Angel Top Picks - October 2016

Diwali Special

Dear Friends,

Let me wish you all a very Happy Diwali and a

Prosperous New Year!

Last year, I had expressed strong faith in our

markets with increasing inflows in equities and

declining interest rates. In line with my

expectations, interest rates have come down;

thanks to the better monsoon, which has kept

food inflation under control. Cheaper

commodity prices and pro-growth government

have also ensured improvement in our macros benefitting the Indian

economy. And look at the current G-sec bond yields, at 6.65%; these are

lowest yields in more than a decade. The last time we saw such low yields,

on a sustainable basis, was back in 2004 and the rest as we know is history.

I believe that the current low interest rate environment is setting the stage for

continued positive returns from the Indian equity markets.

I continue to believe in India’s consumption story and that there is further

scope for growth. Our rural economy had remained weak for last two

years due to poor monsoon, which impacted rural consumption. However,

a strong monsoon this year is a boon for our economy as it will improve the

rural economy and will cool the inflation further. Both of these will lead to

increased consumption, which is already reflected in strong retail loan

growth and higher automobile sales. Overall, India is witnessing unfolding

of a strong consumption story and the current low interest regime will be a

key trigger for further economic growth.

Moreover, government has doubled its expenditure on infrastructure in

FY17 compared to FY16, for building roads, power infrastructure, etc. This

will increase the sales of infrastructure and capital goods companies. A

strong growth in infrastructure activity is very important to increase the

overall efficiency of our economy.

The Sensex earnings in last two years remained flat mainly due to the

underperformance of companies from commodities and PSU sector.

However, with the economic revival, earnings of these sectors seem to have

bottomed out. In my opinion, most companies are expected to post growth

in their earnings and sectors like automobile, infrastructure, cement,

consumer durables, capital goods, etc. will benefit the most from this revival.

This is a healthy situation for retail investors to invest in the equity markets.

If inflation continues to remain moderate, the interest rates and deposit

rates would come down further. In such environment, traditional bank

deposits would not be enjoying same returns as before. A lot of investment

has to come in the equities to earn higher returns. Therefore in my view,

demat account numbers are going to see a huge growth in near future over

increased retail participation. So, this Diwali, let’s welcome prosperity by

increasing the participation in the markets and enjoying the good times.

Best regards,

Dinesh Thakkar

Please refer to important disclosures at the end of this report

Top Picks Report | October 2016

Diwali Special

Return of low bond yields

The G-sec bond yields have fallen to multi-year low after recent repo rate cut by

Top Picks

RBI. The Indian macros have improved strongly in the last two years. With normal

Company

CMP (`)

TP (`)

monsoon and easing inflation, RBI’s, move indicates that this would be the right

Banking/NBFC

time to adopt low yield regime conducive for growth. The consumption-led earning

Axis bank

510

630

growth will be a potent theme in the markets in near term, with focus remaining on

Dewan Housing

301

350

sectors like Automobiles, retail banking, consumer durables, etc. We believe that

Equitas Holdings

175

235

market would remain attractive over its earning potential going ahead.

Consumption

Low bond yield, boon for economy

Amara Raja

1,041

1,218

Asian Granito

267

351

The previous low yield regime (2002-04), led to a GDP growth of by 8-9%. This

Bajaj Electricals

263

306

sparked a strong pick-up in Sensex earnings and a multiyear bull rally in stock

Blue Star

571

634

markets from 2002 to 2007. We believe that the Indian economy has gathered

Mirza International

113

enough momentum for growth with lower inflation and interest rates. With food

Siyaram Silk Mills

1,524

1,714

inflation expected to cool down further, we believe that more rate cuts will be a

reality going forward. In-line with the earlier instance of low yield, we opine that

HCL Tech

787

1,000

this regime is expected to show a strong growth in economy and equity markets.

Infosys

1,055

1,341

India remains an attractive investment destination

Media

Jagran Prakashan

200

225

With the strong improvement in our macros, India remains an attractive

TV Today

328

363

destination for the foreign investors. Our annual FDI inflows have shown decent

Real Estate/infra/Logistics

increase in the last three years indicating strong backing of foreign investors to the

BEL

1,270

1,414

policy decisions taken by the government. We believe that this signifies their strong

Mahindra Lifespace

437

522

commitment in long term investments in India.

Navkar Corp.

195

265

Consumption remains the strong theme

Source: Angel Research;

Note: CMP as of Oct. 14, 2016

India’s consumption story remains intact and there is ample scope of growth going

forward. Due to normal monsoon this year, the rural consumption is expected to

improve in near term, which will be beneficial to overall growth of the economy. As

pointers, this consumption is already reflected in retail loans, vehicle sales, etc.

This strong momentum in consumption is expected to translate in higher corporate

earnings, which had remained weak in the last two years.

Sensex earnings to grow, valuation near 10-year average

We believe that Sensex earnings are expected to grow by 14-15%, going forward.

We also believe that market will remain attractive over its future earning potential.

As the current level, Sensex is trading at 15.8x of FY2018E earnings. As the

corporate earnings pick-up and economy gathers momentum, we expect Sensex to

reach new heights.

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Return of low bond yields: With the recent interest rate cut, India’s 10 year

G-sec bond yields (6.72%) have fallen to 12 year low, (keeping aside, the few

months of low yields just after Lehman Brothers crisis). The low inflation, improved

liquidity, and subsequent rate cuts have seen ~100bps decline in the bond yields,

in this calendar year. Inflation has played a major role in lowering interest rates.

Owing to the supply glut and weak demand, crude prices have tanked from more

than $100 per barrel in March 2014 to current $51 per barrel. Crude oil forms

more than 30% of our imports and any decline in crude oil is a welcome change.

A normal monsoon this year has also ensured inflation remains low for next year,

giving RBI more headroom for further rate cuts.

We believe that the return of sub-7% bond yield indicates that India is moving

towards a sustainable low interest rate regime in near term.

Exhibit 1: Bond Yields at 12 year low, catalyst for markets

10.5

Lehman Brothers crisis

9.5

8.5

7.5

6.5

5.5

4.5

Source: Bloomberg, Angel Research

Low interest rates, boon for economy: The return of low interest rate regime is

a tailwind at the current juncture for the growth of Indian economy. Such an

environment was previously seen in 2002-2004 when yields had fallen from ~8%

in May 2002 to below 6% in January 2003 over lower inflation. RBI, during this

period, kept the accommodative policy and cut repo rates from 6% in March 2002

to 4.5% in September 2003. The low interest rates led to increase in demand,

which triggered strong growth in Indian economy from 2003-2007. Accordingly,

GDP grew from 3.8% in 2002 to more than 9% each in 2005 and 2006. This was

a period of a strong growth of Indian economy in recent history.

The Sensex earnings during this period grew at a CAGR of 27% benefitting from

the strong pick-up in corporate earnings. Sensex too increased from 3,377 in

December 2002 to more than 20,000 by December 2007 showing immense

wealth creation and nearly a five year bully rally in the markets.

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Exhibit 2: Strong GDP growth following period of low inflation

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0

GDP growth (%)

Average inflation (%)

Source: Bloomberg, Angel Research

We believe that we are currently witnessing similar situation as interest rates and

inflation is cooling down, and more reforms are being introduced. This, in our

opinion, is a very conducive atmosphere for growth as lower interest would further

strengthen the domestic consumption and will also help to revive the domestic

capex cycle.

Current inflation trajectory warrants further rate cuts: The declining inflation in our

opinion is not a one-off event and it is very much sustainable in mid-term. It is

noteworthy that the inflation has been gradually declining from the levels of 10%

seen in 2013-14 to current 4.31%.

We believe that there is high probability of inflation cooling further owing to the

internal and external factors: 1) Internal - further easing of food inflation due to

high food grain and vegetable production this year, 2) External - Lower crude oil

prices due to excess crude oil supply and low demand due to slowdown in Chinese

economy. This is already reflected in September 2016 CPI inflation, which stood at

4.31%, close to RBI’s 2018 inflation target of 4%. With the expectations of further

easing of inflation, we believe that repo rates will come down further. The newly

constituted Monetary Policy Committee (MPC) under the RBI is entrusted to

maintain price stability and mange inflation, while keeping in mind the objective of

growth. This means MPC is likely to cut the rates further if inflation continues to

ease.

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Exhibit 3: Change in inflation trajectory

Source: Bloomberg, Angel Research

Macros continue to score high; Foreign investors backing India: Owing to a

host of internal (stable government, liberalization and stable currency) and external

(soft commodity prices, improving US economy) factors, our macros have

continued to improve. Indian economy also remains well prepared for external

shocks as RBI continues to maintain high Forex reserves ($347 bn in October 2016

vs. $286 bn in October 2014) and twin deficits continue to shrink. Our current

account deficit shrunk to 1.1% of GDP in FY16 vs. 4.8% in FY13. This has ensured

that we continue to remain an attractive destination for the foreign investors.

