Value Guide 2017

Value
Guide
November 2016
For Private Circulation only
www.sharekhan.com
SEASON OF
SURPRISE
Intelligent Investing Regular Features Products & Services Trader’s Edge
Market Outlook Report Card PMS Technical view

Stock Ideas Earnings Guide Top Picks Commodities and Currencies
Stock Updates Wealth Creator F&O Insights
Sharekhan Special MF Picks
Advisory
November 2016 2 Sharekhan ValueGuide
CONTENTS
From Sharekhan’s Desk EQUITY
Season of surprises FUNDAMENTALS Viewpoints 26

Financial markets Stock Ideas 15 REGULAR FEATURES
dislike surprises and Stock Updates 16 Report Card 4
the subsequent Sharekhan Special 25 Earnings Guide
uncertainty. And it has I
been a season of
surprises. TECHNICALS DERIVATIVES
Global uncertainty Nifty 28 View 29
has emerged from the
surprise win of the controversial candidate Donald Trump in
ADVISORY DESK
the US Presidential election. His entire election commentary MID Trades 36 Derivative Ideas 36
was based on big-bang change and shift away from the existing
policies adopted by the Democratic government to revive the
US economy. CURRENCY
06
FUNDAMENTALS
RESEARCH BASED EQUITY PRODUCTS
USD-INR 30 GBP-INR 30
Market Outlook 7 EUR-INR 30 JPY-INR 30
Top Picks Basket 10
Wealth Creator Portfolio 14 TECHNICALS
USD-INR 31 GBP-INR 31
PMS DESK EUR-INR 31 JPY-INR 31
WealthOptimizer PMS 32
MUTUAL FUNDS DESK
ProPrime - Diversified Equity 33
ProTech - Index Top MF Picks (equity) 37
Futures Fund 34
Top SIP Fund Picks 38
ProTech - Trailing Stops 35
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Sharekhan ValueGuide 3 November 2016
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REPORT CARD EQUITY FUNDAMENTALS
STOCK IDEAS STANDING (AS ON NOVEMBER 03, 2016)

COMPANY CURRENT PRICE AS ON PRICE 52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX
RECO 03-NOV-16 TARGET HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M
AUTOMOBILES
Apollo Tyres Buy 197.5 245.0 235.0 127.1 -11.8 26.6 26.1 21.3 -9.3 27.4 14.7 15.9
Ashok Leyland Buy 91.3 105.0 112.9 75.1 9.9 6.8 -12.2 2.2 12.9 7.5 -20.1 -2.5
Bajaj Auto Hold 2829.9 3150.0 3122.0 2172.0 -1.8 4.2 15.1 19.5 1.0 4.9 4.7 14.1
Gabriel Industries Buy 121.8 130.0 130.0 75.0 0.8 16.8 31.7 41.9 3.7 17.6 19.8 35.5
Hero MotoCorp Buy 3378.5 4100.0 3740.0 2375.0 -4.1 5.5 18.2 33.9 -1.4 6.2 7.5 27.8
M&M Buy 1361.0 1580.0 1509.0 1091.3 -5.7 -5.9 3.5 11.3 -3.1 -5.3 -5.9 6.3
Maruti Suzuki Buy 5805.6 6430.0 5974.0 3193.3 2.2 19.9 53.0 30.4 5.1 20.7 39.2 24.5
Rico Auto Industries Buy 72.4 ** 75.4 27.7 12.0 45.3 89.8 73.6 15.1 46.3 72.7 65.8
TVS Motor Buy 392.5 455.0 420.0 256.0 4.3 32.0 37.0 38.0 7.2 32.8 24.6 31.7
BSE Auto Index 21991.5 23209.9 15385.1 -3.4 6.3 19.8 22.0 -0.7 7.0 9.0 16.5
BANKS & FINANCE
Allahabad Bank Hold 73.8 83 88.4 39.4 -7.1 -2.3 31.0 -2.4 -4.5 -1.6 19.1 -6.9
Axis (UTI) Bank Hold 475.9 560 638.3 366.7 -13.6 -13.4 2.1 1.2 -11.2 -12.8 -7.2 -3.4
Bajaj Finance Hold 1030.9 1200 1183.9 517.5 -5.1 3.0 47.7 96.9 -2.5 3.7 34.3 88.0
Bajaj Finserv Buy 3347.8 3890 3480.0 1551.3 4.8 26.5 71.9 69.3 7.7 27.4 56.3 61.7
Bank of Baroda Buy 146.6 180 182.5 109.4 -13.2 -1.5 -4.2 -9.5 -10.8 -0.9 -12.8 -13.6
Bank of India Hold 108.8 130 138.9 78.4 -6.6 0.0 24.1 -18.4 -4.0 0.6 12.9 -22.0
Capital First Buy 690.8 840 797.4 346.2 -4.8 1.1 49.7 84.3 -2.2 1.8 36.2 76.0
Corp Bank Reduce 40.8 30 47.8 30.8 -6.6 0.5 8.4 -5.0 -4.0 1.2 -1.4 -9.3
Federal Bank Buy 76.9 95 86.0 41.4 3.4 24.2 65.6 40.7 6.3 25.0 50.7 34.4
HDFC Buy 1401.6 1550 1464.0 1011.5 -1.7 5.7 28.8 16.2 1.1 6.4 17.1 11.0
HDFC Bank Buy 1255.0 1415 1318.5 928.0 -2.5 1.2 13.2 16.6 0.2 1.8 2.9 11.3
ICICI Bank Hold 269.8 290 291.6 180.8 5.3 11.4 24.6 -1.5 8.3 12.2 13.3 -5.9
IDBI Bank Hold 69.5 ** 95.7 47.3 -2.2 1.8 2.5 -17.8 0.6 2.5 -6.8 -21.5
LIC Housing Finance Buy 550.3 700 624.3 388.7 -7.2 11.1 22.3 15.3 -4.6 11.9 11.2 10.1
PTC India Financial Services Buy 40.0 55 49.9 29.7 4.2 5.4 7.7 -11.2 7.1 6.1 -2.0 -15.2
Punjab National Bank Hold 133.2 140 150.6 69.3 -7.1 9.5 60.6 2.2 -4.5 10.2 46.1 -2.4
SBI Buy 245.7 315 271.6 148.3 -3.8 8.4 35.2 5.5 -1.1 9.1 23.0 0.7
Union Bank of India Hold 137.1 150 174.0 104.0 -4.3 7.5 12.0 -12.2 -1.6 8.2 1.9 -16.2
Yes Bank Buy 1208.8 1520 1450.0 631.6 -4.8 -2.2 31.1 56.6 -2.2 -1.5 19.2 49.5
BSE Bank Index 21916.6 23694.7 15224.3 -2.1 3.2 18.6 12.0 0.6 3.8 7.8 6.9
CONSUMER GOODS
Britannia Buy 3301.5 3950 3584.3 2505.1 -5.3 16.6 16.8 4.6 -2.6 17.4 6.2 -0.1
Emami NEW Buy 1247.5 1300 1260.8 901.0 5.4 8.3 29.1 21.8 8.4 9.0 17.4 16.3
GSK Consumer Hold 5899.0 6650 6800.0 5366.5 -5.1 -4.9 2.4 -0.3 -2.5 -4.3 -6.8 -4.8
Godrej Consumer Products Hold 1535.3 1690 1715.0 1118.8 -6.3 -2.0 12.7 19.8 -3.7 -1.3 2.5 14.4
Hindustan Unilever Buy 839.4 950 954.0 765.4 -2.6 -7.4 0.6 6.4 0.2 -6.8 -8.5 1.6
ITC Buy 240.3 280 266.0 177.7 -0.8 -4.9 16.8 10.2 2.0 -4.3 6.2 5.2
Jyothy Laboratories Buy 354.8 400 371.0 252.1 -1.4 23.3 18.5 18.9 1.4 24.1 7.8 13.6
Marico Hold 265.6 310 306.9 190.6 -5.8 -10.8 4.3 38.1 -3.2 -10.2 -5.1 31.8
Zydus Wellness Buy 855.5 1000 930.0 632.0 -5.0 8.3 13.8 2.4 -2.3 9.0 3.6 -2.2
BSE FMCG Index 8389.4 9043.8 6782.2 -1.6 -2.8 11.5 8.0 1.1 -2.2 1.4 3.1
IT / IT SERVICES
Firstsource Solutions Hold 38.5 47 53.7 28.7 -7.8 -18.3 -5.6 16.8 -5.2 -17.7 -14.2 11.6
HCL Technologies Buy 763.1 965 889.9 706.4 -4.9 -6.2 7.2 -10.2 -2.2 -5.6 -2.5 -14.3
Infosys Buy 966.9 1150 1279.3 961.0 -5.9 -9.9 -16.0 -13.7 -3.2 -9.3 -23.6 -17.6
Persistent Systems Buy 653.7 790 798.0 501.1 2.1 -3.5 -10.6 -2.3 5.0 -2.8 -18.7 -6.7
Tata Consultancy Services Hold 2319.5 2450.0 2744.8 2115.0 -3.6 -12.4 -4.9 -7.2 -0.9 -11.9 -13.5 -11.4
Wipro Hold 447.6 550.0 607.0 444.2 -6.5 -18.3 -17.6 -21.2 -3.9 -17.8 -25.0 -24.8
BSE IT Index 9725.7 11775.5 9660.8 -4.4 -10.8 -10.7 -12.9 -1.8 -10.2 -18.7 -16.8
CAPITAL GOODS / POWER
Bharat Heavy Electricals Reduce 137.7 141.0 203.3 90.2 0.3 3.5 10.9 -31.3 3.1 4.2 0.9 -34.4
CESC Hold 593.6 710.0 683.5 404.6 -5.0 -1.0 10.9 5.4 -2.3 -0.3 0.9 0.7
Crompton Greaves Reduce 77.0 70.0 88.9 39.2 -2.2 2.7 35.8 29.9 0.5 3.3 23.5 24.0
Finolex Cables Buy 438.1 500.0 464.0 200.8 -0.5 15.0 56.1 76.7 2.3 15.7 42.0 68.7
Greaves Cotton Buy 135.4 160.0 162.6 114.1 4.2 -3.9 1.9 1.8 7.2 -3.3 -7.3 -2.8
Kalpataru Power Transmission Buy 244.8 320.0 286.6 160.0 -5.8 -5.2 17.5 -7.5 -3.2 -4.6 6.9 -11.7
PTC India Hold 74.3 90.0 87.9 56.1 -1.7 0.0 20.6 18.8 1.0 0.7 9.7 13.5
Skipper Buy 144.0 190.0 219.9 122.0 -8.5 -7.0 -0.1 -5.4 -5.9 -6.4 -9.1 -9.7
Thermax Hold 854.3 920.0 972.0 690.0 -3.1 -0.1 14.1 0.2 -0.4 0.5 3.8 -4.3
Triveni Turbine Buy 127.0 140.0 135.7 87.5 3.3 9.9 14.1 21.1 6.1 10.6 3.8 15.6
Va Tech Wabag Buy 481.4 650.0 769.6 408.8 -14.7 -16.4 -17.5 -23.4 -12.3 -15.9 -25.0 -26.8
V-Guard Industries Buy 205.3 235.0 226.4 78.0 11.0 20.0 113.7 130.5 14.1 20.8 94.4 120.1

EQUITY FUNDAMENTALS REPORT CARD
STOCK IDEAS STANDING (AS ON NOVEMBER 03, 2016)

COMPANY CURRENT PRICE AS ON PRICE 52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX
RECO 03-NOV-16 TARGET HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M
BSE Power Index 1981.3 2153.9 1559.4 -2.7 -1.3 8.7 4.4 0.1 -0.6 -1.1 -0.3
BSE Capital Goods Index 14592.4 15835.4 10934.9 -2.3 -0.6 12.0 0.2 0.4 0.0 1.9 -4.3
INFRASTRUCTURE / REAL ESTATE
Gayatri Projects Hold 657.6 700.0 790.0 482.0 -4.0 -0.4 19.0 -6.9 -1.3 0.3 8.2 -11.1
ITNL Buy 101.6 120.0 117.5 64.0 -1.5 41.1 38.1 15.6 1.3 42.0 25.7 10.4
IRB Infra Buy 223.5 300.0 272.0 195.3 -12.9 8.2 3.9 -8.3 -10.4 8.9 -5.5 -12.4
Jaiprakash Associates Hold 10.6 ** 13.8 5.3 -2.8 -11.0 43.5 -18.2 0.0 -10.4 30.6 -21.9
Larsen & Toubro Buy 1444.2 1640.0 1615.0 1016.1 -1.8 -1.1 16.8 6.5 1.0 -0.5 6.3 1.6
NBCC Buy 235.2 340.0 299.4 162.0 -17.8 -4.8 16.3 21.8 -14.8 -3.5 5.9 16.8
CNX Infra Index 2814.0 2999.2 2204.1 -1.4 -1.3 7.3 1.1 1.3 -0.7 -2.4 -3.4
BSE Real estate Index 1493.1 1646.5 1000.1 -4.1 -3.7 10.5 8.8 -1.5 -3.0 0.5 3.9
OIL & GAS
Oil India Hold 408.3 ** 421.5 300.4 -1.6 13.6 23.4 5.5 1.2 14.4 12.3 0.8
Reliance Buy 1024.0 1300.0 1129.6 888.1 -6.1 3.0 4.9 7.0 -3.5 3.7 -4.6 2.1
Selan Exploration Technology Hold 192.5 345.0 261.9 148.7 7.5 -2.6 -0.5 -14.8 10.5 -1.9 -9.5 -18.7
BSE Oil and gas Index 11756.2 12482.7 7987.3 1.5 13.7 28.4 31.9 4.4 14.4 16.8 25.9
PHARMACEUTICALS
Aurobindo Pharma Buy 769.3 945.0 895.0 582.0 -11.6 3.0 -4.1 -8.2 -9.1 3.7 -12.8 -12.4
Cipla Hold 560.0 660.0 681.0 457.5 -4.9 6.1 4.7 -16.8 -2.2 6.8 -4.8 -20.6
Cadila Healthcare Hold 396.6 450.0 437.4 295.0 1.6 14.1 23.9 -5.3 4.4 14.8 12.7 -9.6
Divi's Labs Hold 1259.7 1430.0 1381.6 917.8 -3.1 7.4 21.1 7.0 -0.4 8.1 10.2 2.1
Glenmark Pharmaceuticals Buy 912.6 1150.0 996.0 671.1 -1.6 11.0 11.6 -6.6 1.2 11.7 1.5 -10.9
Lupin Hold 1470.4 1850.0 1911.9 1280.0 -1.6 -12.5 -6.3 -21.2 1.2 -11.9 -14.7 -24.8
Sun Pharmaceutical Industries Buy 703.7 ** 898.5 647.3 -7.1 -16.1 -11.7 -18.9 -4.4 -15.5 -19.7 -22.6
Torrent Pharma Hold 1317.3 1765.0 1769.5 1175.1 -20.7 -10.0 -8.2 -13.6 -18.4 -9.4 -16.5 -17.5
BSE Health Care Index 15807.6 18078.6 14418.9 -4.1 -1.8 2.7 -11.6 -1.4 -1.2 -6.6 -15.6
BUILDING MATERIALS
Grasim Buy 909.7 1150.0 1072.2 646.6 -7.2 -8.0 10.3 23.6 -4.6 -7.4 0.4 18.0
The Ramco Cements Hold 602.8 ** 685.4 352.7 -2.0 12.4 27.7 63.9 0.7 13.1 16.2 56.5
Shree Cement Hold 16122.2 18000.0 18519.0 9350.0 -9.9 -3.8 29.9 27.2 -7.4 -3.2 18.1 21.5
UltraTech Cement Hold 3906.7 4150.0 4130.0 2579.0 -0.6 6.5 21.9 33.9 2.2 7.2 10.8 27.9
DISCRETIONARY CONSUMPTION
Century Plyboards (India) Buy 237.5 257.0 267.8 135.5 -9.0 8.2 25.9 31.9 -6.4 8.9 14.5 26.0
Cox and Kings Buy 219.8 250.0 276.8 140.1 -2.6 21.2 19.9 -19.5 0.2 22.0 9.0 -23.2
Inox Leisure Hold 244.5 285.0 293.4 170.0 -9.4 -2.3 18.9 7.2 -6.9 -1.6 8.2 2.3
Info Edge (India) Buy 945.3 1040.0 1025.0 688.1 9.3 14.6 27.1 28.5 12.4 15.3 15.6 22.7
KDDL Hold 246.7 275.0 367.0 162.0 9.9 -5.2 37.1 -10.4 12.9 -4.6 24.7 -14.4
KKCL Buy 1872.7 2360.0 2250.0 1603.3 -0.7 1.6 5.9 -9.8 2.1 2.2 -3.7 -13.9
Orbit Exports Buy 273.0 375.0 420.0 205.3 4.0 25.4 1.7 -31.0 6.9 26.2 -7.5 -34.1
Raymond Hold 634.4 675.0 654.0 350.0 15.8 38.8 40.5 51.7 19.1 39.7 27.8 44.9
Relaxo Footwear Buy 417.2 550.0 535.9 357.7 -10.7 -12.7 -16.1 -20.0 -8.2 -12.1 -23.7 -23.6
Speciality Restaurants Hold 88.4 115.0 148.0 80.0 -0.6 -3.8 -6.3 -33.7 2.2 -3.2 -14.7 -36.7
Thomas Cook India Buy 215.2 255.0 228.9 165.0 5.1 9.8 16.3 2.8 8.1 10.6 5.8 -1.8
Wonderla Holidays Buy 378.8 440.0 430.4 321.0 -0.1 -4.9 -0.4 15.2 2.7 -4.2 -9.4 10.0
Zee Entertainment Buy 503.3 620.0 589.9 350.1 -13.1 2.1 20.5 21.9 -10.6 2.8 9.6 16.4
DIVERSIFIED / MISCELLANEOUS
Aditya Birla Nuvo Hold 1314.7 ** 1664.0 684.3 -4.7 -12.0 54.3 36.2 -2.0 -11.4 40.3 30.0
Bajaj Holdings Buy 2195.0 2737.0 2245.0 1310.0 13.2 23.2 53.7 35.1 16.4 24.0 39.8 29.0
Bharti Airtel Hold 309.0 364.0 385.0 282.3 -3.1 -13.6 -15.8 -10.8 -0.3 -13.0 -23.4 -14.8
Bharat Electronics Buy 1305.4 1450.0 1416.9 1008.0 2.5 6.8 12.3 5.2 5.4 7.5 2.2 0.5
Gateway Distriparks Hold 238.8 290.0 360.0 205.6 -6.4 -10.6 -15.7 -27.9 -3.7 -10.0 -23.4 -31.2
Max Financial Hold 540.7 570.0 628.0 302.8 -3.2 -1.2 46.6 29.0 -0.5 -0.6 33.3 23.2
W
PI Industries NE Buy 901.2 955.0 921.9 495.4 7.5 15.5 40.2 35.3 10.5 16.2 27.5 29.2
Ratnamani Metals and Tubes Hold 620.7 ** 675.5 387.0 9.4 19.8 28.1 -3.6 12.5 20.6 16.5 -8.0
Supreme Industries Buy 886.7 1067.0 1025.0 520.0 -2.6 -3.2 10.3 42.0 0.2 -2.6 0.3 35.6
UPL Buy 669.4 800.0 730.7 342.0 -1.6 14.8 16.5 49.6 1.2 15.5 6.0 42.9
BSE500 Index 11617.6 12083.1 9012.0 -2.4 1.9 13.5 10.3 0.3 2.6 3.3 5.3
CNX500 INDEX 7344.1 7647.5 5717.0 -2.4 1.8 13.4 10.3 0.3 2.5 3.2 5.3
CNXMCAP INDEX 15420.8 16169.1 11190.4 -2.7 6.5 17.9 18.0 0.1 7.2 7.2 12.7
In Top Picks basket ** Price target under review

FROM SHAREKHAN’S DESK
Season of surprises
from sharekhan’s desk Financial markets dislike surprises and the subsequent uncertainty. And it has been a season of
surprises.
Global uncertainty has emerged from the surprise win of the controversial candidate Donald Trump
in the US Presidential election. His entire election commentary was based on big-bang change and
shift away from the existing policies adopted by the Democratic government to revive the US
economy. Whether this change will be for good or bad is debatable, but what this essentially does
is create uncertainty, as the contours of the Trump government policies in the world's largest
economy are not clear as of now. The volatility in global risky assets, including equities, clearly
underlines the importance of the US in the global economic landscape, apart from the growing
dependence (and to an extent fixation) of equity markets with easy money (resulting out of the
ultra-loose monetary policy regime).
On the domestic front, the Modi government pulled out a huge surprise by demonetisation of
high-denomination currency notes in India to curb black money, attack corruption and illicit trade.
The move is structurally very positive for the Indian economy, as the black money would flow into
formal the economy eventually - boosting tax revenue and the economic base of the country.
However, in the immediate term, the consumption demand could be dented and hurt the prime
driver of economic growth in the absence of a meaningful pick-up in investments and slack industrial
activity.
Growing risk aversion amid heightened uncertainty has adversely impacted institutional fund flows
into Emerging Markets (EM) in general, and India in particular, due to the "overweight" position
in India of many leading foreign investors. In October, FIIs turned net sellers in both Equity and
Debt segments after a gap of nine months (ie February 2016). FIIs sold Rs5,000 crore in Equities
while the outflows from the Indian debt market stood at Rs7,150 crore in October.
On the other hand, the domestic institutions continued to pump money into Equity and Debt
markets given the strong retail inflows into the Mutual Fund (MF) industry. In October, the domestic
institutions bought equities worth Rs9,158 crore and their debt market net purchases were in
excess of Rs24,500 crore. The buying by the domestic institutions cushioned the pressure on the
benchmark indices, with the Nifty and Sensex ending largely flat in October.
Corporate results for the July-September quarter have been uneven so far and are unlikely to
witness a secular pop in the foreseeable future, although the intensity of earnings downgrades has
ebbed. On the policy front, the progress on forming a consensus on GST tax rates and the overall
structure sets the ball rolling for its implementation at the earliest. The high-frequency domestic
macro-economic data have been mostly sanguine. Inflation has eased off substantially, increasing
the possibility of another rate cut by the RBI in the coming months. A good monsoon is likely to
boost farm output and consequently revive rural consumption growth to some extent. On the
other hand, the Seventh Central Pay Commission (CPC) pay hikes for central government employees
are expected to help lift consumer demand in the urban areas.
It is only during the volatile phases the importance of careful stock picking and research comes to
the fore. On the other hand, the perils of chasing momentum stocks due to greed also get highlighted.
To avoid such pitfalls, the Sharekhan Research Team offers portfolio products (Sharekhan Top
Picks, Power Portfolio) where well-researched quality companies are identified and cheryy-picked
to achieve superior returns across market cycles and conditions. Get in touch with our branches
and advisors to understand and take advantage of these investment portfolio products.
And, this is the right time to do it since the markets have corrected from their recent peaks and the
ongoing volatility would offer an opportunity to enter at relatively better valuations, consequently
adding to the returns. You could also look at gradually increasing your exposure to further ward
off the risk of global uncertainty-driven volatility in the markets. Especially since the outlook for
Indian equities continues to be positive, given the ongoing economic upcycle, expected revival in
corporate earnings and pro-active government policies.

EQUITY FUNDAMENTALS MARKET OUTLOOK
MARKET OUTLOOK NOVEMBER 09, 2016
Fortune favours the brave!

