ValueGuide March2018

ValueGuide
March 2018
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CONTENTS
From the Editor’s Desk EQUITY

Call it a course
correction or
FUNDAMENTALS
reemergence of Market Outlook 07 Sharekhan Special 34
volatility, February saw
Top Picks Performance 11 REGULAR FEATURES
the markets sharply
reverse trends for Stock Update 12 Report Card 4
multiple reasons. Sector Update 32 Earnings Guide 46
Prominent among
these are growing
fiscal concerns and possibly denting of sentiments with TECHNICALS DERIVATIVES
introduction of long term capital gains tax (LTCG) on
Nifty 35 View 36
equities domestically... 06
PMS DESK ADVISORY DESK DERIVATIVES
WealthOptimizer PMS 39 MID Trades 43 Derivatives Ideas 43
ProPrime - Diversified Equity 40
ProTech - Index Futures Fund 41
ProTech - Trailing Stops 42 CURRENCY
FUNDAMENTALS
USD-INR 37 GBP-INR 37
MUTUAL FUND DESK EUR-INR 37 JPY-INR 37
Top MF Picks (equity) 44
Top SIP Fund Picks 45
TECHNICALS
USD-INR 38 GBP-INR 38
EUR-INR 38 JPY-INR 38
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March2017
June 2018 3 Sharekhan ValueGuide
REPORT CARD EQUITY FUNDAMENTALS
STOCK IDEAS STANDING (AS ON MARCH 01, 2018)

CURRENT PRICE AS ON PRICE 52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX
COMPANY
RECO 01-MARCH-18 TARGET HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M
Automobiles
Apollo Tyres Buy 266 292 289 178 1.3 8.8 3.6 44.9 6.7 4.8 -3.2 21.8
Ashok Leyland Buy 141 170 144 81 14.3 17.4 24.9 60.4 20.4 13.1 16.7 34.8
Bajaj Auto Buy 3021 3625 3473 2695 -11.5 -6.1 3.6 11.3 -6.7 -9.5 -3.2 -6.5
Gabriel India Hold 157 175 223 111 -8.8 -15.5 -10.1 36.9 -3.9 -18.6 -16.0 15.1
Hero MotoCorp Buy 3577 4200 4200 3175 -2.7 0.8 -10.3 17.1 2.6 -2.9 -16.2 -1.6
M&M Buy 733 840 803 612 -8.3 4.0 8.7 9.7 -3.3 0.2 1.5 -7.8
Maruti Suzuki Buy 8873 11085 10000 5800 -5.6 3.1 13.6 51.4 -0.5 -0.7 6.1 27.2
Rico Auto Industries Buy 82 115 111 44 -6.6 -13.8 7.4 40.1 -1.6 -17.0 0.3 17.7
TVS Motor Buy 677 825 795 414 0.9 -6.5 11.7 60.2 6.4 -9.9 4.3 34.7
BSE Auto Index 24819 27031 21468 -4.8 -0.4 3.0 16.4 0.3 -4.0 -3.8 -2.2
Banks & Finance
Axis Bank Buy 526 680 628 448 -11.3 -1.5 3.6 3.4 -6.5 -5.1 -3.2 -13.1
Bajaj Finance Buy 1659 1900 1989 1022 -4.1 -3.1 -7.8 54.6 1.1 -6.6 -13.9 30.0
Bajaj Finserv Buy 4999 6050 5835 3762 -0.8 -2.0 -9.0 27.5 4.6 -5.5 -15.0 7.1
Bank of Baroda Buy 138 210 207 134 -9.2 -17.5 0.0 -15.8 -4.3 -20.5 -6.6 -29.2
Bank of India Reduce 113 ** 217 110 -26.3 -39.6 -21.4 -12.1 -22.3 -41.8 -26.6 -26.1
Capital First Buy 669 930 902 627 -7.9 -4.0 -8.5 2.6 -3.0 -7.5 -14.6 -13.8
Federal Bank Buy 94 120 128 83 -3.6 -13.4 -14.7 7.6 1.6 -16.5 -20.3 -9.6
HDFC Buy 1814 2200 1986 1361 -7.8 9.4 3.1 31.0 -2.8 5.4 -3.7 10.1
HDFC Bank Buy 1874 2300 2015 1373 -5.9 1.4 6.0 35.6 -0.8 -2.3 -1.0 13.9
ICICI Bank Buy 305 400 366 240 -11.9 -0.1 2.2 21.1 -7.2 -3.7 -4.5 1.8
LIC Housing Finance Hold 507 620 794 482 -4.7 -11.2 -25.6 -8.8 0.5 -14.4 -30.5 -23.4
Max Financial Buy 495 620 684 480 -8.5 -9.5 -18.9 -12.2 -3.5 -12.8 -24.3 -26.2
PTC India Financial Services Hold 30 37 51 30 -13.8 -18.4 -18.5 -24.3 -9.2 -21.4 -23.9 -36.3
Punjab National Bank Reduce 101 ** 232 92 -39.7 -41.1 -30.0 -29.2 -36.4 -43.2 -34.7 -40.5
SBI Buy 262 350 352 241 -14.3 -16.2 -5.7 -2.7 -9.7 -19.2 -11.9 -18.2
Union Bank of India Hold 104 150 205 100 -21.6 -34.4 -25.4 -30.4 -17.3 -36.8 -30.3 -41.5
Yes Bank Buy 321 410 383 275 -10.8 4.6 -9.6 11.3 -6.0 0.8 -15.6 -6.5
BSE Bank Index 28072 31376 23294 -8.8 -1.3 1.6 19.2 -3.9 -4.9 -5.1 0.2
Consumer goods
Britannia Buy 4944 5500 5066 3045 4.3 2.9 16.5 56.3 9.9 -0.9 8.8 31.4
Emami Buy 1081 1330 1428 990 -5.3 -17.1 -1.5 5.0 -0.2 -20.1 -8.0 -11.7
GSK Consumers Buy 6792 7310 6940 4851 1.1 11.7 27.3 35.4 6.6 7.6 18.9 13.8
Godrej Consumer Products Buy 1080 1250 1128 796 2.7 10.8 16.2 30.8 8.2 6.8 8.5 9.9
Hindustan Unilever Hold 1324 1440 1415 862 -3.4 5.9 9.6 53.6 1.8 2.0 2.4 29.1
ITC Hold 264 325 368 250 -4.1 3.4 -6.9 -0.2 1.1 -0.3 -13.1 -16.1
Jyothy Laboratories Buy 344 420 443 325 -5.7 -10.7 -11.7 -6.1 -0.6 -13.9 -17.6 -21.1
Marico Buy 312 365 349 276 1.3 1.4 0.7 13.5 6.8 -2.3 -6.0 -4.6
Zydus Wellness Hold 1296 1300 1320 809 28.6 40.0 49.7 53.4 35.5 34.9 39.8 28.9
BSE FMCG Index 10515 11047 8717 -2.4 2.3 3.3 19.5 2.8 -1.4 -3.5 0.4
IT / IT services
Firstsource Solution Hold 53 ** 54 30 29.7 30.5 39.4 16.5 36.7 25.8 30.2 -2.1
HCL Technologies Buy 943 1050 1042 796 -4.3 13.8 9.4 12.6 0.9 9.7 2.2 -5.4
Infosys Hold 1161 1180 1221 860 1.4 21.1 28.0 16.6 6.9 16.6 19.5 -2.0
Persistent Systems Buy 835 900 878 558 7.4 28.7 35.4 32.1 13.2 24.0 26.5 11.0
Tata Consultancy Services Hold 3038 3200 3259 2253 -3.2 15.8 24.3 24.8 2.0 11.5 16.1 4.9
Wipro Reduce 293 290 335 242 -2.7 1.4 -1.0 20.1 2.5 -2.3 -7.5 1.0
BSE IT Index 12440 13126 9571 -0.8 17.6 24.8 21.5 4.5 13.3 16.6 2.1
Capital goods / Power
CESC Buy 1005 1165 1190 791 -3.9 0.9 -3.4 21.4 1.3 -2.8 -9.7 2.0
CG Power & Ind. Solutions Hold 82 100 99 68 -10.3 -2.3 0.3 18.2 -5.4 -5.9 -6.3 -0.6
Finolex Cable Hold 706 755 758 430 -2.4 5.6 30.7 61.0 2.9 1.8 22.0 35.3
Greaves Cotton Hold 123 143 179 112 -8.5 8.0 -18.1 -21.9 -3.5 4.1 -23.5 -34.4
Kalpataru Power Transmission Buy 493 535 536 275 6.8 12.1 36.1 75.7 12.5 8.0 27.1 47.7
KEC International Hold 410 460 438 160 17.3 30.5 32.5 145.6 23.6 25.7 23.7 106.4
PTC India Hold 101 115 130 84 -3.1 -12.5 -13.0 17.4 2.1 -15.7 -18.7 -1.3
Skipper Buy 237 275 293 140 0.2 -10.5 10.8 62.6 5.6 -13.8 3.5 36.6
March 2018 4 Sharekhan ValueGuide

EQUITY FUNDAMENTALS REPORT CARD
STOCK IDEAS STANDING (AS ON MARCH 01, 2018)
CURRENT PRICE AS ON PRICE 52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX
COMPANY
RECO 01-MARCH-18 TARGET HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M
Thermax Hold 1218 1290 1375 834 -5.2 10.5 37.3 40.8 -0.1 6.5 28.2 18.4
Triveni Turbine Hold 119 135 167 113 -8.1 -11.0 -9.4 -1.4 -3.1 -14.2 -15.4 -17.1
V-Guard Industries Buy 238 265 251 162 3.8 5.4 28.4 45.0 9.4 1.6 19.9 21.9
Va Tech Wabag Buy 549 650 750 529 -7.0 -7.7 -10.3 -5.9 -2.0 -11.1 -16.2 -20.9
BSE Power Index 2213 2450 2135 -3.8 -2.5 -0.6 3.1 1.4 -6.0 -7.2 -13.3
BSE Capital Goods Index 19027 20883 15226 -7.9 3.8 9.4 24.9 -2.9 0.1 2.2 5.0
Infrastructure / Real estate
Gayatri Projects Buy 212 283 231 126 -0.9 2.4 23.4 55.5 4.5 -1.4 15.3 30.7
IRB Infra Buy 224 270 273 194 -6.8 2.2 3.8 -2.2 -1.8 -1.6 -3.0 -17.8
Jaiprakash Associates Hold 17 ** 30 9 -14.5 -1.4 -29.1 9.1 -9.8 -5.0 -33.7 -8.3
Larsen & Toubro Hold 1315 1520 1470 977 -9.6 8.5 15.4 35.3 -4.8 4.6 7.8 13.7
NBCC Buy 196 260 292 161 -14.4 -24.8 -5.6 19.7 -9.8 -27.5 -11.8 0.6
Sadbhav Engineering Buy 398 460 440 261 -2.9 5.0 38.6 46.2 2.3 1.2 29.5 22.8
CNX Infra Index 3443 3749 2947 -5.3 -0.4 4.3 16.7 -0.2 -4.0 -2.6 -1.9
BSE Real estate Index 2449 2828 1470 -5.3 2.2 12.1 59.0 -0.2 -1.5 4.7 33.7
Oil & gas
Oil India Hold 350 390 389 257 1.7 1.0 25.2 10.9 7.2 -2.7 16.9 -6.8
Petronet LNG NEW Buy 241 320 276 189 -4.5 -1.3 8.7 21.6 0.7 -4.9 1.5 2.2
Reliance Buy 948 1110 991 617 0.5 4.2 17.8 54.8 5.9 0.4 10.0 30.1
Selan Exploration Technology Hold 207 250 270 154 -5.3 -4.4 3.9 17.0 -0.2 -7.9 -3.0 -1.7
BSE Oil and gas Index 15521 16727 13097 -2.5 0.6 4.0 19.0 2.8 -3.1 -2.8 0.0
Pharmaceuticals
Aurobindo Pharma Buy 624 725 809 503 2.3 -7.0 -17.4 -7.4 7.8 -10.4 -22.9 -22.2
Cadila Healthcare Hold 404 485 560 373 -3.3 -5.1 -20.4 -7.2 2.0 -8.6 -25.6 -22.0
Cipla Buy 582 685 663 479 -0.9 -2.7 2.3 -0.4 4.4 -6.3 -4.4 -16.3
Divi's Labs Buy 1018 1275 1142 533 -2.4 -1.6 44.7 34.7 2.8 -5.2 35.2 13.2
Glenmark Pharmaceuticals Hold 545 600 930 517 -7.4 -1.9 -10.5 -41.2 -2.4 -5.4 -16.4 -50.6
Lupin Reduce 804 ** 1498 782 -6.6 -1.3 -19.3 -44.9 -1.5 -4.9 -24.6 -53.7
Sun Pharmaceutical Industries Hold 535 600 729 433 -3.4 1.8 10.9 -22.4 1.8 -1.9 3.5 -34.8
Torrent Pharma Hold 1338 1480 1575 1142 -0.6 5.4 10.4 -1.4 4.7 1.5 3.1 -17.1
BSE Health Care Index 14032 15612 12513 -2.2 1.3 5.1 -9.0 3.0 -2.4 -1.9 -23.5
Building materials
Grasim Buy 1167 1480 1300 830 -1.9 1.4 0.1 39.7 3.4 -2.3 -6.5 17.4
Shree Cement Hold 16595 19600 20560 15600 -4.9 -3.4 -6.6 3.2 0.2 -6.9 -12.8 -13.3
The Ramco Cements Hold 742 775 840 616 -2.2 7.0 7.2 11.6 3.1 3.1 0.1 -6.2
UltraTech Cement Hold 4153 4750 4600 3762 -5.4 -0.8 3.8 11.6 -0.3 -4.4 -3.0 -6.2
Discretionary consumption
Arvind Buy 415 500 479 353 2.1 -4.8 11.2 9.9 7.7 -8.3 3.9 -7.6
Century Plyboards (India) Hold 332 ** 363 235 2.8 6.4 31.7 33.9 8.3 2.5 23.0 12.5
Cox and Kings Buy 241 325 306 183 -1.0 -5.0 -9.7 26.4 4.3 -8.5 -15.6 6.2
Info Edge (India) Hold 1299 1425 1460 796 -2.0 0.9 37.1 54.6 3.3 -2.8 28.0 29.9
Inox Leisure Buy 280 320 326 213 -1.1 2.0 10.9 16.8 4.2 -1.7 3.6 -1.8
KKCL Hold 1549 1950 2200 1500 -9.4 -16.7 -5.7 -11.0 -4.5 -19.7 -11.9 -25.2
Orbit Exports Hold 153 177 190 116 -1.9 9.6 5.9 6.2 3.4 5.6 -1.1 -10.8
Relaxo Footwear Buy 615 735 725 441 -2.8 2.0 20.7 41.9 2.4 -1.7 12.7 19.3
Thomas Cook India Buy 241 270 274 202 3.0 1.7 2.7 23.1 8.5 -2.0 -4.1 3.5
Wonderla Holidays Hold 381 410 425 330 -0.5 8.1 10.0 2.1 4.9 4.1 2.8 -14.2
Zee Entertainment Buy 555 680 619 458 -6.6 -0.3 6.1 10.2 -1.6 -3.9 -0.9 -7.4
Diversified / Miscellaneous
Bajaj Holdings Buy 2721 3628 3036 1750 -2.9 -5.9 -6.6 31.2 2.3 -9.3 -12.8 10.3
Bharat Electronics Buy 153 220 193 136 -4.1 -16.1 -12.2 13.3 1.0 -19.1 -18.0 -4.8
Bharti Airtel Buy 428 600 565 326 -2.4 -11.1 1.9 19.0 2.8 -14.3 -4.8 0.0
Gateway Distriparks Hold 210 215 292 192 -7.6 -14.1 -4.2 -13.6 -2.6 -17.3 -10.5 -27.4
PI Industries Hold 882 ** 1035 674 -3.4 -8.1 21.2 7.1 1.8 -11.4 13.2 -10.0
Ratnamani Metals and Tubes Buy 963 1100 1217 697 -5.6 -0.1 9.7 33.5 -0.6 -3.8 2.5 12.2
Supreme Industries Buy 1192 1450 1490 979 -12.6 3.1 -0.1 22.0 -7.9 -0.6 -6.7 2.5
UPL Buy 714 980 903 673 -5.9 -2.1 -14.2 0.4 -0.8 -5.7 -19.9 -15.6
BSE500 Index 14611 15661 12102 -4.5 2.1 5.8 20.8 0.6 -1.6 -1.2 1.5
CNX500 INDEX 9225 9895 7659 -4.6 2.0 5.8 20.5 0.5 -1.7 -1.2 1.3
CNXMCAP INDEX 19512 21841 16243 -5.4 -0.8 5.9 19.4 -0.3 -4.4 -1.1 0.4

From the Editor’s Desk
From the Editor’s Desk Shifting gears
Call it a course correction or reemergence of volatility, February saw the markets sharply
reverse trends for multiple reasons. Prominent among these are growing fiscal concerns and
possibly denting of sentiments with introduction of long term capital gains tax (LTCG) on equities
domestically. Global environment was also not supportive with a sharp correction in equities
globally due to rising concerns on global interest rate hikes and firming up of bond yields. In the
latter half of the month, volatility spiked further on the negative news of frauds at major public-
sector banks affected market sentiments.
There was some sunshine from positive macroeconomic indicators — lower inflation, a rise in
industrial output and a higher GDP reading for Q3. Corporate earnings also revived strongly,
helping the Sensex and Nifty recover a bit in the latter half of the month. Nevertheless, the
benchmark indices corrected by nearly 5% during February.
The markets are shifting gears in the past few months, leaning more on stronger micros – a
revival in corporate earnings even as macro fundamentals turn shaky. Even as the economy
emerge from the twin chocks of demonetisation and GST, issues such as lower tax collections
under GST, rising energy prices and weakness exports loom large. Globally, a rise in interest
rates, bond yields and inflation, coupled with pressure from crude oil prices may also not prove
conducive. The stock markets, however, can draw confidence from the sure signs of a revival in
corporate earnings that can improve on higher government spending on infrastructure and its
efforts to revive rural demand.
Between concerns of weakening macros and a rebound in corporate earnings, the Sharekhan
Research team believes that the markets may consolidate at current levels. Refer to the Market
Outlook report (on page 7) for further detailed analysis on market conditions and the identified
investment themes for investors.
News on the political front can also create ripples in the markets, if there are any surprise
winners in the eight state elections scheduled this year. The recent results in Nagaland and
Tripura seem to signal that the ruling party is on a firm footing. However, the big test would be in
the coming months when elections are held in politically critical states like Karnataka, Madhya
Pradesh and Rajasthan.
Given the busy election schedule ahead, the aggressive election campaigns would result in
lot of noise in the media and affect sentiments. Globally also, the recent move to impose tariff
barrier by US for import of steel and other metals is likely to result in strong posturing by global
leaders and keep the markets on its toes.
From investor’s perspective, the course correction and volatility would offer opportunities to
buy into quality companies at reasonable prices. Moreover, our research team points out that
it would be better to selective now and investors would do well to focus on quality rather than
chase momentum in year 2018. We, at Sharekhan, would continue to identify such investment
ideas/themes for investors. Our range of investment products with proven track record are also
an attractive offering for investors.

EQUITY FUNDAMENTALS MARKET OUTLOOK
Market Outlook March 05, 2018

Adjusting to changing dynamics
Expect market to slip in a consolidation phase with increased volatility in the near term
Macro concerns emerge: While the economy is premium valuation multiples. However, our base case
recovering from the twin shocks of demonetisation and prognosis is that post the recent correction and growing
GST implementation, rising energy prices, firming up of signs of earnings revival, the market is likely to slip into
bond yields and global volatility have cast a shadow on a time correction phase and consolidate within a range
the macro outlook. Lack of buoyancy in GST collections around the current level. We believe the viability of our
and weak exports data are also worrying factors and structural themes of 1) financialisation, 2) formalization,
further fuel concerns related to fiscal slippage. Globally, 3) government capex and 4) consumption, still holds and
flattening of the yield curve in the US (narrowing of we opine investors may follow them to pick long-term
spread between 10-year and 30-year yields) indicates stocks.
possibility of slower-than-anticipated growth in US
economy and/or higher-than-expected inflationary Valuation – Expect returns in line with earnings
pressures and is not conducive for equity markets. growth: Sensex is trading at close to 18x its one-year
forward earnings, which leaves little scope for multiple
Improving micros provide hope: Growth in corporate expansion from here. Moreover, hardening of bond yields
earnings is finally showing distinct signs of revival. As the (risk premiums) will impact equity valuations. However,
effect of demonetisation and GST implementation fades equities are expected to still give healthy double-digit
off and global commodity prices stabilise, the corporate returns in 2018 on account of healthy revival in earnings
earnings growth trajectory is expected to look up. Post growth coupled with continued inflows into equities.
Q3FY18 results, consensus estimates are stable and
forecast of 16-18% growth in corporate earnings appears Preference: Apart from the core portfolio of stocks from
achievable over the next couple of years. Earnings four investment themes, we believe few pockets that
growth would also get support from public spending on could be winners and outperform the markets in 2018.
infra projects and the government’s policies aimed at These are 1) large-cap stocks that were laggards are
easing rural stress and spur demand. The big picture is expected to see improvement and can outperform the
also supportive as corporate earnings/GDP ratio at 3% benchmark indices viz. oil and gas (ONGC and Petronet),
is close to its bottom and much lower than the high of 7% IT (TCS, Tech Mahindra), Corp Banks (ICICI Bank and
plus seen at the peak in FY2008. On the flip side, rising Axis Bank), 2) rural and semi-urban demand-driven
bond yields and strict NPA norms by the Reserve Bank companies and 3) midcap from auto ancillary/infra and
of India (RBI) could act as a drag on aggregate Sensex construction space. We opine investors should increase
earnings. exposure to large-cap stocks and avoid over-valued
pockets within the mid-cap space.
FII inflows could remain erratic, but domestic MF inflows Sensex PE band (based on one-year forward earnings)
still healthy: While we believe FII inflows could remain
erratic influenced largely by global factors and partly by
domestic valuations, factors such as better awareness,
real interest rate being positive for two years now
apart from the market performance are all encouraging
significant flow of funds into financial assets, including
equities (away from gold and real estate).
Outlook — Markets readjusting to changing dynamics:

In the past few months, the scenario is shifting from
strong macros and weak earnings to that of weakening
macros and stronger micros (earnings revival). Earnings
revival would support markets; however, unfavourable
changes in the macro environment could pose risks to Source: Bloomberg, Sharekhan Research

MARKET OUTLOOK EQUITY FUNDAMENTALS
Macro concerns emerge: The tide seems to have turned. which may upset the trade deficit. Rising energy prices
Hence, while FY2019E GDP growth is expected to pick will also be an impediment in efforts to rein-in inflationary
up from FY2018E levels, the macro outlook now casts pressures. Spurred by fiscal deficit concerns, India’s
a shadow. Macro issues such as fears of fiscal slippage bond yields have spiked with both global and domestic
abetted by rising energy (especially crude oil) prices factors contributing to the rise. Internal challenges such
pack more bite on account of still wobbly GST collections as rise in CPI inflation and expected elevated government
and pose as key concerns. borrowings in FY2019E contribute to hardening of bond
Rising Indian crude basket
yields in India.
Rising Bond yields reflect macro concerns
10.0
9.0
8.0
7.0
6.0
5.0
Feb-13
Feb-14
Feb-15
Feb-16
Feb-17
Feb-18
Source: Petroleum Planning & Analysis Cell India Government 10 Year Gsec Yield (%)
Source: Bloomberg
GST collections have now become very important for
the economy. Hence, low buoyancy in GST collections US Governement 10 years G-sec yield
poses risk of higher-than-budgeted fiscal deficit targets. 3.5
Lot depends on GST collections for FY2019E, but initial
3.0
problems still continue with GST implementation. Slow
2.5
GST collections raise the risk of higher-than-budgeted
2.0
fiscal deficit target.
1.5
Buoyancy in GST collections is the need of the hour 1.0
96000 0.5
0.0
92000
Feb-13
Feb-14
Feb-15
Feb-16
Feb-17
Feb-18
88000
84000 US Government 10 Year Gsec Yield (%)
80000 Source: Bloomberg
However, the rise in Indian bond yields is in line

76000
with global trends as well as seen in US Gsec yields
72000 having risen due to expected rates hikes. The impact
Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 on financials will be most pronounced. With elevated
GST collection Rs Cr inflation expectations, interest rates would bottom out
and near-term borrowing costs would inch up, impacting
Source: Ministry of Finance
cost of funds, and banks may also see MTM hit.
The writing on the wall is clear: The economy needs
to continue its spend on infrastructure and needs to Narrowing of yields is another concern: Globally,
further support the economy by easing the rural and agri narrowing of spreads (flattening of the yield curve)
distress. appears to be in the play once again. As seen from the
chart, the period of steep declines has been near sharp
Rising bond yields queer the pitch: Of late, India’s crude market corrections, when seen in juxtaposition with the
basket has risen sharply from the average of FY2017, yields chart.

