Most of banking stocks reported moderate revenue and profit growth owing to multiple headwinds. In near term we are not seeing improvement in economic condition and asset quality pressure are expected to remain in the system due to tight liquidity situation and rising interest rate. Post result we like SBI, Union Bank and UCO Bank due to their structural improvement in balance sheet, operating and financial metrics.

1. IEA-Equity
Strategy
India Equity Analytics
26th Feb, 2014
Daily Fundamental Report on Indian Equities
Public Sector Banks Result Review 3QFY14
Edition : 214
26th Feb 2014
Most of PSBs profitability were declined due to higher operating cost, surge in provisions and contingencies and creation of DTL special reserve.
But declining profitability and deteriorating asset quality is not a concern but structure damage of balance sheet. Going forward banks with
higher CASA base and healthy growth in deposits would able to protect margin and hence profitability. Post result we like SBI, Union Bank and
UCO
Bank
due
to
their
structural
improvement
in
balance
sheet,
operating
and
financial
metrics.
............................................................................ ( Page : 2-3)
SHREE CEMENT.
"BOOK PROFIT "
25th Feb 2014
The stock is trading at 4x in 1 yr forward P/B chart.we believe for the current market scenario the price is fare enough to trade.But looking at
future capex plans and sluggish demand we belive the earnings and profitability of Shree cement may fall for the next two consecutive
quarters.The profitability may fall due to incrising depriciation.Till now the company's depriciation level is stable but it may surprise further.so
we recommend its a better pic to book profit. ................................................................. ( Page : 4-6)
"BOOK PART
PROFIT "
AXIS BANK :
25th Feb 2014
We advice our investor to book part profit in Axis Bank as bank has achieve our target price level of Rs.1217. We still stick to our valuation on
account of bank’s uncomfortable earnings and asset quality stress. Bank’s profitability was up by 19% YoY on the back of right back of
investment depreciation provisions. Exposure to risky sector remained high which would keep asset quality under stress. These factors compel
us to value bank at 1.5 times of FY14E’s book value......................................................... ( Page : 7-11)
Nestle India :"The nest becomes weaker"
"Neutral"
24th Feb 2014
For 4QCY13, Nestle Ind reported below numbers than street expectations in all counts, sales grew by 4.7%(YoY) led by 3.7% domestic growth
and 20.9% export growth. Its domestic sales contribute 94% and exports 6% of sales. While, PAT marginally declined by 0.7% on YoY basis. At a
CMP of Rs 5043, stock trades at 15.9x P/BV of CY14E. We have a “Neutral” view on stock. .................................................................. ( Page : 1214)
Vardhman Textiles :
"BUY"
24th Feb 2014
Considering the favourable export scenario and completion of capacity expansions, we remain positive on FY14. We, hereby, initiate our
coverage with Vardhman Textiles to BUY with a target price of Rs.412 . Currently the stock is trading at 0.8x p/b , we cut our Earning parameter
for FY15 and cut p/b to 0.7x for FY15 . Looking at the current earning growth and environment the stock is looking very good but due to lack of
trigeers in FY15 we are really conservative for FY15 . ................................................. ( Page : 15-17)
DENA BANK :
"Neutral"
24th Feb 2014
Bank’s performance was lower than our expectation in all fronts and reported very weak set of numbers. Operating as well as financials metrics
were remained muted. Profitability was declined by 67% YoY despite of tax reversal owing to muted growth in NII and higher operating
expenses. We are pessimist about the growth parameters. We have neutral view on the stock. .............................................................. ( Page :
18- 22 )
BANKBARODA :
"BUY"
21th Feb 2014
Bank of Baroda’s profitability was up by 3.6% YoY due to right back of depreciation provisions. Bank’s operating and financials metrics were
remained muted except healthy loan growth. Margin compressed sequentially but management guided domestic NIM of 3% from present of
2.95% which seems achievable if we look at balance sheet structure. We value bank at Rs.634/share which implies 0.75 times of FY14E’s book
value. ......................................................................... ( Page : 23- 27)
Narnolia Securities Ltd,

2. Public Sector Banks Result Review 3QFY14
Moderate NII growth in the system due to muted loan growth
Net interest income of our universe grew by 10.4% YoY on the back of margin
expansion on YoY basis along with moderate to healthy loan growth. In our coverage
universe, Bank of India and UCO Bank were reported healthy NII growth whereas
Andhra Bank reported 10.6% YoY declined in NII. SBI reported NII growth of 13 YoY
largely due to loan growth of 17% while margin was declined by 12 bps and flat at
QoQ basis.
Lower operating profit on account of higher wage settlement provisions and
cost related to branch expenses
Operating profit of our universe was declined by 1.5% YoY on the back of higher
cost against employee provisions, operating cost and non supportive other income.
Most of PSBs were reported negative growth in their other income led by lower
corporate fee income. In our universe ALBK, Bank of India and UCO bank reported
healthy operating profit. But we have not seen improvement of operating metrics in
these banks. Operating leverage of PSBs bank has been increasing led higher wage
provisions and branch expansion.
Profitability declined led by higher operating expenses, higher provisions and
Nifty Vs Bank Nifty during Year
Loan (Rs tn) and YoY Gr(%)
creation of DTL special reserve
Earnings growth of Public Sector Banks (PSBs) are remained weak largely due to
higher operating expenses led by employee provisions and surged in provisions and
contingencies and higher tax provision for DTL special reserve as per RBI’s
suggestion. In our banking coverage universe, profitability declined by 27% YoY and
11.5% QoQ. UCO Bank reported 208% YoY growth while Andhra Bank de-grew by
82% YoY.
Asset quality deterioration sequentially on account of tight liquidity condition
and rising interest rate
Most of PSBs reported 10 to 20% deterioration in asset quality sequentially while
United Bank’s GNPA and net NPA were 11% and 7.5% of gross advance and net
advance respectively and fresh slippages were 16% (annualized). On slippage front
some banks like PNB, Bank of Baroda, Union Bank and UCO bank showed some
strength. But in tight economy condition and rising interest rate scenario, asset
quality pressure would continue. Banks with higher coverage ratio would be
protected. PNB and Bank of Baroda are in better place and their management
commentaries reflect some confidence on asset quality issue.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
2

