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IEA-Equity Strategy

India Equity Analytics


Hindustan Zinc LTD : 'Neutral"
31th Dec 2013

31th Dec, 2013

With a cash-rich balance sheet and strong visibility over production growth of zinc, lead and silver over FY2013-15, we are positive on HZL.The Rampura Agucha underground mine project is operational via ramps (tunnel driven downward from the surface) and commercial production will ramp up in Q3 and Q4 of FY14. The Kayad mine project will also commence commercial production in the current fiscal year. A cash-rich balance sheet, low cost of production and inexpensive valuations make HZL an attractive bet at the current price levels. But looking at the lower LME prices for silver and lead we are neutral for this financial year.we Valuing the stock at this level, we recommend Neutral rating on HZL with a target price of Rs.143 for FY14........................ ( Page : 2-4)

RELIANCE : Good Growth Ahead

"BUY"

30th Dec 2013

Reliance Industries Limited registered a turnover of Rs 197112 Cr for the half year ended 30th September 2013, up 4.7% YoY while it had made turnover of Rs 188,193 Cr in 1HFY13. The exports were higher by 19.3% YoY to Rs 134455 Cr for 1HFY14.. ( Page : 5-7)

J&K BANK :

"HOLD"

30th Dec 2013

J&K Bank is one of our prefer bank in mid cap private sector banking space. Currently bank is trading at 1 times of one year forward book and 4.6 times of one forward earnings which we believe bank is still trading at attractive valuation post recent rally. We advice our investor to hold the stock as bank is trading at lower valuation in comparison to private sector banks despite of having sound fundamental. We value bank at Rs.1578/share which is 1.1 times of FY15s book and 5.2 times of FY15s earnings. ..... ( Page : 8-10)

DCB :

"REDUCE"

27th Dec 2013

DCB is currently trading at 1.3 times of one year forward book which is almost upper side of valuation band. We value the bank at Rs.62/share which is 1.4 times of one year forward book and 15 times of FY14E earnings. Valuation multiple is justified at present fundamental in our view but has potential to expand the multiple once visibility of ROE improvement clearly come to on the floor after 1-2 quarters. ......................................................... ( Page : 11-13)

Infosys : Bala exit; a pros and cons?

"BUY"

26th Dec , 2013

Last week, V Balakrishnan a former CFO and member of Board director resigned from the company to turn entrepreneur of Private Equity space. Currently, he is the head of Infosys business process outsourcing unit, the company's core banking software Finacle, its India business and chairman of Infosys Lodestone. This was now the 8th senior and top level departure after the taking charges by Company founder Narayana Murthy. At a CMP of Rs 3486, it trades at 19.2x FY14E and 16.7x FY15E earnings. We retain our BUY view on the stock with a target price of target price of Rs 3620............................... ( Page : 14-15)

HINDALCO :

"BUY"

24th Dec 2013

Hindalco has expanded its aluminium capacity recently, low aluminium prices, sticky costs, delay in commencement of mining from captive blocks and higher interest and depreciation costs may hit its profitability. In the near-term, there is lack of clarity over production from the Mahan coal block for its Mahan smelter. Without captive coal block, the Mahan smelter is expected to face cost pressures, resulting in lower return ratios over FY2013-15.So Clearance of Mahan coal block will be most awaited trigger for Hindalco. Mean While on the Positive Side We can expect 7% growth on the Stock with a Target Price of Rs.132.............. ( Page:16-18)

Persistent System : "Persistently innovating.."

"REDUCED" 23rd 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 : 1920) 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

Hindustan Zinc LTD.


Company Update
CMP Target Price Previous Target Price Upside Change from Previous

"Neutral"
31st Dec' 13

Neutral
133 143 NA 8% NA

Mined metal production in Q2FY14 was 221k tonnes against 190k tonnes YoY basis a growth of 8.5% and 238k tonnes in Q1 FY14. The increase is due to higher production at Rampura Agucha and restarting of Zawar mines. Integrated Refined Zinc production was at 195k tonnes in Q2FY14 against 153k tonnes in Q2FY13 increase of 28%. Integrated Lead Production was at 29k tonnes against 22k tonnes growth of 31% YoY basis. Silver production was at 83 tonnes in Q2FY14 against 77 tonnes YoY basis. The increase in Production of Zinc and lead was on account of improved utilization of smelter capacity. Revenue increased due to Depreciation in Rupee Hind Zinc reported net sales of Rs3559 Cr up by 24% YoY and 19% QoQ. The growth was mainly due to higher sales volume and improvement in realisation per tonne. The net realsation per tonne of zinc increased by 15% on YoY basis and 9% QoQ at Rs.131794. The net realization per tonne of Lead remained almost flat on YoY basis and increased by 5% in QoQ basis. The increase in net realization per tone is due to depreciation in rupee. Zincs cost of production before royalty during the quarter was Rs.50522 , 8% higher in Rupee and 3% lower in USD terms on YoY basis. The cost of production benefited from higher production volume and operational efficiencies, which were more than offset by rupee depreciation and over Rs 3000/MT decline in by-product credits On YoY basis. The Net Realization per tonne of Silver slumped by 24% on YoY basis. This fall in realization was due to fall in price of silver in LME as company adopts the import parity price. The Companys EBIDTA zoomed by 28% YoY basis at Rs 1,883 Cr and 30% QoQ basis. Net profit was up 7% to Rs. 1,640 Cr in Q2 The positive impact of higher EBITDA was partly offset by lower other income due to mark-to-market losses on investments during the quarter. Investment Concern HZLs revenues are directly linked with the global market for products essentially, Zinc and Lead which are priced with reference to LME prices and Silver to LBMA (London Bullion Metal Association) prices. Disruptions in mining due to equipment failures, unexpected maintenance problems , non-availability of raw materials of appropriate price, quantity and quality for our energy requirements, disruptions to or increased cost of transport services or strikes and industrial actions or disputes.Lower than expected demand by galvanizing industries for zinc and industrial batteries, car batteries industries for lead would affect the company estimates. Financials : Q2FY14 Y-o-Y % Q-o-Q % Q2FY13 Q1FY14 Net Revenue 3826 13.0 6.2 3387 3604 EBITDA 1883 28.2 25.3 1469 1503 Depriciation 186 6.3 1.1 175 184 Tax 254 -6.3 -4.9 271 267 PAT 1640 6.5 -1.2 1540 1660
(In Crs)

Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume (Nos.) Nifty 500188 HINDZINC 143/94 56133 5613 6291

Stock Performance-%
Absolute Rel. to Nifty 1M 4.3 0.0 1yr -1.7 9.2 YTD -3.4 11.3

Share Holding Pattern-%


Promoters FII DII Others 2QFY14 64.9 1.8 31.4 1.8 1QFY14 4QFY13 64.9 64.9 1.5 1.5 31.5 2.0 2.1 31.6

1 yr Forward P/B
450

400
350 300 250 200

150
100 50 0

Jul-12

Jul-07

Jul-08

Jul-09

Jul-10

Jul-11

Jan-07

Jan-11

Jan-08

Jan-09

Jan-10

Jan-12

Jan-13

Jul-13

Source - Comapany/EastWind Research

Jan-14

Narnolia Securities Ltd,


Please refer to the Disclaimers at the end of this Report.

Hindustan Zinc LTD.


Lower other income mutes PAT growth: The other income declined by 48.7% yoy to 267cr due to mark to market losses booked by the company during the quarter while depreciation expenses also increased by 6.8% yoy to 186cr. Consequently the adjusted net profit growth was muted at 10.5% yoy to 1,701cr (in-line with our estimate of 1,722cr). From the Management Corner : Volatile Desel Price and high Sulphuric acid price affecting the company,s PAT adversly.Company is tracking on 95% capacity utilization.Captive plants enjoy the lower Tax rate and company enjoys zero tax from tax free geographycal areas. Smelting Plants are improvised and management is confident that the smelting plants will maintain their stance for the coming quarters also. Outlook and valuation: With a cash-rich balance sheet and strong visibility over production growth of zinc, lead and silver over FY2013-15, we are positive on HZL.The Rampura Agucha underground mine project is operational via ramps (tunnel driven downward from the surface) and commercial production will ramp up in Q3 and Q4 of FY14. The Kayad mine project will also commence commercial production in the current fiscal year. A cash-rich balance sheet, low cost of production and inexpensive valuations make HZL an attractive bet at the current price levels. But looking at the lower LME prices for silver and lead we are neutral for this financial year.we Valuing the stock at this level, we recommend Neutral rating on HZL with a target price of Rs.143 for FY14.
LME Price/Ton
Silver(rs/ounce)

1800 1600 1400 1200 1000 800 600 400 200 0


Mar-13 May-13 Nov-13 Aug-13 Dec-13 Jun-13 Jul-13

Sep-13

Feb-13

Source - Comapany/EastWind Research LME Price/Ton


Lead 160000 140000 120000 100000 80000 60000 40000 20000 0

Mar-13

Apr-13

Apr-13

May-13

Oct-13

Jan-13

Aug-13

Source - Comapany/EastWind Research

LME Price/Ton
Zinc

P/L PERFORMANCE Net Revenue from Operation Other Income Total Income Power, fuel & water Repairs Expenditure EBITDA Depriciation Interest Cost Net tax expense / (benefit) PAT ROE%

FY11 9912 979 10891 1023 492 4417 5496 475 19 1059 4900 21.8

FY12 11405 1543 12948 1228 568 5336 6069 611 14 1419 5526 20.7

FY13 12700 2032 14732 1070 696 6218 6482 647 29 921 6899 21.4

FY14E 13577 1787 15364 1291 707 6484 7093 718 37 1097 6967 18.5

125000 120000 115000 110000 105000 100000 95000 90000

Apr-13

May-13

Nov-13
3

Mar-13

Aug-13

Source - Comapany/EastWind Research

Narnolia Securities Ltd,

Nov-13

Dec-13

Jul-13

Feb-13

Sep-13

Oct-13

Jun-13

Jan-13

Dec-13

Jan-13

Feb-13

Sep-13

Oct-13

Jun-13

Jul-13

Hindustan Zinc LTD.


B/S PERFORMANCE Share Reserve & Total equity Long-term Short-term Long-term Trade Short-term Total Intangibles Tangible Capital Long-term Inventories Trade Cash and Short-term Total RATIOS P/B EPS Debtor to Creditors to Inventories CASH FLOWS Cash from Changes In Net Cash Cash From Cash from Net Cash FY10 423 17701 18124 0 60 0 478 340 20238 109 6071 1113 361 452 152 928 96 20238 FY10 3.2 95.6 1.9 6.0 0.6 FY10 4001 77 4077 -3881 -187 8 FY11 845 21688 22533 0 0 0 475 567 25053 109 7145 875 594 762 209 5633 158 25053 FY11 2.2 11.6 2.1 4.8 0.8 FY11 4483 -212 4272 -3658 -363 250 FY12 845 26036 26881 0 0 0 410 504 29485 47 8466 445 876 798 332 5255 233 29485 FY12 2.1 13.1 2.9 3.6 0.7 FY12 4553 -61 4492 -3499 -1242 -248 FY13 845 31431 32276 0 0 0 484 825 35465 10 8474 1082 1898 1111 403 6942 373 35465 FY13 1.7 16.3 3.2 3.8 0.9 FY13 4935 -183 4752 -3234 -1257 262

