India Strategy 2qfy17 20161010 Mosl RP Pg300

October 2016
India Strategy | Get on track please !
India Strategy
Backbenchers Return!
Research Team (Gautam.Duggad@MotilalOswal.com)
Contents
India Strategy - Backbenchers Return! ................................................................................... 3-41
2QFY17 Highlights & Ready Reckoner ...................................................................................... 42-55
Sectors & Companies ............................................................................................................... 56-296
1. Automobiles 56-72 IDFC Bank 135 Indraprastha Gas 214
Amara Raja Batteries 60 Indian Bank 136 MRPL 215
Ashok Leyland 61 IndusInd Bank 137 O il India 216
Bajaj Auto 62 Kotak Mahindra Bank 138 ONGC 217
Bharat Forge 63 Oriental Bank of Commerce 139 Petronet LNG 218
Bosch 64 Punjab National Bank 140 Reliance Industries 219
Eicher Motors 65 State Bank of India 141 10. Real Estate 220-232
Escorts 66 Union Bank 142 DLF 225
Exide Industries 67 Yes Bank 143 Godrej Properties 226
Hero MotoCorp 68 5b. Financials - NBFC 144-155 Indiabulls Real Estate 227
Mahindra & Mahindra 69 Bajaj Finance 146 Mahindra Lifespaces 228
Maruti Suzuki India 70 Dewan Housing 147 Oberoi Realty 229
Tata Motors 71 HDFC 148 Phoenix Mills 230
TVS Motor 72 Gruh Finance 149 Prestige Estate Projects 231
2. Capital Goods 73-87 Indiabulls Housing 150 Sobha Developers 232
ABB 76 LIC Housing Finance 151 11. Retail 233-238
Alstom T&D Power 77 M & M Financial Services 152 Jubilant Food 236
BHEL 78 Muthoot Finance 153 Shoppers Stop 237
Bharat Electronics 79 Repco 154 Titan Company 238
Crompton Greaves 80 Shriram Transport 155 12. Technology 239-257
CG Consumer 81 6. Healthcare 156-173 Cyient 245
Cummins India 82 Alembic Pharma 158 HCL Technologies 246
Havells India 83 Alkem Labs 159 Hexaware Technologies 247
Larsen & Toubro 84 Aurobindo Pharma 160 Infosys 248
Siemens 85 Biocon 161 KPIT Technologies 249
Thermax 86 Cadila Healthcare 162 Mindtree 250
Voltas 87 Cipla 163 MphasiS 251
3. Cement 88-98 Divis Laboratories 164 NIIT Technologies 252
ACC 92 Dr Reddys Labs. 165 Persistent Systems 253
Ambuja Cement 93 Glenmark Pharma 166 TCS 254
Grasim Industries 94 Granules India 167 Tech Mahindra 255
India Cements 95 GSK Pharma 168 Wipro 256
Ramco Cement 96 IPCA Laboratories 169 Zensar Tech 257
Shree Cement 97 Lupin 170 13. Telecom 258-265
UltraTech Cement 98 Sanofi India 171 Bharti Airtel 263
4. Consumer 99-119 Sun Pharmaceuticals 172 Bharti Infratel 264
Asian Paints 102 Torrent Pharma 173 Idea Cellular 265
Britannia Industries 103 7. Media 174-186 14. Utilities 266-275
Colgate Palmolive 104 D B Corp 178 Coal India 272
Dabur India 105 Dish TV 179 JSW Energy 273
Emami 106 Hathway Cable 180 NTPC 274
Godrej Consumer Products 107 HT Media 181 Power Grid Corp. 275
GSK Consumer 108 Jagran Prakashan 182 15. Others 276-296
Hindustan Unilever 109 PVR 183 Allcargo 276
ITC 110 Siti Cable 184 Arvind 277
Jyothy Labs 111 Sun TV Network 185 Bata India 278
Marico 112 Zee Entertainment 186 Castrol India 279
Nestle India 113 8. Metals 187-202 Concor 280
P&G Hygiene 114 Hindalco 194 Coromandel International 281
Page Industries 115 Hindustan Z inc 195 Dynamatic Tech 282
Parag Milk Foods 116 Jindal Steel & Power 196 Gateway Distripark 283
Pidilite Industries 117 JSW Steel 197 Indo Count Industries 284
Radico Khaitan 118 Nalco 198 Info Edge 285
United Spirits 119 NMDC 199 Inox Leisure 286
5a. Financials - Banks 120-143 SAIL 200 Interglobe Aviation 287
Axis Bank 126 Tata Steel 201 Jain Irrigation 288
Bank of Baroda 127 Vedanta 202 Just Dial 289
Bank of India 128 9. Oil & Gas 203-219 Kaveri Seeds 290
Canara Bank 129 BPCL 208 MCX 291
DCB Bank 130 Cairn India 209 Monsanto India 292
Equitas 131 GAIL 210 PI Industries 293
Federal Bank 132 Gujarat State Petronet 211 SRF 294
HDFC Bank 133 HPCL 212 Tata Elxsi 295
ICICI Bank 134 IOC 213 TTK Prestige 296
Note: All stock prices and indices for companies as on 3 October 2016, unless otherwise stated
Investors are advised to refer through important disclosures made at the last page of the Research Report.
India Strategy | Backbenchers Return!
India Strategy
BSE Sensex: 28,243 S&P CNX: 8,738
Backbenchers Return!
Expect growth acceleration in corporate earnings
Multi-quarter high earnings growth for MOSL universe; cyclicals making

comeback
2QFY17 marks a recovery in earnings, with multi-quarter high growth of 12% for
our MOSL universe. It will also be a quarter of positive sales growth for our
aggregate MOSL universe after nearly two years. Interestingly, cyclicals will take
up the baton from defensives to drive earnings in 2QFY17 and then in 2HFY17.
We expect a shift in earnings drivers, with the share of domestic cyclicals in
earnings expected to hit a 30-quarter high of 40%.
Especially, the contribution of cyclicals like PSU Banks and Metals is moving up
sharply in 2HFY17 vs. 1HFY17.
We also highlight bottoming out of earnings, given that there has been no
downgrade in our aggregate growth estimates during the quarter.
We maintain our Sensex EPS for FY17 at INR1,493, with underlying growth of
12.3%. Importantly, FY17E PAT growth for MOSL universe stands at 25%.
Key sectoral trends/highlights:

It will be the first-ever quarter of YoY aggregate PAT decline for our Technology
universe.
Auto, Cement, Capital Goods and Oil & Gas are expected to exhibit strong
performance in 2QFY17, while Private Banks, Telecom, Utilities, Pharma and
Media will have a relatively muted quarter.
NBFC will report another healthy quarter, while our Consumer universe will
report three-year high profit growth.
Notably, many heavyweights are not showing earnings recovery (ICICI Bank,
Infosys, ONGC, Coal India, Idea) due to company-specific issues/sectoral
headwinds.
Three key trends to watch out for:

Convergence of WPI and CPI: The gap between CPI and WPI has narrowed from
9% in September 2015 to 4.5% in June 2016 and to just 1.3% in September 2016.
Further, increase in WPI would also aid sales growth of Corporate India.
Moderation in interest rates: 10-year G-Sec is down by 250bp over the last
three years to 6.8%, with ~100bp reduction happening in CY16YTD. This is
expected to drive lower interest cost, higher treasury gains and help demand for
several Retail products.
Low base effect: Several sectors PSU Banks, Metals, Cement etc. have a
favorable base to grow upon, driving sharp earnings growth from 2HFY17
onwards.
Sources
October 2016of exhibits in this report include RBI, CMIE, Bloomberg, IMF, Industry, Companies, and MOSL database 3
Model portfolio changes underscore our bias toward growth

Our model portfolio is premised on revival of underlying growth in our MOSL
universe, and the portfolio changes underscore our bias toward growth. We are
betting on the following three themes:
Return of cyclicality; acceleration in growth trends expected in domestic
cyclicals: We are playing this theme via Maruti, M&M, Shree Cements, SBI, LIC
Housing Finance and Federal Bank. We believe Insurance and Exchange sectors
offer a healthy compounding opportunity in India, and thus increase the weight
on Max Financials and introduce MCX to our portfolio. We are also re-
introducing Hindalco to our portfolio.
Attractive long-term opportunity in discretionary consumption: Our conviction
on longer-term opportunity in discretionary consumption led by favorable
income and demographic factors remains intact. We like franchisees which
have corrected due to near-term issues, but have a strong business model and
intact brand. We have increased weightage of Jubilant Foodworks, and added
Arvind Ltd. and Parag Milk Foods to the model portfolio.
Capitalizing on growth in mid-caps: Our bottom-up estimates indicate earnings
outperformance by non-Nifty MOSL universe over Nifty earnings growth. We
have increased the weightage of mid-caps in our portfolio and introduced
Bharat Electronics, SRF, Parag and Exide to the portfolio.
October 2016 4
2QFY17 PREVIEW Return of cyclicals; multi-quarter high growth

2HFY17 to see a strong cyclical recovery; also aided by low base
2QFY17 earnings growth at nine-quarter high
We expect 2QFY17 earnings performance to mark (a) recovery in revenue growth (back on
growth path after 8 quarters), and (b) continued recovery in PAT growth (9 quarter high
PAT growth). MOSL Universe revenue should grow 2%, the first positive print since
2QFY15. EBITDA growth is likely to be 17%, the highest in 8 quarters. PAT is expected to
grow 12% YoY, the highest since 1QFY15 and the first double-digit print in nine quarters.
2HFY17 onwards, Cyclicals will make a comeback and will be key driver of PAT growth in
2HFY17. PSU banks and Metals will report profits (as against loss in 2HFY16). Momentum
st
in Auto volumes have picked-up, whereas Cement is into its 1 year of upcycle. All these
will increase share of cyclicals in the earnings of the Corporate India.
2QFY17E PAT gr. YoY (%) Excluding State-Owned Banks and OMCs, MOSL Universe Sales, EBITDA and PAT growth is
estimated at 3.2%, 13.1% and 7.3%, respectively. While EBITDA margin would expand
30.9
~300bp YoY to ~22.3% (multi-year high), PAT margin is likely to expand ~90bp YoY to
10.5%, driven by sharp 380bp and 160bp expansion in EBITDA and PAT margins of global
cyclicals.
10.9 Three key trends to watch out for

1. Convergence of WPI and CPI: The gap between CPI and WPI has narrowed from 9% in
0.1 September 2015 to 4.5% in June 2016 and to just 1.3% in September 2016. Further,
increase in WPI would also aid sales growth of Corporate India.
Defensive
Domestic
Cyclicals
2. Moderation in interest rates: 10-year G-Sec is down by 250bp over the last three years
Cyclicals
Global
to 6.8%, with ~100bp reduction happening in CY16YTD. This is expected to drive lower
interest cost, higher treasury gains and help demand for several Retail products.
3. Low base effect: Several sectors PSU Banks, Metals, Cement etc. have a favorable
base to grow upon, driving sharp earnings growth from 2HFY17 onwards.
Defensives giving way to cyclicals

Interesting observations For MOSL Universe, cyclicals would drive earnings growth in 2QFY17. Defensives
MOSL Universe PAT growth share in MOSL Universe earnings would decline further to ~32% (recent high was 46%
at 11.8% - highest since in 4QFY16). The share of domestic cyclicals at 40% for 2QFY17 would be at a 30-
1QFY15 quarter high. Earnings would grow 62% YoY for Autos, 40% YoY for Cement, and 50%
MOSL Universe EBITDA YoY for Capital Goods. Oil & Gas is likely to deliver strong 49% earnings growth, largely
margins to expand 300bp aided by low base in OMCs. PAT growth is likely to be 11% for domestic cyclicals (-1%
YoY, but PAT margins in 1QFY17) and 31% for global cyclicals (-6% in 1QFY17) multi-quarter high for both.
expansion just 90bp For the Nifty, too, aggregates would be driven by domestic cyclicals like Autos and
Consumers will report highest Cement, and select Private Sector Banks. Nifty (ex-BPCL) sales would grow 3% in
PAT growth in last 3 years 2QFY17. PAT is likely to grow 6% YoY, the highest in eight quarters. EBITDA is likely to
IT Sector: First ever YoY post robust 12% YoY growth.
decline in PAT
Telecom: weakest revenue Other sectoral highlights
growth ever, with further
The key highlight of the quarter is the first ever decline in PAT for the IT sector (3% YoY
pressure in 2HFY17
PAT decline). Even Healthcare sector PAT is expected to decline 4% YoY.
Many heavy weights are not participating in earnings growth either due to company
specific issues or sectoral headwinds. Our model portfolio is biased towards growth.
Top earnings outperformers: Maruti, TVS Motors, HDFC Bank, IndusInd Bank, Asian
Paints, Shree Cements, Hindalco, Sun Pharma, Gail, IGL, TTK Prestige, Inox.
Top earnings underperformers: Coal India, Infosys, Bharat Forge, Thermax, HUL, ICICI
Bank, Dr. Reddys Labs, Idea, ONGC, JSPL, Wipro, Tech Mahindra
October 2016 5
Three key trends emerging

1] Convergence of CPI and WPI sales growth turning positive after seven
quarters: The gap between CPI and WPI has narrowed substantially from 9% in
September 2015 to 1.3% in September 2016, though the gap had narrowed to ~1.1%
in Jun-14 but in inflationary environment. These trends could have following
implications for the Corporate India:
Boost sales growth: Uptick in WPI augurs well for the sales growth of the
corporates. MOSL Universe sales growth for 2QFY17 is likely to be 1.7% YoY, a
positive print after seven consecutive quarters of sales decline. We expect
further strengthening and acceleration in sales growth.
Higher working capital loan: Further, this would result in higher working capital
requirement, boosting working capital loans for the banking sector (~15% of
loan book).
Enhances tax collections: Uptick in WPI would drive nominal GDP growth and in
turn tax collection for the government.
Moderation in interest rates: Further Moderation in CPI augurs well for lower
interest rates and in turn drives demand for automobile, real-estate, consumer
durables etc.
Pressure on gross margins: Uptick in WPI would partly dilute gross margins,
which witnessed significant boost from lower commodity prices. However,
decline in gross margins could be offset by benefit of operating leverage.
Exhibit 1: WPI and CPI about to converge Exhibit 2: Gap between WPI and CPI has narrowed
CPI % YoY WPI % YoY Difference in CPI-WPI Chg pp
12.0 12.0
9.0
7.0 8.0
5.0
2.0 3.7 4.0
1.1 1.3
-3.0 0.0
-1.2
-8.0 -4.0
Jan-11
Aug-11
Aug-12
Aug-13
Aug-14
Aug-15
Aug-16
Aug-12
Aug-13
Aug-14
Aug-15
Aug-16
Feb-12
Feb-13
Feb-14
Feb-15
Feb-16
Jan-11
Aug-11
Feb-12
Feb-13
Feb-14
Feb-15
Feb-16
Source: MOSL Source: MOSL
2] Softening in interest cost ahead; will drive financial leverage: 10-year G-Sec is
down by 250bp over the last three years to 6.8%, with ~100bp reduction happening
in CY16YTD. This is expected to drive lower interest cost, higher treasury gains and
help demand for several Retail products. This would benefit:
Banks bond portfolio would see trading gains.
Demand for consumer discretionary (Autos, real-estate, consumer durables etc)
would benefit from lower interest rates.
Financial leverage playing out for geared balance sheets, especially for cyclicals
like Metals, Cement etc. This reflects in ~25% PAT growth in FY18 for cyclicals, as
against EBITDA growth of ~16%.
NBFCs benefitting from lower rates in bond markets than the base rates
(currently lower by 100-150bps), though banks could see sustained pressure on
credit growth.
October 2016 6
Exhibit 3: 10-year G-Sec (%) yield down 100bp in CYTD16 Exhibit 4: India corporate Bond Curve AAA (%)
10 Year G-Sec (%) India Corporate Bond Curve AAA 1 Year (%)
10.0 13.0
9.3 12.2
8.8 11.0
7.5 9.0
6.8
6.3 7.0 7.4
5.0 5.3 5.0 5.2
Jul-14
Jul-14
Nov-11
Nov-12
Jun-13
Nov-11
Nov-12
Jun-13
Apr-11
May-12
Apr-11
May-12
Jan-08
Aug-08
Feb-09
Sep-09
Mar-10
Dec-13
Jan-15
Aug-15
Feb-16
Sep-16
Jan-08
Aug-08
Feb-09
Sep-09
Mar-10
Dec-13
Jan-15
Aug-15
Feb-16
Sep-16
Oct-10
Oct-10
Source: MOSL Source: MOSL
3] Favorable base effect for cyclical sectors: Muted earnings performance for the
last 7-8 quarters has resulted in favorable earnings base for several cyclical sectors.
Auto, Cement, Capital Goods, Metals, State-Owned Banks and Oil & Gas are the
prominent sectors that would benefit from low base in 2QFY17. Among these, while
Metals and State-Owned Banks would still witness earnings decline, the pace of
decline would moderate. State-Owned Banks earnings would decline 13% v/s 53%
in 1QFY17 while Metals earnings would decline 16% v/s 25% in 1QFY17. Domestic
Cyclicals as a pack should report 11% PAT growth, the first double-digit print in 8
quarters. Global Cyclicals as a pack should report 31% PAT growth.
Exhibit 5: Sharp rebound in PAT growth for Domestic

Cyclicals (%) Exhibit 6: .and Global Cyclicals (%)
210.3 70.1
48.5
30.9
71.5 21.6
13.1
5.1
9.7 14.9 9.1 1.8 0.7 3.4 10.9
-23.7
-0.9
-13.1 -9.9 -5.5
-57.2 -26.8 -33.8 -25.8
Jun-14
Jun-15
Jun-16
Jun-14
Jun-15
Jun-16
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
Dec-16E
Mar-17E
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
Dec-16E
Mar-17E
Source: Company, MOSL Source: Company, MOSL
October 2016 7
MOSL Universe headline performance at multi-quarter high

Exhibit 7: Multi-quarter high profit growth for MOSL universe
Sector Sales EBITDA PAT PAT PAT EBITDA Margins PAT Margins
(No of companies) Sep-16 % YoY % QoQ Sep-16 % YoY %QoQ Sep-16 % YoY % QoQ Delta Sh. % Chg bp YoY Chg bp YoY
High growth sectors 2417 7 3 436 19 8 256 36 13 68 28 177 224
Auto (13) 1232 7 2 187 22 15 99 62 27 38 11 184 273
Capital Goods (12) 460 5 13 41 18 30 21 50 34 7 2 100 138
Cement (7) 166 2 -9 32 19 -21 19 40 -23 5 2 283 307
NBFC (11) 94 22 4 74 21 6 47 21 13 8 5 -52 -27
Retail (3) 50 21 21 4 22 10 2 18 -7 0 0 5 -13
Consumer (18) 415 10 2 98 14 5 69 16 8 9 8 73 79
Med/Low growth sectors 1642 -5 5 528 11 -2 273 8 -1 21 30 453 199
Others (21) 228 9 6 37 12 -12 15 12 -26 2 2 39 16
Oil Excl. OMCs (9) 1062 -11 5 244 4 -6 141 11 -5 14 16 335 258
Media (9) 59 13 -1 18 16 1 8 6 22 0 1 90 -77
Real Estate (8) 52 -17 -3 19 -2 9 6 6 -8 0 1 551 251
Private Banks (10) 240 15 4 210 20 5 103 5 9 5 11 375 -427
PAT de-growth sectors 3383 4 3 963 10 -2 375 -9 -3 -38 41 160 -161
Technology (13) 863 10 1 196 2 1 147 -3 -3 -4 16 -178 -213
Healthcare (16) 364 9 2 87 1 -2 55 -4 -7 -3 6 -170 -208
PSU Banks (8) 319 0 3 236 7 -1 47 -13 41 -7 5 517 -206
Metals (9) 1038 1 11 185 41 14 50 -16 33 -9 5 512 -93
Utilities (4) 432 3 -4 125 7 -18 55 -16 -28 -10 6 126 -280
Telecom (3) 368 3 -4 133 6 -5 21 -18 -21 -5 2 81 -151
MOSL Excl. OMCs (174) 7442 3 3 1928 12 1 904 6 2 51 100 215 34
MOSL Ex OMCs & PSU Bks (166) 7123 3 4 1691 13 1 857 7 0 209 46
Sensex (30) 4461 2 2 1207 11 0 608 3 2 201 14
Nifty Ex BPCL (49) 5493 3 3 1454 12 1 714 6 2 211 34
Exhibit 8: Sales growth for MOSL Universe turning positive Exhibit 9: PAT growth for MOSL Universe turning into double
after seven quarters digits after eight quarters
21.0 47.9
14.5 35.8
12.4 31.0
4.5 11.8
1.7 4.1 4.8 1.1
-0.8 -0.1
-2.6 -4.4 -3.9 -0.9
-6.7 -8.1 -7.3 -13.3
-11.3 -18.7
Jun-14
Jun-15
Jun-16
Jun-14
Jun-15
Jun-16
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
Dec-16E
Mar-17E
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
Dec-16E
Mar-17E
Exhibit 10: 2QFY17 EBITDA margin (ex-OMCs, Financials) at Exhibit 11: 2QFY17 PAT margin (ex-OMCs, Financials) would
20.7% (+170bp YoY) expand 40 bps to 10.4% led by Metals Cement and Oil & Gas
14.5
MOSL Universe EBITDA MOSL Universe PAT

22.9
12.7
12.6
22.1
Margin LPA: 20% Margin LPA: 11%

21.9
21.8
21.8
12.1
12.0
21.5
11.7
21.1
20.7
20.6
11.1
11.1
10.9
10.8
20.3
20.2
10.7
10.6
10.6
10.4
10.2
10.0
10.0
10.0
10.0
19.3
19.2
19.1
19.0
9.9
18.7
18.6
18.6
18.4
18.2
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
October 2016 8
Exhibit 12: Sales growth of Defensives trending in the 8-12% Exhibit 13: PAT growth for Defensives expected to be flattish
band in 2QFY17
18.2
20.4
12.2 16.4
11.0 11.3 11.1 13.0
9.0 8.7 9.1 8.2 8.2 8.1 10.5 10.1 11.2
7.1 8.8
6.7 6.5
4.9
3.2
0.1
Jun-14
Jun-15
Jun-16
Jun-14
Jun-15
Jun-16
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
Dec-16E
Mar-17E
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
Dec-16E
Mar-17E
Exhibit 14: ...largely driven by muted performance of Exhibit 15: Domestic Cyclicals sales growth to remain in
Technology sector; first decline on YoY basis steady at 7-8%
16.4
36.0 38.6
35.0 33.5 12.4
30.5 11.5
25.2 9.7
19.3 17.0 9.2
15.1 13.3 8.2 8.7 7.7 7.9
11.2 11.6 6.3 7.0 7.4
11.6
6.4 7.0 6.5 8.3 5.6
1.9
-2.6
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
Dec-16E
Mar-17E
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
Dec-16E
Mar-17E
Exhibit 16: Domestic Cyclicals to register double-digit PAT Exhibit 17: Sharp moderation in decline in sales of Global
growth after seven quarters Cyclicals
210.3 29.3
15.0 14.3
71.5
0.2
9.7 14.9 9.1 1.8 0.7 3.4 10.9
-3.7
-0.9 -7.4 -7.9
-23.7 -11.8
-15.9 -19.3 -17.6
-57.2 -22.4
Jun-14
Jun-15
Jun-16
Jun-14
Jun-15
Jun-16
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
Dec-16E
Mar-17E
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
Dec-16E
Mar-17E
Exhibit 18: with sharper swing in PAT growth

70.1
48.5
30.9
21.6
13.1
5.1
-9.9 -5.5
-13.1
-26.8 -33.8 -25.8
Jun-14
Jun-15
Jun-16
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
Dec-16E
Mar-17E
October 2016 9
Tale of two halves

Cyclicals turn from earnings drag to earnings driver
After witnessing severe stress in 1HFY17, cyclicals like State-Owned Banks and
Metals are likely to make a strong comeback, driven by favorable base, interest
rate moderation, and commodity price recovery among others. Cyclicals PAT is
likely to grow ~70% YoY in 2HFY17 v/s just 6% growth in 1HFY17.
While MOSL Universe PAT growth in 2HFY17 is estimated at ~42% YoY (v/s 6% in
1HFY17), almost 90% of this growth is expected to be driven by cyclicals.
PAT for domestic cyclicals should grow 127% YoY in 2HFY17 (v/s ~5% in 1HFY17),
driven by State-Owned Banks, Cement and Capital Goods. For global cyclicals,
PAT is likely to grow 33.5% in 2HFY17 (v/s ~7.7% in 1H), driven by Metals.
Exhibit 19: Cyclicals expected to be biggest drivers of earnings growth in 2H, as against biggest drag in 1HFY17
81 Contribution to 1HFY17 PAT growth (%) 46
Contribution to 2HFY17 PAT growth (%)
15 15 14 14 9 21
7 7 2 2 2 1 0
7 6 6 5 3 3 3 2 2 1 1 0 0
-1 -9
-19
-39 -2 -4
Healthcare
Utilities
Healthcare
Capital Goods
Telecom
Metals
Banks-PSU
Capital Goods
Utilities
Telecom
NBFC
Others
Banks-PSU
NBFC
Others
Metals
Consumer
Consumer
Technology
Cement
Media
Cement
Technology
Automobiles
Banks-Pvt
Real Estate
Automobiles
Banks-Pvt
Real Estate
Media
Retail
Retail
Oil & Gas
Oil & Gas
Exhibit 20: Cyclicals PAT expected to grow significantly ahead of MOSL Universe average in 2HFY17
60 1HFY17 PAT growth (%) LP
593 2HFY17 PAT growth (%)
41
24 22 21
16 14 11
6 6 4 4 3 2
66 57 42 41 25 23 23 23 15 15 12
-2 -7 4 4 2
-20
-36 -6 -47
Healthcare
Utilities
Capital Goods
Healthcare
Utilities
Capital Goods
Telecom
Telecom
Metals
Banks-PSU
Banks-PSU
Metals
NBFC
Others
NBFC
Others
Consumer
Cement
Consumer
Cement
Technology
Media
Technology
Real Estate
Automobiles
Banks-Pvt
Real Estate
Automobiles
Banks-Pvt
Media
MOSL
Retail
Oil & Gas
Oil & Gas
Retail
MOSL
Exhibit 21: Nifty Universe 1HFY17 PAT growth YoY (%)

LP 1HFY17 PAT growth YoY (%)
10089
78
61 59 58 57 54
46 46
32 32 31 28 26 26 24 21 21 20 20 19
16 12 11 10 10 9 9 9 8 8 7 6 6 5 3
-5 -8 -12-13-19 -29 -32 -39

-23 -31 -35
-71
-85
L&T
Kotak Mah. Bk
Eicher Motors
Maruti
Sun Pharma
Hero Moto
Infosys
Bharti Airtel
Grasim Inds
Bosch
Tata Motors
ICICI Bank
Dr Reddy's
Idea Cellular
Ambuja Cem.
IndusInd
HDFC Bank
Wipro
Yes Bank
Nifty
ACC
Bharti Infratel
Asian Paints
NTPC
Bajaj Auto
TCS
SBI
BPCL
HDFC
Reliance Ind.
ITC
Adani Ports
Zee Ent
Axis Bank
Tech Mah.
ONGC
Cipla
Coal India
Tata Steel
BHEL
Hindalco
Ultratech Cem.
Power Grid
M&M
HCL Tech.
BOB
Tata Power
GAIL
Lupin
Aurobindo
HUL
Source: MOSL
October 2016 10
Exhibit 22: Nifty Universe 2HFY17 PAT growth YoY (%)

LP LP LP144
2HFY17 PAT growth YoY (%)
91
64 48
47 44 43 38 38 34 31
29 29 26 24 23 23 23 23 22 21 20 16 15 15 14 13
23 12 11 10 8 7 7 7 7 5 5 3 3
-3 -3 -4 -11 -19
-15 -24
Kotak Mah. Bk PL
Eicher Motors
L&T
ICICI Bank
Maruti
Dr Reddy's
Hero Moto
Infosys
Tata Motors
Bosch
Sun Pharma
Idea Cellular
Grasim Inds
Wipro
SBI
Ambuja Cem.
Yes Bank
IndusInd
Nifty
HDFC Bank
NTPC
Bharti Airtel
Tata Steel
HDFC
Bajaj Auto
ACC
Cipla
Zee Ent
Asian Paints
ONGC
TCS
Bharti Infratel
Axis Bank
Tech Mah.
Tata Power
HCL Tech.
Coal India
Hindalco
Power Grid
ITC
Reliance Ind.
HUL
BPCL
Adani Ports
BHEL
BOB
Ultratech Cem.
M&M
GAIL
Lupin
Aurobindo
Defensives passing on baton to cyclicals
Defensives solely drove MOSL Universe PAT growth over FY14-16, as cyclicals
(both domestic and global) were under pressure. The share of defensives in
MOSL Universe PAT had risen to ~36% by FY16.
However, we expect cyclicals to be key driver of aggregate PAT growth over
FY17-18. Over 75% of the increase in MOSL Universe PAT during the period
would be driven by cyclicals.
We expect the share of cyclicals in MOSL Universe PAT to increase from ~64% in
FY16 to ~70% by FY18.
The key growth drivers among the cyclicals and part of our model portfolio are:
State-Owned Banks: SBI and Union Bank
Autos: M&M, Maruti
Metals: Hindalco
Cement: UltraTech, Shree Cement, JK Lakshmi Cement
Exhibit 23: Cyclicals to drive ~75% of the increase in FY18E MOSL Universe PAT
64 63 57 54 51 30 18 16 3 2
115 96 91 75
163 121
5,471
4,454
Healthcare
Banks-PSU
Utilities
Telecom
MOSL FY17E
Metals
NBFC
MOSL FY18E
Auto
Consumer
Banks-Pvt
Technology
Cement
Cap. Goods
Media
Real Estate
Oil & Gas
Retail
PAT (INRb)
PAT (INRb)
Exhibit 24: Cyclicals grabbing larger share of incremental PAT

Defensive Global Cyclicals
Domestic Cyclicals MOSL Universe PAT Delta (INR b) Defensive
Global Cyclicals
246 Domestic Cyclicals
45 MOSL Universe PAT Delta (INR b)
-250 1044
935
93 297 20
234 115
-24 -431
31 -35 13 25
28
23
59 52
FY14 FY15 FY16 FY17E FY18E
October 2016 11
Share of domestic cyclicals in MOSL Universe PAT at 30-quarter high
Exhibit 25: PAT share of domestic cyclicals continues to trend up while share of defensives trending down
100%
Defensives
32 26 23 27
35 39 39 37 34 32
75%
Global cyclicals
25 33 40 30 28
45 40 37 36 27
50% 25 26 26
Domestic cyclicals 35 37 3740

25%
43 39 36 38
32 35 35 33 35
0%
June-09
June-10
June-11
June-12
June-13
June-14
June-15
June-16
Mar-09
Sep-09
Dec-09
Mar-10
Sep-10
Dec-10
Mar-11
Sep-11
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
Dec-16E
Mar-17E
Defensives include Consumer, Healthcare, Technology, Telecom and Utilities
Global cyclicals include Metals, Oil & Gas and JLR
Domestic cyclicals include Automobiles, Banks, Capital Goods, Cement, Media, NBFCs, Real Estate and Retail
Exhibit 26: 46% of MOSL Universe to report >15% PAT growth

Earnings Growth >30% >15-30% >0-15% <0% Ex RMs (%)
15 24 26 20 -8 -15 -15 -11 23 42 26 22 24 9 13 11 4 18 11 9 6 0 -3 8 12 9 17 7 -7 -9 -3 -4 -10 -9 -2 6 38 51
13 18
21 24 23 26
% of MOSL Universe companies
25 24 31 26
32 35 31 27 30 27 34 30
38 39 42 41 37 38 35 35 38 36 39 35 34 35
42 41 42 40 45 45 21
14 23
19 24 9 10 20 18 18
9
26 14 14 27
13 24 19 27 17 16 17 19
21
11 17 13 16 20 24 22 25 20 26 17
22 18 22 18 16 18 21 25 22
18 10 23 16 19
22 21
18 17 21 19 21
14 24 25 18 22 18 19 16 18 22
10 18 22 23 16 14 25 14
51 13 19
44 45 41 43 38 32 39 35 40 43
35 30
26 27 32 21 21 24 25 25
28 26 24 26 25 20 20 26 18 21 21 20 24
30 28 24
19
Dec 07
June 08
June 13
June 14
Mar 08
Sep 08
Dec 08
June 09
Mar 09
Sep 09
Dec 09
June 10
June 11
June 12
Mar 10
Sep 10
Dec 10
Mar 11
Sep 11
Dec 11
Mar 12
Sep 12
Dec 12
Mar 13
Sep 13
Dec 13
Mar 14
Sep 14
Dec 14
June 15
June 16
Mar 15
Sep 15
Dec 15
Mar 16
Sep 16E
Dec 16E
Mar 17E
PAT Growth Ex RMs (%)
46% of the companies would grow at >15% YoY, and almost 1/4th of the universe
would report >30% PAT growth.
Nearly 1/3rd of the universe would report PAT de-growth.
October 2016 12
Nifty sales/PAT growth at 3%/6%

Nifty PAT is likely to grow 6% YoY in 2QFY17 the highest in eight quarters.
Sales are expected to grow 3% YoY.
Performance is driven by domestic cyclicals like Autos, Cement and select
Private Sector Banks. Consumer and NBFCs are also likely to post healthy
growth.
50% of Nifty universe is expected to post 15%+ PAT growth, led by Autos, Paints,
Cement and certain Private Sector Banks.
Another notable feature of this quarter, as discussed in earlier sections, is the
YoY PAT decline of large-cap Technology companies (Infosys, Wipro, TechM).
Exhibit 27: Nifty (ex BPCL) sales to grow 3% in 2QFY17, third consecutive quarter of positive sales growth
37
32 30 31 31 31 31 31 31
27 25
19 19 19
22 25
21 19 22 21 23 19 LPA: 15%
17 16 15 16 14 15 16
14 12
8 9
8 5 4 4 4
1 3
0
-2 -4 -4 -3
-6 -6
-8
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Exhibit 28: 2QFY17 Nifty (ex BPCL) PAT to grow 6% YoY, highest in nine quarters
44
38
29 30 30
26 24 21 28 25 24 23 23
20 23 23 23
21 16 LPA: 11%
13 14 18
12 11 14 11
7 7 7 8 9
3 5 6
2
0
-3 -5 -2 -2
-6 -7
-10 -9 -12
-14
-20
-24
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3QE
Exhibit 29: 2QFY17 Nifty (ex BPCL) PAT to grow 6% YoY, highest in nine quarters
30.5
28.9
27.7 27.0
26.9 26.8
27.1 26.2 25.4 25.3 25.9
27.0 26.6 25.0 25.5 LPA: 25% 25.2 25.7 24.9 26.5
26.0 24.524.2
25.0 25.4 23.4 23.6 22.5 25.3
24.3 23.0 24.1 23.2 23.3 24.7
22.6 23.8
23.6 23.1 23.7 23.6
22.8 22.3
23.1 22.4
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2QE
3QE
4QE
October 2016 13
Exhibit 30: Nifty companies 2QFY17 performance (INR b)

Company Sales EBITDA PAT PAT Contbn EBITDA margin
Sep-16 Var % YoY Sep-16 Var % YoY Sep-16 Var % YoY (%) Grw. (%) Sep-16 Var (bp)
High PAT Growth (23) 2,567 3 562 29 242 55 34 229 22 444
BHEL 66 11 2 LP 2 LP 0 10 3 1055
Bank of Baroda 35 8 29 24 9 596 1 20 82 1030
Tata Motors 631 3 92 34 32 475 4 69 15 339
GAIL 104 -26 14 80 8 79 1 9 13 788
Lupin 43 30 11 71 7 69 1 7 27 629
Eicher Motors 18 -43 5 12 4 58 1 4 31 1527
Hindalco 250 1 31 42 9 54 1 8 12 355
BPCL 440 -5 23 83 15 45 2 12 5 256
Sun Pharma 78 14 25 27 16 44 2 13 32 326
Ultratech Cement 54 -4 11 15 5 38 1 4 20 324
Kotak Mahindra Bank 20 16 14 30 8 37 1 6 70 756
Ambuja Cements 20 -2 3 14 2 34 0 1 16 237
Yes Bank 14 25 14 34 8 30 1 5 98 627
Maruti Suzuki 181 30 27 21 18 29 3 11 15 -112
ACC 25 -7 3 16 2 29 0 1 12 242
Bharti Airtel 243 2 91 10 15 26 2 8 37 272
IndusInd Bank 14 30 13 29 7 25 1 4 92 -15
Power Grid Corp. 63 29 57 32 18 24 3 9 89 156
Hero MotoCorp 79 16 14 21 9 22 1 5 18 79
Asian Paints 39 14 7 21 5 21 1 2 17 100
Aurobindo Pharma 38 14 9 18 6 20 1 3 24 73
HDFC Bank 83 24 63 24 34 20 5 15 75 -18
Bosch 27 3 5 0 4 20 1 2 17 -57
Med/Low PAT Growth (14) 1,941 3 433 8 279 8 39 56 22 111
Zee Entertainment 17 19 5 30 3 18 0 1 28 235
Bajaj Auto 60 -1 12 -6 11 15 2 4 21 -100
ITC 97 9 39 10 28 14 4 9 40 50
Mahindra & Mahindra 103 17 14 16 11 12 2 3 13 -5
Reliance Inds. 557 -8 106 8 74 12 10 21 19 289
Larsen & Toubro 250 7 23 -10 8 11 1 2 9 -170
HDFC 23 13 21 13 18 11 3 5 94 -9
Hind. Unilever 80 3 15 12 11 8 2 2 19 150
Grasim Industries 25 18 5 38 4 8 1 1 18 261
NTPC 187 6 51 32 23 5 3 3 27 538
Tata Power 97 3 23 -5 3 5 0 0 23 -190
Bharti Infratel 33 7 14 9 6 3 1 0 44 73
TCS 298 10 81 3 62 2 9 3 27 -174
HCL Technologies 115 14 24 8 19 2 3 1 21 -124
Negative PAT Growth (13) 1,424 0 483 0 208 -24 29 -173 34 30
Axis Bank 46 14 47 28 19 -2 3 -1 100 1112
Infosys 170 9 45 4 33 -2 5 -1 27 -130
Cipla 39 13 7 -13 4 -6 1 -1 18 -515
Adani Ports 20 8 13 9 6 -7 1 -1 66 89
Wipro 136 8 26 -5 20 -10 3 -6 19 -269
ONGC 182 -11 89 -14 41 -16 6 -21 49 -157
Tech Mahindra 71 7 10 -7 6 -21 1 -4 14 -220
ICICI Bank 52 -2 54 4 24 -21 3 -17 104 581
State Bank 145 2 108 6 26 -32 4 -33 75 267
Tata Steel 274 -6 40 120 13 -38 2 -21 15 844
Coal India 162 -5 9 -63 13 -49 2 -33 6 -892
Dr Reddy s Labs 35 -11 6 -46 3 -63 0 -12 18 -1109
Idea Cellular 92 6 28 -7 0 -97 0 -21 31 -437
Nifty (50) 5,933 2 1,478 12 729 6 102 112 25 226
Nifty Ex-BPCL (49) 5,493 3 1,454 12 714 6 100 100 26 211
Nifty Ex-BPCL&PSU Banks (47) 5,313 3 1,317 12 679 7 95 113 25 203
October 2016 14
Interesting sectoral trends

Key PAT growth sectors
All Auto companies, except BHFC, would report PAT growth.

Eicher and TVS stand out with 40%+ PAT growth expected, while Maruti should
report a healthy 29% growth.
Excluding Tata Motors (which is expected to post 5.75x PAT), Autos would post
21% growth.
Capital Goods should post multi-quarter high PAT growth of 50%, driven by
favorable base (BHEL and Crompton Greaves posted loss in base).
Consumer companies would report the highest PAT growth in last 12 quarters.
Asian Paints is expected to post healthy ~21% PAT growth.
Pidilite would see ~24% YoY growth in PAT.
Other high-growth companies are Jyothy Labs (81%), Page Industries (35%),
Parag (124%) and United Spirits (68%).
Private Sector Banks profit is expected to grow at a moderate 5% YoY. Yes Bank
(+30%), Kotak Mahindra Bank (37%) and HDFC Bank (+20%) would report strong
growth, whereas ICICI Bank would report ~21% decline.
NBFCs are likely to post another quarter of 20%+ PAT growth. Bajaj Finance (51%),
Muthoot Finance (54%), Bharat Financial (80%) and Gruh Finance (27%) should
deliver strong performance.
Cement is expected to continue strong momentum and report PAT growth of ~40%.
Key PAT de-growth sectors
State-Owned Banks would post another quarter of PAT decline (down 13%) but
this decline is a sharp moderation from the 53% decline posted in 1QFY17.
Metals sector would report 16% fall in PAT (7th quarter of decline). However,
Hindalco would report ~54% growth in PAT.
Telecom sector would report PAT decline (-18%) after posting a growth in two
consecutive quarters.
Exhibit 31: 2QFY17 sectoral sales Exhibit 32: 2QFY17 sectoral PAT Exhibit 33: 2QFY17 sectoral
growth (%) growth (%) EBITDA margin (%)
21 62 36 36
50
13 40 30 29
10 10 9
8 7 24 24 23 23
5 3 21 20
3 3 2 18 16
1 18
11 15
6 6 6 3
9 7
-3 -4
-11 -16-16
-17 -18
Telecom
Utilities
Health Care
Oil Ex. OMCs
Metals
Consumer
MOSL Ex Fin.
Real Estate
Media
Technology
Cement
Auto
Cap Goods
Retail
MOSL Ex. OMCs
Utilities
Health Care
Telecom
Metals
Oil Ex. OMCs
Consumer
Auto
Cement
Media
Technology
Cap Goods
Real Estate
Retail
Financials
MOSL Ex. OMCs
Utilities
Health Care
Oil Ex. OMCs
Metals
Telecom
Consumer
Auto
Cement
Cap Goods
Media
Technology
Real Estate
Retail
Financials
October 2016 15
Significant sequential pick-up in MOSL Universe PAT

PAT growth for several Sharp growth recovery expected in cyclical sectors e.g. Autos, Cement, Real Estate,
sectors in MOSL Universe at Metals and PSU Banks. However, Technology will post its first decline in aggregate
multi-quarter high PAT on YoY basis.
Exhibit 34: Sectoral quarterly PAT trend (INR b)
Sector FY12 FY13 FY14 FY15 FY16 FY17
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun SepE DecE MarE
Auto 53 55 66 83 59 52 49 79 53 74 83 81 93 77 77 60 98 61 86 106 78 99 112 124
Capital Goods 23 29 34 65 26 27 28 60 14 21 22 52 17 19 19 48 12 14 9 45 16 21 21 65
Cement 19 12 16 23 25 19 16 20 19 11 11 18 17 14 9 15 14 13 12 19 24 19 24 28
Consumer 33 37 38 38 41 42 47 45 46 49 53 50 52 55 59 57 57 59 65 62 64 68 74 72
Financials 123 139 155 184 170 165 177 190 186 163 169 196 204 190 183 198 196 189 106 -18 168 195 220 240
Private Banks 42 45 52 57 54 57 67 71 70 72 80 85 82 85 95 100 91 98 106 83 94 102 114 119
PSU Banks 62 75 84 102 92 83 82 83 87 61 59 73 90 72 54 57 71 54 -39 -146 33 47 56 65
NBFC 19 19 20 26 24 25 28 35 29 31 30 38 32 33 34 41 34 38 39 45 41 46 49 57
Healthcare 20 22 21 23 22 28 28 31 34 42 45 44 46 51 34 37 52 52 49 55 56 52 56 65
Media 4 4 4 3 4 5 5 4 5 5 6 5 5 5 8 6 7 8 9 12 7 8 11 11
Metals 89 67 55 72 75 54 42 76 60 57 57 71 67 73 61 33 36 51 -8 22 31 36 56 57
Oil & Gas 56 38 284 367 -251 342 217 403 94 203 137 346 187 153 71 247 251 131 187 191 278 195 212 211
Oil & Gas Ex OMCs 150 178 139 139 154 173 166 133 138 174 175 165 149 149 95 134 147 128 131 137 148 141 151 151
Real Estate 6 7 6 6 6 5 7 5 6 5 5 6 6 5 6 6 5 6 7 4 7 6 8 7
Retail 2 2 2 2 2 2 3 2 2 2 2 3 2 3 2 3 2 2 3 2 2 2 3 2
Technology 66 68 81 83 90 92 96 96 105 120 128 133 132 136 143 141 141 151 153 158 153 147 161 161
Telecom 14 11 14 16 12 12 8 12 15 12 15 20 23 26 27 28 23 26 25 28 26 21 11 18
Utilities 69 45 66 96 80 62 87 97 75 66 83 96 75 55 72 87 76 66 77 87 76 55 71 83
Others 12 10 10 10 11 10 10 9 11 10 11 11 13 11 13 12 13 12 12 14 14 13 15 17
MOSL Univ Excl OMCs 683 685 708 844 776 749 768 858 769 811 866 950 900 869 810 863 877 836 736 732 870 885 993 1,099
MOSL Ex OMCs & PSUBk 621 610 624 743 684 665 687 774 682 751 808 876 811 797 756 807 807 783 775 879 837 838 936 1034
Note: Comparable Universe, excludes Just Dial, Alembic Pharma, Vedanta due to merger, Hathway and Repco Home Fin., MCX, Alkem Labs,
Interglobe Aviation, CG Consumer Electricals, Parag Milk Foods, Equitas Holding and IDFC Bank.
Exhibit 35: Sectoral quarterly PAT growth trend (%)
Sector FY12 FY13 FY14 FY15 FY16 FY17
Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar
Auto 8 4 30 49 11 -4 -26 -5 -10 41 68 3 75 5 -7 -26 6 -21 12 75 -21 62 30 17
Capital Goods 3 0 2 30 12 -5 -18 -7 -47 -25 -20 -13 26 -7 -13 -9 -31 -27 -54 -4 30 50 124 34
Cement 5 73 53 15 28 63 -2 -14 -26 -44 -33 -11 -10 26 -12 -16 -18 -2 32 26 79 40 93 48
Consumer 17 19 17 22 23 15 22 17 13 17 13 11 12 12 12 13 9 7 9 10 13 16 14 17
Financials -4 9 7 52 38 19 14 3 9 -1 -4 3 10 16 8 1 -4 0 -42 PL -14 3 106 LP
Private Banks 31 28 27 29 30 27 28 25 29 26 20 20 18 19 19 17 10 14 12 -16 3 5 7 42
PSU Banks -22 2 2 92 48 11 -2 -18 -5 -27 -28 -12 3 18 -7 -23 -21 -25 PL PL -53 -13 LP LP
NBFC 15 -3 -9 6 27 30 43 38 19 24 9 6 10 7 10 10 7 17 16 10 21 21 25 25
Health Care 15 4 8 8 9 27 34 33 57 50 58 42 34 23 -25 -14 14 2 44 47 7 -1 15 18
Media 14 8 -8 -34 -2 8 22 25 26 12 18 13 -5 3 33 17 33 50 16 113 4 6 20 -11
Metals 13 -6 -22 -24 -15 -19 -23 6 -20 5 36 -6 11 27 7 -53 -47 -30 PL -35 -12 -29 LP 161
Oil & Gas 60 -84 61 96 PL 812 -24 10 LP -41 -37 -14 99 -25 -48 -29 34 -14 162 -23 11 49 13 11
Oil & Gas Ex OMCs 43 25 -11 9 3 -3 19 -4 -10 1 6 24 8 -14 -46 -19 -1 -14 37 3 1 11 15 10
Real Estate -2 -13 -38 -12 -3 -27 22 -19 -5 6 -26 15 14 -8 10 -1 -17 26 16 -32 26 6 18 79
Retail 68 17 13 52 6 14 22 24 15 5 -12 12 -6 24 5 -2 -12 -37 16 -11 26 18 1 4
Technology 20 13 24 26 36 35 19 15 17 31 34 39 25 13 12 6 7 11 7 12 8 -3 6 2
Telecom -26 -38 -9 -3 -13 7 -46 -24 27 2 94 71 50 111 82 36 -1 -2 -7 1 16 -18 -58 -37
Utilities 34 14 20 24 17 40 32 1 -7 7 -5 0 0 -18 -13 -10 1 20 7 0 1 -16 -7 -5
Others 32 -9 -12 -10 -12 -6 0 -19 3 4 19 28 22 10 17 14 -2 3 -12 10 6 16 25 27
MOSL Univ Excl OMCs 15 10 4 20 14 9 9 2 -1 8 13 11 17 7 -7 -9 -3 -4 -9 -15 -1 6 35 50
MOSL Univ Ex OMCs & PSU Bk 21 11 4 14 10 9 10 4 0 13 18 13 19 6 -6 -8 -1 -2 3 9 4 7 21 17
October 2016 16
Exhibit 36: Key assumptions: Commodities bottoming out in 2QFY17

Macro FY16 1QFY17 2QFY17E 3QFY17E 4QFY17E FY17E FY18E
GDP Growth (%) 7.6 7.1 8.0 8.1 7.5 7.7 8.1
IIP Growth (%) 2.4 0.6 1.8 6.4 6.5 3.8 5.5
Inflation CPI-RU (%) 4.9 5.7 5.4 4.9 4.9 5.2 5.4
Currency: USD/INR 65.5 66.9 67.0 68.0 68.0 67.5 70.0
Oil: Brent (USD/bbl) 47.5 46.0 45.9 52.0 54.0 49.5 55.0
Repo Rate (%) 6.9 6.52 6.50 6.25 6.00 6.32 6.00
Interest Rate (%): 1Year CP Rate (Avg) 8.6 8.30 7.87 7.50 7.50 7.75 7.25
10Year G Sec (Avg) 7.7 7.46 7.11 7.00 7.00 7.14 6.75
Sectoral
Banking: Loan Growth (%) 10.7 9.4 11.5 12.0 11.1 11.1 12.5
Auto: CV Volume growth (%) 11.1 9.2 10.3 20.4 20.6 13.5 17.8
Car Volume growth (%) 10.6 2.1 16.8 8.8 15.0 10.8 16.5
Cement: Volume growth (%) 4.0 5.6 2.0 7.5 7.0 5.5 8.0
Capital Goods: L&T order Intake (% YoY) -11.9 12.5 25.5 19.7 17.7 18.9 8.8
Metal: Steel (USD/Tonne) 494 492 500 500 500 499 499
Aluminium (USD/Tonne) 1592 1,570 1619 1620 1630 1610 1650
Zinc (USD/Tonne) 1846 1918 2249 2200 2200 2142 2200
Oil & Gas: Under Recoveries (INRb) 124.3 24.0 28.6 30.0 30.5 113.6 126.0
Singapore GRM (USD/bbl) 7.5 5.0 4.5 6.4 6.4 5.6 6.5
Technology: USD Revenue gr (%) 6.9 3.6 1.7 2.1 2.6 9.0 10.7
* CV volume for Tata Motors and Ashok Leyland; PV Volume for Maruti Suzuki
October 2016 17
Intra-sector 2QFY17 earnings divergence (%)

Sectors Sector +30% Growth 15-30% growth 0-15% growth -ve earnings Earnings
Growth (%) growth (%) momentum
High growth sectors
Auto 62 TTMT: 475, ESC: 154, MSIL: 29, EXID: 24, MM: 12,
EIM: 58, TVSL: 40, HMCL: 22, BOS: 20, AL: 7 BHFC: -21 4 6 2 1
AMRJ: 16, BJAUT: 15
Capital Goods 51 SIEM: 72, ABB: 40, HAVL: 30, LT: 11, BHE: 4, ATD: -1, 3 2
4 2
BHEL/CGR: LP VOLT: 21 KKC: 3 TMX: -11
Cement 40 SRCM: 187, UTCEM: 38, ACC: 29 ICEM: 14, TRCL: 14,
3 1 3 0
ACEM: 34 GRASIM: 8
O il & Gas 38 GAIL: 79, IGL: 56, ONGC: -16, OINL: -17,
(Ex OMCs) BPCL: 45, PLNG: 40, GUJS: 15 RIL: 12 CAIR: -52 7 1 1 3
HPCL/IOCL/MRPL: LP
NBFC 21 BHAFIN: 80, GRHF: 27, DEWH: 23, REPCO: 15, HDFC: 11,
MUTH: 54, BAF: 51 IHFL: 22, LICHF: 20, MMFS:6 3 5 3 0
SHTF: 17
Retail 18 SHOP: 25 JUBI: -19 2 0 1
0
TTAN: 23
Consumer 16 PARAG: 124, JYL: 81, PIDI: 24, APNT: 21, ITC/BRIT: 14,
UNSP: 68, PG: 47, GCPL: 18, MRCO: 16 SKB/CLGT: 12,
6 4 8 0
NEST: 39, PAG: 36 HUVR/DABUR: 8,
HMN: 7, RDCK: 3
Medium/Low growth sectors
Banks - Private 8 DCBB: 49, KMB: 37, IIB: 25, FB: 15, AXSB: -2,
3 2 2 2
YES: 30 HDFCB: 20 EQUITAS: 3 ICICIBC: -21
Media 6 DBCL: 23, JAGP: -10, DITV: -18,
Z: 18, PVRL: -34, HTML: -38, 0 3 0 6
SUNTV: 18 HATH/SITINET: Loss
Real Estate 6 PHNX: 131, OBER: 15, DLFU: -10, SOBHA: -14, 2 0 2
4
PEPL: 69 IBREL: 6 MLIFE: -33, GPL: -50
PAT degrowth sectors
Technology -3 MPHL: 11, INFO/HEXW: -2,
TELX: 29 TCS: 2, WPRO: -10, PSYS: -15,
0 1
HCLT: 2 CYL: -19, 3 9
ZENT/TECHM: -21
MTCL: -32, KPIT: -37
Healthcare -4 IPCA: 100, SANL: 30, GRAN: 11, CIPLA: -6, CDH: -8,
LPC: 69, GNP: 27, DIVI: 2 GLXO: -17, ALKEM: -23, 2 8
3 3
SUNP: 44 ARBP: 20 BIOS: -55, TRP: -56
ALPM: -59, DRRD: -63
Banks - PSU -13 PNB: -31, SBIN: -32,
BOB: 596 CBK/INBK: -33, 1 0 0 7
UNBK: -54, OBC: 55,
BOI: Loss
Metals -16 JSTL: 591, NMDC: -16, NACL: -26, 3
0 0 6
VEDL: 62, HZ: -35, TATA: -38,
HNDL: 54 JSP/SAIL: Loss
Utilities -16 PWGR: 24 NTPC: 5 COAL: -49, 0 1 1
2
JSW: -70
Telecom -18 BHARTI: 26 BHIN: 3 IDEA: -97 0 1 1 1
Earnings momentum: Represents number of companies in each of the growth brackets; PL: Profit to Loss; LP: Loss to Profit
October 2016 18
2QFY17 Key sectoral highlights

2QFY17E YoY (%)
Margin
SECTOR Key highlights Sales EBIDTA PAT Chg YoY Key stock to watch
(pp)
Auto Volume growth in the automobile industry was broad 6.8 21.6 62.1 1.8 Tata Motors (+ve, strong
based and was primarily driven by pre festive earnings growth to
inventory build-up , with 2Ws,PVs and Tractors continue with 475%
contributing to robust growth. 2W volumes grew by growth).
16.5% YoY on the back of pre festive push from OEMs
along with rural recovery on the back of normal
monsoons. PV segment grew by 13% YoY led by new
launches. Tractors witnessed a 30% plus growth
during the quarter after 2 consecutive years of below
normal monsoons and a lower base. LCVs continued
their momentum (+9% YoY) as recovery further
strengthened. The only laggard was M&HCVs , which
witnessed decline (-5% YoY) due to adverse base.
EBITDA margins for our Auto OEM (ex-JLR) coverage Eicher Motors ( strong
universe are likely to expand +50bp YoY (+20bp QoQ), performance to continue
driven by operating leverage but diluted by higher with an estimated 58%
raw material costs. Impact of commodity price earnings growth)
recovery would be reflected in next 2 quarters
Auto aggregate PAT is expected to grow by 62% (incl
JLR) . Ex JLR , Auto sector PAT is estimated to grow by
~24% YoY led by HMCL, Eicher and AL.
Capital Excluding Larsen we expect order intake by most 4.8 18.0 50.4 1.0 Execution from Larsen is
Goods companies to be flattish in 2QFY17 based on likely to remain subdued
announced orders during the quarter. Industrial in 2QFY17 and is
capex continues to remain sluggish while roads, rail expected to pick up in
and Power T&D remain the only bright spot on the 2HFY17 as orders
infra side. approach revenue
booking stage. Revenue
to grow 6.9% YoY and
Net profit growth of
11.7% YoY led by lower
interest cost during the
quarter
Execution to remain subdued on a weak opening Bharat Electronics is
backlog and continued challenges in execution on likely to report strong
account of clearances, funding and land acquisition revenue growth of 18%
issues. YoY led by pick up in
revenue booking of
earlier stuck orders of
hand held thermal device
Margins to improve YoY on account of improvement Havells to report revenue
in operational performance from BHEL and Havells. growth of 13% YoY led by
pick up in demand across
segments. We expect net
profit to register 30% YoY
increase led by extinction
of royalty payment from
1QFY17 (INR400m
annual royalty cost) and
rise in other income on
account of cash realised
on sale of Sylvannia
Cement As monsoon set in, 2QFY17 volume growth will be 2.0 19.3 40.0 2.8 We expect Shree cement
hurt. Good monsoon after two years of drought to report strong PAT
would lead to increase in rural demand making a growth led by volume
favorable base for 2HFY17. Core industry data growth of 9% YoY, ramp-
revealed volume growth of 2.3% YoY in July-Aug-16. up of new facilities as
We expect the MOSL coverage universe to record margin improvement due
volume growth of 2.1% YoY, or -13% QoQ. to better realization
October 2016 19
2QFY17E YoY (%)

Margin
(pp)
Prices remained stable in central and western regions, South based companies
we estimate ASP to remain flat QoQ (+1.2 % YoY). For to deliver +15% YoY
2QFY17, we calculate price changes of (a) +2.5% QoQ growth
(15% YoY) in north, (b) -0.2% QoQ (+4.6% YoY) in
central, (c) -3.5% QoQ in west (-1.3%YoY), (d)+1.3%
QoQ in east (-3.1% YoY) and (e)+1.9% QoQ (-5.4%
YoY) in south.
Consu- Demand across staples universe remains steady with 10.2 13.7 15.8 0.7 We expect ITCs sales to
mer no meaningful pick-up. Rural demand remains under rise 9% (2% increase in
stress with newfound hope now as monsoon which cig volumes) and PAT to
has been close to normal after two preceding years of grow 13.5% YoY. HUVRs
drought. MOSL Consumer universe EBITDA is sales growth is estimated
estimated to grow 13.7%, with 70bp margin at 3.5% (volume growth
improvement. While PFAD and TiO2 prices saw YoY of ~3%), with 150bp
inflation of 33.8% and 1.5% respectively; LLP and EBITDA margin
HDPE prices still remained benign with correction of expansion over a low
15% and 5% respectively. base in 2QFY16. We
expect Asian Paints,
GCPL, Pidilite, P&G
Hygiene and United
Spirits to register robust
PAT performance. Nestle
numbers appear strong
because of Maggi issue in
the base.
Financials Overall earnings trajectory to improve sequentially. 7.8 14.0 3.2 4.4
While provisioning is likely to remain elevated,
reducting in cost of funds and higher non-core
income would support earnings
Private Mixed picture expected with sustained earnings 15.3 20.5 4.9 3.7 ICICIBC is expected to
Banks pressure at corporate lenders like ICICIBC and AXSB utilize one off profit on
led by asset quality strain and sustained growth sale of investments to
trajectory at retail lenders like HDFCB and IIB. We create provisioning for
expect most private banks to report 20%+ loan bad loans which will
growth driven by retail lending. reduce the concerns over
earnings/asset quality in
ensuing quarters.
Valuations at 1.1x FY18
BV remains attractive.
YES growth to remain the
best in the system at
30% with strong ROA and
ROE of 1.8%+ and 22%+
HDFCB Picture perfect
story continues with
impeccable asset quality,
CASA Ratio of 40%+,
continued market share
gain and best in class
return ratios.
PSU Gross stress addition expected to moderate on a -0.4 7.0 -12.7 5.2 SBIN- Strong play on
Banks sequential basis, yet stay at elevated levels owing to improvement in
NPA ageing. Bond gains owing to falling yields, economic growth, lowest
monetization of non-core assets and high focus on NSL, value unlocking
recoveries from written-off accounts to provide some from insurance venture,
respite to offset sustained high credit costs and improving return ratios
muted loan growth and extension of
Chairman tenure by a
year are the key
positives.
October 2016 20
2QFY17E YoY (%)

Margin
(pp)
NBFC Urban-focused companies are expected to continue 21.8 21.0 21.1 -0.5 MUTH, is likely to have a
to outperform due to robust demand uptick from strong quarter with 53%
urban areas. Asset quality stress in rural-focused YoY PAT growth,
financiers, seems to have bottomed out with growth supported by strong gold
expected from 2HFY17. Management commentary on prices. Sequential AUM
outlook for 2HFY17 will be the key monitorable. growth is likely to come
Housing finance companies will continue to deliver in at 5% with margin
strong growth but face downward pressure on yields improvement.
in the retail home loan segment. BFI is likely to report
strong 70% AUM growth
and 80% profit growth,
driven by continued
strong credit demand
from the target segment,
coupled with an increase
in ticket sizes.
Furthermore, the
company recently raised
INR7.5b, the benefit of
which should be
reflected in 2H.
LICHF is likely to report
strong earnings growth
of 20% YoY, led by stable
loan growth and
improvement in margins.
Incremental spreads are
likely to remain strong
on the back of falling
bond yields, resulting in
lower cost of funds.
Health- Sun pharma, Lupin and Cadila healthcare are 8.7 1.5 -4.5 -1.7 SUNP (+ve; gGleevec
care expected to report strong growth in the US aided by would continue to drive
limited competition launch of gGleevec, gGlumetza growth; gGlumetza
and gAsacol HD. launch would also
support growth)
Aurobindo is also likely to continue its growth story in LPC (+ve, gGlumetza and
US, with strong number of product launches over last gFortamet to continue to
18 months. Glenmark is also expected to exhibit drive strong PAT growth)
strong growth in the US, led by gCrestor and couple of
niche dermatology launches
Domestic business for all the pharma companies is IPCA (+ve; strong
expected to bounce back strongly, after being domestic business
impacted by external factors like FDC ban and NLEM growth largely led by
2013 since March 2016. strong traction within its
anti-malarial portfolio)
Media Large broadcasters such as Zee expected to see sixth 12.6 16.1 6.4 0.9 Zee Ent: 15%/16%
consecutive quarter of strong ad performance. ad/domestic subscription
Domestic Subscription is expected to grow 15% for CAGR.
Zee. However, largely remain subdued for the
industry due to lack of digitization triggers. We expect
domestic subscription to pick up from 3QFY17.
While STB seeding is expected to be weak in 2Q due &TV and Zee Anmol
to lack of digitization triggers, seeding is expected to performing well among
pick up in 3QFY17 onwards. DTH companies are the Hindi pack and
expected to continue their current run-rate of regional offerings
seeding STBs, one can expect cable companies to performing well.
keep seeding rates moderate till a verdict on pending
court cases are out. Phase III monetization remains a
key concern for all stakeholders. Monetization
October 2016 21
2QFY17E YoY (%)

Margin
(pp)
expected to improve in 2HFY17.
Unlike broadcasters, ad recovery eluded Print peers in 24% EPS CAGR (adj. for
FY16. We expect 2Q ad growth to remain subdued as pref dividend) over FY16-
key categories like education and real estate remain 18.
weak. DB Corp's expected strong ad growth comes on
an abysmally low base of 2QFY16. Newsprint prices
have marginally inched up in 1H. Ex-DB Corp; print
companies' margins are expected to decline 100-
300bp YoY
Metals Base metal prices were higher in 2Q. Zinc 0.6 41.0 -15.7 5.1 Vedanta and Hindustan
outperformed with ~17% QoQ increase. Aluminum Zinc would benefit from
was up ~3% QoQ. Steel was seasonally weak higher zinc prices and
volumes.
EBITDA for coverage universe is estimated to increase Tata Steel is likely to
10% QoQ / 50% YoY to INR165b. The increase is led surprise positively on
by Vedanta on higher price and volumes in zinc and European margins. SEA
aluminum, and Tata Steel on higher margins in margins are also
Europe expected to be higher on
favorable scrap product
spreads.
Oil & Gas Benchmark Singapore GRMs were down 19% YoY and -6.6 37.8 48.6 4.1 BPCL, HPCL and IOCL
up 2% QoQ and averaged USD5.1/bbl. YoY fall was led (+ve).
by 44% decline in gasoline cracks.
OMC's core earnings will be stable with QoQ increase
in marketing margins. However reported numbers wil
be lower QoQ as 1QFY17 had significant higher
inventory gains
Excl. Brent prices averaged USD45.8/bbl (-8% YoY; flat -10.8 4.4 10.7 3.4 ONGC/OINL (+ve; Oil
OMCs QoQ). Upstream earnings will continue to remain producer countries'
under pressure. Expect subsidy sharing to be nil. efforts to cap production
Expect RIL's PAT to be up +12% YoY led by petchem could revive the oil price
and largely flat refining profit benefited by exchange realization).
rate. IGL (+ve; Expect double
CGD companies (IGL) volume growth revived led by digit volume growth to
policy support on account of increased pollution continue).
awareness. However, gas transmission companies' PLNG (+ve; Capacity
volumes (GAIL, GSPL) are subdued led by expansion + take-or-pay
unfavourable oil-gas economics. GAIL's petchem contracts to boost
business turned profitable and will boost earnings. earnings).
Real Weak presales to continue, expect flattish to marginal -16.9 -2.0 5.7 5.5 Prestige presales on the
Estate uptick QoQ. back of new launches
Net debt to go up on the back of negative cash flow. Impact of RentCo
restructuring in DLF
Retail Jewelry industry demand is likely to decline 15-20% in 21.5 22.4 17.8 0.1 We expect Jubilant
2QFY17 due to gold price volatility and low consumer Foodworks sales to be at
confidence, affecting Titan. Brick and mortar retail 11% with 2% SSSG.
companies continue to face the onslaught of online Shoppers Stops LTL
retailers. Titan has called out a consumption fatigue growth is likely to come
due to spate of deals throughout the year driven by in at 13% off a weak base
online and offline players. which had flat LTL.
Titans sales and PAT
growth will be healthy
but on the back of poor
base of 25%/39% decline
in sales/PAT in 2QFY16.
October 2016 22
2QFY17E YoY (%)

Margin
(pp)
Techno- The seasonal strength that leads to strongest 9.6 1.6 -2.6 -1.8 TCS (Macroeconomic
logy sequential growth in the September quarter is not uncertainties have led to
expected to play out this time, as slowness in weakening of
spending by the BFSI vertical weighs on the industry. expectations, and loss of
Broad macro uncertainty has been leading to delayed momentum. Outlook on
decision making and delayed ramp-up of projects. the remainder of the
year, and the impact of
seasonal weakness in 2H
could further change
expectations).
On account of the subdued revenue growth, flat INFO (CC growth
INR/USD QoQ, and the continued need for guidance after citation of
investments in Digital, margins are expected to downward risk to
decline. existing guidance; led by
macro uncertainties from
Brexit, and loss of
contract from RBS).
Watch out for commentary around Brexit and any WPRO (Outlook for
impact from the same on CC growth guidance for 3QFY17; post a
companies like TCS, INFO, WPRO disappointing guidance
of 0-1% revenue growth
for 2Q, given bottoming
out of the Energy
vertical, and
restructuring of the India
and Middle East
business).
Telecom Rjio impact minimal on voice business in Q2FY17. But 3.4 5.8 -18.2 0.8
expect seasonality led weak traffic growth and 1%
voice RPM decline for both Bharti and Idea
Data deceleration continues with 1.4% data revenue
growth expectation in Q2FY17, driven by a sharp 8-
10% price decline offseting volume growth.
Bharti Africa is likely to see about 15% revenue and
EBITDA decline due to Naira currency devaluation and
sale of business in 2 countries.
Utilities PAT growth will be led by PWGR on strong 2.6 7.2 -15.9 1.3 Coal India e-auction and
capitalization momentum over the last few quarters. ASQ realization.
NTPC's PAT growth would be muted on lower PLFs
and other income. JSW Energy would see impact of
under-utilized capacities.
Coal India EBITDA (ex-OBR) is estimated to decline by
46% YoY on wage hike, lower volumes and prices.
October 2016 23
EARNINGS FY16-18 FY17 Sensex EPS growth at 12%; no downgrades over the quarter
Baton being passed to Cyclicals; earnings acceleration ahead
We expect MOSL Universe PAT to grow 26% in FY17 (6% decline in FY16) and at a
CAGR of ~24% over FY16-18. Recovery in earnings of cyclical sectors coupled with base
effect would drive performance in FY17.
We expect Sensex EPS CAGR of 17% during FY16-18, significantly higher than the 6%
CAGR witnessed during FY08-16. We estimate Sensex EPS at INR1,493 in FY17 (growth
of 12%) and INR1,810 in FY18 (growth of 21%). Key contributors to FY17 expansion
would be Maruti, M&M, Lupin, Sun Pharma, Asian Paints, HDFC Bank, Tata Motors
and Tata Steel.
Cyclical sectors are expected to outperform the defensives over FY16-18, with
Financials, Cement, Metals, Capital Goods and Autos estimated to deliver 46%, 55%,
53%, 32% and 26% PAT CAGR, respectively.
Earnings growth in FY17 would be aided by recovery in sales growth, as WPI has now
moved into positive territory and is driving pricing/realization growth for consumer
facing industries. Expected softening in interest rates (moderation in CPI inflation) is
likely to moderate interest costs, and in-turn, drive PAT growth.
Earnings are also supported by low base effect playing out in several sectors State-
Owned Banks (worst of NPA cycle behind), Metals (commodity prices have recovered),
th
Cement and Capital Goods. Normal monsoons coupled with 7 Pay Commission
awards are expected to provide fillip to consumption in 2HFY17 and FY18.
Exhibit 37: Recovery in cyclicals expected to drive robust 17% CAGR (FY16-18) in Sensex EPS
Sales Gr. / EBIDTA EBIDTA EBITDA margin PAT PAT delta
Sector PAT Gr. / CAGR (%)
CAGR (%) Margin (%) CAGR (%) change (bp) (INR B) Share (%)
(No of Companies) (FY16-18) FY16 (FY16-18) FY16-18 FY16 FY16 FY17E FY18E (FY16-18) FY16-18
High PAT CAGR (>25%) 11 25.9 18 342 1,319 -26 52 31 41 70
Cement (13) 13 16.8 34 687 77 4 66 45 55 6
Metals (9) 9 12.3 36 668 134 -55 88 25 53 10
Financials (35) 13 79.3 13 17 620 -36 62 31 46 37
PSU Banks (10) 9 70.9 11 173 -70 PL LP 77 LP 24
Private Banks (12) 17 87.7 15 -354 406 6 16 20 18 9
NBFC (13) 16 90.0 15 -51 283 11 13 17 15 5
Real Estate (9) 10 31.7 16 356 24 3 21 53 36 1
Capital Goods (16) 12 9.1 25 233 93 -12 43 23 32 4
Media (11) 16 27.8 26 511 33 55 19 46 32 1
Auto (13) 11 14.5 15 120 338 11 24 29 26 11
Medium PAT CAGR (20-25%) 14 21.9 17 120 277 13 18 31 24 8
Healthcare (16) 13 24.9 16 119 197 13 18 32 25 6
Others (29) 16 17.7 20 139 80 12 17 28 22 2
Low PAT CAGR (up to 20%) 11 24.6 14 122 1,798 5 6 16 11 22
Retail (3) 15 7.9 21 85 9 -12 12 27 19 0
Oil & Gas (12) 10 11.9 17 164 763 19 20 13 16 14
Excl. OMCs (9) 10 20.3 16 204 546 2 11 15 13 8
Consumer (18) 12 22.8 15 117 241 10 15 18 17 5
Technology (13) 15 24.1 13 -68 585 6 6 15 10 7
Telecom (3) 7 36.0 8 87 101 -6 2 2 2 0
Utilities (4) 10 31.2 16 351 317 8 -9 22 6 2
MOSL Excl. OMCs (201) 11 25.1 16.4 232.9 3,395 -10 25 24 24 100
MOSL (204) 11 21.5 16.6 224.6 3,612 -6 26 23 24 NA
Sensex (30) 11 24.7 15.8 213.2 1,199 3 14 21 18 NA
Nifty (50) 10 24.1 13.6 143.4 1,414 -1 18 22 20 NA
October 2016 24
Headwinds turning into tailwinds; to drive 12% growth in FY17 Sensex EPS
We believe that headwinds of FY15/FY16 are turning into tailwinds for FY17 and
would drive earnings growth. For example, two consecutive years of drought,
which dragged consumption spending, have made way for normal monsoons.
This along with 7th Pay Commission awards should drive consumption in 2HFY17.
After staying in negative territory for 17 months, WPI turned positive in April
2016. This augurs well from the perspective of topline growth.
Commodity prices, which were deflationary and exerted pressure on topline
growth, are recovering from their multi-year lows. This will provide a catalyst for
growth in commodity-oriented sectors.
Interest rate environment is benign 10-year G-Sec yield is down 100bp in
CYTD16. This would help drive financial leverage for debt-heavy companies and
amplify EBITDA growth.
Exhibit 38: Monsoons were normal after two years of drought Exhibit 39: CPI trending in 5-6% band
SW monsoon % deviation from LPA
7.9
7.6
Agri GDP (%) - RHS
7.7
8.1
7.4
26.0 24.0
7.3
7.0
6.8
5.8
6.1
5.7
5.6
5.6
5.8
5.4
5.4
5.4
12.0 16.0
5.2
5.5
5.0
5.3
5.0
4.9
5.2
5.3
5.0
4.6
4.8
4.9
4.3
4.4
3.7
-2.0 8.0
3.3
3.7
-16.0 0.0
-30.0 -8.0
FY1981
FY1984
FY1987
FY1990
FY1993
FY1996
FY1999
FY2002
FY2005
FY2008
FY2011
FY2014
FY2017E
Jul-14
Jul-15
Jul-16
Apr-14
Apr-15
Apr-16
FY17E
Jan-14
Jan-15
Jan-16
Oct-14
Oct-15
Exhibit 41: Commodity prices recovering from multi-year

Exhibit 40: Benign interest rate environment on the anvil? lows rebased to 100
Repo rate (%) 10-yr yield (%) Crude Steel Zinc
9.0 120
8.3 95
85
7.5 70
6.8 6.8 47
45
38
6.0 6.25
20
Jul-14
Jul-15
Jul-16
Apr-14
Apr-15
Apr-16
Jan-14
Jan-15
Jan-16
Oct-14
Oct-15
Oct-16
Jul-13
Jun-14
Apr-11
May-15
Apr-16
Mar-12
Sep-12
Feb-13
Jan-14
Dec-14
Sep-16
Oct-11
Oct-15
October 2016 25
Several sectors showing pick-up in operating trends
Exhibit 42: Auto (ex JLR) showing sequential sales pick-up Exhibit 43: Petro product consumption growth healthy at 7%
Auto Ex JLR Sales growth YoY (%) Qtrly petro products consumption growth YoY (%)
18.7
15
16.0
15.8
15.4
13.4
12.9
12.1
12.1
11.4
11
9.5
9.4
9
9.1
8.1
7.1
6.8
7 7 11 8
6.4
5 6 6
5
4 3 4 5 5 4 5 4 5
6.8
2 1 1 7
5 1
1
-0.2
-2.7
Dec-13 -3.6
-3.4
(0)
June-14-6.0
(1)
June-11
June-12
June-13
June-15
June-16
Dec-11
Dec-12
Dec-14
Dec-15
Sep-09
Mar-10
Sep-10
Mar-11
Sep-11
Mar-12
Sep-12
Mar-13
Sep-13
Mar-14
Sep-14
Mar-15
Sep-15
Mar-16
Sep-16
Exhibit 45: Cement volume growth moderation due to
Exhibit 44: Consumer revenue growth at two-year high monsoons; especially in North and Central regions
Consumer sales growth YoY (%) Cement Volume growth (%)
16.9
14.4 9.3
12.6 8.9
11.1 11.4 11.5 10.2 6.3 5.5 5.1 5.7
7.7 7.9 7.2 3.2 3.7
1.2
4.5
2.2 1.9 2.1
-5.0 1.6
-0.6
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17E
Jun-14
Jun-15
Jun-16
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16E
FY17 to see new drivers of earnings contribution of hitherto laggard

sectors to pick up
Flattish earnings growth over the last two years was largely driven by defensive
sectors. Pace of investment recovery was sluggish and the Banking sector was
encumbered by rising NPA challenges.
We see this scenario changing in FY17. Pace of earnings growth is accelerating
to 12% for Sensex EPS. Even our broader MOSL Universe is likely to report a
sturdy 26% PAT growth.
Drivers of earnings are changing we expect cyclical sectors to come to the fore
and contribute more to incremental earnings. Contribution of State-Owned
Banks and Metals would go up significantly in FY17, facilitated by low base and
some recovery in operating trends and commodity prices.
October 2016 26
Exhibit 46: PAT contribution of State-Owned Banks to rise, Exhibit 47: Contribution of Metals would also rise, but would
but remain well below historical average still be below long-period average
PSU Banks PAT (INR b) % to MOSL Universe PAT Metals PAT (INR b) % to MOSL Universe PAT
12.6 12.3 15.3 14.6 15.4
11.3 11.5 11.5
10.5 9.2 9.9 8.6 8.5 13.1 12.1
10.7
6.7 9.1 9.0 7.8 7.7
4.7 5.5 5.6
3.7
-1.9
128 151 206 267 303 341 392 410 328 327 212 375
160 251 303 325 226 365 364 322 298 296 134 252 315
-70
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
Exhibit 48: OMCs emerged as a new sector, with promise of Exhibit 49: ~46% of FY17 incremental PAT contributed by
more stability in earnings State-Owned Banks and Oil & Gas
Banks-PSU
6.8
5.9 6.0 6.0 Oil & Gas
5.5 Average of 13 Technology
5.1
4.4 4.0% 4 30 Banks-Private
3.7 4.0 4
2.9 2.8 Automobiles
5
2.0 Healthcare
1.7 4
4 Capital Goods
9 16 Cement
7 4 Consumer
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
NBFC
Others
FY16/17 estimates: Sectoral earnings change YoY

State-Owned Banks, Oil & Gas and Metals would contribute 3/5th of the
incremental PAT in FY17. The contribution is more polarized towards cyclicals.
Only the Utilities sector is expected to drag profits in FY17.
For FY18, the earnings contribution is more dispersed. Top three sectors State-
Owned Banks, Oil & Gas and Autos would contribute 40% of the incremental
MOSL Universe PAT in FY18. Our estimates suggest positive incremental
contribution to PAT from all sectors in FY18.
October 2016 27
Exhibit 50: MOSL Universe absolute PAT change (FY17 YoY; INR b)
65 51 40 37 37 37 35 6 5 2 1
118 80
153
282 -28
4,454
3,532
Healthcare
Banks-PSU
Utilities
Metals
NBFC
Telecom
PAT (INRb)
MOSL FY17E
Auto
Consumer
Cement
Cap. Goods
Banks-Pvt
Technology
Media
Real Estate
Oil & Gas
Retail
MOSL FY16
PAT (INRb)
Exhibit 51: MOSL Universe absolute PAT change (FY18 YoY; INR b)
75 64 63 57 54 51 30 18 16 3 2
115 96 91
163 121
5,471
4,454
Healthcare
Banks-PSU
Utilities
Telecom
MOSL FY17E
Metals
NBFC
MOSL FY18E
Auto
Consumer
Banks-Pvt
Technology
Cement
Cap. Goods
Media
Real Estate
Oil & Gas
Retail
PAT (INRb)
PAT (INRb)
FY17/18 estimates: Contributors to sectoral earnings change in last three
months
In the last three months since our 1QFY17 Strategy, sectors that contributed to
upward earnings momentum include Metals, Autos ex JLR and Oil & Gas. This is
a significant change the Metals sector has been a key drag for overall earnings
in the last few quarters.
While State-Owned Banks have still seen earnings cuts over the last three
months, Technology, unsurprisingly, emerges as a new drag for incremental
earnings. The cut in Technology estimates is driven by macro headwinds
coupled with guidance cuts/warnings from corporates.
Exhibit 52: FY17 PAT estimate change contributors in last three months (INR b)
122 34 26 18 15 6 3 2 0
0 1 2 4 4 4 6 11 11 12 33 89
4,473
4,522
FY17 Cur. PAT
Coal India
Metals
Telecom
NBFC
Others
Banks-PSU
FY17 PAT in June
OMCs
Auto Ex JLR
Oil (Ex OMCs)
Consumer
Cement
Media
Cap. Goods
Technology
Real Estate
Banks-Pvt
Utilities (Ex Coal)
Retail
Sun Pharma
JLR
Healthc. (Ex Sun)
October 2016 28
Exhibit 53: FY18 PAT estimate change contributors in last three months (INR b)
38 16 12 9 4 2 1 0 0 0
1 1 2 4 6 10 12 12 13 20 41
5,561 5,560
Coal India
Metals
NBFC
OMCs
Others
Telecom
Banks-PSU
FY18 Curr. PAT

FY18 PAT in June
Consumer
Auto Ex JLR
Cement
Real Estate
Media
Cap. Goods
Oil (Ex OMCs)
Banks-Pvt
Technology
Utilities (Ex Coal)
Sun Pharma
JLR
Retail
Healthc. (Ex Sun)

Earnings growth: Companies with strong growth in FY17
Exhibit 54: Companies with strong growth in last four quarters, which would continue in FY17
PAT growth (%)
Company 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17E 3QFY17E 4QFY17E FY17E FY18E
Bharat Financial 24.0 37.2 93.6 108.4 285.8 80.2 89.3 94.7 128.2 -3.3
Glenmark Pharma -1.1 21.4 48.1 1301.5 24.0 27.3 49.4 363.8 72.3 16.3
Maruti Suzuki 58.5 65.3 68.2 18.6 23.0 29.4 22.4 22.7 50.3 31.2
Bajaj Finance 30.4 41.7 58.1 36.4 53.8 51.4 29.1 51.7 44.9 27.8
Sanofi India 11.7 16.9 171.9 66.5 32.9 29.9 20.2 17.9 43.8 18.2
TVS Motor 38.4 22.8 19.4 30.1 21.2 40.3 46.8 36.1 39.5 41.8
Ashok Leyland LP 607.2 533.6 93.0 130.0 7.3 72.2 40.5 38.9 38.1
Muthoot Finance 1.7 2.2 20.9 60.6 47.6 53.5 40.4 19.3 38.0 20.2
Ultratech Cement -3.4 -3.9 39.6 10.8 28.3 38.0 52.1 27.8 36.2 53.1
Yes Bank 27.7 26.5 25.1 27.4 32.8 30.3 30.1 31.0 30.9 28.1
TTK Prestige -7.4 21.7 32.6 131.2 10.8 27.1 30.2 36.4 28.3 23.3
Eicher Motors 50.7 54.8 76.1 84.3 58.6 58.1 59.6 39.1 28.0 37.3
Repco Home Fin 21.8 21.2 25.5 21.3 30.8 15.0 33.8 27.7 26.6 30.6
Aurobindo Pharma 15.8 22.7 32.3 38.7 21.0 20.2 15.6 29.9 26.6 22.7
SRF 21.3 31.4 37.3 80.5 24.1 18.3 14.6 37.7 25.8 23.6
IndusInd Bank 24.7 30.2 29.9 25.3 26.0 25.1 25.9 25.4 25.6 26.6
Pidilite Inds. 35.5 41.4 48.6 83.9 16.4 24.1 28.0 19.1 23.7 18.2
Power Grid Corp. 14.7 19.7 28.8 13.2 31.9 24.5 16.5 13.1 23.1 18.6
Godrej Consumer 57.4 37.3 25.6 20.5 17.2 18.1 18.2 23.2 22.9 25.8
GRUH Finance 20.0 19.9 20.0 18.5 19.6 26.9 20.7 22.1 22.3 26.3
Exide Inds. -16.0 24.1 37.8 29.1 25.9 23.8 24.0 14.4 21.8 16.4
LIC Housing Fin 18.6 20.6 21.7 18.5 6.7 20.2 24.9 31.9 21.7 25.4
Asian Paints 34.0 17.3 40.6 22.4 17.9 21.2 22.4 22.8 21.1 15.9
HDFC Bank 20.7 20.5 20.1 20.2 20.2 20.2 20.2 20.2 20.2 20.2
October 2016 29
Exhibit 55: Companies reporting strong growth on low base of FY16

PAT growth (%)
Company 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17E 3QFY17E 4QFY17E FY17E FY18E
JSW Steel PL -85.2 PL 161.4 LP 591.1 LP 767.3 LP 3.8
MCX 7.4 5.6 2.7 -41.7 30.5 6.7 75.8 46.9 266.3 59.6
Jain Irrigation -29.0 Loss Loss -14.1 305.5 LP LP 100.2 151.4 61.2
Jyothy Labs -39.3 -35.5 -41.9 -40.0 78.2 81.3 80.8 102.3 85.0 19.9
IOC 155.1 Loss LP -80.3 28.5 LP 1.8 165.7 79.5 8.1
Indraprastha Gas -10.7 -15.1 -2.8 12.3 45.3 55.7 44.6 44.2 47.4 9.0
ACC -45.5 -42.9 -15.5 -7.0 81.0 29.3 144.5 66.8 45.2 77.2
Hindalco -49.3 -14.4 -35.7 76.9 116.5 54.2 104.9 -3.7 45.1 33.0
Ambuja Cements -44.6 -35.8 -43.2 -9.2 76.5 33.5 114.0 38.6 42.0 64.6
Kotak Mahindra Bank -66.9 -8.8 4.0 3.9 LP 36.9 32.2 36.4 41.9 26.9
Sobha -38.4 -32.6 -46.6 -55.5 2.0 -13.9 50.1 144.1 27.3 93.8
HPCL 3349.3 PL LP -28.2 32.1 LP -13.2 -44.9 23.0 3.7
FY17 estimates: Top earnings upgrade and downgrade

In the last three months, earnings upgrades were led by commodity-oriented
and discretionary consumption names.
Top contributors to earnings downgrades, however, are dispersed across
Telecom, Pharma, Technology, and State-Owned Banks.
Exhibit 56: Top earnings upgrade in last 3 months: FY17E Exhibit 57: Top earnings downgrade in last 3 months: FY17E
% Upgrade in CY16YTD % Downgrade in CY16YTD
PAT (INR b) PAT (INR b)
last 3mths Price last 3mths Price
FY17E FY18E FY17E FY18E Chg (%) FY17E FY18E FY17E FY18E Chg (%)
Tata Steel 31.5 53.2 217.8 -18.0 47.5 IDBI Bank 3.2 13.3 -71.1 -20.0 -20.1
Shree Cement 19.8 25.7 93.3 46.4 56.5 Idea Cellular 6.8 8.5 -56.4 -46.1 -43.7
Vedanta 66.3 83.9 73.0 64.1 98.0 Jubilant Foodworks 0.9 1.6 -42.8 -31.6 -34.4
Bharat Financial 6.9 6.7 57.8 7.3 84.5 Dr Reddy s Labs 15.3 23.7 -36.4 -19.7 1.9
JSW Steel 46.1 47.9 36.9 16.3 71.2 Punjab National Bank 21.2 25.2 -31.1 -35.5 24.2
NMDC 28.4 26.3 23.6 64.2 20.6 Mindtree 5.0 6.8 -28.9 -19.3 -32.0
Maruti Suzuki 70.6 92.7 22.3 24.2 23.1 State Bank 110.6 191.3 -26.4 1.2 13.7
Federal Bank 7.4 8.9 15.9 15.9 33.0 Bharat Forge 6.4 8.7 -19.9 -15.2 5.7
Dalmia Bharat 3.9 6.5 15.3 9.3 122.7 Canara Bank 14.6 20.0 -18.9 -13.1 36.7
Petronet LNG 13.9 17.1 15.0 9.1 38.7 Bata India 1.7 2.0 -14.9 -20.4 -4.9
Indraprastha Gas 6.1 6.7 13.2 12.5 49.4 Tech Mahindra 27.6 33.5 -14.9 -11.6 -19.3
Voltas 4.4 5.3 12.4 6.8 20.1 Ashok Leyland 15.4 21.3 -11.8 -11.6 -5.8
Bajaj Finance 18.5 23.7 12.3 16.0 80.8 Coal India 107.4 133.1 -10.4 -8.5 -0.3
ONGC 173.4 209.0 11.5 8.4 7.6 Wipro 84.2 97.1 -9.6 -9.4 -14.5
IPCA Labs. 2.5 4.1 11.3 11.0 -18.2 Axis Bank 75.9 89.0 -8.9 -8.9 22.6
Pidilite Inds. 9.4 11.1 8.0 8.7 30.6 Eveready Inds. 0.8 1.1 -8.7 -9.0 -16.7
Eicher Motors 17.1 23.5 6.9 6.0 52.9 United Spirits 5.4 8.2 -8.7 -8.1 -18.8
Asian Paints 21.8 25.2 5.6 10.0 34.8 Infosys 140.5 162.4 -7.5 -7.0 -6.0
October 2016 30
FY16-18 estimates: Sensex EPS CAGR at 17%

We expect Sensex EPS CAGR of 17% during FY16-18, significantly higher than the
6% CAGR witnessed during FY08-16.
We expect Sensex EPS at INR1,493 in FY17 (growth of 12%) and INR1,810 in
FY18 (growth of 21%).
Key contributors to the FY17 expansion would be Maruti, M&M, Asian Paints,
HDFC Bank, Lupin, Sun Pharma, Tata Motors, and Tata Steel.
Exhibit 58: Sensex EPS: Expect rebound in FY16-18, with 17% CAGR versus 6% CAGR witnessed during FY08-16
FY16-18E:
FY93-96: FY96-03: FY03-08: FY08-16:
17% CAGR
45% CAGR 1% CAGR 25% CAGR 6% CAGR
1,810
FY93-FY16:
1,493
13% CAGR 1,337 1,356 1,330
1,181
1,120
1,024
720 833 820 834
540
266 291 278 280 272 361 446
181 250 216 236
81 129
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
Exhibit 59: Nifty EPS: Expect rebound in FY16-18, with 19% CAGR versus 4% CAGR witnessed during FY08-16
FY97-03: FY03-08: FY08-16: FY16-18E:
3.5% CAGR 25% CAGR 4% CAGR 19% CAGR
22%
16%
-4% 556
FY97-FY16: 455
401 410 394
9% CAGR 365
281 315 347
236 251 247
169 184
131
75 84 71 75 73 78 92
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
FY17 Sensex EPS unchanged; no downgrades over the quarter

We have not changed our Sensex EPS estimates for FY17 and FY18. This marks a
significant beginning, as last several quarters have seen consistent downgrades.
We expect Sensex EPS to post 12.3% growth in FY17 and 21.3% growth in FY18.
Expected revival in consumption post good monsoons and 7th Pay Commission
handouts coupled with recovery in commodity prices and bottoming out of NPA
cycle in State-Owned Banks drives our conviction that the worst of earnings
downgrade cycle is behind. We are at the cusp of significant earnings revival.
October 2016 31
Exhibit 60: FY17E Sensex EPS is unchanged Exhibit 61: FY18E Sensex EPS up/downgrade
FY17 EPS (INR) FY17 EPS Growth YoY (%) FY18 EPS (INR) FY18 EPS Growth YoY (%)
23.3
21.6 21.7
20.3 23.2 24.2 21.3
22.2 21.8 19.7
21.2 21.6 21.9
17.7 21.0
1,493
1,493
16.4 14.2
12.3 12.3
2,057
2,021
1,979
1,907
1,845
1,790
1,718
1,643
1,550
1,554
1,998
1,890
1,880
1,872
1,854
1,810
May 16 1,519
Nov 15
May 15
June 15
Aug 15
June 16
Feb 15
Mar 15
Sep 15
Dec 15
Feb 16
Mar 16
Sep 16
May 16
Dec 15
June 16
Feb 16
Mar 16
Sep 16
Exhibit 62: Exhibit: Top Sensex companies EPS upgrades/downgrades since 1QFY17 review (%)
Company FY17 Company FY18
Tata Steel 8.4 Tata Steel 11.6
ONGC 7.8 Maruti 11.4
Maruti 6.5 ONGC 10.3
L&T 5.0 Hero Moto 3.9
Tata Motors 3.8 GAIL 2.5
GAIL 2.3 SBI 1.6
Wipro -2.0 Asian Paints 1.5
Coal India -3.0 Bajaj Auto 1.2
M&M -3.1 Infosys -1.8
SBI -3.4 M&M -2.8
Sun Pharma -4.4 Reliance Ind. -4.2
Cipla -5.7 Cipla -5.1
Dr Reddys -27.8 Dr Reddys -16.7
Nifty FY16-18 PAT CAGR at 19%; sales CAGR at 11%

64% of the Nifty companies would post >15% PAT CAGR over FY16-18. Count of
companies reporting profit decline falls from 10 in FY17 to just 1 in FY18.
Only Coal India and Idea are expected to report negative PAT CAGR over FY16-
18.
EBITDA margin for the Nifty is expected to expand 130bp to 25.1% in FY17 and
another 30bp to 25.4% in FY18. PAT margin is expected to expand 40bp to 6.2%
in FY17 and another 50bp to 6.7% in FY18.
October 2016 32
Exhibit 63: Nifty performance: Expect FY16-18 PAT CAGR at 19%

Sales (INR b) Sales EBIDTA Margin (%) EBITDA PAT (INR b) PAT YoY (%) PAT Contbn to
Company FY16 FY17 FY18 CAGR FY16 FY17 FY18 CAGR FY16 FY17 FY18 FY16 FY17 FY18 CAGR Delta %
High PAT Growth (20%+) 11,718 12,494 14,182 10 23 27 27 19 885 1,266 1,669 -14 43 32 37 70
Bank of Baroda 127 146 168 15 69 77 75 19 -54 33 46 PL LP 41 LP 9
BHEL 256 296 337 15 -8 4 6 LP -9 11 14 PL LP 34 LP 2
Tata Steel 1,172 1,102 1,241 3 6 13 14 50 7 32 53 169 322 69 167 4
ACC 114 117 137 10 10 13 18 44 6 9 15 -30 45 77 60 1
Ambuja Cements 94 98 115 11 15 19 23 36 8 12 20 -36 42 65 53 1
Tata Power 88 93 97 5 35 27 24 -14 7 14 16 -10 86 15 46 1
Ultratech Cement 238 263 309 14 18 21 25 33 22 30 45 8 36 53 44 2
Maruti Suzuki 586 694 829 19 16 15 16 19 47 71 93 23 50 31 40 4
Sun Pharma 277 309 332 9 29 30 34 20 47 63 93 -1 35 46 40 4
Grasim Industries 366 408 460 12 16 20 22 30 23 35 44 29 57 24 40 2
Hindalco 1,001 1,007 1,090 4 11 13 13 16 25 36 48 -12 45 33 39 2
GAIL 516 456 543 3 8 14 14 36 23 35 44 -23 51 27 39 2
Zee Entertainment 58 68 77 15 26 29 33 30 10 14 19 4 38 35 36 1
Kotak Mahindra Bank 69 81 97 19 59 71 77 36 35 49 62 -5 42 27 34 2
Mahindra & Mahindra 780 856 976 12 12 14 15 21 32 42 57 12 32 35 34 2
Eicher Motors 157 71 88 -25 11 31 32 29 13 17 24 118 28 37 33 1
Yes Bank 46 57 73 26 94 100 101 31 25 33 43 27 31 28 30 2
Lupin 142 175 205 20 26 27 28 23 23 29 36 -6 28 25 26 1
IndusInd Bank 45 58 71 26 92 92 90 25 23 29 36 27 26 27 26 1
State Bank 788 805 931 9 71 77 72 9 122 111 191 -28 -10 73 25 6
HCL Technologies 311 472 541 32 22 21 21 29 57 79 88 -22 39 12 25 3
Aurobindo Pharma 139 158 181 14 23 24 25 20 20 25 31 26 27 23 25 1
Cipla 137 162 187 17 18 18 20 21 15 17 23 34 12 35 23 1
Tata Motors 2,756 2,911 3,275 9 15 15 15 11 125 152 189 -11 21 24 23 6
Bharti Airtel 965 1,034 1,111 7 35 37 37 10 49 69 73 -12 41 5 22 2
Power Grid Corp. 214 263 312 21 87 89 89 22 60 74 88 18 23 19 21 2
HDFC Bank 276 335 399 20 77 77 77 20 123 148 178 20 20 20 20 5
Medium PAT Growth (10-20%) 4,561 5,153 5,920 14 19 19 20 15 590 666 765 15 13 15 14 16
Hero MotoCorp 284 318 368 14 16 16 17 18 32 37 45 27 17 20 19 1
Asian Paints 141 160 188 15 18 19 19 18 18 22 25 26 21 16 18 1
Bajaj Auto 226 240 287 13 21 20 21 12 38 41 53 25 8 29 18 1
ITC 366 400 451 11 37 38 39 14 93 110 127 -3 18 16 17 3
Larsen & Toubro 1,026 1,124 1,278 12 12 11 12 12 47 55 64 5 16 17 17 2
Bosch 99 110 137 18 21 18 21 18 17 16 22 26 -7 40 14 0
Reliance Inds. 2,332 2,705 3,102 15 17 18 18 17 274 309 342 21 13 11 12 6
HDFC 87 97 110 13 96 96 96 13 71 76 87 18 7 14 11 1
Low PAT Growth (<10%) 8,608 9,204 10,519 11 27 26 26 9 1,319 1,271 1,482 7 -4 17 6 15
TCS 1,086 1,216 1,396 13 28 27 27 10 242 259 293 12 7 13 10 4
Hind. Unilever 311 326 357 7 18 19 19 10 41 44 50 13 7 13 10 1
Infosys 624 695 798 13 27 27 27 13 135 141 162 9 4 16 10 2
ONGC 1,293 1,286 1,447 6 35 37 38 11 174 173 209 -5 -1 21 9 3
ICICI Bank 212 214 251 9 112 123 97 1 97 101 116 -13 4 16 9 2
NTPC 787 820 965 11 24 28 31 26 102 96 119 12 -5 23 8 2
BPCL 1,884 2,104 2,476 15 8 7 7 7 80 84 93 66 6 11 8 1
Wipro 512 555 615 10 21 20 21 10 89 84 97 3 -5 15 4 1
Adani Ports 70 79 89 13 67 64 65 11 29 29 31 24 2 7 4 0
Axis Bank 168 188 216 13 96 97 94 12 82 76 89 12 -8 17 4 1
Tech Mahindra 265 290 329 11 16 15 16 10 31 28 34 20 -11 22 4 0
Bharti Infratel 123 132 144 8 44 44 44 9 22 27 24 13 19 -11 3 0
Dr Reddy s Labs 155 148 174 6 25 19 23 1 23 15 24 2 -32 54 2 0
Coal India 756 764 854 6 21 15 18 -3 143 107 133 4 -25 24 -3 -1
Idea Cellular 360 385 408 6 36 34 34 4 29 7 8 -9 -77 24 -46 -2
Nifty (PAT free float) 24,887 26,851 30,622 11 24 25 25 15 1,435 1,670 2,039 2 16 22 19 100
October 2016 33
NIFTY FY17E 3203 NIFTY FY16 2794
87
81
SBI BOB
37
Tata Motors Reliance Ind.
October 2016
36
ONGC Tata Motors
34
TCS HDFC Bank
35 26 25 24
Reliance Ind. Tata Steel
HDFC Bank Maruti
Sun Pharma HCL Tech.
Coal India Bharti Airtel
24 22 20 20
NTPC BHEL
33 30 29 26 23 22
Maruti ITC
Infosys TCS
22 22
Tata Steel Sun Pharma
17
ITC Kotak Mah. Bk

Ultratech Power Grid

ICICI Bank Grasim
M&M GAIL
17 17 16 14 14 13 12 11
Power Grid Hindalco 3179.049726
BOB M&M
Kotak Mah. Bk Ultratech
Axis Bank Yes Bank
16 14 13 13
Wipro L&T
16 15 14 13 12
Bajaj Auto Lupin
Hindalco Tata Power
12 11
HDFC IndusInd Bk
Exhibit 65: Nifty stock absolute PAT change (FY18 YoY; INR b)
Exhibit 64: Nifty stock absolute PAT change (FY17 YoY; INR b)
10
against ~50% in FY18.
HCL Tech. Infosys
9
GAIL Hero Moto
9
Yes Bank Aurobindo
9
L&T HDFC
BPCL BPCL
Grasim Bharti Infratel
Dr Reddys Zee Ent.
Ambuja Cem Asian Paints
IndusInd Bk Eicher Mot.
Hero Moto Ambuja Cem
Lupin ICICI Bank
Earnings breadth for Nifty improving in FY18
ACC Bajaj Auto

10 8 8 8 6 6 6 6 5 5 5 5 4 4 4 4 4 3 3 3
Eicher Mot. HUL

Bosch ACC
Tech Mah. Cipla
Cipla Adani Ports
BoB, Reliance, Tata Motors, HDFC Bank and Tata Steel.
3 2 0 -1
Aurobindo ONGC
HUL Bosch
Zee Ent. Tech Mah.
Bharti Airtel Wipro
BHEL NTPC
Asian Paints Axis Bank
We expect 10 companies in the Nifty to report PAT decline for FY17.
Tata Power Dr Reddys

-1 -4 -5 -5 -6 -7-12
Adani Ports SBI

9 9 8 8 8 8 7 7 6 6 6 6 6 6 5 4 4 3 2 2 2
-22
Idea Cellular Idea Cellular

1
-35
Bharti Infratel Coal India

NIFTY FY18E 3,916 NIFTY FY17E 3,203
34
incremental PAT contributors accounting for 30% of total incremental PAT
Nearly 50% of the incremental Nifty PAT in FY17E is driven by five companies
For FY18, breadth of earnings is expected to turn better, with top five
India delivers positive returns for 2nd consecutive quarter

MARKETS & FLOWS
FII flows highest in six quarters
Indian equities delivered positive return for the second consecutive quarter despite
weak global cues and geopolitical concerns. After declining 5% last year, returns in
CY16 YTD have been positive.
In CY16 YTD, Brazil (+37%), Russia (+14%), UK (+12%), Taiwan (+11%) and India (+8%)
were the best performers among the key global markets in local currency.
In India, Cement (+41%), Metals (+35%), Media (+28%) and Auto (+23%) sectors were
the top performers for CY16 YTD. Telecom (-20%), Technology (-7%) and Healthcare
(-3%) were the only losers. Midcaps outperformed large caps, delivering 18% positive
return.
Stock breadth was positive in CY16 YTD, with 36 Nifty stocks trading higher. All
Technology and Telecom stocks in the Nifty gave negative returns.
In CY16 YTD, Hindalco (+82%) was the top performer, followed by Yes Bank (+75%),
Eicher Motors (+53%), Tata Steel (+48%) and Ultratech (+41%). Idea (-44%), Tech
Mahindra (-19%), BHEL (-19%), Lupin (-19%) and Bharti Infratel (-15%) were the worst
performers.
Valuations of Indian equities remain attractive. The Sensex trades at 16.8x one-year
forward earnings, at its long-period average of 16.9x. Sensex P/B is at 2.6x, near its 10-
year average of 2.7x. Market-cap-to-GDP ratio of 75% (FY17E GDP) is below the long-
period average of 78%.
Midcaps now trade at a 17% premium to Sensex on a P/E basis. In the last 12 months,
midcaps have delivered 22% positive return, as against 8% return by the Sensex. Also,
in the last five years, midcaps have outperformed the Sensex by 58%.
FIIs invested USD7.5b in CY16 YTD, compared to USD3.3b in CY15. However, DII flows
have been muted in recent months.
Exhibit 66: CY16 returns have been positive so far, with significant volatility, post a decline of 5% in CY15
Sensex annual return YoY (%)
2 years of negative 4 years of negative return in 2 year of negative return in 2 year of

return in 1980s cycle 1990s cycle 2000s cycle negative return
94 in 2011 cycle
82 81
73
64
54 51
37 CAGR of 16% 42 47 47
35 30
25 29 26
17 17 19 13 17
4 7 7 4 9 8
-1 -1 -5
-16 -16
-21 -21 -18 -25
-52
CY80
CY81
CY82
CY83
CY84
CY85
CY86
CY87
CY88
CY89
CY90
CY91
CY92
CY93
CY94
CY95
CY96
CY97
CY98
CY99
CY00
CY01
CY02
CY03
CY04
CY05
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY15
CY16YTD
Source: Company, MOSL
October 2016 35
Exhibit 67: Positive return for the second consecutive quarter (Sensex returns, % QoQ)
13 QoQ Return (%) 14

9
8
6 7
5
4 3 3 3
0 2
0 -1 0
-3 -3
-6
Jun-12
Jun-14
Jun-15
Jun-16
June-13
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Markets: Indian equities v/s global markets

India is among the global markets delivering positive returns; should see growth
pickup in 2HFY17.
In CY16 YTD, Brazil (+37%), Russia (+14%), UK (+12%), Taiwan (+11%) and India
(+8%) were the best performers among the key global markets in local currency.
Exhibit 68: World equity indices (CY16YTD)-local currency (%) Exhibit 69: World equity indices (CY16YTD) USD (%)
Brazil 68
Brazil 37
MSCI EM Russia MICEX 34

15
Russia MICEX 14 Taiwan 16
UK 12 MSCI EM 15
Taiwan 11 South Korea 12
India - Sensex 8 India - Sensex 8
S&P 500 6 S&P 500 6
South Korea 4 Japan 4
China (HSCEI) 0 China (HSCEI) 0
Japan -13
UK -2
Sector performance: Cement and Metals top performers

Telecom, Technology and Healthcare only negative performers for CY16YTD
Cement (+41%), Metals (+35%), Media (+28%) and Auto (+23%) were the top
outperformers for CY16 YTD.
Cement demand improved in 1QFY17 due to boost in infrastructure spending in
the northern and central regions. As monsoon set in, 2QFY17 volume growth
October 2016 36
would be hurt. Good monsoon after two years of drought would lead to
increase in rural demand, making a favorable base for 2HFY17.
Telecom (-20%), Technology (-7%) and Healthcare (-3%) were the only losers for
CY16 YTD.
In CY16 YTD, midcaps outperformed large caps, delivering 18% positive return.
Exhibit 70: Sectoral performance for CY16 YTD (% return)
41
35
28
23 22
18 18 16 16 13 10 8
8 6 4
Telecom,
Technology and
-3
Healthcare only -7
-20
negative
performers
Healthcare
Metal
Nifty
Capital Goods
Utilities
Telecom
NBFC
Midcap 100
Pvt - Banks
Oil
Consumer
Sensex
Cement
Auto
Technology
Media
Real Estate
PSU - Banks
Stock performance: Breadth positive in CY16 YTD; 36 Nifty stocks trade

higher
All Technology and Telecom stocks in Nifty gave negative returns
In CY16 YTD, Hindalco (+82%), Yes Bank (+75%), Eicher Motors (+53%), Tata
Steel (+48%) and Ultratech (+41%) were the top positive performers.
Idea (-44%), Tech Mahindra (-19%), BHEL (-19%), Lupin (-19%) and Bharti Infratel
(-15%) were the worst performers.
53% stocks outperformed the benchmark in CY16 YTD.
Exhibit 71: Best and worst Nifty performers for CY16 YTD (%)53% companies outperformed the benchmark
82
75
53 48
41 41 38
35 33 31 31
28 27 27 23 23
22 20 19 19
15 14 14 13 13 13 11 10 10
8 8 8 3 2
2 1 1
0 -1 -1 -2 -5
-6 -6 -8 -9
-15-15-19-19-19
-44
Hero Moto
Axis Bank
Reliance Ind.
Wipro
BPCL
Nifty
Dr Reddy's
Coal India
TCS
Lupin
Hindalco
Asian Paints
Grasim Ind.
Kotak Mah.Bk
Tata Steel
Maruti
Tata Mot.-DVR
L&T
Tata Power
NTPC
GAIL
Adani Ports
HUL
ICICI Bank
HCL Tech
Bharti Airtel
Cipla
Idea Cellular
Zee Ent.
IndusInd Bk
Tata Motors
Power Grid
Aurobindo
Infosys
BHEL
Yes Bank
Eicher Mot.
UltraTech
Ambuja Cem.
Bosch
HDFC Bank
SBI
M&M
HDFC
BoB
Sun Pharma
Bharti Infratel
ACC
Bajaj Auto
ITC
ONGC
Tech Mah.
October 2016 37
Institutional flows: FII flows highest in last six quarters
Exhibit 72: Yearly FII flows (USD b) fifth year of positive Exhibit 73: Quarterly FII flows (USD b) third consecutive
flows quarter of inflows
29.3
24.5 10.4
17.8 20.0 8.4
17.6 16.2 6.9 6.6 6.2 6.0
10.8
8.1 4.1 4.6
7.5 3.2 3.5
3.3 2.3
1.2 1.7
0.2
-0.5
-0.1 -0.3
-12.2 -2.6
CY05
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY15
CY16 YTD
Jun-13
Jun-14
Jun-15
June-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Exhibit 74: Yearly domestic MF flows (USD b) flows muted Exhibit 75: Quarterly domestic MF flows (USD b) 10
after highest ever inflows in CY15 quarters of inflows
11.2
3.7 3.9
2.7
2.4 2.1
3.4 3.3 3.9 1.5
1.7 2.4
1.3 1.0 1.0
0.4
0.1
-1.2
-3.9 -3.7 -0.6-0.8
-1.2 -1.0
-6.1 -1.4-1.4 -1.3
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY15
CY16 YTD
Jun-13
Jun-14
Jun-15
June-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Exhibit 76: Yearly DII ex-MF flows (USD b) 5th year of Exhibit 77: Quarterly DII ex-MF flows (USD b) heavy selling Sep-16
outflows in 2QFY17
13.6 1.3
0.3 0.5
6.5
3.7 4.7 -0.1
-0.3-0.2 -0.6
0.3 1.4 -0.9
-2.2-2.1 -2.0 -2.2
-1.0 -2.4
-2.3 -2.8-3.0
-3.9
-7.0
-9.3 -8.8 -4.9
CY06
CY07
CY08
CY09
CY10
CY11
CY12
CY13
CY14
CY15
CY16 YTD
Jun-13
Jun-14
Jun-15
June-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
October 2016 38
Valuations at long-term averages; domestic cyclicals to drive growth

Valuations of Indian equities remain attractive. The Sensex trades at 16.8x one-
year forward earnings, at its long-period average of 16.9x. Sensex P/B is at 2.6x,
near its 10-year average of 2.7x.
Market-cap-to-GDP ratio of 75% (FY17E GDP) is below the long-period average
of 78%.
Exhibit 78: 12-month forward Sensex P/E (x) Exhibit 79: 12-month forward Sensex P/B (x)
25 4.3
24.6 4.2
21 3.6
10 Year Avg: 10 Year Avg:
16.9x 2.7x
17 16.8 2.9
2.6
13 2.2
10.7
9 1.6
1.5
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
Exhibit 80: 12-month forward Sensex RoE (%) Exhibit 81: Indias market cap to GDP (%)
25.0
23.0 103
95 Average of 78%
22.0 88 for the period
82 83 81
71 75
64 66 70
19.0 10 Year Avg: 17.0% 55
16.0 15.3
15.8
13.0
Oct-06
Oct-07
Oct-08
Oct-09
Oct-10
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17E
Midcaps continue to outperform; trade at premium to Sensex P/E
Midcaps now trade at a 17% premium to Sensex on a P/E basis.
In the last 12 months, midcaps have delivered 22% positive return, as against 8%
return by the Sensex.
Exhibit 82: Midcaps significantly outperformed large caps in Exhibit 83: Midcaps outperformed large caps by 58% in last
last 12 months five years
Sensex Rebased Nifty Midcap 100 Rebased Sensex Rebased Nifty Midcap 100 Rebased
128 235
122 218
116 195
108 160
104 155
92 115
80 75
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
Oct-16
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Feb-12
Feb-13
Feb-14
Feb-15
Feb-16
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
October 2016 39
Exhibit 84: Midcaps v/s Sensex PE (x) 12-month forward Exhibit 85: Midcaps trading at 17% premium to Sensex
Midcap PE (x) Sensex PE (x) Midcap Vs Sensex PE Prem/(Disc) (%)
23.0 40
Sensex Avg: 16.8x
Midcap Avg: 15.9x 19.8 17
19.5 20
Average: -5%
16.0 16.8 0
12.5 -20
9.0 -40
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Feb-12
Feb-13
Feb-14
Feb-15
Feb-16
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Feb-12
Feb-13
Feb-14
Feb-15
Feb-16
Oct-11
Oct-12
Oct-13
Oct-14
Oct-15
Oct-16
Sector valuations: Growth to pick up in 2HFY17
Oil & Gas trades at a P/B of 1.3x (17% discount to historical average) and P/E of
10.5x (10% discount). OMCs (HPCL, BPCL and IOCL) continue to outperform, led
by improvement in GRM and attractive valuations. RIL was strong in September,
led by news flow on Jio trial subscription along with rebound in GRM.
PSU Banks trade at a 26% discount to historical average P/B. The sector has
been significantly outperforming for four months, driven by equity capital
infusion by GoI and possible revival in asset quality position. Overall, we expect
stress addition in FY17 to be lower than FY16; however, credit costs and core
earnings are likely to remain under pressure in FY17.
Auto sector trades at 17x, above its historical average P/E of 14.2x. Normal
monsoon boosts 2W demand. Expect rural demand to recover in 2HFY17. Broad-
based recovery in PV is yet to be seen, with growth driven by new launches.
On an EV/EBITDA basis, Telecom trades at 5.1x (39% discount to historic
average). Bharti holds strong competitive position in the telecom market. We
expect Bharti to deliver over a 2-3 year horizon. Idea remains a structural sell,
given its weak competitive position and stretched balance sheet.
Exhibit 86: Sector valuations - Snapshot

Relative to Relative to
PE (x) PB (x)
Sensex P/E (%) Sensex P/B (%)
Sector
Prem/ Prem/
Current 10 Yr Avg Current 10 Yr Avg Current 10 Yr Avg Current 10 Yr Avg
Disc (%) Disc (%)
Auto 17.0 14.2 19.8 1 -17 3.5 3.0 15.7 35 12
Banks - Private 17.7 16.2 9.3 5 -5 2.6 2.2 18.9 -1 -20
Banks - PSU 11.1 26.7 -58.5 -34 44 0.8 1.1 -25.7 -69 -60
NBFC 14.7 12.4 18.4 -12 -27 2.6 2.3 15.7 0 -16
Capital Goods 28.0 26.1 7.5 67 50 2.9 4.2 -31.3 10 49
Cement 22.2 16.7 33.2 32 -2 3.4 2.4 41.7 29 -13
Consumer 34.0 28.2 20.8 102 69 11.0 9.5 15.3 321 260
Healthcare 22.8 21.3 7.1 35 26 4.6 4.2 8.4 74 57
Media 25.6 22.8 12.2 52 34 5.9 4.4 34.5 125 61
Metals 12.3 11.8 4.0 -27 -31 1.2 1.6 -25.4 -54 -42
Oil & Gas 10.5 11.7 -10.2 -38 -30 1.3 1.6 -16.6 -48 -41
Real Estate 20.6 26.3 -21.7 23 58 1.0 1.5 -34.9 -63 -47
Retail 41.2 34.9 17.9 145 105 7.2 8.1 -11.0 177 202
Technology 15.3 16.7 -7.9 -9 -1 3.6 4.5 -21.8 36 66
Telecom 19.8 26.2 -24.7 17 60 1.5 2.9 -47.0 -42 5
Utilities 11.3 14.8 -23.5 -33 -11 1.4 1.9 -24.6 -46 -30
October 2016 40
WEIGHT
SECTOR WEIGHT / BSE MOST EFFECTIVE
MOSL model PORTFOLIO PICKS 100 WEIGHT
RELATIVE TO
SECTOR STANCE
BSE100
portfolio Financials 30.6 31.0 0.4 Overweight
Private 18.3 16.0 -2.3 Underweight
HDFC Bank 6.8 7.0 0.2 Buy
ICICI Bank 3.9 4.0 0.1 Buy
Yes Bank 1.1 3.0 1.9 Buy
Federal Bank 0.3 2.0 1.7 Buy
NBFCs 9.1 8.0 -1.1 Underweight
LIC Housing 0.5 3.0 2.5 Buy
Max Financial 0.0 3.0 3.0 Buy
Bharat Financial 0.0 2.0 2.0 Buy
PSU 3.2 7.0 3.8 Overweight
SBI 2.1 5.0 2.9 Buy
Union Bank 0.1 2.0 1.9 Buy
Auto 11.9 15.0 3.1 Overweight
M&M 1.8 4.0 2.2 Buy
Maruti 2.0 4.0 2.0 Buy
Tata Motors 2.8 3.0 0.2 Buy
Ashok Leyland 0.3 2.0 1.7 Buy
TVS Motors 0.0 2.0 2.0 Buy
Consumption / Retail 12.4 12.0 -0.4 Neutral
ITC 5.4 3.0 -2.4 Buy
Indigo 0.0 3.0 3.0 Neutral
Britannia 0.5 2.0 1.5 Buy
Jubilant Food 0.0 2.0 2.0 Neutral
United Beweries 0.2 2.0 1.8 Buy
Energy 8.7 10.0 1.3 Overweight
Reliance 4.7 4.0 -0.7 Neutral
HPCL 0.6 3.0 2.4 Buy
BPCL 0.9 3.0 2.1 Buy
Cap Goods, Infra & Cement 8.0 8.0 0.0 Neutral
Larsen & Toubro 3.1 4.0 0.9 Buy
Ultra Tech 1.1 2.0 0.9 Buy
Shree Cement 0.0 2.0 2.0 Buy
Technology 11.5 7.0 -4.5 Underweight
Infosys 5.5 5.0 -0.5 Buy
HCL Tech 1.2 2.0 0.8 Buy
Healthcare 6.6 4.0 -2.6 Underweight
Sun Pharma 2.2 2.0 -0.2 Buy
Aurobindo 0.6 2.0 1.4 Buy
Utilities / Metals 6.6 4.0 -2.6 Underweight
Power Grid 1.0 2.0 1.0 Buy
Hindalco 0.5 2.0 1.5 Buy
Others 3.7 9.0 5.3 Overweight
Exide 0.2 1.0 0.8 Buy
Manpasand Beverages 0.0 1.0 1.0 Buy
JK Lakshmi Cement 0.0 1.0 1.0 Buy
SRF 0.0 1.0 1.0 Buy
Bharat Electronics 0.0 1.0 1.0 Buy
Parag Milk Foods 0.0 1.0 1.0 Neutral
Arvind 0.0 1.0 1.0 Buy
MCX 0.0 1.0 1.0 Buy
Crompton Greaves Consumer 0.0 1.0 1.0 Buy
TOTAL 100.0 100.0
October 2016 41
MOSL UNIVERSE
Sectors & Companies

BSE Sensex: 28,243 S&P CNX: 8,738 October 2016
MOSL Universe:
2QFY17 Highlights
&
Ready Reckoner
Note: In our quarterly performance tables, our four-quarter numbers may not always add up to the full-year
numbers. This is because of differences in classification of account heads in the companys quarterly and annual
results or because of differences in the way we classify account heads as opposed to the company.
All stock prices and indices as on 3 October 2016, unless otherwise stated.
October 2016 42
MOSL UNIVERSE
MOSL Universe: 2QFY17 aggregate performance highlights

Quarterly Performance - MOSL Universe (INR b)
Sector Sales EBITDA PAT
Sep Jun Sep Var % Var % Sep Jun Sep Var % Var % Sep Jun Sep Var % Var %
(Nos of companies)
15 16 16 YoY QoQ 15 16 16 YoY QoQ 15 16 16 YoY QoQ
Auto (13) 1,154 1,210 1,232 6.8 1.8 154 163 187 21.6 14.5 61 78 99 62.1 26.7
Capital Goods (12) 439 408 460 4.8 12.9 35 31 41 18.0 30.3 14 16 21 50.4 34.3
Cement (7) 163 182 166 2.0 -8.8 27 41 32 19.3 -20.7 13 24 19 40.0 -23.4
Consumer (18) 376 406 415 10.2 2.3 86 94 98 13.7 4.7 59 64 69 15.8 7.7
Financials (29) 605 631 653 7.8 3.4 456 509 520 14.0 2.2 190 169 196 3.2 16.1
Private Banks (10) 208 231 240 15.3 3.7 174 200 210 20.5 4.8 98 94 103 4.9 8.8
PSU Banks (8) 321 310 319 -0.4 2.9 221 239 236 7.0 -1.2 54 33 47 -12.7 41.1
NBFC (11) 77 90 94 21.8 4.1 62 70 74 21.0 6.2 39 42 47 21.1 12.6
Healthcare (16) 335 356 364 8.7 2.2 86 89 87 1.5 -1.6 57 59 55 -4.5 -7.0
Media (9) 53 60 59 12.6 -1.1 15 18 18 16.1 0.8 7 6 8 6.4 22.0
Metals (9) 1,032 938 1,038 0.6 10.7 131 163 185 41.0 13.6 59 37 50 -15.7 32.8
Oil & Gas (12) 2,926 2,781 2,733 -6.6 -1.7 250 466 344 37.8 -26.2 131 278 195 48.6 -29.9
Excl. OMCs (9) 1,191 1,008 1,062 -10.8 5.4 234 260 244 4.4 -5.8 128 148 141 10.7 -4.9
Real Estate (8) 63 54 52 -16.9 -3.0 19 17 19 -2.0 9.5 6 7 6 5.7 -8.3
Retail (3) 41 41 50 21.5 21.2 3 3 4 22.4 9.7 2 2 2 17.8 -7.2
Technology (13) 787 850 863 9.6 1.4 193 195 196 1.6 0.5 151 153 147 -2.6 -3.3
Telecom (3) 356 382 368 3.4 -3.8 126 140 133 5.8 -4.9 26 26 21 -18.2 -20.8
Utilities (4) 421 451 432 2.6 -4.1 116 152 125 7.2 -17.9 66 76 55 -15.9 -27.8
Others (21) 208 214 228 9.5 6.5 33 42 37 12.2 -12.2 13 20 15 12.2 -26.5
MOSL (177) 8,960 8,964 9,113 1.7 1.7 1,732 2,125 2,028 17.1 -4.6 856 1,017 957 11.8 -5.8
MOSL Excl. OMCs (174) 7,224 7,191 7,442 3.0 3.5 1,716 1,918 1,928 12.3 0.5 852 887 904 6.0 1.9
MOSL Excl. OMCs & PSU Banks (166) 6,904 6,881 7,123 3.2 3.5 1,495 1,679 1,691 13.1 0.7 799 854 857 7.3 0.4
Sensex (30) 4,356 4,384 4,461 2.4 1.8 1,091 1,202 1,207 10.6 0.5 588 597 608 3.5 1.9
Nifty Ex BPCL (49) 5,344 5,359 5,493 2.8 2.5 1,302 1,446 1,454 11.7 0.6 677 701 714 5.6 1.9
Quarter-wise sales growth ex OMCs (% YoY) Quarter-wise net profit growth ex OMCs (% YoY)
3.0% 3.0% 6.0%
0.4%
-1.6%
-10.5%
-14.4%
-3.7%
Dec-15 Mar-16 Jun-16 Sep-16E
Dec-15 Mar-16 Jun-16 Sep-16E
Sectoral sales growth - quarter ended Sept-16 (%) Sectoral net profit growth - quarter ended Sep-16 (%)
21 62
13 10 10 50
9 8 40
7 5 3 3 3 2 1 18 16 11
6 6 6 3
-3 -4 -16 -16
-11 -17 -18
MOSL Ex. OMCs
Utilities
MOSL Ex. OMCs
Utilities
Health Care
Telecom
Metals
Health Care
Oil Ex. OMCs
Oil Ex. OMCs
Metals
Telecom
Consumer
Auto
Cement
Consumer
Media
Auto
Cement
Technology
Cap Goods
Real Estate
Cap Goods
Media
Technology
Real Estate
Retail
Retail
Financials
Financials
For Banks: Sales = Net Interest Income, EBITDA = Operating Profits
October 2016 43
MOSL UNIVERSE
Annual performance - MOSL universe (INR Billion)
SECTOR Sales Change YoY (%) EBITDA Change YoY (%) PAT Change YoY (%)
FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E
Auto (13) 5,415 5,792 6,655 7.9 7.0 14.9 783 871 1,042 6.7 11.2 19.7 338 419 539 10.6 23.7 28.8
Capital Goods (16) 2,052 2,256 2,553 0.8 9.9 13.2 187 236 292 -9.3 26.4 23.6 93 133 163 -12.4 42.9 22.6
Cement (13) 1,154 1,279 1,477 5.3 10.8 15.5 194 260 350 18.0 33.6 34.9 77 128 185 3.6 66.1 45.0
Consumer (18) 1,543 1,694 1,940 0.4 9.8 14.5 352 396 465 9.9 12.7 17.3 241 278 328 9.7 15.3 18.2
Financials (35) 3,003 3,284 3,829 9.6 9.3 16.6 2,381 2,714 3,043 10.8 14.0 12.1 620 1,004 1,317 -35.8 61.9 31.2
Private Banks (12) 903 1,048 1,244 18.8 16.0 18.7 792 942 1,047 20.1 19.0 11.1 406 471 567 6.0 16.0 20.4
PSU Banks (10) 1,579 1,637 1,889 2.6 3.7 15.4 1,120 1,235 1,372 2.5 10.3 11.1 -70 212 375 PL LP 76.7
NBFC (13) 521 599 696 18.0 15.0 16.3 469 537 623 18.2 14.5 16.1 283 320 374 11.0 13.0 16.9
Healthcare (16) 1,336 1,484 1,705 11.4 11.1 14.9 333 363 445 19.8 9.0 22.7 197 232 307 13.5 17.9 32.2
Media (11) 253 291 339 14.1 15.2 16.6 70 87 112 22.2 23.0 29.2 33 39 57 55.5 19.0 45.6
Metals (9) 4,100 4,398 4,907 -13.2 7.3 11.6 506 830 933 -37.2 64.2 12.4 134 252 315 -54.8 88.2 24.8
Oil & Gas (12) 12,255 12,732 14,732 -21.9 3.9 15.7 1,457 1,759 1,994 12.4 20.7 13.4 763 916 1,031 19.0 20.0 12.5
Excl. OMCs (9) 5,034 5,356 6,110 -25.1 6.4 14.1 1,022 1,173 1,365 -3.0 14.8 16.3 546 607 697 2.4 11.2 14.7
Real Estate (9) 272 285 331 18.6 4.7 16.4 86 90 117 14.3 3.8 30.6 24 29 45 2.5 21.0 52.9
Retail (3) 170 192 225 -0.1 12.5 17.6 13 16 20 -16.1 17.0 25.4 9 10 12 -11.7 11.5 26.9
Technology (13) 3,065 3,525 4,023 10.5 15.0 14.2 739 814 943 6.8 10.1 15.9 585 622 713 5.7 6.3 14.7
Telecom (3) 1,448 1,551 1,663 7.1 7.1 7.2 522 572 614 10.9 9.6 7.3 101 103 105 -6.4 2.1 2.3
Utilities (4) 1,857 1,949 2,232 3.3 5.0 14.5 579 618 774 13.1 6.9 25.1 317 289 353 8.4 -8.7 22.0
Others (29) 969 1,099 1,294 5.6 13.4 17.8 172 200 248 17.0 16.4 23.7 80 94 120 12.0 16.9 27.8
MOSL (204) 38,894 41,809 47,906 -6.3 7.5 14.6 8,374 9,825 11,390 5.7 17.3 15.9 3,612 4,548 5,591 -6.5 25.9 22.9
Excl. OMCs (201) 31,672 34,434 39,285 -2.6 8.7 14.1 7,939 9,239 10,762 3.4 16.4 16.5 3,395 4,239 5,257 -9.6 24.8 24.0
Sensex (30) 9,851 10,656 12,157 -9.2 8.2 14.1 2,431 2,854 3,259 3.1 17.4 14.2 1,199 1,373 1,665 2.8 14.5 21.3
Nifty (50) 12,764 13,638 15,554 -2.3 6.8 14.0 3,072 3,450 3,967 7.1 12.3 15.0 1,414 1,670 2,039 -1.4 18.1 22.1
For Banks : Sales = Net Interest Income, EBIDTA = Operating Profits; Note: Sensex & Nifty Numbers are Free Float.
Valuations - MOSL universe

