Investment Funds Advisory Today - Buy Stock of UltraTech Cement LTD, DB Corp and Infosys

India Equity Analytics
Daliy Fundamental Report on Indian Equities
IEA-Equity Strategy 14th Jan, 2014 Edition : 183

14th Jan 2014
UltraTech Cement Ltd :
"BUY"
We are expecting 8%-15% Sales growth with ~19% ROE in FY15E.We expect cement demand to pick up from 2HFY14 onwards driven by governments pre-election spending as well as on account of rural demand pick post the good monsoon witnessed this year. UTCL is a largest cement player in India and we expect it to maintain or increase the same through timely commissioning of capacities, which are expect to come on stream by FY15E.We value the stock and arrive at the target price of Rs 1846. As from the current level the upside is very limited (10%), so we recommend investors to "Buy" the stock at lower level dips to get a decent returns over a time horizon of 12-18 months ................................................. ( Page :2-4)
DB Corp :"On strong footing"
"BUY"
14th Jan 2014
In view of upcoming general election, we expect government ad spending to go up substantially. Being one of the biggest player, company will benefit from this. Considering its long-term growth story with favorable earning scenario and leadership position in key market, we are positive on the stock. We initiate BUY view on the stock with the target price of Rs 340. At a CMP of Rs 305, stock trades at 4.3x of FY15E P/BV ............................................... ( Page : 5-6)
Zensar Tech :"Better growth trajectory"
"BUY"
14th Jan 2014
The deal booking and pipeline is good and expects to perform well going forward. It expects double digit growth in the Enterprise Services business for the FY15E on the back of healthy pipeline. Also, it anticipates good growth from the IMS for the FY'15E. Considering healthy order pipeline and its earning visibility in near future, we maintain BUY view on the stock and we revise our target price from Rs 400 to Rs 440. At a CMP of Rs 412, stock trades at 7.2x FY14E EPS . ............................................. ( Page : 7-8)
Infosys : "On the way of excitement"
"BUY"
13th Jan 2014
Infosys largely reported inline set of sales numbers and beats the street on margin front, In USD term, Sales grew by 1.65%(QoQ) and 0.5%(QoQ) in INR term, led by 0.7% (QoQ) volume growth and 0.7%(QoQ) pricing growth. At a CMP of Rs 3549, it trades at 16.3x FY15E At a CMP of Rs 3549, it trades at 16.3x FY15E earnings. We retain our BUY view on the stock with a target price of target price of Rs 3910 (revised from 3620). ....................................... ( Page : 9-12)
INDUSIND BANK
"Neutral"
13th Jan 2014
Despite of reported higher than expected profit we have neutral view on the stock owing to shifting of loan mix from consumer finance to corporate loan which will lead to margin compression and deterioration in asset quality as per our view. Corporate loans generally are big ticket size in nature and with slowing of economy there are higher chances of these loan slip into NPA than other loan. Moreover retail loans are high yield in nature than corporate loan. At current price, we have neutral view on the stock due to trading almost near to our valuation multiple and anticipating margin compression and higher slippage. ........................ ( Page : 13-18)
Private Bank Result Preview 3QFY14 :
13th Jan 2014
Broadly banking indices outperform Nifty by 6% in third quarter and most of banking stocks are trading at attractive valuation. Despite of, we have caution view on account of slowdown in economy, high interest rate and inflationary pressure. High inflation would be risk for the economy going forward. Any rise in inflation would result of rise in interest rate by RBI in its third quarter monetary policy review on 28th Jan.2014 which would be negative for banking industry. Most of banking stocks are expected to report moderate revenue and profit growth owing to multiple headwinds. In private sector banking universe we like HDFC Bank, ICICI bank and DCB.............................................. ( Page : 19-21)
GAIL :
"Neutral"
10th Jan 2014
Company registered a turnover of Rs. 26902.25 Cr, up by 19% in H1FY14 compared to corresponding previous year period. There was fall of 10% in operating profits of the company to Rs 2971.72 Cr for H1FY14. The Other income was down 8% to Rs 279.6 Cr while Interest cost grew 99% to Rs 169.36 Cr. .......................................... ( Page : 22-24)
Narnolia Securities Ltd,
UltraTech Cement Ltd.

Company Update
CMP Target Price Previous Target Price Upside Change from Previous
"BUY"
14th Jan' 14
Buy
1675 1846 1875 10% -2%
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume (Nos.) Nifty 532538 ULTRACEMCO 2066/1404 45942 18377 6272
Stock Performance-%
Absolute Rel. to Nifty 1M -7.3 -9.0 1yr -14.8 -19.9 YTD -10.2 -14.3
The outlook continues to remain challenging. Demand growth in FY14 is likely to be around 5 %, though in the long term growth is likely to be over 8 % - 15% . Government initiatives to expedite large infrastructure projects have yielded little so far and this is putting pressure on cement makers, especially those with debt that has become expensive to service due to high interest rates.We believe that UltraTech will maintain its healthy debt protection metrics , supported by its earnings and cash flows.At present Ultratech is running at 79% of its capacity utilization.The utilization levels will decline due to stabilization of supply from new capacities, owing to insufficient demand in the domestic market. UltraTech plans to strengthen its logistics infrastructure and increase its captive power plant capacity, which will help to reduce its operational cost.We value the stock at the target price of Rs 1846. From the current level the upside is very limited (10%), so we recommend investors to "Buy" the stock at dips to get a decent Q2FY14returns. Update : Ultratech Cement reported a 52 per cent dip in net profit for the July-September quarter at Rs 264. Net sales were down 4 per cent at Rs 4,502 crore .Cement and clinker sales remained unchanged compared with last year at 9.1 million tonnes while white cement and wallcare putty sales were up 15 per cent at 2.75 lakh tonnes (2.39 lakh tonnes). Despite flat cement sales, overall cost increased 4 per cent to Rs 4,100 crore (Rs 3,927 crore) on the back of high logistics cost.Overal realisation during the quarter was down 5 per cent at Rs 239 per 50 kg bag compared with Rs 252 in last year.The companys long-term borrowings stood lower at Rs 3,841 crore (Rs 3,893 crore), while deferred tax liabilities increased 9 per cent to Rs 2,073 crore (Rs 1,906 crore). EBITDA slipped 34.3 percent on yearly basis to Rs 660 crore and operating profit margin declined 670 basis points Y-o-Y to 14.7 percent in the quarter. Struggle for beter Manufacturing : Financial performance impacted by lower selling price and subdued demand. The demand remained sluggish due to prolonged monsoon across the country, resulted in reduced offtake by infrastructure and real estate companies. During the quarter ,benefit of lower imported coal prices was get cancelled due to sharp depreciation of the rupee against the dollar. Logistics and raw material costs continued to rise given the high diesel prices. However, optimisation of fuel mix i.e use of pet coke helped to lower power and fuel costs to an extent. Capacity Addition : Meanwhile, UltraTech Cement agreed to purchase debt-laden Jaiprakash Associates' Gujarat cement unit having a capacity of 4.8 million tonnes for Rs 3,800 crore. Gujarat cement unit comprises of an integrated cement unit at Sewagram and grinding unit at Wankbori. With this acquisition of 4.8 million tonnes per annum, the company's current capacity increases to 59 million tonnes per annum. The transaction implies a valuation of $124 per tonne of cement, which is lower than the existing benchmark of around $140 per tonne, and is a positive for UltraTech.Currently, UltraTechs debt is around Rs.4,500 crore. After the transaction is completed, the companys net debt-to-equity ratio will increase to around 0.45 from 0.27. Debt will increase to 2 times EBIDTA. With projects underway it will stand raised to 70 million tonnes by 2015.
Share Holding Pattern-%

Promoters FII DII Others 2QFY14 62.0 20.7 4.8 12.6 1QFY14 4QFY13 62.0 62.0 20.7 20.6 4.6 4.6 12.7 12.7
1 yr Forward P/B
Price 2x 4x 6x 1x 3x 5x 7x
Source - Comapany/EastWind Research
Financials : Net Revenue EBITDA Depriciation Interest Cost Tax PAT
Q2FY14 4522 679 257 89 107 264

Y-o-Y % -4.3 -34.4 10.8 48.3 -54.1 -52.0
Q-o-Q % -9.2 -36.7 2.0 34.8 -56.7 -60.8
Q2FY13 4727 1035 232 60 233 550
Q1FY14 4980 1072 252 66 247 673

(In Crs)
Aug-04 Mar-05 Oct-05 May-06 Dec-06 Jul-07 Feb-08 Sep-08 Apr-09 Nov-09 Jun-10 Jan-11 Aug-11 Mar-12 Oct-12 May-13
Please refer to the Disclaimers at the end of this Report.