3. Public Sector Banks Result Review 3QFY14
Worry about the structure damage of balance sheet, declined profit is not matter
We are not worried about the declining trend of PSBs profitability but to worry about the
structural damage of balance sheet. Most of PSBs were reported moderate to healthy
loan growth but their deposits and CASA growth were absent. In rising interest rate
scenario, banks with higher low cost deposits would be able to report healthy NII growth
on the back of margin expansion and would absorb operating cost. In our sense, PSBs
would either have to improve their cost structure or improve deposits franchise to report
growth at operating profit level. On cost structure front, we are pessimist as PSBs have
higher numbers of unproductive employee than private banks and their salary at lower to
middle level management are no means less than private sector banks. So banks with
higher deposits growth and strong CASA would be able to report healthy growth going
forward. We have buy rating on SBI on the back of its high CASA base and reasonable
valuation despite of bank’s profitability was declined by 34% YoY.
Outlook
Most of PSBs are trading at lower range of valuation multiple owing to absence of core
earnings, operating leverage, deteriorating asset quality and higher amount of restructure
assets that are in pipeline. Most of banking stocks reported moderate revenue and profit
growth owing to multiple headwinds. In near term we are not seeing improvement in
economic condition and asset quality pressure are expected to remain in the system due
to tight liquidity situation and rising interest rate. Post result we like SBI, Union Bank and
UCO Bank due to their structural improvement in balance sheet, operating and financial
metrics.
Result Snapshot
PSU BANKS
ALBK
ANDHRABANK
BANKBARODA
BANKINDIA
CANBK
DENABANK
IOB
ORIENTBANK
PNB
SBIN
SYNDIBANK
UCOBANK
UNIONBANK
VIJAYABANK
Total
NII
1336
868
3057
2719
2191
661
1398
1230
4221
12641
1359
1566
1964
495
34369
3QFY14
PPP Net Profit
1008
325
522
46
2197
1048
2144
586
1425
626
371
68
961
75
858
224
2702
755
7618
2235
806
380
1137
315
1262
349
168
11
22170
6717
NII
1309
1045
2895
2527
2191
107
1452
1281
4016
12251
1411
1569
1954
705
33404
2QFY14
PPP Net Profit
1154
276
643
71
2125
1168
2102
622
1425
626
369
625
791
133
825
251
2535
505
6312
2375
811
470
1166
400
1225
208
273
136
20601
7590
NII
1330
971
2841
2308
1988
615
1382
1204
3733
11154
1400
1177
1891
456
31120
3QFY13
PPP Net Profit
860
311
712
257
2256
1012
1856
803
1516
714
443
206
1017
116
926
326
2682
1306
7791
3396
864
508
831
102
1358
302
261
127
22513
9175
YoY Growth
NII
PPP Net Profit
0.4
17.2
4.7
-10.6
-26.8
-82.3
7.6
-2.6
3.6
17.8
15.5
-27.0
10.2
-6.0
-12.3
7.5
-16.3
-67.1
1.2
-5.5
-35.3
2.2
-7.3
-31.2
13.1
0.8
-42.2
13.3
-2.2
-34.2
-3.0
-6.8
-25.2
33.0
36.8
208.4
3.8
-7.1
15.5
8.5
-35.7
-91.0
10.4
-1.5
-26.8
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
QoQ Growth
NII
PPP Net Profit
2.0
-12.6
18.0
-16.9
-18.9
-35.5
5.6
3.4
-10.3
7.6
2.0
-5.8
0.0
0.0
0.0
517.7
0.5
-89.2
-3.7
21.5
-43.6
-3.9
4.0
-10.6
5.1
6.6
49.6
3.2
20.7
-5.9
-3.7
-0.7
-19.2
-0.2
-2.5
-21.4
0.5
3.0
67.8
-29.8
-38.6
-91.6
2.9
7.6
-11.5
3

4. SHREE CEMENT.
Update
Book Profit
CMP
Target Price
Previous Target Price
Upside
Change from Previous
4772
4791
4791
0%
NA
Market Data
BSE Code
NSE Symbol
500387
SHREECEM
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume (Nos.)
Nifty
5210/3413
16572
4143
6186
Stock Performance-%
1M
8.2
9.5
Absolute
Rel. to Nifty
1yr
9.5
3.8
YTD
8.1
4.0
Share Holding Pattern-%
2QFY14
64.8
8.2
5.9
21.2
Promoters
FII
DII
Others
1QFY14 4QFY13
64.8
64.8
8.2
8.1
5.7
5.9
21.3
21.2
1 yr Forward P/B
6000
PRICE
2x
3x
4x
5000
1.5x
2.5x
3.5x
4.5x
4000
3000
2000
1000
Apr-13
Nov-13
Sep-12
Jul-11
Feb-12
Dec-10
Oct-09
May-10
Mar-09
Jan-08
Aug-08
Jun-07
Apr-06
Nov-06
Sep-05
Jul-04
Feb-05
Dec-03
Oct-02
May-03
Mar-02
0
Source - Comapany/EastWind Research
"Book Profit"
25th Feb' 14
Profitability and Earning drag may surprise for the next cosecutive quarters.
The stock is trading at 4x in 1 yr forward P/B chart.we believe for the current market
scenario the price is fare enough to trade.But looking at future capex plans and sluggish
demand we belive the earnings and profitability of Shree cement may fall for the next
two consecutive quarters.The profitability may fall due to incrising depriciation.Till now
the company's depriciation level is stable but it may surprise further.so we recommend
its a better pic to book profit.
Volumes grew by18 % but prices came down by 5%. So the EBITDA margin has hit
badly:Shree Cement Ltd has reported a 47% fall in its December quarter net profit on
lower sales as well as 5% degrowth in realization. PAT impacted due to lower other
income (down by 70% YOY), Depriciation burden on EBIDTA (Depriciation increased 41%
YOY). Volumes grew by18 % to3.8mn ton from 3.3mn ton QOQ. Net profit decreased by
47% yoy from Rs.217.44 crore (Rs.62.42 per share) in 2Q13 to Rs.115.49 crore (Rs.33.15
per share) in 2Q14.Total net income from operations stood at Rs.1318.13 crore in 2Q14,
a 6% fall yoy from Rs.1401.23 crore in 2Q13.Other income decreased from Rs.30.2 crore
in 2Q13 to Rs.9.9 crore in 2Q14.In the mean time company declares a Rs.10 as interim
dividend/share.
Power Segment: Realization Down By 15% : For power generation the net realization has
come down from Rs 383 to Rs 334 compared to last year same quarter and in the first
quarter it was still better at Rs 397.So the power realization is down by 13 percent and
hence sales also have come down by 35 percent to Rs.290 Cr. At the same time 14%
increase in its profitability from power segment to Rs112.56 crore while its cement
segment reported 79% fall in its profitability to Rs37.65 crore.
MAT Credit support the buttom line :
During the Quarter Company got MAT (minimum alternative tax) credit entitlement of
Rs9.25 crore and deferred tax of Rs1.79 crore. This reduced total tax payable amount to
Rs15.27 crore from Rs26.31 crore.
On the expansion front :
The 2m-ton Line-IX clinker unit at Ras, Rajasthan, was commissioned in Jun’13.Line X of
similar capacity along with 25MW of WHRS (at the same location) is expected by
Jun’14.Two grinding units of 2m tons each, at Ras and in Bihar,are being constructed and
expected by Jun’14.We expect Shree to be a 21.5m-tpa company by Jun’15.It plans to
foray into high demanding eastern.Total capex for these expansion is Rs.3,000 crore
which is spread over next 2 years.
Financials :
Q2FY14
Y-o-Y %
Q-o-Q %
Q2FY13
Q1FY14
Revenue
1318
-7.7
5.6
1428
1248
EBIDTA
271
-24.7
8.8
360
249
Net Profit
115
-46.9
-32.9
217
172
EPS
33
-46.9
-32.9
62
49
EBIDTA%
21
-18.4
3.1
25
20
NPM%
9
-42.5
-36.5
15
14
(In Crs)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
4

