India Strategy 4qfy18

April 2018
India Strategy | Get on track please !
India Strategy
FY19
earnings Political flux
growth
25%
Monsoon
boost
Trade war / oil
price shocks
Improving
Industrial macros
capex revival
FY18 earnings
growth Rebound of
11% corporate
lenders
More ladders than snakes

Research Team (Gautam.Duggad@MotilalOswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Contents
India Strategy – Earnings recovery imminent 3-49
4QFY18 Highlights & Ready Reckoner 50-64
Sectors & Companies 65-326
Automobiles .......................................... 65-85 Kotak Mahindra Bank .................................... 154 Rain Industries .............................................. 240
Amara Raja Batt. ............................................. 69 Punjab National Bank .................................. 155 SAIL ............................................................... 241
Ashok Leyland ................................................. 70 RBL Bank ........................................................ 156 Tata Steel ...................................................... 242
Bajaj Auto ..................................................... 71 State Bank ................................................... 157 Vedanta ......................................................... 243
Bharat Forge ................................................... 72 Union Bank .................................................... 158
Bosch .............................................................. 73 Yes Bank ........................................................ 159 Oil & Gas ..............................................244-263
CEAT ................................................................ 74 Aegis Logistics ............................................... 250
Endurance Tech. ............................................. 75 NBFC ................................................... 160-177 BPCL .............................................................. 251
Eicher Motors ................................................. 76 Bajaj Finance.................................................. 162 GAIL............................................................... 252
Escorts ............................................................ 77 Capital First .................................................... 163 Gujarat Gas ................................................... 253
Exide Inds. ....................................................... 78 Chola. Inv & Fin.............................................. 164 Gujarat State Petronet .................................. 254
Hero Motocorp ............................................... 79 Dewan Housing.............................................. 165 HPCL .............................................................. 255
Mahindra & Mahindra .................................. 80 GRUH Finance ................................................ 166 Indraprastha Gas ........................................... 256
Mahindra CIE .................................................. 81 HDFC ........................................................... 167 IOC ................................................................ 257
Maruti Suzuki .................................................. 82 Indiabulls Housing ......................................... 168 Mahanagar Gas ............................................. 258
Motherson Sumi ............................................. 83 L&T Fin.Holdings ............................................ 169 MRPL ............................................................. 259
Tata Motors .................................................. 84 LIC Housing Fin .............................................. 170 Oil India ......................................................... 260
TVS Motor ....................................................... 85 MAS Financial ................................................ 171 ONGC ............................................................ 261
M & M Financial ............................................ 172 Petronet LNG ................................................ 262
Capital Goods.........................................86-102 Muthoot Finance ........................................... 173 Reliance Industries ........................................ 263
ABB ............................................................... 89 PNB Housing .................................................. 174
Bharat Electronics ........................................... 90 Repco Home Fin ............................................ 175 Retail ...................................................264-269
BHEL ............................................................. 91 Shriram City Union......................................... 176 Jubilant Foodworks ....................................... 267
Blue Star.......................................................... 92 Shriram Transport Fin. ................................... 177 PC Jeweller .................................................... 268
CG Consumer Elect.......................................... 93 Titan Company .............................................. 269
CG Power & Indl. ............................................. 94 Healthcare........................................... 178-201
Cummins India .............................................. 95 Ajanta Pharma ............................................... 180 Technology ..........................................270-289
Engineers India................................................ 96 Alembic Pharma ............................................ 181 Cyient ............................................................ 275
GE T&D India ................................................... 97 Alkem Lab ...................................................... 182 HCL Technologies .......................................... 276
Havells India .................................................... 98 Aurobindo Pharma ........................................ 183 Hexaware Tech.............................................. 277
Larsen & Toubro ........................................... 99 Biocon............................................................ 184 Infosys ........................................................ 278
Siemens......................................................... 100 Cadila Health ................................................. 185 KPIT Tech....................................................... 279
Thermax ..................................................... 101 Cipla ........................................................... 186 L&T Infotech.................................................. 280
Voltas ............................................................ 102 Divis Labs ....................................................... 187 Mindtree ....................................................... 281
Dr Reddy’ s Labs ......................................... 188 MphasiS ........................................................ 282
Cement ................................................ 103-116 Fortis Health .................................................. 189 NIIT Tech. ...................................................... 283
ACC ............................................................... 107 Granules India ............................................... 190 Persistent Systems ........................................ 284
Ambuja Cements........................................... 108 Glenmark Pharma.......................................... 191 Tata Elxsi ....................................................... 285
Birla Corporation........................................... 109 GSK Pharma ............................................... 192 TCS ................................................................ 286
Dalmia Cement ............................................. 110 IPCA Labs. ...................................................... 193 Tech Mahindra .............................................. 287
Grasim Industries .......................................... 111 Jubilant Life ................................................... 194 Wipro .......................................................... 288
India Cements ............................................... 112 Laurus Labs .................................................... 195 Zensar Tech ................................................... 289
JK Cement ..................................................... 113 Lupin .............................................................. 196
Ramco Cement.............................................. 114 Sanofi India .................................................... 197 Telecom ...............................................290-298
Shree Cement ............................................... 115 Shilpa Medicare ............................................. 198 Bharti Airtel ................................................... 295
UltraTech Cement ......................................... 116 Strides Shasun ............................................... 199 Bharti Infratel ................................................ 296
Sun Pharma ................................................... 200 Idea Cellular .................................................. 297
Consumer ............................................ 117-137 Torrent Pharma ............................................. 201 Tata Comm .................................................... 298
Asian Paints ............................................... 120
Britannia ....................................................... 121 Infrastructure ...................................... 202-207 Utilities ................................................299-307
Colgate .......................................................... 122 Ashoka Buildcon ............................................ 204 CESC .............................................................. 301
Dabur ............................................................ 123 IRB Infra ......................................................... 205 Coal India ...................................................... 302
Emami ........................................................... 124 KNR Constructions ......................................... 206 JSW Energy.................................................... 303
Godrej Consumer .......................................... 125 Sadbhav Engineering ..................................... 207 NHPC ............................................................. 304
GSK Consumer .............................................. 126 NTPC ............................................................. 305
Hind. Unilever ............................................... 127 Logistics .............................................. 208-212 Power Grid Corp. ........................................... 306
ITC ................................................................. 128 Allcargo Logistics ........................................... 210 Tata Power .................................................... 307
Jyothy Labs .................................................... 129 Concor ........................................................... 211
Marico ........................................................... 130 Gateway Distriparks ...................................... 212 Others..................................................308-326
Nestle ............................................................ 131 Arvind............................................................ 308
P&G Hygiene ................................................. 132 Media.................................................. 213-227 Avenue Supermarts....................................... 309
Page Industries.............................................. 133 D B Corp......................................................... 218 BSE ................................................................ 310
Parag Milk Foods........................................... 134 Dish TV........................................................... 219 Castrol India .................................................. 311
Pidilite Inds. .................................................. 135 Ent.Network .................................................. 220 Delta Corp ..................................................... 312
United Breweries .......................................... 136 HT Media ....................................................... 221 Indo Count Inds. ............................................ 313
United Spirits ................................................ 137 Jagran Prakashan ........................................... 222 Info Edge ....................................................... 314
Music Broadcast ............................................ 223 Interglobe Aviation........................................ 315
Financials ............................................. 138-159 Prime Focus ................................................... 224 Kaveri Seed.................................................... 316
Axis Bank ....................................................... 143 PVR ................................................................ 225 Manpasand Beverages .................................. 317
Bank of Baroda ........................................... 144 Sun TV............................................................ 226 MCX............................................................... 318
Bank of India ................................................. 145 Zee Entertainment......................................... 227 Navneet Education ........................................ 319
Canara Bank ............................................... 146 Oberoi Realty ................................................ 320
DCB Bank....................................................... 147 Metals ................................................. 228-243 Quess Corp .................................................... 321
Equitas Holdings............................................ 148 Hindalco......................................................... 234 P I Industries.................................................. 322
Federal Bank ................................................. 149 Hindustan Zinc ............................................... 235 S H Kelkar ...................................................... 323
HDFC Bank .................................................. 150 Jindal Steel & Power ..................................... 236 SRF ................................................................ 324
ICICI Bank ................................................... 151 JSW Steel ....................................................... 237 Team Lease Serv............................................ 325
Indian Bank ................................................... 152 Nalco ............................................................. 238 UPL ................................................................ 326
IndusInd Bank ............................................... 153 NMDC ............................................................ 239
April 2018 2
India Strategy | Earnings recovery imminent
India Strategy
BSE Sensex: 33,371 S&P CNX: 10,245
Earnings recovery imminent

More ladders than snakes
Global Cyclicals drive earnings; Autos and Technology show good recovery
As we step into FY19, the clamor for an earnings recovery has become louder. This is
particularly because the last three years were characterized by a muted earnings
performance due to macro disruptions and several policy changes pertaining to
asset quality in the banking sector. Although we expect Nifty earnings to grow by a
decent 11% in FY18, it is much below our FY18-beginning estimate of +17% – this
can be mainly attributed to the drag from corporate banks (ICICI Bank, Axis Bank
and SBI, which together accounted for 62% of the cut in Nifty PAT estimate in a span
of a year).
However, we believe the worst of the NPA cycle is behind, and with resolution in
several key NCLT assets, the earnings picture for BFSI could turn much brighter in
FY19. Our consumption recovery theme is also gaining strength – also because the
government is expected to be supportive of consumption demand in an election-
busy year. Projection of a normal monsoon in CY18 adds to the cheer. Also, on the
investment side, industrial capex is showing signs of recovery.
Overall, we expect FY19 to kick-start earnings recovery for India, although the
market is likely to be distracted by several macro factors along the way, such as the
ongoing global trade conflict, the US Fed rate increase cycle, domestic equity flows
and, last but not the least, the domestic political developments in an election-heavy
year. Although the path to earning revival is more like a game of snakes-and-ladders
than a straight line, we expect more encouraging ladders than slippery snakes in
FY19. Also, after the recent correction in the markets and the softening of bond
yields, we believe valuations offer enough bottom-up stock-picking opportunities.
As far as the 4QFY18 earnings season is concerned, we expect it to be characterized

by continued dominance of Cyclicals in the earnings pool, even as Technology makes
a smart comeback with double-digit earnings growth. The consumption recovery
story continues to gain ground, with discretionary sectors like Auto and Retail
expected to post a solid performance. PSU lenders and corporate private lenders are
expected to continue dragging the performance owing to higher provisioning
requirements, given the multiplicity of factors at play (the RBI February 2018 circular
on NPA dispensations, volatility in bond yields, recent issues in public sector banks).
 We expect MOSL Universe PAT to grow 11% YoY on a high base (24% earnings
growth in 4QFY17). Global cyclicals will drive the performance with 21% YoY
profit growth and account for 65% of incremental profits while Defensives are
expected to post modest 3% profit growth after five consecutive quarters of
profit decline, aided by IT. Profit growth for MOSL Universe excluding PSU Banks
and private corporate lenders is expected at 15%. Healthcare, Telecom, PSU
Banks and Cement are expected to report muted numbers.
April 2018 3
 We expect Nifty Sales, EBITDA and PAT to growth 14%, 11% and 14%,
respectively. PAT growth of 14%, if delivered, will be highest in 15 quarters.
 We have revised our Nifty EPS estimates downwards by 2% and 3% for FY18E
and FY19E to INR462 and INR 577 vs. INR471 and INR595 earlier, respectively.
We are now building in Nifty EPS growth of 11%/25%/21% for FY18/19/20.
Key sectoral trends/highlights

 Autos universe is expected to report 22% YoY PAT growth, aided by modest
base (11% YoY decline in base quarter). Tata Motors and Maruti Suzuki will
account for roughly 52% of the profit pool. Excluding Tata Motors, Auto universe
is expected to post 28% PAT growth, highest in eight quarters.
 PSU Banks will report a loss of INR 63b (base quarter 4QFY17 reported loss of
INR 37b), with only two (BOB and Indian Bank) of the seven PSU Banks in our
MOSL Universe expected to post profit.
 NBFCs are expected to continue their strong run and post another quarter of
strong and broad-based growth (30% YoY). All NBFCs, barring LIC HF, are
expected to report healthy PAT performance, with Bajaj Finance, MAS Financial,
Muthoot Finance, MMFS, SHTF, Shriram City Union and PNB HF particularly
standing out.
 Private Banks are expected to report 4% PAT growth (YoY), dragged by
corporate focused banks ICICI Bank (-32% YoY) and Axis Bank (-43% YoY).
Excluding ICICI Bank and Axis Bank, private banks profit growth is expected to
come in at 22%, in-line with the trend of last eight quarters.
 Metals will post another quarter of strong performance, with 14% and 31% YoY
growth in EBITDA and PAT, respectively. JSW Steel (70%), Vedanta (86%), Rain
Industries (2.9x) and Hindalco (46%) are expected to post strong earnings
growth, while JSPL is expected to post loss. However, this 30% growth will be
the lowest in last five quarters as previous four quarters had triple digit profit
growth YoY.
 Oil & Gas is expected to report 11% YoY PAT growth on a base of 15% growth in
the quarter ended Mar’17, driven by RIL( contributing 57% to PAT delta), ONGC
and IOC. Among OMCs, only IOC is expected to post strong performance, led by
Paradip ramp-up. HPCL and BPCL would post YoY PAT decline due to lower
marketing margins
 Consumer universe is expected to post 11% YoY growth in profits, third
consecutive quarter of double-digit PAT growth. Britannia, Page Industries,
Nestle, Pidilite, Colgate and United Breweries are expected to post strong set of
numbers, posting PAT growth in excess of 17%, whereas Emami and Jyothy Lab
will post PAT de-growth.
 Utilities are expected to report 37% growth in PAT, led by strong performance
from Coal India (89% YoY PAT growth) and Power Grid (19.2% YoY PAT growth).
Coal India alone will contribute roughly 80% to the PAT delta. Utilities ex Coal
India are still expected to post a robust 11% PAT growth in 4QFY18.
 Technology is expected to report its first double digit PAT growth (10.9%) after
eight quarters, with Persistent systems (-16.4%) being the only IT company
expected to report PAT de-growth. In 4Q, YoY revenue trajectory is likely to
continue to inch up. We expect such acceleration in INFO, TCS and TECHM, and
also organically for WPRO - across our top-tier universe
April 2018 4
 Telecom universe will report loss. Idea’s loss is expected to remain elevated
while Bharti is expected to post 80% YoY decline in profits.
Model portfolio changes

Given the multitude of factors at play – both global and domestic – we expect
increased volatility in the market. In such an environment, our model portfolio
reflects our bias for improving macros, underlying earnings visibility (growth
recovery), our long-held thesis of a consumption recovery in CY18 (especially rural),
and a tilt toward NBFCs within Financials given the recent softening of bond yields
and the continued growth outperformance. Overall, we like Private Financials,
Consumer Discretionary (Auto, Specialty Retail and Media), Energy, and selected
quality Mid-caps. We have also increased our exposure to private capex plays,
beginning 3QFY18. We remain underweight in Metals, given the expectations of
growth moderation from the recent outstanding delivery. We also remain
underweight in Cement, given our valuation discomfort and the continued earnings
disappointment. We have reduced our exposure to Telecom to zero due to the
continued elevated competitive intensity and the lack of earnings visibility.
 BFSI: Among private banks, we are replacing Federal Bank with IndusInd Bank,
as we believe that the latter’s merger with BHAFIN will enable the bank to
report strong progression in earnings, while the momentum in the consumer
finance business already remains strong. IIB has already received a few
approvals, and the merger deal is well on track to get completed over the next
few months. Federal Bank, on the other hand, offers value at current levels, but
is likely to report only a gradual recovery in its returns profile. The probable
extension of the RBI’s asset quality framework on assets worth more than
INR20b also remains an overhang. We also marginally reduce the weight in
ICICIBC, given the recent news-flow. While we maintain our positive stance on
the stock and believe that the bank is in the last phase of the NPL cycle, such
developments may lead to an increase in risk aversion and can prolong the
recovery cycle. Among PSU Banks, we stick with SBIN. Given the sharp
outperformance of HDFC Life, we replace it with Bajaj Finance and further
increase our weight in Shriram Transport Finance. We expect Bajaj Finance to
deliver multiple years of strong growth, with consistent 20-22% RoE and steady
asset quality. The company has a customer base of 25m and is targeting 3x of
that over the next five years, which implies 30% loan CAGR over five years.
 Consumer: We are replacing ITC with Pidilite in the model portfolio. Given ITC’s
current earnings growth profile and recurring concerns around government
actions, we do not expect material re-rating. We continue highlighting our
expectations of a rural consumption recovery and believe that Emami will be
one of the key beneficiaries. It has been impacted by demonetization and GST,
given its higher salience of rural and wholesale channels. Titan remains our top
consumption pick and the persistent market share gains further drive our
comfort, notwithstanding the near-term expensive valuations.
 Energy: We remain bullish on upstream plays, given the rally in crude oil prices
and maintain our weight in ONGC. We also maintain our weights in RIL, IOC and
Petronet.
 Autos: We are raising weight in M&M and Maruti (after the recent correction)
at the expense of Tata Motors. M&M is the best bet on a rural recovery, as
April 2018 5
revival in rural markets improves visibility of volumes in the tractor and UV

businesses. Maruti’s continued volume growth and expectations of another
normal monsoon should drive relative outperformance, in our view.
 Healthcare: We are replacing Lupin with Cipla, given our expectations of growth
outperformance and also the company’s relative high salience of domestic
business.
 Metals and Utilities: We are staying put with Hindalco, and replacing Coal India
with Power Grid. Power Grid is trading attractively at 1.4x FY20E P/BV for an RoE
of ~16% and a CoE of ~10-11%, with strong visibility of EPS CAGR of ~12% over
FY18-22.
 Cap Goods, Infra and Cement: We retain our incremental positive stance on
Private Capex, and replace Siemens with Thermax (recently upgraded to BUY) in
our model portfolio. We believe Thermax is the best play on a recovery in
industrial capex. We have replaced JK Cement with Shree Cement after the
recent correction in the stock. SRCM is likely to deliver EBITDA CAGR of 29%
over FY18-20, led by healthy volume growth and pricing improvement (driven by
higher realizations in the underlying markets in the north)
 Mid-Caps: In Mid-caps, we have added Tata Chemicals, UPL, Aegis, Exide and
Future Consumer in our portfolio. Tata Chemicals is using its cash cows – soda
ash and sodium bicarbonate – to build growth businesses such as consumer and
specialty products. As the company scales up its growth businesses and
deleverages its balance sheet, we expect its consolidated RoCE to improve
considerably, in turn driving a stock re-rating. In Future Consumer, we like the
‘size of prize’ and potential PAT turnaround, with continued strong turnover
growth driving outperformance. We believe UPL is one of the best bets on the
global agrochemicals industry, as it offers (a) a robust product pipeline, (b) an
integrated business model (backward integration of 70-75%), (c) a broad
product portfolio covering various crops across seasons, (d) geographical
diversification, and (e) scope to gain further market share (from the current
~4%). EXID, being the leader, is well placed to take advantage of the OEM
demand recovery and replacement demand. High focus on driving efficiencies in
operations through investments in technology and also sourcing of over 40% of
lead requirement from the captive smelter would drive stronger profitability vis-
à-vis competition. We expect EXID’s revenue to grow at a CAGR of ~15% over
FY18-20, resulting in ~80bp margin expansion and ~23% PAT CAGR. Adjusted for
insurance business value, the stock is quite cheap at 15.5x FY20E EPS.
Focus Nifty stocks from 4QFY18 earnings perspective

We highlight some of the Nifty companies where we are estimating strongest and
muted growth for 4QFY18.
STRONG PERFORMANCE
1. Maruti: Strong volume growth (+11%) coupled with benefit of mix is driving
margin expansion of 140bp YoY and 22% EBITDA growth. This coupled with
higher other income is driving ~28% YoY PAT growth.
2. Eicher: Strong performance in RE with 27% YoY growth in volumes is driving
~27% growth in S/A PAT. VECV is benefitting from strong tailwind in CVs with
~33% volume growth, driving 170bp YoY margin improvement and ~70% PAT
growth.
April 2018 6
3. Bajaj Finance: Bajaj Finance is expected to continue its strong growth trajectory
and post a solid 43% earnings growth. Growth will be driven by consumer and
rural segments. This will be its 12th consecutive quarter of 30%+ profit growth.
4. Coal India: EBITDA is expected to grow 39% YoY due to 5% volume growth, 7%
reduction in cost of production due operating leverage, and 23% increase in E-
auction prices. PAT growth is expected to be even higher due to volatility in tax
rates.
5. RIL: Led by stronger petchem margins, petchem volumes & sustained strong
refining margins, we expect EBITDA to grow 32% YoY & 9% QoQ in the quarter.
6. Titan: Gains from healthy sales growth of around 17% in 4QFY18 will be further
boosted at the EBITDA and PAT level by unusually low EBITDA margin in base
quarter 4QFY17.
7. Tech Mahindra: EBITDA margin bottomed out in 4QFY17 at 12%, ensuing its
recovery thereafter. It should exit FY18 with a strong 17.3% EBITDA margin,
+530bp YoY. This is driving the bulk of the profit growth in the company. Dollar
revenue growth is estimated to be 10%.
WEAK PERFORMANCE
1. SBI: SBI is expected to post a loss of INR16.5b, compared to a loss of INR24b in
the previous quarter, led by elevated provisions as slippages are expected to
remain high.
2. ICICI Bank: ICICI Bank is expected to report 32% YoY decline in PAT to INR13.8b,
led by elevated credit costs towards meeting PCR for NCLT accounts, as well as
high slippages from other stressed accounts
3. Bharti Airtel: Bharti is expected to post a sharp 12% EBITDA decline and 80%
drop in PAT. This is on the back of continued ARPU decline in India resulting in
17% fall in India wireless EBITDA.
THREE KEY TRENDS Three key trends to watch out for

1. The bottoming out of macros: GDP| Inflation |Bond yields
 FY17 and FY18 are characterized by disruptive reforms/initiatives like
demonetization and GST, which took a toll on both macro and micro growth
numbers. However, with the impact of demonetization now behind and GST-
related issues gradually settling down, the macros appear to have bottomed
out, in our view. Better-than-expected GDP data for 3QFY18, IIP trends, auto
monthly sales numbers and fuel consumption data are all pointing toward a
gradual demand pick-up. Broadly speaking, while GDP growth has bottomed
out, inflation too has moderated.
 In fact, our growth and inflation outlooks have turned more favorable. Following
better-than-expected 3QFY18 data and revisions in the previous quarters’ data,
our economist, Nikhil Gupta, has revised up our real GVA/GDP growth forecasts
for FY18 to 6.4%/6.7% from 6%/6.3% earlier. Furthermore, real GDP is expected
to grow 6.9% in FY19, slightly better than 6.8% expected previously. With CPI
consistently coming in below our expectations, we have revised down our FY19
forecast from 5.1% to 4.4%.
 The RBI, in its recent monetary policy meeting, revised down its 4QFY18
inflation projection to 4.5% from 5.1% earlier, implying inflation of 3.9%-4% in
April 2018 7
March 2018, in line with our forecast of 4%. It also cut its inflation forecasts for
1HFY19/2HFY19 to 4.7%-5.1%/4.4% from 5.1%-5.6%/4.5% earlier.
 Also, our proprietary Economic Activity Index (EAI) points toward a continued
recovery, albeit with monthly volatility. After growing reasonably by ~7% YoY in
January 2018, India’s economic activity index (EAI) grew at the four-month
slowest pace of 6.3% YoY in February 2018. Nonetheless, it implies average
growth of 6.6% in the first two months of 2018, similar to the growth witnessed
in 3QFY18. An extremely favorable base is expected to support EAI growth in
March 2018. Accordingly, we continue expecting real GDP growth to improve
slightly from 7.2% in 3QFY18 to 7.3% in 4QFY18.
 Another concern – the sharp rise in bond yields – has also been addressed. Bond
yields had shot up by more than 100bp from 6.7% to7.8% in 6 months, led by
global bond moves and heightened concerns about domestic inflation and fiscal
slippage. However, yields have come off 60-70bp over the past month due to
the combination of policy moves. The Indian government’s 1HFY19 borrowing
calendar has provided some succor. It has planned to borrow only 47.6% of its
full-year borrowing target in 1HFY19, much lower than the average 1H
borrowing of 60-62% of the full-year borrowing target over the past many years.
Furthermore, the borrowing composition, as desired, has tilted toward short-
end securities, which is likely to flatten the yield curve. This announcement
resulted in a correction of bond yields by 30bp in a day. With the RBI revising its
FY19 inflation forecast downward, it added another catalyst for bond yields to
cool off.
2. Industrial capex – on a recovery path

 Industrial capex in India has been subdued over the past 5-6 years, as reflected
in weak capex spends by Indian companies, corroborated by weak orders for
equipment suppliers and muted industrial credit growth. However, capex by
consumer-oriented sectors like Autos, Telecom, Media, FMCG, Food &
Beverages and Consumer Durables/Electronics has remained largely
uninterrupted. Capex spend by the private sector has been an Achilles’ heel,
impacting investments in the economy. Leveraged balance sheets, low capacity
utilization and several macro disruptions in the economy impacted the private
investment cycle. Therefore, the burden of investment growth was falling on the
government’s shoulders. Government spending on infrastructure, especially on
roads and railways, has indeed gone up. However, private capex recovery is the
key for sustainable pick-up in investments in the economy.
 After many years, we are seeing some early signs of pick-up in industrial capex.
Post the cyclical downturn in the core sectors, we are starting to see green
shoots of recovery in sectors like Oil & Gas (O&G), Steel, Cement and Fertilizers,
with the situation expected to get even better. Private sector capex in the
Power sector will be toward renewables; a revival is unlikely in coal-fired plants
in the medium term.
April 2018 8
3. Earnings recovery has been extremely narrow in FY17 and FY18; expected to
get broader in FY19 and FY20; Financials to make a comeback in FY19
 Earnings growth in FY17 and FY18 has been very narrow. It was led by a few
sectors. For example, after growing 14% in FY17, the MOSL Universe earnings
are expected to grow at 8% in FY18. Three sectors – PSU Banks, Metals and Oil &
Gas – accounted for 17%, 18% and 43% of the earnings delta in FY17, i.e. ~80%
of growth was driven by these three cyclicals.
 Similarly, in FY18, Metals, Oil & Gas, NBFC and Autos will contribute 46%, 17%,
19% and 20%, respectively, of the earnings delta for the MOSL Universe, i.e.
>100%% of growth coming from just four sectors.
 Financials’ contribution in earnings growth has come off significantly (from 46%
in FY15 to 23% in FY17) owing to a drag in PSU Banks and private corporate
lenders. It is expected to decline further to 11% in FY18. FY17 and FY18 have
seen a significant increase in gross NPAs and a consequent rise in provisioning
requirement for PSU Banks and Private Corporate lenders, resulting in a sharp
drop in overall contribution of Financials to earnings growth.
 Going forward, we expect financials to make a comeback as asset quality issues
bottom out and provisioning pressure fades off. We expect Financials’
contribution in earnings growth to go back to ~40% in FY19 and sustain even in
FY20 (largely in line with its weight in Nifty). This will largely be driven by PSU
Banks, given the low base of earnings and expected normalization of
provisioning costs.
 On the contrary, we expect contribution of global cyclicals like Metals and
Cyclicals in incremental earnings to moderate. From 49% of incremental
earnings in FY18E, we expect Metals’ contribution to drop to 12% in FY19 and
3% in FY20.
 For Oil & Gas, we expect the sector’s contribution in MOSL universe earnings
growth to come off from 17% to 6% in FY19 and then move up to 12% in FY20.
April 2018 9
4QFY18 PREVIEW Global Cyclicals will drive 4QFY18 earnings

Technology to make a comeback; Consumption gathering steam
 After the disruptive 1HFY18 when GST impacted supply chains and earnings
performance of corporate India, 3QFY18 provided a relief with relative stability
in earnings. 4QFY18 has been characterized by rising volatility and several news-
flows pertaining to Banking sector. While the consumption theme is gathering
steam (especially rural), even the capex cycle is showing some early signs of
revival. Meanwhile, the news-flow pertaining to banking sector, especially PSU
Banks and private corporate lenders continue to remain challenging. Feb’18 RBI
circular on NPA dispensations and unearthing of fraud in Jewelry sector at a
branch of PNB impacted the sentiments. Towards the end of quarter, however
RBI has provided relief pertaining to provisions for treasury losses as well as
NCLT cases.
 As we enter FY19, the macros seem to be bottoming out. GDP growth, IIP
growth, Auto monthly numbers, fuel consumption data are pointing towards
underlying demand improvement in the economy. Even concerns on inflation
have moderated after RBI’s downward revision for CPI projections for FY19.
Bond yields, which had shot up to 7.8%, have now cooled off to 7.1-7.2% after
announcement of government’s 1HFY19 borrowing calendar and downward
revision of inflation projections by RBI. Early projections of CY18 monsoon are
encouraging with Skymet having predicted a normal monsoon.
 However, crude oil prices and monthly GST collections remain an area of
concern. These could have repercussions on India’s twin deficits (Fiscal and
Current Account Deficit) for FY19.
 On the micro front, things are brightening up. We continue to expect strong
earnings recovery in FY19 led by Financials as provisioning bottoms out in PSU
lenders along with resolution of few NCLT cases. Our long held thesis of 2HFY18
consumption recovery is panning out, especially in discretionary and rural
segments, with commentaries from corporates as well as monthly Auto
numbers reaffirming the thesis. This could gather steam in FY19 led by higher
MSP price hikes given government’s explicit focus on farm income, third
consecutive year of normal monsoon and government spending in a busy
election year.
 Overall, we expect the 4QFY18 earnings season to build on the hopes generated
from 3QFY18 performance, notwithstanding the expected volatility in corporate
lender’s 4QFY18 earnings performance given several moving parts.
Global Cyclicals to drive earnings in 4QFY18

 The 4QFY18 expected earnings growth of 11% for MOSL Universe will be led by
global cyclicals even as Defensives post earnings growth after four consecutive
quarters of YoY earnings decline.
 This 11% earnings growth is expected on a base of 24% earnings growth for our
universe in 4QFY17 – the base quarter had strong performance from a) Metals
which had posted 3.4x YoY jump in PAT aided by low base of 4QFY16 and b) PSU
Banks which had posted substantial YoY reduction in losses fromINR146b in
4QFY16 to INR 37b in 4QFY17. If one were to exclude PSU Banks and Metals,
4QFY17 earnings growth for MOSL Universe stood at 3%. On this base of 3%
April 2018 10
earnings growth, MOSL Universe ex PSU Banks and Metals is expected to post
11.5% YoY earnings growth.
 For 4QFY18, we expect MOSL Universe revenue to grow 14% YoY (revenue was
up 15% YoY in the base quarter), among the highest in 22 quarters.
 MOSL Universe EBITDA growth is estimated at 11% YoY (on a base of 13%
growth), with flat underlying operating margin for MOSL Universe (ex-Financials
and OMCs). MOSL Universe PAT is likely to grow 11% YoY (24% PAT growth in
4QFY17) driven by Global Cyclicals like Metals, Oil & Gas & Coal India.
 Global Cyclicals will drive 72% of the incremental PAT delta for MOSL Universe
PAT, with a strong 21% YoY PAT growth.
 Defensives are expected to post PAT growth of 3% after 5 consecutive quarters
of PAT decline. This will be aided by improvement in earnings growth of
Technology universe which is expected to post a double digit profit growth after
eight quarters.
 Domestic Cyclicals is expected to post muted 7% YoY PAT growth, dragged by
Banks. Nifty earnings are expected to grow 14% YoY, while Nifty ex-OMCs,
Metals and PSU Banks is expected to post 12% YoY profit growth.
THREE KEY TRENDS Three key trends characterizing 4QFY18

1. The bottoming out of macros – GDP, Inflation & Bond yields
 FY17 and FY18 are characterized by disruptive reforms/initiatives like
numbers.
 However, with the impact of demonetization now behind and GST-related issues
gradually settling down, the macros appear to have bottomed out, in our view.
Better-than-expected GDP data for 3QFY18, IIP trends, auto monthly sales
numbers and fuel consumption data are all pointing toward a gradual demand
pick-up. Broadly speaking, while GDP growth has bottomed out, inflation too
has moderated.
 In fact, our growth and inflation outlooks have turned more favorable. Following
better-than-expected 3QFY18 data and revisions in the previous quarters’ data,
our economist, Nikhil Gupta, has revised up our real GVA/GDP growth forecasts
for FY18 to 6.4%/6.7% from 6%/6.3% earlier. Furthermore, real GDP is expected
to grow 6.9% in FY19, slightly better than 6.8% expected previously.
 The RBI, in its recent monetary policy meeting, revised down its 4QFY18
inflation projection to 4.5% from 5.1% earlier, implying inflation of 3.9%-4% in
March 2018, in line with our forecast of 4%. It also cut its inflation forecasts for
1HFY19/2HFY19 to 4.7%-5.1%/4.4% from 5.1%-5.6%/4.5% earlier.
 Also, our proprietary Economic Activity Index (EAI) points toward a continued
recovery, albeit with monthly volatility. After growing reasonably by ~7% YoY in
January 2018, India’s economic activity index (EAI) grew at the four-month
slowest pace of 6.3% YoY in February 2018. Nonetheless, it implies average
growth of 6.6% in the first two months of 2018, similar to the growth witnessed
in 3QFY18. An extremely favorable base is expected to support EAI growth in
March 2018. Accordingly, we continue expecting real GDP growth to improve
slightly from 7.2% in 3QFY18 to 7.3% in 4QFY18.
April 2018 11
 Another concern – the sharp rise in bond yields – has also been addressed by
the recent policy moves of the RBI, and bond yields have cooled off ~60bp from
their recent peak.
2. Industrial Capex – on recovery path

 Industrial capex in India has been subdued over the past 5-6 years, as reflected
in weak capex spends by Indian companies, corroborated by weak orders for
consumer-oriented sectors like Autos, Telecom, Media, FMCG, Food &
Beverages and Consumer Durables/Electronics has remained largely
uninterrupted.
 Capex spend by the private sector has been an Achilles’ heel, impacting
investments in the economy. Leveraged balance sheets, low capacity utilization
and several macro disruptions in the economy impacted the private investment
cycle. Therefore, the burden of investment growth was falling on the
government’s shoulders. Government spending on infrastructure, especially on
roads and railways, has indeed gone up. However, private capex recovery is the
key for sustainable pick-up in investments in the economy.
 After many years, we are seeing some early signs of pick-up in industrial capex.
Post the cyclical downturn in the core sectors, we are starting to see green
shoots of recovery in sectors like Oil & Gas (O&G), Steel, Cement and Fertilizers,
with the situation expected to get even better. Private sector capex in the
Power sector will be toward renewables; a revival is unlikely in coal-fired plants
in the medium term.
3. Earnings recovery has been extremely narrow in FY17 and FY18; expected to
get broader in FY19 and FY20; Financials to make a comeback in FY19
Gas – accounted for 17%, 18% and 43%, respectively, of the earnings delta in
FY17, i.e. ~80% of growth was driven by these three cyclicals.
lenders. It is expected to decline further to 11% in FY18.
provisioning costs.
3% in FY20.
April 2018 12
 For Oil & Gas, we expect the sector’s contribution in MOSL universe earnings
growth to come off from 17% to 6% in FY19 and then move up to 12% in FY20.
Earnings breadth improving; recovery to become more broad-based in FY19

Earnings breadth is expected to improve, with only 25% of MOSL Universe expected
to post YoY decline in PAT, the best since September14. However, we note that
4QFY18 earning is driven by few sectors. Metals, Oil & Gas, Utilities (largely Coal
India) and Autos account for the entire earnings delta for 4QFY18. The picture
remains the same for full year FY18 with Metals alone accounting for 46% of
earnings delta for MOSL Universe PAT while Autos & Oil & Gas account for 20% and
17% of the FY18 earnings delta respectively.
Snapshot of sector performance

 Autos are expected to post a solid broad-based 22% PAT growth. Within the
universe, CV players should report outperformance.
 Technology is expected to post healthy set of numbers - (i) 10% EBITDA growth
and (ii) double digit PAT growth (11%) after 8 quarters with tier II expected to
continue to outperform the tier I IT companies.
 Metals will have another strong quarter (30% YoY PAT growth), driven by higher
LME prices and healthy volumes. Deleveraging in select cases will also drive
profit growth.
 Cement (-2%), Healthcare (-1%) and Telecom (Profit to Loss) are expected to
report YoY PAT decline.
 NBFC should report another strong quarter with broad-based 30% profit growth.
 Private Banks are expected to post muted 4% profit growth dragged by
corporate lenders like ICICI Bank and Axis Bank. We expect PSU Banks universe
to post losses of INR 63b vs. loss of INR 37b in base quarter.
 Infrastructure (19%), Metals (31%), Utilities (37%) and Oil & Gas (11%), are
expected to post healthy PAT growth.
 Defensives’ share in MOSL Universe earnings would continue declining to 32%
(35% in 3QFY18, 34% in 4QFY17); the share of Domestic Cyclicals and Global
Cyclicals would be at 30% and 38%, respectively.
 Nifty sales are estimated to grow 14% YoY. PAT is estimated to grow 14%, the
highest since June 2014. EBITDA is likely to post 11% YoY growth.
 Nifty EPS revised downwards for FY18/19: We have revised our estimates
downwards by 2% and 3% for FY18E and FY19E to INR462 and INR 577 vs.
INR471 and INR595 earlier, respectively. We are now building in earnings
growth of 11%/25%/21% for the Nifty for FY18/19/20. For FY18, major earnings
upgrades are in Grasim Industries (+34%) and HPCL (+14%) while the major
earnings downgrades are in Axis Bank (-13%), SBI (-11%), ICICI Bank (-11%), and
Ultratech Cement (-13%). For FY19, the major earnings upgrades are in M&M
(+7%) while the major downgrades are Bharti Airtel (-53%), Vedanta (-20%) and
Axis Bank (-20%).
April 2018 13
Exhibit 1: Profit growth led by Metals, Autos and NBFC

EBITDA PAT
SALES EBITDA NET PROFIT PAT
SECTOR Margins Margins
Var Var Var Var
Mar- Var % Var % Mar- Mar- PAT Chg bp Chg bp
(No of companies) % % % % Sh. %
18 YoY QoQ 18 18 Delta YoY YoY
YoY QoQ YoY QoQ
High gr. sectors 4,250 14 9 966 19 15 463 29 28 105 39 96 129
Retail (3) 73 17 -6 7 45 -11 5 61 4 2 0 195 199
Utilities (7) 652 5 5 222 18 9 113 37 32 30 10 387 403
Metals (10) 1,477 10 3 322 14 13 130 31 15 30 11 72 139
NBFC (16) 173 20 6 133 19 7 75 30 6 17 6 -91 325
Auto (17) 1,834 21 15 270 27 30 135 22 63 24 11 71 6
Infrastructure (4) 41 10 24 12 10 22 5 19 8 1 0 -3 86
Med/Low gr. sectors 7,181 17 11 1,264 18 11 708 10 0 64 60 8 -66
Oil & Gas (14) 4,333 22 9 496 18 5 265 11 -13 27 22 -38 -58
Consumer (18) 463 8 4 109 11 2 74 11 -1 7 6 57 40
Others (19) 267 17 8 47 18 1 25 11 -5 2 2 12 -48
Technology (15) 961 7 3 226 10 4 175 11 6 17 15 63 70
Capital Goods (14) 770 15 43 99 27 76 60 10 93 6 5 126 -29
Private Banks (10) 300 12 4 283 25 19 107 4 2 4 9 967 -274
Life Insurance (1) 87 21 60 3 20 43 3 3 23 0 0 -3 -51
PAT de-gr. sectors 1,508 2 0 537 -13 1 11 -81 -56 -49 1 -609 -334
PSU Banks (7) 374 -2 0 276 -22 4 -63 Loss Loss -26 -5 -1,970 -712
Telecom (4) 340 -10 -2 101 -16 -7 -7 PL Loss -19 -1 -210 -519
Healthcare (22) 418 6 -1 87 17 0 49 -1 -1 -1 4 186 -89
Cement (10) 274 16 4 49 16 8 22 -2 21 0 2 -1 -145
Media (10) 64 10 -1 18 10 -9 7 -13 -18 -1 1 16 -296
Logistics (3) 38 19 19 5 -25 9 3 -45 15 -2 0 -756 -832
MOSL (204) 12939 14.2 8.9 2,767 10.6 10.1 1182 11.2 7.8 119 100 -69 -24
MOSL Excl. OMCs,
8,565 13.9 9.9 2,045 18.4 10.1 1036 11.8 13.2 90 -23
Metals & PSU Bks (184)
Sensex (30) 5,707 11.2 9.6 1,604 12.4 11.9 712 12.6 17.1 29 15
Nifty (50) 9,631 13.5 8.6 2,089 10.8 11.1 945 14.4 8.7 -53 8
April 2018 14
June-12 18.6 Jun-12-35.4 Jun-12 16.5
Sep-12 18.3 Sep-12 65.4 18.8
April 2018
Dec-12 18.0 Dec-12 -3.2 Dec-12 10.3
Mar-13 18.9 Mar-13 3.9 7.7
on high base
June-13 18.1 Jun-13 88.3 Jun-13 7.2 PAT decline
Sep-13 18.4 Sep-13 -9.7 12.6
Dec-13 18.6 Dec-13 5.2 Dec-13 12.0
Mar-14 18.5 Mar-14 -0.9 11.5
June-14 18.8 Jun-14 32.2 Jun-14 14.2
MOSL Universe
Sep-14 18.3 Sep-14 5.6 4.6
growth for MOSL Universe
Dec-14 18.2 Dec-14 -6.7 Dec-14 -0.4
EBITDA Margin LPA: 19.3%

Mar-15 18.8 Mar-15 -9.6 -10.5
June-15 20.0 Jun-15 7.4 Jun-15 -4.0

Sep-15 18.6 Sep-15 0.2 -5.6
Dec-15 18.9 Dec-15 1.1 Dec-15 -4.9
Mar-16 20.2 Mar-16 -16.5 2.6
June-16 21.2 Jun-16 0.8 Jun-16 -1.6
Sep-16 19.9 Sep-16 8.1 3.7
Dec-16 20.0 Dec-16 18.9 Dec-16 8.5
Mar-17 19.9 Mar-17 24.2 14.8
OMCs and Financials) to be highest since June 2016

June-17 19.3 June-17 -6.9 June-17 11.0
Sep-17 20.1 Sep-17 11.8 11.9
Exhibit 2: Fifth consecutive quarter of double digit sales
Dec-17 11.4 Dec-17 15.2
Exhibit 6: 4QFY18 EBITDA margins for MOSL Universe (ex

Dec-17 20.4
Mar-18E 11.2 14.2
Mar-18 20.5
Exhibit 4: MOSL Universe earnings growth to come in at 11%
Source: MOSL
Source: MOSL
Source: MOSL
June-12 10.3 Jun-14 20.9 Jun-14 16.6

Sep-12 9.9
Dec-12 9.6 Sep-14 15.5 Sep-14 11.1
pool at 38%, highest since Sep’11.

Mar-13 10.2 Dec-14 -6.9 Dec-14 10.1
June-13 9.2
Sep-13 9.4 Mar-15 10.3 Mar-15 7.8
Dec-13 10.4 Jun-15 11.1 Jun-15 8.6
Mar-14 10.0 14.0
Sep-15 Sep-15 9.7
June-14 9.9
Sep-14 9.6 Dec-15 13.2 Dec-15 8.0
Dec-14 9.0 Mar-16 10.3 Mar-16 12.1
Mar-15 9.8
June-15 10.2 Jun-16 10.4 Jun-16 9.3
and Financials) to stay flattish YoY

Sep-15 9.8
MOSL Universe PAT Margin LPA: 10%

Sep-16 6.0 Sep-16 6.7
earnings to grow at 3% for defensives
Dec-15 9.3
Mar-16 10.8 Dec-16 -0.8 Dec-16 4.2
June-16 10.5 Mar-17 -4.1 Mar-17 1.0
Sep-16 10.1
Dec-16 9.4 June-17-13.6 June-17 -0.9
Mar-17 10.3 Sep-17 -5.3 Sep-17 1.3
June-17 9.4
Sep-17 9.9 Dec-17 -1.6 Dec-17 2.8
Exhibit 5: After 5 consecutive quarter of YoY PAT decline,
Exhibit 3: Sales growth of Defensives inching up gradually
Dec-17 9.8 Mar-18E 3.3 Mar-18E 3.7
Gas and Coal India. This will result in share of global cyclicals in MOSL earnings
Share of global cyclicals in MOSL universe earnings pool at 26 quarter high
Earnings growth in 4QFY18 is singularly led by global cyclicals like Metals, Oil &
Exhibit 7: 4QFY18 PAT margin for MOSL Universe (ex OMCs
Mar-18 10.3
15
Source: MOSL
Source: MOSL
Source: MOSL
MOSL Universe: Double digit Sales and PAT growth, defensives PAT to grow at 3% after five quarters of
 Auto universe PAT for the quarter at INR 134b will be at all-time high.
 Technology sector will also post all-time high absolute profits in 4QFY18.
Exhibit 8: Sectoral quarterly PAT trend (INR b)
Sector FY14 FY15 FY16 FY17 FY18
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec MarE
Auto 56 77 86 84 95 80 80 65 102 72 88 124 92 94 59 110 64 110 82 134
Capital Goods 16 22 24 54 19 20 21 47 14 16 7 46 16 25 25 54 21 32 31 59
Cement 19 11 11 18 18 14 10 16 14 16 16 24 27 22 16 22 28 20 18 22
Consumer 47 49 54 50 53 56 59 56 57 58 64 60 65 65 65 67 65 72 75 74
Financials 194 169 175 208 212 197 194 216 208 201 116 -10 153 166 183 125 195 185 124 119
Private Banks 70 72 80 85 82 85 95 100 91 98 106 83 94 94 97 102 102 98 104 105
PSU Banks 92 62 61 81 93 75 61 70 76 59 -37 -146 11 16 32 -37 34 19 -52 -63
NBFC 33 34 34 42 37 37 38 46 39 43 44 50 46 54 53 57 56 65 70 75
Healthcare 32 42 87 45 47 51 35 39 56 57 54 54 60 62 56 48 32 49 47 47
Infrastructure 2 2 2 3 2 2 2 3 3 3 3 2 3 3 3 4 4 3 4 5
Logistics 3 3 3 3 4 3 4 4 3 3 3 4 3 2 3 5 3 3 2 3
Media 6 6 6 5 5 6 8 6 8 8 9 9 8 8 9 8 8 10 9 7
Metals 68 72 77 85 88 91 78 41 48 57 -13 30 34 38 54 99 68 78 113 130
Oil & Gas 63 170 109 316 160 131 58 242 233 119 185 204 271 200 226 236 198 245 303 263
Oil & Gas Ex OMCs 107 140 147 135 122 126 82 129 135 120 132 149 140 148 146 163 155 167 183 184
Retail 2 2 2 2 2 3 2 2 2 2 3 2 2 2 3 2 3 3 3 4
Technology 106 121 129 134 132 137 144 141 141 152 153 158 153 157 164 155 152 163 162 171
Telecom 15 13 15 24 23 27 28 29 23 26 26 28 28 24 8 11 3 0 -2 -7
Utilities 84 78 88 92 85 66 76 98 89 87 88 93 87 72 81 83 85 73 86 113
Others 10 7 8 9 12 8 9 11 13 7 11 9 16 10 12 15 15 11 14 17
MOSL Univ 723 842 876 1,133 957 890 810 1,016 1,012 881 809 835 1,015 948 964 1,043 941 1,054 1,070 1,158
MOSL Univ Ex Metals,
501 538 630 652 615 593 612 662 655 646 674 747 700 694 651 745 641 713 707 829
Oil & PSU Banks
Exhibit 9: Sectoral quarterly PAT growth trend (%)
Sector FY14 FY15 FY16 FY17 FY18
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec MarE
Auto -9 45 67 3 70 4 -7 -23 8 -10 10 91 -10 31 -33 -11 -31 16 39 22
Capital Goods -43 -24 -19 -14 19 -10 -12 -14 -28 -20 -69 0 20 51 274 16 26 31 24 10
Cement -31 -48 -35 -15 -6 28 -11 -12 -21 13 68 49 93 39 1 -5 3 -9 11 -2
Consumer 13 15 15 13 12 14 10 13 9 4 7 6 13 13 2 11 0 10 16 11
Financials 8 -4 -7 4 9 17 11 4 -2 2 -40 PL -26 -17 58 LP 28 11 -32 -5
Private Banks 29 26 20 20 18 19 19 17 10 14 12 -16 3 -3 -9 22 9 4 8 3
PSU Banks -6 -30 -31 -9 2 21 0 -13 -18 -21 PL PL -86 -73 LP Loss 218 15 PL Loss
NBFC 17 11 3 6 13 7 13 10 5 17 16 8 20 24 19 15 21 22 33 30
Health Care 43 40 133 48 45 20 -59 -12 20 11 53 38 7 9 4 -12 -46 -20 -15 -2
Infrastructure -1 2 4 52 19 5 10 -6 16 60 27 -14 10 -8 27 70 45 10 34 19
Logistics -6 -1 9 22 13 -2 32 20 -8 4 -32 0 -20 -26 -13 26 23 27 -7 -45
Media 23 14 17 2 -2 2 26 8 42 38 6 57 -1 2 1 -5 2 29 1 -14
Metals -34 6 28 -7 30 26 2 -51 -45 -38 PL -28 -29 -32 LP 236 99 104 108 31
Oil & Gas LP -47 -41 -16 154 -23 -47 -23 45 -9 219 -16 16 68 22 16 -27 22 34 11
Oil & Gas Ex OMCs -8 -6 9 25 14 -10 -44 -4 11 -5 61 15 4 24 10 9 10 12 26 13
Retail 15 3 -12 12 -5 22 7 1 -13 -37 13 -13 33 13 -1 1 15 71 38 68
Technology 17 31 33 38 25 13 11 6 7 11 7 12 8 4 7 -2 0 3 -1 11
Telecom 44 41 128 105 48 105 86 17 2 -5 -9 -2 20 -6 -68 -59 -90 PL PL PL
Utilities -7 6 -6 -13 1 -15 -14 6 5 31 16 -5 -2 -17 -8 -11 -3 2 6 37
Others 26 -3 3 3 15 16 10 19 11 -6 21 -12 21 42 11 65 -3 6 20 12
MOSL Univ 88 -10 5 -1 32 6 -8 -10 6 -1 0 -18 0 8 19 25 -7 11 11 11
MOSL Univ Ex Metals, 6 18 26 11 23 10 -3 2 6 9 10 13 7 7 -3 0 -8 3 9 11
Source: MOSL
Note: Comparable Universe, excludes Alkem Labs, Interglobe Aviation, CG Consumer Electricals, Equitas Holding, IDFC Bank, RBL Bank, L&T
Infotech, Manpasand, SH Kelkar, Endurance Tech, Gujarat Gas, Music Broadcast, Avenue Supermarts, Quess Corp, Teamlease Service, HDFC
Standarad Life, Mahanagar Gas, PC Jeweller, Mas Financials and Laurus Labs.
April 2018 16
Exhibit 10: Key assumptions

Macro FY17 1QFY18 2QFY18 3QFY18 4QFY18E FY18E FY19E
GDP Growth (%) 7.1 5.7 6.5 7.2 7.3 6.6 6.9
IIP Growth (%) 4.6 1.9 3.3 5.9 4.5 4.3 3.6
Inflation CPI-RU (%) 4.5 2.3 3.0 4.5 4.9 3.6 4.4
Currency: USD/INR 67.1 64.5 64.3 64.7 64.4 64.5 66.0
Oil: Brent (US$/bbl) 49.0 50.1 51.7 61.4 66.3 57.4 60.0
Repo Rate (%) 6.38 6.25 6.00 6.00 6.00 6.00 6.00
Interest Rate (%): 1Year CP Rate (Avg) 7.70 7.23 7.01 7.19 7.98 7.35 7.85
10Year G Sec (Avg) 6.95 6.71 6.52 6.97 7.52 6.93 7.60
Sectoral FY17 1QFY18 2QFY18 3QFY18 4QFY18E FY18E FY19E
Auto: CV Volume growth (%) 1.7 -17.0 17.6 36.7 20.3 14.9 10.3
Car Volume growth (%) 10.6 14.0 17.6 11.3 12.4 13.7 13.3
Banking: Loan Growth (%) 5.9 6.0 6.2 10.7 10.0 10.0 12.0
Cement: Volume growth (%) -1.2 -4.0 5.0 12.2 12.0 6.3 7.0
Capital Goods: L&T order Intake (INRb) 1,430 264 342 481 464 1,496 1,753
Capital Goods: L&T order Intake (% YoY) 5.1 -11.1 10.0 37.9 -1.9 4.6 17.2
Metal: Steel (USD/Tonne) 503 580 592 627 660 620 642
Aluminium (USD/Tonne) 1,687 1,909 2,009 2,097 2,000 2,004 2,000
Zinc (USD/Tonne) 2,366 2,589 2,950 3,236 3,200 2,994 3,800
Oil & Gas: Under Recoveries (INRb) 227 58 33 63 101 275 429
Singapore GRM (USD/bbl) 5.7 6.4 8.3 7.3 7.0 7.3 6.0
Technology: $Revenue growth (%) 7.2 2.8 2.8 1.3 1.8 7.9 8.3
'* CV volume for Tata Motors and Ashok Leyland; PV Volume for Maruti suzuki (total volume growth)
Interesting sectoral trends

Sectoral nuances
 Autos universe is expected to report 22% YoY PAT growth, aided by modest
base (11% YoY decline in base quarter). Tata Motors and Maruti Suzuki will
account for roughly 52% of the profit pool. Excluding Tata Motors, Auto universe
is expected to post 28% PAT growth, highest in eight quarters.
 PSU Banks will report a loss of INR 63b (base quarter 4QFY17 reported loss of
INR 37b), with only two (BOB and Indian Bank) of the seven PSU Banks in our
MOSL Universe expected to post profit.
 NBFCs are expected to continue their strong run and post another quarter of
strong and broad-based growth (30% YoY). All NBFCs, barring LIC HF, are
expected to report healthy PAT performance, with Bajaj Finance, MAS Financial,
Muthoot Finance, MMFS, SHTF, Shriram City Union and PNB HF particularly
standing out.
 Private Banks are expected to report 4% PAT growth (YoY), dragged by
corporate focused banks ICICI Bank (-32% YoY) and Axis Bank (-43% YoY).
Excluding ICICI Bank and Axis Bank, private banks profit growth is expected to
come in at 22%, in-line with the trend of last eight quarters.
 Metals will post another quarter of strong performance, with 14% and 31% YoY
growth in EBITDA and PAT, respectively. JSW Steel (70%), Vedanta (86%), Rain
Industries (2.9x) and Hindalco (46%) are expected to post strong earnings
growth, while JSPL is expected to post loss. However, this 30% growth will be
the lowest in last five quarters as previous four quarters had triple digit profit
growth YoY.
 Consumer universe is expected to post 11% YoY growth in profits, third
consecutive quarter of double-digit PAT growth. Britannia, Page Industries,
April 2018 17
Nestle, Pidilite, Colgate and United Breweries are expected to post strong set of
numbers, posting PAT growth in excess of 17%, whereas Emami and Jyothy Lab
will post PAT de-growth.
 Utilities are expected to report 37% growth in PAT, led by strong performance
from Coal India (89% YoY PAT growth) and Power Grid (19.2% YoY PAT growth).
Coal India alone will contribute roughly 80% to the PAT delta. Utilities ex Coal
India are still expected to post a robust 11% PAT growth in 4QFY18.
 Technology is expected to report its first double digit PAT growth (10.9%) after
eight quarters, with Persistent systems (-16.4%) being the only IT company
expected to report PAT de-growth. In 4Q, YoY revenue trajectory is likely to
continue to inch up. We expect such acceleration in INFO, TCS and TECHM, and
also organically for WPRO - across our top-tier universe
 Telecom universe will report loss. Idea’s loss is expected to remain elevated
while Bharti is expected to post 80% YoY decline in profits.
 Oil & Gas is expected to report 11% YoY PAT growth on a base of 15% growth in
the quarter ended Mar’17, driven by RIL( contributing 57% to PAT delta), ONGC
and IOC. Among OMCs, only IOC is expected to post strong performance, led by
Paradip ramp-up. HPCL and BPCL would post YoY PAT decline due to lower
marketing margins.
Exhibit 11: 4QFY18 sectoral PAT growth YoY (%) Exhibit 12: 4QFY18 sectoral PAT growth QoQ (%)
61 93
37 31 30 63
22 19 13
11 11 11 11 10 4 3
32 23 21
17 15 15 8 8 6
6 4 2
-1 -2
-13
-1 -1
-45 -13-18
PL Loss
Loss Loss
MOSL Univ
Utilities
Banks - PSU
Metals
NBFC
Health Care
Telecom
Sensex
Auto
Consumer
Logistics
Technology
Cap. Goods
Banks - Pvt
Cement
Media
Life Ins
Retail
Infra
Oil & Gas
MOSL Univ
Utilities
Banks - PSU
Telecom
Metals
NBFC
Health Care
Sensex
Logistics
Cap. Goods
Auto
Cement
Banks - Pvt
Consumer
Technology
Media
Life Ins
Infra
Retail
Oil & Gas
Exhibit 13: 25% of the companies likely to report PAT decline; lowest since March 2011
Earnings Gr. >30% >15-30% >0-15% <0% Ex OMCs (%)
26 -8 -15 23 26 24 4 11 18 1
15 13 6 -3 12 17 -7 -3 -11 -4 8
24 20 -15 -11 42 22 9 9 0 8 9 7 -13 1 20 10 12
% of MOSL Universe companies
11 18 -9 -3
21 24 23 26 42 41 27
32 35 31 30 27 25 24 31 34 31 38 39 26 35
38 46 36 40 37 34 31 35 44 45 33 30
25
42 40 42 40 37 38 45 36
14 9 10
19 24
26 14 14 9 13 20 18 18 27 15 20
21 11 24 19 13 27 17 16 19 22 25 17 16 18 20 22 22
17 16 24 16
18 22 18 22 10 22
21
18 23 17 22 25
20
22 21 20 25 19
18 22 17 19 18 20 20 20 14 12 19
10 14 24 25 18 17 16 18 14 20 22 20 23 16 12 26 13
44 45 35 51 18
41 43 38 32 39 35
30 26 27 32 31 35
21 21 24 25 25 28 26 24 19 26 24 19 20 26 18 21 21 21 25 26 28 29 29 23 17 26
Dec 07
June 08
June 09
June 10
June 11
June 12
June 13
June 14
June 15
June 16
June 17
Mar 08
Sep 08
Dec 08
Mar 09
Sep 09
Dec 09
Mar 10
Sep 10
Dec 10
Mar 11
Sep 11
Dec 11
Mar 12
Sep 12
Dec 12
Mar 13
Sep 13
Dec 13
Mar 14
Sep 14
Dec 14
Mar 15
Sep 15
Dec 15
Mar 16
Sep 16
Dec 16
Mar 17
Sep 17
Dec 17
Mar 18E
PAT Growth Ex OMCs (%)

rd
54% of the companies would grow at >15% YoY, and almost 1/3 (35%) of the Universe would report >30% PAT growth. 28% of the
Universe would report PAT de-growth.
April 2018 18
THREE KEY TRENDS Three key macro trends as we step into FY19
1. The bottoming out of macros: GDP| Inflation |Bond yields

FY17 and FY18 are characterized by disruptive reforms/initiatives like
numbers.
However, with the impact of demonetization now behind and GST-related issues
gradually settling down, the macros appear to have bottomed out, in our view.
Better-than-expected GDP data for 3QFY18, IIP trends, auto monthly sales numbers
and fuel consumption data are all pointing toward a gradual demand pick-up.
Broadly speaking, while GDP growth has bottomed out, inflation too has moderated.
Exhibit 14: Real GDP growth has bottomed out (%) Exhibit 15: IIP growth also showing higher prints
Real GDP 10 IIP growth
10 % YoY
7.5
9 8
8
7 5
6
5 3
(% YoY)
4
3 0
Jul-16
Jul-17
Jun-16
Jun-17
Nov-16
Nov-17
Apr-16
May-16
Apr-17
May-17
Aug-16
Dec-16
Aug-17
Dec-17
Jan-16
Feb-16
Mar-16
Sep-16
Jan-17
Feb-17
Mar-17
Sep-17
Jan-18
Oct-16
Oct-17
2
Q3 FY14 Q3 FY15 Q3 FY16 Q3 FY17 Q3 FY18
Exhibit 16: Consumer auto sales continues to report strong

momentum Exhibit 17: Industrial auto sales stays robust(% YoY)
(% YoY) Consumer auto sales (% growth) Industrial auto sales (% growth )
75.0
24.8
50.0 32.3
25.0
0.0
-25.0
-50.0
Jul-16
Jul-17
Nov-16
Nov-17
May-16
May-17
Mar-16
Sep-16
Jan-17
Mar-17
Sep-17
Jan-18
Mar-18
Jul-16
Jul-17
Nov-16
Nov-17
May-16
May-17
Mar-16
Sep-16
Jan-17
Mar-17
Sep-17
Jan-18
Mar-18
April 2018 19
Exhibit 18: Petrol consumption trends remain healthy (%

YoY) Exhibit 19: Diesel sales trends have stabilized
(% YoY) Petrol sales (% YoY) Diesel sales
6.1
9.4
Jun-16
Jun-17
Apr-16
Feb-16
Aug-16
Apr-17
Dec-16
Feb-17
Aug-17
Dec-17
Feb-18
Oct-16
Oct-17
Jun-16
Jun-17
Apr-16
Feb-16
Aug-16
Apr-17
Dec-16
Feb-17
Aug-17
Dec-17
Feb-18
Oct-16
Oct-17
Exhibit 20: Real rural wage growth has been steady Exhibit 21: Construction activity has made a strong rebound
Real rural wages (% YoY) Construction 18.0
2.0
(% YoY)
Jun-16
Jun-17
Apr-16
Feb-16
Aug-16
Apr-17
Dec-16
Feb-17
Aug-17
Dec-17
Feb-18
Oct-16
Oct-17
Jun-16
Jun-17
Apr-16
Feb-16
Aug-16
Apr-17
Dec-16
Feb-17
Aug-17
Dec-17
Feb-18
Oct-16
Oct-17
In fact, our growth and inflation outlooks have turned more favorable. Following
better-than-expected 3QFY18 data and revisions in the previous quarters’ data, our
economist, Nikhil Gupta, has revised up our real GVA/GDP growth forecasts for FY18
to 6.4%/6.7% from 6%/6.3% earlier. Furthermore, real GDP is expected to grow
6.9% in FY19, slightly better than 6.8% expected previously. With CPI consistently
coming in below our expectations, we have revised down our FY19 forecast from
5.1% to 4.4%.
Exhibit 22: Revision in key Economic Indicators; GDP growth revised-up; CPI revised downward
Actual data Revised Apr’18 forecasts Previous Jan’18 forecasts
Macro indicators Unit FY16 FY17 FY18F FY19F FY20F FY18F FY19F FY20F
Nominal GDPMP % YoY 10.4 10.8 11.3 11.6 12.3 10 11.4 11.9
Real GDPMP % YoY 8.2 7.1 6.7 6.9 7.2 6.3 6.8 7.4
Real GVABP % YoY 8.1 7.1 6.4 6.7 7 6 6.4 7
Consumer price index (CPI) % YoY 4.9 4.5 3.6 4.4 4.5 3.8 5.1 4.7
Policy repo rate (year-end) % pa 6.75 6.25 6 6 6 6 6 6
INRUSD (average) unit 65.5 67.1 64.4 66 67.7 64.6 65.5 65.7
Current account balance % of GDP -1.1 -0.7 -1.7 -1.7 -1.7 -1.4 -1.5 -1.8
Fiscal balance % of GDP -3.9 -3.5 -3.5 -3.3 -3.1 -3.5 -3.2 -3
The RBI, in its recent monetary policy meeting, revised down its 4QFY18 inflation
projection to 4.5% from 5.1% earlier, implying inflation of 3.9%-4% in March 2018,
in line with our forecast of 4%. It also cut its inflation forecasts for 1HFY19/2HFY19
to 4.7%-5.1%/4.4% from 5.1%-5.6%/4.5% earlier.
April 2018 20
Exhibit 23: RBI expects inflation to remain contained in Exhibit 24: …and expects GDP growth to pick up from 6.6%
FY19… in FY18 to 7.4% next year
Source: RBI Source: RBI
Our proprietary Economic Activity Index (EAI) points toward a continued recovery,
albeit with monthly volatility. After growing reasonably by ~7% YoY in January 2018,
India’s economic activity index (EAI) grew at the four-month slowest pace of 6.3%
YoY in February 2018. Nonetheless, it implies average growth of 6.6% in the first two
months of 2018, similar to the growth witnessed in 3QFY18. An extremely favorable
base is expected to support EAI growth in March 2018. Accordingly, we continue
expecting real GDP growth to improve slightly from 7.2% in 3QFY18 to 7.3% in
4QFY18.
Exhibit 25: MOSL’s proprietary EAI posts healthy growth for Exhibit 26: …on account of a surge in investment activity
the fourth consecutive month in February 2018… (percentage point)
% YoY 3-mma Economic Activity Index Consumption Investment Net exports EAI
12
(pp)
9
3.9 5.3
6 4.2 3.4
5.2 4.1 4.1
3
(1.2) (1.1) (2.6)
0 (0.6) (1.2)
-3
Feb-17
Dec-17
Jan-18
Feb-18
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Feb-17
Mar-17
Sep-17
Jan-18
Feb-18
Oct-17
Please refer to our earlier report for details Contribution of different components to EAI’s growth
Another concern – the sharp rise in bond yields – has also been addressed. Bond
yields had shot up by more than 100bp from 6.7% to7.8% in 6 months, led by global
bond moves and heightened concerns about domestic inflation and fiscal slippage.
However, yields have come off 60-70bp over the past month due to the
combination of policy moves. The Indian government’s 1HFY19 borrowing calendar
April 2018 21
has provided some succor. It has planned to borrow only 47.6% of its full-year
borrowing target in 1HFY19, much lower than the average 1H borrowing of 60-62%
of the full-year borrowing target over the past many years. Furthermore, the
borrowing composition, as desired, has tilted toward short-end securities, which is
likely to flatten the yield curve. This announcement resulted in a correction of bond
yields by 30bp in a day. With the RBI revising its FY19 inflation forecast downward, it
added another catalyst for bond yields to cool off.
Exhibit 27: 10-year G-Sec yield has softened ~70bps from the recent peak
8.0
7.5
7.0
6.5
6.0
Jul-17
Jun-17
Nov-16
Nov-17
Apr-17
May-17
Apr-18
Dec-16
Aug-17
Dec-17
Sep-16
Jan-17
Feb-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-16
Oct-17
2. Industrial capex – on a recovery path
Industrial capex in India has been subdued over the past 5-6 years, as reflected in
weak capex spends by Indian companies, corroborated by weak orders for
consumer-oriented sectors like Autos, Telecom, Media, FMCG, Food & Beverages
and Consumer Durables/Electronics has remained largely uninterrupted. Capex
spend by the private sector has been an Achilles’ heel, impacting investments in the
economy. Leveraged balance sheets, low capacity utilization and several macro
disruptions in the economy impacted the private investment cycle. Therefore, the
burden of investment growth was falling on the government’s shoulders.
Government spending on infrastructure, especially on roads and railways, has
indeed gone up. However, private capex recovery is the key for sustainable pick-up
in investments in the economy.
Exhibit 28: Government’s share of gross projects has increased sharply from FY11
Government Private Government (INR b) Private (INR b)
70,000
46% 42% 38%
56% 53% 49% 60,000
59% 60% 59%
50,000
40,000
54% 58% 62%
44% 47% 51%
41% 40% 41% 30,000
20,000
Mar-10
Mar-11
Mar-12
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Source: Company, MOSL Source: Company, MOSL
April 2018 22
After many years, we are seeing some early signs of pick-up in industrial capex. Post
the cyclical downturn in the core sectors, we are starting to see green shoots of
recovery in sectors like Oil & Gas (O&G), Steel, Cement and Fertilizers, with the
situation expected to get even better. Private sector capex in the Power sector will
be toward renewables; a revival is unlikely in coal-fired plants in the medium term.
 Oil & Gas: Capex is being driven by BS-VI emission norm-related upgrades, along
with brownfield/greenfield expansions by state oil marketing companies.
Additionally, five fertilizer plants are being set up, providing further capex
opportunities. We estimate total O&G capex over 2017-21E at INR2.2t (8%
CAGR)
 Cement sector: Region-wise, utilization has already crossed 80% in north and
east India, and is at ~75% in west India and ~55% in south India. Capacity
addition is primarily being planned by companies in east India due to strong
demand (growing at ~12% YoY). Among the listed companies, UltraTech, Dalmia
Bharat and Shree Cement are adding capacities. JSW Cement, an unlisted player,
is looking to add ~8MTPA of capacity. Most cement players are evaluating
WHRGs to reduce electricity consumption. We estimate cement capex to grow
at a CAGR of 9% over FY17-21.
 Steel capex: With rising commodity prices and protection of import tariffs,
metal companies are announcing capacity addition (FY17-21E capex CAGR of
7%). Tata Steel and JSW Steel have already started work on their respective
plants. However, many steel players like Bhushan Steel, Monnet Ispat, Essar
Steel and Electrosteel remain under stress, and their assets are in the process of
being sold by their lenders under the Insolvency and Bankruptcy (IBC) code.
 Power sector capex: Capex in the power sector has largely shifted toward
renewables at the cost of coal-fired plants. This is especially true for private
sector capex in power. We do not expect any revival in coal-fired capex in the
medium term (FY17-21E: -8% CAGR), and see a continued rise in the share of
renewables.
 Consumer-oriented sectors: Sectors like Autos, FMCG, Consumer
durables/electronics and F&B continue to add capacity, given strong end-market
demand. However, pharma capex is expected to remain muted over FY17-21
owing to deterioration in the business environment for the sector.
Exhibit 29: Refining sector capacity addition and utilization Exhibit 30: Steel sector capacity addition and utilization
Incremental capacity (Mn ton) Utilisation(%) Capacity Addittion m tons Capacity Utilisation(%)
102
107
106
104
103
103
103
102
102
102
101
100
94
92
91
98
90
96
96
88
94
94
86
92
92
91
84
84
89
82
82
88
81
81
81
87
80
80
76
75
74
73
72
72
70
74
68
43
17
29
20
16
13
2
0
4
9
7
8
9
7
1
0
0
2
1
1
4
4
8
6
3
6
9
3
6
5
7
2
7
7
5
3
5
FY99
FY01
FY03
FY05
FY07
FY09
FY11
FY13
FY15
FY17
FY19E
FY21E
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
FY20E
FY21E
April 2018 23
Exhibit 31: Cement sector capacity addition and utilization Exhibit 32: Industrial credit growth starting to pick up
Capacity Addittion (m tons) Utilisation (%) 50%
94
94
35%
90
88
86
35%
84
83
82
81
81
81
81
79
78
76
76
66
74
63
65
71
69
69
68
20%
68
5%
2.1%
29
25
27
41
36
12
36
21
17
18
15
16
14
20
15
8
8
8
4
5
5
7
1
6
-
-10% -5%
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
FY20E
FY21E
Source: MOSL, Company Source: MOSL, Company
3. Earnings recovery has been extremely narrow in FY17 and FY18;

expected to get broader in FY19 and FY20; Financials to make a comeback
in FY19
Gas – accounted for 17%, 18% and 43% of the earnings delta in FY17, i.e. ~80%
of growth was driven by these three cyclicals.
lenders. It is expected to decline further to 11% in FY18. FY17 and FY18 have
seen a significant increase in gross NPAs and a consequent rise in provisioning
requirement for PSU Banks and Private Corporate lenders, resulting in a sharp
drop in overall contribution of Financials to earnings growth.
provisioning costs.
3% in FY20. For Oil & Gas, we expect the sector’s contribution in MOSL universe
earnings growth to come off from 17% to 6% in FY19 and then move up to 12%
in FY20.
April 2018 24
Exhibit 33: Metals contribution to incremental MOSL Exhibit 34: Oil & Gas contribution to incremental MOSL
Universe PAT growth expected to moderate Universe PAT growth expected to moderate too
46%
43%
18% 17%
12% 12%
6%
3%
FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20
Exhibit 35: Autos contribution to incremental MOSL Universe Exhibit 36: Financials contribution to incremental MOSL
PAT growth has been on the higher side in FY18 Universe PAT growth will see a sharp rebound
20% 44%
39%
14%
8%
23%
10%
-6%
FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20
Exhibit 37: Sectoral PAT and PAT delta contribution to MOSL Universe
Sector PAT (INR B) Sector-wise PAT Delta (INR B) Sector-wise PAT Delta (%)
FY16 FY17 FY18E FY19E FY20E FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20
Auto (17) 375 343 407 591 692 52 -32 64 184 101 -32% -6% 20% 14% 8%
Capital Goods (17) 88 128 151 182 215 -22 40 23 31 33 14% 8% 7% 2% 3%
Cement (13) 88 103 92 150 195 15 14 -10 58 45 -9% 3% -3% 4% 4%
Consumer (18) 243 261 287 338 397 20 18 26 51 59 -13% 4% 8% 4% 5%
Financials (38) 551 667 699 1,220 1,772 -302 116 32 521 552 187% 23% 10% 39% 44%
Private Banks (13) 409 406 456 631 852 24 -3 50 175 221 -15% -1% 16% 13% 17%
PSU Banks (7) -40 45 -34 251 504 -346 85 -79 284 254 214% 17% -25% 21% 20%
Life Insurance (1) 8 9 9 10 13 0 1 0 1 3 0% 0% 0% 0% 0%
NBFC (17) 174 208 268 328 402 20 34 60 60 74 -13% 7% 19% 4% 6%
Healthcare (22) 210 232 187 251 316 33 22 -45 64 64 -20% 4% -14% 5% 5%
Infrastructure (4) 9 11 14 15 15 1 1 3 1 0 -1% 0% 1% 0% 0%
Logistics (3) 13 12 13 16 19 -1 -1 1 3 2 1% 0% 0% 0% 0%
Media (13) 32 33 35 51 65 6 2 2 16 14 -4% 0% 1% 1% 1%
Metals (10) 135 228 375 534 574 -168 93 147 159 40 104% 18% 46% 12% 3%
Oil & Gas (14) 773 992 1,047 1,134 1,289 187 219 55 87 156 -116% 43% 17% 6% 12%
Excl. OMCs (11) 636 730 788 914 1,022 110 94 58 126 108 -68% 19% 18% 9% 9%
Retail (3) 12 13 19 24 31 -1 1 6 5 6 1% 0% 2% 0% 0%
Technology (15) 597 644 679 712 790 14 47 35 33 78 -8% 9% 11% 2% 6%
Telecom (4) 97 71 -7 -17 14 -14 -26 -77 -11 31 8% -5% -24% -1% 2%
Utilities (7) 351 325 362 466 517 30 -26 37 104 51 -19% -5% 12% 8% 4%
Others (25) 89 111 132 177 213 -12 22 21 45 36 7% 4% 6% 3% 3%
MOSL (223) 3,663 4,174 4,494 5,844 7,112 -162 511 320 1,350 1,269 100% 100% 100% 100% 100%
April 2018 25
Global Cyclicals to account for 72% of 4QFY18 earnings delta

 Global Cyclicals are expected to post strong earnings growth of 21% YoY (21%
growth in base quarter), led by Metals, Oil & Gas and Coal India, and account for
72% of YoY delta in MOSL Universe PAT. Coal India alone contributes 20% of YoY
delta in MOSL Universe PAT.
 Defensives are expected to post 3% YoY PAT growth after 5 quarters of PAT de-
growth, buoyed by IT (posting its first double digit growth in 8 quarters),
Utilities(11% growth ex Coal India) and Consumer universe posting 11% earnings
growth. Telecom (competitive intensity to stay elevated) and Healthcare are
expected to continue to drag defensive performance.
 For 4QFY18, Domestic Cyclicals will report 7% and 7% YoY growth in EBITDA and
PAT, respectively, driven by Autos and NBFC, whereas PSU Banks and corporate
focused private banks would drag. The PAT growth of 7% is coming on higher
base of 92% growth in the quarter ended March 2017.
Exhibit 38: Cyclicals expected to drive earnings growth in FY18
172 Contribution to 1HFY18 PAT growth (%) Contribution to 2HFY18 PAT growth (%)
45
38
20 15
60 51 15
30 28 22 15 8 7 5 5 4
14 6 6 4 3 2 2 1 1 0
0 -1 -4
-2 -3 -12
-30
-64
-97
-115 -48
Capital Goods
Metals
Banks-PSU
NBFC
Others
Utilities
Healthcare
Infrastructure
Telecom
Consumer
Banks-Pvt
Technology
Logistics
Media
Cement
Life Insurance
Automobiles
Retail
Oil & Gas
Utilities
Capital Goods
Healthcare
Metals
NBFC
Others
Infrastructure
Telecom
Banks-PSU
Consumer
Logistics
Technology
Cement
Automobiles
Banks-Pvt
Media
Life Insurance
Oil & Gas
Retail
Source: MOSL Source: MOSL
Exhibit 39: Cyclicals growth expected to significantly exceed MOSL Universe average growth in FY18, with likely recovery in
Automobiles and Oil & Gas in 2HFY18
1HFY18 PAT growth (%) 2HFY18 PAT growth (%)

102 LP
96 LP
58
38 51
29 28 25 25
22 19 16 31 28 26
7 5 2 2 22 19 22
15 11 10
5 5
-1 -2 -6 -7
-1 -6
-9
-32
PL PL
-32
Healthcare
Healthcare
Utilities
Capital Goods
Telecom
Utilities
Metals
Banks-PSU
Capital Goods
Telecom
Banks-PSU
Metals
NBFC
Infrastructure
Others
Infrastructure
Others
NBFC
Consumer
Logistics
Consumer
Cement
Logistics
Banks-Pvt
Technology
Media
Media
Cement
Automobiles
Life Insurance
Automobiles
Life Insurance
Banks-Pvt
Technology
Retail
MOSL
Oil & Gas
Retail
MOSL
Oil & Gas
Source: MOSL Source: MOSL
April 2018 26
Defensives to post modest PAT growth after five consecutive quarters of

PAT decline
 Defensives solely drove MOSL Universe PAT growth over FY14-16. Cyclicals
(both domestic and global), on the other hand, were under pressure, resulting in
the share of Defensives in aggregate PAT rising to 37% in FY16 from 23% of
FY12.
 Global Cyclicals appear to be the key drivers of PAT growth in FY18, with their
share rising to 36% of aggregate PAT by FY18, a 300bp jump v/s FY17.
 As a result, we expect the share of Cyclicals to increase to 70% by FY18 from
65% in FY17. Key drivers of growth within Cyclicals would be Metals, and Oil &
Gas, Financials (Private Banks, and NBFC) and Autos.
 For 4QFY18, Defensives would report EBITDA growth of 6.1% YoY and PAT
growth of 3.3% YoY.
Exhibit 40: Oil & Gas, Metals and Auto to support earnings performance in 4QFY18
17 7 6 4 2 2 1 0
27 24 17
30 30 0 -1 -2
-1 -19 -26
1063
1,208 1,182
Private Banks
Healthcare
PSU Banks
Utilities
NBFC
Others
Metals
Infrastructure
Telecom
Consumer
Logistics
Auto
Technology
Cement
MOSL 4QFY17
Cap Goods
Media
Life Insurance
MOSL 4QFY18E
Retail
Oil & Gas
PAT (INRb)
PAT (INRb)
Source: MOSL
Share of Defensives to come off further; Global Cyclicals contribution to see sequential pick-up
Exhibit 41: PAT share of Global Cyclicals will see 4pp increase in 4QFY18
100%
Defensives
33 27 25 28 32
35 40 40 42 39 35 34 36 35
75%
Global cyclicals 25 34
25 32 40 41 37 33 33 25 27 27
50% 24 35 38
26 23
34 36 3632
25%
43
Domestic cyclicals
37 35 34 37 37 34 39 36 38 37
30 30
0%
June-09
June-10
June-11
June-12
June-13
June-14
June-15
June-16
June-17
Mar-09
Sep-09
Dec-09
Mar-10
Sep-10
Dec-10
Mar-11
Sep-11
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17
Sep-17
Dec-17
Mar-18E
Defensives includes Consumer, Healthcare, Technology, Telecom and Utilities

Global cyclicals includes Metals, Oil & Gas and JLR
Domestic cyclicals includes Automobiles, Banks, Capital Goods, Infrastructure, Cement, Media, NBFCs, Real Estate and Retail
April 2018 27
Nifty profits expected to post healthy 14% YoY growth

 Nifty PAT is likely to grow 14% YoY, the highest since 2QFY15 and this will be the
third consecutive quarter of double-digit growth. Excluding OMC, PSU Banks and
Metals, the Nifty PAT growth stays healthy at 12%.
 Sales are expected to grow 14% YoY (15% YoY growth in base quarter), again
aided by Cyclicals. Excluding OMC’s, Metals and PSU Banks, sales growth
remains healthy at 13% YoY.
 Nifty EBITDA is expected to grow 11%. Excluding OMC’s, PSU Banks and Metals,
Nifty EBITDA is expected to post 18% YoY growth.
 Nifty performance would be driven by Cyclicals like Coal India (driven by price
hike), ONGC, Vedanta and Reliance Industries (upstream companies benefit
from higher crude prices).
 13 Nifty companies (three from Pharma) are expected to post YoY PAT decline.
Exhibit 42: Nifty sales to grow 14% in 4QFY18

37 35
33
30 32 30 28 26
26 25 26
23 22 26 21
18 22 21
16 14
16 15 14 14 14 15 LPA: 13% 14 14 14
8 8 10 12
4 4 4 4 4 5
0
-1 -3
-4 -4 -5
-8 -8
-12
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4QE
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Exhibit 43: 4QFY18 Nifty PAT to post 14% growth, led by Metals, Auto & Oil and Gas
65
38 36 34
27 29 24 LPA: 10%
22 19 21 19 24 19
16 13 12 16 12 14
11 11 9 14 13
4
10 6 5 2 8 5 1 7 7
0 0
-6 -1
-2 -3 -3 -8
-8 -5 -12 -7
-15
-20
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4QE
April 2018 28
Exhibit 44: 4QFY18 Nifty EBITDA to grow at 11% YoY
47
35 37
29 31
25 26
20 21
17 16 15 18 20 18 15
13 12 13 11 14 13 17 LPA: 12% 16
10 13 10
4 5 6 5 1 5 8 11 8 8 11 11
6 3 2 2
-2
-5 -8 -10 -5
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4QE
Exhibit 45: Nifty sectoral 4QFY18 PAT change YoY (%)

49
39
25 21 17 16 14 11 9 10 3
Utilities, Auto, NBFC and
Oil & Gas to outperform; -2
Telecom, Private Banks -15 -17
-28
and Healthcare to -41
underperform -58 Loss
Healthcare
Utilities
Telecom
NBFC
Nifty
Banks-PSU
Metals
Auto
Consumer
Agro Chem
Technology
Cement
Banks-Pvt
Cap Goods
Media
Retail
Oil & Gas
Infra
April 2018 29
Exhibit 46: Nifty companies’ 4QFY18 performance (INR b)

Sales EBITDA PAT PAT Contbn EBITDA margin
Var % Var % Var % Var % Var % Var % Gr. Var
Mar-18 Mar-18 Mar-18 (%) Mar-18
YoY QoQ YoY QoQ YoY QoQ (%) (bp)
High PAT Gr. (26) 4,838 21 9 1,064 20 5 552 32 4 58 114 22 -19
Cipla 39 9 0 8 55 -4 4 113 -7 0 2 20 597
Coal India 251 8 16 68 39 22 51 89 71 5 20 27 596
Vedanta 244 8 0 72 -1 7 28 86 28 3 11 30 -289
Tech Mahindra 80 7 3 14 54 10 10 63 2 1 3 17 532
Grasim Industries 28 -1 -36 9 65 0 5 59 7 1 2 31 1239
Eicher Motors 25 32 10 8 41 17 7 59 40 1 2 33 220
Bajaj Finserv 77 10 1 77 10 1 8 51 8 1 2 100 0
Titan Company 40 18 -6 4 33 -14 3 49 8 0 1 9 106
Hindalco 311 11 0 36 3 2 11 46 -18 1 3 12 -90
Bajaj Finance 23 37 -3 13 34 -8 6 43 -16 1 2 57 -123
Hero MotoCorp 86 24 17 14 38 24 10 37 22 1 2 17 173
ONGC 240 10 4 131 18 5 57 30 13 6 11 55 369
IOC 1,291 29 17 75 -10 8 48 30 -39 5 9 6 -254
IndusInd Bank 20 21 7 18 12 5 10 28 3 1 2 87 -739
Maruti Suzuki 209 14 8 33 24 10 23 28 28 2 4 16 135
Indiabulls Housing 15 30 11 14 44 16 10 25 12 1 2 90 874
Mahindra & Mahindra 132 24 14 18 43 4 10 25 -1 1 2 13 175
Yes Bank 21 26 9 21 25 6 11 22 4 1 2 102 -82
Bajaj Auto 67 36 5 13 41 3 10 22 3 1 1 19 62
HDFC Bank 107 18 4 87 20 3 48 21 4 5 7 81 84
Kotak Mahindra Bank 25 15 4 20 17 10 12 20 11 1 2 80 161
Dr Reddy’ s Labs 38 6 -1 8 30 -1 4 20 -13 0 1 20 381
Power Grid Corp. 63 -6 -16 58 1 -13 24 19 7 3 3 92 670
Reliance Inds. 1,129 33 13 184 50 4 96 19 1 10 13 16 185
Hind. Unilever 90 9 5 19 16 14 13 17 9 1 2 21 114
UPL 58 8 39 13 21 75 9 16 50 1 1 22 231
HCL Technologies 132 10 3 31 15 3 23 16 7 2 3 23 116
Med/Low PAT Gr. (11) 2,093 8 9 472 11 16 280 8 23 30 17 23 48
HDFC 32 14 11 30 9 12 23 14 17 2 2 94 -441
GAIL 147 10 2 21 38 7 12 14 -5 1 1 14 295
Bharti Infratel 36 2 -2 16 0 -2 7 12 14 1 1 44 -103
Wipro 140 0 2 29 4 3 22 12 12 2 2 21 78
Tata Motors 892 16 20 131 21 53 48 11 322 5 4 15 67
Asian Paints 45 14 6 8 10 -12 5 10 -7 1 0 17 -63
ITC 112 0 12 41 5 4 29 7 1 3 2 36 167
Infosys 181 6 2 49 6 2 38 6 3 4 2 27 -4
TCS 318 7 3 86 6 4 69 4 5 7 2 27 -32
NTPC 189 -7 -9 61 5 17 27 3 29 3 1 32 385
Negative PAT Gr. (13) 2,700 6 7 553 -3 20 114 -24 0 12 -30 20 -190
State Bank 188 -11 1 141 -19 20 -17 Loss Loss -2 15 75 -740
BPCL 616 8 2 26 14 65 17 -10 -23 2 -2 4 23
Larsen & Toubro 416 14 45 51 19 64 28 -17 83 3 -5 12 51
HPCL 617 20 7 22 -21 33 14 -22 -27 2 -3 4 -185
Adani Ports 22 -1 -18 15 -11 -26 8 -28 -24 1 -3 66 -746
Ultratech Cement 87 32 15 14 13 13 5 -30 40 1 -2 16 -289
Sun Pharma 66 -4 0 14 17 3 9 -30 -3 1 -3 22 382
Tata Steel 322 -5 -4 62 -11 9 23 -31 -4 2 -9 19 -142
ICICI Bank 59 -2 3 85 67 69 14 -32 -17 1 -5 146 5994
Axis Bank 48 2 2 40 -9 3 7 -43 -3 1 -4 82 -1036
Lupin 40 -6 0 8 -32 9 3 -45 29 0 -2 19 -711
Zee Entertainment 16 8 -10 4 -8 -27 2 -58 -48 0 -2 26 -447
Bharti Airtel 200 -9 -1 69 -12 -8 2 -80 -69 0 -5 34 -145
Nifty (50) 9631 14 9 2,089 11 11 945 14 9 100 100 22 -53
Note: Bloomberg estimates are used for Bajaj Finserv and Adani Ports.
April 2018 30
Intra-sector 4QFY18 earnings divergence (%)

Sector +30% 15-30% 0-15% -Ve earnings Earnings
Sectors
gr. growth growth growth growth momentum
HIGH GROWTH SECTORS
Retail 61 JUBI: 313,
TTAN & PCJL:49
Utilities 37 JSW: 158, TPWR: 22, NTPC & CESC: 3,
COAL: 89 PWGR: 19 NHPC: 2
Metals 31 SAIL: LP, RINDL: NACL: 6 HZ: -16,

191,VEDL: 86,JSTL: TATA: -31,
70,NMDC: 49,HNDL: 46 JSP: Loss
NBFC 30 SCUF: 1080,SHTF: LTFH: 27, HDFC: 14, LICHF: -3
120,MASFIN: 97, CIFC & IHFL: 25, REPCO: 12
MMFS: 92,PNBHOUSI: DEWH: 24,
53,MUTH: 52,BAF: GRHF: 16
43,CAFL: 40
Autos 22 ESC: 126,MACA: 68, MSIL: 28,MM: 25, TTMT: 11, MSS: -4
AL: 63,EIM: 59,TVSL: AMRJ & BJAUT: EXID: 6,BOS: 5
38,HMCL: 37,BHFC: 32 22,CEAT: 21,ENDU: 20
Infrastructure 19 IRB: 31 SADE: 29 ASBL: -5,
KNRC: -14
MEDIUM/LOW GROWTH SECTORS
Oil & Gas GUJGA: 115,AGIS: IOCL: 30,MAHGL: GAIL: 14, BPCL: -10,HPCL: -22,
7
(Ex OMCs) 101,GUJS: 60,ONGC: 30 26,RIL: 19,PLNG: 15 IGL: 12 OINL: -49,MRPL: -60
BRIT: 28,PIDI: 22, UNSP: 13,APNT:

UBBL: 930, HMN: -3, 2 7 7 2
Consumer 11 PAG & NEST: 18,CLGT & 10,DABUR & GCPL:
FCON: LP JYL: -50
HUVR: 17,PG: 16 8,SKB & ITC: 7,MRCO: 6
ZENT: 563,MTCL: WPRO: 12,
71,TECHM: 63, MPHL: 29,HCLT: NITEC: 11,
Technology 11 PSYS: -16
CYL: 37,TELX & KPIT: 36, 16,HEXW: 16 INFO: 6,
LTI: 32 TCS: 4
BHEL: 276,TMX:
BHE: 13,
160,GETD: 122,BLSTR: HAVL: 20, CRG: -12,
Capital Goods 10 VOLT: 7,
62,SIEM: 60,ABB: CROMPTON: 18 LT: -17
KKC: 6
56,ENGR: 35
EQUITAS: 505, IIB: 28,YES: 22, FB: 11, ICICIBC: -32,
Banks - Pvt 4
RBK: 40 HDFCB: 21.KMB: 20 DCBB: 8 AXSB: -43
PAT DE-GROWTH SECTORS
BOI & SBIN: Loss, CBK,
Banks - PSU Loss BOB: LP INBK: 3
PNB & UNBK: PL
BHARTI: -80,
Telecom PL BHIN: 12
TCOM: -90,IDEA: Loss
TRP: -12,GRAN: -14,AJP: -
FORH: LP,CIPLA:
CDH: 29,ALPM: GNP: 14,GLXO: 11,ARBP: 17,LAURUS: -29,SUNP: -
Health Care -1 113,IPCA: 99,JUBILANT:
22,DRRD: 20 9,DIVI: 2 30,SLPA: -38,BIOS: -39,
48,SANL: 44,ALKEM: 31
STR: -41,LPC: -45
SRCM: 8, DBEL: -3,UTCEM &
GRASIM: 59,
Cement -2 ACEM: 20 TRCL: 3, ICEM: -30,
SNGI: 52
ACC: 1 BCORP: Loss
RADIOCIT: 170,
ENIL: -2,JAGP: -10,Z: -
Media -13 HTML: 62, SUNTV: 23 DBCL: 8
58,DITV: Loss
PRIF IN: 60,PVRL: LP
Logistics -45 GDPL: 6 AGLL: -27,CCRI: -50
April 2018 31
EARNINGS FY18-20 FY18 marks bottoming out of earnings; All eyes on FY19
Financial to lead the earnings recovery
 FY18 earnings growth to come in at 11%: We expect FY18 revenue growth for
our MOSL Universe to come in at 13% (v/s 0% CAGR in FY14-17). This will be the
first year of double-digit revenue growth after three years of flattish sales
performance. The topline performance is led by Metals, Oil & Gas, Cement and
Autos. Overall, we expect EBITDA margin for MOSL Universe (ex-OMCs,
Financials) to stay flat at 20% in FY18. For MOSL Universe, we expect profits to
grow 8% YoY. Metals alone account for 46% of the incremental profits followed
by Autos (20% of delta), and Oil & Gas (17% of delta). PSU Banks, Healthcare and
Cement are key laggards with earnings decline of P to L, 14% and 3%
respectively.
 Corporate lenders to drive Nifty earnings growth of 25% in FY19: Nifty sales are
expected to continue the momentum and deliver healthy 14% YoY growth in
FY19. Nifty EBITDA and PAT are expected to grow 19% and 26% in FY19 and
record 16% and 23% CAGR over FY18-20, respectively. The strong earnings
growth of FY19 is expected to be led by corporate lenders like SBI, ICICI and Axis
Bank. Excluding these corporate lenders, Nifty earnings growth for FY19E is
expected at 19%. Apart from the corporate lenders, Tata Motors, ONGC and
Coal India are other key contributors for FY19 Nifty earnings growth.
Exhibit 47: Recovery in Cyclicals to drive robust 19% PAT CAGR (FY17-20E)
EBITDA
Sales Gr. / EBIDTA EBIDTA PAT Gr. / PAT delta
Sector margin
CAGR (%) Margin (%) CAGR (%) CAGR (%) Share (%)
change (bp)
(No of Companies) (FY17-20) FY18E (FY17-20) FY17-20 FY18E FY19E FY20E (FY17-20) FY17-20
High PAT CAGR (>20%) 12 29.5 16 356 17 56 29 33 70
Financials (38) 17 85.8 16 -207 5 74 45 38 38
PSU Banks (7) 12 79.3 11 -332 -176 -841 101 124 16
Private Banks (13) 19 86.8 19 -130 12 38 35 28 15
Life Insurance (1) 24 125.3 18 -1919 3 14 26 14 0
NBFC (17) 21 83.5 22 145 29 23 23 25 7
Metals (10) 7 19.8 16 500 65 42 7 36 12
Retail (3) 21 10.4 29 194 49 27 26 34 1
Auto (17) 13 13.6 18 196 19 45 17 26 12
Media (13) 11 29.0 16 413 6 44 27 25 1
Others (25) 17 18.9 21 193 19 34 20 24 3
Cement (13) 8 18.3 13 281 -10 63 30 24 3
Medium PAT CAGR (10-20%) 11 21.8 15 279 5 25 17 15 17
Capital Goods (17) 12 10.5 19 195 18 20 18 19 3
Utilities (7) 9 31.7 17 732 11 29 11 17 7
Consumer (18) 12 23.6 14 123 10 18 17 15 5
Logistics (3) 13 13.7 12 -30 8 22 15 15 0
Infrastructure (4) 12 31.6 5 -560 33 4 -1 11 0
Healthcare (22) 10 20.2 12 111 -19 34 26 11 3
Low PAT CAGR (up to 10%) 12 16.1 10 -82 1 6 15 7 13
Oil & Gas (14) 14 13.1 14 -8 6 8 14 9 10
Excl. OMCs (11) 15 17.2 17 92 8 16 12 12 10
Technology (15) 8 22.9 8 -17 5 5 11 7 5
Telecom (4) 0 30.9 -1 -21 PL LP -179 -42 -2
MOSL (223) 12 22.3 14.3 155 8 30 22 19 100
MOSL Excl. OMCs (220) 12 24.6 14.7 215 8 33 22 21 NA
Sensex (30) 11 27.0 14.2 262 11 29 21 20 NA
Nifty (50) 11 22.8 13.7 193 11 26 20 19 NA
April 2018 32
FY18 earnings recovery led by three sectors – Metals, Auto and Oil & Gas
 For MOSL Universe, we estimate FY18 PAT growth at 8% (after 14% growth in
FY17), led by strong performance in Metals, Oil & Gas, Auto and NBFC. Metals,
Oil & Gas and Autos contribute 83% of the earnings delta for our universe in
FY18E.
 Pharma and Telecom are expected to post muted performance, led by sector-
specific headwinds.
Exhibit 48: Nifty EPS – expect 19% CAGR over FY17-20E (v/s 5% CAGR over FY12-17)
FY17-20E:
18.5% CAGR 20%
25% 695
FY08-17:
11%
4.5% CAGR 577
6%
FY01-08: 462
407 413 394 417
21% CAGR 347 369
315
281 251 247
236
169 184
131
73 78 92
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18E
FY19E
FY20E
Nifty EPS estimates revised downwards by 2%/3% for FY18/19
 We have downgraded our estimates for Nifty EPS: -2% for FY18 to INR462 v/s
INR471 earlier, -3% for FY19 to INR577 v/s INR595 earlier, and -.2% for FY20 to
INR695 v/s INR696 earlier.
 We are now building in earnings growth of 11%/25%/21% for the Nifty EPS for
FY18/19/20.
 For FY18, major earnings upgrades are in Grasim Industries (+34%) and HPCL
(+14%) while the major earnings downgrades are in Axis Bank (-13%), SBI (-11%),
ICICI Bank (-11%), and Ultratech Cement (-13%).
 For FY19, the major earnings upgrades are in M&M (+7%) while the major
downgrades are Bharti Airtel (-53%), Vedanta (-20%), and Axis Bank (-20%).
Exhibit 49: Top Nifty companies’ EPS upgrades/downgrades since 3QFY18 review (%)
Companies FY18 Companies FY19
Grasim Industries 34 ICICI Bank 10
HPCL 14 Mahindra & Mahindra 7
UPL 6 State Bank 4
BPCL 6 Tech Mahindra 3
GAIL 6 HCL Technologies 3
Dr Reddy’ s Labs -10 IOC -11
State Bank -11 Grasim Industries -18
ICICI Bank -11 Vedanta -20
Ultratech Cement -13 Axis Bank -20
Axis Bank -13 Bharti Airtel -53
April 2018 33
Exhibit 50: Nifty performance - Expect FY17-20 PAT CAGR of 19%

Sales EBIDTA EBITDA PAT Contbn
Sales (INR b) PAT (INR b) PAT YoY (%)
CAGR Margin (%) CAGR CAGR to
Company FY18E FY19E FY20E % 17-20 FY18 FY19 FY20 % 17-20 FY18E FY19E FY20E FY18 FY19 FY20 % 17-20 Delta %
High PAT Gr. (20%+) 11,462 12,967 13,412 10 26 29 32 17 1,072 1,648 2,098 30 54 27 37 63
State Bank 737 910 1,012 10 78 79 78 10 24 169 311 903 599 84 405 15
Hindalco 1,173 1,156 1,169 5 12 13 12 5 43 58 60 124 35 4 46 2
Axis Bank 187 245 305 19 85 86 88 15 32 64 115 -14 102 80 46 4
Tata Motors 2,925 3,336 3,586 10 13 16 16 15 87 192 199 29 122 4 44 7
Bajaj Finance 76 102 132 34 67 69 71 37 26 35 47 40 38 34 37 1
Vedanta 886 1,041 1,123 16 28 31 32 19 85 124 145 51 46 16 37 4
Titan Company 158 194 236 22 10 10 10 28 11 14 18 39 27 24 30 0
Eicher Motors 89 107 129 22 32 33 34 26 22 28 36 32 28 28 29 1
IndusInd Bank 75 95 120 26 88 89 90 26 36 47 60 26 29 28 28 2
Kotak Mahindra Bk 94 121 149 22 76 78 79 25 62 79 103 26 27 31 28 3
Bajaj Finserv 73 85 97 16 102 104 109 23 29 37 47 26 28 29 28 1
Dr Reddy’ s Labs 144 171 202 13 17 22 24 26 11 19 25 -5 70 28 27 1
Yes Bank 76 99 125 29 101 102 103 30 42 53 69 25 28 29 27 2
Coal India 840 942 1,003 9 19 25 28 32 110 164 191 19 48 16 27 5
Cipla 154 175 197 11 20 20 21 19 17 21 26 36 21 22 26 1
Tata Steel 1,277 1,279 691 -15 17 18 24 -1 70 83 74 90 19 -11 26 2
HDFC Bank 402 485 589 21 81 83 84 24 175 220 275 20 25 25 24 6
Mah. & Mah. 946 1,051 930 4 14 15 16 12 47 56 61 45 18 9 23 1
Indiabulls Housing 50 61 76 29 122 114 112 23 39 44 54 33 15 22 23 1
Maruti Suzuki 803 942 1,114 18 16 16 17 23 83 105 138 11 27 31 22 3
Ultratech Cement 295 371 429 22 19 21 22 24 21 34 45 -19 60 33 20 1
Med.PAT Gr. (10-20%) 10,704 12,780 13,786 14 26 26 26 16 1,347 1,626 1,869 9 21 15 15 31
Hind. Unilever 344 394 448 12 21 22 23 19 52 61 72 22 18 18 19 1
ICICI Bank 229 255 293 10 113 112 113 8 71 116 164 -27 63 41 19 3
Grasim Industries 153 174 196 -18 22 32 33 -5 22 46 52 -30 106 14 18 1
Larsen & Toubro 1,206 1,363 1,485 11 11 12 12 16 68 80 96 15 17 20 17 2
Tech Mahindra 307 347 387 10 15 16 16 15 35 38 44 29 6 16 17 1
Power Grid Corp. 298 350 389 15 88 89 89 15 89 108 115 21 22 6 16 2
Zee Entertainment 66 77 88 11 30 33 34 16 12 17 20 -3 35 19 16 0
Reliance Inds. 4,040 5,311 5,567 22 16 15 15 22 362 401 462 21 11 15 16 8
HDFC 114 132 153 16 93 94 94 15 71 83 97 12 17 17 15 2
GAIL 530 547 620 9 15 16 15 13 47 51 55 24 9 8 13 1
Asian Paints 169 200 236 15 19 19 19 14 21 24 29 2 18 20 13 0
ONGC 1,575 1,754 1,847 9 40 41 42 18 216 279 302 2 30 8 13 5
UPL 176 196 222 11 20 21 21 13 22 24 28 9 10 18 12 0
Bajaj Auto 251 275 310 13 19 19 20 12 43 49 57 5 14 18 12 1
ITC 408 461 516 9 38 38 38 11 109 124 139 7 14 12 11 2
NTPC 839 943 1,030 8 27 31 32 15 107 125 137 5 17 9 10 2
Low PAT Gr. (<10%) 13,706 15,074 16,395 10 14 13 14 5 1,091 1,105 1,275 -6 1 15 3 6
Hero MotoCorp 322 361 396 12 17 16 16 11 37 40 44 10 9 10 9 1
Adani Ports 104 114 127 15 66 65 65 13 37 42 49 -4 13 15 8 0
Wipro 547 585 636 5 20 21 22 8 87 91 102 4 5 12 7 1
Infosys 706 784 859 8 27 26 26 6 162 154 171 13 -5 11 6 1
HCL Technologies 506 568 618 10 23 23 23 11 89 92 100 5 4 8 6 1
TCS 1,229 1,374 1,500 8 26 26 26 7 258 282 309 -2 9 10 6 2
Bharti Infratel 144 148 159 6 44 42 42 4 26 28 31 -7 10 10 4 0
Sun Pharma 260 302 352 5 20 25 27 3 32 52 67 -50 63 29 2 0
IOC 4,320 4,788 5,337 15 8 7 7 4 196 167 205 -1 -15 23 1 0
BPCL 2,368 2,616 2,738 11 6 5 5 3 79 81 91 -17 3 13 -1 0
Lupin 158 180 208 6 19 21 22 1 14 18 24 -45 30 35 -2 0
HPCL 2,202 2,402 2,507 10 5 4 5 3 60 50 58 -3 -18 16 -2 0
Bharti Airtel 841 853 957 0 36 35 37 0 14 7 22 -67 -49 201 -21 -1
Nifty (PAT free float) 35,872 40,821 43,593 11 21 22 23 13 1,804 2,277 2,743 11 26 20 19 100
April 2018 34
NIFTY FY18E NIFTY FY17
3510
3226
April 2018
SBI 145 Reliance Ind. 63
Tata Motors 106 Tata Steel 33
ONGC 64 HDFC Bank 30
Coal India 53 Vedanta 29
ICICI Bank 45 Hindalco 24
HDFC Bank 45 SBI 22
Vedanta 39 Tata Motors 19
Reliance Ind. 39 Infosys 18
Axis Bank 32 Coal India 18
TCS 24 Power Grid 16
Grasim Inds 23 M&M 15
Maruti 22 KMB 13
Sun Pharma 20 Indiabulls HSG 9
Power Grid 20 HUL 9
NTPC 18 L&T 9
KMB 17 GAIL 9
Hindalco 15 Yes Bank 3561.631528 8
ITC 15 Maruti 8
Tata Steel 13 Tech Mah. 8
Ultratech 13 HDFC 8
HDFC 12 IndusInd Bk 7
Yes Bank 12 Bajaj Fin 7
Exhibit 52: Nifty stock absolute FY19E PAT change (INR b)

Exhibit 51: Nifty stock absolute FY18E PAT change (INR b)
L&T 12 ITC 7
IndusInd Bk 10 Bajaj Finserv 6
Bajaj Fin 10 Eicher Mot. 5
HUL 9 NTPC 5
M&M 8 ONGC 5
Dr Reddy’s 8 Cipla 5
Bajaj Finserv 8 HCL Tech. 4
Eicher Mot. 6 Wipro 3
Indiabulls HSG 6 Hero Moto 3
Titan Co 3
Bajaj Auto 6
Bajaj Auto 2
Adani Ports 5
UPL 2
Zee Ent. 4
Asian Paints 0
Wipro 4
Zee Ent. 0
GAIL 4 Dr Reddy’s 1
Lupin 4 Adani Ports 2
Asian Paints 4 HPCL 2
Cipla 4 Bharti Infratel 2
HCL Tech. 3 IOC 2
Hero Moto 3 Ultratech 5
Titan Co 3 TCS
Bharti Infratel 3 5
Axis Bank 5
BPCL 2 Grasim Inds 9
Tech Mah. 2 Lupin 12
UPL 2 BPCL 16
Bharti Airtel 7 ICICI Bank 27
Infosys 8 Bharti Airtel 30
HPCL 11
3,510
Sun Pharma 31
IOC 29 NIFTY FY18E
NIFTY FY19E 4,379
35
Key Sectoral Highlights - 4QFY18

4QFY18E YoY (%)
Sales EBITDA PAT Margin
SECTOR Key highlights Key stocks to watch
Chg YoY (pp)
Auto  A low base of last year (particularly in 20.7 26.8 21.8 0.7  MSIL: An improvement in mix and
2Ws), a strong recovery in rural areas healthy volume growth would lead to
and a revival in construction/mining revenue growth of 14% YoY. EBITDA
activities drove a sustained recovery in margin is likely to expand 140bp YoY to
volumes. Our channel checks indicate 16%, while PAT is expected to rise 28%
continued above-average volume YoY.
growth in rural markets.  EIM: Consol. revenue growth of ~32%
 During the quarter, 2W volumes grew YoY is mainly led by healthy volume
~29% YoY and PV volumes increased growth across RE (+27.4% YoY) and
~7% YoY (with growth of ~4% in cars VECV (+33.2% YoY). PAT is expected to
and ~25% in UVs). CV volumes (driven grow ~59% YoY, led by a strong
by the ban on overloading in key states, improvement in VECV’s operating
the revival in construction/ mining, and performance.
the cyclical recovery in LCVs) grew  AL: Ashok Leyland’s volume growth of
~32% YoY (LCV +44% YoY, M&HCV ~23% YoY and realization growth of
+18.5% YoY). ~6% YoY would translate to revenue
 EBITDA margin for our auto OEM (ex- growth of ~31% YoY. EBITDA margin is
JLR) universe is likely to expand expected to expand 210bp YoY to
(+230bp YoY or +20bp QoQ to 14.2%) 13.1%, led by operating leverage, while
for the third consecutive quarter, PAT should increase ~63% YoY.
despite RM cost inflation.  MM’s volume growth of 25.4% YoY was
 Auto aggregate PAT is likely to grow led by healthy tractor (+41%) and UV
21.8% YoY (ex JLR 48.3%), led by MSIL, sales (+18%). EBITDA margin is
HMCL, EIM and AL. expected to expand 180bp YoY to
14.3%. PAT is expected to rise 25% YoY.
Capital Goods  We expect order intake for the sector 14.6 27.1 10.5 1.3  Execution from LT is likely to grow 14%
to pick up in 4QFY18, given pick-up in in 4QFY18; operating profit is likely to
finalization of orders. BHEL is expected grow 19% YoY. Operating margin is
to report strong order inflow, given expected to improve 50bp YoY to
finalization of the 2,400MW thermal 12.3%. PAT is expected to decline 17%
power plant. Ordering activity in roads, YoY, as 4QFY17 had a lower tax rate.
rail and power T&D remains robust.  Bharat Electronics is likely to report a
 Revenue growth is expected to pick up weak operating performance, despite
in this quarter, as execution improves strong revenue growth of 14% YoY,
post GST implementation. owing to an adverse revenue mix.
 Margin is expected to improve 130bp Gross margin is expected to shrink
YoY to 12.8%, with pick-up in execution 560bp, and PAT is expected to decline
driving operating leverage. 19% YoY.
 Havells is expected to report revenue
growth of 45% YoY, given contribution
from the newly acquired Lloyd. We
expect operating margin to contract
90bp YoY, as given the increase in the
contribution from the low-margin
LLyod business. Net profit is expected
to grow 20% YoY.
Infrastructure  We expect road companies to register  Sadbhav is expected to deliver a strong
healthy revenue growth of 15% operating performance, given healthy
(excluding IRB), driven by a pick-up in revenue growth of 20.5% YoY.
execution of orders in hand. Execution Operating profit is likely to increase
is expected to pick up after being 24% YoY. Net profit is expected to grow
impacted by GST-related issues. IRB has 29% YoY, led by higher other income.
transferred assets to its InvIT portfolio,  Ashoka is expected to deliver a healthy
which will lead to flattish growth in operating performance, given
revenue for the quarter. improved execution (+20% YoY) and
 Net profitability for the companies is better revenue mix-driven operating
expected to improve by 18% YoY, led by margin improvement. Expect operating
a strong operating performance from profit growth of 60% YoY.
Sadbhav and IRB.
April 2018 36
4QFY18E YoY (%)

Chg YoY (pp)
Cement  We expect the MOSL cement universe 15.6 15.5 -2.1 0.0  Shree Cement’s superior execution
to record volume growth of ~9% YoY in capabilities enable it to achieve RoIC of
4QFY18, adjusted for the acquisition over 50% (FY19E), while its gross block
impact on UltraTech. We expect (a) to capacity has been structurally
pan-India players to report volume trending downward.
growth of 7% YoY, (b) players in North  Birla Corp is likely to be profitable due
like SRCM to deliver 8% YoY increase in to the strong performance of the
volumes, and (c) south-based acquired subsidiary Reliance Cement.
companies (DBEL, TRCL and ICEM) to With a 23% market share in the Satna
post 8-14% volume growth. cluster and Reliance Cement’s mineral
 We estimate volume growth at 6% for concession, it has the potential to
FY18, as demand in Rajasthan, Tamil expand to multiple states.
Nadu, UP and Bihar was affected by  We believe Dalmia Cement’s
the sand mining issue. With the issue deleveraging play and superior volume
getting resolved now in most major growth make it attractive for re-rating.
cement-consuming states, demand
growth should revive in FY19.
 Cement prices should remain flat QoQ,
as price declines in north and south
were largely offset by a pricing
improvement in east and central India.
Cement prices declined 1% QoQ in
north and 3% QoQ in south. Pricing
improvement was the sharpest in
central India (+3% QoQ), followed by
east (+2% QoQ). Prices in west were flat
QoQ.
Consumer  We expect aggregate revenue to grow 8.2 10.9 11.0 0.6  Britannia, Colgate, Page Industries,
8.2% YoY and aggregate PAT to grow United Breweries, P&G Hygiene, Asian
11% YoY in 4QFY18. Flat sales expected Paints and Nestle are all likely to report
from ITC (as a result of an unusually double-digit sales, EBITDA and PAT
high base quarter) and net sales growth growth. In 4QFY18, Britannia, Page
of 21% in cigarettes (due to extremely Industries, Pidilite, Colgate, P&G
low excise duty in 4QFY17) are likely to Hygiene and Healthcare and Nestle all
drag down overall sector sales growth, are likely to report 15% PAT growth. It
which otherwise would have been in is likely to be another subdued quarter
double-digits. With all three in terms of earnings growth for Dabur,
components of sales –volumes, Emami, Marico and GCPL.
realization and premiumization – now
firing in tandem, overall sales growth,
barring ITC, is on a recovery path.
 PFAD/palm oil prices declined
14.9%/21.2% YoY in 4QFY18. Ti02 price
increase has stabilized (+3.0% YoY),
while VAM prices have shown an
uptrend. Some other commodities
reported a sharp uptrend: mentha
prices were up significantly by 46% YoY
in 4QFY18, while copra and LLP prices
rose 69% YoY and 26% YoY,
respectively, in two months ended
February 2018. HDPE prices increased
7% YoY.
 Aggregate EBITDA is likely to grow
10.9% YoY, with sales growth revival
leading to better absorption of costs.
EBITDA margin is likely to be 60bp
higher YoY.
April 2018 37
4QFY18E YoY (%)

Chg YoY (pp)
Financials
8.0 -0.3 -3.7
Private Banks  We expect value migration from private 11.9 24.7 3.9  HDFCB, IIB and RBL amongst private
to PSU banks to continue, with former banks.
being better positioned to capture
growth with better capitalization. We
expect private banks to record
3.9%/1.9% QoQ/YoY PAT growth due to
two of the large P banks, ICICI and Axis
Bank, recording a significant PAT
decline, while HDFC Bank is expected to
report 21% YoY PAT growth. Mid-sized
private banks are expected to report
20% - 25% PAT growth.
PSU Banks  On a sequential basis, we expect profit -1.7 -22.4 Loss  We prefer SBIN and BOB among PSU
growth to remain muted for state- banks.
owned banks, with elevated provisions
toward NCLT exposures and fraud
accounts in many banks. We expect all
PSU banks, with the exception of Indian
Bank and BoB, to report losses led by
elevated provisions in a muted revenue
growth environment. Even as bond
yields have increased post 3QFY18
levels, MTM provisioning impact is
expected to be softer in 4Q, with RBI
allowing banks to spread their losses
over four quarters.
NBFC  Core housing growth has stabilized post 20.0 18.6 29.8  LICHF and PNBHF are key stocks to look
RERA implementation, and tier II and III out for with regards margins, given the
locations are the key growth drivers. sharp rise in GSec yields over the past
For housing finance corporations six months.
(HFCs), we expect the share of non-  Vehicle financiers, especially CV
retail loans in the overall portfolio to financiers, are likely to witness a very
inch higher. strong quarter on the growth front.
 Growth rates will remain healthy for  Repco may disappoint on growth as
segments like consumer durables, two- state-specific issues in Tamil Nadu have
wheelers and vehicle finance. M&HCV not yet been completely resolved.
demand has been strong in the quarter
– GoI’s infra push being the key driving
factor.
 We expect a gradual improvement for
microfinance institutions (the most
impacted segment post
demonetization) in terms of both
growth and asset quality. Our
interaction with gold financiers
suggests that growth is slowly coming
back.
 Elevated GSec yields could play a
spoilsport over the medium term from
a spreads perspective. Yields have
hardened 100bp+ from their lows six
months back. If they sustain at these
levels, HFCs would be most impacted.
Vehicle financiers have pricing power to
maintain margins.
April 2018 38
4QFY18E YoY (%)

Chg YoY (pp)
Healthcare  Cadila is expected to maintain its 6.3 16.7 -1.2 1.9  Cadila (+ve; US business to witness
growth momentum in the US business ~35% YoY growth led by gLialda sales).
on the back of gLialda and ramp-up of  Shilpa Medicare (-ve; margin to shrink
other key products. to 19% from 26.2% in 4QFY17.
 Granules is expected to report health  Torrent Pharma (+ve; sales to increase
growth of 14% YoY, led by on the back of successful integration of
commissioning of the new facility. The Unichem portfolio).
company may witness margin  SUNP and LPC (-ve; US business to
contraction due to higher input cost continue to decline on the back of
(witnessed in 3QFY18 also). pricing pressure and regulatory issues).
 Sales momentum is expected to
continue in Jubilant Lifescience
(+29.5%) due to addition of Triad
business (was absent in 4QFY17).
 Laurus Labs’ EBITDA margin is expected
to contract due to a lower share of its
high-margin business.
Logistics  EXIM originating volume by rail is likely 19.0 -25.5 -45.1 -7.6  We expect CCRI to report better
to grow in mid-teens in 4QFY18. In Jan- margins QoQ due to strong volume
Feb 2018, EXIM container volumes growth in the EXIM segment.
were up 21% YoY and domestic  GDPL should see downward pressure
volumes declined 1% YoY. on margins led by margin pressure in
 CCRI is likely to report EXIM handling CFS business and flat margins YoY in rail
volume growth of 13% YoY for 4QFY18, business.
led by strong EXIM rail volumes.  AGLL is likely to see pressure on
 GDPL is likely to report growth of 3% margins due to subdued P&E segment
YoY (flat QoQ) in rail volumes. CFS performance, while MTO segment is
segment is expected to see volume expected to do better.
growth of 15% YoY due to growth from
JNPT.
Media  We expect ad revenue for our Media 9.7 10.3 -13.0 0.2  ZEE’s overall revenue should grow at a
universe to grow ~9% YoY. strong 16% YoY (ex-sports) on the back
Broadcasters are expected to of 16%/13% YoY (ex-sports)
continue their robust (double digit) ad/subscription revenue growth.
ad revenue growth, led by a surge in Higher content cost, coupled with the
ad spends across national advertisers launch of ZEE5, is likely to pressurize
(mainly FMCG and Auto). EBITDA margin (-450bp YoY) for ZEE.
 Revival of ad spends from local  Shift to commission model and fast-
advertisers, together with a low pick in digitization process (in Tamil
base, should provide impetus to ad Nadu) are expected to bolster SUN TV’s
revenue of both Print and Radio revenue and margins. SUN TV, too, is
companies. expected to report robust 19% YoY
 Furthermore, increased circulation revenue growth on the back of
copies/higher contribution from new 21%/19% YoY growth in
stations bode well for Print/Radio ad/subscription revenue.
players.  DB Corp is likely to witness 11% YoY
consol. revenue growth, whereas
Jagran, due to flat ad revenue growth,
should report muted growth.
 MBL should report strong
revenue/EBITDA growth, while ENIL’s
revenues are expected to remain
muted due to de-growth at legacy
stations.
 Expect Dish TV to report meager 1%
QoQ ARPU growth and 0.3m net
subscriber adds. Management may
decide to provide merged numbers
with Videocon D2H (as all the merger
formalities have been completed).
April 2018 39
4QFY18E YoY (%)

Chg YoY (pp)
Metals  Domestic steel prices increased 9.9 13.6 30.7 0.7  SAIL’s EBITDA will increase 51% QoQ to
sharply during the quarter on INR21.7b on higher steel prices.
seasonally strong demand, supply  NMDC’s EBITDA will increase 54% QoQ
disruption and weather-related cuts to INR20.4b on higher iron ore prices
in China. (amid supply issues in Odisha) and
 Base metal prices were also volumes.
marginally higher on improving
global demand and Chinese supply
measures.
 Ferrous companies will outperform
on the back of strong price increases.
Oil & Gas  Singapore complex GRM stood at 21.9 18.0 11.3 -0.4  IOCL is expected to report adjusted
USD7.0/bbl in 4QFY18 v/s EBITDA of INR75b (-10% YoY, +8% QoQ)
USD7.3/bbl in 3QFY18 and in 4QFY18. Expect GRM of USD5.6/bbl
USD6.4/bbl in 4QFY17. We expect and refinery throughput at 17.1mmt
marginal inventory gain/loss during for 4QFY18.
the quarter.  HPCL is expected to report adjusted
 Average Brent crude price was up EBITDA of INR22.4b (-21% YoY, +33%
24% YoY and 9% QoQ to USD67/bbl. QoQ) in 4QFY18. Expect GRM of
We expect higher realizations to USD4.6/bbl and refinery throughput at
benefit the upstream companies. 4.6mmt for 4QFY18.
ONGC and Oil India should see a YoY  BPCL is expected to report adjusted
increase in EBITDA. EBITDA of INR32.1b (+45% YoY, flat
 RIL is expected to clock GRM of QoQ) in 4QFY18. Expect GRM of
USD11.4/bbl, led by strong USD5.3/bbl and refinery throughput at
benchmark (premium of 7.3mmt for 4QFY18.
USD4.4/bbl). The Petchem segment
is expected to do better, led by
healthy petchem deltas and strong
volume growth.
Excl. OMCs  Crude oil prices continued their 23.5 30.5 13.1 1.1  Continue to like OMCs: Strong
upward trend in 4QFY18 as well. benchmark GRMs and sequentially
Average Brent crude price was up better marketing margins are expected
24% YoY (9% QoQ) at USD67/bbl. to benefit OMCs’ (IOCL/BPCL/HPCL)
OMCs are likely to post marginal profitability during the quarter. We
refining inventory gains for the expect OMCs’ core earnings to improve
quarter. sequentially in 4QFY18. Among the
 Domestic oil & gas production has OMCs, we have a higher preference for
improved, which would be beneficial IOCL due to its (a) highest
for the upstream companies. Rise in diversification, (b) strong free cash flow
crude oil price and revived generation and (c) inexpensive
production volume growth for oil valuations.
and gas would benefit ONGC/OINL.  Prefer IGL among CGDs: We expect
 We expect volume growth to volume growth to continue for CGD
continue for CGD players. We might players. Spot as well as crude-linked
see margin compression (YoY/QoQ) LNG prices have inched up in 4QFY18.
in the industrial segment due to However, Gujarat Gas had already
competition from alternative fuels. taken a price hike of INR2.5/scm in Dec
2017 which would take care of the
increased cost. We prefer IGL among
CGD players due to (a) higher longevity
of volume growth compared to MGL
and (b) higher share of CNG v/s PNG,
supporting stable EBITDA/SCM.
 PLNG – a long-term buy: Visibility on
PLNG’s medium/long-term earnings is
high, given (a) the huge gas demand-
supply gap in India, (b) volume growth,
driven by gradual capacity addition,
and (c) earnings growth boosted by
April 2018 40
4QFY18E YoY (%)

Chg YoY (pp)
annual re-gas charge escalation. Poor
competition from existing and
upcoming terminals and lower LNG
prices add to the Buy case for PLNG.
Retail  We expect our Retail Universe to 17.3 45.1 61.4 1.9  TTAN and PCJ both are expected to
report healthy revenue growth of deliver healthy top-line growth.
17.3% YoY in 4QFY18. EBITDA is  For Jubilant Foodworks (JUBI), we
expected to increase by 45.1% YoY expect sales to increase 22.8% YoY,
and adj. PAT by 61.4% YoY. with same-store sales (SSS) up 20%
YoY. Base quarter 4QFY17 had
witnessed 7.5% decline in SSS. Thus, a
favorable base and initiatives taken by
the company should result in highest
SSS growth.
Technology  In 4Q, YoY revenue trajectory is likely 6.6 9.6 10.9 0.6  We expect INFO to start the year by
to continue to inch up. We expect guiding for 6-8% growth in constant
such acceleration in INFO, TCS and currency (which will be higher in
TECHM, and also organically for reported dollar), and are currently
WPRO - across our top-tier universe. pegging our estimate at the higher
 Corresponding aggregate QoQ end of that band. Guidance for FY19
growth is pegged at 2.9% (~2% in will understandably supersede the
constant currency and 80-120bp performance of 4Q.
tailwind from cross currency).  Apart from quantitative guidance,
 We expect aggregate USD revenue TCS’ commentary on BFS and margins
growth of 3.5% QoQ across tier-2 IT, will be crucial, as softness in both is a
60bp higher than tier-1. While cross- downside risk to current valuations.
currency movements will rub off Margin commentary will be crucial,
positively across the board, the INR, especially given the onsite centricity
which is a key determinant of of recent deal wins.
margins, has not moved significantly.
 As a result, barring company-specific
turnarounds such as TECHM (+110bp
QoQ), MTCL (+90bp QoQ) and KPIT
(+80bp QoQ), we expect margins to
be range-bound.
Telecom  Expect 4QFY18 to witness revenue -10.1 -16.1 PL -2.1  BHARTI’s India wireless EBITDA is
and EBITDA drop, primarily on expected to witness steep 17% QoQ
account of ARPU downtrading. decline, pulling down consol. EBITDA
Further, a cut in international IUC by 8% QoQ. Bharti’s Africa EBITDA to
and Jio Phone re-launch (with new grow 1% QoQ led by cost efficiencies.
price plan of INR49) are only  IDEA’s consol. EBITDA likely to
expected to magnify the impact. We decline 15% QoQ.
expect consol. revenue dip of ~4%  BHIN’s consol. EBITDA to decline 2%
QoQ for Bharti/Idea. QoQ.
 Consolidation in the telecom sector,  TCOM to see 1% QoQ overall EBITDA
led by shutdown/acquisition of growth on the back of 3% data
smaller players, should continue to EBITDA growth, partly offset by a 9%
pull down net tenancies. Bharti decline in voice EBITDA.
Infratel is likely to witness 2% QoQ
decline in net tenancies due to the
exit from smaller operators, pulling
down consol. revenue by 2% QoQ.
 Tata Comm.’s revenue is expected to
grow marginally by 1% QoQ as
growth in data revenue is expected
to offset the impact of decline in
voice segment.
April 2018 41
4QFY18E YoY (%)

Chg YoY (pp)
Utilities  Power Grid will report earnings 4.7 18.2 36.6 3.9  Coal India e-auction and ASQ
growth on continuing strong realization..
capitalization momentum.  Power Grid – capitalization
 Coal India EBITDA (ex-OBR) will momentum.
increase by 22% QoQ on price hike  NTPC – commercialization guidance.
and higher volumes.
 NTPC will report muted growth due
to drag on account of under recovery
in fixed charge.
April 2018 42
Markets lose strength toward year-end

MARKETS & FLOWS
Domestic MFs record highest-ever inflows
 The Nifty waxed and waned to close just 10.2% higher at 10,114 in FY18. The index
had rallied strongly by 20.2% (FY18 YTD) up to January before correcting meaningfully
by 4.9% in February and 3.6% in March.
 Markets witnessed significant volatility over the last two months of FY18 owing to
unsupportive global and domestic events (concerns around global interest rate
tightening, potential trade conflict, and domestic political uncertainty after the BJP’s
muted show in the recent by-polls).
 In FY18, Brazil (+31%), MSCI EM (+22%), China (+17%), Japan (+13%) and Korea (+13%)
were the best performers among the key global markets in local currency terms. On
the other hand, the UK (-4%) delivered negative returns.
Highest-ever inflows by domestic  India’s share in the world market cap is at 2.7% (+10bp YoY), above its long-term
MFs, 2.6x of FY17 (USDb)
average of 2.5%. In FY18, the world market cap increased by 14.2% (USD10.1t), while
22.0 India’s market cap rose 16.8%.
 Seven sectors outperformed the benchmark in FY18: Real Estate (+39%), Private Banks
(+24%), Technology (+17%), NBFC (+14%), Metals (+13%), Capital Goods (+12%) and
Consumer (+11%). Healthcare (-14%), PSU Banks (-7%) and Utilities (-7%) were the
10.1
8.4 only negative performers in FY18.
6.6 Midcaps have struggled over the last few months, resulting in their underperformance
4.1 
1.5 versus large-caps. In FY18, midcaps delivered 9% returns, as against +10% by the Nifty.
 Market breadth was positive in FY18, with 34 Nifty stocks closing higher. Titan
-0.2
-2.3 (+104%), Bajaj Finance (+51%), Maruti (+47%), HUL (+47%) and Tech Mahindra (+39%)
-4.4 -4.2-3.6
were the top performers. Lupin (-49%), Tata Motors (-30%), Sun Pharma (-28%), Dr
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
Reddy’s (-21%) and SBI (-15%) were the worst performers.

