COMPANY ANALYSIS

Group 6

Name
Prashant Singh (0267/51)
Prateek Maheshwari (0270/51)
Prateek Sinha (0271/51)
Prateek Tewari (0272/51)
Prithwijit Mukherjee (0277/51)
Puneet Aggarwal (0280/51)
Rajat Gupta (0287/51)
Rajul Nema (0289/51)
Ratnabali Majumdar (0291/51)
Sambit Das (0313/51)

AUGUST 23, 2015

SUN PHARMA
BUY

(CMP 844 | IV (FCFE) 1130 | 52 Week High/Low 1200/743 | Market Cap (Cr.) - 92,842.18)
KEY FINANCIALS

Key Highlights
Rs mn

Huge opportunity in US led generic exports expected to grow at 10-

FY15

FY16E

FY17E

15% over 10 year period

The Indian Pharmaceutical market will grow to USD 55 billion by
2020 at a CAGR of 12-17%
Company to discontinue businesses, which could be low-margin
products and do not make long-term strategic sense
US$ 44bn worth drugs going off patent which will provide further
fillip to Indian companies.

Net Sales
1,74,488 1,95,261 2,20,021
EBIDTA
78,704
88,619
98,270
Net Profit
60,395
66,990
75,409
EPS, Rs
29.2
32.3
36.4
PER, x
31.8
28.7
25.5
P/BV, x
8
6.4
5.3
ROE, %
25.1
22.5
20.7
Debt/Equit y(%)
10.3
8.3
6.8

Risk and Concerns

Source: Bloomberg

The US business contributes 60% of revenues of Sun Pharma and

KEY VALUATION PARAMETERS

Rs mn
FY15
FY16E
FY17E
Operating Margin
24.8
26.3
31.5
Profit Margin
16.6
20.5
25.1
P/E
46.7
33.4
23.2
P/Book
8.0
6.3
5.1
EV/EBITDA
26.0
22.5
17.0
Dividend Yield
-0.5
0.6
BVPS
32.8
21.3
27.6

any USFDA regulatory issue can be critical for the company.

Turnaround of Ranbaxys business
Taro, Suns US subsidiary to face increased competitiveness in US

BUY (CMP 1,096 | IV (DDM) 1183 | 52 Week High/Low 1128/791 | Market Cap (Mn.) 2,751,930)
Key Highlights

KEY FINANCIALS

Top pick in the BFSI industry with stringent underwriting abilities and

Rs mn
PAT

FY15
106,889

FY16E
121,176

FY17E
150,466

stronger corporate growth profile

The Commercial Vehicle segment poised to grow with HCV with a 45% yoy
growth; HDFC with high exposure likely to benefit

ROAE %

19.9%

20.2%

20.6%

EPS, Rs

44.10

49.99

62.08

With one of the best retail franchise in India, business likely to see growth

PER, x

25.7

22.7

18.3

P/BV, x

4.4

3.5

2.7

led by pickup in GDP and consumer spending

23% CAGR loan growth expected over the next 2 years and consistent profit
margin to continue

Key Valuation figures

Risk and Concerns

Underperformance in the stock market in the last few months
Relatively less return than other private banks in India; ~100% in 12 months
to HDFC banks 60%
Lack-lustre growth in real GDP might result in non-realization of value

Historical P/E

1,002

1,224

FY16E P/E

766

936

FY17E P/E

782

956

1,166

1,425

FY16E P/BV

818

1,000

FY17E P/BV

1,060

1,296

DDM

1,042

1,552

Historical P/BV

HOLD

(CMP 250 | TP 276 | 52 Week High/Low 300/194 | Market Cap (Mn.) 648,124.5)

Key Highlights
For valuation, projects in pipeline and projects awarded, both
have been considered. BHEL is Low-bid-winner in over INR 180bn
projects
Q1FY15-16 results led to fall in the price
Power equipment showing signs of revival. In the past 15 months,
over 12GW of power plant orders have been placed
BHEL will be the biggest beneficiary of a demand revival, given
the weakened competition, cost advantage and high degree of
localised manufacturing.

