17 56,455 32.9 39.7 15.4 12.8 18.0 18.7 9.6 7.8
HCL Technologies REDUCE 858 839 879 2.4 12-May-17 1,211,708 59.8 64.0 14.4 13.4 17.8 16.9 10.7 9.6
Infosys Technologies BUY 959 931 1,064 11.0 17-Apr-17 2,193,604 62.8 65.6 15.3 14.6 21.9 22.4 10.7 10.1
KPIT Technologies SELL 112 128 123 10.0 28-Apr-17 21,386 12.4 14.0 9.0 8.0 16.1 15.7 4.7 3.6
Mphasis Ltd SELL 608 583 544 (10.6) 29-May-17 127,002 38.6 44.4 15.8 13.7 13.5 14.8 10.3 9.5
NIIT LTD BUY 86 89 103 19.6 18-May-17 14,181 3.9 7.1 22.1 12.1 2.1 16.2 18.4 11.5
NIIT Technologies ACCUMULATE 556 470 518 (6.8) 08-May-17 32,606 44.9 46.9 12.4 11.9 16.8 16.1 5.5 5.2
Oracle Financial Services Soft SELL 3,685 3,657 3,209 (12.9) 14-Feb-17 308,609 152.0 179.8 24.2 20.5 35.7 36.6 15.4 13.6
Tata Consultancy Services (TCS) REDUCE 2,604 2,309 2,420 (7.1) 19-Apr-17 5,096,972 133.4 143.1 19.5 18.2 32.6 30.9 14.5 12.9
Wipro Technologies REDUCE 556 495 514 (7.5) 26-Apr-17 1,359,387 34.9 36.4 15.9 15.3 18.0 16.9 10.8 10.0
Zensar Technologies REDUCE 869 840 855 (1.6) 27-Apr-17 37,451 55.2 64.4 15.7 13.5 16.3 16.7 8.3 7.4
Logistics
Adani Port & Special Eco Zone BUY 361 306 350 (3.1) 15-Feb-17 728,418 17.5 20.1 20.6 18.0 22.3 20.8 17.1 15.7
Allcargo Global Logistics BUY 175 166 190 8.9 06-Mar-17 43,987 9.7 12.5 18.0 14.0 10.5 12.2 9.5 7.9
Blue Dart Express SELL 4,450 4,675 4,420 (0.7) 09-May-17 105,471 61.3 91.4 72.6 48.7 27.8 31.1 39.0 28.4
Container Corporation of India SELL 1,173 1,020 880 (25.0) 15-Feb-17 285,846 29.4 35.1 39.9 33.4 8.4 9.5 28.1 23.7
Gateway Distriparks Ltd BUY 246 250 295 20.1 19-May-17 26,525 7.5 12.7 32.7 19.3 7.4 11.6 10.9 8.8
Gujarat Pipavav Port Ltd (GPPL) ACCUMULATE 148 164 180 21.9 12-May-17 62,625 5.1 5.7 29.0 25.9 11.6 11.9 14.1 13.3
VRL Logistics Ltd BUY 327 290 340 3.9 27-Feb-17 29,854 9.9 14.2 33.1 23.1 16.4 21.0 12.9 10.0
Media
D B Corp Ltd BUY 372 369 572 53.7 22-May-17 68,373 20.4 23.7 18.2 15.7 24.7 25.5 10.1 8.4
Dish TV India Ltd SELL 84 91 82 (2.1) 25-May-17 89,163 1.0 1.8 83.8 46.6 NM 37.4 9.7 9.0
Entertainment Network (ENIL) REDUCE 860 743 770 (10.5) 25-May-17 41,022 11.4 15.3 75.4 56.2 6.7 8.2 31.4 22.5
HT Media NR 81 - - - - 18,973 NM NM NM NM NM NM NM NM
Hindustan Media Ventures Ltd ACCUMULATE 281 277 307 9.4 22-May-17 20,586 26.4 25.2 10.6 11.1 19.4 15.7 8.8 7.6
Sun TV Network REDUCE 840 809 844 0.5 29-May-17 330,940 26.2 29.5 32.1 28.5 31.5 40.3 18.2 16.2
TV18 Broadcast ACCUMULATE 36 42 47 30.4 24-Apr-17 61,646 0.1 1.3 360.5 27.3 0.5 6.6 206.3 47.3
Zee Entertainment Ent SELL 525 516 470 (10.4) 11-May-17 513,108 10.4 15.4 50.4 34.1 17.4 19.0 25.9 23.2
(Rs) (Rs) (Rs) (%)
Metals & Mining

Hindustan Zinc ACCUMULATE 235 242 265 12.9 29-May-17 991,471 19.7 21.9 11.9 10.7 27.2 26.5 7.3 5.6
JSW Steel ACCUMULATE 191 193 215 12.9 23-May-17 460,439 14.6 15.9 13.0 12.0 15.7 14.6 6.8 6.1
MOIL Ltd BUY 335 336 410 22.3 05-Jun-17 44,649 23.0 24.3 14.6 13.8 11.2 11.3 8.4 7.2
National Aluminium Co SELL 65 69 60 (8.3) 30-May-17 168,536 3.6 3.9 18.2 16.8 6.8 7.2 13.3 8.1
NMDC Ltd SELL 112 117 110 (2.2) 29-May-17 445,831 8.0 9.4 14.1 12.0 11.3 12.5 9.3 8.4
Tata Sponge Iron Ltd SELL 845 832 760 (10.1) 28-Apr-17 13,014 38.2 56.4 22.1 15.0 6.8 9.3 12.1 6.8
Oil & Gas

