The Front Page

Institutional Equities India | October 15, 2015

Hi Rohan,
Market Front Page Top Research Stories
IndexMovements Closing %Chg %YTD ADR/GDR(US$) Latest %Chg %Prem Hindustan Unilever (BUY); Zee Entertainment (BUY); AIA
Sensex 26,780 (0.2) (2.6) HDFCBank 61.7 (0.2) 23.4 Engineering (BUY); Events Calendar
Nifty 8,108 (0.3) (2.1) Reliance 27.7 0.9 (0.4)
Corporate Front Page
BSESmallcap 11,436 0.4 2.5 Infosys 17.4 (0.7) 3.1
CNXMidcap 13,226 (0.1) 5.1 L&T 23.7 (0.4) 0.1 Lupin has signed a marketing agreement with drug maker
S&P500 1,994 (0.5) (3.1) Wipro 12.3 (0.9) 37.1 Boehringer Ingelheim to sell the latter's anti-diabetes drug linaglipitin
IBOV 46,710 (1.4) (6.6) ICICIBank 8.9 (0.3) 1.7 under its own brand name. The branded version of the drug (Ondero
FTSE 6,270 (1.1) (4.5) SBI 37.6 (0.1) (0.0) and Ondero Met) will be promoted by its 400 member strong diabetes
CAC 4,609 (0.7) 7.9 DrReddy's 64.8 0.3 0.4 specialty team. (BS)
Turnover US$m %Chg TataMotors 27.4 (0.1) 1.0 ABB, a power and automation technology company, has bagged
BSE 496 20.4 Commodities Latest %Chg %YTD a Rs1.4bn order from Power Grid Corporation. The order is to supply
NSE 2,263 1.6 Gold(US$/ounce) 1,183 (0.1) (0.2) 765 kilovolt (kV) ultrahigh voltage power transformers to help meet
Derivatives(NSE) 21,854 (22.5) Crude(US$/bl) 47 (0.0) (12.5) the growing demand in the most populous regions in the northern
FIIF&O(US$m) Index Stocks Aluminium(US$/MT) 1,593 (0.1) (14.0) states of Uttarakhand and Uttar Pradesh. (BL)
Netbuying (276) (110) Copper(US$/MT) 5,299 0.5 (15.9) Chennai-based NBFC, Sundaram Finance, has announced a 25 bps
Openinterest 14,343 7,845 ForexRates Closing %Chg %YTD downward revision in interest rates on deposits effective October 16,
Chginopenint. 30 65 Rs/US$ 65.0 0.2 (3.1) 2015. Fixed or cumulative deposits for 12, 18, 24 and 36 months will
NetFlows(US$m) Latest MTD YTD Rs/EUR 74.1 0.1 3.4 fetch interest at 8.25% per annum rate (previously 8.5%). (BS)
FII(Eqy)(13/10) 50 386 3,995 Rs/GBP 99.9 (0.7) (1.6)
Alstom T&D India has bagged orders worth Rs1.4bn from Odisha
DII(Eqy)(14/10) (32) (223) 8,087 BondMarkets Closing bpsChg Power Transmission Corporation for supply of 400/220 kV air insulated
MF(Eqy)(13/10) (13) 98 9,150 10yrbond 7.55(1.00) and gas insulated substations. (ET)
FII(Debt)(13/10) 641 1,611 7,942 Interbankcall 7.10 40.00
Drug firm Unichem Laboratories has received US health regulators
Chart Front Page approval to market its Memantine Hydrochloride tablets USP, used to
Sensexintraday treat severe dementia of the Alzheimers type, in the American
Sensexpricevolumetrend
Sensex(RHS) market. The product would be commercialized from Unichems Goa
26,900 Volumes(Rsbn) plant and the API (Active Pharmaceutical Ingredient) of the product
176 35,000
26,850 would also be produced in house at its Pithampur plant. (BL)
30,000
132 25,000
26,800 20,000 Result table
88
15,000
26,750 Rsm Revenues %YoY PAT %YoY
44 10,000
5,000 HUL 78,196 4.7 9,622 2.6
26,700 0 0 TTKPrestige 4,303 9.9 340 21.7
9:15 10:30 11:45 13:00 14:15 15:30 Sep06 Sep09 Sep12 Oct15
 Institutional Equities

Market Front Page Market Front Page

FII FII trades Volume spurts
Scrip 10/13/2015 10/14/2015 Company CMP M.Cap Vol. 10DA.Vol Vol%
Volume'000 Price Avg.Prem% Volume'000 Price Avg.Prem% (US$m) (in'000) (in'000) Chg

Grasim 0 3,725 2.3 16 3,800 4.2 RamcoCements 333 1,219 1,777 233 661.6
GSFC 60 70 1 InfoEdgeIndia 797 1,479 311 64 386.0
HDFCBank 1,679 1,273 18.0 593 1,273 17.8 ZeeEntertainmentEnterprises 387 5,709 10,887 2,401 353.4
IDFC 2,132 62 2 BajajHoldings&Investment 1,578 2,701 185 42 338.5
KotakMahBank 5 657 0.6 370 659 0.3 TV18Broadcast 34 883 15,984 4,423 261.4
PetronetLNG 23 182 0.1 GreatEasternShipping 363 841 356 109 227.1
PowerGrid 750 133 3,093 133 Mphasis 400 1,293 476 148 220.8
Prestige 105 210 1.2 40 212 1.1 HindustanUnilever 797 26,524 3,966 1,495 165.3
Titan 1 345 0.4 Vakrangee 132 1,074 3,865 1,502 157.3
BharatForge 890 3,187 2,801 1,212 131.0

Top Movers BSE 200

TopGainers Price Chg YTD TopLosers Price Chg YTD Corporate Front Page
(Rs) (%) (%) (Rs) (%) (%)
Jaguar Land Rover said that its second-quarter results will be
GujaratStatePetronet 124 7.2 9.0 BharatForge 890 (4.8) (5.7) affected by a blast at the Chinese port of Tianjin in August which
AurobindoPharma 806 3.2 41.9 TataConsultancyServs 2,484 (4.4) (2.9) destroyed or damaged many of the 5,800 vehicles the company had at
CenturyTextiles&Inds 553 3.1 5.5 CairnIndia 159 (3.8) (34.0) the site. JLR said it was still assessing the damage and that it would
EngineersIndia 209 3.0 (9.2) JSWEnergy 87 (3.7) (15.0) take time to work out the level of insurance and other measures
HindalcoIndustries 89 2.8 (43.8) ZeeEntertainmentEnte 387 (3.7) 1.5 involved. (ET)

Snowman Logistics Ltd has commenced operations at its new

Bengaluru warehouse with a capacity of 4,500 pallets. This takes the
companys total warehousing capacity to 94,500 pallets. (BL)
Institutional Equities

Economy Front Page

The wholesale price index based inflation edged up marginally to -
4.54% in September 2015, compared to -4.95% in August. WPI
inflation continued to be in the negative territory for the 11th straight
month. (BL)

India's palm oil imports rose by 12.20% to 7,83,734 tonnes in

September as against the year-ago period, on account of lower global
prices, industry body Solvent Extractors' Association (SEA) said. Palm
oil makes up 70% of the country's total vegetable oil imports. (ET)

Maharashtra government approved an expenditure of Rs138bn in five

years on the Mukhyamantri Gram Sadak Yojna (CMGSY) for
construction and repairing of roads. CMGSY is to bring greater
connectivity in rural areas. (ET)
 Institutional Equities

BSE/NSE Bulk Deals

Company NameofAcquirer/Seller TransactionDate Buy/Sale Quantity Price DealSize
(Rs) (Rsm)
CadilaHealthcare BarclaysMerchantBank(Singapore) 14/10/2015 Buy 1,559,839 424.0 661
CadilaHealthcare BaringIndiaEquityFundIIIListedInv 14/10/2015 Sell 1,559,839 424.0 661
DaburIndia BarclaysMerchantBank(Singapore) 14/10/2015 Buy 5,292,304 271.5 1,437
DaburIndia BaringIndiaEquityFundIiiListedInv 14/10/2015 Sell 5,292,304 271.5 1,437
GatewayDistriparks SatpalKhattar 14/10/2015 Sell 3,300,000 333.0 1,099
GatewayDistriparks WindmillInternational 14/10/2015 Sell 4,275,187 333.0 1,424
GatewayDistriparks IndiaMidcapMauritius 14/10/2015 Buy 750,000 333.0 250
GatewayDistriparks GMOEmergingDomesticOpportunitiesFund 14/10/2015 Buy 2,079,687 333.0 693
GatewayDistriparks AmansaHoldings 14/10/2015 Buy 567,660 333.0 189
GatewayDistriparks SundaramMutualFundA/CSundaramSelectMidcap 14/10/2015 Buy 950,000 333.0 316
GatewayDistriparks GMOEmergingMarketsFund 14/10/2015 Buy 598,187 333.0 199
Marico BarclaysMerchantBank(Singapore) 14/10/2015 Buy 819,733 394.0 323
Marico BaringIndiaEquityFundIIIListedInv 14/10/2015 Sell 819,733 394.0 323
MEPInfrastructure PrimeIndiaOpportunityFund 14/10/2015 Sell 1,700,000 49.1 83
MEPInfrastructure HaridarshanSales 14/10/2015 Sell 1,377,047 49.1 68
MEPInfrastructure PonikaMultitrade 14/10/2015 Sell 1,310,000 49.1 64
MEPInfrastructure HDFCMutualFund 14/10/2015 Buy 6,790,817 49.1 333
SintexIndustries BarclaysMerchantBank(Singapore) 14/10/2015 Buy 2,200,000 104.3 229
SintexIndustries BaringIndiaEquityFundIIIListedInv 14/10/2015 Sell 2,200,000 104.3 229
SomanyCeramics L&TMfTaxAdvantageFund 14/10/2015 Buy 499,435 349.0 174
SomanyCeramics MacquarieBank 14/10/2015 Sell 500,000 349.0 175
Hindustan Unilever BUY
Earnings downgrade