(m)
Net Sales
EBIDTA
Net Profit
EPS, Rs
P/BV, x
ROE, %
Net Debt/Equity

Key Financials
FY15
FY16e
FY17e
301,829 322,144 426,605
24,850
32,623
61,415
14,192
26,340
47,422
5.8
10.8
19.4
1.9
1.8
1.7
4.3
7.5
12.7
(0.3)
(0.3)
(0.5)

Risk and Concerns

These projects are expected to be awarded in 2QFY16, a slight
change in schedule can change whole valuation
Decrease in growth in Power sector, on whom BHEL is
dependent, will hugely affect the valuation
HOLD recommendation, with target price of INR276 per share, at
17x FY17e earnings is based on the fact that BHEL will be able to
benefit from its operations

Key Valuation Figures

(m)
FY15
FY16e
EBIT/Interest (x)
15.4
27.4
DPS(INR)
1.0
3.0
P/E
45.3
24.5
P/B
1.9
1.8
EV/EBITDA
21.9
14.2
BVPS
139.0
147.0

FY17e
60.7
6.0
13.6
1.7
6.3
159.0

(CMP 14,617.55 | IV (Multiples) 10,448.03 | 52 Week High/Low 14,774.00/5,550.00 | Market Cap (Mn) - 163,042.3

SELL
Key Highlights:

Key Financials

The company recorded sales of Rs. 371.96 crores

for the quarter ended March 31st, 2015, an
increase of 33 percent from the corresponding
quarter last year. The net profit for the period
was Rs 47.11 crores, a growth of 34percent.

In Millions of INR

FY 2015

FY 2016 Est

FY 2017 Est

Revenue

15,139.7

19,629.1

24,981.2

--

10,197.3

13,077.7

EBITDA

3,190.0

4,096.9

5,272.6

Net Inc

1,960.2

2,597.9

3,387.7

As on March 31, 2015, Page Industries Ltd. has

over 18,000 employees, spread over 13 state-ofthe-art manufacturing complexes in Bengaluru,
Mysore, Hassan and Gauribidanur.
During the year 2014-15, your Directors have
declared three interim dividends on 29th May,
2014 (Rs.16 per share), 10th November, 2014
(Rs.18 per share) and 12th February, 2015 (Rs. 18
per share) on an equity share value of Rs. 10 each
The report by BCG suggests that consumption of
apparel will go up by four times between 2010 and
2020. This augurs well for premium brands like
Jockey and Speedo.

EPS

175.75

235.73

309.28

953.6

1,237.0

1,704.9

Gross Profit

Free Cash Flow

Source:
Bloomberg

Key Valuation Parameters

In Millions of INR

FY
2015

FY 2016 Est

FY 2017 Est

P/E

78.13

62.01

47.26

P/Book

39.60

32.06

24.03

P/Cash Flow

101.96

58.68

45.12

EV/EBITDA

48.49

40.17

31.21

0.52

0.69

0.92

51.33

17.86

13.87

Dividend Yield
EV/EBIT
Source: Bloomberg

| Buy | CMP-569.2 | IV ( EV/EBITDA-716.44, P/E-664.69, EV/Sales-703.48 ) |52 Week High /Low 676.90/512.55|Market Capitalization(mn) -1,405,624.9 INR

Sales
EBITDA
EPS
EPS Gr(%)

Key Financials
FY 2015 FY 2016 Est
FY 2017 Est
469,545.0
511,881.4 563,903.6
104,609.0
112,094.1 124,273.8
35.25
37.26
41.11
11.0
5.7
10.3

Valuation Metrics
FY 2015 FY 2016 Est
FY 2017 Est
P/E
17.84
15.27
13.85
P/B
3.81
3.02
2.67
EV/EBITDA
13.59
11.11
10.02
Sales Gr(%)
8.1
8.2
10.2

Key Highlights:

Wipro posted a 1.1% qoq growth in its USD IT Services revenue higher than expected revenue.
The Management remains confident of the revenue growth pick-up sustaining, citing a pick-up in large deal closures
and win rates, uptick in discretionary spending, strong business pipeline and momentum in demand from US
sustaining
The utilization rate of the global IT business moved up by 80bp sequentially to 71.3%. Going ahead, an improvement
in utilization level will be an important margin lever
The EBDITA and EBIT margins posted a dip of 167bp and 144bp qoq, respectively, during the quarter. The IT services
EBIT margin came in at 21.0%. The margin dip was mainly on back of currency impact and wage hikes.
The company has bought the information technology (IT) services business of the Canadian logistics and utilities firm,
Atco, which is expected to result in annual revenue of about US$112mn

Risks and Concerns:

Voluntary attritions (annualized) in the global IT business increased considerably, and remained stagnant at 16.4%. The
Management indicated that it has taken necessary steps to curtail attritions & expects them to decline going ahead

Infosys Limited
(CMP 1095 | IV (P/E) 1091 |
52 Week High/Low 1162/800 | Market
The June 2015 quarterly results indicate that the companys
Cap(INR Bn) 2,535)
headwinds from relatively weak portfolio mix and

