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India Equity Analytics

Daily Fundamental Report on Indian Equities

IEA-Equity Strategy 13th Mar, 2014 Edition : 224


13th Mar 2014

Shakti Pumps (India) Ltd : "Turnarround Counter"

"BUY"

The company was the first to get 5 star rating for energy efficiency for its products from BEE. In addition to submersible pumps, company also producing Vertical Multistage Centrifugal pumps, Pressure booster pumps, Open well pumps, End suction pumps etc. Recently company introduced pumps working with solar power. In next three years company incline to achieve sale revenue of Rs. 600 crore with the net margin of 9-10%. Company is planning to increase the Branch Network to 30 and Dealer network to 3 fold in coming few year. Further, Company have plans to register our presence in all BRICS, G20 and European Union and in other growing countries in coming years. On valuation front shakti pump is available at a single digit PE and EV/EBIDTA of 5.6x/4.1x and 4.7x/3.8x of its FY14E/15E estimates. In a volatile market, a company available at single digit valuations certainly looks up for grabs .................................................................... ( Page : 2-4)

HCLTECH :"Retain confidence"

"BUY"

12th Mar 2014

On performance front, it continues to be bullish on the rebid market and bullish on short-term to medium term, momentum on deals pipeline also looking robust. Considering the increasing discretionary spends across the geographies like US and Europe, we expect healthy earnings performance ahead. ...................................................................... ( Page :5-6 )

BANKBARODA

"BUY"

11th Mar 2014

On fundamental wise, we are not very impressed with bank but in recent market rally, PSB as well as private banks participated more than any sector likely due to outcome of exit poll for the coming election. We believe bank would rally more because of trading at lower side despite of index is running at all time high. But with this fundamental Bank of Baroda would trade in range of Rs.635 to Rs.700 depending upon sentiment as per our view. .................................................................... ( Page : 7-9)

Prestige Estates Projects: "Downgrade to Hold"

"HOLD"

10th Mar 2014

The Prestige Estate has moved up form starting of CY12, peaked in May13, then went down gradulally. The stories behind the current price diving are the concern of price war, staggered economics, and non softening of interest rates. However given the limited upside in counter in near term, we revise our rating on PEPL to Hold with a revised price target of Rs. 190. Regarding the stock's future course, our Hold rating indicates that we do not recommend additional investment in this stock despite its gains in the current period. ..................................................................................... ( Page : 10-11)

Dabur India Ltd: "Confident tone for growth"

"BUY"

7th Mar 2014

Dabur expects volume growth at a range of 8-12% for FY15E led by innovation and effective distribution initiatives in chemist channels. If discretionary demand from urban area improves, then volume growth in double digit would not be a surprise for street. Considering its expected expressive volume growth than other peers, aggression on new launches through innovation and aggressive distribution reach energize our positive stance on the stock. ............................................................. ( Page : 12-16)

CAN FIN HOME

"BUY"

7th Mar 2014

We have initiated coverage with Buy rating on the stock with price target of Rs.220 which implies 1 times of FY14E book value. The company has delivered strong performance all around. During quarter, profitability was up by 60% on the back of healthy NII growth and improvement in operating leverage. Return ratio improved from 12% in FY12 to 18% in 3QFY14 which is expected to remain healthy on the back of improving operating leverage and aggressive branch expansion. ................................................... ( Page :17-23)

DB CORP : "Waging war on Print media"

"NEUTRAL"

7th Mar 2014

The Supreme Court upheld the constitutional validity of the November 11, 2011 Union government notifications, directing implementation of the recommendations of the Majithia Wage Boards for journalists and non-journalists of newspapers and news agencies. This judgment will work as a dampener for newspaper industry as well as DB CORP. Companys EBITDA margin will be effected very negatively not only in FY15E but also next few or more years. Therefore we downgrade DB CORP from `BUY to `NEUTRAL ........................................................................ ( Page : 24-25)
Narnolia Securities Ltd,

VCompany update
CMP Target Price Previous Target Price Upside Change from Previous

Shakti Pumps (India) Ltd.


"Turnarround Counter..."
Buy
76 105 NA 38% 0%

"Buy"
13th Mar' 14

Key Points : The company was the first to get 5 star rating for energy efficiency for its products from BEE. In addition to submersible pumps, company also producing Vertical Multistage Centrifugal pumps, Pressure booster pumps, Open well pumps, End suction pumps etc. Recently company introduced pumps working with solar power. In next three years company incline to achieve sale revenue of Rs. 600 crore with the net margin of 9-10%. Company is planning to increase the Branch Network to 30 and Dealer network to 3 fold in coming few year. Further, Company have plans to register our presence in all BRICS, G20 and European Union and in other growing countries in coming years. On valuation front shakti pump is available at a single digit PE and EV/EBIDTA of 5.6x/4.1x and 4.7x/3.8x of its FY14E/15E estimates. In a volatile market, a company available at single digit valuations certainly looks up for grabs. Pledging of shares by promoters is the only reason for some concern.But ,since its financial performance is improving quarter over quarter ,I dont expect much issues from this angle.Moreover pledge is not with any NBFC but with one of its bankers - Axis Bank.

Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 531431 SHAKTIPUMP 38/88 116 13,645 6,518

Stock Performance-%
Absolute Rel. to Nifty 1M 1.5 (6.0) 1yr 44.2 31.5 YTD 72.4 57.8

Share Holding Pattern-%


Promoters FII DII Others 3QFY14 45.0 0.0 9.9 45.2 2QFY14 1QFY14 44.9 44.9 0.0 0.0 10.5 10.5 44.7 44.7

1 yr Forward P/B

Company Profile Shakti is a manufacturer of stainless steel submersible pumps and motors ranging from 0.5 HP to 255 HP used in domestic, industrial, irrigation, and fire-fighting and located at Pithampur Madhya Pradesh. Company is the first five star rated pump manufacturer in India. In addition to submersible pumps ,company also producing Vertical Multistage Centrifugal pumps, Pressure booster pumps, Open well pumps, End suction pumps. The company is mainly focused on the export market and sup-plies its products to around 50 countries, such as US, UK, Turkey, Spain, Netherlands, Germany, France, Italy, Australia, Sri Lanka, etc. Nearly 58 per cent of its revenues are from exports. Of the balance 42 per cent of domestic revenues, 60 per cent come from supply to farmers, 20 per cent from domestic demand, 12 per cent from government institutions, and the balance 8 per cent from various industrial sectors. Industry Structure and Development The Indian pump industry is estimated to be Rs. 8000 crores in 2012-13. It is likely to grow at 8% and expected to reach Rs. 18000 crores by 2017-18. The market demand is driven by infrastructure based spending, urbanisation, growth in manufacturing activity, refurbishment & upgradation and overall increase in the population, insufficient rains and falling water tables have led to demand for improvement in hydraulics and pump efficiency. The rising cost of oil has positively influenced the demand for energy conservative pumps and pumps driven by renewable energy sources. There will be strong demand for pumps from developing countries like China and India due to industrialisation and investment in water and power segments. The developed nations propose to repair and upgrade their old water infrastructure. This will lead to good replacement demand for pumps in developed countries.

Narnolia Securities Ltd,


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

Shakti Pumps (India) Ltd.


