IEA-Equity Strategy

India Equity Analytics
Persistent System : "Persistently innovating.."
"REDUCED" 23rd Dec 2013

23th Dec, 2013

We had initiated this stock at a CMP of Rs 526(on 16th Feb 2013) and now, it achieved its target of Rs 960. Despite better predictability of growth and attractive visibility of its expansion in new emerging verticals, we advice to book profit on the stock because of its premium valuation. However, sentiment could take a knock in the short run, since investors may prefer paying a premium for stocks with better earnings visibility. Our view could be change with management guidance and post earnings of coming quarter................................................... ( Page : 23)

Tech Mahindra : "On a stronger footing.."

"BUY"

23rd Dec 2013

Post merger with Satyam, strong demand traction in Telecom (Non BT) has improved and company's attractive deal win ratios make us optimistic view on the stock. At a CMP of Rs 1691, relatively the stock is trading at a fair valuation, 12.8x of FY14E earnings (at USD of Rs60/59.5 for FY14E/FY15E). We maintain “BUY” on the stock with a price target of Rs 2330 (revised from Rs 1875)..................... ( Page : 4-5)

CMC : "On track to deliver"

"BUY"

20th Dec 2013

Considering recent healthy demand environment across the IT space with favorable supply side scenario, we remain confident on the stock for better earning visibility and stable margin picture. Still, we reiterate our positive stance on the long-term story of CMC due to its focus on high margin SI and ITES businesses.At a CMP of Rs 1510, stock trades at 14.9X FY14E earnings. We have "BUY" view on the stock and we revise our target price from Rs1490 to Rs1690.............................. (Page : 6-7)

DIVISLAB : Good Growth Ahead

"BUY"

19th Dec 2013

The company posted strong 2QFY4 results with net sales growing to Rs 566 Cr up by 19.7% YoY on the back of good growth coming from all business segments. The generic API grew by 18% YoY to Rs 261 Cr for the quarter and CRAMS business segment grew by 20% YoY to Rs 271 Cr............................................. ( Page : 8-10)

AXIS BANK :

"Neutral"

19th Dec 2013

Axis bank is trading at 1.6 times of one year forward book which is almost upper side of bear case valuation band. We are not seeing bank’s earnings better than expectation as bank’s has significant exposure in riskier sector like infrastructure and power as compare to its peers. We have taken bank’s valuation multiple in bear case scenario on account of non visibility of ROE improvement and expected muted earnings growth. We assume loan and deposits growth of 16% and 15% along with margin at 3.5%. Better than expected performance will lead price performance and valuation multiple............................... ( Page : 11-14)

Godrej Consumer Product : " Strategy Shining"

"BUY"

19th Dec 2013

Its strong 20%+ growth in the domestic household insecticides business is the key growth driver. We expect strong momentum to continue in its international business led by Megasari and consolidation of Darling business. Despite some concerns related to higher leverage, lost domestic focus and currency risk, we remain confident of achieving the 20%+ sales growth with strong PAT growth for FY14E & beyond. ........................................... ( Page : 15-16)

BANK OF INDIA :

"BUY"

18th Dec 2013

Bank of India is trading at 0.5 times of one year forward book which is the lowest in valuation band despite of performing better than expectation largely due to lower CAR and slower economic growth. With the capital infusion to the tune of Rs.1000 cr and improving sign of asset quality would re-rate the stock as it did previously in our view. The management guided fresh slippage in line with 2QFY and inch up higher restructure asset for December quarter. We believe that current level is attractive entry point for the investor with time horizon more than one year with price target of Rs.235.................................... ( Page : 17- 19) Narnolia Securities Ltd,
402, 4th floor 7/1, Lords Sinha Road Kolkata 700071, Ph 033-32011233 Toll Free no : 1-800-345-4000 email: research@narnolia.com, website : www.narnolia.com

Persistent System.
"Persistently innovating.."
Company update CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty Stock Performance Absolute Rel. to Nifty 1M 24.1 23 1yr 105.2 99.4 YTD 91.2 84.6 Book Profit 1007 960 890 th

"Book Profit"
23rd Dec' 13

We had initiated this stock at a CMP of Rs 526(on 16 Feb 2013) and now, it achieved its target of Rs 960. Despite better predictability of growth and attractive visibility of its expansion in new emerging verticals, we advice to book profit on the stock because of its premium valuation. However, sentiment could take a knock in the short run, since investors may prefer paying a premium for stocks with better earnings visibility. Persistent Sytem’s management remains confident of FY14 with deal pipeline being strong and remains focused on increasing the share of IP-led revenues in its portfolio. They expect to see more than 15% USD revenue growth for FY14E. With the potential revenue growth, strong deal pipeline and multi-year relationships with marquee clientele in the Infrastructure vertical, we expect for better earning visibility across niche IT players. Recently , Persistent System reported superlative set of numbers during the 2QFY14 with 21%(QoQ) sales growth in INR term and 8.6%(QoQ) growth in USD term led by 38%(QOQ) growth on the intellectual property (IP) revenues. PAT growth was at 6.5% (QoQ). Margin ramp up: During the quarter, Its EBITDA margin improved by 180bps to 23.3%, positively impacted by currency gain(270bps), while during the quarter company wage hike to its off shore employee at a range of 8-9% was impacted margin by 310 bps adversely. However, management expects to maintain margin at a range of 24-25% for FY14E. Clients Metrics: During the quarter, company added 2 clients at 32 under medium category( >$1mn to $3mn) and 1 client at 16 from large ( > $ 3Mn) . Revenue from top-1 client was improved from 21.2% (1QFY14) to 22.5% . DSO at 62days, almost 12 quarters low. Persistent's management suggests that deal pipeline are looking strong and seeing good activity and traction in the market across the board. Its focus on some of newer technologies like cloud, analytics and mobility are gaining a lot of traction because of pickup in demand environment. The emerging themes, (CAMB) Cloud, Analytics, Mobility, and Big data could also see strong demand traction ahead. Because of actively investment in these themes, management is very confident to see healthy growth and also they expressed their confidence to beat the NASSCOM guidance (1214% revenue growth for FY14E). View and Valuation: The company’s focus is shifting greater proportion to IP led services and company has marquee clientele in cutting-edge technologies around cloud, mobility, collaboration and analytics; witnessing faster growth. Considering the company’s premium valuation, we advice “Book Profit” on the stock. At a CMP of Rs 1007, stock trades at 15.9x FY14E earnings. Our view could be change with management guidance and post earnings of coming quarter. Financials Rs, Crore 2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-% Revenue 432.37 357.29 21.0 326.86 32.3 EBITDA 100.8 76.8 31.3 89.06 13.2 PAT 60.8 57.1 6.5 44.71 36.0 EBITDA Margin 23.3% 21.5% 180bps 27.2% (390bps) PAT Margin 14.1% 16.0% (190bps) 13.7% 40bps
(Source: Company/Eastwind)