Aban Offshore Ltd SELL 181 189 153 (15.6) 30-May-17 10,518 NM NM NM NM NM NM 15.3 12.0
Castrol India Ltd ** ACCUMULATE 413 423 473 14.6 02-Jun-17 204,056 13.6 15.4 30.3 26.8 73.9 78.0 19.1 17.3
Chennai Petroleum Corporation ACCUMULATE 386 416 455 17.8 16-May-17 57,544 64.6 64.3 6.0 6.0 36.5 26.7 5.0 5.3
Gujarat State Petronet Ltd (GSPL) ACCUMULATE 179 174 182 1.6 26-May-17 100,531 9.6 11.4 18.7 15.7 12.6 13.5 10.9 9.4
Indraprastha Gas (IGL) SELL 1,085 1,026 931 (14.2) 29-May-17 151,935 43.3 50.6 25.1 21.4 21.8 21.2 15.3 13.3
Mahanagar Gas Ltd SELL 984 956 827 (16.0) 29-May-17 97,229 39.8 42.5 24.7 23.2 23.4 21.7 14.0 13.2
MRPL ACCUMULATE 132 135 144 9.2 18-May-17 231,001 18.8 16.0 7.0 8.2 39.6 25.8 6.4 5.8
Oil India Ltd ACCUMULATE 302 306 338 12.0 30-May-17 181,412 19.9 31.2 15.2 9.7 3.7 6.3 4.2 3.7
Petronet LNG ACCUMULATE 436 436 457 4.7 11-May-17 327,338 22.7 25.4 19.2 17.2 22.9 21.1 10.8 9.5
Paints
Asian Paints Ltd REDUCE 1,162 1,165 1,175 1.1 12-May-17 1,114,406 21.0 23.9 55.3 48.6 30.4 27.5 35.0 31.2
Berger Paints ACCUMULATE 256 223 240 (6.3) 14-Feb-17 248,371 4.6 5.4 55.7 47.4 24.8 23.9 33.6 29.9
Kansai Nerolac Paints Ltd ACCUMULATE 414 400 430 4.0 04-May-17 222,877 9.3 10.5 44.5 39.4 25.0 24.4 30.1 26.5
Power
NTPC BUY 163 157 184 13.2 30-May-17 1,340,387 12.3 12.1 13.2 13.4 10.3 10.5 7.5 6.7
Tata Power Company Ltd ACCUMULATE 81 84 89 9.9 22-May-17 192,213 5.9 6.9 13.7 11.7 14.3 12.3 8.6 7.4
Real Estate
Phoenix Mills Ltd BUY 435 411 477 9.7 12-May-17 63,010 12.5 17.6 34.8 24.7 9.8 12.6 11.6 9.8
(Rs) (Rs) (Rs) (%)
Shipping
GE Shipping Company SELL 405 428 360 (11.1) 08-May-17 61,537 51.1 60.1 7.9 6.7 8.4 9.2 5.2 4.7
Reliance Defence & Engg Ltd SELL 56 59 48 (14.7) 13-Feb-17 38,880 NM NM NM NM NM NM NM NM
Shipping Corporation of India SELL 75 66 54 (28.0) 13-Feb-17 31,784 2.8 3.1 26.8 24.2 1.8 2.0 10.0 4.3
Others
Aksharchem India Ltd BUY 755 780 960 27.1 30-May-17 5,520 71.0 73.6 10.6 10.3 38.8 29.3 7.1 6.9
Bodal Chemicals Ltd BUY 165 158 210 26.9 29-May-17 18,051 11.3 13.8 14.6 12.0 34.4 31.1 8.1 6.7
Gujarat Alkalies & Chemicals BUY 407 431 590 44.9 18-Apr-17 29,888 49.0 64.7 8.3 6.3 13.6 15.5 5.6 4.8
Indo Count Industries Ltd BUY 182 198 225 23.6 17-May-17 35,937 11.8 16.3 15.4 11.2 30.4 31.5 8.9 7.1
Mirza International Ltd ACCUMULATE 143 147 161 12.8 01-Jun-17 17,124 5.9 8.0 24.2 17.8 15.0 17.8 11.4 9.0
Mold-Tek Packing Ltd ACCUMULATE 275 287 304 10.5 31-May-17 7,620 8.8 12.3 31.3 22.4 15.8 18.9 15.9 12.8
The Pitch Report (Others)

MRF Ltd BUY 68,334 66,856 100,000 46.3 19-May-17 289,737 3,462.0 4,600.0 19.7 14.9 17.0 18.6 10.4 7.9
Balmer Lawrie & Company Ltd BUY 234 232 275 17.7 30-May-17 26,630 14.9 17.0 15.7 13.7 12.5 14.3 7.5 6.4

^ All recommendations are with a 9-12 month perspective from the date of the report/update. Investors are requested to use their discretion while deciding the timing, quantity of investment as well
as the exit.
* Figures for CY16 & CY17
** Figures for CY17 & CY18
# Figures for CY16 & FY18 (15 month period)
## Figures for CY17 & CY18 - September year ending
NR Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s) and/or Kotak Securities policies in circum-
stances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction involving this company and in certain other circumstances.
NM Not Meaningful
PREFERRED PICKS - FUNDAMENTAL
ADANI PORT AND SPECIAL ECONOMIC ZONE Analyst: agarwal.amit@kotak.com

BUY Last report at Rs.355 on 9 June 2017
Current Market Price (Rs) Target Price (Rs) Potential Upside (%) 52 Week H/L (Rs) Mkt Cap (Rs mn)
361 425 17.7% 376 / 195 723264
INVESTMENT ARGUMENT 1 Year Performance

Strategic m oves by APZ in the last 12 m onths including development of a
new port at Vizhinjam, acquisition of Kattupalli port, a transshipment hub 290 Adani Port & Special Economic Zone Nifty
at Mundra, expansion of Dhamra, creating LPG storage in Mundra and
acquisition of Abbot Point Bulk coal Ltd (APB) 230
The company intends to focus on container and Liquid cargo which adds
value to APZ as they have higher margins, lower turnaround time and 170
require lesser investment in term s of infrastructure
APZ now has 10 ports in its fold with the next phase of growth estimated 110
to come from subsidiary ports of Hazira, Dahej and Dhamra.
Management also expects healthy SEZ income over FY17 to FY19E on
the back of addition of new assets at the port 50
Management is also m aking efforts to enhance non-port revenues, taking
measures to bring down cost of debt and other cost and have taken
cognizance of investor concerns with respect to third party transactions
We estimate APZ to deliver earnings CAGR of 9.5% and ROE of ~18% ,
despite a tough global trade environm ent. Source: Bloomberg
RISKS & CONCERNS Share Holding Pattern (%)