Reasons of laggard performance : Having said that, there are reasons we believe this scrip may not perform as per the expectations on the bourses. First and foremost, one should note that Shakti is in a business domain that has low entry barriers and the products can be easily manufactured. Currently, Shakti manufactures only steel sub-mersible pumps and though it posi- tions itself as an energy-efficient pump manufacturer, there are other players too who manufacture such energy-effi-cient pumps. However, the company is increas-ing its product line by adding boost-er pumps, mono-block, and open well pumps to its portfolio. Shakti is installing a new 65,000 unit per annum capacity for booster pumps at a cost of Rs 35 crore, which is being funded through a combination of debt (Rs 25 crore) and internal accruals (Rs 10 crore). This expansion is expected to come on stream and start generat-ing revenues in coming periods Outlook : It is one of the fastest growing companies from this sector .From Rs.41 Cr sales in 2006 it reached a top line of Rs.210 Cr in 2013. Its export thrust and improvement in Indias rural economy is expected to drive further growth .Company is targeting a turnover of Rs.600 Cr in next three years. To drive its domestic growth, Shakti has already strength-ened its marketing team and domestic dealer network to 650 from 192 just two years back. Though this renewed focus should help generate revenues for Shakti, the new product portfolio isnt a unique one and is already manufactured across the country. Thus Shakti seems to be a late entrant in these products and therefore one will have to wait and watch the kind of growth it posts in these segments. Besides, there is a huge unorganised market on the domestic front which firstly eats into the market share (according to the management, Shaktis market share is 3 per cent in the overall pump industry i.e. includ-ing the unorganised market) and sec-ondly, it reduces the pricing power of the organised players, thus impacting realisations and margins. However, Most Governments are insisting on the use of Star-rated pumps wherever it is subsidising their purchase on account of higher energy efficiency. With labour getting scare and expensive, there is a greater preference among agriculturist to work with branded models that promise a higher uptime, circumventing the need to invest in submersible pump extraction, repair or replacement. The result is that the market share of the countrys unorganised sector has steadily declined from 95% to 80%; the performance of the organised sector growth over the unorganised provides the industry optimism. Valuation : At current price of Rs. 75, the stock is trading at P/E of 5.5 x for FY14E and 5.0 x the FY15E. Escorts could post EPS of Rs. 13.6 for FY14E and Rs. 18.7 for FY15E. Considering managements aggressive expansion in production capacity and marketing network, I believe company can deliver good growth in coming years. Further, we expect the company to benefit immensely from the subdued steel prices currently. We expect the benefit to flow in for the next coming quarters as well. We recommend a "Buyrating on stock with price target of Rs. 105 Revenue Q-Q (In Crores)

(Source: Eastwind Research)

Operating Profit Q-Q (In Crores)

(Source: Eastwind Research)

Narnolia Securities Ltd,


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

Shakti Pumps (India) Ltd.


Key financials :
PARTICULAR Performance Revenue Other Income Total Income EBITDA EBIT DEPRICIATION INTREST COST PBT TAX Reported PAT Dividend EPS DPS Yeild % EBITDA % NPM % Earning Yeild % Dividend Yeild % ROE % ROCE% Position Net Worth Total Debt Capital Employed No of Share CMP Valuation Book Value P/B Int/Coverage P/E
(Source: Eastwind Research)

2011A 9M

2012A

2013A

2014E

2015E

2016E

135 1 136 25 22 3 6 17 3 13 2 10.8 1.4

192 1 193 31 27 4 9 18 4 14 2 9.1 1.1

209 7 215 30 25 5 12 20 3 17 2 11.0 1.2

270 7 277 41 34 7 14 26 6 21 2 13.6 1.3

338 7 344 51 43 7 14 36 8 28 2 18.7 1.3

422 7 429 63 55 8 15 47 10 37 2 24.1 1.3

18.4% 9.9% 20.6% 2.6% 20.5% 9.2%

16.0% 7.2% 19.5% 2.4% 15.9% 8.2%

14.4% 7.8% 25.5% 2.7% 15.5% 8.8%

15.0% 7.5% 18.0% 1.7% 16.3% 10.0%

15.0% 8.3% 24.6% 1.7% 18.5% 12.2%

15.0% 8.6% 31.8% 1.7% 19.5% 13.7%

65 81 147 1 52

87 83 170 2 47

109 82 191 2 43

128 80 208 2 76

154 80 234 2 76

189 80 269 2 76

52.6 1.0 3.6 4.9

57.3 0.8 2.9 5.1

71.3 0.6 2.1 3.9

83.7 0.9 2.4 5.6

101.1 0.8 3.1 4.1

123.9 0.6 3.6 3.1


(Figures in crore)

Narnolia Securities Ltd,


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

HCLTECH
"Retain confidence"
Company update
CMP Target Price Previous Target Price Upside Change from Previous

"BUY"
12th Mar' 14

Buy
1454 1650 1560 13% 5.8%

Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 532281 HCLTECH 1589/674 101643 1193062 6512

Stock Performance
Absolute Rel. to Nifty 1M 2.6 -5 1yr 85.5 75.9 YTD 135 122.9

Share Holding Pattern-%


Promoters FII DII Others Current 61.75 28.05 4.20 6 1QFY14 4QFY13 61.84 61.92 26.01 24.45 5.70 6.49 6.45 7.14

1 year forward P/E

Key takeaways from recent Investors Conference in Mumbai: Trump Card on rebid Market: HCL Tech Management expressed its optimistic tone for rebid opportunity with a deal of $45bn for negotiation in CY14E. Most of rebid would be come from Infrastructures and traditional IT segments. Across the tier-1 IT space, HCL Tech will be most beneficiary because of large exposures in Infrastructures space (36% of sales). Visionary approach to changing market dynamics: Forward looking statement from the desk of BoD (Given on annual report 12-13) reveals 5 major strategies to compete market dynamics and company is focused for the same. 5 major technological changes are expected to open up new opportunities for service providers: (1) Smart Computing: Consulting Solution for next-generation IT infrastructure to maximize workforce. The aggregation and management of Cloud services is executed through HCL's proprietary MyCloud platform. (2) Software-as-a-Service (SaaS): software that is owned, delivered and managed remotely by one or more providers. (3) Social Technologies: Technology that facilitates social interactions and is enabled by a communications capability, such as the Internet or mobile device. (4) Mobility: Mobility offering services from mobile application development and integration to mobile application services, to fully managed mobility including provisioning, hosting, and end-user support. (5) Analytics: End-to-end life cycle of services including management and hosting of customer assets, consolidation and migration services, virtualization and design and management of green data centers. Looking for strategic partnership with CSC: HCLTech is looking an opportunity of strategic partnership to transform clients services from legacy to cloud based technologies. As per IT based Gartner survey, clients are looking to retire, replace, and revise 80-85% of their applications over the next 2 years. The company expects to acquire and quantify of this opportunity with CSC (Nasdaq-listed IT services firm Computer Sciences Corporation, CSC). View and Valuation: HCL techs decent level of utilization, focused on cost control and utilization of new market opportunities through vendors consolidation would provide a new shape to the company in near future. On performance front, it continues to be bullish on the rebid market and bullish on short-term to medium term, momentum on deals pipeline also looking robust. Considering the increasing discretionary spends across the geographies like US and Europe, we expect healthy earnings performance ahead. At a CMP of Rs 1454, stock trades at 17.4x of FY14E earnings, We retain BUY on the stock and revised our target price from Rs 1560 to Rs1650. Financials 2QFY14 1QFY14 (QoQ)-% Revenue 8184 7961 2.8 EBITDA 2125 2093 1.5 PAT 1495 1416 5.6 EBITDA Margin 26.0% 26.3% (30bps) PAT Margin 18.3% 17.8% 50bps
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

1QFY13 6273.8 1417 965 22.6% 15.4%

Rs, Crore (YoY)-% 30.4 50.0 54.9 340bps 290bps


5

(Source: Company/Eastwind)

HCLTECH
Healthy deal pipeline:
During the quarter, HCL Tech reported an addition of 15 transformational deals in the US and Europe for the December quarter. These wins have been in the momentum markets of manufacturing and Financial Services as well as the emerging momentum markets of life sciences & Healthcare and Public Services. Across the geographies, USA and Europe remain best to drive deal wins during the quarter because of healthy scenario of demand environment.

