India Daily, October 12, 2018 - Kotak Securities · Insurance: Growth momentum sustained Top movers...

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES. REFER TO THE END OF THIS MATERIAL.

Contents

Daily Alerts

Results

TCS: Good performance, stock price not supportive

Strong and in-line quarter; revenue growth moves to double digit on yoy

comparison

Demand commentary broadly positive barring a couple of rough edges

Like the story but struggle with the stock price

Sector alerts

Cement: Another month of subdued cement prices

Cement prices decline in October 2018 by Rs2/bag to Rs326/bag

Cost pressures increase due to weakening INR/US$ rate

2QFY19 spreads - weak for October 2018

Industry volumes increase by 14% yoy in August; expect next two months

to be good as well

We maintain our cautious stance on the sector on expensive valuations

Insurance: Growth momentum sustained

Most large players strong

Tata AIA and Birla Sun Life maintain stellar growth

Equity inflows rise, surprisingly!

INDIA DAILY October 12, 2018 India 11-Oct 1-day 1-mo 3-mo

Sensex 34,001 (2.2) (9.9) (7.0)

Nifty 10,235 (2.2) (10.0) (7.2)

Global/Regional indices

Dow Jones 25,053 (2.1) (3.6) 0.5

Nasdaq Composite 7,329 (1.3) (7.9) (6.3)

FTSE 7,007 (1.9) (4.2) (8.4)

Nikkei 22,498 (0.4) (0.5) 1.4

Hang Seng 25,266 (3.5) (4.1) (11.3)

KOSPI 2,140 0.5 (6.3) (6.3)

Value traded – India

Cash (NSE+BSE) 419 422 385

Derivatives (NSE) 19,943 12,629 7,905

Deri. open interest 3,800 4,237 3,750

Forex/money market

Change, basis points

11-Oct 1-day 1-mo 3-mo

Rs/US$ 73.8 (5) 186 548

10yr govt bond, % 8.2 - (13) (1)

Net investment (US$ mn)

10-Oct MTD CYTD

FIIs (146) (1,833

) (3,838)

MFs 167 1,170 14,904

Top movers

Change, %

Best performers 11-Oct 1-day 1-mo 3-mo

ARBP IN Equity 756 (3.0) (2.3) 24.8

ICICIBC IN Equity 312 (2.5) (3.5) 14.5

JSTL IN Equity 362 (4.0) (9.5) 14.1

DIVI IN Equity 1,251 (3.6) (1.6) 13.1

WPRO IN Equity 313 (0.9) (4.8) 12.0

Worst performers

JPA IN Equity 6 (4.4) (33.5) (60.2)

UT IN Equity 2 (2.0) (19.7) (41.7)

IDEA IN Equity 35 (4.2) (25.2) (36.4)

YES IN Equity 240 2.7 (23.6) (35.9)

RCAPT IN Equity 242 (4.7) (41.9) (35.4)

For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

Strong and in-line quarter; revenue growth moves to double digit on yoy comparison

TCS delivered 3.7% qoq and 11.5% yoy revenue growth in c/c. The revenue growth was led by

financial services (+3.5%), retail & CPG (+3.4%) and regional markets (+7.3%). Digital revenues

grew strong at 16.5% qoq and 59.8% yoy and now constitute 28.1% of revenues; investments

by clients in building up of digital core, which is a larger opportunity, are contributing to the

acceleration. EBIT margin increased 140 bps qoq with 30 bps increase attributed to operations

and the balance to rupee depreciation. Gross margin barely increased on yoy comparison with

the entire margin increase attributable to SG&A leverage (partly due to decline in bench cost).

Net profit of `79 bn (+22.6% yoy) missed our estimate and was impacted by lower-than-

expected other income (`950 mn Fx loss and `1.37 bn of finance cost).

Demand commentary broadly positive barring a couple of rough edges

Management commentary on demand was largely positive. TCS expects banking demand

improvement to be structural in nature. North America is improving and the growth is broad-

based in nature. Healthcare and energy & utilities demand is strong. The management

reiterated its confidence of double-digit revenue growth in FY2019E. However, there are a few

rough edges that require close monitoring—retail growth is strong but the segment itself is not

structurally out of the woods, technology and communication verticals are volatile and

automotive sub-vertical within manufacturing has slowed.

Like the story but struggle with the stock price

Undoubtedly TCS will have a remarkable FY2019 led by—(1) ramp-up from mega deals signed

in 2HFY18, (2) faster-than-expected recovery in financial services and (3) the industrialization

phase of digital. The company will grow in FY2019 by 10.7%. Currency depreciation has

helped margins rebound strongly to 26.5% from 24.8% in FY2018. However, the stock faces

the test on the following counts—(1) mega deal ramp-up and recovery across verticals were

required for a double-digit growth, something that may not recur as a combination in FY2020E.

The stock price already embeds a strong growth trajectory beyond FY2019E, (2) the ability to

retain currency gains when the rupee stabilizes and (3) rich multiples. Even as we like business

model strengths of TCS, the stock price is not attractive. We broadly retain our estimates; target

price of `1,950 remains unchanged, valuing the stock at ~20X September 2020E earnings.

Our FY2019E and FY2020E estimates are based on INR/USD rate of 70 and 72, respectively.

TCS (TCS) Technology

Good performance, stock price not supportive. TCS reported excellent 3.7% qoq

and 11.5% yoy c/c revenue growth and rupee depreciation-led margin expansion. Revival

in growth of key verticals and benefit of mega deals signed at the beginning of the year

will power 10.7% c/c revenue growth in FY2019E. Double-digit growth requires consistent

flow of mega deals and a strong macro, both of which are not certainties. Stock valuations

already imply consistent double-digit growth, an aggressive assumption, leaving nothing

on the table. REDUCE stays; EPS estimates and TP remain largely unchanged.

REDUCE

OCTOBER 12, 2018

RESULT

Coverage view: Cautious

Price (`): 1,980

Target price (`): 1,950

BSE-30: 34,001

Kawaljeet Saluja

Sathishkumar S

TCS

Stock data Forecasts/Valuations 2019E 2020E 2021E

52-week range (Rs) (high,low) EPS (Rs) 84.7 94.5 103.0

Market Cap. (Rs bn) EPS growth (%) 25.6 11.6 8.9

Shareholding pattern (%) P/E (X) 23.4 20.9 19.2

Promoters 71.9 Sales (Rs bn) 1,473.8 1,648.4 1,784.3

FIIs 16.6 Net profits (Rs bn) 320.5 354.8 386.4

MFs 2.0 EBITDA (Rs bn) 411.6 459.4 494.4

Price performance (%) 1M 3M 12M EV/EBITDA (X) 16.6 14.8 13.7

Absolute (3.2) 0.0 58.4 ROE (%) 33.8 33.7 34.8

Rel. to BSE-30 6.5 6.7 48.3 Div. Yield (%) 1.7 3.3 3.6

Company data and valuation summary

2,276-1,228

7,429.5

TCS Technology

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

Key variables for TCS stock performance

TCS’ strength of business model and global leadership in multiple facets make it a

compelling stock. However, stock investment requires closer scrutiny of three aspects—

Sustenance of growth after adjusting for large deals

FY2019E will be a strong year for TCS led by recovery in retail and banking verticals and

benefits of ramp-up of mega deals. We estimate close to 3% contribution from large deals

to FY2019 constant currency revenue growth rate of 10.7%. TCS signed five mega deals

with cumulative TCV of US$8.8 bn and can contribute US$550 mn incrementally in FY2019E.

Specifically we highlight—(1) large multi-year contract with Marks and Spencer that establishes

TCS as the principal technology partner, (2) US$2.3 bn renewal of outsourcing contract with

AC Nielsen that contains a small portion of incremental revenues, (3) US$2 bn+ contract

with Transamerica that enhances digital capabilities and simplifies servicing of 10 mn+ policies

into a single integrated platform, (4) the Scottish Widows deal that runs over 15 years and

involves end-to-end policy administration services and (5) 10-year deal with M&G Prudential

valued at US$690 mn. The partnership was extended further by an additional US$668 mn,

bringing the total number of policies administered to 5.8 mn and deal size to US$1,358 mn

The important question is whether the growth delivered in FY2019E will repeat in FY2020E.

In support of the growth argument is TCS’ capabilities to structure such deals. Full-blown

recovery in the banking vertical in FY2020E will also aid performance. Against such an

argument is that closure of these mega deals is unusual and that the timing of deal closures

in a short 2HFY18 was fortuitous and unlikely to sustain. Further in a world of constant

disruption, expecting all verticals to fire at the same time can be a stretch.

Reinvestment of currency gains

Currency is a big facilitator for margin in the near term. TCS’ EBIT margin will increase to

26.5% in FY2019, up from 24.8% in FY2018. Whether the company and the industry can

retain the currency benefits is a moot point. Past experience does not suggest so.

Valuation—stock demand high absolute revenue addition

TCS will add US$2.04 bn of absolute incremental revenue in FY2019 in constant currency

terms. To justify the current price (assuming CoE of 11%), TCS needs to add US$2.24 bn of

absolute revenues in FY2020E followed by 10% CAGR in incremental revenues for a period

of eight years. To sustain the growth will not be easy. To put the absolute revenue addition

hurdle in context, Accenture—the closest competition of TCS, has added US$1.6-2.7 bn of

revenues on organic in its best years of FY2016-18.

TCS requires a mix of strong demand across verticals and mega deals to support the current

valuations and generate 11% annual return (COE). In effect, TCS stock embeds double-digit

revenue growth, retention of margin benefit and sustenance of P/E multiple to generate

11% return, a stretch. Punchy valuations and lack of margin of safety is to a large extent the

reason for our cautious stance. However, such an analysis is fraught with one big risk—

rupee depreciation. Currency depreciation brings down the hurdle growth rate quite a bit.

Digital growth accelerates

Digital revenues grew 16.5% qoq and 59.8% yoy in c/c terms and now constitute 28.1% of

revenues. Investments by clients in building up of digital core, which is a larger opportunity,

are contributing to the acceleration. TCS broad-suite of competencies and investments helps

in capturing this large spends. Industry analysts consistently recognize TCS as a leader in

digital.

Technology TCS

4 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Key highlights from earnings call

Margin walk-through. EBIT margin increased 150 bps sequentially to 26.5% in 2QFY19

resulting from (1) 120 bps tailwind from rupee depreciation against the US dollar and

(2) 30 bps tailwind from operational efficiencies.

Revenue growth outlook. Management is confident of reaching double-digit growth in

revenues in FY2019. Strong order book and deal pipeline give good visibility in the

medium term.

Commentary on new service delivery models. (1) Agile delivery model—TCS has

repositioned the agile model as a fast and reliable way to deliver business transformation

at scale. TCS is heavily investing in its location-independent agile model and has seen

good traction from clients. The company aims to become 100% enterprise agile by 2020.

280,000 employees have been trained in agile methods. Delivery surfaces and controls

have been reworked to support agile engagement. TCS has started using an agile

maturity framework to assess its agile engagements and plans to increase the maturity of

its agile engagements. (2) Machine first delivery model—TCS’ automation-led machine

first delivery model goes beyond providing productivity benefits to clients. It changes

work processes to enable growth and transformation with customer experience and

quality at the core.

Deal wins. TCS won US$4.9 bn TCV of deals in the quarter and flat on a sequential

basis. US$1.6 bn TCV of deal wins are in the BFSI vertical while US$700 mn TCV of deal

wins are in retail vertical. North America contributed US$2.4 bn TCV of deal wins.

Client metrics. # of US$100 mn clients increased by four on sequential and seven on yoy

comparison. The company reported healthy increase in number of US$20 mn clients.

BFSI vertical outlook. Growth in the vertical is broad-based across geographies and

between banking and insurance. Management clarified that revenues under the BFSI

vertical represent revenues from BFSI services while platform revenues are reported under

regional markets & others vertical. Demand is driven by investments in cloud migration,

micro-services, cyber security and intelligent automation. Wealth management and

commercial banking practices have seen acceleration in digital investments.

Retail vertical outlook. Technology investments are driven mainly by traditional retail

companies increasing their digital investments to compete with e-commerce companies.

Management cautioned that despite healthy growth of retail revenues, headwinds

continue to exist in the vertical.

Commentary on auto sector. Softness in the auto sector is due to technology changes,

which have forced auto OEMs to invest more in connected vehicles and electric car

projects, leading to squeeze in traditional spends.

Commentary on US geography. Spends in the vertical have improved structurally due

to a milder regulatory environment resulting in spends towards digital transformation.

Reduction in corporate taxes has aided spending by companies.

Commentary on UK geography. Platform deals, large retail deals and strong growth in

BFS services segment are contributing to strong growth in UK revenues. Convergence to

global sourcing models, investments to catch up with technological changes and

leapfrogging technology investments are key drivers of growth in the geography.

Hiring. TCS added 10,227 employees on a net basis during the quarter, taking its total

headcount to 411,102. TCS is using programming contests and Hackathons for

identifying and hiring talent. TCS conducted TCS National Qualifier Test in the quarter.

This provides an alternative to hiring from campuses and provides access to a wider talent

pool and reduces lead time in the hiring process.

TCS Technology


Hedging policy. Management reported no changes to its hedging policy in light of

recent rupee depreciation. TCS’ hedging strategy takes a long-term view of currency

movements and essentially smoothens the effect of currency volatility at the net profit

level.

Capital allocation. TCS completed `160 bn buyback of equity shares during the quarter.

TCS board has recommended an interim dividend of `4/share.

Exhibit 1: TCS Interim Results 2QFY19 (consolidated, IFRS)

Source: Company, Kotak Institutional Equities estimates

Exhibit 2: TCS: Key changes to FY2019E-21E estimates


2QFY19 2QFY19E 2QFY18 1QFY19 KIE yoy qoq FY2019E FY2018 % chg.

Re/US$ rate 70.7 70.5 64.4 67.8 0.2 9.7 4.2 70.3 64.5 9.1

Revenues (US$ mn) 5,215 5,202 4,739 5,051 0.3 10.0 3.2 20,951 19,089 9.8

Revenues 368,540 366,711 305,410 342,610 0.5 20.7 7.6 1,473,839 1,231,040 19.7

Cost of revenues (212,000) (208,991) (176,110) (200,830) 1.4 20.4 5.6 (847,247) (712,880) 18.8

Gross profit 156,540 157,720 129,300 141,780 (0.7) 21.1 10.4 626,593 518,160 20.9

SG&A expenses (58,830) (60,516) (52,700) (56,000) (2.8) 11.6 5.1 (236,758) (213,140) 11.1

EBIT 97,710 97,204 76,600 85,780 0.5 27.6 13.9 389,835 305,020 27.8

Other Income 5,930 10,652 8,120 12,080 (44.3) (27.0) (50.9) 35,684 35,900 (0.6)

Profit before tax 103,640 107,856 84,720 97,860 (3.9) 22.3 5.9 425,519 340,920 24.8

Provision for tax (24,370) (26,839) (20,120) (24,240) (9.2) 21.1 0.5 (104,006) (82,120) 26.7

Net income before MI 79,270 81,017 64,600 73,620 (2.2) 22.7 7.7 321,513 258,800 24.2

Minority Interest (260) (224) (140) (220) (1,016) (540)

Net income (before EO items) 79,010 80,792 64,460 73,400 (2.2) 22.6 7.6 320,497 258,260 24.1

Extraordinary items — — — — — —

Net income 79,010 80,792 64,460 73,400 (2.2) 22.6 7.6 320,497 258,260 24.1

EPS (Rs/ share) 20.7 21.1 16.8 19.2 (2.1) 22.7 7.8 84.7 67.5 25.6

No of shares outstanding (mn) 3,752 3,829 3,829 3,829 3,784 3,829

As % of revenues

Gross profit margin 42.5 43.0 42.3 41.4 42.5 42.1

Operating margin (EBIT) 26.5 26.5 25.1 25.0 26.5 24.8

EBITDA 27.9 27.9 26.7 26.5 27.9 26.4

SG&A expenses 16.0 16.5 17.3 16.3 16.1 17.3

Tax rate (% of PBT) 23.5 24.9 23.7 24.8 24.4 24.1

% chg.