Courage with conviction pays rich dividends: Right policy moves of 16.5-17x one-year forward earnings. Although the Indian indices’
with sincere intentions, backed by a lot of courage and conviction valuations look relatively rich on forward PE basis, in terms of
(though at times unconventional and bizarre) do get appreciated in market cap-to-GDP, India appears attractive at ~0.8-0.85x.
the world looking for big change for a better tomorrow. The two
surprise events of this month - Donald Trump emerging triumphant Strategy – Prefer large-caps over mid-caps; sector overweight on
in US presidential election and the Modi government’s move to Private Banks & NBFCs; we also prefer select companies in the
curb black money - do create short-term uncertainty and volatility. Industrials and Agri Inputs space. Avoid Real Estate, Liquor,
But, at the same time, these two events have the potential to turn Tobacco and Luxury Consumer Companies.
into a boon in the years to come.
Black money to change its colour now: The Modi government’s

audacious move to smash cash and curb black money & corruption SENSEX PE (BASED ON ONE-YEAR FORWARD EARNINGS)
could dampen consumer demand in the near term. However, it has
far-reaching and positive long-term implications for the Indian
economy. It would soften inflationary pressures, improve liquidity
in the formal banking system and ease interest rates. More
importantly, it would help move household savings away from
physical assets into financial assets, which is essential from fiscal
deficit’s point of view and for investment in critical infrastructure
development.
President Trump not the same as candidate Trump: The rhetoric

by US Republican party presidential candidate Donald Trump in
the run-up to the election did unnerve the markets. He did raise
uncomfortable questions that are in the minds of common
Americans but avoided by conventional politicians. However,
Source: Bloomberg
President Trump is likely to be more politically correct. Moreover,
the US political system does limit the powers in the hands of the INDIA MARKET CAP TO GDP RATIO AT COMFORTABLE LEVEL
President due to the overwhelming importance of Senate in terms
of implementation of any major policies.
Q2FY2017 results largely in line so far: Decent Q2FY2017 earnings

performance so far fuels hopes of a broad-based recovery going
ahead. Auto companies have reported strong topline-driven results.
However, Banks and IT sectors continue to be under the weather.
Private banks, which were relatively better off so far vis-à-vis their
PSB counterparts, are also struggling with asset quality issues. Axis
Bank and ICICI Bank results indicate that corporate borrowers are
yet to recover meaningfully and the banking system is yet to emerge
from NPA mess. However, excluding Axis Bank, the earnings of
NIFTY companies so far have been decent with adjusted PAT
growth of 11% YoY.
Domestic valuation on PE basis appears high; but comfortable on

Mcap/GDP metric: Indian markets have rallied significantly since
the beginning of 2016, and valuations too have expanded. Sensex
PE multiple is high, but in line with the long-term average multiple

MARKET OUTLOOK EQUITY FUNDAMENTALS
Global Macros – environment evolving, still benign though
GLOBAL BOND YIELDS FIRMING UP INCREASE IN RISK PERCEPTION
India – Easy liquidity & policy initiatives portend pick-up in corporate earnings
CURRENT ACCOUNT DEFICIT OF INDIA SOFTENING OF RATES, EASY LIQUIDITY KEY FOR NPA RESOLUTION
STEEP SOFTENING OF BOND YIELDS LIQUIDITY EASES; WILL HELP FACILITATE RATE TRANSMISSION

EQUITY FUNDAMENTALS MARKET OUTLOOK
BUMPER KHARIF CROP EASING FOOD INFLATION SOFTENING INFLATIONARY PRESSURE
Q2FY2017 results so far
Q2FY2017 RESULTS LARGELY POSITIVE BARRING FEW SHOCKS LIKE AXIS BANK SENSEX’ CONSENSUS EARNINGS ESTIMATES STABLE

SHAREKHAN TOP PICKS EQUITY FUNDAMENTALS
SHAREKHAN TOP PICKS

Sharekhan Top Picks
Notwithstanding the volatility associated with quarterly Q2FY2017 performance of TVS Motor and its encouraging
result season, the benchmark indices managed to hold their outlook made us more positive on the company’s future
own and ended October on a flattish note. Nifty and Sensex prospects at this point in time.
closed October with marginal gain of 0.3% each. Three more changes include: introduction of Emami in place
Comparatively, the Sharekhan Top Picks portfolio of Britannia as part of churn within the Consumer Staples
appreciated by 2.4% during October and continues to space. Another change relates to the introduction of Grasim
consistently outperform the benchmark indices. in place of Hindustan Unilever (HUL). The change is driven
The performance of Sharekhan Top Picks was boosted by by the relatively better growth outlook for Grasim in the
the handsome gains in Auto/Auto Ancillary stocks. Our medium term vis-à-vis HUL.
overweight position on Auto has paid off well, with the three Lastly, we are moving out Capital First to make way for
Auto/Auto Ancillary stocks gaining 9.9% (on an average) L&T Finance Holdings. Capital First continues to be one of
during October. We retain our positive stance on the Auto our top picks in the Financial sector, but the restructuring-
sector. However, we are making one tactical change in the driven improvement in the performance of L&T Finance
Auto companies under the Top Picks basket. We are could provide better upside to investors in the medium term.
replacing Ashok Leyland with TVS Motor. The strong
CONSISTENT OUTPERFORMANCE (ABSOLUTE RETURNS; NOT ANNUALISED) (%)
1 month 3 months 6 months 1 year 3 years 5 years
Top Picks 2.4 6.0 17.2 18.6 130.0 195.4
Sensex 0.3 -0.5 9.0 4.7 31.2 59.0
Nifty 0.3 0.1 10.2 7.2 36.2 64.3
CNX MIDCAP 2.8 7.2 20.0 19.7 107.8 108.3
ABSOLUTE RETURNS (TOP PICKS VS BENCHMARK INDICES) % CONSTANTLY BEATING NIFTY AND SENSEX (CUMULATIVE RETURNS) SINCE
CONSISTENT TRACK RECORD FOR OVER 7 YEARS APRIL 2009
Sharekhan
(TOP PICKS VS BENCHMARK INDICES) Sensex Nifty CNX 700
(Top Picks) MIDCAP
600
100
YTD CY2016 20.7 6.8 8.8 18.2 500
CY2015 13.9 -5.1 -4.1 6.5 400
CY2014 63.6 29.9 30.9 55.1

300
CY2013 12.4 8.5 6.4 -5.6
200
CY2012 35.1 26.2 29.0 36.0
100
CY2011 -20.5 -21.2 -21.7 -25.0
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jul-09
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Apr-09
Oct-09
Apr-10
Oct-10
Apr-11
Oct-11
Apr-12
Oct-12
Apr-13
Oct-13
Apr-14
Oct-14
Apr-15
Oct-15
Apr-16
Oct-16
CY2010 16.8 11.5 12.9 11.5
CY2009 116.1 76.1 72.0 114.0 Sharekhan Sensex Nifty
Please note the returns are based on the assumption that at the beginning of each month an equal amount was invested in each stock of the Top Picks basket
NAME CMP* PER (x) ROE (%) PRICE UPSIDE
(RS) FY16 FY17E FY18E FY16 FY17E FY18E TARGET (RS)# (%)
Finolex Cables 440 27.0 24.5 21.6 28.5 24.9 24.6 500 14
Emami 1,209 51.9 45.1 33.9 40.1 40.3 44.7 1300 8
Grasim Industries 966 18.4 13.9 12.3 9.5 10.9 10.6 1,150 19
HDFC Bank 1,260 25.9 21.3 17.4 18.3 19.1 20.1 1,415 12
IndusInd Bank 1,201 31.3 24.2 18.4 16.1 16.7 17.6 1,460 22
Kansai Nerolac 378 56.4 46.7 39.0 15.6 17.6 19.4 450 20
L&T Finance 107 28.2 17.9 13.8 10.6 11.8 13.5 125 17
Maruti Suzuki 5,875 38.8 22.2 20.0 18.0 24.5 22.8 6,430 9
PI Industries 863 38.9 29.2 24.5 29.2 30.0 27.6 955 11
Rico Auto 68 27.2 16.2 13.1 7.2 10.9 12.2 ** -
TVS Motor 405 44.0 31.1 22.5 22.6 26.2 29.1 455 12
ZEE Entertainment 520 46.4 38.0 27.1 24.4 26.1 29.3 620 19
*CMP as on October 28, 2016 # Price target for next 6-12 months ** Under review

EQUITY FUNDAMENTALS SHAREKHAN TOP PICKS
NAME CMP PER (x) ROE (%) PRICE UPSIDE

FINOLEX CABLES 440 27.0 24.5 21.6 28.5 24.9 24.6 500 14
Remarks: Finolex Cables (FCL) is a leading manufacturer of Power and Communications Cables in India, having a sizeable market share. The
company is set to benefit from (1) an improving demand environment in its core business of cables; (2) strategy to leverage its brand
equity to build a high-margin consumer product business (Switchgears, Fans etc). Currently, FCL is witnessing a healthy volume
growth, which could improve further once the domestic economy picks up pace.
Apart from retaining core strength in the electrical cables, FCL is gradually adding consumer electrical products in its portfolio. Recently,
the company has launched Fans and has received approval for the Switchgears facility. FCL has also forayed into Electric Water
Heater segment. We believe executing the strategy to add consumer-facing branded electrical products could improve the overall
profile of FCL in terms of margin and return ratios in the long term. In the near to medium term, implementation of GST will be favorable
for the company too.
While the overall business traction is steady, we highly appreciate the strong and consistent cash flow generating ability of FCL.
Prudent working capital management and a cash-rich balance sheet will enable FCL to sustain very healthy return ratios (~20-25%).
We are positive on FCL.
EMAMI 1,209 51.9 45.1 33.9 40.1 40.3 44.7 1,300 8
Remarks: Emami is one of the largest players in the domestic FMCG market with a strong presence in the under-penetrated categories such as
Cooling Oil, Antiseptic Cream, Balm and Men’s Fairness Cream. The recently acquired “Kesh King” brand improves the product and
margin profile of the company.
Unlike other FMCG companies, Emami registered strong volume growth of 11% YoY in Q2FY2017 in its core domestic business and
expects to sustain the momentum in the coming quarters. Its product portfolio in low penetrated categories would help Emami to
achieve good growth in the long run.
Also, the OPM of Emami will sustain in the range of 28-30% in the coming years. The company expects to reduce its debt on account
of better cash generation ability and will be a debt-free company by the end of FY2018.
The desire to become a large FMCG player by riding on a portfolio of differentiated brands and widening reach in various geographies
will help Emami to achieve over 20% CAGR over the next 2-3 years. We recommend a Buy.
GRASIM INDUSTRIES 966 18.4 13.9 12.3 9.5 10.9 10.6 1,150 19
Remarks: Grasim Industries, a flagship company of the Aditya Birla Group ranks among India’s largest private sector companies having core
businesses of Cement (~70% of revenue with listed subsidiary UltraTech Cement), Viscose Stable Fibre (~20%) and Chemicals
(~10%). The company has benefitted from improvement in its profitability in all of its three divisions with outlook continuing to be
positive.
The timely acquisition of JP Group’s cement assets, continuous brownfield expansions and de-bottlenecking are likely to increase its
cement capacity to over 90MT. The structural growth triggers like rising infrastructure investment and pick-up in rural demand (owing
to a good monsoon) are likely to help sustain a favourable growth outlook for the cement sector. The revival in VSF prices, absence of
major capacity additions in China, low inventory and leverage of LIVA brand are likely to sustain VSF division’s profitability going
forward. Further, the company will expand its Caustic Soda capacity from 840KTPA to 1048KTPA in FY2018, which should sustain its
volume growth.
The current restructuring exercise of aligning high-growth businesses in Manufacturing (Cement, Textiles, Chemicals, Insulators,
Solar etc) and Services (Financial Services & Telecom post approval of proposed group restructuring scheme) provides a unique
opportunity to investors to hold a well-diversified portfolio, which is expected to maintain strong growth momentum going forward
across verticals. Overall, we expect Grasim Industries to reap benefits going forward, considering the revival in its core VSF division,
strong demand and better realisations in Chemicals and sturdy growth outlook for the Cement business.
HDFC BANK 1,260 25.9 21.3 17.4 18.3 19.1 20.1 1,415 12
Remarks: HDFC Bank has a pre-eminent presence in the retail banking segment (~50% of loan book) and has been able to maintain a strong &
consistent loan book growth, gradually gaining market share. Going forward, economic recovery and improvement in consumer sentiment
would be positive growth drivers for the bank’s loan growth, which will in turn drive its profitability.
Backed by a current account & savings account (CASA) ratio of 40%+ and a high proportion of retail deposits, the bank’s cost of funds
remains among the lowest in the system, helping it to maintain higher net interest margin (NIM). In addition, the bank’s loan book
growth is driven by high-yielding retail products such as personal loans, vehicle loans, credit cards, mortgages etc, mostly to own
customers (which also positively impacts NIMs).
HDFC Bank has been maintaining near impeccable asset quality, with its NPA ratios consistently been among the lowest versus
comparable peers. The bank has been able to maintain a robust asset quality due to its stringent credit appraisal procedures and
negligible exposure to troubled sectors.
HDFC Bank is well poised to tap the growth opportunities going ahead due to strong capital ratios, healthy asset quality and steady
revival in consumer spending. The bank is likely to maintain a healthy RoE of 18-20% and RoA of 1.8% on a sustainable basis.
Therefore, we expect it to sustain the valuation premium that it enjoys vis-à-vis other private banks.

SHAREKHAN TOP PICKS EQUITY FUNDAMENTALS

INDUSIND BANK 1,201 31.3 24.2 18.4 16.1 16.7 17.6 1,460 22
Remarks: IndusInd Bank is among the fastest growing banks (26% CAGR over FY2012-FY2016), with a loan book of Rs93,678 crore and 1,000
branches across the country. About 55% of the bank’s loan book comprises of retail finance, which is a high-yielding category, and is
showing signs of growth.
Given the aggressive measures taken by the management, the deposit profile has improved considerably (CASA ratio of ~35%).
Going ahead, the bank would follow a differentiated branch expansion strategy (5% branch market share in identified centers) to help
in ensuring healthy growth in savings accounts and retail deposits.
IndusInd Bank has maintained its asset quality despite sluggish economic growth and higher proportion of retail finance in its loan
book. The bank’s asset quality is among the best in the industry, with total stressed loans (restructured loans + gross NPAs) forming
just 1.4% of the loan book.
A likely revival in the domestic economy will further fuel growth in the bank’s consumer finance division while strong capital ratios will
support future growth plans. The stock should continue to trade at a premium valuation, underpinned by strong loan growth, quality
management, high RoAs and healthy asset quality. We have a positive outlook on IndusInd Bank.
KANSAI NEROLAC 378 56.4 46.7 39.0 15.6 17.6 19.4 450 20
Remarks: Kansai Nerolac Paints (KNPL) is the third largest paint company in India with an overall market share of ~16% in the decorative paints
segment. The implementation of the Seventh Pay Commission recommendations and the introduction of GST (shift from non-branded
to branded products) would help boost the urban consumption of paints, while a normal monsoon would boost rural demand.
KNPL is a market leader in the industrial paints business with a 60% market share. Around 75% of its industrial paints business
revenues come from auto coatings. A favourable outlook for the auto industry for the next 1-2 years will boost the company’s industrial
segment revenues.
KNPL’s decorative paints business has better margins compared to the industrial paints business. KNPL’s growing thrust on enhancing
its presence in the decorative paint business and expectations of stable raw material prices in the near term are expected to lift the
operating profit margin (OPM) by 40-50BPS in the next couple of years.
KNPL’s revenues and earnings are expected to clock a CAGR of 14% and 19%, respectively over FY2016-FY2018 on the back of its
relentless focus on enhancing presence in the decorative paints business and the expected improvement in the sales of automotive
paints. We have a positive view on KNPL.
L&T FINANCE 107 28.2 17.9 13.8 10.6 11.8 13.5 125 17
Remarks: L&T Finance Holdings (LTFH) has been winding down its myriad lending businesses to focus on select high-margin segments. LTFH
has decided to focus only on three areas, namely Rural Finance, Housing Finance and Wholesale Finance.
LTFH has been tweaking its portfolio mix in favor of B2C businesses compared to B2B businesses. It has been able to reduce its B2B
loan book composition from 81% in FY2011 to 39% in FY2016. We believe that B2C businesses are less prone to cyclicality, and being
more granular, they can be managed well by strong systems and processes.
We are positive on LTFH, which is progressing well on its business restructuring. We believe that the ongoing realignment strategy can
be crucial in building an attractive business franchise going forward. Already, the Return on Equity (RoE) has improved to 11.72% in
Q2FY2017 from 9.78% in Q1FY2017 and 9.84% in Q2FY2016. We believe that going forward, the company will be able to improve
RoE and gain from scale benefits in the long term.
MARUTI SUZUKI 5,875 38.8 22.2 20.0 18.0 24.5 22.8 6,430 9
Remarks: Maruti Suzuki India (Maruti) is India’s largest passenger vehicle (PV) manufacturer with a strong 47% market share. The company has
been able to gain market share over the last two years due to new product launches, vast distribution network (with an increased focus
on the rural markets) and a shift in consumer preference to petrol models from diesel models.
The recently launched premium hatchback Baleno has received a strong response, which will help Maruti to expand its market share
in the segment. Also, the company recently entered the compact sports utility vehicle (SUV) space with the launch of Vitara Brezza and
has received an encouraging response. Both the new products command a waiting period of 6-8 months each. Further, Maruti recently
entered into the light commercial vehicle (LCV) segment, which would further boost its topline.
Maruti is poised to reap the benefits of an increase in discretionary spending from the 7th Pay Commission payout. The commencement
of the first phase of the Gujarat plant with a 2.5 lakh capacity is scheduled in Q4FY2017. The management plans to double its sales
and premium distribution network (“NEXA”) in order to achieve its target of doubling the domestic volumes over the next five years.

EQUITY FUNDAMENTALS SHAREKHAN TOP PICKS

PI INDUSTRIES 863 38.9 29.2 24.5 29.2 30.0 27.6 955 11
Remarks: PI Industries (PII) is one of the leading companies in the Indian agro-chemicals industry with a unique business model. Its key focused
areas are branded products (in-license products) and custom synthesis & manufacturing (CSM) (high-growth segment).
PII makes and market a niche product in agrochemicals, which help it to outpace the industry growth. CSM is contributing ~60% to the
total revenue. This segment is growing at CAGR of ~30% for the last three years and we believe it would be the key growth driver in the
coming years.
A strong outlook for the domestic market owing to a favorable Rabi season is expected to aid topline growth. Also, the new products
launched in the recent past have gained good acceptability in the market and would continue to contribute to the topline growth. The
CSM business is expected to gather traction in the medium term, as concerns in the near term could constrain growth.
On the EBIDTA margin front, PII has guided for 100-150BPS improvement on account of better operational efficiency (reduction in
fixed costs) and a favorable product mix. The company’s order book remains steady at $800 million. PII has lined up a capex of
~Rs200 crore for FY2017 and ~Rs150 crore for FY2018.
RICO AUTO 68 27.2 16.2 13.1 7.2 10.9 12.2 ** -
Remarks: Rico Auto Industries (RAI) is among the leading players in the auto component space in India. It manufactures and supplies world-
class high precision and fully machined components & assemblies (both aluminum and ferrous) to leading OEM’s and Tier 1 customers
across the globe. The company has hived off its loss-making subsidiaries / JV’s in the past.
Going ahead, a strong demand outlook from key clients - Hero MotoCorp and Maruti Suzuki - would fuel growth for the company. RAI
has commissioned a new plant in Chennai targeted at Renault and would gradually tie up with other automobile OEM’s in South India.
Further, it is in the process of setting up a new plant in Rajasthan, which is likely to go on stream by Q3FY2018.
RAI delivered a strong operating performance in Q1FY2017, driven by lower commodity prices, cost control measures and improved
performance from the JV/ subsidiaries. The company’s revenue was up 8% YoY, which was a surprise. Given the strong operating
performance and benefits of operating leverage, the adjusted PAT more than trebled in Q1FY2017. We expect the earnings to post a
CAGR of 45% between FY2016-FY2018.
TVS MOTOR 405 44.0 31.1 22.5 22.6 26.2 29.1 455 12
Remarks: TVS Motor is the fourth largest two-wheeler (2W) manufacturer in the country with a strong presence in the Scooter segment. The
Scooter segment has surpassed the growth of the Motorcycles segment over the past couple of years and currently contributes 30%
to the total 2W volume. On the Motorcycles front, two new launches in January 2016 (Apache RTR and Victor) have generated higher
volumes for the company.
TVSM’s management expects to outpace the 2W industry growth over the next two years. Good demand for recent upgrades - Victor,
Apache and Jupiter (Million R) and Star City - has helped TVSM to post higher volume and gain market share. Further, the company
is expanding its distribution reach, which would enable it to outgrow 2W industry going forward. TVSM has posted a 23% YoY volume
growth in H1FY2017 as against the 2W industry growth of 17% YoY and expects to continue outpacing the industry in H2FY2017.
The collaboration with BMW would enable TVSM to gain foothold in the high-margin Premium Motorcycles segment, where it currently
has only one model “Apache”. TVSM would also incorporate better manufacturing processes and designing cues gained from the
BMW alliance across its existing product range. We believe this will enhance the brand image of TVSM products and help the company
to command higher margins going forward. We expect the OPM to expand by ~170BPS over the next two years.
TVSM is poised to outpace the 2W industry growth, given the new launches and sustained demand for its products. We expect the
company to report ~18% CAGR in topline over FY2016-FY2018. Benefits of operating leverage, better product mix and alliance with
BMW are expected to aid in margin expansion over the next 1-2 years. We expect TVSM to report 36% CAGR growth in net profit over
the next two years.
ZEE ENTERTAINMENT 520 46.4 38.0 27.1 24.4 26.1 29.3 620 19
Remarks: Among the key players in the domestic Cable TV industry, we expect the broadcasters to be the prime beneficiaries of the mandatory
digitisation process initiated by the government. The broadcasters would benefit from higher subscription revenue at the least incremental
capex, as the subscriber declaration standard improves in the Cable TV industry
The ZEEL management maintains that the advertising spend will continue to grow in double digits going ahead and it will be able to
outperform the industry. Growth in the advertising spend will be driven by an improvement in the macro-economic factors and ZEEL’s
leading position in terms of market share to capture the emerging opportunities
ZEEL’s management has confirmed the sale of sports business to Sony Pictures Network India (SPN) in an all cash deal of Rs2,600
crore ($385 million). The deal will improve the balance sheet strength and ZEEL will be in a much more comfortable position to
accelerate inorganic or strategic investments
We view ZEEL’s move to exit from the loss-making sports business as a landmark deal. Also, the management’s intent to remain a
pure play media company gives us confidence on the prudent capital allocation going forward. We continue to see ZEEL as the prime
beneficiary of the macro revival and ongoing digitisation trend.

WEALTH CREATOR PORTFOLIO EQUITY FUNDAMENTALS
WEALTH CREATOR PORTFOLIO OCTOBER 30, 2016

Wealth Creator portfolio
Objective: To build a balanced and actively managed portfolio of Portfolio performance review
quality companies that will help create meaningful wealth for Sharekhan’s wealth creator portfolio continues to outperform
investors in the multi-year rally expected in the Indian equity market. broader indices with 21.6% returns (weighted average basis) as
In addition to some bottom-up picks, the portfolio contains stocks against 6.0-9.3% increase in Sensex/Nifty.
identified based on three key themes: Replace Tata Motors DVR with TVS Motor - We are making
Policy push: Stocks from sectors benefiting from improvement one change in the portfolio by replacing Tata Motors DVR
in the policy environment (due to uncertainty about Tata group, coupled with rising global
volatility, which is negative for Tata Motors given its huge debt
Early gainers: Beneficiaries of an economic recovery (stocks from
and globally dependent business) with TVS Motor (continues
auto, banking & financial services, logistic sectors) the trend of increasing its market share, better outlook for 2-
Evergreen: Steady performers that provide stable and consistent wheeler companies, along with potential to establish strong
returns including urban consumption plays foothold in premium motor-bike segment through its
collaboration with BMW).
COMPARATIVE RETURNS
Particulars Returns (as on October 30, 2016)
Since inception (August 21, 2014)
Wealth Creator folio (weighted average returns) 21.6
- Large-cap (64%) 16.6
- Mid-cap (36%) 30.5
Sensex 6
Nifty 9.3
CNX Mid-cap 42.3
UPDATE ON WEALTH CREATOR PORTFOLIO

Sr No Scrip Weights Reco price (Rs) Price target (Rs) Potential upside
30-Oct-2016 March-2019
Large-caps (64% weightage)
1 Axis Bank 8 488 1210 148.1
2 Larsen & Toubro 8 1477 3800 157.3
3 Maruti Suzuki 8 5899 9910 68
4 Britannia 8 3313 5400 63
5 IndusInd Bank 8 1195 1950 63.2
6 Sun Pharmaceuticals 8 748 1650 120.5
7 Tata Consultancy Services 8 2390 5100 113.4
8 TVS Motor 8 410 725 76.8
Midcaps (36% weightage; 4% each)
9 Capital First 4 705 1485 110.6
10 V-Guard 4 210 365 74
11 Gateway Distriparks 4 248 810 227.1
12 IRB Infra 4 235 650 176.5
13 Network 18 Media 4 42 135 225.3
14 Gabriel India 4 128 225 76
15 Century Plyboards 4 246 440 79.2
16 Triveni Turbine 4 127 265 109.4
17 PI Industries 4 861 1900 120.7
* Please note we see scope for upward revision in target price (three-year) of some of the stocks depending on the extent of economic recovery and will keep updating on the same

EQUITY FUNDAMENTALS STOCK IDEA
NBCC (INDIA)
BUY CMP: RS238 OCTOBER 27, 2016
Large opportunity + asset light model = A solid investment
COMPANY DETAILS KEY POINTS
A unique business model with strong moat and a huge opportunity: NBCC (India), a
Price target: Rs340
Navratna public sector enterprise, is favourably placed with an asset light business
Market cap: Rs14,280 cr
model and quasi monopoly positioning. NBCC is notified as a Public Works
52-week high/low: Rs299/162 Organisation, which gives it a unique eligibility to bag orders on a nominated basis
NSE volume (No of shares): 10.4 lakh from government departments and PSUs, as per the revised General Financial Rules.
This gives NBCC a unique competitive advantage over its peers. Further, the company
BSE code: 534309
takes up Project Management Consultancy orders on a cost-plus basis (low risk) and
NSE code: NBCC
operates on an extremely asset light model (subcontracting civil work). Therefore,
Sharekhan code: NBCC with minimal capital requirement, NBCC's business is scalable and has the potential
Free float (No of shares): 6.0 cr to generate high returns.
Large order book in sight; redevelopment opportunity adding to its muscle: NBCC
SHAREHOLDING PATTERN
has already amassed a huge order book of Rs71,000 crore (12x its FY2016 revenue),
Others which gives it a strong revenue visibility for the next five years. But, the most interesting
DIIs 6%
3% aspect is that the future prospects look much brighter given the opportunities from
FII multiple areas: redevelopment of old government colonies in Delhi, Rajasthan &
1%
Odisha, development of government lands, Smart Cities, 'Housing for All 2022',
'Amrut' etc.
Exceptional financials with highly capital efficient model; Buy: Given the huge
competitive advantage and a unique business model, NBCC generates high return
Promoters
90%
ratios. Also, it has healthy cash flow generation and net cash positive balance sheet.
We expect NBCC's earnings to grow at a CAGR of ~30% during FY2016-FY2019E.
PRICE CHART Therefore, we initiate 'Buy' on NBCC with a 12-month price target (PT) of Rs340,
based on 30 x FY2019E.
290
270 Key risks: Any unfavourable change in policy from nomination to competitive bidding
250 could dent order inflow outlook meaningfully.
230
210 VALUATIONS Rs cr
190 Particulars FY2015 FY2016 FY2017E FY2018E FY2019E
Net sales 4,399.8 5,838.3 7,146.9 10,446.9 13,466.8
170
Operating profit 292.6 357.6 467.2 736.7 982.1
150
Operating profit (%) 6.65 6.12 6.54 7.05 7.29
Jun-16
Feb-16
Oct-15
Oct-16
Net profit (adjusted) 278.3 311.1 363.1 526.9 679.9

Adj EPS (Rs) 4.6 5.2 6.1 8.8 11.3
EPS Growth (%) 8.1 11.8 16.7 45.1 29.0
PRICE PERFORMANCE P/E (x) 51.3 45.9 39.3 27.1 21.0
(%) 1m 3m 6m 12m P/BV (x) 10.7 9.5 8.3 6.9 5.6
Absolute -5.9 -2.5 18.0 25.2 EV/EBITDA (x) 45.2 36.7 27.7 18.0 13.2
Relative -4.4 -2.3 9.1 21.3 RoCE (%) 33.5 34.2 37.4 45.7 48.3
to Sensex RoE (%) 22.5 21.9 22.5 27.8 29.5
Sharekhan Limited, its analyst or dependant(s) of the analyst might be For detailed report, please visit the Research section of our website, sharekhan.com.
holding or having a postition in the companies mentioned in the article.

