Silver linings

Vol. XXXII/17 The huge foreign exchange reserves leave enough room to keep
Oct 09 – 22, 2017
www.capitalmarket.com interest rates low and rupee capped
......................................................................................................................................
Whether demonetization has resulted in the destruction of the economy or is a much-
Owner : Capital Market Publishers India Pvt. Ltd.
...................................................................................................................................... needed disruption is a polarizing issue. Despite the differences, there is consensus
Managing Director : Ruby Anand
...................................................................................................................................... that India needs to widen the tax base. The conflict is how to go about doing it.
Editor : Mohan Sule Opponents such as former governor of the Reserve Bank of India Raghuram Rajan or
......................................................................................................................................
former economic advisor to the UPA II government Kaushik Basu have no answer
Deputy Editor : Yagnesh Thakkar
...................................................................................................................................... other than to point out to the short-term setbacks. The practitioner of coalition
REGISTERED OFFICE dharma, Manmohan Singh, pronounced the exercise as legalized loot, conveniently
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forgetting the plunder of the national treasury by crony capitalists. A swap of high-
email: info@capitalmarket.com value notes mutated to mean their confiscation. How daily wage earners and those
with unsteady stream of revenues came to own such a large number of high denomina-
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Tel: 91-022-2522-1112 / 2522-9720 Fax: 91-022-2522-0954 / 2523-0011 tion currency and who was responsible for injecting them into the system remain a
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with nil balance. Destruction is needed if the edifice is too rotten to be repaired.
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well as the aggressive push by the market regulator. The plunge in telecom data prices
AHMEDABAD should have been the trigger for exodus to cashless transactions. If payment gateways
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Six-Road Junction, Navrangpura, Ahmedabad-380 009. are yet to find widespread usage despite their proliferation, the fault lies with the
Tel: 079-2642 1534 / 35, 2656 4727 Fax: 079-2642 1535. central bank for not doing enough to push down transaction charges.
email: cm-ahmd@capitalmarket.com
The second silver lining is the implementation of the goods and services tax. The
BENGALURU entire value chain from the supplier of inputs to the manufacturer to the distributor
No.37, 2nd Floor, Dickenson Road, Bengaluru-560 042.
Tel: 080-4151-0674 Fax: 080-4151-0674. and the consumer has to become tax-compliant. Not surprisingly, there are com-
email: cm-bglr@capitalmarket.com plaints about the frequency of filing returns. Much sympathy is being extended to
CHENNAI
the difficulty faced by micro, small and medium enterprises so soon after DeMo. In
No.41, 1 st Flr, Sundareshwarar Street, Mylapore Chennai-600004. a sense, GST is anti-thesis of the socialistic policy of protecting these units with tax
Tel: 044-246-12690 / 38, 249-51900 / 01 / 02 Fax: 044-2461-2638
email: cm-chennai@capitalmarket.com exemptions and benefits instead of incentivizing them to grow big. Most of them till
recently were reluctant to avail or unable to access capital from financial institutions
DELHI due to absence of book-keeping. The new regime encourages these units to achieve
601, 6th Floor, Padma Tower - II, 22, Rajendra Place,
New Delhi - 110 008. Tel: 011 - 2581-1255 / 56 / 57 economies of scale by availing of input tax credit. Many of them could turn out to
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be DMart or Lal Pathlabs by tapping the equity and debt markets. The cascading
HYDERABAD effect will not only be visible in employment generation but also in boosting con-
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email: cm-hyd@capitalmarket.com market on the prospect of better returns.
KOLKATA A valid point is the number of tax slabs. A uniform tax regime implies a common
3A, Shivam building, 3rd Floor, 46E, Rafi Ahmed Kidwai Road, rate. Enough hints have been given by the finance minister that some of the rates will
Kolkata-700 016. Tel: 033-400 14462. Fax: 033-2227-3120
email: cm-kolkata@capitalmarket.com be merged once the system becomes revenue-neutral. Eventually, there might be just
two rates, one for essential and another for non-essential items. No product or service
PUNE
C-28, 1st Flr, Shrinath Plaza, Plot no. 559, Bhamburda, Shivaji Nagar, should remain outside the purview. The recent spurt in petrol and diesel prices has
Fergusson College Road, Pune-411 005. Tel: 020-2551-1616 / 17. provided an impetus to bring them in the GST net, too. The third comforting factor is
email: cm-pune@capitalmarket.com
...................................................................................................................................... that interest rates are still high. Recently, the bond market saw turbulence, with yields
Cover Price: Rs 75 on government paper rising on talk of an imminent fiscal stimulus. The fear was that
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© 2017 Capital Market Publishers India Pvt. Ltd. interest is near-about 3%. The Reserve Bank of India can adopt a neutral stance for the
All rights reserved. Reproduction in whole or in part without remaining part of the fiscal even if wholesale and consumer inflation rallies. It can
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All possible efforts have been made to present factually correct
data. However, the publication is not responsible, if, despite this, many parts of the country seem to have nearly wiped out the monsoon deficit.
errors may have crept in inadvertently or through oversight. Besides, the high rates have proved to be magnets for foreign funds. Their inflows
Though all care is taken in arriving at the recommendations
given in this publication, readers are cautioned that prices of have bolstered the foreign exchange reserves to a record US$400 billion. The stockpile
equity shares and debentures may rise or fall in a manner not
foreseen. Readers are advised to take professional advice
gives room to the monetary authority to maintain liquidity to keep interest rates soft
before investing. and to depreciate the rupee to boost exports, thereby ensuring that the withdrawals of
Subject only to Mumbai jurisdiction
...................................................................................................................................... the dollars from the treasury are replenished. When the economy begins to recover,
Printed and published by Ruby Anand on behalf of Capital Market inflation will also look up. As long as it does not run away, the development should be
Publishers India Pvt. Ltd. Printed at Magna Graphics (I) Ltd welcomed as it will induce risk-taking. Producers will be able to earn better realiza-
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MOHAN M SULE
Oct 09 – 22, 2017 CAPITAL MARKET 3
ReadersReact
The fallout
The goods and services tax
(GST) involved many changes
in rules, procedures, coverage
and tax rates (Q1 of FY 2018:
‘A dull start’, Sep 11-24, 2017).
Hence, lot of uncertainty
prevailed till end June.
Destocking and delay in lifting
deliveries from suppliers was
common, affecting sales of
many goods. Increase in raw
material prices could not be
passed on in the uncertain and
sluggish environment. In fact,
discounts were offered to
reduce inventories. Many
segments had to make
provision to compensate
dealers and distributors for the
hit due to GST on the
inventories they were carrying
end June. All these factors
pulled down the profit margins.
Pravine Atakot, e-mail
Disruptions and confusion
related to GST are likely to
affect Corporate India in the
September 2017 quarter, too,
though to a lesser extent
compared with the June
2017 quarter.
Vitthal Bagthala, e-mail
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4 Oct 09 – 22, 2017 CAPITAL MARKET
Hopefully, the Indian
economy will gather steam and
Corporate India will regain the
earnings growth from the
December 2017 quarter.
Uttam Lakhavad, e-mail
A shake-up
Sebi has restricted trading to
once a month in more than 300
listed companies on suspicion
of being vehicles for money
laundering (Editorial: ‘Clean-
ing up’, Sep 11-24, 2017).
Going beyond, the market
regulator should examine when
and how these companies got
listed, the investment bankers
who shepherded them and the
auditors signing their books.
Gautam Tolia, e-mail
The Insolvency and Bank-
ruptcy Code, passed in May
2016, has blocked crony
capitalists with a track record
of defaults. Earlier, some
helpful bankers would have
bailed them out. Now, they are
shedding businesses to survive.
Jayant Charkhadi, e-mail
The market has become more
transparent. Disclosure norms
are getting stringent. Compa-
nies have to inform the stock
exchanges of any defaults
within 24 hours. The usage of
Aadhaar and KYC removes any
ambiguity about the identity of
domestic investors.
Mukesh Bagda, e-mail
Foreign investors are now
choosing the derivatives
platform over the cash
segment. The opaque nature
of participatory notes (PNs)
does not fit in the concept of
New India propounded by
Prime Minister Narendra
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Modi on 15 August. Concerns
still remain that PNs are being
misused for round-tripping.
Nilesh Baldha, e-mail
Under pressure
The asset quality and earnings,
particularly of wholesale
banks, remained under stress
in the June 2017 quarter
(Banking: ‘Stress continues’,
Sep 11-24, 2017). Elevated
provisioning continued to drag
profitability. The provision
burden will remain elevated on
account of aging of existing
non-performing assets (NPAs)
and the Reserve Bank of India
requiring banks to step up
provisions on top 12 NPA
accounts identified for speedy
resolution under the Insol-
vency and Bankruptcy Code.
Mayank Bhadra, e-mail
Applying the brakes
The Indian auto industry is
disappointed with the Union
Cabinet’s decision to go ahead
and increase in GST cess on
mid-range, large cars and SUVs
to 25% (Automobiles:
‘Discounted by GST’, Sep 11-
24, 2017, 2017). Most auto
makers are still adopting a wait-
and-watch policy until the
ordinance is passed. But the
mood is anything but upbeat.
Rajveer Singh, e-mail
The Indian auto market is
dominated by small cars,
classified as micro vehicles in
other countries. A lot of
models classified as entry
segments in other countries are
regarded as luxury models in
India just because these are
over four meters in length.
These models will not see
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much impact of higher cess.
Tejash Shenoy, e-mail
Change in mood
Public spending continues to
drive capex, (Capital Goods:
‘Profitable show’, Sep 11-24,
2017). Companies are relatively
positive as compared earlier as
enquiry levels have risen and
project pipelines have
improved. Most believe the
goods and service tax-led
disruption is a temporary
phenomenon and demand will
recover in one-two quarters.
Ashok Thumar, e-mail
Teething problems
Trade channels have started
restocking (FMCG: ‘Wholesale
trade chokes’, Sep 11-24,
2017). However, most FMCG
companies have hinted at the
possibility of teething issues
persisting within trade in Q2.
The goods and services
transition period in Q2 will
extend beyond a month as
wholesalers are largely
unorganized, depending
mostly on cash transactions.
Digvijay, e-mail
Looking up
Net sales realizations of steel
products are looking up on
increased cost of coking coal
and higher international steel
prices (Steel: ‘Consumption
improves’, Sep 11-24, 2017,
2017). Steel spreads might get
squeezed with volatility in
coking coal prices, higher iron
ore costs and strength of the
Indian rupee limiting the scope
for domestic price hikes.
Chintan Sandipan, e-mail
Send your feedback to
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Inside
14 | Marked To Market
Gains under attack