5. SHREE CEMENT.
Management Corner : From mid-January there is a big change in demand scenario
because of the Indian calendar, the prices have improved, the demand has also
improved and they think that January to June some impact of elections will be there pre-election demand and other things. So margins should be better than 21 percent.
1500
60
Revenue
1450
50
Growth
1400
40
1350
Outlook :
From the view company Operations in the high utilisation North and Central markets,
capacity expansions underway, low gearing and strong RoE are fundamental positives.
We believe although, near term challenges in terms of a slowdown in demand for
cement would remain, strong balance sheet and better efficiency in terms of cost
remains a key positive for this company to overcome challenges.Company Management
is bull for the rest two quarters of FY2014 as according to them demand has already
buttom out.We are positive on the stock as it always beats its peers group with lower
operational cost.
The stock is trading at 4x in 1 yr forward P/B chart.we believe for the current market
scenario the price is fare enough to trade.But looking at future capex plans and
sluggish demand we belive the earnings and profitability of Shree cement may fall for
the next two consecutive quarters.The profitability may fall due to incrising
depriciation.Till now the company's depriciation level is stable but it may surprise
further.so we recommend its a better pic to book profit.
we recommend book profit at a 11% high,and stay out from the stock for medium
term,till the triggers hit.
Company Description : Shree Cement (SCL) is a cement producer operating in the two
segments cement and power. As of June 30, 2012, the company had a cement capacity
of 13.5 million tonnes per annum (MTPA) and power capacity of 560 MW. The
company’s brands include Shree Ultra,Bangur Cement and Rockstrong Cement. It has
manufacturing facilities at Beawar and Ras in Ajmer and Pali district and grinding units
at Khushkhera, Suratgarh and Jaipur, respectively, in Rajasthan and Roorkee in
Uttarakhand.
P/L PERFORMANCE
FY11
FY12
FY13
FY14E
Net Revenue from Operation
3454
5898
5590
5409
Other Income
203
163
188
197
Total Income
3656
6061
5779
5550
Power and fuel
905
1500
1513
1409
Freight and forwarding
602
1006
915
1090
Expenditure
2569
4252
4029
4318
EBITDA
885
1646
1561
1091
Depriciation
676
873
436
562
Interest Cost
98
235
193
138
Net tax expense / (benefit)
-99
69
115
54
PAT
365
619
1004
478
ROE%
20.8
23.1
26.1
11.0
Narnolia Securities Ltd,
30
1300
20
1250
10
1200
0
1150
-10
1100
-20
Source - Comapany/EastWind Research
EBIDTA
450
400
INTEREST SERVICE COVERAGE
RATIO
12
10
350
300
8
250
6
200
150
4
100
2
50
0
0
Source - Comapany/EastWind Research
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
-
NPM %
OPM %
EBITDA %
5

6. SHREE CEMENT.
B/S PERFORMANCE
Share capital
Reserve & Surplus
Total equity
Long-term borrowings
Short-term borrowings
Long-term provisions
Trade payables
Short-term provisions
Total liabilities
Intangibles
Tangible assets
Capital work-in-progress
Long-term loans and advances
Inventories
Trade receivables
Cash and bank balances
Short-term loans and advances
Total Assets
RATIOS
P/B
EPS
Debtor to Turnover%
Creditors to Turnover%
Inventories to Turnover%
FY10
FY11
FY12
FY13
35
1798
1833
1789
318
28
171
472
4906
0
752
967
299
358
82
416
415
4906
FY10
4.4
212.3
2.3
4.7
1.0
35
1951
1986
1472
217
16
185
267
4940
0
1167
729
308
404
108
499
429
4940
FY11
3.6
118.6
3.1
5.3
1.2
35
2699
2734
818
143
17
584
178
5973
0
1521
97
205
503
181
459
363
5973
FY12
3.8
177.5
3.1
9.9
0.9
35
3809
3844
443
534
18
81
87
6160
0
1782
133
378
530
315
369
326
6160
FY13
4.2
288.2
5.6
1.4
0.9
Trading At :
Source - Comapany/EastWind Research
Narnolia Securities Ltd,
6

7. "BOOK PART
PROFIT "
AXIS BANK
25th Feb, 2014
Company Updated
CMP
Target Price
Previous Target Price
Upside
Change from Previous
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
Stock Performance
1M
Absolute
-2.2
Rel.to Nifty
0.8
BOOK PART
PROFIT
1237
1217
1147
-2
6
532215
AXISBANK
1549/764
55229
3.14 lakh
6186
1yr
-17.4
-21.0
YTD
-17.4
-21.0
Share Holding Pattern-%
Current 4QFY13 3QFY1
3
Promoters
33.9
33.9
33.9
FII
43.2
43.4
40.7
DII
9.7
4.9
8.8
Others
13.2
17.8
16.6
Axis Bank Vs Nifty
Axis Bank is now trading at Rs.1237/share which met our target price of
Rs.1217. This price implies P/BV multiple of 1.5 times which is quite
reasonable as per our view. We advice our investor to book part profit from
this stock as we neither see improvement of asset quality nor revival in
economy in near term. In 3QFY14’s result, bank’s profitability was up by 19%
largely due to reversal of investment depreciation otherwise operating profit
was just up by 10.7% YoY. Bank’s exposure to risky sector (Power +
Infrastructure) remained high at 12.87% as against 12.64% in previous quarter.
However, fresh slippage was marginally softened to Rs.589 cr versus Rs.618
on sequential basis. Impairment of assets (GNPA+ Restructure Assets)
remained stable at 3.7% of net advance which was higher among peers.
Lower multiple on account of uncomfortable earnings and lower corporate
loan demand
We have lower valuation multiple of bank in compare to its peers on account of
uncomfortable earnings and asset quality stress. Operating performance of bank
was remained under pressure as bank’s core operating revenue (NII + Other
Income) grew by 12.6 YoY owing to lower fee income led by muted corporate and
retail fee income. Corporate loan segment which constituted 46% of total loan grew
by 3% YoY while retail segment loan grew by 44% YoY which constituted 33% of
total loan. Incremental loan growth came from retail segment implying that bank has
to maintain retail growth trajectory for industry average loan growth of 15%. Demand
of corporate loan remained weak due to prevailing economy scenario. So loan
growth for FY14 is likely to be line with system credit growth due to weakness in
corporate loan demand and moderation in retail loan.
Asset quality pressure persist; exposure to risky sector remained high
Asset quality pressure remained persist during the quarter with GNPA and net NPA
increased by 10% and 20% YoY respectively in absolute term. Fresh slippage inch
up improved to Rs.589 cr as against Rs.618 cr in previous quarter. In percentage
term GNPA and net NPA stood at 1.42% and 0.47% as against 1.36% and 0.42%
respectively in previous quarter. Provision coverage ratio without technical write off
declined by 270 bps QoQ led by lower provisions made on sequential basis.
Impairment of assets (GNPA + Restructure Assets) for the quarter remained stable
at 3.7% which was higher among peers. Moreover bank’s exposure to risky sector
(Power + Infrastructure) was remained high at 12.87% of net advance where
slippage risks are relatively high.
Financials
NII
Total Income
PPP
Net Profit
EPS
2011
6566
11238
6377
3340
81.4
Narnolia Securities Ltd,
2012
8026
13513
7413
4224
102.2
Rs, Cr
2013
2014E
2015E
9666
12224
14775
16217
19146
21697
9303
11206
12367
5179
5826
6934
110.7
124.2
148.2
(Source: Company/Eastwind)
7

8. AXIS BANK
Moderate growth in profit & loss
Bank’s profitability was up by 19% due to reversal of investment depreciation. Overall
provisions and contingencies were lower by 71% QoQ which led PBT growth of 22%
YoY. At operating profit level, bank grew by 10.7% YoY which was lower among peers
(HDFC Bank 29 YoY, ICICI bank 28.6%). Bank’s NII grew by 19.6% YoY largely due to
margin expansion of 14 bps YoY which was supported by low cost deposits franchise.
Core operating revenue (NII+ other income) grew 12.6% owing to muted other income
growth of 1.8% YoY.
Valuation & View
We value bank at Rs.1217/share implying 1.5 times of FY14E’s book value which is quite
reasonable as per our view. We have given this multiple on account of uncomfortable
earning and asset quality stress. Bank’s profitability was up due to reversal of investment
depreciation otherwise growth at operating profit level was remained lower as compare to
its peers. Asset quality increased at moderate pace with high exposure in risky sector
where fresh slippage risks are remaining high.
Valuation Band
1 Yr forward P/BV
1 Yr forward P/E
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
8

9. AXIS BANK
Fundamenatl throught graph
NII growth led by healthy CD ratio and
margin expansion on YoY basis
Lower other income and higher CI ratio led
muted PPP growth
Profit growth was higher than expectation on
the back of lower provisions
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
9