STOCK UPDATE EQUITY FUNDAMENTALS
BAJAJ AUTO
HOLD CMP: RS2,835 OCTOBER 28, 2016
COMPANY DETAILS
Price target: Rs3,150
Operationally in-line results
KEY POINTS
52-week high/low: Rs3,122/2,173
Q2FY2017 operational results meet estimates: Bajaj Auto reported in-line Q2FY2017
NSE volume (No of shares): 2.5 lakh numbers on the operating front. Topline for the quarter was flat at Rs6,054 crore.
BSE code: 532977 Volumes declined marginally by 2% YoY and realisation per vehicle grew marginally
NSE code: BAJAJ-AUTO 2% YoY, led by higher export realisation and a better product mix. On the margin
Sharekhan code: BAJAJ-AUTO front, the company saw a marginal 30BPS YoY reduction to 21.4% due to higher
commodity costs. Higher other income led to higher net profit of Rs1,123 crore.
Free float (No of shares): 14.7 cr
BAL to outgrow domestic motorcycles industry owing to new launches: BAL has been
gaining market share in the domestic Motorcycles industry on the back of new launches.
Institutions
8% Corporate The company's market share increased to 18.7% in H1FY2017 from 17.7% in FY2016.
Bodies
7% BAL has lined up new products over the next six months to gain further market share.
Foreign
Also, the company would introduce a new brand in the Leisure biking segment (to take
Promoters
18% on Royal Enfield). We expect BAL's domestic motorcycles volume to grow by 17% in
49% FY2017, faster than the industry,
Weakness in exports to persist in near term: BAL's exports segment has been under
Public and
Others pressure, reporting a decline for three consecutive quarters. Weaker crude oil prices
18% and currency devaluation in key markets have crimped BAL's export volumes. BAL
PRICE PERFORMANCE has stuck to its overall exports volume guidance of 1.6 million units for FY2017, implying
(%) 1m 3m 6m 12m an 8% drop in volume.
Absolute -4.0 3.4 8.6 9.5 Maintain estimates and Hold rating: BAL is likely to report a strong double-digit growth
in the domestic Motorcycles industry owing to demand recovery and market share
Relative to Sensex -3.0 3.5 0.3 5.4
gains through the new launches. Overall, we expect BAL to report a 5% volume growth
in FY2017 due to weaker exports volumes. We maintain our 'Hold' rating with a price
Sharekhan Limited, its analyst or dependant(s) of the analyst might be
target (PT) of Rs3,150.
For detailed report, please visit the Research section of our website, sharekhan.com.
BHARAT ELECTRONICS
BUY CMP: RS1,302 OCTOBER 28, 2016
COMPANY DETAILS
Impressive performance,
Market cap: Rs31,248 cr maintain Buy with PT of Rs1,450
KEY POINTS
NSE volume (No of shares): 2.8 lakh
Strong quarter, margin surprises positively: After a lackluster performance in Q1FY2017,
BSE code: 500049
owing to seasonal weakness and delay in order execution, Bharat Electronics (BEL) has
NSE code: BEL delivered a robust performance in Q2FY2017. Revenue grew by 16% YoY to Rs1,794.6
Sharekhan code: BEL crore, led by improved order execution. The company surprised positively on the margins
Free float (No of shares): 6.0 cr front, with 720BPS YoY improvement in gross margins to 52%, led by lower input cost.
SHAREHOLDING PATTERN Further, better operating leverage and control on employee cost helped BEL to expand
Institutions
OPM by 740BPS YoY to 19.3%. Net profit grew by 68.4% YoY to Rs34.6 crore.
15% Order inflows remain strong: At the end of September 30, 2016, the total order book
Non-
promoter stood at Rs34,675 crore, up by 60% YoY. The company added total orders worth Rs4,127
Promoters corporate crore during Q2FY2017, up 108% YoY. We believe that order inflow will further
75% 2%
Foreign
accelerate in FY2017/FY18E on account of the government's 'Make in India' initiative
4% and greater thrust from the government to modernise the country's defence equipment.
Public and
Others Oder execution remains key: The management had earlier given a guidance of 10-12%
4% revenue growth in FY2017. In H1FY2017, revenue grew by a modest 2% YoY; the first
PRICE PERFORMANCE half usually accounts for ~33% of BEL's total revenue. Thus, execution in H2FY2017
(%) 1m 3m 6m 12m
will be crucial to meet the growth guidance.
Absolute -1.6 4.5 5.1 5.0 Maintain Buy with PT of Rs1,450: We have marginally tweaked our earnings estimates
for FY2017/FY2018E to factor in the better-than-expected margin performance in
Relative to Sensex -0.6 4.6 -2.9 1.0
Q2FY2017. BEL remains our preferred pick for the defense play on account of its strong
manufacturing and R&D base, good cost control and growing indigenisation. We reiterate
our 'Buy recommendation with an unchanged price target (PT) of Rs1,450.

EQUITY FUNDAMENTALS STOCK UPDATE
BHARTI AIRTEL
HOLD CMP: RS318 OCTOBER 26, 2016
COMPANY DETAILS
Solid performance, competitive intensity flaring up;
Price target:
Market cap:
Rs364
Rs127,137 cr
maintain Hold
52-week high/low: Rs384/282 KEY POINTS
NSE volume (No of shares): 33.9 lakh Strong operating performance in a seasonally weak quarter: Bharti Airtel has delivered
BSE code: 532454 strong operating performance in Q2FY2017, with OPM expanding by 90BPS QoQ to
NSE code: BHARTI 38.3% (ahead of our expectation). The higher-than-anticipated OPM was aided by
better cost measures across segments. However, the company's revenue declined by
Sharekhan code: BHARTI
3.5% QoQ (up 3.4% YoY) to Rs246.7 billion. Adjusted net profit (ex-exceptional
Free float (No of shares): 131.4 cr items in Q2FY2016) remained flat QoQ but grew by 37.3% YoY to Rs14.6 billion.
Competitive intensity to constrain growth in near term: (1) Owing to the launch of
Institutions Reliane Jio and its free 4G data offers, the Bharti management believes that the
16% competitive intensity will remain high and expects data growth to taper off in the near
term. However, the management stated that there will be more clarity once Jio's free
Promoters Foreign offer period ends in December 2016 and the actual pricing strategy is revealed (2) The
67% 16% company's capex cycle is yet to peak out, but the management has guided for more
Public and spends on the launch of 3G in Kerala and pan-India penetration of 4G services (3)
Others Bharti is planning to launch a bundle service in 4G for deeper penetration and better
1% ARPU (4) On Bharti Infratel stake sale, the management has not decided on the timeline
PRICE PERFORMANCE and is looking at close the deal as soon as possible.
(%) 1m 3m 6m 12m Valuation - Maintain Hold with PT of Rs364: Bharti has delivered a strong performance
Absolute -4.6 -15.8 -12.8 -12.8 across most of the parameters in a seasonally weak quarter. We have broadly maintained
Relative to Sensex -2.8 -16.1 -21.1 -16.0
our estimates for FY2017/FY2018E. At the current level, though the stock is available
at attractive valuation, the heightened competitive intensity will restrict near-term
earnings performance. We maintain our 'Hold' on Bharti with an unchanged PT of
Rs364.
GLENMARK PHARMACEUTICALS
COMPANY DETAILS
Outlook upbeat;
Market cap: Rs26,386 cr maintain Buy with revised PT of Rs1,150
52-week high/low: Rs1002/671
NSE volume (No of shares): 5.72 lakh KEY POINTS
BSE code: 532296 Q2FY2017 misses expectation due to one-off costs: Glenmark Pharmaceuticals
NSE code: GLENMARK (Glenmark Pharma) reported a 16.5% YoY growth in core revenue, while operating
Sharekhan code: GLENMARK profit grew by 12% YoY to Rs449 crore. Net profit grew by 13.1% YoY to Rs224
crore, impacted by forex loss of Rs9 crore and higher staff & interest costs. The strong
revenue performance was driven by growth across key geographies: the US market
SHAREHOLDING PATTERN grew by 29% YoY; Rest of the world (RoW) growth stood at 20.4%; API was up by
Public and Institutions 34% YoY and India business grew by 11% YoY. However, the Latin America business
others 6%
11% contracted by 19% YoY, mainly due to ongoing currency issues in Venezuela.
Strong outlook maintained: The management has indicated that for future growth, the
key focus areas will be Dermatology, Contraceptives and Complex Injectables. Growth
Foreign would be mainly propelled by the US, EU and India markets, which are witnessing
36%
exponential growth on account of new product launches. The company is gearing up
Promoters
47% for the launch of gZetia, where it has 180-day exclusivity in the US (launch scheduled
in H2FY2017). Also, there are a few more significant opportunities, which are due in
PRICE PERFORMANCE FY2018.
(%) 1m 3m 6m 12m Maintain Buy with revised PT of Rs1,150: We have revised FY2018 earnings by 5.5%,
Absolute -4.0 6.4 9.4 -10.0 owing to the good product approval rate, new product launches in FY2017 (including
Relative to Sensex -3.0 6.5 1.1 -13.4 180-day exclusivity of gZetia), sustained growth guidance and strong long-term outlook.
We continue to maintain 'Buy' with the revised price target (PT) of Rs1,150 (20x
Sharekhan Limited, its analyst or dependant(s) of the analyst might be FY2018E earnings).

GRASIM INDUSTRIES
COMPANY DETAILS
To maintain growth momentum;
Market cap: Rs47,824 cr re-iterate Buy with revised PT of Rs1,105
52-week high/low: Rs1,070/648
KEY POINTS
UltraTech's PT revision drives Grasim's valuation upside: In our report dated September
BSE code: 500300
28, 2016, we had revised our price target (PT) for UltraTech Cement to Rs4,150 by
NSE code: GRASIM rolling forward earnings multiple. Consequently, we pencil our revised UltraTech
Sharekhan code: GRASIM valuation for Grasim Industries, leading to a revision in our PT for Grasim to Rs1,105,
Free float (No of shares): 32.1 cr with an unchanged holding company discount. As a result, we maintain our 'Buy'
rating.
VSF, Chemical to aid earnings growth for Q2FY2017: Grasim's VSF division is expected
Public &
others Promoter to sustain its profitability contribution during Q2FY2017, as VSF prices have risen by
28% 31% over 40% from early 2016. Further, the continuous expansion of Caustic Soda division,
along with stable pricing, is likely to aid the Chemical division's profitability. In
aggregate, we expect Grasim to post 20% YoY growth in Q2FY2017 earnings to Rs584
crore on the back of healthy revenue growth (12% YoY) and expansion in Operating
MF & FI Profit Margin (129BPS YoY).
FII
15%
26% Best proxy play on growing manufacturing and services verticals: The current
restructuring exercise of aligning high-growth businesses in Manufacturing and Services
PRICE PERFORMANCE (Financial Services & Telecom post approval of proposed group restructuring scheme)
(%) 1m 3m 6m 12m provides a unique opportunity to investors to hold a well-diversified portfolio, which is
Absolute 7.8 11.7 29.6 40.7 expected to maintain strong growth momentum going forward across verticals.
Relative to Sensex 11.1 7.6 13.7 32.8 Outlook: Grasim is well placed to reap benefits going forward, considering the revival
in its core VSF division, strong demand & better realisations in Chemicals and sturdy
growth outlook for the Cement business. We maintain our 'Buy' rating with a revised
holding or having a postition in the companies mentioned in the article. PT of Rs1,105.
HCL TECHNOLOGIES
COMPANY DETAILS
In-line performance, maintain Buy
Price target: Rs965
Market cap: Rs117,254 cr KEY POINTS
52-week high/low: Rs889/707 Along expected lines: HCL Tech delivered an in-line revenue performance for
Q2FY2017, with a 2.8% QoQ growth on CC basis, led by 4.4% QoQ CC growth in
IMS services. Operating Profit Margin (OPM) declined by 44BPS QoQ to 21.8%, in
BSE code: 532281
line with our expectation. Although Q2FY2017 forex gain was higher-than-expectation,
NSE code: HCLTECH the same decreased by 53% QoQ to Rs31 crore, resulting in 1.6% QoQ de-growth in
Sharekhan code: HCLTECH net profit.
Free float (No of shares): 55.9 cr Maintains FY2017 guidance; Butler America acquisition to strengthen presence in ERD
SHAREHOLDING PATTERN space: (1) HCL Tech has kept its FY2017 revenue growth and margin guidance
Non- unchanged (CC revenue growth guidance of 12.0-14.0% YoY and EBIT margin range
Institutions promoter
7% corporate
of 19.5-20%). The revenue guidance does not include potential revenue from Geometric,
4% IBM IP partnership and Butler America Aerospace acquisition (2) HCL Tech's
Foreign
management plans to acquire Butler America Aerospace in the ERD segment for $85
26% million in cash and expects this transaction to be EPS accretive. In 2015, Butler America
Promoters
60%
Aerospace had revenue of $85.4 million and EBIT margin of 12.2%. The company is
Public and looking for more opportunity in ERD space (3) It is not experiencing any material
Others
3% negative change in environment owing to Brexit (4) C Vijayakumar, Chief Operating
PRICE PERFORMANCE Officer of the company, has been elevated to the position of the President and Chief
Executive Officer (CEO) with effect from October 20, 2016.
(%) 1m 3m 6m 12m
Maintain Buy with a PT of Rs965: HCL Tech's well-rounded September quarter
Absolute 5.3 14.6 -1.1 -0.4
performance, unchanged guidance and acquisition in the ERD space looks directionally
Relative to Sensex 7.7 13.5 -9.7 -3.9 positive. The stock is trading at inexpensive valuation of 14.4x and 12.3x its FY2017E
and FY2018E earnings, respectively. We have maintained our Buy rating with a price
Sharekhan Limited, its analyst or dependant(s) of the analyst might be target (PT) of Rs965.

HERO MOTOCORP
COMPANY DETAILS
Demand outlook strong;
Price target:
Market cap:
Rs4,100
Rs66,193 cr
maintain Buy with PT of Rs4,100
52-week high/low: Rs3,740/2,375 KEY POINTS
NSE volume (No of shares): 3.9 lakh Q2FY2017 results ahead of estimates: Hero MotoCorp's (HMCL) topline grew by
BSE code: 500182 15% YoY to Rs7,796 crore, driven by a healthy 16% YoY growth in volume. Realisation
NSE code: HEROMOTOCO per vehicle declined by 1% YoY. Operating Profit Margin (OPM) improved by 150BPS
YoY to 17.6%. Driven by the robust operating performance and higher other income,
Sharekhan code: HEROMOTOCO the net profit grew by 28% YoY.
Demand outlook strong; 2W industry to post 15% growth in FY2017: Given the
SHAREHOLDING PATTERN improved rural sentiments, the Two Wheeler (2W) industry has gained momentum,
Institutions
Foreign
posting 17% YoY growth in H1FY2017. Increase in the government employees' salaries
14%
42% wef from August 2016 and ongoing festival season upswing are likely to maintain
demand momentum in H2FY2017. We expect the 2W industry to maintain double-
digit growth in H2FY2017, taking FY2017 growth to 15%. Being the market leader
Promoters
and deriving about half of the volumes from rural areas, HMCL is likely to benefit.
35%
Cost control measures, improving demand to offset margin pressure from rising
Public and
Others
commodity prices: HMCL is likely to incur savings under the cost control programme
9% "Leap". HMCL is targeting savings of Rs275 crore from the Leap programme in
PRICE PERFORMANCE FY2017. We believe that the cost savings, coupled with receding pricing pressures
would help the company to offset rising commodity prices. We expect HMCL's to
(%) 1m 3m 6m 12m report 15.9% OPM in FY2018 as against 15.3% reported in FY2016.
Absolute -1.4 7.5 17.7 33.5 Maintain estimates and Buy with unchanged PT of Rs4,100: HMCL is likely to clock
Relative to Sensex 0.2 7.7 8.8 29.3 13% topline and 17% earnings CAGR over FY2016-FY2018, led by strong demand
momentum and recovery in the rural sentiments. The company is among the best plays
Sharekhan Limited, its analyst or dependant(s) of the analyst might be on the rural demand recovery theme. We maintain Buy with a price target (PT) of
holding or having a postition in the companies mentioned in the article. Rs4,100.
HINDUSTAN UNILEVER
COMPANY DETAILS
Price target: Rs950
Disappointing performance;
Market cap: Rs182,417 cr PT revised downward to Rs950
KEY POINTS
BSE code: 500696
In Q2FY2017, HUL's revenue grew by a meager 1.5% YoY to Rs8,480.3 crore, which
was lower than our and street expectation of ~4% YoY growth. The deceleration in
NSE code: HINDUNILVR revenue growth was mainly on account of lower volume, which declined by 1% YoY.
Sharekhan code: HINDUNILVR Gross margins stood flat at 45.8% while the OPM improved by 55BPS to 16.6% (ad-
Free float (No of shares): 71.0 cr spends as percentage of sales fell by ~100BPS to 10%). Operating profit grew by 5.1%
SHAREHOLDING PATTERN YoY to Rs1,404.6 crore and adjusting for the exceptional item, the PAT grew by 8.9%
Others
to Rs1,082.5 crore, driven by 30% YoY growth in other income.
14% The market will take some time to absorb the price increase in the Personal Wash
FIIs category, while the Personal Care category would also take more time to see a material
14% recovery. Baring palm oil, the other key input prices have remained quite stable and
hence the Home Care segment is expected to support the overall revenue growth going
forward. Therefore, we expect volume growth to be in low single-digit in the coming
Domestic Promoters
Institutions 67% quarters. However, any substantial improvement in rural demand in the near term
5% would help HUL to see better volume going ahead (likely to be from Q4FY2017). The
PRICE PERFORMANCE company is confident of maintaining OPM by stringently managing the ad-spend and
other operating costs.
(%) 1m 3m 6m 12m
We have revised downwards our earnings estimates for FY2017 and FY2018 by 4%
Absolute -8.6 -8.2 -4.8 5.2
and 5%, respectively to factor in lower-than-expected volume growth. The stock has
Relative to Sensex -6.8 -8.5 -13.9 1.3 corrected by ~8% in the last one month and is trading at 33.7x its FY2018E earnings.
We maintain our 'Buy' recommendation with a revised price target (PT) of Rs950
Sharekhan Limited, its analyst or dependant(s) of the analyst might be (revised downwards in line with decrease in earnings estimates).

INFO EDGE (INDIA)

COMPANY DETAILS
Impressive performance;
Market cap: Rs10,883 cr maintain Buy with a revised PT of Rs1,040
52-week high/low: Rs1,012/690
KEY POINTS
Strong quarterly performance: For Q2FY2017, Info Edge (India) has delivered forecast-
BSE code: 532777
beating revenue growth performance (up 20.7% YoY), driven by 21.2% YoY (13%
NSE code: NAUKRI YoY per IGAAP) growth in the recruitment business. At 33.1%, OPM expanded by
Sharekhan code: NAUKRI 890BPS QoQ, well ahead of our expectations of 24.4%, led by lower ad-spend. Adjusted
Free float (No of shares): 6.9 cr net profit (ex-tax reversal of Rs40.3 crore in Q2FY2017) increased by 29% YoY to
Rs39.7 crore.
Corporate Broad-based growth momentum persists: (1) The management continues to witness
Bodies Foreign softness in the hiring markets. As per IGAAP accounting standards, the recruitment
0.3% 34.2%
business revenue grew by 13% YoY, which is lower than the traditional high-teen
Institutions growth rate. Lower growth in Nuakri's revenue was due to change in sales incentive
12.1% policies in the middle of Q1FY2017. Though the management stated this strategy will
Public and
be beneficial in the long term, the impact could be negative in the next two quarters (2)
Others Demand for new homes continued to be sluggish in most markets (3) Jeevansathi
Promoters
10.5% reported marginal loss even as its revenue grew by ~30% YoY 4) The Zomato business
42.9%
is on the right track and the management hopes that it will achieve break-even in the
PRICE PERFORMANCE next 3-4 months.
(%) 1m 3m 6m 12m Maintain Buy with revised PT of Rs1,040: We have tweaked our earnings estimates
Absolute 4.7 8.6 13.7 17.8 for FY2017/FY2018 on the back of strong operating performance in Q2FY2017 and
continuation of broad-based growth across segments. We also hope that improvement
Relative to Sensex 5.7 8.7 5.0 13.3
in overall financials of Zomato will help the business in achieving breakeven in FY2017.
We have maintained our Buy rating with a revised SOTP-based price target (PT) of
Sharekhan Limited, its analyst or dependant(s) of the analyst might be Rs1,040.
INFOSYS
COMPANY DETAILS
Good quarter, but big cut in guidance disappoints
Market cap: Rs235,988 cr KEY POINTS
52-week high/low: Rs1,278/996 Beat on revenue front; higher-than-expected cut in guidance a dampener: After a
disappointing Q1FY2017, Infosys has managed to deliver a better-than-expected
performance in Q2FY2017. For the quarter, revenue grew by 3.9% QoQ on CC basis,
BSE code: 500209
driven by strong 4.0% QoQ volume growth. OPM expanded by 84BPS QoQ to 27.3%,
NSE code: INFY led by improved utilisation, coupled with absence of wage hikes and visas costs. Net
Sharekhan code: INFY profit was up by 4.9% QoQ at Rs3,606 crore. On the flip side, Infosys has lowered its
Free float (No of shares): 200.4 cr FY2017 revenue growth guidance to 8-9% on CC basis from the earlier guidance of
SHAREHOLDING PATTERN 10.5-12%, owing to weaker H1FY2017 exit, cancellation of RBS deal, and softer
Public and
demand environment.
Others
10
Promoters
13%
Acknowledges structural concerns for IT sector; new initiatives encouraging but still
small: (1) The management has acknowledged structural concerns for the IT sector (2)
Institutions
The management sees sluggishness in a couple of Financial Services accounts due to
17% softness in tech spends (3) Though the management has arrested the de-growth in the
Corporate US consulting business, a complete transformation in Europe will take 2-4 quarters (4)
Foreign Bodies
Various focused initiatives such as Skava, Edge, Finnacle, Mana, Zero-distance strategy
59% 1 etc are witnessing healthy client adoptions (6) Revised FY2017 EBIT margin band to
24-25% from the earlier targeted band of 24-26%
PRICE PERFORMANCE
(%) 1m 3m 6m 12m Maintain Buy though outperformance may be limited owing to macro overhang: We
have tweaked our earnings estimates for FY2017/FY2018E on account of a cut in
Absolute -0.2 -11.8 -9.2 -2.2 FY2017 revenue guidance and post Q2FY2017 commentary. Though we maintain
Relative to Sensex 2.4 -11.6 -16.6 -6.5 our cautious stance on the IT sector, owing to industry transition and macro overhang,
given the modest valuation and room for improvement, we maintain our 'Buy' rating
Sharekhan Limited, its analyst or dependant(s) of the analyst might be on Infosys with a price target (PT) of Rs1,150.

LIC HOUSING FINANCE

COMPANY DETAILS
Well-managed franchise quality evident in
Price target:
Market cap:
Rs700
Rs30,262 cr
consistent performance
LIC Housing Finance (LICHF) posted Q2FY2017 results that were in line with
BSE code: 500253 expectations, with Profit After Tax (PAT) growing by 20.2% YoY to Rs494.70 crore,
NSE code: LICHSGFIN driven by expansion in Net Interest Income (NII) and Net Interest Margin (NIM).
Sharekhan code: LICHSGFIN LICHF's NII for Q2FY2017 grew by 20.7% YoY to Rs865.70 crore, in line with
expectation, on the back of healthy growth in advances.
SHAREHOLDING PATTERN LICHF was successful in reducing its high-cost bank borrowings to 9.4% of total
borrowings in Q2FY2017 from 10.8% in Q1FY2016. Due to the shift, the Cost of
Funds (CoF) reduced by 14BPS QoQ to 8.94% whereas the Yield on Advances (YOA)
contracted by 5BPS QoQ. We expect COF rationalisation to continue in the next 2-3
Promoter quarters. The shift will help the company to manage YOA pressure (5-10BPS), as its
40.3% fixed rate borrowers move to cheaper floating rate loans.
Public LICHF's asset quality has been well maintained, with Gross Non-Performing Assets
59.7% (GNPAs) at sub-60BPS (flat QoQ) and Net Non-Performing Assets (NNPAs) at sub-
30BPS (flat QoQ). The NPA has been largely in this range for the last five years. During
Q2FY2017, GNPAs stood at 0.57% of loan book while NNPAs stood at 0.28% of
PRICE PERFORMANCE loan book, which is in sharp contrast to the NPA pressure seen across the Financial
(%) 1m 3m 6m 12m sector.
Absolute 7.2 22.5 28.2 30.2 At 2.4X FY2018E BV, LICHF is attractively valued, in view of its consistently strong
asset quality and pick-up in the core loan book (with calibrated growth in high-yielding
Relative to Sensex 9.7 21.4 17.1 25.6
LAP segment). The company's consistent performance, strong positioning and a wide
reach provide further comfort on the business franchise. We maintain 'Buy' with a
revised price target (PT) of Rs700.
MARUTI SUZUKI INDIA

COMPANY DETAILS
Well poised to outpace industry growth;
Market cap: Rs177,011 cr maintain Buy with revised PT of Rs6,430
KEY POINTS
BSE code: 532500
Results beat estimates on stellar operating performance, higher other income: Maruti
Suzuki India (Maruti) reported a strong operating performance for Q2FY2017. Revenue
NSE code: MARUTI grew by 29% YoY, driven by 18% YoY volume growth. Realisation per vehicle grew
Sharekhan code: MARUTI by 9% YoY. Operating Profit Margin (OPM) expanded by 80BPS YoY to 17% and
Free float (No of shares): 13.2 cr surpassed our estimate of 14.5%. Also, other income was up by 72% YoY.
SHAREHOLDING PATTERN Consequently, PAT grew by 60% YoY to Rs2,398 crore.
Institutions PV industry to grow in double digits; Maruti to outpace industry: The Passenger Vehicle
12%
(PV) industry gained momentum in Q2FY2017, recording an impressive growth of
Promoters 18% YoY. The PV industry is likely to clock 10-11% volume growth in FY2017.
56%
Further, Maruti is likely to outpace the PV industry growth in FY2017, underpinned
Foreign by strong demand for the recent launches. In addition, planned launches in the new
25%
segment (Ignis in compact utility vehicle space), upgrades of existing models and the
Public and
Others
commissioning of the Gujarat plant in Q4FY2017 will aid volume expansion. We
7% expect Maruti's volume to grow at 14% CAGR over FY2016-FY2018, which is faster
PRICE PERFORMANCE than the PV industry.
(%) 1m 3m 6m 12m Raise estimates; maintain Buy: Maruti is likely to outpace the PV industry growth rate
in FY2017-FY2018 on the back of sustained strong demand for the recent launches
Absolute 5.4 32.2 52.6 34.8
and a robust product pipeline. The commissioning of the first phase of Gujarat plant
Relative to Sensex 7.0 32.5 41.1 30.5 will further aid volume expansion. Also, OPM is estimated to improve by 80BPS in
FY2017 on the back of operating leverage and lower discounts due to strong demand.
Sharekhan Limited, its analyst or dependant(s) of the analyst might be We maintain 'Buy' rating with a revised price target (PT) of Rs6,430.