18 | RingsideView
Updates on Artson Engineering,
Simplex Castings, Ion Exchange,
Transformers and Rectifiers (India)
and Hind Rectifiers 08 | Cover Story
20 | In Focus Stocks: Casting the net wide
Tata Steel: Shedding flab Companies with proven revenue models are best placed to explore newer
Telecom: A distress call geographical markets for growth
Gold: Back in business

76| Apna Money 90 | Capitalaline Corner

24 | Market Watch
In the net Modison Metals
Stocks-Mid caps Well-connected to growth
Price catch
Sizzlers and dampeners
Mutual Fund scoreboard
Market Report
Cyclone Yellen Can property gain be set off against
off-market loss?
Stocks-Large caps
Movers and shakers

86 | Commodity Watch
69 | Stock Watch Copper
Fineotex Chemical
Focused on speciality products
Time for correction 32 | Corporate Scoreboard
61 | Consolidated Scoreboard
87 | IPO Centre
73 | Over The Counter General Insurance Corporation
63 | Company Index
Buying and Selling Indian Energy Exchange 67 | Bulletin
Tata Sons ups stake in group cos
MAS Financial Services 68 | Watch List

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6 Oct 09 – 22, 2017 CAPITAL MARKET

CoverStory
CoverStory
Stocks
Casting the net wide
Companies with proven revenue models are best placed to explore newer
geographical markets for growth
Speedy scale-up
Marico’s foray into Bangladesh is a
grand success. The feat was achieved in a
fairly short span. Entry was in the CY
1999 and production started in CY 2002
Face Value: Re 1
xxxxx
CMP Rs 308 as on 03 October 2017. One-year return: 9.16%.
S&P BSE Sensex one-year return: 11.52%
Geographical expansion is one of the critical
components of the overall growth strategy
of a company. Take, for instance, Marico.
The fast-moving consumer goods company
serves one out of every two countrymen in
Bangladesh through subsidiary (90% hold-
ing) Marico Bangladesh (MBL). The most
profitable unit among Marico’s international
businesses reported a turnover of Rs 562.9
crore and net profit of Rs 117.2 crore in the
fiscal ended March 2017 (FY 2017). Divi-
dend of Rs 128.2 crore was paid last fiscal,
entitling a dividend payout of 110%. The
operating profit margins were healthy at 27%
and the return on capital employed at 114%.
Through multiple brands, among the
leading companies in the beauty and
wellness space has a product portfolio con-
sisting of coconut oil, value added hair oil,
hair dye, hair serum, male grooming, sham-
poo, skin care and edible oil. The first ranker
in the coconut oil segment and second in
the value-added hair oil category by sales
has launched 17 brands in Bangladesh. The
key brands are Parachute Coconut Oil, Para-
chute Advansed, Nihar and Livon. There
are a total of 58 stock-keeping units.
Lately, the subsidiary is facing slow-
down, with volume growing 2.4% and net
8 Oct 09 – 22, 2017 CAPITAL MARKET
Broadbased growth
The branch count of Muthoot Finance
went up 46.7 times in east, 23.3 times in
west, 16.5 times in north and 5.6 times in
south between June 2017 and June 2007
Face Value: Rs 10
xxxxx
CMP Rs 476 as on 18 September 2017. One-year return: 35.86%.
S&P BSE Sensex one-year return: 13.37%
profit inching up 2% in FY 2017. However,
Bangladesh, with a population of 16 crore,
is a promising market. The country reported
economic growth of 7.1% last fiscal year on
higher private investment and exports.
Marico believes the eastern neighbor prom-
ises substantial potential. A developing
economy with a young demographic profile
provides the perfect consumer base for the
FMCG sector to flourish. Also, political
stability will further help the cause.
Importantly, Marico continues to in-
vest in the market, reflecting business op-
timism. Construction of a refinery unit and
in-house refining at the Shirirchala plant
commenced in FY 2017. Furthermore, set-
ting up of a plant at third-party location
was completed and local manufacturing
operations of Parachute Advansed Body
Lotion commenced. Also, capacity expan-
sion projects were undertaken.
Marico’s foray into Bangladesh is a
grand success. The feat was achieved in a
fairly short span. Entry was in the calen-
dar year (CY) 1999 and production started
in CY 2002. What worked in favor is the
proximity of the country, enabling under-
standing of the dynamics of the market and
facilitating launching of appropriate prod-
Stocks
ucts. Existing brands (Indian) were used to
penetrate the market. Largely, the estab-
lished and proven revenue and business
model in India was transplanted into
Bangladesh. MBL contributed 15.2% to
consolidated net profit of Marico in FY
2017 and 14.7% in FY 2016.
Muthoot Finance is another good ex-
ample of business growth driven by geo-
graphical expansion. Over the decade,
branch count increased 7.8 times to 4,285
in the decade to June 2017. Physical gold
holdings or gold jewelry kept as security
rose 6.6 times to 152 tonnes in the period.
The growth would have been impossible
without exploring new regions.
Of the 551 branches end June 2007,
86% were located in south including in
Tamil Nadu, Kerala, Karnataka, Andhra
Pradesh and Telangana. The tilt has been
repaired drastically, with 62% of the
branches now in the southern region. The
share of other regions has improved sig-
nificantly. The northern region accounts for
17% of the branches compared with 8% a
decade ago. Similarly, the western region
commands a share of 15% of the branches
compared with 5%, while the eastern re-
gion comprises 6% of the branches com-
pared with a mere 1% a decade ago.
In summary, the branch count has im-
proved 46.7 times in east, 23.3 times in
west, 16.5 times in north and 5.6 times in
south between June 2017 and June 2007.
Increase in count in east is on a lower base.
However, the jump in branch count in west
and north is noteworthy.
Now the crucial question is if the dras-
tic change in regional presence over the de-
cade has helped to acquire a new business
profile. The answer is yes. The geographi-
cal expansion has helped in garnering incre-
mental business. In fact, the new geogra-
phies have generated disproportionately
higher business. The southern region ac-
counted for 51% of gold loan assets under
management (AUM) end June 2017 com-
pared with 84% a decade ago. The share of
CoverStory
west improved significantly to 19% from
3% and north to 23% from 13%. The share
of east in the gold loan AUM stood at 7%,
from not even 1% in June 2007. The gold
loan AUM stood at Rs 27800 crore end
June 2017.
The country’s largest gold financier by
loan portfolio serves around 1.3 lakh cus-
tomers daily. The business is highly profit-
able, with the net interest margins of 12.74%
in FY 2017, 10.47% in FY 2016 and 9.79%
in FY 2015. The gross non-performing as-
sets (NPAs) were 2.25% and net NPAs
1.89% end June 2017 quarter. The capital
adequacy ratio was at a healthy level of
25.61. Mutual funds held 10.92% stake.
Marico and Muthoot will continue to
strengthen their geographical presence to
ensure business growth. These two com-
panies can be considered as case studies of
achieving business growth through geo-
graphical expansion. These companies can
outperform the industry growth averages in
the medium to long term.
Essentially, investors should spot com-
panies with proven revenue models. These
companies should have the necessary ex-
pertise and insights about their chosen in-
dustry. Such attributes are a result of sev-
eral years of hard work and commitment of
resources. Banking on these strengths, en-
terprises can explore newer geographical
markets. Ideally, the focus should be on
narrowing down companies that have lim-
ited geographical coverage. This set of com-
panies can focus on geographical expansion
to grow the business.
Expansion could be in different states
within India or overseas. Lately, Indian com-
panies are penetrating neighboring countries
of Bangladesh, Nepal and Sri Lanka. A few
FMCG companies have already built sig-
nificant presence in these markets. Also,
companies such as Cipla are aggressively
exploring the US pharmaceuticals market.
However, the strategy of geographical
expansion of the market is not a cake-walk.
Companies have to burn cash in building
capabilities. Considering the present times
of economic and business challenges, rev-
enue visibility through geographical expan-
sion is critical.
Geographical expansion could pose
various challenges particularly in a popu-
lace and vast country such as India, where
culture, language, tastes, preferences, likes
and dislikes changes every few hundred ki-
lometers. No surprise if companies pre-
Oct 09 – 22, 2017 CAPITAL MARKET
Connecting the dots
Mahanagar Gas will add over 656 km of
steel and PE pipeline and 96 CNG filling
stations over five years, with Niti Ayog
proposing 326 cities for CGD by CY 2022
Face Value: Rs 10
xxxxx
CMP Rs 1082 as on 03 October 2017. One-year return: 61.71%.
S&P BSE Sensex one-year return: 11.52%
dominately operating in the north region
find it difficult to penetrate the southern
region and vice versa.
Geographical expansion can be achieved
through various ways. Organic expansion is
cost-effective compared with acquisitions.
However, acquisitions can provide faster
access to new geographies, riding on the
brands and distribution network. As such,
acquisitions come at a premium. Also, valu-
ations take into account management and
control. One of the biggest risks in inorganic
growth is window-dressing or manipulation
of books of accounts by the seller to claim
hefty valuations. Other risks involve issues
related to culture, human resources and in-
tegration of operations. Such issues can cur-
tail the benefits of acquisition.
Companies can opt for partnerships to
establish access to newer geographies. There
can be joint ventures as well. The strategy
can work only if there is a win-win situation
for both the partners. Otherwise, the under-
standing can collapse any time.
Franchise is a popular method of
partnering with third-party enterprises for
quick market penetration at low capital cost.
However, franchises could end up spoiling
the brand and goodwill if the business is not
being implemented in the right spirit and
long-term interest of all stakeholders. Frauds
and misappropriation of funds is a signifi-
cant risk in this model.
Moreover, as companies grow, they
need to invest efforts and money to put in
place systems to establish control to take
care of risks and ensure customer satis-
faction. The additional cost can end up
eroding the margins. Limited top manage-
Stocks
ment bandwidth can play spoilsport in ex-
pansion efforts.
Too aggressive growth without paying
attention to the bottom line can also back-
fire. Prudence has to be exercised while ex-
panding into new markets. Attempts to grab
share at any cost can do irreparable damage
to the balance sheet. In the new environ-
ment driven by technology and the web, such
business strategies are termed as playing the
market-share game. Pure market-share-
driven business strategy could end up de-
stroying shareholder wealth.
Also, debt-funded expansion can ad-
versely affect the balance sheet and profit
and loss account in case of failure. The
fund-mix needs to be assessed to avoid the
pitfall. Next, miscalculation, misjudgment
and aggressive forecasts can ruin expansion
plans. It is essential to be humble, recog-
nize calls that have gone wrong and try to
rectify them including withdrawing from
the new markets.
For investors one of the biggest chal-
lenges is to figure out whether geographical
expansion has turned out to be a profitable
move. Hard numbers are seldom available to
pass a judgment . If geographical expansion
has been undertaken through subsidiary, as-
certaining success or failure is fairly straight-
forward. Overseas expansions are largely
through subsidiaries and group companies.
To find out companies that fit the in-
vestment theme of geographical expansion
to ensure future growth, Capital Market
looked at those that are profitable to en-
sure they have sufficient strength to with-
stand shocks and failures and bounce back.
A close scrutiny of the balance sheet is a
must. Importantly, only those companies
that are talking about expanding to new
markets and taking efforts to implement
the strategy were selected.
Mahanagar Gas is the sole authorized
distributor of compressed natural gas (CNG)
and piped natural gas (PNG) in Mumbai,
with exclusivity up to CY 2020; the adjoin-
ing areas, primarily neighboring Thane, up
to CY 2030; and Raigad up to CY 2040.
CNG is supplied to over 0.54 million ve-
hicles and PNG to approximately 0.94 mil-
lion domestic households. Infrastructure in-
cludes over 4,838 kilometers of pipeline and
203 CNG filling stations. Royal Dutch Shell
Company has 32.5% stake and Gail India
32.5% equity holding. The state government
of Maharashtra is a key shareholder, with
10% ownership.
9
CoverStory Stocks