During the tenure of earlier government, India failed to push reforms, due to which

annual FDI inflows declined from $42bn in 2009 to $34bn in 2013. However with

the new government pushing for reforms, FDI inflows are returning in India. From

FY2014 to FY2016, annual FDI inflows have consistently shown improvement and

in FY2016, annual FDI inflows increased by 23% to $55 billion. This has ensured

an improvement in our ease of doing business ranking from 142 in 2014 to 130

in 2016, showing an improvement in environment for carrying business. This year,

India is expected to clock ~$60 billion in FDI inflows, which will be the highest FDI

received in India. The increasing FDI indicates that long term investment

opportunities remain in India and is also a testimony of foreign investor’s faith in

our economy.

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Exhibit 4: Surge in FDI inflows; India remains attractive destination

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016

Source: Ministry of Commerce & Industry, Angel Research

Consumption remains the key theme: In our opinion, consumption continues to

remain a dominant theme in India. Our domestic demand is expected to improve

due to a strong revival in the rural economy. This year’s Kharif production is

expected to be strong with food grain production reaching to a record 270 million

tons, 7% higher than total food grain production of 252 million tons in FY16.

In the past two years, rural economy suffered significantly as the agriculture

production took a hit due to drought and decline in Minimum Support Prices (MSP)

of food items by the government. This led to a decline in earnings of the farmers

impacting the rural economy. This year, however, the rural economy is on strong

recovery path with a robust growth in crop production and rise in MSP.

Overall, the domestic consumption is expected to improve with the increase in

demand and this is already reflected on sales of automobile and white goods. The

traction in retail loans has also picked-up over strong recovery in consumer

sentiment. The recent rate cut will further accelerate the consumer demand as

loans will become further cheaper. In the last two years, RBI has cut the interest

rates by 175bps, which has provided a strong cushion for consumption growth.

Overall, we believe that the consumption is expected to remain a strong theme in

the Indian markets. We also expect this to have positive impact on corporate

earnings, which for most sectors look to be bottomed out.

Exhibit 5: Recovery in retail credit

Exhibit 6: Recovery in automobile sector

30.0

20.0

17.5

13.4

15.0

12.3

25.0

10.0

7.2

6.2

6.0

20.0

5.0

15.0

0.0

(0.4)

(5.0)

10.0

(10.0)

(10.1)

5.0

(15.0)

Passenger

Commercial

3 Wheelers

2 Wheelers

Vehicles

Year to September FY16

Year to September FY17

Source: RBI, Angel Research *Retail credit includes vehicle loans and

Source: SIAM, Angel Research

consumer durable loans

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Valuations remain near its long term average: The Sensex in CY2016YTD has

appreciated by ~6%, but has outperformed the US markets by ~1%. During this

period, Chinese markets have declined over growth concerns in their economy.

We believe that the economic revival, improvement in the consumption and further

possibility of interest rate cuts will increase corporate earnings going forward.

Owing to this, we expect Sensex to clock ~14-15% CAGR in earnings in the next

two years.

As the current level, Sensex is trading at 15.8x of FY2018E earnings. As the

corporate earnings pick-up and economy gathers momentum, we expect Sensex to

reach new heights.

Exhibit 7: Sensex EPS estimate

Exhibit 8: Sensex one-year forward P/E (x)

Sensex 1 year forward P/E

10 year Avg

2,000

1,800

24.0

24,4

1,600

1,400

1,200

17.2

19.0

1,000

800

600

14.0

400

200

9.8

9.0

Source: Angel Research

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Stock Info

Axis Bank

CMP

521

 Business growth continues to be strong for the bank: Axis Bank has outpaced

630

the industry growth rate in loan book (19% CAGR over FY12-16), led by a

Upside

21%

39% CAGR in retail loans. Well capitalised balance sheet will help the bank in

Sector

Bank

growing its loan book by more than 20% over the next 2-3 years.

Market Cap (` cr)

124,267

 Asset quality woes restricted to watch list, hence not a cause of concern: Axis

Bank came out with strong disclosure, with loans worth Rs 22,628 cr under

Beta

1.3

watch list, saying ~60% of that could fall into NPAs over 2 years. As indicated

52 Week High / Low

638 / 367

during Q1FY17, 74% of the slippages came from the watch list, indicating that

asset quality problem is not likely to extend beyond the watch list accounts.

3 year-Chart

 Expect ROE to bounce back by FY18end: Axis Bank has maintained RoE of 16-

700

17% over the last 3 years. Though higher credit cost will keep RoE under pressure for

600

FY17, we expect the Bank will be able to sustain 16-17% RoE in the medium term.

500

 Valuations & outlook: At the current levels, the stock trades at 2x its FY18E Adj

400

BV of `268. Thus, we believe the current corrections in the stock gives long

300

term investors an opportunity to enter the stock. We upgrade the stock to a

200

BUY with a target price of `630.

100

Key Financials

Y/E

Op. Inc NIM

PAT

EPS

ABV ROA ROE P/E P/ABV

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

30,226

3.5

7,723

32.3

234

1.3

13.6

16.1

2.2

Source: Company, Angel Research

FY2018E

34,919

3.4

10,669

44.6

268

1.6

16.5

11.7

1.9

Source: Company, Angel Research

Stock Info

Dewan Housing

CMP

301



3^rd largest private sector housing finance company: We expect DHFL’s AUM to

350

grow at a CAGR of 21% over FY2016-18, as demand for housing in the middle

Upside

16.3%

and low income group picks up, while PAT CAGR is expected to be 22%.

Sector

Financials

 Seasoned and granular loan book with stable asset quality: Individual

borrowers account for 72%, while the high yielding loan against property (LAP)

Market Cap (` cr)

8,786

+SME and projects loans account for 19% and 9% of advances respectively. Despite

Beta

1.6

strong loan growth, the GNPAs and NNPAs are likely to be at ~1.17% and 0.82%,

52 Week High / Low

305 / 141

respectively, for FY2017. We don’t expect any major deterioration in the asset

quality going ahead.

3 year-Chart

 Lower cost of funds will help maintain NIM: Nearly

70% of the bank

350

borrowings are due for maturity over the next three years and swapping a part

300

of that with non-convertible debentures (NCDs), where it has ~100bp cost

250

benefit, will help DHFL in maintaining its NIM at ~2.9%.

200

 Outlook: We expect the company to post a healthy loan book CAGR of 21%

150

over FY2015-18E, which is likely to translate in an earnings CAGR of 22%,

100

over the same period. The stock currently trades at 1.4x FY2018E ABV. We

maintain Buy on the stock, with a target price of `350.

Key Financials

Y/E

Op. Inc NIM

PAT

EPS

ABV ROA ROE P/E P/ABV

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

Source: Company, Angel Research

FY2017E

2,225

2.9

866

29.7

184.0

1.1

16.1

10.1

1.6

FY2018E

2,688

2.9

1,084

34.6

215.3

1.2

16.8

8.7

1.4

Source: Company, Angel Research

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Stock Info

Equitas Holdings

CMP

175

 Early mover advantage in the SFB category: Equitas was one of the ten NBFCs

235

to get the license to start a small finance bank (SFB). As the entire book of

Upside

34.3%

Equitas qualifies for PSL, meeting the 75% PSL target will not be a challenge.

Sector

Financials

Sizeable and diversified loan book will keep it ahead of other upcoming SFBs.

Market Cap (` cr)

5,872

 Asset quality and return ratios are likely to remain stable: Equitas will have to

maintain CRR & SLR going ahead; hence yield on total assets is likely to come

Beta

0.9

down. However, as a bank it will be able to raise deposits and hence there will

52 Week High / Low

206 / 134

be reduction in cost of funds. As a result, spreads may not decline much which

in turn will help in maintaining the ROE & ROA which although could undergo

3 year-Chart

a marginal decline. Also we don’t expect any major deterioration in the asset

220

quality going ahead.

210

200

 NIM likely to remain healthy: Equitas will be able to take deposits after it

190

formally starts banking operations leading to ~250bp reduction in cost of

180

funds. Hence we expect the NIM to remain strong at ~11%, going ahead.

170

160

 Outlook: We expect the company to post a strong loan book & earnings

150

CAGR of 38% & 37% over FY2016-18E. The stock currently trades at 2.3x

140

130

FY2018E BV. We maintain Buy on the stock, with a target price of `235.