15 October 2015 Institutional Equities

Higher A&P spends depress profit Company update
HUL reported 2QFY16 results below our estimates. While sales CMP Rs797 Priceperformance(%)

growth at 4.7% surprised marginally on the upside net profit 12mthTP(Rs) 900(13%) 1M 3M 1Y
grew just 1.4%, below our estimates by 8.2%, mainly due to a Absolute(Rs) 0.3 (14.0) 9.0
steep 225bps increase in A&P spends. Interestingly, soaps and Marketcap(US$m) 26,491
Absolute(US$) 2.6 (16.2) 4.9
detergents Ebit declined 4% YoY despite significant input cost Enterprisevalue(US$m) 26,104
benefit as A&P spends moved up. We expect bottom-line Rel.toSensex (3.3) (9.9) 7.4
Bloomberg HUVRIN
pressures to continue in FY16 and we cut our EPS by 8%. We Cagr(%) 3yrs 5yrs
believe EPS growth in FY17 and FY18 would be better for HUL as Sector FMCG EPS 12.8 13.5
price growth returns, headwinds on excise duty abate, and A&P

declines from a high base. We maintain BUY on HUL with a price Shareholdingpattern(%) Stockperformance
target of Rs900. Promoter 67.2 Shares(000') Volume(LHS)
(Rs)
FII 13.9 Price(RHS)
14,000 1,200
A&P spends depress bottom line: HUL reported sales growth of 4.7%, DII 4.8 12,000 1,000
1.7% above our estimate. Reported volume growth was 7% (adjusted Others 14.1 10,000 800
8,000
for one-offs of 6.5%) vs. our estimate of 5%. Gross margin expansion at

600
6,000
52WkHigh/Low(Rs) 981/707 400
316 bps was 50bps below our estimates due to price cuts. Increase in 4,000
Shareso/s(m) 2164 2,000 200
A&P spends by 225 bps, mainly in the S&D segment, resulted in Ebitda 0 0
growth of just 6.8%, 8.5% below our estimate. Dailyvolume(US$m) 20.9

Feb14

Feb15
Dec13

Dec14
Jun14

Jun15
Aug14

Aug15
Oct13

Oct14

Oct15
Apr14

Apr15
DividendyieldFY16ii(%) 1.7
FY16 weak, we expect stronger numbers in FY17: We expect FY16 Freefloat(%) 32.8
EPS to be under pressure due to a weak consumption environment and Financialsummary(Rsbn)
lack of pricing power. However, in FY17, we expect improvement in Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii
growth as: 1) the pricing environment improves; 2) volume growth picks Revenues(Rsbn) 285 312 330 372 420
up due to improvement in urban areas; 3) A&P declines from a high Ebitdamargins(%) 16.6 17.4 18.5 19.3 19.7
base; 4) excise duty increase plays out completely in FY16; and 5) other PreexceptionalPAT(Rsbn) 36 39 43 50 58
income, which would decline this year due to fall in yields, will increase 39 44 43 50 58
ReportedPAT(Rsbn)
again next year. We cut our EPS estimate by ~8% over our forecast
PreexceptionalEPS(Rs) 16.8 18.1 19.7 23.2 26.9
period.
Growth(%) 8.2 7.4 9.3 17.7 15.7
Maintain BUY; TP Rs900 (36x Sep 2017): In the past few years HUL IIFLvsconsensus(%) (4.8) (1.6) 1.1
has made significant efforts to improve the distribution strength of its PER(x) 47.4 44.1 40.4 34.3 29.6
brands, innovate on products and segments, and cut costs. The results ROE(%) 113.6 103.4 97.8 98.2 97.0
have not been visible due to factors such as a sluggish economy, tax Netdebt/equity(x) (0.7) (0.7) (0.7) (0.8) (0.6)
increases, and hyper-competition in the bottom-of-the-pyramid products. EV/Ebitda(x) 35.8 31.4 27.7 23.4 20.4
We believe these headwinds will soon play out and investments made Price/book(x) 48.7 42.9 36.6 31.2 26.6
over the years will be visible in the numbers. Source:Company,IIFLResearch.Pricedason14October2015

Percy Panthaki | percy.panthaki@iiflcap.com Avi Mehta | avi.mehta@iiflcap.com Aditya Sharma | aditya.sharma@iiflcap.com

91 22 4646 4662 91 22 4646 4650 91 22 4060 9307
 Institutional Equities Hindustan Unilever BUY

Figure1: HUL2QFY16results Figure2: Broadbasedgrowthacrosssegmentsexceptsoapsanddetergents

HUL(Rsm) 2QFY15 2QFY16 %YoY SegmentalSales 2QFY15 2QFY16 %ChgYoY
NetSales 74,655 78,196 4.7% Soapsanddetergents 37,551 38,166 1.6%
TotalExpenses (63,973) (66,295) 3.6% Personalcareproducts 21,427 23,456 9.5%
Otheroperationalincome 1,738 1,358 21.9% Beverages 8,991 9,526 5.9%
Ebitda 12,420 13,259 6.8% Foods 4,513 5,071 12.4%
Ebitdamargin(%) 16.6 17.0 32bps Others 3,618 3,243 10.4%
Depreciation (764) (761) 0.3% Overallsegmentalsales 76,101 79,461 4.4%
EBIT 11,657 12,497 7.2% Source:Company,IIFLResearch
Interest (63) 100.0%
OtherIncome 1,978 1,702 14.0% Figure3: HealthymarginexpansioncontinuinginPersonalProducts
SegmentalEBIT 2QFY15 2QFY16 %ChgYoY
EOItems 487(121) 124.9%
Soapsanddetergents 5,112 4,903 4.1%
PBT 14,058 14,077 0.1%
Margin(%) 13.6 12.8 77bps
Tax (4,176) (4,455) 6.7%
Personalcareproducts 5,223 6,119 17.2%
Adj.Taxrate(%) 29.7 31.6 194bps
Margin(%) 24.4 26.1 171bps
ReportedPAT 9,882 9,623 2.6%
Beverages 1,557 1,378 11.5%
AdjustedPAT 9,568 9,703 1.4%
Margin(%) 17.3 14.5 285bps
CostDetails 2QFY15 2QFY16 %YoY
Foods 200 269 34.5%
Raw/PackingMaterial 39,590 38,995 1.5%
Margin(%) 4.4 5.3 87bps
As%ofSales 53.0 49.9 316bps
Others 116 104 9.9%
EmployeeCosts 4,130 3,808 7.8%
Margin(%) 3.2 3.2 2bps
As%ofSales 5.5 4.9 66bps
TotalEBIT(Rsm) 12,207 12,773 4.6%
AdvertisingCost 9,251 11,450 23.8%
Source:Company,IIFLResearch
As%ofSales 12.4 14.6 225bps
OtherExpenses 11,003 12,042 9.4% Results analysis
As%ofSales 14.7 15.4 66bps HUL reported sales growth of 4.7%, 1.7% above our estimate,
Source:Company,IIFLResearch partly driven by up-stocking before transport strike.
The domestic consumer business grew 5% on back of 7% underlying
volume growth (6.5% adj. for up-stocking) broadly in line with
estimates. Volume growth was broad based across categories.
Most of the segments performed in line with our estimate. Soaps
and detergents saw muted top-line growth due to price deflation as
the company passed on input cost benefits.

percy. panth a k i@iif lcap. com 2

 Institutional Equities Hindustan Unilever BUY

The personal products segment delivered sales growth at 9.5% with Figure5: Grossmarginexpandedc316bpsYoYledby benigninputcostenvironment
double-digit growth across skin care, hair care, colour, and Grossmargin(%)(LHS) Grossprofitgrowth(%YoY)(RHS)
cosmetics segments. Hair care registered strong growth in particular 52% 20%
and HUL now has 50% market share in the category; adjusted for
excise impact, sales growth was healthy at 11%. 50% 16%
The packaged foods segment saw eighth consecutive quarters of 48%
12%
double -digit growth (12.4%) on the back of broad-based growth 46%
across the ketch-up, jams, and ice-cream segments. The noodles 8%
business suffered due to overall slowdown in the market along with 44%
FSSAI banning sales of Maggi noodles, the market leader in India. 42% 4%
However, this is a small part of HULs business
40% 0%
The beverages segment grew 5.9% YoY. The company has not yet

1QFY14

2QFY14

3QFY14

4QFY14

1QFY15

2QFY15

3QFY15

4QFY15

1QFY16

2QFY16
taken price increases in tea since it waits for clarity on the input cost
scenario. Coffee sales growth was price driven.

Figure4: Volume growth continues to remain healthy in the context of weak macro Source:Company,IIFLResearch
economicenvironment
FMCGsalesgrowth Volumegrowth Pricegrowth Gross margin expanded 316 bps, which was 50 bps below our
14% expectation, as the company passed on a higher proportion of input
12% cost benefits to the consumers.
10%
8% Figure6: Adspendsgrew22.1%, supporting brandinvestments
6% Adspend(%ofsales)(LHS) Adspendgrowth(%YoY)(RHS)
4% 30%
2% 14%
0% 20%
2% 13%
4%
10%
2QFY14

3QFY14

4QFY14

1QFY15

2QFY15

3QFY15

4QFY15

1QFY16

2QFY16

12%

11% 0%
Source:Company,IIFLResearch
10% 10%

2QFY14

3QFY14

4QFY14

1QFY15

2QFY15

3QFY15

4QFY15

1QFY16

2QFY16
Source:Company,IIFLResearch

percy. panth a k i@iif lcap. com 3

 Institutional Equities Hindustan Unilever BUY

Ad spend at 14.6% (up 225 bps YoY) of sales was 100 bps higher
than our estimate of 13.6% as the company utilised gross margin
Concall Takeaways
benefits towards A&P spends.
Overall
Both advertisement and promotions grew, driven by increase in
competitive intensity and a heavy launch, re-launch, and activation
The domestic consumer business grew 5% on the back of 7%
underlying volume growth. Adjusted for up-stocking before the
calendar
transport strike, sales growth was 6.5%
A&P growth was higher in soaps and detergents vs. other segments,
which can be seen from the 4% EBIT decline for the segment. This
Improvement in market growth depends on rural recovery. The rural
segment typically grows 1.5x that of urban, but the growth has now
implies higher competitive intensity in the segment.
almost converged. Competitive intensity remains strong, leading to
Employee costs were sharply lower by 7.8% YoY due to one-time ploughing back of most of raw material costs savings into ad spends.
credit of Rs 174.6mn for un-utilised pension corpus relating to
earlier years. Soaps and detergents
Other expenses also increased during the quarter, up 9.4% YoY vs. S&D sales growth was almost flat at 1.6% since the company passed
the 4.5% increase of the past two quarters. on the benefit of lower raw material costs to consumers. Ebit margin
Ebitda grew 6.8%, 8.5% below our estimate, dragged by higher- contracted 77 bps due to higher-than-expected ad-spends.
than-expected A&P spends. The company has taken a further effective price cut of 1-2% this
Other income and tax rate came in line with our estimates, leading quarter in this segment, in addition to the price cuts taken earlier.
to adjusted PAT growth of 1.4%, which is 8.2% below our estimates. Skin cleansing was driven by strong volume growth across products.
The premium portfolio has performed better than the mass-market
Figure7: Ebitdamarginexpandsonly32bpsYoYowingtohigheradspends
portfolio. Liquids in particular saw another quarter of double-digit
EBIDTAmargin(%)(LHS) EBITDAgrowth(%YoY)(RHS) volume growth.
20% 30% Rin has been relaunched this quarter and growth accelerated
19% following the re-launch.
25%
18% In detergents, growth was driven by Surf, which grew in double
17% 20% digits, led by volumes. Rin bars and Comfort fabric conditioners did
16% well too.
15% 15% Wheel is the brand that lags in the detergents portfolio. However, its
14% performance has improved vs. the past few quarters, in response to
10% the actions taken by the company.
13%
12% 5% In Household care, Vim delivered double-digit volume growth, driven
by the tubs and liquids formats.
1QFY14