OUT LOOK :
Ultratech's EBIDTA growth has been consistently beats the industry average as well as its peers ACC and Abuja cements. In last few years it also led the industry and its peers on PAT growth .It beats its peers on account of cement realization and volume sales. Additionally Ultratech has also been increasing the usage of low cost pet coke in its fuel mix there by moderating its cost pressure. Strong Brand premium and operational efficiency drives its industry leading profitability . With the overall slow down in demand, Ultratech will continue to loose its market share in FY14E on capacity delay. Hence, We are expecting 8%-15% Sales growth with ~19% ROE in FY15E.We expect cement demand to pick up from 2HFY14 onwards driven by governments pre-election spending as well as on account of rural demand pick post the good monsoon witnessed this year. UTCL is a largest cement player in India and we expect it to maintain or increase the same through timely commissioning of capacities, which are expect to come on stream by FY15E.We value the stock and arrive at the target price of Rs 1846. As from the current level the upside is very limited (10%), so we recommend investors to "Buy" the stock at lower level dips to get a decent returns over a time horizon of 12-18 months.
6,000 5,000 120.0 4,000 100.0 80.0 Net Revenue from Operation Sales Growth 160.0 140.0
3,000
60.0 2,000 1,000 Q2FY11 Q4FY11
Q1FY11 Q3FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14E Q4FY14E
40.0
20.0
(20.0)
On The Expansion Front : Setting up a cement plant with 5.5 MMTPA cement and a 75 mega
watt (MW) captive power plant, with an investment of Rs 2,500 crore. The company has received approval from Expert Appraisal Committee (EAC), under the Ministry of Environment, for the proposed facility. The cement plant will be based on the dry process technology for cement manufacturing with pre-heater and pre-calciner technology and the coal requirement for the project will be met by importing it from Indonesia and South Africa, as an interim basis. Petcoke will be procured from Reliance Industries Limited, Jamnagar. UltraTech had an estimated market share of around 18 per cent, with presence across regions north being the largest, contributing 33 per cent to its sales, followed by west (31 per cent), south (20 per cent), and east (16 per cent) - thereby insulating it from downtrends in any single region. The company has a strong focus on improving operating efficiencies; it has 529 megawatts (MW) of captive power generation capacity, which meets 80 per cent of its power requirement and also maintains power consumption norms in line with the other players in the industry.

60 Capacity Of Cement Production (in MT) 85 Cement Production Cement Capacity Utilisation in % 80
50
40
Company Description :
75
30 70
20
10 0 FY09
30 25 20 15 10
65
P/L PERFORMANCE Net Revenue from Operation Other Income Total Income Power and fuel Freight and forwarding EBITDA Depriciation Interest Cost Tax PAT ROE% P/B
FY11 13798 154 13952 3280 2881 2696 813 292 384 1367 13 2.9
FY12 19232 371 19603 4639 3741 4194 963 256 948 2403 19 3.2
FY13 21319 304 21623 4646 4243 4839 1023 252 1179 2678 18 3.4
FY14E 21267 363 21630 4607 4586 3791 1110 325 775 1934 11 2.9
60 FY10 FY11 FY12 FY13

NPM % 27 24 22 19 19 15 16 13 10 12 OPM % EBITDA %
21
22 18
14
12
5
FY09 FY10 FY11 FY12 FY13

B/S PERFORMANCE Share capital Reserve & Surplus Total equity Long-term borrowings Short-term borrowings Long-term provisions Trade payables Short-term provisions Total liabilities Intangibles Tangible assets Capital work-in-progress Long-term loans and advances Inventories Trade receivables Cash and bank balances Short-term loans and advances Total Assets RATIOS P/B EPS Debtor to Turnover% Creditors to Turnover% Inventories to Turnover% CASH FLOWS Cash from Operation Changes In Working Capital Net Cash From Operation Cash From Investment Cash from Finance Net Cash Flow during year FY10 124 4495 4620 857 750 32 683 133 8375 6 4953 260 146 827 210 112 219 8375 FY10 3.1 88.1 2.9 9.5 1.2 FY10 1673 -79 1593 -843 -740 10 FY11 274 10373 10647 3295 727 113 1830 473 21630 39 12265 760 583 2094 825 190 873 21630 FY11 2.9 49.9 6.0 13.3 1.5 FY11 2195 -197 1998 -2240 248 6 FY12 274 12550 12824 4843 705 121 2207 709 24904 40 12729 1940 1544 2198 1089 214 1041 24904 FY12 3.2 87.7 5.7 11.5 1.1 FY12 3482 -96 3385 -3050 -353 -18 FY13 274 14955 15230 5169 1227 135 2338 949 29590 62 14254 3601 1066 2541 1376 185 1048 29590 FY13 3.4 97.7 6.5 11.0 1.2 FY13 4122 -481 3641 -4407 715 -51
Trading At :
7000 6000 5000 4000 3000 2000 1000 0 2500 2000 1500 1000
NIFTY
ULTRACEMCO
500 0
DB Corp
"On strong footing"
Company update CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Cr) Average Daily Volume Nifty Stock Performance 1M Absolute 11.5 Rel. to Nift 14.0 Share Holding Pattern-%
Current 2QFY14 1QFY14
"BUY"
14th Jan' 14
BUY 302 340 13% -
533151 DBCORP 318.65/210 5502 25750 6273
Festive season coupled with the recently held state assembly elections in 4 states (Rajasthan, M.P, Chhattisgarh, and Delhi) will likely drive revenue growth for print media companies. Across the print media players, DB Corp will be one of the strong beneficiaries for prospect of revenue generation. These 4 states contribute almost 60% of its revenue. Recently, Print media companies decided to hike its cover prices selectively in its mature market to maintain its margin due to increase in news print cost. Going forward, improving ad revenue, cost control measures and expanding into new area would energize its revenue visibility in near future. About the Company: DB Corp, the publisher of Dainik Bhaskar, is a leading publishing house with its highest readership in the country. It publishes 8 newspapers, 65 newspaper editions and around 200 sub-editions in 4 languages (Hindi, Gujarati, English and most recently Marathi) in 13 Indian states. Earning Preview (3QFY14E): DB Corp is like to report 19% (YoY) revenue growth to Rs 366cr led by 18% of revenue growth and 15% of subscription revenue. PAT is expected to grow by 17% (YoY) to Rs 85Cr. We expect to see EBITDA margin up by 100-150bps (YoY) to 28-28.5% because of benign RM cost. Key facts to watch out: Commentary on response of new editions (Patna, Akola and Amravati), new expansion plan, trend of ad revenue from 4 states poll and from governments. Fit well on strong footing: Management is very confident of achieving 17% to 20% growth rate in upcoming quarter. The Company is following principle of launching at least 2 editions in a year and enter into at least one 1 market in every 2 years. Company launched Akola edition in July and Amravati edition in August. Recently company has launched its Patna edition. According to the company, the initial response in Bihar is quite encouraging and as per booking, record of new subscription makes it no.1 in the first day of its launch. Expanding into new exposure: The company has interest in radio under the MY FM brand (94.3), operating in 17 FM radio stations across mini metros and small towns. The company also has exposure to new media with internet and short messaging service (SMS) portals. View and Valuation: In view of upcoming general election, we expect government ad spending to go up substantially. Being one of the biggest player, company will benefit from this. Considering its long-term growth story with favorable earning scenario and leadership position in key market, we are positive on the stock. We initiate BUY view on the stock with the target price of Rs 340. At a CMP of Rs 305, stock trades at 4.3x of FY15E P/BV. Financials Revenue EBITDA PAT EBITDA Margin PAT Margin 2QFY14 437.98 112.45 63.24 25.7% 14.4% 1QFY14 449.4 135.38 77.71 30.1% 17.3% Rs, Cr (QoQ)-% 2QFY13 (YoY)-% -2.5% 378.37 15.8% -17% 81.36 38% -19% 45.41 39% (440 bps) 21.5% 420 bps (290 bps) 12.00% 220 bps (Source: Company/Eastwind)
5
1yr 25.0 21.6
YTD -
Promoters FII DII Others
74.96 17.7 2.95 4.36
74.97 16.5 4.00 4.57
75.0 14.7 5.34 5.02
Stock Performace with Nifty

