Super 10 Investment Picks

- Quality Businesses at fair prices

 Break Up of Ideas

“ Specialists in discovering Multibagger stocks “

 10x10 - Safe Stocks
(Secular Growth Stories)

* Note :- We have identified 5 Ideas that are safe bets and that can consistently deliver strong
returns for the next 10 years. These businesses have scalable business models, good
managements, strong moats, large opportunity size etc. We believe that the high quality nature
of these businesses essentially makes them safe bets that can compound to deliver 10X returns
over the next 10 years.

“ Specialists in discovering Multibagger stocks “

Godrej Properties (GPL) Business Rating – 4/5 Valuation Rating – 4.5/5
Investment Arguments :-
• GPL has one of the best business models in the real estate industry. It uses a high capital efficient model of
building real estate projects with superior return ratios for the developer.

• GPL has huge opportunity from the Godrej group’s large land banks across the country. This has benefited the
company as GPL is the developer for all these projects with a PM fee of around 10% with no capital investment.

• GPL in FY2013 had about 83% revenues from residential segment and about 17% from commercial projects.
The highly prospectable residential segment share is likely to increase further leading to better revenues and
profitability over the next 3-5 years.

• GPL has a very strong balance sheet that would help the company to scale up its operations over the next
decade. GPL is one of the few real estate developers that can raise equity consistently.

• With a large opportunity size, Great Management, Share holder friendly business model and attractive
valuations, the stock can definitely be bought with a 10 year horizon for strong Multibagger returns.

Valuation & Recommendation:

We estimate GPL to report EPS of Rs.18.82 in FY15. Year Net Sales EBITDA PAT EPS P/E
Strong parentage, Huge Godrej group Landbank, Strong
operating margins compared to peers, Development 2012 770 158 129 8.25 25.45
manager and profit sharing for new projects, rising
2013 1,037 286 197 12.64 16.61
Y ear NIIcash
operating Preprovision
flows, are Profit PAT EPS
the strengths P/Ecompany.
of the 2011 7,669 6,006 4,156 44.9 10.47 2012 9,171 7,25 46.8 10.04
The stock at the CMP of Rs.209 trades at 11.16X of its
2013E
FY15E 11,683
EPS. We 8,993 5,996 55.9a 8.41
recommend BUY2014E
on the14,274 2014E 1,165 315 221 14.18 14.81
stock 10,677 6,965 65 7.23 Fig in Rs.Mn a Year
considering the long term potential of the company.
2015E 1,632 408 294 18.82 11.16

“ Specialists in discovering Multibagger stocks “

Tree House Education Business Rating – 4.5/5 Valuation Rating – 4/5
Investment Arguments :-
• THEAL is India’s largest self operated Pre-School chain. THEAL has a good brand recall and has built good
reputation for providing quality education.

• Education business is one of the few sectors that is Recession Proof and Inflation Proof. Within the Education
sector, it is the pre-school segment that offers huge scalability and high return ratios.

• THEAL’s core Pre-School business is a cash cow with strong cash flow from operations derived out of a negative
working capital cycle. The ROCE of its Pre-School centers are upwards of 70%.

• The company’s return ratios can improve further with higher utilization ratios. The company return of incremental
capital employed is exceptional.

• THEAL owns K-12 assets which it plans to monetize by selling its assets which will bring down its asset size
thereby ensuring an asset light business model. With a Good Management, Large Opportunity, Asset light
business model and decent valuations – the stock can multiply multifold over the next decade.

Valuation & Recommendation:

We estimate THEAL to report EPS of Rs.16.90 in FY15. Year Net Sales EBITDA PAT EPS P/E
Strong brand recall, Growing sector, Strong pricing
power, Healthy operating margins, Asset light business
2012 77 42 22 6.43 48.21
Ymodel,
ear NII Preprovision
Centre Profit
additions and PATasset
K-12 EPS sales
P/E 2011 7,6692013
are the 6,006 4,156114
44.9 10.47622012 9,171
33 7,25
9.27 46.8 10.04
33.44
2013E 11,683
drivers 8,993 The
for the stock. 5,996 55.9at8.41
stock 2014Eof14,274
the CMP Rs.310 10,677 6,965 65 7.23 Fig in Rs.Mn a Year
trades at 18.34X of its FY15E EPS. We recommend a 2014E 163 89 47 13.09 23.68
BUY on the stock considering the long term potential of
the company. 2015E 216 118 61 16.9 18.34

“ Specialists in discovering Multibagger stocks “

HSIL (Ceramics + Glass) Business Rating – 3.5/5 Valuation Rating – 4/5
Investment Arguments :-
• HSIL is the market leader in Sanitary ware segment with more than 40 % market share and its container glass
segment is also a market leader with over 70 % market share in South India (Glass is a regional business).

