IEA Report 6th March

IEA Report
6th Apr 2017

KEC "BOOK PROFIT" 6th Apr 2017
Revenue growth for 9MFY17 was subdued due to lower commodity prices and demonetization. But the operating margin continues to remain
accretive during the same period. We expect 5% and 15% revenue growth in FY17E and FY18E respectively based on the strong traction in
Transmission and railway business with strong operating margin. We recommended this stock at Rs. 148 for the target price of Rs. 217 and the
stock have achieved our recommended target price. Fundamentally we remain bullish on the stock based on strong order book position and
improving operating margin but on the valuation front, we are not comfortable at current price level (currently stock is trading at 3.2x of P/B of
FY17). Hence, we advise our investors to Book profits at the current price..................... ( PAGE : 2-7)
AUROPHARMA "HOLD" 5th Apr 2017

We expect Auropharma will be able to register growth from the US and EU business, on the back of 40-45 launches which are expected in FY18.
Apart from that management is focusing to develop dermatology, Ophthalmology segments which will help the company to diversify its portfolio in
future. Currently the stock is trading at 5 times FY17 P/B and 17 times FY17 P/E. Considering the above arguments we maintain HOLD rating in
this stock with the target price of Rs.890 . ........................................... ( Page : 8-9)
KALPATPOWER "HOLD" 3th Apr 2017

The current order win of Rs.1202 Cr further strengthen the standalone order book position, which provides strong revenue visibility (1.95x of TTM
revenue) going ahead. Advanced stage of overseas projects in transmission will help to register strong revenue growth of 20% in FY17. Considering
the railway ministries ambitious target, we see tremendous growth opportunity for the company like KAPLATPOWR. Based on the recent order win,
especially from Railway we have revised our target price to Rs.350 (Standalone business at 290 per share and Subsidiaries at 60 per share) and we
recommend HOLD on the stock. .................................................. ( Page : 10)
JKIL "BUY" 3th Apr 2017

Strong order book and execution of Mumbai metro projects boosted revenue in Q3FY17and we expect it to continue. We believe that the black
listing from BMC projects and penalty will not affect the top and bottom line of the company in bigger way as 70% of current order book is comes
from metro projects. The current downfall in stock price is irrational and we believe it is the opportunity for the investors. We continue to expect
9%, 20% and 27% revenue growth in FY17, FY18 & FY19 respectively based on the strong order book and robust execution of Mumbai metro
projects. Despite blacklisting from BMC projects we remain bullish on the stock and maintain our BUY rating on the stock with unchanged target
price of 330. ..................................................................... ( Page : 11-16)
COSMOFILMS : Initiating Coverage "BUY" 31th Mar 2017

At CMP of 380/- stock is available at 1.4x FY17, 1.15x FY18 and 1.0x FY19 expected book value. With growing and sustainable margins, we believe
company to post healthy ROE of 24+% and 23% in FY18 & FY19 respectuvely, improve significantly from 21% delivered in FY16. We believe Cosmo
is well positioned to see a major rerating once company start delivering sales from new capacity with improved margins and profotability. keeping
in mind above all positives, we initiate "BUY" on the stock with price target of 490/- and 570/- for FY18 & FY19 respectively, valuing stock at 1.5x
and 1.5x of its FY18 & FY19 respective expected book value. .................. ( Page : 17-31)
AUTOMOBILES 31th Mar 2017

We do not expect change in demand of Passenger vehicles due to lower BS-III inventory. On the 2W and Commercial vehicles front demand may
come down for next couple of months due to higher sales of BS-III vehicles. Eicher Motors have already upgraded itself to BS-IV. Hence we consider
Maruti and Eicher Motors as our best picks. ................................... ( Page : 32)
M&M "HOLD" 29th Mar 2017

The management expects 15-20 percent volume growth for the tractor industry in FY18. New launches in 2HFY18 in Tractor and SUV segments will
make the M&M presence further stronger in the domestic market. Expansion in the Ssangyong could lead to better margins going ahead. The stock
is currently trading at 2.5x P/B of FY17. We expect that RoE to maintain over 11%. Based on SOTP valuation method we have valued the standalone
business at Rs. 1112 per share and subsidiaries at Rs. 487 per share. Hence, we recommend HOLD on the stock with target price of Rs. 1600.
.............................................. ( Page : 33-35)
Narnolia Securities Ltd IEA Edition No.- 989
BOOK PROFIT
KEC International 5-Apr-17
Result Update Recent Development:-

CMP 219
Target Price NA KEC has received Rs. 1781 Cr worth of Orders in Transmission and cable
Previous Target Price on 4th April 2017. KEC has secured 1270 Cr transmission orders from
Upside international market (Middle East, Africa, Sri Lanka and Americas), Rs. 432
Change from Previous Cr from India market and Rs. 79 Cr of order for EHV cable supply.
Companys efforts on growing in EPC business in Brazil is clearly paying off.
In last one month, KEC has received orders worth of Rs.2494 Cr from
Market Data
international market which has strengthened the international order book.
BSE Code 532714 Current order book stands at Rs.11628 Cr which implies strong revenue
NSE Symbol KEC visibilities of 1.26x of TTM revenue with improving operating margin.
52wk Range H/L 222/111 Fundamentally we remain bullish on the stock but valuation is little
Mkt Capital (Rs Cr) 5,639 stretched.
Av. Volume 259102
Healthy Order Book:-
Nifty 9265
Current order book stands at Rs. 11175 Cr i.e. 1.3x of the trailing twelve
Stock Performance months revenue with Rs. 3800 Cr of orders in L1 position. Order intake
1Month 3 Month 1Year during the 9 months stood at Rs. 8634 Cr, up by 26% YoY. Management
Absolute 31.4 57.2 72.4 expects healthy orders from SEBs and railways which will provide robust
revenue visibility going ahead. Currently, SEA plant (Brazil) is running at
Rel.to Nifty 27.8 43.9 53.0
100% capacity utilization with 2 years orders in hand.
Share Holding Pattern-%
Operating Margin continues to be strong:-
3QFY17 2QFY17 1QFY17
Promoters 51% 51% 51% EBITDA margin in Q3FY17 has improved by 135 bps YoY to 9.3%. The
Public 49% 49% 49% Improvement in EBITDA margin was attributable to strong performance by
Others 0% 0% 0% SAE (500 bps up YoY), railway business (negative in Q3FY16) and cable
Total 100% 100% 100% business (negative in Q3FY16). Management is working on cost front in
cable business to improve margin and we expect margin improvement in
railway business as the revenue increase. Management has guided 9%
Company Vs NIFTY EBITDA margin in FY17 and improves further in FY18. KEC has bring down
180 KEC NIFTY account receivables days from 246 days in FY16 to 218 days at the end of
160 the Q3FY17 and we anticipate it to improve further based on retention
140 money release from Saudi project which result into improvement in bottom
120 line going forward.
100
In Rs. Cr.
80
Financials Q3FY17 Q2FY17 Q3FY16 YoY % QoQ %
60
Sales 1965 2121 2101 -7% -7%
40
EBITDA 182 185 167 9% -2%
Net Profit* 47 72 23 102% -35%
EBIDTA% 9.3% 8.7% 8.0% 130 bps 60 bps
Sandip Jabuani PAT 3.2% 3.1% 1.2% 200 bps 10 bps
* Net profit is excluding other comprehensive income
sandip.jabuani@narnolia.com
Narnolia Securities Ltd 2
Please refer to the Disclaimers at the end of this Report
Railway :- Potential Revenue growth driver
Management has cut down the revenue growth to 5% in FY17. But maintain the railway top line guidance of 450-500 Cr in FY17
and Rs.1000 Cr for the FY18E based on the huge opportunity in railway electrification project. Railway Ministry has set target to
award 2000 Km, 4000 Km and 6000 km of overhead electrification orders in FY17, FY18 and FY19 respectively. In railways, KEC
commands 20% market share, which may translate into approx.2400 Cr of expected new orders in FY18E. Railway ministrys
focus on execution helps contractor to execute project smoothly and timely. We expect improvement in EBITDA margin based on
incremental volume and speedy execution.
Result Highlights of Q3FY17
Net sales de grew by the 6.5% YoY to Rs. 1965 Cr in Q3FY17 as compared to Rs. 2101 Cr in Q3FY16
EBITDA margin has improved by 135 bsp to Rs. 182 Cr as against Rs 167 Cr on account of 10% plus margin in T&D and
improved performance of railway and SAE business.
KEC has reported 102% YoY growth in PAT with 200 bps improvement on back of higher EBITDA
During the quarter KEC has secured Rs.2706 Cr of new orders in Q3FY17 (up by 20% YoY) and Rs. 8634 Cr in 9 months of
FY17, which is up by 26% YoY
Order book as on 31st December stands at Rs.11175 Cr, ie. 1.3x of TTM revenue.
Managment / Concall Update
Demonetization, delay in conversation of L1 orders into firm order and land acquisition issue at Jammu and Kashmir project led
to de growth in revenue
Management has guided 5% and 10-15% revenue growth in FY17 and FY18 respectively.
EBITDA margin in FY17 will be 9% and it will improve further in FY18
EBITDA margin of SAE tower was 8-9% in Q3FY17
Faced some serious issue in logistic in November and December month due to demonization but now situation is under control.
Losses in Cable segment has come down significantly on YoY
Revenue loss of 50-60 Cr due to demonization
Maintain revenue guidance in railway segment of Rs. 450-500 Cr and Rs.1000 cr in FY18
Interest cost as % of sales will be 2.7% in FY18
Significant improvement in solar business from next year as the KEC is in L1 position of large project. EBITDA margin is slightly
below than normal margin but cash generating on PBT level
Expect to bring down AR collection days to 180 from 218 days based on the release of retention money from Saudi projects
Land acquisition issue at Jammu and Kashmir project has been resolved
Expect more orders from SEBs compare to PGCIL
Outlook and Valuation:-

Revenue growth for 9MFY17 was subdued due to lower commodity prices and demonetization. But the operating margin
continues to remain accretive during the same period. We expect 5% and 15% revenue growth in FY17E and FY18E respectively
based on the strong traction in Transmission and railway business with strong operating margin. We recommended this stock at
Rs. 148 for the target price of Rs. 217 and the stock have achieved our recommended target price. Fundamentally we remain
bullish on the stock based on strong order book position and improving operating margin but on the valuation front, we
are not comfortable at current price level (currently stock is trading at 3.2x of P/B of FY17). Hence, we advise our
investors to Book profits at the current price.

Quartely Performance 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY% QoQ%
Net Sales 2,140 2,021 2,491 1,903 1,998 2,076 2,530 1,763 2,098 1,935 -7% -8%
Other Operating Income 33 32 30 20 23 25 29 22 23 30 19% 27%
Net Sales 2,173 2,053 2,521 1,923 2,021 2,101 2,559 1,785 2,121 1,965 -7% -7%
Change in Invenotry 16 41 76 (13) (1) (39) 74 (49) 8 (11)
RM Cost 1,276 1,053 1,243 900 1,025 924 1,282 870 1,014 854 -8% -16%
COGS 1,292 1,094 1,318 887 1,024 885 1,356 821 1,022 843 -5% -18%
Employee Expenses 149 145 144 158 161 155 168 173 187 186 19% -1%
Other Expenses 225 225 275 203 260 243 279 215 238 243 0% 2%
Erection & Subcontracting 386 485 599 489 421 609 533 390 441 459 -25% 4%
Excise Duty 45 41 36 47 52 27% 11%
Total Expenditure 2,052 1,949 2,336 1,782 1,866 1,934 2,336 1,635 1,936 1,783 -8% -8%
EBITDA 121 105 185 141 155 167 223 150 185 182 9% -2%
Depreciation 22 23 22 29 21 31 22 29 31 30 -5% -4%
EBIT 99 82 162 112 134 136 201 121 154 152 12% -2%
Intreset 91 81 71 71 68 69 71 72 60 58 -16% -2%
PBT 9 136 100 44 69 69 132 54 100 101 46% 0%
Tax (12) 70 37 27 25 43 52 23 35 38 -11% 8%
PAT 20 66 63 17 44 26 80 31 65 63 139% -4%
Margin Profile YoY (+/-) QoQ (+/-)

Gross Margin 40.5% 46.7% 47.7% 53.9% 49.3% 57.0% 47.0% 54.0% 51.8% 57.1% 10 530
EBIDTA 5.6% 5.1% 7.3% 7.3% 7.7% 7.8% 8.7% 8.4% 8.7% 9.3% 150 60
EBIT 4.5% 4.0% 6.4% 5.8% 6.6% 6.7% 7.9% 6.8% 7.3% 7.7% 100 40
PAT 0.9% 3.2% 2.5% 0.9% 2.2% 1.8% 3.1% 1.7% 3.1% 3.2% 140 10
Order Book 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY% QoQ%
Transmission 7,356 6,921 7,131 7,903 7,207 7,028 7,087 7,334 7,442 8,054 15% 8%
SAE 931 876 951 948 1,086 937 1,134 1,769 1,510 1,342 43% -11%
Cables 279 263 570 632 592 469 472 104 216 224 -52% 4%
Railways 279 263 475 738 691 562 567 936 1,186 1,342 139% 13%
Water 466 438 380 316 - 281 189 208 216 112 -60% -48%
Solar 9 9 - - 296 75 38 52 183 101 34% -45%
Total 9,320 8,770 9,508 10,537 9,872 9,351 9,487 10,403 10,753 11,175 20% 4%
Order Intake
Transmission 583 1,478 1,909 2,375 1,024 1,595 1,370 1,469 1,738 1,651 4% -5%
SAE 231 485 421 123 181 247 206 678 465 298 20% -36%
Cables 253 412 393 309 181 270 206 198 279 244 -10% -13%
Railways - 48 84 278 90 90 56 424 528 460 412% -13%
Water - - - - - - - - - -
Solar 11 5 3 - 30 45 38 57 93 54 20% -42%
Total 1,078 2,428 2,811 3,085 1,506 2,246 1,877 2,825 3,103 2,706 20% -13%
4
Narnolia Securities Ltd