Financials;
Rs, Cr Net Sales-USD Net Sales Raw Materials Cost Employee Cost Operation and other expenses 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 RM Cost Operation and other expenses Tax rate Valuation CMP No of Share NW EPS BVPS RoE-% Dividend Payout ratio P/BV P/E FY10 2704.6 12136.3 443.6 6253.7 3498.5 10195.7 1940.6 418.1 154.1 0.0 1522.5 204.1 1472.4 213.4 1259.0 24.1% 18.6% 5.9% -4.6% 16.0% 12.5% 10.4% 51.5% 3.7% 28.8% 14.5% 364.9 67.9 6288.8 18.5 92.6 20.0% 25.0% 3.9 19.7 FY11 3545.3 15730.3 522.1 8589.6 4163.2 13274.9 2455.4 459.7 299.7 0.0 1995.7 142.6 2152.8 488.5 1664.3 31.1% 29.6% 26.5% 32.2% 15.6% 12.7% 10.6% 54.6% 3.3% 26.5% 22.7% 493.5 68.9 7653.0 24.2 111.1 21.7% 31.5% 4.4 20.4 FY12 4151.5 20830.6 612.0 11104.6 5418.8 17135.3 3695.2 549.2 206.5 0.0 3146.0 142.6 3209.8 782.7 2427.1 17.1% 32.4% 50.5% 45.8% 17.7% 15.1% 11.7% 53.3% 2.9% 26.0% 24.4% 490.0 69.3 9837.9 35.0 141.9 24.7% 33.1% 3.5 14.0 FY13 4686.5 25581.1 959.3 12574.2 6386.4 19919.9 5661.2 636.8 306.6 44.5 5024.4 105.6 5269.9 1225.3 4044.6 12.9% 22.8% 53.2% 66.6% 22.1% 19.6% 15.8% 49.2% 3.8% 25.0% 23.3% 759.5 69.6 13164.0 58.1 189.1 30.7% 20.0% 4.0 13.1 FY14E 5464.6 32787.8 983.6 16066.0 7213.3 24262.9 8524.8 742.5 460.5 -491.8 7782.3 79.2 7671.8 1841.2 5830.5 16.6% 28.2% 50.6% 44.2% 26.0% 23.7% 17.8% 49.0% 3.0% 22.0% 24.0% 1454.0 69.6 17854.4 83.8 256.5 32.7% 19.6% 5.7 17.4 FY15E 6484.1 39229.0 1176.9 19418.3 8826.5 29421.7 9807.2 881.0 590.2 78.5 8926.2 59.4 9535.5 2336.2 7199.3 18.7% 19.6% 15.0% 23.5% 25.0% 22.8% 18.4% 49.5% 3.0% 22.5% 24.5% 1454.0 69.6 23913.5 103.4 343.5 30.1% 15.8% 4.2 14.1

(Source: Company/Eastwind)

Narnolia Securities Ltd,


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

BANKBARODA
ANNUAL REPORT UPDATE

"ADD"
11h March. 2014

Result 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

ADD 651 700 624 8 12

532134 BANKBARODA 773/429 21627 18.25 Cr 6537

At the current price of Rs.651/share stock is trading at 0.77 times of FY14E book value which is now premium over its peer group. We value bank at the range of Rs.634 to Rs.790 implying valuation multiple of 0.75 to 0.9 times of one year forward book. But upper side of book value multiple would be possible only if the improvement of asset quality along with improving sign of fundamentals. But in its quarterly result, banks performance was muted all around except healthy loan and deposits growth. CASA growth was remained muted in compare to SBI and PNB. So cost of deposits is unlikely to soften in near term while asset quality was deteriorated higher in percentage as compare to PNB and SBI. In the following section we will discuss the fundamental improvement of bank during quarter. NII growth on the back of loan growth and margin expansion Banks NII grew by 7.6% YoY largely due to healthy loan growth and sequentially margin improvement of 5 bps. Margin improve came from domestic push from 2.85% to 2.95 while international NIM remained stable at 1.18%. Cost of fund declined by

Stock Performance 1M Absolute 16.6 Rel.to Nifty 8.7

1yr -8.3 -21.4

YTD -8.3 -21.4

Share Holding Pattern-% Current 4QFY13 3QFY1 3 Promoters 55.4 55.4 55.4 FII 15.5 15.5 15.3 DII 19.6 19.6 19.0 Others 9.5 9.5 10.3 BANKBARODA Vs Nifty

14 bps quarterly due to lower borrowings as a percentage of percentage of NDTL. Advance growth led by SME and retail Advances grew by 18% YoY largely came from SME and retail sector which grew by 39% and 21% YoY respectively. Bank continued to be cautions while expanding its exposure towards large corporate owing to economy recession. Deposits grew by 21.5% YoY, added by foreign currency non- resident deposits but CASA franchise remained flat at 26%. So in CASA front we are not impressed and going forward cost of fund is unlike to be soften in our view. Profit inflated due to lower provisions led by reversal of investment depreciation Provisions were lower by 11.5% YoY on account of reversal of investment depreciation to the tune of Rs.120 cr offset additional provision towards nonperforming assets. But banks stress loan (slippage + Restructure) loans were Rs.1275 cr which was almost in previous quarter. Lower provisions made 17% up PBT but at operating profit level, it was down by 2.6% YoY. Tax rate was higher due to creation of DTL as per advice by RBI. View & Valuation On fundamental wise, we are not very impressed with bank but in recent market rally, PSB as well as private banks participated more than any sector likely due to

outcome of exit poll for the coming election. We believe bank would rally more because of trading at lower side despite of index is running at all time high. But with this fundamental Bank of Baroda would trade in range of Rs.625 to Rs.700 depending upon sentiment as per our view.

