Max Kotak

INDIA DAILY
December 5, 2014
India
4-Dec 1-day 1-mo 3-mo
Sensex
28,563
0.4
2.3
5.7
8,564
0.3
2.7
5.9
17,900 (0.1)
2.4
4.5
4,769 (0.1)
3.2
4.1
Nifty
Contents
Special Reports
Initiating Coverage
Max India: Diversified but best bet in life insurance space
Daily Alerts
Company alerts
Infosys: Solid progress on metrics important for turnaround
Axis Bank: A steady performer
Global/Regional indices
Dow Jones
Nasdaq Composite
FTSE
6,679 (0.6)
2.1 (2.6)
Nikkei
17,813 (0.4)
5.2 13.7
Hang Seng
23,833
1.7
0.6 (5.6)
1,984 (0.1)
2.7 (3.2)
KOSPI
Value traded India
Cash (NSE+BSE)
223
220
204
Derivatives (NSE)
1,382
1,334 1,645
Deri. open interest
2,034
1,892 1,805
Forex/money market
Change, basis points
4-Dec 1-day 1-mo
Rs/US$
10yr govt bond, %
3-mo
61.7
25
143
8.1
(24)
(63)
MTD
CYTD
Net investment (US$ mn)

3-Dec
FIIs
66
MFs
42
151 16,430
47
2,756
1-day 1-mo
3-mo
Top movers
Change, %
Best performers
AL IN Equity
4-Dec
54.4
(1.2)
16.4
41.3
LICHF IN Equity
430.9
(1.0)
15.3
34.8
Z IN Equity
374.7
(0.5)
5.6
33.3
KKC IN Equity
916.2
2.5
24.1
30.6
IIB IN Equity
784.5
1.1
8.6
27.9
JSP IN Equity
152.8
(0.6)
(6.0)
(34.8)
NMDC IN Equity
139.8
1.2 (12.3)
(24.8)
GMRI IN Equity
19.3
1.6 (14.4)
(21.6)
CAIR IN Equity
262.2
Worst performers
UT IN Equity
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES.
REFER TO THE END OF THIS MATERIAL.
18.5
(0.5)
(5.1)
(21.0)
(1.1) (18.0)
(20.0)
ADD
Max India (MAX)

Banks/Financial Institutions
DECEMBER 05, 2014

INITIATING COVERAGE
Coverage view: Attractive
Diversified but best bet in life insurance space. Max Life (74% of the value in Max
India) will drive superior returns on embedded value or RoEV (16-18%) due to a strong
agency force, banking partner, high persistency and mature traditional business. Max
Healthcares shifting focus to profitability from investment offers earnings visibility. Other
businesses may stay in the investing phase in the near term and will be a drag on earnings
and profitability. We initiate coverage with an ADD rating and target price of `450.
Company dat a and v aluat ion summary
Max India
Stock data
52-w eek range (Rs) (high,low )
443-177
Market Cap. (Rs bn)
106.6
Shareholding pattern (%)
Promoters
40.5
FIIs
27.4
MFs
11.2
Price performance (%)
1M
3M
12M
Absolute
9.6
18.2
90.1
Rel. to BSE-30
6.9
12.1
37.8
Forecasts/Valuations
EPS (Rs)
EPS grow th (%)
P/E (X)
Sales (Rs bn)
Net profits (Rs bn)
EBITDA (Rs bn)
EV /EBITDA (X)
ROE (%)
Div. Yield (%)
2014
5.2
(82.3)
76.3
116.3
1.4
5.1
21.1
4.6
0.9
2015E
7.8
48.1
51.5
139.3
2.1
6.8
15.7
6.3
1.3
Price (`): 400

Target price (`): 450
BSE-30: 28,563
2016E
10.5
35.9
37.9
157.5
2.8
7.9
13.5
7.3
1.8
Valuation: insurance and healthcare to drive value

Max Life Insurance (74% of SOTP) and Max Healthcare (14% of SOTP) are the main value
drivers. Max Life will add `296 /share and `353 /share of Max India, based on the appraisal
value framework, in March 2015E and March 2016E respectively. We value the life insurance
business at 2X EV assuming NBAP margin of 11% and 23X NBM. We value Max Healthcare at
13X EV/EBITDA.
Max Life: well-placed even as industry limps to growth
We believe control over expense overruns and strong (80%+) persistency will drive RoEV of
16-18% for Max Life. Its strong distribution platform, due to an efficient agency force and large
banking partner (Axis Bank), drove 400 bps market share gain over FY2010-14. We hence find
limited downside to our moderate (12%) premium growth forecast. A mature traditional
business will drive stable earnings in the medium term. NBAP margins (13.4% reported in
FY2014) have limited downside, in our view; higher non-participating policies increase upside
risk.
Max Healthcare: focus on returns
Max India has been investing in new hospitals in Mohali, Bhatinda, Delhi and Dehradun.
However, with the investment phase now behind it, we expect 20% topline growth, driven by
640 bps expansion in EBITDA margins to 14.5% over FY2014-17E as the focus shifts from
investments towards efficiencies and returns. This will be driven by an increase in operational
beds and better utilization.
Risks: heavy dependence on bank partner, weakness in life insurance, investment in initiatives
(1) Heavy dependence on its banking partner (over 50% share in new business in FY2014) in
life insurance, (2) sustained weakness in the life insurance industry, leading to subdued APE
growth and expense overruns, (3) large investments in Max Indias new initiatives and (4) high
promoter pledges are areas of stock sensitivity, in our view.
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
Max India
Exhibit 1: Insurance and healthcare to drive value

SOTP-based valuation of Max India, March fiscal year-ends, 2016-17E
Max Life
Valuation
(Rs bn)
2016E 2017E
109
131
Shareholding
(%)
72
Value for Max India

(Rs bn)
2016E
2017E
79
94
Value per share (Rs)

2016E
2017E Average
296
353
324
Comments
2X embedded v alue
Max Healthcare
35
46
46
16
21
60
79
69
13X EV /EBITDA
Max Bupa
10
10
74
27
27
27
Gross capital commitment
Max Speciality F ilms
100
17
18
17
8X EV /EBITDA
Antara
100
108
129
485
446
Total
407
Book v alue
Source: Kotak Institutional Equities estimates
KOTAK INSTITUTIONAL EQUITIES RESEARCH
ADD
Infosys (INFO)
Technology
DECEMBER 05, 2014

UPDATE
Solid progress on metrics important for turnaround. The encompassing theme at

Infosys analyst meet was renew the core (traditional services) and innovate in new
businesses. Achieving the strategic roadmap will require investments, specifics of which
and associated impact on margins will be shared in April 2015. We picked up
encouraging progress on key metrics important for growth acceleration. We incorporate
KIE economists revised Re/USD rate, resulting in 1-5% EPS increase for FY2015-17E.
TP increases to `2,350 due to rollover to September 2016 earnings and EPS upgrade.
Infosys
Stock data
2,201-1,440
Market Cap. (Rs bn)
2,413.9
Promoters
15.9
FIIs
42.7
MFs
4.8
1M
3M
12M
Absolute
2.9
13.3
24.9
Rel. to BSE-30
0.4
7.5
(9.4)
EPS (Rs)
EPS grow th (%)
P/E (X)
Sales (Rs bn)
Net profits (Rs bn)
EBITDA (Rs bn)
EV /EBITDA (X)
ROE (%)
Div. Yield (%)
2014
95.1
15.3
22.1
501.3
108.7
136.3
15.8
26.3
1.5
2015E
108.1
13.7
19.4
541.1
123.5
152.5
13.8
25.6
1.7
Price (`): 2,102

Target price (`): 2,350
BSE-30: 28,563
2016E
125.7
16.3
16.7
626.8
143.6
181.9
11.3
25.4
1.9
Renew the core, innovate in new businessesthe overriding theme at Infosys analyst meet
Infosys provided further insights into the duality of business, i.e. renew the core and innovate in
new businesses. At the heart of this approach is to run with a dual mandate of client
requirement, i.e. efficiency and newer service delivery models for savings in traditional areas
that can be used to fund new initiatives for clients. We find Infosys approach credible as it
rightly places emphasis on digital/new technology initiatives without losing sight of traditional
services. Infosys emphasized that traditional services will be renewed using automation, AI and
design thinking. Infosys provided fascinating case studies using the new approach. Infosys
indicated that these are critical steps for a next-generation IT services company that can deliver
revenue growth of 15-18% and EBIT margin of 25-28%.
Infosys is making good progress on metrics we closely track to assess turnaround
Infosys has taken encouraging steps, in our oft-highlighted areas, important for a turnaround
(1) investments in S&M and sales effectiveness measures, (2) reduction in attrition and
(3) growth in high-potential IMS and BPO. Successful implementation of the three factors will
partly translate into progression of clients across various size buckets, the fourth important
measure for a turnaround. Infosys has hired 207 people in sales and moved 150 people from
delivery to account management roles. The company has spent aggressively in sales training,
used consultants for enhancing proposal quality and made several interventions to retain sales
talent, all of which are important to improve sales effectiveness. The company is now more
flexible in pricing and open to different deal structures in large deals, especially in IMS. Its
headcount in IMS has increased by about 30% in the past two quarters.
Financial implications of new strategy in April 2015; we believe it will not be disruptive
Management will communicate short-term financial targets resulting from the new strategy in
April 2015. We believe that Infosys has sufficient growth and cost-optimization levers to fund this
without being disruptive in margins. KIE economist has revised FY2015-17E Re/USD rate to 61-65
from 61-63 earlier. This results in 0.5-5.2% EPS upgrade for FY2015-17E. Roll over to September
2016E earnings combined with EPS upgrade results in 11% revision in TP to `2,350. ADD.
Infosys
Technology
Acquisitions will be an important element of Infosys strategy

Dr. Sikka indicated that Infosys will go for acquisitions that will help it acquire newer
skills/technologies. The company is interested in acquiring small innovative tech companies
in areas such as AI, automation, Internet of Things and design thinking. Infosys is averse to
acquiring any company with similar skill sets, just for scale. Infosys is not intending to
acquire any IT services company focused on legacy technologies. Besides newer
technologies, the company is open to acquisitions to gain entry in new markets or
strengthen its position in select markets.
3QFY15 could be weak

The management indicated that the growth in retail, telecom and manufacturing verticals
may be soft in 3Q due to seasonality and weak spending trends. BFSI was one of the few
segments in which the company is confident of a strong growth.
Strong progress on metrics for turnaround

UB Pravin Raos presentation gave us comfort on our oft-highlighted metrics to assess
turnaround of Infosys.
Significant steps taken to revitalize sales engine. Infosys has taken several measures
to strengthen its sales capabilities over past two quarters. The company has hired 207
sales people and moved 150 people from deliver into account management roles. S&M
headcount has effectively increased by ~20% in the past two quarters. This also shows in
spike in S&M spend in the past two quarters. It has simplified performance evaluation
Infosys now evaluates performance of sales personnel based on 2-3 relevant and
objective metrics such as revenues, large deal wins and opportunities brought to table, as
against 8-10 metrics used earlier. Fixed compensation and average bonus payouts have
been increased. Over 200 sales employees have been promoted in 2HFY15. Lastly, it is
improved sales training to increase effectiveness of sales force. We believe these
measures will help revitalize the sales force and translate into acceleration of growth.
Several measures to improve employee morale and address attrition. Infosys has
reduced variable component and increased fixed component of employee compensation.
The company has also increased variable payouts (100% in 2QFY15). Besides this, it is
actively engaging with employees by conducting employee satisfaction survey and
responding to key issues of employees. These steps should help Infosys alleviate attrition
in the coming quarters. We expect Infosys attrition to trend down rapidly from 2QFY15,
quarterly annualized attrition of 24.8%.
Flexibility in pricing and willingness to enter into different deal structures. Infosys
has often let go of deals due to its overarching focus on profitability and unwillingness to
enter into complex deal structures. This is more common in commodity service offering
such as IMS. The company indicated that it has reduced pricing and is open to different
deal structures to win large deals in IMS space. This move can improve the deal win ratio,
eventually driving higher growth. Headcount in infra management services has increased
30% in the past two quarters.
Technology
Infosys
Digital technologies gaining scale

Infosys highlighted several successful case studies in new technology areas such as digital,
cloud services, analytics and platform & solutions. The company has 16,000+ employees
spanning 1,000+ engagements across 240+ clients. The management indicated that the size
of projects in these technologies is small but there is opportunity to scale up by executing
several small projects. Infosys digital practice has scaled up to US$20-30 mn/year in some of
its client accounts. The pricing models in these areas are still evolving and vary based on the
nature of projects.
A successful case study of renew the core in product engineering services

Infosys product engineering and design team has integrated software and hardware to
design oil drills having embedded sensors. These drills are linked to next-generation PLM. In
a digital oil field, these drills provide data with the help of embedded sensors. This data is
used for digital oilfield modeling and simulation for determination of the remaining useful
life of oilfield. This is just one of the several successful case studies Infosys management
shared. Besides this, the company has successfully used (1) predictive analytics to prevent
transaction failures in financial services space and (2) predictive maintenance of devices in
manufacturing and mining industries. Infosys also showcased several of its interesting
projects in SMAC technologies.
Exhibit 1: Key changes to estimates, March fiscal year-ends, 2015E-17E (Rs mn)
Revenues
EBITDA
Depreciation
EBIT
Net Profit
EPS (Rs/ share)
Revenues (US$ mn)
Revenue growth (%)
Billing Rates (US$/ manmonth)
Onsite
Offshore
Margins (%)
EBITDA
EBIT
Rs/ US$ rate
2015E
541,062
152,494
(11,900)
140,594
123,505
108.1
New
2016E
626,840
181,878
(15,892)
165,986
143,632
125.7
2017E
730,905
213,049
(18,620)
194,429
169,027
147.9
2015E
537,846
151,682
(11,900)
139,782
122,928
107.6
Old
2016E
610,081
177,010
(15,891)
161,119
140,036
122.5
2017E
689,480
197,772
(18,617)
179,155
160,708
140.6
Change (%)
2015E
2016E
0.6
2.7
0.5
2.7
0.0
0.6
3.0
0.5
2.6
0.5
2.6
2017E
6.0
7.7
0.0
8.5
5.2
5.2
8,858
7.4
9,950
12.3
11,245
13.0
8,880
7.6
10,001
12.6
11,303
13.0
(0.2)
(0.5)
(0.5)
13,330
4,490
13,319
4,456
13,319
4,456
13,364
4,502
13,393
4,481
13,393
4,481
(0.3)
(0.3)
(0.6)
(0.6)
(0.6)
(0.6)
28.2
26.0
61.1
29.0
26.5
63.0
29.1
26.6
65.0
28.2
26.0
60.6
29.0
26.4
61.0
28.7
26.0
61.0
0.8
3.3
6.6
Source: Kotak Institutional Equities estimates
Infosys
Technology
Exhibit 2: Infosys attrition likely to trend down in the coming quarters
Quarterly annualized attrition (%)