CNG accounted for 74% of the revenues
and PNG the remaining 26% including do-
mestic, commercial and industrial PNG in
FY 2017. CNG’s volumes recorded a five-
year CAGR of 5.8% and PNG’s 5.1% end
FY 2017. The debt-free company, with cash
hoard of Rs 610 crore, reported return on
equity of 22% in FY 2017.
As part of its growth strategy, there are
plans to enter new areas and increase pen-
etration in existing areas. Over 656 km of
steel and PE pipeline and 96 CNG filling
stations are to be added over the next five
years. Niti Aayog proposes to expand city
gas distribution (CGD) to 326 cities by CY
2022 through competitive bidding from the
existing 75 authorized geographical areas at
present. The aggregate CGD is estimated to
increase to 46 million standard cubic meters
per day (mscmd) by CY 2025 from 22
mscmd in CY 2017.
Pharmaceuticals producer Cipla is a late
entrant into the US market, the world’s larg-
est and most lucrative drugs market in the
Nimble-footed
Indian Hotels Company’s asset-light
projects are in various stages of
execution under the Ginger brand in
Gurgaon, Corbett, Aurangabad and Surat
Face Value: Re 1
xxxxx
CMP Rs 122 as on 03 October 2017. One-year return: -6.91%.
S&P BSE Sensex one-year return: 11.52%
world. Now, there are plans to aggressively
increase penetration in the US, accounting
for 18% of the revenues and growing 21%
end FY 2017. The share is likely to increase
going forward. As many as18 new products
were launched and 32 abbreviated new drug
applications (Andas) were filed in the US in
FY 2017 as against mere five in FY 2016
and eight in FY 2015. Anda approvals are
pre-requisite to market drugs in the US.
Importantly, the aim is to file 25 Andas
in the current fiscal. Three new products
were launched in the US in the June 2017
quarter. There are plans to launch 10 new
products in the remaining part of the cur-
rent fiscal year. Research and development
expenditure was substantially increased to
7.6% of the revenues in FY 2017 compared
with 6.3% in FY 2016 and 5.6% in FY 2015.
Further, two acquisitions in the US, InvaGen
and Exelan, were integrated last fiscal. Price
erosion in the US generics market is one
immediate concern for drug players operat-
ing in that market.
The third largest pharmaceuticals pro-
ducer in the domestic market and fourth larg-
est in South Africa by sales has 1,500 prod-
ucts and 50 dosage forms. In India, there is
near 70% share of the asthma and chronic

Looking far and wide

Profitable companies, with strength to withstand shocks and failures and bounce back, expanding to new markets as part
of their strategy to grow their business
COMPANY CMP MCAP 52-WEEK MF RONW YEAR TTM NET SALES TTM APAT P/E P/BV DY
(Rs) (Rs cr) HIGH (Rs) LOW (Rs) (%) (%) END (Rs cr) CHG(%) (Rs cr) CHG(%) RATIO (TIMES) (%)
Cipla 585.0 47070.5 621.9 479.0 8.7 7.8 201706 14154.9 6.8 1076.2 2.7 43.7 3.76 0.34
Royal Orchid Hotels 131.2 357.3 150.5 61.4 0 0.9 201706 87.7 -1.0 11.5 74.8 212.6 2.18 0.76
Kwality 98.5 2343.9 169.1 95.5 0 19.7 201706 6229.6 8.6 149.9 6.0 12.1 2.11 0.10
Indian Hotels 116.1 11485.5 145.7 88.8 12.84 0 201706 3970.9 -2.5 -10.5 -93.9 0 4.56 0.30
CCL Products 306.9 4082.0 371.8 229.0 2.37 23.4 201706 967.3 0.7 121.2 -8.3 33.7 6.42 0.81
Britannia Industries 4344.1 52154.3 4408.6 2776.0 6.33 36.9 201706 9080.8 7.0 881.4 4.1 59.2 19.34 0.51
IndusInd Bank 1679.1 100553.5 1818.0 1037.9 12.15 15.3 201706 15150.6 22.2 3043.1 25.6 35.1 4.96 0
Eicher Motors 31180.0 84879.8 33484.0 19570.9 4.12 37.1 201706 7445.1 31.8 1750.4 36.5 48.5 15.88 0.32
Nilkamal 1553.0 2317.0 2274.9 1215.0 7.17 18.3 201706 1981.6 6.7 109.2 -1.6 19.0 3.14 0.26
Supreme Industries 1093.8 13894.2 1250.0 779.9 5 25.0 201706 4429.9 6.9 393.5 15.7 35.3 8.19 0.27
Marico 310.8 40101.4 347.8 234.6 1.53 37.4 201706 5849.1 -2.8 779.0 2.1 51.5 17.24 1.13
Trent 295.1 9806.7 325.2 176.8 8.89 4.2 201706 1826.3 19.5 100.0 4.8 152.8 6.34 0.34
Mahindra & Mahindra 1253.8 77869.5 1459.5 1141.8 7.9 13.9 201706 44122.9 5.4 3405.6 6.8 22.8 2.62 0.90
Mahanagar Gas 1092.9 10794.9 1185.0 636.0 5.02 22.1 201706 2078.6 1.8 425.0 30.5 25.4 5.87 2.17
PNB Housing Finance 1475.1 24573.2 1715.3 789.3 4.38 13.6 201706 4237.0 41.2 612.6 67.4 40.1 4.41 0.40
Mahindra Holidays 344.7 4593.3 469.0 257.4 14.07 26.4 201706 1061.1 13.5 132.8 11.9 30.8 7.68 0.96
Muthoot Finance 474.5 18957.4 525.8 261.1 10.92 19.9 201706 5774.1 16.1 1260.6 40.6 16.5 2.90 1.26
Dr Lal Pathlabs 795.2 6626.6 1278.6 762.7 6.2 26.6 201706 938.8 13.8 159.4 17.6 41.6 10.04 0.16
CMP (current market price) is closing as of 29 September 2017. Consolidated financials considered wherever available. MF (mutual fund) holding as of June 2017, except Mahindra Holidays & Resorts (July
2017). Financial year ended March 2017. RONW : Return on net worth. TTM APAT : Trailing 12-month adjusted profit after tax for the period ended June 2017.
P/E : Price to earnings ratio. P/BV : Price to book value ratio. DY : Dividend yield.
Source: Capitaline Databases