Financials
NII Total Income PPP Net Profit EPS 2011 8802 11611 6982 4242 108.3 2012 10317 13739 8581 5007 121.8

Rs, Cr 2013 2014E 2015E 11315 12218 14122 14946 16400 18304 8999 9206 10067 4481 4444 4819 106.4 105.5 114.4 (Source: Company/Eastwind)
7

Narnolia Securities Ltd,


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

BANKBARODA
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 Exceptional Items PBT Tax Net Profit 3QFY14 7061 2175 245 209 9691 932 10623 6634 3057 932 3989 1056 736 1792 2197 762 16 1436 372 1048 2QFY14 6832 2220 281 140 9473 974 10447 6579 2895 974 3869 1030 714 1744 2125 861 16 1264 80 1168 3QFY13 % YoY Gr 6485 8.9 1898 14.6 403 -39.2 58 258.2 8845 9.6 841 10.9 9686 9.7 6004 10.5 2841 7.6 841 10.9 3681 8.4 798 32.3 627 17.3 1426 25.7 2256 -2.6 1029 -26.0 12 25.0 1227 17.0 203 83.7 1012 3.6 % QoQ Gr 3QFY14E 3.3 7173 -2.0 2350 -12.8 397 50.1 173 2.3 10092 -4.3 1102 1.7 11194 0.8 6792 5.6 3300 -4.3 1102 3.1 4402 2.5 1189 3.1 792 2.7 1981 3.4 2421 -11.5 897 0.0 0 13.6 1524 364.7 457 -10.3 1067

Balance Sheet Date( Rs Cr) Equity Capital Reserve & Surplus Net Worth Total Deposits Borrowings Other liabilities and provisions Total Liability Cash in hand Cash and balances with RBI Total Investment Advances Fixed Assets Others Assets Total Assets

423 35232 35654 503772 29304 18638 587368 16742 87599 115210 352446 2562 12809 587368

423 35127 35549 484931 28558 13995 563033 15681 79980 111840 339855 2498 13179 563033

412 30966 31379 414733 27899 14552 488563 17147 58295 101848 299318 2399 9557 488563

2.5 13.8 13.6 21.5 5.0 28.1 20.2 -2.4 50.3 13.1 17.7 6.8 34.0 20.2

0.0 0.3 0.3 3.9 2.6 33.2 4.3 6.8 9.5 3.0 3.7 2.6 -2.8 4.3

Asset Quality GNPA( Rs Cr) NPA(Rs Cr) % GNPA % NPA % PCR (without technical writeoff)

11926 6624 3.4 1.9 44.5

10888 6316 3.2 1.9 42.0

7321 3363 2.4 1.1 54.1

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

BANKBARODA
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
21886 13084 8802 48.2 2809 11611 32.8 4630 6982 41.5 1331 5650 4242 38.7

2012
29674 19357 10317 17.2 3422 13739 18.3 5159 8581 22.9 2555 6026 5007 18.0

2013
35197 23881 11315 9.7 3631 14946 8.8 5947 8999 4.9 4168 4831 4481 -10.5

2014E
39065 26847 12218 8.0 4182 16400 9.7 7194 9206 2.3 3559 5647 4444 -0.8

2015E
45206 31084 14122 15.6 4182 18304 11.6 8237 10067 9.4 4043 6024 4819 8.4

Balance Sheet
Deposits( Rs Cr) Change (%) of which CASA Dep Change (%) Borrowings( Rs Cr) Investments( Rs Cr) Loans( Rs Cr) Change (%) 305439 27 87589 23 22308 71261 228676 31 384871 26 103524 18 23573 83209 287377 26 473883 23 119981 16 26579 121394 328186 14 521272 10 135531 13 33273 122000 367568 12 573399 10 149084 10 36600 134200 404325 10

Ratio
Avg. Yield on loans Avg. Yield on Investments Avg. Cost of Deposit Avg. Cost of Borrowings 8.0 7.0 4.3 5.5 8.7 7.8 5.1 6.7 8.4 6.4 5.2 5.4 8.6 7.3 5.2 5.5 9.3 8 5.4 5.5

Valuation Book Value CMP P/BV

536 963 1.8

668 794 1.2

759 652 0.9

846 513 0.61

929 513 0.6

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

VResult update
CMP Target Price Previous Target Price Upside Change from Previous

Prestige Estates Projects Ltd.


"Downgrade to Hold..."
Hold
169 190 165 12% 15%

"Hold"
10th Mar' 14

Key Points The Prestige Estate has moved up form starting of CY12, peaked in May13, then went down gradulally. The stories behind the current price diving are the concern of price war, staggered economics, and non softening of interest rates. The heat wave in economy have affected complete sector, this hurt the real estate companies' revenue and the revival which were expected by us in previous year cannot be seen in the manner in which we expect. Earlier in our 3QFY14 result update we had given a buy rating on stock when the price was Rs. 145, with the next 5-6 month price target of Rs. 165. However seeing the current rally in stock post 3QFY14 result and on back of guidance for FY14 at Rs. 4300 crore sales booking as the management commentary on the result call regarding launches in Q3FY14 as well as through the year remained extremely positive. However given the limited upside in counter in near term, we revise our rating on PEPL to Hold with a revised price target of Rs. 190. Regarding the stock's future course, our Hold rating indicates that we do not recommend additional investment in this stock despite its gains in the current period. Result Highlights 3QFY14 Prestige Estates Projects said it sold 1,204 residential units and 0.026 million square feet (Mnsft) of commercial space, aggregating to 2.075 Mnsft, amounting to Rs 1262 crore of sales in Q3 December 2013. Of the above, Prestige share is 904 units -1.55 Mnsft amounting to Rs 940.20 crore of sales, up by 24.69% from that of Q3 December 2012.In Q3 December 2012, the company had sold 682 units aggregating 1.44 Mnsft of residential and commercial space, amounting to Rs 754 crore of sales - Prestige share. (Overall sales of 1.69 Mnsft of area amounting to Rs 873.90 crore). Collections rose 16.69% to Rs 592.30 crore in Q3 December 2013 over Q3 December 2012 - Prestige share. (Overall collections for the Q3 December 2013 - Rs 713.30 crore). In Q3 December 2013, the company launched the first phase of its largest residential project- Prestige Lakeside Habitat in Bangalore aggregating to 2.79 million square feet of total developable area. The project is spread across 102 acres in area and consists of apartments and villas with total developable area of 8.40 Mnsft. Management Guidence FY14E Company will exceed its presales guidance. Company has already done sales to the extent of Rs 1,200 crore plus and now it is just a question of production and these numbers getting recognised because company need to touch the trigger of 30 percent to recognise these numbers. During the year, company has made Rs 3,700 crore and guidance was Rs 4,300 crore. On his outlook for the company's business, Prestige Estates Projects, says there is no slowdown in the Bangalore market and aims to concentrate on the phase 2 and 3 of its Lakeside Habitat project newt quarter Valuation: At the current CMP of Rs. 165, the stock is trading at a PE of 16.0x FY14E & 13.6x FY15E . The company can post EPS of Rs. 10.3 & Rs. 12.1 in FY14E & FY15E and RoE of 11.3% & 12.0%.

Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 533274 PRESTIGE 102/195 5,717 161,912 6,401

Stock Performance-%
Absolute Rel. to Nifty 1M 15.6 9.3 1yr 0.4 (11.5) YTD 0.4 (12.2)

Share Holding Pattern-%


Promoters FII DII Others 3QFY14 75.0 17.4 6.3 1.3 2QFY14 1QFY14 75.0 75.0 17.4 17.2 6.3 6.1 1.3 1.7

1 yr Forward P/B

Narnolia Securities Ltd,


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

10

Prestige Estates Projects Ltd.


