• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Stability in Stock Markets and Sharp Fall in Equity Market | Weekly Share Market Outlook
 

Stability in Stock Markets and Sharp Fall in Equity Market | Weekly Share Market Outlook

on

  • 105 views

In this week seen stability in Stock Markets but Sharp devaluation in Thai Baht has brought a contagion effecting currency of all emerging markets and sharp fall in equity market.

In this week seen stability in Stock Markets but Sharp devaluation in Thai Baht has brought a contagion effecting currency of all emerging markets and sharp fall in equity market.

Statistics

Views

Total Views
105
Views on SlideShare
105
Embed Views
0

Actions

Likes
0
Downloads
0
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Stability in Stock Markets and Sharp Fall in Equity Market | Weekly Share Market Outlook Stability in Stock Markets and Sharp Fall in Equity Market | Weekly Share Market Outlook Document Transcript

    • IEA-Equity Strategy India Equity Analytics 10th Feb, 2014 Daily Fundamental Report on Indian Equities ACC Ltd: "BUY" Edition : 202 10th Feb 2014 ACC's EBIDTA declined by 16% to Rs 1848 crore, While y-o-y sales turnover of ACC declined a mere 2% to Rs 10,908.41 crore, as the sales relaisations remained low and Cost remained stable. Cement sales volumes remained flat for ACC .At current price of Rs 1046, stock is trading at 2.6x P/B and 2.8x P/B on CY14 estimates. The valuation looks good from current level, hence we recommend Buy on the stock at CMP Rs.1046 for a target price Rs.1257. ..................................................... ( Page : 2-4) Ambuja Cements Ltd: "Neutral" 10th Feb 2014 For the full year,net profit declined 1% to Rs 1278 crore as against Rs 1293 crore during CY12. Sales declined 6% to Rs 9192 crore as against Rs 9795 crore in CY12.Flat realisations (Rs 4,177/t,3.5% QoQ) and sluggish volumes spoiled the show(5.3mT, -1.9% YoY) . At current price of Rs 163, stock is trading at 3x P/B on CY14 estimates. We are Neutral on the stock at CMP Rs.163 for a target price Rs.165. ........................................................... ( Page : 5-7) PNB : "Neutral" 10th Feb 2014 Bank’s profit was declined by 42% YoY largely due to higher provisions despite of reporting stable gross NPA. Bank’s operating profit grew by 0.8% indicating stress in its balance sheet. Loan grew by 9.7% lower than industry average whereas deposits de-grew by 20% YoY led 33% declined in wholesale deposits. Asset quality was stable sequentially but most of operating as well as financials parameters are struggling. We lower our price target to Rs.600 from earlier of 770. We have neutral view on the stock. .................................................................. ( Page : 812) Bajaj Corp : "Waiting for Demand Revival" "Neutral" 10th Feb 2014 After witnessing healthy growth in previous 13 quarters, Bajaj Corp disappoints the street with lumpy set of numbers and ramping down in margin picture, largely impacted by weak consumer discretionary demand. Sales grew by 6.9%(YoY) led by 11% volume growth.Considering recent poor demand discretionary environment because of inflationary pressure, we are cautious on the stock. .................................................................................. ( Page : 13-15) INGVYSYA BANK : "BUY" 10th Feb 2014 INGVYSYA Bank reported muted growth in profit (3% YoY) largely due to moderate performance all around. Bank’s business grew by sluggish rate with loan and deposits grew by 8% and 3% YoY respectively. Restructure account as a percentage to total asset increased sequentially to 1.6% from 1.2%. However bank’s CAR and PCR were high at 16.93% and 87.5%, provide strong buffer to the bank in a volatile climate. We value bank at Rs.682/share which 1.8 times of FY14E book. ............................................ ( Page : 16-20) Zydus Wellness : "sweeten with sugar free" "BUY" 7th Feb 2014 Inline set of numbers with stable margin;For 3QFY14, Zydus wellness delivered inline set of numbers than street expectation, Because of weak consumer discretionary demand Sales marginally grew by 2%(YoY). PAT grew by 6% on YoY basis.We retain “Buy” on the stock. However, considering weak consumer descretionery demand we reduced our target price from Rs725 to Rs 610. At a CMP of Rs 504, stock trades at 5x FY15E P/BV. ..................................................... ( Page : 21-23) LUPIN : Strong Results "BUY" 6th Feb 2014 Lupin posted its 3QFY14 results with net sales at Rs 2983 Cr up 20.8% YoY led by strong sales growth in American as well as Indian markets. The US formulation business sales including (IP Sales) grew by 31 % YoY to Rs 1356 Cr and it constitutes 45 % of the total sales. ........................................................... ( Page :24-25) Narnolia Securities Ltd,
    • ACC Ltd. Result Update BUY CMP Target Price Previous Target Price Upside Change from Previous 1046 1257 1122 20% 12% Market Data BSE Code NSE Symbol 500410 ACC 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume (Nos.) Nifty 1355/912 19634 9817 6063 "BUY" 10th Feb' 14 ACC's sales turnover slipped to Rs 11169 crore in 2013 against Rs 11358 crore in the previous year. At first glance, consolidated net profit growth of 9% from the year-ago period looked impressive, given the dull market. But a closer look shows that net profit for the quarter included a tax write-back. PAT was Rs.1094Cr. As this pat is incomparable with previous year pat due to additional depreciation charge as extra-ordinary item in previous year, we adjusted the pat and it reported Rs.1081Cr for Cy13 Down by -19% from Rs 1339Cr in CY12. ACC's EBIDTA declined by 16% to Rs 1848 crore, While y-o-y sales turnover of ACC declined a mere 2% to Rs 10,908.41 crore, as the sales relaisations remained low and Cost remained stable. Cement sales volumes remained flat for ACC . Lower Cement Volume Impacted the Bottomline Growth What is more worrying for the company is that it sold less cement in 2013 than what it did in 2012. This comes as a major jolt for the cement giant which saw its cement sales volume dropping to 23.93 million tonne