EQUITY FUNDAMENTALS MARKET OUTLOOK
The narrowing of spreads (Yields of 30-year and 10-year fag end from Tata Motors, SBI and ONGC. Excluding
GSec in the US, juxtaposed with DJIA) these three stocks, earnings growth at Sensex level
1.60 30000
stood at close to 10%.
1.20 25000 Though some of the heavyweight sector such as IT

20000 services reported decline in profits, management
0.80
15000
commentary is quite encouraging. Similar confidence
0.40 was seen in rural consumer and cap goods companies.
10000
It would be important for an improving trend in Q4 also
0.00 5000 for market participants to gain confidence in a sustained
-0.40 0 revival in earnings growth going ahead.
Feb-88
Feb-91
Feb-94
Feb-97
Feb-00
Feb-03
Feb-06
Feb-09
Feb-12
Feb-15
Feb-18
Government’s infra spending and rural focus targeted
spending will help revive demand: Earnings recovery
US 30 year Gsec yield - 10 year yield Dow Jones
is likely to be driven by economic pick up post fading
Source: Bloomberg of demonetisation/GST effect as well as investment
push by the government. Infra spending has also been
The narrowing of spreads indicates a possibility of lower- improving and is showing its effects as well. Q3FY2018
than-expected growth and higher inflation. Although gross fixed capital formation (GFCF) grew by robust 12%
the spreads are far from crisis levels, recent narrowing in Q3FY2018, up from 6.92% growth seen in the previous
of spread may lead to adjustment in equity markets. quarter.
Globally, the narrowing of spreads (flattening of yield
curve) indicates possibility of lower-than-expected Corp earnings as % of GDP are expected to improve
growth and higher inflation, which is not positive for
equity markets 8.0
Corporate
Improving micros provide hope: The tide certainly 6.0 earnings as % of
GDP are
seems to have turned. While earlier, the economy was expected to
grappling with slowdown issues exacerbated by one- 4.0 improve
off events such as demonetisation and implementation

of deep structural reforms, the micros of individual 2.0
companies and sectors are improving. Consensus
earnings estimates were stable post Q3 results. But 0.0
going forward, rising bond yields and strict NPA norms
FY19E
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
by the RBI could act as a drag on aggregate Sensex
earnings. Corporate Profit as % of GDP
Actual sector-wise earnings growth (%) Source: Sharekhan Research
Pharma -47.0
The government has rural focus and is spending in the
Telecom -39.3 segment to help revive rural demand from a low base,
IT -3.4 which will be crucial for demand revival. Corporate
BFSI -1.4 earnings/GDP at 3% (compared to peak of 7% plus) are
Power 0.1 showing the effect as well as the potential of growth
Diversified 5.5 ahead. The consensus is optimistic and estimates stable
Energy 10.8 performance post Q3.
Auto 11.1
FMCG 13.5 FII inflows could remain erratic but domestic MF
Cap. goods 20.8 inflows still healthy: The rating upgrade of India, as
Metal 537.1
well as its disciplined deficit management, has improved
-150.0 50.0 250.0 450.0 650.0 the confidence of global money as well. Hence, foreign
flows are coming thick and fast in both debt and equity
Source: Sharekhan Research
markets over the years.
The 3QFY2018 earnings season has so far been broadly
in line with expectations, barring disappointment in the

MARKET OUTLOOK EQUITY FUNDAMENTALS
Improving FII inflow in Equity and Debt (Rs Cr) (FY18 is YTD) and stronger micros (earnings revival). Earnings revival
300000
would support the markets; however, unfavourable
250000
changes in the macro environment could pose risk to
200000
premium valuation multiples. However, our base case
150000
prognosis is that post the recent correction and growing
100000
signs of earnings revival, the market is likely to slip into
50000
a time correction phase and consolidate within a range
around the current level. We believe the viability of
0
our structural themes of 1) financialisation (household
-50000
savings moving to financial assets rather than physical
-100000
assets); 2) formalisation (shift of market share from
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
unorganised to organised players in fragmented
FII inflow in Equity & Debt (Rs Cr)
segments); 3) government’s capex (spending on roads/
rail/defence and affordable housing projects); and 4)
Source: CDSL
consumption, still holds; and we opine investors may
However, while we believe FII inflows could remain follow them to pick long-term stocks.
erratic influenced largely by global factors and partly by
Valuations: Sensex is trading close to 18x its one-year
domestic valuations, factors such as better awareness,
forward earnings and is clearly not cheap anymore.
real interest rate being positive for two years now
Thus, scope for further PE expansion is limited. Moreover,
apart from the market performance are all encouraging
hardening of bond yields (risk premiums) will impact
significant flow of funds into financial assets, including
equity valuations. However, equities are expected to
equities (away from gold and real estate).
still give healthy double-digit returns in 2018 on account
Monthly Net inflow/outflow in Equity MFs (Rs Cr) of healthy revival in earnings growth coupled with
continued inflows into equities.
Sensex’ one-year forward P/E band
Source: AMFI
Average monthly MF flows are close to $2.5 billion

in CY2017 with SIP flows of close to Rs. 7,000 crore Source: Bloomberg, Sharekhan Research
monthly now. Annual inflows of $25 billion-30 billion in
MF appear sustainable as it would still amount to less Preference: Apart from the core portfolio of stocks from
than 5% of annual household savings of more than $500 four investment themes, we believe few pockets that
billion annually. could be winners and outperform the markets in 2018.
These are 1) large-cap stocks that were laggards are
Risk: Global disruptions include US monetary stance expected to see improvement and can outperform the
turning more hawkish and risk to valuation multiples benchmark indices viz. oil and gas (ONGC and Petronet),
would be the key risks that we envision before the IT (TCS, Tech Mahindra), Corp Banks (ICICI Bank and
economy. Axis Bank), 2) rural and semi-urban demand-driven
companies and 3) midcap from auto ancillary/infra and
Outlook: Markets readjusting to changing dynamics: In construction space. We opine investors should increase
the past few months, the scenario is turning from strong exposure to large-cap stocks and avoid over-valued
macros and weak earnings to that of weakening macros pockets within the mid-cap space.

EQUITY FUNDAMENTALS Sharekhan Top Picks
Top Picks February 28, 2018

Performance of Sharekhan Top Picks for February 2018
Even in the volatile month of Febuary, the Top Picks basket the importance of being in the right sector and companies
outperformed benchmark indices, falling only 2.9%, as based on the view on markets. For the uninitiated, our
against a decline of 4.8% in both the Sensex and Nifty. flagship investment portfolio, Top Picks, that has the
Both the new additions last month - Godrej Consumer and unbeaten track record of outperformance for nine years is
Tech Mahindra - ended February with gains and made a available in new format on IA platform now.
substantial difference to the folio returns. This underlines
Consistent outperformance (absolute returns; not annualised) (%)

(%) 1 month 3 months 6 months 1 year 3 years 5 years
Sharekhan Top Picks -2.9 0.2 3.9 32.2 62.4 250.0
Sensex -4.8 3.1 7.8 19.0 15.3 74.8
Nifty -4.8 2.6 6.0 18.4 17.0 76.7
CNX MIDCAP 100 -4.6 -1.2 7.6 19.4 46.5 151.6
As on February 28, 2018
Absolute returns (Top Picks Vs Benchmark indices) (%)
Sharekhan Sensex Nifty CNX Midcap 100
(Top Picks)
YTD CY2018 -3.9 0.3 -0.4 -6.9
CY2017 58.0 28.0 29.0 47.3
CY2016 8.8 1.8 3.2 7.1
CY2015 13.9 -5.1 -4.1 6.5
CY2014 63.6 29.9 30.9 55.1
CY2013 12.4 8.5 6.4 -5.6
CY2012 35.1 26.2 29.0 36.0
CY2011 -20.5 -21.2 -21.7 -25.0
CY2010 16.8 11.5 12.9 11.5
CY2009 116.1 76.1 72.0 114.0
Please note the returns are based on the assumption that at the beginning of each month an equal amount was invested in each stock of the Top Picks
Constantly beating Nifty and Sensex (cumulative returns since April 2009)
1000
900
800
700
600
500
400
300
200
100
Nov-09
Nov-10
Nov-15
Nov-16
Nov-17
Jun-09
Jan-15
Jun-15
Jan-16
Jun-16
Jan-17
Jun-17
Jul-10
Jul-11
Jul-12
Jul-13
May-12
May-13
May-14
Feb-10
Feb-11
Feb-12
Mar-13
Mar-14
Mar-15
Feb-18
Apr-09
Apr-10
Apr-11
Oct-12
Oct-13
Oct-14
Apr-16
Apr-17
Sep-09
Sep-10
Sep-11
Dec-11
Dec-12
Dec-13
Aug-14
Aug-15
Aug-16
Sep-17
Sh arekh an Sen sex Nifty

Stock Update EQUITY FUNDAMENTALS
Recommendation Reco Price Price Target/ Upside (%)

Date Company Report Type
Latest Chg (Rs.) Latest Chg
Feb 01, 2018 Bharat Electronics Stock Update BUY n 162 220 n
Summary
• Bharat Electronics Limited (BEL) reported better-than-expected revenue performance in Q3FY18, while margins missed the
mark during the quarter.
• Healthy order book position provides strong revenue visibility.
• Preferred defence play, maintain Buy with an unchanged price target of Rs.220.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BEL-Feb01_18.pdf
Feb 01, 2018 Sundram Fasteners Viewpoint POSITIVE n 534 18-20 $
Summary
• The stock of Sundram Fasteners Limited (SFL) has corrected by ~11% recently, offering a good entry point. We re-iterate our
Positive stance and expect 18-20% upside over the next 6-8 months.
• SFL reported operationally in-line results for Q3FY2018.
• Increasing content per vehicle driven by new product launches will aid topline growth going ahead.
• We expect SFL to report revenue CAGR of 13% over the next two years, thus outpacing industry growth.
• Margin improvement is likely to sustain given the higher share of value-added products and consistent improvement in
subsidiary performance.
Report link: http://old.sharekhan.com/Upload/NewsLetter/SundramFast-Feb01_18.pdf
Feb 02, 2018 Info Edge (India) Stock Update HOLD n 1,347 1,425 #
Summary
• Info Edge (India) Limited (Info Edge) delivered in-line revenue performance for Q3FY2018, while margins beat our modest
expectations.
• The company will make higher advertisement spends to gain market share in its core businesses.
• We maintain our Hold rating on the stock with a revised SOTP-based price target of Rs. 1,425.
Report link: http://old.sharekhan.com/Upload/NewsLetter/InfoEdge-Feb02_18.pdf
Feb 02, 2018 Kajaria Ceramics Viewpoint POSITIVE n 611 15 #
Summary
• Net earnings of Kajaria Ceramics (Kajaria) declined in Q3FY2018 due to higher power costs, despite improvement in volumes.
• Organised tile players are facing near-term headwinds, but lowering of GST rate on tiles gives a silver lining.
• Despite near-term headwinds, the structural, long-term growth story of the sector remains intact.
• We believe the recent correction provides an opportunity for long-term investors. Hence, we reiterate our Positive view on the
stock with a 15% upside potential.
Report link: http://old.sharekhan.com/Upload/NewsLetter/KajariaCera-Feb02_18.pdf
Upgrade  No change  Downgrade 

Note: The arrow indicates change in call and price target, if any, vis-à-vis the previous report

EQUITY FUNDAMENTALS Stock Update
Feb 02, 2018 Power Grid Corporation Viewpoint POSITIVE n 193 20 $
Summary
• Lower capitalisation impacted earnings of Power Grid Corporation (PGCIL).
• Huge investment potential in the near term.
• Higher capitalisation to drive earnings CAGR of 15.5%.
• We retain our Positive stance with 15-20% return.
Report link: http://old.sharekhan.com/Upload/NewsLetter/PowerGrid-Feb02_18.pdf
Feb 02, 2018 Aditya Birla Fashion & Retail Viewpoint BOOK OUT $ 156 156 -
Summary
• Book out in view of low earning visibility in the near term.
• Q3FY2018 performance was strong on a low base; sustenance of the same depends on the revival in the performance of new
businesses..
• Forever 21 and innerwear businesses will take time to turn profitable due to continuous investments.
Report link: http://old.sharekhan.com/Upload/NewsLetter/AdityaBirlaFash-Feb02_18.pdf
Feb 05, 2018 Bajaj Finserv Stock Update BUY n 4,905 6,050 n
Summary
• Bajaj Finserv (BFS) reported strong results for Q3FY2018, with robust performance across all its businesses.
• Business growth of BFL posted healthy momentum.
• General insurance (BAGIC) reported decent performance.
• Life business (BALIC) showed improved growth.
• We maintain our Buy rating on BFS with a price target of Rs. 6,050 based on our SOTP valuation methodology.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BajajFinserv-Feb05_18.pdf
Feb 05, 2018 Bajaj Finance Stock Update BUY n 1,604 1,900 $
Summary
• Bajaj Finance (BAF) posted strong operational performance during Q3FY2018.
• The company continued to report healthy growth momentum.
• Asset quality remained steady for the quarter.
• We believe the ability of BAF to carve out various products in niche categories and prudent management practices would help
it to keep business growth in the higher trajectory.
• We maintain our Buy rating on the stock with a revised price target of Rs. 1,900.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BajajFinance-Feb05_18.pdf


Feb 05, 2018 Bajaj Auto Stock Update BUY n 3,174 3,625 n
Summary
• We retain our BUY rating on the Bajaj Auto Ltd (BAL) stock with an unchanged PT of Rs 3,625.
• For Q3FY18, BAL reports in-line results operationally, with per vehicle realization up 7% y-o-y driven by favourable product mix
and price hikes in the past.
• A slew of new launches, improved economic conditions in both rural and export markets are expected to sustain double digit
growth for FY2019.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BajajAuto-Feb05_18.pdf
Feb 05, 2018 Relaxo Footwears Stock Update BUY # 588 735 n
Summary
• We upgrade our rating on Relaxo Footwear (Relaxo) to Buy on account of sustained strong performance and recent correction
of 23% from its high (~19% since our last update dated December 18, 2017, where we had put it on Hold), which provides a good
entry opportunity.
• Relaxo registered strong performance in Q3FY2018, with revenue and PAT growing in double digits.
• GST is proving to be beneficial for the organised footwear industry due to the shift in demand from the unorganised industry.
• Superior footwear portfolio, distribution expansion (through franchisee route) and strong brand presence would improve the
growth prospects of the company in the long run.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Relaxo-Feb05_18.pdf
Feb 05, 2018 Thomas Cook India Stock Update BUY # 232 270 #
Summary
• We Upgrade Thomas Cook India (TCIL) to Buy with revised price target of Rs. 270 on back of strong earning visibility in near
future.
• TCIL posted strong performance in Q3FY2018 with 51.2% growth in revenue and 129 bps expansion in its operating profit
margin to 4%.
• The company’s travel and related services business, and HR business registered strong performance in Q3 with revenues
growing 63.1% and 48.5%, respectively (largely led by inorganic initiatives).
Report link: http://old.sharekhan.com/Upload/NewsLetter/Thomas-Feb05_18.pdf
Feb 05, 2018 Union Bank of India Stock Update HOLD n 127 150 $
Summary
• We maintain our HOLD rating on the stock of Union Bank of India (UBI) with a revised PT of 150.
• UBI posts decent operating performance in Q3FY18 along with respectable loan growth, while maintaining lower costs of funds.
• However, Asset quality performance disappoints with higher stress addition.
Report link: http://old.sharekhan.com/Upload/NewsLetter/UBI-Feb05_18.pdf

Feb 05, 2018 Gujarat Gas Limited Viewpoint POSITIVE n 838 18-20 $
Summary
• For Q3FY2018, Gujarat Gas Limited (GGAS) reported higher-than-expected volume and EBITDA margin, which led to beat in
operating profit.
• Significant demand potential of 5-6 mmscmd from new geographical areas expected over the next 4-5 years.
• The likely improvement in gas economics vs. alternative fuels would provide pricing power to GGAS and is expected to expand
margins from Q1FY2019.
• We maintain our Positive view and expect 18-20% upside potential.
Report link: http://old.sharekhan.com/Upload/NewsLetter/GujaratGas-Feb05_18.pdf
Feb 05, 2018 BSE Ltd. Viewpoint POSITIVE n 830 20-22 $
Summary
• Income from operations rose 45% on higher fee income and a rise in transaction charges.
• Profitability to turn lower until international exchange breaks even.
• We continue to maintain our positive outlook and expect 20/-22% returns from current prices.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BSE-Feb05_18.pdf
Feb 06, 2018 Hero MotoCorp Stock Update BUY n 3,543 4,200 n
Summary
• Hero MotoCorp (Hero) posted broadly in-line results for Q3FY2018.
• The 2W industry’s growth momentum is expected to continue, which will benefit market leader, Hero.
• We expect margins of the company to remain at 15-16% due to benefits of LEAP programme.
• We maintain our Buy rating on the stock with an unchanged price target (PT) of Rs. 4,200.
Report link: http://old.sharekhan.com/Upload/NewsLetter/HeroMoto-Feb06_18.pdf
Feb 06, 2018 Apollo Tyres Stock Update BUY # 248 292 n
Summary
• We upgrade our recommendation on the stock of Apollo Tyres (ATL) to BUY from HOLD, based on the opportunity of a 15%
correction in the past month and strong earnings outlook.
• For Q3FY18, ATL posts in line performance operationally. Revenue growth driven by demand traction from largely Indian
operations and a ramp up in European operations.
• Based on continued demand traction, sustained margins and strong pricing power, we expect ATL to deliver a robust 19% PAT
CAGR over the next two years.
Report link: http://old.sharekhan.com/Upload/NewsLetter/ApolloTyres-Feb06_18.pdf


Feb 06, 2018 PI Industries Stock Update HOLD n 822 880 $
Summary
• We continue to maintain our HOLD rating on the stock of PI Industries Limited (PI) with a revised price target of Rs880.
• PI Industries reported a weak set of results for Q3FY2018 impacted by surging raw material cost and unfavourable product mix.
• Given the overhang on order execution in existing CSM business and lack of clarity on its pharma CSM venture, we expect
some valuation multiple de-rating, till such time earnings catch up.
Report link: http://old.sharekhan.com/Upload/NewsLetter/PII-Feb06_18.pdf
Feb 06, 2018 The Ramco Cements Stock Update HOLD n 732 775 #
Summary
• Strong volume growth gets offset by higher opex.
• Lower capacity utilisation in south to keep capacity expansion back-ended.
• Elevated fuel price would keep margins under pressure.
• We maintain our Hold rating on the stock.
Report link: http://old.sharekhan.com/Upload/NewsLetter/TheRamcoCements-Feb06_18.pdf
Feb 06, 2018 Century Plyboards (India) Stock Update HOLD n 294 310 n
Summary
• Maintain HOLD rating on the stock of Century Plyboards (India) Ltd (Century) with unchanged price target of Rs 310 considering
the near term pressure on its core business and fair valuation.
• For Q3FY18, MDF unit supports earnings growth as plywood and laminate divisions suffer due to increased raw material costs.
• Despite near term concerns over increased raw material prices and deferment of e-way bill (post GST), the scaling up of MDF
unit with improving operating margins likely to support earnings growth.
Report link: http://old.sharekhan.com/Upload/NewsLetter/CenturyPly-Feb06_18.pdf
Feb 06, 2018 Skipper Stock Update BUY # 237 275 $
Summary
• We have revised our earnings estimates and upgrade our rating to Buy, with a revised price target (PT) of Rs. 275.
• Skipper reported robust earnings growth of 31% y-o-y despite margin pressure in Q3FY2018.
• The company will benefit from steady order flow traction from domestic as well international geographies.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Skipper-Feb06_18.pdf
Feb 06, 2018 Lupin Stock Update REDUCE $ 802 Under Review n
Summary
• Owing to lack of clarity and uncertainty over the outcome of the USFDA warning letter, we downgrade our rating to Reduce
with our PT under review.
• We advise investors to avoid bottom fishing as there is still pain for few more quarters.
• Performance of Lupin during Q3FY2018 was disappointing.
• Lupin could face few more tough quarters as there is elevated pricing erosion, risk of competition in key products and delay in
key product approvals.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Lupin-Feb06_18.pdf

Feb 06, 2018 McLeod Russel India Viewpoint POSITIVE n 163 20-22 $
Summary
• For Q3FY2018, McLeod Russel India (McLeod) reported revenue growth of ~22%, driven by high teen growth in sales volume
and ~7% growth in sales realisation; OPM stood at 9.4%.
• Overseas operations have achieved EBIDTA of US$19.6 million (~Rs. 126 crore) in CY2017 as against US$12 million (~Rs. 82
crore) in CY2016.
• Global tea prices are expected to be high on demand-supply mismatch, which will boost the realisation of Indian tea
manufacturers.
• We maintain our Positive stance on the stock with 20-22% upside.
Report link: http://old.sharekhan.com/Upload/NewsLetter/McLeod-Feb06_18.pdf
Feb 07, 2018 IRB Infrastructure Developers Stock Update BUY n 219 270 n
Summary
• We maintain our ‘Buy’ recommendation on the stock of IRB Infrastructure Developers’ (IRB) with a unchanged price target of
Rs270 on account of its improving financial performance.
• For Q3FY18, BOT like-to-like performance improves despite transfer of road asset to InvIT and project execution on existing
projects remain on track.
• Order book is however at a three year low and bids on new projects are awaited to revitalize construction order book.
• Factors such as near term order wins, a court case resolution and resolution of claims in one key project remain key monitorables
at this stage.
Report link: http://old.sharekhan.com/Upload/NewsLetter/IRBInfra-Feb07_18.pdf
Feb 07, 2018 Cipla Stock Update BUY # 570 685 n
Summary
• We upgrade our rating to Buy, with unchanged price target (PT) of Rs. 685.
• For Q3FY2018, Cipla reported strong performance, with adjusted profit growing by ~22%.
• Management maintains guidance of double-digit growth in the US and India business despite a challenging environment.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Cipla-Feb07_18.pdf
Feb 07, 2018 Thermax Stock Update HOLD n 1,165 1,290 #
Summary
• For Q3FY2018, earnings of Thermax grew broadly in-line with our estimates.
• Healthy order inflow during the quarter translated into healthy order backlog.
• We reiterate our Hold rating on the stock with a revised PT of Rs. 1,290.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Thermax-Feb06_18.pdf


Feb 07, 2018 Firstsource Solutions Stock Update HOLD n 40 45 n
Summary
• During Q3FY2018, Firstsource Solutions Limited (FSL) delivered better-than-expected operating performance against our
modest expectations.
• Management expects robust performance in Q4FY2018, led by strong seasonality along with higher revenue from its core
businesses.
• Given the limited upside from our PT, we maintain our Hold rating with an unchanged PT of Rs. 45.
Report link: http://old.sharekhan.com/Upload/NewsLetter/FSL-Feb07_18.pdf
Feb 07, 2018 Natco Pharma Viewpoint POSITIVE n 831 15-18 $
Summary
• We remain positive on the stock of Natco Pharma and expect a 15-18% upside over the next six months given its first mover
advantage in gCopaxone.
• For Q3FY18 Natco recorded profits above expectation, despite missing sales estimates.
• Performance expected to improve substantially from Q4FY18 onwards due to its flagship product and a better flu season.
• Risks such as increasing competition and negative outcome of USFDA plant inspection may impact future revenue and
profitability prospects.
Report link: http://old.sharekhan.com/Upload/NewsLetter/NatcoPharma-Feb07_18.pdf
Feb 08, 2018 CESC Stock Update BUY n 992 1,165 n
Summary
• Revenue growth driven by volume; higher fuel and power purchase cost led to flat margin.
• Chandrapur project continued to be a drag on the performance, but losses are expected to reduce substantially post signing
of PPA for balance capacities.
• Spencer’s is on the recovery path by reporting positive EBITDA and expects to be PAT-level positive by the end of FY2018.
• We continue to maintain our Buy rating with an unchanged PT of Rs. 1,165 on SoTP basis.
Report link: http://old.sharekhan.com/Upload/NewsLetter/CESC-Feb08_18.pdf
Feb 08, 2018 Aurobindo Pharma Stock Update BUY n 602 725 $
Summary
• We feel the USFDA inspection at key injectable facility and its outcome will weigh on the stock in the near term. Hence, we have
revised downward our PT to Rs. 725. However, we maintain our Buy recommendation on the stock.
• For Q3FY2018, Aurobindo Pharma (Aurobindo) reported in-line results.
• Core business expected to remain stable, but concerns related to product recalls and USFDA inspections could emerge.
Report link: http://old.sharekhan.com/Upload/NewsLetter/AurobindoPharma-Feb08_18.pdf