Rs mn 2018E 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E

Revenues 1,473,839 1,648,377 1,784,302 1,468,817 1,635,923 1,778,578 0.3 0.8 0.3

EBIT 389,835 436,327 470,308 389,164 434,084 469,667 0.2 0.5 0.1

Net profit 320,497 354,776 386,412 319,943 353,258 379,299 0.2 0.4 1.9

EPS (Rs/ share) 84.7 94.5 103.0 84.5 94.1 101.1 0.2 0.4 1.9

Revenues (US$ mn) 20,951 22,894 24,782 20,881 22,721 24,702 0.3 0.8 0.3

Revenue growth (%) 9.8 9.3 8.2 9.4 8.8 8.7

Re/$ rate 70.3 72.0 72.0 70.3 72.0 72.0 0.0 — —

EBIT margin 26.5 26.5 26.4 26.5 26.5 26.4

New Old Change (%)

Technology TCS


Exhibit 3: Revenue mix across geographies and verticals (Sep 2018)

Source: Company, Kotak Institutional Equities

Revenues

(US$ mn) QoQ YoY % of total QoQ YoY

Total revenues 5,215 3.2 10.0 100.0 3.7 11.5

Revenue by geography

North America 2,665 3.4 8.3 51.1 2.6 8.1

Latin America 104 8.7 0.0 2.0 7.1 6.8

UK 814 3.9 22.6 15.6 6.0 22.8

Continental Europe 730 3.2 15.0 14.0 4.1 17.4

India 292 (0.3) (2.2) 5.6 5.0 7.4

Asia Pacific 501 3.2 7.8 9.6 4.5 12.5

MEA 110 (1.4) (3.7) 2.1 0.3 (4.4)

Revenue by verticals

BFSI 1,627 3.6 5.3 31.2 3.5 6.1

Retail & CPG 866 3.2 14.9 16.6 3.4 15.6

Communication & Media 360 0.3 6.9 6.9 — 8.0

Manufacturing 375 1.8 7.1 7.2 1.6 6.9

Life sciences & healthcare 391 6.1 14.6 7.5 5.7 14.7

Energy & Utilities 240 (1.1) 20.5 4.6 — 22.2

Technology & Services 396 1.9 4.5 7.6 2.3 5.8

Regional markets and others 960 5.0 15.0 18.4 7.3 19.8

Revenue by service offerings

Digital revenues 1,465 16.0 57.0 28.1 16.5 59.8

Traditional (non-digital) revenues 3,750 (1.0) (1.5) 71.9 NA NA

Growth (%) C/C growth (%)

TCS Technology


Exhibit 4: Revenue growth across geographies and verticals in constant-currency terms


Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18

Constant currency revenue (qoq %)


North America 1.4 2.4 2.5 1.4 2.2 (1.8) 1.7 1.4 1.5 0.2 3.7 2.6

Latin America 13.3 1.8 0.3 (0.2) 12.5 (7.3) 2.8 5.7 5.0 (7.8) 2.6 7.1

UK (0.7) (0.4) 3.8 (0.1) 1.7 4.1 0.7 2.5 0.8 6.3 8.2 6.0

Continental Europe 2.3 3.6 4.6 3.7 (1.1) 7.1 5.9 5.3 2.6 4.5 5.3 4.1

India (6.7) 2.2 8.5 (7.6) 10.3 9.3 1.5 (6.8) 0.5 2.9 (1.0) 5.0

Asia Pacific 0.4 1.1 1.3 3.5 (1.8) 1.9 1.2 3.0 — 4.0 3.6 4.5

MEA (5.8) 9.5 3.3 2.2 3.8 2.1 0.7 1.0 (0.2) 0.5 (4.6) 0.3

Revenue by verticals - NEW

BFSI 2.3 1.9 (1.5) 0.4 3.7 3.5

Retail & CPG 2.0 (0.9) 6.4 0.8 3.6 3.4

Communication & Media 3.9 1.4 2.2 1.5 5.1 —

Manufacturing 3.8 1.9 2.1 0.6 2.3 1.6

Life sciences & healthcare 4.7 3.6 2.5 1.3 4.3 5.7

Energy & Utilities 7.6 7.2 8.5 6.9 5.2 —

Travel & hospitality 7.0 8.0 2.9 5.1

Technology & Services 3.7 3.4 0.1 0.7 2.4 2.3

Regional markets and others (3.6) (0.6) 0.5 5.6 5.9 7.3

Revenue by services

Digital revenues 6.6 7.6 7.6 5.9 13.9 10.2 9.1 16.5

Total growth 0.5 2.1 3.1 1.0 2.0 1.0 2.0 1.7 1.3 2.0 4.1 3.7

Constant currency revenue (yoy %)


North America 9.7 11.7 9.7 7.9 8.7 4.3 3.5 3.6 2.8 4.9 7.0 8.1

Latin America 20.4 17.5 24.3 15.8 15.1 4.8 8.0 13.6 5.4 5.0 5.2 6.8

UK 9.3 6.4 7.4 2.5 4.9 9.7 6.3 9.2 8.2 10.7 18.7 22.8

Continental Europe 9.2 10.3 12.9 14.9 11.3 15.1 16.5 18.2 22.3 19.1 18.6 17.4

India 3.4 5.6 11.6 (4.5) 13.1 20.9 13.3 14.3 4.1 (2.3) (4.7) 7.4

Asia Pacific 12.0 8.6 7.7 6.5 3.9 4.7 4.7 4.1 6.2 8.6 10.8 12.5

MEA 21.8 25.2 20.0 8.8 19.8 11.4 8.9 7.6 3.7 2.2 (3.6) (4.4)

Revenue by verticals - NEW

BFSI 5.1 4.7 0.2 2.9 4.1 6.1

Retail & CPG (3.4) (1.4) 3.0 8.4 12.7 15.6

Communication & Media 11.6 9.5 16.9 8.9 9.5 8.0

Manufacturing 10.2 9.6 9.5 8.6 6.9 6.9

Life sciences & healthcare 10.7 10.3 13.5 12.6 12.1 14.7

Energy & Utilities 20.3 22.7 29.4 33.7 30.9 22.2


Technology & Services 8.2 10.1 9.6 7.7 6.7 5.8

Regional markets and others 5.5 6.9 2.2 1.8 11.8 19.8

Revenue by services

Digital revenues 30.2 22.7 26.0 31.0 39.6 42.8 44.8 59.8

Total growth 9.9 10.4 10.1 7.0 8.6 7.5 6.3 7.1 6.2 7.2 9.3 11.5

Notes:

(1) Travel & Hospitality vertical included in Retail & CPG vertical from Jun-18. Reclassification of verticals from Jun-18

Technology TCS


Exhibit 5: TCS' yoy constant-currency revenue growth


Exhibit 6: TCS' EBIT margin (%)


11.5

0

4

8

12

16

20

Sep

-12

Dec-

12

Mar-

13

Jun-1

3

Sep

-13

Dec-

13

Mar-

14

Jun-1

4

Sep

-14

Dec-

14

Mar-

15

Jun-1

5

Sep

-15

Dec-

15

Mar-

16

Jun-1

6

Sep

-16

Dec-

16

Mar-

17

Jun-1

7

Sep

-17

Dec-

17

Mar-

18

Jun-1

8

Sep

-18

26.5

22

24

26

28

30

32

Sep

-11

Dec-

11

Mar-

12

Jun-1

2

Sep

-12

Dec-

12

Mar-

13

Jun-1

3

Sep

-13

Dec-

13

Mar-

14

Jun-1

4

Sep

-14

Dec-

14

Mar-

15

Jun-1

5

Sep

-15

Dec-

15

Mar-

16

Jun-1

6

Sep

-16

Dec-

16

Mar-

17

Jun-1

7

Sep

-17

Dec-

17

Mar-

18

Jun-1

8

Sep

-18

TCS Technology


Exhibit 7: Growth in digital revenues has accelerated in recent quarters


Exhibit 8: TCS: client metrics


13.715.5 15.9 16.1 16.8 17.9 18.9 19.7

22.123.8 25.0

28.1

29.8

22.2 25.1

32.6

43.5 48.5 45.5

57.0

0

10

20

30

40

50

60

0

5

10

15

20

25

30

Dec-

15

Mar-

16

Jun-1

6

Sep

-16

Dec-

16

Mar-

17

Jun-1

7

Sep

-17

Dec-

17

Mar-

18

Jun-1

8

Sep

-18

Digital revenues as a % of total revenues (LHS)

Growth (yoy %, RHS)

Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18

Client metrics

US$1 mn clients 847 859 880 897 905 933 941 963 978 989

US$5 mn clients 439 449 454 459 464 470 485 495 508 513

US$10 mn clients 298 295 300 310 322 328 337 350 355 365

US$20 mn clients 179 185 186 190 190 196 203 207 206 213

US$50 mn clients 77 78 80 84 85 91 94 97 97 98

US$100 mn clients 37 36 34 35 36 37 37 38 40 44

Technology TCS


Exhibit 9: TCS: Quarterly operating metrics


Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18

Revenues (US$ mn) 4,207 4,362 4,374 4,387 4,452 4,591 4,739 4,787 4,972 5,051 5,215

Revenues (Rs mn) 284,486 293,050 292,840 297,350 296,420 295,840 305,410 309,040 320,750 342,610 368,540

Exchange rate (Re/US$) 67.6 67.2 67.0 67.8 66.6 64.4 64.4 64.6 64.5 67.8 70.7

Revenue by geography (%)

North America 54.0 53.5 54.0 55.0 53.3 52.5 51.9 52.0 50.2 51.0 51.1

Latin America 2.0 2.0 2.0 2.2 2.1 2.1 2.2 2.2 2.0 1.9 2.0

UK 14.9 14.8 13.8 13.3 13.7 13.9 14.0 14.1 15.2 15.5 15.6

Continental Europe 11.2 11.5 11.8 11.1 11.8 12.5 13.4 13.5 14.2 14.0 14.0

India 5.9 6.2 5.8 6.3 6.8 7.0 6.3 6.3 6.2 5.8 5.6

Asia Pacific 9.6 9.6 10.2 9.6 9.7 9.5 9.8 9.5 9.7 9.6 9.6

MEA 2.4 2.4 2.4 2.5 2.6 2.5 2.4 2.4 2.5 2.2 2.1

Vertical split of revenues (%)

BFSI 33.3 33.6 33.9 32.9 32.5 32.6 31.6 31.1 31.1 31.2

Retail & CPG 13.5 13.0 13.0 12.3 16.0 15.9 16.7 16.6 16.6 16.6

Communication & Media 7.0 7.2 6.7 7.2 7.1 7.1 7.1 7.1 7.1 6.9

Manufacturing 6.8 7.0 6.9 6.9 7.4 7.4 7.5 7.4 7.3 7.2

Life sciences & healthcare 7.3 7.3 7.4 7.4 7.1 7.2 7.3 7.2 7.3 7.5

Energy & Utilities 3.6 3.7 3.6 3.7 4.0 4.2 4.5 4.8 4.8 4.6


Technology & Services 7.8 7.8 7.7 7.8 7.9 8.0 7.9 7.8 7.7 7.6

Regional markets and others 17.5 17.2 17.5 18.4 18.0 17.6 17.4 18.0 18.1 18.4

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Digital revenues 15.5 15.9 16.1 16.8 17.9 18.9 19.7 22.1 23.8 25.0 28.1

Client metrics

US$1 mn clients 829 847 859 880 897 905 933 941 963 978 989

US$5 mn clients 429 439 449 454 459 464 470 485 495 508 513

US$10 mn clients 298 298 295 300 310 322 328 337 350 355 365

US$20 mn clients 173 179 185 186 190 190 196 203 207 206 213

US$50 mn clients 73 77 78 80 84 85 91 94 97 97 98

US$100 mn clients 37 37 36 34 35 36 37 37 38 40 44

Revenue by service offerings (%)

IT solutions and services

- ADM 39.4 38.5 38.4 37.2 37.7

- Enterprise solutions and Consulting 17.1 17.7 17.8 17.5 17.3

- Assurance business 8.8 8.8 9.0 9.0 9.0

Engineering & Industrial services 4.7 4.8 4.8 4.9 5.0

Infrastructure services 15.2 15.5 15.7 16.8 16.2

Asset leverage solutions 3.2 3.2 2.6 3.0 2.9

BPO 11.6 11.5 11.7 11.6 11.9

Employee metrics

Total employees - incl Indian subsidiaries 353,843 362,079 371,519 378,497 387,223 385,809 389,213 390,880 394,998 400,875 411,102

Gross addition 22,576 17,792 22,665 18,362 20,093 11,202 15,868 12,534

Net addition 9,152 8,236 9,440 6,978 8,726 (1,414) 3,404 1,667 4,118 5,877 10,227

Attrition rate (%) 14.7 13.6 12.9 12.2 11.5 11.6 11.3 11.1 11.0 10.9 10.9

Attrition rate - qtrly annualized (%) 15.4 10.7 14.4 12.1 11.9 13.1 12.9 11.1

TCS Technology


Exhibit 10: Profit model, balance sheet, cash model of TCS, March fiscal year-ends, 2014-21E (Rs mn)


2014 2015 2016 2017 2018 2019E 2020E 2021E

Profit model

Revenues 818,094 946,484 1,086,462 1,179,660 1,231,040 1,473,839 1,648,377 1,784,302

Cost of sales (430,645) (544,992) (608,996) (668,870) (712,880) (847,247) (948,704) (1,028,610)

SG&A expenses (149,370) (173,528) (189,565) (207,550) (213,140) (236,758) (263,346) (285,384)

EBIT 238,079 227,964 287,901 303,240 305,020 389,835 436,327 470,308

Other income 15,891 31,396 30,503 41,890 35,900 35,684 37,699 46,972

Pre-tax profits 253,970 259,360 318,404 345,130 340,920 425,519 474,026 517,280

Provision for tax (60,712) (60,828) (75,027) (81,560) (82,120) (104,006) (118,113) (130,200)

Recurring net income 193,258 198,532 243,377 263,570 258,800 321,513 355,913 387,081

Minority Interest (2,092) (2,048) (1,229) (680) (540) (1,016) (1,137) (669)

Reported net income 191,166 196,484 242,148 262,890 258,260 320,497 354,776 386,412

EPS (Rs) 48.8 50.2 61.4 66.7 67.5 84.7 94.5 103.0

Balance Sheet

Shareholders funds 553,352 574,767 731,899 883,150 872,410 1,023,069 1,079,833 1,141,659

Borrowings 1,273 1,143 825 710 540 — — —

Minority interest 6,905 9,136 3,542 3,660 4,020 5,036 6,173 6,842

Other non-current liabilities 16,845 17,776 20,169 20,890 28,840 34,528 38,617 41,801

Total liabilities 578,374 602,821 756,436 908,410 905,810 1,062,632 1,124,623 1,190,302

Net fixed assets 103,644 115,716 117,900 117,410 116,000 122,155 131,121 138,614

Goodwill 39,797 37,115 38,120 37,210 38,840 38,840 38,840 38,840

Intangibles 1,772 2,193 1,343 470 120 120 120 120

Investments 37,673 2,282 3,431 3,440 3,010 3,010 3,010 3,010

Other non-current assets 66,630 97,968 90,393 89,740 94,185 94,185 94,185 94,185

Cash and bank balances 156,495 197,713 330,134 482,234 474,365 584,557 609,874 646,481

Net current assets excluding cash 172,363 149,836 175,116 177,906 179,290 219,765 247,473 269,051

Total assets 578,374 602,821 756,436 908,410 905,810 1,062,632 1,124,623 1,190,302

Cash flow

Operating cash flow, excl. working capital 190,610 185,834 231,753 237,230 248,820 307,608 341,254 364,165

Working capital changes (39,214) 9,447 (48,707) (11,060) (3,060) (34,646) (23,619) (18,394)

Capital expenditure (30,680) (28,862) (19,894) (19,900) (18,060) (26,685) (32,006) (31,551)

Acquisitions (4,524) (2,637) — — — — — —

Other income 15,891 31,396 30,503 41,890 35,900 35,684 37,699 46,972

Free cash flow 132,083 195,179 193,655 248,160 263,600 281,961 323,328 361,193

Ratios (%)

Gross profit margin 47.4 42.4 43.9 43.3 42.1 42.5 42.4 42.4

EBITDA margin 30.7 26.1 28.2 27.4 26.4 27.9 27.9 27.7

EBIT margin 29.1 24.1 26.5 25.7 24.8 26.5 26.5 26.4

EPS growth 37.4 2.8 22.5 8.6 1.1 25.6 11.6 8.9

RoAE 39.7 34.8 37.1 32.6 29.4 33.8 33.7 34.8


Cement prices decline in October 2018 by Rs2/bag to Rs326/bag

All-India cement prices decline in October 2018 by Rs2/bag mom to Rs326/bag as pricing

weakness continued in FY2019 despite strong growth in volumes. The average retail cement

prices so far in FY2019 at Rs329/bag are Rs4/bag down from FY2018. In October, prices

declined (1) the most in the east by Rs5/bag to Rs330/bag, (2) Rs4/bag in the south to

Rs343/bag, and (3) Rs3/bag in the north to Rs301/bag—prices increased marginally in other

regions. Cement prices increased in the west by Rs2/bag to Rs311/bag and in the central region

by Rs3/bag to Rs331/bag. We highlight that in 3QFY19E (based on October prices), prices in the

western and central regions are higher by 2-5% qoq but lower by 3% qoq in the north (Exhibit

1 and 2).

Cost pressures increase due to weakening INR/US$ rate

Cost pressures continue to rise for cement companies—spot INR/US$ rate is down 5%

compared to 2QFY19 rate of Rs70.1/US$—this will hurt costs of cement companies (though

with a lag) given close to 35% of the costs are at parity to US$, per our estimates. Imported

pet-coke prices have remained firm at US$122/ton in October 2018 (Exhibit 5 and 6). We note

that Indian refineries set their ex-works prices on import parity and these prices are set to rise

soon if import prices remain firm. So far in October 2018, domestic pet-coke prices increased by

3% to Rs9,450/ton and are lower than import parity.

2QFY19 spreads—weak for October 2018

Exhibit 3 highlights the monthly spread movement between cement prices and energy costs

(estimated assuming 70% pet-coke usage). The spreads have weakened for pan-India names in

2QFY19 (we estimate 3% qoq decline). We expect spreads to improve for regional names in the

central region due to a 5% qoq price increase but a decline in all other regions besides pan-

India names.

Industry volumes increase by 14% yoy in August; expect next two months to be good as well

As per DIPP data, industry volumes increased by 14% yoy in August 2018 to 25.7 mn tons, but

on a low base—we note that demand growth last year in August 2017 was merely 1%. The

two year volume CAGR works out to 7% for August 2018. We believe the low base will

continue to aid demand growth for September – October 2018 as well—cumulative demand for

these three months was down 1% yoy last year (i.e. in September-October 2017). We note that

as per company narratives, the improvement in demand in the last few months is mostly led by

pick-up in infrastructure activity from increased government spending.

We maintain our cautious stance on the sector on expensive valuations

We maintain our cautious stance on the cement sector on expensive valuations and on

expectations of moderate improvement in earnings over the next two years. Cost headwinds

necessitate a sharp improvement in industry utilizations for meaningful earnings improvement.

However, we believe large capacity addition will keep industry utilizations low (<70%). Despite

the recent correction in stock prices, valuation of large cap. cement names is expensive at 11-

16X FY2019E EV/EBITDA.

Cement India

Another month of subdued cement prices. All-India cement prices declined by

Rs2/bag to Rs326/bag in October 2018, per our channel checks. Prices declined in east,

south and north by Rs3-5/bag during the month but increased marginally in central,

western regions. We expect cost to rise yet again in 3QFY19 due to weakening

INR/US$ rate and firm pet-coke prices. Efficiencies in logistics costs led by increase in the

axle-load limit may aid costs in a few regions but will be partially offset by higher diesel

costs. We maintain our cautious stance on the sector on expensive valuations.

CAUTIOUS

OCTOBER 12, 2018

UPDATE

BSE-30: 34,001

Abhishek Poddar

Murtuza Arsiwalla

Prayatn Mahajan

Cement India


Exhibit 1: All-India prices declined by Rs2/bag in October 2018; among regions, prices were down in North, East and West Monthly cement prices across regions in India, October 2017 – 2018 (Rs per 50 kg bag)

Source: Industry, Kotak Institutional Equities estimates

Region-wise cement price trend for October 2018 (1st week) are as follows:

North—prices declined by Rs3/bag. The cement prices in the north region declined

during the month by Rs3/bag to Rs301/bag. Among states, there were mixed trends with

prices declining by Rs5/bag in Rajasthan and increasing by Rs5/bag in Punjab and parts of

Haryana.

Central—prices increased by Rs3/bag. Cement prices in the central region increased by

Rs3/bag mom to Rs331/bag. Per our channel checks, prices increased by close to Rs5-

10/bag in Uttar Pradesh in cities such as Lucknow, Meerut and Faizabad while prices were

steady in a few cities such as Bhopal.

West—prices increased by Rs2/bag. The cement prices in the west increased by

Rs2/bag mom to Rs311/bag. As per our checks, prices increased by close to Rs5-10/bag

in Maharashtra in cities such as Mumbai, Pune and Nagpur though a few cities such as

Baroda, Surat and Rajkot saw a decline in prices by Rs5-10/bag.