30
26
22
18
14
Jun-14
Sep-14
Dec-13
Mar-14
Jun-13
Sep-13
Mar-13
Dec-12
Jun-12
Sep-12
Mar-12
Sep-11
Dec-11
Jun-11
Dec-10
Mar-11
Jun-10
Sep-10
Mar-10
Dec-09
Jun-09
Sep-09
Mar-09
Sep-08
Dec-08
Jun-08
10
Source: Company, Kotak Institutional Equities

Exhibit 3: S&M spending likely to increase further
S&M spending as % of revenues

7
Sep-14
Mar-14
Sep-13
Mar-13
Sep-12
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Exhibit 4: Infosys: key client metrics
Client metrics
Number of active clients
New clients added in the period
Repeat business %
Million $ clients
5 Million $ clients
25 Million $ clients
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
711
51
99.1
403
199
74
41
19
12
715
39
98.2
413
205
73
40
21
11
776
89
97.5
419
209
71
40
21
12
798
56
96.5
448
213
69
40
23
12
836
66
99.0
466
215
73
41
24
15
873
68
98.3
469
221
77
40
24
15
888
54
97.3
495
226
77
41
25
15
890
50
96.3
501
232
78
42
24
13
910
61
99.0
520
235
78
43
24
12
912
49
98.1
526
237
83
43
27
13
Technology
Infosys
Exhibit 5: Infosys: key quarterly metrics

J un- 12
Sep- 12
Dec - 12
Rev enues (US$ mn)
1,752
1,797
1,911
Rev enues (Rs mn)
96,160
98,580
104,240
Exchange rate (Re/US$)
54.9
54.9
54.5
Rev enue by v ert ic als (%)
Insurance, Banking and F inancial serv ices
34.3
33.7
33.7
Manufacturing
22.0
22.1
21.7
Retail
16.9
17.0
16.0
Telecom
10.1
9.9
9.6
Energy and Utilities
4.6
5.3
5.4
Transportation & Logistics
1.4
1.7
1.8
Serv ices
5.1
5.3
6.3
Others
5.6
5.0
5.5
Rev enue by serv ic e of f erings (%)
ADM
38.0
38.4
35.8
- Application dev elopment
17.1
17.0
15.8
- Application maintenance
20.9
21.4
20.0
Business Process Management
6.2
6.0
6.5
Consulting and Package Implementation
29.9
30.0
32.6
Infrastructure Management
6.6
6.8
6.9
Product Engineering Serv ices
3.5
3.4
3.2
Testing Serv ices
8.3
8.6
8.4
Others
3.0
3.0
2.7
Product rev enues
4.5
3.8
3.9
Rev enue by geography (%)
North America
64.1
63.9
61.0
Europe
21.4
21.9
24.0
India
2.0
1.6
2.2
ROW
12.5
12.6
12.8
Rev enue by projec t t y pe (%)
F ixed price
39.9
42.5
43.4
Time and Material
60.1
57.5
56.6
Client met ric s
Top client contribution to rev enues (%)
4.1
4.0
3.6
Top 5 client contribution to rev enues (%)
16.2
16.0
14.6
Top 10 client contribution to rev enues (%)
25.3
25.4
23.9
Number of activ e clients
711
715
776
New clients added in the period
51
39
89
Repeat business %
99.1
98.2
97.5
Million $ clients
403
413
419
5 Million $ clients
199
205
209
74
73
71
41
40
40
19
21
21
12
11
12
Per- c apit a produc t iv it y (IT Serv ic es and Consult ing) - Report ed (US$)
Onsite
149,250
149,800
155,326
Offshore
54,110
53,388
54,618
Blended
82,542
82,370
85,385
Currenc y - w ise rev enues (%)
USD
72.3
71.9
69.8
GBP
6.9
6.3
6.2
Euro
6.7
8.3
9.6
AUD
8.4
8.3
8.3
Ut iliz at ion measures (IT Serv ic es and Consult ing)
Including trainees
64.7
67.5
67.1
Excluding trainees
69.5
71.6
70.6
Employ ee met ric s
Total Employ ees (Consolidated)
151,151
153,761
155,629
S/W professionals (IT Serv ices & Consulting)
121,245
123,076
123,796
Trainees
4,773
4,655
3,897
Infosy s BPO
22,321
22,918
23,714
Gross additions
9,236
10,420
8,390
Net additions
1,157
2,610
1,868
Laterals hired
5,233
3,656
4,351
L T M A t t rit ion
14.9
15.0
15.1
A t t rit ion quart erly annualiz ed
21.5
20.5
16.9
M ar- 13
1,938
104,540
53.9
J un- 13
1,991
112,670
56.6
Sep- 13
2,066
129,650
62.8
Dec - 13
2,100
130,260
62.0
M ar- 14
2,092
128,750
61.5
J un- 14
2,133
127,700
59.9
Sep- 14
2,201
133,420
60.6
33.9
22.2
15.4
9.3
5.2
1.8
6.7
5.5
33.7
22.5
15.8
8.5
4.9
1.8
7.1
5.7
33.4
23.2
15.7
8.3
5.1
1.8
6.7
5.8
33.5
22.8
16.0
7.9
5.2
1.6
7.0
6.0
33.5
23.0
15.5
8.6
5.3
1.7
6.6
5.8
33.4
23.2
15.8
8.7
5.1
1.5
6.5
5.8
32.8
23.3
15.3
8.9
5.5
1.5
6.6
6.1
35.4
15.5
19.9
6.5
32.7
7.2
3.2
8.3
2.7
4.0
35.0
15.7
19.3
6.3
33.6
7.0
3.2
8.4
2.8
3.7
35.1
16.0
19.1
6.3
33.3
7.2
3.3
8.4
2.7
3.7
35.1
15.9
19.2
6.4
33.4
6.9
3.2
8.7
2.5
3.8
34.9
15.5
19.4
6.7
32.5
7.2
3.4
9.2
2.6
3.5
34.5
15.8
18.7
6.5
32.3
7.9
3.4
9.5
2.7
3.2
35.0
16.1
18.9
6.3
32.4
7.9
3.4
9.4
2.7
2.9
60.2
25.0
2.4
12.4
61.4
23.6
2.6
12.4
61.5
24.0
2.4
12.1
60.0
24.9
2.6
12.5
59.8
25.2
2.6
12.4
60.8
24.5
2.4
12.3
60.8
24.7
2.2
12.3
42.5
57.5
42.1
57.9
42.1
57.9
42.9
57.1
43.5
56.5
42.2
57.8
43.2
56.8
3.6
14.7
24.0
798
56
96.5
448
213
69
40
23
12
3.9
14.9
24.0
836
66
99.0
466
215
73
41
24
15
3.9
15.0
24.5
873
68
98.3
469
221
77
40
24
15
3.7
14.1
23.5
888
54
97.3
495
226
77
41
25
15
3.6
14.1
23.4
890
50
96.3
501
232
78
42
24
13
3.4
13.7
22.9
910
61
99.0
520
235
78
43
24
12
3.4
13.6
22.9
912
49
98.1
526
237
83
43
27
13
152,478
53,815
84,826
151,674
52,600
84,270
153,818
53,499
84,806
157,210
54,666
85,367
157,551
54,315
84,691
157,436
54,201
84,362
161,529
54,039
84,868
68.6
6.1
10.4
8.1
69.3
5.6
9.8
7.9
69.5
5.9
10.1
7.6
68.5
6.0
10.4
7.9
67.8
6.0
10.8
8.1
68.0
5.8
10.6
8.2
68.3
5.9
10.4
8.2
68.5
71.4
70.7
74.3
73.1
77.5
72.5
76.9
72.9
76.7
74.8
80.1
75.2
82.3
156,688
123,666
3,977
24,634
8,990
1,059
3,545
16.3
20.3
157,263
122,687
5,581
26,207
10,138
575
3,008
16.9
24.4
160,227
125,019
14,760
26,834
12,168
2,964
3,806
17.3
23.2
158,404
123,657
5,658
26,475
6,682
(1,823)
3,333
18.1
21.4
160,405
125,344
7,104
27,157
10,997
2,001
2,100
18.7
22.6
161,284
125,182
8,439
28,192
11,506
879
3,954
19.5
26.4
165,411
128,374
9,782
29,067
14,255
4,127
4,774
20.1
24.8
Infosys
Technology
Exhibit 6: Profit model, balance sheet, cash model of Infosys, March fiscal year-ends, 2013-17E (Rs mn)
Profit model
Revenues
Cost of sales
SG&A expenses
EBITDA
Depreciation
EBIT
Other income
Pre-tax profits
Provision for tax
Recurring net income
Extraordinaries
Reported net income
Reported EPS (Rs)
Balance Sheet
Shareholders funds
Deferred tax liability/(assets)
Borrowings
Minority interest
Total liabilities
Gross block
Accumulated depreciation
Net block
CWIP
Net fixed assets
Cash and bank balances
Net current assets excluding cash
Total assets
Cashflow statement
Operating profit before WC changes
Change in WC/other adjustments
Capital expenditure
Taxes paid
Free cash flow
2013
2014
2015E
2016E
2017E
403,520
(241,490)
(46,430)
115,600
(11,310)
104,290
23,590
127,880
(33,670)
94,210
94,210
82.4
501,330
(307,670)
(57,320)
136,340
(13,740)
122,600
26,690
149,290
(40,620)
108,670
(2,190)
106,480
93.2
541,062
(321,502)
(67,066)
152,494
(11,900)
140,594
32,476
173,070
(49,565)
123,505
123,505
108.1
626,840
(363,775)
(81,187)
181,878
(15,892)
165,986
32,127
198,113
(54,481)
143,632
143,632
125.7
730,905
(422,055)
(95,801)
213,049
(18,620)
194,429
37,114
231,543
(62,517)
169,027
169,027
147.9
379,940
(4,690)
375,250
113,810
(42,420)
71,390
11,400
82,790
218,320
74,140
375,250
445,300
(6,290)
439,010
139,500
(55,720)
83,780
9,610
93,390
259,500
86,120
439,010
520,210
(6,290)
513,920
159,705
(67,620)
92,085
9,610
101,695
314,568
97,658
513,920
609,922
(6,290)
603,632
192,377
(83,511)
108,866
9,610
118,476
366,246
118,910
603,632
717,040
(6,290)
710,750
217,119
(102,131)
114,988
9,610
124,598
439,707
146,444
710,750
115,600
(13,100)
(32,460)
(32,930)
37,110
136,340
(6,490)
(27,450)
(31,478)
70,922
152,494
(11,538)
(20,205)
(40,264)
80,487
181,878
(21,252)
(32,672)
(45,646)
82,307
213,049
(27,535)
(24,742)
(52,496)
108,276
Source: Company, Kotak Institutional Equities estimates
ADD
Axis Bank (AXSB)

DECEMBER 05, 2014

UPDATE
A steady performer. Our analysis of Axis Securities shows that a large share of
disbursements in retail (~60%) is originated from this subsidiary. Growth should remain
buoyant in the retail portfolio in the medium term as the bank is building scale with
distribution of retail assets increasing across its branches. Despite the recent
outperformance, we continue to like the transformation that we are seeing in the bank,
which initially was reflected in liabilities and now moving towards loans. Maintain ADD
with TP increased to `525 (from `430 earlier).
Axis Bank
Stock data
503-217
Market Cap. (Rs bn)
1,180.8
Promoters
28.9
FIIs
47.5
MFs
4.6
1M
3M
12M
Absolute
12.3
20.1 109.9
Rel. to BSE-30
9.5
13.9
52.2
EPS (Rs)
EPS grow th (%)
P/E (X)
NII (Rs bn)
Net profits (Rs bn)
BV PS
P/B (X)
ROE (%)
Div. Yield (%)
2014
26.5
19.6
18.9
119.5
62.2
159.9
3.1
17.4
0.8
2015E
29.4
11.2
17.0
139.5
69.1
183.0
2.7
16.9
1.0
2016E
35.0
19.1
14.3
161.4
82.3
210.6
2.4
17.5
1.2
Price (`): 500

Target price (`): 525
BSE-30: 28,563
QUICK NUMBERS
Axis Securities
contributes 60% of
disbursements for
the bank
A sneak peek into Axis Securities: the engine of growth for Axis Bank
Our analysis of Axis Securities offers some pretty good insights into the banks retail operations.
This subsidiary originates retail loans, distributes third-party products and helps the bank in its
resource management. From a retail loan standpoint, this subsidiary is extremely critical as it
contributes ~60% of the overall disbursements in key retail products for the bank. This would
include conversions of leads coming from different channels as well as self-origination. We have
seen different models adopted but discussions with various banks highlight that productivity
and quality are better through internal sources.
We are not yet out of the woods: a bit of caution still warranted
We continue to exercise caution on the impairment ratios of the bank. We still factor credit
costs at 90-100 bps in the medium term. While activities by various agencies are showing signs
of improvement at the margin, we still think that positive surprise on credit costs is still a few
quarters away. With a steady increase in the portfolio of loans starting their repayment cycle
and the regulatory forbearance on restructuring removed from FY2016, we believe that high
credit costs would be needed.
Relatively well-placed among peers; maintain ADD
We maintain our positive view as we believe the shift to retail business now appears to be
complete and the loan portfolios of the frontline private banks are mostly similar. This should
significantly ease concern over the long term. On the other hand, the liability franchise is
impressive with CASA ratio at a healthy ~45% levels, which can support low-risk growth,
especially in retail without materially deteriorating NIM from current levels. Tier-1 ratio is
comfortable at 13%. The bank is well-positioned to capture growth across various segments.
Despite the recent outperformance, we find valuations comfortable and value the bank at 2.3X
book and 14X EPS (September 2016) for RoEs in the range of 17% and ~15% earnings growth.
We maintain ADD (TP changed at `525 from `430 earlier) factoring moderate earnings
changes, roll forward of our TP and changes to the long-term assumptions on earnings growth
for the bank. It still remains an interesting idea among frontline banks, in our view.
Axis Bank
Axis Securities: the engine of growth