Segment Revenue 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY% QoQ%
Transmission-Rest 1,692 1,531 1,976 1,355 1,506 1,557 1,887 1,184 1,529 1,273 -18% -17%
Transmission SAE 184 214 222 187 201 177 266 255 261 227 28% -13%
Total Transmission 1,876 1,745 2,198 1,542 1,707 1,734 2,153 1,439 1,790 1,500 -13% -16%
Cables 237 254 217 259 262 230 292 245 228 278 21% 22%
Railway 29 22 58 45 34 81 50 70 66 105 30% 59%
Water 30 32 38 32 21 13 37 18 19 20 54% 5%
Solar 9 0 - 40 52 14 26 59 48% 127%
Total 2,172 2,053 2,520 1,878 2,024 2,098 2,584 1,786 2,129 1,962 -6% -8%
Order Book Order Intake
Order Book Book to bill Order Intake Growth YoY%

12,000 2.00 10000 0.3
1.80 9000
10,000 0.25
1.60 8000
8,000 1.40 7000 0.2
1.20 6000 0.15
6,000 1.00 5000
0.80 4000 0.1
4,000 0.60 3000 0.05
2,000 0.40 2000
0.20 0
1000
- - 0 -0.05
FY12 FY13 FY14 FY15 FY16 Till FY12 FY13 FY14 FY15 FY16 Till
Q3FY17 Q3FY17
Strong Growth in Railway Segment :- Margin Trend :-
Railway Order Book Growth YoY%

EBITDA M % PAT M %
1,600 160%
1342 140% 10%
1,400
1,186 120% 9%
1,200 8%
100%
1,000 936 7%
80%
800 738 691 60% 6%
562 567 40% 5%
600 475
20% 4%
400 279 263 3%
0%
200 2%
-20%
1%
- -40%
0%
2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17

About the Company :-
KEC International Limited is an India-based company, engaged in infrastructure engineering, procurement and construction
(EPC). The Company is also a manufacturer of power cables and telecom cables in India. The Company operates in four
business verticals, which include power transmission and distribution, cables, railways and water. The Company is also a provider
of turnkey solution in the railway infrastructure EPC space. The Company has powered infrastructure development across 50
countries in developed, developing and emerging economies of South Asia, the Middle East, Africa, Central Asia, the United
States and South East Asia. The Company has eight manufacturing facilities for lattice towers, monopoles, hardware and cables.
Power Transmission
Cabels Railways Water
& Distribution
Transmission Lines Substations Power Cabels

Civil & Track Work Water Resource
LT/HT/EHV
Managment
Lattice Distribution Platforms &
Network Telecom Cabel : Buildings
Towers/Poles
Optical Fiber and Water & Waste
Telecom/Tower/ Jelly filled Signalings Water Treatment
Hardware EPC/OPGE
Electrification
Supply EPC
Manufacturing Facilities
Tower Manufacturing
India, Brazil and Vadodara (Gujarat)
Mexico Mysore (Karnataka)
(SAE Annual Silvassa (Union
production capacity Territory)
100000 MTs)

Financials Snap Shot
INCOME STATEMENT RATIOS
FY14 FY15 FY16 FY17E FY14 FY15 FY16 FY17E
Revenue 7902 8468 8516 8943 EPS 2.6 6.3 7.4 11.5
Other Income 14 146 10 10 Book Value 46.3 51.7 58.8 66.9
Total Revenue 7916 8614 8527 8954 DPS 0.6 0.7 2.2 3.4
EBITDA 493 512 679 760 Payout (incl. Div. Tax.) 23% 11% 30% 30%
EBITDA Margin (%) 6% 6% 8% 9% Valuation(x)
Depreciation 71 88 88 84 P/E 26.0 12.8 16.4 16.0
EBIT 423 424 592 676 Price / Book Value 1.5 1.5 2.1 2.8
Interest 263 309 277 274 Dividend Yield (%) 0.87% 0.88% 1.82% 1.86%
PBT 173 261 325 412 Profitability Ratios
Tax 88 100 133 144 RoE 6% 12% 13% 17%
Tax Rate (%) 1 0 0 0 RoCE 24% 20% 28% 31%
Reported PAT 67 161 192 268 Turnover Ratios
Dividend Paid 15 18 57 80 Asset Turnover (x) 1.1 1.1 1.0 1.1
No. of Shares 26 26 26 26 Debtors (No. of Days) 176 166 193 193
Inventory (No. of Days) 45 38 38 38
Creditors (No. of Days) 148 143 126 126
Net Debt/Equity (x) 0.51 0.55 0.40 0.35
BALANCE SHEET CASH FLOW

FY14 FY15 FY16 FY17E FY14 FY15 FY16 FY17E
Share Capital 51 51 51 51 OP/(Loss) before Tax 155 261 325 412
Reserves 1140 1278 1460 1648 Depreciation 71 88 88 84
Net Worth 1192 1330 1512 1700 Direct Taxes Paid 113 122 135 144
Long term Debt 603 737 602 602 Op. before WC Change 499 596 853 770
Short term Debt 1207 1308 1723 1723 CF from Op. Activity (9) 153 (51) 478
Deferred Tax 73 70 66 66 Capex 161 90 78 0
Total Capital Employed 1794 2067 2114 2302 CF from Inv. Activity (136) 125 18 0
Net Fixed Assets 992 881 860 860 Repayment of LTB 305 640 264 0
Capital WIP 18 16 12 0 Interest Paid 263 309 277 274
Debtors 3808 3853 4495 4729 Divd Paid (incl Tax) 15 17 58 80
Cash & Bank Balances 144 206 111 0 CF from Fin. Activity 132 (216) (63) (354)
Trade payables 3213 3325 2939 3087 Inc/(Dec) in Cash (14) 62 (96) 124
Total Provisions 125 122 114 114 Add: Opening Balance 146 132 194 111
Net Current Assets 1374 1668 2151 2187 Closing Balance 132 194 98 235
Total Assets 7411 7745 8138 8322

HOLD
AUROBINDO PHARMA LTD 5-Apr-17
Company Update Aurobindo Pharma clears USFDA inspection for Unit-11 in Srikakulam,
CMP 681 Andhra Pradesh with zero observations. The Unit-11 plant produces non-
antibiotic active ingredients,which is used for both the captive purpose of
Target Price 890
Aurobindos formulation manufacturing and for supplies to external
Previous Target Price 890 customers. The US formulation business contributes 45 percent of
Upside 31% Aurobindos total revenue Rs.13,890 cr. The acquired business(Agile
Change from Previous 0% Pharma) continues to see profitable during Q3FY17. As on 31 Dec 2016,
Auro pharma has transferred manufacturing of 60 products from Europe to
Vizag facility in India. Management expects supply from this facility to EU
Market Data markets from FY18E. The estimated sales revenue from this facility is Rs.
BSE Code 524804 1300 Cr. per annum. Apart from that recent approvals from USFDA in
NSE Symbol AUROPHARMA various segment will enable the company to launch multiple products in
52wk Range H/L 895/622 FY18E
Mkt Capital (Rs Cr) 39900 Outlook
Av. Volume(,000) 232924
Nifty 9237 We expect Auropharma will be able to register growth from the US and EU
business, on the back of 40-45 launches which are expected in FY18.
Apart from that management is focusing to develop dermatology,
Stock Performance
Ophthalmology segments which will help the company to diversify its
1M 3M 12M
portfolio in future. Currently the stock is trading at 5 times FY17 P/B and 17
Absolute -0.3 0.9 -9.0 times FY17 P/E. Considering the above arguments we maintain HOLD
Rel.to Nifty -3.6 -12.3 -27.6 rating in this stock with the target price of Rs.890
Share Holding Pattern-% Recent developments

Promoters 51.94 53.79 53.9 Aurobindo Pharma recalls of 47,040 bottles of Venlafaxine
Public 48.06 46.21 46.1 hydrochloride capsules (an anti-depressant)
DII Aurobindo Pharma gets US FDA nod for Etomidate injectable (used for
Total 100 100 100 induction of general anaesthesia & sedation)
Aurobindo Pharma gets final USFDA approval for Guaifenesin and
Company Vs NIFTY Dextromethorphan Hydrobromide extended-release tablets
125 AUROPHARMA NIFTY Aurobindo Pharma gets USFDA nod for HIV drug. It has an estimated
120 market size of USD 388 million for the 12 months ended December 2016
115
110 51 products are pending in pipeline.
105 ARBP is going to launch 39 products going ahead.
100
95 Rs,Cr
90 Financials 2012 2013 2014 2015 2016
85
80 Sales 4627 5855 8100 12121 13896
EBITDA 561 861 2132 2564 3206
Net Profit -124 294 1173 1576 1982
Aditya Gupta EPS -4 10 40 54 34
aditya.gupta@narnolia.com ROCE 11% 16% 36% 34% 36%

FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16
Revenue 5855 8100 12121 13896 EPS 10 40 54 69
Other Income 29 23 97 68 Book Value 89 129 12 11
Total Revenue 5884 8123 12217 13964 DPS 2 2 76 84
COGS 2,991 3,606 5,506 6,158 Payout (incl. Div. Tax.) 0 0 2 0
GM 49% 55% 55% 56% P/E 14.46 12.71 22.64 17.81
Other Expenses 1,340 1,530 2,749 2,982 Valuation(x) 15 12
EBITDA 861 2132 2564 3206 Price / Book Value 2 4 7 5
EBITDA Margin (%) 15% 26% 21% 23% Dividend Yield (%) 2% 0% 1% 0%
Depreciation 249 313 333 393 RoE 11% 31% 31% 29%
EBIT 612 1,819 2,231 2,813 Profitability Ratios
Interest 267 310 160 159 RoCE 16% 36% 34% 34%
PBT 374 1,533 2,168 2,722 Asset Turnover (x) 1 1 1 1
Tax 83 363 597 744 Turnover Ratios
Tax Rate (%) 22% 24% 28% 27% Debtors (No. of Days) 100 119 107 107
Reported PAT 294 1173 1576 1982 Inventory (No. of Days) 120 107 109 109
Dividend Paid 67 60 179 359 Creditors (No. of Days) 60 61 62 63
No. of Shares 29 29 29 58 Net Debt/Equity (x) 0.44 0.34 0.26 0.20
BALANCE SHEET CASH FLOW STATEMENT

Share Capital 29 29 29 29 OP/(Loss) before Tax 374 1,533 2,168 2,670
Reserves and surplus 2,577 3,721 5,127 6,958 Depreciation 249 313 333 427
Shareholders' funds 2,606 3,750 5,156 6,987 Direct Taxes Paid 119 344 597 667
Long term Debt 1,148 1,279 1,361 1,368 Operating profit before 819 2,047 2,644 3,290
Total Borrowings 3,384 3,634 3,864 3,883 working capital
CF from Op. Activity 275 646 1,797 871
Non Current liabilities 77 215 235 242 Capital expenditure on (273) (390) (1,362) (481)
Long term provisions 9 9 24 31 fixed
CF assets
from including
Inv. Activity (246) (819) (1,426) (481)
Short term Provisions 80 127 218 240 Proceeds from long- 180 147 82 7
Current liabilities 1,195 1,865 3,634 3,543 term borrowings
Repayment of Long Term Borrowings
(523) (51) - -
Total liabilities 7,273 9,490 12,914 14,681 Interest Paid (112) (94) (144) (193)
Net Fixed Assets 2,857 3,031 4,061 4,115 Divd Paid (incl Tax) (67) (60) (179) (171)
Non Current 22 20 0 0 CF from Fin. Activity 108 118 (94) (345)
Investments
Other non Current assets 19 18 30 30 Inc/(Dec) in Cash 137 (55) 277 46
Current assets 4,137 5,631 8,299 10,035 Add: Opening Balance 66 203 179 469
Total Assets 7,273 9,490 12,914 14,681 Closing Balance 203 148 455 515

HOLD
Kalpatru Power Transmission Ltd. 3-Apr-17
Result Update
CMP 322 Recent Development :-
Target Price 350 Recently, KALPATPOWR has received orders worth of Rs. 1202 Cr in
Previous Target Price 320 Transmission and Railway segment. Company has secured 738 Cr worth of
Upside 9% transmission projects in Telengana (Rs.402 Cr) and Abu Dhabi (Rs.336 Cr)
Change from Previous 9% and big ticket size order worth of Rs.464 Cr in key Railway segment from
Railway Vikas Nigam Limited. With this order win KALPATPOWR
standalone order book stands at Rs.9502 Cr, which gives strong revenue
Market Data
visibility (1.95x of TTM revenue) going forward. Managements has reiterated
BSE Code 522287 15-20% revenue growth in FY 18 based on the current order book and
NSE Symbol KALPATPOWER company will continue to build portfolio of projects in Railway EPC sector,
52wk Range H/L 333/202 which will be key growth driver going forward. Companys real estate arm
Mkt Capital (Rs Cr) 4,942 JMC has also won orders in Residential and commercial building worth of
Av. Volume 23737 Rs.1058 Cr.
Nifty 9174
Strong Opportunity in Infra Segment:-
Stock Performance Currently, Infra segment (Pipeline and Railway) contributes only 10% of the
1Month 3 Month 1Year Order book but we see huge opportunity going forward especially in Railway
Absolute 14.5 29.9 57.4 segment. KALAPTPOWER has strong order pipeline of 3000 Cr and 1500
Rel.to Nifty 12.0 17.8 38.8 Cr in Railway and Pipeline business respectively. Railway Ministry has set a
target to award 2000 Km, 4000 Km and 6000 km of overhead electrification
orders in FY17, FY18 and FY19 respectively which provides huge
opportunity going forward. Shri Shubham logistics business remained
muted in Q3FY17 due to demonization and we do not expect significant
Promoters 59% 59% 59% improvement in it inFY17
Public 41% 41% 41%
Others 0% 0% 0%
Outlook & Valuation:-
Total 100% 100% 100%
The current order win of Rs.1202 Cr further strengthen the standalone order
Company Vs NIFTY book position, which provides strong revenue visibility (1.95x of TTM
155 revenue) going ahead. Advanced stage of overseas projects in transmission
KALPATPOWR NIFTY
will help to register strong revenue growth of 20% in FY17. Considering the
145 railway ministries ambitious target, we see tremendous growth opportunity
135 for the company like KAPLATPOWR. Based on the recent order win,
especially from Railway we have revised our target price to Rs.350
125
(Standalone business at 290 per share and Subsidiaries at 60 per share)
115 and we recommend HOLD on the stock.
105
95 Sales 1158 1143 899 29% 1%
Dec-16
Jun-16
EBITDA
Oct-16
Nov-16
Apr-16
Jul-16
119 122 90 32% -2%