Feb 08, 2018 Torrent Pharmaceuticals Stock Update HOLD n 1,372 1,480 n
Summary
• Reported profit Torrent Pharmaceuticals (Torrent) for Q3FY2018 declined by 76.6% y-o-y mainly on account of higher tax
expense by Rs. 185 crore.
• India and US business are expected to drive growth going ahead.
• We maintain our Hold rating with unchanged PT of Rs. 1,480.
Report link: http://old.sharekhan.com/Upload/NewsLetter/TorrentPharma-Feb08_18.pdf
Feb 08, 2018 Kalpataru Power Transmission Stock Update BUY # 464 535 #
Summary
• We upgrade to Buy on the stock of Kalpataru Power Transmission Ltd (KPTL) with a revised SOTP-based price target to Rs 535.
• For Q3FY18, revenue growth witnessed healthy growth led by strong execution across T&D, railways and pipeline business.
• Management maintains optimistic revenue and order inflow guidance for FY2019 and expects improvement in margins ahead
to be led by a better sales mix.
• CAGR of 20% over FY2018-2020E expected along with an improvement in the return ratios. Further, a robust order book of Rs
10532 crore, provides revenue visibility for 2 years.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Kalpataru-Feb08_18.pdf
Feb 08, 2018 Cadila Healthcare Stock Update HOLD n 405 485 n
Summary
• We maintain our Hold recommendation on the stock Cadila Healthcare with an unchanged price target (PT) of Rs 485.
• Cadila reported a strong operating performance in Q3FY18 on the back of robust growth in its US, Indian and Latin American
businesses.
• Management guides for 25+products in FY2019, expected to pick up pace from Q4FY18. Prioritizing critical launches will
support margin expansion over the next few quarters.
• Any delays in the launch pipeline and negative outcome of regular audits by USFDA could pose challenges.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Cadila-Feb08_18.pdf
Feb 09, 2018 State Bank of India Stock Update BUY n 296 350 $
Summary
• Operating performance in line with expectations
• High provisions dent profitability
• Asset quality weakened, however outlook is better
• Maintain Buy with a revised price target of Rs. 350
Report link: http://old.sharekhan.com/Upload/NewsLetter/SBI-Feb09_18.pdf


Feb 09, 2018 Mahindra & Mahindra Stock Update BUY n 750 840 #
Summary
• We retain Buy rating on the stock of Mahindra and Mahindra (M&M) and have raised target price to Rs 840.
• The Q3FY18 performance was slightly below estimates operationally as auto segment margins were impacted by higher
discounting
• Exceptional gains on profit from sale of investments resulted in greater than expected PAT.
• A strong product pipeline in LCV and utility segments along with expected uptick in tractor demand to sustain growth momentum.
Report link: http://old.sharekhan.com/Upload/NewsLetter/MnM-Feb09_18.pdf
Feb 09, 2018 Petronet LNG Stock Update BUY n 247 320 n
Summary
• In-line operating profit, higher-than-expected Dahej re-gas volume of 215 tBtu gets offset by negative marketing margin on
spot volume
• Dahej expansion by 2.5 mmt on track to get completed by June2019 and construction of Kochi-Mangalore pipeline section by
GAIL (India) is largely on track with minor delay of three month
• Dahej terminal utilisation to remain robust given competitive edge of lower re-gas tariff and pipeline connectivity
• Maintain Buy with unchanged price target of Rs.320.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Petronet_LNG-Feb09_18.pdf
Feb 09, 2018 Glenmark Pharmaceuticals Stock Update HOLD n 535 600 $
Summary
• We maintain our HOLD rating on the stock of Glenmark Pharma with a downward revised PT of Rs 600, given the weak
quarterly performance and a cautious management outlook.
• For Q3FY18 Glenmark posted a weak quarterly performance mainly on account of a 40.2% decline in its US business.
Management cautions about continual pricing pressure to continue for the next five quarters.
• Limited visibility of margin expansion, increasing capex and R&D cost and lower than expected debt reduction to remain as
key overhangs.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Glenmark-Feb09_18.pdf
Feb 09, 2018 Godrej Agrovet Viewpoint POSITIVE n 589 14-16 #
Summary
• Godrej Agrovet Q3FY2018 numbers improved sequentially, with revenue and PAT growing by 7% each as against muted
performance in Q2FY2018.
• Sustenance of strong performance in oil palm and dairy businesses coupled with improvement in crop protection business, will
drive the overall performance in the near term.
• With strong growth prospect we maintain our Positive view on the stock with an upside of 14-16%, though the price has risen
10% in the recent past.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Godrej_Agrovet-Feb09_18.pdf

Feb 09, 2018 Parag Milk Foods Ltd. Viewpoint POSITIVE n 297 12-15 #
Summary
• Revenue rose by a robust 16% y-o-y to Rs. 519 crore on a low base of Q3FY2017 (demonetisation effect); on a quarterly basis,
revenue rose 3%
• Management has forecast 10-11% operating profit margin over the next three years
• We reiterate our Positive view on the stock with 12-15% potential return
Report link: http://old.sharekhan.com/Upload/NewsLetter/Parag_Milk-Feb09_18.pdf
Feb 09, 2018 Kaveri Seeds Limited Viewpoint POSITIVE n 478 18-20 $
Summary
• Muted revenue growth offset by a 3x growth in EBITDA on a drop in other expenses, PAT rises on lower tax rate
• Diversification strategy to reduce dependence on few products and the central, southern regions.
• Company likely to reward shareholders as it has significant cash balances and its capex and working capital requirements are
limited to Rs. 50 crore. Cash flow visibility remains strong.
• Though stock has corrected in the near term, we maintain our positive view on the stock, with a potential upside of 18-20%.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Kaveri_Seeds-Feb09_18.pdf
Feb 12, 2018 Marico Stock Update BUY n 311 365 n
Summary
• We maintain our Buy recommendation on the stock of Marico with an unchanged price target of Rs365.
• Marico maintained the growth momentum with a 9.4% domestic volume growth that resulted in 15% growth in revenues.
• We expect volume growth to stand at 8-10% while international business performance is expected to improve in the coming
quarters.
• Higher copra prices may keep OPM under check at about 18-19%.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Marico-Feb12_18.pdf
Feb 12, 2018 Max Financial Services Stock Update BUY n 521 620 $
Summary
• Max Financial Services (MFS) registered decent growth in GWP during Q3FY2018.
• Margin improvement, effective cost management along with re-balancing of product mix and distribution channels would lead
to better profitability.
• The Indian insurance market is still largely underpenetrated, which provides lot of growth opportunities.
• We maintain Buy with a revised price target (PT) of Rs. 620.
Report link: http://old.sharekhan.com/Upload/NewsLetter/MaxFinSer-Feb12_18.pdf


Feb 12, 2018 Va Tech Wabag Stock Update BUY n 562 650 $
Summary
• We retain our Buy rating on VA Tech Wabug (VTW) with a revised PT of Rs 650.
• Healthy execution in large projects helps VTW better than estimated consolidated revenue growth by 20% y-o-y to Rs 865
crore in Q3FY18.
• Management reiterates its revenue guidance of Rs 3800-4000 crore for FY2018 on back of the healthy order pipeline from
domestic and international projects and a large order backlog.
• A quality engineering company, with niche expertise, professional management, VTW is a structural growth story in the water
treatment industry.
Report link: http://old.sharekhan.com/Upload/NewsLetter/VaTech-Feb12_18.pdf
Feb 12, 2018 Oil India Stock Update HOLD n 361 390 n
Summary
• Lower-than-expected opex led to beat in operating profit for Q3FY2018.
• Strong PAT growth supported by higher operating profit partially offset by lower other income and higher DD&A cost.
• We believe weak domestic oil reserve profile is a cause of concern for long term production.
• We maintain our Hold rating on Oil India with unchanged price target of Rs. 390.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Oil_India-Feb12_18.pdf
Feb 12, 2018 Gayatri Projects Stock Update BUY n 210 283 #
Summary
• We maintain Buy rating on the stock of Gayatri Projects Limited (GPL) based on an increase in its execution run-rate for FY2018-
FY2020.
• In Q3FY2018, GPL achieved strong revenue growth of 73.7% y-o-y to Rs.904 crore on execution capabilities. Margins remained
stable.
• Improved growth outlook of the road sector over the next 3-4 years and the upcoming Bharatmala project augur well for pure
EPC players such as GPL.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Gayatri_Pro-Feb12_18.pdf
Feb 12, 2018 Bank of Baroda Stock Update BUY n 169 210 $
Summary
• Bank of Baroda (BoB) reported strong operating performance for Q3FY2018.
• BoB witnessed healthy loan book traction and growth in domestic loan portfolio.
• Stress book declines by 62 BPS to 13.5% QoQ.
• We maintain our Buy rating on the stock with a price target of Rs. 210.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BankofBaroda-Feb12_18.pdf

Feb 12, 2018 Wonderla Holidays Stock Update HOLD n 388 410 #
Summary
• We maintain a Hold rating on the stock of Wonderla Holiday Limited (WHL) with a revised price target of Rs410 rolling it over to
FY2020E earnings.
• For Q3FY2018, performance was ahead of expectation mainly on account of significant improvement in OPM to 29% led by
operating efficiencies.
• Higher GST rate, affected footfalls and consequently resulted in 6% decline in net revenues.
• Recent cut in GST rates and new attractions in various parks would result in gradual improvement in footfalls.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Wonderla_Hol-Feb12_18.pdf
Feb 12, 2018 Greaves Cotton Stock Update HOLD n 132 143 #
Summary
• Company posted weak operating results for Q3FY2018 as margin pressures continued.
• Structural growth issues in diesel three-wheeler segment to offset strong double-digit growth in replacement and aftermarket
space.
• The company’s adjusted net profit for the first nine months of FY2018 has declined 20% y-o-y and we expect earnings to remain
under pressure in near term.
• We retain Hold on stock with revised price target of Rs. 143 (from Rs. 137 previously) as we rollover our target multiple on
FY2020 earnings.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Greaves_Cot-Feb12_18.pdf
Feb 12, 2018 PTC India Stock Update HOLD n 102 115 $
Summary
• We have fine-tuned our earnings estimates for FY2018E and FY2019E and introduced FY2020E in this report. The correction
in the stock provides a better opportunity to long-term investors, given the steady earnings, higher dividend yields and decent
return ratios. Hence, we retain hold, with a revised price target (PT) of Rs. 115.
• For Q3FY2018, revenue of PTC India (PTC) grew by ~45%.
• We expect better growth outlook on account of power sector reforms.
Report link: http://old.sharekhan.com/Upload/NewsLetter/PTC_India-Feb12_18.pdf
Feb 12, 2018 Oil and Natural Gas Corporation Viewpoint POSITIVE n 191 18-20 $
Summary
• Operating profit largely in-line with estimates, PAT lagged our expectations owing to higher DD&A cost.
• Assume nil subsidy burden up to oil price of $60/bbl but inadequate fuel subsidy amid high oil prices may cap ONGC net oil
realisation at $53-55/bbl for FY2019.
• Recent correction in stock prices on subsidy sharing concerns makes valuation attractive at 8.1x FY2020E EPS.
• We maintain a Positive view on ONGC and expect 18-20% upside potential from current levels.
Report link: http://old.sharekhan.com/Upload/NewsLetter/ONGC-Feb12_18.pdf


Feb 12, 2018 Amara Raja Batteries Viewpoint POSITIVE n 845 12-15 #
Summary
• ARBL reported a strong set of numbers for Q3FY2018, in line with estimates.
• The automotive segment’s growth likely to accelerate on market share gains.
• The industrial segment would register steady demand.
• We reiterate our Positive view on the stock and expect 12-15% upside over the next six months.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Amara_Raja_Batteries-Feb12_18.pdf
Feb 14, 2018 Sadbhav Engineering Stock Update BUY n 396 460 #
Summary
• We maintain our Buy rating on the stock of Sadbhav Engineering Limited (SEL) with a revised price target of Rs.460.
• Strong execution in the transport segment improvement in operating margin (up 45BPS y-o-y) supported earnings in Q3FY18.
• Management maintains conservative order inflow guidance at Rs 8000 crore for FY2019 despite strong order tendering
pipeline it will not be compromising on margins.
• We are factoring in an enhanced executing run rate and improving operating margins over the next two years in our PT.
Report link: http://old.sharekhan.com/Upload/NewsLetter/SadbhavEngg-Feb14_18.pdf
Feb 14, 2018 Grasim Industries Stock Update BUY n 1,128 1,405 #
Summary
• We maintain our Buy recommendation on Grasim Industries with revised price target (PT) of Rs.1,405. (upward revision in
Ultratech price target and higher cash surplus in Grasim standalone).
• For Q3FY18 Grasim posts stellar standalone performance backed by chemical and VSF division.
• Due to the restructuring of its business entities, Q3FY2018 financials are not comparable with the previous quarters.
• Over the next two years, we see an improvement in the growth outlook of UltraTech, while AB Capital will reap benefits of its
leading position in key verticals in financial services.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Grasim-Feb14_18.pdf
Feb 14, 2018 Sun Pharmaceutical Industries Stock Update HOLD n 574 600 n
Summary
• For Q3FY2018, Sun Pharma reported a decline in its profit due to one-off tax expense.
• Halol resolution will be the key monitorable for the near term.
• Management is cautious for FY2108E. Thus, we have revised downward our earnings estimates for FY2018. We maintain our
Hold recommendation on the stock with a price target (PT) of Rs. 600.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Sunpharma-Feb14_18.pdf

Feb 14, 2018 CG Power & Industrial Solutions Stock Update HOLD n 89 100 #
Summary
• We continue to maintain Hold rating on the stock of CG Power (CGP) with revised PT of Rs 100.
• For Q3FY18, CGP delivered a strong topline growth led by both standalone and international markets. Management reiterates
positive outlook.
• Order inflows grew by 24% y-o-y to Rs 1516 crore at the end of Q3FY2018.
• We remain positive on the management’s efforts to cut down losses by keeping the divestment of its Hungary plant on track
coupled with improving margin scope.
Report link: http://old.sharekhan.com/Upload/NewsLetter/CGPower-Feb14_18.pdf
Feb 14, 2018 Finolex Cable Stock Update HOLD n 705 755 #
Summary
• We continue to retain our Hold rating on the stock of Finolex Cables Ltd (FCL) with a revised PT to Rs 755, due to its healthy
return ratios, leaner balance sheet and healthy cash flows in future.
• FCL reported broadly in line performance during Q3FY2018. Realisations improved due to price hikes taken in the wake of
rising copper prices.
• Reduction in GST rate, ability to control costs in a rising commodity price scenario and certification for 400kv for J- Power
augurs well for FCL in the long run.
Report link: http://old.sharekhan.com/Upload/NewsLetter/FinolexCables-Feb14_18.pdf
Feb 14, 2018 Gabriel India Stock Update HOLD $ 160 175 $
Summary
• We downgrade our recommendation on the stock from Buy to Hold, with a revised price target (PT) of Rs. 175.We have reduced
our earnings estimates for Gabriel India Limited (GIL) by 10% and 14% for FY2019 and FY2020, respectively.
• GIL posted lower-than-anticipated performance for Q3FY2018.
• Higher employee expenses on account R&D and increased distribution expenses will fully offset benefits from operating
leverage and cost-control measures, thereby preventing margin improvement.
Report link: http://old.sharekhan.com/Upload/NewsLetter/GabrielIndia-Feb14_18.pdf
Feb 14, 2018 Triveni Turbine Stock Update HOLD n 122 135 $
Summary
• The topline of Triveni Turbine declined 16% y-o-y to Rs. 166 crore owing to rescheduling of deliveries and delay in execution of
certain development orders.
• Steady order backlog of Rs. 697 crore (growth of 10% y-o-y) provides a year-long revenue visibility.
• The management expects the loss of revenue in Q3FY2018 to be recouped in Q4FY2018.
• TT continues to generate healthy return ratios, steady cash flows and negligible debt. Hence, we retain our Hold rating with
revise PT of Rs. 135.
Report link: http://old.sharekhan.com/Upload/NewsLetter/TriveniTurbine-Feb14_18.pdf


Feb 14, 2018 Punjab National Bank Stock Update REDUCE $ 146 Under review -
Summary
• We downgrade our rating on the stock of Punjab National Bank (PNB) to Reduce and keep price target under review.
• For Q3FY18, PNB posts decent operating performance with improved traction on loan growth and slight improvement on asset
quality front.
• Asset quality concerns remain an overhangwith the RBI’s new guidelines for faster resolution on stressed assets. Higher NPA
and credit costs could impact growth prospects.
Report link: http://old.sharekhan.com/Upload/NewsLetter/PNBBank-Feb14_18.pdf
Feb 14, 2018 Bank of India Stock Update REDUCE $ 133 Under review -
Summary
• Bank of India (BoI) posted subdued set of numbers for Q3FY2018.
• The bank witnessed a decline in its loan book during Q3FY2018 mainly on account of a decline in overseas portfolio and fall
in domestic corporate credit.
• Asset quality during the quarter also deteriorated.
• We downgrade our rating on the stock to Reduce and have kept price target Under Review.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BOI-Feb14_18.pdf
Feb 14, 2018 Suprajit Engineering Viewpoint POSITIVE n 274 15-18 $
Summary
• We reiterate positive view on the stock of Suprajit Engineering Limited SEL and expect 15-18% returns over the next six to eight
months.
• Recent 20% correction in past two months offers a good entry opportunity for the investors.
• Q3FY2018 results were in line with estimates on the operating front, cables business witnesses marked improvement in 9M
FY2018 period.
• We believe that strong traction across verticals coupled new growth avenues will help SEL outpace industry growth with 17%
topline CAGR over FY2018-2020.
Report link: http://old.sharekhan.com/Upload/NewsLetter/SuprajitEngg-Feb14_18.pdf
Feb 14, 2018 Birla Corporation Viewpoint POSITIVE n 998 18-20 $
Summary
• For Q3FY2018, Birla Corporation Limited (BCL) reported consolidated operating profit of Rs. 139 crore, lower than our and street
estimates on account of higher operating cost.
• Cost rationalisation and ramp-up at acquired assets remain key for improvement in profitability.
• We maintain our Positive view on BCL and expect 18-20% upside from the current level.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BirlaCorp-Feb14_18.pdf

Feb 15, 2018 Britannia Industries Stock Update BUY n 4,756 5,500 n
Summary
• Britannia’s Q3FY2018 revenue grew by 13% on comparable basis due to double-digit volume growth. Operating efficiencies led
to margin expansion of 225BPS to 15.5%.
• Innovation and distribution expansion remain the key growth drivers for Britannia. The company is planning to launch 50 new
products in the biscuits and adjacent categories by the end of FY2019.
• Benign input prices and operating efficiencies (expected cost saving of Rs.230 crore in FY2018) to drive margins in the near
term.
• We maintain Buy with an unchanged price target of Rs. 5,500.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BritanniaInd-Feb15_18.pdf
GlaxoSmithkline Consumer
Feb 15, 2018 Stock Update BUY # 6,382 7,310 #
Healthcare
Summary
• GlaxoSmithKline Consumer Healthcare (GSK Consumer)’s stock upgraded to Buy with a revised price target of Rs7,310 on
better earning visibility.
• For Q3FY18, revenues grew by 19% on comparable basis driven by 16% volume growth; OPM expanded by 225BPS to 19.7%.
• Improved category growth, better rural consumption, softening of raw material prices coupled with strong growth in premium
brands would aid GSK Consumer to achieve double digit earning growth in the coming quarters.
Report link: http://old.sharekhan.com/Upload/NewsLetter/GSK-Feb15_18.pdf
Feb 15, 2018 Divi’s Laboratories Stock Update BUY n 1,048 1,275 n
Summary
• Company reported muted Q3FY2018 numbers; net sales grew 6.3% to Rs. 1037.9 crore.
• Success resolution of import alert and warning letter in a short span was a big positive.
• We anticipate business to improve in the days to come and hence, maintain Buy rating with an unchanged PT of Rs. 1275.
Report link: http://old.sharekhan.com/Upload/NewsLetter/DiviLab-Feb15_18.pdf
Feb 15, 2018 Cox & Kings Stock Update BUY n 251 325 n
Summary
• We maintain our Buy recommendation on the stock of Cox & Kings Limited’s (CKL) with the unchanged price target of Rs325.
• For Q3FY2018, CKL posted strong performance led by healthy revenue growth of ~18% in its education and Meininger business.
Operating profit grew by 30%.
• Meininger business will post strong growth on back of capacity addition, while the domestic leisure and education business
will post a steady growth.
• Debt reduction by Rs 200crore in FY2019 on the management’s agenda.
Report link: http://old.sharekhan.com/Upload/NewsLetter/CoxKings-Feb15_18.pdf


Feb 15, 2018 NBCC Stock Update BUY n 208 260 $
Summary
• During Q3FY2018, poor operational performance by NBCC did not percolate fully to the bottom line due to higher other income.
• NBCC has a massive order backlog of Rs. 80,000 crore, which provides revenue visibility of 13 years on its FY2017 revenue.
• The company has strong earnings visibility, a lean balance sheet, high return ratios and a quasi-monopoly position in the
industry.
• We retain our Buy recommendation on NBCC and revise our price target to Rs. 260.
Report link: http://old.sharekhan.com/Upload/NewsLetter/NBCC-Feb15_18.pdf
Feb 15, 2018 PTC India Financial Services Stock Update HOLD $ 33 37 $
Summary
• We downgrade our rating on PTC India Financial Services (PFS) to HOLD with a revised PT of 37.
• For Q3FY18, PTC witnesses a decline of 120 BPS in net interest income due to y-o-y contraction in net interest margin (NIM),
despite decent loan book traction.
• Credit cost likely to remain elevated as the company continues to provide for stressed loans thus impacting bottom-line growth
in the near term.
Report link: http://old.sharekhan.com/Upload/NewsLetter/PFS-Feb15_18.pdf
Feb 15, 2018 Carborundum Universal Limited Viewpoint POSITIVE n 353 18-20 $
Summary
• Carborundum Universal Ltd. (CUMI) reported broadly in-line performance for Q3FY2018.
• Management is confident to completely pass on increased commodity prices to customers.
• CUMI has a strong balance sheet and steady cash flows, which will enable it to generate healthy return ratios.
• We reiterate our Positive view with 18-20% upside in the next 12-15 months.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Carborundum-Feb15_18.pdf
Feb 15, 2018 KNR Constructions Limited Viewpoint NEUTRAL n 325 - -
Summary
• Improved execution and higher margins led to strong earnings growth for KNR Constructions Limited (KNR) during Q3FY2018.
• The current order book of the company stands at Rs. 3,333 crore.
• Management targets to close FY2018 with Rs. 1,800 crore plus revenue and conservatively aims for 15% y-o-y revenue growth
for FY2019.
• We see a favourable outlook for the road sector and KNR over the coming years.
• We maintain our Neutral view on the stock.
Report link: http://old.sharekhan.com/Upload/NewsLetter/KNRConst-Feb15_18.pdf

Feb 16, 2018 Gateway Distriparks Stock Update HOLD n 196 215 $
Summary
• Gateway Distriparks Ltd. (GDL) reported marginal growth of 1.5% y-o-y in its consolidated net revenue for Q3FY2018.
• EXIM imbalance and competitive intensity to limit profitability in the near term.
• Considering the short-term business headwinds, we maintain our Hold rating on the stock with a revised price target of Rs. 215.
Report link: http://old.sharekhan.com/Upload/NewsLetter/GatewayDist-Feb16_18.pdf
Feb 16, 2018 Varun Beverages Viewpoint POSITIVE n 652 10-12 #
Summary
• Varun Beverages (VBL) stock has given handsome of return of 27% from initiation of viewpoint. We maintain our positive view
on the stock with upside from 10-12% from the current levels.
• CY2017 revenue performance was impacted by demonetisation and inventory de-stocking prior to implementation of GST.
• The acquisition of new territories in the domestic market and entry into Zimbabwe will further improve the growth prospects of
the company in the near term.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Varun-Feb16_18.pdf
Feb 16, 2018 Bata India Limited Viewpoint POSITIVE n 700 16-18 $
Summary
• For Q3FY2018, Bata India Limited (Bata) registered strong PAT growth of 31% driven by ~430BPS margin improvement due to
a higher proportion of value added products in its revenue mix.
• Premiumisation and improvement in store optimisation will remain the key earnings growth strategy going ahead.
• We maintain our Positive view on the stock of Bata with 16-18% upside.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BataIndia-Feb16_18.pdf
Feb 16, 2018 Mangalam Cement Viewpoint BOOK PROFIT $ 345 345 -
Summary
• We recommend investors to book profit at current levels.
• The stock has underperformed the broader markets. We have lowered our earnings estimates for FY2018-FY2019 significantly
due to marked erosion in operating margin.
• The company may continue to face pressure on profitability due to higher opex cost and pressure on realisation.
Report link: http://old.sharekhan.com/Upload/NewsLetter/MangalamCement-Feb16_18.pdf