South— prices declined by Rs4/bag and weak overall. Cement prices remained

steady in Karnataka, Kerala and Tamil Nadu but decline in Andhra Pradesh by Rs10-

15/bag. Overall, cement prices declined by Rs4/bag to Rs343/bag in the south in October

2018.

East—prices decline by Rs5/bag. The cement prices in the east declined by Rs5/bag to

Rs330/bag in October 2018. Our checks indicate that prices declined by Rs10/bag mom in

West Bengal and by Rs5-10/bag in other states such as Odisha. Prices increased by

Rs10/bag mom in Odisha.

Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18

North 305 304 320 309 309 303 300 296 296 309 302 304 301

Central 313 314 320 320 327 318 323 320 325 344 331 328 331

East 324 331 332 332 337 337 336 337 336 343 346 335 330

West 310 302 300 307 307 303 311 325 321 322 315 309 311

South 348 332 333 352 353 337 346 357 347 347 347 347 343

All India average 324 319 323 328 331 322 326 331 328 335 331 328 326

Change per bag (Rs, mom)

North (3) (1) 16 (12) — (6) (3) (3) (1) 14 (8) 2 (3)

Central (2) 1 6 — 7 (9) 5 (3) 5 19 (13) (3) 3

East (18) 6 1 (—) 5 — (1) — (—) 6 3 (11) (5)

West 2 (8) (3) 7 1 (5) 8 14 (4) 2 (7) (6) 2

South (16) (16) 1 19 1 (17) 9 11 (10) (0) — (1) (4)

All India average (8) (6) 4 5 3 (9) 5 5 (3) 7 (4) (3) (2)

Change per bag (Rs, yoy)

North — (—) 21 15 4 (11) (35) (30) (23) (10) (12) (4) (4)

Central (3) 8 16 22 19 4 (16) (10) 4 28 14 13 18

East (6) 3 11 16 17 11 (4) (12) (15) 2 (4) (7) 5

West 2 (1) (—) 30 23 13 3 (8) (14) (9) (6) — —

South (17) (25) (23) 6 (2) (6) (35) (23) (21) (28) (23) (17) (5)

All India average (6) (7) — 16 10 1 (21) (18) (15) (7) (9) (5) 2

India Cement


Exhibit 2: If we assume October prices were to remain steady for 3QFY19E, cement companies will see a sequential drop in realizations Quarterly trend in cement prices in India across geographies, 3QFY17 - 3QFY19E (Rs per 50 kg bag)


Exhibit 3: Spread between cement prices & energy costs are weak due to muted prices, higher costs Spreads (cement prices less energy costs) and EBITDA/ton for Indian cement companies, 2016-2018 (Rs/ton)

Note: (1) EBITDA/ton computation is based on average reported by companies under our coverage till 1QFY19

Source: Bloomberg, Company, Kotak Institutional Equities estimates

3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19E FY2017 FY2018 FY2019E CY2017 CY2018

North 303 304 327 314 310 307 297 305 301 307 314 301 314 303

Central 309 307 330 316 316 322 322 334 331 310 321 329 317 327

East 326 321 347 344 329 335 336 341 330 327 339 336 335 336

West 304 283 325 320 304 306 319 316 311 289 314 315 308 313

South 359 348 376 369 338 347 350 347 343 351 358 346 358 347

All India average 326 318 346 338 322 327 328 331 328 322 333 329 331 329

Change per bag (Rs, qoq)

North (12) 1 23 (14) (4) (3) (10) 8 (4)

Central (12) (2) 23 (14) (—) 6 1 12 (3)

East (6) (6) 26 (3) (15) 6 1 5 (11)

West 20 (21) 42 (5) (16) 1 13 (3) (5)

South 5 (11) 28 (7) (32) 10 3 (3) (4)

All India average (0) (8) 28 (8) (16) 5 2 3 (3)

Change per bag (Rs, yoy)

North 32 38 22 (2) 7 3 (30) (9) (9) 35 7 (13) 16 (11)

Central 32 28 25 (5) 7 15 (7) 18 15 27 10 8 14 10

East (14) (10) 16 12 3 15 (10) (3) 1 (14) 11 (3) 5 0

West 32 14 39 36 — 22 (6) (5) 7 10 24 1 22 4

South 3 1 34 15 (21) (1) (26) (23) 5 (8) 7 (11) 7 (11)

All India average 16 13 29 12 (4) 9 (18) (7) 6 8 11 (4) 12 (2)

250

350

450

550

650

750

850

950

1,050

3,600

3,900

4,200

4,500

4,800

Oct

-16

Jan-1

7

Apr-

17

Jul-17

Oct

-17

Jan-1

8

Apr-

18

Jul-18

Oct

-18

Spreads: Cement price (-) energy costs EBITDA/ton (Rs) [RHS]

Cement India


Exhibit 4: Cement prices have been weak as industry utilization remain <70% Estimated cement industry utilization and monthly price trends (%,Rs/ton)

Source: Industry, DIPP, Companies, Kotak Institutional Equities estimates

Exhibit 5: Higher pet-coke prices together with depreciating Re/US$ rate to add to cost pressures US pet coke prices (CFR basis), 2016 - 2018 (US$/ton)


3,000

4,000

5,000

6,000

-

10

20

30

40

50

60

70

80

90

100

Sep-1

6

Oct

-16

Nov-

16

Dec

-16

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-

17

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct

-17

Nov-

17

Dec

-17

Jan-1

8

Feb-1

8

Mar-

18

Apr-

18

May-

18

Jun-1

8

Jul-18

Aug-1

8

Sep-1

8

Oct

-18

Utilization (%) All-India cement price Spreads: Cement price (-) energy costs

100102104104

8 8

100100102

94

8 6

96

104110

10295

108

116112113

108113115

125125122

20

40

60

80

100

120

140

Oct

-16

Nov-

16

Dec

-16

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-

17

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct

-17

Nov-

17

Dec

-17

Jan-1

8

Feb-1

8

Mar-

18

Apr-

18

May-

18

Jun-1

8

Jul-18

Aug-1

8

Sep-1

8

Oct

-18

US pet-coke prices (US$/ton) (CFR)

India Cement


Exhibit 6: Domestic pet-coke prices increased by 17% yoy (+3% mom) Domestic pet coke prices, 2016 - 2018 (Rs/ton)


Exhibit 7: Pet-coke imports by Indian companies have decline in recent months Pet-coke imports by India, September 2013 -2018


6,3

50

6,3

50

7,2

50

7,1

50

8,1

50

8,9

50

9,4

50

9,2

00

9,4

50

0

2,000

4,000

6,000

8,000

10,000

12,000

Oct

-16

Nov-

16

Dec

-16

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-

17

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct

-17

Nov-

17

Dec

-17

Jan-1

8

Feb-1

8

Mar-

18

Apr-

18

May-

18

Jun-1

8

Jul-18

Aug-1

8

Sep-1

8

Oct

-18

Domestic pet-coke prices (Rs/ton)

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Sep-1

3

Nov-

13

Jan-1

4

Mar-

14

May-

14

Jul-14

Sep-1

4

Nov-

14

Jan-1

5

Mar-

15

May-

15

Jul-15

Sep-1

5

Nov-

15

Jan-1

6

Mar-

16

May-

16

Jul-16

Sep-1

6

Nov-

16

Jan-1

7

Mar-

17

May-

17

Jul-17

Sep-1

7

Nov-

17

Jan-1

8

Mar-

18

May-

18

Jul-18

Sep-1

8

Pet-coke imports - India (mn tons)

Cement India


Exhibit 8: Indian companies source ~60% of their pet-coke requirement from domestic sources India's pet-coke usage from domestic sources and imports, 2014 - 2018 (mn tons)


Exhibit 9: As per DIPP, cement volumes increased 14% yoy in August 2018; 2 year CAGR at 7% Monthly cement production volumes in India, 2016 - 2018 ('000 tons, %)

Source: DIPP, Kotak Institutional Equities estimates

0

5

10

15

20

25

30

2014 2015 2016 2017 2018

Pet-coke production - India (mn tons) Pet-coke imports - India (mn tons)

(20)

(15)

(10)

(5)

0

5

10

15

20

25

12,000

16,000

20,000

24,000

28,000

32,000

Aug-1

6

Oct

-16

Dec

-16

Feb-1

7

Apr-

17

Jun-1

7

Aug-1

7

Oct

-17

Dec

-17

Feb-1

8

Apr-

18

Jun-1

8

Aug-1

8

('000 tons) (%, yoy) [RHS] (%, yoy 3MA) [RHS]

India Cement


Exhibit 10: Imported coal costs remain elevated due to weakening INR/US$ rate Coal prices at Richard Bay (US$/ton, Rs/ton), 2011-18

Source: Bloomberg, Kotak Institutional Equities estimates

Exhibit 11: Retail diesel prices in India are 6% mom higher in October 2018 Average retail price of diesel in major cities in India (Rs/litre)


3,000

4,000

5,000

6,000

7,000

8,000

40

70

100

130

Oct

-11

Apr-

12

Oct

-12

Apr-

13

Oct

-13

Apr-

14

Oct

-14

Apr-

15

Oct

-15

Apr-

16

Oct

-16

Apr-

17

Oct

-17

Apr-

18

Oct

-18

Richard Bay (US$/ton) [LHS] INR (Rs/US$) [LHS] Richard Bay (Rs/ton) [RHS]

76.2

0

10

20

30

40

50

60

70

80

90

Oct

-00

Oct

-01

Oct

-02

Oct

-03

Oct

-04

Oct

-05

Oct

-06

Oct

-07

Oct

-08

Oct

-09

Oct

-10

Oct

-11

Oct

-12

Oct

-13

Oct

-14

Oct

-15

Oct

-16

Oct

-17

Oct

-18

Average retail price of diesel in India(Rs/litre)

Cement India


Exhibit 12: Railway freights from July have been lower due to non-levy of busy season surcharge Lead distance of cement transportation by railways and average freight rates (km, Rs/ton km)

Source: Indian Railways, Kotak Institutional Equities estimates

Exhibit 13: Cement comparative valuation


480

490

500

510

520

530

540

550

560

570

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

2.0

Aug-1

6

Oct

-16

Dec

-16

Feb-1

7

Apr-

17

Jun-1

7

Aug-1

7

Oct

-17

Dec

-17

Feb-1

8

Apr-

18

Jun-1

8

Aug-1

8

Distance (km, RHS) Freight (Rs/ton km, LHS)(Rs/litre)

P/E (X)

Company (US$ mn) 12-Oct Rating 2017 2018 2019E 2020E 2017 2018 2019E 2020E

Large-cap. stocks

ACC 3,917 1,464 1,270 SELL 34 49 62 70 43 30 24 21

Ambuja Cements 5,929 210 210 REDUCE 6 8 9 11 36 28 24 20

Grasim Industries 5,933 910 1,170 BUY 68 47 46 55 13 19 20 17

Shree Cement 7,702 15,542 12,500 SELL 384 397 421 630 40 39 37 25

UltraTech Cement 14,727 3,778 2,950 SELL 96 88 126 162 40 43 30 23

Mid-cap. stocks

Dalmia Bharat 2,466 2,135 2,830 ADD 39 60 94 122 55 35 23 18

India Cements 419 96 118 REDUCE 6 3 4 8 17 29 23 11

JK Cement 693 697 890 ADD 27 43 45 79 26 16 16 9

JK Lakshmi Cement 478 286 370 ADD 7 4 11 28 41 64 25 10

Orient Cement 261 90 145 ADD (2) 2 7 11 (57) 42 13 8

EV/EBITDA (X) EV/ton of capacity (US$) P/B (X)

Company 2017 2018 2019E 2020E 2017 2018 2019E 2020E 2017 2018 2019E 2020E

Large-cap. stocks

ACC 20.5 16.0 13.0 11.2 109 106 104 99 3.1 2.9 2.7 2.5

Ambuja Cements 16.7 13.6 11.0 9.1 112 113 110 105 2.1 2.0 1.9 1.8

Grasim Industries 5.4 11.3 7.0 6.7 NA NA NA NA 1.4 1.0 1.0 0.9

Shree Cement 20.3 20.9 17.1 12.8 248 211 192 179 7.0 6.1 5.3 4.5

UltraTech Cement 21.6 21.3 15.4 12.9 217 193 181 166 4.3 4.0 3.6 3.1

Mid-cap. stocks

Dalmia Bharat 14.1 12.4 9.7 8.0 157 149 142 133 3.8 3.1 2.8 2.4

India Cements 6.8 8.8 8.0 6.2 54 56 56 54 0.6 0.6 0.6 0.5

JK Cement 10.7 9.1 9.5 7.9 99 92 98 107 2.8 2.5 2.2 1.8

JK Lakshmi Cement 14.4 12.4 9.2 5.9 76 69 67 62 2.4 2.3 2.2 1.8

Orient Cement 17.1 10.0 6.7 5.1 54 55 51 46 1.9 1.8 1.6 1.4

EPS (Rs)Market cap. CMP (Rs) Target price

(Rs)


Most large players strong

HDFC Life reported 20% yoy growth in individual APE and similar growth in overall APE in

September 2018. This is an improvement over its single-digit growth over the last three months.

This was largely driven by a higher ticket size in individual non-single business (up 37% yoy and

41% mom); in all probability the product profile during the month was skewed to ULIPs.

SBI Life reported 23% growth in individual APE (up from 6-10% yoy in the last three months).

Growth was likely driven by volumes with ticket size in individual non-single business up 2%

yoy. The company has focused on streamlining its processes and increasing the share of its

protection business. While near-term growth will be modest (versus 30% + in the past), rise in

penetration will drive business in the medium-term.

Max Life continued its momentum and delivered 30% growth in individual APE likely on the

back of higher growth in ULIPs (43% of APE in 1QFY19 from 29% in 1QFY18).

Unlike other large players, ICICI Prudential Life reported flat individual APE yoy. The company is

reducing focus on ULIPs which are down to 82% of APE in 1QFY19 from 87% in 1QFY18.

Tata AIA and Birla Sun Life maintain stellar growth

Birla SL reported 70% growth in individual APE in September 2018, increasing market share to

2.3% from 1.5% in September 2017. This is likely driven by making strong inroads in HDFC

Bank. 59% yoy rise in ticket size in the individual non-single segment during September 2018

(up 19% in 1HFY19) suggests that a large part of the growth may be from higher-ticket ULIPs.

Tata AIA reported 61% growth in individual APE during September 2018, leading to 53%

growth YTD. Its market share increased to 2.9% (up 80 bps yoy). 8% yoy decline in average

ticket of individual non-single segment suggests that growth is driven by an increase in volume.

Equity inflows rise, surprisingly!

Mutual fund inflows to equities increased, though modestly, to Rs117 bn post three months of

flat inflows at around Rs100 bn. SIPs continued to rise MoM in September; though the increase

was modest, this is positive in the backdrop of concerns of large redemption from equity

investments.

Inflows to liquid funds saw a sharp rise in redemption in September 2018 worth Rs2 tn. While

this may be driven by recent events in debt markets, we would like to highlight that liquid fund

inflows generally tend to be volatile with net redemption in six of the last twelve months;

however, the quantum of redemption in September was high (see Exhibit 8).

Insurance India

Growth momentum sustained. Private sector individual APE continued to rise upwards,

increasing 18% yoy in September 2018 and 16% yoy in 2QFY19. While HDFC Life

recovered to 20% yoy post a few months of sluggish performance, ICICI Life was flat

yoy. SBI Life picked up as well with 23% yoy growth while Max remained strong at 30%

yoy. On the mutual fund side, while outflows from liquid funds were high, inflows to

equities (including SIP) were moderately up MoM. With shifting focus to protection and

other high-margin policies, VNB growth of large players will remain strong and in that

sense APE growth trends are less relevant.

NEUTRAL

OCTOBER 12, 2018

UPDATE

BSE-30: 34,761

QUICK NUMBERS

Private sector APE

up 18% yoy in

September 2018

Private players

increased individual

APE market share

by 130 bps yoy and

200 bps qoq to

59.7% in September

2018

MF equity inflows in

September 2018

was down to `102

bn from `246 bn in

September 2017

Nischint Chawathe

M B Mahesh CFA

Dipanjan Ghosh

Shrey Singh

Insurance India


Exhibit 1: Private sector life insurance APE was up 18% yoy in September 2018 APE in individual and group business, March fiscal year-ends, September 2018 (Rs mn)

Source: IRDA, Life council

Exhibit 2: Private sector individual APE was up 18% yoy YoY growth in adjusted individual business premium, March fiscal year-ends, September 2017-September 2018 (%)


Individual

yoy

growth

(%) Group

yoy

growth

(%) Total

yoy

growth

(%) Individual

yoy

growth

(%) Group

yoy

growth

(%) Total

yoy

growth

(%)

Aegon Religare 89 (10) 1 43 90 (9) 420 (13) 3 40 423 (12)

Aviva 111 (18) 0 (95) 111 (22) 628 2 4 (74) 631 0

Bajaj Allianz 1,269 18 353 (50) 1,622 (9) 6,284 13 1,155 (7) 7,439 9

Bharti Axa 478 40 23 13 501 39 2,438 62 134 25 2,573 59

Birla Sunlife 1,350 70 386 43 1,736 63 5,778 60 996 40 6,774 57

Canara HSBC 976 7 15 83 990 7 3,722 9 189 51 3,911 10

DHFL Pramerica 283 13 34 (48) 317 1 1,730 38 369 (14) 2,099 24

Edelweiss 315 69 7 86 322 69 1,231 82 28 4 1,259 79

Future Generali 244 25 6 37 250 26 1,110 27 30 (34) 1,140 24

HDFC Life 5,315 20 676 14 5,991 20 20,276 14 3,086 34 23,362 16

ICICI Prudential 6,219 0 93 602 6,312 1 31,479 (9) 403 95 31,882 (8)

IDBI Federal 469 11 11 39 480 11 1,882 (4) 45 29 1,927 (4)

India First 551 23 289 536 840 71 2,525 8 685 200 3,210 25

Exide Life 573 (1) 2 (53) 575 (1) 2,736 13 35 (15) 2,770 13

Kotak 1,207 2 76 40 1,283 3 5,224 5 453 10 5,676 5

Max Life 3,561 30 30 41 3,591 31 13,782 24 144 6 13,925 24

Reliance Life 860 41 2 (89) 862 37 3,925 30 32 (52) 3,957 28

SBI Life 7,919 23 245 184 8,164 25 34,097 11 1,805 102 35,902 14

Shriram Life 427 27 21 16 448 26 1,995 14 125 1 2,120 13

Star Union Daichi 602 4 5 33 607 4 2,022 (4) 26 52 2,048 (4)