Sep-16
Feb-17
Mar-16
Mar-17
Jan-17
Aug-16
May-16
Net Profit 47 58 28 68% -19%

Sandip Jabuani EBIDTA% 10.3% 10.7% 10.0% 30 bps (40 bps)
sandip.jabuani@narnolia.com PAT 4.1% 5.1% 3.1% 100 bps (100 bps)
BUY
J.Kumar Infraprojects Limited 3-Apr-17
Result Update BMC Blacklisting will not hurt Revenue and Profitability
CMP 260 BMC has issued show cause notice to JKIL for irregularities in execution of
Target Price 330 three projects namely I) W 266 -concreting of various roads in western
Previous Target Price suburbs II) W 277 improvement of side strips of linking roads in mastic
Upside 27% asphalt in H/W and K/W wards in western suburbs III) AW 90- improvement
of various roads in Asphalt in P/N ward in western sunburns. These projects
Change from Previous
were awarded by Municipal Corporation of Greater Mumbai (MCGM) to the
Joint Venture of J Kumar and KR construction. If the liabilities are
Market Data crystallized than JV has to pay penalty of 19 Cr, 1Cr and 1 Cr respectively
BSE Code 532940 and cumulatively J Kumars share will be 10 Cr. Further the same can be
NSE Symbol JKIL recovered from the sub-agencies to whom work has been given for the
52wk Range H/L 303/105 execution. So we assume there could be minimal impact on bottom line.
Mkt Capital (Rs Cr) 1,967 Around 70% of the current order book contribute by Metro projects and rest
Av. Volume 172674 from Road projects but very minimal orders from BMC. So we believe it will
Nifty 9174 not impact execution and order inflow going ahead. So we remain bullish on
the stock despite BMC issue.
Stock Performance
1Month 3 Month 1Year Key Growth Driver:- Mumbai Metro projects
Absolute 15.8 26.8 -5.1 Mumbai metro projects are continue to be a growth driver for the JKIL for
Rel.to Nifty 13.3 14.7 -23.6 next 3-4 years. The unexecuted work on all 3 Mumbai metro projects
contributes nearly 67% to current order book. All the initial ground work is
Share Holding Pattern-% completed and we expect full swing in execution and management is
confident to complete significant portion of line 2A and 7 by FY19.We
expect Rs. 1275 Cr of revenue from 3 Mumbai metro projects in FY18,
Promoters 44% 44% 43%
around Rs.1000 Cr revenue from line 3 only in FY19 and Rs.770 Cr of
Public 56% 56% 57% revenue from line 2A & 7 in FY19. This will not only support the better
Others 0% 0% 0% revenue growth but also strengthen the operating margin as the metro
Total 100% 100% 100% projects have better margin compare to normal road projects.
Company Vs NIFTY
130
Strong Order Pipeline :-
JKIL NIFTY
110
Around Rs. 10000 Cr of new metro projects in state of Maharashtra will be
bided out in next 1-2 years. JKIL will bid for the Mumbai metro line 2B and 4,
90 total of 10 packages of 500 Cr each, tunnel work of Mumbai- Pune
70 expressway, Mumbai- Nasik expressway, Vijayawada and Bangalore metro
projects. But JKIL will go slow in terms of new order acquisition in order to
50
focus on execution.
30
10 Sales 369 310 310 19% 19%
Jul-16
Sep-16
Feb-17
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Mar-16
Mar-17
EBITDA 63 56 57 11% 13%

Net Profit 27 23 24 13% 17%
Sandip Jabuani EBIDTA% 17.1% 18.2% 18.3% (120 bps) (110 bps)
sandip.jabuani@narnolia.com PAT 7.2% 7.4% 7.7% (50 bps) (20 bps)
Mangment/ Concall Highlights:-
Will Maintain top line of 1600 Cr in FY17 and Rs. 2000 Cr in FY18
Employee expense has gone during the quarter as the JKIL has started metro project in big way and full fledge revenue yet to
come
Preliminary work has completed on Mumbai metro project and work is in full swing
Debtors of 563 Cr at the end of the Q3FY17, but has come down to 440 Cr in Feb
Inventory at the end of Q3FY17: - 106 Cr of RM, 280 Cr of WIP
Protest by localized people against tree cutting but its awarding authority concern and it will not hamper execution.
Advances of 125 Cr has taken from line 3 & 7 and in month time advances will receive from line 2A
Payment cycle for Mumbai metro project is 45 days from date of bill raised
No significant revenue during the Q3FY17 from JNPT project due to utility work is going on
Mgt. expects 200-250 Cr of revenue from Mumbai metro, 200 Cr from other road and flyover projects
Pending work on Delhi metro is tune of 250 Cr at the end of the Q3FY17
Unexecuted portion of JNPT road project is 1050 Cr
Utility revenue of 30 Cr was booked from JNPT road project in Q3FY17
480 Cr of Debt as on 31st Dec 2016
FY18 Top line :- 1300-1400 Cr from Mumbai metro, 400 Cr from JNPT, 200 cr from others
Will maintain 17-18% EBITDA margin going forward
Debt FY17:- 350-400 Cr, FY18 :- 500-550 Cr
Current Working capital days is 174 and expect to bring down to 160 days
1000 Cr of revenue from Line 3, 700-800 Cr of revenue from line 2A &7 in FY19
View and Valuation::-
Strong order book and execution of Mumbai metro projects boosted revenue in Q3FY17and we expect it to continue. We believe
that the black listing from BMC projects and penalty will not affect the top and bottom line of the company in bigger way as 70% of
current order book is comes from metro projects. The current downfall in stock price is irrational and we believe it is the opportunity
for the investors. We continue to expect 9%, 20% and 27% revenue growth in FY17, FY18 & FY19 respectively based on the strong
order book and robust execution of Mumbai metro projects. Despite blacklisting from BMC projects we remain bullish on the
stock and maintain our BUY rating on the stock with unchanged target price of 330.
Mumbai Metro Projects Details

Metro projects Lenghts(Km) Value Strech Execution Period Type Agency
Line 2A 18.6 1350 Dahisar to DN Nagar 30 Months Elevated DMRC
Line 3 9.2 5001 Dharavi - International Airport 54 Months Underground MMRD
Line 7 5.9 360 Andheri (E) - Dahisar (E) 30 Months Elevated MMRD

About the Company :-
J. Kumar Infraprojects Limited is engaged in construction activities. The Company designs and constructs roads, bridges,
flyovers, subways, over bridges, skywalks and railway terminus/stations, among others. The Company's offerings in civil
construction segment include office/commercial buildings, sports complexes and swimming pools. In Irrigation Projects segment,
the Company builds dams, canals, aqueducts and irrigation tanks, and spillways. The Company has approximately 20 hydraulic
piling rigs, which are used to build pile foundations for buildings and flyovers, marine structures and offshore platforms. Its Piling
segment caters to various real estate and infrastructure companies. The Company's projects include Underground Metro CC-24,
Delhi Metro Tunnel, Ahmedabad Metro, Balewadi Bridge and Dhankawadi Flyover. Its other projects include Kapurbawadi
Flyover, Kherwadi Flyover, Amarmahal Flyover, Amarmahal Flyover, Thakur Flyover, Bhivandi Flyover and Aurangabad Flyover.
JKIL
Transporation Eng. Civil Construction Irrigation Others
Roads Terminus/Stations Earthen Dams Micro Pillings

Flyover Buildings Minor Irrigation Tank Micro Tunneling
Bridges Sports Complexes Spillways Ready Mix Concrete
Skywalk Swiming Pools Canals
GradeSeparator Aqueducts
Pedstrain Subways
ROBs/RUBs
Strom water drainage
Key Clinets
Vidharbh Irrigation
DMRC,MEGA, UPRNN, MCX, Development,
PWDs, Indian Pimpari Irrigation HCC,HDIL, Punj
MSRDC, MMRD, M
railway Division, Bambla Lloyd, JSW, LANCO
CMG
Canal Division

Quartely Performance 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY% QoQ%
Net Sales 296 297 393 355 322 299 390 391 303 363 21% 20%
Other Operating Income 5 7 10 9 9 11 13 13 7 6 -41% -2%
Net Sales 300 303 403 364 331 310 404 403 310 369 19% 19%
Change in Invenotry 5 17 7 26 18 12 (1) 32 6 23 1 3
RM Cost 169 156 240 218 196 171 247 246 190 220 28% 16%
COGS 173 173 246 244 215 183 247 279 195 243 33% 24%
Employee Expenses 17 18 23 17 18 21 24 19 22 31 49% 38%
Other Expenses 26 27 40 20 21 33 44 21 23 20 -39% -13%
Labour Exp 22 26 26 16 17 16 26 17 13 12 -25% -6%
Total Expenditure 238 244 335 296 271 253 341 335 253 306 21% 21%
EBITDA 62 60 68 67 60 57 63 68 56 63 11% 12%
Depreciation 12 12 13 12 13 13 13 13 13 14 12% 8%
EBIT 50 47 55 55 47 44 50 55 43 49 11% 13%
Intreset 18 18 23 19 16 13 14 18 17 15 21% -11%
PBT 35 31 38 38 34 34 45 43 32 40 15% 25%
Tax 15 7 10 12 12 11 16 13 9 13 24% 49%
PAT 20 24 27 26 22 24 29 30 23 27 11% 15%
Margin Profile 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY (+/-) QoQ (+/-)
Gross Margin 42.3% 43.0% 38.8% 33.0% 35.1% 40.9% 38.9% 30.9% 37.0% 34.2% (670 bps) (280 bps)
EBIDTA 20.8% 19.7% 16.9% 18.5% 18.1% 18.3% 15.7% 16.9% 18.2% 17.1% (120 bps) (110 bps)
EBIT 16.7% 15.6% 13.7% 15.1% 14.3% 14.2% 12.4% 13.6% 13.9% 13.2% (100 bps) (70 bps)
PAT 6.7% 7.9% 6.8% 7.1% 6.6% 7.7% 7.1% 7.3% 7.4% 7.2% (50 bps) (20 bps)
Growth YoY
Sales Growth 27% 11% -11% 8% 10% 2% 0% 11% -6% 19%
EBIDTA Growth 45% 19% -7% 11% -4% -5% -7% 1% -6% 11%
EBIT Growth 44% 14% -10% 9% -6% -7% -9% 0% -9% 11%
PAT Growth 15% 21% -13% 13% 8% 0% 5% 14% 5% 11%
Operating Matrix FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 YoY% Q3FY16 Q3FY17 YoY%
Opening Order Book 737 1219 1480 1266 2512 3661 3122 3024 -3% 3658 10000 173%
Revenue Booking 365 723 878 879 955 1146 1285 1328 3% 310 369 19%
Order Intake 847 984 664 2125 2104 607 1187 1518 28% 32 0 -100%
Closing Order Book 1219 1480 1266 2512 3661 3122 3024 3214 6% 3380 9700 187%
Strong revenue growth of 19% in Q3FY17 was on account of work commencement on Mumbai metro projects.
JKIL will slow and selective in terms of new order intake in order to focus on execution. Management has guided for Rs.2000 Cr
of new order inflow for the next year to maintain 10000 Cr + order book.
We anticipate healthy operating margin in range of 16-18%, margin depend on revenue mix (tunnel work has better margin comparatively)

Robust Order book :-
Order Book Growth %

JKIL will go slow in terms of
10,000
9,700
12000 2.5
8,646
10000 2 new order intake to focus
8000 1.5 more on execution. Avg.
order intake will be in range
3658.3
6000 1
3,380
2915.4
3,214
3198
3100
3024
4000 0.5 of Rs.2000 Cr in order to

2000 0
maintain 10000 Cr plus
0 -0.5
Order book
Quarterly Sales Trend :-
Sales Growth %
450 30%
393 390 391
400 355 369 25%
350 322 20%
296 297 299 303
300 15%
250 10%
200 5%
Mumbai metro projects
150 0%
100 -5% will drive the revenue
50 -10% growth going ahead
- -15%
Order Book Break up:-

Line 3
Line2 A
1,506 Line 7
449 Delhi Metro

324
NH-348 and Amra Marg
372 (JNPT Road )
4,852
Gavanphata interchange
284 (JNPT Road)
Karalphata interchange
254
(JNPT Road)
338 Kurla to Vakola flyover
1,301
Others
Healthy Debt to Equity position with strong Intreset covarge ratio:-

D/E Intreset Coverage Ratio
4.00
3.58 3.52
3.50 3.23
2.97
3.00 2.65
2.50 D/E will remain strong in
2.00 range of 0.25 to 0.38
1.50
1.00 0.80
0.55
0.33 0.42
0.50 0.25
-
FY12 FY13 FY14 FY15 FY16

FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E
Revenue 1409 1537 1866 2372 EPS 14 15 17 25
Total Revenue 1426 1566 1889 2395 DPS 2.0 2.2 2.4 3.6
EBITDA 248 267 341 438 Payout (incl. Div. Tax.) 15% 15% 15% 15%
EBITDA Margin (%) 18% 17% 18% 18% Valuation(x)
Depreciation 51 60 89 85 P/E 20.2 20.1 21.5 18.6
EBIT 197 207 252 353 Price / Book Value 1.6 1.6 1.8 2.1
Interest 61 69 88 99 Dividend Yield 1% 1% 1% 1%
PBT 154 167 187 276 Profitability Ratios
Tax 51 55 62 91 RoE 8% 8% 8% 11%
Tax Rate (%) 33% 33% 33% 33% RoCE 12% 12% 12% 16%
Reported PAT 103 112 125 185 Turnover Ratios
Dividend Paid 15 16 18 27 Asset Turnover (x) 0.7 0.7 0.8 0.9
No. of Shares 8 8 8 8 Debtors (No. of Days) 77 102 102 102
Inventory (No. of Days) 126 100 100 100
Creditors (No. of Days) 30 30 30 30
Net Debt/Equity (x) 0.25 0.29 0.37 0.38
BALANCE SHEET CASH FLOW

FY16 FY17E FY18E FY19E FY16 FY17E FY18E FY19E
Share Capital 38 38 38 38 OP/(Loss) before Tax 154 167 187 276
Reserves 1245 1338 1441 1594 Depreciation 51 60 89 85
Net Worth 1283 1376 1479 1632 Direct Taxes Paid 43 55 62 91
Long term Debt 29 13 73 73 Op. befor WC Change 249 267 341 438
Short term Debt 294 380 470 550 CF from Op. Activity 64 164 141 161
Deferred Tax 17 17 17 17 Non Current investments 0 0 0 0
Total Capital Employed 1312 1389 1552 1705 Capex 55 75 300 60
Net Fixed Assets 497 512 724 698 CF from Inv. Activity (226) (122) (252) (38)
Capital WIP 68 68 68 68 Repayment of LTB (75) (16) 60 0
Debtors 296 430 522 664 Interest Paid 61 69 88 99
Cash & Bank Balances 174 185 116 113 Divd Paid (incl Tax) 16 20 22 33
Trade payables 114 124 151 192 CF from Fin. Activity 171 (18) 40 (52)
Total Provisions 25 25 29 63 Inc/(Dec) in Cash 9 23 (71) 71
Net Current Assets 762 827 896 1079 Add: Opening Balance 20 174 185 116
Total Assets 1965 2144 2477 2783 Closing Balance 29 197 114 187

Initiating Coverage 30 March 2017
Sector: Packaging Films
Advance Strategy. Simple Solutions COSMO FILMS LTD
LEADING THE GROWTH

COSMO FILMS LTD
Contents : Cosmo Films Limited
Ready for a New Growth Phase: Key Growth Drivers...3
Outlook & Recommendation......4
Capacity Expansion in BOPP to push growth...5
Focus on growing share of Speciality films : Era of Innovations......5
New BOPP Line a cost effective one: To Boost Margins..6
Improving Financial Picture and Return Ratios: A Futuristic picture.......6
Fair Pricing power with almost no commodity risk..7
Well Diversified product portfolio and markets...7
Healthy Dividend Yield with consistant payout....7
Expected turnaround in US business......7
Industry Structure & Demand Scenario : Global & Domestic......8
Cosmo's Business Matrix....10
Financials & Valuations.12
Comparison with Key Industry Players14
Key Risks to Earning Projections..15
Disclaimer..15

Initiating Coverage/Packaging Films 31-Mar-17
COSMO FILMS LIMITED CMP : 377 BUY TP: 490 (+29%)
Target Price Cosmo is a leading manufacturer of BOPP ( Biaxially Oriented

CMP 380 Polypropylene) films in India with a 20% market share. It provides cost-
Target Price 490 effective innovative packaging solutions to leading FMCG & global brands.
Previous Target Price - Company was first to manufacturer BOPP film in India. Now its products
encompass newer categories of valued added products viz: Thermal,
Upside 29%
Coating, Metalizing films besides the traditional BOPP films. Cosmo is the
Change from Previous - larget manufacturer of value added thermal films in the world with 15%
market share. It has diversified portfolio of marquee clients which like
Market Data Britannia, Cadbury, Colgate, Cipla, ITC, Parle, UB, Uniliver etc. Cosmo has
wide manufacturing footprint with 4 state of the art mfg. units in India and 2
BSE Code 508814
outside,one is situated in US and another in South Korea. Cosmo's
NSE Symbol COSMOFILMS consistent efforts towards itroducing innovative products has put it in a
52wk Range H/L 431/262 different categary of film maker with highest margins among industry peers
Mkt Capital (Rs Cr) 740 with commanding industry size.
Av. Volume 69931 READY FOR A NEW GROWTH PHASE ... Key Growth Drivers
Nifty 9,144 Cosmo has expanded its capacity in BOPP films by 60000 mt from
136000 mt/annum to 196000 mt/annum (44% increase), which is going to
Stock Performance be the next growth driver for the company.
1Month 1Year YTD Current positioning of BOPP film indust players augurs well, as there is
Absolute 5.2 15.4 40.4 no overcapacity in the industry at present and almost all the capacities in
India running at 100% utilisation level. Increasing demand of BOPP to
Rel.to Nifty 3.5 2.8 23.2
boost growth in the industry as demand for BOPP is expected to grow at
15% p.a.
3QFY17 2QFY17 1QFY17 In recent years, with launch of value added newer and speciality products
Promoter 43.5 43.5 43.5 through innovations, Cosmo has positioned itself as a leader among its
peers through growth in sales with sustainable high margins vs peers..
Public 56.5 56.5 56.5
Others -- -- --
Total 100.0 100.0 100.0 New BOPP line which has commisioned from Feb 2017, to boost margins
in BOPP film segment as new line is cost effective through higher
production with lesser manufacturing cost vs its existing line..
Company Vs NIFTY
160 COSMOFILMS NIFTY
Cosmo's focus to increase share of value added films in its total product
160
150 COSMOFILMS NIFTY
portfolio will augur well for the company in long run. By FY16 end, share of
150
140 value added films in total reveue was 49%, improved from 40% in FY14. In
140
130
volume terms speciality films contributed 40% in FY16. Management has
120
130
targeted 50% volume from speciality films in long run.
110
120
Cosmo has been working upon to improve its balance sheet and financial
100
110 dynamaics in the past, which has given favourable results. Cosmo has
90
100 positioned itself best financially structured player among its peer which will
80
90 offer benifits in future and comfortable investment opportunity for investors.
Jul-16Jul-16
Sep-16
Feb-17
Jan-17Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Mar-16
Mar-17
80
Cosmo is well poised to grow its sales and profitablity with changing
Sep-16
Feb-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Mar-16
Mar-17
consumption pattern and increasing demand for flexible packaging, which

will enhance capacity utilisation in Speciality and new added BOPP line,
thus benefit of operating leverage will arise.
Anurag Arora
anurag.arora@narnolia.com
Narnolia Securities Ltd3 19
o the Disclaimers at the end of this Report
OUTLOOK & RECOMMENDATION
Rs. In crore
Financials FY15 FY16 FY17E FY18E FY19E Commisioning of new added BOPP capacity will
boost much awaited sales growth for the company.
Sales 1647 1621 1715 2276 2461 Also added capacity will give company cost
EBITDA 104 191 183 285 314 advantage from the new line which is more efficient
EBIT 70 156 144 234 263 and productive vs older line, which will add to
PAT 28 96 95 155 169 margins. Though initially in coming 3-4 quarters
EBIDTA% 6.3% 11.8% 10.7% 12.5% 12.7% there will be contraction in margins, largely due to
PAT % 1.7% 5.9% 5.5% 6.8% 6.9% higher revenue share of BOPP films with lesser
margins vs speciality films which has higher
margins, according to management. We believe
Ratios FY15 FY16 FY17E FY18E FY19E
margins within BOPP film and overall profitability of
company will see major boost with the enhanced
EPS 14 50 49 80 87 sales from the new capacity. Cosmo's focused
BV/Share 196 235 269 325 381 strategic target of maintaining revenue share of
P/E 5 6 9 7 8 speciality films at 50% will augur well in the longer
P/B 0.4 1.2 1.6 1.7 1.8 term.
EV/EBITDA 3.5 3.8 6.1 4.4 4.5
At CMP of 380/- stock is available at 1.4x FY17,
EV/SALES 0.22 0.45 0.65 0.55 0.57
1.15x FY18 and 1.0x FY19 expected book value.
ROE 7.3% 21.1% 18.2% 25% 23% With growing and sustainable margins, we believe
ROCE 11.3% 22.9% 16.3% 26.1% 28.4% company to post healthy ROE of 24+% and 23% in
ROA 2.6% 8.4% 6.7% 10.1% 10.4% FY18 & FY19 respectuvely, improve significantly
D/E 1.1 0.8 1.0 0.7 0.5 from 21% delivered in FY16. We believe Cosmo is
ATO 1.5 1.4 1.2 1.5 1.5 well positioned to see a major rerating once
Sales/WC 9.5 11.4 11.3 12.5 12.7 company start delivering sales from new capacity
Payout 25% 20% 25% 25% 30% with improved margins and profotability. keeping in
mind above all positives, we initiate "BUY" on the
stock with price target of 490/- and 570/- for FY18 &
FY19 respectively, valuing stock at 1.5x and 1.5x of
its FY18 & FY19 respective expected book value.
INVESTMENT RATIONALE: KEY POINTS
CAPACITY EXPANSION IN BOPP TO PUSH THE GROWTH FORWARD

To cater to the growing demand of BOPP film, Cosmo has undertaken capacity expansion in its BOPP line situated at Baroda
plant. Cosmo has enhanced its BOPP capacity from 136000 mt /annum to 196000 mt /anuum, an increase of 44% and 60000
mt/annum. Currently company's BOPP capacity was running at full utilisation. Now with this new BOPP line, which has been
commisioned now from Feb 2017, Cosmo is set to realise next level of growth through sales from new BOPP line. As per
management, at full utilisation level, new line will add upto 600 cr to the topline, which is a significant revenue increase. Also
Cosmo has increased its metalised films capacvity by 7200 MTPA, which will increase revenue in speciality film segment.

As management has indicated, this line may get upto 100% utilisation level within 5-6 months of its commisioning. Though
FY17, will not see any big upmove in sales, FY18 onwards company to see big jump In sales its BOPP film segment, which In
our view may see 30%+ growth in FY18 and 8-9% revenue growth in FY19. This expansion will give major boost to company's
aspiration to become $1bn company by 2020, targeted by management. With this new expanded capacity, Cosmo has become
neck to neck player with the existed largest player in BOPP segment, which has capacity of 210000 mt/annum, giving Cosmo
enough competetive edge in terms of capacity.
FOCUS ON GROWING SHARE OF SPECIALITY FILMS IN PRODUCT PORTFOLIO- "ERA OF INNOVATION"
Cosmo films has not only grown as a Key BOPP Player within the
country with 20% market share and became the largest exporter
of BOPP film from India, also it has been able to sustain as a
value added player with launching new innovative packaging film
products through focus on R&D and technology. Now Cosmo's
value added films contribute 49% to its revenue in FY16, grown
from 40% in FY14. In value terms, speciality films now contribute
almost 40% to the total volume. In traditional commodity (BOPP)
films, industry is competetive and one could not enjoy edge over
others as prices are largely dependent on prices of
homopolymer, (key raw material) ,a derivative of crude oil;
However unlike other BOPP players, Cosmo has been able to
position and prove itself as a value added high margin packaging
film player, through consistant innovations and R&D, providing
Cosmo, big comfort on margins, generating above normal
returns on shareholder's equity.
HIGH MARGINS IN VALUE ADDED SPECIALITY FILMS
70% Continious focus on R&D and introduction of value added

speciality films has helped company to position itself from a
60% commodity film maker to value added industry player, which has
been helping company to sustain its gross margin to higher level
50% Vs. its industry peers.. Gross margins of the company has
Speciality improved consistantly over years and company has been able to
40% films sustain its margins even in the adverse quarters at much higher
levels through increasing revenue share of speciality films.
BOPP
30%
20% GM % According to management, value addition in normal BOPP films

is Rs.25-50 on PPE (Raw material) prices, whereas in Speciality
10% films, value addition is upto Rs.90-100, which improves overall
margins significantly.
0%
Due to higher share of value added films, Cosmo's gross
FY14 FY15 FY16 FY17E margins has seen significant jump from 30-32% to 38-40% from
FY13 to FY16.
Cosmo's consistent focus on R&D is giving it space to grow higher vs its peers and a reason for outperformance in adverse
and difficult times when industry is depressed.. It is evident from the fact that Cosmo has been able to deliver above average
industry margins in after FY12, when industry was going through the phase of overcapacity, low demand and adverse
commodity cycle.
Though management has indicated for comparatively lower gross margins initially after commisioning of new BOPP line, they
are also confident of achieving 50% revenue contribution back from speciality films, and 50% volume (slightly longer term
target), which will give boost ROEs of company in longer term. Till date, Speciality films capacity is running at 60% utilisation on
name plate capacity and they according to them, this is enough for next one year. After achieving 70% utilisation on name plate
capacity.(considered 100% when 70% on name plate capacity).