 In FY18, India recorded highest-ever inflows from domestic MFs of USD22b, which is
2.6x of full-year inflows of USD8.4b in FY17. FII flows remained muted at USD3.2b in
FY18, lower than those in FY17 (USD8.3b). DIIs (ex-MFs) saw outflows of USD4.3b in
FY18 – the second successive year of outflows.
 While markets remain volatile, the Nifty P/E is attractively valued at 17.4x, marginally
above the historical average of 17.0x. At 2.6x, Nifty P/B is near its historical average.
Market-cap-to-GDP at a seven-year high of 86% (FY18E GDP), above its long-term
average.
Exhibit 53: Over FY08-18, Indian markets recorded CAGR of Exhibit 54: Nifty QoQ change (%) — negative return after
7.9% in local currency terms and 2.8% in USD terms four consecutive quarters of positive returns
QoQ Return (%)
24 -36 74 11 -9 7 18 27 -9 19 10
14
34 -50 96 12 -21 0 7 22 -14 21 10 12
10
CAGR in INR: 7.9%
Trend in Nifty CAGR in USD: 2.8% 7 8
6 5 4
4 4 3
3 3
0
-1
-2 -3
10,114
-4 -4
4,735
3,021
5,249
5,834
5,296
5,683
6,704
8,491
7,738
9,174
-5
-5
Jun-14
Jun-15
Jun-16
Jun-17
June-13
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17
Sep-17
Dec-17
Mar-18
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Annual Return in INR (%) Annual Return in USD (%)
April 2018 43
Global equities: India among the bottom-performing markets in FY18

 In FY18, Brazil (+31%), MSCI EM (+22%), China (+17%), Japan (+13%) and Korea
(+13%) were the best performers among the key global markets in local
currency terms. On the other hand, the UK (-4%) delivered negative returns.
Exhibit 55: World equity indices (FY18) – local currency Exhibit 56: World equity indices (FY18) – USD (%)
Brazil 31 Brazil 24
MSCI EM 22 MSCI EM 22
China (HSCEI) 17 South Korea 19
Japan 13 Japan 19
South Korea 13 Taiwan 16
S&P 500 12 China (HSCEI) 16
Taiwan 11 S&P 500 12
India - Nifty 10 India - Nifty 10

Russia MICEX 1 UK 8
UK -4 Russia MICEX 0
India’s share in world market cap above historical average

 India's share in world market cap is at 2.7% (up 10bp YoY), above its long-term
average of 2.5%.
 In FY18, world market cap has increased by 14.2% (USD10.1t), while India's
market cap is up 16.8%.
Exhibit 57: Trend in India's contribution to world market cap Exhibit 58: Market cap change in FY18 (%)
India's Contribution to World Mcap (%) 0.6
1.8 1.0 6.4 1.3 2.2 7.7 29.4 3.7 0.5
3.5
3.3 Mkt cap chg 12M (%) Curr Mcap (USD Tr)
26 25
3.0
Average of 2.5% 20
2.7 17 17
2.5
12 11 11 10 8
2.0
1.6
1.5
Indonesia
Brazil
Korea
India
China
Russia
Japan
Taiwan
US
UK
Mar-08
Sep-08
Mar-09
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16
Mar-17
Sep-17
Mar-18
April 2018 44
Sector performance: Seven sectors outperformed the benchmark

Real Estate, Pvt. Banks, Technology top outperformers
 Seven sectors outperformed the benchmark in FY18: Real Estate (+39%), Private
Banks (+24%), Technology (+17%), NBFC (+14%), Metals (+13%), Capital Goods
(+12%) and Consumer (+11%).
 Healthcare (-14%), PSU Banks (-7%) and Utilities (-7%) were the only negative
performers in FY18.
Exhibit 59: Sectoral performance—absolute and relative to Nifty (%)
MoM Abs. Performance (%) FY18 Relative to Nifty MoM Performance (%) FY18
Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Chg Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Chg
Sector
17 17 17 17 17 17 17 17 17 18 18 18 (%) 17 17 17 17 17 17 17 17 17 18 18 18 (%)
Real Estate 20 0 6 7 -2 -3 11 6 7 0 -5 -10 39 19 -3 7 1 -1 -2 6 7 4 -5 -1 -6 29
Banks - Pvt 5 8 0 6 -2 0 3 2 3 9 -7 -3 24 3 5 1 0 0 1 -3 3 0 4 -2 0 13
Technology -7 6 -4 6 -4 -1 4 4 5 11 0 -3 17 -9 3 -3 0 -2 0 -1 5 2 7 4 0 6
NBFC 4 0 0 7 -1 -2 1 -2 3 7 -6 2 14 3 -3 1 1 1 -1 -4 -1 0 3 -1 5 3
Metal -4 0 1 9 7 2 9 -6 7 3 -2 -12 13 -6 -4 2 3 8 3 3 -5 4 -1 3 -9 3
Cap Goods 9 -2 -3 5 -4 -1 7 0 4 6 -6 -3 12 7 -5 -2 -1 -2 0 2 1 1 2 -1 0 2
Consumer 2 7 3 -3 1 -4 5 1 4 0 -2 -2 11 0 4 4 -9 2 -3 -1 2 1 -5 3 2 1
Telecom 0 1 3 10 1 -10 26 0 10 -17 -1 -8 10 -1 -3 4 4 3 -9 21 1 7 -21 4 -4 0
Auto 3 6 -3 5 -3 2 5 -1 6 -3 -4 -3 9 2 3 -2 -1 -2 3 0 0 3 -8 1 0 -1
Nifty Midcap 5 -3 1 4 -1 -1 8 2 6 -2 -5 -5 9 4 -7 2 -1 0 0 3 3 3 -6 -1 -1 -1
Oil 7 -1 -7 7 7 -2 12 -4 2 1 -5 -6 8 5 -5 -6 2 9 -1 6 -3 -1 -4 0 -2 -2
Cement 8 -1 -1 9 4 -5 11 -5 2 -1 -4 -7 8 6 -4 0 3 5 -4 5 -4 -1 -5 1 -4 -3
Media 4 -7 -2 4 -6 3 7 3 7 2 -7 -2 5 3 -10 -1 -2 -4 5 1 4 4 -3 -2 1 -5
Utilities 2 -5 0 4 -3 -2 6 -1 3 -3 -4 -4 -7 1 -8 1 -1 -1 -1 1 0 0 -7 1 -1 -17
Banks - PSU 5 -3 -2 13 -11 -8 25 2 -3 0 -17 -2 -7 4 -7 -1 7 -10 -6 20 3 -6 -5 -12 2 -17
Healthcare -2 -10 5 0 -7 3 6 -2 6 -2 -3 -7 -14 -3 -13 6 -6 -6 4 0 -1 3 -6 2 -3 -24
Nifty Chg 1 3 -1 6 -2 -1 6 -1 3 5 -5 -4 10
Breadth positive in FY18; 34 Nifty stocks close higher

 Titan (+104%), Bajaj Finance (+51%), Maruti (+47%), HUL (+47%) and Tech
Mahindra (+39%) were the top performers. Lupin (-49%), Tata Motors (-30%),
Sun Pharma (-28%), Dr Reddy’s (-21%) and SBI (-15%) were the worst
performers.
Exhibit 60: Best and worst Nifty performers for FY18 (%)—~50% companies outperformed the benchmark
104
51
47
47
39
34
31
27
27
25
24
24
23
21
20
17
16
15
14
11
11
11
10
10
10
11
9
8
5
4
4
3
2
1
0
-1
-1
-2
-2
-2
-2
-3
-4
-8
-9
-9
SBI -15
Dr Reddy's -21
Sun Pharma -28
Tata Motors -30
Lupin-49
Reliance Ind.
Hero Moto
Wipro
Axis Bank
BPCL
Coal India
Bajaj Fin.
L&T
TCS
IOC
Tata Steel
Kotak Mah.Bk
GAIL
Nifty
Hindalco
Asian Paints
NTPC
Maruti
Bharti Airtel
HCL Tech
Zee Ent
Vedanta
Cipla
HUL
IndusInd Bk
Eicher Motors
ICICI Bank
Adani Ports
UPL
Power Grid
Infosys
UltraTech
Titan Co
Grasim Ind
Yes Bank
HDFC Bank
Bajaj Finserv
M&M
Bharti Infratel
Tech Mah.
Indiabulls Hsg
HDFC
HPCL
Bajaj Auto
ONGC
ITC
April 2018 45
Institutional flows: Domestic MFs record highest-ever inflows

FII flows moderate; DII (ex-MFs) were sellers for second successive year
 India recorded highest-ever inflows from domestic MFs of USD22b, 2.6x of full-
year inflows of USD8.4b in FY17.
 FII flows remained muted at USD3.2b in FY18, lower than inflows in FY17
(USD8.3b).
 DIIs (ex-MFs) saw outflows of USD4.3b in FY18 – the second successive year of
outflows.
Exhibit 61: Yearly domestic MF flows in equities (USD b) Exhibit 62: Quarterly domestic MF flows in equities (USD b)
22.0 7.3
4.7 4.6 4.7 5.3

3.9
10.1 3.7
8.4 2.72.4
2.1 1.7
6.6 1.5
4.1 1.01.0
0.1 0.4
1.5
-0.2 -1.0-0.6-0.8
-2.3 -1.4 -1.3
-4.4 -4.2 -3.6
Jun-13
Jun-14
Jun-15
June-16
June-17
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17
Sep-17
Dec-17
Mar-18
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
Exhibit 63: Yearly FII flows in equities (USD b) Exhibit 64: Quarterly FII flows in equities (USD b)
25.0 25.8 10.4

23.4
18.1 6.6 6.2 6.0 6.6
4.1 4.6
13.1 13.7 3.2 3.5
2.3 1.8
8.5 1.21.7 2.5 2.1
8.3 0.2
3.2
-0.1 -0.3
-2.6 -3.2
-1.5 -4.6
-10.4
Jun-13
Jun-14
Jun-15
June-16
June-17
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17
Sep-17
Dec-17
Mar-18
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
Exhibit 65: Yearly DII ex-MF flows in equity (USD b) Exhibit 66: Quarterly DII ex-MF flows in equity (USD b)
13.7 1.3
11.6 0.5
0.3 0.5
7.4
-0.2 -0.1 -0.5
-0.3 -0.6 -0.8
2.0 -0.9
0.3 -1.5 -1.5 -1.5
-2.0 -2.2
-0.7 -2.4
-2.8-3.0
-3.9 -3.9
-5.3 -4.3
-4.9
-8.5 -10.3
Jun-13
Jun-14
Jun-15
June-16
June-17
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17
Sep-17
Dec-17
Mar-18
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
April 2018 46
Valuations moderate; now at long-period averages

 While markets remain volatile, the Nifty P/E trades at attractive valuations of
17.4x, marginally above the historical average of 17.0x. At 2.6x, the Nifty P/B is
near its historical average.
 Market-cap-to-GDP at a seven-year high of 86% (FY18E GDP), above its long-
term average.
Exhibit 67: 12-month forward Nifty P/E (x) Exhibit 68: 12-month forward Nifty P/B (x)
25 3.5
10 Year 3.0
21 10 Year
Avg: 17.0x
Avg: 2.5x 2.6
17 17.4 2.5
13 2.0
9 1.5
Apr-08
Apr-09
Apr-10
Apr-11
Apr-12
Apr-13
Apr-14
Apr-15
Apr-16
Apr-17
Apr-18
Apr-08
Apr-09
Apr-10
Apr-11
Apr-12
Apr-13
Apr-14
Apr-15
Apr-16
Apr-17
Apr-18
Exhibit 69: 12-month forward Nifty RoE (%) Exhibit 70: India’s market cap to GDP (%)
18.1
103 Average of 78% for
95 the period
16.7 88 86
10 Year Avg: 83 80
81
15.1% 71 69
15.3 64 66
15.3
55
13.9
12.5
Apr-08
Apr-09
Apr-10
Apr-11
Apr-12
Apr-13
Apr-14
Apr-15
Apr-16
Apr-17
Apr-18
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18E
Midcaps underperform large-caps; still command premium v/s large caps
 Midcaps have struggled over the last few months, resulting in its
underperformance versus large-caps. In FY18, midcaps have delivered 9%
returns, as against 10% by Nifty.
 Midcaps now trade at a 19% premium to the Nifty on a P/E basis.
Exhibit 71: Midcaps underperformed large-caps in last 12 months

Nifty Rebased Nifty Midcap 100 Rebased
130
120
110
110
109
100
90
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17
April 2018 47
Exhibit 72: Midcaps v/s Nifty P/E (x) – 12-month forward Exhibit 73: Midcaps trading at 19% premium to Nifty
Midcap PE (x) Nifty PE (x) Midcap Vs Nifty PE Prem/(Disc) (%)
36.0 85
Nifty Avg: 18.6x
Midcap Avg: 19.4x
29.0 55
Average: 4%
22.0 20.8 25
19
15.0
17.4 -5
8.0 -35
Apr-13
Aug-13
Apr-14
Dec-13
Aug-14
Apr-15
Dec-14
Aug-15
Apr-16
Dec-15
Aug-16
Apr-17
Dec-16
Aug-17
Apr-18
Dec-17
Apr-13
Aug-13
Apr-14
Dec-13
Aug-14
Apr-15
Dec-14
Aug-15
Apr-16
Dec-15
Aug-16
Apr-17
Dec-16
Aug-17
Apr-18
Dec-17
Sector valuations: It’s a tale of caution and opportunity now

 Technology sector trades at a P/E of 17.2x, a 9% premium to its historical
average of 15.8x.
 Despite the outperformance of the metals sector in FY18, valuations at 5x
EV/EBITDA remain reasonable and at a discount of 13% to the long-period
average. Consumer, Autos, Private Banks and NBFCs continue to trade at a
significant premium to LPAs.
 Healthcare, PSU Banks and Utilities – the underperforming sectors of FY18 – are
trading at a significant discount to LPAs.
Exhibit 74: Sector valuations - Snapshot

Relative to Relative to
PE (x) PB (x)
Nifty P/E (%) Nifty P/B (%)
Sector
10 Yr Prem/ 10 Yr 10 Yr Prem/ 10 Yr
Current Current Current Current
Avg Disc (%) Avg Avg Disc (%) Avg
Auto 16.7 15.2 10.1 -5 -12 3.6 3.2 13.6 37 24
Banks – PVT 19.7 16.5 19.7 13 -4 2.6 2.2 19.8 0 -14
Banks – PSU 12.5 12.1 3.5 -29 -27 0.7 0.9 -24.4 -73 -63
NBFC 24.2 17.9 34.8 38 5 3.5 2.9 20.3 34 15
Capital Goods 26.8 26.2 2.2 53 50 3.1 3.6 -14.0 17 40
Cement 22.8 19.9 14.6 30 14 2.8 2.2 23.8 6 -11
Consumer 38.3 30.9 24.0 119 82 11.1 9.5 16.8 322 280
Healthcare 20.5 23.0 -10.8 17 34 3.0 3.9 -23.1 14 55
Infrastructure 15.8 13.4 18.3 -10 -22 1.9 1.7 8.9 -27 -32
Media 25.6 22.8 11.9 46 33 4.8 4.0 19.3 84 59
Metals 9.8 12.0 -18.2 -44 -30 1.4 1.4 -0.7 -45 -44
Oil & Gas 11.5 11.5 0.3 -34 -31 1.5 1.6 -2.1 -42 -38
Retail 45.7 26.4 73.0 161 53 10.1 6.6 52.6 285 163
Technology 17.2 15.8 8.8 -2 -7 4.0 4.1 -3.2 51 62
Telecom Loss - - - - 2.3 2.5 -6.1 -12 -2
Utilities 10.4 14.2 -26.4 -41 -14 1.4 1.7 -19.2 -48 -33
April 2018 48
WEIGHT
MOSL model SECTOR WEIGHT / PORTFOLIO
PICKS
BSE
100
MOST
WEIGHT
RELATIVE TO
EFFECTIVE SECTOR
STANCE
BSE100
portfolio Financials 33.4 34.0 0.6 Neutral
Private 20.3 20.0 -0.3 Underweight
HDFC Bank 8.2 8.0 -0.2 Buy
ICICI Bank 3.7 4.0 0.3 Buy
Yes Bank 1.2 3.0 1.8 Buy
IndusInd Bank 2.0 3.0 1.0 Buy
RBL 0.0 2.0 2.0 Buy
PSU 2.5 3.0 0.5 Neutral
SBI 2.0 3.0 1.0 Buy
NBFCs 10.6 11.0 0.4 Neutral
HDFC 6.4 5.0 -1.4 Buy
Bajaj Finance 0.8 3.0 2.2 Buy
Shriram Transport Finance 0.5 3.0 2.5 Buy
Auto 10.8 12.0 1.2 Overweight
M&M 1.5 4.0 2.5 Buy
Maruti 2.5 4.0 1.5 Buy
Motherson Sumi 0.5 2.0 1.5 Buy
Tata Motors 1.4 2.0 0.6 Buy
Consumption / Retail 12.1 11.0 -1.1 Underweight
Titan 0.8 4.0 3.2 Buy
Pidilite Inds. 0.3 3.0 2.7 Buy
Emami 0.0 2.0 2.0 Buy
United Spirits 0.0 2.0 2.0 Neutral
Energy 10.1 11.0 0.9 Neutral
Reliance Inds 6.1 5.0 -1.1 Buy
ONGC 1.1 2.0 0.9 Buy
IOC 0.8 2.0 1.2 Buy
Petronet LNG 0.4 2.0 1.6 Buy
Cap Goods, Infra & Cement 8.5 9.0 0.5 Neutral
Larsen & Toubro 3.4 5.0 1.6 Buy
Shree Cement 0.3 2.0 1.7 Buy
Thermax 0.0 2.0 2.0 Buy
Technology / Media 12.3 6.0 -6.3 Underweight
Infosys 4.6 4.0 -0.6 Buy
Sun TV 0.0 2.0 2.0 Buy
Healthcare 4.4 4.0 -0.4 Neutral
Sun Pharma 1.2 2.0 0.8 Buy
Cipla 0.6 2.0 1.4 Neutral
Utilities / Metals 6.7 4.0 -2.7 Underweight
Hindalco 0.6 2.0 1.4 Buy
Power Grid Corp. 0.9 2.0 1.1 Buy
Midcaps 1.8 9.0 7.2 Overweight
Team Lease 0.0 1.0 1.0 Buy
Sadbhav Engg 0.0 1.0 1.0 Buy
Future Consumer 0.0 1.0 1.0 Buy
Oberoi Realty 0.0 1.0 1.0 Buy
Aegis Logistics 0.0 1.0 1.0 Buy
UPL 0.6 1.0 0.4 Buy
Exide Inds. 0.2 1.0 0.8 Buy
Tata Chemicals 0.3 1.0 0.7 Buy
Repco Home Fin 0.0 1.0 1.0 Buy
Cash 0.0 0.0 0.00
TOTAL 100.0 100.0
April 2018 49
Sectors & Companies

BSE Sensex: 33,371 S&P CNX: 10,245 April 2018
MOSL Universe:
4QFY18 Highlights
&
Ready Reckoner
Note: In our quarterly performance tables, our four-quarter numbers may not always add up to the full-year
numbers. This is because of differences in classification of account heads in the company’s quarterly and annual
results or because of differences in the way we classify account heads as opposed to the company.
All stock prices and indices as on 3 April 2018, unless otherwise stated.
April 2018 50
MOSL Universe: 4QFY18 aggregate performance highlights

Quarterly Performance - MOSL Universe (INR b)
Sector Sales EBITDA PAT
(Nos of Companies) Mar-18 Var % YoY Var % QoQ Mar-18 Var % YoY Var % QoQ Mar-18 Var % YoY Var % QoQ
Auto (17) 1,834 20.7 15.2 270 26.8 30.3 135 21.8 63.2
Capital Goods (14) 770 14.6 42.7 99 27.1 76.4 60 10.5 92.8
Cement (10) 274 15.6 3.7 49 15.5 8.5 22 -2.1 20.8
Consumer (18) 463 8.2 4.1 109 10.9 1.6 74 11.0 -0.8
Financials (34) 934 8.0 6.1 696 -0.3 10.0 122 -3.7 -2.9
Private Banks (10) 300 11.9 4.1 283 24.7 18.5 107 3.9 1.9
PSU Banks (7) 374 -1.7 -0.1 276 -22.4 3.5 -63 Loss Loss
Life Insurance (1) 87 21.1 60.4 3 20.0 43.0 3 3.0 22.7
NBFC (16) 173 20.0 5.9 133 18.6 7.0 75 29.8 6.2
Healthcare (22) 418 6.3 -0.7 87 16.7 0.0 49 -1.2 -0.9
Infrastructure (4) 41 9.6 23.8 12 9.5 22.0 5 18.7 8.3
Logistics (3) 38 19.0 19.2 5 -25.5 8.8 3 -45.1 14.8
Media (10) 64 9.7 -0.9 18 10.3 -9.0 7 -13.0 -18.2
Metals (10) 1,477 9.9 3.3 322 13.6 12.7 130 30.7 14.7
Oil & Gas (14) 4,333 21.9 9.5 496 18.0 5.2 265 11.3 -13.2
Excl. OMCs (11) 1,809 23.5 8.3 373 30.5 0.9 185 13.1 0.2
Retail (3) 73 17.3 -5.7 7 45.1 -10.8 5 61.4 3.6
Technology (15) 961 6.6 2.8 226 9.6 3.7 175 10.9 5.8
Telecom (4) 340 -10.1 -1.6 101 -16.1 -7.2 -7 PL Loss
Utilities (7) 652 4.7 5.2 222 18.2 9.3 113 36.6 31.7
Others (19) 267 16.9 8.2 47 17.7 0.5 25 11.0 -5.2
MOSL (204) 12,939 14.2 8.9 2,767 10.6 10.1 1,182 11.2 7.8
MOSL Excl. OMCs (201) 10,415 12.7 8.5 2,643 11.7 9.7 1,103 11.5 13.0
Sensex (30) 5,707 11.2 9.6 1,604 12.4 11.9 712 12.6 17.1
Nifty (50) 9,631 13.5 8.6 2,089 10.8 11.1 945 14.4 8.7
Quarter-wise sales growth (% YoY) Quarter-wise net profit growth (% YoY)
15.2% 11.8%
14.2% 11.4% 11.2%
11.9%
11.0%
-6.9%
Jun-17 Sep-17 Dec-17 Mar-18E Jun-17 Sep-17 Dec-17 Mar-18E
Sectoral sales growth - quarter ended Mar-18 (%) Sectoral net profit growth - quarter ended Mar-18 (%)
22 21 61
19 17
16 15 14 37 31
10 10 10 8 8 7 6
22 19
11 11 11 11 10
5
-1 -2 -4
-13
-45
-10 PL
MOSL Univ
Utilities
Metals
Health Care
Telecom
Auto
Consumer
Logistics
Technology
Cement
Cap Goods
Media
Retail
Infra
Oil & Gas
Financials
MOSL Univ
Utilities
Metals
Health Care
Telecom
Auto
Logistics
Cement
Consumer
Cap Goods
Media
Technology
Oil & Gas
Retail
Infra
Financials
For Banks: Sales = Net Interest Income, EBITDA = Operating Profits

For Life Insurance: Sales = Net Premium, EBITDA = Operating Profits
April 2018 51
Annual performance - MOSL universe (INR Billion)

Sector Sales (INR B) Chg. YoY (%) EBIDTA (INR B) Chg. YoY (%) PAT (INR B) Chg. YoY (%)
FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
Auto (17) 6,912 7,923 8,644 14.3 14.6 9.1 937 1,213 1,370 11.6 29.5 13.0 407 591 692 18.7 45.1 17.1
Cap. Goods (17) 2,418 2,756 3,053 9.9 14.0 10.8 255 311 351 21.1 22.3 12.8 151 182 215 18.1 20.3 18.3
Cement (13) 1,130 1,326 1,522 -5.8 17.3 14.8 206 276 338 -11.2 33.8 22.3 92 150 195 -10.2 62.8 30.0
Consumer (18) 1,763 2,046 2,358 6.3 16.1 15.2 416 490 572 9.0 17.7 16.7 287 338 397 10.0 17.9 17.4
Financials (38) 3,495 4,249 4,984 11.8 21.6 17.3 2,998 3,657 4,328 7.8 22.0 18.4 699 1,220 1,772 4.8 74.5 45.2
Pvt Bks (13) 1,207 1,470 1,784 14.8 21.8 21.3 1,048 1,290 1,589 10.3 23.1 23.2 456 631 852 12.4 38.3 35.1
PSU Bks (7) 1,445 1,764 1,971 3.5 22.1 11.7 1,146 1,403 1,562 -0.6 22.4 11.3 -34 251 504 -175.6 -841 101.3
Life Ins. (1) 238 294 366 23.5 23.3 24.5 298 360 449 9.1 20.8 24.4 9 10 13 2.8 14.2 25.8
NBFC (17) 605 721 863 24.3 19.1 19.8 506 603 728 25.2 19.3 20.8 268 328 402 28.9 22.6 22.6
Healthcare (22) 1,624 1,876 2,164 0.6 15.5 15.4 328 418 508 -9.1 27.4 21.5 187 251 316 -19.3 34.4 25.5
Infra. (4) 149 170 192 9.0 13.9 13.3 47 52 53 4.2 9.5 2.4 14 15 15 32.6 4.2 -0.8
Logistics (3) 136 155 178 9.9 14.4 14.9 19 23 27 -4.1 22.3 20.9 13 16 19 8.5 22.0 14.6
Media (13) 289 329 372 5.4 13.9 13.1 84 103 121 7.0 23.4 17.7 35 51 65 6.0 44.2 26.5
Metals (10) 5,407 5,881 5,500 20.3 8.8 -6.5 1,068 1,295 1,308 26.5 21.2 1.1 375 534 574 64.7 42.3 7.4
Oil & Gas (14) 16,098 18,577 19,872 20.8 15.4 7.0 2,115 2,326 2,540 23.4 10.0 9.2 1,047 1,134 1,289 5.5 8.3 13.7
Excl. OMCs (11) 9,523 11,320 11,941 21.2 18.9 5.5 1,641 1,888 2,033 29.6 15.0 7.7 788 914 1,022 8.0 15.9 11.8
Retail (3) 291 353 425 21.0 21.3 20.6 30 38 47 40.4 24.8 22.8 19 24 31 48.6 27.2 26.0
Tech.(15) 3,707 4,127 4,528 4.3 11.3 9.7 851 952 1,039 3.5 11.9 9.2 679 712 790 5.4 4.9 11.0
Telecom (4) 1,438 1,435 1,600 -11.3 -0.2 11.5 444 442 529 -17.6 -0.6 19.8 -7 -17 14 PL Loss LP
Utilities (7) 2,609 2,907 3,137 6.8 11.4 7.9 828 1,041 1,171 12.9 25.8 12.4 362 466 517 11.4 28.7 10.9
Others (25) 1,391 1,688 1,964 12.8 21.3 16.3 262 328 390 18.5 25.0 19.0 132 177 213 18.6 34.2 20.5
MOSL (223) 48856 55796 60495 12.9 14.2 8.4 10888 12964 14693 10.6 19.1 13.3 4494 5844 7112 7.7 30.0 21.7
Excl. OMCs (220) 42282 48539 52564 11.8 14.8 8.3 10414 12526 14186 10.8 20.3 13.3 4235 5624 6845 8.3 32.8 21.7
Sensex (30) 11586 13442 14092 11.8 16.0 4.8 3132 3773 4222 10.5 20.5 11.9 1403 1809 2194 10.9 28.9 21.3
Nifty (50) 17219 19651 20804 12.3 14.1 5.9 3919 4669 5237 9.9 19.1 12.2 1804 2277 2743 10.9 26.2 20.5
For Banks: Sales = Net Interest Income, EBIDTA = Operating Profits; Note: Sensex & Nifty Numbers are Free Float
Valuations - MOSL universe

PE (x) EV / EBIDTA (x) P/BV (x) RoE (%) Div Yld (%) EARN. CAGR
Sector FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY17 (FY17-FY20)
Auto (17) 25.2 17.4 14.8 10.0 7.9 6.7 4.5 3.7 3.1 17.7 21.6 21.2 1.0 26.4
Capital Goods (17) 31.6 26.3 22.2 20.0 16.5 14.4 3.5 3.2 3.0 11.1 12.3 13.3 1.2 18.9
Cement (13) 41.8 25.7 19.8 19.0 14.2 11.4 3.3 3.0 2.7 7.8 11.5 13.5 0.6 23.9
Consumer (18) 45.7 38.8 33.0 30.3 26.0 22.1 12.4 11.2 10.3 27.1 28.9 31.1 1.4 15.0
Financials (38) 35.5 20.4 14.0 N.M N.M N.M 2.3 2.1 1.9 6.6 10.5 13.6 1.0 38.5
Private Banks (13) 28.1 20.3 15.0 N.M N.M N.M 2.9 2.6 2.3 10.5 13.0 15.4 0.9 28.0
PSU Banks (7) -105.4 14.2 7.1 N.M N.M N.M 0.8 0.8 0.7 -0.8 5.5 10.1 0.9 124.2
Life Insurance (1) 108.1 94.7 75.2 N.M N.M N.M 22.1 19.3 16.4 20.4 20.3 21.8 0.0 13.9
NBFC (17) 27.9 22.8 18.6 N.M N.M N.M 4.0 3.5 3.0 14.4 15.2 16.4 1.4 24.7
Healthcare (22) 28.9 21.5 17.1 16.2 12.8 10.2 3.6 3.2 2.7 12.3 14.7 16.0 0.5 10.8
Infrastructure (4) 17.2 16.5 16.7 7.6 7.8 8.2 2.2 2.0 1.8 12.9 12.0 10.7 1.0 11.1
Logistics (3) 27.1 22.2 19.4 17.9 14.7 11.9 2.9 2.7 2.5 10.9 12.3 13.1 1.7 14.9
Media (13) 37.1 25.7 20.3 15.6 12.0 9.8 5.3 4.6 3.9 14.3 17.8 19.4 0.6 24.6
Metals (10) 14.4 10.1 9.4 6.3 5.1 4.8 1.7 1.5 1.3 11.5 14.6 14.2 4.0 36.1
Oil & Gas (14) 12.2 11.3 9.9 7.2 6.1 5.4 1.6 1.5 1.3 13.2 13.0 13.4 3.0 9.1
Excl. OMCs (11) 13.3 11.5 10.3 7.7 6.2 5.5 1.6 1.4 1.3 11.9 12.6 12.8 2.3 11.9
Retail (3) 57.5 45.2 35.9 36.2 28.6 23.1 11.0 10.0 9.2 19.2 22.2 25.6 0.7 33.5
Technology (15) 18.7 17.9 16.1 13.2 12.1 10.8 4.7 4.1 3.7 25.2 23.2 23.0 2.0 7.1
Telecom (4) -405 -155 197.4 9.4 9.5 7.8 2.4 2.6 2.6 -0.6 -1.7 1.3 1.4 -42.1
Utilities (7) 13.7 10.6 9.6 9.6 7.9 7.1 2.0 1.8 1.7 14.6 17.2 17.7 4.1 16.7
Others (25) 31.3 23.3 19.3 15.0 12.2 10.0 4.6 4.0 3.5 14.7 17.1 18.2 1.2 24.2
MOSL (223) 24.0 18.5 15.2 N.M N.M N.M 2.9 2.6 2.4 12.1 14.3 15.6 1.7 19.4
MOSL Excl. OMCs (220) 25.0 18.8 15.4 N.M N.M N.M 3.0 2.7 2.4 11.9 14.2 15.6 1.6 20.5
Sensex (30) 23.5 18.2 15.0 N.M N.M N.M 3.0 2.7 2.4 12.7 14.6 15.9 1.4 20.1
Nifty (50) 22.2 17.8 14.7 N.M N.M N.M 3.0 2.7 2.4 13.3 15.0 16.1 1.5 19.0
N.M. : Not Meaningful.
April 2018 52
Ready reckoner: Quarterly performance

Sector CMP Sales (INR m) EBITDA (INR m) PAT (INR m)
Var Var Var Var Var Var
(INR) Rating Mar-18 Mar-18 Mar-18
% YoY % QoQ % YoY % QoQ % YoY % QoQ
Automobiles
Amara Raja Batt. 811 Buy 15,109 12.4 -2.7 2,327 26.2 -3.7 1,212 22.2 -9.9
Ashok Leyland 148 Buy 86,412 30.6 21.5 11,329 55.2 43.7 6,963 62.7 54.8
Bajaj Auto 2,792 Buy 66,617 36.0 4.6 12,736 40.6 3.4 9,784 22.0 2.7
Bharat Forge 717 Buy 14,328 27.3 3.0 4,327 35.2 3.9 2,371 31.7 3.9
Bosch 19,116 Neutral 29,916 16.2 -2.6 7,310 3.9 64.0 4,643 5.4 66.3
CEAT 1,599 Buy 16,484 12.0 4.7 1,813 36.9 -3.0 964 20.9 15.8
Eicher Motors 28,052 Buy 24,942 32.1 9.9 8,274 41.5 17.0 7,300 58.9 40.2
Endurance Tech. 1,263 Buy 16,723 21.2 5.8 2,309 21.6 3.6 1,002 20.0 4.7
Escorts 884 Sell 14,487 41.7 20.2 1,681 126.0 15.9 1,089 126.0 18.5
Exide Inds. 233 Buy 23,818 20.8 4.6 3,118 21.0 10.3 1,747 6.0 13.2
Hero Motocorp 3,640 Neutral 85,736 24.0 17.4 14,336 38.3 23.8 9,860 37.4 22.4
Mahindra CIE 221 Buy 5,754 24.0 2.5 647 50.1 11.0 279 67.5 53.7
Mahindra & Mahindra 769 Buy 131,573 24.0 14.5 17,631 42.6 4.2 10,015 24.5 -1.3
Maruti Suzuki 9,024 Buy 208,623 13.8 8.2 33,291 24.3 9.6 23,007 27.9 27.9
Motherson Sumi 333 Buy 161,653 43.3 12.3 14,690 18.4 16.6 5,182 -3.7 41.8
Tata Motors 343 Buy 892,009 15.5 20.3 130,740 21.0 53.0 48,123 11.3 321.8
TVS Motor 649 Neutral 39,994 40.6 8.5 3,245 100.9 13.2 1,747 37.8 13.2
Sector Aggregate 1,834,182 20.7 15.2 269,803 26.8 30.3 135,290 21.8 63.2
Capital Goods
ABB 1,283 Sell 25,780 18.9 -7.2 2,480 44.6 -15.6 1,380 56.1 -19.5
Bharat Electronics 147 Buy 45,228 13.4 80.0 11,837 20.8 165.9 8,949 13.0 195.5
BHEL 85 Sell 106,712 10.1 61.0 12,290 88.8 316.0 8,102 275.9 428.9
Blue Star 795 Neutral 14,977 8.9 52.3 1,069 41.4 99.8 602 61.8 219.8
CG Consumer Elect. 231 Buy 11,650 8.3 24.2 1,608 16.1 38.1 1,043 17.9 50.1
CG Power & Indl. 80 Neutral 14,095 9.7 19.5 1,058 30.0 21.4 428 -12.5 -17.3
Cummins India 740 Buy 12,227 3.2 -9.7 1,877 10.4 -4.6 1,678 5.9 -2.5
Engineers India 164 Buy 5,221 17.9 10.3 1,069 -25.9 -20.7 890 34.7 -18.0
GE T&D India 400 Neutral 13,275 11.0 -7.7 1,599 45.7 119.7 1,026 122.4 96.8
Havells India 509 Buy 24,789 45.0 26.1 3,100 35.0 18.2 2,056 19.9 18.6
Larsen & Toubro 1,330 Buy 416,408 13.7 44.9 51,419 18.6 63.5 27,537 -16.7 83.1
Siemens 1,124 Neutral 37,378 27.6 53.9 4,045 45.2 48.5 2,869 60.2 50.6
Thermax 1,136 Buy 18,412 23.5 64.8 2,220 28.2 132.6 1,598 159.8 172.8
Voltas 648 Neutral 23,560 15.8 71.4 2,926 31.9 146.7 2,138 6.7 112.9
Sector Aggregate 769,712 14.6 42.7 98,598 27.1 76.4 60,296 10.5 92.8
Cement
ACC 1,551 Neutral 34,575 11.5 1.2 3,359 -1.7 1.4 2,144 1.4 18.5
Ambuja Cements 241 Neutral 28,601 12.9 6.7 5,172 41.7 1.9 2,947 19.5 -0.2
Birla Corporation 764 Buy 15,198 5.7 9.4 1,600 -31.9 15.4 -38 PL Loss
Dalmia Bharat 2,867 Buy 25,386 16.2 21.4 5,118 -7.2 12.6 1,683 -3.1 73.3
Grasim Industries 1,086 Neutral 28,355 -1.4 -36.0 8,694 65.5 -0.5 5,023 59.2 7.4
India Cements 153 Neutral 13,784 2.6 13.6 1,770 -6.8 5.8 238 -30.4 56.5
Ramco Cements 756 Buy 11,897 17.0 12.9 2,622 7.9 15.2 1,390 3.3 26.0
Sanghi Inds. 122 Buy 2,974 20.6 6.4 714 68.7 15.5 400 52.4 24.4
Shree Cement 16,623 Buy 25,950 9.0 13.0 6,033 18.0 14.0 3,292 8.1 12.3
Ultratech Cement 3,949 Buy 87,300 32.4 15.0 14,396 12.6 13.4 4,892 -29.9 40.2
Sector Aggregate 274,020 15.6 3.7 49,479 15.5 8.5 21,971 -2.1 20.8
Consumer
Asian Paints 1,153 Neutral 45,098 14.1 5.9 7,840 10.1 -12.0 5,278 10.0 -6.9
Britannia 5,093 Buy 25,799 14.9 0.8 3,983 29.3 2.3 2,703 28.3 2.6
Colgate 1,084 Buy 11,439 10.3 10.7 2,834 16.0 0.3 1,673 17.4 -1.9
Dabur 337 Buy 20,591 7.5 4.7 4,426 6.0 9.7 3,611 8.2 8.7
Emami 1,099 Buy 6,291 8.9 -16.9 1,886 5.9 -28.7 1,407 -3.4 -32.3
April 2018 53

Future Consumer 55 Buy 7,737 45.0 -1.3 190 633.1 15.3 58 LP LP
Godrej Consumer 1,106 Neutral 25,414 6.8 -2.4 6,004 10.9 4.9 4,141 8.2 -4.2
GSK Consumer 6,000 Neutral 11,819 7.3 14.2 2,464 13.5 20.8 1,890 7.5 15.5
Hind. Unilever 1,348 Buy 89,864 9.4 4.6 19,090 15.6 13.6 13,033 16.6 8.8
ITC 258 Neutral 111,528 0.2 12.1 40,707 5.0 4.3 28,545 6.9 1.2
Jyothy Labs 389 Neutral 5,097 14.4 18.2 791 30.4 14.1 543 -50.0 56.4
Marico 325 Neutral 14,612 11.1 -10.0 2,772 9.8 -8.2 1,807 5.8 -19.0
Nestle 8,361 Neutral 27,728 12.0 7.1 5,862 14.7 -7.4 3,680 17.7 -13.1
P&G Hygiene 9,465 Neutral 6,427 12.0 -8.7 1,825 18.7 -13.2 1,156 16.0 -11.9
Page Industries 22,288 Buy 5,974 19.7 -3.8 1,250 28.3 -3.0 786 17.7 -5.7
Pidilite Inds. 963 Buy 14,122 9.0 -8.5 2,762 7.1 -25.4 1,891 22.1 -20.2
United Breweries 977 Buy 13,742 23.5 14.8 1,796 77.6 17.7 693 930.3 46.4
United Spirits 3,250 Neutral 20,138 -0.6 -11.0 2,708 2.2 -0.5 1,267 13.3 -14.0
Sector Aggregate 463,419 8.2 4.1 109,191 10.9 1.6 74,164 11.0 -0.8
Healthcare
Alembic Pharma 542 Neutral 8,199 11.3 -2.4 1,822 36.5 -2.9 1,134 21.9 -13.2
Alkem Lab 1,910 Buy 14,447 15.4 -17.0 2,719 82.2 -24.4 1,790 30.7 -17.3
Ajanta Pharma 1,402 Buy 4,992 4.7 -15.0 1,412 -17.6 -28.5 1,011 -17.1 -31.5
Aurobindo Pharma 593 Buy 42,395 16.4 -2.2 9,570 24.1 -6.7 6,039 8.6 -8.0
Biocon 607 Neutral 10,319 11.6 -2.5 2,147 18.0 -3.2 875 -39.0 -4.8
Cadila Health 394 Buy 30,715 23.9 -5.8 7,297 57.4 -13.2 4,954 28.5 -8.8
Cipla 571 Neutral 39,031 9.0 -0.3 7,845 55.0 -4.2 4,330 113.1 -7.4
Divis Labs 1,107 Neutral 10,222 -3.8 -1.5 3,399 -5.2 4.2 2,643 1.9 17.6
Dr Reddy’ s Labs 2,129 Neutral 37,506 5.5 -1.5 7,585 30.0 -1.1 3,736 19.5 -12.6
Fortis Health 130 Buy 12,242 9.0 9.2 835 5.7 61.8 406 LP LP
Glenmark Pharma 550 Neutral 22,236 -8.3 2.4 3,744 -8.9 28.9 2,100 14.3 100.5
Granules India 108 Buy 4,142 14.0 0.8 760 -3.3 2.6 391 -14.4 11.7
GSK Pharma 2,152 Neutral 7,420 -2.8 5.4 1,510 29.6 6.5 960 10.5 7.0
IPCA Labs. 677 Buy 7,718 15.9 -10.2 1,559 130.4 -3.3 883 98.8 -16.4
Jubilant Life 847 Buy 21,257 29.5 2.8 4,464 46.4 7.1 2,211 48.4 4.0
Laurus Labs 514 Buy 5,383 13.7 12.4 1,130 -4.8 29.4 528 -29.0 51.3
Lupin 789 Buy 39,826 -6.4 0.2 7,515 -32.0 9.2 3,330 -45.1 29.2
Sanofi India 5,147 Buy 6,396 15.7 -4.6 1,384 36.4 3.0 863 43.8 13.5
Shilpa Medicare 471 Buy 2,055 -8.1 10.8 390 -33.5 43.7 263 -37.7 60.7
Strides Shasun 704 Buy 7,850 -11.6 4.8 1,374 -12.5 11.8 598 -40.7 28.4
Sun Pharma 510 Buy 65,821 -3.6 -0.2 14,432 16.8 3.2 8,542 -30.2 -2.8
Torrent Pharma 1,288 Neutral 17,385 25.9 17.7 4,053 37.4 12.9 1,816 -11.8 -24.0
Sector Aggregate 417,556 6.3 -0.7 86,946 16.7 0.0 49,402 -1.2 -0.9
Infrastructure
Ashoka Buildcon 265 Buy 7,346 20.4 11.5 1,017 59.8 27.8 619 -5.3 19.0
IRB Infra 242 Neutral 16,416 0.9 26.6 8,338 1.5 23.7 2,718 31.2 8.1
KNR Constructions 285 Buy 4,933 2.3 13.9 979 35.6 -0.5 450 -14.1 -31.4
Sadbhav Engineering 396 Buy 12,441 20.5 33.1 1,353 23.5 28.1 880 28.9 42.3
Logistics
Allcargo Logistics 152 Buy 19,878 45.9 34.3 994 -5.9 6.5 419 -26.9 20.4
Concor 1,260 Neutral 15,471 -0.7 6.4 3,297 -33.4 11.0 2,115 -49.9 13.3
Gateway Distriparks 185 Buy 3,078 0.0 6.0 575 9.9 1.0 204 6.3 19.2
Sector Aggregate 38,427 19.0 19.2 4,865 -25.5 8.8 2,737 -45.1 14.8
Media
D B Corp 313 Buy 5,754 11.3 -3.9 1,193 6.3 -14.5 691 7.6 -11.6
Dish TV 72 Buy 7,678 8.4 3.7 2,254 18.3 12.4 -81 Loss Loss
Ent.Network 699 Buy 1,618 -2.2 9.0 359 2.1 0.8 135 -2.1 3.4
April 2018 54

HT Media 86 Neutral 5,894 0.7 -5.7 908 24.1 -32.6 415 62.4 -55.5
Jagran Prakashan 172 Buy 5,775 2.8 -3.4 1,318 -8.5 -19.1 726 -10.5 -14.3
Music Broadcast 397 Buy 762 14.6 0.1 254 53.0 8.9 122 170.4 2.4
PVR 1,248 Buy 5,839 21.0 4.8 777 66.2 -22.6 58 LP -79.8
Prime Focus 90 Buy 7,451 14.0 22.2 1,919 7.2 50.7 633 60.1 LP
Sun TV 894 Buy 6,947 19.3 1.7 5,009 27.2 1.8 2,898 22.8 8.5
Zee Entertainment 582 Buy 16,462 7.7 -10.4 4,315 -8.0 -27.4 1,680 -58.1 -47.9
Sector Aggregate 64,181 9.7 -0.9 18,305 10.3 -9.0 7,276 -13.0 -18.2
Metals
Hindalco 208 Buy 310,632 11.1 0.4 35,917 3.0 2.0 10,650 45.8 -17.8
Hindustan Zinc 310 Neutral 59,657 -4.7 0.7 34,136 -8.9 5.2 25,775 -15.7 15.6
JSPL 230 Buy 78,926 21.7 11.1 19,535 25.9 21.6 -2,131 Loss Loss
JSW Steel 302 Buy 201,404 20.9 12.8 43,341 36.9 12.5 17,204 69.6 -6.1
Nalco 68 Neutral 25,759 1.0 7.8 4,718 10.4 1.1 2,876 6.3 4.4
NMDC 119 Buy 35,055 22.1 42.0 20,446 43.0 53.6 13,767 49.5 52.2
Rain Industries 384 Buy 36,237 46.8 15.2 7,742 75.4 12.7 3,673 190.9 8.9
SAIL 75 Sell 163,020 28.5 6.4 21,735 LP 50.9 6,255 LP 848.7
Tata Steel 580 Neutral 322,434 -4.9 -3.6 62,251 -11.4 9.3 23,079 -31.0 -4.2
Vedanta 284 Buy 243,595 8.2 0.0 72,488 -1.4 7.2 28,406 86.3 28.5
Oil & Gas
Aegis Logistics 263 Buy 16,304 28.6 13.1 765 47.3 6.6 600 101.5 12.0
BPCL 426 Buy 616,099 8.0 1.6 26,270 14.2 65.0 16,542 -10.2 -22.8
GAIL 329 Sell 147,458 9.9 2.3 21,105 38.4 7.1 11,959 14.1 -5.3
Gujarat Gas 844 Buy 17,967 28.3 14.3 2,138 46.1 6.9 713 115.3 18.9
Gujarat State Petronet 185 Neutral 3,611 47.6 3.1 3,077 52.8 3.6 2,031 60.0 11.9
HPCL 353 Buy 617,314 19.8 7.4 22,394 -20.6 32.7 14,218 -21.8 -27.1
IOC 174 Buy 1,290,638 28.6 16.6 75,004 -10.4 7.7 48,345 29.9 -38.7
Indraprastha Gas 278 Buy 12,226 22.0 3.3 2,764 14.1 5.1 1,726 12.5 4.0
Mahanagar Gas 1,012 Buy 6,601 25.7 13.5 1,998 22.5 -0.5 1,255 26.1 1.2
MRPL 112 Neutral 140,458 5.3 -0.4 7,495 -51.8 -57.2 3,457 -60.3 -64.4
Oil India 221 Buy 29,986 23.1 5.1 10,539 36.0 -13.9 6,029 -48.5 -14.5
ONGC 178 Buy 239,846 10.5 4.3 131,117 18.5 4.7 56,604 30.4 12.9
Petronet LNG 232 Buy 66,349 4.2 -14.5 8,236 33.6 -2.8 5,430 15.3 2.7
Reliance Inds. 899 Buy 1,128,503 33.0 13.1 183,547 50.1 4.4 95,687 18.8 1.3
Oil & Gas Sector Aggregate 4,333,359 21.9 9.5 496,451 18.0 5.2 264,595 11.3 -13.2
Oil & Gas Excl. OMCs 1,809,309 23.5 8.3 372,782 30.5 0.9 185,490 13.1 0.2
Retail
Jubilant Foodworks 2,330 Neutral 7,524 22.8 -5.4 1,304 115.5 -4.7 617 313.4 -6.5
PC Jeweller 313 Buy 24,818 15.0 -6.2 2,456 38.9 -8.7 1,642 49.2 0.9
Titan Company 933 Buy 40,384 17.7 -5.5 3,631 33.4 -14.0 3,033 49.5 7.6
Sector Aggregate 72,726 17.3 -5.7 7,390 45.1 -10.8 5,292 61.4 3.6
Technology
Cyient 680 Buy 10,644 13.1 8.2 1,455 16.5 1.7 1,078 37.3 -0.7
HCL Technologies 968 Neutral 132,016 9.5 3.1 30,547 15.3 3.1 23,477 15.9 7.0
Hexaware Tech. 416 Neutral 10,414 8.4 3.6 1,662 2.4 3.9 1,316 15.5 8.6
Infosys 1,140 Buy 181,318 5.9 1.9 49,266 5.8 2.3 38,097 5.7 3.0
KPIT Tech. 223 Neutral 9,328 8.7 2.2 1,083 24.4 9.5 730 35.9 18.0
L&T Infotech 1,418 Buy 19,648 17.1 4.3 3,353 5.1 4.3 3,373 32.4 19.2
Mindtree 801 Buy 14,385 9.1 4.4 2,293 22.7 10.6 1,665 71.3 17.7
MphasiS 855 Neutral 17,412 15.6 4.9 2,959 24.1 7.9 2,492 28.8 15.9
NIIT Tech. 883 Neutral 7,738 7.8 2.3 1,387 10.1 7.0 818 10.7 8.0
Persistent Systems 677 Buy 7,491 3.0 -5.4 951 -27.0 -30.9 704 -16.4 -23.2
April 2018 55

Tata Elxsi 1,005 Buy 3,717 14.0 7.6 929 22.6 -0.6 607 36.3 -3.4
TCS 2,908 Neutral 318,372 7.4 3.0 86,348 6.2 4.2 68,590 3.8 5.0
Tech Mahindra 617 Buy 80,159 7.0 3.1 13,879 54.4 9.7 9,575 62.9 1.5
Wipro 284 Neutral 139,774 -0.1 2.3 28,913 3.8 2.9 21,612 11.7 11.6
Zensar Tech 901 Buy 8,143 9.6 2.6 1,096 87.2 3.9 688 562.9 19.8
Telecom
Bharti Airtel 402 Buy 200,440 -8.6 -1.4 68,918 -12.3 -7.7 1,637 -79.9 -69.1
Bharti Infratel 338 Neutral 35,990 2.2 -1.5 15,703 -0.1 -1.7 6,696 12.2 14.4
Idea Cellular 77 Buy 62,383 -23.2 -4.2 10,377 -51.0 -15.2 -15,760 Loss Loss
Tata Comm 652 Buy 41,594 -3.1 1.1 6,195 23.3 1.1 64 -89.6 LP
Sector Aggregate 340,407 -10.1 -1.6 101,193 -16.1 -7.2 -7,362 PL Loss
Utilities
CESC 1,005 Buy 13,160 -16.3 -22.9 4,963 143.3 58.0 3,033 2.8 96.9
Coal India 278 Buy 250,505 8.1 15.7 67,597 38.7 22.0 51,367 89.0 70.9
JSW Energy 79 Sell 18,803 1.0 -5.7 5,235 -10.8 -10.6 625 158.0 33.3
NHPC 29 Buy 20,090 47.5 34.1 9,036 305.1 15.2 1,720 2.1 -75.0
NTPC 170 Buy 189,313 -7.3 -8.6 61,303 5.2 17.5 27,439 3.1 28.6
Power Grid Corp. 198 Buy 63,101 -6.0 -15.9 57,831 1.4 -12.9 23,989 19.2 6.5
Tata Power 84 Sell 97,131 35.5 39.8 15,752 17.0 30.3 4,733 21.7 59.7
Others
Arvind 403 Neutral 28,296 14.8 4.6 2,476 7.4 -0.3 731 -30.3 -17.3
Avenue Supermarts 1,364 Sell 38,883 25.0 -5.0 3,110 49.7 -26.3 1,756 81.6 -30.3
BSE 788 Buy 1,500 -7.8 9.3 545 84.5 20.4 783 30.2 32.1
Castrol India 205 Buy 9,062 2.7 -6.6 2,590 -1.7 -15.5 1,736 -3.0 -11.7
Delta Corp 276 Buy 1,535 42.0 -5.3 702 103.9 2.1 440 286.4 -1.6
Indo Count Inds. 98 Neutral 4,975 -3.0 8.1 677 -24.9 -2.4 356 -27.0 -2.2
Info Edge 1,233 Buy 2,315 11.1 1.9 764 21.0 -3.1 675 105.3 -4.0
Interglobe Aviation 1,368 Neutral 59,938 23.6 -3.0 14,759 10.8 -23.7 3,689 -16.2 -51.6
Kaveri Seed 498 Buy 443 10.0 -37.2 -15 Loss PL -26 Loss PL
MCX 734 Buy 694 10.9 13.8 241 84.0 78.6 343 56.9 82.9
Manpasand Beverages 375 Buy 3,910 43.0 173.2 794 53.4 196.9 436 39.1 263.3
Navneet Education 148 Buy 3,074 46.5 76.2 550 96.9 169 390 131.4 228.7
Oberoi Realty 509 Buy 3,139 8.4 -11.9 1,697 12.0 -11.9 1,073 5.4 -10.7
P I Industries 903 Buy 6,392 5.6 18.9 1,553 1.1 48.3 1,156 -14.5 43.5
Quess Corp 1,006 Buy 18,203 46.9 14.9 1074 53.0 18 901 144.1 30.6
SRF 2,008 Buy 14,385 8.5 3.0 2,316 7.4 -8.3 1,018 -11.2 -22.4
S H Kelkar 260 Buy 3,075 14.0 8.6 569 54.0 -1.2 357 30.2 5.8
Team Lease Serv. 2,312 Buy 10,336 26.5 12.6 200 36.6 11.7 217 -43.5 17.8
UPL 764 Buy 58,964 10.4 40.6 12854 14.3 55 7145 -15.3 13.0
PL: Profit to Loss; LP: Loss to Profit; UR: Under Review
April 2018 56

Sector CMP NII (INR M) OP. PROFITS (INR M) NET PROFIT (INR M)
Var Var Var Var % Var % Var %
% YoY % QoQ % YoY QoQ YoY QoQ
Financials
Private Banks
Axis Bank 503 Buy 48,408 2.4 2.3 39,769 -9.1 3.2 7,018 -42.7 -3.4
DCB Bank 168 Neutral 2,524 14.6 0.8 1,261 9.4 2.9 572 8.2 0.3
Equitas Holdings 148 Buy 2,994 35.2 11.7 880 85.6 111.5 417 504.9 LP
Federal Bank 92 Buy 9,789 16.2 3.0 6,522 18.8 16.2 2,838 10.6 9.1
HDFC Bank 1,916 Buy 107,179 18.4 3.9 87,061 19.6 3.0 48,427 21.4 4.3
ICICI Bank 270 Buy 58,678 -1.6 2.8 85,485 67.2 69.0 13,772 -32.0 -16.5
IndusInd Bank 1,830 Buy 20,199 21.1 6.6 17,554 11.6 5.4 9,617 27.9 2.7
Kotak Mahindra Bank 1,103 Buy 24,821 14.8 3.7 19,946 17.2 9.6 11,696 19.8 11.1
RBL Bank 483 Buy 5,226 48.4 11.8 3,767 33.7 13.0 1,819 39.8 10.1
Yes Bank 313 Buy 20,647 25.9 9.3 21,123 24.9 5.5 11,174 22.2 3.8
Pvt Banking Sector Aggregate 300,465 11.9 4.1 283,366 24.7 18.5 107,351 3.9 1.9
PSU Banks
Bank of Baroda 145 Buy 46,494 39.7 5.8 36,111 30.5 -1.1 1,743 LP 55.9
Bank of India 108 Neutral 28,388 -18.2 13.5 16,659 -46.7 23.0 -8,045 Loss Loss
Canara Bank 269 Neutral 27,941 3.2 -24.1 20,221 -32.0 -28.6 -7,972 PL PL
Indian Bank 307 Buy 16,751 20.9 3.2 12,390 15.8 2.5 3,300 3.2 8.8
Punjab National Bank 96 Buy 40,506 10.0 1.6 31,700 -49.1 -25.3 -25,235 PL PL
State Bank 250 Buy 188,438 -10.5 0.8 140,893 -18.6 19.9 -16,518 Loss Loss
Union Bank 97 Neutral 25,276 5.9 -0.8 18,475 -13.4 11.7 -10,090 PL Loss
PSU Banking Sector Aggregate 373,793 -1.7 -0.1 276,449 -22.4 3.5 -62,818 Loss Loss
Life Insurance
HDFC Stand. Life 494 Buy 86,948 21.1 60.4 3,085 20.0 43.0 2,544 3.0 22.7
Life Insurance Sector Aggregate 86,948 21.1 60.4 3,085 20.0 43.0 2,544 3.0 22.7
NBFC
Bajaj Finance 1,832 Buy 22,995 36.8 -3.0 13,112 33.9 -7.9 6,420 42.9 -16.3
Capital First 643 Buy 5,582 49.0 6.0 3,420 45.8 12.9 1,005 39.8 15.3
Chola. Inv & Fin. 1,517 Buy 8,307 26.0 5.8 5,055 29.5 7.7 2,749 25.2 10.3
Dewan Housing 534 Buy 6,508 21.4 4.0 5,678 23.8 1.1 3,075 23.9 0.5
GRUH Finance 595 Neutral 2,159 16.4 21.8 1,879 16.5 23.4 1,276 15.6 55.4
HDFC 1,830 Buy 32,472 13.8 10.9 30,450 8.7 11.6 23,378 14.4 17.4
Indiabulls Housing 1,293 Buy 15,451 29.6 10.7 13,919 43.5 16.1 10,475 24.6 12.4
L&T Fin.Holdings 162 Buy 12,854 28.0 1.2 10,094 30.4 7.3 4,002 26.7 4.2
LIC Housing Fin 552 Neutral 9,657 -7.1 7.6 8,345 -6.8 3.7 5,159 -2.5 5.1
M & M Financial 473 Buy 13,195 18.7 23.2 8,691 19.8 32.6 4,490 91.8 62.1
MAS Financial 607 Buy 811 67.0 10.3 579 77.6 13.5 294 97.4 16.1
Muthoot Finance 417 Neutral 11,016 -4.2 4.5 8,026 -3.6 3.4 4,882 51.7 5.3
PNB Housing 1,273 Buy 4,375 31.5 6.5 4,162 35.0 6.8 2,330 52.9 7.1
Repco Home Fin 573 Buy 1,146 11.5 7.0 1,027 13.9 9.8 564 11.5 16.4
Shriram City Union 2,222 Buy 8,711 22.1 -4.9 5,014 16.0 -8.0 1,418 1080.3 -37.1
Shriram Transport Fin. 1,477 Buy 17,543 24.5 2.6 13,744 20.3 1.9 3,297 120.3 -33.5
NBFC Banking Sector Aggregate 172,782 20.0 5.9 133,194 18.6 7.0 74,815 29.8 6.2
Financials Sector Aggregate 933,988 8.0 6.1 696,095 -0.3 10.0 121,893 -3.7 -2.9
PL: Profit to Loss; LP: Loss to Profit; UR: Under Review
For Banks: Sales = Net Interest Income, EBITDA = Operating Profits
For Life Insurance: Sales = Net Premium, EBITDA = Operating Profits
April 2018 57
Ready reckoner: Full year valuations

Sector / Companies CMP RECO EPS (INR) PE (x) EV/EBIDTA (x) ROE (%)
(INR) FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
Automobiles
Amara Raja Batt. 811 Buy 28.3 34.0 40.0 28.7 23.9 20.3 14.6 12.0 10.1 17.3 18.0 18.3
Ashok Leyland 148 Buy 5.4 7.2 9.2 27.2 20.4 16.0 13.7 10.6 8.2 24.3 27.6 29.2
Bajaj Auto 2,792 Buy 147.9 167.8 197.2 18.9 16.6 14.2 13.5 12.0 9.8 23.9 24.6 26.0
Bharat Forge 717 Buy 20.0 26.4 34.8 35.9 27.2 20.6 18.5 15.1 12.1 20.9 23.3 25.4
Bosch 19,116 Neutral 459.1 582.9 694.4 41.6 32.8 27.5 23.2 19.6 16.5 15.2 17.5 18.7
CEAT 1,599 Buy 61.1 84.7 111.7 26.2 18.9 14.3 11.5 10.4 7.9 9.8 12.4 14.5
Endurance Tech. 1,263 Buy 27.9 38.2 51.0 45.3 33.0 24.8 20.0 15.9 12.6 20.8 23.8 26.4
Eicher Motors 28,052 Buy 814.4 1045.3 1337.1 34.4 26.8 21.0 26.4 20.8 16.3 36.3 35.5 34.1
Escorts 884 Sell 39.1 49.5 59.0 22.6 17.9 15.0 16.4 14.3 11.5 18.3 18.7 19.0
Exide Inds. 233 Buy 8.0 9.9 12.1 29.0 23.6 19.2 13.3 11.3 9.2 12.6 14.0 15.3
Hero Motocorp 3,640 Neutral 186.1 202.0 221.3 19.6 18.0 16.4 11.8 11.0 9.9 34.1 32.2 30.9
Mahindra & Mahindra 769 Buy 39.7 46.9 51.2 19.4 16.4 15.0 5.4 4.6 4.5 14.6 14.8 15.2
Mahindra CIE 221 Buy 9.6 12.1 15.1 23.0 18.2 14.6 11.2 9.7 7.8 10.4 11.6 12.8
Maruti Suzuki 9,024 Buy 275.1 349.0 457.0 32.8 25.9 19.7 19.0 15.6 11.7 19.7 21.8 24.2
Motherson Sumi 333 Buy 8.1 12.5 17.5 41.1 26.6 19.0 13.4 9.7 6.9 19.2 25.4 29.3
Tata Motors 343 Buy 25.5 56.6 58.7 13.4 6.1 5.8 3.5 2.8 2.6 13.5 24.0 19.9
TVS Motor 649 Neutral 14.1 22.4 32.4 45.9 28.9 20.1 25.9 17.4 12.4 25.3 32.0 35.2
Sector Aggregate 25.2 17.4 14.8 10.0 7.9 6.7 17.7 21.6 21.2
Capital Goods
ABB 1,283 Sell 19.8 30.1 35.0 64.7 42.6 36.7 36.2 23.5 20.1 11.6 15.4 15.8
Bharat Electronics 147 Buy 7.1 7.8 8.3 20.8 18.9 17.7 12.1 12.1 11.2 17.8 17.6 16.9
BHEL 85 Sell 3.2 3.6 4.3 27.1 23.7 19.8 13.2 11.7 10.0 3.6 4.0 4.7
Blue Star 795 Neutral 16.6 24.6 31.2 47.9 32.3 25.5 24.1 19.1 15.6 20.4 28.3 33.1
CG Consumer Elect. 231 Buy 5.1 6.5 7.7 45.4 35.7 30.2 28.9 22.9 19.9 50.2 49.9 48.5
CG Power & Indl. 80 Neutral 1.1 1.9 3.0 70.3 43.0 27.1 25.3 15.4 13.5 1.7 2.7 4.2
Cummins India 740 Buy 23.0 31.0 36.8 32.1 23.9 20.1 25.6 19.7 16.2 16.5 20.7 22.6
Engineers India 164 Buy 6.3 6.9 8.2 26.0 23.8 19.9 15.0 15.5 12.2 13.9 14.1 15.6
GE T&D India 400 Neutral 10.3 11.3 12.9 38.8 35.4 31.0 24.4 20.7 18.5 23.5 22.3 22.1
Havells India 509 Buy 11.1 13.7 17.0 45.7 37.2 30.0 28.9 23.3 18.7 18.9 20.5 22.2
K E C International 406 Neutral 16.2 18.9 24.3 25.1 21.5 16.7 11.6 9.7 7.3 21.7 21.1 22.3
Larsen & Toubro 1,330 Buy 48.8 57.2 68.6 27.2 23.2 19.4 19.0 15.7 14.0 13.0 13.9 15.1
Siemens 1,124 Neutral 19.8 30.4 34.6 56.9 37.0 32.5 32.4 23.4 20.3 9.1 12.9 13.4
Solar Inds. 1,072 Neutral 24.4 29.6 36.7 43.9 36.2 29.2 24.7 20.6 16.8 20.0 20.6 21.5
Thermax 1,136 Buy 28.0 35.1 43.5 40.5 32.3 26.1 25.5 18.7 14.7 11.9 13.6 15.0
Va Tech Wabag 494 Buy 33.3 35.2 38.6 14.8 14.0 12.8 7.7 6.8 6.1 17.1 16.0 15.6
Voltas 648 Neutral 18.0 21.3 24.3 36.0 30.4 26.7 24.9 21.7 18.6 16.9 17.6 17.6
Cement
ACC 1,551 Neutral 47.4 63.8 72.9 32.7 24.3 21.3 16.8 14.1 11.4 10.1 12.9 14.5
Ambuja Cements 241 Neutral 6.0 8.1 12.7 39.9 29.8 19.0 23.3 18.4 12.3 6.1 7.8 11.2
Birla Corporation 764 Buy 7.4 42.3 50.5 103.0 18.1 15.1 13.0 8.9 7.4 1.7 9.6 10.6
Dalmia Bharat 2,867 Buy 52.0 72.9 102.2 55.2 39.3 28.1 15.0 12.9 10.9 8.9 11.3 14.1
Grasim Industries 1,086 Neutral 47.6 97.9 111.8 22.8 11.1 9.7 17.9 11.2 9.9 6.9 12.9 13.0
India Cements 153 Neutral 2.9 6.6 9.4 53.0 23.1 16.3 10.3 8.5 7.2 1.7 3.9 5.3
JK Lakshmi Cem. 440 Buy 5.7 15.1 21.2 76.9 29.1 20.8 17.5 11.6 9.4 4.8 11.7 14.5
Orient Cement 143 Buy 1.3 3.6 8.3 106.2 40.3 17.3 15.4 12.4 8.7 2.8 7.1 14.9
Prism Cement 117 Buy 2.4 4.9 6.5 49.2 24.0 18.1 19.4 14.0 11.3 11.9 21.2 23.1
Ramco Cements 756 Buy 24.0 29.7 37.8 31.5 25.5 20.0 16.9 15.0 12.0 14.3 15.6 17.2
Sanghi Inds. 122 Buy 4.6 8.5 11.3 26.7 14.3 10.8 12.6 10.8 10.0 9.7 15.6 17.5
Shree Cement 16,623 Buy 365.7 473.5 679.2 45.5 35.1 24.5 22.1 17.9 13.5 15.4 17.3 20.8
Ultratech Cement 3,949 Buy 77.5 123.7 165.0 50.9 31.9 23.9 21.8 15.7 12.4 8.5 12.5 15.1
April 2018 58

Consumer
Asian Paints 1,153 Neutral 21.5 25.4 30.5 53.7 45.4 37.8 34.0 28.9 24.1 26.8 29.4 31.6
Britannia 5,093 Buy 84.2 105.1 131.5 60.5 48.5 38.7 40.6 33.3 26.5 33.9 35.8 40.1
Colgate 1,084 Buy 24.0 28.3 33.8 45.2 38.4 32.0 25.9 23.2 19.7 49.9 55.5 61.9
Dabur 337 Buy 7.6 9.0 10.5 44.5 37.3 32.1 34.5 29.5 25.3 25.4 26.7 28.6
Emami 1,099 Buy 25.0 31.0 36.9 43.9 35.5 29.8 33.2 27.1 23.2 30.1 32.6 36.2
Future Consumer 55 Buy -0.1 0.3 1.1 -546.5 182.0 48.3 193.8 76.2 34.5 -1.8 4.9 16.6
Godrej Consumer 1,106 Neutral 21.3 24.4 27.8 51.9 45.4 39.8 37.2 32.7 28.6 24.0 22.8 22.7
GSK Consumer 6,000 Neutral 161.0 183.8 215.7 37.3 32.7 27.8 26.2 21.8 18.2 20.7 21.6 23.0
Hind. Unilever 1,348 Buy 24.0 28.3 33.3 56.3 47.7 40.5 39.8 33.3 28.3 78.2 89.6 104.1
ITC 258 Neutral 9.0 10.2 11.4 28.9 25.4 22.6 19.1 16.8 14.9 22.8 23.8 24.8
Jyothy Labs 389 Neutral 8.5 10.9 13.6 46.0 35.6 28.7 27.9 22.9 19.2 14.3 18.5 21.8
Marico 325 Neutral 6.4 7.5 9.0 50.8 43.1 36.3 35.5 30.0 25.4 33.1 35.8 39.3
Nestle 8,361 Neutral 140.0 159.1 192.3 59.7 52.6 43.5 35.2 31.7 26.7 43.4 46.2 51.8
P&G Hygiene 9,465 Neutral 142.1 171.3 200.8 66.6 55.3 47.1 40.7 34.4 29.1 61.2 61.8 60.8
Page Industries 22,288 Buy 297.1 415.7 549.8 75.0 53.6 40.5 48.5 34.7 26.5 39.9 44.6 47.7
Pidilite Inds. 963 Buy 17.6 20.6 23.7 54.6 46.7 40.6 33.3 30.5 26.3 24.2 24.5 24.7
United Breweries 977 Buy 14.1 17.4 22.9 69.4 56.1 42.7 29.3 25.3 20.4 14.9 16.2 18.3
United Spirits 3,250 Neutral 32.6 56.9 78.5 99.6 57.1 41.4 48.8 34.2 25.9 17.2 22.3 22.4
Healthcare
Alembic Pharma 542 Neutral 24.8 25.6 30.5 21.9 21.2 17.8 14.5 13.4 11.2 22.5 19.8 20.1
Alkem Lab 1,910 Buy 65.4 89.5 110.6 29.2 21.3 17.3 19.3 15.1 12.2 16.4 19.5 20.6
Ajanta Pharma 1,402 Buy 54.0 65.8 81.4 26.0 21.3 17.2 18.3 15.3 12.2 27.0 26.2 25.9
Aurobindo Pharma 593 Buy 43.8 48.7 53.6 13.6 12.2 11.1 8.8 8.1 6.9 24.2 21.7 19.6
Biocon 607 Neutral 7.6 10.9 19.8 79.7 55.7 30.7 38.1 28.2 17.9 8.9 11.6 18.4
Cadila Health 394 Buy 16.0 20.1 23.3 24.6 19.6 16.9 15.2 12.8 11.0 21.6 22.8 22.0
Cipla 571 Neutral 21.6 26.2 32.0 26.4 21.8 17.8 15.2 13.4 11.1 12.4 13.3 14.1
Divis Labs 1,107 Neutral 32.9 44.0 52.7 33.7 25.2 21.0 23.1 17.0 14.0 16.0 20.0 21.3
Dr Reddy’ s Labs 2,129 Neutral 67.1 114.1 146.1 31.7 18.7 14.6 14.7 9.7 7.5 9.0 13.9 15.6
Fortis Health 130 Buy 1.5 2.8 7.3 88.5 47.1 17.8 17.5 10.8 6.7 1.2 2.2 5.6
Glenmark Pharma 550 Neutral 30.6 32.9 41.1 18.0 16.7 13.4 11.5 11.3 9.4 16.4 15.3 16.2
Granules India 108 Buy 6.3 7.9 11.0 17.1 13.6 9.8 10.5 7.7 5.9 13.2 13.9 17.4
GSK Pharma 2,152 Neutral 38.3 42.6 48.5 56.2 50.5 44.4 34.8 33.5 28.9 19.7 27.2 30.9
IPCA Labs. 677 Buy 21.4 29.2 37.3 31.6 23.1 18.1 17.8 13.6 10.9 10.5 13.0 14.7
Jubilant Life 847 Buy 47.8 62.6 72.5 17.7 13.5 11.7 10.7 8.5 7.2 19.7 21.4 20.4
Laurus Labs 514 Buy 19.0 29.1 35.7 27.0 17.7 14.4 14.6 11.0 9.3 14.1 18.3 18.8
Lupin 789 Buy 31.0 40.2 54.1 25.4 19.6 14.6 12.2 10.6 8.2 10.1 12.1 14.6
Sanofi India 5,147 Buy 141.7 161.8 186.9 36.3 31.8 27.5 20.8 17.0 14.4 16.1 16.8 17.5
Sun Pharma 510 Buy 13.2 21.5 27.7 38.7 23.7 18.4 20.6 14.2 10.9 8.5 13.2 15.3
Shilpa Medicare 471 Buy 13.3 24.3 30.6 35.4 19.4 15.4 23.9 17.2 13.5 11.0 17.4 18.3
Strides Shasun 704 Buy 14.1 40.8 55.7 49.9 17.3 12.6 18.1 11.0 8.8 4.6 12.1 14.5
Torrent Pharma 1,288 Neutral 48.0 61.3 78.5 26.8 21.0 16.4 15.9 11.3 9.4 17.6 19.9 22.3
Infrastructure
Ashoka Buildcon 265 Buy 2.1 7.0 8.3 128.0 37.9 32.1 8.7 8.2 7.9 2.2 6.9 7.5
IRB Infra 242 Neutral 25.4 24.6 21.3 9.5 9.8 11.4 5.7 6.5 7.9 15.5 13.4 10.5
KNR Constructions 285 Buy 16.9 14.0 18.2 16.9 20.4 15.7 9.3 10.3 7.5 23.6 16.2 17.8
Sadbhav Engineering 396 Buy 13.9 16.0 17.4 28.4 24.8 22.8 16.3 13.1 10.6 13.5 13.7 13.2
Logistics
Allcargo Logistics 152 Buy 8.2 11.4 13.2 18.5 13.4 11.5 8.5 6.5 5.2 10.8 13.7 14.4
Concor 1,260 Neutral 44.2 51.2 58.2 28.5 24.6 21.7 23.1 19.0 15.2 11.8 12.8 13.6
Gateway Distriparks 185 Buy 6.2 10.6 12.9 29.7 17.5 14.3 5.9 5.1 4.1 6.6 10.7 12.3
April 2018 59

Media
D B Corp 313 Buy 18.3 23.0 27.6 17.1 13.6 11.3 9.0 7.3 5.9 19.6 21.0 21.3
Den Networks 104 Neutral -2.9 0.1 4.0 -35.9 1458.3 25.8 8.0 5.7 3.8 -6.3 0.2 8.7
Dish TV 72 Buy -0.3 1.6 3.4 -209.6 45.0 21.5 17.3 7.4 5.6 -7.8 32.1 45.0
Ent.Network 699 Buy 7.2 15.3 28.7 97.5 45.6 24.4 29.7 18.1 11.6 3.9 7.9 13.4
Hindustan Media 232 Buy 25.9 28.8 32.4 9.0 8.0 7.1 2.5 1.8 0.9 15.1 14.6 14.3
HT Media 86 Neutral 11.8 12.1 12.7 7.3 7.2 6.8 0.7 -0.2 -1.3 11.5 10.6 10.1
Jagran Prakashan 172 Buy 10.1 13.1 16.0 17.1 13.1 10.8 8.1 6.7 5.3 14.9 18.5 19.5
Music Broadcast 397 Buy 8.3 13.5 17.8 47.5 29.3 22.3 21.2 15.4 11.5 8.3 12.2 14.0
PVR 1,248 Buy 22.1 37.3 51.5 56.4 33.4 24.2 16.9 12.9 10.2 10.2 15.3 18.0
Prime Focus 90 Buy 2.5 5.8 7.9 36.7 15.5 11.3 6.7 5.0 3.7 11.6 18.9 20.7
Siti Networks 16 Neutral -0.9 0.1 0.6 -17.7 125.9 24.6 8.0 6.2 5.2 -15.8 2.4 11.4
Sun TV 894 Buy 27.7 35.8 42.5 32.2 25.0 21.0 16.3 14.0 12.0 26.1 30.9 33.1
Zee Entertainment 582 Buy 13.0 17.6 21.0 44.8 33.1 27.7 26.4 20.8 17.3 17.4 20.2 20.4
Metals
Hindalco 208 Buy 19.2 25.9 26.9 10.8 8.0 7.7 6.2 5.5 5.2 13.8 16.2 14.5
Hindustan Zinc 310 Neutral 21.2 27.9 30.3 14.6 11.1 10.2 8.8 6.6 5.7 26.9 29.8 27.1
JSPL 230 Buy -12.7 7.7 12.2 -18.1 29.9 18.8 10.5 6.8 6.1 -4.0 2.4 3.7
JSW Steel 302 Buy 21.5 24.0 23.7 14.1 12.6 12.7 5.0 4.7 4.7 20.9 19.4 16.2
Nalco 68 Neutral -0.2 5.1 5.3 -392.5 13.3 13.0 6.8 6.3 6.2 -0.3 9.8 9.5
NMDC 119 Buy 13.6 14.0 14.7 8.7 8.5 8.1 5.4 5.1 4.9 18.2 17.2 16.5
Rain Industries 384 Buy 25.6 40.6 44.6 15.0 9.5 8.6 8.6 6.4 5.6 24.7 29.8 25.2
SAIL 75 Sell -0.9 4.3 6.5 -84.9 17.3 11.5 17.0 9.6 7.1 -1.0 4.8 6.9
Tata Steel 580 Neutral 58.2 69.4 61.4 9.9 8.4 9.4 3.0 3.1 4.2 16.0 16.2 12.7
Vedanta 284 Buy 22.8 33.4 38.9 12.5 8.5 7.3 5.7 4.1 3.4 14.1 19.8 20.8
Oil & Gas
Aegis Logistics 263 Buy 6.3 9.5 12.3 41.9 27.6 21.5 31.8 18.4 14.2 30.7 35.9 35.0
BPCL 426 Buy 40.0 41.2 46.5 10.7 10.3 9.2 9.0 8.2 7.4 24.1 21.6 21.1
GAIL 329 Sell 21.0 22.9 24.6 15.7 14.4 13.4 9.7 8.8 8.0 11.9 12.0 12.0
Gujarat Gas 844 Buy 21.6 34.7 44.3 39.1 24.3 19.1 15.4 12.2 10.2 16.8 23.0 24.2
Gujarat State Petronet 185 Neutral 12.7 13.3 13.9 14.6 13.9 13.3 8.9 7.7 7.2 15.0 14.0 13.2
HPCL 353 Buy 39.5 32.5 37.8 8.9 10.9 9.3 6.3 7.0 6.4 28.2 20.6 20.9
Indraprastha Gas 278 Buy 9.4 11.1 12.5 29.6 25.2 22.2 17.5 14.7 12.8 20.7 20.8 20.2
IOC 174 Buy 20.7 17.6 21.7 8.4 9.9 8.0 4.8 5.0 4.2 18.5 14.4 16.1
Mahanagar Gas 1,012 Buy 55.9 53.9 54.6 18.1 18.8 18.6 10.8 10.2 9.8 28.0 24.4 22.5
MRPL 112 Neutral 11.7 11.4 12.4 9.5 9.8 9.0 4.9 4.7 4.0 18.9 16.1 15.5
Oil India 221 Buy 18.3 27.2 28.1 12.1 8.1 7.9 6.7 6.0 5.6 7.4 10.5 10.3
ONGC 178 Buy 16.8 21.8 23.5 10.6 8.2 7.5 4.0 3.5 3.3 9.6 12.0 12.4
Petronet LNG 232 Buy 14.0 16.0 18.8 16.6 14.5 12.3 10.5 9.3 7.3 23.7 22.9 22.9
Reliance Inds. 899 Buy 61.1 67.7 78.0 14.7 13.3 11.5 10.8 7.7 6.7 13.0 12.8 13.0
Oil & Gas Sector Aggregate 12.2 11.3 9.9 7.2 6.1 5.4 13.2 13.0 13.4
Oil & Gas Ex OMCs 13.3 11.5 10.3 7.7 6.2 5.5 11.9 12.6 12.8
Retail
Jubilant Foodworks 2,330 Neutral 30.3 39.3 51.6 76.8 59.3 45.1 33.5 27.4 22.1 22.5 29.8 41.7
PC Jeweller 313 Buy 15.4 19.5 24.9 20.3 16.0 12.6 11.9 9.2 7.5 16.9 18.4 20.1
Titan Company 933 Buy 12.5 15.9 19.8 74.4 58.6 47.2 53.3 41.4 33.3 23.4 25.9 30.3
Technology
Cyient 680 Buy 37.0 38.1 42.9 18.4 17.8 15.8 12.5 10.9 9.6 17.8 16.7 17.1
HCL Technologies 968 Neutral 63.4 66.3 71.6 15.3 14.6 13.5 11.1 9.6 8.7 25.7 24.4 24.0
Hexaware Tech. 416 Neutral 16.6 18.7 21.0 25.1 22.2 19.8 16.2 16.4 14.1 26.9 26.1 25.6
Infosys 1,140 Buy 65.4 71.2 79.2 17.4 16.0 14.4 11.2 10.7 9.6 24.6 23.2 23.2
KPIT Tech. 223 Neutral 12.5 13.5 17.5 17.8 16.5 12.8 9.7 8.5 7.4 14.9 14.0 15.6
L&T Infotech 1,418 Buy 66.3 73.3 86.3 21.4 19.4 16.4 18.0 15.2 12.7 32.4 28.4 27.1
April 2018 60

Mindtree 801 Buy 33.4 41.7 48.8 24.0 19.2 16.4 17.4 14.2 11.8 20.3 24.4 24.9
MphasiS 855 Neutral 44.0 50.8 54.9 19.5 16.8 15.6 15.6 15.1 13.3 15.3 18.8 18.6
NIIT Tech. 883 Neutral 44.8 53.1 61.6 19.7 16.6 14.3 9.9 8.5 7.7 16.2 17.8 19.2
Persistent Systems 677 Buy 40.0 50.3 60.2 16.9 13.5 11.3 10.2 7.8 6.7 16.5 20.0 23.3
TCS 2,908 Neutral 131.8 147.1 161.3 22.1 19.8 18.0 15.8 14.8 13.4 30.7 32.8 31.3
Tata Elxsi 1,005 Buy 36.8 43.6 51.5 27.3 23.1 19.5 16.4 13.9 11.0 36.0 33.8 28.7
Tech Mahindra 617 Buy 39.8 42.3 49.3 15.5 14.6 12.5 13.2 10.0 8.4 20.9 20.1 20.2
Zensar Tech 901 Buy 51.9 63.1 82.6 17.4 14.3 10.9 9.9 7.5 5.7 15.0 16.2 18.5
Wipro 284 Neutral 17.9 18.8 21.1 15.8 15.1 13.4 10.6 9.9 8.7 17.2 17.0 16.9
Telecom
Bharti Airtel 402 Buy 3.6 1.8 5.5 111.1 219.3 73.0 8.6 8.6 7.1 2.1 1.1 3.2
Bharti Infratel 338 Neutral 13.8 15.3 16.8 24.4 22.1 20.1 8.7 9.3 8.4 16.9 19.3 21.6
Idea Cellular 77 Buy -10.9 -12.9 -10.5 -7.1 -6.0 -7.4 14.2 16.0 11.1 -18.4 -23.4 -24.2
Tata Comm 652 Buy 2.2 11.0 22.8 289.9 59.4 28.5 10.3 8.9 6.8 4.3 20.2 32.1
Sector Aggregate -405.1 -155.3 197.4 9.4 9.5 7.8 -0.6 -1.7 1.3
Utilities
CESC 1,005 Buy 86.5 95.2 103.1 11.6 10.6 9.7 7.0 6.7 6.2 10.4 10.4 10.3
Coal India 278 Buy 17.8 26.4 30.8 15.7 10.5 9.1 8.9 6.0 5.2 47.4 65.8 71.2
JSW Energy 79 Sell 3.8 3.6 4.0 20.9 22.1 20.0 9.1 9.3 9.1 5.9 5.5 6.0
NHPC 29 Buy 2.4 3.0 3.2 11.9 9.7 9.1 8.9 7.3 6.5 8.6 10.3 10.7
NTPC 170 Buy 13.0 15.2 16.6 13.1 11.2 10.2 11.3 9.2 8.0 10.6 11.6 11.8
Power Grid Corp. 198 Buy 16.9 20.7 21.9 11.7 9.6 9.1 8.7 7.7 7.2 16.6 17.7 16.5
Tata Power 84 Sell 4.9 7.3 7.9 17.3 11.6 10.7 11.7 10.3 9.6 10.8 14.5 14.0
Others
Arvind 403 Neutral 11.3 14.1 18.8 35.5 28.7 21.4 14.1 12.0 10.2 8.0 9.4 11.7
Avenue Supermarts 1,364 Sell 12.6 17.2 23.0 108.7 79.1 59.3 60.9 46.8 35.6 19.0 22.6 25.4
BSE 788 Buy 42.6 47.6 52.9 18.5 16.6 14.9 - 5.7 3.5 8.7 7.7 8.4
Castrol India 205 Buy 7.0 6.8 7.1 29.3 30.2 29.0 18.9 18.9 19.2 69.1 63.8 62.3
Coromandel International 538 Buy 24.1 29.0 30.3 22.3 18.5 17.7 13.6 12.1 10.8 22.5 23.4 21.1
Delta Corp 276 Buy 5.7 7.4 10.4 48.2 37.1 26.6 24.6 22.2 16.1 12.2 11.9 14.9
Indo Count Inds. 98 Neutral 7.4 9.8 11.5 13.3 10.0 8.5 6.6 5.9 5.0 15.7 17.2 16.8
Info Edge 1,233 Buy 23.4 26.3 33.4 52.8 46.9 36.9 43.9 40.2 30.5 13.7 14.0 15.9
Interglobe Aviation 1,368 Neutral 64.7 75.0 100.0 21.1 18.2 13.7 5.7 5.2 3.9 47.3 41.3 51.0
Kaveri Seed 498 Buy 34.2 40.6 47.4 14.6 12.3 10.5 11.7 10.5 8.7 23.4 27.1 27.4
MCX 734 Buy 21.3 32.0 36.9 34.5 22.9 19.9 37.9 24.2 16.6 8.1 12.0 12.2
Manpasand Beverages 375 Buy 8.8 13.9 18.7 42.8 27.0 20.1 21.1 14.2 10.6 7.2 12.3 15.0
Navneet Education 148 Buy 7.7 9.7 11.4 19.3 15.2 13.0 12.3 9.9 8.3 24.2 26.8 27.1
Oberoi Realty 509 Buy 12.5 49.8 46.5 40.9 10.2 10.9 25.7 7.4 7.7 7.2 25.0 19.5
P I Industries 903 Buy 29.9 38.1 44.2 30.2 23.7 20.4 21.0 16.7 14.0 23.0 24.3 23.3
Piramal Enterprises 2,497 Buy 83.1 116.4 147.9 30.0 21.5 16.9 13.9 10.5 8.7 8.9 10.2 11.6
Quess Corp 1,006 Buy 22.1 33.1 41.9 45.4 30.4 24.0 41.5 26.5 20.6 21.7 21.3 21.7
S H Kelkar 260 Buy 7.9 9.7 12.2 32.9 26.9 21.3 19.3 16.4 12.8 13.4 14.9 16.9
SRF 2,008 Buy 77.4 105.0 138.3 25.9 19.1 14.5 13.9 11.0 8.8 13.3 16.3 18.7
Tata Chemicals 717 Buy 33.7 44.0 50.3 21.3 16.3 14.3 8.2 7.6 6.7 11.3 11.5 12.3
Team Lease Serv. 2,312 Buy 43.3 59.6 88.1 53.4 38.8 26.2 54.2 39.4 26.7 17.7 20.1 23.8
Trident 68 Buy 5.7 10.3 12.8 12.0 6.6 5.3 6.5 4.5 3.5 10.1 16.5 17.9
TTK Prestige 6,314 Neutral 137.8 176.1 203.2 45.8 35.8 31.1 26.7 22.2 19.4 18.0 20.7 21.1
UPL 764 Buy 43.0 47.2 55.6 17.8 16.2 13.7 11.1 10.0 8.4 26.3 23.6 23.1
V-Guard Inds 232 Neutral 4.5 6.0 6.7 51.8 39.0 34.8 35.4 27.8 23.0 26.9 28.8 26.0
UR: Under Review
April 2018 61

Sector / Companies CMP EPS (INR) PE (x) PB (x) ROE (%)
(INR) Reco FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
Axis Bank 503 Buy 12.8 24.7 44.0 39.5 20.4 11.4 1.9 1.8 1.5 5.1 9.0 14.3
DCB Bank 168 Neutral 7.8 9.4 10.9 21.7 17.9 15.5 2.0 1.8 1.6 10.6 10.8 11.2
Equitas Holdings 148 Buy 1.1 7.0 10.7 131.8 21.1 13.9 2.2 2.0 1.8 1.7 10.0 13.6
Federal Bank 92 Buy 5.6 6.8 8.5 16.5 13.5 10.7 1.4 1.3 1.2 9.6 10.2 11.7
HDFC Bank 1,916 Buy 66.8 81.8 102.3 28.7 23.4 18.7 4.0 3.6 3.1 16.2 16.2 17.6
ICICI Bank 270 Buy 11.1 18.1 25.5 24.2 14.9 10.6 1.7 1.6 1.4 7.2 11.1 14.3
IDFC Bank 49 Neutral 3.0 3.2 3.8 16.2 15.1 12.7 1.1 1.0 1.0 6.8 6.9 7.8
IndusInd Bank 1,830 Buy 60.4 78.0 100.2 30.3 23.5 18.3 4.6 3.9 3.3 16.6 18.4 20.0
J&K Bank 58 Buy 8.8 10.0 14.4 6.6 5.8 4.0 0.6 0.6 0.5 9.1 9.9 12.9
Kotak Mahindra Bank 1,103 Buy 32.7 41.5 54.1 33.7 26.6 20.4 4.4 3.8 3.2 11.3 13.5 14.9
RBL Bank 483 Buy 15.4 21.8 29.3 31.4 22.2 16.5 3.1 2.8 2.4 11.9 13.2 15.8
South Indian Bank 24 Buy 1.9 4.1 5.3 12.6 5.8 4.5 0.9 0.8 0.7 6.9 13.7 15.7
Yes Bank 313 Buy 18.2 23.4 30.2 17.1 13.4 10.4 2.8 2.4 2.0 17.4 19.1 20.8
Private Bank Aggregate 28.1 20.3 15.0 2.9 2.6 2.3 10.5 13.0 15.4
Banks-PSU
Bank of Baroda 145 Buy 3.4 8.9 15.7 42.6 16.3 9.3 0.9 0.9 0.8 2.0 5.0 8.4
Bank of India 108 Neutral -18.8 6.3 12.1 -5.7 17.1 8.9 0.6 0.6 0.6 -7.7 3.0 5.5
Canara Bank 269 Neutral -2.4 21.9 61.3 -111.5 12.3 4.4 0.6 0.6 0.5 -0.4 4.1 10.8
Indian Bank 307 Buy 30.3 41.6 47.7 10.1 7.4 6.4 0.9 0.9 0.8 9.7 12.3 12.7
Punjab National Bank 96 Buy -5.7 0.0 14.3 -16.9 2826.4 6.7 0.6 0.6 0.5 -3.0 0.0 7.7
State Bank 250 Buy 2.9 18.7 34.0 87.6 13.4 7.4 1.0 0.9 0.8 -0.3 5.7 12.5
Union Bank 97 Neutral -38.8 7.6 17.1 -2.5 12.8 5.7 0.5 0.4 0.4 -16.0 3.4 7.0
PSU Bank Aggregate -105.4 14.2 7.1 0.8 0.8 0.7 -0.8 5.5 10.1
Life Insurance
HDFC Stand. Life 494 Buy 4.6 5.2 6.6 108.1 94.7 75.2 3.3 2.7 2.2 21.7 21.1 20.3
Life Insurance Aggregate 108.1 94.7 75.2 22.1 19.3 16.4 20.4 20.3 21.8
NBFC
Aditya Birla Cap 152 Buy 3.7 5.3 7.6 41.4 28.5 20.0 4.0 3.1 2.4 12.6 12.4 13.7
Bajaj Finance 1,832 Buy 44.8 61.7 82.8 40.9 29.7 22.1 6.4 5.4 4.5 19.8 19.9 22.3
Capital First 643 Buy 34.2 44.6 56.8 18.8 14.4 11.3 2.4 2.1 1.8 13.7 15.6 17.2
Chola. Inv & Fin. 1,517 Buy 61.3 71.7 86.2 24.8 21.2 17.6 4.6 3.9 3.2 20.2 19.8 20.0
Dewan Housing 534 Buy 37.3 48.0 60.5 14.3 11.1 8.8 1.9 1.7 1.4 14.0 15.9 17.5
GRUH Finance 595 Neutral 9.9 11.6 14.4 60.2 51.2 41.3 18.0 14.8 12.2 32.7 31.7 32.4
HDFC 1,830 Buy 42.7 49.0 57.3 42.8 37.3 31.9 4.9 4.3 3.9 18.3 17.5 17.3
Indiabulls Housing 1,293 Buy 90.9 104.6 127.4 14.2 12.4 10.1 4.0 3.5 3.1 29.8 30.3 32.4
L&T Fin.Holdings 162 Buy 6.7 9.0 11.3 24.2 18.1 14.3 2.6 2.3 2.1 13.3 13.7 15.3
LIC Housing Fin 552 Neutral 38.9 44.3 52.6 14.2 12.5 10.5 2.2 1.9 1.7 16.6 16.5 17.1
M & M Financial 473 Buy 13.9 19.2 23.0 34.1 24.6 20.6 3.2 3.0 2.7 10.9 12.5 13.8
MAS Financial 607 Buy 18.6 24.2 30.0 32.6 25.1 20.2 4.6 4.0 3.5 20.2 17.0 18.5
Muthoot Finance 417 Neutral 44.0 44.7 49.8 9.5 9.3 8.4 2.1 1.8 1.6 24.5 20.9 20.0
PNB Housing 1,273 Buy 50.9 67.5 88.1 25.0 18.8 14.4 3.4 3.0 2.6 14.6 17.0 19.2
Repco Home Fin 573 Buy 32.9 39.0 46.0 17.4 14.7 12.4 2.7 2.3 2.0 16.7 16.9 17.0
Shriram City Union 2,222 Buy 115.2 138.7 167.3 19.3 16.0 13.3 2.6 2.3 2.0 14.2 15.1 15.9
Shriram Transport Fin. 1,477 Buy 77.5 104.8 125.9 19.1 14.1 11.7 2.7 2.3 2.0 14.7 17.5 18.1
NBFC Aggregate 27.9 22.8 18.6 4.0 3.5 3.0 14.4 15.2 16.4
Financials Sector Aggregate 35.5 20.4 14.0 2.3 2.1 1.9 6.6 10.5 13.6
UR: Under Review
April 2018 62
Sectors & Companies

BSE Sensex: 33,371 S&P CNX: 10,245 April 2018
MOSL Universe:
4QFY18 Highlights
&
Ready Reckoner
Note: In our quarterly performance tables, our four-quarter numbers may not always add up to the full-year
numbers. This is because of differences in classification of account heads in the company’s quarterly and annual
results or because of differences in the way we classify account heads as opposed to the company.
All stock prices and indices as on 3 April 2018, unless otherwise stated.
April 2018 63
THIS PAGE INTENTIONALLY LEFT BLANK
April 2018 64
March 2018 Results Preview | April 2018
Automobiles
Company name Volume recovery continues
Amara Raja Batteries Price increases, operating leverage to drive margin expansion
Ashok Leyland
Bajaj Auto  Volume recovery continued in 4QFY18 as well, with strong volume momentum in 2Ws
Bharat Forge (+29% YoY), 3Ws (+95%), UVs (+25%) and CVs (+32%).
BOSCH  EBITDA margin for our auto OEM (ex-JLR) universe is likely to expand (+230bp YoY or
CEAT +20bp QoQ to 14.2%) for the third consecutive quarter, with high commodity costs
Eicher Motors offset by price increases and operating leverage.
Endurance technologies
 We have lowered our FY19 EPS estimates for BJAUT (-4%), MSIL (-6%), TVSL (-11%) and
Escort
TTMT (-6.2%), but increased for AL (+16%), MM (+7%) and ESC (+9%).
 Our top picks are MSIL, EIM and MSS among large caps, and AL and EXID among mid-
Exide Industries
caps. We also believe that MM is the best play on a rural market recovery.
Hero MotoCorp
Mahindra & Mahindra Volume recovery continues across segments
Maruti Suzuki A low base of last year in 2Ws, a strong recovery in rural areas, and a revival in
Tata Motors construction/mining activities drove a sustained recovery in volumes. Our channel
TVS Motor Company checks indicate continued above-average volume growth in rural markets. This has
resulted in strong 2W demand, which is estimated to have grown at ~29% YoY. On
the other hand, CV volumes are driven by the ban on overloading in key states, the
revival in construction/ mining activities, and the cyclical recovery in LCVs. CV
volumes are estimated to increase ~32% YoY, with LCV growth of ~44% and M&HCV
growth of 18.5%. PV demand increased at ~7%, with modest growth of ~4% in cars
and ~25% growth in UVs.
Price increase, operating leverage boost margins despite RM cost inflation
EBITDA margin for the auto OEM (ex-JLR) universe is likely to expand (+230bp YoY or
+20bp QoQ to 14.2%) for the third consecutive quarter, boosted by price increases
and operating leverage, despite commodity price inflation. We expect highest
margin expansion for TTMT S/A (+540bp), HMCL (+290bp), TVS (+240bp) and AL
(+210bp). While we do not expect any company to report YoY contraction in
margins, MM’s margins are estimated to contract ~130bp on a QoQ basis due to
seasonality.
Demand outlook positive across segments, competitive intensity key
Demand outlook for FY19 is positive across segments, driven by a continued rural
recovery, initial estimate of normal monsoon, and a pick-up in economic activity.
We estimate 10-12% growth for 2Ws, 8-10% for 4Ws, 10-12% for M&HCVs, 12-15%
for LCVS and 8-10% for tractors. Key threats to demand are posed by inflationary
fuel prices and higher interest rates. While we expect the margins to improve,
competitive intensity and commodity inflation could also have their effects.
Valuation and view
We have lowered our FY19 EPS estimates for BJAUT (-4%), MSIL (-6%), TVSL (-11%)
and TTMT (-6.2%), but increased for AL (+16%), MM (+7%) and ESC (+9%). The
demand environment and the changing competitive landscape would be the key
determinants of the stock performance. Our top picks are MSIL, EIM and MSS
among large caps, and AL and EXID among mid-caps. We also believe that MM is the
best play on a rural market recovery.
Jinesh Gandhi – Research Analyst (Jinesh@MotilalOswal.com); +91 22 6129 1524
Research Analyst: Deep Shah (deep.shah@MotilalOswal.com); +91 22 6129 1533; Suneeta Kamath (deep.shah@MotilalOswal.com); +91 22 6129 1534
April 2018 65
March 2018 Results Preview | Sector: Automobiles
Exhibit 1: Summary of expected quarterly performance (INR m)

Sector Sales (INR m) EBDITA (INR m) Net Profit (INR m)
CMP Var % Var % Var % Var % Var % Var %
Reco Mar-18 Mar-18 Mar-18
(INR) YoY QoQ YoY QoQ YoY QoQ
Automobiles
Amara Raja Batt. 811 Buy 15,109 12.4 -2.7 2,327 26.2 -3.7 1,212 22.2 -9.9
Ashok Leyland 148 Buy 86,412 30.6 21.5 11,329 55.2 43.7 6,963 62.7 54.8
Bajaj Auto 2,792 Buy 66,617 36.0 4.6 12,736 40.6 3.4 9,784 22.0 2.7
Bharat Forge 717 Buy 14,328 27.3 3.0 4,327 35.2 3.9 2,371 31.7 3.9
Bosch 19,116 Neutral 29,916 16.2 -2.6 7,310 3.9 64.0 4,643 5.4 66.3
CEAT 1,599 Buy 16,484 12.0 4.7 1,813 36.9 -3.0 964 20.9 15.8
Eicher Motors 28,052 Buy 24,942 32.1 9.9 8,274 41.5 17.0 7,300 58.9 40.2
Endurance Tech. 1,263 Buy 16,723 21.2 5.8 2,309 21.6 3.6 1,002 20.0 4.7
Escorts 884 Sell 14,487 41.7 20.2 1,681 126.0 15.9 1,089 126.0 18.5
Exide Inds. 233 Buy 23,818 20.8 4.6 3,118 21.0 10.3 1,747 6.0 13.2
Hero Motocorp 3,640 Neutral 85,736 24.0 17.4 14,336 38.3 23.8 9,860 37.4 22.4
Mahindra CIE 221 Buy 5,754 24.0 2.5 647 50.1 11.0 279 67.5 53.7
Mahindra & Mahindra 769 Buy 131,573 24.0 14.5 17,631 42.6 4.2 10,015 24.5 -1.3
Maruti Suzuki 9,024 Buy 208,623 13.8 8.2 33,291 24.3 9.6 23,007 27.9 27.9
Motherson Sumi 333 Buy 161,653 43.3 12.3 14,690 18.4 16.6 5,182 -3.7 41.8
Tata Motors 343 Buy 892,009 15.5 20.3 130,740 21.0 53.0 48,123 11.3 321.8
TVS Motor 649 Neutral 39,994 40.6 8.5 3,245 100.9 13.2 1,747 37.8 13.2
Auto Sector Aggregate 1,834,182 20.7 15.2 269,803 26.8 30.3 135,290 21.8 63.2
Exhibit 2: Volume snapshot for 4QFY18 ('000 units)

4QFY18 4QFY17 YoY(%) 3QFY18 QoQ(%) FY18 FY17 YoY(%)
Two wheelers 6,014 4,677 28.6 5,270 14.1 23,143 19,921 16.2
Three wheelers 310 160 93.5 282 10.0 1,031 784 31.6
Passenger cars 726 698 4.0 671 8.3 2,779 2,705 2.7
UVs & MPVs 336 293 14.5 317 5.7 1,262 1,105 14.1
Total PVs 1,062 991 7.1 988 7.5 4,040 3,810 6.0
M&HCV 131 111 18.5 107 22.9 385 346 11.3
LCV 186 129 44.2 139 33.9 565 473 19.4
Total CVs 316 239 32.3 245 29.1 950 819 16.0
Total 7,703 6,068 26.9 6,785 13.5 29,164 25,333 15.1
Exhibit 3: Trend in segment-wise EBITDA margins (%) Exhibit 4: Commodity prices remain at higher levels
4QFY17 1QFY18 3QFY18 2QFY18 4QFY18 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18
16.3 16.6
15.4 15.8 15.4 15.0
13.814.5 13.513.2
10.6
9.3
7.9
6.4
2.3
112
122
113
119
124
130
138
126
135
145
107
100
111
121
110
118
117
123
130
97
2W Cars CVs Steel Lead Alu Rubber
April 2018 66
Exhibit 5: Trend in key currencies v/s INR Exhibit 6: QoQ margin (ex-JLR) expands since 1QFY18
USD GBP JPY Aggregate (excld JLR) Aggregate (incl JLR)
120
17
14
100
11
80 8
Jun-15
Jun-16
Jun-17
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Dec-16
Mar-17
Sep-17
Dec-17
Mar-18
4QFY12
2QFY13
4QFY13
2QFY14
4QFY14
2QFY15
4QFY15
2QFY16
4QFY16
2QFY17
4QFY17
2QFY18
4QFY18
Source: Bloomberg, MOSL Source: Company, MOSL
Exhibit 7: Revised estimates

FY19E FY20E
Rev Old Chg (%) Rev Old Chg (%)
Bajaj Auto 167.8 175.2 -4.2 197.2 202.9 -2.8
Hero MotoCorp 186.1 185.0 0.6 202.0 200.1 0.9
TVS Motor 22.4 25.1 -10.7 32.4 33.9 -4.6
Maruti * 349.0 369.9 -5.7 457.0 471.3 -3.0
M&M * 46.9 43.9 6.7 51.2 48.4 5.9
Tata Motors * 56.6 57.9 -2.2 58.7 58.5 0.4
Ashok Leyland 4.7 6.2 -25.1 9.2 7.7 19.4
Eicher Motors * 1045.3 1051.4 -0.6 1337.1 1333.2 0.3
Amara Raja 34.0 34.7 -2.0 40.0 41.4 -3.4
Bharat Forge * 26.4 26.8 -1.3 34.8 35.2 -1.2
BOSCH 582.9 604.8 -3.6 694.4 730.1 -4.9
Ceat 84.7 84.7 0.0 111.7 111.7 0.0
Escorts 49.5 45.6 8.7 59.0 54.9 7.4
Endurance Tech* 38.2 38.5 -0.9 51.0 51.3 -0.6
Exide Industries 9.9 10.2 -3.3 12.1 11.6 4.3
Mahindra CIE 12.1 12.2 -0.7 15.1 15.1 0.0
Motherson Sumi 12.5 12.5 0.0 17.5 17.5 0.0
* Consolidated
Exhibit 8: EBITDA margin to expand YoY for third consecutive quarter

Volumes ('000 units) EBITDA margins (%) Adj PAT (INR M)
4QFY18 YoY (%) QoQ (%) 4QFY18 YoY (bp) QoQ (bp) 4QFY18 YoY (%) QoQ (%)
BJAUT 1045 32.7 4.4 19.1 60 -20 9,784 22.0 2.7
HMCL 2002 23.4 17.1 16.7 290 90 9,860 37.4 22.4
TVS Motor 889 32.0 7.6 8.1 240 30 1,747 37.8 13.2
MSIL 462 11.4 7.1 16.0 140 20 23,007 27.9 27.9
MM 236 25.4 12.4 13.4 170 -130 10,015 24.5 -1.3
TTMT (S/A) 204 37.6 19.2 9.5 540 100 5,535 NM -194.4
TTMT (JLR) * 180 2.6 12.9 14.7 20 390 588 -13.0 206.4
TTMT (Cons) 14.7 70 310 48,123 11.3 322
Ashok Leyland 59 23.3 26.0 13.1 210 200 6,963 62.7 54.8
Eicher (RE) 227 27.4 9.9 32.0 70 30 5,262 27.9 11.5
Eicher (VECV) 23 33.2 42.3 9.9 170 110 2,038 69.5 53.5
Eicher (Consol) 32.0 70 30 7,300 58.9 40.2
Agg. (ex JLR) 5147 26.2 11.4 14.2 230 20 74,213 61.3 26.1
April 2018 67
Exhibit 9: Relative performance – Three months (%) Exhibit 10: Relative performance – One year (%)
Sensex Index Sensex Index MOSL Automobiles Index

110 135
105 125
100 115
95 105
90 95
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17
Dec-17
Jan-18
Feb-18
Mar-18
Source: Bloomberg, MOSL Source: Bloomberg, MOSL
Exhibit 11: Comparative valuation

Sector / Companies CMP Reco. EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
Automobiles
Amara Raja Batt. 811 Buy 28.3 34.0 40.0 28.7 23.9 20.3 14.6 12.0 10.1 17.3 18.0 18.3
Ashok Leyland 148 Buy 5.4 7.2 9.2 27.2 20.4 16.0 13.7 10.6 8.2 24.3 27.6 29.2
Bajaj Auto 2,792 Buy 147.9 167.8 197.2 18.9 16.6 14.2 13.5 12.0 9.8 23.9 24.6 26.0
Bharat Forge 717 Buy 20.0 26.4 34.8 35.9 27.2 20.6 18.5 15.1 12.1 20.9 23.3 25.4
Bosch 19,116 Neutral 459.1 582.9 694.4 41.6 32.8 27.5 23.2 19.6 16.5 15.2 17.5 18.7
CEAT 1,599 Buy 61.1 84.7 111.7 26.2 18.9 14.3 11.5 10.4 7.9 9.8 12.4 14.5
Endurance Tech. 1,263 Buy 27.9 38.2 51.0 45.3 33.0 24.8 20.0 15.9 12.6 20.8 23.8 26.4
Eicher Motors 28,052 Buy 814.4 1045.3 1337.1 34.4 26.8 21.0 26.4 20.8 16.3 36.3 35.5 34.1
Escorts 884 Sell 39.1 49.5 59.0 22.6 17.9 15.0 16.4 14.3 11.5 18.3 18.7 19.0
Exide Inds. 233 Buy 8.0 9.9 12.1 29.0 23.6 19.2 13.3 11.3 9.2 12.6 14.0 15.3
Hero Motocorp 3,640 Neutral 186.1 202.0 221.3 19.6 18.0 16.4 11.8 11.0 9.9 34.1 32.2 30.9
Mahindra & Mahindra 769 Buy 39.7 46.9 51.2 19.4 16.4 15.0 5.4 4.6 4.5 14.6 14.8 15.2
Mahindra CIE 221 Buy 9.6 12.1 15.1 23.0 18.2 14.6 11.2 9.7 7.8 10.4 11.6 12.8
Maruti Suzuki 9,024 Buy 275.1 349.0 457.0 32.8 25.9 19.7 19.0 15.6 11.7 19.7 21.8 24.2
Motherson Sumi 333 Buy 8.1 12.5 17.5 41.1 26.6 19.0 13.4 9.7 6.9 19.2 25.4 29.3
Tata Motors 343 Buy 25.5 56.6 58.7 13.4 6.1 5.8 3.5 2.8 2.6 13.5 24.0 19.9
TVS Motor 649 Neutral 14.1 22.4 32.4 45.9 28.9 20.1 25.9 17.4 12.4 25.3 32.0 35.2
Auto Sector Aggregate 25.2 17.4 14.8 10.0 7.9 6.7 17.7 21.6 21.2
April 2018 68
Amara Raja Batteries

Bloomberg AMRJ IN CMP: INR811 TP: INR1000 (+23%) Buy
Equity Shares (m) 170.8
 We expect AMRJ’s revenue to grow 12.4% YoY (-3% QoQ) to
M. Cap. (INR b)/(USD b) 139 / 2
INR15.1b, driven by strong growth in Automotive OEM &
52-Week Range (INR) 955 / 665
replacement segment.
1,6,12 Rel Perf. (%) 2 / 9 / -22
 Spot LME lead prices increased marginally by 0.5% QoQ, but 6%
YoY in 4QFY18.
Financial Snapshot (INR b)  EBITDA margin is likely to expand 170bp YoY (-20bp QoQ) to
Y/E March 2017 2018E 2019E 2020E 15.4%.
Sales 53.2 59.9 69.2 79.4  We expect PAT to increase 22% YoY to INR1.2b.
EBITDA 8.5 9.1 10.9 12.6  We maintain our FY19E and FY20E EPS estimates at INR34 and
NP 4.8 4.8 5.8 6.8 INR40, respectively.
EPS (INR) 28 28.3 34.0 40.0  The stock trades at 23.9x FY19E and 20.3x FY20E EPS; Maintain
EPS Gr. (%) -2.7 0.9 20.3 17.6 Buy.
BV/Sh. (INR) 152 175 203 235 Key issues to watch
RoE (%) 20.3 17.3 18.0 18.3  Update on demand environment for OEMs, auto replacement
RoCE (%) 19.4 16.5 17.1 17.3 and industrial battery segments.
Valuations
 Update on entry into new segments like e-rickshaw, solar and
P/E (x) 29.0 28.7 23.9 20.3
motive power.
P/BV (x) 5.3 4.6 4.0 3.4
 Outlook for raw material cost trend, recent pricing action.
EV/EBITDA (x) 16.2 15.0 12.2 10.2
 Update on recent capacity expansion plans across product
EV/Sales (x) 2.6 2.3 1.9 1.6
segments.
 Update on progress made on product development in lithium
ion battery space and plans thereof.
Quarterly Performance
Y/E March (INR m) FY17 FY18 FY17 FY18E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 13,081 13,331 13,269 13,445 14,975 14,275 15,535 15,109 53,172 59,893
YoY Change (%) 15.0 15.8 9.5 17.4 14.5 7.1 17.1 12.4 15.1 12.6
RM Cost (% of sales) 65.7 63.9 65.0 68.0 70.0 66.0 66.9 66.7 65.6 67.4
Staff Cost (% of sales) 5.0 5.2 5.5 5.2 5.4 5.2 4.9 5.1 4.7 4.2
Other Exp (% of sales) 11.9 13.7 14.1 13.0 11.7 12.1 12.0 12.8 13.9 11.6
EBITDA 2,273 2,297 2,040 1,844 1,929 2,381 2,416 2,327 8,499 9,052
Margins (%) 17.4 17.2 15.4 13.7 12.9 16.7 15.6 15.4 16.0 15.1
Depreciation 441 457 469 499 544 584 587 656 1,912 2,371
Interest 14 15 14 15 14 13 11 14 58 51
Other Income 90 120 133 151 137 122 168 148 492 575
PBT 1,908 1,945 1,689 1,480 1,508 1,907 1,985 1,806 7,022 7,205
Rate (%) 31.5 29.9 33.5 33.0 33.7 33.3 32.3 32.9 31.9 33.0
Adj PAT 1,307 1,363 1,123 992 999 1,272 1,345 1,212 4,785 4,828
YoY Change (%) 8.0 10.4 -17.9 -9.1 -23.6 -6.7 19.7 22.2 -2.7 0.9
E: MOSL Estimates
April 2018 69
Ashok Leyland
Bloomberg AL IN CMP: INR148 TP: INR179 (+21 %) Buy
 In 4QFY18, volumes increased 23% YoY (+26% QoQ), as M&HCV
M. Cap. (INR b)/(USD b) 432 / 7
and LCV sales increased 15% YoY and 59% YoY, respectively, led
by continued strong demand supported by overloading ban.
1,6,12 Rel Perf. (%) 7 / 15 / 64
 We expect realization to increase by 5.9% YoY (-3.6% QoQ), led by
BS-4 related price hikes, lower discounts on QoQ basis and mix
Financial Snapshot (INR b) impact.
Y/E March 2017 2018E 2019E 2020E  Net revenue is likely to grow 30.6% YoY (+21.5% QoQ) to
Sales 200.2 260.4 308.0 360.6 INR86.4b, led by volume and realization growth.
EBITDA 22.0 28.4 35.6 42.8  EBITDA margin is likely to expand 210bp YoY (+200bp QoQ) to
NP 12.4 15.9 21.2 26.9 13.1% led by operating leverage.
Adj. EPS (INR) 4.2 5.4 7.2 9.2  EBITDA should increase 55% YoY (44% QoQ) to INR11.3b.
EPS Gr. (%) 0.2 28.8 33.1 27.1  PAT should increase 62.7% YoY (+54.8% QoQ) to INR7.0b.
BV/Sh. (INR) 20.9 23.9 28.5 34.7  We revised EPS estimates of FY19/FY20 by 16.4%/19.4% to factor
RoE (%) 21.4 24.3 27.6 29.2 for higher volumes (6%/9% in FY19/FY20) and better operating
RoCE (%) 21.8 20.3 23.3 25.2 performance. The stock trades at EV/EBITDA of 11.2x FY19E and
Valuations 8.8x FY20E EBITDA. Maintain Buy.
P/E (x) 35.0 27.2 20.4 16.0
Key issues to watch
P/BV (x) 7.1 6.2 5.2 4.3
 Update on CV demand and discount trends.
EV/EBITDA (x) 19.4 14.7 11.2 8.8
Div. Yield (%) 1.1 1.4 1.5 1.7
 Update on LCVs, exports and defence business.
 RM cost guidance and price hikes to mitigate the same.
 Capex and investment guidance for FY19.
FY17 FY18 FY17 FY18E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Volumes (nos) 31,165 33,441 32,838 47,622 28,484 40,985 46,627 58,735 145,066 174,831
Growth % 10.7 -10.5 6.2 8.5 -8.6 22.6 42.0 23.3 3.4 20.5
Realizations (INR '000) 1,367 1,382 1,470 1,390 1,488 1,475 1,526 1,471 1,380 1,489
% change -0.9 4.0 10.5 2.1 8.9 6.7 3.8 5.9 2.3 7.9
Net operating revenues 42,588 46,224 48,283 66,179 42,378 60,469 71,132 86,412 200,187 260,390
Change (%) 9.7 -6.9 17.4 10.8 -0.5 30.8 47.3 30.6 5.7 30.1
RM/sales % 68.7 67.8 65.1 71.9 69.4 71.3 71.4 70.6 69.7 70.8
Staff/sales % 8.4 8.0 8.2 6.2 10.3 8.1 6.9 5.9 7.6 7.4
Other exp/sales % 11.6 12.6 10.8 10.8 13.0 10.4 10.6 10.3 11.6 10.8
EBITDA 4,820 5,365 4,541 7,299 3,061 6,118 7,884 11,329 22,025 28,392
EBITDA Margin (%) 11.3 11.6 9.4 11.0 7.2 10.1 11.1 13.1 11.0 10.9
Other Income 385 316 258 404 384 557 380 380 1,363 1,700
Interest 338 339 453 423 366 410 335 356 1,554 1,467
PBT before EO Item 4,154 4,146 2,395 6,114 1,730 4,826 6,576 9,948 16,809 23,081
EO Exp/(Inc) 0 0 0 3,508 126 0 0 0 3,508 126
PBT 4,154 4,146 2,395 2,605 1,605 4,826 6,576 9,948 13,301 22,955
Effective Tax Rate (%) 30.0 29.0 32.5 - 30.7 30.7 31.6 31.2 8.0 31.2
Adj. PAT 2,908 2,944 1,617 4,279 1,199 3,342 4,497 6,963 12,360 15,880
Change (%) 130.0 14.5 -25.6 -16.5 -58.7 13.5 178.1 62.7 2.6 28.5
E: MOSL Estimates
April 2018 70
Bajaj Auto
Bloomberg BJAUT IN CMP: INR2,791 TP: INR3,550 (+27%) Buy
 Overall volume increased by 32.7% YoY (-4.4% QoQ) to ~1,045k
M. Cap. (INR b)/(USD b) 808 / 12
units due to ~34% YoY increase in domestic volume, while export
52-Week Range (INR) 3473 / 2695
volumes increased by ~31% YoY. Volume growth was led by 3Ws,
1,6,12 Rel Perf. (%) -6 / -18 / -11
as domestic 3Wvolumes increased by 144% YoY, while 3W
exports grew by 83% YoY.
Financial Snapshot (INR b)  We expect realization to grow by 2.5% YoY (flat QoQ) led by
Y/E MAR 2017 2018E 2019E 2020E improvement in product mix and price hikes. Consequently, net
Sales 218 251 275 310 revenues are expected to increase by 36% YoY (5% QoQ).
EBITDA 44.2 47.4 53.2 62.9  We expect EBITDA margin to expand by ~60bp YoY (-20bp QoQ)
NP 40.8 42.8 48.6 57.1 to 19.1%, as margin was impacted by BS-IV related provisioning in
Adj. EPS (INR) 141 148 168 197 4QFY17.
EPS Gr. (%) -1.7 4.8 13.5 17.5  We expect PAT to grow by 22% YoY (2.7% QoQ) to INR9.8b.
BV/Sh. (INR) 589 649 717 802  We have cut our EBITDA margin estimate by 80bp/30bp in
RoE (%) 26.9 23.9 24.6 26.0 FY19/FY20, resulting in EPS declining by 4.2%/2.8% for
RoCE (%) 24.6 21.6 22.5 33.0 FY19E/FY20E.
Payout (%) 46.9 52.8 53.7 51.8  The stock trades at 16.6x FY19E and 14.2x FY20E EPS; maintain Buy.
Valuations
P/E (x) 19.8 18.9 16.6 14.2 Key issues to watch
P/BV (x) 4.7 4.3 3.9 3.5  Update on demand of new launches.
EV/EBITDA (x) 14.9 13.8 12.0 9.8  Export demand outlook and pricing in key currency market.
Div. Yield (%) 2.0 2.3 2.7 3.0  Comments on 3W demand recovery in domestic market.
 Update on EV strategy.
Quarterly Performance (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Volumes ('000 units) 995 1,032 852 788 888 1,072 1,001 1,045 3,666 4,007
Growth YoY (%) -1.8 -2.3 -10.5 -9.7 -10.7 3.8 17.6 32.7 (5.8) 9.3
Realization (INR/unit) 57,784 58,676 59,495 62,171 61,258 61,408 63,600 63,725 59,419 62,527
Growth YoY (%) 4.5 2.0 2.0 1.2 6.0 4.7 6.9 2.5 2.4 5.2
Net Sales 57,480 60,545 50,669 48,973 54,424 65,799 63,693 66,617 217,827 250,533
Change (%) 2.7 -0.4 -8.7 -8.6 -5.3 8.7 25.7 36.0 (3.6) 15.0
RM/Sales % 67.2 67.0 66.8 67.8 70.0 69.1 68.4 68.7 67.1 69.2
Staff cost/Sales % 4.7 4.3 4.8 4.6 5.0 4.0 4.2 4.0 4.6 4.3
Oth. Exp./Sales % 7.7 7.4 7.9 9.2 7.8 7.2 8.3 8.4 8.0 7.9
EBITDA 11,763 12,961 10,439 9,060 9,384 12,984 12,315 12,736 44,384 46,874
EBITDA Margins (%) 20.5 21.4 20.6 18.5 17.2 19.7 19.3 19.1 20.4 18.7
Other Income 2,671 3,420 3,193 2,936 4,573 2,964 2,269 2,168 12,220 11,974
Interest 2 7 3 2 2 5 3 0 14 10
Depreciation 775 770 772 757 753 770 747 794 3,073 3,063
PBT 13,657 15,605 12,858 11,236 12,881 15,174 13,833 14,110 53,516 55,775
Tax 3,873 4,378 3,612 3,218 3,642 4,055 4,309 4,326 15,081 16,333
Effective Tax Rate (%) 28.4 28.1 28.1 28.6 28.3 26.7 31.1 30.7 28.2 29.3
Adj. PAT 9,784 11,228 9,246 8,018 9,469 11,119 9,524 9,784 38,436 39,987
Change (%) 2.2 6.7 (4.7) (15.5) (3.2) (1.0) 3.0 22.0 (2.2) 4.0
E: MOSL Estimates
April 2018 71
Bharat Forge
Bloomberg BHFC IN CMP: INR717 TP: INR869 (+21%) Buy
 BHFC’s shipment tonnage is expected to increase by 21.7% YoY
M. Cap. (INR b)/(USD b) 334 / 5
(+3.3% QoQ) to 67,169 tons, as demand for class 8 trucks as well
1,6,12 Rel Perf. (%) -6 / 10 / 22
as domestic CV was strong, along with strong recovery in oil & gas
and industrial segments.
 Net realization is expected to increase 4.6% YoY (flat QoQ) to
Financial Snapshot (INR b)
Y/E Mar 2017 2018E 2019E 2020E
~INR213.3k/ton.
Sales 64.0 82.1 94.2 108.7
 As a result, net revenue would increase 27.3% YoY (+3.0% QoQ) to
EBITDA 12.5 17.9 22.1 26.8 ~INR14.3b.
EPS (INR) 13.1 20.0 26.4 34.8  EBITDA margin is likely to expand 180bp YoY (+30bp QoQ) to
EPS Gr. (%) -7.2 52.8 32.1 31.7 30.2%.
BV/Sh. (INR) 88.4 103.3 123.4 150.6  PAT is expected to increase by 31.7% YoY (+3.9% QoQ) to INR2.4b.
RoE (%) 16.2 20.9 23.3 25.4  We maintain our FY19 and FY20E EPS estimates.
RoCE (%) 9.5 13.2 15.8 18.5  The stock trades at 27.2x FY19E and 20.6x FY20E EPS; Maintain
Valuations Buy.
P/E (x) 54.8 35.9 27.2 20.6
Key issues to watch
P/BV (x) 8.1 6.9 5.8 4.8
 Update on FY19 outlook for Class 8 trucks & India M&HCV.
EV/EBITDA(x) 29.0 19.6 15.7 12.5
 Outlook for oil & gas and mining segments, primarily with
EV/Sales (x) 5.7 4.3 3.7 3.1
regard to price recovery.
Consolidated
 Comment on industry-wide supply constraint in domestic CV.
 Update on new order wins and ramp-up of past order wins
under commercial vehicles, PVs, aerospace and rail.
 Update on capex plans and any capacity addition plans.
Quarterly performance (INR m)
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Tonnage 49,098 46,203 47,083 55,189 55,100 58,659 65,050 67,169 197,573 245,978
Change (%) -5.6 -15.3 -7.2 5.3 12.2 27.0 38.2 21.7 -5.8 24.5
Realization (INR '000/ton) 184.2 192.8 200.4 204.0 217.9 214.5 213.8 213.3 195.6 214.7
Change (%) -15.9 -6.4 -4.0 5.7 18.3 11.2 6.7 4.6 -4.7 9.8
Net operating income 9,044 8,909 9,437 11,257 12,008 12,580 13,906 14,328 38,647 52,822
Change (%) -20.6 -20.7 -11.0 11.3 32.8 41.2 47.4 27.3 -10.2 36.7
RM/Sales (%) 34.4 34.4 32.6 35.1 35.0 35.0 35.6 35.2 34.2 35.3
Staff Cost (% of Sales) 10.1 10.1 9.6 9.2 8.9 8.5 8.0 8.1 9.7 8.3
Other Exp. (% of Sales) 28.5 27.6 30.2 27.3 28.3 27.1 26.4 26.5 28.3 27.0
EBITDA 2,444 2,477 2,606 3,200 3,333 3,694 4,163 4,327 10,726 15,518
EBITDA Margins (%) 27.0 27.8 27.6 28.4 27.8 29.4 29.9 30.2 27.8 29.4
Non-Operating Income 256 309 208 222 259 366 219 229 995 1,074
Interest 170 189 183 185 185 217 143 185 728 730
Depreciation 740 726 739 744 774 781 807 806 2949 3,168
EO Exp / (Inc) 0 0 0 -380 0 0 0 0 -380 0
PBT after EO items 1,791 1,870 1,892 2,872 2,633 3,063 3,432 3,565 8,425 12,693
Eff. Tax Rate (%) 31.8 32.2 32.0 27.8 33.5 33.5 33.5 33.5 30.6 33.5
Adj. PAT 1,221 1,269 1,286 1,801 1,751 2,037 2,282 2,371 5,587 8,441
Change (%) -37.7 -26.3 -22.8 8.7 43.4 60.5 77.4 31.7 -16.9 51.1
E: MOSL Estimates
April 2018 72
Bosch
Bloomberg BOS IN CMP: INR19,116 TP: INR19,096 (0%) Neutral
 Net revenue is expected to grow 16% YoY (-2.6% QoQ) to
M. Cap. (INR b)/(USD b) 600 / 9
INR29.9b, led by strong growth in CVs and Tractors.
52-Week Range (INR) 25245 / 16990
1,6,12 Rel Perf. (%) 4 / -12 / -27
 EBITDA margin is expected to decline by 290bp YoY (+990bp QoQ)
to 24.4%, impacted by higher import content for BS6 products.
 EBITDA is projected to grow 4% YoY (+64% QoQ) to INR7.3b.
Y/E Mar FY17 FY18E FY19E FY20E
 Adjusted PAT is likely to increase 5% YoY to INR4.6b.
Sales 104.4 115.2 132.2 150.8
 We cut FY19 EPS by 3.6% and FY20 EPS by 5% to factor in
EBITDA 19.6 21.3 27.2 31.9 potentially lower margins on BS6 than original estimate.
NP 14.4 14.0 17.8 21.2  The stock trades at 32.8x FY19E and 27.5x FY20E EPS; Maintain
EPS (INR) 473.1 459.1 582.9 694.4 Neutral.
EPS Gr. (%) -1.8 -3.0 27.0 19.1
BV/Sh. (INR) 2,883.1 3,155 3,501 3,912
RoE (%) 15.8 15.2 17.5 18.7
RoCE (%) 23.1 23.0 26.3 27.9
Key issues to watch
Valuations
 Implementation of BS-VI norms for 2-wheelers and underlying
P/E (x) 40.4 41.6 32.8 27.5
opportunity for Bosch.
P/BV (x) 6.6 6.1 5.5 4.9
EV/EBITDA(x) 28.9 25.0 19.3 16.2
 Advancement of BS-VI implementation and its impact on Bosch.
EV/Sales (x) 5.4 4.6 4.0 3.4  Capex plans for BS VI norms.
 Further details on EV strategy & competitive positioning in EVs.
Quarterly performance (S/A)

Y/E March FY17 FY18E FY17 FY18E
(INR Million) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 25,418 26,333 26,927 25,746 26,484 28,119 30,719 29,916 104,351 115,238
YoY Change (%) 10.5 10.6 8.6 2.8 4.2 6.8 14.1 16.2 7.6 10.4
RM Cost (% of sales) 51.3 50.1 54.3 47.6 54.4 55.1 52.8 50.0 51.3 50.1
Other Expenses (% of sales) 17.3 18.1 20.7 14.1 16.2 14.5 21.5 11.2 17.3 18.1
EBITDA 4,734 4,911 2,875 7,037 4,390 5,080 4,457 7,310 19,604 21,256
Margins (%) 18.6 18.6 10.7 27.3 16.6 18.1 14.5 24.4 18.8 18.4
Depreciation 860 889 1,294 1,492 1,062 1,108 1,243 1,522 4,562 4,935
Interest 13 10 17 232 5 0 27 118 272 150
Other Income 1,566 1,890 1,427 1,310 1,295 1,290 1,023 1,292 6,174 4,900
PBT before EO expense 5,428 5,902 2,991 6,624 4,618 5,262 4,211 6,962 20,944 21,071
Extra-Ord expense 0 0 0 0 0 0 0 0 0 0
PBT after EO Expense 5,428 5,902 2,991 6,624 4,618 5,262 4,211 6,962 20,944 21,071
Tax 1,679 1,673 843 2,219 1,592 1,728 1,419 2,320 7,244 7,059
Tax Rate (%) 30.9 28.3 28.2 33.5 34.5 32.8 33.7 33.3 34.6 33.5
Reported PAT 3,749 4,229 2,148 4,405 3,026 3,533 2,792 4,643 13,700 14,012
Adj PAT 3,749 4,229 2,148 4,405 3,026 3,533 2,792 4,643 13,700 14,012
YoY Change (%) -0.7 10.8 -23.5 -6.8 -19.3 -16.5 30.0 5.4 -9.4 2.3
E: MOSL Estimates
April 2018 73
CEAT
Bloomberg CEAT IN CMP: INR1,599 TP: INR1,787 (12%) Buy
 We expect revenue to increase 12% YoY (+5% QoQ) to INR16.5b
M. Cap. (INR b)/(USD b) 65 / 1
in 4QFY18.
52-Week Range (INR) 2030 / 1324
1,6,12 Rel Perf. (%) 3 / -12 / 8
 RM cost is expected to increase by 330bp QoQ (-140bp YoY) to
61.5% in 4QFY18.
 We estimate 90bp QoQ (+200bp YoY) contraction in EBITDA
Financial Snapshot (INR Billion)
Y/E March 2017 2018E 2019E 2020E
margin to 11%. EBITDA is likely to grow 37% YoY (-3% QoQ) to
Sales 64.4 63.4 70,1 83,3
INR1.8b.
EBITDA 10.2 9.0 11.0 12.2  We expect adjusted PAT to increase 21% YoY to INR964m.
NP 3.8 2.5 3.4 4.5  The stock trades at ~18.9x FY19E and 14.3x FY20E EPS. Maintain
EPS (Rs) 93.3 61.1 84.7 111.7 Buy.
EPS Gr. (%) -16.9 -34.6 38.6 31.9
BV/Share 597.0 648.7 722.1 819.0
RoE (%) 16.9 9.8 12.4 14.5
Key things to watch for
RoCE (%) 13.5 8.5 10.0 11.1
 Movement in raw materials prices.
Valuations
P/E (x) 17.1 26.2 18.9 14.3
 Growth in replacement market.
P/BV (x) 2.7 2.5 2.2 2.0  Update on capex plans and timeline for capacity additions.
EV/EBITDA (x) 11.2 12.6 10.7 8.1
EV/Sales (x) 1.1 1.1 1.2 1.0
Consolidated - Quarterly Earning Model

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 16,462 15,966 13,976 14,718 16,286 15,230 15,742 16,484 61,122 63,742
YoY Change (%) 4.2 5.1 -9.3 -5.8 -1.1 -4.6 12.6 12.0 -1.5 4.3
Total Expenditure 14,608 14,113 12,441 13,393 15,740 13,484 13,872 14,671 54,554 57,766
EBITDA 1,854 1,854 1,535 1,325 547 1,747 1,870 1,813 6,568 5,976
Margins (%) 11.3 11.6 11.0 9.0 3.4 11.5 11.9 11.0 10.7 9.4
Depreciation 302 317 351 460 396 409 433 462 1,431 1,700
Interest 252 162 191 212 226 237 273 267 817 1,003
Other Income 57 37 57 36 103 65 66 66 186 300
PBT before EO expense 1,356 1,411 1,050 689 28 1,166 1,230 1,150 4,506 3,574
PBT 1,347 1,411 1,050 564 25 1,086 1,220 1,150 4,373 3,480
Tax 417 430 262 -45 48 421 475 276 1,064 1,219
Rate (%) 30.9 30.5 25.0 -7.9 192.3 38.7 38.9 24.0 24.3 35.0
Minority Interest & P/L of Asso. Cos. -102 -84 -50 -55 -37 -65 -82 -90 -290 -273
Reported PAT 1,033 1,065 838 663 14 730 826 964 3,599 2,534
Adj PAT 1,039 1,065 838 798 11 779 833 964 3,700 2,595
YoY Change (%) -14.7 0.5 -26.1 -24.8 -99.0 -26.8 -0.7 20.9 -17.1 -29.9
Margins (%) 6.3 6.7 6.0 5.4 0.1 5.1 5.3 5.8 6.1 4.1
E: MOSL Estimates
April 2018 74
Eicher Motors
Bloomberg EIM IN CMP: INR28,052 TP: INR34,529 (+23%) Buy
 Royal Enfield’s volumes grew by 27.4% YoY (+9.9% QoQ) to
M. Cap. (INR b)/(USD b) 763 / 12
227,041 units, aided by additional capacity amid healthy demand.
52-Week Range (INR) 33484 / 25316
1,6,12 Rel Perf. (%) 3 / -16 / -2
Net realization is expected to improve by 4.3% YoY (+0.6% QoQ),
supported by price hikes and mix. We expect EBITDA margin to
expand ~60bp YoY to 32% (+30bp QoQ).
 VECV’s volume increased by ~33.2% YoY (+42.3% QoQ). We
Y/E Dec FY17 FY18E FY19E FY20E
Net Income 70.3 89.3 107.7 129.4 expect net realization to increase by 6.5% YoY (-1.7% QoQ).
EBITDA 21.7 28.4 35.1 43.9 Margin is expected to be at 9.9%, up by ~170bp YoY (+110bp
Net Profit 16.8 22.2 28.4 36.4 QoQ).
Adj. EPS (INR) 616.7 814.4 1,045.3 1,337.1  Consolidated revenue would increase ~32.1% YoY (+9.9% QoQ) to
EPS Gr. (%) 56.5 32.1 28.4 27.9 INR24.9b. Consolidated margin is likely to be 33.2%. Consolidated
BV/Sh. (INR) 1,964 2,525 3,369 4,477 Adj. PAT is estimated to grow ~59% YoY (+40% QoQ) at INR7.3b.
RoE (%) 37.3 36.3 35.5 34.1  We are providing INR2.9b for write-off of investment in Polaris JV.
RoCE (%) 33.5 33.5 31.2 31.0  The stock trades at 26.8x FY19E and 21x FY20E EPS. Maintain Buy.
Payout (%) 0.4 0.5 0.6 0.7 Key issues to watch
Valuations
 Outlook on RE demand and order book.
P/E (x) 45.5 34.4 26.8 21.0
 Update on time-line for new launches.
P/BV (x) 14.3 11.1 8.3 6.3
 Update on current demand trends for commercial vehicles and
EV/EBITDA (x) 28.5 21.4 16.7 12.9
discount levels.
Div. Yield (%) 0.4 0.5 0.6 0.7
 Update on capacity addition for RE & VECV.
Quarterly performance (Consolidated)

Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Operating income 15,557 17,549 18,348 18,881 20,006 21,673 22,690 24,942 70,334 89,312
Growth (%) 42.0 35.0 42.9 23.2 28.6 23.5 23.7 32.1 42.4 58.7
EBITDA 4,700 5,422 5,770 5,848 6,207 6,825 7,072 8,274 21,740 28,378
EBITDA Margins (%) 30.2 30.9 31.4 31.0 31.0 31.5 31.2 33.2 60.9 31.8
Exceptional Exp/(Inc) 0 0 0 0 0 0 0 2,900 0 2,900
Recurring PAT 3,763 4,132 4,182 4,594 4,596 5,180 5,205 7,300 16,780 22,159
Growth (%) 58.6 45.2 50.0 33.9 22.1 25.4 24.5 58.9 56.8 65.1
Standalone (Royal Enfield)
Royal Enfield (units) 147,483 166,941 173,838 178,228 183,998 202,867 206,586 227,041 666,490 820,492
Growth (%) 38.3 30.8 38.2 20.3 24.8 21.5 18.8 27.4 38.8 53.9
Net Realn (INR/unit) 105,603 105,576 105,477 105,731 108,691 106,651 109,603 110,263 105,598 108,851
Change - YoY (%) 2.7 3.7 3.3 1.5 2.9 1.0 3.9 4.3 2.4 3.1
EBITDA Margins (%) 30.8 31.3 31.8 31.4 31.4 31.9 31.7 32.0 31.3 31.8
Recurring PAT 3,371 3,962 4,152 4,116 4,943 4,864 4,720 5,262 15,600 19,807
Growth (%) 69.6 54.2 64.5 8.5 46.6 22.8 13.7 27.9 48.9 58.7
VECV
Total CV Volumes 16,071 13,408 11,784 17,341 11,583 15,013 16,231 23,101 58,604 65,928
Growth (%) 32.5 15.0 -7.1 11.5 -27.9 12.0 37.7 33.2 16.2 40.6
Net Realn (INR '000/unit) 1,331 1,470 1,600 1,473 1,557 1,558 1,596 1,569 1,449 1,571
Change - YoY (%) -9.6 -3.8 1.9 10.4 16.9 6.0 -0.2 6.5 -1.1 8.4
EBITDA Margins (%) 9.1 7.2 6.9 8.2 8.3 9.2 8.7 9.9 7.9 9.1
Recurring PAT 1,082 650 570 1,203 650 950 1,328 2,038 3,474 4,966
Growth (%) 40.9 -4.0 -36.0 1,890.9 -39.9 46.2 133.0 69.5 10.1 78.7
E: MOSL Estimates
April 2018 75
Endurance Technologies
Bloomberg ENDU IN CMP: INR1,263 TP: INR1,531(+21%) Buy
 We expect 21.2% YoY growth (5.8% QoQ) in consolidated revenue
M. Cap. (INR b)/(USD b) 178 / 3
to INR16.7b, led by strong performance in domestic as well as
1,6,12 Rel. Perf. (%) -4 / 23 / 52
exports segments.
 Consolidated EBITDA is expected to grow 21.6% YoY (3.6% QoQ),
led by healthy growth in the operating performance of both
Y/E March 2017 2018E 2019E 2020E
Indian and European operations.
Sales 55.9 64.2 73.3 86.0
 EBITDA margin is likely to remain flat YoY (-30bp QoQ) at 13.8%
EBITDA 7.6 9.0 11.1 13.8 mainly due to RM cost inflation.
NP 3.3 3.9 5.4 7.2  We expect PAT to grow 20% YoY (+4.7% QoQ) to INR1b.
Adj EPS (INR) 23.5 27.9 38.2 51.0  The stock trades at 33x FY19E EPS and 24.8x FY20 EPS. Maintain
EPS Gr. (%) 9.9 18.8 37.0 33.5 Buy.
BV/Sh. (INR) 122.9 145.7 175.7 211.3
RoE (%) 20.8 20.8 23.8 26.4 Key issues to watch for
RoCE (%) 15.6 17.4 21.1 24.5  Update on supplies to HMSI and Hero MotoCorp.
Valuations  Update on new products in India.
P/E (x) 53.8 45.3 33.0 24.8  EU business: Level of ramp-up at new plant in Germany.
P/BV (x) 10.3 8.7 7.2 6.0
EV/EBITDA (x) 23.9 20.2 16.1 12.7
Consolidated - Quarterly (INR m)

Y/E March FY17 FY18 FY17 FY18E
INR m 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 14,402 14,482 13,193 13,803 15,503 16,204 15,809 16,723 55,880 64,240
YoY Change (%) 13.3 7.5 2.3 4.8 7.6 11.9 19.8 21.2 6.8 15.0
RM Cost (% of sales) 58.4 57.8 57.0 57.4 59.0 59.3 57.4 58.0 57.7 58.4
Other Exp. (% of sales) 18.9 19.4 19.1 18.9 17.6 18.0 19.2 19.2 19.0 18.5
EBITDA 1,865 2,008 1,773 1,898 2,136 2,292 2,229 2,309 7,555 8,965
Margins (%) 13.0 13.9 13.4 13.8 13.8 14.1 14.1 13.8 13.5 14.0
Depreciation 684 699 741 781 742 768 798 804 2,905 3,113
Interest 104 81 88 49 57 69 47 60 322 233
Other Income 89 54 69 119 60 62 84 72 319 278
Exceptional Item 0 0 0 0 0 0 269 0 0 269
Rep. PBT 1,166 1,281 1,014 1,186 1,397 1,517 1,199 1,516 4,646 5,629
Eff. Tax Rate (%) 24.5 30.3 26.7 29.6 30.9 34.3 34.8 33.9 28.9 33.4
Adj. PAT 880 893 743 835 965 997 957 1,002 3,303 3,746
YoY Change (%) 15.2 14.8 13.5 3.3 9.7 11.6 28.8 20.0 9.9 18.8
April 2018 76
Escorts
Bloomberg ESC IN CMP: INR884 TP: INR826 (-6%) Sell
 Tractor volumes grew ~57% YoY to 23,568 units. Realizations are
M. Cap. (INR b)/(USD b) 108 / 2
estimated to decline ~2% QoQ due to weaker mix.
1,6,12 Rel Perf. (%) 2 / 28 / 53  We expect revenue to grow 42% YoY to INR14.5b in 4QFY18,
driven strong tractor volumes.
 We expect EBITDA margin to expand 430bp to 11.6%.
Y/E March 2017 2018E 2019E 2020E
Consequently, EBITDA should grow 126% YoY to INR1,681m.
Sales 41.5 51.8 58.1 64.2
EBITDA 3.1 5.7 6.8 8.0  PAT should grow by 126% to INR1.1b, restricted by higher tax
NP 1.6 3.5 4.4 5.2 rate.
EPS (INR) 19.2 39.1 49.5 59.0
 We have upgraded our EPS estimates for FY19/20E by 9%/7% to
EPS Growth (%) 70.5 103.5 26.5 19.3
factor in the strong outlook for tractors.
BV/Sh (INR) 190.1 244.3 285.5 336.2
RoE (%) 10.6 18.3 18.7 19.0  The stock trades at 17.9x/15x FY19/20E EPS. Maintain Sell.
RoCE (%) 10.2 18.1 18.7 28.3
Payout (%) 16.9 12.7 16.8 14.1
Valuations
 Market share movement and new launches.
P/E (x) 46.0 22.6 17.9 15.0
P/BV (x) 4.7 3.6 3.1 2.6
 Visibility of order book execution in railways division.
EV/EBITDA (x) 24.3 12.9 10.2 8.0
EV/Sales(x) 1.8 1.4 1.2 1.0
Standalone Quarterly Performance

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 10,480 9,827 10,743 10,223 11,632 12,117 12,050 14,487 41,274 50,286
YoY Change (%) 9.0 20.1 20.5 29.6 11.0 23.3 12.2 41.7 19.3 21.8
EBITDA 900 678 915 744 975 1,409 1,450 1,681 3,237 5,515
Margins (%) 8.6 6.9 8.5 7.3 8.4 11.6 12.0 11.6 7.8 11.0
Depreciation 139 157 167 167 178 179 179 180 631 716
Interest 85 64 49 112 80 84 59 35 311 258
Other Income 102 71 79 183 205 81 82 90 435 458
PBT before EO expense 778 528 777 647 923 1,227 1,294 1,556 2,730 4,999
Extra-Ord expense 58 32 20 -147 0 69 -1 0 -38 68
PBT 720 496 757 794 923 1,159 1,295 1,556 2,768 4,932
Tax 213 119 221 203 297 383 375 467 629 1,521
Rate (%) 29.5 24.0 29.2 25.6 32.1 33.1 29.0 30.0 22.7 30.8
Reported PAT 508 377 536 591 626 776 920 1,089 2,011 3,411
Adj PAT 548 401 550 482 626 822 919 1,089 1,981 3,456
YoY Change (%) 55.8 269.0 112.5 51.1 14.3 104.8 67.0 126.0 91.3 74.5
Margins (%) 5.2 4.1 5.1 4.7 5.4 6.8 7.6 7.5 4.8 6.9
E: MOSL Estimates
April 2018 77
Exide Industries
Bloomberg EXID IN CMP: INR233 TP: INR286 (+23%) Buy
 We expect revenues to grow 21% YoY to INR23.8b, led by strong
M. Cap. (INR b)/(USD b) 198 / 3
OEM and replacement demand, as well as ramp-up in telecom
1,6,12 Rel Perf. (%) 13 / 6 / -10
segment for EXID.
 Spot LME lead prices increased marginally by 0.5% QoQ, but 6%
YoY in 4QFY17.
 EBITDA margin is likely to shrink 10bp YoY (+60bp QoQ) to 13%.
Y/E MARCH 2017 2018E 2019E 2020E
Net Sales 76.2 91.3 105.0 121.1  PAT is likely to grow by 6% YoY (+13% QoQ) to INR1.75b.
EBITDA 10.9 12.1 14.5 17.1  The stock trades at 23.6x FY19E and 19.2x FY20E EPS. Maintain
Adj. PAT 6.9 6.8 8.4 10.3 Buy.
Adj. EPS (INR) 8.1 8.0 9.9 12.1 Key issues to watch
EPS Gr. (%) 10.6 -1.3 23.3 22.6  Update on demand environment for OEMs, auto replacement
BV/Sh. (INR) 58.4 63.5 70.8 79.2 and industrial battery segments post demonetization.
RoE (%) 13.9 12.6 14.0 15.3  Market share in autos and non-autos.
RoCE (%) 14.2 12.8 14.4 15.8  Outlook for raw material cost trend, recent pricing action and
Valuations 29.5 27.4 22.3 26.4 currency hedges, if any.
P/E (x)  Update on technical alliance with China-based Chaowei group
P/BV (x) 28.7 29.0 23.6 19.2
for lithium ion battery.
EV/EBITDA (x) 4.0 3.7 3.3 2.9
Div. Yield (%) 15.8 14.0 11.3 9.2
S/A Quarterly Performance (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 20,103 19,253 17,151 19,717 21,029 23,713 22,765 23,818 76,203 91,326
Growth YoY (%) 11.3 10.4 11.9 11.7 4.6 23.2 32.7 20.8 11.3 19.8
RM(%) 62.4 61.2 60.5 62.7 62.9 67.0 65.5 65.6 61.6 65.3
Employee cost (%) 6.4 6.9 7.5 6.6 6.8 6.2 6.7 6.3 6.8 6.5
Other Exp(%) 15.6 16.9 18.8 17.6 14.9 14.3 15.4 15.1 17.3 14.9
EBITDA 3,142 2,891 2,273 2,578 3,243 2,959 2,826 3,118 10,919 12,145
EBITDA Margin(%) 15.6 15.0 13.3 13.1 15.4 12.5 12.4 13.0 14.3 13.3
Change (%) 18.4 13.3 -5.0 -3.2 3.2 2.3 24.3 21.0 6.8 11.2
Non-Operating Income 150 231 374 255 132 139 111 158 899 539
Interest 17 6 46 0 16 21 9 14 30 60
Depreciation 491 506 522 544 563 597 625 668 2,063 2,453
PBT after EO Exp 2,784 2,611 2,079 2,289 2,796 2,061 2,302 2,595 9,725 9,754
Tax 824 793 564 641 906 706 759 848 2,821 3,219
Adj. PAT 1,961 1,818 1,515 1,648 1,890 1,630 1,543 1,747 6,904 6,815
Change (%) 25.9 17.2 9.4 -6.0 -3.6 -10.3 1.8 6.0 10.6 -1.3
E: MOSL Estimates
April 2018 78
Hero MotoCorp
Bloomberg HMCL IN CMP: INR3,640 TP:INR3,922 (+8%) Neutral
 Volume increased by ~23% YoY (17% QoQ) to 2m units, led by
M. Cap. (INR b)/(USD b) 727 / 11
healthy rural sentiment.
52-Week Range (INR) 4200 / 3180
 Realization would be flat YoY and QoQ at INR42,834/unit.
1,6,12 Rel Perf. (%) 4 / -10 / 2
 Net revenue should increase by 24% YoY (17% QoQ) to INR85.7b.
 EBITDA margin is expected to expand by ~290bp YoY (+90bp QoQ)
Y/E March 2017 2018E 2019E 2020E
to 16.7%, over lower base of previous year due to provisioning
Sales 284.7 322.1 361.3 395.7
related to BS-IV transition.
EBITDA 46.3 53.4 58.2 63.4  EBITDA is likely to grow 49.7% YoY (+23.8% QoQ) to ~INR14.3b.
NP 33.8 37.2 40.3 44.3  We expect PAT to grow 37.4% YoY (+22.4% QoQ) to INR9.9b.
Adj. EPS (INR) 169.1 186.1 202.0 221.3  The stock trades at 18x FY19E and 16.4 FY20E EPS; maintain
EPS Gr. (%) 6.9 10.0 8.5 9.6 Neutral.
BV/Sh. (INR) 506.3 584.0 671.5 764.6 Key issues to watch
RoE (%) 35.7 34.1 32.2 30.9  Update on rural demand.
RoCE (%) 34.5 32.9 31.2 30.0  Update on discounts given.
Payout (%) 57.8 55.6 54.1 54.6  Update on demand of new launches.
Valuations  Outlook on exports.
P/E (x) 21.5 19.6 18.0 16.4
P/BV (x) 7.2 6.2 5.4 4.8
EV/EBITDA (x) 14.4 12.1 11.0 9.9
Div. Yield (%) 2.3 2.5 2.6 2.9

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Volumes ('000 nos) 1,745 1,823 1,473 1,622 1,849 2,023 1,709 2,002 6,664 7,583
Growth YoY (%) 6.1 15.8 -12.8 -5.8 6.0 10.9 16.0 23.4 0.5 13.8
Net Realization 42,391 42,755 43,202 42,635 43,104 41,339 42,745 42,834 42,729 42,481
Growth YoY (%) 1.0 -1.1 1.1 -2.2 1.7 -3.3 -1.1 0.5 -0.4 -0.6
Net Op Revenues 73,989 77,963 63,646 69,152 79,716 83,620 73,055 85,736 284,750 322,127
Change (%) 7.2 14.5 -11.9 -7.9 7.7 7.3 14.8 24.0 0.1 13.1
RM Cost (% sales) 67.1 66.5 64.9 68.5 67.7 68.1 67.4 67.7 66.8 67.7
Staff Cost (% sales) 4.5 4.6 5.9 4.7 4.7 4.6 5.5 4.7 4.9 4.9
Other Exp (% sales) 11.7 11.4 12.3 12.9 11.4 9.9 11.3 10.9 12.1 10.8
EBITDA 12,301 13,689 10,797 9,576 12,959 14,557 11,580 14,336 46,348 53,432
EBITDA Margins (%) 16.6 17.6 17.0 13.8 16.3 17.4 15.9 16.7 16.3 16.6
Other Income 1,204 1,524 1,319 1,182 1,317 1,176 1,100 1,032 5,224 4,625
Interest 15 16 15 15 16 16 16 16 61 63
Depreciation 1,152 1,193 1,249 1,353 1,330 1,360 1,383 1,397 4,927 5,470
PBT 12,337 14,004 10,853 9,390 12,931 14,357 11,282 13,954 46,585 52,524
Adj. PAT 8,831 10,042 7,720 7,178 9,140 10,105 8,054 9,860 33,771 37,160
Growth (%) 18.1 27.7 -2.7 -13.9 3.5 0.6 4.3 37.4 6.9 10.0
E: MOSL Estimates
April 2018 79
Mahindra CIE
Bloomberg MACA IN CMP: INR221 TP: INR272 (+23%) Buy
 MACA’s standalone revenue is expected to increase by 24% YoY
(+2.5% QoQ), led by strong growth for key customers and merger
1,6,12 Rel Perf. (%) -5 / -12 / -14
of Gears India.
 Standalone EBITDA margin is expected to expand ~190bp YoY
(+90bp QoQ) to 11.2% due to favourable mix and operating
Y/E Dec 2017 2018E 2019E 2020E
leverage.
 As a result, standalone PAT is expected to grow 67.5% YoY
Sales 65.2 68.8 74.2 78.8
EBITDA 8.2 9.4 11.1 12.2 (+53.7% QoQ).
EPS (Rs) 9.6 12.1 15.1 16.8  Consolidated revenue is expected to grow by ~5% YoY (-3% QoQ)
EPS Growth (%) 107.8 26.3 24.8 11.3 to INR16.6b.
BV/Share (Rs) 98.3 110.4 125.5 142.4  Consolidated EBITDA margin is expected to expand ~170bp YoY
RoE (%) 10.4 11.6 12.8 12.6 (+30bp QoQ) to 13.7% mainly attributable to improved
RoCE (%) 8.7 10.1 11.5 11.5 performance in standalone business. As a result, consol. PBT is
Valuations expected to grow ~22% YoY (+7% QoQ) to INR1.4b.
P/E (x) 23.0 18.2 14.6 13.1  The stock trades at 14.6x FY19E and 13.1x FY20E EPS; maintain
P/BV (x) 2.2 2.0 1.8 1.6 Buy.
EV/EBITDA(x) 11.5 9.7 7.8 6.7 Key issues to watch
EV/Sales (x) 1.5 1.3 1.2 1.0  Outlook for CY18.
Consolidated  Update on new products/customer addition.
 Update on new order wins and ramp-up of past orders.
Quarterly performance
Consolidated (INR m) CY17 CY18E CY17 CY18E
Consolidated 1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE
Net Sales 15,781 15,849 16,494 17,077 16,570 16,721 17,401 18,099 65,200 68,791
YoY Change (%) 18.9 15 32 25.2 5.0 6 6 6.0
EBITDA 1,889 1,995 2,052 2,285 2,270 2,307 2,367 2,500 8,221 59,347
Margins (%) 12.0 12.6 12.4 13.4 13.7 13.8 13.6 13.8
PBT before EO exp 1,170 1,233 1,334 1,330 1,423 1,462 1,530 1,678 5,136 6,093
YoY Change (%) 49.0 58.3 98.5 250.0 21.6 18.6 14.7 25.8 89.8 18.6
E: MOSL Estimates
Standalone (INR m)
Y/E December CY17 CY18E CY17 CY18E
1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE
Net Sales 4,641 4,495 4,847 5,615 5,754 5,169 5,525 6,468 19,607 22,916
YoY Change (%) 14.8 11.2 21.0 39.6 24.0 15.0 14.0 15.2 21.7 16.9
EBITDA 431 427 488 583 647 594 681 828 1,948 2,750
Margins (%) 9.3 9.5 10.1 10.4 11.2 11.5 12.3 12.8 9.9 12.0
Depreciation 171 182 178 228 230 235 235 244 759 944
Interest 26 18 13 33 30 25 25 21 98 101
Other Income 29 43 27 38 35 38 35 42 127 150
PBT before EO expense 264 269 325 360 422 372 456 604 1,217 1,855
PBT 264 269 325 291 422 372 456 604 1,148 1,855
Tax 97 93 121 144 144 127 155 205 455 631
Rate (%) 36.9 34.4 37.3 49.6 34.0 34.0 34.0 34.0 39.6 34.0
Reported PAT 166 176 204 146 279 246 301 399 693 1,224
Adj PAT 166 176 204 181 279 246 301 399 735 1,224
YoY Change (%) -2.1 25.1 86.2 65.7 67.5 39.2 47.8 95.8 28.0 66.6
E: MOSL Estimates
April 2018 80
Mahindra & Mahindra