10 Oct 09 – 22, 2017 CAPITAL MARKET

CoverStory
obstructive pulmonary disease (lung condi-
tion) inhalation therapy market. Also, there
is considerable presence in a range of other
therapies such as cardiology, urology and
anti-infectives.
Indian Hotels Company is in the pro-
cess of raising Rs 1500 crore through a rights
issue priced at Rs 75 per share including
premium of Rs 74. The stock is currently
available at Rs 116. Funds will be deployed
for capital expenditure, growth expansion
and debt repayment. The consolidated debt-
to-equity ratio stood at 1.55 times end
March 2017. As much as Rs 255 crore was
spent on capital expenditure last fiscal. A
majority of the expenditure was on the up-
coming hotel at Andamans and to commis-
sion the balance floors of Taj Guwahati.
Three hotels under the Ginger brand,
with aggregate 222 keys, were opened in
Mumbai and Ahmedabad in the June 2017
quarter. Also, projects are in various stages
of execution under the Ginger brand in
Gurgaon, Corbett, Aurangabad and Surat.
The strategy is to pursue asset-light model
through management contracts to expand the
portfolio of properties. The Tata group com-
pany signed three management contracts for
four properties at Darjeeling, Gangtok,
Chennai and Jaipur in FY 2017. More man-
agement contracts are in the pipeline.
Key hotel brands include Taj Hotels (31
hotels), Vivanta by Taj Hotels & Resorts
(40) and Gateway Hotels (29) and Ginger
(35), with aggregate room inventory of
16,500. These include 16 international prop-
erties in Dubai, Sri Lanka, Bhutan, South
Africa and London among others. Ginger is
an economy brand, while the rest are luxury
and premium properties.
Mahindra Holidays & Resorts is in
the process of adding four properties, with
aggregate room inventory of 610. The capi-
tal expenditure is approximately Rs 600
crore. These projects are being executed at
Naldehra (110 rooms) and Kandaghat (150)
in Himachal Pradesh, Asanora in Goa (250)
and Ashtamudi in Kerala (100). The planned
room addition over the next three years is
substantial considering the present room
inventory of 3,207. As many as 273 rooms
were added in FY 2017. These were spread
across Hatgad in Maharashtra, Wayanad in
Kerala, Jodhpur and Jaipur in Rajasthan
apart from brown-field expansion. Room
addition is essential due to the increase in
membership and high occupancy of 85%
reported in FY 2017.
Oct 09 – 22, 2017 CAPITAL MARKET
Neighbour’s envoy
Britannia Industries recently forayed
into Nepal: the process of setting up
a plant is on. Entry into other countries
is also on cards
Face Value: Rs 2
xxxxx
CMP Rs 4340 as on 03 October 2017. One-year return: 24.62%.
S&P BSE Sensex one-year return: 11.52%
The Mahindra & Mahindra group com-
pany is among the leading player in the
vacation ownership or time sharing indus-
try. The membership of 2.22 lakh has more
than doubled over the last seven years. The
portfolio of properties includes 49 resorts.
Together with its Finnish subsidiary Holi-
day Club Resorts, there are 81 resorts
across India, Thailand, Malaysia, Dubai,
Finland, Sweden and Spain. Properties are
based at various destinations such as hill
stations, beaches, backwaters, wildlife and
forts and heritage.
Also, opportunities are being explored
for acquisition and leases in various parts of
the country. Besides, there is land bank at
10 destinations across six states. Efforts are
on to expand the bank further. Some of the
existing resorts also have additional land that
can be expanded.
Britannia Industries, the largest
maker of biscuits in the country, managed
to increase the direct reach by a whopping
two times over the last three years to 15.5
lakh outlets in FY 2017. In all, there is ac-
cess to 47 lakh outlets. Going forward, there
are plans to add around two to 2.5 lakh
outlets (direct reach) each year to boost
geographical coverage. Indeed, among the
key strategies are increasing the distribu-
tion footprint, growing rural reach and win-
ning share from local players. Also, the aim
is to enter a new geography every year.
Recently, a foray was made into Nepal: the
process of setting up a plant is on. Entry
into other countries is also on cards. There
are plans enter to new product categories.
The operator in the packaged food seg-
ment, especially in the bakery and dairy
Stocks
products, has a product portfolio consist-
ing of eight power brands. The revenues
from each brand are over Rs 500 crore. Good
Day and Marie Gold are the key brands.
Mutual funds owned 6.33% stake end June
2017 in the debt-free company.
Capacities of imported cream biscuit
line, imported specialty cookie line and first
in-house rusk plant were expanded at five
locations last fiscal year. One green-field
plant is under way in Assam and two more
are planned. To improve competitiveness in
the international market, a green-field project
is planned at the Mundra special economic
zone. The project is expected to go com-
mercial in FY 2019.
ICICI Prudential Life Insurance
Company is a joint venture between ICICI
Bank, among the country’s largest private
sector lender, and Prudential Corporation
Holdings, a part of UK-based Prudential
Group, a international financial services
group with GBP 509 billion of assets under
management (AUM). Since starting opera-
tion in CY 2001, the market leader among
private players in the life insurance sector,
had AUM of Rs 126591 crore end June 2017.
The first private sector life insurer to reach
AUM of Rs 1 trillion and in-force sum as-
sured of over Rs 3 trillion offers long-term
savings and protection products to meet dif-
ferent life- stage requirements.
The focus is on deepening existing
bancassurance relationships and seeking al-
liances with new banks. Also, the aim is to
increase the scale of the agency distribu-
tion channel and use data analytics capa-
bility to grow direct to customers. Next,
there are plans to establish relationship
with new non-bank partners. There is ac-
cess to the network of ICICI Bank and Stan-
dard Chartered Bank. Investment will con-
tinue to add agents. Technology and digiti-
zation will be used to reduce dependence
on physical presence. Bancassurance con-
tinues to be dominating channel contribu-
tor, with a share of 56.9% in business gen-
eration, followed by agency (23.3%), di-
rect (12%), corporate agents and brokers
(6.1%) and group (1.6%) end FY 2017.
IndusInd Bank has 1,210 branches and
2,090 ATMs spread across 687 geographi-
cal locations. Also, there are representative
offices in London, Dubai and Abu Dhabi.
As per the planning cycle (CY2017-2020),
the aim is have 2,000 branches by CY 2020,
entitling significant addition considering the
current level. As per the blueprint, the tar-
11
CoverStory
get is to achieve loan and revenue growth of
around 25-30% and a current-account-sav-
ings-account (Casa) ratio of 40% as against
37.8% as present. Geographical expansion
will play a critical role in improving the Casa
ratio. The objective is to double the cus-
tomer base to over 20 million.
With clearing bank status for the BSE
and the NSE and major commodity ex-
changes in the country including Multi-Com-
modity Exchange, National Commodity and
Derivates Exchange and National Multi-
Commodity Exchange, the outstanding loan
book stood at Rs 113081 crore end June
2017, comprising of corporate and commer-
cial banking 60% and consumer finance 40%.
Within corporate and commercial banking,
large-size companies accounted for 21% and
mid-size companies 20%. In the consumer
finance segment, commercial and utility ve-
hicles form a major chunk of revenue con-
tributor, with a share of 17%. The corpo-
rate loan book yielded 9.51% and consumer
finance 14.48% in the June 2017 quarter.
Stocks
The gross non-performing assets (NPAs)
were at 1.09% and net NPAs at 0.44% in
the June 2017 quarter. Capital adequacy re-
mained comfortable at 16.18%. Mutual
funds held 12.15% stake end June 2017.
Plastic products maker Supreme In-
dustries has a clear path for the future. The
target is to achieve volumes CAGR of 12-
15%, with the operating profit margins of
15-15.5% between FY 2017 and FY 2021.
The business strategy includes capacity ex-
pansion, ramping up the share of value-

Set to fly
Companies with plan to expand their presence to new geographies can outperform the industry growth
averages in the medium to long term