PE (x) EV / EBITDA (x) P/BV (x) RoE (%) Div Yield (%) EARN. CAGR
Sector FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 (FY16-FY18)
Auto (13) 24.9 20.1 15.6 7.8 9.2 7.5 4.7 4.0 3.3 18.7 19.7 21.3 1.0 26.2
Capital Goods (16) 41.6 29.1 23.7 21.2 18.7 15.1 3.3 3.1 2.8 8.0 10.6 11.9 1.1 32.4
Cement (13) 45.6 27.5 18.9 14.3 13.7 9.9 4.0 3.6 3.1 8.7 13.1 16.5 0.6 55.2
Consumer (18) 43.3 37.6 31.8 25.6 25.6 21.6 14.0 12.0 10.2 32.4 31.8 32.3 1.5 16.8
Financials (35) 28.6 17.7 13.5 NM NM NM 2.2 1.9 1.7 7.7 10.8 12.9 1.3 45.8
Private Banks (12) 23.0 19.8 16.5 NM NM NM 3.2 2.7 2.4 13.9 13.8 14.7 0.9 18.2
PSU Banks (10) -47.7 15.6 8.8 NM NM NM 0.9 0.8 0.8 -2.0 5.2 8.7 0.9 LP
NBFC (13) 17.9 15.8 13.5 NM NM NM 3.2 2.8 2.5 18.1 18.0 18.4 2.5 14.9
Healthcare (16) 31.7 26.9 20.3 18.0 17.0 13.5 5.9 5.1 4.2 18.5 18.9 20.8 0.6 24.8
Media (11) 35.4 29.7 20.4 12.4 13.0 9.7 6.4 5.7 4.7 18.2 19.1 23.1 1.2 31.6
Metals (9) 26.8 14.2 11.4 10.2 7.8 6.7 1.3 1.3 1.2 5.0 8.9 10.3 7.3 53.3
Oil & Gas (12) 13.5 11.3 10.0 6.5 6.5 5.7 1.5 1.4 1.3 11.4 12.5 12.8 2.3 16.2
Excl. OMCs (9) 13.7 12.4 10.8 6.7 6.7 5.8 1.4 1.3 1.2 10.0 10.3 10.9 2.0 13.0
Real Estate (9) 28.5 23.5 15.4 11.6 12.7 9.6 1.2 1.2 1.1 4.4 5.1 7.4 1.1 36.0
Retail (3) 53.0 47.6 37.5 30.9 28.8 22.8 8.9 7.8 6.9 16.8 16.4 18.3 0.5 19.0
Technology (13) 17.7 16.6 14.5 14.0 11.4 9.6 4.3 3.8 3.3 24.3 23.1 23.1 1.7 10.4
Telecom (3) 22.4 21.9 21.4 7.0 5.9 5.3 2.1 1.9 1.8 9.2 8.8 8.4 0.5 2.2
Utilities (4) 13.8 15.1 12.4 9.7 10.5 8.7 2.5 2.3 2.1 18.1 15.4 17.2 5.8 5.5
Others (29) 26.9 23.0 18.0 10.9 11.1 8.8 5.0 4.5 3.9 18.6 19.6 21.9 1.7 22.2
MOSL (204) 23.7 18.8 15.3 N.M N.M N.M 2.9 2.6 2.3 12.2 13.8 15.3 1.8 24.4
Excl. OMCs (201) 24.4 19.5 15.7 N.M N.M N.M 2.9 2.6 2.4 12.0 13.5 15.0 1.8 24.4
Sensex (30) 21.2 18.9 15.6 N.M N.M N.M 3.1 2.8 2.5 14.6 14.8 16.0 1.5 17.8
Nifty (50) 22.2 19.2 15.7 N.M N.M N.M 3.0 2.8 2.5 13.5 14.6 15.9 1.5 20.1
N.M. : Not Meaningful.
October 2016 44
MOSL UNIVERSE
Ready reckoner: Quarterly performance

66.58
Sector Sales (INR m) EBDITA (INR m) PAT (INR m)
CMP Var % Var % Var % Var % Var % Var %
Reco. Sep-16 Sep-16 Sep-16
(INR) YoY QoQ YoY QoQ YoY QoQ
Automobiles
Amara Raja Batt. 1,029 Buy 13,668 18.0 3.5 2,414 21.5 6.2 1,425 16.3 9.1
Ashok Leyland 83 Buy 46,787 -5.3 9.9 5,385 -9.4 13.1 3,113 7.3 7.1
Bajaj Auto 2,883 Buy 60,226 -1.2 4.8 12,404 -5.8 5.4 10,766 15.4 10.0
Bharat Forge 940 Buy 9,500 -14.9 5.0 2,638 -18.0 7.9 1,378 -21.3 12.9
Bosch 22,851 Neutral 26,970 3.0 7.0 4,504 -0.4 -0.2 3,667 20.1 -2.5
Eicher Motors 25,773 Buy 17,713 -43.3 13.7 5,500 11.6 17.0 4,040 58.1 7.4
Escorts 407 Buy 9,700 21.0 -7.7 718 143.1 -18.2 433 154.0 -15.7
Exide Inds. 188 Buy 19,456 12.0 -3.1 3,100 20.4 -1.6 1,932 23.8 -1.5
Hero Motocorp 3,523 Neutral 79,223 15.9 7.1 14,145 21.2 6.2 9,416 22.0 6.6
Mahindra & Mahindra 1,443 Buy 102,655 16.7 -2.5 13,518 16.3 -9.2 10,965 12.1 22.5
Maruti Suzuki 5,682 Buy 181,065 29.9 21.3 27,464 21.0 24.0 18,452 29.4 24.2
Tata Motors 541 Buy 630,745 2.9 -4.3 92,151 33.9 21.0 31,568 475.4 67.2
TVS Motor 378 Buy 34,362 19.3 19.3 2,715 28.1 35.5 1,634 40.3 34.7
Sector Aggregate 1,232,071 6.8 1.8 186,653 21.6 14.5 98,789 62.1 26.7
Capital Goods
ABB 1,170 Neutral 21,003 6.7 -0.1 1,854 19.0 9.0 825 40.5 6.6
Bharat Electronics 1,273 Buy 17,280 17.7 98.3 2,161 23.2 LP 2,153 4.1 496.7
BHEL 137 Sell 66,200 11.5 17.7 1,700 LP 139.4 1,795 LP 130.8
CG Consumer Elect. 158 Buy 8,891 NA -20.7 864 NA -44.3 461 NA -49.9
Crompton Greaves 79 Neutral 13,630 -39.9 -4.3 995 13.4 -17.5 293 LP -26.9
Cummins India 929 Neutral 12,965 8.2 3.0 2,208 10.0 7.0 2,045 3.0 12.9
GE T&D India 342 Neutral 10,500 16.3 22.9 1,030 0.4 380.9 460 -0.6 -16.8
Havells India 431 Neutral 15,279 13.2 4.2 2,206 17.6 10.1 1,580 29.9 8.9
Larsen & Toubro 1,470 Buy 250,000 6.9 14.3 23,450 -9.5 23.1 7,650 11.5 25.5
Siemens 1,255 Neutral 32,971 -0.1 25.8 3,755 33.3 60.6 2,958 71.8 127.5
Thermax 879 Sell 9,171 -13.2 12.6 873 -12.3 37.0 576 -11.1 27.4
Voltas 389 Neutral 11,148 4.9 -39.9 735 18.0 -63.2 540 21.1 -65.5
Sector Aggregate 460,146 4.8 12.9 40,966 18.0 30.3 20,876 50.4 34.3
Cement
ACC 1,634 Neutral 25,495 -7.0 -11.2 3,073 16.5 -24.9 1,513 29.3 -36.4
Ambuja Cements 259 Buy 20,431 -2.5 -19.6 3,356 14.0 -42.3 2,051 33.5 -48.7
Grasim Industries 4,903 UR 25,102 18.3 4.8 4,617 37.8 -9.1 3,868 8.0 20.5
India Cements 151 Neutral 11,765 9.0 12.2 2,157 -5.6 7.1 493 14.3 12.1
Ramco Cements 614 Buy 9,256 5.9 -1.8 2,740 0.1 -0.4 1,577 13.7 1.2
Shree Cement 17,956 Buy 19,708 14.4 -10.4 5,742 47.8 -21.4 3,765 187.3 -25.8
Ultratech Cement 3,927 Buy 53,970 -4.0 -12.7 10,664 14.9 -22.3 5,435 38.0 -29.9
Sector Aggregate 165,727 2.0 -8.8 32,349 19.3 -20.7 18,702 40.0 -23.4
Consumer
Asian Paints 1,192 Neutral 39,126 14.0 7.6 6,603 21.2 -19.5 4,936 21.2 -7.7
Britannia 3,483 Buy 23,804 12.0 13.0 3,419 11.2 21.4 2,481 13.5 13.2
Colgate 983 Buy 10,726 13.0 6.7 2,804 9.3 32.7 1,723 11.8 37.1
Dabur 276 Neutral 20,017 4.0 4.0 4,364 9.0 26.7 3,684 8.0 25.8
Emami 1,182 Buy 6,140 16.0 -4.7 1,735 14.0 17.9 1,310 7.5 11.5
Godrej Consumer 1,639 Neutral 25,868 18.0 22.0 4,975 23.1 31.8 3,490 18.1 37.5
GSK Consumer 6,193 Neutral 11,157 4.0 18.2 2,602 6.3 27.8 2,095 12.3 30.4
Hind. Unilever 869 Neutral 80,020 3.5 -1.6 15,035 12.5 -8.1 10,757 8.2 -4.6
ITC 242 Buy 97,056 9.0 -3.5 39,290 10.4 11.4 27,601 13.5 15.7
Jyothy Labs 359 UR 4,339 11.0 -1.4 556 10.8 -30.0 294 81.3 -35.9
October 2016 45
MOSL UNIVERSE

66.58
Consumer (Contd.)
Marico 282 Neutral 14,966 3.0 -14.5 2,519 9.5 -31.8 1,732 16.2 -35.3
Nestle 6,597 Neutral 22,397 29.0 -0.7 3,977 38.4 -8.7 2,319 39.2 -18.7
P&G Hygiene 6,842 Buy 7,063 18.0 26.5 1,488 53.8 -6.1 1,027 47.1 -6.2
Page Industries 15,453 Buy 5,776 25.0 1.0 1,276 25.0 16.8 828 35.8 21.9
Parag Milk Foods 302 Neutral 5,166 10.0 34.7 466 12.5 41.3 217 124.3 101.1
Pidilite Inds. 723 Buy 15,181 15.0 -3.3 3,694 22.6 -6.3 2,410 24.1 -11.3
Radico Khaitan 122 Neutral 4,268 9.0 -0.8 553 1.2 -1.8 238 2.8 10.6
United Spirits 2,424 Buy 21,769 11.5 7.4 2,939 8.3 45.3 1,502 68.2 95.2
Healthcare
Alembic Pharma 669 Neutral 7,844 -22.2 7.9 1,694 -54.9 8.7 1,168 -59.5 14.5
Alkem Lab 1,685 Neutral 13,695 1.0 -6.1 2,328 -8.5 -14.1 1,905 -22.7 -20.2
Aurobindo Pharma 869 Buy 38,017 14.0 2.0 9,124 17.6 2.6 5,924 20.2 2.3
Biocon 964 Sell 9,566 15.5 -2.5 2,248 19.2 -11.4 1,387 -54.7 -5.4
Cadila Health 391 Buy 25,577 4.8 11.8 5,755 -4.3 9.8 4,035 -7.7 13.2
Cipla 589 Neutral 38,941 12.8 8.4 6,898 -12.6 12.9 4,038 -6.4 10.6
Divis Labs 1,299 Neutral 10,100 5.0 0.4 3,939 5.4 -1.9 3,015 2.0 -0.1
Dr Reddy s Labs 3,162 Neutral 35,374 -11.3 9.4 6,190 -45.7 64.1 2,704 -62.5 114.1
Glenmark Pharma 928 Neutral 22,071 19.7 17.2 4,304 15.9 34.8 2,551 27.3 12.5
Granules India 120 Buy 3,521 -3.9 2.4 715 3.7 3.2 343 10.7 -12.0
GSK Pharma 2,813 Neutral 7,438 7.5 8.5 1,056 -12.5 50.4 866 -16.6 23.0
IPCA Labs. 608 Neutral 8,264 10.3 -1.9 1,363 52.8 6.0 713 100.3 27.9
Lupin 1,494 Buy 43,301 30.4 -2.5 11,487 70.9 -12.2 6,902 68.8 -21.7
Sanofi India 4,229 Buy 6,674 13.9 9.8 1,605 13.1 10.1 942 29.9 10.4
Sun Pharma 758 Buy 78,002 14.1 -5.4 24,603 27.2 -15.8 15,903 43.7 -21.8
Torrent Pharma 1,662 Buy 15,268 -9.7 1.3 4,092 -42.7 -6.4 2,492 -56.1 -14.7
Sector Aggregate 363,653 8.7 2.2 87,401 1.5 -1.6 54,888 -4.5 -7.0
Media
D B Corp 396 Buy 5,523 15.5 -3.2 1,374 21.9 -24.2 738 22.8 -29.1
Dish TV 97 Buy 8,051 7.0 3.4 2,911 14.1 10.0 715 -17.8 75.0
Hathway Cable 31 Buy 3,177 15.9 5.2 487 42.6 9.5 -480 Loss Loss
HT Media 84 Neutral 6,129 1.9 -0.3 576 -8.0 -10.4 227 -37.7 1.3
Jagran Prakashan 191 Buy 5,542 9.4 -0.7 1,490 5.3 -3.6 777 -9.6 -7.5
PVR 1,236 Buy 5,316 12.0 -6.8 930 2.7 -20.3 270 -34.3 -39.2
Siti Networks 35 Buy 2,720 16.1 -3.5 425 -0.7 0.1 -341 Loss Loss
Sun TV 530 Not Rated 6,428 13.2 -15.5 4,911 13.6 12.5 2,568 17.6 10.2
Zee Entertainment 579 Buy 16,521 19.3 5.1 4,618 30.3 1.9 3,321 18.4 53.1
Sector Aggregate 59,407 12.6 -1.1 17,723 16.1 0.8 7,795 6.4 22.0
Metals
Hindalco 154 Buy 250,296 1.1 10.4 31,146 41.5 4.1 8,945 54.2 19.0
Hindustan Zinc 255 Neutral 32,518 -19.4 28.5 16,460 -18.7 45.6 13,901 -35.2 34.0
JSPL 79 Neutral 53,913 7.0 14.8 12,827 31.4 30.4 -4,048 Loss Loss
JSW Steel 1,768 Buy 129,235 18.5 10.4 29,476 70.5 -9.8 7,636 591.1 -31.1
Nalco 46 Buy 17,772 -2.1 14.7 3,085 -9.1 58.5 1,662 -26.5 23.1
NMDC 108 Buy 16,393 5.6 -4.7 8,339 -11.2 2.1 7,243 -15.5 1.8
SAIL 48 Sell 96,579 4.3 4.5 -401 Loss PL -12,190 Loss Loss
Tata Steel 383 Sell 274,135 -6.5 8.7 40,260 119.9 24.2 12,967 -38.0 281.4
Vedanta 179 Neutral 167,361 1.1 15.9 43,995 14.0 27.9 13,527 62.2 119.9
Sector Aggregate 1,038,202 0.6 10.7 185,188 41.0 13.6 49,643 -15.7 32.8
October 2016 46
MOSL UNIVERSE

66.58
Oil & Gas
BPCL 628 Buy 440,284 -5.2 -6.1 23,439 82.9 -39.4 14,751 44.9 -43.7
Cairn India 208 Neutral 19,491 -13.1 3.4 8,131 -16.9 2.3 3,258 -51.6 -9.4
GAIL 385 Neutral 103,755 -26.4 -2.9 13,832 80.2 -12.1 7,886 79.0 -6.8
Gujarat State Petronet 155 Neutral 2,744 8.6 6.4 2,392 6.8 2.6 1,249 15.1 3.0
HPCL 432 Buy 421,076 0.2 -6.0 17,997 LP -49.5 9,008 LP -57.1
IOC 604 Buy 809,183 -4.9 -5.5 58,551 1278.0 -55.8 30,050 LP -63.7
Indraprastha Gas 790 Neutral 9,336 -3.3 4.1 2,660 41.5 3.5 1,582 55.7 6.9
MRPL 89 Buy 105,372 3.1 25.1 8,088 LP -48.9 3,950 LP -45.2
Oil India 415 Buy 22,740 -5.2 6.6 7,888 2.4 1.8 5,592 -17.1 13.1
ONGC 260 Buy 182,442 -11.3 3.2 89,339 -14.0 -3.7 40,701 -15.9 -3.8
Petronet LNG 353 Neutral 59,850 -20.7 12.1 5,955 27.6 -7.3 3,491 40.3 -7.6
Reliance Inds. 1,090 Neutral 556,719 -8.5 4.1 106,118 7.9 -1.9 73,510 12.0 -2.6
Sector Aggregate 2,732,993 -6.6 -1.7 344,391 37.8 -26.2 195,028 48.6 -29.9
Excl. OMCs 1,062,449 -10.8 5.4 244,404 4.4 -5.8 141,219 10.7 -4.9
Real Estate
DLF 153 Buy 16,850 -9.7 -9.8 7,961 -15.2 6.9 1,180 -10.3 -54.9
Godrej Properties 352 Neutral 4,903 -66.4 61.4 995 -39.8 150.3 531 -50.0 22.1
Indiabulls Real Estate 94 Buy 6,453 6.5 -26.0 1,466 10.7 -51.1 794 5.9 -32.0
Mahindra Lifespace 439 Neutral 1,054 -13.6 18.6 120 -41.4 -3.5 223 -33.3 45.9
Oberoi Realty 293 Buy 2,507 32.5 -21.7 1,340 22.9 -19.6 832 14.8 -23.6
Phoenix Mills 395 Buy 4,976 17.8 12.5 2,289 23.1 13.1 567 131.0 31.8
Prestige Estates 203 Buy 10,942 -9.1 15.8 3,699 36.5 116.9 1,697 68.5 255.1
Sobha 298 Buy 4,798 6.2 -15.8 1,133 -3.0 13.6 345 -13.9 -3.8
Sector Aggregate 52,483 -16.9 -3.0 19,003 -2.0 9.5 6,169 5.7 -8.3
Retail
Jubilant Foodworks 974 Neutral 6,522 11.0 7.1 605 0.2 4.9 178 -18.9 -6.2
Shopper's Stop 372 Neutral 10,553 18.0 39.6 668 9.4 806.8 161 25.3 LP
Titan Company 408 Neutral 33,184 25.0 19.3 2,465 34.0 -10.6 1,785 22.7 -20.2
Retail Sector Aggregate 50,258 21.5 21.2 3,738 22.4 9.7 2,124 17.8 -7.2
Technology
Cyient 482 Buy 8,627 11.8 3.9 1,063 -8.6 -2.5 798 -19.0 7.8
HCL Technologies 809 Buy 115,393 14.3 1.8 23,832 7.8 -5.5 18,505 1.5 -9.4
Hexaware Tech. 191 Neutral 9,130 11.6 5.0 1,483 1.5 9.6 1,088 -2.4 8.9
Infosys 1,038 Buy 170,474 9.0 1.6 45,217 3.9 1.7 33,468 -1.5 -2.6
KPIT Tech. 127 Neutral 8,039 -1.0 0.1 889 -21.5 3.9 471 -37.2 -14.4
Mindtree 489 Neutral 13,225 13.1 -0.4 1,777 -17.9 -8.9 1,069 -32.5 -13.5
MphasiS 538 Neutral 15,039 -3.4 -0.8 2,486 6.0 1.7 2,100 10.5 2.8
Persistent Systems 640 Neutral 7,221 33.1 2.9 1,044 2.6 -1.3 609 -15.3 -16.9
Tata Elxsi 1,403 Buy 3,230 22.5 9.7 765 24.9 10.8 490 28.6 16.9
TCS 2,412 Neutral 297,913 9.7 1.7 80,597 3.0 2.8 61,782 2.0 -2.2
Tech Mahindra 421 Neutral 70,828 7.1 2.3 10,229 -7.1 -0.6 6,184 -21.3 -5.7
Wipro 479 Neutral 135,759 8.5 -0.2 25,948 -4.9 -2.2 20,139 -9.9 -1.8
Zensar Tech 1,009 Buy 7,851 3.8 3.0 1,047 -10.6 -0.6 726 -20.6 -4.9
Sector Aggregate 862,728 9.6 1.4 196,378 1.6 0.5 147,429 -2.6 -3.3
October 2016 47
MOSL UNIVERSE

66.58
Telecom
Bharti Airtel 319 Buy 243,282 2.1 -4.8 90,670 10.1 -5.0 14,664 26.1 -12.3
Bharti Infratel 363 Buy 32,680 7.5 1.8 14,310 9.3 2.6 6,097 3.1 -19.4
Idea Cellular 81 Sell 91,791 5.6 -3.2 28,284 -7.5 -8.0 209 -97.4 -90.5
Sector Aggregate 367,752 3.4 -3.8 133,264 5.8 -4.9 20,970 -18.2 -20.8
Utilities
Coal India 328 Neutral 161,899 -4.5 -9.0 9,193 -62.9 -74.7 12,761 -49.3 -58.4
JSW Energy 74 Buy 19,299 -23.8 -21.2 8,098 -18.9 -27.5 1,113 -70.5 -69.6
NTPC 151 Buy 187,377 5.7 0.0 50,838 31.9 -0.1 23,276 5.0 -3.2
Power Grid Corp. 181 Buy 63,381 29.2 4.4 56,623 31.5 5.5 18,021 24.5 0.0
Others
Allcargo Logistics 188 Buy 15,033 2.6 7.6 1,376 0.4 6.1 692 -4.6 13.4
Arvind 354 Buy 22,956 9.5 9.1 2,914 11.5 20.7 1,073 14.6 46.1
Bata India 496 Sell 6,156 7.0 -8.7 540 10.1 -34.2 296 32.2 -41.2
Castrol India 487 Buy 8,157 4.4 -15.7 2,576 21.1 -18.1 1,705 19.1 -17.6
Concor 1,382 Neutral 14,332 -4.6 7.0 2,997 -5.2 14.4 2,086 -10.7 16.8
Coromandel
International 247 Buy 35,288 -1.0 71.3 2,647 -15.6 198.7 1,321 -23.9 1561.2
Dynamatic Tech. 3,138 Buy 3,889 5.0 -1.5 447 32.3 -6.7 101 3113.2 -21.0
Gateway Distriparks 255 Buy 2,770 6.7 -0.4 594 -7.4 7.0 297 -3.0 19.8
Indo Count Inds. 732 Buy 6,403 10.0 30.0 1,422 14.2 28.9 832 26.2 38.1
Info Edge 862 Buy 2,056 18.1 4.0 532 59.5 11.3 528 55.6 19.0
Inox Leisure 270 Neutral 3,324 8.0 -1.3 608 7.8 -2.0 262 27.8 4.9
Interglobe Aviation 945 Neutral 43,610 23.2 -4.8 9,985 14.8 -34.7 1,112 -1.3 -81.2
Jain Irrigation 95 Buy 14,341 9.0 -13.4 1,864 17.4 -20.1 135 LP -77.0
Just Dial 436 Buy 1,850 8.0 4.9 290 -26.9 -0.8 252 -45.7 -35.4
Kaveri Seed 380 Neutral 1,261 35.0 -74.5 14 LP -99.1 -31 Loss PL
MCX 1,368 Buy 595 5.6 2.1 175 29.1 0.6 331 6.7 0.9
Monsanto India 2,392 Buy 567 50.0 -76.4 -57 Loss PL -39 Loss PL
P I Industries 839 Buy 5,353 20.0 -21.7 1,120 32.1 -32.4 742 34.9 -41.5
Sintex Inds. 80 Buy 23,345 22.1 37.7 3,865 17.8 35.8 1,649 13.1 116.9
SRF 1,907 Buy 11,937 2.5 -2.1 2,722 9.8 -4.2 1,277 18.3 -8.4
TTK Prestige 5,318 Neutral 4,884 16.0 28.8 684 29.9 44.9 433 27.1 59.0
Sector Aggregate 228,108 9.5 6.5 37,315 12.2 -12.2 15,053 12.2 -26.5
PL: Profit to Loss; LP: Loss to Profit; UR: Under Review; NR: Not Rated
October 2016 48
MOSL UNIVERSE
Sector Net Interest Income Operating Profit Net Profit

(INR Million) Reco. Sep-16 Sep-16 Sep-16
Financials
Private Banks
Axis Bank 551 Buy 46,349 14.1 2.6 46,550 28.3 4.2 18,868 -1.5 21.3
DCB Bank 127 UR 1,839 22.6 3.9 1,009 29.2 8.8 549 48.6 16.7
Equitas Holdings 183 Neutral 1,907 38.4 0.2 788 4.7 -30.8 408 2.7 -33.3
Federal Bank 75 Buy 7,204 18.4 4.0 4,649 38.1 9.2 1,852 14.8 10.7
HDFC Bank 1,287 Buy 83,056 24.3 6.7 62,544 24.0 7.5 34,479 20.2 6.5
ICICI Bank 256 Buy 51,601 -1.7 0.0 53,685 4.1 2.9 23,811 -21.4 6.7
IDFC Bank 79 UR 5,114 NA 2.5 4,851 NA 11.6 3,004 NA 13.5
IndusInd Bank 1,232 Buy 14,176 29.5 4.5 13,018 29.3 5.5 7,008 25.1 6.0
Kotak Mahin. Bank 788 Buy 19,532 16.4 1.8 13,632 30.5 3.7 7,799 36.9 5.1
Yes Bank 1,271 Buy 13,907 25.5 5.6 13,659 34.0 4.5 7,951 30.3 8.7
Pvt Bkg Sector Aggregate 239,573 15.3 3.7 209,534 20.5 4.8 102,725 4.9 8.8
PSU Banks
Bank of Baroda 169 Buy 35,087 8.1 4.1 28,888 23.6 8.2 8,662 595.9 104.5
Bank of India 116 Neutral 28,983 -4.0 4.4 15,829 8.5 -4.3 -2,920 Loss Loss
Canara Bank 319 Neutral 24,446 -7.6 5.9 18,732 -3.6 3.0 3,557 -32.7 55.4
Indian Bank 224 Buy 12,421 15.0 0.5 8,490 15.4 -6.0 2,478 -32.9 -19.4
Oriental Bank 130 Neutral 12,444 -10.0 3.3 8,801 -11.3 -4.0 1,356 -55.0 34.7
Punjab Nat. Bank 144 Neutral 38,593 -10.7 4.3 31,217 6.2 -4.7 4,272 -31.2 39.5
State Bank 255 Buy 145,003 1.7 1.3 108,318 5.5 -2.0 26,328 -32.1 4.4
Union Bank 143 Buy 22,123 5.3 5.2 16,069 13.9 -1.1 3,005 -54.3 80.7
PSU Bkg. Sector Aggregate 319,099 -0.4 2.9 236,345 7.0 -1.2 46,739 -12.7 41.1
NBFC
Bajaj Finance 1,087 Buy 14,540 47.6 3.6 8,460 49.8 1.8 4,231 51.4 -0.2
Dewan Housing 295 Buy 4,747 16.8 4.0 3,872 20.1 11.3 2,222 23.2 10.3
GRUH Finance 335 Buy 1,291 14.2 2.4 1,101 25.9 7.8 656 26.9 9.0
HDFC 1,425 Buy 22,695 13.2 1.8 21,365 13.1 3.9 17,871 11.4 25.8
Indiabulls Housing 855 Buy 9,064 22.5 -5.7 9,111 22.9 4.1 6,775 22.0 7.5
LIC Housing Fin 593 Buy 8,636 20.5 4.7 8,055 19.5 8.9 4,949 20.2 21.3
M & M Financial 386 Buy 7,710 0.7 14.1 4,780 -5.0 33.3 1,542 5.5 77.3
Muthoot Finance 350 Buy 7,358 32.0 3.0 4,297 51.8 -2.6 2,679 53.5 -0.9
Repco Home Fin 832 Buy 938 26.8 11.7 816 26.6 5.8 449 15.0 13.6
Shriram Trans. Fin. 1,222 Buy 14,639 22.7 8.8 11,039 20.8 7.3 3,962 17.2 5.9
NBFC Sector Aggregate 93,842 21.8 4.1 74,448 21.0 6.2 46,739 21.1 12.6
UR: Under Review; NR: Not Rated
October 2016 49
MOSL UNIVERSE
Ready reckoner: Full year valuations

Sector / Companies CMP Reco EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
(INR) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E
Automobiles
Amara Raja Batt. 1,029 Buy 28.7 33.4 42.9 35.9 30.8 24.0 18.3 18.1 14.4 25.8 24.4 25.4
Ashok Leyland 83 Buy 3.9 5.4 7.5 21.2 15.3 11.1 13.9 8.3 6.1 20.9 25.5 29.1
Bajaj Auto 2,883 Buy 131.8 142.6 183.8 21.9 20.2 15.7 12.4 14.1 10.9 33.2 31.2 34.3
Bharat Forge 940 Buy 28.1 27.7 37.4 33.4 34.0 25.2 15.2 16.4 13.3 18.7 17.0 20.3
Bosch 22,851 Neutral 545.9 508.6 709.7 41.9 44.9 32.2 29.2 33.4 22.5 21.9 18.0 21.6
Eicher Motors 25,773 Buy 492.9 630.7 865.8 52.3 40.9 29.8 29.5 30.4 23.5 35.8 41.5 41.0
Escorts 407 Buy 11.1 18.3 30.0 36.6 22.2 13.5 12.3 18.7 12.4 6.1 9.7 14.6
Exide Inds. 188 Buy 7.3 8.9 10.4 25.7 21.1 18.1 9.1 10.9 9.4 14.0 15.3 15.7
Hero Motocorp 3,523 Neutral 158.3 185.4 223.0 22.3 19.0 15.8 12.2 12.4 10.2 43.6 41.9 41.0
Mahindra & Mahindra 1,443 Buy 53.6 70.9 95.9 26.9 20.3 15.0 6.6 6.4 5.2 15.4 15.1 17.5
Maruti Suzuki 5,682 Buy 155.5 233.8 306.8 36.5 24.3 18.5 10.4 14.4 11.0 19.9 21.4 23.2
Tata Motors 541 Buy 36.9 44.6 55.5 14.7 12.1 9.7 3.3 4.9 4.1 18.3 17.2 18.0
TVS Motor 378 Buy 9.1 12.7 18.0 41.5 29.8 21.0 21.4 18.1 13.1 24.1 27.9 31.4
Sector Aggregate 24.9 20.1 15.6 7.8 9.2 7.5 18.7 19.7 21.3
Capital Goods
ABB 1,170 Neutral 15.8 17.7 27.1 74.2 66.1 43.2 36.3 31.6 21.5 11.1 11.1 14.5
Bharat Electronics 1,273 Buy 56.9 61.7 69.0 22.4 20.7 18.5 15.0 15.5 13.3 15.6 15.2 15.3
BHEL 137 Sell -3.7 4.3 5.8 -37.0 31.7 23.5 -8.8 19.5 11.4 -2.7 3.2 4.1
CG Consumer Elect. 158 Buy 1.9 4.5 6.0 83.1 34.8 26.3 21.0 16.5 52.1 99.5 90.0
Crompton Greaves 79 Neutral 2.1 3.2 4.6 38.0 24.2 17.0 10.6 10.3 8.3 3.0 4.3 6.0
Cummins India 929 Neutral 27.2 28.6 31.6 34.1 32.4 29.4 29.6 29.4 25.6 24.9 24.2 23.9
GE T&D India 342 Neutral 3.0 6.9 9.6 112.8 49.8 35.4 50.9 23.4 18.6 5.9 12.7 16.6
Havells India 431 Neutral 7.8 10.6 13.1 55.4 40.7 32.8 23.2 27.1 21.2 19.0 23.1 25.4
Inox Wind 209 Neutral 20.7 20.1 22.0 10.1 10.4 9.5 9.8 7.7 7.0 27.9 21.9 19.9
K E C International 126 Buy 7.4 9.7 12.0 16.9 13.0 10.5 7.9 7.1 6.3 13.5 15.5 16.7
Larsen & Toubro 1,470 Buy 50.6 58.8 68.7 29.1 25.0 21.4 16.1 16.8 14.0 11.1 11.9 12.7
Siemens 1,255 Neutral 16.9 18.1 28.4 74.1 69.2 44.2 37.8 39.3 28.8 11.8 9.5 13.6
Solar Inds. 654 Buy 18.4 26.0 31.1 35.6 25.2 21.0 22.2 14.5 12.1 20.2 24.1 23.6
Thermax 879 Sell 23.5 24.7 29.0 37.4 35.6 30.3 20.1 22.7 19.1 12.5 12.2 13.1
Va Tech Wabag 566 Buy 16.3 25.5 33.9 34.6 22.2 16.7 13.3 11.2 8.6 9.7 13.3 15.9
Voltas 389 Neutral 11.7 13.4 15.9 33.3 28.9 24.5 17.6 19.3 16.3 15.3 17.4 18.1
Cement
ACC 1,634 Neutral 32.0 46.4 82.2 51.1 35.2 19.9 20.8 18.6 11.6 7.2 10.1 17.1
Ambuja Cements 259 Buy 5.5 7.8 12.8 47.4 33.4 20.3 21.6 18.6 12.3 8.3 11.1 17.2
Birla Corporation 720 Buy 20.4 58.6 70.8 35.3 12.3 10.2 9.4 6.9 5.3 5.9 14.5 14.7
Dalmia Bharat 1,909 Buy 21.5 44.4 72.8 88.9 43.0 26.2 8.8 12.6 10.0 5.5 9.7 14.2
Grasim Industries 4,903 UR 241.7 380.2 472.4 20.3 12.9 10.4 6.1 6.0 4.5 9.2 12.9 14.1
India Cements 151 Neutral 4.4 5.8 9.0 34.4 25.9 16.9 7.6 10.2 8.8 3.9 5.7 7.7
J K Cements 885 Buy 14.5 34.6 57.4 61.0 25.6 15.4 15.0 12.7 9.6 6.3 14.0 20.1
JK Lakshmi Cem. 497 Buy 0.4 9.4 30.5 1334.1 52.7 16.3 20.9 16.6 9.6 0.3 8.1 23.5
Orient Cement 222 Buy 3.0 3.2 7.5 73.0 69.5 29.5 25.2 19.9 13.1 6.2 6.3 13.6
Prism Cement 106 Buy 0.1 2.8 7.0 769.8 37.5 15.1 21.1 13.5 8.3 0.7 13.4 27.4
Ramco Cements 614 Buy 23.4 26.2 31.7 26.2 23.4 19.3 11.1 13.9 11.5 19.5 18.5 19.1
Shree Cement 17,956 Buy 168.0 568.2 737.6 106.9 31.6 24.3 24.8 21.0 14.6 10.2 27.9 27.9
Ultratech Cement 3,927 Buy 79.3 108.0 165.3 49.5 36.4 23.8 20.4 19.6 13.4 11.0 13.4 17.9
October 2016 50
MOSL UNIVERSE

Consumer
Asian Paints 1,192 Neutral 18.7 22.7 26.3 63.6 52.5 45.3 31.7 35.9 30.8 34.7 35.7 35.0
Britannia 3,483 Buy 70.1 78.8 98.5 49.7 44.2 35.4 27.3 31.5 24.6 55.9 46.5 44.5
Colgate 983 Buy 22.3 22.8 29.9 44.0 43.0 32.8 23.5 25.9 20.0 67.9 57.7 68.9
Dabur 276 Neutral 7.1 8.0 9.2 38.8 34.5 29.9 27.9 27.7 23.9 33.3 30.8 29.7
Emami 1,182 Buy 25.2 27.7 34.3 46.9 42.6 34.4 31.7 33.2 27.5 43.4 37.5 35.8
Godrej Consumer 1,639 Neutral 33.2 40.8 51.3 49.4 40.2 32.0 30.1 29.5 23.8 23.4 24.5 25.5
GSK Consumer 6,193 Neutral 167.1 175.1 192.6 37.1 35.4 32.2 24.0 25.3 22.4 30.8 27.6 26.1
Hind. Unilever 869 Neutral 19.0 20.4 23.0 45.6 42.6 37.8 31.9 29.6 26.2 82.4 70.2 78.5
ITC 242 Buy 7.7 9.1 10.5 31.4 26.6 23.0 18.3 18.1 15.5 29.3 30.8 30.7
Jyothy Labs 359 UR 4.1 7.6 9.1 87.5 47.3 39.5 25.6 26.6 23.0 9.1 15.7 17.4
Marico 282 Neutral 5.6 6.4 7.9 50.3 43.9 35.8 29.7 30.6 25.1 36.9 37.0 39.3
Nestle 6,597 Neutral 119.9 113.2 142.1 55.0 58.3 46.4 34.0 34.0 27.1 40.9 36.3 39.7
P&G Hygiene 6,842 Buy 130.3 142.7 173.5 52.5 47.9 39.4 31.9 30.8 24.7 30.9 28.6 30.0
Page Industries 15,453 Buy 208.6 267.4 366.3 74.1 57.8 42.2 36.1 37.0 27.4 46.0 45.6 47.6
Parag Milk Foods 302 Neutral 6.7 9.3 12.8 44.9 32.5 23.5 15.4 12.2 19.5 14.1 13.4
Pidilite Inds. 723 Buy 14.8 18.3 21.6 49.0 39.6 33.5 24.3 25.7 21.5 29.9 30.3 28.7
Radico Khaitan 122 Neutral 6.9 6.4 8.3 17.7 19.1 14.7 9.8 11.2 9.5 10.2 8.8 10.5
United Spirits 2,424 Buy 16.7 37.5 56.5 144.9 64.7 42.9 46.0 34.0 25.5 19.8 26.2 25.7
Healthcare
Alembic Pharma 669 Neutral 38.2 25.0 31.9 17.5 26.8 21.0 11.0 18.9 14.2 38.8 26.6 27.7
Alkem Lab 1,685 Neutral 64.7 71.3 84.6 26.0 23.6 19.9 18.5 20.0 15.0 23.8 22.2 22.1
Aurobindo Pharma 869 Buy 33.9 42.9 52.6 25.7 20.3 16.5 14.6 14.1 11.5 32.5 30.4 28.3
Biocon 964 Sell 23.2 27.7 30.6 41.5 34.8 31.5 11.3 19.2 16.1 11.9 12.3 13.0
Cadila Health 391 Buy 15.4 15.9 20.0 25.3 24.5 19.6 14.6 17.6 14.0 32.8 27.4 27.9
Cipla 589 Neutral 18.8 21.1 28.4 31.3 27.9 20.7 17.9 17.6 13.4 12.8 12.7 14.9
Divis Labs 1,299 Neutral 41.9 46.8 55.2 31.0 27.8 23.5 18.0 20.2 16.5 28.6 27.4 28.2
Dr Reddy s Labs 3,162 Neutral 132.3 90.0 139.0 23.9 35.1 22.8 13.0 19.0 13.2 18.8 11.4 15.7
Glenmark Pharma 928 Neutral 24.9 42.9 49.8 37.3 21.7 18.6 18.6 11.6 10.2 16.4 21.2 19.1
Granules India 120 Buy 5.5 6.8 9.8 21.9 17.5 12.3 10.6 8.9 6.9 21.6 19.9 22.4
GSK Pharma 2,813 Neutral 44.2 50.1 61.2 63.7 56.2 46.0 68.3 47.3 37.7 22.1 29.5 40.7
IPCA Labs. 608 Neutral 10.5 19.7 32.4 57.8 30.9 18.8 22.7 15.6 11.7 5.9 10.4 15.3
Lupin 1,494 Buy 50.4 64.3 80.3 29.7 23.2 18.6 19.4 14.8 12.1 22.9 23.7 24.1
Sanofi India 4,229 Buy 103.2 148.4 175.4 41.0 28.5 24.1 18.8 16.2 13.6 14.2 18.5 19.5
Sun Pharma 758 Buy 19.6 26.3 38.5 38.7 28.8 19.7 23.9 17.5 13.7 16.5 19.3 24.4
Torrent Pharma 1,662 Buy 59.3 67.1 85.0 28.1 24.8 19.5 8.8 17.0 14.1 34.1 30.2 30.3
Media
D B Corp 396 Buy 16.2 21.8 25.8 24.4 18.2 15.3 10.6 9.9 8.4 22.6 27.8 29.0
Den Networks 75 Neutral -11.0 1.1 8.2 -6.8 66.5 9.1 15.9 5.9 3.0 -11.1 1.2 8.3
Dish TV 97 Buy 6.5 2.6 3.9 14.9 37.0 24.6 9.9 9.3 7.4 NM NA 48.3
Hathway Cable 31 Buy -1.9 -0.8 2.4 -16.5 -38.6 13.1 13.2 7.9 4.5 -11.3 -5.2 14.3
Hindustan Media 288 Buy 24.6 26.6 29.9 11.7 10.8 9.6 5.6 5.6 4.3 21.9 19.4 18.1
HT Media 84 Neutral 7.3 5.9 7.4 11.5 14.2 11.4 3.5 3.5 2.3 7.7 5.7 6.6
Jagran Prakashan 191 Buy 10.5 11.3 13.1 18.2 17.0 14.6 9.1 9.4 8.2 24.7 21.5 21.6
PVR 1,236 Buy 25.5 27.1 43.5 48.4 45.6 28.4 11.5 16.3 12.2 18.7 13.7 18.8
Siti Networks 35 Buy 0.0 0.5 4.0 - 74.8 8.7 11.9 7.6 3.2 0.1 4.8 29.4
Sun TV 530 Not Rated 21.1 26.1 30.6 25.1 20.3 17.3 7.9 9.9 8.4 23.4 26.2 27.9
Zee Entertainment 579 Buy 10.6 14.6 19.7 54.7 39.7 29.4 23.6 26.2 19.7 27.3 30.4 32.8
October 2016 51
MOSL UNIVERSE

Metals
Hindalco 154 Buy 12.0 17.4 23.1 12.9 8.9 6.7 6.9 6.4 5.5 11.6 15.9 18.2
Hindustan Zinc 255 Neutral 19.8 19.7 22.1 12.9 12.9 11.5 6.2 8.8 7.1 20.7 20.7 20.1
JSPL 79 Neutral -18.2 -17.4 -7.8 -4.3 -4.5 -10.1 15.1 10.8 10.9 -8.5 -9.2 -4.4
JSW Steel 1,768 Buy -0.3 190.9 198.1 - 9.3 8.9 13.4 6.4 5.7 0.0 22.2 19.1
Nalco 46 Buy 2.6 3.8 5.5 17.6 12.3 8.4 4.6 6.6 4.0 5.3 7.2 9.9
NMDC 108 Buy 8.4 9.0 8.3 13.0 12.1 13.1 7.9 8.5 8.4 15.9 11.7 11.8
SAIL 48 Sell -9.0 -7.5 -10.0 -5.4 -6.4 -4.8 - 35.5 29.1 -8.8 -8.1 -12.0
Tata Steel 383 Sell 7.7 32.4 54.8 49.9 11.8 7.0 14.2 8.4 7.0 4.6 22.5 34.5
Vedanta 179 Neutral 10.8 17.8 22.6 16.6 10.0 7.9 5.0 5.4 4.5 8.5 12.4 13.9
Oil & Gas

BPCL 628 Buy 55.2 58.4 64.6 11.4 10.7 9.7 5.9 7.4 6.6 31.8 27.8 25.9
Cairn India 208 Neutral 11.4 10.1 10.7 18.2 20.6 19.5 3.4 5.1 3.6 4.0 3.9 4.0
GAIL 385 Neutral 18.1 27.4 34.9 21.2 14.0 11.0 14.0 9.0 7.2 7.7 12.4 12.7
Gujarat State Petronet 155 Neutral 7.9 9.5 10.9 19.6 16.4 14.2 9.8 8.9 7.7 11.7 12.8 13.3
HPCL 432 Buy 38.0 46.7 48.4 11.4 9.3 8.9 5.4 7.1 6.7 22.4 23.7 21.2
Indraprastha Gas 790 Neutral 29.7 43.8 47.8 26.6 18.0 16.6 9.9 10.0 8.8 18.4 23.2 21.3
IOC 604 Buy 40.6 72.8 78.7 14.9 8.3 7.7 6.2 5.4 4.7 13.6 21.6 20.4
MRPL 89 Buy 7.4 13.3 13.7 12.1 6.7 6.5 1.7 6.6 4.8 19.6 31.9 26.3
Oil India 415 Buy 38.8 38.8 47.0 10.7 10.7 8.8 6.1 7.5 6.7 10.5 10.0 11.4
ONGC 260 Buy 20.4 20.2 24.4 12.8 12.9 10.7 4.6 5.6 4.8 9.5 9.1 10.5
Petronet LNG 353 Neutral 11.2 18.6 22.8 31.5 19.0 15.5 12.6 11.4 9.4 14.0 20.2 21.2
Reliance Inds. 1,090 Neutral 93.6 104.1 115.1 11.7 10.5 9.5 8.6 7.3 6.5 12.0 12.2 12.2
Ex OMCs 13.7 12.4 10.8 6.7 6.7 5.8 10.0 10.3 10.9
Real Estate
DLF 153 Buy 3.1 3.9 4.6 49.6 39.0 33.1 11.4 14.8 13.3 1.9 2.4 2.8
Brigade Enterprises 175 Buy 11.0 11.3 16.9 15.9 15.4 10.3 7.2 8.0 6.3 8.8 8.4 11.6
Godrej Properties 352 Neutral 10.7 10.3 17.5 32.9 34.2 20.1 25.6 22.9 14.8 11.5 9.9 15.2
Indiabulls Real Estate 94 Buy 7.3 8.1 10.4 12.9 11.5 9.0 9.9 11.9 9.6 4.1 4.3 5.3
Mahindra Lifespace 439 Neutral 22.7 30.6 37.5 19.4 14.3 11.7 20.1 12.0 9.2 6.1 7.7 8.6
Oberoi Realty 293 Buy 13.0 17.8 39.9 22.6 16.5 7.3 12.7 9.6 4.3 8.6 10.5 20.6
Phoenix Mills 395 Buy 9.3 16.3 26.5 42.7 24.2 14.9 9.5 9.9 7.1 7.6 12.1 16.9
Prestige Estates 203 Buy 9.4 9.2 9.8 21.6 21.9 20.6 11.3 12.1 10.9 8.8 8.1 8.0
Sobha 298 Buy 14.1 17.9 34.7 21.2 16.6 8.6 10.8 9.5 6.3 5.5 6.7 12.8
Retail
Jubilant Foodworks 974 Neutral 15.0 14.0 24.5 65.1 69.4 39.7 31.3 22.6 15.6 13.4 11.3 18.8
Shopper's Stop 372 Neutral 5.8 8.7 11.4 63.8 42.8 32.7 14.8 12.4 10.2 6.3 8.8 10.6
Titan Company 408 Neutral 8.0 9.0 10.8 50.7 45.5 37.6 34.9 34.6 28.3 21.3 20.4 21.2
Technology
Cyient 482 Buy 30.7 34.2 41.6 15.7 14.1 11.6 9.6 9.5 7.3 16.5 16.2 17.4
HCL Technologies 809 Buy 40.1 55.3 61.7 20.2 14.6 13.1 15.2 10.0 8.3 21.5 25.9 24.8
Hexaware Tech. 191 Neutral 12.9 13.6 16.1 14.8 14.0 11.9 14.3 9.6 7.5 28.9 26.6 26.7
Infosys 1,038 Buy 59.0 61.5 71.1 17.6 16.9 14.6 14.3 10.6 8.8 24.7 22.7 23.5
KPIT Tech. 127 Neutral 14.1 13.2 16.1 9.0 9.6 7.9 5.6 4.1 2.8 21.0 17.4 17.8
Mindtree 489 Neutral 35.9 29.6 40.3 13.6 16.5 12.1 13.0 10.1 7.3 27.4 19.7 23.5
October 2016 52
MOSL UNIVERSE

Technology (Contd.)
MphasiS 538 Neutral 34.5 39.8 44.2 15.6 13.5 12.2 11.1 11.4 9.4 12.3 13.3 14.5
Persistent Systems 640 Neutral 37.2 38.2 48.0 17.2 16.8 13.3 12.8 8.8 6.8 19.5 17.5 20.2
TCS 2,412 Neutral 123.2 131.3 148.5 19.6 18.4 16.2 15.2 13.5 11.6 37.1 33.1 32.1
Tata Elxsi 1,403 Buy 49.7 64.8 81.9 28.2 21.6 17.1 23.0 12.8 9.8 46.3 45.3 44.2
Tech Mahindra 421 Neutral 35.1 31.0 37.7 12.0 13.6 11.2 9.7 9.1 7.4 23.4 18.4 16.2
Zensar Tech 1,009 Buy 68.2 77.0 98.0 14.8 13.1 10.3 9.3 8.6 6.2 24.0 22.3 23.9
Wipro 479 Neutral 36.1 34.2 40.1 13.3 14.0 11.9 11.8 9.4 7.8 20.3 17.6 18.7
Telecom
Bharti Airtel 319 Buy 12.3 17.3 18.3 25.9 18.4 17.5 6.5 5.4 4.8 7.7 10.1 9.8
Bharti Infratel 363 Buy 11.8 14.1 12.5 30.6 25.8 29.1 12.3 10.7 9.4 12.7 14.6 12.5
Idea Cellular 81 Sell 8.1 1.9 2.4 10.0 42.7 34.3 6.2 5.3 4.9 11.9 2.6 3.1
Utilities
Coal India 328 Neutral 22.6 17.0 21.1 14.5 19.3 15.6 8.9 14.5 11.0 42.2 30.7 36.7
JSW Energy 74 Buy 7.6 7.0 8.0 9.8 10.7 9.3 6.8 6.2 5.9 15.5 12.9 13.4
NTPC 151 Buy 12.3 11.7 14.4 12.2 12.9 10.4 11.1 10.8 8.7 11.9 10.5 12.1
Power Grid Corp. 181 Buy 11.5 14.2 16.8 15.8 12.8 10.8 9.6 9.1 7.8 14.7 16.0 16.6
Others
Arvind 354 Buy 14.0 17.6 23.0 25.2 20.1 15.4 9.5 10.1 8.8 12.9 14.2 15.9
Allcargo Logistics 188 Buy 11.4 11.1 14.0 16.4 16.9 13.4 7.8 8.1 6.5 14.0 14.0 18.2
Bajaj Electrical 256 Buy 10.5 15.4 18.4 24.4 16.6 13.9 8.5 8.3 7.2 14.6 18.8 19.2
Bata India 496 Sell 11.2 12.9 15.3 44.3 38.4 32.4 22.9 20.8 17.7 13.2 14.1 15.8
Castrol India 487 Buy 12.8 14.3 15.7 37.9 34.1 31.0 19.3 21.7 20.0 118.4 115.8 113.9
Century Plyboards 260 Buy 7.5 8.1 11.0 34.6 32.0 23.7 14.2 19.5 14.7 36.3 30.1 32.0
Concor 1,382 Neutral 40.6 42.0 50.7 34.0 32.9 27.2 18.0 19.9 16.2 10.2 10.0 11.3
Coromandel Internl. 247 Buy 11.8 14.1 21.3 20.9 17.4 11.6 9.3 9.4 6.9 14.9 16.3 22.0
Dynamatic Tech. 3,138 Buy 19.4 83.5 125.4 162.0 37.6 25.0 11.5 13.1 10.8 4.7 18.3 22.1
Eveready Inds. 251 Buy 9.2 11.0 15.2 27.2 22.9 16.5 15.1 14.3 11.4 16.2 34.2 37.1
Gateway Distriparks 255 Buy 11.4 11.5 17.9 22.4 22.2 14.2 11.7 10.6 8.1 10.1 9.9 14.4
Indo Count Inds. 732 Buy 67.6 82.5 105.8 10.8 8.9 6.9 8.7 5.7 4.5 49.4 39.5 34.4
Info Edge 862 Buy 13.0 17.2 22.1 66.4 50.1 39.0 52.9 46.3 34.3 9.2 11.6 13.7
Inox Leisure 270 Neutral 8.4 8.1 11.2 32.0 33.4 24.0 10.8 13.2 10.7 14.9 11.8 14.4
Insecticides India 497 Buy 32.2 44.7 57.4 15.4 11.1 8.7 6.6 7.0 5.8 19.0 21.8 22.4
Interglobe Aviation 945 Neutral 55.2 59.1 72.4 17.1 16.0 13.0 5.3 5.0 3.8 176.5 106.4 109.9
Jain Irrigation 95 Buy 2.2 5.5 8.2 43.7 17.4 11.7 7.1 7.5 6.0 4.0 8.5 12.5
Just Dial 436 Buy 20.4 16.4 19.7 21.3 26.6 22.2 27.0 17.5 13.0 21.1 15.8 16.5
Kaveri Seed 380 Neutral 24.9 20.3 26.2 15.2 18.7 14.5 11.2 13.2 10.3 20.7 15.1 18.6
Kitex Garments 437 Buy 23.6 32.8 42.7 18.5 13.3 10.2 10.3 7.7 5.6 35.5 36.3 35.5
MCX 1,368 Buy 23.4 29.4 46.8 58.5 46.6 29.2 68.3 67.5 29.5 3.5 12.0 17.8
Monsanto India 2,392 Buy 60.4 67.2 90.2 39.6 35.6 26.5 25.0 30.1 22.4 26.5 28.3 37.0
P I Industries 839 Buy 22.1 28.4 36.1 37.9 29.5 23.2 18.1 20.4 16.1 29.2 29.2 29.3
Sintex Inds. 80 Buy 14.2 15.9 21.4 5.7 5.1 3.8 6.4 5.3 4.5 12.4 12.1 14.4
SRF 1,907 Buy 73.7 92.6 114.5 25.9 20.6 16.7 9.4 11.0 9.4 17.0 18.4 19.4
Symphony 1,167 Sell 15.6 26.7 34.1 74.6 43.8 34.2 59.6 32.4 25.3 33.8 56.2 62.0
TTK Prestige 5,318 Neutral 100.7 129.3 159.4 52.8 41.1 33.4 27.2 25.6 20.8 17.2 19.6 21.3
V-Guard Inds 185 Neutral 3.7 5.0 5.8 49.8 37.3 31.9 14.7 24.4 20.7 26.3 28.2 26.6
Wonderla Holiday 380 Neutral 10.6 11.5 14.6 35.9 33.1 26.1 24.8 18.9 14.7 15.8 15.1 16.8
October 2016 53
MOSL UNIVERSE

Sector / Companies CMP EPS (INR) PE (x) PB (x) RoE (%)
(INR) Reco FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E
Financials
Banks-Private
Axis Bank 551 Buy 34.5 31.8 37.4 16.0 17.3 14.7 2.5 2.3 2.0 17.1 13.8 14.4
DCB Bank 127 UR 6.8 7.7 8.7 18.6 16.6 14.6 2.1 1.8 1.6 11.8 11.7 11.9
Equitas Holdings 183 Neutral 6.2 6.2 7.0 29.6 29.7 26.2 3.7 2.7 2.5 13.3 11.5 9.9
Federal Bank 75 Buy 2.8 4.3 5.2 26.9 17.2 14.4 1.6 1.5 1.4 6.0 8.9 9.9
HDFC Bank 1,287 Buy 48.6 58.4 70.2 26.5 22.0 18.3 4.5 3.9 3.3 18.3 18.9 19.6
ICICI Bank 256 Buy 16.7 17.3 20.0 15.3 14.8 12.8 1.9 1.8 1.6 11.3 10.5 11.2
IDFC Bank 79 UR 1.4 3.4 4.2 57.3 23.1 18.8 2.0 1.8 1.7 0.0 8.2 9.4
IndusInd Bank 1,232 Buy 38.4 48.3 61.1 32.1 25.5 20.2 4.2 3.7 3.2 16.6 15.5 17.0
J&K Bank 88 Neutral 8.6 17.7 21.4 10.2 4.9 4.1 0.7 0.6 0.5 6.6 12.8 13.9
Kotak Mahindra Bank 788 Buy 18.9 26.8 34.0 41.8 29.4 23.2 4.3 3.8 3.3 10.9 13.7 15.2
South Indian Bank 23 Buy 2.5 2.8 3.3 9.4 8.4 7.1 0.8 0.8 0.7 9.3 9.7 10.6
Yes Bank 1,271 Buy 60.4 79.0 101.2 21.0 16.1 12.6 3.9 3.3 2.7 19.9 22.0 23.5
PVT Bank Aggregate 23.0 19.8 16.5 3.2 2.7 2.4 13.9 13.8 14.7
Banks-PSU
Andhra Bank 58 Buy 7.9 10.3 13.2 7.3 5.6 4.4 0.4 0.3 0.3 5.1 6.3 7.6
Bank of Baroda 169 Buy -23.4 14.1 20.0 -7.2 12.0 8.4 1.2 1.1 1.0 -15.3 9.3 12.1
Bank of India 116 Neutral -74.5 -10.8 21.6 -1.6 -10.8 5.4 0.4 0.5 0.5 -25.2 -4.6 8.7
Canara Bank 319 Neutral -51.8 26.8 36.8 -6.2 11.9 8.7 0.7 0.6 0.6 -10.8 5.5 7.2
IDBI Bank 71 Neutral -17.8 1.5 6.4 -4.0 46.4 11.0 0.7 0.7 0.6 -16.4 1.4 5.8
Indian Bank 224 Buy 14.8 25.3 31.4 15.1 8.9 7.1 0.8 0.7 0.7 5.5 8.7 10.0
Oriental Bank 130 Neutral 4.9 16.7 24.2 26.7 7.8 5.4 0.3 0.3 0.3 1.2 4.2 5.8
Punjab National Bank 144 Neutral -20.2 10.8 12.8 -7.1 13.3 11.2 0.8 0.8 0.7 -10.9 5.8 6.6
State Bank 255 Buy 15.7 14.2 24.6 16.2 17.9 10.4 1.1 1.1 1.0 7.8 6.6 10.5
Union Bank 143 Buy 19.7 22.4 39.1 7.3 6.4 3.7 0.5 0.5 0.4 7.0 7.4 11.8
PSU Bank Aggregate -47.7 15.6 8.8 0.9 0.8 0.8 -2.0 5.2 8.7
NBFC
Bajaj Finance 1,087 Buy 23.9 34.6 44.2 45.5 31.4 24.6 7.9 6.5 5.3 21.1 22.8 23.9
Dewan Housing 295 Buy 25.0 30.2 38.4 11.8 9.8 7.7 1.7 1.5 1.3 15.1 16.4 17.8
GRUH Finance 335 Buy 6.7 8.2 10.3 50.0 40.9 32.4 14.6 11.8 9.6 31.5 32.0 32.7
HDFC 1,425 Buy 44.9 48.2 55.1 31.7 29.6 25.9 6.4 5.8 5.2 21.8 21.1 21.6
Indiabulls Housing 855 Buy 55.7 67.6 84.0 15.4 12.7 10.2 3.4 3.1 2.7 27.1 25.3 28.3
LIC Housing Fin 593 Buy 32.5 39.5 49.6 18.3 15.0 12.0 3.3 2.8 2.3 19.3 20.1 21.3
M & M Financial 386 Buy 11.9 14.6 18.1 32.4 26.4 21.3 3.6 3.3 2.9 11.4 12.9 14.5
Muthoot Finance 350 Buy 20.3 28.0 33.6 17.3 12.5 10.4 2.5 2.2 1.9 15.1 18.7 19.9
Power Finance Corp 122 Neutral 23.8 24.0 25.5 5.1 5.1 4.8 0.9 0.8 0.7 18.3 16.8 16.2
Repco Home Fin 832 Buy 24.0 30.4 39.7 34.7 27.4 21.0 5.4 4.6 3.9 17.0 18.3 20.1
Rural Electric. Corp. 124 Neutral 28.5 29.6 34.3 4.4 4.2 3.6 0.9 0.7 0.6 21.0 18.9 18.9
Shriram Transport Fin. 1,222 Buy 53.3 70.5 93.8 22.9 17.3 13.0 2.7 2.4 2.1 12.2 14.8 17.2
NBFC Aggregate 17.9 15.8 13.5 3.2 2.8 2.5 18.1 18.0 18.4
UR: Under Review; NR: Not Rated
October 2016 54
MOSL UNIVERSE
Sectors & Companies

BSE Sensex: 28,243 S&P CNX: 8,738 October 2016
Note: In our quarterly performance tables, our four-quarter numbers may not always add up to the full-year
numbers. This is because of differences in classification of account heads in the companys quarterly and
annual results or because of differences in the way we classify account heads as opposed to the company.
All stock prices and indices as on 3 October 2016, unless otherwise stated.
October 2016 55
September 2016 ResultsSeptember
Preview |2016
Sector: Automobiles
Results Preview s
Automobiles
Company name Volume buoyancy all across, except M&HCVs
Amara Raja Batteries Profitability to remain strong as operating leverage offsets RM inflation
Ashok Leyland We expect the Indian automobiles industry performance to be mixed. While 2W
(+16.5% YoY) and PV (+13.2% YoY) volumes would benefit from festive season
Bajaj Auto demand, LCV (+9% YoY) and Tractor (over 30% YoY growth) volumes would see a
Bharat Forge
cyclical recovery. However, M&HCV (-5% YoY) volumes would be impacted by an
adverse base.
BOSCH EBITDA margin for our auto OEM (ex-JLR) coverage universe is likely to remain stable
YoY, with commodity cost inflation offsetting benefits of operating leverage.
Eicher Motors
We have lowered our FY18 EPS estimates for AL (-11%), MM (-3%) and BOS (-6%), and
Escorts upgraded for MSIL (+11.5%), TVSL (+12%), HMCL (+4%) and AMRJ (+3%).
Our top picks are MM, MSIL and TTMT among large caps, and AL, AMRJ and BHFC
Exide Industries
among midcaps.
Hero MotoCorp
2Ws on strong footing, new launches driving PVs; M&CV volumes decline
Mahindra & Mahindra Growth in the auto sector was primarily led by pre-festive inventory build-up for
Maruti Suzuki 2Ws (+16.5% YoY) and PVs (+13.2% YoY), as improved sentiment and benefit of
normal monsoon/7th Pay Commission are expected to drive strong demand during
Tata Motors
the festive season. On the other hand, LCVs (+9% YoY) and Tractors (over 30% YoY
TVS Motor Company growth) continued to recover. However, M&HCV (-5% YoY) volumes were impacted
by an adverse base (2QFY16 witnessed weak monsoon and pre-buy before
mandatory ABS from Oct-15). PV volumes are driven by new launches as broad-
based recovery is not yet visible.
Benefits of operating leverage to be offset by rising raw material costs
EBITDA margin for our auto OEM (ex-JLR) coverage universe is likely to expand just
~10bp YoY (+20bp QoQ), with operating leverage diluted by higher raw material
costs. We expect considerable margin expansion for TTMT JLR (+270bp YoY, led by
operating leverage), EIM (+330bp YoY for RE) and HMCL (+70bp YoY), while MSIL (-
110bp due to adverse currency movement) and BJAUT (-100bp due to adverse mix
and FX in some of its key markets) are likely to witness a decline.
Acceleration in economic activity key catalyst for demand recovery

While there have been initial signs of recovery in infrastructure, an improvement in
the economic outlook, normal monsoon, the governments rural push and 7th Pay
Commission benefits would be the key catalysts for demand recovery. Lower
interest rates and stable fuel prices would also boost consumer sentiment.
Valuation and view
We have lowered our FY18 EPS estimates for AL (-11%), MM (-3%) and BOS (-6%),
and upgraded for MSIL (+11.5%), TVSL (+12%), HMCL (+4%) and AMRJ (+3%). Our
top picks are MM, MSIL and TTMT among large caps, and AL, AMRJ and BHFC among
midcaps.
Jinesh Gandhi (Jinesh@MotilalOswal.com); +91 22 3982 5416

Aditya Vora (Aditya.Vora@MotilalOswal.com); +91 22 3078 4701 / Venil Shah (Venil.Shah@MotilalOswal.com); +91 22 39825445
October 2016 56
September 2016 Results Preview | Sector: Automobiles
Exhibit 1: Summary of expected quarterly performance (INR m)

RECO Sep-16 Sep-16 Sep-16
Amara Raja Batt. 1,029 Buy 13,668 18.0 3.5 2,414 21.5 6.2 1,425 16.3 9.1
Ashok Leyland 83 Buy 46,787 -5.3 9.9 5,385 -9.4 13.1 3,113 7.3 7.1
Bajaj Auto 2,883 Buy 60,226 -1.2 4.8 12,404 -5.8 5.4 10,766 15.4 10.0
Bharat Forge 940 Buy 9,500 -14.9 5.0 2,638 -18.0 7.9 1,378 -21.3 12.9
Bosch 22,851 Neutral 26,970 3.0 7.0 4,504 -0.4 -0.2 3,667 20.1 -2.5
Eicher Motors 25,773 Buy 17,713 -43.3 13.7 5,500 11.6 17.0 4,040 58.1 7.4
Escorts 407 Buy 9,700 21.0 -7.7 718 143.1 -18.2 433 154.0 -15.7
Exide Inds. 188 Buy 19,456 12.0 -3.1 3,100 20.4 -1.6 1,932 23.8 -1.5
Hero Motocorp 3,523 Neutral 79,223 15.9 7.1 14,145 21.2 6.2 9,416 22.0 6.6
Mahindra & Mahindra 1,443 Buy 102,655 16.7 -2.5 13,518 16.3 -9.2 10,965 12.1 22.5
Maruti Suzuki 5,682 Buy 181,065 29.9 21.3 27,464 21.0 24.0 18,452 29.4 24.2
Tata Motors 541 Buy 630,745 2.9 -4.3 92,151 33.9 21.0 31,568 475.4 67.2
TVS Motor 378 Buy 34,362 19.3 19.3 2,715 28.1 35.5 1,634 40.3 34.7
Sector Aggregate 1,232,071 6.8 1.8 186,653 21.6 14.5 98,789 62.1 26.7
Exhibit 2: Volume snapshot for 2QFY17 ('000 units)

2QFY17 2QFY16 YoY (%) 1QFY17 QoQ (%) FY16 FY15 YoY (%)
Two wheelers 5,750 4,934 16.5 5,119 12.3 19,005 18,434 3.1
Three wheelers 205 265 -22.8 205 -0.2 943 939 0.3
Passenger cars 687 636 8.0 600 14.3 2,556 2,424 5.4
UVs & MPVs 294 230 27.5 252 16.5 901 806 11.9
Total PVs 980 866 13.2 852 15.0 3,457 3,229 7.0
M&HCV 76 86 -11.7 80 -6.1 336 263 27.9
LCV 108 99 8.9 112 -3.7 442 431 2.6
Total CVs 184 185 -0.6 193 -4.7 778 693 12.2
Total 7,119 6,251 13.9 6,369 11.8 24,182 23,296 3.8
Exhibit 3: Trend in segment-wise EBITDA margins (%) Exhibit 4: Commodity prices recover from lows (index)
2QFY15 1QFY16 2QFY16 3QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17
4QFY16 1QFY17 2QFY17
100
124
123
132
100
106
105
108
126
100
107
107
100
112
126
119
85
96
95
89
2W Cars CVs Steel Lead Alu Rubber

October 2016 57
Exhibit 5: Trend in key currencies v/s INR Exhibit 6: Continued improvement in EBITDA margins (%)
USD GBP JPY 18 Aggregate (excld JLR) Aggregate (incl JLR)
160
140 15
120 12
100 9
80 6
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Mar-11
Sep-11
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Source: Bloomberg, MOSL Source: Company, MOSL
Exhibit 7: Revised estimates

EPS (INR) FY17E FY18E
Rev Old Chg (%) Rev Old Chg (%)
Bajaj Auto 142.6 142.5 0.0 183.8 181.6 1.2
Hero MotoCorp 185.4 183.0 1.3 223.0 214.7 3.9
TVS Motor 12.7 12.3 3.5 18.0 16.1 11.9
Maruti * 233.8 219.6 6.5 306.8 275.3 11.5
M&M * 70.9 73.2 -3.1 95.9 98.7 -2.8
Tata Motors * # 44.6 43.0 3.8 55.5 55.3 0.5
Ashok Leyland 5.4 6.5 -16.5 7.5 8.5 -11.5
Eicher Motors * 630.7 623.8 1.1 865.8 844.4 2.5
Amara Raja 35.4 33.4 5.9 42.9 41.5 3.3
Bharat Forge 27.7 27.4 0.9 37.4 36.8 1.5
Exide Industries 8.9 8.9 -0.1 10.4 10.3 0.8
BOSCH 508.6 526.1 -3.3 709.7 757.5 -6.3
* Consolidated Source: Company, MOSL
Exhibit 8: Snapshot of 2QFY17 operating performance

Volumes ('000 units) EBITDA margins (%) Adj PAT (INR m)
2QFY17 YoY (%) QoQ (%) 2QFY17 YoY (bp) QoQ (bp) 2QFY17 YoY (%) QoQ (%)
BJAUT 1,032 -2.3 3.7 20.6 -100 10 10,766 15.4 10.0

HMCL 1,823 15.8 4.5 16.5 70 -10 9,416 22.0 6.6
TVS Motor 816 20.2 13.6 7.9 50 90 1,634 40.3 34.7
MSIL 418 18.4 20.1 15.2 -110 30 18,452 29.4 24.2
MM 185 16.7 -3.6 13.2 -10 -100 10,965 12.1 22.5
TTMT (S/A) 135 14.8 6.3 7.6 90 90 -1,372 -26.6 -237.7
TTMT (JLR) 14.6 340 310 31,568 475.4 66.2
TTMT (Cons) 33 -10.5 7.3 11.5 -50 30 3,113 7.3 7.1
Ashok Leyland 31.1 330 20 4,040 58.1 7.4
Eicher (RE) 138 18.4 2.9 14.9 270 260 376 628.9 41.8
Eicher (VECV) 167 30.8 13.2 31.1 330 20 3,792 66.0 12.5
Eicher (Consol) 13 15.0 -16.6 7.7 40 -140 685 19.6 -36.6
Agg. (ex JLR) 4,623 12.3 7.0 14.0 10 20 57,014 24.4 11.1
October 2016 58
Exhibit 9: Relative performance Three months (%) Exhibit 10: Relative performance One year (%)
Sensex Index MOSL Automobiles Index Sensex Index MOSL Automobiles Index
120 140
112 125
104 110
96 95
88 80
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Mar-16
Sep-15
Jan-16
Feb-16
Sep-16
Oct-15
Jul-16
Jun-16
Aug-16
Sep-16
Source: Bloomberg, MOSL Source: Bloomberg, MOSL
Exhibit 11: Comparative valuation

Sector / Companies CMP RECO EPS (INR) PE (x) EV/EBIDTA (x) RoE (%)
Amara Raja Batt. 1,029 Buy 28.7 33.4 42.9 35.9 30.8 24.0 18.3 18.1 14.4 25.8 24.4 25.4
Ashok Leyland 83 Buy 3.9 5.4 7.5 21.2 15.3 11.1 13.9 8.3 6.1 20.9 25.5 29.1
Bajaj Auto 2,883 Buy 131.8 142.6 183.8 21.9 20.2 15.7 12.4 14.1 10.9 33.2 31.2 34.3
Bharat Forge 940 Buy 28.1 27.7 37.4 33.4 34.0 25.2 15.2 16.4 13.3 18.7 17.0 20.3
Bosch 22,851 Neutral 545.9 508.6 709.7 41.9 44.9 32.2 29.2 33.4 22.5 21.9 18.0 21.6
Eicher Motors 25,773 Buy 492.9 630.7 865.8 52.3 40.9 29.8 29.5 30.4 23.5 35.8 41.5 41.0
Escorts 407 Buy 11.1 18.3 30.0 36.6 22.2 13.5 12.3 18.7 12.4 6.1 9.7 14.6
Exide Inds. 188 Buy 7.3 8.9 10.4 25.7 21.1 18.1 9.1 10.9 9.4 14.0 15.3 15.7
Hero Motocorp 3,523 Neutral 158.3 185.4 223.0 22.3 19.0 15.8 12.2 12.4 10.2 43.6 41.9 41.0
Mahindra & Mahindra 1,443 Buy 53.6 70.9 95.9 26.9 20.3 15.0 6.6 6.4 5.2 15.4 15.1 17.5
Maruti Suzuki 5,682 Buy 155.5 233.8 306.8 36.5 24.3 18.5 10.4 14.4 11.0 19.9 21.4 23.2
Tata Motors 541 Buy 36.9 44.6 55.5 14.7 12.1 9.7 3.3 4.9 4.1 18.3 17.2 18.0
TVS Motor 378 Buy 9.1 12.7 18.0 41.5 29.8 21.0 21.4 18.1 13.1 24.1 27.9 31.4
October 2016 59
Amara Raja Batteries

Bloomberg AMRJ IN CMP: INR1029 TP: INR1,257 (+24%) Buy
Equity Shares (m) 170.8
M. Cap. (INR b)/(USD b) 176 / 3
We expect AMRJs revenue to grow 18% YoY (+3.5% QoQ) to
52-Week Range (INR) 1077/773
INR13.7b.
1,6,12 Rel Perf. (%) 4/4/-8 New capacities in 2Ws, 4Ws and tubular batteries, coupled with
robust demand from 4W and 2W OEMs, are likely to drive volumes
in 2QFY17 and FY17.
Financial Snapshot (INR b)
Y/E March
Spot LME lead prices declined 2% QoQ in 1QFY16 (+6% QoQ in
2016 2017E 2018E 2019E
2QFY17) the impact is likely to be reflected in 2QFY17.
Sales 46.9 55.5 66.1 77.4
EBITDA 8.2 9.7 12.0 14.0
EBITDA margin is likely to expand ~50bp QoQ (+50bp YoY) to
NP 4.9 5.7 7.3 8.6
17.7%. Lower raw material costs due to soft lead prices in 1QFY17,
EPS (INR) 28.7 33.4 42.9 50.3 along with benefits of operating leverage, are expected to aid
EPS Gr. (%) 17.7 16.6 28.5 17.1 margins. However, other expenses could see a marginal rise.
BV/Sh. (INR) 123.0 150.9 186.8 228.9 We expect PAT to grow 16% YoY to INR1.4b.
RoE (%) 25.8 24.4 25.4 24.2 The stock trades at 30.2x FY17E and 23.5x FY18E EPS; Buy.
RoCE (%) 24.2 23.1 24.3 23.2
Valuations Key issues to watch
P/E (x) 35.2 30.2 23.5 20.1 Update on demand environment for OEMs, auto replacement and
P/BV (x) 8.2 6.7 5.4 4.4 industrial battery segments.
EV/EBITDA (x) 21.0 17.7 14.1 11.8 Outlook for raw material cost trend, recent pricing action and
EV/Sales (x) 3.7 3.1 2.6 2.1 currency hedges (if any).
Update on capacity expansion plans across product segments.
Quarterly Performance (INR Million)

Y/E March (INR m) FY16 FY17 FY16 FY17E
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Net Sales 11,306 11,583 12,251 11,697 13,208 13,668 14,579 13,999 46,907 55,454
YoY Change (%) 9.9 9.2 14.9 9.7 16.8 18.0 19.0 19.7 11.4 18.2
RM Cost (% of sales) 64.9 64.0 61.6 62.7 66.2 65.5 65.5 65.2 63.2 65.6
Staff Cost (% of sales) 4.9 5.0 5.0 5.3 5.0 4.8 4.8 5.2 4.2 4.3
Other Exp (% of sales) 12.4 13.8 14.7 15.7 11.6 12.0 12.0 12.2 12.0 12.7
EBITDA 2,001 1,987 2,286 1,908 2,273 2,414 2,574 2,444 8,169 9,705
Margins (%) 17.7 17.2 18.7 16.3 17.2 17.7 17.7 17.5 17.4 17.5
Depreciation 328 343 355 372 441 465 485 500 1,399 1,891
Interest 13 0 3 1 14 3 3 1 5 21
Other Income 136 116 113 97 90 120 125 141 457 475
PBT before EO expense 1,796 1,760 2,041 1,632 1,908 2,066 2,211 2,084 7,222 8,268
PBT 1,796 1,760 2,041 1,632 1,908 2,066 2,211 2,084 7,222 8,268
Rate (%) 31.9 30.4 33.3 33.5 31.5 31.0 31.0 30.5 32.2 31.0
Adj PAT 1,223 1,226 1,362 1,086 1,307 1,425 1,526 1,447 4,894 5,705
YoY Change (%) 15.4 22.2 33.0 6.2 6.8 16.3 12.0 33.3 22.5 16.6
E: MOSL Estimates
October 2016 60
Ashok Leyland
Bloomberg AL IN
CMP: INR83 TP: INR97 (+17%) Buy
Equity Shares (m) 2,845.9
M. Cap. (INR b)/(USD b) 236 / 4
Overall volumes declined by 10.5% YoY as M&HCV volumes fell
15% YoY. However, 8% growth in LCVs arrested further decline in
1,6,12 Rel Perf. (%) 1/-37/-20 overall volumes.
We expect realization to improve 3.9% YoY (flat QoQ) on price
increase and higher contribution from Defense business.
As a result, net revenue is likely to decline ~5% YoY (+26% QoQ),
Y/E March 2016 2017E 2018E 2019E
due to a fall in volumes.
Sales 188.2 215.5 257.4 306.5
EBITDA margin is likely to contract 50bp YoY (+30bp QoQ),
EBITDA 21.7 26.1 33.4 39.2
NP 11.1 15.4 21.3 26.2
impacted by higher RM costs on a YoY basis and negative operating
Adj. EPS (INR) 3.9 5.4 7.5 9.2 leverage.
EPS Gr. (%) 375.1 38.9 38.1 22.9 EBITDA should decline 9% YoY (-9% QoQ) to ~INR5.4b.
BV/Sh. (INR) 19.4 23.2 28.3 34.8 Further, lower interest and higher other income would boost
RoE (%) 20.9 25.5 29.1 29.2 adjusted PAT growth by 7% YoY (+7% QoQ) to INR3.1b.
RoCE (%) 12.8 18.7 22.9 23.9 The stock trades at EV of 9x FY17E and 6.8x FY18E EBITDA. Buy.
Payout (%) 25.6 27.7 26.7 24.4 Key issues to watch
Valuations Current demand environment and discounting trend, as well as
P/E (x) 21.2 15.3 11.1 9.0 plant and channel inventory for MHCVs.
P/BV (x) 4.3 3.6 2.9 2.4 Industry growth and market share guidance for FY1718.
EV/EBITDA (x) 11.4 9.1 6.8 5.3 Raw material cost outlook and margin guidance for FY1718.
Div. Yield (%) 1.2 1.8 2.4 2.7 Capex and investment guidance for FY17.

FY16 FY17 FY16 FY17E
Total Volumes (nos) 28,154 37,369 30,984 43,991 31,163 33,446 36,250 53,965 140,457 154,824
Growth % 41.2 47.3 22.0 28.8 10.7 -10.5 17.0 22.7 33.9 10.2
Realizations (INR '000) 1,379 1,322 1,319 1,354 1,367 1,373 1,377 1,398 1,340 1,392
% change 11.0 4.2 -0.4 2.6 -0.9 3.9 4.4 3.3 3.7 3.9
Net operating revenues 38,831 49,397 40,853 59,553 42,588 46,787 50,688 75,450 188,216 215,513
Change (%) 56.7 53.5 21.6 32.2 9.7 -5.3 24.1 26.7 38.8 14.5
RM/sales % 68.4 70.4 70.8 71.0 68.8 69.0 69.5 69.8 70.5 69.4
Staff/sales % 8.5 7.7 8.5 5.7 8.4 8.5 7.7 5.8 7.4 7.3
Other exp/sales % 13.0 9.9 10.1 10.7 11.6 11.0 11.0 11.2 10.6 11.2
EBITDA 3,925 5,945 4,297 7,531 4,763 5,385 5,973 9,987 21,660 26,108
EBITDA Margins(%) 10.1 12.0 10.5 12.6 11.2 11.5 11.8 13.2 11.5 12.1
Other Income 78 265 259 320 443 450 475 488 1,099 1,856
Interest 701 702 666 602 338 350 425 490 2,735 1,603
PBT before EO Item 1,984 4,378 2,803 6,071 4,154 4,265 4,798 8,761 15,586 21,978
EO Exp/(Inc) 52 65 3,793 0 0 0 3,909 0
PBT 1,984 4,326 2,738 2,279 4,154 4,265 4,798 8,761 11,677 21,978
Effective Tax Rate (%) 36.3 33.7 27.5 66.2 30.0 27.0 27.0 26.8 38.3 27.5
Rep. PAT 1,264 2,868 1,986 770 2,908 3,113 3,503 6,410 7,203 15,934
Adj. PAT 1,264 2,902 2,034 4,563 2,908 3,113 3,503 6,410 11,112 15,934
Change (%) -364 607 534 93 130 7 72 40 330.0 43.4
October 2016 61
Bajaj Auto
Bloomberg BJAUT IN CMP: INR2,833 TP: INR3,496 (+21%) Buy
Overall volumes declined 2% YoY (+4% QoQ) to 1.03m units due to
M. Cap. (INR b)/(USD b) 834 / 13
a 27% YoY fall in exports, while domestic sales arrested further
decline with 22% YoY growth. Total 2W sales declined 1% YoY in
1,6,12 Rel Perf. (%) -3/7/17
2QFY17, while 3W volumes slid 12% YoY, primarily due to a fall in
exports.
We expect realization to grow 1% YoY (+3% QoQ). However, net
Y/E MAR 2015 2016 2017E 2018E
revenues are expected to decline 1% YoY to INR 60.2b, as fall in
Sales 216.1 226.9 258.5 290.3
EBITDA 41.2 47.8 53.8 59.3
volumes is likely to outpace marginal rise in realizations.
NP 30.5 36.5 43.2 50.0 EBITDA margin should contract 100bp YoY (-20bp QoQ) to 20.6%
Adj. EPS (INR) 105.3 126.2 149.1 172.8 due to a marginal increase in RM costs (+50bp) and staff expenses
EPS Gr. (%) -6.0 19.8 18.1 15.9 (+70bp)
BV/Sh. (INR) 369.5 424.8 495.8 578.4 We expect PAT to grow ~15% YoY (+10% QoQ) to INR10.8b.
RoE (%) 30.0 31.8 32.4 32.2 The stock trades at 20.2x FY17E and 15.7x FY18E EPS; maintain Buy.
RoCE (%) 29.4 31.0 31.3 31.0
Key issues to watch
Payout (%) 56.9 52.4 52.4 52.2
Valuations
Update on demand environment at retail level, channel inventory;
P/E (x) 25.1 21.0 17.7 15.3 outlook for FY17.
P/BV (x) 7.2 6.2 5.3 4.6 Ramp-up of Avenger and V-15.
EV/EBITDA (x) 16.3 13.9 11.5 10.0 Outlook for export demand and pricing, especially Nigerian
Div. Yield (%) 1.9 2.1 2.5 2.8 market (sharp currency depreciation); outlook for FY17.
Update on RE60 launch in export markets.

FY16 FY17 FY16E FY17
Volumes ('000 units) 1,013.0 1,056.6 951.5 872.1 994.7 1,031.9 995.5 1,035.2 3,893 4,057
Growth YoY (%) 2.5 0.1 -3.4 11.4 -1.8 -2.3 4.6 18.7 2.2 4.2
Realization (INR/unit) 55,273 57,712 58,486 61,490 57,784 58,362 59,529 60,514 58,274 59,055
Growth YoY (%) 4.0 2.2 1.8 1.5 4.5 1.1 1.8 -1.6 2.8 1.3
Net Sales 55,993 60,978 55,649 53,627 57,480 60,226 59,261 62,644 226,876 239,610
Change (%) 6.6 2.3 -1.6 13.2 2.7 -1.2 6.5 16.8 5.0 5.6
RM/Sales % 67.4 66.5 66.4 65.9 67.2 67.0 67.0 66.8 66.3 66.8
Staff cost/Sales % 4.3 4.0 4.1 3.8 4.7 4.7 4.7 4.4 4.0 4.6
Oth. Exp./Sales % 8.0 8.0 8.5 8.9 7.7 7.8 8.1 8.5 8.2 8.0
EBITDA 11,402 13,171 11,713 11,534 11,763 12,404 12,063 12,830 48,835 49,657
EBITDA Margins (%) 20.4 21.6 21.0 21.5 20.5 20.6 20.4 20.5 21.5 20.7
Other Income 3,063 1,526 1,997 2,569 2,671 3,440 2,850 2,904 10,736 11,864
Interest 1 3 3 4 2 2 3 2 11 9
Depreciation 784 780 746 761 775 785 815 832 3,072 3,207
PBT 13,680 13,915 12,961 13,338 13,657 15,057 14,096 14,899 56,488 58,306
Tax 4,106 4,584 3,947 3,844 3,873 4,291 4,017 4,265 17,328 16,447
Rep. PAT 9,574 9,331 9,013 9,493 9,784 10,766 10,078 10,634 39,161 41,859
Adj. PAT 9,574 9,331 9,013 9,493 9,784 10,766 10,078 10,634 39,124 41,262
Change (%) 29.4 12.0 4.7 52.7 2.2 15.4 11.8 12.0 28.4 5.5
October 2016 62
Bharat Forge
Bloomberg BHFC IN CMP: INR940 TP: INR1137 (+21%) Buy
We expect BHFCs shipment tonnage to decline 6.4% YoY to 51,062
M. Cap. (INR b)/(USD b) 219 / 3
tons, impacted by inventory destocking in the US truck market
(Class 8 trucks) and continued weakness in the export industrial
1,6,12 Rel Perf. (%) 9/-3/-6
business. Net realization is likely to dip ~9% YoY to ~INR186k/ton.
Net revenue would decline 15% YoY (+5% QoQ) to ~INR9.5b.
EBITDA margin is likely to decline 100bp YoY (+80bp QoQ) to
Y/E Mar 2016 2017E 2018E 2019E
27.8%, as negative operating leverage due to a decline in volumes
Sales 76.5 74.0 82.3 92.3
is likely to put pressure on margins (rise in staff and other
EBITDA 14.2 13.7 16.4 18.8
NP 6.6 6.4 8.7 10.6
expenses).
EPS (INR) 28.1 27.7 37.4 45.5
PAT is likely to decline ~21% YoY (+13% QoQ) to INR1.4b.
EPS Gr. (%) -10.9 -1.6 35.0 21.6 The stock trades at 33x FY17E and 24.4x FY18E EPS; maintain Buy.
BV/Sh. (INR) 153.6 171.6 197.0 230.4
RoE (%) 18.7 17.0 20.3 21.3 Key issues to watch
RoCE (%) 12.5 11.6 14.7 16.3 Outlook for US Class 8 Trucks for CY1617.
Valuations Outlook for oil & gas and mining segments, primarily with regard
P/E (x) 32.4 32.9 24.4 20.1 to price recovery.
P/BV (x) 5.9 5.3 4.6 4.0 Update on ramp-up of new orders under commercial vehicles,
EV/EBITDA (x) 16.4 16.5 13.4 11.2
PVs, aerospace and rail.
Consolidated
Update on Alstom JV plant and execution timeline for existing
and new orders.
Quarterly performance (INR Million)

Tonnage 51,984 54,559 50,741 52,413 49,098 51,062 51,317 54,026 209,697 205,503
Change (%) 5.8 3.8 -4.8 -7.5 -5.6 -6.4 1.1 3.1 -0.9 -2.0
Realization (INR '000/ton) 219.1 204.7 207.3 192.3 184.2 186.0 189.8 180.6 205.3 185.1
Change (%) 8.9 -5.5 -7.7 -10.9 -15.9 -9.1 -8.5 -6.1 -4.4 -9.8
Net operating income 11,388 11,168 10,520 10,080 9,044 9,500 9,738 9,756 43,054 38,039.0
Change (%) 15.3 -1.9 -12.2 -17.6 -20.6 -14.9 -7.4 -3.2 -11.6
RM/Sales (%) 34.1 36.5 34.2 35.9 34.4 34.5 35.0 35.3 35.5 34.8
Staff Cost (% of Sales) 8.2 8.2 9.0 9.2 10.1 9.7 10.0 10.4 8.6 10.1
Other Exp. (% of Sales) 26.4 26.5 26.6 25.3 28.5 28.0 27.0 26.1 26.1 27.4
EBITDA 3,566 3,215 3,173 2,982 2,444 2,638 2,726 2,748 12,830 10,555
EBITDA Margins (%) 31.3 28.8 30.2 29.6 27.0 27.8 28.0 28.2 29.8 27.7
Non-Operating Income 299 255 231 225 256 290 330 336 999 1,213
Interest 213 222 226 202 170 180 175 175 863 700
Depreciation 749 653 674 644 740 750 760 780 2,614 3,030
PBT 2,904 2,594 2,461 2,361 1,791 1,998 2,121 2,129 10,310 8,038
Adj. PAT 1,960 1,751 1,690 1,645 1,221 1,378 1,463 1,484 7,039 5,546
Change (%) 35.2 -1.3 -14.0 -18.9 -37.7 -21.3 -13.4 -9.8 -117.6 -21.2
E: MOSL Estimates
October 2016 63
Bosch
Bloomberg BOS IN CMP: INR22,851 TP: INR24,839 (+9%) Neutral
Net revenue is likely to grow ~3% YoY (+7% QoQ) to INR26.9b, led
M. Cap. (INR b)/(USD b) 718 / 11
by growth in the domestic business (Tractors). However, exports are
52-Week Range (INR) 25650/15753
likely to pull down overall growth.
1,6,12 Rel Perf. (%) -4/3/11
EBITDA margin should decline 60bp YoY (-120bp QoQ) to 16.7% on
Financial Snapshot (INR b) account of higher other expenses and lower exports.
Y/E Mar FY16 FY17E FY18E FY19E EBITDA is projected to remain flat YoY (flat QoQ) at ~INR4.5b.
Sales 98.8 110.0 136.6 159.8
Adjusted PAT is likely to grow 20% YoY to INR3.7b, boosted by
EBITDA 20.5 19.7 28.7 33.8
higher other income.
NP 17.1 16.0 22.3 27.4
EPS (INR) 545.9 508.6 709.7 871.9 We are cutting our EPS estimate for FY17 by ~3% and for FY18 by
EPS Gr. (%) 26.3 -6.8 39.5 22.9 6% on account of sluggish growth in exports.
BV/Sh. (INR) 2,639.8 3,021.3 3,553.5 4,207.4 The stock trades at 44.7x FY17E and 32x FY18E EPS; maintain
RoE (%) 21.9 18.0 21.6 22.5 Neutral.
RoCE (%) 29.0 25.5 30.6 30.8
P/E (x) 41.6 44.7 32.0 26.1 Rollout of BS-IV emission norms and implication on Boschs
P/BV (x) 8.6 7.5 6.4 5.4 revenue.
EV/EBITDA 34.0 34.7 23.3 19.4 Implementation of BS-VI norms for 2-wheelers and underlying
(x)
EV/Sales (x) 7.0 6.2 4.9 4.1 opportunity for Bosch.
Consolidated Advancement of BS-VI implementation and its impact on Bosch.
Capex plans for FY17.

Y/E March FY16 FY17 FY16 FY17E
Net Sales 23,012 26,184 27,406 24,672 25,196 26,970 29,872 27,940 96,819 109,978
YoY Change (%) -3.2 2.5 15.1 3.3 9.5 3.0 9.0 13.2 -0.4 13.6
RM Cost (% of sales) 52.0 52.8 52.6 50.7 51.8 52.5 52.2 50.5 51.3
Staff Cost (% of sales) 12.4 13.7 14.2 13.8 12.9 13.0 14.0 13.7 13.5
Other Expenses (% of sales) 14.6 16.2 20.5 13.1 17.4 17.8 20.0 12.4 16.1
EBITDA 4,827 4,522 3,474 5,507 4,511 4,504 4,122 6,536 18,439 19,674
Margins (%) 21.0 17.3 12.7 22.3 17.9 16.7 13.8 23.4 19.0 17.9
Depreciation 704 837 1,115 1,177 860 1,050 1,150 1,195 3,722 4,254
Interest 15 18 28 14 13 16 19 22 99 70
Other Income 1,408 932 882 1,779 1,789 1,800 1,900 1,978 6,227 7,467
PBT after EO Expense 5,497 4,599 3,213 6,281 5,466 5,238 4,853 7,297 21,035 22,816
Tax Rate (%) 31.6 33.6 31.3 21.9 30.7 30.0 30.0 29.3 27.2 30.0
Reported PAT 3,757 3,054 2,208 4,906 3,787 3,667 3,397 5,158 15,315 15,971
Adj PAT 3,770 3,054 2,208 4,761 3,761 3,667 3,397 5,158 15,176 15,971
YoY Change (%) 22.9 -0.3 70.1 65.6 -0.3 20.1 53.9 8.4 11.8 5.2
E: MOSL Estimates
October 2016 64
Eicher Motors
Bloomberg EIM IN
CMP: INR25,773 TP: INR28,807 (+12%) Buy
M. Cap. (INR b)/(USD b) 700 / 11 Royal Enfields volume growth moderated to 31% YoY (+13% QoQ)
52-Week Range (INR) 26602/14818 to 166,941 units. Net realization is expected to remain flat QoQ
1,6,12 Rel Perf. (%) 14/22/33 (+4% YoY), supported by rising share of exports. EBITDA margin
should expand 330bp YoY to 31.1% (+30bp QoQ), driven by lower
commodity prices.
Y/E March FY16* FY17E FY18E FY19E VECVs volume grew 15% YoY (-17% QoQ). Net realization should
Net Income 61.7 70.9 88.4 104.8
decline by 6% YoY (+10% QoQ). Margin is expected to reach 7.7%,
EBITDA 16.9 22.1 28.1 32.9
up 40bp YoY (-140bp QoQ).
Net Profit 13.4 17.1 23.5 28.5
Consolidated revenue would decline ~43% YoY (+14% QoQ) to
Adj. EPS (INR) 492.9 630.7 865.8 1,048.4
INR17.7b. Consolidated margin is likely to be 31.1%. Consolidated
EPS Gr. (%) 73.7 60.0 37.3 21.1
BV/Sh. (INR) 1,275.5 1,766.0 2,462.1 3,314.2
PAT is estimated to rise 58% YoY (+7% QoQ) to INR3.8b.
RoE (%) 35.8 41.5 41.0 36.3 The stock trades at 33x FY17E and 23.6x CY18E EPS. Maintain Buy.
RoCE (%) 21.3 27.1 29.2 27.5
Payout (%) 0.4 0.5 0.6 0.7
P/E (x) 52.3 40.9 29.8 24.6 Update on demand and waiting period for Royal Enfield.
P/BV (x) 20.2 14.6 10.5 7.8 New launches and timelines under Royal Enfield business.
EV/EBITDA (x) 32.5 25.3 19.2 15.6 Update on current demand trends for commercial vehicles,
Div. Yield (%) 0.4 0.5 0.6 0.7 discount levels and channel inventory.
*15m ended.
Quarterly Performance (Based on Ind-AS) (INR Million)

(Consolidated) FY16 (15m) FY17 FY16 FY17E
Y/E December 2Q 3Q * 4Q * 5Q 1Q 2QE 3QE 4QE (15m)
Net operating income 10,959 31,225 33,166 15,322 15,557 17,713 18,300 19,361 61,735 70,931
EBITDA Margins (%) 26.1 15.8 15.6 29.5 30.2 31.1 31.2 32.2 51.6 43.8
Recurring PAT 2,372 2,555 2,708 3,599 3,763 4,040 4,323 5,005 28,347 26,033
Growth (%) 50.7 54.8 76.1 84.3 58.6 58.1 59.6 39.1 23.1 14.8
Standalone (Royal Enfield)
Royal Enfield (units) 106,613 127,611 125,744 148,186 147,483 166,941 171,500 181,000 600,175 666,924
Growth (%) 43.8 55.7 52.9 61.0 38.3 30.8 36.4 22.1 58.7 38.9
Net Realn (INR/unit) 102,791 101,968 102,103 104,258 105,603 106,103 106,703 106,869 103,073 106,355
Change - YoY (%) 2.1 1.8 1.4 -0.2 2.7 4.1 4.5 2.5 2.9 3.2
EBITDA Margins (%) 26.1 27.7 28.6 29.6 30.8 31.1 31.2 31.7 27.6 31.2
Recurring PAT 1,988 2,285 2,450 3,977 3,371 3,792 3,941 5,465 13,095 16,569
Growth (%) 49.2 62.1 97.5 86.3 69.6 66.0 60.8 37.4 288.6 58.2
VECV (derived)
Total CV Volumes 12,128 11,657 12,692 15,553 16,071 13,408 14,556 18,973 63,050 63,008
Growth (%) 6.3 20.8 30.2 41.1 32.5 15.0 14.7 22.0 23.7 24.9
Net Realn (INR
'000/unit) 1,471.8 1,562.4 1,601.6 1,427.3 1,331.0 1,464.1 1,478.7 1,541.0 1,526.4 1,456.7
Change - YoY (%) 12.0 3.7 6.5 -2.1 -9.6 -6.3 -7.7 8.0 8.1 -4.6
EBITDA Margins (%) 8.2 7.3 7.4 8.0 9.1 7.7 8.7 10.4 7.9 9.1
Recurring PAT 773 573 657 830 1,080 685 932 1,753 3,817 4,450
Growth (%) 70.7 27.1 15.4 90.3 39.6 19.6 41.9 111.3 -40.6 45.7
E: MOSL Estimates; * Non-IndAS based
October 2016 65
Escorts
Bloomberg ESC IN CMP: INR407 TP: INR421 (+3%) Buy
We expect ~21% YoY growth (-7.7% QoQ) in revenue (on a very low
M. Cap. (INR b)/(USD b) 49 / 1
base) to INR9.7b.
1,6,12 Rel Perf. (%) 24/180/157
EBITDA margin is likely to expand 370bp YoY to 7.4%, translating
into EBITDA growth of 143% YoY to INR718m.
Financial Snapshot (INR b) We expect PAT to grow 154% YoY to INR433m.
Y/E March 2015 2016 2017E 2018E Tractors volume growth has been healthy at 21% YTD, with 35% YoY
Sales 35.4 35.4 39.6 44.7
growth in 2QFY17.
EBITDA 1.5 1.5 2.6 3.8
NP 0.9 0.9 1.5 2.5
EPS (INR) 11.1 11.1 18.3 30.0
EPS Gr. (%) -16.6 -16.6 64.9 63.7
BV/Sh. (INR) 184.3 184.3 193.6 218.4
RoE (%) 6.1 6.1 9.7 14.6
RoCE (%) 7.4 7.4 9.7 14.1
P/E (x) 36.6 36.6 22.2 13.6 Revision in guidance for tractors business.
P/BV (x) 2.2 2.2 2.1 1.9 Updates on VRS planned.
EV/EBITDA (x) 21.9 21.9 12.1 7.9 Outlook for construction equipment business.
EV/Sales (x) 0.9 0.9 0.8 0.7
Standalone Quarterly Performance (INR Million)

Net Sales 9,614 8,017 8,881 8,047 10,514 9,700 10,035 8,933 34,559 39,182
YoY Change (%) -14.8 -19.2 -15.1 -1.6 9.4 21.0 13.0 11.0 -13.3 13.4
Total Expenditure 9,039 7,721 8,540 7,659 9,636 8,982 9,273 8,423 32,959 36,315
EBITDA 576 295 341 388 878 718 763 509 1,600 2,867
Margins (%) 6.0 3.7 3.8 4.8 8.3 7.4 7.6 5.7 4.6 7.3
Depreciation 161 155 149 137 145 172 195 205 601 717
Interest 158 111 112 152 112 110 92 92 534 406
Other Income 118 148 131 187 104 150 142 149 584 545
PBT before EO expense 374 177 212 287 725 586 618 361 1,049 2,290
Extra-Ord expense 0 9 -1 131 63 400 80 70 140 613
PBT 374 168 212 155 662 186 538 291 910 1,677
Tax 22 6 7 -9 192 48 140 73 27 453
Rate (%) 6.0 3.5 3.4 -5.7 29.1 26.0 26.0 25.0 2.9 27.0
Reported PAT 352 162 205 164 470 137 398 218 883 1,223
Adj PAT 352 171 204 303 514 433 457 271 1,019 1,671
YoY Change (%) 3.1 -317.1 -42.8 137.7 46.2 154.0 123.7 -10.6 36.4 64.0
Margins (%) 3.7 2.1 2.3 3.8 4.9 4.5 4.6 3.0 2.9 4.3
E: MOSL Estimates
October 2016 66
Exide Industries
Bloomberg EXID IN CMP: INR188 TP: INR230 (+25%) Buy
We expect net revenue to grow 12% YoY (-3% QoQ) to INR19.5b on
M. Cap. (INR b)/(USD b) 160 / 2
the back of robust OEM demand (4Ws and 2Ws).
1,6,12 Rel Perf. (%) 2/22/16 EBITDA margin is likely to expand 110bp YoY (+20bp QoQ) to 15.9%
due to lower RM costs (spot lead prices declined in 1QFY17 QoQ).
Financial Snapshot (INR b) EBITDA is estimated to increase 20% YoY (-2% QoQ) to ~INR3.1b.
Y/E MARCH 2015 2016 2017E 2018E
PAT is likely to grow by 24% YoY (-1.5% QoQ) to INR1.9b.
Net Sales 68.7 68.1 76.9 87.7
EBITDA 9.1 10.2 12.2 13.9 The stock trades at 20.5x FY17E and 17.6x FY18E EPS; maintain Buy.
Adj. PAT 5.5 6.2 7.6 8.8
Adj. EPS (INR) 6.4 7.3 8.9 10.4
EPS Gr. (%) 12.1 14.1 21.8 16.4 Key issues to watch
BV/Sh. (INR) 47.7 52.2 58.5 66.3 Update on demand environment for OEMs, auto replacement and
RoE (%) 13.5 14.0 15.3 15.7
industrial battery segments.
RoCE (%) 14.0 14.5 15.8 16.4
Update on market share in autos and non-autos.
Payout (%) 34.3 32.8 24.7 21.2
Outlook for raw material cost trend, recent pricing action and
Valuations
currency hedges, if any.
P/E (x) 28.5 25.0 20.5 17.6
P/BV (x) 3.8 3.5 3.1 2.8
Update on technological upgradation.
EV/EBITDA (x) 15.0 12.7 10.6 9.1 Update on capacity expansion plans across product segments.
Div. Yield (%) 1.2 1.3 1.2 1.2
S/A Quarterly Performance (INR Million)

Net Sales 18,064 17,364 15,211 17,605 20,081 19,456 17,352 20,051 68,092 76,941
Growth YoY (%) -5.4 -1.3 -2.2 7.0 11.2 12.0 14.1 13.9 -0.8 13.0
RM (%) 64.2 64.5 62.2 61.0 62.4 62.3 62.0 62.1 64.1 62.2
Employee cost (%) 6.1 6.7 7.9 7.0 6.4 6.8 7.9 7.3 7.0 7.1
Other Exp(%) 15.1 13.9 14.5 17.0 15.5 15.0 14.5 14.4 14.0 14.9
EBITDA 2,655 2,574 2,343 2,652 3,150 3,100 2,708 3,263 10,171 12,220
EBITDA Margin(%) 14.7 14.8 15.4 15.0 15.7 15.9 15.6 16.2 14.9 15.9
Change (%) -8.8 23.9 30.0 11.3 18.7 20.4 15.6 23.0 11.3 20.1
Non-Operating Income 31 84 75 226 143 165 175 183 497 666
Interest 2 0 1 0 17 5 5 3 3 30
Depreciation 362 383 406 439 491 500 505 523 1,602 2,019
PBT after EO Exp 2,322 2,275 2,011 2,439 2,784 2,760 2,373 2,920 9,063 10,837
Adj. PAT 1,557 1,561 1,339 1,776 1,961 1,932 1,661 2,032 6,228 7,586
Change (%) -16.0 24.1 37.8 29.1 25.9 23.8 24.0 14.4 14.1 21.8
E: MOSL Estimates
October 2016 67
Hero MotoCorp
Bloomberg HMCL IN CMP: INR3,523 TP: INR3,811 (+8%) Neutral
Sales volumes grew 16% YoY (+4% QoQ) to 1.82m units, led by
M. Cap. (INR b)/(USD b) 704 / 11
strong growth from the rural market on the back of normal
monsoon.
1,6,12 Rel Perf. (%) -1/8/38
Realization is expected to decline 1% YoY (+1% QoQ) to INR42.815
Financial Snapshot (INR b) per unit as the share of scooter and entry-level motorcycle
Y/E March 2016 2017E 2018E 2019E increased YoY.
Sales 284.4 317.9 368.0 409.3 Net revenue is likely to grow 16% YoY (~+7% QoQ) to INR79.2b.
EBITDA 44.6 51.9 61.8 63.5 EBITDA margin is expected to expand 70bp YoY (-10bp QoQ) to
NP 31.6 37.0 44.5 46.7 16.5% on lower raw material costs and benefit of operating
Adj. EPS (INR) 158.3 185.4 223.0 233.9
leverage.
EPS Gr. (%) 26.6 17.1 20.3 4.9
BV/Sh. (INR) 397.8 486.8 601.3 726.8
EBITDA is likely to grow 21% YoY (+6% QoQ) to ~INR13.0b.
RoE (%) 43.6 41.9 41.0 35.2 We expect PAT to increase 22% YoY (+7% QoQ) to INR9.4b.
RoCE (%) 42.9 40.9 40.2 34.6 The stock trades at 19x FY17E and 15.8x FY18E EPS; Neutral.
Payout (%) 52.3 49.6 46.4 44.2
P/E (x) 22.3 19.0 15.8 15.1 Update on demand environment (especially rural areas) at retail
P/BV (x) 8.9 7.2 5.9 4.8 level, channel inventory.
EV/EBITDA (x) 14.8 12.4 10.2 9.6 Performance of scooters and impact on HMCLs market share.
Div. Yield (%) 2.0 2.3 2.6 2.6 Guidance on export plans and new launches along with timelines.
Update on cost-saving initiatives.

Total Volumes ('000 nos) 1,646 1,575 1,690 1,722 1,745 1,823 1,865 1,940 6,632 7,374
Growth YoY (%) -4.1 -7.0 2.5 9.3 6.1 15.8 10.3 12.7 0.0 11.2
Net Realization 41,960 43,414 43,159 43,595 42,391 43,446 43,552 43,015 42,886 43,110
Growth YoY (%) 2.3 6.3 4.0 1.1 1.0 0.1 0.9 -1.3 3.1 0.5
Net Op Revenues 69,048 68,371 72,948 75,052 73,989 79,223 81,225 83,450 284,427 317,887
Change (%) -1.9 -1.1 6.7 10.5 7.2 15.9 11.3 11.2 3.1 11.8
RM Cost (% sales) 69.7 68.2 66.9 66.0 67.1 67.5 67.0 67.0 67.9 67.2
Staff Cost (% sales) 4.5 4.5 4.7 4.7 4.5 4.4 4.7 4.7 4.6 4.6
Other Exp (% sales) 10.7 11.4 12.7 13.4 11.7 11.6 12.0 12.4 11.8 11.9
EBITDA 10,420 10,834 11,399 11,919 12,301 13,088 13,268 13,230 44,603 51,886
EBITDA Margins (%) 15.1 15.8 15.6 15.9 16.6 16.5 16.3 15.9 15.7 16.3
Other Income 1,044 1,026 842 1,168 1,204 1,200 1,150 1,196 4,229 4,750
Interest 12 5 6 12 15 10 8 12 49 45
Depreciation 1,030 1,091 1,139 1,155 1,152 1,200 1,400 1,401 4,414 5,153
PBT 10,422 10,764 11,096 11,920 12,337 13,078 13,010 13,014 44,369 51,438
Adj. PAT 7,475 7,721 7,958 8,347 8,831 9,416 9,367 9,410 31,615 37,024
Growth (%) 32.8 1.1 36.5 32.2 18.1 22.0 17.7 12.7 24.4 17.1
E: MOSL Estimates
October 2016 68
Mahindra & Mahindra

Bloomberg MM IN CMP: INR1,443 TP: INR1,693 (+17%) Buy
Overall volumes grew ~17% YoY (-4% QoQ), driven by 36% YoY
M. Cap. (INR b)/(USD b) 896 / 13
growth in tractors, while UVs supported with 13% YoY growth. New
launches contributed to incremental growth in UVs
1,6,12 Rel Perf. (%) -1/9/8
MM (including MVML)s realization would be flat YoY (+1% QoQ), as
better product mix due to an increase in share of tractors is offset
by a rise in lower-ASP compact UVs.
Y/E March 2015 2016 2017E 2018E
Revenue is likely to grow ~17% YoY (-2% QoQ) to ~INR102.6b.
Sales 431.2 436.4 491.2 575.0
EBITDA margin is expected to remain unchanged YoY (-110bp QoQ)
EBITDA 47.2 45.9 51.5 64.6
NP (incl. MVML) 38.6 32.9 38.1 49.4
at 13.2%.
Adj. EPS (INR) * 64.5 55.0 63.7 82.5 PAT is projected to grow 12% YoY (+22% QoQ) to INR10.9b.
EPS Gr. (%) 8.9 4.2 15.7 29.7 We are lowering our consolidated EPS estimate for FY17 and FY18
Cons. EPS (INR) 72.7 53.6 70.9 95.9 by 3% to factor in lower-than-estimated UV volumes.
BV/Sh. (INR) 284.4 366.3 408.7 465.2 The stock trades at 22.7x FY17E and 17.5x FY18E EPS; Maintain Buy.
RoE (%) 23.6 15.4 15.1 17.5
RoCE (%) 18.7 12.6 12.6 14.8 Key issues to watch
Payout (%) 25.7 26.3 33.9 30.4
Outlook for UV and tractor businesses.
Valuations
Product pipeline for FY17.
P/E (x) 22.4 26.2 22.7 17.5
Update on smaller businesses like two-wheelers, commercial
Cons. P/E (x) 19.9 26.9 20.3 15.0
vehicles, Ssangyong, etc.
P/BV (x) 5.1 3.9 3.5 3.1
EV/EBITDA (x) 17.9 18.5 16.3 12.8
Div. Yield (%) 1.0 1.0 1.2 1.4
* incl. MVML
Quarterly Performance (incl MVML, INR m)

Total Volumes (nos) 171,925 158,601 193,554 183,339 192,170 185,156 197,203 212,660 707,689 802,030
Growth YoY (%) -8.1 -10.3 11.8 13.4 11.8 16.7 1.9 16.0 1.3 13.3
Net Realization 549,491 554,454 540,708 554,175 547,674 554,426 545,670 550,742 549,064 539,419
Growth YoY (%) 4.8 8.4 1.1 -1.8 -0.3 0.0 0.9 -0.6 3.8 -1.8
Net Op. Income 94,471 87,937 104,656 101,602 105,247 102,655 107,608 117,121 388,566 432,631
Growth YoY (%) -3.8 -2.8 13.0 11.4 11.4 16.7 2.8 15.3 5.1 11.3
RM Cost (% of sales) 68.0 67.6 68.4 68.7 68.4 68.9 68.9 68.9 68.2 68.8
Staff (% of sales) 7.0 7.3 6.7 5.6 6.8 6.9 6.1 6.3 6.6 6.5
Oth. Exp. (% of Sales) 10.8 11.9 11.4 13.2 10.7 11.0 10.8 11.3 11.8 11.1
EBITDA 13,450 11,626 14,138 12,694 14,885 13,518 15,359 15,029 51,988 58,791
EBITDA Margins (%) 14.2 13.2 13.5 12.5 14.1 13.2 14.3 12.8 13.4 13.6
Interest 562 577 554 637 428 450 440 508 2,329 1,826
Depreciation 2,544 2,830 3,328 3,782 3,484 3,550 3,625 3,807 12,484 14,467
PBT 11,454 13,104 11,185 9,321 13,179 14,818 12,444 12,096 45,144 52,537
Reported PAT 8,299 9,781 8,205 6,614 9,616 10,965 9,185 9,011 32,978 38,776
Adj PAT 8,299 9,781 8,205 6,572 8,952 10,965 9,185 9,011 32,935 38,105
Change (%) -7.4 0.4 15.1 17.6 8.0 12.1 11.9 37.1 4.2 15.7
E: MOSL Estimates
October 2016 69
Maruti Suzuki
Bloomberg MSIL IN CMP: INR5,682 TP: INR6,416 (+13%) Buy
Volumes grew ~18% YoY (+20% QoQ) in 2QFY17 to ~418,470 units,
M. Cap. (INR b)/(USD b) 1,716 / 26
primarily led by incremental volumes of new launches (Brezza and
52-Week Range (INR) 5,707/3,202
Baleno) as well as growth in the mid-size segment.
1,6,12 Rel Perf. (%) 11/41/16
Net realization is likely to improve 9.7% YoY (+1% QoQ) to
INR432,684 per unit, boosting net revenue by 30% YoY (+21% QoQ)
to INR181.1b. Growth in realization is likely to be driven by newly
Y/E MARCH 2016 2017E 2018E 2019E
launched compact UV, Vitara Brezza, and premium hatchback,
Sales 576.5 686.4 820.9 941.7
EBITDA 89.0 103.3 128.7 146.8
Baleno.
Adj. PAT 53.7 69.1 91.0 107.8 We expect margin to contract 110bp YoY (+40bp QoQ) to 15.2% on
EPS (INR) 155.5 233.8 306.8 362.8 account of higher RM costs due to adverse FX movement YoY.
EPS Gr. (%) 23.4 50.3 31.2 18.2 EBITDA is estimated to grow 21% YoY (+24% QoQ) to INR27.4b.
BV/Sh. (INR) 894.0 1,068.61,297.7 1,570.3 We expect PAT to grow 29% YoY (+24% QoQ) to INR18.4b.
RoE (%) 19.9 21.4 23.2 22.7 We are raising our EPS estimate by ~7% for FY17 to ~INR238 and by
RoCE (%) 27.2 29.0 31.1 30.0 11.5% for FY18 to ~INR307 to factor in higher EBITDA growth.
Payout (%) 23.7 23.7 23.9 23.6 The stock trades at 24.3x FY17E and 18.5x FY18E EPS. Maintain Buy.
Valuations
P/E (x) 36.5 24.3 18.5 15.7 Key issues to watch
P/CE (x) 22.8 17.7 14.3 12.3 Update on retail demand scenario, channel inventory, discounting
EV/EBITDA (x) 17.3 14.5 11.1 9.2 trends.
Div. Yield (%) 0.6 0.8 1.1 1.2 Update on new launches in 2HFY17 (Ignis).
*Consol. & adjusted Guidance on FY17 volume growth, margins, forex hedges, and
localization efforts.
Progress on commissioning of Gujarat plant.
Quarterly Performance (INR m)

Total Volumes (nos) 341,329 353,335 374,182 360,354 348,443 418,470 401,750 421,273 1,429,200 1,589,936
Change (%) 13.8 9.8 15.5 3.9 2.1 18.4 7.4 16.9 10.6 11.2
Realizations (INR/car) 391,907 394,348 403,063 424,743 428,400 432,684 432,684 432,646 403,394 431,735
Change (%) 2.8 3.1 3.6 8.1 9.3 9.7 7.3 1.9 4.3 7.0
Net operating revenues 133,769 139,337 150,819 153,058 149,273 181,065 173,831 182,262 576,530 686,431
Change (%) 17.1 13.1 19.7 12.3 11.6 29.9 15.3 19.1 15.4 19.1
RM Cost (% of sales) 67.4 66.8 68.5 66.0 67.8 68.5 68.5 67.7 67.4 68.1
Staff Cost (% of sales) 3.5 3.0 3.3 3.9 3.9 3.2 3.5 3.6 3.4 3.5
Other Cost (% of sales) 12.9 13.9 13.8 14.8 13.4 13.1 13.2 13.4 13.8 13.3
EBITDA 21,673 22,694 21,701 23,501 22,157 27,464 25,757 27,900 88,962 103,278
EBITDA Margins (%) 16.2 16.3 14.4 15.4 14.8 15.2 14.8 15.3 15.4 15.0
Non-Operating Income 2,065 3,371 4,065 5,109 4,833 4,500 4,650 4,750 14,610 18,733
Interest 190 178 244 203 181 200 200 219 815 800
Depreciation 6,716 6,694 7,221 7,608 6,389 6,400 6,750 6,737 28,239 26,276
PBT 16,832 19,193 18,301 20,798 20,420 25,364 23,457 25,694 74,518 94,935
PAT 12,081 14,256 13,943 15,233 14,862 18,452 17,065 18,686 53,654 69,065
Adjusted PAT 12,081 14,256 13,943 15,233 14,862 18,452 17,065 18,686 53,654 69,065
Change (%) 58.5 65.3 68.2 18.6 23.0 29.4 22.4 22.7 44.6 28.7
E:MOSL Estimates
October 2016 70
Tata Motors
Bloomberg TTMT IN CMP: INR541 TP: INR655 (+21%) Buy
We expect JLRs (including JV) volumes to grow 18% YoY (+3% QoQ).
M. Cap. (INR b)/(USD b) 1836 / 28
Net realization is expected to rise 4% YoY (flat QoQ), with
52-Week Range (INR) 599/266 improvement in product mix. EBITDA margin would increase 270bp
1,6,12 Rel Perf. (%) -1/31/74 YoY (+260bp QoQ) to 14.9%. Adjusted PAT is likely to surge ~628%
YoY (and ~42% QoQ) to GBP376m.
Financial Snapshot (INR b) S/A volumes grew 15% YoY (+6.3% QoQ), led by a 9% YoY increase
Y/E March 2015 2016 2017E 2018E (flat QoQ) in commercial vehicles. PV volumes increased 30% YoY
Net Sales 2,631.6 2,755.6 2,910.7 3,275.0 on the back of newly launched Tiago. Margin is likely to rise 80bp
EBITDA 421.1 402.4 430.8 498.8 YoY (+90bp YoY) to 6.6%, driven by operating leverage. Adjusted
NP 140.5 125.2 151.6 188.6 PAT should decline 27% YoY to INR(1.37b) (vis--vis INR(1.9b) in
Adj. EPS (INR) 43.6 36.9 44.6 55.5 2QFY16).
EPS Gr. (%) -1.1 -15.5 21.1 24.4 Consolidated PAT would rise 475% YoY (+67% QoQ) to INR31.6b.
BV/Sh. (INR) 174.8 237.9 281.5 333.8 We upgrade our consolidated EPS estimate by 4% in FY17 to factor
RoE (%) 23.1 18.3 17.2 18.0 in stronger EBITDA margins for JLR.
RoCE (%) 15.7 14.3 12.3 13.2 The stock trades at 12.1x FY17E and 9.7x FY18E EPS. Buy.
Payout (%) 0.0 0.7 8.1 8.7
Valuations
P/BV (x) 3.1 2.3 1.9 1.6 Impact of Brexit on JLR business.
EV/EBITDA (x) 4.6 4.8 4.6 3.8 Current demand trends for JLR and outlook, particularly in China
Div. Yield (%) 0.0 0.0 0.6 0.7
and the US.
Update on Chery JV operations and CV business outlook.
(Consolidated) 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
JLR vols. (incl JV) 114,452 116,745 150,461 162,427 134,334 138,192 166,500 188,315 544,085 627,341
JLR Realizations (GBP/unit) 45,206 43,460 42,004 43,991 45,216 45,171 45,848 45,127 43,602 45,346
JLR EBITDA (%) 16.4 12.2 14.4 16.2 12.3 14.9 16.0 16.2 14.9 15.0
JLR PAT (GBP m) 492 52 414 560 265 376 571 661 1584 1872
S/A vol. (units) 117,160 117,439 122,377 146,766 126,839 134,869 136,600 170,845 511,712 569,153
S/A Realizations (INR/unit) 795,852 894,173 817,198 856,454 813,594 829,866 842,314 891,147 2 11
S/A EBITDA (%) 6.1 6.8 5.7 8.1 6.7 7.6 7.4 8.9 6.5 7.8
S/A PAT (INR m) 333 -1,870 -395 5,014 996 -1,372 898 2,760 -1,629 3,631
Net Op Income 604,009 613,182 722,564 806,844 658,950 630,745 749,724 871,242 2,755,611 2,910,661
Growth (%) -6.6 1.1 3.3 19.4 9.1 2.9 3.8 8.0 4.7 5.6
EBITDA 110,068 68,804 93,800 113,872 76,129 92,151 116,085 110,930 365,160 395,294
EBITDA Margins (%) 18.2 11.2 13.0 14.1 11.6 14.6 15.5 12.7 13.3 13.6
Interest Expenses 11,496 11,594 10,915 12,552 11,694 7,000 6,500 10,950 46,234 36,145
PBT before EO Exp 63,398 15,383 41,300 59,567 20,663 38,751 61,385 59,159 158,602 179,958
EO Exp/(Inc) -6,338 26,529 -457 -6,044 -4,851 0 0 0 18,794 -4,851
PBT after EO Exp 69,736 -11,146 41,757 65,611 25,514 38,751 61,385 59,159 139,809 184,809
Tax 16,485 -7,036 6,513 13,546 7,200 10,718 16,979 12,025 28,726 46,922
Tax rate (%) 23.6 63.1 15.6 20.6 28.2 27.7 27.7 20.3 20.5 25.4
PAT 53,251 -4,111 35,244 52,065 18,314 28,032 44,406 47,135 111,083 137,887
Minority Interest -232 -226 -204 -383 -240 -250 -175 -316 -1,059 -982
Share in profit of Associate -708 39 36 89 4,290 3,785 4,604 5,593 213 18,272
Reported PAT 52,310 -4,298 35,075 51,771 22,364 31,568 48,835 52,411 110,238 155,177
Adj PAT 47,470 5,486 34,690 46,975 18,882 31,568 48,835 52,411 125,170 151,558
Growth (%) (10.9) (83.3) (10.2) 158.4 (60.2) 475.4 40.8 11.6 -11.3 21.1
E: MOSL Estimates
October 2016 71
TVS Motor Company

Bloomberg TVSL IN CMP: INR378 TP: INR463 (+23%) Buy
Total volume grew 20% YoY (+14% QoQ) to 815,562 units.
M. Cap. (INR b)/(USD b) 179 / 3
Motorcycle volumes grew 30% YoY, led by newly launched Victor
1,6,12 Rel Perf. (%) 15/4/57
and robust performance of its premium motorcycle Apache.
Scooter volumes grew 5% YoY (+17% QoQ), while moped volumes
surged 35% YoY (+5% QoQ) on the back of normal monsoon leading
Y/E March to improved sentiment.
2016 2017E 2018E 2019E
Net realization is likely to remain flat YoY (+5% QoQ) at INR42,133
Sales 112.4 131.8 156.6 182.2
EBITDA 7.5 10.0 13.4 16.7
per unit. As a result, net sales would grow 19% YoY to ~INR34b
Adj. PAT 4.3 6.0 8.6 10.8 driven by volume growth.
EPS (INR) 9.1 12.7 18.0 22.8 Margin should expand 50bp YoY (+90bp QoQ) to 7.9%, driven by
EPS Gr. (%) 24.2 39.5 41.8 26.5 benefit of operating leverage and moderation in marketing spends.
BV/Sh (INR) 40.8 50.2 64.5 83.7 We expect PAT to increase ~40% YoY (+35% QoQ) to INR1.6b.
RoE (%) 24.1 27.9 31.4 30.7 We are upgrading our EPS estimates for FY17 by 4% and for FY18 by
RoCE (%) 23.3 28.9 33.1 33.6 12% to factor in higher volume growth and improvement in
Payout (%) 33.7 26.0 20.0 15.8 margins.
Valuations The stock trades at 29.8x FY17E and 21x FY18E EPS; maintain Buy.
P/BV (x) 9.3 7.5 5.9 4.5 Guidance on capex and margins.
EV/EBITDA (x) 24.9 18.1 13.1 12.0 Launch of motorcycle with BMW in 4QFY17.
Div. Yield (%) 0.7 0.7 0.8 0.8
S/A Quarterly Performance (INR Million)

Y/E March FY16 FY17
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE FY16 FY17E
Volumes (units) 638,033 678,749 702,109 659,447 717,964 815,562 786,500 821,813 2,678,338 3,141,839
Growth (%) 9.2 0.4 7.1 9.4 12.5 20.2 12.0 24.6 6.3 17.3
Realization (INR/unit) 40,344 42,442 41,868 42,693 40,127 42,133 43,397 41,965 41,981 41,947
Growth (%) 2.2 7.0 3.5 4.8 (0.5) (0.7) 3.7 (1.7) 5.3 (0.1)
Net Sales 25,741 28,807 29,396 28,154 28,809 34,362 34,132 34,487 112,439 131,790
Growth (%) 11.7 7.4 10.8 14.6 11.9 19.3 16.1 22.5 12.0 17.2
RM(% of sales) 73.0 71.3 71.6 70.2 72.6 72.5 72.0 71.8 71.4 72.2
Emp cost( % of sales) 6.0 5.8 6.0 5.8 6.3 5.6 5.6 5.6 5.9 5.8
Other exp(% of sales) 14.2 15.6 15.7 17.6 14.2 14.0 14.7 15.1 16.0 14.5
EBITDA 1,728 2,119 1,966 1,785 2,004 2,715 2,628 2,604 7,507 9,950
EBITDA Margin(%) 6.7 7.4 6.7 6.3 7.0 7.9 7.7 7.5 6.7 7.6
Interest 130 102 100 131 98 95 85 75 462 353
Depreciation 504 466 493 518 660 650 670 650 1,898 2,629
Other Income 210 57 117 243 362 250 275 293 513 1,180
PBT before EO Exp 1,304 1,609 1,490 1,380 1,608 2,220 2,148 2,173 5,660 8,148
EO Exp 0 0 132 0 0 0 0 0 0 0
PBT after EO Exp 1304 1609 1358 1380 1608 2220 2148 2173 5,660 8148
Tax rate (%) 23.2 27.7 27.7 14.7 24.6 26.4 26.4 26.2 23.6 26.0
Reported PAT 1,001 1,164 945 1,178 1,213 1,634 1,581 1,603 4,321 6,030
Adjusted PAT 1,001 1,164 1,077 1,178 1,213 1,634 1,581 1,603 4,321 6,030
Growth (%) 38.4 22.8 19.4 30.1 21.2 40.3 46.8 36.1 24.2 39.5
October 2016 72
September
March2016
2016Results
2015 ResultsPreview
Preview ||Sector:
September Sector:Capital
2016 Results Goods
CapitalPreview
Goods
Technology
Capital Goods
Guarded optimism
Company name
Successful implementation of structural reforms to help commence
ABB investment cycle
Bharat Electronics Domestic investment cycle: Guarded optimism, exports hamstrung by weak
BHEL global demand
Crompton Greaves Improved business confidence following economic activity revival in India has
created favorable conditions to restart the investment cycle, in our view. However,
Crompton Greaves Consumer
the near-term outlook continues to remain cautious, given challenges such as
Cummins India restrained capex activity by private players. Policy initiatives and efforts are
GE T&D underway for: i) expediting government approvals and ii) establishing monetary
conditions conducive to industrial revival in the medium term.
Havells India
We believe investment revival would be triggered by: i) sustained recovery in
Larsen & Toubro consumption demand and thus capacity utilization and ii) investment push by
Siemens the public sector, leading to a virtuous cycle of cash flow generation in the
Thermax system. Simultaneously, sustained progress in reviving stalled projects is
imperative for attracting new investments and providing the much-needed
Voltas
stimulus to aggregate demand.
By initiating GST, labor and energy sector reforms, the government has partly
addressed concerns about the pace and extent of reforms. Successful
implementation of substantive reforms is essential for structured investment
growth.
Indian machinery exports have decelerated due to factors such as weak global
demand, geopolitical concerns and sharp currency volatility across several
markets. Also, falling crude prices had an adverse impact on global trade and
thus investment demand. Project awards in the Middle East have been muted
in fact, revenue estimates for global industrial players suggest that sluggishness
has continued for around nine quarters.
Make in India: A serious initiative; equipment manufacturers to be key

beneficiaries
Make in India is the central governments initiative to improve the manufacturing
sectors contribution through import substitution and increased exports. The intent
is to ensure that customers in the public and private sectors increasingly procure
equipment manufactured locally. Power Grid also announced its full commitment to
this initiative and has mandated T&D players to manufacture certain components in
India for orders tendered out in key high-end technology products such as
SVC/STATCOM, GIS, 765KV transformers and reactors, HTLS conductors, OPGW and
HVDC.
In our opinion, successful implementation of this initiative should benefit capital
goods players. Increased imports over past 5-6 years, particularly from China/South
Korea, have been a critical area of concern across several product segments, even
where domestic manufacturing capabilities and competitiveness exist. Key
beneficiaries include BHEL/Siemens (railways, solar cells, power T&D, defense, etc.),
L&T/BEL (defense), ABB/Alstom/CRG/Siemens (power T&D etc.) and TMX (industrial
products/power BTG).
Ankur Sharma (Ankur.vsharma@MotilalOswal.com); +91 22 3982 5449
Amit Shah (Amit.Shah@MotilalOswal.com); +91 22 3029 5126
October 2016 73
September 2016 Results Preview | Sector: Capital Goods
Exhibit 12: Summary of expected quarterly performance

Capital Goods
ABB 1,170 Neutral 21,003 6.7 -0.1 1,854 19.0 9.0 825 40.5 6.6
Bharat Electronics 1,273 Buy 17,280 17.7 98.3 2,161 23.2 LP 2,153 4.1 496.7
BHEL 137 Sell 66,200 11.5 17.7 1,700 LP 139.4 1,795 LP 130.8
CG Consumer Elect. 158 Buy 8,891 NA -20.7 864 NA -44.3 461 NA -49.9
Crompton Greaves 79 Neutral 13,630 -39.9 -4.3 995 13.4 -17.5 293 LP -26.9
Cummins India 929 Neutral 12,965 8.2 3.0 2,208 10.0 7.0 2,045 3.0 12.9
GE T&D India 342 Neutral 10,500 16.3 22.9 1,030 0.4 380.9 460 -0.6 -16.8
Havells India 431 Neutral 15,279 13.2 4.2 2,206 17.6 10.1 1,580 29.9 8.9
Larsen & Toubro 1,470 Buy 250,000 6.9 14.3 23,450 -9.5 23.1 7,650 11.5 25.5
Siemens 1,255 Neutral 32,971 -0.1 25.8 3,755 33.3 60.6 2,958 71.8 127.5
Thermax 879 Sell 9,171 -13.2 12.6 873 -12.3 37.0 576 -11.1 27.4
Voltas 389 Neutral 11,148 4.9 -39.9 735 18.0 -63.2 540 21.1 -65.5
Source: MOSL
Ordering activity supported by finalization of base orders; slight pick-up in

domestic tendering activity
Overall ordering activity has been impacted by delay in finalization of large
orders (>INR15b) and restrained capex activity by the private sector.
Local ordering activity has seen some improvement, led by finalization of base
orders. After remaining subdued for most of 2015, tendering has seen some
improvement since January 2016, mainly supported by central government
activity. Sector-wise, roads, railways, power T&D and defense registered strong
tendering activity (fiscal allocations for roads/railways have been increased).
Overseas project awards, particularly in the Middle East, have started to see
some signs of revival since 4QFY16, despite a sharp decline in crude oil prices.
Aggregate project awards in the region improved 40% YoY to USD140b (12-
month moving average).
We believe that growth in large orders is imperative to further boost ordering
activity.
Exhibit 14: EBITDA margins under pressure on slower

Exhibit 13: Constrained growth in revenue project execution
Engg Sector (revenue growth %) EBITDA Margin (%) EBITDA Margin (%)
17.9
16.9
16.3
16.1
16.0
15.6
15.5
17.9
14.5
14.0
13.8
13.5
13.5
12.3
16.9
12.2
12.1
12.0
12.0
12.0
11.7
11.6
11.6
11.3
16.3
15.3 11.0
16.1
10.2
16.0
16.6 10.0
10.0
15.6
15.5
11.7 9.9
1.3 9.2
14.5
8.4
8.3
7.9
14.0
2.7 7.3
13.8
13.5
13.5
12.3
2.8 3.8
12.2
12.1
12.0
12.0
12.0
11.7
11.6
11.6
11.3
19.6
18.2
15.6
26.3
11.0
16.8
21.7
20.9
6.6
3.1
10.2
20.5
12.8
16.4
10.0
10.0
29.0
22.0
28.8
9.9
16.9
7.5
31.8
27.5
9.2
9.2
3.7
2.8
8.4
8.3
7.9
7.3
3.8
-5.2
1QFY14 -3.5
3QFY15 -1.0
-0.8
1QFY16 -1.4
1QFY09
3QFY09
1QFY10
3QFY10
1QFY11
3QFY11
1QFY12
3QFY12
1QFY13
3QFY13
1QFY14
3QFY14
1QFY15
3QFY15
1QFY16
3QFY16
1QFY17
1QFY09
3QFY09
1QFY10
3QFY10
1QFY11
3QFY11
1QFY12
3QFY12
1QFY13
3QFY13
3QFY14
1QFY15
3QFY16
1QFY17
Source: MOSL, Company Source: MOSL, Company
October 2016 74
Exhibit 15: Book-to-bill stable at 3.3x Exhibit 16: Order intake growth continues to remain muted
Order book (INR b) BTB (x) Order intake YoY %
58
3.3
56
3.3
3.3
3.3
3.2
3.1
52
3.0
39
2.9
2.9
2.8
2.6
2.6
22
31
20
2.4
2.4
17
2.3
2.3
2.3
15
2.3
2.2
2.2
2.1
14
9
-36
-2
-1
-1
3,295
3,367
3,263
3,112
3,168
3,127
2,964
2,893
2,958
2,989
3,028
2,943
3,230
3,482
3,594
3,605
3,813
3,717
3,920
3,869
3,922
-11
-12
-23
-24
-34
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
4QFY12-47
4QFY11
2QFY12
2QFY13
4QFY13
2QFY14
4QFY14
2QFY15
4QFY15
2QFY16
4QFY16
Exhibit 17: Relative performance Three-month (%) Exhibit 18: Relative performance One-year (%)
Sensex Index MOSL Capital Goods Index Sensex Index MOSL Capital Goods Index
107 120
105 110
103 100
101 90
99 80
97 70
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Mar-16
Sep-15
Jan-16
Feb-16
Sep-16
Oct-15
Jul-16
Jun-16
Aug-16
Sep-16

Capital Goods
ABB 1,170 Neutral 15.8 17.7 27.1 74.2 66.1 43.2 36.3 31.6 21.5 11.1 11.1 14.5
Bharat Electronics 1,273 Buy 56.9 61.7 69.0 22.4 20.7 18.5 15.0 15.5 13.3 15.6 15.2 15.3
BHEL 137 Sell -3.7 4.3 5.8 -37.0 31.7 23.5 -8.8 19.5 11.4 -2.7 3.2 4.1
CG Consumer Elect. 158 Buy 1.9 4.5 6.0 83.1 34.8 26.3 21.0 16.5 52.1 99.5 90.0
Crompton Greaves 79 Neutral 2.1 3.2 4.6 38.0 24.2 17.0 10.6 10.3 8.3 3.0 4.3 6.0
Cummins India 929 Neutral 27.2 28.6 31.6 34.1 32.4 29.4 29.6 29.4 25.6 24.9 24.2 23.9
GE T&D India 342 Neutral 3.0 6.9 9.6 112.8 49.8 35.4 50.9 23.4 18.6 5.9 12.7 16.6
Havells India 431 Neutral 7.8 10.6 13.1 55.4 40.7 32.8 23.2 27.1 21.2 19.0 23.1 25.4
Inox Wind 209 Neutral 20.7 20.1 22.0 10.1 10.4 9.5 9.8 7.7 7.0 27.9 21.9 19.9
K E C International 126 Buy 7.4 9.7 12.0 16.9 13.0 10.5 7.9 7.1 6.3 13.5 15.5 16.7
Larsen & Toubro 1,470 Buy 50.6 58.8 68.7 29.1 25.0 21.4 16.1 16.8 14.0 11.1 11.9 12.7
Siemens 1,255 Neutral 16.9 18.1 28.4 74.1 69.2 44.2 37.8 39.3 28.8 11.8 9.5 13.6
Solar Inds. 654 Buy 18.4 26.0 31.1 35.6 25.2 21.0 22.2 14.5 12.1 20.2 24.1 23.6
Thermax 879 Sell 23.5 24.7 29.0 37.4 35.6 30.3 20.1 22.7 19.1 12.5 12.2 13.1
Va Tech Wabag 566 Buy 16.3 25.5 33.9 34.6 22.2 16.7 13.3 11.2 8.6 9.7 13.3 15.9
Voltas 389 Neutral 11.7 13.4 15.9 33.3 28.9 24.5 17.6 19.3 16.3 15.3 17.4 18.1
October 2016 75
ABB
Bloomberg ABB IN CMP: INR1,170 TP: INR1,260 (+8%) Neutral
ABB continues to focus on increased localization and cost
M. Cap. (INR b)/(USD b) 248 / 4
optimization, whereby its direct RM costs have declined to 65.4% of
revenue, from a peak of 81% in 4QCY10. The company has set an
1,6,12 Rel Perf. (%) 3/-21/4
internal target to reduce it to 65% over next few years. This has
aided margins, despite negative operating leverage.
The company has inaugurated a new solar inverter manufacturing
Y/E Dec 2014 2015 2016E 2017E
facility, doubling its existing capacity for solar inverters to 2GW.
Net Sales 77.3 81.4 87.3 101.1
EBITDA 6.0 7.5 7.8 11.3
The facility will manufacture ABB's PVS800 central inverter series.
Adj PAT 2.3 3.0 3.7 5.7 ABB inverter range starts from 2kW to 2MW, and can be utilized for
Adj EPS (INR) 12.8 15.8 17.7 27.1 residential rooftops and also cost-efficient megawatt power plants.
EPS Gr (%) 35.0 22.8 12.3 53.0 ABB has also commissioned solution for shore to ship power supply
BV/Sh (INR) 132.7 142.0 159.3 186.4 at V.O. Chidambaranar port on plug-and-play basis, which will
RoE (%) 9.7 11.1 11.1 14.5 eliminate emissions from burning diesel when ships are birthed. For
RoCE (%) 15.4 17.5 16.5 22.1 average docking time of 60 hours for a commercial vessel at a port,
Payout (%) 28.8 23.5 25.6 26.1 diesel generators produce 360 MT of carbon dioxide. Maintain
Valuations Neutral
P/E (x) 91.1 74.2 66.1 43.2
Key issues to watch:
P/BV (x) 8.8 8.2 7.3 6.3
Management commentary suggests cautious optimism; continued
EV/EBITDA (x) 36.6 32.6 25.1 19.3
Div. Yield (%) 0.3 0.3 0.4 0.6
focus on exports and services to be an important driver, with
projection of strong double-digit growth in top and bottom line.
Continued preference for cash generation vis--vis profits.
Quarterly Performance
Y/E December CY15 CY16 CY15 CY16E
1Q 2Q 3Q 4Q 1Q 2Q 3QE 4QE
Sales 18,146 19,316 19,690 24,251 20,003 21,015 21,003 25,404 80,152 86,052
Change (%) (0.7) 6.0 6.7 8.3 10.2 8.8 6.7 4.8 5.0 7.4
EBITDA 1,436 1,610 1,557 2,697 1,571 1,701 1,854 2,754 7,465 7,796
Change (%) 5.0 15.2 15.3 41.2 9.4 5.6 19.0 2.1 24.6 4.4
As % of Sales 7.9 8.3 7.9 11.1 7.9 8.1 8.8 10.8 9.3 9.1
Depreciation 422 375 359 442 359 357 400 482 1598 1598
Interest 208 246 250 207 206 180 250 249 912 886
Other Income 7 10 5 108 148 44 44 10 130 230
PBT 813 999 954 2,155 1,154 1,208 1,248 2,032 5,086 5,543
Tax 270 315 366 796 364 434 388 607 1,747 1,793
Reported PAT 543 575 587 1,294 710 774 825 1,443 2,999 3,670
Adj. PAT 543 685 587 1,359 790 774 825 1,443 3,339 3,750
Change (%) -13.4 12.8 4.9 42.8 45.5 13.1 40.5 6.2 22.8 12.3
Order Intake 18,560 18,950 22,920 20,580 18,300 20,400 24,000 52,010 81,000 114,710
Order Book 79,730 79,560 82,750 79,460 78,040 77,520 81,387 104,546 79,460 106,799
BTB (x) 1.0 1.0 1.0 1.0 0.9 0.9 0.9 1.2 1.0 1.2
E: MOSL Estimates,*: As reported by ABB
October 2016 76
Bharat Electronics
Bloomberg BHE IN
CMP: INR1,273 TP: INR1,450 (+14%) Buy
M. Cap. (INR b)/(USD b) 306 / 5 Bharat Electronics plans to establish defense system integration
52-Week Range (INR) 1,417/1,009 complex with capex of USD120m, which will help to manufacture
1,6,12 Rel Perf. (%) 5/-5/4 missile systems like navigation, seeker, radar, fire control and
guidance.
Financial Snapshot (INR b) BHE expects order inflow of INR120-150b in FY17, led by finalization
Y/E March 2015 2016 2017E 2018E of key projects like Akash missile.
Net Sales 68.4 73.0 82.3 93.2 BHE has guided for revenue growth of 10-12% YoY in FY17, led by
EBITDA 11.4 14.6 15.1 16.9 execution of key orders in hand like Akash missile, WLR, hand-held
NP 11.7 13.7 14.8 16.6 thermal device, tactical control radar, etc.
EPS (INR) 48.6 56.9 61.7 69.0 EBITDA margins in FY17 are guided to be in the range of +/- 100bp
EPS Gr. (%) 25.3 17.1 8.4 11.9 over FY16 (20%).
BV/Sh (INR) 329 364 405 450 BHE plans to explore opportunities in critical infrastructure
RoE (%) 14.8 15.6 15.2 15.3 protection, air traffic management radars, intelligent traffic
RoCE (%) 15.6 16.5 16.0 16.1 management systems, solar power plants and smart city elements.
P/E (x) 15.8 22.4 20.6 18.5
BHE has planned capex of INR23b over next five years toward
P/BV (x) 2.3 3.5 3.1 2.8
modernization and expansion of existing facilities to support the
EV/EBITDA (x) 11.0 15.9 15.5 13.3
governments Make in India initiative. Majority of capex would be
EV/ Sales (x) 1.9 3.2 2.9 2.4
spent on developing BMS test bed, TCS test bed, test bed for missile
system, etc. Maintain Buy
Revenue growth: Key orders (Akash missile, intake INR67b in
FY1112) are currently under execution for Army and Air Force.
Operating at 60% capacity utilization; possibility of strong
operating leverage.