Tata AIA 1,729 61 9 20 1,738 61 7,335 53 45 80 7,379 53

Private players 35,738 18 2,302 17 38,040 18 155,989 11 9,861 36 165,850 13

Pvt. Ex-ICICI and SBI 21,600 23 1,963 5 23,563 22 90,413 20 7,654 24 98,066 21

LIC 24,084 13 6,255 (42) 30,339 (5) 120,298 8 42,387 (10) 162,686 3

Total Premium 59,822 16 8,557 (32) 68,378 7 276,288 10 52,248 (4) 328,536 7

Sep-18 YTD FY2019

Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18

Bajaj Allianz 31 16 50 21 70 28 5 (20) 17 19 20 33 18

Birla Sunlife 18 23 24 (0) (12) 13 20 37 41 41 74 86 70

Canara HSBC 102 39 53 28 16 8 (11) 65 (17) 3 1 18 7

HDFC Standard Life 71 30 65 84 29 22 (2) 70 11 4 3 7 20

ICICI Prudential Life 18 26 11 (2) (11) (16) 17 (31) (30) (5) 4 6 0

India First 69 33 52 51 48 18 (20) 1 1 (1) 1 19 23

Kotak 16 63 64 36 27 48 13 34 6 4 4 (3) 2

Max Life 19 31 10 15 65 33 16 (1) 20 20 41 22 30

Reliance Life (3) (7) (17) 5 3 9 6 37 19 16 9 54 41

SBI Life 46 46 38 34 12 18 5 (11) 27 8 6 10 23

Star Union Daichi (11) 42 17 (5) 31 (35) (39) 30 (9) (33) 11 (4) 4

Tata AIA 14 76 48 7 43 34 22 5 32 55 52 81 61

Private sector 30 33 30 22 16 11 8 (2) 4 9 13 17 18

Pvt. ex-ICICI and SBI 30 31 37 28 32 22 7 21 16 15 21 24 23

LIC 10 26 23 13 17 9 5 3 21 (1) 1 12 13

Total 21 30 27 19 17 10 7 0 12 4 8 15 16

India Insurance


Exhibit 3: APE growth has moderated picked up in 2QFY19 Adjusted premium equivalent of life insurance players, March fiscal year-ends, 2011-2018, 1QFY19-2QFY19


Exhibit 4: Private sector growth was strong in September 2018 YoY growth in individual APE, March fiscal year-ends, 2014-2018, April 2018 - September 2018 (%)


Exhibit 5: Private players gained 200 bps market share in September 2018 Trend in adjusted individual business market share, March fiscal year-ends, September 2017-September 2018 (%)


APE (Rs bn) YoY (%) Market share (%)

2011 2012 2013 2014 2015 2016 2017 2018 1QFY19 2QFY19 2012 2013 2014 2015 2016 2017 2018 1QFY19 2QFY19 2012 2013 2014 2015 2016 2017 2018 1QFY19 2QFY19

Bajaj Allianz Life 20 14 14 11 9 9 12 17 3 4 (29) (2) (17) (18) (2) 34 34 1 15 3 3 2 2 2 2 2 2 2

Birla Sunlife 16 12 11 9 9 8 11 12 3 4 (24) (11) (17) (7) (3) 30 11 41 69 2 2 2 2 2 2 2 2 2

DHFL Pramerica 1 1 1 1 2 2 2 4 1 1 35 43 (17) 63 11 21 62 27 22 0 0 0 0 0 0 1 1 1

Exide 6 6 5 5 4 5 6 6 1 1 (5) (15) (3) (12) 10 27 2 21 6 1 1 1 1 1 1 1 1 1

HDFC Life 30 28 32 25 32 36 41 53 10 14 (7) 16 (22) 26 14 13 29 23 12 5 6 5 7 7 6 7 7 7

ICICI Prudential Life 39 30 34 33 46 51 65 75 13 19 (23) 14 (5) 41 10 27 15 (22) 5 6 7 6 10 10 10 10 10 10

Max Life 17 15 15 18 20 21 27 32 5 9 (12) 0 17 10 8 26 21 14 30 3 3 3 4 4 4 4 4 4

Reliance Life 20 11 10 12 13 10 7 7 2 2 (44) (12) 19 8 (26) (24) 2 22 33 2 2 2 3 2 1 1 1 1

SBI Life 33 24 26 30 33 45 63 80 13 23 (27) 8 14 10 36 40 27 10 17 5 5 6 7 9 10 11 10 12

Private players 239 186 189 182 211 242 306 373 65 101 (22) 2 (3) 16 15 26 22 6 18 35 37 36 45 47 49 51 49 52

Private (ex. SBI, ICICI) 167 131 128 119 132 146 178 218 39 59 (21) (3) (7) 10 11 21 23 18 23 25 25 23 28 28 28 30 30 30

LIC 308 343 326 331 253 279 324 360 68 94 12 (5) 1 (23) 10 16 11 7 (0) 65 63 64 55 53 51 49 51 48

Total industry 547 529 515 513 464 521 630 733 133 195 (3) (3) (0) (9) 12 21 16 6 8

2014 2015 2016 2017 2018 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18

Bajaj Allianz (18.5) (22.6) (7.5) 40.9 38.3 (20.3) 17.2 18.6 19.6 33.4 18.3

Birla Sunlife (18.9) (11.8) (7.7) 35.3 14.9 37.3 40.6 40.6 74.1 86.4 70.1

Canara HSBC (22.8) 17.9 35.2 38.5 33.5 64.9 (16.7) 2.7 0.8 17.7 6.6

HDFC Standard Life (24.2) 25.0 12.3 9.1 30.8 69.6 11.3 3.7 3.1 6.6 20.2

ICICI Prudential Life (1.7) 41.3 8.1 29.0 16.4 (31.1) (30.0) (5.1) 3.8 6.0 0.1

India First (37.2) 5.5 38.1 82.3 42.9 1.4 0.9 (1.4) 0.8 18.5 23.4

Kotak 1.2 32.8 52.2 28.1 31.0 34.2 5.8 3.6 4.4 (3.2) 1.7

Max Life 16.9 10.2 8.0 25.5 21.8 (1.4) 19.7 19.7 41.4 22.2 30.4

Reliance Life 14.6 7.3 (25.6) (22.8) 5.4 37.1 18.6 16.3 8.6 54.1 40.9

SBI Life 17.7 11.0 37.0 38.9 31.1 (11.0) 27.2 8.1 5.9 10.4 22.7

Star Union Daichi 23.3 18.6 (9.0) 64.4 (4.5) 29.8 (9.3) (33.5) 11.4 (3.9) 3.7

Private sector (3.6) 15.8 14.0 26.6 24.3 (1.9) 4.2 8.9 13.2 16.7 18.4

Pvt. ex-ICICI and SBI (7.8) 9.8 9.5 21.8 24.9 21.0 16.4 15.0 21.1 24.4 23.3

LIC (3.4) (26.3) 2.9 14.7 13.4 3.3 20.6 (1.3) 1.5 12.4 13.1

Total (3.4) (10.4) 8.3 20.7 19.3 0.4 11.6 4.1 7.8 14.8 16.2


Bajaj Allianz 2.1 2.1 2.2 2.4 2.1 2.1 2.2 3.4 2.2 2.2 2.0 2.2 2.1

Birla Sunlife 1.5 1.2 1.3 2.1 1.5 1.7 2.4 1.7 1.8 2.4 2.0 2.2 2.3

Canara HSBC 1.8 0.9 1.2 1.6 1.1 1.4 1.2 1.5 0.8 1.4 1.1 1.5 1.6

HDFC Standard Life 8.6 7.0 7.3 7.9 8.5 8.1 7.6 7.5 7.6 6.6 6.6 6.6 8.9

ICICI Prudential 12.1 12.4 12.5 11.8 10.2 11.7 7.5 12.4 10.4 11.5 12.2 11.9 10.4

Max Life 5.3 3.8 4.4 5.8 4.5 6.0 6.8 3.8 4.2 5.5 4.7 4.9 6.0

Reliance Life 1.2 0.9 0.9 1.2 1.1 1.2 1.2 2.2 1.3 1.3 1.1 1.5 1.4

SBI Life 12.5 12.6 12.5 17.1 17.2 9.2 8.4 9.5 10.6 11.3 13.6 13.7 13.2

Tata AIA 2.1 1.9 1.8 2.0 2.4 2.5 3.1 1.6 2.3 2.8 2.7 3.0 2.9

Private sector 58.6 52.2 54.0 64.3 59.1 56.8 53.7 54.6 51.1 55.9 56.9 57.7 59.7

LIC 41.4 47.8 46.0 35.7 40.9 43.2 46.3 45.4 48.9 44.1 43.1 42.3 40.3

Insurance India


Exhibit 6: Mixed trends in ticket size Average policy size in individual non-single segment, September 2017-September 2018 (Rs)


Exhibit 7: Ticket size remains flat in 1HFY19 for private players Average policy-size in individual non-single segment, 2009-2018, 1HFY19 (Rs)


Sep-17 Aug-18 Sep-18

Aegon Religare 22,384 20,000 26,725 19 34

Aviva 64,418 47,611 54,861 (15) 15

Bajaj Allianz 41,369 54,881 57,498 39 5

Bharti Axa 40,693 20,957 39,386 (3) 88

Birla Sun Life 35,498 53,916 56,446 59 5

Canara HSBC Oriental 76,901 71,023 68,836 (10) (3)

DHFL Pramerica 35,421 40,674 39,732 12 (2)

HDFC Life 46,636 45,064 63,755 37 41

ICICI Prudential 91,766 88,654 92,364 1 4

IDBI Federal 43,398 42,372 45,003 4 6

IndiaFirst 34,299 38,499 41,180 20 7

Exide Life 29,805 30,531 34,359 15 13

Kotak 49,726 47,915 51,004 3 6

Edelweiss Tokio 39,459 42,109 18,856 (52) (55)

Max Life 55,797 53,725 54,732 (2) 2

Reliance 33,423 40,786 41,933 25 3

SBI 58,426 58,071 59,728 2 3

Shriram 17,298 13,201 16,355 (5) 24

Star Union 48,618 52,121 55,242 14 6

Tata AIA 68,787 66,205 63,058 (8) (5)

LIC 15,604 15,604 14,595 (6) (6)

YoY (%) MoM (%)

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1HFY19

Bajaj Allianz 15,024 14,598 12,566 13,428 17,151 22,216 26,857 28,170 37,066 45,448 51,452

Exide 17,861 21,622 23,311 26,221 24,704 25,014 26,214 24,594 31,413 31,855 33,061

Reliance Life 13,796 13,713 10,704 10,330 12,951 19,145 25,145 24,544 25,380 33,636 38,252

SBI Life 33,625 30,880 37,099 25,266 27,315 27,499 28,103 34,098 47,109 54,929 55,475

Tata AIA 13,839 16,255 17,537 22,368 20,144 20,810 32,577 44,411 57,204 62,780 62,249

HDFC Standard 24,941 37,201 46,297 43,584 39,559 34,811 43,839 38,211 42,345 45,244 45,615

ICICI Prudential 19,686 29,081 28,462 27,533 34,570 41,948 72,582 88,373 94,759 93,116 86,523

Birla Sunlife 19,941 13,722 16,348 13,849 18,468 20,062 25,480 23,700 30,445 42,518 50,679

Aviva 18,057 29,427 30,961 28,200 30,032 29,012 39,995 42,580 57,923 70,440 52,270

Kotak Mahindra Old Mutual 23,878 29,827 29,069 24,762 29,832 32,753 38,221 42,657 47,157 55,909 51,328

Max Life 13,198 16,546 20,869 25,973 29,564 32,999 38,909 44,569 51,057 55,836 52,083

Sahara Life 8,230 9,008 7,952 6,540 5,969 7,397 6,534 8,780 11,782 14,072 NA

Shriram Life 16,928 21,982 18,767 12,897 12,700 13,627 13,727 13,815 18,820 17,382 14,581

Bharti Axa Life 14,229 24,840 20,868 19,952 22,030 29,960 40,491 40,464 39,017 40,695 33,013

Future Generali Life 12,903 13,308 10,859 15,566 13,673 16,842 34,786 42,945 44,659 19,704 41,856

IDBI Federal 29,239 35,271 28,082 25,994 21,763 24,845 29,066 30,856 36,158 40,836 42,219

Canara HSBC 82,635 62,624 62,372 66,162 49,016 54,072 53,981 57,487 67,193 78,115 73,370

Aegon Religare 12,910 32,576 28,402 25,374 22,015 26,883 36,630 28,475 22,807 24,278 19,883

DHFL Pramerica 12,102 18,645 19,021 13,525 13,134 16,897 25,838 27,324 28,332 37,979 42,344

Star Union Dai-ichi 29,220 29,529 30,483 19,333 18,608 27,033 39,855 41,301 50,424 50,941 49,478

Private Total 18,686 21,005 21,851 21,956 25,296 28,345 36,669 39,193 48,008 52,943 52,597

LIC 5,885 7,169 7,595 8,649 7,983 8,180 10,516 10,399 11,718 12,510 13,688

Grand Total 9,942 11,208 11,000 11,142 10,865 11,312 16,403 16,969 20,341 22,549 23,964

India Insurance


Exhibit 8: Volatile inflows to liquid funds Mutual fund inflows, monthly data, September 2017 onwards (Rs bn)

Source: AMFI, Kotak Institutional Equities

Exhibit 9: MF inflows down yoy Net MF flows (Equity + ELSS+70%balanced), March fiscal year-ends, September 2017-September 2018 (Rs bn)


Exhibit 10: Pace of rise in SIP inflows have moderated Mutual fund inflows, monthly data, April 2016-September 2018 (Rs bn)



Equity (Equity oriented+ELSS+70% of balanced) 246 201 256 229 208 198 114 136 132 107 97 102 117

Liquid/ Money Market 48 (133) 774 (1,385) 966 12 (550) 1,165 (467) 521 (311) 1,711 (2,111)

ETFs 19 16 124 (17) (23) 9 50 3 27 83 (40) 17 24

Others (bal. fig; most debt) (480) 426 108 (578) (88) (98) (122) 71 (191) (246) (71) (84) (332)

Total (166) 511 1,262 (1,750) 1,062 121 (508) 1,374 (500) 465 (326) 1,746 (2,302)

Note:

(1) Equity included arbitrage funds from Sept 2017-March 2018.

246

201

256

229

208 198

114 136 132

107 97 102

117

0

60

120

180

240

300

Sep-1

7

Oct

-17

Nov-

17

Dec

-17

Jan-1

8

Feb-1

8

Mar-

18

Apr-

18

May-

18

Jun-1

8

Jul-18

Aug-1

8

Sep-1

8

30

40

50

60

70

80

Ap

r-1

6

May-

16

Jun

-16

Jul-

16

Au

g-1

6

Sep

-16

Oct

-16

No

v-1

6

Dec-

16

Jan

-17

Feb

-17

Mar-

17

Ap

r-1

7

May-

17

Jun

-17

Jul-

17

Au

g-1

7

Sep

-17

Oct

-17

No

v-1

7

Dec-

17

Jan

-18

Feb

-18

Mar-

18

Ap

r-1

8

May-

18

Jun

-18

Jul-

18

Au

g-1

8

Sep

-18

SIP (Rs bn)

Insurance India


Exhibit 11: MF inflows peaked in FY2018 Net MF flows (Equity + ELSS+70%balanced), March fiscal year-ends, 2006 – YTD FY2019 (Rs bn)


Exhibit 12: Share of ULIPs dropped for most players in 1QFY19 Contribution of various products to APE, March fiscal year-ends, 2012-2018, 1QFY18-1QFY19 (% of total)


375 282 510

41 17

(122)

4

(144) (107)

790 878 956

2,313

691

(750)

-

750

1,500

2,250

3,000

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

YTD

2019

2012 2013 2014 2015 2016 2017 2018 1QFY18 1QFY19

Bajaj Life

Unit linked policies 12 12 10 24 29 62 64 72 54

Participating policies 60 49 51 21 19 20 20 17 30

Non participating policies 28 39 38 54 52 18 17 12 16

Birla SL

Unit linked policies 59 43 45 35 48 33 36 NA NA

Participating policies 0 2 14 16 13 22 18 NA NA

Non participating policies 41 55 41 49 38 45 46 NA NA

ICICI Prudential Life




HDFC Life




Max Life




SBI Life




India Insurance


Exhibit 13: Share of bancassurance dropped in 1QFY19 for most major players Contribution of various products to APE, March fiscal year-ends, 2012-2018, 1QFY19 (% of total)


2012 2013 2014 2015 2016 2017 2018 1QFY19

Bajaj Life

Agency 66 76 84 92 90 90 79 75

Bancassurance 10 7 8 1 2 2 5 3

Corporate agents 19 13 5 1 1 1 1 2

Others 5 4 3 7 7 7 14 20

Birla SL

Agency 70 66 65 67 81 75 69 60

Bancassurance 14 17 20 19 9 9 19 31


Others — — 12 12 5 10 11 9

HDFC Life

Agency 20 16 16 16 13 15 13 15

Bancassurance 64 72 70 67 68 61 59 46


Others 4 5 7 14 16 19 23 34

ICICI Prudential Life

Agency 44 34 28 25 23 23 26 22

Bancassurance 38 45 54 58 57 57 53 55


Others 7.5 7 8 13 16 16 19 20

Max Life

Agency 37 35 31 29 28 25 24 31

Bancassurance 40 48 51 57 59 62 64 54


Others 9 7 8 8 9 10 10 13

SBI Life

Agency 52 53 50 46 38 34 31 33

Bancassurance 44 44 47 52 61 65 67 65


Others 2 3 2 1 1 1 1 1

Insurance India


Exhibit 14: Agent productivity dropped for most players in 1QFY19 Agency data, March fiscal year-ends, 2014-1QFY19

Source: Company, IRDAI, Life Insurance Council, Kotak Institutional Equities

CAGR (%)

2014 2015 2016 2017 2018 1QFY19 (2014-1QFY19)

Policies per agent (#)

Bajaj Life 2.3 1.9 2.2 2.1 2.4 2.1 (2.3)

Birla Sunlife 2.7 2.1 1.8 1.9 2.0 1.5 (12.4)

Exide Life 3.9 3.4 3.1 2.0 1.9 1.5 (19.6)

HDFC Standard Life 5.2 5.2 5.6 5.2 2.1 1.3 (28.0)

ICICI Prudential Life 1.3 1.0 1.2 1.3 1.4 0.9 (8.0)

Kotak Life 7.1 2.5 1.6 1.5 1.5 1.0 (36.7)

Max Life 5.0 3.8 3.6 2.7 2.3 1.9 (19.8)

Reliance Nippon Life 3.4 2.9 2.1 1.3 1.2 1.9 (13.1)

SBI Life 5.5 4.8 5.2 4.7 5.2 3.0 (13.2)

TATA AIA 2.1 1.5 2.3 2.8 3.8 2.1 (0.0)

Total of the above 3.2 2.6 2.7 2.3 2.2 1.6 (14.2)

LIC 26.7 16.3 17.7 17.7 18.0 12.0 (17.2)

Average size of policy (Rs)

Bajaj Life 26,904 35,054 34,525 50,760 63,830 63,185 22

Birla Sunlife 22,434 28,402 31,066 38,536 45,823 43,279 17

Exide Life 29,008 41,668 29,409 54,928 39,841 45,924 11

HDFC Standard Life 12,106 17,368 11,954 18,320 56,394 70,570 51

ICICI Prudential Life 52,947 81,958 88,554 101,274 106,448 93,990 14

Kotak Life 30,089 33,420 34,577 38,354 43,373 44,878 10

Max Life 33,567 40,716 45,274 60,950 72,316 75,556 21

Reliance Nippon Life 20,102 24,672 23,619 24,679 34,919 38,104 16

SBI Life 28,366 36,987 40,690 49,492 49,919 53,071 16

TATA AIA 29,120 29,838 34,667 47,441 45,702 42,150 9

Total of the above 26,677 34,618 34,224 45,093 56,914 58,127 20

LIC 12,636 16,318 16,075 22,622 24,181 24,196 17

Premium per agent (Rs)

Bajaj Life 62,336 66,686 76,129 108,097 155,958 132,734 19

Birla Sunlife 60,345 59,637 56,452 73,546 91,097 66,162 2

Exide Life 113,294 140,918 90,267 112,422 75,856 70,908 (10)

HDFC Standard Life 62,969 91,110 66,701 95,073 119,221 91,010 9

ICICI Prudential Life 67,095 80,494 104,411 127,531 149,334 83,542 5

Kotak Life 213,797 84,549 54,367 57,169 66,481 45,650 (30)

Max Life 166,402 155,588 163,550 165,933 168,807 146,943 (3)

Reliance Nippon Life 68,342 71,279 49,900 32,686 43,452 71,245 1

SBI Life 156,478 177,082 213,417 234,501 257,937 160,087 1

TATA AIA 60,341 45,645 78,330 132,211 175,066 87,285 9

Total of the above 84,167 91,438 91,953 105,868 127,749 95,609 3

LIC 337,096 266,440 284,819 399,628 434,128 290,043 (3)

Notes:

(a) We have considered individual premium for the above calculation.