Bloomberg MM IN CMP: INR769 TP:INR889 (+16%) Buy
 Overall volumes were up 25.4% YoY (+12.4% QoQ), as tractor and
M. Cap. (INR b)/(USD b) 928 / 14
UV volume increased 41% YoY and 18% YoY, respectively. 3W
1,6,12 Rel Perf. (%) 7 / 16 / 8
sales increased 43% YoY, supporting overall volume growth.
 MM’s (including MVML) realization is expected to decline 1.1%
YoY (+1.8% QoQ), led by better product mix due to increase in
Y/E March
share of tractors.
2017 2018E 2019E 2020E
Sales 437.9 488.9 553.1 613.6
 Revenue is likely to increase 24% YoY (14.5% QoQ) to ~INR131.6b.
EBITDA 47.7 60.2 70.3 79.5  EBITDA margin is expected to expand 180bp YoY (-130bp QoQ) to
NP (incl. MVML) 37.4 42.1 47.9 54.9 14.3%.
Adj. EPS (INR) * 31.5 35.5 40.3 46.2  PAT expected to increase 25% YoY to INR10b.
EPS Gr. (%) 11.9 12.6 13.6 14.7  We have upgraded our estimate for FY19/20E by 7%/6% to factor
Cons. EPS (INR) 27.4 39.7 46.9 51.2 in the stronger outlook for tractors and rural markets.
BV/Share (INR) 216 242 270 303  The stock trades at 19.1x FY19E and 16.6x FY20E EPS; Maintain
RoE (%) 14.2 14.6 14.8 15.2 Buy.
RoCE (%) 13.3 13.4 13.8 14.3
Valuations Key issues to watch
P/E (x) 24.4 21.7 19.1 16.6  Outlook for UV and tractor businesses for FY18.
Cons. P/E (x) 28.1 19.4 16.4 15.0  Update on smaller businesses like two-wheelers, commercial
P/BV (x) 3.6 3.2 2.9 2.5
vehicles, Ssangyong, etc.
EV/EBITDA (x) 9.0 14.7 12.4 9.4
 Update on new launches.
Div. Yield (%) 0.8 1.3 1.3 1.3
* incl. MVML
Quarterly Performance (incl MVML)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Volumes (nos) 196,125 187,837 197,457 188,496 201,501 218,437 210,223 236,376 769,617 869,118
Growth YoY (%) 14.1 18.4 1.9 3.5 2.7 16.3 6.5 25.4 8.8 12.9
Net Realization 536,631 535,827 527,728 562,989 550,573 550,176 546,632 556,626 544,367 549,532
Growth YoY (%) -2.3 -3.4 -2.3 0.8 2.6 2.7 3.6 -1.1 -0.9 0.9
RM Cost (% of sales) 68.4 66.6 68.0 68.4 68.5 65.9 66.2 67.3 68.1 67.0
Staff (% of sales) 6.8 7.4 7.4 6.4 7.0 6.6 7.0 6.4 6.9 6.7
Oth. Exp. (% of Sales) 10.6 11.9 11.0 13.5 11.4 11.6 12.1 12.5 11.6 12.0
Total Cost 90,276 86,414 90,051 93,754 96,402 100,946 97,989 113,943 362,398 409,279
EBITDA 14,971 14,234 14,152 12,368 14,539 19,233 16,926 17,631 56,556 68,328
EBITDA Margins (%) 14.2 14.1 13.6 11.7 13.1 16.0 14.7 13.4 13.5 14.3
Other income 1,294 6,881 930 2,940 1,282 5,549 1,011 1,402 12,035 9,244
Interest 515 550 603 673 499 440 435 456 2,285 1,830
Depreciation 3,484 4,602 3,878 3,782 3,783 3,992 4,052 4,186 14,721 16,012
PBT 13,176 15,963 14,239 11,790 11,538 20,350 17,307 14,391 53,597 63,587
Adj PAT 8,949 11,567 8,315 8,043 7,683 14,109 10,147 10,015 37,429 42,142
Change (%) 7.8 18.9 -2.1 17.0 -14.2 22.0 22.0 24.5 12.1 12.6
E: MOSL Estimates
April 2018 81
Maruti Suzuki
Bloomberg MSIL IN
CMP: INR9,024 TP: INR10,685 (+18%) Buy
 Volume grew by 11.4% YoY (+7.1% QoQ) to 461.7k units, led by
M. Cap. (INR b)/(USD b) 2726 / 42
52-Week Range (INR) 10000 / 6024
Baleno, Brezza, newly launched Swift Dzire, and recovery in small
1,6,12 Rel Perf. (%) 4 / 8 / 37 cars.
 Net realization is likely to improve 2.2% YoY (+1.1% QoQ) to

INR451,896 per unit, boosting net revenue by 13.8% YoY (+8.2%
Y/E MARCH 2017 2018E 2019E 2020E QoQ) to INR208.6b. Growth in realization is likely to be driven by
Sales 680.3 794.6 933.2 1,105.2 improvement in product mix and nil discounts on newly launched
EBITDA 104.7 123.8 149.4 191.8 products.
Adj. PAT 74.2 81.4 103.6 136.1  We expect margin to expand 140bp YoY (+20bp QoQ) to 16%
Con.adj.EPS 248.6 275.1 349.0 457.0 mainly due to favorable mix and operating leverage.
EPS Gr. (%) 36.6 10.6 26.9 30.9  EBITDA is estimated to grow by 24% YoY (+9.6% QoQ) to
BV/Sh. (INR) 1,197 1,365 1,575 1,864 INR33.3b.
RoE (%) 20.3 19.7 21.8 24.2  We expect PAT to increase by 27.9% YoY and QoQ to INR23b.
RoCE (%) 27.3 27.8 30.2 33.4  We cut our FY19/20 EPS estimates by 6%/3% to factor in
Valuations appreciating JPY.
P/E (x) 36.3 32.8 25.9 19.7  The stock trades at 25.9x FY19E and 19.7x FY20E EPS. Maintain
P/CE (x) 27.0 24.6 20.0 15.9 Buy.
EV/EBITDA (x) 23.4 19.5 15.7 11.8
Key issues to watch
Div. Yield (%) 0.8 0.9 1.2 1.5
 Update on demand scenario, channel inventory, discounting
*Consol. & adjusted
trends, and new launches.
 Clarity on action plan under Suzuki-Toyota partnership.
 Update on royalty reduction proposal.
Quarterly Perf. (INR m)  (INR m)
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Volumes (nos) 348,443 418,470 387,251 414,439 394,571 492,118 431,112 461,662 1,568,603 1,779,463
Change (%) 2.1 18.4 3.5 15.0 13.2 17.6 11.3 11.4 9.8 13.4
Realizations (INR/car) 428,899 427,001 436,105 442,367 444,678 442,337 447,290 451,896 433,729 446,536
Change (%) 9.4 8.9 8.7 4.6 3.7 3.6 2.6 2.2 7.9 3.0
Net operating revenues 149,447 178,687 168,882 183,334 175,457 217,682 192,832 208,623 680,348 794,594
Change (%) 11.7 29.0 12.5 20.3 17.4 21.8 14.2 13.8 18.4 16.8
RM Cost (% of sales) 67.9 67.7 69.3 69.6 70.0 68.8 69.1 69.2 68.7 69.3
Other Cost (% of sales) 13.4 12.4 12.3 12.4 13.0 11.2 11.5 11.5 12.5 11.8
EBITDA 22,148 30,365 24,882 26,775 23,312 36,775 30,378 33,291 104,710 123,756
EBITDA Margins (%) 14.8 17.0 14.7 14.6 13.3 16.9 15.8 16.0 15.4 15.6
Depreciation 6,380 6,291 6,341 7,010 6,839 6,825 6,890 6,998 26,021 27,552
EBIT 15,768 24,074 18,541 19,765 16,473 29,950 23,488 26,293 78,689 96,204
EBIT Margins (%) 10.6 13.5 11.0 10.8 9.4 13.8 12.2 12.6 11.6 12.1
Interest 181 197 290 226 313 150 263 174 894 900
Non-Operating Income 4,881 8,189 5,968 4,491 6,827 5,229 2,449 6,483 23,001 20,988
PBT 20,468 32,066 24,219 22,850 22,987 35,029 25,674 32,602 99,616 116,292
Adjusted PAT 14,909 24,043 17,472 17,988 15,564 24,843 17,990 23,007 74,452 81,404
Change (%) 23.4 60.6 47.7 21.9 4.4 3.3 3.0 27.9 41.2 9.3
E:MOSL Estimates
April 2018 82
Motherson Sumi
Bloomberg MSS IN CMP: INR333 TP: INR437 (+31%) Buy
 We estimate consolidated revenues to grow ~43% YoY, driven by
M. Cap. (INR b)/(USD b) 700 / 11
consolidation of PKC, strong growth in S/A business (+18%), PKC
1,6,12 Rel Perf. (%) 6 / -8 / 21
(+31%) and SMP (+19.5%). However, we estimate SMR revenues
to decline 1%.
 Consolidated PAT is expected to decline ~4% YoY to ~INR5.2b,
Y/E Mar 2017 2018E 2019E 2020E
impacted by margin decline in S/A and start-up costs in SMRPBV.
Sales 424.9 571.2 683.2 825.6
 Standalone EBITDA margin is expected to decline ~190bp YoY
EBITDA 42.8 51.7 74.7 100.1 (+130bp QoQ) to 18.7% due to impact of copper price inflation.
EPS (Rs) 7.7 8.1 12.5 17.5  For SMR, we estimate EBITDA margins to improve ~20bp to
EPS Growth (%) 18.2 5.0 54.7 39.6 ~11.4% due to operating leverage.
BV/Share (Rs) 39.3 44.8 53.7 65.7  For SMP, we estimate EBITDA margins to improve ~20bp to ~5.9%
RoE (%) 25.6 19.2 25.4 29.3 due to operating leverage.
RoCE (%) 14.7 11.8 17.4 21.5  For PKC, we estimate EBITDA margins to improve ~150bp to 7.8%
Payout (%) 23.6 26.8 29.1 31.5 due to partial easing up of supply side constraints.
Valuations  The stock trades at 26.6x FY19E and 19x FY20E EPS; Maintain Buy.
P/E (x) 43.2 41.1 26.6 19.0
Key issues to watch
P/BV (x) 8.5 7.4 6.2 5.1
 Update on order book of SMRPBV and PKC.
EV/EBITDA(x) 12.1 14.3 9.7 6.9
 Update on new plants of SMRPBV.
EV/Sales (x) 1.2 1.3 1.1 0.8
 Update on trends in key businesses.
Quarterly performance (Cons.) (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 104,504 101,369 106,041 112,839 131,286 134,313 143,979 161,653 424,934 571,231
YoY Change (%) 15.5 10.2 12.3 14.5 25.6 32.5 35.8 43.3 14.2 34.4
RM Cost (% of sales) 61.0 60.5 61.7 59.4 60.8 60.6 61.5 63.4 60.6 61.7
Other Expenses (% of sales) 10.9 10.8 9.3 10.2 10.5 10.3 10.3 9.2 10.3 10.0
EBITDA 9,282 10,068 11,093 12,405 11,864 12,504 12,595 14,690 42,847 51,653
Margins (%) 8.9 9.9 10.5 11.0 9.0 9.3 8.7 9.1 10.1 9.0
Depreciation 2,508 2,643 2,733 2,707 3,768 3,978 3,937 3,968 10,591 15,651
Interest 847 980 1,084 838 1,176 771 1,032 1,083 3,749 4,061
Other Income 37 45 433 948 39 156 151 130 1,463 475
Extra-Ord expense 0 0 0 974 1,502 48 21 0 974 1,571
Tax Rate (%) 32.8 32.4 36.9 22.4 33.7 29.5 32.4 30.6 30.4 31.4
Minority Int & Share of profit 983 774 706 1,887 335 1,168 1,595 1,600 4,350 4,698
Adj PAT 3,026 3,513 3,813 5,383 3,546 4,386 3,656 5,182 16,039 16,769
YoY Change (%) 15.2 -3.8 13.5 42.0 17.2 24.9 -4.1 -3.7 27.5 6.6
E: MOSL Estimates
April 2018 83
Tata Motors
Bloomberg TTMT IN CMP: INR343 TP:INR528 (+54%) Buy
 Consolidated revenues are estimated to grow 15.5% YoY, with
M. Cap. (INR b)/(USD b) 1166 / 18
EBITDA margin expanding 70bp YoY to 14.7%. As a result, adj. PAT
is estimated to grow 11% YoY to ~INR48.1b.
1,6,12 Rel Perf. (%) -5 / -23 / -39
 We expect JLR’s (incl. JV) volume to be up by 2.6% YoY (+13%
QoQ), impacted by weak demand environment in key markets.
Financial Snapshot (INR b)  Net realization is expected to increase by 3% YoY (-0.2% QoQ), led
Y/E March 2017 2018E 2019E 2020E by better mix. EBITDA margin would expand 20bp YoY (+380bp
Net Sales 2,697 2,925 3,336 3,586 QoQ) to 14.7%, led by a better mix and lower Fx hedge losses.
EBITDA 369.1 367.1 524.1 556.4 Higher depreciation would lead to adj. PAT decline of 11% YoY to
NP 67.3 86.7 192.3 199.4 GBP482m.
Adj. EPS (INR) 19.8 25.5 56.6 58.7  S/A volume increased 38% YoY (+19% QoQ), led by 46% growth in
EPS Gr. (%) -48.4 28.8 121.8 3.7 LCVs, 18% YoY growth in M&HCV. EBITDA margin is likely to
BV/Sh. (INR) 171.0 206.6 264.5 324.5 expand 540bp YoY to 9.5%. We expect standalone operations to
RoE (%) 9.8 13.5 24.0 19.9 be PAT positive at INR5.5b (2nd consecutive quarter of positive
RoCE (%) 9.2 7.8 12.8 11.1 PAT).
Payout (%) 0.0 1.3 0.6 0.6  The stock trades at 6.1x FY19E and 5.8x FY20E EPS. Buy.
P/E (x) 17.3 13.4 6.1 5.8  Current demand trends for JLR and outlook for key markets.
P/BV (x) 2.0 1.7 1.3 1.1  Update on new launches.
EV/EBITDA (x) 3.6 3.9 2.7 2.4  Impact of forex hedge loss.
Div. Yield (%) 0.0 0.1 0.1 0.1  Update on Chery JV operations and CV business outlook.
(Consolidated) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
JLR vols. (incl JV) 134,334 139,227 152,245 175,000 138,476 153,210 159,067 179,593 600,806 630,346
JLR Realizations (GBP/unit) 44,338 45,642 46,200 45,746 47,483 48,137 47,181 47,081 45,515 47,449
JLR EBITDA (%) 12.5 10.9 10.1 14.5 7.9 11.8 10.9 14.7 12.1 11.6
S/A vol. (units) 126,839 134,397 132,553 148,533 109,692 153,321 171,388 204,356 542,322 638,757
S/A Realizations (INR/unit) 811,243 765,059 769,912 914,725 829,080 905,798 939,482 940,480 818,038 912,757
S/A EBITDA (%) 6.5 3.3 1.4 4.1 0.0 7.0 8.5 9.5 3.8 7.2
S/A PAT (INR m) 258 -5,793 -10,452 -5,369 -4,671 -2,953 1,880 5,535 -21,341 -181
Net Op Income 650,047 635,376 639,330 772,172 584,934 706,907 741,561 892,009 2,696,925 2,925,410
Growth (%) 7.6 3.3 -9.4 -2.9 -10.0 11.3 16.0 15.5 -1.2 8.5
EBITDA 90,275 74,298 62,403 108,012 49,648 89,383 85,435 130,740 295,887 355,206
EBITDA Margins (%) 13.9 11.7 9.8 14.0 8.5 12.6 11.5 14.7 11.0 12.1
PBT before EO Exp 34,718 21,304 13,071 52,011 -5,145 30,099 19,070 57,661 82,002 101,686
EO Exp/(Inc) 9,204 11,311 7,085 356 -42,515 -715 -1,220 0 27,955 -44,449
PBT after EO Exp 25,514 9,993 5,986 51,655 37,370 30,814 20,290 57,661 54,047 146,135
Tax rate (%) 28.2 42.5 144.8 24.0 32.3 35.4 52.6 23.7 60.2 32.4
Adj PAT 28,970 14,788 -2,239 43,229 3,045 24,366 11,408 48,123 46,581 86,696
Growth (%) (39.0) 61.1 (107.2) (25.0) (89.5) 64.8 (609.6) 11.3 -64.3 86.1
E: MOSL Estimates
April 2018 84
TVS Motor Company

Bloomberg TVSL IN CMP: INR649 TP: INR710 (9%) Neutral
 Volume increased 32% YoY (+7.6% QoQ) to 889.1k units. Scooter
M. Cap. (INR b)/(USD b) 309 / 5
and motorcycle volume increased by 22% and 27% YoY,
1,6,12 Rel Perf. (%) -2 / -7 / 38
respectively. 3W volumes rose by 68% YoY, while moped volume
declined by 7% YoY.
 Net realization is likely to increase 6.5% YoY (+1% QoQ) to
Y/E March 2017 2018E 2019E 2020E
INR44,981 per unit due to a favourable sales mix and price hikes.
 We estimate net sales to grow by ~41% YoY (+8.5% QoQ) to
Sales 121.4 151.4 188.1 226.1
EBITDA 8.6 11.7 18.1 24.6 ~INR45b.
Adj. PAT 5.6 6.7 10.7 15.4  EBITDA margin is expected to be 8.1%, an increase of 240bp YoY
EPS (INR) 11.7 14.1 22.4 32.4 (+30bp QoQ), as margin was dented in 4QFY17 due to provision
EPS Gr. (%) 14.1 20.4 58.8 44.1 related to BS IV transition.
BV/Sh (INR) 50.7 61.2 78.9 105.2  We expect PAT to increase ~38% YoY (+13% QoQ) to INR1.7b.
RoE (%) 25.6 25.3 32.0 35.2  We have cut our FY19E/20E margin by 50bp/10bp. We have
RoCE (%) 22.8 25.6 34.6 41.4 revised downward our FY19E/20E EPS estimate by 11%/5% to
Payout (%) 25.6 25.5 21.4 18.6 factor in lower EBITDA margin and lower other income.
Valuations  The stock trades at 28.9x FY19E and 20.1x FY20E EPS; Maintain
P/E (x) 55.3 45.9 28.9 20.1 Neutral.
P/BV (x) 12.8 10.6 8.2 6.2 Key issues to watch
EV/EBITDA (x) 37.3 27.2 17.4 12.4  Update on demand for new launches Apache RR310 and NTorq.
Div. Yield (%) 0.4 0.5 0.6 0.8  Update on future product actions, including EVs.
 Impact on spare parts business post GST.
 Update on outlook for exports.
S/A Quarterly Performance
Y/E March (INR m) FY17 FY18E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE FY17 FY18E
Motorcycles 282,441 332,070 247,635 213,642 330,050 365,277 313,892 346,357 1,072,503 1,355,576
Scooters 196,314 229,455 221,088 223,242 257,572 328,333 268,947 280,066 870,863 1,134,918
Mopeds 218,872 233,636 233,758 221,253 197,449 229,726 216,478 233,279 910,519 876,932
Three-wheelers 17,337 20,401 16,081 15,435 17,037 25,248 26,968 29,431 69,254 98,684
Volumes (units) 714,964 815,562 718,562 673,572 802,108 948,584 826,285 889,133 2,923,139 3,466,111
Growth (%) 12.1 20.2 2.4 2.0 12.2 16.3 15.0 32.0 9.1 18.6
Realization (INR/unit) 40,305 42,014 41,519 42,230 42,382 42,721 44,597 44,981 41,515 43,669
Growth (%) (0.1) 0.5 0.7 (0.3) 5.2 1.7 7.4 6.5 0.1 5.2
Net Sales 28,817 34,265 29,834 28,445 33,995 40,524 36,850 39,994 121,353 151,363
Growth (%) 11.9 20.8 3.0 1.7 18.0 18.3 23.5 40.6 9.3 24.7
RM (% of sales) 72.5 72.3 72.0 75.1 74.6 73.4 72.7 72.9 73.0 73.4
Emp cost ( % of sales) 6.3 5.8 6.4 6.1 6.1 5.4 5.7 5.6 6.1 5.7
Other exp (% of sales) 14.2 13.8 14.2 13.1 13.1 12.6 13.8 13.4 13.8 13.2
TOTAL EXPENDITURE 26,806 31,498 27,649 26,830 31,881 37,021 33,982 36,749 112,782 139,632
EBITDA 2,011 2,767 2,185 1,615 2,114 3,503 2,868 3,245 8,571 11,731
EBITDA Margin(%) 7.0 8.1 7.3 5.7 6.2 8.6 7.8 8.1 7.1 7.8
Interest 98 94 115 132 107 155 122 137 440 521
Depreciation 660 724 720 775 783 836 824 840 2,878 3,284
Other Income 362 392 348 632 571 456 182 144 1,734 1,352
PBT before EO Exp 1,616 2,340 1,698 1,340 1,794 2,968 2,104 2,412 6,987 9,278
Tax rate (%) 24.5 24.2 21.9 5.4 27.8 28.2 26.6 27.6 20.1 27.6
Adjusted PAT 1,220 1,774 1,327 1,268 1,295 2,132 1,543 1,747 5,581 6,717
Growth (%) 21.9 33.4 10.4 (6.8) 6.1 20.2 16.3 37.8 14.1 20.4
E: MOSL Estimates
April 2018 85
March 2015
2016 March
Results2018
Preview
Results
| Sector:
Preview
Capital
| April
Goods
2018
Technology
Capital Goods
Business activity showing signs of stabilization post GST
Company name
Capex activity remains weak, though green shoots seen in select pockets
ABB
Bharat Electronics Domestic capex cycle weak; exports hamstrung by subdued global demand
BHEL The domestic capex cycle appears to have remained weak. New project
announcements stood at INR6.6t in FY18, a dip of 52% YoY and the lowest since
Blue Star
FY05. Private sector projects fell to their lowest since FY04 to INR3.7t (down 51%
CG Power YoY) and accounted for 56% of total new projects. Though the near-term outlook
Crompton Greaves Consumer remains subdued, we note that policy initiatives and efforts are underway to (i)
Cummins India expedite regulatory approvals, and (ii) establish monetary conditions conducive to
industrial revival over the medium term.
Engineers India
GE T&D  We believe investment revival would be triggered by: (i) a sustained recovery in
consumption demand, and thus, capacity utilization, and (ii) investment push by
Havells India
the public sector, leading to a virtuous cycle of cash flow generation.
Larsen & Toubro Simultaneously, sustained progress in reviving stalled projects is imperative to
Siemens attract new investments and stimulate aggregate demand. Currently, stalled
Thermax
projects stand at 11.6t, 11.4% of the projects under implementation.
 By initiating the GST, labor and energy sector reforms, the Indian government
Voltas
has partly addressed concerns about the pace and extent of reforms.
Implementation of substantive reforms is essential for structured investment
growth.
 Indian machinery exports have decelerated due to weak global demand,
geopolitical concerns, and currency volatility across markets, among others.
Also, volatile crude prices have had an adverse impact on global trade, and thus,
investment demand. Project awards in the Middle-East have been muted.
Equipment manufacturers key beneficiaries of ‘Make in India’ initiative

‘Make in India’ is the central government’s initiative to improve the manufacturing
sector’s contribution through import substitution and increased exports. The intent
is to ensure that customers in the public and private sectors increasingly procure
locally-manufactured equipment. Power Grid has mandated T&D players to produce
certain components in India for orders tendered out in key high-end technology
products, such as SVC/STATCOM, GIS, 765KV transformers and reactors, HTLS
conductors, OPGW, and HVDC.
In our view, the successful implementation of this initiative should benefit Capital
Goods players. Increased imports over the past 5-6 years, particularly from
China/South Korea, have been a key concern across several product segments, even
where domestic manufacturing capabilities and competitiveness exist. Key
beneficiaries include BHEL/Siemens (railways, solar cells, power T&D, defense, etc),
L&T/Bharat Electronics (defense), ABB/Alstom/CG Power/Siemens (power T&D, etc)
and Thermax (industrial products/power BTG).
Ankur Sharma – Research Analyst (Ankur.vsharma@MotilalOswal.com); +91 22 6129 1556

Amit Shah – Research Analyst (Amit.Shah@MotilalOswal.com); +91 22 6129 1543
April 2018 86
March 2018 Results Preview | Sector: Capital Goods
Exhibit 1: Summary of expected quarterly performance

Sector Sales (INR M) EBDITA (INR M) Net Profit (INR M)
CMP (INR) RECO Mar-18 Var % YoY Var % QoQ Mar-18 Var % YoY Var % QoQ Mar-18 Var % YoY Var % QoQ
Capital Goods
ABB 1,283 Sell 25,780 18.9 -7.2 2,480 44.6 -15.6 1,380 56.1 -19.5
Bharat Electronics 147 Buy 45,228 13.4 80.0 11,837 20.8 165.9 8,949 13.0 195.5
BHEL 85 Sell 106,712 10.1 61.0 12,290 88.8 316.0 8,102 275.9 428.9
Blue Star 795 Neutral 14,977 8.9 52.3 1,069 41.4 99.8 602 61.8 219.8
CG Consumer Elect. 231 Buy 11,650 8.3 24.2 1,608 16.1 38.1 1,043 17.9 50.1
CG Power & Indl. 80 Neutral 14,095 9.7 19.5 1,058 30.0 21.4 428 -12.5 -17.3
Cummins India 740 Buy 12,227 3.2 -9.7 1,877 10.4 -4.6 1,678 5.9 -2.5
Engineers India 164 Buy 5,221 17.9 10.3 1,069 -25.9 -20.7 890 34.7 -18.0
GE T&D India 400 Neutral 13,275 11.0 -7.7 1,599 45.7 119.7 1,026 122.4 96.8
Havells India 509 Buy 24,789 45.0 26.1 3,100 35.0 18.2 2,056 19.9 18.6
Larsen & Toubro 1,330 Buy 416,408 13.7 44.9 51,419 18.6 63.5 27,537 -16.7 83.1
Siemens 1,124 Neutral 37,378 27.6 53.9 4,045 45.2 48.5 2,869 60.2 50.6
Thermax 1,136 Buy 18,412 23.5 64.8 2,220 28.2 132.6 1,598 159.8 172.8
Voltas 648 Neutral 23,560 15.8 71.4 2,926 31.9 146.7 2,138 6.7 112.9
Source: MOSL
Operating performance to improve post GST implementation

Project execution, which had suffered during the GST implementation phase, has
stabilized and is now showing signs of pickup. We expect companies from our
coverage universe to report 15% YoY growth at aggregate level. With execution
picking up, we also expect margins to improve for our coverage universe by 130bp,
driven by better operating leverage.
Ordering activity showing initial signs of pickup

 Overall ordering activity has started to see signs of pickup, driven by ordering
from the oil and gas sector, with spending for BS-VI emission norms along with
brownfield/greenfield refineries and fertilizer projects.
 Local ordering activity, which had been impacted on account of GST
implementation-related issues, has now started to see some pickup. Awarding
continues to be supported by government spending and private sector
participation remains subdued. Sector-wise, roads, railways, power T&D and
defense registered strong tendering activity (fiscal allocations for roads/railways
have increased).
Exhibit 3: EBITDA margin improved due to cost

Exhibit 2: Constrained growth in revenue rationalization steps taken by the companies
Engg Sector (revenue growth %) EBITDA Margin (%) EBITDA Margin (%)
17.9
16.1
2.8
16.0
15.5
14.5
14.0
13.5
12.3
12.1
12.0
12.0
12.0
11.6
17.9
11.3
15.3 11.0
10.6
10.2
16.6 10.0
10.0
9.9
9.7
9.2
16.1
16.0
8.7
8.7
8.5
8.4
8.3
8.7 7.8
15.5
2.7 7.2
9.6 6.6
14.5
14.0
4.3
13.5
12.3
26.3
12.1
12.0
12.0
12.0
11.7
11.6
19.6
1.3
3.1
1.2
28.8
16.8
15.6
11.3
21.7
18.2
20.9
5.3
11.0
6.6
2.4
2.9
22.0
3.5
12.8
16.4
10.6
10.2
10.0
10.0
9.9
9.7
9.2
8.7
8.7
8.5
8.4
8.3
-5.2
1QFY14 -3.5
7.8
7.2
4.3
6.6
3QFY15 -1.0
-0.8
1QFY16 -1.4
1QFY11
3QFY11
1QFY12
3QFY12
1QFY13
3QFY13
3QFY14
1QFY15
3QFY16
1QFY17
3QFY17
1QFY18
3QFY18
1QFY11
3QFY11
1QFY12
3QFY12
1QFY13
3QFY13
1QFY14
3QFY14
1QFY15
3QFY15
1QFY16
3QFY16
1QFY17
3QFY17
1QFY18
3QFY18
April 2018 87
December 2018 Results Preview | Sector: Capital Goods
Exhibit 5: Order intake growth driven by strong order inflow

Exhibit 4: Book-to-bill stable at 3.2x for L&T
Order book (INR b) BTB (x) Order intake YoY %
58
56
55
52
3.0
2,686
2.9
2.9
2.8
31
2.6
2.5
2.5
22
2.4
2.4
2.4
2.4
2.4
2.3
2.3
2.3
2.3
18
2.3
2.3
17
20
15
15
2.2
14
2.1
-9
1.7
2
2,964
2,893
2,958
2,989
3,028
2,943
3,230
3,482
3,594
3,605
3,813
3,717
3,934
3,847
3,868
3,797
3,970
3,955
3,871
4,062
-1
-2
-5
-13
-17
-22
3QFY17 -24
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
3QFY13
1QFY14
3QFY14
1QFY15
3QFY15
1QFY16
3QFY16
1QFY17
1QFY18
3QFY18
Exhibit 6: Relative performance – three-month (%) Exhibit 7: Relative performance – one-year (%)
Sensex Index Sensex Index

110
123
105
116
100
109
95
102
90 95
Dec-17
Jan-18
Feb-18
Mar-18
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17

Capital Goods
ABB 1,283 Sell 19.8 30.1 35.0 64.7 42.6 36.7 36.2 23.5 20.1 11.6 15.4 15.8
Bharat Electronics 147 Buy 7.1 7.8 8.3 20.8 18.9 17.7 12.1 12.1 11.2 17.8 17.6 16.9
BHEL 85 Sell 3.2 3.6 4.3 27.1 23.7 19.8 13.2 11.7 10.0 3.6 4.0 4.7
Blue Star 795 Neutral 16.6 24.6 31.2 47.9 32.3 25.5 24.1 19.1 15.6 20.4 28.3 33.1
CG Consumer Elect. 231 Buy 5.1 6.5 7.7 45.4 35.7 30.2 28.9 22.9 19.9 50.2 49.9 48.5
CG Power & Indl. 80 Neutral 1.1 1.9 3.0 70.3 43.0 27.1 25.3 15.4 13.5 1.7 2.7 4.2
Cummins India 740 Buy 23.0 31.0 36.8 32.1 23.9 20.1 25.6 19.7 16.2 16.5 20.7 22.6
Engineers India 164 Buy 6.3 6.9 8.2 26.0 23.8 19.9 15.0 15.5 12.2 13.9 14.1 15.6
GE T&D India 400 Neutral 10.3 11.3 12.9 38.8 35.4 31.0 24.4 20.7 18.5 23.5 22.3 22.1
Havells India 509 Buy 11.1 13.7 17.0 45.7 37.2 30.0 28.9 23.3 18.7 18.9 20.5 22.2
K E C International 406 Neutral 16.2 18.9 24.3 25.1 21.5 16.7 11.6 9.7 7.3 21.7 21.1 22.3
Larsen & Toubro 1,330 Buy 48.8 57.2 68.6 27.2 23.2 19.4 19.0 15.7 14.0 13.0 13.9 15.1
Siemens 1,124 Neutral 19.8 30.4 34.6 56.9 37.0 32.5 32.4 23.4 20.3 9.1 12.9 13.4
Solar Inds. 1,072 Neutral 24.4 29.6 36.7 43.9 36.2 29.2 24.7 20.6 16.8 20.0 20.6 21.5
Thermax 1,136 Buy 28.0 35.1 43.5 40.5 32.3 26.1 25.5 18.7 14.7 11.9 13.6 15.0
Va Tech Wabag 494 Buy 33.3 35.2 38.6 14.8 14.0 12.8 7.7 6.8 6.1 17.1 16.0 15.6
Voltas 648 Neutral 18.0 21.3 24.3 36.0 30.4 26.7 24.9 21.7 18.6 16.9 17.6 17.6
Source: Company, MOSL
April 2018 88
ABB
Bloomberg ABB IN
CMP: INR1,283 TP: INR1,240 (-3%) Sell
M. Cap. (INR b)/(USD b) 272 / 4
 During the quarter, ABB has opened its power distribution factory
52-Week Range (INR) 1744 / 1175 in Nashik, and facility for electrical safety and energy efficiency
1,6,12 Rel Perf. (%) -14 / -14 / -14 products in Bangalore.
 We expect ABB to register 19% YoY growth in revenue, led by 21%
growth in the power grid segment, as we anticipate the execution
Y/E Dec 2017 2018E 2019E 2020E of HVDC order to contribute to revenue.
Net Sales 90.9 115.9 123.2 122.0  We expect EBITDA margin to improve 170bp to 9.6%, led by better
EBITDA 7.4 11.2 12.9 15.0 operating leverage.
Adj. PAT 4.2 6.4 7.4 9.2  Net profit growth is expected to remain robust at 56% YoY to
Adj. EPS (INR) 19.8 30.1 35.0 35.5 INR1.4b. Maintain Sell.
EPS Gr (%) 12.1 52.0 16.2 1.5
BV/Sh (INR) 170.2 195.2 221.0 247.3
RoE (%) 11.6 15.4 15.8 14.4
RoCE (%) 16.2 22.9 23.7 21.7
Payout (%) 22.5 14.7 22.5 22.5
P/E (x) 64.7 42.6 36.7 36.1  Management commentary suggests cautious optimism.
P/BV (x) 7.5 6.6 5.8 5.2 Continued focus on exports and services to be an important driver
EV/EBITDA (x) 21.9 16.6 12.4 9.1 of projected strong double-digit revenue and profit growth.
Div. Yield (%) 0.3 0.3 0.6 0.6  Continued preference for cash generation vis-à-vis profits.
Y/E December CY17 CY18 CY17 CY18E
Sales 21,689 22,237 19,234 27,794 25,780 29,180 27,820 33,129 89,614 114,498
Change (%) 8.3 6.2 (6.4) 10.8 18.9 31.2 44.6 19.2 5.3 27.8
EBITDA 1,715 1,473 1,342 2,937 2,480 2,780 2,570 3,376 7,361 11,206
Change (%) -5.2 29.7 13.4 1.4 44.6 88.7 91.6 14.9 6.0 52.2
As % of Sales 7.9 6.6 7.0 10.6 9.6 9.5 9.2 10.2 8.2 9.8
Depreciation 376 383 389 432 400 350 350 419 1580 1519
Interest 212 231 152 178 200 200 200 193 773 793
Other Income 186 326 378 188 200 200 200 278 1210 878
PBT 1,312 1,185 1,178 2,515 2,080 2,430 2,220 3,041 6,218 9,771
Tax 428 435 344 800 700 800 780 1,108 2,018 3,388
Repoted PAT 884 751 1,134 1,715 1,380 1,630 1,740 1,933 4,200 6,383
Adj. PAT 884 751 834 1,715 1,380 1,630 1,440 1,933 4,200 6,383
Change (%) -5.3 34.9 18.2 5.4 56.1 117.2 72.7 12.7 12.1 52.0
April 2018 89
Bharat Electronics
Bloomberg BHE IN CMP: INR147 TP: INR210 (+41%) Buy
 For FY18, BHE plans to pursue business opportunities in solar
M. Cap. (INR b)/(USD b) 360 / 6
energy, homeland security, smart cities, smart cards and telecom.
 For FY18, BHE’s growth would be driven by radar/missile systems,
1,6,12 Rel Perf. (%) -2 / -16 / -11
communication and network-centric systems, tank electronics, gun
upgrades, electro-optic systems, and electronic warfare systems.
 BHE has planned capacity enhancement and creation of new test
Y/E March 2017 2018E 2019E 2020E
facilities for the defense business.
Net Sales 86.1 112.4 124.8 133.9
 We expect BHE to register revenue growth of 14% YoY, supported
EBITDA 15.5 17.4 19.1 20.4
by execution of Akash missile system, IACCS, and ship-borne EW
NP 6.3 7.1 7.8 8.3
systems.
EPS (INR) 27.2 12.1 10.0 6.8
 We expect EBITDA margin of 26.2% v/s 24.6% in 4QFY17 on better
EPS Gr. (%) 30.6 39.6 44.1 49.0
operating leverage. EBITDA is likely to grow 21% YoY to INR11.8b.
BV/Sh (INR) 20.6 17.8 17.6 16.9
PAT is expected to grow 13% YoY to INR8.9b. Maintain Buy.
RoE (%) 18.8 20.1 18.6 17.8
RoCE (%) 86.1 112.4 124.8 133.9
Valuations
P/E (x) 25.4 20.8 18.9 17.7
Key issues to watch
P/BV (x) 5.2 3.7 3.3 3.0
 Revenue growth: Key orders (Akash missile, intake of INR67b in
EV/EBITDA (x) 20.2 12.7 12.1 11.2
FY11-12) are currently under execution for Army and Air Force.
 Operating at 60% capacity utilization; possibility of strong operating
leverage.
Y/E March FY17 FY18 FY17 FY18
1QE 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 8,714 17,031 20,421 39,877 17,248 24,762 25,128 45,228 86,119 112,367
Change (%) -20.8 15.9 34.3 23.7 97.9 45.4 23.1 13.4 17.5 30.5
EBITDA (467) 3,384 4,828 9,797 1,633 5,950 4,452 11,837 17,617 23,872
Change (%) -699 87 74 8 -450 76 -8 21 28 36
As of % Sales -5.4 19.9 23.6 24.6 9.5 24.0 17.7 26.2 20.5 21.2
Depreciation 435 455 455 571 561 590 594 422 1,915 2,166
Interest 0 3 106 9 3 0 0 0 118 3
Other Income 1,387 1,714 776 909 723 510 492 675 4,710 2,400
PBT 486 4,641 5,043 10,125 1,793 5,870 4,350 12,090 20,294 24,103
Tax 125 1178 1307 2208 540 1746 1322 3141 4818 6749
Reported PAT 361 3,463 3,735 7,918 1,253 4,124 3,028 8,949 15,476 17,354
Change (%) -52.9 68.2 33.3 6.3 247.2 19.1 -18.9 13.0 18.4 12.1
Adj PAT 361 3,463 3,735 7,918 1,253 4,124 3,028 8,949 15,476 17,354
Change (%) -52.9 68.2 33.3 6.3 247.2 19.1 -18.9 13.0 18.4 12.1
April 2018 90
BHEL
Bloomberg BHEL IN CMP: INR85 TP: INR80 (-6%) Sell
 We expect muted revenue growth of 10% YoY, led by lower
M. Cap. (INR b)/(USD b) 314 / 5
availability of orders for execution.
1,6,12 Rel Perf. (%) -4 / -3 / -35
 We expect gross margin to decline 375bp YoY to 41.5%, led by
adverse revenue mix.
 Despite gross margin compression, operating profit is likely to
Y/E March 2017 2018E 2019E 2020E register strong growth of 89% YoY to INR12.3b, as 4QFY17 had
Net Sales 282.2 291.0 319.4 361.9 provision of INR9.6b related to employee expenses.
EBITDA 8.3 13.4 18.5 24.0  We estimate net profit at INR8.1b, as against profit of INR2.2b in
PAT 4.9 11.6 13.2 15.8 4QFY17.
EPS (INR) 1.3 3.2 3.6 4.3  During the quarter, BHEL has secured orders worth INR7.4b for
EPS Gr. (%) -169.3 135.9 14.2 14.2 nuclear steam generators.
BV/Sh. INR 88.0 89.0 90.1 91.5  It has also bagged an order for setting up a 2,400MW supercritical
RoE (%) 1.5 3.6 4.0 4.7 thermal power project in Jharkhand worth INR117b.
RoCE (%) 0.7 2.6 3.0 3.9  BHEL is L1 in 5.2GW of orders. Maintain Sell.
Payout (%) 59.8 59.8 59.8 59.8
Valuations
P/E (x) 63.8 27.1 23.7 19.8 Key issues to watch
P/BV (x) 1.0 1.0 0.9 0.9  Continued constraints on execution due to operational issues.
EV/EBITDA (x) 25.4 14.8 12.1 10.2  Trends in provisions, particularly for liquidated damages on
Div Yield (%) 0.9 2.2 2.5 3.0 project completion.
* Consolidated
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales (Net) 56,118 66,645 63,210 96,882 55,056 62,971 66,264 106,712 282,222 291,002
Change (%) 28.7 12.2 18.7 -2.9 -1.9 -5.5 4.8 10.1 10.8 3.1
EBITDA 710 1,551 2,239 6,509 -883 -954 2,954 12,290 8,270 13,407
Change (%) -133.9 -135.4 -113.9 -24.9 -224.3 -161.5 32.0 88.8 -160.5 62.1
As a % Sales 1.3 2.3 3.5 6.7 -1.6 -1.5 4.5 11.5 2.9 4.6
Interest 57 50 263 3,136 657 552 610 1,180 3,506 3,000
Depreciation 2,182 2,080 2,088 2,139 2,001 1,872 1,820 1,858 8,488 7,552
Other Income 2,493 1,961 1,358 1,452 4,622 4,850 1,375 1,760 3,189 5,262
PBT 965 1,382 1,246 2,686 1,080 1,473 1,898 44,496 6,237 15,462
Tax 188 292 310 530 272 318 367 2,909 1,320 3,866
Reported PAT 778 1,090 935 2,156 808 1,154 1,532 8,102 4,917 11,597
Change (%) 129.5 -160.3 -108.6 -57.4 3.9 5.9 63.8 275.9 -169.3 135.9
Adj. PAT 778 1,090 935 2,156 808 1,154 1,532 8,102 4,917 11,597
Change (%) 129.5 -160.3 -108.6 -57.4 3.9 5.9 63.8 275.9 -169.3 135.9
April 2018 91
Blue Star
Bloomberg BLSTR IN CMP: INR795 TP: INR780 (-2%) Neutral
 Unitary cooling division (UCP) is likely to report revenue growth of
3% YoY; however, on a like-to-like basis, we expect growth of
1,6,12 Rel Perf. (%) 7 / -3 / 1
18%, given pickup in summer and price hike taken by the
company post implementation of new norms.
 We expect revenue growth of 13% YoY in the MEP segment, given
Y/E March 2017 2018E 2019E 2020E
pickup in execution of orders in hand post contract renegotiation,
Net Sales 44.0 47.8 57.5 65.4 which happened on account of GST implementation.
EBITDA 2.4 3.0 3.9 4.8  Operating margin is expected to expand 160bp YoY to 7.1%, led
Adj. PAT 1.2 1.6 2.3 3.0 by better margins in the MEP segment (+90bp YoY). Operating
EPS(INR) -6.0 36.0 48.2 26.9 profit is expected to grow 41% YoY.
EPS Gr. (%) 79.2 83.6 90.0 98.2  Volatile crude prices have raised apprehensions over the pace of
BV/Sh. (INR) 14.8 18.5 26.5 32.1 order awards and execution in the Middle East. Even in the
RoE (%) 61.5 61.5 61.5 61.5 domestic market, new project awards remain constrained.
RoCE (%) 44.0 47.8 57.5 65.4 Maintain Neutral.
Payout (%) 2.4 3.0 3.9 4.8
P/E (x) 62.3 47.9 32.3 25.5
 Impact of implementation of new efficiency norms on Blue
P/BV (x) 9.6 9.5 8.8 8.1
Star’s market share and sales.
EV/EBITDA (x) 31.3 25.3 19.1 15.6
 Sustainability of profitability and capital employed in MEP
Div Yield (%) 1.0 1.3 1.9 2.4
business.
*Consolidated
Quarterly performance (Consolidated)

Sales 12,117 8,911 9,224 13,756 14,611 8,390 9,835 14,977 44,008 47,812
Change (%) 18.8 6.2 17.1 17.8 20.6 -5.8 6.6 8.9 15.4 8.6
EBITDA 791 422 386 756 903 492 535 1,069 2,355 3,002
Change (%) 5.1 -4.6 9.5 25.6 14.1 16.6 38.8 41.4 2.0 27.5
As of % Sales 6.5 4.7 4.2 5.5 6.2 5.9 5.4 7.1 5.4 6.3
Depreciation 135 150 155 166 125 158 172 153 606 608
Interest 92 88 85 114 48 59 74 96 378 276
Other Income 85 81 11 37 37 12 14 38 150 100
PBT 649 266 157 514 766 288 303 858 1,521 2,218
Tax 145 73 15 133 183 84 93 261 367 621
Reported PAT
(before MI and sh. of associates) 504 193 142 381 583 204 210 597 1,165 1,585
Change (%) 35.7 -1.3 -10.6 -2.5 15.7 5.5 48.3 56.8 -0.1 36.0
Adj PAT 514 200 145 372 585 208 188 602 1,165 1,585
Change (%) 38.3 -4.6 -7.0 -6.5 13.8 4.0 29.7 61.8 -0.1 36.0
April 2018 92
CG Power and Industrial

Bloomberg CGPOWER IN CMP: INR80 TP: INR90 (+13%) Neutral
 CG has bagged an INR1.1b order from EESSL for supply of IE3
motors.
1,6,12 Rel Perf. (%) 0 / -4 / -11
 Management intends to monetize ~INR10b of non-core assets,
including additional land at Kanjurmarg, to lower standalone
business debt.
Y/E March 2017 2018E 2019E 2020E
 We expect standalone revenue to grow 9.7% YoY to INR14.1b in
Net Sales 61.2 63.4 67.9 75.4 4QFY18.
EBITDA 4.7 4.4 4.7 5.7  Operating profit is expected to improve 30% YoY to INR1.1b, led by
Adj. PAT -4.2 -5.9 1.7 2.8 better product mix. EBITDA margin should expand 120bp YoY to
EPS(INR) NM NM NM 64.6 7.5%.
EPS Gr. (%) 65.6 57.0 59.4 63.4  We estimate adjusted PAT at INR428m, as against loss of INR489m
BV/Sh. (INR) 4.2 2.8 6.0 8.5 in 4QFY17.
RoE (%) 6.8 6.0 6.7 8.3  Maintain Neutral.
RoCE (%) NM 7.7 7.7 7.7
Payout (%) 61.2 63.4 67.9 75.4
Valuations
P/E (x) 31.2 -14.6 25.8 20.4
Key issues to watch
P/BV (x) 1.4 1.5 1.4 1.4
 Debt reduction in demerged business through asset sales.
EV/EBITDA (x) 13.1 14.2 11.9 10.3
Div Yield (%) 0.7 -0.6 0.3 0.4
* Consolidated
Quarterly performance (Standalone)

FY17 FY18 FY17 FY18
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 11,286 10,848 10,649 12,845 12,607 12,085 11,794 14,095 47,614 50,579
Change (%) 46.6 -5.7 1.1 6.6 11.7 11.4 10.8 9.7 12.7 6.2
EBITDA 623 846 838 814 653 771 871 1,058 3,120 2,304
Change (%) -608.1 -9.1 52.2 3.8 4.8 -8.8 3.9 30.0 -67 -68
As of % Sales (Adj) 5.5 7.8 7.9 6.3 5.2 6.4 7.4 7.5 6.6 4.6
Depreciation 238 227 235 217 229 265 262 252 917 1,009
Interest 252 357 471 558 525 541 536 574 1,638 2,177
Other Income 359 710 585 350 428 615 454 325 2,004 1,875
Exceptional items (reported) -14 -46 -359 -579 125 -189 -426 0 -998 -490
PBT 493 971 717 388 327 579 527 557 2,568 993
Tax 108 89 -103 -101 142 -2 10 128 -7 278
Effec. Tax Rate (%) 21.9 9.2 -14.4 -26.0 43.4 -0.3 1.8 23.1 -0.3 28.0
Reported PAT 371 836 461 -90 310 392 92 428 1,245 225
Adj PAT 385 881 820 489 185 581 518 428 2,575 715
Change (%) 236.7 27.9 8.8 -52.6 -51.9 -34.1 -36.8 -12.5 -3.8 -72.2
E: MOSL Estimates
April 2018 93
Crompton
Bloomberg CROMPTON IN CMP: INR231 TP: INR305 (+32%) Buy
 We expect sales to register growth of 8% YoY, driven by 16%
M. Cap. (INR b)/(USD b) 145 / 2
growth in the lighting segment.
1,6,12 Rel Perf. (%) 1 / 0 / -9
 We expect operating profit of INR1.6b in 3QFY18, an improvement
of 16% YoY, and 90bp expansion in EBITDA margin to 13.8%.
 Net profit is expected to be INR1b in 4QFY18 as against INR885m in
Y/E March 2017 2018E 2019E 2020E
4QFY17, implying a growth of 20.7%. Maintain Buy.
Net Sales 39.8 41.4 46.6 52.6
EBITDA 4.9 5.3 6.4 7.3
Adj. PAT 2.9 3.2 4.1 4.8
EPS (INR) 4.7 5.1 6.5 7.7
EPS Gr. (%) 146.1 8.9 27.1 18.4 Key issues to watch
BV/Sh. (INR) 8.6 11.7 14.3 17.3  Details of segmental sales, as CROMPTON intends to improve
RoE (%) 76.4 50.2 49.9 48.5
sales of its premium category products.
RoCE (%) 32.5 28.4 30.8 34.5
 Ad spends incurred by the company during the quarter, as
Payout (%) 32.7 33.0 50.0 50.0
CROMPTON intends to position itself as an electrical consumer
Valuations
durables brand as against its current positioning as a fans brand.
P/E (x) 49.6 45.5 35.8 30.3
P/BV (x) 27.0 19.9 16.3 13.4
EV/EBITDA (x) 30.8 28.3 23.0 20.0
Div Yield (%) 0.7 0.7 1.4 1.7
* Consolidated
Crompton: Quarterly Estimates (Standalone)

FY17 FY18 FY17 FY18
Sales 10,962 8,737 8,792 10,762 10,554 9,597 9,382 11,650 39,759 41,438
Change (%) 8.5 7.4 -3.7 9.8 6.7 8.3 119.5 4.2
EBITDA 1,573 1,012 972 1,386 1,294 1,207 1,165 1,608 4,902 5,274
Change (%) 17.4 9.0 -17.8 19.3 19.8 16.1 134.0 7.6
As of % Sales 14.4 11.6 11.1 12.9 12.3 12.6 12.4 13.8 12.3 12.7
Depreciation 28 27 26 29 32 32 32 32 110 128
Interest 180 161 162 153 162 157 158 153 655 686
Other Income 34 41 50 69 97 35 66 58 195 256
PBT 1,400 865 834 1,273 1,198 1,054 1,040 1,481 4,331 4,716
Tax 465 286 290 388 395 346 345 437 1,399 1,524
Adjusted PAT 935 579 544 885 802 708 695 1,043 2,932 3,193
Change (%) 28.3 16.6 (14.2) 22.3 27.9 17.9 138.7 8.9
Reported PAT 935 574 544 864 802 708 695 1,043 2,907 3,193
Change (%) 32.0 29.8 (14.2) 23.3 27.9 20.7 166.9 9.8
April 2018 94
Cummins India
Bloomberg KKC IN CMP: INR740 TP: INR1,040 (+41%) Buy
 We expect revenue to increase 3% YoY, supported by growth in the
M. Cap. (INR b)/(USD b) 205 / 3
power generation (9% YoY) and distribution & spares (10% YoY)
1,6,12 Rel Perf. (%) -6 / -26 / -35
segments. The industrial segment is expected to register 13% YoY
growth, led by pick-up in demand from infrastructure side.
 Pickup in the domestic demand environment and various pricing
Y/E March 2017 2018E 2019E 2020E
actions taken by KKC would help strengthen its market leadership
Net Sales 50.8 50.5 59.6 68.8 position in the MHP and HHP segments.
EBITDA 8.0 7.3 10.0 12.0  Domestic revenue should grow 7% YoY in 4QFY18.
Adj. PAT 7.3 6.4 8.6 10.2  We expect export revenue to register 2% growth on YoY basis to
EPS (INR) 26.5 23.0 31.0 36.8 INR3b in 4QFY18, given weak demand in the export market.
EPS Gr. (%) -2.6 -13.2 34.7 18.6  EBITDA margin is expected to improve 100bp YoY to 15.4%; net
BV/Sh. (INR) 135.0 143.9 155.8 170.0 profit is expected to register growth of 6% YoY to INR1.7b.
RoE (%) 21.2 16.5 20.7 22.6 Maintain Buy.
RoCE (%) 20.0 15.8 19.8 21.7
Payout (%) 52.8 52.8 52.8 52.8
Valuations
Key issues to watch
P/E (x) 27.9 32.2 23.9 20.1  Performance of the exports segment, considering poor demand
P/BV (x) 5.5 5.1 4.7 4.4 conditions in LatAm, Europe and China.
EV/EBITDA (x) 25.7 28.1 20.4 16.8
Div Yield (%) 1.9 1.6 2.2 2.6
KKC: Quarterly Performance (Standalone)

FY17 FY18 FY17 FY18
Sales 12,590 12,790 13,550 11,844 13,408 11,539 13,547 12,227 50,773 50,510
Change (%) -3.9 7.1 19.0 11.1 6.5 -9.8 0.0 3.2 7.8 -0.5
EBITDA 2,063 1,990 2,265 1,700 1,953 1,675 1,967 1,877 8,018 7,261
Change (%) -6.9 -1.4 31.1 -4.9 -5.4 -15.8 -13.2 10.4 14.6 -13.0
As of % Sales 16.4 15.6 16.7 14.4 14.6 14.5 14.5 15.4 15.8 14.4
Depreciation 206 209 225 208 208 220 237 316 848 981
Interest 21 43 55 49 42 38 34 54 168 168
Other Income 416 692 461 511 583 536 501 564 2,080 2,185
PBT 2,252 2,430 2,446 1,954 2,286 1,953 2,197 2,072 9,082 8,298
Tax 440 461 466 369 625 424 475 394 1,736 1,918
Adjusted PAT 1,812 1,969 1,981 1,585 1,660 1,529 1,722 1,678 7,346 6,380
Change (%) (14.3) (0.5) 11.3 (5.1) (8.4) (22.3) (13.1) 5.9 (2.8) (13.2)
Reported PAT 1,812 1,969 1,981 1,585 2,222 1,529 1,722 1,678 7,346 6,380
Change (%) (14.3) (0.5) 11.3 (5.1) 22.6 (22.3) (13.1) 5.9 (2.8) (13.2)
April 2018 95
Engineers India
Bloomberg ENGR IN CMP: INR164 TP: INR200 (+22%) Buy
 We expect revenue to increase 18% YoY, supported by growth in
M. Cap. (INR b)/(USD b) 110 / 2
turnkey segment execution (24% YoY) and expect consultancy and
1,6,12 Rel Perf. (%) -3 / 5 / 2
engineering projects to register 16% growth.
 Despite strong revenue growth, we expect operating profit to
decline 26% YoY, as consultancy and engineering projects segment
Y/E March 2017 2018E 2019E 2020E
as well as turnkey project segment included provision write-back of
Net Sales 14.5 18.0 23.8 28.3 INR570m in 4QFY17, leading to margin expansion in both
EBITDA 3.0 4.6 5.0 6.1 segments. We expect margins to normalize in 4QFY18.
Adj. PAT 2.9 4.0 4.3 5.2  We expect net profit to decline 43% YoY to INR890m, led by
EPS (INR) 4.3 6.3 6.9 8.2 normalized tax rate assumed for 4QFY18 (34% as against 19% in
EPS Gr. (%) 3.8 48.1 9.2 19.8 4QFY17). Maintain Buy.
BV/Sh. (INR) 41.2 44.0 47.5 51.7
RoE (%) 10.4 13.9 14.1 15.6
RoCE (%) 10.4 13.9 14.1 15.6
Payout (%) 46.4 46.4 46.4 46.4
Valuations
Key issues to watch
P/E (x) 37.6 25.4 23.3 19.4  Performance of the turnkey project segment, which has seen
P/BV (x) 3.9 3.6 3.4 3.1 margin volatility in the recent past.
EV/EBITDA (x) 28.0 16.4 14.7 11.5
Div Yield (%) 0.9 1.6 1.7 2.1
Standalone - Quarterly Earning Model

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 3,419 3,389 3,250 4,429 3,754 4,291 4,734 5,221 14,486 18,000
YoY Change (%) -12.5 -24.6 -11.8 46.8 9.8 26.6 45.7 17.9 -4.1 24.3
EBITDA 734 937 809 1,443 818 1,390 1,349 1,069 3,022 4,625
Margins (%) 21.5 27.7 24.9 32.6 21.8 32.4 28.5 20.5 20.9 25.7
Depreciation 53 53 59 60 60 62 59 75 225 255
Interest 1 0 -1 30 0 1 1 3 32 5
Other Income 546 561 559 571 456 467 393 350 2,237 1,666
PBT 1,226 1,815 1,309 1,024 1,214 1,794 1,682 1,341 4,102 6,031
Tax 422 508 458 363 400 602 597 452 1,752 2,050
Rate (%) 34.4 28.0 35.0 35.5 32.9 33.6 35.5 33.7 42.7 34.0
Reported PAT 804 1,308 851 660 815 1,192 1,084 890 2,351 3,980
Adj PAT 804 1,042 851 1,241 815 1,192 1,084 890 2,866 3,980
YoY Change (%) 41.4 34.8 37.1 59.5 1.4 14.4 27.4 -28.3 3.8 38.9
Margins (%) 23.5 30.7 26.2 28.0 21.7 27.8 22.9 17.0 19.8 22.1
April 2018 96
GE T&D
Bloomberg GETD IN CMP: INR400 TP: INR430 (8%) Neutral
 We expect GETD to register revenue growth of 11% YoY to
M. Cap. (INR b)/(USD b) 102 / 2
INR13.3b in 4QFY18. Revenue growth would be driven by
1,6,12 Rel Perf. (%) -2 / -2 / 6
execution of the Champa-Kurukshetra pole 3/4 project, which is
expected to be commissioned by FY18.
 We expect operating profit of INR1b in 4QFY18, as against
Y/E March 2017 2018E 2019E 2020E
INR722m in 4QFY17. Gross margin is likely to improve 90bp to
Net Sales 40.5 48.5 49.5 52.5 28.3% from 27.4% in 4QFY17.
EBITDA 2.2 4.2 4.8 5.2  GETD is expected to book net profit of INR534m as against
Adj. PAT 1.5 2.6 2.9 3.3 INR443m in 4QFY17. Maintain Neutral.
EPS (INR) 5.7 10.3 11.3 12.9
EPS Gr. (%) 325.3 79.8 9.7 14.2
BV/Sh. (INR) 40.3 47.2 54.2 62.3
RoE (%) 12.4 23.5 22.3 22.1
RoCE (%) 15.7 28.6 29.2 30.1
Payout (%) 31.4 31.4 31.4 31.4
Valuations
Key issues to watch
P/E (x) 70.3 39.1 35.7 31.2
 Progress in the Champa-Kurukshetra project.
P/BV (x) 10.0 8.5 7.4 6.5
EV/EBITDA (x) 48.3 24.3 20.8 18.7
EV/ Sales (x) 2.7 2.1 2.0 1.9
Div Yield (%) 0.4 0.9 0.9 1.0
FY17 FY18E FY17 FY18
Sales 8,546 8,350 11,652 11,963 12,093 8,700 14,386 13,275 40,521 48,453
Change (%) 11.6 -4.3 63.2 26.9 41.5 4.2 23.5 11.0 22.7 19.6
EBITDA 21 349 751 1,097 1,055 805 728 1,599 2,230 4,187
Change (%) -70.3 -48.7 -241.2 81.7 4,875.9 130.6 -3.0 45.7 -9.0 -9.0
As of % Sales 0.2 4.2 6.4 9.2 8.7 9.3 5.1 12.0 5.5 8.6
Depreciation 217 220 221 224 224 228 218 172 873 873
Interest 226 240 343 344 278 225 238 240 589 589
Other Income 326 425 493 177 421 344 630 362 427 427
PBT -2,425 314 679 705 974 695 1,099 1,550 1,195 3,152
Tax -455 109 236 244 358 220 381 525 508 508
Reported PAT -1,970 205 443 461 616 475 718 1,026 687 2,644
Change (%) -2,041.0 -43.2 -215.4 70.9 -131.3 131.6 62.0 122.4 0.0 0.0
Adj PAT 360 205 443 461 616 475 521 1,026 687 2,644
Change (%) 254.6 -43.2 -215.4 70.9 71.1 131.6 17.6 122.4 2.0 2.0
April 2018 97
Havells India
Bloomberg HAVL IN CMP: INR509 TP: INR630 (+24%) Buy
 Standalone revenue is expected to register growth of 45% YoY,
M. Cap. (INR b)/(USD b) 318 / 5
driven by revenue contribution from recently-acquired Lloyd
1,6,12 Rel Perf. (%)
(INR5.7b). We expect the cables segment to register 7% YoY
2 / -3 / -3
growth, led by an improvement in the prices of copper. Lighting
segment is expected to register 13% growth, whereas electrical
Y/E March 2017 2018E 2019E 2020E
consumer durables segment is expected to register 8% growth.
Net Sales  We expect operating margin to decline 90bp YoY to 12.5% on
61.4 80.8 97.6 113.5
EBITDA 8.2 10.3 13.1 16.0
account of increased contribution from low-margin Lloyd business.
Adj. PAT 6.0 7.0 8.5 10.6
 Net profit is expected to register 20% growth YoY to INR2.1b.
Adj. EPS (INR) 9.6 11.1 13.7 17.0 Maintain Buy.
EPS Gr. (%) 17.1 16.5 22.8 24.1
BV/Sh(INR) 52.4 58.8 66.6 76.3
RoE (%) 18.2 18.9 20.5 22.2
RoCE (%) 18.2 19.1 21.1 23.2
Payout (%) 42.8 42.8 42.8 42.8
Valuations
Key issues to watch
P/E (x)  Commentary on progress of integration of the consumer durables
53.1 45.6 37.1 29.9
P/BV (x) arm of Lloyd Electric with itself.
9.7 8.6 7.6 6.7
EV/EBITDA (x) 35.9 30.1 23.2 18.6
 Commentary on demand scenario across product categories.
Div Yield (%) 0.7 0.8 1.0 1.2
Quarterly Performance (Standalone)

Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
Sales 14,668 14,522 15,060 17,102 18,605 17,774 19,658 24,789 61,353 80,826
Change (%) 17.1 8.7 13.2 17.2 26.8 22.4 30.5 45.0 14.1 31.7
Adj EBITDA 2,004 2,034 1,907 2,296 1,724 2,569 2,622 3,100 8,241 10,257
Change (%) 23.7 7.6 4.0 3.5 -14.0 26.3 37.5 35.0 9.2 24.5
Adj EBITDA margin (%) 13.7 14.0 12.7 13.4 9.3 14.5 13.3 12.5 13.4 12.7
Depreciation 280 308 301 308 336 349 363 313 1,196 1,361
Interest 16 19 15 71 34 67 55 94 122 250
Other Income 314 323 286 419 348 287 278 238 1,343 1,150
Extra-ordinary Items - - (190) (768) - - 210 -
PBT 2,022 2,030 1,877 2,337 1,703 2,440 2,482 2,931 8,266 9,796
Tax 567 572 537 622 489 730 748 874 2,298 2,841
Reported PAT 1,456 1,458 1,151 947 1,214 1,710 1,944 2,056 5,969 6,955
Change (%) 36.3 22.0 -4.0 -74.1 -16.6 17.3 68.9 117.2 17.1 16.5
Adj PAT 1,456 1,458 1,340 1,715 1,214 1,710 1,734 2,056 5,969 6,955
Change (%) 22.2 21.1 13.3 5.0 -16.6 17.3 29.4 19.9 16.9 16.5
April 2018 98
Larsen & Toubro

Bloomberg LT IN CMP: INR1,330 TP: IN1,670 (+26%) Buy
 LT announced order intake of INR285b in 4QFY18 compared to
M. Cap. (INR b)/(USD b) 1861 / 29
INR317b in 4QFY17. Order inflow during the quarter has been
52-Week Range (INR) 1470 / 1052
supported by large as well as base order finalization (>INR15b).
1,6,12 Rel Perf. (%) 3 / 11 / 9
 Large orders worth INR126b were finalized during the quarter.
Domestic order wins were supported by order finalization in the
hydrocarbon and infrastructure segments. Overseas order
Y/E March 2017 2018E 2019E 2020E
finalization was supported by the infrastructure and power
Sales 1,100 1,206 1,363 1,485
segments.
EBITDA 110.7 133.0 160.0 174.0
 For 4QFY18, we expect revenue growth of 14% YoY to INR416b. We
Adj. PAT * 59.2 68.4 80.1 95.9
expect operating profit margin to expand 50bp YoY to 12.3%.
EPS (INR)* 42.3 48.8 57.2 68.6
 We expect net profit to decline 17% YoY to INR27.5b, impacted by
EPS Gr. (%) 43.0 15.5 17.2 19.8
higher tax rate (29% v/s 9% in 3QFY17). Maintain Buy.
BV/Sh (INR) 358.8 391.4 430.0 477.0
RoE (%) 12.5 13.0 13.9 15.1
RoCE (%) 8.0 8.3 9.8 10.3
Payout (%) 33.2 29.2 28.6 27.5
Valuations
P/E (x)* 31.4 27.2 23.2 19.4 Key issues to watch
P/BV (x) 4.2 3.7 3.4 3.1  Net working capital cycle (excluding financial services) stood at
EV/EBITDA (x) 24.8 20.8 17.0 15.3 21.5% of revenue in 3QFY18. For FY17, net working capital cycle
Div Yield (%) 1.1 1.1 1.2 1.4
stood at 18%.
*Consolidated
Quarterly Perf. (Consol.)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 217,265 248,562 261,104 366,187 238,109 264,468 287,475 416,408 1,100,110 1,206,478
Change (%) 8.4 7.5 0.7 11.4 9.6 6.4 10.1 13.7 8% 10%
EBITDA 18,890 23,150 25,052 43,351 20,567 29,604 31,440 51,419 110,747 133,050
Change (%) 15.1 8.6 17.8 -3.6 8.9 27.9 25.5 18.6 5.8 20.1
Margin (%) 8.7 9.3 9.6 11.8 8.6 11.2 10.9 12.3 10% 11%
Depreciation 4,648 4,602 7,223 7,227 5,513 4,306 4,545 5,551 23,699 19,915
Interest 3,248 3,396 3,788 2,966 3,651 3,929 3,625 3,981 13,398 15,185
Other Income 3,058 4,518 2,743 3,995 3,849 4,013 2,129 3,995 14,010 13,985
Extraordinary Inc/(Exp) 0 4,024 0 -2,810 0 1,367 -138 0 1,214 1,230
Reported PBT 14,052 19,670 16,784 37,152 15,253 25,382 25,399 45,882 88,874 113,165
Tax 5,488 6,807 4,399 3,372 4,597 5,439 7,372 15,052 23,782 32,461
Reported PAT 6,096 14,346 9,724 30,246 8,925 18,199 14,900 27,537 60,412 69,580
Change (%) 45.5 84.3 38.8 29.5 46.4 26.9 53.2 -9.0 43 15
Adjusted PAT 6,096 10,321 9,724 33,056 8,925 16,831 15,037 27,537 59,198 68,350
Change (%) 45.5 40.9 38.8 44.6 46.4 63.1 54.6 -16.7 43 15
E: MOSL Estimates
April 2018 99
Siemens
Bloomberg SIEM IN CMP: INR1,124 TP: INR1,285 (+14%) Neutral
 We expect SIEM to register 28% YoY revenue growth during the
M. Cap. (INR b)/(USD b) 400 / 6
quarter to INR37.4b, led by strong performance by the power & gas
52-Week Range (INR) 1470 / 1065
1,6,12 Rel Perf. (%) -1 / -12 / -25
and energy management segments.
 Operating margin is expected to improve by 130bp YoY to 10.8%,
and operating profit is expected to register 45% YoY growth.
Y/E September 2017 2018E 2019E 2020E
 Net profit is expected to register 60% growth YoY to INR2.9b, led
Net Sales 110.1 138.4 143.2 159.7 by higher other income. Maintain Neutral.
EBITDA 10.5 15.1 17.1 18.8
Adj. PAT 7.0 10.8 12.3 13.8
Adj. EPS (INR) 19.8 30.4 34.6 38.8
EPS Gr (%) 10.9 53.8 13.8 12.3
BV/Sh. (INR) 216.4 235.8 257.9 282.7
RoE (%) 9.1 12.9 13.4 13.7
RoCE (%) 14.0 19.1 19.9 14.4
Payout (%) 40.9 44.0 30.0 30.0
Key issues to watch
Valuations
 Raw material imports account for 55% of raw material cost;
P/E (x) 56.9 37.0 32.5 29.0
Siemens AG’s network comprises 82% of imports; INR
P/BV (x) 5.2 4.8 4.4 4.0
depreciation of 11% YoY v/s EUR could have a negative impact on
EV/EBITDA (x) 34.2 23.4 20.3 18.1
the margin profile.
Div. Yield (%) 0.8 0.8 0.9 1.0
Quarterly Performance (Standalone) (INR Million)

FY17 FY18E
Y/E September FY17 FY18 E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Total Revenues 22,933 29,288 26,508 31,418 24,295 37,378 35,454 41,317 110,148 138,445
Change (%) -0.9 5.2 1.2 1.7 5.9 27.6 33.7 31.5 4.8 28.1
EBITDA 2,336 2,786 2,255 3,172 2,724 4,045 3,805 4,524 10,512 15,101
As % of Revenues 10.2 9.5 8.5 10.1 11.2 10.8 10.7 11.0 9.5 10.9
Depreciation 483 502 480 502 470 500 500 453 1,967 1,924
interest 20 21 14 22 17 19 19 22 77 77
Other Income 623 529 731 630 705 889 790 908 2,547 3,291
Extra-ordinary Items 0 72 0 4,230 0 0 0 0 0 0
PBT 2,456 2,864 2,492 7,507 2,942 4,414 4,076 4,957 11,170 16,545
Tax 849 1,001 863 1,269 1,037 1,545 1,345 1,646 3,982 5,573
Reported PAT 1,607 1,863 1,629 6,238 1,905 2,869 2,731 3,311 7,188 10,972
Adjusted PAT 1,607 1,791 1,629 2,008 1,905 2,869 2,731 3,311 7,034 10,818
Change (%) 44.4 -4.8 27.1 -8.6 18.6 60.2 67.7 64.9 16.6 70.5
April 2018 100

Thermax
Bloomberg TMX IN CMP: INR1,136 TP: INR1,350 (+19%) Buy
 During the quarter, Thermax bagged an INR5b order from a
M. Cap. (INR b)/(USD b) 128 / 2
fertilizer company for three natural gas-based co-generation
1,6,12 Rel Perf. (%) -4 / 16 / 5
plants of 20MW each.
 Revenue is likely to grow 24% YoY, supported by execution pick-
up in the energy segment (+30% YoY) and an improvement in
Y/E March 2017 2018E 2019E 2020E
orders available for execution. Operating margin is expected to
Net Sales 44.8 49.6 57.2 71.0 improve by 50bp to 12%.
EBITDA 4.3 4.8 6.1 7.7  Ordering activity remains muted in a weak macro environment.
Adj. PAT 3.1 3.2 4.0 4.9 We believe ordering activity has remained at the base level, with
EPS (INR) 27.2 28.0 35.1 43.5 Thermax announcing a single project worth INR5b. Maintain Buy.
EPS Gr. (%) 8.5 3.1 25.3 23.9
BV/Sh. (INR) 225.4 245.7 272.3 306.5
RoE (%) 12.6 11.9 13.6 15.0
RoCE (%) 11.3 12.1 13.5 14.8
Payout (%) 30.3 23.5 20.7 18.3
P/E (X) 41.8 40.5 32.3 26.1  Demand environment in domestic and overseas markets.
P/BV (X) 5.0 4.6 4.2 3.7
 Sustainability of margins in the chemical (17.3%) and
EV/EBITDA (X) 29.3 26.3 20.4 16.1
environment (8.1%) segments.
Div Yield (%) 0.5 0.6 0.6 0.7
Thermax Consolidated
FY17 FY18E FY17 FY18E
Sales 9,791 10,703 9,440 14,905 8,718 10,331 11,170 18,412 44,831 49,641
Change (%) -20.4 -15.4 -22.6 -0.2 -11.0 -3.5 18.3 23.5 -18.5
EBITDA 804 919 875 1,732 721 952 955 2,220 4,330 4,848
Change (%) -21.2 -16.8 3.6 30.9 -10.3 3.6 9.1 28.2 -3.4 12.0
As of % Sales 8.2 8.6 9.3 11.6 8.3 9.2 8.5 12.1 9.7 9.8
Depreciation 194 199 197 229 189 189 208 194 819 779
Interest 32 24 17 25 16 51 25 8 97 100
Other Income 231 361 252 297 241 236 238 361 1,141 1,076
PBT 809 1,057 913 1,775 757 947 961 2,379 4,554 5,044
Tax 277 350 335 598 284 370 378 784 1,560 1,816
Reported PAT 532 708 578 1,177 473 578 583 1,594 2,230 3,158
Change (%) (26.4) (4.8) (5.5) 1.9 (11.1) (18.3) 0.9 35.5 (20.6) 41.6
Adj PAT 490 783 536 615 406 568 586 1,598 3,063 3,158
Change (%) (10.4) 32.4 (1.2) (46.2) (17.0) (27.4) 9.3 159.8 8.5 3.1
April 2018 101

Voltas
Bloomberg VOLT IN CMP: INR648 TP: INR665 (+2%) Neutral
 Unitary cooling division (UCP) is likely to report revenue growth of
M. Cap. (INR b)/(USD b) 214 / 3
15% YoY, led by pickup in summer and price hike taken by the
1,6,12 Rel Perf. (%) 7 / 18 / 45
company post implementation of new energy efficiency norms.
 We expect revenue growth of 12% YoY in the MEP segment,
supported by favorable base in 4QFY17. The key monitorable
Y/E March 2017 2018E 2019E 2020E
would be sustainability of margins in the segment. VOLT had
Net Sales 60.3 67.1 78.1 89.5 booked EBIT margin of 7.1% in 3QFY18 on execution of better
EBITDA 5.8 7.1 8.4 9.6 margin orders and pickup in execution of domestic orders.
Adj. PAT 5.1 6.0 7.1 8.0  Volatile crude prices have raised apprehensions over the pace of
EPS(INR) 15.5 18.0 21.3 24.3 order awards and also execution in the Middle East. Even in the
EPS Gr. (%) 100.0 113.2 129.0 146.9 domestic market, new project awards remain constrained.
BV/Sh. (INR) 18.0 16.9 17.6 17.6 Maintain Neutral.
RoE (%) 16.5 16.2 16.9 17.0
RoCE (%) 26.2 26.2 26.2 26.2
Payout (%) 60.3 67.1 78.1 89.5 Key issues to watch
Valuations  Impact of implementation of new energy norms on VOLT’s
P/E (x) 42.0 36.0 30.4 26.7 market share and sales.
P/BV (x) 6.5 5.7 5.0 4.4  Sustainability of profitability in MEP segment and also execution
EV/EBITDA (x) 36.7 29.4 24.4 21.0 of international orders (50% of orders are from Qatar).
Div Yield (%) 0.5 0.6 0.7 0.8
*Consolidated
Quarterly Performance (Consolidated)

FY17 FY18 FY17 FY18
Y/E March 1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
Sales 18,500 9,672 11,805 20,351 19,446 10,367 13,747 23,560 60,328 67,120
Change (%) 18.7 -7.0 -6.7 9.7 5.1 7.2 16.5 15.8 5.5 11.3
EBITDA 1,995 687 890 2,219 2,123 857 1,186 2,926 5,791 7,092
Change (%) 52.0 6.4 58.0 22.7 6.4 24.8 33.3 31.9 33.8 22.5
As of % Sales 10.8 7.1 7.5 10.9 10.9 8.3 8.6 12.4 9.6 10.6
Depreciation 66 63 60 56 61 61 61 67 245 250
Interest 48 33 22 58 35 22 19 34 160 110
Other Income 357 658 597 386 550 512 170 352 1,998 1,585
Extra-ordinary Items -9 0 0 -2 -20 0 0 0 11 0
PBT 2,248 1,249 1,405 2,493 2,596 1,287 1,277 3,177 7,395 8,317
Tax 651 421 437 496 727 343 301 1,041 2,089 2,412
Reported PAT 1,597 782 815 2,005 1,879 954 1,004 2,138 5,114 5,955
Change (%) 55.7 20.9 42.2 22.1 17.7 22.0 23.2 6.6 38.8 16.4
Adj PAT 1,587 782 815 2,003 1,859 954 1,004 2,138 5,103 5,955
Change (%) 54.8 20.9 47.9 45.7 17.1 22.0 23.2 6.7 42.6 16.7
April 2018 102

Technology
Cement
Affordable housing, infrastructure to drive healthy demand
Company name
Margins under pressure due to cost push
ACC
Ambuja Cements Volume growth led by affordable housing and infrastructure segments
Birla Corporation We expect companies under our coverage to report volume growth of ~8% YoY in
Dalmia Cement
4QFY18, adjusting for the acquisition impact on UltraTech. All India demand
continues to be healthy, led by pickup in infrastructure, affordable housing, and
Grasim Industries
rural housing in select regions. On a YoY basis, demand is picking up in South,
India Cements Central and East India.
Sanghi Industries
Shree Cement Demand growth in the South is strong, led by Andhra Pradesh and Telangana.
Ramco Cement
Demand growth in the East remains healthy, led by housing and infrastructure
segments. Central India has also seen strong demand improvement, led by revival of
UltraTech Cement
sand mining. Demand in the North is moderate due to the impact of sand mining
ban in Rajasthan. However, players have benefitted due to ramp-down of Binani’s
assets to less than 50% utilization. Demand growth in the West has been healthy
due to pick up in infrastructure projects and favorable base.
We expect the MOSL Cement universe to record volume growth of ~8% YoY in
4QFY18, adjusted for the acquisition impact on UltraTech. We expect (a) pan-India
players to report volume growth of 7% YoY, (b) North based players like SRCM to
report 8%YoY increase in volumes, and (c) South-based (DBEL, TRCL and ICEM)
companies to post 9-14% volume growth.
We estimate volume growth at 6% for FY18, as demand in Rajasthan, Tamil Nadu,

UP and Bihar was affected by sand mining issue. With the issue getting resolved in
most major cement-consuming states, demand growth should revive in FY19.
Sequential decline in pricing

Cement prices should remain flat QoQ, as price declines in the North and South
were largely offset by pricing improvement in East and Central India. Cement prices
declined 1% QoQ in the North and 3% QoQ in the South. Pricing improvement was
the sharpest in Central India (+3% QoQ), followed by the East (+2% QoQ). Prices in
the West remained flat QoQ.
ASP should remain flat QoQ in 4QFY18, as we estimate a price change of (a) -1%
QoQ in North India, (b) +3% QoQ in Central India, (c) 0% QoQ in West India, (d) +2%
QoQ in East India, and (e) -3% QoQ in South India.
Cost push will continue to dent margins

Petcoke prices have increased ~31% YoY and 8% QoQ in 4QFY18 due to firm prices
globally. Cement companies with low-cost inventory of petcoke for earlier quarters
are likely to report QoQ increase in P&F cost. Additionally, increase in diesel prices
would result in higher freight cost for the companies on a YoY basis. Diesel prices
Abhishek Ghosh (Abhishek.Ghosh@motilaloswal.com); +91 22 6129 1538

Pradnya Ganar (Pradnya.Ganar@motilaloswal.com); +91 22 6129 1537
April 2018 103
March 2018 Results Preview | Sector: Cement
have increased 13% YoY and ~3% QoQ, which should translate into higher freight
cost. EBITDA/ton is likely to be lower by INR22 QoQ for our coverage companies, as
the impact of weaker realizations and cost push has been offset by the impact of
positive operating leverage.
Top picks: Shree Cement, Ramco Cement, Birla Corp and Dalmia Cement
Shree Cement’s superior execution capabilities would enable it to achieve RoIC of
over 50% (FY19E), while its gross block to capacity has been structurally trending
downward. Ramco Cement is likely to generate strong operating cash flow, which
would be used to raise grinding capacity by ~16% over FY17-20. We estimate 8%
EBITDA CAGR and 11% PBT CAGR over FY17-20. Birla Corp is likely to be profitable
due to the strong performance of the acquired subsidiary, Reliance Cement. With a
23% market share in the Satna cluster and Reliance Cement’s mineral concession, it
has the potential to expand to multiple states. We believe Dalmia Cement’s
deleveraging play and superior volume growth make it attractive for re-rating.
Exhibit 1: Trend in key performance indicators

Var % Var % Var % Var % Var % Var %
CMP (INR) RECO Mar-18 Mar-18 Mar-18
YoY QoQ YoY QoQ YoY QoQ
Cement
ACC 1,551 Neutral 34,575 11.5 1.2 3,359 -1.7 1.4 2,144 1.4 18.5
Ambuja Cements 241 Neutral 28,601 12.9 6.7 5,172 41.7 1.9 2,947 19.5 -0.2
Birla Corporation 764 Buy 15,198 5.7 9.4 1,600 -31.9 15.4 -38 PL Loss
Dalmia Bharat 2,867 Buy 25,386 16.2 21.4 5,118 -7.2 12.6 1,683 -3.1 73.3
Grasim Industries 1,086 Neutral 28,355 -1.4 -36.0 8,694 65.5 -0.5 5,023 59.2 7.4
India Cements 153 Neutral 13,784 2.6 13.6 1,770 -6.8 5.8 238 -30.4 56.5
Ramco Cements 756 Buy 11,897 17.0 12.9 2,622 7.9 15.2 1,390 3.3 26.0
Sanghi Inds. 122 Buy 2,974 20.6 6.4 714 68.7 15.5 400 52.4 24.4
Shree Cement 16,623 Buy 25,950 9.0 13.0 6,033 18.0 14.0 3,292 8.1 12.3
Ultratech Cement 3,949 Buy 87,300 32.4 15.0 14,396 12.6 13.4 4,892 -29.9 40.2
Sector Aggregate 274,020 15.6 3.7 49,479 15.5 8.5 21,971 -2.1 20.8
*Ultratech YoY not comparable as financials includes JPA numbers for 4QFY18 and not for 4QFY17
Exhibit 2: MOSL universe volume at 59mt (adjusted growth is 8%YoY)

Aggregate Vol (m ton) Volume growth (%)
19.2
15.7
12.5
8.6 8.4 9.3 8.4 8.2
6.3 7.7
5.6 4.2 4.8
3.2 4.0 3.9 3.2
1.8 0.4 1.2
(1.3)
(4.8)
38 42 39 37 38 44 42 38 40 42 44 41 43 50 48 42 45 54 52 47 52 59
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
April 2018 104

March 2018 Results
June 2017
September Results Preview
Preview || Sector: Cement
Sector: Cement
Exhibit 1: Pan-India average cement prices (INR/bag) flat QoQ in 4QFY18

4QFY17 1QFY18 2QFY18 3QFY18 4QFY18E
294
300
286
283
281
278
291
281
278
283
287
291
277
274
275
321
323
304
299
292
305
313
304
301
311
297
304
290
287
288
North Average Prices East Average Prices West Average Prices South Average Prices Central Average Prices National Average
Prices
Exhibit 2: Diesel prices up 13%YoY in 4QFY18 Exhibit 3: Petcoke prices increased 31% YoY in 4QFY18
Diesel price (INR/ltr) YoY growth in Diesel prices Retail petcoke prices (INR/tonne)
29% 67%
44% 51%
20%
13% 25% 31%
12%
8% 11% 11% 17%
4% 3%
-21%
49.3
47.1
46.0
45.6
51.5
52.8
55.0
58.8
55.9
58.8
61.4
66.3
4,583 5,983 6,400 6,293 6,933 7,000 8,000 8,250

1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
Exhibit 4: MOSL coverage realization declined ~1%QoQ in Exhibit 5: Profitability to decrease 3%QoQ, led by lower
4QFY18 realizations
Realization (Rs/ton) Aggregate EBITDA (Rs/ton)

4,028
3,989
4,017
3,873
3,946
4,102
4,241
4,327
4,204
4,377
4,397
4,524
4,408
4,185
4,402
4,553
4,416
4,347
4,675
4,690
4,548
4,516
1,009
783
820
790
490
567
738
783
694
584
854
712
717
714
840
971
880
781
774
877
753
731
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
Exhibit 6: Relative performance—3 months (%) Exhibit 7: Relative performance—1 year (%)
Sensex Index MOSL Cement Index Sensex Index MOSL Cement Index
143
109
103 131
97 119
91 107
85 95
Dec-17
Jan-18
Feb-18
Mar-18
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17
Source: Bloomberg, MOSL
April 2018 105

Exhibit 8: Trend in key operating parameters

Volume (m ton) Realization (INR/ton) EBITDA (INR/ton)
4QFY18 YoY (%) QoQ (%) 4QFY18 YoY (INR) QoQ (INR) 4QFY18 YoY (INR) QoQ (INR)
ACC 7.1 7.0 2.1 4452 187.4 -25.0 476 -42.2 -3.3
Ambuja Cement 6.3 5.0 7.7 4525 316.5 -40.0 818 211.8 -46.4
UltraTech 15.3 8.8 11.3 4795 106.1 6.4 791 -118.0 -10.0
Birla Corp 3.5 5.8 15.6 4631 289.7 45.8 457 -252.3 -0.8
India Cement 3.2 8.9 15.8 4365 -268.0 -85.0 560 -94.5 -53.1
Shree Cement 6.4 7.7 20.0 4058 287.8 -61.2 931 112.6 -72.6
Dalmia Bharat 5.2 13.7 24.7 4907 104.5 -130.7 989 -223.2 -106.3
JK Lakshmi Cem. 2.2 -1.8 6.4 4037 505.3 68.0 459 145.4 11.6
Madras Cement 2.6 14.1 14.3 4539 89.5 -67.1 1020 -55.2 24.1
Orient Cement 1.8 4.3 32.0 3596 152.9 -140.6 244 -192.3 -42.2
Prism Cement 1.6 5.6 20.4 4421 -87.8 244.4 776 30.6 175.1
Sanghi Industries 0.7 -4.2 2.0 4002 823.6 163.9 961 415.6 112.6
Sector Agg. 59 8 13 4,516 169 (31) 731 (43) (22)
Exhibit 9: Comparative Valuations

Sector / Companies CMP RECO EPS (INR) PE (x) PB (x) ROE (%)
Cement
ACC 1,551 Neutral 47.4 63.8 72.9 32.7 24.3 21.3 16.8 14.1 11.4 10.1 12.9 14.5
Ambuja Cements 241 Neutral 6.0 8.1 12.7 39.9 29.8 19.0 23.3 18.4 12.3 6.1 7.8 11.2
Birla Corporation 764 Buy 7.4 42.3 50.5 103.0 18.1 15.1 13.0 8.9 7.4 1.7 9.6 10.6
Dalmia Bharat 2,867 Buy 52.0 72.9 102.2 55.2 39.3 28.1 15.0 12.9 10.9 8.9 11.3 14.1
Grasim Industries 1,086 Neutral 47.6 97.9 111.8 22.8 11.1 9.7 17.9 11.2 9.9 6.9 12.9 13.0
India Cements 153 Neutral 2.9 6.6 9.4 53.0 23.1 16.3 10.3 8.5 7.2 1.7 3.9 5.3
JK Lakshmi Cem. 440 Buy 5.7 15.1 21.2 76.9 29.1 20.8 17.5 11.6 9.4 4.8 11.7 14.5
Orient Cement 143 Buy 1.3 3.6 8.3 106.2 40.3 17.3 15.4 12.4 8.7 2.8 7.1 14.9
Prism Cement 117 Buy 2.4 4.9 6.5 49.2 24.0 18.1 19.4 14.0 11.3 11.9 21.2 23.1
Ramco Cements 756 Buy 24.0 29.7 37.8 31.5 25.5 20.0 16.9 15.0 12.0 14.3 15.6 17.2
Sanghi Inds. 122 Buy 4.6 8.5 11.3 26.7 14.3 10.8 12.6 10.8 10.0 9.7 15.6 17.5
Shree Cement 16,623 Buy 365.7 473.5 679.2 45.5 35.1 24.5 22.1 17.9 13.5 15.4 17.3 20.8
Ultratech Cement 3,949 Buy 77.5 123.7 165.0 50.9 31.9 23.9 21.8 15.7 12.4 8.5 12.5 15.1
April 2018 106

ACC
Bloomberg ACC IN CMP: INR1,551 TP: INR1,710 (10%) Neutral
 We expect dispatches to grow 7% YoY to 7.06mt in 1QCY18, led by
M. Cap. (INR b)/(USD b) 291 / 4
52-Week Range (INR)
capacity ramp-up of eastern units. Average realizations are
1869 / 1450 1,450
1,6,12 Rel Perf. (%)
expected to decline by ~1% QoQ to INR4,452/ton due to pricing
-3 / -12 / -5
drop in underlying markets.
 Revenues are expected to increase ~12% YoY to INR34.6b. EBITDA
Y/E Dec 2016 2017 2018E 2019E
margin is expected to be 9.7%, flat QoQ (-1.3pp YoY).
Sales 108 129 144 162  EBITDA/ton is estimated at INR476 (-INR42 YoY, flat QoQ) due to
EBITDA 13 15 18 21 6% YoY increase in cost partially offset by 4% YoY increase in
NP 7 9 12 14 realization. PAT is likely to increase marginally by 1.5% YoY to
Adj. EPS (INR) 36 47 64 74 INR2.1b.
EPS Gr. (%) -4 31 35 16  The stock trades at a P/E of 24x (CY18E) and 21x (CY19E),
BV/Sh (INR) 461 479 507 497 EV/EBITDA of 14x (CY18E) and 11x (CY19E), and EV/ton of USD110
RoE (%) 8 10 13 15 (CY18E) and USD107 (CY19E). Maintain Neutral.
RoCE (%) 8 10 13 14
Payout (%) 88 62 57 114
Valuations
Key issues to watch out for
P/E (x) 43 33 24 21  Cement pricing recovery.
P/BV (x) 3 3 3 3  Volume growth and demand revival.
EV/EBITDA (x) 21 17 14 11  Ramp-up of new plant in the East.
EV/Ton (x) 121 117 110 107

Cement Sales (m ton) 6.60 6.74 5.96 6.92 7.06 7.08 6.32 7.34 26.22 27.79
YoY Change (%) 3.8 10.1 17.6 27.0 7.0 5.0 6.0 6.0 14.0 6.0
Cement Realization 4,265 4,509 4,645 4,477 4,452 4,652 4,802 4,852 4,488 4,688
YoY Change (%) 3.8 7.2 6.3 2.8 4.4 3.2 3.4 8.4 6.4 4.5
QoQ Change (%) -2.0 5.7 3.0 -3.6 -0.6 4.5 3.2 1.0
Net Sales 30,997 33,125 30,545 34,171 34,575 35,927 33,483 39,907 129,310 143,892
YoY Change (%) 7.9 16.9 23.6 29.7 11.5 8.5 9.6 16.8 20.1 11.3
EBITDA 3,418 4,951 3,530 3,314 3,359 4,287 5,001 5,033 15,213 17,681
Margins (%) 11.0 14.9 11.6 9.7 9.7 11.9 14.9 12.6 11.8 12.3
Depreciation 1,650 1,621 1,551 1,579 1,550 1,637 1,637 1,722 6,401 6,546
Interest 252 225 213 334 250 250 250 250 1,023 1,000
Other Income 1,101 1,663 858 1,231 1,300 1,574 1,574 1,847 4,853 6,295
EO Income/(Expense) 0 0 0 342 0 0 0 0 342 0
PBT after EO Item 2,617 4,768 2,624 2,975 2,859 3,974 4,688 4,907 12,984 16,429
Tax 502 1,550 847 930 715 1,196 1,266 1,259 3,829 4,436
Rate (%) 19.2 32.5 32.3 31.3 25.0 30.1 27.0 25.7 29.5 27.0
Reported PAT 2,115 3,218 1,777 2,045 2,144 2,778 3,423 3,648 9,155 11,993
Adjusted PAT 2,115 3,218 1,777 1,810 2,144 2,778 3,423 3,648 8,913 11,993
Margins (%) 6.8 9.7 5.8 5.3 6.2 7.7 10.2 9.1 6.9 8.3
YoY Change (%) -9.9 32.7 111.3 46.8 1.4 -13.7 92.6 101.6 29.2 34.5
E: MOSL Estimates
April 2018 107

Ambuja Cements
Bloomberg ACEM IN CMP: INR241 TP: INR264 (+10%) Neutral
 We expect dispatches to grow 5% YoY to 6.3mt in 1QCY18, led by
M. Cap. (INR b)/(USD b) 478 / 7
volume growth in underlying markets. Average realizations are
1,6,12 Rel Perf. (%)
expected to decline 1% QoQ to INR4,525/ton due to sequentially
-3 / -16 / -10
weak pricing in underlying markets. Revenue is likely to grow 13%
YoY (and 7% QoQ) to INR28.6b.
Y/E DEC 2016 2017 2018E 2019E
 EBITDA margin is expected to be 18% (-0.9pp QoQ, +3.67pp YoY).
Sales 91.6 104.5 119.0 137.9
EBITDA/ton is estimated at INR818 (-INR46 QoQ, +INR212 YoY).
EBITDA 15.8 19.0 24.3 34.1
 Adjusted PAT is estimated to increase 19.5% YoY to INR2.9b.
NP 9.7 12.0 16.1 25.2
 The stock trades at a P/E of 20x (CY18E) and 12.8x (CY19E),
Adj. EPS (INR) 4.9 6.0 8.1 12.7
EV/EBITDA of 11.6x (CY18E) and 7.6x (CY19E), and EV/ton of
EPS Gr. (%) -10.6 29.5 34.2 56.8 USD142 (CY18E) and USD131 (CY19E). Maintain Buy.
BV/Sh. (INR) 96.4 101.1 106.8 119.0
RoE (%) 5.1 6.1 7.8 11.2
RoCE (%) 6.9 6.5 8.3 11.5
Payout (%) 29.6 26.0 28.9 3.5 Key issues to watch out for
Valuations  Volume growth recovery and outlook.
P/E (x) 34.8 26.9 20.0 12.8  Cement pricing outlook and sustainability.
P/BV (x) 1.7 1.6 1.5 1.4  Cost curve trend in CY18.
EV/EBITDA (x) 18.0 15.3 11.6 7.6
EV/Ton (USD) 154 147 142 131
Quarterly Performance (INR Million)

Sales Volume (m ton)* 6.02 6.07 5.02 5.87 6.32 6.49 5.42 6.58 22.98 24.82
YoY Change (%) 0.9 3.8 9.6 15.3 5.0 7.0 8.0 12.1 6.9 8.0
Realization (INR/ton) 4,208 4,712 4,621 4,565 4,525 4,475 4,575 5,556 4,546 4,796
YoY Change (%) 4.4 9.0 5.0 4.5 7.5 -5.0 -1.0 21.7 6.2 5.5
QoQ Change (%) -3.7 12.0 -1.9 -1.2 -0.9 -1.1 2.2 21.4
Net Sales 25,334 28,600 23,196 26,796 28,601 29,064 24,803 36,563 104,469 119,031
YoY Change (%) 5.3 13.1 15.1 20.5 12.9 1.6 6.9 36.5 8.0 31.0
EBITDA 3,651 6,510 3,544 5,076 5,172 5,603 4,497 9,065 18,956 24,338
Margins (%) 14.4 22.8 15.3 18.9 18.1 19.3 18.1 24.8 18.1 20.4
Depreciation 1,460 1,439 1,403 1,427 1,435 1,435 1,435 1,436 5,729 5,741
Interest 377 165 313 217 200 375 375 550 1,072 1,500
Other Income 1,310 560 1,531 481 500 1,004 1,020 1,521 3,591 4,045
Extraordinary Inc/(Exp) 0 0 0 572 0 0 0 0 687 0
PBT after EO Exp/(Inc) 3,124 5,466 3,359 4,484 4,037 4,797 3,707 8,600 16,432 21,142
Tax 658 1,544 635 1,100 1,090 1,319 945 1,719 3,937 5,074
Rate (%) 21.1 28.2 18.9 24.5 27.0 27.5 25.5 20.0 24.0 24.0
Reported Profit 2,465 3,922 2,724 3,384 2,947 3,478 2,762 6,881 12,496 16,068
Adj PAT 2,465 3,922 2,724 2,952 2,947 3,478 2,762 6,881 11,973 16,068
YoY Change (%) 423.7 -13.2 10.0 56.3 19.5 -11.3 1.4 133.1 29.5 34.2
E: MOSL Estimates
April 2018 108

Birla Corporation
Bloomberg BCORP IN CMP: INR 764 TP: INR1,004 (+31%) Buy
 4QFY18 consolidated cement volumes are estimated to increase
M. Cap. (INR b)/(USD m) 59 / 1
6% YoY to 3.5mt, led by ramp-up of reliance assets. Realizations
1,6,12 Rel Perf. (%)
are estimated to increase by 1% QoQ to INR4,631/ton, led by
-14 / -22 / -9
better prices in the central region.
 We estimate consolidated cement EBITDA/ton at INR457 (flat
Y/E March 2017 2018E 2019E 2020E
QoQ). EBITDA margin is expected to decline by 5.8pp YoY (flat
Sales 43.5 56.0 63.4 68.3
QoQ) to 10.5%.
EBITDA 6.2 7.4 10.4 11.6
 Consolidated EBITDA is likely to increase 15% QoQ (but decline
NP 2.2 0.6 3.3 3.9
32% YoY) to INR1.6b. We expect the company to report a loss of
Adj. EPS (INR) 28.5 7.4 42.3 50.5
INR38m in 4QFY18 as against a profit of INR1b in 4QFY17.
EPS Gr. (%) 27.9 -74.0 470.3 19.2  The stock trades at a P/E of 18.1x (FY19E) and 15.1x (FY20E),
BV/Share (INR) 429 426 457 496 EV/EBITDA of 8.4x (FY19E) and 6.9x (FY20E), and EV/ton of USD83
RoE (%) 7.1 1.7 9.6 10.6 (FY19E) and USD77 (FY20E). Maintain Buy.
RoCE (%) 8.0 5.2 7.6 7.8
Payout (%) 40.8 160.0 27.4 23.0
Valuation
 Volume growth recovery and outlook.
P/E (x) 26.8 103.0 18.1 15.1
 Cement pricing outlook and sustainability.
P/BV (x) 1.8 1.8 1.7 1.5
 Update on profitability of acquired subsidiary of Reliance.
EV/EBITDA (x) 14.9 12.8 8.4 6.9
EV/Ton (USD) 89 90 83 77
Consolidated Numbers (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Cement Sales (m ton) 2.17 2.08 2.49 3.31 3.28 2.65 3.03 3.50 10.04 12.46
YoY Change (%) 10.8 6.1 26.5 50.1 51.3 27.5 21.9 5.8 24.2 24.1
Cement Realization 4,484 4,543 4,330 4,341 4,449 4,662 4,585 4,631 4,623 4,848
YoY Change (%) 21.9 7.8 1.3 6.5 -0.8 2.6 5.9 6.7 8.8 4.9
QoQ Change (%) 10.0 1.3 -4.7 0.3 2.5 4.8 -1.7 1.0
Net Sales 8,936 9,445 10,765 14,374 14,588 12,355 13,893 15,198 43,477 56,034
YoY Change (%) 16.6 18.8 36.8 63.1 63.3 30.8 29.1 5.7 33.0 28.9
EBITDA 1,303 1,294 1,208 2,349 2,404 1,768 1,387 1,600 6,229 7,160
Margins (%) 14.6 13.7 11.2 16.3 16.5 14.3 10.0 10.5 14.3 12.8
Depreciation 379 569 809 797 832 831 823 817 2,555 3,303
Interest 225 527 1,149 902 937 1,053 958 969 2,768 3,917
Other Income 501 450 209 416 161 119 141 144 1,465 565
Profit before Tax 1,200 648 -541 1,065 796 3 -252 -42 2,371 505
Tax 257 -6 -128 -15 239 -12 -34 -3 108 190
Rate (%) 21.4 -0.9 23.6 -1.4 30.0 -421.4 13.4 7.5 4.6 37.7
Adj. PAT 943 654 -413 1,080 557 15 -218 -38 2,263 315
EO Income/(Expense) 0 0 0 68 125 0 0 0 68 125
Reported PAT 943 654 -413 1,011 470 15 -218 -38 2,198 237
YoY Change (%) 278.1 181.9 -343.6 -2.1 -50.2 -97.8 -47.1 -103.8 10.5 -89.2
E: MOSL Estimates
April 2018 109

Dalmia Cement
Bloomberg DBEL IN CMP: INR2,867 TP: INR3,300(+15%) Buy
 4QFY18 cement volumes are estimated to increase ~14% YoY to
M. Cap. (INR b)/(USD b) 255 / 4
5.17mt, led by growth in the South and the East. Realizations are
52-Week Range (INR) 3349 / 1965
1,6,12 Rel Perf. (%)
estimated to decline ~2.6% QoQ to INR4,907/ton, led by weaker
7 / 0 / 34
prices in the South, partially offset by healthy prices in the East.
 We estimate cement EBITDA/ton at INR989 (-INR106/ton QoQ)
Y/E March 2017 2018E 2019E 2020E due to decline in realization. EBITDA margin is expected to decline
Sales 74.0 85.1 96.7 109.4 5.1pp YoY and 1.6pp QoQ to 20.2%.
EBITDA 19.0 19.6 22.2 25.7  EBITDA is estimated to decrease 7% YoY to INR5.12b, translating
NP 3.4 4.6 6.5 9.1 into adjusted PAT decline of 3% YoY to INR1.7b.
Adj. EPS(INR) 38.8 52.0 72.9 102.2  The stock trades at a P/E of 39.3x (FY19E) and 28.1x (FY20E),
EPS Gr. (%) 81.2 34.0 40.3 40.1 EV/EBITDA of 13.9x (FY19E) and 11.6x (FY20E), and EV/ton of
BV/Sh (INR) 558 608 677 775 USD180 (FY19E) and USD174 (FY20E). Maintain Buy.
RoE (%) 7.2 8.9 11.3 14.1
RoCE (%) 7.3 8.0 9.4 11.0
Payout (%) 6.0 4.5 4.8 4.5
Valuation Key issues to watch out for
P/E (x) 74.0 55.2 39.3 28.1  Volume growth recovery and outlook.
P/BV (x) 5.1 4.7 4.2 3.7  Cement pricing outlook and sustainability.
EV/EBITDA (x) 17.5 16.1 13.8 11.6  Update on restructuring timelines.
EV/Ton (USD) 176 184 180 174
Quarterly Performance (Consolidated) (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales Dispatches (m ton) 3.76 3.42 3.56 4.55 3.99 3.64 4.15 5.17 15.29 16.95
YoY Change (%) 21.7 20.0 20.3 17.3 6.1 6.4 16.6 13.7 19.5 10.9
YoY Change (%) -8.7 0.6 -3.2 -1.4 8.5 0.5 4.2 2.2 -3.3 3.6
QoQ Change (%) -3.0 6.0 -3.5 -0.7 6.8 -1.8 0.0 -2.6
Net Sales 17,775 17,134 17,219 21,850 20,466 18,337 20,905 25,386 74,044 85,093
YoY Change (%) 11.1 20.8 16.4 15.6 15.1 7.0 21.4 16.2 15.5 14.9
EBITDA 5,084 4,207 4,147 5,517 5,566 4,408 4,546 5,118 19,019 19,638
Margins (%) 28.6 24.6 24.1 25.2 27.2 24.0 21.7 20.2 25.7 23.1
Depreciation 1,338 1,587 1,887 1,509 1,532 1,653 1,776 1,721 6,027 6,682
Interest 2,412 2,291 2,105 1,998 2,117 1,974 1,419 1,461 8,900 6,971
Other Income 766 796 676 715 700 922 507 571 2,988 2,700
PBT before EO Expense 2,100 1,125 831 2,724 2,617 1,703 1,858 2,507 7,080 8,685
Extra-Ord expense 0 0 8 -139 -267 33 -299 0 -131 -533
PBT after EO Expense 2,100 1,125 823 2,863 2,885 1,669 2,157 2,507 7,210 9,218
Tax 911 662 273 704 889 556 698 629 2,892 2,771
Rate (%) 43.4 58.9 33.2 24.6 30.8 33.3 32.3 25.1 40.1 30.1
Reported PAT (pre minority) 1,189 463 550 2,159 1,996 1,113 1,460 1,878 4,318 6,446
Minority + associate 250 152 151 319 357 193 279 196 870 1,024
PAT Adj for EO items 940 311 405 1,736 1,454 942 971 1,683 3,370 5,050
YoY Change (%) 78.3 149.8 35.2 83.2 54.7 202.9 139.9 -3.1 574.3 49.9
E:MOSL Estimates
April 2018 110

Grasim Industries
Bloomberg GRASIM IN CMP: INR1,086 TP: INR1,187(+9%) Neutral
 VSF margins are likely to be stable, led by firm VSF prices globally.
M. Cap. (INR b)/(USD b) 714 / 11
 Margins for the chemical business are likely to be stable due to
1,6,12 Rel Perf. (%) -5 / -12 / 12 shutdown of capacities globally.
 Standalone EBITDA should remain stable at INR8.7b.
Financial Snapshot (INR Billion)  We estimate adjusted PAT at INR5.02b (+7% QoQ). Maintain
Y/E March 2017 2018E 2019E 2020E Neutral.
Sales 360.7 461.5 566.3 653.2
EBITDA 73.9 71.3 121.9 145.7
Adj. PAT 31.7 14.4 53.6 65.4
Adj. EPS (INR) 67.8 30.8 114.8 140.0
EPS Gr. (%) 28.3 -54.6 272.6 22.0
BV/Sh. (INR) 672.3 698.1 807.9 942.9
RoE (%) 10.8 4.5 15.2 16.0
RoCE (%) 12.2 6.2 13.0 14.4
Payout (%) 7.8 16.2 4.4 3.6
 Pick-up in cement demand and pricing.
 Outlook on VSF business, and strategy to utilize upcoming
capacities globally.
 Outlook on chemical business.

(Standalone) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 23,959 24,887 25,260 28,761 27,403 40,373 44,283 28,355 103,457 140,414
YoY Change (%) 23.8 17.4 9.7 13.1 14.4 62.2 75.3 -1.4 15.3 35.7
EBITDA 5,078 5,301 5,428 5,254 5,553 7,852 8,735 8,694 21,548 30,834
Margins (%) 21.2 21.3 21.5 18.3 20.3 19.4 19.7 30.7 20.8 22.0
Depreciation 1,104 1,119 1,106 1,133 1,103 1,664 1,658 1,737 4,461 6,161
Interest 231 156 107 83 73 427 295 316 576 1,111
Other Income 781 3,587 553 304 658 2,688 372 282 4,739 4,000
PBT before EO Items 4,525 7,612 4,769 4,343 5,036 8,449 7,154 6,923 21,249 27,561
Extraordinary Inc/(Exp) 0 0 0 0 0 -540 91 0 0 -449
PBT after EO Items 4,525 7,612 4,769 4,343 5,036 7,909 7,245 6,923 21,249 27,112
Tax 1,317 1,690 1,455 1,188 1,564 2,164 2,507 1,899 5,649 8,134
Rate (%) 29.1 22.2 30.5 27.4 31.1 27.4 34.6 27.4 26.6 30.0
Reported PAT 3,209 5,923 3,314 3,155 3,472 5,745 4,739 5,023 15,600 18,979
Adj. PAT 3,209 5,923 3,314 3,155 3,472 6,137 4,679 5,023 15,600 19,293
Margins (%) 13.4 23.8 13.1 11.0 12.7 15.2 10.6 17.7 15.1 13.7
E: MOSL Estimates; YoY numbers not comparable due to ABNL merger
April 2018 111

India Cements
Bloomberg ICEM IN CMP: INR153 TP: INR148 (-3%) Neutral
 India Cements’ volumes are expected increase by 9% YoY to 3.16mt
52-Week Range (INR) 226 / 136 in 4QFY18 due to healthy demand from the southern region. We
1,6,12 Rel Perf. (%) 0 / -22 / -18 expect realizations to decrease by 2% QoQ to INR4,365/ton due to
weak prices in the underlying markets of the South. We estimate
Financial Snapshot (INR Billion) revenue at INR13.7b (+3% YoY).
Y/E March 2017 2018E 2019E 2020E  EBITDA is estimated at INR1.8b. EBITDA margin is likely to contract
Sales 50.8 51.5 57.8 65.5 1.3pp YoY and 0.9pp QoQ to 12.8%, translating into blended
EBITDA 8.6 7.1 8.9 10.3 EBITDA/ton of INR560 (-INR53 QoQ and –INR 95YoY) led by
NP 1.7 0.9 2.0 2.9 decrease in realization. PAT is expected to be INR238m in
Adj. EPS (INR) 5.6 2.9 6.6 9.4 4QFY18(v/s INR343m in 4QFY17).
EPS Gr. (%) 31.3 -48.5 129.3 41.8  The stock trades at a P/E of 23x (FY19E) and 16.3x (FY20E),
BV/Sh (INR) 165.8 167.6 173.0 181.3 EV/EBITDA of 8.5x (FY19E) and 7.1x (FY20E), and EV/ton of USD71
RoE (%) 3.4 1.7 3.9 5.3 (FY19E) and USD69 (FY20E). Maintain Neutral.
RoCE (%) 5.1 4.4 5.5 6.6
Payout (%) 20.7 40.1 17.5 12.3
Valuations Key issues to watch out for
P/E (x) 27.2 52.9 23.0 16.3  Visibility on demand recovery in the South.
P/BV (x) 0.9 0.9 0.9 0.8  Demand, especially in Tamil Nadu, after resolution of sand mining
EV/EBITDA(x) 8.9 10.8 8.5 7.1 ban.
EV/Ton (USD) 72 72 71 69  Pricing outlook in South India.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
YoY Change (%) 10 14 37 19 15 10 3 9 27.3 2.2
YoY Change (%) 2.5 -5.6 -11.6 -0.9 -6.1 -10.7 -7.0 -5.8 -16.7 -0.8
QoQ Change (%) 10.7 1.7 -9.0 -3.2 4.8 -3.3 -5.2 -1.9
Net Sales 12,025 13,075 12,679 13,436 12,901 12,683 12,131 13,784 50,795 51,498
YoY Change (%) 11.9 6.7 19.8 17.1 7.3 -3.0 -4.3 2.6 5.6 1.4
EBITDA 2,014 2,244 1,886 1,900 1,856 1,814 1,673 1,770 8,610 7,113
Margins (%) 16.7 17.2 14.9 14.1 14.4 14.3 13.8 12.8 17.0 13.8
Depreciation 511 521 516 639 630 632 633 622 2,571 2,517
Interest 825 876 858 820 874 886 924 919 3,605 3,602
Other Income 32 69 31 17 52 66 37 41 165 196
Extra-Ord expense 0 0 0 0 0 0 0 0
PBT 710 917 542 458 404 362 152 271 2,600 1,189
Tax 271 293 189 115 140 125 0 32 867 297
Rate (%) 38.1 31.9 34.8 25.1 34.6 34.6 0.0 11.9 33.3 25.0
Reported PAT 440 624 353 343 264 237 152 238 1,734 892
Adj PAT 440 624 353 343 264 237 152 238 1,734 892
YoY Change (%) -9.4 53.9 1,018.4 -19.6 -39.9 -62.1 -56.9 -30.4 31.3 -48.5
Margins (%) 3.7 4.8 2.8 2.6 2.0 1.9 1.3 1.7 3.4 1.7
E: MOSL Estimates
April 2018 112

Ramco Cements
Bloomberg TRCL IN CMP: INR756 TP: INR877 (+16%) Buy
 4QFY18 volumes are estimated to grow 14% YoY to 2.6mt, with
M. Cap. (INR b)/(USD b) 178 / 3
52-Week Range (INR)
growth from underlying markets of the South and East. Average
840 / 649
1,6,12 Rel Perf. (%) realizations are expected to decline by 1.5% QoQ to 4,539/ton due
4/3/0
to weaker prices in the South offset by healthy prices in the East.
 EBITDA margin is likely to contract 1.9pp YoY (flat QoQ) to 22%.
EBITDA/ton (ex-windmill) is estimated at INR1020 ( -INR55YoY,
Y/E MARCH 2017 2018E 2019E 2020E
+INR24 QoQ) due to YoY increase in cost.
Sales 39.3 43.2 48.2 56.6  PAT is estimated to increase 3% YoY to INR1.4b.
EBITDA 11.6 10.6 12.0 14.7  The stock trades at a P/E of 25.5x (FY19E) and 20x (FY20E),
NP 6.5 5.7 7.0 8.9
EV/EBITDA of 14.6x (FY19E) and 11.8x (FY20E), and EV/ton of
Adj. EPS (INR) 27.3 24.0 29.7 37.8
USD165 (FY19E) and USD144 (FY20E). Maintain Buy.
EPS Gr. (%) 24.0 -11.9 23.4
27.6
BV/Sh. (INR) 157.1 178.2 203.2 236.3
RoE (%) 19.0 14.3 15.6 17.2
RoCE (%) 14.0 11.6 13.3 15.6
Payout (%) 12.8 19.3 15.7 12.4
Valuations
P/E (x) 25.8 31.5 25.5 20.0  Volume growth recovery and outlook.
P/BV (x) 4.5 4.2 3.7 3.2
 Cement pricing outlook and demand sustainability in the South
EV/EBITDA (x) 15.1 17.1 14.6 11.8
(AP and Tamil Nadu).
EV/Ton (USD) 162 170 165 144

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
YoY Change (%) 14.0 18.4 21.9 9.8 4.1 6.3 14.7 14.1 16.0 9.9
YoY Change (%) -11.9 -1.8 -5.5 -12.4 1.0 -0.1 -1.9 2.0 -7.6 -0.8
QoQ Change (%) -10.2 5.0 -2.0 -5.2 3.5 3.8 -3.7 -1.5
Net Sales 9,667 10,124 9,374 10,166 10,165 10,633 10,534 11,897 39,292 43,228
YoY Change (%) 6.9 15.5 15.3 5.7 5.1 5.0 12.4 17.0 10.7 10.0
EBITDA 2,988 3,493 2,690 2,429 2,781 2,908 2,276 2,622 11,561 10,586
Margins (%) 30.9 34.5 28.7 23.9 27.4 27.3 21.6 22.0 29.4 24.5
Depreciation 663 667 661 664 720 718 730 767 2,655 2,935
Interest 291 282 261 201 155 173 160 133 1,035 621
Other Income 73 93 273 154 176 103 82 105 632 466
PBT 2,106 2,637 2,040 1,718 2,082 2,197 1,592 1,826 8,502 7,496
Tax 547 567 542 373 524 511 364 437 2,009 1,837
Rate (%) 26.0 21.5 26.6 21.7 25.2 23.3 22.9 23.9 23.6 24.5
Reported PAT 1,559 2,070 1,498 1,345 1,558 1,685 1,227 1,390 6,493 5,659
Adj PAT 1,559 2,070 1,498 1,345 1,558 1,609 1,103 1,390 6,493 5,659
YoY Change (%) 57.1 45.6 26.6 -26.3 -0.1 -22.3 -26.4 3.3 25.3 -12.8
Margins (%) 16.1 20.4 16.0 13.2 15.3 15.1 10.5 11.7 16.5 13.1
E: MOSL Estimates
April 2018 113

Sanghi Industries
Bloomberg SNGI IN CMP: INR122 TP: INR157 (+29%) Buy
 We expect 4QFY18 cement volumes to decline by 4% YoY to 0.74mt
due to lower clinker sale. Realizations are expected to increase 4%
1,6,12 Rel Perf. (%)
QoQ to INR4,002/ton due to strong pricing in Gujarat.
6 / 9 / 61
 Revenue is estimated at INR2.9b (+21% YoY; +6% QoQ) and EBITDA
at INR714mn (+69%YoY; +16%QoQ), translating into margin of 24%
Y/E March 2017 2018E 2019E 2020E
(+7pp YoY; +2pp QoQ), led by realization improvement. Adjusted
Sales 10.0 10.7 13.4 15.5
PAT is likely to be INR400m (+52% YoY; +24% QoQ).
EBITDA 2.0 2.5 3.4 4.1
 The stock trades at a P/E of 14.3x (FY19E) and 10.8x (FY20E),
NP 0.6 1.1 2.1 2.8
EV/EBITDA of 8.6x (FY19E) and 6.4x (FY20E), and EV/ton of USD109
Adj. EPS (INR) 2.9 4.6 8.5 11.3
(FY19E) and USD76 (FY20E). Maintain Buy.
EPS Gr. (%) -15.7 59.3 86.0 32.5
BV/Share (INR) 50.6 57.3 67.0 79.8
RoE (%) 5.8 9.7 15.6 17.5
RoCE (%) 7.7 10.4 13.4 13.0
Valuation
P/E (x) 42.5 26.7 14.3 10.8
 Volume and pricing recovery for western region.
P/BV (x) 2.4 2.1 1.8 1.5
 Update on expansion projects.
EV/EBITDA (x) 15.6 12.4 8.6 6.4
EV/Ton (USD) 116.8 115.7 109.4 76.6
Standalone - Quarterly Earning Model (INR million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
YoY Change (%) 0.5 10.1 29.9 (13.6) (6.5) (18.5) (13.3) (4.2) 38.3 (10.0)
YoY Change (%) 2.7 (9.3) (11.9) (9.8) 13.6 21.8 18.5 25.9 (5.3) 19.2
QoQ Change (%) 8.0 (4.5) (10.9) (1.9) 36.0 2.4 (13.3) 4.3
Net Sales 2,707 2,072 2,721 2,467 2,875 2,056 2,796 2,974 9,975 10,701
YoY Change (%) 3.1 -0.1 14.4 -22.1 6.2 -0.8 2.8 20.6 30.9 7.3
EBITDA 655 471 424 423 661 467 618 714 1,982 2,460
Margins (%) 24.2 22.7 15.6 17.2 23.0 22.7 22.1 24.0 19.9 23.0
Depreciation 180 184 184 183 178 180 181 176 731 715
Interest 187 182 191 82 187 189 173 156 642 704
Other Income 5 6 14 7 21 11 57 18 22 107
PBT 292 111 62 166 316 109 322 400 631 1,148
Tax 54 26 16 -97 0 0 0 0 0 0
Rate (%) 18.6 23.5 26.1 -58.4 0.0 0.0 0.0 0.0 0.0 0.0
Reported PAT 238 85 46 263 316 109 322 400 631 1,148
Adj PAT 238 85 46 263 316 109 322 400 631 1,148
YoY Change (%) 9,408.0 -671.1 -80.4 -61.7 32.9 28.4 596.7 52.4 -31.1 81.7
Margins (%) 8.8 4.1 1.7 10.7 11.0 5.3 11.5 13.5 6.3 10.7
E: MOSL Estimates
April 2018 114

Shree Cement
Bloomberg SRCM IN CMP: INR16,623 TP: INR19,116(+15%) Buy
 We expect 4QFY18 cement volumes to grow 8% YoY to 6.4mt, led
M. Cap. (INR b)/(USD b) 579 / 9
52-Week Range (INR)
by healthy growth in eastern markets. Realizations are expected to
20560 / 15600
1,6,12 Rel Perf. (%) 2 / -16 / -14
decline 1.5% QoQ to INR4,058/ton due to weak pricing in the
North.
 Revenue is estimated at INR25.9b (+9% YoY) and EBITDA at INR6b,
Y/E March 2017 2018E 2019E 2020E translating into margin of 23.2% (+1.8pp YoY; flat QoQ) due to YoY
Sales 84.3 96.0 119.5 155.1 increase in realization.
EBITDA 23.7 24.1 29.9 40.2  Merchant power sales are expected to be meaningfully lower due
NP 13.4 12.7 16.5 23.7 to a sharp decline in merchant power rates. We expect power
Adj. EPS (INR) 384.4 365.7 473.5 679.2 EBITDA to be around INR86m.
EPS Gr. (%) 5.4 -4.9 29.5 43.5  SRCM should report an EBITDA/ton of INR931 (-INR73 QoQ), led by
BV/Share (INR) 2,210 2,527 2,952 3,584 weaker QoQ realization and cost push. Adjusted PAT is likely to be
RoE (%) 18.4 15.4 17.3 20.8 INR3.3b (+8% YoY).
RoCE (%) 17.5 14.3 16.4 19.7  The stock trades at a P/E of 35.1x (FY19E) and 24.5x (FY20E),
Payout (%) 43.8 13.2 10.2 7.1 EV/EBITDA of 17.9x (FY19E) and 13.5x (FY20E), and EV/ton of
Valuation USD203 (FY19E) and USD179 (FY20E). Maintain Buy.
P/E (x) 48.7 45.5 35.1 24.5 
P/BV (x) 8.5 6.6 5.6 4.6  Volume and pricing recovery for North India.
EV/EBITDA (x) 26.3 22.7 17.9 13.5  Update on various expansion projects.
EV/Ton (USD) 312 224 203 179  New expansion plans.
Quarterly Performance - Shree Cement (S/A) (INR Million)

Sales Dispat. (m ton) 5.13 4.57 4.91 5.93 5.89 4.88 5.33 6.39 20.54 22.48
YoY Change (%) 18.0 9.2 4.5 10.7 14.8 6.8 8.5 7.7 10.5 9.5
Realization (INR/Ton) 3,885 4,064 3,699 3,771 4,205 4,170 4,120 4,058 3,825 4,135
YoY Change (%) 11.8 12.3 7.2 13.9 8.3 2.6 11.4 7.6 10.7 8.1
QoQ Change (%) 17.4 4.6 -9.0 1.9 11.5 -0.8 -1.2 -1.5
Net Sales 21,987 20,519 18,434 23,803 25,714 21,368 22,962 25,950 84,292 95,995
YoY Change (%) 27.9 19.9 2.2 19.1 17.0 4.1 24.6 9.0 16.5 13.9
EBITDA 7,308 7,013 4,689 5,112 7,133 5,605 5,293 6,033 23,672 24,064
Margins (%) 33.2 34.2 25.4 21.5 27.7 26.2 23.1 23.2 28.1 25.1
Depreciation 1,540 4,322 3,176 3,109 2,312 2,253 2,100 2,551 12,147 9,215
Interest 276 293 411 314 329 380 207 180 1,294 1,096
Other Income 979 782 1,356 1,510 974 995 873 858 5,077 3,700
PBT before EO Exp 6,471 3,180 2,459 3,199 5,466 3,968 3,859 4,161 15,308 17,453
Extra-Ord Expense 0 0 21 0 0 0 -403 0 0 0
PBT 6,471 3,180 2,438 3,199 5,466 3,968 4,262 4,161 15,308 17,453
Tax 1,394 265 83 154 1,065 1,850 928 869 1,917 4,712
Rate (%) 21.5 8.3 3.4 4.8 19.5 46.6 21.8 20.9 12.5 27.0
Reported PAT 5,077 2,915 2,354 3,045 4,401 2,118 3,334 3,292 13,391 12,741
Adj PAT 5,077 2,915 2,375 3,045 4,401 2,118 2,930 3,292 13,391 12,741
YoY Change (%) 106.1 18.3 1.6 -51.4 -13.3 -27.4 23.4 8.1 5.4 -4.9
E:MOSL Estimates
April 2018 115

UltraTech Cement
Bloomberg UTCEM IN CMP: INR3,949 TP: INR4,799 (+22%) Buy
M. Cap. (INR b)/(USD b)
 4QFY18 grey cement volumes are estimated at 17.8mt, including
1084 / 17
52-Week Range (INR) JPA’s volumes. While JPA is expected to operate at 70%
4594 / 3774
1,6,12 Rel Perf. (%) -3 / -5 / -13
utilization, standalone UTCEM volumes are expected to grow by
9% YoY. Realizations are estimated to remain flat QoQ at
INR4,795/ton, as pricing improvement in Central and East India
Y/E March 2017 2018E 2019E 2020E will be offset by weaker pricing in North and South India.
Sales 238.9 295.2 371.0 429.0  We estimate EBITDA/ton at INR791 (-INR10QoQ) due to flat
EBITDA 49.7 56.2 76.5 94.1 realization and cost structure remaining flat QoQ. EBITDA margin
NP 26.4 21.3 34.0 45.3 is expected to remain stable at 16.5%.
Adj. EPS (INR) 96.1 77.5 123.7 165.0  EBITDA is estimated to increase 13% QoQ to INR14.4b, while PAT
EPS Gr. (%) 11.3 -19.3 59.5 33.4 is estimated to decline 30% YoY to INR4.9b due to higher interest
BV/Share (INR) 872 944 1,037 1,152 cost and depreciation related to JPA’s acquisition.
RoE (%) 11.6 8.5 12.5 15.1  The stock trades at a P/E of 32x (FY19E) and 24x (FY20E),
RoCE (%) 9.7 7.3 8.8 10.5 EV/EBITDA of 15x (FY19E) and 12x (FY20E), and EV/ton of USD188
Payout (%) 12.1 22.5 18.8 17.6 (FY19E) and USD184 (FY20E). Maintain Buy.
Valuation
P/E (x) 41.1 50.9 31.9 23.9
 Volume growth recovery and outlook.
P/BV (x) 4.5 4.2 3.8 3.4
 Cement pricing outlook and sustainability.
EV/EBITDA (x) 21.4 21.1 15.0 11.9
 Update on JPA’s operations.
EV/Ton (USD) 247 213 188 184

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales (m ton) 13.19 11.18 11.73 14.07 13.19 13.14 15.85 18.21 48.9 59.1
YoY Change (%) 8.6 3.5 2.3 2.7 0.0 17.5 35.1 29.4 1.6 20.9
Blended Realn.(INR/ton) * 4,723 4,827 4,781 4,689 5,025 5,001 4,789 4,795 4,762 4,888
YoY Change (%) -1.5 -2.9 -0.1 3.2 6.4 3.6 0.2 2.3 -0.8 2.6
QoQ Change (%) 3.9 2.2 -0.9 -1.9 7.2 -0.5 -4.2 0.1
Net Sales 62,295 53,966 56,091 65,953 66,265 65,713 75,899 87,300 238,914 295,177
EBITDA 14,225 10,938 11,135 12,782 15,601 13,513 12,691 14,396 49,690 56,201
Margins (%) 22.8 20.3 19.9 19.4 23.5 20.6 16.7 16.5 20.8 19.0
Depreciation 3,027 3,139 3,156 3,357 3,098 4,988 4,744 4,742 12,679 17,572
Interest 1,525 1,367 1,293 1,529 1,285 3,759 3,472 3,379 5,714 11,895
Other Income 1,504 2,335 970 2,401 1,652 1,680 518 500 6,600 4,350
Extra-Ord expense 0 0 0 137 0 0 -1,038 0 137 -1,038
Tax 3,428 2,757 2,021 3,276 3,963 2,135 1,816 1,883 11,482 9,797
Rate (%) 30.7 31.4 26.4 32.2 30.8 33.1 30.1 27.8 30.4 30.5
Reported PAT 7,749 6,011 5,634 6,883 8,906 4,312 4,215 4,892 26,277 22,325
Adj PAT 7,749 6,011 5,634 6,976 8,906 4,312 3,489 4,892 26,372 21,604
YoY Change (%) 28.3 31.4 6.7 -10.7 14.9 -28.3 -38.1 -29.9 11.3 -18.1
E: MOSL Estimates; YoY not comparable, as financials include JPA numbers for 4QFY18 and not for 4QFY17
April 2018 116

Consumer
Company name Volume growth recovering, ITC to drag overall numbers
Asian Paints Rural sales likely to outpace urban sales for the third consecutive quarter
Britannia Industries
Colgate Strong performance likely from BRIT, Page, UB and Colgate
Dabur For our Consumer Universe, we expect aggregate revenue to grow 8.2% YoY and
Emami aggregate PAT to grow 11% YoY in 4QFY18. Flat sales expected from ITC, as a result
Future Consumer of unusually high base quarter, net sales growth of 21% in cigarettes (due to
Godrej Consumer extremely low excise duty in 4QFY17), are likely to drag down overall sector sales
GSK Consumer growth, which otherwise would have been in double digits. With all three
Hindustan Unilever components of sales –volumes, realization and premiumization – now firing in
ITC
tandem, overall sales growth, barring ITC, is on a recovery path. Aggregate EBITDA is
Jyothy Labs
likely to grow 10.9% YoY, with sales growth revival leading to better absorption of
costs. EBITDA margin is likely to be 60bp higher YoY.
Marico
Nestle India
We expect ITC’s sales to come in flat YoY (with flat cigarette volumes). Cigarette
Page Industries
gross sales were up 6% in the base quarter, while net sales were up 21% due to very
Pidilite Industries
low excise. Consequently, we expect an 8% YoY decline in cigarette net sales in
P&GHH
4QFY18. Adj. PAT for the company is expected to grow 6.9% YoY. HUVR’s volume
United Breweries
growth is likely to be the second highest in 10 quarters at 7%, as rural continues to
United Spirits
do well and both CSD/wholesale seem to have normalized for them (sales growth is
likely to be at 9.4%). EBITDA margin should expand 110bp YoY. Britannia, Colgate,
Page Industries, United Breweries, P&G Hygiene, Asian Paints and Nestle are all
likely to report double-digit sales, EBITDA and PAT growth. Best YoY growth in PAT in
4QFY18 is likely to come from Britannia, Page Industries, Pidilite, Colgate, P&G
Hygiene and Healthcare and Nestle, all of which are likely to report 15% PAT growth.
It is likely to be another subdued quarter on earnings growth for Dabur, Emami,
Marico and GCPL.
Sharp increase in copra and mentha prices

PFAD/palm oil prices declined 14.9%/21.2% YoY in 4QFY18. Ti02 price increase has
stabilized (+3.0% YoY), while VAM prices have shown an uptrend. Some other
commodities reported a sharp uptrend: mentha prices were up significantly by 46%
YoY in 4QFY18, while copra and LLP prices rose 69% YoY and 26% YoY, respectively,
in two months ended February 2018. HDPE prices increased 7% YoY.
Preference for quality and longevity of growth

The consumer sector is characterized by rich near-term valuations, given the
market’s continued preference for quality with healthy growth. Our framework for
earnings visibility, longevity of growth and quality management drives our choices in
the sector universe. We continue preferring Britannia, Hindustan Unilever, Emami,
Pidilite and Colgate. Within the discretionary pack, we like Page Industries (which
has demonstrated robust volume growth even in a weak environment and is poised
to do better) and United Breweries (which has started reporting robust numbers
again and is an extremely strong long-term earnings play).
Krishnan Sambamoorthy – Research Analyst (Krishnan.Sambamoorthy@MotilalOswal.com); +91 22 6129 1545
Vishal Punmiya – Research Analyst (Vishal.Punmiya@MotilalOswal.com); +91 22 6129 1547
April 2018 117
March 2018 Results Preview | Consumer

RECO Mar-18 Mar-18 Mar-18
Consumer
Asian Paints 1,153 Neutral 45,098 14.1 5.9 7,840 10.1 -12.0 5,278 10.0 -6.9
Britannia 5,093 Buy 25,799 14.9 0.8 3,983 29.3 2.3 2,703 28.3 2.6
Colgate 1,084 Buy 11,439 10.3 10.7 2,834 16.0 0.3 1,673 17.4 -1.9
Dabur 337 Buy 20,591 7.5 4.7 4,426 6.0 9.7 3,611 8.2 8.7
Emami 1,099 Buy 6,291 8.9 -16.9 1,886 5.9 -28.7 1,407 -3.4 -32.3
Future Consumer 55 Buy 7,737 45.0 -1.3 190 633.1 15.3 58 LP LP
Godrej Consumer 1,106 Neutral 25,414 6.8 -2.4 6,004 10.9 4.9 4,141 8.2 -4.2
GSK Consumer 6,000 Neutral 11,819 7.3 14.2 2,464 13.5 20.8 1,890 7.5 15.5
Hind. Unilever 1,348 Buy 89,864 9.4 4.6 19,090 15.6 13.6 13,033 16.6 8.8
ITC 258 Neutral 111,528 0.2 12.1 40,707 5.0 4.3 28,545 6.9 1.2
Jyothy Labs 389 Neutral 5,097 14.4 18.2 791 30.4 14.1 543 -50.0 56.4
Marico 325 Neutral 14,612 11.1 -10.0 2,772 9.8 -8.2 1,807 5.8 -19.0
Nestle 8,361 Neutral 27,728 12.0 7.1 5,862 14.7 -7.4 3,680 17.7 -13.1
P&G Hygiene 9,465 Neutral 6,427 12.0 -8.7 1,825 18.7 -13.2 1,156 16.0 -11.9
Page Industries 22,288 Buy 5,974 19.7 -3.8 1,250 28.3 -3.0 786 17.7 -5.7
Pidilite Inds. 963 Buy 14,122 9.0 -8.5 2,762 7.1 -25.4 1,891 22.1 -20.2
United Breweries 977 Buy 13,742 23.5 14.8 1,796 77.6 17.7 693 930.3 46.4
United Spirits 3,250 Neutral 20,138 -0.6 -11.0 2,708 2.2 -0.5 1,267 13.3 -14.0
Source: MOSL
Exhibit 2: 4QFY18 volume growth expectations (%)

Quarter Ending 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18E
Asian Paints (Dom Deco) 4.0 12.0 7.0 15.0 13.0 11.0 12.0 2.0 10.0 4.0 9.0 6.0 8.0
Britannia (Biscuits) 8.0 10.0 12.0 11.0 10.0 8.0 10.0 2.0 2.0 2.0 5.0 11.0 12.0
Colgate (Toothpaste) 5.0 2.0 3.0 1.0 3.0 5.0 4.0 (12.0) (3.0) (5.0) (0.9) 12.0 6.0
Dabur 8.1 8.1 5.5 (2.5) 7.0 4.1 4.5 (5.0) 2.4 (4.4) 7.2 13.0 8.5
Emami 12.0 15.0 13.5 9.3 18.0 18.0 11.0 0.2 (1.5) (18.0) 10.0 6.0 8.0
Godrej Cons. (Soaps) 5.0 DD MSD MSD MSD LDD (MSD) (8.0) 5.0 (9.0) 15.0 15.0 5.0
GSK Consumer 2.0 2.0 0.0 0.0 0.0 (6.0) (3.0) (17.0) (1.0) 0.0 2.5 15.0 6.0
Hindustan Unilever 6.0 6.0 7.0 6.0 4.0 4.0 (1.0) (4.0) 4.0 0.0 4.0 11.0 7.0
ITC (cigarette) (12.0) (17.0) (14.0) (5.0) 0.0 3.0 4.0 (1.0) 0.0 1.0 (6.0) (2.0) 0.0
Marico
Domestic 3.0 6.0 5.5 10.5 8.4 8.0 3.0 (4.0) 10.0 (9.0) 8.0 9.4 5.0
Parachute 5.0 8.0 11.0 4.0 7.0 7.0 (6.0) (1.0) 15.0 (9.0) 12.0 15.0 3.0
Hair Oil 5.0 14.0 8.0 21.0 15.0 9.0 11.0 (12.0) 10.0 (8.0) 3.0 8.0 5.0
Saffola (1.0) 4.0 4.0 17.0 10.0 11.0 8.0 6.0 6.0 (9.0) 12.0 0.0 6.0
Pidilite 5.5 5.0 3.0 6.0 6.0 9.0 7.8 (1.5) 7.0 0.0 15.0 23.0 16.0
Exhibit 3: Relative performance – 3m (%) Exhibit 4: Relative performance – 1Yr (%)

Sensex Index MOSL Metals Index Sensex Index MOSL Metals Index
110 130
105 120
100 110
95 100
90 90
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17
Dec-17
Jan-18
Feb-18
Mar-18
April 2018 118

Exhibit 5: PFAD prices down 15% YoY and 2% QoQ Exhibit 6: Palm oil prices down 21% YoY and 5% QoQ
Palm Fatty Acid price (INR/MT) Palm Oil (Malaysian Ringgit Per Metric Tonne)
39,027
2,394
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Exhibit 7: Mentha prices up 46% YoY; down 5% QoQ Exhibit 8: TiO2 prices up 3% YoY and 2% QoQ
Mentha Oil prices INR / kg TiO2 price (INR/kg)
250
1,430
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
Mar-13
Mar-14
Mar-15
Mar-16
Mar-17
Mar-18

Consumer
Asian Paints 1,153 Neutral 21.5 25.4 30.5 53.7 45.4 37.8 34.0 28.9 24.1 26.8 29.4 31.6
Britannia 5,093 Buy 84.2 105.1 131.5 60.5 48.5 38.7 40.6 33.3 26.5 33.9 35.8 40.1
Colgate 1,084 Buy 24.0 28.3 33.8 45.2 38.4 32.0 25.9 23.2 19.7 49.9 55.5 61.9
Dabur 337 Buy 7.6 9.0 10.5 44.5 37.3 32.1 34.5 29.5 25.3 25.4 26.7 28.6
Emami 1,099 Buy 25.0 31.0 36.9 43.9 35.5 29.8 33.2 27.1 23.2 30.1 32.6 36.2
Future Consumer 55 Buy -0.1 0.3 1.1 -546.5 182.0 48.3 193.8 76.2 34.5 -1.8 4.9 16.6
Godrej Consumer 1,106 Neutral 21.3 24.4 27.8 51.9 45.4 39.8 37.2 32.7 28.6 24.0 22.8 22.7
GSK Consumer 6,000 Neutral 161.0 183.8 215.7 37.3 32.7 27.8 26.2 21.8 18.2 20.7 21.6 23.0
Hind. Unilever 1,348 Buy 24.0 28.3 33.3 56.3 47.7 40.5 39.8 33.3 28.3 78.2 89.6 104.1
ITC 258 Neutral 9.0 10.2 11.4 28.9 25.4 22.6 19.1 16.8 14.9 22.8 23.8 24.8
Jyothy Labs 389 Neutral 8.5 10.9 13.6 46.0 35.6 28.7 27.9 22.9 19.2 14.3 18.5 21.8
Marico 325 Neutral 6.4 7.5 9.0 50.8 43.1 36.3 35.5 30.0 25.4 33.1 35.8 39.3
Nestle 8,361 Neutral 140.0 159.1 192.3 59.7 52.6 43.5 35.2 31.7 26.7 43.4 46.2 51.8
P&G Hygiene 9,465 Neutral 142.1 171.3 200.8 66.6 55.3 47.1 40.7 34.4 29.1 61.2 61.8 60.8
Page Industries 22,288 Buy 297.1 415.7 549.8 75.0 53.6 40.5 48.5 34.7 26.5 39.9 44.6 47.7
Pidilite Inds. 963 Buy 17.6 20.6 23.7 54.6 46.7 40.6 33.3 30.5 26.3 24.2 24.5 24.7
United Breweries 977 Buy 14.1 17.4 22.9 69.4 56.1 42.7 29.3 25.3 20.4 14.9 16.2 18.3
United Spirits 3,250 Neutral 32.6 56.9 78.5 99.6 57.1 41.4 48.8 34.2 25.9 17.2 22.3 22.4
Source: MOSL
April 2018 119

Asian Paints
Bloomberg APNT IN CMP: INR1,153 TP: INR1,250 (+8%) Neutral
 We expect revenue to grow 14% YoY to INR45.1b in 4QFY18, with
M. Cap. (INR b)/(USD b) 1106 / 17
8% volume growth in the domestic decorative business.
52-Week Range (INR) 1261 / 1032
1,6,12 Rel Perf. (%) 5 / -5 / -6  We note that crude prices are up 24% YoY and 9% QoQ in
4QFY18. The magnitude of price movement in crude derivatives is
Financial Snapshot (INR b) lower vis-à-vis crude prices.
Y/E March 2017 2018E 2019E 2020E
Sales 152.9 168.5 200.3 235.5  Gross margins are therefore expected to be down 60bp YoY to
EBITDA 30.2 31.4 37.7 44.8 43.3%.
Adj. PAT 20.2 20.6 24.3 29.3  Operating margin is likely to contract by 60bp to 17.4%, with
Adj. EPS (INR) 21.0 21.5 25.4 30.5 EBITDA growing 10.1% YoY in 4QFY18.
EPS Gr. (%) 8.7 2.1 18.2 20.2
BV/Sh.(INR) 79.3 81.2 91.3 102.0
 We estimate 10% adj. PAT growth for 4QFY18.
RoE (%) 28.5 26.8 29.4 31.6  The stock trades at 45.4x/37.8x FY19E/20E EPS of
RoCE (%) 24.2 22.7 25.5 27.7 INR25.4/INR30.5; maintain Neutral.
Payout (%) 37.8 46.6 51.2 55.7
Valuations
Key issues to watch for
P/E (x) 54.8 53.7 45.4 37.8
 Volume growth trends and demand scenario in urban and rural
P/BV (x) 14.5 14.2 12.6 11.3 geographies.
EV/EBITDA (x) 35.6 34.5 28.6 23.9  Demand outlook for industrial paints.
Div. Yield (%) 0.8 1.0 1.3 1.7  Outlook for raw materials/pricing actions.
 Quarterly market share trend.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Dom Deco Volume Growth % 11.0 12.0 2.0 10.0 4.0 9.0 6.0 8.0 8.8 6.8
Net Sales 35,870 37,095 38,571 39,525 38,152 42,652 42,605 45,098 151,060 168,508
Change (%) 7.6 8.0 0.6 7.8 6.4 15.0 10.5 14.1 5.8 11.5
Raw Material/PM 18,961 20,637 21,691 22,194 21,812 25,042 24,610 25,576 83,483 97,041
Gross Profit 16,910 16,458 16,880 17,330 16,340 17,610 17,995 19,522 67,578 71,467
Gross Margin (%) 47.1 44.4 43.8 43.8 42.8 41.3 42.2 43.3 44.7 42.4
Operating Expenses 8,748 9,404 9,310 10,211 9,686 9,599 9,083 11,681 37,673 40,050
% of Sales 24.4 25.4 24.1 25.8 25.4 22.5 21.3 25.9 24.9 23.8
EBITDA 8,162 7,054 7,570 7,119 6,654 8,011 8,912 7,840 29,905 31,417
Margin (%) 22.8 19.0 19.6 18.0 17.4 18.8 20.9 17.4 19.8 18.6
Change (%) 20.3 16.0 -3.6 2.1 -18.5 13.6 17.7 10.1 8.0 5.1
Interest 63 59 90 90 80 88 92 96 302 356
Depreciation 844 833 845 835 905 889 896 960 3,357 3,651
Other Income 719 793 413 701 783 534 497 827 2,625 2,641
PBT 7,973 6,955 7,048 6,895 6,452 7,569 8,420 7,610 28,871 30,051
Tax 2,593 2,200 2,430 2,205 2,160 2,459 2,913 2,384 9,428 9,917
PAT before Minority 5,381 4,755 4,617 4,690 4,292 5,110 5,507 5,226 19,443 20,134
Adjusted PAT 5,506 4,893 4,744 4,796 4,382 5,262 5,672 5,278 20,162 20,594
Change (%) 21.4 21.2 -9.0 10.1 -20.4 7.5 19.6 10.0 8.7 2.1
E: MOSL Estimates
April 2018 120

Britannia Industries
Bloomberg BRIT IN
CMP: INR5,093 TP: INR6,180 (+21%) Buy
 We expect Britannia’s (BRIT) sales to grow 14.9% YoY to INR25.8b,
M. Cap. (INR b)/(USD b) 611 / 9
with base business volumes growing 12% on a favorable base of
52-Week Range (INR) 5121 / 3320
1,6,12 Rel Perf. (%) 5 / 11 / 39
2% volume growth.
 Wheat and sugar are down YoY. Gross margins are likely to
Financial Snapshot (INR b) expand 60bp YoY to 38.6% in 4QFY18.
Y/E March 2017 2018E 2019E 2020E
Sales 89.6 99.0 118.6 142.6  We expect 170bp YoY expansion in operating margin to 15.4%.
EBITDA 11.9 14.5 18.1 22.6 Estimate 29.3% EBITDA growth and 28.3% adj. PAT growth for the
Adj. PAT 8.8 10.1 12.6 15.8 quarter.
Adj. EPS (INR) 73.7 84.2 105.1 131.5  The stock trades at 48.5x/38.7x FY19E/20E EPS of
EPS Gr. (%) 7.3 14.3 24.8 25.1 INR105.1/INR131.5; maintain Buy. Britannia is one of our top
BV/Sh.(INR) 224.7 271.7 315.8 340.3
picks in the tier-II consumer space.
RoE (%) 36.9 33.9 35.8 40.1
RoCE (%) 31.1 28.9 30.9 35.0
Payout (%) 32.7 35.0 50.0 70.0
Valuations
P/E (x) 69.1 60.5 48.5 38.7
 Pace of rural recovery.
P/BV (x) 22.7 18.7 16.1 15.0
 Outlook for raw materials.
EV/EBITDA (x) 51.1 41.5 33.3 26.5
 Update on dairy business.
Div. Yield (%) 0.5 0.6 1.0 1.8
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Base business volume growth (%) 10.0 10.0 2.0 2.0 2.0 5.0 11.0 12.0 6.0 7.5
Net Sales 21,063 23,612 22,648 22,444 22,248 25,365 25,583 25,799 89,623 98,996
YoY Change (%) 8.5 11.0 5.6 5.2 5.6 7.4 13.0 14.9 7.4 10.5
COGS 12,879 14,902 14,190 13,915 13,873 15,840 15,745 15,849 55,887 61,307
Gross Profit 8,184 8,709 8,458 8,528 8,375 9,525 9,838 9,950 33,736 37,689
Margins (%) 38.9 36.9 37.3 38.0 37.6 37.6 38.5 38.6 37.6 38.1
Other Operating Exp 5,367 5,578 5,487 5,448 5,479 5,836 5,946 5,967 21,872 23,228
% of Sales 25.5 23.6 24.2 24.3 24.6 23.0 23.2 23.1 24.4 23.5
Total Exp 18,246 20,481 19,678 19,363 19,352 21,676 21,691 21,816 77,759 84,535
EBITDA 2,817 3,131 2,970 3,081 2,896 3,689 3,892 3,983 11,864 14,461
Margins (%) 13.4 13.3 13.1 13.7 13.0 14.5 15.2 15.4 13.2 14.6
YoY Growth (%) 3.5 2.0 0.9 6.1 2.8 17.8 31.0 29.3 -5.1 21.9
Depreciation 279 289 303 322 332 336 329 402 1,193 1,399
Interest 15 15 11 13 13 14 26 2 55 55
Other Income 739 670 544 335 741 596 451 518 2,424 2,306
PBT 3,263 3,496 3,201 3,081 3,293 3,934 3,989 4,097 13,040 15,313
Tax 1,071 1,156 997 973 1,133 1,326 1,354 1,394 4,197 5,206
Rate (%) 32.8 33.1 31.1 31.6 34.4 33.7 33.9 34.0 32.2 34.0
Adjusted PAT 2,192 2,340 2,204 2,108 2,160 2,609 2,635 2,703 8,843 10,107
YoY Change (%) 13.2 5.8 4.6 5.9 -1.5 11.5 19.6 28.3 7.3 14.3
E: MOSL Estimates
April 2018 121

Colgate
Bloomberg CLGT IN
CMP: INR1,084 TP: INR1,420 (+31%) Buy
 We expect Colgate’s (CLGT) sales to grow 10.3% YoY to INR11.4b,
M. Cap. (INR b)/(USD b) 295 / 5
with 6% toothpaste volume growth.
1,6,12 Rel Perf. (%) 4 / -4 / -4  Gross margins are expected to expand by 40bp YoY to 63.0%.