2QFY14

3QFY14

4QFY14

1QFY15

2QFY15

3QFY15

4QFY15

1QFY16

2QFY16

Source:Company,IIFLResearch

percy. panth a k i@iif lcap. com 4

 Institutional Equities Hindustan Unilever BUY

Figure8: SoapanddetergentEbitmarginwasdown YoY Figure10:PFADpricesaredown31%YoY

Revenuegrowth(%)(LHS) EBITmargin(%)(RHS) PFAD(inRs/MT)
16 16 60,000
Soapsanddetergentssegment 15
12 50,000
14
8 13
40,000
12
4
11
30,000
0 10
1QFY14

2QFY14

3QFY14

4QFY14

1QFY15

2QFY15

3QFY15

4QFY15

1QFY16

2QFY16
20,000
Apr11 Nov11 Jun12 Jan13 Aug13 Mar14 Oct14 May15
Source:Company,IIFLResearch Source:Company,IIFLResearch

Figure9: LABpricesaredown27%YoY Personal products

LAB(Rs/Kg) Personal products grew at 9.5%, and adjusted for increase in excise
140 duty, growth was 11%. Growth was broad based across different
sub-segments. Ebit margin expanded 171 bps due to benign
130 commodity costs.

120
Growth in personal products, as reported by AC Nielson, has
improved in the recent past.
110 Management indicated that there was enough opportunity to drive
growth in the PP portfolio, since per capita consumption in India is
100 still low.

90 Skin care
Skin care delivered volume-led growth with Fair and Lovely, Ponds,
80
Jan12 Jul12 Jan13 Jul13 Jan14 Jul14 Jan15 Jul15 Vaseline, and Lakme doing well. The facial cleansing portfolio
sustained double-digit growth.
Source:Company,IIFLResearch
Ponds performed well, driven by premium skin lightening and face
wash. Vaseline growth was driven by strong performance of Aloe
Vera and Healthy White variants.

percy. panth a k i@iif lcap. com 5

 Institutional Equities Hindustan Unilever BUY

Hair care Beverages

Hair care growth was volume led. Dove growth accelerated whereas Tea performed well, growing in double digits, on the back of
Clinic Plus, Sunsilk, and TRESemme continued to perform well. activation and market development. Red Label and Lipton green tea
During the quarter, HUL took price cuts of ~25% on shampoo performed well.
bottles, matching P&Gs actions. HULs volume growth rate remained Bru Gold coffee maintained robust growth rates.
unscathed by the increase in competitive intensity. Margins for the beverages segment declined 285 bps owing to
increased promotional spending and delayed increase in pricing as
Oral care management awaits clarity on the input cost environment
Close up clocked double-digit growth. The companys recent
campaign First Move Party has been a big success. Figure12:Broadbasedgrowthacrossbrandsinbeveragesegment
For Pepsodent, management has drawn the action plans to revive Beveragesrevenuegrowth(%)(LHS)
the brand and it is hopeful of results showing in the next 1-2
BeveragesEBITmargin(%)(RHS)
quarters.
17 21
Colour Cosmetics 15
19
Growth was broad-based across Core, Absolute, and 9 to 5. Shade 13
additions were made to the lip and nail portfolio. 11 17
Lakme Absolute Lip Pout was also launched during the quarter, 9
which also saw another successful Lakme Fashion Week. 15
7

Figure11:PPsegmentdelivered11.4%revenuegrowthand200bpsmarginexpansion 5 13

1QFY14

2QFY14

3QFY14

4QFY14

1QFY15

2QFY15

3QFY15

4QFY15

1QFY16

2QFY16
Personalproductrevenuegrowth(%)(LHS)
PersonalproductEBITmargin(%)(RHS)
16 32 Source:Company,IIFLResearch
14
30
12 Foods
10 28 The company maintained double-digit sales growth for eighth
8
26 consecutive quarters.
6
4
Kissan continued with its growth momentum from the previous
24 quarter. Knorr grew well in slow market conditions, led by its instant
2
soups.
0 22
Icecream saw another quarter of double-digit growth.
1QFY14

2QFY14

3QFY14

4QFY14

1QFY15

2QFY15

3QFY15

4QFY15

1QFY16

2QFY16

Pureit
Source:Company,IIFLResearch The quarter saw e-commerce contribution becoming more
significant. Overall performance was subdued in a slow market.

percy. panth a k i@iif lcap. com 6

 Institutional Equities Hindustan Unilever BUY

Management will continue to focus on market development and Figure15:HULtradesat36.8x,3%premiumtoitsthreeyearaveragePEof35.9x

improving in-store execution.
1200
HUVR1yearforwardPEbandchart
Figure13:Packaged foods segment saw seven consecutive quarters of doubledigit 1000
growth
800 35
Foodsrevenuegrowth(%)(LHS) FoodsEBIT margin(%)(RHS) 30
11 600 25
9 20
20 400
7
5 200
3
1 0

Apr08

Apr09

Apr10

Apr11

Apr12

Apr13

Apr14

Apr15
10

Oct08

Oct09

Oct10

Oct11

Oct12

Oct13

Oct14

Oct15
(1)
(3)
(5)
0 (7) Source:Company,IIFLResearch
1QFY14

2QFY14

3QFY14

4QFY14

1QFY15

2QFY15

3QFY15

4QFY15

1QFY16

2QFY16
Source:Company,IIFLResearch

Change in estimates
We change our estimates by 8% mainly to account for lower sales
growth and higher A&P spend.

Figure14:WecutourFY16FY17EPSestimatesby3%each
FY16 Old New %Change
Sales 333,476 329,605 1.2%
Ebidta 65,163 61,050 6.3%
PAT 46,322 42,726 7.8%
FY17 Old New %Change
Sales 376,769 372,405 1.2%
Ebidta 76,623 71,912 6.1%
PAT 54,813 50,309 8.2%
Source:Company,IIFLResearch

percy. panth a k i@iif lcap. com 7

 Company snapshot Hindustan Unilever BUY
Institutional Equities

Background: Hindustan Unilever Limited is India's largest Fast Moving Consumer Goods (FMCG) company. HUL is a subsidiary of Unilever, which has
strong local roots in more than 100 countries across the globe. Unilever has about 67% shareholding in HUL. It is mainly present in home and personal
care and foods and beverages categories. HUL has more than 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin
care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers, which make it a behemoth in Indias FMCG
market. It has a host of brands with strong brand equity and recall, including Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair & Lovely, Ponds, Vaseline,
Lakm, Dove, Pepsodent, and Closeup.

Management
Net sales mix (%) - FY15 Domestic volume growth (%)
Name Designation 7.0%
HUVRIN Others,
SanjivMehta CEO 6.0%
Equity, 4.3%
PBBalaji CFO 6.2% 5.0%
4.0%
Beverage Soaps
s,11.8% and 3.0%
Detergen 2.0%
ts,48.4%
1.0%
Personal
0.0%
Products

2QFY14

3QFY14

4QFY14

1QFY15

2QFY15

3QFY15

4QFY15

1QFY16

,29.3%

Assumptions PE chart EV/Ebitda

Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii PE (x) Avg 1sd -1sd EV/Ebitda (x) Avg 1sd -1sd
Soapsanddetergent
7.7 8.7 0.2 11.3 11.3 32.6
revenuegrowth(%)
Personalproductrevenue 41.9
8.7 10.9 10.2 15.5 15.5 28.6
growth(%)
A&P(%ofsales) 12.9 12.6 14.0 13.3 13.2 34.9
Source:Companydata,IIFLResearch
24.6
27.9
20.6

20.9 16.6

13.9 12.6
Jun08 Apr10 Feb12 Dec13 Oct15 Jun08 Apr10 Feb12 Dec13 Oct15

percy. panth a k i@iif lcap. com 8

 Institutional Equities Hindustan Unilever BUY

Financial summary
Incomestatementsummary(Rsbn) Balancesheetsummary(Rsbn)
Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii Y/e 31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii
Revenues 285 312 330 372 420 Cash&cashequivalents 25 27 32 43 37
Ebitda 47 54 61 72 83 Inventories 29 28 28 32 36
Depreciationandamortisation (3) (3) (3) (4) (4) Receivables 10 10 11 12 14
Ebit 45 51 58 68 79 Othercurrentassets 11 13 15 18 20
Nonoperatingincome 6 6 5 6 7 Creditors 72 66 66 76 85
Financialexpense 0 0 0 0 0 Othercurrentliabilities 30 37 35 43 52
PBT 50 56 62 74 86 Netcurrentassets (25) (25) (15) (13) (29)
Exceptionals 2 5 0 0 0 Fixedassets 30 33 28 32 54
ReportedPBT 52 61 62 74 86 Intangibles 1 1 1 1 1
Taxexpense (12) (17) (20) (24) (27) Investments 28 30 32 34 37
PAT 40 44 43 50 58 Otherlongtermassets 2 2 2 2 3
Minorities,Associatesetc. 0 0 0 0 0 Totalnetassets 36 41 48 56 66
AttributablePAT 39 44 43 50 58 Borrowings 0 0 0 0 0
Otherlongtermliabilities 0 0 0 1 1
Ratioanalysis Shareholders equity 35 40 47 55 65
Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii Totalliabilities 36 41 48 56 66
Persharedata(Rs)
PreexceptionalEPS 16.8 18.1 19.7 23.2 26.9 Cashflowsummary(Rsbn)
DPS 13.0 15.0 13.8 16.2 18.8 Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii
BVPS 16.4 18.6 21.8 25.6 29.9 Ebit 45 51 58 68 79
Growthratios(%) Taxpaid (13) (19) (20) (24) (27)
Revenues 8.4 9.3 5.6 13.0 12.7 Depreciationandamortization 3 3 3 4 4
Ebitda 12.8 14.1 12.8 17.8 15.2 Networkingcapitalchange 1 (4) 1 6 6
EPS 8.2 7.4 9.3 17.7 15.7 Otheroperatingitems 3 0 0 0 0
Profitabilityratios(%) Operatingcashflowbeforeinterest 38 31 42 54 62
Ebitdamargin 16.6 17.4 18.5 19.3 19.7 Financialexpense 0 0 0 0 0
Ebitmargin 15.6 16.3 17.5 18.3 18.8 Nonoperatingincome 8 12 5 6 7
Taxrate 23.4 28.4 31.5 32.0 32.0 Operatingcashflowafterinterest 46 44 47 60 68
Netprofitmargin 13.9 14.0 13.0 13.5 13.9 Capitalexpenditure (8) (5) 1 (7) (27)
Returnratios(%) Longterminvestments (3) (2) (2) (2) (2)
ROE 113.6 103.4 97.8 98.2 97.0 Others (2) (2) 0 0 0
ROCE 154.1 147.1 140.8 142.3 140.5 Freecashflow 33 34 46 50 39
Solvencyratios(x) Equityraising 0 0 0 0 0
Netdebtequity (0.7) (0.7) (0.7) (0.8) (0.6) Borrowings 0 2 0 0 0
NetdebttoEbitda (0.5) (0.5) (0.5) (0.6) (0.4) Dividend (27) (34) (41) (39) (45)
Interestcoverage NM NM NM NM NM Netchgincashandequivalents 6 2 5 11 (6)
Source:Companydata,IIFLResearch Source:Companydata,IIFLResearch