India Insurance


Exhibit 15: Individual agent addition was modest in 1HFY19 Gross individual agent addition, March fiscal year-ends, 2014-1HFY19

Source: Company, IRDAI, Life Insurance Council, Kotak Institutional Equities

Private sector reported 27% market share in group business

LIC remained focus on single premium with 79% share in total premium in September

2018. The share of single premium for private players increased to 45% from 42% in

August 2018 and 43% in September 2017. Among major private players, Bajaj Allianz Life,

Aditya Birla SL and HDFC Life maintain high share of single premium at 74%, 74% and

65% respectively.

The market share of private players in group business increased to 27% from 16% in

August 2018 and September 2017. The swing was largely led by Bajaj Allianz, Aditya Birla

SL and HDFC Life.

Exhibit 16: Share of single premium in overall business increased MoM in September 2018 for private players Share of single premium to total premium, March fiscal year-ends, September 2017-September 2018 (%)

Source: IRDA, Life council, Kotak Institutional Equities

Gross individual agents added (#) YoY (%)

2014 2015 2016 2017 2018 1HFY19 2015 2016 2017 2018 1HFY19

Aegon 3,631 3,106 3,518 726 — — (14) 13 (79) (100) NA

Aviva 6,851 5,465 6,881 4,766 5,490 1,827 (20) 26 (31) 4 (32)

Bajaj 22,356 20,552 30,075 17,734 22,277 10,769 (8) 46 (41) 7 6

Bharti Axa 10,704 10,564 11,791 9,677 16,586 11,475 (1) 12 (18) 43 85

Birla Sunlife 31,918 22,911 20,992 20,753 24,999 13,167 (28) (8) (1) 10 3

Canara HSBC NA NA NA NA NA NA NA NA NA NA NA

DHFL 2,328 1,255 2,467 3,213 5,052 1,971 (46) 97 30 40 (20)

Edelweiss Tokio 3,930 3,939 5,102 5,423 10,498 5,475 0 30 6 71 52

Exide 24,642 20,698 32,278 24,411 28,478 12,291 (16) 56 (24) 3 (13)

Future Generali 8,316 3,930 4,852 3,822 3,421 1,255 (53) 23 (21) (17) (24)

HDFC Life 22,469 21,476 17,911 14,479 24,037 14,511 (4) (17) (19) 39 18

ICICI Pru 35,799 11,910 18,286 14,264 18,057 11,749 (67) 54 (22) 13 13

IDBI Federal 4,432 4,945 4,477 3,777 4,439 2,959 12 (9) (16) 5 45

IndiaFirst 862 566 449 457 362 205 (34) (21) 2 (26) 95

Kotak 24,184 29,903 43,494 42,813 53,151 26,912 24 45 (2) 10 8

Max 22,826 21,524 26,171 22,966 25,497 14,060 (6) 22 (12) (2) 19

Reliance Nippon 76,578 63,252 47,692 29,036 25,153 15,368 (17) (25) (39) (24) 28

SBI Life 40,639 35,571 43,498 38,336 52,258 29,141 (12) 22 (12) 17 17

Tata AIA 18,507 14,622 15,615 13,490 17,598 9,858 (21) 7 (14) 13 15

Private 374,152 305,205 345,715 273,003 338,682 183,350 (18) 13 (21) 9 14

LIC 253,416 342,048 319,428 296,441 265,806 111,835 35 (7) (7) (22) 1

Total 626,802 647,253 665,143 569,444 604,488 295,185 3 3 (14) (7) 8


Bajaj Allianz 87 72 54 43 36 68 70 46 54 65 64 70 74

Birla Sunlife 77 67 60 37 30 24 58 34 64 67 50 57 74

HDFC Life 61 62 54 51 53 64 61 74 65 73 72 67 65

ICICI Prudential 12 14 13 14 16 19 21 25 24 20 21 24 23

Max Life 27 30 30 29 24 25 20 36 31 29 28 27 24

Reliance Life 6 3 8 5 3 4 3 6 6 5 6 4 3

SBI Life 16 19 20 17 19 26 46 37 36 48 45 35 29

Private sector 43 39 34 29 29 38 42 46 43 49 45 42 45

LIC 87 78 84 76 69 73 73 71 81 82 86 83 79

Total 75 66 71 59 53 60 62 62 70 72 75 71 66

Insurance India


Exhibit 17: Share of LIC at 73% Market share in group business, March fiscal year-ends, September 2017-September 2018 (%)

Source: IRDA, Life council, Kotak Institutional Equities


Bajaj Allianz 5.5 4.0 2.4 1.5 1.4 3.8 3.7 2.4 1.3 1.9 1.3 2.6 4.1

Birla Sunlife 2.1 1.4 2.0 1.1 0.9 1.2 2.3 1.0 1.6 2.2 0.7 1.4 4.5

HDFC Life 4.7 6.9 7.0 5.3 8.7 9.0 5.8 13.4 4.7 6.4 4.4 4.3 7.9

ICICI Prudential 0.1 0.2 0.3 0.3 0.5 0.4 0.3 0.7 0.6 0.7 0.6 0.9 1.1

Max Life 0.2 0.4 0.5 0.4 0.5 0.5 0.3 0.4 0.3 0.3 0.2 0.3 0.4

Reliance Life 0.1 0.1 0.2 0.2 0.2 0.2 0.1 0.1 0.2 0.0 0.0 0.0 0.0

SBI Life 0.7 1.8 2.4 2.1 4.1 2.6 5.2 3.8 2.6 4.3 3.7 3.2 2.9

Private sector 16 19 22 16 21 23 22 29 15 21 14 16 27

LIC 84 81 78 84 79 77 78 71 85 79 86 84 73


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September 2018: Results calendar

Source: NSE, Kotak Institutional Equities

Mon Tue Wed Thu Fri Sat Sun

8-Oct 9-Oct 10-Oct 11-Oct 12-Oct 13-Oct 14-Oct

Indiabulls Ventures TCS Hindustan Unilever AU Small Finance

Zee Entertainment Enterprises Avenue Supermarts


Indiabulls Housing Crisil ACC SBI Life Insurance HDFC Bank

IndusInd Bank Federal Bank DCB Bank UltraTech Cement ICICI Lombard

Hero Motocorp Havells india

Infosys Mindtree

J&K Bank Mphasis

Mahindra CIE Automotive Reliance Industries


Asian Paints Adani Port and SEZ Bajaj Auto Bharti Airtel Bharat Electronics

GlaxoSmithkline Pharmaceuticals Ambuja Cements Bajaj Holding & Investment Biocon Coromandel International

Kansai Nerolac Bajaj Finance Bharat Financial Inclusion Crompton Greaves Consumer Dr Reddy's Laboratories

Schaeffler India Bajaj Finserv Hexaw are Technologies JSW Steel ICICI Bank

HDFC Standard Life IDFC Bank Maruti Suzuki PI Industries

ICICI Prudential Life Jubilant Foodw orks Shriram City Union Finance

Rallis India Karur Vysya Bank Yes Bank

RBL Bank Kotak Mahindra Bank

TVS Motor L&T Finance Holdings

L&T Infotech

Mahindra & Mahindra Financial

SIS

SKF

Wipro

29-Oct 30-Oct 31-Oct 1-Nov 2-Nov 3-Nov 4-Nov

Carborundum Universal ABB Canara Bank Berger Paints Aditya Birla Fashion Endurance Technologies

Colgate-Palmolive (India) Bank of Baroda Dabur India Godrej Properties Axis Bank

GRUH Finance Cholamandalam Tata Motors HDFC Gillette India

Tata Pow er Container Corporation Marico Godrej Consumer Products

Info Edge Magma Fincorp

Pidilite Industries P&G Hygiene

Prestige Estates Projects

Tech Mahindra

The Ramco Cement

Torrent Pow er

5-Nov 6-Nov 7-Nov 8-Nov 9-Nov 10-Nov 11-Nov

Cipla Amara Raja Batteries

PNB Housing Finance Titan Company

Timken

WABCO India


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Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Source: Company, Bloomberg, Kotak Institutional Equities estimates

Target O/S ADVT

Price (Rs) price Upside Mkt cap. shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) 3mo

Company Rating 11-Oct-18 (Rs) (%) (Rs bn) (US$ bn) (mn) 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E 2019E 2020E 2021E (US$ mn)

Automobiles

Amara Raja Batteries REDUCE 719 780 8.4 123 1.7 171 32 37 43 17.1 15.9 14.5 22.3 19.2 16.8 11.8 10.1 8.7 3.6 3.1 2.7 17.4 17.5 17.4 0.7 0.8 0.9 6.5

Apollo Tyres BUY 206 340 65.0 118 1.6 541 19 23 28 38.9 26.1 18.1 11.1 8.8 7.4 7.1 6.0 4.9 1.1 1.0 0.9 10.4 12.0 12.7 1.5 1.5 1.5 12.7

Ashok Leyland BUY 112 160 43.1 328 4.4 2,926 6.2 8.9 9.4 15.3 43.2 6.1 18.0 12.6 11.9 9.1 6.6 6.1 3.9 3.3 2.8 23.4 28.4 25.4 1.7 2.4 2.5 46.1

Bajaj Auto SELL 2,526 2,600 2.9 731 9.9 289 155 168 180 10.8 8.1 7.4 16.3 15.0 14.0 10.8 9.6 8.7 3.4 3.0 2.7 22.2 21.4 20.6 2.5 2.7 2.9 30.4

Balkrishna Industries BUY 1,013 1,180 16.5 196 2.7 193 50 61 69 32.7 23.3 12.3 20.4 16.6 14.7 11.2 9.2 8.1 4.0 3.3 2.7 21.3 21.7 20.2 0.5 0.6 0.6 15.9

Bharat Forge SELL 555 600 8.1 258 3.5 466 23 27 29 44.4 14.6 7.1 23.7 20.7 19.3 13.6 11.9 10.9 4.7 4.0 3.5 21.5 21.0 19.4 0.9 1.0 1.1 12.2

CEAT ADD 1,062 1,500 41.3 43 0.6 40 99 108 116 53.7 8.3 7.9 10.7 9.9 9.1 7.3 6.3 5.7 1.4 1.3 1.1 14.4 13.8 13.2 0.9 0.9 1.0 12.5

Eicher Motors SELL 22,357 21,500 (3.8) 610 8.3 27 981 1,124 1,251 23.7 14.6 11.3 22.8 19.9 17.9 16.1 14.0 12.0 8.2 6.3 4.9 41.8 35.8 30.8 0.1 0.1 — 28.0

Escorts BUY 567 1,200 111.8 48 0.9 89 59 71 78 52.3 19.9 10.2 9.6 8.0 7.3 5.5 4.4 3.5 1.7 1.4 1.2 17.6 18.0 17.1 1.6 1.9 2.1 15.5

Exide Industries SELL 251 235 (6.5) 214 2.9 850 10 11 13 25.3 11.0 11.6 24.4 22.0 19.7 13.9 12.4 11.1 3.6 3.3 2.9 15.4 15.5 15.7 1.2 1.4 1.6 8.6

Hero Motocorp SELL 2,871 2,600 (9.4) 573 7.8 200 174 182 196 (6.1) 4.7 7.6 16.5 15.8 14.7 9.6 9.0 8.2 4.4 3.9 3.5 27.9 26.2 25.4 3.0 3.2 3.4 23.1

Mahindra CIE Automotive ADD 265 290 9.5 100 1.4 378 14 16 17 45.0 12.7 10.4 19.0 16.9 15.3 9.5 8.4 7.5 2.4 2.1 1.8 13.2 13.1 12.7 — — — 2.2

Mahindra & Mahindra BUY 730 1,125 54.1 908 12.3 1,138 45 54 56 18.8 19.0 4.2 16.2 13.6 13.1 10.5 8.7 8.1 2.4 2.1 1.9 15.8 16.6 15.4 1.2 1.5 1.5 34.0

Maruti Suzuki ADD 6,876 9,200 33.8 2,077 28.1 302 298 362 408 16.7 21.2 12.9 23.1 19.0 16.8 12.4 9.8 8.2 4.3 3.7 3.2 20.1 21.1 20.5 1.1 1.3 1.5 86.6

Motherson Sumi Systems SELL 229 280 22.5 481 6.5 2,105 11 14 16 40.2 21.5 13.8 19.9 16.4 14.4 8.2 6.8 5.9 4.1 3.5 3.0 22.5 23.2 22.3 1.2 1.4 1.5 16.3

MRF REDUCE 63,428 69,000 8.8 269 3.6 4 3,425 3,932 4,411 28.3 14.8 12.2 18.5 16.1 14.4 8.6 7.4 6.3 2.4 2.1 1.8 13.9 13.9 13.7 0.1 0.1 0.1 8.1

Schaeffler India BUY 5,159 6,000 16.3 86 1.2 17 156 199 233 9.0 27.3 17.6 33.1 26.0 22.1 20.0 15.2 12.6 4.5 4.0 3.5 14.5 16.4 17.0 0.6 0.8 0.9 0.7

SKF ADD 1,631 1,800 10.4 84 1.1 51 69 82 97 19.7 18.5 18.2 23.6 19.9 16.9 15.0 12.4 10.1 4.0 3.4 2.9 16.7 17.1 17.4 0.7 0.9 1.0 0.4

Tata Motors BUY 183 425 132.3 621 7.9 3,396 22 36 39 10.7 62.7 8.0 8.3 5.1 4.7 2.9 2.4 2.2 0.6 0.5 0.5 7.6 11.2 10.8 — — — 54.0

Timken SELL 550 570 3.7 41 0.6 68 19 24 28 41.7 25.1 18.0 28.7 22.9 19.4 17.4 14.1 11.8 4.4 3.7 3.1 16.9 17.5 17.2 0.2 0.2 0.2 0.2

TVS Motor SELL 512 350 (31.6) 243 3.3 475 15 17 20 8.4 15.1 15.6 33.9 29.4 25.4 18.5 16.2 14.2 7.3 6.3 5.4 23.1 22.9 22.9 0.9 1.0 1.2 15.7

Varroc Engineering BUY 789 1,250 58.5 106 1.4 135 39 47 51 52.3 19.9 10.2 20.3 16.9 15.3 16.0 13.5 11.6 3.1 2.6 2.1 15.3 15.3 13.5 — — — —

WABCO India SELL 6,465 6,350 (1.8) 123 1.7 19 169 222 225 17.8 31.3 1.0 38.2 29.1 28.8 24.7 18.7 18.4 6.7 5.5 4.7 19.2 20.9 17.7 0.2 0.2 0.2 0.4

Automobiles Neutral 8,381 113 17.4 25.0 9.7 18.1 14.5 13.2 8.0 6.7 5.9 2.7 2.3 2.1 14.8 16.2 15.6 1.1 1.3 1.4 430.3

Banks

Axis Bank REDUCE 581 600 3.3 1,492 20.2 2,567 19 41 46 1,635.7 118.8 12.3 31.2 14.2 12.7 — — — 2.5 2.1 1.8 7.3 14.3 14.3 0.5 1.1 1.2 98.9

Bank of Baroda ADD 94 130 — 249 3.4 2,652 21 26 29 323.7 26.4 12.1 4.6 3.6 3.2 — — — 0.8 0.6 0.5 12.7 14.0 13.7 — — — 43.7

Canara Bank ADD 225 280 24.4 165 2.2 733 (5) 51 68 91.6 1,147.0 33.3 (46.5) 4.4 3.3 — — — 1.3 0.8 0.5 (1.0) 10.1 12.0 — — — 26.9

City Union Bank ADD 170 185 8.7 125 1.7 665 9 11 12 5.8 13.3 16.7 18.1 15.9 13.7 — — — 2.8 2.4 2.1 15.5 15.6 16.0 1.0 1.1 1.3 2.1

DCB Bank BUY 152 180 18.7 47 0.6 308 10 12 16 28.2 21.0 33.1 14.8 12.3 9.2 — — — 1.7 1.6 1.4 11.7 12.7 14.9 0.6 0.8 1.0 4.3

Equitas Holdings BUY 128 160 24.9 44 0.6 340 4.4 8.4 11.4 378.4 89.9 35.6 28.9 15.2 11.2 — — — 1.9 1.7 1.5 6.4 11.2 13.4 — — — 5.2

