Narnolia Securities Limited positive to buy stocks of Jyothy Lab, ICICI BANK, Crompton Greaves Ltd and BANK OF INDIA with target price of Rs 1846,Rs 130, Rs 1094 and Rs 260. respectively

1. IEA-Equity
Strategy
India Equity Analytics
31th Jan, 2014
Daily Fundamental Report on Indian Equities
BANK OF INDIA :
"BUY"
Edition : 196
31th Jan 2014
Bank of India reported profit de-growth of 27% YoY largely due to higher loan loss provision. At operating profit level, bank reported 15.5% YoY
growth but higher provisions against loan loss (almost double from last quarter) drag profit downward. Bank’s loan and deposits grew
handsomely and asset qualities were also improved sequentially. Restructure loan was at Rs 1146 cr (0.3% loan) which is not alarming. We have
not found any stress at operating profit level. The stock is corrected almost 10% likely due to profit de-growth. We believe buffer up provision
would be temporally phenomena. The stock could reshape its valuation multiple. We have buy rating on the stock with price target of Rs.217
...................................................... ( Page : 2-6)
Maruti Suzuki India Limited :
"NEUTRAL"
31th Jan 2014
The company for 3QFY14 has registered net sales of Rs 10620 Cr down by 2.7% YoY led by 4.5 % volume decline to 288151 units for the period
under review. The decline in the volume came majorly due to weaker performance on export business front. Export sales volumes were down
38.6% YoY ......................................................... ( Page : 7-8)
Crompton Greaves Ltd : "Rebounds begains…….."
"BUY"
31th Jan 2014
We have rolled forward our valuation to FY16E earnings and maintained our Accumulated rating on CGL with a revised target price of Rs130
(Rs105 earlier) based on 14xFY16E EPS, driven by likely turnaround in international operations and a better earnings growth trajectory. We
believe that a record backlog, better/leaner cost structure, good & increasing product basket, improved reach in terms of geography will drive
earnings & intrest coverage ratio over the next few years. ................................................ ( Page : 9-10)
ICICI BANK Cromtom
"BUY"
31th Jan 2014
Bank’s profit growth of 12.6% YoY despite of 21.6% YoY growth in NII and 28.6% growth in operating profit was largely due to higher tax
provisions made of bank (32.4% of PBT versus 27.9% of PBT in 2QFY14). During quarter, bank has created special reserve for deferred tax liability
to the tune of Rs.215 Cr as per recent RBI guideline dated 20th December 2013. Adjusting the same, profit grew by 22% YoY which was quite
impressive. But bank’s cost of fund increased higher than loan yield which would restrict margin expansion. We lower our book value estimates
to Rs.643 from earlier of Rs.657. Accordingly we reduce our target price to Rs.1094 from earlier of Rs.1118.
............................................................... ( Page : 11-15)
Jyothy Lab : "Efforts for stability"
"BUY"
31th Jan 2014
Better numbers than expectation and hope to maintain healthy growth ahead;Jyothy Lab registered better growth with 27.5% sales growth led
by stellar set of performance across all segments. We expect that company’s new management and new strategy of product reach would
energize its growth story in near future. Hence, the management has maintained its guidance of achieving around 25% revenue growth and
OPM of 14% - 15% for FY14. ........................................................ ( Page : 16-18)
Hindustan Unilever :"wait for triggers"
"NEUTRAL"
30th Jan 2014
Delivered stable set of numbers, still expecting key challenges ahead;For 3QFY14, despite slow discretionary demand HUL reported inline set of
numbers with 8.5% (YoY) sales growth led by 4% (YOY) volume growth. PAT grew by 19%(YoY). We do not see any sign of improvement in
volume growth in near future. However, revival in macro economy and resultant improvement in consumer sentiment would play a key triggers
for improvement in the volume growth in near term. ............................................ ( Page :19-21)
Escorts Ltd :"Out Performer……."
"BUY"
30th Jan 2014
Going forward, we remain positive on the company’s growth prospects particularly in AMP segment. We expect demand to improve further in
FY2014E with the economic recovery. However, we remain cautious with regards to growth in Construction Equipment segment in near-tomedium. Thus, We revise our estimates upwards to factor in the strong CY13 tractor volume performance. We therefore revised our rating on
the stock from "Reduce" to "Buy" and advised to our investors to enter at current level with Revised price target of Rs. 175
.................................................................( Page :22-24)
Narnolia Securities Ltd,

2. BANK OF INDIA
Company 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
Stock Performance
1M
Absolute
-21.6
Rel.to Nifty
-17.9
BUY
187
217
235
16
532149
BANKINDIA
393/126
12260
2271804
6074
31th Jan, 2014
Bank of India reported profit de-growth of 27% YoY largely due to higher loan
loss provision. At operating profit level, bank reported 15.5% YoY growth but
higher provisions against loan loss (almost double from last quarter) drag
profit downward. Bank’s loan and deposits grew handsomely and asset
qualities were also improved sequentially. Restructure loan was at Rs 1146 cr
(0.3% loan) which is not alarming. We have not found any stress at operating
profit level. The stock is corrected almost 10% likely due to profit de-growth.
We believe buffer up provision would be temporally phenomena. The stock
could reshape its valuation multiple. We have buy rating on the stock with
price target of Rs.217.
NII growth on the back of higher loan growth and margin expansion
During quarter, Bank India reported NII growth of 17.8% YoY to Rs.2719 cr versus
our expectation of Rs.2683 largely due to higher than expected loan growth,
improvement in credit deposits ratio and margin expansion. Bank reported other
1yr
-47.5
-47.5
YTD
-18.1
-18.1
Share Holding Pattern-%
Current 1QFY14 4QFY1
3
Promoters
64.1
64.1
64.1
FII
13.2
13.6
13.5
DII
15.3
15.6
16.3
Others
7.4
6.7
6.0
BANKINDIA Vs Nifty
"BUY"
income of Rs.1097 cr versus Rs.937 cr in last quarter and Rs.1097 cr in previous
quarter. Total revenue grew by 17.6% YoY to Rs.3816 cr.
Operating leverage remained stable
Bank’s operating leverage remained stable at 0.3% which is quite impressive. In
absolute term, operating expenses increased by 20.3% YoY in which employee cost
and other operating expenses increased by 18.7% and 22.8% respectively. Healthy
NII growth and higher operating cost led pre provisioning profit growth of 15.5% YoY.
Loan loss provisions were almost double from last quarter, but asset quality
improved
Provisions and contingencies increased by 53.3% which includes loan loss provision
of Rs.1173 cr which was double from last quarter. But in absolute term, GNPA
marginally increased by 1.4% on sequential basis while in percentage to gross
advance, it improved by 12.5 bps to 2.8% from 3%. Provisions were little higher by
4% in sequential basis taking almost flat improvement in net NPA. In percentage
term, NPA improved to 1.7% from 1.9% in previous quarter. Provision coverage ratio
without technical write-off was 38.7% and with technical write off, it stood at 63.8%.
Slippage during the quarter was at Rs.1747 cr (2% of advance) versus Rs.1469 cr
(1.8% of advance).
Rs, Cr
Financials
2011
2012
2013
2014E
2015E
NII
7878
8313
9024
10578
10869
Total Income
10519
11635
12790
15082
15373
PPP
5398
6694
7458
8701
8917
Net Profit
2542
2678
2749
2776
3170
EPS
46.5
46.7
47.9
43.2
49.4
(Source: Company/Eastwind)
2
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