Key financials :
PARTICULAR Performance Revenue Other Income Total Income EBITDA EBIT DEPRICIATION INTREST COST PBT TAX Reported PAT Dividend EPS DPS Yeild % EBITDA % NPM % Earning Yeild % Dividend Yeild % ROE % ROCE% Position Net Worth Total Debt Capital Employed No of Share CMP (Ammount in crore) Valuation Book Value P/B Int/Coverage P/E
(Source: Eastwind Research)

2011A

2012A

2013A

2014E

2015E

1543 68 1611 442 381 61 123 326 91 235 39 7.2 1.2

1052 34 1086 331 270 61 119 185 63 122 39 3.7 1.2

1948 64 2011 579 511 68 149 426 131 294 39 8.4 1.1

2532 64 2595 696 621 75 163 522 161 361 39 10.3 1.1

3038 64 3102 805 722 83 163 623 199 423 39 12.1 1.1

28.6% 14.6% 5.7% 1.0% 11.1% 6.5%

31.4% 11.3% 3.7% 1.2% 5.7% 3.0%

29.7% 14.6% 5.2% 0.7% 10.7% 5.7%

27.5% 13.9% 6.2% 0.7% 11.8% 6.6%

26.5% 13.7% 7.3% 0.7% 12.0% 7.4%

2114 1505 3619 33 125

2151 1864 4015 33 100

2743 2420 5163 35 163

3065 3531 2420 2200 5485 5731 35 35 165 165 (Source: Company/Eastwind)

64.4 1.9 3.1 17.5

65.6 1.5 2.3 26.8

78.4 2.1 3.4 19.4

87.6 1.9 3.8 16.0

100.9 1.6 4.4 13.6


(Figures in crore)

Narnolia Securities Ltd,


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

11

Dabur India Ltd.


"Confident tone for growth"
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 Absolute Rel. to Nifty 1M 0.3% -6.03% 1yr 30% 19% YTD 33.9% 22.0% BUY 173 206 19% -

"BUY"
7th Mar' 14

Analysis on recent management interview to media : Dabur expects volume growth at a range of 8-12% for FY15E led by innovation and effective distribution initiatives in chemist channels. If discretionary demand from urban area improves, then volume growth in double digit would not be a surprise for street. A mature segment like Hair Oil remains a concern because of competitive intensity, likely to grow slower than healthcare and home segments. Consistently, Dabur is aggresively working on innovation activities to launch new product as well as product development activities. Recently new launches would come to the people like Vatika Enriched Coconut Oil with hibiscus, Vatika Olive Enriched Hair Oil. Considering its expected expressive volume growth than other peers, aggression on new launches through innovation and aggressive distribution reach energize our positive stance on the stock. Expecting for bottomed up sign on volume growth: Post earning, management of the company expressed hypothetically its view regarding bottoming out of urban demand. The management of other FMCG bellwether like Marico had also stated that the trend of volume decline has bottomed out based on hypothesis. Recent Consumer Confidence Index indicates some upward movement than previous quarters. At a same point, recent softening in CPI and Food Inflation Index (graph on 3rd page of this company's report) hint to improve consumer discretionary demand from rural and urban area. Aggression on expending distribution reach: Dabur is working on chemist channel to drive growth of its health care and Personal care portfolio, and they are planning to distribute personal products through this channel. Dabur had direct coverage of 55,000 chemist stores, which has now increased to 75,000; plans to take it to 125,000 by FY15E. View and Valuation: Despite signs of weak discretionary demand and increased competitive intensity in the market, Dabur India has reported comparatively better volume growth in its key categories. On all operating parameters, its performance was satisfactory. Still, management is cautious for margin ramp up due to high inflation in India. The strong momentum in relatively low competition in the core categories with diversified portfolio, Dabur gets a better place than other peers and its rural distribution expansion should boost sales volumes. We retain our Buy view on the stock with a target price of Rs206. At a CMP of Rs 173 stock trades at 9x FY15E P/BV. Financials Revenue EBITDA PAT EBITDA Margin PAT Margin 3QFY14 1904.28 297.59 243.5 15.6% 12.8% 2QFY14 1748.81 329.24 249.83 18.8% 14.3% (QoQ)-% 8.9 (9.6) (2.5) 220bps 150bps 3QFY13 1635.98 274.51 209.87 16.8% 12.8% Rs, Crore (YoY)-% 16.4 8.4 16.0 120bps 12

500096 DABUR 185/128 30246 908049 6401

Share Holding Pattern-%


Current 2QFY14 1QFY14

Promoters FII DII Others

68.64 19.94 4.47 6.95

68.66 20.71 3.96 6.7

68.66 20.4 3.97 7

P/BV(x)-1year forward

(Source: Company/Eastwind)

Narnolia Securities Ltd,


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

Dabur India Ltd.


Segment-wise snapshot
Segments Domestic Business Hair Care Growth (YoY)-% 24% 6.9% Key takeaways (3QFY14) -Launched Vatika Enriched Olive Hair Oil, -Shampoo grew by 25%(YOY), -Perfumed hair oils posted 8% YoY growth, -Dabur Chyawanprash reported healthy growth with a range of 17-18% YoY, -Launched premium health supplement Dabur Ratnaprash, -Dabur Honey performing well on the back of higher demand, -Toothpastes grew by 14% with premium offerings/added market share, -Flattish growh in Red Toothpaste, -Meswak on new packaging launched , -Honitus: Honey & Tulsi variant launched, -Ethicals portfolio grew by 15.5% YoY, -Hajmola performed well with positve response from Anadana variants, -Recently launched Pudin Hara Lemon Fizz has received emense response, -Odonil 1 Touch Freshener launched in South India, -Odonil and Sanifresh performed well during the quarter, -Gulabari performed well during the quarter, -Launch of Fem Fairness Naturals with No Added Ammonia, -Fem witnessed double digit growth led by good take from Bleaches, -Real Fruit Juice reported double digit growth, -Real in a new Diwali Gift packaging launched, -Organic International Business grew by 29% with 14% constant currency(CC) growth driven by strong growth in GCC, Egypt & Nigeria, -Namaste business registered double digit growth in CC term, (Source: Company/Eastwind)

Health Supplements

19.5%

Oral Care OTC & Ethicals Digestives Home Care Skin Care Foods International Business

10.4% 13.2% 17.7% 16.0% 13.4% 18.0% 26.0%

Dabur New Launches:


Dabur's New Launches Ratnaprash Odonil Variant Beverage variants 3QFY14 Vatika Shampoo variant Vatika hair oil Fem portfolio with no ammonia Pudin Hara Lemon Fizz Vatika Hair Oi l with Hibiscus Q2FY14 OxyLi fe Men Odoni l re-launched with 2x perfume content Test launched Real Mi lk Shakes in Delhi and Punjab Q1FY14 Oxy life Aloe Vera Gel Bleach Real Activ Drinking Yoghurts in mango and strawberry flavours

Ratnaprash Vatika hair oil Vatika Shampoo

Hajmola Anardana Super Babool + Salt Power 4QFY13 New Ethnic flavour "Kokam" under Real Burrst Fem brand was introduced in Turkey Odoni l Gel

Honitus
Fem with no ammonia Odonil Variants

(Source: Company/Eastwind)

Narnolia Securities Ltd,


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

13

Dabur India Ltd.


Key Takeaways:
Slowdown in Hair Oils segment remains for long term? On 3QFY14, Hair Oils segment witnessed decline across categories. Marico reported only 2% YoY volume growth in parachute rigid packs and 8% YoY in value-added hair oils, Bajaj Corp and Navratna oil clocked 1% YoY volume growth. While, Coconut oil segment reported 3-4% YoY volume decline. Importantly, Hair Oil segment is adversely impacted by high input cost pressure leading to frequent price hike. We believe, slowdown in Hair Oil segments could be a short-term jerk. Dabur management believes that there is some structural change in Coconut Hair Oil because of consumption shifting from Coconut Hair Oil to Light Hair Oil. Dabur is carrying small exposures in Coconut Oil; still there is room to report value and volume growth because of support from new launches. Company is likely to be better placed with valueadded offerings Vatika enriched coconut oil with Hibiscus and Vatika Olive Enriched Hair Oil.