Feb 19, 2018 Ratnamani Metals and Tubes Stock Update BUY n 905 1,100 $
Summary
• For Q3FY2018, RMTL has delivered in-line revenue performance, though operating margin’s performance missed the mark
owing to unfavourable product mix.
• Order book continues to remain strong and management anticipates strong order book going forward with expectation of
revenue exceeding Rs. 2000 crore in FY2019.
• Given healthy earnings growth of 30% CAGR over FY18-20E, we believe that the stock remains a good choice for investment
in the long term. The stock has corrected over 30% from its 56-week high.
• We recommend investors to use the market volatility to accumulate the stock for an investment horizon of 12-15 months.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Ratnamani-Feb19_18.pdf
Feb 19, 2018 Rico Auto Industries Stock Update BUY n 83 115 $
Summary
• We maintain Buy recommendation on the stock of Rico Auto Industries (Rico) with revised PT of Rs 115 (earlier PT of Rs 130).
• Recent steep correction (22% in last six weeks) offers good entry point for the investors.
• For Q3FY18 Rico reports revenues that were in line with estimates, PAT comes ahead of estimates due to lower tax outgo.
• The introduction of new products commands higher margins as compared to the conventional products.
• 35% earnings CAGR expected in FY2018-2020 compared to 16% earnings growth for FY2018.
Report link: http://old.sharekhan.com/Upload/NewsLetter/RicoAuto-Feb19_18.pdf
Feb 20, 2018 Bajaj Holdings & Investment Stock Update BUY n 2,710 3,628 #
Summary
• New launches/upgrades to drive the domestic business of Bajaj Auto Limited (BAL).
• Bajaj Finserv (BFS) reported impressive Q3FY2018 performance. Lending business reported strong operating performance,
while insurance business exhibited signs of pick up.
• We maintain our Buy recommendation on Bajaj Holdings and Investment Limited (BHIL) with a revised PT of Rs. 3,628.
Report link: http://old.sharekhan.com/Upload/NewsLetter/BajajHoldings-Feb20_18.pdf
Feb 23, 2018 Federal Bank Stock Update BUY n 95 120 $
Summary
• Federal Bank will be acquiring 26% strategic stake in privately held, Equirus Capital Pvt. Ltd.
• The move will help diversify the operations and services of Federal Bank.
• In the near term, the bank may see some risk on the asset-quality side materialising, which may be an overhang on the stock’s
performance.
• We maintain our Buy rating on the stock with a revised price target (PT) of Rs. 120.
Report link: http://old.sharekhan.com/Upload/NewsLetter/FedBank-Feb23_18.pdf

Feb 26, 2018 Zydus Wellness Stock Update HOLD $ 1240 1300 #
Summary
• The stock price of Zydus Wellness has run-up by 19% since our last update (on 8th February 2018) limiting the upside from
current levels.
• Downgrading it Hold with revised price target of Rs1,300.
• The company’s long term growth prospects are intact and we expect revenues and PAT to grow at CAGR of 14% and 16%
respectively.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Zydus-Feb26_18.pdf
Feb 27, 2018 KEC International Stock Update HOLD $ 412 460 #
Summary
• KEC International (KEC) has given impressive return of 18% in less than one month. Due to the recent run-up in the stock price,
we downgrade our rating to Hold with a revised PT of Rs. 460.
• Management has reiterated its topline growth guidance of 15% and EBITDA margin guidance of 10% for FY2018.
• Management expects to double the revenue from railways in FY2019.
• KEC is L1 bidder in Rs. 4,000 crore worth of orders.
Report link: http://old.sharekhan.com/Upload/NewsLetter/KECInt-Feb27_18.pdf
Feb 27, 2018 Indian Oil Corporation Viewpoint POSITIVE n 378 18-20 $
Summary
• Recent underperformance of IOCL to broader indices provides good entry opportunity. At the CMP, the stock trades at attractive
valuation of 7.2x FY2020E EPS.
• 10% earnings CAGR for IOCL expected over FY2018-EFY2020E, backed by resilient refining and marketing margin and mid-
single digit volume growth.
• Profitability of the Paradip refinery would be the key monitorable in the near term.
• We retain our positive view on the stock of IOCL and expect an 18-20% upside from current level.
Report link: http://old.sharekhan.com/Upload/NewsLetter/IOCL-Feb27_18.pdf
Feb 28, 2018 Ashok Leyland Stock Update BUY n 141 170 #
Summary
• The vehicle scrappage policy for commercial vehicles older than 15 years of age offers a huge growth opportunity to Ashok
Leyland Limited (ALL), which is a pure MHCV player.
• LCV demand has also improved post GST. ALL will be launching a new product every six months in the LCV space.
• Given the huge opportunity post the scrappage scheme, we have raised our MHCV volume assumptions for ALL. We retain Buy
rating on the stock with a revised PT of Rs. 170.
Report link: http://old.sharekhan.com/Upload/NewsLetter/AshokLeyland-Feb28_18.pdf

SECTOR UPDATE EQUITY FUNDAMENTALS
Sector View
Date Sector Report Type
Latest Chg
Feb 02, 2018 Automobiles Sector Update Positive n
Summary
• Automobile sales for January 2018 grew in strong double digit due to low base effect in January 2017 owing to demonetization.
Positive rural sentiments further aided demand.
• Among segments, CV sales surged the most, by 38%, owing to infrastructure development and demand from mining.
• New launches drove up sales of cars & UVs (up 9%), while rural sentiments benefited two-wheeler sales (up 33%).
• Preferred picks: Maruti Suzuki, TVS Motors and Escorts.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Automobile-Feb02_18.pdf
Feb 19, 2018 Q3FY2018 IT results review Sector Update Neutral n
Summary
• The quarter gone by was a mixed bag for the IT sector, with resilient margin performance despite seasonal weakness, though
CC revenue growth remained soft..
• Commentary on BFS and retail verticals recovery continues to remain elusive, while other verticals’ momentum remains
impressive; overall set-up for FY2019 looks more conducive.
• Digital revenue (20-25% of total revenue) is not enough, BFS to step in to accelerate double-digit growth in FY2019E.
• Remain selectively positive, risk-reward for top tier IT companies turning gradually favourable.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q3FY2018_IT_review-Feb19_18.pdf
Feb 19, 2018 Q3FY2018 Oil & Gas results review Sector Update Positive n
Summary
• During Q3FY2018, upstream PSUs witnessed strong operational performance, led by higher oil realisation and gas sales
volume (especially for ONGC).
• Inventory gains boosted refining margins of oil marketing companies (OMCs).
• Mid-stream and city gas distribution (CGD) witnessed strong earnings growth, led by higher volumes.
• We expect robust earnings growth outlook for upstream companies. OMCs are likely to benefit from recovery in auto fuel
marketing.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q3FY2018_OilGas_review-Feb19_18.pdf
Feb 20, 2018 Q3FY2018 Capital Goods & Engineering results review Sector Update Neutral n
Summary
• Our preferred picks in the capital goods and engineering segment are L&T, Kalpataru Power, BEL and KEC.
• Consumer Electrical companies expected to fare well with Government focus on rural electrification.
• For Q3FY18, healthy execution and robust order inflow drove revenues of Sharekhan’s CG universe that rose by 12.5% y-o-y.
• A fall in GST rates augurs well for product based companies. Project based companies remain cautiously optimistic despite
some green shoots.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q3FY2018_CapitalGoods_review-Feb20_18.pdf

EQUITY FUNDAMENTALS SECTOR UPDATE
Sector View
Latest Chg
Feb 21, 2018 Q3FY2018 Auto results review Sector Update Positive n
Summary
• Growth in Q3FY2018 was majorly driven by volumes, as all segments, except passenger vehicles (PV), reported strong double-
digit volume growth.
• The trend of margin decline reversed in Q3FY2018, as the auto sector (ex. TAMO) managed to maintain its margins.
• We expect automotive demand to remain strong and expect double-digit volume growth to sustain in FY2019.
• Leaders in Q3FY2018 results: Ashok Leyland, M&M and Bharat Forge.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q3FY2018_Auto_review-Feb21_18.pdf
Feb 21, 2018 Q3FY2018 Banking and NBFC results review Sector Update Positive n
Summary
• Overall performance for PSU banks (PSB) during Q3FY2018 was below expectations.
• Private banks (PBs) outperformed PSU banks with better loan book growth and stable/improving asset quality performance.
• NBFCs witnessed pressure due to rising yeilds.
• We expect PBs and NBFCs to benefit and take further market share from PSBs.
• Preferred Picks: HDFC Bank, Bajaj Finserv and IndusInd Bank.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q3FY2018_Banking_review-Feb21_18.pdf
Feb 21, 2018 Q3FY2018 Consumer goods and services results review Sector Update Positive n
Summary
• Revenue growth of consumer goods companies got back on the double-digit trajectory in Q3FY2018, with stabilisation in trade
channels and uptick in rural demand (also aided by low base of Q3FY2017).
• Benign input and higher operating leverage led to substantial margin expansion.
• Steady growth momentum to sustain on improving rural demand and stable demand in urban markets.
• Preferred picks: Britannia, Marico, Godrej Consumer Products (GCPL) and Dabur India.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q3FY2018_ConsumerGoods_review-Feb21_18.pdf
Feb 21, 2018 Q3FY2018 Pharma results review Sector Update Cautious n
Summary
• We advise caution and selectively prefer companies like Biocon, Cipla and Divi’s from our coverage universe in the pharma
sector.
• For Q3FY18, our coverage universe reported a de-growth of 1.5% in revenue and a decline of 16.5% in operating profit.
• The sector continues to remain under stress due to a challenging business environment in the US and the appreciating rupee.
• US exporting generic companies would continue suffer as pricing pressure will remain for a few more quarters.
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q3FY2018_Pharma_review-Feb21_18.pdf

SECTOR UPDATE EQUITY FUNDAMENTALS
Sector View
Latest Chg
Feb 21, 2018 Q3FY2018 Cement results review Sector Update Neutral n
Summary
• The risk-reward ratio seems unfavourable at current valuations for the cement. Investors advised to wait for better entry levels.
• Q3FY2018, earnings of cement companies that we cover (active and soft, ex-Grasim) declined 1.4% y-o-y. Increased opex
translated into pressure on net earnings.
• In the ongoing quarter, cement prices may remain flat to marginally lower, but the onus is on cement companies to contain the
higher opex, till pricing power returns for the industry.
• At the current juncture, cement companies are fairly valued and are banking on a demand revival, higher utilisation and pricing
discipline (to contain rising costs).
Report link: http://old.sharekhan.com/Upload/NewsLetter/Q3FY2018_Cement_review-Feb21_18.pdf
Feb 22, 2018 Q3FY2018 results review Sharekhan Special - -
Summary
• In Q3FY2018, aggregate Sensex earnings grew at a healthy rate of 12% (excluding SBI).
• More importantly, there are encouraging signs of pick-up in the economy and revival in earnings growth.
• Strong micros amid growing macro concerns would mean limited scope for expansion of valuation multiples. We expect quality
companies in the structural growth outlook to outperform in such a scenario.
• We recommend investing in companies from few structural growth themes identified by us. Moreover, we believe some of the
laggards such as the tech and energy sector would outperform this year.
Report link: http://old.sharekhan.com/CMT/Upload/NewsLetter/Report/Q3FY18ResultsReview-22Feb_18.pdf

EQUITY TECHNICALS TREND & VIEW
Corrective phase continues

Daily view on Nifty
After a sharp fall in the early part of February, the index has
seen sideways consolidation at 10276 – 10637.
On February 27, 2018, the index has found resistance at the
20DMA and witnessed a sharp fall.
Recently, the support range of 10300-10276 is broken on the
way down.
If the index breaks the support zone, then it is likely to
drift lower towards the short-term target of 10000 in the
forthcoming trading session.
The momentum indicator on the daily chart is bearish.
Crucial support for the index will be at 10070 and 10000,
while crucial resistance will be at 10558 and 10637.
Weekly view on Nifty

From the Elliot Wave perspective, the index has completed
Wave (III) and Wave (IV) is in progress.
Currently, the index is trading around the 20-week moving
average (WMA
As the index has broken the swing low of 10276, it is likely to
drift lower towards 10070 and subsequently to 9800 in the
medium term.
On the way up, 10600 – 10637 will be a crucial resistance
zone on the way up.
The momentum indicator on the weekly chart is bearish.
Crucial support will be at 10070 and 9800, whereas crucial
resistance will be at 10637 and 10830.
Monthly view on Nifty

On the monthly chart, the index is making higher top higher
bottom formation, indicating uptrend in the long term.
However, the index touched the upper end of the rising
channel and witnessed a correction thereafter.
In addition, the index has formed Bearish Engulfing
candlestick, indicating likelihood of correction in the medium
term.
However, the longer-term trend is bullish as Wave (V) on
the way up is pending. Dip towards 9800 – 9700 shall be
considered as a buying opportunity.
The momentum indicator on the monthly chart is bullish.
Crucial support will be at 9800 and 9700, whereas crucial
resistance will be at 10933 and 11171.
Trend Trend reversal Support Resistance Target

Down 10700 9800 10700 9800

MONTHLY VIEW EQUITY DERIVATIVES
10250-10300 zone is a make or break level
Nifty started February series on a negative note and The top five stock futures with the highest open interest in the current
series are:
moved one-sided into the southward direction and has
STOCK FUTURES OPEN INTEREST
been constantly making new lows in this series. This was (SHAREKHAN SCRIP CODE) (Rs. Cr)
mainly due to lot of uncertainty in international markets INFY 4592.22
and, above all, the PNB Scam, which spoiled the market RELIANCE 4532.06
sentiment completely. On the open interest front, Nifty and SUNPHARMA 3308.99
HDFC 3122.51
BankNifty have seen significant amount of short addition
HDFCBANK 3093.73
throughout this series.
The top five stock options with the highest open interest in the current
series are:
MARKET WIDE VS NIFTY ROLLOVER ACTIVITY: STOCK OPTION OPEN INTEREST

Nifty Market Wide (SHAREKHAN SCRIP CODE) (Rs. Cr)
1 SBIN 1231.56
0.9
0.8
MARUTI 1170.63
0.7 RELIANCE 1130.37
0.6
SUNPHARMA 947.33
0.5
85.68%
86.42%
85.72%
84.98%
85%
PNB 905.01
72.69%
73.19%
69.87%
0.4
63.28%
66%
0.3
0.2
0.1
0 View for February series:
Feb
Mar
Jan
Dec
Nov
Oct
On the options front, Nifty 10000 PE has seen significant

Rollover highlights:- amount of addition in open interest in the past few trading
sessions and has become the highest in terms of open
• Nifty future started March series with 1.92 crore vs. interest in the put side in March series. While, on the other
2.52 crore shares in open interest. hand, deep out-of-the-money call option, i.e. 10700 CE, is
the highest in open interest.
• March series started with Rs. 1,37,930 crore vs.
Rs. 1,30,439 crore in stock futures, Rs. 19,947 crore vs. PCR has been trading above 1.10 throughout February
Rs. 28,681 crore in Nifty futures and Rs. 1,29,694 vs. series and touched the high of 1.44, which was there
Rs. 1,35,917 crore in index option and Rs. 9,960 crore during the start of the series. In March series also, it started
on the higher side at 1.44 and is currently at around 1.22
vs. Rs. 12,744 crore in stock options.
levels, which is on the higher side. While, on the other
• Nifty March month rollover was at 62.34% vs. 65.34%. hand, volatility index has been continuously inching higher.
However, in the past few trading sessions, it cooled off a
• Market-wide rollover was 84.71% vs. 85.15%.
bit, currently at around 15 levels. Seeing the above data
and with high volatility, we feel Nifty could continue to see
selling pressure; and if the recent low of 10270 is broken,
then it could test 10000 levels in March series.

CURRENCY FUNDAMENTALS MONTHLY VIEW
Currencies: Rupee weakens on fiscal deficit woes

Key points
CURRENCY LEVELS IN FEBRUARY (IN RS.)
The government in Union Budget 2018 fixed the fiscal deficit target
Currency High Low Close Monthly chg (%)
for FY2019 at 3.3% and for FY2018 at 3.5%
The government also introduced a long-term capital gains tax of 10% USDINR 65.31 63.56 65.18 2.50
for gains in excess of Rs. 1 lakh in the budget. EURINR 80.38 78.60 79.66 0.60
India CPI inflation stood at 5.07% in January 2018 compared to 5.2%
in December 2017. GBPINR 91.57 88.73 90.41 0.55
India IIP stood at 7.1% in December 2017 compared to 8.8% in JPYINR 60.98 58.07 60.84 4.07
November 2017.
Spot INR Movement in February Spot INR Movement in February

USDINR JPYINR 61 EURINR GBPINR
65.2
80.5 91.5
60.5
65 80.3
91
80.1
64.8 60
79.9
90.5
64.6 79.7
59.5
79.5 90
64.4
79.3
59
89.5
64.2 79.1
58.5 78.9
89
64
78.7
63.8 58 78.5 88.5
25-Feb-18
05-Feb-18
09-Feb-18
15-Feb-18
19-Feb-18
21-Feb-18
01-Feb-18
27-Feb-18
07-Feb-18
11-Feb-18
23-Feb-18
25-Feb-18
17-Feb-18
05-Feb-18
03-Feb-18
09-Feb-18
15-Feb-18
19-Feb-18
21-Feb-18
13-Feb-18
01-Feb-18
27-Feb-18
07-Feb-18
11-Feb-18
23-Feb-18
17-Feb-18
03-Feb-18
13-Feb-18
USD-INR: CMP Rs. (65.0)

The Indian Rupee depreciated by 2.50% in the previous month on the back of a strong dollar. Further, foreign exchange market sentiments remained
subdued as the government announced a long-term capital gains tax on equities and widened its fiscal deficit target. It fixed the fiscal deficit target
for FY19 at 3.3% and for FY18 at 3.5%. The Reserve Bank of India (RBI) kept its monetary policy unchanged and said inflation for January-March 2018
quarter is forecast at 5.1% from 4.7% in the third quarter. The RBI also lowered economic growth projection to 6.6% for 2017-18 from 6.7%. Further, FII
outflows from local shares and debt market added downside pressure. As per NSDL $1,739.47 outflows were seen in February 2018.
Outlook: The Indian Rupee is expected to trade with negative bias as market sentiments will remain subdued amid fears of a global trade war after US
President Donald Trump announced steep tariffs on steel and aluminum imports and as Italian voters delivered a hung parliament. Investors expect
that Federal Reserve would be more aggressive with interest rate hike. Further, disappointing macroeconomic data from country and a rise in crude
oil prices will weigh on the rupee. Investors are worried that a rise in crude oil prices will stoke inflation. The rise in inflation may lower the possibility
of rate cut by Reserve Bank of India (RBI). As per the real effective exchange rate (REER) based on a basket of currencies of 36 trading partners, the
rupee is overvalued. Traders will remain cautious ahead of economic data from India. Expected trading range in near term is 64.30-65.90.
EUR-INR: CMP Rs. (80.0)

The euro depreciated by 1.77% in the previous month on the back of strong dollar and disappointing economic data from Eurozone. Further, Draghi’s
Parliamentary address seemed slightly dovish. Traders remained cautious ahead of the Italian parliamentary election.
Outlook: The Euro is expected to trade with positive bias on the back of weakness in dollar and eased in political uncertainty in Germany, after
members of the Germany’s Social Democratic Party voted to join Chancellor Angela Merkel’s next government. Further, the euro may gain strength on
solid economic data from Eurozone and expectation of winding up of quantitative easing sooner than expected. The euro as funding currency because
of their nations’ low-interest rates may gain strength as money flows back to where it was funded from during risk times. However, sharp gains may
be capped, as traders will remain cautious ahead of the European Central Bank Monetary policy meeting. Worries over political uncertainty in Italy
will keep Euro under pressure. Election in Italy appears to have given no party a clear majority. Expected trading range in near term is 78.40-81.20.
GBP-INR: CMP Rs. (89.70)
The British Pound depreciated by 3.04% in the month of February on the back of a strong US Dollar and disappointing economic data from the UK.
Manufacturing, construction and Services PMI data in the UK showed that the activity in the sectors slow down. However, a sharp fall was prevented as
Bank of England kept its monetary policy unchanged and said bank may need to tighten policy faster than expected. BOE’s Mark Carney said interest
rates in the UK may need to rise at a steeper pace than previously thought to prevent the Brexit weakened economy from overheating.
Outlook: The Pound is expected to trade with negative bias as traders will remain cautious ahead of progress in the Brexit deal, Bank of England
monetary policy and economic data from UK. The Bank of England is expected to keep its monetary policy unchanged. More focus will be on
statements from the central bank to get fresh cues. If the central bank remains positive on inflation and economic growth and signals monetary
tightening sooner than expected then we may see sharp bounce back in pound. Expected trading range in near term is 88.40-90.40.
JPY-INR: CMP Rs. (61.65)
The yen appreciated by 2.30% in the previous month as safe-haven demand increased on the sell-off in the global markets and worries over political
instability in Euro area. However, a sharp gain was prevented on strong dollar and divergence in monetary policy.
Outlook: The Yen is expected to trade with positive bias on weakness in the US Dollar. Further, safe-haven demand can increase as market sentiments
are hurt amid fears of a global trade war after US President Donald Trump announced steep tariffs on steel and aluminum imports and Italian voters
delivered a hung parliament. However, sharp gains may be prevented on divergence in monetary policy and as traders will remain cautious ahead
of economic data from Japan and the monetary policy meeting of the Bank of Japan. The currency is expected to trade in a range of 60.15 – 62.85.
CMP as on March 05, 2018

TREND & VIEW CURRENCY TECHNICALS
USDINR: Bulls take control EURINR: Heading towards north

l In case of the USDINR, the range of 63.50-63 acted as l EURINR formed multi week consolidation & broke out
a strong support. A fresh round of buying interest was on the upside in the month of Jan.
seen in the region resulting in a sharp recovery in the l The weekly Bollinger Bands, that had contracted
last month significantly, started expansion along with the price
l The bounce was fueled by positive divergence in the action. Thus the currency pair witnessed sharp move
on the upside.
weekly momentum indicator whereas the monthly
momentum indicator has given a fresh buy signal. l For the last couple of weeks, the momentum has
slowed down. However, the overall trajectory remains
l On the way up, the currency pair has scaled above the positive
crucial daily & weekly moving averages. Also it has
l The overall set up suggests that the rally is far from over
managed to take out a medium term falling trendline. and has the potential to stretch further.
MACD (-0.04854) 1.0 KST (3.25317)
10
0.5
5
0.0
0
-0.5
-5
USDINR - INDIAN RUPEE (64.6500, 65.3100, 64.6200, 65.2000, +0.50000)
68.80 70.0 EURINR (79.5620, 80.1350, 79.2540, 79.4920, -0.04401) 95
94
69.5
93
69.0 100.0% 92
0.0% 100.0%
91
68.5
90
68.0 89
88
67.5
87
67.0 78.6%
86
61.8%
66.5 85
23.6%
50.0% 84
66.0
83
38.2% 65.5 61.8% 82
65.0 81
38.2%
80
23.6% 64.5
50.0% 79
64.0 78
50.0% 63.5 77
0.0% 76
38.2%
63.0
75
62.5 74
61.8%
62.0 73
23.6% 72
61.5
71
61.0
70
60.5 69
60.0 68
67
59.5
66
0.0%
59.0
65
58.5 64
100.0%
58.0 63
57.5 62
2014 A M J J A S O N D 2015 A M J J A S O N D 2016 A M J J A S O N D 2017 A M J J A S O N D 2018 A M J J A S O N 2013 A M J J A S O N D 2014 A M J J A S O N 2015 A M J J A S O N 2016 A M J A S O D 2017 A M J J A S O D 2018 A M J J A S O N
GBPINR: Preparing for next move up JPYINR: Smart rally

l GBPINR is on an upward trajectory and is marching in a l The JPYINR was stuck in a narrow range for several
channelized manner. months last year. The range of 56.25-56 acted as a
l During the Nov-Dec period the currency pair formed a strong support zone for the currency pair.
base near the key weekly moving averages & the lower l Range bound trading activity had formed a triangular
channel line.
pattern & the pattern broke out on the upside in Jan this
l In Jan this year, the currency pair started its next leg on year
the upside & surpassed several crucial hurdles on the
way up. l As a follow through of the bullish breakout, the currency
pair is witnessing a smart rally
l The month of Feb also witnessed consolidation above
those hurdles which are now acting as support levels. l It has crossed crucial moving averages on weekly &
Once that is done, the GBPINR will be set for the next monthly time frame & is attempting deep retracement
move up. of the previous multi month decline.
MACD (1.35079) KST (4.55949)
1
5
0
-1 0
-2
-5
-3
GBPINR (90.3990, 91.0880, 89.6830, 89.7090, -0.64500) 108
JPYINR (60.4842, 61.1804, 60.2321, 61.1174, +0.58790) 71.0
107 70.5
106 70.0
100.0% 69.5
105 69.0
104 68.5
0.0% 100.0% 68.0
103
67.5
102 67.0
101 66.5
66.0
100 65.5
99 65.0
64.5
98 23.6% 64.0
97 61.8% 63.5
63.0
96
61.8% 62.5
95 50.0% 62.0
94 38.2% 61.5
61.0
93 38.2% 60.5
50.0% 92 60.0
50.0% 59.5
91
59.0
23.6%
90 58.5
38.2% 58.0
89
61.8% 57.5
88 57.0
87 56.5
0.0% 56.0
86
55.5
23.6% 85 55.0
78.6% 54.5
84
54.0
83 53.5
82 53.0
52.5
81
52.0
80 51.5
51.0
0.0% 79 100.0%
50.5
78 50.0
77 49.5
M J J A S O N D 2016 M A M J J A S O N D 2017 M A M J J A S O N D 2018 M A M J J A S O 2015 M A M J J A S O N D 2016 M A M J J A S O N D 2017 M A M J J A S O N D 2018 M A M J J
Currency View Reversal Supports Resistances Target