DB Corp
Revenue Geography-wise Revenue Segments
Financials
Rs,cr Sales RM Cost WIP Employee Cost Ad Spend Event Expenses consumption of store & spare Distribution expenses Other expenses Total expenses EBITDA Depreciation and Amortisation Other Income EBIT Interest PBT Tax Exp PAT Growth-% (YoY) Sales EBITDA PAT Expenses on Sales-% RM Cost Employee Cost Other expenses Tax rate Margin-% EBITDA EBIT PAT Valuation: CMP No of Share NW EPS BVPS RoE-% P/BV P/E FY10 1062.1 327.87 -0.0016 131.81 12.98 11.83 51.49 22.81 161.24 720.0284 342.0716 37.83 11.15 304.2416 35.69 279.7016 105.72 173.9816 10.5% 132.2% 265.4% 30.9% 12.4% 15.2% 10.0% 32.2% 28.6% 16.4% 239.15 18.15 648.7 9.59 35.74 26.8% 6.7 24.9 FY11 1265.18 383.91 -0.06 184.56 12.52 16.02 58.7 21.28 185.2 862.13 403.05 43.28 14.18 359.77 15.3 358.65 99.97 258.68 19.1% 17.8% 48.7% 30.3% 14.6% 14.6% 7.9% 31.9% 28.4% 20.4% 246.25 18.3 828.87 14.14 45.29 31.2% 5.4 17.4 FY12 1451.51 508.04 -0.04 242.93 15.04 15.04 83.62 24.34 216.06 1105.03 346.48 50.57 24.02 295.91 9.23 310.7 98.32 212.38 14.7% -14.0% -17.9% 35.0% 16.7% 14.9% 6.8% 23.9% 20.4% 14.6% 219.45 18.3 927.08 11.61 50.66 22.9% 4.3 18.9 FY13 1592.32 544.54 0.03 279.5 17.21 12.08 94.81 28.01 234.07 1210.25 382.07 58.06 21.34 324.01 7.99 337.36 113.18 224.18 9.7% 10.3% 5.6% 34.2% 17.6% 14.7% 7.1% 24.0% 20.3% 14.1% 212.1 18.33 1029.15 12.23 56.15 21.8% 3.8 17.3 FY14E 1865.97 653.09 0.04 335.88 22.39 18.66 115.69 33.59 279.90 1459.2 406.7 64.6 24.3 342.1 8.0 358.4 120.2 238.2 17.2% 6.5% 6.2% 32.0% 16.6% 15.0% 6.4% 21.8% 18.3% 12.8% 302.0 18.3 1160.1 12.99 63.29 20.5% 4.8 23.2 FY15E 2182.15 763.75 0.04 403.70 28.37 21.82 150.57 41.46 329.51 1739.2 442.9 75.6 28.4 367.4 5.1 390.7 131.1 259.6 16.9% 8.9% 9.0% 34.3% 17.0% 15.1% 6.0% 20.3% 16.8% 11.9% 302.0 18.3 1301.7 14.16 71.02 19.9% 4.3 21.3

(Source: Company/Eastwind) 6
Zensar Tech
Company update
"BUY"
14th Jan' 14
Buy
412 440 400 7% 10%
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 504067 ZENSARTECH 424/181 1800 20884 6273
Management expects good growth starting from 4QFY14E with its Infrastructure Management (IM) business gaining momentum. The deal booking and pipeline is good and expects to perform well going forward. It expects double-digit growth in the Enterprise Services business for the FY15 on the back of healthy pipeline. In addition, it anticipates good growth from the IMS for the FY'15. Zensar is on the way to shut down few if its data centre in on site business, and entering into new emerging space in Social networking, Mobility, Analytics and Cloud because of good demand. We expect that order pipeline could be healthier on the back of good demand seen in these emerging areas. 3QFY14E earnings preview: Zensar Tech is likely to report 5-6% (QoQ) sales growth led by healthy growth across all geographies and PAT growth could be seen at 4-5% (QoQ). We expect that EBITDA margin could be down by 100-150bps (QoQ) to 16%. Key things to watch: Updates on new deal win, revenue traction from all geographies & inorganic initiatives. Key Facts Strong geographical footing: Given the order book Enterprise, business expects to grow robustly going forward. It consciously slowed down in the Japan market as it is not profitable and closed one account in Singapore as well. The Chosen markets to perform are the Middle East, China and Africa going forward. Healthy order Pipeline: We are positive on the future prospects on back of the order bookings and pipeline. The recent measures like lean execution, improved efficiencies, and best practices are targeted at improving the profitability profile of the company in FY14E. Recent Management comments also revealed favourable scenario of order booking. Inspirational revenue level of $1bn by FY16: The management has detailed the 4 focus areas, which are expected to take Zensar to an inspirational revenue level of $1bn by FY16. They will expect to grow its existing US relationships and growing the RIMS business in European nation like UK, Germany and Benelux. View and Valuation: The deal booking and pipeline is good and expects to perform well going forward. It expects double digit growth in the Enterprise Services business for the FY15E on the back of healthy pipeline. Also, it anticipates good growth from the IMS for the FY'15E. Order pipeline continues to be stable at $ 200 mn mainly on the back of good demand seen in Mobility, Cloud Computing and social networking side. Considering healthy order pipeline and its earning visibility in near future, we maintain BUY view on the stock and we revise our target price from Rs 400 to Rs 440. At a CMP of Rs 412, stock trades at 7.2x FY14E EPS. Rs, Crore Financials 2QFY14 1QFY13 (QoQ)-% 2QFY13 (YoY)-% Revenue 599.7 533.5 12.4 545.05 10.0 EBITDA 102.54 74.1 38.4 81.05 26.5 PAT 70.6 60.9 15.9 32.17 119.5 EBITDA Margin 17.1% 13.9% 320bps 14.9% 220bps PAT Margin 11.8% 11.4% 40bps 5.9% 590bps
(Source: Company/Eastwind)
Stock Performance
Absolute Rel. to Nifty 1M 29.1 28.5 1yr 49 43.6 YTD 23.99 21.42

Current 1QFY14 4QFY13
Promoters FII DII Others
48.27 11.99 0.96 38.78
48.35 11.68 1.26 38.71
48.36 10.75 1.28 39.61
1 year forward P/E

Zensar Tech
Clients/Headcounts Metrics;
Number of million dollar
$1mn+ $5mn+ $10mn+ $20mn+

Client Contribution to Business
47 6 1 1 35% 40% 69 69% 31% 81% 7286
43 7 2 1 35% 42% 59 72% 28% 82% 6825
41 7 2 1 35% 42% 56 70% 30% 83% 6504
40 8 2 1 35% 43% 55 69% 31% 82% 6508
49 6 1 1 37% 43% 66 68% 32% 81% 6519
47 6 1 1 39% 46% 61 67% 33% 80% 6657
top 5 clients top 10 clients DSO