3. BANK OF INDIA
Balance sheet growth impressive
We are impressed with bank’s balance sheet growth trajectory during the quarter as bank
reported deposits growth of 30% YoY higher than peers (result so far announced) led by
term deposits growth of 35% YoY. Current deposits and saving deposits reported growth
of 24% and 14% respectively taking overall CASA deposits growth of 16%. In percentage
to total deposits, CASA ratio declined to 22.5% from 24.6% in 3QFY13 largely due to
higher growth in term deposits than CASA deposits. Loan grew by 27.2% YoY which is
highest so far result announced. Credit deposits ratio for the quarter stood at 77.4% as
against 76.8% in previous quarter and 79.2% in last quarter.
Margin expansion led by imrprovement in investment yield
NIM for the quarter was 2.89%, an improvement of 50 bps YoY due to improvement of
investment yield. However fund yield and cost of fund both were declined marginally in
sequential but investment yield improved to 8.2% from 7.9% in previous quarter.
Profit declined on account of higher loan loss provisions
Bank of India (Bank India) profit was declined by 27.1% YoY to Rs.586 cr as against our
expectation of Rs.602 cr. Profit growth was lower on account of 98% YoY rise in loan loss
provisions. Overall provisions were increased by 53.3% YoY which drag PBT to 21.3%
YoY de-growth. Tax rate were 21% versus 28.5% of PBT in previous quarter and 14.5 of
PBT in 3QFY13. Total provisions for the quarter stood at 0.4% of net advances higher
than 0.28% in 3QFY13.
Valuation & View
Bank of India reported profit de-growth of 27% YoY largely due to higher loan loss
provision. At operating profit level, bank reported 15.5% YoY growth but higher provisions
against loan loss (almost double from last quarter) drag profit downward. Bank’s loan
and deposits grew handsomely and asset qualities were also improved sequentially.
Restructure loan was at Rs 1146 cr (0.3% loan) which is not alarming. We have not
found any stress at operating profit level. The stock is corrected almost 10% likely due to
profit de-growth. We believe buffer up provision would be temporally phenomena. The
stock could reshape its valuation multiple. We have buy rating on the stock with price
target of Rs.217.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
3

4. BANK OF INDIA
Fundamental Through Graph
NII growth on the back of higher loan growth
and margin expansion
Loan loss provisions were almost double from
last quarter, but asset quality improved
Profit declined on account of higher loan loss
provisions
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
4

5. BANK OF INDIA
Quarterly Result
Interest/discount on advances / bills
Income on investments
Interest on balances with Reserve Bank of India
Total Interest Income
Others Income
Total Income
Interest Expended
NII
Other Income
Total Income
Employee
Other Expenses
Operating Expenses
PPP( Rs Cr)
Provisions
Net Profit
3QFY14
7017
2207
546
9769
1097
10866
7050
2719
1097
3816
989
684
1672
2144
1404
586
2QFY14
6631
2129
479
9239
1100
10340
6712
2527
1100
3627
897
628
1525
2102
1232
622
3QFY13 % YoY Gr % QoQ Gr 3QFY14E Variation
5791
21.2
5.8
6910
-1.5
1809
22.0
3.7
2261
2.5
298
83.4
14.0
472
-13.5
8023
21.8
5.7
9644
-1.3
937
17.1
-0.3
1141
4.0
8960
21.3
5.1
10784
-0.8
5714
23.4
5.0
6960
-1.3
2308
17.8
7.6
2683
-1.3
937
17.1
-0.3
1141
4.0
3246
17.6
5.2
3824
0.2
833
18.7
10.2
931
-5.8
557
22.8
8.8
674
-1.3
1390
20.3
9.7
1606
-4.0
1856
15.5
2.0
2218
3.4
916
53.3
13.9
1382
-1.5
803
-27.1
-5.8
602
2.7
Balance Sheet Data
Equity Capital
Reserve & Surplus
Deposits
Borrowings
Other liabilities and provisions
Total Liability
Cash in hand
Cash and balances with reserve bank of india
Investment
Advance
Fixed Assets
Others Assets
Total Assets
643
26,672
454,140
40,545
14,492
536,492
21,406
39,662
108,253
351,725
2,975
12,470
536,492
597
25,686
432,282
41,751
12,727
513,042
24,621
34,658
107,413
332,190
2,957
11,203
513,042
575
22,698
349,117
28,686
14,890
415,966
17,940
22,580
86,083
276,486
2,853
10,024
415,966
11.9
9881
6156
3.0
1.9
37.7
8765
5947.3
3.0
2.0
32.1
8898
5,228
3.5
2.0
41.2
Asset Quality
GNPA
NPA
GNPA(%)
NPA(%)
PCR(%) Without technical write off
41.3
597
3.8
27,243
5.1 449,063
-2.9
42,513
-2.7
13.9
17.5
30.1
7.8
-7.2
2.1
-1.1
4.9
29.0
4.6
-100.0
19.3
-13.1
-100.0
75.7
14.4
-100.0
25.8
0.8
27.2
2,261
5.9 345,503
4.3
11.3
29.0
4.6
11.0
12.7
17.7
-1.8
0.6
24.4
-97.9
3.5
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
5

6. BANK OF INDIA
Financials & Assuption
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
Net Profit
2011
2012
2013
2014E
2015E
15570
5195
798
295
21858
2642
24500
12218
813
950
13981
7878
2642
10519
3492
1629
5121
5398
2909
2542
46.0
20241
7142
834
264
28481
3321
31802
17957
1145
1065
20167
8313
3321
11635
3069
1871
4941
6694
4016
2678
5.3
23139
7261
1257
251
31909
3766
35675
20238
1489
1158
22885
9024
3766
12790
3131
2201
5332
7458
4709
2749
2.7
27015
8562
1987
1
37565
4504
42069
29922
1419
1281
26987
10578
4504
15082
0
0
6381
8701
4766
2776
1.0
31171
10773
1987
1
43932
4504
48436
30362
1419
1281
33063
10869
4504
15373
3810
3656
6457
8917
5045
3170
14.2
299559
30
22021
-2
213708
26
86677
27
318216
6
32114
46
248833
16
86754
0
381840
20
35368
10
289367
16
94613
9
465844
22
43275
22
358816
24
117097
24
535721
15
49766
15
366720
2
134662
15
7.3
6.3
6.5
4.1
8.0
4.3
8.1
8.7
7.8
5.6
6.9
5.8
8.0
7.1
7.7
5.2
6.8
5.3
7.5
7.3
7.5
6.4
7.5
5.3
8.5
8.0
8.4
5.7
7.5
6.2
322.7
1.5
10.3
365.3
1.0
7.7
416.9
0.7
6.3
434.0
0.6
5.6
0.0
0.5
4.9
Key Balance Sheet Data
Deposits
Deposits Growth(%)
Borrowings
Borrowings Growth(%)
Loan
Loan Growth(%)
Investment
Investment 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.
6