NEW BOPP LINE A COST EFFICIENT ONE: TO BOOST MARGINS
The new BOPP line added by Cosmo at its Vadodara Plant with the cost of INR 2 bn (80% finance by debt and 20% by internal
accruals) has started commercial production from Feb 2017. Based on the management guidance, this new line at its peak
production will add approx. 6 bn to the topline. Also management is confident of achieving full utilisation within 5-6 months from
start of commercial operations.
This new line will have 10.4 mtr width line. Currently, maximum
Sales gross Profit EBITDA Gross % EBITDA% 8.6 mtr width line is available in Indian films industry. On account
of higher width line, management has indicated there will be
3000 45%
42% 42% substantial reduction in per unit power consumtion and also
41% 40%
2500
wastage during production process. Management expects
37%
35% electricity consumption of new line to be 30% lower as compared
32% to the current most efficient line of Cosmo Films. The new line is
2000 30% 30%
likely to reduce cost of production by Rs. 3./kg from the cost it
25%
1500 currently incurs. Around 1 cr. savings on the electricity side could
20%
be seen with this new line, every quarter. Management expects
1000 15% the new line will play critical role in improvement in EBITDA
12% 13% 13%
11% 10% margins.
500 7% 6% 5% We strongly believe, with this line Cosmo will not only be able to
achieve sales growth, also it will be able to command and sustain
0 0%
higher gross and EBITDA margins, outperforming industry.
FY14 FY15 FY16 FY17E FY18E FY19E
IMPROVING FINANCIAL PICTRURE & RETURN RATIOS: A HEALTY FUTURISTIC PICTURE
On the back of strong product portfolio consisting high magin speciality films, higher bargain power, Cosmo has been able to
generate healthy operating cash flows, resultant recuction in gross debt level over year. Cosmo has stengthened its financial
health through improved balance sheet. Continious reuction in Debtor, Inventory days lead to overall reduction in working
capital requirement. This had an effect of generating higher FCFF, Return on equity and Return on capital employed, resultant
value creation for business and investors.
14.0 60
12.0
50
10.0
40
8.0
30
6.0
4.0 20
2.0 10
0.0
0
FY15 FY16 FY17E FY18E FY19E
FY12 FY13 FY14 FY15 FY16 FY17E FY18E
Interest Coverage Ratio Working Capital Turnover Ratio Debt/Equity Debtors Days Investory Days Payable Days
Cosmo's Interest Coverage Ratio has improved significantly from

30.0%
1.8 in FY15 to 5.2 in FY16 and expected to be 8.4 till by FY19
20.0% end. It's Debt to equity to improve from 0.75 in FY16 to 0.48 by
FY19 end. Working Capital to turnover ratio has improved from
10.0%
9.5 in FY15 to 11.4 by FY16 and expected to imptove further to
0.0% 12.7 by FY19. Cosmo's ROCE & ROE to show the same picture
FY14 FY15 FY16 FY17E FY18E FY19E of improvement from FY15 continiously over long term as shown
-10.0%
in graph.
Return on capital employed Return on Equity
450 10.0
400 8.8 9.0
350 7.9 8.0
-10.0% FY14 FY15 FY16 FY17E FY18E FY19E
Return on capital employed Return on Equity
450 10.0 Cosmo's improved financial health has helped

400 9.0 creating value for investor by enhancing its book
8.8
350 7.9 8.0 value per share, which was 196 and 235 in FY15 &
6.9 7.0 FY16 respectively, and further expected to reach
300
6.0 380+by FY19, thus registering CAGR of 18%.
250 5.4 5.6
5.0
200
4.0
150 3.0
On the back of improved CFO, ROE, ROCE and
100 2.0 Asset Turnover Ratio, We strongly believe the stock
1.6 1.7 1.8
50 1.2 1.0 to rerate going forward. Its P/B ratio and Price
0 0.4 0.0 Earning ratio is expetced to rerate going forward as
FY15 FY16 FY17E FY18E FY19E
shown in the chart.
Book Value Price/Book Price/Earning
FAIR PRICING POWER WITH ALMOST NO COMMODITY RISK
Polypropelene which is by product of petrochemical industry is a key raw material for the company with a strong co-relation
with crude prices. The relationship is not leniear with less volatility, however the trend in the price movement of PPE is similar
too that of the crude prices. There are about 4-5 domestic suppliers of PPE, and largest is Reliance Industries. Management
commented that sourcing of this raw material is mainly done through a major private Oil & Gas refinery company. Nominal
rebate and favourable terms are offered to the buyers of PPE who buy PPE in bulk form these suppliers.
Also there is transparent index globally known as PLATT index, which releases prices of PPE every fortnightly. Suppliers of
PPE use this data for price identification and post this they supply PPE to domestic BOPP film producers with applicable rebate
structure as discussed with each BOPP manufacturer. Cosmo films in turn revise its price list on the same day for all its
cusotmers. THis practice is followed by the entire BOPP industry in India. This there is no or minimal commodity pricing risk for
the companies and any fluctuations in te prices of PPE is fully passed-on to the customers.
WELL DIVERSIFIED PRODUCT PORTFOLIO AND MARKETS
Cosmo is fairly immune to the risk related to mamcro-economic environment of a particular country as it has strategically
diversified its presence into 80 countries across the world. It does not have exposure of more than 4% of total turnover to a
particular country except for US. Company will face minimal impact from Brexit, either directly or indirectly (through forex
fluctuations) owing to raw material imports, which nullify and provies a natural hedge for the same, as Cosmo's valu added
films contributes almost 50% of the total turnover till FY17.
HEALTHY DIVIDEND YIELD WITH CONSISTENCY IN PAYOUT
Cosmo has long history of sharing its profits with the investors in form of dividend. Cosmo has been sustaining its dividend
payout in the range of 20-30% depending on the capital which company needs from time to time for expansion and other
capital needs. At CMP Cosmo's stock price offering 3% dividend yield as distributed by the company for FY16, providing
investment opportunity with healthy dividend yield on the invested capital.
EXPECTED TURNAROUND IN US SUBSIDIARY TO HELP AVHIEVING BETTER CONSOLISATED RESULTS
In FY15, Cosmo incurred a loss of $5mn in its US subsidiary and this got reduced to $2.2 mn in FY16. Of this loss in FY16,
50% was booked in only Q1FY16. Though the whole picture of US operations is not very rosy in FY17 despite serious steps
taken by the company for turning it around through restructuring of business and launching of newer value added products
epciality for US markets, Management has guided for much better numbers and break even of US business by FY18. Cosmo is
working for making US business cost efficient through manufacturing new value added producs in US. In past, US business
loss was mainly attributed from forex losses incurred by the US Subsidiary. We believe US break even will give major boost to
company's consolidated performance which has been a drag on stock price since long, leading to rerating of stock in near
future.

INDUSTRY STRUCTURE & DEMAND POSITIONING: GLOBAL & DOMESTIC
The Size of global packaging industry is $700 bn and that of India is at $ 32bn. Te size of global packaging industry is expected
to see a CAGR of 7.5% to $ 1tn over FY15-20. Indian packaigng industry is expected to reach $73bn, to be more double over
the same period.
Both organised and unorganised industry are established in Indian Packaging industry, and also giving intense competetion to
each other.
Indian Packaging industry is divided into rigid and flexible packaging. Rigid is expected to grow at 15% whereas flexible
packaging is expected to grow at 25% annually, thereby gaining share from rigid packaging.
Growing consumption of packaged food, FMCG, personal care and other packaged products in level in Tier II and tier II cities
leading to uge demand and growth for flexible packaging. The continious improvement in lifestyle and per capital income level
will aid significant benifit to flexible packaging industry over medium to long term.
FLEXIBLE PACKAGING TAKING ON RIGID PACKAGING: BOPP EDGE
EXCELLENT CLARITY LOWEST DENSITY
Better Aesthetic Hig Gloss Higher Yield
CHEMICAL INERT BARRIER TO MOISTURE

LOW MELTING POINT &
Better Shelf Life(perishable goods) Fully Recyclable
Suitable for Food & Pharma
250000 DOMESTIC INDUSTRY SIZE
200000 Currently Indian BOPP Industry total production capacity is

560000 MTPA. Jindal Polyfilms is the largest player with total
production capacity of 210000 MTPA. After recent expansion
150000 with total 196000 MTPA capacity, Cosmo has become neck to
neck player with JindalPoly.
100000 There is balance prevailing amongst players unlike 2011-2012,
where there was sudden increase in supply on account of
50000 substantial capacity expansions by all major players in industry
at same time.
0 With the growing demand of BOPP films over years, these

excess capacities of those time got absorbed now and almost all
Jindal Poly Cosmo Max Polyplex Nahar Poly SRF
the BOPP players are running at 100% utilisation currently.
Films Speciality Polyster
DOMESTIC DEMAND SCENARIO FOR FLEXIBLE PACKAGING
The Indian Food & Beverage industry has nearly 25% yearly growth and major application of plastics in food products is in
packaging. Thus growth in food and beverage sector highlights the growth potential for plastics in packaging. Similarly,
personal care sector, which is growing at nearly 15%, will also drive demand for rigid plastics, as it is the most used material for
packaging of personal care products. Other industrial sectors such as, pharmaceutical that is proposed to grow at 13-15% over
next five years, retail industry, that is currently witnessing the shift from unorganized to organized retail; will also stimulate the
demand of plastic in packaging material. Government's current campaign on "Make in India" which aims to turn the country into
a global manufactruing hug will have positive impact on the growth packaging industry.

24
KEY GROWTH DRIVERS FOR FLEXIBLE PACKAGING INDUSTRY
CHANGING PACKAGING PATTERN FOR PRODUCTS TO BOOST INDUSTRY GROWTH
Products to be packed Conventional Packaging Current Packaging Trend

Milk Glass Flexible Pouches, Tetra packs
Beverage Glass, tinplate, aluminium PET Bottle, cans
Pharmaceuticals Paper, glass, aluminium, tinplate PVC, HDPE, blister, aluminium foils
Toothpaste Aluminium tubes Laminated tube, co-extruded tube
Soap Paper cartons Laminated carbons, BOPP/PE, PET/PE
Cosmetics Metal, paper HDPE, PP, Laminated tube
Shampoo Plastic bottle HDPE container, sachets
Fertilizer Jute Woven sacks
Shopping carry bags Paper, jute LDPE, HDPE
Edible Oils Tinplate containers Flexible pouch, laminates, co-extruded
Rice Jute bags BOPP coated bags
source: IBEF
Above changing packaging trend provides enough growth opportunities to expand and grow for BOPP and flexible packaging
industry in future.
STRONG GROWTH IN INDIAN FMCG SECTOR
Key Growth Drivers

Shift to Organised market
Rising income driving purchase
Greater awareness of products and brands
Increasing consumer demand
Availability of online grocery stores
Strong distribution channels
Growth of Modern Trade
Growing Rural markets
New Product launches
Evoliving consumer lifestyle
Desire to experiment with brands
Government reforms to encourage FDI inlow
Increase in penetration
KEY POINTS
Packaging is one of the fastest growing industries stands at $700
bn globally. It has grown higher than GDP in most of countries. In
developing countries like India, it grew at a CAGR of 16% in last
five years and touched $32bn in FY15.
The Indian Packaging contributes 4% of the global packaging

industry. The per capita packaging comsumption in India is low
at 4.3 kg compared to developed countries like Germany and
Taiwan where it is 42 kg and 19 kg respectively. However in the
coming years Indian packaging industry is expected to grow at
18% p.a. , thus providing visibility and enough growth
opportunities for the industry. Within Packaging Flexible
packaging will grow almost twice the rate of rigid packaging.
BOPP players will largely be benifitted with the growing trend of
flexible packaging.
COSMO'S BUSINESS MATRIX : STRENGTHS & WEAKNESSES
PRODUCT PORTFOLIO
PACKAGING FILMS LAMINATION FILMS LABEL FILMS INDUSTRIAL FILMS
1. Printing & Pouching Films 1.Dry Thermal Lam.Films 1.Pressure Sensitive Label stock 1. Pressure Sensitive films
2. Barrier Films 2.Wet Print Lam. Films Films 2. Tape & textile Films
3. Overwrap Films 2. Direct Thermal Printable Film
3. In-mould films
4. Wrap around label films
REVENUE SHARE AMONG PRODUCT CATEGARIES
Chart showing export share over years Cosmo Films Limited is Pioneer of BOPP Industry in
70% India and one of the global leaders and
60% manufacturers of BOPP Films. Company is also the
largest BOPP film exporter from India.
50%
40%
Cosmo's healthy export share in overall topline is
30%
evident of its product quality and strength. Company
20% exports its products to more than 80 countries
10% worldwide.
0% Cosmo operates form its units in India, Korea and
FY12 FY13 FY14 FY15 FY16 US. Korea facility completely caters to Japanese
market. Cosmo is in process of restructuring its US
Domestic share Exports share
subsidiary business by launching new products
there.
FY12 FY13 FY14 FY15 FY16
Domestic share Exports share
SUBSIDIARIES(WHOLLY OWNED) INFORMATION CORPORATE GOVERNANCE: BOARD
CF Global Holdings Limited GK (CGHG) (Japan) Cosmo has fairly large Board with 3/4th number of
Cosmo Films (Netherlands) Cooperatief U.A independent directors on the Board with persons
CF (Netherlands) Holdings Limited B.V. having decent qualification and rich experience in
Cosmo Films Japan, GK different industry working..
Cosmo Films Singapore Pte Limited Mr. Ashok Jaipuria, Chairman & MD
Cosmo Films Korea Limited Mr. A.K Jain, Whole time Director
Cosmo Films Inc Mr. H.K Aggarwal, Independent Director
CF Investment Holding Private (Thailand) Company Mr. Rajeev Gupta, Independent Director
Cosmo Films Inc. (US) Ms. Alpana, Non Ecex. Non Independent Director
Mr. Ashish Kumar Guha, Independent Director
Mr. Pratip Chaudhary, Independent Director
Mr. H.N. Sinor, Independent Director
COSMO FILMS: HOW COMPANY OPERATES
Purchases Homopolymer (derivative of petrochemicals) as Source from Reliance Industries, which updates
raw material for processing of BOPP & Speciality Films prices of homopolymer every fortnight or whenever
Source
any sharp movement seen in crude oil.
Manufacturing process across 6 plants. 4 situated in

Valur addition of Rs. 25-50 in making BOPP film India of which one located at Shendra (Aurangabad)
Plants
Value addition of Rs. 80-100 in making Speciality films is 100% export oriented Unit. One plant is in US and
one is in Korea.
Transparent pricing through Global PLATT Index

Sale of BOPP & Speciality products according to quality and which updates PPE Prices fortnightly, accordingly
Pricing
pricing Cosmo pass on the price increase or decrease to
customers (Industry Practice)
Britannia, Cadbury, Parle, Cipla, Colgate, Conagra,

Garnier, ITC, Microsoft, Nokia, Nestle, Mars,
60% sales to domestic clients to well known brands and Perfetti, UB, Unilover, Reckitt Benckiser, Huhtamaki,
Clients
marquee clients Altea, Amcor, Printpack, Contanstia etc.
US business is done through Cosmo Films Inc.