Effort & Utilization
Onsite Offshore Utilization (Including Trainees) Headcount
Financials;
Rs, Cr Net Sales Other Operating Income Total income from operations (net) Purchases of stock-in-trade Employee Cost Other expenses Total Expenses EBITDA Depreciation Other Income Extra Ordinery Items EBIT Interest Cost PBT Tax PAT Growth-% Sales EBITDA PAT Margin -% EBITDA EBIT PAT Expenses on Sales-% Employee Cost Other expenses Tax rate Valuation CMP No of Share NW EPS BVPS RoE-% Dividen Payout ratio P/BV P/E FY10 497.08 0.00 497.08 0.00 393.17 0.00 393.17 103.91 24.92 8.15 0.00 78.99 0.55 86.59 2.43 84.16 17.8% 28.7% 38.9% 20.9% 15.9% 16.9% 79.1% 0.0% 2.8% 272.10 2.16 293.93 38.96 136.08 28.6% 16.4% 2.00 6.98 FY11 562.56 15.03 577.59 0.00 343.12 135.71 478.83 98.76 25.88 14.20 0.00 72.88 0.85 86.23 -2.24 88.47 13.2% -5.0% 5.1% 17.6% 13.0% 15.7% 59.4% 23.5% -2.6% 157.85 4.34 366.96 20.38 84.55 24.1% 19.9% 1.87 7.74 FY12 700.15 12.57 712.72 0.00 411.36 165.98 577.34 135.38 25.05 27.91 0.00 110.33 1.03 137.21 42.67 94.54 24.5% 37.1% 6.9% 19.3% 15.8% 13.5% 57.7% 23.3% 31.1% 180.00 4.34 417.42 21.78 96.18 22.6% 37.3% 1.87 8.26 FY13 2114.52 13.95 2128.47 236.86 1177.83 418.73 1833.42 295.05 33.16 8.66 0.00 261.89 9.95 260.60 86.07 174.53 202.0% 117.9% 84.6% 14.0% 12.4% 8.3% 55.3% 19.7% 33.0% 248.58 4.36 751.69 40.03 172.41 23.2% 21.9% 1.44 6.21 FY14E 2403.19 16.82 2420.01 269.30 1258.40 532.40 2060.11 359.90 38.59 72.60 0.00 321.31 9.61 384.30 134.50 249.79 13.7% 22.0% 43.1% 15.0% 13.4% 10.4% 52.4% 11.2% 35.0% 412.00 4.37 958.03 57.16 219.23 26.1% 17.4% 1.88 7.21 FY15E 3205.99 22.44 3228.44 359.27 1678.79 710.26 2748.31 480.13 51.48 80.71 0.00 428.65 7.69 501.67 175.58 326.08 33.4% 33.4% 30.5% 15.0% 13.4% 10.2% 52.4% 11.2% 35.0% 412.00 4.37 1238.10 74.62 283.32 26.3% 14.1% 1.45 5.52

Infosys
"On the way of excitement"
Result update
"BUY"
13th Jan' 14
BUY
3549 3910 3620 10% 8%
Inline sales and beats the street on margin front, upgraded earning guidance;
Infosys largely reported inline set of sales numbers and beats the street on margin front, In USD term, Sales grew by 1.65%(QoQ) and 0.5%(QoQ) in INR term, led by 0.7% (QoQ) volume growth and 0.7%(QoQ) pricing growth. However, the good news is that the PAT grew by 21% because of cost rationalization, sequentially. On an ongoing basis, Infosys will retain its revenue acceleration and margin expansion, also operating metrics will turn into greenery from hay. Upgradation of earning guidance by management hinted to join the party to enjoy with 12-14% earnings growth for FY14E like its bellwether. Considering the strategy to build clients relation, execution of growth oriented policy and combination of reduced onsite costs and higher utilization would be an optimistic growth story despite recent hiccups of top management exit. Healthy Margin growth: During the quarter, its EBIT margin expanded by 310 bps (QoQ) to 25%. The company's cost cutting measures are yielding the expected gains. This again is in line with what the market was expecting. During the December quarter, Infosys selling and marketing expenses declined by 13.3% compared to the second quarter. Administrative expenses too have declined by 18.4% in dollar terms. Both these have helped improve operating margins. Steady volume growth: The volume growth in the quarter was weak, 0.7% (QoQ) growth with stable pricing growth of 0.7%(QoQ), but it is also weak for the group and for Infosys. we expect it to be improve in the coming quarters. Healthy deal pipeline: Overall, the company continues to show signs of recovery at the operational level. The company has added 54 new clients in the quarter and added 15 clients where the deal size is over $100 million. This implies that client confidence is returning. Earning Guidance: Infosys upgrades its earning guidance from 6-10% to 9-10% to 11.512% for FY14E, now nearest to NASSCOM guidance (12-14%). Management is very confident to achieve the guidance figure and stated much focused on creating superior financial performance ahead. View and Valuation: Infosys seems to be on its way to rediscovering its past mojo with revenue momentum kicking, and the NRN invisible hand in play. Further announcement of strategic acquisitions, better utilization of cash balances, better deal win, consistent client traction and revenue momentum would help the company to bridge the gap with rivals such as TCS. Considering the revised guidance by management and its growth priority than margin inching up strategy, we upgraded our EPS from Rs 181/208 to Rs 188/218 for FY14E/15E. At a CMP of Rs 3549, it trades at 16.3x FY15E At a CMP of Rs 3549, it trades at 16.3x FY15E earnings. We retain our BUY view on the stock with a target price of target price of Rs 3910 (revised from 3620). Rs, Crore Financials 3QFY14 2QFY14 3QFY13 (YoY)-% (QoQ)-% Revenue 13026 12965 10424 25.0 0.47 EBITDA 3258.9 2836.9 2677 21.7 14.88 PAT 2874.9 2406.9 2369 21.4 19.44 EBITDA Margin 25.0% 21.9% 310bps 25.7% (70bps) PAT Margin 22.1% 18.6% 350bps 22.7% (60bps)
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 500209 INFY 35810/2190 203790 1240448 6171
Stock Performance
Absolute Rel. to Nifty 1M 6.3 3.3 1yr 52.4 49.1 YTD 53.1 49.4

Promoters FII DII Others Current 15.94 39.93 16.16 27.97 1QFY14 4QFY13 16.04 16.04 39.55 40.52 18.28 17.51 26.13 25.93
1 year forward P/E
Infosys.
Revenue growth in USD term-(QoQ) In USD term, Sales grew by 1.65%(QoQ) in USD term and 0.5%(QoQ) in INR term, led by 0.7% volume growth and 0.7%(QoQ) pricing growth. Mgt revised revenue growth to 11.5%-12% for FY14E.
Margin-%
EBIT margin expanded by 310 bps (QoQ) to 25%. Mgt expects to see margin growth in near term.
Segmental Performance: On segmental front: Infosys has reported teen set of growth in all segments; Sales Growth-% Margin-% Segments Sales contribution-% Margin-% QoQ YoY QoQ YoY BFSI 33.5% 0.8% 24.2% 29.9% 340bps 80bps Manufacturing 22.8% -1.3% 31.3% 24.2% 340bps (50bps) Energy&Utilities 19.1% -0.1% 16.4% 28.8% 30bps (130bps) Retail, Logis-&Life sc24.6% 2.1% 27.6% 27.52% 560bps (230bps)
On QoQ, Companys margin improved in entire segments .
Volume and Pricing Growth (QoQ)-%
With 0.7% pricing growth, volume growth was reported by 0.7% growth(QoQ), impacted by seasonal wave.