compared with 24.11 million tonne. It not only impacted its bottom-line growth but also hit its revenues. Stock Performance-% 1M -3.5 -1.9 Absolute Rel. to Nifty 1yr -22.3 -24.4 YTD -21.0 -22.8 Share Holding Pattern-% Cureent Promoters FII DII Others 50.3 20.0 12.9 16.8 3QCY13 2QCY13 50.3 20.9 11.9 16.9 50.3 19.5 11.7 18.6 1 yr Forward P/B Source - Comapany/EastWind Research Poor Operational Performance : At the operating level, poor volumes down by 1.5% from the year-ago period and weak realizations pulled down revenue during the quarter. Net consolidated sales fell by 13% to Rs.2,693.1 crore. Profitability was further hit as costs during the quarter, mainly on freight and power, rose compared with the year-ago period and the September quarter as well. During the CY13 Acc suffered through sluggish demand and at the same time with increasing cost. Company unable to pass on the cost to the consumer due to lower sales volume. Sales Volume come to 23.93 Mmt form 24.11 Mmt(down by ~1%). Rising Input Cost mainly due to Raw Material and Freight Cost.Raw material cost increased 5% to Rs.778/ton from Rs.740/ton and freight cost increased ~5% Rs.961/ton from Rs.920/ton. Other expenses increased ~9% to Rs.975/ton from Rs.894/ton. Management Quotes : According to Management the economic environment in the country was sluggish, thus impacting the demand for cement and concrete. As a result, the company's cement volumes remained almost flat. The company appears not enthusiastic for demand growth going forward. Based on current demand indications, we do not foresee any significant improvement in the cement. Financials : Q4CY13 Y-o-Y % Q-o-Q % Q4CY12 Q3CY13 Net Revenue 2792 -12.2 8.6 3180 2570 EBITDA 361 -9.3 26.2 398 286 Depriciation 153 -3.2 6.3 158 144 Interest Cost 12 -55.6 9.1 27 11 Tax -36 -190.0 -170.6 40 51 PAT 278 16.3 129.8 239 121 (In Crs) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 2
    • ACC Ltd. Outlook Company has made several capacity expansion plans in the region. ACC is replacing the existing facilities at Jamul, Chhattisgarh with a clinker plant with an annual production capacity of 2.8 MT and local grinding capacity of 1.1 MT of cement, while a new plant with annual capacity of 2.7 MT is scheduled to be built in Kharagpur. The capacity expansion plant will increase the company's total cement production capacity to 35 MT from the existing 30 MT.On a QoQ basis, the EBITDA/tonne improved 10.4% due to an improvement in realisations & comparatively lower increase in total expenditure/tonne, it shows a positive view for the further quarters.onsidering the expansion plans we expect 4% growth in sales volume and 10% growth in realization for CY14. Cement Sales Volume Valuation And Recommendation Cement prices witnessed an increase during Oct-Nov,13 but also witnessed a sharp fall during Dec,13 which has contributed towards lower average realizations for the year for the company. Further, with a strong balance sheet with zero debt and better dividend yield of 3%, we continue to remain positive despite near term challenges. We revise our estimates downwards to factor in lower demand growth scenario. At current price of Rs 1046, stock is trading at 2.6x P/B and 2.8x P/B on CY14 estimates. The valuation looks good from current level, hence we recommend Buy on the stock at CMP Rs.1046 for a target price Rs.1257. Cement Realization Cement Realization Company Description : ACC Limited (ACC) is engaged in manufacture of cement & ready mixed concrete. The Company has grinding plants in Karnataka and clinkering line in Maharashtra. The Company’s subsidiaries include ACC Mineral Resources Limited, Lucky Minmat Limited, Bulk Cement Corporation (India) Limited, National Limestone Company Private Limited and Encore Cement and Additives Private Limited. The Company is subsidiary of Ambuja Cement India Private Limited. P/L PERFORMANCE CY11 CY12 CY13 CY14E Net Revenue from Operation 10237 11358 11169 13027 Other Income 191 263 219 219 Total Income 10428 11621 11389 19723 Power and fuel 2199 2384 2384 0 Freight and forwarding 1940 2219 2299 0 Expenditure 8316 9162 9540 10942 EBITDA 1921 2197 1848 2084 Depriciation 510 569 584 639 Interest Cost 97 115 52 50 Tax 215 391 132 323 PAT 1276 1050 1094 1292 ROE% 17.7 18.8 13.8 15.3 Narnolia Securities Ltd, Source - Comapany/EastWind Research 3
    • ACC Ltd. 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% EV P/E EV/EBIDTA Dividend Yield% ROCE% Debt/Equity Current Ratio Cash from Operation Cash From Investment Cash from Finance CY10 188 6093 6281 510 14 188 1581 1466 11041 77 5230 1564 283 926 249 1086 162 11041 CY10 3.2 57.4 3.0 19.1 1.1 19632 18.7 12.7 2.8 14.6 0.1 1.0 1823 (785) (641) CY11 188 6791 6979 506 0 126 816 1051 11921 48 6359 370 461 1113 266 1660 279 11921 CY11 3.1 68.7 2.6 8.0 1.1 20180 16.5 10.5 2.5 15.2 0.1 1.3 1506 (258) (768) CY12 188 7184 7372 85 0 157 661 1227 11928 39 5893 314 566 1134 303 681 325 11928 CY12 3.6 73.8 2.7 5.8 1.0 26240 19.4 11.9 2.1 16.3 0.0 1.4 2027 (308) (1066) CY13 188 7625 7813 0 0 89 642 1081 12101 40 6040 322 880 1122 397 506 340 12101 CY13 2.7 57.6 3.6 5.7 1.0 20296 19.2 12.5 2.7 12.3 0.0 1.4 2027 (308) (1066) Trading At : Source - Comapany/EastWind Research Narnolia Securities Ltd, 4