7. Maruti Suzuki India Limited
Result Update
NEUTRAL
CMP
Target Price
Previous Target Price
Upside
Change from Previous
1638
1700
4%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Market Cap (Rs/Cr)
Average Daily Volume
Nifty
532500
MARUTI
1864/1217
22,266
423015
6073
Stock Performance-%
Absolute
Rel. to Nifty
1M
-7.1
-3.4
1yr
2.9
2.5
YTD
35.0
22.0
Share Holding Pattern-%
Promoters
FII
DII
Others
Current 2QFY14 1QFY1
4
56.2
56.2
56.2
21.5
19.7
22.0
14.0
15.4
13.1
8.3
8.8
8.7
One Year Price Vs NIFTY
"NEUTRAL"
31st Jan' 14
Result Analysis:
The company for 3QFY14 has registered net sales of Rs 10620 Cr down by 2.7% YoY led
by 4.5 % volume decline to 288151 units for the period under review. The decline in the
volume came majorly due to weaker performance on export business front. Export sales
volumes were down 38.6% YoY and 41.3% QoQ to 19,966 units.
EBITDA for MSIL is up 52% YoY to Rs.1,355 Cr and EBITDA margin was up 448 bps YoY
to 12.3%. However results are not comparable on yearly basis as 3QFY13 does not
include impact of SPIL merger. Raw material cost as % of net sales is down 671 bps
YoY.Employee cost as % of net sales is up 62 bps YoY but down 82 bps QoQ to
2.8%.Royalty payments for Q3 FY14 were around levels of H1 FY14.
The net profits for the company during 3QFY14 came at Rs 681 Cr and NPM at 6.25
%.Effective tax rate is around 23.1%.
On realization front, the Net realization for company is up 1.4% YoY to Rs.368547 however
there is sequential decrease in net realization mainly due weak product mix, lower export
sales number and higher contribution of Mini Segments. Discounts in 3QFY14 is at all time
high to Rs.19412/unit vs. 17,500/unit QoQ.
Recent Event :
MSIL has announced that the proposed capacity expansion (1.5 Million units per annum) in
Gujarat would be through a 100% Suzuki (parent) owned subsidiary. The subsidiary would
be fully dedicated to Maruti.
How we see the deal :
1.The near term effect of the deal on PAT is neutral, as this Greenfield facility at Gujrat will
take 2 -3 year to get commissioned and another 1 year to get its full capacity utilization, this
translates period FY17 onwards.
2.The MSIL is getting cars at cost of manufacturing plus portion of incremental capex which
means MSIL will lose manufacturing margins and will getting only the trading margin. The
newly formed company will be 100 % subsidiary of Suzuki Motors Limited.
3.The profit sharing from the upcoming Gujrat facility would depend on the stake of Suzuki
Motor in MSIL.
4..In any case Suzuki Motor will make profit equal to its stake in MSIL whether it makes its
own capex as in this case or MSIL made capex then why did Suzuki made this huge capex.
View & Valuation:
At CMP Rs 1638 the stock is trading at highest 5 year historical P/E multiple and in current
scenario we donot see much upsides from hereon. Therefore we are Neutral for the stock
with target price Rs 1700.The CMP seems to factored almost all the upsides including
improving operational efficiency and volume growth. The stock may see some upward
movement from current price on buzz that Suzuki may increase its stake in MSIL.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
10894
1355
681
12.4%
6.3%
2QFY14
10468
1321
669
12.6%
6.4%
(QoQ)-%
4.1
2.6
1.8
(20bps)
(10bps)
3QFY13
11200
891
501
8.0%
4.5%
Rs, Crore
(YoY)-%
-2.7
52.0
35.9
450bps
180bps
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
7

8. Maruti Suzuki India Limited
Graphical Represenation
SALES & PAT TREND
Net sales of Rs 10620 Cr down by 2.7% YoY
led by 4.5 % volume decline to 288151 units
for the period under review.
(Source: Company/Eastwind)
OPM & NPM TREND
Raw material cost as % of net sales is down
671 bps YoY. Employee cost as % of net sales
is up 62 bps YoY but down 82 bps QoQ to
2.8%.
(Source: Company/Eastwind)
REALIZATION PER VEHICLE
Net realization for company is up 1.4% YoY to
Rs.368547 however there is sequential
decrease in net realization mainly due weak
product mix, lower export sales number and
higher contribution of Mini Segments
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
8

9. Crompton Greaves Ltd.
V-
"Accumulate"
31th Jan' 14
"Rebounds begains…….."
Result update
Accumulate
CMP
Target Price
Previous
Target Price
Upside
110
130
120
15%
8%
Change from
Previous
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume
Nifty
500093
CROMPGREAV
72/137
4,251
775,133
6,074
Stock
Absolute
Rel. to Nifty
1M
(14.2)
(10.6)
1yr
2.3
2.3
YTD
17.9
11.0
Share
Promoters
FII
DII
Others
3QFY14
42.5
18.5
23.8
15.2
1 yr Forward P/B
2QFY14
42.5
16.6
24.5
16.5
1QFY14
41.7
15.2
23.7
19.4
Crompton consolidated net sales rose 12.8% on yearly basis to Rs 3351.9 crore during the
quarter, which were inline with street expectations. Consolidated earnings before interest, tax,
depreciation & amortisation (EBITDA) stands to Rs 169.3 crore and EBITDA margin at 4.9
percent. Power systems revenues increased 17.3 percent on yearly basis to Rs 2132.2 crore
during Dec quarter FY14, and earnings before interest & tax (EBIT) from power segment during
the quarter were Rs 53.3 crore. Meanwhile, its consumer products and industrial systems
divisions posted single digit growth in topline during the quarter and it gone by 7.3% to Rs 651
crore. EBIT of consumer products rose to Rs 75.9 crore up by 19.9% and industrial systems'
EBIT decreased by 42.7% to Rs 29.5 crore. Other income jumped 33.0% yoy to Rs 40.4 crore
while finance cost climbed to Rs 26.7 crore up by 25.6% yoy. At the current level of INR 110, we
maintain 'ACCUMULATE' at the Stock as Power sector has shown sign of revival by posting an
EBIT of Rs 53.3 crore VS Loss of Rs 104.6 crore qoq and also performance of Consumer division
was satisfactory with a sales growth of 7.25% yoy and EBIT Growth of 19.9%.
Margin to improve further :
Domestic power systems and consumer products segment were key margin drivers as they
sustained healthy operating margins of 9.4% and 11.7%, respectively. Collectively, both segments
constitute 41% of total consolidated revenue. Consumer products segment continued its market
share expansion following higher distribution reach in categories like lighting (up 17% yoy and
fans up 13% yoy.
Order scenerio :
Consolidated order book at the quarter ended Dec'14 was Rs. 10074 crore, up 9.12% yoy.
Consolidated order inflow for the quarter was Rs. 2624 crore up 15.7% yoy. Crompton expects a
robust order intake in high value-added segments like UHV/EHV in Asia, Automation/smart grid
in the power segment, Motors in EMEA market, Railway transportation and electronic drives in
the industrial segment.
Valuations :
We have rolled forward our valuation to FY16E earnings and maintained our Accumulated rating
on CGL with a revised target price of Rs130 (Rs105 earlier) based on 14xFY16E EPS, driven by
likely turnaround in international operations and a better earnings growth trajectory. We believe
that a record backlog, better/leaner cost structure, good & increasing product basket, improved
reach in terms of geography will drive earnings & intrest coverage ratio over the next few years.
It has assumed break even EBIT level for international subsidiaries in FY14. Further, In our view,
the stock's performance would largely be driven by an improvement in overseas business, though
standalone performance would protect downsides.
Financials
Consolidated
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
3351.9
169.3
59.5
5.1%
1.8%
2QFY13
3204.9
161.3
57.8
5.0%
1.8%
(Source: Company/ Eastwind Research)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
(QoQ)-%
4.6%
5.0%
3.0%
10 bps
0 bps
3QFY13
2971.8
2.0
-69.0
0.1%
-6.3%
Rs, Crore
(YoY)-%
12.8%
8322.4%
186.2%
500 bps
810 bps
(Consolidated)
9