10
Infosys.
Geography wise revenue contribution-
we expect that growth from Euro as well as Europe would prove a milestone for the company ahead because of healthy demand environment and optimistic tempo of clients expanding.
On geographical front: During the quarter, company has reported 4% revenue growth from Euro and RoW each, which contributes 25% and 13% of sales. While revenue from US declined by 2%, it contributes 60% of Sales. Clients Metrics Clients Concentration: Clients Category 1QFY13 2QFY13 3QFY13 Top clients 4.1% 4% 3.60% Top 5 clients 16.2% 16% 15% Top 10 clients 25.3% 25.40% 23.90% Total Clients and Clients Addition: The company has added 54 new clients in the quarter and added 15 clients where the deal size is over $100 million. This implies that client confidence is returning.
4QFY13 3.6% 14.7% 24.0%
1QFY14 2QFY14 3.9% 4% 14.9% 15% 24.0% 24.5%
3QFY14 3.70% 14% 23.5%
Clients, number 3QFY13 4QFY13 1QFY13 2QFY13 3QFY13 4QFY13 1QFY14 2QFY14 3QFY14 Active clients,nos 665 694 711 715 776 798 836 873 888 New clients 49 52 51 39 89 56 66 68 54
Headcount Metrics:
Employee's Total Employees (Cons-) Net additions Laterals hired LTM Attrition (Stand-) 1QFY13 151,151 1,157 5,233 14.9% 2QFY13 153,761 2,610 3,656 15.0% 3QFY13 155,629 1,868 4,351 15.1% 4QFY13 1QFY14 156,688 157,263 1,059 575 3,545 3,008 16% 16.9% 2QFY14 3QFY14 160,227 158404 2,964 -1823 3,806 3,333 17.3% 18.10%
Its attrition increased to 18% from 17.3%(2QFY14) on LTM basis, however on sequentially basis they have been able to control its attrition. we hope that the further salary hikes across the board will bring down the attrition levels going forward.
Utilization:
We expect that Infys improving utilization despite higher attrition compare to its nearest bellwethers is good sign for its future growth story.
The Company's Utilization is likely to keep inching up, which could lead to margin expansion for a couple of quarters and that is going to be a huge positive for Infosys as a company.
11
Infosys.
Key facts from Management Interview; Management upgraded its earning guidance for FY14E from 9-10% to 11.5-12%. This guidnace means the company only has to achieve flat growth in the fourth quarter to meet the projection. With 85% of the companys revenues coming from clients based in US and Europe, the company should hope the current economic recovery in developed countries would help its revenues. They are seeing confidence coming back from clients metrics. However, they expect [their] budgets only remain stable from last year. Clients are still focused on cost. The Company is looking to bring in about maximum 6,000 off-campus offers starting late January early February, so there is a lot of activity going on that is bringing people in, engaging and developing.
Financials
Rs in Cr, Sales, INR Employee Cost Other expenses Total Expenses EBITDA Depreciation Other Income EBIT Interest Cost PBT Tax PAT Growth-% Sales EBITDA PAT Margin -% EBITDA EBIT PAT Expenses on Sales-% Employee Cost Other expenses Tax rate Valuation CMP No of Share NW EPS BVPS RoE-% Dividen Payout ratio P/BV P/E FY10 22742 12085 2792 14877 7865 905 982 7942 0 7942 1681 6261 4.8% 9.3% 4.6% 34.6% 34.9% 27.5% 53.1% 12.3% 21.2% 2615 57.4 23049.0 109.1 401.7 27.2% 25.1% 6.5 24.0 FY11 27501 14856 3677 18533 8968 854 1211 9325 0 9325 2490 6835 20.9% 14.0% 9.2% 32.6% 33.9% 24.9% 54.0% 13.4% 26.7% 2765 57.4 25976.0 119.0 452.4 26.3% 45.9% 6.1 23.2 FY12 33734 18340 4671 23011 10723 928 1904 11699 0 11699 3367 8332 22.7% 19.6% 21.9% 31.8% 34.7% 24.7% 54.4% 13.8% 28.8% 2865 57.4 31332.0 145.1 545.6 26.6% 24.0% 5.3 19.7 FY13 40352 22565 6254 28819 11533 1099 2365 12799 0 12799 3370 9429 19.6% 7.6% 13.2% 28.6% 31.7% 23.4% 55.9% 15.5% 26.3% 2400 57.4 37994.0 164.2 661.7 24.8% 45.1% 3.6 14.6 FY14E 50330 28185 8556 36741 13589 1371 2567 14785 0 14785 3992 10793 24.7% 17.8% 14.5% 27.0% 29.4% 21.4% 56.0% 17.0% 27.0% 3549 57.4 45629.8 188.0 794.7 23.7% 23.0% 4.5 18.9 FY15E 59631 33691 10734 44425 15206 1624 3578 17160 0 17160 4633 12527 18.5% 11.9% 16.1% 25.5% 28.8% 21.0% 56.5% 18.0% 27.0% 3549 57.4 54797.5 218.2 954.3 22.9% 19.8% 3.7 16.3

12
INDUSIND BANK
Result update NEUTRAL CMP 402 Target Price 428 Previous Target Price Upside 6 Change from Previous( Rs) Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Cr) Average Daily Volume Nifty Stock Performance
Absolute Rel.to Nifty 1M -9.2 -7.0 1yr -6.9 -9.7 YTD -6.9 -9.7
"NEUTRAL"
13th Jan, 2014
Despite of higher profit we remain have neutral view on the stock owing to shifting of loan mix from retail loan to corporate banking. We anticipate two things-(a) margin compression, (b) higher slippage. Retail loan generally have higher yield in nature than corporate loans. Corporate loan has big ticket size loans and in slowdown of economy, corporate loan emerges as biggest slippage risk than other loans. At the current price of Rs.405, stock is trading at 2.4 times of one year forward book. We value bank at Rs.428/share which would be 2.5 times of FY14Es book value. Better than expected earnings led by higher loan growth and margin During quarter Indusind bank reported better than expected earnings largely due to higher loan growth and margin expansion. In 3QF14, bank reported NII growth of 26.4% YoY supported higher yield on asset to 13.7% and margin expansion of 20 bps YoY. Other income grew by 35% YoY to Rs. 480 cr in which fee income registered growth of 30% and trading, forex and other reported 101% growth in YoY due to low base. Declined cost to income ratio boost PPP growth Operating leverage (Operating expenses to total asset) remained at elevated level but cost to income ratio declined on both front i.e. on sequential and yearly basis as well. During quarter bank reported employee cost growth of 22% and operating cost growth of 22% YoY to Rs.206 cr and Rs.563 cr respectively. Cost to income ratio improved by 80 bps sequentially and 280 bps yearly to 46.5%. This led pre provisioning profit growth of 37% YoY. Asset quality witnessed deterioration in sequential basis During quarter bank witnessed deterioration in asset quality with GNPA and net NPA in absolute term deteriorated by 14.7% QoQ and 51% QoQ respectively. Fresh slippages were 1.4% (annualized) as against 1.1% in last quarter. Bank made lower provisions against loan loss, as the result net NPA as the percentage of net loan reached to 0.3% as against 0.2% in 2QFY14. Provision coverage ratio (without technical write off) declined to 73.6% from 80% in 2QFY14 but still above of regulatory requirement of 70%.
532187 INDUSINDBK 561/318 22400 7.88 6171
Share Holding Pattern-% Current 24QFY1 3QFY1 4 3 Promoters 15.2 15.2 15.3 FII 41.1 39.9 42.3 DII 7.2 7.4 7.0 Others 36.4 37.5 35.4 INDUSIND Bank Vs Nifty
Financials
NII Total Income PPP Net Profit EPS 2011 1376 2090 1082 577 12.4 2012 1704 2716 1373 803 17.2