533179 PERSISTENT 1023/477 4029 12139 6274

Share Holding Pattern-%
Current 1QFY14 4QFY13

Promoters FII DII Others

38.96 15.28 21.23 24.53

38.96 14.84 19.31 26.89

38.96 12.39 21.59 27.06

1 year forward P/E-x

Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

2

Persistent System.
Financials
Rs, in Cr. Sales Employee Cost Cost of technical professionals Other expenses Total expenses EBITDA Depreciation Other Income EBIT Interest Cost Profit (+)/Loss (-) Before Taxes Provision for Taxes Net Profit (+)/Loss (-) Growth-% (YoY) Sales EBITDA PAT Expenses on Sales-% Employee Cost Other expenses Tax rate Margin-% EBITDA EBIT PAT Valuation: CMP No of Share NW EPS BVPS RoE-% P/BV P/E FY10 601.16 368.74 0 86.05 454.79 146.37 33.52 11.23 112.85 0 124.08 9.05 115.03 1.2% 60.2% 74.1% 61.3% 14.3% 7.3% 24.3% 18.8% 19.1% 310 4 639.0 28.8 159.7 18.0% 1.9 10.8 FY11 775.84 481.62 30.67 105.24 617.53 158.31 42.39 34.44 115.92 0 150.36 10.62 139.74 29.1% 8.2% 21.5% 62.1% 13.6% 7.1% 20.4% 14.9% 18.0% 366.7 4 747.1 34.9 186.8 18.7% 2.0 10.5 FY12 1000.3 599.05 41.68 135.2 775.93 224.37 61.1 34.44 163.27 0.00 197.71 55.09 142.62 28.9% 41.7% 2.1% 59.9% 13.5% 27.9% 22.4% 16.3% 14.3% 409.2 4 840.5 35.7 210.1 17.0% 1.9 11.5 FY13 1294.5 719 54 218 990.78 303.72 78 34.44 225.44 0.03 259.851 75.37 184.481 29.4% 35.4% 29.4% 55.5% 16.9% 29.0% 23.5% 17.4% 14.3% 541 4 1018.3 46.1 254.6 18.1% 2.1 11.7 FY14E 1657.54 895.07 82.88 290.07 1268.02 389.52 93.54 66.30 295.98 0.00 362.29 108.69 253.60 28.0% 28.3% 37.5% 54.0% 17.5% 30.0% 23.5% 17.9% 15.3% 1007 4.00 1234.4 63.4 308.6 20.5% 3.3 15.9 FY15E 2053.93 1119.39 102.70 379.98 1602.06 451.86 84.18 71.89 367.68 0.00 439.57 131.87 307.70 23.9% 16.0% 21.3% 54.5% 18.5% 30.0% 22.0% 17.9% 15.0% 1007 4.00 1504.7 76.9 376.2 20.4% 2.7 13.1

(Source: Company/Eastwind)

Rating and Price Target Chart

Updation Detail
Date 16-Feb-13 25-Jun-13 7-May-13 31-Jul-13 18-Sep-13 26-Sep-13 9-Oct-13 22-Oct-13 13-Dec-13 23-Dec-13
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

Update Detail Initiation Company Update Result Update Result Update Company Update Company Update Company Update Result Update Company Update Company Update

CMP 526 499 514 522 573 623 682 739 876 1007

View Target Price BUY 580 BUY 580 BUY 580 BUY 580 BUY 642 BUY 834 BUY 834 BUY 890 BUY 960 Book Profit
3

(Source: Company/Eastwind)

Tech Mahindra
"On a stronger footing.."
Company update CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty Stock Performance Absolute Rel. to Nifty 1M 9.3 6.8 1yr 99 93 YTD 39.2 32.7 BUY 1844 2330 1875 26% 24%

"BUY"
23rd Dec' 13

532755 TECHM 1872/895 42991 191827 6274

Share Holding Pattern-% Current 1QFY14 4QFY13 Promoters 36.46 47.17 47.41 FII 32.59 26.79 27.34 DII 15.13 15.83 16 Others 15.82 10.21 9.25 1 year forward P/E-x

Broad-based performance with positive outlook, positive view retained; The company remains confident on demand and expects client budgets to remain at the same levels in FY15E. It announced 2 large deals in the enterprise solutions (previously Mahindra Satyam) and has a healthy deal pipeline. Recently, following the footsteps of other larger giants such as TCS and Infy, Tech Mahindra revealed its earning story better than street expectations for 2QFY14. Sales grew by 16.3% (QoQ) in INR term led by healthy growth across all segments, verticals and geographies. In USD term, sales grew 4.7% (QoQ) better than all nearest peers barring TCS. PAT was up by 4.7% (QoQ) adversely impacted by lower other income and forex loss of Rs 26 Cr during the quarter. The company had forex gains of Rs 134 Cr in the June quarter. Green flag on Margin front: EBITDA margin expanded 222 basis points sequentially to 23.3% aided by a weaker rupee. Despite sweet flavor on margin front, management is still cautious for coming quarter due to Furloughs . Win- Win on all geographies: During the 2QFY14, winning trio was seen across geographies. US (contributes 33% on sales) grew by 8%, RoW (23% on sales) by 9.4% (QoQ). While Europe (contributes 44% on sales) was marginally up by 2.4%(QoQ) in USD term. Post earning management quoted for better outlook in Europe with greater traction in Australia and Africa in near term. All-rounder across all verticals: During the quarter, company reported 2.5% growth in Telecom, 4.7% growth in manufacturing, media including entertainment, BFSI and others each in USD term. While Retail, Transport and Logistic snapped a larger growth figure of 22% sequentially. The company is focusing on BFSI, manufacturing and telecom. BT on Slide: The management said revenues from British Telecom (BT) continued to slide. Those were 12% of consolidated revenues in the June quarter. It believes revenues from BT will be under pressure. View and Valuation: Recently, company’s management explained its 6-pillar strategy i.e., selling 6 service lines of IT, infr- management, network management, security services, value added services and services such as analytics to telcos. Currently, non-IT services contribute 33% of telecom revenues for the company. Further, it is focusing on segments that are growing faster such as platforms, enterprise, mobility and NMACS (networks, mobility, analytics, cloud and security). Post merger with Satyam, strong demand traction in Telecom (Non BT) has improved and company's attractive deal win ratios make us optimistic view on the stock. At a CMP of Rs 1691, relatively the stock is trading at a fair valuation, 12.8x of FY14E earnings (at USD of Rs60/59.5 for FY14E/FY15E). We maintain “BUY” on the stock with a price target of Rs 2330 (revised from Rs 1875). Financials Rs, Crore 2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-% Revenue 4771.5 4103.2 16.3 3523.7 35.4 EBITDA 1110.85 864.5 28.5 756.9 46.8 PAT 718.2 686.3 4.6 455.9 57.5 EBITDA Margin 23.3% 21.1% 220bps 21.5% 150bps PAT Margin 15.1% 16.7% (160bps) 12.9% 220bps
(Source: Company/Eastwind)

Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

4

Tech Mahindra.
Operating Metrics
Client contribution to revenue-% Customer Active Top 10 clients Top 5 clients Top client Revenue mix - onsite/offshore (%) Onsite Offshore Employee Metrics Utilisation % Attrition % 1QFY13 484.00 50.0% 40.0% 17.0% 48.0% 52.0% 75.0% 17.0% 2QFY13 475.00 51.0% 41.0% 14.0% 48.0% 52.0% 74.0% 16.0% 3QFY13 475.00 50.0% 39.0% 15.0% 48.0% 52.0% 76.0% 16.0% 4QFY13 516.00 50.0% 37.0% 13.0% 48.0% 52.0% 77.0% 16.0% 1QFY14 567.00 49.0% 37.0% 12.0% 51.0% 49.0% 76.0% 15.0% 2QFY14 576.00 48.0% 36.0% 12.0% 51.0% 49.0% 75.0% 16.0%

Financials
Rs, Cr Net Sales(mn)-USD Net Sales Employee Cost Operation and other expenses Subcontracting Cost Total Expenses EBITDA Depreciation Other Income Extra Ordinery Items EBIT Interest Cost PBT Tax PAT Growth-% Sales-USD Sales EBITDA PAT Margin -% EBITDA EBIT PAT Expenses on Sales-% Employee Cost Subcontracting Cost Operation and other expenses Tax rate Valuation CMP No of Share NW EPS BVPS RoE-% Dividen Payout-% P/BV P/E FY12 1157 11702.4 6591.9 2210.1 948.6 9750.6 1951.8 319.0 501.3 36.9 1632.80 107.3 2063.7 228.9 1834.8 2.7% 13.8% 11.9% 11.9% 16.7% 14.0% 15.7% 56.3% 8.1% 18.9% 11.1% 652.5 23.2 4815.8 79.0 207.3 38.1% 3.2% 3.1 8.3 FY13 2633 14332.0 8099.5 2287.3 882.0 11268.8 3063.2 389.6 212.2 -160.1 2673.60 92.1 2633.6 647.9 1985.7 127.6% 22.5% 56.9% 8.2% 21.4% 18.7% 13.9% 56.5% 6.2% 16.0% 24.6% 1081.7 23.2 5529.1 85.5 238.0 35.9% 3.0% 4.5 12.7 FY14E 3124.01 18744.06 10309.24 3373.93 1405.80 13683.17 5060.90 509.54 281.16 -209.39 4551.36 98.04 4525.09 1176.5 3348.6 18.6% 30.8% 65.2% 68.6% 27.0% 24.3% 17.9% 55.0% 7.5% 18.0% 26.0% 1844 23.2 8741.77 144.1 376.31 38.3% 4.1% 4.9 12.79 FY15E 3592.61 21376.04 11756.82 3847.69 1603.20 15604.51 5771.53 581.08 213.76 -238.79 5190.45 91.37 5074.05 1319.3 3754.8 15.0% 14.0% 14.0% 12.1% 27.0% 24.3% 17.6% 55.0% 7.5% 18.0% 26.0% 1844 23.2 12360.68 161.6 532.10 30.4% 3.6% 3.5 11.41 FY16E 4023.73 24343.54 13388.95 4381.84 1947.48 17770.79 6572.76 661.75 243.44 -121.72 5911.00 86.93 5945.79 1545.9 4399.9 12.0% 13.9% 13.9% 17.2% 27.0% 24.3% 18.1% 55.0% 8.0% 18.0% 26.0% 1844 23.2 16624.68 189.4 715.66 26.5% 3.1% 2.6 9.74

(Source: Company/Eastwind)

Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

5

CMC
"On track to deliver"
Company update
CMP Target Price Previous Target Price Upside Change from Previous

"BUY"
20th Dec' 13

Buy
1510 1690 1490 12% 13.4%

We believe, CMC will continue with its efforts to enhance revenue contribution of high margin System Integration and ITES segments. Further, its high focus on education space will also add margin in near term. Considering recent healthy demand environment across the IT space with favorable supply side scenario, we remain confident on the stock for better earning visibility and stable margin picture. Still, we reiterate our positive stance on the long-term story of CMC due to its focus on high margin SI and ITES businesses.

Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 517326 CMC 1560/1107 4575 20884 6167

Stock Performance
Absolute Rel. to Nifty 1M 15.0 15.4 1yr 29.2 24.6 YTD 54.5 37.1

Share Holding Pattern-%
Promoters FII DII Others Current 51.12 23.32 17.83 7.73 4QFY13 3QFY13 51.12 51.12 19.87 21.84 20.46 19.05 8.55 7.99

For 2QFY14E earnings, CMC witnessed better Sales and PAT growth with 15% sales growth driven by the strong growth from the System Integration (29%) coupled with the good growth from the System Integration (24%) and ITES business (16%) sequentially. PAT grew by 27%(QoQ) because lower effective tax rate (from 34%, 1QFY14) to 20% of earning before tax) . Steady Margin: During the quarter, EBITDA margin was almost unchanged at 15.8% due to wage hikes (70 bps), but also has positive impact from currency gain (170 bps) which were reinvested into the business. However, Management is still confident to maintain the margin in a range of 15-16%. Deal pipeline: The deal pipeline is in line with the last year. It indicated that pursuing good number of deals in the Developed and as well emerging markets. Considering current sound demand environment across geographies (like US and Europe) and verticals Company is more optimistic for clients acquisition and deal executions ahead. Now, CMC is focusing on new emerging segments like IMS (Infrastructure Management Services), Cloud, Big data, Mobility and Analytics. Considering its impressive client as well as market response, company is expecting to quantify into revenue. Its new and emerging projects like Mining Management System, GPS System and Port & Cargo Management System would play a major role for generating revenue. View and Valuation: CMC expects the growth momentum to improve in the quarters ahead and the revenue growth to be higher than the NASSCOM guidance in FY14. The Company remains a strong with excellent earning visibility led by joint effort of market strategy by TCS (contributes 59% of sales) in its product and solutions. For a long-term prospect, we remain positive on the stock, taking its earning visibility and healthy earnings among the mid-cap IT space (over 25% CAGR in earnings over FY2013-15E). At a CMP of Rs 1510, stock trades at 14.9X FY14E earnings. We have "BUY" view on the stock and we revise our target price from Rs1490 to Rs1690.