Federal Bank BUY 71 105 47.3 141 1.9 1,972 5.7 8.0 9.8 27.8 39.5 22.9 12.5 9.0 7.3 — — — 1.2 1.0 0.9 8.9 11.5 12.9 1.8 2.5 3.1 18.2

HDFC Bank ADD 1,938 2,100 8.4 5,265 71.3 2,595 78 94 112 15.7 20.0 19.1 24.8 20.7 17.4 — — — 3.6 3.2 2.8 16.7 16.2 17.0 0.8 0.9 1.1 81.3

ICICI Bank BUY 312 400 28.3 2,006 27.2 7,072 8 26 31 (17.6) 227.0 18.6 39.4 12.1 10.2 — — — 2.1 1.8 1.5 4.7 14.4 15.2 0.5 1.7 2.0 97.4

IDFC Bank NR 35 — — 120 1.6 3,404 1.2 2.9 4.3 (52.7) 146.7 44.8 29.4 11.9 8.2 — — — 0.8 0.7 0.7 2.6 6.3 8.6 0.7 1.7 2.4 6.7

IndusInd Bank BUY 1,593 1,900 19.3 958 13.0 600 70 86 101 15.8 24.3 17.0 22.9 18.4 15.7 — — — 3.4 2.9 2.6 17.4 16.7 16.9 1— 0.6 0.7 39.8

J&K Bank BUY 40 100 150.6 22 0.3 557 7 11 15 82.4 63.8 33.5 6.0 3.7 2.8 — — — 0.5 0.4 0.4 5.9 9.1 11.2 3.3 5.4 7.3 0.3

Karur Vysya Bank ADD 75 110 46.7 60 0.8 727 3 13 14 (32.3) 306.7 9.1 23.3 5.7 5.2 — — — 1.0 0.9 0.8 3.7 14.1 13.9 1.1 4.4 5.0 2.0

Punjab National Bank ADD 64 80 24.4 178 2.4 2,761 (27) 12 18 40.4 145.3 46.9 (2.4) 5.4 3.6 — — — 3.2 1.1 0.6 (23.4) 10.7 13.8 — — — 41.8

RBL Bank REDUCE 520 500 (3.8) 220 3.0 420 22 29 36 48.1 31.5 21.0 23.2 17.6 14.6 — — — 3.0 2.7 2.4 13.3 15.5 16.5 0.6 0.9 1.0 15.8

State Bank of India BUY 262 370 41.1 2,340 31.7 8,925 8 37 53 204.8 380.5 42.7 34.1 7.1 5.0 — — — 1.7 1.2 1.0 3.1 13.6 16.7 — 0.2 0.2 104.8

Ujjivan Financial Services BUY 249 360 44.8 30 0.4 121 19 28 32 3,033.9 47.3 15.1 13.3 9.0 7.8 — — — 1.5 1.3 1.2 12.1 15.8 15.8 0.7 1.1 1.4 5.5

Union Bank ADD 69 90 31.3 80 1.1 1,169 8 33 40 117.1 330.8 22.5 8.9 2.1 1.7 — — — 1.0 0.6 0.4 3.9 15.2 16.3 1.7 7.2 8.9 10.4

YES Bank SELL 240 200 (16.7) 555 7.5 2,303 18 19 25 (4.4) 10.6 28.2 13.7 12.4 9.7 — — — 2.0 1.7 1.5 14.7 14.5 16.4 1.2 1.3 1.7 142.9

Banks Attractive 14,095 191 804.7 147.0 26.4 28.7 11.6 9.2 1.7 1.5 1.3 6.0 13.1 14.5 0.6 0.9 1.1 748.1

P/B (X) RoE (%) Dividend yield (%)


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Target O/S ADVT



NBFCs

Bajaj Finance SELL 2,162 2,000 (7.5) 1,250 16.9 575 68 90 114 56.6 31.9 27.3 31.8 24.1 19.0 — — — 6.5 5.2 4.2 22.4 24.0 24.6 0.3 0.4 0.5 85.4

Bajaj Finserv REDUCE 5,592 6,100 9.1 890 12.1 159 245 307 376 39.7 25.2 22.5 22.8 18.2 14.9 — — — 3.6 3.0 2.5 17.5 18.1 18.6 0.2 0.2 0.2 22.6

Bharat Financial Inclusion NA 991 — — 139 1.9 139 43 54 69 31.1 27.2 25.8 23.1 18.2 14.5 — — — 3.7 3.1 2.5 17.9 18.5 19.0 — — — 11.6

Cholamandalam ADD 1,110 1,425 28.4 173 2.3 156 74 92 113 19.4 23.8 23.1 14.9 12.1 9.8 — — — 3.0 2.5 2.1 20.6 21.3 21.7 0.8 1.0 1.2 7.9

HDFC ADD 1,685 2,020 19.9 2,865 38.8 1,676 55 65 79 (27.3) 18.7 21.2 30.7 25.9 21.4 — — — 3.9 3.5 3.2 13.6 14.2 15.7 1.2 1.5 1.8 82.7

HDFC Standard Life Insurance SELL 366 405 10.7 737 10.0 2,007 6 7 8 14.8 10.9 14.7 57.6 51.9 45.3 — — — 15.3 13.6 12.2 28.0 27.7 28.4 0.4 0.5 0.6 8.0

ICICI Lombard SELL 776 620 (20.1) 352 4.8 454 26 32 37 37.1 21.5 18.5 29.8 24.5 20.7 — — — 6.5 5.5 4.6 23.8 24.2 24.0 0.8 0.9 1.1 5.8

ICICI Prudential Life BUY 320 500 56.2 460 6.2 1,436 12 13 15 10.1 7.0 10.0 25.8 24.1 21.9 — — — 5.7 4.8 4.1 24.5 21.8 20.2 0.7 0.7 0.8 8.6

IIFL Holdings SELL 412 625 51.6 132 1.8 319 38 45 52 31.5 18.6 16.0 11.0 9.2 8.0 — — — 2.0 1.7 1.5 20.5 20.0 20.0 1.9 2.3 2.7 2.1

L&T Finance Holdings ADD 128 165 29.0 256 3.5 1,996 13 14 16 70.9 12.3 12.8 10.2 9.1 8.0 — — — 1.8 1.6 1.4 18.9 18.8 18.3 1.6 2.0 1.9 21.6

LIC Housing Finance BUY 411 580 41.2 207 2.8 505 48 55 66 10.9 13.9 19.8 8.5 7.4 6.2 — — — 1.3 1.2 1.0 17.0 16.2 16.9 1.8 2.1 2.5 17.7

Magma Fincorp BUY 108 165 53.3 29 0.4 237 13 17 21 34.0 31.8 23.0 8.3 6.3 5.1 — — — 1.1 0.9 0.8 13.9 15.8 17.0 1.8 2.4 2.9 1.0

Mahindra & Mahindra Financial ADD 372 450 20.8 230 3.1 614 23 28 34 58.4 23.2 18.6 16.2 13.2 11.1 — — — 2.3 2.1 1.9 14.3 15.8 16.7 1.7 2.1 2.5 12.5

Max Financial Services ADD 367 650 76.9 99 1.3 268 6 6 6 36.9 1.8 1.8 58.6 57.5 56.5 — — — — — — 8.3 8.0 7.8 0.6 0.6 0.6 5.8

Muthoot Finance ADD 397 480 20.8 159 2.2 400 40 42 48 (7.8) 6.0 14.8 10.0 9.5 8.2 — — — 1.8 1.6 1.4 19.0 17.6 17.8 2.3 2.4 2.8 7.7

PNB Housing Finance REDUCE 865 1,200 38.7 145 2.0 167 62 75 92 25.3 20.9 22.4 13.9 11.5 9.4 — — — 2.0 1.8 1.5 15.2 15.9 17.0 0.4 0.4 0.4 4.4

SBI Life Insurance ADD 541 785 45.1 541 7.3 1,000 15 18 21 26.0 22.9 17.0 37.2 30.3 25.9 — — — 7.1 5.9 5.0 20.6 21.3 20.9 0.4 0.5 0.6 3.2

Shriram City Union Finance ADD 1,574 2,120 34.7 104 1.4 66 139 171 206 38.1 22.6 20.5 11.3 9.2 7.7 — — — 1.8 1.6 1.4 15.5 16.7 17.4 1.1 1.4 1.6 1.4

Shriram Transport BUY 1,046 1,450 38.6 237 3.2 227 109 127 143 57.8 16.2 12.5 9.6 8.3 7.3 — — — 1.6 1.4 1.2 17.6 17.2 16.8 1.5 1.7 2.0 29.7

NBFCs Neutral 9,003 122 13.2 19.5 19.6 23.2 19.4 16.3 3.7 3.2 2.8 15.9 16.5 17.1 0.8 1.0 1.2 748.1

Cement

ACC SELL 1,435 1,270 (11.5) 269 3.6 188 62 70 81 27.0 13.8 15.2 23.2 20.4 17.7 12.7 10.9 9.2 2.7 2.4 2.2 11.9 12.5 13.1 1.2 1.2 1.2 17.0

Ambuja Cements REDUCE 208 210 1.0 413 5.6 1,986 9 11 12 14.5 23.2 15.8 24.1 19.6 16.9 8.0 6.6 5.4 1.9 1.8 1.7 8.1 9.5 10.4 1.7 1.7 1.7 10.8

Dalmia Bharat ADD 2,051 2,830 38.0 183 2.5 89 94 122 139 55.8 29.3 14.8 21.8 16.9 14.7 8.5 6.9 5.8 2.6 2.3 2.0 12.9 14.6 14.5 0.1 0.1 0.1 4.2

Grasim Industries BUY 878 1,170 33.2 578 7.8 657 46 55 70 (2.5) 18.8 28.0 19.0 16.0 12.5 6.9 6.6 6.2 1.0 0.9 0.9 5.2 5.9 7.1 0.6 0.6 0.6 16.8

India Cements REDUCE 92 118 27.6 29 0.4 308 4 8 12 28.0 102.6 41.3 22.1 10.9 7.7 7.8 6.1 5.1 0.5 0.5 0.5 2.5 4.8 6.5 1.1 1.1 1.1 9.9

J K Cement ADD 688 890 29.3 48 0.7 70 45 79 78 3.7 75.4 (0.8) 15.3 8.8 8.8 9.5 7.8 6.4 2.2 1.8 1.5 15.0 22.3 18.5 1.2 1.2 1.2 0.4

JK Lakshmi Cement ADD 271 370 36.6 32 0.4 118 11 28 37 153.5 147.9 30.5 23.9 9.6 7.4 8.9 5.7 4.6 2.1 1.7 1.4 8.9 19.5 21.0 0.7 0.7 0.7 0.4

Orient Cement ADD 88 145 64.4 18 0.2 205 7 11 15 212.9 58.7 41.3 13.1 8.2 5.8 6.6 5.0 3.7 1.6 1.4 1.2 12.9 18.2 21.8 1.7 2.3 2.3 0.3

Shree Cement SELL 14,824 12,500 (15.7) 516 7.0 35 421 630 760 6.0 49.7 20.6 35.2 23.5 19.5 16.2 12.1 9.8 5.1 4.3 3.5 15.4 19.7 19.8 0.3 0.3 0.3 5.7

UltraTech Cement SELL 3,689 2,950 (20.0) 1,013 13.7 275 126 162 201 42.7 28.9 24.0 29.3 22.8 18.4 15.4 12.7 10.5 3.5 3.1 2.6 12.6 14.3 15.4 0.3 0.3 0.3 19.3

Cement Cautious 3,099 42 19.5 30.3 21.8 25.0 19.2 15.8 9.8 8.4 7.3 2.1 1.9 1.7 8.4 10.0 11.0 0.6 0.6 0.6 84.8



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Consumer products

Asian Paints REDUCE 1,219 1,200 (1.6) 1,169 15.8 959 27 33 39 32.1 20.3 18.3 45.0 37.4 31.6 28.2 23.3 19.6 12.1 10.6 9.3 28.8 30.3 31.3 1.0 1.2 1.5 23.8

Bajaj Corp. ADD 401 405 0.9 59 0.8 148 15 17 19 7.8 10.3 9.5 26.0 23.6 21.5 20.8 17.7 15.4 12.1 12.0 11.8 46.3 51.2 55.4 3.2 3.5 3.7 0.6

Britannia Industries ADD 5,570 5,875 5.5 669 9.1 120 104 127 152 24.5 22.2 19.2 53.5 43.8 36.7 35.0 28.6 23.9 15.6 12.6 10.3 32.5 31.8 30.9 0.6 0.8 1.0 15.8

Coffee Day Enterprises REDUCE 246 265 7.5 52 0.7 211 8 10 12 129.9 30.0 21.2 32.1 24.7 20.3 11.2 9.8 9.1 2.1 1.9 1.7 6.6 8.0 8.9 — — — 1.1

Colgate-Palmolive (India) ADD 1,100 1,120 1.9 299 4.1 272 27 32 36 14.7 15.6 15.5 40.3 34.9 30.2 23.0 20.0 17.4 17.6 15.3 13.4 46.0 46.9 47.3 1.5 1.7 2.1 7.5

Dabur India REDUCE 393 345 (12.3) 695 9.4 1,762 9 10 12 17.3 12.9 13.6 43.2 38.2 33.6 36.1 31.1 27.0 12.1 10.6 9.3 28.1 29.6 29.4 1.0 1.1 1.4 21.7

GlaxoSmithKline Consumer REDUCE 6,927 6,325 (8.7) 291 3.9 42 199 223 246 19.5 12.1 10.1 34.8 31.0 28.2 24.2 20.9 18.3 7.5 6.8 6.2 22.8 23.0 23.1 1.3 1.5 1.8 2.2

Godrej Consumer Products REDUCE 728 645 (11.4) 744 10.1 1,022 17 19 22 18.8 13.7 12.7 43.1 37.9 33.6 30.5 26.4 23.0 10.1 8.7 7.6 25.3 24.7 24.2 0.8 0.9 1.0 14.7

Hindustan Unilever REDUCE 1,526 1,430 (6.3) 3,303 44.7 2,160 29 33 37 19.5 13.2 12.6 52.1 46.0 40.8 36.0 31.6 28.0 40.7 34.6 29.7 83.5 81.4 78.3 1.4 1.6 1.8 38.1

ITC ADD 265 310 16.9 3,246 44.0 12,275 10 11 12 8.2 12.3 11.7 27.5 24.5 21.9 17.6 15.6 13.8 5.9 5.6 5.3 20.4 22.2 24.2 2.2 2.5 2.9 58.9

Jubilant Foodworks BUY 1,145 1,430 24.9 151 2.0 132 25 35 46 74.7 37.6 32.4 45.0 32.7 24.7 22.3 16.7 12.5 11.2 8.5 6.5 29.0 29.7 29.9 0.2 0.3 0.3 28.4

Jyothy Laboratories ADD 190 210 10.8 69 0.9 364 6 7 8 27.6 16.7 15.4 33.7 28.9 25.0 22.6 19.1 16.2 5.2 4.5 4.0 16.6 16.8 16.9 0.5 0.8 1.1 0.9

Marico ADD 306 310 1.4 395 5.3 1,291 7 8 9 8.9 20.0 14.5 44.8 37.3 32.6 31.1 25.6 22.1 14.7 13.6 12.6 33.7 37.9 40.2 1.6 1.8 2.0 10.6

Nestle India ADD 9,384 9,950 6.0 905 12.3 96 171 197 223 34.2 15.7 13.2 55.0 47.5 42.0 31.4 27.1 23.7 24.3 22.3 20.5 46.1 49.0 50.8 1.2 1.4 1.6 10.4

Page Industries SELL 28,059 22,300 (20.5) 313 4.2 11 418 508 607 34.3 21.6 19.5 67.2 55.2 46.2 43.3 35.7 29.8 28.4 22.5 18.1 47.8 45.5 43.4 0.6 0.8 0.9 18.5

Pidilite Industries REDUCE 960 960 0.0 487 6.6 508 21 26 31 16.8 21.8 20.2 45.6 37.4 31.1 30.2 24.9 20.6 11.6 9.7 8.1 27.4 28.2 28.4 0.7 0.9 1.0 8.4

S H Kelkar and Company BUY 196 240 22.4 28 0.4 145 7 10 12 (6.2) 41.9 23.2 28.2 19.9 16.2 18.3 13.1 11.4 3.1 2.7 2.4 11.3 14.5 16.0 0.9 1.0 1.4 0.5

Tata Global Beverages ADD 225 230 2.4 142 1.9 631 8 9 10 7.7 17.0 12.9 28.4 24.2 21.5 15.5 13.6 12.0 1.9 1.9 1.8 7.0 7.9 8.5 1.3 1.6 1.8 10.3

Titan Company REDUCE 779 760 (2.4) 691 9.4 888 16 20 23 25.6 21.8 19.3 48.5 39.8 33.4 32.1 25.6 21.0 11.5 9.6 8.1 25.6 26.3 26.4 0.6 0.7 0.9 40.2

United Breweries REDUCE 1,188 1,040 (12.5) 314 4.3 264 21 26 31 39.2 23.6 20.6 57.2 46.2 38.3 28.2 24.2 20.7 9.9 8.4 7.1 18.7 19.6 20.0 0.3 0.4 0.5 14.9

United Spirits REDUCE 497 470 (5.4) 361 4.9 727 10 13 17 34.7 30.9 24.5 48.5 37.0 29.7 28.4 22.9 19.2 9.9 7.3 5.6 24.2 22.7 21.3 — — 0.5 11.8

Varun Beverages REDUCE 751 700 (6.8) 137 1.9 183 15 20 26 29.8 34.5 30.7 50.2 37.3 28.6 16.7 14.2 12.0 6.9 5.9 5.0 14.6 17.1 19.0 — — 0.3 1.3

Consumer products Cautious 14,522 197 17.7 16.0 14.7 40.9 35.2 30.7 26.4 22.6 19.6 10.7 9.5 8.5 26.1 27.1 27.8 1.3 1.5 1.7 340.7

Energy

BPCL REDUCE 278 275 (1.1) 603 8.2 1,967 33 33 36 (19.2) 2.6 7.5 8.5 8.3 7.8 6.5 6.1 5.6 1.5 1.3 1.2 17.9 16.8 16.5 4.7 4.8 5.2 29.0

Castrol India SELL 141 155 9.8 140 1.9 989 7 8 9 2.9 10.1 9.7 20.0 18.1 16.5 12.4 11.2 10.1 13.1 12.8 12.3 67.1 71.5 76.0 3.9 4.4 4.8 3.6

GAIL (India) BUY 350 455 29.9 790 10.7 2,255 29 31 33 41.7 6.4 8.0 12.1 11.4 10.6 7.6 7.1 6.5 1.8 1.6 1.5 15.4 14.9 14.7 2.7 2.9 3.0 27.3