Source - Comapany/EastWind Research ZinC Productions:

Source - Comapany/EastWind Research EBIDTA & Margin :

Trading At :
7000

NIFTY

HINDZINC

160 140 120 100 80 60

6000 5000
4000 3000 2000 1000 0

40
20 0

Source - Comapany/EastWind Research


Narnolia Securities Ltd,
4

RELIANCE
Good Growth Ahead
Company Update
CMP Target Price Previous Target Price Upside Change from Previous

"BUY"

30th

Dec' 13

BUY
878 1040 18% -

About the Company Reliance Industries Limited (RIL) is a conglomerate with business in the energy and materials value chain. The Company operates in three segments: petrochemicals, refining and oil & gas. Half Yearly Business Performance OIL AND GAS (EXPLORATION & PRODUCTION) BUSINESS: Company for half year ended earned Rs 2918 Cr from this business segment down by 38.7% YoY mainly due to Fall in production from KG-D6 owing to geological complexity and natural decline in the fields.The EBIT margin for the segment in 1HFY14 was 24.3% . REFINING & MARKETING BUSINESS Revenue from Refining and Marketing segment during 1HFY14 increased by 5.7% YoY to Rs 178,914 Cr, while EBIT was up 8.3% YoY at Rs 6,125 Cr. GRMs averaged $ 8.0/bbl during 1H FY14 and the refineries achieved an average utilization rate of 112%. 1H FY14 export of refined products was at 22.1 MMT as compared to 19.2 MMT in 1H FY13.

Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs, Cr) Average Daily Volume Nifty 500325 RELIANCE 954/765 283929 52019 6313

Stock Performance-%
Absolute Rel. to Nifty 1M 4 0.5 1yr 6 -1 YTD 11 -7 PETROCHEMICALS BUSINESS 1HFY14 revenue from the Petrochemicals segment increased by 6.7% YoY to Rs 46,842 Cr. Higher prices accounted for 7.4% growth in revenue. EBIT margin improved to 9.4% in 1H FY14 as compared to 8.0% a year ago. The production during 1HFY14 was 11 Mn Tones verses 11.1 Mn Tonnes in 1HFY13. Half Yearly Financial Performance Reliance Industries Limited registered a turnover of Rs 197112 Cr for the half year ended 30th September 2013, up 4.7% YoY while it had made turnover of Rs 188,193 Cr in 1HFY13.The exports were higher by 19.3% YoY to Rs 134455 Cr for 1HFY14. The operating EBITDA during 1HFY14 was Rs 14924 Cr up 2.3 % YoY on the back of higher margins in refining and petrochemicals business. The cost RM increased by 3 % to Rs 162,094 from Rs 156,975 Cr due to higher crude prices. The employee cost for 1HFY14 was Rs 1707 Cr largely flat on yearly basis. The other expenditure increased by 13.6% YoY to Rs 13,101 Cr primarily due to higher expenses on account of power & fuel consumption and higher selling expenses on account of higher exports. The profit after tax was higher by 9.4% at Rs 10,842 Cr as against Rs 9,912 Cr in the corresponding period of the previous year. The other income for 1HFY14 stands Rs 4595 Cr up 14 % YoY mainly due to higher investment income.

Share Holding Pattern-%


Promoters FII DII Others Current 1QFY14 4QFY1 3 45.3 45.3 45.3 17.7 17.4 17.8 11.8 11.6 11.0 25.2 25.7 25.9

1 Yr Price Movement Vs Nifty

Financials
Revenue EBITDA PAT EBITDA Margin PAT Margin 2QFY14 103758 9909 5490 9.6% 5.3% 1QFY14 90336 9610 5352 10.6% 5.9% (QoQ)-% 14.9 3.1 2.6 (110bps) (60bps) 2QFY13 87645 9818 5409 11.2% 6.2%

Rs, Crore (YoY)-% 18.4 0.9 1.5 (170bps) (90bps)


5

(Source: Company/Eastwind)

Narnolia Securities Ltd,


Please refer to the Disclaimers at the end of this Report.

RELIANCE
Continued. The net addition to fixed assets for the half year ended 30th September 2013 was Rs 20,154 Cr including exchange rate difference capitalization. Capital expenditure was principally on account of ongoing expansions projects in the petrochemicals and refining business at Jamnagar, Dahej, Silvassa and Hazira. The Outstanding debt as on 30th September 2013 was Rs 83,982 Cr compared to Rs 72,427 Cr as on 31st March 2013. The company had cash and cash equivalents of Rs 90,540 Cr. These were in bank deposits, mutual funds, CDs and Government securities / bonds. RIL is debt free on a net basis as at 30th September 2013. Management Commentary The management of the company on their half yearly performance said that diversified and integrated petrochemicals business captured margins across segments and delivered nearrecord profit levels even as the domestic economy slowed. The management further said that optimal utilization of best-in-class refinery assets and inherent flexibility in sourcing, product delivery contributed to healthy operating profits from our refining business . View and Valuation The stock is trading at Rs 878 and in light of half yearly performance, business outlook and management commentary we recommend BUY for the stock with Target Price Rs 1040.

Graphical Depiction

2QFY14 SEGMENTAL REVENUE BREAK UP

(Source: Company/Eastwind)

Narnolia Securities Ltd,


Please refer to the Disclaimers at the end of this Report.