120

Key Financials

Y/E

Op. Inc NIM

PAT

EPS

ABV ROA ROE P/E P/ABV

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

Source: Company, Angel Research

FY2017E

1,076

11.7

224

6.7

68.2

2.8

12.4

26.1

2.6

FY2018E

1,465

11.4

315

9.4

77.6

2.8

12.9

18.6

2.3

Source: Company, Angel Research

Stock Info

Amara Raja Batteries

CMP

1,041

 Amara Raja Batteries Ltd (ARBL) is the second largest lead acid storage battery

1,218

manufacturer in the country. It has been outpacing market leader Exide (ARBL

Upside

17.0%

grew at a 21% CAGR over FY2010-16 as compared to standalone Exide's

growth of 7%), leading to its market share improving from 25% in FY10 to

Sector

Auto Ancillary

about 35% currently. ARBL's outperformance has been mainly on back of its

Market Cap (` cr)

17,781

association with global battery leader Johnson Controls Inc (which also holds

Beta

0.8

26% stake in ARBL) for manufacturing ducts.

52 Week High / Low

1,077 / 773

 With the automotive OEMs following a policy of having multiple vendors and

with ARBL’s products enjoying a strong brand recall in the replacement

3 year-Chart

segment, the company is well poised to gain further market share. Given the

1,200

economic recovery and market share gains, the company is expected to grow at

a CAGR of 18% over the next two years as against industry growth of 10-12%.

1,000

 ARBL is a well diversified auto ancillary player having presence across the

800

automotive and the industrial segment. It has a broad OEM as well as

600

replacement customer base. We believe ARBL is a high quality stock to play

400

the auto sector revival. We maintain our Buy rating on the stock.

200

Key Financials

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

5,429

17.5

604

35.3

25.3

29.5

6.8

15.8

3.1

Source: Company, Angel Research

FY2018E

6,471

17.6

742

43.5

24.8

23.9

5.5

13.0

2.5

Source: Company, Angel Research

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Stock Info

Asian Granito

CMP

267

 AGIL’s current, vitrified sales (35%) are lower as compared to its peers like

351

Somany Ceramics (47%) and Kajaria Ceramics (61%). Recently, AGIL has

Upside

31.5%

launched various products in premium segment. Going forward, we expect

Sector

Ceramics

AGIL’s profit margin to improve due to increase in focus for higher vitrified

product sales, which is a high margin business.

Market Cap (` cr)

803

 AGIL is continuously putting efforts to increase the B2C sales from the current

Beta

1.4

level (35% in FY16). It is expected to reach up to 50% in next 2-3 years on the

52 Week High / Low

304 / 109

back of various initiatives taken by AGIL to increase direct interaction with customers

like strengthening distribution network, participation in key trade exhibition, etc.

3 year-Chart

 In July FY2016, AGIL acquired Artistique Ceramic which has a better margin

350

profile. Going forward, we expect the company to improve its operating

300

margin from 7.5% in FY16 (excluding merger) to

12-12.5% in coming

250

financial year. Artisique Ceramics has a contract with RAS GAS to supply

200

quality natural gas at a discounted rate of 50% to current market rate, which

150

would reduce the overall power & fuel cost of the company.

100

 We expect AGIL to report a net revenue CAGR of ~11% to ~`1,220cr and net

profit CAGR of ~39% to `48cr over FY2016-18E. We have a Buy rating on

the stock and target price of `351.

Key Financials

Y/E

Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

Source: Company, Angel Research

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

1,118

11.8

13.0

9.7

20.5

2.0

8.2

1.0

FY2018E

1,220

12.0

16.0

10.7

16.7

1.8

7.2

0.9

Source: Company, Angel Research

Stock Info

Bajaj Electricals

CMP

263

 The company is among the top 4 players in the consumer durables space

306

across all its product categories (leader in small appliances; number-4 in fans

Upside

16.3%

and lighting). It has a strong distribution reach with 4,000 distributors

reaching out to 400,000 retailers.

Sector

Cons. Durable

 In the 3 years preceding FY2016, the company’s E&P segment had been

Market Cap (` cr)

2,655

underperforming owing to cost overruns and delays in project executions.

Beta

0.9

However, the segment has turned around in FY2016 on the profitability front

52 Week High / Low

280 / 155

and delivered a healthy EBIT margin of ~6% for the year. Currently the

segment’s order book stands at `2,480cr.

3 year-Chart

 With expectation of timely execution of new projects in the E&P segment and

400

with the Lighting and Consumer Durables segments expected to benefit from

an improvement in consumer sentiments going forward, we expect the

350

company’s top-line to grow at a CAGR of ~12% to `5,805cr and bottom-line

300

to grow at a CAGR of 24% to `147cr over FY2016-FY2018E. We recommend

250

a Buy rating on the stock.

200

Key Financials

150

Y/E

Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

100

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

5,099

5.6

115

11.4

13.4

23.1

3.1

9.5

0.5

FY2018E

5,805

5.9

147

14.6

15.1

18.0

2.7

7.9

0.5

Source: Company, Angel Research

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Stock Info

Blue Star

CMP

571

 BSL is one of the largest air-conditioning companies in India. With a mere

634

3% penetration level of ACs vs 25% in China, the overall outlook for the room

Upside

11.1%

air-conditioner (RAC) market in India is favourable.

Sector

Cons. Durable

 BSL’s RAC business has been outgrowing the industry by ~10% points over the

Market Cap (` cr)

5,442

last few quarters, resulting in the company consistently increasing its market

share (~7% in FY2014 to 10.5% at present). This has resulted in the Cooling

Beta

0.6

Products Division (CPD)'s share in overall revenues increasing from~23% in

52 Week High / Low

580 / 306

FY2010 to ~42% in FY2016 (expected to improve to ~47% in FY2018E). With

strong brand equity and higher share in split ACs, we expect the CPD to

3 year-Chart

continue to drive growth.

700

 Aided by increasing contribution from the CPD, we expect the overall top-line

600

to post a revenue CAGR of ~16% over FY2016-18E and margins to improve

500

from 5.9% in FY2015 to 7.3% in FY2018E. Moreover, the merger of Blue Star

400

Infotech has infused cash and strengthened the balance sheet. We have an

300

Accumulate recommendation on the stock.

200

Key Financials

100

Y/E

Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

4,283

5.9

141

14.9

20.4

38.3

7.4

20.1

1.3

FY2018E

5,077

7.3

211

22.1

26.4

25.8

6.3

13.6

1.1

Source: Company, Angel Research

Stock Info

Mirza International

CMP

 In the branded domestic segment, we expect the company to report a ~24%

113

CAGR over FY2016-18E to `346cr. We anticipate strong growth for the

Upside

19.0 %

company on the back of (a) the company’s wide distribution reach through its

1,000+ outlets including 120 exclusive brand outlets (EBOs) in 35+ cities and

Sector

Footwear

the same are expected to reach 200 over the next 2-3 years and (b) strong

Market Cap (` cr)

1,142

branding (Red Tape) in the shoes segment.

Beta

1.5

 MIL’s major export revenue comes from the UK (73%), followed by the US

52 Week High / Low

145 / 84

(14%) and the balance from ROW. Export constitutes ~75% of the company’s

total revenue. We expect the company to report healthy growth over the next

2-3 years on back of recovery in the UK market, strong growth in the US market

3 year-Chart

and with it tapping newer international geographies like the Middle East countries.

160

140

 In FY2016, the company acquired Genesis Footwear which has a better

120

margin profile than it. The deal resulted in MIL’s EPS increasing by ~4% and

100

ROE improving from 15.9% to 17.5%. Further, due to this merger, the

company’s capacity has increased from 5.4mn to 6.4mn units.

 We expect MIL to report a net revenue CAGR of ~11% to ~`1,148cr and net

profit CAGR of ~11% to `97cr over FY2016-18E. We have a Buy rating on

the stock and target price of `113.

Key Financials

Y/E

Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

Source: Company, Angel Research

FY2017E

1,024

18.0

6.9

16.6

13.8

2.3

7.3

1.3

FY2018E

1,148

18.0

8.0

16.2

11.9

2.0

6.4

1.2

Source: Company, Angel Research

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Stock Info

Siyaram Silk Mills

CMP

1,524

 SSML has strong brands which cater to premium as well as popular mass

1,714

segments of the market. Further, SSML entered the ladies' salwar kameez and

Upside

12.5%

ethnic wear segment. Going forward, we believe that the company would be able to

Sector

Textile

leverage its brand equity and continue to post strong performance.

Market Cap (` cr)

1,429

 The company has a nationwide network of about 1,600 dealers and business

Beta

0.8

partners. It has a retail network of 160 stores and plans to add another

300-350 stores going forward. Further, the company's brands are sold across

52 Week High / Low

1,550/910

3,00,000 multi brand outlets in the country.