    • Ambuja Cements Ltd. Result Update Neutral CMP Target Price Previous Target Price Upside Change from Previous 163 165 NA 1% NA Market Data BSE Code NSE Symbol 500425 AMBUJACEM 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume (Nos.) Nifty 212/148 25166 12583 6063 Absolute Rel. to Nifty 1yr -18.6 -20.7 YTD -19.2 -21.0 Share Holding Pattern-% Cureent Promoters FII DII Others 50.5 30.5 9.4 9.6 10th Feb' 14 Net profit of Ambuja Cements decline 49% to Rs 317 crore in Q4CY13 as against Rs 212 crore during Q4CY12. Sales declined 5% to Rs 2191 crore Q4CY13 as against Rs 2313 crore during Q4CY12. For the full year,net profit declined 1% to Rs 1278 crore as against Rs 1293 crore during CY12. Sales declined 6% to Rs 9192 crore as against Rs 9795 crore in CY12. Flat realisations (Rs 4,177/t,3.5% QoQ) and sluggish volumes spoiled the show(5.3mT, 1.9% YoY) . During the CY13 Ambuja Cement suffered through sluggish demand and at the same time with increasing cost. Company unable to pass on the cost to the consumer due to lower sales volume. Sales Volume come to 21.6 Mmt form 21.99 Mmt(down by ~2%). Rising Input Cost mainly due to Raw Material and Freight Cost.Raw material cost increased 63% to Rs.358/ton from Rs.219/ton and freight cost increased ~5% Rs.1097/ton from Rs.1046/ton. Other expenses increased 8% to Rs.847/ton from Rs.742/ton. The company is undertaking expansion at Rabriyawas (Rajasthan 0.8 mTPA) and Sankrail (WB, 0.8 mTPA) to be completed by CY14 and CY15 respectively. Stock Performance-% 1M -7.1 -5.4 "Neutral" 3QCY13 2QCY13 50.5 30.1 9.6 9.8 50.6 28.7 10.2 10.5 1 yr Forward P/B Decline in EBITDA margin Key concerns for EBITDA margins to decline in CY13 are Lower realizations, Cost push and no seasonal benefits from operating leverage, Weak rupee push fuel costs higher as rupee depreciation likely to outweigh lower coal prices (more than 35 percent of total requirement comes by import), Higher freight costs and impact of diesel price hike Inched up power fuel and Freight cost. Challenging Outlook Management views the company was able to keep its production cost flat year-on-year and would continue to work on improving operational efficiencies, cost optimization and continued focus on customer and commercial excellence. Board has recommended a final dividend of Rs 2.20 per share and together with the Rs 1.40 per share of interim dividend, the total dividend for the year is Rs 3.60 per share. Key issues to watch out for 1 Volume growth recovery and outlook 2 Cement pricing outlook and sustainability, considering recent downtrend in November 3 and December Source - Comapany/EastWind Research Progress in ongoing mining land acquisition and capex in Nagaur plant of 4.5mt Financials : Q4CY13 Y-o-Y % Q-o-Q % Q4CY12 Q3CY13 Net Revenue 2209 -5.4 9.5 2335 2017 EBITDA 307 -31.8 14.6 450 268 Depriciation 123 -33.9 -1.6 186 125 Interest Cost 17 -29.2 -5.6 24 18 Tax -61 -152.6 -192.4 116 66 PAT 317 49.5 91.0 212 166 (In Crs) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 5
    • Ambuja Cements Ltd. PER Ton Analysis 4QCY13 4QCY12 YOY% 3QCY13 QOQ% Volumes mT 5 5 -2 5 8 Realization(Rs/T) 4177 4332 -4 4126 1 R&M Cost(Rs/T) 406 266 53 415 -2 P&F Cost(Rs/T) 946 1015 -7 934 1 Freight Cost(Rs/T) 1093 1079 1 1073 2 Employee(Rs/T) 226 254 -11 266 -15 Others(Rs/T) 924 884 5 890 4 Valuation and Recommendation India average cement price is still down 0.5 percent Y-o-Y, making Q3CY13 the third consecutive quarter of Y-o-Y decline. On a QoQ basis, the EBITDA/tonne improved 6% due to an improvement in realisations & comparatively lower increase in total expenditure/tonne. The outlook continues to remain challenging due to difficult macroeconomic condition and resultant subdued cement demand. At current price of Rs 163, stock is trading at 3x P/B on CY14 estimates. We are Neutral on the stock at CMP Rs.163 for a target price Rs.165. Company Description : Ambuja Cements Ltd. (ACL) is a cement manufacturing company in India. The Company has five integrated cement manufacturing plants and eight cement grinding units. The Company is engaged in manufacturing of Portland cement. The Company manufactures Portland Pozollana cement and ordinary Portland cement. The Company operates in Cementitious Materials segment . Trading At : P/L PERFORMANCE Net Revenue from Operation Other Income Total Income Power and fuel Freight and forwarding Expenditure EBITDA Depriciation Interest Cost Tax PAT ROE% CY10 7390 248 7638 1697 352 5568 1822 387 49 398 1262 16.9 CY11 8571 248 8819 2003 1939 6594 1977 446 53 474 1228 15.5 CY12 9795 349 10144 2334 2300 7322 2473 569 78 604 1293 17.9 Narnolia Securities Ltd, CY13 9192 391 9583 2066 2370 7549 1643 494 67 220 1278 13.2 Source - Comapany/EastWind Research Source - Comapany/EastWind Research Source - Comapany/EastWind Research Source - Comapany/EastWind Research 6
    • Ambuja Cements Ltd. 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% EV P/E EV/EBIDTA Dividend Yield% ROCE% Debt/Equity Current Ratio Cash from Operation Cash From Investment Cash from Finance CY10 306 7021 7327 65 0 17 1109 1079 10320 16 5616 931 299 902 128 1648 142 10320 CY10 3.0 8.1 1.7 15.0 1.2 20301 17.7 11.1 1.8 15.6 0.0 1.4 1896 (527) (474) CY11 307 7758 8065 51 8 19 961 1173 11577 42 6223 488 504 928 248 2073 238 11577 CY11 3.0 8.2 2.9 11.2 1.1 21829 19.0 11.0 2.1 14.2 0.0 1.5 1554 (445) (473) CY12 308 8489 8797 39 10 22 949 1421 12457 47 5904 524 641 987 221 2260 251 12457 CY12 3.5 10.2 2.3 9.7 1.0 28780 19.7 11.6 1.8 16.7 0.0 1.7 1900 (388) (509) CY13 309 9153 9462 33 1 26 980 1076 12957 6798 0 0 307 936 235 2345 271 12957 CY13 3.0 8.1 2.6 10.7 1.0 25865 22.5 15.7 2.0 12.4 0.0 1.9 0 0 0 Source - Comapany/EastWind Research Source - Comapany/EastWind Research Narnolia Securities Ltd, 7
    • PNB "NEUTRAL" 10h Feb2014 NEUTRAL 556 600 770 8 -22.1 Bank’s profit was declined by 42% YoY largely due to higher provisions despite of reporting stable gross NPA. Bank’s operating profit grew by 0.8% indicating stress in its balance sheet. Loan grew by 9.7% lower than industry average whereas deposits de-grew by 20% YoY led 33% declined in wholesale deposits. Asset quality was stable sequentially but most of operating as well as financials parameters are struggling. We lower our price target to Rs.600 from earlier of 770. We have neutral view on the stock. Market Data BSE Code NSE Symbol 532461 PNB 52wk Range H/L Mkt Capital (Rs Cr) Average Daily Volume Nifty 890/402 19646 7.4 cr 6063 Sluggish growth registered in NII due to muted loan growth During quarter bank’s NII grew by 13.1% YoY to Rs.4221 cr versus our expectation of Rs.4201 cr. Despite of muted loan and deposits growth along with lower credit deposits ratio, bank NII grew on account of higher interest income than interest expenses. During quarter, bank’s wholesale deposits de-grew by 33% YoY which was partly upset by foreign currency borrowing and CASA deposits which escalated down overall interest expenses. Other income was Rs.938 Cr versus Rs.971 cr in last quarter and Rs.899 Cr in previous quarter helped total revenue