AMARA RAJA BATTERIES BAJAJ FINANCE

AJANTA PHARMA BIOCON

CMP (~) 997 CMP (~) 11,136
CMP (~) 1,929 PE ratio FY17E (x) 33.8 1-year return (%) 2.5 1-year return (%) 121.5 CMP (~) 912 PE ratio FY17E (x) 32.9
1-year return (%) 27.2 Debt-equity (x) 0.1 PE ratio (x) 34.8 Price/book value (x) 8.0 1-year return (%) 108.3 Debt-equity (x) 0.5
PE ratio FY17E (x) 29.0 Price/book value FY17E (x) 6.6
PE ratio (x) 42.3 RoE (%) 39.9 PE ratio (x) 19.5 RoE (%) 12.1
Debt-equity (x) Nil Debt-equity (x) NA
136 RoE (%) 25.8 RoE (%) 20.9 220
Ajanta Pharm a 124 Biocon 200
124 250
180
112 220
Sensex 112 BajajFinance 160
190
100 Sensex 140
100 160
88 120
130
88 Sensex 100
76 100
Sep 1, '15 Sensex 80
Sep 2, ’16 Am ara Raja Batteries 70
76 Sep 1, '15 Sep 2, ’16
Sep 1, '15 Sep 2, ’16 Sep 1, '15 Sep 2, ’16

3,000 680 5,100 660

9,000 750 8,400 2,500

4,728
7,715
2,583

4,056
580
6,957

2,000 3,400 540

2,155

6,000 650 5,600 2,000

6,586

5,967

3,406
5,579
1,705

4,689

1,000 480 3,000 550 2,800 1,500 1,700 420

0 380 0 450 0 1,000

0 300
E: Estimates
E: Estimates E: Estimates
E: Estimates

Steady growth in its domestic formulations business, apart from higher Given its strong presence in the two-wheeler
market penetration in the US and Africa, is a huge positive for the market, the potential demand shift from the
company. It saw consolidated net profit grow from ~112 crore in FY13 to unorganised to the organised sector after
~406 crore in FY16. implementation of GST will be the key trigger
The key trigger would be the performance of its recently launched for India’s second largest battery maker,
drug, G-Zegerid, which for now has little competition in the US. Used to catering to the automotive and industrial
treat stomach and oesophagus problems, this drug has incremental segments. Higher growth in the replacement
revenue potential of $13-15 million for Ajanta. Analysts at Anand Rathi market should boost profit. Even otherwise,
have, thus, raised their FY17 revenue and net profit estimates by 9.8 per the business outlook remains good. Analysts
cent and 12.2 per cent, respectively. at Motilal Oswal Securities expect revenues
and earnings to expand by 19 per cent and 25
per cent, respectively, over FY16-18.
As Bajaj Finance has an established direct The noteworthy success in biosimilars has helped this stock gain a little
relationship with dealers and manufacturers over 25 per cent after the June quarter results. Despite the run-up,
of consumer goods, its business model is analysts such as those at Citi remain overweight on Biocon and have
considered robust in the segment. This aids raised their earnings per share target by seven per cent in FY17.
the yearly 40 per cent growth in customer “Biocon’s high leverage to the lucrative global biosimilars
acquisition, without compromising on asset opportunity and the meaningful progress in targeting the developed
quality. After the June quarter results, markets lead us to value it at a premium to other Indian pharma
analysts at JM Financial expect the financier’s companies of similar size,” say Citi’s analysts. Its Malaysian insulin
earnings to grow at 38 per cent on an annual facility which will go on stream from the second half of FY17 would also
basis in FY16-18 and the loan book to grow 35 support earnings growth.
per cent during this period.

KANSAI NEROLAC L&T FINANCE HOLDINGS

CMP (~) 370 PE ratio FY17E (x) 43.7 CMP (~) 97 Price/book value FY17E (x) 2.2
1-year return (%) 49.9 Debt-equity (x) Nil 1-year return (%) 55.1 Debt-equity (x) NA
PE ratio (x) 22.3 RoE (%) 24.2 Price/book value (x) 2.4 RoE (%) 10.1

Being a significant supplier to Turnaround of the wholesale

Maruti, the company would lending business has helped
6,000 560 benefit from higher auto 5,400 1,430 L&T Finance’s stock get re-
160 (~ cr) 160 (~ cr)
demand. Since it is also a major L&T Finance Holdings rated significantly (up 24 per
4,800

KansaiNerolac player in decorative paints, 148 cent) after Q1 results. The

5,018

145
4,000 520 Kansai will gain from Pay 3,600 1,220 segment’s loan book grew 18
3,928

136
4,296

Commission payouts and per cent year-on-year in Q1,

3,859

130 124
3,165

growing income levels. to account for 60 per cent of

2,000 480 Adjusted for the exceptional 112 1,800 1,010
the total loan book. Analysts
115
profit of ~534 crore on asset sale at Prabhudas Lilladher expect
Sensex 100
in FY16, analysts expect 3-4 percentage points
100
earnings to grow 20 per cent Sensex 88 improvement in return on
0 440 annually over the next two 0 800 equity (RoE) from the current
85 76
years, and the stock to continue Sep 1, '15 Sep 2, ’16 10.4 per cent. Long-term
Sep 1, '15 Sep 2, ’16 E: Estimates
trading at premium valuations. E: Estimates
prospects look even better.