percy. panth a k i@iif lcap. com 9

Zee Entertainment BUY
15 October 2015 Institutional Equities
Yet another positive surprise Company update
Zees 2Q adjusted profit at Rs2.7bn (+18% YoY; +10% QoQ) was CMP Rs387 Priceperformance(%)

4% and 8% better than our and consensus estimates respectively. 12mthTP(Rs) 446(15%) 1M 3M 1Y
Sustained strength in ad-revenue growth and improvement in Absolute(Rs) (2.2) 3.2 22.3
Ebitda margins are the key highlights. It is commendable that Zee Marketcap(US$m) 5,810
Absolute(US$) 0.9 0.6 16.3
will maintain its margins in FY16 despite the launch of a Hindi Enterprisevalue(US$m) 5,778
GEC. Zee recorded 30% YoY growth in ad revenues in 1HFY16. Rel.toSensex (5.7) 7.4 20.7
Bloomberg ZIN
Outlook for 2H remains strong as it is well placed to benefit from Cagr(%) 3yrs 5yrs
acceleration in ad spend growth due to its rising network market Sector MEDIA EPS 12.1 4.4
share. Subscription revenue growth will take a while to accelerate

as visibility on timely implementation of phase III of digitisation Shareholdingpattern(%) Stockperformance

is low and monetization would happen with a lag. We upgrade our Promoter 43.1 Shares(000')
Volume(LHS)
(Rs)
Price(RHS)
FY16/17ii EPS estimate by 5/1%. Even after factoring in new FII 48.4
70,000 500
channel losses, we forecast 21% EPS Cagr over FY15-17ii, driven DII 3.5 60,000 400
by strong revenue growth. Retain BUY. Others 5.0 50,000
40,000 300
Strong advertising growth continues: Zees ad revenues grew 35% 52WkHigh/Low(Rs) 422/300 30,000 200
20,000
YoY in 2QFY16 on the back of 13% growth in 2QFY15. It continues to beat Shareso/s(m) 960 10,000 100
industry revenue growth handsomely, driven by the launch of &TV, Dailyvolume(US$m) 12.5 0 0

Dec13

Dec14
Jun14

Jun15
growth in network market share, and increase in original programming

Oct13

Oct14

Oct15
Apr14

Apr15
Feb14

Feb15
Aug14

Aug15
DividendyieldFY16ii(%) 0.6
hours. Strong growth in FMCG ad spends that constitute 50% of television Freefloat(%) 56.9
ad revenues will continue since reduction in raw material costs provides
room to increase advertising spend. E-commerce advertising is growing Financialsummary(Rsm)
briskly and outlook for other sectors is healthy. Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii
Revenues(Rsm) 44,217 48,837 57,512 65,791 74,830
Subscription growth in line; margins beat estimates: Zees domestic
Ebitdamargins(%) 27.2 25.7 25.1 28.6 31.6
subscription revenue grew 11% YoY. Management stated that deals for
PreexceptionalPAT(Rsm) 8,921 8,322 9,372 12,232 15,395
phase III are being finalized at lower rates to support the industry in
ReportedPAT(Rsm) 8,921 8,322 9,372 12,232 15,395
implementing digitisation. The pace of digitisation is still tepid. Even in the
absence of digitisation, management believes that the low-teens growth is PreexceptionalEPS(Rs) 9.3 8.7 9.8 12.7 16.0
sustainable. Ebitda margin expansion of 238bps QoQ is sustainable due to Growth(%) 23.1 (6.7) 12.6 30.5 25.9
buoyancy in ad-revenue growth. IIFLvsconsensus(%) (6.5) (4.1) 0.8
PER(x) 41.6 44.6 39.6 30.4 24.1
High growth visibility; Retain Buy: Zee is one of the few companies in
ROE(%) 26.9 26.6 24.3 26.3 26.8
India to deliver ~18% revenue Cagr over FY12-15. We believe this growth
Netdebt/equity(x) 0.3 0.1 0.0 (0.1) (0.3)
is sustainable in the medium term, driven by acceleration in ad-revenue
growth and digitisation. Once the ongoing investment phase is over, EV/Ebitda(x) 31.6 30.0 25.8 19.4 15.0
margins are likely to settle at 30-35%, as growth in costs would trail Price/book(x) 13.6 10.5 8.9 7.3 5.8
revenues. At 30x FY17ii P/E, Zee is attractively valued, given strong Source:Company,IIFLResearch.Pricedason14October2015
medium-term revenue and margin outlook. BUY.
Bijal Shah | bijal@iiflcap.com Urvil Bhatt | urvil.bhatt@iiflcap.com |
91 22 4646 4645 91 22 4646 4648
 Institutional Equities Zee Entertainment BUY

Figure1: ZeeEntertainment2QFY16resultssummary
(Rsm) 2QFY15 1QFY16 2QFY16 QoQ(%) YoY(%) Revenues were marginally higher than
Revenues 11,178 13,399 13,849 3.4 23.9 our estimates as beat in ad revenues
Totalcosts 7,974 10,287 10,303 0.2 29.2 offset lower syndication income.
Programmingandoperatingcost 4,703 6,108 6,036 (1.2) 28.3
As%ofrevenues 42.1 45.6 43.6 Launch of &TV led to sharp increase in
Staffcost 1,080 1,380 1,267 (8.2) 17.3 content cost YoY.
SG&A 2,191 2,799 3,000 7.2 36.9
Ebidta 3,204 3,112 3,546 14.0 10.7
EbidtaMargin% 28.7 23.2 25.6 Ebitda was 7% higher than our and
consensus estimates driven by better
Otherincome 522 680 589 (13.4) 12.8
than expected ad revenue growth.
Financecost 23 15 21 35.9 (8.8)
Depreciation 134 168 198 17.7 47.8
Ebitda margin expanded 238bps QoQ.
Exceptionalitems 0 0 331 The company is on track to achieve its
Profitbeforetax 3,570 3,608 3,586 (0.6) 0.5 FY16 margin guidance (flat YoY).
Tax 1,300 1,185 1,123 (5.3) (13.6)
PAT 2,270 2,423 2,463 1.7 8.5 Exceptional item relates to non cash
Less:MI (6) (15) (11) investment write off by Zees overseas
subsidiary pertaining to minority stake
PAT 2,275 2,438 2,474 1.5 8.7
in MirriAD Ltd, a UK entity.
AdjustedPAT 2,275 2,438 2,691 10.4 18.3
Revenuebreakdown
Multiple drivers contributed to the strong
Advertising 6,259 7,799 8,433 8.1 34.7 ad-revenue growth.
Subscription 4,245 4,625 4,791 3.6 12.9
Othersales 674 974 625 (35.9) (7.3)
Domestic subscription revenue growth at
Total 11,178 13,399 13,849 3.4 23.9
11% YoY was below estimates. Zee
Subscriptionrevenues maintained FY16 subscription revenue
Domestic 3,373 3,680 3,752 1.9 11.2 growth guidance of low teens.
International 872 945 1039 9.9 19.2
Total 4,245 4,625 4,791 3.6 12.9
Management expects sports losses for FY16
Sportsbusiness to be lower than earlier guidance of Rs1bn.
Revenues 1,181 1,519 1,278 (15.9) 8.2 Losses would further decrease if India-
Costs 1,431 1,504 1,256 (16.5) (12.2) Pakistan cricket series scheduled in
Operatingprofits (250) 15 22 December is not played.
Source:Company,IIFLResearch

bijal@iif lcap.com 2
 Institutional Equities Zee Entertainment BUY

Conference call highlights Figure3: HULs 1HFY16 advertising spend up23% YoY on raw material cost tailwinds;
trendforotherFMCGplayersunlikelytobedifferent
Ad-revenue growth accelerates (Rsm) Adspends(LHS) Grossmargins(RHS)
Zees ad revenues grew 35% YoY in 2QFY16 on the back of 13% YoY 14,000 52%
growth in 2QFY15. This is significantly ahead of the industry, which is
growing in mid teens. This growth is commendable, given that the 12,000
50%
festive season shifts to 3Q this year. A number of factors have driven
the improvement in revenue market share: 10,000
48%
Launch of &TV is supporting growth. Ex-&TV, ad revenue growth was 8,000
26% YoY. Note that, &TVs growth was boosted by telecast of high
cost reality show The Voice - India; 46%
6,000
Uptick in ratings and better monetization of regional channels;
Strong traction from advertisers in Zee Anmol and &Pictures 4,000 44%
launched in past two years;

Dec12

Dec13

Dec14
Sep13

Sep14

Sep15
Jun13

Jun14

Jun15
Mar13

Mar14

Mar15
Increase in original programming hours across channels;
Acceleration in ad-spend growth. FMCG and E-commerce companies
are major drivers of industry growth. Source:Company,IIFLResearch
We believe these tailwinds are likely to continue in FY16. We expect Zee
to report ~27% YoY ad-revenue growth in FY16. Acceleration in subscription revenue growth some time away
The deadline for phase III of digitisation is December, 2015. However,
Figure2: Zeesadrevenuesgrew35%YoYinQ2FY16,significantlyhigherthanindustry preparatory work on the same seems inadequate and delay in
growthrate implementation is likely. Management indicated that initially
broadcasters would have to support cable operators to ensure
(Rsm) Adrevenue(LHS) AdrevenuegrowthYoY(RHS) (%)
implementation of phase III. This implies that monetisation of phase III
9,000 45 subscriber base will take place with a lag. Management guided domestic
8,000 subscription revenue growth to be in low-teens in the absence of
35
7,000 digitisation.
6,000 25
5,000
15
4,000
3,000 5
2,000
(5)
1,000
0 (15)
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16