Rs, Cr 2013 2014E 2015E 2233 2787 4053 3596 4562 5827 1839 2452 2972 1061 1320 1633 20.3 25.3 31.1 (Source: Company/Eastwind) 13
INDUSIND BANK
Better than expected profit on the back of healthy core earnings, lower CI ratio and lower provision With the support of healthy core earnings, improvement in cost income ratio and lower provisions, net profit grew by 30% YoY to Rs. 347 cr as against our expectation of Rs.303 cr largely due to higher than expected loan growth and operating leverage. Healthy profit led ROA and ROE to 1.74% and 16.8% respectively. Margin expansion of 10 bps YoY to 3.7% Bank reported NIM expansion of 20 bps YoY to 3.7% largely due to improvement in loan yield whereas cost of deposits remained flat. Going forward margin would be compressed due to banks strategy to shift loan mix from consumer to corporate. Loan on yield during quarter was 13.7% versus 13.5% in last quarter while cost of fund by and large stable at 10%. Moderate deposits growth due to muted current and term deposits growth In balance sheet front, bank reported moderate growth 10% YoY in deposits largely due to stagnant growth in current account and term deposits. Demand deposits grew by 4% YoY whereas saving deposits grew by 50% YoY. As a percentage of total deposits demand deposits and saving deport were 15.7% and 16.5% versus 16.6% and 12.1% in 3QFY13 respectively. CASA ratio was remained flat at 29.6% from 31.4% in 2QFY14 and 28.7% in 3QFY13. Term deposited reported growth of 4.7% YoY to Rs.382 bn. Loan growth higher than industry average and shifting of loan mix Loan reported 27.4% YoY growth above industry average of 20% despite of slowdown in economy. During quarter bank witnessed shifting of loan composition from consumer finance division to corporate finance which would be result of margin compression and deterioration asset quality. Consumer loan (which is generally high yielding in nature) composition has changed to 47% of loan advance from 52% in 3QFY13 whereas corporate banking division constitute 53% of loan. Corporate loans are generally in high ticket size and in slowdown of economy; there is high chances of such loan slip into NPA. But this quarter we note that bank is able to improve it yield in both front. Corporate yield improved to 11.9% from 11.5% and retail loan improved to 15.6% from 15.5% in sequential basis.

14
INDUSIND BANK
Fundamenatl Through Graph
NII profit led by higher loan growth and margin expansion
Sequentail and yearly improvement of CI ratio boosted PPP
Higher core earnings, improvement in CI ratio and lower provisions support profit growth higher than expecattion
Source: Eastwind/Company
15
INDUSIND BANK
Fundamenatl Through Graph
Loan growth higher than industry average and moderate growth in deposits led by muted current deposits and term deposits
Margin expansion of 10 bps on account of increased in loan yiled and stable cost of fund
Valuation Band (1yr forward book value)
Trading at 1.5 times of one year forward book which we believe fair looking at indsury headwinds and economy
16
INDUSIND BANK
Quarterly Performance
Quarterly Result( Rs. Cr) Interest/discount on advances / bills Income on investments Interest on balances with Reserve Bank of India Others Total Interest Income Others Income Total Income Interest Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions PBT Tax Net Profit Balance Sheet data( Rs. Bn) Net Worth Deposits Borrowings Total Liabilities Investments Advances Total Assets Asset Quality GNPA NPA % GNPA % NPA
3QFY14 1739 368 36 0 2143 480 2624 1413 730 480 1210 206 357 563 647 126 521 174 347
2QFY14 1611 365 42 0 2019 417 2435 1319 700 417 1117 202 327 529 588 89 499 169 330
3QFY13 1455 325 21 0 1800 356 2156 1223 578 356 934 168 293 461 472 79 393 126 267
% YoY
19.5 13.5 71.9 333.3 19.1 35.0 21.7 15.6 26.4 35.0 29.6 22.1 21.9 22.0 37.1 60.3 32.5 38.1 29.8
% QoQ
7.9 0.8 -12.9 -13.3 6.2 15.2 7.7 7.2 4.3 15.2 8.4 1.9 9.3 6.5 10.1 42.0 4.4 3.2 5.0
8664 56247 14771 81799 20134 52469 81799
8313 53058 13995 77422 19413 48968 77422
7495 51098 6567 67896 17594 42426 67896
15.6 10.1 124.9 20.5 14.4 23.7 20.5
4.2 6.0 5.5 5.7 3.7 7.1 5.7
626 165 1.2 0.3
546 109 1.1 0.2
422 125 1.0 0.3
48.3 32.0
14.7 51.0
17
INDUSIND BANK
Financials & Assuptions
Income Statement
Interest Income Interest Expense NII Change (%) Non Interest Income Total Income Change (%) Operating Expenses Pre Provision Profits Change (%) Provisions PBT PAT Change (%)
2011
3589 2213 1376 714 2090 1008 1082 504 577 577
2012
5359 3655 1704 1012 2716 1343 1373 180 1193 803
2013
6983 4750 2233 1363 3596 1756 1839 263 1576 1061
2014E
8308 5521 2787 1775 4562 2110 2452 455 1997 1320
2015
10419 6367 4053 1775 5827 2855 2972 535 2437 1633
Balance Sheet
Deposits( Rs Cr) Change (%) of which CASA Dep Change (%) Borrowings( Rs Cr) Investments( Rs Cr) Loans( Rs Cr) Change (%)
2011
34365 9331 5525 13551 26166
2012
42362 23 11563 24 8682 14572 35064 34
2013
54117 28 15867 37 9460 19654 44321 26
2014E
62234 15 20537 29 15559 23338 54071 22
2015E
74681 20 22404 9 18670 28005 67589 25
Ratio
Avg. Yield on loans Avg. Yield on Investments Avg. Cost of Deposit Avg. Cost of Borrowimgs
2011
10.8 5.4 5.3 7.0
2012
12.0 7.4 7.3 6.7
2013
12.7 6.5 8.8 7.6
2014E
0.0 6.6 8.9 7.5
2015E
12.5 6.5 8.5 7.5
Valuation
Book Value CMP P/BV
2011
87 264 3.0
2012
101 321 3.2
2013
146 405 2.8
2014E
171 405 2.4
2015E
195 405 2.1
18
Private Bank Result Preview 3QFY14

Stock Performance During Quarter
Revenue growth would be moderate owing to tepid loan growth Performance of banking sector is likely to remain modest in 3QFY14E as most of private sector banks in our coverage are expected to reported muted net interest income owing to tepid loan growth and stress in asset quality. However private sector banks are expected to report stable asset quality on sequential basis as compare to PSBs. Loan loss provision are expected to remain high due to higher restructure assets are in pipeline as per some of key bank management. We expect impairment of asset in private sector banks are less and slippages are expected to remain same as in 2QFY14. We expect NII to grow by 23.6% YoY in our private banking coverage universe. HDFC Bank and DCB are expected to report 34% and 22% YoY in 3QFY14E led by higher than industry loan growth and stable NIM. Operating leverage high provision dent net profit Profitability of private sector banks are expected to report 11% YoY on the back of loan loss provisions, MTM provisions, cost income ratio and lower core earnings. HDFC bank and DCB are expected to report 23% YoY and 26% YoY growth in their 3QFY14E while most of large and mid cap banks are expected to report muted profit growth. With the flow of FCNR deposits, we expect deposits cost to come down from present level but most likely the bank get benefit from 4QFY14 and onwards.
Nifty Vs Bank Nifty during Quarter

Muted loan growth reported by system In 2QFY14 banking industry experience loan growth of 18% YoY led by transfer of CP/CD borrowings to bank loans while in 3QFY14 loan growth has moderated to 15% YoY (as on 13th Dec.2013) due to revival of bond and lower demand of corporate loan led by slowdown in economy. We expect loan growth of 15-20% YoY growth in private sector while DCB and HDFC bank are expected to grow by 20%+YoY loan growth. Deposits growth lead by flow of FCNR deposits Deposits growth in the system registered 17% YoY growth as per RBI date (as on 13th Dec.2013) due to flow of FCNR deposits through RBIs special concession window. As per RBI data total fund inflow through FCNR is the tune of US$ 26 bn which would help bank to keep cost of deposits low. But we expect bank would get benefit from 4QFY14 and onwards. We expect lower cost of deposits of deposits in private sector banks largely due to strong franchise base network. HDFC bank and ICICI bank which have CASA of 40%+ would be benefited more than other banks in term of low cost of fund. Through FCNR deposits we expect Yes Bank would be leader but actual benefit would come from next quarter. Asset quality pressure continue to persist Asset quality pressure is likely to remain in 3QFY14E due to rising interest rate, high inflation and slower pace of economic growth. Gross slippages are expected to be elevated as per most of banker. We expect restructure asset in private sector bank would be less as compare to PSBs. With the implementation of FRP (route through which loans lead to investment book), banks are expected to report lower less restructure asset as against previous queerer. In worsen macroeconomic environment, we expect asset quality to remain at the level of 2QFY14. 19 Narnolia Securities Ltd,
Loan (Rs tn) and YoY Gr(%)