 We estimate EBITDA margin expansion of 120bp YoY to 24.8%.
Y/E March 2017 2018E 2019E 2020E Hence, we have modeled EBITDA growth of 16.0% and adjusted
Sales 39.8 42.4 48.2 55.2 PAT growth of 17.4% for the quarter.
EBITDA 9.4 10.9 12.4 14.4  The stock trades at 38.4x/32.0x FY19E/20E EPS of
Adj. PAT 5.8 6.5 7.7 9.2
INR28.3/INR33.8; we have a Buy rating on the stock.
Adj. EPS (INR) 21.2 24.0 28.3 33.8
EPS Gr. (%) -5.7 12.9 17.9 19.7
BV/Sh.(INR) 46.8 49.3 52.6 56.8
RoE (%) 50.1 49.9 55.5 61.9
RoCE (%) 49.3 48.8 54.4 60.7
Payout (%) 48.8 70.0 70.0 70.0
Valuation Key issues to watch for
P/E (x) 51.1 45.2 38.4 32.0
 Volume growth in toothpaste and market share movement.
P/BV (x) 23.2 22.0 20.6 19.1
 Ad spends and competitive intensity in toothpaste, especially
EV/EBITDA (x) 30.9 26.5 23.2 19.7
from Patanjali.
Div. Yield (%) 1.0 1.5 1.8 2.2
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Toothpaste Volume Gr % 5.0 4.0 -12.0 -3.0 -5.0 -0.9 12.0 6.0 -1.5 3.0
Net Sales 10,131 10,566 8,746 10,375 9,781 10,849 10,333 11,439 39,818 42,402
YoY Change (%) 8.8 9.5 -8.6 2.2 -3.5 2.7 18.2 10.3 2.9 6.5
COGS 3,822 3,910 3,159 3,877 3,584 3,970 3,598 4,228 14,768 15,379
Gross Profit 6,309 6,656 5,587 6,498 6,197 6,879 6,735 7,211 25,050 27,023
Gross Margin (%) 62.3 63.0 63.9 62.6 63.4 63.4 65.2 63.0 62.9 63.7
Other operating Expenses 4,197 3,909 3,446 4,055 3,979 3,873 3,911 4,377 15,606 16,140
% to sales 41.4 37.0 39.4 39.1 40.7 35.7 37.9 38.3 39.2 38.1
EBITDA 2,113 2,748 2,141 2,443 2,218 3,006 2,824 2,834 9,444 10,882
Margins (%) 20.9 26.0 24.5 23.5 22.7 27.7 27.3 24.8 23.7 25.7
YoY Growth (%) 3.7 8.1 -10.3 1.2 5.0 9.4 31.9 16.0 0.7 15.2
Depreciation 316 333 342 341 373 392 396 405 1,332 1,565
Financial other Income 101 113 109 80 125 89 90 110 403 413
PBT 1,897 2,527 1,908 2,182 1,970 2,703 2,519 2,539 8,514 9,730
Tax 640 714 630 756 606 927 812 865 2,740 3,211
Rate (%) 33.7 28.3 33.0 34.6 30.8 34.3 32.3 34.1 32.2 33.0
Adj PAT 1,257 1,813 1,278 1,426 1,364 1,776 1,707 1,673 5,774 6,519
YoY Change (%) 1.3 15.6 -12.8 -0.5 8.5 -2.1 33.5 17.4 1.2 12.9
E: MOSL Estimates
April 2018 122

Dabur
Bloomberg DABUR IN
CMP: INR337 TP: INR430 (+28%) Buy
 We expect sales to grow 7.5% YoY to INR20.6b, led by 8.5%
M. Cap. (INR b)/(USD b) 594 / 9
domestic organic volume growth.
1,6,12 Rel Perf. (%) 6/2/9  We expect EBITDA margin to contract 30bp YoY to 21.5% in
4QFY18, with EBITDA growth of 6.0% YoY.
Y/E March 2017 2018E 2019E 2020E  Adjusted PAT is expected to grow 8.2% YoY in the quarter.
Sales 77.0 77.7 91.0 103.9  The stock trades at 37.3x/32.1x FY19E/20E EPS of INR9.0/INR10.5;
EBITDA 15.1 15.7 18.7 21.6 maintain Buy.
Adj. PAT 12.8 13.3 15.9 18.5
Adj. EPS (INR) 7.2 7.6 9.0 10.5
EPS Gr. (%) 1.9 4.5 19.2 16.2
BV/Sh.(INR) 27.5 32.0 35.7 37.6
RoE (%) 28.4 25.4 26.7 28.6
RoCE (%) 24.6 22.2 23.6 25.6
 Domestic volume growth and outlook for rural demand.
Payout (%) 35.0 35.0 50.0 70.0
 Pick-up in science-based Ayurveda product launch.
Valuation
P/E (x) 46.5 44.5 37.3 32.1
 Recovery in wholesale channel.
P/BV (x) 12.2 10.5 9.4 9.0
 Margin performance in international business.
EV/EBITDA (x) 37.6 35.7 29.5 25.3  Competitive intensity, especially from Patanjali.
Div. Yield (%) 0.8 0.8 1.3 2.2

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Domestic Vol Growth (%) 4.1 4.5 -5.0 2.4 -4.4 7.2 13.0 8.5 2.0 6.0
Net Sales 19,522 19,816 18,529 19,147 17,901 19,589 19,664 20,591 77,014 77,745
YoY Change (%) 2.7 1.3 -5.8 -4.7 -8.3 -1.1 6.1 7.5 -2.1 0.9
Total Exp 16,034 15,730 15,190 14,971 14,812 15,390 15,630 16,165 61,925 61,997
EBITDA 3,488 4,087 3,339 4,176 3,089 4,199 4,035 4,426 15,089 15,749
Margins (%) 17.9 20.6 18.0 21.8 17.3 21.4 20.5 21.5 19.6 20.3
YoY Growth (%) 10.5 2.1 -10.6 0.6 -11.4 2.7 20.8 6.0 -0.6 4.4
Depreciation 343 357 333 395 391 401 405 343 1,429 1,539
Interest 118 166 139 117 133 133 132 128 540 526
Other Income 610 893 831 650 813 843 663 664 2,984 2,984
PBT 3,637 4,456 3,697 4,314 3,378 4,508 4,162 4,619 16,104 16,667
Tax 701 873 753 977 589 880 833 999 3,303 3,300
Rate (%) 19.3 19.6 20.4 22.6 17.4 19.5 20.0 21.6 20.5 19.8
Adjusted PAT 2,928 3,573 2,938 3,337 2,787 3,619 3,321 3,611 12,769 13,338
YoY Change (%) 12.0 6.3 -7.5 0.7 -4.8 1.3 13.1 8.2 2.1 4.5
E: MOSL Estimates
April 2018 123

Emami
Bloomberg HMN IN
CMP: INR1,099 TP: INR1,475 (+34%) Buy
 We project Emami’s (HMN) sales to grow ~9% YoY to INR6.3b,
M. Cap. (INR b)/(USD b) 249 / 4
with ~8% domestic volume growth on a base of negative volume
52-Week Range (INR) 1428 / 1000
1,6,12 Rel Perf. (%) 4 / -5 / -7
growth.
 Gross margin is likely to remain flattish at 62.2% in 4QFY18.
Financial Snapshot (INR b) Mentha prices are up sharply by 48% YoY and down 5% QoQ in
Y/E March 2017 2018E 2019E 2020E
the quarter.
Sales 24.9 25.5 30.3 34.8
EBITDA 7.6 7.3 9.2 10.7
 We expect EBITDA margin to contract 80bp to 30%. EBITDA is
NP 6.0 5.7 7.0 8.4 likely to grow ~6% YoY to INR1.9b.
EPS (INR) 26.5 25.0 31.0 36.9  PAT before amortization is expected to decline 3.4% YoY to
EPS Gr. (%) 4.5 -5.7 23.8 19.1 INR1.4b due to a high tax rate of 15.4% (full-year tax rate taken at
BV/Sh. (INR) 77.3 89.1 101.2 102.9 MAT) compared to 6.9% in the base quarter 4QFY17.
RoE (%) 35.8 30.1 32.6 36.2
RoCE (%) 31.0 29.3 37.3 42.9
 The stock trades at 35.5x/29.8x FY19E/20E EPS of
Payout (%) 33.0 35.2 29.0 24.9 INR31.0/INR36.9; maintain Buy.
Valuations
P/E (x) 41.4 43.9 35.5 29.8 Key issues to watch for
P/BV (x) 14.2 12.3 10.9 10.7  Volume growth and broad consumer demand across categories.
EV/EBITDA (x) 33.3 34.0 27.0 23.1  Recovery in wholesale channel.
Div. Yld (%) 0.8 0.8 0.8 0.8
 Outlook for mentha oil prices.
 Competitive intensity, especially from Patanjali.
Quaterly performance
Y/E MARCH FY17 FY18 FY17 FY18E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Domestic volume Growth (%) 18.0 11.0 0.2 -1.5 -18.0 10.0 6.0 8.0 6.9 1.5
Net Sales 6,454 5,728 7,138 5,777 5,411 6,281 7,566 6,291 25,097 25,550
YoY Change (%) 20.1 8.0 -1.5 -4.4 -16.2 9.7 6.0 8.9 4.7 1.8
COGS 2,287 1,848 2,227 2,184 1,967 2,053 2,334 2,376 8,546 8,729
Gross Profit 4,167 3,880 4,911 3,594 3,444 4,228 5,233 3,916 16,552 16,821
Gross margin (%) 64.6 67.7 68.8 62.2 63.6 67.3 69.2 62.2 65.9 65.8
Other Expenditure 2,695 2,128 2,325 1,812 2,642 2,215 2,586 2,029 8,960 9,472
% to sales 41.8 37.1 32.6 31.4 48.8 35.3 34.2 32.3 35.7 37.1
EBITDA 1,473 1,752 2,585 1,781 802 2,013 2,647 1,886 7,591 7,348
Margins (%) 22.8 30.6 36.2 30.8 14.8 32.1 35.0 30.0 30.2 28.8
YoY Change 49.2 15.1 3.7 -4.7 -45.6 14.9 2.4 5.9 10.5 -3.2
Depreciation 106 111 112 140 153 146 195 194 469 687
Interest 125 160 127 168 79 104 92 86 580 362
Other Income 51 87 82 92 65 53 55 57 311 230
PBT 1,292 1,568 2,428 1,565 635 1,817 2,414 1,663 6,853 6,529
Tax 117 230 381 108 28 227 338 256 836 849
Rate (%) 9.1 14.7 15.7 6.9 4.4 12.5 14.0 15.4 12.2 13.0
PAT before Amortization 1,175 1,336 2,047 1,456 605 1,590 2,077 1,407 6,014 5,680
YoY Change (%) 18.0 9.6 4.8 -6.6 -48.5 19.0 1.4 -3.4 5.0 -5.6
Amortization 609 680 705 623 598 604 604 593 2,617 2,400
Reported PAT 567 661 1,342 833 10 987 1,471 814 3,403 3,280
E: MOSL Estimates
April 2018 124

Future Consumer
Bloomberg FCON IN
CMP: INR 55 TP: INR 76 (+39%) Buy
 We expect Future Consumer’s (FCON) sales to grow 45% YoY to
M. Cap. (INR b)/(USD b) 101 / 2
INR7.7b.
1,6,12 Rel Perf. (%) -6 / -15 / 69  Gross margins are expected to expand by 30bp YoY to 14.1%.

 We estimate EBITDA margin expansion of 200bp YoY to 2.5%.
Y/E March 2017 2018E 2019E 2020E Hence, we have modeled EBITDA growth of 633.1% and adjusted
Sales 21.2 29.7 42.6 59.9 PAT to change from loss to profit for the quarter.
EBITDA 0.1 0.6 1.4 3.1  The stock trades at 2.3x/1.6x FY19E/20E EV/sales; we have a Buy
NP -0.6 -0.2 0.5 1.9
rating on the stock.
EPS (INR) -0.4 -0.1 0.3 1.1
EPS Gr. (%) -43.3 -72.9 -400.3 276.5
BV/Sh. (INR) 5.4 6.0 6.3 7.4
RoE (%) -8.5 -1.8 4.9 16.6
RoCE (%) 0.2 3.3 7.3 13.9
Valuations
P/E (x) -147.9 -546.5 182.0 48.3
P/BV (x) 10.2 9.2 8.7 7.4 Key issues to watch for
EV/Sales (x) 4.5 3.2 2.3 1.6
 If the pace of topline growth will be sustained
EV/EBITDA (x) 982.4 169.6 69.2 31.3
 Extent of gross margin expansion.
 Flow of gross margin expansion into EBITDA margin.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 4,671 5,637 5,516 5,335 6,623 7,505 7,840 7,737 21,159 29,705
YoY Change (%) 35.4 30.3 9.3 27.1 41.8 33.1 42.1 45.0 24.3 40.4
Gross Profit 662 746 773 738 924 1,036 1,076 1,093 2,919 4,129
Margins (%) 14.2 13.2 14.0 13.8 13.9 13.8 13.7 14.1 13.8 13.9
EBITDA 8 31 32 26 86 128 165 190 97 568
YoY Change (%) -108.5 -143.0 212.6 -517.7 945.1 316.7 416.3 633.1 LP 487.8
Margins (%) 0.2 0.5 0.6 0.5 1.3 1.7 2.1 2.5 0.5 1.9
Depreciation 77 90 89 70 90 113 106 61 326 370
Interest 134 106 121 88 128 121 136 101 448 486
Other Income 52 54 65 80 58 52 46 141 250 297
PBT -151 -112 -113 -52 -74 -55 -31 168 -427 9
Tax 7 0 0 2 0 0 0 0 9 0
Rate (%) -4.8 0.0 0.0 -3.3 0.0 0.0 0.0 0.0 -2.1 0.0
Minority Interest & P/L of Asso. Cos 49 50 27 47 15 33 16 110 174 174
Reported PAT -207 -162 -140 -101 -89 -88 -47 58 -610 -165
Adj PAT -207 -162 -140 -101 -89 -88 -47 58 -610 -165
YoY Change (%) -28.7 -43.5 -31.0 -66.0 -57.2 -45.6 -66.5 LP Loss Loss
Margins (%) -4.4 -2.9 -2.5 -1.9 -1.3 -1.2 -0.6 0.8 -2.9 -0.6
E: MOSL Estimates
April 2018 125

Godrej Consumer
Bloomberg GCPL IN
CMP: INR1,106 TP: INR1,140 (+3%) Neutral
 We expect Godrej Consumer’s revenue to rise 6.8% YoY to
M. Cap. (INR b)/(USD b) 753 / 12
INR25.4b. Soaps volumes are likely to grow 5% YoY in 4QFY18.
1,6,12 Rel Perf. (%) 5 / 9 / 19  We estimate operating margin to expand 90bp YoY to 23.6%.
Financial Snapshot (INR b)  Thus, we have modeled 10.9% EBITDA growth, and expect adj.
Y/E March 2017 2018E 2019E 2020E PAT to increase by 8.2% YoY to INR4.1b YoY.
Sales 92.4 98.1 112.5 127.1  The stock trades at 45.4x/39.8x FY19E/20E EPS of
EBITDA 18.9 20.5 23.5 26.8 INR24.4/INR27.8. We have a Neutral rating on the stock.
Adj. PAT 12.9 14.5 16.6 18.9
Adj. EPS (INR) 18.9 21.3 24.4 27.8
EPS Gr. (%) 12.4 12.7 14.4 14.1
BV/Sh.(INR) 77.8 99.8 114.2 130.5
RoE (%) 24.6 24.0 22.8 22.7
RoCE (%) 16.8 16.5 16.3 16.8 Key issues to watch for
Payout (%) 31.2 35.2 41.0 45.0  Competitive intensity across categories.
Valuations  Outlook for international business— demand outlook in
P/E (x) 58.5 51.9 45.4 39.8 Indonesia and margin guidance for LatAm.
P/BV (x) 14.2 11.1 9.7 8.5  Currency guidance.
EV/EBITDA (x) 41.0 37.8 32.8 28.7
Div. Yield (%) 0.5 0.7 0.9 1.1

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 21,144 23,563 23,916 23,805 21,728 24,969 26,037 25,414 92,428 98,148
YoY Change (%) 6.5 11.3 8.9 11.8 2.8 6.0 8.9 6.8 9.7 6.2
EBITDA 3,806 4,645 5,067 5,414 3,452 5,330 5,721 6,004 18,932 20,508
Margins (%) 18.0 19.7 21.2 22.7 15.9 21.3 22.0 23.6 20.5 20.9
YoY Growth (%) 21.6 14.1 12.1 19.5 -9.3 14.7 12.9 10.9 16.5 8.3
Depreciation 327 358 363 369 374 386 396 394 1,416 1,549
Interest 326 350 397 379 397 402 386 353 1,452 1,538
Other Income 166 194 294 350 282 286 625 239 1,004 1,432
PBT 3,330 4,133 4,478 4,972 2,960 4,721 5,467 5,496 16,912 18,853
Tax 770 915 988 1,145 634 1,060 1,148 1,309 3,818 4,152
Rate (%) 23.1 22.1 22.1 23.0 21.4 22.5 21.0 23.8 22.6 22.0
Adj PAT 2,561 3,220 3,494 3,827 2,327 3,664 4,322 4,141 13,103 14,662
YoY Change (%) 18.3 7.6 5.1 21.4 -9.2 13.8 23.7 8.2 12.6 11.9
E: MOSL Estimates
April 2018 126

GSK Consumer
Bloomberg SKB IN
 We expect GSK Consumer to report net sales of INR11.8b, up
M. Cap. (INR b)/(USD b) 252 / 4
7.3% YoY, led by 6% volume growth in HFD. We note that the
52-Week Range (INR) 6888 / 4856
1,6,12 Rel Perf. (%) -10 / 13 / 4
base is favorable for this quarter, with 1% YoY volume decline in
HFD (2.3% YoY growth in sales).
Financial Snapshot (INR b)  We estimate EBITDA margin to expand 110bp YoY to 20.8%.
Y/E December 2017 2018E 2019E 2020E
Sales 40.1 43.2 48.5 54.8  Thus, EBITDA and adj. PAT are expected to grow 13.5% and 7.5%
EBITDA 8.6 8.8 10.2 12.1 YoY, respectively.
Adj. PAT 6.6 6.8 7.7 9.1
Adj. EPS (INR) 156.1 161.0 183.8 215.7
INR183.8/INR215.7. We have a Neutral rating on the stock.
EPS Gr. (%) -4.5 3.1 14.1 17.4
BV/Sh.(INR) 742.5 812.2 891.8 985.2
RoE (%) 22.2 20.7 21.6 23.0
Payout (%) 44.9 45.0 45.0 45.0  HFD volume outlook.
Valuation  Outlook for category growth and raw materials.
P/E (x) 38.4 37.3 32.7 27.8  Market share trend.
P/BV (x) 8.1 7.4 6.7 6.1
 Guidance on price increases.
EV/EBITDA (x) 25.7 25.7 21.8 18.2
Div. Yield (%) 1.2 1.2 1.4 1.6
Y/E Mar FY17 FY18 FY17 FY18E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
HFD Volume Growth (%) -6.0 -3.0 -17.0 -1.0 0.0 2.5 15.0 6.0 -6.8 5.5
Net Sales 9,439 10,803 8,604 11,019 9,853 11,153 10,347 11,819 39,864 43,173
YoY Change (%) -5.2 -1.1 -11.5 2.3 4.4 3.2 20.3 7.3 -3.6 8.3
Total Exp 7,404 8,351 6,927 8,848 8,190 8,540 8,307 9,355 31,530 34,391
EBITDA 2,035 2,452 1,677 2,171 1,664 2,614 2,040 2,464 8,335 8,781
Margins (%) 21.6 22.7 19.5 19.7 16.9 23.4 19.7 20.8 20.9 20.3
YoY Change (%) -0.6 3.0 -9.5 1.5 -18.3 6.6 21.7 13.5 -1.0 5.4
Depreciation 147 148 171 177 170 177 151 188 642 686
Interest 6 6 6 9 5 6 2 8 28 20
Other Income 592 578 559 710 557 550 642 591 2,439 2,340
PBT 2,474 2,876 2,059 2,695 2,045 2,981 2,529 2,860 10,104 10,415
Tax 868 1,039 695 936 723 1,057 892 970 3,537 3,642
Rate (%) 35.1 36.1 33.8 34.7 35.3 35.5 35.3 33.9 35.0 35.0
Adj PAT 1,606 1,837 1,364 1,759 1,322 1,924 1,637 1,890 6,566 6,773
YoY Change (%) 2.9 -0.1 -8.3 8.4 -17.7 4.7 20.0 7.5 -4.5 3.1
E: MOSL Estimates
April 2018 127

Hindustan Unilever
Bloomberg HUVR IN
CMP: INR1,348 TP: INR1,530 (+13%) Buy
 We expect Hindustan Unilever’s revenue to grow 9.4% YoY, with
M. Cap. (INR b)/(USD b) 2918 / 45
underlying domestic volume growth of 7% in 4QFY18.
1,6,12 Rel Perf. (%) 4 / 8 / 35  PFAD prices are down 15% YoY (down 2% QoQ) and LAB prices
are up 6.7% YoY (up 4% QoQ).
Y/E March 2017 2018E 2019E 2020E  Gross margins are likely to expand 160bp YoY to 52.6%.
Sales 313.0 337.6 387.3 439.7  We expect operating margin to expand by 110bp YoY to 21.2% in
EBITDA 60.5 71.4 85.8 100.8 4QFY18, leading to EBITDA growth of 15.6% YoY.
Adj. PAT 42.5 51.9 61.2 72.0
Adj. EPS (INR)  Adj. PAT is likely to grow 16.6% YoY to INR13b in the quarter.
19.6 24.0 28.3 33.3
EPS Gr. (%) 1.9 22.1 17.9 17.8
BV/Sh.(INR) 30.0 31.3 31.8 32.1 INR28.3/INR33.3; maintain Buy.
RoE (%) 66.5 78.2 89.6 104.1
RoCE (%) 88.5 100.7 118.6 138.7
Payout (%) 84.0 81.4 83.9 84.7 Key issues to watch for
Valuations  Comments on volume growth and consumer demand
P/E (x) 68.7 56.3 47.7 40.5 environment.
P/BV (x) 45.0 43.1 42.4 42.0  Prospects of rural recovery.
EV/EBITDA (x) 47.9 40.7 33.7 28.7  Performance of Lever Ayush.
Div. Yield (%) 1.2 1.4 1.8 2.1
Y/E March FY17 FY18 Ind AS Ind AS
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE FY17 FY18
Domestic volume growth (%) 4.0 -1.0 -4.0 4.0 0.0 4.0 11.0 7.0 0.8 5.5
Net Sales 81,270 78,427 77,060 82,130 85,290 83,090 85,900 89,864 318,887 344,144
YoY Change (%) 3.6 1.4 -0.7 6.4 4.9 5.9 11.5 9.4 2.7 7.9
COGS 39,555 39,620 37,440 40,220 40,840 39,290 39,050 42,556 156,835 161,736
Gross Profit 41,715 38,807 39,620 41,910 44,450 43,800 46,850 47,308 162,052 182,408
Margin % 51.3 49.5 51.4 51.0 52.1 52.7 54.5 52.6 50.8 53.0
Operating Exp 25,368 24,760 26,060 25,400 25,790 26,980 30,050 28,218 101,588 111,038
% to sales 31.2 31.6 33.8 30.9 30.2 32.5 35.0 31.4 31.9 32.3
EBITDA 16,347 14,046 13,560 16,510 18,660 16,820 16,800 19,090 60,463 71,370
YoY Change (%) 8.1 5.1 -5.2 12.2 14.1 19.7 23.9 15.6 5.1 18.0
Margins (%) 20.1 17.9 17.6 20.1 21.9 20.2 19.6 21.2 19.0 20.7
Depreciation 933 945 1,000 1,080 1,140 1,150 1,210 1,111 3,958 4,611
Interest 60 49 50 60 60 60 50 96 219 266
Other Income 1,076 2,528 820 830 1,130 2,040 1,520 850 5,254 5,540
PBT 16,431 15,580 13,330 16,200 18,590 17,650 17,060 18,732 61,541 72,032
Tax 5,411 4,807 4,480 4,360 5,630 5,250 3,590 5,699 19,058 20,169
Rate (%) 32.9 30.9 33.6 26.9 30.3 29.7 21.0 30.4 31.0 28.0
Adjusted PAT 11,277 10,818 9,199 11,180 12,920 12,360 11,980 13,033 42,474 51,863
YoY Change (%) 6.1 9.3 -10.2 7.6 14.6 14.2 30.2 16.6 3.2 22.1
Reported Profit 11,727 10,956 10,380 11,830 12,830 12,760 13,260 13,033 44,893 51,863
E: MOSL Estimates
April 2018 128

ITC
Bloomberg ITC IN
CMP: INR258 TP: INR275 (+6%) Neutral
 We expect net sales to be flattish YoY at INR111.5b, with cigarette
M. Cap. (INR b)/(USD b) 3139 / 48
volume being flat (base quarter also saw flat volume growth).
1,6,12 Rel Perf. (%) 0 / -7 / -20  We expect cigarette EBIT to grow 2.6% YoY.

 We have factored in EBITDA growth of 5% YoY to INR40.7b, with
Y/E March 2017 2018E 2019E 2020E EBITDA margin expansion of ~170bp YoY to 36.5% in 4QFY18.
Sales 396.4 403.3 455.6 510.5  We expect other FMCG to post revenue growth of 7% YoY.
EBITDA 146.0 154.8 175.8 197.9
Adj. PAT 102.0 108.7 123.6 138.9  We estimate adj. PAT growth of 6.9% YoY to INR28.5b.
Adj. EPS (INR) 8.4 9.0 10.2 11.4  The stock trades at 25.4x/22.6x FY19E/20E EPS of
EPS Gr. (%) 9.4 6.6 13.7 12.4 INR10.2/INR11.4; maintain Neutral.
BV/Sh.(INR) 37.3 41.1 44.5 47.6
RoE (%) 23.5 22.8 23.8 24.8
RoCE (%) 22.5 22.1 23.0 24.1
Payout (%) 68.1 72.0 78.0 84.0
Valuations
P/E (x) 30.8 28.9 25.4 22.6
P/BV (x) 6.9 6.3 5.8 5.4
 Trends in cigarette volume.
EV/EBITDA (x) 20.0 18.6 16.3 14.3  Demand outlook for FMCG categories and segmental
Div. Yield (%) 2.2 2.5 3.1 3.7 profitability.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Cigarette Vol Gr (%) 3.0 4.0 -1.0 0.0 1.0 -6.0 -2.0 0.0 1.5 -1.8
Net Sales 100,540 96,607 92,484 111,255 99,547 97,639 99,522 111,528 400,887 408,236
YoY Change (%) 9.8 9.8 4.3 14.0 -1.0 1.1 7.6 0.2 9.6 1.8
Total Exp 65,278 60,307 57,020 72,502 62,083 60,024 60,477 70,821 255,106 253,404
EBITDA 35,262 36,300 35,464 38,754 37,464 37,615 39,045 40,707 145,780 154,831
Growth (%) 8.4 7.3 2.1 7.5 6.2 3.6 10.1 5.0 6.3 6.2
Margins (%) 35.1 37.6 38.3 34.8 37.6 38.5 39.2 36.5 36.4 37.9
Depreciation 2,613 2,684 2,665 2,418 2,682 2,824 2,908 3,293 10,380 11,707
Interest 101 107 136 -115 104 290 240 190 230 824
Other Income 4,205 4,754 6,879 4,021 4,768 4,942 6,269 4,028 19,859 20,007
PBT 36,754 38,262 39,542 40,471 39,446 39,443 42,167 41,252 155,030 162,307
Tax 12,907 13,262 13,075 13,777 13,841 13,045 13,969 12,707 53,021 53,561
Rate (%) 35.1 34.7 33.1 34.0 35.1 33.1 33.1 30.8 34.2 33.0
Adj PAT 23,847 25,000 26,467 26,695 25,605 26,398 28,198 28,545 102,009 108,746
YoY Change (%) 10.1 10.5 5.7 12.1 7.4 5.6 6.5 6.9 9.5 6.6
E: MOSL Estimates
April 2018 129

Jyothy Labs
Bloomberg JYL IN
 We expect Jyothy Labs’ net sales to grow 14.4% to ~INR5.1b on a
base of 4.1% sales growth.
1,6,12 Rel Perf. (%) 15 / -8 / 2  Gross margin is likely to expand 40bp YoY to 44.4%.
Financial Snapshot (INR b)  We expect EBITDA margin to grow by ~200bp YoY to 15.5%.
Y/E March 2017 2018E 2019E 2020E  We have thus factored in EBITDA growth of 30.4% YoY to
Net Sales 16.8 17.3 20.5 23.9 INR791m.
EBITDA 2.5 2.6 3.2 3.8
Adj PAT 2.0 1.5 2.0 2.5  However, adj. PAT in 4QFY18 is likely to decline 50% YoY to
Adj PAT for NCD 1.5 1.1 1.5 2.0 INR543m, as there was a net tax write-back in base quarter
Adj.EPS (INR) 11.2 8.5 10.9 13.6 4QFY17.
EPS Gr. (%) 175.7 -24.8 29.3 24.0
 The stock trades at 22.9x/19.3x FY19E/20E EV/EBITDA. We
BV/Sh (INR) 59.9 58.1 59.9 64.3
maintain Neutral.
RoE (%) 21.1 14.3 18.5 21.8
RoCE (%) 17.3 11.4 14.3 16.7
Valuations
P/E (x) 34.6 46.0 35.6 28.7
 Update on new launches and innovations.
P/BV (x) 6.5 6.7 6.5 6.1
 Pick-up in Henkel brands’ performance.
EV/EBITDA 29.5 27.7 22.9 19.3
Dividend Yield 1.5 1.8 2.1 2.1
(%)
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,244 4,121 3,839 4,457 3,559 4,299 4,312 5,097 16,662 17,267
YoY Change (%) 5.1 5.9 3.4 4.1 -16.1 4.3 12.3 14.4 4.6 3.6
Total Sales 4,248 4,121 3,839 4,462 3,567 4,299 4,312 5,109 16,671 17,287
COGS 2,199 2,101 2,089 2,502 1,728 2,229 2,230 2,842 8,891 9,029
Gross Profit 2,049 2,020 1,750 1,960 1,840 2,070 2,083 2,266 7,779 8,258
Margins (%) 48.2 49.0 45.6 43.9 51.6 48.1 48.3 44.4 46.7 47.8
Total Exp 1,243 1,383 1,243 1,354 1,403 1,361 1,390 1,476 5,223 5,629
EBITDA 807 637 507 606 437 709 693 791 2,557 2,629
EBITDA Growth % 38.8 28.0 -1.3 -3.5 -45.9 11.3 36.8 30.4 15.1 2.8
Margins (%) 19.0 15.5 13.2 13.6 12.2 16.5 16.1 15.5 15.3 15.2
Depreciation 133 73 73 83 141 74 78 92 363 384
Interest 143 164 144 99 86 119 120 98 551 424
Other Income 25 31 26 21 18 39 23 43 103 123
PBT 555 430 314 446 228 555 517 644 1,746 1,944
Tax 120 119 108 -629 22 98 188 100 -281 408
Rate (%) 21.6 27.7 34.3 -141.1 9.5 17.7 36.4 15.6 -16.1 21.0
Adjusted PAT after NCI 445 320 215 1,087 206 476 347 543 2,067 1,536
YoY Change (%) 72.6 61.2 6.6 778.6 -53.6 48.5 61.5 -50.0 164.4 -25.7
E: MOSL Estimates
April 2018 130

Marico
Bloomberg MRCO IN
 We expect sales to grow 11.1% YoY to INR14.6b, with 5% growth
M. Cap. (INR b)/(USD b) 419 / 6
in domestic volumes.
1,6,12 Rel Perf. (%) 6 / 0 / -2  In our opinion, Parachute, VAHO and Saffola should post 3%, 5%
and 6% volume growth, respectively.
Y/E March 2017 2018E 2019E 2020E  We observe that copra prices are up 69% YoY (data available till
Sales 59.2 63.0 74.0 85.4 Feb’18), while kardi oil prices are up 28% YoY. We are modeling
EBITDA 11.4 11.6 13.7 16.2 gross margin contraction of 420bp YoY to 47.4%.
Adj. PAT 8.1 8.2 9.7 11.6  EBITDA is expected to grow at 9.8% YoY, with margin contraction
Adj. EPS (INR) 6.3 6.4 7.5 9.0
of 20bp YoY to 19% in 4QFY18. Adj. PAT is projected to grow by
EPS Gr. (%) 12.1 1.7 18.0 18.8
5.8% YoY to INR1.8b.
BV/Sh.(INR) 18.0 20.6 21.6 24.0
RoE (%) 36.7 33.1 35.8 39.3  We like MRCO’s franchise, portfolio strength, management
RoCE (%) 31.5 28.3 30.7 33.6 quality and multiple growth drivers. Valuations remain fair. The
Payout (%) 47.7 50.1 72.9 61.4 stock trades at 43.1x/36.3x FY19E/20E EPS of INR7.5/INR9.0;
Valuations maintain Neutral.
P/E (x) 51.7 50.8 43.1 36.3
P/BV (x) 18.0 15.8 15.1 13.5
EV/EBITDA (x)
 Comments on volume growth trends across key categories.
36.4 35.3 30.1 25.4
Div. Yield (%) 0.9 1.0 1.7 1.7
 Outlook for raw materials.
 Margin expansion and guidance for the international business.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Domestic volume growth (%) 8.0 3.4 -4.0 10.0 -9.0 8.0 9.4 5.0 3.6 3.5
Net Sales 17,523 14,395 14,114 13,152 16,815 15,363 16,243 14,612 59,180 63,033
YoY Change (%) 0.2 -0.8 -7.7 2.2 -4.0 6.7 15.1 11.1 -3.3 6.5
COGS 8,400 6,815 6,785 6,365 8,782 8,144 8,688 7,580 28,491 33,194
Gross Profit 9,123 7,581 7,328 6,787 8,033 7,219 7,556 7,033 30,690 29,840
Gross margin (%) 52.1 52.7 51.9 51.6 47.8 47.0 46.5 48.1 51.9 47.3
% to Sales 30.7 35.1 32.6 32.4 28.5 30.1 27.9 29.2 32.6 28.9
EBITDA 3,740 2,530 2,729 2,525 3,243 2,591 3,021 2,772 11,414 11,627
Margins (%) 21.3 17.6 19.3 19.2 19.3 16.9 18.6 19.0 19.3 18.4
YoY Change (%) 18.2 11.4 -5.3 20.1 -13.3 2.4 10.7 9.8 8.1 1.9
Depreciation 208 209 218 273 211 235 213 277 903 937
Interest 54 21 44 47 35 35 39 83 166 192
Other Income 275 247 233 293 229 214 174 199 1,152 816
PBT 3,753 2,548 2,700 2,497 3,226 2,535 2,943 2,611 11,497 11,315
Tax 1,072 740 781 784 866 679 709 802 3,377 3,055
Rate (%) 28.6 29.1 28.9 31.4 26.8 26.8 24.1 30.7 29.4 27.0
Minority Interest 2 2 2 4 1 6 1 2 10 10
Adjusted PAT 2,679 1,806 1,916 1,709 2,359 1,850 2,233 1,807 8,110 8,250
YoY Change (%) 17.2 18.0 -6.8 25.5 -11.9 2.5 16.5 5.8 14.4 1.7
E: MOSL Estimates
April 2018 131

Nestle India
Bloomberg NEST IN
CMP: INR8,361 TP: INR8,275 (-1%) Neutral
 We expect Nestle India’s net sales to grow 12.0% YoY to
M. Cap. (INR b)/(USD b) 806 / 12
~INR27.7b in 1QCY18.
52-Week Range (INR) 8374 / 6262
1,6,12 Rel Perf. (%) 8 / 8 / 16  Gross margins are likely to expand 50bp YoY to 56.3%.

 We expect EBITDA margin to expand by 50bp YoY to 21.1%.
Y/E December 2016 2017 2018E 2019E  EBITDA and adj. PAT are projected to grow by 14.7% YoY (to
Sales 90.8 99.5 111.7 127.3 INR5.9b) and 17.7% YoY (to INR3.7b), respectively.
EBITDA 19.7 21.6 24.3 28.5
Adj. PAT 11.9 13.5 15.3 18.5  The stock trades at 43.5x CY19E EPS of INR192.3; maintain
Adj. EPS (INR) 123.7 140.0 159.1 192.3 Neutral.
EPS Gr. (%) 3.2 13.2 13.6 20.8
BV/Sh.(INR) 312.6 333.0 355.7 385.9
RoE (%) 40.9 43.4 46.2 51.8
RoCE (%) 42.7 44.9 47.4 52.7
Payout (%) 53.4 65.8 66.7 66.3
 Volume trends and management commentary on demand
Valuations
environment.
P/E (x) 67.6 59.7 52.6 43.5
 Further recovery in sales and market share of Maggi.
P/BV (x) 26.7 25.1 23.5 21.7
EV/EBITDA (x) 39.7 35.6 31.5 26.5
 Response to new product/variant launches.
Div. Yield (%) 0.8 1.0 1.2 1.4  Raw material price outlook.
Net Sales 24,757 23,865 25,007 25,896 27,728 27,445 28,758 27,744 99,525 111,674
YoY Change (%) 8.7 6.9 7.5 15.6 12.0 15.0 15.0 7.1 9.7 12.2
COGS 10,939 10,791 10,847 10,693 12,113 12,409 12,474 11,778 43,262 48,773
Gross Profit 13,818 13,075 14,160 15,204 15,615 15,036 16,284 15,966 56,264 62,901
Margin (%) 55.8 54.8 56.6 58.7 56.3 54.8 56.6 57.5 56.5 56.3
Operating Exp 8,708 8,645 8,388 8,873 9,753 9,668 9,790 9,404 34,620 38,614
EBITDA 5,110 4,430 5,773 6,331 5,862 5,368 6,495 6,562 21,644 24,287
Margins (%) 20.6 18.6 23.1 24.4 21.1 19.6 22.6 23.7 21.7 21.7
YoY Growth (%) -7.5 -6.1 19.2 38.7 14.7 21.2 12.5 3.6 10.1 12.2
Depreciation 867 854 864 838 936 923 933 919 3,423 3,711
Interest 228 229 229 234 207 208 208 227 930 850
Other income 578 569 564 629 693 683 677 781 2,350 2,834
PBT 4,593 3,915 5,244 5,889 5,412 4,920 6,031 6,196 19,640 22,559
Tax 1,468 1,408 1,746 1,656 1,732 1,574 1,930 1,983 6,139 7,219
Rate (%) 32.0 36.0 33.3 28.1 32.0 32.0 32.0 32.0 31.3 32.0
Adjusted PAT 3,126 2,507 3,498 4,233 3,680 3,346 4,101 4,214 13,500 15,340
YoY Change (%) 1.8 -11.8 17.8 50.2 17.7 33.5 17.2 -0.5 13.2 13.6
E: MOSL Estimate; Quarterly adjusted for Ind AS
April 2018 132

Page Industries
Bloomberg PAG IN
CMP: INR22,288 TP: INR27,490 (+23%) Buy
 We expect Page to report net sales of INR5.9b, up 19.7% YoY, led
M. Cap. (INR b)/(USD b) 249 / 4
by double digit volume growth. We note that volume growth in
52-Week Range (INR) 25779 / 13650
1,6,12 Rel Perf. (%) 4 / 16 / 41
men’s innerwear has a high base of 10.5%.
 We expect EBITDA margin to grow by 140bp YoY to 20.9%. Thus,
Financial Snapshot (INR b) EBITDA should grow by 28.3% YoY to INR1.2b.
Y/E March 2017 2018E 2019E 2020E
Sales 21.3 25.4 32.3 41.1  Adj. PAT is likely to post 17.7% YoY growth to INR786m.
EBITDA 4.1 5.2 7.1 9.3  The stock trades at 53.6x/40.5x FY19E/20E EPS of
Adj. PAT 2.7 3.3 4.6 6.1
INR415.7/INR549.8; maintain Buy.
Adj. EPS (INR) 238.7 297.1 415.7 549.8
EPS Gr. % 15.0 24.5 39.9 32.2
FCF to PAT 0.7 1.0 0.5 0.8
BV/Sh.INR 596.9 745.5 932.5 1152.5
RoE (%) 40.0 39.9 44.6 47.7
RoCE (%) 40.4 41.4 47.5 51.7
Payout (%) 43.7 50.0 55.0 60.0
 Performance of kidswear.
Valuations
 Competitive intensity.
P/E (x) 93.4 75.0 53.6 40.5
 Minimum wage hike in Karnataka for textile industry.
EV/EBITDA (x) 60.2 47.6 34.7 26.5
Quarterly Performance 27% 25% 25% 23%

Y/E MARCH FY17 FY18 FY17 FY18E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 5,686 5,344 5,283 4,989 6,962 6,257 6,210 5,974 21,301 25,403
YoY Change (%) 26.7 14.6 19.2 12.8 22.5 17.1 17.6 19.7 18.3 19.3
COGS 2,570 2,156 2,131 1,766 3,187 2,651 2,760 2,452 8,623 11,050
Gross Profit 3,116 3,188 3,151 3,223 3,775 3,606 3,450 3,521 12,678 14,353
Gross margin (%) 54.8 59.7 59.7 64.6 54.2 57.6 55.6 59.0 59.5 56.5
EBITDA 1,092 1,075 991 974 1,365 1,284 1,289 1,250 4,132 5,188
Margins (%) 19.2 20.1 18.8 19.5 19.6 20.5 20.8 20.9 19.4 20.4
YoY Change 8.8 6.3 19.6 5.3 25.0 19.5 30.0 28.3 9.7 25.6
Depreciation 59 60 62 65 67 68 70 76 247 280
Interest 39 40 45 56 45 36 41 43 180 165
Other Income 59 62 20 103 40 49 53 61 243 203
PBT 1,053 1,037 904 955 1,294 1,229 1,231 1,192 3,948 4,946
Tax 373 350 275 287 441 389 397 406 1,285 1,632
Rate (%) 35.5 33.8 30.4 30.1 34.1 31.6 32.2 34.0 32.6 33.0
PAT 679 687 629 668 853 841 834 786 2,663 3,314
YoY Change (%) 8.5 14.0 20.9 17.9 25.5 22.4 32.6 17.7 15.0 24.4
E: MOSL Estimates
April 2018 133

P&G Hygiene
Bloomberg PG IN
 We expect PGHH to report net sales of INR6.4b, up 12% YoY.
M. Cap. (INR b)/(USD b) 307 / 5
52-Week Range (INR) 9900 / 6902  We estimate EBITDA margin to expand 160bp YoY to 28.4% in
1,6,12 Rel Perf. (%) 3 / 7 / 22 3QFY18 (June ending).

 EBITDA and adj. PAT would post 18.7% and 16% YoY growth to
Y/E June 2016 2017 2018E 2019E INR1.8b and INR1.1b, respectively, in 3QFY18 (June ending).
EBITDA 6.1 6.6 7.4 8.7 INR142.1/INR171.3; maintain Neutral.
Adj. PAT 4.2 4.3 4.6 5.6
Adj. EPS (INR) 129.9 132.9 142.1 171.3
EPS Gr. (%) 22.0 2.3 6.9 20.5
BV/Sh. (INR) 465.6 212.2 252.9 302.0
RoCE (%) 31.3 40.2 62.3 62.8  Segmental growth numbers.
Valuations  Margin performance.
P/E (x) 72.8 71.2 66.6 55.3
P/BV (x) 20.3 44.6 37.4 31.3
EV/EBITDA (x) 49.0 46.2 40.8 34.4
EV/Sales (x) 13.0 13.2 11.6 10.0

Y/E June FY17 FY18 FY17 FY18E
1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
Net Sales 6,004 6,432 5,739 5,029 6,576 7,042 6,427 5,833 23,208 25,880
YoY Change (%) 11.5 -2.4 5.5 -5.8 9.5 9.5 12.0 16.0 2.0 11.5
EBITDA 1,512 2,286 1,538 1,311 1,875 2,102 1,825 1,569 6,648 7,370
Growth 55.9 5.7 15.3 -17.7 24.0 -8.0 18.7 19.7 9.8 10.9
Margins (%) 25.2 35.5 26.8 26.1 28.5 29.9 28.4 26.9 28.6 28.5
Depreciation 127 132 142 197 128 135 157 157 561 740
Interest 4 43 13 44 4 5 5 5 104 41
Other Income 225 208 232 108 35 71 75 85 726 450
PBT 1,605 2,320 1,614 1,179 1,777 2,033 1,738 1,492 6,709 7,040
Tax 561 814 618 398 622 721 582 500 2,388 2,422
Rate (%) 34.9 35.1 38.3 33.8 35.0 35.5 33.5 33.5 35.6 34.4
Reported PAT 1,044 1,506 996 780 4,320 4,618
Adj PAT 1,044 1,506 996 780 1,156 1,312 1,156 992 4,320 4,618
YoY Change (%) 50.1 2.8 2.6 -28.6 10.6 -12.9 16.0 27.2 55.8 6.9
Margins (%) 17.4 23.4 17.4 15.5 17.6 18.6 18.0 17.0 18.6 17.8
E: MOSL Estimates
April 2018 134

Pidilite Industries
Bloomberg PIDI IN
CMP: INR963 TP: INR1,115 (+16%) Buy
 We expect Pidilite’s (PIDI) revenue to grow by 9% YoY, led by 16%
M. Cap. (INR b)/(USD b) 494 / 8
volume growth in Consumer and Bazaar segment. Sales growth is
1,6,12 Rel Perf. (%) 10 / 16 / 26
likely to be much lower than volume growth because GST
reductions have been passed on in all key segments.
Financial Snapshot (INR b)  EBITDA margin is expected to contract 30bp YoY to 19.6% mainly
Y/E March 2017 2018E 2019E 2020E
due to increase in VAM costs.
Sales 56.2 60.1 71.3 82.2
EBITDA 12.6 13.4 15.4 17.7  We expect EBITDA and PAT to grow by 7.1% and 22.1% YoY to
Adj. PAT 8.6 9.0 10.6 12.1 INR2.7b and INR1.9b, respectively. Tax rate was unusually high at
Adj. EPS (INR) 16.7 17.6 20.6 23.7 38.5% in 4QFY17.
EPS Gr. (%) 6.7 5.4 17.0 14.9
BV/Sh.(INR) 67.7 78.2 90.0 102.0
INR20.6/INR23.7. Maintain Buy.
RoE (%) 28.1 24.2 24.5 24.7
RoCE (%) 26.2 22.5 23.1 23.4
Payout (%) 24.9 25.5 36.4 42.2
 Volume growth in Fevicol.
Valuations
 Outlook for VAM prices.
P/E (x) 57.5 54.6 46.7 40.6
P/BV (x) 14.2 12.3 10.7 9.4
 Outlook for industrial and construction chemical segments.
EV/EBITDA (x) 38.0 35.4 30.5 26.3
Div. Yield (%) 0.4 0.5 0.8 1.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 15,694 14,177 13,344 12,954 15,203 15,299 15,429 14,122 56,168 60,053
YoY Change (%) 6.8 7.5 -0.3 4.9 -3.1 7.9 15.6 9.0 4.8 6.9
EBITDA 3,939 3,214 2,866 2,579 3,210 3,761 3,703 2,762 12,598 13,435
Margins (%) 25.1 22.7 21.5 19.9 21.1 24.6 24.0 19.6 22.4 22.4
Depreciation 258 303 295 296 313 296 292 322 1,151 1,223
Interest 35 26 30 48 37 39 41 42 139 159
Other Income 241 324 272 286 432 337 195 277 1,123 1,240
PBT 3,887 3,209 2,814 2,520 3,292 3,763 3,564 2,674 12,430 13,292
Tax 1,174 912 793 971 1,033 1,245 1,193 783 3,851 4,254
Rate (%) 30.2 28.4 28.2 38.5 31.4 33.1 33.5 29.3 31.0 32.0
Adj PAT 2,713 2,297 2,020 1,549 2,260 2,518 2,370 1,891 8,579 9,039
YoY Change (%) 16.3 11.9 1.5 -7.5 -16.7 9.6 17.3 22.1 6.7 5.4
Margins (%) 17.3 16.2 15.1 12.0 14.9 16.5 15.4 13.4 15.3 15.1
E: MOSL Estimates
April 2018 135

United Breweries
Bloomberg UBBL IN
CMP: INR977 TP: INR1,450 (+48%) Buy
 We expect United Breweries’ revenue to grow by 23.5% YoY to
M. Cap. (INR b)/(USD b) 258 / 4
INR13.7b.
1,6,12 Rel Perf. (%) -5 / 11 / 16  We build in EBITDA margin expansion of 400bp YoY to 13.1%, and
77.6% EBITDA growth YoY to INR1.8b.
Y/E March 2017 2018E 2019E 2020E  We estimate 930.3% adj. PAT growth in 4QFY18.
Net Sales 47.6 55.2 63.5 73.0  The stock trades at 25.3x FY19E EV/EBITDA. Maintain Buy.
EBITDA 6.7 8.7 10.5 13.0
NP 2.3 3.7 4.6 6.0
EPS (INR) 8.7 14.1 17.4 22.9
EPS Growth (%) -23.0 62.0 23.9 31.2
BV/Sh. (INR) 88.3 100.3 115.4 135.2
RoE (%) 10.2 14.9 16.2 18.3
RoCE (%) 9.1 13.1 14.5 16.3
Valuations Key issues to watch for
P/E (x) 112.5 69.4 56.1 42.7  Trends in volume and margins.
P/BV (x) 11.1 9.7 8.5 7.2  Price trend and outlook for raw materials.
EV/EBITDA (x) 39.2 30.2 25.3 20.4  Traction on premium range of beers.
EV/Sales (x) 5.5 4.8 4.2 3.6

Y/E March FY17 FY18
Net Sales 15,642 10,368 10,222 11,127 16,742 12,764 11,971 13,742 47,359 55,219
YoY Change (%) 7.5 -3.3 -6.8 -8.4 7.0 23.1 17.1 23.5 -2.1 16.6
EBITDA 2,909 1,212 1,280 1,011 3,184 2,219 1,526 1,796 6,412 8,725
YoY Change (%) 17.1 -10.3 -28.9 -21.3 9.4 83.1 19.3 77.6 -7.3 36.1
Margins (%) 18.6 11.7 12.5 9.1 19.0 17.4 12.7 13.1 13.5 15.8
Depreciation 637 702 698 833 649 650 650 769 2,870 2,718
Interest 148 141 153 144 142 127 93 146 587 508
Other Income 136 8 330 43 63 12 8 62 516 144
PBT before EO expense 2,260 376 759 76 2,456 1,454 791 943 3,472 5,643
PBT 2,260 376 759 76 2,456 1,454 791 943 3,472 5,643
Tax 790 106 274 9 837 515 317 249 1,178 1,918
Rate (%) 34.9 28.1 36.1 11.7 34.1 35.4 40.1 26.5 33.9 34.0
MI & P/L of Asso. Cos. 0 0 0 0 0 0 0 0 0 4
Adj PAT 1,471 271 485 67 1,619 938 474 693 2,293 3,721
YoY Change (%) 20.4 -48.1 -31.9 -87.1 10.1 246.9 -2.3 930.3 -23.0 62.2
Margins (%) 9.4 2.6 4.7 0.6 9.7 7.4 4.0 5.0 4.8 6.7
E: MOSL Estimates
April 2018 136

United Spirits
Bloomberg UNSP IN
 We expect United Spirits (UNSP) to post flattish revenue of
M. Cap. (INR b)/(USD b) 472 / 7
52-Week Range (INR) 4003 / 1831
INR20.1b, with a 9% decline in volumes.
1,6,12 Rel Perf. (%) 2 / 26 / 47  We note that molasses prices are down sharply YoY. However,
route to market changes are expected to restrict margin
expansion for the second consecutive quarter.
Y/E March 2017 2018E 2019E 2020E
Sales 85.5 80.1 95.7 112.3  We expect EBITDA margin expansion of 30bp YoY to 13.4% and
EBITDA 9.8 9.7 14.4 18.5 EBITDA to grow 2.2% YoY to INR2.7b.
PAT 3.9 4.7 8.3 11.4
 We estimate adj. PAT of INR1.2b in 4QFY18, up 13.3% YoY.
EPS (INR) 26.7 32.6 56.9 78.5
EPS Gr. (%) 87.1 22.1 74.3 38.1  Maintain Neutral.
BV/Sh.(INR) 133.4 189.9 254.7 350.6
RoE (%) 21.3 17.2 22.3 22.4
RoCE (%) 11.8 11.9 16.7 18.9
Payout (%) 0.0 0.0 0.0 0.0
P/E (x) 121.6 99.6 57.1 41.4  Trends in volume growth, premiumization and margins.
P/BV (x) 24.4 17.1 12.8 9.3  Price trend and outlook for ENA/molasses.
EV/EBITDA (x) 46.8 45.8 30.9 23.4
Volume Growth % -0.2 1.0 -5.0 -8.2 -18.9 -15.9 -14.2 -9.0 -3.1 -14.4
Total Revenues 20,405 20,268 24,553 20,250 17,818 19,513 22,633 20,138 85,476 80,102
YoY Change (%) 10.4 7.1 1.9 -0.6 -12.7 -3.7 -7.8 -0.6 4.4 -6.3
Total Exp 18,271 17,967 21,607 17,599 16,244 16,786 19,910 17,430 75,650 70,370
EBITDA 2,134 2,301 2,946 2,651 1,574 2,727 2,723 2,708 9,826 9,732
Margins (%) 10.5 11.4 12.0 13.1 8.8 14.0 12.0 13.4 11.5 12.2
EBITDA growth (%) 24.5 -20.7 15.6 142.3 -26.2 18.5 -7.6 2.2 18.8 -1.0
Depreciation 261 332 313 418 321 326 337 458 1,323 1,442
Interest 1,030 885 922 853 703 659 658 600 3,690 2,620
PBT From operations 843 1,084 1,711 1,380 550 1,742 1,728 1,650 4,813 5,670
Other income 241 339 346 253 309 305 236 254 995 1,104
PBT 1,084 1,423 2,057 1,633 859 2,047 1,964 1,905 5,808 6,775
Tax 253 445 580 515 222 681 491 638 1,923 2,032
Rate (%) 23.3 31.3 28.2 31.5 25.8 33.3 25.0 33.5 33.1 30.0
Adj. PAT 831 978 1,477 1,118 637 1,366 1,473 1,267 3,885 4,742
YoY Change (%) 616.1 -4.2 86.1 237.8 -23.4 39.6 -0.3 13.3 87.1 22.1
E: MOSL Estimates
April 2018 137

December 2017
March 2018Results Preview
Results Preview| January 2018
| April 2018
Technology
Financials - Banks
Company name Higher provisioning to remain a drag on earnings
Private Banks RBI’s revised asset quality framework adds another layer of uncertainty
Axis Bank
DCB Bank  The key factors expected to impact earnings for the quarter are: (a) tepid
Equitas Holdings corporate loan growth, (b) rising bond yields impacting treasury income, (c)
Federal Bank progress on stressed asset resolution under Insolvency and Bankruptcy Code
HDFC Bank (IBC), (d) stressed asset recognition / provisioning as per RBI’s revised asset
ICICI Bank quality framework, and, (e) incremental provisioning required for frauds
Kotak Mahindra Bank uncovered at many banks. Cost of funds is expected to start increasing hereon
RBL Bank for many banks, with deposit rates hardening. We expect trading gains to
Yes Bank
remain minimal, given increase in bond yields even though the revised
Public Sector Banks
government borrowing program has provided some comfort to bond yields.
Bank of Baroda
 On a sequential basis, we expect profit growth to remain muted for state-owned
Bank of India
banks, with elevated provisions towards NCLT exposures and fraud accounts in
Canara Bank
many banks. Even as bond yields have increased post 3QFY18 levels, MTM
Indian Bank
provisioning impact is expected to be softer during 4Q, with RBI allowing banks
Punjab National Bank
to spread their losses over four quarters. We expect incremental stress addition
State Bank of India
Union Bank of India
for corporate banks to remain elevated, with high credit costs weighing down
Life Insurance
on profitability. Mid-sized private banks would continue to outshine peers due
HDFC Standard Life Insurance to continued market share gains (loan growth of 4-5x system), stable asset
quality, and stable-to-improving margins (sharp fall in bulk deposits). We expect
PAT growth of ~25% YoY for IIB, YES and KMB, and over 40% YoY for RBL.
 We remain upbeat on the value migration from state-owned banks to private
sector banks. Within private sector banks, emerging private banks are likely to
be the major beneficiaries. Within state-owned banks, we like SBIN and BOB.
Among private sector banks, our key picks are HDFCB, IIB, ICICIBC and RBL.
 Key things to watch for: (a) Banks’ commentary on admission status of the
second NCLT list and any color on eventual provisions needed for the same, (b)
progress in resolution of key accounts under NCLT’s first list and possible change
in expected haircut with recent developments related to their resolution, (c)
stake sale in non-core assets and capital raising plans, (d) any comments on
pickup in corporate capex, (e) commentary by banks on frauds unfolding in the
banking sector and the way ahead from here, and (f) commentary on stressed
asset reporting and outlook under RBI’s revised stressed assets framework. In
our view, excluding power, most of the highly-levered sector stress exposures
are well communicated/recognized by banks. However, RBI’s revised stressed
asset guidelines place an additional layer of difficulty for banks in terms of
implementation, as large stressed standard assets may be classified as NPA
subject to impairment tests
Great start to bids for key NCLT assets, legal challenges notwithstanding
 Among the bigger NCLT first list accounts, Bhushan Steel, Bhushan Power and
Steel, and Essar Steel have received active interest from bidders with some of
the reported bids entailing significantly lower haircuts than street expectations.
Research Analyst: Nitin Aggarwal (Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542 | Anirvan Sarkar (Anirvan.Sarkar@MotilalOswal.com); +91 22 6129 1544
Alpesh Mehta (Alpesh.Mehta@MotilalOswal.com); +91 22 6129 1526 | Parth Gutka (Parth.Gutka@motilaloswal.com); +91 22 6129 1567
April 2018 138
March 2018 Results Preview | Sector: Financials
While this is an encouraging start, some of the cases have seen disqualification
of bidders due to legal reasons and second bids have been invited for the same.
 While legal hiccups are expected in a first-time phenomenon such as NCLT
resolutions, the interest shown by companies in bidding for referred assets
augurs well for future resolutions; however, we remain cognizant of the fact
that the interest shown by bidders is a function of the quality of the underlying
assets, and extrapolating the success of a few good quality asset resolutions to
the larger universe of NCLT assets may be erroneous.
Loan growth picking up slowly; corporate credit pickup still some time away
 Loan growth at the system level has picked up to 10%+ after several quarters of
mid-single-digit growth. However, corporate credit growth may not happen
immediately. While utilization levels are expected to pick up for core sectors,
companies are expected to bid for stressed asset sales under NCLT before
making greenfield investments.
 We expect retail growth to continue showing strong traction for private banks
and expect mid-sized private banks to grow at 4-5x system during the quarter.
 After a prolonged period of liquidity following demonetization, systemic deposit
growth has finally started stabilizing, as indicated by systemic credit-deposit
ratio at ~75%, the highest in seven quarters. With many banks starting to raise
deposit rates, cost of funds may have bottomed out. Mid-sized state-owned
banks would continue losing market share due to capitalization and asset quality
issues. We expect retail-focused banks like HDFCB and KMB to also report
strong growth in the corporate segment.
Cost of funds may have bottomed out – yields should follow suit
 We expect NII to be flattish QoQ (rising cost of funds combined with interest
reversals) for state-owned banks. For private banks, we expect NII to grow 11%
YoY (and 4% QoQ); mid-sized private banks are expected to report ~23% YoY
growth. Weak loan growth would be the key reason for moderate revenue
growth at the sector level.
 An increase in CD-ratio for most coverage banks as well as for the system over
the last two quarters indicates that liquidity in the system has slowed from the
highs witnessed post demonetization.
 Many banks have raised deposit rates as an attempt to attract more deposits,
indicating a possible start of reversal of cost of funds, which has been benign so
far. However, most banks have also increased MCLR in February/March; so, NIM
is not likely to be impacted meaningfully.
Asset quality stress to stay elevated, RBI’s revised framework adds a level
of uncertainty
 Factors likely to continue weighing on performance include (a) accelerated
resolution under the NCLT route, which would increase credit costs in the near
term, (b) banks’ clean-up exercise (expect largely from restructured loans and
watch list), (c) further possible slippages from RBI’s impairment test (announced
under revised stressed assets framework) for existing standard stressed assets,
which may be deemed non-performing.
April 2018 139

 Performance of SME and agriculture portfolios would be the key thing to watch
for, considering the lagged impact of demonetization and loan waivers/drought
in some large states. Farm loan waivers in key states such as UP, Maharashtra,
Karnataka and Punjab have affected asset quality in the agri segment in the
previous quarters, and we await commentary on the subsequent trend in
repayments.
 While RBI’s revised stressed assets framework is expected to address
recognition and resolution irregularities and is a positive step in the longer term,
in the near term, we expect uncertainty over existing stressed standard assets
failing the impairment test and coming under the revised framework.
ICICIBC, HDFCB and SBIN among our top picks

 Delay in resolution of stressed assets, lack of growth capital and increasing
competition from private banks continue to mar the performance of state-
owned banks. However, with large-scale capital infusion by the government
under the recapitalization program and stake sale in non-core businesses, state-
owned banks should finally get back on the growth track. RBI’s revised stressed
assets recognition framework and tightened supervision in the wake of frauds in
the sector will yield long-term dividends. Meanwhile, mid-sized private sector
banks with healthy capital position would continue reporting strong core
earnings growth. We expect market share gains to accelerate for them. Our top
picks are HDFCB, ICICIBC and SBIN among the large banks. We like RBL amongst
the emerging names.
Exhibit 1: State-owned banks—one-year forward P/BV Exhibit 2: Private sector banks—one-year forward P/BV
P/B (x) Avg (x) Max (x) P/B (x) Avg (x) Max (x)
Min (x) +1SD -1SD Min (x) +1SD -1SD
3.5
2.3
3.0
1.7 2.8 2.6
1.8 2.2 2.6
1.3 1.2 2.0 1.8
0.9
0.8 1.3
0.9
0.7 0.7
0.3 0.5 0.5
Jun-09
Jun-14
Mar-08
Sep-10
Dec-11
Mar-13
Sep-15
Dec-16
Mar-18
Jun-09
Jun-14
Mar-08
Sep-10
Dec-11
Mar-13
Sep-15
Dec-16
Mar-18
April 2018 140

Exhibit 3: Expected quarterly performance (INR m)

Sector CMP Sales (INR M) EBDITA (INR M) Net Profit (INR M)
(INR) RECO Mar-18 YoY % QoQ % Mar-18 YoY % QoQ % Mar-18 YoY % QoQ %
Private Banks
Axis Bank 503 Buy 48,408 2.4 2.3 39,769 -9.1 3.2 7,018 -42.7 -3.4
DCB Bank 168 Neutral 2,524 14.6 0.8 1,261 9.4 2.9 572 8.2 0.3
Equitas Holdings 148 Buy 2,994 35.2 11.7 880 85.6 111.5 417 504.9 -238.7
Federal Bank 92 Buy 9,789 16.2 3.0 6,522 18.8 16.2 2,838 10.6 9.1
HDFC Bank 1,916 Buy 107,179 18.4 3.9 87,061 19.6 3.0 48,427 21.4 4.3
ICICI Bank 270 Buy 58,678 -1.6 2.8 85,485 67.2 69.0 13,772 -32.0 -16.5
IndusInd Bank 1,830 Buy 20,199 21.1 6.6 17,554 11.6 5.4 9,617 27.9 2.7
Kotak Mahindra Bank 1,103 Buy 24,821 14.8 3.7 19,946 17.2 9.6 11,696 19.8 11.1
RBL Bank 483 Buy 5,226 48.4 11.8 3,767 33.7 13.0 1,819 39.8 10.1
Yes Bank 313 Buy 20,647 25.9 9.3 21,123 24.9 5.5 11,174 22.2 3.8
Pvt Banking Sector Aggregate 300,465 11.9 4.1 283,366 24.7 18.5 107,351 3.9 1.9
PSU Banks
Bank of Baroda 145 Buy 46,494 29.8 5.8 36,111 19.6 -1.1 1,743 12.7 55.9
Bank of India 108 Neutral 28,388 -18.2 13.5 16,659 -46.7 23.0 -8,045 -23.1 -65.6
Canara Bank 269 Neutral 27,941 3.2 -24.1 20,221 -32.0 -28.6 -7,972 -472.2 -734.0
Indian Bank 307 Buy 16,751 20.9 3.2 12,390 15.8 2.5 3,300 3.2 8.8
Punjab National Bank 96 Buy 40,506 10.0 1.6 31,700 -49.1 -25.3 (25,235) -1,063.6 -1,196.7
State Bank 250 Buy 188,438 -10.5 0.8 140,893 -18.6 19.9 -16,518 -52.0 -31.6
Union Bank 97 Neutral 25,276 5.9 -0.8 18,475 -13.4 11.7 -10,090 -1,032.2 -19.3
PSU Banking Sector Aggregate 373,793 -2.4 -0.1 276,449 -22.9 3.5 -62,818 NM NM
Banking Sector Aggreagate 674,259 3.5 1.7 559,816 -4.5 10.6 44,533 -35.5 -16.0
Life Insurance
HDFC Standard life* 494 Buy 86,948 21.1 60.4 3,085 20.0 43.0 2,544 3.0 22.7
* For HDFC life Sales represents gross premium, EBITDA represents VNB and PAT represents shareholder's profit
Exhibit 4: Financials – valuations

66 Rating CMP EPS (INR) BV (INR) RoE (%) P/E (x) P/BV (x)
FY20E (INR) FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
Private Banks
AXSB Buy 503 12.8 24.7 44.0 262.4 287.3 326.7 5.1 9.0 14.3 39.5 20.4 11.4 1.9 1.8 1.5
DCBB Neutral 168 7.1 8.9 10.9 82.4 90.9 101.3 9.8 10.3 11.3 23.6 18.8 15.5 2.0 1.9 1.7
EQUITAS Buy 148 1.1 7.0 10.7 67.1 73.5 83.3 1.7 10.0 13.6 131.8 21.1 13.9 2.2 2.0 1.8
FB Buy 92 5.6 6.8 8.5 63.5 69.4 77.1 9.6 10.2 11.7 16.5 13.5 10.7 1.4 1.3 1.2
HDFCB Buy 1,916 66.8 81.8 102.3 473.6 539.2 623.5 16.2 16.2 17.6 28.7 23.4 18.7 4.0 3.6 3.1
ICICIBC Buy 270 11.1 18.1 25.5 156.9 169.3 188.3 7.2 11.1 14.3 24.2 14.9 10.6 1.7 1.6 1.4
IDFCBK Neutral 49 3.0 3.2 3.8 45.5 48.0 50.9 6.8 6.9 7.8 16.2 15.1 12.7 1.1 1.0 1.0
IIB Buy 1,830 60.4 78.0 100.2 397.1 463.3 548.8 16.6 18.4 20.0 30.3 23.5 18.3 4.6 3.9 3.3
JKBK Buy 58 8.8 10.0 14.4 97.4 105.0 117.0 9.1 9.9 12.9 6.6 5.8 4.0 0.6 0.6 0.5
KMB Buy 1,103 32.7 41.5 54.1 248.9 289.5 342.8 11.3 13.5 14.9 33.7 26.6 20.4 4.4 3.8 3.2
RBK Buy 483 15.4 21.8 29.3 155.5 173.4 197.6 11.9 13.2 15.8 31.4 22.2 16.5 3.1 2.8 2.4
SIB Buy 24 1.9 4.1 5.3 27.1 30.4 34.9 6.9 13.7 15.7 12.6 5.8 4.5 0.9 0.8 0.7
YES Buy 313 18.2 23.4 30.2 112.8 132.4 158.2 17.4 19.1 20.8 17.1 13.4 10.4 2.8 2.4 2.0
PSU Banks
BOB IN Buy 145 3.4 8.9 15.7 161.2 167.3 180.2 2.0 5.0 8.4 42.6 16.3 9.3 0.9 0.9 0.8
BOI IN Neutral 108 -18.8 6.3 12.1 182.9 186.1 195.2 -7.7 3.0 5.5 -5.7 17.1 8.9 0.6 0.6 0.6
CBK IN Neutral 269 -2.4 21.9 61.3 448.7 464.6 519.8 -0.4 4.1 10.8 -111.5 12.3 4.4 0.6 0.6 0.5
INBK IN Buy 307 30.3 41.6 47.7 323.5 355.6 392.5 9.7 12.3 12.7 10.1 7.4 6.4 0.9 0.9 0.8
PNB IN Buy 96 -5.7 0.0 14.3 168.7 167.0 179.5 -3.0 0.0 7.7 -16.9 2826.4 6.7 0.6 0.6 0.5
SBIN IN Buy 250 2.9 18.7 34.0 249.0 264.9 294.8 -0.3 5.7 12.5 87.6 13.4 7.4 1.0 0.9 0.8
UNBK IN Neutral 97 -38.8 7.6 17.1 202.4 235.8 250.4 -16.0 3.4 7.0 -2.5 12.8 5.7 0.5 0.4 0.4
Life Insurance
HDFCLIFE** Buy 494 4.6 5.2 6.6 150.7 182.6 219.6 21.7 21.1 20.3 108.1 94.7 75.2 3.3 2.7 2.2
**RoE represents ROEV and P/BV represents P/EV
April 2018 141

6.0
6.5
7.0
7.5
8.0
90
95
100
105
110
2QFY15 62.7 11.0
April 2018
Sep-16
3QFY15 63.2 10.1
Oct-16
Nov-16 4QFY15 65.4 9.0
Dec-17
Dec-16 1QFY16 66.6 9.9
Jan-17
2QFY16 68.1 9.1
Feb-17
Mar-17 3QFY16 69.9 10.6
Sensex Index
Jan-18 Apr-17 10.9
4QFY16 72.5
Loans (INR t)
May-17
Jun-17 1QFY17 72.3 9.0
Jul-17 2QFY17 75.7 11.2
Aug-17
Exhibit 5: Loan growth picked up in 4Q
3QFY17 73.5 5.1

Feb-18 Sep-17
Oct-17 4QFY17 78.8 4.7
Nov-17
Exhibit 9: Relative performance—3 months (%)

1QFY18 76.6 6.0
Chg YoY (%)
Dec-17
MOSL Financials Index

2QFY18 80.1 5.7
Jan-18
Mar-18 Feb-18 3QFY18 81.0 10.2
Exhibit 7: 10-year G-Sec yield has been fairly volatile (%)
Mar-18
4QFY18 83.8 10.7
Apr-18

95
107
119
131
143
1QFY15 2QFY15 82.9 13.1
Mar-17 2QFY15 3QFY15 82.8 10.8

3QFY15 4QFY15 85.3 10.7
Apr-17
4QFY15 1QFY16 87.1 11.0
May-17
1QFY16 2QFY16 91.1 10.6
Jun-17
2QFY16 3QFY16 91.3 10.2
Jul-17
Sensex Index
3QFY16 4QFY16 93.3 9.3
PSU
Aug-17 4QFY16
Deposits (INR t)
1QFY17 95.4 9.1

Sep-17 1QFY17 2QFY17 102.1 12.0
2QFY17
Private
Oct-17 3QFY17 105.2 15.2

Nov-17 3QFY17
4QFY17 108.1 11.2
2.9 2.9 2.8 2.8 2.7 2.7 2.5 2.6 2.6 2.6 2.4 2.7
Exhibit 10: Relative performance—1 year (%)
4QFY17
Dec-17 1QFY18 106.1 11.1
1QFY18
Chg YoY (%)
Jan-18 2QFY18 109.7 7.4

Exhibit 8: NIMs expected to decline slightly QoQ (%)
MOSL Financials Index
2QFY18
Feb-18 3QFY18 108.9 3.5
3QFY18
4QFY18 111.6 5.9
Exhibit 6: Deposit growth also has shown modest recovery
Mar-18
2.3 2.4 2.5 2.3
3.9 4.1 4.1 4.0 4.1 4.0 4.0 4.0 4.0 3.9 3.9 4.1 4.0 3.9 3.83.7
4QFY18
142
Axis Bank
Bloomberg AXSB IN CMP: INR503 TP: INR650 (+29%) Buy
 We expect AXSB to report ~19% loan growth, driven by continued
M. Cap. (INR b)/(USD b) 1294 / 20
strong growth in the retail and SME segments. Overall deposit
growth is likely to be ~12%, increasing the CD ratio, which should
1,6,12 Rel Perf. (%) -2 / -7 / -11
remain elevated at ~96%.
Financial Snapshot (INR B)  Margins are expected to decline slightly QoQ to ~3.3%, as cost of
Y/E March 2017 2018E 2019E 2020E
funds has started reversing.
NII 180.9 187.3 244.9 304.8
 Current BB and below rated book stands at INR161b (~3.8% of
OP 175.8 159.0 211.5 267.6
loans) and is expected to be mostly recognized by FY19. We
NP 36.8 31.7 64.0 115.1
NIM (%) 3.6 3.1 3.4 3.6
expect slippages to remain at elevated levels (~5.5% annualized
EPS (INR) 15.4 12.8 24.7 44.0 slippage ratio), as the bank proceeds to clean up its balance
EPS Gr. (%) -55.5 -17.0 93.7 78.2 sheet, leading to high credit costs.
BV/Sh. (INR) 226.5 262.4 287.3 326.7  We estimate PAT at INR7b (down 43% YoY on a high base) v/s
ABV/Sh. (INR) 203.1 229.4 265.2 301.3 INR7.3b in 3QFY18, weighed down by provisions.
RoE (%) 6.9 5.1 9.0 14.3  AXSB trades at 1.8x FY19E BV and 20.4x FY19E EPS. Buy.
RoA (%) 0.6 0.5 0.8 1.3
Payout (%) 32.5 25.2 15.8 10.5
Valuations
P/E(X) 32.6 39.4 20.4 11.4 Key issues to watch for
P/BV (X) 2.2 1.9 1.8 1.5  Quantum of corporate slippages from BB and below list, and any
P/ABV (X) 2.5 2.2 1.9 1.7 revision in the size of the same.
Div. Yield (%) 1.0 0.6 0.8 0.9

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 45,169 45,139 43,337 47,286 46,161 45,396 47,315 48,408 1,80,931 1,87,281
% Change (Y-o-Y) 11.4 11.1 4.1 3.9 2.2 0.6 9.2 2.4 7.5 3.5
Other Income 27,383 25,397 34,002 30,132 29,998 25,855 25,931 27,763 1,16,913 1,09,548
Total Income 72,552 70,535 77,339 77,418 76,160 71,252 73,246 76,172 2,97,844 2,96,829
Operating Expenses 27,858 29,534 30,937 33,670 33,248 33,478 34,708 36,403 1,21,999 1,37,837
Operating Profit 44,694 41,002 46,402 43,747 42,912 37,773 38,538 39,769 1,75,845 1,58,991
% Change (Y-o-Y) 9.2 13.0 16.4 -0.5 -4.0 -7.9 -16.9 -9.1 9.2 -9.6
Provisions 21,172 36,227 37,958 25,813 23,419 31,404 28,110 31,525 1,21,170 1,14,459
Profit before Tax 23,522 4,774 8,444 17,935 19,492 6,369 10,428 8,244 54,676 44,533
Tax 7,967 1,584 2,649 5,684 6,436 2,045 3,163 1,225 17,883 12,870
Net Profit 15,555 3,191 5,796 12,251 13,056 4,324 7,264 7,018 36,793 31,663
% Change (Y-o-Y) -21.4 -83.3 -73.4 -43.1 -16.1 35.5 25.3 -42.7 -55.3 -13.9
Operating Parameters
Deposit (INR b) 3,579 3,802 3,708 4,144 3,937 4,164 4,090 4,620 4,144 4,620
Loan (INR b) 3,449 3,532 3,472 3,731 3,855 4,102 4,209 4,440 3,731 4,440
Deposit Growth (%) 16.3 17.3 9.6 15.8 10.0 9.5 10.3 11.5 15.8 11.5
Loan Growth (%) 21.2 18.5 10.1 10.1 11.8 16.1 21.2 19.0 10.1 19.0
Asset Quality
Gross NPA (INR b) 96 164 205 213 220 274 250 277 213 277
Gross NPA (%) 2.5 4.2 5.2 5.0 5.0 5.9 5.3 5.9 5.0 5.9
Net NPA (INR b) 40 78 83 86 98 141 118 129 86.3 128.5
Net NPA (%) 1.1 2.0 2.2 2.1 2.3 3.1 2.6 2.7 2.1 2.7
PCR (%) 58.0 52.6 59.5 59.5 55.7 48.7 52.9 53.6 59.5 53.6
E: MOSL Estimates
April 2018 143

Bank of Baroda
Bloomberg BOB IN CMP: INR145 TP: INR185 (+28%) Buy
 After an uptick in loan growth in 3Q, 4QFY18 should register ~11%
M. Cap. (INR b)/(USD b) 384 / 6
YoY loan growth (+6% QoQ). Balance sheet recalibration will
continue, led by focus on granular retail loans. We expect drill-
1,6,12 Rel Perf. (%) 7 / 0 / -27
down in the international book to continue. We expect deposits
Financial Snapshot (INR B) to decline ~2% YoY (but grow 2% QoQ).
Y/E March 2017 2018E 2019E 2020E
 We expect margins to improve to ~2.9%, as interest income
NII 135.1 161.7 175.8 195.3
reversals continue to moderate.
OP 109.8 129.5 141.5 161.3
NP 13.8 8.4 23.6 41.4  We expect slippages to remain elevated (6.7% annualized). We
NIM (%) 2.2 2.4 2.5 2.5 expect absolute GNPAs to increase 6% QoQ to ~INR514b.
EPS (INR) 6.0 3.4 8.9 15.7  Fee income growth is expected to pick up, but non-interest
EPS Gr. (%) NA -43.1 161.5 75.6 income is expected to decline 27% YoY, as the base period had
BV/Sh. (INR) 151.6 161.2 167.3 180.2 one-off treasury gains from demonetization-related inflows.
ABV/Sh. (INR) 111.9 113.0 124.2 143.4
 PAT is expected to be at INR1.7b v/s INR1.1b in 3QFY18, with
RoE (%) 4.0 2.0 5.0 8.4
RoA (%) 0.2 0.1 0.3 0.5
increase in credit costs. Return ratios would still remain sub-
Div. Payout (%) 27.9 31.9 31.2 17.8 optimal. The stock trades at 0.9x FY19E BV and 16.3x FY19E EPS.
Valuations Buy.
P/BV (X) 1.0 0.9 0.9 0.8  Stress addition, mainly from the international book.
P/ABV (X) 1.3 1.3 1.2 1.0
 Guidance on loan growth, margins and operating expenses.
Div. Yield (%) 1.0 0.7 1.9 1.9

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) -2.6 5.6 15.9 -0.1 1.0 8.6 40.2 39.7 6.1 19.7
Other Income 14,444 15,614 17,750 19,773 15,512 17,371 16,730 14,376 67,581 63,989
Total Income 48,155 49,875 49,093 53,056 49,561 54,576 60,671 60,871 2,02,715 2,25,678
% Change (YoY) 21.2 15.1 52.3 7.5 -0.8 13.1 40.6 30.5 24.5 18.0
Provisions 20,041 17,958 20,795 26,230 23,681 23,294 34,265 33,579 85,024 1,14,818
Tax 2,418 3,422 2,630 2,425 767 3,571 1,118 788 10,896 6,244
Net Profit 4,236 5,521 2,527 -989 2,034 3,554 1,118 1,743 13,831 8,448
% Change (YoY) -59.7 343.5 NA NA -52.0 -35.6 -55.8 -276.3 NA -38.9
Cost/Income Ratio (%) 44.6 46.1 47.1 47.9 46.6 44.3 39.8 40.7 45.9 42.6
Provisions/Operating Profits (%) 75.1 66.8 80.1 94.8 89.4 76.6 93.9 93.0 77.5 88.7
Deposit (INR b) 5,622 5,675 5,899 6,017 5,706 5,832 5,733 5,866 6,017 5,866
Loan (INR b) 3,628 3,541 3,500 3,833 3,776 3,873 3,994 4,235 3,833 4,235
Asset Quality
Gross NPA (INR B) 430 429 426 427 462 463 485 547 427 547
Gross NPA (%) 11.2 11.4 11.4 10.5 11.4 11.2 11.3 12.0 10.5 12.0
Net NPA (INR B) 207.8 193.4 190.1 180.8 195.2 195.7 198.5 238.5 180.8 238.5
Net NPA (%) 5.7 5.5 5.4 4.7 5.2 5.1 5.0 5.4 4.7 5.4
PCR (%) 60.2 63.0 64.5 66.8 66.3 67.2 68.0 55.8 66.8 55.8
E: MOSL Estimates
April 2018 144

Bank of India
Bloomberg BOI IN CMP: INR108 TP: INR112 (+4%) Neutral
 Continued asset quality strain and capital conservation efforts
M. Cap. (INR b)/(USD b) 216 / 3
have led to multiple quarters of muted loan growth. We expect
4QFY18 loan growth at ~2% YoY (+6.5% QoQ). We believe deposit
1,6,12 Rel Perf. (%) -3 / -28 / -34
growth will stabilize and expect deposits to stay largely flat (up
Financial Snapshot (INR B) ~1% YoY).
Y/E March 2017 2018E 2019E 2020E  We expect NIM to pick up sequentially to 1.9%, with moderation
NII 118.3 107.8 145.8 165.0 in interest income reversals. NII is expected to decline by 18% YoY
OP 97.3 76.3 109.1 121.7 due to sluggish loan book growth and YoY decline in NIM.
NP -15.6 -28.8 12.7 24.3  Non-interest income is likely to be largely flat sequentially (+1.7%
NIM (%) 2.1 1.8 2.2 2.3 QoQ) and decline sharply YoY, given that the base quarter had
EPS (INR) -14.8 -18.8 6.3 12.1 high treasury gains. Fee income is expected to pick up marginally.
EPS Gr. (%) NM 27.4 -133.5 91.8
 We expect stress additions to moderate sequentially, as the
ROE (%) -6.7 -7.7 3.0 5.5
previous quarter had divergence-related slippages; recoveries
ROA (%) -0.3 -0.4 0.2 0.3
should pick up sharply, as a bulk of the divergence-related
BV/Sh. (INR) 224 183 186 195
ABV/Sh. (INR) 68 95 132 174
amount has been recovered by the bank.
Div. Payout (%) 0.0 NM 47.9 25.0  We expect operating profit to decline sharply by 47% YoY, led by
Valuations decline in other income absent treasury gains. BOI trades at 0.6x
P/E(X) NM NM 17.1 8.9 FY19E BV and 17.1x FY19E EPS. Neutral.
P/BV (X) 0.48 0.59 0.58 0.55 Key issues to watch for
P/ABV (X) 1.60 1.14 0.82 0.62
 Stress addition trends and outlook for FY18.
 Upgrade/recovery trends.
 Outlook on balance sheet growth and further capital infusion.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (Y-o-Y) -4.7 -9.9 5.7 8.8 -8.7 6.9 -12.6 -18.2 0.9 -8.8
Other Income 12,384 20,106 17,693 17,540 16,110 17,064 10,412 10,593 67,723 54,179
Total Income 40,136 47,304 46,319 52,226 41,440 46,146 35,424 38,981 1,85,984 1,61,991
Operating Profit 16,539 24,928 24,584 31,275 23,794 22,331 13,543 16,659 97,326 76,327
% Change (Y-o-Y) -3.0 70.9 74.5 113.6 43.9 -10.4 -44.9 -46.7 61.3 -21.6
Provisions 27,702 22,962 23,026 47,362 22,453 19,533 48,997 23,684 1,21,052 1,14,667
Profit before Tax -11,163 1,966 1,559 -16,087 1,342 2,798 -35,454 -7,024 -23,726 -38,339
Tax -3,750 698 542 -5,632 464 1,007 -12,042 1,020 -8,142 -9,550
Net Profit -7,414 1,268 1,017 -10,455 877 1,791 -23,412 -8,045 -15,584 -28,789
% Change (Y-o-Y) NM NM NM NM NM 41.2 -2,401.8 NM NM NM
Deposit Growth (%) -2.0 -3.8 2.6 5.3 9.2 7.6 -3.1 1.0 5.3 1.0
Loan Growth (%) -5.2 -4.8 -5.4 2.0 0.0 0.3 -2.6 2.0 2.0 2.0
Deposit (INR b) 4,980 5,053 5,426 5,400 5,437 5,437 5,260 5,454 5,400 5,454
Loan (INR b) 3,639 3,633 3,602 3,665 3,640 3,645 3,509 3,738 3,665 3,738
Asset Quality
Gross NPA (INR b) 518.7 522.6 517.8 520.4 510.2 493.1 642.5 610.5 520.4 610.5
Gross NPA (%) 13.4 13.5 13.4 13.2 13.1 12.6 16.9 15.7 13.2 15.7
Net NPA (INR b) 282.6 274.7 255.3 253.1 243.7 235.7 361.2 292.0 253.1 292.0
Net NPA (%) 7.8 7.6 7.1 6.9 6.7 6.5 10.3 7.8 6.9 7.8
PCR (%) 45.5 47.4 50.7 51.4 52.2 52.2 43.8 52.2 51.4 52.2
E: MOSL Estimates
April 2018 145

Canara Bank
Bloomberg CBK IN CMP: INR269 TP: INR280 (+4%) Neutral
 We expect slippages to remain elevated. Continued fresh
M. Cap. (INR b)/(USD b) 196 / 3
slippages and ageing of NPLs are expected to keep credit costs
high (we factor in ~3.1% credit costs in 4QFY18).
1,6,12 Rel Perf. (%) -5 / -19 / -23
 We expect loan growth to pick up to 11% YoY (+2% QoQ) v/s 13%
Financial Snapshot (INR B) YoY (+4% QoQ) in 3QFY18. Deposit growth is expected to be ~2%
Y/E March 2017 2018E 2019E 2020E
QoQ.
NII 98.7 119.7 139.1 161.3
 We expect NIM to decline ~80bp QoQ to 2.1% (3QFY18 NIM had a
OP 89.1 98.1 117.0 139.6
NP 11.2 (1.6) 15.9 44.6 55bp contribution from interest on IT refund). Overall NII should
NIM (%) 1.9 2.1 2.2 2.3 grow ~3% YoY due to sluggish advances growth (1.7% YoY).
EPS (INR) 18.8 (2.4) 21.9 61.3  Non-interest income is expected to decline sharply YoY, as the
EPS Gr. (%) NM NM NM NM base quarter had high treasury gains post demonetization.
BV/Sh. (INR) 471 448.7 464.6 519.8  We expect a loss of ~INR8.90, (v/s profit of INR1.3b in 3QFY18,
ABV/Sh. (INR) 234 269.2 314.4 403.2
which included INR7b of interest income on IT refund). The bank
RoE (%) 4.2 (0.4) 4.1 10.8
RoA (%) 0.2 (0.0) 0.2 0.6
trades at 0.6x FY19E BV and 12.3x FY19E EPS. Maintain Neutral.
Div. Payout (%) 6.4 NM 27.5 9.8
Valuations
P/E (x) 14.3 NM 12.3 4.4
P/BV (x) 0.6 0.6 0.6 0.5  Quantum of loans rescheduled under 5:25, SDR and S4A.
P/ABV (x) 1.15 1.0 0.9 0.7  Outlook on balance sheet growth.
Div. Yield (%) 0.4 2.0 2.2 2.2

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 23,074 24,424 24,138 27,082 27,132 27,834 36,791 27,941 98,718 1,19,698
% Change (Y-o-Y) -8.3 -7.7 8.4 14.1 17.6 14.0 52.4 3.2 1.1 21.3
Other Income 15,847 17,818 17,917 23,963 21,085 19,362 15,665 16,411 75,544 72,522
Total Income 38,921 42,241 42,055 51,045 48,218 47,196 52,456 44,352 1,74,262 1,92,221
% Change (Y-o-Y) -9.2 10.1 27.6 80.6 35.9 15.8 42.9 -32.0 24.7 10.0
Other Provisions 14,929 15,857 14,846 27,087 22,038 21,566 26,736 29,073 72,720 99,414
Profit before Tax 3,260 5,550 4,968 2,642 2,686 3,232 1,577 -8,853 16,420 -1,357
Tax 970 1,981 1,749 500 170 630 320 -880 5,200 240
Net Profit 2,290 3,569 3,219 2,142 2,516 2,602 1,257 -7,972 11,220 -1,597
% Change (Y-o-Y) -52.2 -32.5 278.8 NA 9.9 -27.1 -60.9 -472.2 -139.9 -114.2
Deposit (INR b) 4,653 4,843 5,103 4,953 4,859 4,964 5,039 5,126 4,953 5,126
Loan ( (INR b) 3,213 3,271 3,316 3,420 3,428 3,583 3,731 3,796 3,420 3,796
Deposit Growth (%) -1.4 -0.2 4.0 3.2 4.4 2.5 -1.3 3.5 3.2 3.5
Loan Growth (%) -0.9 1.3 -0.1 5.3 8.4 9.5 12.5 11.0 5.3 11.0
Asset Quality
Gross NPA (INR b) 323.3 333.2 343.4 342.0 376.6 391.6 403.1 443.4 342.0 443.4
Net NPA (INR b) 214.9 218.9 223.0 216.5 243.0 251.7 253.0 288.4 216.5 288.4
Gross NPA (%) 9.7 9.8 10.0 9.6 10.6 10.5 10.4 11.7 9.6 11.7
Net NPA (%) 6.7 6.7 6.7 6.3 7.1 7.0 6.8 7.6 6.3 7.6
PCR (%) 50.8 51.8 52.5 55.6 54.5 54.8 55.8 35.0 36.7 35.0
E: MOSL Estimates
April 2018 146

DCB Bank
Bloomberg DCBB IN CMP: INR168 TP: INR175 (+4%) Neutral
 Loan growth (23% YoY) and deposit growth (21% YoY) are
expected to be significantly above industry average. Growth will
be driven by retail; management intends to curb corporate
1,6,12 Rel Perf. (%) 6 / -14 / -13
growth below 20%.
Financial Snapshot (INR B)  Non-interest income is expected to grow ~15% YoY. While fee
Y/E MARCH 2017 2018E 2019E 2020E income is expected to remain healthy, trading gains should
NII 8.0 9.8 11.6 13.4
moderate, as 4QFY17 had one-off treasury gains from
OP 4.2 5.1 6.2 7.2
NP 2.0 2.4 2.9 3.3
demonetization-related liquidity.
EPS (INR) 7.0 7.8 9.4 10.9  Overall, we expect PPP growth to increase ~9% YoY. We model
EPS Gr. (%) 2.3 10.9 21.4 15.2 opex growth of 19% YoY, lower than previous quarters, as the
BV/Sh. (INR) 68.2 83.1 92.0 102.4 pace of branch addition will slow down. Credit costs may be
RoE (%) 10.8 10.6 10.8 11.2 elevated owing to potential stress in the SME and LAP segments
RoA (%) 0.9 0.9 0.9 0.9
(we factor in 1.3% slippage ratio). We expect PBT growth to
Valuations
increase 6% YoY.
P/E (x) 24.0 21.7 17.9 15.5
P/BV (x) 2.5 2.0 1.8 1.6  DCBB trades at 1.8x FY19E BV and 17.9x FY19E EPS. Expensive
valuations leave room for limited upside. Maintain Neutral.
 Management commentary on slippages in SME segment.
 Update and commentary on balance sheet growth strategy.
 CASA ratio and NIM performance.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 1,770 1,903 2,095 2,203 2,332 2,481 2,505 2,524 7,971 9,841
% Change (Y-o-Y) 26.1 26.9 30.5 30.6 31.7 30.4 19.6 14.6 28.7 23.5
Other Income 601 616 641 636 858 653 749 734 2,495 2,993
Total Income 2,372 2,519 2,736 2,839 3,189 3,134 3,254 3,258 10,465 12,835
Operating Profit 927 1,009 1,093 1,153 1,364 1,244 1,225 1,261 4,182 5,095
% Change (Y-o-Y) 3.4 29.2 29.7 18.9 47.1 23.4 12.2 9.4 19.8 21.8
Core Operating Profit 755 893 968 1,112 1,364 1,244 1,225 1,261 3,630 4,439
Provisions 205 265 305 339 355 302 343 397 1,115 1,397
Profit before Tax 722 744 787 814 1,009 942 883 864 3,067 3,698
Tax Provisions 252 259 274 286 357 353 313 292 1,070 1,315
Net Profit 470 485 513 529 652 589 570 572 1,997 2,383
% Change (Y-o-Y) 0.3 31.3 24.5 -24.0 38.7 21.5 11.1 8.2 2.6 19.4
Deposit (INR b) 156.8 176.8 188.4 192.9 191.5 205.7 213.0 233.4 192.9 233.4
Loan (INR b) 133.4 144.4 145.8 158.2 162.7 174.0 186.0 194.6 158.2 194.6
Deposit Growth (%) 18.2 30.4 33.8 29.2 22.2 16.3 13.0 21.0 29.2 21.0
Loan Growth (%) 27.9 29.1 24.3 22.4 22.0 20.5 27.5 23.0 22.4 23.0
Asset Quality
Gross NPA (INRb) 2.3 2.6 2.3 2.5 2.9 3.2 3.5 3.7 2.5 3.7
Gross NPA (%) 1.7 1.8 1.6 1.6 1.7 1.8 1.9 1.9 1.6 1.9
Net NPA (INRb) 1.2 1.2 1.1 1.2 1.5 1.6 1.6 1.8 1.2 1.8
Net NPA (%) 0.9 0.8 0.7 0.8 0.9 0.9 0.9 0.9 0.8 0.9
PCR (%) 50.0 52.7 52.6 51.1 47.7 50.3 54.4 51.0 51.1 51.0
E: MOSL Estimates
April 2018 147

Equitas Holdings
Bloomberg EQUITAS IN CMP: INR148 TP: 185 (+25%) Buy
 We expect NII growth of 35% YoY due to (a) pickup in loan
growth, as MFI book reduction targets have been largely met, and
(b) recalibration in the liability side (sufficient availability of
1,6,12 Rel Perf. (%) 4 / -8 / -25
funds). AUM growth is expected to be ~10% YoY, as securitized
Financial Snapshot (INR B) portfolio continues to be run down.
Y/E March 2017 2018E 2019E 2020E
 NIM is expected to expand ~100bp QoQ, with quick-paced
NII 8.7 10.4 12.7 15.4
deposit accretion.
OP 3.7 2.4 4.6 6.8
NP 1.7 0.4 2.4 3.6  Opex is expected to grow by ~23% YoY (v/s 36% YoY growth in
EPS (INR) 5.6 1.1 7.0 10.7 total income), with moderation in employee and other expenses,
EPS Gr. (%) -9.5 -79.9 526.1 51.2 as employee additions related to bank transition have largely
BV/Sh. (INR) 66 67 74 83 been made.
RoE (%) 9.6 1.7 10.0 13.6  Asset quality of UCV and MSME portfolios remains a key
RoA (%) 2.2 0.4 1.7 1.9
monitorable. We factor in provisions of INR273m during the
Valuations
P/E(X) 26.4 131.4 21.0 13.9
quarter, a sharp decline from INR860m in the last quarter, as the
P/BV (X) 2.2 2.2 2.0 1.8 company has completely provided on MFI NPAs.
 The stock trades at 2x FY19E BV. Maintain Buy.
 Update on the transition progress.
 Commentary on growth and asset quality in MFI.
Quarterly Performance INR million

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) 62.1 34.7 73.8 29.9 5.7 29.0 -0.9 35.2 44.2 20.3
Other Income 230 287 2 205 820 49 50 284 1,140 1,203
Total Income 2,273 2,293 2,708 2,419 2,980 2,637 2,731 3,278 9,807 11,626
Operating Profit 1,140 885 1,045 474 694 445 416 880 3,657 2,435
Core Operating Profit 1,140 885 1,045 474 694 445 416 880 3,391 2,169
% Change (YoY) 51.6 18.0 27.9 -45.8 -39.1 -49.7 -60.2 85.6 14.5 -33.4
Other Provisions 176 149 340 365 441 271 869 273 1,029 1,854
Profit before Tax 964 736 705 109 253 174 -453 607 2,628 581
Tax 352 273 256 40 98 65 -152 189 922 200
Net Profit 612 463 449 69 155 109 -301 417 1,706 380
% Change (YoY) 61.1 17.5 4.2 -85.3 -74.7 -76.5 -167.0 504.9 2.0 -77.7
Deposits (INR b) 0 0 8 19 23 31 37 39 19 39
Loans (INR b) 57 57 59 58 61 64 72 73 58 73
AUM Growth (%) 47.9 44.7 30.4 17.1 7.3 3.5 7.5 10.3 17.1 10.3
Deposit Growth (%) NM NM NM NM NM NM 386.7 104.5 0.0 104.5
Loan Growth (%) 42.2 26.5 17.4 15.1 6.9 13.6 22.2 25.9 15.0 26.0
Asset Quality
Gross NPA (INR B) 918 1,437 1,450 2,060 3,000 3,702 3,560 3,750 2,060 3,758
Net NPA (INR B) 652 850 790 1,050 1,630 1,988 1,160 1,313 1,050 1,312
Gross NPA (%) 1.6 2.5 2.5 3.5 4.9 5.8 5.0 5.0 3.5 5.1
Net NPA (%) 1.1 1.2 0.8 1.5 3.0 3.2 1.6 1.8 1.8 1.8
PCR (%) 29.0 40.8 45.5 49.0 45.7 46.3 67.4 65.1 49.0 65.1
E: MOSL Estimates
April 2018 148

Federal Bank
Bloomberg FB IN CMP: INR92 TP: INR124 (+35%) Buy
 We expect FB to report ~22% YoY (5% QoQ) loan growth, aided by
M. Cap. (INR b)/(USD b) 177 / 3
renewed focus on corporate growth. Traction in SME and retail
loans would be maintained. We expect NIM to stay flat QoQ, as
1,6,12 Rel Perf. (%) -1 / -25 / -10
any pressure in yields should be supported by benign cost of
Financial Snapshot (INR B) funds.
Y/E Mar 2017 2018E 2019E 2020E
 Other income is likely to grow at 4% YoY, with moderation in
NII 30.5 36.3 43.9 52.6
treasury gains partly offset by healthy fee income.
OP 19.2 23.5 29.0 35.1
NP 8.3 10.2 13.1 16.5  Overall PPoP growth is expected to be ~19% YoY, led by strong
NIM (%) 3.3 3.2 3.2 3.2 revenue growth and controlled opex (+8% YoY).
EPS (INR) 4.8 5.6 6.8 8.5  We expect slippages to moderate during the quarter as the
EPS Gr. (%) 74.1 15.3 22.0 25.9 previous quarter had education loan waiver-related slippages of
BV/Sh. (INR) 50.8 63.5 69.4 77.1
INR710m. GNPA is expected to decline marginally to 2.4%.
ABV/Sh. (INR) 47.2 56.8 62.4 69.3
 We expect PAT of INR2.8b v/s INR2.6b in 4QFY17 and ~INR2.6b in
ROE (%) 9.9 9.6 10.2 11.7
ROA (%) 0.8 0.8 0.9 0.9 3QFY18. FB trades at 1.3x FY19E BV and 13.6x FY19E EPS. Buy.
Payout (%) 26.1 14.3 12.4 9.9
P/E(X) 19.1 16.6 13.6 10.8  Outlook on asset quality.
P/BV (X) 1.8 1.4 1.3 1.2
 Strategy on balance sheet growth, particularly corporate
P/ABV (X) 1.9 1.6 1.5 1.3
growth.
Div. Yield (%) 1.2 0.9 0.9 0.9

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) 14.5 19.4 30.7 22.8 15.6 23.8 20.0 16.2 21.7 18.9
Other Income 2,370 2,616 2,747 2,821 3,291 2,872 2,286 2,934 10,818 11,384
Total Income 9,297 9,878 10,661 11,245 11,298 11,861 11,786 12,723 41,345 47,669
% Change (YoY) 16.0 41.1 45.9 39.2 31.0 22.8 18.2 18.8 35.2 22.3
Provisions 1,685 1,684 1,588 1,227 2,364 1,768 1,624 2,441 6,184 8,198
Tax 901 1,053 1,104 1,699 1,113 1,427 1,390 1,243 4,757 5,173
Net Profit 1,673 2,013 2,057 2,566 2,102 2,637 2,600 2,838 8,308 10,176
% Change (YoY) 18.3 24.8 26.4 2,400.9 25.6 31.0 26.4 10.6 74.7 22.5
Deposit (INR b) 811.3 863.0 922.4 976.6 958.4 972.1 1,005.4 1,162.2 976.6 1,162.2
Loan (INR b) 591.2 646.9 696.3 733.4 763.1 806.5 849.5 894.7 733.4 894.7
Deposit Growth (%) 12.5 17.0 23.3 23.4 18.1 12.6 9.0 19.0 23.4 19.0
Loan Growth (%) 19.3 27.2 32.0 26.2 29.1 24.7 22.0 22.0 26.2 22.0
Asset Quality
Gross NPA (INR b) 17.5 18.2 19.5 17.3 18.7 19.5 21.6 21.5 17.3 21.5
Gross NPA (%) 2.9 2.8 2.8 2.3 2.4 2.4 2.5 2.4 2.3 2.4
Net NPA (INR b) 9.9 10.4 11.0 9.4 10.6 10.7 11.6 11.9 9.4 11.9
Net NPA (%) 1.7 1.6 1.6 1.3 1.4 1.3 1.4 1.3 1.3 1.3
PCR (%) 43.1 42.9 43.5 45.5 43.2 45.3 46.5 44.6 45.5 44.6
E: MOSL Estimates
April 2018 149

HDFC Bank
Bloomberg HDFCB IN CMP: INR1,916 TP: INR2,400 (+25%) Buy
 Loan growth would be strong at 22% YoY. Deposit growth would
M. Cap. (INR b)/(USD b) 5146 / 79
trail loan growth at ~16% YoY, led by CASA inflows.
52-Week Range (INR) 2014 / 1425
 CoF decline would help to negate the impact of declining yields
1,6,12 Rel Perf. (%) 4 / 0 / 22
environment, and we expect HDFCB to report flattish margins at
Financial Snapshot (INR B) 4.3% (calculated). NII is expected to grow at 18% YoY.
Y/E MARCH 2017 2018E 2019E 2020E
 Other income growth is expected to moderate to ~9% YoY,
NII 331.4 401.6 484.7 588.8 factoring in lower trading gains. Fee income should remain healthy.
OP 257.3 325.0 400.7 496.1 Tie-up with new banca partners would drive fee income growth.
NP 145.5 175.3 219.8 274.8
 Opex growth would be lower than total income growth at ~11%
NIM (%) 4.6 4.5 4.5 4.5
YoY, aided by the bank’s strong digital initiatives and focus on
EPS (INR) 56.8 66.8 81.8 102.3
cutting excess flab.
EPS Gr. (%) 16.7 17.7 22.5 25.0
 Healthy PPoP growth would lead to 20% YoY PAT growth, in line
BV/Sh. (INR) 335.9 473.6 539.2 623.5
with 20% growth trend exhibited by the bank in the last few
ABV/Sh. (INR) 330.8 449.2 512.8 594.0
years. Asset quality is expected to remain stable, with GNPA at
RoE (%) 17.9 16.2 16.2 17.6
~1.3%.
RoA (%) 1.8 1.8 1.9 2.0
 HDFCB trades at 3.6x FY19E BV and 23.4x FY19E EPS. Comfort on
Payout (%) 23.2 21.1 19.9 17.6
Valuations
earnings (~24% CAGR over FY17-20) remains high. Maintain Buy.
P/BV (X) 5.7 4.0 3.6 3.1  Performance in retail loan/agri portfolio, especially in CV/CE.
P/ABV (X) 5.8 4.3 3.7 3.2  Trends in digital banking/payments and various initiatives;
Div. Yield (%) 0.6 0.7 0.8 0.9 overall B/S growth outlook and economic recovery.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 77,814 79,936 83,091 90,551 93,707 97,521 1,03,143 1,07,179 3,31,392 4,01,550
% Change (Y-o-Y) 21.8 19.6 17.6 21.5 20.4 22.0 24.1 18.4 20.1 21.2
Other Income 28,066 29,010 31,427 34,463 35,167 36,059 38,692 37,641 1,22,965 1,47,558
Total Income 1,05,881 1,08,945 1,14,518 1,25,014 1,28,874 1,33,580 1,41,835 1,44,819 4,54,357 5,49,108
% Change (Y-o-Y) 20.0 19.5 15.2 26.9 29.2 29.8 27.9 19.6 20.4 26.3
Core Operating Profit 55,423 57,411 62,107 70,990 71,885 74,620 81,919 87,061 2,20,859 3,05,303
Provisions 8,667 7,490 7,158 12,618 15,588 14,762 13,514 13,451 35,933 57,315
Profit before Tax 49,525 52,756 58,935 60,176 59,612 63,417 70,999 73,609 2,21,391 2,67,637
Tax 17,136 18,202 20,281 20,275 20,673 21,907 24,573 25,182 75,894 92,335
Net Profit 32,389 34,553 38,653 39,901 38,938 41,510 46,426 48,427 1,45,496 1,75,302
% Change (Y-o-Y) 20.2 20.4 15.1 18.3 20.2 20.1 20.1 21.4 18.3 20.5
Deposit Growth (%) 18.5 16.7 21.1 17.8 17.0 16.5 10.1 16.2 17.8 16.2
Loan Growth (%) 23.2 18.1 13.4 19.4 23.4 22.3 27.5 21.5 19.4 21.5
Deposit (INR b) 5,738 5,917 6,347 6,436 6,714 6,893 6,990 7,479 6,436 7,479
Loan (INR b) 4,706 4,944 4,950 5,546 5,810 6,049 6,312 6,738 5,546 6,738
Asset Quality
Gross NPA (INR B) 49.2 50.7 52.3 58.9 72.4 77.0 82.3 88.4 58.9 86.6
Gross NPA (%) 1.0 1.0 1.1 1.1 1.2 1.3 1.3 1.3 1.1 1.3
Net NPA (INR B) 14.9 14.9 15.6 18.4 25.3 26.0 27.7 30.6 18.4 30.6
Net NPA (%) 0.3 0.3 0.3 0.3 0.4 0.4 0.4 0.5 0.3 0.5
PCR 69.7 70.6 70.1 68.7 65.1 66.3 66.3 65.3 68.7 64.6
E: MOSL Estimates; * Reported on total assets; # Cal. on interest earning assets
April 2018 150

ICICI Bank
Bloomberg ICICIBC IN CMP: INR270 TP: INR370 (+37%) Buy
 We expect loan growth to pick up to ~11% YoY (+2% QoQ).
M. Cap. (INR b)/(USD b) 1729 / 27
Corporate loan growth would be moderate and international loan
exposure would continue to decline. Retail loans should continue
1,6,12 Rel Perf. (%) -10 / -9 / -8
to exhibit healthy growth.
Financial Snapshot (INR B)  NIM is expected to stay largely flat QoQ at ~3.1% (-40bp YoY), as
Y/E March 2017 2018E 2019E 2020E cost of funds remains favorable. NII is expected to decrease ~2%
NII 217.4 228.7 254.9 292.5 YoY.
OP 264.9 257.8 285.5 331.3  Total other income should increase sharply, led by gains from
NP 98.0 71.3 116.4 163.8 stake sale in ICICI Securities.
NIM (%) 3.3 3.1 3.1 3.1
 Gross slippages are expected to increase from 3QFY18 levels and
EPS (INR) 15.3 11.1 18.1 25.5
remain high (8.2% slippage ratio).
EPS Gr (%) 0.6 -27.2 63.0 40.8
 We expect PAT of INR13.8b v/s INR20.2b in 4QFY17 and INR16.5b
BV/Sh (INR)* 135.4 136.6 151.1 171.7
in 3QFY18. ICICIBC trades at 1x FY19E core BV and 8.2x FY19E EPS.
ABV/Sh (INR)* 107.9 120.7 135.6 157.1
Buy.
RoE (%) 10.2 7.2 11.1 14.3
RoA (%) 1.3 0.9 1.3 1.6
Valuations
AP/E (x) 13.1 13.3 8.2 5.8
 Movement of watch-list accounts.
AP/BV (x) 1.1 1.1 1.0 0.9  Plans on monetization of stakes in various ventures.
AP/ABV (x) 1.4 1.2 1.1 0.9  Outlook on asset quality and trend on further relapse from RL.
* BV ADJ FOR INVT IN SUBSIDIARIES
ICICI Bank: Quarterly Performance (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) 0.8 0.0 -1.6 10.3 8.4 8.7 6.4 -1.6 2.4 5.2
Other Income 34,293 91,197 39,383 30,172 33,879 51,862 31,669 66,269 1,95,045 1,83,679
Total Income 85,878 1,43,730 93,017 89,794 89,778 1,08,953 88,721 1,24,947 4,12,418 4,12,399
Operating Profit 52,147 1,06,361 55,239 51,120 51,833 69,865 50,578 85,485 2,64,867 2,57,761
% Change (YoY) 3.5 106.2 -15.8 -28.1 -0.6 -34.3 -8.4 67.2 11.0 -2.7
Provisions 25,145 70,827 27,127 28,982 26,087 45,029 35,696 66,755 1,52,081 1,73,567
Profit before Tax 27,002 35,534 28,112 22,138 25,746 24,836 14,882 18,731 1,12,786 84,194
Tax 4,679 4,511 3,694 1,892 5,256 4,254 -1,621 4,959 14,775 12,848
Net Profit 22,324 31,023 24,418 20,246 20,490 20,582 16,502 13,772 98,011 71,346
% Change (YoY) -25.0 2.4 -19.1 188.5 -8.2 -33.7 -32.4 -32.0 0.8 -27.2
Deposit (INR b) 4,241 4,491 4,653 4,900 4,863 4,986 5,174 5,469 4,900 5,469
Loan (INR b) 4,494 4,543 4,575 4,642 4,641 4,828 5,054 5,176 4,642 5,176
Asset Quality
Gross NPA (INR b) 275.6 325.5 380.8 425.5 431.5 444.9 460.4 508.0 425.5 508.0
Gross NPA (%) 5.3 6.1 7.2 7.9 8.0 7.9 7.8 9.8 7.9 9.8
Net NPA (INR b) 153.1 164.8 201.6 254.5 253.1 241.3 238.1 269.8 254.5 269.8
Net NPA (%) 3.0 3.2 4.0 4.9 4.9 4.4 4.2 5.2 4.9 5.2
PCR (%) 44.5 49.4 47.1 40.2 41.3 45.8 48.3 46.9 40.2 46.9
E: MOSL Estimates
April 2018 151

Indian Bank
Bloomberg INBK IN CMP: INR307 TP: INR371 (+21%) Buy
 Loan growth is expected to pick up further to ~20% YoY (+3%
M. Cap. (INR b)/(USD b) 147 / 2
QoQ), led by balance sheet recalibration. Deposit growth is
expected be 17% YoY (3% QoQ).
1,6,12 Rel Perf. (%) -1 / 11 / -2
 Calculated NIM is expected to be flattish at 3%. NII will grow
Financial Snapshot (INR b) ~21% YoY on a low base.
Y/E March 2017 2018E 2019E 2020E  Overall non-interest income is expected to decline 16% YoY, led
NII 51.5 63.0 70.6 82.2 by healthy traction in fee income.
OP 40.0 50.8 53.1 58.1  We expect slippage ratio to remain elevated at 2.3% and credit
NP 14.1 14.6 20.0 22.9 costs to elevate to 2.1% (1.2% in 3QFY18).
EPS (INR) 29.3 30.3 41.6 47.7  INBK trades at 0.9x FY19E BV and 7.4x FY19E EPS. Maintain Buy.
EPS Gr. (%) 97.6 3.7 37.2 14.5
BV/Sh. (INR) 301 324 356 392 Key issues to watch for
ABV/Sh. (INR) 247 281 314 351  Outlook on business growth and asset quality remain the key
RoE (%) 10.1 9.7 12.3 12.7 factors to monitor.
RoA (%) 0.7 0.6 0.7 0.7  Quantum of loans rescheduled under the 5/25 scheme.
Payout (%) 23.9 26.1 22.8 22.7  View on margins with an improvement in liquidity and lower
Valuations interest rates.
P/E(X) 10.5 10.1 7.4 6.4
P/BV (X) 1.0 0.9 0.9 0.8
P/ABV (X) 1.25 1.09 0.98 0.87
Div. Yield (%) 2.3 2.6 3.1 3.5
Quarterly Performance INR m

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) 10.3 18.3 12.2 22.1 18.1 20.8 30.2 20.9 15.7 22.4
Other Income 4,417 5,846 5,997 5,854 6,521 7,146 5,489 4,948 22,114 24,104
Total Income 16,780 18,629 18,462 19,704 21,116 22,582 21,717 21,699 73,575 87,114
% Change (YoY) 27.4 36.8 33.2 29.3 38.7 36.7 18.4 15.8 31.9 26.9
Tax 1,788 1,228 1,074 -565 1,644 1,795 -120 1,801 3,526 5,120
Net Profit 3,074 4,051 3,735 3,198 3,724 4,515 3,033 3,300 14,057 14,572
% Change (YoY) 42.7 9.7 671.7 278.0 21.1 11.5 -18.8 3.2 97.6 3.7
Deposits (INR b) 1,774 1,782 1,837 1,825 1,915 1,987 2,065 2,135 1,825 2,135
Loans (INR b) 1,242 1,227 1,220 1,277 1,294 1,392 1,483 1,532 1,277 1,532
Deposit Growth (%) 1.1 3.2 5.2 2.4 7.9 11.5 12.5 17.0 2.4 17.0
Loan Growth (%) 1.5 0.2 -0.7 -1.0 4.2 13.4 21.6 20.0 -1.0 20.0
Asset Quality
Gross NPA (INR B) 88.9 91.9 96.8 98.7 96.5 96.2 96.0 101.6 98.7 101.6
Net NPA (INR B) 55.5 56.6 58.0 56.1 52.4 47.5 49.0 51.8 56.1 51.8
Gross NPA (%) 7.0 7.3 7.7 7.5 7.2 6.7 6.3 6.6 7.7 6.6
Net NPA (%) 4.5 4.6 4.8 4.4 4.1 3.4 3.3 3.4 4.4 3.4
PCR (%) 37.6 38.5 40.1 43.2 45.7 50.7 48.9 49.0 43.2 49.0
E: MOSL Estimates
April 2018 152

IndusInd Bank
Bloomberg IIB IN
CMP: INR1,830 TP: INR2,250 (+23%) Buy
 We expect strong loan growth of ~26% YoY in 4QFY18,
M. Cap. (INR b)/(USD b) 1,095 / 17
significantly ahead of system loan growth. Deposit growth should
52-Week Range (INR) 1,841 / 1,375
10 / 2 / 19
be strong at 27% YoY. Continued market share gains in VF would
1,6,12 Rel Perf. (%)
remain a key factor to monitor. NIM is likely to stay flattish at
FINANCIAL SNAPSHOT (INR BILLION) ~4.1%. The quantum of CASA retained would be a key factor.
Y/E MARCH 2017 2018E 2019E 2020E  We expect non-interest income to grow ~2%, supported by
NII 60.6 75.1 94.8 120.1 healthy fee income growth. Stronger contribution of third-party
OP 54.5 66.4 84.4 108.4 distribution fees owing to increased inflows into MFs and
NP 28.7 36.1 46.6 59.9 insurance industry should continue to support higher third-party
NIM (%) 4.2 4.2 4.2 4.2
distribution fees.
EPS (INR) 48.1 60.4 78.0 100.2
 Opex growth would remain high at ~15%+ YoY v/s 13% growth in
EPS Gr. (%) 18.2 25.7 29.0 28.4
total income. Healthy PPP growth (+12% YoY) and controlled
BV/Sh. (INR) 345 397 463.3 548.8
credit costs would keep earnings growth strong at 28%+ YoY.
ABV/Sh. (INR) 331 380 446.0 530.3
 IIB trades at 3.9x FY19E BV and 23.5x FY19E EPS, with best-in-
RoE (%) 15.3 16.6 18.4 20.0
class RoA of ~1.9% and RoE of 17-19%. Buy.
RoA (%) 1.8 1.8 1.9 1.9
Valuations
P/E (X) 38.1 30.3 23.5 18.3 Key issues to watch for
P/BV (X) 5.3 4.6 3.9 3.3  Continued CV/CE growth would be the key for CFD growth.
P/ABV (X) 5.5 4.8 4.1 3.5  Corporate asset quality a key monitorable.
 Traction in the non-vehicle consumer lending portfolio.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) 38.3 33.4 34.5 31.5 30.8 24.7 20.0 21.1 34.2 23.9
Other Income 9,730 9,704 10,168 12,113 11,673 11,876 11,868 12,346 41,715 47,764
Net Income 23,294 24,307 25,952 28,788 29,413 30,086 30,816 32,545 1,02,341 1,22,861
% Change (YoY) 33.7 27.3 28.5 36.6 28.8 27.5 22.1 11.6 31.6 21.9
Provisions 2,305 2,139 2,169 4,301 3,100 2,938 2,362 2,795 10,913 11,194
Tax 3,419 3,635 3,959 3,905 4,420 4,597 4,923 5,142 14,918 19,082
Net Profit 6,614 7,042 7,506 7,516 8,365 8,801 9,362 9,617 28,679 36,147
% Change (YoY) 26.0 25.7 29.2 21.2 26.5 25.0 24.7 27.9 25.4 26.0
Deposit Growth (%) 31.0 38.9 37.9 36.1 31.4 25.9 22.5 26.8 36.1 26.8
Loan Growth (%) 29.7 26.4 25.1 27.9 24.3 24.5 25.1 25.5 27.9 25.5
Deposit (INR b) 1,018 1,123 1,192 1,266 1,337 1,414 1,461 1,605 1,266 1,605
Loan (INR b) 937 989 1,028 1,131 1,164 1,232 1,285 1,419 1,131 1,419
Asset Quality
Gross NPA (INR b) 8.6 9.0 9.7 10.5 12.7 13.5 15.0 16.0 10.5 16.0
Gross NPA (%) 0.9 0.9 0.9 0.9 1.1 1.1 1.2 1.1 0.9 1.1
Net NPA (INR b) 3.6 3.7 4.0 4.4 5.1 5.4 5.9 6.2 4.4 6.2
Net NPA (%) 0.4 0.4 0.4 0.4 0.4 0.4 0.5 0.4 0.4 0.4
PCR (%) 58.7 58.9 58.8 58.4 60.0 60.1 60.5 61.0 58.4 61.0
E: MOSL Estimates
April 2018 153

Kotak Mahindra Bank

Bloomberg KMB IN CMP: INR1,103 TP: INR1,302 (+18%) Buy
 We expect the standalone bank to report 22% loan growth and
M. Cap. (INR b)/(USD b) 2101 / 32
19% deposit growth in 4QFY18. NIM is likely to decrease by 13bp
QoQ to 4.4%. Overall, we expect NII growth of 15% YoY. CASA
1,6,12 Rel Perf. (%) 3 / 4 / 14
retention would be a key driver of NII and NIM.
Financial Snapshot (INR B)  With strong digital initiatives, fast-paced customer acquisition and
Y/E MARCH 2017 2018E 2019E 2020E
merger synergies from eIVBL, fee income would be a key growth
NII 81.3 94.3 121.0 149.0 driver for the bank. We factor in other income growth of 14% in
OP 59.8 71.3 94.2 117.9 4Q, driven mostly by healthy fee traction and expect an improving
NP 34.1 41.3 54.7 68.5
trend in the coming quarters.
Cons. NP 49.4 62.3 79.0 103.1
 We expect asset quality to remain stable, with GNPA at ~2.3% and
NIM (%) 4.4 4.2 4.4 4.5
NNPA at 1.1%, led by a high provision coverage ratio.
Cons. EPS (INR) 26.8 32.7 41.5 54.1
 On a reported basis, we expect standalone bank earnings to grow
EPS Gr. (%) 42.3 21.9 26.8 30.5
20% YoY. The stock trades at 3.8x FY19E consolidated BV and
Cons. BV. (INR) 207.7 248.9 289.5 342.8
26.6x FY19E consolidated EPS. Maintain Buy.
Cons. RoE (%) 13.8 13.1 14.3 15.8
RoA (%) 1.7 1.6 1.8 1.8
Valuations
P/E(X) (Cons.) 41.1 33.7 26.6 20.4  Guidance on balance sheet growth.
P/BV (X) (Cons.) 5.3 4.4 3.8 3.2  Performance on CASA, fees and growth.
 Performance of non-banking subsidiaries and their contribution
to overall profit.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (Y-o-Y) 20.1 18.9 16.1 16.4 17.0 15.9 16.7 14.8 17.8 16.1
Other Income 7,332 8,311 9,102 10,027 9,069 9,539 10,398 11,417 34,772 40,422
Net Income 26,523 28,265 29,605 31,641 31,525 32,665 34,335 36,238 1,16,033 1,34,763
% Change (Y-o-Y) 21.1 23.2 19.0 24.6 18.9 15.6 16.0 14.5 22.0 16.1
% Change (Y-o-Y) 120.3 37.8 26.8 42.5 21.3 19.8 19.1 17.2 48.1 19.2
Tax Provisions 3,936 4,290 4,558 4,582 4,789 5,140 5,541 5,995 17,366 21,464
Net Profit 7,419 8,133 8,798 9,765 9,128 9,943 10,532 11,696 34,115 41,296
% Change (Y-o-Y) 291.1 42.8 38.6 40.4 23.0 22.3 19.7 19.8 63.2 21.1
Loan growth (%) 16.6 12.9 12.1 14.7 17.9 21.1 23.1 22.1 14.7 22.1
Cost to Income Ratio (%) 50.4 49.1 48.4 46.2 49.4 47.2 47.0 45.0 48.4 47.1
Tax Rate (%) 34.7 34.5 34.1 31.9 34.4 34.1 34.5 33.9 33.7 34.2
Asset Quality
Gross NPA (INR b) 30.6 31.8 31.8 35.8 37.3 38.1 37.1 37.5 35.8 37.5
Gross NPA (%) 2.5 2.5 2.4 2.6 2.6 2.5 2.3 2.3 2.6 2.3
Net NPA (INR b) 14.7 15.2 13.8 17.2 17.8 19.2 17.3 17.6 17.2 17.6
Net NPA (%) 1.2 1.2 1.1 1.3 1.3 1.3 1.1 1.1 1.3 1.1
PCR (%) 52.0 52.3 56.6 52.0 52.3 49.7 53.5 53.0 52.0 53.0
April 2018 154

Punjab National Bank

Bloomberg PNB IN CMP: INR96 TP: INR160 (+67%) Buy
 We expect loan growth to pick up (+15% YoY/+7% QoQ). Deposits
M. Cap. (INR b)/(USD b) 265 / 4
should grow 8% YoY, reflecting some stickiness in CASA, post
inflows after demonetization.
1,6,12 Rel Perf. (%) -3 / -32 / -48
 NII is likely to grow 1.6% QoQ (and 10% YoY) with uptick in loan
Financial Snapshot (INR B) book growth and improvement in margins.
Y/E March 2017 2018E 2019E 2020E
 Overall non-interest income is expected to decline by 35% YoY, as
NII 149.9 159.1 201.7 232.6
OP 145.7 139.1 164.6 188.7
fee income growth should be partly offset by moderation in
NP 13.2 -13.9 0.1 39.7 treasury gains.
NIM (%) 2.3 2.2 2.4 2.5  Stress addition is likely to increase significantly on account of
EPS (INR) 6.2 -5.7 0.0 14.3 fraud reported (16.3% slippages). We expect credit cost to be
EPS Gr. (%) NM NM NM NM ~550bp.
BV/Sh. (INR) 178 169 167 180  Resolutions in key accounts and the fraud reported remains a key
ABV/Sh. (INR) 71 88 112 137
trigger. The stock trades at 0.6x FY19E BV. Maintain Buy.
RoE (%) 3.6 -3.0 0.0 7.7
RoA (%) 0.2 -0.2 0.0 0.4
Payout (%) 0.0 NM NM 12.5 Key issues to watch for
Valuations  Outlook on asset quality, as net stressed loans remain one of the
P/E(X) 15.4 NM NM 6.7 highest in the industry.
P/BV (X) 0.5 0.6 0.6 0.5  Resolution of the ongoing fraud and its impact.
P/ABV (X) 1.35 1.09 0.86 0.70
 Trend in loan growth and fee income.
Div. Yield (%) 0.0 1.7 1.9 1.9
 NIMs and CASA performance.
Quarterly Performance INR m

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) -9.8 -10.2 -9.4 33.1 4.2 3.5 6.9 10.0 -2.1 6.1
Other Income 23,551 23,879 21,398 31,028 23,318 19,060 30,820 20,025 89,514 93,223
Total Income 60,541 62,678 58,706 67,863 61,869 59,212 70,707 60,531 2,39,445 2,52,319
Operating Expenses 27,794 29,557 30,897 5,545 29,696 26,421 28,255 28,831 93,794 1,13,203
% Change (YoY) 4.6 12.7 -4.7 93.1 -1.8 -1.0 52.7 -49.1 19.2 -4.5
Other Provisions 27,384 25,338 25,622 57,535 26,087 24,408 44,667 64,091 1,25,536 1,59,253
Profit before Tax 5,362 7,783 2,187 4,783 6,086 8,383 -2,215 -32,391 20,115 -20,137
Tax 2,299 2,289 116 2,164 2,652 2,777 -4,516 -7,156 6,867 -6,242
Net Profit 3,064 5,494 2,072 2,619 3,434 5,606 2,301 -25,235 13,248 -13,895
% Change (YoY) -57.5 -11.5 306.2 NM 12.1 2.0 11.1 -1,063.6 NM -204.9
Deposits (INR b) 5,540 5,749 6,122 6,217 6,256 6,362 6,480 6,745 6,217 6,745
Loans (INR b) 3,916 3,937 3,857 4,195 3,997 4,103 4,521 4,833 4,195 4,833
Deposit Growth (%) 7.0 6.5 11.6 12.4 12.9 10.7 5.9 8.5 12.4 8.5
Loan Growth (%) 2.8 3.4 -1.8 1.7 2.1 4.2 17.2 15.2 1.7 15.2
Asset Quality
Gross NPA (INR B) 567 565 556 554 577 576 575 693 554 693
Net NPA (INR B) 357 357 350 327 346 346 341 436 327 436
Gross NPA (%) 13.8 13.6 13.7 12.5 13.7 13.3 12.1 13.6 12.5 13.6
Net NPA (%) 9.2 9.1 9.1 7.8 8.7 8.4 7.6 9.0 7.8 9.0
PCR (%) 36.9 36.7 37.1 40.9 40.1 40.0 40.8 37.2 40.9 37.2
E: MOSL Estimates
April 2018 155

RBL Bank
Bloomberg RBK IN CMP: INR483 TP: INR628 (+30%) Buy
 Loan growth (+35% YoY) and deposit growth (+23% YoY) would be
M. Cap. (INR b)/(USD b) 201 / 3
significantly above industry average.
 We expect NII to grow 48% YoY, led by strong loan growth and
1,6,12 Rel Perf. (%) 2 / -11 / -16
favorable NIM, helped by strong CASA inflows and fall in bulk
Financial Snapshot (INR B) deposit rates.
Y/E March 2017 2018E 2019E 2020E
 Overall non-interest income is expected to grow ~15% YoY, led by
NII 12.2 17.9 23.0 30.2
strong growth in fee income and digital initiatives. We expect
OP 9.2 13.2 17.6 23.2
NP 4.5 6.4 9.0 12.2 opex growth of 36%, led by continued capacity expansion.
NIM (%) 3.0 3.4 3.4 3.4 However, opex is expected to trail total income growth of 35%,
EPS (INR) 11.9 15.4 21.8 29.3 driving 34% YoY increase in PPoP.
EPS Gr. (%) 29.3 41.5 34.7  Asset quality is expected to remain largely stable in 4QFY18; MFI
BV/Sh. (INR) 113.4 155.5 173.4 197.6 and agri segment stress is expected to stabilize. Credit costs
ABV/Sh. (INR) 109.8 151.5 169.1 192.7
would largely be under control.
RoE (%) 12.3 11.9 13.2 15.8
 We expect PAT growth of 10% QoQ and 40% YoY. RBK trades at
RoA (%) 1.0 1.2 1.3 1.3
Valuations 2.8x FY19E BV and 22.2x FY19E EPS. We await management
P/E(X) 40.6 31.4 22.2 16.5 commentary on asset quality and growth outlook, and maintain
P/BV (X) 4.3 3.1 2.8 2.4 our Buy rating.
P/ABV (X) 4.4 3.2 2.9 2.5 Key issues to watch for
Div. Yield (%) 0.4 0.5 0.7 0.9
 Management commentary on slippages in SME segment.
 Update and commentary on balance sheet growth strategy.
 CASA ratio and traction on NIMs.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (Y-o-Y) 46.8 59.5 44.6 46.6 54.7 38.7 45.3 48.4 49.1 46.4
Other Income 1,675 1,691 1,823 2,366 2,569 2,411 2,582 2,713 7,555 10,275
Net Income 4,122 4,721 5,038 5,887 6,353 6,612 7,255 7,939 19,768 28,160
% Change (Y-o-Y) 41.8 69.7 43.9
Other Provisions 426 781 362 821 945 749 823 1,010 2,389 3,527
Tax Provisions 445 512 703 695 759 776 858 937 2,354 3,331
Net Profit 973 899 1,287 1,301 1,410 1,506 1,653 1,819 4,460 6,389
% Change (Y-o-Y) 61.4 34.3 58.8 54.6 44.9 67.6 28.5 39.8 52.5 43.2
Deposit (INR b) 258.0 279.6 300.1 345.9 354.3 365.7 386.2 425.4 345.9 425.4
Loan (INR b) 222.6 248.8 267.7 294.5 311.1 335.8 368.9 397.6 294.5 397.6
Deposit Growth (%) NA 37.8 43.9 42.1 37.3 30.8 28.7 23.0 25.0 23.0
Loan Growth (%) NA 44.0 46.3 38.7 39.7 35.0 37.8 35.0 35.0 35.0
Asset Quality
Gross NPA (INR b) 2.5 2.7 2.9 3.6 4.6 4.9 5.8 5.4 3.6 5.4
Gross NPA (%) 1.1 1.1 1.1 1.2 1.5 1.4 1.6 1.3 1.2 1.3
Net NPA (INR b) 1.5 1.4 1.4 1.9 2.5 2.6 3.6 2.3 1.9 2.3
Net NPA (%) 0.7 0.6 0.5 0.6 0.8 0.8 1.0 0.6 0.6 0.6
PCR (%) 41.5 49.8 51.4 46.8 45.3 46.5 38.3 57.3 46.8 57.3
E: MOSL Estimates
April 2018 156

State Bank of India

Bloomberg SBIN IN CMP: INR250 TP: INR362 (+45%) Buy
 For historical data, we have done the line-by-line consolidation
M. Cap. (INR b)/(USD b) 2240 / 34
for the banking business with associate banks (AB) for
comparison. Hence, YoY growth numbers will not be strictly
1,6,12 Rel Perf. (%) -3 / -6 / -26
comparable.
Financial Snapshot (INR B)  We expect loan growth to be muted (+4% QoQ) but pick up slowly
Y/E March 2017 2018E 2019E 2020E
from the previous few quarters.
NII 753.5 737.2 910.4 1,011.
7  NII is expected to be sequentially flat, as interest reversals are
OP 597.0 577.2 718.8 793.6
NP -20.2 -4.8 107.2 255.3 expected to keep yields under pressure and loan growth remains
NIM (%) 2.8 2.6 2.7 2.7 sluggish.
EPS (INR) 0.3 -0.6 11.8 27.9  Stress additions should continue to be high at 6.5%. Commentary
EPS Gr. (%) -98.1 -77.2 - 135.5 on RBI resolution with respect to large accounts is a key
Cons. BV (INR) 211.3 249.0 2,186.
264.9 294.8 monitorable.
Cons. ABV (INR) 126.9 166.8 206.9 246.7
 We expect credit cost to remain elevated, led by continued stress
RoE (%) -1.2 -0.3 5.7 12.5
RoA (%) -0.1 0.0 0.3 0.7
additions and focus on shoring up PCR. The stock trades at 0.9x
Div. Payout (%) NM NM 23.9 14.4 FY19E consolidated BV and 13.4x FY19E consolidated EPS. Buy.
Valuations
P/E (x) NM NM 21.1 9.0 Key issues to watch for
P/BV (x) 0.9 1.1 1.1 1.0  Performance and guidance on asset quality.
P/ABV (x) 2.0 1.4 1.1 0.9
 Outlook and update on ABs’ merger.
Div. Yield (%) 1.0 0.2 1.1 1.6
Quarterly performance (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Interest Income 1,82,450 1,81,190 1,77,690 2,10,660 1,76,060 1,85,857 1,86,875 1,88,438 7,53,483 7,37,230
% Change (YoY) 3.9 0.6 1.4 10.5 -3.5 2.6 5.2 -10.5 299.9 -2.2
Other Income 87,610 1,01,460 1,15,070 1,22,220 80,057 1,60,170 80,842 1,10,548 4,28,627 4,31,616
Total Income 2,70,060 2,82,650 2,92,760 3,32,880 2,56,117 3,46,027 2,67,717 2,98,985 11,82,110 11,68,846
Operating Expenses 1,32,450 1,42,770 1,48,750 1,59,780 1,37,376 1,46,028 1,50,171 1,58,092 5,85,150 5,91,668
Operating Profit 1,37,610 1,39,880 1,44,010 1,73,100 1,18,741 1,99,999 1,17,546 1,40,893 5,96,960 5,77,178
% Change (YoY) 17.7 9.3 19.5 1.0 -13.7 43.0 -18.4 -18.6 323.7 -3.3
Other Provisions 1,30,370 1,48,300 1,19,230 2,09,320 89,295 1,91,374 1,88,762 2,03,818 6,09,844 6,73,249
Profit before Tax 7,240 -8,420 24,780 -36,220 29,446 8,625 -71,216 -62,925 -12,884 -96,071
Tax Provisions 3,510 -2,840 6,580 -1,810 9,391 -7,198 -47,053 -46,407 7,355 -91,268
Net Profit 3,730 -5,580 18,200 -34,410 20,055 15,823 -24,164 -16,518 -20,239 -4,804
% Change (YoY) -91.8 -111.7 94.9 -359.6 437.7 -383.6 -232.8 -52.0 22.5 -76.3
Deposits (INR b) 22,974 23,790 26,028 25,853 26,025 26,232 26,512 26,888 25,853 26,888
Loans (INR b) 17,958 18,039 18,069 18,690 18,042 18,026 18,262 18,931 18,690 18,931
Asset Quality
Gross NPA (INR b) 1,377 1,598 1,082 1,779 1,881 1,861 1,991 2,171 1,779 2,171
Gross NPA (%) 7.4 8.5 7.2 9.1 10.0 9.8 10.4 11.5 9.1 11.5
Net NPA (INR b) 782.4 923.7 614.3 969.8 1077.6 979.0 1023.7 1156.8 969.8 1156.8
Net NPA (%) 4.4 5.1 4.2 5.2 6.0 5.4 5.6 6.1 5.2 6.1
PCR (%) 43.2 42.2 43.2 45.5 42.7 47.4 48.6 46.7 45.5 46.7
E: MOSL Estimates
April 2018 157

Union Bank of India

Bloomberg UNBK IN CMP: INR97 TP: INR104 (+7%) Neutral
 Post a few quarters of slowdown, balance sheet growth should
M. Cap. (INR b)/(USD b) 117 / 2
pick up, with 5% QoQ and 8% YoY growth in advances. Deposit
growth is expected to be ~8% YoY and 3% QoQ.
1,6,12 Rel Perf. (%) -4 / -29 / -49
 NIM is expected to stay flattish sequentially, with moderation in
Financial Snapshot (INR B) interest reversals. NII growth is expected to improve to ~6% YoY.
Y/E March 2017 2018E 2019E 2020E
 Other income is likely to decline sharply due to moderation in
NII 89.0 96.4 121 123
trading gains. Flattish opex growth will lead total income decline
OP 74.3 75.0 98.9 99.1
NP 5.6 -36.7 9.2 21.1 of 9%, leading to PPoP decline of 13%.
NIM (%) 2.3 2.2 2.5 2.2  Slippages are expected to remain at elevated levels, leading to
EPS (INR) 8.1 -38.8 7.6 17.1 increase in GNPA to ~14.1% from 13% in the previous quarter.
EPS Gr. (%) -58.9 -581.0 -119.5 125.6  Overall, we expect PAT to decline and the bank to report a loss of
BV/Sh. (INR) 311.5 202.4 236 250 INR10.1b v/s loss of INR12.5b in 3QFY18. The stock trades at 0.4x
ABV/Sh. (INR) 119.7 98.8 143 160
FY19E BV and 12.8x FY19E EPS. Maintain Neutral.
RoE (%) 2.7 -16.0 3.4 7.0
RoA (%) 0.1 -0.8 0.2 0.4
Div. Payout (%) 0.0 0.0 15.7 14.1 Key issues to watch for
Valuations  Performance on asset quality—slippage from restructured loans,
P/E(X) 12.0 NM 12.8 5.7 going forward.
P/BV (X) 0.31 0.48 0.41 0.39  Trends and efforts to improve CASA ratio and NIM.
P/ABV (X) 0.8 1.0 0.68 0.61
 Update and trends on balance sheet growth.
Div. Yield (%) 0.0 0.0 1.2 2.5

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (YoY) -1.3 8.4 7.0 14.5 6.7 1.9 19.3 5.9 7.1 8.3
Other Income 10,399 11,394 13,397 14,456 14,147 12,173 8,731 9,630 49,646 44,681
Total Income 31,421 34,169 34,763 38,326 36,573 35,381 34,214 34,907 1,38,679 1,41,074
% Change (YoY) 9.2 29.0 38.8 51.4 26.6 6.6 -10.6 -13.4 31.7 0.9
Core Operating Profit 13,091 13,537 11,573 15,521 14,046 14,620 16,486 18,475 42,181 74,977
Provisions 13,530 16,203 16,701 24,441 17,037 35,547 32,544 36,050 70,875 1,21,178
Profit before Tax 2,721 1,994 1,811 -3,101 3,529 -16,157 -15,998 -17,575 3,426 -46,201
Tax 1,058 227 771 -4,183 2,363 -850 -3,500 -7,485 -2,126 -9,471
Net Profit 1,663 1,767 1,040 1,082 1,166 -15,307 -12,499 -10,090 5,552 -36,730
% Change (YoY) -67.9 -73.2 32.4 12.6 -29.9 -966.4 -1,301.8 -1,032.2 -58.9 -761.5
Deposit (INR b) 3,387 3,615 3,798 3,784 3,758 3,860 3,985 4,090 3,784 4,090
Loan (INR b) 2,569 2,652 2,627 2,865 2,784 2,909 2,937 3,080 2,865 3,080
Deposit Growth (%) 3.5 9.3 16.0 10.4 10.9 6.8 4.9 8.1 10.4 8.1
Loan Growth (%) 3.5 7.7 3.5 7.1 8.4 9.7 11.8 7.5 7.1 7.5
Asset Quality
Gross NPA (INR b) 272.8 298.6 324.0 337.1 372.9 382.9 409.9 435.3 337.1 435.3
Gross NPA (%) 10.2 10.7 11.7 11.2 12.6 12.4 13.0 14.1 11.2 14.1
Net NPA (INR b) 158.2 169.5 182.5 188.3 207.8 194.8 204.3 219.3 188.3 219.3
Net NPA (%) 6.2 6.4 7.0 6.6 7.5 6.7 7.0 7.1 6.6 7.1
PCR (%) 42.0 43.2 43.7 44.1 44.3 49.1 50.2 49.6 44.1 49.6
E: MOSL Estimates
April 2018 158