Source:Company,IIFLResearch

bijal@iif lcap.com 3
 Institutional Equities Zee Entertainment BUY

Figure4: Domesticsubscriptiongrew11%YoYinQ2FY16;managementguidedtolow Sports losses could be significantly lower

teenssubscriptionrevenuegrowthforFY16 At the beginning of FY16, Zee had guided to Ebitda loss of Rs1bn in the
(Rsm) (%) sports business. In 1HFY16, the sports business generated positive
Domesticsubscriptionrev(LHS) GrowthYoY(RHS)
Ebitda of Rs37m and management now expects full-year sports losses
4,500 35
to be lower than the guidance. The key sporting event for the year,
4,000 India-Pakistan cricket series, might not be played. In such a case,
25
3,500 Ebitda loss would be even lower.
3,000
15
2,500 Not overly worried about increase in inventory and debtors
2,000 Zees receivable days increased from 79 at end-March 2015 to 105 at
5
end-September 2015. This was a concern highlighted by several
1,500
investors in an otherwise strong quarter. We believe a YoY comparison
1,000 (5)
is more relevant due to seasonality in cash receipts. YoY, there is
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
deterioration in receivable days but not as stark (105 vs. 93).
Negotiation of domestic subscription revenues and receipts of cash
Source:Company,IIFLResearch generally takes place in 4Q. This explains the change in receivable days
during the year.
BARC to release rural data; increase in promotion spends
BARCs rating release from next week will include rural data. This data Figure6: Receivables and inventory days have been seasonally higher at September
will take a month or so to stabilise and reflect the all-India picture. end
Zees flagship channel Zee TV has been traditionally strong in small Rsm Mar13 Sep13 Mar14 Sep14 Mar15 Sep15
towns and rural areas. The company has also increased its ad spends Receivables 9,890 11,825 10,281 11,638 10,692 15,653
and carriage in these areas. Due to low weightage of these markets in
Receivabledays 98 109 85 93 79 105
the earlier rating system, promotion spends on them was low.
Inventories 8,745 10,156 11,736 13,184 11,878 13,743
Figure5: Sellingandotherexpensesgrew37%YoYin2QFY16 Inventorydays 183 206 207 234 200 202
(Rsm) Sellingandotherexpenses(LHS) YoYgrowth(RHS) (%) Source:Company,IIFLResearch
4,000 70
The increased inventory was on account of renewal of a part of movie
3,200 56
library and launch of &TV. The management indicated that it does not
2,400 42 expect any sharp jump in inventory from here-on.
1,600 28
800 14
0 0
1QFY13

2QFY13

3QFY13

4QFY13

1QFY14

2QFY14

3QFY14

4QFY14

1QFY15

2QFY15

3QFY15

4QFY15

1QFY16

2QFY16

Source:Company,IIFLResearch

bijal@iif lcap.com 4
 Institutional Equities Zee Entertainment BUY

Figure7: NonsportsEbitdamarginin2QFY16improved197bps QoQ to28% Figure9: We revise our estimates marginally for FY1618ii to factor in higher ad
(Rsm) revenuegrowth
NonsportsEbitda (LHS) NonsportsEbitda margin(RHS) (%)
4,500 45 Revisedestimates %change
(Rsm) FY16ii FY17ii FY18ii FY16ii FY17ii FY18ii
3,500 35
Revenues 57,512 65,791 74,830 1.1 0.6 0.3
25 Ebitda 14,438 18,828 23,668 4.6 0.6 2.1
2,500
15 RecurringPAT 9,372 12,232 15,395 4.8 0.6 2.1
1,500 EPS 9.8 12.7 16.0 4.8 0.6 2.1
5
Source:Company,IIFLResearch
500 (5)
(500) (15)
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
Source:Company,IIFLResearch

Figure8: Ebitdamarginsexpanded238bpsQoQto25.6%inQ2FY16
(Rsm) Ebitda(LHS) Ebitdamargin(RHS) (%)
4,200 35
3,500 28
2,800
21
2,100
14
1,400
700 7

0 0
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16

Source:Company,IIFLResearch

bijal@iif lcap.com 5
 Institutional Equities
Company snapshot Zee Entertainment BUY

Background: Zee Entertainment is the pioneer of satellite TV and one of the largest broadcasting houses in India. Its portfolio of 30-plus
channels includes the flagship Hindi General Entertainment Channel (GEC) Zee TV, the movie channel Zee Cinema, the sports channel Ten
Sports, and regional channels Zee Bangla and Zee Marathi, among others. The flagship channel, Zee TV, is at the second (or a close third) spot
in the Hindi GEC space. Its Hindi movie channel Zee Cinema and regional GECs Zee Bangla and Zee Marathi are leaders in their respective
genres/markets. Zee enjoys a strong overseas franchise with a reach in 169 countries and 959m subscribers worldwide.

Management Domesticsubscriptionrev(Rsm)
Revenue break-up (%) - FY15
Name Designation GrowthYoY(%)(RHS)

SubhashChandra Chairman Others,5 25,000 30.0%

Internati
onal 25.0%
PunitGoenka CEO 20,000
subscript Advertisi
ion,11 20.0%
MihirModi ChiefFinance&strategy ng,54 15,000
15.0%
10,000
10.0%
Domestic 5,000 5.0%
subscript
ion,30 0 0.0%

FY16ii
FY17ii
FY18ii
FY11
FY12
FY13
FY14
FY15

Assumptions PE chart EV/Ebitda

Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii PE (x) Avg 1sd -1sd EV/Ebitda (x) Avg 1sd -1sd
Adrevenuegrowth(%) 21.2 11.8 26.6 16.1 15.2
Subscriptionrevenue
11.0 (0.5) 9.9 13.3 12.8
growth(%) 37.5 25.0
Sportslosses(Rsm) 976.0 266.0 1,000.0 600.0 600.0
Source:Companydata,IIFLResearch 29.5 20.0

21.5 15.0

13.5 10.0

5.5 5.0
Jun08 Apr10 Feb12 Dec13 Oct15 Jun08 Apr10 Feb12 Dec13 Oct15

bijal@iif lcap.com 6
 Institutional Equities Zee Entertainment BUY

Financial summary
Incomestatementsummary(Rsm) Balancesheetsummary(Rsm)
Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii
Revenues 44,217 48,837 57,512 65,791 74,830 Cash&cashequivalents 10,993 15,656 19,320 26,279 32,552
Ebitda 12,043 12,538 14,438 18,828 23,668 Inventories 11,736 11,878 14,178 15,497 16,659
Depreciationandamortisation (501) (673) (762) (882) (1,002) Receivables 10,281 10,692 12,591 14,404 16,383
Ebit 11,542 11,865 13,676 17,945 22,666 Othercurrentassets 12,338 17,583 17,583 17,583 17,583
Nonoperatingincome 1,807 2,278 2,560 2,560 2,560 Creditors 9,216 9,472 11,240 12,255 13,350
Financialexpense (158) (103) (87) (87) (87) Othercurrentliabilities 3,646 5,072 5,172 5,272 5,372
PBT 13,191 14,040 16,149 20,418 25,139 Netcurrentassets 32,486 41,265 47,260 56,235 64,455
Exceptionals 0 0 0 0 0 Fixedassets 4,022 4,091 4,329 4,446 4,444
ReportedPBT 13,191 14,040 16,149 20,418 25,139 Intangibles 7,708 8,163 8,413 8,663 8,913
Taxexpense (4,291) (4,284) (5,329) (6,738) (8,296) Investments 2,941 1,464 1,464 1,464 1,464
PAT 8,900 9,755 10,820 13,680 16,843 Otherlongtermassets 298 531 531 531 531
Minorities,Associatesetc. 21 (1,433) (1,448) (1,448) (1,448) Totalnetassets 47,455 55,514 61,997 71,340 79,807
AttributablePAT 8,921 8,322 9,372 12,232 15,395 Borrowings 20,187 20,204 20,204 20,204 16,166
Otherlongtermliabilities 61 4 4 4 4
Ratioanalysis Shareholders equity 27,207 35,306 41,789 51,131 63,637
Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii Totalliabilities 47,455 55,514 61,997 71,340 79,807
Persharedata(Rs)
PreexceptionalEPS 9.3 8.7 9.8 12.7 16.0 Cashflowsummary(Rsm)
DPS 2.0 2.3 2.5 2.5 2.5 Y/e 31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii
BVPS 28.3 36.8 43.5 53.2 66.3 Ebit 11,542 11,865 13,676 17,945 22,666
Growthratios(%) Taxpaid (4,291) (4,737) (5,329) (6,738) (8,296)
Revenues 19.5 10.4 17.8 14.4 13.7 Depreciationandamortization 501 673 762 882 1,002
Ebitda 26.2 4.1 15.2 30.4 25.7 Networkingcapitalchange (5,823) (4,116) (2,332) (2,016) (1,946)
EPS 23.1 (6.7) 12.6 30.5 25.9 Otheroperatingitems 1,901 3,124 0 0 0
Profitabilityratios(%) Operatingcashflowbeforeinterest 3,830 6,809 6,778 10,073 13,426
Ebitdamargin 27.2 25.7 25.1 28.6 31.6 Financialexpense (158) (103) (87) (87) (87)
Ebitmargin 26.1 24.3 23.8 27.3 30.3 Nonoperatingincome 1,807 2,278 2,560 2,560 2,560
Taxrate 32.5 30.5 33.0 33.0 33.0 Operatingcashflowafterinterest 5,479 8,984 9,251 12,546 15,899
Netprofitmargin 20.1 20.0 18.8 20.8 22.5 Capitalexpenditure (2,256) (1,197) (1,250) (1,250) (1,250)
Returnratios(%) Longterminvestments (2,290) 1,477 0 0 0
ROE 26.9 26.6 24.3 26.3 26.8 Others (1,053) (2,017) (1,447) (1,448) (1,448)
ROCE 30.8 27.5 27.6 30.8 33.4 Freecashflow (120) 7,247 6,553 9,849 13,202
Solvencyratios(x) Equityraising 778 0 0 0 0
Netdebtequity 0.3 0.1 0.0 (0.1) (0.3) Borrowings 0 18 0 0 (4,038)
NetdebttoEbitda 0.8 0.4 0.1 (0.3) (0.7) Dividend (2,247) (2,601) (2,890) (2,890) (2,890)
Interestcoverage NM NM NM NM NM Netchgincashandequivalents (1,588) 4,663 3,664 6,959 6,273
Source:Companydata,IIFLResearch Source:Companydata,IIFLResearch