10. AXIS BANK
Quarterly Result
Quarterly Result
Interest/discount on advances / bills
Income on investments
Interest on balances with Reserve Bank of India
Others
Total Interest Income
Others Income
Total Income
Interest Expended
NII
Other Income
Total Income
Employee
Other Expenses
Operating Expenses
PPP( Rs Cr)
Provisions
PBT
Tax
Net Profit
3QFY14
5557
2110
49
73
7789
1644
4628
4805
2984
1644
4628
655
1358
2013
2615
202
2413
808
1604
2QFY14
5394
2143
35
37
7609
1766
4703
4672
2937
1766
4703
644
1309
1953
2750
687
2062
700
1362
Balance Sheet Date
Net Worth
Deposits
Loan
37649 36224 27027
262398 255365 244501
211467 201303 179504
Asset qualtiy( Rs Cr)
GNPA
NPA
%GNPA
%NPA
3008
1003
1.4
0.5
2734
838
1.4
0.4
3QFY13 % YoY Gr % QoQ Gr 3QFY14E Variation
4907
13.3
3.0
5748
3.4
2014
4.8
-1.5
2235
5.9
25
97.7
39.4
35
-29.2
19
277.1
95.6
38
-47.4
6965
11.8
2.4
8056
3.4
1615
1.8
-6.9
1774
7.9
4110
12.6
-1.6
4780
3.3
4470
7.5
2.8
5049
5.1
2495
19.6
1.6
3006
0.8
1615
1.8
-6.9
1774
7.9
4110
12.6
-1.6
4780
3.3
615
6.5
1.7
0
1134
19.8
3.8
0
1749
15.1
3.1
2008
-0.3
2362
10.7
-4.9
2772
6.0
387
-47.7
-70.5
752
271.4
1975
22.2
17.0
2020 -16.3
628
28.8
15.5
687
-15.0
1347
19.1
17.7
1333 -16.9
2275
679
1.3
0.4
39.3
3.9
7.3
2.8
17.8
5.0
32.2
10.0
47.8
19.7
37558
272935
214892
-0.2
4.0
1.6
-
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
10

11. AXIS BANK
FINANCIALS & ASSUPTION
Income Statement
2011
2012
2013
2014E
2015E
Interest Income
Interest Expense
NII
Change (%)
Non Interest Income
Total Income
Change (%)
Operating Expenses
Pre Provision Profits
Change (%)
Provisions
PBT
PAT
Change (%)
15155
8589
6566
31.2
4671
11238
25.3
4860
6377
22.4
3033
3345
3340
34.8
21995
13969
8026
22.2
5487
13513
20.2
6100
7413
16.2
3189
4224
4224
26.5
27183
17516
9666
20.4
6551
16217
20.0
6914
9303
25.5
4124
5179
5179
22.6
31198
18974
12224
26.5
6922
19146
18.1
7940
11206
20.5
2402
8804
5826
12.5
38490
23716
14775
20.9
6922
21697
13.3
9330
12367
10.4
2461
9906
6934
19.0
189166
34
77758
18
26268
71788
142408
36
219988
16
91412
18
34072
92921
169760
19
252614
15
112100
23
43951
113738
196966
16
290506
15
124917
11
51266
129873
228481
16
334081
15
143655
15
58956
149354
265037
16
460
1404
3.1
549
1146
2.1
708
1304
1.8
813
1174
1.4
942
1174
1.2
Balance Sheet
Deposits( Rs Cr)
Change (%)
of which CASA Dep
Change (%)
Borrowings( Rs Cr)
Investments( Rs Cr)
Loans( Rs Cr)
Change (%)
Valuation
Book Value
CMP
P/BV
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
11

12. Nestle India
"NEUTRAL"
24th Feb' 14
"The nest becomes weaker"
Result update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
NEUTRAL
5043
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
500790
NESTLEIND
5865/4410
48593
21590
6091
Stock Performance
1M
Absolute
-3.7
Rel. to Nifty
-1.0
1yr
10.7
7.4
YTD
3.4
1.8
Share Holding Pattern-%
Current
Promoters
FII
DII
Others
1 yr Forward P/B
62.8
13.1
5.9
18.2
3QCY13 2QCY13
62.8
12.6
6.3
18.3
62.8
12.6
6.2
18.5
Weak numbers and showing up margin as well…,
For 4QCY13, Nestle Ind reported below numbers than street expectations in all counts,
sales grew by 4.7%(YoY) led by 3.7% domestic growth and 20.9% export growth. Its
domestic sales contribute 94% and exports 6% of sales. While, PAT marginally declined
by 0.7% on YoY basis. The company does not share volume growth numbers, but its
statement did mention that sales rose mainly because of higher prices and product
mix.
For CY13, Company posted 9.2% sales growth, hugely impacted by weak consumer
demand and high competitive intensity environment, PAT up by 6%.
Management will continue to focus on reinforcing the fundamentals of growth drivers.
Further, improve operational efficiencies, and keep rationalizing its SKUs. They are
very confident of strategy to deliver long-term sustainable profitable growth, despite
the short-term challenges.
Margin dip: During the quarter, company has been efficient to maintain its mark of
margin above than 20%. However, Margin ramp down by 210bps(YOY) to 21.1% because
of inflationary pressure on raw material. There was improvement in raw material cost by
110 bps to 46.1% of adjusted net sales. PAT margin inched down by 70bps(YOY) to
12.7%. For CY13, EBITDA Margin and PAT margin were flat at 22.2% and 13%.
Mix impact on RM Cost: Its top 3 inputs by value are milk and milk products, flour, and
palm oil, which together account for two-thirds of its material cost. Milk and wheat flour
have both seen prices increase, while a weak rupee has affected palm oil prices.
However, other inputs such as green coffee and sugar have seen softer price trends.
Jerk on Potential Market share: Nestle has been enjoying its leadership position (No.1)
in all categories except soups and its positioning in Chocolates, noodles, Coffee has
dominantly been unchallenged. Despite all facts, company has been facing many
challenges over the past one and half years from Cadbury's and Ferrero Rocher in
Chocolate, from HUL and ITC in noodles and from HUL in Coffee (Bru).
Nestlé’s more focus on margin stability could sacrifice its volume. Company’s cash cow
portfolio baby foods becoming weaker because of low ad spend. Now, Mead Jhonson
and Danone are dominating in same segment.
View and Valuation: Company’s less aggression on volume growth and the excessive
focus on Margin expansion make us cautious on the stock. At same time, company
believes on expansion of new plant set up by ignoring the dividend payout to
investors. Consistently, its RoE is on downward direction. At a CMP of Rs 5043, stock
trades at 15.9x P/BV of CY14E. We have a “Neutral” view on stock.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
4QCY13
2262.97
478.3
287.1
21.1%
12.7%
3QCY13
2360
503.9
289.6
21.4%
12.3%
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
Rs, Cr
(QoQ)-%
4QCY12
(YoY)-%
-4.1%
2161.1
4.7%
-5.1%
504.1
-5.1%
-0.9%
289.2
-0.7%
(30bps)
23.3%
(210bps)
40bps
13.4%
(70bps)
(Source: Company/Eastwind)
12

13. Nestle India
Sales and Sales Growth(%)
Sales growth led by 4.7% (YoY) India
growth, contributed by net realization
and volume growth in certain product
categories
(Source: Company/Eastwind)
Margin-%
RM inflation outlook appears adverse
and that could impact margins to hold
out.
(Source: Company/Eastwind)
Domestic and Export sales-(% of Sales)
Domestic revenue growth continues to
be very weak
(Source: Company/Eastwind)
Catalysts and Concerns;
Catalysts: Nestle plays on “Urban consumption theme” and now urban consumption and
demand are stagnant. Thus, we see steady growth in near term, while we maintain that
Nestle is a great long-term story with excellent quality management, strong leadership
across several categories in the food segment and with brand portfolio, there are several
headwinds, which will keep volume growth muted.
Concerns: (1)Continued input cost pressure could impacts its margin, (2) Competitive
intensity impacting its market share adversely, (3) Any adverse impact of inflation on
consumer demand would significantly impact sales and earnings growth assumptions.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
13