Outlook Broadly banking indices outperform Nifty by 6% in third quarter and most of banking stocks are trading at attractive valuation. Despite of, we have caution view on account of slowdown in economy, high interest rate and inflationary pressure. High inflation would be risk for the economy going forward. Any rise in inflation would result of rise in interest rate by RBI in its third quarter monetary policy review on 28th Jan.2014 which would be negative for banking industry. Most of banking stocks are expected to report moderate revenue and profit growth owing to multiple headwinds. In private sector banking universe we like HDFC Bank, ICICI bank and DCB. Axis Bank
Axis Bank Rs Cr NII PPP Net Profit
3QFY14E 3006 2772 1333
2QFY14 2937 2750 1362
3QFY13 2495 2311 1296
% YoY Growth 20.5 19.9 2.9
% QoQ Growth 2.3 0.8 -2.1
We expect Axis Bank to report 20% YoY loan growth and 12% YoY deposits growth. Cost Income ratio is expected to be 42% while loan loss provision was remain same at sequential basis. Profitability of bank would be muted on account of non improvement of loan yield. DCB DCB Rs Cr NII PPP Net Profit
3QFY14E 88 42 34
2QFY14 91 40 33
3QFY13 72 32 27
% YoY Growth 22.2 31.3 25.9
% QoQ Growth -3.3 5.0 3.0
We expect loan and deposits growth of DCB would be higher than industry average. Profitability would be grown on account of stable asset quality. We expect Cost to Income ratio at 66% and NIM are expected to compression by >10 bps on sequential basis. Key monitor able would be CI ratio. HDFC Bank HDFC Bank Rs Cr 3QFY14E NII 5087 PPP 3695 Net Profit 2289
2QFY14 4477 3387 1982
3QFY13 3799 3024 1859
% YoY Growth 33.9 22.2 23.1
% QoQ Growth 13.6 9.1 15.5
We expect bank to report loan and deposits growth of 21% and 14% respectively. Asset quality would be remained under control and profitability are expected to grow on account of comfortable core earnings and stable asset quality. Operating leverage is expected to be in better position.
20

ICICI BANK ICICI BANK Rs Cr 3QFY14E NII 4505 PPP 4235 Net Profit 2504
2QFY14 4044 3888 2352
3QFY13 3499 3452 2250
% YoY Growth 28.8 22.7 11.3
% QoQ Growth 11.4 8.9 6.5
We expect loan and deposits growth of 15% and 11% YoY for 3QFY14E respectively. Revenue growth was due to hike of lending rate and asset quality is expected to be stable on sequential basis. Operating leverage and cost of fund would be key monitorable. J&K BANK J&K BANK Rs Cr 3QFY14E 2QFY14 3QFY13 % YoY Growth % QoQ Growth NII 679 682 594 14.3 -0.4 PPP 496 496 435 14.0 0.0 Net Profit 339 303 289 17.5 12.0 J&K bank is expected to report 17.5% YoY profit growth on account of 20%+loan growth and stable asset quality. We expect little bit higher of gross slippage during the quarter as bank reported higher slippage in previous quarter. NIM would be expanded <10 bps QoQ due to high loan yield and lower cost of fund likely to get benefit from CASA deposits. YES Bank YES Bank Rs Cr 3QFY14E 2QFY14 3QFY13 % YoY Growth % QoQ Growth NII 578 672 584 -1.0 -14.0 PPP 664 713 563 17.9 -6.9 Net Profit 358 371 342 4.7 -3.5 We expect Yes bank to report muted earnings on account of high credit cost and restructure assets. Loan growth and deposits growth are expected to be line with industry average. We expect NIM compression on account higher cost of fund and lower loan yield. NIM is key monitorable for the quarter.
Result Preview ; at a glance

PRIVATE BANK AXISBANK CUB DCB DHANBANK FEDERALBNK HDFCBANK ICICIBANK INDUSINDBK INGVYSYABANK J&KBANK KARURVYSYA SOUTHBANK YESBANK Total NII 3006 207 88 96 609 5087 4505 657 397 679 308 374 578 16591 3QFY14E PPP Net Profit 2772 1333 152 71 42 34 22 0.72 418 230 3695 2289 4235 2504 561 303 275 173 496 339 186 41.5 255 131 664 358 13773 7808 NII 2937 190 91 82 548 4477 4044 700 440 682 298 364 672 15525 2QFY14 PPP Net Profit 2750 1362 141 84 40 33 18 -1.85 354 226 3387 1982 3888 2352 588 330 276 176 496 303 157 83 212 127 713 371 13020 7427 NII 2495 163 72 74 497 3799 3499 578 403 594 308 353 584 13419 3QFY13 PPP Net Profit 2311 1296 131 85 32 27 14 4 394 211 3024 1859 3452 2250 472 267 263 162 435 289 212 113 235 128 563 342 11538 7033 YoY Growth NII PPP Net Profit
20.5 27.0 22.2 29.7 22.5 33.9 28.8 13.7 -1.5 14.3 0.0 5.9 -1.0 23.6 19.9 16.0 31.3 57.1 6.1 22.2 22.7 18.9 4.6 14.0 -12.3 8.5 17.9 19.4 2.9 -16.5 25.9 82.0 9.0 23.1 11.3 13.5 6.8 17.5 -63.3 2.3 4.7 11.0
QoQ Growth NII PPP Net Profit

2.3 8.9 -3.3 17.1 11.1 13.6 11.4 -6.1 -9.8 -0.4 3.4 2.7 -14.0 6.9 0.8 7.8 5.0 22.2 18.1 9.1 8.9 -4.6 -0.4 0.0 18.5 20.3 -6.9 5.8 -2.1 -15.5 3.0 -138.9 1.8 15.5 6.5 -8.2 -1.7 12.0 -50.0 3.1 -3.5 5.1

21
GAIL
Company Update CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Cap (Rs Crores) Average Daily Volume Nifty Stock Performance Absolute Rel. to Nifty 1M 0.6 1.7 1yr -5.6 -8.7 YTD -5.0 -20.0 Neutral 348 About The Company
"NEUTRAL" 10th Jan' 14
GAIL (India) Limited is a gas utility company. The Company is engaged in transport through pipeline; manufacture of basic chemicals, fertilizer and nitrogen compounds, plastics and synthetic rubber in primary forms; extraction of crude petroleum; extraction of natural gas and electric power generation, transmission and distribution. The company operates in five segments viz Gas Transmission Business ,LPG Transmission Business, Gas Trading Business, Petrochemical Business and LPG and Liquid Hydrocarbon Business.
1HFY14 Financial Highlights : 532155 GAIL 395/273 44,047 399457 6168