Yes Bank
Bloomberg YES IN CMP: INR313 TP: INR382 (+22%) Buy
 We expect loan growth to be significantly ahead of system
M. Cap. (INR b)/(USD b) 714 / 11
average at 39% YoY on the back of refinancing opportunities and
1,6,12 Rel Perf. (%)
strong growth in retail banking.
-1 / -17 / -10
 We expect NIM to improve YoY, helped by lower cost of funds on
Financial Snapshot (INR B) account of CASA inflows and re-pricing of bulk deposits.
Y/E March 2017 2018E 2019E 2020E
Consequently, NII growth is expected to be healthy at 26% YoY,
NII 58.0 76.5 99.3 125.1
one of the best among peers.
OP 58.4 77.2 100.9 128.2
NP 33.3 41.6 53.4 68.9  Non-interest income growth is likely to be ~18% YoY, led by
NIM (%) 3.4 3.4 3.5 3.5 strong growth from third-party distribution and processing fees.
EPS (INR) 14.6 18.2 23.4 30.2  We expect opex growth to be 19%, as the bank invests in
EPS Gr. (%) 20.8 25.0 28.4 28.9 technology to leverage retail base.
BV/Sh. (INR) 93.7 112.8 132.4 158.2  Asset quality performance so far has been significantly better
ABV/Sh. (INR) 78.5 107.6 127.6 153.1
than industry; we expect this trend to continue. YES trades at 2.4x
RoE (%) 18.9 17.4 19.1 20.8
RoA (%) 1.8 1.7 1.7 1.7
FY19E BV and 13.4x FY19E EPS. Return ratios also remain strong
Valuations (RoA of 1.7% and RoE of 19.1%). Maintain Buy.
P/BV (X) 3.3 2.8 2.4 2.0  Implementation of retail strategy on assets and liabilities sides.
P/ABV (X) 4.0 2.9 2.5 2.0  Performance on asset quality and quantum of loans rescheduled
Div. Yield (%) 0.8 0.6 1.2 1.4
under 5:25 scheme/sale to ARCs.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
% Change (Y-o-Y) 18.1 27.4 28.7 32.1 44.5 33.5 26.8 25.9 26.9 31.9
Other Income 9,655 9,219 10,165 12,574 11,322 12,484 14,223 14,804 41,568 52,832
Total Income 22,171 23,340 25,059 28,971 29,411 31,335 33,111 35,451 99,541 1,29,308
% Change (Y-o-Y) 43.9 36.0 26.5 38.0 30.4 37.6 37.7 24.9 35.7 32.3
Provisions 2,066 1,617 1,154 3,097 2,858 4,471 4,213 4,688 7,934 16,230
Tax 3,683 4,228 4,558 4,671 4,529 4,569 5,036 5,261 17,140 19,395
Net Profit 7,318 8,015 8,826 9,141 9,655 10,027 10,769 11,174 33,301 41,625
% Change (Y-o-Y) 32.8 31.3 30.6 30.2 31.9 25.1 22.0 22.2 31.1 25.0
Deposit Growth (%) 28.6 28.9 30.5 27.9 22.6 23.4 29.7 32.5 27.9 32.5
Loan Growth (%) 33.0 37.7 38.8 34.7 32.1 34.9 46.5 38.5 34.7 38.5
Deposit (INR b) 1,226 1,280 1,324 1,429 1,502 1,580 1,717 1,893 1,429 1,893
Loan (INR b) 1,059 1,102 1,171 1,323 1,400 1,487 1,715 1,832 1,323 1,832
Asset Quality
Gross NPA (INR B) 8.4 9.2 10.1 20.2 13.6 27.2 29.7 31.4 20.2 31.4
Gross NPA (%) 0.8 0.8 0.9 1.5 1.0 1.8 1.7 1.7 1.5 1.7
Net NPA (INR B) 3.0 3.2 3.4 10.7 5.5 15.4 16.0 17.0 10.7 17.0
Net NPA (%) 0.3 0.3 0.3 0.8 0.4 1.0 0.9 0.9 0.8 0.9
PCR (%) 64.2 64.8 66.0 46.9 60.0 43.3 46.4 46.0 46.9 46.0
E: MOSL Estimates
April 2018 159

Financials - NBFCs
Company name Vehicle financiers lead the pack
Bajaj Finance Vehicle financiers could surprise on the upside
Capital First  Core housing growth has stabilized post RERA implementation, and tier II and III
Chola. Inv & Fin. locations are the key growth drivers. For housing finance corporations (HFCs), we
expect the share of non-retail loans in the overall portfolio to inch higher.
Dewan Housing
 Growth rates will remain healthy for segments like consumer durables, two-wheelers
GRUH Finance and vehicle finance. M&HCV demand has been strong in the quarter – GoI’s infra push
HDFC being the key driving factor.
 Farm loan waivers and normal monsoon have lifted sentiment in the rural economy.
Indiabulls Housing
The focus on collections has also helped companies ensure strong recoveries. Vehicle
L&T Finance financiers are expected to report healthy asset quality and growth.
LIC Housing Fin  We expect a gradual improvement for microfinance institutions (the most impacted
segment post demonetization) in terms of both growth and asset quality. Our
M & M Financial
interactions with gold financiers suggest that growth is slowly coming back.
MAS Financial  Elevated G-Sec yields could play a spoilsport over the medium term from a spreads
Muthoot Finance perspective. Yields have hardened 100bp+ from their lows six months ago. If they
sustain at these levels, HFCs would be most impacted. Vehicle financiers have pricing
PNB Housing
power to maintain margins.
Repco Home Fin  BAF, CAFL, MASFIN, CIFC and PNBHF are likely to post earnings growth of 25%+ YoY,
Shriram City Union which is commendable, in our view. Our top picks in this space are HDFC, SHTF, BAF
Shriram Transport Fin.
and CIFC.
HFCs – G-Sec yields key monitorable: HFCs under our coverage are likely to post
AUM growth in line with past trends. Repco may witness another muted quarter, as
state-specific issues in Tamil Nadu are yet to be resolved. We expect the shift
toward LAP for LICHF and toward corporate loans (opportunistic in LRD segment) for
HDFC to continue. Core retail housing yields are expected to remain under pressure
due to intense competition. The benefit of cost of funds is likely to recede, given
100bp+ increase in G-Sec yields over the last six months. G-Sec yield is a key
monitorable.
AFCs – growth across segments to continue: We expect sturdy performance across

asset financiers. Bajaj Finance is likely to report strong AUM and PAT growth. We
expect growth for vehicle finance players like SHTF and MMFS to pick up
sequentially, helped by a better rural economy and clarity emerging post GST
implementation. Auto OEMs, especially CV players, have delivered decent volume
growth in the quarter. Within the 2W segment, we expect market share gains by
smaller players like CAFL and LTFH to continue, while SCUF is expected to lose some
market share.
Gold financiers – recovery taking root: Over the past year, AUM of most gold
financiers has been stable. Our interactions with companies suggest that they have
witnessed some green shoots of recovery in the past quarter.
MFIs – disbursements bouncing back: With stabilization in most states, we expect

credit costs to start declining this quarter onward.
Research Analyst: Alpesh Mehta (Alpesh.Mehta@MotilalOswal.com); +91 22 6129 1526 | Piran Engineer (Piran.Engineer@MotilalOswal.com); +91 22 6129 1539
Nitin Aggarwal (Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542 | Shubhranshu Mishra (Shubhranshu.Mishra@MotilalOswal.com); +91 22 6129 1540
April 2018 160
Exhibit 1: Expected quarterly performance summary (INR m)

Sector Sales EBDITA Net Profit
NBFC
Bajaj Finance 1,832 Buy 22,995 36.8 -3.0 13,112 33.9 -7.9 6,420 42.9 -16.3
Capital First 643 Buy 5,582 49.0 6.0 3,420 45.8 12.9 1,005 39.8 15.3
Chola. Inv & Fin. 1,517 Buy 8,307 26.0 5.8 5,055 29.5 7.7 2,749 25.2 10.3
Dewan Housing 534 Buy 6,508 21.4 4.0 5,678 23.8 1.1 3,075 23.9 0.5
GRUH Finance 595 Neutral 2,159 16.4 21.8 1,879 16.5 23.4 1,276 15.6 55.4
HDFC 1,830 Buy 32,472 13.8 10.9 30,450 8.7 11.6 23,378 14.4 17.4
Indiabulls Housing 1,293 Buy 15,451 29.6 10.7 13,919 43.5 16.1 10,475 24.6 12.4
L&T Fin.Holdings 162 Buy 12,854 28.0 1.2 10,094 30.4 7.3 4,002 26.7 4.2
LIC Housing Fin 552 Neutral 9,657 -7.1 7.6 8,345 -6.8 3.7 5,159 -2.5 5.1
M & M Financial 473 Buy 13,195 18.7 23.2 8,691 19.8 32.6 4,490 91.8 62.1
MAS Financial 607 Buy 811 67.0 10.3 579 77.6 13.5 294 97.4 16.1
Muthoot Finance 417 Neutral 11,016 -4.2 4.5 8,026 -3.6 3.4 4,882 51.7 5.3
PNB Housing 1,273 Buy 4,375 31.5 6.5 4,162 35.0 6.8 2,330 52.9 7.1
Repco Home Fin 573 Buy 1,146 11.5 7.0 1,027 13.9 9.8 564 11.5 16.4
Shriram City Union 2,222 Buy 8,711 22.1 -4.9 5,014 16.0 -8.0 1,418 1080.3 -37.1
Shriram Transport Fin. 1,477 Buy 17,543 24.5 2.6 13,744 20.3 1.9 3,297 120.3 -33.5
NBFC Banking Aggregate 172,782 20.0 5.9 133,194 18.6 7.0 74,815 29.8 6.2
Source: MOSL
Sensex Index MOSL Financials Index Sensex Index MOSL Financials Index
115 146
110 132
105 118
100 104
95 90
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17
Dec-17
Jan-18
Feb-18
Mar-18

Sector / Companies CMP EPS (INR) PE (x) PB (x) RoE (%)
(INR) Reco FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
NBFC
Aditya Birla Cap 152 Buy 3.7 5.3 7.6 41.4 28.5 20.0 4.0 3.1 2.4 12.6 12.4 13.7
Bajaj Finance 1,832 Buy 44.8 61.7 82.8 40.9 29.7 22.1 6.4 5.4 4.5 19.8 19.9 22.3
Capital First 643 Buy 34.2 44.6 56.8 18.8 14.4 11.3 2.4 2.1 1.8 13.7 15.6 17.2
Chola. Inv & Fin. 1,517 Buy 61.3 71.7 86.2 24.8 21.2 17.6 4.6 3.9 3.2 20.2 19.8 20.0
Dewan Housing 534 Buy 37.3 48.0 60.5 14.3 11.1 8.8 1.9 1.7 1.4 14.0 15.9 17.5
GRUH Finance 595 Neutral 9.9 11.6 14.4 60.2 51.2 41.3 18.0 14.8 12.2 32.7 31.7 32.4
HDFC 1,830 Buy 42.7 49.0 57.3 42.8 37.3 31.9 4.9 4.3 3.9 18.3 17.5 17.3
Indiabulls Housing 1,293 Buy 90.9 104.6 127.4 14.2 12.4 10.1 4.0 3.5 3.1 29.8 30.3 32.4
L&T Fin.Holdings 162 Buy 6.7 9.0 11.3 24.2 18.1 14.3 2.6 2.3 2.1 13.3 13.7 15.3
LIC Housing Fin 552 Neutral 38.9 44.3 52.6 14.2 12.5 10.5 2.2 1.9 1.7 16.6 16.5 17.1
M & M Financial 473 Buy 13.9 19.2 23.0 34.1 24.6 20.6 3.2 3.0 2.7 10.9 12.5 13.8
MAS Financial 607 Buy 18.6 24.2 30.0 32.6 25.1 20.2 4.6 4.0 3.5 20.2 17.0 18.5
Muthoot Finance 417 Neutral 44.0 44.7 49.8 9.5 9.3 8.4 2.1 1.8 1.6 24.5 20.9 20.0
PNB Housing 1,273 Buy 50.9 67.5 88.1 25.0 18.8 14.4 3.4 3.0 2.6 14.6 17.0 19.2
Repco Home Fin 573 Buy 32.9 39.0 46.0 17.4 14.7 12.4 2.7 2.3 2.0 16.7 16.9 17.0
Shriram City Union 2,222 Buy 115.2 138.7 167.3 19.3 16.0 13.3 2.6 2.3 2.0 14.2 15.1 15.9
Shriram Transport Fin. 1,477 Buy 77.5 104.8 125.9 19.1 14.1 11.7 2.7 2.3 2.0 14.7 17.5 18.1
NBFC Aggregate 27.9 22.8 18.6 4.0 3.5 3.0 14.4 15.2 16.4
April 2018 161

Bajaj Finance
Bloomberg BAF IN
CMP: INR1,832 TP: INR2,330 (+27%) Buy
M. Cap. (INR b)/(USD b) 1051 / 16  We expect AUM growth of 35% YoY, driven by consumer durables
52-Week Range (INR) 1989 / 1153 financing, in which the company continues to increase its market
1,6,12 Rel Perf. (%) 12 / -8 / 43 share. Rural business too should register strong growth, albeit off a
low base.
Financial Snapshot (INR b)  Calculated margins are expected to remain largely stable on YoY
Y/E Mar 2017 2018E 2019E 2020E basis at 11.5%.
NII 54.7 75.5 101.7 132.2  With investments in upgradation of systems, C/I ratio is expected to
PPP 36.4 50.2 70.5 94.0 remain largely stable YoY at 43%.
PAT 18.4 25.7 35.4 47.5  Asset quality is likely to remain stable. We expect provisions of
EPS (INR) 32.0 44.8 61.7 82.8 INR2.6b as against INR2.5b in 3QFY18 and INR2.9b in 4QFY17.
EPS Gr. % 43.6 39.8 37.8 34.2  Net profit is likely to grow 43% YoY to INR6.4b.
BV/Sh. INR 167 284 337 407  The stock trades at 5.4x FY19E and 4.5x FY20E BV. Maintain Buy.
RoA (%) 3.3 3.4 3.6 3.7
RoE (%) 21.6 19.8 19.9 22.3
Payout (%) 14.0 12.5 12.5 12.5
 Architecture of Bajaj Housing Finance.
Valuations
P/E (x) 57.2 40.9 29.7 22.1  Incremental customer acquisition.
P/BV (x) 10.9 6.4 5.4 4.5  Asset quality trends, especially in LAP and 2W/3W businesses.
Div. Yld.% 0.2 0.3 0.4 0.6  Traction in cross-sell franchise.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue from operations 22,864 23,355 26,930 26,650 31,123 30,862 35,406 34,818 92,723 121,282
YoY Growth (%) 38.9 39.0 30.6 39.1 36.1 32.1 31.5 30.6 34.4 30.8
Interest expenses 8,833 9,562 9,802 9,837 10,780 11,438 11,709 11,823 38,034 45,749
Net Income 14,031 13,793 17,128 16,813 20,344 19,425 23,698 22,995 54,690 75,533
YoY Growth (%) 44.8 40.0 30.5 51.4 45.0 40.8 38.4 36.8 37.6 38.1
Other income 147 56 109 79 140 161 27 61 260 389
Total Income 14,178 13,849 17,237 16,892 20,484 19,586 23,724 23,056 54,949 75,922
YoY Growth (%) 58.1 40.2 33.5 51.7 45.2 36.8 38.2 33.9 40.0 34.0
Provisions and Cont. 1,797 1,654 1,797 2,897 2,817 2,278 2,468 3,241 8,182 10,803
Tax Provisions 2,275 2,185 2,943 2,406 3,234 2,986 4,094 3,452 9,810 13,766
Net Profit 4,240 4,078 5,557 4,492 6,020 5,569 7,668 6,420 18,366 25,678
YoY Growth (%) 53.8 45.9 36.0 42.6 42.0 36.6 38.0 42.9 43.6 39.8
Loan Growth (%) 39.5 37.8 32.6 36.1 38.9 37.8 35.4 36.0 32.9 36.0
Borrowings Growth (%) 40.5 43.4 30.2 33.0 33.4 22.6 30.0 28.7 33.0 28.7
Tax Rate (%) 34.9 34.9 34.6 34.9 34.9 34.9 34.8 35.0 35.1 35.1
E: MOSL Estimates
April 2018 162

Capital First
Bloomberg CAFL IN
M. Cap. (INR b)/(USD b) 63 / 1  The company is likely to maintain its strong growth trajectory. AUM
52-Week Range (INR) 902 / 610 is likely to grow 5% QoQ and 31% YoY, driven by low base of post-
1,6,12 Rel Perf. (%) -2 / -18 / -28 demonetization 4QFY17, and market share gains in the 2W
segment.
Financial Snapshot (INR m)  With margin expansion of 100bp YoY, NII is likely to grow 49% YoY
Y/E Mar 2017 2018E 2019E 2020E to INR5.6b.
NII 12.3 18.7 24.2 30.4  Cost-to-income ratio is expected to remain largely stable annually at
PPP 8.1 11.6 15.5 19.8 51%.
PAT 2.4 3.3 4.3 5.5
 Asset quality is likely to remain stable. We factor in provisions of
EPS (INR) 24.6 34.2 44.6 56.8
EPS Gr. % 34.2 38.9 30.2 27.5
INR1.9b as against INR1.7b in 3QFY18 and INR1.3b in 4QFY17.
BV/Sh.INR 234.4 264.9 305.2 357.3  Net profit is likely to grow 40% YoY to INR1b.
RoA on AUM.% 1.6 1.7 1.8 1.8  The stock trades at 2.1x FY19E and 1.8x FY20E BV. Maintain Buy.
RoE (%) 12.0 13.7 15.6 17.2
Payout.% 10.6 9.0 8.0 7.0
Valuations
P/E (x) 26.1 18.8 14.4 11.3
 Management commentary on growth trends/demand for loans.
P/BV (x) 2.7 2.4 2.1 1.8  Trend in write-offs and overall credit costs.
Div. Yld.% 0.4 0.5 0.6 0.6  Guidance on C/I ratio.
 Movement in borrowing costs and margins.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 5,539 6,112 6,415 6,549 7,213 7,928 8,830 9,313 23,888 32,301
Fee Income 679 751 944 1,019 991 983 1,129 1,369 4,121 5,456
Operating Income 6,218 6,863 7,359 7,568 8,204 8,911 9,959 10,682 28,009 37,757
YoY Growth (%) 56.1 57.6 48.1 35.6 31.9 29.8 35.3 41.1 48.8 34.8
Net Income 3,458 3,902 4,277 4,766 5,140 5,643 6,393 6,951 16,403 24,127
YoY Growth (%) 73.1 74.4 63.0 55.8 48.7 44.6 49.5 45.8 66.5 47.1
YoY Growth (%) 72.4 67.7 67.6 58.5 37.4 50.0 39.4 45.8 68.1 43.2
Provisions and Cont. 995 1,032 1,240 1,264 1,408 1,576 1,691 1,903 4,530 6,578
Profit before Tax 753 805 934 1,082 994 1,178 1,339 1,517 3,575 5,029
Tax Provisions 262 229 320 363 323 393 467 512 1,174 1,695
Net Profit 492 576 614 719 672 785 872 1,005 2,389 3,334
YoY Growth (%) 48.5 40.3 37.8 51.4 36.6 36.3 42.1 39.8 43.8 39.5
AUM Growth (%) 36.1 31.8 25.5 23.6 24.4 28.1 31.8 30.7 20.4 33.0
Borrowings Growth (%) 46.8 42.0 25.0 18.0 25.5 23.4 36.7 35.6 18.0 35.6
Tax Rate (%) 34.7 28.5 34.3 33.6 32.4 33.4 34.9 33.7 35.1 35.1
E: MOSL Estimates; Quarterly and annual numbers may not match due to reporting styles
April 2018 163

Cholamandalam Inv & Fin

Bloomberg CIFC IN
CMP: INR1,517 TP: INR1,750 (+15%) Buy
M. Cap. (INR b)/(USD b) 156.3  With strong growth in the VF segment, coupled with gradual
52-Week Range (INR) 237 / 4 improvement in LAP, we expect AUM growth to pick up to 22% in
1,6,12 Rel Perf. (%) 1530 / 964 4QFY18 compared to 20% in the prior quarter.
 Calculated spreads are expected to be stable sequentially, but up
Financial Snapshot (INR b) 30bp on a YoY basis, largely due to lower cost of funds.
Y/E March 2017 2018E 2019E 2020E  As a result, NII is expected to grow 26% YoY to INR8.3b.
NII 23.5 30.0 34.9 40.9
 Calculated cost-to-income ratio should decline 160bp to 39.7%. We
expect C/I ratio to remain at 40-41% for the next few quarters.
PPP 13.9 18.2 21.7 26.4
 We believe GNPLs have peaked out and should decline going
Adj. PAT 6.9 9.6 11.2 13.5
forward, as the company has started invoking SARFAESI. We expect
EPS (INR) 46.0 61.3 71.7 86.2
provisions of INR0.9b (at similar level in 3QFY18 and at INR0.5b in
EPS Gr. (%) 26.3 33.3 17.0 20.2
4QFY17).
BV (INR) 276.0 330.0 393.0 470.0
 Net profit is likely to grow 25% YoY to INR2.75b.
BVPS Gr. % 18.0 20.0 19.0 19.0
 The stock trades at 3.9x FY19E and 3.2x FY20E BV. Maintain Buy.
RoAA (%) 2.6 3.0 3.0 3.1
RoE (%) 18.0 20.2 19.8 20.0
Valuations
 Management expectation of growth in home equity.
P/E (x) 33.0 24.8 21.2 17.6
 Asset quality trend, especially in home equity.
P/BV (x) 5.5 4.6 3.9 3.2  Trend in opex, given management’s intent to reduce expense
Div. Yld. % 0.3 0.4 0.5 0.5 ratio to 2.5% by FY20.
Quarterly Performance (INR M)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Income from Operations 11,017 11,558 11,698 12,069 12,273 12,884 13,758 14,560 45,790 53,097
Interest Expenses 5,481 5,694 5,658 5,476 5,410 5,568 5,903 6,253 22,308 23,133
YoY Growth (%) 13.8 20.6 20.1 22.5 24.0 24.8 30.1 26.0 13.4 27.6
Other Op. and Other Income 68 69 60 65 76 76 76 81 529 685
Net Operating Income 5,604 5,933 6,100 6,659 6,939 7,392 7,931 8,388 24,011 30,650
YoY Growth (%) 14.3 21.0 20.5 22.6 23.8 24.6 30.0 26.0 12.0 27.6
YoY Growth (%) 20.4 22.7 17.9 19.1 24.6 26.4 33.7 29.5 6.9 31.2
Provisions & Loan Losses 804 772 1,003 529 981 832 902 875 3,106 3,589
Tax Provisions 880 924 884 1,181 1,116 1,199 1,300 1,431 3,868 5,046
Net Profit 1,657 1,709 1,625 2,196 2,066 2,273 2,492 2,749 6,903 9,580
YoY Growth (%) 50.3 41.9 11.5 14.3 24.6 32.9 53.3 25.2 21.4 38.8
AUM Growth (%) 18.3 18.7 16.7 14.6 13.5 14.4 19.5 21.6 15.2 21.6
Disbursement Growth (%) 30.1 21.0 2.7 5.5 6.4 23.6 54.6 40.8 13.5 31.5
NIM on AUM (%) 7.3 7.5 7.5 7.9 7.9 8.2 8.3 8.2 7.6 7.9
Tax Rate (%) 34.7 35.1 35.2 35.0 35.1 34.5 34.3 34.2 35.0 34.5
E: MOSL Estimates; *Quaterly nos and full year nos will not tally due to different way of reporting financial nos
April 2018 164

Dewan Housing Finance

Bloomberg DEWH IN
Equity Shares (m) 167 / 3
M. Cap. (INR b)/(USD b) 678 / 367  Business growth has been good, despite the implementation of
52-Week Range (INR) 1 / -9 / 31 GST and RERA. We expect 34% YoY growth in disbursements off a
1,6,12 Rel Perf. (%) 167 / 3 low base.
 As a result, AUM is likely to grow 30% YoY.
Financial Snapshot (INR m)  We expect stable margins. As a result, we expect 26% YoY growth
Y/E March 2017 2018E 2019E 2020E in NII in the quarter.
NII 15.1 19.8 26.5 33.1  Calculated cost-to-income ratio will decline 60bp YoY to 26.6%.
PPP 16.2 21.3 28.3 35.3  We factor in provisions of INR1.1b for 4QFY18 v/s INR1b in 3QFY18.
Adj. PAT 9.3 11.7 15.0 18.9  Net profit is likely to grow 24% YoY to INR3.1b.
EPS (INR) 29.6 37.3 48.0 60.5
 The stock trades at 1.7x FY19E and 1.4x FY20E BV. Maintain Buy.
EPS Gr. % 18.5 25.9 28.7 26.0
BV (INR) 252 282 321 371
RoAA (%) 1.2 1.2 1.3 1.3
RoE (%) 14.4 14.0 15.9 17.5  Growth in non-retail portfolio v/s retail portfolio.
Payout (%) 15.7 17.4 17.4 17.4  Margin guidance.
Valuations  Asset quality trends in non-retail and LAP segments.
P/E (x) 18.0 14.3 11.1 8.8  Guidance on cost structure.
P/BV (x) 2.1 1.9 1.7 1.4
P/ABV (x) 2.1 1.9 1.7 1.4
Div. Yld. % 0.7 1.0 1.3 1.7
Quarterly performance (INR M)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 19,319 21,227 23,151 22,835 23,529 25,034 25,204 25,842 86,531 99,609
YoY Growth (%) 14.5 21.0 20.8 22.6 24.0 22.0 21.6 21.4 19.8 22.2
Fees and other income 275 451 514 943 549 1,108 1,138 1,226 2,182 4,021
Net Income 4,840 5,371 5,664 6,303 6,209 7,108 7,398 7,733 22,177 28,449
YoY Growth (%) 15.5 18.3 21.6 29.1 28.3 32.4 30.6 22.7 21.4 28.3
YoY Growth (%) 8.4 6.1 9.1 10.8 15.4 21.4 19.0 19.8 8.7 18.9
Operating Profits 3,479 3,972 4,167 4,586 4,640 5,411 5,617 5,678 16,204 21,345
YoY Growth (%) 18.6 23.2 26.9 37.7 33.4 36.2 34.8 23.8 26.9 31.7
Provisions 450 450 450 830 830 1,070 1,000 1,024 2,180 3,924
Tax Provisions 1,015 1,196 1,269 1,273 1,205 1,408 1,558 1,579 4,754 5,749
Profit after tax 2,014 2,326 2,448 2,483 2,605 2,933 3,060 3,075 9,270 11,672
YoY Growth (%) 16.2 29.0 31.7 30.9 29.3 26.1 25.0 23.9 27.1 25.9
Loan growth (%) 18.3 16.0 16.9 16.7 19.8 24.6 21.7 25.6 18.5 22.6
Borrowings growth (%) 20.4 38.5 28.0 33.1 34.4 10.8 12.7 16.3 33.1 23.9
Tax Rate (%) 33.5 34.0 34.2 33.9 31.6 32.4 33.7 33.9 33.9 33.0
E: MOSL Estimates
April 2018 165

Gruh Finance
Bloomberg GRHF IN
CMP: INR594 TP: INR550 (-7%) Neutral
M. Cap. (INR b)/(USD b) 217 / 3  We expect loan growth to be largely in line with trend at 5% QoQ
52-Week Range (INR) 714 / 368 and 18% YoY.
1,6,12 Rel Perf. (%) 13 / 12 / 38  Calculated margins are likely to be largely stable YoY at 5.7%.
 As a result, NII is likely to grow 16% YoY to INR2.2b.
Financial Snapshot (INR b)  Operating expense growth is expected to be 16%, resulting in 17%
Y/E March 2017 2018E 2019E 2020E YoY growth in PPoP.
NII 5.2 6.7 7.8 9.4  We expect collections to be high. We expect provisions of INR26m
PPP 4.7 6.2 7.2 8.8 for the quarter.
PAT 3.0 3.6 4.2 5.2  Net profit is likely to grow 18% YoY to INR1.3b.
EPS (INR) 8.1 9.9 11.6 14.4  The stock trades at 14.8x FY19E and 12.2x FY20E BV. Maintain
EPS Gr. % 21.5 21.3 17.7 23.8 Neutral.
BV/Sh.INR 27.2 33.1 40.1 48.8
ABV/Sh.INR 27.2 33.1 40.1 48.8
RoA (%) 2.4 2.4 2.4 2.4
32.5 32.7 31.7 32.4
 Disbursement growth v/s loan growth.
RoE (%)
Payout (%) 34.0 34.0 34.0 34.0  Outlook on margins.
Valuations  Management’s plan for geographic expansion.
P/E (x) 73.0 60.2 51.1 41.3  Guidance on opex.
P/BV (x) 21.9 17.9 14.8 12.2
Div. Yld. % 0.5 0.6 0.7 0.8

Y/E MARCH FY17 FY18E FY17 FY18E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total income 3,463 3,674 3,810 4,161 3,981 4,141 4,285 4,773 14,874 17,179
Y-o-Y Growth (%) 16.7 17.8 17.8 12.3 15.0 12.7 12.5 14.7 16.6 15.5
Net Income 1,222 1,323 1,513 1,854 1,617 1,726 1,773 2,159 5,678 7,274
Operating Expenses 201 273 219 241 254 303 251 280 935 1,089
Y-o-Y Growth (%) 17.5 20.1 29.8 23.3 33.4 35.5 17.7 16.5 23.6 30.4
Provisions and Cont. 125 91 327 14 279 228 242 26 322 775
Profit before Tax 896 958 967 1,600 1,083 1,194 1,281 1,853 4,420 5,411
Tax Provisions 294 339 326 495 361 417 459 577 1,454 1,813
Net Profit 601 619 640 1,104 722 777 821 1,276 2,967 3,598
Y-o-Y Growth (%) 19.6 19.9 19.2 25.8 20.0 25.5 28.3 15.6 21.8 21.3
Int Exp/ Int Earned (%) 64.7 64.0 60.3 55.4 59.4 58.3 58.6 54.8 61.8 57.7
Tax Rate (%) 32.8 35.4 33.8 31.0 33.3 34.9 35.9 31.1 32.9 33.5
E: MOSL Estimates
April 2018 166

HDFC
Bloomberg HDFC IN
CMP: INR1,830 TP: INR2,225 (22%) Buy
 We estimate AUM growth of 19% YoY, in line with the trend in
M. Cap. (INR b)/(USD b) 3044 / 47
the prior quarters. We expect the pick-up in corporate loan
52-Week Range (INR) 1982 / 1461
growth to sustain.
1,6,12 Rel Perf. (%) 3 / -2 / 8
 NII is expected to grow 14% YoY, with calculated margins
declining by 25bp YoY.
Financial Snapshot (INR b)  Operating expenses will grow 10% YoY to INR2.1b.
Y/E Mar 2017 2018E 2019E 2020E  Asset quality has remained healthy over past several quarters,
NII 99.5 113.7 131.8 153.4 and the trend is likely to continue. Asset quality in the corporate
PAT 74.4 116.6 96.3 112.5 loan book would be a key monitorable.
Adj. EPS.INR 35.7 39.9 47.7 56.3  We estimate provisions at INR1b v/s INR1.5b in 4QFY17.
EPS Gr. (%) 9.6 12.0 19.5 18.0
 We expect reported PAT of INR23.4b in the quarter, manifesting a
BV/Sh. INR 253.0 372.4 429.1 470.4
growth of 14% YoY.
 The stock trades at 2.9x FY19E AP/ABV and 2.1x FY20E AP/ABV
ABV/Sh. INR 201.2 244.9 304.3 345.5
(price adjusted for value of other businesses and book value
RoAA (%) 2.0 1.9 1.9 1.9
adjusted for investments made in those businesses). Buy.
Core RoE.% 18.9 18.3 17.5 17.3
Payout (%) 37.1 34.5 42.9 38.9
Valuation
 Loan growth and uptick in corporate loans.
AP/E (x) 33.2 25.7 18.7 12.7
 Loan growth in affordable housing segment.
P/BV (x) 7.2 4.9 4.3 3.9
 Movement in spreads and margins (on individual loans), and
AP/ABV (x) 5.9 4.2 2.9 2.1
asset quality trends.
Div. Yld (%) 1.0 0.7 1.0 1.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
YoY Change (%) 9.3 14.5 18.0 15.5 16.0 13.7 13.7 13.8 14.5 14.2
Gross fee income 1,888 1,966 1,948 2,684 2,081 1,599 2,091 2,136 8,486 7,906
Core Income 24,178 24,938 27,703 31,208 27,933 27,707 31,378 34,608 108,029 121,625
YoY Change (%) 9.2 14.3 17.2 13.1 15.5 11.1 13.3 10.9 13.6 12.6
% of core income 9.4 8.2 7.7 6.1 9.1 8.1 7.6 6.1 7.7 7.6
Comission expenses 1,369 1,344 1,011 1,300 1,704 1,577 1,691 2,062 5,024 7,033
% of core income 5.7 5.4 3.6 4.2 6.1 5.7 5.4 6.0 4.7 5.8
Core Operating profits 20,535 21,546 24,550 28,005 23,693 23,882 27,292 30,450 94,637 105,317
YoY Change (%) 7.3 14.1 19.5 13.8 15.4 10.8 11.2 8.7 13.8 11.3
Provisions 650 950 1,170 1,480 850 950 950 995 4,250 3,745
Core PBT 19,885 20,596 23,380 26,525 22,843 22,932 26,342 29,455 90,387 101,572
YoY Change (%) 6.7 12.1 17.7 12.1 14.9 11.3 12.7 11.0 12.3 12.4
Profit on Sale of Inv. 9,216 281 34 486 21 654 52,665 1,159 10,017 54,500
Dividend income 536 4,580 1,783 2,246 615 5,381 1,528 2,885 9,144 10,408
One off expense/Prov -2,750 -15,750 -2,750 -15,750
Other Income 111 118 114 125 109 104 117 138 468 468
PBT 26,997 25,575 25,312 29,382 23,587 29,071 64,902 33,637 107,266 151,198
YoY Change (%) 38.3 10.1 15.6 -19.3 -12.6 13.7 156.4 14.5 1.6 41.0
Provision for Tax 8,290 7,310 8,300 8,940 8,030 8,060 8,200 10,259 32,840 34,549
PAT 18,707 18,265 17,012 20,442 15,557 21,011 56,702 23,378 74,426 116,649
YoY Change (%) 37.5 13.9 11.9 -21.6 -16.8 15.0 233.3 14.4 -1.3 56.7
E: MOSL Estimates
April 2018 167

Indiabulls Housing
Bloomberg IHFL IN
CMP: INR1,292 TP: INR1,630 (+26%) Buy
M. Cap. (INR b)/(USD b) 545 / 8  AUM growth is expected to remain robust at 9% QoQ and 28% YoY.
52-Week Range (INR) 1439 / 922  Total income (including investment income) should grow 24% YoY
1,6,12 Rel Perf. (%) 5 / -1 / 18 to INR18.5b.
 Expenses (including provisions) are likely to decrease 11% YoY to
Financial Snapshot (INR b) INR4.6b (off a high base of post-demonetization 4QFY17).
Y/E Mar 2017 2018E 2019E 2020E
 Asset quality is expected to remain stable.
Net Fin inc 35.3 49.7 60.8 75.8
PPP 45.5 60.6 69.0 84.8  PAT is likely to grow 25% YoY to INR10.5b during the quarter.
EPS INR 68.6 90.9 104.6 127.4  The stock trades at 3.5x FY19E and 3.1x FY20E BV. Maintain Buy.
EPS Gr. % 23.2 32.6 15.0 21.8
BV/Sh. INR 286.0 324.0 367.0 420.0
RoA on AUM (%) 3.4 3.4 3.0 2.8
 AUM growth trend and guidance.
RoE (%) 25.5 29.8 30.3 32.4
Payout (%) 39.3 50.0 50.0 50.0
 Movement in incremental spreads and margins, especially given
Valuations the sharp home loan rate cuts.
P/E (x) 18.8 14.2 12.4 10.1  Asset quality trends in the corporate and LAP segments.
P/BV (x) 4.5 4.0 3.5 3.1
P/ABV (x) 4.5 4.0 3.5 3.1
Div. Yld % 2.1 3.5 4.0 4.9

Y/E March FY17 FY18E
FY17 FY18E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Income from operations 23,720 25,098 25,859 29,314 29,560 30,670 33,492 35,871 103,990 129,593
Other Income 2,255 3,651 4,186 2,935 2,690 2,755 7,565 3,024 13,027 16,034
Total income 25,975 28,749 30,045 32,249 32,250 33,425 41,057 38,895 117,017 145,626
Y-o-Y Growth (%) 28.3 28.0 30.2 21.8 24.2 16.3 36.7 20.6 26.8 24.4
Net Income 11,866 12,470 13,716 14,858 14,528 15,070 21,525 18,475 52,910 69,599
Y-o-Y Growth (%) 33.9 24.6 26.8 15.6 22.4 20.8 56.9 24.3 24.4 31.5
Profit before tax 8,750 9,212 10,058 9,698 10,600 11,135 15,594 13,919 37,718 51,248
Y-o-Y Growth (%) 26.4 24.3 24.9 9.0 21.1 20.9 55.0 43.5 20.5 35.9
Tax Provisions 2,401 2,352 2,555 1,325 2,764 2,615 3,939 3,494 8,633 12,812
Net Profit 6,349 6,861 7,502 8,373 7,836 8,520 11,655 10,425 29,085 38,436
Minority Int -49 -18 13 32 46 91 23 50 -22 210
Net Profit after MI 6,301 6,843 7,515 8,405 7,882 8,611 11,677 10,475 29,064 38,226
Y-o-Y Growth (%) 23.2 23.2 24.7 24.4 25.1 25.8 55.4 24.6 24.0 31.5
AUM Growth (%) 31.5 29.3 30.8 32.9 33.0 33.1 31.8 28.1 32.9 28.1
C/I Ratio incl provisions (%) 26.3 26.1 26.7 34.7 27.0 26.1 27.6 24.7
Tax Rate (%) 27.4 25.5 25.4 13.7 26.1 23.5 25.3 25.1 22.9 25.0
E: MOSL Estimates
April 2018 168

L&T Finance
Bloomberg LTFH IN
M. Cap. (INR b)/(USD b) 295 / 5
 The company is likely to report strong numbers in the rural and
52-Week Range (INR) 214 / 119 housing finance segment. Performance in the wholesale finance
1,6,12 Rel Perf. (%) 2 / -23 / 20 segment is a key monitorable.
 We expect 22% YoY growth in the focus segments, driven by
33%/47%/11% YoY growth in the rural/housing/wholesale
Y/E March 2017 2018E 2019E 2020E
segments. AUM (including de-focused book) is likely to cross
NII 31.4 37.2 43.6 50.0
INR790b.
PPP 26.7 36.1 43.5 51.4  Total income is likely to grow 33% YoY, driven by loan mix (rural
PAT 9.2 13.3 17.8 22.5 and housing have higher margins than wholesale finance) and
EPS (INR) 5.2 6.7 9.0 11.3 increased contribution from non-fund-based businesses.
BV/Sh. INR 44.3 61.7 69.3 79.0  Asset quality is likely to remain stable. We model provisions of
RoAA (%) 1.3 1.7 1.9 2.1 INR5.4b, as against INR4.9b in 3QFY18 and INR6.9b in 4QFY17.
RoE (%) 12.4 13.3 13.7 15.3  The stock trades at 2.3x FY19E and 2.1x FY20E BV. Maintain Buy.
Payout (%) 19.8 15.2 14.9 14.7
P/E (x) 30.9 24.1 18.1 14.3
 Commentary on outlook for rural and housing finance segment.
P/BV (x) 3.7 2.6 2.3 2.1
 Competition in the wholesale finance segment, especially
Div. Yld (%) 0.6 0.5 0.7 0.9
renewables.
 Asset quality outlook in the builder financing segment.
 RoE target post capital infusion.
Quarterly performance (INR M)

Y/E March FY17 FY18E FY17 FY18
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 19,965 20,876 20,940 21,626 22,587 23,838 26,302 27,138 83,406 99,865
YoY Growth (%) 14.7 17.4 16.0 20.9 22.0 16.4 36.1 28.0 17.3 25.7
Other income 342 540 679 755 1,071 1,109 709 1,553 2,317 4,441
Total Income 8,751 9,883 10,018 10,801 11,332 11,980 13,415 14,407 39,453 51,133
YoY Growth (%) 13.1 17.7 17.9 22.3 29.5 21.2 33.9 33.4 17.9 29.6
YoY Growth (%) 3.6 -1.9 -1.4 -10.7 1.7 2.8 27.0 40.8 -2.8 17.6
YoY Growth (%) 19.4 31.0 29.7 43.2 45.7 30.6 37.1 30.4 31.2 35.3
Provisions 2,530 3,202 3,282 6,885 4,587 4,707 4,928 5,444 15,899 19,665
Profit before Tax 2,999 3,354 3,582 853 3,468 3,855 4,480 4,650 10,789 16,454
Tax Provisions 951 888 811 -2,286 378 230 636 663 364 1,907
P/L of Associate Company 26 15 (63) 19 2 (22) (4) 15 -3 -9
Profit after tax 2,074 2,481 2,709 3,158 3,092 3,602 3,841 4,002 10,427 14,556
YoY Growth (%) 8.2 16.3 28.7 34.3 49.1 45.2 41.8 26.7 87 39.6
Loan growth (%) 18.2 18.5 10.4 14.4 17.2 18.8 22.6 18.7 10.4 19.6
Tax Rate (%) 31.7 26.5 34.5 -267.9 10.9 6.0 14.2 14.3 3.4 11.6
E: MOSL Estimates
April 2018 169

LIC Housing Finance

Bloomberg LICHF IN
M. Cap. (INR b)/(USD b) 279 / 4
 We expect loan growth of 13% YoY, driven primarily by the LAP
52-Week Range (INR) 794 / 478 segment. The share of builder loans is likely to remain ~4% of
1,6,12 Rel Perf. (%) 11 / -20 / -23 overall book. Growth in the retail home loan book would be the
key monitorable.
 Calculated margins are likely to remain largely stable at 2.4%,
driven by falling loan yields.
Y/E March 2017 2018E 2019E 2020E
 Operating expenses would decrease 4% YoY, with the C/I ratio
NII 36.5 36.6 40.5 47.1
increasing 40bp YoY to ~18%.
PPP 32.4 32.7 36.1 42.2
 Asset quality is likely to remain stable. We model provisions of
Adj. PAT 19.3 19.7 22.4 26.6 INR420m as against INR484m in 3QFY18 and INR893m in 4QFY17.
Adj. EPS INR 38.2 38.9 44.3 52.6  The stock trades at 1.9x FY19E and 1.7x FY20E BV. Maintain
EPS Gr. (%) 16.3 1.8 13.8 18.7 Neutral.
BV/Sh. INR 219.0 251.0 286.0 328.0
RoAA (%) 1.5 1.3 1.4 1.4 Key issues to watch for
RoE (%) 19.1 16.6 16.5 17.1  Trend in incremental spreads.
Payout (%) 18.8 19.7 19.7 19.7  Performance of corporate loan book and loans against property.
Valuations  Management commentary on increasing competitive intensity
P/E (x) 14.4 14.2 12.5 10.5 and margin trends.
P/BV (x) 2.5 2.2 1.9 1.7
Div. Yld % 1.1 1.2 1.4 1.6

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 33,263 34,283 35,125 36,096 36,332 36,581 37,124 38,197 138,767 148,234
YoY Growth (%) 25.1 20.8 22.6 26.6 13.6 2.5 -1.9 -7.1 23.8 1.2
Fees and other income 535 616 362 523 214 586 552 568 2,036 1,919
Net Income 8,780 9,273 9,516 10,919 9,583 9,461 9,528 10,225 38,489 38,797
YoY Growth (%) 24.2 18.8 18.7 22.7 9.1 2.0 0.1 -6.4 21.1 0.8
YoY Growth (%) 18.7 17.3 19.2 22.3 11.2 1.9 -0.7 -6.8 19.4 1.0
Provisions and Cont. 1,165 303 453 893 1,045 578 484 420 2,813 2,527
Tax Provisions 2,156 2,659 2,663 2,769 2,484 2,589 2,655 2,766 10,247 10,494
Net Profit 4,078 4,948 4,993 5,292 4,701 4,891 4,911 5,159 19,311 19,662
YoY Growth (%) 6.7 20.2 19.2 18.1 15.3 -1.1 -1.6 -2.5 16.3 1.8
Loan Growth (%) 15.4 14.9 15.3 15.5 15.4 15.5 15.4 12.9 15.5 12.9
Tax Rate (%) 34.6 35.0 34.8 34.4 34.6 34.6 35.1 34.9 34.7 34.8
E: MOSL Estimates
April 2018 170

Mahindra Financial Services

Bloomberg MMFS IN
M. Cap. (INR b)/(USD b) 291 / 4  There has been good traction in vehicle sales in the quarter,
52-Week Range (INR) 524 / 290 which should translate into 17% YoY AUM growth in the quarter.
1,6,12 Rel Perf. (%) 13 / 6 / 37  Calculated margins are expected to increase over 30bp, due to
lower cost of funds. As a result, we expect 19% NII growth in the
Financial Snapshot (INR b) quarter.
Y/E Mar 2017 2018E 2019E 2020E  With 16% growth in operating expenses, PPoP growth should be
NII 33.2 41.6 48.6 55.9 ~20% YoY.
PPP 19.3 25.8 30.1 34.4  GNPL ratio should decline to ~10% as 4Q is a seasonally strong
PAT 4.0 8.5 11.8 14.1 quarter.
EPS (INR) 7.1 13.9 19.2 23.0  We factor in INR2b provisions in 4QFY18 v/s INR2b in 3QFY18 and
BV/Sh.INR 114.6 148.6 160.0 173.6
INR3.6b in 4QFY17.
ABV/Sh.INR 94.8 121.7 133.0 147.5
 The stock trades at 3x FY19E and 2.7x FY20E BV. Maintain Buy.
RoA on AUM (%) 1.0 1.9 2.2 2.3
RoE (%) 6.4 10.9 12.5 13.8
Valuations  Management commentary on performance of rural areas.
P/E (x) 66.8 34.1 24.6 20.6  Commentary on pick-up in the CV cycle.
P/BV (x) 4.1 3.2 3.0 2.7  Asset quality trend in the wake of good monsoons.
P/ABV (x) 5.0 3.9 3.6 3.2  Margin and growth trends.
Div. Yld.% 0.6 1.0 1.4 1.7
 Performance of subsidiaries.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Other Income 93 241 130 173 107 221 124 184 636 636
Total income 13,757 15,157 15,035 18,427 16,031 16,829 18,464 21,016 62,375 72,340
YoY Growth (%) 0.5 5.4 6.7 9.1 16.5 11.0 22.8 14.1 5.6 16.0
Net Income 6,847 8,071 7,593 11,290 8,704 9,331 10,835 13,379 33,801 42,248
YoY Growth (%) -5.4 2.9 2.7 10.8 27.1 15.6 42.7 18.5 3.5 25.0
YoY Growth (%) -22.1 -10.5 -11.2 6.7 36.5 25.1 65.9 19.8 -7.6 33.6
Provisions 2,245 3,042 4,190 3,614 4,258 4,446 1,989 2,031 13,091 12,725
Profit before Tax 1,341 1,462 -241 3,638 636 1,190 4,563 6,659 6,202 13,050
Tax Provisions 472 514 -85 1,298 162 410 1,793 2,169 2,198 4,534
Net Profit 870 948 -156 2,341 474 780 2,770 4,490 4,003 8,515
YoY Growth (%) -2.2 -35.1 -123.3 -36.8 -45.5 -17.7 -1,871.5 91.8 -40.5 112.7
AUM growth (%) 10.0 14.0 12.9 13.9 13.9 13.8 13.3 16.7 0.0 0.0
Tax Rate (%) 35.2 35.2 35.2 35.7 25.5 34.5 39.3 32.6 35.4 34.7
E: MOSL Estimates
April 2018 171

MAS Financial
Bloomberg MASFIN IN
M. Cap. (INR b)/(USD b) 33 / 1  The company is likely to have a stable quarter. We expect AUM
52-Week Range (INR) 701 / 541 growth of 26% YoY, driven by 25% disbursement growth. Loan
1,6,12 Rel Perf. (%) 4/-/- mix is likely to be largely stable.
 Calculated margins are expected to expand ~200bp on a YoY basis
Financial Snapshot (INR b) to 8.6%. As a result, NII growth should come in at 67%.
Y/E Mar 2017 2018E 2019E 2020E  With 45% YoY growth in opex, C/I ratio is likely to decline 400bp
NII 1,721.0 2.5 3.2 3.9 to 28.6%.
PPP 1,333.0 2.0 2.6 3.2  Asset quality is likely to remain stable. We expect provisions to be
PAT 646.0 1.0 1.3 1.6 sequentially stable at INR1.3b.
EPS (INR) 15.0 18.6 24.2 30.0  Net profit is likely to grow 97% YoY to INR294m.
BV/Sh (INR) 66.2 132.9 151.0 173.5
RoA on AUM. % 2.1 2.7 2.8 2.8
RoE (%) 30.5 20.2 17.0 18.5
Valuations
P/E (x) 40.4 32.6 25.1 20.2
P/BV (x) 9.2 4.6 4.0 3.5  Guidance on growth trends and loan mix.
 Asset quality performance.
 Management commentary on increasing competitive intensity
and margin trends.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Income 835 866 874 840 978 1,061 1,130 1,216 3,415 4,386
Interest expenses 389 384 385 355 375 396 395 406 1,513 1,572
Net Income 445 482 489 485 603 665 735 811 1,902 2,814
Growth Y-o-Y (%) 35.3 38.0 50.4 67.0 47.9
Operating Expenses 142 143 160 159 160 178 225 232 604 794
Operating Profits 303 340 329 326 443 488 510 579 1,298 2,020
Growth Y-o-Y (%) 46.2 43.6 54.9 77.6 55.6
Provisions 70 53 47 96 91 103 123 128 267 445
Profit before tax 233 286 282 230 352 385 388 451 1,031 1,576
Growth Y-o-Y (%) 51.4 34.3 37.3 96.6 52.9
Tax Provisions 83 96 97 80 122 134 134 157 357 547
Net Profit 149 190 185 149 230 251 253 294 674 1,029
Growth Y-o-Y (%) 54.3 31.8 36.9 97.4 52.7
Int. Exp/Int. Income % 46.6 44.4 44.0 42.2 38.4 37.3 34.9 33.3 44.3 35.8
Cost to Income Ratio % 32.0 29.6 32.6 32.8 26.5 26.7 30.6 28.6 31.8 28.2
Prov to Operating Profits % 23.2 15.7 14.3 29.6 20.5 21.1 24.1 22.1 20.6 22.0
Tax Rate % 35.8 33.5 34.4 35.1 34.6 34.8 34.6 34.8 34.6 34.7
E: MOSL Estimates
April 2018 172

Muthoot Finance
Bloomberg MUTH IN
 AUM is expected to grow 6% YoY to INR289b.
M. Cap. (INR b)/(USD b) 166 / 3
 Margins should contract ~130bp YoY to 15.9% due to the high base
in 4QFY17.
1,6,12 Rel Perf. (%) 9 / -18 / -2
 We expect total income to decline 3% YoY to INR11.4b.
 Asset quality is likely to be stable in 4QFY18, as collections should
be high.
Y/E March 2017 2018E 2019E 2020E
 We estimate provisions of INR515m as against INR564m in 3QFY18.
NII 33.6 41.5 41.7 46.1
 PAT is expected to grow 51% YoY to INR4.9b.
PPP 22.0 30.1 29.3 32.4
 The stock trades at 1.8x FY19E and 1.6x FY20E BV. Maintain
PAT 11.8 17.6 17.8 19.9
Neutral.
EPS (INR) 29.5 44.0 44.7 49.8
BV/Sh.(INR) 163.1 196.5 230.3 268.0 Key issues to watch for
RoA on AUM (%) 4.6 6.3 5.9 6.0  Management commentary on business growth and steps taken to
RoE (%) 19.4 24.5 20.9 20.0 sustain AUM growth.
Div. Yld. (%) 1.4 2.1 2.1 2.4  Plan of branch expansion.
P/E (x) 14.1 9.5 9.3 8.4  Movement in yields and margins, with declining cost of funds.
P/BV (x) 2.6 2.1 1.8 1.6  Progress in gold auctions.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Income from operations 12,712 13,497 13,225 16,962 13,758 16,385 15,227 15,619 56,395 60,989
Other operating income 252 320 184 135 165 264 310 211 891 950
Total Operating income 12,964 13,817 13,409 17,096 13,923 16,649 15,537 15,830 57,286 61,939
YoY Growth (%) 13.7 21.6 17.8 18.2 7.4 20.5 15.9 -7.4 17.8 8.1
Other income 44 45 56 36 63 50 130 107 181 350
Total Income 13,008 13,862 13,464 17,132 13,986 16,699 15,667 15,937 57,467 62,289
YoY Growth (%) 13.8 21.6 18.0 18.0 7.5 20.5 16.4 -7.0 17.9 8.4
Net Income 7,437 7,925 7,494 11,672 8,660 11,810 10,978 11,335 34,529 42,782
YoY Growth (%) 50.1 69.5 51.2 37.6 26.6 81.4 72.8 -3.6 48.9 36.5
Provisions 176 171 39 2,430 66 1,170 564 515 2,816 2,315
Tax Provisions 1,534 1,657 1,545 2,675 2,007 2,985 2,565 2,630 7,411 10,187
Net Profit 2,703 2,967 2,911 3,218 3,511 4,542 4,636 4,882 11,799 17,572
YoY Growth (%) 47.6 70.0 55.9 21.3 29.9 53.1 59.3 51.7 45.7 48.9
E: MOSL Estimates
April 2018 173

PNB Housing Finance

Bloomberg PNBHOUSI IN
CMP: INR1,273 TP: INR1,750 (+37%) Buy
 The company will continue its robust growth trajectory. AUM is
M. Cap. (INR b)/(USD b) 211 / 3
expected to grow 12% QoQ and 55% YoY to INR644b.
52-Week Range (INR) 1715 / 1006
 Calculated margins are likely to decline ~40bp YoY/ 14bp QoQ to
1,6,12 Rel Perf. (%) 7 / -22 / -6
2.9%, led by a decline in yields.
 As a result, total income is expected to grow 37% YoY to INR5.5b.
Y/E March 2017 2018E 2019E 2020E
 Asset quality is likely to remain largely stable. GNPL ratio in the
NII 10.0 15.1 21.0 27.4 prior quarter was 0.42%.
PPP 9.1 15.1 20.9 27.6  We estimate provisions of INR594m as against INR561m in 3QFY18.
PAT 5.2 8.4 11.2 14.6  PAT is expected to grow 53% YoY to INR2.33b.
EPS (INR) 31.6 50.9 67.5 88.1
BV/Sh. (INR) 329.5 369.8 423.2 492.9
RoAA (%) 1.4 1.5 1.4 1.3
Payout (%) 22.8 20.9 20.9 20.9  Management commentary on business growth and steps taken to
P/E (x) 40.3 25.0 18.9 14.5 sustain AUM growth.
P/BV (x) 3.9 3.4 3.0 2.6
 Impact of RERA.
Div. Yield (%) 0.5 0.7 1.0 1.2
 Plans of branch expansion.
 Movement in yields and margins, with declining cost of funds.
Quarterly performance (INR m)

Y/E March FY17 FY18E
FY17 FY18E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 8,172 9,130 9,376 10,106 10,965 12,225 13,357 14,685 36,785 51,233
YoY Growth (%) 64.2 69.2 55.2 31.5 45.3 52.5
Other income 457 572 611 654 958 933 1,029 1,080 2,294 4,000
Total Income 2,549 2,856 3,257 3,981 4,394 4,798 5,136 5,455 12,642 19,783
YoY Growth (%) 72.4 68.0 57.7 37.0 50.6 56.5
Operating Expenses 797 1,008 870 898 1,082 1,101 1,237 1,293 3,573 4,712
YoY Growth (%) 35.7 9.2 42.2 44.0 41.7 31.9
YoY Growth (%) 89.1 100.1 63.3 35.0 54.5 66.2
Provisions 280 -225 308 667 481 503 561 594 1,029 2,138
Tax Provisions 513 696 702 892 984 1,114 1,164 1,239 2,803 4,500
Profit after tax 959 1,377 1,378 1,524 1,848 2,080 2,175 2,330 5,237 8,432
YoY Growth (%) 92.6 51.1 57.8 52.9 60.0 61.0
Loans growth (%) 41.2 41.8 42.4 51.2 61.1 61.1 41.8 61.1
Tax Rate (%) 34.8 33.6 33.7 36.9 34.7 34.9 34.9 34.7 34.9 34.8
E: MOSL Estimates
April 2018 174

Repco Home Finance

Bloomberg REPCO IN
 Our interactions at the ground level suggest that the issues
related to property registration in Tamil Nadu (TN) are being
sorted out, but slowly. However, lack of availability of sand still
1,6,12 Rel Perf. (%) 2 / -16 / -32
remains an issue. Hence, we expect loan growth to remain
subdued at 11% in 4QFY18.
 Calculated margins are likely to remain stable at 5.1% on account
Y/E March 2017 2018E 2019E 2020E
of stable cost of funds. As a result, NII growth will be 12% YoY.
NII 3.7 4.3 4.8 5.5
 C/I ratio is expected to decline almost 150bp YoY to 16.7%.
PPP 3.3 3.8 4.3 5.0
 GNPL is expected to improve seasonally. Provisions are expected
PAT 1.8 2.1 2.4 2.9
to be INR164m v/s INR194m in the prior quarter.
EPS (INR) 29.1 32.9 39.0 46.0
 The stock trades at 2.3x FY19E and 2x FY20E BV. Maintain Buy.
BV/Sh. (INR) 181.8 212.4 248.7 291.5
RoAA (%) 2.2 2.2 2.3 2.3
RoE (%) 17.4 16.7 16.9 17.0
 Sand price trends in TN.
Payout (%) 0.0 7.1 7.0 7.0
 Competitive environment and prepayments by borrowers.
Valuation  Business outlook, loan growth, and share of home loans and
P/E (x) 18.9 16.8 14.2 12.0 LAP.
P/BV (x) 3.0 2.6 2.2 1.9  Movement in borrowing costs and margins.
Div. Yield (%) 0.4 0.4 0.4 0.5  Asset quality trends in the LAP segment.
REPCO: Quarterly performance (INR M)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 2,390 2,499 2,589 2,663 2,587 2,715 2,694 2,830 10,140 10,826
Net Interest Income 840 902 907 1,028 959 1,093 1,071 1,146 3,677 4,269
YoY Growth (%) 26.5 22.0 16.2 20.7 14.2 21.2 18.1 11.5 21.1 16.1
Other income 80 98 67 73 71 95 82 87 319 334
Total Income 920 1,000 974 1,102 1,030 1,188 1,153 1,233 3,996 4,603
YoY Growth (%) 26.0 22.0 15.5 16.8 12.0 18.8 18.3 11.9 19.8 15.2
Operating Expenses 149 163 163 200 171 179 217 206 676 773
YoY Growth (%) -3.5 -6.8 1.9 30.7 14.9 9.4 33.0 3.1 5.1 14.5
Operating Profits 771 837 811 902 859 1,009 935 1,027 3,320 3,830
YoY Growth (%) 33.9 29.9 18.7 14.1 11.4 20.6 15.3 13.9 23.3 15.4
Provisions 179 127 96 116 167 166 194 164 519 691
Profit before Tax 592 710 714 786 692 843 741 862 2,802 3,139
Tax Provisions 196 253 250 280 241 285 256 298 979 1,080
Profit after tax 395 457 464 506 452 559 485 564 1,823 2,059
YoY Growth (%) 30.8 17.0 20.4 19.8 14.2 22.3 4.4 11.5 21.4 13.0
Tax Rate (%) 33.2 35.7 35.0 35.6 34.8 33.7 34.6 34.6 35.0 34.4
E: MOSL Estimates
April 2018 175

Shriram City Union Finance

Bloomberg SCUF IN
CMP: INR2,222 TP: INR2,550 (+15%) Buy
 We expect no change in disbursements sequentially or annually
M. Cap. (INR b)/(USD b) 146 / 2
and model for a disbursement of INR63b, resulting in 16% YoY
52-Week Range (INR) 2648 / 1867
AUM growth.
1,6,12 Rel Perf. (%) 13 / 3 / -16
 Calculated spreads should expand 60bp YoY on account of
declining cost of funds. Hence, NII growth is expected to grow
Y/E March 2017 2018E 2019E 2020E
22% YoY.
NII 28.5 34.7 39.3 45.5  Higher growth in operating expenses (32% YoY) is expected to
PPP 17.2 20.9 23.5 27.3 taper PPoP growth to 16% YoY.
PAT 5.6 7.6 9.1 11.0  We expect asset quality to remain largely stable. We factor in
EPS (INR) 84 115 139 167
provisions of INR2.8b as against INR2b in 3QFY18 and INR4.1b in
EPS Gr. (%) 5 37 20 21
BV/Sh. (INR) 763 860 977 1121
4QFY17.
RoA (%) 2.7 3.2 3.4 3.5  The stock trades at 2.3x FY19E and 2x FY20E BVPS. Buy.
RoE (%) 11.7 14.2 15.1 15.9
Valuations
 Trends in asset quality in each segment.
P/E (x) 26.3 19.3 16.0 13.3
P/BV (x) 2.9 2.6 2.3 2.0
 Business growth and momentum, and management
Div. Yield (%) 0.7 0.7 0.8 0.9 commentary on the same.
 Impact of GST.
 Performance of the housing finance subsidiary.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 10,535 11,153 11,557 11,071 12,175 12,849 13,381 13,066 43,796 51,471
Y-o-Y Growth (%) 19.7 22.1 17.7 14.6 18.9 18.7 20.1 22.1 19.1 22.1
Fees and Other Income 15 3 6 5 17 4 152 13 76 185
Y-o-Y Growth (%) 19.2 22.1 17.8 11.8 18.8 18.7 22.0 22.2 18.2 22.5
Y-o-Y Growth (%) 21.3 29.3 19.5 26.2 20.2 19.6 17.1 16.0 25.8 21.5
Provisions 1,356 1,390 2,242 4,118 1,998 2,372 2,046 2,778 8,632 9,193
Profit before Tax 2,784 3,135 2,412 206 2,978 3,041 3,404 2,237 8,536 11,659
Tax Provisions 966 1,090 835 86 1,040 1,058 1,148 819 2,976 4,064
Net Profit 1,818 2,045 1,577 120 1,939 1,983 2,255 1,418 5,561 7,595
Y-o-Y Growth (%) 23.1 34.3 -9.5 -78.4 6.6 -3.0 43.0 1,080.3 5.0 36.6
Int Exp/ Int Earned (%) 34.9 34.1 34.0 35.6 33.0 32.1 31.6 33.3 35.0 32.5
Tax Rate (%) 34.7 34.8 34.6 41.6 34.9 34.8 33.7 36.6 34.9 34.9
E: MOSL Estimates; * Quarterly nos and full year nos will not tally due to different way of reporting financial nos
April 2018 176

Shriram Transport Finance

Bloomberg SHTF IN
CMP: INR1,477 TP: INR1,750 (+25%) Buy
 SHTF’s AUM growth is expected to sustain at 18% YoY in 4QFY18.
M. Cap. (INR b)/(USD b) 335 / 5
 The company will continue to benefit from declining cost of
funds, which should help offset yield pressure. We expect
1,6,12 Rel Perf. (%) 12 / 33 / 23
calculated NIM on AUM to improve ~40bp YoY to 7.7%.
 As a result, NII growth is expected to be strong at 25% YoY.
Y/E March 2017 2018E 2019E 2020E
 Operating expenses are likely to grow 38.5% YoY, resulting in a
Net Inc. 55.2 66.8 76.4 88.1 200bp+ YoY increase in C/I ratio.
PPP 43.7 53.1 60.7 70.3  Asset quality is expected to remain stable. We factor in INR8.7b
PAT 12.6 17.6 23.8 28.6 provisions v/s INR5.9b in 3QFY18 and INR9.1b in 4QFY17.
EPS (INR) 55.4 77.5 104.8 125.9
 The stock trades at 2.3x FY19E and 2x FY20E BVPS. Maintain Buy.
EPS Gr. (%) 6.7 39.8 35.3 20.2
BV/Sh (INR) 498 556 642.4 746.2
RoA on AUM (%) 2.0 2.6 3.1 3.2 Key issues to watch for
RoE (%) 11.7 14.7 17.5 18.1  CV demand in FY19, volume gain on BS4 to BS6 switch.
Payout (%) 20.9 17.4 17.4 17.4  Movement in borrowing costs and margins.
Valuations
 Asset quality trends, given impact of GST.
P/E (x) 26.6 18.8 13.9 11.7
P/BV (x) 3.0 2.6 2.3 2.0
Div. Yield (%) 0.7 0.8 1.1 1.3

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Interest Income 24,764 24,626 24,438 24,185 26,198 26,761 27,573 27,956 98,013 108,489
YoY Growth (%) 15.5 8.9 1.5 -10.2 15.2 21.4 20.8 26.6 3.1 21.0
Securitisation income 1,876 2,262 2,508 2,647 2,488 2,645 3,061 3,058 9,293 11,252
Net Income (Incl. Securitization) 13,474 13,530 14,121 14,087 15,852 16,324 17,094 17,543 55,212 66,813
YoY Growth (%) 18.6 13.4 6.9 -2.4 17.6 20.6 21.1 24.5 8.8 21.0
Fees and Other Income 167 169 183 240 218 324 221 223 758 986
YoY Growth (%) 18.4 12.8 6.8 -2.1 17.8 21.5 21.1 24.0 8.7 21.1
YoY Growth (%) 19.6 15.6 12.7 6.4 23.2 24.6 18.3 20.3 13.8 21.5
Provisions 4,603 4,621 6,105 9,114 5,823 5,879 5,854 8,655 24,443 26,211
Tax Provisions 1,956 2,063 1,834 813 2,382 2,492 2,676 1,792 6,666 9,342
Net Profit 3,741 3,877 3,460 1,496 4,487 4,791 4,956 3,297 12,573 17,531
YoY Growth (%) 16.5 14.7 -7.8 4.0 19.9 23.6 43.3 120.3 6.7 39.4
AUM Growth (%) 23.6 19.1 14.6 8.2 9.1 13.5 18.0 18.0 8.2 18.0
Securitization Inc. / Net Inc. (%) 13.7 16.5 17.5 18.5 15.5 15.9 17.7 17.2 16.6 16.6
Tax Rate (%) 34.3 34.7 34.6 35.2 34.7 34.2 35.1 35.2 34.6 34.8
E: MOSL Estimates; * Quarterly nos and full year nos will not tally due to different way of reporting financial nos
April 2018 177

Healthcare
Company name Niche product approvals to offset regulatory impact on US
Alembic Pharma business; domestic business to recover from GST woes
Ajanta Pharma
Alkem Lab  We expect our Pharma universe to continue reporting low-single-digit revenue
Aurobindo Pharma growth, as faster ANDAs approvals and regulatory issues pertaining to the USFDA
Biocon inspection hurt the US business. A few companies are expected to post a
Cadila Health significant decline in EBITDA during the quarter. Having said that, our pharma
Cipla universe is expected to report robust growth during the quarter, mainly due to a
Divis Labs
lower base of 4QFY17 (impacted by demonetization).
Dr Reddy’ s Labs
 Cadila is expected to continue exhibiting strong growth in the US, led by gLialda
Fortis Health
launch and ramp-up in key products. Glenmark is expected to decline
Glenmark Pharma
GSK Pharma
significantly due to a high base of the year-ago period, which saw the launch of
IPCA Labs. gZetia FTF (launched in 3QFY17, with six months exclusivity). Sun Pharma and
Jubilant Life Lupin, too, are expected to disappoint due to a fall in the US business, led by
Lupin pricing pressure in the base business. Sanofi India, Granules, Ipca, Jubilant life
Sanofi India and Aurobindo are expected to post mid-double-digit growth.
Shilpa Medicare  In 4QFY18, the domestic business is expected to report strong growth as the
Strides Shasun industry bounces back from GST woes and low base of 4QFY17 (impacted by
Sun Pharma demonetization). Although the US business is under pressure from increased
Torrent Pharma
pace of ANDA approvals and regulatory issues, we believe key product approvals
will help negate these issues.
 We maintain our top picks – Sun Pharma, Granules and IPCA.

Healthcare
Alembic Pharma 542 Neutral 8,199 11.3 -2.4 1,822 36.5 -2.9 1,134 21.9 -13.2
Alkem Lab 1,910 Buy 14,447 15.4 -17.0 2,719 82.2 -24.4 1,790 30.7 -17.3
Ajanta Pharma 1,402 Buy 4,992 4.7 -15.0 1,412 -17.6 -28.5 1,011 -17.1 -31.5
Aurobindo Pharma 593 Buy 42,395 16.4 -2.2 9,570 24.1 -6.7 6,039 8.6 -8.0
Biocon 607 Neutral 10,319 11.6 -2.5 2,147 18.0 -3.2 875 -39.0 -4.8
Cadila Health 394 Buy 30,715 23.9 -5.8 7,297 57.4 -13.2 4,954 28.5 -8.8
Cipla 571 Neutral 39,031 9.0 -0.3 7,845 55.0 -4.2 4,330 113.1 -7.4
Divis Labs 1,107 Neutral 10,222 -3.8 -1.5 3,399 -5.2 4.2 2,643 1.9 17.6
Dr Reddy’ s Labs 2,129 Neutral 37,506 5.5 -1.5 7,585 30.0 -1.1 3,736 19.5 -12.6
Fortis Health 130 Buy 12,242 9.0 9.2 835 5.7 61.8 406 LP LP
Glenmark Pharma 550 Neutral 22,236 -8.3 2.4 3,744 -8.9 28.9 2,100 14.3 100.5
Granules India 108 Buy 4,142 14.0 0.8 760 -3.3 2.6 391 -14.4 11.7
GSK Pharma 2,152 Neutral 7,420 -2.8 5.4 1,510 29.6 6.5 960 10.5 7.0
IPCA Labs. 677 Buy 7,718 15.9 -10.2 1,559 130.4 -3.3 883 98.8 -16.4
Jubilant Life 847 Buy 21,257 29.5 2.8 4,464 46.4 7.1 2,211 48.4 4.0
Laurus Labs 514 Buy 5,383 13.7 12.4 1,130 -4.8 29.4 528 -29.0 51.3
Lupin 789 Buy 39,826 -6.4 0.2 7,515 -32.0 9.2 3,330 -45.1 29.2
Sanofi India 5,147 Buy 6,396 15.7 -4.6 1,384 36.4 3.0 863 43.8 13.5
Shilpa Medicare 471 Buy 2,055 -8.1 10.8 390 -33.5 43.7 263 -37.7 60.7
Strides Shasun 704 Buy 7,850 -11.6 4.8 1,374 -12.5 11.8 598 -40.7 28.4
Sun Pharma 510 Buy 65,821 -3.6 -0.2 14,432 16.8 3.2 8,542 -30.2 -2.8
Torrent Pharma 1,288 Neutral 17,385 25.9 17.7 4,053 37.4 12.9 1,816 -11.8 -24.0
Sector Aggregate 417,556 6.3 -0.7 86,946 16.7 0.0 49,402 -1.2 -0.9
Research Analyst: Kumar Saurabh (Kumar.Saurabh@MotilalOswal.com); +91 22 6129 1519; Ankeet Pandya (Ankeet.Pandya@MotilalOswal.com);
Tushar Manudhane (Tushar.Manudhane@MotilalOswal.com); +91 022 6129 1536; Rajat Srivastava (Rajat.Srivastava@motilaloswal.com)
April 2018 178
March 2018 Results Preview | Sector: Healthcare
Exhibit 2: 4QFY18 Aggregates

Healthcare Universe YoY Growth (%) EBITDA Margin (%) PAT margin (%)
Sales EBITDA Adj. PAT 18-Mar 17-Mar CHG (BPS) 18-Mar 17-Mar CHG (BPS)
MNC Pharma 5.0 32.8 24.1 21.0 16.6 439 13.2 11.2 204
Big 5 Generics 4.2 11.6 -13.8 21.5 20.0 141 12.3 14.9 -256
CRAMS -1.2 -9.2 -4.2 31.6 34.4 -279 24.0 24.8 -74
Second Tier generics 9.8 26.9 16.1 20.3 17.5 273 10.9 10.3 59
Sector Aggregate 6.3 16.7 -1.2 20.8 19.0 186 11.8 12.7 -89
USD/INR remained largely stable during the quarter

 During the quarter, there has been marginal appreciation of ~4% (from 67 in
4QFY17 v/s 64.3 in 4QFY18) in the INR against the USD. The impact of
appreciation would be meager on the pharma companies under our coverage as
most of them have hedging to some extent.
 Also, in the last four quarters, the INR has remained more or less stable
(appreciated 3.4%) with respect to the USD, and as such, there has not been any
meaningful impact on profitability of pharma companies.
Sensex Index MOSL Health care Index Sensex Index MOSL Health care Index
111 128
104 116
104
97
92
90 80
Dec-17
Jan-18
Feb-18
Mar-18
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17
Healthcare
Alembic Pharma 542 Neutral 24.8 25.6 30.5 21.9 21.2 17.8 14.5 13.4 11.2 22.5 19.8 20.1
Alkem Lab 1,910 Buy 65.4 89.5 110.6 29.2 21.3 17.3 19.3 15.1 12.2 16.4 19.5 20.6
Ajanta Pharma 1,402 Buy 54.0 65.8 81.4 26.0 21.3 17.2 18.3 15.3 12.2 27.0 26.2 25.9
Aurobindo Pharma 593 Buy 43.8 48.7 53.6 13.6 12.2 11.1 8.8 8.1 6.9 24.2 21.7 19.6
Biocon 607 Neutral 7.6 10.9 19.8 79.7 55.7 30.7 38.1 28.2 17.9 8.9 11.6 18.4
Cadila Health 394 Buy 16.0 20.1 23.3 24.6 19.6 16.9 15.2 12.8 11.0 21.6 22.8 22.0
Cipla 571 Neutral 21.6 26.2 32.0 26.4 21.8 17.8 15.2 13.4 11.1 12.4 13.3 14.1
Divis Labs 1,107 Neutral 32.9 44.0 52.7 33.7 25.2 21.0 23.1 17.0 14.0 16.0 20.0 21.3
Dr Reddy’ s Labs 2,129 Neutral 67.1 114.1 146.1 31.7 18.7 14.6 14.7 9.7 7.5 9.0 13.9 15.6
Fortis Health 130 Buy 1.5 2.8 7.3 88.5 47.1 17.8 17.5 10.8 6.7 1.2 2.2 5.6
Glenmark Pharma 550 Neutral 30.6 32.9 41.1 18.0 16.7 13.4 11.5 11.3 9.4 16.4 15.3 16.2
Granules India 108 Buy 6.3 7.9 11.0 17.1 13.6 9.8 10.5 7.7 5.9 13.2 13.9 17.4
GSK Pharma 2,152 Neutral 38.3 42.6 48.5 56.2 50.5 44.4 34.8 33.5 28.9 19.7 27.2 30.9
IPCA Labs. 677 Buy 21.4 29.2 37.3 31.6 23.1 18.1 17.8 13.6 10.9 10.5 13.0 14.7
Jubilant Life 847 Buy 47.8 62.6 72.5 17.7 13.5 11.7 10.7 8.5 7.2 19.7 21.4 20.4
Laurus Labs 514 Buy 19.0 29.1 35.7 27.0 17.7 14.4 14.6 11.0 9.3 14.1 18.3 18.8
Lupin 789 Buy 31.0 40.2 54.1 25.4 19.6 14.6 12.2 10.6 8.2 10.1 12.1 14.6
Sanofi India 5,147 Buy 141.7 161.8 186.9 36.3 31.8 27.5 20.8 17.0 14.4 16.1 16.8 17.5
Sun Pharma 510 Buy 13.2 21.5 27.7 38.7 23.7 18.4 20.6 14.2 10.9 8.5 13.2 15.3
Shilpa Medicare 471 Buy 13.3 24.3 30.6 35.4 19.4 15.4 23.9 17.2 13.5 11.0 17.4 18.3
Strides Shasun 704 Buy 14.1 40.8 55.7 49.9 17.3 12.6 18.1 11.0 8.8 4.6 12.1 14.5
Torrent Pharma 1,288 Neutral 48.0 61.3 78.5 26.8 21.0 16.4 15.9 11.3 9.4 17.6 19.9 22.3
April 2018 179

Ajanta Pharma
Bloomberg AJP IN CMP: INR1,402 TP:INR1,840 (+31%) Buy
 We expect Ajanta Pharma (AJP) to show 4.7% YoY growth in
M. Cap. (INR b)/(USD b) 124 / 2
revenues on a high base of past year. Except domestic
52-Week Range (INR) 1818 / 1106
1,6,12 Rel Perf. (%) 2 / 18 / -31
formulation segment, we expect a YoY reduction in revenue in all
segments.
 With a pick-up in industry growth, we expect AJP to outperform
Y/E MARCH 2017 2018E 2019E 2020E by growing at 15% YoY due to product launches and better
Sales 20.0 20.8 24.9 29.7 traction in the existing portfolio.
EBITDA 6.9 6.5 7.7 9.4  We expect a decline in Institutional segment of Africa business, as a
NP 5.1 4.8 5.8 7.2 considerable amount of allocated business was supplied in 9MFY18
EPS (INR) 57.3 54.0 65.8 81.4 and the company is yet to receive order to supply for CY2018.
EPS Gro. (%) 21.9 -5.8 21.9 23.6  Though Asia sales are expected to continue at a healthy quarterly
BV/Sh. (INR) 177.2 223.1 279.1 348.2 run-rate, there would be YoY and QoQ decline due to a high base.
RoE (%) 36.7 27.0 26.2 25.9  On overall basis, we expect EBITDA margin to come in at 28.3%
RoCE (%) 35.8 26.9 26.1 25.9 and PAT at INR1b for 4QFY18.
Valuations  The stock trades at 21.3x FY19E EPS. We maintain Buy, with a
P/E (x) 24.4 26.0 21.3 17.2 target price of INR1,840 (25x 12M forward earnings).
P/BV (x) 7.9 6.3 5.0 4.0 Key issues to watch out
EV/EBITDA (x) 17.9 18.7 15.6 12.4  Quantum of institutional business to be allocated by Global
EV/Sales (x) 6.2 5.9 4.8 3.9 Fund for next three years.
D. Yield (%) 0.9 0.6 0.7 0.9  Traction from recently launched products in US market.
Quarterly performance (INR million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,759 5,158 5,331 4,768 4,731 5,404 5,870 4,992 20,016 20,997
YoY Change (%) 21.6 16.8 11.8 12.0 -0.6 4.8 10.1 4.7 15.3 4.9
EBITDA 1,666 1,732 1,780 1,714 1,307 1,837 1,975 1,412 6,890 6,530
Margins (%) 35.0 33.6 33.4 35.9 27.6 34.0 33.6 28.3 34.4 31.1
Depreciation 130 140 153 189 134 146 150 144 612 574
Interest 10 8 8 9 1 1 1 1 35 4
Other Income 55 67 192 24 48 92 152 62 337 353
PBT 1,580 1,651 1,811 1,442 1,187 1,783 1,975 1,329 6,482 6,274
Tax 385 345 385 300 239 464 501 318 1,413 1,523
Rate (%) 24.3 20.9 21.2 20.8 20.1 26.0 25.3 23.9 21.8 24.3
Minority Interest & P/L of Asso. Cos. 0 0 0 0 0 0 0 0 0 0
Reported PAT 1,196 1,307 1,426 1,142 948 1,319 1,475 1,011 5,068 4,751
Adj PAT 1,196 1,307 1,426 1,220 980 1,319 1,475 1,011 5,145 4,775
YoY Change (%) 39.0 26.3 25.2 11.8 -18.0 0.9 3.4 -17.1 24.8 -7.2
Margins (%) 25.1 25.3 26.7 25.6 20.7 24.4 25.1 20.2 25.7 22.7
April 2018 180

Alembic Pharma
Bloomberg ALPM IN CMP: INR542 TP:INR555 (+2%) Neutral
 In 4QFY18, we expect Alembic Pharma (ALPM) to post healthy
M. Cap. (INR b)/(USD b) 102 / 2
growth in sales by ~11% YoY to INR8.2b. International business is
1,6,12 Rel Perf. (%) 0 / 2 / -24
expected to grow ~14% YoY to INR3.1b. India business is expected
to post robust growth of 25.5% YoY to INR3.6b due to a low base
(4QFY17 was impacted by demonetization and NLEM-related
Y/E MARCH 2017 2018E 2019E 2020E
price control).
Sales 31.3 31.3 35.9 41.0
 Reported EBITDA is likely to post growth of ~37%YoY to INR1.8b,
EBITDA 6.1 6.9 7.4 8.8
with EBITDA margin expanding 410bp YoY to 22.2%.
NP 4.0 4.7 4.8 5.7
 We expect reported PAT to increase by 22% YoY to INR1.1b.
EPS (INR) 21.6 24.8 25.6 30.5
 Given that the recent investments in oncology, derma and opthal
EPS Gro. (%) -43.2 15.0 3.1 19.1 filings are expected to fetch returns only from FY20 and beyond,
BV/Sh. (INR) 100.8 119.7 139.3 163.7 high R&D expense, depreciation and pricing pressure in the US
RoE (%) 23.0 22.5 19.8 20.1 will keep growth under check in the near term. Maintain Neutral
RoCE (%) 22.1 21.9 19.5 25.6 with a TP of INR555 @20x 1HFY20E EPS (v/s INR540 @20x
Valuations 1HFY20E EPS.
P/E (x) 25.1 21.8 21.2 17.8
EV/EBITDA (x) 15.4 13.2 12.4 10.3  Contribution of chronic portfolio and growth strategy.
EV/Sales (x) 3.0 2.9 2.5 2.2  Performance of US operations amid market pressure.
D. Yield (%) 0.9 0.9 0.9 0.9  Outlook on future ANDA launches/filings.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 7,270 8,716 7,699 7,367 6,482 7,893 8,400 8,199 31,308 31,333
YoY Change (%) 24.6 -13.1 -16.4 17.8 -10.8 -9.4 9.1 11.3 -0.3 0.1
EBITDA 1,559 1,771 1,446 1,335 1,014 1,792 1,875 1,822 6,109 6,862
Margins (%) 21.4 20.3 18.8 18.1 15.6 22.7 22.3 22.2 19.5 21.9
Depreciation 194 206 211 218.4 218 257 264 284.4 830 1,023
Interest 11 10 8 18.1 9 4 8 21.5 51 42
Other Income 14 12 10 20 2 77 3 6 62 88
PBT before EO expense 1,369 1,567 1,237 1,118.3 789 1,608 1,606 1,521.7 5,290 5,884
Extra-Ord expense 0 0 0 0.0 0 0 0 0.0 0 0
PBT 1,369 1,567 1,237 1,118 789 1,608 1,606 1,522 5,290 5,884
Tax 333 332 393 164.9 155 366 298 388.0 1,222 1,206
Rate (%) 24.3 21.2 31.8 14.7 19.6 22.7 18.5 25.5 23.1 20.5
MI & P/L of Asso. Cos. 16 49 -17 23 -33 27 3 0 38 0
Adj PAT 1,020 1,187 861 930 667 1,216 1,306 1,134 4,029 4,678
YoY Change (%) 46.2 -58.8 -68.0 2.2 -34.6 2.4 51.6 21.9 -45.0 16.1
Margins (%) 14.0 13.6 11.2 12.6 10.3 15.4 15.5 13.8 12.9 14.9
April 2018 181

Alkem Labs
Bloomberg ALKEM IN CMP: INR1,910 TP: INR2,500 (+31%) Buy
 We expect Alkem to post revenue growth of 15.4% YoY to
M. Cap. (INR b)/(USD b) 228 / 4
INR14.4b. Domestic business is expected to post strong growth of
52-Week Range (INR) 2468 / 1578
1,6,12 Rel Perf. (%) -12 / -2 / -23
~39% YoY to INR12.4b due to lower base in 4QFY17, which was
impacted by demonetization and decline in the anti-infective
market. International business is expected to grow 7% YoY, of
which US business is expected to grow by 17% YoY to INR3.4b.
Y/E March 2017 2018E 2019E 2020E
Sales 58.5 63.5 73.6 84.5
 EBITDA margin is expected to expand ~690bp YoY, as margins in
EBITDA 10.0 11.9 14.1 16.9
4QFY17 were impacted due to higher R&D cost, ~500 MR
NP 8.9 7.8 10.7 13.2
additions and muted domestic growth. EBITDA is expected to
EPS (INR) 74.6 65.4 89.5 110.6
increase significantly by 82% YoY to INR2.7b in 4QFY18.
EPS Gro. (%) 6.0 -12.4 36.9 23.6
 PAT is expected to increase by ~31% YoY to INR1.8b.
BV/Sh. (INR) 373.7 424.4 493.7 579.4
 We maintain Buy with a TP of INR2,500 @24x Dec 19E PER. We
RoE (%) 21.9 16.4 19.5 20.6
argue for a multiple re-rating, given the superior earnings growth
RoCE (%) 20.1 14.5 21.8 23.1
profile (>25% EPS CAGR over FY18-20E), improving return ratios
Valuations
(RoICs to improve to ~30% by FY20E from ~20% in FY18E), net
P/E (x) 25.6 29.2 21.3 17.3 cash balance sheet, and high exposure to the domestic business
P/BV (x) 5.1 4.5 3.9 3.3 (~90% of profit comes from the domestic business).
EV/EBITDA (x) 23.1 19.1 15.5 12.5 Key issues to watch out
 Update on observations issued by US FDA at Daman and St.
Louis facility.
 Outlook on future ANDA launches/filings.
 Pick-up in chronic business.
Quarterly perf. (Consol.) (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 7,270 8,716 7,699 7,367 6,482 7,893 8,400 8,199 31,308 31,333
YoY Change (%) 24.6 -13.1 -16.4 17.8 -10.8 -9.4 9.1 11.3 -0.3 0.1
EBITDA 1,559 1,771 1,446 1,335 1,014 1,792 1,875 1,822 6,109 6,862
Margins (%) 21.4 20.3 18.8 18.1 15.6 22.7 22.3 22.2 19.5 21.9
Depreciation 194 206 211 218.4 218 257 264 284.4 830 1,023
Interest 11 10 8 18.1 9 4 8 21.5 51 42
Other Income 14 12 10 20 2 77 3 6 62 88
PBT before EO expense 1,369 1,567 1,237 1,118.3 789 1,608 1,606 1,521.7 5,290 5,884
Extra-Ord expense 0 0 0 0.0 0 0 0 0.0 0 0
PBT 1,369 1,567 1,237 1,118 789 1,608 1,606 1,522 5,290 5,884
Tax 333 332 393 164.9 155 366 298 388.0 1,222 1,206
Rate (%) 24.3 21.2 31.8 14.7 19.6 22.7 18.5 25.5 23.1 20.5
MI & P/L of Asso. Cos. 16 49 -17 23 -33 27 3 0 38 0
Adj PAT 1,020 1,187 861 930 667 1,216 1,306 1,134 4,029 4,678
YoY Change (%) 46.2 -58.8 -68.0 2.2 -34.6 2.4 51.6 21.9 -45.0 16.1
Margins (%) 14.0 13.6 11.2 12.6 10.3 15.4 15.5 13.8 12.9 14.9
E: MOSL Estimates
April 2018 182

Aurobindo Pharma
Bloomberg ARBP IN
CMP: INR593 TP:INR820 (+38%) Buy
 We expect Aurobindo (ARBP) to post 16% YoY sales growth to
M. Cap. (INR b)/(USD b) 348 / 5
INR42.4b in 4QFY18.
1,6,12 Rel Perf. (%) -3 / -22 / -24
 We expect US business (~56% of formulation sales) to grow by ~22%
YoY to INR20.1b. Europe and RoW sales are expected to exhibit
growth of 8% YoY. API sales are estimated to grow by ~5% YoY.
Y/E MARCH 2017 2018E 2019E 2020E
 EBITDA margin is likely to expand moderately by ~140bp to 25.6%
Sales 150.9 166.9 185.7 207.7 YoY (flat sequentially). Overall EBITDA is estimated to increase by
EBITDA 34.3 39.4 43.6 48.8 ~24% to INR10b. We expect adj. PAT at INR6b, compared to
NP 23.0 25.6 28.5 31.4 INR5.3b in the corresponding quarter last year. Moderate growth
EPS (INR) 39.3 43.8 48.7 53.6 in PAT as compared to EBITDA growth is attributed to higher tax
EPS Gro. (%) 13.5 11.4 11.2 10.1 rate at 27.2% and depreciation.
BV/Sh. (INR) 160.0 201.2 247.4 298.5  We continue believing that ARBP is well poised to outperform its
RoE (%) 27.6 24.2 21.7 19.6 peers in the current circumstances, led by its strong US pipeline
RoCE (%) 19.0 18.7 18.2 17.1 and diversified product mix (top-25 products account for ~35% of
Valuations sales). We maintain Buy with a target price of INR820 @ 16x
P/E (x) 15.1 13.5 12.2 11.1 1HFY20E PER.
EV/EBITDA (x) 12.1 10.5 9.1 7.8  Debt reduction during the quarter.
EV/Sales (x) 2.8 2.5 2.1 1.8  Outlook on the US business (~35-40 launches expected over next
Dividend Yield (%) 0.4 0.3 0.4 0.4 12 months).
 Update on observations at Unit-IV.
 Growth outlook for FY19E.
Quarterly Performance Consolidated (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 37,666 37,755 39,062 36,417 36,788 44,360 43,362 42,395 150,897 166,868
YoY Change (%) 14.2 12.2 11.7 -2.8 -2.3 17.5 11.0 16.4 8.1 10.6
EBITDA 8,890 9,293 8,948 7,713 8,417 11,174 10,256 9,570 34,341 39,381
Margins (%) 23.6 24.6 22.9 21.2 22.9 25.2 23.7 22.6 22.8 23.6
Depreciation 1,062 1,102 1,111 1,001 1,312 1,321 1,381 1,290 4,276 5,304
Interest 206 175 143 143 169 173 189 149 667 679
Other Income 159 83 79 218 221 103 258 169 538 750
Extra-Ord expense -70 -202 -158 310 77 4 -73 0 -621 0
PBT 7,851 8,300 7,932 6,477 7,080 9,779 9,017 8,300 30,557 34,149
Tax 2,008 2,240 2,177 1,172 1,910 1,980 3,069 2,261 7,596 9,220
Rate (%) 25.6 27.0 27.4 18.1 27.0 20.2 34.0 27.2 24.9 27.0
Minority Interest -8 3 -31 -19 -15 -13 -3 0 -55 -55
Reported PAT 5,850 6,057 5,785 5,325 5,186 7,812 5,951 6,039 23,015 24,983
Adj PAT 5,790 5,913 5,640 5,560 5,226 7,803 6,564 6,039 22,552 25,647
YoY Change (%) 21.0 21.8 7.4 -0.4 -9.7 32.0 2.9 8.6 13.6 8.6
Margins (%) 15.4 15.7 14.4 15.3 14.2 17.6 15.1 14.2 14.9 15.4
April 2018 183

Biocon
Bloomberg BIOS IN CMP: INR607 TP: INR600 (-1%) Neutral
 Biocon is likely to post revenue growth of ~1 2% YoY to INR10.3b,
M. Cap. (INR b)/(USD b) 364 / 6
on the back of strong growth in Biologics segment by ~49% YoY,
followed by 15% YoY growth in branded formulation segment,
1,6,12 Rel Perf. (%) -1 / 75 / 50
partially off-set by 8% YoY decline in small molecule segment.
 EBITDA is expected to increase ~18% YoY to INR2.1b, with EBITDA
Financial Snapshot (INR Billion) margins at 20.8%.
Y/E MARCH 2017 2018E 2019E 2020E  We expect PAT to decline to INR875m, primarily due to an
Sales 40.8 41.2 52.6 71.8 increase in depreciation due to commencement of Malaysian
EBITDA 11.4 9.4 12.9 20.1 facility and higher tax rate of 31% v/s 6.5% in 4QFY17.
NP 6.0 4.6 6.5 11.9  We have a Neutral rating on the stock with TP of INR600 @ 30x
EPS (INR) 10.2 7.6 10.9 19.8 FY20E PER.
EPS Gro. (%) 31.8 -25.3 43.1 81.5
BV/Sh. (INR) 80.6 86.0 93.7 107.7
RoE (%) 12.3 8.9 11.6 18.4
RoCE (%) 9.4 7.2 11.5 18.1
Valuations
P/E (x) 59.5 79.7 55.7 30.7 Key issues to watch out
P/BV (x) 7.5 7.1 6.5 5.6  Outlook on small molecules and branded formulation segment.
EV/EBITDA (x) 32.0 38.9 28.2 17.9  Update on BIOS plans to list biologics business separately.
Div. Yield (%) 0.4 0.3 0.4 0.8  Growth outlook for FY19E.
Quarterly Performance Consolidated (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 9,920 9,541 10,444 9,250 9,337 9,686 10,579 10,319 40,787 41,199
YoY Change (%) 22.4 21.4 26.1 -2.1 -5.9 1.5 1.3 11.6 18.2 1.0
EBITDA 2,631 2,400 2,761 1,820 1,921 1,822 2,217 2,147 11,366 9,385
Margins (%) 26.5 25.2 26.4 19.7 20.6 18.8 21.0 20.8 27.9 22.8
Depreciation 661 683 703 730 988 936 974 1,032 2,772 3,930
Interest 57 65 88 50 161 138 147 143 260 589
Other Income 409 384 474 653 540 508 339 513 0 1,900
PBT 2,322 2,036 2,444 1,693 1,312 1,256 1,435 1,485 8,334 6,766
Tax 552 417 544 110 376 425 361 462 1,616 1,624
Rate (%) 23.8 20.5 22.3 6.5 28.7 33.8 25.2 31.1 19.4 24.0
PAT 1,666 1,467 1,713 1,433 813 687 919 875 5,958 4,572
YoY Change (%) 34.6 51.2 66.3 -56.6 -51.2 -53.2 -46.4 -39.0 28.3 -23.3
Margins (%) 16.8 15.4 16.4 15.5 8.7 7.1 8.7 8.5 14.6 11.1
April 2018 184

Cadila Healthcare
Bloomberg CDH IN
M. Cap. (INR b)/(USD b) 403 / 6
 Cadila Healthcare's (CDH) 4QFY18 revenue is likely to grow
significantly by 24% YoY to INR30.7b, driven by strong growth in
the US formulations business (up ~44% YoY to INR14.2b) on the
1,6,12 Rel Perf. (%) -1 / -23 / -23
back of launch of gLialda and ramp-up of other key products.
 Overall export formulations are expected to grow ~46% YoY to
INR18.3b, while domestic formulation is likely to grow 10% YoY to
Y/E MARCH 2017 2018E 2019E 2020E
INR9.3b.
Sales 94.3 117.6 131.8 150.7
 We expect EBITDA to significantly increase by 57% YoY to INR7.3b
EBITDA 19.0 27.1 32.6 37.7 and margin to expand ~500bp. Adj. PAT is also likely to increase
NP 14.5 16.4 20.6 23.8 ~95% YoY to INR5.5b on the back of significant margin expansion.
EPS (INR) 14.2 16.0 20.1 23.3  We believe CDH has made investments in the right areas, and will
EPS Gro. (%) -7.9 12.7 25.5 15.9 start accruing benefits over next 2-3 years. We expect strong EPS
BV/Sh. (INR) 68.0 80.1 96.3 115.7 growth from FY17-19E (29% CAGR) on the back of Moraiya
RoE (%) 23.0 21.6 22.8 22.0 resolution and strong launch pipeline in US, with better return
RoCE (%) 15.2 13.8 15.6 16.6 ratios over next two years.
Valuations  Strong launch momentum and limited-competition launches (like
P/E (x) 27.7 24.6 19.6 16.9 Lialda) should drive strong margin improvement (FY19E EBITDA
P/BV (x) 5.8 4.9 4.1 3.4 margin to be ~25%). Maintain Buy with a TP of INR555 @22x
EV/EBITDA (x) 22.9 15.8 12.8 11.0 1HFY20E PER.
Key issues to watch out
 Outlook for FY19E.
 Update on US business post increased competition in gLialda
and Tamiflu.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 22,871 23,531 23,111 24,782 21,973 32,340 32,596 30,715 94,295 117,624
YoY Change (%) -1.2 1.0 -4.8 1.2 -3.9 37.4 41.0 23.9 -1.0 24.7
EBITDA 5,239 5,160 4,043 4,636 2,773 8,571 8,412 7,297 19,036 27,053
Margins (%) 22.9 21.9 17.5 18.7 12.6 26.5 25.8 23.8 20.2 23.0
Depreciation 843 864 898 1,145 1,220 1,267 1,473 1,399 3,750 5,359
Interest 140 187 66 99 219 406 135 254 450 1,014
Other Income 153 236 166 731 210 225 411 183 1,286 1,029
PBQ before EO Income 4,409 4,345 3,245 4,123 1,544 7,123 7,215 5,828 16,122 21,710
EO Exp/(Inc) 2 0 0 0 0 0 0 0 0 0
PBQ after EO Income 4,407 4,345 3,245 4,123 1,544 7,123 7,215 5,828 16,122 21,710
Tax 966 1,068 504 19 293 2,123 1,786 791 1,289 4,993
Rate (%) 21.9 24.6 15.5 0.5 19.0 29.8 24.8 13.6 8.0 23.0
Min. Int/Adj on Consol -121 -99 -76 249 133 33 4 -82 47 88
Adj PAT 3,564 3,376 2,817 3,855 1,384 5,033 5,433 4,954 14,880 16,804
YoY Change (%) -13.0 -26.5 -27.8 -0.7 -61.2 49.1 92.9 28.5 3.7 12.9
Margins (%) 15.6 14.3 12.2 15.6 6.3 15.6 16.7 16.1 15.8 14.3
April 2018 185

Cipla
Bloomberg CIPLA IN
 We expect Cipla’s revenues to grow 9% YoY to INR39b in 4QFY18.
M. Cap. (INR b)/(USD b) 459 / 7
 Export formulation business is expected to report muted growth of
1,6,12 Rel Perf. (%) 0 / -8 / -15
~4% YoY, while domestic business is expected to report robust
growth of ~22% YoY. Export API sales are expected to report decline
of ~12% YoY to INR1.4b.
Y/E MARCH 2017 2018E 2019E 2020E
 EBITDA is expected to increase significantly by ~55% YoY with margin
Sales 146.3 154.2 174.8 197.5 expansion of ~600bp. This is primarily due to lower margin in 4QFY17
EBITDA 24.8 30.5 35.5 41.3 on back of decline in domestic business and higher R&D expense.
NP 12.8 17.3 21.0 25.7  We expect reported PAT to increase significantly by 113% YoY to
EPS (INR) 15.9 21.6 26.2 32.0 INR4.3b on back of margin expansion.
EPS Gro. (%) -15.5 35.7 21.3 22.3  Unlike other large cap peers, Cipla is well poised to deliver robust
BV/Sh. (INR) 155.7 173.9 197.0 225.9 growth in the US due to a lower base and a significant pick-up in
RoE (%) 10.2 12.4 13.3 14.1 the filing quality and rate (filed 32 ANDAs in FY17 and planning to
RoCE (%) 8.1 9.8 11.1 12.2 file 20 in FY18E). We maintain our Neutral rating on the stock with
Valuations a TP of INR600 @ 20x 1HFY20E PER.
P/E (x) 35.9 26.5 21.8 17.8
P/BV (x) 3.7 3.3 2.9 2.5
 Launch of combination inhaler in the UK market (USD450m
EV/EBITDA (x) 20.0 16.0 13.4 11.1
market size).
Div. Yield (%) 0.4 0.4 0.4 0.4
 Growth outlook for FY19E.
 Sustained strong growth in domestic formulations (38% of
sales).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 36,500 37,510 36,472 35,820 35,251 40,824 39,139 39,031 146,300 154,244
YoY Change (%) -4.9 8.6 17.4 9.7 -3.4 8.8 7.3 9.0 7.0 5.4
EBITDA 6,112 6,807 6,776 5,062 6,465 8,044 8,187 7,845 24,756 30,540
Margins (%) 16.7 18.1 18.6 14.1 18.3 19.7 20.9 20.1 16.9 19.8
Depreciation 2,038 2,292 2,577 2,322 2,134 3,022 5,224 2,515 9,229 12,895
Interest 315 352 593 334 279 420 92 238 1,594 1,028
Other Income 252 272 1,535 228 1,514 1,133 529 324 2,287 3,500
PBT after EO expense 4,011 4,436 5,141 2,634 5,566 5,735 3,402 5,415 16,220 20,117
Tax 553 719 1,283 593 1,308 1,374 -642 978 3,094 3,018
Rate (%) 13.8 16.2 25.0 22.5 23.5 24.0 -18.9 18.1 19.1 15.0
Minority Interest 67.6 173.6 109.8 9.3 169.6 134.7 38.1 107.6 360.2 450.0
Reported PAT 3,391 3,543 3,748 2,032 4,088 4,226 4,006 4,330 12,766 16,649
One-off upside
Adj PAT 3,391 3,543 3,748 2,032 4,088 4,226 4,677 4,330 12,766 16,649
YoY Change (%) -47.8 -34.7 8.7 -33.2 20.6 19.3 24.8 113.1 -30.7 30.4
Margins (%) 9.3 9.4 10.3 5.7 11.6 10.4 12.0 11.1 8.7 10.8
April 2018 186

Divi’s Laboratories
Bloomberg DIVI IN CMP: INR1,107 TP:INR1,100 (-1%) Neutral
 Divis Laboratories (DIVI) is likely to register decline in revenues by
M. Cap. (INR b)/(USD b) 294 / 5
~4% YoY to INR10.2b.
 Adjusted EBITDA is likely to decline ~5% YoY to INR3.4b, with
1,6,12 Rel Perf. (%) 11 / 23 / 64
margin contracting slightly by ~45bp.
 PAT is expected to report muted growth of ~2% YoY to INR2.6b.
Financial Snapshot (INR Billion)  US FDA, in November 2017 lifted the import alert at DIVI’s
Y/E MARCH 2017 2018E 2019E 2020E Vishakhapatnam-based Unit-2 facility.
Sales 41.0 37.7 44.2 50.8  Though resolution of import alert in record time is a significant
EBITDA 14.3 11.9 15.9 19.0 positive, we believe that the run-up in the stock already factors
NP 10.6 8.7 11.7 14.0 most of it. We maintain Neutral, with a target price of INR1,100
EPS (INR) 39.9 32.9 44.0 52.7 (23x 1HFY20E EPS).
EPS Gro. (%) -5.8 -17.7 33.9 19.7  The stock trades at 21x FY20E earnings.
BV/Sh. (INR) 201.8 208.0 232.2 261.2
RoE (%) 22.0 16.0 20.0 21.3
RoCE (%) 21.8 16.0 19.9 21.3
Valuations
P/E (x) 27.7 33.7 25.2 21.0
EV/EBITDA (x) 20.4 24.9 18.0 14.8  Outlook for growth for FY19E.
Div. Yield (%) 0.9 1.1 1.5 1.8  Ramp-up of new facility.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Op Revenue 10,060 9,918 9,600 10,631 8,212 8,902 10,379 10,222 40,952 37,715
YoY Change (%) 24.7 3.1 12.7 -2.8 -18.4 -10.2 8.1 -3.8 7.8 -7.9
EBITDA 4,016 3,680 3,777 3,585 2,448 2,772 3,261 3,399 14,350 11,880
Margins (%) 39.9 37.1 39.3 33.7 29.8 31.1 31.4 33.2 35.0 31.5
Depreciation 301 308 310 314 323 339 374 412 1,233 1,449
Interest 4 4 4 10 5 8 3 8 23 23
Other Income 184 226 215 245 297 336 170 577 859 1,379
PBT before EO Income 3,896 3,595 3,678 3,505 2,417 2,761 3,055 3,554 13,953 11,788
EO Income 0 0 0 0 0 0 0 0 0 0
PBT 3,896 3,595 3,678 3,505 2,417 2,761 3,055 3,554 13,953 11,788
Tax 878 565 996 912 652 693 808 911 3,349 3,065
Deferred Tax 0 0 0 0 0 0 0 0 0 0
Rate (%) 22.5 15.7 27.1 26.0 27.0 25.1 26.5 25.6 24.0 26.0
Adj PAT 3,018 3,030 2,683 2,593 1,765 2,068 2,247 2,643 10,604 8,723
YoY Change (%) 23.1 2.5 8.8 -19.5 -41.5 -31.8 -16.3 1.9 -4.2 -17.7
Margins (%) 30.0 30.5 27.9 24.4 21.5 23.2 21.6 25.9 25.9 23.1
Reported PAT 3,018 2,239 2,683 2,593 1,765 2,068 2,247 2,643 10,604 8,723
April 2018 187

Dr Reddy’s Labs
Bloomberg DRRD IN CMP: INR2,129 TP: INR2,575 (+21%) Neutral
 Dr Reddy’s Lab is expected to report moderate growth of ~6% YoY
M. Cap. (INR b)/(USD b) 363 / 6
52-Week Range (INR) 2788 / 1902
in 4QFY18, with revenue at INR37.5b.
1,6,12 Rel Perf. (%) -2 / -15 / -34
 US business is likely to grow ~6% YoY to INR16.2b on the back of
new launches, while Europe sales are expected to post decline of
~4% YoY. India business is expected to report robust growth of
Y/E MARCH 2017 2018E 2019E 2020E
~16% YoY to INR6.6b.
Sales 140.8 144.2 170.9 201.6  EBITDA is expected to grow by 30% YoY to INR7.6b and margin to
EBITDA 24.2 24.9 38.4 48.0 expand by ~380bp YoY to 20.2% due to lower base in 4QFY17
NP 12.0 11.4 19.5 24.9 (which had lower gross margin (due to pricing pressure) and
EPS (INR) 72.6 67.1 114.1 146.1 certain one-off charges).
EPS Gro. (%) -45.1 -7.6 70.0 28.0  PAT is expected to increase by ~20% YoY to INR3.7b, led by
BV/Sh. (INR) 740 768 871 997 margin expansion.
RoE (%) 9.7 9.0 13.9 15.6  We believe the stock will remain range bound until the time we
RoCE (%) 6.4 4.8 10.4 12.4 do not get more visibility about key launches in the US (including
Valuations Aloxi, Nuvaring, Soboxone, Copaxone 20 & 40mg). We maintain
P/E (x) 29.3 31.7 18.7 14.6 Neutral with a TP of INR2,575 @ 20x 1HFY20E PER.
P/BV (x) 2.9 2.8 2.4 2.1
Dividend Yield (%) 0.5 0.5 0.8 1.0  Update on USFDA resolution of warning letters for Srikakulam,
Duvvada and Miryalaguda API plants.
 FY19 outlook for both the generics and PSAI businesses.
 Impact of pricing pressure in the US.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 32,345 35,857 37,065 35,542 33,159 35,460 38,060 37,506 140,809 144,185
YoY Change (%) -13.9 -10.1 -6.6 -5.4 2.5 -1.1 2.7 5.5 -9.0 2.4
EBITDA 3,773 6,023 8,526 5,834 3,058 6,634 7,667 7,585 24,155 24,944
Margins (%) 11.7 16.8 23.0 16.4 9.2 18.7 20.1 20.2 17.2 17.3
Amortization 2,681 2,914 2,924 3,204 2,799 2,940 2,971 2,969 11,722 11,679
Other Income 615 726 320 559 513 182 1,249 492 2,220 2,436
Profit before Tax 1,707 3,835 5,922 3,189 772 3,876 5,945 5,108 14,652 15,700
Tax 444 885 1,221 64 181 1,027 2,601 1,372 2,614 5,181
Rate (%) 26.0 23.1 20.6 2.0 23.4 26.5 43.8 26.9 17.8 33.0
Reported PAT 1,263 2,950 4,701 3,125 591 2,849 3,344 3,736 12,038 10,519
Net Profit 1,263 2,950 4,701 3,125 591 2,849 3,344 3,736 12,038 10,519
One-off/low-competition PAT in US 0 0 0 0 0 0 -930 0 0 0
Adjusted PAT 1,263 3,244 4,701 3,125 591 2,849 4,274 3,736 12,038 10,519
YoY Change (%) -79.8 -55.1 -18.8 -16.9 -53.2 -12.2 -9.1 19.5 -39.8 -12.6
Margins (%) 3.9 9.0 12.7 8.8 1.8 8.0 11.2 10.0 8.5 7.3
April 2018 188

Fortis Healthcare
Bloomberg FORH IN CMP: INR130 TP:INR185 (+42%) Buy
 We expect Fortis to deliver revenue growth of 9% to INR12.2b on
the back of steady growth in the core businesses (Hospitals &
Diagnostics). EBITDA margin will continue to expand sequentially.
1,6,12 Rel Perf. (%) -17 / -17 / -43
 We expect hospital EBITDA to grow more than 4x by FY19E (from
FY16 base) on back of lower base, coupled with strong high-teen
Financial Snapshot (INR Billion) growth in EBITDAC, relatively flattish BT cost (at normalized level)
Y/E MARCH 2017 2018E 2019E 2020E and FHTL transaction.
Sales 45.7 47.0 52.6 60.5  We expect EBITDA margin for the diagnostics business to improve
EBITDA 3.5 3.3 5.6 8.8 by ~300bp by FY19E on the back of deeper penetration in existing
NP 4.8 0.7 1.3 3.4 markets, rationalization of low-margin centers, growth in samples
EPS (INR) 10.3 1.5 2.8 7.3 tested and higher share from the O&M model.
EPS Gro. (%) -638.2 -85.8 87.8 164.5  The current deal proposition by Manipal for the hospital business
BV/Sh. (INR) 111.1 124.6 127.3 134.5 does not provide much upside to the stock. Manipal Hospital has
RoE (%) 10.0 1.2 2.2 5.6 vast experience in the hospital and healthcare business with a
RoCE (%) 3.4 -1.9 3.1 5.4 string financial track record, which will be beneficial for FORH in
Valuations the medium-to-long term. Having said that, the deal is unlikely to
P/E (x) 12.6 88.5 47.2 17.8 be approved by shareholders due to lower valuation given to the
P/BV (x) 1.2 1.0 1.0 1.0 hospital business. We value the hospital business at 18x FY19E
EV/EBITDA 21.1 22.0 12.9 8.0 EV/EBITDA and the diagnostics business at 20x FY19E EV/EBITDA
(x)
EV/Sales (x) 1.6 1.5 1.4 1.2 with TP of INR185.
 Update on deal announcement on merger with Manipal Hospitals.
 PAT breakeven of hospitals business.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 11,212 11,957 11,334 11,234 11,566 11,972 11,207 12,242 45,737 46,986
YoY Change (%) 8.4 10.9 8.9 3.2 3.2 0.1 -1.1 9.0 7.8 2.7
EBITDA 626 990 1,123 790 861 1,065 516 835 3,529 3,277
Margins (%) 5.6 8.3 9.9 7.0 7.4 8.9 4.6 6.8 7.7 7.0
Depreciation 476 517 599 630 590 607 590 563 2,222 2,350
Interest 420 461 748 666 644 660 632 664 2,294 2,600
Other Income 330 380 589 361 576 371 426 327 1,660 1,700
PBT before EO expense 61 393 365 -146 203 169 -280 -65 673 27
Extra-Ord expense 0 -9 -4,194 8 6 468 2 0 16 0
PBT 61 402 4,559 -153 197 -299 -282 -65 657 27
Tax 29 242 190 263 123 170 26 -278 724 40
Rate (%) 47.3 60.2 4.2 -171.7 62.1 -56.8 -9.2 428.5 110.3 150.0
Minority Interest & P/L of Asso. Cos. -130 -154 -165 -41 -151 -233 -117 -192 -4,861 -693
Reported PAT 162 314 4,533 -375 226 -236 -191 406 4,793 680
Adj PAT 162 310 514 -354 228 497 -189 406 4,792 680
YoY Change (%) -82.6 -62.6 -193.1 -61.0 41.1 60.3 -136.7 -214.5 460.3 -85.8
Margins (%) 1.4 2.6 4.5 -3.2 2.0 4.2 -1.7 3.3 10.5 1.4
April 2018 189

Granules India
Bloomberg GRAN IN
 We expect Granules India (GRAN) to post healthy 14% YoY growth
52-Week Range (INR) 157 / 101 in 4QFY18 reported sales to INR4.14b.
1,6,12 Rel Perf. (%) -5 / -11 / -35  EBITDA is likely to decrease marginally by ~3% YoY to INR760m
due to high input cost. EBITDA margin is also expected to contract
Financial Snapshot (INR Billion) by ~330bp YoY to 18.3% due to increase in expense on back of
Y/E MAR 2017 2018E 2019E 2020E commissioning of new facility.
Sales 14.4 16.4 21.6 27.1  Depreciation is expected to increase due to new facility getting
EBITDA 3.0 3.0 4.2 5.5 operational. We expect reported PAT to decrease ~14% YoY to
NP 1.7 1.5 2.0 2.8 INR391m.
EPS (INR) 7.2 6.3 7.9 11.0  We believe the stock is poised for multiple re-rating on the back
EPS Gro. (%) 32.3 -12.4 25.2 38.7 of asset sweating in traditional business, entry in high-value US
BV/Sh. (INR) 39.5 54.6 59.9 67.0 business and commencement of API sales from Omnichem JV. We
RoE (%) 21.1 13.2 13.9 17.4 maintain our Buy rating with a TP of INR175 @18x 1HFY20E.
RoCE (%) 17.9 13.9 14.7 18.1
Valuations
P/E (x) 14.9 17.0 13.6 9.8 Key issues to watch out
P/BV (x) 2.7 2.0 1.8 1.6  New ANDA filings in complex category.
EV/EBITDA (x) 12.2 12.1 9.1 7.1  Update on free-cash generation and debt repayment schedule.
D. Yield (%) 2.5 2.3 1.8 1.5  Update on JV with Onmichem.

(Consolidated) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 3,498 3,638 3,595 3,634 3,860 3,926 4,107 4,142 14,353 16,035
YoY Change (%) 8.4 3.1 4.2 -2.4 10.3 7.9 14.3 14.0 0.4 11.7
EBITDA 685 742 763 785 769 769 740 760 2,988 3,039
Margins (%) 19.6 20.4 21.2 21.6 19.9 19.6 18.0 18.3 20.8 19.0
Depreciation 163 185 187 180 176 186 196 204 715 762
Interest 79 83 84 77 82 104 82 90 323 359
Other Income 30 39 43 0 4 68 9 59 99 140
Tax 154 156 176 166 177 193 169 181 652 720
Rate (%) 32.5 30.4 32.9 31.4 34.4 35.2 35.9 34.5 31.8 35.0
PAT (Ex associate income) 319 357 359 363 338 355 302 344 1,398 1,338
Reported PAT 390 408 390 457 368 403 350 391 1,645 1,513
YoY Change (%) 33.8 28.1 43.5 13.4 -5.5 -1.2 -10.1 -14.4 44.3 -8.1
Margins (%) 11.1 11.2 10.8 12.6 9.5 10.3 8.5 9.4 11.5 9.4
April 2018 190

Glenmark Pharma
Bloomberg GNP IN
CMP: INR550 TP:INR550 (+0%) Neutral
M. Cap. (INR b)/(USD b) 155 / 2
 We expect Glenmark Pharmaceuticals (GNP) to report ~8% YoY
52-Week Range (INR) 930 / 517 decline in overall revenues to INR22.2b. Decline in sales is
1,6,12 Rel Perf. (%) 3 / -14 / -47 primarily attributed to decline in the US business (-27.7% YoY)
due to Zetia FTF launch in 3QFY17 (6 months exclusivity ended in
Financial Snapshot (INR Billion) 1QFY18).
Y/E MAR 2017 2018E 2019E 2020E  The India branded business is likely to post moderate growth of
Sales 89.7 89.5 97.6 109.6 5% YoY, while LatAm business is expected to decline by ~34% YoY;
EBITDA 18.2 15.6 16.2 19.2 RoW and Europe businesses are expected to grow 6.2% and 3%
NP 11.1 8.6 9.3 11.6 YoY, respectively.
EPS (INR) 39.3 30.6 32.9 41.1  EBITDA is likely to decrease 9% YoY to INR3.7b and margin to
EPS Gro. (%) 58.0 -22.2 7.7 24.7 contract marginally by 15bp to 16.8%.
BV/Sh. (INR) 159.2 186.1 215.4 252.8  Weak cash flow conversion and high net debt remain key
RoE (%) 24.7 16.4 15.3 16.2 concerns. Maintain Neutral with a TP of INR550 @ 15x 1HFY20E
RoCE (%) 19.1 14.8 16.6 18.1 EPS. Any big in-licensing deal in innovation business could act as a
Valuations catalyst.
P/E (x) 14.0 18.0 16.7 13.4
P/BV (x) 3.5 3.0 2.6 2.2
EV/EBITDA (x) 10.6 11.9 11.3 9.4  New ANDA filings in complex category.
D. Yield (%) 0.5 0.5 0.5 0.5  Update on free-cash generation and debt repayment schedule.
 Progress of NCE/NBE pipeline and potential out-licensing
prospects.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues (Core) 19,095 21,732 24,630 24,244 23,294 22,234 21,715 22,236 89,701 89,479
YoY Change (%) 17.4 17.9 42.8 11.5 22.0 2.3 -11.8 -8.3 18.2 -0.2
EBITDA 3,192 3,978 6,929 4,110 5,438 3,552 2,905 3,744 18,211 15,640
Margins (%) 16.7 18.3 28.1 17.0 23.3 16.0 13.4 16.8 20.3 17.5
Depreciation 642 770 625 689 777 752 754 739 2,644 3,022
Interest 430 629 617 697 709 698 705 709 2,373 2,821
Other Income 1,358 491 866 -185 489 629 90 492 2,530 1,700
PBT before EO Expense 3,477 3,070 6,553 2,539 4,441 2,731 1,537 2,788 15,724 11,497
Extra-Ord Expense 0 0 0 809 0 0 0 0 809 0
Tax 1,209 876 1,782 -107 1,108 589 489 688 3,827 2,874
Rate (%) 34.8 28.5 27.2 -6.2 24.9 21.6 31.8 24.7 24.3 25.0
Reported PAT (incl one-offs) 2,268 2,193 4,771 1,837 3,334 2,141 1,047 2,100 11,897 8,623
Reported PAT (excl MI) 2,268 2,193 4,771 1,837 3,334 2,141 1,047 2,100 11,897 8,623
YoY Change (%) 24.0 9.4 180.8 23.5 47.0 -2.4 -78.0 14.3 56.5 -27.5
Margins (%) 11.9 10.1 19.4 7.6 14.3 9.6 4.8 9.4 13.3 9.6
April 2018 191

GSK Pharma
Bloomberg GLXO IN
CMP: INR2,152 TP:INR2,500 (+16%) Neutral
M. Cap. (INR b)/(USD b) 182 / 3
 In 4QFY18, we expect GlaxoSmithKline Pharmaceuticals (GLXO) to
52-Week Range (INR) 2760 / 2040
report marginal decline of ~3% YoY in revenues to INR7.4b.
1,6,12 Rel Perf. (%) -8 / -19 / -33  EBITDA is expected to increase 26% YoY to INR1.5b, and margin to
expand by ~510bp to 20.4% (due to regulatory issues GLXO
margin in 4QFY17 came in at 15.3%).
Y/E MARCH 2017 2018E 2019E 2020E  Increase in EBITDA margin will improve adj. PAT to INR960m.
Sales 29.3 28.7 32.1 36.0  We believe GLXO has strong parent support, superior brand
EBITDA 3.5 4.8 5.3 6.1 portfolio (competitive advantage), high payout ratio (>100%) and
NP 2.9 3.2 3.6 4.1 industry-leading return ratios (RoCE of ~30%). At CMP, GLXO
EPS (INR) 34.4 38.3 42.6 48.5 trades at 56x FY18E and 50x FY19E, a huge premium to the sector.
EPS Gro. (%) -22.2 11.5 11.2 13.7 We, thus, maintain our Neutral rating with a target price of
BV/Sh. (INR) 236.9 194.8 156.9 156.9 INR2,500 @ 45x FY19E PER.
RoE (%) 14.5 19.7 27.2 30.9
RoCE (%) 13.9 17.7 24.2 30.9
Valuations
P/E (x) 62.6 56.1 50.5 44.4
EV/EBITDA (x) 50.1 36.0 33.5 28.9  New product introductions in FY19E.
D. Yield (%) 1.4 3.3 3.3 3.3  Market performance of products impacted by DPCO 2013.

Net Sales 6,852 7,829 6,893 7,634 5,868 8,363 7,039 7,420 29,265 28,690
YoY Change (%) 10.2 11.8 -5.4 11.3 -14.4 6.8 2.1 -2.8 6.8 -2.0
EBITDA 702 1,245 350 1,165 -6 1,921 1,418 1,510 3,455 4,843
Margins (%) 10.2 15.9 5.1 15.3 -0.1 23.0 20.1 20.4 11.8 16.9
Depreciation 54 66 66 78 75 77 134 140 264 427
Other Income 441 343 319 351 340 96 120 141 1,463 696
PBT before EO Expense 1,090 1,522 603 1,438 258 1,940 1,404 1,511 4,655 5,112
Tax 386 536 252 570 120 688 507 551 1,744 1,866
Rate (%) 35.4 35.2 41.8 39.6 46.6 35.5 36.1 36.4 37.5 36.5
Adjusted PAT 705 987 351 869 138 1,252 897 960 2,911 3,246
YoY Change (%) -26.4 -4.5 -57.8 -3.3 -80.4 26.8 155.7 10.5 -22.2 11.5
Margins (%) 10.3 12.6 5.1 11.4 2.3 15.0 12.7 12.9 9.9 11.3
Extra-Ord Expense -18 -2 -179 -259 -126 -52 0 0 -457 -178
Reported PAT 723 988 530 1,127 264 1,303 897 960 3,368 3,424
April 2018 192

Ipca Laboratories
Bloomberg IPCA IN CMP: INR677 TP:INR750 (+11%) Buy
 We expect Ipca Laboratories (IPCA) to post revenue growth of
16% YoY to INR7.7b, mainly due to growth in domestic business
1,6,12 Rel Perf. (%) 1 / 31 / -4
and API business by ~29% and ~22% respectively.
 International generic business is expected to post healthy growth
of ~13% YoY to INR2.5b on the back of strong growth in generics
Y/E MARCH 2017 2018E 2019E 2020E
business by ~27% YoY, which will be partially off-set by decline in
Sales 32.1 32.1 35.9 41.7
branded business by ~5%.
EBITDA 4.4 4.9 6.5 7.9  EBITDA is likely to increase significantly by ~130% YoY to INR1.6b,
NP 2.0 2.7 3.7 4.7 with expansion of ~1000bp in EBITDA margin to 20.2%, primarily
EPS (INR) 16.1 21.4 29.2 37.3 due to low base.
EPS Gro. (%) 52.8 33.2 36.6 27.7  PAT is expected to increase significantly by ~99% YoY to INR883m,
BV/Sh. (INR) 194.6 212.7 237.6 269.3 primarily due to margin expansion.
RoE (%) 8.6 10.5 13.0 14.7  We expect PAT CAGR of >30% until FY20, led by steady revenue
RoCE (%) 7.5 9.3 11.4 12.9 growth (~14% till FY20E), and a significant improvement in
Valuations margins (~380bp over two years) on cost-rationalization efforts,
P/E (x) 42.1 31.6 23.2 18.1 significantly lower remediation costs, and a pick-up in the tender
P/BV (x) 3.5 3.2 2.8 2.5 and US businesses. We have a Buy rating with TP of INR750.
 Update on resolution of USFDA regulatory issues.
 Outlook for institutional tender business.
 Impact of emerging market currency weakness.
 Outlook for FY19.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues (Core) 8,422 8,720 7,398 6,658 7,130 8,643 8,592 7,718 32,106 32,083
YoY Change (%) 11.1 16.8 8.1 6.6 -15.3 -0.9 16.1 15.9 11.3 -0.1
EBITDA 1,285 1,280 1,104 677 215 1,490 1,612 1,559 4,448 4,877
Margins (%) 15.3 14.7 14.9 10.2 3.0 17.2 18.8 20.2 13.9 15.2
Depreciation 422 429 432 428 433 441 438 485 1,730 1,797
Interest 65 68 57 44 56 64 56 68 241 244
Other Income 49 62 59 52 62 110 110 119 226 400
PBT before EO Expense 847 845 675 257 -212 1,096 1,228 1,124 2,703 3,235
Extra-Ord Expense 81 -78 39 0 0 0 0 0 0 0
PBT after EO Expense 766 923 636 257 -212 1,096 1,228 1,124 2,703 3,235
Tax 290 374 222 -187 -10 130 172 242 675 534
Rate (%) 34.2 44.2 32.9 -72.7 4.6 11.9 14.0 21.5 25.0 16.5
Reported PAT 476 549 414 444 -202 966 1,056 883 2,028 2,702
Adj PAT 557 471 453 444 -202 966 1,056 883 2,028 2,702
YoY Change (%) 82.5 31.1 88.4 9.6 -136.4 104.9 133.0 98.8 62.8 33.2
Margins (%) 5.6 6.3 5.6 6.7 -2.8 11.2 12.3 11.4 6.3 8.4
April 2018 193

Jubilant Life Sciences

Bloomberg JUBILANT IN
CMP: INR847 TP:INR1,110(+32%) Buy
 We expect sales momentum to continue for Jubilant Life Science
M. Cap. (INR b)/(USD b) 132 / 2
(JLS) by growing at 29.5% YoY to INR21.2b for the quarter.
1,6,12 Rel Perf. (%) 4 / 23 / -8 Considerable part of growth would be due to addition of Triad
business, which was absent in 4QFY17.
 We expect pharmaceutical segment to grow moderately by 4.2%
Y/E MARCH 2017 2018E 2019E 2020E YoY. The pricing pressure in US market is expected to result in
Sales 58.6 72.5 85.8 95.2 subdued growth in pharma segment for JLS.
EBITDA 13.5 15.5 18.7 20.9  Life science ingredient (LSI) is expected to grow at 15% YoY for
NP 5.8 7.5 9.8 11.3 the quarter due to higher volume off-take and better pricing.
EPS (INR) 36.9 47.8 62.6 72.5  We expect EBITDA margin at 21%, better YoY as well as QoQ,
EPS Gro. (%) 46.9 29.5 30.9 15.8 largely due to better profitability in LSI segment.
BV/Sh. (INR) 220.5 264.4 321.8 388.3  We expect PAT to be at INR2.2b, up 48.4% YoY, for the quarter on
RoE (%) 18.0 19.7 21.4 20.4 a low base of past year. There was a sharp jump in interest and
RoCE (%) 11.2 12.4 14.3 14.7 tax outgo in 3QFY17. With debt repayment and lower interest
Valuations rate, interest outgo has been on a downtrend since 4QFY17.
P/E (x) 22.9 17.7 13.5 11.7  The stock trades at 13.5x FY19E EPS. We maintain Buy, with a
P/BV (x) 3.8 3.2 2.6 2.2 target price of INR1,110 (SOTP based).
EV/Sales (x) 2.9 2.3 1.9 1.6  Outlook on contracts for new radiopharmaceutical products.
D. Yield (%) 0.4 0.5 0.6 0.7  Outlook on pricing of products under LSI category.
 Impact of pricing pressure on pharma products for regulated
market.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 14,539 14,193 14,916 16,414 15,961 16,420 20,678 21,257 60,063 74,315
YoY Change (%) 0.6 -2.2 9.1 10.5 9.8 15.7 38.6 29.5 4.5 23.7
EBITDA 3,681 3,403 3,318 3,050 3,376 3,061 4,168 4,464 13,453 15,073
Margins (%) 25.3 24.0 22.2 18.6 21.2 18.6 20.2 21.0 22.4 20.3
Depreciation 715 720 727 752 725 790 818 846 2,914 3,179
Interest 828 800 982 802 687 660 771 660 3,411 2,778
Other Income 44 51 51 105 68 71 32 83 251 254
PBT 2,182 1,934 1,661 1,601 2,032 1,682 2,612 3,041 7,379 9,370
Tax 542 497 480 111 595 427 483 827 1,630 2,332
Rate (%) 24.9 25.7 28.9 6.9 29.3 25.4 18.5 27.2 22.1 24.9
Minority Interest & P/L of Asso. Cos. 24 -11 0 0 -34 -27 3 3 -14 -55
Reported PAT 1,616 1,448 1,181 1,490 1,471 1,282 2,125 2,211 5,757 7,093
Adj PAT 1,616 1,448 1,181 1,490 1,471 1,282 2,125 2,211 5,757 7,093
YoY Change (%) 22.5 14.5 -4.0 1,272.3 -9.0 -11.4 80.0 48.4 46.8 23.2
Margins (%) 11.1 10.2 7.9 9.1 9.2 7.8 10.3 10.4 9.6 9.5
April 2018 194

Laurus Labs
Bloomberg LAURUS IN CMP: INR514 TP:INR613 (+20%) Buy
 We expect 13.7% YoY growth in sales to INR5.4b for the quarter,
led by better traction in ARV/Oncology API, Synthesis and
1,6,12 Rel Perf. (%)
ingredient business. We also expect revenue from US formulation
-2 / -5 / -13
to kick in from 4QFY18.
 The YoY growth would be partly offset by declining Hep-C
Y/E MARCH 2017 2018E 2019E 2020E business.
Sales 19.0 20.9 25.3 29.2  Lower share of higher-margin business is expected to result in
EBITDA 4.1 4.3 5.7 6.8 400bp YoY reduction in EBITDA margin.
NP 1.9 2.0 3.1 3.8  Lower margin and higher tax rate are expected to result in 29%
EPS (INR) 17.8 19.0 29.1 35.7 YoY reduction in PAT to INR528m for the quarter.
EPS Gro. (%) 43.0 7.0 52.7 22.8
 The stock trades at 17.6x FY19E EPS. We maintain Buy, with a
BV/Sh. (INR) 125.8 144.5 173.0 208.0
RoE (%)
target price of INR613 (18x 12M forward earnings).
17.4 14.1 18.3 18.8
RoCE (%) 13.4 11.1 14.1 14.8
Valuations
P/E (x) 28.7 26.8 17.6 14.3
P/BV (x) 4.1 3.5 3.0 2.5
EV/EBITDA 15.3 14.8 11.0 9.2
(x)  Outlook on ANDA filings and pace of approval.
EV/Sales (x) 3.3 3.0 2.5 2.1
D. Yield (%) 0.1 0.1 0.1 0.1  Outlook on ARV API business and filings for formulation.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,165 5,254 5,050 4,735 4,912 5,386 4,789 5,383 19,204 20,470
YoY Change (%) NA NA 12.2 -3.6 17.9 2.5 -5.2 13.7 104.0 6.6
EBITDA 850 1,103 988 1,187 965 1,126 874 1,130 4,129 4,095
Margins (%) 20.4 21.0 19.6 25.1 19.6 20.9 18.2 21.0 21.5 20.0
Depreciation 248 253 263 267 298 301 310 320 1,031 1,228
Interest 279 247 297 148 191 195 178 167 970 731
Other Income 23 76 128 89 75 66 99 70 316 311
PBT 346 680 555 861 552 696 486 713 2,443 2,447
Tax 80 171 81 118 163 208 137 185 451 693
Rate (%) 23.0 25.2 14.6 13.7 29.5 29.9 28.2 26.0 18.4 28.3
Reported PAT 256 508 474 743 389 488 349 528 1,982 1,753
Adj PAT 256 508 474 743 389 488 349 528 1,982 1,753
YoY Change (%) NA NA 17.9 39.0 51.7 -4.1 -26.4 -29.0 111.6 -11.5
Margins (%) 6.2 9.7 9.4 15.7 7.9 9.1 7.3 9.8 10.3 8.6
April 2018 195

Lupin
Bloomberg LPC IN CMP: INR789 TP:INR940 (+19%) Buy
 We expect Lupin's (LPC) 4QFY18 revenue to decline ~6% YoY to
M. Cap. (INR b)/(USD b) 356 / 5
IN39.8b, mainly due to a decline in the US business by ~26% YoY
to INR14b.
1,6,12 Rel Perf. (%) 0 / -29 / -57
 India business is expected to exhibit robust growth of ~27% YoY
to INR11.1b, while Japan sales are expected to improve 17.7%
Financial Snapshot (INR Billion) YoY to INR5.4b in 4QFY18, aided by currency tailwinds.
Y/E MARCH 2017 2018E 2019E 2020E
 EBITDA is estimated to decline ~32% YoY to INR7.5b, as margins
Sales 174.9 157.8 179.6 208.2 are expected to come down by ~710bp to 18.9%.
EBITDA 44.9 30.6 36.8 46.4  Reported PAT is likely to decline 45% YoY to IN3.3b due to
NP 25.6 14.0 18.2 24.4 decrease in EBITDA margin.
EPS (INR) 56.6 31.0 40.2 54.1  LPC has invested ~INR60b toward R&D over FY16-18E (much
EPS Gro. (%) 12.4 -45.2 29.5 34.6 higher than what it invested in a decade prior to that). GMP
BV/Sh. (INR) 298.9 318.6 348.3 391.9 compliance is key to monetize this investment. Although the
RoE (%) 20.9 10.1 12.1 14.6 stock faces near-term pressure, key approvals in the US and
RoCE (%) 13.3 6.8 8.4 10.4 resolution of the WL status (expected in 12 months) will help
Valuations create value in 12-18 months. We maintain Buy with a TP of
P/E (x) 13.9 25.4 19.6 14.6 INR940 @ 20x 1HFY20E PER.
P/BV (x) 2.6 2.5 2.3 2.0
EV/EBITDA (x)
9.2 13.0 10.6 8.2
D. Yield (%)  Outlook on US business for FY19E and ANDA launches.
1.1 1.1 1.1 1.1
 Outlook on future ANDA launches and Gavis integration.
 Update on warning letter for Goa and Indore facility.
 Outlook on inorganic growth initiatives.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 44,677 42,905 44,828 42,533 38,696 39,520 39,756 39,826 174,943 157,798
YoY Change (%) 41.6 28.9 26.1 2.0 -13.4 -7.9 -11.3 -6.4 23.1 -9.8
EBITDA 13,080 10,281 12,158 11,052 7,684 8,531 6,883 7,515 44,931 30,613
Margins (%) 29.3 24.0 27.1 26.0 19.9 21.6 17.3 18.9 25.7 19.4
Depreciation 2,027 2,112 2,309 2,674 2,605 2,722 2,804 2,796 9,122 10,926
Interest 320 263 459 406 439 479 540 526 1,525 1,984
Other Income 826 271 1,036 453 320 740 284 306 1,065 1,650
PBT 11,560 8,177 10,426 8,425 4,959 6,070 3,824 4,499 35,349 19,352
Tax 2,734 1,589 4,095 1,367 1,368 1,541 1,608 1,096 9,785 5,612
Rate (%) 23.7 19.4 39.3 16.2 27.6 25.4 42.0 24.4 27.7 29.0
Minority Interest 6 8 24 -16 -12 19 5 74 72 85
Reported PAT 8,819 6,580 6,307 7,074 3,603 4,511 2,211 3,330 25,492 13,655
Recurring PAT 8,820 6,622 6,331 6,069 3,581 4,550 2,577 3,330 25,492 13,655
YoY Change (%) 55.1 58.0 19.5 -18.9 -59.4 -30.8 -59.3 -45.1 12.3 -46.4
Margins (%) 19.7 15.4 14.1 14.3 9.3 11.5 6.5 8.4 14.6 8.7
April 2018 196

Sanofi India
Bloomberg SANL IN CMP: INR5,147 TP:INR5,600 (+9%) Buy
 We expect Sanofi India's (SANL) revenue to grow ~16 % YoY in
M. Cap. (INR b)/(USD b) 118 / 2
1QCY18 to INR6.4b. High growth of brands like Lantus, Allegra,
52-Week Range (INR) 5995 / 3901
Amaryl M, Enterogermina, Avila, Vaxlgrip and Cardace, and new
1,6,12 Rel Perf. (%) 3 / 19 / -3
product launches should drive SANL’s revenue growth.
 EBITDA is also likely to increase significantly by 36% YoY to
Y/E Dec 2016 2017E 2018E 2019E
INR1.4b during this quarter; expect margin expansion by ~330bp.
Sales 23.7 24.9 28.1 31.0
 We expect PAT to increase 44% YoY to INR863m.
EBITDA 5.3 5.4 6.2 7.1  We have modeled 9% sales growth, 10% EBITDA growth and 13%
Net Profit 3.0 3.3 3.7 4.3 earnings growth over CY16-19E. We maintain Buy with a TP of
Adj. EPS 129.1 141.7 161.8 186.9 INR5,600 @ 30x CY19E.
(INR)
EPS Gr. (%) 24.9 9.8 14.2 15.5
BV/Sh. (INR) 754.5 881.8 962.4 1,068.1
RoE (%) 17.1 16.1 16.8 17.5
RoCE (%) 16.5 16.2 16.4 17.3 Key issues to watch out
Payout (%) 63.5 57.3 50.2 43.5  Amortization of goodwill and brands acquired from Universal
Valuations Medicare.
P/E (x) 39.9 36.3 31.8 27.5
 Clarity on nature of reversal of recently withdrawn NPPA
P/BV (x) 6.8 5.8 5.3 4.8
guidelines.
EV/EBITDA 21.4 20.7 17.0 14.4
(x)
Div. Yield (%) 1.3 1.4 1.4 1.4

Net Sales 5,529 6,006 6,675 6,704 6,396 6,673 7,427 7,594 24,914 28,090
YoY Change (%) 1.6 -1.2 6.9 13.2 15.7 11.1 11.3 13.3 5.2 12.7
EBITDA 1,015 1,154 1,837 1,344 1,384 1,444 1,672 1,714 5,372 6,215
Margins (%) 18.4 19.2 27.5 20.0 21.6 21.6 22.5 22.6 21.6 22.1
Depreciation 253 255 257 257 253 255 257 371 1,022 1,136
Interest 4 0 0 11 4 0 0 7 11 11
Other Income 159 284 208 182 200 200 208 186 807 794
PBT before EO Items 917 1,183 1,788 1,258 1,327 1,389 1,623 1,522 5,146 5,862
Extra-Ord Expense 0 0 0 0 0 0 0 0 0 0
PBT after EO Items 917 1,183 1,788 1,258 1,327 1,389 1,623 1,522 5,146 5,862
Tax 317 446 625 498 465 500 568 607 1,886 2,140
Effective tax Rate (%) 34.6 37.7 35.0 39.6 35.0 36.0 35.0 39.9 36.6 36.5
Reported PAT 600 737 1,163 760 863 889 1,055 915 3,260 3,722
Adj PAT 600 737 1,163 760 863 889 1,055 915 3,260 3,722
YoY Change (%) -25.6 -13.6 44.3 50.5 43.8 20.6 -9.3 20.4 9.8 14.2
Margins (%) 10.9 12.3 17.4 11.3 13.5 13.3 14.2 12.1 13.1 13.3
April 2018 197

Shilpa Medicare
Bloomberg SLPA IN CMP: INR471 TP: INR686 (+46%) Buy
 We expect 8% YoY decline in net sales of Shilpa Medicare (SLPA),
on lower development income.
1,6,12 Rel Perf. (%)
 We expect US formulation sales momentum to continue due to
10 / -25 / -41
better traction in approved products.
 EBITDA margin is expected to decline from 26.2% in 4QFY17 to
19% in 4QFY18 due to lower dossier income.
Y/E March 2017 2018E 2019E 2020E
Sales 7.8 7.8 9.5 11.6
 With lowering of sales and decreased EBITDA margin, we expect
EBITDA 1.8 1.7 2.3 2.9
PAT to decline by 37% YoY to INR263m for the quarter.
NP 1.1 1.1 1.9 2.5
 The stock trades at 19.4x FY19E EPS. We maintain Buy, with a
EPS (INR) 14.0 13.3 24.3 30.6
target price of INR686 (25x 12M forward earnings).
EPS Gro. (%) 6.2 -5.0 82.4 25.9
BV/Sh. (INR) 114.4 127.0 152.9 181.9
RoE (%) 14.4 11.0 17.4 18.3
RoCE (%) 11.5 8.4 13.5 15.2
Valuations
P/E (x) 33.6 35.4 19.4 15.4
 Outlook on new ANDA approvals
P/BV (x) 4.1 3.7 3.1 2.6
 Outlook on market share in approved products
EV/EBITDA (x) 22.5 24.0 17.4 13.6
EV/Sales (x) 5.0 5.1 4.1 3.4

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 1,672 2,113 1,836 2,237 1,685 2,040 1,855 2,055 7,858 7,635
YoY Change (%) 11.7 21.1 -8.2 13.1 0.8 -3.4 1.1 -8.1 8.8 -2.8
EBITDA 333 489 348 587 341 567 272 390 1,758 1,570
Margins (%) 19.9 23.2 19.0 26.2 20.2 27.8 14.7 19.0 22.4 20.6
Depreciation 70 75 78 78 84 83 92 95 300 354
Interest 7 6 7 7 5 5 5 6 27 21
Other Income 24 37 40 79 52 53 51 50 180 205
Share of p/ (L) in Associate/ JV -62 54 -37 -7 28 -76 -8 -6 0 (62)
PBT 342 391 340 633 275 607 234 345 1,655 1,337
Tax 80 124 97 147 90 119 54 70 447 333
Rate (%) 36.5 24.7 36.1 27.8 27.2 26.2 24.7 21.0 28.5 24.9
Minority Interest & P/Lof Asso. Cos. -9 -6 -4 -8 0 0 0 0 -27 0
Reported PAT 147 382 175 390 241 336 164 263 1,091 1,067
Adj PAT 147 382 175 423 241 336 164 263 1,123 1,067
YoY Change (%) -5.3 52.4 -37.1 7.7 64.0 -12.2 -6.1 -37.7 6.2 -5.0
Margins (%) 8.8 18.1 9.5 18.9 14.3 16.5 8.8 12.8 14.3 14.0
April 2018 198

Strides Shasun
Bloomberg STR IN CMP: INR704 TP:INR989(+40%) Buy
 We expect sales of INR7.9b for 4QFY18. The YoY numbers are not
comparable, as 4QFY17 includes API and domestic formulation
1,6,12 Rel Perf. (%) 1 / -23 / -49
sales. API business, which was hived off to Solara, is shown as
discontinued operations. Domestic formulation business was sold
to Eris Life Sciences in November 2017.
Y/E MARCH 2017 2018E 2019E 2020E
 We expect marginal improvement on a QoQ basis.
Sales 34.8 29.5 34.4 39.9
 We expect EBITDA margin to rise by 100bp QoQ, largely due to
EBITDA 6.4 4.1 6.8 8.1 new launches in the US market.
NP 2.9 1.3 3.6 5.0  Accordingly, PAT is expected to rise by 49% QoQ to INR598m for
EPS (INR) 32.3 14.1 40.8 55.7 4QFY18.
EPS Gro. (%) 77.6 -56.2 188.8 36.7  The stock trades at 17.3x FY19E EPS. We maintain Buy, with a
BV/Sh. (INR) 303.1 315.4 356.2 411.9 target price of INR989 (SOTP basis).
RoE (%) 10.8 4.6 12.1 14.5
RoCE (%) 8.3 5.1 8.8 10.2
Valuations Key issues to watch out
P/E (x) 21.9 50.1 17.3 12.7
 Pace of ANDA filings and outlook on niche approvals.
P/BV (x) 2.3 2.2 2.0 1.7
 Outlook on margin improvement in Australia business.
EV/EBITDA (x) 15.1 22.2 13.0 10.4
EV/Sales (x) 2.8 3.1 2.6 2.1
D. Yield (%) 0.0 0.0 0.0 0.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 7,895 9,535 7,298 8,884 6,579 7,695 7,490 7,850 34,834 29,620
YoY Change (%) 28.8 33.3 -15.9 -3.9 -16.7 -19.3 -19.8 -11.6 11.6 -15.0
EBITDA 1,323 1,434 1,416 1,569 629 997 1,228 1,374 6,428 4,230
Margins (%) 16.8 15.0 19.4 17.7 9.6 13.0 16.4 17.5 18.5 14.3
Depreciation 424 468 309 529 356 384 391 400 1,872 1,536
Interest 559 617 441 592 524 486 498 450 2,269 1,952
Other Income 208 658 222 731 345 222 157 160 1,686 884
PBT before EO expense 547 1,008 888 1,179 93 350 497 684 3,973 1,627
Extra-Ord expense 60 0 115 17 34 123 63 0 1,006 219
PBT 487 1,008 773 1,162 60 227 433 684 2,967 1,408
Tax 88 152 235 175 10 33 -2 85 470 121
Rate (%) 18.1 15.1 30.4 15.0 15.9 14.4 -0.4 12.5 15.8 8.6
Minority Interest & P/Lof Asso. Cos. 65 114 1 -7 31 53 32 0 458 117
Reported PAT from Continuing Ops. 334 741 537 994 20 142 403 598 2,039 1,204
Adj. PAT from Continuing Ops. 383 741 617 1,009 48 246 466 598 2,886 1,371
YoY Change (%) 260.9 106.9 4.7 471 -87.5 -66.7 -24.4 -41 136.9 -52.5
Margins (%) 4.9 7.8 8.4 11.4 0.7 3.2 6.2 7.6 8.3 4.6
April 2018 199

Sun Pharma
Bloomberg SUNP IN
CMP: INR510 TP:INR675(+32%) Buy
 Sun Pharmaceuticals (SUNP) is likely to register decline in
M. Cap. (INR b)/(USD b) 1224 / 19
revenues by ~4% YoY to INR65.8b, primarily on the back of a
1,6,12 Rel Perf. (%) -3 / -4 / -38
decrease in US business by ~16% to INR21.4b.
 India business is expected to grow ~6% YoY, while the Row and
API businesses are expected to grow 3% YoY and 7% YoY,
Y/E MARCH 2017 2018E 2019E 2020E
respectively.
Sales  SUNP’s EBITDA is expected to increase ~17% YoY to INR14.4b,
302.6 259.9 302.4 351.5
EBITDA 87.8 52.6 76.0 95.3
with margin expansion of ~380p to 21.9% primarily due to low
NP 69.6 26.6 51.8 66.7 base in 4QFY17 on back of one time inventory write-off of
EPS (INR) 28.9 11.0 21.5 27.7 USD45m and weak US business revenues.
EPS Gro. (%) 48.0 -61.8 94.8 28.8  Although we expect increase in EBITDA, PAT is expected to
BV/Sh. (INR) 152.3 156.3 170.8 191.6 decline 30% YoY to INR8.5b due to lower other income coupled
RoE (%) 18.1 8.5 13.2 15.3 with higher tax rate.
RoCE (%) 19.0 7.7 13.6 16.2  We expect the stock to remain under pressure in the near term
Valuations due to challenges related to growth and margins. We maintain
P/E (x) 19.5 38.7 23.7 18.4 Buy rating with a TP of INR675, based on 24x FY20E.
EV/EBITDA 13.1 21.3 14.2 10.9
(x)  Update on resolution of USFDA warning letter and 483
D.Yield (%) 0.7 1.2 1.2 1.2
observations on Halol.
 Outlook for FY19E.
 Launch of Tildrakizumab and other key products.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 80,067 77,640 76,832 68,252 61,667 65,901 65,982 65,821 302,642 259,370
YoY Change (%) 18.4 13.0 8.5 -10.6 -23.0 -15.1 -14.1 -3.6 7.1 -14.3
EBITDA 26,847 26,666 22,237 12,357 10,535 13,153 13,984 14,432 87,751 52,104
Margins (%) 33.5 34.3 28.9 18.1 17.1 20.0 21.2 21.9 29.0 20.1
Depreciation 3,160 3,038 3,068 3,382 3,466 3,587 3,393 3,654 12,648 14,100
Net Other Income 2,588 5,668 1,851 4,913 847 1,577 889 688 15,376 3,500
PBT before EO Exp 26,275 29,295 21,020 13,888 7,916 11,144 11,479 11,465 90,479 41,504
EO Exp/(Inc) 0 0 0 0 9,505 0 0 0 0 0
PBT 26,275 29,295 21,020 13,888 -1,589 11,144 11,479 11,465 90,479 41,504
Tax 3,527 4,417 3,729 443 1,618 1,114 7,487 1,212 12,116 11,431
Rate (%) 13.4 15.1 17.7 3.2 20.4 10.0 65.2 10.6 13.4 27.5
PAT (pre Minority Interest) 22,748 24,879 17,291 13,445 -3,207 10,030 3,992 10,253 78,363 30,073
Minority Interest 2,411 2,528 2,573 1,208 1,042 908 338 1,711 8,719 4,000
Reported PAT 20,337 22,351 14,718 12,237 -4,249 9,121 3,654 8,542 69,644 26,073
One-off upsides 0 0 0 0 0 0 -5,130 0 0 0
Adj Net Profit 20,337 22,351 14,718 12,237 5,256 9,121 8,784 8,542 69,644 26,073
YoY Change (%) 265.8 117.3 3.9 -28.6 -120.9 -59.2 -75.2 -30.2 28.9 -62.6
April 2018 200

Torrent Pharmaceuticals
Bloomberg TRP IN CMP: INR1,288 TP:INR1,400 (+9%) Neutral
 We expect TRP to post ~26% YoY growth in 4QFY18 reported
M. Cap. (INR b)/(USD b) 233 / 3.6
52-Week Range (INR) 1572 / 1144
sales to INR17.4b. US business is expected to increase ~7% YoY,
1,6,12 Rel Perf. (%) 5 / 5 / -24
while India business is expected to witness 70% YoY growth on
the back of integration of Unichem’s domestic portfolio.
 Reported EBITDA is likely to increase 37% YoY to INR4.1b, with
Y/E MARCH 2017 2018E 2019E 2020E
increase in EBITDA margin by ~200bp YoY.
Sales 58.6 60.2 77.2 87.7  Although EBITDA is expected to increase, we expect PAT to
EBITDA 13.8 13.9 19.7 22.8 decline by ~21% YoY to INR1.8b due to increase in interest
NP 9.3 8.1 10.4 13.3 expense by 118% to INR1.3b and higher tax rate at 23.8% v/s
EPS (INR) 55.2 48.0 61.3 78.5 15.6% in 4QFY17.
EPS Gro. (%) -7.7 -12.9 27.6 28.0  Due to high interest cost, the Unichem deal will take three years to
BV/Sh. (INR) 257.1 287.7 326.9 377.0 turn EPS-accretive (additional interest cost burden of IN2.5-2.7b).
RoE (%) 23.8 17.6 19.9 22.3 Although TRP remains one of the better plays on India’s growth
RoCE (%) 18.6 12.0 18.6 19.9 story (because of a chronic heavy portfolio and one of the best
Valuations margins), the lack of growth catalysts in the near term will keep the
P/E (x) 23.4 26.8 21.0 16.4 stock range bound. Our TP is INR1,400@20x 1HFY20E PER.
P/BV (x) 5.0 4.5 3.9 3.4
EV/EBITDA (x) 16.8 16.4 11.3 9.4
D. Yield (%) 1.3 1.1 1.4 1.8  Contribution of Unichem portfolio and growth strategy.
 Performance of Brazilian operations amid market pressure.
 Outlook on future ANDA launches.