Key Highlights

Hold

organisational changes have been offset by better

execution
in
Financials
(INR)
sales and delivery
Revenue (Bn)
The key factor that continued to concern was theGrowth
traction
%, in
YoY
top 10 clients, which were declining or growing in
low
single
EBITDA (Bn)
digits. Top client grew 15% YoY, top 2-5 clients grew 6% YoY in
Margin %
1QFY16.
Net Inc (Bn)
Declining attrition means measures are helping: Attrition
Margin %
(quarterly annualised) dropped by 720bps YoY (consolidated)
P/E
to 19%. The management expects this to decline by 200bps
EV/Sales
over the next few quarters.
Market Cap. (Bn)
Basic EPS
Risks

False revenue turnaround expectations: Infosys had reported

(In INR)
two strong quarters of revenue growth in 1QFY14
and 2QFY14
FY16E P/E
(3.4% QoQ and 4.2% QoQ, organic constant-currency terms)
FY17E P/E
which had resulted in increased expectations ofFY16E
a turnaround
EV/EBITDA
Movement in USD/INR
FY17E EV/EBITDA
FY16E
P/S
Margin fall due to accelerated investments/ larger
low-margin
FY17E P/S
acquisitions

FY 2014
501

FY 2015 FY 2016E FY 2017E

533

601

678

24.2

6.4

12.6

13.0

134

149

165

190

26.8

27.9

27.5

28.0

106.5

123.3

132.5

151.6

21.2

23.1

22.1

22.4

17.6

20.6

18.9

16.5

3.19

4.18

3.72

3.29

1,876

2,535

46.6

53.9

57.6

65.9

Key Valuation Figures

Estimated Industry Avg

1091
1091
953
972
972

1046
1050
896
922
743
746

High

Low

1289
1280
1097
1125
1149
1140

879
912
634
718
487
485

NSE: TATASTEEL || BUY || CMP 260.25 || TP 437 ||52 Week High/Low

554/245 || MarketCap (Mn) - Rs254,507.00

Key Financials
FY 2015 FY 2016 Est FY 2017 Est

Key Highlights:
Tata Steel India: Volumes to get a boost in 2HFY16 post 3mtpa Kalinganagar
plant commissioning. Operating costs to remain high due to correction of ~INR
4000/tonne in raw material costs. Focus on VAPs, combined with growth in
infra and auto segment to drive value.

Sales (mn)
EBITDA(mn)
Adj PAT (mn)
EPS
EPS Gr(%)
Payout(%)
ROE(%)

1395037
109735
-41012
-42.2
-220%
43.42
1.3

1414568
144286
11066
11.4
127%
44.3
10.6

1485296
181206
31522
32.5
185%
17.1
24.9

Tata Steel Europe: Business to continue burning cash given continued pressure
on margins due to cheap imports from China low demand. Focus on high value products and 17% increase in new products
remain key to growth. Asset sales may result in deleveraging.
Valuation Metrics
FY 2015 FY 2016 Est FY 2017 Est

Risks and Concerns:

Fall in steel prices & slowdown in China to affect volumes and realisations.
Indian steel markets continues to see Korean and Japanese imports.
Worsening of finance costs beyond 8% to pull down earnings significantly.

P/E
P/B
EV/EBITDA
BV/Share(INR)
Sales Gr (%)
D/V

11.95
0.98
9.08
322.8
5%
0.78

11.94
0.74
7.20
356.2
7%
0.78

7.81
0.68
6.60
384.4
7%
0.78

BUY | (CMP 267.05 | IV (Multiples) 302.1 | 52 Week High/Low 336/192.8 | Market Cap (Mn) 19,93,723.4
Key Highlights

SBI Q1 net seen up 4.5%, slippages may fall

Profit on yearly basis is likely to be impacted by rise in provisions,
subdued other income and higher operating expenses
We expect fee income to rise 10 percent year-on-year but treasury
and dividend income may be weak (in Q4FY15, fee income grew
by 9.71 percent and dividend income growth was 36.6 percent).
Net interest margin is estimated to decline on sequential basis as
SBI had one off other income component due to interest income on IT refund in Q4FY15 and due to impact of 30 basis points
lending rate cut by the bank.
Loan growth is expected to (still) be lacklustre due to subdued corporate demand. Estimated loan growth is 8-10 percent for June
quarter.