 Going forward, we expect SSML to report a net sales CAGR of ~12% to

3 year-Chart

~`2,040cr and adj.net profit CAGR of ~14% to `115cr over FY2016-18E on

1,800

1,600

back of market leadership in blended fabrics, strong brand building, wide

1,400

distribution channel, strong presence in tier II and tier III cities and emphasis

1,200

on latest designs and affordable pricing points. At the current market price,

1,000

SSML trades at an inexpensive valuation. We have an Accumulate

800

recommendation on the stock and target price of `1,714.

600

400

Key Financials

200

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

1,799

11.6

104.9

16.4

14.5

2.4

8.5

1.0

FY2018E

2,040

11.7

115

122.4

16.4

12.5

2.0

7.4

0.9

Source: Company, Angel Research

Stock Info

HCL Technologies

CMP

813

 Healthy pipeline: Company’s engineering services has been seeing lumpy

1,000

growth over the last few quarters. This is however largely a function of the

Upside

23.0%

timing of large transformational deals. 6-8 of the large deals signed a few

Sector

quarters ago will aid the company to continue to post industry leading growth.

Market Cap (` cr)

114,652

We expect HCL Tech to post a USD and INR revenue CAGR of 16.3% and

18.0%, respectively, over FY2016-18E (inclusive of the acquisition of

Beta

0.3

Geometric Software and the Volvo deal).

52 Week High / Low

890 / 707

 Robust outlook: For FY2017 revenues are expected to grow between 12.0-

14.0% in CC. Revenue guidance is based on FY2016 (April to March’2016)

3 year-Chart

average exchange rates. The above constant currency guidance translates to

1,200

11.2% to 13.2% growth in US$ terms.

1,000

 Outlook and Valuations: The stock is attractively valued at the current market

800

price and hence we maintain our Buy with a price target of `1,000.

600

Key Financials

400

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

200

June

(`cr)

(%)

(`cr)

(`)

(%)

(x)

FY2017E

49,242

20.5

7,862

55.7

20.3

14.6

3.0

9.0

1.8

FY2018E

57,168

20.5

9,037

64.1

17.9

12.7

2.3

6.8

1.4

Source: Company, Angel Research

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Stock Info

Infosys

CMP

1,027

 Revenue guidance for FY17: The Management has lowered its guidance for

1,370

FY2017, to 8-9% in CC terms and 9.2-10.2% in INR terms (exchange rate as

Upside

33.4%

on March 31, 2016). For FY2016, the company posted a 13.3% growth in CC

Sector

terms V/s a guidance of 12.8-13.2% growth (in CC). We expect the company

Market Cap (` cr)

235,988

to post ~9.0% USD revenue growth in FY2017.

Beta

0.8

 Aims to be US$20bn company by FY20: Company expects its revenue to rise

52 Week High / Low

1,278 / 1,009

to US$20bn by FY2020, up from US$8.7bn in FY2015, as it focuses on

acquisitions and winning more new technology services, implying a

3 year-Chart

14% CAGR over the period. Over the near term, we expect Infosys to post a

1,400

9.0% USD revenue growth in FY2017. Over FY2016-18E, we expect

1,300

USD and INR revenue to grow at a CAGR of 11.0% and 11.2%, respectively.

1,200

 Outlook and Valuations: The stock trades at a valuation of 14.9x FY2018E

1,100

1,000

earnings. We recommend Buy on the stock with a price target of `1,370.

900

Key Financials

800

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

700

600

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

68,350

27.5

14,600

63.6

21.7

16.6

3.6

9.8

2.7

FY2018E

77,236

27.5

16,206

70.6

21.9

14.9

3.3

8.5

2.3

Source: Company, Angel Research

Stock Info

Jagran Prakashan

CMP

200

 We expect JPL to register a net sales CAGR of ~12% over FY2016-18E, on

225

back of (a) strong growth in advertising revenue due to improvement in GDP

growth, and (b) improvement in circulation revenue owing to combination of

Upside

12.5%

increase in cover price and volume growth.

Sector

Media

 Further the acquisition of Radio City would also boost the company's revenue

Market Cap (` cr)

6,648

going ahead. Radio City has ~20 stations across 7 states in the country and is

second only to ENIL in all its operating circles, ie Delhi, Mumbai, Bengaluru,

Beta

0.6

Chennai, Ahmedabad, Hyderabad, Pune and Lucknow. The company covers

52 Week High / Low

213/138

~51% (~66mn people) of the total radio population.

 Raw material prices have been in a declining trend. Thus, considering lower

3 year-Chart

news print costs, healthy sales, and higher margins in the radio business, we

250

expect an adj. net profit CAGR of ~12% over FY2016-18E to `409cr.

 Considering Dainik Jagran's strong presence in the rapidly growing Hindi

200

markets, we expect JPL to benefit from an eventual recovery in the Indian

economy. Hence, we maintain an Accumulate rating on the stock with a target

150

price of `225.

100

Key Financials

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

2,355

28.0

353

10.8

21.7

18.5

4.0

10.0

2.8

FY2018E

2,635

28.0

409

12.5

21.7

16.0

3.5

8.7

2.4

Source: Company, Angel Research

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Stock Info

TV Today Network

CMP

328

 TTNL enjoys a strong viewership ranking in the Hindi and English news

363

channel categories. The company’s Hindi news channel - Aaj Tak has

Upside

10.7%

maintained its market leadership position occupying the No.1 rank for several

Sector

Media

consecutive years in terms of viewership. Its English news channel - India

Today too has been continuously gaining viewership; it has now captured the

Market Cap (` cr)

1,957

No. 2 ranking from No. 4 earlier. Its other channels like Dilli Aaj Tak and Tez

Beta

1.3

are also popular among viewers.

52 Week High / Low

351 /230

 Out of the 7 radio stations, TTNL has sold off 4 (Jodhpur, Amritsar, Patiala

and Shimla) for `4cr. The remaining 3 stations are in the process of getting

3 year-Chart

sold off to ENIL but the sale will have to wait until concerns raised by the MIB

400

are resolved. Going forward, we expect them to be sold off and this would

350

prop up the company’s profitability.

300

250

 We expect TTNL to report a net revenue CAGR of ~16% to ~`743cr and net

200

profit CAGR of ~16% to `128cr over FY2016-18E. We have an Accumulate

150

recommendation on the stock and target price of `363

100

Key Financials

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

637

27.5

110

18.4

17.4

17.9

3.1

9.7

2.7

FY2018E

743

27.5

128

21.4

17.2

15.4

2.6

7.9

2.2

Source: Company, Angel Research

Stock Info

Bharat Electronics (BEL)

CMP

1,270

 High priority to the defense sector in the government’s ‘Make in India’

1,414

campaign, with (1) emphasis on indigenization, (2) increase in FDI limits from

Upside

11.3%

26% to 49%, and (3) over $50bn worth of projects cleared by Defense

Acquisition Council (DAC) in the last 26 months, indicate at the sector being at

Sector

Capital Goods

an inflexion point where Indian defense capex cycle is entering a new era of

Market Cap (` cr)

30,468

growth. The current bid pipeline could lead to strong award activity for the

Beta

1.1

next few years and BEL could emerge as a beneficiary.

52 Week High / Low

1,417 / 1,009

 BEL in FY2016 had ~35% market share in the defense electronics space.

Considering (1) bid-pipeline of Indian Air Force and Navy’s platform projects,

which have high defense electronic component, (2) BEL’s in-house R&D

3 year-Chart

capabilities, and (3) its zero debt status, we believe that BEL would maintain its

1,600

strong market positioning in the defense electronics space.

1,400

 We expect BEL to trade at a premium to its historical valuations on account of

1,200

uptick in investment cycle. Current low competitive intensity which should

1,000

enable BEL to justifiably command scarcity premium, coupled with the fact that the

800

company is the largest listed defense player, makes the stock more attractive. We

600

maintain an Accumulate rating on the stock with price target of `1,414.

400

200

Key Financials

Y/E

Sales

OPM PAT EPS Adj. ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

8,137

16.8

1,410

58.7

44.6

21.6

3.4

15.7

2.7

Source: Company, Angel Research

FY2018E

9,169

17.2

1,499

62.5

46.3

20.3

3.0

13.7

2.4

Source: Company, Angel Research

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Stock Info

Mahindra Lifespace

CMP

437

 MLF has 13 projects under implementation across cities. MLF has exhibited

522

fast completion of projects compared to others. Sales cycle in ~65% of

Upside

19.5%

projects is faster than execution cycle, contrary to industry trends. This fast

execution and sales is optimal, as it helps MLF in revenue recognition,

Sector

Real Estate

inventory cycle (better than Oberoi, DLF), cash flows and profitability. This

Market Cap (` cr)

1,794

translates in creating a virtuous cycle of continuous fast growth.