RELIANCE
Sales Trend (Rs/Bn)

A better realisation with a weaker rupee and improved volume were the key drivers of the sales growth of both petchem and refinery businesses.

(Source: Company/Eastwind)

EBITDA & OPM %

Despite a healthy revenue growth, OPM remain flat due to a lower margin in the refining and exploration segments

(Source: Company/Eastwind)

PAT & NPM %

The improved margin and higher volume of the petrochemical (petchem) business were the major drivers of the profit in Q2FY2014.

(Source: Company/Eastwind)

Narnolia Securities Ltd,


Please refer to the Disclaimers at the end of this Report.

J&K BANK
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 3.6 Rel.to Nifty -12.9 HOLD 1411 1578 1420 12 11

"HOLD"
30th Dec, 2013

532209 J&KBANK 1695/1130 6841 21053 6314

Jammu and Kashmir Bank (J&K Bank) is one of our prefer bank in mid cap private sector banking space. Currently bank is trading at 1times of one year forward book and 4.6 times of one forward earnings which we believe bank is still trading at attractive valuation despite of recent rally. We advice our investor to hold the stock as bank is trading at lower valuation premium in comparison to peers despite of having sound fundamental. We value bank at Rs.1578/share which is 1.1 times of FY15s book and 5.2 times of FY15s earnings. Looking at banks metrics like Tier1 capital of 13.2%, GNPA of 1.7%, PCR at 92% make it strong for trading at premium valuation as compare to peers group. Strong balance sheet growth continued with margin expansion J&K bank aggressively expanding its loan growth outside of the state and witnessed 20.3% growth whereas within state loan grew by 26.4% in 2QFY14. Management guided loan growth of 20-25% in FY14 premium of industry average of 15%. Deposits growth would be 17-18% in FY14 according to management. Banks CASA ratio at the end of 2Q stood at 39% which keep cost of deposits at 6% of level, one of the lowest in industry. Low cost and high yield asset helped bank to maintain NIM at 4.33%. Banks management guided NIM 4%+ level in FY14. Sustainable high return ratio makes a strong case to trade at premium valuation J&K bank has sustainable high return ratio like ROE of 23%+ and ROA of 1.5%+ which help bank to maintain high valuation premium. Operating leverage (operating cost to total asset) of the bank remains at 1.4 to 1.6 times in last few quarters which restrict cost income escalate beyond 36%. Capital adequacy ratio of 13.2% according to basel-II helps bank to maintain high growth trajectory with raising capital in next few years. Stable asset quality with lowest restructure asset comparison to peers At the end of 2QFY14, bank reported GNPA of 1.7% and in absolute basis, GNPA grew by mere 4% QoQ despite of current phase of economy cycle. Restructure loans declined by 70 bps to 3.6% of loans whereas fresh restructure was low at 70 bps of loan. Provision coverage ratio declined by 250 bps QoQ to 89% (without technical write-off) made net NPA to 0.2% from 0.1% in 1QFY14.

1yr 7.8 -0.8

YTD 7.8 -0.8

Share Holding Pattern-% Current 4QFY13 3QFY1 3 Promoters 53.2 53.2 53.2 FII 24.8 24.5 24.3 DII 5.0 4.9 4.9 Others 17.1 17.4 17.7 J&k Bank Vs Nifty

Financials
NII Total Income PPP Net Profit EPS 2011 1544 1908 1149 615 126.9 2012 1838 2172 1370 803 165.7

Rs, Cr 2013 2014E 2015E 2316 2595 3091 2800 2979 3817 1811 1906 2443 1055 1128 1478 217.6 232.6 304.9 (Source: Company/Eastwind)
8

Narnolia Securities Ltd,


Please refer to the Disclaimers at the end of this Report.

J&K BANK
Quaterly Result (Rs. Cr) 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 Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions PBT Tax Net Profit 2QFY14 1244 396 10 0 1650 99 1749 968 682 99 781 177 108 285 496 56 441 138 303 1QFY14 1184 423 17 0 1624 92 1716 969 655 92 747 176 90 266 481 36 445 137 308 2QFY13 1061 417 23 0 1501 91 1592 948 553 91 644 143 78 221 423 33 390 120 270 % YoY Gr
17.3 -5.0 -57.4 9.9 9.4 9.9 2.1 23.4 9.4 21.4 23.6 38.7 28.9 17.5 69.7 13.1 14.8 12.3

% QoQ Gr
5.0 -6.3 -42.8 1.6 7.9 1.9 -0.1 4.1 7.9 4.6 0.6 19.4 7.0 3.2 53.7 -0.9 1.0 -1.7

Balance Sheet Data ( Rs Cr) Net Worth Deposits Borrowings Advances Investment

5475 61171 1346 41121 22316

5173 58601 758 39282 21734

4609 54927 922 34272 22521

18.8 11.4 45.9 20.0 -0.9

5.9 4.4 77.7 4.7 2.7

Asset Qaulity ( Rs Cr) GNPA NNPA GNPA(%) NNPA(%) PCR(%)

709 78 1.7 0.2 89

665 56 1.7 0.1 92

709 78 2.1 0.2 89

0.0 0.0

6.5 38.2

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

J&K BANK
P/L
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 NII Growth(%) Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions Net Profit Net Profit Grwoth(%)

2010
2342 705 11 0 3057 416 3473 1841 83 14 1938 1119 416 1536 366 211 577 958 446 512

2011
2630 1066 17 0 3713 365 4078 2069 46 54 2169 1544 37.9 365 1908 524 235 759 1149 534 615 20.1