14. Nestle India
Financials
Rs in Cr,
Sales
RM Cost
Purchases of stock-in-trade
WIP
Employee Cost
Ad Spend
Other expenses
Total expenses
EBITDA
Depreciation and Amortisation
Other Income
EBIT
Interest
PBT
Tax Exp
PAT
Growth-% (YoY)
Sales
EBITDA
PAT
Expenses on Sales-%
RM Cost
Ad Spend
Employee Cost
Other expenses
Tax rate
Margin-%
EBITDA
EBIT
PAT
Valuation:
CMP
No of Share
NW
EPS
BVPS
RoE-%
P/BV
P/E
CY10
6284.7
2560.1
578.4
(83)
433.4
302.6
1213.0
5004.7
1280.1
127.8
12.7
1165.0
1.1
1163.9
326.5
837.5
CY11
7526.6
2933.4
704.2
(48)
546.5
327.6
1474.2
5937.6
1589.0
153.3
15.1
1450.8
5.1
1445.7
426.4
1019.3
CY12
8334.5
3756.9
111.5
(92)
663.4
355.9
1680.9
6476.5
1858.0
277.2
31.0
1611.9
26.6
1585.3
484.7
1100.6
CY13
9101.1
3907.0
110.0
105
741.5
391.3
1826.3
7081.5
2019.6
330.0
83.1
1772.7
36.5
1736.2
560.9
1175.3
CY13E
9218.0
3871.6
110.62
175
760
488.6
1797.51
7203.9
2014.1
342.9
73.7
1744.9
36.0
1708.9
564.0
1145.0
CY14E
9904.9
4308.6
118.86
99
792.39
435.8
1931.45
7686.19
2218.69
402.0
49.5
1866.23
59.7
1806.5
578.1
1228.45
CY15E
10942.2
4814.6
142.25
131
875.38
492.4
2133.73
8589.64
2352.58
474.0
87.5
1966.08
83.7
1882.4
611.8
1270.62
21.9%
20.5%
27.9%
19.8%
24.1%
21.7%
10.7%
16.9%
8.0%
9.2%
8.7%
6.8%
10.6%
8.4%
4.0%
8.8%
9.9%
4.5%
10.5%
6.0%
3.4%
40.7%
4.8%
6.9%
19.3%
28.0%
39.0%
4.4%
7.3%
19.6%
29.5%
45.1%
4.3%
8.0%
20.2%
30.6%
42.9%
4.3%
8.1%
24.4%
32.3%
42.0%
5.3%
8.3%
19.5%
33.0%
43.5%
4.4%
8.0%
19.5%
32.0%
44.0%
4.5%
8.0%
19.5%
32.5%
20.4%
18.5%
13.3%
21.1%
19.3%
13.5%
22.3%
19.3%
13.2%
22.2%
19.5%
12.9%
21.9%
18.9%
12.4%
22.4%
18.8%
12.4%
21.5%
18.0%
11.6%
3795.2
9.6
855.4
86.9
88.7
97.9%
42.8
43.7
4569.3
9.6
1274.0
105.7
132.2
80.0%
34.6
43.2
4592.0
9.6
1798.4
114.2
186.6
61.2%
24.6
40.2
5189.0
9.6
2368.8
121.9
245.7
49.6%
21.1
42.6
5189.0
9.6
2369.6
119.3
246.8
48.3%
21.0
43.5
5043.0
9.64
3050.2
127.43
316.4
40.3%
15.9
39.57
5043.0
9.64
3773.9
131.81
391.5
33.7%
12.9
38.26
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
14

15. Vardhman Textiles
"Buy"
24th Feb' 14
On a Strong earning foot..
Initial Coverage
CMP
Target Price
Previous Target Price
Upside
Change from Previous
341
412
NA
21%
NA
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume (Nos.)
Nifty
502986
VTL
410/241
2170
868
6155
VTL with its largest domestic capacity in terms of spindles, drives a significant por-tion of
its revenue from spinning segment. Company is one of the largest cotton yarn exporters
from India. Significant presence in Indian market and has emerged as a well known
supplier of the global market. Past few quarters were the turnaround for the company .
Company has strategic tie-ups with Japanese and Korean companies. Consistent
expansion and technological up-gradation has given a global status to the company. VTL
is the supplier of fabrics to the world’s leading brands such as Tommy Hil-figer, Esprit,
Gap, Louis Philippe, Arrow, etc
Profitability at the pick to serve
Vardhman Textiles Ltd (VTL), India’s leading textile player, reported a significant revenue
growth of 30.7% to Rs. 1431 Cr during Q3-FY14 over corresponding period previous year
on the back of 45.8% YoY increase in fabric business to Rs.522 Cr, which constitutes 3540% of the overall revenue. While yarn segment, which is the highest contributor of the
revenue, reported YoY growth of 30.5% to Rs.1182 Cr.
Stock Performance-%
1M
-3.8
-0.5
Absolute
Rel. to Nifty
1yr
22.6
20.1
YTD
29.5
26.2
Share Holding Pattern-%
Promoters
FII
DII
Others
3QFY14
61.9
6.6
17.2
14.4
2QFY14 1QFY14
61.7
61.6
5.7
5.3
18.2
18.9
14.4
14.2
1 yr Forward P/B
Source - Comapany/EastWind Research
Operating profit of the company recorded substantial growth of 70.9% to Rs.274 Cr
during Q3FY14 yoy and outpaced the revenue growth due to significant control over
material cost, employee expenses and fuel charges. Material cost, which constitutes 60%
of the total expenses, grew at YoY rate of 22.9% to Rs.660 Cr. As a result, EBITDA and
operating profit margin re-ported a considerable improvement of 358bps and 455bps
during Q3FY14 yoy respectively. PAT reported the YoY growth of 109.6%, while PAT margin improved by 466bps.
VTL reported consistent and strong YoY growth in past several quarters with the average
growth rate of more than 20%. Company reported compounded quarterly growth of 3.5%
in past 10 quarters
Despite expansion and heavy CAPEX for capacity enhancement, VTL managed to reduce
its debt to equity on the back of significant expansion in reserves & surplus due to
phenomenal improvement in profit-ability in past several quarters.
Company operates at EBITDA and net margin of 24.9% and 12.2% respectively, which
provides sufficient financial cushion against operating cost and financial expenses. With
liquidity being excellent and cash flows positive, current ratio at 2.58 and cash ratio at
0.47 offer no worries.
Financials :
Q3FY14
Y-o-Y %
Q-o-Q %
Q3FY13
Q2FY14
Net Revenue
1431
30.9
10.9
1093
1290
EBITDA
346
53.1
0.0
346
226
Depriciation
72
10.8
1.4
71
65
Interest Cost
31
-22.5
-11.4
35
40
Tax
68
83.8
9.7
62
37
PAT
175
108.3
-1.7
84
178
(In Crs)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
15