PI INDUSTRIES
COMPANY DETAILS
Price target: Rs955
Impressive performance across parameters;
Market cap: Rs11,590 cr Maintain Buy with revised PT of Rs955
BSE code: 523642 Stellar show in Q2FY2017: PI Industries (PII) recorded an exceptional performance
for Q2FY2017, with a topline growth of 22% YoY at Rs544 crore, primarily driven
NSE code: PIIND
by improved demand from exports business. Operating Profit Margin (OPM) expanded
Sharekhan code: PIIND by 480BPS YoY to 23.5%. A favorable product mix resulted in higher-than-expected
Free float (No of shares): 6.6 cr savings in raw material cost, while better operating leverage led to margin beat. Further,
SHAREHOLDING PATTERN a higher depreciation charge, coupled with a lower tax rate resulted in the PAT improving
Institutions
by 78% YoY to Rs101 crore.
13%
Domestic growth to remain intact: The global Agrochemicals market is confronting a
Corporate
Bodies
challenging situation, with the channel inventories at peak levels and commodity prices
Promoters
1% under pressure. This is likely to have an impact on demand for the exports business
52% Foreign (CSM business) in the near term. In contrast, the outlook for the domestic market
23%
remains strong, as the upcoming Rabi season is expected to drive demand for
Public and
agrochemicals. PII is gradually ramping up production at the recently commissioned
Others Jambusar facility. This is likely to result in lower tax rate of 18% for FY2017, while
11%
the tax rate for FY2018 is expected to increase to 22%.
PRICE PERFORMANCE
Valuation; Maintain 'Buy' with a revised PT of Rs955: A strong outlook for the domestic
(%) 1m 3m 6m 12m market (owing to a favorable Rabi season and good acceptability of the recently launched
Absolute 2.7 18.7 34.2 27.6 products) would continue to contribute to topline growth. The CSM business is expected
Relative to Sensex 4.3 19.0 24.1 23.6 to gather traction in the medium term. Driven by better operating efficiencies and a
richer product mix, OPM is expected to improve by 100-150BPS YoY. We retain our
'Buy' rating with a revised price target (PT) of Rs955.
RELIANCE INDUSTRIES
COMPANY DETAILS
Strong petchem margin supports earnings growth;
Market cap: Rs352,891 cr PT raised to Rs1,300
BSE code: 500325 Earnings ahead of estimates; petchem margin surprises positively: RIL reported healthy
Q2FY2017 earnings growth with standalone PAT growing by 18% YoY to Rs7,704
NSE code: RELIANCE
crore. The Petrochemicals business surprised positively with PBIT margin of 16.3%
Sharekhan code: RELIANCE and led to a 38% YoY growth in PBIT. The Refining business maintained a healthy
Free float (No of shares): 173.5 cr trend in profitability, with a GRM of $10.1/barrel (premium of $5/barrel over
SHAREHOLDING PATTERN benchmark Singapore GRM) while PBIT grew by 9.3% YoY on a high base. However,
the consolidated profitability of E&P business continued to be disappointing, with
lower realisation and subdued volume. The Retail business recorded strong growth of
42% YoY at PBIT level, supported by Petroleum Retailing segment. Consequently,
RIL's consolidated adjusted PAT grew by 43% YoY to Rs7,206 crore.
Valuation - reiterate Buy with revised PT of Rs1,300: Refining business performance
was in line with a softer GRM, but is expected to improve in Q3FY2017, considering
the favourable seasonality. Further, the Petchem business surprised positively in
Q2FY2017 and therefore, we have fine-tuned our earnings estimates for FY2017 and
FY2018. In FY2018, the benefit of large capex in the downstream business is likely to
PRICE PERFORMANCE yield positive results and will continue to drive earnings, whereas the Oil & Gas business
(%) 1m 3m 6m 12m will remain subdued. Post trial run, conversion of billable customers in Reliance Jio
would be the critical factor to watch out for. Currently, RIL's stock price seems to be
Absolute 0.5 6.8 2.1 14.0
factoring in concern related to the huge capital allocation in Telecom (the stock is
Relative to Sensex 2.8 5.8 -6.7 9.9 trading at 9.5x FY2018 earnings). But, any positive surprise (in terms of market response
or visibility) could act as a positive trigger. Hence, we retain 'Buy' with a revised price
Sharekhan Limited, its analyst or dependant(s) of the analyst might be target (PT) of Rs1,300.

SUPREME INDUSTRIES
COMPANY DETAILS
Outlook improves;
Price target:
Market cap:
Rs1,067
Rs11,469 cr
upgrade to Buy with revised PT of Rs1,067
52-week high/low: Rs1,023/589 KEY POINTS
NSE volume (No of shares): 86,114
Impressive topline performance: Supreme Industries (SIL) reported strong revenue
BSE code: 509930 growth of 14.2% YoY in Q2FY2017. The strong topline growth was led by 17% YoY
NSE code: SUPREMEIND overall volume growth (realisation down 2% YoY). OPM improved by 340BPS YoY
Sharekhan code: SUPREMEIND to 15.1%, driven by higher realisation in value-added products and savings in power
cost. Interest expenses fell by 13% YoY, resulting in the core net income growing by
80% YoY to Rs57.6 crore.
Volume guidance maintained, margin outlook brighter: SIL's Plastic Piping segment
saw a 20% YoY volume growth in Q2FY2017, while the Packaging segment volume
grew by 4% YoY. Consumer segment volume grew by 22% YoY and Industrial Products
volume rose by 7% YoY. The management has maintained volume growth guidance of
12-15% for FY2017 despite slower H1FY2017 growth of 8% YoY. It sounded confident
of delivering volume growth target, led by strong growth in H2FY2017. The
management has raised its margin guidance for FY2017 to at least 15% from 14-
14.5% earlier, owing to better margin performance in Q2FY2017.
Outlook improves; upgrade to Buy with revised PT of Rs1,067: We are broadly
PRICE PERFORMANCE maintaining our earnings estimates and are expecting adjusted CAGR of 36.6% in
(%) 1m 3m 6m 12m
earnings over FY2016-FY2018E. We expect the success of newly launched high-value
products and stable raw material prices to facilitate margin improvement. Therefore,
Absolute 5.8 -2.5 17.1 47.9 we are upgrading our target multiple for FY2018E to 25x from 24x, valuing its core
Relative to Sensex 7.4 -2.2 8.2 43.2 business at Rs1,030 per share. We are now also valuing its 30% stake in Supreme
Petrochem (at Rs37 per share) for SOTP-based PT, as it has started showing consistency
Sharekhan Limited, its analyst or dependant(s) of the analyst might be in earnings. We are thus revising our PT upwards to Rs1,067 and upgrade the stock to
holding or having a postition in the companies mentioned in the article. 'Buy' from 'Hold' earlier.
UPL
COMPANY DETAILS
Growth levers intact;
Price target:
Market cap:
Rs800
Rs37,692 cr
Maintain Buy with revised PT of Rs800
Decent performance in Q2FY2017: UPL posted decent set of numbers for Q2FY2017,
BSE code: 512070 with the topline coming in at Rs3,657 crore (up 17% YoY). Barring Europe, all the
NSE code: UPL geographies registered positive revenue growth. Europe witnessed 5% YoY decline in
Sharekhan code: UPL revenue. Indian and Latin American markets registered an impressive double-digit
Free float (No of shares): 36.6 cr revenue growth of 23% YoY and 34% YoY, respectively. Overall volumes were up by
23% YoY while prices declined by 5% YoY. Operating performance improved on
account of lower input costs and better operational efficiency. The reported Profit
After Tax (PAT) improved by 19% YoY to Rs166.2 crore. Adjusting for the
extraordinary items, the PAT stood at Rs313 crore.
Latin America to drive growth going ahead: The Latin American market is witnessing
improved traction in agricultural activities, with a favorable outlook for the upcoming
sowing season in the region. UPL launched two new products in Q2FY2017 in the
high-growth Brazil market. This is expected to drive growth going ahead. Also, of late,
the company has been gaining market share in Brazil and expects to outgrow industry
in the near term, translating into market share gains.
PRICE PERFORMANCE
Strong growth outlook; Maintain Buy with revised PT of Rs800: A strong growth
(%) 1m 3m 6m 12m
momentum in the Latin American markets, with the company aiming to outpace industry
Absolute 3.3 16.0 38.4 51.9 growth and gain market share, and a favorable outlook for the Indian business will
Relative to Sensex 4.4 16.2 27.9 46.2 help UPL to boost its overall performance and comfortably achieve its revenue growth
target of 15% for FY2017. Benefits of operating leverage and a better product mix
Sharekhan Limited, its analyst or dependant(s) of the analyst might be would aid margin expansion. We maintain our 'Buy' rating with a revised price target
holding or having a postition in the companies mentioned in the article. (PT) of Rs800.

V-GUARD INDUSTRIES
COMPANY DETAILS
Price target: Rs235
Beats estimate with strong margin surprise;
Market cap: Rs5,838 cr PT revised to Rs235
BSE code: 532953 Strong earnings growth; tops estimates with hefty margin expansion: V-Guard Industry's
Q2FY2017 earnings grew by 70% YoY to Rs39 crore (ahead of our estimate) due to
NSE code: VGUARD
strong operational performance. The company surprised positively with an OPM
Sharekhan code: VGUARD expansion of 236BPS YoY to 10.8%, supported by a 400BPS pop in gross margins.
Free float (No of shares): 10.4 cr Gross margins expanded, owing to softer raw material prices and ongoing cost
SHAREHOLDING PATTERN rationalisation initiatives, especially in supply chain. Revenue grew by 14% YoY to
Rs495 crore, which was in line with expectation.
Growth momentum on track; margin guidance upgraded further: V-Guard's overall
revenue grew by 20% YoY, except Cables, due to robust demand in southern markets
and penetration in the newer markets. Further, the management expects a better festival
season. Overall, the company has retained its FY2017 revenue growth guidance
following the launch of new products in southern markets, but has revised upwards
FY2017 EBITDA margin guidance to 11% from 10% earlier.
Outlook brightens; raise earnings estimates, PT lifted to Rs235; reiterate Buy: We
believe that V-Guard is having a fairly healthy revenue visibility in view of better
PRICE PERFORMANCE
southwest monsoon (after two years of drought) and implementation of the 7th Central
(%) 1m 3m 6m 12m Pay Commission recommendations. However, as guided by the management, we have
Absolute -1.5 31.1 98.2 102.5 built in better OPM in our model and have revised upwards our earnings estimates.
Relative to Sensex -0.1 29.0 80.8 93.9
Further, we have rolled over our valuation multiple to FY2019 earnings and have
arrived at a revised price target (PT) of Rs235 (35x FY2019). We reiterate 'Buy' on V-
Guard, given the strong earnings visibility, superior return ratios (RoE ~25%) and
robust cash flows.
WIPRO
HOLD CMP: RS499 OCTOBER 21, 2016
COMPANY DETAILS
Uninspiring outlook,
Price target:
Market cap:
Rs550
Rs121,345 cr
maintain Hold with revised PT of Rs550
NSE volume (No of shares): 15.9 lakh Revenue in line, margin surprises positively: Wipro's IT Services revenue for Q2FY2017
BSE code: 507685 grew by 0.9% QoQ to $1,948.4 million on CC basis, which was broadly in line with
NSE code: WIPRO
expectation. IT Services EBIT margin remained stable QoQ at 17.8% despite two months
of effective wage hike. Net income grew by 0.7% QoQ to Rs2,073.9 crore.
Sharekhan code: WIPRO
Acquisition of Appirio is prudent digital bet: Wipro has acquired cloud app
Free float (No of shares): 65.0 cr implementation company Appirio in an all-cash deal of $500 million. Appirio caters to
SHAREHOLDING PATTERN Topcoder community with over one million members. For CY2015, the company had
~1,250 headcount and revenue of ~$196 million, while EBIT margin stood at ~12%.
Although the acquisition could be earnings dilutive in the near term, it is very strategic
for Wipro from a long-term perspective.
Tepid guidance, uninspiring commentary: For Q3FY2017, Wipro has guided for weak
0-2% QoQ growth in revenue, including the Appirio acquisition. This indicates that
organic revenue growth will be negative in Q3FY2017. The weak Q3FY2017 revenue
guidance clearly indicates a challenging growth environment for Wipro. Margin for
Q3FY2017 is expected to remain under pressure, owing to the integration of Appirio
and currency headwinds. On the digital side, revenue contribution in Q2FY2017 stood
PRICE PERFORMANCE
at 16.9% as against 17.9% in Q1FY2017. Wipro management continues to see a sluggish
(%) 1m 3m 6m 12m demand environment due to the elongated deal cycle and vendor consolidation.
Absolute 3.1 -9.9 -15.8 -13.4 Maintain Hold with a revised PT of Rs550: Wipro's performance continues to lag its
Relative to Sensex 5.5 -10.7 -23.0 -16.5 peers, despite recent big acquisitions and low base of FY2016. We have tweaked our
estimates for FY2017/FY2018E to incorporate Appirio acquisition. We continue to
Sharekhan Limited, its analyst or dependant(s) of the analyst might be remain cautious on Wipro's growth prospects and maintain our 'Hold' rating with a
holding or having a postition in the companies mentioned in the article. revised price target (PT) of Rs550.

ZEE ENTERTAINMENT ENTERPRISES

COMPANY DETAILS
Price target: Rs620
Strong quarter, maintain Buy with PT of Rs620
KEY POINTS
NSE volume (No of shares): 19.8 lakh Another stellar quarter: After an excellent performance in Q1FY2017, Zee
Entertainment Enterprises (ZEEL) has delivered strong revenue growth of 23% YoY
BSE code: 505537
in Q2FY2017, led by 15.7% YoY rise in Advertising revenue, 21.7% YoY growth in
NSE code: ZEEL Subscription revenue and 117.0% YoY growth in Other Sales & Services revenue. The
Sharekhan code: ZEEL higher Subscription revenue is attributed to catch-up in revenue booked during the
Free float (No of shares): 54.7 cr quarter. OPM expanded by 284BPS YoY to 28.9%, driven by lower Selling & Other
SHAREHOLDING PATTERN Expenses. Reported net income during Q2FY2017 grew by 27% YoY to Rs238.4
crore, while adjusted net profit (ex-MTM losses) was up by 16.8% YoY at Rs321.3
crore.
Focus on five verticals to drive growth: (1) ZEEL management expects some moderation
in Ad Spend from FMCG and E-Commerce sectors in H2FY2017, which could have
an adverse impact on overall Ad revenue. (2) The Telecom sector continues to witness
strong Ad Spend, owing to new launches (Reliance Jio) and increasing competition in
4G (3) ZEEL is focused on five key verticals for future growth: a) Broadcasting b)
International c) Digital d) Movies & Music and e) Live Events. The management sees
PRICE PERFORMANCE
Broadcasting and International verticals driving growth in the medium term, while
Digital and Movies/Music will contribute to growth gradually (4) ZEEL management
(%) 1m 3m 6m 12m is not concerned on the recent draft of TRAI, where primarily broadcasters have been
Absolute -0.6 15.4 31.6 21.0 directed to declare retail price of a-la-carte channels & bouquets
Relative to Sensex 0.8 13.6 20.0 15.9 Maintain Buy with PT of Rs620: We continue to remain positive on ZEEL, being a
structural India consumption theme, and expect its growth trajectory to improve further
Sharekhan Limited, its analyst or dependant(s) of the analyst might be in coming years. We maintain our 'Buy' rating with a price target (PT) of Rs620.
SHAREKHAN SPECIAL OCTOBER 10, 2016

Q2FY2017 earnings preview
Q2FY2017 to be another weak quarter: The headline growth figures the Sensex companies which implies a strong recovery in the earnings
for the Sensex companies do not inspire much confidence in growth in the second half of the fiscal. The biggest turn-around in
Q2FY2017 also. The aggregate net profit of the Sensex companies the earnings growth trajectory is expected to be driven by banks
is likely to remain flat in the quarter despite a mid-single digit growth (due to a low base owing to the balance sheet cleaning exercise
in the revenue and a margin expansion of close to 50 basis points triggered in Q3 last year and a possible bottoming of the asset quality
as compared with the corresponding quarter of the last year. issues in H1 this year) and global commodity-driven metal and
However, excluding the financials, the growth in the Sensex energy companies (again due to a lower base and some upsurge in
companies would stand at 3.5% in Q2FY2017. commodity prices lately). More importantly, the benefits of a good
Banking, Technology and Metal lag; Auto, FMCG and Pharma to monsoon-driven record agricultural output and salary hikes for the
post a healthy performance: In terms of sector-wise performance, government employees would get reflected in the second half of
the earnings growth is likely to be pulled down by the usual suspects, this year.
ie the information technology (IT) services companies (weak demand Valuation
resulted in a weak performance in a seasonally strong quarter), The Sensex trades at a price/earnings (PE) multiple of close to 16.5-
banks (ICICI Bank, Axis Bank and State Bank of India [SBI] to 17.0x on a one-year forward basis which is at a premium to its
show a decline in the net profit) and metals (Tata Steel, largely due historic multiple. However, this needs to be seen in the context of
to foreign exchange [forex] impact and weak demand). On the other extremely low interest rates globally and falling interest rates and
hand, auto companies continue to race ahead while the fortunes bond yields in India. Normally, lower interest rates tend to expand
have turned for the pharmaceutical (pharma) sector. The consumer the PE multiple, though the growth in the earnings remains the key
staples space is likely to sustain its high double-digit growth rate in re-rating driver for the equity market. Thus, a revival in the earnings
Q2 also. growth remains a critical factor for the sustainability of the rally in
Outlook Indian equities.
Turnaround to be driven by cyclicals: Notwithstanding the weak
results in the first two quarters of FY2017, the Street is still factoring
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or
in a healthy double-digit earnings growth in the aggregate profit of having a postition in the companies mentioned in the article.

VIEWPOINT EQUITY FUNDAMENTALS
DCM VIEWPOINT
BOOK PROFIT CMP: RS130 OCTOBER 18, 2016
Book profit with handsome gain of 31%
Key points and Infrastructure (DCM Realty) and (3) Amalgamation of PIL
Casting business still languishing, value unlocking through (post merger with TIARA) into DCM Realty. The company's
demerger plays out well finally: Our main themes of investment Board also agreed to demerge the Cotton Textiles business into
in DCM Ltd was to play the turnaround of its Auto Ancillary DCM Nouvelle. The shareholders of DCM will get one share
business (DCM Engineering, which was into manufacture of of DCM Realty and DCM Nouvelle for every one share held by
Grey Iron Casting) and value unlocking through the demerger them. DCM Realty and DCM Nouvelle will list on the stock
of the Real Estate business. The turnaround in Auto Ancillary exchanges. We believe that the restructuring of its businesses
business is visible, but not at the pace we had anticipated. The will be beneficial for DCM and its shareholders, as it would
value unlocking in Real Estate, though delayed, has materialised result in better independent strategies for the demerged
and has played out as per expectations. businesses, and unlock value for the investors.
Demerger of Realty and Textiles businesses a value unlocking Valuation - book profit with 31% gains: We had recommended
opportunity for investors: On October 15, 2016, DCM's Board DCM in our viewpoint note at Rs99. We recommend investors
of Directors approved the restructuring of its businesses, to book profit at Rs130 (31% gain from our recommended
including the demerger of the Real Estate business through (1) price), as the Auto Ancillary business is expected to turn around
Merger of TIARA into Purearth Infrastructure (PIL) (2) slowly and the positives from the demerger of the Real Estate
Demerger of DCM's Real Estate undertaking with DCM Realty business have already been discounted.
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or
having a postition in the companies mentioned in the article.
INDUSIND BANK VIEWPOINT

VIEW: POSITIVE CMP: RS1,219 OCTOBER 13, 2016
Strong all-round performance;
consistency and quality in growth justify premium valuation
Key points Gross credit cost has been maintained at 15BPS, same as
IndusInd Bank (IIB) has continued with its strong in Q1FY2017. The IIB management has guided for
performance, with 30%+ NII growth for a fifth quarter <60BPS credit cost for FY2017E. At 30BPS level in
in a row. The bank saw strong loan demand during H1FY2017, it appears achievable. Also, on a cautionary
Q2FY2017, with credit growth at 26.4% YoY (10.5% note, the provision declined to Rs213 crore, up 35.3%
QoQ), underpinned by 26.9% YoY growth in the high- YoY (down 7.2% QoQ)
yielding Consumer Finance segment and 26% YoY IIB has been outperforming the industry consistently,
growth in the Corporate loan book. besides maintaining strong asset quality. The bank's asset
IIB has been consistently improving its CASA ratio, which quality trend has been broadly stable. IIB currently trades
jumped 210BPS to 36.5% in Q2FY2017. However, the at 3.1x FY2018E ABV. We maintain our positive view
CASA spike was mainly due to Current Accounts (CA) on the stock and believe that there is 18-20% upside
growth, which grew from 15.7% of total deposits in potential in the stock from the current levels.
Q1FY2017 to 18.2% in Q2FY2017. Fee income growth
of 23% YoY (6% QoQ) slowed a tad compared to the For detailed report, please visit the Research section of our website, sharekhan.com.
previous quarters, but the management has indicated that Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or
it was due to higher base of corporate loan renewals,
which are annual (but not seasonal) in nature.

EQUITY FUNDAMENTALS VIEWPOINT
JAMNA AUTO INDUSTRIES VIEWPOINT

BOOK PROFIT CMP: RS219 OCTOBER 03, 2016
Book handsome gains of 30% in just three months
Key points Q2FY2017, which is likely to impact Jamna's
Positives priced in, book profit: We had initiated a performance. Going ahead, the MHCV industry demand
viewpoint on Jamna Auto Industries (Jamna) on June is expected to revive in H2FY2017, spurred by pre-buying
28, 2016 at the CMP of Rs169. The stock has delivered ahead of the implementation of the new emission norms
an absolute return of 30% in just three months. Our from April 1, 2017 and a possible uptick in the
positive view on the stock was based on strong demand Infrastructure & Mining sector activities. We feel that
traction in the Medium & Heavy Commercial Vehicles Jamna is well positioned to capitalise on these
(MHCV) segment over the past 6-8 quarters, coupled opportunities going forward.
with other key positives such as new product launches Book profit with handsome gains of 30%: The recent
and improved product mix [which would expand run-up in Jamna's stock price has completely factored in
Operating Profit Margin (OPM) by 120BPS over the next all the expected positives. Further, the recent decline in
two years]. Also, the company's strong cash generating the MHCV industry demand is likely to result in a weaker
capabilities (on the back of a robust topline growth), performance in Q2FY2017. At the CMP, the stock is
margin expansion and limited capex plan further trading at 15.9x its FY2018E EPS, which is at the higher
reinforced our 'positive' view on the stock. end of its average historical band and a 10-12% premium
MHCV industry likely to post volume decline; to the leading MHCV OEM player (Ashok Leyland)
Q2FY2017 results likely to be impacted: The MHCV valuation multiple. This leaves limited scope for upside
industry has posted strong double-digit growth for seven from the current levels. Therefore, we recommend
consecutive quarters, led by a huge pent-up demand investors to book profit and wait for a better price point
created due to the earlier slowdown phase. However, to re-enter the stock.
since May 2016, freight rates have been in a downtrend For detailed report, please visit the Research section of our website, sharekhan.com.
- pointing to a slowing fleet replacement demand. We Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or
expect the MHCV industry to report ~13% decline in
TRIDENT VIEWPOINT
VIEW: POSITIVE CMP: RS61 OCTOBER 25, 2016
Strong performance in H1FY2017;
re-iterate positive stance on better textile play
Key points expected to maintain strong momentum in volume growth
Stellar operating performance; lower interest cost propels PAT: owing to an increase in capacity utilisation and addition of
Q2FY2017 was yet another quarter of strong operating three more clients in the coming quarters. In the Terry Towel
performance by Trident, with revenue growing by ~21% YoY space, Trident is focusing on developing innovative products
and PAT expanding by 50% YoY. The strong double-digit and expanding into new geographies such as the UK, Italy,
growth can be attributed to 27% YoY growth in revenue of France, Australia and South Africa in the near to medium term.
the core Home Textiles business. OPM improved by 183BPS Overall, the company's Home Textiles segment is expected to
to 20.1% and operating profit grew by 33.7% YoY to Rs234.9 achieve strong double-digit growth in H2FY2017 and FY2018.
crore. The strong operating performance, along with reduction In the Paper business, the contribution of high-value copier
in interest cost helped the company to grow its reported PAT paper has increased to 50%, which will continue to drive the
by 59.2% YoY to Rs80.1 crore. profitability of the Paper segment in the coming quarters.
Overall, Trident's OPM is expected to sustain ~20-21% in the
Reduction in debt due to better working capital management: coming years.
The healthy free cash generation helped Trident cut debt by
Rs366 crore (including high cost debt of Rs151 crore) in Re-iterate positive stance on better growth prospects: The stock
H1FY2017. The net debt-to-equity ratio improved to 1.4x in is currently trading at just 7.6x FY2018E rough cut earnings.
H1FY2017 from 1.9x in FY2016. The debt reduction resulted The sustainability of better operating performance and
in lower interest cost, which was down by 6.3% YoY in improvement in the balance sheet would act as key triggers
H1FY2017, aiding the strong growth in the bottomline. going ahead. We maintain our positive view and expect 15-
20% returns.
Enhanced Bed Linen capacity utilisation, entry into new market
to drive growth: The Bed Linen segment's capacity utilisation For detailed report, please visit the Research section of our website, sharekhan.com.
is expected to rise to 50-55% by end-FY2017 and rise further Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or
to 70-75% in FY2018. Therefore, the Bed Linen segment is having a postition in the companies mentioned in the article.