INR m 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Revenues 15,070 14,060 14,130 13,810 13,480 14,290 14,770 17,385 58,570 60,185
YoY Change (%) -22.6 -27.8 -8.2 -7.9 -10.6 1.6 4.5 25.9 -12.3 2.8
EBITDA 4,370 3,300 3,160 2,950 2,970 3,290 3,590 4,053 13,774 13,903
Margins (%) 29.0 23.5 22.4 21.4 22.0 23.0 24.3 23.3 23.5 23.1
Depreciation 680 690 730 970 800 840 940 1,031 3,070 3,611
Interest 490 510 480 580 560 510 800 1,267 2,060 3,137
Other Income 260 430 500 1,040 1,050 780 740 630 2,230 3,200
PBT before EO Expense 3,460 2,530 2,450 2,440 2,660 2,720 2,590 2,385 10,874 10,355
Extra-Ord Expense 0 0 0 0 0 0 0 0 0 -1,810
Tax 540 460 160 380 780 680 2,010 568 1,540 4,038
Rate (%) 15.6 18.2 6.5 15.6 29.3 25.0 77.6 23.8 14.2 39.0
Reported PAT 2,920 2,070 2,290 2,060 1,880 2,040 580 1,816 9,334 8,126
Adj PAT 2,920 2,070 2,290 2,060 1,880 2,040 2,390 1,816 9,334 8,126
YoY Change (%) -35.0 -53.9 -34.2 -42.3 -35.6 -30.1 15.5 -20.7 -49.9 -12.9
Margins (%) 19.4 14.7 16.2 14.9 13.9 14.3 16.2 10.4 15.9 13.5
April 2018 201

March2016
March 2018Results
ResultsPreview
Preview || Sector:
Sector: Capital
Infrastructure
Goods
Infrastructure
Company name Road sector at an inflexion point
Ashoka Buildcon Awarding as well as construction activity at new high in FY18
IRB Infra Over the past few years, the Indian government has shown the resolve to tackle
KNR Constructions issues prevailing in the infrastructure sector (related to land acquisition,
Sadbhav Engineering environment/forest clearances, model concession agreement amendment, etc),
with signs of activity improvement already evident since FY17.
Activity in the road sector picked up significantly in FY18 and awarding as well as
construction activity reached new peaks, with awarding of 47km/day (up 5% YoY)
and construction of 27km/day (up 19% YoY). Awarding activity was equally
distributed between EPC projects (51%) and HAM projects (47%), and the balance
2% was awarded on BoT basis. We expect the momentum to continue in FY19 as
well, given that large part of the orders under Bharatmala Pariyojna (34,800km,
INR5.3t) is yet to be awarded. NHAI intends to award contracts of 3,000km in
1QFY19 (which could not be awarded in FY18 due to non-availability of land).
Bharatmala program provides strong medium-term visibility

The recent announcement of the Bharatmala program augurs well for the sector,
with the government planning to incur INR7t over the next few years. Bharatmala
has been launched as an umbrella program, with a primary focus on optimizing
efficiency of movement of goods and people across the country. This program
envisages a corridor approach instead of the existing package-based approach that
has resulted in skewed development. Under the Bharatmala project, the
government plans to invest INR5.4t to build 34,800km of roads – phase-I includes
projects worth INR3.5t for 24,800km, for which awarding will be done over the next
two years and project completion is expected over the next five years. DPR
preparation for projects of 9,000km is already undertaken.
Opportunities abundant for incumbent players

With robust capex planned by both central and state governments (INR7t
construction opportunity), we see abundant business opportunities for incumbent
players in the sector. This will ensure competition remains moderate and
profitability improves. We believe the best way to play the road sector capex theme
is through EPC players that have a strong execution record and a healthy balance
sheet. Our top picks are KNR, Sadbhav Engineering, and Ashoka Buildcon.
Amit Shah (Amit.Shah@MotilalOswal.com); +91 22 6129 1543

Ankur Sharma (Ankur.vsharma@MotilalOswal.com); +91 22 6129 1556
April 2018 202
March 2018 Results Preview | Sector: Infrastructure

Sector Sales (INR M) EBITDA (INR M) Net Profit (INR M)
CMP Var Var Var Var Var Var
(INR) % YoY % QoQ % YoY % QoQ % YoY % QoQ
Infrastructure
Ashoka Buildcon 265 Buy 7,346 20.4 11.5 1,017 59.8 27.8 619 -5.3 19.0
IRB Infra 242 Neutral 16,416 0.9 26.6 8,338 1.5 23.7 2,718 31.2 8.1
KNR Constructions 285 Buy 4,933 2.3 13.9 979 35.6 -0.5 450 -14.1 -31.4
Sadbhav Engineering 396 Buy 12,441 20.5 33.1 1,353 23.5 28.1 880 28.9 42.3
Source: MOSL
Exhibit 2: India road awarding reached a new peak in FY18 Exhibit 3: Roads completed also at all-time highs in FY18
with 47km/day awarding (27km/day)
47 27
Awarded km (per day) 45 Construction km (per day)
23
27 29 17
16
22 14
12 12
9
5
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Exhibit 4: Relative performance – three-month (%) Exhibit 5: Relative performance – one-year (%)
Sensex Index MOSL Infrastructure Index Sensex Index MOSL Infrastructure Index
109 130
103 120
97 110
91 100
85 90
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Jan-18
Feb-18
Mar-18
Sep-17
Oct-17
Dec-17
Jan-18
Feb-18
Mar-18

Capital Goods
Ashoka Buildcon 265 Buy 2.1 7.0 8.3 128.0 37.9 32.1 8.7 8.2 7.9 2.2 6.9 7.5
IRB Infra 242 Neutral 25.4 24.6 21.3 9.5 9.8 11.4 5.7 6.5 7.9 15.5 13.4 10.5
KNR Constructions 285 Buy 16.9 14.0 18.2 16.9 20.4 15.7 9.3 10.3 7.5 23.6 16.2 17.8
Sadbhav Engineering 396 Buy 13.9 16.0 17.4 28.4 24.8 22.8 16.3 13.1 10.6 13.5 13.7 13.2
April 2018 203

Ashoka Buildcon
Bloomberg ASBL IN
M. Cap. (INR b)/(USD b) 50 / 1  Order inflow during the quarter was robust, with ACL bagging HAM
52-Week Range (INR) 281 / 172 project worth INR55b and ABL winning EPC projects worth
1,6,12 Rel Perf. (%) 18 / 38 / 24 INR14.8b in the Road sector.
 We expect revenue growth of 20% YoY, led by overall pickup of the
Financial Snapshot (INR b) orders in hand.
Y/E March 2017 2018E 2019E 2020E  We expect operating margin to expand 340bp to13.8% and
Net Sales 29.8 34.1 39.6 46.0 operating profit to improve 60% YoY to INR1b.
EBITDA 8.9 10.3 11.6 12.1
 Net profit is expected to decline 5.3% YoY to INR619m, given an
Adj. PAT -0.1 0.4 1.3 1.5
increase in depreciation charges and higher tax rate on expiry of
Adj. EPS (INR) -0.5 2.1 7.0 8.3
80IA benefit. Maintain Buy.
EPS Gr (%) NM NM 238.0 18.1
BV/Sh (INR) 89.3 98.4 105.2 113.6
RoE (%) NM 2.2 6.9 7.5
RoCE (%) 9.5 9.8 10.3 10.0
Valuations
P/E (x) NM 128.1 37.9 32.1 Key issues to watch
P/BV (x) 3.0 2.7 2.5 2.3  Equity contribution arrangement from ABL for the recently-won
EV/EBITDA (x) 10.4 9.3 8.5 8.2 HAM projects.
Div. Yield (%) 0.8 0.8 0.8 0.8  Execution timelines for the recently-won HAM projects.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,683 4,428 5,240 6,100 7,228 3,787 6,589 7,346 21,170 25,450
YoY Change (%) -1.4 -5.3 18.2 10.6 54.3 -14.5 25.7 20.4 9.2 20.2
EBITDA 596 698 620 636 975 506 796 1,017 3,316 3,793
Margins (%) 12.7 15.8 11.8 10.4 13.5 13.4 12.1 13.8 15.7 14.9
Depreciation 123 130 107 147 113 130 144 170 507 558
Interest 76 80 90 181 129 116 128 189 474 562
PBT 478 578 538 740 824 368 690 792 2,334 2,674
Tax 170 124 110 87 205 41 170 172 492 588
Rate (%) 35.5 21.4 20.5 11.7 24.9 11.2 24.6 21.8 21.1 22.0
Reported PAT 308 454 428 654 619 327 520 619 1,842 2,085
Adj PAT 308 454 428 654 619 327 520 619 1,842 2,085
YoY Change (%) -32.7 44.1 88.3 -343.7 100.9 -28.0 21.6 -5.3 62.0 13.2
Margins (%) 6.6 10.3 8.2 10.7 8.6 8.6 7.9 8.4 8.7 8.2
April 2018 204

IRB
Bloomberg IRB IN CMP: INR242 TP: INR240 (-1%) Neutral
M. Cap. (INR b)/(USD b) 85 / 1  IRB is expected to register flattish revenue growth of 1% YoY to
52-Week Range (INR) 272 / 194 INR16.4b on account of transfer of BoT projects to InvIT.
1,6,12 Rel Perf. (%) 9 / 9 / -11  EBITDA is expected to register growth of 1.4% YoY to INR8.3b.
 EBITDA margin is expected to improve 30bp YoY to 51%.
Financial Snapshot (INR b)  PAT is expected to improve 31% YoY to INR2.5b led by higher other
Y/E March 2017 2018E 2019E 2020E income and lower tax rate for the quarter.
Net Sales 282.2 291.0 311.2 354.9
 IRB won orders worth INR89b in the HAM and BoT segments.
EBITDA 8.3 14.2 15.5 22.5
PAT 4.9 10.8 8.6 12.7
EPS (INR) 1.3 2.9 2.3 3.5
EPS Gr. (%) NM 119.0 -19.9 -19.9
BV/Sh. INR 88.0 88.9 89.6 90.7
RoE (%) 1.5 3.3 2.6 3.8
RoCE (%) 0.7 2.5 1.7 3.0
Valuations
P/E (x) 67.9 31.0 38.7 26.3
Key issues to watch
P/BV (x) 1.0 1.0 1.0 1.0  Execution timelines for the recently-won HAM projects.
EV/EBITDA (x) 27.8 15.2 15.1 11.5  Impact on the EPC margins of the company once execution of
Div Yield (%) 0.9 1.9 1.5 2.3 lower-margin HAM projects starts.
* Consolidated

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 15,173 12,906 14,109 16,271 18,169 11,227 12,962 16,416 58,459 58,774
YoY Change (%) 36.8 12.3 5.8 5.9 19.7 -13.0 -8.1 0.9 14.0 0.5
EBITDA 7,740 7,090 7,435 8,218 8,178 5,724 6,740 8,338 30,483 28,981
Margins (%) 51.0 54.9 52.7 50.5 45.0 51.0 52.0 50.8 52.1 49.3
Depreciation 2,207 2,274 1,803 2,264 1,816 1,260 1,212 1,418 8,548 5,706
Interest 3,282 3,396 3,389 3,260 2,854 2,356 2,366 3,588 13,327 11,165
Other Income 308 336 298 289 535 424 455 376 1,232 1,790
Extra-Ord expense 0 0 0 0 0 1,041 0 0 0 0
PBT 2,558 1,757 2,541 2,983 4,044 3,573 3,616 3,707 9,839 13,899
Tax 740 335 699 911 1,665 1,225 1,100 987 2,685 4,977
Rate (%) 28.9 19.1 27.5 30.5 41.2 34.3 30.4 26.6 27.3 35.8
Min Int & P/Lof Asso. Cos. 0 0 0 0 0 2 2 2 8 6
Reported PAT 1,818 1,422 1,842 2,072 2,379 2,346 2,514 2,718 7,146 8,916
Adj PAT 1,818 1,422 1,842 2,072 2,379 1,503 2,514 2,718 7,146 8,916
YoY Change (%) 10.4 -4.6 8.6 37.1 30.8 5.7 36.5 31.2 11.8 24.8
Margins (%) 12.0 11.0 13.1 12.7 13.1 13.4 19.4 16.6 12.2 15.2
April 2018 205

KNR
Bloomberg KNRC IN CMP: INR285 TP: INR375 (+32%) Buy
M. Cap. (INR b)/(USD b) 40 / 1  We expect revenue growth of 13.3% YoY to INR4.9b, driven by
52-Week Range (INR) 349 / 190 execution of key projects like Hubli Hospet, Madurai and
1,6,12 Rel Perf. (%) -4 / 32 / 33 Thiruvanthpuram.
 Operating profit is expected to grow 36%, led by margin
Financial Snapshot (INR b) improvement of 490bp YoY to 19.8%.
Y/E March 2017 2018E 2019E 2020E  Operating margin improvement is expected to be led by the
Net Sales 15.4 18.0 20.0 27.8 Madurai and Thirvanthpuram projects, which are in advanced
EBITDA 2.3 3.6 3.2 4.3 stages of completion.
NP 1.7 2.4 2.0 2.6
 Net profit is expected to decline 14% YoY on account of higher tax
EPS (INR) 12.0 16.9 14.0 18.2
rate assumption for the quarter at 28% as against -9% in 4QFY17.
EPS Gr. (%) 4.3 41.2 -17.3 30.2
Maintain Buy.
BV/Sh (INR) 63.7 79.3 93.0 111.0
RoE (%) 20.7 23.6 16.2 17.8
RoCE (%) 16.8 19.0 15.0 17.4
Valuations
P/E (x) 23.8 16.9 20.4 15.7
Key issues to watch
 Management commentary on order inflow for the year and ahead.
P/BV (x) 4.5 3.6 3.1 2.6
EV/EBITDA (x) 17.9 10.9 12.1 8.9
Standalone - Quarterly Earning Model (INR million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 3,032 3,735 3,823 4,821 4,807 3,933 4,332 4,933 15,411 18,006
YoY Change (%) 77.1 72.2 74.9 63.0 58.6 5.3 13.3 2.3 70.7 16.8
EBITDA 437 560 577 722 845 825 984 979 2,296 3,633
Margins (%) 14.4 15.0 15.1 15.0 17.6 21.0 22.7 19.8 14.9 20.2
Depreciation 132 146 166 195 244 235 371 387 639 1,238
Interest 43 56 66 54 52 43 49 56 219 199
Other Income 59 132 102 10 123 27 61 92 303 303
PBT 265 490 338 483 672 574 624 628 1,576 2,499
Tax 19 51 31 -41 -4 -17 -33 178 60 125
Rate (%) 7.1 10.3 9.3 -8.6 -0.6 -2.9 -5.2 28.3 3.8 5.0
Reported PAT 246 439 307 524 676 591 657 450 1,516 2,374
Adj PAT 302 439 415 524 676 591 657 450 1,675 2,374
YoY Change (%) 101.6 -20.6 26.6 -9.5 123.7 34.5 58.1 -14.1 -17.2 41.7
Margins (%) 10.0 11.8 10.9 10.9 14.1 15.0 15.2 9.1 10.9 13.2
April 2018 206

Sadbhav Eng
Bloomberg SADE IN CMP: INR396 TP: INR460 (+16%) Buy
 Sadbhav Infrastructure has received orders worth INR41.2b in the
52-Week Range (INR) 439 / 262 HAM segment whereas Sadbhav Engineering has bagged another
1,6,12 Rel Perf. (%) 1 / 26 / 19 INR1b order in the EPC segment.
 We expect revenue of INR12.4b (up 20.5% YoY), led by smooth
Financial Snapshot (INR b) execution of orders in hand.
Y/E March 2017 2018E 2019E 2020E  EBITDA is expected to grow 23% YoY to INR1.4b. EBITDA margin is
Net Sales 33.2 38.2 46.1 55.8 expected to improve 30bp YoY to 10.9% on better revenue mix.
EBITDA 3.6 4.3 5.3 6.6  Adjusted PAT at INR880m is expected to register 29% growth YoY.
Adj. PAT 1.9 2.4 2.7 3.0
EPS(INR) 11.0 13.9 16.0 17.4
EPS Gr. (%) 42.3 27.1 14.9 8.6
BV/Sh. (INR) 96.8 109.3 123.9 139.9
RoE (%) 12.0 13.5 13.7 13.2
RoCE (%) 7.9 9.0 10.3 12.2
Valuations
P/E (x)
Key issues to watch
36.1 28.4 24.7 22.8
P/BV (x)  Improvement in working capital cycle and overall quality of
4.1 3.6 3.2 2.8
EV/EBITDA (x) balance sheet.
23.3 17.6 14.1 11.4
Div Yield (%) 0.3 0.3 0.3 0.3
*Consolidated
Standalone - Quarterly Earning Model (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 8,070 6,156 8,648 10,329 9,444 6,931 9,351 12,441 33,203 38,166
YoY Change (%) -2.7 -17.5 14.8 20.4 17.0 12.6 8.1 20.5 4.2 14.9
EBITDA 868 654 938 1,096 1,068 788 1,056 1,353 3,556 4,264
Margins (%) 10.8 10.6 10.8 10.6 11.3 11.4 11.3 10.9 10.7 11.2
Depreciation 254 253 250 243 245 251 247 262 1,000 1,005
Interest 172 221 243 355 322 215 285 376 992 1,198
Other Income 48 8 60 218 39 5 74 232 333 350
PBT 489 187 505 716 540 327 598 947 1,897 2,412
Tax 2 1 -19 33 -15 -8 -20 68 18 24
Rate (%) 0.5 0.8 -3.7 4.7 -2.8 -2.6 -3.4 7.1 1.0 1.0
Reported PAT 487 185 524 682 555 335 618 880 1,878 2,388
Adj PAT 487 185 524 682 555 335 618 880 1,878 2,388
YoY Change (%) 20.0 -50.2 89.7 38.7 14.0 80.8 17.9 28.9 22.1 27.1
Margins (%) 6.0 3.0 6.1 6.6 5.9 4.8 6.6 7.1 5.7 6.3
April 2018 207

Logistics
Company name EXIM originating rail volumes remain healthy
Allcargo Lead distance for EXIM cargo reduced
Concor
 EXIM originating container rail volume grew 21% YoY in January-February 2018,
Gateway Distriparks
indicating strong volume growth for the quarter. Domestic container volumes declined
by 1% YoY in January-February 2018.
 CCRI is likely to report better margins QoQ, led by strong volume growth. Margins for
GDPL are unlikely to improve meaningfully due to increasing competitive intensity in
the CFS segment.
 CCRI should witness strong QoQ improvement in earnings, led by robust rail volumes
during 4QFY18. AGLL’s earnings are expected to increase QoQ, led by improvement in
MTO segment.
EXIM originating container volumes grew 21% YoY in January-February

 EXIM originating volume by rail is likely to grow in mid-teens in 4QFY18. In
January-February 2018, EXIM container volumes were up 21% YoY and domestic
volumes declined 1% YoY.
 CCRI is likely to report EXIM handling volume growth of 13% YoY in 4QFY18, led
by strong EXIM rail volumes.
 GDPL is likely to report a growth of 3% YoY (flat QoQ) in rail volumes. CFS
segment is expected to see volume growth of 15% YoY due to growth from
JNPT.
Margins to improve for CCRI

 We expect CCRI to report better margins QoQ due to strong volume growth in
the EXIM segment.
 GDPL should see downward pressure on margins, led by margin pressure in CFS
business and flat margins YoY in rail business.
 AGLL is likely to see pressure on margins due to subdued P&E segment
performance; MTO segment is expected to do better.
Lower leads to hurt margins

 Lead distance for EXIM trade by rail has declined by 4% YoY for January-
February 2018 due to higher container movement from the Mundra and Pipavav
ports than from JNPT. Lead distance for domestic volumes remained flat YoY for
January-February 2018; however, it declined 1% YoY for February 2018.
Exhibit 1: Expected quarterly performance summary

Sector Sales (INR m) EBDITA (INR m) PAT (INR m)
Reco. Mar-18 Mar-18 Mar-18
Logistics
Allcargo Logistics 152 Buy 19,878 45.9 34.3 994 -5.9 6.5 419 -26.9 20.4
Concor 1,260 Neutral 15,471 -0.7 6.4 3,297 -33.4 11.0 2,115 -49.9 13.3
Gateway Distriparks 185 Buy 3,078 0.0 6.0 575 9.9 1.0 204 6.3 19.2
Logistics Sector Aggregate 38,427 19.0 19.2 4,865 -25.5 8.8 2,737 -45.1 14.8
Source: MOSL
Abhishek Ghosh (Abhishek.Ghosh@MotilalOswal.com); +91 22 6129 1538
Pradnya Ganar (Pradnya.Ganar @motilaloswal.com); +91 22 6129 1537
April 2018 208
March 2018 Results Preview | Sector: Logistics
Robust EXIM originating rail volumes – up 24% YoY in February 2018

Exhibit 1: EXIM volumes up 24% YoY in February 2018 Exhibit 2: Domestic volumes down 1% YoY in February 2018
EXIM tonnes originating (million) YoY (%) Domestic tonnes originating (million) YoY (%)
24
20 19 18
17 16 13 18 46 45
10
4 7
0 2 (0) 27 28 28
21 20 18
16 16
8
(4) (1) (1)
0.95
0.91
1.05
0.92
0.93
0.91
0.80
0.87
0.86
0.85
0.90
0.98
0.94
0.90
3.2
2.9
3.5
3.3
3.5
3.5
3.4
3.9
3.7
3.5
3.4
3.7
3.8
3.6
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Jan-17
Feb-17
Mar-17
Sep-17
Jan-18
Feb-18
Oct-17
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Jan-17
Feb-17
Mar-17
Sep-17
Jan-18
Feb-18
Oct-17
Source: Indian Rail, MOSL Source: Indian Rail, MOSL
Exhibit 3: EXIM lead distance declined 5% YoY in February Exhibit 4: Domestic lead distance declined 1% YoY in
2018 February 2018
EXIM average lead (kms) YoY (%) Domestic average lead (kms) YoY (%)
0
(5) (7) (4) (3) (5)
(7) (8) (6) (7) (7) (5) 0 1 2
(9)
(11) (4) (6) (4) (3) (3)
(6) (4) (4) (1) (1)
(7)
1,312
1,304
1,378
1,350
1,377
1,356
1,360
1,313
1,333
1,378
1,308
1,349
1,335
1,285
844
836
832
805
813
829
861
810
798
813
809
820
821
791
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Jan-17
Feb-17
Mar-17
Sep-17
Jan-18
Feb-18
Oct-17
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Jan-17
Feb-17
Mar-17
Sep-17
Jan-18
Feb-18
Oct-17
Source: Indian Rail, MOSL Source: Indian Rail, MOSL
Exhibit 5: India’s imports up 14% YoY, exports up 1% YoY in

February 2018 Exhibit 6: IIP was up ~7.5% YoY in January 2018
Export - YoY (%) Import - YoY (%)
9.0 8.8
55% 8.0
7.2 7.3 7.5
40% 6.0
25% 5.0 5.1 4.8
4.5 4.2 4.4 4.1 7.1
3.1 3.5 3.22.8
10% 5.2
4.0 4.0
-5%
2.2 2.4 1.8
-20% 1.2 1.2
0.8
-35% -0.2
Jun-16
Jun-17
Aug-15
Apr-16
Dec-15
Apr-17
Feb-16
Aug-16
Dec-16
Feb-17
Aug-17
Dec-17
Feb-18
Oct-15
Oct-16
Oct-17
Jul-16
Jul-17
Nov-15
Nov-16
Nov-17
May-16
May-17
Sep-15
Jan-16
Mar-16
Sep-16
Jan-17
Mar-17
Sep-17
Jan-18
Source: CEIC, MOSL Source: CEIC, MOSL
April 2018 209

Allcargo
Bloomberg AGLL IN CMP: INR152 TP: INR198 (+30%) Buy
 We expect AGLL to report EBITDA of INR 994m (-6% YoY, +7%
52-Week Range (INR) 229 / 145 QoQ), led by improvement in MTO segment. We expect PAT of
1,6,12 Rel Perf. (%) -13 / -17 / -22 INR419m (-27% YoY, +20% QoQ) in 4QFY18.
 We estimate MTO volumes at 147k TEU (+16% YoY, +2% QoQ) and
Financial snapshot (INR b)
Y/E March 2017 2018E 2019E 2020E CFS volumes at 92k TEU (+20% YoY, +28% QoQ).
Sales 55.7 65.0 73.9 83.7
 We estimate ~6% EBITDA CAGR and ~10% PAT CAGR over FY17-20,
EBITDA 4.6 4.0 4.9 5.5
NP 2.4 2.0 2.8 3.2 and expect return ratios to improve from ~13.7% in FY17 to ~14.4%
EPS (INR) 9.8 8.2 11.4 13.2
in FY20, driven by margin expansion and reduction in capex
EPS Growth (%) -1.2 -16.5 38.6 16.3
BV/Share (INR) 72.9 79.1 87.3 96.6 intensity in the business.
RoE (%) 13.7 10.8 13.7 14.4  The stock trades at a P/E of 13.4x (FY19E) and 11.5x (FY20E), and at
RoCE (%) 12.1 9.5 11.8 12.5
an EV/EBITDA of 7.2x (FY19E) and 5.8x (FY20E). Maintain Buy.
Valuations
P/E (x) 15.5 18.5 13.4 11.5
EV/EBITDA (x) 8.8 9.6 7.2 5.8  (a) Volume data, and (b) set up of logistics park in Jhajjar.
Consolidated - Quarterly Earning Model (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 13,989 14,084 14,114 13,628 14,834 15,472 14,799 19,878 55,816 64,984
YoY Change (%) -5.2 -3.1 6.4 -1.6 6.0 9.9 4.9 45.9 -0.8 16.4
EBITDA 1,332 1,261 993 1,056 1,030 1,047 933 994 4,642 4,004
Margins (%) 9.5 9.0 7.0 7.7 6.9 6.8 6.3 5.0 8.3 6.2
Depreciation 436 434 407 386 399 398 397 392 1,662 1,586
Interest 75 75 78 96 83 71 71 68 324 293
Other Income 59 80 183 149 159 51 49 41 471 300
PBT 880 822 691 724 707 629 515 574 3,117 2,425
Tax 256 178 211 131 76 6 199 131 776 412
Rate (%) 29.1 21.7 30.6 18.1 10.8 1.0 38.7 22.7 24.9 17.0
Reported PAT 624 643 480 593 630 623 315 444 2,340 2,013
Min. Interest & P& L of Asso. Cos. -14 1 12 -20 -19 15 32 -25 -22 3
Adj PAT 610 652 492 572 611 638 348 419 2,414 2,016
YoY Change (%) -24.6 5.4 -15.2 -10.6 0.2 -2.1 -29.3 -26.9 -3.7 -16.5
Margins (%) 4.4 4.6 3.5 4.2 4.1 4.1 2.3 2.1 4.3 3.1
E: MOSL Estimates
April 2018 210

Concor
Bloomberg CCRI IN CMP: INR1,260 TP: INR1,386(10%) Neutral
 We expect CCRI to report net sales of INR15.5b (-1% YoY, +6%
M. Cap. (INR b)/(USD b) 307 / 5
QoQ), led by (a) volume growth of 13% YoY, and (b) 12% YoY
decrease in realizations.
1,6,12 Rel Perf. (%) -2 / -11 / 13
 We expect EXIM volumes to improve 13% YoY and expect domestic
Financial snapshot (INR b) volumes to grow 10% YoY.
Y/E March 2017 2018E 2019E 2020E
 We estimate EBITDA at INR3.3b (-33% YoY, +11% QoQ) and
Sales 56.1 58.9 67.8 79.2
adjusted PAT at INR2.1b (-50% YoY, +13% QoQ).
EBITDA 12.5 12.4 15.1 18.7
 The stock trades at a P/E of 24.6x (FY19E) and 21.7x (FY20E), and at
NP 9.3 10.8 12.5 14.2
an EV/EBITDA of 19x (FY19E) and 15.2x (FY20E).
EPS (INR) 38.0 44.2 51.2 58.2
EPS Gr. (%) -2.6 16.3 15.9 13.5  CCRI remains a direct play on the upcoming dedicated freight
BV/Sh (INR) 363.0 386.5 413.1 443.3 corridor (DFC) project, which will multiply its asset turnover and
RoE (%) 10.8 11.8 12.8 13.6 significantly improve profitability. Maintain Neutral.
RoCE (%) 10.5 11.5 12.5 13.3
Payout (%) 57.7 48.1 48.1 48.1
P/E (x) 33.2 28.5 24.6 21.7  EXIM and domestic volumes, and realizations.
P/BV (x) 3.5 3.3 3.1 2.8  Progress on MMLPs and DFC projects.
EV/EBITDA (x) 23.2 23.4 19.0 15.2
Div. Yield (%) 1.3 1.4 1.6 1.8
Container Corporation (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 13,392 13,603 13,143 15,579 14,568 14,302 14,536 15,471 56,061 58,876
YoY Change (%) -5.7 -9.4 -6.4 -2.3 8.8 5.1 10.6 -0.7 -5.3 5.0
EBITDA 2,619 2,274 2,605 4,950 3,267 2,821 2,971 3,297 12,469 12,355
Margins (%) 19.6 16.7 19.8 31.8 22.4 19.7 20.4 21.3 22.2 21.0
YoY Change (%) -9.0 -28.1 -6.9 6.2 24.8 24.1 14.0 -33.4 -6.8 -0.9
Depreciation 841 860 921 877 953 969 995 1,151 3,518 4,068
Interest 0 2 1 32 0 0 0 36 37 37
Other Income 692 763 845 593 936 954 727 620 2,892 5,738
Extra-Ord expense 0 0 0 865 0 0 -1,485 0 865 375
PBT 2,470 2,175 2,529 3,768 3,251 2,805 4,187 2,729 10,941 13,614
Tax 685 596 669 411 817 576 1,297 614 2,361 3,304
Rate (%) 27.7 27.4 26.4 10.9 25.1 20.5 31.0 22.5 21.6 24.3
Reported PAT 1,785 1,578 1,860 3,358 2,434 2,229 2,891 2,115 8,580 10,310
Adj PAT 1,785 1,578 1,860 4,223 2,434 2,229 1,866 2,115 9,259 10,594
YoY Change (%) -13.7 -32.4 -9.7 37.9 36.4 41.2 0.3 -49.9 -2.6 14.4
Margins (%) 13.3 11.6 14.2 27.1 16.7 15.6 12.8 13.7 16.5 18.0
E: MOSL Estimates
April 2018 211

Gateway Distriparks
Bloomberg GDPL IN CMP: INR185 TP: INR231 (+25%) Buy
 We expect GDPL to report net sales of INR3b (flat YoY, +6% QoQ),
52-Week Range (INR) 292 / 170 led by growth in CFS business.
1,6,12 Rel Perf. (%) -10 / -27 / -38  We estimate EBITDA at INR575m (+10% YoY, +1% QoQ) and EBITDA
margin at 18.7%. We estimate adjusted PAT at INR204m (+6% YoY,
Y/E March 2017 2018E 2019E 2020E
Sales 11.6 11.7 13.4 15.3 +19% QoQ).
EBITDA 2.2 2.2 2.6 3.2  The stock trades at a P/E of 17.5x (FY19E) and 14.3x (FY20E), and at
NP 0.7 0.7 1.2 1.4
an EV/EBITDA of 7.8x (FY19E) and 6.3x (FY20E.
EPS (INR) 6.8 6.2 10.6 12.9
 GDPL remains a direct play on the upcoming dedicated freight
EPS Gr. (%) -32.3 -18.1 90.3 16.8
BV/Sh (INR) 93.6 95.5 102.3 108.3 corridor project, which will multiply its asset turnover and
RoE (%) 7.3 6.6 10.7 12.3
significantly improve profitability. Maintain Buy.
RoCE (%) 10.0 9.1 12.4 14.6
Valuations
P/E (x) 27.2 29.7 17.5 14.3
EV/EBITDA (x) 9.5 9.6 7.8 6.3  Volume growth, realization and per TEU profitability.
Div. Yield (%) 3.8 2.0 1.8 3.1

(Consolidated) 1Q* 2Q* 3Q* 4Q* 1Q* 2Q* 3Q* 4QE
Net Sales 2,782 2,857 2,876 3,077 2,661 3,023 2,904 3,078 11,592 11,667
YoY Change (%) 5.9 10.1 7.7 19.5 -4.4 5.8 1.0 0.0 10.7 0.6
EBITDA 555 581 587 523 450 587 569 575 2,246 2,180
Margins (%) 19.9 20.3 20.4 17.0 16.9 19.4 19.6 18.7 19.4 18.7
PBT 349 379 403 332 229 364 309 354 1,463 1,257
Tax 124 127 146 109 49 74 52 75 506 250
Rate (%) 35.6 33.6 36.2 32.8 21.5 20.4 16.7 21.1 34.6 19.9
PAT before minority / profit of assoc. 225 252 257 223 180 290 258 280 957 1,007
YoY Change (%) 13.0 -15.0 -11.9 -5.6 -20.1 15.2 0.3 25.2 -6.5 5.2
Margins (%) 8.1 8.8 8.9 7.3 6.8 9.6 8.9 9.1 8.3 8.6
Less: Minority/Add: Profit of Asso. 39 79 54 31 47 107 87 76 203 317
Reported PAT 186 173 203 192 133 183 171 204 754 691
Adj PAT 186 173 203 192 133 183 171 204 754 691
YoY Change (%) -47.8 -43.5 -34.3 -27.5 -28.7 5.8 -15.8 6.3 -31.2 -8.4
Margins (%) 6.7 6.0 7.1 6.2 5.0 6.0 5.9 6.6 6.5 5.9
E: MOSL Estimates, *Indicates addition of Rail and CFS details as provided and not actual consolidated number
April 2018 212

March 2018 Results Preview | Sector: Media
Media
Company name Broadcasters to continue outpacing overall sector growth
D B Corp Print and Radio to bounce back, led by revival in local ad spending
Dish TV India
HT Media Rebound by local advertisers to stimulate overall growth
Jagran Prakashan With the waning GST impact, 4QFY18 witnessed healthy ad spends from local
MBL advertisers following the recovery in spends by national advertisers in 3Q. We
ENIL expect most media companies (including print and radio) to post ad recovery from
Prime Focus 4QFY18, as ad spends across sectors gain momentum. Furthermore, the favorable
PVR base (demonetization impact in 4QFY17) should be supportive.
Sun TV
Zee Entertainment
Ad revenue for media sector to grow 9% YoY
We expect ad revenue for our Media universe to grow 9% YoY. Broadcasters are
likely to continue their previous quarter’s trend of double-digit growth mainly on
the back of increased ad spends by national advertisers, led by increased launches
across the FMCG and auto space (contributing 55-60% of total ad revenue). We
expect Zee to garner 16% YoY growth in ad revenue ex-sports and Sun TV to register
21% YoY ad revenue growth. Print and radio companies, mainly dependent on local
advertisers, have fragmented ad revenue across sectors.
Amongst print companies, we expect DB Corp to register 14% YoY ad revenue
growth, mainly driven by low base and revival in ad spends. Jagran, however, is
expected to report flat YoY ad revenue due to high base of ad spends attributed to
the UP elections in 4QFY17.
Within the radio pack, higher contribution from new stations coupled with revived
volumes in existing stations should drive growth. We expect 15% YoY ad revenue
growth for MBL, but a 2% YoY decline for ENIL. This is mainly due to the price hike
strategy of ENIL, which we believe continues to hurt volume growth at legacy
stations.
Monetization of digitization to continue driving subscription revenue

For Zee, subscription revenue is expected to decline 3% YoY; however, ex-sports, it
is expected to grow 13%, as we expect renewal of subscription contracts with
distributors to augur well. Sun TV’s subscription revenue should grow at a healthy
19% primarily on the back of (1) digitization in Tamil Nadu, which got hastened with
the recent blackout of analog signals, and (2) improving APRU. Dish TV is expected
to see a meager 250k net subscriber addition, with flat ARPUs.
Print companies, Jagran and DB Corp should see 7% YoY growth in circulation
revenue.
Dish TV’s ARPU and subscriber growth would remain under pressure given the
intense competition in the sector. We expect meager 1% QoQ ARPU growth and
0.3m net subscriber additions. The headline numbers, however, could vary
depending on the management’s call to merge Videocon D2H financials, as all
merger formalities have been completed in March 2018.
Aliasgar Shakir – Research analyst (Aliasgar.Shakir@motilaloswal.com); +91 022 6129 1565

Hafeez Patel – Research analyst (Hafeez.Patel@motilaloswal.com); +91 22 6129 1568
April 2018 213
Expect aggregate EBITDA to witness healthy 9% YoY growth

Aggregate EBITDA for our Media universe is expected to grow 9% YoY. For Zee, we
expect overall revenue to grow at a healthy 8% (ex-sports: 16%). However, higher
cost towards Zee5 launch and increase in original content hours should pressurize
EBITDA margins. We expect ~450bp YoY dip in EBITDA margin to 26.2% and 8% YoY
decline in EBITDA. Sun TV should see strong 19% YoY revenue growth. This coupled
with the shift to commission model (from the earlier private partnership model)
should lead to robust 27% EBITDA growth, and 450bp EBITDA margin expansion.
Jagran’s overall revenue is expected to register muted 3% YoY growth on flat ad

revenues, whereas DB Corp should garner a healthy 11% YoY growth (backed by
14% YoY ad revenue growth).
ENIL should see 2% revenue decline on weak revenue growth, primarily at legacy
stations, while MBL is likely to grow by a healthy 15%, led by higher utilization at
both new and legacy stations.
Dish TV’s steady revenue performance coupled with cost efficiencies should provide
impetus to 12% QoQ EBITDA growth.
Exhibit 1: Media coverage: Quarterly snapshot

FY16 FY17 FY18
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE YoY (%) QoQ (%)
Advertisement Revenue (INR b)
MBL 0.5 0.6 0.6 0.6 0.6 0.7 0.7 0.7 0.7 0.8 0.8 0.8 15 0
ENIL 1.0 1.2 1.4 1.5 1.1 1.3 1.5 1.7 1.0 1.3 1.5 1.6 -2 9
ZEE 7.7 8.3 9.2 8.5 9.1 9.6 9.6 8.5 9.7 9.9 12.0 9.7 15 -19
SUN TV 3.5 3.3 3.3 3.1 3.4 3.4 3.0 2.9 3.3 3.5 3.6 3.5 21 -1
Jagran Prakashan 2.9 3.3 3.7 3.2 3.5 3.4 3.7 3.3 3.6 3.4 3.6 3.3 0 -6
DB Corp 3.1 3.1 3.9 3.2 3.7 3.3 4.0 3.1 3.9 3.5 3.8 3.5 14 -6
HT Media 4.4 4.5 5.1 4.7 4.5 4.3 4.7 4.1 4.3 4.0 4.5 4.0 -2 -12
HMVL 1.7 1.7 1.8 1.7 1.8 1.7 1.7 1.7 1.8 1.6 1.8 1.8 5 3
Total 24.8 25.8 29.1 26.5 27.8 27.6 28.8 26.0 28.3 27.8 31.5 28.3 9 -10
Growth (YoY) 10% 16% 15% 14% 12% 7% -1% -2% 2% 1% 9% 9%
Subscription Revenue (INR b)
ZEE 4.6 4.8 5.2 5.9 5.3 5.8 5.9 5.6 4.8 5.0 5.0 5.4 -3 8
SUN TV 2.3 2.3 2.4 2.5 2.7 2.8 2.8 2.8 3.1 3.2 3.2 3.3 19 2
Dish TV 6.8 6.9 7.1 7.0 7.3 7.3 6.9 6.2 6.9 7.0 6.9 7.0 14 2
Jagran Prakashan 1.0 1.0 1.0 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.2 7 6
DB Corp 1.0 1.1 1.1 1.1 1.2 1.2 1.2 1.2 1.2 1.3 1.3 1.3 7 -1
HT Media 0.7 0.7 0.8 0.8 0.8 0.8 0.8 0.7 0.8 0.7 0.7 0.7 -4 4
HMVL 0.5 0.5 0.5 0.5 0.6 0.5 0.6 0.6 0.6 0.5 0.5 0.5 -3 12
Total 17.0 16.9 17.8 18.9 18.8 19.5 19.4 18.2 18.5 18.8 18.8 19.5 7 4
Growth (YoY) 13% 8% 8% 9% 11% 15% 9% -4% -2% -4% -3% 7%
Total Revenue (INR b)
MBL 0.5 0.6 0.6 0.6 0.6 0.7 0.7 0.7 0.7 0.8 0.8 0.8 15 0
ENIL 1.0 1.2 1.4 1.5 1.1 1.3 1.5 1.7 1.0 1.3 1.5 1.6 -2 9
ZEE 13.3 13.8 15.9 15.2 15.7 17.0 16.4 15.3 15.4 15.8 18.4 16.5 8 -10
SUN TV 6.9 5.7 5.7 5.6 7.6 6.3 5.9 5.8 7.9 6.8 6.8 6.9 19 2
Dish TV 7.4 7.5 7.7 8.0 7.8 7.8 7.5 7.1 7.4 7.5 7.4 7.7 8 4
Jagran Prakashan 4.8 5.2 5.8 5.3 5.6 5.5 6.0 5.6 5.9 5.7 6.0 5.8 3 -3
DB Corp 4.7 4.8 5.9 5.1 5.7 5.4 6.3 5.2 5.9 5.7 6.0 5.8 11 -4
HT Media 5.9 6.0 6.8 6.3 6.1 6.0 6.5 5.9 6.0 5.6 6.3 5.9 1 -6
HMVL 2.2 2.3 2.4 2.3 2.4 2.3 2.3 2.3 2.4 2.1 2.3 2.4 3 5
Prime Focus 5.2 4.5 4.7 4.7 5.3 4.7 5.1 6.5 5.1 5.5 6.1 7.5 14 22
Total 51.8 51.4 56.9 54.6 58.0 56.9 58.2 56.0 57.8 56.6 61.5 60.8 8 -1
Growth (YoY) 19% 15% 15% 11% 12% 11% 2% 3% 0% -1% 6% 8%
April 2018 214

FY16 FY17 FY18

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE YoY (%) QoQ (%)
EBITDA (INR b)
MBL 0.1 0.2 0.3 0.2 0.2 0.3 0.3 0.2 0.2 0.2 0.2 0.3 53 9
ENIL 0.4 0.4 0.5 0.4 0.3 0.2 0.4 0.4 0.2 0.3 0.4 0.4 2 1
ZEE 3.1 3.6 4.3 4.1 4.5 4.9 5.2 4.7 4.8 4.9 5.9 4.3 -8 -27
SUN TV 4.1 4.3 4.4 4.2 4.4 4.7 4.4 3.9 4.5 5.0 4.9 5.0 27 2
Dish TV 2.4 2.6 2.7 2.6 2.6 2.7 2.4 1.9 2.0 2.2 2.0 2.3 18 12
Jagran Prakashan 1.3 1.5 1.7 1.4 1.6 1.5 1.9 1.4 1.6 1.4 1.6 1.3 -9 -19
DB Corp 1.2 1.1 1.9 1.2 1.8 1.5 2.0 1.1 1.9 1.4 1.4 1.2 6 -14
HT Media 0.6 0.7 1.2 0.8 0.6 0.5 1.1 0.7 0.8 1.0 1.3 0.9 24 -33
HMVL 0.5 0.5 0.6 0.5 0.6 0.5 0.4 0.6 0.5 0.5 0.6 0.7 14 12
Prime Focus 1.2 0.5 0.7 0.8 1.0 0.7 1.2 1.8 1.0 1.2 1.3 1.9 7 51
Total 15.0 15.2 18.2 16.1 17.6 17.5 19.2 16.7 17.5 18.1 19.7 18.2 9 -8
Growth (YoY) 21% 19% 20% 18% 18% 15% 5% 3% 0% 3% 3% 9%
EBITDA Margin (%)
MBL 31.5 28.8 39.2 36.0 30.5 41.7 36.6 24.9 31.5 31.9 30.6 33.3 836bps 269bps
ENIL 34.8 32.6 32.6 26.2 26.6 17.8 25.3 21.3 16.0 22.6 24.0 22.2 94bps -180bps
ZEE 23.7 26.0 27.1 27.0 28.8 28.9 31.5 30.7 31.4 31.0 32.3 26.2 -447bps -613bps
SUN TV 59.0 75.9 76.3 74.5 57.4 74.6 74.6 67.6 57.0 73.4 72.0 72.1 452bps 9bps
Dish TV 32.0 33.9 34.4 32.6 34.0 34.1 31.8 26.9 27.2 28.9 27.1 29.4 245bps 228bps
Jagran Prakashan 28.0 28.3 29.9 25.6 27.6 27.6 31.0 25.6 27.3 24.5 27.2 22.8 -281bps -441bps
DB Corp 25.3 22.7 32.1 22.7 31.5 27.9 31.6 21.7 31.4 24.6 23.3 20.7 -97bps -257bps
HT Media 10.1 11.0 17.8 12.1 10.5 8.4 17.0 12.5 13.3 18.6 21.5 15.4 290bps -614bps
HMVL 24.3 23.1 25.1 23.0 23.8 22.0 17.8 24.4 21.5 21.5 25.3 27.1 265bps 177bps
Prime Focus 23.7 11.8 15.3 17.5 19.3 15.9 24.1 27.4 20.1 22.1 20.9 25.8 -162bps 487bps
Average 29.2 29.4 33.0 29.7 29.0 29.9 32.1 28.3 27.7 29.9 30.4 29.5 120bps -94bps
Growth (YoY, bps) 281 154 170 102 -25 47 -85 -144 -131 3 -169 120
PAT (INR b)
MBL 0.1 0.1 0.2 0.2 0.1 0.1 0.1 0.0 0.1 0.1 0.1 0.1 170 2
ENIL 0.3 0.3 0.3 0.2 0.2 0.1 0.2 0.1 0.0 0.1 0.1 0.1 -2 3
ZEE 1.8 1.9 2.3 2.3 2.2 2.4 2.5 2.9 2.5 4.6 3.2 1.7 -43 NM
SUN TV 2.0 2.2 2.2 2.4 2.3 2.7 2.4 2.4 2.5 2.8 2.7 2.9 23 9
Dish TV 0.5 0.9 0.7 4.8 0.4 0.7 0.1 -0.3 -0.1 -0.2 0.0 -0.3 -8 NM
Jagran Prakashan 1.8 0.9 0.9 0.8 0.8 0.9 1.0 0.8 0.9 0.7 0.8 0.7 -10 -14
DB Corp 0.6 0.6 1.1 0.6 1.0 0.9 1.2 0.6 1.1 0.8 0.8 0.7 8 -12
HT Media 0.2 0.4 0.7 0.4 0.2 0.3 0.9 0.3 0.4 0.7 1.2 0.4 62 -67
HMVL 0.4 0.5 0.5 0.4 0.5 0.5 0.4 0.4 0.4 0.4 0.5 0.5 29 11
Prime Focus -2.1 -0.2 -0.2 -2.4 1.0 -0.4 0.2 0.4 0.0 0.2 -0.1 0.6 64 NM
Total 5.6 7.4 8.7 9.7 8.8 8.2 9.0 7.7 7.9 10.2 9.4 7.6 -1 -19
Growth (YoY) 2% 35% 14% 78% 56% 11% 4% -21% -10% 23% 4% -1%
ZEE’s Ad/Subscription revenue for previous quarters includes sports business. Source: Company, MOSL
ZEE’s 4QFY17 and 2QFY18 PAT excludes exceptional gain from sports business.
Exhibit 3: 4QFY18E subscription/circulation revenue growth

Exhibit 2: 4QFY18E ad revenue growth (YoY, %) (YoY, %)
19
21
14
15 14 15
7 7
5
0
-2 -2 -3 -4 -3
ZEE SUN TV Jagran DB HT HMVL MBL ENIL ZEE SUN TV Dish TV Jagran DB Corp HT HMVL
Corp Media Media
ZEE’s ad revenue includes sports business for 4QFY17 ZEE’s subscription revenue includes sports business for 4QFY17
April 2018 215

March 2017
September 2018 Results
Results Preview
Preview || Sector:
Sector: Media
Media
Exhibit 4: 4QFY18 estimated total revenue growth (YoY, %)
8 19 8 3 11 1 3 15 14
-2
ZEE SUN TV Dish TV Jagran DB Corp HT Media HMVL MBL ENIL Prime
Focus
ZEE’s subscription revenue includes sports business for 4QFY17 Source: Company, MOSL
Exhibit 5: Media universe quarterly revenue and EBITDA margin
Consol Revenue (INR b) EBITDA margin (%)

31 33 32
29 29 29 30 29 30 28 30 30 29
26 28 28
43.5 44.8 49.6 49.1 51.8 51.4 56.9 54.6 58.0 56.9 58.2 56.0 57.8 56.6 61.5 60.8
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18E
Exhibit 6: Media universe quarterly PAT and growth

PAT (INR b) YoY growth (%)
78
56
35
16 14 23
2 11 4 4
-9 -4 -7 -10 -1
-21
5.5 5.5 7.6 5.5 5.6 7.4 8.7 9.7 8.8 8.2 9.0 7.7 7.9 10.2 9.4 7.6
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18E
PAT for ZEE excludes exceptional gain from sports business Source: Company, MOSL
April 2018 216


Media
D B Corp 313 Buy 5,754 11.3 -3.9 1,193 6.3 -14.5 691 7.6 -11.6
Dish TV 72 Buy 7,678 8.4 3.7 2,254 18.3 12.4 -81 Loss Loss
Ent.Network 699 Buy 1,618 -2.2 9.0 359 2.1 0.8 135 -2.1 3.4
HT Media 86 Neutral 5,894 0.7 -5.7 908 24.1 -32.6 415 62.4 -55.5
Jagran Prakashan 172 Buy 5,775 2.8 -3.4 1,318 -8.5 -19.1 726 -10.5 -14.3
Music Broadcast 397 Buy 762 14.6 0.1 254 53.0 8.9 122 170.4 2.4
PVR 1,248 Buy 5,839 21.0 4.8 777 66.2 -22.6 58 LP -79.8
Prime Focus 90 Buy 7,451 14.0 22.2 1,919 7.2 50.7 633 60.1 LP
Sun TV 894 Buy 6,947 19.3 1.7 5,009 27.2 1.8 2,898 22.8 8.5
Zee Entertainment 582 Buy 16,462 7.7 -10.4 4,315 -8.0 -27.4 1,680 -58.1 -47.9
Sector Aggregate 64,181 9.7 -0.9 18,305 10.3 -9.0 7,276 -13.0 -18.2
Source: MOSL
Exhibit 8: Relative performance-3m (%) Exhibit 9: Relative performance-1 Yr (%)
Sensex Index MOSL Media Index Sensex Index MOSL Media Index
111 128
104 116
104
97
92
90 80
Dec-17
Jan-18
Feb-18
Mar-18
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17
Exhibit 10: Comparative valuations

Media
D B Corp 313 Buy 18.3 23.0 27.6 17.1 13.6 11.3 9.0 7.3 5.9 19.6 21.0 21.3
Den Networks 104 Neutral -2.9 0.1 4.0 -35.9 1458.3 25.8 8.0 5.7 3.8 -6.3 0.2 8.7
Dish TV 72 Buy -0.3 1.6 3.4 -209.6 45.0 21.5 17.3 7.4 5.6 -7.8 32.1 45.0
Ent.Network 699 Buy 7.2 15.3 28.7 97.5 45.6 24.4 29.7 18.1 11.6 3.9 7.9 13.4
Hindustan Media 232 Buy 25.9 28.8 32.4 9.0 8.0 7.1 2.5 1.8 0.9 15.1 14.6 14.3
HT Media 86 Neutral 11.8 12.1 12.7 7.3 7.2 6.8 0.7 -0.2 -1.3 11.5 10.6 10.1
Jagran Prakashan 172 Buy 10.1 13.1 16.0 17.1 13.1 10.8 8.1 6.7 5.3 14.9 18.5 19.5
Music Broadcast 397 Buy 8.3 13.5 17.8 47.5 29.3 22.3 21.2 15.4 11.5 8.3 12.2 14.0
PVR 1,248 Buy 22.1 37.3 51.5 56.4 33.4 24.2 16.9 12.9 10.2 10.2 15.3 18.0
Prime Focus 90 Buy 2.5 5.8 7.9 36.7 15.5 11.3 6.7 5.0 3.7 11.6 18.9 20.7
Siti Networks 16 Neutral -0.9 0.1 0.6 -17.7 125.9 24.6 8.0 6.2 5.2 -15.8 2.4 11.4
Sun TV 894 Buy 27.7 35.8 42.5 32.2 25.0 21.0 16.3 14.0 12.0 26.1 30.9 33.1
Zee Entertainment 582 Buy 13.0 17.6 21.0 44.8 33.1 27.7 26.4 20.8 17.3 17.4 20.2 20.4
Source: MOSL
April 2018 217

D B Corp
Bloomberg DBCL IN CMP: INR313 TP: INR420 (+34%) Buy
 We expect print ad revenue to grow 14% YoY to INR3.5b, primarily
due to low base and revival in local ad spends.
1,6,12 Rel Perf. (%)
 Circulation revenue is likely to grow 7% YoY to INR1.3b, led by the
-4 / -24 / -29
circulation drive.
 DBCL’s aggregate revenue is likely to grow 11% to INR5.7b, as print
Y/E MARCH 2017 2018E 2019E 2020E
ads, which account for 60-65% of overall revenue, are expected to
Net Sales 22.6 23.4 25.6 27.8
pick up during the quarter.
EBITDA 6.4 5.9 6.9 7.9
 We expect EBITDA to reach INR1.1b (+6% YoY) and margin to dip
Adj. Net Profit 3.7 3.4 4.2 5.1
~100bp YoY to 20.7% on account of higher newsprint cost.
Adj. EPS (INR) 20.4 18.3 23.0 27.6
 We estimate net profit at INR691m, up 8% YoY.
Adj. EPS Gr. (%) 28.3 -10.4 25.8 20.1  The stock trades at 13.6x FY19E and 11.3x FY20E EPS. Maintain
BV/Sh (INR) 86.7 100.2 118.3 141.1 Buy.
RoE (%) 25.1 19.6 21.0 21.3
RoCE (%) 23.7 18.9 20.5 20.8 Key things to watch for
Div. Payout (%) 48.7 26.3 20.9 17.4  Ad revenue (we expect 14% YoY growth).
Valuations  EBITDA margin (we expect 20.7%).
P/E (x) 15.3 17.1 13.6 11.3
P/BV (x) 3.6 3.1 2.6 2.2
EV/EBITDA (x) 8.8 9.2 7.3 5.9
Div. Yield (%) 2.6 1.3 1.3 1.3
Consolidated - Quarterly Earning Model (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 5,746 5,391 6,273 5,171 5,943 5,683 5,986 5,754 22,580 23,366
YoY Change (%) 21.4 12.7 6.3 1.5 3.4 5.4 -4.6 11.3 10.1 3.5
EBITDA 1,812 1,505 1,982 1,122 1,864 1,399 1,396 1,193 6,422 5,852
Margins (%) 31.5 27.9 31.6 21.7 31.4 24.6 23.3 20.7 28.4 25.0
Depreciation 211 216 218 218 220 229 232 232 863 913
Interest 34 6 30 5 16 20 11 26 74 73
Other Income 41 41 36 51 70 57 39 117 170 283
PBT before EO expense 1,608 1,325 1,771 950 1,698 1,207 1,191 1,053 5,654 5,149
PBT 1,608 1,325 1,771 950 1,698 1,207 1,191 1,053 5,654 5,149
Tax 568 440 590 309 597 421 410 362 1,907 1,789
Rate (%) 35.3 33.2 33.3 32.5 35.1 34.8 34.4 34.4 33.7 34.8
Reported PAT 1,040 885 1,181 642 1,101 787 781 691 3,748 3,359
Adj PAT 1,040 885 1,181 642 1,101 787 781 691 3,748 3,359
YoY Change (%) 62.0 55.9 6.6 6.2 5.9 -11.1 -33.9 7.6 28.3 -10.4
Margins (%) 18.1 16.4 18.8 12.4 18.5 13.8 13.0 12.0 16.6 14.4
E: MOSL Estimates
April 2018 218

Dish TV India
Bloomberg DITV IN CMP: INR72 TP: INR101 (+39%) Buy
 We expect DITV’s overall revenue to grow 4% QoQ to INR7.7b.
 Subscription revenue is likely to grow 2% QoQ to INR7b on the back
1,6,12 Rel Perf. (%)
of net subscriber adds. We expect net subscriber additions of 0.3m
3 / -9 / -41
in 4QFY18.
 The headline numbers, however, could vary depending on the
Y/E March 2017 2018E 2019E 2020E
management’s call to merge Videocon D2H financials, as all merger
Net Sales 30.1 30.0 34.2 38.2
formalities have been completed in March 2018.
EBITDA 9.7 8.4 11.2 13.6  ARPU is likely to remain steady due to intense competition
Adj. NP 1.1 -0.4 1.7 3.6 offsetting the gains from increasing HD share. We expect ARPU to
Adj. EPS (INR) 1.0 -0.3 1.6 3.4 grow by a meager 1% QoQ to INR145.
Adj. EPS Gr.(%) -84.2 -133.6 -565.3 109.9  EBITDA is likely to grow 12% QoQ to INR2.3b and margin is
BV/Sh (INR) 4.6 4.0 5.6 9.0 expected to expand 230bp QoQ to 29.4% primarily on the back of
RoE (%) 25.1 -11.9 33.2 46.0 revenue, with cost remaining steady.
RoCE (%) 18.0 6.6 15.8 23.4  We expect DITV’s net loss to widen to INR81m.
Valuations  The stock trades at EV/EBITDA of 7.4x FY19E and 5.6x FY20E.
P/E (x) 70.4 -209.6 45.0 21.5 Maintain Buy.
P/BV (x) 15.7 17.2 12.5 7.9
EV/EBITDA (x) 8.6 10.2 7.4 5.6 Key things to watch for
 Quarterly net subscriber adds (we expect 0.3m).
 ARPU (we expect 1% QoQ growth to INR145).
 EBIDTA margin (we expect 29.4%).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 7,786 7,793 7,480 7,086 7,389 7,486 7,408 7,678 30,144 29,961
YoY Change (%) 5.7 3.6 -3.0 -11.4 -5.1 -3.9 -1.0 8.4 -1.5 -0.6
EBITDA 2,647 2,657 2,376 1,906 2,012 2,161 2,005 2,254 9,729 8,432
EBITDA margin (%) 34.0 34.1 31.8 26.9 27.2 28.9 27.1 29.4 32.3 28.1
Depreciation 1,649 1,683 1,718 1,728 1,822 1,899 1,847 1,864 6,631 7,432
Interest 526 574 613 573 590 611 502 584 2,239 2,286
Other Income 115 174 153 104 98 77 158 112 475 445
PBT before EO expense 587 574 198 -291 -302 -272 -186 -81 1,334 -840
Extra-Ord expense 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
PBT 587 574 198 -291 -302 -272 -186 -81 1,334 -840
Tax 189 -116 114 -7 -162 -93 -150 0 241 -405
Rate (%) 32.2 (20.3) 57.6 2.4 53.8 34.3 80.7 0.0 18.1 48.2
MI & P/L of Asso. Cos. (15.3) (13.7) (20.2) 0.0 (22.7) (17.1) (28.3) 0.0 0.0 (68.1)
Reported PAT 414 704 104 -284 -117 -162 -8 -81 1,093 -367
Adjusted PAT 414 704 104 -284 -117 -162 -8 -81 1,093 -367
YoY Change (%) -22.1 -19.1 -84.8 NM NM NM NM NM -84.2 NM
PAT margin (%) 5.3 9.0 1.4 -4.0 -1.6 -2.2 -0.1 -1.1 3.6 -1.2
E: MOSL Estimates
April 2018 219

Entertainment Network
Bloomberg ENIL IN CMP: INR699 TP: INR820 (+17%) Buy
 We expect ENIL’s standalone revenue to decline 2% YoY to
INR1.6b, pulled down by muted growth at legacy stations, partly
1,6,12 Rel Perf. (%)
offset by higher contribution from new stations.
-1 / -19 / -26
 ENIL’s 35 legacy stations are expected to see a 7% YoY drop to
INR1.4b. This is primarily due to the price hike strategy wherein the
Y/E March 2017 2018E 2019E 2020E ad inventory cap is likely to continue outweighing the yield
Net Sales 5.6 5.4 6.7 8.2 improvement.
EBITDA 1.3 1.2 1.7 2.6  Its 17 new stations (batch-1 of phase-3) are expected to contribute
Adj. NP 0.5 0.3 0.7 1.4 INR237m (15% of revenue).
Adj. EPS (INR) 11.4 7.2 15.3 28.7  Standalone EBITDA is likely to grow 2% YoY to INR359m and
Adj. EPS Gr. (%) -49.5 -37.2 113.8 86.9 margins are expected to expand 90bp YoY.
BV/Sh (INR) 179.3 185.9 200.0 227.5  PAT is expected to decline 2% YoY to INR135m.
RoE (%) 6.6 3.9 7.9 13.4  The stock trades at an EV/EBITDA of 18.7x FY19E and 12x FY20E.
RoCE (%) 4.9 3.2 6.7 11.8 Maintain Buy.
Valuation
P/E (x) 61.2 97.5 45.6 24.4
 Growth in advertisement revenue in new and old stations.
P/BV (x) 3.9 3.8 3.5 3.1
EV/EBITDA (x) 27.3 29.0 18.7 12.0
Standalone - Quarterly Earning Model (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 1,107 1,296 1,506 1,655 1,044 1,257 1,484 1,618 5,565 5,403
YoY Change (%) 9.0 11.5 4.9 12.4 -5.8 -3.0 -1.5 -2.2 9.4 -2.9
Total Expenditure 813 1,065 1,125 1,303 877 973 1,128 1,259 4,306 4,237
EBITDA 294 231 381 352 167 284 356 359 1,259 1,167
Margins (%) 26.6 17.8 25.3 21.3 16.0 22.6 24.0 22.2 22.6 21.6
Depreciation 85 140 147 164 156 159 161 167 536 643
Net Interest cost -33 -22 -4 -1 -15 -9 -5 -6 -60 -35
PBT before EO expense 243 114 239 188 25 134 201 199 783 558
PBT 243 114 239 188 68 134 201 199 783 601
Tax 78 35 76 50 23 74 70 64 238 231
Rate (%) 32.0 30.5 31.7 26.7 34.2 55.5 34.9 32.0 30.4 38.5
Reported PAT 165 79 163 138 44 60 131 135 545 370
Adj PAT 165 79 163 138 17 60 131 135 545 342
YoY Change (%) -36.3 -70.7 -43.3 -31.6 -89.9 -24.5 -19.8 -2.1 -46.5 -37.2
Margins (%) 14.9 6.1 10.8 8.3 1.6 4.7 8.8 8.3 9.8 6.3
E: MOSL Estimates
April 2018 220

HT Media
Bloomberg HTML IN CMP: INR86 TP: INR98 (+14%) Neutral
 We expect consolidated revenue to grow by a meager 1% YoY to
INR5.9b.
1,6,12 Rel Perf. (%)
 Ad revenue is likely to decline 2% YoY to INR4b, primarily due to
-3 / -16 / -9
weak English ad revenue.
 English ad revenue is expected to decline ~7% YoY to INR2.1b,
Y/E MARCH 2017 2018E 2019E 2020E
mainly impacted by digital medium. However, 5% YoY growth in
Net Sales 24.5 23.7 24.5 25.4 Hindi ad revenue to INR1.8b should partly offset the impact on
EBITDA 3.0 4.1 4.0 3.9 overall ad revenue.
Adj. NP 1.7 2.7 2.8 2.9  We expect circulation revenue to decline 4% YoY to INR0.7b.
Adj. EPS (INR) 7.4 11.8 12.1 12.7  EBITDA is likely to grow 24% to INR0.9b and margin is expected to
Adj. EPS Gr. (%) -1.8 59.3 2.6 4.9 increase 290bp YoY to 15.4%, primarily on the back of savings in
BV/Sh (INR) 96.8 108.2 119.8 131.9 discretionary cost.
RoE (%) 7.9 9.7 10.2 10.5  Net profit is likely to come in at INR0.4b (+62% YoY). The stock
RoCE (%) 9.7 11.5 10.6 10.1 trades at 7.1x FY19E and 6.8x FY20E EPS. Maintain Neutral.
Div. Payout (%) 6.9 4.3 4.2 4.0
Valuations
P/E (x) 11.7 7.3 7.1 6.8 Key things to watch for
P/BV (x) 0.9 0.8 0.7 0.7  English ad revenue (we expect ~7% YoY de-growth).
EV/EBITDA (x) 10.0 6.3 5.4 4.5  Hindi ad revenue (we expect 5% growth).
Div. Yield (%) 0.5 0.5 0.5 0.5  EBITDA margin (we expect 15.4%).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 6,147 6,022 6,499 5,853 5,990 5,606 6,254 5,894 24,521 23,745
YoY Change (%) 4.5 0.2 -4.6 -7.3 -2.5 -6.9 -3.8 0.7 -2.0 -3.2
EBITDA 643 505 1,105 731 799 1,045 1,347 908 2,983 4,099
Margins (%) 10.5 8.4 17.0 12.5 13.3 18.6 21.5 15.4 12.2 17.3
Depreciation 295 304 312 337 320 317 307 329 1,248 1,273
Interest 247 245 241 218 194 199 194 202 951 788
Other Income 478 780 549 488 531 435 645 465 2,295 2,076
PBT before EO expense 579 736 1,100 665 817 965 1,491 841 3,079 4,114
Extra-Ord expense 0 0 0 0 0 -31 0 0 0 -31
PBT 579 736 1,100 665 817 997 1,491 841 3,079 4,145
Tax 186 224 36 225 239 219 121 292 671 871
Rate (%) 32.2 30.5 3.3 33.8 29.2 22.0 8.1 34.7 21.8 21.0
Mi & P/L of Asso. Cos. 168 202 150 184 162 116 126 134 705 538
Reported PAT 224 309 914 256 415 662 1,244 415 1,703 2,737
Adj PAT 224 309 914 256 415 638 933 415 1,703 2,712
YoY Change (%) -9.5 -16.1 32.9 -40.7 85.5 106.3 2.1 62.4 -1.9 59.3
Margins (%) 3.6 5.1 14.1 4.4 6.9 11.4 14.9 7.0 6.9 11.4
E: MOSL Estimates
April 2018 221

Jagran Prakashan
Bloomberg JAGP IN CMP: INR172 TP: INR215 (+25%) Buy
 We expect advertising revenue to remain flat at INR3.3b on
account of high base in 4QFY17 (led by UP elections).
1,6,12 Rel Perf. (%)
 However, driven by an increase in the circulation copies, circulation
5 / -10 / -19
revenue is likely to grow 7% YoY to INR1.1b.
 We estimate Radio revenue to grow 15% to INR0.8b and EBITDA to
Y/E MARCH 2017 2018E 2019E 2020E
grow 53% to INR0.3b.
Net Sales 22.8 23.3 26.0 28.6  Aggregate revenue is expected to grow 3% to INR5.8b.
EBITDA 6.4 5.9 7.1 8.3  Increase in newsprint cost is likely to impact EBITDA. We expect
Adj. Net Profit 3.5 3.1 4.1 5.0 EBITDA decline of 9% YoY to INR1.3b and EBITDA margin at 22.8%
Adj. EPS (INR) 10.7 10.1 13.1 16.0 (-280bp YoY). PAT is expected to fall 11% to INR0.7b.
Adj. EPS Gr. (%) -11.5 -5.3 30.5 21.5  The stock trades at 13.1x FY19E and 10.8x FY20E EPS. Maintain
BV/Sh (INR) 65.9 63.1 72.1 83.9 Buy.
RoE (%) 18.4 14.9 18.5 19.5
RoCE (%) 15.9 14.1 17.1 18.1
Div. Payout (%) 0.0 35.8 27.4 22.6
Valuations
P/E (x) 16.2 17.1 13.1 10.8
 Ad revenue (we expect flat YoY growth).
P/BV (x) 2.6 2.7 2.4 2.0
 EBITDA margin (we expect 22.8% margin).
EV/EBITDA (x) 7.9 8.1 6.3 5.0
Div. Yield (%) 0.0 1.7 1.7 1.7

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Revenue from Operations 5,644 5,548 6,016 5,620 5,913 5,665 5,981 5,775 22,829 23,335
YoY Change (%) 17.3 6.8 4.4 6.1 4.8 2.1 -0.6 2.8 8.4 2.2
EBITDA 1,558 1,531 1,866 1,441 1,613 1,386 1,629 1,318 6,395 5,945
Margins (%) 27.6 27.6 31.0 25.6 27.3 24.5 27.2 22.8 28.0 25.5
Depreciation 302 308 329 351 328 340 343 330 1,289 1,340
Interest 102 78 89 81 72 74 76 79 350 301
Other Income 93 112 78 128 120 125 108 130 412 484
PBT 1,248 1,257 1,526 1,137 1,333 1,098 1,318 1,040 5,168 4,788
Tax 407 396 546 327 446 375 446 313 1,675 1,580
Rate (%) 32.6 31.5 35.8 28.7 33.5 34.2 33.8 30.2 32.4 33.0
MI & P/L of Asso. Cos. 3 8 7 0 21 27 25 0 17 73
Reported PAT 838 853 973 811 866 695 848 726 3,475 3,135
Adj PAT 838 853 973 811 866 695 848 726 3,475 3,135
YoY Change (%) -11.6 5.9 4.3 1.2 3.3 -18.5 -12.9 -10.5 -2.4 -9.8
Margins (%) 14.9 15.4 16.2 14.4 14.6 12.3 14.2 12.6 15.2 13.4
E: MOSL Estimates
April 2018 222

Music Broadcast
Bloomberg RADIOCIT IN CMP: INR397 TP: INR469 (+18%) Buy
 We expect revenue to grow 15% YoY to INR762m on the back of
waning GST impact (providing impetus to revival in ad spends
1,6,12 Rel Perf. (%)
across sectors) and higher utilization at new stations.
3 / -2 / -2
 EBITDA is expected to rise 53% YoY to INR254m; margin is likely
to expand 836bp YoY to 33.3%.
Y/E March 2017 2018E 2019E 2020E
 We expect PAT to grow 170% YoY to INR122m, led by higher
Sales 2.7 3.0 3.5 4.0
EBITDA.
EBITDA 0.9 1.0 1.3 1.6  The stock trades at EV/EBITDA of 15.6x FY19E and 11.7x FY20E.
Adj. NP 0.4 0.5 0.8 1.0 Maintain Buy.
Adj. EPS (INR) 6.4 8.3 13.5 17.8
Adj.EPS Gr (%) -26.1 29.9 62.3 31.4
BV/Sh. (INR) 96.1 104.4 118.0 135.8
RoE (%) 9.7 8.3 12.2 14.0
RoCE (%) 8.6 8.7 12.0 14.0
Valuations Key things to watch for
P/E (x) 61.7 47.5 29.3 22.3  Growth in utilization in new and old stations.
P/BV (x) 4.1 3.8 3.4 2.9  Yield improvement at legacy stations.
EV/EBITDA (x) 23.5 21.5 15.6 11.7

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 628 692 728 666 703 758 762 762 2,714 2,985
YoY Change (%) 38.0 24.7 12.3 12.7 11.9 9.5 4.7 14.6 20.7 10.0
Total Expenditure 437 403 462 500 481 516 529 508 1,802 2,034
EBITDA 192 289 266 166 222 242 233 254 913 951
Margins (%) 30.5 41.7 36.6 24.9 31.5 31.9 30.6 33.3 33.6 31.9
Depreciation 45 45 50 56 64 67 65 63 197 259
Interest 41 41 50 59 39 38 39 42 190 158
Other Income 11 8 9 17 47 50 43 37 44 177
PBT 116 211 175 68 166 187 172 186 570 711
Tax 40 68 73 23 57 60 53 64 203 235
Rate (%) 34.5 32.2 41.6 33.3 34.6 32.0 30.9 34.6 35.7 33.0
Reported PAT 76 143 102 45 108 127 119 122 367 476
Adj PAT 76 116 102 45 108 127 119 122 367 476
YoY Change (%) -27.5 7.4 -52.5 -75.7 42.3 9.7 16.4 170.4 32.7 29.9
Margins (%) 12.1 16.8 14.0 6.8 15.4 16.8 15.6 16.0 13.5 15.9
E: MOSL Estimates
April 2018 223

Prime Focus
Bloomberg PRIF IN CMP: INR90 TP: INR130 (+44%) Buy
 We expect consolidated revenue to grow 14% YoY to INR7.5b,
primarily on the back of creative business.
1,6,12 Rel Perf. (%)
 Given the strong offering pipeline, we expect creative business to
-10 / -7 / -11
grow at 12% YoY to INR6b.
 Further, the Tech business is likely to reach INR1.1b, growing at
Y/E MARCH 2017 2018E 2019E 2020E
24% YoY, driven by client additions and contract renewals.
Net Sales 21.5 24.2 27.7 31.9  We expect EBITDA to reach INR1.9b, up 7% YoY, and margin to dip
EBITDA 4.8 5.4 6.5 7.7 ~160bp to 25.8% due to higher operating cost.
Adj. Net Profit 0.4 0.7 1.7 2.6  We estimate net profit at INR633m, up 60% YoY.
Adj. EPS (INR) 1.2 2.5 5.8 7.9  The stock trades at an EV/EBITDA of 5x FY19E and 3.7x FY20E.
Adj.EPS Gr. (%) NM 100.6 137.5 36.4 Maintain Buy.
BV/Sh (INR) 18.6 23.8 37.9 46.7
RoE (%) 7.6 11.6 18.9 20.7
RoCE (%) 8.5 10.2 13.6 15.7
Valuations
P/BV (x) 4.8 3.8 2.4 1.9  Consolidated revenue (we expect 14% YoY growth).
EV/EBITDA (x) 8.4 7.0 5.0 3.7  EBITDA margin (we expect 25.8%).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 5,262 4,665 5,072 6,537 5,135 5,473 6,096 7,451 21,536 24,154
YoY Change (%) 1.5 4.0 8.3 40.4 -2.4 17.3 20.2 14.0 13.3 12.2
EBITDA 1,016 740 1,223 1,790 1,033 1,207 1,273 1,919 4,769 5,432
Margins (%) 19.3 15.9 24.1 27.4 20.1 22.1 20.9 25.8 22.1 22.5
Depreciation 690 701 653 502 645 708 758 709 2,546 2,821
Interest 303 325 229 421 376 362 453 449 1,279 1,641
Other Income 13 172 8 52 85 65 26 29 245 205
ESOP expense 6 53 113 84 115 139 42 43 256 340
Foreign exchange gain/(loss) 10 -96 8 -336 22 149 -25 55 -414 200
PBT before EO expense 40 -264 244 498 2 211 21 801 519 1,035
Extra-Ord expense -1,019 41 0 9 0 0 0 0 -968 0
PBT 1,059 -305 244 489 2 211 21 801 1,487 1,035
Tax 6 90 -38 32 -28 -8 91 152 90 207
Rate (%) 0.6 -29.3 -15.4 6.5 -1,212.4 -3.9 432.2 19.0 6.0 20.0
MI & P/L of Asso. Cos. 31 -34 55 71 21 41 16 17 123 95
Reported PAT 1,022 -361 227 387 10 178 -87 633 1,274 733
Adj PAT 9 -308 227 395 10 178 -87 633 365 733
YoY Change (%) -97.1 -3.8 -220.1 -122.7 4.8 LP -138.2 60.1 LP 101.2
Margins (%) 0.2 -6.6 4.5 6.0 0.2 3.2 -1.4 8.5 1.7 3.0
E: MOSL Estimates
April 2018 224

PVR
Bloomberg PVRL IN CMP: INR1,248 TP: INR1,760 (+41%) Buy
 We expect revenue to grow 21% YoY to INR5,839m in 4QFY18 on
account of screen additions and strong content pipeline.
52-Week Range (INR) 1660 / 1145
1,6,12 Rel Perf. (%)
 Margins are likely to expand ~360bp to 13.3%. We expect EBITDA
-2 / -3 / -25
to grow 66% to INR777m.
 We expect PAT to reach INR58m in 4QFY18.
Y/E MARCH 2017 2018E 2019E 2020E
 The stock trades at 33.4x FY19E and 24.3x FY20E EPS. Maintain
Net Sales 21.2 23.4 27.5 32.9
Buy.
EBITDA 3.1 3.8 5.1 6.2
Adj. Net Profit 1.0 1.0 1.7 2.4
Adj. EPS (INR) 20.5 22.1 37.3 51.5
Adj. EPS Gr. (%) -3.8 7.8 68.7 37.9
BV/Sh (INR) 206.5 226.8 261.7 310.8
RoE (%) 10.4 10.2 15.3 18.0
RoCE (%) 9.5 9.3 12.4 14.8
Payout (%) 7.0 8.2 6.5 4.7
P/E (x) 60.8 56.4 33.4 24.3  Growth in sponsorship revenue.
P/BV (x) 6.0 5.5 4.8 4.0  Number of screen additions.
EV/EBITDA (x) 23.4 19.4 14.5 11.5
Div Yield (%) 0.2 0.2 0.3 0.3
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 5,622 5,438 5,309 4,826 6,366 5,554 5,573 5,839 21,194 23,354
YoY Change (%) 15.7 14.6 6.1 18.4 13.2 2.1 5.0 21.0 14.6 10.2
EBITDA 1,065 804 800 467 1,120 905 1,003 777 3,136 3,807
Margins (%) 19.0 14.8 15.1 9.7 17.6 16.3 18.0 13.3 14.8 16.3
Depreciation 331 346 345 363 376 347 375 517 1,384 1,660
Interest 193 194 204 216 208 207 212 226 806 903
Other Income 165 175 111 171 164 42 32 56 623 311
PBT 681 440 363 45 700 387 449 90 1,528 1,555
Tax 249 149 127 45 258 140 154 31 570.0 520.9
Rate (%) 36.6 33.8 35.1 99.8 36.8 36.1 34.2 34.8 37.3 33.5
Reported PAT 428 291 239 -0.5 445 252 289 58.4 958 1,034
Adj PAT 444 291 239 -0.5 445 255 289 58.4 984 1,034
YoY Change (%) -3.0 -8.7 -23.5 NM 0.1 -12.3 20.8 NM -8.0 5.0
Margins (%) 7.6 5.4 4.5 0.0 7.0 4.5 5.2 1.0 4.5 4.4
E: MOSL Estimates
April 2018 225

Sun TV
Bloomberg SUNTV IN CMP: INR894 TP: INR1,225 (+37%) Buy
 We expect Sun TV’s standalone revenue to grow 19% YoY to
M. Cap. (INR b)/(USD b) 352 / 5
INR6.9b.
1,6,12 Rel Perf. (%)
 Advertising and broadcasting revenue is expected to witness 21%
-1 / 11 / 1
YoY jump to INR3.5b, on the back of (1) transition to commission
model, (2) waning GST impact, and (3) low base.
Y/E March 2017 2018E 2019E 2020E
 We expect subscription revenue to grow 19% YoY to INR3.3b
Net Sales 25.6 28.4 33.6 38.5 primarily led by fast pick-up in the digitization in Tamil Nadu
EBITDA 17.4 19.4 23.4 26.9 coupled with improving ARPU.
Adj. Net Profit 9.8 10.9 14.1 16.7  Sun TV’s standalone EBITDA is estimated to grow 27% YoY to INR5b
Adj. EPS (INR) 24.9 27.7 35.8 42.5 and margins to expand 450bp to 72.1%.
Adj. EPS Gr. (%) 14.1 11.6 29.1 18.7  PAT is expected to grow 23% YoY to INR2.9b.
BV/Sh (INR) 102.1 110.2 121.7 135.3  The stock trades at 25x FY19E and 21x FY20E EPS. Maintain Buy.
RoE (%) 26.0 26.1 30.9 33.1
RoCE (%) 26.0 26.1 30.9 33.1
Div. Payout (%) 46.5 70.8 67.7 67.9
Valuations
P/BV (x) 8.8 8.1 7.3 6.6  Ad revenue growth (expect 21% YoY growth).
EV/EBITDA (x) 19.4 17.2 14.0 12.0  Subscription revenue growth (expect 19% YoY growth).
Div. Yield (%) 1.1 1.9 2.3 2.8

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 7,608 6,255 5,894 5,825 7,863 6,759 6,833 6,947 25,583 28,402
YoY Change (%) 10.4 10.2 2.8 3.1 3.4 8.1 15.9 19.3 6.8 11.0
EBITDA 4,364 4,663 4,397 3,936 4,484 4,961 4,920 5,009 17,361 19,374
Margins (%) 57.4 74.6 74.6 67.6 57.0 73.4 72.0 72.1 67.9 68.2
Depreciation 1,008 1,030 1,107 767 1,035 1,027 1,145 957 3,911 4,163
Interest 1 2 7 2 1 1 1 3 13 5
Other Income 216 488 389 374 371 372 291 360 1,466 1,394
PBT 3,571 4,119 3,673 3,541 3,819 4,306 4,066 4,408 14,904 16,599
Tax 1,240 1,415 1,272 1,182 1,302 1,459 1,397 1,511 5,109 5,669
Rate (%) 34.7 34.4 34.6 33.4 34.1 33.9 34.3 34.3 34.3 34.1
MI & P/L of Asso. Cos. 0 0 0 0 0 0 0 0 0 0
Reported PAT 2,331 2,704 2,401 2,359 2,516 2,847 2,670 2,898 9,794 10,931
Adj PAT 2,331 2,704 2,401 2,359 2,516 2,847 2,670 2,898 9,794 10,931
YoY Change (%) 19.0 21.7 11.0 5.4 8.0 5.3 11.2 22.8 14.2 11.6
Margins (%) 30.6 43.2 40.7 40.5 32.0 42.1 39.1 41.7 38.3 38.5
E: MOSL Estimates
April 2018 226

Zee Entertainment
Bloomberg Z IN
 We expect advertising revenue to grow 15% YoY to INR9.7b. Ex-
M. Cap. (INR b)/(USD b) 559 / 9
sports, ad revenue is expected to grow 16% YoY. Low base coupled
1,6,12 Rel Perf. (%) 6 / 5 / -2 with revived ad spending should bode well.
 Subscription revenue is likely to decline 3% YoY to INR5.4b.
However, excluding sports, it is expected to grow 13% YoY.
Y/E MARCH 2017 2018E 2019E 2020E  Total revenue is expected to grow 8% YoY to INR16.5b. Ex-sports,
Net Sales 64.3 66.1 76.5 87.7 revenue is likely to grow 16% YoY.
EBITDA 19.3 20.0 25.3 29.7  Yet, higher content cost coupled with the launch of ZEE5 is
Adj. NP 12.9 12.5 16.9 20.2 expected to pressurize EBITDA. We expected consolidated EBITDA
Adj. EPS (INR) 13.4 13.0 17.6 21.0 to witness 8% YoY decline to INR4.3b and margin to contract 450bp
Adj. EPS Gr. (%) 52.5 -2.9 35.4 19.3 YoY to 26.2%.
BV/Sh (INR) 69.3 80.2 94.2 111.6  PAT is expected to de-grow ~89% YoY to INR1.7b. However,
(INR)
RoE (%) 22.4 17.4 20.2 20.4 excluding the exceptional gain of INR12.2b from sale of sports
RoCE (%) 20.7 15.7 18.9 20.4 business in 4QFY17, on an adjusted basis, PAT is expected to
Div. Payout (%) 13.0 21.6 20.5 17.2 decline ~58% YoY.
Valuations  The stock trades at 33x FY19E and 27.6x FY20E EPS. Maintain Buy.
P/E (x) 43.4 44.6 33.0 27.6
P/BV (x) 8.4 7.2 6.2 5.2 Key things to watch for
EV/EBITDA (x) 28.6 26.6 20.8 17.2  Ad revenue (expect 16% YoY growth ex-sports).
Div. Yield (%) 0.4 0.4 0.5 0.5  Subscription revenue (expect 13% YoY growth ex-sports).

Y/E March FY17 FY18
FY17 FY18E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Revenue from Operations 15,717 16,954 16,391 15,280 15,402 15,821 18,381 16,462 64,342 66,065
YoY Change (%) 18.5 23.0 3.4 0.4 -2.0 -6.7 12.1 7.7 10.7 2.7
EBITDA 4,532 4,892 5,158 4,688 4,844 4,912 5,944 4,315 19,269 20,014
Margins (%) 28.8 28.9 31.5 30.7 31.4 31.0 32.3 26.2 29.9 30.3
Depreciation 251 336 249 316 311 411 505 453 1,152 1,679
Interest 75 86 90 1,122 147 3 24 1,089 1,372 1,262
Other Income 734 432 525 549 1,011 2,031 480 123 2,240 3,646
Fair Value through P&L gain/(loss) -1,132 -829 -714 470 -532 -148 -419 0 -2,205 -1,099
Extra-Ord expense 0 0 0 -12,234 0 -1,346 0 0 -12,234 -1,346
PBT 3,808 4,074 4,630 16,504 4,864 7,727 5,477 2,896 29,014 20,965
Tax 1,626 1,634 2,081 1,464 2,344 1,832 2,260 1,217 6,805 7,652
Rate (%) 42.7 40.1 44.9 8.9 48.2 23.7 41.3 42.0 23.5 36.5
MI & P/L of Asso. Cos. 13 56 41 -116 4 -16 -4 0 -7 -16
Reported PAT 2,169 2,383 2,508 15,156 2,516 5,912 3,222 1,680 22,216 13,329
Adj PAT 2,169 2,383 2,508 4,006 2,516 4,885 3,222 1,680 12,852 12,474
YoY Change (%) -9.0 -9.9 -6.1 180.1 16.0 104.9 28.5 -58.1 52.3 -2.9
Margins (%) 13.8 14.1 15.3 26.2 16.3 30.9 17.5 10.2 20.0 18.9
E: MOSL Estimates
April 2018 227

March 2018 Results Preview | Sector: Metals
Metals
Company name Ferrous companies to outperform on higher realization
Hindalco JSPL, SAIL and NMDC set to report strong earnings growth
Hindustan Zinc
Steel product prices increase sharply
Jindal Steel & Power
Steel product prices rose sharply in 4QFY18, driven by seasonally strong demand,
JSW Steel
higher exports, disruption at some of the domestic mills, and strong global prices
Nalco
amid Chinese winter shutdowns. Domestic long product prices increased ~21% QoQ
NMDC
(or ~INR6,700/t) and flat product prices were up ~13% QoQ (or INR5,000/t).
SAIL Domestic iron ore prices were also higher (up by ~28% QoQ or INR600/t, for NMDC’s
Tata Steel fines) due to strong demand and disruption in mining activity in Odisha. Base metal
Vedanta prices have increased modestly – aluminum LME is up ~3% QoQ to USD2,174/t, zinc
is up ~6% QoQ to USD3,419/t and lead is up ~2% QoQ to USD2,529/t. Alumina was
down ~13% QoQ at USD376/t.
Steel volumes for the four companies under our coverage universe are expected to
increase 1% QoQ/5% YoY, led by JSPL. Tata Steel’s volumes declined ~9% QoQ due
to shut-down. Aluminum volumes are expected to increase 3% QoQ on ramp-up at
Vedanta.
Strong earnings growth driven by ferrous companies

We expect our Metals coverage universe to continue reporting strong earnings
growth, with EBITDA increasing 14% QoQ/16% YoY. Combined PAT would increase
by 10% QoQ/59% YoY. Ferrous companies are expected to outperform on the back
of higher realizations.
Ferrous companies to outperform led by strong increase in realization

NMDC’s EBITDA is expected to increase by 54% QoQ to INR20.4b, led by higher
prices and a recovery in volumes as the rail infrastructure issue was resolved. SAIL’s
EBITDA is likely to increase by ~51% QoQ to INR21.7b on higher steel prices. We
expect ~INR2,000 QoQ increase in EBITDA/t to INR5,700. JSP’s EBITDA is expected to
increase by ~22% QoQ to INR19.5b on higher steel margins, partly offset by
weakness in the power business due to coal availability. JSW Steel’s EBITDA is
expected to increase by ~13% QoQ to INR43.3b on favorable steel spreads (EBITDA
per ton of INR9,900). Tata Steel’s EBITDA is expected to increase ~9% QoQ to
INR62.2b as higher spreads in India (margin at ~INR15,000/t) and EU (~USD90/t) are
partly offset by lower India volumes.
Base metals to report modest earnings growth

Vedanta’s EBITDA is expected to increase by ~7% QoQ to INR72.5b, aided by oil and
aluminum, which are benefiting from both higher volumes and realization QoQ.
Hindalco’s EBITDA is expected to increase modestly by ~2% QoQ to INR35.9b due to
the impact of LME hedges and cost increases. Nalco’s EBITDA is likely to be flat QoQ
as higher volumes and LME are offset by lower alumina prices.
Sanjay Jain – Research analyst (SanjayJain@MotilalOswal.com); +91 22 6129 1523

Dhruv Muchhal – Research analyst (Dhruv.Muchhal@MotilalOswal.com); +91 22 6129 1549
April 2018 228

Sector Sales (INR m) EBDITA (INR m) Net Profit (INR m)
Metals
Hindalco 208 Buy 310,632 11.1 0.4 35,917 3.0 2.0 10,650 45.8 -17.8
Hindustan Zinc 310 Neutral 59,657 -4.7 0.7 34,136 -8.9 5.2 25,775 -15.7 15.6
JSPL 230 Buy 78,926 21.7 11.1 19,535 25.9 21.6 -2,131 Loss Loss
JSW Steel 302 Buy 201,404 20.9 12.8 43,341 36.9 12.5 17,204 69.6 -6.1
Nalco 68 Neutral 25,759 1.0 7.8 4,718 10.4 1.1 2,876 6.3 4.4
NMDC 119 Buy 35,055 22.1 42.0 20,446 43.0 53.6 13,767 49.5 52.2
Rain Industries 384 Buy 36,237 46.8 15.2 7,742 75.4 12.7 3,673 190.9 8.9
SAIL 75 Sell 163,020 28.5 6.4 21,735 LP 50.9 6,255 LP 848.7
Tata Steel 580 Neutral 322,434 -4.9 -3.6 62,251 -11.4 9.3 23,079 -31.0 -4.2
Vedanta 284 Buy 243,595 8.2 0.0 72,488 -1.4 7.2 28,406 86.3 28.5
Exhibit 2: India import parity HRC prices

Spot Quaterly average
Average domestic HRC steel 46,500 Avg. is up INR4988 QoQ
HRC Mumbai (INR/t)
price up INR4,988/t QoQ

42,000
37,500
33,000
28,500
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Feb-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17
Exhibit 3: China steel spreads with raw materials

HRC Rebar
490
Chinese steel mills product
spreads at multi-year highs 410
330
250
170
90
Nov-17
Nov-15
Nov-16
May-17
Nov-13
Nov-14
May-15
May-16
Aug-17
Feb-18
May-13
May-14
Aug-15
Aug-16
Feb-16
Feb-17
Aug-13
Aug-14
Feb-14
Feb-15
Source: MOSL, Company
Exhibit 4: Domestic steel demand growth – trailing 12-month (YoY %)

Domestic steel
consumption up ~7% YoY in Cons. (mt) Trailing 12m Growth (%)
January and February 10.0 8.1
8.0
6.0
3.9
4.0
2.0
0.0
-2.0
Jun-13
Jun-14
Jun-15
Apr-13
Jun-16
Jun-17
Aug-13
Apr-14
Dec-13
Apr-15
Feb-14
Aug-14
Dec-14
Apr-16
Feb-15
Aug-15
Dec-15
Apr-17
Feb-16
Aug-16
Dec-16
Oct-13
Feb-17
Aug-17
Dec-17
Oct-14
Feb-18
Oct-15
Oct-16
Oct-17
April 2018 229

India’s remains a net Exhibit 5: India net steel imports – kt

exporter of steel Net steel imports (kt)
1,000
500
-500
-1,000
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Nov-12
Nov-13
Nov-14
Nov-15
Nov-16
Nov-17
May-12
May-13
May-14
May-15
May-16
May-17
Jan-12
Mar-12
Sep-12
Jan-13
Mar-13
Sep-13
Jan-14
Mar-14
Sep-14
Jan-15
Mar-15
Sep-15
Jan-16
Mar-16
Sep-16
Jan-17
Mar-17
Sep-17
Jan-18
Exhibit 6: India steel – sales volumes (mt)
Tata Steel SAIL JSW Steel JSP

11.5 11.4 12.0 12.1
10.8 10.9 10.8 10.1
9.4 8.8 9.0 9.1
8.5
4.0 3.9 4.0 4.1
3.3 3.8 3.6 3.5
3.1 3.1 3.1 2.6 3.3
3.8 3.6 3.3 3.4 3.5 3.8 3.8
3.2 2.7 2.7 2.9 2.8 3.0
2.4 2.1 2.3 2.3 2.7 2.2 2.6 3.0 3.2 2.8 3.1 3.3 3.0
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
Exhibit 7: India steel – EBITDA/ton (INR)

20,000 Average Tata Steel SAIL JSW Steel JSP
15,000
10,000
5,000
0
-5,000
-10,000
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
Exhibit 8: Revenue of coverage universe

1,339
1,381
Nalco
1,256
1,240
1,600
1,134
1,117
1,116
1,070
1,012
1,003
1,400 Hindalco
993
989
913
909
1,200
Revenue (INR b)
VEDL
1,000
800 NMDC
600 JSP
400 JSW Steel
200
0 SAIL
Tata Steel
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
April 2018 230

Exhibit 9: EBITDA of coverage universe

300 242 247 Nalco
250 203 209 192 189
209 Hindalco
183
200 151 156 VEDL
132 137
150 114 113
69 NMDC
EBITDA (INR b)
100
JSP
50
0 JSW Steel
-50 SAIL
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
Tata Steel
Exhibit 10: Quarterly average aluminum prices – USD/ton

Aluminum Premium Aluminum total price Alumina
Quarter
Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY
4QFY18 2,174 3% 18% 94 0% -8% 2,268 3% 16% 376 -13% 11%
3QFY18 2,105 5% 23% 94 3% 29% 2,200 5% 23% 431 29% 41%
2QFY18 2,011 5% 24% 91 -22% 21% 2,103 4% 24% 335 13% 43%
1QFY18 1,910 3% 21% 117 13% 17% 2,027 4% 21% 295 -13% 17%
4QFY17 1,851 8% 22% 103 40% -8% 1,954 10% 20% 341 12% 56%
3QFY17 1,710 6% 14% 73 -3% -21% 1,783 5% 12% 305 30% 31%
2QFY17 1,620 3% 2% 76 -24% -25% 1,696 1% 0% 235 -7% -20%
1QFY17 1,570 4% -11% 100 -10% -50% 1,672 3% -15% 253 15% -25%
4QFY16 1,516 1% -16% 111 20% -70% 1,627 2% -25% 219 -6% -36%
3QFY16 1,495 -6% -24% 93 -8% -78% 1,588 -6% -33% 233 -20% -34%
2QFY16 1,591 -10% -20% 100 -49% -75% 1,692 -14% -29% 293 -13% -9%
1QFY16 1,765 -2% -2% 198 -48% -47% 1,963 -10% -10% 336 -2% 6%
4QFY15 1,800 -8% 5% 377 -9% 20% 2,177 -9% 8% 343 -3% 4%
3QFY15 1,966 -1% 11% 414 3% 68% 2,380 0% 18% 355 11% 10%
2QFY15 1,987 11% 12% 404 8% 63% 2,391 10% 18% 322 2% 1%
1QFY15 1,798 5% -2% 374 19% 52% 2,172 7% 4% 317 -3% -3%
4QFY14 1,708 -3% -15% 313 27% 29% 2,022 0% -10% 328 2% -4%
3QFY14 1,768 -1% -11% 246 -1% 1% 2,015 -1% -10% 323 1% -1%
2QFY14 1,780 -3% -7% 248 1% -1% 2,029 -2% -6% 318 -3% 1%
1QFY14 1,834 -8% -7% 246 2% 2,081 -7% 327 -4% 3%
Exhibit 11: Global aluminum production trend Exhibit 12: China aluminum production trend
Production YoY Production YoY
3.0 48
5,400 22.0 2.8 42
YoY growth (%)
17.0 2.6 36
YoY growth (%)
'000 tons
4,800
m tons
12.0 2.4 30
7.0 2.2 24
4,200
2.0 2.0 18
3,600 -3.0 1.8 12
-8.0 1.6 6
3,000 -13.0 1.4 0
Jul-16
Jul-17
Apr-16
Apr-17
Jan-16
Jan-17
Jan-18
Oct-15
Oct-16
Oct-17
Jul-16
Jul-17
Apr-16
Apr-17
Jan-16
Jan-17
Jan-18
Oct-16
Oct-17
Source: MOSL, Company, Bloomberg Source: MOSL, Company, Bloomberg
April 2018 231

Exhibit 13: LME aluminum and inventories

Inventories (RHS) Spot
2,300 2.5
2,150 2.3
USD/t
2,000 2.0
m tons
1,850 1.8
1,700 1.5
1,550 1.3
1,400 1.0
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17
Source: MOSL, Bloomberg
Exhibit 14: Other base metals quarterly average prices – USD/ton

Zinc Copper Lead Silver (Rs/kg)
Quarter
Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY
4QFY18 3,419 6% 23% 6,982 2% 20% 2,529 2% 11% 38,518 0% -7%
3QFY18 3,235 9% 29% 6,819 7% 29% 2,491 7% 16% 38,571 0% -7%
2QFY18 2,955 14% 31% 6,345 12% 33% 2,332 8% 25% 38,659 -3% -16%
1QFY18 2,596 -6% 35% 5,662 -3% 20% 2,166 -5% 26% 39,766 -4% 0%
4QFY17 2,778 11% 65% 5,831 11% 25% 2,276 6% 31% 41,447 0% 16%
3QFY17 2,513 12% 56% 5,277 11% 8% 2,149 15% 28% 41,273 -10% 19%
2QFY17 2,253 17% 22% 4,772 1% -9% 1,873 9% 9% 45,851 15% 32%
1QFY17 1,875 19% -14% 4,726 1% -22% 1,718 -1% -12% 39,726 12% 7%
4QFY16 1,581 -2% -24% 4,672 -4% -20% 1,744 4% -3% 35,595 2% -4%
3QFY16 1,616 -15% -28% 4,892 -7% -26% 1,681 -2% -16% 34,804 0% -5%
2QFY16 1,892 -13% -18% 5,259 -13% -25% 1,714 -12% -21% 34,651 -7% -19%
1QFY16 2,183 5% 5% 6,043 4% -11% 1,942 8% -7% 37,194 0% -11%
4QFY15 2,083 -7% 3% 5,818 -12% -17% 1,806 -10% -14% 37,167 1% -17%
3QFY15 2,235 -3% 17% 6,624 -5% -7% 2,000 -8% -5% 36,694 -14% -20%
2QFY15 2,311 11% 24% 6,995 3% -1% 2,181 4% 4% 42,691 2% -7%
1QFY15 2,073 2% 13% 6,787 -4% -5% 2,095 0% 2% 41,862 -7% -7%
4QFY14 2,029 6% 0% 7,040 -2% -11% 2,105 0% -8% 44,935 -3% -20%
3QFY14 1,906 3% -2% 7,153 1% -10% 2,111 0% -4% 46,099 0% -23%
2QFY14 1,859 1% -1% 7,073 -1% -8% 2,101 2% 6% 46,077 3% -17%
1QFY14 1,840 -9% -5% 7,147 -10% -9% 2,053 -11% 4% 44,837 -20% -18%
4QFY13 2,032 4% 0% 7,931 0% -5% 2,301 5% 10% 55,927 -7% 1%
3QFY13 1,946 3% 3% 7,908 3% 6% 2,198 11% 11% 59,949 8% 11%
2QFY13 1,885 -2% -15% 7,705 -2% -14% 1,974 0% -20% 55,755 2% -5%
1QFY13 1,927 -5% -14% 7,869 -5% -14% 1,973 -6% -23% 54,406 -2% -5%
April 2018 232

Exhibit 15: Relative performance – three months (%) Exhibit 16: Relative performance – one year (%)
Sensex Index MOSL Metals Index Sensex Index MOSL Metals Index
110 130
105 120
100 110
95 100
90 90
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17
Dec-17
Jan-18
Feb-18
Mar-18

Metals
Hindalco 208 Buy 19.2 25.9 26.9 10.8 8.0 7.7 6.2 5.5 5.2 13.8 16.2 14.5
Hindustan Zinc 310 Neutral 21.2 27.9 30.3 14.6 11.1 10.2 8.8 6.6 5.7 26.9 29.8 27.1
JSPL 230 Buy -12.7 7.7 12.2 -18.1 29.9 18.8 10.5 6.8 6.1 -4.0 2.4 3.7
JSW Steel 302 Buy 21.5 24.0 23.7 14.1 12.6 12.7 5.0 4.7 4.7 20.9 19.4 16.2
Nalco 68 Neutral -0.2 5.1 5.3 -392.5 13.3 13.0 6.8 6.3 6.2 -0.3 9.8 9.5
NMDC 119 Buy 13.6 14.0 14.7 8.7 8.5 8.1 5.4 5.1 4.9 18.2 17.2 16.5
Rain Industries 384 Buy 25.6 40.6 44.6 15.0 9.5 8.6 8.6 6.4 5.6 24.7 29.8 25.2
SAIL 75 Sell -0.9 4.3 6.5 -84.9 17.3 11.5 17.0 9.6 7.1 -1.0 4.8 6.9
Tata Steel 580 Neutral 58.2 69.4 61.4 9.9 8.4 9.4 3.0 3.1 4.2 16.0 16.2 12.7
Vedanta 284 Buy 22.8 33.4 38.9 12.5 8.5 7.3 5.7 4.1 3.4 14.1 19.8 20.8
Metals Sector Aggregate 14.4 10.1 9.4 6.3 5.1 4.8 11.5 14.6 14.2
Source: MOSL
April 2018 233

Hindalco
Bloomberg HNDL IN CMP:INR208 TP:INR340 (+64%) Buy
 Standalone: We expect standalone EBITDA to decline 15% QoQ to
M. Cap. (INR b)/(USD b) 463 / 7
INR11.2b on (a) lower copper Tc/Rcs, (b) impact of cost increase
1,6,12 Rel Perf. (%) -12 / -20 / -4
and LME hedging dragging the aluminum segment and (c) higher
transfer price of alumina from Utkal. Copper EBITDA is likely to
decline 12% QoQ to INR3.5b, while aluminum EBITDA would
Y/E March 2017 2018E 2019E 2020E
decline by 16% QoQ to INR7.7b. Including Utkal aluminum,
Sales 1,001.8 1,173 1,156 1,169
EBITDA will increase by 7% QoQ to INR12.4b.
EBITDA 124.4 139.4 146.6 144.7
 Aluminum volumes are expected to increase 2% QoQ to 333kt,
NP 19.1 42.7 57.7 59.9
while copper volumes are expected to decline 7% QoQ to 95kt.
Adj. EPS (INR) 8.6 19.2 25.9 26.9
EPS Gr(%) -28.5 123.8 35.1 3.8
 Novelis: We expect Novelis to report adjusted EBITDA of
BV/Sh. (INR) 129.9 147.8 172.6 198.4 USD313m, growth of 7% YoY. Adjusted EBITDA/t is estimated at
RoE (%) 7.4 13.8 16.2 14.5 USD388 (v/s USD383 in 3QFY18). Volumes are expected to
RoCE (%) 7.3 8.7 9.7 9.7 increase by 3% YoY to 813kt.
Payout (%) 15.0 8.5 6.3 6.1
P/E (x) 24.3 10.8 8.0 7.7  Lower margins in aluminum.
P/BV 1.6 1.4 1.2 1.0  Foreign exchange rate impact at Novelis.
EV/EBITDA (x) 7.5 6.1 5.5 5.2
Div. Yield (%) 0.5 0.7 0.7 0.7

Y/E March FY17 FY18 FY17 FY18E FY19E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Aluminium (sales, kt) 291 320 310 328 299 329 325 333 1,249 1,286 1,309
Copper (sales, kt) 62 106 97 114 105 93 102 95 379 395 380
Net Sales 75,973 90,123 93,136 110,261 97,700 103,082 110,228 105,258 369,366 416,269 427,311
Change (YoY %) -11.4 1.0 14.3 27.2 28.6 14.4 18.4 -4.5 7.6 12.7 2.7
EBITDA 11,325 11,564 11,852 13,472 11,477 13,899 13,117 11,160 48,135 49,653 51,908
As % of Net Sales 14.9 12.8 12.7 12.2 11.7 13.5 11.9 10.6
Interest 5,996 5,943 5,879 5,411 4,878 4,836 4,828 4,353 23,229 18,895 15,131
Depreciation 3,382 3,516 3,580 3,802 3,792 3,804 3,822 3,806 14,280 15,223 15,244
Other Income 2,184 3,364 2,200 2,226 2,563 1,872 2,994 1,594 10,052 9,023 5,509
PBT (before EO item) 4,131 5,469 4,593 6,485 5,371 7,131 7,460 4,596 20,679 24,559 27,041
Extra-ordinary Income -2 857 -3 -1,044 -1,055 -1,153 852 -3,252
PBT (after EO item) 4,129 6,326 4,593 6,482 4,327 6,076 6,307 4,596 21,531 21,307 27,041
Total Tax 1,189 1,929 1,390 1,457 1,431 2,146 2,552 1,287 5,964 7,416 7,571
% Tax 28.8 35.3 30.2 22.5 26.6 30.1 34.2 28.0 27.7 34.8 28.0
Reported PAT 2,941 4,397 3,204 5,025 2,896 3,930 3,755 3,309 15,567 13,890 19,469
Adjusted PAT 2,987 3,954 3,204 4,689 3,502 4,649 4,864 2,996 14,951 16,010 19,469
Novelis adj. EBITDA (USDm) 268 270 255 292 289 302 305 313 1,085 1,209 1,266
E: MOSL Estimates
April 2018 234

Hindustan Zinc
Bloomberg HZ IN CMP:INR307 TP: INR342 (+11%) Neutral
 We expect HZL’s EBITDA to increase 5% QoQ (down 9% YoY) to
M. Cap. (INR b)/(USD b) 1309 / 20
INR34.1b, on higher zinc and silver volumes, despite marginally
1,6,12 Rel Perf. (%) 0 / -7 / -5
lower realization.
 LME zinc is up 6% QoQ to USD3,419/t, but due to hedges the
effective LME for HZL will be down ~2% QoQ. Lead is broadly flat
Y/E March 2017 2018E 2019E 2020E
Sales 173.0 218 262 277
QoQ at USD2,488/t.
EBITDA 97.4 120.7 152.8 163.2  Refined zinc sales are expected to increase 5% QoQ to 209kt.
NP 83.2 89.4 117.7 128.2 Lead is expected to decline 10% QoQ to 41kt. Silver volumes are
Adj. EPS (INR) 19.7 21.2 27.9 30.3 expected to increase 14% QoQ to 150t.
EPS Gr(%) 7.5 31.7 8.9  PAT is expected to increase 16% QoQ to INR25.7b on higher other
BV/Sh. (INR) 72.9 84.5 102.3 121.7
income.
RoE (%) 24.4 26.9 29.8 27.1
RoCE (%) 29.4 34.5 39.8 35.6
Payout (%) 179.3 45.4 36.0 36.0
P/E (x) 14.6 13.6 10.3 9.5  Decline in global zinc prices.
P/BV (x) 12.0 11.4 8.7 8.1
 Production issues.
EV/EBITDA (x) 0.0 9.0 6.6 5.6
Div. Yield (%) 10.2 2.8 2.9 3.2
Quarterly
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Zinc refined (kt) 120 148 211 217 190 193 200 209 696 792
Lead refined (kt) 23 32 36 47 34 40 45 41 138 160
Silver (tonnes) 88 107 117 135 110 146 132 150 447 538
Zinc LME (USD/t) 1,918 2,252 2,518 2,777 2,589 2,950 3,236 3,179 2,366 3,048
Net Sales 25,306 35,257 49,799 62,602 45,760 53,090 59,220 59,657 172,964 217,727
Change (YoY %) -30.3 -12.6 45.2 99.9 80.8 50.6 18.9 -4.7 21.6 25.9
EBITDA 11,309 20,767 27,834 37,480 23,840 30,240 32,440 34,136 97,390 120,656
Change (YoY %) -42.5 2.6 88.3 186.5 110.8 45.6 16.5 -8.9 43.7 23.9
As % of Net Sales 44.7 58.9 55.9 59.9 52.1 57.0 54.8 57.2 56.3 55.4
Finance cost 712 712 451 142 1,370 840 170 0 2,017 2,380
DD&A 3,644 4,317 4,589 5,321 3,600 3,940 4,810 5,105 17,871 17,455
Other Income 6,101 7,702 5,882 4,811 5,300 4,870 2,980 3,596 24,496 16,746
PBT (before EO item) 13,053 23,440 28,676 36,829 24,170 30,330 30,440 32,626 101,998 117,566
EO exp. (income) -5 0 0 0 0 -2,910 0 0 -5 -2,910
PBT (after EO item) 13,059 23,440 28,676 36,829 24,170 33,240 30,440 32,626 102,003 120,476
Total Tax 2,680 4,421 5,477 6,259 5,410 7,790 8,140 6,852 18,837 28,192
% Tax 20.5 18.9 19.1 17.0 22.4 23.4 26.7 21.0 18.5 23.4
Reported PAT 10,379 19,019 23,199 30,570 18,760 25,450 22,300 25,775 83,166 92,285
Adjusted PAT 10,374 19,019 23,199 30,570 18,760 22,540 22,300 25,775 83,161 89,375
Change (YoY %) -53.4 -11.4 28.1 42.2 80.8 18.5 -3.9 -15.7 -0.7 7.5
April 2018 235

Jindal Steel & Power

Bloomberg JSP IN CMP: INR230 TP: 362 (+58%) Buy
 Standalone: We estimate standalone EBITDA to increase 49%
M. Cap. (INR b)/(USD b) 210 / 3
QoQ to INR13.7b. Steel sales volumes would increase 30% QoQ to
1,6,12 Rel Perf. (%) -6 / 54 / 75
1,200kt. Realization is expected to be higher, while EBITDA per
ton would increase 15% QoQ to INR11,232/t.
 Jindal Power: Jindal Power’s EBITDA is expected to decline 50%
Y/E March 2017 2018E 2019E 2020E
QoQ to INR1.8b due to low coal availability. Generation volumes
Sales 216.2 271.7 359.1 386.1
would be lower by 37% QoQ to 1,918MU.
EBITDA 46.6 62.9 95.4 100.9
 Oman: We expect EBITDA to increase ~3% QoQ to INR4.3b on
Adj. PAT -19.1 -11.6 7.0 11.2
higher steel prices and favorable cost.
Adj. EPS (INR) -20.9 -12.7 7.7 12.2
EPS Gr (%) 14.8 -39.1 -160.5 58.8
 Consolidated EBITDA is likely to increase 22% YoY to INR19.5b.
BV/Sh. (INR) 328.5 313.9 321.2 333.0
RoE (%) -7.9 -4.0 2.4 3.7
RoCE (%) 1.0 2.7 5.9 6.4
Payout (%) 0.0 0.0 0.0 0.0
Valuations
P/E (x) -11.0 -18.1 29.9 18.8 Key issues to watch for
P/BV 0.7 0.7 0.7 0.7  Ramp-up of Angul.
EV/EBITDA (x) 14.3 10.7 6.8 6.1  Power demand growth.
Div. Yield (%) 0.0 0.0 0.0 0.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 46,962 48,609 55,812 64,861 59,364 62,393 71,048 78,926 216,243 271,731
Change (YoY %) -1.2 -3.6 21.5 27.7 26.4 28.4 27.3 21.7 11.1 25.7
EBITDA 9,841 8,484 12,767 15,521 13,527 13,734 16,065 19,535 46,613 62,861
Change (YoY %) -3.3 -13.1 132.0 73.1 37.5 61.9 25.8 25.9 35.5 34.9
As % of Net Sales 21.0 17.5 22.9 23.9 22.8 22.0 22.6 24.8 21.6 23.1
Interest 8,529 8,716 8,353 8,642 9,006 9,268 9,670 9,609 34,240 37,552
Depreciation 9,171 9,986 10,274 10,059 9,622 9,977 9,632 10,707 39,490 39,938
Other Income 312 7 3 90 0 14 10 1 411 25
PBT (before EO item) -7,548 -10,211 -5,856 -3,090 -5,101 -5,496 -3,227 -780 -26,706 -14,604
Extra-ordinary Income -6,257 0 0 2,534 0 -1,497 0 0 -3,723 -1,497
PBT (after EO item) -13,805 -10,211 -5,856 -556 -5,101 -6,994 -3,227 -780 -30,429 -16,101
Total Tax -1,410 -2,739 -1,306 428 -887 -1,999 -457 555 -5,027 -2,787
% Tax 10.2 26.8 22.3 -76.9 17.4 28.6 14.2 -71.1 16.5 17.3
Reported PAT -12,395 -7,473 -4,551 -984 -4,214 -4,995 -2,770 -1,335 -25,402 -13,314
MI - Loss/(Profit) -1,560 -2 -458 -505 -334 -497 -67 -23 -2,524 -921
Associate 14 11 18 -16 10 19 43 100 27 171
Adjusted PAT -4,564 -7,460 -4,074 -3,029 -3,871 -2,982 -2,660 -1,212 -19,128 -10,725
Change (YoY %) 34.5 317.8 -38.7 -37.4 -15.2 -60.0 -34.7 -60.0 14.8 -43.9
April 2018 236

JSW Steel
Bloomberg JSTL IN CMP: INR302 TP: INR334 (+11%) Buy
 Consolidated EBITDA is expected to increase 13% QoQ / 37% YoY
M. Cap. (INR b)/(USD b) 731 / 11
to INR43.3b on higher steel prices.
1,6,12 Rel Perf. (%) 1 / 15 / 48
 Standalone steel sales would increase 3% QoQ to ~4.1mt.
 Standalone EBITDA/t is expected at INR9,866 per ton, increasing
10% QoQ on higher realization, partly offset by increase in cost.
Y/E March 2017 2018E 2019E 2020E
 Adjusted consolidated PAT is estimated to decline 6% QoQ to
Sales 556.0 695.2 762.0 787.3
INR17.2b on a normalized tax rate (was 5% in 3Q).
EBITDA 122.6 138.4 156.1 156.2
Adj. PAT 35.8 52.0 58.0 57.4
Adj. EPS (INR) 14.8 21.5 24.0 23.7
EPS Gr(%) 45.3 11.5 -1.0
BV/Sh. (INR) 93.7 112.5 135.2 157.6
RoE (%) 17.3 20.9 19.4 16.2
RoCE (%) 7.9 8.8 9.6 8.8
Valuation  Steel price hikes and impact of coking coal.
P/E (x) 20.4 14.0 12.6 12.7  Domestic steel demand growth.
P/BV 3.2 2.7 2.2 1.9
EV/EBITDA (x) 10.2 9.0 7.9 7.8
Div. Yield (%) 0.7 0.4 0.4 0.7

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 117,080 132,278 140,126 166,562 146,990 168,180 178,610 201,404 556,046 695,184
Change (YoY %) 1.1 21.3 61.1 55.7 25.5 27.1 27.5 20.9 32.8 25.0
EBITDA 32,694 29,586 28,669 31,649 26,170 30,360 38,510 43,341 122,598 138,381
Change (YoY %) 100.9 71.1 221.5 73.5 -20.0 2.6 34.3 36.9 101.9 12.9
EBITDA (INR per ton) 9,907 7,745 7,942 8,012 7,720 7,667 9,556 10,571 8,295 8,928
EBITDA (USD per ton) 146 115 117 119 116 118 150 163 124 138
Interest 9,358 9,646 9,201 9,476 9,450 9,500 9,230 9,281 37,681 37,461
Depreciation 8,315 8,915 9,146 8,779 8,190 8,510 8,520 8,455 35,154 33,675
Other Income 334 296 333 558 410 390 420 457 1,521 1,677
PBT (before EO Item) 15,356 11,320 10,655 13,953 8,940 12,740 21,180 26,062 51,284 68,922
EO Items -2,640 -2,640
PBT (after EO Item) 15,356 11,320 10,655 13,953 8,940 12,740 18,540 26,062 51,284 66,282
Total Tax 4,507 4,734 3,511 3,992 2,840 4,450 940 8,811 16,743 17,041
% Tax 29.4 41.8 32.9 28.6 31.8 34.9 5.1 33.8 32.6 25.7
Reported PAT 10,848 6,587 7,145 9,961 6,100 8,290 17,600 17,251 34,541 49,241
MI (Profit)/Loss 112 -117 13 57 30 -210 -117 64 -297
Share of P/(L) of Ass. 130 795 143 125 140 70 140 70 1,193 420
Adjusted PAT 11,090 7,265 7,300 10,143 6,240 8,390 18,313 17,204 35,798 50,147
Change (YoY %) -1,076.8 557.5 -529.2 515.1 -43.7 15.5 150.8 69.6 40.1
April 2018 237

Nalco
Bloomberg NACL IN CMP: INR86 TP: INR84 (-2%) Neutral
 We expect EBITDA to be flat QoQ at INR4.7b as higher volumes
M. Cap. (INR b)/(USD b) 132 / 2
and aluminum realization are offset by lower alumina realization
1,6,12 Rel Perf. (%) 3 / -21 / -21
and higher cost.
 Aluminum LME is up 3% QOQ to USD2,162/t. Alumina realization
is expected to decline 13% QoQ to USD368/t.
Y/E March 2017 2018E 2019E 2020E
 Aluminum volumes are expected to increase by 2% QoQ to 112kt.
Sales 75.4 92.2 92.9 94.1
Alumina sales would increase by 38% QoQ to 353kt.
EBITDA 10.8 15.0 16.6 17.0
 PAT is estimated to increase 4% QoQ to INR2.9b.
NP 7.2 -0.3 9.9 10.2
Adj. EPS (INR) 3.7 -0.2 5.1 5.3
EPS Gr(%) 37.9 -104.7 NM 2.6
BV/Sh. (INR) 52.8 50.6 53.7 56.9
RoE (%) 7.2 -0.3 9.8 9.5
RoCE (%) 7.9 11.9 12.9 12.6
Payout (%) 60.5 59.7 41.0 40.0
Valuations
P/E (x) 19.1 -408.7 13.8 13.5 Key issues to watch for
P/BV 1.3 1.4 1.3 1.2  Availability of coal for captive power plant.
EV/EBITDA (x) 9.5 7.3 6.7 6.5  LME price trend, utilization of smelter.
Div. Yield (%) 3.9 2.5 2.5 2.5

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Alumina Production ('000 tons) 524 444 566 573 526 509 516 566 2,107 2,117
Aluminium Prod. ('000 tons) 94 94 99 101 101 105 111 112 388 429
Aluminium Sales ('000 tons) 82 99 99 109 89 113 110 112 389 424
Alumina Sales ('000 tons) 291 290 311 403 259 380 256 353 1,295 1,248
Avg LME Aluminium (USD/ton) 1,570 1,619 1,710 1,851 1,910 2,011 2,097 2,162 1,687 2,045
NSR premiums (USD/ton) 290 132 196 275 323 239 269 250 223 270
Alumina NSR (USD/ton) 257 266 277 323 314 334 422 368 260 360
Net Sales 15,490 18,461 19,881 25,497 18,027 24,548 23,888 25,759 79,329 92,222
Change (YoY %) 3.9 1.7 21.6 36.0 16.4 33.0 20.2 1.0 16.4 16.3
EBITDA 1,946 1,723 2,852 4,275 2,275 3,355 4,668 4,718 10,796 15,016
Change (YoY %) -13.0 -49.2 109.2 79.1 16.9 94.7 63.7 10.4 15.1 39.1
As % of Net Sales 12.6 9.3 14.3 16.8 12.6 13.7 19.5 18.3 13.6 16.3
Interest 5 6 6 10 4 4 5 0 17
Depreciation 1,188 1,353 1,177 1,086 1,170 1,123 1,243 1,152 4,804 4,689
Other Income 1,336 1,369 759 620 859 810 766 704 4,083 3,138
Extra-ordinary Income 0 0 -371 -30 0 162 6,784 0
PBT (after EO Item) 2,089 1,733 2,057 3,768 1,960 3,199 10,969 4,269 10,058 13,465
Total Tax 739 521 618 1,084 670 853 3,752 1,393 2,962 6,668
% Tax 35.4 30.1 30.0 28.8 34.2 26.7 34.2 32.6 29.4 49.5
Reported PAT 1,350 1,212 1,439 2,684 1,289 2,346 7,218 2,876 7,097 6,797
Adjusted PAT 1,350 1,212 1,699 2,705 1,289 2,227 2,754 2,876 7,097 6,797
April 2018 238

NMDC
Bloomberg NMDC IN CMP: INR118 TP: INR215 (+81%) Buy
 NMDC’s EBITDA is expected to increase 54% QoQ to INR20.4b due
M. Cap. (INR b)/(USD b) 376 / 6
to higher realization and volumes.
1,6,12 Rel Perf. (%) -7 / -6 / -23
 Iron ore sales volumes are expected to increase 24% QoQ to
10mt, as evacuation issues are resolved.
 Domestic iron ore realization is expected to increase 15% QoQ to
Y/E March 2017 2018E 2019E 2020E
INR3,419/t on price hikes.
Sales 88.3 112.4 115.0 120.7
 Adjusted PAT is expected to increase 52% QoQ to INR13.8b.
EBITDA 44.9 62.8 65.5 69.0
Adj. PAT 31.5 43.2 44.4 46.5
Adj. EPS (INR) 10.0 13.6 14.0 14.7
EPS Gr(%) 11.7 37.0 2.9 4.7
BV/Sh. (INR) 71.2 78.5 85.3 92.8
RoCE (%) 11.5 17.8 16.8 16.2  Increase in global iron ore prices.
Payout (%) 74.9 46.6 51.3 49.0  Stronger-than-expected iron ore demand.
Valuation
P/E (x) 11.9 8.7 8.5 8.1
P/BV 1.7 1.5 1.4 1.3
EV/EBITDA (x) 7.2 5.4 5.1 4.9
Div. Yield (%) 4.3 4.5 5.1 5.1

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Production (m tons) 7.6 6.3 9.7 10.4 8.5 7.2 8.6 10.0 35.6 35.6
Sales (m tons) 7.8 8.0 10.1 9.8 9.2 8.3 8.1 10.0 35.6 35.6
Avg Dom. NSR (USD/t) 32 31 35 43 46 43 45 51 36 47
Avg Dom. NSR (INR/t) 2,160 2,093 2,403 2,871 2,938 2,836 2,967 3,419 2,410 3,040
Lumps % (production) 36 36 36 36 36 36 36 36 36 36
Net Sales 17,207 17,392 24,979 28,717 28,415 24,213 24,690 35,055 88,294 112,374
EBITDA 8,164 8,258 14,226 14,295 16,206 12,852 13,314 20,446 44,944 62,818
As % of Net Sales 47.4 47.5 57.0 49.8 57.0 53.1 53.9 58.3 50.9 55.9
EBITDA per ton (USD) 16 15 21 22 27 24 25 31 19 27
EBITDA per ton (INR/t) 1,050 1,030 1,415 1,463 1,765 1,549 1,652 2,041 1,262 1,767
Interest 81 15 53 59 82 102 112 0 208
Depreciation 560 544 551 307 467 620 772 631 1,962 2,489
Other Income 3,452 2,735 1,559 1,343 1,286 1,099 1,111 799 9,088 4,294
Extra-ordinary item 0 0 -5,972 -2,961 -1,258 -823 234 0 -8,933
PBT (after EO Item) 10,975 10,434 9,208 12,312 15,686 12,406 13,776 20,613 42,929 64,623
Total Tax 3,862 2,727 3,257 7,193 5,994 3,963 4,910 6,596 17,038 21,463
% Tax 35.2 26.1 35.4 58.4 38.2 31.9 35.6 32.0 39.7 33.2
Reported PAT 7,113 7,708 5,952 5,119 9,692 8,443 8,866 14,017 25,891 43,160
Adjusted PAT 6,619 6,293 9,156 9,211 11,316 8,835 9,044 13,767 31,279 43,160
April 2018 239

Rain Industries
Bloomberg RINDL IN CMP:INR384 TP: INR480 (+25%) Buy
 We expect EBITDA to increase 13% QoQ to INR7.7b on higher
M. Cap. (INR b)/(USD b) 129 / 2
volumes.
1,6,12 Rel Perf. (%) 8 / 115 / 235
 Carbon business EBITDA per ton will increase 1% QoQ to
USD135/t.
 Chemical business EBITDA per ton will increase from USD58/t
Y/E March 2016 2017E 2018E 2019E
QoQ to USD60/t.
Sales 93.2 113.9 133.9 146.1
 Cement business EBITDA per ton will decline 13% QoQ to
EBITDA * 13.5 23.1 28.6 30.8
INR450/t.
NP 3.2 8.6 13.1 14.5
 Adj. PAT will increase 9% QoQ to INR3.6b.
Adj. EPS (INR) 9.6 25.5 38.9 43.0
EPS Gr (%) 1.2 165.2 52.3 10.7
BV/Sh. (INR) 89.6 112.7 149.2 189.9 Key issues to watch for
RoE (%) 10.9 25.2 29.7 25.4  Environment measures in China.
RoCE (%) 12.7 21.3 26.2 26.4  Global aluminum production growth.
Payout (%) 15.6 9.4 6.2 5.6
Valuation
P/E (x) 45.5 17.2 11.3 10.2
P/BV 4.9 3.9 2.9 2.3
EV/EBITDA, x* 15.6 9.0 6.9 6.1
Div. Yield (%) 0.2 0.5 0.5 0.5

Net Sales 24,680 26,371 30,508 31,448 36,237 36,642 37,706 38,291 113,007 148,876
Change (YoY %) 14 4 36 32 47 39 24 22 21 32
EBITDA 4,414 4,678 6,738 6,872 7,742 7,173 7,268 7,142 22,702 29,325
As % of Net Sales 17.9 17.7 22.1 21.9 21.4 19.6 19.3 18.7 20.1 19.7
Carbon EBITDA 3,746 4,002 6,336 6,412 7,213 6,644 6,654 6,529 20,496 27,040
USD/t 76 82 118 133 135 130 125 120 103 127
Chemical EBITDA 544 465 133 198 254 254 338 338 1,340 1,183
USD/t 135 120 38 58 60 60 80 80 90 70
Cement EBITDA 124 211 269 262 276 276 276 276 866 1,103
INR/t 232 379 533 515 450 450 450 450 411 450
Interest 1,536 1,483 1,463 1,465 1,163 1,163 1,163 1,163 5,947 4,652
Depreciation 1,366 1,295 1,335 1,260 1,237 1,204 1,182 1,221 5,256 4,843
Other Income 206 475 256 198 290 311 270 270 1,134 1,141
PBT (before EO Inc.) 1,718 2,375 4,195 4,345 5,632 5,117 5,193 5,028 12,633 20,970
EO Income(exp) -670 0 0 -302 0 0 0 0 -973 0
PBT (after EO Inc.) 1,048 2,375 4,195 4,043 5,632 5,117 5,193 5,028 11,661 20,970
Total Tax 400 819 1,662 868 1,915 1,740 1,766 1,710 3,749 7,130
% Tax 38.2 34.5 39.6 21.5 34.0 34.0 34.0 34.0 32.1 34.0
Reported PAT 647 1,556 2,534 3,175 3,717 3,377 3,427 3,319 7,912 13,840
Less: Min. Int. & assc. 55 41 78 103 44 41 41 60 285 186
Adjusted PAT 1,263 1,515 2,456 3,374 3,673 3,336 3,386 3,259 8,599 13,654
Change (YoY %) 331.5 8.0 29.2 136.8 190.9 120.2 37.9 -3.4 72.7 58.8
April 2018 240

SAIL
Bloomberg SAIL IN CMP: INR74 TP: 71 (-3%) Sell
 SAIL’s EBITDA is expected to increase ~51% QoQ to INR21.7b.
M. Cap. (INR b)/(USD b) 309 / 5
Volumes would increase 1% QoQ to 3.8mt. EBITDA per ton would
1,6,12 Rel Perf. (%) -5 / 34 / 7
increase by ~INR2000/t to INR3,278/t on higher steel prices and
operating leverage gains from higher volumes.
 PAT will increase from INR659m in 3QFY18 to INR6.2b in 4QFY18.
Y/E March 2017 2018E 2019E 2020E
Sales 445.0 568.7 666.1 689.5
EBITDA 0.7 44.7 83.0 106.9
NP -26.3 -3.6 17.8 26.8
Adj. EPS (INR) -6.4 -0.9 4.3 6.5
EPS Gr(%) -37.1 -86.1 -589.8 50.2
BV/Sh. (INR) 89.7 87.8 91.6 97.6
RoE (%) -6.9 -1.0 4.8 6.9
RoCE (%) -2.9 2.2 6.1 8.7 Key issues to watch for
Payout (%)  Commissioning of Bhilai capacity and steel prices.
Valuation
P/E (x) -11.6 -83.9 17.1 11.4
P/BV 0.8 0.8 0.8 0.8
EV/EBITDA (x) 1,067.0 17.3 9.6 7.1
Div. Yield (%) 0.0 0.0 0.0 0.0

Production (m tons) 3.4 3.5 3.3 3.6 3.2 3.7 3.6 4.2 13.8 14.7
Change (YoY %) 10.1 30.6 9.2 0.4 -5.8 4.7 8.9 15.8 11.5 6.0
Sales (m tons) 2.8 3.6 3.3 3.4 3.0 3.5 3.8 3.8 13.1 14.1
Change (YoY %) 4.1 31.4 13.8 -8.6 8.1 -1.7 14.2 10.3 8.6 7.5
Realization (INR per ton) 32,993 31,182 34,237 36,827 38,242 38,467 40,646 42,900 33,814 40,191
Change (YoY %) -6.6 -7.7 11.1 22.1 15.9 23.4 18.7 16.5 4.7 18.9
Net Sales 92,381 112,256 112,982 126,905 115,796 136,174 153,237 163,020 444,524 568,226
Change (%) -2.8 21.3 26.4 11.6 25.3 21.3 35.6 28.5 13.8 27.8
NSR to RM Spread (INR/t) 21,555 15,462 17,625 16,797 18,065 19,776 20,773 22,635 17,653 20,444
EBITDA 2,338 1,114 -428 -2,644 -839 9,143 14,402 21,735 380 44,441
Change (YoY %) -386.2 -114.5 -96.9 -76.5 -135.9 720.5 -3,468.1 -922.0 -101.1 11,582.6
EBITDA per ton (INR) 835 310 -130 -767 -277 2,583 3,820 5,720 29 3,143
EBITDA per ton (USD) 12 5 -2 -11 -4 40 59 88 0 48
Interest 5,941 6,028 6,108 7,202 5,879 6,435 6,745 6,563 25,278 25,622
Depreciation 6,002 6,659 6,699 7,439 6,947 7,622 7,596 7,698 26,800 29,863
Other Income 893 682 688 3,094 893 486 1,195 546 5,356 3,120
PBT (after EO Inc.) -9,254 -12,531 -12,536 -14,188 -12,872 -7,403 823 8,019 -48,509 -11,434
Total Tax -3,899 -5,215 -4,587 -6,475 -4,859 -2,013 391 1,764 -20,176 -4,716
% Tax 42.1 41.6 36.6 45.6 37.7 27.2 47.5 22.0 41.6 41.2
Reported PAT -5,355 -7,316 -7,948 -7,713 -8,014 -5,391 432 6,255 -28,332 -6,718
Adjusted PAT -5,042 -6,358 -7,956 -7,715 -7,951 -3,224 659 6,255 -27,066 -4,655
Change (YoY %) 56.8 -18.1 -48.0 -37.3 57.7 -49.3 -108.3 -181.1 -29.8 -82.8
April 2018 241

Tata Steel
Bloomberg TATA IN CMP: INR579 TP: 778 (+34%) Neutral
 India: We expect Tata Steel’s standalone EBITDA to decline 2%
M. Cap. (INR b)/(USD b) 697 / 11
QoQ to INR45.3b on lower volumes even as margins are higher.
1,6,12 Rel Perf. (%) -12 / -13 / 15
Sales volume is down 9% QoQ to 3mt due to shutdown at
Kalinganagar. EBITDA per ton is estimated to increase ~INR1,000
QoQ to INR15,087/t on higher realization.
Y/E March 2017 2018E 2019E 2020E
 Europe: EU sales volumes would increase 10% QoQ to 2.7mt.
Sales 1,123 1,277 1,279 691
Margins are estimated to increase to USD92/t on healthy steel
EBITDA 170 216 228 164
spreads.
Adj. PAT 37 70 83 74
 Consolidated EBITDA is expected to increase 9% QoQ to INR62.2b.
Adj. EPS (INR) 38.0 58.2 69.4 61.4
EPS Gr(%) 394.2 53.4 19.1 -11.5
Adjusted PAT is expected to decrease 4% QoQ to INR23.1b.
BV/Sh. (INR) 330 398 457 509
RoE (%) 15.7 16.0 16.2 12.7
Payout (%) -27.0 21.4 13.1 17.4  Imports from China and global iron ore prices.
Valuation
P/E (x) 15.2 9.9 8.3 9.4
P/BV 1.8 1.5 1.3 1.1
EV/EBITDA (x) 7.7 6.0 5.5 6.6
Div. Yield (%) 1.4 1.4 1.4 1.4

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales (k tons) 5,410 5,650 6,110 6,830 5,830 6,450 6,560 6,454 24,000 25,294
Change (YoY %) -14.5 -10.2 -4.1 -1.6 7.8 14.2 7.4 -5.5 -7.4 5.4
Net Sales 252,298 263,710 279,565 338,960 295,568 324,641 334,466 322,434 1,134,532 1,277,109
Change (YoY %) -16.7 -10.0 -0.3 14.9 17.2 23.1 19.6 -4.9 -3.2 12.6
EBITDA 32,420 29,700 35,393 70,252 49,740 47,207 56,969 62,251 167,764 216,168
Change (YoY %) 16.9 62.3 356.3 218.6 53.4 58.9 61.0 -11.4 121.2 28.9
(% of Net Sales) 12.8 11.3 12.7 20.7 16.8 14.5 17.0 19.3 14.8 16.9
EBITDA(USD/tss) 90 79 86 154 132 112 134 151 104 132
Interest 10,707 13,511 13,874 12,631 13,437 13,499 13,273 13,694 50,723 53,903
Depreciation 12,417 14,677 13,797 15,892 15,011 14,733 14,751 15,113 56,784 59,608
Other Income 1,367 1,084 1,301 1,522 1,555 2,532 2,259 1,932 5,274 8,277
PBT (before EO Inc.) 10,662 2,597 9,022 43,250 22,846 21,507 31,205 35,377 65,531 110,934
EO Income(exp) -35,231 634 284 -45,199 -6,289 -147 -11,235 -79,512 -17,672
PBT (after EO Inc.) -24,568 3,230 9,306 -1,948 16,557 21,359 19,969 35,377 -13,981 93,263
Total Tax 7,405 3,634 6,984 9,760 7,405 11,380 9,508 12,325 27,782 40,618
% Tax 69.4 139.9 77.4 22.6 32.4 52.9 30.5 34.8 42.4 36.6
Reported PAT -31,973 -403 2,322 -11,708 9,152 9,980 10,461 23,052 -41,762 52,645
Adj. PAT (after MI & asso) 3,400 -1,127 2,035 33,435 15,352 10,205 24,100 23,079 37,742 72,736
April 2018 242

Vedanta
Bloomberg VEDL IN CMP:INR284 TP: INR346 (+22%) Buy
 We expect VEDL’s EBITDA to increase 7% QoQ (down 1% YoY) to
M. Cap. (INR b)/(USD b) 1056 / 16
INR72b, driven by oil, aluminum and iron ore. Adjusted PAT is
1,6,12 Rel Perf. (%) -10 / -17 / -7
estimated to increase 28% QoQ to INR28.4b on higher other
income and lower tax rate.
 Aluminum: EBITDA is expected to increase by 16% QoQ to
Y/E March 2017 2018E 2019E 2020E
INR7.1b, driven by higher LME (up ~USD65/t) and volumes (up 4%
Sales 722.3 886 1,041 1,123
QoQ to 444kt), partly offset by higher costs.
EBITDA * 175.5 198.2 258.5 286.2
 Zinc India: EBITDA is expected to increase 5% QoQ to INR34.1b on
NP 56.3 84.8 124.2 144.6
higher zinc and silver volumes.
Adj. EPS (INR) 15.1 22.8 33.4 38.9
EPS Gr (%) 50.7 46.4 16.4
 Power: EBITDA is expected to decline 17% QoQ to INR4.9b off a
BV/Sh. (INR) 162.7 159.9 176.8 196.8 stronger base.
RoE (%) 9.7 14.1 19.8 20.8  Copper: EBITDA is expected to increase 7% QoQ to INR3.2b.
RoCE (%) 12.4 14.0 18.4 19.4  Oil & Gas: EBITDA is expected to increase 17% QoQ to INR15.8b
Payout (%) 154.2 111.5 37.5 37.4 on higher oil prices and volumes.
Valuation
P/BV 1.7 1.8 1.6 1.4  Progress on ramp-up of 1.25mtpa smelter.
EV/EBITDA, x* 8.2 7.5 5.5 4.7  Movement in base metal prices.
Div. Yield (%) 6.8 7.5 3.7 4.3

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 144,371 158,596 194,171 225,113 182,850 215,900 243,610 243,595 722,250 885,955
Change (YoY %) -15.2 -4.2 30.5 40.9 26.7 36.1 25.5 8.2 12.4 22.7
EBITDA 34,396 46,674 59,964 73,501 48,740 56,690 67,630 72,488 213,319 245,548
Copper 4,379 3,779 4,479 4,312 2,130 3,920 2,970 3,180 16,926 12,200
Aluminum 2,660 4,200 6,520 9,900 5,280 4,570 6,100 7,057 23,057 23,007
Iron ore 3,730 1,050 4,710 3,870 400 -40 2,310 3,115 13,224 5,785
Power 3,870 4,030 4,452 4,565 1,100 3,660 5,950 4,933 16,425 15,643
Zinc-India 11,309 20,767 27,834 37,480 23,840 30,240 32,440 34,136 95,302 120,656
Zinc-International 2,490 3,390 2,020 1,380 3,210 3,890 4,460 4,228 9,261 15,788
Oil&Gas 7,937 10,391 10,837 11,210 13,850 11,760 13,590 15,839 40,132 55,039
Others -1,978 -934 -887 784 -1,070 -1,310 -190 -1,008 -2,570
Finance cost 13,931 14,503 15,082 15,035 15,920 13,840 13,060 13,001 58,550 55,821
DD&A 14,920 15,289 15,203 16,037 13,860 14,260 15,490 15,645 62,915 59,255
Other Income 10,935 12,521 9,160 9,208 10,550 8,760 5,730 7,500 45,806 32,540
PBT (before EO item) 16,480 29,403 38,840 51,637 29,510 37,350 44,810 51,342 137,660 163,012
EO exp. (income) 0 0 0 1,144 0 -1,860 1,580 1,144 -280
PBT (after EO item) 16,480 29,403 38,840 50,493 29,510 39,210 43,230 51,342 136,516 163,292
Total Tax 4,914 6,623 8,968 20,604 6,810 9,350 13,640 14,092 37,783 43,892
% Tax 29.8 22.5 23.1 40.8 23.1 23.8 31.6 27.4 27.7 26.9
Reported PAT 11,567 22,780 29,872 29,889 22,700 29,860 29,590 37,250 98,733 119,400
Profit from Asso. 0 2 -20 -8 0 0 0 15 -27 15
Minority interest 5,417 10,261 11,188 15,775 7,450 8,950 9,060 8,859 43,584 34,319
Adjusted PAT 6,150 12,521 18,663 15,249 15,250 19,050 22,110 28,406 56,266 84,816
Change (YoY %) -56.4 50.1 -1,124.9 34.8 148.0 52.1 18.5 86.3 -73.8 50.7
April 2018 243

March
March2018
2018Results
ResultsPreview
Preview ||Sector:
Sector:Oil
Oil&&Gas
Gas
Oil & Gas

Company name GRMs up YoY (down QoQ); crude prices increase YoY/QoQ
Aegis Logistics Marketing margins expand
BPCL
 Singapore complex GRM stood at USD7.0/bbl in 4QFY18 v/s USD7.3/bbl in 3QFY18 and
GAIL
USD6.4/bbl in 4QFY17. We expect marginal inventory gain during the quarter.
Gujarat Gas
 Average Brent crude price was up 24% YoY and 9% QoQ to USD67/bbl. We expect
Gujarat State Petronet
higher realizations to benefit the upstream companies. ONGC and Oil India should see
HPCL
a YoY increase in EBITDA.
Indraprastha Gas
 RIL is expected to clock GRM of USD11.4/bbl, led by strong benchmark (premium of
IOC USD4.4/bbl). The Petchem segment is expected to do better, led by healthy petchem
Mahanagar Gas deltas and strong volume growth.
MRPL
Oil India Brent up 24% YoY and 9% QoQ; upstream subsidy nil in 4QFY18
ONGC  Crude oil price continued to trend upward in 4QFY18. Average Brent crude price
Petronet LNG was up 24% YoY (+9% QoQ) at USD67/bbl. OMCs are likely to witness marginal
Reliance Industries inventory gain for the quarter.
 We do not build in any net under-recovery either for the OMCs or for the
upstream companies.
GRM at USD7.0/bbl, up from USD6.4/bbl in 4QFY17

 Reuters Singapore Complex GRM was up 9% YoY (-3% QoQ) to USD7.0/bbl in
4QFY18 v/s USD7.3/bbl in 3QFY18 and USD6.4/bbl in 4QFY17.
 PE, PP and PVC delta improved sequentially. POY and PSF spreads were up
11%/6% QoQ. RIL would benefit from healthy deltas and strong volumes growth
during the quarter.