COMPANY HIGHLIGHTS
Royal Orchid Hotels The portfolio consists of 43 hotels. Of these, 10 are owned or leased and 33 are managed, with aggregate room inventory of
3,159. Of these, 2,182 are under management contract. There are plans to go up to 45 managed hotels by next fiscal year as
part of asset-light strategy. Eight hotels, with 374 rooms were added last fiscal through management contracts. Key hotel
brands include Royal Orchid (five-star), Royal Orchid Central (four-star), Regenta Hotel (four-star), Royal Orchid Suites
(service apartments) and Regenta Inn (budget hotel).
Mahindra & Mahindra The tractor and utility vehicle maker in September 2017 announced the second foray into Turkey through acquisition of Erkunt
Traktor Sanayii, the fourth largest tractor brand in the country. This association with Erkunt on the back of the Hisarlar
acquisition earlier in the year will help in growing the farm equipment business in Turkey. Two brands (Mahindra and Erkunt)
will strengthen the product portfolio and will offer complete mechanization solutions for the diverse needs of Turkish farmers.
Additionally, the combined forces will build an export business, especially in the neighboring markets of Middle East,
Commonwealth of Independent States and Europe. The transaction is expected to close by December 2017.
Nilkamal The focus is on three business verticals of molded plastic furniture, ready furniture and mattress. The furniture segment
witnessed a growth of over 30% in the distributor and dealer network last fiscal year. The aim is to scale up revenues from
mattress to Rs 200 crore in the next three years from Rs 48 crore in FY 2017, primarily through strengthening of the
distribution network. Various dealer engagement programs have been launched. The current network consists of 980 channel
partners and over 15,000 dealers pan India.
CCL Products Subsidiary Continental Coffee Pvt Ltd has been established to promote instant coffee brands in the domestic market. There is
already a strong presence in the international markets in the traditional spray-dried instant coffee segment. A successful entry
has been made in the freeze- dried coffee segment. Now, the focus is on making a mark in the domestic market. Coffee is
being marketed under the Continental brand in the domestic market. The budget of Rs 30 crore for brand-building will be
incurred over of three years.
Trent Tata group company established in CY 1998 operates Westside, one of the country’s largest retail chains; Star Bazaar, a
hypermarket chain; and Landmark a family entertainment format store. As many as 17 Westside stores were opened and
three unviable stores closed last fiscal year. One Westside store was opened in the first quarter of FY 2018. At present,
Westside operates through 66 malls or shopping centers and 42 standalone stores across India. Westside is planning to
accelerate expansion in the coming years by focusing broadly on two formats: flagship stores (prominent full-offer stores) and
curated smaller stores in non-metros and emerging micro-markets.
PNB Housing Finance The deposit-taking housing finance company plans to add 19 branches in FY 2018, taking the total count to 85 from 66. After
the expansion, coverage will expand to 56 cities from 40 at present. Scope for expansion is huge considering the average
branch count of the top five housing finance companies is 261. There is no presence in the east, while the west is the largest
contributor in the assets under management (AUMs), with a share of 36%, followed by north 35% and south 29%. The AUMs
stood at Rs 46755 crore end June 2017.
Kwality One of the largest private dairy companies in the country had a network of 1,900 distributors (900 end March 2012),
covering 45,000 touch points (19,000 end March 2012), with a strong presence in north India (NCR, Rajasthan, Uttar
Pradesh and Haryana) end FY 2017. The aim is to enhance presence to over 100,000 points of sale over the medium term
through modern trade channels, exclusive brand stores, select online modes in sync with brand salience and new
products. The product portfolio includes pouched milk, curd, chaas, paneer, flavored milk, cream, packed ghee, table-
butter, cheese, yoghurts and milk powders.
Source: Companies.

12 Oct 09 – 22, 2017 CAPITAL MARKET

CoverStory
added products, launching new products and
widening the distribution network. The ex-
isting capacity of 4.99 lakh tonnes will be
increased to seven lakh tonnes, with capital
expenditure of around Rs 1200 to 1300 crore,
by FY 2021.
Reach in existing locations will be in-
creased to capture market share in untapped
locations. Channel partners will be hiked.
The distribution network, which at present
is over 2,950 channel partners (2,699 end
March 2016), will be expanded. There are
plans to increase exports significantly over
the next five years. Exports contribute mere
2.5% to the total turnover at present.
The product portfolio comprises plas-
tic piping system, cross-laminated films and
products, protective packaging products,
industrial molded components, molded fur-
niture, storage and material handling prod-
ucts, performance packaging films and com-
posite gas cylinders. There are 25 manufac-
turing facilities located across the country.
The number will touch 28 by FY 2018 and
29 by FY 2021.
After conquering the domestic market
with Royal Enfield motorcycle, Eicher
Motors has set eyes on the international
market. The ambition is to lead and grow
the under-served global mid-sized motor-
cycle segment (250-750cc) with Royal
Enfield. Royal Enfield enjoyed market share
of 24% in the domestic market in the 150
cc and above segment end FY 2017. In in-
ternational markets, motorcycles are rolled
out of 568 dealerships across 46 countries
along with 25 exclusive stores in 13 coun-
tries and two direct subsidiaries in North
America and Brazil.
Royal Enfield’s exclusive stores are lo-
cated in nodal cities including London,
Bogota, Medellin, Dubai, São Paulo, Madrid,
Paris, Bangkok and Jakarta. South East Asia
has emerged as the most promising destina-
tion. Revenues from international markets
amounted to Rs 222 crore in FY 2017. The
number of domestic dealers is expected to
increase to 825 covering around 600 towns
by March 2018 from 675 end March 2017
and 527 end March 2016.
The capital expenditure target is Rs 800
crore for the current fiscal year. Primarily,
the expenditure will be on capacity expan-
sion, technology centre, infrastructure, de-
velopment of products and distribution net-
work. The total capacity of Royal Enfield is
8.25 lakh numbers. It will be ramped up to
nine lakh by FY 2019. The joint venture
Oct 09 – 22, 2017 CAPITAL MARKET
Kick-start
Eicher Motors wants to lead and grow
the under-served global mid-sized
motorcycle segment (250-750cc)
with Royal Enfield
Face Value: Rs 10
xxxxx
CMP Rs 31158 as on 03 October 2017. One-year return: 20.89%.
S&P BSE Sensex one-year return: 11.52%
(JV) with the Volvo group rolls out trucks
and buses. Personal utility vehicles, branded
as Multix, are made by another JV, with US-
based Polaris Industries.
Dr Lal PathLabs offers a broad range
of diagnostic and related healthcare tests
and services for use in core testing, patient
diagnosis and prevention, monitoring and
treatment of disease and other health con-
ditions. The catalogue of services includes
1,110 test panels, 2,028 pathology tests
and 1,561 radiology and cardiology tests.
There were 189 clinical labs including a
national reference lab in Delhi, 1,759 pa-
tient service centers and 5,021 pick-up
points end FY 2017. Approximately 29.3
million samples from 13.3 million patients
were collected and processed last fiscal year.
There is significant presence in the north-
Testing times
Dr Lal PathLabs is deepening presence
in north India by developing additional
reference labs. Operations in the east
are being scaled up
Face Value: Rs 10
xxxxx
CMP Rs 794 as on 03 October 2017. One-year return: -26.13%.
S&P BSE Small cap Index one-year return: 15.37%
Stocks
ern region, with a revenue share of 72.3%,
followed by east 12.2%, west 7.6%, south
6.7% and others 1.2%.
As part of the growth strategy, pres-
ence in north India is being deepened by
developing additional reference labs such as
in Lucknow. Operations in the east are be-
ing scaled up by developing ecosystems via
a new reference lab at Kolkata that will go
operational by March 2018. Footprints in
south and west are being expanded through
focused city approach. Strategic acquisitions
and partnership opportunities are being ex-
plored in select new geographies. Also, hos-
pital-based clinical lab is another area that is
being examined. There are plans to set up
more clinical laboratories to strengthen pres-
ence in new geographies. The debt-free com-
pany had cash and investments of Rs 422.6
crore end June 2017.
Conclusion
Geographical expansion is necessary for In-
dia Inc in view of the changing market dy-
namics. Non- industrialized states such as
Bihar, Uttar Pradesh an d Madhya Pradesh
among others are reporting decent economic
growth in recent years and likely to do well
in future as well. The noteworthy develop-
ment is message to entrepreneurs to focus
on these markets apart traditionally indus-
trialized states.
Investors should spot small- and mid-
cap companies, in particular, able to spread
their wings to newer geographical markets
and grab market share. Such companies
have tremendous scope to grow their top
and bottom lines. They could add to in-
vestors’ wealth if successful. However, the
exercise is also risky. Companies have to
put in money upfront for geographical ex-
pansion. Failure can result in loss of capi-
tal and opportunity and also consume
management bandwidth.
The critical part about the investment
theme is the fact that companies can de-
ploy their business insights to grow their
businesses. The intangible strategy is more
critical than raising and deploying finan-
cial resources. Funds can be accessed
through various sources considering the
liquidity in the system. Skills to envisage
growth opportunities are acquired after
years of hands-on experience. Sharehold-
ers, thus, have to bet the management’s
ability to steer their businesses out of their
traditional strongholds.
— Venkatesh S
13
MarkedToMarket
MarkedToMarket
IPO Performance