10. Crompton Greaves Ltd.
Key financials
PARTICULAR
2009A
2010A
2011A
2012A
2013A
2014E
2015E
2016E
8737
74
8811
996
874
122
81
867
305
0
563
75
1.2
8.8
9141
110
9251
1278
1122
155
43
1190
365
35
860
82
1.3
13.4
10005
113
10118
1344
1150
194
34
1229
310
-38
881
82
1.3
13.7
11249
63
11311
804
544
260
57
550
182
0
368
52
0.8
5.7
12094
75
12170
383
180
203
71
185
101
-121
-37
30
0.5
-0.6
13304
110
13414
665
412
253
90
432
137
0
295
52
0.8
4.6
14634
110
14744
922
669
253
100
679
215
0
464
52
0.8
7.2
16098
110
16208
1014
736
278
110
736
233
0
502
52
0.8
7.8
11.4%
6.4%
13.0%
1.7%
30.7%
25.2%
14.0%
9.4%
5.2%
0.5%
34.3%
30.0%
13.4%
8.8%
5.1%
0.5%
26.9%
24.9%
7.1%
3.3%
4.1%
0.6%
10.2%
9.2%
3.2%
-0.3%
-0.6%
0.5%
-1.0%
0.6%
5.0%
2.2%
4.2%
0.7%
8.4%
7.5%
6.0%
3.0%
6.6%
0.7%
11.8%
11.3%
6.0%
3.0%
7.1%
0.7%
11.4%
11.5%
1831
718
2549
64
68
2504
501
3005
64
256
3275
395
3670
64
268
3611
985
4596
64
138
3562
1851
5413
64
94
3529
2000
5529
64
110
3941
2000
5941
64
110
4391
2000
6391
64
110
28.5
2.4
10.8
8
39.0
6.6
26.2
19
51.0
5.3
33.5
20
56.3
2.5
9.6
24
55.5
1.7
2.5
55.0
2.0
4.6
24
61.4
1.8
6.7
15
68.4
1.6
6.7
14
Performance
Revenue
Other Income
Total Income
EBITDA
EBIT
DEPRICIATION
INTREST COST
PBT
TAX
Extra Oridiniary Items
Reported PAT
Dividend (INR)
DPS
EPS
Yeild %
EBITDA %
NPM %
Earning Yeild %
Dividend Yeild %
ROE %
ROCE%
Position
Net Worth
Total Debt
Capital Employed
No of Share (Adj)
CMP
Valuation
Book Value
P/B
Int/Coverage
P/E
(Source: Company/ Eastwind Research)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
10

11. ICICI BANK
Result update
ACCUMULATE
CMP
981
Target Price
1094
Previous Target Price
1118
Upside
12
Change from Previous
-2.147
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
532174
ICICIBANK
358/127
11104
19.54 lakhs
6073
Stock Performance
Absolute
Rel.to Nifty
1M
-11.3
-7.6
1yr
-18.1
-18.1
YTD
-18.1
-18.1
Share Holding Pattern-%
Current 4QFY13 3QFY1
3
Promoters
66.7
64.1
64.1
FII
11.0
13.2
13.6
DII
Others
15.4
6.9
ICICI Bank Vs Nifty
15.3
7.4
15.6
6.7
"ACCUMULATE"
31th Jan, 2013
Bank’s profit growth of 12.6% YoY despite of 21.6% YoY growth in NII and
28.6% growth in operating profit was largely due to higher tax provisions
made of bank (32.4% of PBT versus 27.9% of PBT in 2QFY14). During quarter,
bank has created special reserve for deferred tax liability to the tune of Rs.215
Cr as per recent RBI guideline dated 20th December 2013. Adjusting the same,
profit grew by 22% YoY which was quite impressive. But bank’s cost of fund
increased higher than loan yield which would restrict margin expansion. We
lower our book value estimates to Rs.643 from earlier of Rs.657. Accordingly
we reduce our target price to Rs.1094 from earlier of Rs.1118.
Healthy NII growth on the back of higher loan growth and margin expansion
During quarter, bank reported NII growth of 21.6% YoY to Rs.4256 cr on the back of
higher than expected loan growth and loan yield led by credit deposits ratio and
expansion NIM. Other income registered growth of 26.5% YoY to Rs.2801 cr versus
Rs.2166 cr in previous quarter and Rs.2215 Cr in last quarter in corresponding
quarter. Healthy NII along with higher support from other income, revenue of the
bank grew by 23.5% YoY to Rs.7057 Cr.
Stable operating leverage led healthy operating profit growth
Operating leverage (opex to total assets) was remained very impressive and was
stable at 0.46% versus 0.43% in 3QFY13. Cost to income ratio of the bank improved
by 250 bps YoY to 37.4% as against 39.6%. Operating expenses increased by
15.7% YoY in which employee cost and other operating expenses increased by 6%
and 23% YoY respectively. Healthy revenue growth and controlled operating
expenses led operating profit growth of 28.6% YoY to Rs.4440 cr.
Asset quality by and large stable sequentially but provision declined
Bank reported deterioration in asset quality (GNPA) in sequential basis by 3.7% in
absoluter term. In percentage to gross advance, GNPA stood at 3.07% versus 3.1%
in previous quarter (marginally improved). Provisions were declined by 0.6% QoQ
taking net NPA increased by 15.3% QoQ. In percentage to net advance, this ratio
stood at 0.94% versus 0.85% in previous quarter. Lower provisions made PCR to
70.1% versus 73.1% in previous quarter.
Financials
NII
Total Income
PPP
Net Profit
EPS
2011
10739
42252
10950
6093
52.9
2012
10734
18237
10386
6465
56.0
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
Rs, Cr
2013
2014E
2015E
13866
17734
21111
22212
27035
30413
13199
16762
18856
8325
10658
11955
72.2
92.3
103.6
(Source: Company/Eastwind)
11