CMP Var Var Var Var Var Var
(INR) % YoY % QoQ % YoY % QoQ % YoY % QoQ
Oil & Gas
Aegis Logistics 263 Buy 16,304 28.6 13.1 765 47.3 6.6 600 101.5 12.0
BPCL 426 Buy 616,099 8.0 1.6 26,270 14.2 65.0 16,542 -10.2 -22.8
GAIL 329 Sell 147,458 9.9 2.3 21,105 38.4 7.1 11,959 14.1 -5.3
Gujarat Gas 844 Buy 17,967 28.3 14.3 2,138 46.1 6.9 713 115.3 18.9
Gujarat State Petronet 185 Neutral 3,611 47.6 3.1 3,077 52.8 3.6 2,031 60.0 11.9
HPCL 353 Buy 617,314 19.8 7.4 22,394 -20.6 32.7 14,218 -21.8 -27.1
IOC 174 Buy 1,290,638 28.6 16.6 75,004 -10.4 7.7 48,345 29.9 -38.7
Indraprastha Gas 278 Buy 12,226 22.0 3.3 2,764 14.1 5.1 1,726 12.5 4.0
Mahanagar Gas 1,012 Buy 6,601 25.7 13.5 1,998 22.5 -0.5 1,255 26.1 1.2
MRPL 112 Neutral 140,458 5.3 -0.4 7,495 -51.8 -57.2 3,457 -60.3 -64.4
Oil India 221 Buy 29,986 23.1 5.1 10,539 36.0 -13.9 6,029 -48.5 -14.5
ONGC 178 Buy 239,846 10.5 4.3 131,117 18.5 4.7 56,604 30.4 12.9
Petronet LNG 232 Buy 66,349 4.2 -14.5 8,236 33.6 -2.8 5,430 15.3 2.7
Reliance Inds. 899 Buy 1,128,503 33.0 13.1 183,547 50.1 4.4 95,687 18.8 1.3
Oil & Gas Sector Aggregate 4,333,359 21.9 9.5 496,451 18.0 5.2 264,595 11.3 -13.2
Oil & Gas Excl. OMCs 1,809,309 23.5 8.3 372,782 30.5 0.9 185,490 13.1 0.2
Source: MOSL
Swarnendu Bhushan – Research Analyst (Swarnendu.Bhushan@MotilalOswal.com); +91 22 6129 1529
Abhinil Dahiwale – Research Analyst (Abhinil.Dahiwale@motilaloswal.com); +91 22 6129 1566
April 2018 244
March 2018 Results Preview | Sector: Oil & Gas
Marketing margins improve in 4Q

 In 3QFY18, OMCs could not take price hikes in auto fuels due to Gujarat
elections. However, since then, they have steadily increased auto fuel prices.
 As a result, gross marketing margins have improved from INR2.2/lit and INR2/lit
on petrol and diesel in 3QFY18 to INR3.2/lit and INR3.4/lit respectively in
4QFY18.
Domestic gas production has revived

 After almost a decade of negative-to-flat growth, domestic gas production has
grown 2.47% YoY in 11MFY18 v/s 3% YoY decline in FY17. We expect domestic
gas production to grow 10-15% annually over the next five years.
 Domestic crude oil production declined by 0.84% YoY in 11MFY18. Production
for ONGC grew 0.41% YoY to 20.4mmt during 11MFY18; OIL’s production grew
4.37% YoY to 3.1mmt during 11MFY18.
LNG imports have grown

 LNG imports grew at 16% in FY17 primarily due to expansion of Dahej from
10mmtpa to 15mmtpa. LNG imports increased by 6% YoY in 11MFY18. LNG
imports grew at 19.7% YoY in Jan-Feb 2018 due to base effect. We expect
similar growth in Mar 2018 as well.
Valuation and view

 Continue to like OMCs: Strong benchmark GRMs and sequentially better
marketing margins are expected to benefit OMCs’ (IOCL/BPCL/HPCL)
profitability during the quarter. We expect OMCs’ core earnings to improve
sequentially in 4QFY18. Among the OMCs, we have a higher preference for IOCL
due to its (a) highest diversification, (b) strong free cash flow generation and (c)
inexpensive valuations.
 Yet another good quarter for RIL: RIL is expected to clock GRM of USD11.4/bbl,
led by strong benchmark (premium of USD4.4/bbl). Petchem segment is
expected to benefit from healthy deltas and strong volume growth.
 Prefer IGL among CGDs: We expect volume growth to continue for CGD players.
Spot as well as crude linked LNG prices have inched up in 4QFY18. However,
Gujarat Gas had already taken a price hike of INR2.5/scm in Dec 2017 which
would take care of the increased cost. We prefer IGL among CGD players due to
(a) higher longevity of volume growth compared to MGL and (b) higher share of
CNG v/s PNG, supporting stable EBITDA/SCM.
 PLNG – a long-term buy: Visibility on PLNG’s medium/long-term earnings is
high, given (a) the huge gas demand-supply gap in India, (b) volume growth,
driven by gradual capacity addition and (c) earnings growth boosted by annual
re-gas charge escalation. Poor competition from existing and upcoming
terminals and lower LNG prices add to the buy case for PLNG.
 ONGC appears attractive: Higher oil prices result in higher realizations.
However, we believe if oil prices sustain above USD70/bbl, then the threat of
subsidy sharing returns in both ONGC and OINL. ONGC has been showing
growth in its oil and gas production unlike OINL. We prefer ONGC as its (a) cost
efficiency would result in a decline in opex, (b) gas production is likely to grow
10-15% annually for the next 3-4 years, (c) oil production is set to increase
marginally, (d) it has no subsidy burden, and (e) valuations are attractive.
April 2018 245

Exhibit 2: Relative performance - 3m (%) Exhibit 3: Relative performance - 1Yr (%)

Sensex Index MOSL Oil & Gas Index Sensex Index MOSL Oil & Gas Index
110 130
105 120
100 110
95 100
90 90
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17
Dec-17
Jan-18
Feb-18
Mar-18 Source: Bloomberg, MOSL
Exhibit 4: Comparative valuations

Sector / Companies CMP Reco EPS (INR) PE (x) EV/EBIDTA (x) ROE (%)
Oil & Gas
Aegis Logistics 263 Buy 6.3 9.5 12.3 41.9 27.6 21.5 31.8 18.4 14.2 30.7 35.9 35.0
BPCL 426 Buy 40.0 41.2 46.5 10.7 10.3 9.2 9.0 8.2 7.4 24.1 21.6 21.1
GAIL 329 Sell 21.0 22.9 24.6 15.7 14.4 13.4 9.7 8.8 8.0 11.9 12.0 12.0
Gujarat Gas 844 Buy 21.6 34.7 44.3 39.1 24.3 19.1 15.4 12.2 10.2 16.8 23.0 24.2
Gujarat State Petronet 185 Neutral 12.7 13.3 13.9 14.6 13.9 13.3 8.9 7.7 7.2 15.0 14.0 13.2
HPCL 353 Buy 39.5 32.5 37.8 8.9 10.9 9.3 6.3 7.0 6.4 28.2 20.6 20.9
Indraprastha Gas 278 Buy 9.4 11.1 12.5 29.6 25.2 22.2 17.5 14.7 12.8 20.7 20.8 20.2
IOC 174 Buy 20.7 17.6 21.7 8.4 9.9 8.0 4.8 5.0 4.2 18.5 14.4 16.1
Mahanagar Gas 1,012 Buy 55.9 53.9 54.6 18.1 18.8 18.6 10.8 10.2 9.8 28.0 24.4 22.5
MRPL 112 Neutral 11.7 11.4 12.4 9.5 9.8 9.0 4.9 4.7 4.0 18.9 16.1 15.5
Oil India 221 Buy 18.3 27.2 28.1 12.1 8.1 7.9 6.7 6.0 5.6 7.4 10.5 10.3
ONGC 178 Buy 16.8 21.8 23.5 10.6 8.2 7.5 4.0 3.5 3.3 9.6 12.0 12.4
Petronet LNG 232 Buy 14.0 16.0 18.8 16.6 14.5 12.3 10.5 9.3 7.3 23.7 22.9 22.9
Reliance Inds. 899 Buy 61.1 67.7 78.0 14.7 13.3 11.5 10.8 7.7 6.7 13.0 12.8 13.0
Oil & Gas Ex OMCs 13.3 11.5 10.3 7.7 6.2 5.5 11.9 12.6 12.8
Source: MOSL
April 2018 246

Brent up 19% QoQ (23% YoY), GRM strong, light/heavy spread widens
Exhibit 5: Brent crude price up 24% YoY and 9% QoQ at Exhibit 6: Premium of Brent over WTI declined QoQ to
USD67/bbl USD4.1/bbl in 4QFY18
Brent Crude Price (USD/bbl) Brent less WTI (USD/bbl)
32
140
24
105
16
70
8
35 0
0 -8
1QFY05
4QFY05
3QFY06
2QFY07
1QFY08
4QFY08
3QFY09
2QFY10
1QFY11
4QFY11
3QFY12
2QFY13
1QFY14
4QFY14
3QFY15
2QFY16
1QFY17
4QFY17
3QFY18
1QFY05
4QFY05
3QFY06
2QFY07
1QFY08
4QFY08
3QFY09
2QFY10
1QFY11
4QFY11
3QFY12
2QFY13
1QFY14
4QFY14
3QFY15
2QFY16
1QFY17
4QFY17
3QFY18
Exhibit 7: Reuters Singapore GRM rose 9% YoY (-3% QoQ) to Exhibit 8: YoY GRM increase led by higher Diesel and
an average of USD7.0/bbl in 4QFY18 Jet/Kero cracks
Reuters Singapore GRM (USD/bbl) 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18
10 20
8 10
6 0
4 -10
-20
2
-30
0
Gasoline
LPG
Fuel Oil
Diesel
Jet/Kero
Naphtha
1QFY05
4QFY05
3QFY06
2QFY07
1QFY08
4QFY08
3QFY09
2QFY10
1QFY11
4QFY11
3QFY12
2QFY13
1QFY14
4QFY14
3QFY15
2QFY16
1QFY17
4QFY17
3QFY18
Source: Bloomberg, MOSL Source: Reuters, MOSL
Exhibit 9: Crude differentials improved YoY in 4QFY18 Our key assumptions

In USD/bbl Brent - Dubai Arab L-H  Our crude price assumptions are USD66.3/bbl for
4QFY18, USD57.4/bbl for FY18 and USD60/bbl for
9
FY19/20.
6  We expect the regional benchmark Singapore
4 Reuters GRM to remain strong in the near term
and settle at ~USD6/bbl over the the medium-to-
1
-long term.
-1
1QFY05
1QFY06
1QFY07
1QFY08
1QFY09
1QFY10
1QFY11
1QFY12
1QFY13
1QFY14
1QFY15
1QFY16
1QFY17
1QFY18
April 2018 247

Exhibit 10: Polymer spreads declined YoY/QoQ

(INR/kg) RIL Basic prices (INR/kg) Simple Spreads Int. Spreads
PE PP PVC POY PSF Naphtha PE PP PVC POY PSF
1QFY15 109.0 107.7 77.0 97.7 97.6 57.6 51.4 50.1 19.5 51.8 51.7
2QFY15 113.0 110.3 79.4 102.9 103.6 55.9 57.1 54.4 23.5 58.5 59.2
3QFY15 109.3 107.0 70.0 92.7 92.4 40.2 69.1 66.8 29.8 61.0 60.7
4QFY15 90.7 84.3 63.7 80.6 79.8 30.5 60.1 53.8 33.2 56.6 55.8
1QFY16 102.3 100.3 70.1 84.8 84.0 35.6 66.7 64.7 34.5 56.8 56.0
2QFY16 95.8 85.8 65.5 79.0 80.5 29.4 66.4 56.4 36.1 56.1 57.5
3QFY16 88.8 76.7 65.0 73.0 77.5 29.2 59.6 47.6 35.8 50.2 54.7
4QFY16 85.6 70.4 62.3 71.5 74.0 22.8 62.8 47.6 39.5 53.8 56.3
1QFY17 92.4 81.5 68.1 74.4 79.7 27.4 65.0 54.1 40.7 53.1 58.3
2QFY17 91.4 83.9 69.2 74.1 79.3 26.0 65.5 57.9 43.3 53.9 59.2
3QFY17 88.8 82.7 70.8 74.1 79.3 27.1 63.7 55.6 43.7 53.0 58.2
4QFY17 89.1 87.4 75.9 83.0 89.5 33.5 55.6 53.8 42.4 56.7 63.2
1QFY18 89.4 85.4 73.9 85.0 82.2 28.9 60.5 56.4 45.0 62.5 59.6
2QFY18 85.1 84.3 71.4 84.5 83.0 30.0 55.1 54.3 41.4 61.0 59.5
3QFY18 85.8 89.5 70.9 87.1 91.7 36.4 49.3 53.0 34.5 58.4 63.0
4QFY18 91.1 94.8 73.9 92.7 94.8 35.6 55.5 59.1 38.2 64.7 66.9
QoQ (%) 6.2% 5.9% 4.2% 6.4% 3.5% -2.3% 12.5% 11.6% 11.1% 10.9% 6.3%
YoY (%) 2.3% 8.5% -2.6% 11.7% 6.0% 6.4% -0.2% 9.8% -9.8% 14.2% 5.8%
Exhibit 11: Polymer spreads up QoQ (INR/kg): PE/PP/PVC Exhibit 12: POY spreads up 11% QoQ; PSF spreads up 6.3%
spreads up 12.5%/11.6%/11.1% QoQ QoQ (INR/kg)
PE PP PVC POY PSF
80 80
60 70
40 60
20 50
0
40
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
Source: Bloomberg, Company, MOSL Source: Bloomberg, Company
Exhibit 13: Petrol-diesel price difference (INR/liter) Exhibit 14: Petrol/diesel gross margin trend (INR/liter)
35
Petrol Diesel
Petrol - Diesel price
difference (INR/ltr)
3.4
3.2
3.2
3.2
3.1
3.1
25
3.1
2.9
2.7
2.7
2.7
2.6
2.6
2.6
2.5
2.4
2.4
2.3
2.3
2.2
2.0
2.0
1.9
1.9
15
5
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-17
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
1QFY16 3QFY16 1QFY17 3QFY17 1QFY18 3QFY18

Source: IOCL, MOSL *4QFY18 gross margins are indicative Source: IOCL, MOSL
April 2018 248

Exhibit 15: With almost nil subsidy, model ONGC’s net Exhibit 16: Expect higher LNG volumes in 4QFY18 (mmscmd)
realization for 4QFY18 at USD68.1/bbl and stable production in RIL’s KG-D6
Net Realization Subsidy Burden Gross Realization RIL KG-D6 PLNG GAIL India GSPL
114 106 110
97 95 96 101 103 102 100
114
97
110
110
110
109
109
91 94 86 87 90
108
107
103
102
64 66 64
76
58 59 56 59
68
64 52
63
61
48
62
63
62
63
43 46 44 43 46
62
64
56
55
52
49 2 51
51
51
61
63
40
74
48
46
44 29 31 34 35
35
40
22 24 23 23 24 24 25 24 25 25 26 23 27
59 5
68
61
56
55
52
51
51
51
48
48
47
47
47
46
46
45
44
6 5 6
41
8 8
40
7 6
36
35
33
13 13 12 12 12 11 11 10 9
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
FY13 FY14 FY15 FY16 FY17 FY18
Exhibit 17: Expect RIL’s GRM at USD11.4/bbl in 4QFY18 (USD/bbl)

Singapore GRM Premium / (Disc) RIL GRM
11.9 12.0 11.6
11.5 11.5 11.5 11.4
10.4 10.6 10.8 10.8
10.1 10.1
8.7 3.5 3.7
8.3 1.5 2.4 3.0 5.5 4.3 4.4
7.3 4.1 5.1
4.3 6.5
2.9 5.0
3.5 1.0
8.6 8.0 8.0 7.8 8.3

6.7 6.4 6.4 7.3 7.0
5.8 6.3 6.3
4.8 5.0 5.1
1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18
Exhibit 18: Lower GRMs for OMCs in 4QFY18 (USD/bbl)
IOC HPCL BPCL

8.6
8.0
7.2
6.7
6.6
6.2
6.1
5.3
5.3
5.0
4.9
4.6
8.6
8.0
7.9
3.6
7.6
7.5
7.5
3.4
6.8
6.5
2.4
6.4
2.1
5.9
10.8
10.0
4.6
2.3
2.0
2.1
8.8
0.8
2.7
6.0
3.0
4.3
7.7
8.9
4.3
8.0
6.2
6.1
3.2
(2.0)
(7.7)
(1.0)
1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18
April 2018 249

Aegis Logistics
Bloomberg AGIS IN CMP: INR263 TP: INR303 (+15%) Buy
 AGIS is an attractive play on India’s rising LPG consumption.
52-Week Range (INR) 300 / 170 Recently commissioned Haldia LPG terminal will drive the next leg
1,6,12 Rel Perf. (%) 7 / 7 / 22 of growth for the LPG segment.
 Liquids segment is expected to remain a cash cow for the company
Financial snapshot (INR b) and will grow in line with capacity addition.
Y/E March 2017 2018E 2019E 2020E  We estimate AGIS’ EBITDA at INR765m (+47% YoY, +7% QoQ), led
Sales 39 52 67 87 by ramp-up of Haldia and Pipavav LPG terminal in 4QFY18.
EBITDA 2 3 5 6  We estimate PAT at INR600m (+101% YoY, +12% QoQ) for 4QFY18.
Adj. PAT 1 2 3 4
 AGIS trades at 21.5x FY20E EPS of INR12.3 and 14.2x FY20E
Adj. EPS (INR) 4 6 10 12
EV/EBITDA. Maintain Buy.
EPS Gr.% 6 74 52 28
BV/Sh.INR 18 23 30 40
RoE (%) 21.7 30.7 35.9 35.0
RoCE (%) 18.5 24.6 30.3 31.3
Payout (%) 22.4 22.4 22.4 22.4
Valuation
P/E (x) 73.0 41.9 27.6 21.5
 (a) Ramp-up of Pipavav and Haldia LPG terminal, (b) Capacity
P/BV (x) 14.6 11.5 8.7 6.6
EV/EBITDA (x) 43.5 32.3 18.4 14.2
addition in the liquids segment, (c) Clarity on the commissioning
Div. Yld (%) 0.3 0.5 0.7 0.9 of two new LPG terminals.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 7,393 6,760 12,481 12,678 8,560 12,409 14,421 16,304 39,311 51,694
YoY Change (%) -1.6 36.3 136.0 190.1 15.8 83.6 15.5 28.6 77.6 31.5
EBITDA 472 462 605 519 566 678 717 765 2,057 2,727
Margins (%) 6.4 6.8 4.8 4.1 6.6 5.5 5.0 4.7 5.2 5.3
Depreciation 60 61 61 60 57 63 90 86 241 296
Interest 42 42 38 41 34 34 49 53 162 170
Other Income 16 15 9 14 16 14 14 19 54 62
PBT 385 374 515 433 491 595 592 644 1,708 2,323
Tax 68 99 93 112 23 36 28 39 372 125
Rate (%) 17.7 26.4 18.1 25.7 4.6 6.0 4.7 6.0 21.8 5.4
Reported PAT 275 250 376 298 440 521 535 600 1,198 2,095
Adj PAT 275 250 376 298 440 521 535 600 1,198 2,095
YoY Change (%) 8.9 -6.2 25.5 -5.6 59.8 108.5 42.5 101.5 5.7 74.9
Margins (%) 3.7 3.7 3.0 2.3 5.1 4.2 3.7 3.7 3.0 4.1
E: MOSL Estimates
April 2018 250

BPCL
Bloomberg BPCL IN
M. Cap. (INR b)/(USD b) 838 / 13
 We expect BPCL’s core earnings to improve YoY/QoQ, led by strong
52-Week Range (INR) 550 / 400 GRMs and better marketing margins in 4QFY18.
1,6,12 Rel Perf. (%) -2 / -17 / -11  We model nil subsidy-sharing for OMCs; subsidy in 4QFY18 would
be entirely borne by the government.
Financial snapshot (INR b)  We peg BPCL’s refinery throughput at 7.5mmt for 4QFY18 v/s
Y/E March 2017 2018E 2019E 2020E 7.3mmt in 3QFY18 and 6.0mmt in 4QFY17.
Sales 2,013 2,368 2,616 2,738  We model GRM of USD5.3/bbl and total inventory gains of INR5.9b
EBITDA 135 132 134 150 for BPCL in 4QFY18.
Adj. PAT 95 79 81 91  We expect BPCL to report adjusted EBITDA of INR32.1b (+45% YoY,
Adj. EPS (INR) 48.3 40.0 41.2 46.5 flat QoQ) in 4QFY18.
EPS Gr.% 97.8 -2.8 -14.9 16.3  We estimate PAT at INR16.5b (-10% YoY, -23% QoQ) for 4QFY18.
BV/Sh.INR 156.7 175.8 204.5 236.7  BPCL trades at 9.2x FY20E EPS of INR46.5 and 1.8x FY20E BV
RoE (%) 32.4 24.1 21.6 21.1 (adjusted for investments), with ~5% dividend yield. Maintain Buy.
RoCE (%) 16.2 12.6 11.7 12.1
Valuation
 (a) Inventory and forex change impact, (b) GRM, (c) Kochi refinery
P/E (x) 8.8 10.7 10.3 9.2 expansion and (d) update on Mozambique/Brazil E&P blocks.
P/BV (x) 2.7 2.4 2.1 1.8
EV/EBITDA (x) 8.4 8.9 8.8 7.9
Div. Yld (%) 5.1 4.2 2.5 2.9

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 469,387 446,927 535,427 570,365 571,258 533,252 606,164 616,099 2,022,106 2,326,772
YoY Change (%) -9.9 -3.4 15.1 31.0 21.7 19.3 13.2 8.0 7.3 15.1
Total Expenditure 428,532 433,257 500,775 548,242 559,008 497,976 574,281 583,954 1,910,807 2,215,219
EBITDA 40,855 13,670 34,652 22,123 12,250 35,276 31,882 32,145 111,299 111,553
Margins (%) 8.7 3.1 6.5 3.9 2.1 6.6 5.3 5.2 5.5 4.8
EBITDA adj. for inventory and one-offs 28,025 17,300 20,112 23,001 26,345 28,436 15,922 26,270 88,438 96,973
Depreciation 4,315 4,524 4,836 5,238 5,892 6,404 6,774 7,303 18,913 26,373
Interest 1,111 1,024 1,349 1,475 1,789 2,348 2,002 2,400 4,959 8,539
Other Income 1,986 10,367 4,024 6,624 6,566 8,004 7,274 2,358 23,001 24,202
PBT 37,415 18,489 33,978 22,033 11,136 34,528 30,380 24,800 110,428 100,843
Tax 11,210 5,437 9,771 3,616 3,690 10,952 8,943 8,258 30,035 31,843
Rate (%) 30.0 29.4 28.8 16.4 33.1 31.7 29.4 33.3 27.2 31.6
Reported PAT 26,205 13,052 22,719 18,417 7,446 23,576 21,437 16,542 80,393 69,001
Adj PAT 26,205 13,052 23,147 18,417 7,446 23,576 21,437 16,542 80,393 69,001
YoY Change (%) 11.0 26.2 49.8 -13.0 -71.6 80.6 -7.4 -10.2 13.9 -14.2
Margins (%) 5.6 2.9 4.3 3.2 1.3 4.4 3.5 2.7 4.0 3.0
Key Assumptions
Refining throughput (mmt) 6.2 6.4 6.8 6.0 6.4 7.0 7.3 7.5 25.4 28.2
Reported GRM (USD/bbl) 6.1 3.1 5.9 6.0 4.9 8.0 7.9 5.3 5.3 7.2
Marketing sales volume excld exports
(mmt) 9.7 8.9 9.8 9.3 10.0 9.8 10.7 9.6 37.7 40.1
Marketing GM incld inv (INR/litre) 4.8 3.3 4.4 4.2 3.1 4.3 3.8 4.1 3.7 3.7
E: MOSL Estimates
April 2018 251

GAIL
Bloomberg GAIL IN
CMP: INR329 TP: INR285 (-14%) Sell
M. Cap. (INR b)/(USD b) 741 / 11
 We expect GAIL to report adj. PAT of INR11.9b (+14% YoY and -5%
52-Week Range (INR) 389 / 260 QoQ). We model nil subsidy sharing for GAIL in 4QFY18 (v/s nil in
1,6,12 Rel Perf. (%) -1 / -5 / 2 4QFY17 and 3QFY18).
 We expect marginal improvement in gas transmission led by higher
Financial snapshot (INR b) LNG import as well as domestic gas production.
Y/E March 2017 2018E 2019E 2020E  We estimate EBITDA at INR21b in 4QFY18 v/s INR15b in 4QFY17 and
Sales 480.7 529.8 547.4 619.8 INR19.7b in 3QFY18.
EBITDA 63.2 80.5 85.7 91.7  Segmental EBIT (pre-subsidy) is expected to be INR19b (+27% YoY),
Adj. PAT 38.2 47.3 51.4 55.4 led by a turnaround in petchem division profitability and likely
Adj. EPS (INR) 17.0 21.0 22.9 24.6 higher gas transmission profitability.
EPS Gr. (%) 71.4 23.9 8.8 7.7  GAIL trades at 13.4x FY20E EPS of INR24.6. Maintain Sell.
BV/Sh.(INR) 169.6 182.8 197.1 212.6
RoCE (%) 8.7 10.2 10.3 10.3  (a) Petchem profitability, (b) profitability in the gas trading
Payout (%) 50.1 37.3 37.3 37.3 business, (c) progress of pipeline projects, (d) pending tariff
Valuations revisions for key pipelines, and (e) visibility on placement of US
P/E (x) 19.4 15.7 14.4 13.4
contracts.
P/BV (x) 1.9 1.8 1.7 1.5
EV/EBITDA (x) 8.3 8.9 8.4 7.8
Div. Yield (%) 2.0 2.0 2.2 2.3

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 106,866 118,582 121,079 134,217 114,065 124,097 144,143 147,458 480,743 529,763
Change (%) -14.6 -15.8 -9.5 15.4 6.7 4.7 19.0 9.9 -6.9 10.2
EBITDA 15,732 15,155 17,015 15,250 18,994 20,694 19,699 21,105 63,152 80,491
% of Net Sales 14.7 12.8 14.1 11.4 16.7 16.7 13.7 14.3 13.1 15.2
Depreciation 3,354 3,563 3,579 3,471 3,451 3,425 3,668 3,724 13,968 14,267
Interest 1,774 1,198 1,601 220 1,014 926 479 1,019 4,794 3,437
Other Income 1,362 3,361 3,002 4,981 1,158 2,929 3,027 1,757 12,705 8,872
Extraordinary item* 4,893 0 0 -7,880 0 0 0 0 -2,987 0
PBT 16,858 13,755 14,836 8,659 15,687 19,273 18,580 18,120 54,108 71,660
Tax 3,506 4,508 5,007 6,058 5,431 6,177 5,957 6,161 19,079 23,726
Rate (%) 20.8 32.8 33.7 70.0 34.6 32.0 32.1 34.0 35.3 33.1
PAT 13,352 9,247 9,829 2,602 10,256 13,096 12,622 11,959 35,029 47,934
Adj PAT 8,459 9,247 9,829 10,482 10,256 13,096 12,622 11,959 38,016 47,934
Change (%) 99.4 109.9 48.0 36.1 21.3 41.6 28.4 14.1 65.4 26.1
EPS (INR) 3.8 4.1 4.4 4.7 4.6 5.8 5.6 5.3 16.9 21.3
Key Assumptions
Gas Trans. volume (mmsmd) 96 101 103 102 100 106 109 110 100 106
Petchem sales ('000MT) 110 136 146 186 131 175 176 158 578 640
E: MOSL Estimates
April 2018 252

Gujarat Gas
Bloomberg GUJGA IN CMP: INR844 TP: INR1,066 (+26%) Buy
M. Cap. (INR b)/(USD b) 116 / 2
 GUJGA has seen pick up in industrial volumes in 4QFY18. We expect
52-Week Range (INR) 974 / 722 volume of 6.6mmscmd, and EBITDA/scm at INR3.6 led by price hike
1,6,12 Rel Perf. (%) -1 / -8 / 0 taken in Dec 2017 in industrial segment.
 We expect 4QFY18 PNG industrial/commercial volumes at
Financial snapshot (INR b) 4.7mmscmd (+9% YoY, +4% QoQ), and PNG household volumes at
Y/E March 2017 2018E 2019E 2020E 0.5mmscmd (-4% YoY, +2% QoQ). We expect CNG volumes at
Sales 50.9 62.4 78.3 88.8 1.3mmscmd (+9% YoY, +4% QoQ).
EBITDA 7.4 8.9 11.0 12.8  We expect GUJGA to report EBITDA of INR2.1b (+46% YoY, +7%
PAT 2.2 3.0 4.8 6.1 QoQ) for 4QFY18.
EPS (INR) 16.1 21.6 34.7 44.3  We expect GUJGA to report PAT of INR713m (+115% YoY, +19%
EPS Gr. (%) 7.0 34.3 61.1 27.5 QoQ).
BV/Sh.(INR) 119.5 137.0 165.2 201.2  We model total volumes of 6.2/7.1/8.0mmscmd and EBITDA/scm of
RoE (%) 14.0 16.8 23.0 24.2 INR3.9/4.3/4.4 in FY18/FY19/FY20.
RoCE (%) 14.4 15.9 20.4 23.8  The stock trades at 19.1x FY20E EPS of INR44.3. Maintain Buy.
Payout (%) 18.7 18.7 18.7 18.7
P/E (x) 52.6 39.1 24.3 19.1  PNG and CNG volumes
P/BV (x) 7.1 6.2 5.1 4.2  EBITDA/scm
EV/EBITDA (x) 18.6 15.6 12.2 10.2  Gas cost
Div. Yield (%) 0.3 0.4 0.6 0.8

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 12,247 12,370 12,309 14,002 14,780 13,914 15,713 17,967 50,927 62,374
YoY Change (%) -26.7 -21.3 -17.1 1.6 20.7 12.5 27.7 28.3 -16.6 22.5
EBITDA 2,173 2,094 1,709 1,463 2,698 2,027 1,999 2,138 7,440 8,862
Margins (%) 17.7 16.9 13.9 10.4 18.3 14.6 12.7 11.9 14.6 14.2
Depreciation 632 645 653 643 666 683 688 718 2,672 2,754
Interest 534 541 539 476 496 499 487 472 2,090 1,954
Other Income 62 52 75 71 78 89 91 116 371 374
PBT 1,070 959 593 415 1,615 934 915 1,065 3,050 4,528
Tax 321 265 170 84 571 323 315 351 839 1,560
Rate (%) 30.0 27.6 28.6 20.2 35.4 34.6 34.4 33.0 27.5 34.5
Reported PAT 748 695 423 331 1,044 611 600 713 2,210 2,968
YoY Change (%) 27.7 150.3 31.5 -63.9 39.4 -12.1 41.9 115.3 7.0 34.3
Margins (%) 6.1 5.6 3.4 2.4 7.1 4.4 3.8 4.0 4.3 4.8
Total volume (mmscmd) 5.1 5.2 5.3 6.1 6.1 5.7 6.3 6.6 5.4 6.2
CNG 1.1 1.2 1.2 1.2 1.3 1.3 1.3 1.3 1.2 1.3
PNG - Industrials/commercial 3.5 3.6 3.7 4.3 4.4 4.0 4.5 4.7 3.8 4.4
PNG - Households 0.4 0.4 0.5 0.6 0.4 0.5 0.5 0.5 0.5 0.5
EBITDA (INR/scm) 4.7 4.4 3.5 2.7 4.8 3.8 3.5 3.6 3.8 3.9
E: MOSL Estimates
April 2018 253

March 2018
March 2018 Results
Results Preview
Preview || Sector:
Sector: Oil
Oil &
& Gas
Gas
Gujarat State Petronet

Bloomberg GUJS IN CMP: INR185 TP: INR191 (-17%) Neutral
 We expect GUJS to report net sales of INR3.6b and PAT of INR2.0b
M. Cap. (INR b)/(USD b) 104 / 2
(+60% QoQ, +12% YoY).
1,6,12 Rel Perf. (%) -6 / -12 / 0
 We model transmission volume at 35mmscmd (+50% YoY, +4%
QoQ), led by increased gas demand from power sector, and
transmission tariff at INR1,127/mscm (-6% YoY, flat QoQ).
Y/E March 2017 2018E 2019E 2020E
 GUJS had won the bids for three cross-country pipelines (Mehsana-
Sales 10.3 13.4 14.4 14.5
Bhatinda, Bhatinda-Srinagar, Mallavaram-Bhilwara). We await
EBITDA 8.9 11.7 12.5 12.5 clarity on the current status, timelines and other details regarding
Adj. PAT 5.0 7.1 7.5 7.8 these pipelines.
Adj. EPS (INR) 8.8 12.7 13.3 13.9  We build in gas transmission volumes of 31.7mmscmd for FY18 and
EPS Gr. (%) 11.5 43.8 4.9 4.5 32mmscmd for FY19/20, and model tariff at INR1,200/mscm for
BV/Sh.(INR) 79.8 89.6 100.0 110.9 FY19/20.
RoE (%) 11.6 15.0 14.0 13.2  The stock trades at 13.3x FY20E EPS of INR13.9. Maintain Neutral.
RoCE (%) 9.9 12.5 11.7 11.2
Payout (%) 22.6 22.2 22.0 21.9
Valuations
P/BV (x) 2.3 2.1 1.8 1.7  Transmission volumes and tariffs
EV/EBITDA (x) 11.9 8.8 7.7 7.2  Progress on the three pipelines
Div. Yield (%) 0.9 1.3 1.4 1.4  Commissioning of GSPC/Adani’s Mundra terminal

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 2,579 2,564 2,668 2,446 2,963 3,348 3,502 3,611 10,256 13,425
Change (%) -0.5 -0.7 3.4 5.5 14.9 30.6 31.3 47.6 1.8 30.9
EBITDA 2,330 2,245 2,275 2,013 2,760 2,855 2,971 3,077 8,864 11,663
% of Net Sales 90.4 87.6 85.3 82.3 93.1 85.3 84.8 85.2 86.4 86.9
% Change 2.6 -3.8 0.6 -1.6 18.4 27.2 30.6 52.8 -0.5 31.6
Depreciation 430 436 465 460 430 438 442 460 1,791 1,770
Interest 167 148 165 116 106 90 55 72 596 323
Other Income 147 304 177 273 164 278 121 357 901 920
PBT 1,881 1,965 1,822 1,710 2,389 2,605 2,595 2,902 7,378 10,490
Tax 668 666 636 441 864 836 779 871 2,411 3,349
Rate (%) 35.5 33.9 34.9 25.8 36.2 32.1 30.0 30.0 32.7 31.9
PAT 1,213 1,298 1,186 1,270 1,525 1,770 1,816 2,031 4,966 7,142
Adj. PAT 1,213 1,298 1,186 1,270 1,525 1,770 1,816 2,031 4,966 7,142
Change (%) 8 7 -9 28 26 36 53 60 7 44
EPS (INR) 2.2 2.3 2.1 2.3 2.7 3.1 3.2 3.6 8.8 12.7
Transmission Vol. (mmscmd) 25.1 24.6 26.2 23.4 26.9 31.6 33.5 35.0 24.8 31.7
Implied adj. tariff (INR/mscm) 1,073 1,079 1,095 1,197 1,157 1,112 1,123 1,127 1,111 1,130
E: MOSL Estimates
April 2018 254

March 2018
March 2018 Results
Results Preview
Preview || Sector:
Sector: Oil
Oil &
& Gas
Gas
HPCL
Bloomberg HPCL IN CMP: INR353 TP: INR536 (+52%) Buy
M. Cap. (INR b)/(USD b) 539 / 8
 We expect HPCL’s core earnings to decline YoY/QoQ, led by lower
52-Week Range (INR) 493 / 324 core GRMs in 4QFY18.
1,6,12 Rel Perf. (%) -4 / -24 / -9  We model nil subsidy-sharing for OMCs; subsidy in 4QFY18 would
Financial snapshot (INR b)  We peg HPCL’s refinery throughput at 4.6mmt for 4QFY18 v/s
Y/E MARCH 2017 2018E 2019E 2020E 4.6mmt in 4QFY17 and 4.5mmt in 3QFY18.
Sales 1,870 2,202 2,402 2,507  We model GRM of USD4.6/bbl and total inventory gains of INR5.5b
EBITDA 105.8 104.8 100.2 114.8 for HPCL in 4QFY18.
Adj. PAT 62.1 60.3 49.6 57.7  We expect HPCL to report adjusted EBITDA of INR22.4b (-21% YoY,
Adj. EPS (INR) 40.7 39.5 32.5 37.8 +33% QoQ) in 4QFY18.
EPS Gr. (%) 66.6 (2.9) (17.8) 16.5  We estimate PAT at INR14.2b (-22% YoY, -27% QoQ) for 4QFY18.
BV/Sh.(INR) 133.4 147.5 168.6 193.1  HPCL trades at 9.3x FY20E EPS of INR37.8 and 1.8x FY20E BV
RoE (%) 32.4 28.2 20.6 20.9
(adjusted for investments), with ~5% dividend yield. Maintain Buy.
RoCE (%) 18.8 15.1 10.8 11.1
Payout (%) 67.4 64.3 35.1 35.1
Valuations
 GRM
P/E (x) 8.7 8.9 10.9 9.3
 Impact of forex and inventory change
P/BV (x) 2.6 2.4 2.1 1.8
EV/EBITDA (x) 6.7 7.4 8.1 7.3
Div. Yield (%) 6.5 6.2 2.8 3.2

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 448,495 421,025 485,556 515,248 534,685 475,226 574,743 617,314 1,870,324 2,201,967
YoY Change (%) -12.9 0.0 12.9 25.3 19.2 12.9 18.4 19.8 5.3 17.7
EBITDA 36,961 12,609 29,653 28,860 16,280 29,056 31,585 27,871 108,083 104,792
Margins (%) 8.2 3.0 6.1 5.6 3.0 6.1 5.5 4.5 5.8 4.8
Depreciation 6,108 6,160 6,336 6,749 6,671 6,804 6,799 7,068 25,353 27,342
Interest 1,250 1,164 530 2,268 1,430 1,563 899 1,581 5,212 5,473
Other Income 2,665 5,469 2,878 4,047 5,703 5,194 4,743 2,105 15,060 17,744
PBT 32,268 10,755 25,666 23,890 13,883 25,882 28,631 21,326 92,578 89,722
Tax 10,534 3,741 8,143 5,702 4,636 8,535 9,134 7,108 28,120 29,412
Rate (%) 32.6 34.8 31.7 23.9 33.4 33.0 31.9 33.3 30.4 32.8
Reported PAT 21,734 7,013 17,523 18,188 9,247 17,347 19,497 14,218 64,458 60,310
YoY Change (%) 72.5 -356.9 60.9 24.9 -57.5 147.4 11.3 -21.8 82.5 -6.4
Margins (%) 4.8 1.7 3.6 3.5 1.7 3.7 3.4 2.3 3.4 2.7
Key Assumptions
Core GRM (USD/bbl) 4.8 4.2 3.9 8.5 8.8 5.6 6.1 4.6 5.4 6.3
Marketing sales volume incl exports
(mmt) 8.9 8.0 9.3 8.9 9.3 8.7 9.4 9.2 35.1 36.6
Marketing GM incld inv (INR/litre) 4.7 3.5 3.9 4.0 3.2 3.8 3.1 4.3 4.0 3.6
E: MOSL Estimates
April 2018 255

March 2018
March 2018 Results
Results Preview
Preview || Sector:
Sector: Oil
Oil &
& Gas
Gas
Indraprastha Gas
Bloomberg IGL IN CMP: INR278 TP: INR416 (+49%) Buy
 We expect IGL to report volumes of 5.46mmscmd, and assume
M. Cap. (INR b)/(USD b) 195 / 3
EBITDA/scm at INR5.6 for 4QFY18.
1,6,12 Rel Perf. (%) -7 / -11 / 26
 We expect 4QFY18 CNG volumes at 4.07mmscmd (+12% YoY, +5%
QoQ) and PNG volumes at 1.39mmscmd (+17% YoY, +1% QoQ).
 We expect IGL to report EBITDA of INR2.8b (+14% YoY, +5% QoQ)
Y/E MARCH 2017 2018E 2019E 2020E
for 4QFY18.
Sales 38.1 45.5 51.5 57.7
 We expect IGL to report PAT of INR1.7b (+29% YoY, +4% QoQ).
EBITDA 9.6 10.7 12.4 13.8  We model total volumes of 5.2/5.8/6.5mmscmd and EBITDA/SCM at
Adj. PAT 6.2 6.6 7.7 8.8 ~INR5.9/SCM in FY18/FY19/FY20.
Adj. EPS (INR) 8.8 9.4 11.1 12.5  The stock trades at 22.2x FY20E EPS of INR12.5. Maintain Buy.
EPS Gr. (%) 46.9 6.9 17.7 13.2
BV/Sh.(INR) 41.8 48.9 57.6 66.6
RoE (%) 21.0 20.7 20.8 20.2
RoCE (%) 19.8 19.6 19.8 19.4
Payout (%) 22.7 21.3 18.1 24.0
Valuation
P/BV (x) 6.7 5.7 4.8 4.2  Increase in volumes
EV/EBITDA (x) 19.6 17.5 14.7 12.8
 EBITDA/SCM
Div. Yield (%) 0.7 0.7 0.7 1.1

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 8,970 9,624 9,467 10,019 10,492 11,261 11,839 12,226 38,081 45,818
Change (%) -0.3 -0.3 2.1 13.1 17.0 17.0 25.1 22.0 3.5 20.3
EBITDA 2,570 2,575 2,554 2,422 2,773 2,816 2,631 2,764 10,121 10,984
EBITDA (Rs/scm) 6.5 6.1 6.0 5.6 6.2 5.9 5.4 5.6 6.1 5.8
% of Net Sales 28.7 26.8 27.0 24.2 26.4 25.0 22.2 22.6 26.6 24.0
% Change 32.7 37.0 38.0 36.2 7.9 9.4 3.0 14.1 35.9 8.5
Depreciation 466 483 479 244 439 450 453 486 1,671 1,828
Interest 0 0 0 12 4 4 4 0 12 11
Other Income 106.5 251.4 152.4 208.8 178.8 249.7 325.5 336.2 719.1 1,090.2
PBT before EO 2,211 2,344 2,227 2,375 2,509 2,612 2,499 2,615 9,157 10,235
EO 0 -167 -83 -300 0 0 0 0 -550 0
PBT after EO 2,211 2,177 2,144 2,075 2,509 2,612 2,499 2,615 8,607 10,235
Tax 731 735 696 734 897 923 840 889 2,896 3,549
Rate (%) 33.1 33.8 32.5 35.4 35.7 35.3 33.6 34.0 33.7 34.7
PAT 1,480 1,442 1,448 1,341 1,613 1,689 1,659 1,726 5,711 6,686
Adj. PAT 1,480 1,552 1,504 1,535 1,613 1,689 1,659 1,726 6,076 6,686
EPS (INR) 2.1 2.2 2.1 2.2 2.3 2.4 2.4 2.5 8.7 9.6
Gas Volumes (mmscmd)
CNG 3.31 3.47 3.48 3.65 3.70 3.91 3.89 4.07 3.48 3.90
PNG 1.02 1.11 1.13 1.19 1.20 1.30 1.37 1.39 1.11 1.32
Total 4.34 4.58 4.61 4.84 4.90 5.22 5.26 5.46 4.59 5.21
YoY Change (%)
CNG 11.7 11.9 13.2 15.7 11.8 12.9 11.9 11.6 13.2 12.0
PNG 17.7 13.3 20.1 25.8 17.2 17.6 21.2 16.8 19.2 18.2
Total 13.0 12.3 14.8 18.1 13.1 14.0 14.2 12.9 14.6 13.5
E: MOSL Estimates
April 2018 256

IOC
Bloomberg IOCL IN CMP: INR174 TP: INR261 (+50%) Buy
 We expect IOCL’s core earnings to improve YoY, led by strong GRMs
M. Cap. (INR b)/(USD b) 1650 / 25
and healthy marketing margins in 4QFY18.
1,6,12 Rel Perf. (%) -7 / -20 / -20
 We model nil subsidy-sharing for OMCs; subsidy in 4QFY18 would
 We peg IOCL’s refinery throughput at 17.0mmt for 4QFY18 v/s
Y/E MARCH 2017 2018E 2019E 2020E
17.1mmt in 4QFY17 and 18.2mmt in 3QFY18 –Paradip refinery was
Sales
under shutdown in Feb-Mar 2018.
3,553 4,320 4,788 5,337
 We model GRM of USD5.6/bbl and total inventory gains of INR14b
EBITDA 340 366 333 386
for IOCL in 4QFY18.
Adj. PAT 198 196 167 205
 We expect IOCL to report adjusted EBITDA of INR75b (-10% YoY,
Adj. EPS (INR) 21 21 18 22
+8% QoQ) in 4QFY18.
EPS Gr. (%) 101 -1 -15 23
 We estimate PAT at INR48b (+30% YoY, -39% QoQ) in 4QFY18.
BV/Sh.(INR) 108 116 128 142
 IOCL trades at 8.0x FY20E EPS of INR22 and at 1.2x FY20E BV.
RoE (%) 21 18 14 16
Dividend yield is 6-7%. Maintain Buy.
RoCE (%) 15 13 11 13
Valuations
 Utilization of Paradip refinery
P/E (x) 8.3 8.4 9.9 8.0  GRM
P/BV (x) 1.6 1.5 1.4 1.2  Capex plans
EV/EBITDA (x) 6.6 5.9 6.3 5.3  Forex/inventory changes
Div. Yield (%) 6.4 7.0 3.0 3.7

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 856,553 800,435 931,019 1,003,375 1,054,342 905,667 1,106,669 1,290,638 3,591,382 4,357,317
YoY Change (%) -15.3 -5.1 13.0 28.0 23.1 13.1 18.9 28.6 3.7 21.3
Total Expenditure 720,652 748,519 848,541 959,289 1,002,427 831,935 973,982 1,201,638 3,277,001 4,009,982
EBITDA 135,901 51,916 82,478 44,086 51,915 73,732 132,687 88,999 314,381 347,335
Margins (%) 15.9 6.5 8.9 4.4 4.9 8.1 12.0 6.9 8.8 8.0
Depreciation 14,350 15,048 15,541 17,290 17,213 16,970 17,151 17,145 62,230 68,479
Interest 6,800 6,147 9,967 11,541 7,180 7,726 6,549 6,860 34,454 28,315
Other Income 5,637 14,347 4,938 20,593 12,276 5,878 13,534 7,518 45,515 39,206
PBT 120,388 45,069 61,907 35,849 67,878 54,914 122,522 72,513 263,212 317,827
Tax 37,698 13,850 21,958 -1,358 22,393 17,951 43,690 24,169 72,148 108,203
Rate (%) 31.3 30.7 35.5 -3.8 33.0 32.7 35.7 33.3 27.4 34.0
Reported PAT 82,690 31,219 39,949 37,206 45,485 36,963 78,832 48,345 191,064 209,625
Adj PAT 82,690 31,219 39,949 37,206 26,767 36,963 78,832 48,345 191,064 191,104
YoY Change (%) 35.2 -456.2 52.3 85.5 -67.6 18.4 97.3 29.9 84.9 0.0
Margins (%) 9.7 3.9 4.3 3.7 2.5 4.1 7.1 3.7 5.3 4.4
Key Assumptions
Core GRM (USD/bbl) 3.6 4.2 5.1 6.9 6.6 6.9 7.9 5.6 6.4 9.1
Domestic sale of refined products (mmt) 19.3 17.3 19.0 18.5 19.8 18.0 19.7 19.3 74.1 76.8
Marketing GM/litre net of inv gain
(INR/litre) 3.5 3.8 4.0 4.0 5.1 3.9 2.9 3.7 3.8 3.9
E: MOSL Estimates
April 2018 257

March 2018
March 2018 Results
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Preview || Sector:
Sector: Oil
Oil &
& Gas
Gas
Mahanagar Gas
Bloomberg MAHGL IN CMP: INR1,012 TP: INR1,228 (+21%) Buy
 We expect MGL to report volumes of 2.79mmscmd, and assume
EBITDA/scm at INR8.0 for 4QFY18.
1,6,12 Rel Perf. (%) -1 / -12 / 1
 We expect 4QFY18 CNG volumes at 2.01mmscmd (+5% YoY, flat
QoQ) and PNG volumes at 0.77mmscmd (+11% YoY, +5% QoQ).
 We expect MGL to report EBITDA of INR2.0b (+22% YoY, -1% QoQ)
Y/E MARCH 2017 2018E 2019E 2020E
for 4QFY18.
Sales 20.3 23.0 24.5 27.1
 We expect MGL to report PAT of INR1.3b (+26% YoY, +1% QoQ).
EBITDA 6.4 8.1 7.8 7.9  We model total volumes of 2.70/2.86/3.10mmscmd and
Adj. PAT 3.9 5.0 4.8 4.9 EBITDA/SCM at INR8.2/7.5/7 in FY18/FY19/FY20.
EPS Gr. (%) 26.5 27.0 -3.6 1.2
BV/Sh.(INR) 188.4 210.5 231.7 253.3
RoE (%) 24.5 28.0 24.4 22.5
RoCE (%) 24.3 27.8 24.2 22.4
Payout (%) 60.5 60.5 60.5 60.5
Valuation
P/BV (x) 5.4 4.8 4.4 4.0  Increase in volumes
EV/EBITDA (x) 13.7 10.7 10.7 10.3
 EBITDA/SCM
Div. Yield (%) 2.2 2.8 2.7 2.7

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,834 5,209 5,043 5,253 5,309 5,338 5,814 6,601 20,340 23,046
YoY Change (%) -5.9 -3.4 -2.1 3.0 9.8 2.5 15.3 25.7 -2.1 13.3
EBITDA 1,524 1,615 1,672 1,631 2,033 2,003 2,009 1,998 6,442 8,052
EBITDA/SCM 6.7 6.8 7.1 6.9 8.7 8.1 8.0 8.0 6.9 8.2
Margins (%) 31.5 31.0 33.1 31.1 38.3 37.5 34.6 30.3 31.7 34.9
Depreciation 216 231 247 257 246 259 268 292 951 1,064
Interest 5 1 5 -1 2 0 0 5 10 7
Other Income 123 150 124 130 120 139 141 197 527 597
PBT 1,425 1,533 1,544 1,505 1,904 1,883 1,883 1,898 6,007 7,577
Tax 498 511 554 510 661 635 643 643 2,072 2,582
Rate (%) 34.9 33.3 35.9 33.9 34.7 33.7 34.1 33.9 34.5 34.1
Reported PAT 927 1,022 990 995 1,243 1,248 1,240 1,255 3,934 4,995
Adj PAT 927 1,022 990 995 1,243 1,248 1,240 1,255 3,934 4,995
YoY Change (%) 19.1 40.9 30.2 17.9 34.1 22.1 25.2 26.1 26.5 27.0
Margins (%) 19.2 19.6 19.6 18.9 23.4 23.4 21.3 19.0 19.3 21.7
Sales Volumes (mmscmd)
CNG 1.86 1.93 1.88 1.92 1.89 1.99 2.01 2.01 1.90 1.98
PNG - Domestic 0.29 0.29 0.31 0.32 0.32 0.33 0.34 0.38 0.30 0.34
PNG - Industry/ Commercial 0.35 0.37 0.37 0.37 0.36 0.38 0.39 0.39 0.37 0.38
PNG - Total 0.64 0.67 0.68 0.70 0.68 0.71 0.73 0.77 0.67 0.72
Total Volumes 2.50 2.60 2.56 2.62 2.57 2.70 2.74 2.79 2.57 2.70
E: MOSL Estimates
April 2018 258

March 2018
March 2018 Results
Results Preview
Preview || Sector:
Sector: Oil
Oil &
& Gas
Gas
MRPL
Bloomberg MRPL IN CMP: INR112 TP: INR119 (+7%) Neutral
 Reuters Singapore’s GRM is up +9% YoY (-3% QoQ) at USD7.0/bbl.
M. Cap. (INR b)/(USD b) 196 / 3
We model MRPL’s GRM at USD5.2/bbl (v/s USD6.8/bbl in 3QFY18
1,6,12 Rel Perf. (%) -3 / -18 / -8
and USD8.1/bbl in 4QFY17).
 We expect refinery throughput at 4.1mmt v/s 4.5mmt in 3QFY18
and 4.2mmt in 4QFY17.
Y/E MARCH 2017 2018E 2019E 2020E
 We expect MRPL to report EBITDA of INR7.5b (v/s INR17.5b in
Sales 432.1 475.1 518.8 532.4 3QFY18). We estimate adjusted PAT at INR3.5b (v/s INR9.7b in
EBITDA 47.1 39.9 39.2 40.2 3QFY18).
Adj. PAT 25.9 20.5 20.0 21.7  For MRPL, we model GRM of USD6.4/bbl in FY19/20. The stock
Adj. EPS (INR) 14.8 11.7 11.4 12.4 trades at 9x FY20E EPS of INR12.4 and EV of 4.4x FY19E EBITDA.
EPS Gr. (%) 95.1 (20.7) (2.5) 8.3 Maintain Neutral.
(20.7)
BV/Sh.(INR) 57.5 66.4 75.2 84.7
RoCE (%) 19.6 13.7 13.0 13.2  GRM
Payout (%) 34.7 23.4 23.4 23.4  Forex fluctuations
Valuation  Inventory changes
P/E (x) 7.6 9.5 9.8 9.0
P/BV (x) 1.9 1.7 1.5 1.3
EV/EBITDA (x) 5.1 5.3 5.0 4.4
Div. Yield (%) 5.4 2.1 2.0 2.2

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 84,288 99,690 114,753 133,349 102,624 90,965 141,020 140,458 432,079 475,068
YoY Change (%) -25.5 -2.5 30.1 43.5 21.8 -8.8 22.9 5.3 9.0 9.9
EBITDA 12,206 7,855 11,476 15,540 5,827 9,082 17,495 7,495 47,076 39,900
Margins (%) 14.5 7.9 10.0 11.7 5.7 10.0 12.4 5.3 10.9 8.4
Depreciation 1,703 1,681 1,702 1,703 1,637 1,701 1,720 1,767 6,788 6,825
Interest 1,459 1,115 1,395 1,219 1,074 1,053 1,159 1,135 5,188 4,422
Other Income 2,295 926 636 375 204 828 202 593 4,232 1,827
Extra-Ord expense 0 0 0 -15,973 0 259 0 0 -15,973 259
PBT 11,340 5,984 9,015 28,966 3,320 6,898 14,819 5,185 55,305 30,221
Tax 4,155 1,826 3,355 9,542 980 2,118 5,110 1,728 18,877 9,936
Rate (%) 37 31 37 33 30 31 34 33 34 33
Reported PAT 7,185 4,159 5,660 19,424 2,340 4,780 9,709 3,457 36,428 20,285
Adj PAT 7,185 4,159 5,660 8,713 2,340 4,959 9,709 3,457 25,907 20,459
YoY Change (%) 36.0 -146.5 91.8 -35.5 -67.4 19.2 71.5 -60.3 98.3 -21.0
Margins (%) 8.5 4.2 4.9 6.5 2.3 5.5 6.9 2.5 6.0 4.3
Key Assumptions
Core GRM (USD/bbl) 5.3 5.5 5.1 8.1 7.1 5.3 6.8 5.2 6.0 6.1
E: MOSL Estimates
April 2018 259

March 2018
March 2018 Results
Results Preview
Preview || Sector:
Sector: Oil
Oil &
& Gas
Gas
Oil India
Bloomberg OINL IN CMP: INR221 TP: INR260 (+18%) Buy
 We estimate gross and net realization at USD65.5/bbl, with no
M. Cap. (INR b)/(USD b) 266 / 4
subsidy sharing burden.
1,6,12 Rel Perf. (%) -3 / -12 / -11
 However, other expenditure in 3QFY18 was much lower. We
expect this to normalize in 4QFY18. We estimate EBITDA at
INR10.5b (+77% YoY and -4% QoQ).
Y/E MARCH 2017 2018E 2019E 2020E
 We expect OINL to report adjusted PAT of INR6.0b (v/s INR7.1b in
Sales 93.6 105.2 113.9 115.8
3QFY18 and INR0.2b in 4QFY17).
EBITDA 29.6 40.3 45.8 46.5  Our Brent price assumption is USD57.4/bbl for FY18 and USD60/bbl
Adj. PAT 27.0 22.1 32.7 33.7 for FY19/20.
EPS Gr. (%) 7.2 -18.3 48.1 3.3
BV/Sh.(INR) 242.0 251.7 266.1 281.0 Key issues to watch for
RoE (%) 5.7 7.4 10.5 10.3  DD&A charges
RoCE (%) 6.4 5.8 7.9 7.7  Oil & gas production volumes
Payout (%) 96.5 46.9 46.9 46.9
Valuations
P/E (x) 17.2 12.1 8.1 7.9
P/BV (x) 0.9 0.9 0.8 0.8
EV/EBITDA (x) 9.7 7.2 6.0 5.6
Div. Yield (%) 4.5 3.2 5.0 5.0
Quarterly Performance (INR Billion)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 22.2 23.3 23.8 24.4 23.3 24.7 28.5 30.0 93.6 106.6
Change (%) -19.2 -2.8 7.1 28.3 5.0 6.1 20.0 23.1 1.1 13.8
EBITDA 8.6 8.4 6.6 5.9 8.7 10.1 12.2 10.5 29.6 41.6
% of Net Sales 38.8 35.9 28.0 24.4 37.5 40.9 42.9 35.1 31.6 39.1
Change (%) -20.4 8.6 7.1 0.2 1.3 21.0 84.2 77.2 -3.6 40.8
D,D&A 2.3 2.5 2.8 3.3 2.9 3.2 3.6 3.9 10.9 13.6
Interest 1.0 1.0 1.0 1.0 1.0 1.1 1.0 0.8 4.0 3.9
OI (incl. Oper. other inc) 2.4 3.9 3.2 8.7 1.5 3.3 2.1 3.1 18.3 10.1
PBT before exceptionals 7.7 8.8 6.1 10.4 6.4 9.1 9.8 9.0 33.0 34.3
Exceptional item 0.0 0.0 0.0 11.5 0.0 0.0 0.0 0.0 11.5 0.0
PBT after exceptionals 7.7 8.8 6.1 -1.1 6.4 9.1 9.8 9.0 21.5 34.3
Tax 2.8 2.9 1.5 -1.3 1.9 2.7 2.7 3.0 6.0 10.3
Rate (%) 36.2 33.7 25.1 -12.5 29.4 29.3 28.0 33.0 18.1 29.9
PAT 4.9 5.8 4.5 0.2 4.5 6.5 7.1 6.0 15.5 24.0
Change (%) -36.2 -14.0 18.8 -95.9 -8.9 11.3 55.1 3,022.1 -32.8 55.2
Adj. EPS (INR) 4.1 4.8 3.8 9.7 3.7 5.4 5.9 5.0 22.5 20.0
Key Assumptions (USD/bbl)
Exchange rate (INR/USD) 66.9 67.0 67.4 67.2 64.5 64.3 64.8 64.4 67.1 64.5
Gas Price (USD/bbl) 3.4 3.4 2.8 2.8 2.8 2.8 3.2 3.2 3.1 3.0
Gross Oil Realization 43.1 44.6 49.2 52.5 48.4 50.1 59.4 65.5 47.3 55.9
Subsidy - - - - - - - - - -
Net Oil Realization 43.1 44.6 49.2 52.5 48.4 50.1 59.4 65.5 47.3 55.9
Subsidy (INR b) - - - - - - - - - -
April 2018 260

March 2018
March 2018 Results
Results Preview
Preview || Sector:
Sector: Oil
Oil &
& Gas
Gas
ONGC
Bloomberg ONGC IN CMP: INR178 TP: INR222 (+25%) Buy
 We estimate gross and net realization at USD68.1/bbl, as we
M. Cap. (INR b)/(USD b) 2280 / 35
expect the entire subsidy to be borne by the government.
1,6,12 Rel Perf. (%) -4 / -2 / -16
 We estimate EBITDA at INR131b (v/s INR67b in 3QFY18 and
INR125b in 4QFY17), led by a rise in realization.
 We expect ONGC to report adjusted PAT of INR57b in 4QFY18 (v/s
Y/E March 2017 2018E 2019E 2020E
INR50b in 3QFY18 and INR43.4b in 4QFY17).
Sales 1,421 1,575 1,754 1,847
 Our Brent price assumption is USD57.4/bbl for FY18 and
EBITDA 471 635 721 769 USD60/bbl for FY19/20.
Adj. PAT 211 216 279 302  The stock trades at 7.6x FY20E EPS of INR23.5, with implied
Adj. EPS (INR) 16.4 16.8 21.8 23.5 dividend yield of ~5%. Maintain Buy.
EPS Gr. (%) 20.8 2.3 29.6 8.2
BV/Sh.(INR) 172.4 178.2 185.9 194.1
RoE (%) 10.1 9.6 12.0 12.4
RoCE (%) 8.5 8.5 10.1 10.3
Payout (%) 52.5 64.9 64.9 64.9
P/E (x) 10.8 10.6 8.2 7.5  DD&A charges
P/BV (x) 1.0 1.0 1.0 0.9  Oil & gas production volumes
EV/EBITDA (x) 5.4 4.0 3.5 3.3
 Development plan for KG Basin
Div. Yield (%) 4.2 5.2 6.8 7.4

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 176,704 182,866 199,338 217,140 190,735 189,649 229,959 239,846 776,048 850,189
YoY Change (%) -21.5 -11.1 9.2 33.7 7.9 3.7 15.4 10.5 0.1 9.6
EBITDA 92,761 95,391 102,898 67,252 98,807 104,692 125,247 131,117 358,302 459,863
Margins (%) 52.5 52.2 51.6 31.0 51.8 55.2 54.5 54.7 46.2 54.1
Depreciation 36,997 34,529 47,039 53,875 45,204 48,389 58,614 57,920 172,440 210,127
Interest 2,920 3,034 3,062 3,202 2,769 3,274 3,099 2,500 12,217 11,643
Other Income 10,668 12,920 9,727 45,195 8,544 19,315 11,265 14,205 78,511 53,329
PBT 63,512 70,748 62,524 55,371 59,378 72,343 74,800 84,902 252,155 291,422
Tax 21,186 20,999 19,001 11,969 20,530 21,036 24,653 28,298 73,155 94,516
Rate (%) 33.4 29.7 30.4 21.6 34.6 29.1 33.0 33.3 29.0 32
Reported PAT 42,325 49,749 43,523 43,402 38,847 51,307 50,147 56,604 179,000 196,905
Adj PAT 42,325 49,749 43,523 43,402 38,847 51,307 50,147 56,604 179,000 196,905
YoY Change (%) -21.2 2.7 3.3 -0.3 -8.2 3.1 15.2 30.4 -8.3 10.0
Margins (%) 24.0 27.2 21.8 20.0 20.4 27.1 21.8 23.6 23.1 23.2
Key Assumptions (USD/bbl)
Fx rate (INR/USD) 66.9 67.0 67.4 67.2 64.5 64.3 64.8 64.4 67.1 64.5
Gross Oil Realization 46.1 47.9 50.1 54.9 51.0 51.2 60.6 68.1 49.8 57.7
Subsidy 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net Oil Realization 46.1 47.9 50.1 54.9 51.0 51.2 60.6 68.1 49.8 57.7
Subsidy (INR b) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
E: MOSL Estimates
April 2018 261

March 2018
March 2018 Results
Results Preview
Preview || Sector:
Sector: Oil
Oil &
& Gas
Gas
Petronet LNG
Bloomberg PLNG IN CMP: INR232 TP: INR317 (+37%) Buy
 We model Dahej LNG volumes at 199tbtu, with 105% utilization,
M. Cap. (INR b)/(USD b) 348 / 5
and Kochi LNG volumes at 8.8tbtu, with 14% utilization in 4QFY18.
1,6,12 Rel Perf. (%) -2 / -6 / 1
 We expect PLNG to report PAT of INR5.4b (+15% YoY, +3% QoQ)
and EBITDA of INR8.2b (+34% YoY, -3% QoQ) for 4QFY18.
 PLNG’s long-term growth would depend on Dahej’s ramp-up and
Y/E March 2017 2018E 2019E 2020E
Kochi terminal’s pipeline connectivity.
Sales 246.2 286.0 289.5 332.9
 As against 15mmt capacity, PLNG has ~16mmt long-term take-or-
EBITDA 25.9 33.1 36.1 43.1 pay contracts.
Adj. PAT 17.1 21.0 24.0 28.3  The stock trades at 12.3x FY20E EPS of INR18.8. Maintain Buy.
Adj. EPS (INR) 11.4 14.0 16.0 18.8
EPS Gr. (%) 102.7 23.0 14.3 17.9 Key issues to watch for
BV/Sh.(INR) 54.0 64.0 75.5 89.1  Utilization at Dahej terminal
RoE (%) 23.2 23.7 22.9 22.9  Progress on Kochi-Mangalore pipeline
RoCE (%) 20.2 21.3 21.6 22.9  Spot volumes and marketing margin on spot volumes
Payout (%) 25.7 28.1 28.1 28.1
Valuation
P/E (x) 20.4 16.6 14.5 12.3
P/BV (x) 4.3 3.6 3.1 2.6
EV/EBITDA (x) 13.9 10.7 9.4 7.4
Div. Yield (%) 1.1 1.4 1.7 1.9

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 53,373 66,144 62,993 63,651 64,351 77,702 77,571 66,349 246,160 285,973
YoY Change (%) -36.3 -12.3 22.4 4.9 20.6 17.5 23.1 4.2 -9.3 16.2
EBITDA 6,425 7,264 6,071 6,163 7,442 8,987 8,474 8,236 25,923 33,139
Margins (%) 12.0 11.0 9.6 9.7 11.6 11.6 10.9 12.4 10.5 11.6
Depreciation 806 860 1,009 1,016 1,027 1,039 1,039 1,118 3,691 4,222
Interest 556 554 517 469 465 465 367 306 2,097 1,601
Other Income 494 915 550 1,508 707 1,019 414 944 3,466 3,084
PBT 5,556 6,765 5,095 6,186 6,658 8,504 7,482 7,757 23,602 30,400
Tax 1,777 2,170 1,121 1,478 2,282 2,616 2,194 2,327 6,545 9,419
Rate (%) 32 32 22 24 34 31 29 30 28 31
PAT 3,779 4,596 3,975 4,708 4,376 5,888 5,288 5,430 17,057 20,981
YoY Change (%) 115.8 84.7 122.8 96.8 15.8 28.1 33.0 15.3 102.7 23.0
Margins (%) 7.1 6.9 6.3 7.4 6.8 7.6 6.8 8.2 6.9 7.3
Key Assumptions
Regas volume (tbtu) 50.1 60.7 75.3 71.1 80.5 79.0 92.0 94.3 257.1 345.8
Sales volume (tbtu) 118.1 128.2 116.1 108.9 111.1 141.0 131.0 113.6 471.2 496.8
E: MOSL Estimates
April 2018 262

March 2018
March 2018 Results
Results Preview
Preview || Sector:
Sector: Oil
Oil &
& Gas
Gas
Reliance Industries
Bloomberg RIL IN CMP: INR899 TP: INR1,134 (+26%) Buy
 We expect RIL to report GRM of USD11.4/bbl v/s USD11.6/bbl in
M. Cap. (INR b)/(USD b) 5319 / 82
3QFY18 and USD11.5/bbl in 4QFY17. We model a premium of
1,6,12 Rel Perf. (%) -3 / 7 / 20
USD4.4/bbl over benchmark GRM of USD7.0/bbl (up 9% YoY –but
down 3% QoQ).
 Petchem segment is expected to do better due to healthy deltas
Y/E March 2017 2018E 2019E 2020E
and strong volume growth in the segment.
Net Sales 3,054 4,040 5,311 5,567  We expect RIL to report consolidated EBITDA of INR183b v/s
EBITDA 462 641 782 847 INR176b in 3QFY18 and INR122b in 4QFY17.
Net Profit 299 362 401 462  We expect RIL to report consolidated PAT of INR95b (up 18% YoY
Adj. EPS (INR) 50.5 61.1 67.7 78.0 and 1% QoQ).
EPS Gr. (%) 0.5 20.9 10.9 15.2  RIL trades at 11.5x FY20E adjusted EPS of INR78. Core segment
BV/Sh. (INR) 445.6 496.8 563.7 632.3 performance is expected to be strong going forward. Positive
RoE (%) 12.1 13.0 12.8 13.0 developments in the telecom business would drive growth further
RoCE (%) 7.2 8.1 8.1 8.7 for the company. Maintain Buy.
Payout (%) 12.5 14.8 13.2 0.0
P/E (x) 17.8 14.7 13.3 11.5  GRM
P/BV (x) 2.0 1.8 1.6 1.4  Petchem margins
EV/EBITDA (x) 16.2 11.6 8.7 7.6
 Progress on remaining core expansions
EV/Sales (x) 2.4 1.8 1.3 1.2
 Update on telecom venture
Consolidated - Quarterly Earning Model (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 649,900 761,610 794,080 848,230 834,710 914,810 998,100 1,128,503 3,053,820 3,876,123
YoY Change (%) -15.2 8.3 17.6 42.1 28.4 20.1 25.7 33.0 11.4 26.9
EBITDA 112,110 111,460 115,010 122,280 125,540 155,650 175,880 183,547 460,860 640,617
Margins (%) 17.3 14.6 14.5 14.4 15.0 17.0 17.6 16.3 15.1 16.5
Depreciation 27,250 27,740 27,930 33,540 30,370 42,870 45,300 42,693 116,460 161,233
Interest 12,060 8,830 12,040 5,560 11,190 22,720 20,950 13,795 38,490 68,655
Other Income 23,780 23,930 27,360 19,360 32,250 23,310 22,180 11,168 94,430 88,908
PBT 96,580 98,820 102,400 102,540 116,230 113,370 131,810 118,227 400,340 479,637
Tax 25,810 27,030 27,160 22,010 25,440 32,400 37,750 22,830 102,010 118,420
Rate (%) 26.7 27.4 26.5 21.5 21.9 28.6 28.6 19.3 25.5 24.7
Minority Interest 0 0 0 0 0 0 -390 -290 0 -680
Reported PAT 70,770 71,790 75,240 80,530 90,790 80,970 94,450 95,397 298,330 361,607
Adj PAT 70,770 71,790 75,240 80,530 90,790 80,970 94,450 95,687 298,330 361,897
YoY Change (%) 17.5 11.6 3.9 11.5 28.3 12.8 25.5 18.8 10.1 21.3
Margins (%) 10.9 9.4 9.5 9.5 10.9 8.9 9.5 8.5 9.8 9.3
E: MOSL Estimates
April 2018 263

Retail
Company name Double-digit sales growth likely again for sector players
Jubilant Foodworks EBITDA and PAT to grow significantly
PC Jeweller
Titan Company
All three companies under our coverage likely to report strong numbers
We expect our Retail Universe to report healthy revenue growth of 17.3% YoY in
4QFY18. EBITDA is expected to increase by 45.1% YoY and adj. PAT by 61.4% YoY.
For Titan (TTAN), despite a high base (43% sales growth in 4QFY17), the jewelry
segment sales are likely to come in healthy and in line with management
expectations. Sales in the watches segment are also recovering, according to
management commentary in the last earnings call. We forecast healthy sales and
EBITDA growth of 17.7% YoY, while PAT growth is likely to be 49.5% YoY in 4QFY18.
As the blended EBITDA margin in the base quarter was unusually low at 7.9%, we
expect higher PAT growth relative to sales growth. Lower tax rates YoY are also
likely to boost PAT.
PC Jeweler (PCJ) is expected to report another quarter of healthy sales (+20% YoY) in
the domestic jewelry business, despite a high base. Thus, despite a likely decline in
exports because of the impact on new indirect taxes in the Gulf region, overall sales
growth is likely to be ~18%. With faster growth in the domestic business (led by
healthy same-store sales growth), the EBITDA margin for PCJ is likely to expand
170bp YoY to 9.9% in 4QFY18. Consequently, EBITDA is expected to grow by an
impressive 38.9% YoY and adj. PAT by 49.2% YoY.
For Jubilant Foodworks (JUBI), we expect sales to increase 22.8% YoY, with same-
store sales (SSS) up 20% YoY. Base quarter 4QFY17 had witnessed a 7.5% decline in
SSS. Thus, a favourable base and initiatives undertaken by the company should
result in high SSS growth. With SSS growth well above cost increases, the margins
are expected to expand sharply by 740bp YoY, resulting in more than doubling of
EBITDA and quadrupling of PAT from that in the year-ago period, when PAT had
declined 46.3% YoY.
We prefer the jewelry plays given huge growth opportunity for organized players
We continue maintaining our Buy rating on both TTAN and PCJ. In FY17, TTAN and
PCJ accounted for only ~8% of the INR2t jewelry market. Regulations governing the
segment, including identity proofs for all transactions over INR 200,000, GST
implementation and crackdown on black money, have tilted trade decisively in favor
of organized players, among which TTAN and PCJ are the dominant players in terms
of scale and trust. Earnings CAGR is likely to be very impressive for both companies
at around 30% over FY17-20.
While we like JUBI’s business model with strong earnings growth potential on a
recovery, poor visibility of double-digit SSSG beyond the near term (which is aided
by a weak base), as well as expensive valuations of 59.3x FY19E EPS and 45.1x FY20E
EPS (despite 70% EPS CAGR assumption over FY17-20), makes us vary of turning
constructive.
Krishnan Sambamoorthy – Research Analyst (Krishnan.Sambamoorthy@MotilalOswal.com); +91 22 6129 1545
Vishal Punmiya – Research Analyst (Vishal.Punmiya@MotilalOswal.com); +91 22 6129 1547
April 2018 264
March 2018 Results Preview | Sector: Retail

Retail
Jubilant Foodworks 2,330 Neutral 7,524 22.8 -5.4 1,304 115.5 -4.7 617 313.4 -6.5
PC Jeweller 313 Buy 24,818 15.0 -6.2 2,456 38.9 -8.7 1,642 49.2 0.9
Titan Company 933 Buy 40,384 17.7 -5.5 3,631 33.4 -14.0 3,033 49.5 7.6
Sector Aggregate 72,726 17.3 -5.7 7,390 45.1 -10.8 5,292 61.4 3.6
Source: Company, MOS
Exhibit 2: Tanishq’s LTL sales grew 12% in 3QFY18 Exhibit 3: Tanishq’s jewelry grammage grew 6% in 3QFY18
Tanishq- LTL Growth (%) Jewelry volume growth (%)

68.0
52.0 51.0 75.0
30.0 49.0 49.0
18.0 37.0
15.0 28.0
6.0 4.0 12.0
(8.0) (12.0) (5.0)3.0 15.0
4.0
(15.0) (13.0) (2.0) 6.0
(25.0) (11.0) (10.0)
(40.0) (21.0) (24.0) 25.0
6.0
(10.0)
(32.0)
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
Exhibit 4: Gold prices up 4.5% YoY in 4QFY18

Average gold price (INR/10 gm) Gold price change YoY (%)
20.4
10.2 13.0
(0.1) 4.3 3.5 3.9 0.4 4.5
(4.9) (5.7) (6.8) (2.9) (2.7) (6.7)
(12.8) (10.2)
29,924
28,401
27,690
26,561
26,867
26,793
25,810
25,780
27,805
29,539
31,066
29,137
28,892
28,751
28,983
29,248
30,188
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
Exhibit 5: JUBI’s SSS is expected to grow 20% in 4QFY18 Exhibit 6: Domino’s is expected to add 13 stores in 4QFY18
SSS Growth (%) Dominos stores

1,127
1,125
1,125
1,117
1,107
1,081
1,049
1,026
990
950
16.1
17.8
911
876
7.7
6.3
6.6
1.9
6.6
4.6
3.2
2.0
2.9
4.2
6.5
5.5
838
797
761
726
679
632
602
576
552
(2.6)
(3.4)
(2.4)
(5.3)
(3.2)
(3.3)
(7.5)
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
April 2018 265

Exhibit 7: Relative performance – three months (%) Exhibit 8: Relative performance – one-year (%)
Sensex Index MOSL Retail Index Sensex Index MOSL Retail Index
240
113
210
106
180
99
150
92 120
85 90
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Mar-18
Sep-17
Jan-18
Feb-18
Oct-17
Dec-17
Jan-18
Feb-18
Mar-18

Retail
Jubilant Foodworks 2,330 Neutral 30.3 39.3 51.6 76.8 59.3 45.1 33.5 27.4 22.1 22.5 29.8 41.7
PC Jeweller 313 Buy 15.4 19.5 24.9 20.3 16.0 12.6 11.9 9.2 7.5 16.9 18.4 20.1
Titan Company 933 Buy 12.5 15.9 19.8 74.4 58.6 47.2 53.3 41.4 33.3 23.4 25.9 30.3
April 2018 266

Jubilant Foodworks
Bloomberg JUBI IN
CMP: INR2,330 TP: INR2,185 (-6%) Neutral
 We expect JUBI’s revenue to grow by 22.8% YoY to INR7.5b in
M. Cap. (INR b)/(USD b) 153 / 2
4QFY18.
1,6,12 Rel Perf. (%) 18 / 59 / 100  SSSG is likely to be 20% for the quarter on a base of 7.5% decline.
 We anticipate addition of 13 Domino’s stores this quarter.
Y/E March 2017 2018E 2019E 2020E  Gross margin is likely to contract by 220bp to 74.7%.
Sales 25.8 29.5 34.2 40.0  We expect EBITDA margin to expand by 750bp YoY to 17.3%, and
EBITDA 2.4 4.5 5.5 6.6
EBITDA to grow by 115.5% YoY to INR1.3b.
Adj. PAT 0.6 2.0 2.6 3.4
Adj. EPS (INR) 10.6 30.3 39.3 51.6  We estimate adj. PAT to grow by 313.4% YoY to INR617m.
EPS Gr. (%) -28.0 186.2 29.6 31.3  The stock trades at 59.3x/45.1x FY19E/20E EPS of
BV/Sh.(INR) 122.1 134.8 132.1 123.7
INR39.3/INR51.6. Maintain Neutral.
RoE (%) 8.7 22.5 29.8 41.7
RoCE (%) 8.9 23.6 29.4 40.3
Payout (%) 23.6 36.3 89.0 96.8 Key issues to watch for:
Valuations  Demand outlook for QSR and Pizza space, as well as
P/E (x) 219.9 76.8 59.3 45.1 competition.
P/BV (x) 19.1 17.3 17.6 18.8  Benefits of cost-saving efforts.
EV/EBITDA (x) 63.2 33.6 27.5 22.2  Performance of Dunkin Donuts and margin guidance.
Div. Yield (%) 0.1 0.5 1.5 2.1
Quarterly Standalone Performance

Y/E March FY17 FY18
No of Stores 1049 1081 1107 1117 1125 1125 1127 1140 1117 1140
LTL Growth (%) -3.2 4.2 -3.3 -7.5 6.5 5.5 17.8 20.0 -2.5 12.5
Net Sales 6,089 6,655 6,588 6,128 6,788 7,266 7,952 7,524 25,833 29,530
YoY Change (%) 6.7 13.3 3.9 -0.9 11.5 9.2 20.7 22.8 7.2 14.3
Gross Profit 4,675 4,979 4,938 4,710 5,183 5,388 5,926 5,619 19,526 22,116
Gross Margin (%) 76.8 74.8 74.9 76.9 76.4 74.1 74.5 74.7 75.6 74.9
Other Expenses 4,098 4,336 4,297 4,104 4,387 4,366 4,557 4,315 17,115 17,625
EBITDA 577 643 641 605 796 1,022 1,369 1,304 2,411 4,490
EBITDA Growth % -14.2 6.4 -11.9 -15.1 37.8 59.0 113.7 115.5 -11.3 86.2
Margins (%) 9.5 9.7 9.7 9.9 11.7 14.1 17.2 17.3 9.3 15.2
Depreciation 326 366 381 438 462 326 393 455 1,554 1,636
Other Income 31 43 35 36 30 36 33 77 147 177
PBT 282 320 295 203 364 733 1,009 926 1,004 3,031
Tax 92 104 95 53 125 248 349 309 305 1,031
Rate (%) 32.7 32.5 32.2 26.4 34.4 33.8 34.6 33.3 30.4 34.0
Adjusted PAT 190 216 200 149 238 485 660 617 699 2,001
YoY Change (%) -31.1 -1.3 -31.9 -46.3 25.6 124.8 230.6 313.4 -34.4 186.2
E: MOSL Estimates
April 2018 267

PC Jeweller
Bloomberg PCJL IN
 We expect PCJ’s revenue to grow by 15% YoY in 4QFY18 to
M. Cap. (INR b)/(USD b) 123 / 2
INR24.8b, led by strong SSSG in the domestic business.
1,6,12 Rel Perf. (%) -4 / -17 / 38  Store additions are likely to be lower this quarter than earlier
expectations.
 Gross margins are likely to expand 150bp YoY to 13.7%.
Y/E March FY17 FY18E FY19E FY20E
Sales 84.8 103.6 124.1 149.9  We expect EBITDA margin to expand by 170bp YoY to 9.9%, and
EBITDA 7.6 10.4 12.7 15.5 EBITDA to grow by 38.9% YoY to INR2.5b.
NP 4.2 6.1 7.7 9.8
EPS (Rs) 10.7 15.4 19.5 24.9  We estimate adj. PAT to grow by 49.2% to INR1.6b.
EPS Growth (%) 5.7 44.4 26.6 27.6
BV/Share (Rs) 85.0 98.0 113.9 134.0  The stock trades at 16x/12.6x FY19E/20E EPS of INR19.5/INR24.9.
RoE (%) 14.6 16.9 18.4 20.1 Maintain Buy.
RoCE (%) 16.9 17.8 18.8 20.2
Valuation
P/E (x) 29.3 20.3 16.0 12.6
Key issues to watch for:
P/BV (x) 3.7 3.2 2.7 2.3  Pace of shift from unorganized to organized.
EV/EBITDA (x) 15.6 11.6 9.3 7.5  Outlook and same-store sales growth guidance.
EV/Sales (x) 1.4 1.2 0.9 0.8

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 16,645 21,746 21,074 21,581 21,185 26,223 26,449 24,818 81,046 98,676
YoY Change (%) 10.2 30.2 -3.4 15.3 27.3 20.6 25.5 15.0 12.1 21.8
Gross Profit 2,658 2,419 2,601 2,644 3,060 3,497 3,695 3,412 10,322 13,663
Margins (%) 16.0 11.1 12.3 12.3 14.4 13.3 14.0 13.7 12.7 13.8
EBITDA 2,057 1,787 1,767 1,769 2,332 2,785 2,689 2,456 7,379 10,262
YoY Change (%) 22.0 -8.9 -20.6 6.7 13.4 55.9 52.2 38.9 -2.0 39.1
Margins (%) 12.4 8.2 8.4 8.2 11.0 10.6 10.2 9.9 9.1 10.4
Depreciation 50 55 56 59 49 49 53 60 220 211
Interest 636 710 699 702 596 764 816 500 2,747 2,676
Other Income 101 504 139 508 215 207 455 450 1,252 1,327
PBT 1,472 1,527 1,150 1,515 1,901 2,178 2,276 2,346 5,664 8,701
Tax 406 457 81 415 543 672 649 704 1,359 2,568
Rate (%) 27.6 30.0 7.0 27.4 28.6 30.9 28.5 30.0 24.0 29.5
Adj PAT 1,066 1,069 1,070 1,101 1,358 1,506 1,627 1,642 4,305 6,133
YoY Change (%) 31.2 16.3 -27.4 39.7 27.4 40.8 52.1 49.2 7.8 42.5
Margins (%) 6.4 4.9 5.1 5.1 6.4 5.7 6.2 6.6 5.3 6.2
E: MOSL Estimates
April 2018 268

Titan Company
Bloomberg TTAN IN CMP: INR933 TP: INR1090 (+16%) Buy
 We expect TTAN’s revenue to increase 17.7% YoY to INR40.3b.
M. Cap. (INR b)/(USD b) 828 / 13
52-Week Range (INR) 963 / 456  We factor in EBITDA growth of 33.4% YoY for 4QFY18, with
1,6,12 Rel Perf. (%) 17 / 50 / 91 underlying margin expansion of 100bp YoY to 9% off a low base in
4QFY17.
 Adj. PAT is expected to grow by 49.5% YoY to INR3.0b.
Y/E March 2017 2018E 2019E 2020E
EBITDA 11.6 15.5 19.7 24.4 INR15.9/INR19.8. Maintain Buy.
Adj. PAT 7.0 11.1 14.1 17.5
Adj. EPS (INR) 9.0 12.5 15.9 19.8
EPS Gr. (%) 18.5 38.8 27.0 24.1
BV/Sh.(INR) 48.0 59.1 63.8 66.6
RoE (%) 20.6 23.4 25.9 30.3
RoCE (%) 21.0 24.0 26.5 31.0
Payout (%) 39.7 50.0 70.0 85.0
Valuation
P/E (x) 103.3 74.4 58.6 47.2
P/BV (x) 19.4 15.8 14.6 14.0
EV/EBITDA (x) 70.6 52.6 41.2 33.1
Key issues to watch for:
Div. Yield (%) 0.4 0.7 1.2 1.8
 Pace of shift from unorganized to organized.
 Update on Prevention of Money Laundering Act (PMLA)
regulations, specifically for the jewellery sector.
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 28,026 26,799 39,484 34,297 39,851 34,731 42,748 40,384 129,789 157,715
YoY Change (%) 4.3 1.0 16.2 43.4 42.2 29.6 8.3 17.7 16.6 21.5
Total Exp 25,157 24,157 35,998 31,576 36,202 30,750 38,524 36,753 118,234 142,230
EBITDA 2,869 2,643 3,486 2,721 3,649 3,981 4,224 3,631 11,555 15,485
EBITDA Growth % 43.8 44.4 24.0 30.3 27.2 50.6 21.2 33.4 32.4 34.0
Margins (%) 10.2 9.9 8.8 7.9 9.2 11.5 9.9 9.0 8.9 9.8
Depreciation 263 278 289 224 295 310 349 242 1,105 1,196
Interest 88 120 79 82 108 145 109 75 377 437
Other Income 134 107 166 273 283 446 213 308 705 1,250
PBT 2,652 2,351 3,283 2,687 3,529 3,972 3,979 3,622 10,777 15,101
Tax 468 660 952 658 1,038 1,189 1,159 589 2,760 3,975
Rate (%) 17.7 28.1 29.0 24.5 29.4 29.9 29.1 16.3 25.6 26.3
Adjusted PAT 2,184 1,691 2,331 2,029 2,491 2,783 2,820 3,033 8,017 11,127
YoY Change (%) 44.1 15.6 3.1 8.6 14.1 64.6 21.0 49.5 12.8 38.8
E: MOSL Estimates
April 2018 269

March 2018 Results Preview | Sector: Technology
Technology
Our recent IT sector update
Looking on expectantly
Gradual growth uptick, tier-2’s outperformance to sustain
Expect the gradual, albeit marginal, growth uptick to continue

 Our recent report on the sector discussed the cyclical impetus in CY18 that is
likely to drive some revenue acceleration in FY19, even as the structural
challenges prevail. A strong exit from FY18 will only fuel that thesis further,
especially given the usual weakness associated with 4Q, with client focus on
freezing budgets for the best part of 4Q’s first month and a half.
 “Strong”, therefore, should be taken in that context – whereby sequential
growth will be contained, but YoY trajectory may continue to inch up. We expect
such acceleration in INFO, TCS and TECHM, and also organically for WPRO –
across our top-tier universe. Corresponding aggregate QoQ growth is pegged at
Company Name 2.9% (~2% in constant currency and 80-120bp tailwind from cross currency).
Cyient TCS, with its recent deal wins, and HCLT, with anticipated IMS recovery, should
HCL Tech lead the pack at 2-2.2% QoQ CC revenue growth.
Hexaware
Infosys Tier-2’s outperformance to sustain (ex-PSYS)
 We expect aggregate USD revenue growth of 3.5% QoQ across tier-2 IT, 60bp
KPIT Tech
higher than tier-1, despite modeling 5% QoQ decline in PSYS revenues (post the
L&T Infotech
company’s update of anticipated 8m decline in IP revenues).
Mindtree  This will be led by: [1] Cyient (+8.8% QoQ), where boost will come from
Mphasis Rangsons, [2] LTI (+4% QoQ), which should continue delivering on its
NIIT Tech expectation of better 2H v/s 1H, and [3] MTCL (+4.3% QoQ), where the revenue
Persistent performance is expected to be similar to 3Q. While ZENT should continue
demonstrating recovery on multiple fronts (US, IMS, Digital Consumer), the
Tata Elxsi
focus away from MVS and products in IMS may weigh on overall revenue.
TCS
TechM Margin movement to be range-bound, except for TECHM, PSYS, MTCL and
Wipro KPIT
Zensar While cross-currency movements will rub off positively across the board, the INR,
which is a key determinant of margins, has not moved significantly. As a result,
barring company-specific turnarounds such as TECHM (+110bp QoQ), MTCL (+90bp
QoQ) and KPIT (+80bp QoQ), we expect margins to be range-bound. Performance
will be the worst at PSYS, given the softness in IP-led revenues, which flow directly
down to profits.
Ashish Chopra – Research analyst (Ashish.Chopra@MotilalOswal.com); +91 22 6129 1530

Sagar Lele – Research analyst (Sagar.Lele@MotilalOswal.com); +91 22 6129 1531
April 2018 270
Watch out for INFO’s guidance, TCS’ margin outlook and sector’s
commentary on deals, BFS
 Guidance for FY19 will understandably supersede the performance of 4Q, and
all eyes will be on INFO come 13th April. We expect INFO to start the year by
guiding for 6-8% growth in constant currency (which will be higher in reported
dollar), and are currently pegging our estimate at the higher end of that band.
 Traditional pain points of 1Q seasonality no longer hold for WPRO, and with
weaker areas such as Healthcare and Communications having seen their
bottom, there is a good reason to expect better 1Q guidance than earlier years.
However, there is a risk of offset from client-specific factors like the Energy
account in 3Q. We expect 1QFY19 guidance of 1-3% QoQ CC.
 Apart from quantitative guidance, TCS’ commentary on BFS and margins will be
crucial, as softness in both is a downside risk to current valuations.
Opportunities despite valuation catch-up; we prefer INFO, TECHM, CYL,

ZENT and PSYS
 Post the sector’s outperformance to the index by as much as 19% since
November 2017, valuations are not cheap, as reflected by the fact that: [1] IT
index's discount to Sensex has almost been eliminated to 2.3%, compared to 10-
year average of ~8%, and [2] almost all companies in our coverage universe are
trading above their 10-year average.
 That said, given the benchmarks in valuation set by similar growth companies
such as CTSH and ACN, we believe that there are bottom-up opportunities to
capitalize on momentum improvement. Our top picks are a function of [1]
tactical opportunities from valuation mismatches, which should catch up
gradually with performance (INFO, CYL), and [2] a turnaround of
revenue/margin trajectory, making a case for both earnings growth and
valuation multiples (TECHM, ZENT, PSYS).

Technology CMP (INR) RECO Mar-18 Mar-18 Mar-18
Cyient 680 Buy 10,644 13.1 8.2 1,455 16.5 1.7 1,078 37.3 -0.7
HCL Technologies 968 Neutral 132,016 9.5 3.1 30,547 15.3 3.1 23,477 15.9 7.0
Hexaware Tech. 416 Neutral 10,414 8.4 3.6 1,662 2.4 3.9 1,316 15.5 8.6
Infosys 1,140 Buy 181,318 5.9 1.9 49,266 5.8 2.3 38,097 5.7 3.0
KPIT Tech. 223 Neutral 9,328 8.7 2.2 1,083 24.4 9.5 730 35.9 18.0
L&T Infotech 1,418 Buy 19,648 17.1 4.3 3,353 5.1 4.3 3,373 32.4 19.2
Mindtree 801 Buy 14,385 9.1 4.4 2,293 22.7 10.6 1,665 71.3 17.7
MphasiS 855 Neutral 17,412 15.6 4.9 2,959 24.1 7.9 2,492 28.8 15.9
NIIT Tech. 883 Neutral 7,738 7.8 2.3 1,387 10.1 7.0 818 10.7 8.0
Persistent Systems 677 Buy 7,491 3.0 -5.4 951 -27.0 -30.9 704 -16.4 -23.2
Tata Elxsi 1,005 Buy 3,717 14.0 7.6 929 22.6 -0.6 607 36.3 -3.4
TCS 2,908 Neutral 318,372 7.4 3.0 86,348 6.2 4.2 68,590 3.8 5.0
Tech Mahindra 617 Buy 80,159 7.0 3.1 13,879 54.4 9.7 9,575 62.9 1.5
Wipro 284 Neutral 139,774 -0.1 2.3 28,913 3.8 2.9 21,612 11.7 11.6
Zensar Tech 901 Buy 8,143 9.6 2.6 1,096 87.2 3.9 688 562.9 19.8
April 2018 271

Exhibit 2: Double-digit growth driven by cross-currency tailwinds; everyone in single-digits on a CC basis

Revenue (USD m) Revenue (INR b)
Company 4QFY18E 4QFY17 YoY (%) 3QFY18 QoQ (%) 4QFY18E 4QFY17 YoY (%) 3QFY18 QoQ (%)
TCS 4,946 4,452 11.1 4,787 3.3 318 296 7.4 309 3.0
Infosys 2,817 2,569 9.7 2,755 2.3 181 171 5.9 178 1.9
Wipro 2,063 1,955 5.5 2,013 2.5 140 140 (0.1) 137 2.3
HCLT 2,051 1,817 12.9 1,988 3.2 132 121 9.5 128 3.1
TECHM 1,245 1,131 10.1 1,209 3.0 80 75 7.0 78 3.1
Aggregate 13,122 11,924 10.1 12,752 2.9 852 803 6.1 830 2.7
EBITDA Margin (%) PAT (INR b)
Company 4QFY18E 4QFY17 YoY (bp) 3QFY18 QoQ (bp) 4QFY18E 4QFY17 Yoy (%) 3QFY18 QoQ (%)
TCS 27.1 27.4 (30) 26.8 30 69 66 3.8 65 5.0
Infosys 27.2 27.2 - 27.1 10 38 36 5.7 37 3.0
Wipro 20.7 19.9 80 20.6 10 22 19 11.7 19 11.6
HCLT 23.1 22.0 120 23.1 - 23 23 0.8 22 7.0
TECHM 17.3 12.0 530 16.3 110 10 6 62.9 9 1.5
Aggregate 24.5 23.8 70 24.3 30 161 151 7.1 153 5.4
Exhibit 3: Tier-II in significantly better shape on revenue growth

Revenue (USD m) Revenue (INR b)
Company 4QFY18E 4QFY17 YoY (%) 3QFY18 QoQ (%) 4QFY18E 4QFY17 YoY (%) 3QFY18 QoQ (%)
Persistent Systems 116 109 6.7 123 (5.0) 7.5 7.3 3.0 7.9 (5.4)
Hexaware 162 145 11.8 156 3.6 10.4 9.6 8.4 10.0 3.6
KPIT Tech. 145 128 13.0 141 2.8 9.3 8.6 8.7 9.1 2.2
Mindtree 223 196 14.3 214 4.3 14.4 13.2 9.1 13.8 4.4
Mphasis 260 222 17.5 252 3.4 17.4 15.1 15.6 16.6 4.9
Cyient 165 141 17.3 152 8.8 10.6 9.4 13.1 9.8 8.2
NIIT Tech 120 104 15.4 115 4.4 7.7 7.2 7.8 7.6 2.3
Zensar 127 112 13.2 123 3.2 8.1 7.4 9.6 7.9 2.6
LTI 305 254 20.1 294 4.0 19.6 16.8 17.1 18.8 4.3
Aggregate 1,624 1,410 15.2 1,569 3.5 105.2 94.5 11.3 101.7 3.5
EBITDA margin (%) PAT (INR b)
Company 4QFY18E 4QFY17 YoY (bp) 3QFY18 QoQ (bp) 4QFY18E 4QFY17 YoY (%) 3QFY18 QoQ (%)
Persistent Systems 12.7 17.9 (520) 17.4 (470) 0.7 0.8 (16.4) 0.9 (23.2)
Hexaware 16.0 16.9 (90) 15.9 - 1.3 1.1 15.5 1.2 8.6
KPIT Tech. 11.6 10.1 150 10.8 80 0.2 0.1 150.1 0.2 45.3
Mindtree 15.9 14.2 180 15.1 90 1.7 1.0 71.3 1.4 17.7
Mphasis 17.0 15.8 120 16.5 50 2.5 1.9 28.8 2.2 15.9
Cyient 13.7 13.3 40 14.6 (90) 1.1 0.8 37.3 1.1 (0.7)
NIIT Tech 17.9 17.6 40 17.1 80 0.8 0.7 10.7 0.8 8.0
Zensar 13.5 7.9 560 13.3 20 0.7 0.1 562.9 0.6 19.8
LTI 17.1 19.0 (200) 17.1 - 2.7 2.5 6.7 2.8 (3.9)
Aggregate 15.4 15.2 30 15.5 (10) 11.7 9.2 28.0 11.1 5.5
Exhibit 4: Improvement from the seasonally weak 3Q (QoQ, CC %)
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18
8.0
6.0
4.0 3.4
2.2 2.7
2.1 1.9 1.7 1.7 2.0
1.0 1.5 1.5 1.3 1.5
2.0 0.9
0.0
0.0
-2.0
TCS INFO WPRO HCLT TECHM
April 2018 272

Exhibit 5: YoY traction seen improving for TCS, INFO and TECHM (Revenue YoY CC, %)
Revenue YoY CC (%)
15.8
12.0
10.3
10.8
14.0
12.4
15.0
12.0
15.8
13.6
11.4
13.1
14.1
16.1
12.3
10.3
10.6
22.6
18.9
14.7
12.6
12.1
11.0
9.8
9.9
6.8
8.4
7.3
6.1
6.9
6.1
7.4
8.9
7.4
5.3
6.4
4.6
5.8
7.4
8.3
8.4
6.0
7.6
9.5
7.2
6.3
5.3
3.5
2.9
3.2
3.0
9.2
8.1
9.1
5.9
6.0
8.1
8.1
5.0
5.6
TCS INFO WPRO HCLT TECHM
Exhibit 6: Significant cross-currency tailwinds this quarter

TCS Infosys Wipro HCL Tech Tech Mahindra Cross currency tailwind (bp)
200 150
Incremental revenue (USD m)
130
120
150 110 110
100
100 80 80
70
60
50 50 50
30
20
0
-50
NITEC
TCS
MPHL
KPIT
CYL
INFO
MTCL
PSYS
TECHM
WPRO
LTI
HEXW
ZENT
HCLT
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
Exhibit 7: YoY margin improvement seen in HCLT, WPRO and TECHM (EBITDA margin, %)
27.8 27.4 28.0 27.2

27.1 27.2
28
23.1
24 22.2 22.0
20.6 19.9 20.7
20
16.9 17.3
16
12
TCS Infosys HCL Tech Wipro Tech Mahindra
Exhibit 8: Upward traction seen in all Tier-II vendors other than PSYS, HEXW and KPIT (revenue growth, YoY, USD, %)
2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18

20.1
17.5 17.3
14.3 15.4
11.8 13.0 13.2
6.7
Persistent Hexaware KPIT Tech. Mindtree Mphasis Cyient NIIT Tech Zensar LTI
Systems
April 2018 273

Exhibit 9: 4QFY18 currency highlights (INR)

Rates (INR) Change (QoQ)
USD EUR GBP AUD USD EUR GBP AUD
Average 64.34 79.0 89.6 50.6 -0.6% 3.7% 4.2% 1.7%
Closing 65.18 80.8 91.6 50.2 -2.5% -0.7% -1.3% -2.4%
Exhibit 10: 4QFY18 currency highlights (in USD)
Rates (USD) Change (QoQ)
EUR GBP AUD EUR GBP AUD
Average 1.23 1.39 0.79 4.3% 4.8% 2.2%
Closing 1.23 1.40 0.77 2.7% 3.7% -1.7%
Exhibit 11: Cross currencies: Assumed rates v/s actual

Guided at EUR GBP AUD INR/USD
Infosys 1.09 1.30 0.75 nm
Wipro 1.18 1.33 0.76 64.49
Actual (Average) 1.23 1.39 0.79 64.34
Change (%) EUR GBP AUD INR/USD

Infosys 12.7% 7.0% 4.8% nm
Wipro 4.1% 4.6% 3.4% -0.2%
Exhibit 12: Relative performance—3m (%) Exhibit 13: Relative performance—1Yr (%)
Sensex Index MOSL Technology Index Sensex Index MOSL Technology Index
115 130
110 120
105 110
100 100
95 90
Dec-17
Jan-18
Feb-18
Mar-18
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17

Company Rating EPS (INR) P/E (x) RoE (%) FY18-20E CAGR (%)
FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E USD rev. EPS
TCS Neutral 131.8 147.1 161.3 22.1 19.8 18.0 30.7 32.8 31.3 8.9 10.6
Infosys Buy 65.4 71.2 79.2 17.4 16.0 14.4 24.6 23.2 23.2 8.7 10.1
Wipro Neutral 17.9 18.8 21.1 15.8 15.1 13.4 17.2 17.0 16.9 6.9 8.6
HCL Tech Neutral 63.4 66.3 71.6 15.3 14.6 13.5 25.7 24.4 24.0 8.9 6.3
TechM Buy 40.2 42.8 49.8 15.3 14.4 12.4 20.9 20.1 20.2 10.5 11.3
Mphasis Neutral 44.0 50.8 54.9 19.5 16.8 15.6 15.3 18.8 18.6 11.2 11.7
LTI Buy 66.3 73.3 86.3 21.4 19.4 16.4 32.4 28.4 27.1 13.9 14.1
Mindtree Buy 33.4 41.7 48.8 24.0 19.2 16.4 20.3 24.4 24.9 11.8 20.8
KPIT Tech Neutral 12.5 13.5 17.5 17.8 16.5 12.8 14.9 14.0 15.6 7.5 18.0
Cyient Buy 37.0 38.1 42.9 18.4 17.8 15.8 17.8 16.7 17.1 12.6 7.6
Hexaware Neutral 16.6 18.7 21.0 25.1 22.2 19.8 26.9 26.1 25.6 12.8 12.6
NIIT Tech Neutral 44.8 53.1 61.6 19.7 16.6 14.3 16.2 17.8 19.2 9.6 17.2
Persistent Buy 40.0 50.3 60.2 16.9 13.5 11.3 16.5 20.0 23.3 10.9 22.7
Zensar Buy 51.9 63.1 82.6 17.4 14.3 10.9 15.0 16.2 18.5 12.7 26.1
April 2018 274

March
March 2018
2018 Results
Results Preview
Preview || Sector:
Sector: Technology
Technology
Cyient
Bloomberg CYL IN CMP: INR680 TP: INR675 (-1%) Buy
 We expect CYL’s USD revenue to grow 8.8% QoQ in 4QFY18.
 In the core services business, CYL’s revenue is expected to
1,6,12 Rel Perf. (%)
increase by 2.5% QoQ. Due to appreciation in EUR/USD and
9 / 28 / 34
AUD/USD, we expect a cross-currency tailwind of 150bp for CYL.
 Rangsons is expected to see strong growth and achieve its 15%
Y/E June 2017 2018E 2019E 2020E
growth guidance for the year by clocking USD22m in revenue (up
Sales 36.1 39.2 45.5 51.2
81% QoQ) during the quarter.
EBITDA 4.9 5.5 6.0 6.7  Margins are expected to contract 90bp QoQ to 13.7% on higher
PAT 3.7 4.2 4.3 4.8 incremental revenue from Rangsons (lower-margin business).
EPS (INR) 30.6 37.0 38.1 42.9  PAT estimate for the quarter is INR1,078m (-0.7% QoQ), primarily
EPS Gr. (%) (0.2) 20.9 3.0 12.4 because of margin contraction and a higher ETR compared to the
BV/Sh. (INR) 188.7 207.9 227.8 250.0 previous quarter.
RoE (%) 16.2 17.8 16.7 17.1  The stock trades at 18x FY19E and 16x FY20E EPS. Maintain Buy.
RoCE (%) 15.9 17.1 16.2 16.6
Payout (%) 34.3 48.0 48.0 48.0
P/E (x) 22.4 18.5 18.0 16.0  Update on trajectory of top customer.
P/BV (x) 3.6 3.3 3.0 2.7  Revenue outlook and visibility for FY19.
EV/EBITDA (x) 14.3 12.4 10.9 9.5  Health and performance expectations of top customers.
Div yld (%) 1.5 2.6 2.7 3.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 125 137 136 141 141 150 152 165 538 608
QoQ (%) 3.1 9.5 -0.5 3.8 0.0 6.5 1.3 8.8 14.0 13.1
Revenue (INR m) 8,349 9,136 9,171 9,410 9,070 9,654 9,834 10,644 36,065 39,202
YoY (%) 15.0 18.4 17.3 15.3 8.6 5.7 7.2 13.1 16.5 8.7
GPM (%) 35.0 34.4 34.0 34.4 34.9 35.4 35.6 33.9 34.4 34.9
SGA (%) 22.0 20.4 20.6 21.1 22.1 20.8 21.1 20.2 21.0 21.0
EBITDA 1,090 1,283 1,228 1,249 1,160 1,410 1,431 1,455 4,848 5,456
EBITDA Margin (%) 13.1 14.0 13.4 13.3 12.8 14.6 14.6 13.7 13.4 13.9
EBIT Margin (%) 10.4 11.5 10.7 10.6 9.9 11.9 11.8 11.3 10.8 11.2
Other income 116 184 309 264 350 407 273 312 874 1,342
ETR (%) 25.5 22.6 25.8 18.1 31.2 28.0 18.3 26.0 24.2 25.8
PAT 740 973 940 785 876 1,116 1,086 1,078 3,699 4,156
QoQ (%) -12.3 31.5 -3.4 -16.5 11.6 27.4 -2.7 -0.7
YoY (%) -1.1 -1.2 8.3 -7.0 18.4 14.7 15.5 37.3 7.4 12.4
EPS (INR) 6.6 8.7 8.4 7.0 7.8 9.9 9.7 9.6 32.9 37.0
Headcount 12,082 12,286 12,155 12,048 12,201 12,537 12,799 13,109 12,048 13,109
Util incl. trainees (%) 73.5 78.0 78.3 77.4 74.1 75.9 78.6 78.0
Attrition (%) 19.9 22.7 22.6 15.6 16.6 14.2 16.8
Offshore rev. (%) 40.7 40.1 40.4 39.2 40.4 41.2 42.8 42.6
E: MOSL Estimates
April 2018 275

HCL Technologies
Bloomberg HCLT IN CMP: INR968 TP: INR950 (-2%) Neutral
 We expect HCLT’s USD revenue to grow 3.2% QoQ and 2% QoQ
M. Cap. (INR b)/(USD b) 1368 / 21
on a constant currency basis.
 Growth during the quarter will be a function of a pick-up in IMS,
1,6,12 Rel Perf. (%) 5/4/0
some moderation in ERD and a seasonal drop in IP revenue.
 With this, we expect HCLT to close the year with USD revenue
Y/E JUNE 2017 2018E 2019E 2020E
growth of 12.6%, which would translate into ~10.8% CC growth,
Sales
at the lower end of its 10.5-12.5% guidance.
467.2 505.9 567.6 618.1
EBITDA 103.1 114.6 130.1 139.6
 EBIT margins are likely to expand by 20bp to 19.8% because of
PAT 84.6 89.0 92.4 100.1 lower amortization related to the IP partnerships.
EPS (INR) 59.8 63.4 66.3 71.6  With this, we expect 19.8% EBIT margin for FY18, within the 19.5-
EPS Gr. (%) 49.2 6.0 4.5 8.1 20.5% guidance range.
BV/Sh. (INR) 239.0 256.0 283.5 311.6  Adjusted PAT estimate for the quarter is INR23.5b (+7% QoQ),
RoE (%) 27.5 25.7 24.4 24.0 also aided by higher other income.
RoCE (%) 25.3 23.1 22.8 22.4  The stock trades at 14.8x FY19E and 13.7x FY20E EPS. Maintain
Payout (%) 40.1 20.5 48.3 50.3 Neutral.
Valuation
P/BV (x) 4.1 3.8 3.5 3.1  Traction in IMS and Engineering Services; organic growth
EV/EBITDA 12.1 11.3 9.7 9.9 outlook for FY19.
(x)  Operating margin movement.
Div yld (%) 2.4 1.3 3.3 3.7
 Traction in Digital and update on IP partnerships.
HCL Tech Quarterly Performance (US GAAP, INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 1,691 1,722 1,745 1,817 1,884 1,928 1,988 2,051 6,975 7,851
QoQ (%) 6.5 1.9 1.4 4.1 3.7 2.3 3.1 3.2 11.9 12.6
Revenue (INR m) 113,360 115,190 118,140 120,530 121,490 124,340 128,080 132,016 467,220 505,926
YoY (%) 15.9 14.1 14.2 12.7 7.2 7.9 8.4 9.5 14.2 8.3
GPM (%) 34.4 33.6 33.9 33.7 33.7 34.0 34.3 35.8 33.9 34.5
SGA (%) 12.1 11.8 11.7 11.8 11.6 11.8 11.2 12.6 11.8 11.8
EBITDA (INRm) 25,210 25,110 26,280 26,490 26,810 27,590 29,640 30,547 103,090 114,587
EBITDA Margin (%) 22.2 21.8 22.2 22.0 22.1 22.2 23.1 23.1 22.1 22.6
EBIT Margin (%) 20.6 20.1 20.4 20.0 20.1 19.7 19.6 19.8 20.3 19.8
Other income 2,530 2,350 2,310 2,150 2,690 2,980 2,640 3,438 9,340 11,748
ETR (%) 21.0 21.1 21.5 11.5 20.0 20.4 20.9 20.5 18.8 20.5
PAT before EOI 20,430 20,150 20,710 20,250 21,710 21,880 21,940 23,477 84,570 89,007
QoQ (%) 6.1 -1.4 2.8 -2.2 7.2 0.8 0.3 7.0
YoY (%) 14.6 10.5 7.9 5.2 6.3 8.6 5.9 15.9 13.5 5.2
EPS 14.5 14.3 14.7 16.5 15.1 15.7 15.7 16.8 59.8 63.4
Headcount 107,968 109,795 111,092 115,973 117,781 119,040 119,291 123,091 115,973 123,091
Util excl. trainees (%) 85.8 85.3 84.6 85.7 85.7 86.0 85.8 85.7 83.1 83.9
Attrition (%) 17.8 18.6 17.9 16.9 16.2 15.7 15.2
Fixed Price (%) 60.9 61.3 63.2 61.6 59.8 60.4 60.8
E: MOSL Estimates
April 2018 276

Hexaware Technologies
Bloomberg HEXW IN CMP: INR416 TP: INR340 (-18%) Neutral
 We expect USD revenue to increase by 3.6% and CC revenue to
M. Cap. (INR b)/(USD b) 125 / 2
grow by 3%.
 Ramp-down in key customers is now behind, and we expect the
1,6,12 Rel Perf. (%) 23 / 51 / 82
company to start delivering towards its stated outlook for CY18,
which requires a CQGR of 3% through the year.
Y/E DEC 2016 2017E 2018E 2019E
 We expect stability in EBITDA margins at 16% (+10bp QoQ).
Sales
Pressure from customer ramp-downs, wage hikes and transition
35.3 39.4 44.8 51.1
EBITDA 5.7 6.6 7.4 8.4
costs impacted margins in the two quarters before this.
PAT 4.2 5.0 5.6 6.3  Our PAT estimate for the quarter is INR1,316m, up 8.6% from the
EPS (INR) 13.7 16.6 18.7 21.0 previous quarter, on the back of revenue growth, stable margins
EPS Gr. (%) 5.8 21.2 12.7 12.5 and higher other income.
BV/Sh. (INR) 56.3 66.0 76.3 87.7  The stock trades at 22.1x CY18E and 19.7x CY19E earnings.
RoE (%) 26.5 26.9 26.1 25.6 Neutral.
RoCE (%) 24.2 24.6 25.3 25.3
Payout (%) 38.6 23.5 41.6 37.0
Valuation
P/BV (x) 7.3 6.3 5.4 4.7  Large deal pipeline and traction post the increased S&M spend.
EV/EBITDA (x) 20.4 17.7 15.9 13.6  Health of top customers.
Div yld (%) 1.3 1.0 1.9 1.9  Margin outlook now that the revenue pressures are behind.
Quarterly Performance (Indian GAAP) (INR m)

Y/E Dec CY17 CY18 CY17 CY18E
Revenue (USD m) 144.7 152.6 154.0 156.1 161.8 168.5 176.8 179.4 607 687
QoQ (%) 4.2 5.5 0.9 1.4 3.6 4.1 4.9 1.5 15.7 13.0
Revenue (INR m) 9,605 9,836 9,931 10,048 10,414 11,037 11,583 11,754 39,420 44,788
YoY (%) 17.1 13.1 9.8 6.8 8.4 12.2 16.6 17.0 11.5 13.6
GPM (%) 34.1 33.7 35.2 32.8 32.4 33.6 33.8 32.3 33.9 33.0
SGA (%) 17.2 17.4 17.7 16.9 16.4 17.0 16.5 16.5 17.3 16.6
EBITDA 1,623 1,598 1,734 1,599 1,662 1,837 2,004 1,861 6,554 7,364
EBITDA Margin (%) 16.9 16.2 17.5 15.9 16.0 16.6 17.3 15.8 16.6 16.4
EBIT Margin (%) 15.3 14.6 15.8 14.3 14.4 15.2 15.9 14.4 15.0 15.0
Other income 28 146 178 132 154 89 66 62 484 371
ETR (%) 23.8 22.9 18.9 23.0 20.5 20.5 20.5 20.5 22.0 20.5
PAT 1,139 1,224 1,420 1,211 1,316 1,402 1,515 1,398 4,994 5,630
QoQ (%) -6.3 7.4 16.0 -14.7 8.6 6.6 8.1 -7.8
YoY (%) 35.3 22.5 27.5 -0.4 15.5 14.6 6.7 15.4 19.7 12.7
EPS (INR) 3.8 4.1 4.7 4.0 4.4 4.7 5.0 4.6 16.6 18.7
Headcount 12,734 13,098 13,488 13,705 14,489 15,037 15,821 16,291 13,705 16,291
Utilization (%) 78.9 80.8 79.7 80.9 78.0 79.0 79.0 77.0 81.4 79.9
Attrition (%) 14.9 13.8 13.7 13.1
Offshore rev. (%) 35.5 35.3 34.6 34.9 33.9 34.5 34.6 34.0 35.1 34.2
E: MOSL Estimates
April 2018 277

Infosys
Bloomberg INFO IN CMP: INR1,140 TP: INR1,250 (+10%) Buy
 In 3QFY18, while INFO kept its annual guidance unchanged at 5.5-
M. Cap. (INR b)/(USD b) 2606 / 40
6.5%, it cited expectations of a better 4Q compared to 3Q.
 In line with this, we expect CC revenue growth of 1.5% in 4QFY18
1,6,12 Rel Perf. (%) 0 / 20 / 1
versus 0.8% in the previous quarter.
 We expect EBITDA margin to expand by 20bp QoQ to 24.5%.
Y/E MAR 2017 2018E 2019E 2020E
Execution on profitability has been above expectations over the
Sales 684.9 705.7 783.5 859.3 last few quarters, primarily driven by higher utilization. However,
EBITDA 186.1 190.1 207.2 223.6 we expect the improvement to slow down as this lever has
PAT 143.8 162.2 154.1 171.4 peaked out.
EPS (INR) 62.8 65.4 71.2 79.2  With this, we expect full-year EBIT margin at 24.3%, above the
EPS Gr. (%) 6.4 4.2 8.9 11.2 mid-point of the profitability guidance range of 23-25%.
BV/Sh. (INR) 302 278.3 323.5 359.2  Our PAT estimate is INR38.1b (+3% QoQ), adjusted for the
RoE (%) 22.0 24.6 23.2 23.2 USD225m exceptional reversal of income tax expense provision in
RoCE (%) 22.0 24.6 23.2 23.2 the previous quarter.
Payout (%) 40.9 45.0 47.7 47.9  The stock trades at 15.1x FY19E and 13.6x FY20E earnings. Buy.
Valuations
P/E (x) 17.1 16.4 15.1 13.6
 Update on internal stability of the company and strategy under
P/BV (x) 3.6 3.9 3.3 3.0
the new leadership.
EV/EBITDA (x) 11.1 11.0 9.3 8.4
 Commentary around contribution of newly-launched services,
Div Yield (%) 2.4 3.0 3.2 3.5
and revenue scale and growth from products and solutions.
 Commentary around macro, verticals, margins and pricing.
Quarterly Performance (IFRS) (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 2,501 2,587 2,551 2,569 2,651 2,728 2,755 2,817 10,208 10,951
QoQ (%) 2.2 3.4 -1.4 0.7 3.2 2.9 1.0 2.3 7.4 7.3
Revenue (INR m) 167,820 173,100 172,730 171,200 170,780 175,670 177,940 181,318 684,850 705,708
YoY (%) 16.9 10.7 8.6 3.4 1.8 1.5 3.0 5.9 9.7 3.0
GPM (%) 38.7 39.1 39.7 39.7 38.8 38.7 38.5 38.4 39.3 38.6
SGA (%) 12.2 11.8 12.2 12.5 12.1 11.9 11.4 11.2 12.2 11.6
EBITDA 44,470 47,330 47,670 46,580 45,610 47,020 48,170 49,266 186,050 190,066
EBITDA Margin (%) 26.5 27.3 27.6 27.2 26.7 26.8 27.1 27.2 27.2 26.9
EBIT Margin (%) 24.1 24.9 25.1 24.6 23.7 24.2 24.3 24.5 24.7 24.3
Other income 7,530 7,600 8,200 7,460 8,140 8,830 9,620 7,770 30,790 34,360
ETR (%) 28.4 28.8 28.1 27.0 28.2 27.4 2.9 27.0 28.0 21.1
PAT 34,360 36,060 37,080 36,030 34,880 37,260 36,970 38,097 143,830 162,237
QoQ (%) -4.5 4.9 2.8 -2.8 -3.2 6.8 -0.8 3.0
YoY (%) 13.4 6.1 7.0 0.2 1.5 3.3 -0.3 5.7 6.6 12.8
EPS (INR) 15.0 15.8 16.2 15.8 15.3 16.3 16.2 17.6 62.8 65.4
Headcount 197,050 199,829 199,763 200,364 198,553 198,440 201,691 209,447 200,364 209,447
Attrition (%) 21.0 20.0 18.4 17.1 21.0 21.4 18.7
Offshore rev. (%) (IT Serv) 43.0 43.0 43.5 43.3 43.4 44.4 45.2
Fixed Price (%) 45.7 47.1 49.5 49.4 49.3 50.4 51.4
E: MOSL Estimates
April 2018 278

KPIT Technologies
Bloomberg KPIT IN CMP: INR223 TP: INR250 (+12%) Neutral
 Post the seasonal weakness witnessed in 3Q, we expect growth to
bounce back for KPIT in 4QFY18. We are modeling CC revenue
growth of 2% and USD revenue growth of 2.8% QoQ.
1,6,12 Rel Perf. (%) 5 / 76 / 59
 This would lead to a 9.3% growth for KPIT in FY18, which is a stark
improvement compared to 3.1% delivered in the previous year.
Y/E MAR 2017 2018E 2019E 2020E
 Like in the previous quarters, we expect growth to be driven by
Sales 33.2 36.3 39.6 43.2
the Automotive & Engineering.
EBITDA 3.5 3.8 4.2 4.5  Given intense profitability pressures faced by KPIT over the past
PAT 2.1 2.5 2.7 3.5 few quarters, and revival of organic revenue growth, we expect
EPS (INR) 11.9 12.5 13.5 17.5 80bp QoQ improvement in EBITDA margin in 4QFY18 to 11.6%.
EPS Gr. (%) -15.3 5.1 7.8 29.2  Our PAT estimate of INR730m (+18% QoQ), is a function of
BV/Sh. (INR) 79.2 89.9 103.4 120.8 sequential improvement in operating performance and higher
RoE (%) 14.3 14.9 14.0 15.6 other income.
RoCE (%) 15.9 16.1 16.5 18.7  KPIT trades at 16.5x FY19E and 12.8x FY20E earnings. Maintain
Payout (%) 16.8 16.0 14.8 11.5 Neutral.
Valuations
P/E (x) 18.7 17.8 16.5 12.8
EV/EBITDA (x) 11.5 10.3 8.6 7.5
 Growth in IES, Engineering Services and top client.
Div yld (%) 0.9 0.9 0.9 0.9
 Update on the deal with Birlasoft.
 Plan to recoup profitability.
Quarterly Performance (Indian GAAP) (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 120 123 123 128 134 142 141 145 494 562
QoQ (%) -3.5 3.0 -0.4 4.4 4.8 5.7 -0.7 2.8 0.8 13.7
Revenue (INR m) 8,032 8,310 8,307 8,585 8,704 9,160 9,128 9,328 33,234 36,320
YoY (%) 5.9 2.3 2.2 2.1 8.4 10.2 9.9 8.7 3.1 9.3
GPM (%) 28.9 29.5 29.0 29.2 26.6 28.1 30.7 31.1 29.1 29.2
SGA (%) 18.3 18.5 18.8 19.0 17.6 18.2 19.9 19.5 18.7 18.8
EBITDA 855 914 846 870 788 902 989 1,083 3,486 3,769
EBITDA Margin (%) 10.7 11.0 10.2 10.1 9.1 9.9 10.8 11.6 10.5 10.4
EBIT Margin (%) 8.3 8.6 7.9 7.3 6.9 7.8 8.6 9.4 8.0 8.2
Other income 116 49 29 12 121 114 25 123 207 383
Interest 56 14 66 0 26 26 24 24 136 100
ETR (%) 24.3 25.1 23.1 15.3 23.4 24.4 21.3 25.0 22.2 23.6
PAT 551 562 475 537 555 603 619 730 2,125 2,508
QoQ (%) -37.8 2.0 -15.5 13.1 3.3 8.7 2.6 18.0
YoY (%) 24.0 -25.2 -35.4 -39.3 0.9 7.4 30.3 35.9 -24.5 18.1
EPS (INR) 2.8 2.8 3.7 2.7 2.8 3.0 3.1 3.7 11.9 12.5
Headcount 11,288 11,666 11,881 12,110 12,261 11,946 12,211 12,805 12,110 12,805
Offshore rev. (%) 41.5 43.2 43.0 43.0 43.9 42.3 42.1 42.7 42.7 42.7
Fixed Price (%) 28.5 28.0 33.7 35.8 34.8 36.2 38.0
E: MOSL Estimates
April 2018 279

L&T Infotech
Bloomberg LTI IN CMP: INR1,418 TP: INR1,400 (-1%) Buy
 LTI witnessed exceptionally strong growth of 8.5% QoQ in the
M. Cap. (INR b)/(USD b) 244 / 4
previous quarter, although 2.2% of it was pass-through.
 Continued momentum, led by ramp-up in recent deal wins is
1,6,12 Rel Perf. (%) 2 / 69 / 85
expected to drive 4% USD revenue growth and 3.5% CC growth in
4QFY18.
Y/E MARCH 2017 2018E 2019E 2020E
 With strong execution throughout the year, LTI is expected to
Sales 65.0 72.7 85.7 97.6
close FY18 with 16.4% YoY growth.
EBITDA 12.3 12.3 15.2 17.8  We expect EBITDA margin to remain steady at 17.1%, as the
PAT 9.7 11.6 12.8 15.1 company reinvests any gains in developing capabilities and
EPS (INR) 55.5 66.3 73.3 86.3 augments its sales function.
EPS Gr. (%) 5.9 19.5 10.5 17.9  Our PAT estimate for the quarter is INR3.4b, which is higher
BV/Sh. (INR) 179.7 230.1 285.7 351.4 sequentially by 19.2%. We have adjusted our PAT estimate for the
RoE (%) 37.6 32.4 28.4 27.1 one-time USD10m hit that LTI would be taking in the quarter in
RoCE (%) 40.3 30.2 32.4 31.2 relation to an issue with one of its customers.
Payout (%) 29.7 20.0 20.0 20.0  The stock trades at 19.4x FY19E and 16.4x FY20E earnings. Buy.
Valuation
P/BV (x) 7.9 6.2 5.0 4.0
 Deal wins and visibility on continuity of traction next year.
EV/EBITDA (x) 19.1 19.4 15.5 12.9
 Outlook on top clients and their contribution to growth.
Div Yld (%) 1.2 0.9 1.0 1.2
 Growth in Digital.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 231 240 245 254 259 271 294 305 970 1,129
QoQ (%) 0.6 3.7 2.3 3.7 2.0 4.4 8.5 4.0 9.3 16.4
Revenue (INR m) 15,550 16,020 16,667 16,772 16,707 17,509 18,837 19,648 65,009 72,701
YoY (%) 16.6 9.1 12.1 7.7 7.4 9.3 13.0 17.1 11.2 11.8
GPM (%) 35.3 35.4 34.3 35.8 33.8 33.9 33.3 34.1 35.2 33.8
SGA (%) 15.7 16.4 16.2 16.8 17.0 17.1 16.2 17.0 16.3 16.8
EBITDA 3,050 3,044 3,020 3,190 2,799 2,943 3,215 3,353 12,303 12,310
EBITDA Margin (%) 19.6 19.0 18.1 19.0 16.8 16.8 17.1 17.1 18.9 16.9
EBIT Margin (%) 16.9 16.1 15.3 16.5 14.4 14.5 14.9 15.6 16.2 14.9
Other income 372 365 597 503 1,084 1,017 883 1,330 1,837 4,314
ETR (%) 21.2 21.0 21.2 22.3 23.4 23.2 23.4 23.4 21.4 23.4
PAT 2,359 2,326 2,481 2,547 2,673 2,730 2,829 3,373 9,711 11,605
QoQ (%) 3.2 -1.4 6.7 2.7 4.9 2.1 3.6 19.2
YoY (%) 35.1 21.3 10.5 11.4 13.3 17.4 14.0 32.4 5.9 19.5
EPS (INR) 13.5 13.3 14.2 14.6 15.3 15.6 16.2 19.3 55.5 66.3
Headcount 19,292 21,074 20,605 21,023 22,321 22,554 23,394 24,314 21,023 24,314
Util incl. trainees (%) 77.4 78.7 78.1 78.3 77.7 79.6 80.3 81.0 7807.5 79.7
Attrition (%) 19.5 18.5 18.1 16.9 14.7 15.0 14.6
Offshore rev. (%) 51.9 51.2 52.3 51.3 53.2 53.4 53.8 54.8 48.3 53.8
E: MOSL Estimates
April 2018 280

March
March2018
2018 Results
ResultsPreview
Preview ||Sector:
Sector:Technology
Technology
MindTree
Bloomberg MTCL IN CMP: INR801 TP: INR725 (-10%) Buy
 MTCL has been seeing a recovery in its organic growth trajectory.
M. Cap. (INR b)/(USD b) 134 / 2
 With this trend continuing, we expect revenue growth of 4% QoQ
in 4QFY18 on a constant currency basis. Because of cross-
1,6,12 Rel Perf. (%) 1 / 62 / 65
currency tailwinds of 30bp, we expect USD revenue growth of
4.3%.
Y/E MARCH 2017 2018E 2019E 2020E
 With organic momentum returning, and margin levers of
Sales 52.4 54.4 62.6 70.0 utilization, offshoring and pricing improvement remaining intact,
EBITDA 7.2 7.3 9.4 11.0 we expect EBITDA margin expansion of 80bp QoQ to 15.9%.
PAT 4.2 5.3 6.9 8.0  Our PAT estimate for the quarter is INR1.7b, which implies 17.7%
EPS (INR) 24.9 33.4 41.7 48.8 QoQ growth. The increase is led by improved operating
EPS Gr. (%) -30.6 34.2 24.8 17.0 performance and higher other income.
BV/Sh. (INR) 153.0 159.2 182.8 209.9  The stock trades at 19.2x FY19E and 16.4x FY20E earnings. Buy.
RoE (%) 16.8 20.3 24.4 24.9
RoCE (%) 20.1 20.7 26.3 27.7
Valuation  Update on the health of top clients, and outlook for next year.
P/E (x) 32.2 24.0 19.2 16.4  Margin trajectory, going forward, given improvement in organic
P/BV (x) 5.2 5.0 4.4 3.8 growth and in acquired entities.
EV/EBITDA (x) 17.3 16.6 12.7 10.6
 Deal wins during the quarter and growth in Digital.
Div Yld (%) 1.2 1.6 1.9 2.2

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 199 193 192 196 200 206 214 223 780 844
QoQ (%) 2.1 -3.0 -0.4 1.8 2.3 3.0 3.9 4.3 9.0 8.2
Revenue (INR m) 13,276 12,954 12,953 13,181 12,895 13,316 13,777 14,385 52,364 54,373
YoY (%) 35.8 10.8 6.7 -0.2 -2.9 2.8 6.4 9.1 11.7 3.8
GPM (%) 37.0 34.2 34.1 34.0 34.9 32.4 35.1 36.0 34.8 34.6
SGA (%) 22.3 21.7 20.7 19.8 23.8 20.8 20.0 20.1 21.1 21.1
EBITDA 1,951 1,621 1,740 1,869 1,435 1,541 2,074 2,293 7,181 7,343
EBITDA Margin (%) 14.7 12.5 13.4 14.2 11.1 11.6 15.1 15.9 13.7 13.5
EBIT Margin (%) 10.8 8.6 9.5 10.3 7.3 8.0 11.7 12.7 9.8 10.0
Other income 198 170 144 -95 368 598 59 368 417 1,393
ETR (%) 24.2 26.0 25.2 22.8 28.6 24.9 15.2 24.0 24.6 22.9
PAT 1,235 948 1,031 972 931 1,247 1,415 1,665 4,186 5,258
QoQ (%) -7.1 -23.2 8.8 -5.7 -4.2 34.0 13.5 17.7
YoY (%) -3.7 -40.1 -31.7 -26.9 -24.6 31.5 37.2 71.3 -30.6 25.6
EPS (INR) 7.4 5.6 6.1 5.8 7.2 7.4 8.6 10.1 24.9 33.4
Headcount 16,110 16,219 16,099 16,470 16,561 16,910 17,200 17,795 16,470 17,795
Util incl. trainees (%) 71.4 71.4 71.3 70.9 73.2 73.2 72.8 74.0 71.3 73.3
Attrition (%) 16.5 16.4 16.1 15.1 14.0 13.0 12.6
Offshore rev. (%) 40.5 40.8 39.8 39.5 42.0 42.4 42.1 42.3 40.2 42.2
Fixed Price (%) 48.7 50.6 52.5 52.8 52.9 55.5 56.4
E: MOSL Estimates
April 2018 281

Mphasis
Bloomberg MPHL IN CMP: INR855 TP: INR800 (-6%) Neutral
 The HP channel has seen six consecutive quarters of steady
M. Cap. (INR b)/(USD b) 180 / 3
performance. We expect this trend to continue in 4QFY18 as well.
 Additionally, growth would be supported by continued traction in
1,6,12 Rel Perf. (%) 2 / 32 / 38
Direct International and stability in Digital Risk.
 We expect CC revenue growth of 2.9% QoQ and cross-currency
Y/E MAR 2017 2018E 2019E 2020E
tailwinds of 50bp, leading to USD revenue growth of 3.4% QoQ.
Sales 60.8 65.4 72.7 81.0  The company is on an improving trajectory on a YoY basis, as
EBITDA 9.7 10.5 11.7 13.1 growth would improve to 15.6% YoY in 4QFY18 from -0.7% YoY in
PAT 8.2 8.5 9.8 10.6 4QFY17.
EPS (INR) 38.9 44.0 50.8 54.9
 We expect EBIT margin to expand by 50bp to the higher end of its
EPS Gr. (%) 12.9 13.0 15.6 8.0
BV/Sh. (INR) 292.4 257.6 282.0 306.9
guided band of 14-16%.
RoE (%) 13.2 15.3 18.8 18.6  Our PAT estimate is INR2.5b (+15.9% QoQ). Higher PAT is led by
RoCE (%) 12.4 14.5 18.0 18.3 improved operating performance and translation gains.
Payout (%) 43.7 50.1 43.3 45.6  The stock trades at 16.2x FY19E and 15x FY20E EPS. Neutral.
Valuations
P/BV (x) 2.8 3.2 2.9 2.7
 Outlook for Digital Risk. given an interest rate cycle reversal.
EV/EBITDA(x) 15.0 13.5 11.8 10.3
Div yld (%) 2.1 2.7 2.7 3.0  Strategy changes, roadmap under the new leadership, and
outlook for FY19E
 Top customer outlook and consequent impact on the Direct
International channel.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 224 224 224 222 231 242 252 260 894 985
QoQ (%) -0.3 -0.2 -0.3 -0.9 4.2 4.9 3.8 3.4 -3.5 10.2
Revenue (INR m) 15,167 15,176 15,361 15,059 15,360 16,047 16,607 17,412 60,763 65,426
YoY (%) 1.5 -2.6 1.3 -0.7 1.3 5.7 8.1 15.6 -0.2 7.7
GPM (%) 28.1 28.1 27.8 28.7 27.3 27.5 27.6 29.1 28.2 27.9
SGA (%) 12.0 11.8 12.3 12.8 12.4 12.1 11.1 12.1 12.2 11.9
EBITDA 2,445 2,463 2,396 2,384 2,295 2,493 2,742 2,959 9,688 10,489
EBITDA Margin (%) 16.1 16.2 15.6 15.8 14.9 15.5 16.5 17.0 15.9 16.0
EBIT Margin (%) 15.2 15.3 14.7 14.6 13.8 14.4 15.5 16.0 15.0 14.9
Other income 572 711 617 485 469 375 354 647 2,385 1,845
ETR (%) 27.7 27.5 28.5 27.5 26.9 25.4 26.0 26.5 27.8 26.1
PAT 2,043 2,166 2,044 1,934 1,872 1,977 2,150 2,492 8,188 8,492
QoQ (%) 6.4 6.0 -5.6 -5.4 -3.2 5.6 8.8 15.9
YoY (%) 23.2 14.0 17.7 0.7 -8.4 -8.7 5.2 28.8 13.0 3.7
EPS (INR) 9.7 10.3 9.7 8.8 9.1 10.2 11.1 12.9 38.5 44.0
Headcount 22,374 22,284 22,018 21,979 21,878 22,183 22,335 21,773 21,979 21,773
Net Additions 50 -90 -266 -39 -101 305 152 -562 -345 -206
HP Channel rev. (%) 23.4 23.9 24.0 24.4 25.8 26.1 26.0
Fixed Price (%) 19.8 19.1 20.6 19.3 21.3 22.6 24.8
E: MOSL Estimates
April 2018 282

NIIT Technologies
Bloomberg NITEC IN CMP: INR883 TP: INR800 (-9%) Neutral
 We expect 2.5% QoQ CC revenue growth for NITEC in 4QFY18.
Traction is expected to continue despite a negative impact of the
ramp-down of Morris to the tune of USD1.5m. Growth would be
1,6,12 Rel Perf. (%) 3 / 55 / 92
supported by Digital and ramp-up of new deal wins.
 The company would have a tailwind of 70bp because of cross-
Y/E MARCH 2017 2018E 2019E 2020E currency movements, leading to USD revenue growth of 3.2%
Sales 27.8 29.8 33.0 36.1 QoQ.
EBITDA 4.6 5.0 5.6 6.2  We expect EBITDA margin to expand by 80bp QoQ to 17.9%
PAT 2.6 2.8 3.3 3.8
because of a better mix of revenue and improved operational
EPS (INR) 38.0 44.8 53.1 61.6
EPS Gr. (%) -16.9 17.9 18.5 15.9
efficiencies.
BV/Sh. (INR) 286.5 280.8 314.7 328.2  Our PAT estimate is INR818m (+8% QoQ). While the operational
RoE (%) 13.7 16.2 17.8 19.2 performance supports decent growth in PAT, it would be further
RoCE (%) 15.7 15.8 17.5 18.3 boosted by other higher income.
Payout (%) 32.9 31.2 30.1 26.0
 The stock trades at 16.6x FY19E and 14.3x FY20E earnings.
Valuations
P/E (x) 23.2 19.7 16.6 14.3 Neutral.
P/BV (x) 3.1 3.1 2.8 2.7
EV/EBITDA 9.8 10.1 8.6 7.7
(x)
Div Yld (%) 1.4 1.6 1.8 1.8  Traction in Digital and the international business.
 Progress on development of strategy under new leadership.
 Deal wins and outlook for the year.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) Ex. forex 99 103 101 104 107 113 115 119 408 454
QoQ (%) -2.2 4.2 -2.4 3.1 2.9 5.3 2.1 3.2 0.5 11.3
Revenue (INR m) 6,707 6,929 6,938 7,176 7,089 7,372 7,565 7,738 27,750 29,764
YoY (%) 4.6 2.2 2.2 4.8 5.7 6.4 9.0 7.8 3.5 7.3
GPM (%) 35.1 35.3 36.0 36.2 35.4 35.0 36.4 36.9 35.7 36.0
SGA (%) 19.9 18.8 19.2 18.6 19.8 18.9 19.3 19.0 19.1 19.2
EBITDA 1,015 1,145 1,162 1,260 1,108 1,190 1,296 1,387 4,582 4,981
EBITDA Margin (%) 15.1 16.5 16.7 17.6 15.6 16.1 17.1 17.9 16.5 16.7
EBIT Margin (%) 10.3 11.9 12.1 13.2 11.2 11.5 13.0 13.9 11.9 12.4
Other income 83 29 59 -12 58 87 5 94 159 244
ETR (%) 10.4 24.9 25.3 13.4 34.7 21.8 16.5 24.0 18.6 23.9
Minority Interest 46.0 54.0 48.0 72.0 42.0 61.0 70.0 72.0 220.0 245.0
PAT 285 590 624 739 513 671 757 818 2,238 2,759
QoQ (%) -63.9 107.0 5.8 18.4 -30.6 30.8 12.8 8.0 -20.1 23.3
YoY (%) -51.4 -13.6 -15.8 -6.5 80.0 13.7 21.3 10.7
EPS (INR) 5.1 9.7 10.6 12.6 8.7 11.4 12.3 13.3 38.0 45.7
Headcount 9,022 8,868 8,809 8,853 8,963 9,022 9,081 9,391 8,853 9,391
Attrition (%) 13.4 12.9 12.9 12.7 12.1 11.4 11.4
Offshore rev. (%) 39.0 39.0 40.0 41.0 40.0 39.0 39.0 39.8 39.3
Fixed Price (%) 46.0 46.0 48.0 48.0 49.0 48.0 46.0
April 2018 283