This is one of the subsidiaries of the bank that is primarily into providing resource
management, marketing of third-party financial products and retail broking (online and
offline). The exhibit below shows that the contribution of this subsidiary to the overall retail
business for the bank is very critical. As of FY2014, this subsidiary originated 60% of the
overall disbursements in the retail portfolio. It does appear based on historical trends that
the bank has been able to scale up this business as growth in disbursements has exceeded
40% CAGR over the past three years. We are not able to give the financial implication of
this model as this segment (origination and resource management) has a very high cost
structure of ~90%. Also, it is a bit challenging to understand the trends as this business has
been housed in different companies in the past three years. Prior to FY2012, it was with Axis
Sales and Securities, which was subsequently transferred to Axis Capital and which has now
been transferred to Axis Securities. The shift in business across companies was mainly an
after-effect of the acquisition of Enams various companies.
Banks follow multiple models for originating retail loans, which could include the following:
(1) direct walk-in or website referrals, (2) branch/internal referrals that are converted by bank
employees, (3) direct sales team (DST) through a banks own subsidiary and/or (4) direct
sales agent (DSA). There would be an overlap where lead origination is at the branch but the
conversion is done by the DST, which is Axis Securities.
There are various arguments for banks to use a multi-model approach towards retail
origination but based on our discussions with many retail banks, we note that most of them
follow a similar approach, though the scale of contribution could differ depending on the
comfort levels of each bank towards a specific model. However, our discussion with most
banks did highlight that banks give greater focus to their direct sales team as there is better
productivity and cost efficiencies as compared to other channels. We understand that DSA
models have undergone a huge change in recent years, especially after the retail slowdown
post FY2009. There are fewer but larger players today but it is expensive though it can help
build scale much faster. However, a big drawback is that these disbursements may not be
sticky as they work actively in refinancing their customers with a different bank if there is a
good value proposition for the customer.
Exhibit 1: Axis Securities originates ~60% of the retail loans for Axis Bank
Disbursements across loan products, March fiscal year-ends, 2013-14
Home loans
LAP
Personal loans
Auto loans
Schematic loan for SME
Credit cards (#)
2012
(Rs mn)
53,840
6,440
10,320
5,040
160,000
2013
(Rs mn)
77,340
13,750
18,600
23,820
15,230
302,660
Growth
(%)
43.6
113.5
80.2
202.2
89.2
Contribution
to total
disbursements
(%)
54.0
57.0
62.0
93.0
Total
disbursement
s in FY2013
(Rs mn)
143,222
24,123
30,000
25,613
2014
(Rs mn)
88,720
21,360
26,440
26,380
27,980
449,148
Growth
(%)
14.7
55.3
42.2
10.7
83.7
48.4
Contribution to
total
disbursements
(%)
55.0
58.0
69.0
93.0
Total
disbursements
in FY2014
(Rs mn)
161,309
36,828
38,319
28,366
Notes:
(a) The business have been in multiple subsidiaries in the past. Axis Securities and Sales Ltd, Axis Capital Ltd and Axis Securities Ltd
Retail growth to remain strong; to lead overall growth in the medium term
We expect Axis Bank to grow its loan book by 17-18% CAGR for FY2014-16E primarily on
the back of strong growth in the retail portfolio. While we have seen a moderate recovery in
the corporate loan portfolio at 13% yoy, we believe that a large share of growth is more
driven by advantage that the bank has the appetite to pick up credit through refinancing as
the demand for fresh corporate loan is yet to show any strong signs of change. The bank
has broadly maintained its exposure in the infrastructure sector at similar levels in the past
three years a trend that is not likely to change in the short term but could decline as the
bank is not actively focusing on this portfolio given the lack of fresh demand. As there are
lower concerns in the SME portfolio, we dont see any sharp slowdown in this portfolio.
11
Axis Bank
Exhibit 2: Share of lending to retail has been rising in recent years, which is likely to be NIM dilutive
Break-up of loans, March fiscal year-ends, 2010-2QFY15 (%)
Retail loans
Housing
Auto
Personal
Others
Non retail loans
SME
Corporate
Agriculture
20 10
20.0
14.1
2.6
1.9
1.3
80.0
17.5
50.3
12.2
20 11
19.5
13.3
2.1
2.7
1.4
80.5
15.0
53.3
12.2
20 12
22.1
16.6
2.9
1.3
1.3
77.9
14.0
53.6
10.2
20 13
27.4
19.7
3.8
1.9
1.9
72.6
15.2
49.9
7.5
20 14 1Q FY 15 2Q FY 15
30.7
39.6
38.9
22.1
24.1
23.8
3.7
4.0
3.5
2.5
3.6
3.5
2.5
7.9
8.2
69.3
60.4
61.1
15.4
16.3
15.6
44.4
44.2
45.5
7.8
Notes:
(a) There has been a change in the definition of retail and SME loans in FY2015. Exposure in agriculture has
been divided into SME and retail. Under retail, this has been included under others.
Exhibit 3: Axis Banks exposure to stressed sectors has been gradually declining
Break-up of top exposure (funded), March fiscal year-ends, 2010-2QFY15 (%)
Chemicals
Financial companies
Real Estate
Retail trade
Food processing
Metals and metal products
Power generation and distribution
Infrastructure
Telecom
Shipping and logistics
Engineering and electronics
Petrochemicals and petroleum products
T o t a l o f 10 t o p s e ct o r s
20 10
11.0
5.4
6.5
6.4
6.0
5.1
8.2
2.9
2.7
5 8 .7
20 11
3.3
14.3
4.5
4.4
7.4
5.7
8.2
5.0
2.9
3.7
5 9 .3
20 12
1.8
12.7
3.2
3.2
4.1
4.3
4.7
6.8
2.5
3.4
46 .6
20 13
1.6
7.0
2.6
2.9
4.1
4.2
4.9
7.6
2.3
3.5
40 .7
20 14 1Q FY 15 2Q FY 15
4.6
4.3
4.5
3.3
3.3
3.3
3.6
3.6
3.6
3.6
3.7
3.5
4.6
4.6
5.2
5.2
5.2
5.2
7.4
7.6
7.8
1.4
2.3
2.3
2.1
3.3
3.3
3.3
0.5
0.5
39 .4
38 .4
39 .0
As highlighted in the previous section, we note that the bank has been able to build a
strong distribution platform for its retail assets. We note that the retail loans currently are in
a build-up stage and hence the bank is likely to see acceleration in loan growth. Over the
next year we should see the growth slowing down from current levels of 27% yoy. Also,
Axis Bank has access to one of the lowest costs of funds and this helps the bank as it would
remain extremely competitive from a pricing perspective.
The only risk is the ability of the bank to build scale efficiently. The origination costs in select
short-duration products can be fairly prohibitive to make the exposure profitable as
distribution and its associated costs of various retail asset products can be quite varied. For
example, unsecured loans would be primarily distributed for internal customers while the
bank may not take the same view while disbursing housing loans. There are different models
on originating housing loans, which could include a combination of DSA (refinance for
existing loans), direct sales teams that work independently or work closely with the builders
as the banks turnaround time is faster where loans are of pre-approved properties and
originate loans from internal customers. Auto loans, on the other hand, may require
origination teams working closely at dealer showrooms.
12
Axis Bank
Exhibit 4: Axis Bank is a formidable player in the mortgage segment

Share of Axis Bank in housing loans, March fiscal year-ends (%)
Key public banks
BoB
Canara Bank
PNB
SBI
Key priv ate banks
Axis Bank
HDF C Bank
ICICI Bank
Kotak Bank
All the banks listed abov e
Other banks
Total banks (from RBI)
Key NBF Cs
HDF C Ltd. (a)
LIC Housing F inance (a)
Dew an Housing F inance
Indiabulls (a)
REPCO
All NBF Cs listed abov e
Other NBF Cs
Total NBF Cs
Top 5 play ers
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2.1
2.1
2.3
12.2
1.8
2.2
2.1
13.0
1.8
2.2
2.8
12.6
1.9
2.1
3.1
12.2
2.0
1.8
2.1
12.5
2.1
2.0
2.2
13.9
2.4
2.3
2.4
16.4
2.3
2.8
2.2
16.7
2.2
2.5
2.0
16.2
2.1
1.7
1.9
15.9
2.2
2.2
1.9
16.0
2.2
2.2
1.9
15.7
2.2
2.1
1.9
15.6
0.2
11.9
30.8
33.3
64.1
0.6
14.8
34.4
35.2
69.6
1.1
18.0
38.5
34.8
73.3
1.5
20.5
0.6
41.3
32.6
73.9
2.1
18.5
0.7
39.2
31.7
70.9
2.7
1.3
14.8
0.8
38.9
32.7
71.6
3.4
2.0
10.9
1.1
39.8
29.4
69.2
3.5
2.1
10.1
1.3
39.8
27.0
66.9
4.4
2.2
7.7
1.3
37.2
26.2
63.4
5.2
2.2
7.7
1.4
36.8
24.0
60.8
5.8
2.2
8.1
1.4
38.5
23.1
61.6
6.1
2.1
8.1
1.3
38.4
23.0
61.5
6.0
2.1
8.3
1.4
38.3
22.7
61.0
20.0
6.6
0.8
27.4
8.5
35.9
51.0
18.7
6.1
0.8
25.6
4.8
30.4
53.2
17.8
5.6
0.9
24.3
2.4
26.7
55.1
18.1
5.4
1.0
24.6
1.5
26.1
57.7
20.2
5.7
1.1
2.0
29.0
0.1
29.1
59.1
14.1
6.5
1.5
1.6
23.6
4.7
28.4
51.8
14.1
7.8
2.0
1.8
0.0
25.7
5.1
30.8
52.5
13.7
8.7
2.6
2.6
0.0
27.6
5.5
33.1
52.7
14.0
9.4
4.0
3.1
0.4
30.9
5.6
36.6
51.7
14.8
10.0
4.5
3.3
0.5
33.1
6.1
39.2
53.6
15.2
10.1
4.6
3.3
0.5
33.8
4.6
38.4
55.2
15.1
9.9
4.7
3.3
0.5
33.5
5.0
38.5
55.0
15.3
10.0
4.7
3.4
0.6
33.9
5.1
39.0
55.3
2014 1QF Y 15 2QF Y 15
Notes:
(a) HDF C, LICHF - indiv idual loans only ; Indiabulls - mortagage loans.
(b) F irst Blue Housing F inance merged w ith Dew an Housing in F Y2013, F Y2012 numbers reinstated for the merger.
(c) Loans of other NBF Cs assumed at 15% of loans of NBF Cs listed abov e for 1Q-2QF Y15, in line w ith historical trends
The question of profitability is still unclear

The management in the previous call indicated that the yields in the retail loan portfolio are
currently at 11.3-11.4%, which is comparatively higher as compared to the corporate loan
portfolio, which is currently at 10.4%. Hence, the shift to retail should be margin accretive.
However, this would an incorrect way of analysis as we need to measure the impact on
yields in the corporate portfolio in two different segments between domestic and foreign
currency loans. We note that the foreign currency loans, ~15% of the loans or 30-35% of
the corporate loan portfolio, has an NIM of 1.7% of loans and this implies that the yield in
the domestic portfolio is probably higher than the yields in the retail portfolio. Hence, the
yields would be under pressure if the bank is shifting the mix of domestic corporate loan
portfolio with retail loans. However, we have not seen this change impacting NIM so far,
making it a bit challenging to understand the impact on yields and NIMs.
On the funding costs side, the recent decline in interest rates is not likely to be a big positive
for Axis Bank. The bank has seen a fairly stable cost of funds in recent years, primarily as the
banks engine for originating retail deposits has done an admirable work and the bank has a
strong CASA ratio, which has kept funding costs at relatively low levels.
On the operating cost side, the initial costs are likely to be higher for Axis Bank as the
origination costs are to be charged at the time of disbursements though the bank would
benefit partially as collection costs would be low in the initial phase of loan growth.
However, a broad sense would be to keep operating costs higher in the initial leg of growth.
13
Axis Bank
Expect greater productivity to drive retail fee income growth though overall fee
income likely to remain muted
We broadly build non-interest income to grow at 10% CAGR for FY2014-16E primarily as
we are not too convinced that the fee income would grow at a pace higher than loan
growth in the medium term. The contribution from treasury business should be stronger
considering that Axis Bank has a strong desk in this business. The demand from corporate
loans remains muted though economic activity could result in higher share of transactionrelated fee business. It is important to note that the fee income business is steadily seeing
higher contribution from non-lending activities, especially as the fee income in the retail
business has picked up pace, especially as the contribution from distribution of third party
products, liability fee income as well as payments related business is witnessing faster
growth.
Exhibit 5: Contribution on retail banking to fee income increased in recent quarters
Break-up of fee income, March fiscal year-ends, 2010-2QFY15 (%)
Corporate banking/credit
Business Banking
Capital markets
Re t a il b a n k in g
Agri & SME banking
Treasury and debt capital mkts
Others
Total (Rs bn)
% of average assets
20 10
28.0
12.0
1.6
27.3
7.3
17.5
6.3
31
1.9
20 11
31.8
9.4
1.7
24.5
5.9
18.6
8.1
41
2.0
20 12
33.7
8.5
1.1
25 .1
5.8
19.1
6.6
51
1.9
20 13
30.7
7.7
1.0
29 .4
6.1
20.2
5.0
58
1.9
20 14 1Q FY 15
26.8
25.0
7.3
10.0
28 .8
37.1
6.4
3.6
20.0
24.0
10.8
0.4
67
14
1.8
1.5
2Q FY 15
28.8
8.0
37.8
6.0
19.0
0.3
16
1.7
Exhibit 6: Axis Banks share of fee income to assets has been declining in recent years
Fee income to assets, March fiscal year-ends, 2010-17E (%)
A xis Bank
HDFC Bank
ICICI Bank
IndusInd Bank
Yes Bank
2010
1.6
1.5
1.4
0.7
1.3
2011
1.6
1.5
1.5
0.7
1.3
2012
1.7
1.5
1.3
1.4
1.2
2013
1.7
1.5
1.2
1.5
1.3
2014
1.5
1.4
1.2
1.5
1.3
2015E
1.4
1.3
1.1
1.4
1.2
2016E
1.3
1.2
1.2
1.4
1.1
2017E
1.3
1.2
1.2
1.4
1.1
Still building conservative estimates on LLP as we are not yet out of the woods
We maintain our conservative outlook on credit costs at 90-100 bps over the next two years.
The management has not changed their estimates on fresh impairments for FY2015. We are
broadly building slippages and fresh restructuring at 1.7% of loans each in the medium term
and expect gross NPLs to increase ~40 bps to 1.7% of loans in this period.
The bank has a large exposure in the infrastructure vertical, especially in the power portfolio,
where the risk of impairment is still high. While we are seeing progress towards resolution of
various bottlenecks, we still would want to maintain a cautious outlook as there is still a long
period when the serviceability is fully addressed. Also, note that the restructuring window
closes from the next financial year, which would imply that the banks have to make higher
provisions when they slip into NPLs else risk a steep fall in provision coverage ratio. In the
power portfolio, ~50% of the loans have now started to service their loans as the assets
have achieved DCCO (Date of Commencement of Commercial Operations) with a larger
share expected to be operational in FY2015-16E.
14
Axis Bank
Exhibit 7: We expect gross NPLs to rise in the medium term