40% sales goes to more than 80 countries worldwide with (US), a wholly owned subsidiary.
major contribution from US and JAPAN. Not more than 4% Subsy Films manufactured in Cosmo Films Korea
sales comes from a single country expect US. Ltd(Korean Subsy)) get sold to Japan by CF Global
Holdings,GK, Japan (japanese Subsy)
`
METHODOLOGY OF CHECKING CAPACITY UTILISATION
In BOPP Industry in India and across globe, name plate ( a unit measurement) capacity is calculated based on 25 micron film
under standard 24 hour unit of production for 365 days. Based on customer requirements, Cosmo can produce different micron
films. If a company produces 70% of total name plate capacity, it is considered as 100% utilisation. In FY16, Cosmo has
produced 100000 MT on a name plate installed capacity of 136000 MT. p.a., thereby implying a 100% capacity utilisation.
Currently Cosmo is operating at 72-73% utilisation on name plate capacity which is more than 100%, as guided by
management.
FINANCIALS & VALUATIONS

28
Ratios

COMPARISON WITH KEY INDUSTRY PEERS
Return on equity EV/EBITDA comparison

35
25.0
30
20.0
25
15.0 20
15
10.0
10
5.0
5
0.0 0
201209
201303
201309
201403
201409
201503
201509
201603
201609
201212
201306
201312
201406
201412
201506
201512
201606
-5.0
Jindal Poly Cosmo Polyplex

Jindal Poly Cosmo Polyplex
Asset Turnover
1.4 Price/Book
1.8
1.6
1.2
1.4 1
1.2 0.8
1
0.6
0.8
0.4
0.6
0.4 0.2
0.2 0
0 FY13 FY14 FY15 FY16
1 2 3 4 5
Jindal Poly Polyplex Cosmo Jindal Poly Polyplex Cosmo
A quick look into comparison between Cosmo ans

Return on Assets its nearest listed industry peers suggest that Cosmo
will be able to command higher valutation vis a vis
9
its peers such as JindalPoly (Highest Capacity in
8 BOPP) and Polyplex.
7
Cosmo has highest ROE, Assets Turnover, ROCE,
6 Return on Assets and Book value in comparison to
5 Jindal Poly Films and Polyplex Corp. as shown here
4
in the respective charts, however its stock price
quoting at approx. similar valuations on EV/EBITDA,
3
EV/Sales and oter valuations parameters.
2
1 With ROE to enhance further in FY18&FY19, with
0 operating leverage to come in play and higher
-1 FY13 FY14 FY15 FY16 margins management intent of consistently growing
Jindal Poly Polyplex
share of value added films in total portfolio, We
Cosmo strongly believe Cosmo will be able to command
premium valutations in future.
-1
Jindal Poly Polyplex
Cosmo
RECENT DEVELOPMENTS TOWARDS FUTURE GROWTH
Cosmo Has recently acquired 34 acres of adjoining land available for sale close to its Waluj plant. Cosmo has entered into a
definite agreement to purchase this land, for which advance has been paid and deal will be concluded by FY17 end. This land
is acquired to target future growth plans of Cosmo. Management has guided that whatever the growth plans will be, it will be in
direction to create value addition in current portfolio. New land will only be used to either to add speciality film capacity or any
related value added project complementary to packaging business, of which company Cosmo possess knowledge.
KEY RISKS TO OUR EARNING PROJECTIONS
FOREX FLUCTUATIONS
Cosmo's almost 40% sales comes from the export markets. Cosmo has been incurring huge losses in the past due to adverse
currency movements. Cosmo is being exposed to USD/INR and USD/YEN . It sells its products in US and is exposed to
USD/INR fluctuation risk. Also It sells it products manufactured in Korean plant to Japanese local markets in yen and pays to
Korean Subsidiary in USD, thus exposed to cross currency fluctiation risk. Any future adverse movement may impact Cosmo's
earnings.
THREAT OF NEW CAPACITY AND INCREASED COMPETETION
Though Cosmo's new capsacity addition will easily be get absorbed as Indian markets need 50000 MTPA additional BOPP
film. Also it takes 12-15 months for any additional capacity to come in the market and there is no expansion announced by any
other player in India till date, as per management, However any new capacity going forward may impact future sales growth in
future.
PRICING RISK
As per management there is no raw material commodity risk as far as product pricing is concerned as any increase or
decrease in raw material is passed on to customers every time whenever PPE prices are updated through Global PLATT
Index, however lots of economic conditions play role in product pricing. Thus any delay in pass on of raw material price hike
may hamper gross margins for the short duration.
DELAY IN RAMP UP OF NEWLY EXPANDED CAPACITY
As per management , within 5-6 months of the commercial production start in new capacity, Company is hopeful of achieving
100% utilisation, however any delay in ramp up of utilisation may adversly impact our revenue and profit projections.
DELAY IN TURN AROUND OF US SUBSIDIARY

Management has guided for break even in US subsidiary's business by FY18 end, however any delay in earning turnaround in
US business may impact consolidated earnings in future.

Country moves to Bharat Stage-IV Expected BS-III inventory
The Supreme Court has banned the sale of BS-III compliant

vehicles from 1st April 2017 and it has put public health over
potential commercial losses to companies. According to the
data submitted by Society of Indian Automobile Manufacturers
(SIAM), to the Apex court which states that companies were
holding a stock of around 8,20,000 such vehicles which
included 96,000 commercial vehicles, 6,70,000 two wheelers,
40,000 three wheelers and 16,000 cars. The combined value
of the stock is around Rs.12000 crore. The cost of upgrading
these vehicles to BS IV emission standards was estimated at
between Rs 1,500 crore and Rs 2,000 crore. The decision has
left the Auto manufacturers under serious pressure to
minimize their inventory within two days. The OEMs who have
strong hold on exports could have minimal impact but it would
be severe for those who does not have or very less presence
in the export market.
Major impact on 2Ws & CVs...
Within two wheeler industry the hit will be more on Hero Commercial Vehicles industry will get impacted most because
Motocorp and Honda Motorcycles because these two players it has highest inventory value wise. Majority of the OEMs have
combined holds around 80% of the total two wheeler upgraded themselves to BS-IV but they have not stopped
inventories. Bajaj Auto has an inventory of around 80000 units production of BS-III vehicles. The management of Ashok
but considering the 50% contribution from exports it will not Leyland has stated that the majority of the vehicles in pipeline
get impacted. TVS Motors does not have much BS-III have been sold and left over stock will be exported to other
inventory and it has also started selling & manufacturing BS-IV markets where they have significance presence.
vehicles.
2Ws BS-III Inventory CV BS-III Inventory

HEROMOTOCO BAJAJ-AUTO HMSI Others M&M ASHOKLEY TATAMOTORS Others
6%
45% 21% 21%

37%
32% 26%
12%
Our View Our Top Picks

We expect that it will take huge effort and time to get rid of this We do not expect change in demand of Passenger vehicles
pile up BS-III stock for all the OEMs. The dealers are due to lower BS-III inventory. On the 2W and Commercial
proposing higher discounts to minimize the inventory losses. vehicles front demand may come down for next couple of
Discounts will lead to lower realization and margins for months due to higher sales of BS-III vehicles. Eicher Motors
companies with higher inventories The companies with good have already upgraded itself to BS-IV. Hence we consider
export exposure may not have much impact but it can put auto Maruti and Eicher Motors as our best picks.
industry under stress for short term depending on the
corrective measures taken by the individual OEMs.

HOLD
MAHINDRA & MAHINDRA LIMITED 29-Mar-17
Result Update M&M, the leader in the Farm Equipment business, has geared itself to
CMP 1276 become a full-line farm machinery player under the global strategy. To exploit
Target Price 1600 the growth opportunities in segments like harvesters, tillage, haying & plant
and fertilizers, its product mix is set to see a substantial shift in the next 2
Previous Target Price
years. The geographical mix of M&M's farm machinery products stood at
Upside 25% around 30 percent in FY16 which rose to 37 percent in the FY17 YTD and the
Change from Previous - company aims to take it to 50 per cent by FY19. Launch of new vehicles by
the competitors in the fast growing UV segment led to decrease in the market
share of M&M. The company will launch a multi-utility vehicle code named
Market Data
U321 before the end of next financial year preceded by a sports utility
BSE Code 500520 vehicle code named S201 in the second half of the year. On Korean
NSE Symbol M&M subsidiary, M&M has capital expenditure plan of more than USD700 million
for the next three-four years to bring out one new product every year and this
52wk Range H/L 1509/1142
could lead further expansion in margins of the company going ahead. The
Mkt Capital (Rs Cr) 79,292 Company has built adequate manufacturing capacity for the immediate future
Av. Volume 114489 and is planning to invest in additional capacity in preparation for the mid to
Nifty 9,101 long term.
3QFY17 Result Highlights

Stock Performance
1Month 1Year YTD M&M have reported 4% QoQ growth in net revenue in 3QFY17 due to 24%
Absolute -2.3 8.8 2.2 volume growth in Farm Equipment. Auto volumes degrew by 4% QoQ. Farm
& Auto segment realization declined by 1%QoQ.
Rel.to Nifty -4.8 -4.5 -15.7
EBITDA Margin improved by 20 bps YoY to 11.8% due to higher sales of
Share Holding Pattern-% tractors during the quarter.
3QFY17 2QFY17 1QFY17 PAT Margin was increased by 250 bps YoY to 10%. Exceptional item of
Promoter 26.8 26.8 26.8 Rs.364 crore during the quarter.
Public 73.2 73.2 73.2
Outlook
Others -- -- --
Total 100.0 100.0 100.0 The management expects 15-20 percent volume growth for the tractor
industry in FY18. New launches in 2HFY18 in Tractor and SUV segments will
make the M&M presence further stronger in the domestic market. Expansion
Company Vs NIFTY
in the Ssangyong could lead to better margins going ahead. The stock is
130 M&M NIFTY currently trading at 2.5x P/B of FY17. We expect that RoE to maintain over
125
11%. Based on SOTP valuation method we have valued the standalone
120
115
business at Rs. 1112 per share and subsidiaries at Rs. 487 per share. Hence,
110 we recommend HOLD on the stock with target price of Rs. 1600.
105
100 Rs. In crore
95
Financials 3QFY17 2QFY17 3QFY16 QoQ YoY
90
85 Sales 11010 10609 11004 4% 0%
80
EBITDA 1299 1233 1280 5% 2%
Jul-16
Sep-16
Feb-17
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Mar-17
Mar-16
Net Profit 1112 1163 834 -4% 33%

EBIDTA% 11.8% 11.6% 11.6%
Naveen Kumar Dubey PAT % 10.1% 11.0% 7.6%
naveen.dubey@narnolia.com
33
M&M
Investment Arguments
Monsoon has played a significant role in shaping the rural demand in favour of M&M, because about 90% of the tractors and
more than 40% of the utility vehicles have been sold in rural areas by the company. So M&M remains the big beneficiary of
improving rural demand in long run.
Recently launched "Yuvo" brand tractors have made the Farm Equipment segment portfolio stronger and M&M is all set to take
advantage of growing demand of 41-50 HP tractors. This category contributes more than 45% of total tractor sales.
The Company has built adequate manufacturing capacity for the immediate future and is planning to invest in additional
capacity in preparation for the mid to long term.
Ssangyong can be a new growth driver for M&M in utility vehicles segment and this could lead further expansion in margins of
the company going ahead.
M&M is going full-throttle on a global strategy to transform itself into a full-line farm machinery player. This should see the
contribution of non-tractor farm equipment to the product mix increasing 5-fold from 4 percent in December 2015 to 20 percent by
FY19.
Management Highlights
16-17% industry volume growth in Tractor segment for FY17. 15-20% growth in FY18.
EBITDA Margin may stay in FY17 at the similar level of FY16.
Effective Tax rate is 21-22% for FY17.
As per management there will not be significant price change in the truck segment due to GST.
Capex of around Rs.2500 crore every year.
Inventory level for Tractor is 60 days and for Auto 50 days.
The company will launch a multi-utility vehicle codenamed U321 before the end of next financial year preceded by a sports
utility vehicle codenamed S201 in the second half of the year.
Ssangyong has a capital expenditure plan of more than $700 million for the next three-four years to bring out one new product
every year.
Mahindra and the Ssangyong version of the SUV will drive the Korean brands ambitious entry into the North American market
by 2020.
M&M aims to get 50 percent of its farm equipment revenues from international markets.
Sustainable growth in Farm Equipment Segment
Farm Equipment Segment Growth
90000 36% 40%

80000 22% 30%
20%
70000 12% 20%
60000 3% 5%
0% 10%
50000
0%
40000
-16% -26% -10%
30000 -24% -30%
20000 -20%
74555
59714
38604
62358
45246
62666
43321
74595
61658
76486
61152
10000 -30%
0 -40%