USD-INR Up 64.23 64.62/64.36 65.89/66.50 66.75
GBP-INR Up 87.27 88.44/87.52 91.08/92.16 94.00
EUR-INR Up 77.30 78.68/77.88 80.38/81 82.00
JYP-INR Up 59.45 60.60/60 61.40/63 62-63.4

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Disclaimer: Product is offered by Sharekhan Ltd (Registered Portfolio Manager with SEBI Regn. Nos. INP000000662 CIN No. U99999MH1995PLC087498) and having registered office at 10th Floor, Beta Building, Lodha
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purport to be an invitation or an offer for services, client is required to take independent advise before opting for any service. Securities investments are subject to market and other risks and client should refer to the risk
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OVERVIEW as on February 28, 2018
The investment product aims to outperform the benchmark indices with relatively DE Nifty
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well researched, quality companies to build a well balanced, diversified portfolio. 3 Year 35.6 16.4 17.9 27.9
It is a low-risk, low-chum portfolio with bulk of investment (range of 65-75%) in Top *Note : Net of Quarterly AMC Fees
100 large-cap companies and the rest invested in well researched, quality mid-cap
companies. Disclaimer: Returns are based on a client’s
returns since inception and may be different
from those depicted in the risk disclosure
document.
PRICING
Top 10 stocks
Minimum investment of Rs. 25 lakh
Bajaj Finserv
Charges
Bharti Airtel
¾¾ 2.5% per annum; AMC fee charged every quarter
Britannia Industries
¾¾ 0.5% brokerage
HDFC Bank
¾¾ 20% profit sharing after the 15% hurdle is crossed at the end of every fiscal
Indusind Bank
Larsen & Toubro
Maruti Suzuki India
Reliance Industries
TVS Motors
Zee Entertainment Enterprises
FUND OBJECTIVE
A good return on money through long-term investing in quality companies

PMS DESK PMS FUNDS
PROTECH - INDEX FUTURES FUND
OVERVIEW
The ProTech–Index Futures Fund PMS strategy is suitable for long-term investors Product performance
who desire to profit from both bullish and bearish market conditions. The strategy as on February 28, 2018
involves going long (buying) or going short (selling without holding) on Nifty futures by NT
(In %) Sensex Nifty
predicting the market direction based on a back-tested automated model. Strategy
1 Month -0.32 -4.95 -4.85
3 Months 5.55 3.12 2.60

INVESTMENT STRATEGY
Fy 16-17 -14.88 16.88 18.55
The strategy has the potential to generate profits irrespective of the market
direction by going long or short on Nifty futures. Fy 15-16 11.28 -9.36 -8.86
An automated basic back-testing model is used to predict the market direction for Fy 14-15 -3.41 24.89 26.65
the Nifty which then decides the strategy to be deployed in terms of going long
or short. Fy 13-14 8.79 18.85 17.98
The portfolio is not leveraged, ie its exposure never exceeds its value. Fy 12-13 3.65 8.23 7.31
Fy 11-12 13.10 -10.50 -9.20

PRICING Fy 10-11 9.20 10.90 11.10
Minimum investment of Rs. 25 lakh Fy 09-10 14.70 80.50 73.80
Charges Since Inception* 168.10 237.64 247.26
¾¾ AMC fees: 0% Best Month 28.90 28.26 28.07
¾¾ Brokerage: 0.05% Worst Month -17.10 -23.89 -26.41
Best Quarter 33.30 49.29 42.04

¾¾ Profit sharing: Flat 20% charged on a quarterly basis
Worst Quarter -17.73 -24.98 -24.53
*01-Feb-2006
Disclaimer: Returns are based on a client’s

FUND MANAGER’S VIEW returns since inception and may be different
document.
After a positive quarter this month saw returns peter out as the long trade was booked and a
short trade was initiated mid-month. As the move downwards accelerates, so should the returns. Investments in
Further, this month we saw the first clear expansion in volatility indicators, though recently they Nifty Index
are falling back. A sustained expansion in volatility should result in a similar widening of returns
as compared to the last few years. Volatility was the main reason pulling down the performance
of the strategy.
Our market view remains for a lot of bigger moves on both sides, still more so for a generally
downward trending market in the months ahead. The selling activity seen this month does not look
like a one-off reaction and appears indicative of a larger change in the market trend.
Fund Manager: Rohit Srivastava
FUND OBJECTIVE
Absolute returns irrespective of market conditions.

PMS FUNDS PMS DESK
PROTECH - TRAILING STOPS
OVERVIEW
Our ProTech–Trailing Stops PMS strategy is ideal for Traders and Investors looking Product performance
for Regular Income from trading and desire to make profits in both bullish and bearish
as on February 28, 2018
market conditions. It is designed to payout book profits on monthly basis.*
TS
It is also for those investors who are looking for better income than Fixed Income or (In %) Sensex Nifty
Strategy
Deposits. This strategy involves going Long (buying) or Short (selling without holding)
on stock futures. 1 Month 3.16 -4.95 -4.85
* Terms and conditions apply 3 Months 14.04 3.12 2.60
Fy 16-17 3.79 16.88 18.55

INVESTMENT STRATEGY Fy 15-16 -0.56 -9.36 -8.86
This strategy spots the winning trades based on technical analysis vs time frame- Fy 14-15 -3.69 24.89 26.65
based portfolios, basically the momentum calls.
Fy 13-14 -1.06 18.85 17.98
A risk model has been developed for stock portfolio allocation that reduces the risk
and portfolio volatility through staggered building of positions. Fy 12-13 14.89 8.23 7.31
It is non-leveraged—the exposure will never exceed the value of the portfolio. Fy 11-12 29.00 -6.10 -4.60
Fy 10-11
PRICING Fy 09-10
Minimum investment of Rs. 25 lakh Since Inception* 49.83 84.49 89.02
Charges Best Month 9.96 11.25 12.43
¾¾ AMC fees: 0% Worst Month -6.49 -8.93 -9.28
Best Quarter 10.18 13.52 13.53

¾¾ Brokerage: 0.05%
Worst Quarter -8.20 -12.69 -12.47
¾¾ Profit sharing: Flat 20% charged on a quarterly basis
*09th May 2011
Disclaimer: Returns are based on a client’s

FUND MANAGER’S VIEW returns since inception and may be different
document.
We have been actively putting out trades on both the long and short sides, in what has been a
wild ride for the market. We, however, clearly distinguish between the stocks we want to be short
on and those that we want to be long of. This helped churn out 3.16% for this month. The higher
volatility was very helpful and we hope that it is here to stay. The bigger the up and down moves, Investments in
the wider the returns for our strategy. Nifty Index
Our market view remains for a lot of bigger moves on both sides, still more so for a generally Stock futures
downward trending market in the months ahead. The selling activity seen this month does not look
like a one-off reaction and appears indicative of a larger change in the market trend.
Fund Manager: Rohit Srivastava
FUND OBJECTIVE
Absolute returns irrespective of market conditions.

ADVISORY DESK MONTHLY PERFORMANCE
Advisory Products and Services

The Advisory Desk is a central desk consisting of a Mumbai-based expert
team that runs various sample model portfolios (for illustrative purposes
only) for clients of all profiles, be they traders or investors.
These products are different from Sharekhan research-based technical
and fundamental offerings as these essentially try to capture the trading
opportunities in stocks where momentum is expected before or after
some event including the announcement of results or where some news/
event is probable.
Advisory products are ideal for those who do not have time to either
monitor the market tick by tick or shift through pages of research for data
or pour over complex charts to catch a trend. However, all these products
require perfect discipline and money management.
For investors
PORTFOLIO DOCTOR
It is a service under which the Portfolio Doctor reviews an existing portfolio based on various parameters and suggests changes to
improve its performance. To avail of this service please write to the Portfolio Doctor at portfoliodoctor@sharekhan.com.
NEW ALPHA DELIVERY PICKS

This is a long only, cash market delivery product where stock ideas will
New Alpha Delivery Picks Rules
be rolled out based on short-term triggers with proper fundamental
rationale. Recently we revised certain features of Alpha Delivery Picks Ideas Ideas based on Stock Ideas,
to incorporate ideas from both the Fundamental research desk and Viewpoints, Stock Updates,
the Market analysis team. The time frame of the stock ideas in New Market analysis
Alpha Delivery Picks will be a maximum of two months. Stop loss will be
Weightage (%) 7
5-10% and profit potential will be 10-20%. We will report the old series’
performance data separately. For more details please write to us at
alphapicks@sharekhan.com Stop Loss (%) Maximum 10, minimum 5
For traders Profit Potential (%) Maximum 20, minimum 10
SHAREKHAN PRE-MARKET ACTION Time Frame Maximum 2 months
These ideas are put out in Sharekhan Pre-market Action report along 5% trailing Stop loss on 5% rise
Trail Stop loss
with stop loss and targets valid for a day. There is a market watch list in stock price
of stocks with positive and negative bias for intra-day traders. For more A) Pre defined / Trail stop loss
Exit Rules
details please write to us at premarket@sharekhan.com. is hit
B) Unexpected event/news/
MID DERIVATIVE CALLS outcome
These calls are based on the analysis of open interest, implied volatility
C) Time frame
and put-call ratio in the derivative market. It is a leveraged product and
ideal for aggressive traders. These calls have pre-defined stop loss, Performance
Daily
targets, time frame and quantity to execute. For details of the product Reporting
please write to us at derivative@sharekhan.com.
Report Card
MID performance* Derivative Calls
Product Alpha Delivery Series II * Ticket size (Rs) 100,000
Month Feb 2018 CY2018 Apr-Dec 2017
Month Feb 2018 CY2018 Apr-Dec 2017
No. of calls 2 4 81*
No. of calls 83 179 499
Open - 2 6
Profit booked 43 97 273
Profit booked - 0 39
Stop loss hit 2 2 36 Stop loss hit 40 82 226
Strike rate (%) - 0 52 Strike rate (%) 52 54 55
* we had 8 open calls in April (not considered)

MF PICKS MUTUAL FUNDS DESK
Sharekhan top mutual fund picks (equity) February 14, 2018

Data as on February 1, 2018
Scheme name NAV (Rs) Returns (%)
Absolute 6 Compound annualised
months 1 yr 3 yrs 5 yrs Since inception
Large Cap Funds
IDFC Classic Equity Fund - Reg - Growth 47 10.1 29.6 14.3 15.8 13.3
ICICI Prudential Focused Bluechip Equity Fund - Growth 42 9.7 27.6 11.1 17.3 15.9
Aditya Birla Sun Life Top 100 Fund - Growth 60 6.2 23.2 10.3 17.9 15.7
Franklin India Bluechip - Growth 477 6.9 22.2 9.9 14.7 21.7
BNP Paribas Equity Fund - Growth 88 6.5 27.7 8.5 17.0 17.7
Indices
S&P BSE Sensex 35907 10.23 27.59 7.14 12.66 16.18
Mid & Small Cap Funds
Reliance Small Cap Fund - Growth 47 19.7 47.2 22.9 35.3 23.2
Kotak Emerging Equity Scheme - Reg - Growth 41 10.3 27.5 16.9 24.6 13.9
HDFC Mid-Cap Opportunities Fund - Growth 59 8.3 27.8 16.3 25.9 18.1
Aditya Birla Sun Life Mid Cap Fund - Growth 328 7.8 29.4 16.1 22.9 25.6
BNP Paribas Mid Cap Fund - Growth 36 8.1 30.6 14.5 24.0 11.5
Indices
S&P BSE MID CAP 17271 12 32 17 20 22
Multi Cap Funds
DSP BlackRock Opportunities Fund - Reg - Growth 229 9.7 26.2 15.7 20.2 19.3
SBI Magnum Multi Cap Fund - Growth 49 10.4 28.8 15.1 21.0 13.7
Aditya Birla Sun Life Equity Fund - Growth 739 7.4 23.9 14.5 21.7 24.8
Kotak Select Focus Fund - Reg - Growth 34 6.9 25.5 13.0 21.0 15.8
BNP Paribas Dividend Yield Fund - Growth 50 8.2 30.3 12.8 18.8 13.9
Indices
S&P BSE 500 15330 10 29 11 15 15
Tax-saving funds (ELSS)
IDFC Tax Advantage (ELSS) Fund - Reg - Growth 60 15.4 42.1 15.7 21.8 21.8
DSP BlackRock Tax Saver Fund - Growth 49 8.4 24.4 14.3 20.6 15.4
Aditya Birla Sun Life Tax Relief 96 - Growth 32 12.1 34.3 13.9 22.2 12.5
Reliance Tax Saver (ELSS) Fund - Growth 68 10.4 31.8 11.0 22.8 16.7
Franklin India Taxshield - Growth 570 6.8 22.2 10.1 18.5 24.0
Indices
Nifty 500 9687 10 29 11 15 10
Thematic Funds
DSP BlackRock Natural Resources & New Energy Fund - Reg - Gth 37 14.5 27.4 25.8 23.3 14.4
L&T Infrastructure Fund - Reg - Growth 19 17.2 42.2 20.6 23.7 6.3
ICICI Prudential Banking and Financial Services Fund - Retail - Growth 63 3.2 33.2 17.2 22.7 21.5
Aditya Birla Sun Life Special Situations Fund - Growth 27 11.1 28.4 14.9 21.2 10.3
Franklin Build India Fund - Growth 44 12.1 28.7 14.2 26.0 19.2
Indices
Nifty 50 11017 9 26 8 13 14
Balanced Funds
ICICI Prudential Balanced - Growth 132 7.7 19.6 12.3 18.2 15.2
HDFC Balanced Fund - Growth 153 6.2 22.2 12.1 19.1 17.0
Reliance RSF - Balanced - Growth 57 7.1 24.3 11.7 17.2 14.7
Aditya Birla Sun Life Balanced 95 - Growth 770 4.9 18.4 10.6 17.0 20.8
SBI Magnum Balanced Fund - Growth 128 8.0 22.0 10.1 17.3 16.4
Indices
CRISIL Hybrid 35+65 - Aggressive Index -- 5.9 19.2 10.2 13.5 14.8
BNP Paribas Mutual Fund Equity schemes
Scheme name NAV (Rs) Returns (%)
Absolute 6 Compound annualised
months 1 yr 3 yrs 5 yrs Since inception
BNP Paribas Mid Cap Fund - Growth 36 8.1 30.6 14.5 24.0 11.5
BNP Paribas Dividend Yield Fund - Growth 50 8.2 30.3 12.8 18.8 13.9
BNP Paribas Long Term Equity Fund - Growth 39 6.5 28.7 9.1 18.0 11.9
BNP Paribas Equity Fund - Growth 88 6.5 27.7 8.5 17.0 17.7
Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at Sharekhan first understand the
individual’s investment objectives and risk-taking capacity, and then recommend a suitable portfolio. So, we suggest that you get in touch with our Mutual Fund
Advisor before investing in the best funds.n
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the mutual funds mentioned in the article.

MUTUAL FUNDS DESK MF PICKS
Sharekhan top sip fund picks February 14, 2018

Data as on February 1, 2018
Investment period 1 year 3 years 5 years
Total amount invested (Rs) 12,000 36,000 60,000
Present Avg annual Present Avg annual Present Avg annual
Funds would have grown to (Rs) NAV value (Rs) return (%) value (Rs) return (%) value (Rs) return (%)
Large-Cap Funds
IDFC Classic Equity Fund - Reg - Growth 47 13,361 12.3 48,749 10.9 95,907 10.0
ICICI Prudential Focused Bluechip Equity Fund - Growth 42 13,388 12.6 47,224 9.7 93,766 9.5
Aditya Birla Sun Life Top 100 Fund - Growth 60 13,042 9.4 45,838 8.6 93,403 9.4
Franklin India Bluechip - Growth 477 13,148 10.4 44,980 7.9 88,866 8.3
BNP Paribas Equity Fund - Growth 88 13,121 10.2 44,574 7.6 90,188 8.6
S&P BSE Sensex 35907 13,533 13.9 45,576 8.4 84,309 7.1
Mid & Small Cap Funds
Reliance Small Cap Fund - Growth 47 14,220 20.2 56,546 16.7 1,44,108 19.5
Kotak Emerging Equity Scheme - Reg - Growth 41 13,106 10.0 48,987 11.1 1,17,206 14.6
HDFC Mid-Cap Opportunities Fund - Growth 59 13,099 10.0 48,961 11.1 1,12,722 13.7
Aditya Birla Sun Life Mid Cap Fund - Growth 328 13,016 9.2 48,112 10.4 1,09,201 12.9
BNP Paribas Mid Cap Fund - Growth 36 12,996 9.0 47,147 9.7 1,07,226 12.5
S&P BSE MID CAP 17271 13,359 12.3 49,740 11.7 1,07,252 12.5
Multi-Cap Funds
DSP BlackRock Opportunities Fund - Reg - Growth 229 13,258 11.4 48,926 11.1 1,02,641 11.5
SBI Magnum Multi Cap Fund - Growth 49 13,310 11.9 47,896 10.3 1,03,520 11.7
Kotak Select Focus Fund - Reg - Growth 34 13,101 10.0 47,657 10.1 1,01,688 11.3
Aditya Birla Sun Life Advantage Fund - Growth 437 12,842 7.6 47,175 9.7 1,03,990 11.8
Franklin India High Growth Companies Fund - Growth 42 13,357 12.3 47,152 9.7 1,04,642 12.0
S&P BSE 500 15330 13,415 12.8 47,105 9.6 91,375 8.9
Tax-saving funds (ELSS)
IDFC Tax Advantage (ELSS) Fund - Reg - Growth 60 13,908 17.3 50,805 12.5 1,06,624 12.4
Reliance Tax Saver (ELSS) Fund - Growth 68 13,401 12.7 48,496 10.7 1,06,824 12.4
Aditya Birla Sun Life Tax Relief 96 - Growth 32 13,566 14.2 48,449 10.7 1,05,007 12.0
DSP BlackRock Tax Saver Fund - Growth 49 13,160 10.5 47,964 10.3 1,01,673 11.3
Franklin India Taxshield - Growth 570 13,054 9.5 44,727 7.7 94,104 9.6
Nifty 50 11017 13,411 12.8 45,602 8.4 85,331 7.4
BNP Paribas Mutual Fund Equity schemes

Compounded Compounded Compounded
Present value Present value Present value
Funds would have grown to (Rs) Category annualised annualised annualised
(Rs) (Rs) (Rs)
return (%) return (%) return (%)
BNP Paribas Dividend Yield Fund - Growth Multi Cap 13,206 10.9 47,300 9.8 98,611 10.6
BNP Paribas Mid Cap Fund - Growth Mid Cap 12,996 9.0 47,147 9.7 1,07,226 12.5
BNP Paribas Long Term Equity Fund - Growth ELSS 13,061 9.6 44,640 7.6 92,636 9.2
BNP Paribas Equity Fund - Growth Large Cap 13,121 10.2 44,574 7.6 90,188 8.6
Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at
Sharekhan first understand the individual’s investment objectives and risk-taking capacity, and then recommend a suitable portfolio.
So, we suggest that you get in touch with our Mutual Fund Advisor before investing in the best funds.n
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the mutual funds mentioned in the article.

EARNINGS GUIDE EQUITY FUNDAMENTALS
Sharekhan Earnings Guide Prices as on March 01, 2018