NATCO PHARMA PAGE INDUSTRIES PROCTER & GAMBLE HYGIENE TATA ELXSI
CMP (~) 680 CMP (~) 15,198 CMP (~) 6,570 CMP (~) 1,569
1-year return (%) 50.7 1-year return (%) 6.1 1-year return (%) 8.7 1-year return (%) -15.2
PE ratio (x) 74.7 PE ratio (x) 72.9 PE ratio (x) 50.4 PE ratio (x) 31.6
PE ratio FY17E (x) 36.1 PE ratio FY17E (x) 57.4 PE ratio FY17E (x) 45.5 PE ratio FY17E (x) 24.2
Debt-equity (x) 0.1 Debt-equity (x) 0.3 Debt-equity (x) Nil Debt-equity (x) Nil
RoE (%) 11.8 RoE (%) 52.2 RoE (%) 28.0 RoE (%) 46.3

160 Natco Pharma’s product Strong brand backing 128

Spread across the health 140
Tata Elxsi is a unique
launches in the US 116 and continuous care, beauty and company in the
Natco Pharm a Sensex Tata Elxsi
market over the next 12 108 refreshing of its product grooming segments, information technology
140 months are key triggers offerings have been Vicks, Old Spice and space which offers
Procter& Gam ble 114 120
for growth. Analysts at 100 key strengths of the Whisper are its three design solutions to
120 Jefferies believe Natco is 92 company, which sells market-leading brands. clients in the
Sensex Sensex
on the verge of a innerwear and Despite operating in a automobile, broadcast
84 100 100
100 breakout in its US sportswear under the highly competitive and communication
Page Ind
business. They expect 76 Jockey brand. While sector, the company has sectors. Its new division
EPS to expand by 55 per 68 growth across segments almost doubled sales Sensex Over The Top's content,
80 86 80
Sep 1, '15 Sep 2, ’16 cent in FY16-19; others Sep 1, '15 Sep 2, ’16 remains healthy at a Sep 1, '15 Sep 2, ’16
and profits in three Sep 1, '15 Sep 2, ’16
aimed at broadcasters,
peg FY16-18 earnings little over 15 per cent years and operates on has been received well
growth higher, at over annually, that of negative working by clients, which include
60 per cent. According to sportswear is better capital, justifying its Hotstar, Voot, Eros Now
Jefferies, Natco is the than the rest at a little premium stock and Hungama. Its
2,100 440 best positioned among 3,000 410 over 20 per cent. 3,600 580 valuations. Analysts at 1,500 210 automobiles business is
(~ cr) (~ cr) (~ cr) (~ cr)
3,421

Indian generics players For these reasons, Angel Broking expect also fast growing.
2,732

1,409
1,965

to overcome sector analysts at Ambit Capital P&G Hygiene’s revenue Analysts at Motilal Oswal
1,247
2,923

1,400 340 2,000 340 2,400 520 1,000 190

2,205

1,075

headwinds, justifying its expect the company to to grow over 14 per cent Securities believe the
2,482

premium valuation. The deliver 30 per cent yearly in FY16-18 (year two divisions together
1,749
1,606
1,088

700 240 US patent verdict in 1,000 270 earnings growth 1,200 460 ending June), due to 500 170 can help it post 24 per
favour of its marketing between FY17 and FY21, strong brands and cent annual growth
partner Mylan for and its return on capital distribution network between FY16 and FY18,
0 140 multiple sclerosis drug 0 200 employed to rise to 57 0 400 while consensus sees 0 150 higher than the
copaxone also works to per cent, from 42 per earnings growing 18 per consensus estimate of
E: Estimates E: Estimates June ended E: Estimates E: Estimates
its advantage. cent in FY16. cent in FY16-18. 15.6 per cent.

CMP: Current market price as on Sep 2, 2016; PE (price-to-earnings) ratio (x) is for trailing 12 months; NA: Not applicable as they are finance companies; RoE: Return on equity; E: Estimates
Source: Bloomberg Data compiled by BS Research Bureau