12. ICICI BANK
Lower growth in deposits led by muted growth in term deposits
In balance sheet front, bank’s deposits grew by 11% YoY lower than expectation largely
due to lower growth in term deposits. Demand deposits and saving deposits grew by
9.3% and 11.8% YoY taking overall CASA deposits growth to 16% YoY. In percentage to
total deposits, CASA stood at 42.9% versus 40.9% in last quarter. But in sequential
basis, bank reported 40 bps declined in CASA and borrowing also increased by 4%.
Overall cost of fund was increased by 32 bps in sequential basis which restricted margin
expansion despite of improvement in loan yield.
Higher loan growth led by retail loan followed by overseas and corporate loan
Loan grew by 16% YoY higher than expectation. Incremental loan growth came from
retail advances which grew by 22% YoY followed by oversea and corporate loan. Retail
loan now constituted 39% of total loan versus 37% in last quarter. Retail loans are
generally high yield in nature and higher loan constitute would result of margin sustaining
at current level. We are susceptible about the margin improvement because of higher
cost of fund as bank reported lower CASA and higher borrowing as a percentage to
NDTL in sequential basis.
Margin expansion marginally on account of higher cost of fund than deposits
NIM improved marginally from previous quarter to 3.32% from 3.31% largely due to
higher cost of fund than loan yield. Sequentially, cost of fund increased to 9.1% from
8.8% in previous quarter due to higher borrowing cost along with lower CASA ratio. Loan
yield improved to 9.9% from 9.7% in previous quarter. We believe NIM of the bank would
be highest as increasing cost of fund would cushion loan yield improvement.
Valuation & View
Bank’s profit growth of 12.6% YoY despite of 21.6% YoY growth in NII and 28.6% growth
in operating profit largely due to higher tax provisions made of bank (32.4% of PBT
versus 27.9% of PBT in 2QFY14). During quarter, bank has created special reserve for
deferred tax liability to the tune of Rs.215 Cr as per recent RBI guideline dated 20th
December 2013. Adjusting the same, profit grew by 22% YoY which was quite
impressive. But bank’s cost of fund increased higher than loan yield would restrict margin
expansion. We lower our book value estimates to Rs.643 from earlier of Rs.657.
Accordingly we reduce our target price to Rs.1094 from earlier of Rs.1118.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
12

13. ICICI BANK
Chart Focus
NII growth on account of higher than expected
loan growth and margin expansion
Healthy revenue growth and impressive
operating leverage led operating profit
Despite of higher revenue grwoth and
operating profit growth, net profit muted
because of higher tax provisions against DTL
Source: Company/Eastwind
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
13

14. ICICI 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
8224
2923
34
275
11456
2801
14257
7200
4256
2801
7057
997
1620
2617
4440
695
3745
1212
2533
2QFY14
7737
2839
47
190
10813
2166
12980
6770
4044
2166
6210
872
1451
2322
3888
625
3263
911
2352
3QFY13
7066
2742
136
194
10138
2215
12353
6639
3499
2215
5714
941
1321
2261
3452
369
3084
834
2250
% YoY
Balance Sheet
Net Worth
Deposits
Borrowings
Investment
Loan
74057
316970
150940
171985
332632
73103
309046
145356
168829
317786
67119
286418
147149
166842
286766
10.3
1.3
10.7
2.6
2.6
3.8
3.1
1.9
16.0
4.7
10448
3121
3.1
0.9
70.1
10078
2707
3.1
0.9
73.1
9803
2185
3.4
0.8
77.7
Asset Quality
GNPA (Rs Cr)
NPA (Rs Cr)
% GNPA
% NPA
PCR(w/o technical write-off)(%)
16.4
6.6
-75.3
42.1
13.0
26.5
15.4
8.4
21.6
26.5
23.5
6.0
22.7
15.7
28.6
88.4
21.4
45.4
12.6
% QoQ 3QFY14E Variation
6.3
7971
-3.1
2.9
3012
3.0
-28.5
52
55.8
44.7
236
-14.1
5.9
11271
-1.6
29.3
2325
-17.0
9.8
13597
-4.6
6.4
6766
-6.0
5.2
4505
5.9
29.3
2325
-17.0
13.6
6831
-3.2
14.4
0
-100.0
11.7
0
-100.0
12.7
2596
-0.8
14.2
4235
-4.6
11.2
657
-5.4
14.8
3578
-4.5
33.1
1073
-11.5
7.7
2504
-1.1
6.6
2.1
0.4
1.6
-98.2
-1.2
3.7
42.8
75608
318387
153387
3012
328689
15.3
Source: Company/Eastwind
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
14

15. ICICI BANK
Financials & Assuption
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
Balance Sheet
DEPOSITS
Deposits Growth
Borrowings
Borrowings Growth(%)
Investment
Growth(%)
Advances
Growth(%)
2011
2012
2013
2014E
2015E
19098
9181
469
1334
30081
31513
61595
11315
1683
6345
19343
10739
31513
42252
4393
26910
31302
10950
4631
0
0
6093
22130
9684
491
1238
33543
7503
41045
14304
1469
7035
22808
10734
7503
18237
3515
4335
7850
10386
1583
8803
2338
6465
27341
11009
543
1182
40076
8346
48421
16889
2087
7234
26209
13866
8346
22212
3893
5120
9013
13199
1803
11397
3071
8325
31646
11785
184
946
44561
9302
53863
18217
0
10146
27812
16749
9302
26051
4451
5441
9892
16159
2592
13567
4071
9496
34992
13220
184
946
49342
9302
58644
20402
0
11364
28840
20502
9302
29804
5096
6229
11325
18478
2853
15626
4688
10938
259106
7.3
125839
8.8
209653
12.5
256019
13.4
255500
-1.4
140165
11.4
159560
-23.9
253728
-0.9
292,614
14.5
145,341
3.7
171,394
7.4
290,249
14.4
321,875
10.0
158,535
9.1
187,360
9.3
339,592
17.0
360,500
12.0
177,560
12.0
209,843
12.0
380,343
12.0
7.5
4.7
4.4
6.4
5.0
8.7
6.4
5.6
6.1
5.8
9.4
6.7
5.8
6.4
6.0
9.3
6.3
5.7
6.4
0.0
9.2
6.3
8.0
6.4
5.9
480
2.3
5.5
524
1.7
7.3
578
1.5
9.4
643
1.6
9.2
682
1.5
10.6
Eastwind Calculation
Yield on Advances
Yield on Investments
Cost of deposits
Cost of Borrowings
Cost of fund
Valuation
Book Value
P/BV
P/E
Source: Company/Eastwind
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
15