Sales Net profit EPS (%) EPS PE (x) RoCE (%) RoNW (%)
CMP DPS Div
Company growth
(Rs) FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY19/FY17 FY17 FY18E FY19E FY18E FY19E FY18E FY19E Rs. Yld(%)
Automobiles
Apollo Tyres 266 13,180.0 14,662.4 16,804.5 1,099.3 917.7 1,046.5 21.6 16.0 18.3 -8% 12.3 16.6 14.5 9.4 10.0 9.6 10.0 3.0 1.1
Ashok Leyland 141 20,015.4 26,281.0 30,816.5 1,558.5 1,607.4 2,039.3 5.3 5.5 7.0 15% 26.6 25.6 20.1 22.8 25.7 22.3 23.8 1.6 1.1
Bajaj Auto 3,021 21,766.7 25,268.4 29,218.0 3,827.6 4,061.2 4,710.2 132.3 140.4 162.9 11% 22.8 21.5 18.5 29.0 30.6 21.4 22.2 55.0 1.8
Gabriel India 157 1,529.1 1,806.5 2,081.6 83.2 91.5 109.2 5.8 6.4 7.6 14% 27.1 24.6 20.7 24.8 25.7 17.8 18.4 1.3 0.8
Hero Motocorp 3,577 28,475.0 31,669.0 36,167.2 3,377.1 3,630.5 4,025.2 169.1 181.8 201.6 9% 21.2 19.7 17.7 43.7 42.2 31.2 30.3 85.0 2.4
M&M 733 41,895.4 45,808.4 50,187.6 3,414.3 3,983.6 4,391.8 27.5 32.0 35.3 13% 26.6 22.9 20.8 17.3 17.5 13.7 13.8 13.0 1.8
Maruti Suzuki 8,873 68,035.0 79,484.0 91,858.0 7,338.0 8,163.0 10,597.0 242.9 270.2 350.8 20% 36.5 32.8 25.3 26.4 28.5 19.7 21.0 75.0 0.8
Rico Auto Industries 82 1,079.2 1,225.3 1,382.2 49.5 57.4 74.3 3.7 4.2 5.5 23% 22.3 19.5 14.9 11.6 13.2 10.2 12.0 0.8 0.9
TVS Motor 677 12,135.3 14,611.1 17,471.3 615.1 683.5 1,054.7 12.9 14.4 22.2 31% 52.3 47.0 30.5 25.2 34.4 24.3 30.1 2.5 0.4
Banks & Financials
Axis Bank 526 29,784.4 29,971.3 34,224.2 3,679.3 3,430.2 5,192.9 15.4 13.4 20.3 15% 34.2 39.3 26.0 - - 5.6 7.5 5.0 1.0
Bajaj Finance 1,659 5,468.6 7,429.2 10,241.6 1,836.4 2,571.8 3,569.5 33.6 44.6 61.9 36% 49.4 37.2 26.8 - - 23.5 25.7 3.6 0.2
Bajaj Finserv 4,999 - - - - - - - - - - - - - - - 0.0 0.0 1.8 0.0
Bank of Baroda 138 20,271.5 21,635.1 24,189.9 1,383.1 1,030.2 3,338.9 6.0 3.9 12.5 45% 23.1 35.8 11.1 - - 2.4 7.0 1.2 0.9
Bank of India 113 18,598.4 16,192.6 17,821.1 (1,558.3) (2,717.9) 221.1 -14.8 -22.9 1.9 - - - 60.7 - - - 0.7 0.0 0.0
Capital First 669 1,228.2 1,807.4 2,582.9 239.0 338.0 481.2 24.5 34.7 49.4 42% 27.3 19.3 13.5 - - 13.8 17.1 2.6 0.4
Federal Bank 94 4,134.4 4,774.9 5,633.0 830.8 965.5 1,340.7 4.3 5.0 6.9 27% 21.9 18.8 13.6 - - 8.2 10.5 0.8 0.9
HDFC 1,814 9,509.6 10,935.6 12,807.1 7,442.6 10,874.4 9,854.1 46.8 65.1 59.0 12% 38.8 27.9 30.7 - - 18.1 14.8 15.0 0.8
HDFC Bank 1,874 45,435.7 54,144.5 65,445.4 14,549.6 17,676.4 21,533.4 56.8 65.8 80.2 19% 33.0 28.5 23.4 - - 16.6 16.4 11.0 0.6
ICICI Bank 305 41,241.8 39,442.8 46,318.0 9,801.1 7,242.1 11,537.1 16.8 11.3 19.8 8% 18.1 27.0 15.4 - - 7.2 11.0 0.0 0.0
LIC Hsg. Fin. 507 3,694.0 3,648.2 4,202.0 1,931.1 1,922.2 2,278.8 38.2 38.1 45.1 9% 13.3 13.3 11.2 - - 16.2 16.8 6.2 1.2
Max Financial 495 - - - - - - - - - - - - - - - - - - 0.0
PTC India Fin. Ser. 30 721.6 539.9 647.7 345.3 194.6 325.3 5.4 3.0 5.1 -3% 5.6 9.9 5.9 - - 7.8 12.2 1.5 5.0
PNB 101 23,944.5 25,589.7 27,769.5 1,324.8 1,527.7 2,714.9 6.2 7.2 12.8 43% 16.2 14.1 7.9 - - 3.4 5.8 1.0 1.0
SBI 262 97,320.7 1,08,920.7 1,24,937.1 10,484.1 14,102.8 17,871.7 13.1 17.7 22.4 31% 19.9 14.8 11.7 - - 7.3 8.7 2.6 1.0
Union Bank of India 104 13,868.0 14,044.3 16,244.4 555.2 (3,039.3) 838.3 8.1 -35.5 9.8 10% 12.8 - 10.6 - - - 3.5 0.0 0.0
Yes Bank 321 9,954.1 12,824.1 16,815.8 3,330.1 4,103.8 5,571.2 78.9 18.0 24.4 -44% 4.1 17.9 13.2 - - 17.4 20.4 2.0 0.6
Consumer Goods
Britannia 4,944 9,324.1 10,212.9 11,659.2 884.5 1,005.6 1,236.7 73.7 83.8 103.1 18% 67.1 59.0 48.0 52.0 46.9 33.7 33.6 22.0 0.4
Emami 1,081 2,532.6 2,678.3 3,213.0 549.8 601.9 770.8 24.2 26.5 34.0 19% 44.7 40.8 31.8 34.4 43.2 32.5 36.4 7.0 0.6
GSK Consumer 6,792 4,421.1 4,531.7 5,132.9 656.7 704.6 800.1 156.1 167.5 190.2 10% 43.5 40.5 35.7 32.3 32.7 21.3 21.6 70.0 1.0
GCPL 1,080 9,608.8 10,231.3 12,092.3 1,307.1 1,444.1 1,815.8 19.1 21.2 26.6 18% 56.6 51.0 40.6 17.5 21.3 24.5 25.0 15.0 1.4
Hindustan Unilever 1,324 34,487.0 36,938.1 41,967.8 4,249.0 5,044.8 6,111.8 19.7 23.3 28.2 20% 67.2 56.8 47.0 100.7 102.7 73.5 75.1 17.0 1.3
ITC 264 55,448.5 64,192.8 73,684.1 10,200.9 11,512.1 13,586.4 8.4 9.5 11.2 15% 31.4 27.8 23.6 32.5 35.5 24.8 27.5 4.8 1.8
Jyothy Laboratories 344 1,749.1 1,865.4 2,206.9 204.1 240.6 244.5 11.3 13.2 13.5 9% 30.5 26.1 25.5 17.3 22.1 20.5 18.2 6.0 1.7
Marico 312 5,935.9 6,431.7 7,480.7 811.0 861.4 1,052.9 6.3 6.7 8.2 14% 49.5 46.6 38.1 44.1 48.3 34.8 36.8 3.5 1.1
Zydus Wellness 1,296 462.6 510.5 580.3 111.3 124.5 146.2 28.5 31.9 37.4 15% 45.5 40.6 34.6 22.0 22.1 20.0 19.9 6.5 0.5
IT / IT services
FSL 53 3,555.6 3,538.8 3,815.6 280.0 313.7 342.5 4.2 4.7 5.1 10% 12.7 11.3 10.4 11.6 12.3 14.1 13.4 0.0 0.0
HCL Technologies 943 46,722.0 50,316.1 54,789.9 8,456.0 8,669.6 9,193.0 60.7 62.3 66.0 4% 15.5 15.1 14.3 29.1 27.4 24.6 23.1 24.0 2.5
Infosys 1,161 68,484.0 70,203.4 75,554.7 14,357.0 15,905.5 15,349.3 62.8 64.2 70.7 6% 18.5 18.1 16.4 30.7 32.7 24.2 23.9 25.8 2.2
Persistent Systems 835 2,878.4 3,084.4 3,450.9 312.9 341.3 373.0 39.1 42.7 46.6 9% 21.4 19.6 17.9 22.1 21.6 16.9 16.4 9.0 1.1
TCS 3,038 1,17,966.0 1,22,218.9 1,33,257.1 26,289.0 25,622.9 28,365.1 137.3 133.9 148.2 4% 22.1 22.7 20.5 35.5 36.2 27.7 28.2 47.0 1.5
Wipro 293 55,040.2 54,764.5 58,574.1 8,489.5 8,463.2 9,135.5 17.5 18.1 20.2 7% 16.7 16.2 14.5 11.5 11.3 14.2 13.5 3.0 1.0
Cap goods / Power
CESC 1,005 7,410.0 8,211.0 8,799.0 862.0 935.0 1,018.0 64.7 70.2 76.4 9% 15.5 14.3 13.2 5.6 5.8 6.9 7.3 12.0 1.2
CG Power & Ind. Solutions 82 6,119.8 6,413.3 7,181.9 182.7 170.9 275.9 2.9 2.7 4.4 23% 28.1 30.1 18.6 7.9 10.1 4.0 6.2 0.0 0.0
Finolex Cables 706 2,444.9 2,914.4 3,126.9 316.0 359.3 379.3 20.7 23.5 24.8 10% 34.2 30.1 28.5 24.1 22.2 29.9 28.1 3.0 0.4
Greaves Cotton 123 1,634.3 1,726.4 1,815.3 174.7 167.2 175.6 7.2 6.8 7.2 0% 17.1 18.1 17.1 25.1 25.5 17.4 17.7 5.5 4.5
Kalpataru Power 493 4,894.1 5,647.0 6,862.0 269.1 330.0 410.9 17.5 21.5 26.8 24% 28.2 22.9 18.4 18.5 20.3 12.6 14.0 2.0 0.4
KEC International 410 8,584.4 9,662.3 10,980.4 305.0 459.1 574.7 11.9 17.9 22.4 37% 34.5 23.0 18.4 22.4 24.3 25.3 25.3 1.6 0.4
PTC India 101 14,074.8 18,497.0 22,979.2 242.7 276.3 337.2 8.2 9.3 11.4 18% 12.3 10.8 8.8 16.8 18.2 18.0 17.9 3.0 3.0

EQUITY FUNDAMENTALS EARNINGS GUIDE
Sales Net profit EPS (%) EPS PE (x) RoCE (%) RoNW (%)
CMP DPS Div
Company growth
(Rs) FY17 FY18E FY19E FY17 FY18E FY19E FY17 FY18E FY19E FY19/FY17 FY17 FY18E FY19E FY18E FY19E FY18E FY19E Rs. Yld(%)
Skipper 237 1,703.0 2,100.8 2,498.7 98.0 115.3 148.0 9.6 11.3 14.5 23% 24.7 21.0 16.4 22.9 24.2 21.3 22.9 1.6 0.7
Thermax 1,218 3,763.7 3,996.8 4,535.3 278.0 283.8 334.2 23.3 23.8 28.0 10% 52.3 51.1 43.4 16.8 18.3 11.4 12.4 6.0 0.5
Triveni Turbine 119 745.0 715.7 842.7 124.0 97.8 125.4 3.8 3.0 3.8 0% 31.3 40.1 31.3 33.4 39.0 23.2 27.2 1.2 1.0
V-Guard Industries 238 2,150.6 2,414.7 2,908.0 151.8 182.0 238.0 3.6 4.3 5.6 25% 66.6 55.4 42.5 34.7 37.0 25.8 27.4 0.7 0.3
Va Tech Wabag 549 3,207.9 3,771.9 4,194.6 102.4 168.1 195.1 18.8 30.8 35.7 38% 29.2 17.8 15.4 23.0 23.2 15.4 15.4 4.0 0.7
Infra / Real Estate
Gayatri Projects 212 2,115.4 3,054.9 4,008.2 89.8 143.1 208.6 5.1 8.1 11.8 52% 41.8 26.2 18.0 14.6 17.6 14.7 18.4 0.5 0.2
IRB Infra 224 5,845.9 5,768.6 6,206.0 715.5 1,110.7 1,468.5 20.4 31.6 41.8 43% 11.0 7.1 5.4 16.0 18.8 19.3 21.4 5.0 2.2
Jaiprakash Asso 17 6,219.3 - - (4,841.9) - - -19.9 - - - - - - - - - - 0.0 0.0
Larsen & Toubro 1,315 1,10,011.0 1,24,457.2 1,39,423.0 5,920.0 7,138.8 9,049.2 42.3 51.0 64.7 24% 31.1 25.8 20.3 11.6 12.9 13.7 15.8 14.0 1.1
NBCC 196 6,279.0 6,923.5 9,481.7 351.1 390.4 530.5 3.9 4.3 5.9 23% 50.2 45.2 33.2 35.7 44.1 22.5 28.0 1.1 0.6
Sadbhav Eng. 398 3,320.3 3,693.7 4,272.4 187.8 235.2 271.2 10.9 13.7 15.8 20% 36.4 29.0 25.2 11.7 12.1 13.3 13.5 0.7 0.2
Oil & gas
Oil India 350 9,510.0 11,071.0 12,045.0 2,210.0 2,646.0 2,682.0 29.2 35.0 35.4 10% 12.0 10.0 9.9 10.7 10.6 8.9 8.8 16.4 4.7
Petronet LNG 241 24,616.0 30,364.0 33,636.0 1,706.0 2,167.0 2,255.0 11.4 14.4 15.0 15% 21.1 16.7 16.1 27.0 25.5 24.6 22.0 2.5 1.0
Reliance 948 3,05,382.0 3,52,338.0 3,84,401.0 29,833.0 35,920.0 39,878.0 50.4 60.7 67.4 16% 18.8 15.6 14.1 10.2 10.7 11.8 11.7 5.5 0.6
Selan Exp 207 55.8 65.3 73.2 8.7 17.0 19.8 5.3 10.3 12.1 51% 39.2 20.1 17.1 7.4 8.3 6.0 6.8 5.0 2.4
Pharmaceuticals
Aurobindo Pharma 624 15,089.9 18,030.2 21,516.5 2,289.6 2,718.2 3,533.4 39.1 46.4 60.3 24% 16.0 13.5 10.3 28.7 31.2 25.5 25.8 2.5 0.4
Cadila Healthcare 404 9,429.2 11,332.1 13,518.6 1,487.3 1,517.8 2,111.1 14.5 14.8 20.6 19% 27.8 27.3 19.6 14.8 20.6 18.8 21.8 3.2 0.8
Cipla 582 14,630.2 16,727.6 19,451.7 1,006.4 1,849.9 2,579.2 16.3 23.0 32.1 40% 35.6 25.3 18.1 13.2 16.5 13.5 16.1 2.0 0.3
Divi's Labs 1,018 4,106.3 3,853.2 4,515.9 1,060.4 900.2 1,192.9 39.9 33.9 44.9 6% 25.5 30.0 22.7 23.7 26.0 18.1 20.9 10.0 1.0
Glenmark Pharma 545 9,185.7 8,912.8 9,892.1 1,274.7 774.1 974.2 45.2 27.4 34.5 -13% 12.1 19.8 15.8 13.6 15.2 14.9 16.0 2.0 0.4
Lupin 804 17,494.3 16,060.8 16,945.9 2,713.4 1,508.0 1,623.4 60.1 33.4 35.9 -23% 13.4 24.1 22.4 9.7 9.8 9.7 9.5 7.5 0.9
Sun Pharma 535 31,578.4 28,350.8 31,092.0 6,964.4 2,680.8 4,889.8 29.0 11.2 20.4 -16% 18.4 47.9 26.3 10.1 13.9 7.0 11.5 3.5 0.7
Torrent Pharma 1,338 5,713.0 6,265.9 8,460.0 934.0 908.5 1,097.5 55.2 53.7 64.8 8% 24.2 24.9 20.6 17.8 17.9 17.6 16.9 14.0 1.0
Building Materials
Grasim 1,167 10,345.7 16,098.2 18,731.7 1,560.0 1,946.3 2,218.4 23.7 29.6 33.8 19% 49.1 39.4 34.6 5.9 4.5 4.4 4.8 22.5 1.9
Shree Cement 16,595 8,429.2 9,839.8 11,909.3 1,339.7 1,316.8 1,674.8 384.5 378.0 480.7 12% 43.2 43.9 34.5 14.7 16.2 15.9 17.4 116.0 0.7
The Ramco Cements 742 3,949.5 4,297.6 4,782.0 649.3 568.2 677.8 27.3 24.1 28.8 3% 27.2 30.8 25.8 10.5 11.7 14.6 15.6 3.0 0.4
UltraTech Cement 4,153 23,891.0 29,498.0 35,643.6 2,641.0 2,299.8 2,977.0 96.4 83.9 108.7 6% 43.1 49.5 38.2 8.3 8.6 9.2 10.9 9.5 0.2
Discretionary
Arvind 415 9,235.5 10,603.1 12,419.9 332.7 317.1 617.9 12.9 12.3 23.9 36% 32.2 33.7 17.4 6.8 10.7 8.6 15.1 2.4 0.6
Century Ply (I) 332 1,818.7 2,068.9 2,509.2 178.4 170.0 254.7 8.0 7.6 11.4 20% 41.4 43.4 29.0 15.0 18.5 22.0 26.5 1.0 0.3
Cox and Kings 241 2,179.4 2,394.5 2,774.5 327.8 429.6 500.1 19.4 25.4 29.5 23% 12.4 9.5 8.2 13.8 16.1 19.6 20.8 1.0 0.4
Info Edge (India) 1,299 802.1 910.9 1,084.9 208.4 280.5 329.5 17.2 23.2 27.3 26% 75.5 56.0 47.6 17.3 18.3 12.6 13.2 4.5 0.3
Inox Leisure 280 1,220.7 1,385.7 1,614.7 30.6 77.2 100.9 3.3 8.4 11.0 83% 85.0 33.4 25.5 14.4 16.2 12.3 13.8 0.0 0.0
KKCL 1,549 492.4 472.9 531.9 85.3 80.9 93.6 69.2 65.6 76.0 5% 22.4 23.6 20.4 19.8 20.7 21.5 22.5 19.0 1.2
Orbit Exports 153 130.5 146.2 175.4 20.1 22.7 29.6 7.1 8.1 10.6 22% 21.5 18.9 14.4 22.6 25.3 16.5 18.7 2.6 1.7
Relaxo Footwears 615 1,739.8 2,022.1 2,364.9 123.0 153.8 191.5 10.2 12.8 16.0 25% 60.3 48.1 38.4 26.0 23.4 17.2 14.7 1.0 0.2
Thomas Cook India 241 8,588.0 10,876.9 13,384.3 77.5 163.5 267.3 2.1 4.5 7.3 86% 114.9 53.6 33.1 15.3 24.9 10.2 14.9 0.4 0.2
Wonderla Holidays 381 270.4 287.0 349.4 33.7 47.3 61.4 6.0 8.4 10.9 35% 63.4 45.3 34.9 16.0 17.6 10.8 13.4 1.0 0.3
ZEEL 555 6,434.2 6,778.7 7,973.0 1,218.7 1,332.3 1,693.5 12.7 13.9 17.6 18% 43.7 40.0 31.6 22.5 25.2 17.4 19.0 2.5 0.5
Diversified / Miscellaneous
Bajaj Holdings 2,721 842.0 - - 2,473.2 - - 222.2 - - - 12.2 - - - - - - 32.5 1.2
Bharat Electronics 153 8,654.0 10,954.9 12,586.3 1,497.0 1,669.1 1,908.5 6.1 6.8 7.8 13% 25.1 22.5 19.7 20.6 21.5 15.0 15.7 2.3 1.5
Bharti Airtel 428 95,468.3 84,938.3 96,112.6 4,969.5 1,385.5 3,814.7 12.4 3.5 9.5 -12% 34.5 122.2 45.0 7.4 9.6 2.4 5.5 1.4 0.3
Gateway Distriparks 210 393.4 398.1 445.1 74.1 76.7 83.2 6.8 7.1 7.7 6% 30.8 29.8 27.4 7.6 9.1 7.6 8.7 7.0 3.3
PI Industries 882 2,276.8 2,351.3 2,695.4 459.4 376.0 476.7 33.4 27.3 34.6 2% 26.4 32.3 25.5 20.1 21.6 21.2 22.5 4.0 0.5
Ratnamani Metals 963 1,476.2 1,710.9 2,121.4 144.5 147.5 203.1 31.1 31.8 43.8 19% 31.0 30.3 22.0 17.7 21.6 12.2 15.0 5.5 0.6
Supreme Industries 1,192 4,462.3 4,983.8 5,747.9 376.7 367.7 466.0 29.7 29.0 36.7 11% 40.1 41.1 32.5 23.2 27.5 19.0 20.8 15.0 1.3
UPL 714 16,312.0 17,701.8 19,820.9 1,806.1 1,890.8 2,346.5 35.8 37.4 46.5 14% 20.0 19.1 15.4 16.6 17.7 23.3 24.0 7.0 1.0
Note:
Crompton Greaves is in the process of selling its overseas power system business by Q4FY2016. Hence, we have not estimated the FY2017 numbers
Aurobindo Pharma post 1:1 bonus Divis Labs post 1:1 bonus
Cadila Healthcare post stock split from Rs 5 to Rs 1 Godrej Consumer Products post 1:1 bonus
M&M post 1:1 bonus Grasim- Changed reporting to standalone financial numbers

Remarks
Automobiles
Apollo Tyres  Apollo Tyres Limited (ATL) is the market leader in the truck and bus tyre segments with a 28% market share in
India. Domestic operations of the company contribute about 65% to the topline and are poised to grow in double
digits, led by strong demand in the commercial vehicle (CV) segment. The MHCV segment, forming about 65%
of domestic demand, has seen strong growth led by pickup in the OEM and aftermarket space. Better economic
growth translating into increased freight demand coupled with higher demand from the infrastructure segment is
driving strong double-digit volume growth for the MHCV industry. Further, with imposition of anti-dumping duty
on Chinese radial truck tyre imports and increased customs duty on radial tyre imports from 10% to 15%, domestic
tyre players such as ATL have benefited. We expect ATL to deliver a robust 19% PAT CAGR over the next two
years. Further, the recent correction in stock prices gives a better price point to enter the stock. We upgrade our
recommendation on the stock from Hold to Buy, with an unchanged PT of Rs. 292.
Ashok Leyland  Ashok Leyland Limited (ALL), the second largest CV manufacturer in India, is a pure play on CV. The CV industry
is poised for healthy growth in FY2018. The MHCV industry bounced back sharply, reporting growth of 20% and
42% in Q2FY2018 and Q3FY2018, respectively. Improved economic growth, higher government spending on
road construction, increased mining activities and higher run-time of trucks post introduction of the unified GST
regime have led to robust demand for the MHCV industry. Further, Finance Ministry has approved the vehicle
scrappage policy for commercial vehicles older than 15 years of age. As per the draft policy, vehicles bought
on or before March 31, 2005, would be eligible for scrapping. Therefore, about 11 lakh MHCVs would qualify for
scrappage. This signifies the humungous size of opportunity for MHCV players, given the current industry size
of 4 lakh units. We expect MHCV volumes of ALL to report a 14% CAGR over FY2018-FY2020. LCV demand has
improved substantially post GST rollout. Increased proliferation of hub and spoke model post GST has increased
the demand for last mile connectivity, thus boosting LCV demand. Further ALL has concrete plans of widening the
product portfolio in the LCV space by introducing a product every six months. Given the huge opportunity post
the scrappage scheme and the expected traction in LCV space, ALL is the best stock to play the MHCV upcycle.
We retain our Buy rating on the stock with a revised price target of Rs. 170.
Bajaj Auto  Bajaj Auto Limited (BAL) is a leading motorcycle and three-wheeler (3W) manufacturer with a significant presence
in export markets. In the domestic market, it is a leader in the premium motorcycle segment. After two consecutive
years of volume decline, Bajaj Auto has recently seen recovery in export volumes.. With the recent surge in crude
prices (crude prices have surged 50% in the past seven months), demand in key markets, including Africa is
gaining traction. Nigeria, which is one of the significant markets for BAL, has staged a marked revival. Moreover,
other Asian countries such as Philippines and ASEAN markets are gaining traction. Export volumes are expected
to grow by 13% in FY2019. We expect BAL to report 12% volume growth for FY2019. We have maintained our
earnings estimates for FY2019. We retain our Buy rating on the stock, with an unchanged PT of Rs. 3,625.
Gabriel India  Gabriel India Limited (GIL) is one of India’s leading manufacturers of shock absorbers and front forks with a
diversified customer base. Overall demand situation for the passenger segment (2W and passenger cars) has
improved significantly, as key concerns around GST rollout have been addressed. The transitory impact of new
emission norms (for 2W) has also been put behind. OEM is the key segment for GIL, forming about 85% of overall
revenue. GIL reported a decline in its margins for Q3FY2018, which was a third consecutive quarter of margin
drop, defying the strong revenue growth of 18%. GIL has been adding manpower and creating infrastructure
to enhance its distribution network in the aftermarket space. Moreover, the company has increased its R&D
expenses to focus on new product introductions and has increased considerable headcount in this space. Going
ahead, we expect cost increases to be structural in nature, which would thus restrict margin improvement. We
expect margins to remain at similar levels in FY2017. We downgrade our recommendation on the stock from Buy
to Hold, with a revised price target of Rs. 175.
Hero MotoCorp  Hero MotoCorp Limited (HMCL) is the largest 2W manufacturer in the world. The company reported sales of
over 6.6 million vehicles in FY2017 and a domestic market share of 39%. Driven by positive rural sentiments on
account of Good progressing Rabi season and higher MSPs would augment farm incomes, leading to sustained
higher demand. Further, increased sops in the recent Union Budget for the rural segment would maintain the
positive demand momentum for the industry. Management expects the 2W industry to grow in double digits for
FY2019. Hero is expected to grow broadly inline with the industry. Further, OPM is expected to sustain at current
levels of 15-16%. We maintain our Buy rating on the stock with an unchanged PT of Rs. 4,200.
M&M  M&M is a leading manufacturer of tractors and utility vehicles (UV) in India. Tractor volumes of the company grew
impressively by 23% for FY2017Going ahead, M&M expects the growth momentum to continue for tractor sales.
Some key measures announced in the budget include assured prices (higher MSPs in the form of 1.5x of the cost
for crops going ahead) and increased allocation for rural credit, which are expected to have a positive effect on

tractor sales. Positive rural sentiments coupled with a slew of new product launches lined up would boost tractor
volumes. Thus, we expect the auto segment’s volumes to post a CAGR of 11% over FY2018-FY2020, driven by
new product launches, which would help it regain market share. We expect overall volumes of M&M to post a 10%
CAGR over the next two years. We retain our Buy rating on the stock with a revised price target of Rs. 840.
Maruti Suzuki  Maruti Suzuki India Limited (MSIL) is India’s largest passenger vehicle (PV) manufacturer. The company reported a
strong 47% market share as of FY2017. On account of the strong successes of recent launches, MSIL has gained a
leadership position across the passenger vehicle segment, viz. cars, utility vehicles and vans. Further, the company
has plans to reintroduce Swift in February 2018 on a new platform and has planned several refreshes across the
product range. MSIL is ramping its Gujarat capacity to meet the growing demand (production has doubled to
about 20,000 per month) and the company is planning to open the second line with capacity of 250,000/annum
by Q3FY2019. MSIL is ramping its Gujarat capacity to meet the growing demand (production has doubled to
about 20,000 per month) and the company is planning to open the second line with capacity of 250,000/annum
by Q3FY2019. We expect MSIL to continue outpacing industry growth and report a 12% volume CAGR over
FY2018-FY2020. Further, the board of MSIL has approved a revision in the method of royalty calculation, which
would result in lower royalty on new models beginning Ignis. MSIL is well poised to fortify its leadership position
across the passenger vehicle segment. Maruti Suzuki is amongst our top picks in the automotive space. We
maintain Buy with a revised PT of Rs. 11,085.
Rico Auto  Rico Auto (Rico) is one of the largest producers of high-pressure non-ferrous die castings for the auto sector.
The company has secured project orders worth Rs. 1,900 crore. These orders are executable over a project
life of about 5-6 years. The order book implies execution of orders worth Rs. 350 crore on an annual basis,
thus strongly improving topline visibility. Further, management is witnessing strong traction in the defence and
aftermarket space. Given the robust order book and new growth avenues, management expects topline to report
over a 20% CAGR during FY2018- FY2020. Rico would soon be introducing new products, which are part of the
recent order wins. As per management, the new products command better margins (in excess of 15%). Further,
increased contribution from the high-margin defence and aftermarket segments would aid in margin expansion.
Management is aiming at 100-150 bps annual margin expansion and aims to reach 15% margin level in the next
3-4 years as against 10.7% margin in FY2017. Further, given the margin improvement on account of a better
product mix, we expect Rico to report robust 35% earnings growth over FY2018-FY2020. However the project
order wins would be executed from H2FY2019 and would be ramped up gradually in a phased manner with the
management expecting peak execution worth Rs 400 cr in FY2022. We maintain our Buy rating on the stock with
a revised PT of Rs. 115.
TVS Motor  TVS Motor (TVSM) is the fourth largest 2W manufacturer in the country with a strong presence in the scooter
segment. Over the past couple of years, the scooter segment’s growth has surpassed that of the motorcycle
segment’s. With sustained demand for recent launches and planned new launches (it plans to launch a new
motorcycle and scooter in Q4FY2018), we expect TVSM to continue outpacing the industry’s growth. Apart
from the domestic market, the recent surge in crude prices (prices have increased by 50% in the past seven
months) has improved the export outlook for the company and it expects strong double-digit volume growth in
the medium term. Secondly, cost-control initiatives in the form of better vendor negotiation in the wake of strong
volume growth and better pricing power owing to strong brands would also help margin improvement. Further,
the TVSM product mix is expected to improve, given increased share of the high-margin, non-moped segment.
TVSM would lead the earnings growth pack for the 2W industry, given market share gains and scope for margin
improvement. We expect TVSM to report a 43% earnings CAGR over FY2018-FY2020. TVSM is our preferred pick
in the 2W segment. We maintain Buy on the stock with a PT of Rs. 825.
Banks & Finance

Axis Bank  Axis Bank is the third-largest private sector bank, which continues to grow faster than the industry and has
diversified its book in favour of the retail segment (~40% of loans in the retail segment). The bank’s liability
profile has improved significantly, which would help sustain margins at healthy levels. We expect earnings growth
to remain reasonably strong, driven by healthy operating performance. Though asset quality pressures have
emerged as pain points due to exposure in the infrastructure and steel sectors, we expect the stress to persist in
the near term.
Bajaj Finance  Bajaj Finance, owned by Bajaj Finserv, is a fast-growing, well-diversified leading NBFC in the country. The
company has assets spread across products, viz loans for consumer durables, 2Ws and 3Ws, loans to small and
medium enterprises (SME), mortgage loans and commercial loans. Apart from its strong loan growth, the asset
quality and provisioning for Bajaj Finance remain among the best in the system. Given the strong growth rate,
high margins and return ratios, its premium valuations within the NBFC space are justified.