1Q 2Q 3Q 4Q 1QE 2QE 3QE 4QE
Sales 10997 14677 15172 32148 8714 17280 18515 37778 72952 82288
Change (%) 8.6 13.4 -5.7 9.8 -20.8 17.7 22.0 17.5 6.6 12.8
EBITDA 78 1754 2926 9988 -467 2161 2877 10497 14582 15068
Change (%) -117 48 5 26 -699 23 -2 5 27 3
As of % Sales 0.7 12.0 19.3 31.1 -5.4 12.5 15.5 27.8 20.0 18.3
Depreciation 408 403 414 468 435 450 450 570 1689 1905
Interest 0 3 1 41 0 0 0 0 45 0
Other Income 1337 1375 1355 1336 1387 1350 1250 2245 5322 6232
PBT 1007 2724 3865 10888 486 3061 3677 12172 18169 19395
Tax 241 656 908 2799 125 673 809 2989 4515 4596
Reported PAT 767 2068 2957 8089 361 2387 2868 9182 13654 14799
Change (%) 199.5 40.7 8.8 11.9 -52.9 15.5 -3.0 13.5 17.6 8.4
Adj PAT 767 2068 2957 8017 361 2387 2868 9182 13654 14799
Change (%) 199.5 40.7 8.8 10.9 -52.9 15.5 -3.0 14.5 17.4 8.4
E: MOSL Estimates
October 2016 77
BHEL
Bloomberg BHEL IN CMP: INR137 TP: INR120 (-12%) Sell
BHEL is expected to post improvement in its operational
M. Cap. (INR b)/(USD b) 336 / 5
performance during the quarter on the back of weak 2QFY16
performance. We estimate revenues to register 11.5% YoY growth,
1,6,12 Rel Perf. (%) 1/6/-39
operating profit at INR17b as against loss of INR47b, and net profit
at INR18b as against loss of INR21b in 2QFY16. Loss during 2QFY16
was led by execution of JDU clause orders, where raw material cost
Y/E March 2015 2016 2017E 2018E was significantly higher than other orders in the order backlog. We
Net Sales 301.8 256.3 295.5 336.6 expect gross margins to improve 540bp YoY to 39.6%.
EBITDA 21.0 -19.6 13.0 21.6 During the quarter, BHEL secured orders for setting up 80MW solar
PAT 14.3 -9.1 10.6 14.3 photovoltaic power plant on EPC basis for INR4.4b. BHEL has also
EPS (INR) 5.8 -3.7 4.3 5.8 received a 30MW solar photovoltaic power plant order of INR1.7b.
EPS Gr. (%) -58.8 -163.6 -216.7 34.5 BHEL now has sizeable order backlog of 330MW in the solar
BV/Sh. INR 139.3 135.0 138.4 142.9 segment.
RoE (%) 4.3 -2.7 3.2 4.1 BHEL is L1 in 12+GW of orders, of which it expects 7GW of orders to
RoCE (%) 2.7 -4.1 1.4 2.9 be finalized in FY17. Incremental order inflow of INR100b can be
Payout (%) 19.9 -10.8 20.0 20.0 expected from 16GW of projects under execution on account of
Valuations implementation of new emission norms; maintain Sell.
P/E (x) 23.5 -37.0 31.7 23.5
P/BV (x) 1.0 1.0 1.0 1.0
EV/EBITDA (x) 11.4 -12.1 20.0 11.7
Continued constraint on execution due to operational issues.
Div Yield (%) 0.8 0.3 0.6 0.8
Trends in provisions, particularly for liquidated damages on
* Consolidated
project completion.
Sales (Net) 43,617 59,380 53,256 100,048 56,225 66,200 61,300 111,804 256,300 295,528
Change (%) -15.0 -3.4 -14.1 -21.1 28.9 11.5 15.1 11.8 -15.1 15.3
EBITDA -2,093 -4,742 -16,387 3,638 710 1,700 -4,700 15,257 -19,597 12,967
Change (%) -196.1 -262.6 -657.8 -78.4 -133.9 -135.9 -71.3 319.4 -193.4 -166.2
As a % Sales -4.9 -8.0 -30.8 3.6 1.3 2.6 -7.7 13.6 -7.6 4.4
Interest 33 44 52 140 57 55 55 102 268 268
Depreciation 2,425 2,249 2,255 2,428 2,182 2,350 2,500 2,902 9,356 9,933
Other Income 4,924 3,733 1,706 4,139 2,493 2,800 1,800 4,283 14,501 3,308
PBT 373 -3,302 -16,989 5,209 965 2,095 -5,455 16,537 -14,721 14,142
Tax 34 -1,253 -5,969 1,555 188 300 -1,500 4,548 -5,633 3,536
Reported PAT 339 -2,049 -11,020 3,596 778 1,795 -3,955 11,989 -9,088 10,607
Change (%) -82.5 -264.1 -618.3 -59.5 129.5 -187.6 -64.1 233.4 -164.0 -216.7
Adj. PAT 339 -2,049 -11,020 3,655 778 1,795 -3,955 11,989 -9,088 10,607
Change (%) -82.5 -264.1 -618.3 -61.7 129.5 -187.6 -64.1 228.1 -163.6 -216.7
October 2016 78
Crompton Greaves
Bloomberg CRG IN CMP: INR79 TP: INR85 (+8%) Neutral
Operational performance during the quarter might suffer as
Cromptons facility at Kanjurmarg was impacted by fire, while
production at Mandideep facilities had been impacted by water
1,6,12 Rel Perf. (%) -3/49/28
logging on account of heavy rains.
The board of Crompton Greaves (which had accepted the revised
sale offer for the overseas T&D business from First Reserve
Y/E March 2015 2016 2017E 2018E
International, a US-based private equity firm, for an enterprise
Net Sales 140.1 52.7 57.0 63.0
EBITDA 6.4 3.7 4.8 5.6
value of EUR115m on a debt-free, cash-free basis) has entered into
Adj PAT 1.8 1.3 2.0 2.9 a share purchase agreement with Pauwels Spaco Ltd (SPV of First
EPS(INR) 2.9 2.1 3.2 4.6 Reserve) to complete the transaction before 31st October 2016.
EPS Gr. (%) 21.2 -29.6 56.8 42.7 With this sale, management plans to focus on the Indian power and
BV/Sh. (INR) 60.9 73.3 75.9 79.5 industrial businesses.
RoE (%) 4.9 3.0 4.3 6.0 The company has appointed investment banker to sell-off its
RoCE (%) 7.3 5.1 5.8 7.3 automation business company, ZIV.
Payout (%) 24.0 0.0 18.5 18.5 Management intends to monetize ~INR10b of non-core assets,
Valuations including additional land at Kanjurmarg, to lower standalone
P/E (x) 24.9 35.3 24.2 17.0 business debt. Maintain Neutral.
P/BV (x) 1.2 1.0 1.0 1.0
Key issues to watch
EV/EBITDA (x) 10.3 14.7 10.3 8.3
Lowering debt in demerged business through asset sale.
Div Yield (%) 1.0 0.0 0.8 1.1
Further concrete development on plans to sell ZIV in FY17.
* Consolidated
Quarterly performance (Consolidated)

Sales (Net) 10,275 13,500 12,247 16,699 14,238 13,630 13,760 14,945 52,721 57,007
Change (%) -70.1 -60.6 -49.2 6.0 38.6 1.0 12.4 -10.5 -62.4 8.1
EBITDA -136 1,295 964 1,548 1,206 995 965 1,269 3,671 4,835
Change (%) -107.9 -23.1 53.8 -48.3 -983.2 -23.1 0.1 -18.0 -42.9 31.7
Adjusted EBITDA -136 1,295 964 1,548 1,206 995 965 1,269 3,671
As of % Sales (Adj) -1.3 9.6 7.9 9.3 8.5 7.3 7.0 8.5 7.0
Depreciation 603 604 622 728 603 550 550 398 2,558 2,101
Interest 153 317 103 240 306 250 235 241 814 1,032
Other Income 425 326 109 257 176 210 240 274 1,116 900
EO Income/(Exp) -11 0 -1,585 -2,030 0 0 0 0 -1,113
PBT -479 699 -1,237 -1,193 472 405 420 904 -2,210 2,601
Tax 166 224 -65 -182 68 120 150 255 144 592
Effective Tax Rate (%) -34.7 32.1 5.3 15.2 14.3 29.6 35.7 28.2 -6.5 22.8
Minority interest -8.3 -23.7 -3.1 9.8 3.6 -8.0 -5.0 -8.0 -25.3 -25.3
Reported PAT -637 499 -1,168 -1,022 401 293 275 658 -2,328 2,034
Adjusted PAT -626 499 416 1,008 401 293 275 658 1,297 2,034
Change (%) (197.7) (28.3) (185.0) (63.4) (164.0) (41.2) (33.9) (34.8) (29.5) 56.8
E: MOSL Estimates
October 2016 79
CG Consumer Electricals
Bloomberg CROMPTON
IN
We expect Crompton to register revenues of INR8.9b in 2QFY17., Of
the total revenues, 70% would be contributed by the electrical
consumer durables segment and the balance 30% by the lighting
1,6,12 Rel Perf. (%) -
segment.
We expect operating profit of INR864m in 2QFY17., Operating
margins are expected to stand at 9.7% in 2QFY17, as against 13.8%
Y/E March 2016 2017E 2018E
in 1QFY17. Net profit is expected to be INR461m in 2QFY17, as
Net Sales 18.1 41.2 47.3
against INR920m in 1QFY17.
EBITDA 2.1 4.9 6.2
Adj PAT 1.1 2.8 3.8
EPS (INR) 1.9 4.5 6.0
EPS Gr. (%) (70.3) 138.6 32.1
BV/Sh. (INR) 3.6 5.5 7.9
RoE (%) 52.1 99.5 90.0
RoCE (%) 28.8 34.9 39.0
Payout (%) - 50.0 50.0
P/E (x) 83.1 34.8 26.3 Details of segmental sales:, as Crompton intends to improve sales
P/BV (x) 43.3 28.9 20.1 of the premium category products.
EV/EBITDA (x) 53.5 22.5 17.7 Ad spends incurred by the company during the quarter: as
Div Yield (%) - 1.3 1.8 Crompton intends to position itself as an electrical consumer
* Consolidated durables brand from the current positioning of a fans brand.
Crompton: Quarterly Estimates (Standalone) INR Million

Y/E March 3Q 4Q 1Q 2QE 3QE 4QE
Sales 8,101 10,016 11,208 8,891 9,180 11,924 18,117 41,203
Change (%) 12.0 10.6 13.3 19.0 127.4
EBITDA 828 1,272 1,551 864 972 1,543 2,095 4,936
Change (%) -8.1 2.0 17.4 21.3 135.6
As of % Sales 10.2 12.7 13.8 9.7 10.6 12.9 11.6 12.0
Depreciation 30 33 28 34 32 36 63 135
Interest 158 159 147 140 140 135 318 607
Other Income 1 0 2 1 0 1 39 48
PBT 641 1,079 1,377 691 800 1,373 1,753 4,242
Tax 218 321 457 230 260 452 525 1,399
Effective Tax Rate (%) 33.9 29.7 33.2 33.3 32.5 32.9 29.9 33.0
Adjusted PAT 424 759 920 461 540 921 1,228 2,843
Change (%) (51.1) (10) 27 21 (69.4) 131.4
Reported PAT 412 666 920 461 540 921 1,089 2,843
Change (%) (52.4) (21) 31 38 (72.9) 161.0
October 2016 80
Cummins India
Bloomberg KKC IN CMP: INR929 TP: INR850 (-9%) Neutral
We expect revenue improvement of 8.2% YoY, supported by growth
M. Cap. (INR b)/(USD b) 257 / 4
in the industrial (31%) and automotive (67%) segments. Industrial
segment growth would be driven by a pick-up in the infrastructure
1,6,12 Rel Perf. (%) 2/-4/-22
(roads and metros) and data center segments. Pick-up in the
domestic demand environment and various pricing actions taken by
KKC to regain lost market share post CPCB-2 compliance will help
Y/E March 2015 2016 2017E 2018E
domestic revenues grow 9% YoY in 2QFY17.
Net Sales 44.1 47.0 50.8 57.8
EBITDA 7.4 7.7 8.6 9.9
We expect export revenues to improve 7% YoY to INR4.7b in
Adj PAT 7.9 7.5 7.9 8.8
2QFY17. Exports have witnessed a decline of 22% in 1QFY17, led by
EPS (INR) 28.3 27.2 28.6 31.6 weak demand in LatAm, Europe and China.
EPS Gr. (%) 31.0 -4.0 5.2 10.3 EBIDTA margins are expected to remain stable YoY at 17.0%; expect
BV/Sh. (INR) 104.1 114.4 125.9 138.5 net profit growth of 3% YoY to INR2.1b. Maintain Neutral.
RoE (%) 28.8 24.9 24.2 23.9
RoCE (%) 29.0 25.2 24.1 24.1
Payout (%) 49.4 51.5 51.5 51.5
Valuations Key issues to watch:
P/E (x) 32.8 34.1 32.5 29.4 Cost optimization possibilities in power gen business, given
P/BV (x) 8.9 8.1 7.4 6.7 increased localization due to a significant decline in imports post
EV/EBITDA (x) 33.5 31.8 28.4 24.7 CPCB-2 implementation.
Div Yield (%) 1.6 1.6 1.7 1.8 Performance of exports segment as exports declined 22% YoY in
1QFY17 on weak demand in LatAm, Europe and China.
KKC: Quarterly Performance (Standalone) (INR Million)

Y/E March 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Sales 13,101 11,977 11,469 10,614 12,590 12,965 12,419 13,091 47,161 50,811
Change (%) 25.3 4.7 5.9 -6.4 -3.9 8.2 8.3 23.3 7.0 7.7
EBITDA 2,217 2,007 1,550 1,773 2,063 2,208 2,217 2,404 7,853 8,638
Change (%) 23.3 5.7 -18.2 0.8 -6.9 10.0 43.0 35.6 3.7 23.5
As of % Sales 16.9 16.8 13.5 16.7 16.4 17.0 17.8 18.4 16.7 17.0
Depreciation 203 200 201 206 206 245 258 180 810 889
Interest 24 2 2 24 21 24 24 24 96 96
Other Income 595 600 566 513 416 618 600 631 2,279 2,265
PBT 2,585 2,405 1,912 2,056 2,252 2,556 2,535 2,832 9,226 9,919
Tax 472 419 288 386 440 511 507 525 1,561 1,984
Adjusted PAT 2,114 1,986 1,624 1,670 1,812 2,045 2,028 2,307 7,665 7,935
Change (%) (0.3) (1.9) (10.3) (12.3) (14.3) 3.0 24.9 38.1 (2.5) 3.5
Reported PAT 2,114 1,986 1,624 1,670 1,812 2,045 2,028 2,307 7,665 7,935
Change (%) (0.3) (1.9) (10.3) (12.3) (14.3) 3.0 24.9 38.1 (2.5) 3.5
E: MOSL Estimates
October 2016 81
GE T&D
Bloomberg GETD IN CMP: INR342 TP: INR345 (+1%) Neutral
We expect Alstom T&D to register robust revenue growth of 16%
YoY to INR10.5b in 2QFY17. Revenue growth would be driven by
execution of Champa Kurukshetra phase I project.
1,6,12 Rel Perf. (%) 8/-34/-40
We expect operating profit to remain flat YoY at INR1.0b in 2QFY17,
primarily on account of prevailing adverse revenue mix. Gross
Y/E March 2015 2016 2017E 2018E margins are expected to decline by 470bp to 30.5% from 35.2% in
Net Sales 37.0 34.1 40.5 45.1 2QFY16.
EBITDA 3.1 2.3 3.5 5.4 Net profit is expected to remain flat YoY at INR460m. Maintain
Adj PAT 1.2 0.8 2.1 2.9 Neutral.
EPS (INR) 4.7 3.0 8.1 11.5
EPS Gr. (%) 5.6 -35.7 167.3 41.7
BV/Sh. (INR) 51.2 52.1 56.3 62.2
RoE (%) 9.4 5.9 14.9 19.3
RoCE (%) 14.9 10.1 16.7 24.2
Payout (%) 38.2 59.5 40.0 40.0
Valuations
P/E (x) 72.6 112.8 42.2 29.8
P/BV (x) 6.7 6.6 6.1 5.5
EV/EBITDA (x) 29.0 39.5 25.4 16.3 Key issues to watch
EV/ Sales (x) 2.4 2.7 2.2 2.0 Progress in the Champa-Kurukshetra Phase I project.
Div Yield (%) 0.5 0.5 0.9 1.3

Sales 7,660 9,031 7,436 9,715 8,546 10,500 8,900 12,521 34,135 40,467
Change (%) 1.2 1.2 1.2 -28.6 11.6 16.3 19.7 28.9 -7.8 18.5
EBITDA 72 1,025 -14 850 214 1,030 780 1,514 2,324 3,538
Change (%) -90.4 16.9 NA -18.5 199.6 0.4 -5,593.0 78.1 -9.0 -9.0
As of % Sales 0.9 11.4 -0.2 8.7 2.5 9.8 8.8 12.1 6.8 8.7
Depreciation 212 215 215 216 217 220 225 229 873 873
Interest 117 143 168 189 226 230 220 230 589 589
Other Income 412 23 117 64 326 80 80 75 427 427
PBT 155 691 -280 509 -2,429 660 415 1,129 1,289 2,503
Tax 54 228 -98 210 -455 200 150 335 508 508
Effective Tax Rate 34.7 33.0 NA 41.3 18.7 30.3 36.1 29.7 39.4 20.3
Reported PAT 102 463 -182 299 -1,974 460 265 794 781 1,995
Change (%) -67.5 30.4 -803.1 -44.8 -2,044.9 -0.6 -245.5 165.9 0.0 0.0
Adj PAT 102 463 -182 299 553 460 265 794 781 1,995
Change (%) -64.4 30.4 NA -44.8 444.7 -0.6 -245.5 165.9 2.0 2.0
E: MOSL Estimates
October 2016 82
Havells India
Bloomberg HAVL IN CMP: INR431 TP: INR435 (+1%) Neutral
Havells has launched premium segment intelligent water heaters
M. Cap. (INR b)/(USD b) 269 / 4
and expects to capture 15% market share of the INR15b water
heater segment.
1,6,12 Rel Perf. (%) 2/26/64
Standalone revenue growth is expected to be 13.2%, supported by
low base effect (2QFY16 revenue decline of 1.1%).
We expect double-digit sales growth to be witnessed across all
Y/E March 2015 2016 2017E 2018E
business segments. Operating margins are expected to improve
Net Sales 85.7 77.1 64.5 75.7
45bp YoY to 14.4% in 2QFY17, led by better operating leverage.
EBITDA 7.2 8.0 9.3 11.7
Adj PAT 5.2 4.8 6.6 8.2
Net profit growth is expected to be 31% YoY, aided by improvement
Adj EPS (INR) 8.3 7.8 10.6 13.1 in non-operating income, driven by incremental cash infusion on
EPS Gr. (%) -4.7 -6.0 36.2 24.2 account of sale of Sylvannia to Sanghai Fielo for EUR149m. Maintain
BV/Sh(INR) 29.1 41.0 45.7 51.8 Neutral.
RoE (%) 28.4 19.0 23.1 25.4
RoCE (%) 17.0 20.4 23.1 26.2
Payout (%) 57.6 93.0 55.3 53.4
Valuations
P/E (x) 52.1 55.4 40.7 32.8
P/BV (x) 14.8 10.5 9.4 8.3
Key issues to watch
EV/EBITDA (x) 21.6 31.6 27.2 21.2
Performance of Reo and Standard brands; commentary on new
Div Yield (%) 0.7 0.9 1.2 1.4
product launches.
* Consolidated
Guidance on deployment of cash received from the sale of
Sylvannia to Sanghai Feilo.
Standalone (INR Million)

FY16E FY17 FY16 FY17E
Sales 12,523 13,498 13,445 14,754 14,668 15,279 15,265 17,097 54,369 63,015
Change (%) -1.9 -1.1 7.8 9.3 17.1 13.2 13.5 15.9 3.8 15.9
Adj EBITDA 1,620 1,876 1,815 2,196 2,004 2,206 2,409 2,637 7,479 9,264
Change (%) -1.4 2.2 0.0 11.1 23.7 17.6 32.7 20.1 2.9 23.9
Adj EBITDA margin (%) 13.1 14.0 13.5 14.9 13.7 14.4 15.8 15.4 13.8 14.7
Depreciation 248 229 232 237 280 280 300 399 922 1,259
Interest 30 29 19 48 16 16 19 -1 126 50
Other Income 170 96 132 291 307 300 250 290 687 1,147
PBT 1,489 1,702 1,712 2,208 2,022 2,210 2,340 2,530 7,119 9,102
Tax 421 494 505 567 567 630 667 685 1,988 2,549
Reported PAT 1,068 1,207 1,208 1,641 1,456 1,580 1,673 1,844 5,130 6,553
Change (%) -0.4 0.9 3.9 34.7 36.3 30.9 38.5 12.4 10.3 27.7
Adj PAT 1,085 1,216 1,191 1,637 1,450 1,580 1,673 1,844 5,129 6,633
Change (%) -0.4 0.0 0.3 23.6 33.7 29.9 40.4 12.7 6.5 29.3
E: MOSL Estimates
October 2016 83
Larsen & Toubro

Bloomberg LT IN CMP: INR1,470 TP: INR1,660 (+13%) Buy
L&T announced order intake of INR169.5b in 2QFY17 compared to
M. Cap. (INR b)/(USD b) 1375 / 21
INR114b in 2QFY16. Domestic order wins are supported by large
orders getting finalized. Key orders finalized during the quarter are a)
1,6,12 Rel Perf. (%) -1/7/-9
Power segment (INR38.6b), boiler order for 1980MW NLC Ghatampur
order and b) Defense sector order for INR6.9b.
Financial Snapshot (INR b) Overseas wins have been muted, particularly impacted by the sharp
Y/E March 2015 2016 2017E 2018E decline in crude prices. L&T has booked EPC order for EHV cables
Sales 920 1,026 1,124 1,278 worth INR17.2b.
EBITDA 113 123.3 126.6 153.5 We expect revenue growth of 7% YoY to INR250b. We expect
Adj PAT * 44 47.3 55.0 64.3 operating profit decline of 9.5% YoY. Operating profit growth would
EPS (INR)* 47 50.6 58.8 68.7 be impacted by the implementation of Ind-AS, as key subsidiaries like
EPS Gr. (%) -4.2 7.1 16.2 16.9 L&T MHI would not be consolidated and would be directly added to
BV/Sh (INR) 437.3 470.2 514.2 565.0 net profit.
RoE (%) 11.2 11.1 11.9 12.7 We expect net profit growth of 11.5% YoY to INR7.6b.
RoCE (%) 6.5 6.9 8.2 9.5 L&T has tied up with GE for the manufacture of offshore oil and gas
Payout (%) 27.5 26.9 21.7 22.8 equipment to be used in the KG basin on revival of exploration by
Valuations ONGC and Reliance post the new gas policy. L&T Hydrocarbon would
P/E (x)* 33.9 31.6 27.2 23.3 make the subsea manifold at its modular fabrication yard at
P/BV (x) 3.9 3.7 3.4 3.1 Kattupalli. GE will provide technology and manufacturing know-how
EV/EBITDA (x) 20.7 19.9 18.5 15.4 to L&T to enable the manufacture of sub-sea manifolds at its facility
Div Yield (%) 0.8 0.9 0.8 1.0 in Tamil Nadu. Maintain Buy.
*Consolidated Key issues to watch:
Profitability of the heavy engineering segment, which booked losses
of INR2.2b in FY16 on under-recovery of cost and provisions for
foreseeable losses.
Net working capital (excluding financial services) at 24% of revenue
in 4QFY16 remains at a high, given tight liquidity conditions.
Quarterly Performance (Consolidated, INR m)

Sales 200,482 233,932 258,293 331,570 218,738 250,000 302,000 391,716 1,026,317 1,124,326
Change (%) 7.0 10.6 8.3 18.3 9.1 6.9 16.9 18.1 12% 10%
EBITDA 16,411 25,917 26,499 48,592 19,050 23,450 31,850 52,575 123,339 126,561
Change (%) -8.9 8.6 -8.3 34.6 16.1 -9.5 20.2 8.2 8.8 2.6
Margin (%) 8.2 11.1 10.3 14.7 8.7 9.4 10.5 13.4 12% 11%
Depreciation 4,658 6,936 6,198 8,203 4,648 4,600 4,500 3,969 27,472 17,717
Interest 3,893 8,278 7,446 7,737 3,375 4,500 7,500 8,243 30,412 23,618
Other Income 2,833 2,191 4,517 2,182 3,024 2,700 3,050 3,203 11,830 11,978
Extraordinary Inc/(Exp) 0 3,096 0 485 0 0 0 0 3,581 0
Reported PBT 10,692 15,990 17,371 34,834 14,052 17,050 22,900 43,566 80,866 97,203
Tax 4,282 4,936 5,555 9,537 5,488 6,800 8,000 11,767 23,782 23,782
Reported PAT 4,190 9,959 10,348 24,536 6,096 7,650 13,000 28,595 50,905 54,977
Change (%) -37.3 15.6 19.4 18.6 45.5 -23.2 25.6 16.5 3.8 3.8
Adjusted PAT 4,190 6,863 10,348 24,051 6,096 7,650 13,000 28,595 47,324 54,977
Change (%) -21.0 -20.3 19.4 22.0 45.5 11.5 25.6 18.9 7.9 7.9
October 2016 84
Siemens
Bloomberg SIEM IN CMP: INR1,255 TP: INR1260 Neutral
Siemens Ltd has received orders of INR2.2b for Power Grid
M. Cap. (INR b)/(USD b) 447 / 7
Company of Bangladesh Limited (PGCB) project from Siemens AG,
which involves supply of 400KV/230KV switch yard equipment,
1,6,12 Rel Perf. (%) 1/0/-14
reactors, power transformers, firefighting systems, air-conditioning
systems, auxiliary power system, building management systems,
illumination systems, AC control and protections, engineering for
Y/E September 2015 2016 2017E 2018E
civil and plant for 500MW High Voltage Direct Current (HVDC)
Net Sales 105.1 110.2 112.3 125.9
station.
EBITDA 9.8 10.4 13.9 15.9
Adj PAT 6.0 6.5 10.1 11.8
We expect Siemens to register muted revenue growth YoY of
Adj EPS (INR) 17.0 18.1 28.4 33.2 INR26.2b, as we exclude the healthcare division revenue which it
EPS Gr (%) 36.3 7.1 56.7 16.7 sold in 3QFY16. Excluding health care, we expect robust revenue
BV/Sh. (INR) 144.0 191.4 209.6 230.8 growth of 19% YoY, led by strong performance from the industrial
RoE (%) 11.8 9.5 13.6 14.4 and energy segments.
RoCE (%) 18.2 15.5 19.1 20.1 We expect EBIDTA growth of 33% YoY to INR3.7b and net profit
Payout (%) 35.4 30.1 30.1 30.0 growth of 72% YoY to INR2.9b on account of better product mix and
Valuations higher other income. Maintain Neutral.
P/E (x) 73.2 68.4 43.6 37.4 Key issues to watch:
P/BV (x) 8.6 6.5 5.9 5.4 Raw material imports account for 55% of raw material cost;
EV/EBITDA (x) 43.1 38.9 28.6 24.7 Siemens AGs network comprises 82% of imports; Euro
Div. Yield (%) 0.8 2.7 0.7 0.8
appreciating 2% vs. INR YoY could dent product competitiveness
and margin profile.
Quarterly Performance (Standalone) (INR Million)

Y/E September FY15 FY16 FY15 FY16E
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4QE
Total Revenues 21,860 26,530 23,760 32,995 23,142 27,836 26,204 32,971 105,124 110,153
Change (%) -1.9 5.2 0.1 3.5 5.9 4.9 10.3 -0.1 -1.4 3.3
EBITDA 1,890 2,502 2,531 2,817 1,940 3,061 2,338 3,755 9,761 10,382
As % of Revenues 8.6 9.4 10.7 8.5 8.4 11.0 8.9 11.4 9.2 9.4
Operational EBIDTA 1,890 2,501 2,531 3,309 10,231 2,665 2,928 2,656 3,309 10,231
As % of Revenues 8.6 9.4 10.7 10.0 44.2 9.6 11.2 8.1 3.1 9.3
Depreciation 564 553 564 475 586 590 625 470 2,156 2,271
interest 19 13 18 23 19 21 21 31 73 93
Other Income 303 360 555 407 411 270 279 802 1,604 1,763
Extra-ordinary Items 5,280 74 0 469 0 0 0 0 5,798 0
PBT 6,890 2,371 2,503 3,195 1,746 2,720 1,971 4,056 15,080 9,966
Tax 549 752 821 1,004 606 946 670 1,098 3,102 3,320
Reported PAT 6,341 1,619 1,683 2,191 1,140 1,774 1,300 2,958 11,978 6,645
Adjusted PAT 1,061 1,544 1,683 1,722 1,140 1,774 1,300 2,958 6,034 6,460
Change (%) 117.4 74.9 2.6 12.9 7.5 14.9 -22.7 71.8 33.0 42.4
Order Intake (INR b) 21 27 22 31 34 29 32 27 101 123
Order book (INR b) 121 102 101 96 108 110 116 116 96 116
BTB (x) 1.2 1.0 1.0 1.3 1.0 1.0 1.1 1.1 0.9 1.1
E: MOSL Estimates, Adj EBITDA: Adjusted for change in project revenues and cost estimates
October 2016 85
Thermax
Bloomberg TMX IN CMP: INR879 TP: INR730 (-17%) Sell
During the quarter, Thermax has increased its stake in First Energy
M. Cap. (INR b)/(USD b) 105 / 2
Limited from 33% to 54.7% with incremental investment of INR60m
in the company. First Energy Limited operates in the alternative
1,6,12 Rel Perf. (%) 8/4/-3
energy space.
Revenue is expected to register de-growth of 13% YoY, led by
constrained execution environment prevailing in the energy
Y/E March 2015 2016 2017E 2018E
segment. Operating margins are expected to remain stable YoY at
Net Sales 54.0 52.6 46.7 49.5
EBITDA 4.6 4.1 4.2 4.9
9.5%.
Adj PAT 2.6 2.8 2.9 3.5 Ordering activity continues to remain muted on a weak macro
EPS (INR) 21.8 23.5 24.7 29.0 environment. We believe domestic orders have remained at the
EPS Gr. (%) -6.0 8.2 5.0 17.4 base level (~INR57b per quarter) as the company has not
BV/Sh. (INR) 180.1 197.7 212.5 230.6 announced any meaningful order during the quarter.
RoE (%) 12.4 12.5 12.2 13.1 Increased internationalization of the business is a vital part of
RoCE (%) 8.5 11.3 10.9 12.7 Thermaxs ongoing strategy. The company also announced plans to
Payout (%) 39.8 32.9 34.3 32.1 partly localize operations in SE Asia by setting up subsidiaries.
Valuations Thermax is planning to set up a boiler facility in Indonesia with capex
P/E (X) 40.4 37.4 35.6 30.3 of USD50m. Thermax expects the facility to generate revenue of
P/BV (X) 4.9 4.4 4.1 3.8 USD100m over 3-4 years post commissioning of the plant. Maintain
EV/EBITDA (X) 23.0 26.1 25.0 21.1 Sell.
Div Yield (%) 0.8 0.9 1.0 1.1
Demand environment in domestic and overseas markets.
Sustainability of margins in energy (11.0% in 2QFY16) and
environment (8.0% in 2QFY16) segments.

Sales 10,173 10,565 10,390 12,932 8,145 9,171 9,664 12,388 44,589 39,606
Change (%) 21.2 -11.3 -9.4 -14.3 -19.9 -13.2 -7.0 -4.2 -5.1 -11.2
EBITDA 788 996 988 1,182 637 873 942 1,355 3,742 3,807
Change (%) 36.5 -18.5 -24.8 -27.3 -19.1 -12.3 -4.7 14.7 -20.4 1.8
As of % Sales 7.7 9.4 9.5 9.1 7.8 9.5 9.7 10.9 8.4 9.6
Depreciation 158 157 160 135 168 193 187 156 609 704
Interest 12 2 2 -1 7 15 10 14 46 46
Other Income 210 131 131 478 211 170 185 311 1,140 877
PBT 829 968 957 1,526 673 835 930 1,496 4,227 3,934
Tax 271 320 279 413 221 259 288 436 1,252 1,205
Reported PAT 558 648 678 1,113 452 576 642 1,059 2,975 2,730
Change (%) 34.8 (24.7) (11.1) (15.9) (19.0) (11.1) (5.4) (4.8) (11.4) (8.2)
Adj PAT 558 648 678 1,113 452 576 642 1,059 2,975 2,730
Change (%) 34.8 (24.7) (11.1) (15.9) (19.0) (11.1) (5.4) (4.8) (11.4) (8.2)
E: MOSL Estimates
October 2016 86
Voltas
Bloomberg VOLT IN CMP: INR389 TP: INR360 (-8%) Neutral
Unitary cooling division (UCP) is likely to report strong revenue
M. Cap. (INR b)/(USD b) 129 / 2
growth on the back of low base effect of 2QFY16. AC demand had
been impacted in 1HFY16 given: i) weak summer ii) sluggish
1,6,12 Rel Perf. (%) 1/25/37
consumer spends and iii) high base effect. We model in UCP
revenue growth of 18% YoY.
Y/E March 2015 2016 2017E 2018E We expect revenue growth of 5% YoY in the MEP segment, led by
Net Sales 51.8 58.6 64.7 72.0 high base effect (18% YoY growth in 2QFY16). However, key
EBITDA 4.1 4.4 5.7 6.7 monitorable would be margins in the segment. Voltas had booked
Adj PAT 3.4 3.9 4.4 5.3 loss of INR86m in 3QFY16 on account of cost overrun getting
EPS(INR) 10.2 11.7 13.4 15.9
booked for the UAE project, while the acceleration claim is yet to be
EPS Gr. (%) 37.5 14.0 15.3 18.1
BV/Sh. (INR) 63.6 72.4 82.0 93.3 booked.
RoE (%) 17.2 15.3 17.4 18.1 Sharp decline in crude prices has raised apprehensions over the
RoCE (%) 16.6 14.8 16.4 16.9 pace of order awards and also execution in the Middle East. Even in
Payout (%) 23.3 28.6 28.6 28.6
the domestic market, new project awards have continued to remain
Valuations
P/E (x) 22.6 37.3 28.9 24.5 constrained. Maintain Neutral.
P/BV (x) 3.6 5.4 4.7 4.2
EV/EBITDA (x) 18.3 29.6 22.0 18.6 Key issues to watch:
Div Yield (%) 1.0 0.7 0.9 1.0
Revenue contribution from air cooler business post launch of 11
models with honey comb technology.
Progress on legacy projects and also capital employed in MEP
business.
Quarterly Performance (Consolidated)

Sales 15,643 10,626 13,077 18,888 18,552 11,148 13,918 21,045 58,574 64,662
Change (%) -11.0 7.9 37.5 26.8 18.6 4.9 3.4 13.5 13.0 10.4
EBITDA 1,313 623 583 1,853 1,995 735 895 2,097 4,369 5,722
Change (%) -0.4 -19.9 1.6 29.5 52.0 18.0 53.5 13.2 6.6 31.0
As of % Sales 8.4 5.9 4.5 9.8 10.8 6.6 6.6 9.8 7.5 8.8
Depreciation 59 68 69 80 66 80 85 89 278 320
Interest 34 36 33 59 48 45 45 48 153 186
Other Income 248 302 183 478 357 200 200 312 1,176 1,069
PBT 1,468 821 687 2,471 2,248 810 965 2,272 5,220 6,286
Tax 452 376 126 664 651 250 250 610 1,599 1,760
Reported PAT 1,025 446 542 1,764 1,576 540 695 1,644 3,620 4,446
Change (%) -7.0 -11.1 -49.5 47.9 53.7 21.1 28.2 -6.8 -7.4 22.8
Adj PAT 1,025 446 520 1,485 1,567 540 695 1,644 3,515 4,446
Change (%) -7.9 -10.7 -17.3 27.1 52.8 21.1 33.7 10.7 3.9 26.5
E: MOSL Estimates
October 2016 87
September 2016 Results Preview
Cement
Company name
Cement prices firm despite monsoon impact
Volume growth to be muted
ACC
Ambuja Cements
Sluggish volumes in 2QFY17 as monsoon sets in: Cement demand was strong in
Grasim Industries the last two quarters, led by (1) a boost in infrastructure spending in north/central
India Cements regions, (b) stabilization of rural demand and (c) favorable base. However, the onset
Shree Cement on monsoon is expected to have hurt demand in 2QFY17, with core industry data
revealing subdued volume growth of 2.3% YoY in July-Aug-16. The MOSL coverage
Ramco Cement
universe is likely to record weak volume growth of 2.1% YoY (-13% QoQ) in 2QFY17.
UltraTech Cement
We expect (a) pan-India players to post 2% to 5% YoY volume decline (UTCEM >
ACC, ACEM), (b) players with better capacity headroom (SRCM, JKLC) to deliver -2%
to +9% YoY growth and (c) south-based companies to deliver +15% YoY growth.
Good monsoon after two years of drought, however, would lead to an increase in
rural demand and provide a favorable base for 2HFY17. Higher budget allocation to
cement-intensive sectors and the rural economy too offer good growth visibility for
2HFY17.
Prices remain stable: We note that prices remained stable in central/western

regions. In our view, ASPs should remain flat QoQ (+1.2% YoY) in 2QFY17. We
calculate price changes of: (a) +2.5% QoQ (+15% YoY) in north, (b) -0.2% QoQ (+4.6%
YoY) in central, (c) -3.5% QoQ in west (-1.3% YoY), (d) +1.3% QoQ in east (-3.1% YoY)
and (e) +1.9% QoQ (-5.4% YoY) in south.
which should aid profitability: Stable ASPs, despite weak volumes, are likely to
aid profitability, in our view. The MOSL coverage universe EBITDA/ton stands at
INR865 (-6% QoQ, +22% YoY).
Continue preferring cost and growth leaders: Strong visibility on demand

recovery and benefits of stable pricing should aid earnings growth in 2HFY17/FY18.
Sectoral dynamics (uptick in demand, moderating supply, etc.) too are moving in the
positive direction. Although valuations are in expensive territory, earnings could
surprise positively in FY18, led by realization improvements, particularly in
north/central regions. In this scenario, we continue preferring companies with
higher exposure to north/central regions. UTCEM and SRCM are our top picks
among large caps. We find JK Lakshmi and JKCE attractive among mid-caps, while
Ramco and Dalmia Cement should benefit from demand recovery.
Abhishek Ghosh (Abhishek.Ghosh@motilaloswal.com); +91 22 3982 5436

Aashumi Mehta (Aashumi.Mehta@MotilalOswal.com); +91 22 6129 1537
October 2016 88
September 2016 Results Preview | Sector: Cement
Exhibit 20: Expected quarterly performance summary

Cement
ACC 1,634 Neutral 25,495 -7.0 -11.2 3,073 16.5 -24.9 1,513 29.3 -36.4
Ambuja Cements 259 Buy 20,431 -2.5 -19.6 3,356 14.0 -42.3 2,051 33.5 -48.7
Grasim Industries 4,903 Under Review 25,102 18.3 4.8 4,617 37.8 -9.1 3,868 8.0 20.5
India Cements 151 Neutral 11,765 9.0 12.2 2,157 -5.6 7.1 493 14.3 12.1
Ramco Cements 614 Buy 9,256 5.9 -1.8 2,740 0.1 -0.4 1,577 13.7 1.2
Shree Cement 17,956 Buy 19,708 14.4 -10.4 5,742 47.8 -21.4 3,765 187.3 -25.8
Ultratech Cement 3,927 Buy 53,970 -4.0 -12.7 10,664 14.9 -22.3 5,435 38.0 -29.9
Sector Aggregate 165,727 2.0 -8.8 32,349 19.3 -20.7 18,702 40.0 -23.4
Source: MOSL
Exhibit 21: MOSL universe set to grow at 2.1% in 2QFY17 (%) Exhibit 22: MOSL universe volume at 41mt
Volumes (MT) - RHS Volume growth (%)
MOSL Universe
20
15
9.3
8.9
8.3
16.9
10
6.3
5.7
5.5
5.1
3.7
5
3.2
2.5
2.1
1.8
1.6
1.2
0.4
-1.3
0
-5.0
-5 39 36 38 42 39 37 38 44 43 39 40 42 43 40 42 49 47 41
-10
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17E
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17E
Exhibit 24: Pan-India average cement prices (INR/bag) flat

Exhibit 23: Utilizations (%) dip QoQ QoQ in 2QFY17, led by north, east and south regions
2QFY16 1QFY17 2QFY17
356
337
331
310
300
300
299
296
296
296
296
291
285
285
283
281
278
248
68
70
78
72
65
71
80
73
65
68
78
70
65
67
76
73
67
65
71
71
66
65
76
72
65
North East West South Central Average

2QFY11
4QFY11
2QFY12
4QFY12
2QFY13
4QFY13
2QFY14
4QFY14
2QFY15
4QFY15
2QFY16
4QFY16
2QFY17E
prices
(INR/bag)
October 2016 89
Exhibit 25: MOSL coverage to post QoQ uptick in average Exhibit 26: Profitability to dip QoQ led by weak volume
realizations in 2Q show
Realization (INR/ton) EBITDA (INR/ton)
4,487
4,483
4,426
4,426
4,397
1,130
4,387
4,377
4,357
4,325
4,320
4,295
4,216
4,192
4,189
4,177
4,170
4,138
4,133
1,007
4,062
4,019
3,936
988
966
3,772
3,735
915
903
865
833
831
814
806
788
780
3,380
759
717
714
711
705
681
600
578
489
566
570
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17E
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17E
Exhibit 27: Relative performance3 months (%) Exhibit 28: Relative performance1 year (%)
Sensex Index MOSL Cement Index Sensex Index MOSL Cement Index
120 160
115 140
110
120
105
100
100
95 80
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
Jul-16
Jun-16
Aug-16
Sep-16
Source: Bloomberg, MOSL
Exhibit 29: 2QFY17 estimates for MOSL coverage

Volume (m ton) Realization (INR/ton) EBITDA (INR/ton)
2QFY17E YoY (%) QoQ (%) 2QFY17E YoY (INR/T) QoQ (INR/T) 2QFY17E YoY (INR/T) QoQ (INR/T)
ACC 5.3 -5.0 -12.9 4,267 -171 0 679 208 102
ACEM 4.7 -5.1 -20.5 4,394 117 50 802 201 80
UltraTech 10.5 -2.4 -18.4 4,961 -92 274 996 161 -56
India Cement 2.5 16.0 8.9 4,605 -287 100 859 -197 -14
Shree Cement 4.6 9.0 -11.1 3,962 316 77 1,155 366 -117
Dalmia Bharat 3.3 15.0 -12.8 4,736 -101 150 1,022 33 -298
J K Cements 1.7 -5.0 -8.0 4,653 -98 -50 668 85 -211
JK Lakshmi 1.7 -2.0 -19.6 3,699 5 50 446 65 -106
Madras Cement 2.0 15.0 -5.2 4,551 -477 125 1,249 -185 -44
Orient Paper 1.3 28.0 -7.3 3,176 -342 50 274 -86 -5
Prism Cement 1.3 -5.0 -17.3 4,061 112 -50 605 271 -92
Sector Aggregate 41.0 2.1 -13.4 4,426 -57 100 865 154 -51
Source: MOSL
October 2016 90

Cement
ACC 1,634 Neutral 32.0 46.4 82.2 51.1 35.2 19.9 20.8 18.6 11.6 7.2 10.1 17.1
Ambuja Cements 259 Buy 5.5 7.8 12.8 47.4 33.4 20.3 21.6 18.6 12.3 8.3 11.1 17.2
Birla Corporation 720 Buy 20.4 58.6 70.8 35.3 12.3 10.2 9.4 6.9 5.3 5.9 14.5 14.7
Dalmia Bharat 1,909 Buy 21.5 44.4 72.8 88.9 43.0 26.2 8.8 12.6 10.0 5.5 9.7 14.2
Grasim Industries 4,903 UR 241.7 380.2 472.4 20.3 12.9 10.4 6.1 6.0 4.5 9.2 12.9 14.1
India Cements 151 Neutral 4.4 5.8 9.0 34.4 25.9 16.9 7.6 10.2 8.8 3.9 5.7 7.7
J K Cements 885 Buy 14.5 34.6 57.4 61.0 25.6 15.4 15.0 12.7 9.6 6.3 14.0 20.1
JK Lakshmi Cem. 497 Buy 0.4 9.4 30.5 1334.1 52.7 16.3 20.9 16.6 9.6 0.3 8.1 23.5
Orient Cement 222 Buy 3.0 3.2 7.5 73.0 69.5 29.5 25.2 19.9 13.1 6.2 6.3 13.6
Prism Cement 106 Buy 0.1 2.8 7.0 769.8 37.5 15.1 21.1 13.5 8.3 0.7 13.4 27.4
Ramco Cements 614 Buy 23.4 26.2 31.7 26.2 23.4 19.3 11.1 13.9 11.5 19.5 18.5 19.1
Shree Cement 17,956 Buy 168.0 568.2 737.6 106.9 31.6 24.3 24.8 21.0 14.6 10.2 27.9 27.9
Ultratech Cement 3,927 Buy 79.3 108.0 165.3 49.5 36.4 23.8 20.4 19.6 13.4 11.0 13.4 17.9
Source: MOSL
October 2016 91
ACC
Bloomberg ACC IN CMP: INR1,634 TP: INR1,795 (+10%) Neutral
Dispatches in 3QCY16 are estimated at 5.33mt (-5% YoY). Average
M. Cap. (INR b)/(USD b) 307 / 5
realizations are expected to remain flat QoQ (-1.9% YoY) at
52-Week Range (INR) 1,738/1,173
INR4,267/ton.
1,6,12 Rel Perf. (%) -1/4/12
Revenues are expected to de-grow 7% YoY to INR25.5b. EBITDA
Financial Snapshot (INR Billion) margin is expected to be 12.1%, down 2.2pp QoQ (+2.5pp YoY).
Y/E Dec 2014 2015 2016E 2017E EBITDA/ton is estimated at INR721 (+INR270 YoY, +INR140 QoQ).
Sales 114.8 114.3 116.9 137.2 Pure cement EBITDA/ton is estimated at INR577 (-INR92 QoQ) due
EBITDA 12.5 11.7 15.6 24.3 to weak volumes. PAT is likely to grow 6% YoY to INR1.5b. We
NP 8.6 6.0 8.7 15.5 believe subsiding headwinds in its east operations would improve
Adj. EPS (INR) 45.9 32.0 46.4 82.2 cost structure and volume growth.
EPS Gr. (%) -5.6 -30.3 45.2 77.2
BV/Sh (INR) 438 449.3 465.6 493.6
The stock trades at 19.9x CY17E EPS, 11.4x CY17E EV/EBITDA and
RoE (%) 10.7 7.2 10.1 17.1
FY17E EV/ton of USD125/ton. Maintain Neutral.
RoCE (%) 10.9 7.4 10.2 16.7
Payout (%) 63.6 65.1 64.9 65.9 Key issues to watch out for
Valuations
Cement pricing recovery.
P/E (x) 35.6 51.1 35.2 19.9
Volume growth and demand revival.
P/BV (x) 3.7 3.6 3.5 3.3
EV/EBITDA (x) 21.5 23.8 18.4 11.4
Update on cost-saving measures.
EV/Ton (x) 131 136.2 129.4 125.2
Visibility on seamless operation of plants in the east.

Cement Sales (m ton) 5.82 6.20 5.61 5.99 6.36 6.12 5.33 6.99 23.62 24.80
YoY Change (%) -10.2 -2.4 -0.2 4.0 9.3 -1.3 -5.0 16.7 -2.4 5.0
Cement Realization 4,535 4,385 4,438 4,339 4,171 4,267 4,267 4,374 4,423 4,273
YoY Change (%) 5.5 -1.2 -1.8 -2.3 -8.0 -2.7 -3.9 0.8 0.0 -3.4
QoQ Change (%) 2.1 -3.3 1.2 -2.2 -3.9 2.3 0.0 2.5
Net Sales 28,854 29,612 27,400 28,461 29,274 28,698 25,495 33,461 114,328 116,927
YoY Change (%) -2.8 -1.6 -0.1 3.0 1.5 -3.1 -7.0 17.6 -0.4 2.3
EBITDA 4,137 2,795 2,638 2,162 3,696 4,092 3,073 4,744 11,731 15,605
Margins (%) 14.3 9.4 9.6 7.6 12.6 14.3 12.1 14.2 10.3 13.3
Depreciation 1,698 1,657 1,607 1,559 1,434 1,410 1,550 2,013 6,521 6,407
Interest 226 143 150 154 164 183 200 203 673 750
Other Income 1,141 775 678 844 1,121 686 750 942 3,437 3,500
PBT after EO Item 3,230 1,771 1,559 1,292 3,220 3,185 2,073 3,470 7,974 11,948
Tax 824 456 389 267 898 806 560 961 1,936 3,226
Rate (%) 25.5 25.8 24.9 20.6 27.9 25.3 27.0 27.7 24.3 27.0
Reported PAT 2,406 1,314 1,170 1,026 2,322 2,378 1,513 2,509 6,039 8,722
Adjusted PAT 2,497 1,314 1,170 1,026 2,322 2,378 1,513 2,509 6,039 8,722
Margins (%) 8.7 4.4 4.3 3.6 7.9 8.3 5.9 7.5 5.3 7.5
YoY Change (%) -5.2 -45.5 -42.9 -15.5 -7.0 81.0 29.3 144.5 -30.0 44.4
E: MOSL Estimates
October 2016 92
Ambuja Cements
Bloomberg ACEM IN CMP: INR259 TP: INR309 (+19%) Buy
Dispatches in 3QCY16 are estimated to decline 5.1% YoY to 4.65mt.
M. Cap. (INR b)/(USD b) 402 / 6
Average realizations are expected to improve 2.7% YoY (+1.2% QoQ)
to INR4,394/ton. Revenue is estimated at INR20.4b (+2.5% YoY).
1,6,12 Rel Perf. (%) -5/-2/16
EBITDA margin is expected to be 16.4% (-6.5pp QoQ, +2.3pp YoY).
Financial Snapshot (INR Billion) EBITDA/ton is estimated at ~INR722 (-INR272/ton QoQ, +INR121/ton
Y/E DEC 2014 2015 2016E 2017E YoY).
Sales 99.1 93.7 97.9 114.5 Adjusted PAT is estimated to grow 33.5% YoY to INR2.1b.
EBITDA 18.6 14.4 18.5 26.6
NP 13.2 8.5 12.0 19.8 The stock trades at 17.8x CY17E EPS, 12.8x EV/EBITDA and CY17E
Adj. EPS (INR) 8.5 5.5 6.1 10.0
EV/ton of USD172/ton. Maintain Buy.
EPS Gr. (%) 25.9 -35.9 11.0 64.6
BV/Sh. (INR) 65.6 66.9 96.6 103.1
RoE (%) 13.4 8.3 6.3 10.0
RoCE (%) 14.3 8.9 8.5 10.3
Payout (%) 61.8 44.9 57.3 35.2
Key issues to watch out for
Valuations
Volume growth recovery and outlook.
P/E (x) 30.4 47.4 29.3 17.8
Cement pricing outlook and sustainability.
P/BV (x) 3.9 3.9 1.8 1.7
Update on ACC-ACEM restructuring timeline.
EV/EBITDA (x) 18.8 24.0 19.4 12.8
EV/Ton (USD) 182 180 182 172

Sales Volume (m ton)* 5.43 5.95 4.90 5.48 5.97 5.85 4.65 6.38 21.76 22.85
YoY Change (%) -10.4 1.8 1.9 0.8 9.9 -1.7 -5.1 16.4 -1.8 5.0
Realization (INR/ton) 4,465 4,190 4,277 4,300 4,053 4,344 4,394 4,371 4,306 4,286
YoY Change (%) 2.6 -9.5 -6.0 -1.8 -9.2 3.7 2.7 1.7 -3.8 -0.5
QoQ Change (%) 2.0 -6.2 2.1 0.5 -5.7 7.2 1.2 -0.5
Net Sales 24,246 24,928 20,952 23,558 24,183 25,412 20,431 27,884 93,683 97,910
YoY Change (%) -8.1 -7.9 -4.2 -1.0 -0.3 1.9 -2.5 18.4 26.8 15.1
EBITDA 4,715 3,661 2,944 3,042 4,235 5,813 3,356 5,115 14,362 18,519
Margins (%) 19.4 14.7 14.1 12.9 17.5 22.9 16.4 18.3 15.3 18.9
Depreciation 1,578 1,485 1,553 1,641 1,477 1,511 1,500 1,682 6,257 6,170
Interest 214 316 207 181 182 205 185 191 918 763
Other Income 1,336 1,234 898 1,067 1,415 1,368 1,100 1,117 4,535 5,000
Rate (%) 25.4 26.8 26.2 36.4 27.7 26.9 26.0 28.6 27.7 27.4
Reported Profit 3,177 2,264 1,536 1,100 3,038 3,995 2,051 3,110 8,076 12,194
Adj PAT 3,177 2,264 1,536 1,454 2,885 3,995 2,051 3,110 8,478 12,041
YoY Change (%) -29.0 -44.6 -35.8 -43.2 -9.2 76.5 33.5 114.0 -35.8 42.0
E: MOSL Estimates
October 2016 93
Grasim Industries
Bloomberg GRASIM IN CMP: INR4,903 Under review
We expect VSF volumes to grow 18% YoY (+6% QoQ) to 128,421
M. Cap. (INR b)/(USD b) 458 / 7
tons in 2QFY17, while realizations are expected to improve 8.9%
52-Week Range (INR) 5,349/3,242
YoY (-0.8% QoQ) to INR 127,039/ton.
1,6,12 Rel Perf. (%) 7/15/31
Standalone EBITDA margin is estimated at 18.4%, +2.6pp YoY (-
Financial Snapshot (INR Billion) 2.8pp QoQ).
Y/E March 2015 2016 2017E 2018E EBITDA is estimated to de-grow -9% QoQ (+38% YoY) to INR4.6b,
Sales 324.4 365.9 408.2 459.6 translating into PAT of INR3.8b (+8% YoY).
EBITDA 47.3 60.2 79.8 101.5
Adj. PAT 17.5 22.6 35.5 44.1
The stock trades at 10.2x FY18E consolidated EPS, 6.7x FY18E
EV/EBITDA and implied cement EV/ton of USD124/ton.
Adj. EPS (INR) 190.5 241.7 380.2 472.4
EPS Gr. (%) -11.4 26.8 57.3 24.3
BV/Sh. (INR) 2,519 2,767 3,121 3,568
RoE (%) 7.8 9.2 12.9 14.1
RoCE (%) 8.8 10.0 13.2 15.6
Valuations Pick-up in cement demand and pricing thereon.
P/E (x) 25.4 20.0 12.7 10.2 Outlook on VSF business, and strategy to utilize upcoming
P/BV (x) 1.9 1.7 1.5 1.4 capacities globally.
EV/EBITDA (x) 15.7 11.3 8.9 6.7
EV/Ton (x) 178 143 126 124

Y/E March FY16 FY17E FY16 FY17E
(Standalone) 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
VSF Volume (ton) 102,737 113,756 120,700 130,000 121,000 128,421 132,770 141,969 468,000 524,160
YoY Change (%) 18.9 12.7 24.4 9.7 17.8 12.9 10.0 9.2 16.2 12.0
VSF Realization (INR/ton) 113,309 116,708 126,090 126,090 128,039 127,039 125,039 121,242 121,693 125,193
YoY Change (%) -4.8 -1.4 8.0 13.8 13.0 8.9 -0.8 -3.8 5.0 2.9
QoQ Change (%) 2.3 3.0 8.0 0.0 1.5 -0.8 -1.6 -3.0
Net Sales 19,234 21,224 23,120 25,044 23,959 25,102 25,853 26,131 88,622 101,045
YoY Change (%) 35.1 34.1 49.7 47.2 24.6 18.3 11.8 4.3 41.7 14.0
EBITDA 2,676 3,350 4,289 4,298 5,078 4,617 4,577 5,868 14,613 20,141
Margins (%) 13.9 15.8 18.6 17.2 21.2 18.4 17.7 22.5 16.5 19.9
Depreciation 948 1,005 1,231 1,287 1,104 1,250 1,400 1,218 4,471 4,971
Interest 409 401 396 268 231 210 240 245 1,474 926
Other Income 484 2,323 550 635 781 2,000 1,050 769 3,992 4,600
PBT after EO Items 1,802 4,266 3,213 3,086 4,525 5,157 3,987 4,882 12,659 18,843
Tax 541 684 609 1,001 1,317 1,289 997 1,108 2,835 4,711
Rate (%) 30.0 16.0 19.0 32.4 29.1 25.0 25.0 22.7 22.4 25.0
Reported PAT 1,261 3,582 2,604 2,086 3,209 3,868 2,990 3,774 9,825 14,132
Adj. PAT 1,261 3,582 2,604 2,086 3,209 3,868 2,990 3,774 9,825 14,132
Margins (%) 6.6 16.9 11.3 8.3 13.4 15.4 11.6 14.4 11.1 14.0
YoY Change (%) 19.2 19.7 182.4 359.1 154.4 8.0 14.8 80.9 81.1 43.8
E: MOSL Estimates
October 2016 94
India Cements
Bloomberg ICEM IN CMP: INR151 TP: INR154 (+2%) Neutral
India Cements volumes are expected to grow 16% YoY (-8% QoQ)
to 2.51mt in 2QFY17. We estimate realizations to de-grow 6% YoY
1,6,12 Rel Perf. (%) 0/59/76
(+2.2% QoQ) to INR4,605/ton. Revenue is estimated at INR11.7b
(+9% YoY, +12% QoQ).
Financial Snapshot (INR Billion) EBITDA is estimated at INR2.1b, and EBITDA margin is likely to
Y/E March 2015 2016E 2017E 2018E decline 0.9pp QoQ to 18.3%, translating into blended EBITDA/ton of
Sales 44.2 42.3 44.6 48.9 INR859 (-INR197/ton YoY). PAT is expected at INR493m (v/s +INR
EBITDA 6.8 7.7 7.7 8.7
431m in 2QFY16).
NP 0.3 1.4 1.7 2.5
Adj. EPS (INR) 0.0 4.4 5.8 9.0 Valuations stand at 16.9x FY18E EPS and 8x FY18E EBITDA. Maintain
EPS Gr. (%) -100 -11,446 32.8 53.6 Neutral.
BV/Sh (INR) 117.0 118.8 76.2 132.4
RoE (%) 0.8 3.9 5.7 7.7
RoCE (%) 6.5 5.9 7.2 8.0
Payout (%) 0.0 25.9 0.0 0.0
Valuations Key issues to watch out for
P/E (x) -2915 34.4 25.9 16.9 Visibility on AP demand recovery.
P/BV (x) 0.7 1.3 2.0 1.1
Demand and pricing outlook, especially in south India.
EV/EBITDA(x) 8.2 9.7 9.4 8.0
Timeline and capex plan for TN expansion of 2.6mt.
EV/Ton (USD) 62 77 77 75

Sales Dispatches (m ton) 2.10 2.17 1.94 2.50 2.31 2.51 2.07 2.64 8.70 9.53
YoY Change (%) -18 -8 -8 19 10 16 7 6 -4.5 9.6
YoY Change (%) 18.9 5.1 -0.6 -5.8 -10.7 -5.9 1.2 12.9 4.1 -3.7
QoQ Change (%) 4.7 -3.1 -3.0 -4.3 -0.8 2.2 4.3 6.7
Net Sales 10,743 10,791 9,296 11,471 10,485 11,765 10,062 12,289 42,269 44,600
YoY Change (%) -12.4 -4.6 -10.3 11.9 -2.4 9.0 8.2 7.1 -4.4 5.5
EBITDA 1,960 2,286 1,462 2,115 2,014 2,157 1,490 2,031 7,813 7,692
Margins (%) 18.2 21.2 15.7 18.4 19.2 18.3 14.8 16.5 18.5 17.2
Depreciation 554 552 552 522 511 635 545 588 2,180 2,279
Interest 965 954 906 913 825 920 890 810 3,704 3,445
Other Income 44 33 74 70 32 55 65 144 222 296
Extra-Ord expense 107 40 0 0 0 0 0 0 147
PBT 378 773 79 750 710 657 120 777 2,003 2,264
Tax 0 363 24 238 271 164 30 101 625 566
Rate (%) 0.0 46.9 30.9 31.7 38.1 25.0 25.0 13.0 31.2 25.0
Reported PAT 378 410 55 512 440 493 90 675 1,378 1,698
Adj PAT 485 431 55 512 440 493 90 675 1,480 1,698
E: MOSL Estimates
October 2016 95
Ramco Cements
Bloomberg TRCL IN CMP: INR614 TP: INR713 (+16%) Buy
2QFY17 volumes are estimated to grow 15% YoY (-5% QoQ) to
M. Cap. (INR b)/(USD b) 146 / 2
1.97mt. Average realizations are expected to decline 9.5% YoY
(+2.8% QoQ) to 4,551/ton.
1,6,12 Rel Perf. (%) 11/41/75
EBITDA margin is expected to increase 0.4pp QoQ to 29.6%.
Financial Snapshot (INR Billion) EBITDA/ton (ex-windmill) is estimated at INR1,249 (-~INR44 QoQ, -
Y/E MARCH 2015 2016 2017E 2018E INR185 YoY).
Sales 35.9 35.9 38.2 43.1
PAT is estimated to grow 13.7% QoQ to INR1.6b.
EBITDA 6.6 10.5 11.6 13.6
NP 2.4 5.6 6.2 7.6 The stock trades at 19.3x FY18E EPS, 11.2x EV/EBITDA and FY18E
Adj EPS 10.2 23.4 26.2 31.7 EV/ton of USD141. Maintain Buy.
(INR)
EPS Gr. (%) 106.8 130.3 11.7 21.2
BV/Sh. (INR) 111.1 129.9 152.6 179.7
RoE (%) 9.5 19.5 18.5 19.1
RoCE (%) 7.0 13.2 13.1 14.6
Payout (%) 17.1 14.9 13.3 14.6
Valuations
Volume growth recovery and outlook.
P/E (x) 60.3 26.2 23.4 19.3
Cement pricing outlook and demand sustainability in south (AP
EV/EBITDA (x) 25.7 15.8 13.7 11.2
and Tamil Nadu).
EV/Ton (USD) 174 159 148 141

Sales Dispatches (m ton) 1.81 1.71 1.63 2.09 2.08 1.97 1.77 2.14 7.235 7.96
YoY Change (%) -14.8 -11.9 -5.4 10.9 14.5 15.0 9.0 2.8 -5.6 10.0
YoY Change (%) 17.7 6.1 6.5 -8.4 -14.5 -9.5 -7.9 7.5 5.0 -6.0
QoQ Change (%) -2.5 -2.9 0.5 -3.7 -9.0 2.8 2.2 12.5
Net Sales 9,041 8,740 8,119 9,788 9,429 9,256 8,281 11,225 35,872 38,191
YoY Change (%) -2.2 -5.2 3.3 1.8 4.3 5.9 2.0 14.7 -0.2 6.5
EBITDA 2,104 2,736 2,446 3,035 2,750 2,740 2,203 3,946 10,504 11,639
Margins (%) 23.3 31.3 30.1 31.0 29.2 29.6 26.6 35.2 29.3 30.5
Depreciation 667 671 679 652 663 680 710 754 2,670 2,807
Interest 493 453 418 439 291 290 290 358 1,802 1,229
Other Income 452 199 109 240 310 310 330 355 999 1,305
PBT 1,396 1,811 1,458 2,183 2,106 2,080 1,533 3,189 7,031 8,907
Tax 403 423 280 342 547 502 280 1,343 1,448 2,672
Rate (%) 28.9 23.4 19.2 15.7 26.0 24.2 18.3 42.1 20.6 30.0
Adj PAT 992 1,387 1,177 1,840 1,559 1,577 1,253 1,846 5,583 6,235
YoY Change (%) 173.7 54.6 412.8 97.0 57.1 13.7 6.4 0.3 130.4 11.7
Margins (%) 11.0 15.9 14.5 18.8 16.5 17.0 15.1 16.4 15.6 16.3
E: MOSL Estimates
October 2016 96
Shree Cement
Bloomberg SRCM IN CMP: INR17,956 TP: INR20,400 (+14%) Buy
We expect 2QFY17 cement volumes to grow 8.2% YoY (-12% QoQ)
M. Cap. (INR b)/(USD b) 626 / 9
to 4.53mt (including clinker), and realizations to grow 8.7% YoY
52-Week Range (INR) 18,519/9,350
(+2% QoQ) to INR3,962/ton.
1,6,12 Rel Perf. (%) 5/34/42
Merchant power sale is expected to be 500m units (v/s 608m units
Financial Snapshot (INR Billion) in 1QFY17) at ~INR3.5/unit (v/s INR3.52 in 1QFY17). Power EBITDA
Y/E March 2015 2016 2017E 2018E is estimated at INR450m (v/s INR784m in 1QFY17).
Sales 64.4 72.9 91.3 112.5
Revenue is estimated at INR19.7b (+14.4% YoY) and EBITDA at
EBITDA 13.3 16.7 27.9 38.3
INR5.7b, translating into margin of 29.1% (-4.1 QoQ, +5.9pp YoY).
NP 4.6 5.9 19.8 25.7
Adjusted PAT is likely to be INR3.7b (v/s INR1b in 2QFY16).
Adj EPS (INR) 133.2 168.0 568.2 737.6
EPS Gr. (%) -40.0 26.1 238.3 29.8 Valuations stand at 24.3x FY18E EPS, 14.6x FY18E EBITDA and FY18E
BV/Share (INR) 1,515 1,774 2,302 2,993 EV/ton at USD275/ton. Maintain Buy.
RoE (%) 9.3 10.2 27.9 27.9
RoCE (%) 10.0 10.6 26.3 26.9
Payout (%) 22.8 17.4 7.2 6.3
Valuation
Volume and pricing recovery for north India.
P/E (x) 134.8 106.9 31.6 24.3
Update on scale-up of recently commissioned Chhattisgarh units.
P/BV (x) 11.9 10.1 7.8 6.0
New expansion plan.
EV/EBITDA (x) 46.2 36.3 21.0 14.6
EV/Ton (USD) 374 343 308 275
Quarterly Performance - Shree Cement (S/A) (INR Million)

Y/E June FY16 FY17 FY16 FY17E
1Q 2Q 3Q 1Q 2QE 3QE 4QE
Sales Dispat. (m ton) 4.19 4.70 5.60 5.13 4.53 5.45 6.59 18.83 21.73
YoY Change (%) 7.9 23.3 35.6 18.0 8.2 16.0 17.6 16.5 15.4
Realization (INR/Ton) 3,646 3,500 3,200 3,885 3,962 4,035 3,652 3,437 3,862
YoY Change (%) 0.0 -1.1 -9.5 11.8 8.7 15.3 14.2 -3.1 12.4
QoQ Change (%) 4.9 -4.0 -8.6 21.4 2.0 1.8 -9.5
Net Sales 17,235 18,268 20,174 21,987 19,708 23,747 25,855 72,872 91,296
YoY Change (%) 7.4 18.5 28.2 27.9 14.4 30.0 28.2 13.2 25.3
EBITDA 3,885 4,240 5,050 7,308 5,742 7,863 6,993 16,691 27,906
Margins (%) 22.5 23.2 25.0 33.2 29.1 33.1 27.0 22.9 30.6
Depreciation 2,704 3,042 3,338 1,540 1,930 1,650 1,377 11,467 6,498
Interest 232 233 286 276 140 145 145 1,015 706
Other Income 238 236 755 979 920 1,200 1,256 1,673 4,355
PBT 1,166 1,199 2,181 6,471 4,592 7,268 6,728 5,619 25,058
Tax -122 170 -53 1,394 826 1,018 2,024 29 5,262
Rate (%) -10.4 14.2 -2.4 21.5 18.0 14.0 30.1 0.5 21.0
Reported PAT 1,287 1,029 2,233 5,077 3,765 6,251 4,703 5,590 19,796
Adj PAT 1,310 1,030 2,234 5,077 3,765 6,251 4,703 5,852 19,796
YoY Change (%) 10.3 9.0 79.3 287.4 265.7 179.8 2.9 26.1 238.3
E: MOSL Estimates
October 2016 97
UltraTech Cement
Bloomberg UTCEM IN
CMP: INR3,927 TP: INR4,675 (+19%) Buy
M. Cap. (INR b)/(USD b) 1,077 / 16
2QFY17 cement volumes are estimated to de-grow 2.4% YoY (-18%
52-Week Range (INR) 4,130/2,581 QoQ) to 10.54mt. Realizations are estimated to de-grow 3.4% YoY
1,6,12 Rel Perf. (%) -3/11/34 (+1.2% QoQ) to INR4,133/ton.
We estimate grey cement EBITDA/ton at INR840 (-INR115 QoQ).
Financial Snapshot (INR Billion) EBITDA margin is expected to increase 3.3pp YoY (-2.4pp QoQ) to
Y/E March 2015 2016 2017E 2018E 19.8%.
Sales 226.6 238.4 262.9 309.3
EBITDA is estimated to decline 22% QoQ (+15% YoY) to INR10.6b,
EBITDA 39.2 43.5 54.3 76.9
translating into PAT de-growth of 30% QoQ (to INR5.4b).
NP 20.1 21.7 29.6 45.4
Adj EPS(INR) 73.4 79.3 108.0 165.3 The stock trades at 23.3x FY18E EPS, 12.7x FY18E EV/EBITDA and
EPS Gr. (%) -2.8 7.9 36.2 53.1 FY18E EV/ton of USD216. Maintain Buy.
BV/Sh (INR) 687.3 755.8 852.2 1,000.0
RoE (%) 11.2 11.0 13.4 17.9
RoCE (%) 9.9 9.3 11.5 15.2 Key issues to watch out for
Payout (%) 14.2 13.9 10.8 10.5 Volume growth recovery and outlook.
Valuation Cement pricing outlook and sustainability.
P/E (x) 52.5 48.7 35.7 23.3
Update on scale-up of newly commenced Rajasthan plant.
P/BV (x) 5.6 5.1 4.5 3.9
Update on financial performance of Star Cement, UAE.
EV/EBITDA (x) 27.0 24.1 18.8 12.7
Acquisition of JPA assets.
EV/Ton (USD) 252 232 226 216

Sales (m ton) 12.14 10.80 11.47 13.60 12.91 10.54 13.02 15.68 48.1 52.2
YoY Change (%) 3.8 4.3 4.4 15.2 6.3 -2.4 13.5 15.3 7.2 8.4
Grey Cement Realn.(INR/ton) * 4,183 4,279 4,139 3,946 4,083 4,133 4,233 4,358 4,138 4,213
YoY Change (%) 2.2 -0.8 -0.1 -9.4 -2.4 -3.4 2.3 10.5 -2.1 1.8
QoQ Change (%) -4.0 2.3 -3.3 -4.7 3.5 1.2 2.4 2.9
Net Sales 59,476 56,209 57,473 64,359 61,823 53,970 66,219 80,929 238,410 262,941
YoY Change (%) 5.3 4.5 4.7 4.8 3.9 -4.0 15.2 25.7 5.2 10.3
EBITDA 10,939 9,283 10,439 12,850 13,723 10,664 13,973 15,952 43,498 54,312
Margins (%) 18.4 16.5 18.2 20.0 22.2 19.8 21.1 19.7 18.2 20.7
Depreciation 2,852 3,333 3,238 3,493 3,027 3,200 3,300 4,038 12,890 13,565
Interest 1,399 1,303 1,257 1,110 1,525 1,500 1,480 1,424 5,053 5,929
Other Income 1,770 1,050 1,318 1,055 2,006 1,800 1,854 1,840 5,015 7,500
Rate (%) 28.6 30.9 30.0 26.7 30.7 30.0 30.0 29.4 28.9 30.0
Adj PAT 6,040 3,939 5,086 6,814 7,749 5,435 7,733 8,706 21,747 29,623
YoY Change (%) -3.4 -3.9 39.6 10.8 28.3 38.0 52.1 27.8 7.9 36.2
E: MOSL Estimates; * Grey cement realization is our estimate
October 2016 98
September
September 2016 2016 Results
Results Preview Preview
| Consumer
Consumer
Company name No greenshoots yet
Asian Paints Demand environment remains soft; input prices inching up QoQ
Britannia Industries
Volumes not yet out of woods; margin expansion to taper
Colgate We expect our Consumer universes revenue and PAT to increase 10.2% and 15.8%,
Dabur respectively in 2QFY17. Demand across our Staples universe remains steady, with no
Emami meaningful pick-up. Rural demand remains under stress, with newfound hope
Godrej Consumer
following near-normal monsoon after two years of drought. MOSL Consumer
universe EBITDA is likely to grow 13.7%, with 70bp margin expansion. We expect
GSK Consumer
ITCs sales to grow 9% (2% increase in cigarette volumes) and PAT to grow 13.5%.
Hindustan Unilever HUVRs sales growth is estimated at 3.5% (volume growth of ~3%), with 150bp
ITC EBITDA margin expansion over a low base in 2QFY16. We expect Asian Paints, GCPL,
Jyothy Labs Pidilite, P&G Hygiene and United Spirits to register robust PAT performance. Nestle
Marico
numbers appear strong because of Maggi issue in the base.
Nestle India
YoY RM trends still benign; sequential inflation seen in some commodities
Page Industries PFAD and TiO2 prices saw YoY inflation of 33.8% and 1.5%, respectively. LLP and
Parag Milk Foods HDPE prices still remained benign, with correction of 15% and 5%, respectively.
Pidilite Industries Pricing has been broadly flattish across segments, with companies (selectively in our
P&GHH
coverage) continuing with price/volume offers to boost incipient volume growth;
yet, some have started taking selective price hikes following sequential increase in
Radico Khaitan
raw material (RM) cost.
United Spirits
Preference for quality and longevity of growth

The Consumer sector is characterized by rich near-term valuations, given the
markets continued preference for quality with healthy growth. Our framework for
earnings visibility, longevity of growth and quality management drives our choices in
the sector universe. We continue to prefer Britannia, Emami, P&G Hygiene and
Colgate, notwithstanding near-term challenges. We also like Pidilite and Page
Industries in the discretionary pack.
Interesting management commentaries

GCPL: With monsoon happening, towards-November end or December end,
we should see a revival in rural demand for sure. Then, it should accelerate
around quarter four.
Britannia: Seeing reasonably good volume growth and material cost inflation
of around 9.5%. Will take weighted average price increase of 7.5% for FY17
versus earlier expectation of 4-5%.
Nestle: New variants met with an encouraging response. Other non-noodle
products like dairy and chocolates are also seeing traction.
Krishnan Sambamoorthy (Krishnan.Sambamoorthy@MotilalOswal.com)/Vishal Punmiya (Vishal.Punmiya@MotilalOswal.com)

October 2016 99
September 2016 Results Preview | Consumer

Consumer
Asian Paints 1,192 Neutral 39,126 14.0 7.6 6,603 21.2 -19.5 4,936 21.2 -7.7
Britannia 3,483 Buy 23,804 12.0 13.0 3,419 11.2 21.4 2,481 13.5 13.2
Colgate 983 Buy 10,726 13.0 6.7 2,804 9.3 32.7 1,723 11.8 37.1
Dabur 276 Neutral 20,017 4.0 4.0 4,364 9.0 26.7 3,684 8.0 25.8
Emami 1,182 Buy 6,140 16.0 -4.7 1,735 14.0 17.9 1,310 7.5 11.5
Godrej Consumer 1,639 Neutral 25,868 18.0 22.0 4,975 23.1 31.8 3,490 18.1 37.5
GSK Consumer 6,193 Neutral 11,157 4.0 18.2 2,602 6.3 27.8 2,095 12.3 30.4
Hind. Unilever 869 Neutral 80,020 3.5 -1.6 15,035 12.5 -8.1 10,757 8.2 -4.6
ITC 242 Buy 97,056 9.0 -3.5 39,290 10.4 11.4 27,601 13.5 15.7
Jyothy Labs 359 UR 4,339 11.0 -1.4 556 10.8 -30.0 294 81.3 -35.9
Marico 282 Neutral 14,966 3.0 -14.5 2,519 9.5 -31.8 1,732 16.2 -35.3
Nestle 6,597 Neutral 22,397 29.0 -0.7 3,977 38.4 -8.7 2,319 39.2 -18.7
P&G Hygiene 6,842 Buy 7,063 18.0 26.5 1,488 53.8 -6.1 1,027 47.1 -6.2
Page Industries 15,453 Buy 5,776 25.0 1.0 1,276 25.0 16.8 828 35.8 21.9
Parag Milk Foods 302 Neutral 5,166 10.0 34.7 466 12.5 41.3 217 124.3 101.1
Pidilite Inds. 723 Buy 15,181 15.0 -3.3 3,694 22.6 -6.3 2,410 24.1 -11.3
Radico Khaitan 122 Neutral 4,268 9.0 -0.8 553 1.2 -1.8 238 2.8 10.6
United Spirits 2,424 Buy 21,769 11.5 7.4 2,939 8.3 45.3 1,502 68.2 95.2
Source: MOSL
Exhibit 32: 2QFY17 volume growth expectations (%)

Quarter Ending 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16E 1Q17 2Q17E
Asian Paints 12.0 7.0 12.0 11.0 10.0 3.0 4.0 12.0 5.0 15.0 13.0 11.0 16.0
Britannia (Biscuits) 1.0 3.0 3.0 10.0 6.0 8.0 8.0 10.0 12.0 11.0 10.0 8.0 8.0
Colgate (Toothpaste) 9.0 11.0 7.0 5.0 7.0 5.0 5.0 2.0 3.0 1.0 1.5 5.0 5.5
Dabur 10.7 9.0 9.2 8.3 8.7 7.4 8.1 8.1 5.5 -2.5 6.0 4.1 6.0
Emami 6.0 1.5 -10.0 12.5 11.5 11.0 12.0 15.0 13.5 9.3 13.0 18.0 13.0
Godrej Consumer
Soaps 4.0 6.0 -4.0 MSD LSD LSD 5.0 DD MSD MSD MSD LDD LSD
GSK Consumer 10.0 11.0 8.0 3.0 2.0 5.0 2.0 2.0 2.0 0.0 2.0 -6.0 -2.0
Hindustan Unilever 5.0 4.0 3.0 5.0 5.0 3.0 6.0 6.0 7.0 6.0 6.0 4.0 3.0
ITC (cigarette) -4.0 -2.0 -3.0 -2.5 -4.0 -13.0 -12.0 -17.0 -15.0 -5.0 -3.0 3.0 2.0
Marico
Parachute 1.0 2.0 10.0 6.0 7.0 8.0 5.0 8.0 11.0 4.0 7.0 7.0 6.0
Hair Oil 15.0 8.0 5.0 11.0 13.0 10.0 5.0 14.0 8.0 21.0 15.0 9.0 7.0
Saffola 7.0 9.0 11.0 10.0 9.0 3.0 -1.0 4.0 4.0 17.0 10.0 11.0 11.0
Pidilite 15.0 11.0 12.0 13.0 10.0 7.0 5.5 5.0 3.0 11.0 12.0 9.0 10.0
Radico Khaitan 7.2 7.6 3.5 -3.5 -3.9 2.0 -4.2 -10.3 -7.2 -3.8 2.0 3.6 3.0
Exhibit 33: Relative performance 3m (%) Exhibit 34: Relative performance 1Yr (%)
Sensex Index MOSL Consumer Index Sensex Index MOSL Consumer Index
106 120
104 110
102 100
100 90
98 80
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
Jul-16
Jun-16
Aug-16
Sep-16
October 2016 100

Exhibit 35: PFAD prices up 33.8% YoY but down 0.7% QoQ Exhibit 36: Palm oil prices rise 27.8% YoY
Palm Fatty Acid price (INR/MT) Palm Oil (Malaysian Ringgit Per Metric Tonne)
60,000
3,100
2,747
Malaysian Ringgit\MT
51,000
40,778 2,700
42,000
2,300
33,000
24,000 1,900
15,000 1,500
May-14
May-15
May-16
Sep-13
Jan-14
Sep-14
Jan-15
Sep-15
Jan-16
Sep-16
May-14
May-15
May-16
Sep-13
Jan-14
Sep-14
Jan-15
Sep-15
Jan-16
Sep-16
Exhibit 37: Mentha prices down 3% YoY but up 5% QoQ Exhibit 38: TiO2 prices up 1.5% YoY
1,250 Mentha Oil prices INR / kg TiO2 price (INR/kg)
310
270
1,000 945 250
230 250 210
210
750
190 208
500 150
Jun-14
Jun-15
Jun-16
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
May-14
May-15
May-16
Sep-13
Jan-14
Sep-14
Jan-15
Sep-15
Jan-16
Sep-16

Consumer
Asian Paints 1,192 Neutral 18.7 22.7 26.3 63.6 52.5 45.3 31.7 35.9 30.8 34.7 35.7 35.0
Britannia 3,483 Buy 70.1 78.8 98.5 49.7 44.2 35.4 27.3 31.5 24.6 55.9 46.5 44.5
Colgate 983 Buy 22.3 22.8 29.9 44.0 43.0 32.8 23.5 25.9 20.0 67.9 57.7 68.9
Dabur 276 Neutral 7.1 8.0 9.2 38.8 34.5 29.9 27.9 27.7 23.9 33.3 30.8 29.7
Emami 1,182 Buy 25.2 27.7 34.3 46.9 42.6 34.4 31.7 33.2 27.5 43.4 37.5 35.8
Godrej Consumer 1,639 Neutral 33.2 40.8 51.3 49.4 40.2 32.0 30.1 29.5 23.8 23.4 24.5 25.5
GSK Consumer 6,193 Neutral 167.1 175.1 192.6 37.1 35.4 32.2 24.0 25.3 22.4 30.8 27.6 26.1
Hind. Unilever 869 Neutral 19.0 20.4 23.0 45.6 42.6 37.8 31.9 29.6 26.2 82.4 70.2 78.5
ITC 242 Buy 7.7 9.1 10.5 31.4 26.6 23.0 18.3 18.1 15.5 29.3 30.8 30.7
Jyothy Labs 359 UR 4.1 7.6 9.1 87.5 47.3 39.5 25.6 26.6 23.0 9.1 15.7 17.4
Marico 282 Neutral 5.6 6.4 7.9 50.3 43.9 35.8 29.7 30.6 25.1 36.9 37.0 39.3
Nestle 6,597 Neutral 119.9 113.2 142.1 55.0 58.3 46.4 34.0 34.0 27.1 40.9 36.3 39.7
P&G Hygiene 6,842 Buy 130.3 142.7 173.5 52.5 47.9 39.4 31.9 30.8 24.7 30.9 28.6 30.0
Page Industries 15,453 Buy 208.6 267.4 366.3 74.1 57.8 42.2 36.1 37.0 27.4 46.0 45.6 47.6
Parag Milk Foods 302 Neutral 6.7 9.3 12.8 44.9 32.5 23.5 15.4 12.2 19.5 14.1 13.4
Pidilite Inds. 723 Buy 14.8 18.3 21.6 49.0 39.6 33.5 24.3 25.7 21.5 29.9 30.3 28.7
Radico Khaitan 122 Neutral 6.9 6.4 8.3 17.7 19.1 14.7 9.8 11.2 9.5 10.2 8.8 10.5
United Spirits 2,424 Buy 16.7 37.5 56.5 144.9 64.7 42.9 46.0 34.0 25.5 19.8 26.2 25.7
Source: MOSL
October 2016 101

Asian Paints
Bloomberg APNT IN CMP: INR1,192 TP: INR1,160 (-3%) Neutral
We expect Asian Paints (APNT) revenue to grow 14% to INR39.1b
M. Cap. (INR b)/(USD b) 1,143 / 17
in 2QFY17, with a ~16% rise in domestic decorative volumes.
52-Week Range (INR) 1,213/785
1,6,12 Rel Perf. (%) 3/25/34 We note crude prices are up just 1% YoY (down 1% QoQ). The
magnitude of price movement in crude derivatives is lower vis--vis
Financial Snapshot (INR b) crude prices. Operating margin should expand 100bp to 16.9% in
Y/E March 2015 2016 2017E 2018E
2QFY17. We estimate 21.2% PAT growth for 2QFY17.
Sales 140.1 140.9 160.5 187.8
EBITDA 20.6 25.8 31.2 36.1
The stock trades at 45.3x FY18E EPS of INR26.3; maintain Neutral.
Adj. PAT 14.2 18.0 21.8 25.2
Adj. EPS.INR 14.8 18.7 22.7 26.3
EPS Gr. (%) 15.8 26.3 21.1 15.9
BV/Sh.(INR) 49.4 58.4 68.7 81.5
RoE (%) 32.4 34.7 35.7 35.0
RoCE (%) 28.6 30.6 32.1 31.8
Payout (%) 41.1 40.4 44.1 43.7
Valuations Key issues to watch for
P/E (x) 80.3 63.6 52.5 45.3 Volume growth trends and demand scenario in urban and rural
P/BV (x) 24.1 20.4 17.3 14.6 geographies.
EV/EBITDA (x) 54.9 43.5 35.7 30.6 Demand outlook for industrial paints.
Div. Yield (%) 0.6 0.8 1.0 1.1
Outlook for raw materials/pricing actions.

Volume Growth % * 12.0 7.0 15.0 13.0 11.0 16.0 16.5 18.0 11.8 15.5
Net Sales 33,343 34,321 36,554 36,698 36,374 39,126 42,038 42,919 140,916 160,457
Change (%) 9.1 14.0 15.0 17.0 13.9
Raw Material/PM 19,088 20,322 21,032 20,055 19,191 23,167 24,817 25,100 80,497 92,276
Gross Profit 14,254 13,999 15,523 16,643 17,183 15,959 17,220 17,819 60,419 68,181
Gross Margin (%) 42.8 40.8 42.5 45.4 47.2 40.8 41.0 41.5 42.9 42.5
Operating Expenses 7,468 8,550 8,942 9,669 8,981 9,356 9,232 9,445 34,630 37,014
% of Sales 22.4 24.9 24.5 26.3 24.7 23.9 22.0 22.0 24.6 23.1
EBITDA 6,786 5,449 6,581 6,974 8,203 6,603 7,988 8,374 25,790 31,167
Margin (%) 20.4 15.9 18.0 19.0 22.6 16.9 19.0 19.5 18.3 19.4
Change (%) 20.9 21.2 21.4 20.1 25.3 20.9
Interest 89 92 76 149 64 93 77 183 407 417
Depreciation 663 680 690 721 855 762 773 851 2,756 3,242
Other Income 610 1,276 1,678 466 719 1,467 2,097 97 4,029 4,380
PBT 6,643 5,952 7,492 6,570 8,003 7,215 9,235 7,437 26,656 31,889
Tax 2,047 1,836 2,281 2,279 2,603 2,237 2,863 2,183 8,444 9,886
PAT before Minority 4,596 4,116 5,210 4,291 5,400 4,978 6,372 5,253 18,213 22,004
Minority Interest 59 42 32 117 50 42 32 126 250 250
Adjusted PAT 4,537 4,073 5,178 4,174 5,351 4,936 6,340 5,127 17,962 21,753
E: MOSL Estimates
October 2016 102

Britannia Industries
Bloomberg BRIT IN CMP: INR3,483 TP: INR4,000 (+15%) Buy
We estimate Britannia (BRIT)s sales to increase 12% YoY to
M. Cap. (INR b)/(USD b) 418 / 6
INR22.2b, with around 8% volume growth.
52-Week Range (INR) 3,575/2,507
1,6,12 Rel Perf. (%) 5/18/4 Continued distribution and portfolio gains, especially in identified
central geographies will aid BRITs volume outperformance, in our
Financial Snapshot (INR b) view.
Y/E March 2015 2016 2017E 2018E
Sales 77.8 83.3 94.2 110.7 Due to increase in wheat and sugar costs, we expect 10bp
EBITDA 7.8 11.5 12.9 16.2 contraction in operating margin YoY. We project EBITDA and PAT to
Adj. PAT 5.7 8.4 9.5 11.8 grow 11.2% and 13.5%, respectively.
Adj. EPS. INR 47.9 70.1 78.8 98.5 The stock trades at 35.4x FY18E EPS of INR98.5; maintain Buy.
EPS Gr. (%) 47.3 46.3 12.5 25.0
Britannia is one of our top picks in the Tier-II Consumer space.
BV/Sh.(INR) 103.5 147.2 192.0 250.4
RoE (%) 56.4 55.9 46.5 44.5
RoCE (%) 43.9 46.0 38.5 37.8
Payout (%) 33.4 28.5 35.0 35.0
Valuations
P/E (x) 72.7 49.7 44.2 35.4 Key issues to watch for
P/BV (x) 33.6 23.7 18.1 13.9 Volume growth in biscuits.
EV/EBITDA (x) 52.8 35.6 31.4 24.6 Outlook for raw materials.
Div. Yield (%) 0.5 0.6 0.8 1.0 Performance of subsidiaries.

Volume growth (%) 10.0 12.0 11.0 10.0 8.0 8.0 9.5 11.0 10.8 9.0
Net Sales 19,411 21,253 21,468 21,121 21,063 23,804 24,581 24,744 83,254 94,192
YoY Change (%) 8.5 12.0 14.5 17.1 7.1 13.1
COGS 11,587 12,672 12,852 12,878 12,879 14,312 14,642 14,997 49,989 56,829
Gross Profit 7,824 8,581 8,616 8,244 8,184 9,492 9,939 9,747 33,265 37,362
Margins (%) 40.3 40.4 40.1 39.0 38.9 39.9 40.4 39.4 40.0 39.7
Other Operating Exp 5,102 5,507 5,552 5,557 5,367 6,073 6,406 6,617 21,718 24,463
% of Sales 26.3 25.9 25.9 26.3 25.5 25.5 26.1 26.7 26.1 26.0
EBITDA 2,722 3,074 3,064 2,687 2,817 3,419 3,533 3,130 11,547 12,899
Margins (%) 14.0 14.5 14.3 12.7 13.4 14.4 14.4 12.6 13.9 13.7
YoY Growth (%) 3.5 11.2 15.3 16.5 38.2 -1.3
Depreciation 274 272 281 308 279 326 337 398 1,134 1,340
Interest 7 15 12 15 15 14 9 11 49 49
Other Income 401 477 506 578 739 597 633 529 1,962 2,497
PBT 2,842 3,265 3,278 2,942 3,263 3,676 3,819 3,249 12,326 14,007
Tax 906 1,078 983 952 1,071 1,195 1,241 1,045 3,920 4,552
Rate (%) 31.9 33.0 30.0 32.4 32.8 32.5 32.5 32.2 31.8 32.5
Adjusted PAT 1,936 2,186 2,295 1,990 2,192 2,481 2,578 2,204 8,407 9,455
YoY Change (%) 13.2 13.5 12.3 10.8 46.4 12.5
E: MOSL Estimates
October 2016 103

Colgate
Bloomberg CLGT IN CMP: INR983 TP: INR1,190 (+21%) Buy
We expect Colgate (CLGT)s sales to grow 13% YoY to INR10.7b.
M. Cap. (INR b)/(USD b) 267 / 4
Toothpaste volume growth is likely to be ~5.5%.
1,6,12 Rel Perf. (%) 4/6/-6 We estimate gross margin expansion of 80bp and EBITDA margin
Financial Snapshot (INR b) contraction of 50bp to 25.8%. Hence, we have modeled an EBITDA
Y/E March 2015 2016 2017E 2018E growth of 9.3% and adjusted PAT growth of 11.8% in 2QFY17.
Sales 39.5 38.0 42.8 49.1 The stock trades at 32.8x FY18E EPS of INR29.9; we have a Buy rating
EBITDA 8.3 9.5 10.2 13.1 on the stock.
Adj. PAT 5.6 6.1 6.2 8.1
Adj. EPS (INR) 20.6 22.3 22.8 29.9
EPS Gr. (%) 13.9 8.7 2.2 31.1
BV/Sh.(INR) 28.3 37.5 41.7 45.2
RoE (%) 81.6 67.9 57.7 68.9
RoCE (%) 82.5 67.0 56.6 67.6
Payout (%) 60.6 49.1 70.0 70.0 Key issues to watch for
Valuations Volume growth in toothpaste and market share movement.
P/E (x) 47.8 44.0 43.0 32.8 Ad spends and competitive intensity in toothpaste, especially from
P/BV (x) 34.7 26.2 23.6 21.7 Patanjali.
EV/EBITDA (x) 31.9 27.9 25.9 20.0
Div. Yield (%) 1.3 1.1 1.6 2.1

Toothpaste Volume Gr % 2.0 3.0 1.0 3.0 5.0 5.5 6.0 6.0 2.3 5.5
Net Sales 9,237 9,492 9,259 10,028 10,056 10,726 10,508 11,477 38,016 42,768
YoY Change (%) 8.9 13.0 13.5 14.4 -3.9 12.5
COGS 3,641 3,730 3,584 3,998 3,822 4,129 4,015 4,473 14,953 16,439
Gross Profit 5,596 5,763 5,674 6,030 6,234 6,598 6,493 7,004 23,063 26,329
Gross Margin (%) 60.6 60.7 61.3 60.1 62.0 61.5 61.8 61.0 60.7 61.6
Other operating Expenses 3,630 3,332 3,496 3,593 4,197 3,928 4,045 4,393 14,051 16,562
% to sales 39.3 35.1 37.8 35.8 41.7 36.6 38.5 38.3 37.0 38.7
Other operating Income 72 134 170 75 76 134 170 79 451 458
EBITDA 2,038 2,564 2,349 2,512 2,113 2,804 2,618 2,691 9,463 10,225
Margins (%) 21.9 26.6 24.9 24.9 20.9 25.8 24.5 23.3 24.6 23.7
YoY Growth (%) 3.7 9.3 11.5 7.1 15.1 8.1
Depreciation 253 269 295 297 316 310 339 348 1,114 1,313
Interest 0 0 0 0 0 0 0 0 0 0
Financial other Income 81 65 64 37 101 77 77 107 246 362
PBT 1,866 2,360 2,118 2,251 1,897 2,572 2,355 2,450 8,595 9,274
Tax 626 818 717 770 640 849 777 795 2,516 3,061
Rate (%) 33.5 34.7 33.9 34.2 33.7 33.0 33.0 32.4 29.3 33.0
Adj PAT 1,241 1,542 1,401 1,481 1,257 1,723 1,578 1,656 6,079 6,214
YoY Change (%) 1.3 11.8 12.7 11.8 8.7 2.2
E: MOSL Estimates
October 2016 104

Dabur
Bloomberg DABUR IN CMP: INR276 TP: INR300 (+9%) Neutral
We expect sales to rise 4% YoY to INR20b, led by ~6% domestic
M. Cap. (INR b)/(USD b) 486 / 7
organic volume growth.
1,6,12 Rel Perf. (%) -6/-1/-9 We expect Daburs EBITDA margin to expand 100bp.

Hence, we have modeled EBITDA and PAT growth of 9% and 8%,
Y/E March 2015 2016 2017E 2018E
respectively, in 2QFY17.
Sales 78.1 77.6 82.9 94.4 The stock trades at 29.9x FY18E EPS of INR9.2; maintain Neutral.
EBITDA 13.0 15.0 16.7 19.0
Adj. PAT 10.7 12.5 14.1 16.3
Adj. EPS (INR) 6.1 7.1 8.0 9.2
EPS Gr. (%) 15.7 17.2 12.5 15.5
BV/Sh.(INR) 19.1 23.6 28.4 33.8
RoE (%) 35.5 33.3 30.8 29.7
RoCE (%) 27.7 27.7 26.9 26.8
Payout (%) 37.0 28.0 35.0 35.0
Key issues to watch for
Valuations
P/E (x) 45.5 38.8 34.5 29.9
Domestic volume growth and outlook for rural demand.
P/BV (x) 14.5 11.7 9.7 8.2 Update on project CORE.
EV/EBITDA (x) 36.6 31.1 27.7 23.9 Margin performance in international business.
Div. Yield (%) 0.8 0.7 1.0 1.2 Competitive intensity, especially from Patanjali.
Quarterly Performance 38,264 49% 0% (INR Million)

Domestic Vol Growth (%) 8.1 5.5 -2.5 7.0 4.1 6.0 10.0 7.0 4.5 7.0
Net Sales 19,017 19,247 19,552 19,800 19,239 20,017 21,898 21,721 77,616 82,875
YoY Change (%) 1.2 4.0 12.0 9.7 -0.6 6.8
Total Exp 15,861 15,244 15,822 15,688 15,796 15,653 17,611 17,106 62,614 66,166
EBITDA 3,157 4,004 3,730 4,112 3,443 4,364 4,287 4,615 15,002 16,709
Margins (%) 16.6 20.8 19.1 20.8 17.9 21.8 19.6 21.2 19.3 20.2
YoY Growth (%) 9.1 9.0 14.9 12.2 15.8 11.4
Depreciation 325 329 320 358 343 339 330 515 1,332 1,527
Interest 118 124 111 132 118 125 113 72 485 427
Other Income 531 588 655 578 655 677 753 738 2,352 2,823
PBT 3,244 4,140 3,953 4,201 3,637 4,577 4,598 4,766 15,538 17,577
Tax 620 728 783 868 701 893 920 967 2,999 3,480
Rate (%) 19.1 17.6 19.8 20.7 19.3 19.5 20.0 20.3 19.3 19.8
Adjusted PAT 2,615 3,411 3,167 3,318 2,927 3,684 3,676 3,783 12,512 14,070
YoY Change (%) 12.0 8.0 16.1 14.0 17.4 12.5
E: MOSL Estimates 22% 13% 4% 27%
October 2016 105

Emami
Bloomberg HMN IN CMP: INR1,182 TP: INR1,380 (+17%) Buy
We project Emami (HMN)s sales to grow 16% YoY to INR6.1b, led by
M. Cap. (INR b)/(USD b) 268 / 4
~13% volume expansion. Excluding Kesh King, like-to-like organic
volume growth would be 3-4%.
1,6,12 Rel Perf. (%) 3/16/-7
The management had guided for INR2.8b Kesh King turnover in FY17
Financial Snapshot (INR b) as per Ind-AS.
Y/E March 2015 2016 2017E 2018E
We expect gross margin to expand 50bp to 66.8% and EBITDA
Sales 22.2 23.9 28.0 32.9
EBITDA 5.4 6.8 8.1 9.6
margin to contract 50bp to 28.3%. Thus, EBITDA is liekly to increase
NP 4.9 5.7 6.3 7.8
14% YoY to INR1.7b.
EPS (INR) 21.4 25.2 27.7 34.3 PAT is expected to rise only 7.5% YoY to INR1.3b due to low tax rate
EPS Gr. (%) 20.7 17.7 10.0 23.9 of 10.2% in the base quarter, 2QFY16.
BV/Sh. (INR) 54.2 61.8 86.1 105.5
The stock trades at 34.4x FY18E EPS of INR34.3; maintain Buy.
RoE (%) 44.9 43.4 37.5 35.8
Emami remains one of our preferred ideas.
RoCE (%) 44.0 37.9 34.5 38.6
Payout (%) 32.7 27.9 39.7 35.0
P/E (x) 55.2 46.9 42.6 34.4 Volume growth and broad consumer demand across categories.
P/BV (x) 21.8 19.1 13.7 11.2 Outlook for mentha oil prices.
EV/EBITDA (x) 48.6 40.0 33.2 27.5 Update on Kesh King integration.
Div. Yld (%) 0.6 0.7 0.9 1.0 Competitive intensity, especially from Patanjali.
Quarterly Performance -17% (INR Million)

Y/E MARCH FY16 FY17 FY16 FY17E
Domestic volume Growth (%) 15.0 13.5 9.3 18.0 18.0 13.0 14.0 9.0 14.0 13.0
Net Sales 5,372 5,293 7,246 6,026 6,444 6,140 8,550 6,875 23,937 28,010
YoY Change (%) 19.9 16.0 18.0 14.1 8.0 17.0
COGS 2,114 1,783 2,423 2,193 2,287 2,038 2,859 2,521 8,513 9,704
Gross Profit 3,258 3,510 4,823 3,833 4,157 4,103 5,691 4,354 15,424 18,305
Gross margin (%) 60.6 66.3 66.6 63.6 64.5 66.8 66.6 63.3 64.4 65.4
Other Expenditure 2,271 1,988 2,329 1,992 2,684 2,367 2,834 2,305 8,580 10,191
% to sales 42.3 37.6 32.1 33.1 41.7 38.6 33.1 33.5 35.8 36.4
EBITDA 987 1,523 2,494 1,841 1,473 1,735 2,858 2,049 6,844 8,114
Margins (%) 18.4 28.8 34.4 30.6 22.9 28.3 33.4 29.8 28.6 29.0
YoY Change 31.6 34.5 17.9 31.2 49.2 14.0 14.6 11.3 26.7 18.6
Depreciation 88 92 99 169 106 103 111 172 450 493
Interest 44 192 172 136 125 86 51 39 543 302
Other Income 187 122 53 88 51 134 158 189 449 532
PBT 1,041 1,361 2,276 1,623 1,292 1,680 2,853 2,027 6,301 7,852
Tax 42 139 320 87 117 370 628 447 459 1,562
Rate (%) 4.0 10.2 14.1 5.4 9.1 22.0 22.0 22.1 7.3 19.9
PAT 996 1,219 1,953 1,541 1,175 1,310 2,225 1,580 5,841 6,291
YoY Change (%) 40.6 33.2 6.3 11.6 18.0 7.5 13.9 2.5 20.7 7.7
Amortization 137 620 617 727 609 600 600 591 2,100 2,400
Reported PAT 866 631 1,367 850 596 710 1,625 989 3,741 3,891
E: MOSL Estimates
October 2016 106

Godrej Consumer
Bloomberg GCPL IN CMP: INR1,639 TP: INR1,570 (-4%) Neutral
We expect Godrej Consumers revenue to rise 18% to
M. Cap. (INR b)/(USD b) 558 / 8
INR25.9b, led by Home Insecticide business, due to good
52-Week Range (INR) 1,710/1,120
monsoon and cases of dengue and chikungunya.
1,6,12 Rel Perf. (%) 6/6/26
Demand trends in international business remain weak,
Financial Snapshot (INR b) primarily driven by macroeconomic trends.
Y/E March 2015 2016 2017E 2018E
Sales 82.8 89.7 101.0 116.7 We estimate operating margin to expand 80bp YoY to 19.2%.
EBITDA 13.7 16.2 19.7 24.2 We have modeled EBITDA and PAT growth of 23.1% and
Adj. PAT 9.1 11.3 13.9 17.5 18.1%, respectively.
Adj. EPS (INR) 26.7 33.2 40.8 51.3
EPS Gr. (%) 22.0 24.4 22.9 25.8 The stock trades at 32x FY18E EPS of INR51.3. We have a
BV/Sh.(INR) 131.4 152.2 181.1 220.6 Neutral rating on the stock.
RoE (%) 21.4 23.4 24.5 25.5
RoCE (%) 15.9 16.7 16.7 17.6
Payout (%) 26.7 29.3 28.9 23.0
Valuations
Growth trend in soap volumes.
P/E (x) 61.5 49.4 40.2 32.0
Competitive intensity across categories.
P/BV (x) 12.5 10.8 9.1 7.4 Outlook for international business demand outlook in Indonesia
EV/EBITDA (x) 42.2 35.7 29.6 23.9 and margin guidance for LatAm.
Div. Yield (%) 0.4 0.6 0.7 0.7

Net Sales 19,854 21,922 22,859 22,087 21,202 25,868 27,888 26,066 89,678 101,025
YoY Change (%) 6.8 18.0 22.0 18.0 8.8 12.7
EBITDA 3,132 4,041 4,540 4,547 3,775 4,975 5,623 5,372 16,242 19,744
Margins (%) 15.8 18.4 19.9 20.6 17.8 19.2 20.2 20.6 18.1 19.5
YoY Growth (%) 20.5 23.1 23.8 18.2 21.7 21.6
Depreciation 230 235 257 284 327 235 257 253 1,031 1,072
Interest 329 313 296 250 326 447 423 136 1,002 1,332
Other Income 218 231 196 159 166 254 215 232 820 868
PBT 2,806 3,722 4,264 4,228 3,298 4,547 5,158 5,215 15,028 18,208
Tax 636 761 948 1,030 754 1,050 1,238 1,261 3,171 4,303
Rate (%) 22.7 20.4 22.2 24.4 22.9 23.1 24.0 24.2 21.1 23.6
Minority Int 5 5 5 0 6 6 7 6 395 25
Adj PAT 2,166 2,956 3,311 3,199 2,538 3,490 3,913 3,940 11,298 13,880
YoY Change (%) 17.2 18.1 18.2 23.2 28.1 22.9
E: MOSL Estimates
October 2016 107

GSK Consumer
Bloomberg SKB IN CMP: INR6,193 TP: INR5,990 (-3%) Neutral
We expect GSK Consumer to report net sales of INR11.2b, up 4%
M. Cap. (INR b)/(USD b) 260 / 4
YoY, led by 2% volume decline in MFD. In our view, discretionary
demand in the core MFD category is yet to witness an uptrend.
1,6,12 Rel Perf. (%) 0/-9/-5
We estimate EBITDA margin to expand 50bp YoY to 23.3%, and PAT
Financial Snapshot (INR b) growth of 12.3% YoY.
Y/E December 2015 2016 2017E 2018E
Sales 43.5 41.9 43.4 47.7 The stock trades at 32x FY18E EPS. We have a Neutral rating on the
EBITDA 7.8 9.4 9.2 10.2 stock.
Adj. PAT 5.8 7.0 7.4 8.1
Adj. EPS (INR) 138.8 167.1 175.1 192.6
EPS Gr. (%) -13.5 20.4 4.8 10.0
BV/Sh. (INR) 502.4 581.5 687.6 790.5
RoE (%) 29.7 30.8 27.6 26.1
RoCE (%) 29.8 30.8 27.6 26.1
Payout (%) 32.4 33.7 35.0 40.0
P/E (x) 44.6 37.9 34.5 32.0 Growth in MFD volume.
P/BV (x) 12.3 10.6 9.0 7.8 Outlook for market growth and raw materials.
EV/EBITDA (x) 30.5 25.3 26.9 22.7 Performance of non-MFD portfolio.
Div. Yield (%) 0.7 0.9 1.0 1.2 Competitive intensity, especially from Patanjali.

Y/E Mar FY16 FY17 FY16 FY17E
MFD Volume Growth (%) 2.0 0.0 0.0 0.0 -6.0 -2.0 0.0 2.0 0.5 2.0
Net Sales 9,955 10,728 9,811 10,565 9,439 11,157 10,400 12,358 41,887 43,354
YoY Change (%) -5.2 4.0 6.0 17.0 3.5
Total Exp 7,907 8,280 8,165 8,152 7,404 8,555 8,655 9,549 32,438 34,163
EBITDA 2,048 2,448 1,646 2,413 2,035 2,602 1,744 2,810 9,450 9,191
Margins (%) 20.6 22.8 16.8 22.8 21.6 23.3 16.8 22.7 22.6 21.2
YoY Change (%) -0.6 6.3 6.0 16.4 -2.7
Depreciation 192 171 173 182 147 196 199 212 718 754
Interest 7 2 2 2 6 6 6 -10 8 8
Other Income 549 574 569 578 592 774 767 595 1,921 2,728
PBT 2,398 2,849 2,039 2,807 2,474 3,174 2,307 3,203 10,645 11,158
Tax 838 983 708 966 868 1,079 773 1,074 3,619 3,794
Rate (%) 34.9 34.5 34.7 34.4 35.1 34.0 33.5 33.5 34.0 34.0
Adj PAT 1,561 1,866 1,332 1,841 1,606 2,095 1,534 2,129 7,026 7,364
YoY Change (%) 2.9 12.3 15.2 15.7 4.8
E: MOSL Estimates
October 2016 108

Hindustan Unilever
Bloomberg HUVR IN CMP: INR869 TP: INR860 (-1%) Neutral
We expect Hindustan Unilevers revenue to increase 3.5%, with an
M. Cap. (INR b)/(USD b) 1,880 / 28
underlying ~3% volume growth. Volume growth pick-up would be
contingent on recovery in rural consumption demand, in our view.
1,6,12 Rel Perf. (%) -5/-11/-1
PFAD prices have gone up by 33.8% YoY (down 0.7% QoQ) and LAB
Financial Snapshot (INR b) prices are down 5% YoY (down 4% QoQ).
Y/E March 2015 2016 2017E 2018E
Sales 301.7 305.0 320.1 350.3
We expect operating margin to expand 150bp YoY to 18.8% in
EBITDA 52.1 57.3 61.7 69.4
2QFY17.
Adj. PAT 36.5 41.2 44.1 49.8 We estimate EBITDA and PAT growth at 12.5% YoY and 9.5% YoY,
Adj. EPS (INR) 16.9 19.0 20.4 23.0 respectively. The stock trades at 37.8x FY18E EPS of INR23;
EPS Gr. (%) 2.7 12.9 7.1 12.8 maintain Neutral.
BV/Sh.(INR) 17.2 29.0 29.1 29.5
RoE (%) 104.3 82.4 70.2 78.5
RoCE (%) 140.6 108.1 92.6 103.6
Payout (%) 88.9 84.0 93.2 89.1
Valuations
P/E (x) 51.5 45.6 42.6 37.8
Comments on volume growth and consumer demand
P/BV (x) 50.5 29.9 29.8 29.4
environment.
EV/EBITDA (x) 35.5 32.3 29.9 26.6
Div. Yield (%) 1.7 1.8 2.2 2.4
Competitive intensity in S&D and Shampoos.