Risks and Concerns :

Key factor in Q1 earnings to watch out for would be 5:25 restructuring

(which allows banks to extend long terms loans for 20-25 years and
refinance them every 5 or 7 years). SBI pipeline for debt restructuring
under 5:25 scheme is expected to be around Rs 6,500 crore.

BUY

(CMP 456 | IV (FCFE) 511 | 52 Week High/Low 452/336 | Market Cap (Mn) 1,645,330)

Key Highlights:

Key Financials

Revenue grew at 2.8% Q-o-Q, Voice minutes grew 4.7% Q-o-Q

to 290.8 billion minutes and Data volumes grew 17.8% Q-o-Q to
102 billion MB, which further aided revenues.
EBITDA came in at 8256.2 crore, higher than expectations of
8172.9 crore. EBITDA margins came in at 34.9%, up 131 bps Y-oY but down 35 bps Q-o-Q.

FY 2015

As data and voice volumes grow further, the company would

benefit from higher operating leverage leading to higher EBITDA
margins by FY17E.
Nonetheless, considering the ability to deliver superior data
services, it will grow its revenue and PAT at a CAGR of 8.2% and
19.7%, respectively, in FY15-17E.

920,394

989,462 1,087,991

EBITDA( mn)
Operating
Margin(%)

312,210

334,587

375,178

17%

16%

16%

51835

56412

66175

EPS ()

13.0

15.9

18.4

EPS growth(%)

85%

23%

15%

Payout(%)

17%

18%

18%

ROE(%)

8.5%

9.1%

9.6%

Valuation Metrics

Risks and Concerns:

Africa has been disappointing with sales CAGR of 5.8% in FY1315 to 26906.9 Cr. EBITDA margins have declined from 26.9%
in FY12 to 20.5% in Q1FY16 due to competition & pricing cuts.
Rising debt and higher requirement of funds on account of
recently purchased spectrum is a concern as Net interest to EBIT
shot to 43.2% in Q4FY15 from 28% a year ago.
A higher-than-expected decline in data tariffs post RJio hits the
market could be a downside risk to the estimates.

BUY

FY 2015

FY 2016E

FY 2017E

P/E (x)

30.3

25.8

22.3

P/B (x)

2.5

2.4

2.1

EV/EBITDA (x)

7.0

6.9

6.1

BV/Share()

155.0

175.1

192.2

Sales Gr (%)

7%

8%

10%

0.6%

0.7%

0.8%

Dividend Yield(%)

(CMP 167 | TP - 52 Week High/Low 187/129 | Market Cap (Cr.) - 60026.5)

Key Highlights

FY 2017E

Sales ( mn)

Net Income ( mn)

FY 2016E

For EV/EBITDA and Price/Earnings, 4

multiples were used in each case
Industry average of comparable
firms
High demand scenario (last 5 year
average of high estimates)
Average demand scenario (last 5
year average of average estimates)
Low demand scenario (last 5 year
average of low estimates)
For EV/Sales, 3 multiples were used
high, average and low as above

In Millions of INR
except Per Share
EV/EBITDA Method
Enterprise Value
Current debt
Preferred Equity
Cash
Equity (Intrinsic
Value)
Outstanding shares
Share Value
EBITDA (forward)
EV/EBITDA
P/E Method
Price/Earnings
EPS
Share Value
EV/Sales Method
EV/Sales
Revenue
Enterprise Value
Equity Value
Share Value

FY 2016 Est
Industry Avg
12,96,545.5
2,02,338.0
19.0
17,572.0

FY 2016 Est
Est Low
9,64,223.1
2,02,338.0
19.0
17,572.0

FY 2016 Est
Est High
14,30,350.1
2,02,338.0
19.0
17,572.0

FY 2016 Est
Est Average
12,25,947.1
2,02,338.0
19.0
17,572.0

11,11,760.5
3,598.71
308.93
1,30,979.1
9.90
Industry Avg
(Comparables)
20.38
9.53
194.24

7,79,438.1
3,598.71
216.59
1,30,979.1
7.36

12,45,565.1
3,598.71
346.11
1,30,979.1
10.92

10,41,162.1
3,598.71
289.32
1,30,979.1
9.36

Est Low
23.23
9.53
221.33
Est Low
2.02
3,64,011.6
7,36,211.9
5,51,426.9
153.23

Est High
43.56
9.53
415.10
Est High
2.53
3,64,011.6
9,20,672.4
7,35,887.4
204.49

Est Average
33.96
9.53
323.59
Est Average
2.95
3,64,011.6
10,74,192.4
8,89,407.4
247.15