growth to 9.7% YoY. Result update CMP Target Price Previous Target Price Upside Change from Previous Stock Performance 1M Absolute -8.9 Rel.to Nifty -7.1 1yr -36.8 -38.6 YTD -36.8 -38.6 Higher operating cost led 0.8% YoY growth in operating profit Operating expenses increased by 21.5% YoY in which employee cost and other operating expenses increased by 25% and 14% YoY respectively. Cost to income Share Holding Pattern-% Current 4QFY13 3QFY1 3 Promoters 58.9 57.9 57.9 FII 17.5 17.9 18.0 DII 18.5 18.4 19.1 Others 5.1 5.9 5.1 PNB Vs Nifty ratio increased to 47.6% from 43% in last quarter. Operating leverage for the quarter stood at 0.47% versus 0.43% in last quarter. Due to higher operating cost and sluggish revenue growth, operating profit increased mere by 0.8% YoY. Stable asset quality and lower slippage surprise us positively On asset quality front, bank reported stability as GNPA increased by 0.4% QoQ in absolute term whereas in percentage to gross advance, it stood at 5.09% (5.27% in 2QFY14). Fresh slippages were surprised us positively and was 1.4% (annualized) versus 3% in previous quarter. Provisions were increased by 8.6% QoQ taking net NPA declined to 5.5% on sequential basis. In percentage to net advances, it improved to 2.79% from 3.06% in 2QFY14. With the support from higher provisions despite of stable gross NPA, provision coverage ratio increased to 45.3% from 42% in previous quarter. Financials NII Total Income PPP Net Profit EPS 2011 11807 15420 9056 4433 140.6 2012 13414 17617 10614 4884 144.0 Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. Rs, Cr 2013 2014E 2015E 14857 16536 17691 19072 20775 21930 10907 11155 12500 4748 3408 5209 134.3 94.1 143.9 (Source: Company/Eastwind) 8
    • PNB Deposits de-grew by 20% YoY led by 33% YoY de-growth in wholesale deposits Deposits of the bank was declined by 20% due to 33% negative growth in term deposits. Current deposits and saving deposits grew by 7% and 14% YoY respectively taking overall CASA ratio to 38.3% from 27% in last quarter. Loan grew by 9.7% YoY in which MSME and retail advances registered growth of 21.6% and 17.5% YoY respectively. Corporate loan grew by 7.3% YoY whereas retail advances, housing and car/vehicle loans grew at a healthy pace of 16.7% and 16.3% yoy, respectively. Overseas loan grew by 15.9% YoY and it constitute 10% bank’s total loan book. Management guided loan growth would be 14-15% in FY14. Margin expansion sequentially Net interest margin of bank expand by 10 bps QoQ due to lower cost of fund than yield on loan. Cost of fund declined by 25 bps due to higher share of CASA franchise. Yield on loan remained at 10.1% whereas yield on investment declined to 7.3% from 7.7% sequentially. Management guided NIM for FY14 would be 3.25% to 3.5%. This could be possible because of low cost franchise network. Profit declined due to lower NII growth, higher operating expenses and provisions PNB delivered muted set of numbers with net profit declined by 42% YoY largely due to higher provisions and contingencies which was up by almost 100% YoY. With the higher provisions, we could not anticipate bank’s deteriorating asset quality. Sequentially bank reported improvement in asset quality and in fresh slippage front it surprises us positively. Valuation & View Bank’s profit was declined by 42% YoY largely due to higher provisions despite of reporting stable gross NPA. Bank’s operating profit grew by 0.8% indicating stress in its balance sheet. Loan grew by 9.7% lower than industry average whereas deposits degrew by 20% YoY led 33% declined in wholesale deposits. Asset quality was stable sequentially but most of operating as well as financials parameters are struggling. We lower our price target to Rs.600 from earlier of 770. We have neutral view on the stock. Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 9
    • PNB Chart Focus Sluggish growth registered in NII due to muted loan growth Higher operating cost led 0.8% YoY growth in operating profit Profit declined due to lower NII growth, higher operating expenses and provisions Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 10
    • PNB 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 on deposits Interest on RBI/Inter bank borrowings Others Interest Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions PBT Tax Net Profit 3QFY14 2QFY13 3QFY13 % YoY Gr % QoQ Gr 3QFY14E Variation(%) 8246 8023 7891 4.5 2.8 8361 -1.4 2599 2568 2518 3.2 1.2 2649 -1.9 95 101 113 -16.0 -5.9 90 5.8 44 41 27 62.5 5.5 27 63.9 10984 10734 10548 4.1 2.3 11127 -1.3 938 899 971 -3.3 4.3 1121 -16.3 10045 9834 11519 -12.8 2.1 10006 0.4 6315 6335 6407 -1.4 -0.3 178 116 112 58.9 53.4 270 267 296 -8.8 1.1 6763 6718 6815 -0.8 0.7 6926 -2.4 4221 4016 3733 13.1 5.1 4201 0.5 938 899 971 -3.3 4.3 1121 -16.3 5160 4915 4704 9.7 5.0 5322 -3.0 1758 1659 1407 24.9 6.0 1714 2.6 699 721 614 13.8 -3.1 734 -4.8 2457 2380 2022 21.5 3.2 2448 0.4 2702 2535 2682 0.8 6.6 2874 -6.0 1590 1899 802 98.4 -16.3 2007 -20.8 1112 636 1880 -40.8 74.9 867 28.3 357 131 575 -37.9 173.3 260 37.2 755 505 1306 -42.1 49.4 607 24.5 Balance Sheet Date Equity Capital Reserve & Surplus Deposits Borrowings Investment Advance 362 34972 420647 49163 143368 326133 353 34152 405699 40888 134125 313852 362 34972 420647 49163 143368 326133 Asset Quality GNPA NPA GNPA(%) NPA(%) PCR(%) Without technical write off 16595 9084 5.09 2.79 45.3 16526 9609 5.27 3.06 41.9 13990 7586 4.60 2.60 45.8 353 34759 426195 42711 141287 334443 2.4 0.6 -1.3 15.1 1.5 -2.5 Source : Eastwind/ Company Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 11
    • PNB Financial & 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 (%) 26986 15179 11807 39.3 3613 15420 27.6 6364 9056 23.6 4622 4433 4433 13.5 36476 23062 13414 13.6 4203 17617 14.2 7003 10614 17.2 3577 7037 4884 10.2 41893 27037 14857 10.8 4216 19072 8.3 8165 10907 2.8 4386 6522 4748 -2.8 43513 26977 16536 11.3 4240 20775 8.9 9621 11155 2.3 6253 4902 3408 -28.2 49565 31875 17691 7.0 4240 21930 5.6 9430 12500 12.1 5059 7442 5209 52.8 312899 25 120325 18 31590 95162 242107 30 379588 21 134129 11 37264 122703 293775 21 391560 3 153344 14 39621 129896 308725 5 450294 15 139752 -9 47857 143572 339598 10 517838 15 153766 10 44728 149094 356578 5 8.7 6.0 4.4 4.4 9.7 6.4 5.6 4.5 10.3 7.4 6.5 3.9 9.6 7.2 6.4 4.0 10.5 7.8 6.6 4.1 682 1220 1.8 820 926 1.1 924 759 0.8 1000 543 0.5 1107 543 0.5 Balance Sheet Deposits( Rs Cr) Change (%) of which CASA Dep Change (%) Borrowings( Rs Cr) Investments( Rs Cr) Loans( Rs Cr) Change (%) Ratio Avg. Yield on loans Avg. Yield on Investments Avg. Cost of Deposit Avg. Cost of Borrowimgs Valuation Book Value CMP P/BV Source : Eastwind/ Company Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 12