2012
3394 1403 39 0 4836 334 5170 2902 41 54 2997 1838 19.1 334 2172 521 281 802 1370 567 803 30.6

2013
4318 1723 97 0 6137 484 6621 3741 26 54 3821 2316 26.0 484 2800 652 337 989 1811 756 1055 31.4

2014E
4959 1892 53 0 6904 383 7287 4217 91 0 4308 2595 12.1 383 2979 633 440 1072 1906 779 1128 6.9

2015E
5703 2085 53 0 7841 727 8568 4639 111 0 4750 3091 19.1 727 3817 811 563 1374 2443 965 1478 31.1

Key Balance sheet data


Deposits Deposits Growth(%) Borrowings Borrowings Growth(%) Loan Loan Growth(%) Investments Investments Growth(%) 37237 1100 23057 13956 44676 20.0 1105 0.4 26194 13.6 19696 41.1 53347 19.4 1241 12.3 33077 26.3 21624 9.8 64221 20.4 1075 -13.4 39200 18.5 25741 19.0 70643 10.0 1230 14.4 45080 15.0 20124 -21.8 77707 10.0 1500 22.0 51843 15.0 22178 10.2

Eastwind Calculation
Yield on Advances Yield on Investments Yield on Funds Cost of deposits Cost of Borrowings Cost of fund 10.2 5.0 7.7 4.9 8.8 5.1 10.0 5.4 7.5 4.6 9.1 4.7 10.3 6.5 8.3 5.4 7.7 5.5 11.0 9.4 8.9 5.8 7.4 5.9 11.0 9.4 10.6 6.0 7.4 6.0 11.0 9.4 10.6 6.0 7.4 6.0

Valuation
Book Value P/BV P/E 621 1.1 6.4 718 1.2 6.9 844 1.1 5.5 1003 1.3 5.9 1186 1.2 6.1 1441 1.0 4.6

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

10

DCB
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 19.2 Rel.to Nifty 15.6 Book Profit 57.25 62 62 8 -

"Book Profit"
27th Dec,2013

Development Credit Bank (DCB) currently trading at 1.3 times of one year forward book which is now almost of higher side of our valuation range. We value the bank at Rs.62/share at the higher side which is 1.4 times of one year forward book and 15 times of FY14Es earnings. Present valuation multiple justified on account of DCBs consistent improvement in its return ratio and management guided similar trend of growth in FY14,however bank cited margin could be compressed by 25-30 bps. We cant rule out the valuation multiple expansions but there is need to watch 1-2 quarters more as per our view Well capitalized and stable asset quality Bank is well capitalized with tier 1 ratio of 13% means no need to raise money in short term. Banks management guided loan and deposits growth of 25-27% and 3032% in FY14 which seen possible looking at present scenario. Management is also very focus on low ticket size loan (prefer less than 30 mn) on account of avoiding large slippage. At the 2QFY14, bank reported slippage of Rs.21 cr which was 1.3% in annualized basis. Fresh slippage ratio remains in the range of 1.1-1.5 times in last few quarters, so we believe bank would maintain similar trend in term of fresh slippage which restrict GNPA out of control. Provision coverage ratio at the end of 2QFY14 stood at 84% (without technical write off) and management reiterate PCR to maintain above of 80%. Potential to expand valuation multiple, need to watch growth trajectory 1-2 quarters more On valuation front, DCB valuation could be expanded if visibility of ROE improvement is clearly seen. ROE improvement could be possible in two front- first reducing cost income ratio which will boost the profit and second loan growth specially in high yield segment like SME and MSME. We observed that banks CostIncome ratio was higher at 66.2% at the end of 2QFY14. Cost income ratio would reduce to less than 65% in FY14 and would further reduce to 60% in FY15 according to management. To reduce the cost, bank initiated to invest high yield segment, planning to maintain CASA at 30% in long run while in short term does not expect below of 27% and escalating branch network. In FY13 bank opened 10 branches but in 1HFY14, DCB opened 9 branches and will go upto 120-125 branches in FY14.

532772 DCB 54.85/38 1437 2158026 6279

1yr 20.4 13.1

YTD 20.4 13.1

Share Holding Pattern-% Current 4QFY13 3QFY1 3 Promoters 18.5 18.5 18.5 FII 11.4 11.4 11.1 DII 14.1 12.5 13.0 Others 56.1 57.7 57.5 DCB Vs Nifty

Financials
NII Total Income PPP Net Profit EPS 2011 189 301 86 21 1.1 2012 228 328 84 55 2.3

Narnolia Securities Ltd,


Please refer to the Disclaimers at the end of this Report.

Rs, Cr 2013 2014E 2015E 284 127 190 401 272 334 126 95 127 102 95 127 4.1 3.8 5.1 (Source: Company/Eastwind) 11

DCB
Quarterly Result( Rs Cr) 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 Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions PBT Tax Net Profit Balance Sheet (Rs Cr) Net Worth Deposits Loan Asset quality (Rs Cr) GNPA NPA % GNPA % NPA 2QFY14 1QFY14 2QFY13 % YoY % QoQ 205.2 201.5 170.9 20.1 1.8 57.9 56.7 47.6 21.8 2.1 5.5 2.3 1.1 378.2 142.4 0.2 0.2 0.4 -45.6 -9.7 268.8 260.7 219.9 22.2 3.1 27.3 45.1 27.5 -0.9 -39.5 296.1 305.8 247.5 19.6 -3.2 177.6 177.6 153.0 16.1 0.0 91.3 83.1 67.0 36.3 9.8 27.3 45.1 27.5 -0.9 -39.5 118.5 128.2 94.5 25.5 -7.6 38.8 37.7 34.1 13.9 2.9 39.6 39.2 33.9 16.8 1.1 78.4 76.9 68.0 15.4 2.0 40.1 51.3 26.5 51.4 -21.8 7.0 8.5 4.4 60.8 -17.4 33.1 42.8 22.1 49.5 -22.7 0.0 0.0 0.0 33.1 42.8 22.1 49.5 -22.7