Bajaj Finserv  Bajaj Finserv is a financial conglomerate present in the financing business (vehicle finance, consumer finance and
distribution) and is among the top players in the life insurance and general insurance segments. Consumer finance
(Bajaj Finance) and general insurance businesses of the company continue to report a robust performance, while
the life insurance business is showing signs of an uptick, after being affected by a change in regulations.
Bank of Baroda  Bank of Baroda is among the top public sector banks (PSBs) having a sizeable overseas presence (over 100
offices in 24 countries) and a strong network of over 5,000 branches across the country. The company has a
stronghold in western and eastern India. Performance metrics of the company remain better than that of other
PSBs and asset quality has deteriorated in-line with RBI’s directive to clean the balance sheet.
Bank of India  Bank of India has a network of over 4,800 branches, spread across the country and abroad, along with a diversified
product and services portfolio, and steadily growing assets. Operating performance and earnings have eroded
significantly due to margin deterioration and a sharp rise in NPAs. Given the rise in the number of incremental
stressed loans and weaker capital position, valuations of the company may remain subdued.
Capital First  Capital First (erstwhile Future Capital Holdings) had been acquired by global private equity firm, Warburg Pincus
(with a 36% stake). The present management has taken several initiatives to tap the high-growth retail product
segments, such as gold loans, loan against property and loan against shares. The company has a strong capital
adequacy ratio (CAR) and sound asset quality. Loan book of the company is expected to sustain 25-30% growth
over the next three years. As a result of several initiatives taken in the recent past, the operating leverage will play
out and may lead to significant pick-up in profitability over the medium term.
Federal Bank  Federal Bank is among the better-performing old private sector banks in India with a strong presence in south
India, especially Kerala. Under the new management, the bank has taken several initiatives that will improve the
quality of its earnings and asset book. The asset quality has shown stress in the past few quarters. We, however,
expect a gradual improvement in NPAs and operating performance. Valuations seem attractive over the medium
to long term.
HDFC  HDFC is among the top mortgage lenders in the country providing housing loans to individuals, corporates and
developers. The company has interests in banking, asset management and insurance through its key subsidiaries.
As these subsidiaries are growing faster than HDFC, the value contributed by them would be significantly higher
going forward. Due to a dominant market share and consistent return ratios, the company should continue to
command a premium over other NBFCs. Any unlocking of value from its insurance business will be positive for
the stock.
HDFC Bank  HDFC Bank is among the top performing banks in the country having deep roots in the retail segments. Despite
the general slowdown in credit growth, the bank continues to report strong growth in advances from retail
products. Relatively high margins (compared with its peers), strong branch network and better asset quality make
HDFC Bank a safe bet with a scope for expansion in its valuations.
ICICI Bank  ICICI Bank is India’s largest private sector bank with a network of over 4,850 branches. The bank has made
inroads in to retail loans (~45% of the book) and has significantly improved its liability franchisee. Operating
profit improved significantly, though its exposure to some troubled sectors (such as infrastructure and steel)
led to increased pressure on asset quality. However, healthy growth in operating income and proceeds from
monetisation of its stake in various subsidiaries will help the bank to deal with its NPA challenges.
LIC Housing  LIC Housing Finance is one of the largest mortgage financiers in India with a market share of 11% and loan book
of over Rs. 1,00,000 crore. The company is promoted by Life Insurance Corporation of India, which is among the
most trusted brands in the country. With over 200 branches, 1,241 direct sales agents, 6,535 home loan agents
and 782 customer relationship associates, the company has one of the strongest distribution structures in India
to support business expansion. Going ahead, a revival in the economy and moderation in borrowing rates could
be key triggers for the stock. Therefore, considering stable RoE of ~20%, sound asset quality and healthy growth
outlook, the company’s fundamentals are strong.
Max India  Max India has demerged into three different entities, of which Max Financial Services will hold Max Life Insurance
(new Max IndiWa will hold Max Healthcare, Max Bupa Health Insurance and Antara businesses). Max Life Insurance
(held by Max Financial Services) is among the leading private sector insurers and has gained critical mass and
enjoys the best operating parameters in the industry. As the insurance sector is showing signs of stabilisation, the
company’s favourable product mix and a strong distribution channel will result in healthy growth in premiums and
profits.
PNB  Punjab National Bank (PNB) has strong liability mixes in the banking space, with low-cost deposits constituting
over 44% of its total deposits. This helps the bank maintain one of the highest margins among PSBs. However,
with the recent fraud coming into limelight, we expect the stock to remain under pressure and earnings to be
impacted by higher provisioning.

PFS  PTC India Financial Services, owned by PTC India, is focused on providing financial solutions to projects in the
energy value chain. Given the robust lending opportunities in the renewable energy segment and the likely
reforms in the thermal power segment, loan growth is expected to remain strong over the next 2-3 years.
The proceeds from exits in investments would add to profitability. Asset quality, despite some deterioration, is
manageable.
SBI  State Bank of India (SBI) is the largest bank of India with loan assets worth over Rs. 14 lakh crore. The successful
merger of the associate banks and value unlocking from the insurance business could provide further upside
for the bank. While the bank is favourably placed in terms of liability base and the operating profit is better than
peers, asset quality has emerged as a key pain point, which will affect earnings growth. PSU bank recapitalisation
plan by the government could benefit the bank to make up for capital requirements to promote growth.
Union Bank of India  Union Bank of India has a strong branch network and an all-India presence. The bank aspires to become the
largest retail and MSME bank. Hence, it has ramped up its manpower and infrastructure to ramp up retail and SME
lending. The bank’s asset quality challenges have come to the fore (mainly from the corporate portfolio), whereas
low tier-1 CAR also remains an area of concern.
Yes Bank  Yes Bank, a new generation private bank, started its operations in November 2004 and has emerged as one of
the top performing banks. The bank follows a unique business model based on knowledge banking, which offers
product depth and a sustainable competitive edge over established banking players. The bank is suitably poised
to ride the recovery in the economy and the retail deposit franchise is showing a sharp improvement, which will
support margins in the medium to long term.
Consumer goods
Britannia  Britannia is the second largest player in the Indian biscuit market with ~30% market share. Under a new leadership,
Britannia has been able to leverage and monetise its strong brand and premium positioning in the biscuits and
snacks segments. The company is well placed to sustain its higher-than-industry growth rate with an improving
distribution reach, deep penetration in rural India, enhanced international business, entry into newer categories
and focus on cost efficiency. Management is confident of regaining double-digit growth at standalone level in the
coming quarters.
Emami  Emami is one of the largest players in the domestic FMCG market with a strong presence in underpenetrated
categories such as cooling oil, antiseptic cream, balm and men’s fairness cream. With a revamped distribution
strategy, management expects Kesh King brand to post recovery in sales in the coming quarters. Management is
confident of achieving double-digit revenue growth in FY2019 on account of the expected improvement in rural
demand and a stable demand environment in urban India. The company has maintained its thrust in new product
launches and enhancing its direct distribution reach.
GSK Consumer  GSK Consumer Healthcare is a leading player in the malted food drinks (MFD) segment with ~70% share in the
domestic market. GSK Consumer posted good performance in Q3FY2018 with improved volume growth and
margins. We expect increasing penetration of low-cost packs of Horlicks-based brand in rural markets/small
towns; catering to premium and super premium health food drink (HFD) category through relevant launches and
sustained investment behind brands; and improving penetration in northern and western parts of India to drive
long-term growth for the company. In view of improved earnings visibility and discounted valuations, we upgrade
our rating on the stock to Buy.
GCPL  Godrej Consumer Products Limited (GCPL) is a major player in personal wash, hair colour and household insecticide
market segments in India. The recent acquisitions, i.e. Strength of Nature, Darling Group, Tura, Megasari and Latin
American companies, have helped the company expand its geographic footprint and improve growth prospects.
The strategy of sustained new product additions and enhanced distribution reach in the domestic market bode
well for the company to achieve double-digit revenue growth and stable OPM. On the international front, revenue
growth is expected to improve, with Africa and Indonesia business expected to see recovery in their performance
. Hence, we recommend a Buy rating on the stock with a PT of Rs. 1,250.
HUL  Hindustan Unilever is India’s largest FMCG company. In Q3FY2018, domestic business volume growth of HUL
stood at 11%, driven by normalisation in trade channels and pick-up in demand in both rural and urban markets.
The company has passed on the benefits of reduction in GST rates of essential items by offering price discounts/
grammage increase in about 800 SKUs of key products. This should further help in reporting good volume
growth in an environment of improving demand (especially in rural markets). However, more clarity will emerge
in the next one to two quarters, when base effect fades off. Though raw-material prices are increasing, margin
expansion would sustain and we expect margins to remain at 18-19% in the coming quarters. The current valuation
does not provide much upside. Hence, we maintain our Hold recommendation on the stock with a revised price
target of Rs. 1,440.

ITC  ITC has a strategy of effectively utilising the excess cash generated from its cash cow, the cigarette business,
to strengthen and enhance its other non-cigarette businesses. The recent cess hike on cigarettes will keep
cigarette sales volume under pressure in the near term. The non-cigarette FMCG business would see better
growth in the coming years, with an expected pick-up in rural demand. This, however, will not add substantially to
the company’s profitability. Hence, in view of the near term concerns on the cigarette business, we have a Hold
recommendation on the stock.
Jyothy Labs  Jyothy Laboratories Limited (JLL) is the market leader in the fabric whitener segment in India. Venturing into new
categories based on the ayurvedic platform and improvement in the reach of the existing product portfolio will
help JLL achieve double-digit earnings growth in the near to medium term. The stock has corrected by 12% in the
past one month. Thus, in view of the recent correction and better growth prospects, we upgrade our rating on the
stock from Hold to Buy, with an unchanged price target of Rs. 420.
Marico  Marico is among India’s leading FMCG companies. Core brands, Parachute and Saffola, have a strong footing in the
market. The company follows a three-pronged strategy, which hinges on expansion of its existing brands, launch
of new product categories (especially in the beauty and wellness space) and growth through acquisitions. Marico
is one of the strongest players in the domestic branded hair oil and edible oil markets, with a leadership position
in both the categories. Recovery in rural sales, sustained new product launches and distribution expansion would
help Marico to maintain steady volume growth in the coming quarters. With most of the international geographies
witnessing a recovery, we expect the international business to post better performance in the coming quarters.
Zydus Wellness  Zydus Wellness has a small product portfolio, consisting of just three brands (Nutralite, Sugar Free and Everyuth)
that cater to a niche category. Zydus Wellness has a strong portfolio of leading brands under its portfolio, which
are largely placed in low penetrated categories. Hence, most brands are likely to report double-digit revenue
growth in a stable market environment. Performance of Zydus Wellness has improved post the revamp of the
distribution system and enhanced marketing initiatives of key brands. With urban demand expected to remain
stable, we expect revenue and PAT of Zydus Wellness to post CAGRs of 14% and 16%, respectively, over FY2017-
FY2020. However, with the recent run-up in the stock price, the upside is limited from current levels. Hence, we
downgrade our rating on the stock from Buy to Hold.
IT/IT services
Firstsource  Firstsource Solutions Limited (FSL) is a specialised BPO service provider. Management expects strong net profit
growth of 25-30% y-o-y in Q4FY2018. Growth in net profit would also be aided by higher revenue growth in its
core businesses and improvement in OPM, led by better profitability in ISGN business and exit of loss-making units
of the domestic business. For FY2019, management has guided that it expects 35-40 BPS margin improvement
as against FY2018. Further, the deal pipeline is expected to grow at 7-8% in FY2019. Health of its balance sheet
is improving gradually, as the company is reducing its debt burden consistently through internal accruals. Any
favourable corporate event to unlock the value for minority shareholders would be an upside trigger.
HCL Tech  HCL Technologies has a leadership position in the engineering and research and development (ERD) and
infrastructure management services (IMS) space, which together account for ~58% of the company’s total
revenue. Management expects higher acceleration of revenue due to a healthy order book and strong pipeline
in the Mode 2 (Digital, Next Gen and Cloud) and Mode 3 services (Product and Platform). However, the company
foresees a slowdown in IMS services (38.6% of total revenue) to continue for the near term owing to ongoing
delays in the decision-making process for technological spending by clients. The company has not shied away
from taking the inorganic route to strengthen its offerings. Additionally, management has made investments in
digital technologies (DRYiCE), which will catapult the company to the next level of growth during the ongoing
digital transition. We remain positive on the company in view of its large order wins, aggressive bets in ERD
space, accelerated pace of investments in the products segment and superior earnings visibility.
Infosys  Infosys is India’s premier IT and ITeS company that provides business consulting, technology, engineering
and outsourcing services. After the appointment of Mr. Nandan Nilekani as the non-executive chairman of the
board, we see some respite in the ongoing tussle between the founder and board. Infosys has anounced the
appointment of Salil Parekh as CEO and MD of the company for five years, effective January 2, 2018. He has
rich experience in the consulting/IT outsourcing business and has managed similar assignments in the past. The
newly appointed CEO will review the refreshing strategy and lay out the priorities of the strategic roadmap for
Infosys in the investor meet in April 2018. However, we are concerned about steady execution under the new
management and the digital transformations strategy. Thus, we maintain our Hold rating on the stock.
Persistent  Persistent Systems has proven expertise, strong presence in newer technologies, strength to improve its IP
base and a decent margin profile, all of which sets it apart from other mid-cap IT companies. PSL is focusing on
the development of Internet of Things (IoT) products and platforms, as it sees significant traction from industrial
machinery, SmartCity, healthcare and smart agriculture verticals. Further, led by the alliance with IBM to build IoT
solutions for IBM’s Watson platform and re-sell agreement with IBM, we expect revenue momentum to accelerate
in FY2019 and margin improvement in the coming quarters due to the initiatives taken by the company.

TCS  Tata Consultancy Services is among the pioneers of the IT services outsourcing business in India and is the
largest IT services firm in the country. Digital revenue grew by 29% y-o-y to $3 billion in FY2017. Given the positive
commentary on the retail vertical and continued growth momentum in the digital vertical, we expect earnings to
report a CAGR of 8.5% over FY2017-FY2020. However, given the regulatory overhang (US tax reforms impact)
and sluggish pick-up in spend in the BFSI segment (32% of total revenue), we maintain our Hold rating on the
stock.
Wipro  Tata Consultancy Services is among the pioneers of the IT services outsourcing business in India and is the
largest IT services firm in the country. Digital revenue grew by 29% y-o-y to $3 billion in FY2017. With annual
revenue run-rate of $4 billion from the digital business, management highlighted that digital revenue is expected
to touch 30-33% of total revenue over the next couple of years from the current level of 22.1%. Given the positive
commentary on the retail vertical and continued growth momentum in the digital vertical, we expect earnings to
report a CAGR of 8.5% over FY2017-FY2020. However, given the regulatory overhang (US tax reforms impact)
and sluggish pick-up in spend in the BFSI segment (32% of total revenue), we maintain our Hold rating on the
stock.
Capital goods/Power
CESC  CESC is the power distributor in Kolkata and Howrah (backed by 1,225MW of power generation capacity)
which is a strong cash generating business. Further, 600MW of regulated generation capacity (to serve Kolkata
distribution) has come on stream recently in Haldia. Also its 600MW thermal power project at Chandrapur has
signed PPA and started operating. The losses in the retail business are coming down gradually over the past and
it is expected to break-even soon. The BPO subsidiary, Firstsource, is performing well in-line with expectations.
However, the recent diversification into unrelated businesses like IPL franchisee would hurt its valuations. CESC
has announced the demerger of the business into four verticals namely Power Distribution, Power Generation,
Retail and IT Outsourcing. The restructuring looks beneficial for minority shareholders optically. However, we
await clarity on the financials of the demerged companies
CG Power & Ind. Solutions  Key businesses of CG Power and Industrial Solutions - industrial and power systems - are going through a rough
patch and are potential beneficiaries of the upcoming investment cycle revival. Moreover, the company is looking
to unlock value by selling its international subsidiaries.
Finolex Cables  Finolex Cables, a leading manufacturer of power and communications cables, is set to benefit from an improving
demand environment in its core business of cables. The company is leveraging its brand strength to build a high-
margin consumer product business. The company has recently launched fans and switch gears. The company
is planning to launch water heaters soon. The addition of new products in its product portfolio could prove to be
the next growth driver. We anticipate healthy earnings growth, return ratios in high teens and superior cash flows,
which bode well for the stock. Therefore, we remain positive on the stock.
Greaves Cotton  Greaves Cotton Limited (GCL) is a mid-sized and well-diversified engineering company. Core competencies of
the company are in diesel/petrol engines, power gensets, agro engines and pump sets (engine segment). The
aftermarket and genset businesses (accounting for about 35% of revenue) are poised to grow in strong double
digits (15-16%) over the next two years. The multi-brand aftermarket segment will drive growth on account of new
product additions. Moreover, the company is introducing new products in the genset segment. However, the 3W
automotive diesel engine business (contributing 40% to the topline) will continue to face headwinds. Demand
shift towards 4W goods carriers, alternative fuels such as CNG and electric vehicles where GCL has limited or
no presence will create structural growth issues for GCL. We expect revenue to grow at 8% in FY2019, similar to
the growth likely in FY2018. Furthermore, management has guided for higher raw-material pressures for the next
two quarters, which could translate in sustained margin pressures. We retain our Hold rating on the stock with a
revised price target of Rs. 143.
Kalpataru  Kalpataru Power Transmission is a leading EPC player in the power transmission and distribution space in India.
Opportunities in this space are likely to grow significantly, thereby providing healthy growth visibility. OPM of the
standalone business is likely to remain around 10%, while OPM of JMC Projects (a subsidiary) is showing signs of
improvement. We see some value-unlocking potential from the sale of assets or listing of new business in future.
We remain positive on the stock.
KEC  KEC International is a Global Power Transmission Infrastructure EPC major. It has presence in the verticals of
Power T&D, Cables, Railways, Water, Renewable (Solar Energy) and Civil. Globally, the company has powered
infrastructure development in more than 61 countries. KEC is a leader in Power Transmission EPC projects
and has more than seven decades of experience. Over the years, it has grown through the organic as well as
inorganic route. We estimate the company’s OPM to improve to ~ 10% and D-E ratio to improve to 0.4:1 by the end
of FY2020E; we retain our Positive outlook on the stock.

PTC India  PTC India is a leading power trading company in India with a market share of 35-40% in the short-term trading
market. Over the past few years, the company has made substantial investments in areas such as power generation
projects and power project financing, which will start contributing to its earnings. We retain our positive stance on
expected healthy volume uptick, with an increasing share of long-term contract business.
Skipper  Skipper is uniquely placed to exploit the growing opportunities in two lucrative segments: power (transmission
tower manufacturing and EPC projects) and water (PVC pipes). The company had a comfortable order book of
Rs. 2,640 crore at the end of Q1FY2018 in the transmission business, which looks promising given the huge
investments proposal by the government in the power T&D segment over the next five years. The company has
expanded the PVC capacity manifold (4x) and aspires to turn into a national player from a regional player.
Thermax  The energy and environment businesses of Thermax are direct beneficiaries of the continuous rise in India Inc’s
capex. Thermax Group’s order book stands around its consolidated revenue. However, the company has shown
an ability to maintain double-digit margins in a tough macroeconomic environment. We retain our Hold rating on
the stock due to its rich valuation.
Triveni Turbines  Triveni Turbines (TTL) is a market leader in 0-30MW steam turbine segment. TTL is at an inflexion point with
a strong ramp-up in the after-market segment and overseas business while the domestic market is showing
distinct signs of a pick-up. The company has also formed a JV with GE for steam turbines of 30-100MW range
which is likely to grow multi- fold in the next 4-5 years. TTL is virtually a debt-free company with a limited capex
requirement and an efficient working capital cycle, reflected in very healthy return ratios. Further, boosted by the
expected uptick in the domestic capex cycle, the company’s earnings are likely to grow by 6% per CAGR from
FY2017-FY2019E.
V-Guard  V-Guard Industries is an established brand in the electrical and household goods space, particularly in south
India. Over the years, it has successfully ramped up its operations and network to become a multi-product
company. The company has a strong presence in the southern region. It is also aggressively expanding in non-
south markets and is particularly focusing on tier-II and III cities where there is lot of pent-up demand for its
products. We remain Positive on the stock.
Va Tech Wabag  VA Tech Wabag (VTW) is one of the world’s leading companies in the water treatment field with eight decades
of plant-building experience. Given the rising scarcity of fresh water, we expect flow of huge investments in the
water segment, both globally and domestically. With rising urbanisation and industrialisation in India, we expect
substantial investments in this space. Given the large opportunity ahead and inherent strengths of VTW, such as
professional management, niche technical expertise and global presence, we remain positive on the stock.
Infrastructure/Real estate
Gayatri Proj  Gayatri Projects is a Hyderabad-based infrastructure company with a strong presence in irrigation, road and
industrial construction businesses. Order book of the company stands at Rs. ~14,000 crore, which is 5x its TTM
revenue. Further, the company expects to sustain 30%+ topline growth over the next 3-4 years with OPM around
15%. The company has completed its power and road BOT portfolio and plans to unlock value by offloading stake
to private equity. The company has the potential to transform itself into a bigger entity.
IRB Infra  IRB Infrastructure Developers is the largest toll road BOT player in India and the second largest BOT operator in
the country with all its projects being toll based. The company has an integrated business model with an in-house
construction arm, which provides a competitive advantage in bidding for larger projects and captures the entire
value from BOT assets. Further, the company has a profitable portfolio as majority of its operational projects have
become debt-free and are present in high-growth corridors, providing it a healthy cash flow. Thus, the company is
well poised to benefit from the huge opportunity in road development projects on account of its proven execution
capabilities and scale of operations.
Jaiprakash Asso  Jaiprakash Associates has been facing earnings pressure across business verticals. The company has just
concluded its cement asset sale worth Rs. 16,000 crore and transferred 1,000 acres worth Rs. 13,000 crore to an
SPV, which will reduce its debt burden. Going ahead, the company will be focusing primarily on EPC business and
balance portfolio of business verticals and aim to reduce its debt further. The current business restructuring has
led to a cautious view on the stock.
L&T  Larsen & Toubro (L&T), being the largest engineering and construction company in India, is a direct beneficiary of
the domestic infrastructure capex cycle. The company is expected to perform well, backed by its sound execution
track record and healthy order book. Monetisation of the non-core businesses will continue for some time, leaving
scope for further value unlocking. Measures planned by the company to improve its return ratios augur well.
Hence, we remain positive on the stock.