Pace of innovation continues Vatika Enriched Olive Hair Oil launched during the quarter

We expect that the volume growth in Hair Oil segment has bottomed out and coming quarter and next spell of growth would come largely from increasing per capita income. Innovation combined with optimum pricing strategy to maintain market share will be key growth driver of this category. How chemist channel would play a role to opportune the gain of market share? Considering the weak consumer sentiment in urban area, there was less opportunity to invest in urban growth in the past 2 years. Now, as green shoots are visible and consumer sentiment is improving, the company is beginning to invest in urban growth with Project COREchemist outlet and range expansion. However, there could be a few quarters of transitory period. As part of this project, Dabur has recruited 350 people in the front end and will incur Rs15cr for the first phase. Project COREs primary focus will be the health care portfolio(Chyawanprash, Honey, Glucose), OTC products (Honitus, Lal Tel) and personal care portfolio which are more relevant to the chemist channel than to general trade. At present, it increased its coverage to 75000 from 55000-chemist store and, plans to take it to 125,000 by FY15E. We expect that project CORE will be favorable to improve margin picture as well as revenue builder.
(Source: Company/Eastwind)

Chemist Shope in India

Narnolia Securities Ltd,


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

14

Dabur India Ltd.


Conference Call (Q3FY14 ): Key Facts at a glance
Volume Growth Pricing Growth Urban and Rural Growth Innovation and new launches Ad spend Margin Growth Hair Care Health Care Skin Care Oral Care:
-Dabur expects to achieve volume growth in the range of 8-12% in FY15%E, and if urban growth revives, volume growth could be in the range of double digit growth. -For 4QFY14E, price increase could be at a range of by 1-2% YoY. The company may hike prices by 4-5% in FY15E and focus will be on pursuing an aggressive and profitable growth strategy. -Its rural growth has been faster than urban growth since the past few quarters but now this gap has reduced. Now, Dabur believes that growth will be driven by the urban areas, which is witnessing an uptick. The company will be shifting its focus to the urban area, which will drive premiumization. -The company expects to continue with the new launches and innovations, but spread over the year and not cluttered in one quarter. Dabur could launch a range of summer products in beverages and health supplements. -Ad expenses to be maintain within the range of 13-15% at the consolidated level for FY15E. -Dabur expects to improve gross margin in FY15E, its inventory that includes the high cost raw materials (increased due to high-cost petroleum derivatives) will exist until February 2014. Dabur expects gross margin to improve by 100bps if the inflation scenario remains benign. -Dabur expects to maintain growth of high single-digit in this segment. -Dabur expects that there is huge opportunities for growth in this segment and Project CORE will help to drive growth for the same. The company expects to see growth in mid-teens helped by the pickup in winter in Q4FY14. -Dabur does not believe that launching sensitive toothpaste now will drive growth of this portfolio as big players are already present in this segment.

International business
For 3QFY14, The International Business (contributes around one third of consolidated sales) grew by 26%. Organic business grew by 29% with 14% constant currency growth rate led by strong performance in GCC, Egypt and Nigeria. The GCC business reported a 21% growth, while sales in Egypt and Nigeria both grew by 16%. Bangladesh remains an important geography for the company, which was impacted by political instability and economic uncertainty resulting in slow growth of 10% YoY. Dabur has organized a strong team and product portfolio for this geography.

IntlBusiness New Launches

Dermoviva Face Wash

Dabur will expand its footprint only in adjacent geographies of its current markets like in Iran, Iraq and Africa. It believes that Bangladesh and Pakistan together have the potential to become Rs500cr market each over the long term.
21% 16% 16% Fem Gold Hair Removal Cream

GCC EGYPT Key Growth Markets Q3FY14(%)

NIGERIA Dermoviva Hand Wash


(Source: Company)

Narnolia Securities Ltd,


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

15

Dabur India Ltd.


Financials
Rs in Cr, Sales RM Cost Purchases of stock-in-trade WIP Employee Cost Ad Spend Other expenses Total expenses EBITDA Depreciation and Amortisation Other Income EBIT Interest PBT Tax Exp PAT Growth-% (YoY) Volume Pricing 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-% P/BV P/E FY10 3391.4 811.0 750 (10) 285 493.5 438.4 2767.3 624.1 50.0 39.4 613.5 12.3 601.2 100.5 500.7 FY11 4104.5 1806.8 252 (122) 309 534.6 524.1 3304.8 799.7 95.2 32.2 736.6 29.1 707.5 139.0 568.5 FY12 5305.4 2278.8 509 (103) 387 659.5 683.1 4415.2 890.2 103.4 57.4 844.2 53.8 790.4 146.4 644.0 FY13 6178.9 2422.1 599 (2) 471 837.0 819.10 5146.6 1032.2 112.7 92.0 1011.5 58.9 952.6 182.62 770.0 FY14E 7070.30 2757.42 742.38 (71) 608.05 996.91 908.53 5942.59 1127.71 111.09 141.41 1158.03 54.69 1103.34 212.39 890.95 9.5% 4.5% 14.4% 9.3% 15.7% 39.0% 14.1% 8.6% 12.9% 19.3% 16.0% 16.4% 12.6% 173.00 174.30 2689.06 5.11 15.43 33.1% 11.21 33.84 FY15E 8203.32 3240.31 820.33 (41) 738.30 1132.06 1066.43 6956.42 1246.90 133.15 164.07 1277.82 51.95 1225.87 232.91 992.95 10.5% 5.0% 16.0% 10.6% 11.4% 39.5% 13.8% 9.0% 13.0% 19.0% 15.2% 15.6% 12.1% 173.00 174.30 3335.36 5.70 19.14 29.8% 9.04 30.37
16

20.9% 33.9% 28.1% 23.9% 14.6% 8.4% 12.9% 16.7% 18.4% 18.1% 14.8% 158.6 86.8 935.4 5.8 10.8 53.5% 14.7 27.5

21.0% 28.1% 13.5% 44.0% 13.0% 7.5% 12.8% 19.6% 19.5% 17.9% 13.9% 96.1 174.1 1391.1 3.3 8.0 40.9% 12.0 29.4

29.3% 11.3% 13.3% 43.0% 12.4% 7.3% 12.9% 18.5% 16.8% 15.9% 12.1% 103.2 174.2 1716.9 3.7 9.9 37.5% 10.5 27.9

16.5% 16.0% 19.6% 39.2% 13.5% 7.6% 13.3% 19.2% 16.7% 16.4% 12.5% 131 174.3 2124.38 4.4 12.19 36.2% 10.75 29.7

(Source: Company/Eastwind)

Narnolia Securities Ltd,


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

CAN FIN HOME


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 8.7 Rel.to Nifty 3.1 BUY 189 220 16 -