Competition from ports on the west coast including JNPT
Weak coal imports Others
Slowing econom y and trade DII
5.5%
Slow capex at SEZs 14.3%
COMPANY BACKGROUND
APZ has entered into an agreem ent with GMB to build, operate and
maintain the port for a period of 30 years till 2031 extendable by another
20 years. Promoter
The port is into providing cargo handling services for bulk, crude and FII 56.3%
container cargo. 23.9%
SECTOR BACKGROUND
Demand for port infrastructure is driven by the 3Cs: coal, containers and
crude. Source: Bloomberg
Quarterly Breakup of volumes (mn tonnes)

FINANCIALS (RS MN) FY17 FY18E FY19E
35.0 Mundra Others
Sales 84,394 96,000 107,060
Growth (%) 16.3 13.8 11.5 30.0
EBITDA 53,956 61,056 68,197 25.0
EBITDA margin (%) 63.9 63.6 63.7 20.0
PBT 39,463 44,272 51,029 15.0
Net profit 38,914 40,745 46,826
10.0
EPS (Rs) 18.9 19.8 22.8
5.0
Growth (%) 34.5 4.7 14.9
0.0
CEPS (Rs) 24.8 25.9 29.0
Q4FY16 Q1FY17 Q2FY17 Q3FY17 Q4FY17
Book value (Rs/share) 84.7 103.8 124.8
Dividend/share (Rs) 1.3 1.5 2.5 Source: Company
ROE (%) 22.3 19.1 18.2
ROCE (%) 10.9 11.3 11.7 Volume Projections (mn tonnes)
Net cash (debt) (186,837) (178,079) (161,907)
250
Net Worcking Capital (Days) 17.1 18.9 19.9 Mundra Total
200
VALUATION PARAMETERS FY17 FY18E FY19E
P/E (x) 19.1 18.2 15.9 150
P/BV (x) 4.3 3.5 2.9
100
EV/Sales (x) 10.8 9.4 8.3
EV/EBITDA (x) 16.9 14.8 13.0 50
0
PRICE PERFORMANCE (%) 1M 3M 6M
FY15 FY16 FY17 FY18E FY19E
7.4 15.3 37.7
Source: Bloomberg, Company, Kotak Securities - Private Client Research Source: Company, Kotak Securities - Private Client Research

BODAL CHEMICALS Analyst: jatin.damania@kotak.com

BUY Last report at Rs.158 on 29 May 2017
165 210 27.3% 172 / 93 18002

Bodal Chemicals (B CL) is a fully integrated manufacturer of d yes
In termediates/dyestuff and has diversified into speciality chemicals. It commands a 2080 Bodal Chemicals Nifty
m arket share of ~3% globally & ~10% of the domestic dyestuff industry. In terms of
dye intermedia tes, market share is at ~5% at the global level & ~20% dom estically. 1680
W ith the increasing capacities of dyestuff, captive co nsum ption of intermediates
should increase in next 2-3 years from 45% to 75% . Besides this, optimum 1280
utilisation of LABSA and Liquid dye stuff would help the company to report 19%
revenue CAGR during the F Y17-FY19E period. 880
EBITDA m ar gin to remain in the range of 17-18% during FY1 8E-FY19E, su pported
by integrated business model and higher captive consum ption of interm ediates. 480
Expectation of strong EBITDA margin and a stable working capital cycle, CF O is
likely to remain strong for the next two years (average of ~Rs1.7bn for the next 2 80
years) . Strong oper ating performance would also help the company to report
healthy RoE of 31.2% and 27.1% in FY18E and FY1 9E re spectively.
The stock is available at attractive valuations of 11.4x/9.9x F Y18E/FY19E earnings.
W e initiate coverage with BUY rating and a target price of Rs205, valuing it at 13x
FY19E earnings. Source: Bloomberg
RISKS & CONCERNS

Regulator y Environment; Incr ease in Raw Material Prices; Foreign E xchange Share Holding Pattern (%)
Variation; Execution of capex plan
COMPANY BACKGROUND Others

Bodal Chemicals Limited is Integrated compan y, offering end-to-end solution to our
31.31%
customers globally. T he com pany is among worlds largest manufacturer and exporter
of Dyes Intermediate, Dyestuff and Su lphuric Acid, with vertically and horizontally
integrated who provides product solutions and ser vice solution on fastest possib le route
to their customers. BCL having its presence not only in Ind ia but across the globe and
serving to 50+ countries with its Innovative prod ucts and services. BC L with presence
across dyestuff value chain and strong d omestic/expor ts penetration is aptly placed to DII
take benefit of opportunities in dyestuff industry. 0.11% Promoter
FII 64.17%
SECTOR BACKGROUND 4.41%
The Indian dyestuffs and pigments industry has transformed from being import
dependent to an expor t driven ind ustry. Given the stringent measures in majority of the
developed economies, compan ies are sourcing the dye intermediates and pigm ents Source: Bloomberg
from cost-effective m arkets (developing economies). Exports from In dia have grown at
double digit over the last few years, mainly due to cut down in production by C hina.
EBITDA Margin to remain in range of 17-18%
FINANCIALS (RS MN) FY17E FY18E FY19E
EBITDA (Rs mn)
Sales 12,363 14,492 16,875
EBITDA Margin (%-RHS)
Growth (%) 35.9 17.2 16.4 3,000 18.5
EBITDA 2,258 2,624 2,991 18.0
2,250
EBITDA margin (%) 18.3 18.1 17.7 17.5
PBT 1,999 2,322 2,677 1,500 17.0
Net profit 1,286 1,510 1,740 16.5
EPS (Rs) 11.3 13.8 15.9 750
16.0
Growth (%) 49.6 17.4 15.3
0 15.5
CEPS (Rs) 14.0 16.5 19.2
FY15 FY16 FY17E FY18E FY19E
BV (Rs/share) 31.0 44.4 58.8
Dividend per share (Rs) 0.8 1.1 1.3 Source: Company, Kotak Securities - Private Client Research
ROE (%) 34.3 31.2 27.1
ROCE (%) 18.5 19.2 18.3 Casf flow from operations to remain strong
Net cash (debt) (2,139) (675) (346)
Net Working Capital (Days) 95 95 103 2,000
VALUATION PARAMETERS FY17E FY18E FY19E 1,500