bijal@iif lcap.com 7
AIA Engineering BUY
Management
meeting
15 October 2015 Institutional Equities
Mining headwinds in the near term Company update
While AIAE has not seen mine closures for existing customers, CMP Rs978 Priceperformance(%)

near-term volume supplies to the mining segment may suffer due 12mthTP(Rs) 1115(14%) 1M 3M 1Y
to focus on containing increase in receivables and higher due Absolute(Rs) 1.7 (2.2) 6.6
diligence in new customer addition. Medium-term outlook remains Marketcap(US$m) 1,416
Absolute(US$) 3.8 (3.9) 0.8
robust on the back of superior economics for high-chrome cast Enterprisevalue(US$m) 1,304
media vs. forged media for mine operators. Ongoing expansion Rel.toSensex (3.2) 1.7 4.8
Bloomberg AIAEIN
will ensure that AIAE has enough capacity when the demand Cagr(%) 3yrs 5yrs
environment improves. Near-term margins would be under Sector CapitalGoods EPS 33.7 20.3
pressure due to lower export benefits and lower forward premium

on forex hedging. However, pickup in volumes should help sustain Shareholdingpattern(%) Stockperformance
profitability levels at ~25% over medium term. We cut FY17/18 Promoter 61.7 Shares(000') Volume(LHS)
(Rs)
Price(RHS)
EPS estimates by ~8%. We retain BUY. FII 21.4
3,500 1,400
DII 5.4 3,000 1,200
Uncertainty on near-term volumes led by mining slowdown: AIAE 2,500 1,000
Others 11.6
continues to add new mining customers to its roster and it has not 2,000 800
1,500 600
experienced closure of existing mines. However, given sluggish outlook 52WkHigh/Low(Rs) 1364/866 1,000 400
for mine operators, it has increased the due diligence of mines in terms of Shareso/s(m) 94 500 200
0 0
cost of production, is insisting on credit insurance and is limiting large Dailyvolume(US$m) 1.1

Feb14

Feb15
Dec13

Dec14
Jun14

Jun15
Aug14

Aug15
Oct13

Oct14

Oct15
Apr14

Apr15
volume supplies to protect receivables from mining segment. This could DividendyieldFY16ii(%) 0.8
result in sluggish volume growth to the mining segment in the near term. Freefloat(%) 38.4
Hence, we build in only 6% overall volume growth for FY16 to 198,000
Financialsummary(Rsm)
tonnes vs earlier management guidance of ~9% volume growth.
Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii
Robust medium-term outlook intact: Despite the sluggishness in Revenues(Rsm) 20,801 21,836 22,397 25,107 31,384
near-term volumes, medium-term growth outlook is robust driven by a Ebitdamargins(%) 24.1 26.8 26.5 25.5 25.5
large addressable market, demonstrated value proposition for mining PreexceptionalPAT(Rsm) 3,470 4,309 4,260 4,511 5,506
customers and ongoing expansion to increase manufacturing capacity ReportedPAT(Rsm) 3,250 4,309 4,260 4,511 5,506
from 260,000 tonnes currently to 440,000 tonnes by FY17. Successful PreexceptionalEPS(Rs) 36.8 45.7 45.2 47.8 58.4
commercial testing of grinding balls larger than 125mm diameter would
Growth(%) 64.6 24.2 (1.1) 5.9 22.1
expand addressable market as and when it happens.
IIFLvsconsensus(%) (1.2) (8.0) (1.7)
Core business profitability should sustain: Management does not see PER(x) 26.6 21.4 21.6 20.4 16.7
risk to profitability from lower prices since raw material prices have also ROE(%) 21.9 22.5 18.8 17.3 18.2
corrected. Also, the company is not too worried about the recent Netdebt/equity(x) (0.4) (0.3) (0.3) (0.4) (0.3)
appreciation of the INR vs other currencies as USD is the transaction EV/Ebitda(x) 17.1 14.5 14.1 12.8 10.1
currency for most countries except South Africa. However, lower export Price/book(x) 5.3 4.4 3.8 3.3 2.8
benefits (3% of export revenue now vs. 4.5% earlier) and contraction in Source:Company,IIFLResearch.Pricedason13October2015
premium to USD-INR spot rate would affect margins in the near term.

Anupam Gupta | anupam.gupta@iiflcap.com Renu Baid | renu.baid@iiflcap.com |

91 22 4646 4641 91 22 4646 4651
 Institutional Equities AIA Engineering BUY

Sluggish mining sector could affect near-term volume growth Figure1: VolumegrowthtominingsectorlikelytobesluggishinFY16
AIAE management highlighted that the extent of slowdown in global
mining output is unprecedented. However, until now, the company ('000tonnes) Miningvolume Volumegrowht(RHS)
has not seen closure or stoppage of production at its customer 200 60%
mines. Also, AIAE has become aggressive in pitching its product 180
160 50%
against forged media since in a weak environment it could highlight
140
the benefits better and as a result has seen steady customer 40%
120
addition. 100 30%
80
However, near term volume growth would get affected due to the 60 20%
overall slowdown in mining sector. Specific factors that are 40 10%
impacting volume offtake include - 20
0 0%
Despite grinding media being a critical consumable for mine FY12 FY13 FY14 FY15 FY16ii FY17ii FY18ii
operations, company has become cautious on supply of large Source:Company,IIFLResearch
tonnages if there is any delay in payments from clients.
AIAE has also increased focus on due diligence of end customer Robust medium-term growth outlook intact
mines and their economics in order to have longer-term visibility Even as there are some worries on near-term volume growth outlook
on sustainability of volumes from new mines. given slowdown in mining sector production, management remains
confident of the medium-to-long-term growth outlook for high
AIAE has started using credit insurance from third parties to chrome cast grinding media.
ensure that receivables are protected. Where credit insurance is
not available, the company prefers to refuse business in order to
Steady replacement of forged grinding media by high chrome
cast media, supported by better economics (higher yield that
keep working capital expansion under check.
more than offsets the premium pricing over forged media) for
mine operators is the key volume growth driver for AIAE.
AIAE management also indicated that there has been no out-ofthe-
Current supplies of high chrome cast media by AIAE and its key
ordinary demand to reduce prices, which can be attributable to
competitor Magotteaux total to 0.27-0.28m tonnes vs. annual
sluggishness in the mining sector. Regular demand for reviewing
grinding media demand of ~1.5m tonnes for all types of grinding
prices is mostly linked to lower commodity prices for key raw
media across ore types.
material such as steel scrap and ferro chrome. Management
indicated that most long-term supply contracts have a built-in price The current addressable market for high chrome cast media is
variation clause wherein the company passes on changes in prices to ~0.8m tonnes given that balls up to 125mm diameter of have
customers with a slight lag. been commercially tested so far. As AIAE is able to establish
viability of high chrome cast balls greater than 125mm in
diameter which find usage in primary crushing of ores, the
addressable market would expand.

anupam.gupta@iiflcap.com 2
 Institutional Equities AIA Engineering BUY

Our analysis of export and import of cast grinding media globally Increased in exchange rate volatility has resulted in contraction
highlights that AIAE has gained traction in countries such as of forward premiums during the recent past. Furthermore, the
South Africa, Brazil, the Philippines, Russia, and Canada. company has lowered the amount of forward cover due to high
However, larger mining centres such as Australia, Chile, and volatility and this too could hurt margins in the near term.
Mexico where AIAE is yet to penetrate sufficiently present a large Figure2: Weexpectmarginstosustainat~2526%overFY1718ii
and attractive opportunity.
Revenuegrowth(LHS) Ebitdamargin(RHS)
Although AIAEs entire manufacturing capacity is based in India, 30% 28%
freight expense is not a limiting factor. In the past, AIAE has
been successful in replacing Magotteaux for supplies to a 25% 25%
Canadian mine despite Magotteaux having local production in
Canada. 20% 22%

15% 19%
Healthy profitability likely to sustain
AIAE entered the mining segment in 2009-10 and over 5-6 years 10% 16%
ending FY15, the company demonstrated that as operations with
new mining customers stabilise, it has been able to raise prices and 5% 13%
improve profitability levels. Ebitda margins, which were hurt by 0% 10%
entry pricing strategy to expand customer base in the early years, FY12 FY13 FY14 FY15 FY16ii FY17ii FY18ii
expanded from 17.7% in FY13 to 26.8% in FY15. AIAE management
Source:Company,IIFLResearch
indicates that Ebitda margin of ~22-24% is sustainable, given the
pricing environment and competition in the industry. This is despite
Given managements strategy of being more aggressive, lower gains
the company pitching its products aggressively against forged media
from export incentives, and volatile exchange rate movements, we
in sluggish times when demonstrated benefits can be higher.
expect Ebitda margins to contract from 26.8% in FY15 to 25.5% by
FY17. However, we expect this level to sustain in FY18 as gains from
Factors such as export incentives and forward premium on USDINR
higher volume should offset the pressure from other factors.
hedges have supported margins higher than management guidance.
Recent changes in both these factors would result in pressure on
Well prepared with on-track capacity expansion
Ebitda margins in the near term.
The key to capture volume growth in the mining segment is to have
Export incentive for AIAE has reduced from 4.5% of export spare capacity, which would enable the company to finalise large
revenue till end FY15 to 3% now. This is accounted as other supply deals when needed. Consequently, AIAE is investing in
operating income in the profit and loss statement. AIAE expanding capacity ahead of actual volume growth. Management
management is not worried about this incentive being abolished expects that current production capacity of 260,000 tonnes to
entirely, given the governments focus on boosting domestic increase to ~325,000 tonnes by 3QFY16. The second phase of
manufacturing. greenfield expansion, which would increase capacity to 440,000
Slow and steady depreciation of INR vs. USD had resulted in a tonnes, should be commissioned by end-FY17. The balance capital
stable forward premium over the spot rate, which benefited AIAE. expenditure for this expansion stands at ~Rs3bn.

anupam.gupta@iiflcap.com 3
 Company snapshot AIA Engineering BUY
Institutional Equities

Background: AIA Engineering is a manufacturer of high chrome mill internal products used by cement, mining and utility industries serving both
replacement as well as new capacity demand from these industries. AIAE is one of the leading suppliers of grinding media globally. It meets
~90% of the requirement of the local cement sector and has a share of more than 30% of the supplies in the overseas cement sector (ex-China).
The products are marketed under the Vega brand in more than 75 countries. The current manufacturing capacity of 260,000 tonnes is primarily
based in Gujarat. Ongoing and planned expansion will increase manufacturing capacity to 440,000 tonnes by end-FY17.