16. Jyothy Lab
"BUY"
31st Jan' 14
"Efforts for stability"
Result update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
BUY
207
260
26%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
532926
JYOTHYLAB
221/140
3741
51716
6074
Stock Performance
1M
Absolute
7.9
Rel. to Nift
11.7
1yr
36.6
36.2
YTD
3.5
4.9
Share Holding Pattern-%
Current
Promoters
FII
DII
Others
66.7
15.3
8.6
9.4
1 yr Forward P/B
2QFY14 1QFY14
63.7
16.0
9.8
10.5
63.7
17.0
9.1
10.2
Better numbers than expectation and hope to maintain healthy growth ahead;
For 3QFY14, Jyothy Lab registered better growth with 27.5% sales growth led by
stellar set of performance across all segments. Its synergy affect of the Henkel
Integration and entry into new geographies combined with rural, urban, modern and
traditional shops envisage its brilliant performance during the quarter. PAT grew by
60.5% on YoY basis.
We expect that company’s new management and new strategy of product reach
would energize its growth story in near future. Hence, the management has
maintained its guidance of achieving around 25% revenue growth and OPM of 14% 15% for FY14.
Volume growth: Volume grew by 22% while 5% was price/product mix growth. The
dishwash and personal care grew higher versus overall volume growth while fabric
care and HI grew slower.
Margin impacted due to higher Ad spend: Company’s EBITDA margin declined 130bps
(YoY) to 14.3% and improved 130bps sequentially. Company increased its RM cost from
28.5% (3QFY13) to 29.5% and Ad spend from 6.9%(3QFY13) to 9.2%. While, PAT margin
improved by 180bps(YoY) and 270bps(QoQ) to 9.1%. Management expected to see
EBITDA margin at a range of 14-15% and Ad spends at 10-12%, which is in-line.
However, they will spend little more on Ad spend in coming quarters but it will not be
more than 12%.
Segments/ Brandwise Performance: In its bread and butter business detergent & soap
segment which includes brands like Ujala, Henko, Exo, Pril, Margo, Mr. White, grew by
27.6%. Ujala fabric whitener continues to be the market leader with a market share of
72.5% by value. There was a strong over 25% growth in the dishwash segment
especially Exo bars. Pril posted a modest growth.
Home Care, which includes mosquito repellant Maxo and Exo scrubber, saw revenues
growth of 26% . The coils saw moderation due to a weak season. Others business,
which include brands like Fa and Neem, saw revenue to Rs 4cr from negative Rs 0.32cr
(3QFY13).
View and Valuation: Going forward, the company will focus on brand building with
extension of current brands and continue to adapt to the continuous changes of
consumers. Management is confident that these efforts will further strengthen
brands and establish better consumer connect.
The Company’s products are available through 2.9 mn outlets in India and expects the
sub-stockist will increase by 20% from the current 2000 to 2400 by the end of FY14E.
We believe the distribution restructuring would lead to generate sales and its presence
in highly demanding categories would help to manage high margins and volume
growth simultaneously. We maintain "BUY" view with a target price of Rs 260. At a
CMP of Rs207, stock trades at 3.9x FY15E P/BV.
Financials
Rs, Cr
3QFY14
2QFY14
(QoQ)-%
3QFY13
(YoY)-%
Revenue
297.44
306.1
-2.8%
233.3
27.5%
EBITDA
42.7
40
7%
36.5
17%
PAT
27.2
19.6
39%
16.9
61%
EBITDA Margin
14.4%
13.1%
130bps
15.6%
(12bps)
PAT Margin
9.14%
6.40%
270bps
7.24%
180bps
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
16

17. Jyothy Lab
Sales and Sales Growth (YoY)-%
The company has maintained its guidance of
achieving around 22% - 25% revenue growth.
(Source: Company/Eastwind)
Sales Mix-segment (%)
(Source: Company/Eastwind)
Margin-%
Management expected to see EBITDA margin
at a range of 14-15% in FY14E.
(Source: Company/Eastwind)
RM Cost and Ad Spend-(% of sales)
Company will spend little more on Ad spend
in coming quarters but it will not be more
than 12%.
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
17

18. Jyothy Lab
Key takeaways from Conference call;
1) The company has maintained its guidance of achieving around 22% - 25% revenue
growth.
(2) EBITDA margin will be between 14-15% and ad spends will be 10-12% which is in-line
and they will spend little more ad spend in coming quarters but it will not be more than
12%.
(3) For FY15, the company will re-launch Henko with a completely new positioning and
formulation in Q1 FY15,
(4) They will extend Margo brand in skin care category and planned several activities for
Maxo in FY15 including entry into low smoke coil.
(4) The company will continue to invest aggressively in expanding its share of revenue
from non-South markets. Next year target is 40% should be from south and 60% from rest
of south India. And finally, 70-30% in favour of rest of India.
Financials
Rs in Cr
Sales
Raw Materials Cost
Employee Cost
Advertisement and Publicity
Other expenses
Total expenses
EBITDA
Depreciation
Other Income
EBIT
Interest Cost
Profit (+)/Loss (-) Before Taxes
Provision for Taxes
Net Profit (+)/Loss (-)
Growth-% (YoY)
Sales
EBITDA
PAT
Expenses on Sales-%
RM Cost
Employee Cost
Ad spend
Other expenses
Tax rate
Margin-%
EBITDA
EBIT
PAT
Valuation:
CMP
No of Share
NW
EPS
BVPS
RoE-%
P/BV
P/E
FY10
596.32
317.19
75.38
26.62
85.31
504.5
91.82
12.36
17.8
79.46
1.7
95.56
21.48
74.08
FY11
626.39
320.27
81.31
33.99
111.52
547.09
79.3
13.03
16.91
66.27
1.99
81.19
15.43
65.76
FY12
912.99
502.99
113.67
41.79
170.46
828.91
84.08
24.65
22.73
59.43
23.83
58.33
19.94
38.39
FY13
1105.96
584.35
130.48
95.54
165.92
976.29
129.67
22.43
5.202
107.24
68.22
44.222
-14.87
59.092
FY14E
1373.60
714.27
151.10
137.36
185.44
1188.17
185.44
26.57
54.94
158.87
63.25
150.56
28.61
121.95
FY15E
1703.27
885.70
178.84
153.29
238.46
1456.29
246.97
32.95
68.13
214.03
49.25
232.91
44.25
188.66
65.3%
88.3%
93.0%
5.0%
-13.6%
-11.2%
45.8%
6.0%
-41.6%
21.1%
54.2%
53.9%
24.2%
43.0%
106.4%
24.0%
33.2%
54.7%
53.2%
12.6%
4.5%
14.3%
22.5%
51.1%
13.0%
5.4%
17.8%
19.0%
55.1%
12.5%
4.6%
18.7%
34.2%
52.8%
11.8%
8.6%
15.0%
-33.6%
52.0%
11.0%
10.0%
13.5%
19.0%
52.0%
10.5%
9.0%
14.0%
19.0%
15.4%
13.3%
12.4%
12.7%
10.6%
10.5%
9.2%
6.5%
4.2%
11.7%
9.7%
5.3%
13.5%
11.6%
8.9%
14.5%
12.6%
11.1%
169.85
7.3
387.8
10.1
53.1
19.1%
3.2
16.7
219.8
8.1
631.1
8.1
77.9
10.4%
2.8
27.1
155
16.1
612.4
2.4
38.0
6.3%
4.1
65.0
175
16
638.6
3.7
39.9
9.3%
4.4
47.4
207
16
713.4
7.6
44.6
17.1%
4.6
27.2
207
16
854.9
11.8
53.4
22.1%
3.9
17.6
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
18