1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE Ind AS
Volume Growth (%) 6.0 7.0 6.0 4.0 4.0 3.0 5.0 7.0 5.8 4.9
Net Sales 78,445 77,314 77,640 77,212 81,282 80,020 81,910 83,119 310,610 326,331
YoY Change (%) 3.6 3.5 5.5 7.7 5.1
COGS 38,976 38,965 37,424 37,688 39,555 39,369 39,892 40,249 153,053 159,064
Gross Profit 39,469 38,349 40,216 39,523 41,727 40,651 42,018 42,870 157,557 167,266
Margin % 50.3 49.6 51.8 51.2 51.3 50.8 51.3 51.6 50.7 51.3
Operating Exp 24,349 24,982 25,914 24,820 25,368 25,617 26,930 27,646 100,065 105,560
% to sales 31.0 32.3 33.4 32.1 31.2 32.0 32.9 33.3 32.2 32.3
EBITDA 15,120 13,366 14,302 14,703 16,359 15,035 15,088 15,224 57,491 61,706
YoY Change (%) 8.2 12.5 5.5 3.5 7.3
Margins (%) 19.3 17.3 18.4 19.0 20.1 18.8 18.4 18.3 18.5 18.9
Depreciation 749 761 822 875 933 822 887 826 3,208 3,469
Interest 47 45 45 16 60 45 45 16 153 2
Other Income 1,230 1,944 1,451 1,014 1,076 1,200 1,015 1,966 5,638 5,258
PBT 15,554 14,503 14,886 14,826 16,442 15,367 15,172 16,348 59,769 63,493
Tax 4,960 4,560 4,373 4,203 5,411 4,610 4,551 4,793 18,096 19,366
Rate (%) 31.9 31.4 29.4 28.3 32.9 30.0 30.0 29.3 30.3 30.5
Adjusted PAT 10,628 9,943 10,513 10,624 11,277 10,757 10,620 11,555 41,673 44,127
Reported Profit 10,692 9,822 9,717 11,135 11,739 10,757 10,620 11,555 41,673 44,127
YoY Change (%) 9.8 9.5 9.3 3.8 5.9
E: MOSL Estimates
October 2016 109

ITC
Bloomberg ITC IN CMP: INR242 TP: INR300 (+24%) Buy
We expect net sales to grow 9% YoY to INR97.1b, with cigarette
M. Cap. (INR b)/(USD b) 2,922 / 44
volume growing 2% YoY. In the base quarter, there was 14% volume
decline. The demand scenario is improving in 1QFY17; cigarette
1,6,12 Rel Perf. (%) -7/-4/3
volume had grown ~3% YoY.
Financial Snapshot (INR b) We expect cigarette EBIT to grow 8.9% YoY. We have factored in
Y/E March 2015 2016 2017E 2018E EBITDA growth of 10.4% YoY to INR39.3b.
Sales 360.8 362.2 395.8 446.3
We expect Other FMCG to post revenue growth of ~9%.
EBITDA 134.9 137.2 153.6 177.0
Adj. PAT 96.1 93.1 109.8 127.0 We estimate a muted 13.5% YoY PAT increase to INR27.6b.
Adj. EPS (INR) 8.0 7.7 9.1 10.5
The stock trades at 23x FY18E EPS of INR10.5; maintain Buy.
EPS Gr. (%) 8.5 -3.5 17.9 15.6
BV/Sh.(INR) 25.6 27.3 31.9 36.7
RoE (%) 33.7 29.3 30.8 30.7
RoCE (%) 32.2 27.8 29.6 30.0
Payout (%) 62.8 88.4 64.4 64.4
Valuations
P/BV (x) 9.5 8.9 7.6 6.6 Trends in cigarette volume.
EV/EBITDA (x) 20.5 19.9 17.6 15.0 Demand outlook for FMCG categories and segmental profitability.
Div. Yield (%) 2.1 2.8 2.4 2.8

Cigarette Vol Gr (%) -17.0 -14.0 -5.0 0.0 3.0 2.0 -3.0 -5.0 -9.0 -1.0
Net Sales 91,600 89,042 91,767 101,687 100,540 97,056 97,273 104,939 365,827 399,809
YoY Change (%) -1.3 2.6 9.4 9.8 9.0 6.0 3.2 0.2 9.3
Total Exp 59,078 53,441 55,715 64,817 65,278 57,766 58,280 64,875 228,647 246,199
EBITDA 32,522 35,601 36,052 36,871 35,262 39,290 38,993 40,064 137,179 153,610
Growth (%) 2.0 4.1 11.7 8.4 10.4 8.2 8.7 1.4 12.0
Margins (%) 35.5 40.0 39.3 36.3 35.1 40.5 40.1 38.2 37.5 38.4
Depreciation 2,576 2,588 2,625 2,549 2,613 3,106 3,150 3,315 10,319 12,184
Interest 105 103 161 123 101 186 195 197 491 678
Other Income 3,565 3,992 6,779 4,116 4,205 4,591 7,118 4,826 17,693 20,740
PBT 33,407 36,902 40,045 38,315 36,754 40,590 42,766 41,378 144,061 161,488
Tax 11,746 12,589 13,517 13,363 12,907 12,989 13,258 12,523 50,949 51,676
Rate (%) 35.2 34.1 33.8 34.9 35.1 32.0 31.0 30.3 35.4 32.0
Adj PAT 21,661 24,313 26,528 24,952 23,847 27,601 29,509 28,856 93,113 109,812
E: MOSL Estimates
October 2016 110

Jyothy Labs
Bloomberg JYL IN CMP: INR359 Under Review
We expect Jyothy Labs net sales to grow 11% to INR4.3b, driven
mainly by volume growth.
1,6,12 Rel Perf. (%) 14/9/6 EBITDA margin is likely to remain flat YoY at 12.8%.
Financial Snapshot (INR b) We have factored in EBITDA growth of 10.8% YoY to INR556m.
Y/E March 2015 2016 2017E 2018E The stock trades at 39.5x FY18E EPS of INR9.1. The stock has run up
Net Sales 15.1 16.6 18.4 21.1 by 18% since 1QFY17 results. Speculation around Henkel deal will
EBITDA 1.6 2.2 2.6 2.9 overshadow fundamentals in FY17, in our view.
Adj PAT 1.3 0.7 1.4 1.6
Adj PAT for NCD 1.3 0.1 0.7 1.0
Adj.EPS (INR) 7.0 4.1 7.6 9.1
EPS Gr. (%) -41.6 85.0 19.9
BV/Sh (INR) 43.1 46.7 49.8 54.5
RoE (%) 16.8 9.1 15.7 17.4
RoCE (%) 9.7 7.2 13.4 16.3
Valuations
P/E (x) 51.1 87.5 47.3 39.5
Update on new launches and innovations.
P/BV (x) 8.3 7.7 7.2 6.6
EV/EBITDA 42.7 31.3 26.6 23.0
Update on Henkel call option.
Dividend Yield (%) 1.1 1.1 1.1 1.1 Pick-up in Henkel brands performance.

Net Sales 4,040 3,909 3,726 4,901 4,399 4,339 4,173 5,447 16,576 18,358
YoY Change (%) 8.9 11.0 12.0 11.1 10.1 10.8
Other Operating Income 3.4 6.6 6.4 3.8 3.9 6.9 6.7 4.7 20.2 22.2
Total Sales 4,043 3,916 3,732 4,905 4,403 4,346 4,180 5,452 16,596 18,380
COGS 2,096 2,040 1,923 2,899 2,219 2,224 2,115 3,166 8,958 9,723
Gross Profit 1,947 1,876 1,810 2,006 2,184 2,122 2,065 2,286 7,638 8,657
Margins (%) 48.2 47.9 48.5 40.9 49.6 48.8 49.4 41.9 46.1 47.2
Total Exp 1,366 1,374 1,290 1,381 1,389 1,566 1,504 1,635 5,410 6,095
EBITDA 581 502 520 621 795 556 561 651 2,227 2,562
EBITDA Growth % 36.8 10.8 7.8 4.9 36.6 15.0
Margins (%) 14.4 12.8 13.9 12.7 18.0 12.8 13.4 11.9 13.4 14.0
Depreciation 69 72 74 100 71 75 78 94 314 317
Interest 164 151 151 152 157 151 151 168 618 628
Other Income 50 46 25 21 29 53 29 58 141 168
PBT 398 325 320 390 596 382 360 446 1,436 1,785
Tax 149 162 166 215 146 88 83 93 693 410
Rate (%) 37.5 50.0 52.0 55.2 24.6 23.0 23.0 20.9 48.3 23.0
Adjusted PAT 258 162 153 175 459 294 277 353 743 1,374
YoY Change (%) 78.2 81.3 80.8 102.3 -39.6 85.0
E: MOSL Estimates
October 2016 111

Marico
Bloomberg MRCO IN CMP: INR282 TP: INR305 (+8%) Neutral
We expect sales to increase 3% YoY to INR15b, with ~10% domestic
M. Cap. (INR b)/(USD b) 364 / 5
volume growth. In our opinion, Parachute, Saffola and VAHO
volumes would expand 6%, 11% and 7%, respectively.
1,6,12 Rel Perf. (%) -2/5/34
We observe copra prices have corrected 29% YoY (two months data
Financial Snapshot (INR b) available for 2QFY17), while kardi oil prices are up 1% YoY. We are
Y/E March 2015 2016 2017E 2018E modeling 200bp YoY gross margin expansion and 100bp EBITDA
Sales 57.2 60.1 63.0 75.3
margin expansion for 2QFY17.
EBITDA 8.6 10.4 11.8 14.3
Adj. PAT 5.7 7.2 8.3 10.2 PAT is projected to grow by 16.2% YoY to INR1.7b.
Adj. EPS (INR) 4.4 5.6 6.4 7.9 The stock trades at 35.8x FY18E EPS of INR7.9; maintain Neutral.
EPS Gr. (%) 18.1 26.1 14.6 22.8
We like MRCOs franchise, portfolio strength, management quality
BV/Sh.(INR) 14.1 16.3 18.5 21.6
and its multiple growth driver model. However, expensive
RoE (%) 36.0 36.9 37.0 39.3
valuations underscore our Neutral stance.
RoCE (%) 27.7 31.4 32.2 34.3
Payout (%) 28.1 60.2 42.0 39.9
Valuations
P/E (x) 63.5 50.3 43.9 35.8
P/BV (x) 19.9 17.4 15.2 13.1
Comments on volume growth trends across key categories.
EV/EBITDA (x) 42.4 34.6 30.6 25.1
Div. Yield (%) 0.4 1.2 1.0 1.1
Outlook for raw materials.
Margin expansion and guidance for the international business.

Domestic organic vol gr (%) 6.0 5.5 10.5 8.4 8.0 10.0 7.0 9.0 7.0 9.0
Net Sales 17,482 14,530 15,290 12,878 17,499 14,966 16,360 14,136 61,224 62,961
YoY Change (%) 0.1 3.0 7.0 9.8 7.0 2.8
COGS 9,662 7,600 7,530 5,993 8,419 7,529 8,303 7,054 30,614 31,304
Gross Profit 7,821 6,930 7,760 6,885 9,079 7,437 8,058 7,083 30,610 31,657
Gross margin (%) 44.7 47.7 50.8 53.5 51.9 49.7 49.3 50.1 50.0 50.3
% to Sales 26.6 31.9 32.0 37.1 30.8 32.9 30.0 33.2 32.8 31.6
EBITDA 3,164 2,300 2,870 2,102 3,695 2,519 3,153 2,385 10,558 11,751
Margins (%) 18.1 15.8 18.8 16.3 21.1 16.8 19.3 16.9 17.2 18.7
YoY Change (%) 16.8 9.5 9.9 13.4 23.1 11.3
Depreciation 188 220 230 311 208 242 248 360 1,018 1,058
Interest 45 40 60 68 54 24 18 11 202 106
Other Income 337 161 190 320 319 190 238 352 830 1,098
PBT 3,267 2,201 2,770 2,044 3,753 2,443 3,124 2,365 10,167 11,685
Tax 982 680 720 678 1,072 708 906 699 2,956 3,385
Rate (%) 30.1 30.9 26.0 33.2 28.6 29.0 29.0 29.5 29.1 29.0
Adjusted PAT 2,285 1,491 2,020 1,362 2,679 1,732 2,216 1,665 7,092 8,292
YoY Change (%) 17.2 16.2 9.7 22.2 23.7 14.6
E: MOSL Estimates
October 2016 112

Nestle India
Bloomberg NEST IN CMP: INR6,597 TP: INR6,846 (+4%) Neutral
We expect Nestle Indias net sales to rise 29% YoY to INR22.4b,
M. Cap. (INR b)/(USD b) 636 / 10
largely owing to Maggi impact in the base. Maggi re-launch has
52-Week Range (INR) 7,390/4,990
been successful, with several new variants. It has already clawed
1,6,12 Rel Perf. (%) 3/5/-5
back to 57% market share.
Financial Snapshot (INR b) We estimate EBITDA margin to expand 120bp YoY to 17.8%. EBITDA
Y/E December 2014 2015 2016E 2017E and PAT are projected to increase by 38.4% YoY (to INR4b) and
Sales 98.1 81.2 92.1 109.3
39.2% YoY (to INR2.3b), respectively.
EBITDA 20.5 15.9 18.2 22.6
Adj. PAT 12.5 11.6 10.9 13.7 The stock trades at 46.4x CY17E EPS; maintain Neutral.
Adj. EPS (INR) 129.4 119.9 113.2 142.1
EPS Gr. (%) 6.1 -7.3 -5.5 25.5
BV/Sh.(INR) 294.3 292.3 331.0 385.8
RoE (%) 47.9 40.9 36.3 39.7
RoCE (%) 39.2 40.7 36.3 39.6
Payout (%) 48.7 40.5 48.6 45.7
Valuations
P/BV (x) 22.4 22.6 19.9 17.1 Volume trends and management commentary on demand
EV/EBITDA (x) 30.4 38.8 33.8 26.9 environment.
Div. Yield (%) 1.0 0.7 0.8 1.0 Recovery in sales and market share of Maggi.

Net Sales 25,068 19,338 17,362 19,464 22,957 22,561 22,397 24,225 81,233 92,140
YoY Change (%) 8.4 -20.1 -32.1 -22.6 -8.4 16.7 29.0 24.5 -17.2 13.4
COGS 10,626 8,553 7,429 8,082 9,851 9,495 9,740 10,346 34,689 39,431
Gross Profit 14,442 10,785 9,934 11,383 13,106 13,066 12,657 13,879 46,544 52,708
Margin (%) 57.6 55.8 57.2 58.5 57.1 57.9 56.5 57.3 57.3 57.2
Operating Exp 8,443 7,183 7,059 7,892 7,927 8,709 8,681 9,188 30,577 34,505
EBITDA 6,000 3,602 2,874 3,491 5,180 4,357 3,977 4,691 15,967 18,204
Margins (%) 23.9 18.6 16.6 17.9 22.6 19.3 17.8 19.4 19.7 19.8
YoY Growth (%) 23.5 -26.1 -46.2 -36.0 -13.7 21.0 38.4 34.4 -22.2 14.0
Depreciation 950 720 906 897 891 889 933 948 3,473 3,661
Interest 34 1 0 -2 38 1 0 3 33 42
Other income 352 533 334 403 416 522 417 440 1,621 1,795
PBT 5,367 3,414 2,302 2,999 4,666 3,989 3,461 4,179 14,083 16,295
Tax 1,663 1,093 637 913 1,614 1,136 1,142 1,485 4,305 5,377
Rate (%) 31.0 32.0 27.7 30.4 34.6 28.5 33.0 35.5 30.6 33.0
Adjusted PAT 3,704 2,322 1,666 2,086 3,052 2,853 2,319 2,694 9,778 10,918
YoY Change (%) 26.4 -21.9 -49.1 -36.7 -17.6 22.9 39.2 29.1 -21.6 11.7
E: MOSL Estimates
October 2016 113

Page Industries
Bloomberg PAG IN CMP: INR15,453 TP: INR17,800 (+15%) Buy
We expect Page to report net sales of INR5.8b, up 25% YoY, led by
M. Cap. (INR b)/(USD b) 172 / 3
double-digit volume growth.
52-Week Range (INR) 15,599/9,770
1,6,12 Rel Perf. (%) 3/16/8 We expect EBITDA margin to remain flat YoY at 22.1% and PAT to
post 35.8% YoY growth to INR828m.
Y/E March 2015 2016 2017E 2018E
The stock trades at 42.2x FY18E EPS of INR366.3; maintain Buy.
Sales 15.4 17.8 22.5 28.6
EBITDA 3.2 3.8 4.7 6.3
Adj. PAT 2.0 2.3 3.0 4.1
Adj. EPS (INR) 175.7 208.6 267.4 366.3
EPS Gr. % 27.5 18.7 28.2 37.0
FCF to PAT 0.6 0.8 0.7 0.5
BV/Sh.INR 346.8 453.0 586.7 769.8
RoE (%) 50.7 46.0 45.6 47.6
RoCE (%) 41.6 42.6 46.5 51.3
Payout (%) 48.9 49.1 50.0 50.0
Valuations
Volume trends and management commentary on demand
P/E (x) 87.9 74.1 57.8 42.2 environment.
EV/EBITDA (x) 54.5 45.9 37.0 27.4 Update on foray into kidswear segment.
GST impact.
Quarterly Performance 25% 26% 25% 24% 25% 26% 25% 24% (INR Million)
Net Sales 4,489 4,621 4,408 4,343 5,719 5,776 5,510 5,458 17,840 22,463
YoY Change (%) 27.4 25.0 25.0 25.7 15.6 25.9
COGS 1,783 1,802 1,653 1,630 2,570 2,282 2,067 2,030 6,913 8,948
Gross Profit 2,705 2,818 2,755 2,712 3,149 3,494 3,444 3,427 10,927 13,515
Gross margin (%) 60.3 61.0 62.5 62.5 55.1 60.5 62.5 62.8 61.2 60.2
% to sales 37.9 38.9 42.0 41.7 36.0 38.4 41.7 41.8 40.1 39.4
EBITDA 1,004 1,021 904 901 1,092 1,276 1,146 1,149 3,776 4,663
Margins (%) 22.4 22.1 20.5 20.7 19.1 22.1 20.8 21.0 21.2 20.8
YoY Change 8.8 25.0 26.8 27.5 18.5 23.5
Depreciation 56 57 57 69 59 51 51 59 238 221
Interest 50 35 34 36 39 21 20 16 153 96
Other Income 56 5 2 3 59 15 5 12 62 90
PBT 953 934 814 800 1,053 1,218 1,079 1,086 3,448 4,436
Tax 327 324 241 241 373 390 345 328 1,116 1,436
Rate (%) 34.3 34.7 29.5 30.2 35.5 32.0 32.0 30.2 32.4 32.4
PAT 626 610 574 558 679 828 734 758 2,332 3,000
YoY Change (%) 8.5 35.8 27.9 35.8 19.0 28.6
E: MOSL Estimates
October 2016 114

Parag Milk Foods

Bloomberg PARAG IN CMP: INR302 TP: INR340 (+13%) Neutral
We expect Parag to report net sales of INR5.2b, up 10% YoY, led by
growth in value-added products.
1,6,12 Rel Perf. (%) -10/-/- We estimate EBITDA margin to expand 20bp YoY to 9% and PAT to
grow to INR217m.
The stock trades at 23.5x FY18E EPS of INR12.8. We have a Neutral
Y/E March 2015 2016 2017E 2018E
Sales 14.4 16.5 18.4 22.8
rating on the stock.
EBITDA 1.1 1.5 1.8 2.3
Adj. PAT 0.3 0.5 0.8 1.1
Adj. EPS (INR) 20.2 6.7 9.3 12.8
EPS Gr. % 101.6 -66.7 38.2 37.9
BV/Sh.INR 77.6 51.4 89.4 102.2
RoE (%) 18.9 19.5 14.1 13.4
RoCE (%) 12.4 12.4 11.1 11.7
Valuations
P/E (x) 14.9 44.9 32.5 23.5
Milk prices and global SMP price movement.
P/BV (x) 3.9 5.9 3.4 3.0 Competitive intensity.
EV/EBITDA (x) 8.5 16.9 15.5 12.3
EV/Sales (x) 0.6 1.5 1.5 1.2

Net Sales 3,738 4,696 3,875 4,142 3,835 5,166 4,456 4,906 16,451 18,363
YoY Change (%) 19.6 2.6 10.0 15.0 18.4 13.9 11.6
EBITDA 285 414 378 399 330 466 466 517 1,476 1,779
Margins (%) 7.6 8.8 9.8 9.6 8.6 9.0 10.5 10.5 9.0 9.7
Depreciation 90 64 82 97 98 71 90 124 334 383
Interest 112 146 112 120 92 88 67 46 490 294
Other Income 5 -3 10 4 8 3 3 4 16 18
PBT 87 201 194 186 147 311 312 351 668 1,120
Tax 17 105 49 25 39 93 94 110 195 336
Rate (%) 19.3 51.9 25.1 13.4 26.5 30.0 30.0 31.5 29.2 30.0
Adj PAT 70 97 145 161 108 217 218 240 473 784
YoY Change (%) 0.1 54.0 124.3 50.4 49.4 46.7 65.7
Margins (%) 1.9 2.1 3.7 3.9 2.8 4.2 4.9 4.9 2.9 4.3
E: MOSL Estimates
October 2016 115

P&G Hygiene and Healthcare

Bloomberg PG IN CMP: INR6,842 TP: INR7,900 (+15%) Buy
We expect PGHH to report net sales of INR7.1b, up 18% YoY, led by
M. Cap. (INR b)/(USD b) 222 / 3
base effect and double-digit sales growth in feminine hygiene. Good
52-Week Range (INR) 7,113/5,171
rains during the quarter may positively affect healthcare revenue
1,6,12 Rel Perf. (%) 5/-1/2
growth.
Financial Snapshot (INR b) We estimate EBITDA margin to expand 490bp YoY to 21.1% over an
Y/E March 2015 2016 2017E 2018E unusually low margin base in 1QFY16 (June ending) and PAT to post
Sales 23.3 24.8 29.1 35.0
47.1% YoY growth to INR1b in 1QFY17 (June ending).
EBITDA 4.8 6.0 6.7 8.3
Adj. PAT 3.5 4.2 4.6 5.6 The stock trades at 39.4x FY18E EPS of INR173.5; maintain Buy.
Adj. EPS (INR) 106.5 130.3 142.7 173.5
EPS Growth (%) 14.6 22.3 9.5 21.6
BV/Share (INR) 378.5 465.0 535.7 621.6
RoE (%) 31.0 30.9 28.6 30.0
Healthcare business growth, given high base and likely weak
RoCE (%) 31.5 31.2 28.8 30.2
season in June 2016 quarter.
Valuations
P/E (x)
Margin performance, given exceptionally high base.
64.2 52.5 47.9 39.4
P/BV (x) 18.1 14.7 12.8 11.0

Y/E June FY16 FY17E FY16 FY17E
(Standalone) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Net Sales 5,986 7,137 6,138 5,583 7,063 8,136 6,997 6,875 24,843 29,072
YoY Change (%) 3.8 10.7 10.5 0.1 18.0 14.0 14.0 23.1 6.5 17.0
EBITDA 968 2,161 1,332 1,586 1,488 1,893 1,659 1,704 6,046 6,745
Margins (%) 16.2 30.3 21.7 28.4 21.1 23.3 23.7 24.8 24.3 23.2
Depreciation 127 142 124 124 146 163 142 152 517 604
Interest 12 23 2 3 10 21 2 2 40 35
Other Income 212 206 236 222 212 206 236 215 876 869
PBT 1,041 2,202 1,442 1,680 1,544 1,915 1,751 1,765 6,365 6,975
Tax 344 735 469 586 517 642 586 591 2,134 2,337
Rate (%) 33.0 33.4 32.5 34.9 33.5 33.5 33.5 33.5 33.5 33.5
Reported PAT 698 1,467 973 1,094 1,027 1,274 1,164 1,174 4,232 4,638
Adj PAT 698 1,467 973 1,094 1,027 1,274 1,164 1,174 4,232 4,638
YoY Change (%) 13.5 61.8 12.0 2.2 47.1 -13.2 19.6 7.3 22.3 9.6
Margins (%) 11.7 20.6 15.9 19.6 14.5 15.7 16.6 17.1 17.0 16.0
E: MOSL Estimates
October 2016 116

Pidilite Industries
Bloomberg PIDI IN CMP: INR723 TP: INR850 (+18%) Buy
We expect Pidilite (PIDI)s revenue to grow 15% YoY, led by double-
M. Cap. (INR b)/(USD b) 371 / 6
digit volume growth in Consumer and Bazaar segment.
EBITDA margin is expected to expand 150bp YoY to 24.3%. Base
1,6,12 Rel Perf. (%) 5/11/17
quarter 2QFY16 had witnessed 640bp EBITDA margin expansion
Financial Snapshot (INR b) YoY.
Y/E March 2015 2016 2017E 2018E We expect EBITDA and PAT to grow 22.6% and 24.1% YoY,
Sales 48.8 54.1 60.7 73.8 respectively.
EBITDA 8.0 12.2 14.0 16.5 The stock trades at 33.5x FY18E EPS of INR21.6; maintain Buy.
Adj. PAT 5.1 7.6 9.4 11.1 Pidilite is one of our preferred ideas. Dominant leadership position
Adj. EPS (INR) 10.0 14.8 18.3 21.6 in core Adhesives segment imparts strong pricing power. This
EPS Gr. (%) 13.2 47.3 23.7 18.2 coupled with its strategy of building adjacencies in portfolio and
BV/Sh.(INR) 44.3 54.3 66.2 84.2 potential gains from distribution outreach drives our long-term
RoE (%) 24.3 29.9 30.3 28.7 preference for Pidilite.
RoCE (%) 23.6 28.5 28.7 27.4
Payout (%) 28.7 28.5 26.6 13.9
P/E (x) 72.2 49.0 39.6 33.5 Volume growth in Fevicol.
P/BV (x) 16.3 13.3 10.9 8.6 Outlook for VAM prices.
EV/EBITDA (x) 45.6 29.9 25.7 21.5 Outlook for industrial and construction chemical segments.
Div. Yield (%) 0.4 0.6 0.7 0.4 Progress on Elastomer project (if any).

Consolidated 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Net Sales 14,695 13,201 13,391 12,409 15,694 15,181 15,667 14,175 54,138 60,717
YoY Change (%) 9.4 5.2 11.4 18.9 6.8 15.0 17.0 14.2 11.8 12.2
EBITDA 3,423 3,014 2,953 2,384 3,943 3,694 3,690 2,688 12,183 14,014
Margins (%) 23.3 22.8 22.0 19.2 25.1 24.3 23.5 19.0 22.5 23.1
Depreciation 242 329 330 351 258 359 360 147 1,331 1,122
Interest 39 31 31 35 35 15 16 1 133 67
Other Income 139 123 97 186 241 123 97 82 66 542
Extra-Ord expense -9 12 7 35 4 0 0 0 48 4
PBT 3,290 2,765 2,681 2,150 3,887 3,442 3,411 2,622 10,737 13,363
Tax 948 836 822 637 1,174 1,033 1,023 780 3,221 4,010
Rate (%) 28.8 30.2 30.7 29.6 30.2 30.0 30.0 29.7 30.0 30.0
Adj PAT 2,333 1,941 1,866 1,547 2,717 2,410 2,388 1,843 7,564 9,357
YoY Change (%) 35.5 41.4 48.6 83.9 16.4 24.1 28.0 19.1 45.7 23.7
Margins (%) 15.9 14.7 13.9 12.5 17.3 15.9 15.2 13.0 14.0 15.4
E: MOSL Estimates
October 2016 117

Radico Khaitan
Bloomberg RDCK IN CMP: INR122 TP: INR130 (+7%) Neutral
We expect Radicos (RDCK)s revenue to increase 9% to INR4.3b,
aided by 3% volume growth. Karnataka price hike impact will be
witnessed in 2QFY17.
1,6,12 Rel Perf. (%) 22/15/33
The premium segment should continue to accelerate, aided by
Financial Snapshot (INR b) uptrading (premiumization) and RDCKs strategy to defocus on
Y/E March 2015 2016 2017E 2018E regular brands (given the harsh taxation environment and
Sales 14.9 16.4 17.6 20.1
unfavorable raw material scenario).
EBITDA 1.9 2.1 2.0 2.3
Adj. PAT 0.9 0.9 0.9 1.1 We expect operating margin to contract 100bp YoY to 13%.
Adj. EPS (INR) 6.6 6.9 6.4 8.3 PAT is estimated to grow 2.8% YoY to INR238m.
EPS Gr. (%) 4.2 3.9 -7.2 29.7
BV/Sh.(INR) 64.7 70.2 75.5 82.3 The stock trades at 14.7x FY18E EPS of INR8.3. The stock has run up
RoE (%) 10.5 10.2 8.8 10.5 by 31% since 1QFY17 results; we downgrade it to Neutral.
RoCE (%) 9.0 8.7 7.6 8.5
Payout (%) 11.5 10.8 15.0 15.0
Valuations
P/E (x) 18.4 17.7 19.1 14.7
P/BV (x) 1.9 1.7 1.6 1.5 Key issues to watch for
EV/EBITDA (x) 12.8 11.7 11.4 9.7 Further price hikes, if any.
Div. Yield (%) 0.6 0.6 0.8 1.0 Price trend and outlook for ENA.

Net sales 4,173 3,915 4,244 3,997 4,304 4,268 4,711 4,289 16,367 17,572
YoY Change (%) 3.1 9.0 11.0 7.3 10.0 7.4
Total Expenses 3,710 3,368 3,653 3,661 3,740 3,714 4,149 3,984 14,275 15,588
EBITDA 462 547 592 336 564 553 562 305 2,092 1,984
Margins (%) 11.1 14.0 13.9 8.4 13.1 13.0 11.9 7.1 12.8 11.3
YoY Change (%) 21.9 1.2 -4.9 -9.2 15.7 -5.1
Depreciation 107 100 100 103 105 110 110 122 403 446
Interest 213 208 197 230 214 183 173 175 847 745
Other Income 98 70 68 148 39 70 68 197 371 373
PBT 240 309 363 150 283 331 348 204 1,212 1,166
Tax 68 78 103 55 68 93 97 57 296 315
Rate (%) 28.4 25.1 28.2 36.7 24.0 28.0 28.0 27.8 24.4 27.0
Adjusted PAT 172 232 261 95 215 238 250 148 917 851
YoY Change (%) 25.2 2.8 -4.0 55.5 25.5 -7.2
E: MOSL Estimates
October 2016 118

United Spirits
Bloomberg UNSP IN CMP: INR2,424 TP: INR3,070 (+27% Buy
We expect United Spirits (UNSP)s revenue to increase 11.5% YoY to
M. Cap. (INR b)/(USD b) 352 / 5
INR21.8b and have built-in 2% YoY volume growth. In addition, we
52-Week Range (INR) 3,645/2,120
forecast Prestige+ portfolio to grow in high single digit to double
1,6,12 Rel Perf. (%) 5/-15/-29
digits. Addition of Diageo portfolio does aid revenue performance.
Financial Snapshot (INR b) We build in EBITDA margin contraction of 40bp YoY to 13.5% and
Y/E March 2015 2016 2017E 2018E 8.3% EBITDA growth YoY to INR2.9b. We estimate 68.2% PAT
Sales 85.8 83.4 93.3 106.6
growth in 2QFY17 mainly due to low interest costs and low other
EBITDA 6.8 8.8 11.3 14.7
income in the base quarter.
PAT -0.2 2.4 5.4 8.2
EPS (INR) -1.6 16.7 37.5 56.5 Maintain Buy. UNSP is among our long-standing top ideas in the
EPS Gr. (%) NA LP 124.0 50.8 large cap Consumer space. We expect benefits of premiumization
BV/Sh.(INR) 45.4 123.1 163.1 219.9 and cost cutting, driven by the new management, to bolster
RoE (%) -1.2 19.8 26.2 25.7 margins in the medium term.
RoCE (%) -6.1 8.5 12.8 16.4
Payout (%) 0.0 0.0 0.0 4.4
P/E (x) -1,551.9 144.9 64.7 42.9 Trends in volume growth, premiumization and margins.
P/BV (x) 53.3 19.7 14.9 11.0 Price trend and outlook for ENA.
EV/EBITDA (x) 53.3 40.7 30.8 23.1
Impact of ban on alcohol in certain states.
Div. Yield (%) 0.0 0.0 0.0 0.1

Y/E March FY16 FY17 FY16 FY17
Volume Growth % 0.4 -2.3 1.6 -4.0 -3.0 2.0 2.0 6.0 -1.1 1.9
Net Sales 18,487 19,524 24,007 21,251 20,273 21,769 26,767 23,829 82,760 92,639
YoY Change (%) 9.7 11.5 11.5 12.1 2.1 11.9
Total Exp 16,773 18,278 23,814 19,421 18,251 18,830 23,421 20,847 73,980 81,349
EBITDA 1,715 2,714 2,329 1,830 2,023 2,939 3,346 2,982 8,780 11,289
Margins (%) 9.3 13.9 9.7 8.6 10.0 13.5 12.5 12.5 10.6 12.2
Depreciation 249 242 256 271 261 291 307 353 1,010 1,212
Interest 1,284 1,100 1,077 1,009 1,030 770 754 575 4,469 3,128
PBT From operations 182 1,372 996 550 732 1,878 2,285 2,053 3,301 6,949
Other income 320 15 82 965 346 363 294 174 1,060 1,177
PBT 502 1,386 1,078 1,515 1,078 2,241 2,579 2,227 4,361 8,125
Tax 386 494 486 504 309 740 851 782 1,930 2,681
Rate (%) 76.9 35.6 45.1 33.3 28.6 33.0 33.0 35.1 44.3 33.0
PAT 116 893 592 1,010 769 1,502 1,728 1,445 2,431 5,444
E: MOSL Estimates
October 2016 119

September 2016 Results PreviewSeptember
| Sector:2016 Results Preview
Financials - Banks
Financials - Banks
Technology
Company name Trading gains and lower cost of funds to drive earnings
Axis Bank
PSBs asset quality to show improvement; PBs to utilize one off gains to clean up
Bank of Baroda
Bank of India
We expect earnings to improve sequentially, as 2HFY16 and 1QFY17 earnings
Canara Bank
were marred by (a) AQR related issues, and (b) accelerated stress addition and
DCB Bank
provisioning. While provisions are likely to remain elevated (due to the lag
Equitas Holdings
impact of NPL addition), we believe increased activity on monetization of non-
Federal Bank
core assets, reduction in COF, and bond gains would support earnings.
HDFC Bank
ICICI Bank
NIMs should largely be stable QoQ (but fall YoY for private banks), as (a) banks
IDFC Bank
have refrained from cutting the base rate/MCLR in 1HFY17, which would
Indian Bank support loan yields, (b) cost of deposits has continued to fall, and (c) base has
IndusInd Bank been reset in 2H, led by high slippages from the RBIs AQR. While there are
Kotak Mahindra Bank positive factors at play for NIMs, intense competition in the refinancing business
Oriental Bank of Commerce and in retail loans is likely to keep incremental lending yields under pressure
Punjab National Bank Gross stress addition is likely to moderate sharply QoQ for state-owned banks
State Bank of India but would still be at elevated levels. We expect large private banks in the
Union Bank of India corporate lending segment to take advantage of strong profits on sale of
Yes Bank investments to clean up their balance sheets. Hence, provisioning for them
should stay elevated. For some state-owned banks, recoveries have improved;
however, ageing of NPAs would weigh on earnings.
The governments focus on fiscal discipline and addressing policy roadblocks,
the RBIs support to address stress issues in the system (S4A, SDR, 5:25, etc),
banks intense efforts on recoveries, and deleveraging of corporate balance
sheets augur well for Financials. Improving auto/CV sales, higher cement
dispatches, the RBIs consumer confidence survey, and rising activity in stalled
projects point to a gradual recovery. Our key picks are ICICIBC, YES and HDFCB
among private sector banks. We like SBIN and BOB among state-owned banks.
Exhibit 40: Expected quarterly performance (INR m)

Private Banks
Axis Bank 551 Buy 46,349 14.1 2.6 46,550 28.3 4.2 18,868 -1.5 21.3
DCB Bank 127 Under Review 1,839 22.6 3.9 1,009 29.2 8.8 549 48.6 16.7
Equitas Holdings 183 Neutral 1,907 38.4 0.2 788 4.7 -30.8 408 2.7 -33.3
Federal Bank 75 Buy 7,204 18.4 4.0 4,649 38.1 9.2 1,852 14.8 10.7
HDFC Bank 1,287 Buy 83,056 24.3 6.7 62,544 24.0 7.5 34,479 20.2 6.5
ICICI Bank 256 Buy 51,601 -1.7 0.0 53,685 4.1 2.9 23,811 -21.4 6.7
IDFC Bank 79 Under Review 5,114 NA 2.5 4,851 NA 11.6 3,004 NA 13.5
IndusInd Bank 1,232 Buy 14,176 29.5 4.5 13,018 29.3 5.5 7,008 25.1 6.0
Kotak Mahindra Bank 788 Buy 19,532 16.4 1.8 13,632 30.5 3.7 7,799 36.9 5.1
Yes Bank 1,271 Buy 13,907 25.5 5.6 13,659 34.0 4.5 7,951 30.3 8.7
Pvt Bkg Sector Aggregate 239,573 15.3 3.7 209,534 20.5 4.8 102,725 4.9 8.8
Alpesh Mehta (Alpesh.Mehta@MotilalOswal.com); +9122 39825415/Sunesh Khanna (Sunesh.Khanna@MotilalOswal.com); +912239825521

Piran Engineer (Piran.Engineer@MotilalOswal.com); +91 22 3980 4393
October 2016 120
September 2016 Results Preview | Sector: Financials - Banks

PSU Banks
Bank of Baroda 169 Buy 35,087 8.1 4.1 28,888 23.6 8.2 8,662 595.9 104.5
Bank of India 116 Neutral 28,983 -4.0 4.4 15,829 8.5 -4.3 -2,920 Loss Loss
Canara Bank 319 Neutral 24,446 -7.6 5.9 18,732 -3.6 3.0 3,557 -32.7 55.4
Indian Bank 224 Buy 12,421 15.0 0.5 8,490 15.4 -6.0 2,478 -32.9 -19.4
Oriental Bank 130 Neutral 12,444 -10.0 3.3 8,801 -11.3 -4.0 1,356 -55.0 34.7
Punjab National Bank 144 Neutral 38,593 -10.7 4.3 31,217 6.2 -4.7 4,272 -31.2 39.5
State Bank 255 Buy 145,003 1.7 1.3 108,318 5.5 -2.0 26,328 -32.1 4.4
Union Bank 143 Buy 22,123 5.3 5.2 16,069 13.9 -1.1 3,005 -54.3 80.7
PSU Bkg. Sector Aggregate 319,099 -0.4 2.9 236,345 7.0 -1.2 46,739 -12.7 41.1
Expect stable NIMs QoQ, helped by decline in cost of funds

Continued fall in cost of We expect NII to be flat QoQ and YoY for state-owned banks, but grow 15% YoY and
funds and just marginal 4% QoQ for private sector banks. Yields on funds would be stable QoQ, led by (a)
decline in yield on loans to largely stable benchmark rates (base rate and MCLR), and (b) high interest reversals
support NIMs in the last quarter. Intense competition in the refinancing market and retail loans
should put some pressure on blended yields. Banks have cut deposit rates by 75-
200bp over the past year, which would lower cost of deposits and, in turn, support
margins. Banks with a higher share of bulk deposits are likely to emerge as key
beneficiaries, as wholesale rates came off sharply in 1QFY17. A pick-up in unsecured
loans (PL and CC) and high auto loan disbursements should also offer support.
Share of trading gains in Yields down sharply QoQ; profit on sale of investments to support earnings
overall earnings to remain During the quarter, bond yields declined ~50bp, which should benefit trading
high during the quarter
income. Trading gains are likely to be meaningful. To provide for balance sheet
stress, banks have monetized strategic investments, may repatriate profit on foreign
operations and book trading gains on the sale of HTM security in OMO.
MTM/realized losses on equity exposure (taken via SDRs) would marginally negate
gains on the investment portfolio.
Asset quality stress to be elevated, but decline sharply QoQ

ICICIBC and AXSB are
The RBIs tough stance on the cleanup of balance sheets by March 2017 would
expected to utilize one off
weigh on banks asset quality. However, following the RBIs AQR and the cleanup
profit on sale of
investments for aggressive exercise taken by banks, we expect stress to decline QoQ. Factors likely to continue
stress assets recognition weighing on performance include (a) lagged impact/harmonization of account status
(though not necessary) of the RBIs AQR, (b) banks continued cleanup exercise
(expect largely from RL and watch list), (c) non-fund-based exposure turning into
NPAs for some stressed corporates, and (d) impact on the supply chain of stressed
large corporates. Performance on the watch list will be the key thing to watch out
Large PSBs like PNB, BOB for. Recovery efforts (including sale to ARC) have accelerated, but are yet to
and UNBK can surprise materialize. We expect weak trend in recoveries for large corporate exposure and
positively on recoveries and continued healthy trend in SME exposure. Banks like PNB, BOB, UNBK which have
upgrades aggressively recognized stress loans over the last one year may surprise positively
on this front.
October 2016 121

Business growth remains muted

Retail and SME remains a The moderate demand environment is likely to result in ~10% YoY deposit/loan
key driver of growth. Large growth in 2QFY17. Impact of UDAY scheme, weak corporate loan growth (5% as of
corporate growth remains August 2016), and capital conservation efforts could lead to state-owned banks
muted growth falling short of the industry average. Private sector banks growth should
remain healthy at ~19% YoY, helped by strong retail growth, especially auto/CV
loans and refinancing.
Corporate fees remain muted

No new sanctions, moderate corporate loan growth and largely refinancing-led
incremental corporate growth have continued to impact corporate fees. Retail fees
are likely to be healthy, led by higher disbursement of vehicle loans and unsecured
loans, and momentum (although moderating) in housing loan growth. For state-
owned banks, employee expenses would be a key enabler for earnings growth (led
by the absence of amortization of second pension option-related liability and the
settlement of wage negotiations).
Core operating profits under pressure; Trading gains a key to profitability

Decline in NIMs YoY, muted Core revenue growth is likely to remain muted YoY, led by moderate balance sheet
loan and fee income growth growth, declining margins and moderate fee income growth. Non-core revenue and
to keep core PPoP growth
contained opex is likely to support pre-provision operating profit (PPoP) growth.
under pressure
Private sector banks would continue outperforming state-owned banks. Apart from
continued asset quality stress and focus on balance sheet health would drive banks
to make high provisions, which could impact earnings. Over the past year, Indian
banks (mainly state-owned) have sold assets worth ~INR700b to asset
reconstruction companies (ARCs). We believe write-downs and the resultant MTM
provisioning for the same (as per the RBIs guidelines) would begin over the coming
1-2 quarters. For state-owned banks, we expect PAT of INR49b v/s INR33b in
1QFY17. For private banks, we expect growth of 5% YoY.
Roll forward target price by a quarter; Reducing Rf by 25bp
We have revised our earnings estimates meaningfully for IDFC Bank (+5% to factor
higher bond gains), Federal Bank (+10% to factor higher trading gains and marginally
better provisions), SBIN (-3% to factor lower margin), and Canara Bank (+6% to
factor high bond gains). On rolling forward one quarter and reduction in Rf by 25bp
to 7.25% now, our target prices are revised upwards. On the back of steep run up in
valuations, ratings for DCB Bank and IDFC Bank are put under review. We await
more clarity over operating trends and growth plans.
October 2016 122

Exhibit 41: Revised EPS estimates and target price

Old EPS (INR) New EPS (INR) % Change Target Price
FY17 FY18 FY19 FY17 FY18 FY19 FY17 FY18 FY19 Old New Chg %
AXSB 31.8 37.4 43.3 31.8 37.4 43.3 0.1 -0.1 -0.1 600 630 5
BOB 14.1 20 25.2 14.1 20 25.2 0.1 -0.1 0.2 190 203 6.8
BOI -10.8 21.6 27.3 -10.8 21.6 27.3 -0.4 -0.1 0.2 105 110 4.8
CBK# 25.4 34.8 47.7 26.8 36.8 50.5 5.6 5.7 6 240 305 27.1
DCB 7.4 8.6 10.8 7.7 8.7 11 3.7 1.7 1.4 117 Under Review
Equitas Holdings 5.3 6.1 8.1 6.0 6.6 8.7 14.1 8.7 7.0 - -
FB 3.9 4.7 5.5 4.3 5.2 6.1 10.9 10.2 11.5 79 90 13.9
HDFCB 58.4 70.2 84.6 58.4 70.2 84.6 0.1 0.1 0 1,450 1,500 3.4
ICICIBC 17.2 19.9 24.1 17.3 20 23.8 0.6 0.6 -1.3 305 320 4.9
IDFCB 3.3 4 5.1 3.4 4.2 5.4 3.3 4.8 5.8 65 Under Review
INBK# 24.8 31.4 37.1 25.3 31.4 37.1 2 0 0 225 260 15.6
IIB 49.5 62.5 75.6 48.3 61.1 74.5 -2.5 -2.3 -1.4 1,300 1,385 6.5
KMB* 26.8 34 41.8 26.8 34 41.8 -0.2 -0.1 -0.1 866 940 8.5
OBC 16.7 24.2 33.3 16.7 24.2 33.3 0 0.1 -0.1 105 117 11.4
PNB 10.8 12.8 17 11.8 13.9 18 9.3 8.2 5.7 110 125 13.6
SBIN 14.7 24.3 31 14.2 24.6 31.4 -3.1 1.4 1.1 290 307 5.9
UNBK 22.4 39.1 48.6 22.4 39.1 48.6 0 0 0.1 160 170 6.3
YES 78.8 99.2 119.3 79 101.2 121.9 0.2 2 2.2 1,400 1,500 7.1
# Reduction in Risk premium as well by 25bp; * SOTP moved to average of FY18 and FY19 vs FY18 earlier
Exhibit 42: Financials - valuations

Sector / Companies CMP EPS (INR) PE (x) PB (x) ROE (%)
(INR) Reco FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E
Banks-Private
Axis Bank 551 Buy 34.5 31.8 37.4 16.0 17.3 14.7 2.5 2.3 2.0 17.1 13.8 14.4
DCB Bank 127 UR 6.8 7.7 8.7 18.6 16.6 14.6 2.1 1.8 1.6 11.8 11.7 11.9
Equitas Holdings 183 Neutral 6.2 6.2 7.0 29.6 29.7 26.2 3.7 2.7 2.5 13.3 11.5 9.9
Federal Bank 75 Buy 2.8 4.3 5.2 26.9 17.2 14.4 1.6 1.5 1.4 6.0 8.9 9.9
HDFC Bank 1,287 Buy 48.6 58.4 70.2 26.5 22.0 18.3 4.5 3.9 3.3 18.3 18.9 19.6
ICICI Bank 256 Buy 16.7 17.3 20.0 15.3 14.8 12.8 1.9 1.8 1.6 11.3 10.5 11.2
IDFC Bank 79 UR 1.4 3.4 4.2 57.3 23.1 18.8 2.0 1.8 1.7 0.0 8.2 9.4
IndusInd Bank 1,232 Buy 38.4 48.3 61.1 32.1 25.5 20.2 4.2 3.7 3.2 16.6 15.5 17.0
J&K Bank 88 Neutral 8.6 17.7 21.4 10.2 4.9 4.1 0.7 0.6 0.5 6.6 12.8 13.9
Kotak Mahindra Bank 788 Buy 18.9 26.8 34.0 41.8 29.4 23.2 4.3 3.8 3.3 10.9 13.7 15.2
South Indian Bank 23 Buy 2.5 2.8 3.3 9.4 8.4 7.1 0.8 0.8 0.7 9.3 9.7 10.6
Yes Bank 1,271 Buy 60.4 79.0 101.2 21.0 16.1 12.6 3.9 3.3 2.7 19.9 22.0 23.5
PVT Bank Aggregate 23.0 19.8 16.5 3.2 2.7 2.4 13.9 13.8 14.7
Banks-PSU
Andhra Bank 58 Buy 7.9 10.3 13.2 7.3 5.6 4.4 0.4 0.3 0.3 5.1 6.3 7.6
Bank of Baroda 169 Buy -23.4 14.1 20.0 -7.2 12.0 8.4 1.2 1.1 1.0 -15.3 9.3 12.1
Bank of India 116 Neutral -74.5 -10.8 21.6 -1.6 -10.8 5.4 0.4 0.5 0.5 -25.2 -4.6 8.7
Canara Bank 319 Neutral -51.8 26.8 36.8 -6.2 11.9 8.7 0.7 0.6 0.6 -10.8 5.5 7.2
IDBI Bank 71 Neutral -17.8 1.5 6.4 -4.0 46.4 11.0 0.7 0.7 0.6 -16.4 1.4 5.8
Indian Bank 224 Buy 14.8 25.3 31.4 15.1 8.9 7.1 0.8 0.7 0.7 5.5 8.7 10.0
OBC 130 Neutral 4.9 16.7 24.2 26.7 7.8 5.4 0.3 0.3 0.3 1.2 4.2 5.8
Punjab National Bank 144 Neutral -20.2 10.8 12.8 -7.1 13.3 11.2 0.8 0.8 0.7 -10.9 5.8 6.6
State Bank 255 Buy 15.7 14.2 24.6 16.2 17.9 10.4 1.1 1.1 1.0 7.8 6.6 10.5
Union Bank 143 Buy 19.7 22.4 39.1 7.3 6.4 3.7 0.5 0.5 0.4 7.0 7.4 11.8
PSU Bank Aggregate -47.7 15.6 8.8 0.9 0.8 0.8 -2.0 5.2 8.7
UR: Under Review Source: Company, MOSL
October 2016 123

4QFY12 46.9 18.7
5.0
6.5
8.0
9.5
11.0
0.2
0.8
1.4
2.0
Sep-05 1QFY13 47.6 16.5
Sep-06
October 2016
2QFY13 48.1 15.9
Sep-06 3QFY13 50.3 15.1
14.0 Dec-07
Sep-07 4QFY13 53.5
1QFY14 54.0 13.5
Sep-08 17.5 Mar-09
2QFY14 56.5
3QFY14 57.6 14.5
Sep-09 Jun-10
Loans (INR t)
4QFY14 60.1 14.3
1.9
Sep-10 1QFY15 61.2 13.3

Sep-11
2QFY15 62.7 11.0
Sep-11
3QFY15 63.2 10.1
PSU Banks Sector PB (x)
Dec-12
Sep-12 4QFY15 65.4 9.0
10yr GSec Yields (%)

0.6
1QFY16 66.6 9.9

1.1
Sep-13 Mar-14
7.2
2QFY16 68.3 9.5
9.2
Chg YoY (%)
Sep-14 3QFY16 70.2 11.1
Exhibit 45: Loan growth remains moderate at ~10%

4QFY16 72.8 11.3 Jun-15
Exhibit 47: 10-year Gsec yields remained flat QoQ (%)

LPA (x)
Sep-15
Exhibit 43: State-owned banksone-year forward P/BV
1QFY17 72.6 9.4

2QFY17 73.2 9.8 Sep-16
0.8
6.8
Sep-16
1QFY12 3.1 4QFY12 61.0 14.4

3.4
0.5
1.5
2.5
3.5
2QFY12 3.3 1QFY13 62.3

3.5 13.5
3QFY12 3.4 Sep-06
3.5 2QFY13 64.1 13.9
4QFY12 3.3
3.6
3.3
3.0 3QFY13 64.7 11.0

1QFY13 3.5 Dec-07
3.0 4QFY13 69.0 13.1
2QFY13 3.6
3QFY13 3.0 1QFY14 70.7 13.5
0.9
3.7 Mar-09
4QFY13 2.9 2QFY14 73.3 14.4
3.7
1QFY14 2.8 3QFY14 75.0 15.9
3.7 Jun-10
2QFY14 2.8 4QFY14 77.4 14.6
3.8
PSU
Deposits (INR t)
3QFY14 2.8 12.4

3.8 1QFY15 79.5
4QFY14 2.7 Sep-11
3.8 2QFY15 82.9 13.1
1QFY15 2.7
3.9 3QFY15 82.8 10.8
2.2
Pvt Banks Sector PB (x)
Private
2QFY15 2.7 Dec-12
4.1 4QFY15 85.3 10.7
3QFY15 2.7
4.0
4QFY15 2.6 1QFY16 87.1 11.0
4.0 Mar-14
1QFY16 2.6 2QFY16 91.6 11.3
4.0
2QFY16 2.6 3QFY16 91.8 10.9
4.0
Chg YoY (%)
2.4 Jun-15
3QFY16
Exhibit 46: Deposit growth remains at sub-10% levels
4.0 4QFY16 93.8 9.9

Exhibit 48: NIMs expected to remain largely stable (%)
LPA (x)
4QFY16 2.5
4.0 1QFY17 96.0 9.7
Exhibit 44: Private sector banksone-year forward P/BV
1QFY17 2.5 Sep-16

4.0 2QFY17 98.6 9.8
2.6
124
2QFY17E 2.6 4.0
Exhibit 49: State-owned banks net slippage ratio expected Exhibit 50: Provisions to PPoP (%) to remain elevated in case
to decline QoQ but remain elevated (%, annualized) of state-owned banks
Net Slippage Ratio (%) 171
11.0
PSBs PBs
128
8.4
73 79 73
55 55 61 62
52 59
3.3
3.2
51
3.1
48
2.7
2.7
2.5
40 38
2.1
2.1
2.0
2.0
1.9
2.6
1.9
1.5
30 26
2.0
16 15 18 20 17 25
1.9
1.1
1.1
1.1
17 11 13
20 13
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17E
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17E
Exhibit 51: Relative performance3 months (%) Exhibit 52: Relative performance1-year (%)
Sensex Index MOSL Financials Index Sensex Index MOSL Financials Index
115 130
110 115
100
105
85
100
70
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
95
Jun-16 Jul-16 Aug-16 Sep-16
October 2016 125

September
September2016
2016 Results
December ResultsPreview
2015 Results ||Sector:
Preview
Preview Financials
| Sector:
Sector: --Banks
Financials
Financials Banks
Axis Bank
Bloomberg AXSB IN CMP: INR551 TP: INR630 (+14%) Buy
We expect loan growth to be healthy at ~19% YoY. Deposit growth
M. Cap. (INR b)/(USD b) 1313 / 20
is likely to be lower at ~16% YoY AXSB is utilizing infra bonds and
52-Week Range (INR) 638 / 367
the refinancing window effectively. Sustainability of mid-high-teens
1,6,12 Rel Perf. (%) -7 / 11 / 3
CASA growth rate would be a key factor to monitor.
Financial Snapshot (INR b) NIM is likely to be stable QoQ at ~3.8%, despite (a) impact of high
Y/E March 2016 2017E 2018E 2019E share of high-quality incremental corporate growth (refinancing),
NII 168.3 187.7 216.2 250.7 and (b) expected higher stress addition during the quarter. NIM
OP 161.0 181.2 202.4 228.5 would be supported by expected sharp fall in cost of funds QoQ.
NP 82.2 75.9 89.0 103.1 Strong unsecured loan growth would provide yield cushion.
NIM (%) 3.8 3.6 3.5 3.4 AXSB had created a stressed asset watch list of INR252.5b (both
EPS (INR) 34.5 31.8 37.4 43.3 fund-based and non-fund based) in 4QFY16, of which 60% is
EPS Gr. (%) 11.2 -7.7 17.3 15.8 expected to slip into NPA category over FY17-18. As at the end of
BV/Sh. (INR) 217 243 274 310
1QFY17, the watch list stood at INR228.6b (~12% of corporate
ABV/Sh. (INR) 210 228 257 296
customer assets). We continue to expect relatively higher
RoE (%) 17.1 13.8 14.4 14.8
proportion of slippages in FY17, leading to higher credit costs. High
RoA (%) 1.7 1.3 1.3 1.3
provisions may be partially compensated by strong trading gains.
Payout (%) 15.0 17.6 17.6 17.6
AXSB trades at 1.9x FY18E BV and 13.2x FY18E EPS. Buy.
Valuations
P/E(X) 15.6 16.9 14.4 12.4
P/BV (X) 2.5 2.2 2.0 1.7 Quantum of slippages from stressed asset watch list.
P/ABV (X) 2.6 2.4 2.1 1.8 Quantum of loans rescheduled under the 5:25, SDR and S4A
Div. Yield (%) 0.9 0.9 1.0 1.2 schemes.

Interest Income 99,361 99,596 101,933 108,990 111,139 113,638 116,450 121,218 409,880 462,444
Interest Expense 58,799 58,975 60,313 63,464 65,970 67,289 69,140 72,387 241,551 274,785
Net Interest Income 40,562 40,621 41,621 45,526 45,169 46,349 47,310 48,831 168,330 187,659
% Change (Y-o-Y) 22.5 15.2 15.9 19.8 11.4 14.1 13.7 7.3 18.3 11.5
Other Income 22,983 20,414 23,378 26,940 27,383 29,758 28,047 30,271 93,715 115,459
Net Income 63,545 61,035 64,998 72,466 72,552 76,106 75,357 79,102 262,044 303,118
Operating Profit 40,921 36,280 39,851 43,985 44,694 46,550 45,087 44,907 161,036 181,238
% Change (Y-o-Y) 41.3 14.7 20.2 9.6 9.2 28.3 13.1 2.1 20.3 12.5
Other Provisions 11,218 7,072 7,126 11,683 21,172 17,962 14,156 12,974 37,099 66,263
Profit before Tax 29,703 29,208 32,725 32,302 23,522 28,589 30,931 31,934 123,938 114,975
Tax Provisions 9,919 10,051 10,972 10,759 7,967 9,720 10,517 10,888 41,701 39,092
Net Profit 19,784 19,156 21,753 21,543 15,555 18,868 20,414 21,045 82,237 75,884
% Change (Y-o-Y) 18.7 18.9 14.5 -1.2 -21.4 -1.5 -6.2 -2.3 11.8 -7.7
Operating Parameters
NIM (Reported,%) 3.8 3.9 3.8 4.0 3.8 3.9
NIM (Cal, %) 3.9 3.9 3.8 4.0 3.8 3.8 3.8 3.7 3.8 3.6
Deposit Growth (%) 13.2 14.2 16.2 11.0 16.3 15.9 17.7 20.0 11.0 20.0
Loan Growth (%) 23.5 23.1 21.0 20.5 21.2 18.6 18.8 20.0 20.5 20.0
CD Ratio (%) 92.5 92.0 93.2 94.6 96.4 94.1 94.1 94.6 94.6 94.6
Core CASA ratio (%) 40.0 40.0 40.0 40.0 40.0 40.0
Asset Quality
OSRL (INR b) 85.2 84.3 77.5 80.7 73.6 80.7
OSRL (%) 3.0 2.8 2.5 2.4 2.1 2.4
Gross NPA (INR b) 42.5 44.5 57.2 60.9 95.5 107.5 115.1 114.1 60.9 114.1
Gross NPA-on customer assets, % 1.38 1.4 1.7 1.67 2.54 3.0 3.0 2.77 1.7 2.8
E: MOSL Estimates
October 2016 126

Bank of Baroda
Bloomberg BOB IN CMP: INR169 TP: INR203 (+20%) Buy
We expect balance sheet consolidation to continue, with a YoY
M. Cap. (INR b)/(USD b) 390 / 6
decline in loans/deposits in absolute terms. BOBs focus would
remain on profitable growth, and incremental growth would be
1,6,12 Rel Perf. (%) 2 / -1 / -15
driven by granular Retail, Agri and SME credit.
Expect margins to expand sequentially to 2.3%, led by lower
Y/E March 2016 2017E 2018E 2019E
interest income reversals; net slippage ratio is likely to moderate
NII 127.4 146.0 167.8 191.4 (3.5% in 1QFY17), led by expected decline in sequential slippages
OP 88.2 112.4 125.8 140.6 and continued strong momentum in upgrades/recoveries.
NP -54.0 32.6 46.2 58.3 Fee income would remain muted. However, higher share of non-
NIM (%) 2.0 2.3 2.4 2.4 core income should support earnings.
EPS (INR) -23.4 14.1 20.0 25.2
PAT should more than double sequentially, but in absolute terms, it
EPS Gr. (%) NM NM 41.5 26.4
would still be at muted levels.
BV/Sh. (INR) 146.4 157.3 172.6 192.0
ABV/Sh. (INR) 91.8 102.3 119.0 142.5 Bulk of the asset quality stress has been taken in the last three
RoE (%) -15.3 9.3 12.1 13.9 quarters. We expect only a marginal increase in GNPAs in 2QFY17.
RoA (%) -0.8 0.5 0.6 0.7 The stock trades at 8.5x FY18E EPS and 0.9x FY18E BV. Buy.
Div. Payout (%) 0.0 23.2 23.2 23.2
Valuations
P/E(X) NM 11.8 8.4 6.6 Key issues to watch for
P/BV (X) 1.1 1.1 1.0 0.9 Stress addition, mainly from international book.
P/ABV (X) 1.8 1.6 1.4 1.2 Guidance on loan growth, margins and operating expenses.
Div. Yield (%) 0.0 1.7 2.4 3.0 Proceeds from stake sale in non-core assets.

Interest Income 112,765 111,564 106,140 110,144 104,335 106,417 108,165 111,458 440,613 430,375
% Change (YoY) 3.9 -4.6 -17.7 5.0 -2.6 8.1 37.5 20.0 -3.4 14.6
Other Income 9,672 11,440 11,129 17,747 14,444 16,335 15,510 13,476 49,989 59,765
Net Income 44,269 43,885 38,183 51,051 48,155 51,421 52,701 53,455 177,387 205,732
% Change (YoY) -11.2 -2.7 -27.1 -4.5 21.2 23.6 67.1 10.2 -11.1 27.5
Profit before Tax 16,022 4,453 -44,604 -42,852 6,654 12,738 14,328 14,972 -66,981 48,693
Tax Provisions 5,501 3,208 -11,184 -10,551 2,418 4,076 4,728 4,846 -13,025 16,069
Net Profit 10,522 1,245 -33,420 -32,301 4,236 8,662 9,600 10,126 -53,955 32,624
% Change (YoY) -22.7 -88.7 NM NM -59.7 595.9 -128.7 -131.3 NM NM
NIM (Reported, %) 2.3 2.1 1.7 2.2 2.2 2.1
NIM (Calculated, %) 2.1 2.0 1.7 2.1 2.2 2.3 2.4 2.5 2.0 1.9
Deposit Growth (%) 7.5 8.0 4.4 -7.0 -5.2 -5.5 2.1 8.0 -7.0 8.0
Loan Growth (%) 7.0 7.6 -2.4 -10.3 -11.2 -12.6 -1.8 5.0 -10.3 5.0
CD Ratio (%) 68.9 67.7 65.2 66.9 64.5 62.6 62.6 65.0 66.9 65.0
Tax Rate (%) 34.3 72.0 25.1 24.6 36.3 32.0 33.0 32.4 19.4 33.0
Asset Quality
Gross NPA (INR B) 173 237 389 405 430 440 442 440 405 440
Gross NPA (%) 4.1 5.6 9.7 10.0 11.2 11.4 11.0 10.3 10.0 10.3
E: MOSL Estimates
October 2016 127

Bank of India
Bloomberg BOI IN
CMP: INR116 TP: INR110 (-5%) Neutral
Continued asset quality strain and capital conservation efforts
would keep loan/deposit growth below the industry averageflat
to marginally lower on a YoY basis. We expect NIM to expand
1,6,12 Rel Perf. (%) 0 / 4 / -21
marginally QoQ to ~2.1%, led by lower interest income reversals.
Financial Snapshot (INR b) Non-interest income is likely to grow ~50% YoY, led by higher non-
Y/E March 2016 2017E 2018E 2019E
core income. Fee income is expected to grow ~30% YoY, albeit on a
NII 117.2 118.7 141.0 162.6
lower base (-20% YoY in 2QFY16).
OP 60.4 64.8 83.7 98.6
NP -60.9 -10.1 20.2 25.6 We expect operating profit to decline 4.3% QoQ (but grow 8.5%
NIM (%) 2.1 2.1 2.3 2.3 YoY), driven by continued deterioration in asset quality, keeping
EPS (INR) -74.5 -10.8 21.6 27.3 provisioning elevated. We expect loss before taxes of INR2.9b v/s a
EPS Gr. (%) NM NM -300.6 26.8 loss of INR7.4b in 1QFY17 and INR11.3b in 2QFY16.
ROE (%) -25.2 -4.6 8.8 10.4
ROA (%) -1.0 -0.2 0.3 0.3
BOI trades at 0.3x FY18E BV and 4.7x FY18E EPS. Maintain Neutral.
BV/Sh. (INR) 266 236 253 274 Key issues to watch for
ABV/Sh. (INR) 44 69 100 159
Stress addition trends and outlook for FY17.
Div. Payout (%) 0.0 0.0 23.2 23.2
Valuations
Upgrade/recovery trends; management is targeting INR175b in
P/E(X) -1.5 -10.7 5.3 4.2 FY17 v/s INR85.5b in FY16.
P/BV (X) 0.43 0.49 0.46 0.42 Quantum of loans rescheduled under the 5:25 scheme.
P/ABV (X) 2.63 1.68 1.15 0.73 Outlook on balance sheet growth and further capital infusion.
Div. Yield (%) 0.0 0.0 3.8 4.8 Update on asset monetization plan to increase Tier I ratio.

Interest Income 108,186 105,399 100,397 105,013 94,259 96,155 98,101 100,945 417,965 389,460
% Change (Y-o-Y) 8.4 -0.4 -2.6 12.0 -4.7 -4.0 11.7 -0.4 3.0 1.3
Other Income 8,406 7,781 10,473 8,836 12,384 11,545 10,952 10,838 36,525 45,719
Net Income 37,533 37,978 37,553 40,708 40,136 40,527 41,209 42,592 153,772 164,464
% Change (Y-o-Y) -17.3 -31.7 -24.5 2.6 -3.0 8.5 16.4 9.5 -19.8 7.4
Profit before Tax 1,895 -17,791 -21,950 -40,062 -11,163 -4,171 -1,598 2,572 -77,908 -14,360
Tax Provisions 598 -6,529 -6,894 -4,191 -3,750 -1,251 -479 1,172 -17,016 -4,308
Net Profit 1,297 -11,262 -15,056 -35,871 -7,414 -2,920 -1,118 1,400 -60,892 -10,052
% Change (Y-o-Y) -83.9 NM NM NM NM NM NM NM NM NM
NIM (Reported, %) 2.1 2.3 2.0 2.1 2.2 2.1
NIM (Cal, %) 2.1 2.2 1.9 2.3 2.0 2.1 2.2 2.2 2.1 2.1
Deposit Growth (%) 1.5 1.3 -0.3 -3.6 -2.0 -3.3 -1.1 7.0 -3.6 7.0
Loan Growth (%) 3.5 -1.1 -3.2 -7.2 -1.9 0.3 3.8 12.6 -7.2 12.6
CD Ratio (%) 77.7 75.2 75.1 74.3 77.8 78.0 78.8 78.1 74.3 78.1
Tax Rate (%) 31.5 36.7 31.4 10.5 33.6 30.0 30.0 45.6 21.8 30.0
Asset Quality
Gross NPA (INR b) 268.9 298.9 365.2 498.8 518.7 521.3 514.3 507.0 498.8 507.0
Gross NPA (%) 6.8 7.6 9.2 13.1 13.4 13.2 12.5 11.8 13.1 11.8
E: MOSL Estimates
October 2016 128

Canara Bank
Bloomberg CBK IN CMP: INR319 TP: INR305 (-4%) Neutral
We expect slippages to moderate (3.1% of loans), given bulk of the
M. Cap. (INR b)/(USD b) 173 / 3
stress has been recognized in the last three quarters, driven by
RBIs Asset Quality Review (AQR) and its second-level impact.
1,6,12 Rel Perf. (%) 14 / 49 / 7
Asset quality deterioration would keep credit costs elevated. We
Financial Snapshot (INR b) expect credit costs at ~175bp for the quarter.
Y/E March 2016 2017E 2018E 2019E Low balance sheet growth and subdued margins (+10bp QoQ, -10bp
NII 97.6 101.1 114.3 127.8
YoY) would mar core PPoP growth (-36% YoY).
OP 71.5 80.4 92.4 104.9
Loan/deposit growth is expected to be muted at 1%/-2% YoY.
NP -28.1 14.6 20.0 27.4
Like other state-owned banks, we expect CBKs fee income growth
NIM (%) 1.9 1.9 2.0 2.0
EPS (INR) -51.8 26.8 36.8 50.5 to be muted. However, non-core income could surprise positively.
EPS Gr. (%) NM NM 37.2 37.4 Overall non-interest income is likely to grow ~25%.
BV/Sh. (INR) 477 498 527 565 Despite just 4% PPoP de-growth, we expect PBT to decline 33% YoY.
ABV/Sh. (INR) 227 271 335 421 We upgrade earnings by ~6% over FY16-19 to factor in higher
RoE (%) -10.8 5.5 7.2 9.3
trading gains. NIMs and better than expected trading gains can
RoA (%) -0.5 0.3 0.3 0.4
Div. Payout (%) 0.0 20.9 23.2 23.2
provide upside to our estimates. The stock trades at 0.4x FY18E BV
Valuations and 5.4x FY18E EPS. Maintain Neutral.
P/E (x) -6.1 11.7 8.6 6.2 Key issues to watch for
P/BV (x) 0.66 0.63 0.60 0.56 Quantum of loans rescheduled under the 5:25, SDR and S4A
P/ABV (x) 1.39 1.16 0.94 0.75
schemes.
Div. Yield (%) 0.0 1.5 2.3 3.2
Outlook on balance sheet growth.
Update on asset monetization plan to increase Tier I ratio.
Interest Income 111,397 112,675 108,821 107,329 102,017 104,823 106,287 109,144 440,221 422,271
% Change (Y-o-Y) 3.6 11.8 -6.5 -4.5 -8.3 -7.6 14.7 18.2 1.0 3.6
Other Income 11,130 12,105 11,686 13,832 15,847 15,126 15,105 17,061 48,752 63,138
Net Income 36,295 38,570 33,952 37,570 38,921 39,572 40,639 45,120 146,386 164,251
% Change (Y-o-Y) 11.6 19.6 -13.6 -5.0 -9.2 -3.6 32.5 38.9 2.8 12.4
Profit before Tax 6,438 7,318 1,236 -46,850 3,260 5,082 5,419 7,046 -31,858 20,806
Tax Provisions 1,650 2,029 386 -7,795 970 1,525 1,626 2,122 -3,730 6,242
Net Profit 4,788 5,289 850 -39,055 2,290 3,557 3,794 4,924 -28,128 14,565
% Change (Y-o-Y) -40.7 -15.6 -87.0 NM -52.2 -32.7 346.5 NM NM NM
NIM (Rep, %) 2.2 2.2 2.2 2.2 2.2 2.2
NIM (Cal, %) 2.0 2.1 1.7 1.9 1.9 2.0 2.0 2.1 1.9 2.0
Deposit Growth (%) 10.0 5.2 6.1 1.3 -1.4 -2.2 -0.4 9.0 1.3 9.0
Loan Growth (%) 7.0 3.9 6.3 -1.6 -0.9 1.4 1.7 10.0 -1.6 10.0
CD Ratio (%) 68.7 66.6 67.7 67.7 69.0 69.0 69.0 68.3 67.7 68.3
Tax Rate (%) 25.6 27.7 31.2 16.6 29.8 30.0 30.0 30.1 11.7 30.0
Asset Quality
Gross NPA (INR b) 130.8 140.2 198.1 316.4 323.3 323.8 324.3 323.9 316.4 323.9
Gross NPA (%) 4.0 4.3 5.8 9.4 9.7 9.5 9.3 8.7 9.4 8.7
E: MOSL Estimates
October 2016 129

DCB Bank
Bloomberg DCBB IN CMP: INR127 Under Review
Loan growth (28% YoY) and deposit growth (20% YoY) would be
significantly above industry average.
We expect NII to grow 23% YoY, led by strong loan growth and a
1,6,12 Rel Perf. (%) 10 / 47 / -17
robust margin performance (+10bp YoY). We expect margins to stay
broadly stable QoQ, led by higher pricing competition in mortgages.
Y/E MARCH 2016 2017E 2018E 2019E
Non-interest income is expected to grow by ~43% YoY, led by
NII 6.2 7.6 9.2 11.3 strong growth in trading gains. Overall, we expect revenue growth
OP 3.5 4.1 4.7 5.9 to remain strong at 28% YoY and PPP growth to be 29% YoY. We
NP 1.9 2.2 2.5 3.1 model opex growth of 27% YoY, led by the branch expansion
NIM (%) 3.9 3.9 3.8 3.8 strategy. We expect PBT/PAT to grow 40%/49% YoY.
EPS (INR) 6.8 7.7 8.7 11.0
Focus on granular SME and retail loans, along with working capital
EPS Gr. (%) 0.9 12.2 14.0 25.2
corporate loans, has led to stable asset quality; we expect this trend
BV/Sh. (INR) 61.6 69.3 78.0 89.0
RoE (%) 11.8 11.7 11.9 13.1 to continue.
RoA (%) 1.1 1.0 0.9 1.0 DCBB trades at 1.3x FY18E BV and 11.3x FY18E EPS. We roll forward
Valuations the target price by a quarter. At the revised target price of INR126,
P/E (x) 18.4 16.4 14.4 11.5 upside is limited. Rating for DCB has been put under review as we
P/BV (x) 2.0 1.8 1.6 1.4 await for more clarity over core operating trend.
Div. Yield (%) 0.0 0.0 0.0 0.0
Update and commentary on balance sheet growth strategy.
CASA ratio and traction on NIMs.

Interest Income 4,043 4,162 4,299 4,481 4,706 4,893 5,073 5,218 16,985 19,890
% Change (Y-o-Y) 1.0 27.4 31.6 30.1 26.1 22.6 19.2 20.4 21.9 21.9
Other Income 631 487 472 615 601 695 680 677 2,205 2,653
Net Income 2,035 1,987 2,077 2,301 2,372 2,534 2,593 2,707 8,400 10,206
Operating Profit 897 781 843 970 927 1,009 1,032 1,101 3,490 4,069
% Change (Y-o-Y) 10.4 30.5 23.3 42.6 3.4 29.2 22.4 13.5 25.8 16.6
Other Provisions 180 217 210 273 205 225 240 258 879 929
Profit before Tax 716 564 633 698 722 784 792 843 2,611 3,140
Tax Provisions 248 195 221 2 252 235 238 233 666 958
Net Profit 469 369 412 695 470 549 554 609 1,945 2,183
% Change (Y-o-Y) 5.0 -10.1 -3.1 10.4 0.3 48.6 34.5 -12.4 1.7 12.2
NIM (Reported,%) 3.8 3.8 4.0 3.9 4.1 3.9
NIM (Cal, %) 3.6 3.8 3.9 3.9 3.8 3.9 3.9 3.8 3.8 3.9
Deposit Growth (%) 25.8 24.4 18.9 18.4 18.2 20.3 21.6 26.0 18.4 26.0
Loan Growth (%) 25.7 27.2 23.7 23.5 27.9 27.6 27.7 25.0 23.5 25.0
CD Ratio (%) 78.6 82.5 83.3 86.6 85.1 87.5 87.5 85.9 86.6 85.9
Tax Rate (%) 34.6 34.6 34.9 0.3 34.9 30.0 30.0 27.7 25.5 30.5
Asset Quality
Gross NPA (INR B) 2.1 2.2 2.3 2.0 2.3 2.6 2.8 2.9 2.0 2.9
Gross NPA (%) 2.0 2.0 2.0 1.5 1.7 1.8 1.9 1.8 1.5 1.8
E: MOSL Estimates
October 2016 130

Equitas Holdings
Bloomberg EQUITAS IN CMP: INR183 TP: 220 (+20%) Neutral
We expect NII growth of 38% YoY, led by strong loan growth of
40%+ YoY, aided by increased focus on SME and housing credit
growth. Traction in MFI and vehicle loans would be maintained.
1,6,12 Rel Perf. (%) -/-/-
Margins would decline QoQ, led by (a) prepayment charges on
Y/E March 2016 2017E 2018E 2019E
borrowings (as replaced with bulk deposits), (b) a month impact of
NII 5.1 8.7 11.6 15.4 regulatory requirement of CRR and SLR, and (c) excess liquidity in
OP 3.2 4.0 4.6 6.3 the balance sheet due to transition.
NP 1.7 2.0 2.2 2.9
Non-interest income would be ~INR390m (+5% QoQ). Operating
NIM (%) 11.6 11.1 9.0 8.6
expenses are expected to grow 33% QoQ (v/s flat total income),
EPS (INR) 6.2 6.0 6.6 8.7
EPS Gr. (%) 56.1 -2.3 9.7 30.6 driven by costs associated with transition from an NBFC to an SFB,
BV/Sh. (INR) 50 67 74 82 leading to moderate PPP growth (-30% QoQ).
ABV/Sh. (INR) 49 66 72 79 We have upgraded estimates by ~5% to factor in better than
RoE (%) 13.3 11.3 9.4 11.1
expected margin. Maintain Neutral.
RoA (%) 3.0 2.2 1.5 1.4
Div. Payout (%) 0.0 0.0 0.0 0.0
Valuations
P/E(X) 29.1 29.8 27.1 20.8
P/BV (X) 3.6 2.7 2.4 2.2 Key issues to watch for
P/ABV (X) 3.7 2.7 2.5 2.3 Update on the transition progress.
Div. Yield (%) 0.0 0.0 0.0 0.0 Commentary on growth and asset quality in MFI.

% Change (Y-o-Y) 51.6 38.4 49.1 64.0 72.3
Other Income 237 228 250 296 370 388 408 407 1,718 1,572
Net Income 1,493 1,606 1,765 1,925 2,273 2,295 2,666 3,078 6,789 10,312
Operating Expenses 745 854 948 1,050 1,134 1,507 1,753 1,951 3,597 6,344
Operating Profit 748 753 817 875 1,139 788 913 1,127 3,192 3,967
% Change (Y-o-Y) 52.3 4.7 11.8 28.8 24.3
Other Provisions 165 138 143 146 176 161 208 296 591 841
Tax Provisions 207 218 243 261 352 220 247 275 930 1,093
Net Profit 376 397 431 468 612 408 458 556 1,671 2,033
% Change (Y-o-Y) 62.6 2.7 6.4 18.8 21.7
NIM (Cal, %) 14.1 13.0 14.1 14.0 13.8
Tax Rate (%) 35.5 35.4 36.1 35.8 36.5 35.0 35.0 33.1 35.7 35.0
E: MOSL Estimates
October 2016 131

Federal Bank
Bloomberg FB IN CMP: INR75 TP: INR90 (+20%) Buy
We expect 21% YoY (4% QoQ) loan growth, aided by greater focus
M. Cap. (INR b)/(USD b) 128 / 2
on corporate credit growth. Traction in SME, agri and retail loans
would be maintained. Improvement in CD ratio YoY would aid
1,6,12 Rel Perf. (%) 7 / 48 / 6
margins. We expect NIM to improve 20bp YoY and remain stable
QoQ at 3.3%.
Y/E Mar 2016 2017E 2018E 2019E
NII 25.0 29.7 34.7 41.1 Non-interest income would grow by 50%+ YoY, led by strong
OP 14.2 17.4 20.3 24.5 trading gains, leading to strong PPoP growth of 38% YoY.
NP 4.8 7.4 8.9 10.6
We expect trading gains to be utilized for shoring up the coverage
NIM (%) 3.2 3.3 3.2 3.2
EPS (INR) 2.8 4.3 5.2 6.1
ratio. Accordingly, we factor in higher credit cost. PBT is expected to
EPS Gr. (%) -52.9 56.3 19.8 18.4 grow 14% YoY.
BV/Sh. (INR) 47 50 54 59 On the back of higher trading gains and expected traction in loan
ABV/Sh. (INR) 43 45 51 57
growth, we have upgraded estimates by ~10% over FY17-19. We
ROE (%) 6.0 8.9 9.9 10.8
roll forward our target price by a quarter. We maintain Buy with a
ROA (%) 0.5 0.7 0.7 0.7
Payout (%) 29.3 23.2 23.2 23.2 revised target price of INR90 (1.6x FY18E BV). FB trades at 1.1x
Valuations FY18E BV and 13.4x FY18E EPS.
P/E(X) 26.2 16.7 14.0 11.8
P/BV (X) 1.5 1.4 1.3 1.2
Outlook on asset quality.
P/ABV (X) 1.7 1.6 1.4 1.3
Div. Yield (%) 1.0 1.2 1.4 1.7 Strategy on balance sheet growth and capital raising.

Interest Income 19,132 19,023 19,028 20,265 20,138 20,646 21,252 22,429 77,447 84,465
% Change (YoY) 7.2 0.4 3.1 10.1 14.5 18.4 24.6 17.0 5.2 18.6
Other Income 1,939 1,823 1,833 2,269 2,370 2,748 2,112 2,306 7,864 9,536
Net Income 7,987 7,906 7,885 9,128 9,297 9,952 9,653 10,330 32,906 39,232
% Change (YoY) 4.5 -17.9 -18.1 -15.9 16.0 38.1 30.5 8.6 -12.5 22.5
Other Provisions 1,531 873 751 3,886 1,685 1,800 1,350 1,157 7,041 5,992
Profit before Tax 2,141 2,493 2,504 59 2,574 2,849 2,896 3,127 7,197 11,446
Tax Provisions 727 880 877 -44 901 997 1,014 1,094 2,440 4,006
Net Profit 1,414 1,613 1,627 103 1,673 1,852 1,883 2,032 4,757 7,440
% Change (YoY) -35.8 -32.9 -38.5 -96.3 18.3 14.8 15.7 1,880.8 -52.7 56.4
NIM (Reported,%) 3.1 3.1 3.0 3.3 3.3 3.1
NIM (Cal, %) 3.2 3.1 3.1 3.4 3.3 3.3 3.4 3.4 3.2 3.4
Deposit Growth (%) 16.7 14.3 14.1 11.8 12.5 13.3 16.2 18.0 11.8 18.0
Loan Growth (%) 10.1 5.0 9.8 13.3 19.3 20.9 22.4 22.0 13.3 22.0
CD Ratio (%) 68.7 68.9 70.5 73.4 72.9 73.6 74.3 75.9 73.4 75.9
Asset Quality
Gross NPA (INR b) 13.0 15.0 16.8 16.7 17.5 19.5 21.2 22.9 16.7 22.9
Gross NPA (%) 2.6 2.9 3.2 2.8 2.9 3.1 3.2 3.2 2.8 3.2
E: MOSL Estimates
October 2016 132

HDFC Bank
Bloomberg HDFCB IN CMP: INR1,287 TP: INR1,500 (+17%) Buy
We expect healthy loan growth of ~21% YoY (~2x the system), aided
M. Cap. (INR b)/(USD b) 3253 / 49
by higher growth in retail products and continued momentum in
52-Week Range (INR) 1,318 / 929
corporate loans.
1,6,12 Rel Perf. (%) 1 / 9 / 13
Fee income growth would continue to lag loan growth in the near
term; however, it is expected to remain healthy at ~18% YoY, led by
Y/E MARCH 2016 2017E 2018E 2019E
continued traction in retail fees.
NII 275.9 335.5 399.2 484.4 Computed NIM is likely to be stable QoQ. Despite strong expansion,
OP 213.6 256.8 306.3 375.0 opex growth is expected to be 21% YoY, as the benefit of
NP 123.0 147.8 177.6 213.8 digitalization is reflected in lower sourcing cost.
NIM (%) 4.7 4.8 4.7 4.6 Strong operating performance (24%+ PPP growth) and healthy asset
EPS (INR) 48.6 58.4 70.2 84.6
quality (GNPA to remain stable QoQ at 1%) would lead to 20%+ YoY
EPS Gr. (%) 19.3 20.2 20.2 20.4
earnings growth in 2QFY17.
BV/Sh. (INR) 287.3 332.2 386.1 450.9
ABV/Sh. (INR) 283.7 326.5 379.0 438.7 HDFCB trades at 3.1x FY18E BV and 16.8x FY18E EPS. Comfort on
RoE (%) 18.3 18.9 19.6 20.2 earnings (~20% CAGR over FY16-19) remains high. Maintain Buy.
RoA (%) 1.9 1.9 1.9 1.9
Payout (%) 22.9 23.4 23.4 23.4
Performance in retail loan portfolioespecially in segments like
Valuations
P/E(X) 26.5 22.1 18.4 15.3 CV/CE, where commentary from industry experts is positive.
P/BV (X) 4.5 3.9 3.3 2.9 Trends in digital banking/payment industry and various initiatives
P/ABV (X) 4.6 4.0 3.4 2.9 by the bank.
Div. Yield (%) 0.7 0.9 1.1 1.3 Overall B/S growth outlook with anticipated economic recovery.

Interest Income 140,411 147,725 154,111 159,968 165,160 173,022 179,488 188,416 602,214 706,087
% Change (Y-o-Y) 23.5 21.2 24.0 24.0 21.8 24.3 21.6 19.0 23.2 21.6
Other Income 24,619 25,518 28,722 28,659 28,066 30,017 32,835 35,236 107,517 126,154
Net Income 88,507 92,327 99,407 103,192 105,881 113,073 118,758 123,936 383,432 461,649
% Change (Y-o-Y) 26.2 24.2 20.0 21.5 20.0 24.0 18.4 18.8 22.7 20.2
Tax Provisions 14,262 14,922 17,251 16,982 17,136 17,565 20,549 20,026 63,417 75,275
Net Profit 26,957 28,695 33,568 33,742 32,389 34,479 40,336 40,558 122,962 147,761
% Change (Y-o-Y) 20.7 20.5 20.1 20.2 20.2 20.2 20.2 20.2 20.4 20.2
NIM (Reported,%)* 4.3 4.2 4.3 4.3 4.4 4.3
NIM (Cal, %)# 4.7 4.6 4.6 4.7 4.7 4.7 4.7 4.7 4.7 4.7
Deposit Growth (%) 30.1 29.7 26.5 21.2 18.5 21.1 19.5 20.0 21.2 20.0
Loan Growth (%) 22.4 27.9 25.7 27.1 23.2 21.4 21.1 22.0 27.1 22.0
CD Ratio (%) 78.9 82.6 83.3 85.0 82.0 82.8 84.4 86.4 85.0 86.4
Tax Rate (%) 34.6 34.2 33.9 33.5 34.6 33.8 33.8 33.1 34.0 33.8
Asset Quality
Gross NPA (INR B) 38.5 38.3 42.6 43.9 49.2 53.1 58.3 58.9 43.9 58.9
Gross NPA (%) 1.0 0.9 1.0 0.9 1.0 1.0 1.1 1.0 0.9 1.0
E: MOSL Estimates; * Reported on total assets; # Cal. on interest earning assets
October 2016 133

ICICI Bank
Bloomberg ICICIBC IN CMP: INR256 TP: INR320 (+25%) Buy
Equity Shares (m) 5813.3 We expect moderate loan growth of 12-13% YoY (similar to the last
M. Cap. (INR b)/(USD b) 1,488 / 22 quarter) to continue. Retail loan growth has picked up over the last
52-Week Range (INR) 293 / 181 two years and is expected to remain a key driver of loan growth.
1,6,12 Rel Perf. (%) -1 / -4 / -12 Moderate growth, coupled with a YoY decline in NIMs (due to a
Financial Snapshot (INR b) higher share of non interest earning assets), should lead to broadly
Y/E March 2016 2017E 2018E 2019E flat NII on YoY basis. On a QoQ basis, we expect NIM to remain
NII 212.2 214.0 250.8 294.1 stable, led by a fall in cost of funds.
OP 238.6 263.9 242.1 273.4 We have factored in ~5% YoY growth in fees income, led by
NP 97.3 100.7 116.4 138.3 moderate corporate loan growth. We build in ~INR54b net capital
NIM (%) 3.6 3.2 3.3 3.4 gains from stake sale in ICICI Pru Life towards the end of quarter.
EPS (INR) 16.7 17.3 20.0 23.8 Gross slippages are expected to remain high in 2QFY17 as well.
EPS Gr (%) -13.2 3.5 15.6 18.9 Outstanding watch list (fund based and non-fund based) stood at
BV/Sh (INR)* 132.9 145.2 159.5 176.3 INR420b in 1QFY17.
ABV/Sh (INR)* 117.3 121.6 138.8 160.1 We expect PPoP (ex capital gains from stake sale) to grow by 4%
RoE (%) 11.3 10.5 11.2 12.3 YoY; however, led by higher credit cost, we factor in a 20% YoY
RoA (%) 1.4 1.3 1.4 1.4 decline in earnings. We expect one-off stake sale gains to be utilized
Div. Payout (%) 0.0 0.0 0.0 0.0 for provisions. ICICIBC trades at 0.9x FY18E core BV and 7.2x FY18E
Valuations EPS. Buy.
AP/E (x) 11.4 10.2 8.2 6.3
AP/BV (x) 1.4 1.2 1.0 0.9
AP/ABV (x) 1.6 1.4 1.2 0.9
Div. Yield (%) 2.0 1.8 2.1 2.5 Movement of watch list accounts.
* BV adj for invt in subsidiaries Plans on monetization of stakes in various ventures.
Outlook on asset quality and trend on further relapse from RL.
Quantum of loans rescheduled under the 5/25 scheme.

Interest Income 128,126 130,989 133,461 134,819 133,303 132,502 135,108 139,332 527,394 540,243
% Change (YoY) 13.9 12.8 13.3 6.4 0.8 -1.7 -1.0 5.0 11.5 0.8
Other Income 29,899 30,074 42,169 51,089 34,293 91,153 33,486 34,327 153,231 193,258
Net Income 81,050 82,588 96,698 105,134 85,878 142,754 87,491 91,093 365,471 407,216
% Change (YoY) 11.5 9.8 30.2 30.0 3.5 108.8 -21.5 -26.1 21.0 10.6
Tax Provisions 11,063 11,862 6,976 -5,206 4,679 15,874 10,871 11,722 24,694 43,146
Net Profit 29,762 30,301 30,181 7,019 22,324 23,811 26,614 27,924 97,263 100,673
% Change (YoY) 12.1 11.9 4.5 -76.0 -25.0 -21.4 -11.8 297.8 -13.0 3.5
NIM (Reported,%) 3.5 3.5 3.5 3.4 3.2 3.5
NIM (Cal, %) 3.7 3.7 3.7 3.5 3.3 3.2 3.3 3.3 3.6 3.3
Deposit Growth (%) 9.6 9.2 14.6 16.6 15.3 15.8 14.8 16.8 16.6 16.8
Loan Growth (%) 15.2 13.3 15.8 12.3 12.4 13.0 9.7 13.3 12.3 13.3
Domestic CD Ratio (%) 85.1 84.3 84.8 83.2 85.1 84.3 84.8 83.2 83.2 83.2
Asset Quality
Gross NPA (INR b) 151.4 158.6 211.5 262.2 271.9 320.0 349.2 339.6 262.2 339.6
Gross NPA (%) 3.7 3.8 4.7 5.8 5.9 6.7 7.1 6.7 5.8 6.7
E: MOSL Estimates
October 2016 134

IDFC Bank
Bloomberg IDFCB IN CMP: INR79 Under review
Equity Shares (m) 3,392.6 We expect 16% YoY (6% QoQ) loan growth, aided by greater focus
M. Cap. (INR b)/(USD b) 268 / 4
on retail banking. Though incremental deposits raised in 2Q would
aid margins, we expect NIM (calculated) to decline to ~2.1% (v/s
1,6,12 Rel Perf. (%) -/-/-
2.5% in 1Q), led by lower asset yields.
Financial Snapshot (INR b) Non-interest income would be ~INR3b (+40% QoQ), led by strong
Y/E March 2H2016 2017E 2018E 2019E trading gains. Operating expenses are likely to grow 18% QoQ (v/s
NII 8.5 21.2 27.8 34.7 14% QoQ growth in total income), driven by costs associated with
OP 7.4 18.8 22.8 29.7 expansion of retail and rural banking franchise, leading to moderate
NP 4.7 11.6 14.2 18.3 PPP growth of 11% QoQ.
NIM (%) 2.5 2.4 2.5
EPS (INR) 3.4 4.2 5.4 We expect ~INR230m provisions (broadly stable QoQ). PAT is
EPS Gr. (%) 22.9 28.8 expected to grow ~13% QoQ to INR3b, largely helped by strong
BV/Sh. (INR) 40.2 42.8 46.0 50 profit on sale of investments.
ABV/Sh. (INR) 37.8 40.4 43.2 47
We have upgraded earnings by ~5% over FY16-19 to factor in higher
RoE (%) 8.2 9.4 11.2
RoA (%) 1.2 1.1 1.2 trading gains and marginally better margins. We also roll forward
Payout (%) 20.0 20.0 20.0 20.0 target price by a quarter to INR80. We wait to see trends in the
Valuations quarter related to margins and outlook on growth. We revise our
P/E(X) 16.1 13.1 10.2 rating from Buy to Under Review.
P/BV (X) 1.3 1.2 1.1
P/ABV (X) 1.4 1.3 1.2 Key issues to watch for
Div. Yield (%) 1.2 1.5 2.0 Outlook on balance sheet growth and costs.
Retail franchise building plans and update.

FY16 FY17 2HFY16 FY17E
3Q 4Q 1Q 2QE 3QE 4QE
Interest Income 17,891 18,155 19,755 19,954 20,240 21,268 36,046 81,216
Interest Expense 14,028 13,987 14,766 14,840 14,988 15,414 28,015 60,007
Net Interest Income 3,863 4,168 4,989 5,114 5,252 5,853 8,031 21,208
% Change (Y-o-Y) 35.9 40.4 NA
Other Income 2,179 1,377 2,128 3,000 3,250 3,622 3,556 12,000
Net Income 6,042 5,545 7,117 8,114 8,502 9,475 11,587 33,208
Operating Expenses 2,153 2,947 2,768 3,263 3,771 4,588 5,100 14,390
Operating Profit 3,889 2,598 4,349 4,851 4,731 4,887 6,487 18,818
% Change (Y-o-Y) 21.6 88.1 NA
Other Provisions 123 119 236 230 235 320 242 1,021
Profit before Tax 3,766 2,479 4,113 4,621 4,496 4,567 6,246 17,797
Tax Provisions 1,345 829 1,465 1,617 1,574 1,573 2,173 6,229
Net Profit 2,422 1,651 2,648 3,004 2,922 2,994 4,072 11,568
% Change (Y-o-Y) NA NA NA NA 20.7 81.4 NA
NIM (Cal, %) 2.1 2.3 2.5 2.1 2.0 2.2 2.2 2.5
Tax Rate (%) 35.7 33.4 35.6 35.0 35.0 34.4 34.8 35.0
E: MOSL Estimates
October 2016 135

Indian Bank
Bloomberg INBK IN CMP: INR225 TP: INR260 (+16%) Buy
On a lower base, we expect an uptick in loan growth to 5.5% v/s
M. Cap. (INR b)/(USD b) 108 / 2
1.5% in 1QFY17 and 2.5% YoY in FY16. Deposits are also expected to
grow ~7% YoY. Decline in cost of funds would keep margins stable
1,6,12 Rel Perf. (%) 3 / 103 / 60
to improving at 2.6%.
Y/E March 2016 2017E 2018E 2019E
Fee income would be subdued on lower corporate loan growth.
NII 44.5 51.9 58.7 66.8 Trading gains growth is expected to be muted, given unfavorable
OP 30.3 36.4 41.1 45.7 base. Overall, we expect 5% YoY growth in non-interest income.
NP 7.1 12.1 15.1 17.8 Asset quality stress is expected to be largely behind, as the bank has
NIM (%) 2.5 2.7 2.7 2.7 recognized entire SDR (INR11b) and ~80% of 5:25 refinanced
EPS (INR) 14.8 25.3 31.4 37.1
accounts as NPA. We expect slippage ratio to moderate to 2%
EPS Gr. (%) -29.2 70.6 24.1 18.2
(annualized) v/s 7.5% in 2HFY16 and 2.7% in 1QFY17. Expect credit
BV/Sh. (INR) 281 300 324 352
ABV/Sh (INR) 202 228 263 303 cost of 1.5%, as INBK looks to improve provision coverage (38% in
RoE (%) 5.5 8.7 10.0 11.0 1QFY17).
RoA (%) 0.4 0.6 0.6 0.7 INBK trades at 0.5x FY18E BV and 5.2x FY18E EPS. Maintain Buy.
Div. Payout (%) 23.2 23.2 23.2 23.2
Valuations
P/E (x) 12.6 7.4 5.9 5.0 Outlook on business growth and asset quality remains the key
P/ BV (x) 0.66 0.6 0.6 0.5 factor to monitor.
P/ABV (x) 0.92 0.8 0.7 0.6 Quantum of loans rescheduled under the 5/25 scheme.
Div. Yield (%) 0.8 2.7 3.4 4.0 View on margins with an improvement in liquidity and lower
interest rates.

Interest Income 41,190 41,412 39,994 39,842 40,713 41,196 42,460 43,875 162,439 168,245
% Change (Y-o-Y) 4.5 -8.2 0.5 2.4 10.4 15.0 18.0 23.6 -0.3 16.8
Other Income 3,756 4,375 4,390 5,294 4,417 4,615 5,056 4,607 17,814 18,695
Net Income 14,959 15,179 15,498 16,640 16,780 17,036 18,165 18,635 62,277 70,618
% Change (Y-o-Y) 11.2 -3.8 -4.3 1.2 27.5 15.4 24.2 14.4 6.9 13.4
Profit before Tax 3,006 5,984 425 138 4,862 3,540 4,296 5,152 9,554 17,852
Tax Provisions 853 2,291 2 -707 1,788 1,062 1,289 1,573 2,439 5,713
Net Profit 2,153 3,693 423 845 3,074 2,478 3,007 3,579 7,115 12,139
% Change (Y-o-Y) 3.9 17.5 -84.8 -59.0 42.8 -32.9 610.9 323.6 -29.2 70.6
NIM (Rep, %) 2.4 2.3 2.3 2.4 2.5 2.3
NIM (Cal, %) 2.5 2.4 2.5 2.5 2.7 2.7 2.7 2.8 2.5 2.7
Deposit Growth (%) 12.9 4.7 8.1 5.4 1.1 6.8 9.9 10.0 5.4 10.0
Loan Growth (%) 5.7 5.0 6.4 2.5 1.5 5.5 7.1 10.0 2.5 10.0
CD Ratio (%) 69.8 70.9 72.2 72.4 70.0 70.0 70.3 72.4 72.4 72.4
Tax Rate (%) 28.4 38.3 0.4 NM 36.8 30.0 30.0 30.5 25.5 32.0
Asset Quality
Gross NPA (INR b) 58.2 57.7 70.7 88.3 88.9 88.4 88.4 90.9 88.3 90.9
Gross NPA (%) 4.7 4.6 5.6 6.7 7.0 6.7 6.4 6.2 6.7 6.2
E: MOSL Estimates
October 2016 136

IndusInd Bank
Bloomberg IIB IN CMP: INR1,232 TP: INR1,385 (+12%) Buy
Equity Shares (m) 595.0 We expect strong loan/deposit growth of ~29%/~31% YoY in
M. Cap. (INR b)/(USD b) 733 / 11
2QFY17. Continuation of positive growth trend in the CV/CFD
52-Week Range (INR) 1,255 / 799
segment would remain a key factor to monitor. Overall, NIM is
1,6,12 Rel Perf. (%) 5 / 17 / 21
likely to remain largely stable QoQ at 3.8-3.9%, led by lower cost of
Financial Snapshot (INR Billion) funds and an increase in the share of high-yielding loans.
Y/E MARCH 2016 2017E 2018E 2019E We expect non-interest income growth to be strong at ~31%. Opex
NII 45.2 58.2 71.2 87.0 growth would remain high at ~30%+ YoY, led by continued
OP 41.4 53.5 64.2 78.1
investments in branches, people and technology.
NP 22.9 28.7 36.3 44.4
Strong PPP growth (+30% YoY) would keep earnings growth strong
NIM (%) 4.0 4.2 4.1 4.0
EPS (INR) 38.4 48.3 61.1 74.5 at 25%+ YoY, despite factoring in 50%+ YoY increase in provisions.
EPS Gr. (%) 13.4 25.6 26.6 22.0 IIB trades at 2.9x FY18E BV and 17.4x FY18E EPS, with best-in-class
BV/Sh. (INR) 291.0 332.5 385.1 449.2 RoA of ~2% and RoE of 17-18%. Delay in CV cycle revival and sharp
ABV/Sh. (INR) 287.5 329.4 382.4 446.9 moderation in fees remain the key risks to our estimates. Buy.
RoE (%) 16.6 15.5 17.0 17.9
RoA (%) 1.8 1.8 1.9 1.8
Valuations Uptick in CV/CE demand would be the key for CFD growth.
P/E (X) 32.2 25.6 20.2 16.6
Corporate asset quality a key monitorable.
P/BV (X) 4.2 3.7 3.2 2.8
P/ABV (X) 4.3 3.8 3.2 2.8
Traction in the non-vehicle consumer lending portfolio.
Div. Yield (%) 0.4 0.5 0.6 0.7

Interest Income 27,235 27,978 29,277 31,317 32,917 34,255 35,723 37,369 115,807 140,264
% Change (YoY) 22.5 31.3 36.2 37.1 38.3 29.5 26.9 22.9 32.1 28.9
Other Income 7,616 7,835 8,390 9,128 9,730 10,283 11,082 12,404 32,970 43,498
Net Income 17,423 18,778 20,124 21,810 23,294 24,459 25,973 27,994 78,135 101,720
% Change (YoY) 23.2 38.9 37.1 35.4 33.7 29.3 27.0 27.3 33.7 29.2
Tax Provisions 2,744 2,884 3,029 3,172 3,419 3,610 3,767 3,996 11,828 14,793
Net Profit 5,250 5,600 5,810 6,204 6,614 7,008 7,312 7,781 22,865 28,716
% Change (YoY) 24.7 30.2 29.9 25.3 26.0 25.1 25.9 25.4 27.5 25.6
NIM (Reported,%) 3.7 3.9 3.9 3.9 4.0 3.9
NIM (Cal, %) 3.5 3.7 3.7 3.8 3.8 3.8 3.8 3.7 3.7 3.8
Deposit Growth (%) 21.6 22.5 24.6 25.4 31.0 30.9 31.0 28.0 25.4 28.0
Loan Growth (%) 23.1 30.6 28.7 28.5 29.7 29.2 29.3 27.0 28.5 27.0
CD Ratio (%) 93.0 96.8 95.1 95.1 92.1 95.6 93.8 94.3 95.1 94.3
Tax Rate (%) 34.3 34.0 34.3 33.8 34.1 34.0 34.0 33.9 34.1 34.0
Asset Quality
Gross NPA (INR b) 5.7 6.0 6.8 7.8 8.6 8.9 9.4 12.7 7.8 12.7
Gross NPA (%) 0.8 0.8 0.8 0.9 0.9 0.9 0.9 1.1 0.9 1.1
E: MOSL Estimates
October 2016 137

Kotak Mahindra Bank

Bloomberg KMB IN CMP: INR788 TP: INR940 (+19%) Buy
On a reported basis, we expect standalone bank earnings to grow
M. Cap. (INR b)/(USD b) 1,445 / 22
44% YoY. However, the base quarter (2QFY16) included one-off
expenses related to integration (integration cost of INR120m+NPA
1,6,12 Rel Perf. (%) -2 / 4 / 15
provisions of INR620m for eIVBL). Adjusted for all these, we expect
PAT to grow 21% YoY.
Y/E MARCH 2016 2017E 2018E 2019E
We expect the standalone bank to report 11%+ loan growth and
NII 69.0 80.8 97.2 116.9 17%+ deposit growth in 2QFY17. NIMs are expected to be largely
OP 40.4 57.7 74.4 92.9 stable YoY. Overall, we expect NII growth of 16% YoY.
NP 20.9 33.1 43.5 54.4 With strong customer acquisition and merger synergies from eIVBL,
Cons. NP 34.6 49.1 62.3 76.6 fee growth should remain healthy. Even traction on CASA should
NIM (%) 4.1 4.4 4.5 4.5
pick up.
Cons. EPS (INR) 18.9 26.8 34.0 41.8
Consolidated earnings are likely to be up 23% YoY. Adjusted for
EPS Gr. (%) 41.9 26.9 23.0
Cons. BV. (INR) 182 208 240 280 one-offs in the base quarter, earnings are likely to grow 14% YoY.
Cons. RoE (%) 10.9 13.7 15.2 16.0 The stock trades at 3.1x FY18E consolidated BV and 22.1x FY18E
RoA (%) 1.1 1.6 1.8 1.9 consolidated earnings. Maintain Buy.
Payout (%) 5.1 5.8 5.8 5.8
Valuations
P/E(X) (Cons.) 40.3 28.4 22.4 18.2 Key issues to watch for
P/BV (X) (Cons.) 4.2 3.7 3.2 2.7 Guidance on balance sheet growth.
Div. Yield (%) 0.0 0.1 0.1 0.1 Performance on CASA, fees and growth the initial pain of merger
is behind now.
Performance of non-banking subsidiaries and their contribution to
overall profit.
Kotak Bank (standalone)
% Change (Y-o-Y) 59.5 61.6 66.7 65.4 20.1 16.4 14.8 17.5 63.4 17.1
% Change (Y-o-Y) -10.3 42.4 63.4 38.7 120.3 30.5 21.4 36.4 34.8 42.8
Net Profit 1,898 5,695 6,347 6,958 7,420 7,799 8,390 9,488 20,898 33,097
% Change (Y-o-Y) -55.8 28.1 36.6 32.0 291.0 36.9 32.2 36.4 12.0 58.4
Other Businesses
Kotak Prime 1,190 1,270 1,260 1,300 1,200 1,300 1,425 1,499 5,025 5,424
Kotak Mah. Investments 300 360 390 500 400 450 500 601 1,540 1,951
Kotak Mah. Capital Co 30 70 60 170 230 200 210 222 320 862
Kotak Securities 670 780 550 510 600 650 700 856 2,515 2,806
International subs 250 320 260 220 130 180 230 248 1,050 788
Kotak Mah. AMC & Trustee
Co. 200 230 40 250 190 225 225 303 720 943
Kotak Investment Advisors 0 0 -10 50 110 110 115 115 50 450
Kotak OM Life Insurance 660 480 600 770 710 720 725 732 2,510 2,887
Con.adj and MI -30 230 -40 -180 -240 -10 -10 135 -19 -19,766
Conso. PAT 5,168 9,435 9,457 10,548 10,750 11,624 12,510 14,197 34,608 29,440
% Change (Y-o-Y) -25.9 31.5 32.0 15.5 108.0 23.2 32.3 34.6 13.7 -14.9
E: MOSL Estimates, Quarterly numbers vary from full year number due to difference in reporting
October 2016 138

Oriental Bank of Commerce

Bloomberg OBC IN CMP: INR130 TP: INR117 (-10%) Neutral
Loan/deposit growth would remain moderate (5-6% YoY).
NII is likely to remain subdued (-10% YoY), led by moderate loan
growth and impact from interest income reversals. NIMs are
1,6,12 Rel Perf. (%) 6 / 23 / -8
expected to remain broadly stable QoQ at 2.3%.
Financial Snapshot (INR b) Given the subdued economic environment, fee income growth is
Y/E March 2016 2017E 2018E 2019E likely to remain in low single digit. Overall, non-interest income is
NII 53.7 50.8 59.5 71.4
expected to increase by 30% YoY, driven by favorable base and
OP 36.8 35.9 42.0 49.5
trading gains during the quarter.
NP 1.6 5.8 8.4 11.5
EPS (INR) 4.9 16.7 24.2 33.3 Opex is expected to accelerate to 12% YoY. Overall PPP is expected
EPS Growth (%) 0.0 0.0 45.0 37.3 to de-grow 11% YoY.
BV/Sh. (INR) 418.0 409.5 428.1 453.6 Over the last two quarters, slippages (ex AQR) have risen sharply.
ABV/Sh. (INR) 202 185 223 290 However, the clean-up exercise taken up by the new management
RoE (%) 1.2 4.2 5.8 7.5 might throw more negative surprises in 2Q. Hence, we remain
RoA (%) 0.1 0.2 0.3 0.4
cautious on asset quality (expect 150bp of credit costs).
Div. Payout (%) 16.7 23.2 23.2 23.2
The stock trades at 0.2x FY18E BV and 4.3x FY18E EPS. Maintain
Valuations
P/E (x) 0.0 6.8 4.7 3.4 Neutral.
P/ABV (x) 0.56 0.62 0.51 0.39 Outlook on asset quality, as net stressed loans remain one of the
Div. Yield (%) 0.0 2.9 4.3 5.8
highest in the industry.
Quantum of loans rescheduled under the 5:25 scheme.
Balance sheet growth and traction in focus loan segments.
Interest Income 51,149 50,296 49,560 49,584 47,789 48,705 49,464 51,072 200,587 197,031
% Change (YoY) 6.9 11.0 0.9 4.3 -9.3 -10.0 -2.8 0.1 5.7 -5.5
Other Income 4,539 4,246 3,945 4,933 6,138 5,515 4,907 5,303 17,663 21,863
Net Income 17,824 18,076 17,038 18,469 18,184 17,959 17,636 18,849 71,408 72,627
% Change (YoY) -8.5 16.1 -24.5 -27.7 -12.2 -11.3 8.7 9.2 -12.9 -2.5
Profit before Tax 4,668 4,231 -4,167 -1,474 1,667 1,995 2,162 2,938 3,258 8,762
Tax Provisions 2,090 1,218 80 -1,690 660 638 692 989 1,698 2,979
Net Profit 2,578 3,013 -4,247 216 1,007 1,356 1,470 1,949 1,561 5,783
% Change (YoY) -29.3 3.4 NM NM -60.9 -55.0 NM 801.7 -68.6 270.5
NIM (Rep, %) 2.7 2.8 2.6 2.7 2.4 2.7
NIM (Cal,%) 2.5 2.7 2.5 2.5 2.2 2.3 2.3 2.3 2.6 2.3
Deposit Growth (%) 5.0 6.9 4.4 2.4 4.4 5.7 5.1 11.0 2.4 11.0
Loan Growth (%) 8.3 7.0 7.9 3.7 4.0 6.3 7.1 10.0 3.7 10.0
CD Ratio (%) 74.8 73.7 71.7 71.3 73.5 73.1 72.8 70.6 71.3 0.0
Tax Rate (%) 44.8 28.8 -1.9 114.7 39.6 32.0 32.0 33.7 52.1 34.0
Asset Quality
Gross NPA (INR b) 85.8 85.6 118.2 147.0 172.1 176.1 172.6 162.9 147.0 162.9
Gross NPA (%) 5.9 5.7 7.8 9.6 11.5 11.0 10.6 9.6 9.6 9.6
E: MOSL Estimates
October 2016 139

Punjab National Bank

Bloomberg PNB IN CMP: INR144 TP: INR125 (-13%) Neutral
We expect PNBs loans and deposits to grow 5-6% YoY in 2QFY17,
M. Cap. (INR b)/(USD b) 282 / 4
partially driven by higher risk aversion. NII is likely to be muted (-
11% YoY), led by higher interest reversals and growth in safer
1,6,12 Rel Perf. (%) 15 / 52 / 1
assets.
Financial Snapshot (INR b) Fee income growth is likely to remain moderate (+10% YoY); overall
Y/E March 2016 2017E 2018E 2019E non-interest income is expected to grow 54%+ YoY, led by higher
NII 153.1 158.5 179.3 205.7
growth in non-core income.
OP 122.2 132.8 143.3 157.2
Significant stress additions in FY16 and management guidance of
NP -39.7 23.2 27.2 35.3
NIM (%) 2.6 2.5 2.6 2.7 INR300b+ watch list at the end of 4Q are likely to drive NPAs higher
EPS (INR) -20.2 11.8 13.9 18.0 (like in 1Q). Recoveries could surprise positively, with intense
EPS Gr. (%) NM NM 17.3 29.8 efforts. Expect credit costs to remain ~250bp in an effort to tick
BV/Sh. (INR) 180 190 202 217 coverage ratio up (37% in 1QFY17).
ABV/Sh. (INR) 54 89 106 144 We have rolled forward target price by a quarter. Value unlocking in
RoE (%) -10.9 6.4 7.1 8.6
housing finance and insurance business, and improvement in asset
RoA (%) -0.6 0.3 0.4 0.4
Payout (%) 0.0 17.4 17.4 17.4
quality remains a key trigger. The stock trades at 0.5x FY18E BV and
P/E(X) -7.1 12.1 10.3 8.0 5.9x FY18E EPS. Maintain Neutral.
P/BV (X) 0.8 0.8 0.7 0.7
P/ABV (X) 2.65 1.61 1.34 0.99
Div. Yield (%) 0.0 1.2 1.5 1.9
Outlook on asset quality, as net stressed loans remain one of the
highest in the industry.
Capital raising plans via fresh issue and sale of non-core assets.

Interest Income 120,347 123,450 122,206 108,240 115,749 117,465 118,471 118,790 474,244 470,476
% Change (YoY) -6.3 4.1 -2.7 -27.0 -9.8 -10.7 -0.9 52.1 -7.5 3.5
Other Income 13,974 13,569 16,706 24,522 23,551 23,960 20,701 20,793 68,770 89,005
Net Income 54,998 56,789 57,902 52,199 60,541 62,553 61,509 62,883 221,888 247,486
% Change (YoY) 0.2 2.2 6.1 0.8 4.6 16.4 12.6 2.1 2.2 8.7
Profit before Tax 13,207 10,564 -8,577 -72,574 5,362 9,377 9,325 11,054 -57,379 35,118
Tax Provisions 6,000 4,354 -9,087 -18,902 2,299 3,094 3,077 3,470 -17,635 11,940
Net Profit 7,207 6,210 510 -53,671 3,064 6,282 6,248 7,584 -39,744 23,178
% Change (YoY) -48.7 7.9 -93.4 NM -57.5 1.2 1,124.8 NM NM NM
NIM (Rep, %) 2.9 3.0 2.8 1.8 2.5 2.6
NIM (Cal, %) 2.9 3.0 2.8 1.8 2.4 2.6 2.6 2.6 2.6 2.6
Deposit Growth (%) 16.4 14.0 13.3 10.3 7.0 4.7 6.1 7.0 10.3 7.0
Loan Growth (%) 9.6 6.7 8.4 8.4 2.8 5.9 5.7 5.0 8.4 5.0
CD Ratio (%) 73.6 70.6 71.6 74.6 70.7 71.4 71.4 73.2 74.6 73.2
Tax Rate (%) 45.4 41.2 105.9 26.0 42.9 33.0 33.0 31.4 30.7 34.0
Asset Quality
Gross NPA (INR B) 254 249 343 558 567 539 513 490 558 490
Gross NPA (%) 6.5 6.4 8.5 12.9 13.8 12.7 11.8 10.8 12.9 10.8
E: MOSL Estimates
October 2016 140

State Bank of India

Bloomberg SBIN IN CMP: INR255 TP: INR307 (+20%) Buy
We expect loan growth to be broadly in line with system average at
M. Cap. (INR b)/(USD b) 1,981 / 30
10%. Deposit growth is expected to be slightly better than the
industry at ~12%. Incremental loan growth would be driven by
1,6,12 Rel Perf. (%) 1 / 19 / 1
retail loans and relatively low-yielding low-risk corporate loans.
Financial Snapshot (INR b) Computed NIM is likely to be stable/marginally decline QoQ to
Y/E March 2016 2017E 2018E 2019E 2.9%. Post the sharp increase in slippages in 2HFY16, we expect
NII 569 595 689 778 stress additions to moderate broadly in-line with the last quarter
OP 433 469 505 565
and cost of funds to improve further, supporting NIMs.
NP 100 110 150 191
NIM (%) 3.0 2.8 2.9 2.9
We expect non-interest income growth of 24% YoY, led by higher
EPS (INR) 15.7 14.2 24.6 31.4 trading gains and recoveries in written-off accounts. Fee income
EPS Gr. (%) -30.8 -9.5 73.0 27.2 growth would remain muted at sub-10% YoY. Cost (+11% YoY)
Cons. BV (INR) 222 234 253 279 containment would continue. Overall PPoP growth is expected to
Cons. ABV (INR) 159 163 198 234 be 6% YoY.
RoE (%) 7.6 7.7 9.8 11.5
We expect credit cost to remain elevated, led by focus on improving
RoA (%) 0.5 0.5 0.6 0.6
Div. Payout (%) 20.1 19.6 19.3 19.2
strength of the balance sheet. The stock trades at 0.8x FY18E
Valuations consolidated BV and 8.7x FY18E consolidated EPS. Buy.
Cons. P/E (x) 15.5 17.2 9.9 7.8
Cons. P/BV (x) 1.10 0.98 0.90 0.82 Key issues to watch for
Cons P/ABV (x) 1.54 1.50 1.24 1.04 Performance and guidance on asset quality.
Div. Yield (%) 1.0 0.9 1.6 2.0
Growth outlook and key focus segments for growth.
Outlook and update on non-core stake sales and ABs merger.

Interest Income 396,429 406,576 405,535 428,313 415,935 422,015 431,472 450,690 1,636,853 1,720,113
Interest Expense 259,109 264,050 269,470 275,406 272,812 277,012 281,502 293,469 1,068,035 1,124,796
% Change (YoY) 3.6 7.4 -1.2 3.9 4.2 1.7 10.2 2.8 3.4 4.7
Other Income 50,880 61,973 61,775 106,956 73,351 76,729 72,859 115,159 281,584 338,097
Net Income 188,200 204,498 197,840 259,864 216,474 221,732 222,829 272,380 850,402 933,415
% Change (YoY) 4.7 21.9 3.3 11.2 20.1 5.5 13.9 -0.5 9.4 8.5
Tax Provisions 15,099 20,262 5,332 -2,460 11,198 12,390 13,606 14,377 38,234 51,570
Net Profit 36,924 38,791 11,153 12,638 25,210 26,328 28,912 29,136 99,507 109,586
% Change (YoY) 10.3 25.1 -61.7 -66.2 -31.7 -32.1 159.2 130.5 -24.0 10.1
NIM (Reported, %) 3.0 3.0 2.8 3.1 2.8 3.0
NIM (Cal, %) 3.0 3.0 2.8 3.2 2.9 2.9 2.9 3.0 3.0 2.9
Deposit Growth (%) 13.7 10.9 10.7 9.8 10.5 12.3 13.7 9.0 9.8 9.0
Loan Growth (%) 6.8 10.5 12.9 12.6 10.7 10.2 10.7 11.0 12.6 11.0
Tax Rate (%) 34.3 32.3 32.3 -24.2 32.0 32.0 33.0 26.0 27.8 32.0
Asset Quality
OSRL (INR B) 560 535 486 391 366 391
OSRL (%) 4.4 4.0 3.5 2.7 2.6 2.7
Gross NPA (INR B) 564 568 728 982 1,015 1,048 1,069 1,077 982 1,077
Gross NPA (%) 4.3 4.2 5.1 6.5 6.9 6.9 6.7 6.4 6.5 6.4
E: MOSL Estimates
October 2016 141

Union Bank of India

Bloomberg UNBK IN CMP: INR143 TP: INR170 (+19%) Buy
Capital conservation efforts continue. We expect moderate
deposit/loan growth of ~5/6% YoY. Retail, Agri and SME segments
are likely to be the key growth drivers.
1,6,12 Rel Perf. (%) 3 / -9 / -25
Financial Snapshot (INR b) We expect NIM to remain stable to improving QoQ, and NII growth
Y/E March 2016 2017E 2018E 2019E to be muted at 5% YoY, led by in-line loan growth.
NII 83 90 104 117 Non-interest income is likely to grow 15% YoY, led by higher non-
OP 56.4 65.0 76.5 87.5
core income.
NP 13.5 15.4 26.9 33.4
NIM (%) 2.3 2.3 2.5 2.5 After significant clean-up in 2HFY16 and 1QFY17, we expect
EPS (INR) 19.7 22.4 39.1 48.6 quarterly slippages to moderate to ~INR25b. Ageing of NPA will
EPS Gr. (%) -29.6 13.9 74.5 24.4 keep credit cost high. Overall, we expect PAT decline of 54% YoY.
BV/Sh. (INR) 294 314 348 391
The stock trades at 0.4x FY18E BV and 3.7x FY18E EPS. Buy.
ABV/Sh. (INR) 151 148 191 254
RoE (%) 7.0 7.4 11.8 13.2
RoA (%) 0.3 0.4 0.6 0.6
Div. Payout (%) 11.5 11.6 11.6 11.6 Key issues to watch for
Valuations Performance on asset qualityslippage from restructured loans,
P/E(X) 7.3 6.4 3.7 2.9 going forward.
P/BV (X) 0.49 0.46 0.41 0.37 Quantum of loans rescheduled under the 5:25 scheme.
P/ABV (X) 0.95 0.97 0.75 0.56
Trends and efforts to improve CASA ratio and NIM.
Div. Yield (%) 1.4 1.6 2.7 3.4
Update and trends on balance sheet growth.

Interest Income 82,599 81,415 79,094 78,880 78,766 80,444 81,958 81,993 321,988 323,160
% Change (YoY) 0.6 0.8 -5.9 -1.7 -1.3 5.3 15.5 14.7 -1.5 8.4
Other Income 7,832 9,595 8,927 9,964 10,399 11,017 10,075 11,489 36,317 42,980
Net Income 29,134 30,612 28,892 30,811 31,421 33,139 33,129 35,409 119,448 133,099
% Change (YoY) 8.5 5.8 -9.0 -14.7 9.2 13.9 19.0 19.4 -3.1 15.2
Profit before Tax 8,458 9,782 965 -1,551 2,721 4,419 6,686 9,156 17,654 22,982
Tax Provisions 3,270 3,200 180 -2,512 1,058 1,414 2,139 2,972 4,138 7,584
Net Profit 5,188 6,582 785 961 1,663 3,005 4,546 6,183 13,516 15,398
% Change (YoY) -21.9 77.3 -74.0 -78.3 -67.9 -54.3 478.9 543.3 -24.1 13.9
NIM (Reported,%) 2.4 2.3 2.2 2.3 2.3 2.3
NIM (Cal, %) 2.4 2.3 2.2 2.3 2.3 2.4 2.4 2.4 2.3 2.4
Deposit Growth (%) 10.0 10.2 4.6 8.2 3.5 4.5 8.7 8.0 8.2 8.0
Loan Growth (%) 6.0 3.3 5.0 4.6 3.5 6.4 6.4 5.0 4.6 5.0
Tax Rate (%) 38.7 32.7 18.6 NM 38.9 32.0 32.0 32.5 23.4 33.0
Asset Quality
OSRL (INR b) 141.3 139.1 136.2 85.7 72.5 85.7
OSRL (%) 5.5 5.5 5.2 3.1 2.7 3.1
Gross NPA (INR b) 141.4 155.4 185.0 241.7 272.8 286.4 296.1 293.7 241.7 293.7
Gross NPA (%) 5.5 6.1 7.1 8.7 10.2 10.4 10.5 10.0 8.7 10.0
E: MOSL Estimates
October 2016 142

Yes Bank
Bloomberg YES IN CMP: INR1,271 TP: INR1,500 (+18%) Buy
Despite a high base, we expect loan growth to be significantly
M. Cap. (INR b)/(USD b) 535 / 8
above the industry average at 39%+ YoY on the back of refinancing
and strong growth in retail banking.
1,6,12 Rel Perf. (%) -7 / 37 / 67
NIMs are likely to improve marginally QoQ on the back of lower
Y/E March 2016 2017E 2018E 2019E
cost of funds (relatively high reliance on bulk deposits) and sticky
NII 45.7 57.5 73.5 92.8 lending rates. NII growth is expected to be healthy at ~26% YoY
OP 43.0 57.2 73.6 91.6 the best among the peers.
NP 25.4 33.3 42.6 51.3 Non-interest income growth is likely to be ~45% YoY, led by strong
NIM (%) 3.4 3.4 3.5 3.6 growth from third-party distribution, continued momentum in
EPS (INR) 60.4 79.0 101.2 121.9
financial advisory and higher trading gains.
EPS Gr. (%) 25.8 30.8 28.1 20.5
Led by aggressive franchise expansion, we expect opex growth to
BV/Sh. (INR) 328 390 471 568
ABV/Sh. (INR) 323 386 466 563 remain high (29%+ YoY). Productivity gains should push C/I lower.
RoE (%) 19.9 22.0 23.5 23.5 Asset quality performance so far has been significantly better than
RoA (%) 1.7 1.8 1.9 1.8 industry; we expect this trend to continue.
Div. Payout (%) 19.1 20.3 20.3 20.3 YES trades at 2.4x FY18E BV and 11.4x FY18E EPS. Return ratios also
Valuations remain strong (RoA of ~1.8% and RoE of 20%+). Our estimates do
P/E(X) 23.3 17.8 13.9 11.5
not factor in capital raising. Maintain Buy.
P/BV (X) 4.3 3.6 3.0 2.5
P/ABV (X) 4.3 3.6 3.0 2.5 Key issues to watch for
Div. Yield (%) 0.7 1.0 1.3 1.5 Implementation of retail strategy on assets and liabilities sides.
Performance on asset quality and quantum of loans rescheduled
under 5:25 scheme/sale to ARCs.