Gross and net NPL ratios, March fiscal year-ends, 2010-17E (%)
Gross NPL
Exhibit 8: Loan-loss provisions could ease by FY2017

Slippages and LLP, March fiscal year-ends, 2010-17E (%)
Slippages
Net NPL
2.0
1.7
1.7
2.4
1.7
Loan loss provisions
2.2
2.0
1.6
1.3
1.2
1.1
1.2
1.6
1.2
1.7
1.5
1.0
1.2
0.4
0.3
0.3
0.4
0.4
0.4
0.4
0.5
1.3
0.9
0.8
0.4
1.4
1.2
1.0
1.7
1.3
1.0
1.0
0.9
0.7
0.8
1.6
0.8
0.4
2017E
2016E
2015E
2014
2013
2012
2011
2010
2017E
2016E
2015E
2014
2013
2012
2011
2010
Operating costs have scope for improvement

We broadly expect operating cost growth at <15% CAGR over the next few years. We think
the bank would shift focus from expansion to improving productivity as the bank is well
present across most regions. Our discussion with the bank does indicate that the changing
behavior patterns, especially on the way they interact with the bank through alternate
mediums, is forcing banks to take a serious relook at infrastructure expansion. However, at
this stage, the growth would be driven by the requirements of the local business areas.
We expect operating expenses to assets to decline 20 bps to 2.1-2.2% levels while staff
costs to assets to remain lower than most of the other banks. We note that the manpower
management is also done at the subsidiary level and hence the contribution of staff costs
could be relatively lower as compared to other banks.
Exhibit 9: Operating costs like to decline
Cost structure for Axis Bank, March fiscal year-ends, 2010-14 (%)
HDFC Bank
IndusInd Bank
ICICI Bank
Axis Bank
Yes Bank
2011
3.1
2.5
1.7
2.3
1.5
2012
3.0
2.6
1.8
2.3
1.4
Opex to
2013
3.0
2.7
1.8
2.2
1.5
total assets
2014 2015E
2.6
2.5
2.7
2.8
1.8
1.8
2.2
2.2
1.7
1.8
2016E
2.4
2.8
1.8
2.1
1.8
2017E
2.3
2.8
1.8
2.0
1.8
2011
1.1
0.9
0.7
0.8
0.8
Employee costs to total assets

2012
2013
2014 2015E 2016E
1.1
1.1
0.9
0.9
0.9
0.9
1.0
1.0
1.0
1.0
0.8
0.8
0.7
0.8
0.8
0.8
0.8
0.7
0.7
0.7
0.7
0.8
0.8
0.8
0.8
2017E
0.9
1.0
0.8
0.6
0.8
15
Axis Bank
Exhibit 10: Cost-income ratio could decline as growth slows

Cost-income ratio, March fiscal year-ends, 2011-17E (%)
HDFC Bank
IndusInd Bank
ICICI Bank
Axis Bank
Yes Bank
2011
48.1
48.2
42.2
42.7
36.3
2012
49.7
49.4
43.0
44.7
37.7
2013
49.6
48.8
40.6
42.6
38.4
2014
45.6
45.7
38.3
40.8
39.4
2015E
44.1
47.3
37.8
41.7
40.7
2016E
42.4
47.3
37.3
40.9
41.6
2017E
41.3
47.1
36.8
40.8
42.1
Exhibit 11: Axis Bank: estimate changes

March fiscal year-ends, 2015-17E (` mn)
Net interest income

NIM (%)
Customer assets
Other income
Fee income
Treasury income
Operating expenses
Employee expenses
PBT
Tax
Net profit
2015E
139,507
3.5
2,954
25,090
79,555
54,477
9,000
91,440
29,856
102,432
33,284
69,147
New estimates
2016E
161,370
3.4
3,437
26,630
90,165
61,014
11,000
102,845
32,175
121,961
39,630
82,331
2017E
178,935
3.3
3,968
27,726
101,828
68,336
13,000
114,509
34,196
138,428
44,981
93,447
2015E
137,903
3.4
2,954
25,090
82,156
54,477
9,000
91,440
29,856
103,429
33,608
69,820
Old estimates
2016E
159,529
3.4
3,437
28,109
93,100
61,014
11,000
104,338
33,668
120,082
39,020
81,063
2017E
176,644
3.2
3,968
31,192
104,139
68,336
12,000
117,892
37,580
131,598
42,762
88,837
% change
2015E 2016E 2017E
1.2
1.2
1.3
(3.2)
(1.0)
(1.0)
(1.0)
(5.3)
(3.2)
(1.4)
(4.4)
1.6
1.6
1.6
(11.1)
(2.2)
8.3
(2.9)
(9.0)
5.2
5.2
5.2
16
Axis Bank
Exhibit 12: Axis Bank trading at 2.0X one-year forward book

One-year forward trading PER and PBR, March fiscal year-ends, 200714 (X)
Exhibit 13: Axis Bank trading at premium to peers

Axis Bank trading premium to peers, 2007-14 (X)
1.5
Rolling PER (X) (LHS)
Rolling PBR (X) (RHS)
25
20
15
10
1.3
1.1
0.9
0.7
Dec-14
Dec-13
Dec-12
Dec-11
Dec-10
Dec-09
Dec-08
Dec-07
Dec-06
Dec-14
Dec-13
Dec-12
Dec-11
Dec-10
Dec-09
Dec-08
Dec-07
Dec-06
0.5
Source: Company, Bloomberg, Kotak Institutional Equities estimates

17
Axis Bank
Exhibit 14: Axis Bank key financial ratios and growth rates
March fiscal year-ends, 2012-17E (%)
Growth rates (%)

Net loan
Total Asset
Deposits
Current
Savings
Fixed
Net interest income
Total other income
Net fee income
Net capital gains
Net exchange gains
Operating expenses
Employee expenses
Key ratios (%)
Yield on average earning assets
Yield on average loans
Yield on average investments
Average cost of funds
Interest on deposits
Difference
Net interest income/earning assets
New provisions/average net loans
Interest income/total income
Fee income/total income
Operating expenses/total income
Tax rate
Dividend payout ratio
Share of deposits
Current
Fixed
Savings
Loans-to-deposit ratio
Equity/assets (EoY)
Dupont analysis (%)
Net interest income
Net other income
Operating expenses
Invt. depreciation
(1- tax rate)
ROA
Average assets/average equity
RoE
2012
2013
2014
2015E
2016E
2017E
19.2
17.7
16.3
7.7
26.5
15.4
22.2
(3.2)
17.0
29.3
(80.1)
19.6
25.7
28.9
16.0
19.2
14.8
21.6
23.4
9.2
20.6
66.8
20.9
15.7
705.0
(1.5)
15.1
14.3
16.8
12.5
11.2
0.8
21.9
9.9
23.6
19.1
13.0
7.3
(44.1)
128.5
14.3
9.4
18.1
16.5
17.0
28.3
23.2
10.3
16.7
14.8
7.4
1.0
174.7
(5.0)
15.7
14.8
17.8
16.4
16.7
16.7
17.3
16.3
15.7
6.1
13.3
12.0
22.2
13.0
12.5
7.8
16.6
15.5
15.5
15.5
16.0
15.2
10.9
4.1
12.9
12.0
18.2
13.0
11.3
6.3
8.6
9.9
7.8
5.9
6.0
2.7
3.1
0.7
59.7
32.3
44.7
32.5
15.6
9.0
10.5
7.5
6.3
6.4
2.7
3.2
1.0
59.6
31.0
42.6
31.4
16.3
8.7
10.3
7.4
5.9
5.8
2.8
3.4
1.0
61.7
27.9
40.8
33.5
15.1
8.7
10.1
7.5
5.8
5.6
2.9
3.5
1.0
63.7
24.9
41.7
32.5
17.1
8.4
9.8
7.2
5.5
5.4
2.9
3.4
0.9
64.2
24.3
40.9
32.5
17.1
8.1
9.5
6.9
5.4
5.3
2.7
3.3
0.8
63.7
24.3
40.8
32.5
17.1
18.1
58.5
19.1
55.6
17.3
55.0
19.0
51.8
19.0
51.7
19.0
51.5
23.5
77.1
8.0
25.2
78.0
9.7
27.7
81.9
10.0
29.2
82.7
9.8
29.3
83.5
9.7
29.5
84.3
9.6
3.0
0.4
2.1
2.3
67.5
1.6
12.6
20.3
3.1
0.6
2.1
2.2
()
68.6
1.7
11.2
18.5
3.3
0.6
2.0
2.2
()
66.5
1.7
10.1
17.4
3.4
0.6
1.9
2.2
67.5
1.7
10.1
16.9
3.3
0.6
1.9
2.1
67.5
1.7
10.3
17.5
3.2
0.5
1.8
2.0
67.5
1.7
10.4
17.3
18
Axis Bank
Exhibit 15: Axis Bank - income statement and balance sheet

March fiscal year-ends, 2012-17E (` mn)
Income statement (Rs mn)

Total interest income
Loans
Investments
Total interest expense
Deposits from customers
Net interest income
Net interest income (after prov.)
Other income
Net fee income
Net capital gains
Net exchange gains
Operating expenses
Employee expenses
Depreciation on investments
Other provisions
Pretax income
Tax provisions
Net Profit
% growth
PBT+provisions-treasury
% growth
Balance sheet (Rs mn)
Cash and bank balance
Cash
Balance with RBI
Balance with banks
Net value of investments
Govt. and other securities
Shares
Debentures and bonds
Net loans and advances
Fixed assets
Net owned assets
Other assets
Total assets
Deposits
Borrowings and bills payable
Other liabilities
Total liabilities
Paid-up capital
Reserves & surplus
Total shareholders' equity
2012
2013
2014
2015E
2016E
2017E
219,946
153,794
63,943
139,769
121,836
80,177
10,996
69,182
54,202
43,417
728
6,740
60,071
20,802
581
(150)
62,882
20,460
42,422
25.2
73,580
30.3
271,826
191,662
77,470
175,163
150,155
96,663
18,340
78,323
65,511
50,251
5,863
6,641
69,142
23,770
(1,039)
200
75,531
23,736
51,794
22.1
87,168
12.1
306,412
219,504
83,431
186,895
154,589
119,516
21,850
97,666
74,052
53,938
3,276
15,177
79,008
26,013
(1,003)
223
93,490
31,314
62,177
20.0
111,285
29.5
349,128
254,063
90,964
209,621
171,980
139,507
25,090
114,417
79,555
54,477
9,000
14,418
91,440
29,856
100
102,432
33,284
69,147
11.2
118,622
3.6
393,661
289,824
99,747
232,291
193,665
161,370
26,630
134,740
90,165
61,014
11,000
16,292
102,845
32,175
100
121,961
39,630
82,331
19.1
137,690
18.8
441,401
327,940
109,131
262,466
218,046
178,935
27,726
151,209
101,828
68,336
13,000
18,410
114,509
34,196
100
138,428
44,981
93,447
13.5
153,254
13.0
335,088
49,976
150,744
2,662
1,293,597
851,306
6,118
236,366
2,717,412
26,617
26,617
93,545
4,466,259
3,286,747
619,495
122,528
4,028,771
4,698
432,790
437,489
389,861
59,971
168,648
3,194
1,481,039
1,037,786
6,118
236,366
3,200,271
28,412
28,412
97,437
5,197,020
3,834,255
712,419
147,034
4,693,708
4,698
498,614
503,312
452,233
71,965
186,777
3,833
1,686,766
1,242,311
6,118
236,366
3,731,290
30,263
30,263
101,492
6,002,043
4,428,296
819,282
176,441
5,424,019
4,698
573,325
578,024
139,339
35,957
71,072
3,516
931,921
584,162
7,400
231,508
1,697,595
22,593
22,593
64,829
2,856,278
2,201,043
371,570
55,580
2,628,193
4,132
223,953
228,085
204,350
40,539
107,382
3,354
1,137,375
722,499
7,549
260,744
1,969,660
23,556
23,556
70,666
3,405,607
2,526,136
474,799
73,593
3,074,528
4,680
326,399
331,079
282,387
41,646
128,767
2,218
1,135,484
690,967
6,118
236,366
2,300,668
24,102
24,102
89,808
3,832,449
2,809,446
538,691
102,107
3,450,244
4,698
377,506
382,205
19
Kotak Institutional Equities: Valuation summary of KIE Universe stocks

Rating
Price (Rs)
4-Dec-14
Target
price
(Rs)
Upside
(%)
Mkt cap.
(Rs mn)
(US$ mn)
O/S
shares
(mn)
2015E
EPS (Rs)
2016E
2017E
EPS growth (%)