P/E (x) 14.6 11.9 10.3
P/BV (x) 5.3 3.7 2.8 1,000
EV/Sales (x) 1.5 1.2 1.0
EV/EBITDA (x) 8.0 6.7 5.5 500
0
PRICE PERFORMANCE (%) 1M 3M 6M FY15 FY16 FY17E FY18E FY19E
(2.1) 15.0 27.7

ENGINEERS INDIA LTD Analyst: ruchir.khare@kotak.com

159 195 22.6% 176 / 93 107166

Engineers India enjoys healthy market share in the Hydrocarbon
250 Engineers India Ltd Nifty
consultancy segment. It enjoys prolific relationship with few of the
major oil & gas companies like HPCL, BPCL, ONGC and IOC.
Company is well poised to benefit from recovery in the infrastructure 190
spending in the hydrocarbon sector.
We believe that in future, company shall inevitably benefit from 130
MoPNG huge target of nearly Rs 1.2 trillion envisaged for various
projects in XII five year plan.
Company has been observing pick up in order inflows/revenue 70
booking in consultancy business space which enjoys healthy
margins.
Source: Bloomberg
RISKS & CONCERNS
Slowdown in domestic Hydrocarbon industry.
Share Holding Pattern (%)
COMPANY BACKGROUND Others

A Public sector undertaking. 13.5%
Leading player in domestic market
DII
Hydrocarbon consulting business is a direct leverage on Promoter
Hydrocarbon sector. MPoNG has envisaged investments at Rs 1.2 59.3%
trillion for various projects in 12th five year plan.
FII
Indian Hydrocarbon sector has witnessed substantial capacity 6.6%
addition over the last decade. Refining capacity currently stands at
215 MMT against 62 MMT in 1998.
Source: Bloomberg
Segment Sales (Rs bn)

25
Sales 14,486 22,145 31,417
Growth (%) (4.1) 52.9 41.9 20
EBITDA 3,022 3,986 6,916
EBITDA margin (%) 20.9 18.0 22.0 15
PBT 5,002 6,040 8,961
10
Net profit 3,250 4,107 6,094
EPS (Rs) 4.8 6.1 9.0 5
Growth (%) 10.0 26.4 48.4
CEPS (Rs) 5.2 6.4 9.4 0
FY14 FY15 FY16 FY17E FY18 FY19
BV (Rs/share) 41.1 43.3 48.1
DPS (Rs) 2.8 3.3 3.7 Source: Company, Kotak Securities - Private Client Research
ROE (%) 12.0 14.4 19.8
ROCE (%) 12.0 14.4 19.7 Revenue Mix (%)
Net cash (debt) 26,400 29,639 34,646
Refineries
NW Capital (Days) (111.3) (103.4) (96.0) Storage 14%
Terminals
VALUATION PARAMETERS FY17E FY18E FY19E 29%
P/E (x) 33.0 26.1 17.6
P/BV (x) 3.9 3.7 3.3
Petrochemi
EV/Sales (x) 5.5 3.5 2.3 cals
EV/EBITDA (x) 26.6 19.4 10.4 32%
Pipelines
19% Fertilizers
6%
(4.6) 2.0 1.0
Source: Bloomberg, Company, Kotak Securities - Private Client Research Source: Company

FIEM INDUSTRIES LTD (FIEM) Analyst: arun.agarwal@kotak.com

882 1254 42.2% 1510 / 778 11642

Good last year m onsoon, strong Khariff production growth and increase
550 FIEM Industries Ltd (FIEM) Nifty
in Rabi sowing will support demand growth in the rural areas. In the
urban areas, growth will be driven by increased scooterization and 450
strong demand in sports/premium motorcycle segm ent. FIEM generates
almost 92% of its autom obile business revenues from the 2W segm ent 350
and hence recovery in this segm ent will be positive for the company.
Honda M otorcycle and Scooters India Limited (HMSI) and TVS M otors 250
(TVSM) are the top clients accounting for ~70% of FIEMs autom otive
business revenues. FIEMs key custom ers growing at a strong pace 150
augurs well for the company.
LED sales future growth will be supported by governm ent/non- 50
government institutional orders, IPIS (integrated passenger inform ation
system) and retail sales (JV with Su-Kam Power Systems)
We expect com panys debt to come down and the company to become
net debt free. Source: Bloomberg
RISKS & CONCERNS

Lower than expected growth in two wheeler demand
High dependence on few clients Others
Further significant fall in LED prices 12.0%
DII
COMPANY BACKGROUND 9.0%
FIEM is one of the leading manufacturers of automotive lighting and
signaling equipment for the two wheeler segment in India. Apart from
automotive lighting, FIEMs product portfolio comprises of rear view FII
mirrors, sheet metal parts and plastic components for two /four wheeler 15.0%
segm ent. Recently, FIEM ventured into the LED lighting business. Promoter
64.0%
SECTOR BACKGROUND
Auto ancillary sector will be the key beneficiary of expected revival in the
domestic automobile demand. Source: Bloomberg
Revenues (Rs mn)

16,000
Sales 10,174 12,091 14,184
Growth (%) 3.1 18.8 17.3
12,000
EBITDA 1,174 1,472 1,776
EBITDA margin (%) 11.5 12.2 12.5
8,000
PBT 455 952 1,309
Net profit 471 667 916
4,000
Adjusted EPS (Rs) 35.8 50.7 69.6
Growth (%) (25.2) 41.6 37.5
CEPS (Rs) 54.8 82.1 103.0 0
FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E
BV (Rs/share) 321.7 362.7 422.6
Dividend / share (Rs) 8.0 8.0 8.0 Source: Company, Kotak Securities - Private Client Research
ROE (%) 13.5 14.8 17.7
ROCE (%) 15.2 17.8 22.2 EBITDA margin (%)
Net cash (debt) (1,608) 166 581
13.0
NW Capital (Days) 19.9 18.2 18.1
12.5
VALUATION PARAMETERS FY17E FY18E FY19E
P/E (x) 24.7 17.4 12.7
12.0
P/BV (x) 2.7 2.4 2.1
EV/Sales (x) 1.2 1.0 0.8
EV/EBITDA (x) 10.1 7.8 6.2 11.5
PRICE PERFORMANCE (%) 1M 3M 6M 11.0

FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E
(1.7) 9.4 (12.6)

GUJARAT STATE PETRONET LTD Analyst: sumit.pokharna@kotak.com

ACCUMULATE Last report at Rs.167 on 16 June 2017
179 182 1.7% 204 / 119 100419

Pipeline tariff revision and higher gas volumes key triggers
In the entire gas utility business, we believe GSPL is best placed as 350 GSPL Nifty
pure play gas transm ission Company and has no exposure to 300
stressed commodity business such as oil exploration, etc.
W e expect domestic gas consumption to rise meaningfully with the 250
fall in international gas prices. Spot LNG prices continues to trade 200
lower in a range of US$5.1 - 5.5/mm btu.
GSPL will benefit on account of 1). Higher gas transmission volum es 150
and 2). Expected upward revision in tariffs. 100
Higher gas transmission volum es will be supported by 1) lower LNG
prices, and 2) RLNG demand from the power sector. 50
Additionally, rising city gas distribution growth opportunities, potential
shift to natural gas due to environm ental/pollution norm s (industrial /
CNG) and volumes from Mundra LNG term inal (FY18 onwards) adds
support to long term volumes.
Source: Bloomberg
W e believe a ban on usage of furnace oil and pet coke will lead to
industry fuel dem and shifting to natural gas (economical and less
polluting). This will be a big positive for city gas distribution Share Holding Pattern (%)
companies (m ore so for GSPL as it serve in industrial belt) as it will
result in incremental volume growth from industrial custom ers. Others
15.4%
RISKS & CONCERNS
Project execution risk Promoter
Lower than expected gas off-take by consum ers 37.7%
Delay in expected tariff hike by PNGRB
DII
COMPAN Y BACKG ROUND 29.9%
GSPL is prim arily engaged in transm ission of natural gas through
pipeline on an open access basis from supply points to dem and
centers. FII
17.1%
SECTOR BACKGROUND
Gas sector growth is tied in with the way India's gas supplies Source: Bloomberg
develop. In the short-run, the growth will be fueled by im ported
RLNG and in the longer-run by both RLNG and domestic gas.
Gas transmission volume trend (mmscm)
2,500 10%
Sales 10,276 12,210 12,945
Growth (%) 3.6 18.8 6.0 2,400 5%
EBITDA 8,883 10,611 11,257 2,300
EBITDA margin (%) 86.4 86.9 87.0 0%
2,200
PBT 7,284 9,102 9,739
-5%
Net profit 4,713 6,099 6,525 2,100
EPS (Rs) 9.6 11.5 12.3 2,000 -10%
Growth (%) 16.0 20.6 6.6
CEPS (Rs) 12.7 15.0 15.9 1,900 -15%
Book value (Rs/share) 78.9 87.3 95.9
ROE (%) 12.6 13.7 13.2
ROCE (%) 11.6 13.8 13.6 GSPL's implied gas transmission tariff (Rs./Scm)
Net cash (debt) 3,015 6,633 10,749
1.23
Net Working Capital (Days) 78.2 78.2 78.2 1.20
1.17
VALUATION PARAMETERS FY17 FY18E FY19E 1.14
P/E (x) 18.7 15.5 14.6 1.11
P/BV (x) 2.3 2.1 1.9 1.08
EV/Sales (x) 9.5 7.7 6.9 1.05
EV/EBITDA (x) 11.0 8.8 8.0 1.02
0.99
PRICE PERFORMANCE (%) 1M 3M 6M 0.96
(3.5) 5.0 21.9

IRB INFRASTRUCTURE DEVELOPERS LTD Analyst: teena.virmani@kotak.com

234 295 26.1% 273 / 177 77772

Companys current order book stands at Rs.99.5 bn with Rs.38.2bn in
ongoing projects, Rs 7.02 bn in O&M phase and Rs.54.36bn from 350 IRB Infrastructure Developers Ltd Nifty
recently awarded projects.
Various projects have witnessed sharp improvem ent in traffic volum es 290
leading to healthy growth in toll revenues. Average toll collection per day
for the company is also expected to increase going forward led by 230
improvement in tolling across projects. 170
During FY17, company has received a healthy order inflow of road BOT
projects totaling nearly 329 km on NH-79 and NH-8. W ith this IRB has 110
m et its order inflow guidance for the current fiscal which was expected to
be around 300-400km. 50
W e expect EPC revenues in FY18 to be largely driven by execution of
Goa-Kundapur, Solapur-Yedeshi, Yedeshi-Aurangabad and Rajasthan-
Kaithal project and going ahead, from new projects.
RISKS & CONCERNS Source: Bloomberg

Delays in financial closure of recently awarded projects
Lower than expected toll revenues or slowdown in traffic growth Share Holding Pattern (%)
Execution delays or slower than expected decline in interest rate
COMPANY BACKGROUND DII Others

IRB is an experienced player in road BOT segment and likely to benefit 8.0% 6.8%
from upcom ing project awards in road segm ent
It has the second largest road BOT portfolio in the country and has
successfully launched InVIT in Q1FY18
SECTOR BACKGROUND
NHAI has ramped up the awarding process and along with MoRTH, it is FII Promoter
likely to achieve healthy growth in order awards as compared to FY16. 27.8% 57.4%
Further inflow in EPC and BOT segment is expected in coming quarters
Source: Bloomberg
Order book break up (Q4FY17)

