ENLIGHTEN YOUR INVESTMENT PORTFOLIO WITH AXISDIRECT FUNDAMENTAL MUHURAT PICKSMUHARAT PICKS SAMVAT 2074 @ ArisDirect Portfolio Performance @ Benchmark Performance (BSE 200) 70 68.0% 60 2 44.8% 40 30.8% 20 2 13.3% 139% 10 1.2% a ~ Mohurat Picks Muhurat Picks Muhurat Picks 2014 2015 2016 Our recommended portfolio of stocks for Diwall in previous years have given returns of 30.8% in 2016-17, 44.8% in 2015-16 and 68% in 2014-15. Whereas, BSE 200 has given retums of 13.9% in 2016-17, 13.3% in, 2015-16 and 1.2% in 2014-15. Fundamental stocks recommended last Diva (Samvet 2073) -Indusind Bank, Inerglobe Aviation, Lumax Industries, Minda Industries, Reliance Industries, Stee Strips Wheals, TVS Srchakra, Wonderla Holidays and Zee Learn. éFOND Ue NE koa «ze w Meena z@e)conyyan Maser il INDIA - A ENTREPRENEURSHIP ‘CONSUMPTION ‘AADHAR NUMBER DEMONETISATION ENCOURAGEMENT Reepetioyse Digital Identneation ‘Attack on black money & Favourable Government 125 crore population For All counterfeit currency ‘policies FAVOURABLE JAN DHAN SCHEME GST IMPLEMENTATION NORMAL RAINFALL DEMOGRAPHIC Financial Inclusion Formalised Economy PREDICTIONS FOR 2018 DIVIDEND No active El Nino or La Nina >50 erpeople in the age pattems predicted bracket of 14-65 years nese. 7ROAD MAP AHEAD MEDIA Political parties’ media spend will rise in the 2018 and 2019 elections thus benefiting the media and print media sector CONSUMPTION Rise in per capita earnings would lead to improving spends in discretionary segment like automobile, retail, petroleum & allied products, connectivity entertainment and data consumption 90ee persoirect AUTO ANCILLARY In. wake of changing environment, few structural changes in the auto industry to benefit auto ancillary companies along with rise in demand from OEM INFRASTRUCTURE Huge investments in infrastructure can be foreseen as India is an emerging economy which will benefit Engineering Procurement Consumption (EPC) ‘companies with a proven track record FMCG Select FMCG and consumer durable ‘goods companies have sounded bullish in ‘near to medium term on expected rich kharif harvest and probable good Rabi harvest. Good monsoon in 2048 will be an icing on the cake AROAD MAP AHEAD Wish you all a Happy Diwali and prosperous New Year (Samvat 2074)!!! ‘As we step into Samvat 2074, let us recollect the journey and the recent past before peeking into the future. Over last couple of years, Indian economy is transforming into a new Avatar (the process in still continuing!) Itis, now, a digitally revolutionized economy where each individual can be identified using Aadhaar, nearly 100% households have been brought into the banking fold by implementation of Jan-Dhan scheme, an economy moving closer to financialisation and formalization by implementation of demonetization and GST, an economy where failure of business is permitted in time bound process thereby encouraging entrepreneurship. India is thus shedding its old skin to transform into an economic power, the world is looking upto! This transformation would increasingly be visible over next couple of years. With its 125 er. population (~17% of the global population), india is a consumption powerhouse; equipped with well educated, largest workforce (>50 cr. people in the age bracket of 14-65 years), India has the demographic dividend in its favour, which if properly bankrolled can lead it to becoming the fastest growth engine of the world for next couple of decades. The business friendly Government is leaving no stones unturned to capitalize on the strengths of the economy. Thus, it is not where you are, but the direction you take that matters! Now looking at a near term, the global geo-political tensions persist along with regulated withdrawal of liquidity by the central banks of developed nations (read US and Europe). Notwithstanding these events, it must be recognized that India is a domestic growth story with rural consumption leading from the front. Though it is too early to make a weather forecast, the intemational weather forecasters are predicting that there are no active El Nino or La Nifia patterns, and neutral conditions remain favored in the Northern hemisphere through the 2018- mening ‘a normal rainfall for 208. Another good monsoon (after 2 consecutive good monsoons (2016 & 2017)) would do wonders for the rural economy, Which supports 70% of India’s population, thereby driving consumption. In addition to a probable good monsoon, rural consumption