TREND & VIEW EQUITY TECHNICALS
Nifty in corrective mode

Daily view on Nifty
After hitting a high of 8968, the Nifty has witnessed some
correction
We had mentioned in our earlier report that if the Index is
unable to cross and sustain above the resistance line, then a fall
towards 8400 is likely. The Nifty has moved as per our
expectation till now
The Index had multiple supports around 8500 and has broken
the multiple support zone decisively, indicating that further
correction is likely
Moreover, the Index has given a Head & Shoulders breakdown
having bearish implications
Also, the momentum indicator on the daily chart is in ‘sell’
mode, thus confirming a short-term downtrend
Crucial supports for Nifty will be ~8290 and 8150 while crucial
resistance will be near 8550 and 8680 levels
Weekly view on Nifty

The Nifty had made an Evening Star pattern at the top, which
has bearish implication. Since then, the Index has been in a
corrective mode
The Nifty had multiple supports around 8500 levels. The Index
managed to see a bounce from 8500 but found resistance at
8737, which was the 50% retracement level of the fall from
8968 to 8506. The equality target of the previous fall now comes
to ~8290
The Nifty has minor support around 8400. If the Nifty closes
below 8400, then it is likely to drift lower toward 8290 to meet
the equality target. On the upside, the Index has to cross 8737
levels in order to negate the bearish outlook
Any rise shall be seen as a selling opportunity as long as the
Nifty is trading below 8737. The momentum indicator on the
weekly chart is in the ‘sell’ mode, indicating that further
correction is likely
• Crucial support would be ~8290 and 8150 whereas resistance
will be ~8737 levels
Monthly view on Nifty

The Nifty had given a negative close last month after six months
of positive closing
Since then, the Nifty has been in a corrective mode
Further correction toward 8150 is likely, which is 38.2%
retracement level of the rise from 6825 to 8968
However, the Nifty remains in a bull market and the uptrend
will not reverse till it is trading above 7927
Any dips shall be seen as a buying opportunity from medium
to long-term view
The momentum indicator on the monthly chart is in the ‘buy’
mode, thus confirming the uptrend
A crucial support will be ~8150 and 7927 and a resistance will
be ~8950
Medium term
Trend Trend reversal Support Resistance Target
UP 7927 7927 8950 8950

EQUITY DERIVATIVES MONTHLY VIEW
Derivative View: "Market light in terms of Open Interest;

All eyes now on US Presidential election, Fed policy"
The Nifty Futures started the October F&O series on a positive Top 5 stock futures with the highest OI in current series
note. It constantly declined in the first half of the series and tested STOCK FUTURES (SHAREKHAN SCRIP CODE) OPEN INTEREST (RS CR)
the important support of 8500. However, the Index was unable to HDFCBANK 4,141.82
sustain at that level and slowly inched higher. With no major activity
RELIANCE 3,027.53
in the market, finally it managed to close absolutely flat for the
second consecutive F&O series. Throughout the October F&O SBIN 2,614.14
series, we observed a continuous unwinding of long positions. Of
AXISBANK 2,566.02
late, we have also seen some shorts getting built up in the Index
and other heavyweight counters. SUNPHARMA 2,493.43
At the end of the October F&O series, FIIs have cut some of their
long bets in the Index Futures. Also, since the start of the November Top 5 stock options with the highest OI in current series
F&O series, FIIs have started building some shorts ahead of the STOCK OPTIONS (SHAREKHAN SCRIP CODE) OPEN INTEREST (RS CR)
outcome of the US Presidential Election. Till now, they are net sellers SBIN 1,145.92
of ~Rs3,800 crore in Index Futures. In the cash market, they have
AXISBANK 866.78
sold shares worth more than Rs1,000 crore since the beginning of
the November F&O series. This clearly suggests that FIIs are now RELIANCE 824.04
squaring off their long bets and want to stay light ahead of the ICICIBANK 781.23
major US election event.
MARUTI 599.71
ROLL-OVER: MARKET-WIDE VS NIFTY
90.00%
80.00%
View
70.00%
60.00%
50.00%
84.48%
84.01%
83.33%
82.42%
81.99%
81.45%
81.09%
On the options front, the 8200 PE has the highest number of shares
77.74%
74.82%
69.97%
40.00%
65.60%
63.21%
30.00%
in OI for the November F&O series, followed by the 8400 strike
20.00%
10.00%
price. On the call side, 9000 CE has the highest number of shares
0.00% in OI followed by the 8700 strike price.
Oct
Nov
Sep
Aug
Jul
Jun
Nifty Market Wide PCR started the November F&O series on the lower side at 0.97
and is now trading at ~0.92. On the other hand, the India Volatility
Roll-over highlights
Index (VIX) has been rising ahead of the US Election outcome.
The benchmark Nifty Futures started the November F&O series Currently, it stands at ~16-17 levels. From the above data we can
on the lower side with at 1.88 crore shares in Open Interest (OI) infer that majority of the long positions are out of the system, and
compared to the October F&O series (2.46 crore shares in OI). In
simultaneously, we are observing short build-up. Also, we feel that
Indian Rupee terms, Nifty Futures started November with Rs16,306
near-term movement in the market will purely depend on the
crore OI v/s Rs21,281 crore OI, while Stock Futures started with
outcome of the US Presidential election. Till that time, we would
Rs74,649 crore OI v/s Rs71,304 crore OI in October. Index Options
see more of volatile trading sessions and should trade carefully.
started the new series with Rs96,830 crore OI v/s Rs101,191 crore
OI. Stock Options started the November series with Rs8,352 crore
in OI v/s Rs7,854 crore OI.
Rollovers in Nifty Futures were marginally higher for the November

series compared to the October series (69.97% Vs 65.60%). Market-
wide rollover was decent at 82.42% compared to October's rollover
of 81.99%.

MONTHLY VIEW CURRENCY FUNDAMENTALS
Currencies: Dollar gains on growing expectations of a rate hike in December by the Federal Reserve
Key points CURRENCY LEVELS IN OCTOBER 2016 (IN RS)
RBI cuts repo rate by 25BPS to 6.25% and reverse repo rate to 5.75%
Currency High Low Close Monthly chg (%)
India's industrial output contracted by 0.7% in August compared USDINR 66.96 66.40 66.8325 0.55%
to -2.4% in July
EURINR 75.15 72.66 72.94 -2.11%
India CPI eased to 4.31% in September compared to 5.05% in August
GBPINR 87.18 81.18 81.5556 -5.76%
China's GDP remained unchanged at 6.7% in Q32016 compared
JPYINR 66.23 63.92 64.13 -2.86%
to Q22016
October 2016 contract price movement October 2016 contract price movement
USD-INR CMP: Rs66.72

The Indian rupee depreciated by 0.55% against the US dollar in October on the back of a stronger greenback and FII outflows from local shares
and debt markets. The dollar gained strength on mounting expectations of a rate hike in December by the Federal Reserve. Further, weak
domestic markets added to the downside pressure. However, a sharp downside was prevented after the RBI slashed interest rates by 25BPS.
Outlook: The Indian rupee is expected to trade with a negative bias owing to growing risk aversion in the global markets and continued FII
outflows. Market sentiment in India is fragile ahead of the US presidential election. Investors fear that if Donald Trump wins, then there may be
a temporary sell-off in the markets, as his stance on issues like foreign policy, trade relations and immigration remains unclear. Demand for the
dollar may increase from importers and due to FCNR redemption. As per the latest REER reading (provisional) (114.51), the rupee is overvalued
by more than 10%. Expected trading range in the near term is 66.20 - 67.50.
EUR-INR CMP: Rs74.28

The euro depreciated by 2.26% on account of a stronger dollar, worries over the health of the European financial system and divergence in global
monetary policy. ECB President Mario Draghi signaled that any changes in the central bank's stimulus may come in December, as it would wait
for updated economic forecasts to take a final decision. He also added that the ECB did not discuss tapering of its asset purchase programme, or
the possible timeline to end the stimulus.
Outlook: The Euro is expected to trade with a negative bias due to a stronger dollar and divergence in global monetary policy. The Federal
Reserve refrained from increasing rates in the recent meeting but strongly signaled that it could still hike rates by the end of 2016 if the American
labor market improves further. The ECB kept its monetary policy unchanged but reassured markets that it would not hesitate to ease policy
further if the inflation outlook warranted it. Market sentiments are fragile ahead of the US presidential election. The expected trading range in the
near term is 72.50 - 75.20.
GBP-INR CMP: Rs83.45

The pound depreciated by 5.62% against the dollar on disappointing UK economic data, worries over Brexit and divergence in global monetary
policy. Dovish statements from the UK's Prime Minister Theresa May continued to hurt the British currency. She said that Article 50 would be
triggered by the end of March. Investors were jittery over the British government's eagerness to prioritise immigration control over membership
of the EU's single market.
Outlook: The pound is expected to trade with a negative bias on the back of a stronger dollar and ongoing worries over Brexit. Further,
divergence in global monetary policy and disappointing UK economic data may add to the downside pressure. Also, the Fed is expected to tighten
its monetary policy by the end of 2016. However, a sharp downside may be cushioned after the Bank of England (BOE) upgraded its growth and
inflation forecast for 2017. Further, England's High Court ruled that the UK government needed parliamentary approval to trigger Brexit. The
expected trading range in the near term is 81.90 - 85.20.
JPY-INR CMP: Rs64.92

The yen depreciated by 3.42% owing to a stronger dollar and divergence in global monetary policy. The dollar gained strength after the upbeat
US economic data fuelled expectations of a rate hike by the Fed in December.
Outlook: The yen is expected to trade with a positive bias after the Bank of Japan (BOJ) kept its monetary policy unchanged and maintained its
forecast that the Japanese economy is likely to expand moderately. Further, demand for safe haven assets may increase on growing risk aversion
in the global markets, worries over Brexit, fears over global economic slowdown and volatility in crude oil prices. Demand for safe haven assets
may also increase ahead of the US presidential election. The expected trading range in the near term is 63.0 - 66.0.
CMP as on November 04, 2016

CURRENCY TECHNICALS TREND & VIEW
USD-INR: Slippery slope ahead EUR-INR: Scaling higher

USDINR had faced resistance near 78.6% retracement of the In mid-August, EURINR faced resistance near a falling trendline
February-March fall. From there, it entered a correction mode. from the previous highs and started tumbling.
On the way down, the currency pair has broken the lower end Structurally, it formed a multi-week triangular pattern and broke
of a medium-term rising channel. out on the downside in the beginning of October.
The price is finding it difficult to sustain above the key daily as Consequently, it tumbled toward the crucial swing low of 72.40.
well as weekly MAs. In the last few weeks, USDINR seems to
Near the low, it found support from the lower end of the falling
have formed a triangular pattern, which is likely to break out
channel as well.
on the downside.
Daily & weekly momentum indicators are in a bearish mode. Therefore, EURINR has entered a pullback mode. The daily
Key levels to watch on the way down will be 66.01-65. On the momentum indicator has triggered a bullish crossover. Hence,
other hand, 67.14-67.36 will act as a key resistance zone on a EURINR looks poised to rise up to 75.35-75.50. The recent
closing basis. low of 72.48 will act as a crucial support.
KST (-0.07267) 1.5 MACD (-0.18105) 1.0
1.0
0.5 0.5
0.0
-0.5 0.0
-1.0
-1.5 -0.5
USDINR - INDIAN RUPEE (66.7683, 66.7879, 66.6200, 66.6583, -0.09320) EURINR (74.0670, 74.2300, 73.7510, 74.0110, -0.05000)
69.5
69.4 78.5
69.3
69.2
78.0
69.1
69.0
100.0% 68.9
77.5
68.8
68.7
68.6 77.0
68.5
68.4
78.6% 68.3 76.5
68.2
68.1
68.0 76.0
67.9
61.8% 67.8
67.7 75.5
67.6
50.0% 67.5
67.4 75.0
67.3
67.2
38.2% 74.5
67.1
67.0
66.9
74.0
66.8
23.6% 66.7
66.6 73.5
66.5
66.4
66.3 73.0
66.2
66.1
0.0% 66.0 72.5
65.9
65.8
65.7 72.0
65.6
65.5
65.4 71.5
65.3
65.2
65.1 71.0
65.0
64.9
70.5
2016 February March April May June July Augus t Septem ber October Novem ber Decem ber er 2016 February March April May June July Augus t Septem ber October Novem ber Decem ber
GBP-INR: Room on the downside JPY-INR: Bounce on the cards

GBPINR has been in a downtrend from short-term as well as JPYINR formed a triangular pattern and broke out on the
medium-term perspective. On the way down, it broke multiple downside in the beginning of October. It also broke a rising
supports. trendline along with the price pattern.
The currency pair reached near 61.8% retracement of the However, the bears couldn't push the price significantly down.
previous multi-year rally, which has led to a minor rebound. The currency pair found support near the lower end of the falling
Our channel study shows that overall, there is some more channel.
downside potential. The same is evident from the momentum Daily momentum indicator is showing positive divergence and
indicators as well. has formed a bullish hook. Therefore, the currency pair can
78.82 - 77 will be the key levels to watch on the way down. On bounce back toward 66.35-66.80. Reversal for the bullish view
the other hand, 86.15 will act as a crucial resistance. can be placed below the swing low of 63.26.
KST (-6.58467)
10 KST (0.16015) 4
3
5 2
1
0 0
-1
-5 -2
-3
JPYINR (64.6066, 65.0497, 64.4952, 64.7168, +0.11020)
GBPINR (81.3070, 83.4040, 81.0640, 83.0500, +1.72300)
110 68.5
0.0%
68.0
105
67.5
100 67.0
23.6% 66.5
95
66.0
65.5
38.2%
90
65.0
64.5
50.0%
85
64.0
61.8% 63.5
80
63.0
62.5
75
78.6% 62.0
61.5
70
61.0
60.5
65
100.0% 60.0
59.5
30 6 13 20 27 4 11 18 25 1 8 15 22 29 5 12 19 26 3 10 17 24 31 7 14
2010 2011 2012 2013 2014 2015 2016 2017 June July Augus t Septem ber October Novem ber
Currency View Reversal Supports Resistances Target

USD-INR Down 67.36 66.25/65.50 67/67.13 65.00
GBP-INR Down 86.15 80.73/78.81 84.20/85.50 77.00
EUR-INR Up 72.48 73.40/72.75 74.43/75.12 75.50
JYP-INR Up 63.26 64.19/63.38 65.50/66.28 66.80

WEALTHOPTIMIZER PMS DESK
WEALTHOPTIMIZER PMS
The Indian equity market presents an excellent opportunity for the long-term investors. Sharekhan offers you solutions to meet your
financial objectives. WealthOptimizer is a portfolio management product that involves enhancing wealth over the long term. The goal is
to not only outperform the market but also generate superior returns.
Strategy
• To invest in the most undervalued stocks of growing companies on the basis of reported financial performance
How the product works

• Fundamental analysis is performed on more than 5,000 companies
• Stocks with sound fundamentals are picked, subject to strategy conditions
• Top 10 stocks are selected each day based on the maximum scope to grow
• No particular sector forms more than 20% of the client’s portfolio
• Fundamentals of stocks held are reviewed every quarter based on quarterly results
• Automated decision making system for transparent and disciplined investing
Key product specifications

• Minimum investment amount: Rs25 lakh
• Recommended investment duration: Two years or more
Phone: 022-6750 2152 / 2261 / 2363 / 2104 E-mail: pms@sharekhan.com
Disclaimer: Product is offered by Sharekhan Ltd (Registered Portfolio Manager with SEBI Regn. Nos. INP000000662 CIN No. U99999MH1995PLC087498) and having registered office at 10th Floor,
Beta Building, Lodha iThink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai -400042, Maharashtra. Tel: 022-61150000. Email: igc@sharekhan.com,
pms@sharekhan.com. This information does not purport to be an invitation or an offer for services, client is required to take independent advise before opting for any service. Securities investments are
subject to market and other risks and client should refer to the risk disclosure document carefully. Past performance is no indication of future results. Future performance may vary. Detailed disclaimers and
risk disclosure document is available on our website www.sharekhan.com, please acquaint yourself with these before investing.

PMS DESK PMS FUNDS
Portfolio Management Service

We are pleased to introduce you to Sharekhan’s Portfolio We have the following strategies on offer:
Management Service (PMS) in which we completely manage
ProPrime (based on fundamental research)
your investment portfolio so that you stop worrying about
the market volatility and focus your energy on things that Diversified Equity
you like to do! ProTech (based on technical analysis)
We have a wide range of strategies that you can choose from. Index Futures Fund Trailing Stops
Our strategies are based on fundamental research and
technical analysis.
PROPRIME - DIVERSIFIED EQUITY

OVERVIEW Product performance
as on October 31, 2016
The ProPrime—Diversified Equity PMS strategy is suitable for long-term investors
looking to create an equity portfolio through disciplined investments that will lead to a (In %) Scheme S&P CNX 500
growth in the portfolio’s value with medium to high risk. 1 Month 3.5 1.4
3 Month 5.7 2.3
6 Month 17.0 13.9
INVESTMENT STRATEGY
1 Year 13.5 11.1
Disciplined investment decisions are taken in specific stocks based on thorough
Best Month 30.0 13.5
fundamental research.
Worst Month -17.9 -10.5
Investments are made primarily in the Nifty Fifty or the BSE 100 scrips.
Best Quarter 41.0 51.2
Attempts to have an exposure of minimum of 70% in the Nifty Fifty stocks and Worst Quarter -29.2 -12.0
that of minimum of 90% in the BSE 100 stocks.
Disclaimer: Returns are based on a client’s
Endeavours to create a core portfolio of blue-chip companies with a proven track returns since inception and may be different from
record and have partial exposure to quality companies in the mid-cap space. those depicted in the risk disclosure document.
PRICING Top 10 stocks

Minimum investment of Rs25 lakh Hero MotoCorp
Charges L&T Finance Holdings

Federal Bank
2% per annum; AMC fee charged every quarter
IndusInd Bank
0.5% brokerage
HDFC Bank
20% profit sharing after the 12% hurdle is crossed at the end of IL&FS Transport Networks
every fiscal
Britannia Industries
Zee Entertainment Enterprises
Reliance Industries
Lupin
FUND OBJECTIVE
A good return on money through long-term investing in quality companies

PMS FUNDS PMS DESK
PROTECH - INDEX FUTURES FUND
OVERVIEW
The ProTech–Index Futures Fund PMS strategy is suitable for long-term investors
who desire to profit from both bullish and bearish market conditions. The strategy
involves going long (buying) or going short (selling without holding) on Nifty futures
by predicting the market direction based on a back-tested automated model.
Product performance
as on October 31, 2016
INVESTMENT STRATEGY (In %) Scheme Sensex Nifty

The strategy has the potential to generate profits irrespective of the market 1 Month -2.06 0.23 0.17
direction by going long or short on Nifty futures. 3 Months -4.01 -0.43 -0.15
An automated basic back-testing model is used to predict the market direction FY15-16 11.28 -9.36 -8.86
for the Nifty which then decides the strategy to be deployed in terms of going
FY14-15 -3.41 24.89 26.65
long or short.
FY13-14 8.79 18.85 17.98
The portfolio is not leveraged, ie its exposure never exceeds its value.
FY12-13 3.65 8.23 7.31
FY11-12 13.10 -10.50 -9.20
PRICING FY10-11 9.20 10.90 11.10

Minimum investment of Rs25 lakh FY09-10 14.70 80.50 73.80
Charges Since Inception* 135.36 175.87 185.47
AMC fees: 0% Best Month 28.90 28.26 28.07

Worst Month -17.10 -23.89 -26.41
Brokerage: 0.05%
Best Quarter 33.30 49.29 42.04
Profit sharing: Flat 20% charged on a quarterly basis
Worst Quarter -17.73 -24.98 -24.53
*01-Feb-2006

FUND MANAGER’S VIEW returns since inception and may be different from
In what was a very unexciting month in terms of market performance, with regular those depicted in the risk disclosure document.
gyrations, the system faced an additional drawdown of 2%. Lack of clear one-sided
trend and low volatility did not help in accelerating returns either. We witnessed a Investments in
drawdown above 20% and are keeping the system open till 25% in light of expectation
Nifty Index
of a change in market's behaviour in the coming days. We have recovered from all
previous drawdowns and expect the same.
The market is trending down slowly and despite lower volatility it has not advanced.
We see further weakness ahead and consequently higher volatility, which should
benefit our strategy going forward. This month, we saw weakness in market breadth,
as Small Cap stocks were the only ones making new highs.
Fund Manager: Rohit Srivastava
FUND OBJECTIVE
Absolute returns irrespective of market conditions.

PMS DESK PMS FUNDS
PROTECH - TRAILING STOPS

OVERVIEW
Our ProTech–Trailing Stops PMS strategy is ideal for Traders and Investors look-
ing for Regular Income from trading and desire to make profits in both bullish and
bearish market conditions. It is designed to payout book profits on monthly basis.*
It is also for those investors who are looking for better income than Fixed Income Product performance
or Deposits. This strategy involves going Long (buying) or Short (selling without as on October 31, 2016
holding) on stock futures.
(In %) Scheme Sensex Nifty
* Terms and conditions apply
1 Month -3.98 0.23 0.17
3 Months -6.29 -0.43 -0.15
INVESTMENT STRATEGY FY15-16 -0.56 -9.36 -8.86

FY14-15 -3.69 24.89 26.65
This strategy spots the winning trades based on technical analysis vs time frame-
based portfolios, basically the momentum calls. FY13-14 -1.06 18.85 17.98
FY12-13 14.89 8.23 7.31
A risk model has been developed for stock portfolio allocation that reduces the
risk and portfolio volatility through staggered building of positions. FY11-12 29.00 -6.10 -4.60
FY10-11
It is non-leveraged—the exposure will never exceed the value of the portfolio.
FY09-10
Since Inception* 28.95 50.74 55.39
PRICING Best Month 9.10 11.25 12.43
Minimum investment of Rs25 lakh Worst Month -5.09 -8.93 -9.28
Charges Best Quarter 9.90 13.52 13.53
AMC fees: 0% Worst Quarter -8.20 -12.69 -12.47
Brokerage: 0.05% *09th May 2011
Profit sharing: Flat 20% charged on a quarterly basis

returns since inception and may be different from
those depicted in the risk disclosure document.
FUND MANAGER’S VIEW
We took more risk this month, as the market was trending lower, but stocks continued Investments in
to diverge on both sides - causing more stop-outs. A clear trending market should Nifty Index
eventually emerge and we want to be prepared to take full advantage of it when that
Stock futures
happens. We are closely monitoring the 20% drawdown threshold, so that we do not
cross it. This month was poor, as the loss at 4% was the highest in a long time.
The market is trending down slowly and despite lower volatility has not advanced.
We see further weakness ahead and consequently higher volatility, which should
benefit our strategy going forward. This month we saw weakness in market breadth,
as small cap stocks were the only ones making new highs.
Fund Manager: Rohit Srivastava
FUND OBJECTIVE
Absolute returns irrespective of market conditions.

MONTHLY PERFORMANCE ADVISORY DESK
Advisory Products and Services

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

This is a long only, cash market delivery product where stock
ideas will be rolled out based on short-term triggers with proper New Alpha Delivery Picks Rules
fundamental rationale. Recently we revised certain features of
Alpha Delivery Picks to incorporate ideas from both the Funda- Ideas Ideas based on Stock Ideas,
mental research desk and the Market analysis team. The time Viewpoints, Stock Updates,
frame of the stock ideas in New Alpha Delivery Picks will be a Market analysis
maximum of two months. Stop loss will be 5-10% and profit
potential will be 10-20%. We will report the old series’ perfor- Weightage (%) 7
mance data separately. For more details please write to us at
alphapicks@sharekhan.com. Stop Loss (%) Maximum 10, minimum 5
For traders Profit Potential (%) Maximum 20, minimum 10
Time Frame Maximum 2 months
SHAREKHAN’S PRE-MARKET ACTION
These ideas are put out in Sharekhan’s Pre-market Action report Trail Stop loss 5% trailing Stop loss on 5%
along with stop loss and targets valid for a day. There is a market rise in stock price
watch list of stocks with positive and negative bias for intra-day
Exit Rules A) Pre defined / Trail stop loss
traders. For more details please write to us at
is hit
premarket@sharekhan.com.
B) Unexpected event/news/
MID DERIVATIVE CALLS outcome
These calls are based on the analysis of open interest, implied volatil-
C) Time frame
ity and put-call ratio in the derivative market. It is a leveraged prod-
uct and ideal for aggressive traders. These calls have pre-defined stop Performance Daily
loss, targets, time frame and quantity to execute. For details of the Reporting
product please write to us at derivative@sharekhan.com.
Report Card
MID performance* MID Derivative Calls performance*
Product New Alpha Delivery Picks Ticket size (Rs) 100,000
Month October 2016 FY2017 Month October 2016 FY2017
No. of calls 16 52 No. of calls 11 101
Open 11 11 Profit booked 2 50
Profit booked 9 33
Stop loss hit 9 51
Stop loss hit 1 8
Strike rate (%) 18 50
Strike rate (%) 90 80

MUTUAL FUNDS DESK MF PICKS
SHAREKHAN’S TOP MUTUAL FUND PICKS (EQUITY) OCTOBER 13, 2016

Data as on September 30, 2016
Scheme name Star NAV (Rs) Returns (%)

rating Absolute Compounded annualised
6 months 1 year 3 years 5 years Since inception
Large-cap funds
SBI Bluechip Fund 32.1 15.6 15.7 26.2 20.2 11.6
Birla Sun Life Frontline Equity Fund 181.1 16.7 14.2 23.2 18.2 22.8
Kotak 50 186.9 13.6 9.6 22.0 14.7 24.2
ICICI Prudential Focused Bluechip Equity Fund 31.9 16.1 12.7 20.2 16.1 14.9
Franklin India Bluechip 385.3 12.0 11.1 20.1 14.1 21.9
Indices
BSE Sensex 27,866.0 10.0 6.5 12.9 11.1 16.0
Mid-cap funds
Mirae Asset Emerging Bluechip Fund 37.6 26.9 23.1 44.6 28.5 23.7
Kotak Emerging Equity Scheme 31.4 26.1 20.7 43.3 24.8 12.8
HDFC Mid-Cap Opportunities Fund 45.4 26.2 21.3 39.7 24.6 17.7
Principal Emerging Bluechip Fund 81.9 27.0 21.8 39.7 26.6 30.6
BNP Paribas Mid Cap Fund 28.1 20.0 12.4 33.8 24.6 10.4
Indices
BSE MID CAP 13,166.7 24.8 21.9 32.9 16.5 22.0
Multi-cap funds
Birla Sun Life Pure Value Fund 47.2 25.2 25.0 41.8 24.5 20.0
ICICI Prudential Value Discovery Fund 124.5 14.4 10.7 33.3 23.8 23.1
SBI Magnum Multi Cap Fund 37.5 16.0 15.4 29.7 20.2 12.8
Franklin India Opportunities Fund 61.4 15.4 10.9 27.0 17.0 11.5
IDFC Classic Equity Fund 35.5 20.1 18.0 18.9 14.3 12.0
Indices
BSE 500 11,700.7 15.2 11.4 18.5 12.9 14.9
Tax-saving funds
Reliance Tax Saver (ELSS) Fund 49.7 16.4 16.9 34.0 20.8 15.6
Birla Sun Life Tax Relief 96 24.1 15.9 13.8 29.4 19.9 10.8
DSP BlackRock Tax Saver Fund 38.0 22.0 20.4 28.5 20.6 14.8
Sundaram Taxsaver - (Open Ended Fund) 83.8 20.5 17.5 24.6 16.7 18.2
L&T Tax Advantage Fund 42.5 19.1 13.1 23.8 16.0 14.6
Indices
Nifty 500 7,394.9 14.9 11.2 18.9 13.2 9.5
Thematic funds
Franklin Build India Fund 32.5 18.5 16.0 37.0 24.8 18.1
Birla Sun Life Special Situations Fund 20.7 27.8 17.0 32.3 19.5 8.8
Sundaram Rural India Fund 34.0 30.9 33.2 32.0 18.9 12.5
DSP BlackRock India Tiger Fund 75.2 18.0 11.8 28.3 13.9 17.8
Birla Sun Life India GenNext Fund 64.3 25.6 20.4 27.8 22.3 18.1
Indices
Nifty 50 8,611.2 11.3 8.3 14.5 11.7 13.9
Balanced funds
HDFC Balanced Fund 122.1 15.1 13.6 26.8 17.4 16.9
DSP BlackRock Balanced Fund 125.6 18.4 17.0 24.8 15.1 15.7
Birla Sun Life Balanced 95 639.9 16.3 15.3 24.0 16.8 21.2
Franklin India Balanced Fund 100.8 11.7 11.3 23.9 16.5 14.7
ICICI Prudential Balanced 105.0 17.3 15.9 23.7 18.4 14.9
Indices
Crisil Balanced Fund Index -- 10.1 9.7 13.8 11.3 12.6
Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at Sharekhan
first understand the individual’s investment objectives and risk-taking capacity, and then recommend a suitable portfolio. So, we suggest
that you get in touch with our Mutual Fund Advisor before investing in the best funds.
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the mutual funds mentioned in the article.