NBCC  NBCC (India), a Navratna public sector enterprise is notified as a Public Works Organisation (PWO), which gives
it a unique eligibility to bag orders on a nominated basis from government departments and PSUs. NBCC has
already amassed a huge order book, which gives it a strong revenue visibility for the next five years. Moreover,
future prospects look much brighter, given the opportunities from multiple areas such as redevelopment of old
government colonies in Delhi, Rajasthan and Odisha, development of government lands, Smart Cities, ‘Housing
for All 2022’ and ‘Amrut’. We remain positive on the stock considering the huge competitive advantage, a unique
business model, high return ratios and healthy cash flows.
Sadbhav Eng  SEL is engaged in 1) EPC business for transport, mining and irrigation sectors and 2) development of roads and
highways on BOT basis through SIPL. SEL has a healthy order book of Rs. 9,644 crore (2.7x its TTM revenue, with
presence in 11 states). The company has robust in-house integrated execution capabilities with qualified human
resource and owned equipment. We expect SEL to benefit from improved order execution, enhanced order
inflows (particularly from the transport segment) and resolution of working capital issues, resulting in a sturdier
balance sheet. Further, improving outlook for the Indian road sector and limited competitive intensity augur well
for SEL since it is present in both, asset creation and EPC verticals.
Oil & Gas

Oil India  Oil India has several hydrocarbon discoveries across reserves in Rajasthan and the north-eastern region of
India. The company holds 2P (proved and probable) reserves of 79 mmt for oil and 124 mmtoe for gas. Reserve-
replacement ratio of the company is also healthy. The recent increase in oil price and gradual revival in production
has improved the earnings outlook. Operational performance of the company is healthy and the stock offers high
dividend yield.
Petronet LNG  Petronet LNG is the largest LNG re-gasifier in India with 15 mmt LNG terminal at Dahej and 5 mmt LNG terminal at
Kochi. The company enjoys a competitive edge compared to other LNG import terminals given its low tariff and
long-term contracted volume with use or pay clause. We expect Dahej terminal to operate above 100% utilisation,
given its competitive edge and resolution of pipeline connectivity issues in southern India are expected to
improve utilisation for Kochi terminal. Petronet LNG would be the key beneficiary of rising share of LNG in India’s
overall gas consumption.
Reliance Industries  Reliance Industries has one of the largest and complex refining businesses in India and enjoys a substantially
higher refining margin over the benchmark GRM. We expect GRM to remain healthy and the petrochem margin
to be maintained in the medium term on an uptick in domestic demand. Capex in the downstream business
(incremental capacity in the petchem business and petcoke gasification in refining) would be the key earnings
driver in the coming years. Large investment in Reliance Jio could add value in the long term.
Selan Exploration  Selan Exploration Technology is an oil E&P company with five oil fields in the oil-rich Cambay basin of Gujarat.
Initiatives to monetise oil reserves in its Bakrol and Lohar oil fields will improve production. However, challenges
related to monetisation of its large hydrocarbon reserve base and near-term production ramp-up issues are likely
to be an overhang on the stock in the near to medium term.
Pharmaceuticals
Aurobindo Pharma  Aurobindo Pharma is set to post healthy growth on account of ramp-up in the U.S. and European markets, thanks
to a strong product pipeline built over a period and focus on niche segments such as injectibles, hormones,
penems and sterile products. The expected increase in the export-led business and a favourable tilt in revenue
mix are likely to boost margins, resulting in faster earnings growth as compared to revenue. Management has
indicated that pricing pressure in the US is easing. There is good traction in Europe and ROW businesses. Hence,
margins are likely to improve. Management has guided for the launch of over 25 products (more approvals of
complex products) in the coming years, which will help Aurobindo Pharma to achieve higher growth and mitigate
the increasing pricing pressure in the U.S. market.
Cadila  Cadila management has guided for product approvals of 40+ ANDAs and expects to launch 25+ products in
FY2019. According to management, these launches will witness a pick up from Q4FY2018. However, we expect
the full benefit of these launches and monetisation of new approvals to drive US growth over FY2019E-FY2020E.
Cadila is prioritising critical launches, which should support margin expansion over the next few quarters.
Cipla  Management maintains guidance of double-digit growth in the US and India business despite a challenging
environment on account of new product launches planned for FY2018 and FY2019 (one niche product every
quarter). The company expects gRenvela, gDacogen and gPulmicort to ramp up in Q4FY2018 and boost sales.
The company has also launched Sereflo (fluticasone and salmeterol) in the UK and Australia, which will fully start
contributing to sales from FY2019. Cipla has an exhaustive pipeline of inhalers and complex generics, which has
a huge market size. These opportunities will give an escalated growth trend to revenue and will give a boost to
the topline in the long run.

Divis Labs  Successful resolution of an import alert and warning letter in a short span is a big positive for Divis. During
Q3FY2018, USFDA lifted import alert from Unit-2 at Vizag and Divis received Establishment Inspection Report
(EIR) for the same facility. Hence, Unit-2 is completely out of the warning letter and import alert, thereby assuring
regular supplies without third party verification delays. Consequently, we expect the overall business to improve
from Q4FY2018 and resume normalcy from FY2019. Moreover, two blocks at Unit-1 will be commercialised by
H2FY2019 and the new plant at Vizag is likely to be completed in FY2019. Thus, with no additional remediation-
related costs and regular supplies and capacity expansion coming on stream, we expect performance of the
company to improve from the upcoming quarter.
Glenmark Pharma  Management was cautious in its outlook, as there is significant pricing pressure in the US base business (increased
to 13% from 10-12% earlier) due to consolidation of players and increasing competition, which will continue for at
least five more quarters. Although there are few more significant opportunities, which fall in FY2018 and FY2019,
we feel pricing pressure in the US base business, limited visibility of margin expansion, increasing capex and
R&D cost and lower-than-expected debt reduction (Rs. 300 crore in FY2018) will remain a key overhang in the
near term. Timely monetisation of key products and big licensing deals in the R&D business will be key positive
triggers to watch out for. In addition, update on Form 483 for its Baddi unit is a crucial trigger to monitor.
Lupin  Management of Lupin indicated that remediation at two plants under warning letter will be completed by Q4FY2018
and, thereafter, USFDA shall be invited for re-inspection. Since there are two facilities under the warning letter,
there is chance that both need resolution for the letter to be lifted. Hence, resolution could take 9-12 months.
We feel Lupin could face few more tough quarters as there is elevated pricing erosion, risk of competition in key
products, such as Minastrin, fortamet and glumetza, and delay in key product approvals (25-30% of products are
filed from two facilities under warning letter). Hence, we expect recovery in sales of the US business to take time
and operating margin for FY2018 and FY2019 to remain at 20-21%. In addition, tax rate for two years is likely to
be at 28-30% (vs. earlier guidance of 25-28%).
Sun Pharma  Sun Pharma recently announced that the USFDA has accepted its New Drug Application (NDA) for OTX-101
(cyclosporine A, Ophthalmic solution), marking an important developmental milestone for its dry eye candidate. The
acceptance of NDA is positive from the company’s efforts to build its speciality pipeline in the U.S. Remediation at
Halol plant has been completed. Approval of Tildrakizumab (likely in March 2018) will be another key monitorable
in the near term (possibility of delay in approval will act negatively), which shall also be closely monitored.
Torrent Pharma  Management is confident of double-digit growth for the domestic business for the next two years. On the US
front, management guides launch of 8-10 ANDAs in FY2019 and expects few of these launches to be meaningful
(US$5 million-20 million). Torrent continues to guide for volume pick-up, as it optimises utilisation of Dahej facility,
while freeing up capacity at Indrad.
Building materials
Grasim  Grasim is better placed compared to other large players in the cement space owing to its strong balance sheet,
comfortable debt/equity ratio, attractive valuation and diversified business. The full ramp-up of the Vilayat plant
(increasing capacity to 804,000 tonne) is likely to aid VSF volumes going ahead, though prices may soften in
the near term. Further, the merger of Aditya Birla Chemicals India Ltd. (ABCIL) and expansion in the caustic soda
division are likely to maintain strong performance in the chemical division. On the cement front, the company
expects demand to pick up in the near term, while slow execution of government projects and surplus inventory
remain areas of concern.
The Ramco Cements  The Ramco Cements, one of the most cost-efficient cement producers in India, will benefit from capacity addition
carried out ahead of its peers in the southern region. The company is mulling over the expansion of its satellite
grinding capacity from 4 mtpa to 7.1 mtpa at a cost of Rs. 1,095 crore. The expansion aims to strengthen reach
in Andhra Pradesh, West Bengal and North Eastern states. The company has reaped the benefits through cost-
saving measures, besides constantly reducing debt, which has led to improved profitability. In a nutshell, better
volumes, cost efficiencies and reducing leverage have yielded benefits.
Shree Cement  The expansion plan of Shree Cement to reach 40 mtpa by FY2019 (currently 29.3 mtpa) and increasing
geographical footprint in the eastern and southern regions is likely to aid better volume growth going ahead.
Pricing discipline in the cement business should help improve realisations over FY2018 to FY2020. However,
increased cost structure (power and freight cost) affecting operating margins and higher effective tax rate are
likely to limit net earnings growth in the near term.
UltraTech Cement  UltraTech Cement is India’s largest cement company. The capacity is expected to reach 95.4 mtpa by the end of
FY2019. We expect UltraTech to report industry-leading volume growth on account of timely capacity expansion
(acquisition of Jaypee Group’s cement assets) and likely revival in demand (with the start of affordable housing
projects and enhanced spending on infrastructure development). However, rise in the cost of petcoke and diesel
along with integration of Jaypee Group’s cement asset integration pose a near term risk to operating margin.

Discretionary consumption
Arvind  Arvind is one of India’s leading vertically integrated textile companies with an experience of more than eight
decades in the industry. The company has switched itself into the branded retail space by enhancing its branded
portfolio. Arvind is a licensee for marketing various marquee global brands in India such as Arrow, US Polo,
Tommy Hilfiger, and Calvin Klein. The company also operates specialty retail stores under licensee brands
such as GAP, The Children’s Place, Aeropostale and Sephora. The company is also present in the retail space
through Unlimited and The Arvind stores. Management proposes to demerge its branded, retail and engineering
businesses as both these have matured enough to enhance their growth prospects in the coming years. Moreover,
listing these businesses as separate entities will help create value for the businesses, as separate leadership and
development of best strategies for the business will enhance focus.
Century Plyboards  Century Plyboards is a leading player in the organised plywood industry with a market share of 25%. Strong
growth in the sector, Century’s premium positioning and brand equity strength and the successful rollout of GST
would enable it to report revenue CAGR of 15.2% over FY2018E-FY2019E. Earnings are likely to report a 29.8%
CAGR over FY2018E-FY2019E on account of revenue growth and better absorption of fixed costs. We believe
structural growth triggers for Century Plyboards are becoming visible due to: 1) GST implementation (expected to
result in a shift of market share to organised players from unorganised players, as they lose cost advantage); 2)
the government’s relentless focus on affordable housing; and 3) MDF unit getting operational in tandem with GST
implementation.
Cox & Kings  Cox & Kings is an integrated player in the tourism and travel industry, with a strong presence in the global leisure
travel segment and the education tourism segment in Europe. The company has a 30% market share in the global
outbound tourism market. Domestic leisure travel and Meininger Hotels have maintained strong revenue growth
momentum, while the international leisure travel business is in the recovery mode. Bookings in the education
business have increased by 6% on a y-o-y basis. Reduction in debt continues to reduce stress on the balance
sheet and makes it a better play in the travel and tourism space. Hence, we maintain our Buy recommendation
on the stock with unchanged price target of Rs. 325.
Info Edge (India)  Info Edge is India’s premier online classified company in the recruitment, matrimony, real estate, education and
related service sectors. Naukri.com is a quality play and is directly related to GDP growth and internet/mobile
penetration. Management believes the impact of RERA has bottomed-out and the revival can be expected in
major cities such as Mumbai and Pune. Thus, the company has started discussions with potential developers
and spending more on marketing (Q3FY2018 vs. earlier) in anticipation that the registered brokers/developers
in major cities will start spending more to meet the pent-up demand. The ramp-up in promotional expenses will
weigh on 99acres’ profitability performance. We continue to derive comfort on Info Edge’s business strength,
with leading market share in key businesses. We expect its earnings trajectory to catch up, as macro headwinds
subside.
INOX Leisure  INOX Leisure Limited (ILL), India’s second largest multiplex operator with 122 properties and 488 screens across
60 cities (accounting for about 20% of the multiplex screens in India), is scripting a blockbustre growth story
through a mix of inorganic and organic expansion plans. The ILL mega show is supported by an improving
content quality in the Indian mainstream and regional cinema with its movies regularly hitting the Rs. 100 crore or
Rs. 200 crore box-office collection mark. FY2017 was a difficult year for Inox and management expects FY2018
to be a better year, underpinned by a strong content pipeline and improvement in other operating metrics. We
continue to remain positive on ILL from a long-term perspective, given its pan-India growth plans, healthy balance
sheet (lower financial leverage) and potential benefits from GST rollout.
KKCL  Kewal Kiran Clothing Limited (KKCL) is a branded apparel play with four brands in its kitty. Killer, its flagship denim
brand, has created a niche in the minds of consumers. The performance of Q3FY2018 was subdued mainly
due to a lower pricing environment. To increase sales, the company had revised its strategy in the last quarter,
which we believe will put some pressure on the working capital in the near term and would result in increased
short-term debt. Thus, citing the near-term headwinds in terms of lower bargaining power, we maintain our Hold
recommendation with a revised price target of Rs. 1,950.
Orbit Exports  Orbit Exports (Orbit) is a leading manufacturer and exporter of novelty fabrics, exporting its products to over
32 countries. The company is a recognised star export house and operates in the niche area of high-end fancy
fabrics, which are mainly used by designers in women’s fashion apparels. Management indicated that the Latin
American business has started recovering and good performance can be expected in the coming quarters. The
Middle East business is, however, expected to remain under pressure. The high-margin Ribbons & Made-ups
business is expected to grow in strong double digits. Overall, management is confident of growing in mid-to-high
teens in the short to medium term. Further, Orbit has one of the better balance sheets in the textiles industry. We
expect it to improve further in the coming years. However, in view of near-term concerns in export markets, we
maintain our Hold rating on the stock.

Relaxo Footwear  Relaxo Footwear is present in the fast-growing footwear category, where it caters to customers with its four top-of-
the- mind recall brands, such as Hawaii, Sparx, Flite and Schoolmate. The company has emerged as an attractive
investment opportunity owing to its growing scale, strong brand positioning and healthy financial performance.
Relaxo has a superior portfolio of footwear brands and its relentless focus on driving sales through the expansion
of distribution and improving the brand presence augur well for the company to achieve good growth in the
backdrop of better demand environment. Moreover, GST implementation will be a key growth lever for Relaxo, as
a large part of the Indian footwear market is unorganised (~60%).
Thomas Cook (I)  Thomas Cook India Limited (TCIL), owned by value investor Prem Watsa, is an integrated leisure travel and human
service management company in India. FY2017 was a year of integration for the travel and HR businesses of TCIL.
With recent acquisitions in the domestic and international markets, the travel and related business and HR business
would remain key growth drivers in the near term. The foreign exchange business will continue to complement
the travel and travel-related services businesses in the long run. We maintain our Hold recommendation on the
stock.
Wonderla Holidays  Wonderla Holidays Limited (WHL) is the largest amusement park company in India with over a decade of
successful and profitable operations. The company owns and operates two amusement parks under the brand
name Wonderla in Kochi and Bengaluru and came up with a third park in Hyderabad in Q1FY2017. Footfalls at
Bangalore and Kochi parks are expected to revive over a longer stretch of time as benefits of reduction in GST
rates to 18% from 28% earlier would be seen from Q1FY2019. Margin improvement will sustain as Hyderabad
park is attaining certain scale. Construction work of Chennai park will take another 6-8 months to commence
and is unlikely to meet the target of getting operational in early FY2020. Reduction in GST rates augurs well for
the amusement park industry and lower ticket prices would help in improving the footfalls. We maintain our Hold
recommendation on the stock with a revised price target of Rs. 410.
Zee Entertainment  Zee Entertainment Enterprises Limited (ZEEL), part of the Essel Group, is one of India’s leading television media
and entertainment companies. The company has a bouquet of more than 40 channels across Hindi, regional,
sports and lifestyle genres. ZEEL continues to outperform the broadcasting advertising market and expects to
continue the momentum with an improvement in macro economy. As demonitisation and GST are behind now,
management expects ad revenue growth will remain at around mid-teens in FY2018. Domestic subscription
revenue growth is expected to be in a low-teen CAGR for the next 3-4 years. Management is confident to maintain
margins at 30%+ level despite investments in digital offerings. Without investments, margins can go to 34%+
level. ZEEL consistently focuses on its five key pillars to drive its growth. We believe successful execution of this
strategy will have a material impact on sustainable growth going forward. We continue to see ZEEL as the prime
beneficiary of macro revival and digitisation.
Diversified/Miscellaneous
Bajaj Holdings  Bajaj Holdings and Investment Limited (BHIL, erstwhile Bajaj Auto) was demerged in December 2007, whereby its
manufacturing business was transferred to the new Bajaj Auto Limited (BAL) and its strategic business consisting
of the wind farm and financial services businesses was vested with Bajaj FinServ (BFS). All the businesses and
properties, assets, investments and liabilities of erstwhile Bajaj Auto, other than the manufacturing and strategic
ones, now remain with BHIL. BHIL is a primary investment company focusing on new business opportunities.
Given the strategic nature of its investments (namely BAL and BFL), we have given a holding company discount of
50% to its equity investments. Liquid investments have been valued at cost.. Further, the price target for BFS and
that for BAL has been maintained at Rs. 6,050 and Rs. 3,625, respectively, post Q3FY2018 results. Consequently,
we have maintained our Buy recommendation on BHIL with a revised price target of Rs. 3,628.
BEL  Bharat Electronics Limited, a PSU manufacturing electronic, communication and defence equipment, stands to
benefit from the enhanced budgetary outlay for strengthening and modernising the country’s security equipment.
The ‘Make in India’ initiative of the government will support earnings growth in the coming years, as it is the only
player with strong research and manufacturing units across the country. The current order book of around Rs.
40,469 crore (4.6x FY2017 revenue) provides revenue visibility for the next 3-4 years.
Bharti Airtel  Bharti Airtel is the leader in the Indian mobile telephony space. Management continues to focus sharply on
increasing retail ARPU, enhancing African operations, non-mobile services (enterprise services) and value-added
services (Airtel TV and music) to boost revenue and reduce churn rate. Industry consolidation (three-player
market, with the exit of smaller players) will help Airtel to maintain its leading position in revenue market share
with improving profitability. Going forward, from a long-term perspective, explosive growth in the data segment,
strong network, acquisitions (Tata Tele and Telenor) and reach will help Bharti emerge stronger. We have a Buy
rating on the stock.

GDL  With its dominant presence in the container freight station (CFS), rail freight and cold chain businesses, Gateway
Distriparks has evolved as an integrated logistics player. The CFS business is a cash cow, while its investments in
the rail freight and cold storage businesses have started bearing fruits. The company is one of the largest players
in the CFS business and has evolved as the largest player in the rail freight business as well as the cold storage
business. The proposed capex for all the three segments will strengthen its presence in each of the segments
and increase its pan-India presence going forward.
PI Industries  PI Industries (PI), a leading agro chemical company, has a differentiated business model focusing on the fast-
growing custom synthesis and manufacturing (CSM) business, which contributes 60% to its revenue. PI is
gradually ramping up production at Jambusar facility. The company has introduced three new products (one
maize herbicide and two rice fungicides) till date in FY2018 Further, utilisation of the new plant at Jambusar
(phase 3) is likely to ramp up over the next 2-3 quarters. Management has highlighted some green shoots in
the global agrichem market, as a result of reduction in inventory levels and expects the global market to revive
in H2FY2019. Further, with healthy order book of little over $1 billion in CSM business, management expects
improvement in order execution in FY2019. In the domestic agri business, the company will be launching two new
products in Q4FY2018 and three new products in FY2019 (one wheat herbicides under 9(3) registration and two
insecticides products under 9(4) in the rice and vegetables category). Further, owing to supply-side constraints
from China, the company is planning backward integration in FY2019 for one of its key raw materials imported
from China. Further, continuous delay in order execution in the CSM business will be taking a toll on earnings
performance. We continue to maintain our Hold rating on the stock with a revised PT of Rs. 880.
Ratnamani Metals  Ratnamani Metals and Tubes Limited (RMTL) is the largest stainless steel tube and pipe manufacturer in India.
Despite a challenging business environment due to increasing competition, we remain positive on RMTL on
account of its strong balance sheet, ability to generate superior return ratios in the coming years and expansion
of Seamless SS tube capacity in the next few years. Further, management has maintained a strong outlook on the
potential opportunities in the oil and gas sector, city gas distribution projects, cross-country pipelines and inter-
linking of rivers across India.
Supreme Industries  Supreme Industries is a leading manufacturer of plastic products with a significant presence across the piping,
packaging, industrial and consumer segments. We remain positive on its new launches of value-added products
and capacity expansion plans, which are largely funded by its robust internal accruals. The company enjoys
superior return ratios with low gearing levels. With diversified products, an extensive distribution network,
improved capital structure and government thrust on better infrastructure, Supreme Industries has emerged as
one of the best proxy plays on the increasing use of plastic consumption in India. Hence, we remain positive on
the stock.
UPL  UPL is a leading global producer of crop protection products, intermediates, specialty chemicals and other
industrial chemicals. The company is present across agricultural inputs segment, ranging from seeds to crop
protection products and post-harvest activities. The company has also started to focus on premium products
in agro-chemicals. UPL has outpaced the global agrochemical industry, growing at ~17% for FY2017 as against
a decline of ~2.5% for the industry. Consequently, the company has gained ~1% market share. Moreover, agro-
commodity prices are likely to remain lower going ahead, which in turn will boost demand for generic products,
in which UPL is a major player. A positive outlook for geographies such as India, Europe and Latin America
would also drive revenue growth going ahead. Further, given the expected cyclical recovery in CY2018, led by
decreasing channel inventories in key regions and some uptick in agri commodity prices, we expect acceleration
in earnings trajectory over the next two years (21% earnings CAGR over FY2018- FY2020E). With its extensive
product catalogues coupled with a strong distribution network and backward-integrated systems, UPL is better
placed to benefit from the global recovery in the agri commodity space over the next 2-3 years. We maintain Buy
with a PT of Rs. 980.

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What’s new in the latest version of TradeTiger

Draw on charts: Ichimoku on scanner:

Net rupee change on Dynamic OCF with

From the Editor’s Desk EQUITY

STOCK IDEAS STANDING (AS ON MARCH 01, 2018)

March 2018 4 Sharekhan ValueGuide

March 2018 5 Sharekhan ValueGuide

March 2018 6 Sharekhan ValueGuide

Market Outlook March 05, 2018

Outlook ­— Markets readjusting to changing dynamics:

March 2018 7 Sharekhan ValueGuide

84000 US Government 10 Year Gsec Yield (%)

80000 Source: Bloomberg

However, the rise in Indian bond yields is in line

March 2018 8 Sharekhan ValueGuide

1.20 25000 Though some of the heavyweight sector such as IT

off events such as demonetisation and implementation

Actual sector-wise earnings growth (%) Source: Sharekhan Research

March 2018 9 Sharekhan ValueGuide

Average monthly MF flows are close to $2.5 billion

March 2018 10 Sharekhan ValueGuide

Top Picks February 28, 2018

Consistent outperformance (absolute returns; not annualised) (%)

Sh arekh an Sen sex Nifty

March 2018 11 Sharekhan ValueGuide

Recommendation Reco Price Price Target/ Upside (%)

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Feb 01, 2018 Sundram Fasteners Viewpoint POSITIVE n 534 18-20 $

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Feb 02, 2018 Kajaria Ceramics Viewpoint POSITIVE n 611 15 #

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Recommendation Reco Price Price Target/ Upside (%)

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Feb 05, 2018 BSE Ltd. Viewpoint POSITIVE n 830 20-22 $

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Recommendation Reco Price Price Target/ Upside (%)

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Feb 06, 2018 Skipper Stock Update BUY # 237 275 $

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March 2018 16 Sharekhan ValueGuide

Outlook — Markets readjusting to changing dynamics:

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