5 Growth Stocks

JK Tyre & Industries Ltd
-Valuations Attractive

JK Tyre & Industries Ltd – Investment Snapshot
(as on Apr 24, 2016)
Recommendation :- BUY
Maximum Portfolio Allocation :- 5%
Investment Phases & Buying Strategy
Time Frame:- 12 to 36 months
1st Phase (Now) of Accumulation :- 50%
Current Accumulation Range :- 85-90 Rs
JK Tyre & Industries is a mid-cap tyre company which is leading
player in the TBR segment. The company has got strong presence
with about 125 distributors in India apart from presence in
about 100 countries. The company will benefit from lower
rubber prices which will drive its profitability.
Core Investment Thesis :
JK Tyre & Industries is primarily engaged in the manufacture of
tyres and is a market leader in the TBR segment.The stock at the
CMP of 85.00/- is trading at 4.23x its FY15 EPS. The stock currently
offers a dividend yield of 1.78% and is trading at attractive
valuations.
Current Market Price – Rs. 85.00
Book Value – 48.12
Bloomberg / Reuters Code -JKI. IN/
JKIN.NS
BSE / NSE Code –530007/ JKTYRE
Market Cap (INR CR) – 1917
P/BV - 1.77
Face Value – Rs.2
52 Week High / Low – 133.50/76.10
Pro oter’s Holdi g – 52.34%
Other Holdings -47.66%

Company Overview
•JKIL is part of JK organisation is an Automotive Tyre, tube and flaps manufacturing company and is the
leader in Radial tyre in India and manufactures passenger car tyres, commercial tyres, farm tyres and off the
road tyres.
•JKIL has 6 domestic plants, 3 of them are located in Mysore, 1 in Banmore, 1 in Kankroli and 1 in Chennai .
•JKIL acquired the Mexican tyre major Tornel in 2008 along with their 3 Mexican plants, the company now
has 9 plants with an installed capacity of 20.6 mn tyres p.a. in truck/ bus radials, passenger car radials and
bias tyres segment.
•JKIL products are sold from over 125 distributors in over 100 countries spread across 6 continents and is the
only tyre company to launch a 24*7 on road tyre assistance initiative called Fix-a-tyre in Chennai.

Inox Wind Ltd(IWL)
-Capex & Order Book to drive Growth

Inox Wind Ltd - Investment Snapshot
(as on Apr 24, 2016)
Inox Wind is our typical Multibagger stock, which is a Good
Investment due to the enormous growth opportunities in sector
primarily due to increase in government focus on renewable
energy space which will result in increase in order book. The
business model is robust with good pricing power which will
deliver superior returns in the long run. This is a good
investment from a three year perspective.
The company is in the wind energy space which has been
growing at a fast clip due to improvement in demand post
restoration of Accelerated Depreciation and Generation based
incentives.
Current Market Price – Rs. 270.00
Current Dividend Yield – Nil
Bloomberg / Reuters Code –INXW. IN/
INWN.NS
BSE / NSE Code – 539083/INOXWIND
Market Cap (Rs. Cr) – 5980
P/E - 13.69
Face Value – Rs. 10
52 Week High / Low – Rs. 482.50 /
Rs.215.00
Pro oter’s Holdi g - 85.62%
FII - 3.36%
DII - 4.82%
Other Holdings - 6.20%

Company Snapshot
•IWL belongs to Inox group companies and is a fully integrated player in wind energy market with the state-
of-art manufacturing plants near Ahmedabad (Gujarat) for blades and tabular towers; at Una (Himachal
Pradesh) for Hubs and nacelles.
•IWL is one of the largest manufacturers of Wind Turbine Generator (WTG) in India. IWL supplies the key
components of WTG along with associated and auxillary components and offer wind farm projects on a
turnkey basis across India through their wholly owned subsidiaries - Inox Wind Infrastructure Services Ltd
(IWISL) and Maruti Shakti Energy India Ltd (MSEIL).
•IWL has the projects across different states like Rajasthan, Maharashtra and Andhra Pradesh and have an
aggregate power project capacity of 5000MW.
•IWL expansion is setting up a new plant at Barwani (Madhya Pradesh) for manufacturing of rotors and
towers.