would be defined by the trends in minimum support price (MSP) for agricultural produce and the Government expenditure on MINREGA schemes both of which are unlikely to de-grow ahead of elections. Moreover, the managements of select FMCG and consumer durable goods companies have sounded bullish in near to medium 4ROAD MAP AHEAD Apsorecr term (2HFY18 to 1HFY19) on expected rich kharif harvest and probable good Rabi harvest. We prefer the rural consumption theme which includes discretionary segment viz., automobile and packaging. Moreover, few structural changes, being implemented in automobile industry in wake of changing environmental equations, are likely to benefit couple of auto ancillaries in tong run along with rise in demand from OEMs. Election fever would grip the nation as 6 states gear up for their state elections in 2018 followed by another 11 states in 2019 along with general elections. In order to improve their tally, we expect the political parties to spend thus benefiting the media segment largely and print media in particular. Being an emerging economy, india has tremendous potential to invest in infrastructure be it roads, highways, flyovers, bridges, Investments in Railways, Airports, seaports, waterways etc. We expect a substantial rise in investments for infrastructure building over next year especially in the projects with short gestation period which include safety and convenience in Railways, connectivity among villages and improvement in intra-city roads etc. Projects affecting general public like Metro-rails, sanitation, water resources and smart city projects to improve the livability index in different cities would gather pace ahead of the elections. EPC companies with light balance sheet and proven track record are expected to be beneficiaries of rising investments in infrastructure building. We also like companies in infrastructure and home improvement segment manufacturing value added products like ERW steel pipes and hollow sections etc, Lastly rise in per capita earnings would lead to improving spends in discretionary segment be in automobiles, retail, petroleum & allied products, connectivity, entertainment and data consumption etc. As the income rises, spends on discretionary elements like clothing, entertainment, eating out, rises multifold To sum up, we are quite positive on India story in general which gives us a confidence that the next year is going to be good from equity investment angle. We expect our bouquet of stocks recommended for Samvat 2074 to outperform. our earlier performances viz., the double digit outperformance over the benchmark. ;MUHARAT PICKS SAMVAT 2074 [APL Apollo Tubes Dilip Bulldcon Jagran Prakashan Lumax Industries COM: Re 1865 2 2 2 @ cP: Rs, 670 coup: Re. 170 CrP: Rs. 1226 eye grange (Beni yn Target Rs. 2196 ‘Target: Rs. 867 “Target Rs. 208 Target: Rs. 1597 Minda Corporation Molé-Tek Packaging Reliance Industries uP: Re. 6. a uP: Rs. 283; & era (CHP: Rs. 638 & ‘a Raton Target Rs, 188, “Target: Rs. 358 Target: Rs. 987 CMP cs on Sth Oc 2017 Maruti Suzuki CP: Rs, 7906 & Target: Rs. 9298 ‘Stee! Strips Wheels ‘CHP: Rs. 600 & ite endeared Target: Rs. 1061APL APOLLO TUBES cM: 1865 Target: 2195 % Upside Stock Data No of shores 236cr Market cop (R.Cr) 4401 Cr high/iow fs) 1948/84 Avg. daly vo. (6rmhs) 16.105 Bloombegcode —APATIN Reuters code APLANS Price Performance 250 fOck16 dani? May-17— Sep-i7 1st sentec —APL Apoto Estebishad in 1986 a8 Bhar Tubes Pvt.Ltd, APL Apolo Tubes Ltd. (APLA) started with production of MS Back pipes at its ‘Sikandarabad unt vith an intial capac of 6 200 NTPA which by FY18 end would stand at 2.000.000 NTPA, largest inthe ERW Pipes incustyin India APL Apolo slo a plonse in bringing advanced soba technologies to India and has vast ition nator alsa exports to over 35 counties words Investment Rationale Indian ERW Pipe segment Is growing at 9-10% p.a: APL clocking double the grown: Inia ERW Pipe segment has a total size (fRe. $2500 CrlN!TPAnvalvalvolume frm, The grovthcriver fo the industry comes fom Goverment trust on infastuctre (Gen nfasiucure Smart Cts, AMIRUT Senema, Cly Gas Dietibvten and cher fast rouing areas lke green haute, agreuture ‘auipmen, sportsigyt esuipmnts ete, From FYUT-17, APLA reported 35% volume CAGR and 8 42% CAGR in Nel Seles over the same period. FYY7-FY 19E we expect the company torepot a volumelNet Sal 21% CAGR each, Market leader with ~25%, share In total ERW Pipes capacity in india: With