Gains under attack

70% of the new offers listed in H1 are trading at a premium, while eight of the 15 issues debuting
in September are quoting at a discount to the offer price
COMPANY ISSUE TIMES OFFER LIST LIST LIST LIST LIST PRICE HIGH /LOW VAR. (%) VAR(%)
OVER PRICE PRICE PRICE PRICE PRICE DATE 03-OCT-2017 FRM DATE FRM OFFER FRM LIST
CLOSE SUBSCB (Rs) OPEN CLOSE HIGH LOW (Rs) OF LISTING PRICE PRICE
(Rs) (Rs) (Rs) (Rs) (Rs)
SBI Life Insuran 22-Sep-17 3.55 700.00 733.30 708.00 738.00 702.25 3-Oct-17 708.00 738/702 1.14 -3.45
Madhya Prad. Tod 21-Sep-17 2.27 66.00 70.00 79.20 79.20 68.00 29-Sep-17 94.00 95/68 42.42 34.29
AKM Lace 22-Sep-17 1.15 25.00 25.50 24.90 25.55 23.60 29-Sep-17 25.00 26/24 0.00 -1.96
Worth Peripheral 19-Sep-17 45.14 43.00 51.60 51.60 51.60 51.60 27-Sep-17 83.15 84/52 93.37 61.14
ICICI Lombard 19-Sep-17 2.40 661.00 650.00 681.55 694.00 638.15 27-Sep-17 683.95 694/638 3.47 5.22
Sagar Diamonds 18-Sep-17 9.04 45.00 45.00 44.55 48.70 39.55 26-Sep-17 36.05 49/34 -19.89 -19.89
Sri Krishna Met. 18-Sep-17 1.08 55.00 53.95 49.00 53.95 44.00 26-Sep-17 46.10 54/44 -16.18 -14.55
Capacit’e Infra. 15-Sep-17 130.31 250.00 399.00 342.40 399.00 335.65 25-Sep-17 332.70 399/329 33.08 -16.62
Matrimony.com 13-Sep-17 2.83 985.00 985.00 901.20 1025.00 893.20 21-Sep-17 803.30 1025/775 -18.45 -18.45
Manav Infra 8-Sep-17 2.75 30.00 32.00 24.00 33.00 24.00 18-Sep-17 23.80 33/17 -20.67 -25.63
Bharat Road 8-Sep-17 1.57 205.00 204.90 208.15 218.65 196.50 18-Sep-17 173.50 219/173 -15.37 -15.32
Dixon Technolog. 8-Sep-17 82.65 1766.00 2725.00 2892.80 3020.25 2725.00 18-Sep-17 2698.95 3020/2510 52.83 -0.96
Nouritrans Exim 7-Sep-17 1.15 30.00 26.05 24.30 29.20 24.00 15-Sep-17 14.80 29/12 -50.67 -43.19
A & M Febcon 6-Sep-17 1.38 18.00 18.00 18.00 18.60 14.40 14-Sep-17 17.40 19/14 -3.33 -3.33
Dhruv Wellness 4-Sep-17 1.88 20.00 19.60 19.50 20.20 19.35 12-Sep-17 19.50 20/19 -2.50 -0.51
Pashupati Cotsp. 31-Aug-17 1.65 75.00 77.00 75.00 77.00 75.00 8-Sep-17 74.60 77/73 -0.53 -3.12
ANG Lifesciences 31-Aug-17 7.61 80.00 96.00 96.00 96.00 96.00 8-Sep-17 90.00 115/81 12.50 -6.25
Shish Industries 28-Aug-17 1.36 30.00 32.00 32.95 36.00 32.00 5-Sep-17 29.00 36/23 -3.33 -9.38
Apex Frozen 24-Aug-17 4.49 175.00 199.90 209.85 209.85 195.00 4-Sep-17 307.25 355/195 75.57 53.70
Servotech Power 14-Aug-17 1.40 31.00 30.70 31.85 32.00 30.70 24-Aug-17 37.00 47/31 19.35 20.52
Geekay Wires 14-Aug-17 1.37 33.00 33.35 33.25 33.70 33.15 24-Aug-17 33.10 34/33 0.30 -0.75
Lexus Granito 11-Aug-17 34.90 45.00 53.00 54.00 54.00 53.00 23-Aug-17 123.50 129/53 174.44 133.02
Ashok Masala 11-Aug-17 10.48 10.00 12.00 10.04 12.00 9.90 22-Aug-17 7.75 12/8 -22.50 -35.42
Vaishali Pharma 10-Aug-17 1.55 72.00 71.90 70.35 73.00 66.55 22-Aug-17 63.10 73/58 -12.36 -12.24
Cochin Shipyard 3-Aug-17 75.83 432.00 435.00 522.00 522.00 435.00 11-Aug-17 519.35 580/435 20.22 19.39
Security & Intel 2-Aug-17 4.34 815.00 875.00 756.70 878.00 749.00 10-Aug-17 781.15 878/708 -4.15 -10.73
Surevin BPO 1-Aug-17 52.77 40.00 48.00 40.20 48.00 38.30 9-Aug-17 38.00 48/32 -5.00 -20.83
Total Transport 28-Jul-17 127.34 45.00 54.00 54.00 54.00 54.00 7-Aug-17 45.00 65/43 0.00 -16.67
Keerti Knowledge 28-Jul-17 1.70 52.00 51.00 51.25 52.40 49.00 7-Aug-17 43.90 52/30 -15.58 -13.92
Globalspace 28-Jul-17 1.43 66.00 66.00 65.65 70.00 65.00 7-Aug-17 60.00 70/60 -9.09 -9.09
Shanti Overseas 26-Jul-17 14.21 50.00 60.00 42.90 60.00 41.00 3-Aug-17 36.05 60/30 -27.90 -39.92
Captain Techno. 24-Jul-17 13.58 40.00 48.00 48.00 48.00 47.80 1-Aug-17 45.00 53/42 12.50 -6.25
Jigar Cables 20-Jul-17 8.49 30.00 33.15 36.00 36.00 33.00 28-Jul-17 43.05 52/33 43.50 29.86
Univastu India 19-Jul-17 6.65 40.00 48.00 40.20 48.00 38.50 27-Jul-17 45.15 48/39 12.88 -5.94
Salasar Techno 17-Jul-17 270.06 108.00 259.15 272.10 272.10 250.00 25-Jul-17 264.30 333/198 144.72 1.99
7NR Retail Ltd 10-Jul-17 1.70 27.00 27.00 27.00 27.10 26.75 18-Jul-17 27.20 27/24 0.74 0.74
Shrenik 10-Jul-17 2.97 40.00 41.90 48.00 48.00 41.90 18-Jul-17 136.55 137/42 241.38 225.89
G G Engineering 7-Jul-17 1.50 20.00 21.00 20.70 21.00 19.90 17-Jul-17 44.80 45/17 124.00 113.33
Ace Integrated 5-Jul-17 1.42 40.00 38.90 39.55 41.80 38.90 13-Jul-17 30.55 42/26 -23.63 -21.47
Transwind Infra. 4-Jul-17 21.58 27.00 30.85 32.40 32.40 30.85 12-Jul-17 33.75 44/31 25.00 9.40
Bansal Multiflex 4-Jul-17 3.95 31.00 34.00 35.70 36.85 32.70 12-Jul-17 67.35 71/33 117.26 98.09