GSPL SELL 171 185 8.5 96 1.3 564 16 12 13 31.3 (25.1) 12.1 11.0 14.6 13.0 4.3 5.2 4.5 1.7 1.5 1.4 16.2 10.9 11.1 1.4 1.0 1.1 1.6

HPCL REDUCE 208 185 (11.0) 317 4.3 1,524 28 29 31 (32.3) 1.7 6.6 7.4 7.2 6.8 7.3 7.4 7.4 1.2 1.1 1.0 17.2 16.1 15.8 5.5 5.6 6.0 26.0

Indraprastha Gas SELL 230 240 4.5 161 2.2 700 12 13 15 16.4 12.3 10.7 19.1 17.1 15.4 12.0 10.5 9.2 3.9 3.4 3.0 22.1 21.5 20.9 1.1 1.3 1.8 9.9

IOCL REDUCE 131 120 (8.4) 1,272 17.2 9,479 16 15 17 (24.1) (1.8) 12.3 8.4 8.6 7.6 5.0 4.8 4.3 1.1 1.0 0.9 12.9 11.9 12.6 4.8 4.7 5.2 19.6

Mahanagar Gas ADD 790 965 22.2 78 1.1 99 56 60 64 16.0 7.6 5.4 14.1 13.1 12.4 8.1 7.4 6.7 3.3 2.9 2.6 24.8 23.5 22.0 2.8 3.1 3.2 12.8

ONGC ADD 153 200 30.8 1,963 26.6 12,833 20 20 19 16.8 0.3 (5.9) 7.5 7.5 8.0 3.7 3.5 3.5 0.8 0.8 0.7 11.2 10.6 9.5 4.4 4.6 4.6 17.4

Oil India SELL 198 200 1.1 225 3.0 1,135 23 24 23 (6.7) 3.4 (2.5) 8.6 8.3 8.5 5.7 5.4 5.4 0.8 0.7 0.7 9.2 9.0 8.4 4.7 4.8 4.7 2.5

Petronet LNG BUY 212 280 32.0 318 4.3 1,500 16 18 20 16.7 13.1 9.4 13.1 11.6 10.6 8.8 7.4 6.5 2.9 2.5 2.3 23.3 23.2 22.7 2.7 3.5 4.3 10.5

Reliance Industries SELL 1,088 985 (9.5) 6,438 87.2 5,922 69 78 87 17.6 12.4 11.9 15.7 13.9 12.5 10.9 9.3 7.9 2.0 1.7 1.5 12.2 12.1 12.1 0.6 0.6 0.7 159.4

Energy Attractive 12,400 168 4.0 5.6 6.7 11.6 11.0 10.3 7.2 6.6 6.0 1.5 1.3 1.2 12.6 12.2 12.0 2.2 2.3 2.5 319.5



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Price (Rs) price Upside shares 3mo


Industrials

ABB SELL 1,290 1,020 (20.9) 273 3.7 212 26 29 36 30.1 14.2 23.5 50.1 43.8 35.5 29.3 26.3 21.8 7.0 6.3 5.6 14.5 15.1 16.7 0.7 0.7 0.7 2.4

BHEL REDUCE 73 89 21.4 269 3.6 3,671 3.3 5.5 7.6 47.9 69.3 38.0 22.6 13.3 9.7 7.0 4.3 3.1 0.8 0.8 0.8 3.6 6.1 8.2 2.7 4.6 6.4 9.7

Carborundum Universal SELL 359 322 (10.2) 68 0.9 189 14 17 20 25.0 21.4 13.8 25.1 20.7 18.2 13.8 11.3 9.7 3.9 3.5 3.1 16.3 17.8 18.1 1.2 1.4 1.6 0.5

CG Power and Industrial BUY 39 62 57.8 25 0.3 627 1.4 3.6 5.7 71.6 157.3 57.0 27.9 10.9 6.9 7.2 5.3 4.1 0.9 0.9 0.8 3.3 8.4 12.5 — — — 4.3

Cummins India REDUCE 669 710 6.1 186 2.5 277 28 33 37 15.2 17.5 13.7 24.1 20.5 18.0 20.1 17.2 14.8 4.4 4.1 3.8 18.7 20.6 21.8 2.2 2.7 3.0 5.2

Kalpataru Power Transmission BUY 305 560 83.3 47 0.6 153 23.9 32.7 41.3 23.4 36.6 26.4 12.8 9.3 7.4 6.2 4.9 4.1 1.6 1.4 1.2 13.0 15.5 16.9 0.5 0.5 0.5 0.6

KEC International BUY 253 410 62.0 65 0.9 257 21 27 33 16.9 29.7 23.0 12.1 9.3 7.6 7.1 5.7 4.9 2.6 2.1 1.7 24.1 25.2 24.9 0.9 1.2 1.4 2.8

L&T BUY 1,226 1,600 30.5 1,719 23.3 1,401 62.8 67.1 83.3 21.5 6.8 24.1 19.5 18.3 14.7 15.7 15.0 13.0 3.1 2.8 2.5 16.7 16.1 18.0 1.7 1.8 2.3 50.5

Siemens SELL 887 1,000 12.8 316 4.3 356 29 35 — 21.4 21.7 — 30.5 25.1 - 16.8 13.5 — 3.6 3.4 — 12.3 14.0 — 1.3 1.6 — 4.1

Thermax REDUCE 918 1,065 16.0 109 1.5 113 27.8 38.7 43.8 34.7 39.2 13.2 33.1 23.7 21.0 20.9 15.4 13.2 3.6 3.2 2.9 11.1 14.3 14.7 1.0 1.2 1.3 1.1

Industrials Neutral 3,076 42 23.8 17.8 15.7 22.1 18.8 16.2 14.8 13.0 10.9 2.6 2.4 2.4 11.8 12.9 14.7 1.6 1.9 2.2 81.1

Infrastructure

Adani Ports and SEZ BUY 314 460 46.7 649 8.8 2,071 19 23 29 1.2 21.1 29.8 16.8 13.8 10.7 11.8 9.7 8.5 2.7 2.3 1.9 17.0 17.7 19.4 0.6 0.7 0.6 16.2

Ashoka Buildcon BUY 109 220 101.9 31 0.4 282 9 10 10 4.1 17.8 (1.3) 12.4 10.6 10.7 8.2 7.0 6.5 1.4 1.2 1.1 11.8 12.3 11.0 1.5 1.2 1.2 0.6

Container Corp. SELL 594 635 6.8 290 3.9 487 21 25 29 17.4 20.9 15.0 28.7 23.7 20.6 17.5 13.9 11.4 2.9 2.6 2.5 10.3 11.6 12.3 1.5 1.8 1.7 5.3

Dilip Buildcon BUY 523 1,240 137.0 72 1.0 137 56 71 85 19.8 27.5 20.1 9.4 7.4 6.1 5.4 4.3 3.7 2.2 1.7 1.3 26.7 26.2 24.4 — — — 3.5

Gateway Distriparks BUY 167 250 49.4 18 0.2 109 7 8 11 (5.8) 15.2 37.5 23.3 20.3 14.7 10.7 8.8 7.2 3.1 2.7 2.3 9.8 14.5 17.1 — 1.8 1.8 0.2

Gujarat Pipavav Port BUY 102 150 46.6 49 0.7 483 5.3 6.5 7.8 29.7 22.9 19.3 19.2 15.6 13.1 10.1 8.3 6.9 2.4 2.4 2.3 12.7 15.3 17.8 4.3 5.2 6.2 0.6

IRB Infrastructure BUY 130 320 145.9 46 0.6 351 31 33 23 36.8 7.1 (31.3) 4.2 3.9 5.7 5.9 6.4 7.6 0.7 0.6 0.6 17.6 16.3 10.0 2.4 3.1 3.3 5.7

Mahindra Logistics REDUCE 526 565 7.5 37 0.5 71 15 21 25 50.7 39.3 23.7 35.6 25.5 20.7 19.7 14.3 11.3 7.4 6.0 4.8 22.7 25.8 25.8 — — — 0.5

Sadbhav Engineering BUY 200 370 84.8 34 0.5 172 17 22 22 31.7 27.9 2.9 11.8 9.2 9.0 9.1 7.2 6.0 1.6 1.4 1.2 14.5 16.2 14.5 — — — 1.3

Infrastructure Attractive 1,226 17 11.3 20.2 16.7 15.9 13.2 11.3 10.2 8.7 7.8 2.4 2.0 1.8 14.8 15.5 15.7 1.0 1.2 1.2 33.9

Internet

Info Edge ADD 1,450 1,425 (1.7) 177 2.4 122 26 33 40 14.9 27.5 20.6 56.1 44.0 36.5 42.4 32.1 26.0 6.6 6.0 5.4 13.2 14.3 15.6 0.6 0.6 0.7 3.2

Just Dial ADD 444 610 37.3 30 0.4 67 26 30 33 23.0 15.0 9.4 17.0 14.8 13.5 8.0 6.2 4.9 2.6 2.3 2.0 16.7 16.6 15.7 0.6 0.7 0.7 20.0

Internet Cautious 207 3 17.6 23.0 16.8 42.2 34.3 29.3 30.6 24.0 20.0 5.5 4.9 4.3 12.9 14.2 14.7 0.6 0.6 0.7 23.2

Media

DB Corp. REDUCE 187 270 44.3 34 0.5 184 20 23 26 14.9 12.3 14.8 9.2 8.2 7.2 4.8 4.2 — 1.9 1.8 — 20.7 22.3 25.2 9.0 11.2 13.5 0.5

DishTV ADD 55 90 62.5 102 1.4 1,925 1.8 3.4 4.9 514.6 88.2 42.6 NM 16.1 11.3 4.9 3.8 3.0 1.5 1.4 1.2 5.1 8.9 11.5 — — — 4.3

Jagran Prakashan REDUCE 108 168 55.3 32 0.4 311 11 12 14 10.0 12.2 14.6 10.2 9.1 7.9 4.4 3.8 3.3 1.7 1.6 1.6 15.9 18.3 20.2 4.6 8.3 8.3 0.4

PVR BUY 1,257 1,430 13.8 59 0.8 47 38 50 61 41.2 32.3 22.4 33.2 25.1 20.5 12.8 10.9 9.2 4.8 4.1 3.5 15.3 17.6 18.3 0.3 0.4 0.5 11.8

Sun TV Network REDUCE 637 660 3.7 251 3.4 394 35 37 41 20.6 6.6 10.3 18.3 17.2 15.6 12.3 11.4 9.9 5.0 4.6 4.3 28.4 27.9 28.6 3.1 3.5 3.9 17.8

Zee Entertainment Enterprises REDUCE 464 430 (7.3) 446 6.0 960 17 20 22 11.4 17.1 12.6 27.7 23.7 21.0 16.3 14.3 12.6 5.2 4.6 4.1 19.9 20.6 20.5 1.0 1.2 1.5 19.6

Media Attractive 924 13 28.7 19.5 16.7 22.1 18.5 15.9 10.3 9.0 7.6 3.6 3.3 3.2 16.3 17.7 19.9 1.8 2.2 2.6 54.5

Mkt cap. EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%)


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Metals & Mining

Coal India ADD 267 320 20.0 1,655 22.4 6,207 25 25 27 120.4 2.2 6.6 10.7 10.5 9.8 8.1 6.9 6.3 6.6 7.3 7.7 62.7 65.9 76.0 7.5 9.4 9.4 14.9

Hindalco Industries BUY 217 330 52.4 486 6.6 2,229 28 33 35 28.1 17.8 6.4 7.7 6.6 6.2 5.3 4.4 4.0 0.8 0.7 0.6 10.8 11.4 10.9 0.6 0.6 0.6 38.9

Hindustan Zinc REDUCE 270 280 3.6 1,142 15.5 4,225 21 24 27 (3.8) 15.7 12.3 13.1 11.3 10.1 7.5 6.2 5.1 2.8 2.4 2.1 22.9 23.2 22.6 3.0 3.0 3.0 6.0

Jindal Steel and Power REDUCE 167 215 28.9 161 2.2 968 8 14 22 195.9 68.5 60.8 20.5 12.2 7.6 6.4 5.8 4.9 0.5 0.5 0.5 2.7 4.3 6.5 — — — 36.2

JSW Steel SELL 362 350 (3.2) 874 11.8 2,406 31 26 31 16.1 (16.2) 17.2 11.6 13.8 11.8 6.9 8.1 7.1 2.5 2.1 1.8 23.5 16.6 16.8 0.9 0.9 0.9 37.5

National Aluminium Co. BUY 67 87 29.9 129 1.8 1,933 10 8 9 238.9 (16.0) 3.6 6.8 8.1 7.8 3.1 3.7 3.6 1.2 1.2 1.1 17.6 14.4 14.6 9.0 9.0 9.0 11.8

NMDC REDUCE 108 120 10.7 343 4.6 3,164 12 10 11 4.2 (14.3) 5.9 8.9 10.4 9.8 5.4 6.3 5.8 1.3 1.3 1.2 15.3 12.4 12.5 5.1 5.1 5.1 6.6

Tata Steel ADD 555 660 18.9 634 8.6 1,205 76 85 94 12.8 12.1 10.9 7.3 7 5.9 5.8 6.1 5.7 1.0 0.9 0.8 14.3 14.3 14.4 1.8 1.8 1.8 73.2

Vedanta BUY 208 360 73.2 773 10.5 3,717 27 38 39 26.7 39.0 2.2 7.6 5.5 5.4 5.0 3.7 3.3 1.1 1.0 0.9 15.4 19.4 17.7 3.9 5.5 5.6 50.3

Metals & Mining Attractive 6,198 84 35.8 10.0 9.1 9.7 8.8 8.1 6.2 5.6 5.1 1.7 1.5 1.4 17.3 17.5 17.3 3.9 4.6 4.6 275.5

Pharmaceutical

Apollo Hospitals ADD 1,121 1,090 (2.8) 156 2.1 139 20 27 33 133.5 36.7 21.6 56.9 41.6 34.2 19.8 16.7 14.7 4.5 4.2 3.9 8.2 10.5 11.8 0.4 0.6 0.7 15.5

Aster DM Healthcare BUY 160 240 50.3 81 1.1 505 5 8 12 74.4 62.0 51.4 33.2 20.5 13.5 12.0 9.5 7.4 2.6 2.4 2.1 8.3 12.2 16.3 — — — 0.2

Aurobindo Pharma ADD 756 760 0.5 443 6.0 584 42 57 64 1.0 35.8 12.3 17.9 13.2 11.8 12.0 8.9 7.9 3.2 2.6 2.2 19.3 19.9 18.6 0.7 0.8 1.0 40.6

Biocon SELL 609 330 (45.8) 365 4.9 601 8 15 18 35.9 75.7 21.7 72.3 41.1 33.8 31.5 21.0 17.9 6.0 5.4 4.8 8.7 13.9 14.3 0.5 0.9 1.0 23.6

Cipla BUY 616 680 10.4 496 6.7 805 24 31 40 34.5 31.0 29.4 26.2 20.0 15.4 14.7 11.7 9.1 3.1 2.8 2.4 12.4 14.6 15.7 0.8 1.0 1.4 23.0

Dr Lal Pathlabs REDUCE 961 900 (6.4) 80 1.1 83 24 29 34 19.0 17.9 18.4 39.5 33.5 28.3 24.2 20.3 16.6 8.5 7.1 6.0 23.4 23.1 22.9 0.5 0.6 0.7 1.2

Dr Reddy's Laboratories REDUCE 2,459 2,150 (12.6) 408 5.5 166 89 118 141 50.2 32.8 19.3 27.7 20.9 17.5 14.0 9.9 8.3 2.9 2.6 2.3 11.1 12.6 13.3 0.6 0.7 0.9 34.5

HCG BUY 216 270 25.3 19 0.3 85 2 4 7 28.8 87.5 73.4 107.0 57.1 32.9 16.6 13.7 10.8 3.4 3.2 3.0 3.3 5.9 9.4 — — — 0.2

Laurus Labs ADD 420 500 18.9 45 0.6 106 16 29 34 2.4 79.9 17.5 25.9 14.4 12.3 12.1 8.4 7.3 2.7 2.3 1.9 10.9 17.1 15.6 — — — 0.6

Lupin REDUCE 837 800 (4.4) 378 5.1 450 27 39 50 (28.9) 44.0 27.4 30.9 21.4 16.8 14.5 10.5 8.4 2.6 2.3 2.1 8.6 11.4 12.4 0.5 0.7 0.9 45.0

Narayana Hrudayalaya ADD 232 265 14.1 47 0.6 204 3 6 9 23.0 103.2 40.7 75.1 37.0 26.3 21.5 15.0 12.0 4.3 3.9 3.4 5.9 11.0 13.7 — — — 0.2

Sun Pharmaceuticals SELL 587 540 (8.0) 1,408 19.1 2,406 16 24 29 7.5 45.5 21.6 36.0 24.7 20.3 19.2 13.8 11.4 3.4 3.0 2.7 9.8 12.9 13.2 0.6 0.8 1.0 60.8

Torrent Pharmaceuticals NR 1,597 — — 270 3.7 169 47 61 81 18.0 29.6 32.1 33.8 26.1 19.7 14.8 12.7 10.4 5.2 4.5 3.8 15.3 17.2 19.3 0.7 0.9 1.2 7.9

Pharmaceuticals Neutral 4,197 57 11.3 40.7 22.6 31.7 22.5 18.3 16.3 12.1 10.1 3.4 3.0 2.7 10.9 13.5 14.6 0.6 0.8 1.0 253.3

Real Estate

Brigade Enterprises BUY 192 290 51.3 26 0.4 136 9 15 17 (17.0) 59.2 15.8 20.9 13.1 11.3 13.2 10.3 8.2 1.1 1.0 1.0 5.4 8.1 8.8 1.3 1.3 1.3 0.3

DLF RS 153 — — 274 3.7 1,784 5.3 23.9 14.1 (74.4) 354.6 (41.0) 29.2 6.4 10.9 44.8 7.9 14.6 0.8 0.7 0.7 2.6 11.3 6.2 1.3 1.3 1.3 21.9

Godrej Properties SELL 489 400 (18.2) 112 1.5 216 12.9 15.1 18.2 (32.9) 16.3 20.8 37.8 32.5 26.9 635.5 182.0 97.0 3.9 3.5 2.6 10.9 11.4 10.1 — — — 1.9

Lemon Tree Hotels ADD 70 76 9.4 55 0.7 786 — 1 2 147.2 174.0 66.8 155.8 56.9 34.1 34.9 21.2 15.8 6.4 5.8 5.4 4.2 10.7 16.3 — — 1.3 —

Oberoi Realty BUY 370 560 51.4 134 1.8 340 62 44 66 385.4 (28.0) 49.3 6.0 8.3 5.6 8.5 10.4 4.4 1.4 1.2 1.0 27.4 15.2 19.2 0.5 0.5 0.5 2.7