Robust Order Book
•As of Sep 2015, IWL’s order book stood at 1202MW comprising of 841MW for the supply and erection of
WTGs and the balance 360MW for the supply of WTG’s.
•IWL’s order book includes 70% of executed binding contracts and balance 30% are on Letter of Intent or
MOU basis.
•IWL’s order books can be geographically classified as 38% in Rajasthan, 39% in Gujarat and 1% in Andhra
Pradesh and the company is looking to expand their operations in Andhra Pradesh and Tamilnadu having
huge wind energy potential to be installed.
•IWL has access to project sites of Rajasthan, Maharashtra and Gujarat which keep them in a position for an
installation of an aggregate of 5000MW and makes them available with infrastructure to provide turnkey
solutions.

Proven Technology
•IWL has a comprehensive product portfolio and can manufacture turbines up to 2MW apart from a range of
turbine models which allows it to supply various types of WTG’s that can suit the needs of its customers in
terms of both cost and wind conditions at a proposed WTG site.
•IWL launched the 93m blade turbines and has installed 1242MW of turbines. It has introduced 100m blade
turbines which are specifically designed for low-end sites.
•IWL 93m blade turbines help generate better output at a low wind speed sites. IWL has also entered in to a
licensing agreement with windnovation Engineering solutions of Germany to manufacture rotor blades of
113M which enables IWL to save on production cost and its height ensures better wind capture.
•IWL’s 93m blade turbines offer more Efficient Power Curves, Improved Up-times and Reduced O&M , Ideal
for low wind pockets, Higher Energy Yield & Improved Realizations etc which will help the company to
increase its market share.
.

Limited Competition
•There is limited competition within Indian WTG suppliers with the top 4‐5 players holding almost 88% of the
market. Key players operating in the industry are Inox Wind, Suzlon Energy, Gamesa, GE, and ReGen
Powertech.
• One of the key factors limiting competition is the unique nature of the Indian WTG market, where the WTG
supplier also needs to have access to land, arrange for the related infrastructure (evacuation facilities, road
infrastructure), and arrange for the power off-take with the discom. This limits competition from overseas
players especially Chinese & Koreans who do not have the wherewithal to arrange all this.

S H Kelkar Ltd(SHKL)
-Favourable demand scenario to drive Growth

S H Kelkar Ltd - Investment Snapshot
(as on Apr 24, 2016)
Current Accumulation Range :- 240-250Rs
S H Kelkar is our typical Multibagger stock, which is the
largest domestic fragrance manufacturer with ~ 20.5% market
share in the Indian fragrance industry and exports to over 52
countries .The company has over 4,100 customers which
include leading national and MNC FMCG companies, blenders
and producers of fragrances and flavors.This is a good
investment from a three year perspective.
The company is in the fragrance and flavour industry which has
been growing at double digits. The company is the third largest
player in the fragrance industry with about 21% market share.
Though valuations are slightly stretched in the near term it
gives good visibility given its proxy play as a FMCG player.
Current Market Price – Rs. 244
Current Dividend Yield – NA
Bloomberg / Reuters Code –SHKL. IN/
NA
BSE / NSE Code – 539450/SHK
P/E - 44.36
52 Week High / Low – Rs. 259.90 /
Rs.180.00
FII - 6.02%
DII - 3.74%

Company Snapshot
•SHKL is the largest domestic fragrance producer commanding ~ 20.5% market share in the Indian fragrance
industry with over 9,700 fragrances, fragrance ingredients and flavors created, manufactured and supplied
as on FY15.
•SHKL has a long standing reputation developed over its 90 year history as a supplier of quality fragrances for
use by FMCG companies in personal and home care products, food and beverage industries with exports to
over 52 countries.
•SHKL is also an emerging flavor producer in India with exports of its flavor products reaching 15 countries.
SHK has a large and diverse mix of over 4,100 customers which include leading national and MNC FMCG
companies, blenders as well as producers of fragrances and flavors.
•SHKL sells its brands The SHK, Keva and Cobra brands and their products enjoy substantial brand equity in
India.

Third largest Fragrance Player
•SHKL is the 3rd largest fragrance company in India by revenue, with a market share of ~ 20.5%. Its
competitors are mainly MNCs such as Givaudan SA, Firmenich, International Flavors and Fragrances Inc. and
Symrise SA which collectively hold a 57.0% market share of the global fragrance and flavor industry.
•In FY15 SHKL developed over 502 new fragrance and flavor compounds which have been sold commercially.
Its research team developed 12 molecules over the last 3 years, out of which it has filed patent applications
for 3.
•SHKL combines its innovation efforts with a strong quality control system which enables traceability and
repeatability for each batch of its products. This has led to a contribution of ~ 14.3% of revenues in FY15
from product launches of the last 3 financial years.
•With a solid business model, an 8,000 wide fragrance product range and strong sales & marketing capability
apart from its robust sales team of 95 people from 9 centers in India and overseas, SHKL would be able to
sustain its market share in the ~ Rs. 20 bn Indian fragrance industry.

