Escolar Documentos
Profissional Documentos
Cultura Documentos
Company strategic and early investments in R&D and manufacturing infrastructure has enabled to become one of the leading suppliers of APIs in
the ARV therapeutic area to reap long term benefits on account of a robust business model, healthy balance sheet, strong business prospects in
terms of multiple levers in place for growth and ability of the management to leverage its capabilities in a bid to cultivate its business.
At the higher end of the price band of Rs 428, the IPO is valued at 12.6x EV/EBITDA and 34.1x P/E on FY16 basis. We believe the company is being
offered at upper band of its valuations. We maintain "SUBCRIBE" on this IPO. .......................................... ( Page : 2 -3)
ONGC
"BUY"
ONGC is likely to achieve its annual target of 5.87MT crude production in FY17. The company has already crossed its daily production target of
16200 tonnes per day as compared to 15300 tonnes in Aug 2015. Recent upsurge in the crude oil prices will make onshore production viable. The
management has also guided that no subsidy has been decided by the government in FY17, thus benefits of higher crude would flow into the
company. Considering above arguments we recommend BUY on this stock with a target price of Rs. 365. ............................................... ( Page :
4 -6)
EICHERMOT
"NEUTRAL"
Going forward, we expect capacity addition in line with demand(RE), seventh pay commission payout, expectation of pre-buying on new emission
norms and improving infrastructure activities in the country may be next growth drivers for the company. But in the near term we see some stress
in demand due to demonetisation and see some tapering of growth due to higher base in previous year. Presently, we are 'Neutral' on this stock
considering lateset demonetisation and confusion regarding the demand scenario, with a target price of Rs. 26000. Earlier, we recommended 'BUY'
on this stock at Rs.19753, and 'Booked Profit' at Rs.24777, an upside of 25%. ......... ( Page : 7-9)
SADBHAV
"BUY"
Though the execution in Q2FY17 was slow due to heavy monsoon, we expect full fledged execution in H2FY17 will help SADBHAV to register robust
revenue growth. Reduced working capital from Irrigation project and repayment of loan from SIPL will strengthen companys balance sheet
position. SADBHAV is better placed to grab opportunities from upcoming government spending to boost infrastructure. We are keeping our
positive stance on stock. We maintain Buy rating for a target price of 315/- .......... ( Page :10 -13)
BANKBARODA
"BUY"
Focus of the management on profitability has resulted in steady quarter this time. BoB has shown a sign of improvement in its profitability. In the
clean up exercise, BoB has recognised huge stress assets in its balance sheet. Going forward we expect the stress assets to decline significantly thus
resulting in credit cost to decline. However BoB needs to come out of the consolidation of advances and should grow its loan portfolio to further
support the operating profitability. Strong capitalization of 12.9% CRAR (Tier 1 at 10.6%) will help the bank to grow further without any near term
dilution. We recommend BUY with the target price of Rs 188. ....... ( Page : 14-18)
ASIANPAINT
"NEUTRAL"
Management remained silent on volume growth improvement (which indicates lower double digit volume growth going ahead) but did hint at
margin pressures. We do not see significant improvement in volume growth, margin risks (due to high input cost) and peak valuations (trades at
FY18 P/E of 45x) make the risk-reward unfavorable. We see downside risks to our estimates due to an unfavorable H2FY17 base with top line and
gross margins peaking out.It also expects paint companies to register flat growth in sales during Q3FY17 compared Q3FY16, following the
government's move to scrap old Rs 500 and 1,000 notes. While the month of October saw significant jump in sales during festive season,
November has seen a significant fall on account of the demonetization announcement.
While the paint industry is 80-85 per cent cash-driven with the paint retailers accepting only cash payments for the sales, is now shifting over to
digitized payments to keep the business going. We maintain Neutral rating with a target price of Rs.1015. ......................................................... (
Page : 19-20)
KEC
"HOLD"
Efficient working capital management boosted earnings and strengthened balance sheet position and we expect it to continue going forward.
Considering the ramp up in execution of substation (T&D) project, healthy SAE order book & margin level and huge potential in railway business
will help KEC to perform better in H2FY17. But considering the current macroeconomic condition we recommend HOLD on the stock with
unchanged target price of Rs. 164/-. ................................................ ( Page : 21-22)
Narnolia Securities Ltd
899
"SUBSCRIBE"
7th Dec 2016
IPO Note
Issue Detail
Company Overview
Type
Issue Size
Offer Price
35 Shares
Issue Open
6-Dec-16
Issue Close
Shares Offer
Face Value
Lead Mgrs
8-Dec-16
3.115
Rs 10
Citigroup Global Markets India
Pvt Ltd, Jefferies India Pvt Ltd ,
Kotak Mahindra Capital
Company Ltd.
Listing
Registrar
NSE,BSE
Laurus Labs Ltd was incorporated in 2005 which is Hyderabad based pharmaceutical company.
Laurus Labs is in the business of manufacturing generic active pharmaceutical ingredients (APIs) for
therapeutic areas of antiretrovirals (ARVs) and Hepatitis C. Company also manufacture APIs in
oncology and other therapeutic areas.
Company operate in four buisness : Generics - APIs , Generics - FDFs , Synthesis and Ingredients.
Generics -API business comprises the development , manufacture and sale of APIs and advanced
intermediates . Generics FDF business comprises the development and manufacturing oral solid
formulation. Synthesis business includes contact development and manufacturing services for
global pharmaceutical companies . Ingredients business comprises the manufacture & sale of
speciality ingredients for use in the nutraceutical and cosmeceutical sectors. Company has lunched
59 products . company's key customers Asper pharmacare Ltd , Auropharma , Cipla , Mylan , Natco ,
Strides shasun Ltd . Company owned 32 patents and had 150 pending patent application in several
countries . Company has three manufaturing facilities in visakhapatnam , andhra Pradesh. Company
sells its products in 32 countries in sub saharan africa , south east asis and Latin America.