O&M contracts
Sales 59,691 58,900 63,840 7.0% 2.0%
5.0% Sindhudurg airport
Growth (%) 13.6 (1.3) 8.4 20.0%
1.0% Goa-Kundapur
EBITDA 31,715 27,943 30,125 Solapur Yedeshi
EBITDA margin (%) 53.1% 47.4% 47.2% 9.0% Yedeshi Aurangabad
PBT 9,840 12,166 12,284 15.0% 3.0% Rajasthan Kaithal
Net profit 7,155 8,465 8,678 Udaipur-Guj
20.0%
EPS (Rs) 20.4 24.1 24.7 18% Agra Etawah
Growth (%) 12.5 18.3 2.5 Kishangarh-Gulabpura
CEPS(Rs) 44.7 41.8 45.2 Gulabpura-Chittorgarh
Book value(Rs/share) 157.8 179.4 201.7
DPS (Rs) 2.0 2.0 2.0 Source: Company, Kotak Securities - Private Client Research
ROE (%) 13.7 14.3 13.0
ROCE (%) 11.2 11.1 12.4 Segmentwise Revenue Break up (Rs mn)
Net cash (debt) 143,484 120,766 135,726 70000
Net Working Capital (Days) 52 52 52 Toll EPC
60000
50000
VALUATION PARAMETERS FY17E FY18E FY19E
P/E (x) 11.5 9.7 9.5 40000
P/BV (x) 1.5 1.3 1.2 30000
EV/Sales (x) 3.7 3.4 3.3 20000
EV/EBITDA (x) 7.0 7.1 7.1
10000
PRICE PERFORMANCE (%) 1M 3M 6M 0

FY11 FY12 FY13 FY14 FY15 FY16 FY17
(4.7) (6.1) 14.8

ITC LTD Analyst: ritwik.rai@kotak.com

ACCUMULATE Last report at Rs.309 on 29 May 2017
317 342 7.9% 320 / 222 3679419

Trend of cigarette volume growth suggests that, after a reshuffle
160 ITC Ltd Nifty
in cigarette consumption patterns, there is stability in the cigarette
market. ITC, which has c.80% market share in the cigarette 150
market, is likely to see a fair degree of stability in revenue growth 140
going forward. 130
The cigarette industry has been able to combat structural 120
negatives with a higher mix of <65mm cigarettes. In ITCs own
110
product mix, <65mm cigarettes now contribute more than 30% (as
per our channel checks) 100
Recent excise duty hikes suggest a more benign approach in 90
excise duty hikes, after ~15% hikes through FY13-FY16. 9-10%
growth in cigarette EBIT is now the base-case scenario, unless
tax trajectory changes significantly. Moreover, other divisions of
ITC (paper, hotels, agri-business) have a weak base, and could Source: Bloomberg
surprise positively.
Valuations of ITC are attractive relative to large-cap FMCG plays,
as well as ITCs own historical bands. Share Holding Pattern (%)
RISKS & CONCERNS Mutual Funds

Significant changes in tax trajectory, including potential negatives 0.98 3.1
FPIs
from GST rollout
Financial Institutions/ Banks
20.27
COMPANY BACKGROUND 33.67
Insurance Companies
ITC is India's largest cigarette company, with c.80% market share. 11.2
The company is also involved in several other segments, which Non-Institutions
include non-cigarette FMCG goods, paper, paperboards, and 21.11
Corporate Bodies
packaging, hotel, and agri-business. 9.67
Other
SECTOR BACKGROUND
Indian FMCG sectors size is pegged at Rs 3 Trillion with rural
Source: Bloomberg
India contributing to about a third of the revenues.
Cigarette Volume Growth (Est., %, y/y)

FINANCIALS (RS MN) FY17 FY18E FY19E 10
Sales 554,485 601,283 657,945
5
Growth (%) 7 8 9
0
EBITDA 145,780 166,926 185,577
EBITDA margin (%) 26 28 28 -5
PBT 155,030 179,583 203,357 -10
Net profit 102,009 118,525 134,216 -15
EPS (Rs) 8 10 11 -20
Growth (%) 10 16 13
CEPS (Rs) 9 11 12
Book value (Rs/share) 26 31 36
Dividend per share (Rs) 5 5 5 Source: Kotak Securities - Private Client Research
ROE (%) 32 34 36
ROCE (%) 26 29 29 Cigarette EBIT Growth (%, y/y)
Net cash (debt) 95,158 138,354 198,752 25.00%
Net Working Capital (Days) 193 207 210
20.00%
VALUATION PARAMETERS FY17 FY18E FY19E 15.00%

P/E (x) 37.7 32.5 28.7 10.00%
P/BV (x) 12.1 10.3 8.8
EV/Sales (x) 6.5 5.9 5.3 5.00%
EV/EBITDA (x) 24.6 21.2 18.8 0.00%

8.6 10.3 35.2

KAJARIA CERAMICS LTD Analyst: teena.virmani@kotak.com

ACCUMULATE Last report at Rs.715 on 16 May 2017
705 757 7.4% 790 / 437 106568

Kajaria ceramics is ideally positioned to capture the increased demand
with its expanded capacity as well as its ongoing capex plan 700 Kajaria Ceramics Ltd Nifty
Com pany is carrying out expansion at several plants and post these 600
expansions, companys capacity is likely to reach 74 msm by FY17
500
We expect com pany to continue to gain market share vis--vis peers led
by improved branding and product mix as well as increased focus on tier 400
3 and tier 4 cities. 300
We continue to remain positive on the company on account of expected 200
improvem ent in volumes going forward with GST implementation. W e
believe that stock will continue to trade at higher valuations on account of 100
excellent earnings visibility on volume expansion and m argin 0
improvem ent led by lower gas prices coupled with demand revival.
RISKS & CONCERNS

Dem and slowdown Source: Bloomberg
Steep increase in gas prices
COMPANY BACKGROUND Share Holding Pattern (%)

Kajaria Ceramics is the second largest player in the organized tile
industry with a pan-India presence and manufactures ceram ic tiles, Others
polished and glazed vitrified tiles for wall and floor applications. 22.3%
With an annual capacity of 74 m n. sq. meters by FY17, distributed
across seven plants, company caters to the customer's dem and through
a wide distribution network and nearly 1100 designs. Com pany also DII Promoter
markets international tile brands and has also tied up with Vitra, to 6.2%
market high end bathware and bath fittings in India.
47.2%
SECTOR BACKGROUND
Consumption of tiles has grown at a CAGR of 12% between 2007-13
and has been led by increasing consumerism and urbanization FII
Strong GDP growth, im provem ent in real estate demand and 24.4%
replacement dem and is likely to drive demand growth going forward
Source: Bloomberg
Sales break up (Mn Sq m)