Interest Income 32,519 33,772 33,760 35,283 38,623 40,383 41,964 44,041 135,334 165,012
% Change (Y-o-Y) 42.2 29.4 27.3 27.1 24.2 25.5 27.0 26.9 30.9 25.9
Other Income 5,452 6,181 7,461 8,028 9,005 8,900 9,450 10,327 27,121 37,682
Net Income 16,050 17,266 19,030 20,443 22,171 22,807 24,144 26,076 72,789 95,199
% Change (Y-o-Y) 43.7 24.7 33.2 30.7 43.9 34.0 26.8 29.8 32.4 32.9
Other Provisions 980 1,039 1,479 1,865 2,066 1,966 1,600 2,305 5,363 7,937
Tax Provisions 2,591 3,048 3,260 3,369 3,683 3,742 4,184 4,402 12,268 16,011
Net Profit 5,512 6,104 6,757 7,021 7,318 7,951 8,789 9,195 25,394 33,253
% Change (Y-o-Y) 27.7 26.5 25.1 27.4 32.8 30.3 30.1 31.0 26.6 30.9
NIM (Cal, %) 3.5 3.6 3.6 3.6 3.5 3.6 3.6 3.6 3.6 3.6
Deposit Growth (%) 25.2 24.0 23.1 22.5 28.6 29.6 33.2 27.0 22.5 27.0
Loan Growth (%) 35.1 29.0 26.7 30.0 33.0 39.0 38.4 28.0 30.0 28.0
Customer assets growth (%) 26.3 23.6 19.5 23.4 29.9 23.4
CD Ratio (%) 83.6 80.5 83.2 87.9 86.4 86.4 86.4 88.6 87.9 88.6
Asset Quality
Gross NPA (INR B) 3.7 4.9 5.6 7.5 8.4 9.3 10.0 10.4 7.5 10.4
Gross NPA (%) 0.5 0.6 0.7 0.8 0.8 0.8 0.9 0.8 0.8 0.8
E: MOSL Estimates
October 2016 143

Financials - NBFCs
Company name
Divergent performance
Margin and asset quality performance to be keenly watched
Bajaj Finance
We expect NBFCs under our coverage universe to report PAT growth of 21% YoY in
Dewan Housing
2QFY17. We expect NBFCs to sequentially deliver stable trends on growth and profitability.
GRUH Finance However, good progress in monsoon this year and a sharper focus on recoveries are likely
HDFC to lead to above-trend-line performance in terms of asset quality in 2H. In addition, we
expect the improving macroeconomic environment, easing wholesale rates and sharp fall
Indiabulls Housing
in bond yields to offer some support. Within our NBFC coverage universe, BAF and BFI are
LIC Housing Fin likely to post strong earnings growth of 51% and 80%, respectively. Housing finance
M & M Financial companies (HFCs) should see a stable quarter in terms of loan growth. However, we would
Muthoot Finance
closely look at the margins performance, considering the sharp reduction in bond yields
and the significant proportion of incremental funding coming via bonds.
Repco Home Fin
Shriram Transport Fin. Housing finance companies

HFCs under our coverage universe should deliver PAT growth of 21% YoY in 2QFY17
due to strong demand for loans in the individual segment. The sharp rally in bond
yields was the key positive in the quarter, with marginal cost of funds of AAA-rated
NBFCs down ~20bp sequentially. DHFL raised INR140b via bonds in the quarter at
lower borrowing cost (~50-75bp lower than bank borrowing rate), the benefits of
which should be reflected in NIM over next few quarters, in our view. HDFC is likely
to deliver 15% loan growth, and dividend from the bank will support earnings
growth. Mid-size/small NBFCs under our coverage (like DEWH, IHFL, REPCO and
GRUH) are likely to report +20% YoY earnings growth in 2QFY17.
Asset finance companies

Among AFCs under our coverage, we expect BAF to report 51% YoY earnings growth,
led by strong growth momentum and stable asset quality. SHTF is likely to witness
over 17% earnings growth, led by stable growth and marginal margin expansion.
MMFS is likely to see marginal growth QoQ, with margins expansion led by lower
slippages and a YoY decline in credit cost driving earnings.
Gold financing
Specialized gold financing company, MUTH, is likely to have a strong quarter with
53% YoY PAT growth, supported by strong gold prices. Sequential AUM growth is
likely to come in at 5% with margin improvement.
October 2016 144

September 2016 Results Preview | Sector: Financials
Exhibit 53: Expected quarterly performance summary (INR m)

Reco Sep-16 Sep-16 Sep-16
NBFC
Bajaj Finance 1,087 Buy 14,540 47.6 3.6 8,460 49.8 1.8 4,231 51.4 -0.2
Dewan Housing 295 Buy 4,747 16.8 4.0 3,872 20.1 11.3 2,222 23.2 10.3
GRUH Finance 335 Buy 1,291 14.2 2.4 1,101 25.9 7.8 656 26.9 9.0
HDFC 1,425 Buy 22,695 13.2 1.8 21,365 13.1 3.9 17,871 11.4 25.8
Indiabulls Housing 855 Buy 9,064 22.5 -5.7 9,111 22.9 4.1 6,775 22.0 7.5
LIC Housing Fin 593 Buy 8,636 20.5 4.7 8,055 19.5 8.9 4,949 20.2 21.3
M & M Financial 386 Buy 7,710 0.7 14.1 4,780 -5.0 33.3 1,542 5.5 77.3
Muthoot Finance 350 Buy 7,358 32.0 3.0 4,297 51.8 -2.6 2,679 53.5 -0.9
Repco Home Fin 832 Buy 938 26.8 11.7 816 26.6 5.8 449 15.0 13.6
Shriram Transport Fin. 1,222 Buy 14,639 22.7 8.8 11,039 20.8 7.3 3,962 17.2 5.9
NBFC Sector Aggregate 93,842 21.8 4.1 74,448 21.0 6.2 46,739 21.1 12.6
Source: MOSL
Exhibit 54: Relative performance3 months (%) Exhibit 55: Relative performance1-year (%)
Sensex Index MOSL Financials Index Sensex Index MOSL Financials Index
115 130
110 115
105 100
100 85
95 70
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
Jul-16
Jun-16
Aug-16
Sep-16

Sector / CMP EPS (INR) PE (x) PB (x) RoE (%)
Companies (INR) Reco FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E
NBFC
Bajaj Finance 1,087 Buy 23.9 34.6 44.2 45.5 31.4 24.6 7.9 6.5 5.3 21.1 22.8 23.9
Dewan Housing 295 Buy 25.0 30.2 38.4 11.8 9.8 7.7 1.7 1.5 1.3 15.1 16.4 17.8
GRUH Finance 335 Buy 6.7 8.2 10.3 50.0 40.9 32.4 14.6 11.8 9.6 31.5 32.0 32.7
HDFC 1,425 Buy 44.9 48.2 55.1 31.7 29.6 25.9 6.4 5.8 5.2 21.8 21.1 21.6
Indiabulls Housing 855 Buy 55.7 67.6 84.0 15.4 12.7 10.2 3.4 3.1 2.7 27.1 25.3 28.3
LIC Housing Fin 593 Buy 32.5 39.5 49.6 18.3 15.0 12.0 3.3 2.8 2.3 19.3 20.1 21.3
M & M Financial 386 Buy 11.9 14.6 18.1 32.4 26.4 21.3 3.6 3.3 2.9 11.4 12.9 14.5
Muthoot Finance 350 Buy 20.3 28.0 33.6 17.3 12.5 10.4 2.5 2.2 1.9 15.1 18.7 19.9
Power Fin. Corp 122 Neutral 23.8 24.0 25.5 5.1 5.1 4.8 0.9 0.8 0.7 18.3 16.8 16.2
Repco Home Fin 832 Buy 24.0 30.4 39.7 34.7 27.4 21.0 5.4 4.6 3.9 17.0 18.3 20.1
Rural Elec.. Corp. 124 Neutral 28.5 29.6 34.3 4.4 4.2 3.6 0.9 0.7 0.6 21.0 18.9 18.9
Shriram Tran. Fin. 1,222 Buy 53.3 70.5 93.8 22.9 17.3 13.0 2.7 2.4 2.1 12.2 14.8 17.2
NBFC Aggregate 17.9 15.8 13.5 3.2 2.8 2.5 18.1 18.0 18.4
Source: MOSL
October 2016 145

Bajaj Finance
Bloomberg BAF IN CMP: INR1,087 TP: INR1,275 (+17%) Buy
We expect healthy AUM growth of 38% YoY in 2QFY17, driven by
M. Cap. (INR b)/(USD b) 582 / 9
strong growth in consumer and commercial lending. While
52-Week Range (INR) 1,180 / 492
seasonally 2Q is a weak quarter, independence day sale have been
1,6,12 Rel Perf. (%) -1/46/106
good.
NII should grow 48% YoY; margins are likely to expand on a YoY
basis, led by higher proportion of disbursements toward high-
2015 2016 2017E 2018E
yielding consumer loans.
NII 28.7 40.3 54.6 69.8
Asset quality is likely to remain stable. As of June 2016, GNPAs were
PPP 17.4 25.1 35.9 46.9
PAT 9.0 12.8 18.5 23.7
at 1.47% and NNPAs at 0.41%.
EPS (INR) 17.9 23.9 34.6 44.2 We expect provisions of INR2.0b, as against INR1.8b in 1QFY17 and
EPS Gr. (%) 23.9 33.4 44.9 27.8 INR1.4b in 2QFY16.
BV/Sh. (INR) 95.7 136.8 166.3 204.0 Net profit is likely to grow 52% YoY to INR4.2b.
RoAonAUM % 3.1 3.2 3.5 3.4 The stock trades at 6.5x FY17E and 5.3x FY18E BV. Maintain Buy.
RoE (%) 20.4 21.1 22.8 23.9
Valuations
Business growth momentum, as AUM is growing at 30%+ for the
P/E (x) 60.7 45.5 31.4 24.6
last 20+ quarters.
P/BV (x) 11.4 7.9 6.5 5.3
Guidance on margin due to changing product mix going forward.
Div. Yield (%) 0.2 0.2 0.2 0.3
Asset quality trends in consumer electronics and two-wheeler
businesses.
Performance of businesses such as rural SME lending, lifestyle
financing and e-commerce financing.

Income from operations 15,716 15,921 19,717 18,212 21,659 22,850 25,364 23,981 69,566 93,854
Other Operating Income 746 878 897 957 1,205 1,229 1,229 1,101 3,477 4,764
Operating Income 16,462 16,799 20,614 19,168 22,864 24,079 26,593 25,082 73,043 98,618
YoY Growth (%) 32.4 36.3 39.6 34.1 38.9 43.3 29.0 30.9 35.7 35.0
Interest expenses 6,771 6,947 7,493 8,058 8,833 9,540 10,589 10,340 29,269 39,302
Net Income 9,692 9,853 13,121 11,110 14,031 14,540 16,004 14,741 43,775 59,315
YoY Growth (%) 30.3 43.3 48.4 35.9 44.8 47.6 22.0 32.7 39.7 35.5
Other income 96 206 83 406 147 200 250 304 792 901
Total Income 9,788 10,059 13,203 11,516 14,178 14,740 16,254 15,046 44,566 60,216
YoY Growth (%) 30.3 49.1 54.0 40.9 58.1 49.8 27.7 43.2 42.4 44.0
Provisions and Cont. 1,033 1,368 1,462 1,565 1,797 2,000 1,800 1,992 5,429 7,589
Tax Provisions 1,468 1,486 2,167 1,740 2,275 2,229 2,779 2,475 6,861 9,757
Net Profit 2,756 2,794 4,085 3,150 4,240 4,231 5,275 4,778 12,785 18,524
YoY Growth (%) 30.4 41.7 58.1 36.4 53.8 51.4 29.1 51.7 42.4 44.9
Loan Growth (%) 32.0 35.6 41.0 36.5 39.5 38.0 34.0 38.0 38.8 32.0
Borrowings Growth (%) 34.7 30.0 37.2 38.7 40.5 39.0 36.0 42.1 38.7 35.9
Cost to Income Ratio (%) 46.3 43.9 41.6 43.9 41.4 42.6 39.4 38.6 44.5 41.0
Tax Rate (%) 34.8 34.7 34.7 35.6 34.9 34.5 34.5 34.1 34.1 35.1
E: MOSL Estimates
October 2016 146

Dewan Housing Finance

Bloomberg DEWH IN CMP: INR295 TP: INR402 (+36%) Buy
AUM is likely to grow at a healthy 22% YoY, led by strong
momentum in the affordable housing space.
NII growth is likely to remain at 17%, and margins are likely to come
1,6,12 Rel Perf. (%) 4/36/30
under pressure as incremental growth is coming from the low-
Financial Snapshot (INR b) yielding salaried segment product.
2015 2016 2017E 2018E DHFL raised INR140b via bonds during the quarter at lower
NII 12.6 14.8 18.6 23.9 borrowing cost (~50-75bp lower than bank borrowing rate), the
PPP 10.5 12.8 16.1 20.9 benefit of which should be reflected in NIM over next few quarters
Adj. PAT 6.2 7.3 9.0 11.5 Cost-income ratio is likely to remain stable QoQ at 28%.
EPS (INR) 21.3 25.0 30.2 38.4 Asset quality to remain stable. As of June 2016, GNPAs were 0.98%
EPS Gr. (%) 3.5 17.2 20.7 27.1
and NNPAs nil. We factor in provisions of INR500m for 2QFY17.
BV (INR) 159.1 171.9 201.3 229.8
Net profit is likely to grow 18% YoY to INR2.12b.
RoAA (%) 1.3 1.2 1.3 1.4
The stock trades at 1.5x FY17E and 1.3x FY18E BV. Maintain Buy.
RoE (%) 15.1 15.1 16.4 17.8
Valuations Business growth trends and momentum, and management
P/E (x) 13.8 11.8 9.8 7.7 commentary on the same.
P/BV (x) 1.9 1.7 1.5 1.3 Management views on margins, as incremental growth is coming
P/ABV (x) 1.9 1.7 1.5 1.3 from the low-yielding salaried segment.
Div. Yield (%) 1.2 6.8 2.0 2.6 Movement in borrowing costs following rate cuts, and outlook on
lending rates.
Loan growth and asset quality trends in non-retail segment.
DEWH: Quarterly performance (INR Million)

Interest Income 16,331 17,640 18,461 19,159 19,318 20,091 20,894 20,556 71,590 80,859
YoY Growth (%) 21.6 22.5 20.2 19.7 14.5 16.8 12.2 2.8 21.0 11.4
Net Income 4,189 4,542 4,656 4,880 4,840 5,347 5,483 6,382 18,267 22,052
YoY Growth (%) 17.7 22.5 18.5 19.9 15.5 17.7 17.8 30.8 19.7 20.7
YoY Growth (%) 15.6 7.6 8.5 28.1 8.4 11.9 3.9 7.4 14.8 7.8
Operating Profits 2,934 3,223 3,285 3,330 3,479 3,872 4,058 4,717 12,772 16,126
YoY Growth (%) 18.6 30.0 23.3 16.4 18.6 20.1 23.6 41.6 21.9 26.3
Provisions 320 450 480 500 450 500 550 900 1,750 2,400
Tax Provisions 881 970 946 934 1,015 1,150 1,196 1,320 3,730 4,681
Profit after tax 1,733 1,804 1,859 1,897 2,014 2,222 2,312 2,498 7,292 9,046
YoY Growth (%) 17.8 18.5 16.5 16.9 16.2 23.2 24.4 31.7 17.4 24.1
Tax Rate (%) 33.7 35.0 33.7 33.0 33.5 34.1 34.1 34.6 33.8 34.1
E: MOSL Estimates
October 2016 147

Gruh Finance
Bloomberg GRHF IN CMP: INR335 TP: INR384 (+15%) Buy
We expect loan growth to remain strong at ~25% YoY on the back
M. Cap. (INR b)/(USD b) 122 / 2
of strong demand for housing in the self-employed segment.
Margins are likely to contract YoY due to increased competition.
1,6,12 Rel Perf. (%) 2/24/20
NII is likely to grow 14% YoY to INR1.3b.
Net income is likely to grow 14% YoY to INR1.2b, and cost-to-
income ratio is expected to be less than 15%.
2015 2016 2017E 2018E
Asset quality should witness seasonal improvement and remain
NII 3.4 4.2 5.4 6.8
PPP 3.2 3.8 4.9 6.2
largely stable YoY. In 1QFY17, GNPAs were at 0.56% and NNPAs at
PAT 2.0 2.4 3.0 3.8 0.27%. We expect provisions of INR80m for the quarter.
EPS (INR) 5.6 6.7 8.2 10.3 Net profit is likely to grow 27% YoY to INR656m.
EPS Gr. (%) 14.2 19.4 22.3 26.3 The stock trades at 11.8x FY17E and 9.6x FY18E BV. Maintain Buy.
BV/Sh. (INR) 19.6 23.0 28.3 35.0
ABV/Sh. (INR) 19.6 23.0 28.3 35.0
RoA (%) 2.5 2.4 2.3 2.3
RoE (%) 30.9 31.5 32.0 32.7
Payout (%) 35.7 34.3 30.0 30.0 Business outlook, loan growth, asset quality trends and
Valuations management commentary on the same.
P/E (x) 59.7 50.0 40.9 32.4 Movement in borrowing costs and margins, as the impact of the
P/BV (x) 17.1 14.6 11.8 9.6 RBIs rate cut would be seen during the quarter.
Div. Yield (%) 0.6 0.7 0.7 0.9 Managements outlook on developments in the affordable
housing space.

Total income 2,967 3,118 3,236 3,705 3,501 3,711 3,934 4,738 12,754 15,884
Y-o-Y Growth (%) 22.8 21.0 19.3 21.5 18.0 19.0 21.6 27.9 20.3 24.5
Net Income 1,066 1,131 1,202 1,554 1,260 1,291 1,320 2,075 4,680 5,946
Operating Expenses 196 257 205 245 239 190 250 366 844 1,046
Operating Profit 869 874 997 1,309 1,021 1,101 1,070 1,708 3,836 4,900
Y-o-Y Growth (%) 18.6 22.7 21.8 22.8 17.5 25.9 7.4 30.5 20.4 27.7
Provisions and Cont. 121 72 178 61 125 100 80 49 219 354
Profit before Tax 749 803 818 1,248 896 1,001 990 1,660 3,617 4,546
Tax Provisions 246 286 281 370 294 345 342 588 1,181 1,568
Net Profit 503 517 537 878 601 656 648 1,072 2,436 2,978
Y-o-Y Growth (%) 20.0 19.9 20.0 18.5 19.6 26.9 20.7 22.1 19.5 22.3
Int Exp/ Int Earned (%) 64.1 63.7 62.9 58.1 64.0 65.2 66.4 56.2 63.3 62.6
Tax Rate (%) 32.8 35.6 34.4 29.6 32.8 34.5 34.5 35.4 32.7 34.5
E: MOSL Estimates
October 2016 148

HDFC
Bloomberg HDFC IN CMP: INR1,425 TP: INR1,639 (+15%) Buy
We expect moderate earnings growth of over 11% YoY, an
M. Cap. (INR b)/(USD b) 2,244 / 34
improvement from sluggish core earnings growth in past few
52-Week Range (INR) 1,463 / 1,012
quarters.
1,6,12 Rel Perf. (%) 0/16/11
We estimate AUM growth at 15%, which will be largely driven by the
individual segment.
Spreads are likely to remain largely stable at 2.3%. However, margins
2015 2016 2017E 2018E
would be the key monitorable. NII is likely to grow 13% YoY to
NII 80.0 87.0 96.5 110.1
INR23b.
PAT 59.9 70.9 76.1 87.1
Non-interest income would be strong at INR7b, up 7% YoY,
Adj. EPS (INR) 29.0 30.6 34.5 37.8
supported by dividend income from bank.
EPS Gr. (%) 3.9 5.6 12.8 9.6
Cost-to-income ratio should remain largely stable at 7.5%.
BV/Sh. (INR) 197.9 221.7 245.8 273.7
Asset quality has remained healthy over past several quarters, and
ABV/Sh. (INR) 145.6 169.5 193.6 217.1
the trend is likely to continue. However, asset quality in corporate
RoAA (%) 2.5 2.6 2.5 2.5
loan book would be a key monitorable.
Core RoE (%) 24.0 21.5 19.4 19.0
We estimate provisions of INR700m, as against INR520m in 1QFY16.
Payout (%) 45.7 43.9 43.5 43.5
The stock trades at 4.5x FY17E AP/ABV and 3.6x FY18E AP/ABV (price
Valuation
adjusted for value of other businesses and book value adjusted for
AP/E (x) 37.0 32.9 25.5 20.7
investments made in those businesses). Buy.
P/BV (x) 7.2 6.4 5.8 5.2
AP/ABV (x) 7.4 5.9 4.5 3.6 Key issues to watch for
Div. Yield (%) 1.1 1.2 1.3 1.5 Loan growth and uptick in corporate loans.
Movement in spreads and margins (on individual loans) and asset
quality trends.
Dividend income from subsidiaries.
HDFC: Quarterly Performance (INR Million)

YoY Change (%) 16.8 6.7 8.2 4.9 9.3 13.2 11.7 9.9 8.8 11.0
Gross fee income 1,755 1,768 1,810 2,894 1,913 2,200 2,750 3,308 8,183 10,172
Core Income 22,140 21,815 23,631 27,595 24,204 24,895 27,116 30,460 95,137 106,675
YoY Change (%) 16.8 6.5 9.8 8.0 9.3 14.1 14.7 10.4 10.1 12.1
% of core income 9.2 8.6 8.5 6.1 9.4 8.6 7.8 5.9 8.0 7.8
Comission expenses 978 1,053 1,087 1,304 1,369 1,400 1,475 1,504 4,422 5,748
% of core income 4.4 4.8 4.6 4.7 5.7 5.6 5.4 4.9 4.6 5.4
Core Operating profits 19,133 18,890 20,543 24,603 20,561 21,365 23,521 27,167 83,126 92,613
YoY Change (%) 16.5 6.5 9.1 7.4 7.5 13.1 14.5 10.4 9.7 11.4
Provisions 500 520 680 950 650 700 700 700 2,650 2,750
Core PBT 18,633 18,370 19,863 23,653 19,911 20,665 22,821 26,467 80,476 89,863
YoY Change (%) 16.0 5.6 8.1 5.5 6.9 12.5 14.9 11.9 8.5 11.7
Profit on Sale of Inv. 230 480 569 15,199 9,216 190 750 1,594 16,478 11,750
Dividend income 548 4,248 1,356 1,917 510 4,550 1,650 2,619 8,113 9,329
One off expense/Prov 0 0 0 -4,500 -2,750 -4,500 -2,750
PBT 19,520 23,236 21,905 36,421 26,997 25,530 25,371 30,886 101,081 108,784
Provision for Tax 5,910 7,193 6,700 10,350 8,290 7,659 7,611 9,075 30,150 32,635
PAT 13,610 16,043 15,205 26,071 18,707 17,871 17,760 21,811 70,931 76,149
YoY Change (%) 1.2 18.2 6.7 40.0 37.5 11.4 16.8 -16.3 18.4 7.4
E: MOSL Estimates
October 2016 149

Indiabulls Housing
Bloomberg IHFL IN CMP: INR855 TP: INR976 (+14%) Buy
We expect AUM to grow +26% YoY, driven by robust demand in the
M. Cap. (INR b)/(USD b) 360 / 5
mortgage business. Share of retail home loans is likely to increase.
1,6,12 Rel Perf. (%) 4/21/0
Spreads are likely to contract (but remain over 300bp) due to
reduction in lending rates by the company and increased share of
Financial Snapshot (INR b) home loans.
2015 2016 2017E 2018E Cost-income ratio is likely to remain stable at ~16%.
Net Fin inc 21.8 28.7 36.0 45.7 Asset quality is expected to remain stable. In 1QFY17, GNPAs were
PPP 27.7 36.4 43.9 54.7 at 0.84% and NNPAs at 0.36%.
EPS (INR) 53.5 55.7 67.6 84.0
PAT is likely to grow 22% YoY to INR6.8b during the quarter.
EPS Gr. (%) 14.2 4.1 21.4 24.4
BV/Sh. (INR) 186.5 253.8 279.9 314.8 The stock trades at 3.1x FY17E and 2.7x FY18E BV. Maintain Buy.
RoA on AUM 3.6 3.3 3.3 3.3
(%)
RoE (%) 30.8 27.1 25.3 28.3
Payout (%) 47.9 76.0 52.5 50.0
AUM growth trend and growth guidance, as competition from
Valuations
banks is increasing.
P/E (x) 16.0 15.4 12.7 10.2
Movement in incremental spreads and margins.
P/BV (x) 4.6 3.4 3.1 2.7
P/ABV (x) 4.6 3.4 3.1 2.7
Asset quality trends in corporate segment and loan against
Div. Yield (%) 4.1 5.3 4.1 4.9 property.
Updates on acquisition of retail bank, NorthOak Bank, in the UK.

Y/E March FY16 FY17
Other Income 1,960 2,607 2,326 2,463 2,255 3,349 4,262 5,356 9,356 15,221
Total income 20,249 22,457 23,077 26,472 25,975 27,306 28,458 31,336 92,256 113,075
Y-o-Y Growth (%) 27.4 31.7 24.2 24.7 28.3 21.6 23.3 18.4 26.8 22.6
Net Income 8,859 10,007 10,820 12,855 11,866 12,413 13,119 13,836 42,541 51,233
Y-o-Y Growth (%) 26.6 33.4 30.2 22.3 33.9 24.0 21.2 7.6 27.7 20.4
Profit before tax 6,922 7,413 8,055 8,898 8,750 9,111 9,697 10,522 31,289 38,079
Y-o-Y Growth (%) 29.2 31.1 29.5 18.7 26.4 22.9 20.4 18.2 26.5 21.7
Tax Provisions 1,810 1,858 2,010 2,083 2,401 2,278 2,424 2,417 7,761 9,520
Net Profit 5,113 5,555 6,045 6,815 6,349 6,833 7,273 8,105 23,528 28,559
Minority Int 0 0 -21 -60 -49 -58 -57 -56 -81 -220
Net Profit after MI 5,113 5,555 6,024 6,754 6,301 6,775 7,215 8,049 23,447 28,339
Y-o-Y Growth (%) 20.7 23.9 26.0 22.6 23.2 22.0 19.8 19.2 23.3 20.9
E: MOSL Estimates
October 2016 150

LIC Housing Finance

Bloomberg LICHF IN CMP: INR593 TP: INR758 (+28%) Buy
LICHF is likely to report strong earnings growth of 20% YoY, led by
M. Cap. (INR b)/(USD b) 300 / 4
stable loan growth and improvement in margins.
We expect loan growth of 15% YoY, driven primarily by the retail
1,6,12 Rel Perf. (%) 4/10/20
segment. The share of builder loans is likely to remain below 3% of
overall book.
Margins are likely to improve 10bp YoY, driven by significantly
2015 2016 2017E 2018E
lower cost of funds due to falling bond yields as well as significant
NII 22.4 29.4 36.7 43.6
share of fixed rate book.
PPP 20.9 27.1 33.9 40.0
Adj. PAT 13.5 16.4 20.0 25.0
C/I ratio is expected to remain stable at sub-14%.
Adj. EPS (INR) 26.7 32.5 39.5 49.6 Asset quality is likely to remain stable. We model provisions of
EPS Gr. (%) 12.1 21.8 21.7 25.4 INR500m, as against INR301m in 2QFY16.
BV/Sh (INR) 154.8 181.1 212.9 252.7 The stock trades at 2.8x FY17E and 2.3x FY18E BV. Maintain Buy.
RoAA (%) 1.4 1.5 1.5 1.6
RoE (%) 17.5 19.3 20.1 21.3 Key issues to watch for
Payout (%) 21.1 20.3 20.3 20.3 Trend in incremental spreads, given stable share of LAP and lower
Valuations cost of funds.
P/E (x) 22.2 18.3 15.0 12.0 Performance of corporate loan book and loans against property.
P/BV (x) 3.8 3.3 2.8 2.3 Management commentary on increasing competitive intensity
Div. Yield (%) 0.8 1.0 1.2 1.5 (which is resulting in higher repayments) and margin trends.
LICHF: Quarterly Performance (INR Million)

Interest Income 29,174 30,260 31,018 32,057 33,263 34,780 36,326 37,515 122,508 141,885
YoY Growth (%) 30.2 34.8 36.2 26.4 25.1 20.5 24.1 28.7 31.6 24.7
Fees and other income 481 634 549 683 535 700 600 934 2,346 2,770
Net Income 7,069 7,803 8,018 8,897 8,780 9,336 9,867 11,505 31,787 39,489
YoY Growth (%) 24.6 31.3 30.0 25.3 24.2 19.7 23.1 29.3 27.7 24.2
Operating Expenses 835 1,060 1,214 1,578 1,382 1,281 1,281 1,616 4,687 5,560
YoY Growth (%) 25.3 35.4 28.8 27.0 18.7 19.5 26.2 35.1 29.1 25.2
Provisions and Cont. 443 301 344 376 1,165 500 600 635 1,465 2,900
Tax Provisions 1,969 2,325 2,271 2,463 2,156 2,606 2,755 3,343 9,028 10,860
Net Profit 3,821 4,117 4,189 4,480 4,078 4,949 5,231 5,911 16,608 20,169
YoY Growth (%) 18.6 20.6 21.7 18.5 6.7 20.2 24.9 31.9 19.8 21.4
Adj PAT (Post Tax) 3,821 4,117 4,189 4,480 4,078 4,949 5,231 5,911 16,401 19,961
YoY Growth (%) 18.6 20.6 21.7 18.5 6.7 20.2 24.9 31.9 21.8 21.7
Loan Growth (%) 17.9 17.0 15.2 15.5 15.4 15.0 15.0 18.5 15.5 18.5
Borrowings Growth (%) 17.8 15.2 14.6 14.9 15.7 0.0 0.0 0.0 14.9 23.1
Tax Rate (%) 34.0 36.1 35.2 35.5 34.6 34.5 34.5 36.1 35.2 35.0
E: MOSL Estimates
October 2016 151

Mahindra Financial Services

Bloomberg MMFS IN
M. Cap. (INR b)/(USD b) 217 / 3 MMFS AUM is likely to grow 11% YoY. Disbursements too are likely
52-Week Range (INR) 388 / 173 to grow 10% YoY.
1,6,12 Rel Perf. (%) 11/47/57 Net income is likely to remain flat YoY at INR7.9b. Margins are likely
to improve QoQ on back of lower slippages.
Asset quality is likely to improve QoQ led by lower slippages. As of
2015 2016 2017E 2018E
June 2016, NPLs stood at 10.7%.
NII 30.4 32.1 36.1 42.3 We expect provisions of INR2.4b v/s INR2.8b in 2QFY16 and INR2.2b
PPP 20.8 20.9 22.9 26.8 in 1QFY17.
PAT 8.3 6.7 8.2 10.2 Net profit is expected to grow 6% YoY to INR1.5b, driven by moderate
EPS (INR) 14.7 11.9 14.6 18.1 AUM growth and lower margins.
BV/Sh.(INR) 100.5 107.8 118.3 131.4 The stock trades at 3.6x FY17E and 3.2x FY18E ABV. Maintain Buy.
ABV/Sh (INR) 91.1 93.6 106.3 121.7
RoA on AUM 2.6 1.9 2.0 2.2
(%)
RoE (%) 15.5 11.4 12.9 14.5
Payout (%) 32.0 47.2 28.1 28.1
Valuations
Management commentary on performance of rural areas.
P/E (x) 26.2 32.4 26.5 21.3
Asset quality trend in the wake of good monsoon.
P/BV (x) 3.8 3.6 3.3 2.9
P/ABV (x) 4.2 4.1 3.6 3.2
Margin and growth trends.
Div. Yield (%) 1.0 1.0 0.9 1.1
Performance of subsidiaries.

Other Income 76 183 85 176 93 140 120 238 519 591
Total income 13,684 14,383 14,087 16,897 13,757 14,829 16,058 21,662 59,051 66,305
YoY Growth (%) 6.7 5.1 0.9 9.9 0.5 3.1 14.0 28.2 5.7 12.3
Net Income 7,239 7,841 7,391 10,186 6,847 7,850 8,995 12,984 32,658 36,676
YoY Growth (%) -0.2 0.7 -6.8 5.7 -22.1 -5.0 19.1 36.2 0.3 9.8
Provisions 3,228 2,772 3,406 1,089 2,245 2,400 2,500 3,062 10,495 10,207
Tax Provisions 486 799 367 2,003 472 838 984 2,180 3,656 4,473
Net Profit 890 1,462 672 3,703 870 1,542 1,811 4,011 6,727 8,236
YoY Growth (%) -42.6 -29.4 -50.8 11.1 -2.2 5.5 169.7 8.3 -19.1 22.4
Provisions/Operating Profits (%) 70.1 55.1 76.6 16.0 62.6 50.2 47.2 33.1 50.3 44.5
Tax Rate (%) 35.3 35.3 35.3 35.1 35.2 35.2 35.2 35.2 35.2 35.2
E: MOSL Estimates
October 2016 152

Muthoot Finance
Bloomberg MUTH IN CMP: INR350 TP: INR405 (+16%) Buy
AUM is expected to grow ~14% YoY to INR284b, led by strong gold
M. Cap. (INR b)/(USD b) 139 / 2
prices.
Calculated margins are likely to improve YoY led by better auction
1,6,12 Rel Perf. (%) -2/83/109
realization and increase in lending rates. Moreover, cost of funds is
also declining.
As a result, NII is expected to grow 31% YoY to INR7.5b.
2015 2016 2017E 2018E
Asset quality is likely to improve slightly, as increase in gold prices
NII 21.6 25.4 30.3 35.7
helps to improve recoveries.
PPP 10.7 14.8 18.0 21.7
PAT 8.1 11.2 13.4
We estimate provisions of INR200m, as against INR146m in 2QFY16
6.7
EPS (INR) 16.8 20.3 28.0 33.6
and INR176m in 1QFY17.
BV/Sh.(INR) 127.7 140.8 158.7 180.1 The stock trades at 2.2x FY17E and 1.9x FY18E BV. Maintain Buy.
RoA on AUM 3.0 3.4 4.2 4.2
(%)
RoE (%) 14.3 15.1 18.7 19.9
Div. Yld. (%) 1.7 2.4 2.9 Key issues to watch for
Valuations Management commentary on business growth and steps taken to
P/E (x) 20.8 17.3 12.5 10.4 sustain AUM growth.
P/BV (x) 2.7 2.5 2.2 1.9 Movement in yields and margins, with declining cost of funds.
Asset quality trends during the quarter.

Other operating income 145 136 148 179 252 150 150 76 607 627
Total Operating income 11,401 11,361 11,383 14,469 12,964 13,218 13,506 14,573 48,614 54,261
YoY Growth (%) 4.8 7.4 6.6 31.5 13.7 16.3 18.7 0.7 12.7 11.6
Other income 26 38 29 43 44 25 35 52 136 156
Total Income 11,426 11,400 11,412 14,513 13,008 13,243 13,541 14,625 48,750 54,417
YoY Growth (%) 4.6 7.4 6.7 31.7 13.8 16.2 18.7 0.8 12.7 11.6
Net Income 5,756 5,747 5,796 8,874 7,437 7,533 7,476 8,608 26,173 31,055
YoY Growth (%) 4.6 7.2 23.3 116.9 50.1 51.8 41.6 -15.4 38.9 21.9
Provisions 106 146 74 1,299 176 200 200 280 1,624 856
Tax Provisions 1,003 939 1,032 2,098 1,534 1,417 1,387 1,675 5,072 6,014
Net Profit 1,832 1,745 1,867 2,652 2,703 2,679 2,621 3,165 8,097 11,169
YoY Growth (%) 1.7 2.2 20.9 60.6 47.6 53.5 40.4 19.3 20.7 38.0
E: MOSL Estimates
October 2016 153

Repco Home Finance

Bloomberg REPCO IN CMP: INR832 TP: INR966 (+16%) Buy
We expect loan growth of 25% YoY, led by healthy demand for
housing in the self-employed segment.
Calculated margins are likely to be largely stable YoY, with yield
1,6,12 Rel Perf. (%) -1/32/7
pressure offset by increased low-cost NHB funding.
Asset quality is expected to improve in line with seasonal trends as
2Q and 4Q are the strongest quarters for asset quality performance.
2015 2016 2017E 2018E
In 2QFY16, GNPAs were at 1.8% and NNPAs at 0.9%.
NII 2.4 3.0 3.9 5.1
PPP 2.1 2.7 3.5 4.5
C/I ratio would again rise to 19% due to ESOP amortization charges.
PAT 1.2 1.5 1.9 2.5 Provisions are expected to be INR130m v/s INR179m in the prior
EPS (INR) 19.7 24.0 30.4 39.7 quarter and INR47m in 2QFY17.
BV/Sh. (INR) 130.2 152.7 179.5 214.6 PAT is expected to grow 15% YoY to INR449m.
RoAA (%) 2.3 2.2 2.2 2.2 The stock trades at 4.6x FY17E and 3.9x FY18E BV. Maintain Buy.
RoE (%) 15.9 17.0 18.3 20.1
Payout (%) 8.8 11.6 11.6 11.6
Business outlook, loan growth, and share of home loans and LAP.
Valuation
Repayment trends the company is witnessing higher repayments
P/E (x) 42.2 34.7 27.4 21.0
P/BV (x) 6.4 5.4 4.6 3.9
due to intense competition.
Div. Yield (%) 0.2 0.3 0.4 0.5
Movement in borrowing costs and margins.
Asset quality trends in the LAP segment.
REPCO: Quarterly performance (INR Million)

Interest Income 1,935 2,084 2,191 2,312 2,389 2,580 2,761 3,192 8,521 10,923
Net Interest Income 664 740 781 852 840 938 1,020 1,134 3,036 3,931
YoY Growth (%) 25.2 24.7 32.8 28.7 26.5 26.8 30.7 33.1 27.7 29.5
Other income 66 80 63 91 80 75 90 90 300 335
Total Income 730 820 843 943 920 1,013 1,110 1,224 3,336 4,266
YoY Growth (%) 24.7 28.4 32.4 26.2 26.0 23.6 31.6 29.8 27.7 27.9
Operating Expenses 154 175 160 153 149 197 192 253 643 791
YoY Growth (%) 37.0 36.8 13.0 -7.1 -3.5 12.4 19.7 65.4 17.5 23.0
Operating Profits 576 644 683 790 771 816 918 971 2,693 3,475
YoY Growth (%) 21.8 26.3 37.9 35.7 33.9 26.6 34.4 22.9 30.4 29.1
Provisions 113 47 92 140 179 130 130 136 392 575
Tax Provisions 161 207 205 228 196 237 272 296 800 1,001
Profit after tax 302 391 386 422 395 449 516 539 1,501 1,900
YoY Growth (%) 21.8 21.2 25.5 21.3 30.8 15.0 33.8 27.7 21.9 26.6
Tax Rate (%) 34.7 34.6 34.7 35.0 33.2 34.5 34.5 34.5 34.8 34.5
E: MOSL Estimates
October 2016 154

Shriram Transport Finance

Bloomberg SHTF IN CMP: INR1,222 TP: INR1,448 (+18%) Buy
SHTFs AUM is expected to continue to grow 20% YoY.
M. Cap. (INR b)/(USD b) 277 / 4
Calculated margins on AUMs should improve QoQ (previous
52-Week Range (INR) 1,325 / 737
quarter has low margins) and remain broadly stable YoY at 7.8%.
1,6,12 Rel Perf. (%) 1/20/24
Cost to income is likely to remain stable at 24%
GNPLs would remain elevated at +6.3%, and would start receding
from 2H.
2015 2016 2017E 2018E
Recoveries in the construction equipment financing business also
Net Inc. 41.1 50.7 61.1 70.9
remain a key monitorable.
PPP 31.1 38.4 46.6 54.3
We factor in provisions of INR5b, as against INR4.6b in 1QFY17.
PAT 12.4 11.8 16.0 21.0
Cons.PAT 10.3 12.1 16.0 21.3
The stock trades at 2.4x FY17E and 2.1x FY18E consolidated BV.
EPS (INR) 54.6 51.9 70.3 92.7 Maintain Buy.
Cons. EPS INR 45.3 53.3 70.5 93.8
BV/Sh (INR) 407.1 447.5 502.8 575.7
Cons. BV (INR) 408.4 449.6 505.1 579.1
RoA on AUM 2.5 2.1 2.4 2.8 Key issues to watch for
(%)
RoE (%) 14.1 12.2 14.8 17.2 Business growth and momentum, and management commentary
Payout (%) 17.0 22.3 21.2 21.2 on the same.
Valuations Movement in borrowing costs and margins.
P/Cons. EPS(x) 27.0 22.9 17.3 13.0 Asset quality trends.
P/Cons. BV (x) 3.0 2.7 2.4 2.1 Recoveries in equipment financing portfolio.
Div. Yield (%) 0.8 0.8 1.1 1.4
SHTF: Quarterly Performance (INR Million)

Interest Income 22,015 22,402 23,675 27,207 24,764 27,190 29,148 30,472 95,300 111,574
YoY Growth (%) 39.3 31.3 24.5 34.3 15.5 23.5 19.8 23.6 32.0 20.8
Securitisation income 1,313 1,586 1,567 1,705 1,863 1,864 1,883 1,673 6,171 7,284
Net Income (Incl. Securin.) 11,356 11,929 13,002 14,438 13,461 14,639 15,577 17,414 50,727 61,092
YoY Growth (%) 17.4 18.4 23.5 33.0 18.5 22.7 19.8 20.6 23.3 20.4
Fees and Other Income 162 211 193 197 167 200 250 195 762 800
Net Operating Income 11,519 12,140 13,195 14,635 13,628 14,839 15,827 17,609 51,489 61,891
YoY Growth (%) 16.2 18.6 23.6 32.9 18.3 22.2 19.9 20.3 23.1 20.2
YoY Growth (%) 16.4 19.3 24.3 33.9 19.4 20.8 19.9 25.2 23.7 21.4
Provisions 3,823 3,997 4,199 8,567 4,591 4,990 4,980 7,707 20,586 22,267
Tax Provisions 1,579 1,761 1,959 733 1,956 2,087 2,380 1,985 6,032 8,407
Net Profit 3,211 3,381 3,751 1,439 3,741 3,962 4,518 3,752 11,782 15,961
YoY Growth (%) 4.8 11.9 20.1 -54.6 16.5 17.2 20.5 160.7 -4.8 35.5
AUM Growth (%) 11.3 13.8 16.6 23.1 23.6 0.0 0.0 0.0 23.1 18.3
Securitization Inc. / Net Inc. (%) 11.4 13.1 11.9 11.7 13.7 12.6 11.9 9.5 12.0 11.8
Tax Rate (%) 33.0 34.3 34.3 33.7 34.3 34.5 34.5 34.6 33.9 34.5
E: MOSL Estimates; * Quarterly nos and full year nos will not tally due to different way of reporting financial nos
October 2016 155

September 2016 Results Preview |2015
September Sector: Healthcare
Results Preview
Healthcare
Company name Domestic growth to pick up
Alembic Pharma Limited-competition gGleevec and gGlumetza sales would continue to drive
Alkem Labs growth for Sun Pharma and Lupin in 2QFY17. Additionally, the exclusive
authorized generic launch of gAsacol HD would drive growth for Cadila
Aurobindo Pharma
Healthcare in the quarter. Overall, we expect our pharma universe to report
Biocon sales growth of 8.7% YoY in 2QFY17.
Cadila Healthcare However, we expect our pharma universe to report muted 1.5% YoY growth in
EBITDA, largely due to higher R&D expenditure. Additionally, as US regulatory
Cipla
headwinds continue to plague the sector, higher remediation expenses and de-
Divi's Laboratories risking of key products are expected to continue weighing on operating margins.
Dr Reddy s Labs With respect to the US market, Sun Pharma, Lupin and Cadila Healthcare are
expected to report strong 2QFY17 results, aided by their limited-competition
Glenmark Pharma
launches. Aurobindo is also likely to continue its growth story in the US, with a
GSK Pharma strong number of product launches over last 18 months. Glenmark is also
Ipca Laboratories expected to exhibit strong growth in the US, led by gCrestor and a few niche
dermatology launches. However, Dr. Reddys may see another muted quarter
Lupin
due to delayed approvals for the US market and increased competition in key
Ranbaxy Labs products (e.g., gVidaza).
Sanofi India Domestic business for all pharma companies is expected to bounce back
strongly, after being impacted by external factors like FDC ban and NLEM 2013
Sun Pharma since March 2016. We expect Ipca Labs to report strong growth in its domestic
Torrent Pharmaceuticals business, largely led by strong traction in its anti-malarial portfolio.
Among MNCs, Sanofi is likely to report better numbers, whereas GSK is
expected to report subdued numbers due to ongoing supply issues.
Although the pace of approvals has picked up at the USFDA end, we believe the
lack of key approvals, coupled with increase in R&D spends and regulatory
concerns in domestic/US markets, will keep growth under check. Aurobindo and
Sun Pharma continue to remain our top picks.

Healthcare
Alembic Pharma 669 Neutral 7,844 -22.2 7.9 1,694 -54.9 8.7 1,168 -59.5 14.5
Alkem Lab 1,685 Neutral 13,695 1.0 -6.1 2,328 -8.5 -14.1 1,905 -22.7 -20.2
Aurobindo Pharma 869 Buy 38,017 14.0 2.0 9,124 17.6 2.6 5,924 20.2 2.3
Biocon 964 Sell 9,566 15.5 -2.5 2,248 19.2 -11.4 1,387 -54.7 -5.4
Cadila Health 391 Buy 25,577 4.8 11.8 5,755 -4.3 9.8 4,035 -7.7 13.2
Cipla 589 Neutral 38,941 12.8 8.4 6,898 -12.6 12.9 4,038 -6.4 10.6
Divis Labs 1,299 Neutral 10,100 5.0 0.4 3,939 5.4 -1.9 3,015 2.0 -0.1
Dr Reddy s Labs 3,162 Neutral 35,374 -11.3 9.4 6,190 -45.7 64.1 2,704 -62.5 114.1
Glenmark Pharma 928 Neutral 22,071 19.7 17.2 4,304 15.9 34.8 2,551 27.3 12.5
Granules India 120 Buy 3,521 -3.9 2.4 715 3.7 3.2 343 10.7 -12.0
GSK Pharma 2,813 Neutral 7,438 7.5 8.5 1,056 -12.5 50.4 866 -16.6 23.0
IPCA Labs. 608 Neutral 8,264 10.3 -1.9 1,363 52.8 6.0 713 100.3 27.9
Lupin 1,494 Buy 43,301 30.4 -2.5 11,487 70.9 -12.2 6,902 68.8 -21.7
Sanofi India 4,229 Buy 6,674 13.9 9.8 1,605 13.1 10.1 942 29.9 10.4
Sun Pharma 758 Buy 78,002 14.1 -5.4 24,603 27.2 -15.8 15,903 43.7 -21.8
Torrent Pharma 1,662 Buy 15,268 -9.7 1.3 4,092 -42.7 -6.4 2,492 -56.1 -14.7
Sector Aggregate 363,653 8.7 2.2 87,401 1.5 -1.6 54,888 -4.5 -7.0
Kumar Saurabh (Kumar.Saurabh@MotilalOswal.com); +91 22 6129 1519

Gaurav Tinani (Gaurav.Tinani@MotilalOswal.com); +91 22 6129 1552
October 2016 156
September 2016 Results Preview | Sector: Healthcare
Exhibit 58: 2QFY17 Aggregates

Healthcare Universe YoY Growth (%) EBITDA Margin (%) PAT margin (%)
Sales EBITDA Adj PAT 16-Sep 15-Sep CHG (BPS) 16-Jun 15-Sep CHG (BPS)
MNC Pharma 10.5 1.3 2.5 18.9 20.3 -145 12.8 13.8 -99
Big 5 Generics 10.6 11.6 12.0 25.9 23.4 259 16.1 15.9 20
CRAMS 2.5 5.2 2.8 34.2 32.8 138 24.7 24.6 6
Second Tier generics 5.8 -17.6 -31.3 19.8 25.3 -549 12.3 19.0 -667
Sector Aggregate 8.7 1.5 -1.6 24.0 24.2 -18 15.1 17.2 -208
Depreciated USD/INR to benefit export-oriented companies

In 2QFY17, the average rate of INR against USD has depreciated >4% YoY (67 v/s
64.3 last year).
At the same time, USD/INR has been flat sequentially. Thus, it is unlikely to
result in any significant MTM impact for companies with large forex debt and
derivative exposures.
The recent impact of Brexit vote will weigh negatively on companies from
2QFY17. However, we note that exposure to the UK market is limited (<1-2% of
sales) for most of the Indian companies. Apart from currency impact, it is
unclear as of now if Indian companies will have to conduct separate trials for
approval in the UK and other EU markets. If true, then this would lead to
additional costs (not expected for at least next two years).
Healthcare
Alembic Pharma 669 Neutral 38.2 25.0 31.9 17.5 26.8 21.0 11.0 18.9 14.2 38.8 26.6 27.7
Alkem Lab 1,685 Neutral 64.7 71.3 84.6 26.0 23.6 19.9 18.5 20.0 15.0 23.8 22.2 22.1
Aurobindo Pharma 869 Buy 33.9 42.9 52.6 25.7 20.3 16.5 14.6 14.1 11.5 32.5 30.4 28.3
Biocon 964 Sell 23.2 27.7 30.6 41.5 34.8 31.5 11.3 19.2 16.1 11.9 12.3 13.0
Cadila Health 391 Buy 15.4 15.9 20.0 25.3 24.5 19.6 14.6 17.6 14.0 32.8 27.4 27.9
Cipla 589 Neutral 18.8 21.1 28.4 31.3 27.9 20.7 17.9 17.6 13.4 12.8 12.7 14.9
Divis Labs 1,299 Neutral 41.9 46.8 55.2 31.0 27.8 23.5 18.0 20.2 16.5 28.6 27.4 28.2
Dr Reddy s Labs 3,162 Neutral 132.3 90.0 139.0 23.9 35.1 22.8 13.0 19.0 13.2 18.8 11.4 15.7
Glenmark Pharma 928 Neutral 24.9 42.9 49.8 37.3 21.7 18.6 18.6 11.6 10.2 16.4 21.2 19.1
Granules India 120 Buy 5.5 6.8 9.8 21.9 17.5 12.3 10.6 8.9 6.9 21.6 19.9 22.4
GSK Pharma 2,813 Neutral 44.2 50.1 61.2 63.7 56.2 46.0 68.3 47.3 37.7 22.1 29.5 40.7
IPCA Labs. 608 Neutral 10.5 19.7 32.4 57.8 30.9 18.8 22.7 15.6 11.7 5.9 10.4 15.3
Lupin 1,494 Buy 50.4 64.3 80.3 29.7 23.2 18.6 19.4 14.8 12.1 22.9 23.7 24.1
Sanofi India 4,229 Buy 103.2 148.4 175.4 41.0 28.5 24.1 18.8 16.2 13.6 14.2 18.5 19.5
Sun Pharma 758 Buy 19.6 26.3 38.5 38.7 28.8 19.7 23.9 17.5 13.7 16.5 19.3 24.4
Torrent Pharma 1,662 Buy 59.3 67.1 85.0 28.1 24.8 19.5 8.8 17.0 14.1 34.1 30.2 30.3
Exhibit 60: Relative performance three-month (%) Exhibit 61: Relative performance one-year (%)
Sensex Index MOSL Health care Index Sensex Index MOSL Health care Index
107 120
105 110
103 100
101 90
99 80
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
Jul-16
Jun-16
Aug-16
Sep-16
October 2016 157

Alembic Pharma
Bloomberg ALPM IN CMP: INR669 TP: INR640 (-4%) Neutral
We expect Alembic Pharma (ALPM) to post 22.2% YoY decline in
M. Cap. (INR b)/(USD b) 126 / 2
2QFY17 reported sales to INR7.8b. International business is
expected to decline 48% YoY owing to lower contribution from
1,6,12 Rel Perf. (%) 9/1/-12
gAbilify, while India business is expected to witness 14% YoY growth
aided by strong traction within the anti-infective portfolio.
Financial Snapshot (INR Billion)
INR million 2015 2016 2017E 2018E
Reported EBITDA is likely to decline 54% YoY to INR1.7b, with
EBITDA margin contracting 1570bp YoY, primarily on account of
Sales 20.5 31.5 31.4 38.1
EBITDA 4.0 10.0 6.6 8.8
lower gAbilify sales in 2QFY17 numbers.
NP 2.8 4.8 4.7 6.0
We expect reported PAT to decrease 60% YoY to INR1.2b, in line
EPS (INR) 15.0 38.2 25.0 31.9 with operational performance.
EPS Gro. (%) 20.0 154.6 -34.5 27.7 We believe increase in competition in gAbilify, coupled with high
BV/Sh. (INR) 46.9 84.9 102.9 127.8 R&D expense and rise in depreciation due to planned capex of
RoE (%) 36.3 38.8 26.6 27.7 INR15b over next 2-3 years, will keep profit growth under check.
RoCE (%) 29.6 50.6 24.9 26.5 The stock trades at 27x/21x FY17E/18E EPSin line with peers. We
Valuations 0.0 0.0 0.0 0.0 maintain our Neutral rating with a target price of INR640 (20x
P/E (x) 41.8 16.4 25.1 19.6 FY18E EPS).
P/BV (x) 13.4 7.4 6.1 4.9
EV/EBITDA 29.9 11.5 17.7 13.3 Key issues to watch out
(x)
Contribution of chronic portfolio and growth strategy.
Performance of US operations amid market pressure.
Outlook on future ANDA launches/filings.
Quarterly performance (Consolidated) (INR Million)

Net Sales 5,833 10,088 9,210 6,256 7,270 7,844 7,923 8,401 31,453 31,438
YoY Change (%) 18.0 84.7 80.3 24.7 24.6 -22.2 -14.0 34.3 68.8 0.0
EBITDA 1,021 3,760 3,839 1,423 1,559 1,694 1,664 1,374 10,025 6,602
Margins (%) 17.5 37.3 41.7 22.7 21.4 21.6 21.0 16.4 31.9 21.0
Depreciation 129 133 217 244 194 215 222 232 722 862
Interest 6 7 10 13 11 3 3 -4 37 12
Other Income 0 1 28 26 14 70 85 145 91 314
PBT 886 3,621 3,640 1,192 1,369 1,546 1,524 1,292 9,357 6,042
Tax 188 735 951 286 333 375 350 271 1,986 1,329
Rate (%) 21.2 20.3 26.1 24.0 24.3 24.3 23.0 21.0 21.2 22.0
Minority Interest & P/L of Asso. Cos. 1 4 -1 -5 16 4 -1 -5 6 -2
Reported PAT 698 2,882 2,690 911 1,020 1,168 1,175 1,026 7,365 4,714
Adj PAT 698 2,882 2,690 911 1,020 1,168 1,175 1,026 7,365 4,714
YoY Change (%) 7.9 273.0 280.7 29.5 46.2 -59.5 -56.3 12.6 212.8 -36.0
Margins (%) 12.0 28.6 29.2 14.6 14.0 14.9 14.8 12.2 23.4 15.0
E: MOSL Estimates
October 2016 158

Alkem Labs
Bloomberg ALKEM IN CMP: INR1,685 TP: INR1,800 (+7%) Neutral
Revenues are likely to exhibit muted 1% YoY growth, primarily
M. Cap. (INR b)/(USD b) 201 / 3
owing to presence of certain deferred revenues in 2QFY16.
52-Week Range (INR) 1,853/1,175
Additionally, we expect revenues to be weighed by NPPA-led
1,6,12 Rel Perf. (%) -
downward price erosions.
EBITDA is also likely to decline 9% YoY, driven by margin contraction
INR million FY15 FY16 FY17E FY18E
of 180bp during this quarter.
We expect PAT to remain flat due to higher taxes in 1QFY17, as
Sales 37.9 49.9 56.5 67.6
EBITDA 5.4 8.5 9.7 12.5
against +6% in 1QFY16.
NP 5.1 7.7 8.5 10.1 ALKEM's US business could potentially double from ~USD150m in
EPS (INR) 38.7 64.7 71.3 84.6 FY16 to ~USD300m over next 3-4 years, driven by a strong pipeline
EPS Gr. (%) 6.2 67.4 10.1 18.7 of ~50 pending ANDAs.
BV/Sh. (INR) 250.9 293.0 349.9 415.5 Lower base effect will continue to have a positive impact as the US
RoE (%) 18.4 23.8 22.2 22.1 will still contribute ~22% to sales, much lower than peers at ~40%
RoCE (%) 14.6 17.6 20.1 20.3 and above.
P/E (x) 46.6 27.9 25.3 21.3
P/BV (x) 7.2 6.2 5.2 4.3
Key issues to watch out
EV/EBITDA (x) 40.6 25.2 21.9 16.4 Updates on ramp-up in US sales.
EV/Sales (x) 5.8 4.3 3.8 3.0 Update on form 483 issued to Alkems Daman facility.
Pick-up in chronic business.
Quarterly Performance (Consolidated) (INR Million)

Net Revenues 12,075 13,560 12,747 11,426 14,579 13,695 14,404 13,863 49,915 56,541
YoY Change (%) 29.0 25.3 20.7 1.0 13.0 21.3 31.7 13.3
EBITDA 2,062 2,545 2,354 1,580 2,711 2,328 2,449 2,237 8,482 9,725
Margins (%) 17.1 18.8 18.5 13.8 18.6 17.0 17.0 16.1 17.0 17.2
Depreciation 206 277 244 260 230 280 295 271 1,006 1,075
Net Other Income 251 334 161 319 181 222 385 502 975 1,290
PBT before EO Exp 2,107 2,602 2,270 1,639 2,663 2,270 2,539 2,468 8,451 9,940
EO Exp/(Inc) 0 0
PBT 2,107 2,602 2,270 1,639 2,663 2,270 2,539 2,468 8,451 9,940
Tax 68 91 345 1,066 230 335 360 368 1,606 1,292
Rate (%) 3.2 3.5 15.2 65.0 8.6 14.8 14.2 14.9 19.0 13.0
PAT (pre Minority Interest) 2,039 2,511 1,925 573 2,433 1,935 2,179 2,101 6,845 8,648
Reported PAT 2,011 2,466 1,889 567 2,388 1,905 2,149 2,078 6,731 8,520
YoY Change (%) 17.0 -56.3 0 0
Adj Net Profit 2,011 2,466 1,872 1,577 2,388 1,905 2,149 2,078 6,731 8,520
YoY Change (%) 17.0 21.4 18.7 -22.7 14.8 31.8 45.5 26.6
October 2016 159

Aurobindo Pharma
Bloomberg ARBP IN CMP: INR869 TP:1,050 (+21%) Buy
We expect Aurobindo (ARBP) to post 15% YoY growth in sales for
M. Cap. (INR b)/(USD b) 509 / 8
2QFY17 to INR38.0b, aided by sustained traction in the US.
We expect US business (~58% of formulation sales) to grow 23%
1,6,12 Rel Perf. (%) 13/7/5
YoY in 2Q on the back of 75+ ANDA approvals in the US over last 18
months. Europe and RoW sales are expected to exhibit modest 6%
YoY growth, while API sales are estimated to grow ~5% YoY in 2Q.
EBITDA margin would expand 70bp YoY to 24.0%. Overall EBITDA is
INR million 2015 2016 2017E 2018E
estimated to grow 17.6% YoY to INR9.1b. We expect reported PAT
Sales 121.2 139.0 157.8 181.0
at INR5.9b, compared to INR4.5b in the corresponding quarter last
EBITDA 25.6 32.1 38.3 45.8
year.
NP 15.8 19.8 25.1 30.8
EPS (INR) 27.0 33.9 42.9 52.6
The stock trades at 19.7x FY17E, 16x FY18E EPS, which is at ~15%
EPS Gr. (%) 18.9 25.5 26.6 22.7 discount to peers. Maintain Buy as we expect the valuation gap to
BV/Sh. (INR) 88.3 120.6 160.9 211.0 narrow on account of the companys increasing profitability, strong
RoE (%) 35.4 32.5 30.4 28.3 earnings growth trajectory (25% CAGR) and improving free cash
RoCE (%) 20.4 20.8 21.1 21.6 flow.
P/E (x) 29.2 23.3 18.4 15.0
P/BV (x) 8.9 6.5 4.9 3.7
EV/EBITDA (x) 19.3 15.4 12.9 10.5 Key issues to watch out
EV/Sales (x) 4.1 3.6 3.1 2.7 Clarity on fund raising plans.
Outlook on US business (175+ pending approvals).
Profitability of acquired Actavis business in Europe.

Net Sales 32,989 33,335 34,955 37,468 37,259 38,017 39,039 43,461 136,506 154,830
YoY Change (%) 13.3 15.7 10.4 18.5 12.9 15.2 17.1 24.3 14.6 13.5
EBITDA 7,251 7,756 8,230 8,824 8,890 9,124 9,369 10,956 29,601 35,394
Margins (%) 22.0 23.3 23.5 23.5 23.9 24.0 24.0 25.2 21.7 22.9
Depreciation 890 928 995 1,113 1,062 1,050 1,050 1,104 3,926 4,267
Interest 208 241 227 251 206 200 200 209 927 815
Other Income 294 117 69 206 159 200 200 241 3,137 3,746
Extra-Ord expense 106 579 -129 -46 -70 0 0 70 660 0
PBT 6,340 6,125 7,206 7,711 7,850 8,074 8,319 9,814 27,225 34,058
Tax 1,634 1,622 1,860 2,097 2,008 2,150 2,250 2,617 7,444 9,025
Rate (%) 25.8 26.5 25.8 27.2 25.6 26.6 27.0 26.7 27.3 26.5
Minority Interest -19 -10 -3 -14 -8 -10 -15 -17 -39 -50
Reported PAT 4,725 4,513 5,350 5,629 5,850 5,934 6,084 7,214 19,820 25,082
Adj PAT 4,784 4,929 5,251 5,582 5,789 5,924 6,069 7,248 20,304 25,082
YoY Change (%) 15.8 22.7 32.3 38.7 21.0 23.8 23.1 38.0 36.6 23.5
October 2016 160

Biocon
Bloomberg BIOS IN CMP: INR964 TP: INR550 (-48%) Sell
Biocons revenue is likely to grow 12% YoY to INR9.3b, driven by
M. Cap. (INR b)/(USD b) 193 / 3
21% growth in CRO division, 11% growth in Biopharma sales and
licensing income at INR134m.
1,6,12 Rel Perf. (%) 7/85/108
EBITDA is expected to increase 19% YoY to INR2.2b, with EBITDA
margins at 23.5%. The company has been facing issues on two
fronts, which will continue to affect its performance this quarter
Y/E March 2015 2016 2017E 2018E
(1) capacity constraints in insulin and (2) adverse business
Sales 30.6 34.5 39.4 46.5
EBITDA 6.7 7.9 9.6 11.4
environment in the Middle East.
Net Profit 4.0 4.6 5.5 6.1
We expect PAT to decline to INR1.4b, primarily owing to lower
Adj. EPS (INR) 20.1 23.2 27.7 30.6 other income.
EPS Gr. (%) -2.8 15.5 19.4 10.3 Key growth drivers for FY16E/17E will be: 1) commercialization and
BV/Sh. (INR) 163.5 195.2 214.8 236.4 ramp-up of the insulin plant in Malaysia, 2) ramp-up in CRO
RoE (%) 12.3 11.9 12.9 12.9 division, 3) contribution from API/immuno-suppressants supplies to
RoCE (%) 11.1 17.9 10.9 11.3 partners and 4) branded formulations in India. However, capex for
Payout (%) 23.5 29.3 29.3 29.3 long-term initiatives is likely to exert pressure on profitability and
Valuations return ratios in the near term.
P/E (x) 40.2 34.8 29.2 26.5 The stock trades at 36.6x FY17E and 31.5x FY18E earnings. Maintain
P/BV (x) 4.9 4.1 3.8 3.4 Sell.
EV/EBITDA (x) 24.1 19.6 16.0 13.4
Div. Yield (%) 0.6 1.4 0.9 0.9 Key issues to watch out
Update on Middle-East problems.
Progress on product registration for Rh-Insulin/Glargine in
Europe/US and other outlicensing opportunities.

Net Sales 8,105 8,282 8,282 9,450 9,814 9,566 9,273 10,718 34,507 39,371
YoY Change (%) 12.8 10.5 8.8 13.8 21.1 15.5 12.0 13.4 12.8 14.1
EBITDA 1,978 1,886 1,799 1,852 2,538 2,248 2,253 2,529 7,853 9,568
Margins (%) 24.4 22.8 21.7 19.6 25.9 23.5 24.3 23.6 22.8 24.3
Depreciation 591 596 621 647 661 596 621 723 2,423 2,601
Interest 44 29 15 166 57 65 75 69 102 266
Other Income 304 3,406 289 3,014 502 350 375 273 1,192 1,500
PBT 1,647 4,667 1,452 4,053 2,322 1,937 1,932 2,010 6,520 8,201
Tax 376 1,378 241 591 552 400 400 411 1,131 1,763
Rate (%) 22.8 29.5 16.6 14.6 23.8 20.7 20.7 20.5 17.3 21.5
PAT 1,238 3,059 1,030 3,303 1,666 1,387 1,382 1,302 4,646 5,545
YoY Change (%) 20.2 199.9 13.4 64.0 34.6 -54.7 34.2 -60.6 -7.0 19.4
Margins (%) 14.3 13.6 11.9 24.3 15.3 36.9 12.4 35.0 25.6 27.7
E: MOSL Estimates; Note - Quarterly nos will not add up to full-year nos due to restatements
October 2016 161

Cadila Healthcare
Bloomberg CDH IN CMP: INR391 TP:INR400 (+2%) Buy
Cadila Healthcare's (CDH) 2QFY17 revenue is likely to grow 8.6%
M. Cap. (INR b)/(USD b) 400 / 6
YoY to INR 25.5b, driven by 3% YoY growth in the US formulations
business. Growth in the US formulations business is expected to be
1,6,12 Rel Perf. (%) 3/10/-15
largely driven by launch of authorized generic of Asacol HD.
Overall export formulations are expected to grow 6% YoY to
INR13.1b, while domestic formulation is likely to grow 12% YoY to
Y/E March 2015 2016 2017E 2018E
INR8.4b.
Sales 86.4 97.5 102.4 120.9
We expect EBITDA to decline 4% YoY to INR5.8b and EBITDA margin
EBITDA 17.4 23.0 23.2 28.4
Net Profit 11.5 15.8 16.3 20.5
to decline 210bp due to adverse business mix. Adjusted PAT is also
Adj. EPS (INR) 11.2 15.4 15.9 20.0 likely to decline 8% YoY to INR4.0b.
EPS Gr. (%) 39.8 37.7 3.2 25.5 We believe CDH has made investments in the right areas and will
BV/Sh. (INR) 41.5 52.3 63.9 79.5 start accruing benefits over next 2-3 years. We expect sharp ramp-
RoE (%) 29.7 32.8 27.4 27.9 up in the US business post successful remediation of Moraiya
RoCE (%) 19.8 23.3 20.4 22.3 warning letter. We estimate 14% EPS CAGR for FY16-18E, with
Payout (%) 0.0 0.0 0.0 0.0 better return ratios over next two years.
Valuations Stock trades at 24.8x FY17E and 19.8x FY18E EPS. Maintain Buy.
P/E (x) 31.0 22.5 21.8 17.4
P/BV (x) 8.4 6.6 5.4 4.4
EV/EBITDA (x) 21.3 16.0 15.6 12.5
Div. Yield (%) 0.0 0.0 0.0 0.0

Update on US FDA resolution for Moraiya facility.
Outlook for recovery in domestic formulations.
Progress on improvement in balance sheet.

Net Revenues 23,159 24,394 24,284 24,491 22,871 25,577 26,371 27,563 96,329 102,383
YoY Change (%) 23.7 15.7 10.9 7.0 -1.2 4.8 8.6 12.5 12.9 6.3
EBITDA 5,111 6,013 5,787 5,814 5,239 5,755 5,934 6,313 21,782 23,241
Margins (%) 22.1 24.6 23.8 23.7 22.9 22.5 22.5 22.9 22.6 22.7
Depreciation 691 733 770 783 843 850 860 875 3,022 3,428
Interest 119 127 126 100 140 140 140 146 463 566
Other Income 240 237 255 241 153 200 215 224 918 792
PBQ after EO Income 5,047 4,930 5,137 5,180 4,407 4,965 5,149 5,516 19,259 20,039
Tax 577 922 1,149 1,259 966 1,050 1,050 1,142 4,298 4,208
Rate (%) 11.4 18.7 22.4 24.3 21.9 21.1 20.4 20.7 22.3 21.0
Min. Int/Adj on Consol -132 99 92 34 -121 -120 -120 -119 300 -480
Reported PAT 4,602 3,909 3,896 3,887 3,562 4,035 4,219 4,493 14,661 16,310
Adj PAT 4,096 4,370 3,903 3,881 3,564 4,035 4,219 4,493 14,821 16,310
YoY Change (%) 103.2 56.6 38.6 -15.7 -13.0 -7.7 8.1 15.8 26.4 10.1
Margins (%) 17.7 17.9 16.1 15.8 15.6 15.8 16.0 16.3 15.4 15.9
E: MOSL Estimates
October 2016 162

Cipla
Bloomberg CIPLA IN CMP: INR589 TP: INR540 (-8%) Neutral
We expect Ciplas revenues to grow 12.8% YoY to INR38.9b on a
M. Cap. (INR b)/(USD b) 473 / 7
lower base of 2QFY16 and consolidation of Invagen sales.
Export formulation business is expected to grow 13.8% YoY to
1,6,12 Rel Perf. (%) 3/3/-15
INR21.3b. Domestic business is also expected to grow 13% YoY to
INR14.3b, driven by traction in Respiratory business. Export API
sales are expected to report muted 3.1% YoY growth to INR2.3b.
Y/E March 2015 2016 2017E 2018E
EBITDA is likely to decline 13% YoY to INR6.9b, with margin
Sales 113.5 136.8 161.8 187.1
EBITDA 21.6 25.0 28.5 36.5
contracting 520bp to 17.7%, owing to lower gNexium sales
Net Profit 11.3 15.1 16.9 22.8
compared to 2QFY16. We expect reported PAT to decline 6% YoY to
Adj. EPS (INR) 14.0 18.8 21.1 28.4 INR4.0b.
EPS Gr. (%) -18.6 34.0 12.1 34.7 We believe that earnings acceleration and potential upgrades on
BV/Sh. (INR) 134.3 147.5 165.6 191.1 successful EU inhaler portfolio monetization would help it sustain
RoE (%) 10.5 12.8 12.7 14.9 current multiples going forward (24x one-year forward P/E). The
RoCE (%) 11.0 10.6 10.1 12.2 stock trades at 27.3x FY17E and 20.4x FY18E earnings. Maintain
Payout (%) 15.9 14.0 13.9 10.3 Neutral.
Valuations
P/E (x) 37.2 27.8 24.8 18.4
P/BV (x) 3.9 3.5 3.2 2.7
Div. Yield (%) 0.4 0.4 0.5 0.5 Launch of combination inhaler in the UK market (USD450m
market size).
Margin improvement in Medpro operations (acquired in July
2014).
Sustained strong growth in domestic formulations (38% of sales).

Net Revenues 38,385 34,524 31,066 32,665 35,937 38,941 41,604 45,327 136,640 161,809
YoY Change (%) 41.1 24.8 12.3 5.6 -6.4 12.8 33.9 38.8 20.4 18.4
EBITDA 10,545 7,894 5,294 4,421 6,110 6,898 7,452 8,019 28,154 28,478
Margins (%) 27.5 22.9 17.0 13.5 17.0 17.7 17.9 17.7 20.6 17.6
Depreciation 1,494 1,340 1,375 1,414 1,608 1,600 1,650 1,762 5,623 6,620
Interest 639 503 230 368 313 400 400 444 1,738 1,557
Other Income 505 259 51 547 252 500 500 748 1,363 2,000
Tax 2,418 1,812 120 -39 708 1,250 1,400 1,548 4,311 4,906
Rate (%) 27.1 28.7 3.2 -1.2 15.9 23.2 23.7 23.6 19.5 22.0
Minority Interest 7.4 186.1 174.2 185.4 79.7 110.0 95.0 165.3 553.1 450.0
Reported PAT 6,492 4,312 3,447 3,040 3,652 4,038 4,407 4,847 17,291 16,944
Adj PAT 6,492 4,312 3,447 3,040 3,652 4,038 4,407 4,847 17,291 16,944
YoY Change (%) 120.4 44.4 5.1 17.1 -43.7 -6.4 27.9 59.4 46.4 -2.0
Margins (%) 16.9 12.5 11.1 9.3 10.2 10.4 10.6 10.7 12.7 10.5
E: MOSL Estimates
October 2016 163

Divi's Laboratories
Bloomberg DIVI IN CMP: INR1,299 TP:INR1,215 (-6%) Neutral
Divi's Laboratories (DIVI) is likely to register 5% YoY growth in
M. Cap. (INR b)/(USD b) 345 / 5
1QFY17 revenue to INR10.1b.
Adjusted EBITDA is also likely to exhibit muted 5% YoY growth to
1,6,12 Rel Perf. (%) 0/17/8
INR3.9b with margins at 39.0%, aided by lower raw material costs.
Reported EBITDA is expected to be weighed down by one-time ex-
gratia amount of INR790m to the companys employees.
Y/E March 2015 2016 2017E 2018E
We expect PAT to increase 2% YoY to INR3.0b, in line with EBITDA
Sales 31.0 37.7 44.5 52.6
EBITDA 11.5 14.1 16.6 20.2
growth during this quarter.
Net Profit 8.5 11.1 12.4 14.6
Management expects FY16 revenue to grow more than 15-16%,
Adj. EPS (INR) 32.1 41.9 46.8 55.2 with EBITDA margin sustaining at 37%.
EPS Gr. (%) 10.1 30.6 11.7 18.0 We estimate ~15-20% revenue, EBITDA, PAT CAGR over FY16-18E,
BV/Sh. (INR) 131.7 161.5 180.4 210.8 while maintaining EBITDA margin at ~37-38.5%. We expect balance
RoE (%) 26.3 28.6 27.4 28.2 sheet to continue to strengthen further, and expect dividend
RoCE (%) 26.1 28.4 27.2 28.1 payout to go up to 45% in FY18E, from 29% in FY16.
Payout (%) 36.5 45.0 45.0 45.0 The stock trades at 28.5x FY17E and 24.8x FY18E earnings. Maintain
Valuations Neutral.
P/E (x) 36.6 28.0 25.1 21.3
P/BV (x) 8.9 7.3 6.5 5.6
EV/EBITDA (x) 27.0 22.1 18.6 15.1
Div. Yield (%) 0.9 1.4 1.5 1.8
Ramp-up at Vizag SEZ.
Outlook for growth beyond FY18.

Net Op Revenue 8,069 9,619 8,518 10,934 10,060 10,100 10,349 14,019 37,690 44,527
YoY Change (%) 26.1 15.9 8.1 34.2 24.7 5.0 21.5 28.2 21.5 18.1
EBITDA 3,000 3,736 3,212 3,960 4,016 3,939 3,984 4,647 14,064 16,586
Margins (%) 37.2 38.8 37.7 36.2 39.9 39.0 38.5 33.1 37.3 37.3
Depreciation 289 301 299 292 301 320 525 670 1,182 1,816
Interest 2 3 2 15 4 4 7 7 23 22
Other Income 360 321 163 193 184 200 340 488 922 1,212
PBT 3,069 3,752 3,074 3,845 3,896 3,815 3,792 4,458 13,781 15,961
Tax 617 795 608 623 878 800 925 909 2,662 3,511
Rate (%) 20.1 21.2 19.8 16.2 22.5 21.0 24.4 20.4 19.5 22.0
Reported PAT 2,452 2,957 2,466 3,222 3,018 3,015 2,867 3,549 11,098 12,449
Adj PAT 2,452 2,957 2,466 3,222 3,018 3,015 2,867 3,549 11,098 12,449
YoY Change (%) 46.0 28.8 11.8 40.8 23.1 2.0 16.3 10.1 30.6 12.2
Margins (%) 30.4 30.7 28.9 29.5 30.0 29.9 27.7 25.3 29.4 28.0
October 2016 164

Dr Reddys Labs
Bloomberg DRRD IN CMP: INR3,161 TP:INR3,000 (-5%) Neutral
Dr Reddys Lab is expected to report subdued numbers in 2QFY17,
M. Cap. (INR b)/(USD b) 539 / 8
with revenue declining 11.3% YoY to INR35.4b and PAT down 62.5%
52-Week Range (INR) 4,383/2,750
YoY at INR2.7m. This is primarily due to the lack of new launches in
1,6,12 Rel Perf. (%) 2/-6/-33
the US and increased generic competition in gVidaza.
US business is likely to decline 20% YoY to INR14.8b, while Russia
and CIS region sales are expected to decline in single-digits due to
Y/E March 2015 2016 2017E 2018E
currency devaluation. However, India business is expected to report
Sales 148.2 154.7 147.8 173.6
robust 12% YoY growth in 2QFY17.
EBITDA 33.5 39.1 28.1 39.9
Net Profit 22.2 22.6 15.3 23.7
EBITDA is expected to decline 45% YoY to INR6.2b and EBITDA
Adj. EPS (INR) 130.2 132.3 90.0 139.0 margin to decline 1100bp YoY to 17.5%, weighed down by higher
EPS Gr. (%) 4.5 1.7 -32.0 54.4 remediation costs and increased competition in key products.
BV/Sh. (INR) 653.2 752.3 822.5 945.7 PAT is expected decline 62.5% YoY with taxes at 25% in 2QFY17.
RoE (%) 21.9 18.8 11.4 15.7 Even though near-term earnings growth is muted due to recent
RoCE (%) 14.2 13.9 8.6 12.6 warnings letters, we believe the company is focusing on the right
Payout (%) 17.9 17.6 17.6 17.6 areas for growth in the US. The stock trades at 25.5x FY17E and
Valuation 19.1x FY18E earnings. Maintain Neutral.
P/E (x) 25.5 25.1 36.9 23.9
P/BV (x) 5.1 4.4 4.0 3.5 Key issues to watch out
EV/EBITDA (x) 16.9 14.2 20.0 13.9 Update on USFDA resolution of warning letters for Srikakulam,
Div. Yield (%) 0.6 0.5 0.4 0.6 Duvvada and Miryalaguda API plants.
Potential competition in key US products like Toprol XL and
Dacogen.
FY18 outlook for both generics and PSAI businesses.
Quarterly Performance - IFRS (INR Million)

Y/E March FY16 FY17
Sales 37,578 39,890 39,679 37,562 32,345 35,374 37,663 42,113 154,708 147,809
YoY Change (%) 6.8 11.2 3.2 -3.0 -13.9 -11.3 -5.1 12.1 4.4 -4.5
EBITDA 9,855 11,404 10,033 8,249 3,773 6,190 8,587 9,219 39,088 28,084
Margins (%) 26.2 28.6 25.3 22.0 11.7 17.5 22.8 21.9 25.3 19.0
Amortization 2,268 2,466 2,577 3,032 2,681 2,700 2,500 2,466 10,343 10,347
Other Income 390 160 124 -2,732 615 115 515 681 -1,605 1,926
Tax 1,721 1,879 1,788 1,739 444 901 1,518 1,462 7,127 4,326
Rate (%) 21.6 20.7 23.6 70.0 26.0 25.0 23.0 19.7 26.3 22.0
Net Profit 6,256 7,219 5,792 745 1,263 2,704 5,084 5,972 20,012 15,336
YoY Change (%) 13.7 25.7 0.8 -27.5 -79.8 -62.5 -12.2 58.8 -9.8 -23.4
Margins (%) 16.6 18.1 14.6 10.0 3.9 7.6 13.5 14.2 12.9 10.4
E - MOSL Estimates
October 2016 165

Glenmark Pharma
Bloomberg GNP IN CMP: INR928 TP: INR900 (-3%) Neutral
We expect Glenmark Pharmaceuticals (GNP) to report robust 19.7%
M. Cap. (INR b)/(USD b) 252 / 4
YoY growth in overall revenues to INR22.1b, driven by its buoyant
performance in the US and India market.
1,6,12 Rel Perf. (%) 12/5/-18
The India branded business is likely to grow 13% YoY, while the US
generic segment is expected to grow 29% YoY, primarily aided by
gCrestor launch. LatAm business is expected to witness 29% YoY
Y/E March 2015 2016 2017E 2018E
decline in 2Q sales owing to no sales in Venezuela. We also do not
Sales 66.0 75.9 92.4 108.7
EBITDA 11.8 13.7 24.3 26.8
factor in any out-licensing income in our 2QFY17 assumptions.
Net Profit 4.8 7.0 12.1 14.1 EBITDA is likely to increase 16% YoY to INR4.3b. Nevertheless, we
Adj. EPS (INR) 17.5 24.9 42.9 49.8 expect margins to contract 60bp YoY to 19.5%, weighed down by
EPS Gr. (%) -12.3 42.0 72.3 16.3 higher R&D expenses. Adjusted PAT is expected at INR 2.6b, up 27%
BV/Sh. (INR) 110.6 151.3 202.3 260.2 YoY, aided by lower tax expenses.
RoE (%) 15.8 16.4 21.2 19.1 We expect GNP to gradually reduce its net debt over FY16-18E,
RoCE (%) 12.5 12.7 20.4 19.4 resulting in an improvement in D/E from 1.0x in FY16 to 0.6x by
Payout (%) 13.8 10.0 6.6 5.9 FY18E. We also expect a gradual improvement in return ratios over
Valuations the same period.
P/E (x) 47.7 33.6 19.5 16.8 The stock trades at 22x FY17E and 19x FY18E EPS. Maintain Neutral.
P/BV (x) 7.6 5.5 4.1 3.2
Div. Yield (%) 0.2 0.2 0.4 0.4 New ANDA filings in complex category.
Update on free cash generation and debt-repayment schedule.
Progress of NCE/NBE pipeline and potential out-licensing
prospects.

Net Revenues (Core) 16,258 18,440 17,245 21,740 18,832 22,071 21,723 28,586 75,909 92,362
YoY Change (%) 10.0 10.3 1.9 24.0 15.8 19.7 26.0 31.5 15.1 21.7
EBITDA 3,374 3,713 3,379 1,952 3,192 4,304 4,779 10,833 14,326 24,720
Margins (%) 20.8 20.1 19.6 9.0 17.0 19.5 22.0 37.9 18.9 26.8
Depreciation 654 634 559 584 642 750 850 484 2,691 2,727
Interest 419 426 469 475 430 423 480 906 1,789 2,239
Other Income 273 314 340 1,189 1,358 400 340 -848 787 1,250
PBT before EO Expense 2,574 2,967 2,692 2,082 3,477 3,531 3,790 8,594 10,632 21,004
Extra-Ord Expense 0 0 0 0 0 0 0 0 0 0
Tax 745 962 992 594 1,209 980 1,250 1,696 3,028 5,135
Rate (%) 28.9 32.4 36.9 28.5 34.8 27.8 33.0 19.7 28.5 24.5
Reported PAT (incl one-offs) 1,829 2,004 1,699 1,487 2,268 2,551 2,540 6,898 7,604 15,868
Reported PAT (excl MI) 1,829 2,004 1,699 1,487 2,268 2,551 2,540 6,898 7,604 15,868
YoY Change (%) -1.1 21.4 48.1 1,301.5 24.0 27.3 49.4 363.8 60.0 108.7
Margins (%) 11.2 10.9 9.9 6.8 12.0 11.6 11.7 24.1 10.0 17.2
E: MOSL Estimates
October 2016 166

Granules India
Bloomberg GRAN IN CMP: INR120 TP:INR160 (+33%) Buy
We expect Granules India (GRAN) to post 3.9% YoY decline in
2QFY17 reported sales to INR3.5b. This is mainly due to exclusion of
JV sales (Omnichem and Biocause) owing to Ind-AS accounting.
1,6,12 Rel Perf. (%) -4/-12/-23
However, reported EBITDA is likely to increase 4% YoY to INR715m,
with EBITDA margin expanding 150bp YoY, primarily owing to lower
raw material costs and better business mix.
INR million 2015 2016 2017E 2018E
Sales 12.9 14.3 15.6 19.0
We expect reported PAT to decrease 20% YoY to INR343m, in line
EBITDA 2.1 2.8 3.2 4.0
with operational performance.
NP 0.9 1.2 1.6 2.2
EPS (INR) 4.5 5.5 6.8 9.8
EPS Gr. (%) 19.9 22.8 25.1 42.6
We expect GRAN to report 34% PAT CAGR over FY16-18E, driven by
BV/Sh. (INR) 21.1 30.7 39.6 47.5 improving traction in finished dosages formulations. However, the
RoE (%) 23.1 21.6 19.9 22.4 story beyond FY18 is much rosier, as we see more approvals in the
RoCE (%) 13.3 14.0 14.1 16.4 US for the OTC and Rx business and ramp-up is expected in
P/E (x) 30.2 24.6 19.7 13.8 Omnichem JV, which will drive both revenue and profitability. At
P/BV (x) 6.4 4.4 3.4 2.8 CMP, the stock trades at 18x FY17E and 12x FY18E EPS. We
EV/EBITDA (x) 15.0 11.0 9.3 7.2 maintain Buy with target price of INR160 (@16x FY18E EPS)
EV/Sales (x) 2.4 2.1 1.9 1.6
D. Payout (%) 14.4 11.0 13.6 13.9
Contribution of Auctus portfolio and outlook on ANDA filings.
Performance of Omnichem JV operations.
Outlook for growth beyond FY18E.

Net Sales 3,226 3,664 3,449 3,723 3,437 3,521 4,070 4,603 14,295 15,631
YoY Change (%) 3.7 19.1 7.9 5.0 6.6 -3.9 18.0 23.6 11.2 9.3
EBITDA 627 689 677 783 692 715 790 949 2,725 3,162
Margins (%) 19.4 18.8 19.6 21.0 20.1 20.3 19.4 20.6 19.1 20.2
Depreciation 139 156 167 174 163 170 189 221 643 744
Interest 81 104 114 99 79 90 92 190 399 452
Other Income 14 16 26 14 23 25 26 20 77 94
PBT 420 445 422 525 472 480 534 558 1,759 2,060
Tax 133 136 151 193 154 157 180 182 617 673
Rate (%) 31.6 30.4 35.7 36.7 32.5 32.7 33.7 32.6 35.1 32.7
Reported PAT 285 310 272 332 390 343 354 376 1,140 1,386
YoY Change (%) 24.8 40.3 15.2 48.2 36.5 20.2 14.3 38.5 36.9 21.5
Margins (%) 8.8 8.5 7.9 8.9 11.3 9.7 8.7 8.2 8.0 8.9
E: MOSL Estimates
October 2016 167

GSK Pharma
Bloomberg GLXO IN CMP: INR2,813 TP: INR3,150 (+12%) Neutral
In 2QFY17, we expect GlaxoSmithKline Pharmaceuticals (GLXO) to
M. Cap. (INR b)/(USD b) 238 / 4
report 7.5% YoY increase in revenues to INR7.4b.
52-Week Range (INR) 3,850/2,752
1,6,12 Rel Perf. (%) -4/-38/-23
EBITDA is also likely to decline 12% YoY to INR1.1b, with EBITDA
margin contracting 320bp YoY to 14.2%.
Y/E December 2015 2016E 2017E 2018E
We expect adjusted PAT to decline 16.6% YoY at INR866m. Growth
Sales 32.7 27.4 30.4 34.1
EBITDA 6.0 4.5 4.9 6.2
and profitability are expected to gradually improve, with volume
Net Profit 5.3 3.7 4.2 5.2
ramp-up in key NLEM products.
Adj. EPS (INR) 62.4 44.2 50.1 61.2
EPS Gr. (%) 11.1 -29.2 13.3 22.2 We believe GLXO has strong parent support, superior brand
BV/Sh. (INR) 215.9 200.2 169.8 150.5 portfolio (competitive advantage), high payout ratio (~100%) and
RoE (%) 23.1 22.1 29.5 40.7 industry-leading return ratios (RoCE of 50%+).
RoCE (%) 21.9 21.2 27.0 38.2
Payout (%) 114.3 167.8 159.4 130.4 However, current valuation of 53x FY17E and 40x FY18E EPS
Valuations adequately reflects recovery in the business over this period, in our
P/E (x) 53.7 75.8 66.9 54.7 view. Maintain Neutral.
P/BV (x) 15.5 16.7 19.7 22.2
EV/EBITDA (x) 55.0 59.8 56.6 45.1
Div. Yield (%) 1.9 1.9 2.1 2.1
New product introductions in FY17-18E.
Market performance of products impacted by DPCO 2013.

Net Sales 4,889 5,497 5,858 5,687 5,444 6,080 6,674 6,313 21,931 24,511
YoY Change (%) 9.9 8.7 13.8 11.1 11.4 10.6 13.9 11.0 10.9 11.8
EBITDA 829 1,214 1,419 1,129 1,291 1,458 1,605 1,183 4,591 5,536
Margins (%) 17.0 22.1 24.2 19.9 23.7 24.0 24.0 18.7 20.9 22.6
Depreciation 259 284 290 296 301 300 312 283 1,129 1,196
Interest 1 1 1 1 1 7 1 -5 4 4
Other Income 194 99 94 126 256 164 150 118 514 688
PBT before EO Items 763 1,028 1,222 958 1,245 1,315 1,442 1,023 3,972 5,025
Extra-Ord Expense -161 0 0 -677 0 0 0 0 -838 0
PBT after EO Items 924 1,028 1,222 1,635 1,245 1,315 1,442 1,023 4,810 5,025
Tax 279 386 497 433 439 462 500 207 1,595 1,608
Effective tax Rate (%) 30.2 37.5 40.7 26.5 35.3 35.1 34.7 20.2 33.2 32.0
Reported PAT 645 642 725 1,202 806 853 942 816 3,215 3,417
Adj PAT 484 642 725 704 806 853 942 816 2,377 3,417
YoY Change (%) -6.4 11.7 16.9 171.9 66.5 32.9 29.9 15.9 20.6 43.7
Margins (%) 9.9 11.7 12.4 12.4 14.8 14.0 14.1 12.9 10.8 13.9
E: MOSL Estimates
October 2016 168

Ipca Laboratories
Bloomberg IPCA IN
CMP: INR608 TP: INR525 (-23%) Neutral
M. Cap. (INR b)/(USD b) 77 / 1 We expect Ipca Laboratories (IPCA) to witness 10.3% YoY growth in
52-Week Range (INR) 807/402 overall revenues, aided by strong domestic anti-malarial sales.
1,6,12 Rel Perf. (%) 13/-6/-25 Domestic formulation is expected to exhibit robust 17% YoY
growth, while total API sales would witness 7% YoY decline.
Financial Snapshot (INR Billion) EBITDA is likely to grow 53% YoY, with margin improving 460bp YoY
Y/E March 2015 2016 2017E 2018E to 16.5% in 2QFY17. However, profitability is still lower due to
Sales 31.4 28.9 32.6 38.3 negative operating leverage (US import alerts and weak traction in
EBITDA 5.3 3.4 5.2 6.9 institutional business).
Net Profit 2.5 1.3 2.5 4.1 We expect reported PAT to improve to INR713m, with taxes at 20%
Adj. EPS (INR) 19.8 10.5 19.7 32.4 in 2QFY17.
EPS Gr. (%) -47.7 -46.9 87.2 64.3 While we believe that regulatory overhang would weigh on
BV/Sh. (INR) 175.0 181.0 197.7 225.2 valuation multiples, growth in domestic business remains healthy.
RoE (%) 12.0 5.9 10.4 15.3
We expect IPCA to clock FY16-18E EPS CAGR of 75% on the back of
RoCE (%) 10.1 5.5 9.0 13.0
15% revenue CAGR and recovery in EBITDA margin to 18%.
Payout (%) 5.9 0.0 15.0 15.0
Stock trades at 30x FY17E EPS and 19x FY18E EPS. Maintain Neutral.
Valuation
P/E (x) 26.8 50.6 27.0 16.4
P/BV (x) 3.0 2.9 2.7 2.4
EV/EBITDA (x) 17.5 15.1 11.9 11.9
Div. Yield (%) 0.2 0.0 0.6 0.9
Update on resolution of USFDA regulatory issues.
Outlook for institutional tender business.
Impact of emerging market currency weakness.

Net Revenues (Core) 7,580 7,492 6,841 6,246 8,422 8,264 8,402 7,561 28,850 32,649
YoY Change (%) -19.0 -4.0 -7.6 -0.5 11.1 10.3 22.8 21.1 -8.2 13.2
EBITDA 822 892 892 635 1,285 1,363 1,385 1,188 3,417 5,221
Margins (%) 10.8 11.9 13.0 10.2 15.3 16.5 16.5 15.7 11.8 16.0
Depreciation 421 437 448 392 422 415 450 362 1,722 1,648
Interest 55 70 91 81 65 90 76 75 316 307
Other Income 41 53 50 87 49 35 50 147 169 280
PBT before EO Expense 388 438 403 249 847 893 909 897 1,548 3,546
PBT after EO Expense 271 199 394 221 766 893 909 897 1,432 3,307
Tax 82 82 162 -156 290 180 205 385 186 1,060
Rate (%) 21.3 18.8 40.3 -62.7 34.2 20.2 22.6 42.9 12.0 29.9
Reported PAT 189 117 232 377 476 713 704 512 1,246 2,247
Adj PAT 305 356 241 405 557 713 704 512 1,362 2,486
YoY Change (%) -79.0 -42.0 -54.3 -375.5 82.5 100.3 192.6 26.4 -51.1 80.3
Margins (%) 2.5 1.6 3.4 6.0 5.6 8.6 8.4 6.8 4.3 6.9
E: MOSL Estimates
October 2016 169

Lupin
Bloomberg LPC IN CMP: INR1,494 TP:INR1,850 (+24%) Buy
We expect Lupin's (LPC) 2QFY17 revenue to grow 30% YoY to
M. Cap. (INR b)/(USD b) 669 / 10
INR43.3b, aided by buoyant performance in US generic segment
52-Week Range (INR) 2,127/1,294
(gGlumetza and gFortamet sales, consolidation of Gavis financials).
1,6,12 Rel Perf. (%) 0/-10/-37
India business is expected to exhibit 14% YoY growth to INR9.9b.

Japan sales are expected to improve 28% YoY to INR4.1b in 2QFY17,
Y/E March 2015 2016 2017E 2018E
aided by currency tailwinds.
Sales 127.7 142.1 174.6 204.9
EBITDA 36.2 37.5 47.5 56.3
Rep. PAT 24.0 22.7 29.3 36.2
EBITDA is estimated to improve 71% YoY to INR11.5b, with EBITDA
Rep.EPS (INR) 53.7 50.7 65.5 80.9 margin at 26.5%.
Adj. PAT 24.0 22.7 29.0 36.2
Adj. EPS (INR) 53.5 50.4 64.3 80.3 Reported PAT is likely to jump 69% YoY to INR6.9b, slower than
EPS Gr. (%) 38.1 -5.7 27.5 25.0 EBITDA growth, weighed down by higher interest expenses.
BV/Sh. (INR) 197.4 243.8 298.3 368.1
RoE (%) 30.4 22.9 23.7 24.1 Key growth drivers for FY17/18 will be the strong product pipeline
RoCE (%) 29.1 16.8 15.9 16.9 for the US, including higher contribution from oral contraceptives
Payout (%) 16.9 17.9 16.2 13.1 and launches in niche areas of ophthalmic and dermatology. The
Valuations stock trades at 23x FY17E and 19x FY18E EPS. Maintain Buy.
P/E (x) 30.1 31.9 25.0 20.0
P/BV (x) 8.1 6.6 5.4 4.4
Outlook on future ANDA launches and Gavis integration.
EV/EBITDA (x) 19.9 20.8 15.9 13.0
Revival in constant currency sales growth in Irom.
Div. Yield (%) 0.5 0.5 0.6 0.6
Outlook on inorganic growth initiatives.

Net Sales 31,561 33,213 35,558 41,707 44,394 43,301 42,104 44,845 142,085 174,644
YoY Change (%) -5.5 4.7 11.9 35.5 40.7 30.4 18.4 7.5 11.3 22.9
EBITDA 8,248 6,721 8,772 13,050 13,080 11,487 10,741 12,194 37,534 47,503
Margins (%) 26.1 20.2 24.7 31.3 29.5 26.5 25.5 27.2 26.4 27.2
Depreciation 1,014 1,068 1,114 1,487 2,027 2,050 2,000 2,018 4,635 8,095
Interest 70 102 92 213 320 350 350 404 446 1,424
Other Income 757 415 653 349 826 600 600 674 1,877 2,700
PBT 7,921 5,967 8,219 11,699 11,560 9,687 8,991 10,446 34,330 40,685
Tax 2,258 1,851 2,909 4,188 2,734 2,700 2,400 3,051 11,536 10,985
Rate (%) 28.5 31.0 35.4 35.8 23.7 27.9 26.7 29.2 33.6 27.0
EO Exp/(Inc) 0 0 0 0 0 0 0 0 0 0
Minority Interest -3 27 13 51 6 85 98 186 88 375
Recurring PAT 5,666 4,088 5,298 7,460 8,819 6,902 6,493 7,210 22,707 29,325
YoY Change (%) -9.3 -35.1 -11.9 36.4 55.7 68.8 22.6 -3.4 -5.5 29.1
Margins (%) 18.0 12.3 14.9 17.9 19.9 15.9 15.4 16.1 16.0 16.8
E: MOSL estimates; Quarterly nos will not add up to full year nos due to restatement of past quarters
October 2016 170

Sanofi India
Bloomberg SANL IN CMP: INR4,229 TP:INR5,250 (+24%) BUY
We expect Sanofi India's (SANL) revenue to grow 14% YoY in
3QCY16 to INR6.7b. High growth of brands like Lantus, Allegra,
52-Week Range (INR) 4,770/3,850
Amaryl M, Enterogermina, Avila, Vaxlgrip and Cardace, and new
1,6,12 Rel Perf. (%) -4/-10/-4
product launches should drive SANLs revenue growth.
EBITDA is also likely to grow 13% YoY to INR1.6b during this quarter.
We expect PAT to increase by 30% YoY to INR942m, higher than
Y/E December 2014 2015 2016E 2017E
EBITDA growth owing to lower tax expense.
Sales 19.8 21.9 24.5 27.9
EBITDA 3.4 4.6 5.5 6.4
We expect earnings growth momentum to sustain over next few
Net Profit 2.0 2.4 3.4 4.0
years, led by strong revenue CAGR of 13% over CY15-17E and
Adj. EPS (INR) 85.5 103.2 148.4 175.4 ~210bp margin expansion from current levels.
EPS Gr. (%) -17.8 20.6 43.8 18.2 The stock trades at 29x CY16E and 25x CY17E EPS. Maintain Buy.
BV/Sh. (INR) 643.7 725.2 804.0 898.2
RoE (%) 13.3 14.2 18.5 19.5
RoCE (%) 14.8 16.1 18.5 19.7
Payout (%) 46.9 41.6 46.9 46.3 Key issues to watch out
Valuations
Amortization of goodwill and brands acquired from Universal
P/E (x) 53.4 44.3 30.8 26.1
Medicare.
P/BV (x) 7.1 6.3 5.7 5.1
Clarity on nature of reversal of recently withdrawn NPPA
EV/EBITDA (x) 29.7 21.7 17.6 14.8
guidelines.
Div. Yield (%) 1.0 1.1 1.3 1.5

Net Sales 4,889 5,497 5,858 5,687 5,444 6,080 6,674 6,313 21,931 24,511
YoY Change (%) 9.9 8.7 13.8 11.1 11.4 10.6 13.9 11.0 10.9 11.8
EBITDA 829 1,214 1,419 1,129 1,291 1,458 1,605 1,183 4,591 5,536
Margins (%) 17.0 22.1 24.2 19.9 23.7 24.0 24.0 18.7 20.9 22.6
Depreciation 259 284 290 296 301 300 312 283 1,129 1,196
Interest 1 1 1 1 1 7 1 -5 4 4
Other Income 194 99 94 126 256 164 150 118 514 688
PBT before EO Items 763 1,028 1,222 958 1,245 1,315 1,442 1,023 3,972 5,025
Extra-Ord Expense -161 0 0 -677 0 0 0 0 -838 0
PBT after EO Items 924 1,028 1,222 1,635 1,245 1,315 1,442 1,023 4,810 5,025
Tax 279 386 497 433 439 462 500 207 1,595 1,608
Effective tax Rate (%) 30.2 37.5 40.7 26.5 35.3 35.1 34.7 20.2 33.2 32.0
Reported PAT 645 642 725 1,202 806 853 942 816 3,215 3,417
Adj PAT 484 642 725 704 806 853 942 816 2,377 3,417
YoY Change (%) -6.4 11.7 16.9 171.9 66.5 32.9 29.9 15.9 20.6 43.7
Margins (%) 9.9 11.7 12.4 12.4 14.8 14.0 14.1 12.9 10.8 13.9
E: MOSL Estimates
October 2016 171

Sun Pharma
Bloomberg SUNP IN CMP: INR758 TP:INR925 (+22%) Buy
Sun Pharmaceuticals (SUNP) is likely to register 14% YoY growth in
M. Cap. (INR b)/(USD b) 1,823 / 27
revenues, primarily driven by limited-competition gGleevec sales,
coupled with the launch of gGlumetza in 2QFY17.
1,6,12 Rel Perf. (%) -2/-19/-23
India business is expected to grow 13.5% YoY to INR20.7b, while the
US business is likely to report 12% YoY jump in revenues with
Y/E March 2015 2016 2017E 2018E
USD55m of gGleevec sales during this quarter.
Sales 272.9 277.4 309.3 332.5
We expect margins to improve to 31.5% in 2QFY17 from 28.3% in
EBITDA 77.2 79.6 94.3 114.6
2QFY16. Overall EBITDA is expected to grow 27% YoY to INR24.6b
Rep. PAT 47.4 47.1 71.0 92.7
over a low base.
Rep.EPS (INR) 19.7 19.6 29.5 38.5
Adj. PAT 47.4 47.1 63.3 92.7
We expect total reported PAT at INR17.0b, compared to INR11.1b
Core EPS (INR) 19.7 19.6 26.3 38.5
in 2QFY16 and INR15.9b in 1QFY17.
EPS Gr. (%) 50.8 -0.7 50.9 30.6 We believe SUNP is an attractive Indian play on specialty business in
BV/Sh. (INR) 106.5 130.5 142.4 174.0 the US. We maintain our Buy rating, in light of its multiple earnings
RoE (%) 21.5 16.5 19.3 24.4 triggers (MK-3222, RBXY integration benefits and specialty product
RoCE (%) 22.7 18.7 21.5 24.8 pipeline), superior execution track record, high RoIC (30%) and
Payout (%) 21.8 0.0 21.1 16.3 cash-rich balance sheet (net cash of USD850m). The stock trades at
Valuations 28x FY17E and 20x FY18E EPS.
P/E (x) 39.1 39.4 29.3 20.0
P/BV (x) 7.2 5.9 5.4 4.4
Div. Yield (%) 0.6 0.0 0.8 0.8 Update on resolution of USFDA warning letter on Halol.
Turnaround of Ranbaxys business.
Outlook on competitive landscape for Taros products.

(INR Million) 1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE
Net Revenues 67,615 68,376 70,821 76,342 82,430 78,002 80,568 77,792 282,697 318,792
YoY Change (%) 6.6 -14.9 2.2 24.0 21.9 14.1 13.8 1.9 3.0 12.8
EBITDA 17,678 19,337 21,690 25,203 29,210 24,603 25,081 24,899 84,816 103,793
Margins (%) 26.1 28.3 30.6 33.0 35.4 31.5 31.1 32.0 30.0 32.6
Depreciation 2,402 2,711 2,508 2,643 3,160 3,150 3,100 3,191 10,135 12,600
Net Other Income 296 430 1,022 -1,235 225 200 600 -225 -177 800
PBT before EO Exp 15,573 17,055 20,205 21,325 26,275 21,653 22,581 21,484 74,505 91,993
EO Exp/(Inc) 6,852 0 0 0 0 0 0 0 6,852 0
PBT 8,721 17,055 20,205 21,325 26,275 21,653 22,581 21,484 67,653 91,993
Tax 1,128 3,355 2,020 1,706 3,527 3,000 2,800 2,632 9,349 11,959
Rate (%) 7.2 19.7 10.0 8.0 13.4 13.9 12.4 12.3 12.5 13.0
PAT (pre Minority Interest) 7,593 13,700 18,185 19,619 22,748 18,653 19,781 18,852 58,304 80,034
Minority Interest 2,034 2,633 4,019 2,482 2,411 2,750 2,750 1,089 11,145 9,000
Reported PAT 5,559 11,067 14,166 17,137 20,337 15,903 17,031 17,763 47,159 71,034
YoY Change (%) -53.9 -46.0 258.3 93.0 265.8 43.7 20.2 3.7 3.9 50.6
Margins (%) 8.2 16.2 20.0 22.4 24.7 20.4 21.1 22.8 16.7 22.3
E: MOSL Estimates; * Quarterly no. dont match with annual no. because of reinstatement of financials
October 2016 172

Torrent Pharmaceuticals
Bloomberg TRP IN CMP: INR1,662 TP:INR1,700 (+2%) Buy
We expect Torrent Pharmaceuticals (TRP) to post 21.6% YoY decline
M. Cap. (INR b)/(USD b) 281 / 4
in 2QFY17 reported sales to INR15.3b. US business is expected to
52-Week Range (INR) 1,768/1,190
decline 46% YoY owing to lower contribution from gAbilify, while
1,6,12 Rel Perf. (%) 4/10/4
India business is expected to witness 15% YoY growth with
successful integration of Elders portfolio.
Y/E March 2015 2016 2017E 2018E
Reported EBITDA is likely to decline 43% YoY to INR4.1b, with
Sales 46.5 66.8 63.3 72.8
EBITDA 10.2 27.2 17.4 20.4
EBITDA margin contracting 1540bp YoY, primarily on account of
Net Profit 5.7 10.0 11.3 13.9
lower gAbilify sales in 2QFY17 numbers.
Adj. EPS (INR) 33.4 59.3 67.1 85.0
EPS Gr. (%) 4.9 77.5 13.2 26.8 We expect reported PAT to decrease 45% YoY to INR2.5b, in line
BV/Sh. (INR) 147.2 200.3 243.8 299.0 with operational performance.
RoE (%) 25.7 34.1 30.2 30.3
RoCE (%) 22.2 39.0 23.5 25.9 We expect core earnings (excluding one-offs) trajectory to remain
Payout (%) 29.7 28.7 36.2 36.3 strong (forecast 20% CAGR over FY16-18E) as we think margin
Valuation upside in domestic portfolio is still not fully reflected. The stock
P/E (x) 42.2 23.8 21.0 16.6 trades at 24.5x FY17E and 19x FY18E EPS, which is at 20% premium
P/BV (x) 9.6 7.0 5.8 4.7 over its last five-year average valuations. Maintain Buy.
EV/EBITDA (x) 25.3 9.2 14.6 12.0
Div. Yield (%) 0.8 1.8 1.4 1.8 Key issues to watch out
Contribution of Elder Pharma portfolio and growth strategy.
Performance of Brazilian operations amid market pressure.
Outlook on future ANDA launches

Net Revenues 19,470 16,910 15,390 14,990 15,070 15,268 15,171 16,262 66,760 63,291
YoY Change (%) 74.8 38.9 31.8 29.9 -22.6 -21.6 -10.3 5.7 43.5 -5.2
EBITDA 9,090 7,140 6,130 4,840 4,370 4,092 4,081 3,691 27,200 17,373
Margins (%) 46.7 42.2 39.8 32.3 29.0 26.8 26.9 22.7 40.7 27.5
Depreciation 590 610 610 650 680 700 715 661 2,460 2,756
Interest 580 480 420 380 490 450 450 443 1,860 1,833
Other Income 670 740 510 240 260 300 425 415 2,160 1,400
PBT before EO Expense 8,590 6,790 5,610 4,050 3,460 3,242 3,341 3,001 25,040 14,184
Extra-Ord Expense 0 -530 1,930 0 0 0 0 0 -530 0
Tax 4,100 1,640 200 480 540 750 850 697 6,420 2,837
Rate (%) 47.7 24.2 3.6 11.9 15.6 23.1 25.4 23.2 25.6 20.0
Reported PAT 4,490 5,680 3,480 3,570 2,920 2,492 2,491 2,304 19,150 11,347
YoY Change (%) 75.4 186.9 108.4 174.6 -35.0 -44.5 -56.1 -33.8 155.0 -40.7
Margins (%) 23.1 33.6 22.6 23.8 19.4 16.3 16.4 14.2 28.7 17.9
E: MOSL Estimates; Consolidation of Elder Pharma brands from 2QFY15
October 2016 173

Media
Company name Ad growth to normalize for Broadcasters, to lag for Print

Earnings to improve for Broadcasters, remain mixed for Pay TV and Print
D B Corp
Expect 10% ad revenue growth: We expect ~10% YoY ad revenue growth for our
Media universe, marginally lower than the 10-14% YoY in the preceding four
Dish TV India
quarters. ZEE is likely to continue its strong ad performance for the sixth consecutive
Hathway Cable & Datacom
quarter, though the growth rate is expected to moderate due to high base effect
&TV performance is now in the base. We expect stable performance from its
HT Media flagship channel, Zee TV and from &TV. Largely stable FMCG spends coupled with
renewed spending by other sectors such as Auto, Telecom and Mobile Handsets
Jagran Prakashan should aid ad growth. Our industry interactions indicate that ad growth, which was
in recovery mode for most of FY16, should pick up in 2HFY17.
PVR
Aggregate earnings to grow ~10% YoY: Aggregate Media sector earnings are
expected to improve (up 10% YoY), primarily led by Broadcasters. SUNTVs ad
Siti Networks
growth (7%) is expected to improve post a dismal 1Q. Among the Print companies,
Sun TV
DB Corp is expected to see strong earnings growth, as ad growth is expected to
remain strong in 2Q, despite a weak print ad outlook for 2Q. Ad revival post a dismal
Zee Entertainment FY16 should translate into earnings growth of ~23% YoY. Jagran is likely to see
earnings growth of ~10% YoY. HMVLs earnings would decline 8% YoY. HT Medias
profitability would be affected by continuing de-growth in the English segment
coupled with higher interest outgo related to new radio licenses. We expect ZEE and
SUNTVs earnings to grow 18% and 16%, respectively. Pay TV operators (HATH and
SCNL) are likely to report lower losses on a QoQ basis.
Expect monetization to improve in 2H for Pay TV operators; increased activity

toward phase-III seeding: We expect monetization for Pay TV operators to improve
only once the impending stay orders on DAS III implementation are lifted. This
should drive increased MSO share in digital cable revenuethe key to improve
economics of MSOs as well as pricing for broadcasters and DTH operators. However,
with phase I/II monetization remaining subpar as of now, we expect MSOs to be
relatively more cautious in phase-III markets. Phase-III digitization is expected to
gain steam by 3QY17. We expect subscriber additions to taper down QoQ for Dish
TV due to seasonality. We model 0.67m gross additions and 0.36m net additions
for Dish TV during the quarter compared with an estimated 0.7m gross additions
and 0.41m net additions in 1QFY17.
Digitization upside, ad growth revival key themes: Subscriber-level ARPU increases

in phase I/II markets and phase-III digitization are key growth triggers. MSOs are
likely to witness profitability improvement, as they continue to drive monetization
efforts in phase I/II. With expected improvement in GDP growth and stable-to-
marginally increasing raw material prices, gross margins of advertisers (FMCG and
Auto companies among others) are likely to be healthy. This coupled with renewed
spends by Telecom in 2H, should keep ad growth healthy. Broadcasters as well as
Print companies would benefit.
Jay Gandhi (Jay.Gandhi@MotilalOswal.com); +91 22 3089 6693
Aliasgar Shakir (Aliasgar.shakir@MotilalOswal.com); +91 22 3010 2415
October 2016 174
September 2016 Results Preview | Sector: Media
Exhibit 62: Media coverage: Quarterly snapshot

2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17E YoY (%) QoQ (%)
Advertisement Revenue (INR b)
ZEEL 6.3 7.4 6.7 7.8 8.4 9.4 8.6 9.1 9.8 16 7
Sun TV 2.9 3.2 3.3 3.5 3.3 3.3 3.1 3.4 3.5 7 4
Dish TV NM NM NM NM NM NM NM NM NM NM NM
DB Corp 3.3 3.9 3.2 3.1 3.1 3.91 3.2 3.7 3.6 16 -4
Jagran Prakashan 3.1 3.4 2.9 3.3 3.2 3.7 3.3 3.5 3.5 8 -1
Hathway cable and Datacom NM NM NM NM NM NM NM NM NM NM NM
HT Media 4.2 4.7 4.4 4.4 4.5 5.1 4.4 4.5 4.4 -2 -3
HMVL 1.4 1.5 1.5 1.7 1.7 1.8 1.7 1.8 1.8 5 -1
Subscription Revenue (INR b)
ZEEL 4.2 4.5 5.1 4.6 4.8 5.2 5.9 5.3 5.4 13 3
Sun TV 2.1 2.3 2.3 2.3 2.3 2.4 2.5 2.7 2.8 18 2
Dish TV 6.2 6.6 6.8 6.8 6.9 7.1 7.4 7.3 7.5 8 3
DB Corp 0.9 1.0 1.0 1.0 1.1 1.1 1.1 1.2 1.2 15 3
Jagran Prakashan 1.0 1.0 1.0 1.0 1.0 1.0 1.1 1.1 1.1 7 0
Hathway Cable and Datacom 1.1 1.0 1.2 0.9 1.1 1.1 1.2 1.1 1.1 5 5
HT Media 0.7 0.7 0.7 0.7 0.8 0.8 0.8 0.8 0.8 4 2
HMVL 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.6 0.6 5 0
Total Revenue (INR b)
ZEEL 11.2 13.6 13.5 13.4 13.8 16.0 15.3 15.7 16.5 19 5
Sun TV 5.1 5.5 5.5 6.9 5.7 5.7 5.7 7.6 6.4 12 -16
Dish TV 6.7 7.1 7.5 7.4 7.5 7.7 8.0 7.8 8.1 7 3
DB Corp 4.8 5.5 4.9 4.7 4.8 5.9 5.1 5.7 5.5 16 -3
Hathway cable and Datacom 2.6 2.4 2.7 2.6 2.7 3.0 3.4 3.0 3.2 17 6
HT Media 5.6 6.1 5.8 5.9 6.0 6.8 6.3 6.1 6.1 2 0
HMVL 2.0 2.1 2.0 2.2 2.3 2.4 2.3 2.4 2.4 5 -1
EBITDA (INR b)
ZEEL 3.2 3.5 2.7 3.1 3.5 4.3 4.1 4.5 4.6 30 2
Sun TV 4.0 4.3 4.2 4.1 4.3 4.4 4.3 4.4 4.9 12 11
Dish TV 1.6 1.9 2.2 2.4 2.6 2.7 2.6 2.6 2.9 14 10
DB Corp 1.2 1.8 1.2 1.2 1.1 1.87 1.1 1.8 1.4 22 -24
Hathway cable and Datacom 0.4 0.2 0.3 0.4 0.3 0.5 0.8 0.4 0.5 45 12
HT Media 0.7 0.9 0.5 0.6 0.6 1.2 0.7 0.6 0.6 -8 -10
HMVL 0.4 0.4 0.4 0.5 0.5 0.6 0.5 0.6 0.5 -9 -17
EBITDA Margin (%)
ZEEL 28.7 25.9 20.1 23.2 25.6 27.0 27.0 28.8 28.0 235bps -88bps
Sun TV 77.8 77.5 77.2 59.2 76.1 76.7 74.7 57.4 76.4 32bps 1904bps
Dish TV 24.1 26.8 29.4 32.1 33.9 34.4 32.6 34.0 36.2 226bps 217bps
DB Corp 25.7 33.3 24.6 25.7 23.6 31.9 22.2 31.8 24.9 131bps -689bps
Jagran Prakashan 24.4 28.2 24.8 28.0 28.0 29.9 25.6 27.7 26.9 -107bps -82bps
Hathway cable and Datacom 15.2 10.3 11.5 15.9 12.5 16.6 23.5 14.7 15.5 301bps 74bps
HT Media 12.8 14.2 8.4 9.7 10.4 17.4 11.1 10.5 9.4 -102bps -106bps
HMVL 19.5 19.4 22.0 24.4 22.9 25.0 22.5 23.8 19.9 -304bps -391bps
Adj. PAT (INR b) 6.69 11.62 6.97 4 -40
ZEEL 2.28 3.09 2.31 2.44 2.81 2.75 2.61 2.17 3.32 18 53
Sun TV 1.54 2.14 2.03 1.97 2.18 2.16 2.36 2.33 2.54 16 9
Dish TV -0.15 -0.03 0.35 0.54 0.87 0.68 4.83 0.41 0.72 -18 75
DB Corp 0.68 1.05 0.64 0.66 0.60 1.07 0.64 1.04 0.74 23 -29
Hathway cable and Datacom -0.4 -0.6 -0.8 -0.4 -0.5 -0.3 -0.5 -0.5 -0.5 -4 -11
HT Media 0.44 0.67 0.39 0.25 0.36 0.69 0.38 0.22 0.23 -38 1
HMVL 0.31 0.37 0.39 0.42 0.45 0.47 0.47 0.49 0.41 -8 -15
October 2016 175

Exhibit 63: 2QFY17 ad revenue growth (YoY, %)
16
16
8
7
5
-2
ZEEL HMVL Jagran HT Media Sun TV DB Corp

Exhibit 64: 2QFY17 subscription/circulation growth (YoY, %)
18
15
13
8
7
4
DB Corp Sun TV Dish TV HT Media JAGP ZEEL

Exhibit 65: Media universe quarterly PAT (INR b)
11.6
8.4 8.3
7.4 7.5 7.0
6.7
5.8 5.9 5.6 5.3 5.8
4.9 5.0 4.9
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17E

Exhibit 66: Newsprint prices moderating
Newsprint price - INR (RHS) Newsprint price - USD 800

43,000
36,000 650
29,000 500
22,000 350
15,000 200
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-08
Dec-08
Mar-09
Sep-09
Dec-09
Mar-10
Sep-10
Dec-10
Mar-11
Sep-11
Dec-11
Mar-12
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
October 2016 176


Media
D B Corp 396 Buy 5,523 15.5 -3.2 1,374 21.9 -24.2 738 22.8 -29.1
Dish TV 97 Buy 8,051 7.0 3.4 2,911 14.1 10.0 715 -17.8 75.0
Hathway Cable 31 Buy 3,177 15.9 5.2 487 42.6 9.5 -480 Loss Loss
HT Media 84 Neutral 6,129 1.9 -0.3 576 -8.0 -10.4 227 -37.7 1.3
Jagran Prakashan 191 Buy 5,542 9.4 -0.7 1,490 5.3 -3.6 777 -9.6 -7.5
PVR 1,236 Buy 5,316 12.0 -6.8 930 2.7 -20.3 270 -34.3 -39.2
Siti Networks 35 Buy 2,720 16.1 -3.5 425 -0.7 0.1 -341 Loss Loss
Sun TV 530 Not Rated 6,428 13.2 -15.5 4,911 13.6 12.5 2,568 17.6 10.2
Zee Entertainment 579 Buy 16,521 19.3 5.1 4,618 30.3 1.9 3,321 18.4 53.1
Sector Aggregate 59,407 12.6 -1.1 17,723 16.1 0.8 7,795 6.4 22.0
Source: MOSL
Exhibit 68: Relative Performance-3m (%) Exhibit 69: Relative Performance-1 Yr (%)
Sensex Index MOSL Media Index Sensex Index MOSL Media Index
120 120
115 110
110
100
105
90
100
95 80
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
Jul-16
Jun-16
Aug-16
Sep-16
Exhibit 70: Comparative valuations

Media
D B Corp 396 Buy 16.2 21.8 25.8 24.4 18.2 15.3 10.6 9.9 8.4 22.6 27.8 29.0
Den Networks 75 Neutral -11.0 1.1 8.2 -6.8 66.5 9.1 15.9 5.9 3.0 -11.1 1.2 8.3
Dish TV 97 Buy 6.5 2.6 3.9 14.9 37.0 24.6 9.9 9.3 7.4 NM NA 48.3
Hathway Cable 31 Buy -1.9 -0.8 2.4 -16.5 -38.6 13.1 13.2 7.9 4.5 -11.3 -5.2 14.3
Hindustan Media 288 Buy 24.6 26.6 29.9 11.7 10.8 9.6 5.6 5.6 4.3 21.9 19.4 18.1
HT Media 84 Neutral 7.3 5.9 7.4 11.5 14.2 11.4 3.5 3.5 2.3 7.7 5.7 6.6
Jagran Prakashan 191 Buy 10.5 11.3 13.1 18.2 17.0 14.6 9.1 9.4 8.2 24.7 21.5 21.6
PVR 1,236 Buy 25.5 27.1 43.5 48.4 45.6 28.4 11.5 16.3 12.2 18.7 13.7 18.8
Siti Networks 35 Buy 0.0 0.5 4.0 - 74.8 8.7 11.9 7.6 3.2 0.1 4.8 29.4
Sun TV 530 Not Rated 21.1 26.1 30.6 25.1 20.3 17.3 7.9 9.9 8.4 23.4 26.2 27.9
Zee Entertainment 579 Buy 10.6 14.6 19.7 54.7 39.7 29.4 23.6 26.2 19.7 27.3 30.4 32.8
Source: MOSL
October 2016 177

D B Corp
Bloomberg DBCL IN CMP: INR396 TP: INR465 (+17%) Buy
Equity Shares (m) 183.4 We expect ad growth to remain strong, courtesy the low base of
M. Cap. (INR b)/(USD b) 73 / 1 2QFY16 and as the impact on business due to pricing renegotiations
52-Week Range (INR) 439/287 last year is now behind. Any incremental pick-up in ad volumes
1,6,12 Rel Perf. (%) -2/16/15 would come at higher ad yields.
We expect print ad revenue to grow 16% YoY to INR3.57b.
Circulation revenue would grow 15% YoY to INR1.21b.
Y/E MARCH 2015 2016 2017E 2018E
Net Sales 20.1 20.5 23.8 26.7 Aggregate revenue is likely to grow 16% YoY to INR5.5b, as all major
EBITDA 5.7 5.4 7.1 8.1 revenue lines (print ad, circulation and radio) gain steam.
Adj. Net Profit 3.2 3.0 4.0 4.7 Raw material costs are expected to increase on rising newsprint
Adj. EPS (INR) 17.5 16.2 21.8 25.8 costs and higher newsprint consumption, led by recent district and
Adj. EPS Gr. (%) 10.0 -7.4 34.3 18.6 main edition launches in Bihar. However, EBITDA margin is likely to
BV/Sh (INR) 70.2 73.3 83.1 94.7 improve, as revenue growth outpaces opex escalation. We expect
RoE (%) 26.4 22.6 27.8 29.0 EBITDA margin to expand ~130bp YoY to ~25%.
RoCE (%) 22.7 20.0 24.8 26.2 Startup losses related to the Bihar footprint expansion are expected
Div. Payout (%) 53.9 81.5 55.0 55.0 to continue and remain at 1Q levels.
Valuations
Net profit is likely to grow 23% YoY to INR0.74b.
P/E (x) 22.6 24.4 18.2 15.3
P/BV (x) 5.6 5.4 4.8 4.2
The stock trades at 18.2x FY17E and 15.3x FY18E EPS. Buy.
EV/EBITDA (x) 12.7 13.6 10.0 8.5
Div. Yield (%) 2.0 2.8 2.5 3.0 Key things to watch for
YoY ad growth (we expect 16%).
EBITDA margin (we expect 25%).