• There are strong tailwinds driving revenue growth in both the segments. Both the segments are a beneficiary of
the Indian consumption boom (Housing, Beers, Soft Drinks, Pharma, Liquor etc).

• HSIL sanitary ware business continues to perform well with strong Margins and Revenue growth. With a strong
line-up of brands and a unparalleled distribution strength, HSIL is well positioned for profitable growth.

• Even though Glass Industry has a concentrated structure, HSIL is able to pass on costs only with a lag and
hence this business has performed badly in the last 7 quarters. With the oversupply in the market subsidizing, we
believe that this division can get back to steady state ROCE’s of 15%.

• HSIL’s capital allocation to its retail subsidiary (EVOK) and inorganic growth has been a concern. The stock’s
current valuations prices in the negatives with a strong potential for upside going forward.

Valuation & Recommendation:

We estimate HSIL to report EPS of Rs.15.78 in FY15. Year Net Sales EBITDA PAT EPS P/E
Market leader in sanitaryware segment, 70% market in
container glass segment in south India, Strong pricing 2012 1,567 250 94 14.23 12.65
Ypower,
ear NIIConcentrated
PreprovisionIndustry
Profit PAT EPS P/Eimproving
structure, 2011 7,669 6,006 4,156 44.9 10.47 2012 9,171 7,25 46.8 10.04
2013E 11,683
operational 8,993 turnaround
leverage, 5,996 55.9 in8.41 2014E
glass 14,274
division, 20136,965 651,761
are 10,677 7.23 Fig in259
Rs.Mn a 82
Year 12.41 14.50
the key triggers for the stock. The stock at the CMP of
Rs.180 trades at 11.41X of its FY15E EPS. We 2014E 1,802 270 90 13.62 13.22
recommend a BUY on the stock considering the long
term potential of the stock. 2015E 2,085 313 104 15.78 11.41

“ Specialists in discovering Multibagger stocks “

Bajaj Electricals Business Rating – 4/5 Valuation Rating – 4/5
Investment Arguments :-
• Bajaj Electricals has a great Consumer Durables business and a below average E&P business. The losses in
the E&P segment has masked the real quality of its consumer durable business.

• Bajaj Electricals has a slew of brands and an unparalleled distribution network across India with the maximum
penetration across Tier-1,2 and 3 centers. It follows a Asset light model in which manufacturing is done by its
vendors and the company only does marketing, sales and distribution. This leads to extremely high ROCE’s of as
much as 80% and also provides the much needed flexibility to its operations.

• Bajaj Electricals is one of the few successful multi-product companies in which its among the Top-3 in all the sub
segments it operates in. Company has still a lot of potential to grow its product portfolio.

• Bajaj Electricals E&P segment is showing significant signs of turnaround. With a new management in place and
the company’s focus on receiving high margin orders, Bajaj Electricals is well positioned to show a market
improvements in its Earnings. With a turn around in E& P segment, the market would focus on the underlying
value of its consumer segment and assign it a much higher multiple.

Valuation & Recommendation:

We estimate Bajaj Electricals to report EPS of Rs.21.40 Year Net Sales EBITDA PAT EPS P/E
in FY15. Strong brand, Robust Distribution network,
YGood
ear NII Preprovision
market positioning,Profit
RisingPAT EPS P/E
market 2011
share, 7,6692012
New 3,130
6,006 4,156 44.9 10.472392012 118 11.8 46.8
9,171 7,25 26.69
10.04
2013E 11,683
product 8,993strong
launches, 5,996 55.9
Rural8.41 2014E 14,274
consumption and 10,677 6,965 65 7.23 Fig in Rs.Mn a Year
Turnaround in its E&P segment are the key triggers for 2013 3,388 111 51 3.3 95.45
the stock. The stock at the CMP of Rs.315 trades at
14.72X of its FY15E EPS respectively. We recommend a 2014E 4,098 159 59 5.90 53.39
BUY on the stock considering the long term potential of
the stock.. 2015E 4,672 395 213 21.4 14.72

“ Specialists in discovering Multibagger stocks “

EClerx Business Rating – 4.5/5 Valuation Rating – 4/5
Investment Arguments :-
• The company has been growing at over 40% over the last many years. While this Revenue Growth is difficult
to sustain, it can certainly grow at about 20% CAGR over the next 5 years. The company is operating in a space in
which Indian companies have significant Moats and are Globally competitive. The Size of the opportunity is Huge
and companies which can scale their Operations well can create strong niche for themselves in the Industry.