MUTUAL FUNDS DESK
MF PICKS
SHAREKHAN’S TOP SIP FUND PICKS OCTOBER 13, 2016

Data as on September 30, 2016
Investment period 1 year 3 years 5 years

Total amount invested (Rs) 12,000 36,000 60,000
Funds would have grown to (Rs) NAV Present Avg. annual Present Avg. annual Present Avg. annual
value (Rs) return (%) value (Rs) return (%) value (Rs) return (%)
Large-cap funds
SBI Bluechip Fund 32 13,338 12.2 46,831 9.4 99,208 10.8
Birla Sun Life Frontline Equity Fund 181 13,429 13.0 45,112 8.0 94,281 9.6
Franklin India Bluechip 385 13,065 9.7 43,627 6.8 86,427 7.7
ICICI Prudential Focused Bluechip Equity Fund 32 13,284 11.7 43,593 6.8 88,871 8.3
Tata Large Cap Fund 177 13,165 10.6 43,044 6.3 85,832 7.5
BSE Sensex 27,866 12,802 7.3 39,422 3.2 76,422 5.0
Mid-cap funds
Mirae Asset Emerging Bluechip Fund 38 14,141 19.5 55,451 15.9 1,31,112 17.2
Kotak Emerging Equity Scheme 31 14,006 18.3 54,420 15.2 1,20,686 15.3
Principal Emerging Bluechip Fund 82 14,228 20.3 52,970 14.1 1,21,877 15.5
HDFC Mid-Cap Opportunities Fund 45 14,193 20.0 52,427 13.7 1,18,714 14.9
BNP Paribas Mid Cap Fund 28 13,439 13.1 50,010 11.9 1,14,412 14.0
BSE Midcap 13,167 14,038 18.6 50,319 12.1 1,02,064 11.4
Multi-cap funds
Birla Sun Life Pure Value Fund 47 14,247 20.5 53,476 14.5 1,23,315 15.8
SBI Magnum Multi Cap Fund 38 13,374 12.5 48,334 10.6 1,02,462 11.5
Kotak Select Focus Fund 26 13,655 15.1 47,906 10.3 1,01,902 11.4
ICICI Prudential Value Discovery Fund 124 13,152 10.5 47,333 9.8 1,07,323 12.5
Franklin India Opportunities Fund 61 13,284 11.7 45,947 8.7 95,573 9.9
BSE 500 11,701 13,226 11.1 42,582 5.9 83,548 7.0
Tax-saving funds
DSP BlackRock Tax Saver Fund 38 13,941 17.7 48,695 10.9 1,03,709 11.8
Birla Sun Life Tax Relief 96 24 13,328 12.1 47,758 10.2 1,03,028 11.6
Axis Long Term Equity Fund 33 12,987 9.0 46,490 9.2 1,05,717 12.2
L&T Tax Advantage Fund 42 13,573 14.3 45,843 8.6 93,225 9.4
IDFC Tax Advantage (ELSS) Fund 42 13,158 10.5 44,557 7.6 95,038 9.8
Nifty 50 8,611 12948 8.6 40,383 4.0 78,294 5.6
Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at Sharekhan
first understand the individual’s investment objectives and risk-taking capacity, and then recommend a suitable portfolio. So, we suggest
that you get in touch with our Mutual Fund Advisor before investing in the best funds.
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the mutual funds mentioned in the article.

EARNINGS GUIDE EQUITY FUNDAMENTALS
Sharekhan Earnings Guide Prices as on November 03, 2016

Company CMP Sales Net profit EPS (%) EPS PE (x) RoCE (%) RoNW (%) DPS Div
(Rs) growth yield
FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY18/FY16 FY16 FY17E FY18E FY17E FY18E FY17E FY18E (Rs) (%)
AUTOMOBILES
Apollo Tyres 197.5 11,793.0 13,639.6 15,370.7 1,045.2 1,013.9 1,167.9 20.5 19.9 22.9 6% 9.6 9.9 8.6 14.9 15.6 14.3 14.4 2.0 1.0
Ashok Leyland 91.3 18,863.5 21,774.6 24,453.1 1,116.0 1,444.5 1,707.9 3.9 4.9 5.8 22% 23.4 18.6 15.7 21.5 22.9 23.4 24.6 1.0 1.0
Bajaj Auto 2,829.9 22,624.7 24,236.9 28,134.4 3,741.2 4,249.5 4,790.7 129.4 146.9 165.7 13% 21.9 19.3 17.1 40.8 40.2 29.9 29.1 50.0 1.8
Gabriel Industries 121.8 1,438.2 1,628.3 1,881.6 75.8 82.7 104.2 5.3 5.8 7.3 17% 23.0 21.0 16.7 25.3 27.7 19.3 21.2 0.5 0.4
Hero MotoCorp 3,378.5 28,514.0 31,768.0 36,326.3 3,047.0 3,775.6 4,116.1 152.6 189.1 206.1 16% 22.1 17.9 16.4 56.0 51.8 40.3 37.1 40.0 1.2
M&M 1,361.0 38,866.6 44,605.7 51,254.5 3,290.7 3,831.8 4,816.3 53.0 61.7 77.5 21% 25.7 22.1 17.6 18.8 20.8 15.5 17.1 12.0 0.9
Maruti Suzuki 5,805.6 57,746.2 69,923.0 82,464.0 4,571.0 7,990.0 8,853.0 151.3 264.5 293.1 39% 38.4 21.9 19.8 32.5 30.4 24.5 22.8 25.0 0.4
Rico Auto Industries 72.4 1,007.0 1,184.7 1,361.8 34.0 56.6 70.0 2.5 4.2 5.2 44% 29.0 17.2 13.9 13.6 14.9 10.9 12.2 0.5 0.7
TVS Motor 392.5 11,243.9 13,074.7 15,588.3 437.8 618.0 855.0 9.2 13.0 18.0 40% 42.7 30.2 21.8 24.3 29.3 26.2 29.1 2.5 0.6
Banks & Financials
Allahabad Bank 73.8 7,808.6 8,458.0 9,644.5 (743.3) 663.8 872.4 -12.1 10.8 14.2 - - 6.8 5.2 - - 4.4 5.6 0.0 0.0
Axis (UTI) Bank 475.9 26,204.4 29,402.9 34,262.1 8,223.7 8,533.6 10,348.6 34.5 35.8 43.4 12% 13.8 13.3 11.0 - - 15.1 16.1 5.0 1.0
Bajaj Finance 1,030.9 4,029.7 5,252.2 7,163.9 1,278.6 1,747.3 2,424.0 23.9 32.6 45.3 38% 43.2 31.6 22.8 - - 21.3 24.1 2.5 0.2
Bajaj Finserv 3,347.8 9,446.4 - - 1,863.3 - - 117.1 - - - 28.6 - - - - 0.0 0.0 1.8 0.1
Bank of Baroda 146.6 17,738.7 20,063.6 23,133.7 (5,395.6) 2,239.0 3,635.4 -23.4 9.7 15.7 - - 15.1 9.3 - - 5.5 8.4 0.0 0.0
Bank of India 108.8 15,377.2 17,084.7 19,230.6 (6,089.2) 959.5 1,250.0 -74.5 11.7 15.3 - - 9.3 7.1 - - 2.9 3.7 0.0 0.0
Capital First 690.8 806.9 1,087.6 1,434.9 166.4 236.9 335.5 18.2 26.0 36.8 42% 37.9 26.6 18.8 - - 13.2 16.7 2.4 0.3
Corp Bank 40.8 5,974.6 6,381.9 7,152.2 (506.5) 214.1 276.3 -5.0 2.1 2.7 - - 19.5 15.1 - - 1.9 2.4 0.0 0.0
Federal Bank 76.9 3,290.6 3,829.5 4,463.4 475.6 811.2 1,046.1 2.8 4.7 6.1 48% 27.8 16.3 12.6 - - 9.6 11.4 0.7 0.9
HDFC 1,401.6 8,387.5 9,356.6 10,510.5 7,093.1 7,694.9 8,653.5 44.9 48.7 54.7 10% 31.2 28.8 25.6 - - 20.0 20.0 17.0 1.2
HDFC Bank 1,255.0 38,343.2 45,461.1 54,382.9 12,296.2 14,984.5 18,358.7 48.6 59.3 72.6 22% 25.8 21.2 17.3 - - 19.1 20.1 9.5 0.8
ICICI Bank 269.8 36,547.1 39,282.6 45,816.0 9,726.3 12,037.8 14,996.5 16.7 20.7 25.8 24% 16.1 13.0 10.5 - - 12.6 14.2 5.0 1.9
IDBI Bank 69.5 9,499.7 10,450.9 11,918.9 (3,664.8) 977.4 1,497.4 -17.8 4.7 7.3 - - 14.6 9.6 - - 3.5 5.2 0.0 0.0
LIC Hsg. Fin. 550.3 2,944.1 3,488.0 4,140.7 1,660.8 2,053.1 2,512.5 32.9 40.7 49.8 23% 16.7 13.5 11.1 - - 20.6 21.3 5.5 1.0
PTC India Fin. Ser 40.0 414.2 527.2 671.8 391.1 333.0 429.3 7.0 5.9 7.6 5% 5.7 6.7 5.2 - - 18.0 20.3 1.2 3.0
PNB 133.2 22,188.8 25,287.3 29,307.5 (3,974.4) 1,655.1 2,318.9 -20.2 8.4 11.8 - - 15.8 11.3 - - 4.2 5.7 0.0 0.0
SBI 245.7 85,040.2 92,817.6 1,04,429.9 9,950.7 12,490.9 14,925.9 12.8 16.1 19.2 22% 19.2 15.3 12.8 - - 8.4 9.4 2.6 1.0
Union Bank of India 137.1 11,944.8 13,113.4 14,645.1 1,351.6 1,955.0 2,361.9 19.7 28.4 34.4 32% 7.0 4.8 4.0 - - 8.3 9.3 2.0 1.4
Yes Bank 1,208.8 7,278.9 9,091.2 11,349.1 2,539.4 3,225.3 4,066.6 60.4 76.7 96.7 27% 20.0 15.8 12.5 - - 21.4 22.7 10.0 0.8
Consumer Goods
Britannia 3,301.5 8,397.2 9,943.3 11,345.8 831.5 1,001.5 1,200.4 69.3 83.5 100.0 20% 47.6 39.5 33.0 76.4 68.1 48.7 43.9 20.0 0.6
Emami 1,247.5 2,393.7 2,767.7 3,290.8 528.1 607.9 810.2 23.3 26.8 35.7 24% 53.6 46.5 34.9 40.3 44.7 38.5 48.2 3.0 0.2
GSK Consumers* 5,899.0 4,135.6 4,425.0 5,002.7 712.7 799.4 877.8 169.4 190.1 208.7 11% 34.8 31.0 28.3 45.6 42.9 30.1 28.3 70.0 1.2
GCPL 1,535.3 8,757.8 9,788.4 11,314.6 1,086.7 1,317.5 1,596.4 31.9 38.7 46.9 21% 48.2 39.7 32.7 21.7 23.5 23.3 23.1 5.8 0.4
Hindustan Unilever 839.4 33,491.3 35,347.2 39,432.7 4,167.3 4,583.5 5,410.0 19.3 21.2 25.0 14% 43.6 39.6 33.6 83.0 70.8 60.6 51.4 9.5 1.1
ITC 240.3 36,582.7 40,527.6 46,866.4 9,311.3 10,539.9 12,783.4 7.7 8.7 10.6 17% 31.2 27.6 22.7 40.4 44.2 31.5 35.8 8.5 3.5
Jyothy Laboratories 354.8 1,659.5 1,815.0 2,104.8 74.2 147.8 217.5 4.3 8.2 12.0 67% 82.5 43.3 29.6 17.6 21.8 16.7 21.9 1.0 0.3
Marico 265.6 6,024.5 6,347.9 7,430.3 707.9 850.2 1,086.9 5.5 6.6 8.4 24% 48.3 40.2 31.6 46.8 47.5 35.9 35.8 3.8 1.4
Zydus Wellness 855.5 429.5 459.5 523.9 103.7 122.9 137.2 26.5 31.4 35.1 15% 32.2 27.2 24.4 25.4 23.8 23.5 22.0 6.5 0.8
IT / IT services
Firstsource Solution 38.5 3,217.3 3,803.4 4,273.9 255.2 318.0 375.8 3.8 4.7 5.6 21% 10.1 8.2 6.9 13.9 14.0 16.3 16.4 0.0 0.0
HCL Technologies*** 763.1 31,136.0 46,784.6 52,663.9 5,669.0 8,096.2 9,470.2 40.3 57.6 67.4 29% 18.9 13.2 11.3 32.4 32.2 26.4 25.9 17.0 2.2
Infosys 966.9 62,441.0 68,910.2 74,858.5 13,492.0 14,285.1 15,675.0 59.0 62.4 68.5 8% 16.4 15.5 14.1 32.6 31.8 23.3 22.8 24.3 2.5
Persistent Systems 653.7 2,312.3 2,896.5 3,328.4 297.4 308.4 350.5 37.2 38.5 43.8 9% 17.6 17.0 14.9 23.0 23.5 17.3 17.3 8.0 1.2
TCS 2,319.5 1,08,646.2 1,17,866.0 1,27,846.1 24,215.2 25,899.3 28,363.1 122.9 131.4 143.9 8% 18.9 17.7 16.1 37.2 34.2 28.9 26.5 43.5 1.9
Wipro 447.6 51,244.0 55,802.6 59,911.3 8,892.2 8,506.5 9,634.4 36.2 34.5 39.0 4% 12.4 13.0 11.5 13.5 14.3 16.5 16.8 12.0 2.7
Cap goods / Power
BHEL 137.7 25,138.0 32,731.0 35,932.3 (913.0) 134.6 1,023.0 -3.7 0.5 4.2 - - 250.3 32.9 0.8 4.7 0.4 3.0 0.3 0.2
CESC 593.6 6,493.0 7,150.0 7,787.0 707.0 746.5 794.8 53.3 56.3 60.0 6% 11.1 10.5 9.9 7.3 7.4 8.4 8.6 10.0 1.7
Crompton Greaves 77.0 5,272.0 5,631.3 6,023.2 128.4 210.7 233.7 2.0 3.4 3.7 36% 38.5 22.6 20.8 5.3 5.7 4.4 4.7 0.0 0.0
Finolex Cables 438.1 2,461.0 2,767.3 3,214.5 249.0 275.0 311.2 16.3 18.0 20.3 12% 26.9 24.4 21.5 23.3 23.1 24.9 24.6 2.5 0.6
Greaves Cotton 135.4 1,616.2 1,732.2 1,982.9 181.4 186.4 209.5 7.4 7.6 8.6 8% 18.3 17.8 15.7 29.6 30.6 20.4 21.1 5.5 4.1
Kalpataru Power 244.8 4,365.0 5,422.7 6,148.7 200.0 271.2 307.1 13.0 17.7 20.0 24% 18.8 13.9 12.2 17.6 17.8 11.4 11.7 1.5 0.6
PTC India 74.3 12,799.0 13,709.0 14,403.8 234.0 244.0 257.0 7.9 8.2 8.7 5% 9.4 9.1 8.5 12.8 12.8 15.2 15.3 2.2 3.0
Skipper 144.0 1,506.0 1,746.6 2,076.4 83.1 96.0 117.6 8.1 9.4 11.5 19% 17.8 15.3 12.5 24.9 24.6 22.6 22.7 1.3 0.9
Note: For Grasim and Apollo Tyres we have shifted our estimates to consolidated

EQUITY FUNDAMENTALS EARNINGS GUIDE
Company CMP Sales Net profit EPS (%) EPS PE (x) RoCE (%) RoNW (%) DPS Div
(Rs) growth yield
FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY18/FY16 FY16 FY17E FY18E FY17E FY18E FY17E FY18E (Rs) (%)
Thermax 854.3 4,352.0 4,056.9 4,237.1 306.0 290.4 313.7 25.6 24.4 26.3 1% 33.4 35.0 32.5 16.2 16.4 11.3 11.2 6.0 0.7
Triveni Turbine 127.0 796.3 834.4 1,054.5 107.6 147.1 182.8 3.3 4.5 5.5 30% 39.0 28.5 22.9 50.3 44.8 42.0 37.9 1.1 0.9
Va Tech Wabag 481.4 2,549.0 3,020.0 3,577.0 85.6 128.5 164.1 15.8 23.7 30.2 38% 30.5 20.3 15.9 17.5 19.4 12.5 14.5 4.0 0.8
V-Guard Industries 205.3 1,862.0 2,146.0 2,487.0 111.7 154.0 173.0 3.7 5.1 5.7 24% 55.3 40.3 36.0 40.4 37.2 29.0 26.3 3.5 1.7
Infra / real estate
Gayatri Projects 657.6 1,812.2 2,064.8 2,467.0 58.6 67.5 107.9 16.5 19.0 30.4 36% 39.7 34.6 21.6 9.8 11.5 8.0 11.7 2.0 0.3
ITNL 101.6 8,263.8 8,624.0 9,277.9 311.5 224.1 324.2 9.5 6.8 9.9 2% 10.7 14.9 10.3 8.6 9.1 3.3 4.7 2.0 2.0
IRB Infra 223.5 5,130.2 6,283.1 6,995.4 635.8 782.1 956.9 18.1 22.3 27.2 23% 12.4 10.0 8.2 13.2 15.1 15.2 16.4 4.0 1.8
Jaiprakash Asso 10.6 8,793.8 - - (3,511.7) - - -14.4 - - - - - - - - - - 0.0 0.0
Larsen & Toubro 1,444.2 1,02,632.0 1,11,785.3 1,26,385.8 4,732.0 5,249.4 6,287.5 50.8 56.4 67.5 15% 28.4 25.6 21.4 7.1 8.2 11.4 12.5 16.3 1.1
NBCC 235.2 5,838.3 7,146.9 10,446.9 311.1 363.1 526.9 5.2 6.1 8.8 30% 45.4 38.9 26.8 37.4 45.7 22.5 27.8 2.0 0.9
Oil & gas
Oil India 408.3 9,765.0 8,925.5 10,388.7 2,545.0 2,009.3 2,371.9 42.3 33.4 39.5 -3% 9.7 12.2 10.3 9.9 11.2 8.8 10.0 16.0 3.9
Reliance Ind 1,024.0 2,76,544.0 2,99,408.5 3,40,501.8 27,630.0 30,978.2 33,887.1 93.7 105.1 114.9 11% 10.9 9.7 8.9 9.1 9.2 11.4 11.3 10.5 1.0
Selan Exp. 192.5 62.0 78.1 96.2 12.9 20.9 24.5 7.9 12.7 14.9 37% 24.4 15.2 12.9 9.2 10.4 7.2 8.1 5.0 2.6
Pharmaceuticals
Aurobindo Pharma 769.3 13,896.1 16,477.8 19,707.6 2,048.0 2,630.0 3,455.0 35.0 44.9 59.0 30% 22.0 17.1 13.0 29.4 33.1 31.6 30.6 2.5 0.3
Cipla 560.0 13,678.3 16,843.3 19,670.7 1,505.9 1,979.9 2,688.9 19.5 21.3 27.5 19% 28.7 26.3 20.4 12.7 14.8 13.2 14.7 2.0 0.4
Cadila Healthcare 396.6 9,837.6 10,839.2 12,372.1 1,522.6 1,782.4 2,261.1 14.9 17.4 22.1 22% 26.6 22.8 17.9 28.9 33.2 26.3 26.2 3.2 0.8
Divi's Labs 1,259.7 3,769.0 4,256.1 5,178.5 1,111.9 1,228.4 1,448.7 41.9 46.3 57.2 17% 30.1 27.2 22.0 32.3 32.9 26.3 26.7 10.0 0.8
Glenmark Pharma 912.6 7,650.0 9,499.0 10,272.0 1,068.0 1,451.0 1,631.0 37.8 51.4 57.8 24% 24.1 17.8 15.8 24.3 25.7 25.7 22.7 2.0 0.2
Lupin 1,470.4 14,208.5 17,022.9 20,420.4 2,270.7 3,035.1 3,791.7 50.4 67.4 84.1 29% 29.2 21.8 17.5 22.2 25.6 21.7 21.5 7.5 0.5
Sun Pharma 703.7 28,269.7 35,638.9 36,757.9 5,401.1 7,317.6 8,122.9 22.4 30.4 33.8 23% 31.4 23.1 20.8 23.5 24.2 19.2 17.9 3.0 0.4
Torrent Pharma 1,317.3 6,529.0 6,762.3 7,276.9 1,862.0 1,205.6 1,380.3 110.0 71.3 81.6 -14% 12.0 18.5 16.1 27.1 25.8 27.3 22.7 35.0 2.7
Building materials
Grasim 909.7 35,171.6 38,180.6 43,623.5 2,443.6 3,250.8 3,650.6 52.3 69.6 78.2 22% 17.4 13.1 11.6 14.8 15.6 10.9 10.6 4.5 0.5
The Ramco Cements 602.8 3,672.9 3,890.8 4,388.5 534.4 567.1 704.1 22.4 23.8 29.6 15% 26.9 25.3 20.4 10.5 11.7 16.9 17.9 3.0 0.5
Shree Cement** 16,122.2 5,568.0 8,968.0 10,986.0 474.0 1,588.0 2,025.0 136.2 455.7 581.2 107% 118.4 35.4 27.7 22.0 23.0 23.0 23.0 24.0 0.1
UltraTech Cement 3,906.7 23,841.0 25,028.2 29,290.2 2,287.2 2,987.6 3,339.4 83.5 109.0 121.9 21% 46.8 35.8 32.1 16.7 17.1 12.7 12.6 9.5 0.2
Discretionary
Cox and Kings 219.8 2,351.9 2,347.9 2,665.4 284.9 309.1 424.2 16.8 18.3 25.1 22% 13.1 12.0 8.8 10.4 13.0 13.4 16.4 1.0 0.5
Century Ply (I) 237.5 1,664.0 1,925.0 2,192.0 167.0 199.0 230.0 7.5 8.9 10.3 17% 31.7 26.7 23.1 21.8 20.6 30.4 26.5 1.0 0.4
Inox Leisure 244.5 1,332.7 1,308.2 1,571.8 77.5 63.0 108.7 8.4 6.9 11.8 19% 29.1 35.4 20.7 13.1 17.8 9.6 14.3 0.0 0.0
Info Edge (India) 945.3 723.5 856.4 1,019.3 153.0 199.1 260.1 12.7 16.5 21.5 30% 74.4 57.3 44.0 15.2 17.1 10.3 12.0 3.0 0.3
KDDL 246.7 449.8 514.2 605.7 5.3 8.7 16.7 5.2 8.6 16.4 78% 47.4 28.7 15.0 11.1 12.9 10.1 16.5 1.5 0.6
KKCL 1,872.7 457.4 511.0 577.4 68.0 81.6 93.5 55.1 66.2 75.8 17% 34.0 28.3 24.7 31.3 31.4 25.5 25.5 60.0 3.2
Orbit Exports 273.0 150.0 161.0 185.0 23.0 25.2 29.9 16.0 17.6 20.8 14% 17.1 15.5 13.1 15.9 16.6 20.7 20.9 3.8 1.4
Raymond 634.4 5,621.0 6,022.0 6,562.0 115.5 144.6 187.3 20.3 23.8 30.8 23% 31.3 26.7 20.6 11.4 12.8 8.6 10.2 3.0 0.5
Relaxo Footwear 417.2 1,715.4 1,945.7 2,269.5 120.2 146.3 183.7 10.0 12.2 15.3 24% 41.7 34.2 27.3 29.6 36.7 19.8 22.1 0.6 0.1
Speciality Rest. 88.4 321.4 379.9 460.1 0.2 14.7 26.4 0.0 3.1 5.6 - - 28.5 15.8 6.5 11.2 4.7 8.1 1.0 1.1
Thomas Cook India 215.2 4,236.7 5,464.6 6,724.1 50.2 140.3 281.1 0.8 2.9 5.8 169% 268.9 74.2 37.1 11.4 20.4 14.1 22.8 0.4 0.2
Wonderla Holidays 378.8 205.4 281.6 358.6 59.8 59.1 88.3 10.6 10.5 15.6 21% 35.8 36.1 24.3 21.0 28.4 14.2 19.3 0.5 0.1
ZEEL 503.3 5,851.5 6,754.6 7,597.4 1,030.1 1,318.1 1,841.8 11.2 13.7 19.2 31% 44.9 36.7 26.2 27.6 32.6 26.1 29.3 2.3 0.4
Diversified / Miscellaneous
Aditya Birla Nuvo 1,314.7 5,422.6 7,110.5 7,794.1 303.6 370.0 395.2 23.3 28.5 30.4 14% 56.4 46.1 43.2 6.4 6.5 4.4 4.5 5.0 0.4
Bajaj Holdings 2,195.0 469.8 - - 2,265.2 - - 203.5 - - - 10.8 - - - - - - 25.0 1.1
Bharti Airtel 309.0 96,619.2 1,00,050.0 1,06,779.7 4,735.3 3,758.2 3,529.3 11.8 9.4 8.8 -14% 26.2 32.9 35.1 10.5 8.6 5.9 4.6 1.4 0.4
Bharat Electronics 1,305.4 7,295.2 8,205.3 9,330.9 1,364.9 1,538.2 1,762.2 56.9 64.1 73.4 14% 22.9 20.4 17.8 18.5 18.2 13.8 13.7 17.0 1.3
Gateway Distriparks 238.8 1,046.1 1,133.3 1,215.8 123.6 123.9 148.7 11.4 11.4 13.7 10% 21.0 21.0 17.5 14.0 16.0 12.9 15.4 7.0 2.9
Max Financial 540.7 11,711.9 - - 252.7 - - 9.5 - - - 57.1 - - - - - - 0.0 0.0
PI Industries 901.2 2,096.8 2,495.2 2,984.2 300.0 399.6 475.5 22.2 29.6 35.2 26% 40.6 30.4 25.6 34.6 34.1 30.0 27.6 3.1 0.3
Ratnamani Metals 620.7 1,719.0 1,702.0 1,954.0 162.7 164.3 190.8 34.8 35.2 40.8 8% 17.8 17.6 15.2 19.9 20.7 14.8 15.2 5.5 0.9
Supreme Industries** 886.7 2,974.8 4,812.0 5,843.1 212.0 420.5 522.9 16.7 33.1 41.2 57% 53.1 26.8 21.5 30.4 33.7 26.0 26.4 7.5 0.8
UPL 669.4 13,301.5 15,520.3 18,046.2 1,438.9 1,843.4 2,243.4 27.6 35.3 43.0 25% 24.3 19.0 15.6 18.5 19.0 22.5 22.3 5.0 0.7
^Marico after 1:1 bonus
**June-ended financial year till FY2015, FY2016 consists of only 9 months
Crompton Greaves is in the process of selling its overseas power system business by Q4FY2016; hence, we have not estimated the FY2017 numbers
Divis Labs after 1:1 bonus; BEL after 2: 1 bonus
*** June ended
Cadila Healthcare post stock split from Rs5 to Rs1