14 Oct 09 – 22, 2017 CAPITAL MARKET

MarkedToMarket

COMPANY ISSUE TIMES OFFER LIST LIST LIST LIST LIST PRICE HIGH /LOW VAR. (%) VAR(%)
OVER PRICE PRICE PRICE PRICE PRICE DATE 03-OCT-2017 FRM DATE FRM OFFER FRM LIST
CLOSE SUBSCB (Rs) OPEN CLOSE HIGH LOW (Rs) OF LISTING PRICE PRICE
(Rs) (Rs) (Rs) (Rs) (Rs)
Gautam Exim 3-Jul-17 2.14 40.00 40.00 43.85 44.70 34.00 11-Jul-17 44.70 51/34 11.75 11.75
Pushpanj. Realms 30-Jun-17 1.08 55.00 55.00 55.45 56.00 52.00 10-Jul-17 80.00 90/52 45.45 45.45
AU Small Finance 30-Jun-17 53.60 358.00 525.00 541.20 545.00 506.80 10-Jul-17 563.95 724/496 57.53 7.42
Accord Synergy 28-Jun-17 138.25 60.00 72.00 72.00 72.00 72.00 6-Jul-17 53.00 93/50 -11.67 -26.39
GTPL Hathway 23-Jun-17 1.36 170.00 170.00 171.65 174.50 162.25 4-Jul-17 137.85 190/127 -18.91 -18.91
Central Dep. Ser 21-Jun-17 119.43 149.00 250.00 261.60 269.95 250.00 30-Jun-17 347.40 486/243 133.15 38.96
ERIS Lifescience 20-Jun-17 2.25 603.00 612.00 601.05 627.70 592.30 29-Jun-17 577.60 728/511 -4.21 -5.62
Tejas Networks 16-Jun-17 1.48 257.00 257.00 263.30 271.00 257.00 27-Jun-17 292.45 377/257 13.79 13.79
GLOBE TEX.(I) 15-Jun-17 2.48 51.00 50.00 50.15 52.00 43.70 23-Jun-17 46.00 53/44 -9.80 -8.00
Riddhi Corporate 15-Jun-17 1.94 130.00 130.00 131.50 143.00 130.00 22-Jun-17 176.00 180/130 35.38 35.38
Shri Ram Switch. 30-May-17 67.56 19.00 22.80 22.80 22.80 22.80 7-Jun-17 18.00 32/16 -5.26 -21.05
India Grid Trust 19-May-17 1.08 100.00 100.00 98.45 100.00 94.00 6-Jun-17 95.65 100/91 -4.35 -4.35
Vadivarhe Speci. 25-May-17 39.88 42.00 50.40 50.40 50.40 50.40 2-Jun-17 135.00 144/50 221.43 167.86
Yug Decor 23-May-17 2.26 26.00 27.00 26.10 29.90 26.05 31-May-17 33.00 38/23 26.92 22.22
Jalan Transol. 23-May-17 2.51 46.00 42.25 41.95 43.00 40.55 31-May-17 37.75 44/33 -17.93 -10.65
Bhakti Gems 22-May-17 1.91 20.00 18.70 20.05 20.35 18.50 30-May-17 20.00 24/16 0.00 6.95
PSP Projects 19-May-17 5.04 210.00 199.00 208.95 208.95 189.05 29-May-17 345.15 373/189 64.36 73.44
HUDCO 11-May-17 79.31 60.00 73.45 72.50 77.80 70.55 19-May-17 82.90 102/66 38.17 12.87
IRB InvIT Fund 5-May-17 4.66 102.00 103.25 101.79 105.00 99.65 18-May-17 94.40 105/93 -7.45 -8.57
Meera Industries 4-May-17 8.65 36.00 36.00 36.05 37.00 33.00 15-May-17 132.60 133/31 268.33 268.33
Zota Health 2-May-17 14.83 125.00 140.40 125.60 144.35 125.50 10-May-17 147.95 153/126 18.36 5.38
CKP Products 28-Apr-17 4.81 50.00 50.00 50.15 53.10 50.00 9-May-17 50.10 54/50 0.20 0.20
S Chand & Compan 28-Apr-17 42.23 670.00 707.00 675.85 707.00 658.00 9-May-17 461.75 707/425 -31.08 -34.69
Pure Giftcarat 28-Apr-17 1.41 13.00 10.80 13.25 14.50 10.80 8-May-17 14.70 17/8 13.08 36.11
InfoBeans Tech. 21-Apr-17 31.17 58.00 69.60 69.60 69.60 69.60 2-May-17 63.25 80/58 9.05 -9.12
Panache Digilife 17-Apr-14 2.21 81.00 84.00 85.75 86.80 84.00 25-Apr-17 96.00 123/84 18.52 14.29
KMS Medisurgi 17-Apr-17 2.11 30.00 30.00 30.50 32.40 30.00 24-Apr-17 30.10 33/30 0.33 0.33
Sikko Industries 7-Apr-17 12.04 32.00 34.40 35.20 35.50 34.10 18-Apr-17 37.00 46/34 15.63 7.56
M K Proteins 7-Apr-17 1.18 70.00 72.00 72.00 72.05 70.20 18-Apr-17 79.00 85/67 12.86 9.72
ASL Industries 7-Apr-17 2.41 35.00 33.10 35.05 36.00 32.00 18-Apr-17 28.00 36/28 -20.00 -15.41
Dev Information 6-Apr-17 72.06 42.00 50.40 50.40 50.40 50.40 17-Apr-17 60.55 68/45 44.17 20.14
Escorp Asset Mgt 6-Apr-17 1.98 15.00 15.00 15.10 15.10 15.00 17-Apr-17 15.25 17/15 1.67 1.67
Focus Lighting 5-Apr-17 88.05 45.00 54.00 54.00 54.00 54.00 13-Apr-17 104.45 181/54 132.11 93.43
Creative Periph. 3-Apr-17 1.60 75.00 75.75 83.25 83.75 75.75 12-Apr-17 114.90 146/76 53.20 51.68
Relstruct Build 24-Mar-17 1.13 50.00 50.00 46.75 50.00 46.00 5-Apr-17 35.40 51/26 -29.20 -29.20
Bohra Industries 27-Mar-17 3.15 55.00 56.20 57.85 58.40 55.50 5-Apr-17 38.00 59/36 -30.91 -32.38
Shankara Build. 24-Mar-17 28.97 460.00 545.00 632.80 638.00 545.00 5-Apr-17 1445.80 1520/545 214.30 165.28
Octaware Tech. 24-Mar-17 1.51 90.00 91.00 90.55 93.00 90.10 3-Apr-17 98.00 108/90 8.89 7.69
Prime Customer 23-Mar-17 1.10 60.00 60.10 60.50 61.45 60.00 31-Mar-17 134.40 134/60 124.00 123.63
Oceanic Foods 22-Mar-17 1.88 65.00 65.00 65.20 66.80 64.00 31-Mar-17 110.10 120/63 69.38 69.38
Euro India Fresh 24-Mar-17 1.09 78.00 82.40 89.85 92.75 82.40 31-Mar-17 132.40 157/82 69.74 60.68
Laxmi Cotspin 22-Mar-17 5.85 20.00 21.00 19.90 21.35 19.50 31-Mar-17 16.70 21/14 -16.50 -20.48
CL Educate 22-Mar-17 1.68 502.00 398.00 417.90 417.90 398.00 31-Mar-17 337.90 474/314 -32.69 -15.10
Manas Properties 22-Mar-17 1.04 360.00 360.55 360.20 364.90 360.00 30-Mar-17 364.90 368/360 1.36 1.21
Maximus Interna. 22-Mar-17 2.00 25.00 23.00 25.10 25.55 23.00 30-Mar-17 25.25 27/23 1.00 9.78
Manomay Tex 20-Mar-17 3.31 30.00 32.40 31.95 32.40 30.00 28-Mar-17 36.55 37/30 21.83 12.81
Note: Price in Rs adjusted for rights, bonus and splits. Var(%) from offer price and list price as on 03 October 2017.