"BUY"
7th March 2014

We have initiated coverage with Buy rating on the stock with price target of Rs.220 which implies 1 times of FY14E book value. The company has delivered strong performance all around. During quarter, profitability was up by 60% on the back of healthy NII growth and improvement in operating leverage. Return ratio improved from 12% in FY12 to 18% in 3QFY14 which is expected to remain healthy on the back of improving operating leverage and aggressive branch expansion. Healthy NII growth on the back of robust loan growth The companys NII grew by 39% YoY to Rs.40.2 Cr which came from impressive loan growth of 49% YoY. Margin of the company was however declined by 13 bps sequentially on account of higher cost of fund. Yield on loan remained same sequentially which restricted NII growth below than previous quarter (49% YoY). CanFin Home has about 16-17% of exposure in rural area where spread is lower. From last two quarters, yield on loan remained same while cost of borrowing increased by 10 bps which made margin lower sequentially. Loan book continued to be healthy on account of higher non housing loan growth Loan book grew by 49.1% YoY led by strong disbursement in retail segment. The companys exposure to non house loan was about 7% of total loan which grew from Rs.138 cr in 3QFY13 to Rs.400 cr in 3QFY14. The company remains focus on salaried segment which account about 90% of loans. Average ticket size loan is Rs. 16 lakhs. Concentration of individual loan segment declined to 92% of total loan from 94% in March 2013 and this segment shifted towards non housing. Although revenue contribution from this segment is very low but spread is relatively thicker than housing segment. Funding compositions have high credit quality and carried low risk Funding composition of the company continued to be rate MAA+ by ICRA indicating high credit quality and carried low risk. The composition comprises 50% from NHB and 45% from banks, altogether account for 95% of total funding while remaining come from deposits. Average tenure of funding is 7-10 years due to its loan tenure portfolio of 10-15 years. From year FY12 to FY13, source of funding composition saw dramatically changed as share of NHB increased to 50% from previous year of 23% while loan from related party declined to 45% from 70% in FY12. The benefit was also come at effect as blended borrowing cost came down to 9.2% in FY13 from 9.8% in FY12. At the end of 3QFY14, borrowing cost stood at 9.3% from 9.4% in last quarter. Rs, Cr Financials 2010 2011 2012 2013 2014E NII 63 72 84 96 162 Total Income 71 77 91 110 162 PPP 54 60 68 74 114 Net Profit 39 42 44 54 80 EPS 19.1 20.5 21.4 26.4 39.3 (Source: Company/Eastwind) 17 Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.

511196 CANFINHOME 196/113 389 15.59 Lakh 6401

1yr 26.9 15.0

YTD 26.9 15.0

Share Holding Pattern-% Current 4QFY13 3QFY1 3 Promoters 42.4 42.4 42.4 FII 0.6 0.6 0.6 DII 0.5 0.5 0.5 Others 56.5 56.5 56.5 CANFINHOME Vs Nifty

CAN FIN HOME


Aggressive branch expansion drives incremental business growth The company has opened almost 40 branches from last two years and it became double to 81 from 41 in March 2011. The company has planned to open 85 braches at the end of FY14. The incremental business came from additional branches as we got evidence from revenue growth. The company revenue was Rs.72 cr in FY11 which increased to Rs.96 cr in FY13 and in 9MFY14, it reached to Rs.115 cr while cost to income ratio was remained flat at 30% level. The company is planning to open other 25 branches by 2015 in north area which would cater for incremental loan growth outside of southern state. Being presence in Bangalore would help to get benefit naturally in realty boom The reality volume in Bangalore is higher than Mumbai, Pune and Delhi-NCR region according to our real estate analyst as we got evidence from recent result publish. Can Fin Homes 16% total branches are in Bangalore region, so it will be natural beneficiary of this realty boom in Bangalore. At present 4 southern states constitute about 70% of loan book. Strong profit growth due to healthy NII growth and improvement in operating leverage During quarter, the company reported healthy net profit growth of 60% YoY on the back of robust loan growth of 50% YoY and declined cost income which led by improvement in operating leverage. With the improvement in operating leverage, the companys return ratio ROE improved from 12.6% in FY12 to 18% in 3QFY14. As discuss above, the company is more aggressive in branch expansion which would increase incremental business and profitability and hence return ratio. Asset quality continues to be healthy. On asset quality front, the company continues to remain healthy with gross NPA level came down to 0.3 during quarter from 1.6 in FY07. With the strong recovery and high coverage ratio, net NPA level has been 0% since FY11. During quarter, Can Fins GNPA was declined to 0.32% from 0.34% in previous quarter whereas net NPA level was at 0% led by almost 100% provision provided by the company. Asset quality is expected to remain healthy going forward on the back of strict lending practice and 90%+ exposure to salaried personal where chances of slippage is relatively low.

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

18

CAN FIN HOME


About the company Can Fin Homes Ltd was promoted in 1987 by Canara Bank in association with reputed financial institutions including HDFC and UTI. Canara Bank holds 42.4% stake in CFHL. Today, CFHL offers a range of products on housing, such as loans for home purchase, home construction, home improvement/extension and site purchase as well as nonhousing finance. The company has 81 branches at present with a large presence in South India. Concern Any sharp increase in the interest rate would discourage consumers to purchase home and thus demand could be impacted. Around 45% of funding source come from banking and any adverse regulation like hike of interest rate could impact borrowing cost. This would impact companys NII, NIM and profitability. View & Valuation We have initiated coverage with Buy rating on the stock with price target of Rs.220 which implies 1 times of FY14E book value. The company has delivered strong performance all around. During quarter, profitability was up by 60% on the back of healthy NII growth and improvement in operating leverage. Return ratio improved from 12% in FY12 to 18% in 3QFY14 which is expected to remain healthy on the back of improving operating leverage and aggressive branch expansion.

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

19

CAN FIN HOME


CHART FOCUS

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

20

CAN FIN HOME

Valuation BaND

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

21

CAN FIN HOME


Quarterly Result Interest Earned Interest Expenses NII Other Income Total Income Operating Expenses PPP Provisions PBT Tax Expenses PAT Balance Sheet Capital Reserves and surplus Net Worth Borrowings TOTAL LIABILITIES Loans TOTAL ASSETS Spread Analysis Yield On Advances Cost of Borrowings Spread NIM ROE% Break-Up ROA Total Assets/ Total Equity ROE(%) 3QFY14 151.7 111.5 40.2 0.1 40.3 11.4 28.9 0.0 28.9 8.5 20.3 2QFY14 137.9 99.8 38.1 0.0 38.2 12.4 25.7 0.0 25.7 7.0 18.7 3QFY13 % YoY Gr % QoQ Gr 102.8 47.5 10.0 73.9 51.0 11.8 29.0 38.7 5.4 0.1 36.4 144.2 29.0 38.7 5.5 11.3 1.3 -8.3 17.8 62.4 12.2 0.0 17.8 62.4 12.2 5.1 66.1 22.0 12.6 60.9 8.6

20 428 448 4817 5265 5355 5355

20 407 427 4315 4742 4864 4864

20 366 386 3144 3530 3592 3592

0.0 17.0 16.1 53.2 49.2 49.1 49.1

0.0 5.2 4.9 11.6 11.0 10.1 10.1

11.3 9.3 2.1 3.0

11.3 9.2 2.1 3.1

11.5 9.4 2.1 3.2

1.5 12.2 18.2

1.5 11.6 17.6

1.5 10.3 15.9

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

22

CAN FIN HOME


Financials & Assumption

PROFIT & LOSS ACCOUNT( Rs Cr) Interest Earned Interest Expenses NII Other Income Total Income Operating Expenses PPP Provisions PBT Tax Expenses PAT BALANCE SHEET ITEMS( Rs Cr) Net Worth Borrowings Loans SPREAD ANALYSIS(%) Yield On Advances Cost of Borrowings Spread NIM EFFICENCY RATIO(%) Operating Expenses to Total Income ( CI Ratio) NII to Loan fund Loan to borrowings VALUATION Book Value(Rs) P/B(x) P/E(x)