Marquee Clientele
•SHKL’s fragrance business has a diversified customer base of over 3,700 customers consisting of leading
national and MNC FMCG companies, blenders as well as producers of fragrances.
•SHKL’s distinct advantage it enjoys is low customer concentration. Out of the net revenue from operations
of ~ Rs. 8.4 bn in FY15 revenue from SHKs largest customer was ~ Rs. 240 Mn.
•Revenues from exports form a significant part of SHKL’s top-line. Its revenues are majorly driven by FMCG
and fragrance consumption in emerging markets comprising of Asia, Middle East and North Africa.
•With a growing FMCG sector in India and other emerging markets, favorable demographics in place as well
as customer diversity both in terms of low client concentration and significant exports SHKL is an effective
FMCG proxy.

Capex & Debt
•SHKL has 4 fragrance manufacturing facilities, 3 in India and 1 in The Netherlands and its manufacturing
facilities in India are working at a 35-45% capacity.
•SHKL has already completed its capex cycle for the next 3-5 years and is looking to achieve economies of
scale with increased demand and production.
•SHKL repayment of significant long term debt post issue combined with an absence of material capex plans
would ensure that financial risk is contained over the medium term, further cementing the case of SHKL as
an effective FMCG proxy.

SHKL’s Flavour Busi ess
•SHKL has a small 2% share in the Indian flavor industry which is dominated by global leaders. SHKL will be
able to take advantage of excess capacity apart from the industry growing at a stable CAGR of 10.4% over
the last 4 years.
•SHKL’s established brand equity with its fragrance and flavor products and a growing clientele of its flavor
products currently over 400,SHKL is expected to increase its market share in an expanding industry thereby
further augmenting its growth.
•SHKL is also an emerging player in the flavor industry with its exports business reaching over 15 countries.
With a diverse portfolio of 1,100 flavor products, this business has over 400 customers including
manufacturers of beverages, confectionary, dairy products, bakery products, pharmaceuticals, oral hygiene,
etc.

Indocount Industries(ICIL)
-Export play on Home Textiles

Indocount Industries Ltd– Investment Snapshot
(as on Apr 24, 2016)
Indocount Industries is our special report stock, which is a high
growth stock which is a Good Investment under current Market
conditions. It has a presence in a space which offers enormous
potential and is also trading at reasonable valuations which will
deliver superior returns in the long run.
The company is an Export play in the textile space and has
established its reputation which has been its strength. The
company has robust clientele with leading brands doing business
through them. The company is also likely to benefit from
capacity expansion which will drive its growth.
Current Market Price – Rs.1040
Current Dividend Yield – NA
Bloomberg / Reuters Code –ICNT. IN/
ICNT.NS
BSE / NSE Code – 521016/ ICIL
Market Cap (In Rs. Cr) - 4107
Total Equity Shares [Mn]– 41.98
52 Week High / Low – Rs. 1254.00/
Rs.385.00
Pro oter’s Holdi g – 58.95%
FII - 6.98%
Mutual Funds - 1.76%

Home Textiles & Spinning-Major Contributors
Reveues (Rs.Mn)
•The company was organized into three business-operating segments i.e Home Textiles, Yarn and Consumer
Durables. Initially, the company manufactured only yarn.
• The company has a total of 80016 spindles producing around 14000 tons of combed cotton yarn per
annum.
•In 2007, the company forayed into the high-margin home textiles business and is 3rd largest exporter of Bed
Linen from India and the 4th largest Bed Sheet exporter to USA .
•In the bed linen segment, which is a complete export oriented product. The company started with a
capacity of 36mn metres in FY07 and has gradually increased its capacity to 45 mn metres in FY14. In FY15
the company expanded the capacity further to 68 mn metres.

Bed Linen Expansion-Growth Driver
Product Mix
•Indo Count has a strong position in bed linen exports by offering high product quality and meeting delivery
deadlines.
• Indo Count boasts marquee clientele of global retailers including Wal-Mart, Bed Bath & Beyond, Target,
Macy’s, JC Penney, Debenhams House of Fraser, British Home Stores and John Lewis .
•With the capacity expansion at 68M meters the capacity of bed sheet has increased from 12 Mn bed sheet
per annum to 17 Mn bed sheet per anum .
•Indo Count has around 6 months of orders at any point of time and the incremental demand will result in
full utilization of the expanded capacity in the next 2-3 years.