19. Hindustan Unilever
"NEUTRAL"
30th Jan' 14
"wait for triggers"
Result update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
NEUTRAL
570
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
500696
HINDUNILVR
725/432
123161
2006314
6153
Stock Performance-%
1M
Absolute
0.23
Rel. to Nifty
3.2
1yr
21.18
20.33
YTD
21.63
19.85
Share Holding Pattern-%
Current
Promoters
FII
DII
Others
67.25
14.83
3.35
14.57
2QFY14 1QFY14
67.25
15.33
3.03
14.39
52.5
20.23
7.13
20.16
Delivered stable set of numbers, still expecting key challenges ahead;
For 3QFY14, despite slow discretionary demand HUL reported inline set of numbers
with 8.5% (YoY) sales growth led by 4% (YOY) volume growth. PAT grew by 19%(YoY).
Increasing competitive intensity, slow consumer demand and expectation of hike in
input cost in near term could be major concern for HUL. We expect that these concerns
could play out over the next couple of quarters.
We do not see any sign of improvement in volume growth in near future. However,
revival in macro economy and resultant improvement in consumer sentiment would
play a key triggers for improvement in the volume growth in near term.
Steady margin growth: During the quarter, EBITDA margin inched up by 50bps(YoY) to
17% because of stable INR movement against the USD and stable set of RM cost than
same quarter previous year. PAT margin also improved slightly to 17.4% on YoY. During
the quarter, company has been efficient to manage cost inflation through judicious
pricing and unwinding of promotions.
Volume growth: Volume growth for the quarter was at 4%, which is slightly lower than
the 5% registered in previous several quarters due to further deterioration in market
growth rates and higher component of price versus volume in its core soaps and
detergents category.
Segment-wise performance: (a)Soaps and Detergents delivered a healthy performance.
The company witnessed a price led growth in this segment during the quarter. Wheel
was re-launched with superior formulation at quarter end. It has grown well compared
to preceding last 2 quarters. (b)Household Care delivered another strong quarter with
both Vim and Domex growing in double digits. (3)On Personal Products, Skin Care
performing well with a revenue growth in mid teens in a slowing market and in spite of
the delay in the onset of the winter season.
P/BV (x) -1year forward
Product Strategy: The company has launched premium range of hair care products Toni and Guy. This brands are sold through select top end outlets. However, its
operating metrics was challenging given the volatile cost environment, led by the INR
depreciation, and heightened competitive intensity during the quarter.
View and Valuation: To continue to deliver strong growth, HUL is likely to continue with
aggressive marketing and offer discounts/price cuts, especially in soaps, detergents and
personal products and the company fights off competition rivals domestic as well as
multi-national. we are confident of the medium to long-term growth prospects of the
FMCG sector. At a CMP of Rs 570, stock trades at 29x FY15E P/BV. We have a NEUTRAL
view on the stock.
Financials
Rs, Crore
3QFY14
2QFY14
(QoQ)-%
3QFY13
(YoY)-%
Revenue
7037.78
6747.2
4.3
6433.89
9.4
EBITDA
1226.8
1085.31
13.0
1088.99
12.7
PAT
1043.7
888.3
17.5
877.08
19.0
EBITDA Margin
17.4%
16.1%
130bps
16.9%
50bps
PAT Margin
14.8%
13.2%
160bps
13.6%
120bps
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
19

20. Hindustan Unilever
Volume and Pricing growth -%(YoY)
Volume growth for the quarter was at 4%,
which is slightly lower than the 5% registered
in previous several quarters
(Source: Company/Eastwind)
Sales (cr) and Growth(YoY)-%
(Source: Company/Eastwind)
Seg
Segments
Soaps & Detergents
Personal Products
Beverages
Packaged Foods
Others
% of Sales
47.0%
31.9%
11.8%
5.2%
3.8%
Revenue Growth-%
3QFY13 2QFY14 3QFY14
19.9%
6.4%
7.1%
8.5%
11.8%
12.4%
18.2%
16.1%
7.2%
7.7%
8.7%
12.9%
-33.4%
5.7%
-4.7%
3QFY13
12.4%
28.3%
17.7%
-0.7%
-6.4%
Margin-%
2QFY14 3QFY14
14.0%
13.3%
22.8%
28.6%
17.0%
16.2%
3.3%
-3.6%
1.5%
-4.9%
EBITDA Margin up by 90bps to 13.3% from
Soap and Detergent, flat margin growth on
Personal Products.
(Source: Company/Eastwind)
Margin-%
EBITDA margin inched up by 50bps(YoY) to
17% because of stable INR movement against
the USD and stable set of RM cost than same
quarter previous year.
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
20