Beta

0.4

 MLF as of 4QFY2016 is pursuing ~4.0mn sq. ft. of sale of the total ~15.0mn

52 Week High / Low

518 / 415

sq. ft. of saleable area. Having sold ~60% of ongoing projects, we expect MLF

to launch ~2.8mn sq.ft. of saleable area in rational way during 4QFY2016-

3 year-Chart

2QFY2018E, across 6 cities. Maturity at existing projects, new launches give better

650

revenue visibility for medium-term. Further, MLF is sitting on land bank of 11.0mn

600

sq.ft across 4 cities, which allays any concern over long-term revenue growth.

550

 With Real Estate Regulatory Bill closer to reality, MLF should be minimally

500

impacted, given their strong parentage and ethically implemented processes.

450

In the longer-term organized, professionally run, well funded players would

400

enjoy strong trust due to their reliable and fast execution strategies. With

350

improvement in company’s fundamentals, strong earnings growth visibility

300

and long-term growth outlook, at current valuations of 1.1x FY2017E P/BV,

MLF looks attractive. We maintain BUY on MLF with target price of `522.

Key Financials

Source: Company, Angel Research

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

1,152

22.7

29.9

7.6

14.6

1.1

15.7

2.3

FY2018E

1,300

24.6

138

35.8

8.6

12.2

1.0

10.1

1.9

Source: Company, Angel Research

Stock Info

Navkar

CMP

195

 NCL is one of the largest and one of the three CFS at JNPT with rail

265

connectivity, helping it garner high market share at the port. NCL is in a massive

Upside

35.9%

expansion mode where it is increasing its capacity by 234% to 1,036,889 TEUs

Sector

Logistics

at JNPT and coming up with an ICD at Vapi (with Logistics Park).

Market Cap (` cr)

2,778

 The ICD with rail link should benefit from first mover advantage in a region

Beta

0.6

that has huge market potential and accounts for ~27% of volumes at JNPT.

The ICD should be able to capture the EXIM volumes from the region through

52 Week High / Low

224 / 151

rail link that till now was being custom cleared at JNPT (Import) or being

transported via road and consolidated at JNPT (Export). South Gujarat

3 year-Chart

volumes will now head straight to the Vapi ICD; thus the company can now

230

cater to bulk commodities and domestic traffic that it had been rejecting owing

210

to capacity constraints at CFS.

190

 We expect NCL to successfully use its rail advantage and scale up its

utilizations at both JNPT and Vapi ICD. We have a Buy rating on the stock.

170

Key Financials

150

Y/E

Sales

OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales

130

March

(` cr)

(%)

(` cr)

(`)

(%)

(x)