1079 8788 6677

1046 8320 6472

902 7137 5671

19.6 23.1 17.7

3.2 5.6 3.2

235 57 3.5 0.9

226 54 3.5 0.8

226 38 4 0.7

4.0 50.0

4.0 5.6

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

12

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

2010
459 317 142 -28.2 107 249 -21.6 201 48 -36.5 121 -73 -79 -10.1

2011
536 347 189 33.6 112 301 21.2 215 86 79.9 57 29 21 -127.2

2012
717 489 228 20.4 100 328 8.9 244 84 -2.6 29 55 55 157.1

2013
916 632 284 24.9 117 401 22.4 275 126 50.5 24 102 102 85.3

2014E
1090 963 127 -55.3 145 272 -32.3 177 95 -24.5 0 95 95 -6.7

2015E
1279 1089 190 49.1 145 334 23.0 207 127 33.5 0 127 127 33.5

Balance Sheet
Deposits( Rs Cr) Change (%) of which CASA Dep Change (%) Borrowings( Rs Cr) Investments( Rs Cr) Loans( Rs Cr) Change (%) 4787 3 1693 17 504 2018 3460 6 5610 17 1975 17 861 2295 4271 23 6336 13 2035 3 1123 2518 5284 24 8364 32 2272 12 1526 3359 6586 25 9618 15 2597 14 1697 2886 7903 20 11061 15 1825 -30 1952 3318 9484 20

Ratio
Avg. Yield on loans Avg. Yield on Investments Avg. Cost of Deposit Avg. Cost of Borrowimgs 10.4 4.7 5.9 6.8 9.4 5.8 5.2 6.4 10.1 6.9 6.4 7.2 10.8 5.8 6.4 6.4 9.7 6.8 5.9 6.0 9.7 6.8 5.9 6.0

Valuation Book Value CMP P/BV

30 32.2 1.1

31 45.9 1.5

36 45 1.3

40 45 1.1

44 57.3 1.3

49 57.3 1.2

Source: Eastwind/ Company


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

13

Infosys
Bala exit; a pros and cons?
Company update
CMP Target Price Previous Target Price Upside Change from Previous

"BUY"
26th Dec' 13

BUY
3486 3622 3390 4% 7%

Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 500209 INFY 3570/2190 160944 1240448 6268

Stock Performance
Absolute Rel. to Nifty 1M 4.1 -0.3 1yr 52.1 44.9 YTD 27.2 23.3

Does Balakrishnan departure from Infosys would affect the companys bread and butter? Last week, V Balakrishnan a former CFO and member of Board director resigned from the company to turn entrepreneur of Private Equity space. Currently, he is the head of Infosys business process outsourcing unit, the company's core banking software th Finacle, its India business and chairman of Infosys Lodestone. This was now the 8 senior and top level departure after the taking charges by Company founder Narayana Murthy. Behind the top-level departure, only one cause reflects on the picture that is the tussle of CEO post. Current CEO Shibulal is going to complete its tenure by next years. Among the front-runner of this post, Balakrishnan was strong contender for the post of CEO race. How do we see the impacts of this buzz? (a) We think, there would not be any major impact on qualitative and quantitative sense and company would not see any major gap between sales executives and clients. Yes, the magnitude of the exits could create a leadership vacuum. However, very soon company will try to turn into smoothie organization structure. (b) V Balakrsihnans resignation is not one night decision and not an affect of internal hiccups. Post declaration of his resignation V Balakrishnan stated to media it was my long term plan and we were waiting for SEBI approval for my new Private Equity firm. th Even, he sold 1,00,000 shares in the company for Rs 33 crore in the open market on 9 Nov 2013 (50,000 shares each held by his daughters), it indicates its earlier decision. Therefore, we think Balas exit is a part of an ongoing strategy to reshuffle the top management at Infosys. (c) The top management conundrum has not been new to Infosys. Even, as Infosyss hyper-growth story played out over the course of three decades, powered by not just its seven cofounders but also several talented employees that came on later on. Even, most of company founders have churned out and company has been working for growth story and committing for strategy 3.0. (d) Post Narayana Murthy, company has committed for future transformational changes and next generation growth plan. Recently, the company has undertaken a clear shift in direction where it has been focusing on higher-margin businesses, a strategy that rival TCS that has successfully implemented. For near term, there could be some small sort of rally on the stock because of this knee jerk and as the December quarter is generally expected to be a bit tepid for the technology sector. Although, the street will forget all things after a good quarter earnings or a strong commentary on the business outlook. For long term, we do not see any major pressure because of cos poster boy exit. Rs, Crore Financials 2QFY14 1QFY14 2QFY13 (YoY)-% (QoQ)-% Revenue 12965 11267 9858 31.5 15.07 EBITDA 2836.9 2664 2597 9.2 6.49 PAT 2406.9 2374 2369 1.6 1.39 EBITDA Margin 21.9% 23.6% (170bps) 26.3% (440bps) PAT Margin 18.6% 21.1% (250bps) 24.0% (540bps)
(Source: Company/Eastwind)

Share Holding Pattern-%


Promoters FII DII Others Current 16.04 40.52 17.51 25.93 4QFY13 3QFY13 16.04 16.04 40.55 39.42 18.7 18.33 24.71 26.21

1 year forward P/E

Narnolia Securities Ltd,


Please refer to the Disclaimers at the end of this Report.