Remarks
Automobiles
Apollo Tyres Apollo Tyre is the market leader in truck and bus tyre segments with a 28% market share in India. The company
will be investing $600mn over the next three years to set up a greenfield facility in Hungary and Rs4,000 crore to
expand capacity at Chennai facility. The expanded capacities are likely to come on stream by 2017-18. Also the
recent foray in the 2 wheeler tyres strengthens Apollo Tyres presence across all the key automobile segments. ATL
is likely to witness healthy double-digit topline growth, led by demand improvement in both, the domestic as well
as European operations. Further, softening RM prices and better pricing power would enable ATL to expand
margins in H2FY2017. We expect ATL’s margins to be around 14.9% in FY2017. We retain our Buy rating with
a revised price target (PT) of Rs245.
Ashok Leyland Ashok Leyland, the second largest CV manufacturer in India, is a pure CV play. ALL’s Board of Directors has
approved the amalgamation of Hinduja Foundries (HFL – a group company) with itself. ALL sources its complete
casting require¬ments from HFL and is a key client, constituting ~35% of HFL’s total revenue. A downtrend in
the freight rates and a high sales base of Q2FY2015 (due to pre-buying ahead of implementation of safety norms)
have hurt MHCV demand in the recent past. MHCV demand is expected to gain pace in H2FY2017, spurred by
the increased government invest¬ment in infrastructure, revival in mining and pre-buying due to the impending
im¬plementation of the new emission norms wef April 1, 2017. We expect MHCV industry’s growth as well as
ALL’s FY2017 volume growth to moderate to 10% as against the earlier expectation of 15%. HFL acquisition is
likely to result in ~3% equity dilution for ALL. The absolute net profit for ALL is unlikely to be impacted by this
event given the tax benefits available to ALL. The tax benefits would offset the losses from HFL in the near term.
Further, pre-buying and the government’s proposed scrappage policy are likely to boost MHCV sales go¬ing
ahead. We have maintained our ‘Buy’ rating on the stock with a revised Price Target (PT) of Rs105.
Bajaj Auto Bajaj Auto's domestic motorcycle volumes have been under pressure over the last couple of years largely due to
issues in the executive segment However, the launch of CT100 and refreshed Platina has given a much needed
volume push while the newly launched Pulsar variants, Avenger and V-series have helped consolidate its leadership
in the premium and luxury motorcycle segments. The macro-economic issues (sharp currency depreciation) in the
key export markets including Nigeria have affected the dispatches to these countries and the impact is likely to be
felt for the next one to two quarters. The launch of its quadricycle, RE60, has been delayed by legal issues and the
matter is expected to be sorted soon and will be a trigger for re-rating of the stock. Bajaj Auto is likely to report
a strong double-digit growth in the domestic motorcycles space on the back of demand recovery and market share
gains through the new launches. However, the decline in export volumes would largely offset the gains made in
the domestic motorcycles market. Overall, we expect BAL to report a 5% volume growth in FY2017. We maintain
our 'Hold' rating with a price target (PT) of Rs3,150.
Gabriel India Gabriel is one of India’s leading manufacturers of shock absorbers and front forks with a diversified customer
base. Gabriel’s revenues are expected to grow at a healthy 15% CAGR over FY2016-FY2018 due to improved
outlook for the two-wheeler industry and the passenger car segments. There has been a ramp-up in supplies to
Honda Motorcycle & Scooter’s (HMSI) new plant in Gujarat, as also to the new models of Maruti Suzuki and
Mahindra & Mahindra (M&M). In the near term, the stock performance would be influenced by the recovery in
the two-wheeler market, a likely positive rub-off from the implementation of the Seventh Pay Commission’s
recommendations and expectations of a normal monsoon in 2016. The OPM is estimated to improve by 70BPS
over the next two years due to operating leverage and cost control initiatives. In view of the improved earnings,
we upgrade our recommendation on the stock from “Hold” to “Buy” with a price target (PT) of Rs130
Hero MotoCorp HMCL is the largest two-wheeler manufacturer in the world with sales of over 6.6 mn vehicles in FY16 and a
domestic market share of 39%. We expect the two-wheeler industry to grow at 10-12% CAGR over the next five
years driven by increased penetration levels in rural areas and replacement demand. HMCL is expected to maintain
its leadership position in the industry with new launches in the premium motorcyles and scooters segments.
Further, massive capex plans implemented by the company in the past, including shall ramp up the production
levels. We believe that the cost savings from the LEAP program, coupled with receding pricing pressures would
help the company to offset rising commodity prices.. HMCL is likely to clock 13% topline and 17% earnings
CAGR over FY2016-FY2018, led by strong demand momentum and recovery in the rural sentiments. The company
is among the best plays on the rural demand recovery theme. We maintain our Buy rating with a revised price
target (PT) of Rs4,100.
M&M M&M is a leading maker of tractors and UVs in India. We expect demand for the automobile segment to pick up
with an improvement in customer sentiment. Additionally, new launches especially in the compact UV space will
drive volume growth. After growing in strong double digits, the tractor demand was under pressure in FY15-16
due to weak monsoon. Given the normal monsoon for FY2017 (leading to an improved rural outlook), we have
raised our FY2017 tractor volume growth forecast for M&M from 10% YoY earlier to 15% YoY. We remain
positive on the stock, given its leadership position in the domestic tractor and UV segments as well as the value
derived from its subsidiaries across business segments. We maintain our Buy rating on the stock with a SOTP-
based price target of Rs1580.
Maruti Suzuki Maruti Suzuki is India's largest passenger vehicle maker with a strong 46% market share. It has been able to gain
market share over the last two years on the back of a diverse product portfolio, a large distribution network with
an increased focus on rural markets and a shift in consumer preference to petrol models from diesel. It is poised to

Remarks
reap the benefits from the increased discretionary spending from the Seventh Pay Commission pay-out. The recently
launched premium hatchback, Baleno and Compact SUV Vitara Brezza have received a positive response which
will help the company expand market share in the segment. The management plans to double its existing sales and
distribution network in order to achieve its target of doubling domestic volumes over the next five years. Maruti
is likely to outpace the PV industry growth rate in FY2017-FY2018 on the back of sustained strong demand for
recent launches and a robust product pipeline. The commissioning of the first phase of Gujarat plant will further
aid volume expansion. MSIL's yen exposure is expected to reduce with a higher localisation level while the royalty
on future models shall be INR denominated, thus shielding the OPM's partly. Also, Operating Profit Margin
(OPM) is expected to improve on the back of operating leverage and lower discounts due to strong demand. We
maintain 'Buy' rating with a revised price target (PT) of Rs6,430.
Rico Auto Inds. Rico Auto is one of the largest producers of high-pressure non-ferrous die castings for the auto sector. The significant
cash inflow due to stake sale in a JV company has enabled it to deleverage its balance sheet. Additionally, a lower
interest burden will result in a growth in the earnings and free cash flow. Further, improved demand outlook from
the key customers - Hero MotoCorp, Maruti Suzuki and Renault (60-65% of total revenue), coupled with
commissioning of the Chennai plant will boost the company's topline going forward. We expect the company to
clock 16% revenue CAGR over the next two years. Further, RAI's margins are also likely to improve due to a
better product mix, operating leverage and improved profitability of subsidiaries/JV. We retain our Buy rating on
the stock with a revised PT of Rs72.
TVS Motor TVS Motor is the fourth largest two-wheeler manufacturer in the country with a strong presence in the scooter
segment. The scooter segment has surpassed the growth in the motorcycle segment over the past couple of years
and currently contributes 30% of the total two-wheeler volumes. On the motorcycle front, two new launches in
January 2016 (Apache RTR and Victor) have generated higher volumes for the company TVSM is poised to
outpace the 2W industry growth given the new launches and sustained demand for its products. The alliance with
BMW would further aid topline growth. We also believe that the alliance with BMW would be a game changer for
TVSM, as it would enhance its brand image in the premium motorcycle category. Also, the technological inputs
received from BMW would significantly enhance the brand appeal of the entire TVSM product range, enabling it
to command higher margins. Benefits of operating leverage, better product mix and alliance with BMW are
expected to aid in margin expansion over the next 1-2 years. We expect TVSM to report 36% CAGR growth in
net profit over the next two years. We retain our 'Buy' rating with a revised price target (PT) of Rs455.
Banks & Finance
Allahabad Bank With a wide network of over 3,000 branches spread across India, Allahabad Bank enjoys a stronghold in north
and east India. But it has reported a rise in NPAs resulting in deterioration of its asset quality. Higher proportion
of stressed loans and low tier-I CAR remain the key concerns of the bank.
Axis Bank Axis Bank is the third largest private sectors bank, continues to grow faster than the industry and has diversified
its book in favour of the retail segment (~40% of loans in retail segment). The bank’s liability profile has improved
significantly which would help to sustain the margins at healthy levels. We expect the earnings growth to remain
reasonably strong driven by a healthy operating performance. While asset quality pressures have emerged as pain
points due to infrastructure and steel exposures, we expect the stress to persist in near term.
Bajaj Finance Bajaj Finance, owned by Bajaj Finserv, is one of the most diversified and leading NBFCs in the country. It has
assets spread across products, viz loans for consumer durables, two- and three-wheelers, loans to small and medium
enterprises (SMEs), mortgage loans and commercial loans. Despite a strong growth in loans, the asset quality and
provisioning remain among the best in the system. Given the strong growth rate, high margins and return ratios,
it deserves to trade at a premium to the other NBFCs
Bajaj Finserv Bajaj Finserv is a financial conglomerate having presence in financing business (vehicle finance, consumer finance
and distribution) and is among the top players in the life insurance and general insurance segments. Its consumer
finance (Bajaj Finance) and general insurance businesses continue to report a robust performance while the life
insurance business is showing signs of a pick-up after being affected by a change in regulations.
Bank of Baroda Bank of Baroda is among the top public sector banks (PSBs) having a sizeable overseas presence (over 100 offices
in 24 countries) and a strong network of over 5,000 branches across the country. It has a stronghold in western
and eastern India. Its performance metrics remain better than that of the other PSBs and asset quality has deteriorated
in line with the RBI’s directive to clean the balance sheet.
Bank of India Bank of India has a network of over 4,800 branches, spread across the country and abroad, along with a diversified
product and services portfolio, and steadily growing assets. The operating performance and earnings have eroded
significantly due to margin deterioration and sharp rise in NPAs. Given the rise in the number of incremental
stressed loans and the relatively weaker capital position, its valuations may remain subdued.
Capital First Capital First (erstwhile Future Capital Holdings) had been acquired by global private equity firm, Warburg Pincus
(a 72% stake). The present management has taken several initiatives to tap the high-growth retail product segments,
like gold loans, loan against property and loan against shares. It has a strong CAR and sound asset quality. Its
loan book is expected to sustain a 25-30% growth in the next three years. As a result of several initiatives taken,
the operating leverage will play out and may lead to significant pick-up in profitability over medium term.

Remarks
Corp Bank Corporation Bank is a mid-sized PSB having a relatively higher presence in south India. It is predominantly
exposed to the corporate segment, which constitutes about 45% of its book. Due to a higher dependence on the
wholesale business and a low CASA ratio, it lags its peers in terms of operational performance. Also, the rise in
NPAs could keep provisioning high and weaken earnings performance.
Federal Bank Federal Bank is among the better performing old private sector banks in India with a strong presence in south
India, especially Kerala. Under the new management, the bank has taken several initiatives, which would improve
the quality of its earnings and asset book. The asset quality has shown stress in the past few quarters, though we
expect a gradual improvement in the NPAs and the operating performance to pick up gradually. The valuations
seems attractive over the medium to long term.
HDFC HDFC is among the top mortgage lenders providing housing loans to individuals, corporates and developers. It
has interests in banking, asset management and insurance through its key subsidiaries. As these subsidiaries are
growing faster than HDFC, the value contributed by them would be significantly higher going forward. Due to a
dominant market share and consistent return ratios, it should continue to command a premium over the other
NBFCs. Any unlocking of value from its insurance business will be positive for the stock.
HDFC Bank HDFC Bank is among the top performing banks in the country having deep roots in the retail segments. Despite
the general slowdown in the credit growth, the bank continues to report a strong growth in advances from retail
products. Its relatively high margins (compared with its peers), strong branch network and better asset quality
make HDFC Bank a safe bet and there is scope for expansion in the valuations.
ICICI Bank ICICI Bank is India’s largest private sector bank with a network of over 3,800 branches in India and a presence in
around 18 countries. The bank has made inroads into retail loans (~45% of the book) and significantly improved
its liability franchisee. The operating profit improved significantly though its exposure to some troubled sectors
(infrastructure, steel etc) has increased pressure on the asset quality. However, a healthy growth in the operating
income and proceeds from monetisation of the stake in subsidiaries will help to deal with the NPA challenges.
IDBI Bank IDBI Bank is one of leading PSBs of India in terms of size of asset, though it is largely present in the corporate
lending space. It is gradually working towards improving its liability base and expanding the retail book which is
likely to reflect in the form of better margins and return ratios. However, due to huge asset quality pressure, low
tier-I CAR and slower business growth, the stock is likely to underperform in the near term.
LIC Housing LICHFL is the third largest mortgage financier (including banks) in India with a market share of 11% and loan
book of over Rs1,00,000 crore. It is promoted by Life Insurance Corporation of India, which is among the most
trusted brand in the country. With over 200 branches, 1,241 direct sales agents, 6,535 home loan agents and 782
customer relationship associates, the company has among the strongest distribution structures in India to support
business expansion. Going ahead, a revival in the economy and moderation in the borrowing rates could be the
key triggers for the stock. Therefore, considering stable RoE of ~20%, sound asset quality and healthy growth
outlook, the company’s fundamentals are strong.
PNB Punjab National Bank has one of the best liability mixes in the banking space, with low-cost deposits constituting
around 40% of its total deposits. This helps it to maintain one of the highest margins among PSBs. However, in
view of the weakness in the economy and relatively higher exposure to troubled sectors, the asset quality stress has
increased and NPA issues will persist over next few quarters.
PFS PTC India Financial Services, owned by PTC India, is focused on providing financial solutions to projects in the
energy value chain. Given the robust lending opportunities in the renewable energy segment and the likely reforms
in the thermal power segment, the loan growth is expected to remain strong over the next two to three years. The
proceeds from exits in investments would add to the profitability. The asset quality despite some deterioration is
manageable.
SBI State Bank of India is the largest bank of India with loan assets of over Rs14 lakh crore. The successful merger of
the associate banks and value unlocking from insurance business could provide further upside for the bank. While
the bank is favourably placed in terms of liability base and the operating profit is also better than peers; the asset
quality has emerged as a key pain point which will affect the earnings growth.
Union Bank Union Bank of India has a strong branch network and an all-India presence. The bank aspires to become the
largest retail, MSME bank. Hence, it has ramped up its manpower and infrastructure to ramp up retail, SME
lending. The bank’s asset quality challenges have come to fore (mainly from the corporate portfolio) whereas low
tier-1 CAR also remains an area of concern.
Yes Bank Yes Bank, a new generation private bank, started its operations in November 2004 and has emerged as among the
top performing banks. It follows a unique business model based on knowledge banking, which offers product
depth and a sustainable competitive edge over established banking players. The bank is suitably poised to ride the
recovery in the economy and the retail deposit franchise is showing a sharp improvement which will support the
margins in the medium to long term.
Consumer goods
Britannia Britannia is the second largest player in the Indian biscuit market with about 30% market share. Under a new
leadership, Britannia has been able to leverage and monetise its strong brand and position in the biscuit and snack

Remarks
segments. The company can sustain its higher than industry growth rates with an improving distribution reach, entry
into newer categories and focus on cost efficiency. We recommend a Buy on the stock with a price (PT) of Rs3,950.
Emami Emami is one of the largest players in the domestic FMCG market with a strong presence in the under-penetrated
categories such as cooling oil, antiseptic cream, balm and men’s fairness cream. The recently acquired “Kesh King”
brand improves the product and margin profiles of the company. The desire to become a large FMCG player by
riding on a portfolio of differentiated brands and widening reach in various geographies will help Emami to achieve
a growth of over 20% CAGR over the next 2-3 years. We recommend a Buy on the stock.
GSK Consumer GSK Consumer Healthcare is a leading player in the MFD segment with ~70% share in the domestic market.
Judicious new launches and brand extensions, and the expansion of its distribution reach have helped it to stay ahead
of the competition and maintain its pricing power over the years. But the slowdown in discretionary space has
affected the company’s volume growth. In a bid to de-risk its business model, it has expanded its product portfolio
by entering into new categories such as biscuits and oats in the recent years. With cash balance of more than Rs2,500
crore, the company can invest in growth initiatives and/or reward its shareholders with a healthy dividend payout.
GCPL Godrej Consumer Products is a major player in personal wash, hair colour and household insecticide market
segments in India. The recent acquisitions, ie Strength of Nature, Darling Group, Tura, Megasari and Latin
American companies, have helped the company to expand its geographic footprint and improve growth prospects.
We believe that the decent volume growth in the domestic business, coupled with a strong growth in Indonesia,
Africa and Argentina businesses would help it to achieve an 18% topline growth and 20%+ bottomline growth
(CAGR) over FY2015-FY2017.
HUL Hindustan Unilever is India's largest FMCG Company. With improving sentiments in the urban markets and a
normal monsoon resulting in better rural demand, HUL's volume growth in the domestic business is expected to
improve in the coming years. Also, new product launches and entry into new categories will drive the performance
of the company in future. With improving business fundamentals the downside risk in the stock price is limited.
Hence, we recommend a Buy on the stock. In the long term, it will be one of the key beneficiaries of the Indian
consumerism story.
ITC ITC has a strategy of effectively utilising the excess cash generated from its cash cow, the cigarette business, to
strengthen and enhance its other non-cigarette businesses. This would nurture the growth of these businesses some
of which are at a nascent stage. The quantum of excise duty of 10% declared in the Union budget 2016-17 was
much lower than in the earlier years. This should help in stabilising cigarette sales volume in the coming years. The
current valuation makes ITC one of the cheapest stocks in the large-cap FMCG space.
Jyothy Labs Jyothy Laboratories is the market leader in the fabric whitener segment in India. With the successful integration of
Henkel and the induction of a new management team led by S Raghunanadan, it has transformed itself from a
one-brand wonder to an aggressive FMCG player. We expect its top line to grow at a CAGR of 15%. A stable
OPM and lower interest cost would aid the PAT to grow at 26% CAGR over FY15-17.
Marico Marico is among India’s leading FMCG companies. Its core brands, Parachute and Saffola, have a strong footing
in the market. It follows a three-pronged strategy which hinges on expansion of its existing brands, launch of new
product categories (especially in the beauty and wellness space) and growth through acquisitions. While the domestic
product portfolio is likely to achieve a steady growth in volumes, the international business is yet to gain momentum.
Marico has been our preferred pick in the FMCG sector and we remain positive on its long-term growth story.
Zydus Wellness Zydus Wellness is bearing the brunt of a limited product portfolio of three brands (Nutralite, Sugar Free and
Everyuth) that cater to a niche category. The company would benefit from a lower input cost, improving urban
consumer sentiment and a new distribution system in FY17. Thus, we expect a better operating performance from
it in FY17.
IT/IT services
Firstsource Firstsource Solutions is a specialized BPO service provider. The management continues to maintain revenue growth
(10-12% YoY on CC terms) and margin expansion (70-90BPS YoY) guidance for FY2017 with an upward bias.
The health of its balance sheet is improving gradually as the company is gradually reducing its debt burden
through internal accruals. The company expects to be comfortably net cash positive by the end of FY17. We
expect the ongoing macro overhang to restrict the stock's outperformance in the near-to-medium term, as FSL has
38.1% exposure to the UK.
HCL Tech HCL Technologies is a global technology company. Its management indicates that the demand environment looks
promising with an increase in market share coupled with a significant increase in the deal funnel. The management
has made investments in digital technologies (DRYiCE), which will catapult the company to the next level of
growth during the ongoing digital transition. We remain positive on the company in view of its large order wins,
acquisitions in the ERD space, investments in applications space and superior earnings visibility.
Infosys Infosys is India's premier IT and IT-enabled Services Company that provides business consulting, technology,
engineering and outsourcing services. It has also given a promising aspiration target for 2020 of achieving $20bn
in revenues and 30% in margin. Under the leadership of Vishal Sikka, the company is doing the right thing by
investing in the digital space (both organic and inorganic), improving client engagement through design thinking,
and automation. We remain positive on the company's growth prospects for the coming years.

Remarks
Persistent Persistent Systems has proven expertise and a strong presence in newer technologies, strength to improve its IP
base and the best-in-the-class margin profile which set it apart from the other mid-cap IT companies. Looking at
the strong growth in enterprise revenue, PSL's enterprise digital transformation strategy is shaping up well. Further,
led by the recent acquisitions and alliance with IBM to build IoT solutions for IBM's Watson platform, we expect
the revenue momentum to accelerate in FY2017/FY2018 and the margins are likely to remain stable on the back
of the initiatives taken by the company.
TCS Tata Consultancy Services is among the pioneers of the IT services outsourcing business in India and is the largest
IT service firm in the country. Its management expects the digital revenues to grow much faster in the coming
years; these grew by 52.2% YoY to $2.3 billion in FY16. The management noted that headcount addition will be
materially lower than in FY16 and dependence on Visas will come down. We believe that the ongoing transition
phase of the IT industry and macro overhang ('Brexit' and US election) will restrict stock outperformance in the
medium term. On a longer term basis, we still prefer TCS, owing to its diversified portfolio and head-start in the
Digital space.
Wipro Wipro is among the top five IT companies in India but in the last few years it has been lagging the industry in terms
of growth. We believe, owing to weakness in the energy, telecom, and some project deferrals, it’s unlikely to show
material improvement in earnings on an organic basis in FY17. The management has given an ambitious target of
$15 billion revenues and 23% margin by 2020. We see the target of new CEO Abid Ali Neemuchwala as an uphill
task looking at the current growth trajectory. Therefore, we remain sceptical, as anecdotal evidence on Wipro in
the last two to three years does not inspire confidence.
Capital goods/Power
BHEL Bharat Heavy Electricals, India’s biggest power equipment manufacturer, has been the prime beneficiary of the
multi-fold increase in the investments made in the domestic power sector over the last few years. However, the
order inflow has been showing signs of slowing down which would remain a major concern for the company. The
key challenge before the company now would be to maintain a robust order inflow and margin amid rising
competition and lower order inflow.
CESC CESC is the power distributor in Kolkata and Howrah (backed by 1,225MW of power generation capacity) which
is a strong cash generating business. Further, 600MW of regulated generation capacity (to serve Kolkata distribution)
has come on stream recently in Haldia. Also its 600MW thermal power project at Chandrapur has signed PPA and
started operating. The losses in the retail business are coming down gradually over the past and it is expected to
break even soon. The BPO subsidiary, FirstSource, is performing well in line with expectations. However, the
recent diversification into unrelated businesses like IPL franchisee would hurt its valuations.
Crompton Greaves Crompton Greaves’ key businesses—industrial and power systems—are passing through a rough patch and are
potential beneficiaries of the upcoming investment cycle revival. Also, the company is looking to unlock value by
selling its international subsidiaries.
Finolex Cables Finolex Cables, a leading manufacturer of power and communications cables, is set to benefit from an improving
demand environment in its core business of cables. It is leveraging its brand strength to build a high-margin
consumer product business. It has recently launched Fans and switch Gears. Further, it is planning to launch water
Heaters soon. Addition of new products in the product portfolio could be the next growth driver. We see a healthy
earnings growth, return ratios in high teens and superior cash flows which bode well for the stock. Hence, we
remain positive on the stock.
Greaves Cotton Greaves Cotton is a mid-sized and well-diversified engineering company. Its core competencies are in diesel/petrol
engines, power gensets, agro engines, pump sets (engine segment) and construction equipment (infrastructure
equipment segment). The management has taken a strategic call to close and hive off the loss-making infrastructure
equipment division. GCL’s growth momentum is expected to pick up and we expect 11% CAGR over FY2016-18
due to a revival in the automotive business and the agri-equipment space. A better economic growth, improved
product mix, forecast of a normal monsoon after two consecutive years of drought coupled with new product
launches are likely to spur revenue growth for GCL. We remain positive on the stock and maintain our Buy rating
with a price target of Rs160.
Kalpataru Kalpataru Power Transmission is a leading EPC player in the transmission & distribution space in India.
Opportunities in this space are likely to grow significantly, thereby providing healthy growth visibility. The OPM
of the stand-alone business is likely to remain around 10%; however the OPM of JMC Projects (a subsidiary) is
showing signs of improvement. We see some value unlocking potential from selling assets or listing of new business
in future. We remain positive.
PTC India PTC India is a leading power trading company in India with a market share of 35-40% in the short-term trading
market. In the last few years, the company has made substantial investments in areas like power generation
projects and power project financing which will start contributing to its earnings. We retain our positive stance on
expected healthy volume uptick, with an increasing share of long-term contract business.