Market Cap
(Post Issue)
4527.8
987,46,904
241,07,440
7042253
105789157
Company Strategies
> Company is a leading developer and manufacturer of generics APIs in select , high- growth
therapeutics areas of ARV and Hepatitis C.
> Company has strong R&D capabilities & process chemistry skills . Company is focused on
undertaking dedicated R&D in existing products where company believe there is significant growth
potential.
> Copany has maintained long standing relationship with multi national pharmaceutical companies .
Company cumulative revenue from such customers has grown year over year for the last three
financial years.
> Company experienced Promoters and Qualified Operational Personnel
Risk
QIB
50%
Non-Institutional
15%
Retail
35%
> Any manufacturing or quality control problems may subject us to regulatory action, damage our
reputation and have an adverse effect on business, results of operations, financial condition and
cash flows.
> Company derive a significant portion of revenue from a few customers, most of whom Company
do not have long term contractual arrangements with, and the loss of one or more such customers,
the deterioration of their financial condition or prospects, or a reduction in their demand for our
products could adversely affect business, results of operations, financial condition and cash flows
Recommendation
Company strategic and early investments in R&D and manufacturing infrastructure has enabled to become one of the leading suppliers of
APIs in the ARV therapeutic area to reap long term benefits on account of a robust business model, healthy balance sheet, strong business
prospects in terms of multiple levers in place for growth and ability of the management to leverage its capabilities in a bid to cultivate its
business.
At the higher end of the price band of Rs 428, the IPO is valued at 12.6x EV/EBITDA and 34.1x P/E on FY16 basis. We believe the company is
being offered at upper band of its valuations. We maintain "SUBSCRIBE" on this IPO.
Figure in Rs (Crore)
30th Sept
2016
Total Income
EBITDA
PAT
EBITDA Margin
PAT Margin
No of Shares
Post Issue Diluted EPS
Price
P/E( At upper price band)
P/E( At lower price band)
EV/EBITDA( At upper price band), X
EV/EBITDA( At lower price band), X
ROE %
31 March
2016
31 March
2015
31 March
2014
942
209
75
22%
8%
10.57
14.21
1,791
380
133
21%
7%
10.57
12.55
1,361
234
68
17%
5%
10.57
6.47
1,169
218
97
19%
8%
10.57
9.20
Rs 426 - 428
34.1
33.9
12.85
12.80
16%
15.6%
9.5%
27.1%
Figure in Rs (Crore)
Balance Sheet
30th Sept
2016
31 March
2016
31 March
2015
31 March
2014
Shareholders' funds
Long-term borrowings
Short-term borrowings
Total Borrowing
Deferred tax liability (net)
Long-term provisions
Other Long Term Liabilities
830
99
82
769
82
640
78
281
929
852
722
358
283
576
461
481
304
432
188
312
859
942
735
500
60
8
38
45
10
5
45
12
7
44
4
0
106
96
60
16
308
354
25
249
145
20
231
133
7
227
164
7
687
2581
413
2303
371
1888
399
1273
1276
152
6
13.74
1155
129
7
9.06
911
94
7
13.97
615
69
0
14.53
Non-current assets
1447
1300
1026
698
521
533
14
39
26
487
445
28
30
13
475
285
59
31
12
328
195
23
25
4
1134
2581
1003
2303
862
1888
575
1273
Trade payables
Other current liabilities
Short-term provisions
Current liabilities
TOTAL Liabilities
Fixed assets
Inventory
Trade receivables
Cash and bank balances
Short-term loans and advances
Other Current Assets
Current assets
Total
Buy
OIL AND NATURAL GAS CORPORATION LTD.
Company Update
CMP
298
Target Price
Previous Target Price
Upside
Change from Previous
365
22%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Av. Volume(,000)
Nifty
500312
ONGC
299/187
254953
427
8163
Stock Performance
1M
Absolute
Rel.to Nifty
10.5
14.8
3M
12M
25.4
23.3
43.0
34.6
Promoters
Public
Others
Total
Q2FY17_Result Update
Profit after tax for 2QFY17 stands at Rs. 4976 Cr as compared to Rs.
4681 Cr in the same quarter of FY16.
Crude oil production in 2QFY17 is 6.392MMMT (de-growth of 2% on
YoY).