2015E
2016E
2017E
2015E
PER (X)
2016E
2017E
EV/EBITDA (X)
2015E 2016E 2017E
Price/BV (X)
2015E
2016E 2017E
Dividend yield (%)

2015E 2016E 2017E
2015E
RoE (%)
2016E
2017E
ADVT-3mo
(US$ mn)
Amara Raja Batteries
SELL
743
550
(26.0)
126,931
2,050
171
24.4
29.9
35.4
13.6
22.5
18.4
30.4
24.8
21.0
18.4
15.3
13.2
7.5
6.1
5.0
0.7
0.8
1.0
27.4
27.2
26.3
4.0
Apollo Tyres
BUY
237
250
5.3
120,842
1,952
509
22.1
23.6
24.8
4.2
6.4
5.4
10.7
10.1
9.6
6.0
6.1
5.9
2.1
1.8
1.5
0.4
0.4
0.4
22.0
19.3
17.1
21.8
Ashok Leyland
SELL
54
40
(26.5)
154,816
2,501
2,848
0.4
1.9
2.7
121.2
401.7
42.0
14.6
Bajaj Auto
ADD
2,625
2,800
6.7
759,617
12,270
289
108.2
134.2
154.0
(3.4)
Bharat Forge
SELL
991
630
(36.4)
230,746
3,727
237
29.5
35.9
42.2
SELL
15,432
238.0
380.8
Eicher Motors
28.5
20.1
21.0
13.4
10.9
2.9
2.2
2.2
10.0
13.5
14.8
24.3
19.6
17.0
17.5
15.4
13.7
6.7
5.7
4.8
1.6
2.0
2.3
30.0
31.6
30.7
12.3
21.7
17.3
33.6
27.6
23.5
17.4
14.9
13.0
7.3
6.0
2.8
5.0
2.6
0.6
1.6
0.7
0.8
23.7
23.9
23.4
17.0
31.4
13.6
9,000
(41.7)
418,281
6,757
27
63.3
60.0
26.9
64.8
40.5
31.9
36.4
23.6
18.8
15.9
11.8
8.8
0.2
0.2
0.2
27.5
Exide Industries
REDUCE
171
160
(6.6)
145,648
2,353
850
7.1
8.9
10.3
24.2
24.9
15.9
24.1
19.3
16.6
15.0
12.4
10.9
3.6
3.2
2.8
1.5
1.5
1.5
15.5
17.4
17.9
7.8
Hero Motocorp
BUY
3,218
3,350
4.1
642,594
10,380
200
148.4
195.7
230.8
40.6
31.9
17.9
21.7
16.4
13.9
16.8
12.8
11.2
9.4
7.7
6.3
2.3
3.0
3.6
47.7
51.5
49.6
34.0
REDUCE
1,265
1,275
0.8
785,744
12,692
562
58.7
63.4
88.2
(14.3)
7.9
39.3
21.5
20.0
14.3
17.0
16.0
13.1
4.0
3.7
3.4
0.5
0.7
1.4
18.9
19.3
24.7
22.6
BUY
3,407
3,700
302
25.6
49.0
Mahindra & Mahindra

Maruti Suzuki
1,029,141
16,624
33.4
115.7
172.4
232.6
35.0
29.4
19.8
14.6
17.0
12.3
9.4
4.4
3.8
3.2
0.8
1.3
1.7
15.7
20.6
23.7
REDUCE
426
375
(12.0)
375,566
6,067
882
9.7
15.5
22.6
59.2
45.7
43.8
27.5
18.9
14.2
10.4
7.6
10.0
7.4
5.3
0.6
1.1
1.6
25.6
30.9
32.6
20.4
Tata Motors
BUY
528
680
28.8
1,589,665
25,678
3,218
51.9
69.1
77.8
11.6
33.1
12.5
10.2
7.6
6.8
4.9
4.0
3.5
2.1
1.6
1.3
22.6
23.8
21.4
46.9
WABCO India
ADD
4,535
4,900
8.0
86,021
1,390
19
72.7
130.4
159.9
25.3
79.5
22.6
62.4
34.8
28.4
38.1
22.1
18.0
9.9
8.2
6.8
0.2
0.7
0.9
17.0
25.9
26.3
0.7
Automobiles
Attractive
6,465,612
104,440
12.8
32.5
19.6
18.9
14.3
11.9
10.0
8.1
7.0
3.8
3.2
2.6
0.7
1.0
1.3
20.2
22.1
21.8
232.4
28.1
Motherson Sumi Systems
8.6
483.2
143.1
24.0
40.5
(4.2)
16.7
Axis Bank
ADD
500
525
1,180,769
19,073
2,349
29.4
35.0
39.8
11.2
19.1
13.5
17.0
14.3
12.6
2.7
2.3
2.0
1.0
1.2
1.4
16.9
17.5
17.3
Bajaj Finserv
BUY
1,261
1,260
(0.1)
200,665
3,241
159
102.2
112.6
127.8
6.1
10.2
13.4
12.3
11.2
9.9
2.0
1.7
1.5
1.1
1.1
1.1
16.9
16.5
16.1
1.6
Bank of Baroda
ADD
1,085
1,050
(3.2)
466,001
7,527
431
111.0
133.9
167.4
5.3
20.7
25.0
9.8
8.1
6.5
1.2
1.1
0.9
2.1
2.5
3.1
13.0
14.1
15.8
19.0
Bank of India
ADD
298
305
2.4
191,266
3,090
643
58.6
65.7
89.9
38.0
12.1
36.8
5.1
4.5
3.3
0.6
0.5
0.5
2.3
2.6
3.5
13.5
13.5
16.2
16.5
Cholamandalam
ADD
467
500
7.1
67,038
1,083
143
27.3
36.2
44.0
6.6
32.6
21.6
17.1
12.9
10.6
2.1
1.9
1.6
0.9
1.2
1.5
15.8
16.8
17.8
0.3
City Union Bank
ADD
93
105
13.1
55,167
891
543
7.1
7.9
9.0
10.7
11.9
13.4
13.1
11.7
10.3
1.9
1.6
1.4
1.2
1.3
1.5
17.6
16.1
16.0
DCB Bank
BUY
107
105
(2.1)
30,200
488
250
6.3
7.3
8.7
4.9
15.5
18.8
16.9
14.6
12.3
1.7
1.5
1.3
Federal Bank
BUY
147
145
(1.6)
126,008
2,035
855
12.0
14.0
15.9
22.5
16.5
13.7
12.3
10.5
9.3
1.6
1.5
1.3
HDFC
ADD
1,113
1,210
1,749,116
28,254
1,561
41.3
48.1
56.9
18.4
16.4
18.4
26.9
23.1
19.5
6.1
5.4
HDFC Bank
ADD
941
1,000
6.2
2,274,570
36,741
2,399
43.1
51.7
60.4
22.0
19.8
16.9
21.8
18.2
15.6
4.4
3.7
ICICI Bank
BUY
362
360
(0.6)
2,097,021
33,873
5,775
18.9
21.7
25.1
11.2
15.0
15.5
19.2
16.7
14.4
2.6
2.4
IDFC
BUY
161
200
24.0
256,561
4,144
1,512
10.1
9.1
11.9
(16.0)
(10.3)
31.8
16.0
17.8
13.5
1.4
1.3
IIFL Holdings
BUY
182
175
(3.8)
55,584
898
296
14.0
16.5
19.2
49.3
17.5
16.7
13.0
11.1
9.5
2.2
1.9
IndusInd Bank
5.0
8.7
1.2
13.6
12.6
13.2
1.8
1.7
1.9
2.2
14.0
14.6
14.8
10.3
4.8
1.5
1.8
2.1
21.8
22.6
23.7
41.8
3.1
0.9
1.1
1.2
21.8
22.0
21.7
30.6
2.1
1.6
1.8
2.1
14.2
14.9
15.5
64.6
1.2
1.2
0.5
0.6
10.0
8.1
9.8
17.4
1.7
2.0
2.3
2.7
18.5
19.1
19.6
0.7
10.8
ADD
784
800
2.0
414,474
6,695
526
33.7
39.4
46.2
25.9
16.9
17.1
23.3
19.9
17.0
3.9
3.4
2.9
0.6
0.7
0.8
19.1
18.8
18.8
REDUCE
141
135
(4.2)
68,305
1,103
485
17.9
20.6
22.1
(26.7)
15.2
7.5
7.9
6.8
6.4
1.1
1.0
0.9
2.6
3.0
3.2
14.3
14.8
14.2
2.3
Karur Vysya Bank
BUY
562
620
10.3
67,955
1,098
107
48.0
65.0
77.1
19.8
35.4
18.6
11.7
8.6
7.3
1.4
1.2
1.1
2.1
2.9
3.4
15.1
16.9
17.7
1.5
L&T Finance Holdings
SELL
72
60
(17.1)
124,403
2,009
1,718
4.9
5.4
5.9
42.8
8.4
10.8
14.6
13.5
12.2
2.0
1.8
1.6
2.2
1.2
1.2
14.0
14.1
14.1
5.6
LIC Housing Finance
ADD
431
450
4.4
217,459
3,513
505
30.8
36.3
43.1
17.9
17.9
18.9
14.0
11.9
10.0
2.7
2.3
2.0
1.2
1.5
1.7
19.1
19.3
19.6
17.5
Magma Fincorp
ADD
107
135
25.7
20,447
330
190
9.5
12.0
13.5
32.3
26.5
13.0
11.3
9.0
7.9
1.2
1.1
1.0
1.4
1.7
2.0
11.2
13.3
13.8
0.3
Mahindra & Mahindra Financial
SELL
328
260
(20.8)
186,697
3,016
564
17.2
20.0
25.2
9.2
16.6
25.6
19.1
16.4
13.0
3.2
2.8
2.4
1.2
1.4
1.8
17.8
18.2
19.9
Max India
ADD
400
450
12.5
106,570
1,721
266
7.8
10.5
13.9
48.1
35.9
31.9
51.5
37.9
28.7
3.0
2.6
2.2
1.3
1.8
2.4
6.3
7.3
8.2
2.2
Muthoot Finance
BUY
195
235
20.4
77,487
1,252
372
18.3
22.5
27.7
(12.9)
23.1
23.2
10.7
8.7
7.0
1.4
1.3
1.1
2.8
3.5
4.3
15.4
16.4
18.1
0.8
Oriental Bank of Commerce
ADD
317
300
(5.4)
95,082
1,536
300
42.5
51.4
61.5
11.8
20.9
19.8
7.5
6.2
5.2
0.7
0.6
0.6
2.7
3.2
3.9
9.2
10.3
11.4
9.8
16.9
J&K Bank
PFC
306
330
7.9
403,668
6,521
1,319
45.2
43.4
45.4
10.2
1,095
900
(17.8)
396,629
6,407
362
125.5
148.0
174.0
36.0
17.9
338
350
3.7
333,267
5,383
987
55.1
54.0
55.4
16.1
(2.0)
REDUCE
1,697
1,550
(8.7)
111,841
1,807
59
89.7
113.9
131.8
4.1
Shriram Transport
ADD
1,204
1,000
(16.9)
273,178
4,413
223
69.2
85.8
101.4
SKS Microfinance
ADD
369
330
(10.6)
46,515
751
108
16.4
20.2
State Bank of India
ADD
320
330
3.0
2,391,274
38,627
7,466
18.8
21.6
Union Bank
ADD
226
220
(2.8)
143,909
2,325
630
40.5
46.1
52.8
ADD
760
680
(10.5)
316,814
5,118
361
44.4
47.6
56.3
14,633,652
236,379
Punjab National Bank

Rural Electrification Corp.
Shriram City Union Finance
YES Bank
ADD
REDUCE
ADD
Attractive
20
India Daily Summary - December
(4.1)
7.0
4.6
6.8
7.0
6.7
1.3
1.1
1.0
3.3
3.1
3.3
20.2
15.6
14.4
17.5
8.7
7.4
6.3
1.0
0.9
0.8
1.2
1.5
1.7
12.4
13.1
13.7
18.4
2.6
6.1
6.3
6.1
1.3
1.1
1.0
3.2
3.4
3.5
23.7
19.6
17.5
14.1
26.9
15.8
18.9
14.9
12.9
2.4
2.1
1.8
0.6
0.7
0.9
16.6
16.5
16.6
0.7
22.1
24.1
18.2
17.4
14.0
11.9
2.8
2.4
2.1
0.8
1.0
1.2
17.3
18.5
18.7
13.2
27.4
154.2
23.0
35.3
22.4
18.2
13.5
3.8
27.2
21.4
23.1
11.9
26.9
28.8
15.2
24.1
17.0
14.8
11.9
1.8
1.7
1.5
1.0
1.0
1.1
11.3
11.9
13.3
93.0
51.6
13.6
14.7
5.6
4.9
4.3
0.7
0.6
0.6
2.7
3.0
3.5
14.1
14.2
14.5
16.8
(1.1)
7.3
18.3
17.1
16.0
13.5
2.4
2.1
1.8
1.0
1.1
1.3
19.7
16.0
16.6
27.1
18.2
14.2
18.0
14.9
13.0
11.1
2.1
1.9
1.7
1.4
1.5
1.8
14.2
14.5
15.2
513.9
3.0
2.4
India Daily Summary - December 5, 2014
Company
Aut o mo b ile s

21
Company
Ce me n t
Rating
Price (Rs)
4-Dec-14
Target
price
(Rs)
Upside
(%)
Mkt cap.
(Rs mn)
(US$ mn)
O/S
shares
(mn)
2015E
EPS (Rs)
2016E
2017E
EPS growth (%)

2015E
2016E
2017E
2015E
PER (X)
2016E
2017E
EV/EBITDA (X)
2015E 2016E 2017E
Price/BV (X)
2015E
2016E 2017E
Dividend yield (%)