Sales 4,734 4,781 5,859 5,143 5,704 5,523 6,733 5,868 20,516 23,828
YoY (%) -3.2 -0.4 5.6 5.9 20.5 15.5 14.9 14.1 1.9 16.1
EBITDA 1,218 1,127 1,868 1,142 1,812 1,374 2,343 1,574 5,355 7,103
YoY (%) -9.5 -8.7 1.2 -4.4 48.7 21.9 25.4 37.9 -5.6 32.6
EBITDA margin (%) 25.7 23.6 31.9 22.2 31.8 24.9 34.8 26.8 26.1 29.8
Depreciation 208 215 233 222 211 245 264 249 878 969
Interest 21 27 19 24 34 20 20 17 92 91
Other Income 68 53 37 122 41 43 50 55 281 189
PBT 1,057 938 1,654 1,017 1,608 1,152 2,108 1,363 4,666 6,232
Tax 393 337 585 375 568 415 759 491 1,690 2,234
PAT 665 601 1,068 642 1,040 738 1,349 872 2,976 3,999
Adj PAT 665 601 1,068 642 1,040 738 1,349 872 2,976 3,999
YoY (%) -16.0 -11.8 1.6 0.4 56.5 22.8 26.3 35.7 -7.3 34.4
Revenue break-up
Ad revenue (print) 3,107 3,079 3,912 3,184 3,734 3,572 4,499 3,627 13,282 15,432
Circulation revenue 1022 1057 1141 1136 1176 1216 1324 1318 4,356 5,033
Radio 215 240 323 298 281 281 371 337 1,076 1,271
Others 375 387 461 507 513 455 539 586 1,730 2,001
Total revenue 4,734 4,781 5,859 5,143 5,704 5,523 6,733 5,868 20,516 23,828
October 2016 178

Dish TV India
Bloomberg DITV IN CMP: INR97 TP: INR120 (+24%) Buy
We expect DITVs revenue to increase 7% YoY and 4% QoQ on a
M. Cap. (INR b)/(USD b) 103 / 2
reported basis to INR8.05b. (Since 1Q, DITV has started netting off
entertainment tax with subscription revenue; hence, YoY numbers
1,6,12 Rel Perf. (%) 3/2/-16
are not comparable).
Subscription revenue is likely to grow 3% QoQ to INR7.51b.
Y/E March 2015 2016 2017E 2018E
Net Sales 27.8 30.6 33.1 37.6
We expect gross additions of 0. 67m and net additions of 0.36m.
EBITDA 7.4 10.2 11.6 13.8
Adj. NP 0.0 6.9 2.8 4.2
Adj. EPS (INR) 0.0 6.5 2.6 3.9
EBITDA margin is expected to expand 200bp QoQ to 36.2%.
Adj. EPS Gr.(%) NA NA -59.7 50.4
BV/Sh (INR) -2.9 3.6 6.2 10.1 We expect net profit of INR0.71m in 2QFY17.
RoE (%) NA NA NA NA
RoCE (%) 9.9 60.2 22.1 26.2 The stock trades at an EV of 9.2x FY17E and 7.2x FY18E EBITDA. Buy.
Div. Payout(%) NA NA NA NA
Valuations
P/E (x) NM 15 37 25
P/BV (x) NA NA 15.7 9.6 Key things to watch for
EV/EBITDA (x) 15.4 10.8 9.2 7.2 Quarterly gross additions (we expect 0.67m).
EV/Sub (INR) 8,730 7,646 6,562 5,632 ARPU (we expect INR166).
EBIDTA margin (we expect 36.2%)
Sales 7,367 7,524 7,715 7,994 7,786 8,051 8,425 8,837 30,599 33,098
YoY Change (%) 15.0 11.9 8.1 5.9 5.7 7.0 9.2 10.5 10.0 8.2
Operating expenses 4,998 4,974 5,060 5,385 5,140 5,140 5,471 5,712 20,350 21,461
EBITDA 2,368 2,550 2,655 2,609 2,646 2,911 2,954 3,125 10,249 11,636
YoY Change (%) 50.8 57.1 38.8 17.6 11.7 14.1 11.3 19.8 39.4 13.5
EBITDA margin (%) 32.1 33.9 34.4 32.6 34.0 36.2 35.1 35.4 33.5 35.2
Depreciation 1,598 1,330 1,463 1,516 1,613 1,629 1,661 1,679 5,907 6,581
Interest 480 548 549 512 521 482 434 389 2,087 1,826
Other Income 252 197 42 218 119 150 150 151 640 570
PBT 542 870 686 799 631 950 1,009 1,208 2,895 3,799
Tax -4,029 223 235 250 299 -4,029 1,007
Effective Tax Rate (%) (504.2) 35.3 24.8 24.8 24.8 26.5
Net profit 542 870 686 4,828 409 715 759 909 6,924 2,793
Net Subs (m) 13.3 13.7 14.0 14.5 14.9 15.3 15.8 16.2 14.5 16.2
ARPU (INR/month) 173 171 172 174 165 166 168 170 172 167
October 2016 179

Hathway Cable
Bloomberg HATH IN CMP: INR31 TP: INR50 (+61%) Buy
We expect standalone revenue to grow 6% QoQ to INR3.2b.
Cable subscription revenue is expected to grow 5% QoQ to
1,6,12 Rel Perf. (%) 15/-30/-22
INR1.13b.
EBITDA would grow 12% QoQ to INR496m on overall basis and 15%
Y/E March 2015 2016 2017E 2018E
QoQ on an ex-activation basis to INR296m. EBITDA margin would
Net Sales 18.3 20.8 25.0 31.5
expand 80bp QoQ to ~15.5%. On an ex-activation basis, EBITDA
EBITDA 2.6 3.9 5.7 9.3
EBITDA #
margin would be largely flat QoQ at 9%.
1.7 1.6 3.9 8.7
Adj. NP -2.3 -1.6 -0.7 2.1
Adj. EPS (INR) -2.9 -1.9 -0.9 2.5 Net loss is expected to reduce from INR0.53b in 1QFY17 to
Adj. EPS Gr. (%) NA NA NA NA INR0.47b in 2QFY17.
BV/Sh (INR) 18.3 16.3 15.2 18.3
RoE (%) -17.4 -11.2 -5.5 14.9 The stock trades at attributable EV/EBITDA (ex-activation) of 13.4x
RoCE (%) -3.4 -2.6 1.3 16.1 FY17E and 5.6x FY18E. Maintain Buy.
Valuations
P/E (x) -11.6 -17.6 -38.6 13.4
EV/EBITDA (x)* 18.9 14.5 9.2 5.3 Key things to watch for
EV/EBITDA (x)*# 28.9 34.9 13.4 5.6 Cable subscription revenue growth (we expect 5% QoQ).
EV/Sub (INR)* 4,139 4,569 4,245 3,956 EBITDA margin (we expect 15.5%).
* Based on attributable EBITDA and subs post EBITDA margin ex-activation (we expect 9%).
minority stake; # (ex-activation)

Sales 2,587 2,740 3,004 3,399 3,021 3,207 3,521 3,848 11,731 13,597
YoY Change (%) 3.4 4.0 25.6 25.9 16.8 17.0 17.2 13.2 14.7 15.9
EBITDA 411 342 498 798 445 496 690 888 2,048 2,519
YoY Change (%) -6.3 -14.8 102.5 157.4 8.3 45.3 38.6 11.4 46.8 23.0
EBITDA margin (%) 15.9 12.5 16.6 23.5 14.7 15.5 19.6 23.1 17.5 18.5
Depreciation 592 615 637 701 704 711 718 725 2,545 2,857
Interest 214 235 225 230 298 308 319 330 904 1,254
Other Income 45 26 28 17 51 51 52 53 116 207
PBT -349 -483 -336 -116 -505 -471 -295 -114 -1,285 -1,385
Adjusted net profit -349 -483 -336 -116 -505 -471 -295 -114 -1,285 -1,385
YoY Change (%) NA NA NA NA NA NA NA NA -28.3 7.8
Forex and exceptional items 24 6 -10 343 27 0 0 0 364 27
Reported PAT -374 -489 -326 -459 -532 -471 -295 -114 -1,648 -1,412
October 2016 180

HT Media
Bloomberg HTML IN CMP: INR84 TP: INR90 (+7%) Neutral
Equity Shares (m) 232.8 We expect revenue to grow 2% YoY to INR6.13b.
Print ad revenue would decline 2% YoY to INR4.38b, as English ad
revenues continue to languish. Hindi revenue growth too is
1,6,12 Rel Perf. (%) 0/-4/-8
expected to moderate, as print industry ad growth overall has
remained weak in 2Q. We have factored in a de-growth of 6% YoY in
Financial Snapshot (INR Billion) English ad revenue (INR2.62b) and 5% growth in Hindi ad revenue
Y/E MARCH 2015 2016 2017E 2018E (INR1.76b).
Net Sales 22.9 25.0 26.8 29.5
Radio ad revenue is expected to grow 30% YoY to INR381m.
EBITDA 2.8 3.1 3.0 3.5
Adj. NP 1.8 1.7 1.3 1.7
We expect circulation revenue to increase 4% YoY to INR0.79b.
Adj. EPS (INR) 8.7 7.3 5.7 7.2 EBITDA margin is likely to decline by ~100bp YoY to 9.4%.
Adj. EPS Gr. (%) 17.4 -16.2 -22.2 27.1 Adjusted net profit would decline YoY to INR0.22b, primarily led by
BV/Sh (INR) 90.0 99.2 106.7 115.9 higher interest outgo related to new radio licenses.
RoE (%) 10.1 7.7 5.5 6.5
The stock trades at 14.8x FY17E and 11.6x FY18E EPS. Neutral.
RoCE (%) 10.7 8.7 7.1 7.9
Div. Payout (%) 4.9 4.3 4.3 4.3 Key things to watch for
Valuations YoY English ad growth (we expect 6% YoY de-growth).
P/E (x) 9.6 11.5 14.8 11.6 Hindi ad growth (we expect 5% YoY growth).
P/BV (x) 0.9 0.8 0.8 0.7 EBITDA margin (we expect 9.4%).
EV/EBITDA (x)* 4.0 5.5 5.2 3.8
Div. Yield (%) 0.5 0.4 0.3 0.4
* Proportionate
(Consolidated)
Revenue 5,872 6,016 6,811 6,310 6,147 6,129 7,549 7,002 25,008 26,826
YoY (%) 7.5 7.2 12.5 9.4 4.7 1.9 10.8 11.0 9.2 7.3
EBITDA 568 627 1,186 697 643 576 902 878 3,079 2,999
YoY (%) -8.3 -13.0 37.7 44.4 13.1 -8.0 -24.0 26.0 14.7 -2.6
EBITDA margin (%) 9.7 10.4 17.4 11.1 10.5 9.4 12.0 12.5 12.3 11.2
Depreciation 228 272 247 271 295 319 347 379 1,018 1,340
Interest 94 125 209 202 247 245 242 242 630 975
Other Income 281 456 271 535 478 447 440 440 1,543 1,804
Extra-ordinary exps 0 0 0 0 0 0 0 0 0 0
PBT 527 686 1,001 759 579 459 753 698 2,973 2,489
Tax 171 206 193 263 186 122 201 187 832 697
PAT 356 480 809 497 392 337 552 511 2,142 1,792
Reported PAT 249 364 688 376 224 227 442 411 1,678 1,304
Adj PAT 249 364 688 376 224 227 442 411 1,678 1,304
YoY (%) -23.8 -17.0 -11.7 -4.2 -10.1 -37.7 -35.8 9.3 -6.7 -22.3
October 2016 181

Jagran Prakashan
Bloomberg JAGP IN CMP: INR191 TP: INR225 (+18%) Buy
Equity Shares (m) 326.9 We expect advertising revenue to grow 8% YoY to INR4.04b.
52-Week Range (INR) 213/138 Advertising revenue (ex-Radio) is expected to grow 8% to INR3.46b.
1,6,12 Rel Perf. (%) -1/9/27 We expect circulation revenue to grow 7% YoY to INR1.07b.
Financial Snapshot (INR Billion) Radio revenue and EBITDA would be INR0.59b and INR0.19b,
Y/E March 2015 2016 2017E 2018E respectively. Aggregate revenue would grow ~9% to INR5.54b.
Net Sales 17.7 21.1 23.5 26.0
EBITDA 4.5 6.0 6.6 7.4 We estimate EBITDA at INR1.49b and EBITDA margin at 26.9%.
Adj. NP 2.3 3.4 3.7 4.2
Adj. EPS (INR) 7.2 10.5 11.3 13.1 Adjusted earnings would grow 10% YoY to INR0.78b.
Adj.EPS Gr (%) 12.8 44.6 7.5 15.9
BV/Sh (INR) 36.1 49.3 55.9 64.9
The stock trades at 17.3x FY17E and 14.9x FY18E EPS. Buy.
RoE (%) 21.7 24.7 21.5 21.6
RoCE (%) 20.3 24.8 17.2 17.4
Div. Payout 57.0 40.5 36.4 31.4
(%)
Valuations
P/E (x) 26.8 18.6 17.3 14.9
Key things to watch for
P/BV (x) 5.4 3.9 3.5 3.0
EV/EBITDA (x) 13.7 10.9 9.5 8.3
Div. Yield (%) 1.8 1.8 1.8 1.8
YoY ad growth ex-Radio City (we expect ~8%).
EBITDA margin (we expect 26.9%).
(INR Million)
Sales 4,750 5,064 5,764 5,295 5,580 5,542 6,336 6,070 21,065 23,528
YoY (%) 7.9 16.1 22.5 25.3 17.5 9.4 9.9 14.6
EBITDA 1,341 1,416 1,721 1,358 1,546 1,490 1,839 1,749 5,896 6,624
YoY (%) 25.3 33.2 29.9 29.5 15.3 5.3 6.9 28.8 30.9 12.4
EBITDA margin (%) 28.2 28.0 29.9 25.6 27.7 26.9 29.0 28.8 28.0 28.2
Depreciation 231 287 284 242 244 318 315 268 1,044 1,146
Interest 186 81 172 143 139 111 89 70 523 408
Other Income 195 -6 64 148 89 80 72 65 345 305
Exceptional item 51 -145 0 0 0 0 0 0 -95 0
PBT 1,068 1,186 1,329 1,120 1,252 1,141 1,507 1,476 4,769 5,375
Tax 348 327 396 319 407 363 480 470 1,390 1,720
Reported net profit 721 859 933 802 840 777 1,027 1,006 3,378 3,655
YoY (%) 30.8 51.8 40.8 -38.2 8.9 8.9 10.1 25.5 44.5 11.3
October 2016 182

PVR
Bloomberg PVRL IN CMP: INR1,236 TP: INR1,329 (+8%) Buy
We expect revenues to grow ~12% YoY (-6.8% QoQ) to INR5.3b.
52-Week Range (INR) 1,334/646 EBITDA margin is likely to decline 160bp YoY to 17.5%, translating
1,6,12 Rel Perf. (%) -2/57/43 into EBITDA growth of 2.7% YoY to INR930m.
We expect PAT to de-grow 34% YoY (on a very high base) to
INR270m. Buy.
Y/E March 2015 2016 2017E 2018E
Sales 14.8 18.7 22.5 26.6
EBITDA 2.0 3.3 4.0 5.2
NP 0.1 1.2 1.3 2.0
Adj EPS (INR) 3.3 25.5 27.1 43.5
EPS Gr. (%) -77.7 664.3 6.2 60.3
BV/Sh. (INR) 98.5 186.2 210.8 251.4
RoE (%) 3.4 18.7 13.7 18.8
RoCE (%) 8.0 14.5 11.3 14.9
Valuations
P/E (x) 369.8 48.4 45.6 28.4
P/BV (x)
Footfalls, like-to-like growth.
12.5 6.6 5.9 4.9
EV/EBITDA (x) Advertisement income, spend per head, average ticket price.
30.5 18.3 15.3 11.4
Div yield(%) 0.1 0.2 0.3 0.4

Net Sales 4,860 4,746 5,005 4,126 5,702 5,316 6,156 5,116 18,736 22,468
YoY Change (%) 34.2 18.6 19.1 37.7 17.3 12.0 23.0 24.0 26.8 19.9
EBITDA 1,107 905 853 465 1,167 930 1,194 647 3,330 3,999
Margins (%) 22.8 19.1 17.0 11.3 20.5 17.5 19.4 12.6 17.8 17.8
Depreciation 267 298 304 359 331 420 440 460 1,227 1,706
Interest 218 206 192 223 192 190 180 190 839 770
Other Income 25 95 67 65 63 40 35 30 252 165
PBT before EO expense 647 496 424 -52 707 360 609 27 1,516 1,689
Extra-Ord expense 33 0 5 29 26 0 0 0 67 0
PBT 615 496 420 -81 681 360 609 27 1,449 1,689
Tax 175 85 119 22 249 90 152 7 401.8 422.1
Rate (%) 28.5 17.1 28.4 -27.1 36.6 25.0 25.0 25.0 27.7 25.0
Reported PAT 435 411 299 -104 428 270 455 20 1,045 1,266
Adj PAT 458 411 305 -66 444 270 458 20 1,248 1,266
YoY Change (%) 468.0 347.1 -5.3 -70.1 -3.0 -34.3 50.1 NM 744.2 1.4
Margins (%) 9.0 8.7 6.0 -2.5 7.5 5.1 7.4 0.4 5.6 5.6
E: MOSL Estimates
Niket Shah (Niket.Shah@MotilalOswal.com) / Chintan Modi (Chintan.Modi@MotilalOswal.com)

Chitvan Oza (Chitvan.Oza@MotilalOswal.com)
October 2016 183
SITI Networks
SITINET IN
Bloomberg
M. Cap. (INR b)/(USD b) 23 / 0 We expect reported revenue to decline 3.5% QoQ to INR2.72b,
52-Week Range (INR) 42/30 primarily led by (a) lower activation and other operating revenue,
1,6,12 Rel Perf. (%) 3/-16/-1
and (b) SITINETs move from gross to net billing in Mumbai and
Delhi.
Financial Snapshot (INR Billion) Cable subscription revenue is likely to optically decline 6% QoQ to
Y/E March 2015E 2016 2017E 2018E ~INR1.3b, with SITINET moving from gross to net billing in Mumbai
and Delhi. Apart from the accounting change, digitization-led
Net Sales 9.0 11.9 12.9 18.3
triggers for subscription were elusive in 2Q.
EBITDA 1.4 3.0 3.6 7.2
EBITDA# 0.7 0.9 1.0 6.1 Activation revenue is likely to grow 3% to INR0.37b in 2QFY17, as
Adj. NP -1.1 0.0 0.4 3.6 seeding remains subdued due to pending stay orders in selective
Adj. EPS (INR) -1.6 0.0 0.5 4.0 high courts. We have factored in set-top box seeding of ~0.4m for
Adj. EPS Gr. (%) NM NM NM NM
the quarter.
BV/Sh (INR) 3.7 9.1 10.9 16.9 Carriage revenue would remain flat QoQ at INR0.65b.
RoE (%) -57.5 0.1 4.8 29.4 EBITDA is expected to remain flat QoQ at INR0.42b, primarily led by
RoCE (%) -2.1 6.4 6.6 23.5 lower activation and other operating revenue. On an ex-activation
Valuation basis, EBITDA is likely to decline marginally to INR49m in 2QFY17.
P/E (x) -21.1 8,243 74.9 8.7
Net loss would decline to INR341m (1QFY17 net loss: INR536m).
EV/EBITDA (x)* 26.1 11.3 8.3 3.5
EV/ EBITDA (x)* 47.0 39.6 30.2 4.2 The stock trades at attributable EV/EBITDA (ex-activation) of 4.2x
EV/Sub (INR)* 3,368 2,762 2,419 2,000 FY18E. Maintain Buy.
* Based on attributable EBITDA and subs post Key things to watch for
minority stake; # (ex-activation) Subscription revenue growth (we expect 6% QoQ decline).
Activation revenue (we expect INR0.37b).
EBITDA margin (we expect 15.6%).

Sales 2,297 2,342 3,699 3,567 2,820 2,720 3,535 3,819 11,890 12,895
YoY (%) 9.9 6.8 66.9 39.3 22.7 16.1 -4.4 7.1
Operating Expenses 1,953 1,914 2,449 2,614 2,395 2,295 2,278 2,296 8900 9,264
EBITDA 344 428 1,251 952 425 425 1,257 1,522 2,990 3,632
YoY (%) 0.5 4.0 159.2 913.1 23.5 -0.7 0.5 59.8
EBITDA margin (%) 15.0 18.3 33.8 26.7 15.1 15.6 35.6 39.9 25.1 28.2
Depreciation 358 367 391 515 547 558 569 582 1,632 2,256
Interest 344 343 346 351 297 188 190 192 1,378 869
Other Income 24 87 48 81 49 50 60 67 240 227
PBT -334 -195 562 167 -370 -271 558 816 220 732
Tax 5 35 2 89 65 30 37 38 131 170
Effective Tax Rate (%) -1.6 -17.8 0.4 53.1 -17.7 -11.1 6.6 4.7 59.6 23.2
PAT -339 -229 560 79 -435 -301 521 778 89 562
Minority Interest 28 48 170 -160 101 40 20 8 85 169
Adj PAT -367 -277 390 238 -536 -341 501 770 3 393
Reported Net Profit -367 -277 390 241 -536 -341 501 770 -16 393
October 2016 184

Sun TV
Bloomberg SUNTV IN
CMP: INR530 Not Rated
We expect Sun TVs revenue to increase 12% YoY to INR6.36b.
M. Cap. (INR b)/(USD b) 209 / 3
1,6,12 Rel Perf. (%) 14/29/37
Advertising and broadcasting revenue is likely to grow 7% YoY to
INR3.5b, as ad volumes improve post a dismal 1QFY17.
Y/E March 2015 2016 2017E 2018E We expect domestic subscription revenue to grow 2% QoQ to
Net Sales 22.4 24.0 27.4 31.0 INR2.35b.
EBITDA 16.1 17.1 19.5 22.3
Adj. Net Profit 7.4 8.3 10.3 12.1 Sun TVs EBITDA/EBIT is estimated to grow ~12%/16% YoY to
Adj. EPS (INR) 18.7 21.1 26.1 30.6 INR4.36b/INR3.88b. PAT should grow 16% YoY to INR2.54b.
Adj. EPS Gr. (%) 4.7 12.8 23.8 17.2
BV/Sh (INR) 85.8 92.2 99.8 109.6 The stock trades at 20.3x FY17E and 17.3x FY17E EPS. Not Rated.
RoE (%) 21.8 23.4 26.2 27.9
RoCE (%) 22.4 24.1 27.1 29.1
Div. Payout (%) 60.2 59.1 61.3 58.8
Valuations
P/E (x) 28.3 25.1 20.3 17.3 Key things to watch for
P/BV (x) 6.2 5.8 5.3 4.8 YoY ad growth (we expect 7%).
EV/EBITDA (x) 12.4 11.5 9.9 8.4 QoQ domestic subscription growth (we expect 2%).
Div. Yield (%) 2.1 2.5 3.0 3.4
Quarterly Performance (Standalone) * (INR million)

Revenue 6,911 5,681 5,741 5,707 7,608 6,362 6,740 6,670 24,040 27,380
YoY (%) 9.1 11.6 3.9 4.0 10.1 12.0 17.4 16.9 7.2 13.9
EBITDA 4,092 4,322 4,404 4,266 4,364 4,861 5,153 5,111 17,084 19,488
YoY (%) 11.3 9.2 2.9 0.8 6.7 12.5 17.0 19.8 5.8 14.1
As of % Sales 59.2 76.1 76.7 74.7 57.4 76.4 76.5 76.6 71.1 71.2
Depreciation and Amortization 1,302 1,176 1,348 1,007 1,008 1,241 1,314 1,273 4,835 4,835
Interest 8 1 5 8 1 7 7 10 21 25
Other Income 222 204 246 223 216 265 320 281 894 1,081
PBT 3,003 3,349 3,298 3,475 3,571 3,878 4,151 4,109 13,122 15,708
Tax 1,031 1,166 1,142 1,294 1,240 1,334 1,428 1,417 4,633 5,419
Reported PAT 1,973 2,184 2,156 2,180 2,331 2,544 2,723 2,692 8,490 10,289
Extraordinary Item 180
Adj PAT 1,973 2,184 2,156 2,360 2,331 2,544 2,723 2,692 8,673 6,700
YoY (%) 19.1 41.4 0.7 16.3 18.1 16.5 26.3 14.1 17.6 -22.7
*Incl IPL rev/EBITDA loss
October 2016 185

Zee Entertainment
Bloomberg Z IN CMP: INR579 TP: INR610 Buy
Equity Shares (m) 960.4 We expect advertising revenue to grow 16% YoY to INR9.78b. Any
M. Cap. (INR b)/(USD b) 556 / 8 dip in the operational performance of flagship, Zee TV is likely to be
52-Week Range (INR) 589/350 more than offset by strong performance by Zee Anmol, &TV and
1,6,12 Rel Perf. (%) 10/38/37 regional offerings.
We estimate 13% YoY growth in subscription revenue to INR5.43b.
Financial Snapshot (INR Billion) (Domestic subscription to grow 15% YoY to INR4.3b).
Y/E MARCH 2015 2016 2017E 2018E Total revenue is likely to grow 19% YoY to INR16.52b, aided by a
Net Sales 48.8 58.3 68.1 76.8 spike in other sales and services. The spike is courtesy the box office
EBITDA 12.5 15.0 19.4 25.5 performance of Zee-produced Hindi movie, Rustom in 2Q.
Adj. NP 9.8 10.2 14.0 18.9
We are building in ~17% YoY increase in content cost to bake in
Adj. EPS (INR) 10.2 10.6 14.6 19.7
some escalation due to the aforementioned movie release.
Adj. EPS Gr. (%) 9.7 3.9 37.8 34.9
We expect EBITDA margin to dip by ~80bp QoQ (but improve by
EPS ex-&TV (INR) 10.8 11.8 15.3 19.4
240bp YoY) to 28%.
RoE (%) 31.2 27.3 30.4 32.8
RoCE (%) 19.0 17.8 21.4 25.1 Sports losses are expected to be INR199m.
Div. Payout (%) 22.1 21.3 15.4 12.7 Adjusted PAT is likely to grow ~18% YoY to INR3.32b.
Valuations The stock trades at 38.8x FY17E and 28.8x FY18E EPS. Buy.
P/E (x) 55.6 53.5 38.8 28.8
P/E ex-&TV (x) 52.4 47.9 37.0 29.1
EV/EBITDA (x) 43.3 36.5 23.6 17.5
Div. Yield (%) 0.4 0.4 0.4 0.4
Sports loss (we expect INR199m).

Advertsing Revenue 7,799 8,433 9,419 8,645 9,120 9,782 11,114 10,199 34,037 40,216
Subscription Revenue 4,625 4,791 5,218 5,944 5,282 5,427 6,037 6,854 20,578 23,599
Other Sales and Services 974 625 1,314 727 1,315 1,313 1,117 509 3,640 4,253
Net Sales 13,399 13,849 15,951 15,316 15,716 16,521 18,269 17,562 58,255 68,068
Change (%) 23.4 23.9 17.0 13.7 17.3 19.3 14.5 14.7 19.3 16.8
Prog, Transmission & Direct Exp 6,108 6,036 7,023 6,881 6,575 7,167 7,955 7,460 25,968 29,158
Staff Cost 1,380 1,267 1,288 1,297 1,499 1,470 1,644 1,581 5,209 6,194
Selling and Other Exp 2,799 3,000 3,337 3,002 3,110 3,266 3,661 3,237 12,084 13,273
EBITDA 3,112 3,546 4,302 4,136 4,532 4,618 5,008 5,284 14,994 19,442
Change (%) 0.7 10.6 21.8 52.7 45.6 30.3 16.4 27.8 22.5 29.7
EBITDA margin (%) 23.2 25.6 27.0 27.0 28.8 28.0 27.4 30.1 25.7 28.6
Depreciation 168 198 201 273 251 254 256 210 840 972
Finance cost 15 21 45 42 75 75 76 77 123 303
Other Income 680 589 290 458 734 613 354 525 2,016 2,225
Fair Value through P&L -1,132 -1,132
Extraordinary items -331 -331 0
PBT 3,609 3,585 4,346 4,278 3,807 4,902 5,030 5,522 15,716 19,260
Tax 1,185 1,123 1,602 1,618 1,626 1,576 1,509 1,655 5,528 6,365
PAT 2,423 2,463 2,744 2,658 2,181 3,326 3,521 3,866 10,187 12,895
Minority Interest/Associates -15 -11 -6 53 12 5 2 3 22 22
Adj PAT after Minority Interest 2,438 2,805 2,750 2,605 2,170 3,321 3,519 3,863 10,497 12,873
Change (%) 15.8 23.3 -10.9 12.9 -11.0 18.4 28.0 48.3 7.4 22.6
Sports EBITDA 15 22 -150 -236 171 -199 -151 0 -349 -179
Non-Sports EBITDA 3,097 3,524 4,452 4,372 4,361 4,817 5,159 5,284 15,343 19,621
October 2016 186

September
September 2016 Results 2016|Results
Preview Sector:Preview
Metals
Metals
Company name Metals 2QFY17 preview
Hindalco Base metals perform well; Steel seasonally weak
Hindustan Zinc
Base metal prices were higher in 2QFY17. Zinc outperformed with ~17% QoQ increase,
Jindal Steel & Power
while aluminum was up ~3% QoQ. Steel was seasonally weak.
JSW Steel EBITDA for our metals coverage universe is estimated to increase 10% QoQ/50% YoY
Nalco to INR165b, led by Vedanta (due to higher prices and volumes in zinc and aluminum)
NMDC and Tata Steel (due to higher margins in Europe).
SAIL We move to FY18E valuation for SAIL, JSW Steel, Hindalco and Hindustan Zinc to
ensure consistency in our metals coverage universe.
Tata Steel
We have upgraded Vedantas target price to INR202/share (from INR160), considering
Vedanta
higher zinc prices and incorporating Ind-AS adjustments.
Base metals perform well; steel seasonally weak

Our metals coverage universe continues to perform well amid higher prices and
volumes. Steel prices, however, were seasonally lower (down INR500-1,900/t QoQ).
Among base metals, zinc LME averaged 17% higher QoQ to USD2,249/t, while
aluminum LME averaged 3% higher QoQ to USD1,619/t. Lead was up ~8% QoQ,
while silver increased ~15% QoQ.
We estimate EBITDA for our metals coverage universe to increase 10% QoQ/50%
YoY to INR165b, led by Vedanta and Tata Steel. Vedantas EBITDA is estimated to
increase 23% QoQ/10% YoY to INR42b due to higher prices and volumes of zinc and
aluminum. Tata Steels EBITDA is estimated to increase 24% QoQ (+2x YoY) to
INR40b due to strong volumes in India and higher spreads in Europe. We estimate
EBITDA/t of ~USD70 in Tata Steels EU operations. Among other ferrous names, JSW
Steels EBITDA is estimated to be down 10% QoQ (+70% YoY) to INR29b on account
of lower steel prices and an increase in raw material costs. SAIL is estimated to be
back in red, with EBITDA/t loss of ~INR130/t due to lower steel prices.
Hindalcos consolidated EBITDA is estimated to increase 4% QoQ to INR31b, led by

Novelis as well as an increase in copper with production normalizing post the
shutdown in 1Q. Nalcos EBITDA is estimated to increase 32% YoY to INR2.5b on
higher volumes and lower costs. NMDCs EBITDA is estimated to increase 2% QoQ to
INR8.3b, with the impact of lower realization more than offset by volume growth
and lower costs.
Revising base metal estimates; Hindalco and JSW our top picks
We revise our FY17/18 zinc price estimates to USD2,200/t from USD2,000/t earlier.
We move to FY18E valuation for SAIL, JSW Steel, Hindalco and Hindustan Zinc to
ensure consistency across our coverage universe. Our revised TPs are presented in
(Exhibit 14, 15 and 16). Vedantas TP is upgraded to INR202/share (from INR160),
considering higher zinc price estimate and incorporating Ind-AS changes.
Sanjay Jain (SanjayJain@motilaloswal.com); +91 22 3982 5412

Dhruv Muchhal (Dhruv.Muchhal@MotilalOswal.com); +91 22 3027 8033
October 2016 187
September 2016 Results Preview | Sector: Metals

Metals
Hindalco 154 Buy 250,296 1.1 10.4 31,146 41.5 4.1 8,945 54.2 19.0
Hindustan Zinc 255 Neutral 32,518 -19.4 28.5 16,460 -18.7 45.6 13,901 -35.2 34.0
JSPL 79 Neutral 53,913 7.0 14.8 12,827 31.4 30.4 -4,048 Loss Loss
JSW Steel 1,768 Buy 129,235 18.5 10.4 29,476 70.5 -9.8 7,636 591.1 -31.1
Nalco 46 Buy 17,772 -2.1 14.7 3,085 -9.1 58.5 1,662 -26.5 23.1
NMDC 108 Buy 16,393 5.6 -4.7 8,339 -11.2 2.1 7,243 -15.5 1.8
SAIL 48 Sell 96,579 4.3 4.5 -401 Loss PL -12,190 Loss Loss
Tata Steel 383 Sell 274,135 -6.5 8.7 40,260 119.9 24.2 12,967 -38.0 281.4
Vedanta 179 Neutral 167,361 1.1 15.9 43,995 14.0 27.9 13,527 62.2 119.9
Sector Aggregate 1,038,202 0.6 10.7 185,188 41.0 13.6 49,643 -15.7 32.8

Metals
Hindalco 154 Buy 12.0 17.4 23.1 12.9 8.9 6.7 6.9 6.4 5.5 11.6 15.9 18.2
Hindustan Zinc 255 Neutral 19.8 19.7 22.1 12.9 12.9 11.5 6.2 8.8 7.1 20.7 20.7 20.1
JSPL 79 Neutral -18.2 -17.4 -7.8 -4.3 -4.5 -10.1 15.1 10.8 10.9 -8.5 -9.2 -4.4
JSW Steel 1,768 Buy -0.3 190.9 198.1 - 9.3 8.9 13.4 6.4 5.7 0.0 22.2 19.1
Nalco 46 Buy 2.6 3.8 5.5 17.6 12.3 8.4 4.6 6.6 4.0 5.3 7.2 9.9
NMDC 108 Buy 8.4 9.0 8.3 13.0 12.1 13.1 7.9 8.5 8.4 15.9 11.7 11.8
SAIL 48 Sell -9.0 -7.5 -10.0 -5.4 -6.4 -4.8 - 35.5 29.1 -8.8 -8.1 -12.0
Tata Steel 383 Sell 7.7 32.4 54.8 49.9 11.8 7.0 14.2 8.4 7.0 4.6 22.5 34.5
Vedanta 179 Neutral 10.8 17.8 22.6 16.6 10.0 7.9 5.0 5.4 4.5 8.5 12.4 13.9
Source: MOSL
Exhibit 73: India import parity HRC prices

Spot Quaterly average
36,000
HRC Mumbai (INR/t)
Domestic HRC steel prices

were down ~INR100/t QoQ 33,000
in 2Q to INR30,971/t. 30,000
27,000
24,000
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
October 2016 188

Exhibit 74: China steel spreads with raw material

HRC Rebar
315
Chinese steel mills product
spreads have come off their 270
highs on an increase in 225
coking coal prices. 180
135
90
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
Source: MOSL, Company
Exhibit 75: Domestic steel demand growth trailing 12-month (YoY %)
Domestic steel demand
growth in July was tepid at Cons. (mt) Trailing 12m Growth (%)
~1% YoY. It improved in
8.1
10.0
7.4
7.3
7.2
7.2
7.1
7.1
7.1
7.0
6.9
6.9
6.9
6.9
6.8
6.8
6.7
6.7
August to 4.4% YoY. On
6.7
6.7
6.6
6.6
6.6
6.6
6.5
6.5
6.3
6.3
6.2
6.1
8.0
5.9
5.9
5.9
5.9
5.8
5.8
5.7
5.6
5.5
5.4
5.1
5.1
trailing 12M basis, demand 6.0

4.2
is up 4.2% YoY. 4.0
2.0 3.4
0.0 1.6
-2.0
Jun-13
Jun-14
Jun-15
Apr-13
Jun-16
Aug-13
Apr-14
Dec-13
Apr-15
Feb-14
Aug-14
Dec-14
Apr-16
Feb-15
Aug-15
Dec-15
Feb-16
Aug-16
Oct-13
Oct-14
Oct-15
Exhibit 76: India steel sales volumes (mt)
Tata Steel SAIL JSW Steel JSPL

10.8 10.4
8.8 8.7 9.4 8.8 9.0 9.1
8.5 8.5
3.3 3.5
3.1 3.0 3.1 3.1 3.1 2.6 3.3
2.9
3.2 3.8 3.0
2.8 2.9 2.9 2.7 2.7 2.9 2.8
2.1 2.1 2.1 2.4 2.1 2.3 2.3 2.7 2.2 2.8
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Exhibit 77: India steel EBITDA/ton (INR)

Average Tata Steel SAIL JSW Steel JSPL
20,000
15,000
10,000
5,000
0
-5,000
-10,000
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
October 2016 189

Exhibit 78: India steel realization (INR/ton)

Average Tata Steel SAIL JSW Steel JSPL
55
Realization (000' INR/T)

50
45
40
35
30
25
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Exhibit 79: Quarterly average aluminum prices USD/ton

Aluminum Premium Aluminum total price Alumina
Quarter
Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY
2QFY17E 1,619 3% 2% 27 -45% -68% 1,646 2% -2% 234 -7% -20%
1QFY17 1,572 4% -11% 49 -37% -71% 1,620 2% -16% 253 15% -25%
4QFY16 1,516 1% -16% 77 -3% -76% 1,593 1% -25% 219 -6% -36%
3QFY16 1,495 -6% -24% 79 -7% -75% 1,574 -6% -31% 233 -20% -34%
2QFY16 1,591 -10% -20% 86 -48% -73% 1,677 -13% -27% 292 -13% -9%
1QFY16 1,765 -2% -2% 165 -48% -43% 1,930 -9% -8% 337 -2% 6%
4QFY15 1,800 -8% 5% 315 -1% 43% 2,115 -7% 10% 343 -3% 4%
3QFY15 1,966 -1% 11% 318 2% 72% 2,285 -1% 17% 355 11% 10%
2QFY15 1,987 11% 12% 311 8% 67% 2,299 10% 17% 321 1% 1%
1QFY15 1,798 5% -2% 289 31% 61% 2,088 8% 4% 317 -3% -3%
4QFY14 1,708 -3% -15% 221 19% 23% 1,929 -1% -12% 328 2% -4%
3QFY14 1,769 -1% -11% 185 0% 6% 1,954 -1% -10% 323 1% -1%
2QFY14 1,781 -3% -7% 186 3% 4% 1,966 -2% -6% 318 -3% 1%
1QFY14 1,835 -8% -7% 180 1% 28% 2,015 -8% -5% 328 -4% 3%
4QFY13 2,003 0% -8% 179 3% 80% 2,181 0% -4% 341 5% 8%
3QFY13 1,997 4% -4% 174 -3% 99% 2,171 4% 0% 326 3% -2%
2QFY13 1,918 -3% -20% 179 27% 105% 2,097 -1% -16% 315 -1% -15%
1QFY13 1,978 -9% -24% 141 42% 62% 2,119 -7% -21% 318 0% -21%
Exhibit 80: Global aluminum production trend Exhibit 81: China aluminum production trend
Production YoY Production YoY
3.0 50
5,400 22.0 2.8
YoY growth (%)
17.0 40
YoY growth (%)
2.6
'000 tons
4,800
m tons
12.0
2.4 30
4,200 7.0
2.0 2.2
2.0 20
3,600 -3.0
-8.0 1.8
10
3,000 -13.0 1.6
1.4 -
Jul-14
Jul-15
Jul-16
Apr-15
Apr-16
Jan-15
Jan-16
Oct-14
Oct-15
Jul-14
Jul-15
Jul-16
Apr-14
Apr-15
Apr-16
Jan-15
Jan-16
Oct-14
Oct-15
Source: MOSL, Company, Bloomberg Source: MOSL, Company, Bloomberg
October 2016 190

Exhibit 82: LME aluminum and inventories

Inventories (RHS) Spot
1,800
3.3
1,700
USD/t
2.9
m tons
1,600
1,500 2.5
1,400 2.1
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
Source: MOSL, Bloomberg
Exhibit 83: Other base metals quarterly average prices USD/ton

Zinc Copper Lead Silver (Rs/kg)
Quarter
Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY Avg. QoQ YoY
2QFY17E 2,249 17% 22% 4,770 1% -9% 1,864 8% 9% 45,869 15% 32%
1QFY17 1,916 14% -12% 4,729 0 -22% 1,719 0 -11% 39,780 12% 7%
4QFY16 1,680 4% -19% 4,672 -4% -20% 1,744 4% -3% 35,595 2% -4%
3QFY16 1,614 -13% -28% 4,892 -7% -26% 1,681 -2% -16% 34,804 0% -5%
2QFY16 1,849 -16% -20% 5,259 -13% -25% 1,714 -12% -21% 34,651 -7% -19%
1QFY16 2,189 5% 6% 6,043 0 -11% 1,942 0 -7% 37,194 0% -11%
4QFY15 2,082 -7% 3% 5,818 -12% -17% 1,806 -10% -14% 37,167 1% -17%
3QFY15 2,234 -3% 17% 6,624 -5% -7% 2,000 -8% -5% 36,694 -14% -20%
2QFY15 2,312 12% 24% 6,994 3% -1% 2,181 4% 4% 42,691 2% -7%
1QFY15 2,071 2% 13% 6,787 -4% -5% 2,096 0% 2% 41,862 -7% -7%
4QFY14 2,030 6% 0% 7,041 -2% -11% 2,106 0% -8% 44,935 -3% -20%
3QFY14 1,912 3% -2% 7,153 1% -10% 2,111 0% -4% 46,099 0% -23%
2QFY14 1,862 1% -1% 7,073 -1% -8% 2,102 2% 6% 46,077 3% -17%
1QFY14 1,841 -9% -5% 7,148 -10% -9% 2,053 -11% 4% 44,837 -20% -18%
4QFY13 2,030 4% 0% 7,931 0% -5% 2,301 5% 10% 55,927 -7% 1%
3QFY13 1,948 3% 3% 7,909 3% 6% 2,199 11% 11% 59,949 8% 11%
2QFY13 1,887 -2% -15% 7,706 -2% -14% 1,975 0% -20% 55,755 2% -5%
1QFY13 1,929 -5% -14% 7,869 -5% -14% 1,974 -6% -23% 54,406 -2% -5%
Exhibit 84: Earnings and TP change Steel and Iron ore

EBITDA (INR b) Adj. PAT (INR b) TP Comments
2QFY17E FY17E FY18E 2QFY17E FY17E FY18E
Old 40 143 165 12.8 30.9 49.5 241
Tata Steel New 40 144 170 13.0 33.3 55.0 278 Increase in spreads in Europe
Change 0% 1% 3% 1% 8% 11% 15%
Old 0 37 66 -12.2 -9.1 3.3
Impact of coking coal price increase. Move to FY18
SAIL New 0 13 18 -12.2 -32.4 -42.7 31
valuation.
Change -66% -73% 254%
Old 27 140 145 7 47 46
Move to FY18E valuation from weighted average of
JSW Steel New 29 140 146 8 46 48 2,205
FY17-18E.
Change 0% 1% -1% 5%
Old 13 50 51 -4.0 -13.9 -7.1 88
JSPL New 11 49 50 -4.6 -15.4 -7.7 88 Lower steel realization and power sales
Change -3% -1% 11% 9%
Old 8 36 40 7.2 28.4 26.3 136
NMDC New 8 36 40 7.2 28.4 26.3 136
Change
October 2016 191

Exhibit 85: Earnings and TP change Aluminum

EBITDA (INR b) Adj. PAT (INR b) TP
Comments
Old 12 48 50 3.7 15.0 18.3
Hindalco
New 12 48 50 3.3 14.3 18.2 Exchange rate estimates
(Standalone)
Change -4% -2% 0% -11% -5% -1%
Old 32 133 143 9 37 48 Exchange rate estimates. Move to
Hindalco
New 31 131 143 9 36 48 245 FY18E valuation from weighted
(Consol)
Change -3% -1% 0% -5% -3% 0% average of FY17-18E.
Old 3 13 18 1.9 7.7 10.7 67
On higher aluminum CoP in 2Q and
Nalco New 3 12 18 1.3 6.9 10.7 64
lower volumes
Change -26% -9% 0% -31% -10% 0% -5%
Exhibit 86: Earnings and TP change Others

EBITDA (INR b) Adj. PAT (INR b) TP
Comments
Old 15 84 93 13 77 84 Increase zinc LME estimate from
HZL New 17 92 105 14 84 93 240 USD2,000/t earlier to USD2,200/t.
Change 11% 10% 12% 10% 8% 12% Move to FY18E valuation.
Old 44 198 224 13 61 76 160 Increase zinc LME estimate from
VEDL New 42 204 234 12 64 81 202 USD2,000/t earlier to USD2,200/t. Ind-
Change -3% 3% 4% -1% 5% 7% 26% AS adjustments incorporated.
Top Picks
Hindalco (Buy, TP: INR245): Hindalcos (HNDL) strong cost positioning in aluminum,
support from domestic coal cost, limited room for LME to decline from current
levels, improving mix at Novelis and exit from capex phase are key positives.
HNDLs average primary aluminum cost of production has declined by more than
~USD600/ton over the past year due to benefits from operating leverage, falling
cost of coal, operating efficiencies and lower cost of crude derivatives, thereby
significantly improving its positioning on global cost curve. These cost savings,
except for crude derivatives, are sustainable, in our view.
Copper smelting continues to benefit from higher TC/RCS amid oversupply of copper
concentrates. Meanwhile, Novelis is likely to see margins improve as the share of
high-margin auto products in total mix increases.
HNDLs capex phase is now behind us, as newly added capacities enter the final
stage of commissioning. We estimate HNDL to generate FCF (pre-interest) of
INR85b/INR94b in FY17E/18E. Net debt is estimated to decline from INR553b in
FY16 to INR468b in FY18, driving equity value. Maintain Buy.
JSW Steel (Buy, INR2,205): JSW Steel (JSTL) is likely to benefit from counter-cyclical
low-cost capacity expansion, which would drive strong volume growth. The
company is set to accelerate volumes at a CAGR of 17% (to 15.8mtpa) over FY16-18E
after a hiatus of two years. It grew volumes at a CAGR of 23% during FY05-14.
October 2016 192

EBITDA is estimated to increase more than 2x YoY to INR140b in FY17E. Net debt is
estimated to decline from INR505b in FY16 to INR408b in FY18E. JSTL is of the few
major domestic steel companies to generate positive FCF.
JSTL is well positioned to benefit from the upcoming auction of iron ore mines in
Karnataka. The stock trades at EV/EBITDA of 6.5xFY17E and 5.7xFY18E. JSTL has
strongest volumes among peers and less exposure to steel price volatility. Maintain
Buy.
Exhibit 87: Relative performance three-month (%) Exhibit 88: Relative performance one-year (%)
Sensex Index MOSL Metals Index Sensex Index MOSL Metals Index
131 180
122 160
140
113
120
104 100
95 80
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
Jul-16
Jun-16
Aug-16
Sep-16
October 2016 193

Hindalco
Bloomberg HNDL IN CMP:INR154 TP: INR245 (+59%) Buy
Standalone: We estimate standalone EBITDA to increase 3% QoQ
M. Cap. (INR b)/(USD b) 318 / 5
(+93% YoY) to INR11.7b on higher copper volumes as production
stabilizes. Aluminum segment EBITDA is estimated to decline
1,6,12 Rel Perf. (%) -1/66/110
marginally by 5% QoQ to INR8b on higher raw material prices.
Aluminum sales volumes are estimated to increase 9% QoQ (+15%
Y/E March 2015 2016 2017E 2018E YoY) to 318kt. LME aluminum averaged USD1,619/t (+3% QoQ).
Sales 1,042.8 1,001 1,007 1,090
Copper volumes are estimated to increase 53% QoQ to 95kt as
EBITDA 89.4 106.1 131.1 143.3
production normalizes post shutdown in 1Q.
NP 27.9 24.7 35.9 47.7
Novelis: We estimate Novelis to report adjusted EBITDA of
Adj. EPS (INR) 13.5 12.0 17.4 23.1
USD281m (+5% QoQ) on higher volumes. Adj. EBITDA/t is estimated
EPS Gr(%) 8.7 -11.5 45.1 33.0
at USD350 (v/s. USD355 in 1QFY17). Volumes are estimated to
BV/Sh. (INR) 105.4 101.8 116.1 137.6
RoE (%) 12.3 11.6 15.9 18.2
increase by 2% YoY to 804kt. Buy.
RoCE (%) 4.9 5.9 8.1 9.1
Payout (%) 12.1 13.7 9.4 7.1
Valuations
P/E (x) 11.6 13.1 9.0 6.8
P/BV 1.5 1.5 1.4 1.1 Key issues to watch for
EV/EBITDA (x) 9.9 8.3 6.4 5.5 Lower margins in aluminum.
Div. Yield (%) 0.9 0.9 0.9 0.9 Foreign exchange rate impact at Novelis.
Quarterly Performance (INR million)

Alumina (Production, kt) 660 628 704 703 708 665 715 710 2,660 2,798
Aluminium (sales, kt) 248 277 292 329 291 318 318 327 1,146 1,255
Copper (sales, kt) 96 104 87 97 62 95 95 95 384 347
Exchange USD/INR 63.7 65.0 65.9 67.6 67.0 67.0 68.0 68.0 65.5 67.5
Avg LME Aluminium (USD/T) 1,765 1,593 1,495 1,516 1,570 1,619 1,620 1,630 1,592 1,610
Net Sales 85,753 89,246 81,503 86,675 75,973 86,925 87,572 89,159 343,177 339,629
Change (YoY %) 7.2 4.3 -5.3 -7.5 -11.4 -2.6 7.4 2.9 -0.6 -1.0
EBITDA 8,773 6,028 6,716 11,664 11,325 11,662 12,107 12,496 33,182 47,590
Change (YoY %) 17.2 -32.8 -27.3 37.6 29.1 93.5 80.3 7.1 -2.9 43.4
As % of Net Sales 10.2 6.8 8.2 13.5 14.9 13.4 13.8 14.0
EBITDA - Aluminium 5,088 2,275 2,988 7,642 8,488 8,042 8,486 8,874 17,992 33,890
EBITDA-Copper 3,686 3,753 3,728 4,023 2,837 3,621 3,621 3,622 15,190 13,700
Interest 6,017 6,160 5,824 5,747 5,996 5,996 5,986 5,976 23,748 23,954
Depreciation 3,320 2,958 3,080 3,412 3,382 3,365 3,348 3,332 12,770 13,427
Other Income 1,944 4,175 2,501 2,041 2,184 2,047 2,178 2,311 10,662 8,720
PBT (after EO item) 1,381 1,086 313 4,547 4,129 4,348 4,950 5,500 7,326 18,927
Total Tax 309 53 -92 983 1,189 866 1,352 1,248 1,254 4,656
% Tax 22.4 4.9 -29.3 21.6 28.8 19.9 27.3 22.7 17.1 24.6
Reported PAT 1,072 1,033 405 3,563 2,941 3,482 3,598 4,251 6,073 14,271
Adjusted PAT 1,145 900 259 3,769 2,943 3,279 3,732 4,147 6,073 14,273
Consolidated Financials
Net Sales 250,505 247,542 233,588 246,016 226,771 250,296 251,552 255,616 1,000,538 1,007,223
EBITDA 22,977 22,004 23,034 31,025 29,916 31,146 31,113 32,261 106,053 131,128
Consolidated adj. PAT 3,471 5,801 4,367 10,272 7,515 8,945 8,946 9,892 24,717 35,855
E: MOSL Estimates
October 2016 194

Hindustan Zinc
Bloomberg HZ IN CMP:INR255 TP: INR240 (-6%) Neutral
We expect HZLs EBITDA to increase 49% QoQ (-17% YoY) to
M. Cap. (INR b)/(USD b) 1,076 / 16
INR16.8b due to higher production and prices. Zinc LME is up 17%
QoQ to USD2,249/t. Zinc production is estimated to increase 37%
1,6,12 Rel Perf. (%) 13/26/75
QoQ to 140kt. Lead production is estimated to increase 20% QoQ,
Financial Snapshot (INR Billion) while silver production is estimated to rise 13% QoQ to 107 tons.
Y/E March 2015 2016 2017E 2018E We estimate PAT to increase 37% QoQ to INR14.2b on lower other
Sales 147.9 142.3 167.3 183.8 income due to huge dividend payment in the quarter. Neutral.
EBITDA 74.3 67.8 91.6 104.7
NP 81.9 83.6 83.5 93.3
Adj. EPS (INR) 19.4 19.8 19.8 22.1
EPS Gr(%) 18.9 2.1 -0.1 11.7
BV/Sh. (INR) 102.6 88.5 102.1 117.4
RoE (%) 20.3 20.7 20.8 20.1
RoCE (%) 22.6 20.6 24.2 23.7
Payout (%) 26.6 164.9 24.7 25.2
Valuations
P/E (x) 13.1 12.8 12.8 11.5
EV/EBITDA (x) 10.2 10.6 8.6 7.0 Delay in recovery of volumes at Rampura Agucha.
Div. Yield (%) 1.7 11.0 1.5 1.7

Production (integrated only)
Zn refined (000 tons) 187 211 206 154 102 140 255 250 758 747
Pb refined (000 tons) 27 39 35 38 25 30 40 45 139 140
Silver (tons) 86 110 116 127 95 96 128 144 439 463
Zinc LME (USD/t) 2,190 1,898 1,616 1,680 1,918 2,249 2,200 2,200 1,846 2,142
Net Sales 36,302 40,333 34,306 31,324 25,306 32,518 54,193 54,792 142,264 166,809
Change (YoY %) 20.7 34.1 -9.8 -18.7 -30.3 -19.4 58.0 74.9 -3.8 17.3
EBITDA 19,655 20,245 14,783 13,081 11,309 16,460 31,492 31,937 67,763 91,197
As % of Net Sales 54.1 50.2 43.1 41.8 44.7 50.6 58.1 58.3 47.6 54.7
Interest 16 12 51 90 712 90 90 90 169 982
Depreciation 1,729 1,750 1,716 1,930 3,644 3,644 3,644 3,644 6,716 7,231
Other Income 5,637 8,689 5,547 7,422 6,101 4,436 4,476 4,443 27,294 19,457
PBT (before EO item) 23,546 27,171 18,562 18,482 13,053 17,162 32,233 32,646 88,173 102,441
Extra-ordinary Income -1,761 0 0 4 5 0 0 0 -1,757 0
PBT (after EO item) 21,785 27,171 18,562 18,487 13,059 17,162 32,233 32,646 86,416 102,441
Total Tax 1,287 5,715 449 -3,013 2,680 3,261 6,447 6,856 4,438 19,242
% Tax 5.9 21.0 2.4 -16.3 20.5 19.0 20.0 21.0 5.1 18.8
Reported PAT 20,498 21,456 18,114 21,500 10,379 13,901 25,787 25,790 81,978 83,199
Adjusted PAT 22,155 21,456 18,114 21,495 10,375 13,901 25,787 25,790 83,644 83,199
Change (YoY %) 37.0 32.6 -17.1 -9.7 -53.2 -35.2 42.4 20.0 2.1 -0.5
E: MOSL Estimates
October 2016 195

Jindal Steel & Power

Bloomberg JSP IN CMP: INR79 TP: 88 (+11%) Neutral
Standalone: We expect standalone EBITDA to increase 15% QoQ to
INR7.6b on higher steel volumes and pellet sales.
Jindal Power: We expect Jindal Power EBITDA to increase 9% QoQ
1,6,12 Rel Perf. (%) -3/12/23
to INR2b on higher margins from lower coal prices and sales under
long-term contract which fetch higher margins. Realization is
estimated at INR3.12/kWh, down from INR3.34/kWh in last quarter.
Y/E March 2015 2016 2017E 2018E
Oman: EBITDA is estimated at INR1.8b, down from INR2.2b in 1Q.
Sales 201.6 194.7 211.9 215.8
EBITDA 54.6 34.4 49.7 50.3
Neutral.
Adj. PAT 6.3 -16.7 -17.4 -7.7
Adj. EPS (INR) 6.9 -18.2 -19.0 -8.4
EPS Gr(%) -66.8 -363.0 4.2 -55.5
BV/Sh. (INR) 230.0 198.4 178.9 170.0
RoE (%) 2.9 -8.5 -10.1 -4.8
RoCE (%) 4.5 1.2 2.2 3.7
Payout (%) 27.0 0.0 0.0 0.0
P/E (x) 12.1 -4.6 -4.4 -9.9
Progress on restructuring of SEBs.
P/BV 0.4 0.4 0.5 0.5
Chinese steel imports.
EV/EBITDA (x) 9.5 15.7 11.3 11.2
Div. Yield (%) 1.9 0.0 0.0 0.0
Quarterly Performance (Consolidated) (INR million)

Net Sales 47,527 50,402 45,949 50,796 46,962 51,162 56,664 57,667 194,673 212,454
Change (YoY %) -4.5 -6.2 -11.0 7.9 -1.2 1.5 23.3 13.5 -3.7 9.1
EBITDA 10,176 9,765 5,504 8,965 9,841 11,317 13,574 13,851 34,410 48,582
Change (YoY %) -37.5 -40.5 -61.4 13.5 -3.3 15.9 146.6 54.5 -37.2 41.2
As % of Net Sales 21.4 19.4 12.0 17.6 21.0 22.1 24.0 24.0 17.7 22.9
Interest 8,516 7,647 8,061 8,584 8,529 8,750 8,790 8,830 32,808 34,900
Depreciation 7,466 5,005 6,378 9,346 9,171 8,379 8,357 8,335 28,194 34,241
Other Income 750 354 50 1,047 312 -297 -382 919 2,200 551
PBT (before EO item) -5,055 -2,532 -8,885 -7,918 -7,548 -6,109 -3,955 -2,396 -24,391 -20,008
Extra-ordinary Income 0 -4,394 910 1,126 -6,257 0 0 0 -2,358 -6,257
PBT (after EO item) -5,055 -6,927 -7,976 -6,792 -13,805 -6,109 -3,955 -2,396 -26,750 -26,265
Total Tax -1,501 19 -2,120 -3,161 -1,410 27 28 29 -6,763 -1,326
% Tax 29.7 -0.3 26.6 46.5 10.2 -0.4 -0.7 -1.2 25.3 5.0
Reported PAT -3,555 -6,945 -5,855 -3,631 -12,395 -6,136 -3,983 -2,425 -19,987 -24,939
MI - Loss/(Profit) -137 -832 -105 93 -1,560 -485 -485 -485 -980 -3,014
Associate 26 -66 16 11 14 101 101 101 -14 316
Adjusted PAT -3,393 -1,785 -6,645 -4,840 -4,564 -5,551 -3,398 -1,839 -16,662 -15,352
Change (YoY %) -181.1 -140.4 -381.1 4.6 34.5 210.9 -48.9 -62.0 -363.0 -7.9
E: MOSL Estimates
October 2016 196

JSW Steel
Bloomberg JSTL IN CMP: INR1,768 TP: INR2,205 (+24%) Buy
Consolidated EBITDA is estimated to decline 10% QoQ to INR29.4b
M. Cap. (INR b)/(USD b) 427 / 6
on seasonally lower steel prices and an increase in cost of coking
coal. PAT is estimated at INR7.6b, down from INR11b in 1Q, on
1,6,12 Rel Perf. (%) 1/28/94
lower EBITDA and an increase in depreciation cost from
capitalization of newly commissioned plants.
Standalone EBITDA is estimated to decline 9% QoQ to INR28.3b.
Y/E March 2015 2016 2017E 2018E
Sales 529.7 418.8 578.1 638.0
Volumes are estimated to be up 5% QoQ (11% YoY) to 3.5mt.
EBITDA 94.0 60.7 139.7 146.0
Realization is estimated to decline ~INR530/t QoQ to ~INR32,160/t
Adj. PAT 18.0 -0.1 46.1 47.9 as impact of lower domestic steel prices is partly offset by higher
Adj. EPS (INR) 74.5 -0.3 190.9 198.1 realization on exports. EBITDA margin is estimated at INR8,080/t,
EPS Gr(%) 93.2 -100.5 - 3.8 down from INR9,276/t in 1Q. Buy.
54,722.4
BV/Sh. (INR) 922 775 945 1,126
RoE (%) 8.3 0.0 22.2 19.1
RoCE (%) 5.7 2.7 9.4 9.1
Payout (%) 18.1 -36.6 7.5 7.2
Valuation
P/E (x) 24.0 n.a. 9.4 9.0 Key issues to watch for
P/BV 1.9 2.3 1.9 1.6 MIP/anti-dumping measures against steel imports.
EV/EBITDA (x) 9.7 15.4 6.5 5.8 Domestic steel demand growth.
Div. Yield (%) 0.6 0.6 0.7 0.7
Quarterly Performance (Consolidated) (INR million)

Net Sales 115,762 109,069 86,983 106,975 117,080 129,235 157,135 174,688 418,789 578,138
Change (YoY %) -12.7 -21.5 -34.2 -15.1 1.1 18.5 80.7 63.3 -20.9 38.1
EBITDA 16,273 17,293 8,918 18,246 32,694 29,476 37,757 39,758 60,730 139,686
Change (YoY %) -37.7 -38.5 -61.2 8.4 100.9 70.5 323.4 117.9 -35.4 130.0
Interest 8,222 8,363 8,107 8,335 9,358 10,199 10,286 10,374 33,027 40,216
Depreciation 9,385 6,822 7,734 7,938 8,315 8,897 9,049 9,204 31,879 35,464
Other Income 258 390 226 808 334 811 813 814 1,682 2,772
PBT (before EO Item) -1,077 2,498 -6,696 2,781 15,356 11,191 19,235 20,995 -2,494 66,777
EO Items -7 -14 -21,221 -11 0 0 0 0 -21,254 0
PBT (after EO Item) -1,084 2,483 -27,917 2,770 15,356 11,191 19,235 20,995 -23,748 66,777
Total Tax 166 1,424 -18,100 1,270 4,507 3,797 6,371 6,935 -15,241 21,610
% Tax -15.3 57.3 64.8 45.8 29.4 33.9 33.1 33.0 64.2 32.4
Reported PAT -1,250 1,060 -9,817 1,500 10,848 7,394 12,864 14,060 -8,508 45,167
MI (Profit)/Loss 199 132 610 10 112 112 112 112 950 446
Share of P/(L) of Ass. -17 -22 -26 203 130 130 130 130 138 520
Pref. Dividend 70 70 70 70 0 0 0 0 279 0
Adjusted PAT -1,135 1,105 -1,701 1,649 11,090 7,636 13,106 14,302 -84 46,134
Change (YoY %) -117.5 -85.2 -152.8 161.4 -1,076.8 591.1 -870.5 767.3 -100.5 -54,722.4
E: MOSL Estimates
October 2016 197

Nalco
Bloomberg NACL IN CMP: INR46 TP: INR64 (+39%) Buy
We estimate Nalco to report a 32% QoQ increase in EBITDA to
M. Cap. (INR b)/(USD b) 119 / 2
INR2.6b. PAT is estimated to decline 2% QoQ to INR1.3b on lower
other income due to share buyback.
1,6,12 Rel Perf. (%) 0/7/24
Aluminum sales volume is estimated to increase 14% QoQ to 94kt.
Aluminum LME is up 3% QoQ to USD1,619/t. Realized premium is
estimated at USD210/t, down from USD290/t in last quarter.
Y/E March 2015 2016 2017E 2018E
Alumina realization is estimated at USD270/t, up 5% QoQ. Buy.
Sales 73.8 68.2 71.2 81.2
EBITDA 17.1 9.4 11.9 18.3
NP 12.3 6.8 6.9 10.7
Adj. EPS (INR) 4.8 2.6 3.6 5.5
EPS Gr(%) 81.6 -44.8 36.2 54.1
BV/Sh. (INR) 49.7 50.2 53.9 57.3
RoE (%) 9.9 5.3 6.9 9.9
RoCE (%) 14.6 7.5 8.1 13.4
Payout (%) 34.2 77.7 57.1 37.0
Valuations
P/E (x) 10.1 18.3 13.4 8.7
P/BV 1.0 1.0 0.9 0.8
Availability of coal for captive power plant.
EV/EBITDA (x) 4.0 7.0 4.8 2.6
Div. Yield (%) 3.1 3.6 3.6 3.6
LME price trend, utilization of smelter.

Aluminium Prod. ('000 tons) 86 94 96 96 94 94 103 105 372 397
Alumina Sales ('000 tons) 220 315 285 375 291 311 321 358 1,195 1,282
Avg LME Aluminium (USD/ton) 1,769 1,593 1,495 1,517 1,570 1,619 1,620 1,630 1,593 1,610
NSR premiums (USD/ton) 349 300 261 224 290 210 210 210 283 230
Alumina NSR (USD/ton) 306 308 263 239 257 270 273 272 299 260
Net Sales 14,913 18,151 16,353 18,744 15,490 17,142 18,792 19,777 68,160 71,201
Change (YoY %) -11.2 -9.0 -14.2 4.1 3.9 -5.6 14.9 5.5 -7.7 4.5
EBITDA 2,237 3,393 1,363 2,387 1,946 2,576 3,586 3,825 9,380 11,933
Change (YoY %) -19.1 -28.5 -74.1 -44.2 -13.0 -24.1 163.0 60.3 -45.0 27.2
Other Income 1,308 1,260 1,240 1,558 1,336 577 632 689 5,366 3,233
PBT (before EO Item) 2,543 3,581 1,558 2,812 2,089 1,959 3,018 3,308 10,493 10,374
Extra-ordinary Income 0 0 535 0 0 0 0 0 535
PBT (after EO Item) 2,543 3,581 2,092 2,812 2,089 1,959 3,018 3,308 11,028 10,374
Total Tax 908 1,319 757 733 739 639 985 1,080 3,718 3,443
% Tax 35.7 36.8 36.2 26.1 35.4 32.6 32.6 32.6 33.7 33.2
Reported PAT 1,634 2,261 1,335 2,079 1,350 1,320 2,033 2,228 7,310 6,931
Adjusted PAT 1,634 2,261 994 2,079 1,350 1,320 2,033 2,228 6,956 6,931
E: MOSL Esitmates
October 2016 198

NMDC
Bloomberg NMDC IN CMP: INR108 TP: INR136 (+26%) Buy
NMDCs EBITDA is estimated to increase 2% QoQ to INR8.3b as
M. Cap. (INR b)/(USD b) 343 / 5
lower realization is offset by marginally higher volumes and lower
cost.
1,6,12 Rel Perf. (%) 2/-1/8
Iron ore sales volumes are estimated to increase 2% QoQ (32% YoY)
to 7.9mt, aided by an increase in domestic demand.
Realization is down 8% QoQ to INR1,856/t.
Y/E March 2015 2016 2017E 2018E
Sales 123.6 64.6 71.2 76.7
Other income is estimated to decline 16% QoQ to INR2.9b on
EBITDA 77.8 32.3 35.6 39.7 dividend outflow.
Adj. PAT 65.9 33.2 28.4 26.3 PAT is estimated to increase 2% QoQ to INR7.2b. Buy.
Adj. EPS (INR) 16.6 8.4 9.0 8.3
EPS Gr(%) 3.1 -49.7 7.5 -7.6
BV/Sh. (INR) 81.5 75.9 72.9 74.0
RoE (%) 20.8 15.9 11.7 11.8
RoCE (%) 20.8 15.6 10.9 11.0
Payout (%) 44.5 177.0 80.1 86.7
Valuations
P/E (x) 6.7 13.3 12.4 13.4
Increase in global iron ore prices.
P/BV 1.4 1.5 1.5 1.5
Quicker-than-expected production ramp-up.
EV/EBITDA (x) 3.3 9.5 8.7 8.6
Div. Yield (%) 7.7 9.9 5.4 5.4

Production (m tons) 6.0 6.4 7.4 8.8 7.6 7.9 8.2 8.8 28.8 32.7
Sales (m tons) 6.7 6.4 7.2 8.5 7.8 7.9 8.2 8.8 28.8 32.7
Avg Dom. NSR (USD/t) 45 39 31 25 30 27 30 30 34 30
Avg Dom. NSR (INR/t) 2,786 2,409 2,054 1,658 2,007 1,856 2,062 2,062 2,201 1,999
Net Sales 18,557 15,528 15,172 15,299 17,207 16,393 18,180 19,444 64,556 71,223
EBITDA 11,027 9,395 6,441 5,398 8,164 8,339 9,803 9,300 32,260 35,607
Change (QoQ %) -43.4 -14.8 -31.4 -16.2 -13.1 2.1 17.6 -5.1 -58.5 10.4
EBITDA per ton (USD) 27 24 14 9 16 15 18 15 17 17
EBITDA per ton (INR/t) 1,655 1,457 892 634 1,051 1,056 1,196 1,055 1,119 1,089
Interest 0 0 0 654 81 0 0 0
Depreciation 401 506 523 647 560 574 588 603 2,078 2,324
Other Income 4,887 4,264 4,212 4,380 3,452 2,887 1,352 1,314 17,744 9,004
PBT (before EO Item) 15,513 13,153 10,130 8,476 10,975 10,652 10,568 10,011 47,927 42,287
Extra-ordinary item 0 -154 -23 -1,672 0 0 0 0 -1,848
PBT (after EO Item) 15,513 12,999 10,107 6,804 10,975 10,652 10,568 10,011 46,079 42,287
Total Tax 5,412 4,525 3,557 1,275 3,862 3,409 3,382 3,204 14,769 13,855
% Tax 34.9 34.8 35.2 18.7 35.2 32.0 32.0 32.0 32.1 32.8
Reported PAT 10,101 8,474 6,550 5,529 7,113 7,243 7,186 6,808 31,309 28,431
Adjusted PAT 10,101 8,574 6,565 6,888 7,113 7,243 7,186 6,808 32,565 28,431
E: MOSL Estimates
October 2016 199

SAIL
Bloomberg SAIL IN CMP: INR48 TP:INR31 (-35%) Sell
We estimate SAIL to report operating EBITDA loss of INR0.4b, as
M. Cap. (INR b)/(USD b) 198 / 3
against profit of INR2.3b in 1Q on lower steel prices.
1,6,12 Rel Perf. (%) 1/-2/-13
Realization is estimated to decline by INR800/t QoQ to INR32,193/t.
EBITDA/t loss is estimated at ~INR130, as against profit of
Y/E March 2015 2016 2017E 2018E
~INR830/t in 1Q on lower steel prices.
Sales 459.5 395.0 460.5 559.9
EBITDA 49.0 -28.6 17.8 22.7
NP 21.6 -37.0 -30.8 -41.2
PAT loss is estimated at INR12.2b, an increase from INR5b in 1Q.
Adj. EPS (INR) 5.2 -9.0 -7.5 -10.0 Sell.
EPS Gr(%) 13.9 -271.5 -16.8 33.6
BV/Sh. (INR) 107.0 95.5 88.0 78.0
RoE (%) 4.9 -8.8 -8.1 -12.0
RoCE (%) 5.4 -6.0 -1.1 -1.4
Payout (%) 45.2 0.0 0.0 0.0
Valuations
P/E (x) 9.3 -5.4 -6.5 -4.9 Key issues to watch for
P/BV (x) 0.5 0.5 0.6 0.6 Commissioning of ISP and Bhilai capacity expansion.
EV/EBITDA (x) 9.8 -19.4 35.7 29.2
Div. Yield (%) 4.2 0.0 0.0 0.0

Production (m tons) 3.1 2.7 3.0 3.6 3.4 3.4 3.5 3.7 12.4 14.0
Change (YoY %) 4.5 -18.3 -4.6 5.0 10.1 27.2 16.5 2.5 -3.4 13.1
Sales (m tons) 2.7 2.7 2.9 3.8 2.8 3.0 3.4 4.3 12.1 13.4
Change (YoY %) -2.3 -6.7 1.4 19.3 4.1 9.5 15.9 13.3 3.3 11.0
Realization (INR per ton) 35,313 33,797 30,825 30,163 32,993 32,193 35,028 35,028 32,290 33,971
Change (YoY %) -14.2 -15.1 -20.6 -17.7 -6.6 -4.7 13.6 16.1 -17.3 5.2
Net Sales 95,028 92,569 89,391 113,716 92,381 96,579 117,695 149,570 390,704 456,225
Change (%) -16.2 -20.7 -19.5 -1.8 -2.8 4.3 31.7 31.5 -14.5 16.8
EBITDA -817 -7,685 -13,815 -11,235 2,338 -401 5,794 5,083 -33,551 12,813
Change (YoY %) -107.2 -157.5 -214.4 -220.8 -386.2 -94.8 -141.9 -145.2 -172.9 -138.2
EBITDA per ton (INR) -303 -2,806 -4,764 -2,980 835 -134 1,724 1,190 -2,773 954
EBITDA per ton (USD) -5 -43 -72 -44 12 -2 25 18 -42 14
Interest 4,430 4,674 5,242 6,121 5,941 6,232 6,517 6,792 20,468 25,481
Depreciation 4,261 4,358 4,591 7,786 6,002 6,498 6,987 7,469 20,995 26,957
Other Income 1,743 1,306 1,046 1,735 893 564 560 557 5,830 2,574
PBT (after EO Inc.) -7,765 -15,410 -22,603 -23,406 -9,254 -12,567 -7,150 -8,621 -69,184 -37,592
Total Tax -4,549 -7,651 -7,315 -11,097 -3,899 -377 -214 -259 -30,612 -4,749
% Tax 58.6 49.6 32.4 47.4 42.1 3.0 3.0 3.0 44.2 12.6
Reported PAT -3,216 -7,760 -15,287 -12,309 -5,355 -12,190 -6,935 -8,362 -38,572 -32,843
Adjusted PAT -3,216 -7,760 -15,287 -12,309 -5,042 -12,190 -6,935 -8,362 -38,572 -32,370
Change (YoY %) -160.7 -219.5 -465.4 -468.3 56.8 57.1 -54.6 -32.1 -301.4 -16.1
E: MOSL Estimates
October 2016 200

Tata Steel
Bloomberg TATA IN CMP: INR383 TP: 278 (-27%) Sell
India: We estimate Tata Steels standalone EBITDA to increase 17%
M. Cap. (INR b)/(USD b) 372 / 6
QoQ to INR25.9b on higher volumes. Volumes are estimated at
2.7mt, up from 2.1mt in last quarter, aided by contribution from
1,6,12 Rel Perf. (%) 3/9/73
Kalinganagar. Blended sales realization is estimated to decline
INR1,420/t QoQ to INR41,000/t. Steel EBITDA is estimated at
INR9,438/t, down from INR10,332/t in 1Q.
Y/E March 2015 2016 2017E 2018E
Sales 1,395 1,172 1,102 1,241
Europe: EU steel margin is estimated to increase ~USD23/t QoQ to
EBITDA 128 76 144 170
USD73/t on higher steel spreads. Volumes are estimated to be
Adj. PAT 3 7 32 53 marginally higher QoQ to 2.6mt. EBITDA is estimated at INR12.6b, a
Adj. EPS (INR) 2.9 7.7 32.4 54.8 sharp increase from INR8.6b in 1Q.
EPS Gr(%) -91.9 168.6 322.5 68.8 Consolidated EBITDA is estimated at INR40b, an increase of 24%
BV/Sh. (INR) 185 152 136 181 QoQ. PAT is expected to come in at INR12.8b, up from adj. PAT of
RoE (%) 1.3 4.6 22.5 34.5 INR3.4b in 1Q. Sell.
RoCE (%) 6.1 5.4 7.9 9.5
Payout (%) -23.0 -28.6 -363.8 16.7
Valuations
P/E (x) 136.5 50.8 12.0 7.1 Key issues to watch out
P/BV 2.1 2.6 2.9 2.2
Imports from China and global iron ore prices.
EV/EBITDA (x) 8.7 15.1 8.4 7.0
Div. Yield (%) 2.1 2.1 2.1 2.1

Sales (k tons) 6,330 6,290 6,370 6,940 5,410 6,014 5,978 6,329 25,930 23,730
Change (YoY %) -2.0 -3.2 1.1 -1.7 -14.5 -4.4 -6.2 -8.8 -1.5 -8.5
Avg Realization (INR/tss) 47,868 46,589 44,017 42,518 46,635 45,584 46,759 46,779 45,180 46,438
Net Sales 303,003 293,047 280,390 295,076 252,298 274,135 279,511 296,048 1,171,516 1,101,992
Change (YoY %) -16.8 -18.1 -16.6 -12.4 -16.7 -6.5 -0.3 0.3 -16.0 -5.9
EBITDA 27,742 18,305 7,757 22,052 32,420 40,260 36,921 34,804 75,857 144,405
(% of Net Sales) 9.2 6.2 2.8 7.5 12.8 14.7 13.2 11.8 6.5 13.1
Steel EBITDA(USD/tss) 69 45 18 47 89 100 91 81 45 90
Interest 10,980 10,487 9,641 10,178 10,707 12,245 12,410 12,396 41,286 47,758
Depreciation 13,465 13,708 11,327 12,319 12,417 13,537 13,438 13,399 50,818 52,791
Other Income 7,622 29,382 962 1,291 1,367 2,032 983 1,298 39,257 5,680
PBT (before EO Inc.) 10,919 23,491 -12,249 847 10,662 16,510 12,057 10,307 23,008 49,536
EO Income(exp) 1,584 -5,637 -7,118 -28,578 -35,231 -39,749 -35,231
PBT (after EO Inc.) 12,503 17,854 -19,367 -27,731 -24,568 16,510 12,057 10,307 -16,740 14,306
Total Tax 5,154 2,402 2,434 5,060 7,405 3,658 2,988 2,754 15,050 16,805
% Tax 47.2 10.2 -19.9 597.4 69.4 22.2 24.8 26.7 65.4 33.9
Reported PAT 7,349 15,452 -21,801 -32,791 -31,973 12,852 9,068 7,553 -31,790 -2,499
Minority Interests -68 8 -310 -720 29 -9 -16 -1,089 4
Share of asso. PAT 212 -157 219 -67 142 143 145 146 207 577
Adj. PAT (after MI & asso) 6,045 20,925 -14,155 -3,560 3,400 12,967 9,222 7,715 9,256 33,304
E: MOSL Estimates
October 2016 201

Vedanta
Bloomberg VEDL IN CMP:INR179 TP: INR202 (+12%) Neutral
We estimate VEDLs EBITDA to increase 23% QoQ to INR42.4b on
M. Cap. (INR b)/(USD b) 665 / 10
higher prices and volumes in zinc and aluminum.
Standalone business EBITDA is estimated to decline 24% QoQ to
1,6,12 Rel Perf. (%) 5/86/106
INR7.9b on lower copper margins due to a fall in acid prices and
seasonally weak iron ore volumes. Aluminum EBITDA is estimated
to increase 43% QoQ to INR2.9b.
Y/E March 2015 2016 2017E 2018E
Cairn EBITDA is estimated to increase 25% QoQ to INR9.9b.
Sales 749.2 644.3 719.0 805.3
EBITDA * 159.4 110.4 168.2 190.3
Ex-HZL and Cairn India, EBITDA is estimated to increase 3% QoQ to
NP 59.5 31.9 64.3 81.1 INR15.6b. Neutral.
Adj. EPS (INR) 20.1 10.8 17.3 21.8
EPS Gr(%) -21.3 -37.3 -13.8 102.7
BV/Sh. (INR) 121.7 151.8 172.1 183.5
RoE (%) 17.0 7.9 10.7 12.3
RoCE (%) 9.9 7.4 10.9 12.1
Payout (%) 20.4 48.9 30.4 24.1
Valuation
P/BV 1.1 1.1 1.0 1.0 Commissioning of 1.25mtpa smelter.
EV/EBITDA (x)* 6.7 8.6 6.4 5.4
Recovery in base metal prices.
Div. Yield (%) 1.8 2.3 2.3 2.3

Net Sales 170,169 165,609 148,766 159,793 144,371 165,065 199,833 209,762 644,336 719,031
Change (YoY %) -0.2 -15.3 -22.6 -10.3 -15.2 -0.3 34.3 31.3 -12.5 11.6
EBITDA 45,353 38,601 29,057 34,720 34,396 42,401 61,567 65,558 147,731 203,922
Change (YoY %) -20.1 -39.0 -52.7 -13.7 -24.2 9.8 111.9 88.8 -33.4 38.0
As % of Net Sales 26.7 23.3 19.5 21.7 23.8 25.7 30.8 31.3 22.9 28.4
Interest 13,578 14,181 13,906 15,380 13,931 13,846 14,271 14,357 57,045 56,405
D&A 17,175 16,602 17,704 15,629 14,920 16,272 16,642 16,886 67,109 64,720
Other Income 11,480 12,152 7,154 13,757 10,935 10,180 10,491 10,736 44,543 42,343
PBT (before EO item) 26,080 19,969 4,602 17,468 16,480 22,464 41,146 45,051 68,119 125,141
Extra-ordinary Income -4,143 0 2,000 -123,123 0 0 0 0 -125,266 0
PBT (after EO item) 21,937 19,969 6,602 -105,655 16,480 22,464 41,146 45,051 -57,147 125,141
Total Tax 3,525 2,040 1,606 -2,841 4,914 5,015 8,567 10,383 4,330 28,879
% Tax 16.1 10.2 24.3 2.7 29.8 22.3 20.8 23.0 -7.6 23.1
Reported PAT 18,412 17,929 4,996 -102,814 11,567 17,449 32,578 34,668 -61,477 96,262
Minority interest 8,459 9,587 4,819 9,004 5,417 4,978 9,268 9,299 31,869 28,962
Adjusted PAT 14,096 8,342 -1,823 11,305 6,150 12,471 23,310 25,369 31,920 67,300
Change (YoY %) -29.6 -51.2 -111.5 54.7 -56.4 49.5 -1,378.9 124.4 -47.1 110.8
E: MOSL Estimates
October 2016 202

September | Sector:
2016 ResultsOil & Gas
Preview
Oil & Gas

Company name Crude flat QoQ; OMCs core earnings strong; CGDs to shine
BPCL GRMs sustain QoQ; marketing margins on uptrend
Cairn India
Though down 19% YoY, benchmark GRMs sustained QoQ. Reported refining earnings
GAIL
are likely to decline QoQ, as inventory gains had boosted 1Q earnings.
Gujarat State Petronet
OMCs core earnings should improve, led by sequentially higher auto fuel marketing
HPCL margins. Flat oil and gas realization and nil subsidy sharing would sustain upstream
Indraprastha Gas profitability.
IOC Sequentially strong petchem spreads would benefit RIL. For city gas distribution (CGD)
MRPL companies, we expect strong volume growth to sustain. Petchem turnaround should
Oil India favorably impact GAILs earnings.
ONGC Brent average flat QoQ, down 8% YoY; upstream subsidy nil in 2QFY17
Petronet LNG While crude prices rebounded towards the end of 2QFY17, led by OPEC efforts
Reliance Industries to cut production, average for the quarter was flat QoQ at ~USD46/bbl. There is
a possibility of minor inventory losses, as the last fortnight oil price average was
lower than at the start of the quarter.
We estimate 2QFY17 kerosene under-recoveries at INR23b (~INR11.5/liter) and
LPG under-recoveries at INR19b (INR74/cylinder).
As these are within the governments subsidy limit of INR12/liter for kerosene
and ~INR200/cylinder for LPG, we model nil sharing for upstream companies.
GRM at USD5.1/bbl (down 19% YoY); petchem spreads up QoQ and YoY
The regional benchmark Reuters Singapore GRM was down 19% YoY, led by
decline in gasoline cracks to USD5.1/bbl.
In petchem, polymer and polyster, spreads increased sequentially. Meaningful
increase in PP spreads should benefit RIL, as it has higher PP capacity.

Oil & Gas
BPCL 628 Buy 440,284 -5.2 -6.1 23,439 82.9 -39.4 14,751 44.9 -43.7
Cairn India 208 Neutral 19,491 -13.1 3.4 8,131 -16.9 2.3 3,258 -51.6 -9.4
GAIL 385 Neutral 103,755 -26.4 -2.9 13,832 80.2 -12.1 7,886 79.0 -6.8
Gujarat State Petronet 155 Neutral 2,744 8.6 6.4 2,392 6.8 2.6 1,249 15.1 3.0
HPCL 432 Buy 421,076 0.2 -6.0 17,997 LP -49.5 9,008 LP -57.1
IOC 604 Buy 809,183 -4.9 -5.5 58,551 1278.0 -55.8 30,050 LP -63.7
Indraprastha Gas 790 Neutral 9,336 -3.3 4.1 2,660 41.5 3.5 1,582 55.7 6.9
MRPL 89 Buy 105,372 3.1 25.1 8,088 LP -48.9 3,950 LP -45.2
Oil India 415 Buy 22,740 -5.2 6.6 7,888 2.4 1.8 5,592 -17.1 13.1
ONGC 260 Buy 182,442 -11.3 3.2 89,339 -14.0 -3.7 40,701 -15.9 -3.8
Petronet LNG 353 Neutral 59,850 -20.7 12.1 5,955 27.6 -7.3 3,491 40.3 -7.6
Reliance Inds. 1,090 Neutral 556,719 -8.5 4.1 106,118 7.9 -1.9 73,510 12.0 -2.6
Sector Aggregate 2,732,993 -6.6 -1.7 344,391 37.8 -26.2 195,028 48.6 -29.9
Excl. OMCs 1,062,449 -10.8 5.4 244,404 4.4 -5.8 141,219 10.7 -4.9
Source: MOSL
Harshad Borawake (HarshadBorawake@MotilalOswal.com); +91 22 6129 1529

Abhinil Dahiwale (Abhinil.Dahiwale@MotilalOswal.com); +91 22 3980 4309
October 2016 203
September 2016 Results Preview | Sector: Oil & Gas
Auto fuel marketing margins higher QoQ

Post diesel deregulation on October 18, 2014, OMCs have demonstrated pricing
power by (a) passing on the change in international product prices and exchange
rates, and also by (b) tweaking marketing margins.
We estimate gross margin at INR1.7/1.5/liter on petrol/diesel (v/s INR1.4/liter in
the regulated era). We believe marketing margins would continue to exceed
regulated era margins.
Valuation and view
Against the backdrop of a lower oil price regime, auto fuel pricing freedom and
stable marketing margins, we retain OMCs (HPCL/BPCL/IOCL) as our top picks.
CGD players are being re-rated, led by volume growth and margin improvement.
Recent cut in APM price is negative for ONGC/OINL; however, OPEC efforts to
cut oil production should revive realizations, benefitting ONGC/OINL.
RILs core projects have seen minor delays, while telecom commercial launch
would be in January 2017. While core earnings growth would be significant,
telecom losses would cap consolidated earnings and return ratios.
Exhibit 90: Relative performance - 3m (%) Exhibit 91: Relative performance - 1Yr (%)
Sensex Index MOSL Oil & Gas Index Sensex Index MOSL Oil & Gas Index
140
119
111 120
103 100
95 80
Jul-16
Jun-16
Aug-16
Sep-16
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15

Oil & Gas
BPCL 628 Buy 55.2 58.4 64.6 11.4 10.7 9.7 5.9 7.4 6.6 31.8 27.8 25.9
Cairn India 208 Neutral 11.4 10.1 10.7 18.2 20.6 19.5 3.4 5.1 3.6 4.0 3.9 4.0
GAIL 385 Neutral 18.1 27.4 34.9 21.2 14.0 11.0 14.0 9.0 7.2 7.7 12.4 12.7
Gujarat State Petronet 155 Neutral 7.9 9.5 10.9 19.6 16.4 14.2 9.8 8.9 7.7 11.7 12.8 13.3
HPCL 432 Buy 38.0 46.7 48.4 11.4 9.3 8.9 5.4 7.1 6.7 22.4 23.7 21.2
Indraprastha Gas 790 Neutral 29.7 43.8 47.8 26.6 18.0 16.6 9.9 10.0 8.8 18.4 23.2 21.3
IOC 604 Buy 40.6 72.8 78.7 14.9 8.3 7.7 6.2 5.4 4.7 13.6 21.6 20.4
MRPL 89 Buy 7.4 13.3 13.7 12.1 6.7 6.5 1.7 6.6 4.8 19.6 31.9 26.3
Oil India 415 Buy 38.8 38.8 47.0 10.7 10.7 8.8 6.1 7.5 6.7 10.5 10.0 11.4
ONGC 260 Buy 20.4 20.2 24.4 12.8 12.9 10.7 4.6 5.6 4.8 9.5 9.1 10.5
Petronet LNG 353 Neutral 11.2 18.6 22.8 31.5 19.0 15.5 12.6 11.4 9.4 14.0 20.2 21.2
Reliance Inds. 1,090 Neutral 93.6 104.1 115.1 11.7 10.5 9.5 8.6 7.3 6.5 12.0 12.2 12.2
Ex OMCs 13.7 12.4 10.8 6.7 6.7 5.8 10.0 10.3 10.9
Source: MOSL
October 2016 204

On QoQ basis, GRM up 2%, Brent flat, light/heavy spreads rise marginally
Exhibit 93: Brent crude price was flat QoQ but down 8% YoY Exhibit 94: Premium of Brent over WTI increased QoQ to
to an average of USD45.8/bbl in 2QFY17 USD0.9/bbl in 2QFY17
Brent Crude Price (USD/bbl) Brent less WTI (USD/bbl)
140 25
120 20
100 15
80
10
60
5
40
20 0
0 (5)
2QFY05 2QFY07 2QFY09 2QFY11 2QFY13 2QFY15 2QFY17 2QFY05 2QFY07 2QFY09 2QFY11 2QFY13 2QFY15 2QFY17
Exhibit 95: Reuters Singapore GRM up 2% QoQ, but down

19% YoY to average of USD5.1/bbl Exhibit 96: YoY GRM decline led by lower gasoline cracks
Reuters Singapore GRM (USD/bbl) 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17
10 20
8 10
6 0
4 (10)
2
(20)
Gasoline
LPG
Naphtha
Jet/Kero
Diesel
Fuel Oil
0
2QFY05 2QFY07 2QFY09 2QFY11 2QFY13 2QFY15 2QFY17
Source: Bloomberg, MOSL Source: Reuters, MOSL
Exhibit 97: Crude differentials declined in 2QFY17 (USD/bbl) Our key assumptions
In USD/bbl Brent - Dubai Arab L-H Our crude price assumptions are USD49.5/bbl for
10 FY17 and USD55/bbl over long term.
8 We expect the regional benchmark Singapore
6 Reuters GRM to remain in the USD6-7/bbl range
4 for the near term, with downward bias.
2
0
(2)
2QFY05 2QFY07 2QFY09 2QFY11 2QFY13 2QFY15 2QFY17
October 2016 205

Exhibit 98: Polymer spreads rise QoQ due to improved outlook

(INR/kg) RIL Basic prices Simple Spreads Int. Spreads
PE PP PVC POY PSF Naphtha PE PP PVC POY PSF
3QFY14 107.6 109.8 72.3 103.4 106.0 59.3 48.4 50.6 13.1 56.3 58.9
4QFY14 112.3 113.0 74.3 97.9 100.9 58.4 53.9 54.6 15.9 51.4 54.4
1QFY15 109.0 107.7 77.0 97.7 97.6 57.6 51.4 50.1 19.5 51.8 51.7
2QFY15 113.0 110.3 79.4 102.9 103.6 55.9 57.1 54.4 23.5 58.5 59.2
3QFY15 109.3 107.0 70.0 92.7 92.4 40.2 69.1 66.8 29.8 61.0 60.7
4QFY15 90.7 84.3 63.7 80.6 79.8 30.5 60.1 53.8 33.2 56.6 55.8
1QFY16 102.3 100.3 70.1 84.8 84.0 35.6 66.7 64.7 34.5 56.8 56.0
2QFY16 95.8 85.8 65.5 79.0 80.5 29.4 66.4 56.4 36.1 56.1 57.5
3QFY16 88.8 76.7 65.0 73.0 77.5 29.2 59.6 47.6 35.8 50.2 54.7
4QFY16 85.6 70.4 62.3 71.5 74.0 22.8 62.8 47.6 39.5 53.8 56.3
1QFY17 92.4 81.5 68.1 74.4 79.7 27.4 65.0 54.1 40.7 53.1 58.3
2QFY17 91.4 83.9 69.2 74.1 79.3 26.0 65.5 57.9 43.3 53.9 59.2
QoQ (%) -1.1% 2.9% 1..7% -0.4% -0.4% -5.2% 0.6% 6.9% 6.2% 1.6% 1.4%
YoY (%) -4.5% -2.2% 5.7% -6.2% -1.4% -11.5% -1.4% 2.6% 19.8% -3.8% 2.8%
Exhibit 99: Polymer spreads increase (INR/kg): PE , PP, PVC Exhibit 100: POY spread down 3.8% QoQ; PSF spreads up
spreads change -1.4%/2.6%/19.8% QoQ 2.8% QoQ (INR/kg)
PE PP PVC POY PSF
80 80
60 60
40 40
20 20
0
0
2QFY11 2QFY13 2QFY15 2QFY17
2QFY11 2QFY13 2QFY15 2QFY17
Source: Bloomberg, Company, MOSL Source: Bloomberg, Company
Exhibit 101: We model nil subsidy for OMCs in FY17 and FY18
(INR b) FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Fx Rate (INR/USD) 40.3 46.0 47.5 45.6 47.9 54.5 60.6 61.1 65.5 67.5 70.0
Brent (USD/bbl) 82 85 70 86 114 111 108 86 48 49.5 55
Product-wise Gross Under recoveries (INR b)
Petrol 73 52 52 27 0 0 0 0 0 0 0
Diesel 353 523 93 348 819 915 628 109 0 0 0
Kerosene 191 282 174 200 278 296 306 248 116 114 126
LPG* 156 176 143 205 284 399 465 366 161 174 242
Total 773 1,033 461 780 1,385 1,610 1,399 723 276 287 368
Sharing of Gross Under recoveries (INR b)
Government 353 713 260 410 829 1,000 707 273 263 270 332
Upstream 257 329 145 303 552 600 671 428 13 17 36
OMC's 163 (9) 56 67 0 10 21 22 0 0 0
Total 773 1033 461 780 1,385 1,610 1,399 723 276 287 368
Sharing of Gross Under recoveries (%)
Government 46 69 56 53 60 62 51 38 95 94 90
Upstream 33 32 31 39 40 37 48 59 5 6 10
OMC's 21 (1) 12 9 0 1 2 3 0 0 0
Total 100 100 100 100 100 100 100 100 100 100 100
*LPG includes DBTL component Source: Company, MOSL
October 2016 206

Exhibit 102: Petrol-diesel price difference (INR/liter) Exhibit 103: Diesel in over-recovery zone post deregulation
40 Diesel (under)/over recovery (INR/ltr)
3
Petrol - Diesel price
difference (INR/ltr)
30
2
20
1
10
0
0
(1)
Jul-14
Jun-12
Nov-12
Apr-13
May-15
Aug-11
Dec-14
Aug-16
Mar-11
Jan-12
Sep-13
Feb-14
Mar-16
Oct-10
Oct-15
Jun-15
Jun-16
Nov-15
May-15
May-16
Dec-14
Aug-15
Feb-15
Mar-15
Sep-15
Dec-15
Aug-16
Jan-16
Mar-16
Sep-16
Source: PPAC, MoPNG, MOSL Source: PPAC, MoPNG, MOSL
Exhibit 104: With almost nil subsidy, model ONGCs net Exhibit 105: Expect higher LNG volumes in 2QFY17
realization for 2QFY17 at USD47/bbl (mmscmd) and lower production in RILs KG-D6
RIL KG-D6 PLNG GSPL GAIL India
120
Net Realization Subsidy Burden Gross Realization

110110110114103109108107109102
110
95 96 95 97 97 96
76 94 95 97 100
56 64 51 43 91 48 52
63 63 62 74 62 86 87
63 63 62 64 61 40 0 5 44 46 47 38 38 36 51
35 46
90
46 44
40 90 43
2 0 0 0
24 25 24 25 27
0
47 47
48 51 40 45 46 33 47 41 36 56 59 49 44 35 46 47 21 20 21 22 24 23 29
80
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 23 24 70
FY13 FY14 FY15 FY16 FY17 14 12 14 13 13 12 12 12 11

11 10 9 9 60
2QFY14 2QFY15 2QFY16 2QFY17E

Exhibit 107: Cairns Rajasthan production likely to remain

Exhibit 106: Expect RILs GRM at USD10/bbl (USD/bbl) flat at 167kbpd
Singapore GRM Premium / (Disc) RIL GRM Rajasthan gross Oil Production (kbpd)
3.5 11.5
11.5
3.1 10.8
10.6
2.4 10.4
191
1.4 10.1
1.5 10.1
10.0
186
183
180
175
174
173
172
172
170
170
169
168
168
167
167
167
3.1 9.6
163
0.4 9.5
3.1 9.3
2.9 8.7
1.8 8.4
3.5 8.3
138
5.4 2.3 7.7
6.7 0.9 7.6
4.3 3.3 7.6
125
125
125
125
6.3 1.0 7.3
118
116
4.3
6.5
4.9
45
9.1
8.7
8.6
8.0
8.0
7.7
18
15
6.6
6.5
6.3
6.2
5.8
5.1
5.0
4.8
6
2QFY10
3QFY10
4QFY10
1QFY11
2QFY11
3QFY11
4QFY11
1QFY12
2QFY12
3QFY12
4QFY12
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
FY13 FY14 FY15 FY16 FY17
October 2016 207

BPCL
Bloomberg BPCL IN CMP: INR628 TP: INR703 (+12%) Buy
We expect OMCs (IOCL, BPCL, HPCL) core earnings to improve, led
M. Cap. (INR b)/(USD b) 908 / 14
by higher marketing margins. However, on a reported basis, earnings
would decline QoQ, as 1QFY17 had significant inventory gains.
1,6,12 Rel Perf. (%) 8/30/39
We model nil subsidy sharing for OMCs; the subsidy in 2QFY17
Financial snapshot (INR b) would entirely be borne by the government.
Y/E March 2015 2016 2017E 2018E 2QFY17 gross under-recoveries (including LPG DBTL component)
Sales 2,424 1,884 2,104 2,476 have declined 41% YoY, led by lower crude oil/petroleum product
EBITDA 96.0 142.1 147.1 162.4 prices and diesel deregulation.
Adj. PAT 48.1 79.8 84.5 93.4 We peg BPCLs refinery throughput at 6.3mmt for 2QFY17 v/s 6mmt
Adj. EPS (INR) 33.2 55.2 58.4 64.6 in 2QFY16 and 6.2mmt in 1QFY17.
EPS Gr.% 22.9 66.1 5.8 10.6 We expect BPCL to report PAT of INR14.7b in 2QFY17 (-44% QoQ,
BV/Sh.INR 155.9 191.2 228.6 270.9 +45% YoY).
RoE (%) 22.9 31.8 27.8 25.9 BPCL trades at 9.7x FY18E EPS and 2.1x FY18E BV (adjusted for
RoCE (%) 11.6 18.1 16.0 15.7 investments), with 3% dividend yield. Buy.
Payout*(%) 41.2 38.7 38.1 37.8
Valuation
P/E (x) 18.9 11.4 10.7 9.7
EV/EBITDA (x) 11.4 7.7 7.4 6.6
(a) Inventory and forex change impact, (b) GRM, (c) Kochi refinery
Div. Yld (%) 1.8 2.7 2.9 3.0
*Based on standalone
expansion, and (d) update on Mozambique/Brazil E&P blocks.
Quarterly Performance (Standalone)

Y/E March FY16 FY17 FY16 FY17E IndAS
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 2QFY17*
Net Sales 519,167 464,227 466,131 441,455 468,902 440,284 528,607 605,081 1,890,981 2,042,874 479,910
Change (%) -22.2 -25.1 -19.5 -14.0 -9.7 -5.2 13.4 37.1 -20.5 8.0 3.4
EBITDA 37,686 12,813 23,631 34,380 38,707 23,439 31,363 31,486 108,510 124,994 23,439
% of Sales 7.3 2.8 5.1 7.8 8.3 5.3 5.9 5.2 5.7 6.1 4.9
Depreciation 5,372 4,172 4,564 4,435 4,315 5,850 5,800 6,084 18,543 22,049 5,850
Interest 1,147 1,074 975 2,433 1,111 1,408 1,944 2,312 5,629 6,775 1,408
Other Income 3,794 7,373 3,545 7,461 4,134 5,198 5,656 4,740 22,174 19,728 5,198
PBT 34,962 14,940 21,637 34,973 37,415 21,379 29,275 27,830 106,512 115,899 21,379
Tax 11,200 4,760 6,751 9,482 11,210 6,628 9,076 9,018 32,193 35,932 6,628
Tax rate (%) 32.0 31.9 31.2 27.1 30.0 31.0 31.0 32.4 30.2 31.0 31.0
PAT 23,762 10,180 14,886 25,491 26,205 14,751 20,199 18,812 74,319 79,967 14,751
Change (%) 95.4 119.3 170.1 -10.6 10.3 44.9 35.7 -26.2 46.2 7.6 44.9
EPS (INR) 16.4 7.0 10.3 17.6 18.1 10.2 14.0 13.0 51.4 55.3 10.2
E: MOSL Estimates; *Under IndAS, revenues are shown on gross basis including excise duties
October 2016 208

Cairn India
Bloomberg CAIR IN
CMP: INR208 Neutral
We expect CAIR to report consolidated net sales of INR19b in
M. Cap. (INR b)/(USD b) 390 / 6
2QFY17 (v/s INR22b in 2QFY16 and INR18.8b in 1QFY17). Net sales
are likely to increase QoQ, led by crude priceBrent average price
1,6,12 Rel Perf. (%) 4/24/28
was flat QoQ (down 8% YoY).
Financial snapshot (INR b) We estimate consolidated EBITDA at INR8.1b in 2QFY17 v/s INR9.8b
Y/E March 2015 2016 2017E 2018E in 2QFY16 and INR7.9b in 1QFY17.
Sales 146.5 86.3 88.2 104.0 We expect CAIRs 2QFY17 Rajasthan production (Cairn share) at
EBITDA 96.2 36.2 40.0 48.3 116.9kboepd v/s 117.7kboepd in 2QFY16 and 120.5kbpd in 1QFY17.
Adj. PAT 69.5 21.4 18.9 20.0 We model Brent crude price of USD49.5/bbl for FY17, USD55/bbl
Adj. EPS (INR) 37.1 11.4 10.1 10.7
for FY18 and USD55/bbl for the long term, and take a quality
EPS Gr. (%) -43.1 -69.2 -11.8 5.9
discount of 15% for CAIR.
BV/Sh.(INR) 314.0 259.0 264.1 271.5
The stock trades at 19.5x FY18E EPS of INR10.7. Neutral.
RoE (%) 12.0 4.0 3.9 4.0
RoCE (%) 9.8 2.8 4.1 3.9
Payout (%) 28.4 30.7 30.7 30.7
Valuations
P/E (x) 5.6 18.2 20.6 19.5
In the medium term: (a) update on PSC extension, (b) production
P/BV (x) 0.7 0.9 0.8 0.8 ramp-up, (c) reserve updates, and (d) clarity on cash utilization.
EV/EBITDA (x) 2.5 6.2 5.1 3.6 During the quarter: (a) net realization, (b) forex fluctuations, and
Div. Yield (%) 4.3 1.4 1.3 1.3 (c) guidance on production ramp-up and reserve upgrade.

1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE 2QFY17
Net Sales 26,271 22,421 20,395 17,168 18,851 19,491 23,512 26,742 86,256 88,597 19,491
Change (%) -41.4 -43.7 -41.8 -35.9 -28.2 -13.1 15.3 55.8 -41.1 2.7 -13.1
EBITDA 13,728 9,789 7,386 5,347 7,950 8,131 11,035 13,310 36,249 40,426 8,131
% of Net Sales 52.3 43.7 36.2 31.1 42.2 41.7 46.9 49.8 42.0 45.6 41.7
% Change -58.5 -64.9 -66.2 -60.1 -42.1 -16.9 49.4 148.9 -62.3 11.5 -16.9
Exploration w/off 824 682 725 369 13 59 98 187 2,601 358 59
D,D&A 8,766 8,644 8,930 4,732 8,103 8,025 8,100 7,849 31,072 32,076 8,025
Interest 16 58 45 151 179 78 85 83 270 425 78
Other Income (Net) 3,816 1,204 1,419 6,502 5,284 4,208 4,458 4,738 12,941 18,689 4,208
PBT before exceptionals 7,938 1,609 -895 6,596 4,939 4,178 7,211 9,929 15,249 26,256 4,178
Forex Fluctuations 1,820 3,807 488 1,028 -1,248 0 0 0 7,143 -1,248 0
Exceptional items 0 -116,738 0 0 -116,738 0 0
PBT 9,758 5,417 -407 -109,113 3,691 4,178 7,211 9,929 -94,346 25,008 4,178
Tax 1,408 -1,310 -494 369 95 919 1,587 3,129 -27 5,730 919
Tax rate* (%) 17.7 -81.4 n.a. n.a. 1.9 22.0 22.0 31.5 0.0 21.8 22.0
PAT 8,350 6,727 87 -109,482 3,596 3,258 5,624 6,800 -94,319 19,278 3,258
Adj. PAT 8,350 6,727 87 6,262 3,596 3,258 5,624 6,800 21,425 19,278 3,258
Adj. EPS 4.5 3.6 0.0 3.3 1.9 1.7 3.0 3.6 11.4 10.3 1.7
Key Assumptions and Cain's share in production (kboepd)
Exchange rate (INR/USD) 63.7 65.0 66.0 67.0 66.9 67.0 68.0 68.1 65.4 67.5
Brent Price (USD/bbl) 61.9 50.5 43.7 34.5 46.0 45.9 52.0 54.1 47.7 49.5
Ravva & Cambay Prodn 10.0 10.3 9.1 8.4 8.5 8.5 8.5 8.5 9.5 8.5
Rajasthan Prodn 120.5 117.7 119.3 117.4 116.9 116.9 118.3 119.6 118.7 117.9
Total 130.5 128.0 128.4 125.8 125.4 125.4 126.8 128.1 128.2 126.5
E: MOSL Estimates; * Excluding forex fluctuations, includes MAT credit.
October 2016 209

GAIL
Bloomberg GAIL IN
CMP: INR385 TP: INR414 (+8%) Neutral
We expect GAIL to report a PAT of INR7.9b (up 79% YoY and down 7%
M. Cap. (INR b)/(USD b) 488 / 7
QoQ). We model nil subsidy sharing for GAIL in 2QFY17 (v/s nil in
2QFY16 and 1QFY17).
1,6,12 Rel Perf. (%) -1/-1/23
We estimate EBITDA at INR13.8b in 2QFY17 v/s INR7.6b in 2QFY16
Financial snapshot (INR b)
Y/E March 2015 2016 2017E 2018E and INR15.7b in 1QFY17.
Sales 567.4 516.1 455.9 543.3 Segmental EBIT (pre-subsidy) is expected to be INR13.4b, up 74%
EBITDA 47.0 39.7 62.4 73.7 YoY, led by turnaround in petchem division profitability and likely
Adj. PAT 29.9 23.0 34.8 44.2
higher gas trading profitability.
Adj. EPS (INR) 23.6 18.1 27.4 34.9
EPS Gr. (%) -27.5 -23.2 51.3 27.1
GAIL trades at 11x FY18E EPS of INR34.9. Maintain Neutral.
BV/Sh.(INR) 229.6 241.1 262.4 284.5
RoE (%) 10.8 7.7 12.4 12.7
RoCE (%) 7.9 6.5 9.3 10.4 Key issues to watch for
Payout (%) 30.1 36.5 32.0 36.5 (a) Petchem profitability, (b) profitability in gas trading business, (c)
Valuations progress of pipeline projects worth USD4b, (d) pending tariff
P/E (x) 16.3 21.2 14.0 11.0
revisions for key pipelines, and (e) transmission volumes post
P/BV (x) 1.7 1.6 1.5 1.4
EV/EBITDA (x) 11.0 11.5 7.8 6.2 RasGas contract renegotiation.
Div. Yield (%) 1.6 1.4 2.1 2.9
Net Sales 125,191 140,880 133,801 116,272 106,866 103,755 116,501 129,083 516,143 456,205 105,104
Change (%) -6.4 -0.3 -10.6 -18.5 -14.6 -26.4 -12.9 11.0 -9.0 -11.6
EBITDA 9,976 7,675 10,847 11,186 15,732 13,832 15,524 17,271 39,684 62,358 13,832
% of Net Sales 8.0 5.4 8.1 9.6 14.7 13.3 13.3 13.4 7.7 13.7 13.3
Depreciation 3,077 3,227 3,330 3,497 3,354 3,519 3,545 3,777 13,131 14,196 3,519
Interest 1,636 1,635 1,583 1,546 1,774 1,650 1,550 1,431 6,400 6,406 1,650
Other Income 1,248 3,787 3,284 3,256 1,362 3,107 2,694 2,333 11,576 9,496 3,107
Extraordinary item* 0 0 0 0 4,893 0 0 0 0 4,893 0
PBT 6,511 6,599 9,218 9,399 16,858 11,770 13,123 14,395 31,728 56,146 11,770
Tax 2,270 2,194 2,576 1,699 3,506 3,884 4,330 4,750 8,739 16,471 3,884
Rate (%) 34.9 33.2 27.9 18.1 20.8 33.0 33.0 33.0 27.5 29.3 33.0
PAT 4,241 4,405 6,643 7,700 13,352 7,886 8,792 9,645 22,989 39,675 7,886
Adj PAT 4,241 4,405 6,643 7,700 8,459 7,886 8,792 9,645 22,989 34,782 7,886
Change (%) -31.7 -66.2 18.7 50.8 99.4 79.0 32.4 25.3 -23.2 51.3 79.0
EPS (INR) 3.3 3.5 5.2 6.1 6.7 6.2 6.9 7.6 18.1 27.4 6.2
Key Assumptions
Gas Trans. volume (mmsmd) 87 90 97 95 96 97 98 101 92 98
Petchem sales ('000MT) 50 84 84 116 110 150 155 161 334 576
Segmental EBIT Breakup (INR m)
Gas Transmission 3,937 5,755 4,277 4,510 5,554 4,946 4,840 4,786 18,479 20,127
LPG Transmission 822 580 543 693 526 599 598 592 2,639 2,316
Natural Gas Trading 3,424 1,925 4,834 3,766 4,219 3,375 2,890 2,923 13,950 13,408
Petrochemicals -3,002 -2,369 -1,606 -1,089 930 1,686 3,725 4,481 -8,066 10,822
LPG & Liq.HC (pre-subsidy) 2,768 721 2,328 1,642 2,144 1,920 1,726 2,151 7,459 7,942
Unallocated; GAILTEL 681 1,101 -121 979 606 893 893 893 2,640 3,285
Total 8,630 7,714 10,255 10,501 13,979 13,420 14,673 15,827 37,100 57,898
Less: Subsidy 0 0 0 0 0 0 0 0 0 0
Total 8,630 7,714 10,255 10,501 13,979 13,420 14,673 15,827 37,100 57,898
October 2016 210

Gujarat State Petronet

Bloomberg GUJS IN CMP: INR155 TP: INR169 (+9%) Neutral
Equity Shares (m) 563.0 We expect GUJS to report net sales of INR2.7b and PAT of INR1.2b
(flat QoQ and up 15% YoY).
We model transmission volume at 26.5mmscmd (+9.1% YoY, +5%
1,6,12 Rel Perf. (%) 3/2/25
QoQ) and transmission tariff at INR1,075/mscm (+1.2% YoY, flat
QoQ).
GUJS had won the bids for three cross-country pipelines (Mehsana-
Y/E March 2015 2016 2017E 2018E
Bhatinda, Bhatinda-Srinagar, Mallavaram-Bhilwara). We await
Sales 10.6 9.9 11.4 12.6
clarity on the current status, timelines and other details regarding
EBITDA 9.2 8.6 10.1 11.1
these pipelines.
Adj. PAT 3.6 4.4 5.3 6.2
We build gas transmission volumes of 26.9mmscmd for FY17 and
Adj. EPS (INR) 6.4 7.9 9.5 10.9
EPS Gr. (%) -14.4 23.9 19.9 15.5
29mmscmd for FY18 and model tariff at INR1,127/mscm for FY17
BV/Sh.(INR) 64.4 70.5 77.9 86.3
and INR1,200/mscm for FY18. The stock trades at 14.2x FY18E EPS
RoE (%) 12.6 11.7 12.8 13.3 of INR10.9. Maintain Neutral.
RoCE (%) 10.3 9.7 10.6 11.2
Payout (%) 18.2 22.2 22.3 22.5
Valuations
P/BV (x) 2.4 2.2 2.0 1.8 Transmission volumes.
EV/EBITDA (x) 10.4 10.9 8.9 7.7 Progress on clearances of the three pipelines.
Div. Yield (%) 0.8 1.0 1.2 1.4
Net Sales 2,557 2,526 2,475 2,313 2,579 2,744 3,079 3,013 9,870 11,414 2,744
Change (%) 11.0 -28.0 1.9 -2.1 0.9 8.6 24.4 30.3 -6.9 15.6 8.6
Employee Costs 74 113 89 71 79 119 96 81 347 375 119
Operating expenses 193 121 243 130 117 170 191 187 687 665 170
Other Expenditure 53 52 57 69 52 63 71 69 231 255 63
EBITDA 2,237 2,240 2,086 2,042 2,330 2,392 2,721 2,675 8,605 10,118 2,392
% of Net Sales 87.5 88.7 84.3 88.3 90.4 87.2 88.4 88.8 87.2 88.7 87.2
% Change 11.9 -30.7 2.7 3.5 4.2 6.8 30.4 31.0 -6.8 17.6 6.8
Depreciation 434 464 472 473 430 480 485 523 1,843 1,918 480
Interest 207 213 184 168 167 175 178 186 773 706 175
Other Income 143 122 288 137 147 165 195 146 690 653 165
PBT 1,738 1,685 1,718 1,538 1,881 1,902 2,253 2,112 6,679 8,147 1,902
Tax 610 600 483 541 668 653 773 725 2,234 2,819 653
Rate (%) 35.1 35.6 28.1 35.2 35.5 34.3 34.3 34.3 33.4 34.6 34.3
PAT 1,128 1,085 1,235 997 1,213 1,249 1,480 1,387 4,445 5,328 1,249
Adj. PAT 1,128 1,085 1,235 997 1,213 1,249 1,480 1,387 4,445 5,328 1,249
Change (%) 33 -2 39 35 8 15 20 39 24 20 15
EPS (INR) 2.0 1.9 2.2 1.8 2.2 2.2 2.6 2.5 7.9 9.5 2.2
Transmission Vol. (mmscmd) 24.2 24.3 25.1 24.4 25.1 26.5 28.0 28.0 24.5 26.9 26.5
Implied adj. tariff (INR/mscm) 1,126 1,068 1,054 1,028 1,073 1,075 1,180 1,180 1,069 1,127 1,075
October 2016 211

HPCL
Bloomberg HPCL IN
We expect OMCs (IOCL, BPCL, HPCL) core earnings to improve, led
M. Cap. (INR b)/(USD b) 440 / 7
by higher marketing margins. However, on a reported basis,
earnings would decline QoQ, as 1QFY17 had significant inventory
1,6,12 Rel Perf. (%) 6/52/60
gains.
We model nil subsidy sharing for OMCs; the subsidy would entirely
Y/E MARCH
be borne by the government.
2015 2016 2017E 2018E
2QFY17 gross under-recoveries (including LPG DBTL component)
Sales 2,064 1,793 1,939 2,099
EBITDA
have declined 41% YoY, led by lower crude oil/petroleum product
54.2 76.2 91.5 94.5
Adj. PAT 27.3 38.6 47.5 49.3
prices and diesel deregulation.
Adj. EPS (INR) 26.9 38.0 46.7 48.4 We peg refinery throughput at 4mmt for 2QFY17 (v/s 4.5mmt in
EPS Gr. (%) 57.6 41.3 23.0 3.7 1QFY17 and 4.2mmt in 2QFY16).
BV/Sh.(INR) 158 182.1 212.4 243.9 We expect HPCL to report PAT of INR9b in 2QFY17 (-57% QoQ).
RoE (%) 17.6 22.4 23.7 21.2 HPCL trades at 8.9x FY18E standalone EPS and 7.2x FY18E
RoCE (%) 7.3 11.4 12.6 11.6 consolidated EPS of INR60. The stock trades at 1.8x FY18E BV. Buy.
Payout (%) 35.7 35.4 35.1 35.0
Valuations
P/BV (x) 2.7 2.4 2.0 1.8 (a) GRM, (b) impact of forex and inventory change, and (c)
EV/EBITDA (x) 9.9 6.8 5.7 5.7 Bhatinda refinery profits.
Div. Yield (%) 1.9 2.7 3.2 3.4

Y/E March FY16 FY17 FY16 FY17 IndAS
Net Sales* 517,204 420,036 434,311 421,260 447,793 421,076 512,998 556,830 1,792,811 1,938,697 458,973
Change (%) -12.6 -18.7 -14.9 -5.4 -13.4 0.2 18.1 32.2 -13.1 8.1
EBITDA 29,802 -1,265 21,711 25,921 35,653 17,997 18,674 19,162 76,168 91,486 17,997
% of Net Sales 5.8 -0.3 5.0 6.2 8.0 4.3 3.6 3.4 4.2 4.7 4.3
Depreciation 7,508 5,428 6,978 6,754 6,108 6,600 7,089 7,392 26,668 27,189 6,600
Interest 1,227 1,650 1,610 1,913 1,395 1,552 1,685 1,685 6,401 6,316 1,552
Other income 3,138 3,640 2,732 4,771 3,368 3,680 3,680 2,761 14,282 13,489 3,680
PBT 24,204 -4,704 15,855 22,025 31,518 13,526 13,580 12,847 57,381 71,470 13,526
Tax 8,324 -1,499 5,433 6,495 10,534 4,518 4,536 4,291 18,753 23,878 4,518
Rate (%) 34.4 31.9 34.3 29.5 33.4 33.4 33.4 33.4 32.7 33.4 33.4
PAT 15,880 -3,205 10,423 15,529 20,984 9,008 9,044 8,556 38,627 47,592 9,008
Change (%) 3,349.3 nm nm -28.2 32.1 nm -13.2 -44.9 41.3 23.2 nm
Adj. EPS 15.6 -3.2 10.2 15.3 20.6 8.9 8.9 8.4 38.0 46.8 8.9
October 2016 212

Indraprastha Gas
Bloomberg IGL IN CMP: INR790 TP: INR838 (+6%) Neutral
We expect IGL to report volumes of 4.4mmscmd and PAT of
M. Cap. (INR b)/(USD b) 111 / 2
INR1.6b (up 56% YoY and 7% QoQ) for 2QFY17.
IGL's CNG volumes have seen an uptick in the last quarter, driven by
1,6,12 Rel Perf. (%) 1/28/61
anti-pollution drive in Delhi and we expect some uptick in the
current quarter as well.
Y/E MARCH
We expect 2QFY17 CNG volumes at 3.4mmscmd (+10% YoY, +3%
2015 2016 2017E 2018E
QoQ). We model total volumes of 4.4/4.6mmscmd in FY17/FY18.
Sales 36.7 36.7 36.1 42.0
EBITDA
We expect profitability to improve QoQ and YoY, driven by lower
7.8 7.6 10.3 11.2
Adj. PAT 4.4 4.2 6.1 6.7
cut in CNG prices versus gas cost decline.
Adj. EPS (INR) 31.3 29.7 43.8 47.8 The recent anti-pollution drive in Delhi, along with the Supreme
EPS Gr. (%) 21.6 -4.9 47.4 9.0 Court directive to set up ~100 CNG stations in Delhi, should increase
BV/Sh.(INR) 149.9 172.6 205.9 241.9 earnings. Also, the recent cut in domestic gas price juxtaposed with
RoE (%) 22.7 18.4 23.2 21.3 rise in crude oil prices will increase the competitiveness of CNG v/s
RoCE (%) 20.1 17.1 21.8 20.3 diesel/petrol; we expect this to translate into higher volumes.
Payout (%) 19.2 20.2 20.5 20.9 The stock trades at 16.6x FY18E EPS of INR47.8. Neutral.
Valuation
P/BV (x) 5.3 4.6 3.8 3.3 (a) Likely increase in volumes following lower gas prices, and (b)
EV/EBITDA (x) 14.0 14.0 10.0 8.8 EBITDA margin.
Div. Yield (%) 0.8 0.8 1.1 1.3
Quarterly performance (INR million)

Y/E MARCH FY16 FY17 FY16 FY17E IndAS
Net Sales 8,994 9,658 9,269 8,816 8,970 9,336 8,909 8,874 36,737 36,090 10,176
Change (%) 3.7 1.8 -1.5 -3.4 -0.3 -3.3 -3.9 0.7 0.1 -1.8
EBITDA 1,938 1,880 1,850 1,929 2,570 2,660 2,551 2,548 7,597 10,329 2,660
EBITDA (Rs/scm) 5.6 5.0 5.0 5.2 6.5 6.5 6.3 6.2 5.2 5.1 6.5
% of Net Sales 21.5 19.5 20.0 21.9 28.7 28.5 28.6 28.7 20.7 28.6 28.5
% Change -6.3 -12.4 -1.9 12.2 32.7 41.5 37.9 32.1 -2.9 36.0 41.5
Depreciation 386 395 399 398 466 426 445 422 1,577 1,758 426
Interest 36 27 18 10 0 0 0 0 91 0 0
Other Income 79 99 135 106 107 129 165 192 420 593 129
PBT 1,596 1,557 1,569 1,627 2,211 2,363 2,271 2,318 6,349 9,164 2,363
Tax 577 542 517 551 731 781 751 767 2,187 3,030 781
Rate (%) 36.2 34.8 33.0 33.9 33.1 33.1 33.1 33.1 34.4 33.1 33.1
PAT 1,018 1,016 1,051 1,076 1,480 1,582 1,520 1,552 4,162 6,134 1,582
EPS (INR) 7.3 7.3 7.5 7.7 10.6 11.3 10.9 11.1 29.7 43.8 11.3
Gas Volumes (mmscmd)
CNG 2.97 3.10 3.07 3.15 3.31 3.41 3.37 3.46 3.07 3.39
PNG 0.87 0.98 0.94 0.95 1.02 1.03 1.04 1.05 0.93 1.03
Total 3.84 4.08 4.01 4.10 4.34 4.43 4.41 4.50 4.01 4.42
YoY Change (%)
CNG 4.7 2.9 4.1 7.1 11.7 10.0 9.7 9.7 4.7 10.3
PNG (4.8) 4.7 5.1 7.7 17.7 5.0 10.0 10.6 3.1 10.6
Total 2.3 3.3 4.3 7.2 13.0 8.8 9.8 9.9 4.3 10.3
October 2016 213

IOC
Bloomberg IOCL IN
We expect OMCs (IOCL, BPCL, HPCL) core earnings to improve, led by
M. Cap. (INR b)/(USD b) 1,465 / 22
higher marketing margins. However, on a reported basis, earnings
would decline QoQ, as 1QFY17 had significant inventory gains.
1,6,12 Rel Perf. (%) 6/42/43
We model nil subsidies for OMCs subsidies would entirely be borne
by the government.
Y/E MARCH
1QFY17 gross under-recoveries (including LPG DBTL component) have
2015 2016 2017E 2018E
declined 41% YoY, led by lower crude oil/petroleum product prices
Sales 4,483 3,544 3,333 4,047
and diesel deregulation.
EBITDA 93.4 217.0 346.8 371.7
Adj. PAT
We peg refinery throughput at 15.8mmt for 2QFY17 (+18.7% YoY)
32.4 98.5 176.8 191.2
Adj. EPS (INR) 13.4 40.6 72.8 78.7
higher due to the recently commissioned Paradip refinery being
EPS Gr. (%) -39.2 203.8 79.5 8.1 operational for the full quarter.
BV/Sh.(INR) 283.5 313.3 360.4 411.1 We expect IOCL to report net profit of INR30b in 2QFY17 (-64% QoQ, -
RoE (%) 4.7 13.6 21.6 20.4 flat YoY).
RoCE (%) 4.4 9.6 14.2 14.0 IOCL trades at 7.7x FY18E EPS and at 1.5x FY18E BV. Dividend yield is
Payout (%) 52.0 44.0 35.4 35.8 ~4%. Buy.
Valuations
P/E (x) 45.2 14.9 8.3 7.7
P/BV (x) 2.1 1.9 1.7 1.5
EV/EBITDA (x) 21.2 8.0 5.1 4.4 Key issues to watch for
Div. Yield (%) 1.1 2.3 3.6 4.0 (a) Update on Paradip refinery, (b) GRM, (c) capex plans, and (d)
forex/inventory changes.
Net Sales 1,010,089 851,148 831,788 800,189 856,553 809,183 939,550 1,067,732 3,493,214 3,673,018 882,010
Change (%) -19.0 -23.5 -22.2 -14.4 -15.2 -4.9 13.0 33.4 -20.0 5.1
EBITDA 98,026 4,249 49,590 36,136 132,581 58,551 68,047 73,936 188,001 333,114 58,551
% of Net Sales 9.7 0.5 6.0 4.5 15.5 7.2 7.2 6.9 5.4 9.1 7.2
Depreciation 11,435 11,286 11,693 14,114 14,350 16,450 22,000 24,464 48,528 77,264 16,450
Interest 5,922 7,293 6,104 10,682 6,800 6,023 6,221 6,122 30,001 25,167 6,023
Other Income 11,329 12,726 14,062 10,805 8,957 7,791 7,309 6,402 48,923 30,459 7,791
PBT 91,999 -1,604 45,854 22,146 120,388 43,869 47,135 49,751 158,395 261,142 43,869
Tax 27,642 1,688 15,286 9,789 37,698 13,819 16,026 16,915 54,405 84,458 13,819
Rate (%) 30.0 nm 33.3 44.2 31.3 31.5 34.0 34.0 34.3 32.3 31.5
PAT 64,357 -3,292 30,569 12,356 82,690 30,050 31,109 32,836 103,991 176,684 30,050
Change (%) 155.1 nm nm -80.3 28.5 nm 1.8 165.7 97.2 69.9 nm
Adj. EPS (INR) 26.5 -1.4 12.6 5.1 34.1 12.4 12.8 13.5 42.8 72.8 12.4
E: MOSL Estimates; *Under IndAS revenues are shown on gross basis including excise duties
October 2016 214

MRPL
Bloomberg MRPL IN
M. Cap. (INR b)/(USD b) 156 / 2 We expect MRPL to report EBITDA of INR8b (v/s INR15.8b in
52-Week Range (INR) 93/51 1QFY17). We estimate adjusted PAT of INR3.9b (v/s INR7.2b in
1,6,12 Rel Perf. (%) 13/17/60 1QFY17).
Regional benchmark Reuters Singapore GRM is down 23% YoY/4%
QoQ to USD4.8/bbl. We model MRPLs GRM at USD5/bbl v/s
Y/E MARCH 2015 2016 2017E 2018E
USD10/bbl in 1QFY17 and USD0.3/bbl in 2QFY16.
Sales 574.6 396.3 441.6 516.3
EBITDA -14.1 29.6 38.0 48.6 We expect refinery throughput at 4.6mmt (+24% QoQ and +32%
Adj. PAT -17.4 12.9 23.3 24.0 YoY).
Adj. EPS (INR) -9.9 7.4 13.3 13.7
For MRPL, we model GRM of ~USD7bbl for FY17/FY18. The stock
EPS Gr. (%) -430.5 -174.5 80.3 3.1
trades at 6.5x FY18E EPS, and at an EV of 4.7x FY18E EBITDA. Buy.
BV/Sh.(INR) 30.3 36.6 46.8 57.3
RoE (%) -27.7 19.6 31.9 26.3
RoCE (%) -5.9 23.1 19.8 15.5
Payout (%) 0.0 0.0 23.8 23.0
Valuation
P/E (x) -9.0 12.1 6.7 6.5 Key issues to watch for
P/BV (x) 2.9 2.4 1.9 1.6 (a) GRM, (b) forex fluctuations, and (c) inventory changes.
EV/EBITDA (x) -9.4 2.9 5.3 4.7 Updates on foray into petrol and diesel marketing.
Div. Yield (%) 0.0 0.0 3.0 3.0 Payment of outstanding dues to Iran.
Quarterly Performance (Standalone)

Y/E MARCH FY16 FY17 FY16 FY17E IndAS
Net Sales 113,131 102,176 88,166 92,848 84,259 105,372 124,002 127,986 396,320 441,619 121,178
Change (%) -28.1 -35.8 -40.1 -16.3 -25.5 3.1 40.6 37.8 -31.0 11.4
EBITDA 10,283 -2,151 6,075 15,438 15,814 8,088 11,604 11,318 29,645 46,824 8,088
% of Net Sales 9.1 -2.1 6.9 16.6 18.8 7.7 9.4 8.8 7.5 10.6 7.7
% Change nm nm nm 43 54 nm 91 -27 n.a. 57.9 nm
Depreciation -1,486 -1,593 -1,596 -2,449 -1,707 -1,875 -1,885 -2,004 -7,124 -7,471 -1,875
Interest -1,218 -1,588 -1,515 -1,458 -1,431 -1,770 -1,780 -2,580 -5,778 -7,562 -1,770
Other Income 2,157 2,437 1,657 2,475 2,325 1,200 785 826 8,726 5,136 1,200
PBT b/f forex/exceptional 9,736 -2,896 4,621 14,007 15,001 5,643 8,724 7,560 25,469 36,927 5,643
Forex gain/(loss) -3,103 -7,026 -1,631 -143 -3,631 0 0 0 -11,903 -3,631 0
Exceptional items -1,542 -205 -6 -77 0 0 0 0 -1,830 0 0
PBT 5,092 -10,127 2,984 13,787 11,370 5,643 8,724 7,560 11,736 33,296 5,643
Tax -1,032 1,032 0 -254 -4,167 -1,693 -2,617 -1,512 -254 -9,989 -1,693
Rate (%) 20.3 10.2 0 1.8 36.6 30.0 30.0 20.0 2.2 30.0 30.0
PAT 4,060 -9,095 2,984 13,534 7,203 3,950 6,107 6,047 11,483 23,307 3,950
Adj. PAT* 5,278 -8,933 2,989 13,594 7,203 3,950 6,107 6,047 12,928 23,307
Change (%) nm nm nm 16.2 77.4 nm 104.6 -55.5
EPS (INR) 2.3 -5.2 1.7 7.7 4.1 2.3 3.5 3.5 6.6 13.3
GRM (USD/bbl) 6.6 0.3 4.8 8.2 10.0 5.0 6.5 6.5 5.3 6.8
Throughput (mmt) 3.9 3.5 3.8 4.5 3.7 4.6 4.5 4.5 15.7 17.3
October 2016 215

Oil India
Bloomberg OINL IN
We expect OINL to report adjusted PAT of INR5.6b (v/s INR6.7b in
M. Cap. (INR b)/(USD b) 249 / 4
2QFY16 and INR4.9b in 1QFY17).
We estimate EBITDA at INR7.9b (up 2.4% YoY and up 1.8% QoQ). We
1,6,12 Rel Perf. (%) 9/19/-11
estimate gross and net realization at USD44.9/bbl, with no subsidy
sharing burden.
Y/E MARCH
We model upstream subsidy if under-recovery is above government
2015 2016 2017E 2018E
support of INR12/liter in kerosene and ~INR200/kg in LPG.
Sales 92.3 92.7 94.5 105.8
EBITDA
Our Brent price assumption is USD49.5/55/bbl for FY17/18.
30.1 31.2 33.8 38.0
Adj. PAT 25.1 23.3 22.9 28.2
The stock trades at 8.8x FY18E EPS of INR47. We remain positive on
Adj. EPS (INR) 41.8 38.8 38.8 47.0 OINL due to attractive valuations and high dividend yield of ~4%. Buy.
EPS Gr. (%) -15.8 -7.2 -1.8 23.4
BV/Sh.(INR) 357.9 377.9 399.1 424.6
RoE (%) 11.9 10.5 10.0 11.4
RoCE (%) 8.7 8.3 7.5 8.5
Payout (%) 45.6 48.3 45.6 45.6
Valuations
P/E (x) 9.9 10.7 10.7 8.8
(a) Subsidy sharing, (b) DD&A charges, and (c) oil & gas production
P/BV (x) 1.2 1.1 1.0 1.0
EV/EBITDA (x) 8.1 8.1 7.4 6.7
volumes.
Div. Yield (%) 3.9 3.9 3.6 4.3
Quarterly Performance (INR Billion)

Y/E March FY16 FY17 FY15 FY16 FY17E IndAS
Net Sales 27.5 24.0 22.2 19.0 21.3 22.7 24.8 25.6 92.3 92.7 94.5 22.7
Change (%) 9.4 15.2 7.6 -26.2 -22.4 -5.2 11.8 35.0 1.1 0.4 2.0 -5.2
EBITDA 10.8 7.7 6.3 6.3 7.8 7.9 9.0 9.6 30.1 31.2 34.2 7.9
% of Net Sales 39.4 32.1 28.4 33.2 36.3 34.7 36.1 37.6 32.7 33.6 36.2 34.7
Change (%) -2.7 10.4 21.3 -7.6 -28.5 2.4 42.3 52.8 -15.0 3.4 9.9 2.4
D,D&A 1.9 2.2 2.5 3.1 2.3 2.4 2.4 2.4 7.4 9.7 9.4 2.4
Interest 0.8 0.9 0.9 0.9 1.0 1.0 1.0 0.9 3.4 3.5 3.9 1.0
OI (incl. Oper. other inc) 4.1 5.6 3.7 5.4 3.3 3.8 3.8 3.4 18.0 18.8 14.3 3.8
PBT before exceptionals 12.2 10.2 6.6 7.8 7.7 8.3 9.4 9.7 37.3 36.8 35.2 8.3
Exceptional item 0.0 0.0 0.0 2.2 0.0 0.0 0.0 0.0 0.0 2.2 0.0 0.0
PBT after exceptionals 12.2 10.2 6.6 5.6 7.7 8.3 9.4 9.7 37.3 34.6 35.2 8.3
Tax 4.5 3.4 2.5 0.9 2.8 2.8 3.1 3.2 12.2 11.3 11.9 2.8
Rate (%) 36.7 33.8 37.6 11.7 36.2 33.0 33.0 33.0 32.7 30.8 33.7 33.0
PAT 7.8 6.7 4.1 4.7 4.9 5.6 6.3 6.5 25.1 23.3 23.3 5.6
Change (%) -9.0 10.9 -17.6 -14.9 -36.2 -17.1 53.2 39.0 -15.8 -7.2 0.2 -17.1
Adj. EPS (INR) 12.9 11.2 6.8 11.4 8.2 9.3 10.5 10.9 41.8 42.3 38.8 9.3
Key Assumptions (USD/bbl)
Exchange rate (INR/USD) 63.5 65.0 65.9 67.5 66.9 67.0 68.0 68.0 61.1 65.5 67.5
Gas Price (USD/bbl) 4.7 4.7 4.2 4.2 3.4 3.4 2.6 2.6 4.8 4.4 3.0
Gross Oil Realization 61.9 48.7 42.0 32.6 43.1 44.9 51.0 53.1 84.5 46.3 48.0
Subsidy 4.4 2.3 - - - - - - 37.4 1.7 -
Net Oil Realization 57.4 46.4 42.0 32.6 43.1 44.9 51.0 53.1 47.2 44.6 48.0
Subsidy (INR b) 1.7 0.8 - (1.0) - - - - 55.2 1.6 -
October 2016 216