M&M

Net Revenue 74,001 71,949 78,016 82,412 EPS 76 51 52 55
Total Revenue 74,506 72,474 78,557 82,953 DPS 16.4 14.0 14.0 14.0
COGS 44,893 42,850 45,340 48,211 Payout (incl. Div. Tax.) 22% 28% 27% 25%
GPM 61% 60% 58% 59% Valuation(x)
Other Expenses 12,342 13,444 15,036 15,246 P/E 6.3 12.8 23.4 23.2
EBITDA 10,120 8,793 9,647 10,714 Price / Book Value 1.3 1.6 2.6 2.5
EBITDA Margin (%) 14% 12% 12% 13% Dividend Yield (%) 3.43% 2.16% 1.16% 1.10%
Depreciation 2,170 2,124 2,582 2,555 Profitability Ratios
EBIT 7,951 6,669 7,066 8,159 RoE 20% 12% 11% 11%
Interest 2,954 3,157 3,373 3,812 RoCE 16% 14% 13% 14%
PBT 5,502 4,038 4,234 4,888 Turnover Ratios
Tax 1,496 1,720 1,864 1,466 Asset Turnover (x) 0.8 0.8 0.7 0.7
Tax Rate (%) 27% 43% 44% 30% Debtors (No. of Days) 28.2 27.8 30.0 30.0
Reported PAT 4,667 3,137 3,211 3,421 Inventory (No. of Days) 67.9 72.0 85.6 60.0
Dividend Paid 1,009 872 872 872 Creditors (No. of Days) 58.2 57.6 63.8 63.8
No. of Shares 62 62 62 62 Net Debt/Equity (x) 1.1 0.9 0.9 0.8
BALANCE SHEET CASH FLOW STATEMENT

Share Capital 295 296 296 296 OP/(Loss) before Tax 5,502 4,038 4,234 4,888
Reserves 23,012 25,561 28,323 30,873 Depreciation 2,175 2,128 2,612 2,555
Net Worth 23,307 25,856 28,620 31,169 Direct Taxes Paid (1,275) (1,701) (2,044) (1,466)
Long term Debt 25,492 22,327 25,096 25,598 OP before WC changes 8,086 6,454 7,252 10,134
Short term Debt 2,781 7,177 8,251 8,663 CF from Op. Activity (244) 1,055 971 6,924
Deferred Tax 1,202 1,287 1,552 1,552 (66,102) (80,047) (88,000) (172)
Total Capital Employed 48,799 48,183 53,716 56,767 Capex (3,665) (4,759) (4,334) (3,660)
Net Fixed Assets 19,228 21,315 24,186 25,291 CF from Inv. Activity (4,490) (4,444) (5,238) (4,706)
Capital WIP 1,244 1,273 806 806 Repayment of Long Term Borrowings
(53,265) (45,084) (94,098) -
Debtors 5,725 5,476 6,419 6,781 Interest Paid (583) (489) (541) (3,812)
Cash & Bank Balances 6,523 4,912 4,906 3,346 Divd Paid (incl Tax) (1,094) (1,200) (1,068) (872)
Trade payables 11,800 11,355 13,628 14,396 CF from Fin. Activity 5,577 1,669 3,971 (3,770)
Total Provisions 5,089 5,654 5,901 6,127 Inc/(Dec) in Cash 844 (1,720) (296) (1,552)
Net Current Assets 14,817 13,195 14,739 15,986 Add: Opening Balance 3,823 4,633 3,000 4,906
Total Assets 88,270 94,844 1,08,223 1,13,724 Closing Balance 4,633 2,720 2,792 3,019

PART BOOK PROFIT
Indusind Bank 27-Mar-17
Result Update Recent Development and Result Update

CMP 1404 Recently there was news from management stating that Indusind Bank was
Target Price 1480 in talks with multiple entities for business expansion. It also includes the
widely speculated merger of Bharat Financial Inclusion. However we wait for
Previous Target Price 1400
the confirmation on any such deal. But any such development with Bharat
Upside 5% Financial Inclusion would be synergistic and will boost earnings growth of
Change from Previous 6% Indusind Bank.
Market Data Indusind Bank posted the strong set of 3Q FY17 results. NII grew by 35%
YoY backed by healthy loan growth as well as improvement in NIM. C/I ratio
BSE Code 532187 was well within control to 47.5%. Operating Profit remained healthy with
NSE Symbol 29% YoY growth. PAT grew by 29% YoY. NIM improved by 9 bps YoY to
INDUSINDBK
52wk Range H/L 1414/912 4%, it remained flat QoQ. Sequentially assets quality saw marginal
deterioration with GNPA at 94bps against 90bps. Advances increased by
Mkt Capital (Rs Cr) 69444
25% YoY backed by growth in both consumer as well as corporate portfolio.
Av. Volume (,000) 141 Deposits Increased by 38% YoY, whereas CASA Increased by 46% YoY.
Nifty 9045 CASA ratio increased by 50 bps QoQ to 37%.
Stock Performance Advances growth remained healthy, CASA Spiked

1Month 1Year YTD Advances grew by a healthy pace of 25% YoY despite the busy quarter (on
Absolute 3.7 49.0 27.8 liability side) backed by both Consumer Finance and Corporate Bank
division. Both the segment registered 25% growth YoY. Overall vehicle
Rel.to Nifty 1.9 18.2 11.4
finance grew by 20% YoY and Non Vehicle consumer portfolio grew by 38%
YoY. Under Vehicle Finance, CV grew by 10%, SCV picked up to 18% and
Share Holding Pattern-% car loan grew by 22%. Equipment financing grew by 28% YoY, Credit card
3QFY17 2QFY17 1QFY17 business grew by 51% YoY. Management highlighted that the IIB has
Promoters 16.7 16.7 16.7 gained the market share in overall vehicle financing except in 2 wheeler
segment which remained flat QoQ.
Public 83.3 83.3 83.3
Others
Deposits grew by 38% YoY mainly due to demonetization effect. However
Total 100.0 100.0 100.0 growth was only 6% QoQ due to one off IPO deposits in 2Q FY17 got
redeem in 3Q FY17. CASA grew by 46% YoY which led the CASA ratio to
Company Vs NIFTY 37%. SA increased by 56% and CA increased by 35% YoY. Management
highlighted that the increase in CASA can be attributed equally to both-
150 INDUSINDBK NIFTY
customer acquisition as well as demonetization.
140
130
120 Operating Profit Remain Healthy.
110
Operating profit of the Indusind bank has shown a healthy growth of 29%
100 YoY backed by strong NII and other income growth of 35% and 21%
90 respectively. Other income growth was supported by 22% YoY growth in fee
80 income. Fee from investment banking grew by 41% YoY but remain flat
sequentially. Loan processing fees grew by 5% YoY. Distribution fee income
grew by 44% YoY. C/I ratio increased marginally to 47.5% from 47.3% a
year back due to 29% growth in operating expenses. Bank opened 40 new
DEEPAK KUMAR branches this quarter which led the total branches to 1075 and has the
Deepak.kumar@narnolia.com
target of 1200 in FY17.
INDUSINDBK
Demonetization led huge decline in Cost of Fund.

NIM has improved by 9bps YoY to 4% but remain flat QoQ. Improvement in NIM was backed by decline in cost of
fund. Cost of fund declined by 53bps YoY to 5.27%. Cost of deposits fall by 80 bps YoY to 6.35% as on 3Q FY17.
This 80 bps fall in cost of deposits was the highest in last 18 quarters. Decline in cost of deposits was the result of
spike in CASA ratio due to demonetization. Overall Yield of IIB declined by 44bps to 9.27%. Yield on advances
declined by 34 bps YoY to 11.73%. Yield on consumer finance division declined by 53 YoY bps whereas corporate
portfolio saw as decline of 22 bps YoY in its Yield. However sequentially yield on CFD decline marginally by 4 bps.
Most of the CFD book is on fixed rate. In the declining interest rate scenario, Yields will further taper but with the
strategy of management to shift to portfolio mix towards high yield CFD and decline in cost of fund will maintain the
NIMs at current level.
Assets Qaulity remains largely stable

Assets Quality of IIB saw marginal increase in its GNPA to 0.94% against 0.90% as on 2Q FY17. NNPA increased
by 2 bps to 0.39%. Slippages were Rs 281 Cr, increased by 8% QoQ. However slippages in CFD improved to Rs
170 Cr against Rs 188 Cr on 2Q FY17. GNPA in vehicle segment improved except in Car segment. LAP also saw
10bps increase in GNPA. Management highlighted that delinquencies and slippages in the consumer bank have
actually improved over the quarter because repayments came in faster before December 30.Bank also saw
delinquent clients as well as written-off clients end with paying up. Restructured assets declined to 41 bps against
44 bps on 2Q FY17. The decline was due to slip of 2 small accounts into NPA. PCR remained flat at 59%. Credit
cost was 15 bps for the quarter and it was 45 bps for 9 months. Management expects the credit cost to restrict to
60bps in FY17.
Quarterly Performance (Rs in Crore)

Financials 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY % QoQ%
Interest Inc. 2437 2579 2724 2798 2928 3132 3292 3469 3699 26% 7%
Interest Exp. 1576 1654 1743 1703 1754 1863 1935 2009 2121 21% 6%
NII 861 925 981 1094 1173 1268 1356 1460 1578 35% 8%
Other Income 611 658 724 784 839 913 973 970 1017 21% 5%
Total Income 1472 1584 1705 1878 2012 2181 2329 2431 2595 29% 7%
Ope Exp. 698 733 782 871 951 1030 1096 1149 1232 29% 7%
PPP 774 851 923 1007 1061 1151 1234 1282 1363 28% 6%
Provisions 98 107 123 158 177 214 230 214 217 22% 1%
PBT 676 743 799 848 884 938 1003 1068 1146 30% 7%
Tax 229 248 274 288 303 317 342 364 396 31% 9%
Net Profit 447 495 525 560 581 620 661 704 751 29% 7%
Financials 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(+/-) QoQ(+/-)
NII Growth % (YoY) 18.0 18.4 22.5 31.3 36.2 37.1 38.3 33.4 34.5
Other Inc./Net Inc. % 41.5 41.6 42.5 41.7 41.7 41.9 41.8 39.9 39.2 (2.51) (0.74)
C/I Ratio % 47.4 46.3 45.9 46.4 47.3 47.2 47.0 47.3 47.5 0.19 0.19
Empl. Cost/ Tot. Exp. % 36.6 36.2 34.8 34.5 34.3 32.7 32.6 32.7 32.0 (2.35) (0.72)
Other Exp/Tot. Exp.% 63.4 63.8 65.2 65.5 65.7 67.3 67.4 67.3 68.0 2.35 0.72
PPP Growth % (YoY) (22.3) (10.9) 11.7 116.0 80.7 98.9 86.9 35.3 22.5
Provision/PPP % 12.7 12.6 13.4 15.7 16.7 18.6 18.7 16.7 15.9 (0.78) (0.78)
Tax % 33.8 33.3 34.3 34.0 34.3 33.8 34.1 34.0 34.5 0.26 0.48
PAT Growth % 28.9 25.1 24.7 30.2 29.9 25.3 26.0 25.8 29.2
RoE % 18.3 19.8 20.4 16.7 14.1 14.6 15.1 15.4 15.7 1.67 0.34
RoA % 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 (0.04) (0.05)

INDUSINDBK
Margins Performance 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(+/-) QoQ(+/-)
Yield % on Advances 13.0 12.8 12.7 12.4 12.1 12.0 12.1 11.9 11.7 (0.34) (0.13)
Yield % on Corporate Bank 10.9 10.6 10.4 10.1 10.0 10.1 10.2 9.9 9.8 (0.22) (0.16)
Yield % on Consumer Finance 15.8 15.8 15.7 15.4 15.1 14.9 14.6 14.6 14.5 (0.53) (0.04)
Overall Yield % on Total Assets 10.3 10.1 10.1 9.8 9.7 9.7 9.6 9.5 9.3 (0.44) (0.24)
Cost of Deposits % 7.8 7.7 7.6 7.4 7.2 7.1 6.9 6.6 6.4 (0.80) (0.25)
Overall Cost Of Funds % 6.6 6.5 6.4 5.9 5.8 5.7 5.7 5.5 5.3 (0.53) (0.24)
NIM % 3.7 3.7 3.7 3.9 3.9 3.9 4.0 4.0 4.0 0.09 -
NII Growth % (YoY) PAT Growth % C/I Ratio %

Overall Yield % on Total Assets Overall Cost Of Funds % NIM %
50.00 48.00
12.00
40.00 47.50
10.00
47.00
30.00 8.00
46.50
6.00
20.00
46.00 4.00
10.00 45.50 2.00
- 45.00 -
3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
(Rs in Crore)
Other Income Break Up 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY % QoQ%
Trade and Remittances 62 80 56 84 85 97 109 103 106 25% 4%
Foreign Exchange Income 169 110 159 170 170 140 151 156 179 5% 15%
Distribution Fees 98 127 107 119 126 138 137 156 181 44% 16%
General Banking Fees 42 45 49 41 46 48 56 49 64 38% 29%
Loan Processing fees 91 111 104 145 185 228 215 201 195 5% -3%
Investment Banking 59 96 123 114 113 122 114 161 160 41% -1%
Total Fee-Based Income 522 569 599 673 726 774 782 826 885 22% 7%
Securities/MM/FX 88 90 125 110 113 139 191 145 132 17% -9%
Trading/Others
Total Other Income 611 658 724 784 839 913 973 970 1017 21% 5%
Other Income/Total Net Income % Fee Income/ Advances %