• The company has a very Robust Clientele and best part is that, most of it are Repeat Clientele which
speaks volumes about Service quality. Account Mining and New Accounts are significant opportunities for
expanding the company's Business.

• The biggest problem in this sector has been the differentiating Factor between various vendors and we believe
that this company through its Efficient Operations/ Technology backbone/ Processes has been able to carve out a
Niche for itself and has also scaled up operations significantly.

• Company in spite of growing in size, has been consistently improving its Return Ratios. Currently its Return on
Equity is > 50% and ROIC > 100% which is very rare. Management’s capital allocation skills are credible.

Valuation & Recommendation:

We estimate Eclerx to report EPS of Rs.98.89 in FY15.
Rising global IT spend, Huge KPO potential, robust
Year Net Sales EBITDA PAT EPS P/E
clientele, Strong operating margins, Incredible ROE of 2012 473 190 160 54.99 21.99
Y ear NII Preprovision Profit PAT EPS P/E 2011 7,669 6,006 4,156 44.9 10.47 2012 9,171 7,25 46.8 10.04
50%, Rising dividend payouts are the strengths of the
company. The stock at the CMP of Rs.1209 trades at
2013E 20136,965 65661
7.23 Fig in255
Rs.Mn a172
Year 57.44 21.05
12.23X 11,683 8,993
of its FY15E 5,996
EPS 55.9 8.41We2014E
respectively. 14,274a 10,677
recommend
BUY on the stock considering the long term potential of 2014E 850 323 255 85.34 14.17
the KPO segment and its high quality Management.
2015E 985 374 296 98.89 12.23

“ Specialists in discovering Multibagger stocks “

 BJP Manifesto Bets
(High Quality Cyclical’s)

* Note :- We have also identified 3 Quality cyclical stocks that can deliver exceptionally strong
returns in case of a strong Government at the centre. These stocks are extremely undervalued
and are good bottom-up stories. These 3 Ideas can deliver multiple time returns during a good
economic cycle backed by earnings growth as well as valuation re-rating.

“ Specialists in discovering Multibagger stocks “

VA Tech Wabag Business Rating – 4.5/5 Valuation Rating – 3.5/5
Investment Arguments :-
• VA Tech Wabag is a water technology company. The company does not do construction on its own and uses sub
contractors, thereby improving its capital efficiency and building an asset light business. The company’s core
ROCE’s are upwards of 30% and incremental returns are even higher.

• Company is present in the entire value chain in the water business thereby providing a one stop solution. The
company owns about 100 patents and this technological expertise differentiates the company from its competitors
and enables it to prequalify for high tech projects apart from being cost competitive in bidding for projects.

• The company has huge opportunity in the desalination space which has not only been cost effective but also
takes care of the need for clean water which has become a basic necessity. The rise in income levels have
created awareness among the people for safe and clean drinking water which has resulted in a huge spending by
the government. The company’s overseas subsidiaries performance has been robust with order book rising from
Rs.10.6Bn in FY10 to about Rs.14 Bn in FY14 thereby diversifying their business.

• With a professional Management team, Huge opportunity size and Global presence, the stock is definitely well
positioned for strong returns going forward.

Valuation & Recommendation:

We estimate VA Tech Wabag to report EPS of Rs.48.00
in FY15. Presence in the entire value chain, Strong
Year Net Sales EBITDA PAT EPS P/E
order book which provides visiblity, healthy operating 2012 1,444 130 73 27.9 28.57
margins, Increased government spending on water
7,6692013 1,619 155 90 7,25
34.1 46.8
23.37
treatment and improving international subsidiary
Yperformance
ear NII Preprovision Profit PAT
are the strengths EPScompany.
of the P/E 2011The 6,006 4,156 44.9 10.47 2012 9,171 10.04
2013E
stock at11,683 8,993
the CMP of 5,996
Rs.79755.9 8.41at2014E
trades 14,274
16.60X of its 10,677 6,965 651,878
2014E 7.23 Fig in188
Rs.Mn a111
Year 42.00 18.98
FY15E EPS respectively. We recommend a BUY on the
stock considering the thrust of the new government . 2015E 2,178 218 127 48 16.60

“ Specialists in discovering Multibagger stocks “

Transport Corporation Business Rating – 3.5/5 Valuation Rating – 3.5/5
Investment Arguments :-
• TCI operates in five business segments transportation, express(courier),supply chain solutions, coastal shipping
and windmill. TCI business model has been improving consistently over the years has moved up the value chain
from being a basic trucking company which is leveraging its assets has built a robust express cargo to supply
chain solutions division.