1QFY17 4QFY16
68.93
31.07
68.93
31.07
68.93
31.07
100
100
100
Company Vs NIFTY
140
07-Dec-16
ONGC
NIFTY
130
120
110
100
Financials
2012
2013
2014
2015
90
Sales
EBITDA
Net Profit
EPS
P/E
147285
48491
28144
33
8.2
162403
43499
24220
28
11.0
174477
49725
26507
31
10.3
160890
42301
18334
21
14.3
Nov-16
Oct-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
Dec-15
Nov-15
80
Aditya Gupta
Rs,Cr
2016
131517
41261
14123
17
13.2
(Source: Company/Eastwind)
aditya.gupta@narnolia.com
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
ONGC will invest USD 20 billion in next 5-7 years primarily in deepwater fields to augment gas production
Management is confident of volumes improving on back of project implementation
Subsidy
Subsidy Burden
16202
13796 13764
12622
13200
13641
9458
1096
Operational Highlights
Volume Trend
Crude Oil (MMT)
7.0
6.5
6.2
6.0
6.5
6.2
6.5
6.3
6.5
6.2
6.4
6.0
6.4
5.7
6.6
6.0
Gas (BCM)
6.5
5.8
6.5
5.8
6.6
5.8
6.5
5.8
6.3
5.8
6.3
5.5
6.4
5.5
5.0
4.0
3.0
2.0
1.0
-
FY13
Revenue (Net of Excise Duty)1,62,403
Other Income
5,491
Total Revenue
1,67,893
COGS
(1,120)
GPM
-1%
Other Expenses
1,06,755
EBITDA
43,499
EBITDA Margin (%)
27%
Depreciation
11,763
EBIT
31,735
Interest
484
PBT
36,742
Tax
12,752
Tax Rate (%)
35%
Reported PAT
24,220
Dividend Paid
9,509
No. of Shares
856
INCOME STATEMENT
FY14
FY15
1,74,477
1,61,212
6,894
5,925
1,81,371
1,67,137
(719)
1,723
0%
1%
1,16,169
1,04,795
49,725
42,342
28%
26%
16,581
18,033
33,144
24,309
624
2,864
39,413
27,370
12,760
9,697
32%
35%
26,507
18,334
9,509
9,259
856
856
RATIOS
FY16
1,31,498
7,023
1,38,521
725
1%
82,414
42,051
32%
18,009
24,042
2,157
22,718
8,417
37%
14,124
5,756
856
EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
Profitability Ratios
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Net Debt/Equity (x)
Souce: Eastwind/Company
Share Capital
Reserves and surplus
Shareholders' funds
Long term Debt
Total Borrowings
Non Current liabilities
Long term provisions
Short term Provisions
Current liabilities
Total liabilities
Net Fixed Assets
Non Current Investments
Other non Current assets
Current assets
Total Assets
FY13
4,278
1,48,250
1,52,528
8,843
11,527
14,849
161370
1,64,703
39,745
15,396
19,619
18,615
26,350
27,400
2,53,461
BALANCE SHEET
FY14
FY15
4,278
4,278
1,67,873
1,76,177
1,72,151
1,80,454
31,681
47,575
13,907
5,345
18,552
19,357
203832
228030
2,09,603
2,23,186
53,827
32,660
16,028
18,816
24,480
16,097
30,678
30,466
31,357
35,039
19,941
20,191
3,24,911
3,38,292
FY16
4,278
1,80,467
1,84,744
46,272
7,321
21,547
231016
2,36,529
32,508
9,687
25,784
33,886
40,937
15,227
3,56,211
FY13
28
178
11
39%
FY14
FY15
FY16
31
201
11
36%
21
211
11
51%
17
216
7
41%
11
2
4%
10
2
3%
14
1
4%
13
1
3%
16%
20%
15%
16%
10%
11%
8%
10%
0.64
35
29
42
0
0.54
34
31
64
0
0.48
43
24
69
0
0.37
27
28
94
0
Souce: Eastwind/Company
Souce: Eastwind/Company
Souce: Eastwind/Company
NEUTRAL
6-Dec-16
22742
Target Price
Previous Target Price
Upside
Change from Previous
26000
14%
-
Market Data
BSE Code
NSE Symbol
505200
EICHERMOT
26602/14818
61,855
7067
8087
1Year
YTD
-7.6
-2.9
38.9
36.9
34.7
32.9
Absolute
Rel.to Nifty
Gross Margin increased by 460 bps YoY to 48.1% majorly due to better product
mix and lower commodity cost.
Promoter
Public
Others
Total
50.6
49.4
-100.0
4QFY16
50.7
49.3
-100.0
54.9
45.1
-100.0
Company Vs NIFTY
160
EICHERMOT
Stock Performance
1Month
Eicher Motors have reported Rs.1755 crore of revenue, a growth of 35% YoY in
2QFY17. The motorcycle volumes clocked 33% growth YoY in 2QFY17 on
account of higher RE Classic 350 sales. The realization also improved by 3%
YoY, because of price hike during the quarter. The waiting period for Classic350'
models remain 3 months and for other models it is 14-15 days. The company has
scaled up the capacity to 675000 units in FY17, looking at the growing demand
for premium motorcycles. On commencement of Vallam Vadagal facility the total
production capacity will reach to 900000 units in FY19.This facility will commence
production in 3 phases starting from 2QFY18. Market share in top-20 cities in the
premium segment stands at 20%. The commercial Vehicle segment reported
sales of 3176 units, a degrowth of 13% YoY. The demand from fleet owners may
remain sluggish due to the cash crunch in the economy. CV segment market
share has improved from 11% to 13% in the current fiscal. The management has
stated that the business outlook continues to be strong in the long run for both RE
and VECV.
NIFTY
150
140
130
EBITDA Margin expanded by 390 bps YoY to 30.9% driven by benefit of operating
leverage. PAT Margin expanded by 170 bps YoY to 23.5%.
Outlook and Valuation
Going forward, we expect capacity addition in line with demand(RE), seventh
pay commission payout, expectation of pre-buying on new emission norms and
improving infrastructure activities in the country may be next growth drivers for the
company. But in the near term we see some stress in demand due to
demonetisation and see some tapering of growth due to higher base in previous
year. Presently, we are 'Neutral' on this stock considering lateset demonetisation
and confusion regarding the demand scenario, with a target price of Rs. 26000.
Earlier, we recommended 'BUY' on this stock at Rs.19753, and 'Booked Profit' at
Rs.24777, an upside of 25%.
120
Rs. In crore
110
100
Financials
2QFY17
1QFY17
2QFY16
QoQ
YoY
90
Sales
EBITDA
Net Profit
EBIDTA%
PAT %
1755
542
413
31%
24%
1556
470
376
30%
24%
1300
351
285
27%
22%
13%
15%
10%
35%
55%
45%
Oct-16
Nov-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Feb-16
Mar-16
Jan-16
Dec-15
Nov-15
80
(Source: Company/Eastwind)
EICHERMOT
Investment Argument
>> The user segment has changed drastically for RE and 90% of the customers have bought these bikes for daily use. The
penetration in the premium segment is very low, so we assume that there is a lot of potential exist for Royal Enfield going ahead.