2015E 2016E 2017E
2015E
RoE (%)
2016E
2017E
ADVT-3mo
(US$ mn)
ACC
SELL
1,476
1,280
(13.3)
277,159
4,477
188
50.4
68.8
90.5
7.6
36.6
31.5
29.3
21.5
16.3
16.6
11.5
8.5
3.3
3.0
2.6
1.6
1.6
1.6
11.6
14.6
17.1
7.7
Ambuja Cements
SELL
230
205
(10.9)
356,348
5,756
1,522
9.1
11.5
14.3
35.2
26.3
23.5
25.2
19.9
16.1
15.9
12.6
9.8
3.2
3.0
2.6
1.3
1.5
1.7
13.3
15.7
17.4
6.7
3,474
3,590
3.3
319,069
203.9
260.2
355.0
9.9
Grasim Industries
ADD
5,154
92
27.6
36.4
17.0
13.3
1.4
1.3
1.1
1.1
1.1
1.1
12.2
4.5
India Cements
REDUCE
93
100
7.3
28,629
462
307
2.8
6.2
12.8
224.0
126.9
104.4
33.9
14.9
7.3
8.1
6.7
5.4
0.7
0.7
0.7
2.9
2.9
2.9
2.2
5.0
9.8
5.4
Shree Cement
SELL
9,032
6,400
(29.1)
314,648
5,083
35
255.1
374.3
480.5
8.1
46.7
28.4
35.4
24.1
18.8
17.7
13.3
10.7
5.9
4.9
3.9
0.2
0.2
0.2
18.0
22.1
23.1
2.3
UltraTech Cement
SELL
2,465
2,000
(18.9)
676,303
10,924
274
81.6
103.4
141.7
9.2
26.7
37.1
30.2
23.8
17.4
16.3
12.0
9.1
3.5
3.1
2.7
0.4
0.4
0.4
12.4
14.0
16.6
10.1
792
605
(23.6)
Cement
Cautious
(4.0)
9.8
5.9
4.2
2.7
8.4
1,972,156
31,856
11.4
31.7
33.9
26.6
20.2
15.1
12.6
9.3
7.0
2.8
2.5
2.2
0.9
0.9
0.9
10.5
12.5
14.6
36.7
759,397
12,267
959
16.0
18.7
21.7
25.3
16.4
16.3
49.3
42.4
36.5
31.2
26.5
22.7
15.7
13.3
11.2
0.8
1.0
1.2
34.7
34.0
33.4
17.6
14.5
Consumer products
Asian Paints
Bajaj Corp.
SELL
BUY
344
340
(1.3)
50,792
820
148
14.3
16.8
19.0
19.2
17.3
12.9
24.0
20.5
18.1
21.3
17.3
10.5
9.4
8.3
3.3
2.5
3.2
42.1
Britannia Industries
BUY
1,834
1,875
2.2
219,992
3,554
120
47.7
57.2
67.8
44.5
20.0
18.6
38.5
32.1
27.0
24.7
20.4
17.1
17.2
13.0
10.1
0.8
1.0
1.3
55.0
46.2
42.1
3.7
Colgate-Palmolive (India)
ADD
1,918
1,800
(6.1)
260,766
4,212
136
41.3
48.3
57.4
14.4
17.1
18.8
46.5
39.7
33.4
31.7
26.4
21.6
40.8
38.1
35.3
1.7
2.0
2.3
90.6
99.3
109.8
5.5
6.2
Dabur India
ADD
48.4
48.6
2.0
245
245
0.0
430,221
6,949
1,744
6.1
7.3
8.4
17.2
20.0
15.4
40.2
33.5
29.0
31.7
26.5
22.5
13.0
10.7
8.9
1.0
1.3
35.7
35.0
33.4
GlaxoSmithKline Consumer
REDUCE
5,880
5,300
(9.9)
247,293
3,995
42
138.1
156.2
180.9
(14.0)
13.2
15.8
42.6
37.6
32.5
31.5
27.0
22.5
11.5
9.9
8.6
0.9
1.0
1.3
29.3
28.3
28.2
Godrej Consumer Products
REDUCE
962
880
(8.5)
327,337
5,288
340
25.3
30.2
35.2
13.3
19.3
16.7
38.0
31.8
27.3
25.5
21.2
17.8
7.4
6.5
5.6
0.7
0.8
1.0
21.1
21.7
22.0
2.6
Hindustan Unilever
REDUCE
825
730
(11.5)
1,783,883
28,815
2,163
19.0
21.4
24.2
15.6
12.8
13.0
43.4
38.5
34.0
32.4
27.4
23.8
45.2
38.0
32.3
1.7
1.8
2.1
113.8
107.4
102.6
11.5
14.1
1.9
2.2
2.5
ITC
1.1
1.2
ADD
383
395
3.1
3,060,133
49,431
8,016
12.2
14.1
16.3
15.6
15.3
31.4
27.2
23.6
20.7
17.5
14.8
10.5
9.3
8.3
31.8
33.0
36.3
37.9
Jubilant Foodworks
SELL
1,390
1,050
(24.5)
91,123
1,472
66
18.0
25.8
36.2
17.4
43.2
40.3
77.2
53.9
38.4
35.2
25.2
18.2
13.7
10.9
8.6
0.1
19.5
22.6
25.2
5.9
Jyothy Laboratories
REDUCE
250
220
(12.1)
45,328
732
181
9.5
11.2
14.5
102.4
18.1
29.1
26.3
22.3
17.3
24.7
18.2
15.6
5.8
5.1
5.0
1.2
1.4
1.6
22.7
24.4
29.2
1.6
Marico
BUY
329
350
6.4
212,173
3,427
645
9.2
11.5
13.3
16.2
25.7
15.7
35.9
28.5
24.7
23.8
18.8
16.0
12.0
9.4
7.6
0.8
1.0
1.2
37.8
37.0
34.0
3.5
Nestle India
SELL
6,343
5,300
(16.4)
611,555
9,879
96
122.4
145.2
177.0
6.9
18.7
21.9
51.8
43.7
35.8
29.1
25.0
21.5
20.4
16.5
13.5
0.8
1.0
1.2
46.2
43.7
43.1
Page Industries
SELL
10,138
7,500
(26.0)
113,083
1,827
11
180.6
223.2
273.6
31.0
23.6
22.6
56.1
45.4
37.0
35.2
28.6
23.3
28.8
21.3
15.6
0.7
0.8
0.8
59.2
54.0
48.6
1.7
Pidilite Industries
BUY
479
455
(5.0)
245,437
3,965
513
11.1
13.7
16.7
24.5
24.0
21.3
43.2
34.8
28.7
29.2
23.0
18.6
10.7
9.1
7.7
0.7
1.0
1.3
26.7
28.2
29.0
2.6
6.3
2.5
Speciality Restaurants
SELL
Tata Global Beverages
2.4
193
175
(9.1)
9,042
(34.8)
53.6
55.8
73.4
47.8
30.7
25.1
17.1
11.8
2.9
2.7
0.5
0.5
0.6
8.4
0.3
REDUCE
163
155
(5.1)
101,046
1,632
618
6.4
7.5
8.7
16.2
18.2
14.8
25.6
21.7
18.9
13.1
11.5
10.0
1.7
1.6
1.5
1.4
1.5
1.8
6.7
7.6
8.4
8.4
Titan Company
SELL
386
340
(11.8)
342,330
5,530
888
9.8
11.1
13.0
15.8
13.2
17.2
39.5
34.8
29.7
26.9
22.3
19.0
11.0
9.3
8.0
0.7
1.0
1.3
30.8
29.0
28.9
7.8
United Breweries
SELL
834
650
(22.0)
220,395
3,560
264
10.1
13.6
17.4
18.1
34.0
28.7
82.4
61.5
47.8
33.8
28.2
23.5
11.9
10.3
8.7
0.2
0.2
0.3
15.0
17.9
19.7
BUY
2,869
3,200
416,967
6,735
145
24.7
67.3
83.6
375.8
172.3
24.3
116.1
42.7
34.3
40.5
24.0
20.5
13.3
10.5
8.3
0.1
0.2
0.3
11.7
27.5
26.9
15.2
9,548,293
154,235
18.3
19.4
17.0
39.5
33.1
28.3
26.2
21.7
18.4
13.0
11.2
9.7
1.3
1.5
1.8
32.8
33.9
34.3
140.3
0.6
United Spirits
Consumer products
11.5
Neutral
146
47
2.6
4.0
4.0
5.8
2.7
Energy
Aban Offshore
RS
550
505
57
99.6
106.8
110.5
3.5
5.5
5.2
5.0
6.8
6.3
6.0
0.5
0.5
1.3
1.1
12.3
11.4
10.7
14.9
727
840
15.6
525,357
8,486
723
51.0
56.4
56.7
(9.1)
10.5
0.5
14.2
12.9
12.8
7.6
6.6
6.6
2.4
2.2
1.9
2.1
2.3
2.4
17.9
17.6
15.9
19.6
262
275
4.9
491,487
7,939
1,875
47.9
38.5
31.3
(26.4)
(19.8)
(18.6)
5.5
6.8
8.4
4.0
4.5
4.2
0.8
0.8
0.7
4.7
4.6
4.6
15.2
11.4
8.8
12.0
Castrol India
SELL
531
300
(43.5)
262,637
4,242
495
10.0
11.4
12.6
(0.2)
14.3
10.5
53.3
46.6
42.2
35.5
30.9
27.9
48.9
46.4
44.1
1.5
1.7
1.9
76.5
102.1
107.3
3.6
GAIL (India)
ADD
471
560
19.0
597,136
9,646
1,268
33.7
39.1
44.2
3.3
15.9
13.1
14.0
12.1
10.7
9.9
8.0
6.8
2.0
1.8
1.7
2.2
2.9
3.3
15.1
16.0
16.5
12.1
15.3
Cairn India
GSPL
18.8
7.2
1.1
ADD
109
105
563
7.5
8.7
10.0
0.9
15.5
14.6
12.6
10.9
6.8
6.0
5.2
1.7
1.5
1.4
1.4
2.4
3.7
12.1
12.7
13.6
2.5
Hindustan Petroleum
REDUCE
583
540
(7.4)
197,403
3,189
339
49.6
57.5
58.6
(2.9)
15.8
2.0
11.7
10.1
9.9
10.1
7.9
6.8
1.2
1.1
1.1
2.6
3.0
3.0
10.8
11.7
11.1
19.8
Indian Oil Corporation
ADD
347
400
15.3
842,500
13,609
2,428
25.2
34.4
37.8
4.3
36.3
10.0
13.8
10.1
9.2
9.0
6.2
5.0
1.2
1.1
1.0
2.6
3.4
3.7
9.0
11.3
11.5
9.3
Oil & Natural Gas Corporation
ADD
371
420
13.3
3,172,376
51,244
8,556
32.8
41.0
45.4
5.8
24.9
10.7
11.3
9.0
8.2
5.0
4.0
3.5
1.7
1.5
1.4
3.1
4.0
4.4
15.5
17.6
17.7
32.5
Oil India
BUY
586
700
19.4
352,476
5,694
601
55.5
70.0
74.9
12.0
26.0
7.0
10.6
8.4
7.8
6.9
5.2
4.9
1.6
1.4
1.3
3.8
4.8
5.1
15.5
17.9
17.4
4.4
REDUCE
204
190
(7.0)
153,263
2,476
750
10.9
12.5
15.4
14.8
14.9
23.0
18.8
16.3
13.3
10.2
9.5
7.9
2.7
2.5
2.2
1.1
1.6
2.2
15.4
15.9
17.4
7.0
ADD
959
1,100
2,815,981
45,487
3,232
72.0
76.1
90.9
5.9
5.7
19.4
13.3
12.6
10.5
10.2
9.5
6.4
1.4
1.3
1.2
1.0
1.0
1.3
11.3
10.8
11.8
53.5
9,503,494
153,511
0.0
13.8
10.1
11.6
10.2
9.3
7.2
6.0
5.0
1.5
1.4
1.2
2.3
2.9
3.2
12.7
13.2
13.3
191.2
Petronet LNG
Reliance Industries
Energy
Cautious
(4.1)
14.8
61,601
995

31,279
ADD
REDUCE
Bharat Petroleum

Rating
Price (Rs)
4-Dec-14
Target
price
(Rs)
Upside
(%)
Mkt cap.
(Rs mn)
(US$ mn)
O/S
shares
(mn)
2015E
EPS (Rs)
2016E
2017E
EPS growth (%)

2015E
2016E
2017E
2015E
PER (X)
2016E
2017E
EV/EBITDA (X)
2015E 2016E 2017E
Price/BV (X)
2015E
2016E 2017E
Dividend yield (%)