Persistent Systems
Bloomberg PSYS IN CMP: INR677 TP: INR900 (+33%) Buy
 We expect 5% QoQ decline in revenue for PSYS in 4QFY18. It
recently guided for a decline to the tune of USD8m in its IP
portfolio. This decline has been greater than the earlier expected
1,6,12 Rel Perf. (%) -17 / -3 / 3
impact of a seasonal decline in IBM IoT revenue.
 The decline in IP revenue would also result in a corresponding hit
Y/E MARCH 2017 2018E 2019E 2020E on profitability, because of which we are baking in a contraction
Sales 28.8 30.3 34.4 38.3 of 470bp in EBITDA margin to 12.7%.
EBITDA 4.7 4.5 5.7 6.6  Our PAT estimate for the quarter is INR704m, down 23.2% QoQ.
Adj. PAT 3.1 3.2 4.0 4.8 The PAT decline is caused by the sharp drop in both revenue and
Adj. EPS (INR) 37.7 40.0 50.3 60.2 profitability.
EPS Gr. (%) 1.4 6.1 25.9 19.6  The stock trades at 13.5x FY19E and 11.3x FY20E earnings. Buy.
BV/Sh.(INR) 244.5 254.1 264.8 267.8
RoCE (%) 16.7 16.0 15.7 19.3  Performance and outlook for top clients in ISV (ex-IBM).
Payout (%) 23.9 32.5 27.8 26.6  Commentary on traction with Enterprise customers and
Valuations potential of winning large deals in Digital.
P/E (x) 18.0 16.9 13.5 11.3  Outlook on sustainable profit margins in the near-to-medium
P/BV (x) 2.8 2.7 2.6 2.5 term.
EV/EBITDA (x) 9.6 9.6 7.6 6.5  Outlook on IP revenue after the hit in 4QFY18.
Div. Yield (%) 1.3 1.9 2.1 2.4

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 104.8 105.2 110.0 109.0 113.0 118.1 122.5 116.4 429 470
QoQ (%) 4.3 0.4 4.6 -0.9 3.6 4.5 3.8 -5.0 22.0 9.6
Revenue (INR m) 7,018 7,040 7,455 7,271 7,280 7,613 7,919 7,491 28,784 30,302
QoQ (%) 3.6 0.3 5.9 -2.5 0.1 4.6 4.0 -5.4
YoY (%) 40.2 29.7 25.9 7.4 3.7 8.1 6.2 3.0 24.5 5.3
GPM (%) 34.7 35.5 36.3 36.1 34.3 34.4 36.7 31.6 35.7 34.3
SGA (%) 19.6 19.8 20.4 18.2 20.0 19.2 19.4 18.9 19.5 19.4
EBITDA 1,058 1,108 1,187 1,302 1,044 1,158 1,375 951 4,653 4,527
EBITDA Margin (%) 15.1 15.7 15.9 17.9 14.3 15.2 17.4 12.7 16.2 14.9
EBIT Margin (%) 10.2 10.5 10.7 12.5 9.0 10.2 12.4 7.5 11.0 9.8
Other income 253 243 318 143 368 336 193 373 958 1,269
ETR (%) 24.3 25.3 26.7 19.9 26.3 25.9 22.0 25.0 24.1 24.7
PAT 733 735 819 842 751 826 917 704 3,129 3,197
QoQ (%) -9.3 0.3 11.4 2.8 -10.8 10.0 10.9 -23.2
YoY (%) 9.0 2.3 5.7 4.2 2.5 12.4 11.9 -16.4 5.2 2.2
EPS (INR) 9.2 9.2 10.2 9.1 9.4 10.3 11.5 8.8 37.7 40.0
Headcount 9,389 9,305 9,229 9,460 9,401 9,246 9,109 9,240 9,460 9,240
Attrition (%) 16.7 15.9 15.8 15.7 15.5 15.5 14.7
IP rev. proportion (%) 28.2 27.8 28.4 27.6 27.2 26.0 26.8 21.6 28.0 25.4
E: MOSL Estimates
April 2018 284

Tata Elxsi
Bloomberg TELX IN CMP: INR1,005 TP: INR1,236 (+23%) Buy
 Growth on a YoY basis has been picking up for the last three
quarters, and has increased from 9.3% in 1QFY18 to 11.4% in
3QFY18.
1,6,12 Rel Perf. (%) -2 / 19 / 24
 We expect this trend to continue, resulting in 14% YoY growth in
4QFY18 to INR3,717m.
Y/E MARCH 2017 2018E 2019E 2020E  EBITDA margin at 25% is expected to contract by 210bp QoQ, but
Sales 12.3 13.8 15.8 18.4 expand by 180bp YoY to 25%.
EBITDA 2.9 3.4 4.0 4.7  PAT at INR607m is expected to see an increase of 36.3% YoY.
Adj. PAT 1.8 2.3 2.7 3.2  The stock trades at 23x FY19E and 19.5x FY20E earnings. Buy.
Adj. EPS (INR) 28.1 36.8 43.6 51.5
EPS Gr. (%) 13.2 30.8 18.4 18.2
BV/Sh.(INR) 89.8 114.5 143.0 216.2
RoE (%) 37.1 36.0 33.8 28.7
RoCE (%) 37.1 36.0 33.8 43.3
Payout (%) 34.2 32.7 34.6 27.8
P/E (x) 35.7 27.3 23.0 19.5  Addition of new customers and subsequent realization.
P/BV (x) 11.2 8.8 7.0 4.6  JLR’s contribution to revenue.
EV/EBITDA (x) 20.5 16.7 13.9 11.0  Outlook on growth and profitability for the next year.
Div. Yield (%) 0.8 1.0 1.2 1.8

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 2,959 3,042 3,102 3,260 3,232 3,422 3,455 3,717 12,330 13,830
YoY Change (%) 21.5 15.4 13.2 10.9 9.3 12.5 11.4 14.0 14.7 12.2
EBITDA 691 775 713 758 734 840 935 929 2,932 3,444
Margins (%) 23.3 25.5 23.0 23.2 22.7 24.6 27.1 25.0 23.8 24.9
Depreciation 67 64 69 68 65 64 63 82 269 273
Other Income 8 -26 24 -21 79 89 68 58 -48 288
PBT 632 685 668 669 749 864 940 905 2,615 3,459
Tax 215 231 226 224 251 292 313 299 862 1,167
Rate (%) 34.0 33.6 33.9 33.4 33.6 33.8 33.2 33.0 33.0 33.7
Reported PAT 417 455 441 445 497 572 628 607 1,753 2,292
Adj PAT 417 455 441 445 497 572 628 607 1,753 2,292
YoY Change (%) 16.7 19.3 8.4 8.3 19.3 25.9 42.2 36.3 12.6 30.8
Margins (%) 14.1 14.9 14.2 13.6 15.4 16.7 18.2 16.3 14.2 16.6
E: MOSL Estimates

April 2018 285
March
March2018
2018 Results
ResultsPreview
Preview ||Sector:
Sector:Technology
Technology
TCS
Bloomberg TCS IN CMP: INR 2,908 TP: INR2,700 (-7%) Neutral
 Revenue growth for TCS is expected to pick up in 4QFY18 to 2.2%
M. Cap. (INR b)/(USD b) 5730 / 88
QoQ in CC terms from 1.3% in the previous quarter, led by ramp-
52-Week Range (INR) 3255 / 2255
up of recently-won deals.
1,6,12 Rel Perf. (%) -2 / 13 / 9
 With cross-currency tailwinds of 110bp, we expect USD revenue
growth of 3.3% QoQ.
Y/E MAR 2017 2018E 2019E 2020E
 Our EBIT margin estimate for 4Q stands at 25.5% (+30bp QoQ),
Sales 1,179.7 1,228.7 1,374.1 1,499.9
led by currency benefits. However, we expect margins to take a
EBITDA 323.1 325.0 360.3 390.5 hit 1QFY19 onwards, as lower margin deals start to hit
PAT 262.9 257.8 281.7 308.7 profitability, in addition to the usual headwinds of visa expenses
EPS (INR) 133.4 131.8 147.1 161.3 and wage hikes.
EPS Gr. (%) 8.3 -1.2 11.6 9.6  Our PAT estimate stands at INR68.6b (+5% QoQ), led by
BV/Sh. (INR) 448.3 418.3 482.1 550.5 sequential growth in operating parameters and higher other
RoE (%) 32.6 30.7 32.8 31.3 income.
RoCE (%) 32.4 26.8 25.3 25.3  The stock trades at 19.8x FY19E and 18x FY20E earnings. Neutral.
Payout (%) 35.2 109.3 47.0 47.9
Valuation
 Outlook on BFS and Retail.
P/E (x) 21.8 22.1 19.8 18.0
 Traction in new Digital initiatives (automation/solutions).
P/BV (x) 6.5 7.0 6.0 5.3
EV/EBITDA  Margin expectations for the next year, given multiple
16.3 16.1 14.3 12.9
(x)
Div. yield (%) 1.6 5.0 2.4 2.7
headwinds.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 4,362 4,374 4,387 4,452 4,591 4,739 4,787 4,946 17,575 19,063
QoQ (%) 3.7 0.3 0.3 1.5 3.1 3.2 1.0 3.3 6.2 8.5
Revenue (INR m) 293,050 292,840 297,350 296,420 295,840 305,410 309,040 318,372 1,179,660 1,228,662
YoY (%) 14.2 7.8 8.7 4.2 1.0 4.3 3.9 7.4 8.6 4.2
GPM (%) 43.9 44.8 44.5 45.0 42.8 43.6 43.5 44.0 44.5 43.5
SGA (%) 17.1 17.1 16.8 17.6 17.8 16.9 16.7 16.9 17.1 17.0
EBITDA 78,380 81,110 82,290 81,330 74,120 81,640 82,880 86,348 323,110 324,988
EBITDA Margin (%) 26.7 27.7 27.7 27.4 25.1 26.7 26.8 27.1 27.4 26.5
EBIT Margin (%) 25.1 26.0 26.0 25.7 23.4 25.1 25.2 25.5 25.7 24.8
Other income 9,630 10,520 11,850 9,890 9,320 8,120 8,640 9,582 41,890 35,662
ETR (%) 24.0 23.8 23.6 23.1 24.2 23.7 24.3 24.3 23.6 24.1
PAT 63,179 65,860 67,780 66,080 59,450 64,460 65,310 68,590 262,899 257,810
QoQ (%) -0.4 4.2 2.9 -2.5 -10.0 8.4 1.3 5.0
YoY (%) 10.7 8.8 10.9 4.2 -5.9 -2.1 -3.6 3.8 8.6 -1.9
EPS (INR) 32.1 33.4 34.4 33.5 30.4 33.7 34.1 35.8 133.4 131.8
Headcount 362,079 371,519 378,497 387,223 385,809 389,213 390,880 400,685 387,223 400,685
CC QoQ rev gr (%) 3.1 1.0 2.0 1.0 2.0 1.7 1.3 3.3 8.4 8.5
Attrition (%) 13.6 12.9 12.2 11.5 11.6 11.3 11.3 9.9
E: MOSL Estimates
April 2018 286

March
March 2018
2018 Results
Results Preview
Preview || Sector:
Sector: Technology
Technology
Tech Mahindra
Bloomberg TECHM IN CMP: INR617 TP: INR700 (+14%) Buy
 We expect 3% QoQ growth in USD revenue in 4QFY18, led by
M. Cap. (INR b)/(USD b) 607 / 9
1.5% CC organic growth, and 150bp benefit from cross-currency
movements.
1,6,12 Rel Perf. (%) 3 / 27 / 24
 Organic growth is expected to be a function of flat revenue in LCC,
strength in Enterprise and some seasonal support from Comviva.
Y/E MARCH 2017 2018E 2019E 2020E
 We expect EBITDA margin to expand by 100bp QoQ to 17.3%, led
Sales 291.4 307.3 346.5 386.7
by seasonal strength in Comviva, completion of rationalization in
EBITDA 41.8 46.9 56.9 63.6 LCC and better operational efficiencies.
Adj. PAT 28.4 35.4 37.6 43.8  Expect PAT to increase by 1.5% QoQ to INR9.6b, despite higher
Adj. EPS (INR) 32.0 39.8 42.3 49.3 margins, led by lower other income and higher ETR.
EPS Gr. (%) -8.8 24.4 6.5 16.4  The stock trades at 14.6x FY19E and 12.5x FY20E earnings. Buy.
BV/Sh.(INR) 187.9 197.9 228.9 264.6
RoE (%) 18.4 20.9 20.1 20.2
RoCE (%) 15.2 17.0 16.4 16.8
Payout (%) 29.1 30.2 23.6 24.4
Valuation
 Performance of the Telecom segment and expectations around
P/E (x) 19.3 15.5 14.6 12.5
top customer performance.
P/BV (x) 3.3 3.1 2.7 2.3
EV/EBITDA (x) 12.6 11.4 8.9 7.4
 Comments on profitability, including LCC.
Div. Yield (%) 1.5 1.9 1.6 1.9
 TCV of deal wins in the Enterprise segment.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 1,032 1,072 1,116 1,131 1,138 1,179 1,209 1,245 4,351 4,772
QoQ (%) 0.9 4.0 4.1 1.4 0.6 3.6 2.5 3.0 7.8 9.7
Revenue (INR m) 69,209 71,674 75,575 74,950 73,361 76,064 77,760 80,159 291,408 307,344
YoY (%) 10.0 8.3 12.8 8.9 6.0 6.1 2.9 7.0 10.0 5.5
GPM (%) 29.5 30.6 30.7 26.9 28.0 29.3 30.8 32.8 29.4 30.3
SGA (%) 14.6 15.7 15.0 14.9 15.3 14.7 14.5 15.5 15.1 15.0
EBITDA 10,290 10,701 11,865 8,987 9,347 11,057 12,647 13,879 41,843 46,930
EBITDA Margin (%) 14.9 14.9 15.7 12.0 12.7 14.5 16.3 17.3 14.4 15.3
EBIT Margin (%) 12.0 11.5 12.4 8.2 9.4 11.0 12.7 13.5 11.0 11.7
Other income 1,519 1,387 1,552 2,378 4,106 3,222 2,250 1,980 6,836 11,558
Interest expense 274 345 349 318 370 386 341 294 1,286 1,391
ETR (%) 25.9 30.8 20.2 28.2 25.4 25.3 21.8 24.0 26.0 24.1
PAT excl. BT amort & EOI 6,561 6,447 8,560 5,879 7,985 8,362 9,431 9,575 27,447 35,353
QoQ (%) -23.5 -1.7 32.8 -31.3 35.8 4.7 12.8 1.5
YoY (%) 5.4 -17.9 12.8 -31.5 21.7 29.7 10.2 62.9 -12.0 28.8
EPS (INR) 7.4 7.3 9.6 6.6 9.0 9.4 10.6 10.8 31.9 39.8
Headcount 107,216 111,743 117,095 117,693 115,990 117,225 115,241 121,376 117,693 121,376
Attrition (%) 21.0 19.0 18.0 17.0 17.0 16.0 17.0
Offshore rev. (%) 36.6 36.5 36.1 35.7 36.3 35.9 34.2 33.0 36.2 34.8
E: MOSL Estimates
April 2018 287

March
March2018
2018 Results
ResultsPreview
Preview ||Sector:
Sector:Technology
Technology
Wipro
Bloomberg WPRO IN CMP: INR284 TP: INR300 (+6%) Neutral
 In the previous quarter, Wipro had guided for 1% to 3% QoQ CC
M. Cap. (INR b)/(USD b) 1398 / 22
growth for 4Q. The guidance embedded meaningful revenue
impact from insolvency of a customer, whereby it also took
1,6,12 Rel Perf. (%) -1 / -6 / 0
~USD50m one-time provision on costs in the previous quarter.
 We expect growth to be at the lower end of the guided range at
Financial Snapshot (INR b) 1.5%. A cross-currency tailwind of 100bp would lead to USD
Y/E MAR 2017 2018E 2019E 2020E revenue growth of 2.5% QoQ.
Sales 550.4 547.0 585.1 636.3  We expect EBIT margin in IT Services to remain steady at 17.3%
EBITDA 108.8 111.5 123.2 137.2 (+10bp QoQ) because of low organic growth at a time when
PAT 83.3 86.8 91.1 102.4 operational efficiencies have played out over the last few
EPS (INR) 16.9 17.9 18.8 21.1 quarters.
EPS Gr. (%) -6.3 5.9 5.0 12.4  Our PAT estimate is INR21.6b (+11.6% QoQ). However, adjusting
BV/Sh. (INR) 105.9 101.8 120.6 129.7 for the one-time provisioning in the previous quarter, 4Q PAT
RoE (%) 16.9 17.2 17.0 16.9 would decline 4.1% QoQ on account of lower other income and
RoCE (%) 13.6 13.6 14.8 15.5 higher ETR.
Payout (%) 5.8 0.0 0.0 47.3  The stock trades at 15.1x FY19E and 13.4x FY20E earnings.
Valuations Neutral.
P/E (x) 16.8 15.8 15.1 13.4
P/BV (x) 2.7 2.8 2.4 2.2
 Revenue growth guidance for 1QFY19.
EV/EBITDA (x) 10.8 11.5 9.7 8.5
 Commentary on Healthcare and Communications verticals.
Div Yld (%) 0.3 0.0 0.0 3.5
 Commentary on large deal wins and ramp-up schedule.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 1,931 1,916 1,903 1,955 1,972 2,014 2,013 2,063 7,705 8,061
QoQ (%) 2.6 -0.8 -0.7 2.7 0.9 2.1 0.0 2.5 4.9 4.6
Revenue (INR m) 135,992 137,657 136,878 139,875 136,261 134,234 136,690 139,774 550,402 546,959
QoQ (%) -0.2 1.2 -0.6 2.2 -2.6 -1.5 1.8 2.3
YoY (%) 11.1 10.0 6.4 2.6 0.2 -2.5 -0.1 -0.1 7.4 -0.6
GPM (%) 29.1 28.9 29.4 28.0 28.7 29.5 30.1 30.9 28.9 29.8
SGA (%) 13.0 13.2 13.0 11.9 12.8 12.6 13.4 14.0 12.8 13.2
EBITDA 26,528 26,539 27,878 27,844 26,683 27,788 28,104 28,913 108,789 111,488
EBITDA margin (%) 19.5 19.3 20.4 19.9 19.6 20.7 20.6 20.7 19.8 20.4
IT Serv. EBIT (%) 17.8 17.8 18.3 17.7 16.8 17.3 17.2 17.3 17.9 17.2
EBIT Margin (%) 16.1 15.8 16.4 16.1 16.0 16.8 16.7 16.8 16.1 16.6
Other income 4,848 4,958 5,120 5,328 5,079 5,728 5,054 4,388 20,254 20,249
ETR (%) 22.9 22.2 23.3 24.2 22.3 22.7 19.2 22.5 23.2 21.7
PAT 20,518 20,672 21,094 19,340 20,765 21,917 19,371 21,612 83,326 86,840
QoQ (%) -8.2 0.8 2.0 -8.3 7.4 5.5 -11.6 11.6
YoY (%) -6.2 -7.5 -5.6 -13.5 1.2 6.0 -8.2 11.7 -6.3 4.2
EPS (INR) 4.2 4.3 4.4 4.0 4.3 4.5 4.0 4.5 16.9 17.9
Headcount 173,863 174,238 179,129 181,482 166,790 163,759 162,553 167,468 181,482 167,468
Attrition (%) 16.5 16.6 16.3 16.3 15.9 15.7 15.9
Offshore rev. (%) 45.6 46.1 46.5 47.2 46.4 46.8 46.5 45.9 46.4 46.4
Fixed Price (%) 56 56.4 57.7 58.3 58.2 57.7 57.7
E: MOSL Estimates
April 2018 288

March
March2018
2018 Results
ResultsPreview
Preview ||Sector:
Sector:Technology
Technology
Zensar Technologies
Bloomberg ZENT IN CMP: INR 901 TP: INR1,100 (+22%) Buy
 We expect revenue of USD127m, representing growth of 3.2%
QoQ. This would translate into 1.9% QoQ CC growth, a cross-
currency tailwind of 30bp for ZENT.
1,6,12 Rel Perf. (%) 3 / 14 / -14
 Growth would be a function of strength in Digital, recovery in the
Financial Snapshot (INR b) US and portfolio rationalization.
Y/E MAR 2017 2018E 2019E 2020E  We expect EBITDA margin to expand by 20bp QoQ to 13.5%. This
Sales 30.6 31.1 36.1 40.6
would mark the return of ZENT’s profitability to levels seen before
EBITDA 3.8 3.8 4.8 5.9
the margin shocker in 4QFY17, where EBITDA margin had touched
PAT 2.3 2.3 2.8 3.7
EPS (INR) 52.1 51.9 63.1 82.6
a low of 7.9%.
EPS Gr. (%) -24.1 -0.3 21.6 30.9  Our PAT estimate is INR688m, up 19.8% QoQ on account of
BV/Sh. (INR) 325.9 363.9 414.1 477.5 translation gains.
RoE (%) 17.2 15.0 16.2 18.5
 The stock trades at 14.3x FY19E and 10.9x FY20E earnings. Buy.
RoCE (%) 23.2 18.8 22.1 24.1
Payout (%) 23.0 22.8 17.6 19.9
Valuations
P/E (x) 17.3 17.4 14.3 10.9
EV/EBITDA (x) 9.7 9.7 7.3 5.6  Traction in Digital, large deals and other new initiatives.
Div Yld (%) 1.3 1.3 1.2 1.8  Margin outlook, given restructuring of IMS business.
 Progress on revival of revenue growth post US turnaround.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue (USD m) 114 116 118 112 114 119 123 127 459 482
QoQ (%) 3.1 1.8 1.3 -4.9 2.2 3.8 3.4 3.2 1.4 4.9
Revenue (INR m) 7,554 7,703 7,865 7,433 7,367 7,626 7,937 8,143 30,556 31,073
YoY (%) 7.2 1.8 3.9 -0.4 -2.5 -1.0 0.9 9.6 3.1 1.7
GPM (%) 29.1 30.1 30.2 27.7 27.6 28.8 30.1 30.2 29.3 29.2
SGA (%) 15.4 15.6 16.4 19.9 17.4 17.2 16.8 16.7 16.8 17.0
EBITDA 1,037 1,111 1,085 585 748 884 1,054 1,096 3,819 3,781
EBITDA Margin (%) 13.7 14.4 13.8 7.9 10.2 11.6 13.3 13.5 12.5 12.2
EBIT Margin (%) 12.3 12.8 12.3 6.2 7.7 9.3 11.3 11.2 10.9 9.9
Other income 198 70 201 -228 203 194 49 161 241 607
ETR (%) 32.6 29.6 30.2 45.5 32.0 26.8 33.7 28.0 31.6 30.0
PAT 741 704 800 104 472 608 574 688 2,349 2,342
QoQ (%) 5.4 -5.0 13.7 -87.0 354.7 29.0 -5.7 19.8
YoY (%) -2.8 -22.9 11.9 -85.2 -36.3 -13.6 -28.3 562.9 -24.1 -0.3
EPS (INR) 16.4 15.6 17.7 2.3 10.5 13.5 12.7 15.2 52.1 51.9
Headcount 8,238 8,316 8,564 8,524 8,567 8,414 8,597 8,897 8,524 8,897
Utilization (%) 79.8 80.1 79.5 79.2 83.2 85.9 84.8 81.0 79.7 83.7
Offshore rev. (%) 31.2 33.8 33.5 34.5 37.5 37.5 37.0 35.3 33.2 36.8
E: MOSL Estimates
April 2018 289

Telecom
Company name Another dismal quarter…
Bharti Airtel …primarily led by continued ARPU downtrading
Bharti Infratel
Idea Cellular There appears to be no solace for the Telecom sector. 4QFY18 consolidated EBITDA is likely
Tata Communications to decline 8% QoQ for Bharti and 15% QoQ for Idea. RJio’s EBITDA should improve 12% on
10% revenue growth. Bharti Infratel’s EBITDA should decline 2% QoQ, hit by tenancies.
TCOM should see 1% EBITDA growth.
 ARPU continues its downward spiral: 4QFY18 saw fresh round of undercutting
by telcos, with lower price plans focusing on market share gains v/s profitability
to gain the 15% revenue market share still lying with smaller operators. We
expect ARPU downtrading of 7-8% for Bharti/Idea and 5% for RJio.
 Cut in international IUC from INR0.53/minute to INR0.30/minute (applicable
from February 2018) is likely to impact the EBITDA of the incumbents, Bharti
and Idea, by 1-1.5%.
 JioPhone impact: In January 2018, RJio re-launched its Jiophone at a new price
point of INR49 (in addition to INR150 earlier), targeting the low ARPU
subscribers. Further, our channel checks indicate that RJio is expected to add
6m-8m monthly Jiophone subscribers, thus eating into the feature phone
market of incumbents.
Expect India wireless revenue to decline ~4% QoQ

We expect Bharti’s India wireless revenue to decline 4% QoQ (and 51% YoY) to
INR102.8b in 4QFY18. Idea’s consolidated revenue should drop 4% QoQ (and 23%
YoY) to INR62.4b. This is largely due to APRU downtrading, as the incumbents try
matching RJio’s offerings. Bharti’s consolidated revenue is expected to decline 1.4%
QoQ (and 9% YoY) to INR200.4b, as the rest of the businesses – Africa, passive
infrastructure and enterprise segment – too are expected to remain subdued. RJio is
likely to see 10% revenue growth, with robust subscriber growth partly offset by
ARPU decline.
ARPUs to decline further

We expect Bharti/Idea’s ARPUs to decline 7%/8% QoQ to INR114/INR104. This
should be partly aided by ~3% average subscriber growth to 294m/192m. RJio’s
ARPU is expected to decline 5% QoQ to INR145 on account downward revision in
price plans. With average ARPU of INR125-145 (post GST) for its popular plans,
average subscriber base is likely to grow 16% QoQ to 173m.
EBITDA continues to plunge

4QFY18 is likely to witness a plunge in EBITDA due to continued revenue decline,
coupled with increase in network cost.
Bharti’s India wireless EBITDA is expected to witness a steep 17% QoQ (and 39%
YoY) decline to INR29b. Idea’s consolidated EBITDA too is expected to fall 15% QoQ
(and 51% YoY) to INR10.4b. Bharti’s consolidated EBITDA is likely to fall 8% QoQ
(and 12% YoY) to INR68.9b.
Aliasgar Shakir – Research analyst (Aliasgar.Shakir@motilaloswal.com); +91 022 6129 1565

Hafeez Patel – Research analyst (Hafeez.Patel@motilaloswal.com); +91 22 6129 1568
April 2018 290
March 2018 Results Preview | Sector: Telecom
Bharti’s India wireless EBITDA margin is likely to shrink ~440bp QoQ (and 870bp YoY)
to 28.2%, while Idea’s consolidated EBITDA margin is expected to contract 220bp
QoQ (9pp) to 16.6%. Bharti’s other segments like Africa, passive infrastructure and
enterprise may remain subdued, leading to consolidated EBITDA margin contraction
of 240bp QoQ (-150bp YoY) to 34.4%.
Bharti’s Africa business EBITDA likely to remain steady

We expect Bharti’s Africa revenue to remain flat QoQ (grow 2% YoY) at INR51.5b.
Africa EBITDA margin is expected to continue its upward trajectory, with 20bp
sequential improvement to 35.4% led by cost efficiencies; EBITDA should grow 1%
QoQ (and 41% YoY) to INR18.2b.
Bharti Infratel: Tenancy exits to limit EBITDA growth

Bharti Infratel is expected to witness ~3,720 (2% QoQ) tenancy cuts in 4QFY18 on a
consolidated basis to 209,756 co-locations. Shutdown by smaller players continues
to put down tenancies. We expect consolidated revenue to decline 2% QoQ (but
grow 2% YoY) to INR36b on muted rentals and energy revenue growth.
Tata Communications: EBITDA to grow 1% QoQ

Revenue should grow 1% QoQ to INR41.6b on the back of 2% data revenue growth
to INR29.5b, partly offset by 2% decline in voice revenue to INR12.1b. EBITDA
should grow 1% QoQ to INR6.2b on the back of 3% data EBITDA growth to INR5.5b,
partly offset by a 9% voice EBITDA decline to INR671m.
Our view: We expect ARPU to continue to remain under pressure for the next 3-4
quarters until the larger players take away share from the smaller players. As all
three big players (Bharti, Vodafone-Idea and RJio) reach a position of similar market
share and financial & network capabilities, ARPU recovery should set in, driving
EBITDA and FCF growth.

CMP (INR) RECO Mar-18 Var % YoY Var % QoQ Mar-18 Var % YoY Var % QoQ Mar-18 Var % YoY Var % QoQ
Telecom
Bharti Airtel 402 Buy 200,440 -8.6 -1.4 68,918 -12.3 -7.7 1,637 -79.9 -69.1
Bharti Infratel 338 Neutral 35,990 2.2 -1.5 15,703 -0.1 -1.7 6,696 12.2 14.4
Idea Cellular 77 Buy 62,383 -23.2 -4.2 10,377 -51.0 -15.2 -15,760 Loss Loss
Tata Comm 652 Buy 41,594 -3.1 1.1 6,195 23.3 1.1 64 -89.6 LP
Sector Aggregate 340,407 -10.1 -1.6 101,193 -16.1 -7.2 -7,362 PL Loss
April 2018 291

Exhibit 2: Industry wireless subscriber and net additions trend (m)
Wireless Subsriber (m) Wireless Subsriber net additions (m)
1200 29 28
1150 21 21 23
14
1100 7 9 7 6 4 6 6
4 5
1050 1 -1 0 -1 -3
-3 -5 -5
1000
-16 -15
950
900
Jul-16
Jul-17
Jun-16
Jun-17
Nov-16
Nov-17
Apr-16
May-16
Apr-17
May-17
Aug-16
Dec-16
Aug-17
Dec-17
Mar-17
Jan-18
Jan-16
Feb-16
Mar-16
Sep-16
Jan-17
Feb-17
Sep-17
Oct-16
Oct-17
Source: TRAI, MOSL
Exhibit 3: Player-wise QoQ wireless traffic trend (b min) Exhibit 4: Player-wise QoQ wireless traffic growth trend (%)
Bharti (India) Idea Vodafone - India
13.1
16
11.3
512
10.8
10.7
495
10.3
437
422
12
9.1
8.4
381
7.3
330
315
313
308
283
15.5
5.4
8
255
251
231
3.6
210
3.5
199
196
3.1
2.2
1.7
4 0.7
0
-0.5
1QFY17 -1.3
2QFY17 -1.9
-2.0
-4
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4QE
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18E
FY17 FY18
Exhibit 5: Player-wise QoQ data traffic trend (b Mb) Exhibit 6: Player-wise QoQ wireless traffic growth trend (%)
Bharti (India) Idea Vodafone - India Bharti (India) Idea Vodafone - India
1312
1106
99.1
83.8
73.5
784
710
61.4
571
567
47.8
472
439
384
30.2
24.3
253
22.7
238
225
178
172
16.7
158
15.4
129
127
13.2
110
109
107
105
101
109.8
93
9.8
12.7
31.0
65.9
41.1
18.6
6.5
1.3
7.7
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4QE
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18E
-3.5
FY17 FY18
April 2018 292

Exhibit 7: Player-wise QoQ ARPU trend (INR) Exhibit 8: Player-wise QoQ wireless traffic growth trend (%)
176
171
0.9
0.8
158
154
196
142
141
132
188
172
114
114
158
-13.1
145
123
-0.4
-0.5
-1.1
-15.2
-2.0
-3.1
-4.0
-4.4
-6.3
-6.6
-13.0
-7.0
-7.5
-7.7
-8.3
-8.4
-8.4
180
173
156
142
141
130
113
104
-9.2
-9.4
-9.9
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4QE
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18E
FY17 FY18
Exhibit 9: Aggregate India wireless revenue and growth trend (QoQ, %)
Agg. India wireless revenue Agg. India wireless revenue growth (QoQ, %)
8 7
600 6 5 4
500 1 2 2
-1 -1 0
400 -3
300 -6
-10 -9
200
100
0
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
Source: TRAI, MOSL
Exhibit 10: Relative Performance-3m (%) Exhibit 11: Relative Performance-1 Yr (%)
Sensex Index MOSL Telecom Index Sensex Index MOSL Telecom Index
108
143
100
131
92
119
84
107
76 95
Dec-17
Jan-18
Feb-18
Mar-18
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17

Telecom
Bharti Airtel 402 Buy 3.6 1.8 5.5 111.1 219.3 73.0 8.6 8.6 7.1 2.1 1.1 3.2
Bharti Infratel 338 Neutral 13.8 15.3 16.8 24.4 22.1 20.1 8.7 9.3 8.4 16.9 19.3 21.6
Idea Cellular 77 Buy -10.9 -12.9 -10.5 -7.1 -6.0 -7.4 14.2 16.0 11.1 -18.4 -23.4 -24.2
Tata Comm 652 Buy 2.2 11.0 22.8 289.9 59.4 28.5 10.3 8.9 6.8 4.3 20.2 32.1
Sector Aggregate -405.1 -155.3 197.4 9.4 9.5 7.8 -0.6 -1.7 1.3
April 2018 293

Exhibit 13: Wireless KPIs

FY15 FY16 FY17 FY18 YoY QoQ
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE (%) (%)
Wireless SUBS (m)
Bharti (India) 226 231 235 243 251 256 260 266 274 281 282 290 298 8.8 2.6
Idea 158 162 167 172 175 176 179 185 190 189 182 189 196 3.5 4.0
Vodafone - India 184 185 188 194 198 199 201 205 209 212 207 213
Avg. Wireless Subs (m)
Bharti (India) 222 228 233 239 247 253 258 263 270 277 281 286 294 9.0 2.8
Idea 155 160 165 170 174 176 178 182 187 189 186 185 192 2.6 3.7
Vodafone - India 182 185 187 191 196 199 200 203 207 211 210 210
ARPU (INR/month)
Bharti (India) 198 198 193 192 194 196 188 172 158 154 145 123 114 -27.5 -7.0
Idea 179 180 173 174 179 180 173 156 142 141 130 113 104 -26.7 -8.3
Vodafone - India 184 184 178 175 177 176 171 158 142 141 132 114
MOU/Sub (INR)
Bharti (India) 418 424 404 405 415 414 406 419 471 507 518 575 580 23.3 1.0
Idea 400 408 383 387 387 379 368 385 412 441 459 509 534 29.7 5.0
Vodafone - India 321 327 316 316 317 314 306 308 336 NA NA NA
Wireless traffic (B min)
Bharti (India) 278 290 282 290 308 315 313 330 381 422 437 495 512 34.2 3.5
Idea 185 196 189 196 202 199 196 210 231 251 255 283 308 33.2 9.1
Vodafone - India 174 181 177 181 186 187 184 189 211 NA NA NA
Data traffic (B Mb)
Bharti (India) 87 102 115 134 147 158 178 172 225 472 784 1,106 1,312 482.8 18.6
Idea 55 63 72 81 82 93 107 109 127 253 439 571 710 459.1 24.3
Vodafone - India 64 75 83 94 94 101 110 105 129 238 384 567
Exhibit 14: Quarterly financials (pro forma)

FY15 FY16 FY17 FY18 YoY QoQ
4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE (%) (%)
Revenue (INR b)
Bharti (ex Africa) 168.0 174.3 174.7 177.3 185.1 193.0 193.5 179.8 168.9 171.1 165.7 151.9 149.0 -11.8 -1.9
Bharti (consolidated) 230.2 235.9 237.5 239.8 249.6 255.5 246.5 233.4 219.3 219.6 217.8 203.2 200.4 -8.6 -1.4
Idea 84.2 87.9 86.9 90.1 94.8 94.9 93.0 86.6 81.3 81.7 74.7 65.1 62.4 -23.2 -4.2
Vodafone - India 104.0 105.5 103.9 105.1 108.8 108.9 106.5 99.7 92.2 92.4 85.7 74.5
EBITDA (INR b)
Bharti (ex Africa) 68.0 69.6 69.6 70.8 76.8 81.9 82.0 72.4 65.7 64.2 62.8 56.6 50.7 -22.8 -10.5
Idea 30.6 29.8 30.6 31.3 36.2 30.9 28.4 21.7 21.2 18.8 15.0 12.2 10.4 -51.0 -15.2
EBITDA Margin (%)
Bharti (ex Africa) 40.5 39.9 39.8 39.9 41.5 42.5 42.4 40.3 38.9 37.5 37.9 37.3 34.0 -487bps -325bps
Bharti (consolidated) 35.1 34.9 34.7 35.1 36.5 37.4 38.3 36.3 35.8 35.3 36.4 36.8 34.4 -145bps -237bps
Idea 36.4 33.9 35.2 34.7 38.1 32.6 30.5 25.0 26.1 23.0 20.1 18.8 16.6 -945bps -216bps
PAT (INR b)
Idea 9.4 8.5 8.1 7.6 5.8 2.2 0.9 -3.8 -3.3 -8.1 -11.1 -12.8 -15.8 NA NA
EPS (INR)
Idea 2.6 2.4 2.2 2.1 1.6 0.6 0.3 -1.1 -0.9 -2.3 -3.1 -3.6 -3.6 NA NA
April 2018 294

Bharti Airtel
Bloomberg BHARTI IN CMP: INR402 TP: INR581 (+45%) Buy
Equity Shares (m) 3997.3  We expect consolidated revenue to decline 1.4% QoQ (and 9%
M. Cap. (INR b)/(USD b) 1606 / 25 YoY) to INR200.4b. Given the continued ARPU downtrading on
52-Week Range (INR) 565 / 333 account of the renewed competition from RJIo, we expect India
1,6,12 Rel Perf. (%) -4 / -2 / 6 wireless revenue to decline 4.4% QoQ (and 21% YoY) to
INR102.8b. Africa revenue is expected to remain flat QoQ at
Financial Snapshot (INR Billion) INR51.5b.
Y/E March 2017 2018E 2019E 2020E  Consolidated EBITDA margin is likely to contract 240bp QoQ to
Net Sales 954.7 841.0 853.1 957.4 34.4%, led by 440bp contraction in India wireless margin to
EBITDA 353.3 300.4 302.1 356.2 28.2%, partly offset by 20bp expansion in Africa EBITDA margin to
Adj. NP 44.4 14.4 7.3 22.0 35.4%.
Adj EPS(INR) 11.1 3.6 1.8 5.5  Consolidated net profit is expected to fall 46% QoQ (and 56% YoY)
Adj EPS Gr.(%) -9.5 -67.5 -49.3 200.6 to INR1.6b.
BV/Sh (INR) 168.8 170.5 171.1 175.4  We expect India wireless ARPU to decline 7% QoQ (and 28% YoY)
RoE (%) 6.6 2.1 1.1 3.2 to INR114.
RoCE (%) 5.3 3.8 3.2 4.3  Bharti trades at an EV/EBITDA of 8.9x FY19E and 7.3x FY20E.
Div. payout (%) 12.7 40.8 65.7 21.9 Maintain Buy.
Valuations
Key monitorables
P/E (x) 36.1 111.1 219.3 73.0
 Consolidated revenue (expect 1.4% decline QoQ).
P/BV (x) 2.4 2.4 2.3 2.3
 India wireless revenue (expected to decline 4.4% QoQ).
EV/EBITDA (x) 7.4 8.9 8.9 7.3
 Consolidated EBITDA margin (expected at 34.4%; -240bp QoQ).
Div. Yld (%) 0.2 0.2 0.2 0.2
 India wireless EBITDA margin (expected at 28.2%; -440bp QoQ).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Revenue 2,55,465 2,46,515 2,33,357 2,19,346 2,19,581 2,17,769 2,03,186 2,00,440 9,54,683 8,40,976
YoY Change (%) 7.9 3.4 -3.0 -12.1 -14.0 -11.7 -12.9 -8.6 -1.1 -11.9
Total Expenditure 1,59,985 1,52,113 1,48,542 1,40,746 1,41,997 1,38,549 1,28,498 1,31,522 6,01,386 5,40,566
EBITDA 95,480 94,402 84,815 78,600 77,584 79,220 74,688 68,918 3,53,297 3,00,410
Margins (%) 37.4 38.3 36.3 35.8 35.3 36.4 36.8 34.4 37.0 35.7
Depreciation 50,402 49,560 48,350 49,418 48,192 46,873 48,375 50,341 1,97,730 1,93,781
Net Finance cost 19,399 19,057 19,356 19,162 18,274 23,266 20,882 16,940 76,974 79,362
Other Income 2,787 1,568 3,487 2,494 3,698 3,907 2,950 2,950 10,336 13,505
Extra-Ord expense 3,536 66 2,040 6,055 503 1,786 2,395 0 11,697 4,684
PBT 24,930 27,287 18,556 6,459 14,313 11,202 5,986 4,587 77,232 36,088
Tax 10,089 11,136 11,841 1,753 8,136 5,341 379 1,835 34,819 15,691
Rate (%) 40.5 40.8 63.8 27.1 56.8 47.7 6.3 40.0 45.1 43.5
Minority Interest 222 1,544 1,678 972 2,504 2,431 2,549 1,116 4,416 8,600
Reported PAT 14,619 14,607 5,037 3,734 3,673 3,430 3,058 1,637 37,997 11,798
Adj PAT 16,724 14,646 5,775 8,146 3,890 4,364 5,301 1,637 44,421 14,445
YoY Change (%) 70.7 25.9 -54.6 -45.5 -76.7 -70.2 -8.2 -79.9 -9.5 -67.5
Margins (%) 6.5 5.9 2.5 3.7 1.8 2.0 2.6 0.8 4.7 1.7
E: MOSL Estimates
April 2018 295

Bharti Infratel
Bloomberg BHIN IN CMP: INR338 TP: INR380 (+12%) Neutral
 We expect consolidated revenue to decline 2% QoQ (but grow 2%
M. Cap. (INR b)/(USD b) 641 / 10
YoY) to INR36b.
1,6,12 Rel Perf. (%)
 Consolidation in the sector is likely to continue pressurizing
1 / -23 / -9
tenancies. We expect 2% QoQ decline in tenancies leading to 2%
QoQ decline in consolidated rental revenue to INR22.1b. We
Y/E March 2017 2018E 2019E 2020E
expect energy and other reimbursements to remain flat QoQ at
Net Sales 134.2 144.3 147.9 159.4
INR13.9b.
EBITDA 59.0 63.6 61.7 66.5  We expect consolidated EBITDA too to decline 2% QoQ to
Adj. NP 27.5 25.6 28.2 31.1 INR15.7b. Though rental EBITDA margin is expected to drop 90bp
AdjEPS INR 14.9 13.8 15.3 16.8 QoQ to 65.5%, 190bp expansion in energy EBITDA margin to 8.8%
Gr. (%) 25.3 -6.9 10.4 10.0 would enable consolidated EBITDA margin of 43.6%.
BV/Sh (INR) 83.7 80.2 78.0 77.4  We expect PAT to rise 14% QoQ to INR6.7b.
RoE (%) 16.2 16.9 19.3 21.6  Bharti Infratel trades at EV/EBITDA of 9x FY19E and 8.4x FY20E.
RoCE (%) 13.2 14.6 14.6 16.5 Maintain Neutral.
Payout (%) 125.0 125.8 114.0 103.6
Valuations Key monitorables
P/E (x) 22.8 24.4 22.1 20.1  Consolidated net co-location deletions (we expect ~3,720 QoQ
P/BV (x) 4.0 4.2 4.3 4.4 tenancy deletions in 4QFY18).
EV/EBITDA (x) 9.6 8.8 9.0 8.4  Consolidated revenue per sharing operator (expected to remain
Div. Yld (%) 4.7 4.4 4.4 4.3 flat QoQ).
Consolidated Quarterly Performance (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue from operations 32,106 32,919 34,007 35,204 35,239 36,482 36,553 35,990 1,34,237 1,44,264
YoY Change (%) 6.9 8.3 9.5 10.6 9.8 10.8 7.5 2.2 8.9 7.5
EBITDA 13,947 14,498 14,801 15,723 15,750 16,146 15,982 15,703 58,969 63,581
Margins (%) 43.4 44.0 43.5 44.7 44.7 44.3 43.7 43.6 43.9 44.1
Depreciation 5,648 5,629 5,664 5,684 5,905 5,941 5,895 6,045 22,626 23,786
Interest -1,281 -2,472 -947 287 -627 -109 510 -489 -4,414 -715
Other Income 352 333 357 414 474 401 495 0 1,455 1,370
PBT 9,932 11,674 10,441 10,166 10,946 10,715 10,072 10,146 42,212 41,879
Tax 2,369 3,936 4,237 4,200 4,307 4,331 4,218 3,450 14,742 16,306
Rate (%) 23.9 33.7 40.6 41.3 39.3 40.4 41.9 34.0 34.9 38.9
Reported PAT 7,563 7,738 6,204 5,966 6,639 6,384 5,854 6,696 27,470 25,573
Adj PAT 7,563 7,738 6,204 5,966 6,639 6,384 5,854 6,696 27,470 25,573
YoY Change (%) 71.0 30.8 25.3 -17.0 -12.2 -17.5 -5.6 12.2 22.2 -6.9
Margins (%) 23.6 23.5 18.2 16.9 18.8 17.5 16.0 18.6 20.5 17.7
E: MOSL Estimates
April 2018 296

Idea Cellular
Bloomberg IDEA IN CMP: INR77 TP: INR91 (+17%) Buy
 We expect consolidated revenue to decline 4.2% QoQ (and 23.2%
M. Cap. (INR b)/(USD b) 279 / 4
52-Week Range (INR)
YoY) to INR62.4b.
118 / 72
1,6,12 Rel Perf. (%) -5 / -4 / -20  We expect ARPU to decline 8% QoQ (and 27% YoY) to INR104,
impacted by downward revision in price plans (by RJio).
Financial Snapshot (INR Million)
 EBITDA margin is expected to contract ~220bp QoQ/9.5pp YoY to
Y/E March 2017 2018E 2019E 2020E
16.6% due to plunge in revenue.
Net Sales 355.8 284.3 258.8 292.6
EBITDA 102.8 56.8 49.9 72.3  We expect Idea’s net loss to widen to INR15.8b v/s INR12.8b in
Adj. NP -4.0 -47.4 -56.1 -45.8 3QFY18.
AdjEPS (INR) -1.1 -10.9 -12.9 -10.5  Idea trades at an EV/EBITDA of 17.2x FY19E and 11.9x FY20E.
Adj.EPSGr(%) -116.2 880.5 18.5 -18.3 Maintain Buy.
BV/Sh(INR) 68.6 61.4 48.5 46.7
RoE (%) -1.7 -18.4 -23.4 -24.2
RoCE (%) 1.6 -2.4 -3.2 -2.0
Key monitorables
Payout (%) 0.0 0.0 0.0 0.0
 Consolidated revenue (expect 4.2% decline QoQ).
Valuations
 Blended ARPU (we expect INR104, 8% QoQ fall).
P/E (x) -69.9 -7.1 -6.0 -7.4
 EBITDA margin (we expect 220bp contraction QoQ).
P/BV (x) 1.1 1.3 1.6 1.7
EV/EBITDA(x) 7.4 14.3 17.2 11.9
Div. Yield (%) 0.0 0.0 0.0 0.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Gross Revenue 94,866 93,002 86,627 81,261 81,665 74,655 65,096 62,383 3,55,758 2,84,267
YoY Change (%) 7.9 7.0 -3.9 -14.3 -13.9 -19.7 -24.9 -23.2 12.7 -20.1
EBITDA 30,949 28,374 21,916 21,199 18,754 15,016 12,234 10,377 1,02,763 56,849
Margins (%) 32.6 30.5 25.3 26.1 23.0 20.1 18.8 16.6 28.9 20.0
Depreciation 19,192 19,543 19,653 19,885 20,679 21,143 21,415 23,326 78,272 86,563
Share in Profits from Associates 1,035 1,057 1,144 983 818 843 818 834 4,218 3,313
Net Finance Costs 9,429 8,726 9,494 9,366 11,539 11,829 11,490 11,408 37,342 46,266
PBT 3,363 1,161 -6,087 -7,069 -12,646 -17,113 -19,853 -23,522 -8,633 -72,666
Tax 1,158 247 -2,248 -3,792 -4,497 -6,047 -7,008 -7,762 -4,636 -25,314
Rate (%) 34.4 21.3 36.9 53.6 35.6 35.3 35.3 33.0 53.7 34.8
Reported PAT 2,205 914 -3,839 -3,277 -8,149 -11,066 -12,845 -15,760 -3,997 -47,352
YoY Change (%) -74.2 -88.7 NM NM NM NM NM NM NM NM
Margins (%) 2.3 1.0 -4.4 -4.0 -10.0 -14.8 -19.7 -25.3 -1.1 -16.7
E: MOSL Estimates
April 2018 297

Tata Communications
Bloomberg TCOM IN CMP: INR652 TP: INR750 (+15%) Buy
 Tata Communications’ revenue is expected grow 1% QoQ (decline
M. Cap. (INR b)/(USD b) 186 / 3
3% YoY) to INR41.6b on steady data revenues, offsetting the
1,6,12 Rel Perf. (%) 4 / -12 / -22
impact of muted voice revenue.
 Data revenue is likely to grow 2% QoQ (6% YoY) to INR29.5b
Financial Snapshot (INR Million) whereas voice revenue is expected to decline 2% QoQ (and 20%
Y/E March 2017 2018E 2019E 2020E YoY) to INR12.1b.
Net Sales 176.2 168.0 174.8 190.5
 Core EBITDA is expected to grow 1% QoQ to INR6.2b on the back
EBITDA 24.1 23.6 27.9 33.9
of data EBITDA, and Core EBITDA margin should remain flat at
Adj. NP 2.8 0.6 3.1 6.5
AdjEPS (INR) 10.0 2.2 11.0 22.8
14.9%. Data EBITDA is expected to grow 3% QoQ to INR5.5b.
Adj.EPSGr. (%) 192.1 -77.4 388.0 108.3  The stock trades at an EV/EBITDA of 9.8x FY19E and 7.5x FY20E.
BV/Sh(INR) 55.9 48.8 59.8 82.6 Maintain Buy.
RoE (%) 46.1 4.3 20.2 32.1
RoCE (%) 9.9 -39.1 5.3 8.3
Valuations
P/E (x) 65.6 289.9 59.4 28.5 Key monitorables
P/BV (x) 11.7 13.4 10.9 7.9  Data revenue performance (we expect 2% QoQ growth).
EV/EBITDA(x) 11.4 11.7 9.8 7.5  Data EBITDA margin (we expect flat EBITDA margin of 18.7%).
Div. Yield (%) 0.7 0.7 0.7 0.7
Cons. Quarterly Earning Model (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 44,569 45,091 43,601 42,937 43,100 42,176 41,146 41,594 1,76,197 1,68,017
YoY Change (%) -14.0 -12.1 -14.5 -16.5 -3.3 -6.5 -5.6 -3.1 -2.9 -4.6
EBITDA 6,720 6,625 5,691 5,024 5,586 5,645 6,128 6,195 24,059 23,554
Margins (%) 15.1 14.7 13.1 11.7 13.0 13.4 14.9 14.9 13.7 14.0
Depreciation 4,660 4,644 4,677 4,677 4,447 4,837 4,728 5,403 18,658 19,415
Interest 933 960 999 780 761 877 896 853 3,672 3,387
Other Income 954 728 909 1,012 444 292 740 158 3,603 1,634
PBT before EO expense 2,081 1,750 924 578 822 223 1,244 98 5,332 2,387
Exceptional expense 0 0 0 10,633 0 2,134 0 0 10,633 2,134
PBT 2,081 1,750 924 -10,055 822 -1,911 1,244 98 -5,301 253
Tax 734 899 923 -192 461 588 1,050 32 2,364 2,131
Rate (%) 35.3 51.4 99.9 1.9 56.0 -30.8 84.4 33.0 -44.6 843.8
MI & P/L of Asso. Cos. -6 -5 -7 -49 39 1 92 1 -25 134
Reported PAT 1,353 856 7 -9,815 322 -2,500 101 64 -7,640 -2,012
Adj PAT 1,353 856 7 616 322 291 -37 64 2,832 641
YoY Change (%) 212.5 1,321.3 -96.6 NM -76.2 NM -597.3 -89.6 NM NM
Margins (%) 3.0 1.9 0.0 1.4 0.7 0.7 -0.1 0.2 1.6 0.4
E: MOSL Estimates
April 2018 298

March 2018 Results Preview | Sector: Utilities
Utilities
Company name Coal India and Power Grid to outperform
CESC Coal India to benefit from price hike
Coal India
JSW Energy Within our Utilities Universe, we expect Coal India to outperform, led by the price
NHPC hike benefit. We estimate its EBITDA (ex-OBR) to increase 22% QoQ/39% YoY to
NTPC INR67.5b on the price hike benefit. Dispatches have increased 5% YoY/QoQ to
Power Grid Corp. 159mt. We expect higher growth (~7% YoY) in FSA volumes, while e-auction
Tata Power volumes are expected to be broadly flat. FSA realizations are estimated to decline
3% YoY, while e-auction realization is estimated to be broadly flat QoQ. We expect
PAT to increase 89% YoY/71% QoQ to INR51.4b.
Power Grid’s PAT is expected to increase by ~19% YoY to INR23.9b, led by growth in
regulated equity. We estimate capitalization of INR84.9b, taking full-year
capitalization to ~INR280b. NTPC’s adj. PAT is expected to increase by ~3% YoY to
INR27.4b due to under-recoveries at some of its plants. Regulated equity is expected
to increase by ~15% YoY to INR507b. Commercial capacity is unchanged QoQ.
1.6GW of capacity was commissioned during the quarter.
CESC’s growth is likely to be muted as tariff approval is delayed. JSW Energy’s

EBITDA is expected to decline 11% YoY/34% QoQ to INR5.2b on lower generation at
merchant plants and lower hydro power generation. NHPC’s PAT is expected to
increase ~2% YoY to INR1.7b. Tata Power’s PAT is expected to increase 15% YoY to
INR4.4b on higher coal prices.
Modest growth in conventional electricity generation: All-India electricity

generation grew 7%/4% in January/February. Conventional electricity generation
grew ~6%/3% YoY. YTD February electricity generation growth (including
renewables) was 5.2% YoY.
ST prices seasonally higher: Short-term (ST) prices on IEX were down 2% QoQ to
INR3.5/kWh. IEX day-ahead volumes were up 12% YoY to 10.6bu in 4QFY18.

Sector CMP Sales EBDITA PAT
(INR) Reco Mar-18 Mar-18 Mar-18
CESC 1,005 Buy 13,160 -16.3 -22.9 4,963 143.3 58.0 3,033 2.8 96.9
Coal India 278 Buy 250,505 8.1 15.7 67,597 38.7 22.0 51,367 89.0 70.9
JSW Energy 79 Sell 18,803 1.0 -5.7 5,235 -10.8 -10.6 625 158.0 33.3
NHPC 29 Buy 20,090 47.5 34.1 9,036 305.1 15.2 1,720 2.1 -75.0
NTPC 170 Buy 189,313 -7.3 -8.6 61,303 5.2 17.5 27,439 3.1 28.6
Power Grid Corp. 198 Buy 63,101 -6.0 -15.9 57,831 1.4 -12.9 23,989 19.2 6.5
Tata Power 84 Sell 97,131 35.5 39.8 15,752 17.0 30.3 4,733 21.7 59.7
Sanjay Jain – Research analyst (SanjayJain@MotilalOswal.com); +91 22 6129 1523

Dhruv Muchhal – Research analyst (Dhruv.Muchhal@MotilalOswal.com); +91 22 6129 1549
April 2018 299
Exhibit 2: Relative performance—3m (%) Exhibit 3: Relative performance—1Yr (%)

Sensex Index MOSL Utilities Index Sensex Index MOSL Utilities Index
122
106
102 114
98 106
94 98
90 90
Jul-17
Jun-17
Nov-17
Apr-17
May-17
Aug-17
Dec-17
Mar-17
Sep-17
Jan-18
Feb-18
Mar-18
Oct-17
Dec-17
Jan-18
Feb-18
Mar-18

Sector / Companies CMP Reco EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
Utilities
CESC 1,005 Buy 86.5 95.2 103.1 11.6 10.6 9.7 7.0 6.7 6.2 10.4 10.4 10.3
Coal India 278 Buy 17.8 26.4 30.8 15.7 10.5 9.1 8.9 6.0 5.2 47.4 65.8 71.2
JSW Energy 79 Sell 3.8 3.6 4.0 20.9 22.1 20.0 9.1 9.3 9.1 5.9 5.5 6.0
NHPC 29 Buy 2.4 3.0 3.2 11.9 9.7 9.1 8.9 7.3 6.5 8.6 10.3 10.7
NTPC 170 Buy 13.0 15.2 16.6 13.1 11.2 10.2 11.3 9.2 8.0 10.6 11.6 11.8
Power Grid Corp. 198 Buy 16.9 20.7 21.9 11.7 9.6 9.1 8.7 7.7 7.2 16.6 17.7 16.5
Tata Power 84 Sell 4.9 7.3 7.9 17.3 11.6 10.7 11.7 10.3 9.6 10.8 14.5 14.0
April 2018 300

CESC
Bloomberg CESC IN
CMP: INR1005 TP: INR1,391 (+38%) Buy
 We expect CESC’s standalone PAT to increase 2.8% YoY to
M. Cap. (INR b)/(USD b) 134 / 2
INR3.03b, driven by savings in transmission and distribution losses,
1,6,12 Rel Perf. (%) 2 / -5 / 6
partly offset by delay in approval of tariff for FY18.
 Regulated equity is estimated to grow by 6.7% YoY/1.3% QoQ to
Financial Snapshot (INR Million) INR40.1b.
Y/E MARCH FY17 FY18E FY19E FY20E  Spencer EBITDA should improve with a better performance after
Sales 139.0 146.5 156.3 164.6 initial GST hiccups, and transitory impact due to regulatory issues
EBITDA 31.6 36.2 37.7 39.1 in certain states in 3Q. The company expects to turn PAT positive
NP 6.9 11.5 12.7 13.7 in 4QFY18. Buy.
EPS (INR) 51.9 86.5 95.2 103.1
EPS Gr. (%) 14.7 66.8 10.0 8.4
BV/Sh. (INR ) 797.4 871.9 955.1 1,046.2
RoE (%) 6.5 10.4 10.4 10.3
RoCE (%) 7.3 8.3 8.5 8.5
Payout (%) 19.3 11.6 10.5 9.7
VALUATION
P/BV (x) 1.3 1.1 1.0 1.0  Performance of Spencer.
EV/EBITDA (x) 8.8 7.5 7.1 6.6  Progress on demerger.
Div. Yield (%) 1.0 1.0 1.0 1.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 20,120 20,160 16,200 15,720 21,840 20,880 17,060 13,160 72,200 72,940
Change (%) 18.1 13.8 5.3 6.3 8.5 3.6 5.3 -16.3 12.2 1.0
EBITDA 5,110 5,910 3,150 2,040 6,070 5,050 3,140 4,963 16,210 19,223
Change (%) 32.4 34.9 5.7 -57.1 18.8 -14.6 -0.3 143.3 1.4 18.6
As of % Sales 25.4 29.3 19.4 13.0 27.8 24.2 18.4 37.7 22.5 26.4
Depreciation 960 990 980 1,160 1,050 1,080 1,090 1,072 4,090 4,292
Interest 1,150 1,160 1,080 1,090 1,210 1,260 1,210 1,286 4,480 4,966
Other Income 260 320 300 590 400 350 430 167 1,470 1,347
Regulatory (inc)/exp 620 600 -960 -3,410 1,940 -90 -700 -1,150 -3,150 0
PBT 2,640 3,480 2,350 3,790 2,270 3,150 1,970 3,921 12,260 11,311
Tax 900 1,060 830 840 490 680 430 889 2,380 2,489
Reported PAT 1,740 2,420 1,520 2,950 1,780 2,470 1,540 3,033 9,880 8,823
Adjusted PAT 1,740 2,420 1,520 2,950 1,780 2,470 1,540 3,033 8,630 8,823
Change (%) 14.5 24.1 35.7 19.0 2.3 2.1 1.3 2.8 22.1 2.2
April 2018 301

Coal India
Bloomberg COAL IN
 We expect Coal India’s EBITDA (ex-OBR) to increase ~22% QoQ to
M. Cap. (INR b)/(USD b) 1728 / 27
INR67.6b on price hike benefit and higher volumes.
-9 / -3 / -17
 Dispatches are up 5% YoY to 159.1mt. FSA volumes are estimated
1,6,12 Rel Perf. (%)
to increase 6.8% YoY to 124mt on strong power sector demand.
Financial Snapshot (INR Million) E-auction volumes would be flat YoY at ~28mt.
Y/E MARCH 2017 2018E 2019E 2020E  FSA realization is estimated to decline 3% YoY to INR1,338/ton on
Net Sales 782.2 840.3 941.6 1,002.9 grade slippage impact, after factoring for the price hike.
EBITDA 149.1 171.8 251.9 292.8  E-auction realization is estimated to be flat QoQ at INR1,974/t.
NP 92.7 110.4 163.9 190.9  PAT is estimated to increase ~71% QoQ to INR51.4b. Buy.
Adj.EPS (INR) 14.9 17.8 26.4 30.8
EPS Gr. (%) -34.0 19.2 48.4 16.5
BV/Sh. (INR) 39.5 37.5 40.1 43.2
RoE (%) 37.8 47.4 65.8 71.2
RoCE (%) 32.2 46.0 67.3 73.0
Payout (%) 163.0 111.3 90.0 90.0
Valuation
P/BV (x) 6.9 7.3 6.8 6.3  E-auction volumes and realization.
EV/EBITDA 8.8 8.0 5.6 4.9  Global coal prices.
(x)
Div. Yield (%) 7.3 6.0 7.2 8.4

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 184,219 162,125 204,146 231,716 191,617 181,483 216,433 250,505 782,206 840,325
Change (%) -5.6 -7.3 4.2 8.3 4.0 11.9 6.0 8.1 0.3 7.4
Adj. EBITDA 44,879 8,851 46,673 48,719 34,151 12,888 55,405 67,597 149,121 170,327
As of % Sales 24.4 5.5 22.9 21.0 17.8 7.1 25.6 27.0 19.1 20.3
Depreciation 6,672 6,921 7,011 8,498 6,699 7,146 7,511 8,025 29,101 29,380
OBR 2,331 1,425 8,124 14,843 -1,069 578 9,226 3,444 26,722 12,180
Interest 890 970 1,107 1,151 1,209 1,007 974 385 4,117 3,575
Other Income 11,306 14,125 11,167 18,558 12,066 6,107 8,409 9,082 55,156 35,663
PBT 46,293 13,661 41,598 42,784 39,378 10,264 46,102 64,824 144,337 160,855
Tax 15,641 7,660 12,754 15,606 15,860 6,576 16,052 13,457 51,660 51,944
Tax Rate (%) 33.8 56.1 30.7 36.5 40.3 64.1 34.8 20.8 35.8 32.3
Reported PAT 30,653 6,001 28,845 27,179 23,518 3,689 30,050 51,367 92,677 108,911
Adjusted PAT 30,653 6,001 28,845 27,179 23,518 3,689 30,050 51,367 92,677 108,911
Change (%) -19.1 -76.2 -21.7 -35.9 -23.3 -38.5 4.2 89.0 -34.9 17.5
April 2018 302

JSW Energy
Bloomberg JSW IN
 We estimate JSW Energy’s EBITDA to decline 11% YoY to INR5.2b
M. Cap. (INR b)/(USD b) 130 / 2
on lower generation at Hydro and merchant power plants.
0 / -1 / 12
 Vijaynagar PLF is estimated at 45% v/s 77% in the previous year.
1,6,12 Rel Perf. (%)
 Imported coal prices are estimated to be broadly flat QoQ at
Financial Snapshot (INR Million) USD84/t. Sell.
Y/E MARCH 2017 2018E 2019E 2020E
Sales 826.3 815.4 845.6 918.0
EBITDA 33.2 28.6 29.0 31.3
NP 6.3 6.2 5.9 6.5
EPS (INR) 3.8 3.8 3.6 4.0
EPS Gr. (%) -51.5 -0.9 -5.6 10.5
BV/Sh. (INR ) 63.2 64.6 65.8 67.3
RoE (%) 6.3 5.9 5.5 6.0
RoCE (%) 8.6 7.8 7.5 7.5
Payout (%) 52.1 52.6 55.7 50.4
VALUATION
P/BV (x) 1.3 1.2 1.2 1.2  International coal prices.
EV/EBITDA (x) 8.5 9.6 9.4 9.1  Short-term power market prices.
Div. Yield (%) 2.5 2.5 2.5 2.5
Consolidated performance (INR Million)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 24,500 20,470 19,043 18,621 22,316 20,490 19,932 18,803 82,634 81,541
YoY Change (%) 16.3 -19.1 -28.1 -30.6 -8.9 0.1 4.7 1.0 -17.1 -1.3
EBITDA 11,173 9,627 6,575 5,869 8,688 8,824 5,853 5,235 33,244 28,600
Margins (%) 45.6 47.0 34.5 31.5 38.9 43.1 29.4 27.8 40.2 35.1
Depreciation 2,398 2,471 2,444 2,379 2,428 2,449 2,407 2,417 9,692 9,700
Interest 4,293 4,356 4,229 3,970 3,963 3,910 3,406 3,351 16,848 14,629
Other Income 416 516 505 732 1,025 1,705 879 994 2,170 4,604
PBT before EO expense 4,899 3,316 407 253 3,323 4,170 920 461 8,875 8,874
PBT 4,899 3,316 407 253 3,323 4,170 920 461 8,875 8,874
Tax 1,248 1,167 249 22 1,114 1,202 198 60 2,685 2,574
Rate (%) 25.5 35.2 61.2 8.6 33.5 28.8 21.5 13.0 30.3 29.0
MI and Associates -14 -25 -56 -11 36 -1 254 -224 -106 66
Reported PAT 3,665 2,174 214 242 2,173 2,969 469 625 6,295 6,235
Adj PAT 3,665 2,174 214 242 2,173 2,969 469 625 6,295 6,235
YoY Change (%) 32.1 -42.3 -93.3 -92.1 -40.7 36.6 119.1 158.0 -51.2 -1.0
April 2018 303

NHPC
Bloomberg NHPC IN
 We expect PAT to increase 2% YoY to INR1.7b.
M. Cap. (INR b)/(USD b) 298 / 5
6 / -2 / -21
 Other income is expected to decline from INR5.7b in 3Q to INR1.3b
1,6,12 Rel Perf. (%)
in 4Q as the base is stronger due to dividend from subsidiaries and
Financial Snapshot (INR Million) late payment surcharge. Buy.
Y/E MARCH 2017 2018E 2019E 2020E
Sales 86.2 90.6 106.2 117.3
EBITDA 48.4 51.7 66.4 74.8
NP 30.3 25.1 30.7 32.8
EPS (INR) 3.0 2.4 3.0 3.2
EPS Gr. (%) 25.6 -17.2 22.2 7.0
BV/Sh. (INR ) 28.3 28.6 29.4 30.3
RoE (%) 10.0 8.6 10.3 10.7
RoCE (%) 7.0 6.4 7.8 9.1
Payout (%) 98.9 88.3 72.3 71.3
Valuation
P/BV (x) 1.0 1.0 1.0 0.9  Commissioning of on-going projects.
Div. Yield (%) 8.4 6.3 6.3 6.7

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 21,968 24,034 13,086 13,624 23,275 19,717 14,979 20,090 72,712 78,062
YoY Change (%) 9.7 2.5 -4.3 -16.9 6.0 -18.0 14.5 47.5 -1.1 7.4
EBITDA 13,565 15,595 6,244 2,231 13,863 11,150 7,843 9,036 37,636 41,892
Margins (%) 61.8 64.9 47.7 16.4 59.6 56.5 52.4 45.0 51.8 53.7
Depreciation 3,384 3,422 3,551 3,527 3,536 3,505 3,469 3,358 13,884 13,868
Interest 2,751 2,794 2,688 2,499 2,409 2,356 2,279 2,164 10,732 9,208
Other Income 1,633 8,779 1,750 2,426 1,053 5,194 5,688 1,271 14,587 13,205
Rate regulated activity 1,379 1,085 1,340 3,336 2,010 1,426 1,710 -1,098 7,140 4,047
PBT 10,443 19,243 3,095 1,966 10,980 11,908 9,492 3,688 34,746 36,068
Tax 1,864 3,696 948 282 2,354 1,722 2,613 1,968 6,790 8,656
Rate (%) 17.9 19.2 30.6 14.3 21.4 14.5 27.5 53 19.5 24.0
Reported PAT 8,578 15,547 2,147 1,684 8,627 10,186 6,879 1,720 27,956 27,412
Adj PAT 8,578 15,547 2,147 1,684 8,627 10,186 6,879 1,720 27,956 27,412
April 2018 304

NTPC
Bloomberg NTPC IN
 We expect adjusted PAT to increase ~3% YoY to INR27.4b, as
M. Cap. (INR b)/(USD b) 1398 / 21
growth in regulated equity is offset by under-recovery on account
6 / -5 / -9
of lower DC at a few plants.
1,6,12 Rel Perf. (%)
 Installed capacity is unchanged QoQ. It commissioned ~1.6GW in
Financial Snapshot (INR Million) standalone and 600MW in JV in the quarter.
Y/E MARCH 2017 2018E 2019E 2020E  Regulated equity is expected to increase by 15% YoY to INR507b.
Net Sales 817.2 838.9 943.0 1,029.8 Buy.
EBITDA 218.3 227.8 289.1 329.3
NP 101.9 107.1 125.1 136.8
Adj.EPS (INR) 12.4 13.0 15.2 16.6
EPS Gr. (%) 5.1 5.0 16.9 9.3
BV/Sh. (INR) 118.7 126.4 135.6 145.0
RoE (%) 10.9 10.6 11.6 11.8
RoCE (%) 6.6 6.5 7.2 7.7
Payout (%) 38.7 34.7 33.0 36.2
Valuation
P/BV (x) 1.4 1.3 1.2 1.1  PLF for coal-based projects and generation loss.
EV/EBITDA (x) 11.3 11.5 9.4 8.2  Core RoE and incentives.
Div. Yield (%) 2.7 3.0 3.6 3.9  Impact of shift in GCV determination.
Quarterly Performance (standalone) (INR m)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 188,585 193,979 193,959 204,167 201,076 198,518 207,151 189,313 782,734 796,058
Change (%) 10.3 8.1 10.9 11.4 6.6 2.3 6.8 -7.3
EBITDA 52,139 53,914 52,260 58,248 52,684 55,933 52,177 61,303 216,200 222,097
Other income 1,579 1,906 2,502 4,702 6,626 2,616 3,135 4,796 10,689 17,173
PBT 30,761 32,580 30,819 30,080 34,654 32,228 25,848 35,750 123,879 128,480
Tax 7,066 7,621 6,131 9,286 8,472 7,842 2,240 8,312 30,026 26,865
PAT 23,695 24,960 24,687 20,794 26,182 24,386 23,608 27,439 93,853 101,614
Change (%) 4.1 -17.9 -7.5 -25.5 10.5 -2.3 -4.4 32.0 -12.9 8.3
Adj. PAT 24,047 23,410 22,448 26,606 25,742 28,387 21,336 27,439 96,227 102,903
Change (%) 5.7 -0.7 0.0 0.5 7.0 21.3 -5.0 3.1 1.0 6.9
A. Core PAT 22,827 22,138 20,536 23,121 20,757 26,337 19,046 23,712 88,298 89,852
Core RoE (%) 21.9 21.0 19.4 21.4 18.9 22.7 15.3 18.7 20.7 19.0
a. Base RoE - 15.5% 15,582 16,337 16,428 16,765 17,058 17,972 19,245 19,623 65,113 73,899
b. PLF incentive 1,530 30 0 1,470 549 660 450 1,524 3,030 3,183
c. Others 5,715 5,771 4,108 4,885 3,150 7,705 -650 2,565 20,155 12,769
B. Other income 1,220 1,272 1,912 3,485 4,985 2,050 2,290 3,726 7,930 13,051
Key metrics
Regulated Equity 420,146 423,072 424,822 440,489 439,927 487,680 505,625 507,196 440,489 507,196
Commercial cap.(MW) 39,552 39,602 39,602 40,522 40,749 43,619 44,492 44,492 40,522 44,492
Coal-based PLF (%) 81.4 74.7 77.2 81.2 79.1 76.6 76.9
April 2018 305

Power Grid Corporation

Bloomberg PWGR IN
 We estimate PAT to grow by 19% YoY to INR23.9b, driven by
M. Cap. (INR b)/(USD b) 1038 / 16
growth in regulated equity.
2 / -10 / -10
 We estimate capitalization of INR84.9b in the quarter, with full-
1,6,12 Rel Perf. (%)
year capitalization at INR280b. We estimate capex of INR41b, with
Financial Snapshot (INR Million) full-year capex at INR220b. Buy.
Y/E MARCH 2017 2018E 2019E 2020E
Sales 257.0 298.2 350.3 388.5
EBITDA 226.6 262.7 310.6 344.6
NP 73.1 88.6 108.2 114.7
EPS (INR) 14.0 16.9 20.7 21.9
EPS Gr. (%) 25.1 21.3 22.1 6.0
BV/Sh. (INR ) 95.3 108.5 124.8 141.7
RoE (%) 15.6 16.6 17.7 16.5
RoCE (%) 7.3 8.2 8.8 8.8
Payout (%) 21.0 22.5 22.1 24.1
P/E (x) 14.0 11.6 9.5 8.9  Capitalization/capex guidance for FY18.
P/BV (x) 2.1 1.8 1.6 1.4  Details on competitively bid projects.
EV/EBITDA (x) 9.6 8.7 7.7 7.1
 Development on green energy projects, state JVs, etc.
Div. Yield (%) 1.3 1.6 1.9 2.1
Quarterly Performance INR million

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 60,691 62,296 65,010 67,120 71,814 72,528 75,070 63,101 257,165 285,634
Change (%) 29.4 28.5 22.1 16.9 18.3 16.4 15.5 -6.0 24.4 11.1
EBITDA 53,675 55,788 58,220 57,015 62,699 65,560 66,364 57,831 226,715 252,454
Change (%) 29.8 30.3 22.8 12.9 16.8 17.5 14.0 1.4 24.0 11.4
As of % Sales 88.4 89.6 89.6 84.9 87.3 90.4 88.4 91.6 88.2 88.4
Depreciation 17,573 18,769 19,653 20,633 21,311 22,350 23,186 10,106 76,628 76,953
Interest 15,178 15,876 16,426 15,558 17,624 18,673 19,555 19,116 63,038 74,968
Other Income 1,902 2,507 2,866 3,424 2,085 2,397 2,781 1,486 8,649 8,749
PBT 22,827 23,650 25,006 24,247 25,848 26,934 26,405 30,095 95,698 109,281
Tax 4,819 4,888 5,706 5,083 5,324 5,523 5,996 6,106 20,496 22,949
Reported PAT 18,008 18,762 19,300 19,164 20,524 21,410 20,408 23,989 75,202 86,332
Adjusted PAT 18,008 18,762 19,458 20,131 21,386 21,539 22,517 23,989 76,169 89,431
Change (%) 32.8 33.2 21.1 28.3 18.8 14.8 15.7 19.2 28.0 17.4
April 2018 306

Tata Power
Bloomberg TPWR IN
 We expect Tata Power’s adj. PAT to increase ~15% QoQ (up 51%
M. Cap. (INR b)/(USD b) 228 / 4
YoY) to INR4.5b, driven by an increase in coal prices, offset by
2 / 3 / -17
higher losses at Mundra.
1,6,12 Rel Perf. (%)
 We expect fuel cost under-recovery at Mundra of INR0.8/kWh,
Financial Snapshot (INR Million) driven by higher coal prices.
Y/E MARCH 2017 2018E 2019E 2020E  We estimate PAT of coal companies to increase by ~43% YoY to
Sales 279.0 312.9 324.7 341.8 INR3.6b, driven by higher realization. Sell.
EBITDA 58.5 64.6 69.3 71.9
NP 14.0 12.9 19.6 21.3
EPS (INR) 5.2 4.8 7.3 7.9
EPS Gr. (%) 83.8 -7.5 51.9 8.6
BV/Sh. (INR ) 43.5 46.3 53.8 58.6
RoE (%) 11.9 10.6 14.5 14.0
RoCE (%) 6.8 5.5 6.3 6.4
Payout (%) 0.0 27.2 17.9 16.5
Valuation
P/BV (x) 1.9 1.8 1.5 1.4  Cost control at Mundra.
Div. Yield (%) 0.0 1.6 1.6 1.6  Performance at Delhi.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 68,383 72,089 66,837 71,668 69,686 76,573 69,499 97,131 278,977 312,890
YoY Change (%) -24.9 -23.8 -27.6 -23.2 1.9 6.2 4.0 35.5 -5.4 12.2
EBITDA 16,355 14,616 14,029 13,467 18,311 18,498 12,087 15,752 58,467 64,648
Margins (%) 23.9 20.3 21.0 18.8 26.3 24.2 17.4 16.2 21.0 20.7
Depreciation 4,393 4,476 5,318 5,698 5,857 5,900 5,972 5,964 19,886 23,693
Interest 7,915 7,243 7,010 8,973 9,286 9,814 8,455 7,921 31,140 35,475
Other Income -477 1,029 -792 2,262 313 1,331 911 -232 2,022 2,322
Rate regulated activity -2,721 -3,064 1,523 -1,832 -2,438 -2,641 1,459 0 -6,095 -3,620
PBT before EO expense 849 862 2,432 -775 1,044 1,474 30 1,635 3,369 4,183
Extra-Ord expense 0 0 0 -6,515 0 -1,488 3,151 0 -6,515 1,663
PBT 849 862 2,432 -7,289 1,044 -15 3,181 1,636 -3,145 5,846
Tax 1,449 -1,117 706 -1,496 2,630 1,553 1,263 935 -458 6,380
Rate (%) 170.6 -129.6 29.0 20.5 252.0 39.7 57 14.6 109.1
MI & P/L of Asso. Cos. 1,324 1,383 4,356 3,169 3,224 3,909 4,197 3,783 10,142 15,112
Reported PAT 725 3,362 6,082 -2,625 1,638 2,342 6,115 4,483 7,455 14,578
Adj PAT 725 3,362 6,082 3,890 1,638 3,830 2,965 4,483 13,969 12,915
April 2018 307

Arvind
Bloomberg ARVND IN CMP: INR403 TP: INR402 Neutral
 We expect revenue to grow 14.8% YoY to INR28,296m in 4QFY18.
M. Cap. (INR b)/(USD b) 104 / 2
52-Week Range (INR) 478 / 354  EBIDTA margin is likely to contract 60bp YoY to 8.8%. EBIDTA is
1,6,12 Rel Perf. (%) -1 / 4 / -13 likely to grow by 7.4% YoY to INR2476m.

 We estimate adj. PAT to decline 22% YoY to INR831m from
Y/E MARCH 2017 2018E 2019E 2020E INR1,048m. Neutral.
Net Sales 92.4 106.4 122.5 138.1
EBITDA 9.4 9.1 11.0 13.0
Adj. Net Profit 3.3 2.9 3.6 4.9
Adj. EPS (INR) 12.4 11.3 14.1 18.8
Adj. EPS Gr. (%) 1.2 -8.4 23.8 34.1
BV/Sh (INR) 138.1 145.2 154.5 167.3
RoE (%) 10.3 8.0 9.4 11.7
RoCE (%) 8.8 7.2 7.7 9.1
Div. Payout (%) 23.5 32.0 34.5 32.1
P/E (x) 30.9 33.7 27.2 20.3  Movement of currency and cotton prices.
P/BV (x) 2.8 2.6 2.5 2.3  Performance of textile and apparel business.
EV/EBITDA (x) 14.6 15.5 12.8 10.8
Div. Yield (%) 0.6 0.8 1.0 1.3

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 21,041 23,311 23,355 24,648 24,750 26,285 27,058 28,296 92,355 106,380
YoY Change (%) 17.8 19.1 14.8 10.4 17.6 12.8 15.9 14.8 15.3 15.2
EBITDA 2,445 2,323 2,359 2,306 2,070 2,123 2,484 2,476 9,433 9,149
Margins (%) 11.6 10.0 10.1 9.4 8.4 8.1 9.2 8.8 10.2 8.6
Depreciation 691 719 734 827 863 833 933 950 2,971 3,580
Interest 891 731 676 585 614 620 671 700 2,884 2,608
Other Income 166 221 109 284 163 256 122 258 780 798
PBT before EO expense 1,029 1,094 1,059 1,178 756 926 1,003 1,084 4,358 3,759
Extra-Ord expense -2 -63 -27 -89 -69 45 106 0 -181 220
PBT 1,027 1,031 1,031 1,089 686 970 1,108 1,084 4,178 3,539
Tax 317 270 280 131 135 237 112 271 997 755
Rate (%) 30.9 26.1 27.1 12.0 19.7 24.4 10.1 25.0 23.9 21.3
MI & Profit/Loss of Asso. Cos. -23 -5 20 -11 -16 0 -6 0 19 19
Reported PAT 733 766 732 969 568 734 1,002 813 3,200 2,803
Adj PAT 734 813 752 1,048 623 677 883 813 3,338 2,976
YoY Change (%) 28.3 21.3 -18.3 7.8 -15.1 -16.7 17.5 -22.4 5.9 -10.8
Margins (%) 3.5 3.3 3.1 3.9 2.3 2.8 3.7 2.9 3.5 2.6
Chintan Modi – Research analyst (Chintan.Modi@motilaloswal.com); +91 22 6129 1554

April 2017 308
Avenue Supermarts
Bloomberg DMART IN
M. Cap. (INR b)/(USD b) 851 / 13  We expect revenue to grow 125% YoY to INR 38,8830m in 4QFY18.
52-Week Range (INR) 1393 / 628  EBIDTA margin is likely to expand 130bp YoY to 8%. EBIDTA is likely
1,6,12 Rel Perf. (%) 6 / 18 / 104
to grow by 50% YoY to INR3,110m.
Financial Snapshot (INR Billion)  We estimate PAT to grow 82% YoY to INR1,756m from INR967m.
Y/E MARCH 2017 2018E 2019E 2020E Sell.
Net Sales 119.0 150.9 190.5 242.6
EBITDA 9.8 13.5 18.1 23.8
Adj. Net Profit 4.8 7.8 10.8 14.4
Adj. EPS (INR) 7.7 12.6 17.2 23.0
Adj. EPS Gr. (%) 34.5 63.6 37.4 33.4
BV/Sh (INR) 61.6 70.3 82.4 98.5 Key things to watch for
RoE (%) 17.9 19.0 22.6 25.4
 Store additions during the quarter.
RoCE (%) 14.2 16.1 21.4 25.4
 Like-to-like store sales growth.
Div. Payout (%) 0.0 30.0 30.0 30.0
Valuations
P/E (x) 154.1 94.2 68.6 51.4
P/BV (x) 19.2 16.8 14.3 12.0
EV/EBITDA (x) 67.2 48.8 36.5 27.7
Div. Yield (%) 0.0 0.4 0.5 0.6

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 26,524 27,787 33,394 31,106 35,981 35,083 40,948 38,883 118,977 150,897
YoY Change (%) - - - 40.6 35.7 26.3 22.6 25.0 38.6 26.8
EBITDA 2,348 2,328 2,883 2,077 3,032 3,179 4,217 3,110 9,812 13,535
Margins (%) 8.9 8.4 8.6 6.7 8.4 9.1 10.3 8.0 8.2 9.0
Depreciation 288 305 314 354 337 351 393 450 1,278 1,567
Interest 281 319 310 308 243 109 110 100 1,220 562
Other Income 49 80 85 99 228 212 137 100 286 677
PBT 1,828 1,785 2,344 1,515 2,680 2,930 3,851 2,660 7,600 12,083
Tax 643 628 825 548 932 1,020 1,334 905 2,683 4,143
Rate (%) 35.2 35.2 35.2 36.2 34.8 34.8 34.6 34.0 35.3 34.3
Reported PAT 1,184 1,156 1,519 967 1,748 1,910 2,518 1,756 4,788 7,837
Adj PAT 1,184 1,156 1,519 967 1,748 1,910 2,518 1,756 4,788 7,837
YoY Change (%) - - - 47.4 47.6 65.2 65.8 81.6 49.5 63.7
Margins (%) 4.5 4.2 4.5 3.1 4.9 5.4 6.1 4.5 4.0 5.2
E: MOSL Estimates

April 2017 309
March 2018 Results Preview | Sector: Exchanges
BSE
Bloomberg BSE IN CMP: INR788 TP: INR1,070 (+36%) Buy
 We expect revenue to decline by 7.8% YoY to INR1,500m,
52-Week Range (INR) 1178 / 726 primarily because of the absence of income from depository
1,6,12 Rel Perf. (%) 0 / -26 / -31 services, adjusted for which there would be growth.
 We estimate EBITDA margin of 36.3%, up 1,820bp YoY and 340bp
QoQ. Stability in costs, combined with an increase in revenue
Y/E March 2017 2018E 2019E 2020E
from sources other than depository, is expected to drive margins
Net Sales 5.2 4.7 5.1 5.5
EBITDA 1.0 1.1 1.3 1.5
higher.
PAT 2.4 2.4 2.6 2.9  PAT at INR783m is expected to grow at 30.2% YoY. Buy.
EPS (INR) 41.0 42.6 47.6 52.9
EPS Gr (%) 68.4 4.0 11.6 11.2
BV / Sh (INR) 495 492 618 628 Key things to watch for
P/E (x) 22.7 7.2 19.5 17.6  Volume movement and market share dynamics post pricing
P / BV (x) 1.9 1.9 1.5 1.5 strategy change
RoE (%) 8.3 8.7 7.7 8.4  Performance in non-equity segments
RoCE (%) 13.7 11.2 10.0 10.6  Update on operations in and prospects of INX

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Revenue from operations 1,285 1,392 1,323 1,628 1,174 1,232 1,373 1,500 5,223 4,723
YoY Change (%) 24.7 30.4 14.1 17.8 -8.6 -11.5 3.8 -7.8 11.5 -9.6
Total Expenditure 947 935 989 1,332 868 848 920 955 4,203 3,618
EBITDA 338 456 334 296 306 384 453 545 1,020 1,105
Margins (%) 26.3 32.8 25.3 18.2 26.1 31.2 33.0 36.3 19.5 23.4
Depreciation 118 126 135 161 101 109 112 113 540 435
Interest 2 4 3 2 2 4 3 2 10 10
Investment income 552 630 514 684 410 460 354 425 2,785 2,048
Extra-Ord expense 136 72 0 0 0 5 8 24
PBT 634 885 711 817 613 727 686 832 3,255 2,708
Tax 110 127 76 93 118 126 162 129 406 535
Rate (%) 17.4 14.4 10.7 11.4 19.2 17.4 23.6 15.5 12.5 19.8
Minority Interest & P/L of Asso. Cos. 87 118 106 122 -2 -68 -63 -60 435 -190
Reported PAT 437 640 529 601 497 668 587 762 2,414 2,363
Adj PAT 549 701 529 601 497 672 592 783 2,414 2,363
YoY Change (%) 135.3 44.0 62.2 2.7 -9.5 -4.2 12.0 30.2 42.3 -2.1
Margins (%) 42.8 50.4 40.0 36.9 42.4 54.6 43.1 52.2 46.2 50.0

April 2017 310
Castrol (India)
Bloomberg CSTRL IN CMP: INR205 TP: INR247 (+21%) Buy
 We expect revenue to grow 3% YoY (-7% QoQ) to INR9.1b, led by
M. Cap. (INR b)/(USD b) 203 / 3
227 / 172 volumes at 51.2m liters (+2% YoY, -3% QoQ) and realization at
52-Week Range (INR)
1,6,12 Rel Perf. (%) 4 / 9 / -17 INR177/liter (+1% YoY, -1% QoQ).
 We expect CSTRL to report EBITDA of INR2.6b (-2% YoY, -16%
QoQ). EBITDA margin would be 28.6%, lower than 29.8% in
Y/E Dec 2016 2017 2018E 2019E
1QCY17.
Sales 33.6 35.8 36.8 37.6
EBITDA 9.9 10.3 10.0 9.7  We estimate net profit at INR1.7b (-3% YoY, -12% QoQ).
PAT 6.7 6.9 6.7 7.0
 The stock trades at 28.9x CY19E EPS of INR7.1. Maintain Buy.
EPS (INR) 6.8 7.0 6.8 7.1
EPS Gr. (%) 5.8 2.9 -2.8 4.0
BV/Sh.(INR) 9.9 10.3 11.0 11.7
RoCE (%) 86.4 69.2 63.9 62.4 (a) Volume growth.
Payout (%) 97.4 81.5 90.0 90.0 (b) Operating margin expansion.
Valuations
(c) Launch of new products.
P/E (x) 30.0 29.2 30.0 28.9
(d) Competitive pressure from other players.
P/BV (x) 20.7 19.9 18.7 17.4
EV/EBITDA (x) 19.5 18.8 18.8 19.1
Div. Yield (%) 2.7 2.3 2.5 2.6

Net Sales 8,822 8,704 8,614 9,703 9,062 9,328 8,888 9,537 35,843 36,816
YoY Change (%) 3.5 -10.1 13.1 24.5 2.7 7.2 3.2 -1.7 6.7 2.7
EBITDA 2,633 2,095 2,536 3,066 2,590 2,655 2,216 2,510 10,330 9,970
YoY Change (%) 4.7 -33.4 19.1 41.7 -1.7 26.7 -12.6 -18.1 3.8 -3.5
Margins (%) 29.8 24.1 29.4 31.6 28.6 28.5 24.9 26.3 28.8 27.1
Depreciation 123 118 111 103 115 128 125 108 455 476
Interest 3 1 2 6 3 4 4 4 12 15
Other Income 185 155 333 164 200 224 210 229 837 863
PBT 2,692 2,131 2,756 3,121 2,672 2,747 2,297 2,626 10,700 10,342
Tax 902 752 974 1,154 935 961 804 919 3,782 3,620
Rate (%) 34 35 35 37 35 35 35 35 35 35
PAT 1,790 1,379 1,782 1,967 1,736 1,785 1,493 1,707 6,918 6,722
YoY Change (%) 3.8 -33.3 27.5 26.3 -3.0 29.5 -16.2 -13.2 2.5 -2.8
Margins (%) 20.3 15.8 20.7 20.3 19.2 19.1 16.8 17.9 19.3 18.3
E: MOSL Estimates
Swarnendu Bhushan – Research Analyst (Swarnendu.Bhushan@MotilalOswal.com); +91 22 6129 1529

Abhinil Dahiwale – Research Analyst (Abhinil.Dahiwale@motilaloswal.com); +91 22 6129 1566
April 2017 311
March 2018 Results Preview | Sector: Others
Delta Corp
Bloomberg DELTA IN CMP: INR276 TP: INR332 (+20%) Buy
 We expect revenue to grow 42% YoY to INR1,535m, driven by
52-Week Range (INR) 401 / 139 traction in Goa casinos and ramp-up of online business.
1,6,12 Rel Perf. (%) -20 / 35 / 18  EBITDA margin is likely to expand 1,390bp to 45.7%, and EBITDA is
expected to grow 104% YoY to INR702m on a low base.
Y/E MARCH 2017 2018E 2019E 2020E  Net profit is likely to increase 287% YoY to INR440m.
Net Sales 4.5 5.9 7.7 9.7
 We maintain our target price at INR332/share. Buy.
EBITDA 1.6 2.5 3.2 4.4
Adj. Net Profit 0.7 1.5 2.0 2.8
Adj. EPS (INR) 3.1 5.7 7.4 10.4
Adj. EPS Gr. (%) 125.5 87.7 25.7 39.7
BV/Sh (INR) 39.7 59.4 65.4 74.1
RoE (%) 8.1 12.2 11.9 14.9  Company strategy w.r.t increase in annual license fee.
RoCE (%) 8.7 11.7 11.9 22.2  Goa - move from offshore to onshore - policy to be announced
Div. Payout (%) 13.2 25.0 21.0 16.2 by Goa government.
Valuations  Daman - grant of casino license
P/E (x) 81.9 43.6 33.6 24.1  Sikkim -commencement of new airport.
P/BV (x) 6.3 4.2 3.8 3.4
EV/EBITDA (x) 53.0 32.2 26.0 18.8
Div. Yield (%) 0.1 0.5 0.5 0.6

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 1,087 1,343 1,036 1,081 1,286 1,453 1,622 1,535 4,547 5,896
YoY Change (%) 34.6 43.8 3.4 5.3 18.4 8.2 56.6 42.0 21.2 29.7
Total Expenditure 671 776 723 737 833 798 935 834 2,907 3,398
EBITDA 415 567 313 344 453 655 687 702 1,640 2,498
Margins (%) 38.2 42.2 30.2 31.8 35.2 45.1 42.4 45.7 36.1 42.4
Depreciation 91 93 89 87 89 94 94 100 361 372
Interest 87 87 82 94 70 22 3 5 350 100
Other Income 9 11 11 19 37 86 79 70 49 280
PBT before EO expense 246 399 152 182 332 624 669 667 978 2,306
Extra-Ord expense -46 2 5 0 -18 0 0 0 -42 -18
PBT 292 397 147 181 350 624 669 667 1,020 2,324
Tax 85 91 40 64 127 194 225 227 280 779
Rate (%) 29.2 22.9 27.2 35.4 36.1 31.1 33.6 34.0 27.4 33.5
Minority Interest & P/L of Asso. Cos. 4 -16 6 3 1 -2 -3 0 2 2
Reported PAT 202 322 101 114 223 433 447 440 738 1,543
Adj PAT 170 323 105 114 211 433 447 440 707 1,531
YoY Change (%) 2,539.9 494.1 -9.4 -29.3 24.4 33.8 327.8 286.4 126.5 116.5
Margins (%) 15.6 24.1 10.1 10.5 16.4 29.8 27.6 28.7 15.6 26.0
E: MOSL Estimates

April 2017 312
March 2018 Results Preview | Sector: Textiles
Indo Count Industries

Bloomberg ICNT IN CMP: INR98 TP: INR104 (+6%) Neutral
 We expect revenue to de-grow 3% YoY (+8% QoQ) to INR4,975m
52-Week Range (INR) 210 / 82 in 4QFY18, as India’s import share in US terry towel market
1,6,12 Rel Perf. (%) 1 / -6 / -62 declined 17.6% in January 2018, and the bed sheet market has
remained flattish.
 India’s share in US terry towel imports decliCned 20% in 3QFY18;
Y/E March 2017 2018E 2019E 2020E
bed sheet share also declined 5% during the same period.
Sales 22.6 18.8 21.7 24.1
EBITDA 4.3 2.8 3.5 3.9  EBITDA margin is likely to contract 400bp YoY to 13.6%, and
NP 2.6 1.5 1.9 2.3 EBITDA is likely to de-grow 25% YoY to INR677m.
EPS (INR) 13.0 7.4 9.8 11.5
EPS Gr. (%) -10.7 -43.2 32.5 17.8
 PAT is expected to de-grow 27% YoY to INR356m in 4QFY18.
BV/Sh. (INR) 42.9 51.2 62.3 75.1 Neutral.
RoE (%) 34.8 15.7 17.2 16.8
RoCE (%) 26.5 14.0 16.2 24.3
Valuations
P/E (x) 7.5 13.3 10.0 8.5
 Movement in cotton prices.
P/BV (x) 2.3 1.9 1.6 1.3
 Change in India’s market share in US made-ups textile and
EV/EBITDA (x) 5.4 7.8 6.1 5.2
apparel imports.
EV/Sales (x) 1.0 1.2 1.0 0.9

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,926 5,763 5,029 5,129 4,318 4,928 4,600 4,975 22,578 18,828
YoY Change (%) 7.6 0.0 0.4 -0.1 -12.4 -14.5 -8.5 -3.0 7.0 -16.6
EBITDA 1,103 1,164 1,020 901 653 711 693 677 4,285 2,787
Margins (%) 22.4 20.2 20.3 17.6 15.1 14.4 15.1 13.6 19.0 14.8
Depreciation 80 73 79 79 75 76 77 80 331 312
Interest 98 116 91 89 82 88 58 57 421 299
Other Income 0 0 0 0 0 0 0 0 0 0
PBT 924 975 849 733 496 548 558 540 3,532 2,176
Tax 321 348 287 245 177 189 194 183 965 718
Rate (%) 34.8 35.7 33.8 33.4 35.6 34.5 34.7 34.0 27.3 33.0
Reported PAT 603 627 562 488 320 359 364 356 2,567 1,458
Adj PAT 603 627 562 488 320 359 364 356 2,567 1,458
YoY Change (%) 15.6 21.5 -27.3 -28.1 -47.0 -42.8 -35.2 -27.0 -10.7 -43.2
Margins (%) 12.2 10.9 11.2 9.5 7.4 7.3 7.9 7.2 11.4 7.7
E: MOSL Estimates
Sumant Kumar (Sumant.Kumar@MotilalOswal.com); +91 22 6129 1569

Aksh Vashishth (Aksh.Vashishth@MotilalOswal.com); +91 22 6129 1553
April 2017 313
Info Edge
Bloomberg INFOE IN CMP: INR1220 TP: INR1550 (27%) Buy
 We expect standalone revenue to grow 11.1% YoY to INR2.3b.
M. Cap. (INR b)/(USD b) 156 / 2
 Recruitment segment (~75% of business) is estimated to grow
1863 1458 / 800
1,6,12 Rel Perf. (%) -3 / 9 / 39
13% YoY to INR1.8b.
 We estimate real estate portal 99acres.com’s revenue at
INR302m (10% YoY) and that of matrimonial portal
Y/E March 2017 2018E 2019E 2020E
Jeevansathi.com at INR178m (up 25% YoY).
Sales 8.0 9.1 10.4 12.1
 99acres.com should see better growth as demonetization now
EBITDA 2.3 3.1 3.7 4.7 gets captured in the base and RERA-led uncertainty has been
NP 2.0 2.6 3.2 4.1 waning.
EPS (Rs) 15.7 23.4 26.3 33.4  Our EBITDA margins estimate for the quarter stands at 33%
EPS Gr. (%) 38.2 49.0 12.5 27.1 compared to 34.7% in the previous quarter, and 30.3% in 4QFY17.
BV/Share 162.7 177.6 196.7 222.9  Consequently, we expect PAT of INR675m, up 105.3% YoY. Buy.
RoE (%) 10.2 13.7 14.0 15.9
RoCE (%) 10.2 13.7 14.0 15.9
Valuations
 Situation around the RERA-led uncertainty and consequent
P/E (x) 77.6 52.1 46.3 36.4
impact on 99acres.com.
P/BV (x) 7.5 6.8 6.2 5.5
EV/EBITDA (x) 56.5 42.9 35.6 27.0
 Traction in the recruitment business from segments other than IT.
EV/Sales (x) 16.0 14.9 12.7 10.5
 Commentary around monetization in Zomato.com.
Quarterly Performance (Standalone)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Revenues 1,976 2,100 1,861 2,084 2,225 2,252 2,272 2,315 8,021 9,063
YoY (%) 13.1 20.6 7.3 8.0 12.6 7.2 22.1 11.1 12.6 13.0
Salary costs 963 915 938 936 991 938 954 979 3,752 3,861
Ad and Promotion costs 258 221 184 217 254 176 256 289 881 975
Other Expenses 277 269 268 300 276 251 273 283 1,114 1,083
Operating Profit 478 695 471 632 703 888 788 764 2,275 3,144
Margins (%) 24.2 33.1 25.3 30.3 31.6 39.4 34.7 33.0 28.4 34.7
Other Income 243 248 250 113 264 262 220 241 855 986
Depreciation 60 62 63 56 54 53 53 54 241 214
PBT bef. Extra-ordinary 661 881 658 689 913 1,097 956 951 2,889 3,916
Provision for Tax 217 254 187 320 270 270 253 276 978 1,069
ETR (%) 32.9 28.8 28.4 46.5 29.6 24.6 26.5 29.0 33.9 27.3
PAT bef. Minority 444 627 471 369 642 786 534 675 1,911 2,637
EOI 0 174 0 -40 0 -41 -169 0 134 -210
Adjusted PAT 444 801 471 329 642 827 703 675 2,045 2,427
YoY (%) 54.9 136.0 116.7 -15.6 44.8 3.2 49.1 105.3 65.7 18.7
E: MOSL Estimates

April 2017 314
March 2018 Results Preview | Sector: Aviation
InterGlobe Aviation
Bloomberg INDIGO IN CMP: INR1,368 TP: INR1,400 (+2%) Neutral
 We expect INDIGO to report revenue of INR60b in 4QFY18 (+24%
M. Cap. (INR b)/(USD b) 525 / 8
1377 / 1005 YoY, -3% QoQ) and EBITDAR of INR14.8b (+11% YoY, -24% QoQ).
52-Week Range (INR)
1,6,12 Rel Perf. (%) 5 / 20 / 19  We model ticket yield at INR3.51 (+2.3% YoY, -5% QoQ) and RPK
at 14.7b (+20% YoY). Any deviation in yield would have a
meaningful impact on our estimates.
Y/E March 2017 2018E 2019E 2020E
Sales 185.8 232.0 292.8 352.0  We model ATF at INR61.7/liter (+11.5% YoY, +9.4% QoQ) for
EBITDA 21.4 33.3 34.8 46.7 4QFY18 and expect INDIGO to report net profit of INR3.7b.
NP 16.6 24.8 28.8 38.4
 We model ASK at 76b/92b in FY19/FY20 v/s 54b in FY17, and RPK
EPS (INR) 43.2 64.7 75.0 100.0
at 68b/81b in FY19/FY20 v/s 46.3b in FY17, driven by an increase
EPS Gr. (%) -16.6 49.6 15.9 33.4
in fleet size.
BV/Sh (INR) 98.5 175.2 187.7 204.4
RoE (%) 51.0 47.3 41.3 51.0  The stock trades at 13.7x FY20E EPS of INR100 and at an EV of
RoCE (%) 31.4 36.7 45.0 57.7 8.1x FY20E adjusted EBITDAR. Maintain Neutral.
Payout (%) 89.1 83.3 83.3 83.3
Valuations
P/E (x) 31.6 21.1 18.2 13.7
 Induction of new aircraft in the fleet.
P/BV (x) 13.9 7.8 7.3 6.7
 Fuel costs and their impact on yields.
Adj.EV/EBITDAR(x) 13.7 10.3 9.6 8.1
Div. Yield (%) 2.3 3.3 3.8 5.1

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 45,789 41,669 49,865 48,482 57,529 52,910 61,779 59,938 185,805 232,156
YoY Change (%) 8.7 17.7 16.0 18.5 25.6 27.0 23.9 23.6 15.1 24.9
Fuel cost 13,674 15,524 16,712 17,734 17,929 16,781 20,465 22,532 63,644 77,708
Employee cost 4,789 5,080 5,273 5,339 5,843 6,004 6,137 6,600 20,482 77,708
Other expenses 12,046 11,388 13,471 12,087 14,250 14,550 15,820 16,047 48,992 60,667
EBITDAR 15,279 9,677 14,409 13,322 19,507 15,574 19,357 14,759 52,687 69,198
Margins (%) 33.4 23.2 28.9 27.5 33.9 29.4 31.3 24.6 28.4 29.8
Net Rentals 7,127 7,721 8,164 8,242 8,537 8,193 9,442 9,624 31,254 35,796
EBITDA 8,152 1,956 6,245 5,080 10,970 7,382 9,915 5,135 21,433 33,402
Margins (%) 17.8 4.7 12.5 10.5 19.1 14.0 16.0 8.6 11.5 14.4
Depreciation 1,148 1,189 1,184 1,052 983 1,025 1,074 1,153 4,573 4,235
Interest 1,163 610 759 777 770 857 844 837 3,308 3,308
Other Income 1,626 1,608 1,719 2,938 2,026 2,146 2,719 2,051 7,891 8,942
PBT 7,467 1,765 6,022 6,190 11,243 7,645 10,716 5,196 21,443 34,801
Tax 1,549 367 1,149 1,786 3,132 2,130 3,096 1,507 4,852 9,864
Rate (%) 20.7 20.8 19.1 28.9 27.9 27.9 28.9 29.0 22.6 28.3
Reported PAT 5,918 1,398 4,873 4,403 8,111 5,516 7,620 3,689 16,592 24,937
EPS 15.4 3.6 12.7 11.5 21.1 14.4 19.9 9.6 43.2 65.0
YoY Change (%) -8.8 24.1 -25.9 -24.0 37.1 294.5 56.4 -16.2 -17.0 50.3
E: MOSL Estimates
Abhinil Dahiwale (Abhinil.Dahiwale@motilaloswal.com); +91 22 6129 1566

Swarnendu Bhushan (Swarnendu.Bhushan@MotilalOswal.com); +91 22 6129 1529
April 2017 315
Mar 2018 Results Preview | Sector: Agri
Kaveri Seed
Bloomberg KSCL IN CMP: INR498 TP: INR664 (+33%) Buy
 We expect revenue to grow 10% YoY to INR443m in 4QFY18. We
52-Week Range (INR) 708 / 433 expect growth to be driven by continuous focus on non-cotton
1,6,12 Rel Perf. (%) 3 / -10 / -22 business.
 We expect EBITDA margin of -3.3% v/s -67.4% in 4QFY17 and
EBITDA of INR-15m v/s INR-272m in 4QFY17.
Y/E March 2017 2018E 2019E 2020E
Sales 7.0 7.8 8.9 10.2  We expect adjusted PAT of INR-26m in 4QFY18 as against INR-
EBITDA 1.4 2.3 2.7 3.2 306m in the year-ago period. Buy.
NP 1.3 2.3 2.7 3.1
EPS (INR) 19.1 34.2 40.6 47.4
EPS Gr. (%) -21.4 79.5 18.5 17.0
BV/Sh (INR) 146.8 139.4 159.5 186.6
RoE (%) 13.6 23.4 27.1 27.4
RoCE (%) 16.0 24.7 28.7 29.0
Payout (%) 32.2 52.6 50.3 43.0
Valuations
 Outlook of monsoon and corn acreage in rabi season.
P/E (x) 26.1 14.6 12.3 10.5
P/BV (x) 3.4 3.6 3.1 2.7
 Market share movement in major markets of Gujarat and
EV/EBITDA (x) 23.6 14.1 11.7 9.7 Maharashtra.
Div Yield (%) 0.6 2.9 3.3 3.3
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 4,940 678 679 403 5,906 696 706 443 7,050 7,780
YoY Change (%) -8.4 2.2 -2.7 -1.9 19.6 2.7 4.1 10.0 -1.6 10.4
Total Expenditure 3,357 644 644 675 3,837 549 609 458 5,654 5,469
EBITDA 1,583 34 34 -272 2,069 147 97 -15 1,395 2,311
Margins (%) 32.0 5.0 5.0 -67.4 35.0 21.2 13.8 -3.3 19.8 29.7
Depreciation 78 72 69 66 63 61 57 60 302 254
Interest 0 0 0 0 2 1 0 0 2 5
Other Income 54 170 101 18 43 164 16 48 344 280
PBT before EO expense 1,559 132 66 -320 2,046 250 56 -27 1,435 2,332
PBT 1,559 132 -527 -912 2,046 250 56 -27 843 2,332
Tax 15 60 30 -40 22 41 1 -1 70 70
Rate (%) 1.0 45.6 -5.7 4.4 1.1 16.5 2.6 4.2 8.3 3.0
Minority Interest & P/L of Asso. Cos. 0 0 0 0 0 0 0 0
Reported PAT 1,544 72 -557 -872 2,024 209 54 -26 773 2,262
Adj PAT 1,544 72 69 -306 2,024 209 54 -26 1,316 2,262
YoY Change (%) -29.6 NM -40.9 NM 31.1 191.7 -21.9 -91.5 -55.1 71.8
Margins (%) 31.3 10.6 10.2 -75.9 34.3 30.0 7.7 -5.8 18.7 29.1
E: MOSL Estimates

April 2017 316
March 2018 Results Preview | Sector: Consumer
Manpasand Beverages
Bloomberg MANB IN CMP: INR375 TP: INR467 (+25%) Buy
 We expect revenue to grow 43% YoY to INR 3,910m in 4QFY18,
52-Week Range (INR) 512 / 336 based on healthy growth in Mango Sip and Fruits Up, and increased
1,6,12 Rel Perf. (%) -2 / -26 / -6 traction in recently launched Jeera Sip and Siznal. Additionally,
sales through Parle-tie up will contribute to ~5% of revenues.
 EBIDTA margin is likely to expand 137bp to 20.3% and EBIDTA is
Y/E MARCH 2017 2018E 2019E 2020E
Net Sales
likely to grow by 53.3% YoY to INR794m.
7.2 9.6 14.2 18.6
EBITDA 1.4 1.8 2.8 3.6  We estimate PAT to grow 39% YoY to INR436m from INR313m.
Adj. Net Profit 0.7 1.0 1.6 2.1 Buy.
Adj. EPS (INR) 6.3 8.8 13.9 18.7
Adj. EPS Gr. (%) 43.8 38.2 58.4 34.6
BV/Sh (INR) 100.8 107.4 117.9 132.0
RoE (%) 7.3 7.2 12.3 15.0 Key things to watch for
RoCE (%) 8.4 8.4 14.3 17.3  Progress on performance of tie-ups.
Div. Payout (%) 12.3 24.6 24.6 24.6  Performance of new product launches.
Valuations  Update on commissioning of new plants.
P/E (x) 58.6 42.4 26.8 19.9
P/BV (x) 3.7 3.5 3.2 2.8
EV/EBITDA (x) 28.8 22.4 14.8 11.1
Div. Yield (%) 0.2 0.5 0.7 1.0

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 2,369 1,025 1,025 2,734 3,015 1,258 1,431 3,910 7,171 9,614
YoY Change (%) 63.1 34.6 11.6 28.6 27.2 22.8 39.7 43.0 34.8 34.1
Total Expenditure 1,917 803 819 2,217 2,451 1,043 1,164 3,116 5,773 7,775
EBITDA 453 222 205 518 563 215 267 794 1,398 1,839
Margins (%) 19.1 21.7 20.0 18.9 18.7 17.1 18.7 20.3 19.5 19.1
Depreciation 149 171 177 241 237 169 175 330 738 868
Interest 1 8 2 1 4 9 6 1 12 0
Other Income 17 17 60 85 98 64 53 50 179 197
PBT 320 61 86 361 421 102 139 513 827 1,167
Tax 33 7 13 48 62 12 19 77 101 163
Rate (%) 10.4 10.8 15.6 13.2 14.7 12.0 13.9 15.0 12.2 14.0
Reported PAT 286 54 72 313 359 89 120 436 726 1,004
Adj PAT 286 54 72 313 359 89 120 436 726 1,004
YoY Change (%) 82.5 24.5 49.2 22.5 25.3 65.3 65.5 39.1 43.8 38.2
Margins (%) 12.1 5.3 7.1 11.5 11.9 7.1 8.4 11.1 10.1 10.4
E: MOSL Estimates

April 2017 317
March 2018 Results Preview | Sector: Exchanges
MCX
Bloomberg MCX IN CMP: INR734 TP: INR1,050 (+43%) Buy
 Total volumes at MCX traded during the quarter stood at INR15t,
52-Week Range (INR) 1258 / 665 up 17.3% QoQ and 20.9% YoY.
1,6,12 Rel Perf. (%) -3 / -37 / -50  Volumes at MCX have seen a strong pick-up after four quarters of
YoY decline post demonetization.
Y/E March 2017 2018E 2019E 2020E  That drives our revenue expectation of INR694m, which is an
Sales 2.6 2.6 3.1 3.6 increase of 13.8% YoY.
EBITDA 0.8 0.7 1.3 1.6
 Consequently, EBITDA margins are expected to expand by
NP 1.3 1.1 1.6 1.9
1,590bp YoY to 29%.
EPS (INR) 24.8 21.3 32.0 36.9
EPS Gr. (%) 6.2 -14.3 50.5 15.4  We expect PAT to increase by 57% YoY to INR343m. Buy.
BV/Sh.(INR) 266.4 259.4 275.7 329.2
RoE (%) 10.2 8.1 12.0 12.2
RoCE (%) 10.0 7.8 11.6 11.9
Payout (%) 70.7 113.7 75.5 65.5
 Expectations of volume revival.
Valuations
 Pace of reforms under SEBI.
P/E (x) 29.1 34.0 22.6 19.6
P/BV (x) 2.7 2.8 2.6 2.2
 Strategy around new opportunities.
EV/EBITDA (x) 30.5 35.3 20.1 15.9
Dividend yield 2.5 3.3 3.3 3.3
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Sales 676 652 686 626 592 673 610 694 2,641 2,568
Q-o-Q Gr. (%) 18.7 7.8 5.1 -8.7 -5.5 13.6 -9.4 13.8 12.4 -2.8
Staff Costs 143 144 198 160 178 178 169 169 644 693
Other expenses 265 257 296 335 282 288 306 284 1,116 1,158
Depreciation 49 42 45 49 48 48 35 40 186 171
EBIT 219 209 148 82 84 158 101 201 695 546
Margins (%) 32.4 32.1 21.5 13.1 14.2 23.6 16.5 29.0 26.3 21.3
Other Income 308 302 312 243 277 243 156 257 1,164 931
PBT bef. Exceptional items 527 511 459 325 361 401 256 458 1,857 1,478
Tax 152 134 119 106 98 110 68 114 512 391
Rate (%) 28.9 26.3 26.0 32.6 27.2 27.3 26.7 25.0 27.5 26.5
PAT 375 376 339 219 263 292 188 343 1,346 1,087
Q-o-Q Gr. (%) 30.3 0.5 -9.9 -35.5 20.0 11.0 -35.6 82.9 221.7 -17.0
EPS (INR) 6.5 7.4 6.7 4.3 5.1 5.7 3.7 6.7 26.4 21.3
Total volumes (INR t) 16.0 16.4 13.9 12.4 12.0 14.1 12.8 15.0 58.7 53.9
Q-o-Q Gr. (%) 7.3 2.3 -15.2 -10.3 -3.4 17.0 -8.8 17.3
Y-o-Y Gr. (%) 17.7 10.3 6.4 -16.5 -24.8 -14.0 -7.6 20.9 4.1 -8.1
E: MOSL Estimates

April 2017 318
Navneet Education
Bloomberg NELI IN CMP: INR148 TP: INR194 (+31%) Buy
 We expect revenue to grow 47% YoY to INR3,074m in 4QFY18,
52-Week Range (INR) 194 / 128  EBIDTA margin is likely to expand 460bp YoY to 17.9% and EBIDTA
1,6,12 Rel Perf. (%) 12 / -14 / -23 is likely to grow by 97% YoY to INR550m.

 We estimate PAT to grow 131% YoY to INR390m from INR169m.
Y/E MARCH 2017 2018E 2019E 2020E Buy.
Net Sales 11.8 12.3 14.4 16.3
EBITDA 2.8 2.7 3.4 3.9
Adj. Net Profit 1.7 1.8 2.3 2.7
Adj. EPS (INR) 7.3 7.7 9.7 11.5
Adj. EPS Gr. (%) 61.9 4.8 26.8 17.6
BV/Sh (INR) 29.7 33.6 38.9 45.3
RoE (%) 26.7 24.2 26.8 27.2
RoCE (%) 23.9 20.3 23.3 24.6
Div. Payout (%) 48.4 58.7 41.2 48.8
Valuations
P/BV (x) 4.7 4.2 3.6 3.1  New series launches under Indiannica.
EV/EBITDA (x) 12.2 12.3 9.5 8.0  Syllabus change in Maharashtra and Gujarat
Div. Yield (%) 1.6 1.6 1.8 2.2

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 5,602 1,725 1,566 2,098 5,652 1,834 1,744 3,074 11,813 12,304
YoY Change (%) 8.5 47.0 38.6 11.9 0.9 6.3 11.4 46.5 24.0 4.2
EBITDA 1,749 282 203 279 1,624 281 205 550 2,813 2,654
Margins (%) 31.2 16.3 13.0 13.3 28.7 15.3 11.7 17.9 23.8 21.6
Depreciation 60 62 65 64 53 56 62 75 284 245
Interest 23 0 1 11 26 16 1 8 43 51
Other Income 76 61 55 40 123 47 44 33 152 246
PBT before EO expense 1,743 281 193 244 1,668 256 186 500 2,638 2,603
PBT 1,743 281 193 244 1,668 256 186 500 2,638 2,603
Tax 607 95 66 75 572 89 67 110 827 816
Rate (%) 34.8 33.9 34.3 30.8 34.3 34.9 36.1 22.0 31.3 31.3
Reported PAT 1,136 186 126 169 1,097 166 119 390 1,811 1,787
Adj PAT 1,136 186 126 169 1,097 166 119 390 1,811 1,787
YoY Change (%) 15.5 69.8 68.3 80.1 -3.4 -10.5 -6.1 131.4 50.7 -1.3
Margins (%) 20.3 10.8 8.1 8.0 19.4 9.1 6.8 12.7 15.3 14.5

April 2017 319
March 2018 Results Preview | Sector: Real Estate
Oberoi Realty
Bloomberg OBER IN CMP: INR509 TP: INR612 (+20%) Buy
 We expect sales volumes to decline 2% YoY to 132,500sf in the
M. Cap. (INR b)/(USD b) 173 / 3
52-Week Range (INR) 577 / 339 quarter, primarily on account of decreased traction in Mulund
1,6,12 Rel Perf. (%) 2 / 16 / 26 (Eternia and Enigma) and 360 West projects.
 In case of annuity portfolio, the primary driver would be increased
occupancy to 55% from 30% YoY in respect of its Commerz II
Y/E MARCH 2017 2018E 2019E 2020E
project.
Sales 11.1 12.3 39.8 36.3
EBITDA 5.7 6.6 21.8 20.0  We estimate sales of INR3,139m, up 8% YoY.
Net Profit 3.8 4.2 16.9 15.8
 We expect EBITDA margin to expand by 180bp YoY to 54.1%.
EPS (INR) 11.2 12.5 49.8 46.5
EPS Gr. (%) -13.1 11.7 300.0 -6.7  We estimate net profit of INR1,073m, up 5% YoY.
BV/Sh (INR) 168.6 178.8 219.7 257.8
 We maintain our target price at INR612.
RoE (%) 6.8 7.2 25.0 19.5
RoCE (%) 6.1 6.0 18.2 15.3
Valuations
P/BV (x) 2.9 2.8 2.2 1.9  Launch plan for monetizing Thane land parcel.
EV/EBITDA (x) 30.3 27.6 8.0 8.4  Action plan to increase sales momentum for its Mulund Projects
EV/ Sales (x) 15.5 14.8 4.4 4.6 (Eternia and Enigma).

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 3,200 2,520 2,521 2,895 2,607 3,035 3,562 3,139 11,137 12,344
YoY Change (%) 52.2 32.1 -67.8 25.8 -18.5 20.5 41.3 8.4 -21.3 10.8
EBITDA 1,666 1,258 1,262 1,515 1,355 1,638 1,926 1,697 5,701 6,616
Margins (%) 52.1 49.9 50.1 52.3 52.0 54.0 54.1 54.1 51.2 53.6
Depreciation 123 124 125 123 124 128 122 130 495 503
Interest 14 13 15 14 16 16 18 30 56 80
Other Income 103 127 125 125 96 50 42 65 479 252
PBT 1,631 1,248 1,247 1,502 1,312 1,544 1,828 1,602 5,629 6,285
Tax 553 417 407 492 405 509 635 538 1,869 2,088
Rate (%) 33.9 33.4 32.6 32.8 30.9 33.0 34.8 33.6 33.2 33.2
Reported PAT 1,088 837 847 1,018 914 1,043 1,202 1,073 3,791 4,232
Adj PAT 1,088 837 847 1,018 914 1,043 1,202 1,073 3,791 4,232
YoY Change (%) 36.8 12.5 -60.1 50.3 -16.1 24.6 41.9 5.4 -12.7 11.6
Margins (%) 34.0 33.2 33.6 35.2 35.0 34.4 33.7 34.2 34.0 34.3

Darshit Shah – Research analyst (Darshit.Shah@motilaloswal.com); +91 22 6129 1546
April 2017 320
March 2018 Results Preview | Sector: Staffing
Quess Corp
Bloomberg QUESS IN CMP: INR1006 TP: INR1300 (+29%) Buy
 We expect revenue of INR18.2b for Quess in 4QFY18, signifying
M. Cap. (INR b)/(USD b) 147 / 2
52-Week Range (INR) 1199 / 688 growth of 47% YoY.
1,6,12 Rel Perf. (%) 1 / 16 / 30  Inorganic additions that would add to YoY growth in the quarter
include Monster, TBSS, Greenpiece and Vedang Cellular.
Excluding these, growth is expected to be 28% YoY.
INR million FY17 FY18E FY19E FY20E
Sales 43.1 61.0 81.3 96.9  Additionally, incremental revenue from the smart city
EBITDA 2.4 3.5 5.3 6.6 implementation is expected to add 5pp more to growth.
NP 1.3 3.2 5.0 6.3
 EBITDA margins at 5.9% are expected to be higher by 20bp YoY
EPS (Rs) 9.9 22.8 34.1 43.1
because of margin-accretive acquisitions.
EPS Growth (%) 40.4 130.7 49.6 26.6
BV/Share (Rs) 73.8 180.1 224.8 280.5  Our PAT estimate is INR901m, up 144% YoY. Buy.
P/E (x) 102.8 44.6 29.8 23.5
P/BV (x) 13.7 5.6 4.5 3.6 Key things to watch for
EV/EBITDA (x) 56.0 40.4 27.7 21.6  Integration of recently acquired entities.
EV/Sales (x) 3.1 2.3 1.8 1.5  Restructuring of operations in the Industrials segment.
RoE (%) 21.0 22.3 21.7 22.0  Organic growth momentum, and traction in the general staffing
RoCE (%) 13.8 19.0 19.5 20.4 business post GST.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 9,910 10,177 10,668 12,395 12,973 13,953 15,840 18,203 43,149 60,968
YoY Change (%) 35.7 26.9 17.7 24.4 30.9 37.1 48.5 46.9 25.6 41.3
EBITDA 528 551 597 702 752 789 909 1,074 2,378 3,524
Margins (%) 5.3 5.4 5.6 5.7 5.8 5.7 5.7 5.9 5.5 5.8
Depreciation 60 69 72 73 75 83 122 125 275 406
Interest 92 98 123 157 164 155 171 175 471 665
Other Income 7 57 60 30 35 168 126 130 154 459
PBT 382 441 462 502 548 719 742 904 1,787 2,913
Tax 135 140 130 130 151 -764 53 0 534 -293
Rate (%) 35.4 31.7 28.1 25.8 27.6 -106.3 7.1 0.0 29.9 -10.1
Minority Interest & P/L of Asso. Cos. 0 0 -4 3 10 2 0 3 -1 15
Reported PAT 247 301 337 369 387 1,481 690 901 1,254 3,192
Adj PAT 247 301 337 369 387 1,481 690 901 1,254 3,192
YoY Change (%) 37.1 65.9 95.2 5.5 56.7 391.6 104.8 144.1 41.8 154.5
Margins (%) 2.5 3.0 3.2 3.0 3.0 10.6 4.4 4.9 2.9 5.2
E: MOSL Estimates

April 2017 321
March 2018 Results Preview | Sector: Agri
PI Industries
Bloomberg PI IN CMP: INR903 TP: INR1061 (+18%) Buy
 We expect revenue to grow 5.6% YoY to INR6,392m, aided by
M. Cap. (INR b)/(USD b) 123 / 2
52-Week Range (INR) 1035 / 674 growth of 7% in agri-input business and 5% in CSM business.
1,6,12 Rel Perf. (%) 4 / 15 / -3  We estimate 110bp margin contraction to 24.3%, and expect
EBITDA to remain flat at INR1,553m.
Y/E March 2017 2018E 2019E 2020E  We estimate adjusted PAT at INR1,156m, as against INR1,352m in
Sales 22.8 23.2 26.5 30.4 4QFY17. Buy.
EBITDA 5.5 5.6 6.9 8.0
NP 4.6 4.1 5.2 6.1
EPS (INR) 33.4 29.9 38.1 44.2
EPS Gr. (%) 46.4 -10.5 27.3 16.2
BV/Sh. (INR) 118.3 141.4 171.6 207.9
RoCE (%) 31.0 22.6 24.3 29.5  CSM growth and order book.
Valuations  New launches and tie-ups.
P/E (x) 27.0 30.2 23.7 20.4
P/BV (x) 7.6 6.4 5.3 4.3
EV/EBITDA (x) 21.0 20.1 15.9 13.3
EV/Sales (x) 5.1 4.8 4.2 3.5

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 6,834 5,719 4,878 6,056 5,848 5,611 5,377 6,392 23,487 23,228
YoY Change (%) 15.4 20.0 -4.5 3.6 -14.4 -1.9 10.2 5.6 8.5 -1.1
EBITDA 2,100 1,558 1,033 1,537 1,621 1,222 1,048 1,553 6,228 5,443
Margins (%) 30.7 27.2 21.2 25.4 27.7 21.8 19.5 24.3 26.5 23.4
Depreciation 178 181 183 185 197 205 211 220 727 834
Interest 16 13 12 31 14 12 14 12 72 52
Other Income 113 134 133 -21 126 123 160 124 358 532
PBT before EO expense 2,019 1,497 972 1,299 1,535 1,127 982 1,445 5,788 5,090
PBT 2,019 1,497 972 1,299 1,535 1,127 982 1,445 5,788 5,090
Tax 306 205 33 -53 218 324 177 289 491 1,007
Rate (%) 15.2 13.7 3.4 -4.0 14.2 28.7 18.0 20.0 8.5 19.8
Reported PAT 1,713 1,293 939 1,352 1,318 803 806 1,156 5,296 4,083
Adj PAT 1,713 1,293 939 1,352 1,318 803 806 1,156 5,296 4,083
YoY Change (%) 99.5 126.8 32.6 40.8 -23.1 -37.8 -14.2 -14.5 71.0 -22.9
Margins (%) 25.1 22.6 19.3 22.3 22.5 14.3 15.0 18.1 22.5 17.6
E: MOSL Estimates

April 2017 322
S H Kelkar
Bloomberg SHKL IN CMP: INR260 TP: INR318 (+22%) Buy
 We expect revenue to grow 14% YoY to INR3,075m in 4QFY18, led
52-Week Range (INR) 333 / 237 by a rebound in FMCG demand and available cross-selling
1,6,12 Rel Perf. (%) -8 / -4 / -25 opportunities post CFF acquisition.
 EBIDTA margin is likely to expand 480bp YoY to 18.5%, and EBIDTA
is likely to grow by 54% YoY to INR569m.
Y/E MARCH 2017 2018E 2019E 2020E
Net Sales 10.6 10.6 12.3 14.1  We estimate adj. PAT to grow 30% YoY to INR357m from INR274m.
EBITDA 1.7 1.9 2.3 2.9 Buy.
Adj. Net Profit 1.0 1.1 1.4 1.8
Adj. EPS (INR) 7.2 7.9 9.7 12.2
Adj. EPS Gr. (%) 43.5 9.1 22.4 26.6
BV/Sh (INR) 56.1 61.4 68.3 77.0
RoCE (%) 19.0 19.8 21.8 24.8  Supply side issues with disruptions in Germany, US, China.
Div. Payout (%) 28.9 28.9 28.9 28.9  CFF acquisition – cross-selling opportunities.
Valuations  Complete shift of ingredients from Netherlands to
P/E (x) 37.9 34.8 28.4 22.5 manufacturing plants in India.
P/BV (x) 4.9 4.5 4.0 3.6
EV/EBITDA (x) 24.0 20.5 17.3 13.6
Div. Yield (%) 0.6 0.6 0.8 1.1

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 2,768 2,453 2,494 2,698 2,529 2,219 2,831 3,075 10,412 10,655
YoY Change (%) 25.2 9.8 1.9 -6.5 -8.6 -9.5 13.5 14.0 6.5 2.3
EBITDA 474 420 395 370 427 355 576 569 1,650 1,926
Margins (%) 17.1 17.1 15.9 13.7 16.9 16.0 20.3 18.5 15.9 18.1
Depreciation 44 49 48 53 58 57 58 60 194 234
Interest 17 22 2 10 6 11 7 6 52 30
Other Income 32 25 19 40 38 12 7 20 115 76
PBT 444 375 364 346 401 298 416 523 1,520 1,638
Tax 169 132 110 71 133 110 144 176 482 563
Rate (%) 38.1 35.1 30.2 20.7 33.1 36.8 34.7 33.6 31.7 34.3
Minority Interest & Profit/Loss of Asso.
Cos. 0 0 0 0 0 0 0 -10 0 -10
Reported PAT 275 243 254 274 268 189 272 357 1,038 1,086
Adj PAT 275 243 254 274 268 189 338 357 1,038 1,152
YoY Change (%) 41.0 246.2 16.4 12.5 -2.5 -22.4 33.0 30.2 42.8 11.0
Margins (%) 9.9 9.9 10.2 10.2 10.6 8.5 11.9 11.6 10.0 10.8
E: MOSL Estimates

April 2017 323
March 2018 Results Preview | Sector: Diversified
SRF
Bloomberg SRF IN CMP: INR2,008 TP: INR2,351 (+17%) Buy
 Execution of deferred order book is expected to deliver revenue
M. Cap. (INR b)/(USD b) 115 / 2
52-Week Range (INR) 2045 / 1420 growth of 8.5% YoY to INR14.3b.
1,6,12 Rel Perf. (%) 8 / 22 / 9  We expect packaging film business to deliver growth of over 18%,
followed by growth of 6% in the chemicals & polymers business.
Y/E March 2017 2018E 2019E 2020E  We expect EBITDA margin to remain flattish at 16.1%, with
Sales 48.2 55.0 64.8 74.4 growth of 7% in EBITDA to INR2,316m. Adjusted PAT is expected
EBITDA 9.7 9.5 12.0 14.5 to decline 11.2% YoY to INR1,018m. Buy.
NP 4.9 4.4 6.1 8.1
EPS (INR) 85.9 77.4 105.0 138.3
EPS Gr. (%) 12.8 -9.9 35.6 31.7
BV/Sh. (INR) 544.6 602.1 683.9 798.9
RoE (%) 16.6 13.3 16.3 18.7
RoCE (%)
17.7 16.7 20.7 25.2
Valuations  Outlook on specialty chemicals.
P/E (x)  Margins in Technical Textiles and Packaging segments.
23.4 25.9 19.1 14.5
P/BV (x) 3.7 3.3 2.9 2.5
EV/EBITDA (x) 13.8 14.4 11.2 8.9
EV/Sales (x) 2.8 2.5 2.1 1.7

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 12,994 12,154 11,330 13,258 13,884 12,864 13,971 14,385 48,218 55,014
YoY Change (%) 6 5 3.4 19.1 6.9 5.8 23.3 8.5 5.0 14.1
EBITDA 2,962 2,397 2,313 2,157 2,091 2,110 2,527 2,316 9,694 9,462
Margins (%) 22.8 19.7 20.4 16.3 15.1 16.4 18.1 16.1 20.1 17.2
Depreciation 696 700 709 730 758 768 770 770 2,834 3,059
Interest 281 240 269 228 271 305 239 237 1,018 1,026
Other Income 62 70 64 259 203 152 209 210 455 710
Extra-Ord expense 0 0 45 -185 0 0 0 0 -276 0
PBT 2,047 1,526 1,355 1,644 1,266 1,189 1,727 1,519 6,572 6,087
Tax 501 298 271 352 228 162 415 501 1,422 1,644
Rate (%) 24.5 19.5 20.0 21.4 18.0 13.6 24.0 33.0 21.6 27.0
Reported PAT 1,546 1,228 1,084 1,292 1,038 1,028 1,312 1,018 5,150 4,444
Adj PAT 1,546 1,228 1,120 1,147 1,038 1,028 1,312 1,018 4,934 4,444
YoY Change (%) 37.5 12.0 10.1 7.0 -32.8 -16.3 17.2 -11.2 14.4 -9.9
Margins (%) 11.9 10.1 9.9 8.6 7.5 8.0 9.4 7.1 10.2 8.1
E: MOSL Estimates

April 2017 324
March 2018 Results Preview | Sector: Staffing
TeamLease Services
Bloomberg TEAM IN CMP: INR2312 TP: INR2700 (+17%) Buy
 We expect revenue growth of 26.5% YoY to INR10.3b. This marks
52-Week Range (INR) 2537 / 982 a significant pick-up from 12.7% YoY growth seen in the previous
1,6,12 Rel Perf. (%) 16 / 35 / 120 quarter.
 We note that in the previous quarter, volume addition was back-
ended, which will get fully realized in 4Q, resulting in strong
Y/E March 2017 2018E 2019E 2020E
growth.
Sales 30.4 36.8 46.6 57.5
EBITDA 0.4 0.7 0.9 1.3  EBITDA margin is expected to be 1.9%, flat QoQ and up 10bp YoY.
NP 0.7 0.7 1.0 1.5
 Our PAT expectation of INR217m (-43.5% YoY) factors in a zero
EPS (Rs) 38.8 43.3 59.6 88.1
EPS Growth (%) 167.6 11.6 37.5 47.9
tax rate owing to benefits from Section 80JJJAA of the Income Tax
BV/Share (Rs) 222.9 266.2 325.8 413.9 Act. However, the decline is because the company realized
P/E (x) 60.5 54.2 39.4 26.6 exceptionally high benefits in 4QFY17 (ETR of -104%). Buy.
P/BV (x) 10.5 8.8 7.2 5.7
EV/EBITDA (x) 86.4 57.8 40.1 27.3
 Expectations around a GST-led pick-up in the general staffing
EV/Sales (x) 1.3 1.0 0.8 0.6
business.
RoE (%) 19.2 17.7 20.1 23.8
 Momentum in the IT staffing business.
RoCE (%) 19.0 17.7 19.9 23.6
 Penetration of other HR services in existing customers and new
accounts.

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 6,878 7,226 8,147 8,168 8,530 8,756 9,181 10,336 30,418 36,802
YoY Change (%) 21.4 12.3 29.1 23.0 24.0 21.2 12.7 26.5 21.4 21.0
EBITDA 62 86 148 146 130 151 179 200 442 660
Margins (%) 0.9 1.2 1.8 1.8 1.5 1.7 1.9 1.9 1.5 1.8
Depreciation 10 10 10 13 20 20 24 24 43 88
Interest 2 3 3 3 2 3 8 7 11 21
Other Income 61 70 37 57 58 44 42 48 224 193
PBT 110 143 171 188 166 173 189 217 612 745
Tax 37 52 56 -196 2 -3 5 0 -50 4
Rate (%) 33.4 36.7 32.7 -103.9 1.3 -1.5 2.5 0.0 -8.2 0.6
Reported PAT 74 90 115 384 164 176 184 217 663 741
Adj PAT 74 90 115 384 164 176 184 217 663 741
YoY Change (%) 48.7 57.9 132.1 318.7 122.7 94.4 60.1 -43.5 167.3 11.7
Margins (%) 1.1 1.2 1.4 4.7 1.9 2.0 2.0 2.1 2.2 2.0
E: MOSL Estimates

April 2017 325
March 2018 Results Preview | Sector: Agrochemicals
UPL
Bloomberg UPLL IN CMP: INR764 TP: INR945 (+24%) Buy
 We expect revenue to grow 10.4% YoY to INR58.9b in 4QFY18,
M. Cap. (INR b)/(USD b) 386 / 6
52-Week Range (INR) 902 / 675 driven by robust growth of 15% in ROW market, followed by 12%
1,6,12 Rel Perf. (%) 9 / -10 / -8 growth in North America.
 We expect Latin America to post moderate growth of 6.5%, with
India and Europe business growing at 10% each.
Y/E March 2017 2018E 2019E 2020E
Sales 163.1 175.8 196.1 222.3  We expect EBITDA margin to expand 70bp YoY to 21.8% and
EBITDA 32.2 35.8 40.7 47.0 EBITDA to increase 14% YoY to INR12,854m.
NP 19.9 21.7 23.8 28.1
 We expect adjusted PAT to de-grow 15.3% to INR7,145m on
EPS (Rs) 39.5 43.0 47.2 55.6
EPS Gr. (%) 81.5 8.9 9.7 17.9
account of higher tax rate of 25% in 4QFY18 v/s 7.2% in 4QFY17.
BV/Share 146.5 180.7 218.2 262.4 Buy.
RoE (%) 30.0 26.3 23.6 23.1
RoCE (%) 22.4 19.3 18.9 19.3
 Acreages and growth in Brazil.
Valuations
P/E (x) 19.4 17.8 16.2 13.7
 New launches and share of branded products.
P/BV (x) 5.2 4.2 3.5 2.9
EV/EBITDA (x) 13.0 11.5 10.0 8.4
EV/Sales (x) 2.6 2.4 2.1 1.8
Consolidated - Quarterly Earning Model (INR M)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Net Sales 35,100 35,406 39,190 53,410 37,230 37,700 41,940 58,964 163,106 175,834
YoY Change (%) 7.2 15.7 18.1 20.4 6.1 6.5 7.0 10.4 15.8 7.8
EBITDA 6,990 6,396 7,580 11,250 7,500 7,190 8,290 12,854 27,056 35,834
Margins (%) 19.9 18.1 19.3 21.1 20.1 19.1 19.8 21.8 16.6 20.4
Depreciation 1,690 1,540 1,620 1,870 1,580 1,650 1,690 2,125 6,720 7,045
Interest 1,600 1,800 1,830 2,130 800 1,820 1,110 2,543 7,360 6,273
Other Income 870 820 1,290 1,460 1,010 760 1,190 1,340 6,720 7,045
Exchange difference on trade
248 921 320 890 590 420 1,130 0 4,440 4,300
rec./payable
Extra-Ord expense 280 560 -20 -10 190 310 70 0 810 0
PBT 4,042 2,395 5,120 7,830 5,350 3,750 5,480 9,526 16,605 26,816
Tax 440 430 470 560 480 750 -140 2,382 1,900 3,472
Rate (%) 10.9 18.0 9.2 7.2 9.0 20.0 -2.6 25.0 11.4 12.9
Minority Interest & P/L of Asso. Cos. 0 320 60 -120 140 630 -120 0 190 570
Reported PAT 3,602 1,645 4,590 7,390 4,730 2,370 5,740 7,145 14,515 22,775
Adj PAT 4,180 3,586 4,915 8,435 5,010 3,320 6,320 7,145 15,233 22,775
YoY Change (%) 18.3 86.8 47.7 91.3 19.9 -7.4 28.6 -15.3 -372.2 49.5
Margins (%) 11.9 10.1 12.5 15.8 13.5 8.8 15.1 12.1 9.3 13.0
E: MOSL Estimates

April 2017 326
Motilal Oswal India Strategy Gallery
Explanation of Investment Rating
Investment Rating Expected return (over 12-month)
Capital Goods
BUY >=15%
SELL < - 10%
NEUTRAL > - 10 % to 15%
UNDER REVIEW Rating may undergo a change
NOT RATED We have forward looking estimates for the stock but we refrain from assigning recommendation
NOT E S
*In case the recommendation given by the Research Analyst becomes inconsistent with the investment rating legend, the Research Analyst shall within 28 days of the inconsistency, take appropriate measures to make the recommendation consistent with the investment rating legend.
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India Strategy 4qfy18

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India Strategy 4qfy18

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April 2018

India Strategy | Get on track please !

More ladders than snakes

Earnings recovery imminent

As far as the 4QFY18 earnings season is concerned, we expect it to be characterized

Key sectoral trends/highlights

Model portfolio changes

revival in rural markets improves visibility of volumes in the tractor and UV

Focus Nifty stocks from 4QFY18 earnings perspective

THREE KEY TRENDS Three key trends to watch out for

2. Industrial capex – on a recovery path

4QFY18 PREVIEW Global Cyclicals will drive 4QFY18 earnings

Global Cyclicals to drive earnings in 4QFY18

THREE KEY TRENDS Three key trends characterizing 4QFY18

2. Industrial Capex – on recovery path

Earnings breadth improving; recovery to become more broad-based in FY19

Snapshot of sector performance

Exhibit 1: Profit growth led by Metals, Autos and NBFC

Dec-14 18.2 Dec-14 -6.7 Dec-14 -0.4

EBITDA Margin LPA: 19.3%

OMCs and Financials) to be highest since June 2016

Dec-17 11.4 Dec-17 15.2

Exhibit 6: 4QFY18 EBITDA margins for MOSL Universe (ex

June-12 10.3 Jun-14 20.9 Jun-14 16.6

pool at 38%, highest since Sep’11.

and Financials) to stay flattish YoY

MOSL Universe PAT Margin LPA: 10%

Dec-17 9.8 Mar-18E 3.3 Mar-18E 3.7

Exhibit 10: Key assumptions

Interesting sectoral trends

Oil & Gas

Oil & Gas

PAT Growth Ex OMCs (%)

1. The bottoming out of macros: GDP| Inflation |Bond yields

Exhibit 16: Consumer auto sales continues to report strong

Exhibit 18: Petrol consumption trends remain healthy (%

Source: RBI Source: RBI

Government Private Government (INR b) Private (INR b)

Source: Company, MOSL Source: Company, MOSL

Source: Company, MOSL Source: Company, MOSL

3. Earnings recovery has been extremely narrow in FY17 and FY18;

FY17 FY18 FY19 FY20 FY17 FY18 FY19 FY20

Global Cyclicals to account for 72% of 4QFY18 earnings delta

Exhibit 38: Cyclicals expected to drive earnings growth in FY18

Oil & Gas

Source: MOSL Source: MOSL

1HFY18 PAT growth (%) 2HFY18 PAT growth (%)

Oil & Gas

Source: MOSL Source: MOSL

Defensives to post modest PAT growth after five consecutive quarters of

Defensives includes Consumer, Healthcare, Technology, Telecom and Utilities

Nifty profits expected to post healthy 14% YoY growth

Exhibit 42: Nifty sales to grow 14% in 4QFY18

Exhibit 44: 4QFY18 Nifty EBITDA to grow at 11% YoY

Exhibit 45: Nifty sectoral 4QFY18 PAT change YoY (%)

Oil & Gas

Exhibit 46: Nifty companies’ 4QFY18 performance (INR b)

Intra-sector 4QFY18 earnings divergence (%)

Metals 31 SAIL: LP, RINDL: NACL: 6 HZ: -16,

BRIT: 28,PIDI: 22, UNSP: 13,APNT:

Logistics -45 GDPL: 6 AGLL: -27,CCRI: -50

Exhibit 50: Nifty performance - Expect FY17-20 PAT CAGR of 19%

Exhibit 52: Nifty stock absolute FY19E PAT change (INR b)

Key Sectoral Highlights - 4QFY18