ONGC
Bloomberg ONGC IN
CMP: INR260 TP:INR290 (+11%) Buy
We expect ONGC to report adjusted PAT of INR40.7b in 2QFY17 (v/s
M. Cap. (INR b)/(USD b) 2,226 / 33
INR42.3b in 1QFY17 and INR48.4b in 2QFY16).
We estimate EBITDA at INR89.3b (v/s INR92.8b in 1QFY17 and
1,6,12 Rel Perf. (%) 10/13/4
INR103.9b in 2QFY16). We estimate gross and net realization at
USD46.9/bbl, as we expect the entire subsidy to be borne by the
Y/E March
government.
2015 2016 2017E 2018E
We model upstream subsidy if under-recovery is above government
Sales 1,609 1,293 1,286 1,447
EBITDA
support of INR12/liter in kerosene and ~INR200/cylinder in LPG.
547 452 480 552
Adj. PAT 177 176 176 215
The stock trades at 10.7x FY18E consolidated EPS of INR24.2.
Adj. EPS (INR) 21.1 20.4 20.2 24.4 Valuations are attractive, with implied dividend yield of 3-4%. Buy.
EPS Gr. (%) -33.0 -0.7 0.3 22.2
BV/Sh.(INR) 211 216 227 240
RoE (%) 10.4 9.5 9.1 10.5
RoCE (%) 9.2 8.7 7.6 8.6
Payout (%) 51.8 48.8 46.2 47.9
Valuation Key issues to watch for
P/E (x) 12.3 12.8 12.9 10.7 (a) Subsidy sharing, (b) DD&A charges, (c) oil & gas production
P/BV (x) 1.2 1.2 1.1 1.1 volumes, and (d) new investments in KG Basin following new deep
EV/EBITDA (x) 4.7 5.5 5.6 4.8
water gas pricing policy.
Div. Yield (%) 2.7 3.3 3.1 3.8
Quarterly performance (Standalone) (INR Billion)

Net Sales 227.0 205.6 184.0 161.4 176.7 182.4 197.4 201.9 778.0 758.4 182.4
Change (%) 4.4 1.0 -1.7 -24.2 -22.1 -11.3 7.3 25.1 -5.3 -2.5 -11.3
EBITDA 120.0 103.9 86.4 59.7 92.8 89.3 95.9 93.6 370.0 371.6 89.3
% of Net Sales 52.9 50.5 47.0 37.0 52.5 49.0 48.6 46.3 47.6 49.0 49.0
Change (%) -4.7 -4.3 -8.0 -39.9 -22.7 -14.0 11.0 56.8 -13.5 0.4 -14.0
D,D & A 45.8 46.1 39.5 41.0 37.0 38.4 44.4 51.5 172.4 171.2 38.4
Interest 0.0 0.0 0.0 0.1 2.9 0.7 0.7 0.7 0.1 5.0 0.7
Other Income 9.4 12.5 9.6 20.9 10.7 10.5 9.6 8.8 52.4 39.5 10.5
(Impairment) / writeback -39.9 24.0 0.0 0.0 0.0 0.0 -15.9 0.0 0.0
PBT 83.5 70.4 16.6 63.5 63.5 60.7 60.4 50.2 233.9 234.9 60.7
Tax 28.9 22.0 3.7 19.3 21.2 20.0 19.9 16.7 73.9 77.8 20.0
Rate (%) 34.6 31.2 22.3 30.4 33.4 33.0 32.9 33.2 31.6 33.1 33.0
PAT 54.6 48.4 12.9 44.2 42.3 40.7 40.5 33.5 160.0 157.1 40.7
Change (%) 14.2 -11.1 -64.0 12.2 -22.5 -15.9 214.9 -24.1 -9.7 -1.9 -15.9
Adjusted PAT 54.6 48.4 40.8 27.5 42.3 40.7 40.5 33.5 171.3 157.1 40.7
Adj. EPS 6.4 5.7 4.8 3.2 4.9 4.8 4.7 3.9 20.0 18.4 4.8
Fx rate (INR/USD) 63.7 65.0 66.0 67.3 67.0 67.0 68.0 68.0 65.5 67.5
Gross Oil Realization 63.8 51.2 44.3 34.9 46.1 46.9 53.0 55.1 48.6 50.3
Subsidy 4.9 2.4 0.0 0.0 0.0 0.0 0.0 0.0 1.8 0.0
Net Oil Realization 58.9 48.8 44.3 34.9 46.1 46.9 53.0 55.1 46.7 50.3
Subsidy (INR b) 11.3 6.0 0.0 0.0 0.0 0.0 0.0 0.0 17.3 0.0
October 2016 217

Petronet LNG
Bloomberg PLNG IN
CMP: INR353 TP: INR364 (+3%) Neutral
M. Cap. (INR b)/(USD b) 265 / 4
We expect PLNG to report PAT of INR3.5b (+40.3% YoY, -7.6% QoQ)
52-Week Range (INR) 366/175 and EBITDA of INR5.9b (+27.6% YoY, -7.3% QoQ) for 2QFY17.
1,6,12 Rel Perf. (%) 1/31/94 We model Dahej LNG volumes at 3.3mmt (up 8.1% YoY, flat QoQ) in
2QFY17.
Dahej terminal utilization is above ~110% and long-term growth
Y/E March 2015 2016 2017E 2018E
would depend on Dahejs ramp-up and Kochi terminals pipeline
Sales 395.0 271.3 239.1 237.3
connectivity.
EBITDA 14.4 15.9 24.2 28.5
Adj. PAT 8.8 9.1 13.9 17.1 As against 15mmt capacity, PLNG has ~16mmt (RasGas: 8.5, new
Adj. EPS (INR) 10.0 11.2 18.6 22.8 contracts: ~7.5) long-term take-or-pay contracts.
EPS Gr. (%) 5.4 10.4 60.3 22.8 The stock trades at 15.5x FY18E consolidated EPS of INR22.8.
BV/Sh.(INR) 75.8 85.0 99.2 116.5 Maintain Neutral.
RoE (%) 16.5 14.0 20.2 21.2
RoCE (%) 10.6 9.9 14.0 15.4
Payout (%) 23.4 26.7 24.0 24.0
Valuation (a) Ramp-up at Dahej terminal, (b) progress on Kochi-Mangalore
P/E (x) 35.3 31.5 19.0 15.5 pipeline, (c) spot volumes and marketing margin on spot volumes.
P/BV (x) 4.7 4.2 3.6 3.0 Petronet LNGs earnings are largely protected due to take-or-pay
EV/EBITDA (x) 20.9 18.0 11.8 9.8 contracts with off-takers.
Div. Yield (%) 0.6 0.7 1.1 1.3
Net Sales 83,772 75,450 51,460
60,653 53,373 59,850 59,506 66,388 271,334 239,117 59,850
Change (%) -17.6 -31.3 -54.0
-15.3 -36.3 -20.7 15.6 9.5 -31.3 -11.9 -20.7
EBITDA 3,611 4,668 3,158
4,466 6,425 5,955 5,779 6,068 15,903 24,227 5,955
% of Net Sales 4.3 6.2 6.17.4 12.0 9.9 9.7 9.1 5.9 10.1 9.9
Change (%) 0.9 -10.1 -7.3
101.7 77.9 27.6 83.0 35.9 10.5 52.3 27.6
Depreciation 801 808 807800 806 806 873 1,027 3,216 3,512 806
Interest 612 612 588576 556 520 515 491 2,387 2,083 520
Other Income 333 360 584427 494 505 434 414 1,704 1,847 505
PBT 2,531 3,608 2,348
3,517 5,556 5,134 4,826 4,964 12,004 20,479 5,134
Tax 780 1,120 564
1,124 1,777 1,643 1,544 1,589 3,588 6,553 1,643
Rate (%) 30.8 31.0 24.032.0 32.0 32.0 32.0 32.0 29.9 32.0 32.0
Adj. PAT 1,751 2,488 1,784
2,393 3,779 3,491 3,281 3,376 8,416 13,926 3,491
Change (%) 11.8 -5.3 9.9
42.1 115.8 40.3 83.9 41.1 12.2 65.5 40.3
Tax write-back 724 0 724 0 0
PAT 2,475 2,488 1,784 2,393 3,779 3,491 3,281 3,376 9,140 13,926 3,491
Adj. EPS (INR) 2.3 3.3 2.4 3.2 5.0 4.7 4.4 4.5 11.2 18.6 4.7
Dahej Gas Volume (TBTU) 125.4 153.9 138.2 148.5 165.2 166.8 166.0 168.5 566.0 666.5
Dahej Gas Volumes (mmt) 2.6 3.1 2.7 3.0 3.3 3.3 3.3 3.4 11.3 13.3
Kochi Gas Volumes (mmt) 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.3 0.3
Avg. Dahej Regas (INR/mmbtu) 40.0 40.2 24.7 37.9 49.0 44.0 38.6 39.8 35.7 42.9
October 2016 218

Reliance Industries
Bloomberg RIL IN
CMP: INR1,090 TP: INR1,139 (+4%) Neutral
M. Cap. (INR b)/(USD b) 3,533 / 53
We expect RIL to report GRM of USD10/bbl (v/s USD11.5/bbl in
52-Week Range (INR) 1,129/859 1QFY17 and USD10.6/bbl in 2QFY16.
1,6,12 Rel Perf. (%) 9/-6/19 RILs refining segment profit is likely to decline QoQ due to decline
in GRMs. Petchem profitability is expected to increase YoY, led by
Financial snapshot (INR b) improved petchem margins, particularly PP.
Y/E March 2015 2016 2017E 2018E
We expect RIL to report standalone PAT of INR73.5b (flat QoQ,
Net Sales 3,290.8 2,331.6 2,704.7 3,102.0
+12% YoY). Reported consolidated numbers would include shale gas
EBITDA 316.0 401.4 474.0 554.0
business, but with a one-quarter lag.
Net Profit 227.2 274.2 308.8 341.5
Adj. EPS (INR) 77.6 93.6 104.1 115.1 RIL trades at 9.5x FY18E adjusted EPS of INR115. RIL's new
EPS Gr. (%) 3.2 20.6 11.2 10.6 refining/petchem projects are likely to add to earnings from
BV/Sh. (INR) 738.5 818.4 897.0 994.8 2HFY18/FY19, but Telecom business would be a drag on
RoE (%) 11.0 12.0 12.2 12.2 profitability. Maintain Neutral.
RoCE (%) 10.2 11.1 11.8 12.2
Payout (%) 16.7 16.7 16.6 16.6
GRM.
Valuations
Petchem margins.
Adj. P/E (x) 14.0 11.7 10.5 9.5
KG-D6 production.
P/BV (x) 1.5 1.3 1.2 1.1
Update on Telecom venture.
EV/EBITDA (x) 11.9 8.9 7.3 6.5
EV/Sales (x) 1.1 1.5 1.3 1.2
Quarterly Performance (Standalone) (INR Billion)

Net Sales 658.2 608.2 565.7 499.6 535.0 556.7 704.9 908.1 2,331.6 2,704.7 606.8
Change (%) -31.7 -37.0 -29.5 -10.9 -18.7 -8.5 24.6 81.8 -29.1 16.0
EBITDA 93.1 98.3 102.7 107.3 108.2 106.1 121.5 138.3 401.4 474.0 106.1
% of Net Sales 14.1 16.2 18.2 21.5 20.2 19.1 17.2 15.2 17.2 17.5 19.1
Change (%) 23.6 19.4 42.5 24.3 16.2 7.9 18.3 28.9 27.0 18.1 7.9
Depreciation 22.7 23.7 24.1 25.2 19.5 21.7 32.4 41.4 95.7 115.0 21.7
Interest 6.0 6.9 6.1 5.5 9.2 8.5 8.8 8.5 24.5 35.1 8.5
Other Income 18.2 16.2 22.9 18.6 20.3 19.6 21.1 20.3 75.8 81.3 19.6
PBT 82.6 83.8 95.5 95.1 99.8 95.5 101.4 108.7 357.0 405.3 95.5
Tax 19.5 18.2 23.3 21.9 24.3 22.0 23.8 26.4 82.8 96.5 22.0
Rate (%) 23.5 21.7 24.4 23.0 24.3 23.0 23.5 24.3 23.2 23.8 23.0
Adj. PAT 63.2 65.6 72.2 73.2 75.5 73.5 77.6 82.2 274.2 308.8 73.5
Change (%) 11.8 14.2 41.9 17.3 19.5 12.0 7.5 12.3 20.7 12.6 12.0
Adj. EPS (INR) 21.6 22.4 24.7 25.0 25.8 25.1 26.5 28.1 93.8 105.6 25.1
Fx Rate (INR/USD) 63.5 65.0 66.0 67.0 67.0 68.3 68.4 68.3 65.4 68.0
RIL GRM 10.4 10.6 11.5 10.8 11.5 10.0 10.9 11.2 10.8 10.9
Singapore GRM 8.0 6.3 8.0 7.7 5.0 5.1 6.5 6.6 7.5 5.8
Premium/(disc) to Singapore 2.4 4.3 3.5 3.1 6.5 4.9 4.4 4.6 3.3 5.1
KGD6 Prodn (mmscmd) 11.3 11.4 10.6 9.7 8.7 8.6 8.6 8.5 10.8 8.6
Segmental EBIT Breakup (INRb)
Refining 51.4 54.1 63.3 63.8 65.8 56.0 60.8 58.6 232.7 241.2
Petrochemicals 24.6 25.2 25.9 27.3 29.0 33.0 33.1 36.7 103.0 131.7
E&P 0.8 0.6 0.4 -1.0 0.5 0.4 0.4 0.4 0.8 1.7
Others 0.6 0.6 0.9 0.9 1.0 1.0 0.8 0.6 3.0 3.2
Total 77.5 80.5 90.5 91.0 96.3 90.4 95.0 96.2 339.4 377.9
October 2016 219

Real Estate
Company name Torpidity continues amid signs of gradual recovery
DLF Presales momentum and new launches key for revival
Godrej Properties
Sluggishness likely to continue in 2Q
Indiabulls Real Estate
The grim situation in the Indian Real Estate sector continued in 2Q, as developers
Mahindra Lifespaces increased focus on project completion led to muted presales momentum. Also, high
Oberoi Realty inventory levels, lower demand and limited liquidity affected new launches.
Phoenix Mills However, reputed names continued to show some vigor in 2Q, with Godrej
launching its project Emerald in Thane and Prestige coming up with Boulevard and
Prestige Estate Projects
Lake Ridge in Bengaluru. While there was some respite in Mumbai and Bengaluru,
Sobha Developers
the NCR market remained a drag.
Commercial segment in bright spot, PE interest healthy

Steady lease rentals, high absorption levels, inadequate supply and global investor
interest have led to growth in the commercial real estate sector, even as the
residential property market continues to lose ground. Despite the ongoing
slowdown, private equity (PE) players remain buoyant on Indian realty with the
government simplifying foreign direct investment (FDI) norms for the sector.
Some respite may be seen in 2HFY17

A positive twist to the otherwise grim situation may be seen on hopes of better
monsoon, a revival in the economy, and lower inflation and interest rates. Also, we
believe the improving regulatory environment coupled with government initiatives
(for example, Housing for All by 2022 and Smart Cities) is likely to positively impact
the sector. The setting up of the Real Estate Regulatory Authority to ensure time-
bound delivery of projects and more efficient/transparent dealings with developers
should boost consumer sentiment, and thus, investments. Also, the affordable
housing segment has gained some traction on the peripheries of major cities.
Valuation and view

The Real Estate sector appears set to respond to the fundamental concerns of lack
of affordability, liquidity stress, and lack of transparency. With the Real Estate Bill
passed in the upper house, the government focusing on affordable housing, and
favorable interest rates, we believe the sector is set for gradual recovery. Bengaluru,
followed by Mumbai, remains a preferred play amid slow signs of recovery. The
commercial segment appears well poised for growth. Our preferred picks are PEPL,
Brigade (valuation discount and Bengaluru proxies) and Oberoi (Mumbai recovery
play). As a longer-term growth play, we like GPL for its business model and
positioning (although we currently have a Neutral rating due to its at-par valuation).
Aashumi Mehta (Aashumi.Mehta@motilaloswal.com); +91 22 3010 2397
October 2016 220

September 2016 Results Preview | Sector: Real Estate

Real Estate
DLF 153 Buy 16,850 -9.7 -9.8 7,961 -15.2 6.9 1,180 -10.3 -54.9
Godrej Properties 352 Neutral 4,903 -66.4 61.4 995 -39.8 150.3 531 -50.0 22.1
Indiabulls Real Estate 94 Buy 6,453 6.5 -26.0 1,466 10.7 -51.1 794 5.9 -32.0
Mahindra Lifespace 439 Neutral 1,054 -13.6 18.6 120 -41.4 -3.5 223 -33.3 45.9
Oberoi Realty 293 Buy 2,507 32.5 -21.7 1,340 22.9 -19.6 832 14.8 -23.6
Phoenix Mills 395 Buy 4,976 17.8 12.5 2,289 23.1 13.1 567 131.0 31.8
Prestige Estates 203 Buy 10,942 -9.1 15.8 3,699 36.5 116.9 1,697 68.5 255.1
Sobha 298 Buy 4,798 6.2 -15.8 1,133 -3.0 13.6 345 -13.9 -3.8
Sector Aggregate 52,483 -16.9 -3.0 19,003 -2.0 9.5 6,169 5.7 -8.3
Source: MOSL

Real Estate
DLF 153 Buy 3.1 3.9 4.6 49.6 39.0 33.1 11.4 14.8 13.3 1.9 2.4 2.8
Brigade Enterprises 175 Buy 11.0 11.3 16.9 15.9 15.4 10.3 7.2 8.0 6.3 8.8 8.4 11.6
Godrej Properties 352 Neutral 10.7 10.3 17.5 32.9 34.2 20.1 25.6 22.9 14.8 11.5 9.9 15.2
Indiabulls Real Estate 94 Buy 7.3 8.1 10.4 12.9 11.5 9.0 9.9 11.9 9.6 4.1 4.3 5.3
Mahindra Lifespace 439 Neutral 22.7 30.6 37.5 19.4 14.3 11.7 20.1 12.0 9.2 6.1 7.7 8.6
Oberoi Realty 293 Buy 13.0 17.8 39.9 22.6 16.5 7.3 12.7 9.6 4.3 8.6 10.5 20.6
Phoenix Mills 395 Buy 9.3 16.3 26.5 42.7 24.2 14.9 9.5 9.9 7.1 7.6 12.1 16.9
Prestige Estates 203 Buy 9.4 9.2 9.8 21.6 21.9 20.6 11.3 12.1 10.9 8.8 8.1 8.0
Sobha 298 Buy 14.1 17.9 34.7 21.2 16.6 8.6 10.8 9.5 6.3 5.5 6.7 12.8
Exhibit 110: Quarterly presales trend

FY16
Presales (INR b) FY14 FY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17
NCR Centric developers 55.8 46.9 12.2 9.3 7.2 12.6
DLF 40.7 38.6 10.4 5.8 4.1 11.3 2.1
Unitech 15.1 8.3 1.8 3.5 3.1 1.3
Mumbai Centric developers 39.7 52.1 13.2 12.4 28.9 12.4 12.3
IBREL 30.7 20.3 8.0 7.6 7.3 6.3 8.2
HDIL 5.6 14.1 3.5 3.4 3.9 3.5
OBER 3.4 17.7 1.7 1.4 17.7 2.6 4.1
Bangalore Centric developers 89.1 93.2 15.3 17.4 13.8 19.5
Sobha 23.4 21.0 5.0 4.9 4.8 5.3
PEPL 36.3 43.7 5.3 6.1 5.1 9.9
Purva 16.0 14.2 1.7 2.4 1.5 1.5 3.0
Brigade 13.4 14.3 3.3 4.0 2.4 2.8 2.1
Diversified 27.7 34.4 10.2 14.3 10.4 12.1 6.6
MAHLIFE 3.7 7.0 1.9 2.2 1.3 2.9 1.6
GPL (own stake) 12.6 10.7 5.3 9.3 6.1 6.2 1.3
Kolte Patil 11.3 16.8 3.0 2.8 3.0 3.0 3.7
October 2016 221

September2015
December 2016 Results
ResultsPreview
Preview || Sector:
Sector: Real
Real Estate
Estate
Exhibit 111: Launch velocity (msf)

Launch velocity deteriorates Launch Mumbai NCR Bangalore Pune Hyderabad Chennai India
in Bengaluru and Mumbai. 1QCY11 16 50 11 7 9 5 89
NCR witnesses considerable 2QCY11 11 48 8 12 6 6 84
improvement in new 3QCY11 12 19 31 5 3 4 71
launches. 4QCY11 9 34 4 15 11 7 70
2011 48 151 54 38 11 22 314
1QCY12 17 32 11 13 12 6 79
2QCY12 11 17 1 14 5 5 48
3QCY12 14 40 9 8 13 7 79
4QCY12 18 40 21 12 18 5 97
2012 61 129 43 46 48 23 303
1QCY13 15 26 14 8 10 7 70
2QCY13 16 37 39 15 5 6 113
3QCY13 12 31 33 8 15 8 92
4QCY13 11 19 8 11 13 8 57
2013 55 112 94 42 13 29 332
1QCY14 25 21 24 15 4 9 94
2QCY14 15 38 19 11 2 7 91
3QCY14 12 28 38 11 6 4 93
4QCY14 23 13 24 12 6 4 77
2014 75 100 105 50 18 24 355
1QCY15 21 20 19 13 5 5 78
2QCY15 21 20 39 9 2 18 108
Source: MOSL, Liases Foras
Exhibit 112: Sales volume trendsResidential

Volume (msf) Mumbai NCR Bangalore Pune Chennai India
1QCY11 9 27 9 7 5 57
2QCY11 8 22 7 10 6 52
3QCY11 9 18 9 8 4 48
4QCY11 8 23 14 10 7 62
2011 34 90 39 35 22 219
1QCY12 9 31 11 9 6 67
2QCY12 10 21 16 9 5 62
3QCY12 10 26 16 11 7 69
4QCY12 10 20 12 9 5 57
2012 39 99 55 39 23 255
1QCY13 10 25 10 9 7 62
2QCY13 9 22 13 7 6 58
3QCY13 8 21 11 5 8 53
4QCY13 10 22 17 8 8 65
2013 37 90 51 29 29 238
1QCY14 12 22 16 10 9 68
2QCY14 11 17 18 9 7 62
3QCY14 10 12 10 9 4 45
4QCY14 10 18 13 12 4 58
2014 43 69 57 40 24 233
1QCY15 12 14 17 12 5 60
2QCY15 12 15 16 9 6 58
Source: MOSL, Liases Foras
October 2016 222

Exhibit 113: Commercial supply (msf)Commercial sector is Exhibit 114: Commercial absorption (msf)e-commerce and
on the cusp of revival; gradual economic push to further start-ups account for a huge chunk of commercial space
improve growth take-up
NCR Mumbai Bangalore NCR Mumbai Bangalore
6.3 5.0
5.0
3.8
3.8
2.5 2.5
1.3 1.3
0.0
0.0
1QCY11
2QCY11
3QCY11
4QCY11
1QCY12
2QCY12
3QCY12
4QCY12
1QCY13
2QCY13
3QCY13
4QCY13
1QCY14
2QCY14
3QCY14
4QCY14
1QCY15
2QCY15
1QCY11
2QCY11
3QCY11
4QCY11
1QCY12
2QCY12
3QCY12
4QCY12
1QCY13
2QCY13
3QCY13
4QCY13
1QCY14
2QCY14
3QCY14
4QCY14
1QCY15
2QCY15
Source: DTZ Source: DTZ
Exhibit 115: Recent private equity deals in Indian real estate sector
Deal
Entry/ Micro Size
Exit Date Investor Investee Asset City Market (INR M)
Entry May-16 KKR Mantri Developers Residential project Bangalore 145
Entry May-16 Edelweiss Aakruti Residential project Mumbai 300
Entry Mar-16 Blackstone Salarpuria Sattva Commercial project Bangalore 470
Entry Feb-16 KKR Sunteck Realty Signia Isle and Signia Pearls Mumbai BKC 150
Entry Jan-16 IIFL Ariisto Realtors Kandivali Mumbai Kandivali 500
exit Jan-16 Apollo Global Ahuja Construction Ahuja towers Mumbai worli 460
Exit ICICI Kolte
Entry Dec-15 KKR SARE Homes Gurgaon Gurgaon 200
Entry Mar-16 Blackstone Salarpuria Sattva Commercial project Bangalore 470
Entry Dec-15 Ask group Rajesh life spaces Vikhroli Mumbai 11 3,650
Entry Sep-15 GIC DLF Two upcoming projects in Moti NCR Delhi 19,900
Entry Aug-15 ICICI Prudential Asset Management ATS Residential project near sector 150, NCR Noida 1,300
Entry Aug-15 Standard Chartered Private Equity Tata Realty & Commercial Asset Investment - - 20,000
Entry Aug-15 Goldman Sachs Piramal Realty - - - 9,000
Entry Aug-15 Blackstone Group and Panchshil NA IT SEZ Pune Kharadi 7,500
Entry Jul-15 Standard Chartered Private Equity Shapoorji Pan India Affordable Housing - - 12,800
Entry Jul-15 Edelweiss Group Saya Group Saya Gold Avenue NCR Ghaziabad 2,000
Exhibit 116: Recent land deals in India

Land Area Transaction Value
Date Buyer Seller Micro Market City
(Acres) (INR m)
Mar-16 Essar SNN Hebbal Bangalore 8 3,000
Oct-15 Runwal Crompton Greaves Kanjurmarg Mumbai 13 4,960
Sep-15 ATS Infrastructure NA Noida NCR 25 13,000
Jul-15 Wadhwa Group HDFC Thane Mumbai 7 2,080
Jul-15 Godrej Properties Puravankara Projects Kanakpura Road Bangalore 40 1,400
Jun-15 Brigade Enterprises (with GIC) Kansai Nerolac Paints Perungudi, OMR Chennai 15 5,500
May-15 Shree Sawan Builders CIDCO Nerul Mumbai 0.4 452
Apr-15 Casa Grande (Local Developer) Rane Group GST Road Chennai 6 775
Source: MOSL
October 2016 223

Exhibit 117: Relative performancethree months (%) Exhibit 118: Relative performanceone year (%)
Sensex Index MOSL Real Estate Index Sensex Index MOSL Real Estate Index
107 120
105 105
90
103
75
101
60
99
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Mar-16
Sep-15
Jan-16
Feb-16
Sep-16
Oct-15
Jun-16 Jul-16 Aug-16 Sep-16
October 2016 224

DLF
Bloomberg DLFU IN CMP: INR153 TP: INR171 (+19%) Buy
M. Cap. (INR b)/(USD b) 272 / 4
For 2QFY17, we expect revenue of INR16.8b (-9.7% YoY), EBITDA of
INR7.9b (margin of 7%) and PAT of INR1.2b.
1,6,12 Rel Perf. (%) 3 / 15 / 6 DLF Phase-V super premium product is expected to remain the
main contributor to presales in 2QFY17.
The stock trades at 31.7x FY18E EPS and 0.9x FY18E BV, and at a
Y/E March 2015 2016 2017E 2018E
27% discount to our NAV estimate of INR201. Maintain Buy.
Net Sales 76.5 92.6 84.3 90.7
EBITDA 30.2 38.7 34.9 38.5
Adj PAT 5.4 5.5 7.0 8.2
EPS (INR) 3.0 3.1 3.9 4.6
EPS Gr. (%) -16.5 1.5 27.2 17.9
BV/Sh. (INR) 157.0 156.3 157.9 160.2
RoE (%) 1.9 1.9 2.4 2.8
Approach toward a REIT listing.
RoCE (%) 4.3 3.7 4.6 4.5
RentCo restructuring.
Payout (%) 77.2 76.0 58.2 49.4
Valuations
Movement in gearing levels.
P/E (x) 48.2 47.5 37.3 31.7
Outcome of legal and regulatory proceedings.
P/BV (x) 0.93 0.9 0.9 0.9 Strategy to improve core DevCo operations.
EV/EBITDA (x) 15.4 12.5 14.1 12.7
Div. Yield (%) 1.4 1.4 1.4 1.4
Quarterly Performance 0.14202 (INR Million)

Sales 22,312 18,655 28,277 23,356 18,675 16,850 22,748 25,979 92,599 84,252
Change (%) 29.3 -7.3 44.5 19.5 -16.3 -9.7 -19.6 11.2 21.1 -9.0
EBITDA 8,275 9,391 12,255 8,744 7,448 7,961 7,933 11,525 38,664 34,867
Change (%) 12.3 18.0 54.1 25.7 -10.0 -15.2 -35.3 31.8 27.9 -9.8
As % of Sales 37.1 50.3 43.3 37.4 39.9 47.2 34.9 44.4 41.8 41.4
Depreciation 1,363 1,447 3,451 1,518 1,462 1,654 1,643 1,799 7,778 6,558
Interest 6,043 7,056 6,724 6,331 7,478 6,700 7,045 6,049 26,154 27,272
Other Income 1,145 1,315 1,531 1,602 1,581 2,043 2,267 2,609 5,593 8,500
Extra-ordinary Items (475) (154) (150) -6 3,291 (786) -
PBT 1,538 2,049 3,461 2,491 3,380 1,650 1,512 2,995 9,539 9,536
Tax 312 776 2,107 999 550 495 453 1,363 4,194 2,861
Effective Tax Rate (%) 20 38 61 40 16.3 30.0 30 30 40.6 30.0
Reported PAT Pre MI 1,226 1,273 1,354 1,492 2,830 1,155 1,058 1,632 5,346 6,675
Reported PAT 1,216 1,315 1,640 1,324 2,614 1,180 1,208 1,987 5,494 6,990
Adj. PAT 1,216 1,315 1,640 1,324 2,614 1,180 1,208 1,987 5,494 6,990
Change (%) (4.9) 20.6 24.4 (22.9) 115.1 (10.3) (26.3) 50.1 1.7 27.2
Presales (msf) 0.3 0.2 0.2 0.5 0.0 0.2 0.28 0.39 1.3 1.1
Presales (INR b) 10.4 5.8 4.1 11.3 2.1 3.9 6.7 9.0 31.4 25
Realization (INR/sf) 31,394 23,958 19,286 21,692 68,333 19,697 24,364 23,377 24,185 22,435
Leasing (msf) 0.2 -0.1 0.5 0.4 0.0 0.2 0.34 0.69 1.0 1.2
E: MOSL Estimates
October 2016 225

Godrej Properties
Bloomberg GPL IN CMP: INR352 TP: INR377 (+9%) Neutral
We estimate 2QFY17 revenue at ~INR4.9b, EBITDA at INR995m
(margin at 17%) and PAT at INR531m.
1,6,12 Rel Perf. (%) 0/4/2 We expect presales of INR4b due to the launch of the Emerald
project in Thane, followed by phase-II of project Trees (Mumbai),
Financial Snapshot (INR Billion) phase-II of Anandam, Garden City and Palm Grove.
Y/E March 2015 2016 2017E 2018E The stock trades at 19.8x FY18E EPS and 2.8x FY18E BV, and close to
Net Sales 18.4 26.3 26.2 30.4
its SOTP value of INR377. Maintain Neutral.
EBITDA 2.6 3.5 4.1 5.9
NP 1.9 2.3 2.2 3.8
EPS (INR) 9.6 10.7 10.3 17.5
EPS Gr. (%) 19.1 11.6 -3.9 70.5
BV/Sh (INR) 92.6 100.3 108.2 122.2
RoE (%) 10.5 11.5 9.9 15.2
RoCE (%) 4.7 5.5 6.2 8.0
Valuations Debt movement.
P/E (x) 36.2 32.5 33.8 19.8 Execution timeline of ongoing projects.
P/BV (x) 3.7 3.5 3.2 2.8 Launch of recently acquired projects.
EV/EBITDA (x) 24.2 18.0 15.0 9.4
Div. Yield (%) 0.6 0.6 0.6 0.9

Total Revenue 1,992 14,585 4,223 5,540 3,038 4,903 5,002 13,285 26,340 26,229
Change (%) -40.0 396.1 -18.7 -20.6 52.6 -66.4 18.5 139.8 42.9 -0.4
EBITDA 367 1,652 802 684 398 995 1,065 1,631 3,504 4,089
Change (%) -17.1 191.1 25.2 -25.8 8.3 -39.8 32.9 138.5 36.2 16.7
As of % Sales 18.4 11.3 19.0 12.3 13.1 20.3 21.3 12.3 13.3 15.6
Depreciation 31 35 38 46 34 29 31 36 150 130
Interest 100 23 27 3 138 100 120 142 154 500
Other Income 311 229 280 121 290 225 284 201 941 1,000
PBT 547 1,823 1,016 755 516 1,091 1,198 1,653 4,142 4,459
Tax 118 588 300 243 106 327 359 544 1,248 1,338
PAT before MI 429 1,236 717 512 410 764 839 1,109 2,894 3,121
Minority -31 -174 -197 -181 25 -233 -289 -403 -583 -900
Reported PAT 398 1,062 520 331 435 531 550 706 2,311 2,221
Change (%) -12.7 127.8 10.1 -35.6 9.2 -50.0 5.7 113.1 21.1 -3.9
Presales (msf) 0.6 0.5 0.7 0.3 0.17 0.50 0.70 0.88 2.1 2.3
Presales (INR b) 5.3 9.3 6.5 3.3 1.3 4.0 5.5 7.2 24.5 18.0
Realizations (INR/sf) 9,521 17,095 9,864 9,706 7,910 8,000 7,857 8,131 11,607 10,800
E: MOSL Estimates
October 2016 226

Indiabulls Real Estate

Bloomberg IBREL IN CMP: INR94 TP: INR108 (+17%) Buy
IBREL is likely to post revenue of INR6.5b, EBITDA of INR1.5b
(margin of 23%) and PAT of INR794m.
1,6,12 Rel Perf. (%) 18 / 51 / 42 We expect Indiabulls Blu to continue driving revenue in 2QFY17,
along with Silverlake Villas in Alibaug and One Indiabulls in Gurgaon.
Financial Snapshot (INR Billion) However, there could be a dip on account of overall market
Y/E March 2015 2016 2017E 2018E slowdown. We estimate presales at ~INR7.6b in 2Q.
Net Sales 26.0 26.8 28.4 31.9
The stock trades at a 17% discount to our NAV estimate of INR108,
EBITDA 5.7 7.5 7.5 9.0
and at 8.8x FY18E EPS and 0.5x FY18E BV. Maintain Buy.
NP 2.5 3.1 3.4 4.4
EPS (INR) 6.5 7.3 8.1 10.4
EPS Gr. (%) 10.5 12.2 11.9 28.3
BV/Sh. (INR) 168.7 169.9 174.7 181.5
RoE (%) 3.5 4.1 4.3 5.3
RoCE (%) 4.6 4.2 4.1 4.9
Valuations Progress in launch plan of projects in portfolio.
P/E (x) 14.2 12.7 11.3 8.8 Overall debt movement.
P/BV (x) 0.5 0.54 0.53 0.51 Status of unsold inventory and pending collections.
EV/EBITDA (x) 16.9 12.1 11.3 9.0
Div Yield (%) 0.0 0.0 2.2 2.2

Y/E March FY16 FY17 FY16E FY17E
Sales 7,382 6,057 6,644 6,690 8,725 6,453 7,354 5,847 26,773 28,378
Change (%) 21.0 -18.7 1.9 12.6 18.2 6.5 10.7 -12.6 2.9 6.0
EBITDA 2,362 1,325 2,055 1,773 2,996 1,466 2,020 1,032 7,514 7,496
Change (%) 64.5 -28.5 32.1 100.6 26.9 10.7 -1.7 -41.8 31.2 -0.3
As % of Sales 32.0 21.9 30.9 26.5 34.3 22.7 27.5 17.7 28.1 26.4
Depreciation 26 26 23 20 169 34 32 -105 95 130
Interest 980 876 814 814 1,402 945 875 503 3,484 3,725
Other Income 131 627 171 156 219 616 176 89 1,085 1,100
PBT 1,487 1,050 1,389 1,095 1,644 1,103 1,289 724 5,021 4,741
Tax 458 256 476 417 459 364 425 317 1,608 1,565
Effective Tax Rate (%) 31 24 34 38 27.9 33 33 33 32.0 33.0
Minority Interest -122 -44 -109 -89 -17 55 56 143 -363 236
Reported PAT 907 750 804 589 1,168 794 920 550 3,051 3,413
Change (%) 133 101 2 -37 29 6 14 -7 23 12
Presales (INR b) 8.0 7.6 7.3 6.3 8.2 7.6 10.1 11.8 29.2 37.7
E: MOSL Estimates
October 2016 227

Mahindra Lifespaces
Bloomberg MLIFE IN CMP: INR439 TP: INR477 (+9%) Neutral
Equity Shares (m) 40.8 For 2QFY17, we estimate standalone revenue at INR1.05b, margins
M. Cap. (INR b)/(USD b) 18 / 0 at ~11.4%, EBITDA at INR120m (-41% YoY) and PAT at INR223m.
1,6,12 Rel Perf. (%) 3 / -10 / -13 Presales are expected to be driven by its projects LArtista in Pune,
Vivante in Andheri-Mumbai, Windchimes in Bengaluru, Luminaire in
Financial Snapshot (INR Billion) NCR and Bloomdale in Nagpur.
Y/E March 2015 2016 2017E 2018E The stock trades at 12.2x FY18E EPS and 1.1x FY18E BV. Maintain
Net Sales 10.9 8.3 11.4 13.1 Buy.
EBITDA 4.2 1.7 2.5 3.1
Adj PAT 2.7 0.9 1.3 1.5
Adj EPS (INR) 64.9 22.7 30.6 37.5
EPS Gr (%) 163.6 -65.1 35.0 22.3
BV/Sh (INR) 359.7 381.0 413.9 459.3
RoE (%) 19.5 6.1 7.7 8.6
RoCE (%) 11.4 3.6 5.7 7.1
Payout (%) 10.2 29.8 17.0 11.0
Regulatory issues and overall market scenario critical for Mumbai
Valuations
launches.
P/E (x) 6.8 19.4 14.9 12.2
Affordable housing key to future success.
P/BV (x) 1.2 1.2 1.1 1.0
EV/EBITDA (x) 7.0 20.6 12.3 9.5
Div. Yield (%) 1.1 1.1 1.1 1.1

(Standalone) 1Q 2Q 3Q 4QE 1Q 2QE 3QE 4QE
Sales 1,046 1,220 1,669 1,089 889 1,054 1,683 1574 5,021 5,200
Change (%) -65.5 15.4 99.5 -17.2 -15 -19.5 3.6
Total Expenditure 986 1,015 1,379 939 764 934 1,350 1,230 4,320 4,278
EBITDA 60 205 290 150 124 120 333 344 701 922
As % of Sales 5.7 16.8 17.4 13.8 14.0 11.4 19.8 21.9 14.0 17.7
Change (%) -97.1 48.0 -621.2 20.9 106.8 -41.4 14.9 129.4 -69.0 -11.3
Depreciation 10 10 10 11 11 10 11 11 40 43
Interest 121 40 63 124 82 75 65 78 470 300
Other Income 245 309 213 217 180 275 220 205 994 880
PBT 175 464 430 233 211 310 477 461 1,186 1,459
Tax 61 129 123 67 58 87 134 129 383 408
Effective Tax Rate (%) 31.0 27.8 28.7 28.7 28 28.0 28.0 28.0 32.3 28.0
Reported PAT 114 335 307 166 153 223 343 332 803 1,050
Change (%) -92.9 -16.1 182.9 -27.5 34.2 -33.3 11.9 100.1 -65.6 30.8
Adj. PAT 114 335 307 166 153 223 343 332 803 1,050
Change (%) -92.9 -16.1 182.9 -27.5 34.2 -33.3 11.9 100.1 -65.6 30.8
E: MOSL Estimates
October 2016 228

Oberoi Realty
Bloomberg OBER IN CMP: INR293 TP: INR348 (+20%) Buy
We expect a stable quarter, with revenue at INR2.5b (32% YoY),
EBITDA at 1.3b (margins of 53%) and PAT at INR832m (14.8% YoY).
1,6,12 Rel Perf. (%) -3 / 9 / 3 We expect 2QFY17 presales to be INR1.2b, given no new launches.
Exquisite and Eternia are expected to see flattish to lower
Financial Snapshot (INR Billion) momentum.
Y/E March 2015 2016 2017E 2018E The stock trades at7.3x FY18E EPS and 1.4x FY18E BV, and at a 20%
Net Sales 9.2 14.1 19.5 33.9
discount to our NAV estimate of INR348. Maintain Buy.
EBITDA 5.1 6.7 9.1 20.1
Adj PAT 3.2 4.3 5.8 13.1
Adj EPS (INR) 9.7 13.0 17.8 39.9
EPS Growth (%) 1.9 34.3 36.8 124.7
BV/Share (INR) 141.2 156.3 170.0 203.9
RoE (%) 7.0 8.6 10.5 20.6 Key issues to watch out for
RoCE (%) 6.3 7.4 9.4 18.4 Launch of Borivali project (Tata Steel Land), the luxury Worli
Payout (%) 24.2 18.6 20.4 12.1 project, and the response they generate.
Valuations Leasing activity in Commerz II.
P/E (x) 30.3 22.6 16.5 7.3 Incremental presales in launched projects during the current
P/BV (x) 2.1 1.9 1.7 1.4
market slowdown and regulatory overhang in Mumbai.
EV/EBITDA (x) 19.9 14.8 9.2 4.1
Div. Yield (%) 0.7 0.7 1.0 1.4
Consolidated Quarterly performance (INR Million)

Total Revenue 2,111 1,892 7,819 2,258 3,200 2,507 8,546 5,248 14,081 19,501
Change (%) 20.4 2.0 260.2 -34.5 51.6 32.5 9.3 132.4 52.6 38.5
EBITDA 1,285 1,090 3,278 1,021 1,666 1,340 4,459 1,664 6,674 9,129
Change (%) 32.6 -2.5 159.0 -43 30 23 36.0 63.0 29.9 36.8
As of % Sales 61 58 42 45 52 53 52 32 47 47
Depreciation 122 122 124 122 123 124 129 124 490 500
Interest 16 1 0 -15 14 50 40 43 2 147
Other Income 82 116 84 80 103 95 78 75 362 350
PBT 1,229 1,084 3,239 993 1,631 1,261 4,368 1,572 6,545 8,832
Tax 412 359 1,145 368 553 429 1,485 534 2,285 3,003
Reported PAT 817 725 2,094 625 1,079 832 2,883 1,037 4,260 5,829
Adj PAT 819 725 2,094 625 1,089 832 2,883 1,037 4,260 5,829
Change (%) 27.4 2.7 164.2 -39.3 32.9 14.8 37.7 66.0 34.3 36.8
Presales (msf) 0.08 0.06 1.02 0.1 0.1 0.1 0.40 0.88 1.3 1.5
Presales (INR b) 1.7 1.4 17.7 2.6 4.1 1.2 7.4 15.5 23.5 28.2
October 2016 229

Phoenix Mills
Bloomberg PHNX IN
We estimate consolidated revenue at INR4.9 (+18% YoY), EBITDA at
INR2.3b (margin of 46%) and PAT at INR567m (2.3x YoY).
1,6,12 Rel Perf. (%) -3 / 19 / 16 We expect consumption growth of 15-25% across malls. No major
adverse impact due to online sales is yet visible.
One Bangalore and Kessaku are seeing good sales momentum.
Y/E March 2015 2016 2017E 2018E
However, the Pune project has been slow due to unfavorable market
Net Sales 16.5 17.8 23.0 27.8
conditions.
EBITDA 7.6 8.5 9.8 13.6
Adj PAT 1.3 1.8 2.5 4.1 The stock trades at 12.8x FY18E EPS and 2.2x FY18E BV, and at a 16%
EPS (INR) 2.4 9.3 16.3 26.5 discount to our NAV estimate of INR390. Maintain Buy.
EPS Growth (%) -72.4 278.5 76.0 62.6
BV/Share (INR) 115.5 122.1 134.9 156.7
RoE (%) 2.1 7.6 12.1 16.9
RoCE (%) 9.0 9.2 9.7 13.9 Key issues to watch out for
Payout (%) 95.7 25.3 21.6 17.7 Pick-up in monetization velocity.
Valuations Debt movement.
P/E (x) 138.1 36.5 20.7 12.8 Acquisition of turnkey projects.
P/BV (x) 2.9 2.8 2.5 2.2 Rental growth.
EV/EBITDA (x) 10.7 10.1 9.0 6.4
Div. Yield (%) 0.6 0.6 0.9 1.2
Quarterly Performance (Consol) (INR M)

1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE Consol Consol
Sales 3,963 4,223 4,936 4,667 4,424 4,976 5,876 7,746 17,786 23,022
Change (%) 13 -5 7 17 12 18 19.0 66.0 8 29.4
EBITDA 1,810 1,859 2,135 2,065 2,023 2,289 2,542 2,993 8,500 9,847
Change (%) -1 -11 0 30 12 23 19 45 12 16
As % of Sales 46 44 43 44 46 46 43 39 48 43
Depreciation 415 416 465 477 469 435 505 475 1,773 1,884
Interest 1,025 1,049 1,077 1,168 1,056 967 990 881 4,305 3,894
Other Income 61 103 27 121 73 134 68 175 312 450
PBT 431 498 552 220 572 1,021 1,115 1,812 2,347 4,519
Tax 123 198 205 218 267 327 357 580 746 1,446
Effective Tax Rate (%) 28 40 37 99 32 32 32 32 27 32
Reported PAT Pre MI 308 300 347 3 305 694 758 1,232 1,989 3,073
Change (%) -20 -27 -42 -101 -1 132 118 49,006 10 55
Minority 53 59 22 21 -124 113 107 440 203 536
Associate 4 5 2 5 2 -14 -11 -23 17 -46
Adj. PAT 366 246 328 -14 431 567 640 769 1,415 2,491
Change (%) 44 17 (24) (96) 18 131 95 (5,545) 300 76
October 2016 230

Prestige Estate Projects

Bloomberg PEPL IN CMP: INR203 TP: INR225 (+17%) Buy
We estimate consolidated revenue at INR11b (-9% YoY), EBITDA at
INR3.6b (margin of 33.8%) and PAT at INR1.7b.
1,6,12 Rel Perf. (%) 9 / 6 / -13 We estimate presales at ~INR6b in 2Q, led by Valley Crest in
Mangalore and Lake Ridge in Bengaluru.
The stock trades at 19.6x FY18E EPS and 1.5x FY18E BV, and at a
Y/E March 2015 2016 2017E 2018E 46% discount to our NAV estimate of INR275; maintain Buy.
Net Sales 34.2 46.3 46.5 49.5
EBITDA 9.9 10.4 10.9 11.7
Adj PAT 3.3 3.5 3.5 3.7
Adj EPS (INR) 8.9 9.4 9.2 9.8
EPS Gr (%) -1.3 5.7 -1.3 6.2
BV/Sh(INR) 101.9 110.5 118.0 126.1
RoE (%) 9.8 8.8 8.1 8.0
RoCE (%) 7.7 6.8 6.4 6.4
Payout (%) 19.8 15.0 19.0 17.9
Valuations Execution as per the promised delivery timeline.
P/E (x) 21.7 20.6 20.9 19.6 Pick-up in market dynamics.
P/BV (x) 1.9 1.7 1.6 1.5 Debt movement.
EV/EBITDA (x) 10.6 12.0 11.7 10.6
Div. Yield (%) 0.8 0.6 0.8 0.8

FY16 FY17 FY16 FY17
1Q 2Q 3Q 4Q 1Q 2QE 3QE 4QE Consol Consol
Total Revenue 14,933 12,043 9,804 9,563 9,449 10,942 12,586 13,564 46,344 46,540
Change (%) -36.7 -9.1 28.4 41.8 35.5 0.4
EBITDA 2,901 2,710 2,289 2,524 1,706 3,699 2,588 2,882 10,424 10,424
As of % Sales 19.4 22.5 23.3 26.4 18.1 33.8 20.6 21.3 22.5 23.4
Depreciation 290 378 390 526 336 378 390 449 1,584 1,584
Interest 837 882 896 973 790 882 896 938 3,587 3,587
Other Income 185 268 198 187 265 268 198 196 838 838
PBT 1,959 1,719 1,201 1,211 845 2,707 1,500 1,691 6,090 6,009
Tax 623 622 472 425 141 921 510 575 2,142 2,143
Reported PAT 1,336 1,097 729 786 704 1,787 990 1,116 3,948 3,966
Minority -189 -90 -93 -64 -226 -90 -153 33 -436 -436
Adj PAT 1,146 1,007 636 723 478 1,697 837 1,150 3,512 3,466
Change (%) -58.3 68.5 31.6 59.1 5.7 -1.3
Presales (msf) 0.8 1.0 0.9 1.5 0.8 0.9 1.4 2.0 4.1 5.1
Presales (INR b) 5.3 6.1 5.1 9.9 5.1 5.9 9.4 14.6 26.4 35.0
Leasing (msf) 0.1 0.1 0.2 0.17 0.04 0.10 0.1 0.2 0.5 0.4
E: MOSL Estimates
October 2016 231

Sobha Developers
Bloomberg SOBHA IN
We estimate revenue at INR4.8b (+6% YoY), EBITDA at INR997m
(margin of 23%) and PAT at INR345m (-14% YoY).
1,6,12 Rel Perf. (%) 4 / -3 / 0 Presales are estimated at INR3.8b (0.7msf). Dependency on
Bengaluru volume mix is likely to remain high in 2Q. The formal
Financial Snapshot (INR Billion) launch of group housing project in NCR-Gurgaon (3.23msf) in
Y/E March 2015 2016 2017E 2018E 1QFY17 would contribute to presales.
Net Sales 24.4 19.4 21.8 27.7
The stock trades at 8.8x FY18E EPS and 1.1x FY18E BV, and at a 55%
EBITDA 6.2 4.4 5.2 8.2
discount to our NAV estimate of INR505. Maintain Buy.
Adj PAT 2.5 1.4 1.8 3.4
EPS (INR) 25.5 14.1 17.9 34.7
EPS Gr. (%) 6.2 -44.7 27.3 93.8
BV/Sh (INR) 248.0 261.2 270.9 270.9
RoE (%) 10.6 5.5 6.7 12.8
RoCE (%) 8.7 4.6 6.2 9.5
Payout (%) 27.5 14.2 39.0 20.1
Valuations Key issues to watch out for
P/E (x) 12.0 21.7 17.1 8.8 FY17 guidance fulfillment contingent on approvals and launch of
P/BV (x) 1.2 1.2 1.1 1.1 projects in NCR and Kochi.
EV/EBITDA (x) 7.9 11.5 9.7 6.4 Timeline and ticket pricing are expected to remain the key.
Div. Yield (%) 2.3 0.7 2.3 2.3
Consolidated Quarterly Performance (INR Million)

Sales 4,576 4,519 3,990 5,512 5,701 4,798 5,561 5,786 19,432 21846
Change (%) -21 -33 -42 9 25 6 39 5 -20 12
EBITDA 1,080 1,168 1,099 1,176 997 1,133 1,305 1,756 4,430 5,191
Margin % 23.6 25.8 27.5 21.3 17.5 23.6 23.5 30.4 22.8 23.8
Depreciation 136 136 155 189 154 165 170 216 597 705
Interest 418 454 446 362 382 520 495 624 1,637 2,021
Other Income 63 42 19 108 81 75 90 104 343 350
PBT 589 620 517 733 542 523 730 1,021 2,539 2,816
Tax 223 232 203 518 201 178 248 347 1,188 957
Effective Tax Rate (%) 38 37 34 71 37 34 34 34 47 34
Reported PAT 352 401 321 276 359 345 482 674 1,381 1,758
Change (%) -38 -33 -47 -55 2 -14 50 144 -45 27
Presales (msf) 0.8 0.9 0.8 0.9 0.8 0.7 0.85 0.98 3.4 3.3
Presales (INR b) 5.0 5.0 4.8 5.3 4.7 3.8 5.0 5.9 20.1 19.4
E: MOSL Estimates
October 2016 232

September 2016 September
Results Preview
2016 |Results
Sector:Preview
Retail
Retail
Company name Muted footfalls; no revival yet, slow pace of expansion
Jubilant Foodworks
Consumption fatigue a major worry
Shoppers Stop Retail sales to grow at 21.5% off a low base

Titan Company For our Retail coverage universe, we expect 21.5% revenue growth and 17.8% PAT
growth in 2QFY17, led by low base (Titan had reported 25% sales decline due to
premature redemptions in its Golden Harvest Scheme). EBITDA is likely to grow
22.4%. Jewelry industry demand is likely to decline 15-20% in 2QFY17 due to gold
price volatility and low consumer confidence. Gold imports were the lowest since
4QFY13. Titans jewelry revenue is likely to be negatively impacted. We expect
Jubilant Foodworks sales to grow 11%, with same store sales growth (SSSG) at 2%.
Weak consumer sentiment persists. Shoppers Stops LTL growth is likely to be 13%
off a weak base (flat LTL sales). Brick-and-mortar retail companies continue to face
the onslaught of online retailers. Titan has called out a consumption fatigue due to
the spate of deals throughout the year by both online and offline players.
Store expansion slows down

The Retail companies under our coverage are moderating store expansion. Titan
added only one Tanishq store (5.5ksf), Jubilant has likely added 25 stores and
Shoppers Stop one new store in 2QFY17. Expansion plans are likely to be a function
of pickup in consumer sentiment, which is getting delayed.
No preferred pick in the sector, given weak environment

We note that demand remains sluggish across all retail players, with no recovery in
sight. Competition is also a worry for JUBI and SHOP in a period of slowdown. While
we like the JUBI business model, with decent RoEs even in slowdown, and strong
potential earnings growth on recovery, the poor medium-term visibility, with
possible worsening of consumer sentiment no longer justifies a positive view we
downgraded our rating to Neutral, last month. Similarly, while we like TTANs
franchise, management quality and long-term opportunity in jewelry segment,
headwinds remain a worry for TTAN.

Retail
Jubilant Foodworks 974 Neutral 6,522 11.0 7.1 605 0.2 4.9 178 -18.9 -6.2
Shopper's Stop 372 Neutral 10,553 18.0 39.6 668 9.4 806.8 161 25.3 LP
Titan Company 408 Neutral 33,184 25.0 19.3 2,465 34.0 -10.6 1,785 22.7 -20.2
Retail Sector Aggregate 50,258 21.5 21.2 3,738 22.4 9.7 2,124 17.8 -7.2
October 2016 233

September 2016 Results Preview | Sector: Retail
Exhibit 120: SHOP to post LTL sales growth of 13% in 2QFY17 Exhibit 121: Jubilant Foodworks SSS to grow at 2% in
on a base of 0.1% LTL sales growth in 2QFY16 2QFY17
LTL Sales growth (%) SSS Growth (%)

17.4
15.5
12.5 12.0 12.7
11.0
8.4
22.3
19.8
16.1
10.0 5.5 5.5
7.7
6.3
6.6
1.9
6.6
4.6
3.2
2.0
2.9
5.0
4.0 5.9
1.0
3.7
-2.6
-3.4
-2.4
-5.3
-3.2
0.8 0.1
Jun-12
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
Exhibit 122: Gold prices rose 20.4% YoY in 2QFY17
Gold price YoY (%)

20.0% 20.4%
12.2% 10.2%
8.0%
4.3% 3.5%
-2.1% -0.1% -2.9%

-6.3% -4.1% -4.9% -5.7% -6.8%
-12.8% -10.2%
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Exhibit 123: Shoppers Stop has 82 stores and 20 HyperCITY Exhibit 124: Dominos stores crossed 1,062 as on September
stores as of date 3, 2016
Shoppers Stop Hypercity Dominos stores Cities
81 82
77
73 72 73 74 76
1062
1049
1026
69 72
990
950
67
911
65
876
838
60 61
797
761
54 55 55 19 20
726
679
632
602
576
16 17 17 17 17
552
515
14 15 15 15 15 15
12 12 12 13
112
118
123
128
132
142
152
154
167
185
196
208
216
225
235
243
248
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17*
Jun-13
Jun-14
Jun-15
Jun-16
Sep-12
Dec-12
Mar-13
Sep-13
Dec-13
Mar-14
Sep-14
Dec-14
Mar-15
Sep-15
Dec-15
Mar-16
Sep-16
October 2016 234

Exhibit 125: Relative performance three months (%) Exhibit 126: Relative performance one-year (%)
Sensex Index MOSL Retail Index Sensex Index MOSL Retail Index
110 120
105 110
100 100
95 90
90 80
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
Jul-16
Jun-16
Aug-16
Sep-16

Retail
Jubilant Foodworks 974 Neutral 15.0 14.0 24.5 65.1 69.4 39.7 31.3 22.6 15.6 13.4 11.3 18.8
Shopper's Stop 372 Neutral 5.8 8.7 11.4 63.8 42.8 32.7 14.8 12.4 10.2 6.3 8.8 10.6
Titan Company 408 Neutral 8.0 9.0 10.8 50.7 45.5 37.6 34.9 34.6 28.3 21.3 20.4 21.2
October 2016 235

Jubilant Foodworks
Bloomberg JUBI IN CMP: INR974 TP: INR1,090 (+12%) Neutral
We expect JUBIs revenue to grow 11% YoY. 2QFY17 SSSG is likely to
be positive at around 2% due to the launch of Burger Pizza (which is
receiving good response), Ramadan impact in the base quarter and
1,6,12 Rel Perf. (%) -16/-37/-48
sales of Pizza Mania Extreme for the entire quarter. Discretionary
spending is expected to improve in 2HFY17, led by good progress in
monsoon and 7th Pay Commission. Commodity inflation continues,
Y/E March 2015 2016 2017E 2018E
but remains benign (around low-single-digit).
Sales 20.9 24.4 26.8 32.8
EBITDA 2.6 2.6 2.8 4.0 We expect EBITDA margin to contract 100bp YoY to 9.3%, and
Adj. PAT 1.1 1.0 0.9 1.6 EBITDA to remain flattish YoY at INR605m.
Adj. EPS (INR) 16.9 15.0 14.0 24.5
EPS Gr. (%) -6.2 -11.7 -6.2 74.7 We estimate PAT to decline by 18.9% to INR178m.
BV/Sh.(INR) 98.6 111.3 124.2 130.6
The stock trades at 39.7x FY18E EPS of INR24.5. Maintain Neutral.
RoE (%) 17.2 13.4 11.3 18.8
RoCE (%) 18.1 14.1 11.9 19.2
Valuations Clarity on the appointment of new CEO.
P/E (x) 57.5 65.1 69.4 39.7 Demand outlook for QSR and Pizza space, as well as competition.
P/BV (x) 9.9 8.7 7.8 7.5 Performance of Dunkin Donuts and margin guidance.
EV/EBITDA (x) 24.5 23.8 22.6 15.6 Changes in expansion and capex strategy (if any).
Div. Yield (%) 0.0 0.3 0.3 0.3

Y/E March FY16 FY17 Consol. Consol.
No of Stores 911 950 990 1026 1049 1074 1104 1141 1026 1141
LTL Growth (%) 4.6 3.2 2.0 2.9 -3.2 2.0 5.0 7.0 3.2 2.7
Net Sales 5,707 5,875 6,339 6,180 6,089 6,522 7,290 6,865 24,383 26,766
YoY Change (%) 19.7 17.2 14.4 14.0 6.7 11.0 15.0 11.1 17.5 9.8
Gross Profit 4,320 4,474 4,880 4,728 4,675 4,966 5,575 5,244 18,583 20,460
Gross Margin (%) 75.7 76.1 77.0 76.5 76.8 76.1 76.5 76.4 76.2 76.4
Other Expenses 3,647 3,870 4,153 4,015 4,098 4,360 4,775 4,466 15,943 17,700
EBITDA 673 604 727 713 577 605 800 778 2,640 2,760
EBITDA Growth % -14.2 0.2 10.0 9.1 0.4 4.6
Margins (%) 11.8 10.3 11.5 11.5 9.5 9.3 11.0 11.3 10.8 10.3
Depreciation 292 307 316 328 326 378 389 423 1,282 1,515
Other Income 29 30 24 29 31 38 31 31 110 131
PBT 411 327 436 415 282 265 442 387 1,467 1,376
Tax 135 108 143 136 92 87 145 128 483 453
Rate (%) 32.9 32.9 32.8 32.9 32.7 32.9 32.9 33.1 32.9 32.9
Adjusted PAT 276 220 293 278 190 178 296 259 984 923
YoY Change (%) -31.1 -18.9 1.3 -7.0 -20.2 -6.2
E: MOSL Estimates
October 2016 236

Shoppers Stop
Bloomberg SHOP IN CMP: INR372 TP: INR365 (-2%) Neutral
We expect SHOPs revenue to grow 18% YoY to INR10.6b.
52-Week Range (INR) 422/335 Growth in same-store sales (SSS) is estimated at 13% on a base of
1,6,12 Rel Perf. (%) -3/-9/-10 0.1% LTL sales growth.
EBITDA margin is likely to contract by 50bp to 6.3% in 2QFY17; we

have factored in EBITDA growth of 9.4% and PAT growth of 25.3%
Y/E March 2015 2016 2017E 2018E
Sales
to INR161m.
30.4 34.1 38.6 44.7
EBITDA 1.9 2.2 2.6 3.1 The stock trades at 32.7x FY18E EPS of INR11.4; maintain Neutral.
Adj. PAT 0.4 0.5 0.7 0.9
Adj. EPS (INR) 4.9 5.8 8.7 11.4
EPS Gr. (%) 7.9 19.3 48.9 30.9
BV/Sh.(INR) 93.1 95.6 104.7 113.6
RoE (%) 5.5 6.3 8.8 10.6
RoCE (%) 5.7 6.2 7.6 8.9
Payout (%) 15.3 0.0 20.0 20.0
P/E (x) 76.1 63.8 42.8 32.7 Comments on same-store performance; margin outlook.
P/BV (x) 4.0 3.9 3.6 3.3 Update on Omni-channel strategy.
EV/EBITDA (x) 16.7 14.9 12.4 10.2
Guidance on HyperCITYs breakeven.
Div. Yield (%) 0.2 0.0 0.5 0.6

LTL Sales Gr % 12.7 0.1 17.4 5.9 5.5 13.0 4.0 10.0 9.0 8.0
Deptt Stores 73 74 76 77 81 82 83 84 77 84
Net Sales 6,846 8,943 9,118 8,959 7,559 10,553 9,847 10,610 34,132 38,569
YoY Change (%) 11.8 4.6 19.1 9.7 10.4 18.0 8.0 18.4 11.9 13.0
Total Exp 6,677 8,333 8,405 8,437 7,485 9,886 9,030 9,608 31,960 36,008
EBITDA 169 611 712 523 74 668 817 1,002 2,173 2,561
Growth % -45.2 10.0 33.0 6.5 -56.4 9.4 14.7 15.0 17.9
Margins (%) 2.5 6.8 7.8 5.8 1.0 6.3 8.3 9.4 6.4 6.6
Depreciation 199 309 211 258 372 330 226 119 977 1,048
Interest 139 135 158 141 159 132 155 116 573 562
Other Income 207 53 58 50 237 64 70 -115 213 256
PBT 37 220 402 174 -220 269 507 652 836 1,207
Tax 16 91 166 72 -85 108 203 258 346 483
Rate (%) 41.9 41.5 41.2 41.5 38.5 40.0 40.0 39.5 41.4 40.0
Adjusted PAT 22 129 236 102 -136 161 304 395 490 724
YoY Change (%) 188.1 -19.1 71.3 -1.2 -726.9 25.3 28.8 20.3 47.9
E: MOSL Estimates
October 2016 237

Titan Company
Bloomberg TTAN IN CMP: INR408 TP: INR390 (-4%) Neutral
We expect TTANs revenue to increase 25% to INR33.2b.
M. Cap. (INR b)/(USD b) 362 / 5
52-Week Range (INR) 445/303 Jewelry division sales were impacted by decline in industry demand
1,6,12 Rel Perf. (%) -1/8/17 by around 15-20%. As per the management, 2QFY17 started with
good expectation, given bountiful monsoon, but as the quarter
Financial Snapshot (INR b) progressed, consumer sentiment was patchy and became
Y/E March 2015 2016 2017E 2018E unpredictable. Base demand remained weak even as consumer
Sales 119.0 111.8 126.3 147.8 walk-ins improved due to good deals and new product launches.
EBITDA 11.5 8.6 10.4 12.6
During the quarter, TTAN added only one Tanishq store (5.5ksf).
Adj. PAT 8.2 7.1 7.9 9.6
Adj. EPS (INR) 9.3 8.0 9.0 10.8 We factor in EBITDA growth of 34% in 2QFY17, with underlying
EPS Gr. (%) 11.1 -13.4 11.4 21.0 margin expansion of 50bp to 7.4%, and 22.7% PAT growth.
BV/Sh.(INR) 34.8 40.4 47.1 54.9
The stock trades at 37.6x FY18E EPS of INR10.8; maintain Neutral.
RoE (%) 29.3 21.3 20.4 21.2
RoCE (%) 27.3 21.8 20.7 21.2
Payout (%) 29.9 30.0 30.0 30.0
Valuation
P/BV (x) 11.7 10.1 8.6 7.4 Comments on consumer demand for Jewelry and Watches.
EV/EBITDA (x) 31.2 42.0 34.5 28.3 Expansion initiatives.
Div. Yield (%) 0.7 0.6 0.7 0.8
Update on the new Golden Harvest Scheme.
Quarterly Performance (INR million)

Net Sales 26,868 26,547 33,984 24,372 27,825 33,184 35,683 29,609 111,770 126,300
YoY Change (%) -7.1 -25.5 17.3 -1.5 3.6 25.0 5.0 21.5 -5.5 13.0
Total Exp 24,872 24,601 31,026 22,414 25,067 30,718 32,720 27,438 103,179 115,943
EBITDA 1,996 1,840 2,822 1,958 2,759 2,465 2,963 2,170 8,591 10,357
EBITDA Growth % -27.3 -39.6 12.2 -21.2 38.2 34.0 5.0 10.8 -20.4 20.6
Margins (%) 7.4 6.9 8.3 8.0 9.9 7.4 8.3 7.3 7.7 8.2
Depreciation 227 240 248 254 261 271 280 257 971 1,068
Interest 118 87 114 104 88 96 125 156 423 465
Other Income 395 302 415 452 297 363 498 616 1,612 1,773
PBT 2,045 1,815 2,875 2,052 2,706 2,461 3,056 2,373 8,809 10,597
Tax 530 361 622 156 471 677 840 661 1,678 2,649
Rate (%) 25.9 19.9 21.6 7.6 17.4 27.5 27.5 27.9 19.0 25.0
Adjusted PAT 1,516 1,454 2,253 1,896 2,236 1,785 2,215 1,712 7,131 7,948
YoY Change (%) -14.5 -39.4 18.1 -11.9 47.5 22.7 -1.7 -9.7 -13.4 11.4
E: MOSL Estimates
October 2016 238

September
September 2016 Results Preview 2016 Results
| Sector: Preview
Technology
Technology
Company Name No fireworks this season
Cyient Brexit and impending US elections keep expectations muted
HCL Technologies
Expectations laid low by macro and company-specific warnings
Hexaware Technologies
The seasonal strength that leads to strongest sequential growth in the September
Infosys quarter is hardly expected to play out this time, as slowness in spending by the BFSI
KPIT Technologies vertical weighs on the industry. In dollar terms, growth will be pegged back further
MindTree Consulting by sharp depreciation of the GBP v/s the USD (-8.5% QoQ). Hopes of a positive
Mphasis
surprise are laid low by commentaries from some companies:
TCS cited that weakness in discretionary spending in US BFSI is likely to cause
NIIT Tech
sequential loss of momentum.
Persistent Systems INFO suffered termination of a contract with RBS standalone UK bank, Williams
TCS & Glyn (W&G), leading to gradual ramp down of as many as 3,000 employees.
Tech Mahindra MTCL cited expectation of sequential revenue decline in USD terms and lower
Wipro profitability due to cross-currency movements, delayed ramp-ups, project

Zensar Technologies
cancellations and weakness in Bluefin.
Tepid constant currency growth marred further by GBP

Against the above backdrop, we see top-tier growth in constant currency
ranging from 0.1% to 3.1% QoQ and from 6.1% to 12.7% YoY.
In USD terms (including the impact from GBP depreciation and other
currencies), we expect growth of -0.5% to 2.5% QoQ and 4.6% to 11.5% YoY.
While TECHM may lead sequential growth at 3.1% CC, that would be from
contribution from three acquisitions (Target 1 month, Pininfarina 2 months
and Bio 3 months), excluding which organic growth would be 1.5% QoQ CC.
Margins may follow revenues amid missing currency tailwind

While the GBP depreciated v/s the USD QoQ, the INR was flat QoQ. Amid softening
of revenue growth in the recent years, the industrys profitability has held up,
thanks to significant depreciation of the INR. However, continued deceleration of
revenue growth, combined with investments necessary to transition to Digital have
weighed on margins. Normally, strong 2Q growth comes to the aid of margins, but
this quarter we see sequential movements ranging from -160bp to 30bp for tier-I
(wage hikes taking toll on HCLT the most) and from -130bp to 70bp for tier-II.
Estimate cuts not behind us, yet; watch for INFOs guidance, TCS BFSI outlook
We believe there is room for estimates to moderate further, given the ask rates
implied in the current FY17 revenue estimates. This is especially given that the
seasonal weakness of 2H will be further exacerbated by current sluggish macro
and the US elections in November. To that extent, watch out for commentaries
suggesting any offsets from ramp-ups in large deals that have been delayed,
causing some growth impediment in recent quarters.
Watch out for the extent of cut in INFOs guidance, along with commentary
from TCS on the expected impact from current BFSI spending in 2HFY17.
Ashish Chopra (Ashish.Chopra@MotilalOswal.com); +91 22 3982 5424

Sagar Lele (Sagar.Lele@MotilalOswal.com); +91 22 3982 5585
October 2016 239
September 2016 Results Preview | Sector: Technology
PAT decline seen in 2Q PAT decline led by margin contraction and forex losses
Aggregate PAT for tier-I is expected to decline by 2% YoY, and for tier-II, the
10.5
decline is expected to be 12.3% YoY. The primary reasons are

1. Industry-wide margin pressure - EBITDA margins are expected to decline YoY
2.0
1.5
in 2QFY17 for all companies under our coverage (barring Mphasis). For tier-
I, we model decline of 120-270bp YoY, and for tier-II, we model decline of
(1.5)
(2.4)
160-510bp YoY.
(32.5)
(9.9)
(15.3)
2. Forex losses On a closing basis, INR appreciated 1.4% QoQ against the USD
(19.0)
ZENT (20.6)
TECHM (21.3)
KPIT (35.4)
NITEC (23.3)
in 2QFY17, due to which we expect some translation losses v/s forex gains in
2QFY16
CYL
TCS
MPHL
MTCL
PSYS
INFO
WPRO
HEXW
HCLT
Valuation and view: Triggers missing despite valuation comfort; prefer INFO, HCLT
Lest the macro turns for the better, we see further moderation in estimates,
limiting any upside triggers for the sector over the near term. Risks are lesser at
led by margin pressure across the HCLT, given visibility from its unchanged guidance for the year, and TECHM, with
board
expectations within deliverable limits. From a medium-to-long-term
150
perspective, we prefer INFO and HCLT.

Given the traction in revenue growth (notwithstanding the cyclical speed
breaker) at INFO under its new leadership, we take greater comfort in its
valuations, compared to TCS, which too is citing challenges in BFSI a risk to its
-170
-290
premium multiple.
-120
-130
-160
-210
Potential of double-digit organic growth at HCLT (substantiated by order book),

-220
-270
-280
-280
better growth compared to TECHM and WPRO, along with 25%+ RoE leaves
-430
-510
ample room for upside, despite embedding conservatism on the margin outlook.
Moreover, its exposure to IMS and Engineering Services makes it less vulnerable
TCS
INFO
KPIT
NITEC
MPHL
CYL
TECHM
PSYS
MTCL
WPRO
HCLT
HEXW
ZENT
to the weakness seen in BFSI.

Among the tier-II IT, we prefer CYL and ZENT.
Exhibit 128: Earnings aggregate for 2QFY17

Sector CMP Sales (INR m) EBDITA (INR m) PAT (INR m)
INR Reco Sep-16 % YoY % QoQ Sep-16 % YoY % QoQ Sep-16 % YoY % QoQ
Cyient 482 Buy 8,627 11.8 3.9 1,063 -8.6 -2.5 798 -19.0 7.8
HCL Technologies 809 Buy 115,393 14.3 1.8 23,832 7.8 -5.5 18,505 1.5 -9.4
Hexaware Tech. 191 Neutral 9,130 11.6 5.0 1,483 1.5 9.6 1,088 -2.4 8.9
Infosys 1,038 Buy 170,474 9.0 1.6 45,217 3.9 1.7 33,468 -1.5 -2.6
KPIT Tech. 127 Neutral 8,039 -1.0 0.1 889 -21.5 3.9 471 -37.2 -14.4
Mindtree 489 Neutral 13,225 13.1 -0.4 1,777 -17.9 -8.9 1,069 -32.5 -13.5
MphasiS 538 Neutral 15,039 -3.4 -0.8 2,486 6.0 1.7 2,100 10.5 2.8
Persistent Systems 640 Neutral 7,221 33.1 2.9 1,044 2.6 -1.3 609 -15.3 -16.9
TCS 2,412 Neutral 297,913 9.7 1.7 80,597 3.0 2.8 61,782 2.0 -2.2
Tech Mahindra 421 Neutral 70,828 7.1 2.3 10,229 -7.1 -0.6 6,184 -21.3 -5.7
Wipro 479 Neutral 135,759 8.5 -0.2 25,948 -4.9 -2.2 20,139 -9.9 -1.8
Zensar Tech 1,009 Buy 7,851 3.8 3.0 1,047 -10.6 -0.6 726 -20.6 -4.9
Sector Aggregate 859,498 9.6 1.4 195,612 1.6 0.5 146,939 -2.6 -3.4
October 2016 240

Exhibit 129: Double-digit USD revenue growth (YoY) seen only in HCLT amongst tier-I
Revenue (USD m) Revenue (INR b)
Company 2QFY17E 2QFY16 YoY (%) 1QFY17 QoQ (%) 2QFY17E 2QFY16 YoY (%) 1QFY17 QoQ (%)
TCS 4,446 4,156 7.0 4,362 1.9 298 272 9.7 293 1.7
Infosys 2,544 2,392 6.4 2,501 1.7 170 156 9.0 168 1.6
Wipro 1,922 1,832 4.9 1,931 (0.5) 136 125 8.5 136 (0.2)
HCLT 1,722 1,545 11.5 1,691 1.9 115 101 14.3 113 1.8
TECHM 1,057 1,011 4.6 1,032 2.5 71 66 7.1 69 2.3
Aggregate 11,692 10,935 6.9 11,516 1.5 790 720 9.7 779 1.4
EBITDA Margin (%) PAT (INR b)
TCS 27.1 28.8 (170) 26.7 30 62 61 2.0 63 (2.2)
Infosys 26.5 27.8 (130) 26.5 - 33 34 (1.5) 34 (2.6)
Wipro 19.1 21.8 (270) 19.5 (40) 20 22 (9.9) 21 (1.8)
HCLT 20.7 21.9 (120) 22.2 (160) 19 18 1.5 20 (9.4)
TECHM 14.4 16.6 (220) 14.9 (43) 6 8 (21.3) 7 (5.7)
Aggregate 23.5 25.3 (178) 23.7 (21) 140 143 (2.0) 145 (3.4)
Exhibit 130: Margin decline expected to be steep across tier-II (except MPHL), YoY
Revenue (USD m) Revenue (INR b)
Persistent Systems 108 83 29.9 105 2.9 7.2 5.4 33.1 7.0 2.9
Hexaware 136 125 8.9 129 5.4 9.1 8.2 11.6 8.7 5.0
KPIT Tech. 120 125 (3.7) 120 0.2 8.0 8.1 (1.0) 8.0 0.1
Mindtree 197 180 9.5 199 (0.8) 13.2 11.7 13.1 13.3 (0.4)
Mphasis 229 237 (3.3) 224 2.1 15.0 15.6 (3.4) 15.2 (0.8)
Cyient 129 118 8.7 124 3.8 8.6 7.7 11.8 8.3 3.9
NIIT Tech 100 104 (4.2) 99 0.7 6.7 6.8 (1.3) 6.7 (0.1)
Zensar 117 116 0.7 114 2.8 7.9 7.6 3.8 7.6 3.0
Aggregate 1,019 973 4.8 1,000 1.9 68.0 63.5 7.0 67.2 1.2
EBITDA margin (%) PAT (INR b)
Persistent Systems 14.5 18.7 (430) 15.1 (60) 0.6 0.7 (15.3) 0.7 (16.9)
Hexaware 16.2 17.8 (160) 15.6 70 1.1 1.1 (2.4) 1.0 8.9
KPIT Tech. 11.1 13.9 (290) 10.7 40 0.2 0.3 (35.4) 0.2 (6.6)
Mindtree 13.4 18.5 (510) 14.7 (130) 1.1 1.6 (32.5) 1.2 (13.5)
Mphasis 16.5 15.1 150 16.1 40 2.1 1.9 10.5 2.0 2.8
Cyient 12.3 15.1 (280) 13.1 (80) 0.8 1.0 (19.0) 0.7 7.8
NIIT Tech 14.8 17.6 (280) 15.3 (50) 0.5 0.7 (23.3) 0.3 67.4
Zensar 13.3 15.5 (210) 13.8 (50) 0.7 0.9 (20.6) 0.8 (4.9)
Aggregate 14.5 15.0 (60) 15.4 (90) 6.4 7.2 (12.3) 6.2 1.8
October 2016 241

Exhibit 131: Macro-led weakness to dampen seasonal strength in tier-I (QoQ, CC %)
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17
6.0
4.4
3.5
3.1 2.9 3.1
2.5 2.7 2.4
2.1 1.91.72.0 2.0 1.7
1.3
0.2 0.1 0.3 0.4
TCS INFO WPRO HCLT TECHM
Exhibit 132: YoY traction seen picking up only at HCLT, led by Volvo IT acquisition (YoY, CC
%)
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17

15.8
12.0
10.3
10.8
14.0
12.4
15.0
12.0
15.8
13.6
11.4
12.7
22.6
18.9
14.7
9.8
9.9
8.5
6.9
8.3
8.4
6.0
7.6
9.5
6.4
9.2
8.1
5.9
6.0
6.1
TCS INFO WPRO HCLT TECHM
Exhibit 133: TCS and HCLT to outperform peers organically (revenue growth, QoQ, USD, %)
TCS Infosys Wipro HCL Tech Tech Mahindra

9
7
5
2.5
1.9
1.9
1.7
3
-0.5
1
-1
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
October 2016 242

Exhibit 134: Incremental revenue to revive at TECHM, aided by acquisitions; cross-currency movements unsupportive again
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 Cross currency impact on USD revenues (bp)
225 Incremental revenue (USDm)
TCS
INFO
TECHM
WPRO
HCLT
150
75 (30)
0
(50)
TCS
Wipro
Mahindra
HCL Tech
Infosys
-75
Tech
(60) (60) (60)

Exhibit 135: Absence of strong seasonal margin expansion in 2QFY17
TCS Infosys HCL Tech Wipro Tech Mahindra
30
26
22
18
14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
Exhibit 136: Sequential improvement seen in some mid-caps due to company-specific
dynamics (revenue growth, QoQ, USD, %)
12.0 3QFY16 4QFY16 1QFY17 2QFY17
8.1
6.25.4 6.1
4.3 3.8
2.9 3.12.8
2.3 1.7 2.1 2.12.6
0.7 0.2 0.0 0.7
-0.8 -1.0 -0.3 -0.8 -1.2-1.4

-1.9 -1.6 -1.4
-3.4 -2.5
-3.5 -3.7
Persistent Hexaware KPIT Tech. Mindtree Mphasis Cyient NIIT Tech Zensar
Systems
October 2016 243

Exhibit 137: 2QFY17 currency highlights (INR)

Rates (INR) Change (QoQ)
USD EUR GBP AUD USD EUR GBP AUD
Average 66.95 74.8 88.0 50.8 0.0% -1.1% -8.4% 1.8%
Closing 66.61 74.4 86.4 50.8 -1.4% -1.1% -4.9% 0.8%
Exhibit 138: 2QFY17 currency highlights (USD)

Rates (USD) Change (QoQ)
EUR GBP AUD EUR GBP AUD
Average 1.12 1.31 0.76 -1.1% -8.5% 1.7%
Closing 1.12 1.30 0.77 1.2% -2.5% 2.9%
Exhibit 139: Cross currencies: Assumed rates v/s actual

Guided at EUR GBP AUD INR/USD
Infosys 1.10 1.51 0.73 nm
Wipro 1.13 1.46 0.74 67.12
Actual (Average) 1.12 1.31 0.76 66.95
Change (%) EUR GBP AUD INR/USD

Infosys 1.5% -13.0% 3.9% nm
Wipro -1.2% -10.0% 2.5% -0.2%
October 2016 244

Exhibit 140: Relative performance3m (%) Exhibit 141: Relative performance1Yr (%)
Sensex Index MOSL Technology Index Sensex Index MOSL Technology Index
110 110
105 104
100 98
95 92
90 86
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Mar-16
Sep-15
Jan-16
Feb-16
Sep-16
Oct-15
Jul-16
Jun-16
Aug-16
Sep-16

Company Mcap Rating TP Upside EPS (INR) P/E (x) RoE (%) FY16-18E CAGR (%)
USDb (INR) (%) FY17E FY18E FY17E FY18E FY17E FY18E USD rev. EPS
TCS 70.9 Neutral 2,500 3.6 131.3 148.5 18.4 16.2 33.1 32.1 9.8 9.8
Infosys 35.4 Buy 1,300 25.2 61.5 71.1 16.9 14.6 22.7 23.5 9.6 9.7
Wipro 17.6 Neutral 570 19.0 34.2 40.1 14.0 12.0 17.6 18.7 6.7 5.3
HCL Tech 17.1 Buy 940 16.2 55.3 61.7 14.6 13.1 25.9 24.8 11.2 7.4
TechM 6.2 Neutral 500 18.8 31.0 37.7 13.6 11.2 18.4 16.2 7.9 3.7
Mphasis 1.7 Neutral 570 5.9 39.8 44.2 13.5 12.2 13.3 14.5 5.7 13.3
Mindtree 0.6 Neutral 550 12.5 29.6 40.3 16.5 12.1 19.7 23.5 12.0 5.9
KPIT Tech 0.4 Neutral 150 18.1 13.2 16.1 9.6 7.9 17.4 17.8 4.3 7.0
Cyient 0.8 Buy 550 13.4 33.2 42.0 14.6 11.6 15.8 17.5 12.5 16.9
Hexaware 0.9 Neutral 230 20.4 13.6 16.1 14.0 11.9 26.6 26.7 11.2 11.4
NIIT Tech 0.4 Neutral 530 24.4 39.5 47.0 10.8 9.1 14.5 15.6 7.8 1.3
Persistent Sys. 0.8 Neutral 710 10.9 38.2 48.0 16.8 13.3 17.5 20.2 18.5 13.6
Zensar 0.7 Buy 1,300 28.7 75.7 98.2 13.3 10.3 22.0 24.0 8.0 20.0
Source: MOSL
October 2016 245

Cyient
Bloomberg CYL IN CMP: INR485 TP: INR550 (+13%) Buy
We expect CYLs USD revenue to grow 3.8% QoQ in 2QFY17.
M. Cap. (INR b)/(USD b) 54.4 /0.8
The guidance for Rangsons for FY17 is of 50% growth (~USD58m).
However, 1Q was soft at USD9m. Although growth is expected to
1,6,12 Rel Perf. (%) 1/-8/20
pick up, we are conservative in our assumptions given sustained
disappointment since its acquisition. We estimate revenue of
USD11m (+16% QoQ) for 2Q, and USD52m (34% YoY) for FY17.
Y/E June 2015 2016 2017E 2018E
Sales
In the core services business, CYLs revenue is expected to grow
27.4 31.0 35.6 41.8
EBITDA 2.8% QoQ, led by strong traction in top accounts and momentum in
4.0 4.2 4.8 6.0
PAT 3.5 3.3 3.7 4.7
the verticals of Aerospace, Railway and Communication.
EPS (INR) 31.3 30.7 33.2 42.0 CYL has distributed its wage hike over 1Q and 2Q in FY17, and
EPS Gr. (%) 32.0 (1.9) 8.2 26.3 hence, would see a negative impact sequentially. We expect EBITDA
BV/Sh. (INR) 164.3 186.6 209.9 239.3 margin to decline by 70bp QoQ, also factoring in the increased
RoE (%) 19.0 16.5 15.8 17.5 revenue from lower margin Rangsons business.
RoCE (%) 17.4 15.1 14.9 16.6 PAT estimate for the quarter is INR798m, up 7.8% QoQ.
Payout (%) 25.6 22.8 30.0 30.0 The stock trades at 14.6x FY17E and 11.6x FY18E EPS. Maintain Buy.
Valuation
P/BV (x) 3.0 2.6 2.3 2.0 Update on problem verticals like Semiconductor, Energy and GIS.
EV/EBITDA (x) 12.4 11.2 9.6 7.3 Outlook for Rangsons for FY17 and progress on synergy through
Div yld (%) 1.6 1.4 2.1 2.6
DLM.
Margin trajectory going ahead.

Revenue (USD m) 114 118 118 121 124 129 135 140 472 528
QoQ (%) -2.6 3.6 0.0 2.1 2.6 3.8 4.5 4.4 5.6 11.8
Revenue (INR m) 7,263 7,717 7,818 8,158 8,306 8,627 9,147 9,548 30,955 35,627
YoY (%) 16.8 14.8 9.8 11.7 14.4 11.8 17.0 17.0 13.1 15.1
GPM (%) 35.4 36.6 34.4 34.2 35.2 33.0 32.9 34.0 35.1 33.8
SGA (%) 22.7 21.6 20.3 21.1 22.1 20.7 19.4 19.3 21.4 20.3
EBITDA 918 1,164 1,102 1,063 1,090 1,063 1,233 1,406 4,247 4,792
EBITDA Margin (%) 12.6 15.1 14.1 13.0 13.1 12.3 13.5 14.7 13.7 13.5
EBIT Margin (%) 10.1 12.6 11.3 9.4 10.4 10.0 11.3 12.5 10.8 11.1
Other income 298 299 246 222 116 174 378 260 1,065 928
ETR (%) 28.7 23.5 20.8 20.4 25.5 24.0 24.0 24.0 23.4 24.3
PAT 748 985 869 844 740 798 1,078 1,114 3,446 3,730
QoQ (%) -20.3 31.7 -11.8 -2.8 -12.3 7.8 35.1 3.4
YoY (%) 9.2 9.2 -13.9 -10.1 -1.1 -19.0 24.1 32.0 -1.9 8.2
EPS (INR) 6.7 8.8 7.7 7.5 6.6 7.1 9.6 9.9 30.7 33.2
Headcount 11,507 11,311 11,481 11,569 12,297 12,547 12,897 13,147 11,569 13,147
Util incl. trainees (%) 75.4 76.1 76.7 73.3 75.5 76.3 74.8 76.3
Attrition (%) 18.8 21.6 20.6 18.4 19.9
Offshore rev. (%) 44.7 44.6 43.3 41.0 44.6 45.1 44.3 45.2
E: MOSL Estimates
October 2016 246

HCL Technologies
Bloomberg HCLT IN CMP: INR809 TP: INR940 (+16%) Buy
We expect HCLTs USD revenue to grow 1.9% QoQ in 2QFY17 (and
M. Cap. (INR b)/(USD b) 1143 / 17
2.4% QoQ on a constant currency basis). Impact from cross
currency movement should shave off ~50bp from revenue growth.
1,6,12 Rel Perf. (%) 4 / -13 / -13
We expect momentum to continue in the IMS business, and
stability in BPO (after the sharp decline seen in 1Q). Deal signings
over the last many quarters provide visibility and confidence in
Y/E JUNE 2015 2016 2017E 2018E
Sales
execution of its 12-14% revenue growth guidance.
370.6 311.4 471.7 541.4
EBITDA
EBIT margin is likely to decline by 150bp to 19.1% because of wage
87.0 68.2 99.2 113.6
PAT 72.6 56.7 78.7 88.3
hikes and continued investments in the business. EBIT margin of 19-
EPS (INR) 50.4 40.1 55.3 61.7 19.3% over the remainder of the year is likely to lead to 19.5% EBIT
EPS Gr. (%) 11.7 -20.3 37.9 11.5 margin for FY17 the lower end of the 19.5-20.5% guidance range.
BV/Sh. (INR) 177.0 200.2 234.3 274.1 PAT estimate for the quarter is INR18.5b, -9.4% QoQ, on lower
RoE (%) 31.7 21.5 25.9 24.8 margins and lower other income (losses on hedges and translation).
RoCE (%) 29.2 19.9 23.7 23.1 The stock trades at 14.6x FY17E and 13.1x FY18E EPS. Maintain Buy.
Payout (%) 31.8 42.4 32.5 30.8
Valuation
P/E (x) 16.1 20.2 14.6 13.1
P/BV (x) 4.6 4.0 3.5 3.0 Commentary on performance expectations for FY17.
EV/EBITDA 11.7 11.2 9.9 8.2 Deal signings and order book.
(x) Organic growth in IMS and traction in Engineering.
Div yld (%) 2.0 2.1 2.2 2.3
Quarterly Performance (US GAAP) (INR m)

Y/E June FY16* FY17 FY16* FY17E
1Q 2Q 3Q 1Q 2QE 3QE 4QE
Revenue (USD m) 1,545 1,566 1,587 1,691 1,722 1,765 1,808 4,698 6,986
QoQ (%) 0.5 1.4 1.3 6.5 1.9 2.5 2.5 -21.1 48.7
Revenue (INR m) 100,970 103,410 106,980 113,360 115,393 120,006 122,953 311,360 471,712
YoY (%) 15.6 11.4 15.4 15.9 14.3 16.0 14.9 -16.0 51.5
GPM (%) 34.4 34.6 34.9 34.4 32.3 32.4 32.0 34.6 32.8
SGA (%) 12.5 13.0 12.7 12.1 11.7 11.6 11.6 12.7 11.7
EBITDA Margin (%) 21.9 21.5 22.2 22.2 20.7 20.8 20.5 21.9 21.0
EBIT Margin (%) 20.6 20.0 20.8 20.6 19.1 19.3 19.0 20.5 19.5
Other income 2,410 3,550 2,000 2,530 1,588 2,588 1,580 7,960 8,286
ETR (%) 21.3 20.9 20.5 21.0 21.5 21.5 21.5 20.9 21.4
PAT before EOI 18,230 19,190 19,250 20,430 18,505 20,172 19,550 56,670 78,658
QoQ (%) 2.3 5.3 0.3 6.1 -9.4 9.0 -3.1
YoY (%) 6.1 -0.2 14.3 14.6 1.5 5.1 1.6 -20.2 38.8
EPS 12.9 13.6 13.6 14.5 13.1 14.1 13.7 40.1 55.3
Headcount 105,571 103,696 104,896 107,968 110,268 113,268 116,268 104,896 116,268
Util excl. trainees (%) 83.6 84.7 85.6 85.8 85.7 85.3 85.0 81.8 83.1
Attrition (%) 16.3 16.7 17.3 17.8
Fixed Price (%) 56.2 57.0 56.8 60.9
E: MOSL Estimates, *: 9 month year
October 2016 247

Hexaware Technologies
Bloomberg HEXW IN CMP: INR191 TP: INR230 (+20%) Neutral
We expect USD revenue to grow 5.1% QoQ to USD136.3m. In
1QCY16, HEXW was impacted by client-specific issues. It expects
growth for the year to be dominated by 2Q and 3Q. In line with this,
1,6,12 Rel Perf. (%) -2 / -41 / -32
2Q saw a sharp revival: 6.6% QoQ growth. We expect the strength
to continue, and lead to 5.8% QoQ CC growth in 3Q.
EBITDA margin declined by 240bp YoY in 1HCY16. However, this
Y/E DEC 2014 2015 2016E 2017E
Sales
trend is expected to reverse with resurrection of revenue growth
25.8 31.2 35.5 41.6
EBITDA
momentum. We expect EBITDA margin improvement of 60bp QoQ
4.8 5.4 5.7 7.1
PAT 3.3 3.9 4.1 4.9
to 16.2% in 3QCY16.
EPS (INR) 10.6 12.9 13.6 16.1 The expansion, however, wont be sufficient to reach the
EPS Gr. -15.9 22.1 5.1 18.1 managements desired level of 17% in CY16, especially given the
(%)
BV/Sh. upcoming wage hike in 2H.
42.9 47.4 55.0 65.0
(INR) Our PAT estimate for the quarter is INR1,088m, up 8.9% from the
RoE (%) 25.7 28.9 26.6 26.7
RoCE (%) 27.6 27.7 24.1 26.1 previous quarter, on the back of strong revenue growth and margin
Payout (%) 77.4 64.5 40.9 29.0 expansion.
Valuation The stock trades at 14x CY16E and 11.9x CY17E earnings. Neutral.
P/E (x) 18.0 14.8 14.0 11.9
P/BV (x) 4.5 4.0 3.5 2.9
EV/EBITDA
10.7 9.7 9.3 7.3
(x) Large deal pipeline and traction post the increased S&M spend.
Div yld (%) 4.4 4.5 3.0 2.5
Commentary on sustenance of revenue growth.
Margin outlook for the remainder of the year.
Quarterly Performance (Indian GAAP) (INR m)

Y/E Dec CY14 CY15 CY15 CY16E
Revenue (USD m) 114.9 121.3 125.1 124.1 121.7 129.7 136.3 139.8 485 527
QoQ (%) 0.3 5.6 3.1 -0.8 -1.9 6.6 5.1 2.6 14.9 8.6
Revenue (INR m) 7,134 7,722 8,184 8,195 8,202 8,697 9,130 9,503 31,235 35,532
YoY (%) 21.1 26.5 22.0 15.1 15.0 12.6 11.6 16.0 21.0 13.8
GPM (%) 35.7 35.0 35.3 34.7 33.6 34.6 34.5 34.9 35.1 34.4
SGA (%) 17.9 17.8 17.4 18.8 19.0 19.0 18.3 17.8 18.0 18.5
EBITDA Margin (%) 17.8 17.1 17.8 15.9 14.6 15.6 16.2 17.1 17.1 15.9
EBIT Margin (%) 16.2 15.6 16.4 14.3 12.9 14.0 14.7 15.5 15.6 14.3
Other income -96 84 97 88 55 132 127 143 173 457
ETR (%) 21.2 23.5 22.4 21.0 24.2 25.8 25.8 25.8 22.1 25.5
PAT 834 989 1,115 994 842 999 1,088 1,200 3,932 4,129
QoQ (%) -11.2 18.6 12.7 -10.9 -15.3 18.6 8.9 10.3
YoY (%) 18.6 29.3 29.7 5.9 1.0 1.0 -2.4 20.7 20.4 5.0
EPS (INR) 2.8 3.3 3.7 3.3 2.8 3.3 3.6 4.0 12.9 13.6
Headcount 10,100 11,009 11,341 11,375 11,599 11,875 12,318 12,651 11,375 12,651
Utilization (%) 73.6 72.1 70.4 69.7 69.6 70.0 72.0 73.0 72.3 72.2
Attrition (%) 16.6 17.1 17.4 16.9 16.0 16.6
Offshore rev. (%) 41.1 38.8 39.2 37.7 36.9 36.1 37.1 38.4 39.2 37.1
E: MOSL Estimates
October 2016 248

Infosys
Bloomberg INFO IN CMP: INR1,038 TP: INR1,300 (+25%) Buy
INFO cut its revenue growth guidance for FY17 after 1Q to 10.5-12%
M. Cap. (INR b)/(USD b) 2,372 / 36
(3-4% CQGR), from 11.5-13.5% (3-3.7% CQGR) earlier. However,
52-Week Range (INR) 1,278 / 1,009
following the termination of RBS contract and further worsening of
1,6,12 Rel Perf. (%) 2 / -26 / -19
the macro, it cited further likelihood of a guidance cut.
In USD terms, our revenue growth estimate is 1.7% QoQ on the
back of 30bp impact of cross-currency movement.
Y/E MAR 2015 2016 2017E 2018E
Sales 533.2
Although we expect higher sequential growth in 2Q (2% v/s 1.7% in
624.4 695.4 798.3
EBITDA 149.0 1Q), the annual guidance is likely to be revised downward.
170.8 185.4 216.8
PAT 123.3 134.9 140.5 162.4
We expect EBITDA margin to remain flat QoQ at 26.5%, as revenue
EPS (INR) 53.9 59.0 61.5 71.1 growth momentum has been affected over the last two quarters.
EPS Gr. (%) 15.8 9.4 4.1 15.6 Our PAT estimate is INR33.47b, -2.6% QoQ, led by lower other
BV/Sh. (INR) 240 270.3 301.3 336.2 income (loss on translation).
RoE (%) 26.0 24.7 22.7 23.5 The stock trades at 16.9x FY17E and 14.6x FY18E earnings. Buy.
RoCE (%) 24.1 23.2 21.5 22.3
Payout (%) 34.3 41.9 48.8 42.2
P/E (x) 21.7 17.6 16.9 14.6 FY17 revenue guidance.
P/BV (x) 4.9 3.8 3.4 3.1 TCV of deal wins during the quarter.
EV/EBITDA (x) 15.8 11.9 10.6 8.8 Commentary around contribution of newly launched services.
Div Yield (%) 1.6 2.4 2.9 2.9 Commentary around macro, verticals, margins and pricing.
Quarterly Performance (IFRS) (INR m)

Revenue (USD m) 2,256 2,392 2,407 2,446 2,501 2,544 2,598 2,653 9,501 10,297
QoQ (%) 4.5 6.0 0.6 1.6 2.2 1.7 2.1 2.1 9.1 8.4
Revenue (INR m) 143,540 156,350 159,020 165,500 167,820 170,474 176,663 180,424 624,410 695,381
YoY (%) 12.4 17.2 15.3 23.4 16.9 9.0 11.1 9.0 17.1 11.4
GPM (%) 38.6 40.1 39.5 40.5 38.7 38.8 39.1 39.4 39.7 39.0
SGA (%) 12.4 12.3 12.3 12.5 12.2 12.3 12.4 12.5 12.4 12.4
EBITDA Margin (%) 26.2 27.8 27.2 28.0 26.5 26.5 26.7 26.9 27.4 26.7
EBIT Margin (%) 24.0 25.5 24.9 25.5 24.1 24.1 24.5 24.7 25.0 24.4
Other income 7,580 7,930 8,020 7,720 7,530 6,035 8,159 6,404 31,250 28,128
ETR (%) 27.9 29.0 27.2 27.9 28.4 29.0 29.0 29.0 28.0 28.8
PAT 30,300 33,980 34,650 35,970 34,360 33,468 36,520 36,134 134,930 140,502
QoQ (%) -2.2 12.1 2.0 3.8 -4.5 -2.6 9.1 -1.1
YoY (%) 5.0 9.8 6.6 16.1 13.4 -1.5 5.4 0.5 9.4 4.1
EPS (INR) 13.3 14.9 15.2 15.7 15.0 14.6 16.0 15.8 59.0 61.5
Headcount 179,523 187,976 193,383 194,044 197,050 206,239 209,464 215,349 194,044 215,349
Util excl. trainees (%) 80.9 82.0 81.4 80.8 81.1 82.7 80.9 80.8 81.7 81.5
Attrition (%) 19.2 19.9 18.1 17.3 21.0
Offshore rev. (%) (IT Serv) 43.9 43.9 43.5 43.5 43.0
Fixed Price (%) 42.4 44.0 44.6 45.1 45.7
E: MOSL Estimates
October 2016 249

KPIT Technologies
Bloomberg KPIT IN CMP: INR127 TP: INR150 (+18%) Neutral
1QFY17 for KPIT was marked by 3.5% QoQ revenue decline and
M.Cap. (INR b) /(USD b) 25.4/0.4
550bp margin decline.
1, 6, 12 Rel. Per (%) -1/-29/12
Internal changes in structure, changing business environment and
pressure in traditional ERP implementation resulted in the pressure.
The situation is not expected to reverse in 2Q.
Y/E MAR 2015 2016 2017E 2018E
Post the sharp decline seen in 1Q, we expect revenue of US120m
Sales
(0.2% QoQ), led by stability in the top client, post a 12% QoQ
29.9 32.2 33.2 37.3
EBITDA 3.3 4.4 4.3 5.2
decline in 1Q.
PAT 2.4 3.0 2.6 3.2
With cessation of the revenue decline, we expect EBITDA margin to
EPS (INR) 11.8 14.1 13.2 16.1 expand by 40bp QoQ, reversing a wee bit of 550bp decline in the
EPS Gr. (%) -7.9 19.0 -6.4 22.5 previous quarter.
BV/Sh. (INR) 65.7 69.0 82.8 99.0 Our PAT estimate is INR471m, -14.4% QoQ, because of the
RoE (%) 18.4 21.0 17.4 17.8 compounding of flat revenue and lower other income.
RoCE (%) 16.8 24.3 20.6 21.8 KPIT trades at 9.6x FY17E and 7.9x FY18E earnings. Maintain
Payout (%) 10.1 10.6 15.2 12.4 Neutral.
Valuations
P/E (x) 10.7 9.0 9.6 7.9 Growth in IES, Engineering Services and top client.
P/BV (x) 1.9 1.8 1.5 1.3
Margin performance and guidance.
EV/EBITDA (x) 6.5 5.0 4.3 3.0
Commentary on deal wins across segments.
Div yld (%) 0.9 1.2 1.6 1.6
Plan to recoup revenue growth and profitability.
Quarterly Performance (Indian GAAP) (INR m)

Revenue (USD m) 118 125 123 124 120 120 124 128 490 492
QoQ (%) -3.3 5.3 -1.0 0.7 -3.5 0.2 3.4 3.5 0.3 0.4
Revenue (INR m) 7,583 8,123 8,130 8,407 8,032 8,039 8,438 8,736 32,243 33,245
YoY (%) 9.9 7.2 4.3 10.2 5.9 -1.0 3.8 3.9 7.8 3.1
GPM (%) 28.1 32.1 32.9 35.3 28.9 29.1 30.9 31.3 32.2 30.1
SGA (%) 18.5 18.1 18.3 19.1 18.3 18.0 16.3 15.9 18.5 17.1
EBITDA Margin (%) 9.6 14.0 14.6 16.1 10.7 11.1 14.6 15.4 13.5 13.0
EBIT Margin (%) 7.3 11.9 12.3 13.6 8.3 8.6 12.2 13.0 11.4 10.6
Other income 106 86 36 20 116 24 127 46 248 313
Interest 47 44 35 25 56 82 79 76 152 293
ETR (%) 27.9 25.4 26.5 13.4 24.3 26.0 26.0 26.0 22.8 25.7
PAT 444 751 735 885 551 471 799 818 2,815 2,639
QoQ (%) -11.8 69.1 -2.1 20.4 -37.8 -14.4 69.5 2.4
YoY (%) -12.6 6.3 12.5 75.7 24.0 -37.2 8.7 -7.5 18.7 -6.2
EPS (INR) 2.2 3.8 3.7 4.4 2.8 2.4 4.0 4.1 14.1 13.2
Headcount 10,839 10,659 10,559 10,910 11,288 11,247 11,316 11,575 10,910 11,575
Offshore rev. (%) 44.7 44.9 41.2 42.1 41.5 41.9 41.9 42.5 43.2 41.9
Fixed Price (%) 26.2 27.1 29.1 26.4 28.5
E: MOSL Estimates
October 2016 250

MindTree
Bloomberg MTCL IN CMP: INR489 TP: INR550 (+13%) Neutral
Earlier during the quarter, MTCL guided for a decline in 2Q revenue
due to [1] cross-currency movements, [2] project cancellations, [3]
slower ramp-up at a few large clients from different verticals, and
1,6,12 Rel Perf. (%) -10 / -39 / -42
[4] continued weakness in Bluefin.
Consequently, EBITDA margin too is expected to decline QoQ,
Y/E MARCH 2015 2016 2017E 2018E
accentuated by expected EBITDA loss in Bluefin.
Sales
In line with this, we expect revenue decline of 0.8% QoQ and
35.6 46.9 54.3 62.8
EBITDA 7.1 8.3 8.0 10.8
EBITDA margin decline of 130bp QoQ.
PAT 5.4 6.0 5.0 6.8
We expect the trend of robust deal wins to continue. The company
EPS (INR) 31.9 35.9 29.6 40.3 won deals with TCV of USD898m LTM (average of USD225m per
EPS Gr. (%) 18.6 15.3 -17.4 35.9 quarter), of which 40% is Digital.
BV/Sh. (INR) 119.8 142.4 158.4 184.1 Our PAT estimate for the quarter is INR1.1b, which implies 13.5%
RoE (%) 29.4 27.4 19.7 23.5 QoQ decline.
RoCE (%) 32.8 30.6 22.6 29.3 The stock trades at 16.5x FY17E and 12.1x FY18E earnings. Neutral.
Payout (%) 26.6 29.3 40.5 29.8
Valuation Key issues to watch for
P/E (x) 15.3 13.6 16.5 12.1
Guidance for growth in 2H, especially in the verticals of BFSI and
P/BV (x) 4.1 3.4 3.1 2.7 Retail.
EV/EBITDA (x) 10.3 9.4 9.6 7.0 Margin trajectory, going forward, given the increased investments
Div Yld (%) 1.7 2.1 2.5 2.5 and revenue growth issues.
Deal wins during the quarter and growth in Digital.

Revenue (USD m) 155 180 184 196 199 197 202 207 715 806
QoQ (%) 4.8 16.4 2.3 6.1 2.1 -0.8 2.5 2.1 22.5 12.6
Revenue (INR m) 9,816 11,693 12,145 13,242 13,276 13,225 13,765 14,057 46,896 54,323
YoY (%) 16.4 31.6 33.2 44.2 35.8 13.1 13.3 6.5 31.7 15.8
GPM (%) 41.8 41.3 40.3 38.1 37.0 33.9 35.0 35.9 40.2 35.5
SGA (%) 24.2 22.8 22.6 21.0 22.3 20.5 20.0 20.0 22.5 20.7
EBITDA Margin (%) 17.6 18.5 17.7 17.1 14.7 13.4 15.0 15.9 17.7 14.8
EBIT Margin (%) 14.3 15.8 14.8 14.4 10.8 9.5 11.2 12.0 14.9 10.9
Other income 374 195 147 94 198 156 169 132 810 655
ETR (%) 22.4 22.5 22.6 22.2 24.2 24.0 24.0 24.0 22.4 24.1
PAT 1,382 1,582 1,509 1,560 1,235 1,069 1,295 1,379 6,034 4,978
QoQ (%) 7.4 14.5 -4.6 3.4 -7.1 -13.5 21.2 6.5
YoY (%) 6.8 15.1 7.2 21.2 -3.7 -32.5 -14.2 3.7 12.5 -17.5
EPS (INR) 8.2 9.4 9.0 9.3 7.4 6.4 7.7 8.2 35.9 29.6
Headcount 14,427 15,582 16,243 16,623 16,110 16,010 16,310 16,610 16,623 16,610
Util incl. trainees (%) 70.3 71.4 68.5 69.4 71.4 71.3 71.5 72.0 69.9 71.6
Attrition (%) 18.4 17.1 16.0 15.7 16.5
Offshore rev. (%) 51.9 47.6 45.5 42.4 40.5 40.5 40.3 40.4 46.6 40.4
Fixed Price (%) 48.9 49.7 50.0 47.7 48.7
E: MOSL Estimates
October 2016 251

Mphasis
Bloomberg MPHL IN CMP: INR538 TP: INR570 (+6%) Neutral
In 1QFY17, HP channel revenue declined by 4.2% QoQ to USD52m,
M. Cap. (INR b)/(USD b) 113 / 2
implying a run-rate of USD204m. This is expected to stabilize in 2Q,
post the renewed MSA coming into effect, after the completion of
1,6,12 Rel Perf. (%) -3 / 3 / 23
the transaction between HPE and Blackstone.
We expect revenue growth of 2.1% QoQ driven by stability in HP
Y/E MAR 2015 2016 2017E 2018E
channel and Digital Risk and continued traction in the Direct
Sales 57.9 60.9 61.6 71.3 International business in 2Q.
EBITDA 8.7 9.0 10.0 11.9 EBITDA margin is likely to expand 40bp QoQ to 16.5% because of
PAT 6.8 7.2 8.3 9.3 the continued improvement in revenue mix and higher incremental
EPS (INR) 32.3 34.5 39.8 44.2 growth from the Direct International business.
EPS Gr. (%)* -8.6 6.8 15.5 11.1
BV/Sh. (INR)
MPHL had raised its EBIT margin guidance by 100bp at the end of
260.8 299.4 296.0 313.8
RoE (%)* 12.8 12.3 13.3 14.5 4QFY16 to 14-16% for FY17, and expressed confidence in achieving
RoCE (%)* 11.5 11.2 12.5 13.9 the higher end of the range.
Payout (%) 49.6 0.0 93.0 49.7 Our PAT estimate is INR2.1b (+2.8% QoQ).
Valuations
The stock trades at 13.5x FY17E and 12.2x FY18E EPS. Neutral.
P/E (x)* 16.7 15.6 13.5 12.2
EV/EBITDA(x)* 10.5 9.9 9.0 7.4 Outlook for Digital Risk.
Div yld (%) 3.0 0.0 6.9 4.1 Deal TCV during the quarter in Direct Channel (organic business),
*Annualized values for 5m FY14
and focus areas.
Performance in Direct International business, and outlook for the
year.
Y/E March FY16 FY17E FY16 FY17E
Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17
Revenue (USD m) 234 237 229 225 224 229.1 233 237 926 924
QoQ (%) 1.9 1.1 -3.4 -1.6 -0.3 2.1 1.5 2.1 -2.2 -0.2
Revenue (INR m) 14,964 15,575 15,167 15,173 15,167 15,039 15,551 15,858 60,879 61,615
YoY (%) 0.4 6.3 7.5 6.2 1.5 -3.4 2.5 4.6 5.1 1.2
GPM (%) 26.1 26.9 25.6 27.6 28.1 28.4 27.9 28.1 26.6 28.1
SGA (%) 11.8 11.9 11.3 12.1 12.0 11.9 11.7 11.7 11.8 11.8
EBITDA Margin (%) 14.1 15.1 14.3 15.4 16.1 16.5 16.1 16.4 14.7 16.3
EBIT Margin (%) 12.7 13.9 13.2 14.3 15.2 15.5 15.1 15.4 13.5 15.3
Other income 564 492 456 442 572 594 548 518 1,954 2,231
ETR (%) 27.3 26.4 27.7 27.1 27.7 27.7 27.7 27.7 27.1 27.7
PAT 1,742 1,900 1,736 1,864 2,043 2,100 2,080 2,127 7,242 8,349
QoQ (%) -2.0 9.1 -8.6 7.4 6.4 2.8 -1.0 2.3
YoY (%) -0.3 18.6 5.1 4.9 -17.9 -26.3 -20.1 -26.2 6.9 15.3
EPS (INR) 8.3 9.0 8.3 8.9 9.7 10.0 9.9 10.1 34.5 39.8
Headcount 34,159 24,169 23,563 22,324 22,374 21,091 21,411 21,856 22,324 21,856
Net Additions 100 -9990 -606 -1239 50 -1283 320 445 -11735 -468
HP Channel rev. (%) 28.8 26.5 24.2 24.3 23.4
Fixed Price (%) 12.3 14.0 19.2 21.1 19.8
E: MOSL Estimates
October 2016 252

Persistent Systems
Bloomberg PSYS IN CMP: INR640 TP: INR710 (+11%) Neutral
Revenue growth is expected to be strong at PSYS, led by the
Enterprise segment and pick-up in the recently announced IBM
Watson deal. Aided by these factors, we expect 2QFY17 revenue to
1,6,12 Rel Perf. (%) 5 / -25 / -9
grow 2.9% QoQ to USD108m.
We expect gradual pick up in IBM Watson IoT deal revenue, with
Y/E MARCH 2015 2016 2017E 2018E highest absolute revenue and consequently, margins in the
Sales 18.9 23.1 29.7 34.5 December quarter.
EBITDA 3.9 4.2 4.7 5.9 However, EBITDA margin is expected to be under pressure because
Adj. PAT 2.9 3.0 3.1 3.8 of wage hikes effective this quarter (230-240bp impact), offset by
Adj. EPS (INR) 36.3 37.2 38.2 48.0 missing visa costs of 1Q and operational efficiencies. As a result of
EPS Gr. (%) 16.6 2.3 2.7 25.8
this, we expect 60bp QoQ decline in EBITDA margin to 14.5%.
RoE (%) 22.1 19.5 17.5 20.2
RoCE (%) 18.6 18.9 16.9 15.9 Our PAT estimate for the quarter is INR609m, down 16.9% QoQ,
Payout (%) 27.5 29.6 31.4 25.0 owing to lower margins and lower other income.
Valuations The stock trades at 16.8x FY17E and 13.3x FY18E earnings. Neutral.
P/E (x) 17.6 17.2 16.8 13.3
P/BV (x) 3.5 3.0 2.7 2.6
Div. Yield (%) 1.6 1.7 1.9 1.9 Performance and outlook for top clients in ISV (ex-IBM).
Commentary on traction with Enterprise customers and potential
of winning large deals.
Outlook on sustainable profit margins in the near to medium
term.

Revenue (USD m) 78.6 83.0 89.7 100.4 104.8 107.8 112.4 115.3 352 440
QoQ (%) -1.8 5.5 8.1 12.0 4.3 2.9 4.3 2.5 14.0 25.2
Revenue (INR m) 5,004 5,427 5,921 6,771 7,018 7,221 7,644 7,837 23,123 29,720
QoQ (%) 0.6 8.5 9.1 14.4 3.6 2.9 5.9 2.5
YoY (%) 15.0 16.9 19.7 36.1 40.2 33.1 29.1 15.7 22.3 28.5
GPM (%) 39.7 38.9 38.8 35.7 34.7 33.6 35.9 36.6 38.1 35.3
SGA (%) 20.4 20.2 20.1 19.8 19.6 18.7 18.8 19.4 20.1 19.5
EBITDA Margin (%) 19.4 18.7 18.8 15.9 15.1 14.5 16.6 16.7 18.0 15.8
EBIT Margin (%) 14.8 14.4 14.6 12.1 10.2 9.6 12.0 12.1 13.9 11.0
Other income 198 182 160 210 253 126 255 174 750 808
ETR (%) 28.5 25.5 24.4 21.4 24.3 25.5 25.5 25.5 24.8 25.2
PAT 672 718 775 808 733 609 873 839 2,974 3,053
QoQ (%) -11.6 6.9 7.8 4.3 -9.3 -16.9 43.4 -3.9
YoY (%) -2.3 0.7 4.1 6.3 9.0 -15.3 12.7 3.8 2.3 2.7
EPS (INR) 8.4 9.0 9.7 10.1 9.2 7.6 10.9 10.5 37.2 38.2
Headcount 8,454 8,545 8,966 9,264 9,389 9,569 9,739 9,909 9,264 9,909
Attrition (%) 16.4 17.1 17.1 16.4 16.7
IP rev. proportion(%) 18.4 16.2 20.1 28.2 28.2 27.9 30.1 30.1 21.1 29.1
E: MOSL Estimates
October 2016 253

NIIT Technologies
Bloomberg NITEC IN CMP: INR 426 TP: INR530 (+24%) Neutral
We expect revenue growth for NITEC to remain subdued in 2Q.
M. Cap. (INR b)/(USD b) 26.1/0.4
Although deal wins have been strong for NITEC in recent quarters,
the company witnessed couple of sizeable project completions in
1,6,12 Rel Perf. (%) 8/-27/18
the last quarter, and some delays in the commencement of new
deals. This is expected to contain any revenue growth in 2Q.
Y/E MARCH FY15 FY16 FY17E FY18E
We expect USD revenue decline of 0.8% in 2Q, also aggravated by
Sales 23.7 26.8 27.8 30.3 cross-currency movement, given the higher exposure of NITEC to
EBITDA 3.5 4.7 4.6 4.7 GBP, which declined by 8.5% QoQ against the USD.
PAT 1.9 2.8 2.8 2.9 Deal wins in international geographies are expected to continue
EPS (INR) 18.8 45.7 39.5 47.0
EPS Gr. (%)
showing strength.
-51.7 143.7 -13.6 18.9
BV/Sh. (INR) 223.7 259.8 284.3 318.1 Consequent to the subdued revenue growth, we expect EBITDA
RoE (%) 8.5 19.0 14.5 15.6 margin to decline by 50bp QoQ to 14.8%.
RoCE (%) 14.6 18.6 15.9 14.4 Our PAT estimate is INR524m, down 27.2% QoQ, driven by (a)
Payout (%) 50.6 21.9 27.8 23.4
decline in revenue and margins, and (b) lower other income.
Valuations
P/E (x) 22.7 9.3 10.8 9.1 The stock trades at 10.8x FY17E and 9.1x FY18E earnings. Neutral.
P/BV (x) 1.9 1.6 1.5 1.3
EV/EBITDA (x) 6.6 4.8 4.9 4.4
Div Yld (%) 2.2 2.3 2.6 2.6 Traction in the international business.
Demand environment and update on ramp-up delays.
Deal wins.
Commentary on margin targets, going ahead.
Revenue (USD m) Ex. forex 98 104 103 102 99 98 101 103 406 401
QoQ (%) 5.9 6.2 -0.9 -1.2 -2.5 -0.8 2.3 2.3 8.6 -1.2
Revenue (INR m) 6,411 6,779 6,787 6,847 6,692 6,688 7,154 7,262 26,824 27,796
YoY (%) 11.0 15.2 14.0 12.0 4.4 -1.3 5.4 6.1 338.9 333.6
GPM (%) 36.4 37.2 37.3 37.1 35.3 34.8 37.4 37.0 37.0 36.2
SGA (%) 20.1 19.6 19.1 18.7 20.0 20.0 19.5 19.0 19.5 19.6
EBITDA Margin (%) 16.3 17.6 18.2 18.4 15.3 14.8 17.9 18.0 17.6 16.5
EBIT Margin (%) 12.0 13.7 14.2 14.2 10.9 10.5 13.8 14.0 13.5 12.4
Other income 79 13 52 39 71 27 95 53 183 246
ETR (%) 25.9 22.9 20.9 18.2 10.3 22.0 22.0 22.0 21.8 19.5
Minority Interest 40.0 43.0 48.0 39.0 46.0 46.0 46.0 46.0 170.0 184.0
PAT 587 683 741 790 720 524 801 787 2,801 2,425
QoQ (%) -433.5 16.4 8.5 6.6 -8.9 -27.2 52.8 -1.7 145.9 -13.4
YoY (%) 35.6 70.8 53.7 -548.9 22.7 -23.3 8.0 -0.3
EPS (INR) 9.6 11.2 12.1 12.9 5.1 8.5 13.0 12.8 45.8 39.5
Headcount 9,228 9,592 9,517 9,476 9,022 9,072 9,372 9,522 9,476 9,522
Attrition (%) 14.3 13.7 13.6 13.6 13.6
Offshore rev. (%) 39.0 41.0 41.0 39.0 39.0 40.0 38.6
Fixed Price (%) 42.0 41.0 43.0 46.0 46.0
October 2016 254

TCS
Bloomberg TCS IN CMP: INR 2,412 TP: INR2,500 (+4%) Neutral
During the quarter, TCS cited growth concerns because of a
M. Cap. (INR b)/(USD b) 4,752 / 71
sequential loss in momentum, led by weakness in BFSI discretionary
52-Week Range (INR) 2,769 / 2,119
spend in the US.
1,6,12 Rel Perf. (%) -3 / -14 / -16
We expect little impact from seasonal strength in 2Q for TCS, and
estimate 2.5% QoQ CC growth.
We believe the pullback in discretionary spending will weigh on
Y/E MAR 2015 2016 2017E 2018E
margins too, derailing the company at least for FY17, from its
Sales 946.5 1,086.5 1,216.2 1,396.5
EBITDA
targeted margin band of 26-28%. Our EBIT margin estimate for 2Q is
272.9 306.8 329.3 373.8
PAT 25.4% QoQ (+40bp QoQ), below the lower end of the guided range.
217.0 242.7 263.5 298.1
EPS (INR) 110.8 123.5 134.1 148.5
Before the update by TCS, we were estimating 80bp margin
EPS Gr. (%) 13.5 11.5 8.5 13.1
expansion, given the assumption of accelerating revenue growth in
BV/Sh. (INR) 293.4 371.4 422.9 503.7 2Q.
RoE (%) 39.0 38.2 33.5 31.5 Our PAT estimate stands at INR61.8b (-2.2% QoQ). The decline is led
RoCE (%) 37.8 36.8 32.4 30.7 by lower other income, which is impacted by forex losses.
Payout (%) 71.3 35.2 34.8 37.0 The stock trades at 18x FY17E and 15.9x FY18E earnings. Neutral.
Valuation
P/E (x) 21.8 19.5 18.0 15.9
EV/EBITDA (x) 16.7 14.6 13.4 11.5 Growth in troubled segmentsEnergy, Telecom, Insurance.
Div. yield (%) 3.3 1.8 1.9 2.3 Outlook on revenue from TCS Japan.
Traction in new Digital initiatives (automation/solutions).
Outlook for BFSI vertical going ahead.

Revenue (USD m) 4,036 4,156 4,145 4,207 4,362 4,446 4,537 4,657 16,544 18,002
QoQ (%) 3.5 3.0 -0.3 1.5 3.7 1.9 2.0 2.7 7.1 8.8
Revenue (INR m) 256,681 271,655 273,640 284,486 293,050 297,913 308,492 316,703 1,086,462 1,216,157
YoY (%) 16.1 14.1 11.7 17.5 14.2 9.7 12.7 11.3 14.8 11.9
GPM (%) 44.9 45.5 45.6 44.8 43.9 43.9 44.2 44.3 45.2 44.1
SGA (%) 16.8 16.7 17.3 17.0 17.1 16.8 17.2 16.9 17.0 17.0
EBITDA Margin (%) 28.1 28.8 28.3 27.8 26.7 27.1 27.0 27.4 28.2 27.1
EBIT Margin (%) 26.3 27.1 26.6 26.1 25.1 25.4 25.5 25.9 26.5 25.5
Other income 7,707 6,751 6,990 9,050 9,630 5,540 9,191 6,193 30,498 30,554
ETR (%) 23.2 24.1 23.2 23.7 24.0 24.0 24.0 24.0 23.6 24.0
PAT 57,086 60,553 61,095 63,412 63,179 61,782 66,674 67,069 242,146 258,704
QoQ (%) -3.3 6.1 0.9 3.8 -0.4 -2.2 7.9 0.6
YoY (%) 12.9 14.5 12.2 7.4 10.7 2.0 9.1 5.8 11.6 6.8
EPS (INR) 29.1 30.8 31.0 32.3 32.1 31.4 33.8 34.0 123.2 131.3
Headcount 324,935 335,620 344,691 353,843 362,079 371,803 379,264 388,145 353,843 388,145
CC QoQ rev gr (%) 3.4 3.9 0.5 2.1 3.1 2.5 2.0 2.7
Attrition (%) 15.9 16.2 15.9 15.5 13.6
E: MOSL Estimates
October 2016 255

Tech Mahindra
Bloomberg TECHM IN
CMP: INR 421 TP: INR500 (+19%) Neutral
We expect 3.1% QoQ CC growth in TECHMs revenue. In USD terms,
M. Cap. (INR b)/(USD b) 414 / 6
we expect TECHMs revenue to grow by 2.5% QoQ 60bp negative
1,6,12 Rel Perf. (%) -10 / -21 / -33 impact of cross-currency movement.
In Telecom, 2Q is expected to be under pressure because of
consolidation of revenue in LCC. In Enterprise, growth is expected
to continue showing strong momentum.
Y/E MARCH 2015 2016 2017E 2018E
Revenue is also likely to include one month integration of Target,
Sales 224.8 264.9 290.0 329.1
EBITDA two months of Pininfarina and three months of BIO. Together, the
41.5 43.4 44.1 52.3
Adj. PAT 26.3 31.2 28.5 33.5
acquisitions are expected to add to 1.6pp; 1.5pp is expected from
Adj. EPS (INR) 29.6 35.1 32.1 37.7 organic growth.
EPS Gr. (%) 3.0 18.4 -8.5 17.6 We expect EBITDA margin to decline by 50bp to 14.4%. Margins are
BV/Sh.(INR) 142.2 165.6 191.0 213.5 expected to be weighed upon by restructuring in LCC, and also by
RoE (%) 24.5 23.4 18.4 16.2 depreciation of the GBP.
RoCE (%) 20.5 20.1 16.1 16.8 Consequently, we expect PAT to decline 5.7% QoQ, to INR6.2b in
Payout (%) 20.5 34.2 28.2 23.2 2QFY17, also led by lower other income.
Valuation The stock trades at 13.1x FY17E and 11.2x FY18E earnings. Neutral.
P/BV (x) 3.0 2.5 2.2 2.0 Performance of the Telecom segment.
EV/EBITDA (x) 8.1 7.5 8.1 6.5 Comments on profitability including LCC.
Div. Yield (%) 1.4 2.9 2.1 2.1
TCV of deal wins in the Enterprise segment.

Revenue (USD m) 989 1,011 1,015 1,023 1,032 1,057 1,085 1,120 4,037 4,294
QoQ (%) 0.5 2.2 0.4 0.8 0.9 2.5 2.7 3.2 10.2 6.4
Revenue (INR m) 62,938 66,155 67,011 68,837 69,209 70,828 73,813 76,154 264,941 290,004
YoY (%) 22.9 20.5 16.5 12.5 10.0 7.1 10.2 10.6 17.9 9.5
GPM (%) 29.4 32.0 31.3 30.6 29.5 29.5 30.2 29.0 30.8 29.6
SGA (%) 14.4 15.4 14.3 13.7 14.6 15.1 14.3 13.4 14.5 14.3
EBITDA Margin (%) 15.0 16.6 16.9 16.9 14.9 14.4 15.9 15.6 16.4 15.2
EBIT Margin (%) 12.3 13.7 14.4 13.7 12.0 11.4 12.9 12.2 13.5 12.1
Other income 1,366 1,658 639 1,659 1,519 877 1,110 868 5,322 4,375
Interest expense 214 173 244 330 274 349 331 313 961 1,268
ETR (%) 23.7 24.8 23.2 14.6 25.9 23.5 23.5 23.5 21.4 24.1
PAT excl. BT amort & EOI 6,762 7,855 7,592 8,971 6,561 6,184 7,552 7,257 31,180 27,555
QoQ (%) 43.3 16.2 -3.3 18.2 -23.5 -5.7 22.1 -3.9
YoY (%) 7.2 9.2 -2.3 90.1 5.4 -21.3 -0.5 -15.4 20.0 -11.6
EPS (INR) 7.6 8.8 8.5 10.1 7.4 7.0 8.5 8.2 35.1 32.1
Headcount 103,673 105,235 107,137 105,432 107,216 109,756 110,947 113,858 103,673 105,235
Attrition (%) 19.0 20.0 20.0 21.0 21.0
Offshore rev. (%) 39.0 38.3 37.3 36.8 36.6 36.1 35.6 35.0 37.8 35.8
E: MOSL Estimates
October 2016 256

Wipro
Bloomberg WPRO IN
CMP: INR 479 TP: INR570 (+19%) Neutral
M. Cap. (INR b)/(USD b) 1180 / 18
We expect revenue to decline by 0.5% in USD terms, and growth of
0.1% QoQ in constant currency terms; a negative impact of 60bp on
1,6,12 Rel Perf. (%) 0 / -27 / -28 account of depreciation of currencies against the USD.
In 1Q, WPRO had guided for 0-1% QoQ growth in 2Q. However,
Financial Snapshot (INR b) given the macroeconomic environment, uncertainties surrounding
Y/E MAR 2015 2016 2017E 2018E the BFSI vertical, and continued weakness in Energy, we expect
Sales 469.5 512.4 555.3 614.7 revenue growth to land up near the lower end of the range.
EBITDA 104.6 108.1 110.7 129.8 We expect EBIT margin in IT Services to decline by 120bp because
PAT 86.6 88.9 84.2 97.1 of the full impact of wage hikes, and increased investments.
EPS (INR) 35.1 36.1 34.2 40.1
EPS Gr. (%)
We expect overall EBIT margin to decline by 40bp because of
10.9 2.9 -5.4 17.3
BV/Sh. (INR) 166.1 189.7 199.3 227.1
improved profitability in the Products business.
RoE (%) 23.0 20.3 17.6 18.7 Our PAT estimate is INR20.1b, -1.8% QoQ, on account of lower
RoCE (%) 20.2 16.7 14.7 16.7 margins compared to the previous quarter.
Payout (%) 34.2 16.6 37.4 32.5
The stock trades at 14x FY17E and 12x FY18E earnings. Neutral.
Valuations
P/E (x) 13.6 13.3 14.0 12.0
EV/EBITDA (x) 9.9 9.8 9.4 7.6 Revenue growth guidance for 3QFY17.
Div Yld (%) 2.5 1.3 2.7 2.7 Stabilization of the Energy vertical.
Commentary on large deal wins and ramp-up schedule.