>> Royal Enfield's R&D centre in the UK is developing a 600-650cc twin-cylinder motorcycle, designed to serve cruiser riders of
the US and Europe. The bike is likely to be launched next year.
>> RE has expanded its footprint in the exports by opening up stores in the various export markets like; Latin America, Paris,
London, indonesia, bangkok and Madrid.
>> On the commercial vehicle front, the transportation sector has been affected mostly by the cash crunch and monthly run-rate
would be 10-20% lower in second half than the first of the current fiscal. We anticipate that this could be deferral of sales only in
near term, because around 80-85 percent commercial vehicles are financed.
Management Highlight
>> Management said that the out look for RE is strong backed by healthy order book.
>> CV space looks challenging going ahead due to cash cruch in the economy.
>> Higher growth potential international markets are Latin America and South East Asia.
>> Production is 50000 units per month and average waiting period is 3 months for classic models.
>> Currently RE dealer count is 500 and it will reach more than 600 by FY17.
>> Capex is Rs.600 crore for RE and Rs.400 crore for VECV towards setting up technical centers and capacity enhancement.
>> Multix- Plant in Jaipur, produced 650 units till december 2015. Target customers for Multix are Independent businessmen.
>> No plans for setting up plants in overseas market in near future.
>> The company plans to increase its capacity in the Pithampur facility from 5500 to 7500 units per month going forward.
Royal Enfield
(100%)
VECV (54.4%)
Key Risks
>> Company have plans to increase its capacity to 9 Lakh units per annum by the end of 2018. Rise in demand may increase the
waiting period for the bikes in short term, which is 3-4 months.
>> In the US market the company can face stiff competition from Harley Davidson.
>> Bajaj Auto's Avenger can be potential threat for Royal Enfield in Indian market.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
EICHERMOT
CY13
146
760
35
24%
RATIOS
CY14
FY16
227
470
928
1275
59
117
26%
25%
FY17
581
1715
145
25%
34
7
0.7%
66
16
0.4%
41
15
0.6%
43
15
0.6%
19%
27%
24%
36%
37%
58%
34%
42%
1.3
27
41
64
0.04
1.4
23
41
63
0.00
1.9
19
37
58
0.00
0.9
19
37
58
0.00
INCOME STATEMENT
CY13
Revenue (Net of Excise Duty)
6810
Other Income
95
Total Revenue
6905
COGS
4639
GPM
32%
Other Expenses
925
EBITDA
713
EBITDA Margin (%)
10%
Depreciation
130
EBIT
583
Interest
8
PBT
671
Tax
145
Tax Rate (%)
22%
Reported PAT
394
Dividend Paid
95
No. of Shares
3
CY14
8738
107
8846
5766
34%
1198
1115
13%
220
895
10
993
291
29%
615
159
3
FY16
15689
112
15801
10121
35%
2063
2447
16%
452
1996
9
2099
647
31%
1278
318
3
FY17
6778
203
6981
3561
47%
746
2082
31%
147
1935
3
2135
657
31%
1575
392
3
EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
Profitability Ratios
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Net Debt/Equity (x)
Souce: Eastwind/Company
Souce: Eastwind/Company
BALANCE SHEET
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Total Capital Employed
Net Fixed Assets
Capital WIP
Debtors
Cash & Bank Balances
Trade payables
Total Provisions
Net Current Assets
Total Assets
CY13
27
2028
2055
84
84
180
2139
2120
125
513
683
1191
170
1008
5337
CY14
27
2489
2516
0
58
239
2516
2728
236
562
380
1513
265
614
6408
FY16
27
3437
3464
0
86
338
3464
3314
118
834
476
2509
99
353
8479
CASH FLOW
FY17
27
4620
4648
0
37
338
4648
3724
118
360
596
1084
52
813
7663
CY13
CY14
FY16
FY17
OP/(Loss) before Tax
671
993
2099
2135
Depreciation
130
220
452
147
Direct Taxes Paid
(150)
(281)
(634)
(657)
Operating profit before working
718capital changes
1126
2460
2285
CF from Op. Activity
716
1047
2282
656
0
(150)
(869)
0
Capital expenditure on fixed assets
(712) including
(972)capital (1070)
advances and
(558)
capital work-in-p
CF from Inv. Activity
(790)
(1087)
(1481)
(593)
Repayment of Long Term Borrowings
(1)
0
0
0
Interest Paid
(8)
(10)
(9)
(3)
Divd Paid (incl Tax)
(88)
(115)
(486)
(335)
CF from Fin. Activity
(47)
(162)
(563)
(444)
Inc/(Dec) in Cash
(121)
(202)
238
(380)
Add: Opening Balance
804
683
353
591
Closing Balance
683
481
591
211
Souce: Eastwind/Company
Souce: Eastwind/Company
BUY
2-Dec-16
SADBHAV ENG.
Result Update
CMP
277
315
14%
-
Target Price
Previous Target Price
Upside
Change from Previous
Market Data
BSE Code
532710
NSE Symbol
SADBHAV
369/198
4,753
4923
8087
1Month
3 Month
1Year
3.1
8.1
-4.3
3.9
-21.9
-23.5
Promoters
Public
3QFY16 4QFY15
47%
53%
47%
53%
47%
53%
Sadbhav reported subdued numbers for the Q2FY17 due to heavy monsoon
and project related issues. The company suffered Rs. 70 Cr of revenue loss
on Irrigation project in MP on account of heavy monsoon,Rs.30 Cr of
revenue loss on two road project in Karnataka due to Kaveri Water dispute
and around Rs. 35 Cr of revenue loss in BCCL (Mining) project because of
service tax related issues. Top line de grew by the 17.5% YoY to Rs. 616 Cr
as compared to Rs. 746 Cr in 2QFY16. EBITDA for the quarter stood at Rs.