a total instated capacity of 2OMTPA, APLA‘s the lender nthe Indian ERW Pipe segment ith total capacity of BPA, Futher, within the organized segment APLA enjoys Pioneer in introducing global technology to India: APLA has bean a pioneer in Inroduing global technologis Ihe OFT and Insine Galvanizing in Inia. Both technologies inroduces in FY17 ars lily to be game changers for the company oving fo the Donefis of superior prove! quality, customization of pipe dimensions as er eusiomer needs; improved operators efflency ang fastorssuot tums, Those technologas vil expand aderessable market of APL Apollo by catering to indus like agreture ‘Squipment, sportsigym aquimant, ane afordabie housing Valuation: On comparing valuations vi-évs earings growin APL Apolo trades at anatase 14 Sx/ts PYIGE earings despite tepenting robust volume grouth of 42% CAGR over hetast 10 year. Further having reported strong ROES of +23% vi-dvepeors ‘tis bate place to capture the fas groving epporunties Wh trust on este, afreabla housing and cparatonaieation of (geen facsty at Rip to open up na aaa that APLA can cater fo. Ovig to these factors, ve beieve APLA oul gr at & faster pace of ~21%/26%/36% Revenue/EBITOA/PAT CAGR than the industry ver FY17-FYT9E. Thus we vslue APL Apo Tubes ata 18x PIE FY19E EPS which is 30% higher than the current value. ers RoE, Mar co 7 FYI7) @ B Frise 8) 2 Frise is 2 2DILIP BUILDCON Dilip Buldcon Linited (OBL) Is one of the lergest and fastest groving private secor readocused Engineering Procurement *% Upside CCorstucion (EPS) contracts in the county The company develops nfasruture acoss the county in many dvetsa ars such 679 ‘8 roads & bridges, weler santation& sevage,iigatin,incustl, commerci & resident bulngs, Investment Rationale cM: Terget £78 reverwe pine ale: Menagerie FY ret FP pes fT ee 867 Se rare Sen Cl ees reas Gas ete CoE sooth Na ina moe 2sBsmaign Salanenat sd Rayfoas Sues Fe re uy snecton a pleas amengoerngel beeresbeet cae ang apa sat) ean nen store ‘Sale of BOT assets ~ right step forward: Dip Bulicon has signed an agreement with Shrem Group forsale offs entire BOT patito (14 operatona 4 Under constucien proecis and 6 Hysrd Annuity Mowe (HAM) projets) af sn equity value of Ri 1 bo Stock Data ‘Se ertrpris value f “Re 105 bn. The Varascton ie expected to be completed in anhes, sheren OBL would roca “Rs §5 ‘nin FYIB end remsning in FY12, which would be vlzd in srenghhening the balanee sheet reduction of dott) No.of shores W37cr Peving the way or creation of EPC behemoth: We balsa this sale of operational and under censructon BOT assets would ‘ow BBL to partepate in new HAM projects wort Rs 150-200 bn n FYB, Stong order Backlog of Rs 156 bn (atthe end of Market cap () omc. iV) are paricpaton new Hal rots uid ese stains tping poh of 20.25 oer next 48 yes. Al, ompatitonn HAN projects has easee wth 48 acre in recent projects v8 8.5 biasersin HAFYT. Easing competion would S2week highviow (Rs) 634/179 ‘ete sustained or Better margin fer OBL golng fora Employing capital in the right business: RoE in EPC business ie superior ocaptal intensive SOT business. Consolidated ‘Avg, daly vo. (beh) 4.16102 FOCE of DEL would ise to 28% (in FY19) ater sale BOT porto fom =18% (im FV17) Bloomberg code —_DBLIN ‘cash conversion cycle improves: Cash conversion days Gecining to 97 va. 119 Ga and 188 YoY Recel Reuters code Dist 80, payable days to 62 vs. 64 Cod and 89 Vc. Te company targets to Keep NWVC level at 100-110 days by tne end of FY 18 trough: a) Raley the number of project sts 025 o ler inventory to £00 mn feature phone uses in India. Rio ‘ms to add ~25 mn subscribers every month rom GAFY 18 le by (a sale of-20 mn JoPhones, ane (b) conventional subset ce sth on 2817 ‘daitons of-5 mn per month, Fue retailing: Doubling retal presence in next fen years: RIL has commissioned 1258 etal outs (vs. 1,221 Q4FY 17) and Stock Data has senived throughput st 360 KLPM in Q1FY18. Fuel sale was evenly stibuted aeross India (ox Zante provins). Inne ow years, RIL sims to fap 2.250 demand areas which represents 65-70% of HSD demand No, of shares 6206er ‘commissioning of Refinery Oft-gs Cracker (ROGC) and Pet coke gestleton projects wl Loost quately PAT by ~Re 20 bn. Market cap (Rs) 15,20,083 Vie expect RIL to resp ful benef a al pet-chem projects fem QSFY 18 S2week highow (| 872/466 ‘Strong GRM outook going forward: Management expects GRM to remain fim, a8 net refining capacity adsion of 3.5 mbpd cover C¥17-20 