• The company’s shift to high value add businesses such as express and supply chain solutions will structurally
improve its Margins and Return ratios. ROCE’s in these 2 segments are higher than 25% and hence the company
would continue to improve % of revenues from such operations.

• TCI has abut 10mn Sq.Ft of warehousing space, 7000 trucks, 6 Cargo ships and 14000 delivery points across
India. It moves almost 2.5% of Indian GDP. The scale of operations that the company has achieved is a big
competitive advantage on which it is building these high margins services.

• With a fledgling E-Commerce opportunity, the cope for growth is huge. As Indian economy organizes itself, the
potential to grow as a large logistics player is huge and hence the interest from several smart Investors such as
Mr. Radhakishan Damani.

Valuation & Recommendation:

We estimate TCI to report EPS of Rs.12.36 in FY15. Year Net Sales EBITDA PAT EPS P/E
Presence across segments, High value add services,
improving operating margins, strong delta from GST & 2012 1,954 156 59 8.16 14.83
E-Commerce, unmatched scale (Warehouse &
Transport) and Consistent profit track record even in 2013 2,131 174 70 9.55 12.67
Y ear NII Preprovision Profit PAT EPS P/E 2011 7,669 6,006 4,156 44.9 10.47 2012 9,171 7,25 46.8 10.04
difficult times are the strengths of the company. The
2013E
stock at11,683
the CMP8,993 5,996trades
of Rs.121 55.9 at
8.41 2014E
9.79X of its14,274 2014E
FY15E 10,677 6,965 652,295
7.23 Fig in184
Rs.Mn a 76
Year 10.39 11.65
EPS. We recommend a BUY on the stock considering
the logistics focus of the new government. 2015E 2,730 218 90 12.36 9.79

“ Specialists in discovering Multibagger stocks “

Sanghvi Movers Business Rating – 3.5/5 Valuation Rating – 4.5/5
Investment Arguments :-
• SML has been ranked as the 4th largest in Asia and 12th largest in the world by Cranes International. The
company contains a fleet of 400 medium sized heavy duty hydraulic and crawler cranes with capacities ranging
from 20 to 800 tons.

• SML undertakes implementation of turnkey projects, including providing of well maintained equipments, expert
technical services and skilled manpower. The company has a very good track record in terms of the work that they
do and the client list contains some of the most reputed names. The company has a near monopoly in the
segment of 100 tonnes and above.

• With Infra sector likely to be the focus of the new government we expect this company’s business and profits to
improve manifold over the years. With a new investment cycle, Sanghvi movers would be one of the biggest
beneficiaries of the same.

• The stock is currently available at extremely cheap valuations and we believe that the intrinsic value of the stock
is upwards of 200 Rs/ Share.

Valuation & Recommendation:

We estimate SML to report EPS of Rs.13.67 in FY15.
Market leader, Robust fleet base, Strong operating
Year Net Sales EBITDA PAT EPS P/E
margins when compared to peers, strong pricing power, 2012 450 315 102 23.56 3.44
Improvement in capacity utilization, Likely revival in
power and oil & gas sector, are the strengths of the 2013 339 232 41 9.47 8.55
company. The stock at the CMP of Rs.81 trades at
5.92X of its FY15E EPS respectively. We recommend a
YBUY
earonNII
2014E 290 189 46 10.72 7.56
thePreprovision Profit
stock considering thePAT
likelyEPS P/Eof 2011
focus 7,669 6,006 4,156 44.9 10.47 2012 9,171 7,25 46.8 10.04
the new
2013E 11,683
government 8,993
in the Infra5,996
space.55.9 8.41 2014E 14,274 10,677 2015E6,965 65370
7.23 Fig in241
Rs.Mn a 59
Year 13.67 5.92

“ Specialists in discovering Multibagger stocks “

 Super Dividend Ideas
(Sustainable Dividend Payouts)

* Note :- The 2 – high yield stocks that we have mentioned in this write-up have a dividend yield
of over 7%. We believe that the current level of dividends in these 2 companies will not only
sustain but also grow over the next 5 years. These stocks not only provide variety to your
portfolio but also provide the necessary cash flows to re-invest.