2015E 2016E 2017E
2015E
RoE (%)
2016E
2017E
ADVT-3mo
(US$ mn)
ABB
SELL
1,317
700
(46.8)
279,073
4,508
331
11.8
24.1
32.2
41.9
103.5
33.6
111.2
54.6
40.9
60.8
34.6
27.3
15.3
13.3
11.3
0.3
0.3
0.3
9.1
16.7
19.1
2.0
Bharat Heavy Electricals
SELL
274
200
(27.0)
670,398
10,829
2,448
11.6
13.7
15.9
(18.1)
18.0
16.6
23.7
20.0
17.2
15.5
11.9
8.9
1.9
1.8
1.7
0.9
1.1
1.2
8.3
9.2
10.0
23.0
34.8
0.8
22.2
Crompton Greaves
BUY
192
210
9.2
120,523
1,947
627
5.5
10.6
15.4
41.9
91.6
45.7
12.5
16.6
11.2
8.8
3.1
2.7
2.3
1.2
9.2
16.0
20.2
REDUCE
916
720
(21.4)
253,957
4,102
277
26.7
32.6
43.7
25.3
21.9
34.2
34.3
28.1
21.0
31.2
22.4
16.3
8.5
7.3
6.2
1.2
1.4
1.9
26.7
28.1
32.0
2.9
Kalpataru Power Transmission
ADD
181
200
10.7
27,715
448
153
9.9
8.7
11.6
24.3
(12.4)
33.3
18.2
20.8
15.6
7.9
6.7
5.9
1.2
1.2
1.1
0.8
0.8
0.8
7.0
5.8
7.4
0.8
KEC International
ADD
105
115
36.5
Larsen & Toubro
ADD
1,629
1,725
Siemens
SELL
976
600
(38.5)
Thermax
REDUCE
1,064
850
(20.1)
REDUCE
281
260
(7.6)
Cummins India
Voltas
Industrials
18.1
1.0
10.0
26,866
434
257
4.5
8.5
12.1
89.1
41.8
23.2
12.2
8.6
8.5
6.6
5.3
1.9
1.5
1.0
1.9
2.7
8.8
18.2
0.7
5.9
1,513,374
24,446
927
40.8
58.6
78.8
(16.2)
43.7
34.4
39.9
27.8
20.7
20.7
15.9
13.6
3.9
3.6
3.2
-1
-1
-1
10.4
13.5
16.2
42.7
347,573
5,614
356
17.8
24.3
29.9
104.7
36.2
23.1
54.8
40.2
32.6
31.1
23.8
19.2
7.7
6.8
6.0
0.5
0.7
0.9
14.3
18.0
19.6
4.8
126,753
2,047
119
22.7
33.5
45.9
10.1
47.5
36.8
46.8
31.7
23.2
32.6
21.0
14.9
5.8
5.2
4.5
0.8
1.0
1.3
12.8
17.2
20.8
331
8.7
12.0
14.2
16.9
38.4
18.6
32.4
23.4
19.8
26.7
17.5
14.4
4.6
4.1
3.6
0.8
1.3
1.5
14.9
18.5
19.4
12.8
36.7
29.3
36.7
26.9
20.8
21.1
15.9
13.2
3.6
3.3
3.0
0.1
0.1
0.1
9.8
12.3
14.2
112.8
35.7
28.7
5.0
13.4
Cautious
93,111
1,504
3,459,342
55,879
(5.8)
1.7
14.5
1.0
Infrastructure
Adani Port and SEZ
REDUCE
286
300
4.8
592,449
9,570
2,084
12.2
16.5
21.2
Container Corporation
REDUCE
1,355
1,330
(1.8)
264,151
4,267
195
48.9
55.4
70.4
Gujarat Pipavav Port
REDUCE
177
160
(9.3)
85,327
1,378
483
6.9
9.4
12.2
IRB Infrastructure
REDUCE
261
210
(19.5)
86,664
1,400
332
13.8
14.8
20.5
Infrastructure
Attractive
45.6
(3.1)
90.9
(0.1)
23.5
17.3
13.5
15.2
11.6
9.3
4.1
3.2
0.7
0.8
1.0
24.5
25.9
26.7
13.2
27.0
27.7
24.5
19.2
18.9
15.9
12.2
3.4
3.1
2.8
0.8
0.9
1.2
13.0
13.4
15.3
35.9
29.2
25.5
18.8
14.5
20.8
15.8
12.1
4.9
3.8
3.0
21.2
22.9
23.2
3.0
7.6
37.8
18.9
17.6
12.7
8.9
7.9
7.8
2.2
2.1
1.8
12.4
12.2
15.2
15.1
1.5
1.5
1.5
2.8
1,074,555
17,357
27.1
27.6
29.1
24.4
19.2
14.8
14.5
11.5
9.6
4.1
3.5
2.9
0.7
0.8
1.0
16.8
18.2
19.7
35.5
Info Edge
ADD
947
1,070
13.0
113,875
1,839
109
9.9
15.4
25.3
20.8
54.8
64.6
95.5
61.7
37.5
87.0
48.4
26.5
6.9
6.5
6.0
0.4
0.6
0.9
10.9
11.9
18.3
2.9
Just Dial
ADD
1,543
1,700
10.2
108,589
1,754
70
20.7
32.6
51.8
20.3
57.6
59.0
74.6
47.3
29.8
58.4
34.4
19.5
17.4
14.3
11.2
0.5
0.7
1.2
25.1
33.3
42.2
7.8
Internet
Attractive
222,464
3,593
25.6
56.3
61.5
84.2
53.9
33.4
69.9
40.2
22.5
10.5
9.5
8.2
0.4
0.6
1.0
12.4
17.7
24.7
10.7
2.3
2.9
3.6
28.1
30.7
31.2
0.3
(0.6)
8.7
20.4
3.9
0.6
Infrastructure
Media
DB Corp.
ADD
384
375
(2.3)
70,509
1,139
183
18.7
23.3
27.1
12.1
24.5
16.1
20.5
16.5
14.2
11.8
9.5
8.1
5.4
4.7
4.2
DishTV
ADD
69
70
2.2
72,949
1,178
1,065
(0.1)
1.4
3.2
93.5
1,516.7
135.4
(717.0)
50.6
21.5
11.4
9.2
7.1
4.4
4.4
4.4
Jagran Prakashan
ADD
133
135
1.5
43,463
702
311
7.7
9.7
11.5
2.6
26.1
18.5
17.3
13.7
11.5
9.5
7.9
6.7
3.9
3.5
3.1
3.0
3.8
4.5
23.8
27.1
28.7
Sun TV Network
ADD
375
385
2.7
147,723
2,386
394
20.2
22.7
26.5
6.2
12.7
16.6
18.6
16.5
14.2
11.8
10.2
8.6
4.3
3.9
3.6
2.7
3.3
3.8
24.4
25.0
26.4
5.2
Zee Entertainment Enterprises
ADD
375
325
(13.3)
359,832
5,812
960
8.6
10.2
12.5
(6.8)
19.2
22.1
43.8
36.7
30.1
25.7
22.0
18.4
6.9
6.3
5.6
1.2
1.5
1.7
16.5
17.9
19.7
20.6
694,477
11,218
8.8
25.6
24.9
31.7
25.3
20.2
15.9
13.4
11.1
5.5
5.0
4.6
1.4
1.8
2.1
17.3
19.9
22.6
30.7
ADD
356
360
1.1
2,248,310
36,317
6,316
22.5
28.1
23.7
(5.9)
24.7
(15.5)
15.8
12.7
15.0
9.4
8.1
8.9
4.5
3.9
3.5
3.2
4.0
3.4
29.8
32.8
24.6
19.2
REDUCE
5.7
0.8
26.3
Media
Neutral
Metals & Mining

Coal India
Hindalco Industries
Hindustan Zinc
Jindal Steel and Power
JSW Steel
National Aluminium Co.
NMDC
Sesa Sterlite
Tata Steel
Metals & Mining
166
165
(0.5)
342,570
5,534
2,065
16.3
16.6
22.5
10.2
10.0
8.1
8.1
6.6
0.7
0.8
0.8
0.8
8.0
7.6
8.7
ADD
171
190
11.3
721,051
11,647
4,225
16.9
18.3
19.3
2.7
8.1
5.8
10.1
9.3
8.8
6.1
4.8
3.8
1.7
1.5
1.3
2.1
2.1
2.1
17.8
16.8
15.7
3.4
REDUCE
153
160
4.7
139,752
2,257
915
15.9
21.6
25.6
(23.8)
35.9
18.6
9.6
7.1
6.0
8.1
6.1
5.6
0.7
0.6
0.6
1.2
1.2
1.2
6.6
8.9
9.7
21.8
1,169
1,490
27.5
282,488
4,563
242
111.0
140.2
160.0
67.8
26.3
14.1
10.5
8.3
7.3
6.0
5.3
4.7
1.2
1.0
0.9
1.0
1.0
1.0
11.6
13.1
13.3
11.7
11.6
11.4
10.6
5.3
BUY
20.4
31.0
1.9
0.7
SELL
58
56
(3.1)
148,964
2,406
2,577
5.0
5.1
5.4
88.9
2.4
6.7
5.0
4.4
1.0
2.6
2.6
1.7
10.2
9.8
9.7
ADD
140
185
32.3
554,267
8,953
3,965
18.4
18.5
17.5
15.3
0.5
(5.6)
7.6
7.6
8.0
4.1
4.2
4.2
1.7
1.5
1.4
6.1
6.1
6.1
23.1
21.0
18.2
8.4
REDUCE
237
275
16.0
703,073
11,357
2,965
23.2
20.8
21.9
37.1
(10.6)
5.6
10.2
11.4
10.8
5.5
4.8
4.2
0.9
0.9
0.8
1.4
1.4
1.4
9.2
7.7
7.7
22.5
462
495
7.2
448,556
7,246
971
38.9
45.6
56.2
4.4
17.0
23.4
11.9
10.1
8.2
6.7
6.4
5.7
1.0
0.9
0.9
1.7
1.7
1.7
8.9
9.7
11.0
41.0
5,589,030
90,280
9.8
11.2
0.7
11.6
10.5
10.4
6.7
5.9
5.4
1.6
1.5
1.3
2.7
3.0
2.7
13.8
13.9
12.8
156.8
REDUCE
Cautious
1.2
1.1
2.3
Pharmaceutical
Biocon
SELL
471
360
(23.5)
94,120
1,520
200
21.3
23.1
24.0
3.0
8.6
3.8
22.1
20.4
19.6
13.8
12.4
11.5
3.0
2.7
2.5
1.6
1.7
1.8
13.6
13.9
13.2
8.4
Cipla
BUY
659
680
3.1
529,326
8,550
803
17.7
24.5
32.0
2.1
38.9
30.5
37.3
26.9
20.6
21.9
16.9
12.8
4.7
4.2
3.6
0.5
0.8
1.0
13.3
16.4
18.7
23.6
Dr Reddy's Laboratories
(9.9)
ADD
3,476
3,130
Lupin
BUY
1,482
1,600
Sun Pharmaceuticals
SELL
839
790
Pharmaceuticals
Neutral
8.0
(5.9)
591,864
9,560
170
132.5
147.2
163.2
11.1
10.9
26.2
23.6
21.3
17.2
14.9
13.0
5.4
4.5
3.8
0.6
0.6
0.7
22.4
20.7
19.4
665,533
10,750
450
53.8
60.2
71.3
31.7
12.0
18.4
27.6
24.6
20.8
16.8
14.6
11.9
7.4
5.9
4.7
0.5
0.6
0.7
30.1
26.6
25.2
13.2
1,738,485
28,082
2,072
30.4
33.6
37.7
10.1
10.5
12.3
27.6
25.0
22.2
18.4
15.4
13.5
7.1
5.7
4.7
0.8
1.0
1.1
29.4
25.3
23.0
38.4
11.5
14.0
15.4
28.3
24.8
21.5
18.2
15.2
12.9
6.2
5.1
4.2
0.7
0.9
1.0
21.8
20.5
19.7
100.7
3,619,328
58,463
22
India Daily Summary - December
5.3
17.2
Company
Industrials

23
Company
Real Estate
DLF
Godrej Properties
Oberoi Realty
Prestige Estates Projects
Sobha Developers
Sunteck Realty
Real Estate
Rating
Price (Rs)
4-Dec-14
Target
price
(Rs)
Upside
(%)
Mkt cap.
(Rs mn)
(US$ mn)
O/S
shares
(mn)
2015E
EPS (Rs)
2016E
2017E
EPS growth (%)

2015E
2016E
2017E
2015E
PER (X)
2016E
2017E
EV/EBITDA (X)
2015E 2016E 2017E
Price/BV (X)
2015E
2016E 2017E
Dividend yield (%)