1 year forward P/E

Financials
Revenue EBITDA PAT EBITDA Margin PAT Margin 2QFY14 560.75 88.41 67.3 15.8% 12.0% 1QFY14 486.61 77.04 53.12 15.8% 10.9% (QoQ)-% 15.2 14.8 26.7 110bps 2QFY13 458.64 76.59 49.4 16.7% 10.8%

Rs, Crore (YoY)-% 22.3 15.4 36.2 (90bps) (120bps)
6

(Source: Company/Eastwind)

Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

CMC
Key facts from recent Concall
►CMC continues to target growth ahead of the overall IT industry; the company expects to grow faster than that in the current financial year ►Expects operating Profit margin between 15 percent and 16 percent for FY14E, ►The Capex expected to be Rs 190 crore (planned is around Rs 230 crore) for FY'14.The capex will be financed by internal accruals. ►Company’s hiring Plan; a net addition of 400-500 this year ► Notably, it targets revenues of Rs 250-300 crore from Education and Training business in next two 3-4 years timeline.

Financials;
Rs, Cr Net Sales Purchases of stock-in-trade Employee Cost Subcontracting and outsourcing cost Other expenses Total Expenses EBITDA Depreciation Other Income EBIT Interest Cost PBT Tax PAT Growth-% Sales EBITDA PAT Margin -% EBITDA EBIT PAT Expenses on Sales-% Employee Cost Subcontracting Cost Tax rate Valuation CMP No of Share NW EPS BVPS RoE-% Dividen Payout ratio P/BV P/E FY10 870.73 99.35 276.16 173.56 159.94 709.01 161.72 9.85 18.75 151.87 3.17 167.45 24.23 143.22 -7.4% 27.7% 23.3% 18.6% 17.4% 16.4% 31.7% 19.9% 14.5% 1340.0 1.50 510.68 95.48 340.45 28.0% 18.6% 3.94 14.03 FY11 1084.40 99.28 345.13 262.35 170.17 876.93 207.47 10.46 11.80 197.01 0.22 208.59 32.42 176.17 24.5% 28.3% 23.0% 19.1% 18.2% 16.2% 31.8% 24.2% 15.5% 2079.6 1.50 654.02 117.45 436.01 26.9% 19.9% 4.77 17.71 FY12 1469.34 145.40 440.22 446.11 213.63 1245.36 223.98 21.37 17.46 202.61 0.02 220.05 68.59 151.46 35.5% 8.0% -14.0% 15.2% 13.8% 10.3% 30.0% 30.4% 31.2% 994.8 3.00 772.19 50.49 257.40 19.6% 23.2% 3.86 19.70 FY13 1927.87 188.56 521.65 679.73 222.88 1612.82 315.05 23.20 13.17 291.85 0.18 304.84 76.76 228.08 31.2% 40.7% 50.6% 16.3% 15.1% 11.8% 27.1% 35.3% 25.2% 1410.0 3.03 946.26 75.27 312.30 24.1% 19.4% 4.51 18.73 FY14E 2239.31 201.54 593.42 794.96 235.13 1825.04 414.27 41.95 22.39 372.33 0.2 394.52 86.79 307.73 16.2% 31.5% 34.9% 18.5% 16.6% 13.7% 26.5% 35.5% 22.0% 1510 3.03 1192.11 101.56 393.44 25.8% 20.1% 3.84 14.87 FY15E 2600.41 234.04 702.11 923.15 273.04 2132.34 468.07 60.69 26.00 407.38 0.25 433.14 99.62 333.52 16.1% 13.0% 8.4% 18.0% 15.7% 12.8% 27.0% 35.5% 23.0% 1510 3.03 1454.91 110.07 480.17 22.9% 21.2% 2.78 13.72
7

(Source: Company/Eastwind)

Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

DIVISLAB
Good Growth Ahead
Result Update
CMP Target Price Previous Target Price Upside Change from Previous

"BUY"
19th Dec' 13

BUY
1186 1350 14% -

About The Company :
Divi’s Laboratories Limited is an India-based manufacturer of Active Pharmaceutical Ingredients (APIs) and Intermediates. Divi is engaged in manufacture of generic APIs, custom synthesis of active ingredients for innovator companies and other specialty chemicals like peptides and nutraceuticals.

Investment Rationale :
Company is one of the few CRAMS (Contract Research and Manufacturing Services) players with a superior business mix comprising high-margin custom synthesis of APIs (Active Pharma Ingredients) and intermediates for innovator companies. The company collaborates with innovators throughout the product development cycle. Post commercialization, company is usually the key supplier of APIs and intermediates for these products to the innovators. In 2012-13, the company added six products to its custom synthesis portfolio. The CRAMS business which contributes nearly 45%- 50% of the total revenues have from Rs 560 Cr in 2009 to Rs 1000 Cr translating CAGR of 15 %.The Generic API business which contributes another 45-50 % to the total revenues is also well track after witness some pressure in FY10.As on FY13 this segment contributed Rs 1029 Cr to the total revenues and this segment to more revenues to the company in the light of upcoming patent cliff of US and new launches . The company have one more business segment ‘Nutraceuticals’ relatively smaller and newer as compared to other business segment can act as growth driver going forward. The management of the company is quite optimistic for this business segment and has guided that this business at 40-50% CAGR (albeit on a low base) over the next 2-3 years.

Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs, Cr) Average Daily Volume Nifty 532488 DIVISLAB 1189/905 15631 5.43 6217

Stock Performance-%
1M Absolute Rel. to Nifty 2.8 0.1 1yr 4.4 -1.3 YTD 1.4 -14.6

Share Holding Pattern-%
Promoters FII DII Others Current 1QFY14 4QFY1 3 52.1 52.2 52.2 15.8 14.9 14.0 12.5 12.5 13.3 19.5 20.5 20.5

2QFY14 Results Update.
The company posted strong 2QFY4 results with net sales growing to Rs 566 Cr up by 19.7% YoY on the back of good growth coming from all business segments. The generic API grew by 18% YoY to Rs 261 Cr for the quarter and CRAMS business segment grew by 20% YoY to Rs 271 Cr. The company derives almost 45-50% of revenues each from CRAMS and generic API business while rest comes from ‘Nutraceuticals’. The operating EBITDA for the quarter came at Rs 250 Cr and OPM at 43.9 %. Company’s 2QFY14 EBITDA margins were higher than 34.8% reported in Q2FY13 on account of higher gross margins, lower power cost and forex loss in Q2FY13.The RM cost as % of net sales stands at 50% for the 2QFY14 while employee cost as % of net sales was 10 %.

One Year Price vs Nifty

Financials
Revenue EBITDA PAT EBITDA Margin PAT Margin 2QFY14 567 249 205 43.9% 36.2% 1QFY14 517 197 174 38.1% 33.7% (QoQ)-% 9.7 26.4 17.8 580bps 250bps 2QFY13 474 165 117 34.8% 24.7%

Rs, Crore (YoY)-% 19.6 50.9 75.2 910bps 1150bps
8

(Source: Company/Eastwind)

Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

DIVISLAB
Continued…
The net profits for the 2QFY14 came at Rs 205 Cr and NPM came at 36.2%.The net profits also include forex gain of Rs 31 Cr. The company reports its forex gain under other income headings and forex loss under its other expenditure head. The tax rate for the quarter stands at 22%. Company has capitalized Fixed assets to the tune of Rs120 Cr for H1 FY14. The company will commercialize DSN SEZ by the end of the year and the FDA inspection post that. The new DSN SEZ contribution will start in Q1 FY15E and full benefits will fructify only from Q2 FY15E.The existing DSN blocks contributed Rs125 Cr revenues in Q2 FY14 as against Rs70.8 Cr in Q1 FY14.