FY2017E

408

42.9

6.8

6.9

28.8

2.0

18.8

7.7

FY2018E

612

42.3

164

11.5

10.5

16.9

1.8

12.7

5.1

Source: Company, Angel Research

October 17, 2016

Stock Watch | October 2016

Diwali Special

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

Agri / Agri Chemical

Rallis

Neutral

230

4,478

1,937

2,164

13.3

14.3

9.0

11.0

25.6

20.9

4.5

3.9

18.4

19.8

2.4

2.1

United Phosphorus

Neutral

683

34,625

15,176

17,604

18.5

37.4

44.6

18.3

15.3

3.6

3.0

21.4

21.2

2.4

2.0

Auto & Auto Ancillary

Ashok Leyland

Buy

111

22,952

22,407

26,022

10.6

5.2

6.4

15.5

12.6

3.5

3.0

23.6

24.7

1.1

0.9

Bajaj Auto

Neutral

2,805

81,162

25,093

27,891

19.5

19.2

143.9

162.5

19.5

17.3

5.5

4.7

30.3

29.3

3.0

2.6

Bharat Forge

Neutral

915

21,305

7,726

8,713

20.5

21.2

35.3

42.7

25.9

21.4

4.8

4.3

18.9

20.1

2.8

2.4

Eicher Motors

Neutral

25,400

68,990

16,583

20,447

17.5

18.0

598.0

745.2

42.5

34.1

14.5

11.1

41.2

38.3

4.0

3.2

Gabriel India

Accumulate

120

130

1,722

1,544

1,715

9.0

9.3

5.4

6.3

22.2

19.0

4.2

3.7

18.9

19.5

1.1

0.9

Hero Motocorp

Neutral

3,482

69,535

31,253

35,198

15.3

15.0

172.3

192.1

20.2

18.1

7.4

6.3

38.9

37.0

2.1

1.8

Jamna Auto Industries Neutral

218

1,741

1,486

1,620

9.8

9.9

15.0

17.2

14.5

12.7

3.2

2.7

21.8

21.3

1.2

1.1

L G Balakrishnan & Bros Neutral

598

939

1,302

1,432

11.6

11.9

43.7

53.0

13.7

11.3

1.9

1.8

13.8

14.2

0.8

0.7

Mahindra and Mahindra Neutral

1,357

84,285

46,534

53,077

11.6

11.7

67.3

78.1

20.2

17.4

3.3

2.9

15.4

15.8

1.8

1.5

Maruti

Accumulate

5,681

5,998

171,624

69,186

82,217

14.7

14.4

198.5

241.4

28.6

23.5

5.6

4.5

20.2

19.9

2.2

1.8

Minda Industries

Neutral

346

2,741

2,728

3,042

9.0

9.1

68.2

86.2

5.1

4.0

1.1

0.9

23.8

24.3

1.1

0.9

Motherson Sumi

Neutral

330

46,361

45,896

53,687

7.8

8.2

13.0

16.1

25.3

20.5

8.2

6.5

34.7

35.4

1.1

0.9

Rane Brake Lining

Neutral

1,232

975

511

562

11.3

11.5

28.1

30.9

43.9

39.9

6.7

6.1

15.3

15.0

2.0

1.9

Setco Automotive

Neutral

568

741

837

13.0

15.2

17.0

2.8

2.5

0.5

0.4

15.8

16.3

1.1

1.0

Tata Motors

Neutral

555

160,370

300,209

338,549

8.9

8.4

42.7

54.2

13.0

10.2

2.1

1.8

15.6

17.2

0.6

TVS Motor

Neutral

391

18,574

13,390

15,948

6.9

7.1

12.8

16.5

30.6

23.6

7.6

6.0

26.3

27.2

1.4

1.2

Amara Raja Batteries

Buy

1,041

1,218

17,781

5,429

6,471

17.5

17.6

35.3

43.5

29.5

23.9

6.8

5.5

25.3

24.8

3.1

2.5

Exide Industries

Neutral

191

16,239

7,439

8,307

15.0

8.1

9.3

23.6

20.5

3.3

2.9

14.3

16.7

1.8

1.6

Apollo Tyres

Accumulate

218

235

11,071

12,877

14,504

14.3

13.9

21.4

23.0

10.1

9.5

1.6

1.4

16.4

15.2

1.0

0.9

Ceat

Accumulate

1,375

1,450

5,562

7,524

8,624

13.0

12.7

131.1

144.3

10.5

9.5

1.9

1.6

19.8

18.6

0.8

0.7

JK Tyres

Neutral

155

3,508

7,455

8,056

15.0

21.8

24.5

7.1

6.3

1.5

1.2

22.8

21.3

0.6

0.5

Swaraj Engines

Neutral

1,380

1,714

660

810

15.2

16.4

54.5

72.8

25.3

19.0

7.9

7.2

31.5

39.2

2.4

1.9

Subros

Neutral

134

805

1,488

1,681

11.7

11.9

6.4

7.2

21.0

18.7

2.2

2.0

10.8

11.4

0.8

0.7

Indag Rubber

Neutral

201

527

286

326

19.8

16.8

11.7

13.3

17.2

15.1

2.9

2.7

17.8

17.1

1.5

1.3

Banking

Axis Bank

Buy

521

630

124,267

30,126

34,919

3.5

3.4

32.3

44.6

16.1

11.7

2.2

1.90

13.6

16.5

Bank of Baroda

Neutral

154

35,519

19,980

23,178

1.8

11.5

17.3

13.4

8.9

1.5

1.3

8.3

10.1

Canara Bank

Neutral

313

17,012

15,225

16,836

1.8

14.5

28.0

21.6

11.2

1.5

1.2

5.8

8.5

Dewan Housing Finance Buy

301

350

8,786

2,225

2,688

2.9

29.7

34.6

10.1

8.7

1.6

1.4

16.1

16.8

Equitas Holdings

Buy

175

235

5,872

1,076

1,465

11.7

11.4

6.7

9.4

26.1

18.6

2.6

2.3

12.4

12.9

Federal Bank

Neutral

12,191

9,353

10,623

2.9

4.4

5.8

16.1

12.2

1.5

1.4

9.5

11.0

HDFC

Neutral

1,319

208,561

11,475

13,450

3.4

45.3

52.5

29.1

25.1

5.6

5.0

20.2

20.5

HDFC Bank

Accumulate

1,261

1,350

319,366

46,097

55,433

4.5

58.4

68.0

21.6

18.6

3.8

3.16

18.8

18.6

ICICI Bank

Accumulate

242

254

140,682

39,029

45,903

3.3

16.7

16.3

14.5

14.8

1.8

1.6

10.1

12.4

LIC Housing Finance

Accumulate

586

630

29,553

3,712

4,293

2.6

2.5

39.0

46.0

15.0

12.7

2.8

2.4

19.9

20.1

October 17, 2016

Stock Watch | October 2016

Diwali Special

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

Punjab Natl.Bank

Neutral

139

29,579

23,532

23,595

2.3

2.4

6.8

12.6

20.4

11.0

3.2

2.2

3.3

6.5

RBL Bank

Buy

315

365

11,638

1,783

2,309

2.6

12.7

16.4

24.8

19.2

2.7

2.4

12.8

13.3

South Ind.Bank

Neutral

3,187

6,435

7,578

2.5

2.7

3.1

8.7

7.6

1.1

0.9

10.1

11.2

St Bk of India

Neutral

252

195,544

88,650

98,335

2.6

13.5

18.8

18.7

13.4

1.8

1.6

7.0

8.5

Union Bank

Neutral

141

9,703

13,450

14,925

2.3

25.5

34.5

5.5

4.1

0.8

0.7

7.5

10.2

Yes Bank

Neutral

1,260

53,044

8,978

11,281

3.3

3.4

74.0

90.0

17.0

14.0

3.2

2.7

17.0

17.2

Capital Goods

ACE

Neutral

437

709

814

4.1

4.6

1.4

2.1

31.5

21.0

1.3

1.2

4.4

6.0

0.8

0.7

BEML

Buy

943

1,157

3,926

3,451

4,055

6.3

9.2

31.4

57.9

30.0

16.3

1.8

1.6

6.3

10.9

1.3

1.1

Bharat Electronics

Accumulate

1,270

1,414

30,468

8,137

9,169

16.8

17.2

58.7

62.5

21.6

20.3

3.3

3.0

44.6

46.3

2.7

2.4

Voltas

Neutral

397

13,136

6,511

7,514

7.9

8.7

12.9

16.3

30.8

24.4

5.5

4.9

16.7

18.5

1.8

1.5

BGR Energy

Neutral

114

823

16,567

33,848

6.0

5.6

7.8

5.9

14.6

19.3

0.8

4.7

4.2

0.1

BHEL

Neutral

133

32,602

28,797

34,742

2.8

2.3

6.9

57.9

19.3

1.0

1.3

4.8

0.8

0.5

Blue Star

Accumulate

571

634

5,442

4,283

5,077

5.9

7.3

14.9

22.1

38.3

25.8

7.4

6.3

20.4

26.4

1.3

1.1

Crompton Greaves

Neutral

4,726

5,777

6,120

5.9

7.0

3.3

4.5

22.8

16.8

1.0

4.4

5.9

0.8

0.6

Greaves Cotton

Neutral

126

3,084

1,755

1,881

16.8

16.9

7.8

8.5

16.2

14.9

3.2

3.0

20.6

20.9

1.4

1.3

Inox Wind

Buy

223

286

4,938

5,605

6,267

15.7

16.4

24.8

30.0

9.0

7.4

2.5

1.8

25.9

24.4

0.9

0.8

KEC International

Neutral

124

3,196

9,294

10,186

7.9

8.1

9.9

11.9

12.6

10.4

1.8

1.6

15.6

16.3

0.6

0.5

Thermax

Neutral

902

10,752

5,421

5,940

7.3

25.7

30.2

35.1

29.9

4.2

3.9

12.2

13.1

1.9

1.7

VATech Wabag

Buy

560

681

3,053

3,136

3,845

8.9

9.1

26.0

35.9

21.5

15.6

2.7

2.3

13.4

15.9

0.9

0.7

Cement

ACC

Neutral

1,640

30,806

11,225

13,172

13.2

16.9

44.5

75.5

36.9

21.7

3.5

3.2

11.2

14.2

2.7

2.3

Ambuja Cements

Neutral

253

50,306

9,350

10,979

18.2

22.5

5.8

9.5

43.7

26.7

3.7

3.3

10.2

12.5

5.4

4.6

India Cements

Neutral

158

4,855

4,364

4,997

18.5

19.2

7.9

11.3

20.0

14.0

1.4

8.0

8.5

1.9

1.6

JK Cement

Neutral

961

6,722

4,398

5,173

15.5

17.5

31.2

55.5

30.8

17.3

3.7

3.2

12.0

15.5

2.1

1.7

J K Lakshmi Cement

Buy

490

565

5,763

2,913

3,412

14.5

19.5

7.5

22.5

65.3

21.8

4.0

3.4

12.5

18.0

2.6

2.1

Orient Cement

Accumulate

189

215

3,869

2,114

2,558

18.5

20.5

8.1

11.3

23.3

16.7

3.4

2.9

9.0

14.0

2.4

1.9

UltraTech Cement

Neutral

4,038

110,829

25,768

30,385

21.0

23.5

111.0

160.0

36.4

25.2

4.6

4.1

13.5

15.8

4.4

3.7

Construction

ITNL

Neutral

102

3,350

8,946

10,017

31.0

31.6

8.1

9.1

12.6

11.2

0.5

4.2

5.0

3.7

3.4

KNR Constructions

Neutral

793

2,229

1,385

1,673

14.7

14.0

41.2

48.5

19.2

16.3

3.6

3.1

14.9

15.2

1.7

1.4

Larsen & Toubro

Buy

1,473

1,700

137,238

67,665

77,249

10.7

11.5

57.3

71.2

25.7

20.7

2.4

2.2

12.6

14.3

2.2

1.9

Gujarat Pipavav Port

Neutral

175

8,470

705

788

52.2

51.7

5.0

5.6

35.0

31.3

3.5

3.1

11.2

11.7

9.9

Nagarjuna Const.

Neutral

4,603

8,842

9,775

9.1

8.8

5.3

6.4

15.6

12.9

1.2

1.1

8.2

9.1

0.7

0.6

PNC Infratech

Buy

124

143

3,186

2,350

2,904

13.1

13.2

9.0

8.8

13.8

14.1

0.5

0.4

15.9

13.9

1.5

1.2

Simplex Infra

Neutral

337

1,666

6,829

7,954

10.5

31.4

37.4

10.7

9.0

1.1

1.0

9.9

13.4

0.7

0.6

Power Mech Projects

Neutral

490

721

1,801

2,219

12.7

14.6

72.1

113.9

6.8

4.3

1.2

1.1

16.8

11.9

0.4

0.3

Sadbhav Engineering

Accumulate

273

298

4,677

3,598

4,140

10.3

10.6

9.0

11.9

30.3

22.9

3.2

2.8

9.9

11.9

1.6

1.3

NBCC

Neutral

257

15,399

7,428

9,549

7.9

8.6

8.2

11.0

31.3

23.3

1.6

1.2

28.2

28.7

1.8

1.3

October 17, 2016

Stock Watch | October 2016

Diwali Special

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

MEP Infra

Neutral

697

1,877

1,943

30.6

29.8

3.0

4.2

14.3

10.2

6.9

4.7

0.6

1.7

1.6

SIPL

Neutral

109

3,836

1,036

1,252

65.5

66.2

(8.4)

(5.6)

4.1

4.7

(22.8)

(15.9)