2015E 2016E 2017E
2015E
RoE (%)
2016E
2017E
ADVT-3mo
(US$ mn)
BUY
154
210
36.1
275,040
4,443
1,781
2.9
4.1
6.0
(21.0)
42.0
48.5
53.8
37.9
25.5
16.3
14.1
10.0
0.9
0.9
0.9
1.9
1.3
1.3
1.8
2.5
3.6
36.7
REDUCE
270
225
(16.8)
53,884
870
198
9.7
11.5
15.5
20.5
19.1
34.6
27.9
23.4
17.4
21.7
13.7
9.8
2.8
2.5
2.3
0.7
0.9
0.9
10.3
11.3
13.8
1.2
BUY
274
325
18.6
89,969
1,453
328
16.7
25.9
42.3
76.0
55.4
63.3
16.4
10.6
6.5
8.3
4.3
3.3
1.8
1.6
1.3
0.7
0.7
0.7
11.8
16.2
22.1
REDUCE
254
240
(5.5)
95,231
1,538
350
11.2
15.8
14.8
8.5
40.3
(6.1)
22.6
16.1
17.2
13.1
10.1
9.5
2.2
2.0
1.8
0.5
0.5
0.5
12.1
14.0
11.7
1.4
ADD
523
540
3.3
51,258
828
98
23.6
38.7
65.7
(1.7)
64.1
69.9
22.2
13.5
8.0
10.6
7.8
5.3
2.1
1.9
1.6
1.3
1.3
1.3
9.8
14.6
21.3
1.8
ADD
291
410
40.9
60
10.7
81.2
88.8
(57.4)
656.7
9.3
27.1
3.6
3.3
25.5
3.0
1.7
2.5
1.5
1.0
3.8
3.8
9.7
52.7
37.5
0.3
5.5
66.2
38.2
29.7
17.9
12.9
14.1
9.6
7.4
1.4
1.3
1.2
1.1
1.1
1.0
4.6
7.2
9.1
43.0
26.5
Attractive
18,323
296
583,706
9,429
1,139,604
18,408
1.4
Technology
HCL Technologies
1,475
(9.2)
Hexaware Technologies
SELL
228
175
(23.3)
Infosys
ADD
2,102
2,350
Mindtree
ADD
1,239
1,150
Mphasis
SELL
405
370
TCS
ADD
2,638
Tech Mahindra
ADD
2,679
Wipro
ADD
593
630
ADD
370
430
16.2
REDUCE
296
270
(8.7)
IDEA
BUY
159
192
Reliance Communications
SELL
101
90
ADD
456
435
(4.6)
Technology
REDUCE
1,624
113.5
12.6
4.1
7.3
16.0
15.4
14.3
11.3
10.3
9.1
4.5
3.7
3.2
1.5
1.7
1.8
31.2
26.6
24.0
68,671
1,109
302
11.0
13.1
14.5
(12.8)
18.8
10.9
20.7
17.4
15.7
13.9
11.9
10.7
7.2
6.4
5.8
3.9
3.4
3.8
30.9
39.0
38.8
10.3
2,413,859
38,991
1,143
108.1
125.7
147.9
13.7
16.3
17.7
19.4
16.7
14.2
13.8
11.3
9.3
4.6
3.9
3.3
1.7
1.9
2.2
25.6
25.4
25.5
84.9
(7.1)
103,648
1,674
84
63.7
71.6
80.2
18.8
12.4
12.0
19.4
17.3
15.4
13.5
11.5
9.6
5.1
4.3
3.6
1.3
1.4
1.6
29.3
26.9
25.1
4.2
(8.7)
85,160
1,376
210
32.7
33.9
34.9
122.3
3.5
2.9
12.4
12.0
11.6
6.9
6.4
6.0
1.6
1.5
1.4
4.0
4.2
4.3
13.1
12.8
12.5
0.8
2,700
2.4
5,167,026
83,464
1,959
109.9
126.5
143.9
12.6
15.1
13.8
24.0
20.9
18.3
17.9
15.1
12.9
8.2
6.8
5.7
2.3
1.9
2.2
36.5
35.8
34.0
2,900
8.2
631,219
10,196
209
137.5
165.3
190.0
7.4
20.2
15.0
19.5
16.2
14.1
13.5
11.2
9.5
4.9
3.9
3.1
1.0
1.1
0.8
28.5
27.5
25.4
26.2
6.3
1,463,117
23,634
2,463
34.9
39.0
45.0
10.2
11.6
15.4
17.0
15.2
13.2
11.4
9.7
8.1
3.6
3.1
2.6
1.5
1.7
1.7
23.0
21.8
21.4
19.5
11,072,304
178,852
12.9
13.5
14.1
20.4
18.0
15.8
14.6
12.4
10.5
5.5
4.6
3.9
1.9
1.8
2.0
27.0
25.8
24.9
221.9
1,478,638
23,885
3,997
15.5
17.1
21.1
85.8
10.2
24.0
23.9
21.7
17.5
7.0
6.2
5.4
2.3
2.1
2.0
0.6
0.9
1.4
9.9
10.1
11.7
30.1
558,839
9,027
1,889
11.2
13.0
15.7
38.9
16.3
20.7
26.5
22.8
18.9
11.0
9.6
8.4
3.2
3.1
3.1
3.8
3.3
4.0
11.8
13.8
16.3
6.5
20.8
571,587
9,233
3,320
8.4
9.5
9.4
41.3
13.5
(0.7)
19.0
16.7
16.8
8.6
7.1
6.2
2.3
2.0
1.8
0.4
0.5
0.6
15.2
13.9
12.3
18.7
(11.2)
243,354
3,931
2,467
3.5
5.3
8.8
8.8
50.0
66.8
28.7
19.1
11.5
7.1
6.7
5.7
0.7
0.7
0.7
2.8
3.8
6.0
11.9
285
3.4
7.5
12.6
171.9
122.3
69.3
135.7
61.1
36.1
7.7
6.9
6.2
8.7
7.5
6.1
1.0
1.2
1.4
8.3
13.2
18.8
4.7
63.4
15.8
22.1
24.3
21.0
17.2
7.7
6.8
5.9
2.1
2.0
1.8
1.1
1.2
1.6
8.7
9.4
10.7
71.9
11.8
Attractive
706
101.6
105.8
49.4
Telecom
Bharti Airtel
Bharti Infratel
Tata Communications
Telecom
Attractive
129,903
2,098
2,982,321
48,174
Utilities
Adani Power
SELL
45
36
(19.4)
128,231
2,071
2,872
(6.9)
(4.2)
(4.3)
(577.9)
38.3
(0.6)
(6.5)
(10.6)
(10.5)
10.6
9.3
9.7
2.8
3.8
6.0
(35.4)
(30.6)
(44.5)
3.8
JSW Energy
SELL
93
73
(21.7)
152,935
2,470
1,640
9.5
9.2
8.0
37.8
(3.8)
(12.4)
9.8
10.2
11.6
6.2
5.6
5.7
1.9
1.6
1.4
21.2
16.9
12.8
3.9
NHPC
REDUCE
20
22
9.2
223,074
3,603
11,071
1.6
1.9
2.0
(1.1)
21.4
2.2
12.8
10.5
10.3
9.0
7.7
7.8
0.8
0.7
0.7
2.0
2.4
6.0
7.0
6.8
2.2
NTPC
REDUCE
142
140
(1.4)
1,171,268
18,920
8,245
10.7
13.1
14.8
(16.7)
22.5
13.6
13.3
10.9
9.6
11.3
8.7
7.1
1.3
1.2
1.1
2.3
2.8
3.1
9.9
11.3
11.9
13.6
BUY
137
160
17.2
714,112
11,535
5,232
9.8
12.4
15.6
14.0
26.4
25.8
13.9
11.0
8.7
10.2
9.1
7.8
1.9
1.7
1.5
2.2
2.8
3.5
14.3
16.3
18.4
12.0
SELL
66
62
(5.9)
ADD
89
96
7.7
Power Grid
Reliance Power
Tata Power
Utilities
Cautious
184,858
2.5
2,986
2,805
3.7
4.1
6.2
(11.9)
11.5
50.5
17.8
16.0
10.6
21.7
11.1
8.3
0.9
0.9
0.8
5.5
7.7
241,117
3,895
2,468
1.5
4.4
5.6
(28.3)
187.7
27.7
58.0
20.2
15.8
8.5
6.9
6.3
1.6
1.5
1.4
1.3
1.3
1.3
3.2
8.5
10.1
6.6
2,909,068
46,991
(12.2)
31.6
17.1
16.7
12.7
10.8
10.4
8.5
7.5
1.4
1.3
1.2
1.8
2.1
2.5
5.2
8.1
10.0
10.8
57.1
8.7
0.9
Others
ADD
175
200
14.6
32,807
530
187
5.9
11.3
14.4
20.6
92.6
27.4
29.7
15.4
12.1
12.9
8.6
6.9
2.8
2.4
2.1
9.6
16.8
18.7
0.7
Coromandel International
SELL
323
210
(35.0)
92,396
1,492
283
16.5
18.6
21.6
36.7
13.1
16.0
19.6
17.4
15.0
11.0
10.0
8.8
3.5
3.1
2.6
1.4
1.4
1.4
19.1
18.8
18.9
1.6
Godrej Industries
ADD
300
345
15.2
100,486
1,623
331
14.6
18.0
20.2
48.6
22.7
12.2
20.5
16.7
14.9
17.9
12.8
9.0
3.1
2.7
2.3
0.6
0.6
0.6
16.5
17.4
16.8
2.9
Havells India
ADD
327
290
(11.3)
204,114
3,297
624
9.2
11.6
13.3
15.7
25.1
14.6
35.3
28.2
24.6
21.7
17.4
15.1
10.4
8.7
7.4
1.1
1.4
1.6
31.8
33.6
32.5
7.7
RS
29
70,541
1,139
2,219
1.1
4.5
4.5
120.0
306.6
(0.1)
26.0
6.4
6.4
12.3
9.4
9.1
0.5
0.5
0.5
0.0
0.0
0.0
2.5
9.0
8.5
28.8
1.3
22.8
Jaiprakash Associates
Rallis India
1.3
BUY
216
230
6.6
41,947
678
194
9.1
11.5
14.5
16.7
26.1
25.8
23.7
18.8
14.9
13.9
10.8
8.5
5.0
4.2
3.4
1.2
24.3
25.3
1.4
Tata Chemicals
BUY
455
520
14.3
115,850
1,871
255
32.0
41.0
46.7
110.1
28.0
13.9
14.2
11.1
9.7
7.5
6.3
5.4
1.9
1.7
1.5
2.2
2.2
2.2
14.1
16.3
16.5
4.9
UPL
ADD
340
370
8.9
145,597
2,352
429
27.7
32.9
37.5
13.7
19.1
13.7
12.3
10.3
9.1
7.3
6.4
5.5
2.3
2.0
1.7
1.3
1.5
1.6
20.7
20.9
20.2
9.7
59.9
Others
1.2
1.7
910,308
14,704
146.1
42.5
13.1
21.2
14.9
13.1
11.1
8.9
7.9
2.4
2.2
1.9
1.2
1.3
1.5
11.5
14.5
14.5
KIE universe
75,240,109
1,215,363
11.0
17.9
15.1
18.2
15.5
13.4
10.9
9.1
7.8
2.7
2.4
2.1
1.5
1.7
1.9
14.6
15.4
15.8
KIE universe (ex-energy)
65,736,615
1,061,852
14.1
18.9
16.3
19.8
16.7
14.4
12.0
10.0
8.7
3.0
2.7
2.4
1.4
1.5
1.7
15.2
16.0
16.5
Notes:
(a) We have used adjusted book values for banking companies.
(b) 2015 means calendar year 2014, similarly for 2016 and 2017 for these particular companies.
(c) Exchange rate (Rs/US$)=
61.91
Carborundum Universal
Disclosures
Ko ta k I n s ti tu ti o n a l Eq u i ti e s R e s e a rc h c o ve ra g e u n i ve rs e
Distribution of ratings/investment banking relationships
Percentage of companies covered by Kotak Institutional
Equities, w ithin the specified category.
70%
60%
Percentage of companies w ithin each category for w hich

Kotak Institutional Equities and or its affiliates has provided
investment banking services w ithin the previous 12 months.
50%
40%
36.4%
30%
22.1%
22.1%
20%
10%
4.5%
4.5%
BUY
ADD
19.5%
1.9%
0.6%
REDUCE
SELL
0%
* The above categories are defined as follow s: Buy = We

expect this stock to deliver more than 15% returns over the
next 12 months; Add = We expect this stock to deliver 515% 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 12month horizon basis. These ratings are used illustratively to
comply w ith applicable regulations. As of 30/09/2014 Kotak
Institutional Equities Investment Research had investment
ratings on 154 equity securities.
Source: Kotak Institutional Equities
As of September 30, 2014
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 analysts 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.
24
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accounts managed by Kotak Mahindra Mutual Fund. Kotak Securities Limited and its non US affiliates may, to the extent permissible under applicable
laws, have acted on or used this research to the extent that it relates to non US issuers, prior to or immediately following its publication. Foreign
currency denominated securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of or income
derived from the investment. In addition, investors in securities such as ADRs, the value of which are influenced by foreign currencies affectively
assume currency risk. In addition options involve risks and are not suitable for all investors. Please ensure that you have read and understood the
current derivatives risk disclosure document before entering into any derivative transactions.
Kotak Securities Limited established in 1994, is a subsidiary of Kotak Mahindra Bank Limited. Kotak Securities is one of Indias largest brokerage and
distribution house.
Kotak Securities Limited is a corporate trading and clearing member of Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited
(NSE), MCX Stock Exchange Limited (MCX-SX), United Stock Exchange of India Limited (USEIL) and a dealer of the OTC Exchange of India (OTCEI). Our
businesses include stock broking, services rendered in connection with distribution of primary market issues and financial products like mutual funds
and fixed deposits, depository services and Portfolio Management.
Kotak Securities Limited is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services (India)
Limited (CDSL).Kotak Securities Limited is also registered with Insurance Regulatory and Development Authority as Corporate Agent for Kotak
Mahindra Old Mutual Life Insurance Limited and is also a Mutual Fund Advisor registered with Association of Mutual Funds in India (AMFI)
We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered
in last five years. However SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise
letters or levied minor penalty on KSL for certain operational deviations. We have not been debarred from doing business by any Stock Exchange / SEBI
or any other authorities; nor has our certificate of registration been cancelled by SEBI at any point of time.
We offer our research services to primarily institutional investors and their employees, directors, fund managers, advisors who are registered with us
Details of Associates are available on our website ie www.kotak.com
Research Analyst has not served as an officer, director or employee of Subject Company
We or our associates may have received compensation from the subject company in the past 12 months. We or our associates may have managed or
co-managed public offering of securities for the subject company in the past 12 months. We or our associates may have received compensation for
investment banking or merchant banking or brokerage services from the subject company in the past 12 months. We or our associates may have
received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject
company in the past 12 months. We or our associates may have received any compensation or other benefits from the subject company or third party
in connection with the research report.
Research Analyst or his/her relatives may have financial interest in the subject company. Kotak Securities Limited or its associates may have financial
interest in the subject company. Research Analyst or his/her relatives does not have actual/beneficial ownership of 1% or more securities of the subject
company at the end of the month immediately preceding the date of publication of Research Report: Kotak Securities Limited or its associates may
have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of
publication of Research Report. Subject Company may have been client during twelve months preceding the date of distribution of the research report.
Three year Price history of the daily closing price of the securities covered in this note is available at nseindia.com and
economictimes.indiatimes.com/markets/stocks/stock-quotes. (Choose name of company in the list browse companies and select 3 years in icon YTD in
the price chart)

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INDIA DAILY

4-Dec 1-day 1-mo 3-mo

Deri. open interest

Net investment (US$ mn)

Max India (MAX)

DECEMBER 05, 2014

Price (`): 400

Valuation: insurance and healthcare to drive value

Exhibit 1: Insurance and healthcare to drive value

Value for Max India

Value per share (Rs)

Gross capital commitment

Max Speciality F ilms

Source: Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH

DECEMBER 05, 2014

Solid progress on metrics important for turnaround. The encompassing theme at

Price (`): 2,102

Acquisitions will be an important element of Infosys strategy

3QFY15 could be weak

Strong progress on metrics for turnaround

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Digital technologies gaining scale

A successful case study of renew the core in product engineering services

Source: Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 2: Infosys attrition likely to trend down in the coming quarters

Quarterly annualized attrition (%)

Source: Company, Kotak Institutional Equities

S&M spending as % of revenues

Source: Company, Kotak Institutional Equities

Exhibit 4: Infosys: key client metrics

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 5: Infosys: key quarterly metrics

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Axis Bank (AXSB)

DECEMBER 05, 2014

Price (`): 500

Axis Securities: the engine of growth

Source: Company, Kotak Institutional Equities

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 4: Axis Bank is a formidable player in the mortgage segment

2014 1QF Y 15 2QF Y 15

Source: Company, Kotak Institutional Equities estimates

The question of profitability is still unclear

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Source: Company, Kotak Institutional Equities

Source: Company, Kotak Institutional Equities

KOTAK INSTITUTIONAL EQUITIES RESEARCH

Exhibit 7: We expect gross NPLs to rise in the medium term

Exhibit 8: Loan-loss provisions could ease by FY2017

Loan loss provisions

Source: Company, Kotak Institutional Equities

Source: Company, Kotak Institutional Equities

Operating costs have scope for improvement

Employee costs to total assets

Source: Company, Kotak Institutional Equities estimates

KOTAK INSTITUTIONAL EQUITIES RESEARCH