Company registered a turnover of Rs. 26902.25 Cr, up by 19% in H1FY14 compared to corresponding previous year period. There was fall of 10% in operating profits of the company to Rs 2971.72 Cr for H1FY14. The Other income was down 8% to Rs 279.6 Cr while Interest cost grew 99% to Rs 169.36 Cr, The net profits for H1FY14 was Rs 1723.84 Cr down by 19 %in comparison to 2HFY13. The company during the first half of the current financial year, earned the revenues of Rs. 23,437 Cr from Natural Gas Trading up 24% YoY as compared to corresponding period of the last year. The revenues from Natural Gas Transmission increased by 9% YoY to Rs. 2,066 Cr for H1FY14. The net sales from LPG and Liquid Hydrocarbons business increased by 11% YoY to Rs. 2,043 Cr as against Rs. 1,842 Cr for the same period of last year. The net sales from Petrochemicals business increased by 54% to Rs 2,237 Cr for 1HFY14. The revenues from LPG transmission increased by 72% to Rs. 189 Cr in 1HFY14.
Share Holding Pattern-% Current 1QFY14 4QFY13 Promoters 57.3 57.3 57.3 FII 17 16.7 16.3 DII 21.6 22 22.2 Others 3.9 3.9 4 1 yr Price Movement Vs Nifty
1HFY14 Production Highlights :

During 1HFY14, Petrochemical Production was 231 TMT, up by 20 % YoY it was 193 TMT in 1HFY13.The Petrochemical Sales were 229 TMT, up by 37 % against 167 TMT in the corresponding period in the previous year. The LPG and Other Liquid Hydrocarbon production were 685 TMT, against 684 TMT in 1HFY13. The LPG transmission was 1,428 TMT. The Natural Gas transmission was 97.25 MMSCMD, against 107.72 MMSCMD. The Natural Gas stood at 80.33 MMSCMD in 1HFY14 as against 81.92 MMSCMD in 1HFY3.
Highlights of Conference Call:

The company has commissioned Kochi pipeline on 25th August 2013. Company has shared Rs 698.68 Cr towards LPG subsidy in the quarter ended September 2013 compared to Rs 785.67 Cr in the corresponding previous year period. Ministry of Petroleum and Natural gas has capped subsidy burden of Gail (India) at Rs 1400 Cr for FY'14. Capex incurred during H1FY'13 was Rs 2525 Cr as Rs 1500 Cr on Petrochemical, Rs 400 Cr on pipeline expansion, Rs 270 Cr on E&P and Rs 360 Cr towards equity contribution.
Financials Revenue EBITDA PAT EBITDA Margin PAT Margin 2QFY14 13944.6 1405.5 915.7 10.1% 6.6% 1QFY14 12855.6 1136.7 606.5 8.8% 4.7% (QoQ)-% 8.5 23.6 51.0 120bps 180bps 2QFY13 11361.2 1380.3 985.4 12.1% 8.7%
Rs, Crore (YoY)-% 22.7 1.8 -7.1 (200bps) (210bps)

22

GAIL
Continued
Projected Capex for FY'14 is Rs 5000 Cr and Rs 3500 Cr in FY'15. The company has borrowed Rs 585 Cr during Q2FY'14. Total borrowings stood at Rs 10632 Cr at the end of September 2013 quarter-out of which 56% loan is foreign currency loan. Almost 90% of foreign currency loan is financially or naturally hedged. The company anticipates increase in gas availability in near future. It expects around 20-25 mmscmd of gas over a period of 3-4 years including 11-12 mmscmd of gas from domestic sources and 10-15 mmscmd from LNG. GAIL has shared Rs 698.68 Cr towards LPG subsidy in the quarter ended September 2013 compared to Rs 785.67 crore in the corresponding previous year period
Recent Events
GAIL management indicated that, MoPNG has in-principle agreed to provisionally cap GAILs FY14 subsidy at INR14b, implying 2HFY14 subsidy to be nil. As per our view the final decision will be post Finance Ministry consent.
Risk & Concern

Uncertainty on under recovery sharing Near-term gas supply visibility which may lead to under-utilization of new pipelines
View and Valuation :

The stock is currently trading at Rs 346 and business outlook going forward ,management guidance does not provide us with much convincing thought .We donot see much upsides attached with the stock in current business scenario. We therefore recommend NEUTRAL
view on the stock. Graphical Dipiction 2QFY14 SEGMENTAL SALES TURNOVER

23
GAIL
SALES TREND
Sales increased by 22% YoY driven by higher revenues from the natural gas trading and petrochemical segments
EBITDA & OPM%
Adj PAT & NPM %
Higher Depcreciation owing to capitalization of assets with respect to new pipelines and higher interest cost resulted in a NPM decline

24
N arnolia Securities Ltd

402, 4th floor 7/ 1, Lord s Sinha Road Kolkata 700071, Ph 033-32011233 Toll Free no : 1-800-345-4000 em ail: research@narnolia.com , w ebsite : w w w .narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any action based upon it. This report/message is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any from. The report/message is based upon publicly available information, findings of our research wing East wind & information that we consider reliable, but we do not represent that it is accurate or complete and we do not provide any express or implied warranty of any kind, and also these are subject to change without notice. The recipients of this report should rely on their own investigations, should use their own judgment for taking any investment decisions keeping in mind that past performance is not necessarily a guide to future performance & that the the value of any investment or income are subject to market and other risks. Further it will be safe to assume that NSL and /or its Group or associate Companies, their Directors, affiliates and/or employees may have interests/ positions, financial or otherwise, individually or otherwise in the recommended/mentioned securities/mutual funds/ model funds and other investment products which may be added or disposed including & other mentioned in this report/message.

Investment Funds Advisory Today - Buy Stock of UltraTech Cement LTD, DB Corp and Infosys

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Investment Funds Advisory Today - Buy Stock of UltraTech Cement LTD, DB Corp and Infosys

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India Equity Analytics

Daliy Fundamental Report on Indian Equities

IEA-Equity Strategy 14th Jan, 2014 Edition : 183

UltraTech Cement Ltd :

DB Corp :"On strong footing"

14th Jan 2014

Zensar Tech :"Better growth trajectory"

14th Jan 2014

Infosys : "On the way of excitement"

13th Jan 2014

13th Jan 2014

Private Bank Result Preview 3QFY14 :

13th Jan 2014

10th Jan 2014

UltraTech Cement Ltd.

Share Holding Pattern-%

Source - Comapany/EastWind Research

Financials : Net Revenue EBITDA Depriciation Interest Cost Tax PAT

Q2FY14 4522 679 257 89 107 264

Y-o-Y % -4.3 -34.4 10.8 48.3 -54.1 -52.0

Q-o-Q % -9.2 -36.7 2.0 34.8 -56.7 -60.8

Q2FY13 4727 1035 232 60 233 550

Q1FY14 4980 1072 252 66 247 673

Please refer to the Disclaimers at the end of this Report.

UltraTech Cement Ltd.

Source - Comapany/EastWind Research

60 FY10 FY11 FY12 FY13

Source - Comapany/EastWind Research

Narnolia Securities Ltd,

UltraTech Cement Ltd.

Source - Comapany/EastWind Research

Narnolia Securities Ltd,

BUY 302 340 13% -

533151 DBCORP 318.65/210 5502 25750 6273

1yr 25.0 21.6

Promoters FII DII Others

74.96 17.7 2.95 4.36

74.97 16.5 4.00 4.57

75.0 14.7 5.34 5.02

Stock Performace with Nifty

Narnolia Securities Ltd,

Narnolia Securities Ltd,

Share Holding Pattern-%

Promoters FII DII Others

48.27 11.99 0.96 38.78

48.35 11.68 1.26 38.71

48.36 10.75 1.28 39.61

1 year forward P/E

Narnolia Securities Ltd,

$1mn+ $5mn+ $10mn+ $20mn+

47 6 1 1 35% 40% 69 69% 31% 81% 7286

43 7 2 1 35% 42% 59 72% 28% 82% 6825

41 7 2 1 35% 42% 56 70% 30% 83% 6504

40 8 2 1 35% 43% 55 69% 31% 82% 6508

49 6 1 1 37% 43% 66 68% 32% 81% 6519

47 6 1 1 39% 46% 61 67% 33% 80% 6657

top 5 clients top 10 clients DSO

Onsite Offshore Utilization (Including Trainees) Headcount

Narnolia Securities Ltd,

Share Holding Pattern-%

1 year forward P/E

On QoQ, Companys margin improved in entire segments .

Volume and Pricing Growth (QoQ)-%