    • Bajaj Corp "NEUTRAL" 10th Feb' 14 " Waiting for Demand Revival" Results update Neutral CMP Target Price Previous Target Price Upside Change from Previous 208 - Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 533229 BAJAJCORP 287/198 3071 37072 6063 Stock Performance 1M -4.1 -2 Absolute Rel. to Nifty 1yr -10.9 -12.6 YTD -22.9 -22.2 Share Holding Pattern-% Promoters FII DII Others Current 2QFY14 1QFY14 75 75 75 12.87 13.28 12.08 2.08 2.29 2.5 10.05 9.43 10.42 1 yr Forward P/B Bajaj Corp reported below numbers than street: After witnessing healthy growth in previous 13 quarters, Bajaj Corp disappoints the street with lumpy set of numbers and ramping down in margin picture, largely impacted by weak consumer discretionary demand. Sales grew by 6.9%(YoY) led by 11% volume growth consolidated with 11.9%(YoY) rural growth and 11.7%(YoY) urban growth in value term. PAT was seen on reverse mood and they reported 9.5% decline on YoY basis. The strong earnings visibility and robust cash generation ability of the company make Bajaj Corp one of the better picks in the FMCG .The management expects to increase Almond Drops Hair Oil volume mkt- share to 65% v/s 55% by FY16E. Margin declined: Despite softening in LLP prices and lower exposure of Ad spend during the quarter, EBITDA margin declined by 210bps(YoY) to 27% and PAT margin drastically down by 430bps(YoY) to 24.2%. However, company has been efficient to maintain its EBITDA margin above the mark of 27% and PAT margin at 24%. Still, sitting on attractive margin pictures than its nearest peers. Mix performance across segments: Its flagship brand Bajaj Almond Drops Hair Oil (contributes 94% of sales) marginally grew by 3.5%. During the quarter, its market share expanded to 60% and this brand has created a unique positioning for itself through initiatives like product differentiation (Almond based), focused marketing, unique packaging. Strong distribution network: The Company reaches consumers through 2.62mn retail outlets serviced by 6889 distributors and 15,122 wholesalers. It is panning out across 1.6mn retail outlet in rural area and 1.04mn retail outlet s in urban area. However, management is confident to see healthy distribution reach. Softness in RM cost: During the quarter average price of LLP decreased to Rs 75.85/Kg from Rs 78.63/Kg in corresponding quarter of previous year. Prices of Refined oil decreased from Rs 79.71/Kg in Q3FY13 to Rs 76.16/Kg in Q3FY14. No marks on No Marks Brand: First time, new acquired (from Ozone Ayurvedics) anti acne No Marks brand added Rs 6cr revenue during the quarter with 54% margin. However, this revenue was reported for only 1.5months without any effort of promotion activities. Management expects to see better numbers in near future and also envisages for promotional activities through Advertisement and expansion of channel of distributions. View and Valuation: Company is well placed in the fast growing light hair oil segment, led by steady volume growth, better pricing strategy and sustained market leadership position. Considering recent poor demand discretionary environment because of inflationary pressure, we are cautious on the stock. Hence, we downgrade our view from“ Buy” to "Neutral" on the stock. At a CMP of Rs 208, stock trades at P/BV of 4.9x FY15E. Financials Rs, Cr 3QFY14 2QFY14 (QoQ)-% 3QFY13 (YoY)-% Revenue 158.2 158.25 0.0% 148.06 6.8% EBITDA 42.8 42.9 -0.2% 43.2 -0.9% PAT 38.38 40.03 -4.1% 42.4 -9.5% EBITDA Margin 27.1% 27.1% 29.2% (210bps) PAT Margin 24.3% 25.3% (100bps) 28.6% (430bps) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. (Source: Company/Eastwind) 13
    • Bajaj Corp Sales and Sales Growth(%) sales grew by 7%(YoY) led by 11% overall volume growth (Source: Company/Eastwind) Margin-% Still company has been efficient to maintain its EBITDA and PAT margin over 23% mark. (Source: Company/Eastwind) Sales Mix-Brands Brands 2QFY12 3QFY12 4QFY12 Bajaj Almond Drops Hair Oil 93.6% 94.5% 94.1% Bajaj Kailash Parbat Thanda Tel 3.1% 2.1% 2.8% Bajaj Brahmi Amla Hair Oil 2.1% 2.3% 2.0% Bajaj Amla Shikakai Hair Oil 0.4% 0.4% 0.4% Others+Nomarks 0.5% 0.5% 0.4% 1QFY13 93.8% 3.9% 1.5% 0.2% 0.3% 2QFY13 96.0% 1.1% 2.1% 0.3% 0.5% 3QFY13 97.0% 0.1% 2.0% 0.2% 0.4% 4QFY14 94.7% 3.5% 1.2% 0.1% 0.5% 1QFY14 2QFY14 3QFY142 95.0% 96.2% 94.0% 2.5% 2.0% 0.2% 1.1% 1.2% 1.3% 0.1% 0.1% 0.2% 0.3% 0.3% 4.3% The management expects to increase Almond Drops Hair Oil volume mkt- share to 65% v/s 55% by FY16E. (Source: Company/Eastwind) Expenses on Sales (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 14
    • Bajaj Corp Key take-aways from Conference Call (attended on 7th Feb 2014) (1)Management is not thinking of any price hike as the company still has inventory of low cost LLP. The mgmt expects LLP to come down with appreciation in Rupee and crude oil decline (after improvement in Syria situation. (2) The mgmt said that it is now more focused on volume growth, as there is no issue with margin. (3) NOMARKS is majorly sold through chemist shops. The mgmt said that NOMARKS will see boost in sales once its sales is pushed in general stores also. (4) Tax rate at 20% in near term. (5) On the full year basis, the mgmt assigned Rs 28.6 crore as amortization cost related to NOMARKS brand. In next four years (FY14-17), total acquisition cost of Rs 140.9 crore will be amortized 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 FY10 294.6 116.8 0 0 14 37.3 29.4 197.3 97.3 0.8 5.1 101.6 0.0 101.6 17.6 83.9 FY11 358.7 156.6 0.0 0.0 16.3 40.5 37.3 250.6 108.1 1.8 17.8 124.0 0.0 124.0 21.0 103.1 FY12 473.3 194.4 34.4 -9.0 