Management Guidance
The management of the company after strong 2QFY14results expects that revenue to grow by 15-20 % (15% guided earlier), with FY15E growth expected above 20%. The management further indicated that this high level of OPM is not sustainable but reiterated that 38% levels OPM is quite reachable . On Power shortage ,which declined the OPM in 1QFY14 has been solved and will aid margin expansion going forward. The capex guidance stands at INR500-600m (apart from INR2b addition from CWIP) and tax rate guidance remains between 23-24%.

View & Valuation
The company is not only the most profitable company in the CRAMS space, but also features among the most profitable companies in the Indian healthcare sector with EBIDTA margin of 35-40% backed by its strong chemistry skills and custom synthesis presence.The stock is currently trading at CMP of Rs 1186, strong 2QFY14 results ,optimistic management guidance and better business model in comparison to its peers makes us confident for the stock. We are positive for the stock and recommend BUY with

target price of Rs 1350.
Graphical Depiction Revenue Break Up: 2QFY14

(Source: Company/Eastwind)

Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

9

DIVISLAB
Sales and PAT Trend (Rs)

Net sales growing to Rs 566 Cr up by 19.7% YoY on the back of good growth coming from all business segments.

(Source: Company/Eastwind)

OPM %

2QFY14 EBITDA margins were higher than 34.8% reported in Q2FY13 on account of higher gross margins, lower power cost and forex loss in Q2FY13.

(Source: Company/Eastwind)

NPM %

The 2QFY14 PAT also include forex gain of Rs 31 Cr. The company reports its forex gain under other income headings and forex loss under its other expenditure head.

(Source: Company/Eastwind)

Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

10

AXIS BANK
Company Update CMP Target Price Previous Target Price Upside Change from Previous NEUTRAL 1286 1325 1247 3 6.3

"NEUTRAL "
19th Dec, 2013

Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Cr) Average Daily Volume Nifty Stock Performance 1M Absolute 12.9 Rel.to Nifty 12.6

532215 AXISBANK 1549/763 39764 2066127 6217

Axis bank is trading at 1.6 times of one year forward book which we believe that it is higher side of our bear case valuation band. We have neither seen valuation band expansion nor did earnings lead price performance. Axis bank has significant exposure in infrastructure and power (12.64% in 2QFY14) as compare to its peer group. Asset quality pressure may persists in coming quarters which restrict bank’s valuation multiple in the range of 1.4 to 1.6 times of book in our view. We advice our investors to book part profit at the current level. Our valuation multiples are based upon bank’s present growth parameters, better than expected performance and visibility of ROE improvement will expand valuation and multiples. Healthy NII growth on the back of margin improvement and loan growth During 2QFY14, Axis bank reported NII growth of 26.2% YoY largely due to 50 bps YoY improvement of margin and 577 bps YoY increased of credit deposits ratio and 17% increased in loan growth. Axis bank’s interest earnings assets increased by 20% YoY whereas interest bearing liabilities increased by 13% YoY. Total revenue of the bank grew by 21.3% YoY to Rs.4703 cr. Non- interest income registered growth of 14% YoY to Rs.1766 cr. Declined in cost income ratio led robust growth in operating profit Operating expenses increased by 12.1% YoY to Rs.1953 cr in which employee cost and other operating cost increased by 11.4% and 12.5% respectively. Cost income ratio declined by 440 bps to 41.5% from 44.9% in 2QFY13. Employee cost and other operating cost as a percentage of total assets remain flat at 0.2% and 0.4% respectively. With the support of healthy NII, fee income and improvement of cost income, operating profit grew by 29% YoY and -3.3% in QoQ to Rs.2750 cr. Sequential declined of operating profit was due to gain of treasury income in 1QFY14 which was absent in 2QFY14. Sequentially stable asset quality help to make lower provision On asset quality front, Axis bank reported 10 bps deterioration in GNPA on sequential basis to 1.4%. In absolute term GNPA increased by 10% QoQ and provision increased by 12% QoQ. This led net NPA increased by 6% sequentially. In percentage term NPA stood at 0.4%, flat on QoQ basis. Provision coverage ratio (without technical write off) was improved by 100 bps to 69.3% and PCR at technical write off was 89%. During quarter bank made loan loss provision of Rs.687 cr versus Rs.712 cr in 1QFY14 and Rs.509 cr in 2QFY13. On sequential basis risky sector like power and infrastructure exposure remain flat at 12.64% from 12.67% in 1QFY14. Rs, Cr Financials 2011 2012 2013 2014E 2015E NII 6566 8026 9666 12620 14710 Total Income 11238 13513 16217 19715 21804 PPP 6377 7413 9303 11238 12429 Net Profit 3340 4224 5179 6343 6977 EPS 81.4 102.2 110.7 135.2 149.1 (Source: Company/Eastwind) 11 Narnolia Securities Ltd,

1yr -5.2 -10.9

YTD -5.2 -10.9

Share Holding Pattern-% Current 4QFY13 3QFY1 3 Promoters 33.9 33.9 33.5 FII 40.7 4094.0 39.6 DII 8.8 8.5 10.0 Others 16.6 16.6 17.0 Axis Bank Vs Nifty

AXIS BANK
Healthy NII growth and controlled CI ratio along with stable margin help to boost up profit With the support of healthy NII growth and controlled operating expenses led net profit of 26% YoY to Rs.1362 cr from Rs.1081 cr. Consequently ROA improved by 12 bps to 1.6% and ROE declined to 15.3% from 17.5% in 2QFY13 largely due to operating leveraging. Modest deposits growth and strong traction in loan growth On business growth parameters, bank’s total business grew by 12% YoY to Rs.4567 bn as against Rs.4077 bn. Deposits grew by moderate pace with 8% YoY while current deposits and saving deposits grew by 9% and 18% respectively taking overall CASA ratio to 42.9%. Bank’s strategy to focus on retail deposits seem well is shaping as share of retail deposits in term deposits increased continuously to 45.2% from 40.3% in21QFY13. Loan grew by 17% YoY to Rs.20130 bn. Incremental loan growth came from retail advance and SME segment. Share of retail loan increased to 30.2% of overall loan from 25.7% in 2QFY13. Bank’s has decreased in share of risky sector (Power & Infrastructure) exposure to 12.64% from 13.63% in 2QFY13. Credit deposits ratio improved by 577 bps YoY to 78.8% implying best utilization of excess liquidity in balance sheet. Sequential declined of margin owing to flat loan yield During quarter bank reported 7 bps QoQ declined in NIM to 3.79% led by 500 bps sequentially declined of credit deposits ratio and almost flat of loan yield on QoQ basis. Loan yield during the quarter was 10.5% and cost of deposits declined from 7.4% to 7.1% sequentially. Valuation & View Axis bank delivered good set of numbers during quarter but exposure to stress sector remain at 12%+ level. Moreover Axis bank has higher exposure in small, medium enterprises and infra segment in comparison to peers. In challenging macro environment and tight liquidity situation, Axis bank is more vulnerable among peers. At the current price of Rs.1286, stock is trading at 1.6 times of one year forward book which is upper side of bear case valuation band. We advice book part profit at current level. We value bank at multiple of 1.4 to 1.6 times of one year forward book which implies Rs. price range of Rs.1247 to Rs.1325.

Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

12

AXIS BANK
Quarterly Result Interest/discount on advances / bills Income on investments Interest on balances with Reserve Bank of India Others Total Interest Income Fee Income Trading Income Miscellaneous Income Others Income Total Income Interest Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions PBT Tax Net Profit Balance Sheet Date ( Rs Bn) Net Worth Deposits Loan Asset qualtiy( Rs Cr) GNPA NPA %GNPA %NPA 2QFY14 5394 2143 35 37 7609 1432 5 329 1766 9375 4672 2937 1766 4703 644 1309 1953 2750 687 2062 700 1362 1QFY14 5189 2015 34 39 7278 1317 440 24 1781 9059 4413 2865 1781 4647 643 1160 1803 2844 712 2131 722 1409 2QFY13 % YoY Gr % QoQ Gr 4736 13.9 4.0 1897 13.0 6.3 22 58.9 2.6 32 14.9 -5.5 6687 13.8 4.6 1343 6.6 8.7 207 -97.6 -98.9 0 1270.2 1551 13.9 -0.9 8238 13.8 3.5 4360 7.2 5.9 2327 26.2 2.5 1551 13.9 -0.9 3877 21.3 1.2 578 11.4 0.1 1164 12.5 12.9 1742 12.1 8.3 2136 28.8 -3.3 509 35.0 -3.5 1626 26.8 -3.2 545 28.4 -3.1 1081 26.0 -3.3

362 2554 2013

349 2384 1982

252 2356 1721

43.6 8.4 16.9

3.7 7.1 1.6

2734 838 1.4 0.4

2490 790 1.3 0.4

2191 654 1.3 0.4

24.8 28.1

9.8 6.1

Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

13

AXIS BANK
FINANCIALS & ASSUPTION

Income Statement
Interest Income Interest Expense NII Change (%) Non Interest Income Total Income Change (%) Operating Expenses Pre Provision Profits Change (%) Provisions PBT PAT Change (%)

2011
15155 8589 6566 31.2 4671 11238 25.3 4860 6377 22.4 3033 3345 3340 34.8

2012
21995 13969 8026 22.2 5487 13513 20.2 6100 7413 16.2 3189 4224 4224 26.5

2013
27183 17516 9666 20.4 6551 16217 20.0 6914 9303 25.5 4124 5179 5179 22.6

2014E
33243 20622 12620 30.6 7095 19715 21.6 8478 11238 20.8 2176 9062 6343 22.5

2015E
38426 23716 14710 16.6 7095 21804 10.6 9376 12429 10.6 2461 9967 6977 10.0

Balance Sheet
Deposits( Rs Cr) Change (%) of which CASA Dep Change (%) Borrowings( Rs Cr) Investments( Rs Cr) Loans( Rs Cr) Change (%) 189166 34 77758 18 26268 71788 142408 36 219988 16 91412 18 34072 92921 169760 19 252614 15 112100 23 43951 113738 196966 16 290506 15 124917 11 51266 129873 228481 16 334081 15 143655 15 58956 149354 265037 16

Valuation Book Value CMP P/BV

460 1404 3.1

549 1146 2.1

708 1304 1.8

828 1288 1.6

957 1288 1.3

Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

14

Godrej Consumer Product
" Strategy Shining"
Company update CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Cr) Average Daily Volume Nifty Stock Performance 1M Absolute -2.1 Rel. to Nifty -4.8 BUY 840 960 725 14% 32%
Key facts from recent Management Comments:

"BUY"
19th Dec' 13

532424 GODREJCP 977/693 28593 120012 6217

1yr 17.6 11.5

YTD 27.0 8.8

Share Holding Pattern-% Current 1QFY14 4QFY13 Promoters 63.3 63.3 63.5 FII 28.7 28.3 28.2 DII 1.2 1.2 1.2 Others 6.8 7.2 7.1 1 yr Forward P/B

▪ Godrej Consumer's management is hopeful of seeing an uptick in the urban demand and the rural demand is expected to be strong due to good harvest. We expect 20-22% (YoY) sales growth for 3QFY14. ▪ The company does not see company’s margins coming under pressure going ahead, due to heavy investments it has made in advertisements. We expect 15-15.5% EBITDA margin for FY14E and 15.5-16% for FY15E. ▪ On International revenue front, Godrej Consumer could see some threads in certain areas especially Indonesia (18% of sales) and Nigeria (13% of sales), Indonesia is going into election next year and in Nigeria, there have been wage hikes. ▪ Godrej Consumer aims to grow 10 times in the next 10 years. Key updates; Demand Pickup scenario: On demand side scenario, we expect that the strong agricultural season leading to strong rural GDP growth would support to improve demand environment very soon. Considering recent GDP growth and Current Account Deficit (CAD) numbers, we are expecting that the economy is moving to track and urban demand will see some picking up. Strong focus on driving growth with 10x10 strategy: Its strong focus on driving growth in the domestic and international market by expansion of products and distribution reach, we expect strong earning in near future. With launching new products in domestic as well as international mkt, Godrej CP will explore organic & inorganic growth. Along with its 3x3 strategy, it has 10x10 strategy also, which refers to 10x growth in 10 yrs. Products strategy: The company continues to gain and enjoy market leader ship position across all three formats. The company is driving increase in penetration with launch of "Goodknight Advanced colour play". The company has launched Goodknight aerosol and coil in Nigeria. Recent developments: The Company has entered into an agreement on Oct 7, 2013, to acquire a 30% stake in Bhabani Blunt Hair Dressing Pvt Ltd, a premier hair salon company with one of the strongest consumer franchises in this space. View and Valuations: Its strong 20%+ growth in the domestic household insecticides business is the key growth driver. We expect strong momentum to continue in its international business led by Megasari and consolidation of Darling business. Despite some concerns related to higher leverage, lost domestic focus and currency risk, we remain confident of achieving the 20%+ sales growth with strong PAT growth for FY14E & beyond. At a CMP of Rs840, stock trades at 5.7x FY15E P/BV. We retain BUY with a price target of Rs 960. Financials Rs, Cr 2QFY14 1QFY14 (QoQ)-% 2QFY13 (YoY)-% Revenue 1961.7 1724.9 13.7% 1600.32 22.6% EBITDA 299.8 225.4 33.0% 248.96 20.4% PAT 195 133 46.6% 159.31 22.4% EBITDA Margin 15.3% 13.1% 210bps 15.6% (30bps) PAT Margin 9.9% 7.7% 220bps 10.0% (10bps) (Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