11.9

9.9

Engineers India

Neutral

254

8,557

1,725

1,935

16.0

19.1

11.4

13.9

22.3

18.3

3.1

3.0

13.4

15.3

3.9

3.5

FMCG

Asian Paints

Neutral

1,208

115,857

17,128

18,978

16.8

16.4

19.1

20.7

63.2

58.4

22.0

20.8

34.8

35.5

6.7

6.0

Britannia

Accumulate

3,324

3,626

39,881

9,795

11,040

14.6

14.9

80.3

94.0

41.4

35.4

17.0

13.1

41.2

3.9

3.4

Colgate

Accumulate

920

995

25,012

4,605

5,149

23.4

23.8

26.9

38.6

34.2

21.4

16.7

64.8

66.8

5.4

4.8

Dabur India

Accumulate

280

304

49,203

8,315

9,405

19.8

20.7

8.1

9.2

34.5

30.4

9.6

8.0

31.6

31.0

5.6

4.9

GlaxoSmith Con*

Neutral

6,205

26,095

4,350

4,823

21.2

21.4

179.2

196.5

34.6

31.6

9.2

7.8

27.1

26.8

5.4

4.8

Godrej Consumer

Neutral

1,574

53,603

10,235

11,428

18.4

18.6

41.1

44.2

38.3

35.6

8.5

7.2

24.9

24.8

5.3

4.7

HUL

Neutral

842

182,219

35,252

38,495

17.6

17.4

20.4

21.9

41.2

38.4

33.9

29.7

82.2

77.3

5.0

4.5

ITC

Buy

240

283

289,458

40,059

44,439

39.0

39.2

9.1

10.1

26.4

23.8

7.2

6.3

27.2

26.5

6.7

6.0

Marico

Accumulate

276

300

35,667

6,430

7,349

18.8

19.5

6.4

7.7

43.2

35.9

13.0

11.0

33.2

32.5

5.4

4.6

Nestle*

Neutral

6,859

66,132

10,073

11,807

20.7

21.5

124.8

154.2

55.0

44.5

22.6

20.3

34.8

36.7

6.4

5.4

Tata Global

Neutral

153

9,669

8,675

9,088

9.8

7.4

8.2

20.7

18.7

2.3

2.2

7.9

8.1

1.0

Procter & Gamble

Accumulate

6,953

7,369

22,569

2,939

3,342

23.2

23.0

146.2

163.7

47.6

42.5

106.5

102.1

25.3

23.5

7.2

6.3

HCL Tech^

Buy

813

1,000

114,652

49,242

57,168

20.5

55.7

64.1

14.6

12.7

3.0

2.3

20.3

17.9

2.2

1.8

Infosys

Buy

1,027

1,370

235,988

69,934

79,025

27.5

64.8

72.0

15.9

14.3

3.5

3.2

22.0

22.3

2.8

2.4

TCS

Buy

2,366

3,004

466,184

121,684

136,286

27.3

135.0

150.1

17.5

15.8

5.8

5.4

33.2

33.9

3.6

3.2

Tech Mahindra

Buy

419

700

40,696

30,347

33,685

17.0

37.5

41.3

11.2

10.2

2.4

2.1

21.8

20.7

1.1

0.9

Wipro

Buy

475

680

115,338

51,631

55,822

21.7

17.9

35.9

36.9

13.2

12.9

2.8

2.5

19.0

18.1

1.9

1.7

Media

D B Corp

Neutral

399

7,328

2,297

2,590

27.4

28.2

21.0

23.4

19.0

17.0

4.4

3.8

23.7

23.1

3.0

2.6

HT Media

Neutral

2,106

2,693

2,991

12.6

12.9

7.9

9.0

11.5

10.1

1.0

0.9

7.8

8.3

0.4

0.2

Jagran Prakashan

Accumulate

200

225

6,548

2,355

2,635

28.0

10.8

12.5

18.5

16.0

4.0

3.5

21.7

2.8

2.5

Sun TV Network

Neutral

542

21,367

2,850

3,265

70.1

71.0

26.2

30.4

20.7

17.8

5.3

4.7

24.3

25.6

7.1

6.1

Hindustan Media Ven.

Neutral

294

2,161

1,016

1,138

24.3

25.2

27.3

30.1

10.8

9.8

2.0

1.8

16.2

15.8

1.4

1.3

TV Today Network

Accumulate

328

363

1,957

637

743

27.5

18.4

21.4

17.9

15.3

3.1

2.6

17.4

17.2

2.7

2.2

Metal

Coal India

Neutral

313

197,734

84,638

94,297

21.4

22.3

24.5

27.1

12.8

11.6

5.3

5.1

42.6

46.0

1.8

1.7

Hind. Zinc

Neutral

245

103,605

14,252

18,465

55.9

48.3

15.8

21.5

15.5

11.4

2.5

2.2

17.0

20.7

7.3

5.6

Hindalco

Neutral

155

31,914

107,899

112,095

7.4

8.2

9.2

13.0

16.8

11.9

0.8

4.8

6.6

0.8

JSW Steel

Neutral

1,745

42,179

53,201

58,779

16.1

16.2

130.6

153.7

13.4

11.4

1.8

1.6

14.0

14.4

1.5

1.3

NMDC

Neutral

117

46,466

6,643

7,284

44.4

47.7

7.1

7.7

16.5

15.2

1.4

8.8

9.2

4.8

4.3

SAIL

Neutral

19,783

47,528

53,738

(0.7)

2.1

(1.9)

2.6

18.4

0.5

(1.6)

3.9

1.3

1.1

Vedanta

Neutral

196

58,019

71,744

81,944

19.2

21.7

13.4

20.1

14.6

9.7

1.2

1.1

8.4

11.3

1.2

0.9

Tata Steel

Neutral

412

40,004

121,374

121,856

7.2

8.4

18.6

34.3

22.1

12.0

1.4

1.3

6.1

10.1

1.0

0.9

October 17, 2016

Stock Watch | October 2016

Diwali Special

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

Oil & Gas

Cairn India

Neutral

224

42,063

9,127

10,632

4.3

20.6

8.8

11.7

25.5

19.2

0.8

3.3

4.2

6.1

5.0

GAIL

Neutral

430

54,589

56,220

65,198

9.3

10.1

27.1

33.3

15.9

12.9

1.5

1.4

9.3

10.7

1.2

1.0

ONGC

Neutral

277

236,602

137,222

152,563

15.0

21.8

19.5

24.1

14.2

11.5

1.2

1.1

8.5

10.1

2.0

1.8

Indian Oil Corp

Neutral

643

156,117

373,359

428,656

5.9

5.5

54.0

59.3

11.9

10.8

1.8

1.7

16.0

15.6

0.6

0.5

Reliance Industries

Neutral

1,078

349,600

301,963

358,039

12.1

12.6

87.7

101.7

12.3

10.6

1.3

1.1

10.7

11.3

1.6

1.4

Pharmaceuticals

Alembic Pharma

Neutral

681

12,831

3,483

4,083

20.2

21.4

24.3

30.4

28.0

22.4

6.4

5.1

25.5

25.3

3.6

3.0

Aurobindo Pharma

Accumulate

824

877

48,209

15,720

18,078

23.7

41.4

47.3

19.9

17.4

5.2

4.0

29.6

26.1

3.3

2.8

Cadila Healthcare

Neutral

392

40,136

11,126

13,148

22.0

17.1

20.0

22.9

19.6

5.9

4.7

28.8

26.6

3.6

3.0

Cipla

Sell

587

490

47,133

15,378

18,089

17.4

18.4

21.6

27.2

21.6

3.5

3.1

13.7

15.2

3.3

2.7

Dr Reddy's

Neutral

3,029

50,194

16,043

18,119

23.1

24.7

126.0

157.8

24.0

19.2

3.5

3.1

15.7

17.1

3.1

2.7

Dishman Pharma

Sell

248

3,995

1,718

1,890

22.7

22.8

9.5

11.3

26.1

21.9

2.5

2.3

10.1

10.9

2.8

2.4

GSK Pharma*

Neutral

2,957

25,048

3,528

3,811

16.6

18.8

51.8

59.4

57.1

49.8

15.3

15.2

26.3

30.6

6.9

6.4

Indoco Remedies

Sell

313

225

2,881

1,112

1,289

18.2

13.2

15.6

23.7

20.0

4.2

3.6

19.2

2.7

2.3

Ipca labs

Neutral

620

7,819

3,303

3,799

15.3

17.3

19.7

35.8

31.5

3.1

2.9

9.1

9.4

2.5

2.2

Lupin

Buy

1,464

1,809

66,016

15,912

18,644

26.4

26.7

58.1

69.3

25.2

21.1

4.9

4.0

21.4

20.9

4.2

3.5

Sanofi India*

Neutral

4,233

9,748

2,357

2,692

17.3

153.5

169.2

27.6

25.0

4.7

3.8

25.8

28.4

3.8

3.1

Sun Pharma

Buy

746

944

179,455

31,129

35,258

30.0

30.9

28.0

32.8

26.6

22.7

4.1

3.4

18.7

18.9

5.3

4.5

Power

Tata Power

Neutral

21,204

36,916

39,557

17.4

27.1

5.1

6.3

15.4

12.4

1.4

1.2

9.0

10.3

1.6

1.4

NTPC

Neutral

145

119,477

86,605

95,545

17.5

20.8

11.8

13.4

12.3

10.8

1.2

10.5

11.1

2.7

Power Grid

Neutral

177

92,808

25,763

29,762

74.3

73.1

14.8

17.3

12.0

10.3

1.9

1.6

16.9

17.5

7.9

7.5

Real Estate

Prestige Estate

Neutral

206

7,706

4,707

5,105

25.2

26.0

10.3

13.0

20.0

15.8

1.6

1.5

10.3

10.2

2.8

2.5

MLIFE

Buy

437

522

1,794

1,152

1,300

22.7

24.6

29.9

35.8

14.6

12.2

1.1

1.0

7.6

8.6

2.3

1.9

Telecom

Bharti Airtel

Neutral

306

122,260

105,086

114,808

34.5

34.7

12.2

16.4

25.1

18.6

1.7

1.6

6.8

8.4

2.1

1.8

Idea Cellular

Neutral

26,916

40,133

43,731

37.2

37.1

6.4

6.5

11.7

11.5

1.0

0.9

8.2

7.6

1.7

1.4

Others

Abbott India

Neutral

4,729

10,048

3,153

3,583

14.1

14.4

152.2

182.7

31.1

25.9

152.5

130.3

25.6

26.1

2.9

2.5

Asian Granito

Buy

267

351

803

1,118

1,220

11.8

12.0

13.0

16.0

20.5

16.7

2.0

1.8

9.7

10.7

1.0

0.9

Bajaj Electricals

Buy

263

306

2,655

5,099

5,805

5.6

5.9

11.4

14.6

23.1

18.0

3.1

2.7

13.4

15.1

0.5

Banco Products (India)