Management FY15 revenue composition FY15 volume composition

Name Designation
Domestic Non
BhadreshShah ManagingDirector Mining
28% mining
43% 57%
SanjayMajmudar IndependentNonexecutiveDirector

Exports
72%
Keycompetitor:MegatteauxInternational,Belgium

Assumptions PE chart EV/Ebitda

Y/e31Mar, PE (x) Avg 1sd -1sd EV/Ebitda (x) Avg 1sd -1sd
FY14A FY15A FY16ii FY17ii FY18ii
Consolidated
Miningvolume
96,068 107,000 116,630 137,623 185,792 17.5
(tonnes) 25.0
Nonminingvolume
80,932 81,000 81,710 84,517 91,884 14.5
(tonnes) 20.0
Totalvolume 11.5
177,000 188,000 198,340 222,141 277,676
(tonnes) 15.0
Volumegrowth(%) 9.9 6.2 5.5 12.0 25.0 8.5
Realisation(Rs/Kg) 114 112 110 110 110
10.0
Source:Companydata,IIFLResearch 5.5

5.0 2.5
Jun08 Apr10 Feb12 Dec13 Oct15 Jun08 Apr10 Feb12 Dec13 Oct15

anupam.gupta@iiflcap.com 4
 Institutional Equities AIA Engineering BUY

Financial summary
Incomestatementsummary(Rsm) Balancesheetsummary(Rsm)
Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii
Revenues 20,801 21,836 22,397 25,107 31,384 Cash&cashequivalents 7,489 8,238 9,207 11,022 12,256
Ebitda 5,021 5,848 5,935 6,402 8,003 Inventories 3,508 4,596 4,909 5,847 7,309
Depreciationandamortisation (381) (697) (745) (908) (1,108) Receivables 4,315 3,938 4,295 5,159 6,879
Ebit 4,640 5,151 5,190 5,494 6,895 Othercurrentassets 2,134 2,737 2,808 3,147 3,934
Nonoperatingincome 334 832 850 900 900 Creditors 2,184 1,899 1,948 2,184 2,730
Financialexpense (64) (39) (40) (40) (40) Othercurrentliabilities 1,273 1,477 1,515 1,699 2,123
PBT 4,911 5,943 6,000 6,354 7,755 Netcurrentassets 13,988 16,132 17,755 21,292 25,524
Exceptionals (220) 0 0 0 0 Fixedassets 4,884 5,979 7,734 7,826 8,218
ReportedPBT 4,690 5,943 6,000 6,354 7,755 Intangibles 0 0 0 0 0
Taxexpense (1,433) (1,634) (1,740) (1,843) (2,249) Investments 0 0 0 0 0
PAT 3,257 4,309 4,260 4,511 5,506 Otherlongtermassets 0 0 0 0 0
Minorities,Associatesetc. (7) 0 0 0 0 Totalnetassets 18,872 22,111 25,489 29,118 33,742
AttributablePAT 3,250 4,309 4,260 4,511 5,506 Borrowings 1,206 951 951 951 951
Otherlongtermliabilities 200 246 246 246 246
Ratioanalysis Shareholdersequity 17,466 20,913 24,291 27,920 32,544
Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii Totalliabilities 18,872 22,111 25,489 29,118 33,742
Persharedata(Rs)
PreexceptionalEPS 36.8 45.7 45.2 47.8 58.4 Cashflowsummary(Rsm)
DPS 6.0 8.0 8.0 8.0 8.0 Y/e31Mar,Consolidated FY14A FY15A FY16ii FY17ii FY18ii
BVPS 185.2 221.7 257.5 296.0 345.0 Ebit 4,640 5,151 5,190 5,494 6,895
Growthratios(%) Taxpaid (1,433) (1,634) (1,740) (1,843) (2,249)
Revenues 18.8 5.0 2.6 12.1 25.0 Depreciationandamortization 381 697 745 908 1,108
Ebitda 61.9 16.5 1.5 7.9 25.0 Networkingcapitalchange 681 (1,395) (654) (1,722) (2,998)
EPS 64.6 24.2 (1.1) 5.9 22.1 Otheroperatingitems 0 0 0 0 0
Profitabilityratios(%) Operatingcashflowbeforeinterest 4,269 2,819 3,541 2,837 2,756
Ebitdamargin 24.1 26.8 26.5 25.5 25.5 Financialexpense (64) (39) (40) (40) (40)
Ebitmargin 22.3 23.6 23.2 21.9 22.0 Nonoperatingincome 334 832 850 900 900
Taxrate 30.6 27.5 29.0 29.0 29.0 Operatingcashflowafterinterest 4,540 3,612 4,351 3,697 3,616
Netprofitmargin 15.7 19.7 19.0 18.0 17.5 Capitalexpenditure (1,163) (1,793) (2,500) (1,000) (1,500)
Returnratios(%) Longterminvestments 74 0 0 0 0
ROE 21.9 22.5 18.8 17.3 18.2 Others 448 67 0 0 0
ROCE 28.5 29.2 25.4 23.4 24.8 Freecashflow 3,899 1,886 1,851 2,697 2,116
Solvencyratios(x) Equityraising 0 0 0 0 0
Netdebtequity (0.4) (0.3) (0.3) (0.4) (0.3) Borrowings (403) (255) 0 0 0
NetdebttoEbitda (1.3) (1.2) (1.4) (1.6) (1.4) Dividend (665) (882) (882) (882) (882)
Interestcoverage NM NM NM NM NM Netchgincashandequivalents 2,830 749 969 1,815 1,234
Source:Companydata,IIFLResearch Source:Companydata,IIFLResearch

anupam.gupta@iiflcap.com 5
2QFY16 Result summary Institutional Equities

Results above expectations

Company FY16EPS FY17EPS Keyreasons
change(%) change(%)
Loangrowth,adjustingforthepurchaseofRs41.3bnworthloansfromRBS,was24%YoY.Retailloangrowthof23%YoYwasa
sharppickupfromthe18%YoYregisteredin1QFY16.
Although NIMs expanded 20bps sequentially, the pressure on yields has been tremendous 37bps QoQ decline for the
portfolio.
IndusIndBank (3) (3) Growthincorefeeincomewasinlinewiththeorganicloangrowthof24%YoY.However,othernoninterestincomeincreased
125%YoYduetohigherprofitonsaleofinvestments.
Asset quality improved with the GNPA ratio declining 2bps QoQ. Outstanding restructured loans were flat QoQ at 0.63% of
loans2QFY16.
Wecutearningsestimatestoreflectimpendingpressureonmarginsthroughbaseratecutsandcontinuingpressureonyields.
Infosysrevenuegrowthof6.9%wassignificantlyaboveour4.5%.EBITDAmarginsexpandedby160bpsvs.our110bps.Growth
wasbroadbasedwithkeyverticals,servicelinesandtop10accountswitnessingstronggrowth.Webelievethattherobust
growth during 1HFY16, improving large deal wins and account mining are early indicators of a material turnaround in its
Infosys 1 1
traction.
Realizationswereasignificantpositivesurprise(3.4%ccQoQ).Webelieveservicemixchanges,productivitybenefitsandlower
thananticipatedaggressioninpricingwerethekeytailwinds.
Zeeposted30%YoYgrowthinadrevenuesfor1HFY16.Thecompanycontinuestobeatindustryrevenuegrowthhandsomely
drivenbylaunchof&TV,growthinnetworkmarketshareandincreaseinoriginalprogramminghours.Outlookforadrevenue
ZeeEntertainment 5 1 growthin2HFY16remainsstrong.
Ebitdamarginsexpanded238bpsQoQin2QFY16.Marginexpansionlookssustainablegivenbuoyancyinadrevenuegrowth.It
iscommendablethatZeewouldmaintainitsmarginsinFY16despitelaunchofHindiGEC.

Results below expectations

Company FY16EPS FY17EPS Keyreasons
change(%) change(%)
Salesgrowthat4.7%wasaboveourestimateof3%duetohighervolumegrowth.Evenadjustedforoneoffs,salesgrowthwas
1%aboveourestimate.
HUL (8) (8)
A&Pspendincreased225bpswhichwashigherthanourestimateby100bpsthiswasthemainreasonwhyEbitdagrowth
missedourestimateby8%,andthemissfloweddowntothenetprofitlevel.
2QFY16 Result summary
Institutional Equities