15

Godrej Consumer Product
Quaterly snapshot:
Qtrly, -1 Sales Gr(YoY) PAT Gr(YoY) EBITDA Margin -2 PAT Margin 2QFY12 23% -2.6% 18.0% 12.0% 3QFY12 36% 68.3% 20.1% 13.9% 4QFY12 31% 36.0% 18.9% 13.5% 1QFY13 39% -45.5% 14.5% 12.1% 2QFY13 35% 24.7% 15.6% 10.8% 3QFY13 26% 3.1% 16.8% 11.3% 4QFY13 30% 58.7% 16.2% 13.3% 1QFY14 23.9% 1.8% 13.1% 9.0% 2QFY14 22.6% 22.4% 15.3% 10.9%

Regionwise margin:
Regions India Indonesia Africa Latin America Europe 2QFY12 18.9% 19.4% 26.0% 7.4% 11% 3QFY12 20.4% 20.6% 31% 9% 5% 4QFY12 20.2% 20.7% 19.3% 16.3% 10.5%
FY10 2041.2 2.5 2043.7 619.59 367.16 -40.45 151.81 132.8 402.98 1633.89 409.81 23.6 44.81 0 386.21 11.1 419.92 80.33 339.59 46.3% 95.2% 97.0% 30.3% 6.5% 7.4% 19.7% 19.1% 20.1% 18.9% 16.6% 261.0 30.8 954.7 11.0 31.0 35.6% 30.6% 8.4 23.7

1QFY13 15.1% 18% 19% 3% 13%
FY11 3693.6 28.11 3721.71 1458.28 294.12 -45.22 284.51 352.85 695.96 3040.5 681.21 49.92 24.13 41.14 631.29 43.64 652.92 138.21 514.71 81.0% 66.2% 51.6% 39.2% 9.5% 7.6% 18.7% 21.2% 18.3% 17.0% 13.8% 365.0 32.4 1725.2 15.9 53.2 29.8% 38.3% 6.9 23.0

2QFY13 17.6% 19% 16% 4% 9%
FY12 4866.16 45.93 4912.09 2174.67 356.11 -212.26 391.91 449.86 850.47 4010.76 901.33 64.44 6.07 200.17 836.89 65.84 977.29 226.05 751.24 31.7% 32.3% 46.0% 44.3% 9.2% 8.0% 17.3% 23.1% 18.3% 17.0% 15.3% 559.0 34.0 2815.2 22.1 82.8 26.7% 22.6% 6.8 25.3

3QFY13 18% 20% 20% 8% 5%

4QFY13 16.7% 19% 7% 9% 13%

1QFY14 15.8% 15% 13% 3% 9%
FY14E 7823.32 20.30 7843.62 3176.67 552.13 -183.50 723.08 902.02 1459.0 6629.4 1214.2 94.3 47.8 78.4 1119.9 61.1 1185.1 225.17 959.9 22.4% 23.1% 17.5% 40.5% 11.5% 9.2% 18.6% 19.0% 15.5% 14.3% 12.2% 840.0 34.0 4073.9 28.2 119.7 23.6% 20.7% 7.0 29.8

2QFY14 18.9% 17% 14% 7% 10%
FY15E 9198.58 23.86 9222.44 3781.20 649.19 -224.07 850.19 1014.47 1689.7 7760.7 1461.7 102.1 56.2 92.2 1359.6 53.2 1454.9 290.98 1163.9 17.6% 20.4% 21.3% 41.0% 11.0% 9.2% 18.3% 20.0% 15.8% 14.7% 12.6% 840.0 34.0 5038.8 34.2 148.1 23.1% 17.1% 5.7 24.6

Financials and Valuation
Rs, in Cr Sales Other Operating Income Total income from operations RM Cost Purchases of stock-in-trade WIP Employee Cost Ad Spend Other expenses Total expenses EBITDA Depreciation and Amortisation Other Income Exceptional Item EBIT Interest PBT Tax Exp PAT Growth-% (YoY) Sales EBITDA PAT Expenses on Sales-% RM Cost Ad Spend Employee Cost Other expenses Tax rate Margin-% EBITDA EBIT PAT Valuation: CMP No of Share NW EPS BVPS RoE-% Div- Payout-% P/BV P/E FY13 6390.79 16.58 6407.37 2640.31 451.03 -118.06 590.68 660.35 1196.46 5420.77 986.6 77 67.78 96.12 909.6 77.45 996.05 179.18 816.87 31.3% 9.5% 8.7% 41.2% 10.3% 9.2% 18.7% 18.0% 15.4% 14.2% 12.7% 836.0 34.0 3313.0 24.0 97.4 24.7% 23.0% 8.6 34.8

(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

16

BANK OF INDIA
Company Update CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Cr) Average Daily Volume Nifty Stock Performance 1M Absolute -14.5 Rel.to Nifty -13.7 BUY 206 235 14 -

"BUY"
18th Dec, 2013

532149 BANKINDIA 393/126 12260 2271804 6139

1yr -32.2 -37.1

YTD -32.2 -37.1

Share Holding Pattern-% Current 1QFY14 4QFY1 3 Promoters 64.1 64.1 64.1 FII 13.2 13.6 13.5 DII 15.3 15.6 16.3 Others 7.4 6.7 6.0 BANKINDIA Vs Nifty