Neutral

226

1,615

1,353

1,471

12.3

12.4

14.5

16.3

15.6

13.9

21.5

19.4

14.5

14.6

1.1

1.0

Coffee Day Enterprises

Neutral

227

4,683

2,964

3,260

20.5

21.2

4.7

8.0

28.4

2.6

2.4

5.5

8.5

2.0

1.8

Competent Automobiles Neutral

186

114

1,137

1,256

3.1

2.7

28.0

23.6

6.6

7.9

35.7

32.3

14.3

11.5

0.1

Elecon Engineering

Neutral

742

1,482

1,660

13.7

14.5

3.9

5.8

17.5

11.7

4.1

3.8

7.8

10.9

0.8

0.7

Finolex Cables

Neutral

438

6,701

2,883

3,115

12.0

12.1

14.2

18.6

30.9

23.6

16.4

14.3

15.8

14.6

2.0

1.8

Garware Wall Ropes

Neutral

531

1,162

873

938

12.9

13.1

30.9

34.9

17.2

15.2

2.7

2.3

15.7

15.2

1.2

1.1

October 17, 2016

Stock Watch | October 2016

Diwali Special

Company Name

Reco

CMP

Target

Mkt Cap

Sales (` cr)

OPM (%)

EPS (`)

PER (x)

P/BV (x)

RoE (%)

EV/Sales (x)

(`)

Price (`)

(` cr)

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

FY17E

FY18E

Goodyear India*

Neutral

849

1,959

1,598

1,704

10.4

10.2

49.4

52.6

17.2

16.1

79.4

69.6

18.2

17.0

0.9

0.8

Hitachi

Neutral

1,533

4,168

2,081

2,433

8.8

8.9

33.4

39.9

45.9

38.4

37.0

30.9

22.1

21.4

2.0

1.7

HSIL

Neutral

345

2,496

2,384

2,515

15.8

16.3

15.3

19.4

22.6

17.8

22.4

19.3

7.8

9.3

1.2

1.1

Interglobe Aviation

Neutral

934

33,672

21,122

26,005

14.5

27.6

110.7

132.1

8.4

7.1

50.5

36.1

168.5

201.1

1.6

1.2

Jyothy Laboratories

Neutral

356

6,457

1,440

2,052

11.5

13.0

8.5

10.0

41.8

35.6

10.1

9.4

18.6

19.3

4.8

3.3

Kirloskar Engines India

Neutral

351

5,074

2,554

2,800

9.9

10.0

10.5

12.1

33.4

29.0

14.0

13.2

10.7

11.7

1.6

1.4

Linc Pen & Plastics

Neutral

263

389

382

420

9.3

9.5

13.5

15.7

19.6

16.8

3.3

2.9

17.1

17.3

1.1

1.0

M M Forgings

Neutral

441

532

546

608

20.4

20.7

41.3

48.7

10.7

9.1

60.4

53.5

16.6

17.0

0.8

0.7

Manpasand Bever.

Neutral

728

4,164

836

1,087

19.6

19.4

16.9

23.8

43.1

30.6

5.2

4.5

12.0

14.8

4.7

3.5

Mirza International

Buy

113

1,142

1,024

1,148

18.0

6.9

8.0

13.8

11.9

2.3

2.0

16.6

16.2

1.3

1.1

MT Educare

Neutral

134

535

366

417

17.7

18.2

9.4

10.8

14.3

12.4

3.2

2.8

22.2

22.3

1.4

1.2

Narayana Hrudaya

Neutral

345

7,045

1,873

2,166

11.5

11.7

2.6

4.0

130.3

87.0

8.0

7.2

6.1

8.3

3.9

3.3

Navkar Corporation

Buy

195

265

2,778

408

612

42.9

42.3

6.8

11.5

28.8

16.9

2.0

1.8

6.9

10.5

7.7

5.1

Navneet Education

Neutral

103

2,456

1,062

1,147

24.0

6.1

6.6

16.9

15.6

3.5

3.1

20.5

19.8

2.4

2.2

Nilkamal

Neutral

1,567

2,338

1,995

2,165

10.7

10.4

69.8

80.6

22.4

19.4

89.5

77.8

16.6

16.5

1.2

1.0

Page Industries

Neutral

15,613

17,414

2,450

3,124

20.1

17.6

299.0

310.0

52.2

50.4

347.7

265.4

47.1

87.5

7.2

5.6

Parag Milk Foods

Neutral

306

2,576

1,919

2,231

9.3

9.6

9.4

12.9

32.4

23.7

5.0

4.2

15.5

17.5

1.5

1.3

Quick Heal

Neutral

232

1,624

408

495

27.3

27.0

7.7

8.8

30.0

26.4

2.8

9.3

10.6

3.1

2.6

Radico Khaitan

Neutral

139

1,852

1,659

1,802

13.0

13.2

6.3

7.4

22.0

18.9

1.9

1.7

8.6

9.3

1.5

1.4

Relaxo Footwears

Neutral

443

5,315

2,085

2,469

9.2

8.2

7.6

7.9

58.6

55.7

22.7

19.4

17.9

18.8

2.6

2.2

S H Kelkar & Co.

Neutral

307

4,437

1,036

1,160

15.1

15.0

6.1

7.2

50.2

42.7

5.4

4.9

10.7

11.5

4.1

3.7

Siyaram Silk Mills

Accumulate

1,524

1,714

1,429

1,799

2,040

11.6

11.7

104.9

122.4

14.5

12.4

2.4

2.0

16.4

1.0

0.9

Styrolution ABS India*

Neutral

611

1,074

1,440

1,537

9.2

9.0

40.6

42.6

15.0

14.3

38.4

34.9

12.3

11.6

0.7

0.6

Surya Roshni

Neutral

213

933

3,342

3,625

7.8

7.5

17.3

19.8

12.3

10.8

23.4

18.8

10.5

10.8

0.5

Team Lease Serv.

Neutral

1,017

1,739

3,229

4,001

1.5

1.8

22.8

32.8

44.7

31.0

4.8

4.1

10.7

13.4

0.4

0.3

The Byke Hospitality

Neutral

185

742

287

384

20.5

7.6

10.7

24.4

17.3

5.1

4.1

20.7

23.5

2.6

1.9

Transport Corporation

Neutral

181

1,388

2,671

2,911

8.5

8.8

13.9

15.7

13.1

11.6

1.8

1.6

13.7

13.8

0.6

TVS Srichakra

Neutral

3,869

2,963

2,304

2,614

13.7

13.8

231.1

266.6

16.7

14.5

434.8

342.3

33.9

29.3

1.3

1.1

UFO Moviez

Neutral

457

1,262

619

685

33.2

33.4

30.0

34.9

15.3

13.1

2.1

1.8

13.8

13.9

1.7

1.4

Visaka Industries

Neutral

193

306

1,051

1,138

10.3

10.4

21.0

23.1

9.2

8.3

24.7

23.1

9.0

9.2

0.5

VRL Logistics

Neutral

313

2,854

1,902

2,119

16.7

16.6

14.6

16.8

21.5

18.6

4.7

4.1

21.9

22.2

1.6

1.4

Wonderla Holidays

Neutral

399

2,254

287

355

38.0

40.0

11.3

14.2

35.3

28.1

5.1

4.4

21.4

23.9

7.5

6.1

Source: Company, Angel Research, Note: *December year end; ^#September year end;

^&October year end; ^June year end; Price as of October 14, 2016

October 17, 2016

Top Picks Report | October 2016

Diwali Special

Research Team Tel: 022 - 39357800

E-mail: [email protected]

Website: www.angelbroking.com

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October 17, 2016