22.9 64.7 49.3 356.8 116.5 2.6 37.4 151.3 0.1 151.2 31.1 120.1 FY13 606.7 237.4 24.4 -2.8 29.2 71.2 74.2 433.7 173.1 3.3 40.1 209.8 0.1 209.8 42.2 167.6 FY14E 692.6 214.7 58.9 -1.4 36.4 51.9 145.4 505.9 186.6 3.8 42.6 225.4 7.0 218.4 42.6 175.8 FY15E 792.5 261.5 67.4 -1.6 43.6 71.3 150.6 592.8 199.7 5.3 47.6 242.0 7.0 235.0 47.0 188.0 97.4% 82.5% 78.6% 21.8% 11.1% 22.8% 32.0% 7.8% 16.5% 28.2% 48.5% 39.6% 14.1% 7.8% 4.9% 14.4% 7.0% 6.9% 39.6% 12.7% 4.7% 10.0% 17.4% 43.7% 11.3% 4.5% 10.4% 16.9% 41.1% 13.7% 4.8% 10.4% 20.6% 39.1% 11.7% 4.8% 12.2% 20.1% 31.0% 7.5% 5.3% 21.0% 19.5% 33.0% 9.0% 5.5% 19.0% 20.0% 33.0% 34.5% 28.5% 30.1% 34.6% 28.7% 24.6% 32.0% 25.4% 28.5% 34.6% 27.6% 27.0% 32.5% 25.4% 25.2% 30.5% 23.7% 132.0 14.8 27.9 5.7 1.9 300.7% 69.8 23.2 100.1 14.8 376.3 7.0 25.5 27.4% 3.9 14.3 115.7 14.8 427.8 8.1 29.0 28.1% 4.0 14.2 275.0 14.8 483.8 11.4 32.8 34.6% 8.4 24.2 208.0 14.8 547.4 11.9 37.1 32.1% 5.6 17.5 208.0 14.8 623.3 12.7 42.3 30.2% 4.9 16.3 Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. (Source: Company/Eastwind) 15
    • INGVYSYA BANK Result update CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol BUY 538 682 677 27 0.7 531807 INGVYSYABK 52wk Range H/L Mkt Capital (Rs Cr) Average Daily Volume Nifty Stock Performance 1M Absolute -8.8 Rel.to Nifty -7.0 667/405 10164 19.97lakhs 6063 "BUY" 10h Feb2014 INGVYSYA Bank reported muted growth in profit (3% YoY) largely due to moderate performance all around. Bank’s business grew by sluggish rate with loan and deposits grew by 8% and 3% YoY respectively. Restructure account as a percentage to total asset increased sequentially to 1.6% from 1.2%. However bank’s CAR and PCR were high at 16.93% and 87.5%, provide strong buffer to the bank in a volatile climate. We value bank at Rs.682/share which 1.8 times of book. NII growth of 3% YoY due to lower interest income During quarter, bank reported NII growth of 3% YoY largely due to lower interest income and higher cost of deposits. Term deposits have been continuously declining from past three quarters whereas borrowing as a percentage of NDTL (net demand time liability) increased sequentially to 18.1% from 14.1%. During quarter wholesale deposits are offset by foreign currency borrowings. This had increased cost of fund despite of CASA growth. Other income was Rs.215 Cr versus Rs.187 cr in last quarter and Rs.185 cr in previous quarter. With the support from other income, total revenue grew by 7% YoY to Rs.631 cr. 1yr -8.5 -10.3 YTD -8.5 -10.3 Operating expenses higher and operating leverage remain stable Operating leverage (Operating cost to total assets) remained stable at 0.6% which indicated stable cost management. In absolute term, operating expenses increased Share Holding Pattern-% Current 4QFY13 3QFY1 3 Promoters 43.2 43.4 43.6 FII 28.8 28.9 28.6 DII 14.4 13.6 14.8 Others 13.6 14.1 13.1 INGVYSYA Bank Vs Nifty by 9% YoY in which employee cost and other operating cost increased by 12% and 5% YoY respectively. Cost to income ratio increased by 117 bps YoY to 56.5% from 55.3%. Operating profit increased by 4% YoY to Rs.274 cr. Improvement in asset quality Sequentially bank reported improvement in asset quality with GNPA stood at 1.71% versus 1.75% in percentage to gross advances. In absolute term GNPA increased by 2% QoQ while loan loss provision was remain same as in previous quarter. This had resulted of increased net NPA by 17% sequentially in absoluter term and as a percentage to net advance, it stood at 0.21% versus 0.19% in 2QFY14. Consequently provisions coverage ratio declined to 87.5% from 89.1% in previous quarter. Bank’s outstanding restructure account increased in sequential basis to 1.6% versus 1.2% to total advances. Financials NII Total Income PPP Net Profit EPS 2011 1007 1661 635 319 26.3 2012 1208 1878 768 456 30.4 Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. Rs, Cr 2013 2014E 2015E 1539 1696 2058 2266 2555 2916 993 1167 1283 613 701 739 39.6 37.1 39.2 (Source: Company/Eastwind) 16
    • INGVYSYA BANK Business growth sluggish, wholesale deposits replace by foreign currency borrowings On business growth parameters, bank reported muted growth in deposits which grew by 3% in which CASA deposits grew by 13% YoY. Term deposits de-grew by 1% YoY and 6% QoQ to Rs.254 bn. During quarter bank’s wholesale deposits replace by foreign currency borrowings under RBI’s special concession window. CASA in percentage term stood at 34.7% versus 31.7% in 3QFY13 and 32.5% in previous quarter. Loan grew by 8% YoY led by SME loan growth of 25% YoY followed by agriculture loan (56% YoY). Credit deposits ratio improved to 87.4% versus 84% in last quarter and 82% in previous quarter. NIM narrow on account of reversal of interest income NIM squeeze by 11 bps QoQ to 3.35% as compare to 3.45% in previous quarter largely on account of restructure few account as the part of corporate debt restructure which resulted interest reversal of Rs.25.7 cr. Adjusting for the interest reversal, NIM was higher at 3.55% in the current quarter. Capital adequacy ratio of the bank stands at 16.93% in which tier 1 capital of 14.4%, according to basel-3 norms. Profit lower on account of muted performance all around Ingvysya Bank reported net profit growth of 3% YoY to Rs.167 cr versus our expectation of Rs.173 cr. Lower profit growth was largely due to muted growth at NII level led by lower loan and deposits growth. Operating expenses were by and large stable and improvement in asset quality provided some cushion to profit. Tax rate was higher at 33.4% versus 31.7% in previous quarter and 32% in 3QFY13. Valuation & View INGVYSYA Bank reported muted growth in profit (3% YoY) largely due to moderate performance all around. Bank’s business grew by sluggish rate with loan and deposits grew by 8% and 3% YoY respectively. Restructure account as a percentage to total asset increased sequentially to 1.6% from 1.2%. However bank’s CAR and PCR were high at 16.93% and 87.5%, provide strong buffer to the bank in a volatile climate. We value bank at Rs.682/share which 1.8 times of book. Valuation Band Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 17