Revenue (USD m) 1,794 1,832 1,838 1,882 1,931 1,922 1,953 1,996 7,346 7,802
QoQ (%) 1.1 2.1 0.3 2.4 2.6 -0.5 1.6 2.2 3.7 6.2
Revenue (INR m) 122,376 125,135 128,605 136,324 135,992 135,759 139,973 143,544 512,440 555,267
QoQ (%) 0.8 2.3 2.8 6.0 -0.2 -0.2 3.1 2.6
YoY (%) 9.9 7.1 7.2 12.3 11.1 8.5 8.8 5.3 9.1 8.4
GPM (%) 30.7 31.4 29.8 29.7 29.1 27.9 28.7 29.0 30.4 28.7
SGA (%) 12.2 12.4 12.0 12.3 13.0 12.2 11.8 11.7 12.2 12.2
EBITDA Margin (%) 21.3 21.8 20.8 20.6 19.5 19.1 20.3 20.7 21.1 19.9
IT Serv. EBIT (%) 21.0 20.7 20.2 20.1 17.8 16.6 17.9 18.4 20.5 17.7
EBIT Margin (%) 18.5 19.0 17.9 17.4 16.1 15.7 17.0 17.3 18.2 16.5
Other income 5,286 5,138 5,715 5,426 4,848 4,895 4,150 3,827 21,565 17,719
ETR (%) 21.2 22.4 21.8 22.7 22.9 22.9 22.9 22.9 22.1 22.9
PAT 21,877 22,354 22,341 22,350 20,518 20,139 21,421 22,075 88,922 84,153
QoQ (%) -3.8 2.2 -0.1 0.0 -8.2 -1.8 6.4 3.1
YoY (%) 4.0 7.2 1.9 -1.8 -6.2 -9.9 -4.1 -1.2 2.7 -5.4
EPS (INR) 8.9 9.1 9.1 9.1 8.3 8.3 8.8 9.1 36.1 34.2
Headcount 161,789 168,396 170,664 172,912 173,863 173,728 177,613 181,998 172,912 181,998
Attrition (%) 16.4 16.4 16.3 16.1 16.5
Offshore rev. (%) 45.4 46.1 46.2 45.8 45.6 46.0 45.8 45.7 45.9 45.8
Rev Guidance (USDm) 1821-1857 1841-1878 1875-1912 1901-1939 1931-1950
Fixed Price (%) 54.5 53.4 55.9 56.9 56
E: MOSL Estimates
October 2016 257

Zensar Technologies
Bloomberg ZENT IN
CMP: INR 1,010 TP: INR1,300 (+29%) Buy
We expect revenue of USD117m, representing growth of 2.8%. We
52-Week Range (INR) 1,136 / 801
expect revenue growth to be a function of momentum in top
1,6,12 Rel Perf. (%) -2 / -6 / 14 accounts, contribution of new deals and traction in Digital on the
positive side; and continued pruning of non-core accounts and
products/MVS business in Infrastructure Management on the
Y/E MAR
negative.
2015 2016 2017E 2018E
Sales 469.5 29.6 31.9 37.0 Despite the pruning of non-core/low-yield business, we expect
EBITDA 104.6 4.3 4.7 6.1 EBITDA margin to decline by 50bp QoQ because of wage hikes, and
PAT 86.6 3.1 3.4 4.4 the requirement of investments to boost capabilities and to
EPS (INR) 35.1 68.2 75.7 98.2 augment sales and marketing.
EPS Gr. (%) 10.9 17.0 10.5 29.6
Post this, we expect margin expansion in the remainder of the year.
BV/Sh. (INR) 166.1 314.4 371.7 445.6
RoE (%) 23.0 24.0 22.0 24.0
Our PAT estimate is INR726m, -4.9% QoQ, on account of lower
RoCE (%) 20.2 28.5 26.6 29.4 margins and lower forex gain compared to the previous quarter.
Payout (%) 34.2 17.6 22.6 21.1 The stock trades at 13.3x FY17E and 10.3x FY18E earnings. Buy.
Valuations
P/E (x) 15.9 14.8 13.3 10.3
EV/EBITDA (x) 11.8 10.2 8.5 6.1 Traction in Digital, large deals and other new initiatives.
Div Yld (%) 2.1 1.2 1.7 2.0 Margin outlook given the need for reinvestment.
Progress on restructuring.

Revenue (USD m) 111 116 115 111 114 117 119 122 453 473
QoQ (%) 5.1 4.8 -1.4 -3.7 3.1 2.8 1.5 3.0 5.4 4.3
Revenue (INR m) 7,046 7,564 7,568 7,464 7,624 7,851 8,085 8,326 29,643 31,886
YoY (%) 16.5 16.8 5.5 13.5 8.2 3.8 6.8 11.5 12.8 7.6
GPM (%) 31.7 32.1 30.6 30.8 29.1 28.8 30.2 32.0 31.3 30.1
SGA (%) 16.4 16.6 16.2 18.5 15.3 15.5 15.0 15.5 16.9 15.3
EBITDA 1,080 1,171 1,089 922 1,053 1,047 1,233 1,376 4,262 4,709
EBITDA Margin (%) 15.3 15.5 14.4 12.4 13.8 13.3 15.2 16.5 14.4 14.8
EBIT Margin (%) 13.8 14.0 12.9 10.7 12.5 11.8 13.7 15.0 12.8 13.3
Other income 148 229 95 116 169 128 243 166 588 706
ETR (%) 29.8 26.9 30.4 21.1 30.5 28.0 28.0 28.0 27.3 28.6
PAT 762 913 715 703 763 726 941 988 3,094 3,418
QoQ (%) 6.2 19.8 -21.7 -1.7 8.5 -4.9 29.7 4.9
YoY (%) 36.3 35.7 2.9 -2.1 0.1 -20.6 31.6 40.5 17.0 10.5
EPS (INR) 17.6 20.6 15.8 15.5 16.9 16.1 20.9 21.9 68.2 75.7
Headcount 7,895 8,050 8,192 8,256 8,238 8,238 8,288 8,338 8,256 8,338
Utilization (%) 79.0 80.0 82.0 81.0 79.8 82.0 82.0 82.0 80.5 81.5
Offshore rev. (%) 35.0 37.0 34.0 36.0 31.2 31.4 31.0 30.9 35.5 31.1
E: MOSL Estimates
October 2016 258

Telecom
Company name
Revenue de-growth steeper than seasonality impact
Bharti Airtel Data growth moderation to 1.5% QoQ on 8-10% price drop
Bharti Infratel Impact of RJio launch offer to be minimal

RJio launched its welcome offer only in September and has had only limited reach
Idea Cellular thus far. Its impact on other telecom companies has so far been lower than we had
expected. The larger impact is likely to spill over to 3QFY17, with RJio increasing
distribution coverage and being in action for the full quarter.
Expect seasonality and data-led weak revenue growth

Overall, we expect Bharti to report India wireless revenue of INR146b, down 2.9%
QoQ (but up 7.1% YoY). On a consolidated basis, Bhartis revenue should decline
4.8% to INR243.3b, led by 15% Africa revenue decline to USD793m. Idea is likely to
report revenue of INR91.8b, down 3.2% QoQ. Bharti Infratel is likely to report
revenue of INR32.7b, up 1.8% QoQ and 7.5% YoY.
Voice revenue to decline: In 2QFY17, Bharti and Ideas traffic growth should be
subdued, largely on account of seasonality. With the interconnect issue
remaining unresolved in 2QFY17, there was limited impact of Rjios unlimited
voice offering on Bharti and Idea. We expect Bhartis voice revenue to decline
4.4% QoQ (but grow 18.6% YoY) to INR100.9b. Idea should see its voice revenue
declining 4.8% QoQ (but growing 4% YoY) to INR63.8b. We expect 1% voice RPM
contraction QoQ for both Bharti and Idea, and voice traffic contraction of 3.4%
QoQ for Bharti and 3.9% QoQ for Idea.
Data to see flattish growth: RJio has had a larger impact on the data revenues of
Bharti and Idea, given the shift of users towards RJios free data offer in the
metros and tier-1 towns. We expect data revenue growth to decelerate in
2QFY17. For Bharti, we expect marginal growth of 1.4% QoQ and 23% YoY in
data revenue to INR35.8b. For Idea, we expect data revenue of INR20b, a
subdued growth of 1.4% QoQ and 18% YoY. Data revenues are also impacted by
price declines of 10% for Bharti and 8% for Idea.

Telecom
Bharti Airtel 319 Buy 243,282 2.1 -4.8 90,670 10.1 -5.0 14,664 26.1 -12.3
Bharti Infratel 363 Buy 32,680 7.5 1.8 14,310 9.3 2.6 6,097 3.1 -19.4
Idea Cellular 81 Sell 91,791 5.6 -3.2 28,284 -7.5 -8.0 209 -97.4 -90.5
Aliasgar Shakir (Aliasgar.shakir@MotilalOswal.com); +91 22 3010 2415

Jay Gandhi (Jay. Gandhi@MotilalOswal.com); +91 22 3089 6693
October 2016 258

EBITDA margin in contraction mode

Given the weak revenues coupled with heavy network investment, EBITDA margins
should remain under pressure. We expect Bhartis India business EBITDA margin to
shrink 160bp QoQ to 42.2% and Ideas EBITDA margin to contract 80bp QoQ to
30.8%. On YoY basis, Ideas EBITDA margin should decline 440bp, given its increased
network investment intensity. Bhartis EBITDA margin should be up 210bp YoY.
Bhartis consolidated EBITDA margin should see only 10bp impact QoQ to 37.3% due
to revenue mix change the lower margin Africa business is likely to see revenue
declining 15% QoQ. The sale of operations in two regions, Burkina Faso and Sierre
Leone, contributing about 7.5% of Africa revenue should impact Bhartis overall
revenue. Naira currency (accounts for ~33% of Africa revenue) depreciation of over
20% should further impact Africa revenue and costs by 7-8%. Tower sale should not
have a meaningful impact just a quarterly revenue loss of INR5m-6m.
Our view: We expect Bharti and Idea to remain under pressure, given seasonality-
led sluggishness and an uncertain outlook. Bharti Infratels renewal concerns
should be resolved in the next 2-3 quarters.
Exhibit 144: Wireless subscriber net additions (m)
Wireless Subsriber net additions
10 9 9
6 7 7 8 8 8
5 7 6 7 7
3 3 2 2
5 6 5 5 4 6 6 5 5
3 2 2
3
1 3 2 1 1 1
-2 -1 -1
-3
-6
Jul-13
Jul-14
Jul-15
Jun-16
Jun-13
Jun-14
Jun-15
Nov-13
Nov-14
Nov-15
Apr-16
May-16
May-14
Apr-15
May-15
Apr-13
May-13
Apr-14
Aug-13
Dec-13
Aug-14
Dec-14
Aug-15
Dec-15
Sep-14
Jan-15
Feb-15
Mar-15
Sep-15
Jan-16
Feb-16
Mar-16
Jan-13
Feb-13
Mar-13
Sep-13
Jan-14
Feb-14
Mar-14
Oct-13
Oct-14
Oct-15
Source: TRAI, MOSL
Exhibit 145: QoQ wireless traffic growth (%)
Bharti (India) Idea RCOM Vodafone - India

10
-5
-10
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17E
October 2016 259

June 2016 Results Preview
September | Sector:
2016 Results Telecom
Preview
Exhibit 146: Trend in wireless RPM (INR)
Bharti (India) Idea RCOM Vodafone - India

70.0
60.0
50.0
40.0
30.0
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17E
Exhibit 147: Aggregate traffic growth and RPM trend for wireless majors
QoQ traffic growth (%) Avg. RPM QoQ (%)
5 5
4 4 4
3 2 3 3
2 3 2 2 1
0 0 0 3 1 1 0
2 2
1 1
-1 -1
-1
-2 -2 -3
-3 -4 -3
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17E
Exhibit 148: Aggregate India wireless revenue growth (QoQ, %)

Aggregate India wireless revenue growth (QoQ, %)
5.7 5.7
4.8
3.4 3.8
3.1 2.5
1.8 1.7
1.1
-1.2 -1.1
-1.9
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
Exhibit 149: Relative Performance-3m (%) Exhibit 150: Relative Performance-1 Yr (%)
Sensex Index MOSL Telecom Index Sensex Index MOSL Telecom Index
110 120
105 110
100
100
95
90 90
85 80
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Sep-15
Jan-16
Feb-16
Mar-16
Sep-16
Oct-15
Jul-16
Jun-16
Aug-16
Sep-16
October 2016 260

Exhibit 151: Wireless KPIs

FY14 FY15 FY16 FY17
YoY (%) QoQ (%)
2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2QE
EOP Wireless SUBS (m)
Bharti (India) 193 199 206 209 212 217 226 231 235 243 251 256 260 10.4 1.5
Idea 127 129 136 139 144 151 158 162 167 172 175 176 179 7.3 1.7
RCOM 116 118 112 110 111 107 111 111 112 102 104 99
Vodafone - India 156 160 167 170 174 179 184 185 188 194 198 199
AV. Wireless Subs (m)
Bharti (India) 192 196 202 207 211 214 222 228 233 239 247 253 258 10.6 1.7
Idea 126 128 133 138 142 148 155 160 165 170 174 176 178 8.0 1.2
RCOM 122 117 115 111 111 109 109 111 112 107 103 102
Vodafone - India 156 158 164 169 172 177 182 185 187 191 196 199
ARPU (INR/month)
Bharti (India) 192 195 196 202 198 202 198 198 193 192 194 196 187 -3.1 -4.5
Idea 165 170 174 181 176 180 179 180 173 174 179 177 169 -1.9 -4.5
RCOM 121 125 128 135 136 141 144 137 134 138 152 144
Vodafone - India 191 193 192 193 187 189 184 184 178 175 177 176
MOU/Sub
Bharti (India) 437 434 437 435 418 416 418 424 404 405 415 414 394 -2.6 -5.0
Idea 368 376 397 401 384 388 400 408 383 387 387 379 360 -6.0 -5.0
RCOM 277 288 296 311 307 315 330 316 307 313 329
Vodafone India (reported) 334 334 335 336 321 319 321 327 316 316 317 314
Revenue per min (p)
Bharti (India) 44.0 44.8 44.9 46.5 47.2 48.6 47.5 46.8 47.6 47.5 46.8 47.3 47.5 -0.2 0.6
Idea 44.8 45.3 43.7 45.1 45.8 46.3 44.9 44.2 44.7 44.4 46.4 47.7 47.0 5.1 -1.5
RCOM 43.5 43.5 43.1 43.5 44.2 44.7 43.7 44.3 43.7 44 46.3 43.8 45.2 3.5 3.3
Vodafone India (reported) 57.2 57.7 57.3 57.4 58.2 59.3 57.4 56.2 56.2 55.3 55.8 56.2
Wireless traffic (B min)
Bharti (India) 251 255 265 271 264 267 278 290 282 290 308 315 304 7.9 -3.4
Idea 139 145 157 165 162 171 185 196 189 196 202 199 192 1.6 -3.7
RCOM 102 102 102 103 102 103 108 105 103 100 102 100
Vodafone India (reported) 156 158 164 170 166 169 174 181 177 181 186 187
Exhibit 152: Quarterly Financials (proforma)

FY14 FY15 FY16 FY17 YoY (%) QoQ (%)
2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2QE
Revenue (INR b)
Bharti (ex Africa) 143.0 147.1 151.6 159.9 159.5 163.9 168.0 174.3 174.7 177.3 185.1 193.0 190.3 8.9 -1.4
Bharti (consolidated) 213.2 219.4 222.2 229.6 228.5 232.2 230.2 235.9 237.5 239.8 249.6 255.5 243.3 2.4 -4.8
Idea 63.2 66.1 70.4 75.6 75.7 80.2 84.2 87.9 86.9 90.1 94.8 94.9 91.8 5.6 -3.2
RCOM 53.9 54.0 56.7 55.2 54.0 54.7 57.0 55.4 53.6 53.0 59.2 53.6 53.8 0.4 0.3
Vodafone - India 89.1 91.1 94.2 97.1 96.5 99.9 100.1 101.7 99.5 100.0 104.0 105.0
EBITDA (INR b)
Bharti (ex Africa) 49.2 52.1 54.8 59.8 60.6 62.8 68.0 69.6 69.6 70.8 76.8 81.5 81.1 16.5 -0.4
Bharti (consolidated) 68.1 70.7 72.7 76.8 76.9 77.7 80.9 82.2 82.3 84.1 91.1 95.5 93.2 13.1 -2.4
Idea 19.7 20.6 22.3 25.0 24.9 27.5 30.6 29.8 30.6 31.3 36.2 30.7 28.3 -7.5 -8.0
RCOM 18.9 18.5 18.5 18.6 18.3 18.5 19.8 18.8 17.8 18.0 19.6 15.6 16.8 -5.4 8.0
EBITDA Margin (%)
Bharti (ex Africa) 34.4 35.4 36.2 37.4 38.0 38.3 40.5 39.9 39.8 39.9 41.5 42.2 42.6 279bps 43bps
Bharti (consolidated) 32.0 32.2 32.7 33.4 33.7 33.5 35.1 34.9 34.7 35.1 36.5 37.4 38.3 361bps 91bps
Idea 31.2 31.1 31.7 33.1 32.9 34.3 36.4 33.9 35.2 34.7 38.1 32.4 30.8 -437bps -159bps
RCOM 35.0 34.2 32.7 33.7 33.8 33.8 34.7 33.8 33.3 34.0 33.1 29.1 31.3 -193bps 225bps
PAT (INR b)
Bharti (consolidated) 5.1 6.1 9.6 11.1 13.8 14.4 12.6 21.1 15.4 11.1 13.2 14.6 14.7 -4.6 0.3
Idea 4.5 4.7 5.9 7.3 7.6 7.7 9.4 8.5 8.1 7.6 5.8 2.2 0.2 -97.4 -90.5
RCOM 2.7 1.5 2.0 1.6 2.1 2.3 0.1 1.9 1.6 2.0 1.5 0.9 -0.6 -138.8 -170.5
EPS (INR)
Bharti 1.3 1.5 2.4 2.8 3.5 3.6 3.1 5.3 3.8 2.8 3.3 3.7 3.7 -4.6 0.3
Idea 1.3 1.4 1.8 2.1 2.1 2.1 2.6 2.4 2.2 2.1 1.6 0.6 0.1 -97.4 -90.5
RCOM 1.3 0.7 1.0 0.8 0.9 1.0 0.0 0.8 0.7 0.8 0.6 0.4 -0.3 -138.8 -170.5
October 2016 261


Telecom
Bharti Airtel 319 Buy 12.3 17.3 18.3 25.9 18.4 17.5 6.5 5.4 4.8 7.7 10.1 9.8
Bharti Infratel 363 Buy 11.8 14.1 12.5 30.6 25.8 29.1 12.3 10.7 9.4 12.7 14.6 12.5
Idea Cellular 81 Sell 8.1 1.9 2.4 10.0 42.7 34.3 6.2 5.3 4.9 11.9 2.6 3.1
October 2016 262

Bharti Airtel
Bloomberg BHARTI IN CMP: INR319 TP: INR410 (+29%) Buy
Equity Shares (m) 3,997.4 We expect consolidated revenue to grow 2.1% YoY but decline
M. Cap. (INR b)/(USD b) 1,274 / 19 4.8% QoQ to INR243b, largely led by seasonality. India wireless
52-Week Range (INR) 385/282 revenue would grow 7% YoY on a like-to-like basis to INR146.2b.
1,6,12 Rel Perf. (%) 1/-17/-14 Africa business revenue would decline 15% QoQ to ~USD793b,
led by (a) Naira currency devaluation, sale of operations in
Financial Snapshot (INR Billion) Burkina Faso and Sierra Leone, and (c) sale of tower.
Y/E March 2015 2016 2017E 2018E
Net Sales 920.4 965.3 971.4 1,013.2 Consolidated EBITDA margin is expected to decline 10bp QoQ to
EBITDA 312.3 339.8 354.6 364.0 ~37.3%, given the revenue mix change.
Adj. NP 55.8 49.1 52.7 45.6
AdjEPS(INR) 14.0 12.3 13.2 11.4
We expect Africa revenue and EBITDA to decline 15% and 14%
AdjEPS Gr(%) 189.7 78.4 -5.6 -7.1
QoQ to INR53b and INR12b, respectively.
BV/Sh (INR) 155.0 164.2 174.2 183.0
RoE (%) 9.2 7.7 7.8 6.4
Consolidated net profit would decline 5% YoY (but grow 0.3%
RoCE (%) 5.8 6.2 6.2 5.7
QoQ) to INR14.7b.
Payout (%) 19.9 17.0 20.5 22.6
Valuations
Bharti trades at proportionate EV/EBITDA of 6.1x FY17E and 5.7x
P/E (x) 22.6 25.7 24.0 27.7
FY18E. Maintain Buy.
P/BV (x) 2.0 1.9 1.8 1.7 Key things to watch for
EV/EBITDA x 6.6 6.4 6.1 5.7 Consolidated revenue growth (we expect 4.8% decline QoQ).
Div. Yld (%) 0.7 0.7 0.7 0.7 India wireless revenue growth (we expect 7% YoY).
Africa revenue growth (we expect 15% decline QoQ).
Consolidated EBITDA margin (we expect 37.3%).
Consolidated - Quarterly Earning Model (INR Million)

Gross Revenue 236,709 238,357 240,659 249,596 255,465 243,282 229,474 243,156 965,321 971,377
YoY Change (%) 3.1 4.3 3.7 8.4 7.9 2.1 -4.6 -2.6 297.0 NA
EBITDA 82,243 82,343 84,137 91,122 95,480 90,670 80,616 87,871 339,844 354,637
Margins (%) 34.7 34.5 35.0 36.5 37.4 37.3 35.1 36.1 35.2 36.5
Depreciation 40,404 42,390 43,541 48,163 50,402 50,907 51,416 51,925 174,498 204,651
Interest 19,206 18,752 14,167 17,010 19,399 16,793 16,793 16,793 69,135 69,778
Other Income 2,419 1,929 3,037 3,129 2,787 2,783 2,783 2,783 10,513 11,137
Extra-Ord expense -21,384 -6,761 3,405 2,999 3,536 0 0 0 -21,741 3,536
PBT 46,435 29,890 26,060 26,079 24,930 25,753 15,190 21,936 128,465 87,809
Tax 21,827 13,394 13,523 10,789 10,089 9,127 5,384 7,774 59,533 32,375
Rate (%) 47.0 44.8 51.9 41.4 40.5 35.4 35.4 35.4 46.3 36.9
Minority Interest & P/Lof Asso. Cos. 3,478 1,133 1,457 2,095 222 1,962 1,157 1,671 8,163 5,012
Reported PAT 21,130 15,363 11,080 13,195 14,619 14,664 8,649 12,490 60,769 50,422
Mobile ARPU (INR/month) 198.2 192.6 192.0 194.2 195.7 187.0 166.5 179.2 192.9 182.2
QoQ Growth (%) -0.1 -2.8 -0.3 1.1 0.8 -4.5 -10.9 7.6 -2.6 -5.5
Mobile MOU/sub/month 345.0 333.7 325.8 321.3 310.1 303.3 303.3 296.7 342.7 310.1
QoQ Growth (%) -1.7 -3.3 -2.4 -1.4 -3.5 -2.2 0.0 -2.2 -1.1 -9.5
Mobile Traffic (B Min) 9,097 9,480 10,066 10,102 9,427 9,460 9,460 9,494 38,746 37,842
QoQ Growth (%) 4.4 4.2 6.2 0.4 -6.7 0.4 0.0 0.4 8.2 -2.3
Mobile RPM (INR) 0.57 0.58 0.59 0.60 0.6 0.6 0.5 0.6 0.6 0.6
QoQ Growth (%) 1.7 0.4 2.1 2.5 4.5 -2.3 -10.9 10.0 -1.5 4.4
E: MOSL Estimates
October 2016 263

Bharti Infratel
Bloomberg BHIN IN CMP: INR363 TP: INR435 (+20%) Buy
We expect revenue to grow 7.5% YoY and 1.8% QoQ to INR32.7b.
M. Cap. (INR b)/(USD b) 688 / 10
52-Week Range (INR) 437/302 Revenue from rent is expected to grow 1.3% QoQ. Energy and other
1,6,12 Rel Perf. (%) 7/-18/-16 reimbursements are expected to grow 2% QoQ.
We expect EBITDA to improve 2.6% QoQ to INR14.3b. EBITDA
Financial Snapshot (INR Billion) margin should expand ~40bp QoQ to 43.8%.
Y/E March 2015 2016 2017E 2018E
We expect ~19% drop in PAT QoQ to INR6.1b, primarily led high
Net Sales 116.7 123.3 132.4 144.2
investment income in previous quarter.
EBITDA 50.0 54.1 58.1 63.9
Adj. NP 19.9 22.5 26.7 23.7 Bharti Infratel trades at an EV/EBITDA of 11.4x FY17E and 10x
AdjEPS INR 10.5 11.8 14.1 12.5 FY18E. Maintain Buy.
Gr. (%) 99.0 48.1 33.9 5.4
BV/Sh (INR) 89.7 96.7 95.8 103.7
RoE (%) 11.4 12.7 14.6 12.5
RoCE (%) 11.1 11.2 13.0 14.5
Payout (%) 44.0 39.0 32.0 36.1
Valuations
Consolidated co-location additions (we expect ~2,440 in 2Q).
P/E (x) 34.5 30.6 25.8 29.1
Trend in consolidated sharing revenue per sharing operator (we
P/BV (x) 4.0 3.7 3.8 3.5
expect 0.3% QoQ increase).
EV/EBITDAx 13.9 12.3 11.4 10.0
Div. Yld (%) 1.1 1.1 1.1 1.1

Revenue from operations 30,031 30,410 31,056 31,817 32,106 32,680 33,428 34,156 123,314 132,369
YoY Change (%) 5.6 3.8 5.3 8.0 6.9 7.5 7.6 7.3 5.7 7.3
EBITDA 12,896 13,094 13,623 14,495 13,947 14,310 14,750 15,131 54,108 58,138
Margins (%) 42.9 43.1 43.9 45.6 43.4 43.8 44.1 44.3 43.9 43.9
Depreciation 5,450 5,563 5,526 5,697 5,648 5,657 5,657 5,657 22,236 22,619
Interest 566 -1,675 292 -1,029 -1,281 -333 -333 -333 -1,847 -2,281
Other Income 564 564 487 433 352 252 252 252 2,048 1,108
PBT 7,444 9,770 8,292 10,260 9,932 9,238 9,679 10,059 35,767 38,907
Tax 3,020 3,854 3,342 3,076 2,369 3,141 3,291 3,420 13,292 12,221
Rate (%) 40.6 39.4 40.3 30.0 23.9 34.0 34.0 34.0 37.2 31.4
Minority Interest & P/L of Asso. Cos. 0 0 0 0 0 0 0 0 0 0
Reported PAT 4,424 5,916 4,950 7,184 7,563 6,097 6,388 6,639 22,475 26,687
Adj PAT 4,424 5,916 4,950 7,184 7,563 6,097 6,388 6,639 22,475 26,687
YoY Change (%) -4.4 27.2 -2.3 28.9 71.0 3.1 29.0 -7.6 12.8 18.7
Margins (%) 14.7 19.5 15.9 22.6 23.6 18.7 19.1 19.4 18.2 20.2
October 2016 264

Idea Cellular
Bloomberg IDEA IN CMP: INR81 TP: INR75 (-7%) Sell
We expect consolidated revenue to grow 5.6% YoY (3.2% QoQ) to
M. Cap. (INR b)/(USD b) 632/10
INR91.8b.
1,6,12 Rel Perf. (%) 2 / 13 / 23 We expect Idea to report mobile traffic growth of 3.7% QoQ. We
estimate voice RPM to decline 1%; our estimate factors 5% QoQ
Financial Snapshot (INR Million) drop in MoU per subscriber per month.
Y/E March 2015 2016 2017E 2018E EBITDA margin is expected to decline ~160bp QoQ/440bp YoY to
Net Sales 315.7 359.8 360.9 371.2
30.8% due to increased network cost.
EBITDA 108.1 127.8 107.9 108.2
Net profit is expected to remain marginally positive at INR209m,
Adj. NP 31.9 29.1 -3.4 -6.5
AdjEPS (INR) 8.9 8.1 -1.0 -1.8
down 90% QoQ in 2QFY17, as the sequential EBITDA decline trickles
Adj.EPSGr(%) 216 48 -111 -122 down to the bottom-line.
BV/Sh(INR) 64.0 71.6 70.6 68.8 Idea trades at an EV/EBITDA of 6.5x FY17E and 6.4x FY18E.
RoE (%) 16.1 11.9 -1.3 -2.6
RoCE (%) 8.2 6.8 2.6 2.0
Payout (%) 8.1 8.9 6.4 6.8 Key things to watch for
Valuations Voice RPM trajectory (we expect RPM to decline 1.5% QoQ).
P/E (x) 9.0 9.9 -83.9 -44.6 Mobile traffic (we expect 3.7% QoQ growth).
P/BV (x) 1.3 1.1 1.1 1.2 EBITDA margin (we expect ~160bp decline QoQ).
EV/EBITDA(x) 5.0 5.4 6.5 6.4
Div. Yield (%) 0.8 0.7 -0.1 -0.1

Gross Revenue 87,915 86,891 90,097 94,839 94,866 91,791 83,563 90,720 359,772 360,940
YoY Change (%) 14.0 0.3
EBITDA 29,793 30,570 31,285 36,160 30,742 28,284 22,001 26,832 127,840 107,859
Margins (%) 33.9 35.2 34.7 38.1 32.4 30.8 26.3 29.6 35.5 29.9
Depreciation 14,117 15,381 16,231 19,737 19,192 19,886 20,596 21,063 65,466 80,736
Share in Profits from Associates 927 1,035 1,056 1,077 1,098 4,266
Interest 3,240 2,726 3,349 7,678 9,224 9,135 9,135 9,135 16,993 36,628
Other Income 0 0 0 0 0 0 0 0 0 0
PBT before EO expense 13,364 12,464 11,705 8,745 3,362 319 -6,653 -2,267 45,382 -5,238
PBT 13,364 12,464 11,705 8,745 3,362 319 -6,653 -2,267 45,382 -5,238
Tax 4,816 4,371 4,063 2,989 1,158 110 -2,291 -781 16,239 -1,804
Rate (%) 36.0 35.1 34.7 34.2 34.4 34.4 34.4 34.4 35.8 34.4
Reported PAT 8,548 8,093 7,642 5,756 2,204 209 -4,362 -1,486 29,143 -3,434
Margins (%) 9.7 9.3 8.5 6.1 2.3 0.2 -5.2 -1.6 8.1 -1.0
E: MOSL Estimates
October 2016 265

Utilities
Company name Utilities 2QFY17 preview

Power Grid to outperform; 2Q generation growth tepid
Coal India
Within our utility sector coverage universe, we expect Power Grid to report strong
JSW Enegry set of numbers with 2QFY17 PAT of INR18b (+24% YoY). Other companies at best
would report muted profit growth.
NTPC
NTPCs PAT is estimated to increase ~5% YoY to INR23.3b, led by lower PLF
Power Grid Corporation
incentives and other income. The companys commercial capacity is estimated to be
flat QoQ at 45.9GW. JSW Energy is expected to be impacted by under-utilization of
its Vijaynagar plant (estimated to have operated at just ~28% PLF in 2Q v/s. 81% in
the year-ago period). The companys EBITDA is estimated to decline 19% YoY to
INR8.1b and PAT to be down 70% YoY to INR1.1b.
Coal India is estimated to disappoint with EBITDA (ex-OBR) fall of ~46% YoY to
~INR12.7b, mainly due to a decline in coal dispatches (-5% YoY), lower e-auction
realization (-8% QoQ/-9% YoY) and impact of wage provisions. We estimate PAT to
decline 43% YoY to INR12.8b.
Generation growth tepid: Indias electricity generation in 2Q is estimated to have

increased by less than 2%, mainly due to subdued performance in July (+1.5% YoY)
and August (flat). However, generation in September (based on preliminary data) is
estimated to have increased ~2% YoY. Heavy rainfall which reduced agriculture
sector demand is one of the key reasons for lower demand/generation.
ST prices down 11% QoQ: Short-term (ST) prices were down 11% QoQ to
INR2.25/kWh in 2QFY17. ST volumes were up 26% YoY.

Utilities
Coal India 328 Neutral 161,899 -4.5 -9.0 9,193 -62.9 -74.7 12,761 -49.3 -58.4
JSW Energy 74 Buy 19,299 -23.8 -21.2 8,098 -18.9 -27.5 1,113 -70.5 -69.6
NTPC 151 Buy 187,377 5.7 0.0 50,838 31.9 -0.1 23,276 5.0 -3.2
Power Grid Corp. 181 Buy 63,381 29.2 4.4 56,623 31.5 5.5 18,021 24.5 0.0
Sanjay Jain (SanjayJain@MotilalOswal.com); +91 22 3982 5412

Dhruv Muchhal (Dhruv.Muchhal@MotilalOswal.com); +91 22 3027 8033
October 2016 266
Power generation in July Exhibit 155: Power generation BU

increased 2% YoY. It was
Generation - BU change yoy - %
flat in August.
100
88
99
98
97
96
95
95
94
94
94
92
92
90
90
90
89
89
89
89
87
87
86
86
86
86
85
85
85
84
84
83
82
81
79
79
79
78
77
77
76
16 15
13 14
12 12 1213 12 12
10 9 10 8
6 5
7 6 8 6 5 7
5 3 6 6 6 7
5
4 4 4 3
1 2 1 1 2 0
0 -1
Jun-13
Jun-14
Jun-15
Apr-13
Jun-16
Aug-13
Apr-14
Dec-13
Feb-14
Aug-14
Apr-15
Dec-14
Feb-15
Aug-15
Apr-16
Dec-15
Feb-16
Aug-16
Oct-13
Oct-14
Oct-15
Source: MOSL, CEA
PLF was down 250bp YoY to Exhibit 156: NTPC coal-based power plants monthly PLF (%)
73% in July. It was down
NTPC's coal-based plants PLF - %
410bp YoY to 72% in
89.6
88.9
87.4
87.2
85.3
83.9
83.1
82.5
82.2
81.7
81.7
81.6
81.5
81.5
81.3
80.9
80.4
79.4
79.4
78.5
78.2
77.8
August.
77.1
76.7
76.5
76.2
75.7
74.0
73.7
73.6
72.3
69.8
Jul-14
Jul-15
Jul-16
Nov-14
Nov-15
May-14
May-15
May-16
Jan-14
Mar-14
Sep-14
Jan-15
Mar-15
Sep-15
Jan-16
Mar-16
Source: MOSL, CEA
Exhibit 157: NTPC commercialized and commissioned capacity (MW)
Commercialized Commissioned
1565
1160 1255
1105
800
565 675 650 660
500 500 450525
99 110 20 20 15 0 0
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17
Source: MOSL, Company Data
October 2016 267

Exhibit 158: Power Grid capex and capitalization (INR b)
Capitalized Capex
172
71 68 64 66
49 58 47 49 50 51 45 51 51 45 50 56 50 56
25
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17E
Regulated equity base is Exhibit 159: Power Grid regulated equity base (INR b)
up 21% YoY.
Regulated equity
370 382 388 400

305 316 328
265 276 293
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
4Q16
1Q17
2Q17E
October 2016 268

Coal Indias volume monitor August 2016

Exhibit 160: Production declined 10.4% YoY in August
Production (mt) YoY (%)

16 15 13 13 13 13.5
11 9 11 12 10 10.7 10.0
7 557 7 6.3
4 5 5 556 5 6 3.9 5.5
2 3 2
0 1 0 -2 1
-2 -2 -2 -2 -2
3.4 -3.4
-7
39 -10.4
43
46
43
54
36
35
33
33
32
33
35
39
44
47
43
53
38
36
35
33
35
35
40
44
47
47
48
57
42
41
39
35
36
37
44
47
52
53
51
59
40
43
43
37
32
Jul-13
Jul-14
Jul-15
Jul-16
Nov-12
Nov-13
Nov-14
Nov-15
May-13
May-14
May-15
May-16
Jan-13
Mar-13
Sep-13
Jan-14
Mar-14
Sep-14
Jan-15
Mar-15
Sep-15
Jan-16
Mar-16
Exhibit 161: Dispatches declined by 9.6% YoY in August
Dispatches (mt) YoY (%)
1514
11 9 10 10 10 9 9.6
5 67 6 6 7 7677 79 6.6
2 0 2 2 2 30 2 3.5 4.1 1.5
-1 -1 1 1 -2 1 -2 -1 5.5
-9 -2.5 -9.6
39
42
44
40
46
40
38
37
38
35
36
36
39
43
44
40
45
41
41
38
38
37
35
39
42
44
44
43
48
44
44
42
41
41
40
44
45
48
48
46
49
42
46
45
41
37
Jul-13
Jul-14
Jul-15
Jul-16
Nov-12
Nov-13
Nov-14
Nov-15
May-13
May-14
May-15
May-16
Jan-13
Mar-13
Sep-13
Jan-14
Mar-14
Sep-14
Jan-15
Mar-15
Sep-15
Jan-16
Mar-16
Exhibit 162: Inventory at mines declined MoM in August (14mt destocked ytd FY17)
COAL inventory - mt
58 55
54 52 52 49
46 49 45 48 47 44
40 37 44 42
39 39
32 32 29 31 33 37 35 32 32 34 38
Jun-14
Jun-15
Jun-16
Apr-14
Aug-14
Apr-15
Dec-14
Feb-15
Aug-15
Apr-16
Dec-15
Feb-16
Aug-16
Oct-14
Oct-15

Exhibit 163: Rake availability declined in April Exhibit 164: Share of dispatches to power sector
Rakes/day YoY (%) Share of dispatch to power (%)
12.6 86%
11.411.9
9.1 9.6 10.610.5 10.2 83%
8.2 8.7 7.4 81%
4.8 5.3 79% 78%
4.1 76% 76% 76% 75% 77%
74% 74% 75% 73%
-1.4 -1.9
205 218 217 215 206 198 196 195 198 211 224 225 226 227 233 211 73%
Jul-15
Jun-15
Nov-15
Apr-15
May-15
Apr-16
Aug-15
Dec-15
Jan-15
Feb-15
Mar-15
Sep-15
Jan-16
Feb-16
Mar-16
Oct-15
Jun-14
Jun-15
Apr-14
Dec-13
Feb-14
Aug-14
Apr-15
Dec-14
Apr-16
Feb-15
Aug-15
Dec-15
Feb-16
Oct-13
Oct-14
Oct-15
Source: MOSL, Coal India, ICMW Source: MOSL, Coal India, ICMW
October 2016 269

3
Jan-14 38 Jan-14 3,292 Jan-14 2,143 Apr-13
4
36 3,340 2,164
Mar-14 32 Mar-14 3,364 Mar-14 2,183 Jul-13
October 2016
32 3,302 2,256
5545
May-14 31 May-14 3,301 May-14 2,317 Oct-13
31 3,645 2,555
Jul-14 48 Jul-14 3,772 Jul-14 3,045
59 4,075 3,347 Jan-14
66
Sep-14 61 Sep-14 4,400 Sep-14 3,566
56 4,444 3,616 Apr-14
666 565
Nov-14 46 Nov-14 4,241 Nov-14 3,114
4
32 3,547 2,061
2
Jan-15 30 Jan-15 3,823 Jan-15 2,218 Jul-14
28 4,146 2,305
111
Mar-15 30 Mar-15 3,866 Mar-15 2,220 Oct-14
3
2,023
Act. Real. (G1-G8) - INR/t

29 3,437
May-15 24 May-15 3,154 May-15 1,879 Jan-15
26 3,047 1,885
Jul-15 21 Jul-15 2,942 Jul-15 1,605
66666
Allocated (mt)
40 2,729 1,934 Apr-15

54
Sep-15 23 Sep-15 2,682 Sep-15 1,803

5
26 2,657 1,718 Jul-15

3
Avg. realization - INR/t

1,361
4
Nov-15 15 Nov-15 2,952 Nov-15

7
1,715
Exhibit 169: Average realization (G1-G8 grade)

27 3,173 Oct-15
8
Jan-16 28 Jan-16 3,189 Jan-16 1,723
Exhibit 167: Average E-auction realization INR/t

Exhibit 165: Monthly E-auction allocated quantity
31 3,068 1,769
5
Exhibit 171: Share (%) of high grade in allotted mix

Jan-16
5 5
Mar-16 15 Mar-16 2,465 Mar-16 1,285

1,293
11
18 3,044
9
Allocated (higher grade) as % of total qty. allocated

May-16 22 May-16 2,948 May-16 1,447 Apr-16
E-auction monthly monitor July 16
13 2,505 1,227
at reserve price - INR/t

12
4 4
Jul-16 20 Jul-16 3,032 Jul-16 1,469 Jul-16
Source: ICMW
Source: ICMW
Source: ICMW
Source: ICMW
4
Jan-14 376 Jan-14 1,520 Apr-13
1,200
1,600
2,000
2,400
2,800
3,200
3,600
6
528 1,574
Mar-14 448 Mar-14 1,695 Jul-13
547 1,829 1Q14
May-14 618 May-14 1,939 Oct-13
855 2,192
Jul-14 1,123 Jul-14 2,327 2Q14
2,414 Jan-14
8
1,266
Sep-14 2,487 3Q14
67.9
Sep-14 1,385
1,648 2,707 Apr-14
Nov-14 1,224 Nov-14 2,345 4Q14
473 1,422 Jul-14
1
Jan-15 559 Jan-15 1,592 1Q15

651 1,664
Mar-15 585 Mar-15 1,577 2Q15 Oct-14
Realn. premium - INR/t

Act. Real. (G9-G17) - INR/t
8
394 1,455
May-15 332 May-15 1,501 3Q15 Jan-15
311 1,508
Jul-15 154
Offered (mt)
Jul-15 1,275 Apr-15

162 1,369 4Q15
6
Sep-15 325 Sep-15 1,519

E-auction real. - CIL - INR/t
286 1,366 1Q16 Jul-15

Nov-15 147 Nov-15 1,103
107 1,245 2Q16 Oct-15
Exhibit 170: Average realization (G9-G17 grade)
Jan-16 139
Exhibit 166: Monthly E-auction offered quantity
14
E-auction real. - exchanges - INR/t
Jan-16 1,215
101
Exhibit 168: Realization trend CIL v/s. exchanges
1,284 3Q16
10
52.3
Mar-16 148 Mar-16 1,085 Jan-16
90
18
1,078 4Q16
May-16 64
14
May-16 1,133 Apr-16
Richards Bay - USD/t

63 1,096
28
1Q17
60.7
Jul-16 52
at reserve price - INR/t
Jul-16 1,173 Jul-16
270
Source: ICMW
Source: ICMW
Source: ICMW
Source: ICMW
Exhibit 172: Realized premium over reserve price & RB Index

Exhibit 173: Relative performance3m (%) Exhibit 174: Relative performance1Yr (%)
Sensex Index MOSL Utilities Index Sensex Index MOSL Utilities Index
107 120
105 110
103 100
101 90
99 80
Jul-16
Jun-16
Nov-15
Apr-16
May-16
Dec-15
Aug-16
Mar-16
Sep-15
Jan-16
Feb-16
Sep-16
Oct-15
Jul-16
Jun-16
Aug-16
Sep-16

Utilities
Coal India 328 Neutral 22.6 17.0 21.1 14.5 19.3 15.6 8.9 14.5 11.0 42.2 30.7 36.7
JSW Energy 74 Buy 7.6 7.0 8.0 9.8 10.7 9.3 6.8 6.2 5.9 15.5 12.9 13.4
NTPC 151 Buy 12.3 11.7 14.4 12.2 12.9 10.4 11.1 10.8 8.7 11.9 10.5 12.1
Power Grid Corp. 181 Buy 11.5 14.2 16.8 15.8 12.8 10.8 9.6 9.1 7.8 14.7 16.0 16.6
October 2016 271

Coal India
Bloomberg COAL IN CMP: INR328 TP: INR350 (+6%) Neutral
We estimate Coal Indias EBITDA (ex-OBR) to decline 50% YoY to
M. Cap. (INR b)/(USD b) 2,071 / 31
INR12.7b due to lower volumes, e-auction realization and impact of
wage hike provision.
1,6,12 Rel Perf. (%) 0/2/-8
Dispatches are down 5% YoY to 116mt. FSA volumes are estimated
Financial Snapshot (INR Billion) to decline 8% YoY to 95mt given weak demand from the power
Y/E March 2015 2016 2017E 2018E sector. E-auction volumes are up 17% YoY to ~17mt.
Sales 720.1 756.4 764.3 853.6 FSA realizations are estimated to increase 5% YoY to INR1,354/t. E-
EBITDA 152.3 159.4 114.2 150.9 auction realization is estimated to decline 8% QoQ to INR1,450/t.
NP 137.3 142.7 107.6 133.5 We estimate 17% YoY increase in wage cost due to the wage hike
EPS (INR) 21.7 22.6 17.0 21.1 provision.
EPS Gr. (%) -14.1 4.0 -24.6 24.1
BV/Sh. (INR) 63.9 53.6 55.3 57.4
RoE (%) 34.0 42.2 30.8 36.8
RoCE (%) 34.5 40.0 32.7 39.2
Payout (%) 112.9 145.5 90.0 90.0
Valuations
P/E (x) 14.8 14.2 18.8 15.2
P/BV (x) 5.0 6.0 5.8 5.6
EV/EBITDA (x) 7.1 7.6 9.3 7.3
Div. Yield (%) 6.4 8.5 4.0 4.9
E-auction volumes and realization.
Global coal prices.

Y/E March FY16 FY17 FY15 FY16 FY17E
Sales 189,558 169,576 189,715 207,595 177,961 161,899 193,205 231,219 720,146 756,443 764,283
Change (%) 6.5 8.2 6.8 -0.1 -6.1 -4.5 1.8 11.4 4.7 5.0 1.0
Cash EBITDA (OBR adj.) 50,911 25,171 49,337 62,100 38,621 12,689 37,643 61,823 190,567 187,519 150,776
As of % Sales 26.9 14.8 26.0 29.9 21.7 7.8 19.5 26.7 26.5 24.8 19.7
Depreciation 5,575 5,864 6,279 6,946 6,672 6,672 6,672 5,850 23,198 24,664 25,864
OBR 7,091 410 7,419 13,195 2,331 3,496 5,244 25,534 38,267 28,114 36,604
Interest 40 15 30 121 890 40 40 -905 73 207 65
Other Income 20,095 19,636 19,819 21,393 17,564 16,565 18,147 20,066 86,761 80,943 72,342
EO Income/(Expense) -226 248 337 56 0 0 0 0 50 415 0
PBT 58,072 38,766 55,766 63,287 46,293 19,047 43,834 51,411 215,839 215,891 160,585
Tax 20,429 13,328 18,584 20,807 15,641 6,285 14,465 16,599 78,573 73,148 52,990
Effective Tax Rate (%) 35.0 34.6 33.5 32.9 33.8 33.0 33.0 32.3 36.4 33.9 33.0
Reported PAT 37,643 25,438 37,182 42,479 30,653 12,761 29,369 34,812 137,266 142,743 107,595
Adjusted PAT 37,869 25,190 36,845 42,424 30,653 12,761 29,369 34,812 137,216 142,329 107,595
Change (%) -5.7 15.2 12.4 0.4 -19.1 -49.3 -20.3 -17.9 -14.2 3.7 -24.4
E: MOSL Estimates
October 2016 272

JSW Energy
Bloomberg JSW IN CMP: INR74 TP: INR95 (+27%) Buy
We estimate JSW Energys EBITDA to decline 19% YoY to INR8.1b
M. Cap. (INR b)/(USD b) 122 / 2
due to under-utilization of the Vijaynagar plant and an increase in
cost of imported coal.
1,6,12 Rel Perf. (%) -2/-2/-24
Vijaynagar is estimated to have operated at just 28% PLF v/s. 81%
Financial Snapshot (INR Billion) last year.
Y/E MARCH 2015 2016 2017E 2018E Imported coal price average was ~USD8/t higher QoQ to USD58/t.
Sales 938.0 996.9 915.5 1,018.2
PAT is estimated at INR1.1b, down ~70% YoY on low utilization.
EBITDA 36.2 41.4 37.5 41.8
NP 13.8 12.5 8.3 13.2
EPS (INR) 8.4 7.6 5.1 8.1
EPS Gr. (%) 22.2 -10.0 -33.4 59.3
BV/Sh. (INR ) 45.8 52.0 54.8 60.6
RoE (%) 19.6 15.5 9.5 14.0
RoCE (%) 13.9 12.5 9.9 11.5
Payout (%) 23.7 26.3 39.5 24.8
Valuation
P/E (x) 14.1 9.2 14.7 9.2
P/BV (x) 2.6 1.3 1.4 1.2
Div. Yield (%) 1.7 2.9 2.7 2.7 Capitalization/capex guidance for FY17.
Details on competitively bid projects.
Development on green energy projects, state JVs, etc.

Net Sales 21,070 25,314 26,491 26,814 24,500 19,299 19,313 28,435 99,690 91,548
YoY Change (%) -17.6 12.4 11.3 22.5 16.3 -23.8 -27.1 6.0 6.3 -8.2
EBITDA 8,173 9,983 11,913 11,378 11,173 8,098 6,657 11,598 41,446 37,525
Margins (%) 38.8 39.4 45.0 42.4 45.6 42.0 34.5 40.8 41.6 41.0
Depreciation 1,984 2,240 2,650 2,627 2,398 2,470 2,544 2,589 9,502 10,000
Interest 2,640 3,511 4,491 4,389 4,293 4,250 4,207 3,995 15,032 16,745
Other Income 691 898 264 247 416 240 240 64 2,100 960
PBT before EO expense 4,239 5,129 5,035 4,610 4,899 1,618 146 5,077 19,013 11,740
Extra-Ord expense 0 -1,500 0 0 0 0 0 0 -1,500 0
PBT 4,239 6,629 5,035 4,610 4,899 1,618 146 5,077 20,513 11,740
Tax 1,155 1,537 1,816 1,543 1,248 437 39 1,446 6,051 3,170
Rate (%) 27.2 23.2 36.1 33.5 25.5 27.0 27.0 28.5 29.5 27.0
Minority Interest & P/L of Asso. Cos. 310 172 12 12 -14 69 69 152 507 276
Reported PAT 2,775 4,920 3,206 3,054 3,665 1,113 38 3,479 13,955 8,295
Adj PAT 2,775 3,767 3,206 3,054 3,665 1,113 38 3,479 12,897 8,295
YoY Change (%) -15.2 16.4 -19.0 -5.9 32.1 -70.5 -98.8 13.9 -6.0 -35.7
Margins (%) 13.2 14.9 12.1 11.4 15.0 5.8 0.2 12.2 12.9 9.1
E: MOSL Estimates
October 2016 273

NTPC
Bloomberg NTPC IN CMP: INR151 TP: INR199 (+32%) Buy
We estimate modest 5% YoY growth in adjusted PAT to INR23.3b in
M. Cap. (INR b)/(USD b) 1,241 / 19
2QFY17. Generation business PAT is estimated to increase 7% YoY
to INR20.7b, while other income is estimated to be down 9% YoY to
1,6,12 Rel Perf. (%) -5/4/14
INR2.6b.
Financial Snapshot (INR Billion) PLF incentives are estimated to decline from INR1.5b in 1QFY17 to
Y/E MARCH 2015 2016 2017E 2018E INR0.5b.
Sales 806.2 787.1 820.4 965.0 Commercial capacity is estimated to remain unchanged at 45.9GW.
EBITDA 171.9 191.6 228.2 301.9
NP 99.9 101.6 96.5 119.0
EPS (INR) 12.1 12.3 11.7 14.4
EPS Gr. (%) -12.4 1.7 -5.1 23.3
BV/Sh. (INR ) 99.6 108.2 115.1 124.1
RoE (%) 11.8 11.9 10.5 12.1
RoCE (%) 7.4 7.3 6.8 8.2
Payout (%) 47.4 27.2 34.2 31.2
Valuations
P/E (x) 12.0 10.5 13.0 10.5
P/BV (x) 1.5 1.2 1.3 1.2
EV/EBITDA (x) 12.0 11.1 10.9 8.7
PLF for coal-based projects and generation loss.
Div. Yield (%) 2.6 2.6 3.0 3.3 Core RoE and incentives.
Quarterly Performance (standalone) (INR million)

Sales 170,187 177,229 173,175 179,901 187,354 187,377 178,094 180,416 700,492 733,241
Change (%) -5.9 6.9 -7.6 -6.4 10.1 5.7 2.8 0.3
EBITDA 33,718 38,550 45,277 53,355 50,874 50,838 51,773 54,817 170,900 208,302
Depreciation 12,380 13,229 13,935 14,710 13,952 15,028 15,829 16,936 54,253 61,745
Interest 7,309 8,145 8,251 8,599 9,004 9,846 9,973 10,226 32,304 39,050
Other income 3,046 4,510 3,405 5,706 2,810 3,205 2,852 5,464 16,667 14,330
Exceptional 0 0 -384 -39 33 0 0 0 -424 33
PBT 17,076 21,686 26,113 35,712 30,761 29,168 28,822 33,119 100,587 121,871
Tax -4,278 -7,297 1,184 8,548 7,066 5,892 5,822 6,690 -1,842 25,469
PAT 21,354 28,983 24,929 27,164 23,695 23,276 23,000 26,429 102,429 96,401
Change (%) -3.0 39.9 -18.9 -7.7 11.0 -19.7 -7.7 -2.7 -0.5 -5.9
Adj. PAT 21,330 22,165 20,691 25,603 24,047 23,276 23,000 26,429 89,789 96,753
Change (%) 9.6 24.2 -10.1 -6.3 12.7 5.0 11.2 3.2 7.8
A. Generation 18,742 19,364 18,197 21,355 21,850 20,719 20,724 22,069 77,658 85,362
Core RoE (%) 20 20 19 21 21 20 19 19 20 19
a. Base RoE - 15.5% 14,305 14,690 15,168 15,656 16,166 16,467 16,924 17,553 59,819 67,110
b. PLF incentive 780 890 -17 1,052 1,530 500 780 781 2,705 3,591
c. Others 3,657 3,784 3,046 4,647 4,154 3,752 3,020 3,735 15,134 14,661
B. Other income 2,588 2,801 2,493 4,248 2,197 2,557 2,276 4,360 12,132 11,391
Key metrics
Regulated Equity 369,160 389,020 393,853 414,204 420,146 429,779 443,710 462,251 414,204 462,251
Commercial capacity (MW) 43,143 43,943 44,443 45,103 45,878 45,928 48,028 48,828 45,103 48,828
Coal-based PLF (%) 77.6 77.3 78.2 81.3 81.4 0.0 0.0 0.0 78.6
E: MOSL Estimates
October 2016 274

Power Grid Corporation

Bloomberg PWGR IN CMP: INR181 TP: INR209 (+15%) Buy
We estimate PWGLs adjusted PAT to increase 24% YoY to INR18b on
M. Cap. (INR b)/(USD b) 948 / 14
an increase in capitalization. We estimate capitalization of INR50b in
the quarter.
1,6,12 Rel Perf. (%) 0/19/31
Financial Snapshot (INR Billion) We estimate regulated equity base to increase to INR399b by
Y/E MARCH 2015 2016 2017E 2018E 2QFY17 from INR328b in 2QFY16.
Sales 176.6 213.5 263.5 311.6
EBITDA 151.3 186.0 233.9 278.8 Other income is estimated to increase 11% YoY to INR1.4b.
NP 50.9 60.1 74.1 87.8
EPS (INR) 9.7 11.5 14.2 16.8 We estimate core-RoE of 17.2% (v/s 17.4% in 1Q).
EPS Gr. (%) 10.9 18.2 23.1 18.6
BV/Sh. (INR ) 73.5 82.6 94.4 108.2
RoE (%) 13.9 14.7 16.0 16.6
RoCE (%) 6.2 6.6 7.4 8.0
Payout (%) 24.7 20.8 17.1 18.1
Valuations
P/BV (x) 2.0 1.7 1.9 1.7 Capitalization/capex guidance for FY17.
EV/EBITDA (x) 11.2 9.5 9.1 7.8 Details on competitively bid projects.
Div. Yield (%) 1.4 1.5 1.1 1.4 Development on green energy projects, state JVs, etc.
Quarterly Performance INR million

Sales 47,170 49,046 53,596 57,536 60,691 63,381 65,782 65,083 207,348 255,200
Change (%) 19.8 18.1 23.1 23.4 28.7 29.2 22.7 13.1 21.2 23.1
EBITDA 41,369 43,051 47,486 50,874 53,688 56,623 58,895 58,035 182,781 227,505
Change (%) 22.8 21.1 27.0 26.6 29.8 31.5 24.0 14.1 24.5 24.5
As of % Sales 87.7 87.8 88.6 88.4 88.5 89.3 89.5 89.2 88.2 89.1
Depreciation 13,695 14,481 15,805 17,847 17,573 19,386 20,095 20,637 61,828 77,691
Interest 11,091 11,490 12,875 14,773 15,178 15,791 16,369 15,946 50,230 63,283
Other Income 710 1,224 1,452 2,079 1,902 1,366 1,366 1,441 5,464 6,098
Extraordinary Inc / (Exp) 0 0 0 0 0 0 0 0 0 0
PBT 17,293 18,304 20,259 20,332 22,840 22,812 23,797 22,892 76,188 92,630
Tax 3,628 3,823 4,127 4,341 4,819 4,790 4,997 4,807 15,920 19,452
Reported PAT 13,665 14,480 16,131 15,991 18,022 18,021 18,800 18,085 60,267 73,177
Adjusted PAT (Pre Exceptional) 13,665 14,480 16,131 15,991 18,022 18,021 18,800 18,085 60,267 73,177
Change (%) 14.7 19.7 28.8 13.2 31.9 24.5 16.5 13.1 19.0 21.4
E: MOSL Estimates
October 2016 275

September 2016 Results Preview | Sector: Logistics
Allcargo
Bloomberg AGLL IN CMP: INR188 TP: INR217 (+15%) Buy
We expect AGLL to report EBITDA of INR1.3b (-2% YoY, +3% QoQ)
and PAT of INR630m (-15% YoY, flat QoQ) due lower volumes and
flat margins.
1,6,12 Rel Perf. (%) 3/12/17
We estimate MTO volumes at 122K TEU (+2% QoQ, +4.5% YoY) and
Financial Snapshot (INR b) CFS volumes at 70K TEU (-7% QoQ, +1% YoY); the rise in volumes
Y/E March 2015 2016 2017E 2018E would be led by the recovery in macro trade.
Sales 56.2 56.8 58.6 63.0
We estimate EBITDA/PAT CAGR of 9%/11% over FY16-18, and
EBITDA 4.6 5.2 5.5 6.2 expect return ratios to improve from ~14% to 17%, driven by
NP 2.3 2.9 2.7 3.4 margin expansion and reduction in capex intensity in the business.
EPS (INR) 9.2 11.4 10.7 13.6
The stock trades at 13.8x FY18E EPS of INR13.6. Maintain Buy.
EPS Growth (%) 55.5 23.9 (5.9) 26.2
BV/Share (INR) 75.7 87.5 71.3 82.2
RoE (%) 12.6 14.0 13.5 17.7
RoCE (%) 9.4 11.6 11.2 14.5
P/E (x) 20.4 16.4 17.5 13.8 (a) Volume data and (b) setup of logistics park in Jhajjar.
P/BV (x) 2.5 2.1 2.6 2.3
EV/EBITDA (x) 11.1 9.8 8.6 6.9

Y/E March FY16 FY17 FY16 FY17
Net Sales 14,764 14,652 13,365 13,976 13,976 14,385 14,903 14,972 56,756 58,236
YoY Change (%) 11.8 0.2 -6.7 -1.2 -5.3 -1.8 11.5 7.1 0.8 2.6
EBITDA 1,411 1,371 1,183 1,216 1,297 1,270 1,370 1,517 5,181 5,453
Margins (%) 9.6 9.4 8.9 8.7 9.3 8.8 9.2 10.1 9.1 9.4
Depreciation 362 422 386 359 436 440 445 453 1,529 1,773
Interest 106 108 115 95 75 75 76 77 425 303
Other Income 67 73 125 122 111 120 122 124 386 477
PBT before EO expense 1,009 913 807 884 897 875 971 1,111 3,614 3,853
Extra-Ord expense 49 -10 39 6 17 0 0 0 84 17
PBT 960 923 769 878 880 875 971 1,111 3,530 3,837
Tax 190 178 162 169 256 245 272 311 700 1,084
Rate (%) 19.8 19.3 21.1 19.3 29.1 28.0 28.0 28.0 19.8 28.2
Reported PAT 770 745 606 709 624 630 699 800 2,830 2,753
MI & P& L of Asso. Cos. -19 9 -18 -47 -14 -14 -14 -57 -76 -99
Adj PAT 751 725 615 691 610 615 685 786 2,782 2,696
YoY Change (%) 45.7 0.0 -22.4 22.5 -18.7 -15.2 11.4 13.7 7.2 -3.1
Margins (%) 5.1 5.0 4.6 4.9 4.4 4.3 4.6 5.2 4.9 4.6
E: MOSL Estimates
Harshad Borawake (HarshadBorawake@MotilalOswal.com)/ Abhinil Dahiwale (Abhinil.Dahiwale@MotilalOswal.com)
October 2016 276

September 2016 Results Preview | Sector: Textiles
Arvind
Bloomberg ARVND IN CMP: INR354 TP: INR372 (+5%) Buy
We expect ARVNDs revenue to grow 9.5% YoY (+9.1% QoQ) to
INR22.9b in 2QFY17, driven by the brand and retail segments.
1,6,12 Rel Perf. (%) 13/18/22 We expect EBITDA margin to expand 20bp YoY (+120bp QoQ) to
12.7%, and estimate EBITDA of INR2.9b.
Consequently, we expect adjusted PAT to grow 14.6% YoY to
Y/E March 2015 2016 2017E 2018E
INR1.1b. Buy.
Sales 78.5 84.5 93.5 106.7
EBITDA 10.1 10.7 11.6 13.3
NP 3.4 3.6 4.5 5.9
EPS (INR) 13.2 14.0 17.6 23.0
EPS Gr. (%) -3.6 6.3 25.1 30.8
BV/Sh. (INR) 105.5 112.8 135.1 153.5
RoE (%) 12.9 12.9 14.2 15.9
RoCE (%) 11.6 10.5 10.7 11.9
Div Payout (%) 23.4 20.5 23.8 21.2
Valuations
Growth and margin expansion in brand and retail segments.
P/E (x) 26.8 25.2 20.1 15.4
P/BV (x)
Performance of newly acquired brands and newer formats.
3.4 3.1 2.6 2.3
EV/EBITDA (x) 12.3 11.5 10.2 8.8
Realizations in textiles.
Div Yield (%) 0.7 0.7 1.0 1.1

Net Sales 17,868 20,964 21,575 23,196 21,041 22,956 23,840 25,747 83,603 93,522
YoY Change (%) 0.8 6.7 4.0 13.7 17.8 9.5 10.5 11.0 6.5 11.9
EBITDA 2,077 2,614 2,805 2,967 2,415 2,914 3,075 3,254 10,462 11,597
Margins (%) 11.6 12.5 13.0 12.8 11.5 12.7 12.9 12.6 12.5 12.4
Depreciation 586 614 654 664 691 714 737 731 2,518 2,758
Interest 959 947 895 945 891 845 780 712 3,745 3,235
Other Income 270 320 188 208 196 225 272 312 986 943
PBT before EO expense 802 1,373 1,445 1,566 1,029 1,580 1,830 2,123 5,186 6,547
Extra-Ord expense -29 -38 -13 0 -2 0 0 0 80 0
PBT 773 1,335 1,432 1,566 1,027 1,580 1,830 2,123 5,106 6,547
Tax 233 406 386 458 317 507 589 684 1,482 2,095
Rate (%) 30.2 30.4 26.9 29.2 30.9 32.1 32.2 32.2 29.0 32.0
MI & Profit/Loss of Asso. Cos. -12 19 13 5 -24 0 0 0 25 87
Reported PAT 552 910 1,033 1,103 734 1,073 1,241 1,439 3,649 4,540
Adj PAT 572 937 1,042 1,104 735 1,073 1,241 1,439 3,684 4,540
YoY Change (%) -36.9 -2.3 -6.1 47.0 28.5 14.6 19.1 30.4 -3.7 23.2
Margins (%) 3.1 4.3 4.8 4.8 3.5 4.7 5.2 5.6 4.4 4.9
E: MOSL Estimates
Niket Shah (Niket.Shah@MotilalOswal.com)

Chintan Modi (Chintan.Modi@MotilalOswal.com) / Chitvan Oza (Chitvan.Oza@MotilalOswal.com)
October 2016 277

September 2016 Results Preview | Sector: Consumer
Bata India
Bloomberg BATA IN CMP: INR496 TP: INR459 (-7%) Sell
We expect revenue to grow 7% YoY (-9% QoQ) to INR6.2b in
2QFY17.
1,6,12 Rel Perf. (%) -7/-13/-14 EBITDA is likely to increase 10% YoY to INR540m (on a very low
base), with margin expansion of 30bp to 8.8%.
Adjusted PAT is expected to grow 32% YoY to INR296m (on a very
Y/E March 2015* 2016 2017E 2018E
low base). Sell
Sales 26.9 24.3 25.8 27.8
EBITDA 3.4 2.7 2.9 3.4
NP 1.9 1.4 1.7 2.0
EPS (INR) 14.6 11.2 12.9 15.3
EPS Gr. (%) -4.8 -23.6 15.4 18.4
BV/Sh.(INR) 79.5 89.5 93.7 100.3
RoE (%) 20.2 13.2 14.1 15.8
RoCE (%) 20.3 13.4 14.2 15.8
SSS growth during the quarter.
Payout (%) 28.8 40.9 67.3 56.9
Share of accessories in total revenue.
Valuations
Impact on margins due to promotional campaigns.
P/E (x) 33.9 44.3 38.4 32.4
P/BV (x)
New store additions.
6.2 5.5 5.3 4.9
EV/EBITDA (x) 18.4 22.4 20.8 17.7
Dividend yield 0.7 1.2 1.5 1.5
*15 months
Net Sales 6,849 5,754 6,176 5,447 6,746 6,156 6,793 6,101 24,226 25,805
YoY Change (%) 10.1 5.0 15.0 10.9 -1.5 7.0 10.0 12.0 NM 6.5
EBITDA 834 491 798 553 820 540 914 636 2,676 2,916
Margins (%) 12.2 8.5 12.9 10.2 12.2 8.8 13.4 10.4 11.0 11.3
Depreciation 194 192 195 206 162 180 200 207 788 769
Interest 5 4 4 3 7 2 4 3 17 11
Other Income 78 82 71 104 110 90 100 100 335 380
PBT 1,143 694 669 447 761 448 810 526 1,459 2,516
Tax 240 153 224 169 257 152 275 179 786 855
Rate (%) 33.7 40.6 33.5 37.7 34.0 34.0 34.0 34.0 35.7 34.0
Reported PAT 902 541 445 279 504 296 534 347 2,185 1,661
Adj PAT 473 224 445 279 503 296 534 347 1,438 1,661
YoY Change (%) -22.3 -42.7 27.4 10.5 6.3 32.2 20.0 24.5 386.6 15
Margins (%) 6.9 3.9 7.2 5.1 7.4 4.8 7.9 5.7 5.9 6.4
E: MOSL Estimates

October 2016 278

Castrol (India)
Bloomberg CSTRL IN
We expect revenue to grow 4% YoY to INR8.2b due to the
M. Cap. (INR b)/(USD b) 241 / 4
combined effect of YoY flat realization at INR172/liter and volume
at 47.6m liters (+5% YoY, -16% QoQ).
1,6,12 Rel Perf. (%) 7/17/1
We expect CSTRL to report EBITDA of INR2.6b (+21% YoY, -18%
Financial Snapshot (INR b) QoQ). EBITDA margin is estimated to come in 31.6%, higher than
Y/E Dec 2014 2015 2016E 2017E 27.2% in 3QCY15, but lower than 32.5% in 2QCY16.
Sales 33.9 33.0 34.6 37.8
Net profit is expected at INR1.7b (+19% YoY, -18% QoQ)
EBITDA 7.2 9.3 10.6 11.5
The stock trades at 30.7x/27.9 CY16E/CY17E EPS. Buy.
Adj. PAT 4.7 6.4 7.1 7.8
Adj. EPS (INR) 9.6 12.8 14.3 15.8
EPS Gr. (%) 6.1 33.8 11.6 10.0
BV/Sh.(INR) 10.0 11.6 13.0 14.6
RoE (%) 76.0 118.4 116.2 114.2
RoCE (%) 76.2 118.5 116.4 114.3
(a) Volume growth.
Payout (%) 92.7 87.1 94.6 87.6
Valuations (b) Operating margin expansion.
P/E (x) 45.9 34.3 30.7 27.9 (c) Launch of new products.
P/BV (x) 43.8 37.8 33.8 30.2 (d) Competitive pressure from other players.
EV/EBITDA (x) 29.8 22.8 19.5 17.9
Div. Yield (%) 1.9 2.2 2.7 2.7

Volume (m litres) 46.0 53.7 45.3 46.1 50.2 56.5 47.6 48.3 191 203
Realization 173 171 172 171 170 171 172 172 172 171
Net Sales 7,958 9,202 7,811 7,882 8,521 9,679 8,157 8,285 32,853 34,643
YoY Change (%) -2.4 1.1 -2.3 -7.9 7.1 5.2 4.4 5.1 -2.8 5.4
EBITDA 1,873 2,728 2,127 2,093 2,516 3,144 2,576 2,372 8,821 10,609
YoY Change (%) 29.9 45.1 22.7 2.8 34.3 15.2 21.1 13.3 24.4 20.3
Margins (%) 23.5 29.6 27.2 26.6 29.5 32.5 31.6 28.6 26.8 30.6
Depreciation 111 94 94 91 86 149 115 113 390 463
Interest 3 2 1 2 4 7 5 5 8 21
Other Income 164 186 181 250 223 202 175 201 781 801
PBT 1,923 2,818 2,213 2,250 2,649 3,190 2,631 2,455 9,204 10,926
Tax 761 973 781 842 925 1,121 926 864 3,357 3,836
Rate (%) 39.6 34.5 35.3 37.4 34.9 35.1 35.2 35.2 36.5 35.1
Reported PAT 1,162 1,845 1,432 1,408 1,724 2,069 1,705 1,591 5,847 7,089
Adj PAT 1,162 1,845 1,432 1,408 1,724 2,069 1,705 1,591 5,847 7,089
YoY Change (%) 15.9 43.7 21.5 6.7 48.4 12.1 19.1 13.0 22.2 21.2
Margins (%) 14.6 20.0 18.3 17.9 20.2 21.4 20.9 19.2 17.8 20.5
E: MOSL Estimates

October 2016 279
Concor
Bloomberg CCRI IN CMP: INR1,382 TP: INR1,556 (+13%) Neutral
We expect CCRI to report net sales of INR14.3b (-4.6% YoY, +7%
M. Cap. (INR b)/(USD b) 269 / 4
QoQ), led by (a) realization decline of -9% YoY and flat QoQ, and (b)
52-Week Range (INR) 1,575/1,051
volume growth of 7.1% YoY and 4.6% QoQ.
1,6,12 Rel Perf. (%) 2/-2/-16
We model EXIM volumes to improve 5% YoY, and expect domestic
volumes to grow 2% YoY.
Financial Snapshot (consolidated, INR b)
Y/E March 2015 2016 2017E 2018E We estimate EBITDA at INR2.9b (-5.2% YoY, +14% QoQ) and PAT at
Sales 61.5 63.1 62.1 71.6
INR2.1b (-10% YoY, +17% QoQ).
14.0 11.6 11.9 14.6
The stock trades at 21.9x/17.8x FY17E/FY18E EV/EBITDA. CCRI
EBITDA
remains a direct play on the upcoming dedicated freight corridor
NP 10.5 7.9 8.2 9.9
(DFC) project, which will multiply its asset turnover and significantly
EPS (INR) 54.1 40.6 42.0 50.7
improve profitability. Neutral.
EPS Gr. (%) 11.7 -24.9 3.3 20.8
BV/Sh (INR) 385.5 409.4 434.4 464.6
RoE (%) 14.7 10.2 10.0 11.3
RoCE (%) 13.9 9.8 9.6 10.9
Valuations
EXIM and domestic volumes, and realizations.
P/E (x) 27.2 36.2 35.0 29.0
Progress on MMLPs and DFC projects.
P/BV (x) 3.8 3.6 3.4 3.2
EV/EBITDA (x) 18.5 22.5 21.9 17.8
Div. Yield (%) 0.9 0.9 1.0 1.2
Container Corporation (INR Million)

1Q 2Q 3Q 4QE 1Q 2QE 3QE 4QE
Net Sales 14,209 15,019 14,046 14,152 13,392 14,332 13,890 14,895 57,426 56,509
YoY Change (%) 11.9 10.9 -3.3 -6.2 -5.7 -4.6 -1.1 5.2 15.2 -1.6
Terminal & Service Charges 8,963 9,456 8,848 9,180 8,493 9,089 8,808 9,445 68,844 35,835
As a % of revenue 63.1 63.0 63.0 64.9 63.4 63.4 63.4 63.4 119.9 63.4
Employee Expenses 373 369 396 401 380 407 394 495 3,118 1,677
Other Expenses 1,994 2,034 2,001 2,596 1,901 1,840 1,662 1,663 17,421 7,065
EBITDA 2,878 3,161 2,800 1,975 2,619 2,997 3,025 3,291 10,813 11,932
Margins (%) 20.3 21.0 19.9 14.0 19.6 20.9 21.8 22.1 18.8 21.1
YoY Change (%) -3.6 1.1 -23.7 -40.1 -9.0 -5.2 8.1 66.7
Depreciation 907 876 876 988 841 870 900 929 4,027 3,540
Interest 0 0 0 0 0 0 0 0 0 0
Other Income 798 858 813 978 692 750 815 856 3,447 3,113
PBT 2,770 3,137 2,737 1,965 2,470 2,877 2,940 3,218 10,232 11,499
Tax 701 808 676 555 685 791 809 872 2,740 3,157
Rate (%) 25.3 25.8 24.7 28.3 27.7 27.5 27.5 27.1 26.8 27.5
Adj PAT 2,069 2,335 2,061 1,409 1,785 2,086 2,132 2,346 7,492 8,347
YoY Change (%) -21.0 21.7 -31.5 -51.9 -13.7 -10.7 3.5 66.5 -23.9 11.4
Margins (%) 14.6 15.5 14.7 10.0 13.3 14.6 15.3 15.8 13.0 14.8
E: MOSL Estimates
October 2016 280

September 2016 Results Preview | Sector: Fertilizers
Coromandel International
Bloomberg CRIN IN CMP: INR247 TP: INR298 (+21%) Buy
We expect revenue to decline 1% YoY (+71% QoQ) to INR35.3b in
2QFY17.
1,6,12 Rel Perf. (%) -6/17/47 Margins are likely to decline 130bp YoY (+320bp QoQ) to 7.5%.
EBITDA should de-grow 16% YoY to INR2.6b.
We expect adjusted PAT to decline 24% YoY to INR1,321m. Buy.
Y/E March 2015 2016 2017E 2018E
Sales 113.1 115.2 118.7 132.0
EBITDA 8.5 7.7 8.7 11.2
NP 4.0 3.4 4.1 6.2
EPS (INR) 13.9 11.8 14.1 21.3
EPS Gr. (%) 7.6 -14.9 19.7 50.6
BV/Sh. (INR) 75.6 83.2 90.2 103.1
RoE (%) 18.0 14.9 16.3 22.0
RoCE (%) 12.7 10.8 12.3 16.6
Valuations
P/E (x) 17.8 20.9 17.5 11.6
EV/EBITDA (x) 10.7 11.9 9.8 7.2 Performance of exports in non-subsidy business.
EV/Sales (x) 0.8 0.8 0.7 0.6

Net Sales 22,041 35,644 27,555 30,209 20,595 35,288 30,310 32,474 115,449 118,652
YoY Change (%) 17.2 2.8 -7.0 0.8 -6.6 -1.0 10.0 7.5 2.1 2.8
EBITDA 929 3,137 1,653 2,004 886 2,647 2,394 2,728 7,722 8,662
Margins (%) 4.2 8.8 6.0 6.6 4.3 7.5 7.9 8.4 6.7 7.3
Depreciation 261 282 247 275 244 275 270 265 1,064 1,064
Interest 599 497 542 567 651 550 480 450 2,205 2,138
Other Income 156 245 142 116 125 160 170 190 658 688
PBT before EO expense 225 2,603 1,006 1,278 117 1,982 1,814 2,203 5,112 6,149
Extra-Ord expense 0 0 -250 0 0 0 0 0 -250 0
PBT 225 2,603 1,256 1,278 117 1,982 1,814 2,203 5,362 6,149
Tax 72 868 453 351 38 661 599 705 1,744 2,029
Rate (%) 32.0 33.4 36.0 27.5 32.1 33.4 33.0 32.0 32.5 33.0
Reported PAT 153 1,735 804 927 79 1,321 1,216 1,498 3,618 4,120
Adj PAT 153 1,735 644 927 79 1,321 1,216 1,498 3,449 4,120
YoY Change (%) -53.0 -3.6 -47.9 35.0 -48.0 -23.9 88.9 61.6 -14.6 19.4
Margins (%) 0.7 4.9 2.3 3.1 0.4 3.7 4.0 4.6 3.0 3.5
E: MOSL Estimates

October 2016 281
September 2016 Results Preview | Sector: Aerospace
Dynamatic Tech
Bloomberg DYTC IN CMP: INR3,138 TP: INR3,260 (+4%) Buy
We expect revenue to grow 5% YoY (-1.5% QoQ) to INR3.9b in
2QFY17, led by weak performance in the Hydraulics and
52-Week Range (INR) 3,240/1,482
Automotive divisions, which are expected to post flat growth YoY.
1,6,12 Rel Perf. (%) 7/72/16
Margins are likely to expand 240bp YoY to 11.5%. EBITDA is
Financial Snapshot (INR Billion) expected to grow 32.2% YoY to INR447m.
Y/E March 2015 2016 2017E 2018E
We estimate adjusted PAT at INR101m, as against profit of INR3m
Sales 16.3 14.9 16.3 17.9
in 2QFY16. Buy.
EBITDA 1.5 1.4 1.9 2.3
NP 0.2 0.1 0.5 0.8
EPS (INR) 27.9 19.4 83.5 125.4
EPS Gr. (%) 12.3 -30.6 330.9 50.2
BV/Sh(INR) 412.6 406.2 505.5 630.9
RoE (%) 8.5 4.7 18.3 22.1
RoCE (%) 8.3 6.8 10.9 12.9
Valuations
P/BV (x) 7.6 7.7 6.2 5.0 Execution outlook and ramp-up for the Aerospace division.
EV/EBITDA (x) 13.3 14.9 11.0 9.0
EV/Sales (x) 1.2 1.4 1.3 1.2

Net Sales 3,728 3,704 3,628 3,878 3,946 3,889 3,954 4,305 14,938 16,316
YoY Change (%) -12.3 -14.2 -5.4 -0.2 5.9 5 9 11 -8.3 9.2
EBITDA 245 338 300 528 479 447 415 573 1,411 1,909
Margins (%) 6.6 9.1 8.3 13.6 12.1 11.5 10.5 13.3 9.4 11.7
Depreciation 129 130 127 138 128 140 126 132 524 527
Interest 193 182 175 177 181 165 160 155 727 657
Other Income 11 6 4 28 26 9 12 16 50 65
PBT before EO expense -66 32 2 241 197 151 141 302 209 790
PBT -66 32 2 241 197 151 141 302 209 790
Tax 31 29 -22 49 68 50 47 100 86 261
Rate (%) -46.1 90.1 -973.8 20.3 34.7 33 33 33 41.2 33
Reported PAT -97 3 25 192 128 101 95 202 123 529
Adj PAT -97 3 25 192 128 101 95 202 123 529
YoY Change (%) NM -90.4 339.1 281.4 NM 3,113.2 284.8 5.2 -30.5 330.6
Margins (%) -2.6 0.1 0.7 5 3.3 2.6 2.4 4.7 0.8 3.2
E: MOSL Estimates

October 2016 282
Gateway Distriparks
Bloomberg GDPL IN CMP: INR255 TP: INR354 (+39%) Buy
We expect GDPL to report net sales of INR2.7b (+7% YoY, flat QoQ),
led by increased volumes in Rail and CFS businesses.
1,6,12 Rel Perf. (%) -5/-20/-36 We estimate EBITDA at INR594m (-7% YoY, +7% QoQ) and EBITDA
margin at 21.4%. We estimate adjusted PAT at INR274m (-8% YoY,
Financial Snapshot (INR b) +22% QoQ).
Y/E March 2015 2016 2017E 2018E
Sales 11.1 10.5 11.3 12.4 The stock trades at 11.8x/9x FY17E/FY18E adjusted EV/EBITDA.
EBITDA 3.3 2.5 2.5 3.2 GDPL remains a direct play on the upcoming dedicated freight
NP 1.9 1.2 1.3 1.9 corridor project, which will multiply its asset turnover and
EPS (INR) 17.3 11.4 11.5 17.9 significantly improve profitability. Buy.
Adj. EPS (INR) 12.6 8.7 8.8 12.9
Adj. EPS Gr.h (%) 25.0 -31.3 1.5 46.5
RoE (%) 16.0 10.1 9.9 14.4
RoCE (%) 12.9 7.6 8.5 12.2
Payout (%) 47.9 81.7 55.9 44.6
P/E (x) 14.8 22.4 22.2 14.2 Volume growth, realization and per TEU profitability.
Adj. P/E (x) 20.2 29.4 29.0 19.8
EV/EBITDA (x) 8.8 11.8 11.8 9.0
Adj. EV/EBITDA (x) 11.8 16.6 16.6 12.8
Div. Yield (%) 2.7 2.7 2.1 2.6

(Consolidated) 1Q 2Q 3Q 4Q 1Q* 2QE 3QE 4QE
Net Sales 2,628 2,595 2,671 2,575 2,782 2,770 2,812 2,944 10,470 11,308
YoY Change (%) -6.1 -11.3 -2.4 -2.9 5.9 6.7 5.3 14.3 -5.8 8.0
EBITDA 690 641 619 569 555 594 658 705 2,518 2,511
Margins (%) 26.3 24.7 23.2 22.1 19.9 21.4 23.4 23.9 24.1 22.2
YoY Change (%) -8.4 -25.2 -28.4 -28.3 -19.6 -7.4 6.3 23.9 -22.9 -0.3
Depreciation 201 202 202 200 195 205 206 209 805 815
Interest 51 50 46 38 51 46 51 48 184 197
Other Income 57 48 47 13 40 59 60 66 165 224
PBT 495 437 418 345 349 401 460 514 1,695 1,724
Tax 296 141 126 108 124 127 148 165 671 563
Rate (%) 59.8 32.2 30.1 31.4 35.6 31.7 32.1 32.1 39.6 32.7
PAT before minority / profit of assoc. 199 297 292 237 225 274 312 349 1,024 1,160
YoY Change (%) -48.0 -38.0 -44.5 -46.0 13.0 -7.6 7.1 47.6 -43.9 13.3
Margins (%) 7.6 11.4 10.9 9.2 8.1 9.9 11.1 11.9 9.8 10.3
E: MOSL Estimates, *1QFY17 is addition of Rail and CFS details as provided and not actual consolidated number

October 2016 283
September 2016 Results Preview | Sector: Textiles
Indo Count Industries

Bloomberg ICNT IN CMP: INR732 TP: INR1,321 (+80%) Buy
We expect revenue to grow 10% YoY (30% QoQ) to INR6.4b in
2QFY17.
1,6,12 Rel Perf. (%) -8/-38/-28 We estimate 80bp margin expansion to 22.2%, and 14% YoY EBITDA
growth to INR1.4b.
PAT should grow 26% YoY to INR832m, from INR659m in 2QFY16.
Y/E March 2015 2016 2017E 2018E
Buy.
Sales 17.8 22.1 24.6 29.6
EBITDA 3.1 4.7 5.4 6.7
NP 1.6 2.7 3.3 4.2
EPS (INR) 41.5 67.6 82.5 105.8
EPS Gr. (%) 33.9 62.9 22.1 28.2
BV/Sh. (INR) 107.4 166.1 252.1 362.5
RoE (%) 45.8 49.4 39.5 34.4
RoCE (%) 27.3 33.6 31.3 30.8 Key things to watch for
Valuations Any addition of clients and geographies, and ramp-up there.
P/E (x) 17.6 10.8 8.9 6.9 Progress on brands business.
P/BV (x) 6.8 4.4 2.9 2.0 Foreign exchange gains and losses.
EV/EBITDA (x) 10.3 6.8 5.7 4.5
EV/Sales (x) 1.8 1.4 1.3 1.0
Standalone - Quarterly Earning Model (INR Million)

Net Sales 4,579 5,821 5,026 5,250 4,926 6,403 6,031 6,300 22,128 24,629
YoY Change (%) 44.9 21.6 17.3 15.0 7.6 10.0 20.0 20.0 24.2 11.3
EBITDA 1,012 1,245 1,084 1,163 1,103 1,422 1,363 1,455 4,735 5,443
Margins (%) 22.1 21.4 21.6 22.2 22.4 22.2 22.6 23.1 21.4 22.1
Depreciation 67 44 45 51 80 56 59 60 189 251
Interest 146 155 93 119 98 89 90 84 549 351
Other Income 0 0 0 0 0 4 6 6 0 21
PBT 798 1,046 946 993 924 1,281 1,220 1,317 3,998 4,862
Tax 277 387 311 333 321 448 415 448 1,329 1,604
Rate (%) 34.6 37.0 32.9 33.5 34.8 35.0 34.0 34.0 33.3 33.0
Reported PAT 522 659 634 660 603 832 805 869 2,668 3,258
Adj PAT 522 659 634 660 603 832 805 869 2,668 3,258
YoY Change (%) 109.4 55.1 45.4 44.5 15.6 26.2 27.0 31.8 62.9 22.1
Margins (%) 11.4 11.3 12.6 12.6 12.2 13.0 13.4 13.8 12.1 13.2
E: MOSL Estimates

October 2016 284

September 2016 Results Preview | Sector: Others
Info Edge
Bloomberg INFOE IN CMP: INR862 TP: INR1,000 (+16%) Buy
Equity Shares (m) 121.7 We expect standalone revenue to grow 18.1% YoY to INR2.1b in
M. Cap. (INR b)/(USD b) 105 / 2 2QFY17.
Recruitment segment (~75% of business) is estimated to grow 16%
1,6,12 Rel Perf. (%) 5/1/0
YoY to INR1.5b. We estimate revenue of real estate portal
99acres.com at INR295m (up 6.5% YoY) and that of matrimonial
portal Jeevansathi.com at INR155m (up 42% YoY).
Y/E March 2015 2016 2017E 2018E
Sales 6.1 7.1 8.3 9.8 Our EBITDA margin estimate for the quarter stands at 25.9%, as
EBITDA 1.8 1.4 2.3 2.9 against 24.2% in the previous quarter and 19.2% in 2QFY16. We
PAT 1.9 1.3 2.1 2.7 expect this sequential improvement to be led by rebound in
EPS (INR) 13.7 12.0 17.4 21.9 revenue growth, as costs largely remain unchanged.
EPS Gr. (%) 16.4 -12.1 44.4 26.2
Consequently, we expect adjusted PAT of INR528m (up 19% QoQ,
BV/Sh. (INR) 138.3 143.0 153.7 169.0
RoE (%) 13.6 8.6 11.7 13.6 and 56% YoY). Buy.
RoCE (%) 13.6 7.2 11.3 13.6
Payout (%) 26.4 39.9 38.0 30.1
Valuation
P/E (x) 56.7 64.5 44.7 35.4
EV/Sales (x) 13.9 10.9 9.1 7.4 Impact of consolidation in real estate segment, and outlook on ad
spends given the current competitive dynamics.
Traction in recruitment business from segments other than IT.
Commentary around monetization of Zomato.com.

Y/E March FY16 FY17 FY16 E FY17E
1Q* 2Q 3Q 4Q 1Q* 2QE 3QE 4Q
Revenues 1,747 1,741 1,734 2,042 1,976 2,056 2,082 2,313 7,235 8,427
YoY (%) 20.6 18.0 19.0 18.0 13.1 18.1 20.1 13.3 18.3 16.5
Salary costs 792 753 804 890 963 986 1,008 1,031 3,205 3,987
Ad and 461 375 271 212 258 259 262 291 1,318 1,071
Other Expenses 261 280 274 318 277 279 282 288 1,131 1,126
Operating Profit 234 334 385 623 478 532 530 704 1,580 2,243
Margins (%) 13.4 19.2 22.2 30.5 24.2 25.9 25.4 30.4 21.8 26.6
Other Income 193 195 216 203 243 243 223 226 827 935
Depreciation 45 50 54 60 60 61 63 64 210 249
PBT bef. EO 382 478 546 767 661 714 690 865 2,197 2,930
Provision for Tax 95 138 169 195 217 186 179 225 621 807
ETR (%) 24.9 29.0 31.0 25.4 32.9 26.0 26.0 26.0 28.3 27.6
PAT bef. Minority 286 339 377 572 444 528 510 640 1,576 2,122
EOI 0 0 -160 0 0 0 0 0 -160 0
Adjusted PAT 286 339 218 572 444 528 510 640 1,417 2,122
YoY (%) -29.3 0.0 -44.8 -30.9 54.9 55.6 134.6 11.9 -28.0 49.8
EPS (INR) 2.4 2.8 1.8 4.7 3.6 4.3 4.1 5.2 11.7 17.2
E: MOSL Estimates
Ashish Chopra (Ashish.Chopra@MotilalOswal.com)/ Sagar Lele (Sagar.Lele@MotilalOswal.com)

October 2016 285
Inox Leisure
Bloomberg INOL IN CMP: INR270 TP: INR256 (-5%) Neutral
We expect revenue to grow 8% YoY (-1.3% QoQ) to INR3.3b in
2QFY17 on the back of decent box office collections.
1,6,12 Rel Perf. (%) -4/24/7 Margins are likely to remain flattish at 18.3%. We expect EBITDA to
increase 7.8% YoY to INR608m.
We expect profit of INR262m, as against INR205m in 2QFY16.
Y/E March 2015 2016 2017E 2018E
Neutral.
Sales 10.2 11.6 13.3 15.7
EBITDA 1.2 1.9 2.1 2.7
NP 0.2 0.8 0.7 1.0
EPS (INR) 2.2 8.4 8.1 11.2
EPS Gr. (%) -42.8 284.0 -4.1 39.1
BV/Sh. (INR) 53.2 61.4 69.2 79.9
RoE (%) 4.6 14.9 11.8 14.4
RoCE (%) 10.0 13.2 10.6 12.5
Valuations
P/E (x) 122.9 32.0 33.4 24.0
Footfall growth during the quarter due to a high base and stronger
P/BV (x) 5.1 4.4 3.9 3.4
content.
EV/EBITDA (x) 23.0 14.8 13.3 10.7
Number of screen additions.

Y/E Mar FY16 FY17 FY16 FY17E
Net Sales 3,025 3,078 2,973 2,513 3,369 3,324 3,508 3,008 11,589 13,274
YoY Change (%) 30.2 15.7 -1.1 15.4 11.4 8.0 18.0 19.7 14.0 30.5
EBITDA 645 564 528 151 621 608 600 274 1,888 2,143
Margins (%) 21.3 18.3 17.8 6.0 18.4 18.3 17.1 9.1 16.3 16.1
Depreciation 197 197 201 207 203 220 240 255 803 952
Interest 62 62 61 59 58 64 66 62 244 255
Other Income 15 14 9 16 25 20 20 22 53 55
PBT before EO expense 400 320 275 -100 385 344 314 -21 895 991
Extra-Ord expense 0 0 -50 0 0 0 0 0 -50 0
PBT 400 320 226 -100 385 344 314 -21 845 991
Tax 148 115 70 -262 136 83 74 -5 70 248
Rate (%) 36.9 35.9 30.9 N.M 35.2 24.0 23.5 N.M 8.3 25.0
Reported PAT 253 205 156 161 250 262 240 -16 775 743
Adj PAT 253 205 190 161 250 262 240 -16 820 743
YoY Change (%) 452.0 287.9 33.1 N.M -1.3 27.8 26.2 N.M 294.8 -9.4
Margins (%) 8.4 6.7 6.4 6.4 7.4 7.9 6.8 -0.5 7.1 5.6
E: MOSL Estimates

October 2016 286

September 2016 Results Preview | Sector: Aviation
InterGlobe Aviation
Bloomberg INDIGO IN
CMP: INR945 TP: INR1,014 (+7%) Neutral
We expect INDIGO to report revenue of INR43.6b in 2QFY17
M. Cap. (INR b)/(USD b) 340 / 5
(+23.2% YoY, -4.8% QoQ) and EBITDAR of INR9.9b (+14.8% YoY, -
1,6,12 Rel Perf. (%) 9/-8/NA
34.7% QoQ).
We model yield at INR3.90 (-8.7% YoY) and RPK at 11.2b (+35%
Financial Snapshot (INR Billion) YoY). Any deviation in yield would have a meaningful impact on our
Y/E March 2015 2016 2017E 2018E estimates.
Sales 139.3 161.4 209.6 273.1
We expect net profit of INR1.1b (-1.3% YoY, -81.2% QoQ).
EBITDA 18.7 30.1 31.4 39.0
NP 13.1 19.9 21.3 26.1 We model ASK at 57.1b/70.3b in FY17/FY18 v/s 42.8b in FY16, and
EPS (INR) 36.3 55.2 59.1 72.4 RPK at 47.8b/58.9b in FY17/FY18 v/s 35.9b in FY16, driven by an
EPS Gr. (%) 175.6 52.1 7.0 22.6 increase in fleet size.
BV/Sh (INR) 11.7 50.9 60.2 71.6 We assume IndiGos fleet at 116 aircraft as of end-2QFY17 (v/s 107
RoE (%) 310.5 176.5 106.4 109.9 at FY16-end). We model Indigo fleet at 136/154 by end-FY17/FY18.
RoCE (%) 33.7 42.9 47.2 55.1
The stock trades at 16x/13x FY17E/FY18E reported EPS of
Payout (%) 99.0 93.0 84.3 84.3
INR59.1/INR72.4 and at EV of 8.8x/7.6x FY17E/FY18E adjusted
Valuations
EBITDAR. Maintain Buy.
P/E (x) 26.0 17.1 16.0 13.0
80.9 18.6 15.7 13.2
P/BV (x)
Induction of new aircraft in the fleet.
Adj.EV/EBITDAR(x) 12.9 9.2 8.8 7.6
Fuel costs and their impact on yields.
Div. Yield (%) 3.0 4.2 4.7 5.6

Net Sales 42,115 35,399 42,978 40,907 45,789 43,610 59,250 60,929 161,399 209,578
YoY Change (%) NA NA NA 7.0 NA NA NA 48.9 15.9 29.9
Fuel cost 13,477 12,421 11,659 10,236 13,674 15,369 18,474 20,137 47,793 67,654
Employee cost 3,825 4,472 4,670 4,932 4,789 5,417 5,702 6,398 17,899 22,307
Other expenses 9,072 9,809 9,989 10,689 12,046 12,840 14,041 15,165 39,560 54,091
EBITDAR 15,741 8,697 16,660 15,049 15,279 9,985 21,034 19,228 56,147 65,526
Margins (%) 37.4 24.6 38.8 36.8 33.4 22.9 35.5 31.6 34.8 31.3
Net Rentals 6,017 6,324 6,782 6,999 7,127 8,166 9,064 9,789 26,122 34,146
EBITDA 9,724 2,373 9,878 8,050 8,152 1,818 11,971 9,439 30,025 31,380
Margins (%) 23.1 6.7 23.0 19.7 17.8 4.2 20.2 15.5 18.6 15.0
Depreciation 1,200 1,283 1,307 1,242 1,148 1,195 1,289 1,324 5,031 4,956
Interest 328 382 340 269 1,163 700 690 681 1,319 3,234
Other Income 1,057 891 1,097 1,569 1,626 1,521 1,428 1,526 4,614 6,101
PBT 9,253 1,599 9,329 8,108 7,467 1,444 11,420 8,960 28,290 29,291
Tax 2,762 473 2,756 2,315 1,549 332 3,426 2,688 8,306 7,995
Rate (%) 29.9 29.5 29.5 28.6 20.7 23.0 30.0 30.0 29.4 27.3
Reported PAT 6,491 1,127 6,573 5,793 5,918 1,112 7,994 6,272 19,983 21,296
EPS 18.0 3.1 18.2 16.1 16.4 3.1 22.2 17.4 55.5 59.1
YoY Change (%) 23.7 0.3 -8.8 -1.3 21.6 8.3 53.2 6.6
E: MOSL Estimates
October 2016 287

September 2016 Results Preview | Sector: Agri
Jain Irrigation
Bloomberg JI IN CMP: INR95 TP: INR98 (+3%) Buy
We expect revenue to grow 9% YoY to INR14.3b in 2QFY17.
52-Week Range (INR) 101/47 EBITDA is likely to increase 17.4% YoY to INR1.86b. We expect
1,6,12 Rel Perf. (%) 9/46/43 margins to expand 90bp YoY to 13%.
We expect adjusted PAT at INR135m, as against loss of INR70m in
2QFY16. Buy.
Y/E March 2015 2016 2017E 2018E
Sales 61.5 62.9 72.3 83.2
EBITDA 7.8 8.2 9.9 11.7
NP 0.9 1.0 2.6 4.1
EPS (INR) 1.9 2.2 5.5 8.2
EPS Gr. (%) 28.8 17.7 151.4 48.9
BV/Sh (INR) 46.3 60.5 65.1 67.7
RoE (%) 4.0 4.0 8.5 12.5
RoCE (%) 16.1 8.2 9.2 11.2
Valuations
P/E (x) 51.1 43.5 17.3 11.6 Key things to watch for
P/BV (x) 2.1 1.6 1.5 1.4 Receivable days in MIS business.
EV/EBITDA (x) 10.8 9.5 7.8 6.2 Execution of solar pump orders and new tenders.
EV/Sales (x) 1.4 1.2 1.1 0.9
Debt reduction.

Net Sales 15,950 13,157 13,785 20,100 16,558 14,341 16,404 24,985 62,993 72,289
YoY Change (%) 2.7 3.6 6.7 -1.6 3.8 9.0 19.0 24.3 2.4 14.8
EBITDA 2,000 1,588 1,527 2,876 2,335 1,864 1,854 3,898 7,991 9,937
Margins (%) 12.5 12.1 11.1 14.3 14.1 13.0 11.3 15.6 12.7 13.7
Depreciation 672 635 673 714 687 718 700 698 2,695 2,799
Interest 1,236 1,151 1,199 1,223 1,086 1,060 1,060 1,063 4,810 4,262
Other Income 60 75 56 179 131 107 99 85 371 398
PBT before EO expense 152 -123 -289 1,118 693 193 193 2,222 857 3,273
Extra-Ord expense 0 -360 384 18 0 0 0 0 41 0
PBT 152 -483 94 1,135 693 193 193 2,222 898 3,273
Tax 15 -183 7 245 84 35 35 422 83 655
Rate (%) 9.8 37.8 6.9 21.6 12.2 18.0 18.0 19.0 NM NM
MI& Profit/Loss of Asso. Cos. -8 -6 -4 -7 24 24 25 30 -25 61
Reported PAT 144 -295 92 898 585 135 133 1,769 840 2,558
Adj PAT 144 -70 -265 884 585 135 133 1,769 1,042 2,618
YoY Change (%) -29.0 NM NM -14.1 305.5 - - 100.2 21.2 151.4
Margins (%) 0.9 -0.5 -1.9 4.4 3.5 0.9 0.8 7.1 1.7 3.6
E: MOSL Estimates

October 2016 288

Just Dial
Bloomberg JUST IN CMP: INR436 TP: INR550 (+26%) Buy
We expect revenue to grow 8% YoY (4.9% QoQ) to INR1.9b in
2QFY17.
1,6,12 Rel Perf. (%) -8/-55/-63 We expect EBITDA margin to contract 750bp YoY to 15.7% (-90bp
QoQ). Consequently, we estimate EBITDA to de-grow 27% YoY to
Financial Snapshot (INR Billion) INR290m.
Y/E March 2015 2016 2017E 2018E
PAT should decline 45.7% to INR252m from INR464m in 2QFY16.
Sales 5.9 6.9 7.6 8.8
Buy.
EBITDA 1.7 1.7 1.3 1.6
NP 1.4 1.4 1.1 1.4
EPS (INR) 19.7 20.4 16.4 19.7
EPS Growth (%) 14.6 3.7 -19.9 20.2
BV/Sh (INR) 95.5 96.7 110.7 127.5
RoE (%) 23.0 21.1 15.8 16.5
RoCE (%) 23.0 21.1 15.8 16.5
Payout (%) 12.2 0.0 14.2 14.8
Valuations
Performance of Search Plus and traction from JD Omni.
P/E (x) 22.1 21.4 26.7 22.2
Addition of paid campaigns.
P/BV (x) 4.6 4.5 3.9 3.4
Promotional campaigns.
EV/EBITDA (x) 18.2 17.7 23.1 17.4
Div Yield (%)
Employee addition.
0.6 0.0 0.6 0.8

Net Sales 1,660 1,713 1,713 1,796 1,763 1,850 1,927 2,083 6,908 7,617
YoY Change (%) 23.0 16.2 11.0 14.9 6.2 8.0 12.5 16.0 17.1 10.3
EBITDA 452 397 374 450 293 290 316 365 1,706 1,254
Margins (%) 27.2 23.2 21.8 25.1 16.6 15.7 16.4 17.5 24.7 16.5
Depreciation 67 78 81 84 90 96 100 106 311 392
Interest 0 0 0 0 0 0 0 0 0 0
Other Income 137 262 96 155 287 160 120 110 585 673
PBT 521 581 389 521 490 354 336 369 1,980 1,535
Tax 161 118 119 168 100 103 97 111 561 399
Rate (%) 31 20 31 32 20 29 29 30 28.4 26.0
Reported PAT 361 464 270 353 389 252 239 258 1,419 1,136
Adj PAT 361 464 270 353 389 252 239 258 1,419 1,136
YoY Adj PAT Change (%) 28.2 47.2 -16.0 -25.1 8.0 -45.7 -11.6 -27.0 2.8 -19.9
Margins (%) 21.7 27.1 15.8 19.7 22.1 13.6 12.4 12.4 20.5 14.9
E: MOSL Estimates

October 2016 289

Kaveri Seeds
Bloomberg KSCL IN CMP: INR380 TP: INR367 (-3%) Neutral
We expect revenue to grow 35% YoY to INR1.3b.
52-Week Range (INR) 543/300 We expect EBITDA at INR14m (loss of INR453m 2QFY16), with
1,6,12 Rel Perf. (%) 17/-12/-19 margins at 1.1%
We expect adjusted PAT to post loss of INR31m, as against loss of
INR475m in 2QFY16. Neutral.
Y/E March 2015 2016 2017E 2018E
Sales 11.6 8.9 8.1 9.6
EBITDA 3.1 1.9 1.6 2.0
NP 3.0 1.7 1.4 1.8
EPS (INR) 43.7 24.9 20.3 26.2
EPS Gr. (%) 42.5 -42.9 -18.8 29.4
BV/Sh (INR) 109.6 131.3 136.5 145.3
RoE (%) 47.4 20.7 15.1 18.6
RoCE (%) 50.2 22.2 16.4 20.2
Payout (%) 20.6 46.5 74.4 66.3
Valuations
Impact on cotton acreages due to reduced sowing.
P/E (x) 8.7 15.2 18.8 14.5
Cotton yields.
P/BV (x) 3.5 2.9 2.8 2.6
Any write-offs.
EV/EBITDA (x) 8.5 13.9 16.3 12.7
Div Yield (%) 2.0 2.7 3.4 4.0

Net Sales 5,394 934 919 438 4,940 1,261 1,241 635 7,685 8,081
YoY Change (%) -34.8 -54.1 1.3 9.7 -8.4 35.0 35.0 45.0 -33.8 5.1
Total Expenditure 3,137 1,387 790 486 3,357 1,247 1,216 674 5,800 6,505
EBITDA 2,256 -453 129 -47 1,583 14 25 -38 1,885 1,576
Margins (%) 41.8 -48.4 14.0 -10.8 32.0 1.1 2.0 -6.0 24.5 19.5
Depreciation 52 59 81 75 78 80 82 84 267 324
Interest 0 1 1 1 0 0 0 0 2 2
Other Income 21 54 42 57 54 52 48 50 174 208
PBT before EO expense 2,225 -458 89 -66 1,559 -14 -10 -73 1,789 1,458
PBT 2,225 -458 89 -66 1,559 -14 -10 -73 1,789 1,458
Tax 34 17 -1 12 15 17 20 3 62 58
Rate (%) 1.5 -3.7 -0.7 -17.7 1.0 -122.0 -208.1 -4.1 3.5 4.0
Reported PAT 2,191 -475 92 -75 1,544 -31 -30 -76 1,728 1,399
Adj PAT 2,191 -475 92 -75 1,544 -31 -30 -76 1,728 1,399
YoY Change (%) -5.1 NM -74.2 NM -29.6 NM NM NM -42.6 -19.0
Margins (%) 40.6 -50.9 10.0 -17.0 31.3 -2.5 -2.4 -11.9 22.5 17.3
E: MOSL Estimates

October 2016 290

September 2016 Results Preview | Sector: Others
MCX
Bloomberg MCX IN CMP: INR1,368 TP: INR1,400 (+2%) Buy
Total volumes at MCX traded during the quarter stood at INR15.2t,
down 5.1% QoQ and up 2.4% YoY.
This drives our revenue estimate for the quarter to INR562m,
1,6,12 Rel Perf. (%) 38/52/41
down 3.6% QoQ and flat YoY.
Our EBIT margin estimate for the quarter is 17.8%, down 370bp
Y/E MARCH 2015 2016 2017E 2018E
from 21.5% in 1QFY17, mainly because of the sequential revenue
Sales
decline.
2.0 2.1 3.2 4.7
EBITDA 0.7 0.6 1.5 2.8
We do not expect much change in costs, including in
PAT 1.3 0.4 1.9 3.0
advertisement expenses, which has pared down after FY16.
EPS (INR) 24.6 20.5 35.2 56.1 Our PAT estimate is INR311m, down 5.1% QoQ and up 0.4% YoY.
EPS Gr. (%) -18.1 -16.6 71.6 59.4 We are modeling ETR of 25% for 2QFY17. Buy.
BV/Sh. (INR) 235.8 235.6 253.5 282.0
RoE (%) 10.7 3.7 14.4 20.9
RoCE (%) 10.4 8.9 14.0 20.5
Payout (%) 6.9 191.7 68.7 64.7
Valuation
P/BV (x) 3.5 3.5 3.2 2.9 Any move to enter commodities space by potential competitors
EV/EBITDA (x) 38.6 46.1 18.7 9.2 like NSE.
Div yld (%) 0.2 2.1 2.9 4.4 Cost base and impact on margins.
Pace of reforms under SEBI.

Sales 518 563 498 556 582 562 721 731 2,135 2,596
Q-o-Q Gr. (%) -1.8 8.8 -11.6 11.6 16.9 -3.6 28.4 1.4 4.8 21.6
Staff Costs 90 109 100 106 143 143 145 147 406 579
Other expenses 282 318 264 313 265 269 292 300 986 1,054
Depreciation 63 65 64 54 49 49 49 50 246 198
EBIT 83 71 70 82 125 100 234 234 498 765
Margins (%) 16.1 12.7 14.0 14.8 21.5 17.8 32.5 32.0 23.3 29.5
Other Income 300 338 276 278 356 315 305 320 1,191 1,296
PBT bef. Exceptional 382 409 346 360 480 415 539 554 1,689 2,061
Tax 131 99 110 72 152 104 135 138 413 529
Rate (%) 34.3 24.2 31.8 20.1 31.7 25.0 25.0 25.0 24.4 25.7
PAT 251 310 236 287 328 311 405 415 1,277 1,531
Q-o-Q Gr. (%) -49.0 23.5 -24.0 21.8 14.1 -5.1 29.9 2.6 2.1 266.2
EPS (INR) 4.9 6.1 3.5 5.3 6.5 6.1 7.9 8.1 25.0 30.0
Total volumes (INR t) 13.6 14.8 13.0 14.9 16.0 15.2 16.6 17.5 56.3 65.2
Q-o-Q Gr. (%) -3.5 9.2 -12.0 14.3 7.3 -5.1 9.1 5.7
Y-o-Y Gr. (%) 15.4 18.5 -3.3 5.9 17.7 2.4 27.0 17.5 8.7 15.8
E: MOSL Estimates
Ashish Chopra (Ashish.Chopra@MotilalOswal.com)/ Sagar Lele (Sagar.Lele@MotilalOswal.com)
October 2016 291

Monsanto India
Bloomberg MCHM IN CMP: INR2,392 TP: INR2,706 (13%) Buy
We expect revenue to grow 50% YoY to INR567m (on a very low
base) in 2QFY17.
52-Week Range (INR) 2,745/1,520
1,6,12 Rel Perf. (%) 5/33/-17 EBITDA is estimated at negative INR57m, as against negative
INR256m in 2QFY16.
We expect PAT loss at INR39m, as against loss of INR264m in
Y/E March 2015 2016 2017E 2018E
2QFY16.
Sales 5.6 5.4 6.1 7.5
EBITDA 1.2 1.1 1.3 1.7
NP 1.1 1.0 1.2 1.6
EPS (INR) 61.6 60.4 67.2 90.2
EPS Gr. (%) -17.6 -1.8 11.1 34.3
BV/Sh (INR) 216.9 239.4 234.5 252.6
RoE (%) 29.6 26.5 28.3 37.0
RoCE (%) 29.7 26.7 28.3 37.0
Trends in shift of crop to corn due to increasing corn prices.
Payout (%) 70.3 96.9 107.4 79.9
Age profile of corn seeds sold.
Valuations
Realizations in glyphosate.
P/E (x) 38.8 39.6 35.6 26.5
P/BV (x) 11.0 10.0 10.2 9.5
EV/EBITDA (x) 35.5 38.2 31.3 23.3
Div Yield (%) 1.5 2.1 2.5 2.5

Net Sales 2,633 378 1,537 869 2,403 567 1,998 1,068 5,416 6,096
YoY Change (%) -0.6 -58.2 14.8 28.8 -8.7 50.0 30.0 23.0 -2.7 12.6
Total Expenditure 1,921 634 1,071 710 1,801 623 1,434 884 4,336 4,816
EBITDA 712 -256 466 158 603 -57 563 184 1,080 1,280
Margins (%) 27.0 -67.7 30.3 18.2 25.1 -10.0 28.2 17.2 19.9 21.0
Depreciation 21 22 29 22 21 26 28 30 93 102
Interest 3 1 1 2 3 0 0 0 7 0
Other Income 27 22 28 64 24 38 45 57 141 170
PBT before EO expense 716 -257 464 198 602 -45 580 211 1,121 1,348
Extra-Ord expense 0 0 56 -27 0 0 0 0 29 0
PBT 716 -257 408 225 602 -45 580 211 1,092 1,348
Tax 88 6 1 -16 37 -6 75 27 79 189
Rate (%) 12.3 -2.5 0.2 -7.0 6.1 13.0 13.0 13.0 7.2 14.0
Reported PAT 628 -264 407 241 566 -39 505 184 1,013 1,159
Adj PAT 628 -264 463 241 566 -39 505 184 1,039 1,159
YoY Change (%) -11.6 NM -4.3 NM -9.9 NM 9.1 -23.7 -2.2 11.5
Margins (%) 23.8 -69.8 30.1 27.7 23.5 -6.9 25.3 17.2 19.2 19.0
E: MOSL Estimates

October 2016 292
PI Industries
Bloomberg PI IN CMP: INR839 TP: INR865 (+3%) Buy
We expect revenue to grow 20% YoY (-22% QoQ) to INR5.4b in
M. Cap. (INR b)/(USD b) 115 / 2
2QFY17.
1,6,12 Rel Perf. (%) 3/36/25 We estimate 190bp margin expansion to 20.9%, and expect EBITDA
to grow 32% YoY to INR1.1b.
We estimate adjusted PAT at INR742m, as against INR550m in
Y/E March 2015 2016 2017E 2018E
2QFY16. Buy.
Sales 19.4 21.0 25.2 30.2
EBITDA 3.7 4.3 5.6 6.9
NP 2.5 3.0 3.9 4.9
EPS (INR) 18.0 22.1 28.4 36.1
EPS Gr. (%) 30.3 22.8 28.5 27.1
BV/Sh. (INR) 65.6 85.8 108.7 138.1
RoE (%) 30.9 29.2 29.2 29.3
RoCE (%) 27.6 26.8 27.6 28.8
Valuations
P/E (x) 46.6 37.9 29.5 23.2
CSM growth and order book.
P/BV (x) 12.8 9.8 7.7 6.1
Agrochemical business updates for FY17.
EV/EBITDA (x) 30.0 25.7 19.8 15.6
EV/Sales (x) 5.8 5.3 4.4 3.6
Standalone - Quarterly Earning Model (INR Million)

Net Sales 5,921 4,461 5,110 5,848 6,834 5,353 6,132 6,901 21,340 25,219
YoY Change (%) 25.7 4.6 1.2 8.9 15.4 20.0 20.0 18.0 10.0 18.2
EBITDA 1,344 848 1,048 1,073 1,656 1,120 1,381 1,394 4,313 5,550
Margins (%) 22.7 19.0 20.5 18.3 24.2 20.9 22.5 20.2 20.2 22.0
Depreciation 115 117 137 170 178 170 185 205 538 738
Interest 27 15 27 26 16 20 18 18 95 72
Other Income 86 45 51 70 113 60 62 60 251 295
PBT before EO expense 1,288 760 935 947 1,575 990 1,240 1,231 3,931 5,035
Extra-Ord expense 0 -44 -29 -20 0 0 0 0 -93 0
PBT 1,288 805 964 967 1,575 990 1,240 1,231 4,023 5,035
Tax 429 223 239 14 306 247 310 296 904 1,159
Rate (%) 33.3 27.7 24.7 1.4 19.4 25.0 25.0 24.0 22.5 23.0
Reported PAT 859 582 725 953 1,269 742 930 936 3,119 3,876
Adj PAT 859 550 704 934 1,269 742 930 936 3,047 3,876
YoY Change (%) 24.4 20.8 19.1 64.0 47.7 34.9 32.1 0.2 32.2 27.2
Margins (%) 14.5 12.3 13.8 16.0 18.6 13.9 15.2 13.6 14.3 15.4
E: MOSL Estimates

October 2016 293
September 2016 Results Preview | Sector: Diversified
SRF
Bloomberg SRF IN
CMP: INR1,907 TP: INR2,061 (+8%) Buy
We expect SRFs revenue to grow 2% YoY (-2% QoQ) to INR11.9b.
M. Cap. (INR b)/(USD b) 110 / 2
Its technical textile and packaging segments are crude-driven and
52-Week Range (INR) 1,925/1,022
are expected to see a decline in realizations.
1,6,12 Rel Perf. (%) 13/37/61
We expect EBITDA margin at 22.8% (+150bp YoY, -50bp QoQ) and
Financial Snapshot (INR Billion) EBITDA at INR2.7b. We believe margins will be largely driven by the
Y/E March 2015 2016 2017E 2018E packaging segment.
Sales 45.4 46.0 48.7 56.7
We expect adjusted PAT to grow 18% YoY (-8% QoQ) to INR1.27b.
EBITDA 7.2 9.6 11.3 13.2
Buy.
NP 3.0 4.2 5.3 6.6
EPS (INR) 52.7 73.7 92.6 114.5
EPS Gr. (%) 86.4 39.7 25.8 23.6
BV/Sh. (INR) 392.9 456.8 533.5 628.6
RoE (%) 13.9 17.0 18.4 19.4
RoCE (%) 15.6 19.4 21.5 23.9
Valuations
P/E (x) 36.2 25.9 20.6 16.7
Growth in chemicals segment (particularly specialty chemicals).
P/BV (x) 4.9 4.2 3.6 3.0
Client additions and capex plans in specialty chemicals.
EV/EBITDA (x) 16.9 12.4 10.5 8.9
EV/Sales (x)
Margins in technical textile and packaging segment.
2.7 2.6 2.4 2.1

Net Sales 12,214 11,646 10,974 11,150 12,192 11,937 11,775 12,811 45,984 48,713
YoY Change (%) 5.7 -2 -1 3 0 2 7 15 1.3 5.9
Total Expenditure 9,547 9,167 8,637 8,918 9,352 9,216 9,078 9,801 36,267.8 37,460.3
EBITDA 2,667 2,480 2,337 2,232 2,841 2,722 2,696 3,011 9,716 11,253
Margins (%) 21.8 21.3 21.3 20.0 23.3 22.8 22.9 23.5 21.1 23.1
Depreciation 725 732 713 725 734 760 810 836 2,894 3,140
Interest 344 327 305 315 282 289 295 284 1,291 1,135
Other Income 45 39 92 106 55 65 65 75 283 259
Extra-Ord expense -8 104 65 -57 -63 0 0 0 105 0
PBT 1,652 1,355 1,346 1,356 1,943 1,738 1,656 1,966 5,709 7,238
Tax 522 353 339 268 501 460 447 531 1,482 1,935
Rate (%) 31.6 26.0 25.2 19.8 25.8 26.5 27.0 27.0 26.0 26.7
Reported PAT 1,129 1,003 1,007 1,088 1,442 1,277 1,209 1,435 4,227 5,303
Adj PAT 1,124 1,080 1,056 1,042 1,395 1,277 1,209 1,435 4,304 5,303
YoY Change (%) 21.3 31 37 80 24 18 15 38 42.1 23.2
Margins (%) 9.2 9.3 9.6 9.3 11.4 10.7 10.3 11.2 9.4 10.9
E: MOSL Estimates

October 2016 294

Tata Elxsi
Bloomberg TELX IN CMP: INR1,403 TP: INR1,965 (+40%) Buy
We expect revenue to grow 22.5% YoY (9.7% QoQ) to INR3.2b in
2QFY17, driven by the automotive and broadcast divisions.
52-Week Range (INR) 2,396/1,372
1,6,12 Rel Perf. (%) -10/-38/-33 Margins are likely to expand 50bp to 23.7%. EBITDA is expected to
grow 25% YoY to INR765m.
We estimate PAT at INR490m, as against INR381m in 2QFY16. Buy.
Y/E March 2015 2016 2017E 2018E
Sales 8.5 10.8 13.2 16.4
EBITDA 1.8 2.5 3.2 4.0
PAT 1.0 1.5 2.0 2.6
EPS (INR) 33.0 49.7 64.8 81.9
EPS Gr. (%) 42.3 50.5 30.4 26.3
BV/Sh. (INR) 91.0 123.9 162.3 208.2
RoE (%) 39.6 46.3 45.3 44.2
RoCE (%) 39.6 46.3 45.3 44.2
Impact of Euro depreciation.
Payout (%) 39.9 33.8 40.7 43.9
Brexit impact on the companys operations and clients.
Valuations
P/E (x) 42.5 28.2 21.6 17.1
P/BV (x) 15.4 11.3 8.6 6.7
EV/EBITDA (x) 24.0 16.9 12.8 9.8
Div. Yield (%) 0.8 1.0 1.6 2.1

Net Sales 2,435 2,637 2,741 2,940 2,943 3,230 3,399 3,674 10,752 13,245
YoY Change (%) 27.7 28.1 23.7 27.1 20.9 22.5 24.0 25.0 26.6 23.2
EBITDA 560 613 663 672 691 765 849 858 2,508 3,179
Margins (%) 23.0 23.2 24.2 22.8 23.5 23.7 25.0 23.4 23.3 24.0
Depreciation 90 57 57 59 67 60 62 61 263 243
Interest 0 0 0 0 0 0 0 0 0 0
Other Income 76 27 10 6 11 37 37 40 119 123
PBT 546 583 616 618 634 742 824 837 2,363 3,058
Tax 189 202 217 208 215 252 280 285 815 1,040
Rate (%) 34.6 34.7 35.2 33.6 33.8 34.0 34.0 34.0 34.5 34.0
Reported PAT 357 381 399 411 419 490 544 553 1,548 2,018
Adj PAT 357 381 399 411 419 490 544 553 1,548 2,018
YoY Change (%) 71.8 61.2 43.8 37.7 17.4 28.6 36.2 34.5 50.5 30.4
Margins (%) 14.7 14.5 14.6 14.0 14.2 15.2 16.0 15.0 14.4 15.2
E: MOSL Estimates

October 2016 295
September 2016 Results Preview | Sector: Consumer
TTK Prestige
Bloomberg TTKPT IN CMP: INR5,318 TP: INR4,781 (-10%) Neutral
We expect revenue to grow 16% YoY to INR4.9b in 2QFY17.
52-Week Range (INR) 5,540/3,584 We expect EBITDA margin to expand 150bp YoY to 14%.
1,6,12 Rel Perf. (%) 11/10/34 Consequently, we expect EBITDA to grow 30% YoY to INR684m.
We expect adjusted PAT to grow 27% YoY to INR433m. Neutral.
Y/E March 2015 2016 2017E 2018E
Sales 13.9 15.3 17.9 20.2
EBITDA 1.5 1.8 2.4 3.0
NP 0.9 1.2 1.5 1.9
EPS (Rs) 77.8 100.7 129.3 159.4
EPS Gr. (%) -15.0 29.6 28.3 23.3
Sales 554.2 620.3 697.9 798.8
RoE (%) 14.7 17.2 19.6 21.3
RoCE (%) 14.9 17.3 19.0 20.3
Performance of appliances division.
Valuations
Outlook on exports, and recent acquisition of Horwood
P/E (x) 68.4 52.8 41.1 33.4
Homeware.
P/BV (x) 9.6 8.6 7.6 6.7
EV/EBITDA (x) 41.3 33.8 25.9 21.0
EV/Sales (x) 4.4 4.0 3.5 3.1

Net Sales 3,404 4,210 4,478 3,077 3,790 4,884 5,374 3,816 15,170 17,858
YoY Change (%) 1.2 10.2 16.7 7.5 11.3 16.0 20.0 24.0 9.3 17.7
EBITDA 378 526 581 338 472 684 779 477 1,823 2,429
Margins (%) 11.1 12.5 13.0 11.0 12.4 14.0 14.5 12.5 12.0 13.6
Depreciation 47 49 52 62 56 68 78 78 209 279
Interest 6 7 5 2 25 15 18 20 20 79
Other Income 28 22 20 30 18 25 25 34 100 101
PBT 317 492 544 303 327 626 708 413 1,656 2,089
Tax 97 152 172 87 109 193 224 118 508 639
Rate (%) 30.6 30.8 31.7 28.6 33.4 30.8 31.7 28.6 30.7 30.6
Reported PAT 220 340 372 216 217 433 484 295 1,148 1,450
Adj PAT 246 340 372 216 272 433 484 295 1,174 1,507
YoY Change (%) -7.4 21.7 32.6 131.2 10.8 27.1 30.2 36.4 29.6 28.3
Margins (%) 7.2 8.1 8.3 7.0 7.2 8.9 9.0 7.7 7.7 8.4
E: MOSL Estimates

October 2016 296
NOTES
October 2016 298

Disclosures
This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company (ies) and/sector(s), if any, covered in the report and may be distributed by it and/or its
affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or
inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution andCoal
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October 2016

India Strategy | Get on track please !

Multi-quarter high earnings growth for MOSL universe; cyclicals making

Key sectoral trends/highlights:

Three key trends to watch out for:

Model portfolio changes underscore our bias toward growth

2QFY17 PREVIEW Return of cyclicals; multi-quarter high growth

10.9 Three key trends to watch out for

Defensives giving way to cyclicals

Three key trends emerging

Source: MOSL Source: MOSL

5.0 5.3 5.0 5.2

Exhibit 5: Sharp rebound in PAT growth for Domestic

Source: Company, MOSL Source: Company, MOSL

MOSL Universe headline performance at multi-quarter high

MOSL Universe EBITDA MOSL Universe PAT

Margin LPA: 20% Margin LPA: 11%

Exhibit 18: with sharper swing in PAT growth

Tale of two halves

Oil & Gas

Exhibit 21: Nifty Universe 1HFY17 PAT growth YoY (%)

-5 -8 -12-13-19 -29 -32 -39

Exhibit 22: Nifty Universe 2HFY17 PAT growth YoY (%)

Exhibit 24: Cyclicals grabbing larger share of incremental PAT

FY14 FY15 FY16 FY17E FY18E

Share of domestic cyclicals in MOSL Universe PAT at 30-quarter high

Domestic cyclicals 35 37 3740

Exhibit 26: 46% of MOSL Universe to report >15% PAT growth

15 24 26 20 -8 -15 -15 -11 23 42 26 22 24 9 13 11 4 18 11 9 6 0 -3 8 12 9 17 7 -7 -9 -3 -4 -10 -9 -2 6 38 51

PAT Growth Ex RMs (%)

Nifty sales/PAT growth at 3%/6%

Exhibit 30: Nifty companies 2QFY17 performance (INR b)

Interesting sectoral trends

All Auto companies, except BHFC, would report PAT growth.

Oil Ex. OMCs

MOSL Ex. OMCs

Significant sequential pick-up in MOSL Universe PAT

Exhibit 36: Key assumptions: Commodities bottoming out in 2QFY17

Intra-sector 2QFY17 earnings divergence (%)

2QFY17 Key sectoral highlights

2QFY17E YoY (%)

2QFY17E YoY (%)

2QFY17E YoY (%)

2QFY17E YoY (%)

Exhibit 41: Commodity prices recovering from multi-year

Several sectors showing pick-up in operating trends

FY17 to see new drivers of earnings contribution of hitherto laggard

FY16/17 estimates: Sectoral earnings change YoY

Oil (Ex OMCs)

Healthc. (Ex Sun)

FY18 Curr. PAT

Oil (Ex OMCs)

Healthc. (Ex Sun)

Exhibit 55: Companies reporting strong growth on low base of FY16

FY17 estimates: Top earnings upgrade and downgrade

FY16-18 estimates: Sensex EPS CAGR at 17%

FY17 Sensex EPS unchanged; no downgrades over the quarter

Nifty FY16-18 PAT CAGR at 19%; sales CAGR at 11%