43.00 0.90
42.00 0.88
41.00 0.86
40.00 0.84
39.00 0.82
38.00 0.80
37.00 0.78
3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
38
INDUSINDBK
Outlook & Valuation:
Among the mid size private bank, Indusind bank remains one of the consistent performers in growth and profitability
parameter. Superior loan book growth, diversified fee income profile and low credit cost are the key drivers of the
bank. We expect the IIB to maintain 25%+ loan growth in near to mid-term backed by revival in economic environment
and declining interest rate. We expect the consumer loan demand to pick up with improving vehicle financing and card
business giving the boost. Spike in CASA ratio and focus on consumer finance segment will help to maintain the NIM
at 4%. With healthy capitalization of Tier 1 at 14.7% we expect the RoA of 1.9%+, RoE of 16%-17%. Since Indusind
Bank has achieved our target price and valuation has got little stretched but based on strong fundamentals we think
investors should hold the stock in their portfolio. We recommend part book profit and hold the rest with the target price
of Rs 1480.
Concall Highlights:
>> Bond book will do well as the rate goes down. But the issue lies in the reinvestment risk in the book of banks.
>> Credit cost is well within the guidance. May come up slightly better than the guidance of 60 Bps of full year.
>> Security Receipts is Rs 223 Cr.
>> 2 small accounts slipped from restructured book.
>> RWA to total assets declined to 79% from 83% previous quarter. Quality of book has improved.
>> Assets quality in vehicle book has improved except for Car.
>> CASA increased can be attributed 50% to demonetization effect and 50% for the customer accquisition.
>> Gained market share in vehicle finance in all segment except in 2 wheeler segment.
>> LAP was slow in the month of Nov, but the business came back in Dec.
>> MFI book is flat QoQ with Rs 3000 Cr. MFI loan book target is Rs 10000 Cr in 3 years.
Assets Quality (Rs in Crore)

3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(+/-) QoQ(+/-)
GNPA (Rs) 673 563 570 602 681 777 861 899 971 43% 8%
GNPA % 1.05 0.81 0.79 0.77 0.82 0.87 0.91 0.90 0.94 0.12 0.04
NNPA (Rs) 202 210 225 241 273 322 356 369 401 47% 9%
NNPA % 0.32 0.31 0.31 0.31 0.33 0.36 0.38 0.37 0.39 0.06 0.02
Slippages (Rs) 161 449 133 189 252 274 253 261 281 12% 8%
Restructured Assets % 0.55 0.53 0.63 0.63 0.58 0.53 0.49 0.44 0.41 -0.17 -0.03
Total Stress Assets (Rs) 353 368 455 493 482 473 464 440 424 -12% -4%
(GNPA+Std.
Specific PCR Rest.)
% 70.1 62.6 60.6 60.0 59.9 58.6 58.7 59.0 58.7 -1.16 -0.25
GNPA Composition Consumer Finance %

3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(+/-) QoQ(+/-)
Commercial Vehicle 1.44 1.27 1.18 1.10 1.05 1.00 1.08 1.07 1.02 -0.03 -0.05
Utility 0.97 1.08 1.06 1.03 1.00 1.21 1.27 1.17 1.07 0.07 -0.10
Construction Equipment 1.64 1.44 1.46 1.57 1.45 1.26 1.39 1.40 1.24 -0.21 -0.16
Small CV 0.90 0.92 1.04 0.84 0.81 0.98 1.05 0.97 0.83 0.02 -0.14
TW 2.36 2.53 2.65 2.83 2.95 3.02 3.15 3.62 3.60 0.65 -0.02
Cars 0.48 0.56 0.58 0.41 0.39 0.50 0.49 0.49 0.75 0.36 0.26
LAP/HL/PL 0.32 0.33 0.48 0.41 0.57 0.65 0.68 0.71 0.81 0.24 0.10
Tractor - - - - - - 0.24 0.49 0.28 N/A -0.21
Cards 1.53 1.24 1.32 1.35 1.48 1.45 1.73 1.68 1.62 0.14 -0.06
Total 1.22 1.15 1.14 1.09 1.08 1.08 1.14 1.17 1.16 0.08 -0.01
39
INDUSINDBK
GNPA % NNPA % Restructured Assets % Specific PCR %

1.20
72.00
1.00 70.00
68.00
0.80
66.00
0.60 64.00
62.00
0.40 60.00
58.00
0.20 56.00
54.00
- 52.00
Advances (Rs in Crore)

3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Net Advances (Rs in Cr) 63,847 68,788 72,243 78,294 82,167 88,419 93,678 98,949 1,02,770
Adv. Growth YoY % 21.69 24.84 23.15 30.64 28.69 28.54 29.67 26.38 25.07
>> Growth QoQ % 6.53 7.74 5.02 8.38 4.95 7.61 5.95 5.63 3.86
Sectoral Breakup % 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Corporate Banking% 57.7 58.7 58.5 59.2 58.3 58.7 58.8 59.0 58.3
Consumer Finance% 42.3 41.3 41.5 40.8 41.7 41.3 41.2 41.0 41.7
Net Advances (Rs in Cr) Adv. Growth YoY % Corporate Banking % Consumer Finance %
1,20,000 35.00
60.00
1,00,000 30.00
50.00
25.00
80,000
20.00 40.00
60,000
15.00 30.00
40,000
10.00 20.00
20,000 5.00 10.00
- - -

INDUSINDBK
Consumer Finance Book Break Up (Rs in Crore)

1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(+/-) QoQ(+/-)
Comm. Vehicle Loans 11,405 12,360 13,204 14,101 13,847 14,208 14,569 10% 3%
>>Tractor - - - - 1,229 1,460 1,764 N/A 21%
Utility Vehicle Loans 2,043 2,037 2,041 2,058 2,097 2,157 2,237 10% 4%
Small CV 1,860 1,938 2,019 2,045 2,133 2,274 2,381 18% 5%
Two Wheeler Loans 2,829 2,857 3,034 3,045 3,076 3,134 3,323 10% 6%
Car Loans 3,293 3,539 3,754 3,917 4,076 4,324 4,570 22% 6%
Equipment Financing 2,827 2,861 3,036 3,244 3,435 3,597 3,875 28% 8%
Credit Card 786 885 1,008 1,204 1,258 1,408 1,519 51% 8%
Loan Against Property 4,032 4,331 4,759 5,248 5,585 5,872 6,429 35% 9%
Others-BL,PL,GL,etc 932 1,147 1,393 1,687 1,855 2,124 2,198 58% 3%
DEPOSITS (Rs in Crore)

3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Deposits (Rs in Cr) 69,376 74,134 77,693 80,841 86,423 93,000 1,01,768 1,12,313 1,19,218
>> Growth YoY % 23.3 22.5 21.6 22.5 24.6 25.4 31.0 38.9 37.9
>> Growth QoQ % 5.1 6.9 4.8 4.1 6.9 7.6 9.4 10.4 6.1
CASA (Rs) 23,634 25,300 26,945 28,085 30,232 32,724 35,043 41,034 44,162
>>CASA Growth YoY % 30.6 28.5 26.5 25.6 27.9 29.3 30.1 46.1 46.1
>> Growth QoQ % 5.7 7.0 6.5 4.2 7.6 8.2 7.1 17.1 7.6
CASA % 34.1 34.1 34.7 34.7 35.0 35.2 34.4 36.5 37.0
CA % 16.5 16.7 16.6 16.1 16.3 16.6 15.7 18.2 15.9
SA % 17.6 17.5 18.0 18.6 18.7 18.5 18.8 18.3 21.1
Credit Deposit Ratio 92.0 92.8 93.0 96.8 95.1 95.1 92.1 88.1 86.2
Deposit Growth YoY % >>CASA Growth YoY % CA % SA % CASA %

50.00
40.0
45.00
40.00 35.0
35.00 30.0
30.00 25.0
25.00 20.0
20.00
15.0
15.00
10.00
10.0
5.00 5.0
- -

INDUSINDBK

INCOME STATEMENT (Rs in Crore) RATIOS
FY14 FY15 FY16 FY17E Business Ratios FY14 FY15 FY16 FY17E
Int./disc. on advances / bills 6,627 7,717 9,245 11,643 Credit-Deposit(%) 91.1 92.8 95.1 95.0
Income on Investments 1,477 1,680 1,781 2,201 CASA % 32.5 34.1 35.2 35.5
Int. on bal.with RBI 149 277 409 341 Efficiency Ratios
Others 1 17 147 137 Emp. Cost as a % of Total Inco. (%) 16.9 16.8 15.8 15.9
Total Interest Income 8,254 9,692 11,581 14,323 Other Exp./Total Inco. (%) 28.8 30.0 31.2 32.0
Total Interest expended 5,363 6,272 7,064 8,470 Cost Income Ratio (%) 45.7 46.8 47.0 47.9
Net Interest Income 2,891 3,420 4,517 5,853 Spread Analysis As Calculated
Other Income 1,891 2,404 3,297 4,184 Yield on Advances (%) 13.6 13.2 12.3 12.2
Total Income 4,781 5,824 7,814 10,036 Yield on Investments (%) 7.9 8.0 7.3 7.1
Total Operating Expenses 2,185 2,726 3,672 4,809 Yield on Earning Assets (%) 11.5 11.2 10.7 10.6
Pre Provisioning Profit 2,596 3,098 4,141 5,228 Cost of Deposits (%) 8.2 7.9 7.3 6.9
Provisions and Contingencies 468 389 672 803 Cost of Fund (%) 8.1 7.8 7.0 6.7
Profit Before Tax 2,128 2,709 3,469 4,425 Interest Spread (%) 3.5 3.5 3.8 4.0
Tax 720 915 1,183 1,497 NIM (%) 4.0 4.0 4.2 4.3
PAT 1,408 1,794 2,286 2,928 Profitability Ratio
RoE % 17.5 19.0 16.6 16.2
RoA % 1.8 1.8 1.8 1.9
BALANCE SHEET (Rs in Crore) Int. Expended / Int. Earned (%) 65.0 64.7 61.0 59.1
FY14 FY15 FY16 FY17E Provisions/PPP (%) 18.0 12.6 16.2 15.4
Capital 526 529 595 595 Other Income/Net Income (%) 39.5 41.3 42.2 41.7
Reserves & Surplus 8517 10115 17101 19625 Tax Rate (%) 33.8 33.8 34.1 33.8
Deposits 60502 74134 93000 116341 Asset Quality Ratio
Borrowings 14762 20618 22156 25179 GNPA (%) 1.12 0.81 0.87 0.96
Other Liabilities & Provisions 2719 3719 7205 8758 GNPA(Rs) 621 563 777
Total Capital & Liabilities 87026 109116 140057 170498 NNPA (%) 0.33 0.31 0.36 0.41
NNPA (Rs) 184 210 322
Cash & Balances with RBI 4414 4035 4521 7161 PCR (%) 70 63 59 59.0
Bal. with Bank&Money at Call 2356 6744 5591 6112 Os. Std. Restr. Assets (%) 0.33 0.53 0.53 0.40
Investments 21563 22878 31214 35368
Advances 55102 68788 88419 110524 Capital Adequacy Ratio
Fixed Assets 1016 1158 1255 1386 Capital Adequacy Ratio (%) 13.8 12.1 15.5 15.3
Other Assets 2575 5513 9057 9947 Tier I Capital (%) 12.7 11.2 14.9 14.6
Total Assets 87026 109116 140057 170498 Tier II Capital (%) 1.1 0.9 0.6 0.7
Narnolia Securities
42 Ltd
N arnolia Securities Ltd
201 | 2nd Floor | Marble Arch Bu ild ing | 236B-AJC Bose
Road | Kolkata-700 020 , Ph : 033-40501500
email: narnolia@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.

IEA Report 6th March

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6th Apr 2017

AUROPHARMA "HOLD" 5th Apr 2017

KALPATPOWER "HOLD" 3th Apr 2017

JKIL "BUY" 3th Apr 2017

COSMOFILMS : Initiating Coverage "BUY" 31th Mar 2017

AUTOMOBILES 31th Mar 2017

M&M "HOLD" 29th Mar 2017

Result Update Recent Development:-

Result Highlights of Q3FY17

Managment / Concall Update

Outlook and Valuation:-

Narnolia Securities Ltd 3

Please refer to the Disclaimers at the end of this Report

Margin Profile YoY (+/-) QoQ (+/-)

Please refer to the Disclaimers at the end of this Report

Order Book Order Intake

Order Book Book to bill Order Intake Growth YoY%

Strong Growth in Railway Segment :- Margin Trend :-

Railway Order Book Growth YoY%

Narnolia Securities Ltd 5

Please refer to the Disclaimers at the end of this Report

Transmission Lines Substations Power Cabels

Narnolia Securities Ltd 6

Please refer to the Disclaimers at the end of this Report

BALANCE SHEET CASH FLOW

Narnolia Securities Ltd 7

Please refer to the Disclaimers at the end of this Report

Share Holding Pattern-% Recent developments

Narnolia Securities Ltd 8

BALANCE SHEET CASH FLOW STATEMENT

Narnolia Securities Ltd 9

Please refer to the Disclaimers at the end of this Report

119 122 90 32% -2%

Net Profit 47 58 28 68% -19%

EBITDA 63 56 57 11% 13%

View and Valuation::-

Mumbai Metro Projects Details

Narnolia Securities Ltd 12

Please refer to the Disclaimers at the end of this Report

Transporation Eng. Civil Construction Irrigation Others

Roads Terminus/Stations Earthen Dams Micro Pillings

Narnolia Securities Ltd 13

Please refer to the Disclaimers at the end of this Report

Narnolia Securities Ltd 14

Please refer to the Disclaimers at the end of this Report

Order Book Growth %

4000 0.5 of Rs.2000 Cr in order to

Quarterly Sales Trend :-

Order Book Break up:-

449 Delhi Metro

Healthy Debt to Equity position with strong Intreset covarge ratio:-

Narnolia Securities Ltd 15

Please refer to the Disclaimers at the end of this Report

BALANCE SHEET CASH FLOW

Narnolia Securities Ltd 16

Please refer to the Disclaimers at the end of this Report

Advance Strategy. Simple Solutions COSMO FILMS LTD

LEADING THE GROWTH

Narnolia Securities Ltd 17

Contents : Cosmo Films Limited

Ready for a New Growth Phase: Key Growth Drivers...3

Outlook & Recommendation......4

Capacity Expansion in BOPP to push growth...5