CDR Exit - Major Positive
•In FY08 due to global recessionary conditions and the consequent cash flow constraints, the company had
approached its lenders to restructure its debts under the Corporate Debt Restructuring (CDR) System and
exited it in Q4FY15.
• In July 2008, the company was admitted into the CDR cell and Rs.300 Cr has been spent on restructuring
the co pa y’s debts .
•With an improved demand scenario and ramp up of underutilized capacity, the company was able to exit
CDR by FY15 which is four years ahead of the scheduled exit. .
•Indo Count was recorded debt-to-equity ratio of ~0.69x in FY15. The Total debt as on FY15 is at Rs.343 Cr
which includes long term debt of Rs.67 Cr and the working capital debt of Rs.276 Cr .

Bed Linen - Strong Competitive Position
•The global apparel market is estimated to be US$ 1.15 Trillion which is approximately 1.8% of the world
GDP.
• About 75% of the market is concentrated in EU-27,USA,China and Japan followed by Brazil, India, Russia,
Canada and Australia.
•Within the top markets there is major distinction between developed countries and the emerging ones in
terms of per capita spend on apparel.
•The lowest per capita spend on these markets is India (US$37) which is only 4% of the highest one i.e
Australia(US$1131) .

PI Industries Ltd(PIIL)
-In licensing initiatives to drive growth

PI Industries Ltd - Investment Snapshot
(as on Apr 24, 2016)
PI Industries has strong order book amounting to USD600m, the
CSM business has robust revenue visibility-book-to-bill of 3.1x.
The company is also foraying into new segments like
pharmaceuticals and electronics chemicals which will be the
next key growth drivers.This is a good investment from a three
year perspective.
The company boasts of a unique business model, a strong R&D-
led custom synthesis business built over the last two decades,
and an equally compelling domestic agro-chemicals business
largely built by in-licensing arrangements with major global agro-
chemicals innovators.
Current Market Price – Rs.643
Current Dividend Yield – 0.39%
Bloomberg / Reuters Code –PI. IN/
PIIL.NS
BSE / NSE Code – 523642/PIIND
P/E - 31.58
52 Week High / Low – Rs. 758.90 /
Rs.497.55

Company Snapshot
•PIIL is one of the leading players in the agrochemical custom synthesis exports space. The Company
addresses issues like process research, analytical development, scale-up and large-scale manufacturing
needs of agrochemical giants and leading global innovators.
•PIIL plays an important role in building a pipeline of novel molecules to combat new and emergent threats
to cropping.
•PIIL has gained recognition as a reliable partner by virtue of its track-record in CSM business and for its
initial stage itself, the company maintains the prime relationship status throughout the commercial lifecycle
of the product.

Business Segments
•Domestic Agri Inputs which constitutes about 41% of revenues offers plant protection products, and
specialty plant nutrient products and solutions. PIIL has a strong rural reach and brand equity, with millions
of Indian farmers duly backed by a robust pipeline of products for sustained growth in the sector.
•Custom Synthesis & Manufacturing (CSM) (59% of revenues) for contract research and production of agro-
chemicals, intermediates and other niche fine chemicals for global innovators. The business, backed with a
strong R&D support, works to develop and commercialize products based on newly discovered chemistries
with reputed MNC innovators.

CSM Business
•CSM business involves a high level of trust, especially for companies like PI who are involved in the
development of early stage molecule.
•Longstanding relationships with global agro-chemical innovators is a testament to PIIL’s trust and reliability,
which are major entry barriers for any new entrant.
•PIIL has reached this level over a period of 20 years and it will take a long gestation period for a new entrant
to acquire knowledge, create strong R&D capabilities, infrastructure and built trust.

In-Licensing Business model
•PIIL works on a unique model of in-licensing new molecules from global innovators and nurturing the same
into strong brand propositions in the Indian agro-chemical market; these are high-performance, high
potential, early-stage products over which PIIL enjoys exclusive marketing rights.
•PIIL key brands include NOMINEE GOLD, OSHEEN, KEEFUN, BIOVITA, KITAZIN, FORATOX, FOSMITE and
ROKET. Depending upon the agreement with the global innovator, PI either imports the technical or bulk
formulations or chooses to manufacture either of the two at its owned factories in India.
•In-licensing products enjoy exclusivity and market leadership and with ~60% of domestic agro-chemical
revenues coming from in-licensing, PIIL enjoys best-in-class margins in this segment over peers.

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