    • INGVYSYA BANK Chart Focus NII lower on account of sluggish interest income Operating expenses higher and operating leverage remain stable Profit lower on account of muted performance all around Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 18
    • INGVYSYA BANK Quarterly Performance 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 Tax Net Profit Key balance sheet data (Rs Cr) Advances Deposits CASA(%) Asset Quality Gross NPLs (Rs Cr) Gross NPLs (%) Net NPLs (Rs Cr) Net NPLs (%) Provision Coverage (%) 3QFY14 2QFY13 3QFY13 936 961 906 336 353 332 0 0 0 1 3 1 1273 1317 1239 215 185 187 1488 1502 1425 857 877 836 416 440 403 215 185 187 631 625 590 214 207 191 142 142 135 356 349 326 274 276 263 23 18 25 84 82 76 167 176 162 34048 38956 34.7 32856 40030 32.5 31599 37691 31.7 583 1.7 73 0.21 87.5 574 1.7 62 0.19 89.1 % Chg(YoY) % Chg(QoQ) 3QFY14E Varaition(%) 3.3 -2.5 975 -3.9 1.2 -4.9 390 -14.0 266.7 -51.1 0 50.8 -70.6 0 2.8 -3.3 1365 -6.7 15.0 16.2 215 0.0 4.4 -0.9 1580 -5.8 2.5 -2.3 968 -11.4 3.3 -5.5 397 4.7 15.0 16.2 215 0.0 7.0 0.9 612 3.1 12.2 3.7 202 6.2 5.1 0.1 135 5.4 9.2 2.2 337 5.9 4.2 -0.7 275 -0.4 -6.5 27.3 17 35.7 9.9 2.4 85 -1.6 3.1 -5.1 173 -3.4 7.8 3.4 3.6 -2.7 33903 43989 571 1.8 16 0.05 97.2 0.4 -11.4 Source : Eastwind/ Company Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 19
    • INGVYSYA BANK Financial & Assuption 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 2013 2014E 2015E 2033 646 2 13 2694 655 3349 1357 48 283 1688 1007 21.3 655 1661 606 420 1026 635 317 319 31.6 2868 982 1 7 3857 670 4527 2153 247 249 2648 1208 20.1 670 1878 651 459 1110 768 312 456 43.2 3550 1307 2 3 4862 727 5588 2579 393 351 3323 1539 27.3 727 2266 751 522 1273 993 380 613 34.3 3824 1476 1 13 5314 858 6172 2619 923 0 3618 1696 10.3 858 2555 819 569 1388 1167 127 701 14.4 4501 1616 1 13 6132 858 6990 3038 1033 0 4074 2058 21.3 858 2916 964 670 1633 1283 181 739 5.4 30194 16.7 4147 13.0 23602 27.5 11021 5.2 35195 16.6 5696 37.4 28721 21.7 12715 15.4 41334 17.4 6511 14.3 31772 10.6 18278 43.7 45467 10.0 8024 23.2 34949 10.0 20327 11.2 50923 12.0 8986 12.0 40192 15.0 22766 12.0 8.6 5.9 7.3 4.5 8.0 4.9 10.0 7.7 8.8 6.1 8.7 6.5 11.2 7.1 9.3 6.2 11.4 6.9 10.9 7.3 9.6 5.8 11.4 6.8 11.2 7.1 9.7 6.0 11.5 6.8 217 1.5 12.2 265 1.3 11.7 299 1.9 14.1 379 1.4 14.5 418 1.3 13.7 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 Valuation Book Value P/BV P/E Source : Eastwind/ Company Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 20
    • Zydus Wellness. "BUY" 7th Feb' 14 "sweeten with sugar free" Result Update CMP Target Price Previous Target Price Upside Change from Previous Buy 504 610 725 21% -16% Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Cr) Average Daily Volume Nifty 531335 ZYDUS 749/415 1969 13282 6036 Stock Performance 1M Absolute -6.9% Rel.to Nifty -4.10% 1yr 1.5% 0% YTD -4.9% -7.1% Share Holding Pattern-% Current Promoters FII DII Others 72.54 8.17 8.07 11.22 P/BV(x)-1year forward 2QFY14 1QFY14 72.54 7.91 8.39 11.16 72.54 5.12 10.85 11.49 Inline set of numbers with stable margin; For 3QFY14, Zydus wellness delivered inline set of numbers than street expectation, Because of weak consumer discretionary demand Sales marginally grew by 2%(YoY). PAT grew by 6% on YoY basis. Company’s half of revenue come from Sugar Free and Ever yuth, We expect these two products continue to generate revenue and some support to over all margins, now vegetable oil prices are going down. Due to expected decline in Advertisement cost, softness in Palm Oil, Crude Derivatives and better realization in Ever Youth could help to improve its margin in next couple of quarters. Stable margin: During the quarter, its EBITDA margin was flat at 26% on YoY basis; while, it improved 150bps sequentially because of cost rationalization in RM and Ad spend. PAT margin up by 390bps to 26.4%, favorably impacted by lower provision for tax and extra other income. Woprking on cost rationalization: Considering slower demand and high competitive intensity, company has been able to manage its normal range of margin by reducing cost. During the quarter, RM cost on sales declined from 30.3%(3QFY13) to 26.7% and Ad spend down from 15.2% (3QFY13) to 13.8%. Strong brand value in sugar free products: Over the year, Sugar Free Brand has successfully captured 92% market Share. Sugar Free product has very strong brand equity and it is always on the top of the buyers' mind when it comes to the sugar substitute. Considering the entry of other players in same product, it has rolled out an aggressive ad campaign and expended this brand on different segments like, Sugar Free Gold (Aspartame based), Sugar Free Natrura (Sucralose based), Sugar Free Herbvia (Stevia) and Sugar Free D'lite (Drink). Aggressive target on capturing Everyuth market share: Recently, company re launched its Everyuth brand with innovative packaging, strong distribution network and expensive media initiatives. The company decided to increase its prices in the range of 10-15% in Everyuth brand at the time of relauch and extended its everyuth brand to the premium soap in 3 variants, like Fruit bathing bar, Neem bathing bar and Lemon. View and Valuation: Taking into consideration of product re-launch, strong distribution reach under a beneficiary scenario of margin, management is very confident to achieve revenue at 500cr in FY15E, expecting growth rate by 21.5%. Its large market share and aggressive promotions in its pillar brand (Sugar Free, Everyuth) would energize its revenue growth in near future. We retain “Buy” on the stock. However, considering weak consumer descretionery demand we reduced our target price from Rs725 to Rs 610. At a CMP of Rs 504, stock trades at 5x FY15E P/BV. Financials Revenue EBITDA PAT EBITDA Margin PAT Margin 3QFY14 103.39 26.83 27.27 26.0% 26.4% 2QFY14 103.92 25.51 25.7 24.5% 24.7% (QoQ)-% (0.5) 5.2 6.1 150bps 130bps 3QFY13 101.77 26.32 22.88 25.9% 22.5% Rs, Crore (YoY)-% 1.6 1.9 19.2 10bps 390bps (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 21