65 Cr as against Rs. 81 Cr in 2QFY16, 19% down YoY with similar margin.
PAT de grew by 33% YoY to Rs. 19 Cr vs Rs.28 Cr in same period last year.
Higher 80 IA benefit led to NIL effective tax rate for the quarter and it will be
continue for the next 3 quarters based on higher revenue contribution from
road EPC and irrigation projects. Current order book stands at Rs. 9363 Cr
(including Orders won after September) which provides strong revenue
visibility going forward.
Highway & Road drives the revenue growth:Currently 5 EPC projects are under execution and another 4 HAM project
will come under execution by January. 4 out of 5 projects have achieved
financial closure and expecting to get appointment date by January, 2017.
The company has already started working on these projects before getting
appointment date and expects to book Rs.300 Cr (approx.) revenue in
Q4FY17.Irrigation projects in MP lost one and half month due to heavy
monsoon but now all the projects are on track and management is confident
to complete it quickly. Blocked working capital will be released and it will be
used to fund working capital requirements on ongoing EPC projects.
Management is in talk with BCCL to settle down services tax issues in
mining and expects Rs. 350 Cr of annual revenue from mining. EPC (Road
& Irrigation) dominated revenue in H2FY17 will boost the bottom line by way
of 80 IA tax benefit.
Outlook and Valuation
Company Vs NIFTY
120
SADBHAV
NIFTY
110
100
90
80
70
In Rs. Cr
60
50
40
Sandip Jabuani
Financials
FY13
FY14
FY15
FY16
FY17E
Sales
EBITDA
Net Profit
EBIDTA%
P/E
2160
394
7
18.2%
313.2
2733
436
44
15.9%
53.1
3447
580
-175
16.8%
-15.2
3878
803
-47
20.7%
-56.9
4487
929
67
20.7%
75.1
(Source: Company/Eastwind)
sandip.jabuani@narnolia.com
Narnolia Securities Ltd,
10
Concall Update : Current Order stands at 9363 Cr (3128 Cr received after September)
Maintain Order intake of Rs. 5000-7000 Cr in FY17
Revenue loss of Rs.100 Cr due to heavy monsoon and 30 Cr on BCCL services tax issue
Growth will led by highway & construction segment for the next 2-3 years
Debtors will come down (1000 cr approx. on standalone books)as the money release from EPC project
Loan outstanding to SIPL is Rs. 280 cr and mgmt expecting to come down below 100 Cr
Rs. 320 Cr of mobilization advance on HAM project yet to receive
Achieved financial closure of 4 HAM projects and expect to get appointment date in December and commencement of work in
January.
Maintain revenue guidance of Rs. 3600-3700 Cr for FY17
Services tax issue at BCCL project will settle down by December.
No impact of demonetization on execution of the project
Tax rate will be NIL for next 3 quarter because of higher revenue from road EPC project. (all EPC project is eligible for 80 IA
benefit)
Segmental Order Book
BOT
EPC
Irrigation
Minning
10,000
9,000
2,153
8,000
7,000
2,269
2,724
2,728
2,392
2,273
6,000
5,000
4,000
3,000
1,872
1,345
1,919
2,226
1,136
2,061
1,975
1,733
2,015
1,097
1,982
2,193
1,811
1,749
3,021
1,442
2,851
2,567
2QFY15
3QFY15
Order book
9,500
4QFY15
1,836
3,995
1,187
3,837
3,477
3,054
1,404
990
573
233
174
156
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
1QFY15
1,276
4,430
2,000
1,000
1,902
1,644
Book to Bill
3.79
4.00
3.50
9,000
8,941
2.76
3.00
2.35
8,500
8,000
2.50
2.00
8,200
1.50
7,500
7,487
7,000
1.00
0.50
6,500
FY14
FY15
FY16
11
Segmental Revenue
BOT
EPC
Irrigation
Minning
Power Generation
1,200
1,000
1
1
800
2
600
1
68
400
200
31
132
100
132
100
461
428
204
168
160
470
374
407
424
402
1QFY15
2
90
449
300
280
201
189
138
72
35
147
199
166
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
111
33
1QFY17
2QFY17
Toll Collection
Toll Collection
250
200
150
155
139
139
147
1QFY15
2QFY15
3QFY15
165
162
1QFY16
2QFY16
214
200
208
4QFY16
1QFY17
Managment Expecting
toll revenue will grow
25-30% CAGR
173
100
50
4QFY15
3QFY16
EBITDA
2QFY17
EBITDA M
120
11%
11%
11%
11%
11%
11%
100
10%
11%
80
10%
10%
10%
60
10%
10%
9%
40
9%
20
72
60
78
96
89
81
74
81
87
65
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
9%
12
FY14
2.9
82.4
0.7
24%
RATIOS
FY15
FY16
-10.2
-2.7
89.6
104.8
0.8
0.8
-8%
-30%
FY17E
3.9
107.9
0.8
21%
53.1
1.9
0.45%
-15.2
1.7
0.53%
-56.9
1.5
0.53%
75.1
2.7
0.28%
4%
5%
-11%
4%
-3%
5%
4%
6%
0.3
76.9
29.0
51.8
3.88
0.3
72.4
30.2
50.1
4.07
0.2
77.4
18.9
37.5
4.49
0.3
77.0
18.9
38.0
4.25
INCOME STATEMENT
FY14
Revenue (Net of Excise Duty)2733
Other Income
30
Total Revenue
2762
COGS
2064
GPM
1
Other Expenses
153
EBITDA
436
EBITDA Margin (%)
16%
Depreciation
127
EBIT
309
Interest
449
PBT
-110
Tax
-14
Tax Rate (%)
13%