14

Infosys.
View and Valuation:
Infosys seems to be on its way to rediscovering its past mojo with revenue momentum kicking, its past strategy of under-promising and over delivering - remember present guidance now factors flat gorwth in next 2 qtrs, and the NRN invisible hand in play. Further announcement of strategic acquisitions, better utilization of cash balances, rampup in sales investment ,better deal win, consistent client traction and revenue momentum would help the company to bridge the gap with rivals such as TCS and HCL Tech. Considering the revised guidance by management and its growth priority than margin inching up strategy, we are positive on the stock. At a CMP of Rs 3486, it trades at 19.2x FY14E and 16.7x FY15E earnings. We retain our BUY view on the stock with a target price of target price of Rs 3622.

Financials
Rs in Cr, FY10 FY11 FY12 FY13 FY14E FY15E

Sales, INR Employee 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 Other expenses Tax rate Valuation CMP No of Share NW EPS BVPS RoE-% Dividen Payout ratio P/BV P/E

22742 12085 2792 14877 7865 905 982 7942 0 7942 1681 6261 4.8% 9.3% 4.6% 34.6% 34.9% 27.5% 53.1% 12.3% 21.2% 2615.1 57.4 23049.0 109.1 401.7 27.2% 25.1% 6.5 24.0

27501 14856 3677 18533 8968 854 1211 9325 0 9325 2490 6835 20.9% 14.0% 9.2% 32.6% 33.9% 24.9% 54.0% 13.4% 26.7% 2765.1 57.4 25976.0 119.0 452.4 26.3% 45.9% 6.1 23.2

33734 18340 4671 23011 10723 928 1904 11699 0 11699 3367 8332 22.7% 19.6% 21.9% 31.8% 34.7% 24.7% 54.4% 13.8% 28.8% 2865.0 57.4 31332.0 145.1 545.6 26.6% 24.0% 5.3 19.7

40352 22565 6254 28819 11533 1099 2365 12799 0 12799 3370 9429 19.6% 7.6% 13.2% 28.6% 31.7% 23.4% 55.9% 15.5% 26.3% 2400.0 57.4 37994.0 164.2 661.7 24.8% 45.1% 3.6 14.6

48659.6 27736.0 7785.5 35521.5 13138.1 1325.3 2433.0 14245.8 0.0 14245.8 3846.4 10399.4 20.6% 13.9% 10.3% 27.0% 29.3% 21.4% 57.0% 16.0% 27.0% 3486 57.4 45236.1 181.1 787.8 23.0% 23.8% 4.4 19.2

55939.5 32165.2 9230.0 41395.2 14544.3 1523.5 3356.4 16377.1 0.0 16377.1 4421.8 11955.3 15.0% 10.7% 15.0% 26.0% 29.3% 21.4% 57.5% 16.5% 27.0% 3486 57.4 53832.6 208.2 937.5 22.2% 20.7% 3.7 16.7
15

(Source: Company/Eastwind)

Narnolia Securities Ltd,


Please refer to the Disclaimers at the end of this Report.

Hindalco Industries Ltd.


Company Update
CMP Target Price Previous Target Price Upside Change from Previous 124 132 NA 7% NA

"Buy"
24 Dec' 13

Novelis, leader in aluminum rolling and recycling completed $400 millionexpansion program in South Korea. The expansion of its Yeongju and Ulsan plants increases the company's production capacity in the region by more than 50 percent to approximately one million metric tons of aluminum sheet per year.Hindalco has expanded its smelting capacity by 359kt via Mahan greenfield project.Aruna Sundarajan is back and set to take charge as Industries new additional chief secretary and looks forward optimistically for a better industrial climate focusing on young entrepreneurship. The PM's Project Monitoring Group has sorted out issues with regards to Hindalco's 7000 Cr rupees Utkal Alumina refinery among others. On a medium-term view we would still be positive on Hindalco Industries. As the improvement happens across economies whether it is US, Europe, to an extent in China also we think Hindalco is very well positioned. Hindalco Industries, the world's largest Aluminium rolling company, disappointed with the second quarter net profit declining marginally to Rs 357Cr from Rs 358.9Cr y-o-y, dented by higher finance cost. Bottom line was largely supported by other income; otherwise profit would have much lower than currently reported. Other income, which included Rs61 Cr non-recurring income and dividend of Rs 100 Cr from subsidiaries, more than doubled to Rs 280Cr in three-month period ended September 2013 from Rs 132.4Cr in a year ago period. Net sales increased over 2 percent year-on-year to Rs 6245Cr during September quarter. EBITDA climbed 3 percent Y-o-Y to Rs 481Cr while operating profit margin improved marginally to 7.7 percent from 7.63 percent during the same period on higher inventory. Finance cost surged 6.5 times on a yearly basis to Rs 183Cr in the quarter gone by, given higher average borrowing. Revenue from Aluminium business grew 11 percent y-o-y to Rs 2,342.6Cr, driven by higher volumes, but EBIT margin of the same business declined to 7.1 percent during 2QFY14 During the same period, total metal production increased to 1,32,000 ton (excluding Mahan production) from 1,28,000 ton while alumina production (excluding Utkal alumina production) rose to 3,34,000 ton from 3,28,000 ton y-o-y, but sequentially it was down from 3,48,000 ton due to a planned ramp down at one of refineries. In case of copper business, revenue slipped 2.2 percent Y-o-Y to Rs 3,974Cr in the quarter gone by, but its EBIT margin expanded to 6 percent. Cathode production declined to 77,000 ton from 78,000 ton y-o-y. Financials : Q2FY14 Y-o-Y % Q-o-Q % Q2FY13 Q1FY14 Net Revenue 6585 4.6 5.1 6296 6266 EBITDA 540 4.8 12.8 515 478 Depriciation 196 13.7 7.3 173 183 Tax 83 -5.9 -17.4 88 101 PAT 357 -0.5 -24.7 359 474
(In Crs)

Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume (Nos.) Nifty 500440 HINDALCO 137/83 25497 17848 6284

Stock Performance-%
Absolute Rel. to Nifty 1M -1.3 -2.7 1yr 11.3 0.5 YTD 8.7 0.0

Share Holding Pattern-%


Promoters FII DII Others 2QFY14 37.0 24.9 14.4 23.7 1QFY14 4QFY13 37.0 32.1 24.8 24.5 14.3 15.5 23.9 28.0

1 yr Forward P/B
800 700 600 500 2.0

PRICE 3x

BV 4x

1x P/BV

2x

3.0

2.5

400
300 200 100 0

1.5

1.0

0.5

0.0

Sep-06

Sep-07

Sep-08

Sep-09

Sep-10

Sep-11

Sep-12

Mar-07

Mar-06

Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

Source - Comapany/EastWind Research

Mar-13

Sep-13

Narnolia Securities Ltd,


Please refer to the Disclaimers at the end of this Report.

16

Hindalco Industries Ltd.


Out Look : Although Hindalco has expanded its aluminium capacity recently, low aluminium prices, sticky costs, delay in commencement of mining from captive blocks and higher interest and depreciation costs may hit its profitability. In the near-term, there is lack of clarity over production from the Mahan coal block for its Mahan smelter. Without captive coal block, the Mahan smelter is expected to face cost pressures, resulting in lower return ratios over FY2013-15.So Clearance of Mahan coal block will be most awaited trigger for Hindalco. Mean While on the Positive Side We can expect 7% growth on the Stock with a Target Price of Rs.132.
LME Price/Ton
120000 115000 Primary Aluminium

110000
105000 100000 95000 90000

Apr-13

Mar-13

May-13

Aug-13

Source - Comapany/EastWind Research LME Price/Ton


Copper 480000 460000 440000 420000 400000 380000 360000 340000

Apr-13

May-13

Nov-13
Nov-13

Mar-13

Aug-13

OPERATING MATRIX Aluminium Revenue Copper Revenue Aluminium Results Copper Results Capital Employed P/L PERFORMANCE Net Revenue from Operation Other Income Total Income Expenditure EBITDA Depriciation Interest Cost Tax Minority Interest Share in Profit/(Loss) of Associates PAT ROE%

FY10 6761 11752 1963 599 138254 FY11 72078 431 72509 64102 7976 2725 1839 964 366 57 2456 8.5

FY11 7965 15902 2004 602 74799 FY12 80821 783 81604 72856 7965 2645 1758 786 211 -50 3397 10.6

FY12 9041 17575 1822 802 178990 FY13 80193 1012 81205 72395 7798 2822 2079 886 -20 16 3027 8.6

FY13 8779 17305 930 768 225246 FY14E 86000 1360 87360 78572 7428 2700 2500 825 0 0 2763 7.3

Source - Comapany/EastWind Research

Source - Comapany/EastWind Research


17

Narnolia Securities Ltd,

Dec-13

Jan-13

Feb-13

Sep-13

Oct-13

Jun-13

Jul-13

Dec-13

Feb-13

Sep-13

Oct-13

Jun-13

Jan-13

Jul-13

Hindalco Industries Ltd.


B/S PERFORMANCE Share capital Reserve & Surplus Total equity Long-term borrowings Short-term borrowings Long-term provisions Trade payables Short-term provisions Total liabilities Intangibles Tangible assets Capital work-in-progress Long-term loans and advances Inventories Trade receivables Cash and bank balances Short-term loans and advances Total Assets RATIOS P/B EPS Debtor to Turnover% Creditors to Turnover% Inventories to Turnover% CASH FLOWS Cash from Operation Changes In Working Capital Net Cash From Operation Cash From Investment Cash from Finance Net Cash Flow during year FY10 191 21346 21545 10763 13236 3901 9742 1016 69235 7876 21124 5801 1983 11275 6544 2195 1134 69235 FY10 1.6 20.5 10.8 16.0 1.9 FY10 5542 -598 4944 -5448 428 -76 FY11 191 28824 29023 13736 13956 4138 12980 1077 84376 12272 20133 13131 2035 14096 8000 2556 1164 84376 FY11 1.4 12.8 11.1 18.0 2.0 FY11 6929 -703 6226 -6710 825 341 FY12 191 31179 31911 37127 3731 5289 11052 1377 101402 15429 19871 22798 3774 13246 8017 3296 2159 101402 FY12 0.8 17.7 9.9 13.7 1.6 FY12 8534 -932 7602 -13220 6237 619 FY13 191 34597 35330 49857 6442 5691 9613 1610 120590 16435 21490 33831 3170 14332 8952 3770 3257 120590 FY13 0.5 15.8 11.2 12.0 1.8 FY13 6852 -3874 2978 -13765 10278 -510

Source - Comapany/EastWind Research

Source - Comapany/EastWind Research

Trading At :
7000 6000 5000 4000 3000 2000 1000 0 160 140 120 100 80 60 40 20 0

NIFTY

HINDALCO

Source - Comapany/EastWind Research


Narnolia Securities Ltd,
18

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 Sytems 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 companys 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 companys 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.

19

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
20

(Source: Company/Eastwind)

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.

21