    • Zydus Wellness. Sales and its Growth(%) Sales marginally grew by 2%(YoY). (Source: Company/Eastwind) Margin-% It expects expansion in gross margin, which will help it to fund new product launches. (Source: Company/Eastwind) Expenses-(% of Sales) (Source: Company/Eastwind) Focus on expansion of Distribution network: The Company has been increasing its distribution network to improve its growth of its cash-cow brand. Everyuth scrub and peeloff are sold through 3.3 to 4.0 lakh retail outlets while Zydus Wellness is sold through 3.4 lakh retail outlets (an increase of 11% YoY). The company targets to increase the distribution reach by 15-20% per annum. Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 22
    • Zydus Wellness. Financials and Valuation Rs in Cr, Total Sales Less: Excise Duty Net Sales Other Operating Income Total income from operations 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 FY10 267.5 0.0 267.5 0.6 268.1 37.5 54.0 (5) 9.3 61.0 44.4 201.0 67.1 1.6 6.0 71.4 0.0 69.2 24.0 45.2 FY11 335.5 0.1 335.4 1.0 336.4 49.9 74.9 (5) 18.3 59.2 54.5 252.1 84.2 1.5 7.2 90.0 0.0 90.0 30.5 59.5 FY12 344.6 9.2 335.5 1.3 336.8 94.1 23.7 4 20.6 59.7 57.4 259.7 77.1 3.9 9.0 82.2 0.0 82.2 13.7 68.6 FY13 410.0 22.9 387.1 0.9 388.0 119.1 14.7 (10) 27.3 69.8 70.1 291.4 96.6 4.5 15.8 107.9 0.1 107.8 8.8 98.9 FY14E 446.9 29.05 417.8 1.6 419.4 106.9 22.70 16 31.45 75.5 73.39 325.91 93.47 4.7 20.1 108.89 0.0 108.9 8.2 100.72 FY15E 500.5 32.53 467.9 1.8 469.7 124.5 25.42 18 37.58 86.9 84.55 376.76 92.94 4.5 22.5 111.01 0.0 111.0 8.9 102.13 -94.8% -93.7% -93.1% 25.5% 25.6% 31.7% 0.1% -8.5% 15.3% 15.2% 25.3% 44.2% 8.1% -3.2% 1.8% 12.0% -0.6% 1.4% 14.0% 22.7% 3.5% 16.6% 34.7% 14.8% 17.6% 5.4% 16.2% 33.9% 28.0% 17.7% 6.1% 17.0% 16.6% 30.7% 18.0% 7.0% 18.1% 8.2% 25.5% 18.0% 7.5% 17.5% 7.5% 26.5% 18.5% 8.0% 18.0% 8.0% 25.0% 26.6% 16.9% 25.0% 26.7% 17.7% 22.9% 24.4% 20.4% 24.9% 27.8% 25.5% 22.3% 26.0% 24.0% 19.8% 23.6% 21.7% 381.7 3.9 100.6 11.6 25.7 44.9% 14.8 33.0 597.3 3.9 141.9 15.2 36.3 41.9% 16.5 39.3 380.4 3.9 186.9 17.5 47.8 36.7% 8.0 21.7 456.5 3.9 256.5 25.3 65.6 38.6% 7.0 18.0 504.0 3.91 329.8 25.76 84.4 30.5% 6.0 19.57 504.0 3.91 399.9 26.12 102.3 25.5% 4.9 19.30 Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. (Source: Company/Eastwind) 23
    • LUPIN Result Update BUY CMP Target Price Previous Target Price Upside Change from Previous 915 1000 9% Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs, Cr) Average Daily Volume Nifty 500257 LUPIN 951/569 41,018 395892 6022 Stock Performance-% 1M Absolute Rel. to Nifty -2 1 1yr 53.4 52.8 YTD 48.3 35.9 "BUY" 06th Feb' 14 Strong Results Lupin posted its 3QFY14 results with net sales at Rs 2983 Cr up 20.8% YoY led by strong sales growth in American as well as Indian markets. The US formulation business sales including (IP Sales) grew by 31 % YoY to Rs 1356 Cr and it constitutes 45 % of the total sales. The Indian formulation business grew by 14% YoY to Rs 650 Cr and it contributed 22% of the company’s overall revenue for the quarter .The business from other geographies viz Japan and South Africa also have grown well with registering growth of 10% and 18% respectively.API (Active Pharmaceutical Ingredient) net sales grew by 26% to Rs 297.3 Cr during the quarter as compared to Rs 235.3 Cr for 3QFY13 and contributed 10% of company’s consolidated revenues.   The operating EBITDA for the quarter came at Rs 773 Cr and OPM at 25.6%.The material cost during the quarter decreased by 30bps to Rs 1121 Cr and this constitutes 37.6% of net sales. The manufacturing and other expenses decreased by 90 bps to Rs 749 Cr for the quarter while employ cost deceased by 30 bps to Rs 387 Cr. The revenue expenditure on R&D stands at Rs 271 Cr which is 9.1 % of the 3QFY14 sales. The net profits for the quarter came at Rs 484 Cr and NPM at 15.8 % .The overall impact of Forex on net profits was a loss of Rs 68.8 Cr of which Rs 25.5 Cr forex gain is reflected in other income while the corresponding forex loss is captured across various other P&L Lines. Balance Sheet Highlights st Share Holding Pattern-% Promoters FII DII Others Current 2QFY14 1QFY1 4 46.8 46.8 46.8 31.9 31.5 30.7 11.3 12.1 12.4 10.0 9.7 10.1 One Year Price vs Nifty > Operating WC increased to Rs 2769.5 Cr as on 31 Dec 2013 as against Rs 2674.3 Cr as St on September 2013.The working capital number of days stood at 94 days as on 31 Dec 2013. > Capital Expenditure was Rs 104.1 Cr in the quarter Recent Developments Company filed 5 ANDA approvals in the quarter .Cumulative ANDA filings with US FDA now stands at 186 with the company having received 96 approvals till date. The company received 5 approvals from European regulatory authorities in the quarter. Company acquired Nanomi B.V of Netherlands and with this acquisition company has forayed into technology intensive complex injectables space. As per management with the use of  Nanomi’s proprietary technology platform, Lupin would be able to make significant in roads into the niche area of complex injectables. View & Valuation The company at its CMP of Rs 915 is trading at 23 times of one year forward FY14 EPS of Rs 39.In the light of strong results ,management commentary and strong business outlook going forward we maintain BUY for the stock with Target price 1000. Financials Revenue EBITDA PAT EBITDA Margin PAT Margin 3QFY14 3022 773 484 25.6% 16.0% 2QFY14 2668 660 417 24.7% 15.6% (QoQ)-% 13.3 17.1 16.1 80bps 40bps 3QFY13 2501 606 342 24.2% 13.7% Rs, Crore (YoY)-% 20.8 27.6 41.5 130bps 230bps (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 24
    • LUPIN Sales and PAT Trend (Rs) Company posted its 3QFY14 results with net sales at Rs 2983 Cr up 20.8% YoY led by strong sales growth in American as well as Indian markets. (Source: Company/Eastwind) OPM % The material cost during the quarter decreased by 30bps to Rs 1121 Cr and this constitutes 37.6% of net sales. (Source: Company/Eastwind) NPM % The overall impact of Forex on net profits was a loss of Rs 68.8 Cr of which Rs 25.5 Cr forex gain is reflected in other income while the corresponding forex loss is captured across various other P&L Lines. (Source: Company/Eastwind) Narnolia Securities Ltd, Please refer to the Disclaimers at the end of this Report. 25
    • 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.