Despite of improving fundamental from past two quarters, Bank of India is trading at 0.5 times of one year forward book which is the lowest level in our valuation parameters. We believe that current level is attractive entry point for the investor with time horizon more than one year. With the capital infusion of Rs.1000 cr by GoI and improving sign of asset quality would re-rate the stock in our view as it previously witnessed i.e. 0.8 to 1.2 times of book. The management has guided fresh slippage of about Rs.1500 cr and restructures to the tune of Rs.1000-1200 cr in 3QFY14 which is in line with 2QFY14. We recommend buy with price target of Rs. 235 Shown Improving sign of asset quality with higher recovery and up-gradation rather than write-off Most of banks especially PSUs are beaten down by the market on account of slower economic growth and stress in asset quality. But Bank of India has witnessed improvement in asset quality in 2QFY14 as fresh slippages were down by 26% sequentially and 46% Year-on-year basis. Moreover bank reported reduction to the tune of Rs.1009 cr versus Rs.1338 cr in 1QFY14. Most of reduction was due to higher recovery and up-gradation rather than write-off. Write-off came down sharply from Rs.598 cr 1QFY14 to Rs.120 cr in 2QFY14. Inch up restructure guidance in 3QFY14 As far as restructure loan are concern, bank’s total restructure loan was about 5% of total loan asset and bank’s management expects Rs.1000-1200 cr of restructure in December quarter. In 2QFY14, bank sold about Rs.370 cr of bad loan to Asset Reconstruction Company (ARC) for recovery and during quarters its plan to sell about Rs.500 cr of bad loan to ARC. Sequentially improving PCR provide cushion on stress asset Despite of stable asset quality and lower slippage, Bank of India provided 24% more provision in sequential basis which improved its provision coverage ratio(Without technical write off) to 63.3% from 61% in preceding quarter same year. Higher provision would provide cushion on stress asset without hurting profit going further. Capital infusion by GoI raise CAR ratio to 8.1% from 7.75% Bank has lower CAR to 7.75% at the end of 2QFY14 according to Basel 3 norm. Now Bank of India has approved to initiate process to raise further capital for issue of 4.63cr Equity Shares to GoI on Preferential basis at a price of Rs. 215.70 per share. This capital infusion is taking CAR ratio to 8.1% and government holding rise to 66.7% from 64.1%. Capital infusion to the tune of Rs.1000 cr diluting our FY14E’s book value by 40 bps. Rs, Cr Financials 2011 2012 2013 2014E 2015E NII 7878 8313 9024 12110 11804 Total Income 10519 11635 12790 16672 16366 PPP 5398 6694 7458 9670 9492 Net Profit 2542 2678 2749 3533 3269 EPS 46.5 46.7 47.9 61.6 57.0 (Source: Company/Eastwind) 17 Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

BANK OF INDIA
Quarterly Result Interest/discount on advances / bills Income on investments Interest on balances with Reserve Bank of India Others Total Interest Income Others Income Total Income Interest on deposits Interest on RBI/Inter bank borrowings Others Interest Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions Net Profit Balance Sheet Data Equity Capital Reserve & Surplus Deposits Borrowings Other liabilities and provisions Total Liability Cash in hand Cash and balances with reserve bank of india Investment Advance Fixed Assets Others Assets Total Assets 2QFY14 6631 2129 479 0 9239 1100 10340 5966 414 333 6712 2527 1100 3627 897 628 1525 2102 1232 622 1QFY14 6190 1885 465 0 8541 1181 9722 5401 296 308 6004 2537 1181 3718 963 575 1537 2180 695 964 2QFY13 % YoY Gr % QoQ Gr 5881 12.8 7.1 1835 16.0 12.9 289 65.6 2.9 0 42.9 36.4 8005 15.4 8.2 894 23.1 -6.8 8900 16.2 6.4 5154 15.8 10.5 536 -22.8 40.0 119 179.8 8.2 5810 15.5 11.8 2196 15.1 -0.4 894 23.1 -6.8 3090 17.4 -2.4 700 28.2 -6.8 536 17.1 9.3 1236 23.4 -0.8 1854 13.4 -3.6 1552 -20.6 77.4 302 106.0 -35.5

597 25,686 432,282 41,751 12,727 513,042 24,621 34,658 107,413 332,190 2,957 11,203 513,042

575 21,774 332,695 29,434 11,262 395,739 17,080 19,198 90,147 256,148 2,839 10,327 395,739

575 21,774 332,695 29,434 11,262 395,739 17,080 19,198 90,147 256,148 2,839 10,327 395,739

3.9 18.0 29.9 41.8 13.0 29.6 44.2 80.5 19.2 29.7 4.2 8.5 29.6

3.9 18.0 29.9 41.8 13.0 29.6 44.2 80.5 19.2 29.7 4.2 8.5 29.6

Asset Quality GNPA NPA GNPA(%) NPA(%) PCR(%) Without technical write off

9873 6156 3.0 1.9 37.6

8765 5947.3 3.0 2.0 32.1

8898 5,228 3.4 2.0 41.2

11.0 17.7

12.6 3.5

Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

18

BANK OF INDIA
Financials & Assuption Interest/discount on advances / bills Income on investments Interest on balances with Reserve Bank of India Others Total Interest Income Others Income Total Income Interest on deposits Interest on RBI/Inter bank borrowings Others Interest Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions Net Profit

2011
15570 5195 798 295 21858 2642 24500 12218 813 950 13981 7878 2642 10519 3492 1629 5121 5398 2909 2542 46.0 299559 30 22021 -2 213708 26 86677 27 7.3 6.3 6.5 4.1 8.0 4.3 322.7 1.5 10.3

2012
20241 7142 834 264 28481 3321 31802 17957 1145 1065 20167 8313 3321 11635 3069 1871 4941 6694 4016 2678 5.3 318216 6 32114 46 248833 16 86754 0 8.1 8.7 7.8 5.6 6.9 5.8 365.3 1.0 7.7

2013
23139 7261 1257 251 31909 3766 35675 20238 1489 1158 22885 9024 3766 12790 3131 2201 5332 7458 4709 2749 2.7 381840 20 35368 10 289367 16 94613 9 8.0 7.1 7.7 5.2 6.8 5.3 416.9 0.7 6.3

2014E
29515 8828 1889 1 40233 4562 44795 25422 1419 1281 28123 12110 4562 16672 4131 3965 7002 9670 5254 3533 28.5 434075 14 36854 4 347241 20 110351 17 8.5 8.0 8.4 5.7 7.5 6.5 469.4 0.4 3.8

2015E
31171 10152 1889 1 43213 4562 47775 28709 1419 1281 31410 11804 4562 16366 4055 3892 6874 9492 5406 3269 -7.5 503527 16 37953 3 366720 6 126904 15 8.5 8.0 8.4 5.6 7.5 6.2 510.4 0.4 4.1

Key Balance Sheet Data
Deposits Deposits Growth(%) Borrowings Borrowings Growth(%) Loan Loan Growth(%) Investment Investment Growth(%)

Eastwind Calculation
Yield on Advances Yield on Investments Yield on Funds Cost of deposits Cost of Borrowings Cost of fund

Valuation
Book Value P/BV P/E

Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

19

Risk Disclosure & Disclaimer: This report/message is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any action based upon it. This report/message is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any from. The report/message is based upon publicly available information, findings of our research wing “East wind” & information that we consider reliable, but we do not represent that it is accurate or complete and we do not provide any express or implied warranty of any kind, and also these are subject to change without notice. The recipients of this report should rely on their own investigations, should use their own judgment for taking any investment decisions keeping in mind that past performance is not necessarily a guide to future performance & that the the value of any investment or income are subject to market and other risks. Further it will be safe to assume that NSL and /or its Group or associate Companies, their Directors, affiliates and/or employees may have interests/ positions, financial or otherwise, individually or otherwise in the recommended/mentioned securities/mutual funds/ model funds and other investment products which may be added or disposed including & other mentioned in this report/message.

20