16. Vardhman Textiles
Advantage India remains for most of FY14E
Chinese players imported yarn from India owing to the high cotton prices. This led to
the strong performance of Vardhman over the last three quarters. There is no clarity yet
on the policy to be followed by China. If the current scenario continues, Indian spinners
will continue to gain. However, if Chinese players are able to procure cotton at lower
prices, it will have a negative impact on the demand for Indian yarn. We, thereby,
remain conservative about our FY15 estimates.
Business and its strategies
VTL with its largest domestic capacity in terms of spindles drives a significant portion of
its revenue from spinning segment. Company is one of the largest cotton yarn exporters
from India. Significant presence in Indian market and has emerged as a well-known
supplier of the global market. Past few quarters were the turnaround for the company.
Company has strategic tie-ups with Japanese and Korean companies. Consistent
expansion and technological up-gradation has given a global status to the company. VTL
is the supplier of fabrics to the world’s leading brands such as Tommy Hilfiger, Esprit,
Gap, Louis Philippe, Arrow, etc
Views and Valuation
Vardhman is geared to report a record profit in FY14. Despite weak macro-economic
scenario and recent expansion, VTL managed to report significant improvement in its
key metrics.Considering the favourable export scenario and completion of capacity
expansions, we remain positive on FY14. We, hereby, initiate our coverage with
Vardhman Textiles to BUY with a target price of Rs.412 . Currently the stock is trading at
0.8x p/b , we cut our Earning parameter for FY15 and cut p/b to 0.7x for FY15 . Looking
at the current earning growth and environment the stock is looking very good but due
to lack of trigeers in FY15 we are really conservative for FY15 .
P/L PERFORMANCE
Net Revenue from Operation
Cost Of Projects & Contractual
Power and fuel
Other expences
Employee benefit Expence
Expenditure
EBITDA
Depriciation
Interest Cost
Tax
PAT
ROE%
FY12
4641
2651
460
386
292
4025
616
274
174
66
141
6
FY13
4972
2316
559
486
349
3997
975
295
177
168
356
14
FY14E
6245
2741
647
887
433
4709
1536
343
160
336
720
23
Narnolia Securities Ltd,
FY15E
6682
3007
702
1002
520
5231
1451
397
160
296
628
17
Source - Comapany/EastWind Research
16

17. Vardhman Textiles
B/S PERFORMANCE
Share capital
Reserve & Surplus
Total equity
Long-term borrowings
Short-term borrowings
Long-term provisions
Trade payables
Short-term provisions
Total liabilities
Intangibles
Tangible assets
Capital work-in-progress
Long-term loans and advances
Inventories
Trade receivables
Cash and bank balances
Short-term loans and advances
Total Assets
RATIOS
P/B
EPS
Debtor to Turnover%
Creditors to Turnover%
Inventories to Turnover%
FY10
FY11
FY12
FY13
57
1548
1604
2346
297
3
87
26
5077
0
2553
45
77
1297
476
262
272
5077
FY10
1.0
45.3
14.2
2.6
3.9
63
2202
2264
2925
20
3
123
30
6103
0
2534
156
111
1933
667
71
395
6103
FY11
0.7
82.5
15.1
2.8
4.4
63
2144
2207
2044
505
5
116
48
5967
18
2557
185
92
1535
630
84
326
5967
FY12
0.6
22.2
13.6
2.5
3.3
63
2444
2506
2100
778
6
84
64
6789
22
2679
213
147
1784
746
65
475
6789
FY13
0.7
56.0
15.0
1.7
3.6
CASH FLOWS
Cash from Operation
Changes In Working Capital
Net Cash From Operation
Cash From Investment
Cash from Finance
Net Cash Flow during year
FY10
640
-629
11
-132
10
-111
FY11
933
-902
31
-456
234
-192
FY12
576
444
1020
-647
-355
18
FY13
843
-510
333
-517
165
-19
Source - Comapany/EastWind Research
Source - Comapany/EastWind Research
Trading At :
Narnolia Securities Ltd,
17

18. DENA BANK
"NEUTRAL"
24th Feb, 2014
ANNUAL REPORT UPDATE
Result update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
Market Data
BSE Code
NSE Symbol
NEUTRAL
51.55
57
55
11
-
Bank’s performance was lower than street expectation and disappointed in
most of operating metrics. GNPA remain high at 2.96% while net NPA were
1.97%. Provision coverage ratio (without technical write off) improved slightly
on sequential basis. Valuation wise, stock is trading at 0.4 times of one year
forward book which is quite reasonable. But looking at growth and operating
metrics, we believe bank would be trade in the range of 0.3 to 0.4 times of one
year forward book. We have neutral view on the stock with price target of
Rs.57.
532121
DENABANK
NII grew at moderate pace owing to margin compression on Y-o-Y
Dena bank reported very weak set of numbers during quarter with NII grew by 7.5%
YoY to Rs.661 cr largely due to margin compression in year on year basis led by
higher cost of fund than fund yield. Higher cost of fund was due to 208 bps declined
in low cost franchise deposits. Other income was lower at 10.7% YoY to Rs.129 cr
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
Stock Performance
1M
Absolute
-13.6
Rel.to Nifty
-10.7
103/42
1809
1.16 lakh
6155
1yr
-50.3
-53.9
YTD
-50.3
-53.9
Share Holding Pattern-%
Current 4QFY13 3QFY1
3
Promoters
66.6
55.2
55.2
FII
7.9
8.6
16.5
DII
4.9
7.3
8.1
Others
20.7
28.9
20.2
DENA Bank Vs Nifty
versus Rs.144 cr in previous quarter. Total income was moderate at 4% YoY growth.
Higher operating expenses led negative growth in PPP
Operating expenses during quarter was higher at 32.5% YoY which escalated cost
income ratio to 63.4% versus 51.4% in last year. Bank’s employee cost and other
operating expenses both surged to 33% and 32% YoY respectively. This had make
down operating profit to Rs.371 cr (down by 16.3% YoY) versus Rs.443 cr in last
quarter and Rs.371 cr in previous quarter.
Provision and contingencies were up on the back of deteriorating asset quality
Provisions and contingencies were up by 44% QoQ on the back of deteriorating
asset quality. In absolute term gross NPA and net NPA both increased by 5% YoY
each. In percentage term GNPA and net NPA stood at 2.96% and 1.97 versus
3.04% and 2.02% in previous quarter. Cumulative provision was up by 4.7% which
slightly improved provisions coverage ratio without technical write off to 33.4% from
33.5% in 2QFY14. Dena Bank's Capital Adequacy Ratio as per Basel III norms stood
at 10.61% as against 10.21% in previous quarter.
Financials
NII
Total Income
PPP
Net Profit
EPS
2011
1763
2297
1224
612
18.3
2012
2101
2683
1528
803
22.9
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
Rs, Cr
2013
2014E
2015E
2383
2551
3538
3039
3410
4397
1739
1808
1627
810
445
502
23.2
9.5
10.7
(Source: Company/Eastwind)
18

19. DENA BANK
Profitability declined despite of tax reversal
Profitability declined by 67% YoY due to reversal of tax to the tune of Rs. 79 cr as against
reversal of Rs.73 cr in previous quarter. At PBT level, bank was negative at Rs.12 cr
which was highly discouraging. This was basically due to moderate NII growth, higher
operating expenses and higher provisions.
Sequentially margin improved on the back of stable loan yield and slightly
increased of cost of deposits
NIM improved by 10 bps sequentially on the back of higher yield on advance than cost of
deposits. During quarter, bank’s yield on advances remained flat at 11.6% while yield on
investment improved by 4 bps QoQ to 7.6%. Cost of deposits increased by 5 bps QoQ to
7.6%. Going forward, management guided NIM at the range of 2.75% to 3%.
Deposits growth faster than loan growth
On balance sheet growth front, bank’s deposits grew by 13.2% YoY led by term deposits
which grew by 17% YoY. Current account deposits de-grew by 5% YoY while saving
account deposits grew by 9% YoY. Overall CASA ratio de-grew by 208 bps to 29%.
Bank’s loan grew by 11% YoY aided by agriculture and MSME segment which was grown
by 30.7% and 25.4% YoY respectively. Retail advance grew by moderate at 14.4% YoY.
Management guided loan growth of 15-17% for FY14. We model 15% loan growth and
6% deposits growth for FY14.
Valuation & View
Bank’s performance was lower than street expectation and disappointed in most of
operating metrics. GNPA remain high at 2.96% while net NPA were 1.97%. Provision
coverage ratio (without technical write off) improved slightly on sequential basis.
Valuation wise, stock is trading at 0.4 times of one year forward book which is quite
reasonable. But looking at growth and operating metrics, we believe bank would be trade
in the range of 0.3 to 0.4 times of one year forward book. We have neutral view on the
stock with price target of Rs.57.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
19