Reported PAT
44
Dividend Paid
11
No. of Shares
15
FY15
3447
44
3491
2576
1
164
580
17%
219
361
615
-210
34
-16%
-175
14
17
FY16
3878
45
3922
2730
1
192
803
21%
287
516
726
-165
17
-10%
-47
14
17
FY17E
4487
45
4532
0
0
0
929
21%
304
625
581
89
21
24%
67
0
0
EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation(x)
P/E
Price / Book Value
Dividend Yield (%)
Profitability Ratios
RoE
RoCE
Turnover Ratios
Asset Turnover (x)
Debtors (No. of Days)
Inventory (No. of Days)
Creditors (No. of Days)
Net Debt/Equity (x)
Souce: Eastwind/Company
Share Capital
Reserves
Net Worth
Long term Debt
Short term Debt
Deferred Tax
Total Capital Employed
Net Fixed Assets
Capital WIP
Debtors
Cash & Bank Balances
Trade payables
Total Provisions
Net Current Assets
Total Assets
FY14
15
1235
1250
4848
468
36
6098
6007
1
576
128
388
174
548
7871
FY15
17
1520
1537
6256
411
24
7793
9598
1
684
205
473
271
760
11933
FY16
17
1781
1798
8069
601
23
9867
13527
0
822
126
399
357
477
15809
FY17E
17
1848
1865
7869
601
23
9734
11805
1
951
0
461
332
435
14132
Souce: Eastwind/Company
FY14
FY15
FY16E
FY17E
OP/(Loss) before Tax
26
-233
-165
89
Depreciation
130
223
287
304
Direct Taxes Paid
56
68
17
21
Operating profit before working
469capital changes
596
890
974
CF from Op. Activity
786
385
2130
657
0
0
20
0
Capital expenditure on fixed assets
225 including
158 capital 7300
advances and
1417
capital work-in-p
CF from Inv. Activity
(1441)
(1357)
9330
1417
Repayment of Long Term Borrowings
0
0
0
0
Interest Paid
455
615
726
581
Divd Paid (incl Tax)
11
13
14
0
CF from Fin. Activity
706
1037
1580
(781)
Inc/(Dec) in Cash
52
64
13041
1294
Add: Opening Balance
58
110
205
126
Closing Balance
110
174
13245
1420
Souce: Eastwind/Company
Souce: Eastwind/Company
13
BUY
2-Dec-16
BANK OF BARODA
Steady Quarter, Focus on Profitability
Result Update
CMP
162
Target Price
Previous Target Price
Upside
Change from Previous
188
16%
Market Data
BSE Code
NSE Symbol
532134
BANKBARODA
179/104.
37235
1461
8192
Stock Performance
1Month
Absolute
Rel.to Nifty
9.6
13.0
3 Month
(3.4)
(7.8)
1Year
4.8
1.3
Promoters
Public
Others
Total
1QFY17 4QFY16
59.2
40.8
59.2
40.8
59.2
40.8
100.0
100.0
100.0
Company Vs NIFTY
120
BANKBARODA
NIFTY
115
110
105
100
95
90
85
Operating Profit grew by 15% YoY on the back of Net Interest Income
turning positive and registering the growth of 6% YoY. Operating expenses
grew by 12% YoY which led the C/I ratio to stable at 46% YoY. Other
income grew by 36% YoY backed by treasury income. Core fee income
picked up by 13% YoY.
NIM improved by 21 bps YoY to 2.29% largely led by improvement in both
domestic as well as overseas NIM of 16 bps and 13 bps YoY respectively.
This improvement in NIM was backed by decline in cost of fund which was
supported by healthy CASA and shedding of high cost of deposits.
Overseas NIM improved on the back of focus on high yielding assets.
Management has targeted the domestic NIM of 3% and overseas NIM more
than 1%.
Stress Assets Decline
Slippages were restricted to Rs 2861 Cr against Rs 6096 Cr on 1Q FY17
giving a sign of improvement from this quarter. Healthy recovery & upgradation has also helped to decline the net NPA at Rs 42949 Cr against Rs
42992 Cr QoQ. Recovery & Up-gradation increased by 8% QoQ. The GNPA
and NNPA of the bank stand at 11.35% and 5.46% against 11.15% and
5.73% in previous quarter. PCR improved to 63% against 60% QoQ.
Standard restructured assets now stands at Rs 13860 Cr which declined by
25 QoQ. This quarter management invoked an SDR of Rs 2370 Cr and
there was no 5/25 refinance. These all give us comfort on stress assets
which seems to improve further going forward. However management has
maintained their stance on the earlier guidance of GNPA at RS 45000 Cr to
Rs 50000 Cr in FY17.
Advances Consolidate
As the focus of the management is on profitability, balance sheet continues
to be on consolidation phase. Thus, resulting decline in advances by 15%
YoY. Domestic advances declined by 11% and overseas advances declined
by 22% YoY. As a strategy on overseas portfolio, management has shifted
focused towards higher yielding assets i,e. local credit and syndicated
loans. Buyers credit which comprise low yield will decline further. Corporate
portfolio declined by 10% YoY. Home loan portfolio increased by 12% YoY.
However the loan growth must pick up for the further improvement in
operating profitability.
80
DEEPAK KUMAR
Deepak.kumar@narnolia.com
Narnolia Securities Ltd,
14
BANKBARODA
Concall Highlights:
>> Deacceleration of international portfolio was due to shed in low yield assets.