Results in line with expectations

Company FY16EPS FY17EPS Keyreasons
change(%) change(%)
BajajCorpreportedresultsbroadlyinlinewithourestimates.Salesgrowthat10.7%was1.2%belowourestimates,dueto
moderationingrowthofADHOto11.0%and26%declineinNoMarksbusiness.
BajajCorp (3) (5) Gross margin expansion of 343 bps (115 bps miss) was a result of c5% price hike, 30% decline in LLP prices (31% of raw
materialcost)&17.2%increaseinvegetableoilprices(12%ofrawmaterialcost).
Loweradspends(down135bpsYoY)pushedEBITDAgrowthto24.2%,3.5%aboveourestimates.
TCSdeliveredahealthy3.9%(cc,QoQ)revenuegrowthduring2QFY15.Itwasmarginallylowerthanour4.2%.EBITDAmargin
expansionwasalsomarginallylowerat74bps(vs.our100bpsQoQ).
TCS (2) (1)
Revenue growth was driven by strong volume growth (4.9% QoQ) and broadbased growth across key verticals. Growth in
digitalrelatedserviceswasstrongandcontributedto35%ofincrementalrevenues.
Events Calendar October 2015
Monday
5 6
12
Infosys, Rel Indl Infra
Sep CPI: 4.41%
Aug IIP: 6.40%
19
Gati, Gruh Finance, HCL Tech,
Heritage Foods, Hindustan Zinc
Kesoram Inds, Mah Scooters,
Motilal Oswal, Orient Cement,
Petronet LNG, SKS Micro,
Sasken Comm, Ultratech Cem
26
Bharti Airtel, Blue Star,
Emkay Global Fin, ENIL, HDFC,
Hester Biosc, Himachal Futurist
Hindustan Media, Kirloskar Ind
Navneet Educat, Sterlite Tech,
Wonderla
Black: Quarterly results, Blue: Economic data, Red: India Holiday
Tuesday
13
DCB Bank, TCS
20
ACC, Bajaj Finserv, BASF,
Biocon, Container Corp,
Dewan Hsg, Everest Inds,
Federal Bank, Hero MotoCorp,
Jyothy Lab, Kajaria Ceramics,
Mphasis, Syngene Intl,
Welspun India, Zee Media,
Zensar
Sep CPI: AL/RL
27
Axis Bank, Bharat Bijlee,
Coromandel Intl, Dish TV,
GIC Hsg Fin, Lupin, Mah Holid,
Navin Fluorine, Nucleus Softw,
PI Inds, Thermax, TVS Motor,
Vedanta
Wednesday
7 8
Bajaj Corp
14
Goa Carbon, Hindustan Unilev
Hinduja Venture, Network18,
TTK Prestige, TV18 Broadcast,
Zee Ent
Sep WPI: -4.54%
21
Akzo Nobel, Bajaj Auto,
Bajaj Hldg & Inv, Blue Dart,
Cairn, Delta Corp, HCL Infosys
HDFC Bank, IB Real Estate,
IB Ventures, Idea Cellular,
IB Hsg Fin, IRB Infra,
JSW Steel, KPIT, Mahindra CIE
Mah & Mah Fin, Noida Toll,
Tata Coffee, Wipro
28
Amara Raja Batt, Ambuja Cem
Dabur India, Elecon Engg,
Greenply Inds, HT Media,
JSW Energy, Kirloskar Oil Engi
Tata Elxsi, Transport Corp
Thursday Friday
1 2
9 10
Indusind Bank
15 16
CCL Product, Cyient, D B Corp Agro Tech Foods, Edelweiss Fin CRISIL, South Indian Bank,
Himatsingka, Karur Vysya Bk, NIIT, RS Softwa, Reliance Inds Unichem Labs
LIC Hsg Fin, Mastek, Mindtree,
Sintex, VGuard
Sep Exports:
Sep Imports:
22 23
Cadila 3i Infotech, Asian Paints,
Bharti Infra, Chola Inv & Fin,
GSFC, Kansai Nerolac, Rallis,
Symphony
29 30
Bharat Forge, Colgate, Ajanta Pharma, Apollo Tyre,
Crompton Greav, Dishman, Atul, Bharat Electronics,
Dr Reddys, Emami, Grasim, Century Text, Elgi Equipment,
Gujarat Pipavav, HCC, ICICI Bank, Indoco Remedies,
JM Fin, MRF, Neuland Lab, JSW Holdg, Karnataka Bank,
Redington, SKF, Supreme Inds Kotak Mah Bank, Mah Life Dev,
Torrent Pharma Merck, NOCIL, Religare,
Shoppers Stop, Titan
Sep CPI: IW
Institutional Equities
Saturday
3
17
24
Godrej Consu, L&T Fin Hldg
Persistent 25 Oct
31
Carborundum Univ,
Glaxo Pharma, GHCL, IDFC,
JK Cement, Sudarshan Chem
Nov 2 Greaves Cotton,
Phillips Carbon, VRL Log
Nov 3 ABB, Berger paints, PVR
Prism Cements, Tech Mah, TBZ
Nov 4 Ashok Leyl, Century Ply
Godrej Prop, Jai Corp, Repco,
Vardhman Text
Nov 5 ICRA, Jubilant Foodw,
Manappuram Fin,
Shreyas Shipping, Tata Steel
Nov 6 Glaxo Consu, Info Edge,
Mah & Mah, Ramco Cement, UBI
Nov 7 Britannia, VA Tech Wab
Nov 9 BPCL, Suprajit Engg
Nov 14 Shree Cements
Events Institutional Equities

Oct-Dec 15 Jan-Mar 16 Apr-Jun 16

Economics / RBIs Monetary Policy meeting (Oct, Dec) RBIs Monetary Policy meeting (Jan, Mar) RBIs Monetary Policy meeting (Apr, Jun)
Politics
2QFY16 Quarterly GDP 3QFY16 Quarterly GDP 4QFY16 Quarterly GDP

Cement Wonder Cement 4.0mtpa plant in Rajasthan J K Lakshmi Cements 1.75mtpa Udaipur plant
ACCs 3.5mtpa Jamul plant

Metals SAIL: Commissioning of new blast furnace, SMS,

billet caster, bar and rod mill at Bhilai
JSW Steel: Dolvi plant expansion from 3.3mtpa to
5mtpa

Oil & Gas RIL PET Phase 1 (0.33mntpa) start up RIL PX plant (2.1mtpa) start up
IOC Paradip refinery (300Kbpd) start up Phased start up of RIL petcoke gassifier
ONGC OPAL (1.1mn tpa) cracker start up RIL JIO (4G) Services commercial launch in March
RIL PTA Phase 2 (1.2mntpa) start up

Pharma Cadila Healthcare: Launch of generic Asacol HD in Sun Pharma: Launch of generic Gleevec in US with Dr Reddys: Launch of generic Jalyn in US
US with 180-day market exclusivity; Launch of 180-day market exclusivity Cipla: Launch of generic Fosrenol in US through
generic Prevacid ODT and generic Rapamune in US Lupin: Launch of generic Glumetza in US with 180- InvaGen
Sun Pharma, Lupin, Glenmark: Launch of generic day market exclusivity
Ortho Tri-Cyclen Lo in US Biocon: Qualification of the Malaysian insulin facility
Lupin: Launch of generic Welchol oral suspension in by Emerging Market regulators
US with 180-day market exclusivity; Launch of
generic Fosrenol in US, together with partner Natco,
with 180-day market exclusivity
Glenmark: Launch of generic Welchol (oral
suspension & tablets) in US
Events Institutional Equities

Oct-Dec 15 Jan-Mar 16 Apr-Jun 16

Telecom Finalisation of regulation of OTT players 2100, 2300 MHz spectrum auctions Commercial LTE launch by Jio
Idea LTE rollout
Notification of spectrum sharing / trading rules

Utilities Introducing the bill on amendments of Electricity Act Auction for subsidy for LNG gas price pooling for the JPVL: Commissioning of 660MW at Bara
2003 in Parliament to further segregate the power sector
distribution sector. Revision in domestic APM gas prices
Hearing on the capping of power cost for captive coal JSPL: Commissioning unit four (600MW) at Tamnar II
based projects in Delhi High Court
GMR Energy: Commissioning of 685MW at Raikheda
JPVL: Commissioning of 660MW at Bara
 Institutional Equities

Disclosure : Published in 2015, India Infoline Ltd 2015

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has not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (d) has not received any compensation for products or
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1
 Institutional Equities

A graph of daily closing prices of securities is available at http://www.nseindia.com/ChartApp/install/charts/mainpage.jsp, www.bseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes.
(Choose a company from the list on the browser and select the three years period in the price chart).

Name, Qualification and Certification of Research Analyst:Prabodh Agrawal (Chartered Accountant), Abhijit Akela (PGDM), Abhishek Murarka (MBA), Abhishek Sharma (PGDM), Amit Tiwari (MBA), Anupam Gupta
(PGDBM), Ashutosh Datar (Chartered Accountant), Avi Mehta (PGDBM), Balaji Subramanian (PGDM), Bhaskar Chakraborty (PGDM), Bijal Shah (Chartered Accountant), Devesh Agarwal (PGDBM), G.V. Giri (MBA),
Harshvardhan Dole (B.Tech, PGBDA), J. Radhakrishnan (CWA, CFA), Joseph George (Chartered Accountant, Chartered Financial Analyst), Mohit Agrawal (Chartered Accountant), Percy Panthaki (Chartered Accountant),
Piran Engineer (PGDM), Renu Baid (BMS; MMS degree in Finance), Sampath Kumar (Chartered Accountant), Sandeep Muthangi (PGDM), Rahul Jeewani (PGDM), Kevin Mehta (Chartered Accountant), Nandish Dalal
(Chartered Accountant), Krithika Subramanian (Chartered Accountant), Urvil Bhatt (Chartered Accountant), Nikunj Gala (MBA), Nishant Shah (Chartered Accountant)
India Infoline Limited (Formerly India Infoline Distribution Company Limited), CIN No.: U99999MH1996PLC132983, Corporate Office IIFL Centre, Kamala City, Senapati Bapat Marg, Lower Parel, Mumbai
400013 Tel: (91-22) 4249 9000 .Fax: (91-22) 40609049, Regd. Office IIFL House, Sun Infotech Park, Road No. 16V, Plot No. B-23, MIDC, Thane Industrial Area, Wagle Estate, Thane 400604 Tel: (91-22) 25806650.
Fax: (91-22) 25806654 E-mail: mail@indiainfoline.com Website: www.indiainfoline.com, Refer www.indiainfoline.com for detail of Associates.
National Stock Exchange of India Ltd. SEBI Regn. No. : INB231097537/ INF231097537/ INE231097537, Bombay Stock Exchange Ltd. SEBI Regn. No.:INB011097533/ INF011097533/ BSE-Currency, MCX Stock
Exchange Ltd. SEBI Regn. No.: INB261097530/ INF261097530/ INE261097537, United Stock Exchange Ltd. SEBI Regn. No.: INE271097532, PMS SEBI Regn. No. INP000002213, IA SEBI Regn. No. INA000000623, SEBI
RA Regn.:- INH000000248

Key to our recommendation structure

BUY - Absolute - Stock expected to give a positive return of over 20% over a 1-year horizon.

SELL - Absolute - Stock expected to fall by more than 10% over a 1-year horizon.

In addition, Add and Reduce recommendations are based on expected returns relative to a hurdle rate. Investment horizon for Add and Reduce recommendations is up to a year. We assume the current hurdle rate at
10%, this being the average return on a debt instrument available for investment.

Add - Stock expected to give a return of 0-10% over the hurdle rate, i.e. a positive return of 10%+.

Reduce - Stock expected to return less than the hurdle rate, i.e. return of less than 10%.

Distribution of Ratings: Out of 186 stocks rated in the IIFL coverage universe, 104 have BUY ratings, 7 have SELL ratings, 53 have ADD ratings and 22 have REDUCE ratings.

Price Target: Unless otherwise stated in the text of this report, target prices in this report are based on either a discounted cash flow valuation or comparison of valuation ratios with companies seen by the analyst as
comparable or a combination of the two methods. The result of this fundamental valuation is adjusted to reflect the analysts views on the likely course of investor sentiment. Whichever valuation method is used there is a
significant risk that the target price will not be achieved within the expected timeframe. Risk factors include unforeseen changes in competitive pressures or in the level of demand for the companys products. Such demand
variations may result from changes in technology, in the overall level of economic activity or, in some cases, in fashion. Valuations may also be affected by changes in taxation, in exchange rates and, in certain industries,
in regulations. Investment in overseas markets and instruments such as ADRs can result in increased risk from factors such as exchange rates, exchange controls, taxation, and political and social conditions. This
discussion of valuation methods and risk factors is not comprehensive further information is available upon request.