21. Hindustan Unilever
Key facts from HUL Con-call (attended on 28th Jan, 2014)
(1)The mgmt stated that FMCG market growth continues to remain soft across the
categories, with high competitive intensity and uncertain media environment. While, for
medium to long term the mgmt is positive on FMCG sector.
(2)The management expects to see some cost burden on promotion through media
because of 12 minutes advertisement cap.
(3)Rural growth continues to outpace urban growth by 200 bps and there is no clear-cut
sign of uptick in urban demand as per available data from Nielsen.
(4)Personal products and packaged foods both segments have headroom for growth and
will remain focus area.
(5)Tax rate is expected to rise by 300-400 bps for FY15.
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
18025.6
6762.8
2173.1
75.7
970.9
2423.0
2783.2
15188.7
2836.9
191.9
82.7
2727.6
7.5
2720.2
615.3
2104.9
FY11
20022.6
7796.9
2692.8
-307.6
1014.9
2797.1
3317.4
17311.3
2711.2
207.5
255.2
2758.9
1.0
2757.9
650.3
2107.6
FY12
23436.3
9487.0
2919.5
95.2
1200.9
2697.0
3553.2
19952.8
3483.6
211.9
259.6
3531.3
1.7
3529.7
821.5
2708.1
FY13
27004.0
10987.8
3125.3
-26.0
1412.7
3290.0
4008.9
22798.7
4205.3
251.3
532.0
4486.0
25.7
4460.3
1226.7
3233.7
FY14E
28959.1
11873.2
3185.5
-27.9
1515.0
3619.9
4054.3
24219.9
4739.1
270.4
579.2
5047.9
25.7
5022.2
1406.2
3616.0
FY15E
31506.3
13075.1
3465.7
-30.3
1648.2
3938.3
4568.4
26665.4
4840.9
294.2
630.1
5176.9
27.0
5149.9
1442.0
3707.9
-13.4%
-4.9%
-16.1%
11.1%
-4.4%
0.1%
17.0%
28.5%
28.5%
15.2%
20.7%
19.4%
7.2%
12.7%
11.8%
8.8%
2.1%
2.5%
37.5%
13.4%
5.4%
15.4%
22.6%
38.9%
14.0%
5.1%
16.6%
23.6%
40.5%
11.5%
5.1%
15.2%
23.3%
40.7%
12.2%
5.2%
14.8%
27.5%
41.0%
12.5%
5.2%
14.0%
28.0%
41.5%
12.5%
5.2%
14.5%
28.0%
15.7%
15.1%
11.7%
13.5%
13.8%
10.5%
14.9%
15.1%
11.6%
15.6%
16.6%
12.0%
16.4%
17.4%
12.5%
15.4%
16.4%
11.8%
238.7
218.2
2668.9
9.6
12.2
78.9%
19.5
24.7
284.6
215.9
2735.0
9.8
12.7
77.1%
22.5
29.2
419.0
218.2
3681.1
12.4
16.9
73.6%
24.8
33.8
483.3
216.2
2864.8
15.0
13.3
112.9%
36.5
32.3
570.00
216.26
3571.24
16.72
16.51
101.3%
34.52
34.09
570.00
216.26
4243.13
17.15
19.62
87.4%
29.05
33.24
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
21

22. Escorts Ltd.
V-
"Buy"
30th Jan' 14
"Out Performer……."
Result update
Buy
CMP
Target Price
Previous
Target Price
Upside
Change from
Previous
125
175
105
40%
67%
Market Data
BSE Code
NSE Symbol
52wk Range
H/L Capital
Mkt
(Rs Crores)
Average Daily
Volume
Nifty
500495
ESCORTS
48/96
1,505
225,953
6,120
Stock Performance-%
Absolute
Rel. to Nifty
1M
(11.3)
(8.2)
1yr
62.7
61.0
YTD
147.9
140.2
Share Holding Pattern-%
Promoter's
FII's
DII's
Others's
3QFY14
42.0
9.4
2.1
46.5
2QFY14 1QFY14
42.0
42.0
12.3
12.1
4.7
5.4
41.0
40.6
In 5QFY13 the company saw revenue growth of 12.8% to Rs 1159.6 crore. This result was
mirrors the pent-up demand for tractor business, partly driven by improved crop cultivation
and production and revival in farm equipment segment. In current quarter 84% of Escorts’
revenues come from the sale of tractors, and it saw volumes growth of 11.3% to 19047 in its
tractor sales. Company construction equipment business witnessed a flattish of 1.4% to Rs.
130.9 crore and stands at 11% of company total revenue during this quarter. Lower inventory
levels typical of this quarter, where sales are better than in the preceding quarter, translated
into a 6.1% operating margin, up 100 basis points from the year-ago period. Further, A
marginal price hike in the latter part of the December quarter also propped up realizations.
More importantly, the improved financial position in the farm segment eased cash flows and
working capital cycles, which in turn trimmed interest costs.
Industry players expects the year 2013-14 to end with volume growth of around 15%
After an all time high sales in Oct 2013, where the industry saw a volume growth of 28.8% YoY,
Nov'13 volume growth was expected on lower side. While in Dec'13, the industry came back
strongly with a 21.1% growth. In April-Dec'13 period, the industry saw a healthy 23.8% growth in
volume. So while high growth is expected to tilt down in lean season, overall, the industry as a
whole is still expected to end the year with a volume growth of about 15% for 2013-14. Key
markets that supported the growth in FY'14 are Andhra Pradesh, Madhya Pradesh, Rajasthan and
Chhattisgarh. Some of these markets grew by more than 30% YoY. All macroeconomic factors
such as crop prices, productivity, soil moisture, government focus on rural spending etc are
favoring the farm equipment business.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
22

23. Escorts Ltd.
Penetration to high HP Tractors
Escorts management aims to improve tractor margins from the current ~10% to 15% over the next 1-2
years led by change in focus to higher HP tractors and by cost rationalization measures. Higher tractor
margins would take Escorts' company level EBITDA margins from ~6% to ~10%, as tractor segment
contributes 80% to the company's overall sales. Moreover, the management's strategy to focus on
higher HP tractors and increase presence in Southern markets will lead to faster-than-market growth.
Outlook on Industry
Despite being an agricultural nation, Tractors penetration in India is about 5% of total cultivable
land. Going forward, we expect deeper penetration of Tractors to happen which will continue to
drive strong demand for the sector. The growth in farm incomes will fuel the need for further
mechanization, which will tend to accelerate as social welfare programs, urbanization and
alternative occupations move farm labor to other sectors. So the demand for higher HP tractors
will be the future growth within the sector. The proportion of higher power (greater than 50 HP+)
segment has shown increase in total industry volume share by 380 bps from 12.6% in FY'08 to
about 18% in FY'13. For tractor industry more than festive season it is the monsoons that matters
a lot. The onset of positive sentiments because of monsoons, the reservoirs are full, the kharif crop
sowing is more than 1,000 lakh hectors which is almost 6 percent up vis-à-vis last year. The prices
of the crops declared by the government are pretty good and on top of it there are host of
financiers who are financing the tractors and funds are available to prospective buyers and that is
also leading to growth.
Company Outlook
The stock is currently trading at 6.5x FY14E EPS with a negative bias in case of construction equipment
segment due to adverse macroeconomic conditions . At current price of Rs. 117, the stock is trading at
P/E of 7.1 x for FY13E and 6.5 x the FY14E. Escorts could post EPS of Rs. 12.13 for FY14E and Rs. 12.98
for FY15E. An increase in volumes is an indication of healthy demand. Tractor sales revival has enabled
the company to register strong result. Escorts’ EBITDA margin and bottom-line exceeded our
expectations. Going forward, we remain positive on the company’s growth prospects particularly in
AMP segment. We expect demand to improve further in FY2014E with the economic recovery.
However, we remain cautious with regards to growth in Construction Equipment segment in near-tomedium. Thus, We revise our estimates upwards to factor in the strong CY13 tractor volume
performance. We therefore revised our rating on the stock from "Reduce" to "Buy" and advised to
our investors to enter at current level with Revised price target of Rs. 175
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
23

24. Escorts Ltd.
Graphical representations :
Revenue from operation :
(Source: Eastwind Research)
(Figures in crore)
Operating profit :
(Source: Eastwind Research)
(Figures in crore)
Net Profit :
(Source: Eastwind Research)
(Figures in crore)
Trailling ROE % & Trailling Asset T/O :
(Source: Eastwind Research)
(Figures in crore)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
24

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
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