20. DENA BANK
NII grew by 7.5% YoY to Rs.661 cr largely due
to margin compression in year on year basis
led by higher cost of fund than fund yield.
Higher operating expenses led negative
growth in PPP
Profitability declined by 67% YoY due to
reversal of tax to the tune of Rs. 79 cr as
against reversal of Rs.73 cr in previous
quarter.
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
20

21. DENA BANK
Quarterly Result ( Rs Cr)
Interest/discount on advances / bills
Income on investments
Interest on balances with Reserve Bank of India
Others
Total Interest Income
Others Income
Total Income
Interest Expended
NII
Other Income
Total Income
Employee
Other Expenses
Operating Expenses
PPP( Rs Cr)
Provisions( Incl. tax provision)
PBT
Tax
Net Profit
3QFY14
1848
654
3
30
2534
129
2663
1873
661
129
790
255
164
419
371
382
-12
-79
68
2QFY14
1790
644
9
7
2450
150
2600
1825
625
150
775
251
154
406
369
335
34
-73
107
3QFY13
1742
519
3
0
2264
144
2408
1649
615
144
759
192
124
316
443
157
286
80
206
Balance Sheet Data (Rs Cr)
Deposits
Saving Accounts
Current Accounts
Loan
96081
21983
5786
69895
93669
21476
5695
64785
84882
20216
6083
63040
Asset Quality
GNPA (Rs Cr)
NPA (Rs Cr)
GNPA(%)
NPA(%)
PCR(%) (Without technical writeoff)
2066
1375
2.96
1.97
33
1968
1309
3.04
2.02
34
% YoY Gr % QoQ Gr 3QFY14E ariation(%)
V
6.1
3.2
1931
-4.3
26.0
1.4
666
-1.9
-1.5
-70.1
9
-72.2
7541.0
303.8
4
707.6
11.9
3.4
2610
-2.9
-10.7
-13.9
150
-14.0
10.6
2.4
2760
-3.5
13.6
2.6
1926
-2.8
7.5
5.7
684
-3.3
-10.7
-13.9
150
-14.0
4.0
1.9
834
-5.3
32.8
1.6
225
13.4
32.1
6.1
150
9.2
32.5
3.3
375
11.7
-16.3
0.4
458
-19.1
144.2
14.1
351
8.9
-104.1
-134.2
107
-110.9
-199.3
8.6
21
-470.0
-67.2
-36.9
86
-21.1
1317
817
2.09
1.30
38
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
21

22. DENA BANK
P/L
Interest/discount on advances / bills
Income on investments
Interest on balances with Reserve Bank of India
Others
Total Interest Income
Others Income
Total Income
Interest on deposits
Interest on RBI/Inter bank borrowings
Others
Interest Expended
NII
NII Growth(%)
Other Income
Total Income
Employee
Other Expenses
Operating Expenses
PPP( Rs Cr)
Provisions
Net Profit
2011
2012
3820
1193
16
4
5034
534
5567
3117
8
145
3270
1763
60.3
534
2297
688
385
1073
1224
612
612
5161
1544
38
51
6794
582
7376
4528
18
147
4693
2101
19.1
582
2683
715
440
1155
1528
725
803
2013 2014E
6819
2019
31
30
8899
655
9555
6234
59
223
6516
2383
13.4
655
3039
792
508
1300
1739
706
810
7421
2536
28
50
10035
859
10894
6583
0
228
7484
2551
7.1
859
3410
978
625
1603
1808
1308
445
2015E
8737
2307
28
50
11122
859
11981
7242
0
342
7583
3538
38.7
859
4397
1690
1080
2770
1627
1000
502
64210
25.1
1692
8.3
44828
26.4
18769
19.6
77167
20.2
3881
129.4
56693
26.5
23028
22.7
97207
26.0
8414
116.8
65781
16.0
34343
49.1
102068
5.0
6515
-22.6
72359
10.0
34203
-0.4
112274
10.0
9763
49.9
83213
15.0
38442
12.4
8.5
6.4
7.4
4.9
9.0
5.0
9.1
6.7
8.0
5.9
4.2
5.8
10.4
5.9
8.1
6.4
3.4
6.2
10.5
7.4
9.4
6.5
3.4
6.9
10.5
6.0
9.1
6.5
3.5
6.2
Key Balance sheet data
Deposits
Deposits Growth(%)
Borrowings
Borrowings Growth(%)
Loan
Loan Growth(%)
Investments
Investments Growth(%)
Eastwind Calculation
Yield on Advances
Yield on Investments
Yield on Funds
Cost of deposits
Cost of Borrowings
Cost of fund
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
22

23. BANKBARODA
"BUY"
21h Feb. 2014
ANNUAL REPORT UPDATE
Result update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
BUY
513
624
22
532134
BANKBARODA
773/429
21627
18.25 Cr
6091
During quarter bank’s most of operating as well as financials was muted
except loan growth of 18% YoY. Asset quality was better among peers but in
tight liquidity situation it would remain challenging. Margin was compressed
slightly in sequential basis but management continued to guided domestic
NIM at 3% level from present of 2.95%. We value bank at Rs.634/share which is
0.75 times of FY14E’s book value.
Moderate NII growth despite of healthy loan growth and stable CD ratio
Bank’s NII growth moderate at 7.8% YoY to Rs. 3057 cr despite of healthy loan
growth and stable CD ratio. This was due to margin compression of 28 bps YoY led
by lower loan yield than cost of fund. However bank has taken several steps to
reduce the cost as share of bulk deposits declined to 73.8% from 79.3% in last year
and liability franchise increased by increased by 556 bps YoY. Other income (11%
YoY) was supportively help to growth revenue by 8.4% YoY to Rs.3989 cr.
Stock Performance
1M
Absolute
-18.8
Rel.to Nifty
-15.3
1yr
-32.4
-35.7
YTD
-32.4
-35.7
Share Holding Pattern-%
Current 4QFY13 3QFY1
3
Promoters
55.4
55.4
55.4
FII
15.5
15.5
15.3
DII
19.6
19.6
19.0
Others
9.5
9.5
10.3
Higher operating expenses led de-growth in operating profit
Operating expenses increased by 25.7% in which employee cost increased higher by
32.3% YoY followed by 17.3% other operating expenses. This was result of
escalating cost to income ratio to 45% from 39% in last year. Higher cost income
ratio and moderate income growth led operating profit de-growth by 2.6% YoY to
Rs.2197 cr.
Provisions lower on account of right back of investment depreciation
Provisions and contingencies declined by 12% QoQ largely due to reversal of
provisions against investment depreciation to the tune of Rs.120 cr as against Rs.93
cr in previous quarter. Loan loss provision was by and large same as in previous
BANKBARODA Vs Nifty
quarter and stood at Rs.819 cr versus Rs. 838 cr. With the reversal of provisions,
PBT increased by 17% YoY and 14% QoQ to Rs.1436 cr.
Profitability increased due to lower provisions
Profitability increased by 3.6% YoY to Rs.1048 cr on account of higher tax provision
made by bank led by DTL special reserve as per suggestion by RBI. In 9MFY14,
total effective tax rate altogether came to 17%. Management guided tax rate for full
year would be 20-22%.
Financials
NII
Total Income
PPP
Net Profit
EPS
2011
8802
11611
6982
4242
108.3
2012
10317
13739
8581
5007
121.8
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
Rs, Cr
2013
2014E
2015E
11315
12218
14122
14946
16400
18304
8999
9206
10067
4481
4444
4819
106.4
105.5
114.4
(Source: Company/Eastwind)
23