Imports/outsourced JV Own manufacturing
Sales 25,456 29,758 34,009 16
Growth (%) 6% 17% 14%
6.06
EBITDA 4,923 5,981 6,836 12 6.5
EBITDA margin (%) 19.3% 20.1% 20.1%
PBT 3,963 5,236 6,040 8
Net profit 2,524 3,472 4,008
10.52 9.49
EPS (Rs) 15.9 21.9 25.2 4
Growth (%) 10% 38% 15%
CEPS (Rs) 21.0 27.1 30.8 0
Book value (Rs/share) 71.1 90.1 112.4 Q4FY17 Q4FY16
ROE (%) 24.6 27.1 24.9
ROCE (%) 32.4 35.0 33.1 Revenues (Rs mn)
Net cash (debt) 217 (2,115) (5,039)
Sanitaryware Imports/outsourced
Net Working Capital (Days) 45.0 45.0 45.0 8000 JV Own manufacturing
7000
VALUATION PARAMETERS FY17E FY18E FY19E 862 445.4
6000
P/E (x) 44.4 32.3 28.0 5000 2126.7 2535
P/BV (x) 9.9 7.8 6.3 4000
EV/Sales (x) 4.2 3.5 3.0 3000
EV/EBITDA (x) 21.7 17.5 14.9 2000 3846 3372.4
1000
0
Q4FY17 Q4FY16
3.0 22.2 52.5

SHREE CEMENT LTD Analyst: teena.virmani@kotak.com

18635 22716 21.9% 20560 / 12477 649243

Shree Cement has a current capacity of 27.2MT and company is
575 Shree Cement Ltd Nifty
expanding its capacity by nearly 11.6 MT over FY17-19 to 39MT.
Cement prices and demand are likely to start recovering in 475
northern and central region post elections in UP/Punjab. This is
likely to aid revenue growth going forward. 375
Costs are likely to move up going forward but company expects to
275
improve EBITDA per tonne owing to expected price hikes.
We expect company to benefit from volume expansion as well as 175
pricing improvement going forward and hence we remain positive
on the company. 75
RISKS & CONCERNS

Decline in cement prices may put downward risk to our estimates
Decline in merchant power rates may also impact revenues from Source: Bloomberg
the power division.
COMPAN Y BACKG ROUND
Shree Cements is one of the most efficient cement producers in DII Others
India and is best placed to capitalize on the growing cement 4.6% 5.9%
demand in northern India.
Shree Cement's capacity is expected to be enhanced to 39 MT by
FY19 post the undergoing expansion.
FII
Owing to demonetization, demand is likely to remain weak from
housing while rural demand has revived with normalization of cash Promoter
circulation in the system. Continued focus of government on low 64.8%
cost housing, infrastructure development and lower interest rates
should augur well for demand in long term.
Cement prices have also recovered across regions in line with Source: Bloomberg
demand improvement. Costs are likely to move up but with
improved demand, it is likely to be passed on.
Volume growth of Shree Cements (MT)
FINANCIALS (RS MN) FY17 FY18E FY19E 24
Sales 84,292 103,600 120,565 20
Growth (%) 51.4 22.9 16.4
16
EBITDA 23,672 32,250 38,700
12
EBITDA margin (%) 28.1 31.1 32.1
8
PBT 15,308 22,186 26,776
4
Netprofit 13,391 18,193 21,956
0
EPS (Rs) 384.4 522.2 630.2
Growth (%) 194.4 35.9 20.7
CEPS (Rs) 733.0 920.1 1,081.5
BV (Rs/share) 1,917.4 2,415.6 3,021.8
Dividend /share(Rs) 24.0 24.0 24.0 Source: Company, Kotak Securities - Private Client Research
ROE (%) 22.1 24.1 23.2
ROCE (%) 22.9 26.7 26.2 Cement EBITDA per tonne trend(Rs/tonne)
Netcash(debt) 29,605 45,406 64,882
1600
NW Capital(Days) 47.0 47.0 47.0
1200
VALUATION PARAMETERS FY17 FY18E FY19E 800
P/E (x) 48.5 35.7 29.6
P/BV (x) 9.7 7.7 6.2 400
EV/Sales (x) 7.4 5.8 4.8
0
EV/EBITDA (x) 26.2 18.7 15.1

(5.8) 9.6 26.2

TIME TECHNOPLAST Analyst: sanjeev.zarbade@kotak.com

164 178 8.5% 177 / 48 34276

One of the leading players in industrial packaging. 540 Time Technoplast Nifty
Going ahead, capex to moderate and would be largely confined to 480
maintenance related work. This should boost free cash 420
generation. 360
Composite cylinders can potentially be a major revenue driver. 300
240
Balance sheet leverage is progressively decreasing.
180
120
RISKS & CONCERNS 60
Slowdown in industrial production and adverse movement in basic
feedstock price ie HDPE
Source: Bloomberg
COMPANY BACKGROUND
The key product categories for the company are Industrial
packaging products, lifestyle products (door mats, chairs, Share holding (%)
syringes), technical products (automotive components),
Others
infrastructure products (pipes and monolithic construction) and
8%
new products (composite cylinders). The largest segment is the DII
industrial packaging accounting for 74% of revenues. 8%
Diversified product portfolio of plastic products.
Company has eight manufacturing units in overseas locations
FII
SECTOR BACKGROUND 31%
Promoter
Major demand drivers are chemical industries. 53%
Large number of unorganized players
Source: Bloomberg
Revenue trend Rs bn
Sales 24,606 26,895 30,929 35
Growth (%) (0.6) 9.9 15.0 30
EBITDA 3,365 3,997 4,485 25
EBITDA margin (%) 13.7 14.9 14.5
20
PBT 1,436 2,037 2,541
15
Net profit 1,268 1,518 1,883
10
EPS (Rs) 5.1 7.2 9.0
Growth (%) (2.7) 41.5 24.0 5
CEPS (Rs) 9.8 12.4 14.7 0
Book value (Rs/share) 53.8 67.9 76.4 FY14 FY15 FY16 FY17E FY18E
ROE (%) 9.8 11.8 12.4
ROCE (%) 9.4 10.9 11.2 Revenue mix (%)
Net cash (debt) (6,698) (5,089) (5,118)
Net Working Capital (Days) 83.8 79.8 80.9 Composite Others
Cylinder 14.0%
VALUATION PARAMETERS FY16 FY17E FY18E 2.0%
Lifestyle
P/E (x) 32.1 22.7 18.3 5.0%
P/BV (x) 3.1 2.4 2.1
EV/Sales (x) 1.7 1.5 1.3 Auto
EV/EBITDA (x) 12.2 9.8 8.8 components
5.0%
Packaging
PRICE PERFORMANCE (%) 1M 3M 6M 74.0%
24.4 33.9 68.3