“ Specialists in discovering Multibagger stocks “

IBHFL Business Rating – 4/5 Valuation Rating – 4.5/5
Investment Arguments :-
• Over the last 3 years time period, IBHF has been undergoing a transformation, where it is moving from being a
high risk unsecured lender to being a more matured and focused player on mortgage loans. The company exited
the highly volatile business segments like personal loans and auto loans and has been building a long term and
stable asset portfolio. We expect the company’s loan assets growth to be around 25% in the medium term.

• IBHFL has one of the best balance sheets in the Industry with cash and cash equivalents of around 7000 Cr. We
believe that the company is well positioned to grow its Loan book without any equity dilution for the next 4 years.

• The company’s Gross and Net NPA’s have consistently improved during the past four years with Gross NPA’s
reducing from 1.92% to about 0.79%. The company currently has a stable portfolio and in fact generates strong
Return on Equity of around 27% backed by low cost of operations.

• IBHF has a strong dividend track record and has a dividend policy of paying 50% of its profits as dividends. With
continuing improvement in its earnings, we believe that the company would be able to consistently distribute
strong dividends for its shareholders.

Valuation & Recommendation:

We estimate IndiaBulls housing to report EPS of
Rs.53.75 in FY15. Strong sector growth, Superior asset
Year Net Sales EBITDA PAT EPS P/E
quality, Strong operating margins, Stable Loan book, 2012 801 408 250 16.06 17.87
consistent profit and dividend track record are the
strengths of the company. The stock at the CMP of 2013 4,658 4,169 1,228 39.29 7.30
Rs.287 trades at 4.80X of its FY15E EPS respectively.
We recommend a BUY on the stock considering the 2014E 5,600 3,080 1,680 53.75 5.34
current dividend Yield of around 10%. We believe that
Ysuch
earhigh
NIIdividends
Preprovision
can beProfit PAT EPS P/E 2011 7,6692015E
sustained. 6,006
4,156 44.9 10.47
6,230 20121,869
3,427 9,171 7,25
59.8 46.84.80
10.04
2013E 11,683 8,993 5,996 55.9 8.41 2014E 14,274 10,677 6,965 65 7.23 Fig in Rs.Mn a Year
“ Specialists in discovering Multibagger stocks “
ILFS Investment Managers Business Rating – 3/5 Valuation Rating – 4.5/5
Investment Arguments :-
• IIML is a Unique Company in the New Generation Private Equity Industry that has Huge Growth Potential.

• IIML is a Leader in the Private Equity with Strong and Durable Competitive advantages to sustain it going
forward, especially in the Infra and Real Estate sector where it has good Moats from its strong parentage (IL&FS
Group) and strong performance track record.

•The Business Model of the company makes sure that Share Holder's are rewarded heavily and this can be seen
from one of the Best Return on Equity (ROE's) of >50% consistently. These returns can in fact inch Higher with
increased AUM going forward.

• The company has been affected with depressed investor sentiments and hence has not been able to raise
incremental funds. With a turn in cycle and a new government at helm, the company can once again grow.

• The stock is a high Dividend play and would give Stability and Cash Flows for your Portfolio with its Dividend
Yield of > 10.5% at current market prices.

Valuation & Recommendation:

We estimate IIML to report EPS of Rs.3.52 in FY15. Year Net Sales EBITDA PAT EPS P/E
Leader in private equity, recovery in Infra and realty
sectors, Strong operating margins when compared to 2012 221 118 74 3.54 4.24
peers, Consistent profit making track record, high payout
of 80%, robust ROE of about 50%,rising dividend yield, 2013 225 125 77 3.67 4.09
are the strengths of the company. The stock at the CMP
of Rs.15 trades at 4.26X of its FY15E EPS respectively. 2014E 212 112 72 3.45 4.35
We recommend a BUY on the stock considering the
2015E 230 115 74 3.52 4.26
Y ear NII
payout ratioPreprovision Profit PAT EPS P/E 2011 7,669 6,006
and dividend yield. 4,156 44.9 10.47 2012 9,171 7,25 46.8 10.04
“ Specialists in discovering Multibagger stocks “
2013E 11,683 8,993 5,996 55.9 8.41 2014E 14,274 10,677 6,965 65 7.23 Fig in Rs.Mn a Year
 THANK YOU

“ Specialists in discovering Multibagger stocks “