24. BANKBARODA
Asset quality by and large stable, PCR increased
On asset quality front, bank’s gross NPA increased by 10% YoY and net NPA
deteriorated by 5% in absolute term led by higher provision in balance sheet. In
percentage term, GNPA and net NPA stood at 3.4% and 1.9% versus 3.2% and 1.9% in
previous quarter. Provisions coverage ratio without technical write off was improved by
246 bps QoQ to 44.5%. Bank’s asset quality was better than among peers under our
coverage universe.
Margin compression on account of higher cost of fund than fund yield
NIM compressed by 5 bps QoQ to 2.37% due to stable loan yield while cost of fund
increased marginally by 10 bps to 5.4%. Bank has taken several steps to curtail cost by
reducing share of bulk deposits and increasing CASA ratio. Domestic NIM improved to
2.95% versus 2.85% in previous quarter whereas oversea NIM remained flat at 1.18% as
against 1.19%. Domestic NIM improvement was on account of higher investment yield to
7.98% from 7.9% on sequential basis.
Loan growth healthy led by SME and retail
Overall deposits de-grew by 4% YoY led by 10% declined of term deposits on year on
year basis. Current account and saving account deposits registered growth of 19% and
13% YoY respectively. This was the result of CASA ratio increased by 556 bps YoY to
26.2%. Loan grew by 18% YoY led by SME growth of 39.2% YoY followed by 21% YoY
growth retail. Corporate loan growth remained intact as bank’s has caution outlook
towards corporate exposure in tight economy scenario.
Valuation & View
During quarter bank’s most of operating as well as financials was muted except loan
growth of 18% YoY. Asset quality was better among peers but in tight liquidity situation it
would remain challenging. Margin was compressed slightly in sequential basis but
management continued to guided domestic NIM at 3% level from present of 2.95%. We
value bank at Rs.634/share which is 0.75 times of FY14E’s book value.
Narnolia Securities Ltd,22
Please refer to the Disclaimers at the end of this Report.
24

25. BANKBARODA
Bank’s NII growth moderate at 7.8% YoY to Rs.
3057 cr despite of healthy loan growth and
stable CD ratio. This was due to margin
compression of 28 bps YoY led by lower loan
yield than cost of fund
Higher operating expenses led de-growth in
operating profit
Profitability increased due to lower provisions
Source: eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
25

26. BANKBARODA
Quarterly Result (Rs Cr)
Interest/discount on advances / bills
Income on investments
Interest on balances with Reserve Bank of India
Others
Total Interest Income
Others Income
Total Income
Interest Expended
NII
Other Income
Total Income
Employee
Other Expenses
Operating Expenses
PPP( Rs Cr)
Provisions
Exceptional Items
PBT
Tax
Net Profit
3QFY14
7061
2175
245
209
9691
932
10623
6634
3057
932
3989
1056
736
1792
2197
762
16
1436
372
1048
2QFY14
6832
2220
281
140
9473
974
10447
6579
2895
974
3869
1030
714
1744
2125
861
16
1264
80
1168
3QFY13 % YoY Gr
6485
8.9
1898
14.6
403
-39.2
58
258.2
8845
9.6
841
10.9
9686
9.7
6004
10.5
2841
7.6
841
10.9
3681
8.4
798
32.3
627
17.3
1426
25.7
2256
-2.6
1029
-26.0
12
25.0
1227
17.0
203
83.7
1012
3.6
Balance Sheet Date( Rs Cr)
Equity Capital
Reserve & Surplus
Net Worth
Total Deposits
Borrowings
Other liabilities and provisions
Total Liability
Cash in hand
Cash and balances with RBI
Total Investment
Advances
Fixed Assets
Others Assets
Total Assets
423
35232
35654
503772
29304
18638
587368
16742
87599
115210
352446
2562
12809
587368
423
35127
35549
484931
28558
13995
563033
15681
79980
111840
339855
2498
13179
563033
412
30966
31379
414733
27899
14552
488563
17147
58295
101848
299318
2399
9557
488563
11926
6624
3.4
1.9
44.5
10888
6316
3.2
1.9
42.0
7321
3363
2.4
1.1
54.1
Asset Quality
GNPA( Rs Cr)
NPA(Rs Cr)
% GNPA
% NPA
% PCR (without technical writeoff)
% QoQ Gr 3QFY14E
3.3
7173
-2.0
2350
-12.8
397
50.1
173
2.3
10092
-4.3
1102
1.7
11194
0.8
6792
5.6
3300
-4.3
1102
3.1
4402
2.5
1189
3.1
792
2.7
1981
3.4
2421
-11.5
897
0.0
0
13.6
1524
364.7
457
-10.3
1067
2.5
0.0
13.8
0.3
13.6
0.3
21.5
3.9
5.0
2.6
28.1
33.2
20.2
4.3
-2.4
6.8
50.3
9.5
13.1
3.0
17.7
3.7
6.8
2.6
34.0
-2.8
20.2
4.3
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
26

27. BANKBARODA
Income Statement
2011
2012
2013
2014E
2015E
Interest Income
Interest Expense
NII
Change (%)
Non Interest Income
Total Income
Change (%)
Operating Expenses
Pre Provision Profits
Change (%)
Provisions
PBT
PAT
Change (%)
21886
13084
8802
48.2
2809
11611
32.8
4630
6982
41.5
1331
5650
4242
38.7
29674
19357
10317
17.2
3422
13739
18.3
5159
8581
22.9
2555
6026
5007
18.0
35197
23881
11315
9.7
3631
14946
8.8
5947
8999
4.9
4168
4831
4481
-10.5
39065
26847
12218
8.0
4182
16400
9.7
7194
9206
2.3
3559
5647
4444
-0.8
45206
31084
14122
15.6
4182
18304
11.6
8237
10067
9.4
4043
6024
4819
8.4
305439
27
87589
23
22308
71261
228676
31
384871
26
103524
18
23573
83209
287377
26
473883
23
119981
16
26579
121394
328186
14
521272
10
135531
13
33273
122000
367568
12
573399
10
149084
10
36600
134200
404325
10
Avg. Yield on loans
Avg. Yield on Investments
Avg. Cost of Deposit
Avg. Cost of Borrowings
8.0
7.0
4.3
5.5
8.7
7.8
5.1
6.7
8.4
6.4
5.2
5.4
8.6
7.3
5.2
5.5
9.3
8
5.4
5.5
Valuation
Book Value
CMP
P/BV
536
963
1.8
668
794
1.2
759
652
0.9
846
513
0.61
929
513
0.6
Balance Sheet
Deposits( Rs Cr)
Change (%)
of which CASA Dep
Change (%)
Borrowings( Rs Cr)
Investments( Rs Cr)
Loans( Rs Cr)
Change (%)
Ratio
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
27

28. N arnolia Securities Ltd
402, 4th floor 7/ 1, Lord s Sinha Road Kolkata 700071, Ph
033-32011233 Toll Free no : 1-800-345-4000
em ail: research@narnolia.com ,
w ebsite : w w w .narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing “East wind” & information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to change
without notice. The recipients of this report should rely on their own investigations,
should use their own judgment for taking any investment decisions keeping in mind that
past performance is not necessarily a guide to future performance & that the the value of
any investment or income are subject to market and other risks. Further it will be safe to
assume that NSL and /or its Group or associate Companies, their Directors, affiliates
and/or employees may have interests/ positions, financial or otherwise, individually or
otherwise in the recommended/mentioned securities/mutual funds/ model funds and
other investment products which may be added or disposed including & other mentioned
in this report/message.