RESEARCH TEAM
Fundamental Desk
Sanjeev Zarbade Ritwik Rai Pankaj Kumar
Capital Goods, Engineering FMCG, Media Midcap
Teena Virmani Sumit Pokharna Nipun Gupta

Construction, Cement Oil and Gas Information Technology
Arun Agarwal Amit Agarwal Jayesh Kumar

Auto & Auto Ancillary Logistics, Paints, Transportation Economy
Ruchir Khare Jatin Damania K. Kathirvelu

Capital Goods, Engineering Metals & Mining Production
Technical Desk
Shrikant Chouhan Amol Athawale
Derivatives Desk
Sahaj Agrawal Malay Gandhi Prashanth Lalu Prasenjit Biswas

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No 21, Opp. Film City Road, A K Vaidya Marg, Malad (East), Mumbai 400097. Telephone No: 42856825. SEBI Registration No: NSE INB/INF/INE 230808130, BSE
INB 010808153/INF 011133230, MSEI INE 260808130/INB 260808135/INF 260808135, AMFI ARN 0164 and PMS INP000000258. NSDL/CDSL: IN-DP-NSDL-23-
97, Research Analyst INH000000586. Our research should not be considered as an advertisement or advice, professional or otherwise. The investor is
requested to take into consideration all the risk factors including their financial condition, suitability to risk return profile and the like and take professional
advice before investing. Investments in securities market are subject to market risks, read all the related documents carefully before investing. Derivatives
are a sophisticated investment device. The investor is requested to take into consideration all the risk factors before actually trading in derivative contracts.
Compliance Officer Details: Mr. Manoj Agarwal . Call: 022 - 4285 8484, or Email: ks.compliance@kotak.com.
In case you require any clarification or have any concern, kindly write to us at below email ids:
Level 1: For Trading related queries, contact our customer service at 'service.securities@kotak.com' and for demat account related queries contact us at
ks.demat@kotak.com or call us on: Online Customers - 30305757 (by using your city STD code as a prefix) or Toll free numbers 18002099191 / 1800222299,
Offline Customers - 18002099292
Level 2: If you do not receive a satisfactory response at Level 1 within 3 working days, you may write to us at ks.escalation@kotak.com or call us on 022-
42858445 and if you feel you are still unheard, write to our customer service HOD at ks.servicehead@kotak.com or call us on 022-42858208.
Level 3: If you still have not received a satisfactory response at Level 2 within 3 working days, you may contact our Compliance Officer (Name: Manoj
Agarwal) at ks.compliance@kotak.com or call on 91- (022) 4285 8484.
Level 4: If you have not received a satisfactory response at Level 3 within 7 working days, you may also approach CEO (Mr. Kamlesh Rao) at ceo.ks@kotak.com
or call on 91- (022) 4285 8301.

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June 2017

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Investment Strategist

Change in the Global Indices

Investment Strategist June 2017 2

Market sentiment was Cement, etc) and

Market performance - sector wise (May 2017) Benchmark indices - India

Source: Bloomberg Source: Bloomberg

Investment Strategist June 2017

Rupee/US$ Brent Crude (US$/bl)

Source: Bloomberg Source: Bloomberg

Investment Strategist June 2017 4

The European Central Bank (ECB) is committed to main- 0

Last month, the Organization of the Petroleum Export-

Investment Strategist June 2017

Automobiles Maruti Suzuki, HeroMoto Corp, FIEM Industries

Source: Kotak Securities - Private Client Research

Export oriented / Defensive sectors

IT Infosys, NIIT Ltd

Source: Kotak Securities - Private Client Research

Investment Strategist June 2017 6

Looking Back Nifty Options Concentration

For queries and feedback you can e-mail us at ksderivative.desk@kotak.com

Investment Strategist June 2017 8

MONTHLY SNAPSHOT TREND WATCH

Monthly Open : 9340

NIFTY : 9657 BANK NIFTY: 23745

Range : 9640-9690 Range : 23670-23860

Resistance : 9675-9690-9710-9735-9750 Resistance : 23860-23950-24030-24090

Support : 9640-9630-9610-9570-9550 Support : 23670-23610-23530-23470

Source : www.SpiderSoftwareIndia.Com 1500

Investment Strategist June 2017

Investment Strategist June 2017

The Pitch Report

Auto & Auto Ancillary

Capital Goods & Engineering

Capital Goods & Engineering

Metals & Mining

Oil & Gas

The Pitch Report (Others)

Source: Kotak Securities - Private Client Research

ADANI PORT AND SPECIAL ECONOMIC ZONE Analyst: agarwal.amit@kotak.com

INVESTMENT ARGUMENT 1 Year Performance

RISKS & CONCERNS Share Holding Pattern (%)

Quarterly Breakup of volumes (mn tonnes)

Investment Strategist June 2017 20

BODAL CHEMICALS Analyst: jatin.damania@kotak.com

INVESTMENT ARGUMENT 1 Year Performance

RISKS & CONCERNS

COMPANY BACKGROUND Others

VALUATION PARAMETERS FY17E FY18E FY19E 1,500

Investment Strategist June 2017

ENGINEERS INDIA LTD Analyst: ruchir.khare@kotak.com

INVESTMENT ARGUMENT 1 Year Performance

COMPANY BACKGROUND Others

Segment Sales (Rs bn)

Investment Strategist June 2017 22

FIEM INDUSTRIES LTD (FIEM) Analyst: arun.agarwal@kotak.com

INVESTMENT ARGUMENT 1 Year Performance

RISKS & CONCERNS

Revenues (Rs mn)

PRICE PERFORMANCE (%) 1M 3M 6M 11.0

Investment Strategist June 2017

GUJARAT STATE PETRONET LTD Analyst: sumit.pokharna@kotak.com

INVESTMENT ARGUMENT 1 Year Performance

Investment Strategist June 2017 24