>> Out of Rs 45000 Cr high cost of deposits, 90% is already shed and rest will be done in 3Q FY17.
>> International cost of deposits has gone up due to LIBOR effect.
>> Efforts are to remix the portfolio towards higher yielded assets in overseas market. Focus on local credit and syndicated
loans which gives yield of 3.6% as compared to 1.2% on buyers credit. Buyers credit are consistently deacreasing.
>> In 2 days following the demonitization BoB has collected Rs 11500 Cr of which Rs 9500 Cr has gone into CASA.
>> Management holds the earlier guidance of slippages. Target the NNPA of less than 2% in FY19-20.
>> Due RBI guidelines on ratings of corporate exposure of above Rs 100 Cr, management expects deceleration in capital.
>> Targeting domestic NIM of 3% and overseas NIM of 1%- 1.2%.
>> CASA target of 35%.
>> Target to grow at a CAGR of 12%-15% from FY14 numbers over the 3 years period.
(Rs in Crore)
Quarterly Performance
Financials
Interest Inc.
Interest Exp.
NII
Other Income
Total Income
Ope Exp.
PPP
Provisions
PBT
Tax
Net Profit
2QFY15
10826
7425
3401
992
4393
1990
2403
888
1515
411
1104
3QFY15
10718
7432
3286
1090
4376
2037
2339
1262
1077
743
334
4QFY15
10762
7590
3172
1295
4467
1774
2694
1818
876
278
598
1QFY16
11276
7817
3460
967
4427
2225
2202
600
1602
550
1052
2QFY16
11156
7912
3244
1144
4389
2051
2337
1892
445
321
124
3QFY16
10614
7909
2705
1113
3818
2114
1704
6165
-4460
-1118
-3342
4QFY16
11014
7684
3330
1775
5105
2533
2572
6858
-4285
-1055
-3230
1QFY17
10434
7062
3371
1444
4815
2146
2669
2004
665
242
424
2QFY17
10485
7059
3426
1561
4988
2297
2690
1796
894
342
552
YoY %
-6%
-11%
6%
36%
14%
12%
15%
-5%
101%
7%
344%
QoQ%
0%
0%
2%
8%
4%
7%
1%
-10%
34%
42%
30%
Profitability Metrix
Ratios
Yield On Advances
Cost of Deposits
NIM% (Overall)
NIM% (Domestic)
NIM% (Overseas)
NII Growth %
C/I Ratio
Other Inc./Net Inc. %
Tax %
PAT to Total Income%
2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 YoY(bps) QoQ(bps)
8.4
8.1
7.7
7.9
7.6
7.0
6.9
7.2
7.3
(0.35)
0.03
5.2
5.2
5.2
5.1
5.1
5.0
5.0
4.7
4.8
(0.26)
0.11
2.4
2.2
2.2
2.3
2.1
1.7
2.2
2.2
2.3
0.21
0.06
3.0
2.9
2.8
2.9
2.7
2.1
2.7
2.8
2.9
0.16
0.05
1.2
0.9
1.0
0.9
0.9
0.9
0.9
1.0
1.0
0.13
17.5
7.5
1.5
3.9
(4.6)
(17.7)
5.0
(2.6)
5.6
10.20
8.16
45.3
46.6
39.7
50.3
46.7
55.4
49.6
44.6
46.1
(0.69)
1.50
22.6
24.9
29.0
21.8
26.1
29.1
34.8
30.0
31.3
5.24
1.31
27.1
69.0
31.7
34.3
72.0
25.1
24.6
36.3
38.3
(33.78)
1.93
25.1
7.6
13.4
23.8
2.8
(87.5)
(63.3)
8.8
11.1
8.23
2.27
15
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
BANKBARODA
Outlook & Valuation:
Focus of the management on profitability has resulted in steady quarter this time. BoB has shown a sign of improvement in its
profitability. In the clean up exercise, BoB has recognised huge stress assets in its balance sheet. Going forward we expect the
stress assets to decline significantly thus resulting in credit cost to decline. However BoB needs to come out of the
consolidation of advances and should grow its loan portfolio to further support the operating profitability. Strong capitalization of
12.9% CRAR (Tier 1 at 10.6%) will help the bank to grow further without any near term dilution. We recommend BUY with the
target price of Rs 188.