Remarks
Skipper Skipper is uniquely placed to exploit the growing opportunities in two lucrative segments: power (transmission
tower manufacturing and EPC projects) and water (PVC pipes). It has a comfortable order book of more than
Rs2,000 crore in the transmission business, which looks promising given the huge investments proposal by the
government in the power T&D segment in the next five years. It has expanded the PVC capacity manifold (4x)
and aspires to turn a national player from a regional player.
Thermax The energy and environment businesses of Thermax are direct beneficiaries of the continuous rise in India Inc’s
capex. Thermax’ group order book stands at around consolidated revenues. However, the company has shown its
ability to maintain a double-digit margin in a tough environment. We retain Hold on the stock due to its rich
valuation.
Triveni Turbines Triveni Turbines (TTL) is a market leader in 0-30MW steam turbine segment. TTL is at an inflexion point with a
strong ramp-up in the after-market segment and overseas business while the domestic market is showing distinct
signs of a pick-up. The company has also formed a JV with GE for steam turbines of 30-100MW range which is
likely to grow multi-fold in the next 4-5 years. TTL is virtually a debt-free company with a limited capex requirement
and an efficient working capital cycle, reflected in very healthy return ratios. Further, boosted by the expected
uptick in the domestic capex cycle, the company's earnings are likely to grow by 25%+ per annum over the next
3-4 years.
V Guard Ind V-Guard Industries is an established brand in the electrical and household goods space, particularly in south
India. Over the years, it has successfully ramped up its operation and network to become a multi-product company.
The company has a strong presence in the south region. It is also aggressively expanding in non-south markets and
is particularly focusing on the tier-II and III cities where there is a lot of pent-up demand for its products.
Va Tech Wabag VA Tech Wabag (VTW) is one of the world’s leading companies in the water treatment field with eight decades of
plant building experience. Given the rising scarcity of fresh water availability, we expect flow of huge investments
in water segment both globally and domestically. With rising urbanisation and industrialisation in India, we
expect substantial investments in this space. Given the large opportunity ahead and inherent strengths of VTW,
like professional management, niche technical expertise and global presence, we remain positive on the stock.
Infrastructure/Real estate
Gayatri Proj Gayatri Projects is a Hyderabad-based infrastructure company with a very strong presence in irrigation, road and
industrial construction businesses. The order book stands at Rs12,269 crore, which is 6.8x its FY2016 revenues.
It is also expanding its power and road BOT portfolio and plans to unlock value by offloading stake to private
equity. The company has potential to transform itself into a bigger entity.
IL&FS Trans IL&FS Transportation Networks is India’s largest player in the BOT road segment with a pan-India presence and
a diverse project portfolio. The fair mix of annuity and toll projects, and state and NHAI projects along with the
geographical diversification across 12 states reduce the risk to a large extent and provide comfort. Further, a
strong pedigree along with the outsourcing of civil construction activity helps it to scale up its portfolio faster.
Thus, it is well equipped to capitalise on the huge and growing opportunity in the road infrastructure sector.
IRB Infra IRB Infrastructure Developers is the largest toll road BOT player in India and the second largest BOT operator in
the country with all its projects being toll based. It has an integrated business model with an in-house construction
arm which provides a competitive advantage in bidding for the larger projects and captures the entire value from
the BOT asset. Further, it has a profitable portfolio as majority of its operational projects have become debt-free
and it has presence in high-growth corridors which provides healthy cash flow. Thus, it is well poised to benefit
from the huge opportunity in the road development projects on the back of its proven execution capability and the
scale of its operations.
Jaiprakash Asso Jaiprakash Associates has been facing earnings pressure across business verticals. Further, it is in the process of
concluding its cement asset sale to deleverage its balance sheet. The construction and real estate division has also
been underperforming lately. The current uncertainty in business restructuring and liquidity concerns has led to a
cautious view on the stock.
L&T Larsen & Toubro, being the largest engineering and construction company in India, is a direct beneficiary of the
domestic infrastructure capex cycle. Further, backed by its sound execution track record and healthy order book,
the company will do well. Monetisation of the non-core businesses will continue for some time, leaving scope for
further value unlocking. Measures planned by the company to improve its return ratios augur well. Hence, we
remain positive on the stock.
NBCC NBCC (India), a Navratna public sector enterprise is notified as a Public Works Organization (PWO), which gives
it a unique eligibility to bag orders on a nominated basis from government departments and PSUs. NBCC has already
amassed a huge order book, which gives it a strong revenue visibility for the next five years. Moreover, future
prospects look much brighter given the opportunities from multiple areas, like redevelopment of old government
colonies in Delhi, Rajasthan & Odisha, development of government lands, Smart Cities, 'Housing for All 2022' and
'Amrut. Given the huge competitive advantage, a unique business model, high return ratios and healthy cash flows,
we remain positive on the stock.

Remarks
Oil & gas

Oil India Oil India has several hydrocarbon discoveries across reserves in Rajasthan and the north-eastern region of India.
The total proven and probable reserves of the company stand at 52 MMTOE and 121 MMTOE respectively. Its
reserve-replacement ratio is also healthy. Though currently weak global crude oil prices are weighing on its
performance, operational performance is healthy and offers high dividend yield.
Reliance Ind Reliance Industries has one of the largest and complex refining businesses in India which enjoys a substantially
higher refining margin over the benchmark GRM. Further, its petrochemical business is also highly efficient, where
RIL is expanding capacity. We expect the GRM to remain healthy and the petrochem margin to be maintained in
the medium term on an uptick in the domestic demand. Currently, the decline in gas output from the KG-D6 basin
is weighing on the stock price; however, capex in downstream business (incremental capacity in the petchem
business and petcoke gasification in refining) would be the earnings driver in the coming years. Large investment
in Reliance Jio could add value in long term.
Selan Exploration Selan Exploration Technology is an oil E&P company with five oil fields in the oil-rich Cambay Basin of Gujarat.
The initiatives taken to monetise the oil reserves in its Bakrol and Lohar oil fields are likely to improve production.
Further, it intends to explore its next field, Indrora, which is the most prolific one with significant reserves. Based
on this, we expect it to ramp up production significantly, subject to approval for the new wells. However, weak
global oil prices are likely to be an overhang on the stock in the medium term.
Pharmaceuticals
Aurobindo Pharma Aurobindo Pharma is set to post a healthy growth on the back of a ramp-up in the US and European markets,
thanks to a strong product pipeline built over a period and focus on niche segments like injectibles, hormones,
penems and sterile products. The expected increase in the export-led business and a favourable tilt in the revenue
mix are likely to boost the margin, resulting in a faster growth in the earnings as compared with the revenues. It
has recently acquired the commercial operations (revenue size EUR320mn) of Actavis Plc in seven western European
countries and of Natrol in the USA to take on the nutraceutical business, which is a strategic fit.
Cadila Cadila Healthcare’s performance in the US generic vertical is likely to improve on the back of new product
approvals. Besides, its consumer business and exports to the emerging markets will help it to achieve a superior
growth. Cadila has recently launched its Authorised Generic (AG) Asacol HD in the US market, numbers from
which will start reflecting from Q2FY2017 onwards. This will help the company to get its US business growth
back on track. Further, the company expects the resolution of USFDA warning letter to come in Q2FY2017 (by
September 2016), which will be another key trigger to improve the overall operating performance from Q2FY2017
onwards.
Cipla Cipla has brought about a paradigm shift in its business strategy. To revive growth, it has (1) enhanced focus on
technology-intensive products in the inhalation and nasal spray segments; (2) established front-end presence in the
key markets like South Africa, USA and Europe; (3) developed an appetite for inorganic expansions; and (4)
invested in future growth areas like biosimilars.
Divi’s Labs The management has altered the FY2017 revenue growth guidance to 14-15% (vs. 18-20%), as the Kakinada
expansion has been delayed. However, the OPM will be maintained in the range of 37-38%. Once the Rs750
crore capex materialises, sales growth for FY2018 onwards can go back to the higher trajectory. The management
expects the Kakinada SEZ to boost growth, reaffirming 20% growth from FY2018 onwards.
Glenmark Pharma The management has given a revenue growth guidance of more than 25% for FY2017 (including Zetia). The
company will report 12-15% base revenue growth in FY2017 and FY2018 each. The management has indicated
that for future growth, the key focus areas will be dermatology, contraceptives and complex injectables. The
growth would be mainly driven by the USA, EU and India, which are witnessing an exponential growth on
account of launch of new products. Currently, it has three new chemical entities and four new biological entities
in clinical trials, out-licensing potential.
Lupin The expected ramp-up in the launch of oral contraceptives, ophthalmic products, branded franchise (with addition
of in-licenced product-Alinia, Inspira Chamber VHC and Locoid lotion) in the USA and a robust pipeline of new
launches in the domestic and overseas markets provide strong growth visibility for Lupin. However, we believe in
the near term, the stock may remain range-bound till the USFDA concerns subside. We remain focused on the Goa
plant and the outcome of the 483s issued there in March 2016, given that it is a large source of Lupin’s pipeline
and any delay in product approvals could hurt the earnings forecast. Product approvals from this plant would be
a monitorable.
Sun Pharma The combination of Sun Pharma, Taro, Dusa Pharma, the generic business of URL Pharma and the acquisition of
Ranbaxy offers an excellent business model for Sun Pharma. Also, the integration process with Ranbaxy is set to
help boost the profitability due to favourable synergies from H2FY2017. The management maintains its aim to
achieve a $300-mn synergy from the merger of Ranbaxy. With a strong cash balance, it is well positioned to
capitalise on the growth opportunities and inorganic initiatives. The company has started receiving few approvals
from the Halol unit, which points to resolution of the plant issues in the near future.
Torrent Pharma A well-known name in the domestic formulation market, Torrent Pharmaceuticals has been investing in expanding
its international presence. With the investment phase now over, it should start gaining from its international

Remarks
operations in the USA, Russia and Brazil. Better field force productivity, focus on developed market and stronger
balance sheet would result in a sustainable earnings growth. Company acquired 30 key brands of Elder Pharma
for Rs2,000 crore which is a strategic fit in long run. The company has proposed to raise funds up to Rs10,000
crore through a mix of equity and debt instruments, part of which may be used for inorganic initiatives.
Building materials
Grasim Grasim is better placed compared with the other large players in the cement space due to its strong balance sheet,
comfortable debt/equity ratio, attractive valuation and diversified business. The full ramp-up of Vilayat plant
(increasing capacity to 804,000 tonne) is likely to aid VSF volumes going ahead, though prices may soften in the
near term. Further, the merger of ABCIL and expansion in caustic division are likely to maintain a strong performance
in chemical division. On the cement front, the company expects demand to pick up in the near term while a slow
execution of government projects and surplus inventory remain concern areas.
The Ramco Cements The Ramco Cements, one of the most cost-efficient cement producers in India, will benefit from the capacity
addition carried out ahead of its peers in the southern region. In certain key markets of The Ramco Cements, like
Telangana, Maharashtra and Andhra Pradesh, demand has started to pick up but realisations have been under
pressure. The company has reaped the benefits through cost-saving measures, besides constantly reducing its debt,
leading to improved profitability. In a nutshell, better volumes, cost efficiencies and reducing leverage have yielded
benefits for the company.
Shree Cement Shree Cement’s cement grinding capacity has grown to 27.2mtpa which will support its volume growth in the
coming years. It has a power plant with capacity of 612MW for its own consumption and merchant sale which is
expected to support its revenue growth going ahead. Thus, a volume growth of the cement division and the
additional revenue accruing from the sale of surplus power will drive the earnings of the company.
UltraTech Cement UltraTech Cement is India’s largest cement company with approximately 91mtpa cement capacity post acquisition
of JP Associates’ cement assets. The eastern region has seen a robust growth in infrastructure and housing demand
while the other regions have seen infrastructure spending only with no major improvement in housing and rural
demand. The management has guided for a 7-8% demand growth for FY17 driven by infrastructure spend and
revival in retail demand after a good monsoon. However, the uncertainty over cement price and increase in price
of pet coke (trading with upward bias, Q2FY17 onwards may feel the impact) will be the key monitorable for
FY17. However, cost efficiency (impact of new grinding and waste heat recovery) and base effect may lead to
better operating performance for UltraTech.
Discretionary consumption
Century Plyboards Century Plyboards is a leading player in the organised plywood industry with a market share of 25%. A strong
growth in the sector, Century’s premium positioning and brand equity strength, and the impending GST roll-out
would enable it to post a revenue growth (CAGR) of 16.5% over FY14-17. On the back of a revenue growth and
better absorption of fixed costs, the earnings are likely to grow at a much stronger rate of 25% CAGR over FY14-
17. It is a quality consumer play in a niche growing segment. Its robust return ratios and strong growth potential
make us positive on the stock. We have a Buy rating on it with a price target of Rs257.
Cox & Kings: Cox & Kings is an integrated player in the tourism & travel industry, with a strong presence in the global leisure
travel segment and the education tourism segment in Europe. It has a 30% market share in the global outbound
tourism market. It is a market leader in education tourism in the UK. The terrorist attacks in Brussel and Paris
earlier this year will have some impact on the business fundamentals. The impact of ‘Brexit’ would be limited to
currency translation affect in the near term. We retain Buy on the stock with a long-term view as the company is
focusing on strengthening its balance sheet.
Info Edge (India) Info Edge is India’s premier online classified company in the recruitment, matrimony, real estate, education and
related service sectors. Naukri is a quality play on the improving macro environment and is directly related to the
GDP growth and Internet/mobile penetration. Further, prevailing lower competitive intensity in the real estate
space is positive in terms of profitability. We expect Zomato business’ growth to extend in the coming years, with
better integration of services and increasing monetisation opportunities. Going ahead, other investee ventures,
like www.meritnation.com, www.policybazaar.com, www.mydala.com and www.canvera.com, are also likely to
gain from the ongoing e-commerce boom in India.
INOX Leisure INOX Leisure Ltd (ILL), India's second largest multiplex operator with 112 properties and 440 screens across 57
cities accounting for about 23% of the multiplex screens in India, is scripting a blockbuster growth story through
a mix of inorganic and organic expansion plan to scale up the total screen count to 688 screens over the next 24-
30 months. The ILL mega show is supported by an improving content quality in the Indian mainstream and
regional cinema with its movies regularly hitting the Rs100-crore or Rs200-crore box-office collection mark. We
continue to remain positive on ILL from a long-term perspective, given its pan-India growth plans, healthy balance
sheet (lower financial leverage) and potential benefits from GST rollout.
KKCL Kewal Kiran Clothing is a branded apparel play with four brands in its kitty. Killer, its flagship denim brand, has
created a niche space in the minds of consumers. With a gross market turnover of over Rs300 crore, Killer is ahead
of its rival, Spykar. A strong brand profile, a disciplined management and a consistent track record coupled with
a robust balance sheet make us positive on the company.

Remarks
KKDL KKDL Ltd (erstwhile Kamala Dials and Devices) is present in the watch manufacturing business and has a strong
presence in the luxury watches retail business through subsidiary, Ethos. The watch business generates steady
revenues and cash flow with minimal capex, as no capacity is likely to come on stream and the utilisation levels are
expected to improve. The high-end retail watch business “Ethos” provides a strong growth opportunity in terms
of revenue growth via its online venture wherein it generates leads that translate into lower customer acquisition
cost and better fixed cost management that would result in robust margin improvement and strong profit growth.
This unique high-growth potential business along with the steady manufacturing business that generates free cash
is attractively priced currently and offers significant returns over the medium to long term. The medium-term impact
related to the PAN disclosure issue has made us put the stock on Hold with a PT of Rs275.
Orbit Exports Orbit Exports (Orbit) is a leading manufacturer and exporter of novelty fabrics exporting its products to over 32
countries. It is a recognised star export house and operates in the niche area of high-end fancy fabrics, which are
mainly used by designers in women’s fashion apparels. A strong OPM profile has enabled it to earn higher returns
averaging at 21% in RoCE and at 33% in RoE over the last three years. Given the strong financials, niche capabilities
and a vigilant management, Orbit is well poised for a strong earnings growth.
Raymond Raymond is present in the fast-growing discretionary & lifestyle category of branded textiles and apparels. With
growing incomes, rise in aspirations to lead a luxurious life, greater discretionary spending and favourable
demographics, the segment of branded apparels & fabrics presents a good growth opportunity and Raymond with
its brands and superior distribution set-up is very well geared to encash the same. Any development with regard to
the Thane land in the form of either joint development or disposal would lead to value unlocking and provide
significant cash to the company.
Relaxo Footwear Relaxo Footwear is present in the fast-growing footwear category, wherein it caters to customers with its four top-
of-the-mind-recall brands, viz, Hawaii, Sparx, Flite and Schoolmate. It has emerged as an attractive investment
opportunity due to its growing scale, strong brand positioning and healthy financial performance.
Speciality Rest. Speciality Restaurants is a leading player in the fine-dining space with a portfolio of well-established brands such
as Mainland China and Sigree. It is a good proxy on the Indian consumption story as several factors such as
demographics, increasing disposable income and the trend of nuclear families are playing in its favour. Given the
slow pace of growth of consumer discretionary spending and pressure on the operating profit margin due to the
addition of new stores, we maintain our Hold rating on the stock.
Thomas Cook (I) Thomas Cook India (TCIL), owned by the legendary value investor Prem Watsa, is an integrated leisure travel and
human service management company in India. The improvement in the domestic and global macro environment
provides a huge growth opportunity in the Indian leisure and travel industry. Quess Corp (its human resource
management business) provides exposure to the fast growing HR, office management and technology solutions
businesses. Moreover, we see a turnaround in the financial performance of Sterling Holidays. The value unlocking
in Quess Corp has happened through IPO, which is broadly in line with our expectations. We maintain Buy with
a price target of Rs255.
Wonderla Holidays Wonderla Holidays Ltd (WHL) is the largest amusement park company in India with over a decade of successful
and profitable operations. It owns and operates two amusement parks under the brand name Wonderla in Kochi
and Bengaluru, and came up with a third park in Hyderabad in Q1FY2017. With a steady improvement in
footfalls, the Hyderabad park getting operational in Q1FY17, a strong growth in the non-ticket revenues (F&B
and product sales) and an 4-5% increase in the annual ticket price, WHL’s revenues are expected to grow at a
CAGR of 30% over FY15-18. Its OPM of 35-40% is better compared with some of the matured international
parks. better compared with some of the mature international parks.
Zee Entertainment Zee Entertainment Enterprises, part of the Essel group, is one of India's leading TV media and entertainment
companies. It has a bouquet of more than 40 channels across Hindi, regional, sports and lifestyle genres. For
FY2017, the management expects that the industry ads revenue growth range of 14-15% and ZEEL will continue
to beat the industry average led by market-share gain. ZEEL continues to outperform the broadcasting advertising
market and expects to continue the momentum with an improvement in the macro economy. ZEEL's recent move
to exit from the loss-making sports business will improve its profitability, strengthen balance sheet and position the
company to accelerate inorganic or strategic investments. We continue to see ZEEL as the prime beneficiary of
macro revival and digitisation.
Diversified/Miscellaneous
Aditya Birla Nuvo Post the announcement of merger between Aditya Birla Nuvo and Grasim Industries, whereby shareholders holding
ten shares of Aditya Birla Nuvo would get three shares in Grasim, and Aditya Birla Nuvo will cease to exist as a
company, we are asking our investors to buy Grasim, as it would become the holding company for all the business
that Aditya Birla Nuvo has currently. Thus, in view of this restructuring, we have put ABNL to hold while the PT
is under review.
Bajaj Holdings Bajaj Holdings & Investment Ltd (BHIL, erstwhile Bajaj Auto) was demerged in December 2007, whereby its
manufacturing business was transferred to the new Bajaj Auto Ltd (BAL) and its strategic business consisting of the
wind farm and financial services businesses was vested with Bajaj FinServ (BFS). All the businesses and properties,
assets, investments and liabilities of erstwhile Bajaj Auto, other than the manufacturing and strategic ones, now

Remarks
remain with BHIL. BHIL is a primary investment company focused on new business opportunities. Given the
strategic nature of BHIL's investments (namely BAL and BFL), we have given a holding company discount of 50%
to BHIL's equity investments. The liquid investments, and investments in other group companies have been valued
at cost. Further, the price target (PT) for BFS has been revised upwards to Rs3,890, as the company has reported
better-than-expected results for Q2FY2017 and long-term upside potential remains intact since all three business
streams are in high-growth and emerging segments. Consequently, we have maintained our 'Buy' rating and have
revised upwards the PT to Rs2,737.
Bharti Airtel Bharti Airtel is the leader in the Indian mobile telephony space. The long awaited entry of a competitor with deep
pockets – Reliance Jio - in the market with aggressive pricing and deep market penetration strategy, Airtel will have
to bear the brunt in the short term. Going forward, from a long-term perspective, explosive growth in the data
segment, strong network and reach will help Bharti emerge stronger, but the near-term blips make us keep our Hold
rating on the stock with a price target of Rs 364
BEL Bharat Electronics, a PSU manufacturing electronic, communication and defence equipment, stands to benefit from
the enhanced budgetary outlay for strengthening and modernising the country's security. The "Make in India"
initiative of the government will support the earnings growth in the coming years, as it is the only player with strong
research and manufacturing units across the country. The company's current order book of around Rs34,675 crore
provides revenue visibility for the next three to four years.
GDL With its dominant presence in the container freight station segment and recent forays into the rail freight and cold
chain businesses, Gateway Distriparks has evolved as an integrated logistic player. Its CFS business is a cash cow
while its investments in the rail and cold storage businesses have started bearing fruits. It is one of the largest
players in the CFS business and has also evolved as the largest player in the rail freight business as well as the cold
storage business. The proposed capex for a.ll the three segments will strengthen its presence in each of the segments
and increase its pan-India presence.
Max India Max India has demerged into three different entities of which Max Financial Services will hold Max Life Insurance
(new Max India will hold Max Healthcare, Max Bupa Health Insurance and Antara businesses). Max Life Insurance
(held by Max Financial Services) is among the leading private sector insurers, has gained the critical mass and
enjoys among the best operating parameters in the industry. As the insurance sector is showing signs of stabilisation,
the company’s favourable product mix and a strong distribution channel will result in a healthy growth in the
premiums and profits.
PI Industries PI Industries (PII), a leading agro-chemical company, has a differentiated business model with focus on the fast-
growing custom synthesis and manufacturing (CSM) business, which contributes 60% of its revenues. To sustain
the growth momentum, the company has expanded its manufacturing capacity in Jambusar at a cost of Rs300
crore and the new capacity has commissioned in H2FY2016. A strong outlook for the domestic market, owing to
a favorable Rabi season, is expected to aid topline growth. Also, the new products launched in the recent past have
gained good acceptability in the market and would continue to contribute to topline growth. The CSM business is
expected to gather traction in the medium term, as concerns in the near term could affect growth. This is likely to
result in a revenue growth of ~18-20% over the next couple of years. On the EBIDTA margin front, PII has guided
for 100-150BPS improvement on account of better operational efficiency (reduction in fixed costs) and favorable
product mix. The company's order book stands at $800 million PII has lined up a capex of ~Rs200 crore for
FY2017 and ~Rs150 crore for FY2018. We have maintained our Buy rating on the stock with a revised PT of
Rs955.
Ratnamani Metals Ratnamani Metals & Tubes is the largest stainless steel tube and pipe maker in India. Despite the challenging
business environment due to increasing competition, we remain positive on RMTL on the back of its strong
balance sheet. Further, the management has maintained a strong outlook on the potential opportunities in the oil
& gas sector and inter-connection of the rivers across the country.
Supreme Ind Supreme Industries is a leading manufacturer of plastic products with a significant presence across piping, packaging,
industrial and consumer segments. We remain positive on its new launches of value-added products and capacity
expansion plans, which are largely funded by its robust internal accruals. The company enjoys superior return
ratios with low gearing levels. With diversified products, extensive distribution network, improved capital structure
and government thrust’s on better infrastructure, Supreme has emerged as one of the best proxy play on the
increasing use of plastic consumption in India. Hence, we remain positive on the stock.
UPL UPL is a leading global producer of crop protection products, intermediates, specialty chemicals and other industrial
chemicals, United Phosphorus has presence across value-added agricultural inputs ranging from seeds to crop
protection products and post-harvest activities. It has also started to focus on premium products in agro-chemicals.
UPL's consistent focus and ability to introduce innovative products (both in India and overseas markets), presence
in high-growth markets (Brazil and India) and plans of tapping new markets (China and Africa)augur well for the
company. Strong growth momentum in the Latin American markets, with the company aiming to outpace the
industry growth and gain market share, coupled with a favorable outlook for the Indian business will help UPL to
boost its overall performance and comfortably achieve its revenue growth target of 15% for FY2017. Also, a
better product mix, operating leverage and likelihood of market share gains in the key markets (India and Brazil)
should boost the overall performance. We retain our 'Buy' rating with a revised Price Target (PT) of Rs800


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Value

Market Outlook Report Card PMS Technical view

From Sharekhan’s Desk EQUITY

Season of surprises FUNDAMENTALS Viewpoints 26

Compliance Officer: Ms. Namita Amod Godbole; Tel: 022-6115000;

STOCK IDEAS STANDING (AS ON NOVEMBER 03, 2016)

November 2016 4 Sharekhan ValueGuide

STOCK IDEAS STANDING (AS ON NOVEMBER 03, 2016)

Sharekhan ValueGuide 5 November 2016

November 2016 6 Sharekhan ValueGuide

MARKET OUTLOOK NOVEMBER 09, 2016

Fortune favours the brave!

Black money to change its colour now: The Modi government’s

President Trump not the same as candidate Trump: The rhetoric

Q2FY2017 results largely in line so far: Decent Q2FY2017 earnings

Domestic valuation on PE basis appears high; but comfortable on

Sharekhan ValueGuide 7 November 2016

Global Macros – environment evolving, still benign though

GLOBAL BOND YIELDS FIRMING UP INCREASE IN RISK PERCEPTION

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BUMPER KHARIF CROP EASING FOOD INFLATION SOFTENING INFLATIONARY PRESSURE

Q2FY2017 results so far

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SHAREKHAN TOP PICKS

CY2015 13.9 -5.1 -4.1 6.5 400

CY2014 63.6 29.9 30.9 55.1

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NAME CMP PER (x) ROE (%) PRICE UPSIDE

EMAMI 1,209 51.9 45.1 33.9 40.1 40.3 44.7 1,300 8

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NAME CMP PER (x) ROE (%) PRICE UPSIDE

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NAME CMP PER (x) ROE (%) PRICE UPSIDE

PI INDUSTRIES 863 38.9 29.2 24.5 29.2 30.0 27.6 955 11

RICO AUTO 68 27.2 16.2 13.1 7.2 10.9 12.2 ** -

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WEALTH CREATOR PORTFOLIO OCTOBER 30, 2016

UPDATE ON WEALTH CREATOR PORTFOLIO

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Net profit (adjusted) 278.3 311.1 363.1 526.9 679.9

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INFO EDGE (INDIA)

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LIC HOUSING FINANCE

MARUTI SUZUKI INDIA

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ZEE ENTERTAINMENT ENTERPRISES

SHAREKHAN SPECIAL OCTOBER 10, 2016

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INDUSIND BANK VIEWPOINT

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