wil ag demand grow of ~5 mpd. In CYT, strong demand grovth of 14 mip shall support margin Also, song ‘Ava, daly vol (Smits) 25.54.1797 emand growth from Asa (especialy, Inia and Chin), possible lower refning rurate in Latam wil support GRM. FCF positive: RIL's major capex cyclo ill end by QFY8 post which RL wl become FCF postive or the fisttime in 5 years, Bloombergcode LIN Reuters code REUBO Price Performance 10 od 10 ors) » 8 3054 cy 405 16 sant? May? Sepet7 aim x8 5225 —ostsemex —tobonceinds EYNBE ees 276 sa0s n2 ua Sere Ae Secu Copan Src RS SEUTRE LA, CptBST alk ala ‘Stee Sip Wheels Linited (SSL) designs and manufactures automotive sie! wheas since 1961, Ris among he lecing supplier cmp Beas {0 Indian'and Global manufacturers te product portolo comprises of sleel wheels for Commercial Vehses (CV), Pastenger 880 Upside Vehicles (PV), eoctre, 28317 and OTR (OM the Read) vehicles’ le has © manufacturing locations at Dappar in Puna (Grn wheel tims eapec), Chennai (Grn), Jamshedpur (1 &mn) Target: Investment Rationale 1061 Heavier wheels o drive growth: SSWL posted good growth in wheels manufacturing in FYI7, recording an overall volume _govth of 8% 0+. Wheel volumes of lhe segments moved up ¥-o-, PV (6%), 263 (7%), CVs (6%), Tractors (20%) and OTR. 300%). The ssles were skewed towards the heavier whee inceating bee nancial perlrmanes of the compen. wheel volumes saa steep decline in QIFY18 due to pre-buyng of BSS compatbe vehicles in QAFY'7 and GST uncertainty leading to deferment of new purchases. However, we expect good velume growth in Q2FY 18 led by beaver wheels (Tractors due to normal monsoon and CV with GST ehangeovers geting balan) Stock Data Brownfield expansion at Chennai to boost growth: New prosutionlnes for see wheal rms have been at up to meat the No, of shares 155.Cr (owing demand rom commercial vehicle customers don south as wll sf ering exports rom Chena The CV wheels factor in Chennel would be ready to sat producion by Sep'7 ene nd wil have 9 na output for 1.1 millon wheels with Market cop (8) 1,aba ce Daimler India CY being akey client Pasktunover stained could be Rs 350 Cr We expect SSL to have a capactyublizaton of =20% by FYTBE and surpass £0% by FYI8E S2week high/low (s|__ 9571 481 ‘Greenteld alloy whee! plant in Mehsana, Gujrat to drive growth: Vin ts Gujarat foray, SSW is breaking groundin alloy eRe a whee! precition for heft time wth anil espacy of 15 milion wheels; whieh has been eonmisioned sh has commenced rosction in ugT7. Peak tumover which ean be atisined ith tn itil eapacty is Re 450 Cr io expect SSW to havo @ Eapacty ulizaton of -20% by FYTBE and surpess 60% by FYI9E. Seeing the reponse fom OEMS, romp ups expected tobe faster and phase 2 (additonal rilion wheels) of aloy whee plan which was planned to be commissioned by FY18-20E could SrWHNS __satteariarthan expacted. The price of alloy vines is 4-5 times the ste! wheel which ill ave a pose mpact en the margins of 5 the company. This wil mprove the average blended realizations of the preduct mix going orvars Bloomberg code SSWIN Reuters code Factors driving ROCE: FYI9E would be the year hen SSWL would reap the refute ofboth ts expansions (CY and sloy Posey aromas vine) Aloywhasle and CV segrant exports ae expected o add snfiant value forthe company going anesd. Ws expact wo Fevenues to grow at 20% CAGR and earnings to grow at 28% CAGR over FY17-T9E. We aso expect EBITDA margins fo heresse vs {fom 12.3% In FY17 to 14% in FY19E le by producton of ly wheels and heavier wheels (CVs, Tractors, OTR) - Financial Summary 100 rl Ey Ro ress » co a w ~ } 7 Ma 214 7 ch16 samt? May-I7—Sep-l7 FYE 208 2 192 “tse senso steels Wheel one as 228‘Teflon Doses ave ig maden compan we SEBI Reseach Ast Regus 201 (hn at ar to he Regus {fe Seranos i. SL 9 SEBI Regs Fssarch Ay havingenraon no. E0000257. 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The Canpany terest at make oiaton nd alations nts dosmen nay be ego mene ene ay gr rt Tha vege ar hose eas ane Conga a Srnayenaierbeioal Devers apiedincee Axi Sooo Lint, Croat os: Ut No.2, Pots Mait iy, 8, L8S Ron, Nar Kanan Juco, Kal (ve), Mus P0070, Te No ~ 180200800224 40008, Royo Ae House, {nF Wo nero Cae, Pandang Bahar Marg, Won, burda al0 (28 Cemplanen Ose Boond Shaka Ema compton ofcanktecen, No [2242071682 SEB Pot anager tg No INPODCEDSS Apersoirect FOR MORE UPDATE, FOLLOW US ON FOR MORE DETAILS: Visit: Email: Phone: www.axisdirect.in helpdesk@axisdirect.in 1800 210 0808 CT