Prestige Estates Projects ADD 169 315 86.0 64 0.9 375 10 10 11 (24.2) 8.4 — 17.8 16.4 15.9 12.1 12.0 12.0 1.3 1.2 — 7.3 7.5 7.3 0.9 0.9 0.9 0.7

Sobha REDUCE 403 510 26.4 38 0.5 95 20 23 24 (7.5) 14.8 3.5 20.0 17.4 16.8 11.9 11.2 10.6 1.3 1.3 1.5 6.8 7.4 9.1 1.7 1.7 1.7 1.5

Sunteck Realty REDUCE 340 360 6.0 50 0.7 140 19 19 39 22.4 1.6 106.6 18.2 17.9 8.7 15.9 15.5 6.6 1.7 1.5 1.3 9.5 8.9 16.2 0.3 0.3 0.3 1.9

Real Estate Neutral 753 10 (22.8) 69.2 (6.9) 17.5 10.4 11.1 20.2 11.1 11.2 1.2 1.1 1.0 7.0 10.6 9.1 0.8 0.8 0.9 30.8

Dividend yield (%)Mkt cap. EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%)


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Technology

HCL Technologies REDUCE 1,009 1,100 9.0 1,405 19.0 1,409 71 78 82 14.6 8.9 5.0 14.1 13.0 12.4 9.1 8.1 7.4 3.2 2.7 2.4 24.4 22.3 20.6 0.8 3.1 3.3 34.3

Hexaware Technologies SELL 385 455 18.3 114 1.5 302 20 24 27 19.5 21.6 12.7 19.4 16.0 14.2 14.3 10.8 9.4 5.0 4.2 3.6 27.6 28.7 27.5 2.1 2.1 2.6 22.2

Infosys ADD 673 770 14.4 2,941 39.8 4,350 36 41 45 12.8 13.3 8.9 18.5 16.3 15.0 12.6 10.9 9.8 4.2 3.7 3.4 23.4 24.2 23.7 3.2 2.9 3.1 89.1

L&T Infotech ADD 1,715 2,100 22.4 297 4.0 175 83 96 113 30.5 15.6 18.1 20.7 17.9 15.2 15.6 12.5 10.6 6.3 5.1 4.1 33.5 31.3 30.0 1.4 1.5 1.8 10.0

Mindtree ADD 981 1,225 24.9 161 2.2 165 45 57 65 29.5 27.0 14.5 21.9 17.3 15.1 13.8 10.8 9.3 5.0 4.2 3.6 24.7 26.6 25.8 1.4 1.7 2.0 26.2

Mphasis SELL 1,026 900 (12.3) 198 2.7 193 53 60 63 21.9 12.1 4.7 19.2 17.1 16.3 14.0 11.9 11.0 3.8 3.4 3.1 18.9 21.0 20.0 1.9 2.4 2.9 7.3

TCS REDUCE 1,980 1,950 (1.5) 7,430 100.6 3,829 85 95 103 25.6 11.6 8.9 23.4 20.9 19.2 16.6 14.8 13.7 7.3 6.9 6.5 33.8 33.7 34.8 1.7 3.3 3.6 83.3

Tech Mahindra ADD 695 865 24.4 614 8.3 891 46 57 64 8.4 22.4 13.0 15.0 12.3 10.9 8.9 7.0 5.9 2.8 2.4 2.0 20.2 21.2 20.3 1.3 1.5 1.6 39.0

Wipro REDUCE 313 325 3.8 1,416 19.2 4,507 19 23 25 12.8 19.5 7.5 16.4 13.7 12.8 10.5 8.8 8.0 2.5 2.3 2.1 16.5 17.6 17.4 0.5 3.2 3.5 21.1

Technology Cautious 14,576 197 15.9 13.0 8.7 19.6 17.4 16.0 13.4 11.7 10.7 4.7 4.3 3.9 23.9 24.5 24.3 1.8 3.0 3.3 332.5

Telecom

Bharti Airtel ADD 285 445 55.9 1,141 15.4 3,997 (6) (4) 5 (221.5) 28.8 215.1 (49.6) (69.7) 60.6 8.4 7.1 5.6 1.7 1.8 1.8 (3.4) (2.5) 2.9 0.4 (0.3) 0.4 26.4

Bharti Infratel REDUCE 260 285 9.7 480 6.5 1,850 13 12 13 (4.8) (8.5) 7.7 19.8 21.7 20.1 7.3 7.7 7.3 3.0 3.0 2.9 14.6 13.7 14.6 4.1 3.7 4.0 10.1

IDEA REDUCE 35 45 30.2 302 4.1 4,359 (17) (17) (15) (75.6) (2.4) 11.4 (2.1) (2.0) (2.3) 38.1 32.1 19.8 0.7 1.0 1.9 (29.7) (41.1) (59.4) — — — 16.5

Tata Communications ADD 484 660 36.5 138 1.9 285 0 3 7 (77.5) 694.2 123.5 1,305 164.3 73.5 10.1 8.9 8.0 (60.1) (81.6) (1,580.2) 7.8 (42.1) (211.0) 1.3 1.6 1.6 3.0

Telecom Cautious 2,061 28 (2,384.5) 5.0 68.0 (28.7) (30.2) (94.4) 10.1 8.9 7.3 2.0 2.2 2.3 (6.9) (7.2) (2.4) 1.2 0.7 1.2 56.0

Utilities

CESC BUY 848 1,180 39.2 112 1.5 133 115 128 141 31.7 11.6 10.1 7.4 6.6 6.0 5.4 4.8 4.2 0.7 0.7 0.6 10.0 10.4 10.5 1.5 1.5 1.6 8.1

JSW Energy REDUCE 59 70 18.1 97 1.3 1,640 5.1 6.5 6.6 65.9 26.8 2.9 11.6 9.2 8.9 5.3 4.3 3.9 0.8 0.7 0.7 7.2 8.5 8.0 — — — 1.3

NHPC ADD 24 30 27.4 242 3.3 10,260 3.1 3.2 3.4 26.9 1.8 8.0 7.6 7.5 6.9 7.1 6.9 7.3 0.8 0.7 0.7 10.4 10.2 10.6 7.4 7.5 6.3 1.4

NTPC BUY 163 190 16.5 1,345 18.2 8,245 15 16 18 18.8 4.4 16.5 10.9 10.5 9.0 8.8 8.2 6.9 1.2 1.1 1.1 11.6 11.3 12.2 2.7 2.9 3.3 10.7

Power Grid BUY 186 250 34.6 972 13.2 5,232 19 21 23 19.3 13.6 7.6 9.9 8.7 8.1 7.2 6.6 6.3 1.6 1.4 1.3 17.1 17.5 17.0 3.4 3.8 4.1 13.3

Tata Power BUY 62 90 44.6 168 2.3 2,705 6.0 7.0 10.9 12.7 15.6 57.0 10.3 8.9 5.7 10.1 9.7 8.4 1.0 0.9 0.8 10.1 10.6 14.6 — — — 4.6

Utilities Attractive 2,936 40 21.1 8.8 14.1 10.0 9.2 8.1 7.8 7.2 6.5 1.2 1.1 1.0 11.9 12.0 12.5 3.0 3.3 3.5 39.5

Dividend yield (%)Mkt cap. EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%)


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Others

Aditya Birla Fashion and Retail BUY 175 220 25.7 135 1.8 773 2 4 6 50.6 59.1 53.5 76.3 47.9 31.2 22.5 17.5 14.2 10.7 8.7 6.8 15.0 20.0 24.5 — — — 5.0

Astral Poly Technik SELL 868 640 (26.2) 104 1.4 120 19 25 29 30.2 28.8 16.1 45.5 35.3 30.4 24.5 19.4 16.4 8.0 6.6 5.5 19.8 20.5 19.7 0.1 0.1 0.2 1.0

Avenue Supermarts SELL 1,326 860 (35.1) 828 11.2 624 16 20 26 28.6 26.4 27.5 82.0 64.9 50.9 47.3 37.2 29.2 14.6 11.9 9.7 19.6 20.3 21.0 — — — —

Bayer Cropscience REDUCE 4,337 4,100 (5.5) 149 2.0 34 106 130 154 20.5 23.1 18.3 41.1 33.4 28.2 26.1 21.2 17.6 7.2 6.2 5.3 18.9 20.0 20.3 0.5 0.6 0.7 0.6

Crompton Greaves Consumer SELL 200 215 7.5 125 1.7 627 6 7 9 19.5 20.7 17.4 32.4 26.8 22.8 20.1 16.9 14.2 11.0 8.5 6.5 40.4 35.8 32.3 1.0 1.3 — 2.9

Dhanuka Agritech ADD 415 650 56.6 20 0.3 49 27 31 34 3.9 15.4 10.8 15.5 13.5 12.2 11.1 9.1 7.8 2.8 2.4 2.1 19.2 19.2 18.5 1.4 1.6 1.8 0.2

Godrej Agrovet ADD 516 640 24.0 99 1.3 189 15 19 23 28.9 28.8 21.1 34.8 27.0 22.3 18.9 14.8 12.3 5.1 4.3 3.7 15.7 17.4 17.9 — 0.6 0.7 0.9

Godrej Industries RS 477 — — 160 2.2 336 16 20 — 8.9 24.2 — 30.1 24.2 - 26.1 28.4 — 3.9 3.4 — 13.9 15.1 — 0.4 0.4 — 4.0

Havells India SELL 580 485 (16.4) 363 4.9 625 14 17 20 26.6 20.5 17.6 41.4 34.3 29.2 26.3 21.4 17.9 8.6 7.5 6.5 22.0 23.2 23.9 0.8 1.0 1.2 15.2

InterGlobe Aviation BUY 761 980 28.8 292 4.0 383 (11) 42 75 (118.1) 496.4 79.4 (71.7) 18.1 10.1 (40.5) 8.3 4.5 4.3 3.5 2.6 (5.9) 21.5 29.9 (0.1) - 0.5 19.6

Kaveri Seed SELL 499 515 3.1 33 0.4 66 34 34 37 7.3 0.1 8.3 14.5 14.5 13.4 11.7 11.1 9.8 3.5 3.0 2.6 26.4 22.4 21.0 1.6 2.0 2.0 5.1

PI Industries BUY 754 875 16.0 104 1.4 138 31 40 48 17.9 26.8 21.5 24.1 19.0 15.6 17.1 13.4 10.8 4.5 3.8 3.1 20.5 21.7 21.9 0.5 0.6 0.8 2.2

Rallis India ADD 179 220 23.0 35 0.5 195 10 12 13 17.2 19.4 9.7 17.7 14.8 13.5 11.6 9.8 8.6 2.7 2.4 2.2 15.8 17.1 16.9 2.0 2.2 2.5 0.7

SIS REDUCE 925 1,130 22.2 68 0.9 73 33 40 48 48.5 21.1 17.8 27.8 22.9 19.4 17.4 14.5 12.1 5.5 4.5 3.8 21.8 21.7 21.1 0.3 0.4 0.5 0.4

SRF BUY 1,727 2,200 27.4 99 1.3 57 100 132 150 23.8 32.2 14.1 17.3 13.1 11.5 10.4 8.2 6.9 2.5 2.1 1.8 15.0 17.3 17.0 0.8 0.8 0.9 11.4

Tata Chemicals ADD 634 760 19.8 162 2.2 255 44 51 56 (15.3) 14.6 11.5 14.4 12.6 11.3 5.9 4.9 4.1 1.3 1.3 1.2 9.7 10.3 10.8 2.4 2.7 2.7 6.8

TCNS Clothing Co. BUY 569 760 33.7 35 0.5 64 18 23 27 15.3 27.5 20.8 32.2 25.2 20.9 17.2 12.9 10.1 6.4 4.9 3.9 22.7 22.2 20.9 — — — —

TeamLease Services SELL 2,419 1,785 (26.2) 41 0.6 17 60 77 100 38.9 29.2 28.7 40.4 31.3 24.3 40.7 30.8 23.6 7.6 6.1 4.9 20.8 21.7 22.4 — — — 1.1

UPL ADD 605 660 9.1 308 4.2 507 49 55 60 14.6 11.9 9.5 12.3 11.0 10.0 8.4 7.1 6.1 2.8 2.3 1.9 24.7 22.9 21.1 1.7 1.8 2.0 30.2

Vardhman Textiles ADD 1,011 1,300 28.6 58 0.8 56 118 130 142 14.8 9.7 9.8 8.5 7.8 7.1 6.6 6.0 5.3 1.1 1.0 0.9 13.1 13.0 13.0 2.0 3.0 3.0 0.5

Voltas SELL 498 530 6.4 165 2.2 331 17 21 25 0.4 18.8 18.9 28.7 24.2 20.3 21.4 17.4 14.5 3.8 3.4 3.0 13.9 14.8 15.7 0.7 0.8 1.0 12.0

Whirlpool SELL 1,436 1,350 (6.0) 182 2.5 127 37 46 56 33.9 24.7 20.2 38.8 31.1 25.9 23.4 18.5 15.1 8.4 7.0 6.0 23.7 24.5 24.8 0.5 0.6 1.2 1.7

Others 3,566 48 (10.1) 39.1 18.2 32.9 23.7 20.0 19.3 14.2 11.0 4.7 4.1 3.7 14.4 17.2 18.3 0.6 0.7 0.8 121.3

KIE universe 101,221 1,371 23.1 28.4 15.2 20.1 15.6 13.6 10.2 9.0 8.0 2.5 2.3 2.1 12.6 14.6 15.2 1.5 1.8 2.0

KIE universe (ex-energy) 88,821 1,203 29.5 34.6 17.0 22.4 16.6 14.2 11.3 9.8 8.6 2.8 2.5 2.3 12.6 15.3 16.0 1.4 1.8 1.9

Notes:

(a) We have used adjusted book values for banking companies.

(b) 2019 means calendar year 2018, similarly for 2020 and 2021 for these particular companies.

(c) Exchange rate (Rs/US$)= 73.84

Mkt cap. EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%)

Disclo

sure

s

Disclosures

Ratings and other definitions/identifiers

Definitions of ratings

BUY. We expect this stock to deliver more than 15% returns over the next 12 months.

ADD. We expect this stock to deliver 5-15% returns over the next 12 months.

REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.

SELL. We expect this stock to deliver <-5% returns over the next 12 months.

Our target prices are also on a 12-month horizon basis.

Other definitions

Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the following

designations: Attractive, Neutral, Cautious.

Other ratings/identifiers

NR = Not Rated. The investment rating and target price, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s)

and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction

involving this company and in certain other circumstances.

CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.

NC = Not Covered. Kotak Securities does not cover this company.

RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient

fundamental basis for determining an investment rating or target. The previous investment rating and price target, if any, are no longer in effect for this stock

and should not be relied upon.

NA = Not Available or Not Applicable. The information is not available for display or is not applicable.

NM = Not Meaningful. The information is not meaningful and is therefore excluded.

Kotak Institutional Equities Research coverage universe

Distribution of ratings/investment banking relationships

Source: Kotak Institutional Equities As of June 30, 2018

Percentage of companies covered by Kotak Institutional

Equities, within the specified category.

* The above categories are defined as follows: Buy = We

expect this stock to deliver more than 15% returns over

the next 12 months; Add = We expect this stock to

deliver 5-15% returns over the next 12 months; Reduce

= We expect this stock to deliver -5-+5% returns over

the next 12 months; Sell = We expect this stock to deliver

less than -5% returns over the next 12 months. Our

target prices are also on a 12-month horizon basis.

These ratings are used illustratively to comply with

applicable regulations. As of 31/03/2018 Kotak

Institutional Equities Investment Research had

investment ratings on 207 equity securities.

Percentage of companies within each category for

which Kotak Institutional Equities and or its affiliates has

provided investment banking services within the

previous 12 months.

21.4%

31.3%

25.4%21.9%

2.0%5.0% 4.5%

0.5%

0%

10%

20%

30%

40%

50%

60%

70%

BUY ADD REDUCE SELL

Corporate Office Overseas Affiliates

Kotak Securities Ltd.

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Tel:+1 212 600 8856 Copyright 2018 Kotak Institutional Equities (Kotak Securities Limited). All rights reserved.

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Research Analyst or his/her relative's financial interest in the subject company(ies): No Kotak Securities Limited has financial interest in the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: YES

Nature of financial interest is investment banking and/or other businesss relationships Our associates may have actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report. Research Analyst or his/her relatives has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: No Kotak Securities Limited has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of Research Report: No Subject company(ies) may have been client during twelve months preceding the date of distribution of the research report. A graph of daily closing prices of securities is available at https://www.moneycontrol.com/india/stockpricequote/ and http://economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose a company from the list on the browser and select the"three years" icon in the price chart). Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051, Telephone No.: +22 43360000, Fax No.: +22 67132430. Website: www.kotak.com / www.kotaksecurities.com. Correspondence Address: Infinity IT Park, Bldg. No 21, Opp. Film City Road, A K Vaidya Marg, Malad (East), Mumbai 400097. Telephone No: 42856825. SEBI Registration No: INZ000200137 (Member of NSE, BSE & MSE) AMFI ARN 0164, PMS INP000000258 and Research Analyst INH000000586. NSDL/CDSL: IN-DP-NSDL-23-97. Compliance Officer Details: Mr. Manoj Agarwal. Call: 022 - 4285 8484, or Email: [email protected]. Investments in securities market are subject to market risks, read all the related documents carefully before investing. In case you require any clarification or have any concern, kindly write to us at below email ids: Level 1: For Trading related queries, contact our customer service at ‘[email protected]’ and for demat account related queries contact us at [email protected] or call us

on: Toll free numbers 18002099191 / 1800222299 and 18002099292 Level 2: If you do not receive a satisfactory response at Level 1 within 3 working days, you may write to us at [email protected] or call us on 022-42858445 and if you feel you

are still unheard, write to our customer service HOD at [email protected] or call us on 022-42858208. Level 3: If you still have not received a satisfactory response at Level 2 within 3 working days, you may contact our Compliance Officer (Name: Mr. Manoj Agarwal) at

[email protected] or call on 91- (022) 4285 8484.

Level 4: If you have not received a satisfactory response at Level 3 within 7 working days, you may also approach CEO (Mr. Kamlesh Rao) at [email protected] or call on 91-(022) 4285 8301.

First Cut notes published on this site are for information purposes only. They represent early notations and responses by analysts to recent events. Data in the notes may not have been verified by us and investors should not act upon any data or views in these notes. Most First Cut notes, but not necessarily all, will be followed by final research reports on the subject. There could be variance between the First cut note and the final research note on any subject, in which case the contents of the final research note would prevail. We accept no liability for the contents of the First Cut Notes.

For further disclosure please view https://kie.kotak.com/kinsite/index.php

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