2010
208 145 63 9 71 17 54 -1 55 16 39

2011
226 154 72 5 77 17 60 1 58 16 42

2012
279 196 84 8 91 23 68 7 61 17 44

2013
379 283 96 14 110 36 74 -1 75 21 54

2014E
586 424 162 0 162 48 114 0 114 34 80

275 1865 2167

311 1904 2250

348 1982 2673

392 3073 4012

463 5309 6600

10.7 9.9 0.8 3.1

10.5 8.1 2.4 3.2

10.7 9.9 0.8 3.1

9.8 9.2 0.6 2.4

11.3 9.3 2.0 3.0

24.4 2.9 116.2

22.3 3.2 118.2

25.2 3.1 134.8

32.8 2.4 130.6

30.0 0.8 111.2

134 0.6 4.2

152 0.7 5.2

170 0.7 5.2

191 0.7 5.2

226 0.8 4.8

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

23

DB CORP
"Waging war on Print media"
Latest update
CMP Target Price Previous Target Price Upside Change from Previous

"Neutral"
7th March' 14

Neutral
301 340 -

Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 533151 DBCORP 321.50/210

5521 25750
6261.65

The Supreme Court upheld the constitutional validity of the November 11, 2011 Union government notifications, directing implementation of the recommendations of the Majithia Wage Boards for journalists and non-journalists of newspapers and news agencies. This will act as a huge negative for newspaper industry. They have to pay all arrears up to March 2014.It will be paid in four equal installments within one year from November 11, 2011. This would create huge financial burden to a industry already facing problems of rising raw material prices. One the other hand most of newspaper venturing into reginal market in search for better sales volume and margin. This judgment will work as a dampener for newspaper industry as well as DB CORP. Companys EBITDA margin will be effected very negatively not only in FY15E but also next few or more years. Therefore we downgrade DB CORP from `BUY to `NEUTRAL

3QFY14E Earning Performance:


Stock Performance
Absolute Rel. to Nifty 1M -6 -7.32 1yr 22 11.3 YTD 0 -0.002

During the quarter, company has seen 18.2% revenue growth from its advertisement, 14% from circulation and 25% from Radio business on YoY basis. Management expressed its interest regarding inorganic expansion in near future to maintain its healthy growth across all segments.

Management Commentary:
Share Holding Pattern-%
Promoters FII DII Others Current 74.96 17.73 2.95 4.36 2QFY14 74.97 16.46 4.00 4.57 1QFY14 74.98 14.66 5.34 5.02

According to management, Company will maintain a pragmatic approach towards operational controls and higher efficiency. DBCORP will continue to capitalize its consumption potential of Tier 2 and 3 cities. And they are studying on marketing strategies of niche brands in Tier 2 and 3 cities. Company is expected to launch its Bihar edition on 19 Jan, 2014, and we expect to see some part of additional revenue from Bihar edition by 4QFY14E and also expect to see breakeven in 3 to 4 years.

Stock Performace with Nifty

View and Valuation:


In view of upcoming general election, we expect government ad spending to go up substantially. Provision of TRAIs 12 minutes ad cap would provide revenue visibility to print media players, being one of the largest players DB Corp will be strong beneficiary in near future. But Considering latest update regarding directing implementation of the recommendations of the Majithia Wage Boards for journalists and non-journalists of newspapers and news agencies, earning visibility could not be promising. Wages hike and payment of arrers will create huge burden to the profit and loss A/C of the company as well as margin shape. And it may hamper company's plan for investing in regional market in future because it needs internal cash flow. Therefore we are downgrading this stock from`BUY' to `Neutral'.

Financials
Revenue EBITDA PAT EBITDA Margin PAT Margin 3QFY14 518.2 153.8 93.57 29.7% 18.1% 2QFY14 438 112.5 63.2 25.7% 14.4% (QoQ)-% 18.3 36.7 48.0 400bps 370bps 3QFY13 438.9 122.8 73.2 28.0% 16.7%

Rs, Crore (YoY)-% 18.1 25.2 27.9 170bps 140bps


24

(Source: Company/Eastwind)

Narnolia Securities Ltd,


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

DB CORP
Revenue Geography-wise Revenue Segments

Financials;
Rs,cr Sales RM Cost WIP Employee Cost Ad Spend Other expenses Total expenses EBITDA Depreciation and Amortisation Other Income EBIT Interest PBT Tax Exp PAT Growth-% (YoY) Sales EBITDA PAT Expenses on Sales-% RM Cost Employee Cost Ad Spend Event Expenses consumption of store & spare Distribution expenses Other expenses Tax rate Margin-% EBITDA EBIT PAT Valuation: CMP No of Share NW EPS BVPS RoE-% P/BV P/E FY10 1062.1 327.87 -0.0016 131.81 12.98 161.24 720.03 342.07 37.83 11.15 304.24 35.69 279.70 105.72 173.98 10.5% 132.2% 265.4% 30.9% 12.4% 1.2% 1.1% 4.8% 2.1% 15.2% 10.0% 32.2% 28.6% 16.4% 239 18 649 9.6 36 27% 6.7 24.9 FY11 1265.18 383.91 -0.06 184.56 12.52 185.2 862.13 403.05 43.28 14.18 359.77 15.3 358.65 99.97 258.68 19.1% 17.8% 48.7% 30.3% 14.6% 1.0% 1.3% 4.6% 1.7% 14.6% 7.9% 31.9% 28.4% 20.4% 246 18 829 14.1 45 31% 5.4 17.4 FY12 1451.51 508.04 -0.04 242.93 15.04 216.06 1105.03 346.48 50.57 24.02 295.91 9.23 310.7 98.32 212.38 14.7% -14.0% -17.9% 35.0% 16.7% 1.0% 1.0% 5.8% 1.7% 14.9% 6.8% 23.9% 20.4% 14.6% 219 18 927 11.6 51 23% 4.3 18.9 FY13 1592.32 544.54 0.03 279.5 17.21 234.07 1210.25 382.07 58.06 21.34 324.01 7.99 337.36 113.18 224.18 9.7% 10.3% 5.6% 34.2% 17.6% 1.1% 0.8% 6.0% 1.8% 14.7% 7.1% 24.0% 20.3% 14.1% 212.1 18.33 1029 12.2 56 22% 3.8 17.3 FY14E 1861.91 623.74 -1.86 307.21 22.34 260.67 1371.5 490.5 64.5 27.9 426.0 8.0 445.9 156.1 289.8 16.9% 28.4% 29.3% 32.0% 16.6% 1.2% 0.8% 6.0% 1.8% 14.0% 8.4% 26.3% 22.9% 15.6% 301 18.33 1180 15.8 64 25% 4.7 19.0 FY15E 2176.94 740.16 -2.18 380.97 23.95 315.66 1656.7 520.3 75.4 28.3 444.9 5.1 468.1 163.8 304.3 16.9% 6.1% 5.0% 34.3% 17.0% 1.1% 1.0% 6.2% 1.9% 14.5% 7.5% 23.9% 20.4% 14.0% 301 18.33 1344 16.6 73 23% 4.1 18.1

(Source: Company/Eastwind)

Narnolia Securities Ltd,


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

25

N arnolia Securities Ltd


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