Other income Break Up
>>Commission, Exchange,
Brokerage
>>Incidental Charges
>>Other Miscellaneous
Income
>>FX
Profits (Treasury)
Total Fee-Based Income
Trading Gains
Recovery from PWO
Total Other Income
(Rs in Crore)
2QFY15
333
104
93
252
782
179
31
992
Yield On Advances
3QFY15
373
79
106
253
811
244
36
1090
4QFY15
429
100
101
244
874
360
61
1295
Cost of Deposits
1QFY16
346
79
94
278
797
157
13
967
2QFY16
361
95
131
253
841
224
79
1144
3QFY16
339
91
128
241
799
289
24
1112
NIM
4QFY16
454
116
111
481
1162
509
104
1775
1QFY17
339
106
139
264
848
557
39
1444
NII Growth %
10.0
20.0
8.0
15.0
6.0
10.0
4.0
5.0
2.0
(5.0)
2QFY17
372
148
155
273
948
546
68
1562
YoY%
3%
55%
18%
8%
13%
144%
-14%
37%
QoQ%
10%
40%
12%
3%
12%
-2%
74%
8%
C/I Ratio
60.0
50.0
40.0
30.0
20.0
(10.0)
(15.0)
(20.0)
10.0
-
BANKBARODA
Assets Quality Performance
GNPA (Rs)
GNPA %
NNPA (Rs)
NNPA %
Slippages (Rs)
Recovery & Upgradation
Gross Restr. Assets (Rs)
PCR %
2QFY15
13058
3.32
6705
3QFY15
15492
3.85
8291
4QFY15
16261
3.72
8069
1QFY16
17274
4.13
8470
2QFY16
23710
5.56
12798
3QFY16
38934
9.68
21806
4QFY16
40521
9.99
19406
1QFY17
42992
11.15
20783
2QFY17
42949
11.35
19342
YoY%
81%
1.04
51%
QoQ%
0%
0.02
-7%
1.74
1853
513
23371
65
2.11
2852
380
23100
62
1.89
1789
354
31572
65
2.07
1908
827
31257
65
3.08
6962
414
30170
58
5.67
15785
325
30716
53
5.06
5932
3200
29004
60
5.73
6096
2482
29809
60
5.46
2861
2687
28464
63
0.77
-59%
550%
-6%
0.08
-0.05
-53%
8%
-5%
0.05
Specific PCR %
GNPA %
NNPA %
70
60
50
40
30
20
10
-
12.00
10.00
8.00
6.00
4.00
2.00
-
Advances
Net Advances (Rs in Cr)
Advances Growth YoY %
>> Growth QoQ %
2QFY15
385766
13.51
1.05
3QFY15
393630
11.69
2.04
4QFY15
428065
7.82
8.75
1QFY16
408388
6.97
-4.60
2QFY16
414900
7.55
1.59
3QFY16
384272
-2.38
-7.38
4QFY16
383770
-10.35
-0.13
1QFY17
362766
-11.17
-5.47
2QFY17
354150
-14.64
-2.38
Advances Break Up %
>>Domestic
>>International
2QFY15
67.08
32.92
3QFY15
66.28
33.72
4QFY15
68.18
31.82
1QFY16
67.54
32.46
2QFY16
66.92
33.08
3QFY16
67.45
32.55
4QFY16
68.60
31.40
1QFY17
69.09
30.91
2QFY17
69.60
30.40
Deposits
Deposits (Rs in Cr)
>> Growth YoY %
>> Growth QoQ %
CASA % (Domestic)
CASA Growth YoY %
>> Growth QoQ %
Credit Deposit Ratio
2QFY15
566926
16.91
2.77
31.89
15.91
6.78
68.05
3QFY15
564600
12.07
-0.41
32.42
12.93
0.75
69.72
4QFY15
617560
8.55
9.38
33.01
11.25
9.27
69.32
1QFY16
593087
7.51
-3.96
31.89
10.76
-5.78
68.86
2QFY16
612458
8.03
3.27
31.95
4.11
0.37
67.74
3QFY16
589687
4.44
-3.72
29.97
-5.11
-8.17
65.17
4QFY16
574038
-7.05
-2.65
33.57
-7.14
6.93
66.85
1QFY17
562174
-5.21
-2.07
33.83
-1.16
0.29
64.53
2QFY17
567531
-7.34
0.95
34.23
1.72
3.29
62.40
17
BANKBARODA
Financials Snap Shot
(Rs in Crore) RATIOS
FY15
FY16 Business Ratios
FY13
FY13
FY14
FY15
FY16
26,611
28,657
31,669
30,700
Credit-Deposit(%)
69.3
69.8
69.3
66.9
Income on Investments
7,888
9,294
10,604
11,334
CASA % (Domestic)
30.4
31.8
33.0
33.6
1,538
1,671
1,718
1,470
Efficiency Ratios
Others
FY14
404
841
924
2,295
22.0
23.5
22.6
26.4
36,442
40,463
44,915
45,799
16.3
17.7
20.8
24.2
24,486
27,604
30,547
32,107
38.3
41.2
43.4
50.6
11,956
12,858
14,368
13,692
8.4
7.7
7.5
7.3
7.3
7.3
8.1
9.0
7.5
6.8
6.6
6.8
Other Income
4,511
5,555
5,449
5,992
Total Income
16,466
18,414
19,818
19,684
6,306
7,592
8,604
9,962
5.2
4.8
4.7
4.9
5.3
4.9
4.7
5.0
10,160
10,821
11,213
9,721
4,965
4,825
5,230
15,954
5,195
5,996
5,983
2.3
1.9
1.9
1.9
444
1,065
2,151
2.4
2.1
2.0
2.0
4,804
5,001
3,912
(5,068)
RoE %
16.1
14.4
9.7
-15.3
RoA %
0.9
0.8
0.5
-0.8
67.2
68.2
68.0
70.1
Provisions/PPP (%)
95.6
80.5
87.4
-256.0
27.4
30.2
27.5
30.4
8.6
17.8
35.9
18.9
Tax
Net Profit attributable to the group
Souce: Eastwind/Company
Profitability Ratio
FY13
FY14
FY15
FY16
423
431
444
462
32859
37416
41574
42041
Deposits
482639
579997
629981
586690
Borrowings
26553
36976
35502
33845
GNPA (%)
2.40
2.94
3.72
9.99
16805
21136
26290
27947
GNPA(Rs)
7,983
11,876
16,261
40,521
559388
676114
733977
691179
NNPA (%)
1.28
1.52
1.89
5.06
NNPA (Rs)
4,192
6,035
8,069
19,406
68.24
Capital
14151
19445
23557
22811
PCR (%)
114911
128074
114188
Investments
125617
122113
130246
128894
Advances
333625
403715
435415
391486
Fixed Assets
2550
2849
2978
6359
Other Assets
9894
13081
13706
27441
Total Assets
559388
676114
733977
691179
65.45
64.99
60.06
22,553
31,572
29,004
13.3
12.3
12.6
13.2
10.1
9.3
9.9
10.8
3.2
3.0
2.7
2.4
Souce: Eastwind/Company
Souce: Eastwind/Company
18
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