Oct 09 – 22, 2017 CAPITAL MARKET 15

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RingsideView
RingsideView
Artson Engineering
Rs 180-crore order backlog
Bids have been submitted for projects worth Rs 150 crore. The
focus, however, will be on small projects of Rs 100-200 crore
Artson Engineering held its 38 AGM in
Mumbai on 21 September 2017. Chairman
Vinayak Deshpande, Chief Operating
Officer Nikhil Naniwadekar and Chief
Finance Officer S Balaji were present.
Highlights of the meeting:
Artson Engineering is 75% owned by
industrial and urban infrastructure developer
Tata Projects (TPL). The Board for
Industrial and Financial Reconstruction)-
registered company since CY 2004 could
post a net profit only after the fiscal ended
March 2015 (FY 2015) due to the challenging
economic conditions and pre-qualification
issue in PSU segment. The improved
financial position has enabled servicing the
PSU segment from the current financial year.
The Rs 40-crore loan taken by Artson
Engineering from TPL was converted from
interest-bearing to interest-free on the con-
dition that no dividend will be declared till
the loan is repaid. The loan is for 20 years.
Hence, dividends cannot be distributed till
the loan is repaid. However, dividends can
be paid if loan is repaid in four to five years
on making good profit. The priority, there-
fore, is to retire the loan with the profit.
The cost of debt stood at 10.5%, down from
12.5%, after favorable credit rating.
FY 2017 commenced with an order
backlog of about Rs 72 crore and ended
with an order backlog of Rs 178 crore. The
current order backlog stands at Rs 180
crore. The operating profit margins on the
orders are in the 7-8% range. The execution
time is six-18 months.
Bids have been submitted for projects
worth Rs 150 crore. The status of the bids
will be known in the coming three months.
Investments in infrastructure is picking up
due to government’s investments. The pri-
vate sector, too, is expected to start invest-
ing shortly. There is good scope in indus-
trial and urban construction.
The focus, however, will be on small
projects of Rs 100-200 crore to maintain
dominance in the space, where substantial
orders can be bagged. Opportunities exist in
the oil and gas, minerals and metals, power
18
Lifting pf pressure
The Rs 40-crore loan taken by Artson
Engineering from Tata Projects was
converted to interest-free from
interest-bearing
Face Value: Re 1
xxxxx
CMP Rs 71 as on 3 October 2017. One-year return: 24.63%.
S&P BSE Small cap Index one-year return: 23.40%
generation, pollution control and replace-
ment sectors.
There is optimism about growing mul-
tiple times from the present size. Being a
critical part of its strategy, contributions can
be expected from Tata Projects’s urban in-
frastructure business. There is scope for part-
nerships in the online warehousing business,
a good bet after the rollout of the goods and
services tax.
Simplex Castings
Order book up 25%
Investments are being undertaken to extend reach
in the railways and automobiles businesses
Simplex Castings held its AGM on 14
September 2017. It was addressed by
Chairman and Managing Director Ketan
Shah. Highlights:
Sales volumes of Simplex Castings were
down 3-4% in the fiscal ended March 2017
(FY 2017). Prices were more or less at same
levels. Some cost increases resulted in
pressure on the margins.
Exports stood at around 8% of total
sales and should reach to 15-17% in the next
couple of years. Marketing initiatives are
being undertaken to boost exports in the
current fiscal.
Sales tax refund of Rs 2.32 crore was
received in FY 2016 compared with nil for
FY 2017. There was a capital gain of Rs
2.10 crore in FY 2016 as against nil last fis-
cal, further lowering the overall profitabil-
ity in FY 2017.
Railways account for around 50% of
total sales. Rest comes from the steel,
construction, mining, power, sugar, de-
fence, oil & gas and other engineering sec-
tors. Enquiries continue to remain high
from railways.
New products have been introduced for
railways. Investments are being undertaken
to extending reach in the railways and auto-
mobiles businesses in FY 2018.
Borrowings have increased due to higher
working capital requirement and tight mar-
ket conditions. FY 2018 will be the base for
future growth.
The order book is up 25% over a year
ago. The margins are good but will depend on
execution, expected to pick up going forward.
Ion Exchange
GST hurts business
Lower execution and unfavorable product-mix
can lead to some margin pressure
Ion Exchange held its AGM on 15
September 2017. It was addressed by
Chairman and Managing Director Rajesh
Sharma. Highlights:
In the short term, good and services (GST)
related issues continue to hurt the business
of Ion Exchange. Most orders in the
engineering space are from government or
semi-government bodies. There is the issue
of who will bear the tax increase due to
GST. Discussions are going on with Union
government and clarity is awaited. Not much
of ordering has happened so far in the
September 2017 quarter due the confusion.
Orders in hand will be billed with GST.
Government bodies are expected to accept
the bills and release the payment.
The Srilankan order is very much on
track. Revenue recognition will start from
the September 2017 quarter and will save
the fiscal ending March 2018 (FY 2018).
The order has better margins and payment
terms than the average international orders.
Around 30% of the order value of around
Rs 100 crore will be booked in FY 2018 and
the rest in FY 2019.
Overall, lower execution and unfavor-
able product-mix can lead to some margin
pressure in the near term.
Oct 09 – 22, 2017 CAPITAL MARKET
RingsideView
The only one-stop solutions provider
for water treatment in India is planning to
introduce surface water treatment solutions
by closely working with the public health
engineering departments and the rural water
supply departments of various states.
So far seven plants for neer water bottles
have supplied to the Indian Railways. Ten-
der for another give plants will be awarded
by the railways in the current fiscal. Around
Rs 3000 crore worth of tenders are floating
around for water projects related to cleanli-
ness and management.
Subsidiaries in Philippines, Srilanka,
Indonesia and in Africa are in losses due to
country-specific issues. Changes in govern-
ment in Philippines and Srilanka led to de-
lay in execution of the orders. Africa is a
huge market, but payment issues have led
to lower order book. The US subsidiary will
be in green this fiscal. The remaining sub-
sidiaries will be in green by FY 2019, unless
any geopolitical issues occur.
The chemicals and resin business con-
tinues to remain strong with good margins.
There are no plans of hiving off the con-
sumer product segment. The segment is ex-
pected to break even in the last quarter of
FY 2018. If not, losses will continue.
The stock is expected to get out of the
trade-to-trade segment on the BSE by end
of FY 2018.
Transformers and Rectifiers (India)
June 2017 quarter hit by GST
With current capacity, net sales of Rs 1200
crore can be generated without any capex
Transformers and Rectifiers (India) held its
conference call on 13th September 2017. It
was addressed by Chairman Jitendra
Mamtora and other key management
team Highlights:
The June 20 17 quarter was hit by the goods
and services tax (GST) rollout and some
orders getting held back. The June 2016
quarter sales were significantly higher due
to onetime export order. Business loss of
Rs 20-22 crore is expected in the June 17
quarter. The situation is expected to
improve from Q2.
The order book of Rs 893 crore trans-
lated to around 27,000 mega volt amp end
June 2017. Net sales of Rs 880-900 crore are
expected in the fiscal ending March 2018 (FY
2018). Installation of one large transformer was
completed in FY 2017 and 10 such new orders
are expected in the current fiscal. Transformer
Oct 09 – 22, 2017 CAPITAL MARKET
Looking ahead
Transformers and Rectifiers’ (India)
target is margins of around 12%
at the operating level in the next
couple of years
Face Value: Re 1
CMP Rs 33 as on 3 October 2017. One-year return: 2.58%.
S&P BSE Small cap Index one-year return: 23.40%
orders have been received from the railways
as well. These have better margins. The ferro-
alloy market is picking up and orders have
been received for supply of transformers to
this segment. Thus, sales are likely to pick up
significantly from the current fiscal.
Australia, Latin America, Commonwealth
of Independent States countries and Iran are
some of the key markets with presence. En-
quiry levels for exports are high and so also
from state electricity boards and the indus-
trial segment. The only worry is Power Grid
Corporation of India due to the low level of
tenders floated compared with the last fiscal.
Exports are expected to constitute
around 20% of sales, the industrial segment
15%, solar transformers 10% and utilities
rest. The largest supplier of transformers to
Metros is present in virtually every Metro
project in India.
Ambitious goal
The aim of Hind Rectifiers is to go back
to double-digit margins in the next 12-15
months and achieve net sales of around
Rs 135 crore in the current fiscal
Face Value: Rs 2
CMP Rs 113 as on 3 October 2017. One-year return: 26.45%.
S&P BSE Small cap Index one-year return: 23.40%
The margins are set to improve on an
annual basis. The target is margins of around
12% at the operating level in the next couple
of years on higher capacity utilization, more
matured competition, large export orders and
cost control.
Borrowing is around Rs 200 crore, with
average interest of about 11%. Borrowings
are to remain at this level despite higher sales
due to better advances. Overall, there is op-
timism about good performance going ahead.
With current capacity, net sales of around
Rs 1200 crore can be generated without any
additional capex.
Hind Rectifiers
Set to turn around
After four years of losses, FY 2018
to be a positive year
Hind Rectifiers held its AGM on 8 September
2017. It was addressed by Chairman and
Managing Director S K Nevatia. Highlights:
With an order book of around Rs 160 crore,
Hind Rectifiers is comfortably placed for
the rest of the financial year ending March
2017 (FY 2017). Indian Railways has
increased the budget allocations. Many
orders for existing and new products have
received from the railways.
While payment terms have remained the
same, the margins are better and should help
to generate better operating profit. The aim
is to go back to double-digit margins in the
next 12-15 months and achieve net sales of
around Rs 135 crore in the current fiscal.
The June 2017 quarter was affected by
rains and the rollout of the goods and ser-
vices tax (GST). The FY 2017 balance sheet
has been cleaned. There are no more issues
on slow-moving orders or bad debts. Most
of the GST-led issues have been now solved.
More or less, GST has been neutral. Loss of
some tax benefits has been balanced by neu-
tralizing of lot of unorganized competition.
The appointment of Piyush Goyal as
Railway Minister is a welcome move for
sectors depending on railway orders. Indian
Railways is expected to release good quan-
tum of orders by the end of FY 2018. After
four years of losses, FY 2018 is expected to
bring better prospects, while FY 2019 is
projected to be even brighter.
Around Rs 12 crore are to be mobilised
through a rights issue. Pricing will be de-
cided in the next couple of months. The
funds will be used to meet the working capi-
tal requirements. 
19
InFocus
InFocus
Tata Steel
Shedding flab
The elimination of cash burn in Europe, responsible for high
leverage, will reduce and take off the load from Indian operations
Stung by its costly global foray, India’s sec-
ond largest private sector steel maker by
output is focussing on its home base and
deleveraging its European operations. Tata
Steel and ThyssenKrupp AG will create a
50:50 joint venture (JV) by combining the
flat steel businesses of the two companies
in Europe and the steel mill services of the
German group. The deal does not involve
any cash transactions. Both the sharehold-
ers will contribute to debt and liabilities,
based on fair valuation, to achieve an equal
shareholding in the venture.
This business combination creates a
strong number two steelmaker in Europe,
second only to Arcelor Mittal and will be
better positioned to cope with the struc-
tural challenges in the European steel indus-
try. The deal is expected to be completed
by the end of next year after the two com-
panies receive regulatory approvals.
Steel companies are strengthening their
position through cross-border mergers and
acquisitions. The focus is on improving ex-
isting technology to upgrade production
process and developing new value-added-
products. Arcelor Mittal along with Nippon
Steel and Sumitomo Metal Corporation ac-
quired ThyssenKrupp Steel US in the cal-
endar year (CY) 2014 for US$1,550 mil-
lion. Essar Global bought Canada-based
Algoma Steel for an aggregate value of 1.8
billion Canadian dollars in CY 2007. JSW
Steel, the flagship steel company of JSW
Group, on 1 December 2016 entered into a
consortium to buy 35% stake in Ilva steel
plant, in Italy.
Back home, Tata Steel has executed an
agreement with Creative Port Development
for acquisition of the majority stake, i.e.,
51%, in January 2017 for the proposed
development of Subarnarekha Port at
Chaumukh village of Balasore district in
Odisha through a wholly-owned subsid-
iary, Subarnarekha Port Pvt Ltd. Kirloskar
Ferrous Industries on 1 August 2016 an-
nounced to take over the pig iron plant of
VSL Steels for US$ 23.68 million. JSW Steel
picked up the entire 74% holding of Praxair
Oxygen Pvt Ltd in their joint venture, JSW
20
Discounting the deleveraging
The Tata Steel stock has not posted any
significant gains post the deal as the
price has factored in a better capital
structure with ThyssenKrupp AG
Base = 100
Praxair Oxygen, for Rs 240 crore on 18
August 2016, making the industrial gases
supplier its wholly owned subsidiary.
The Central government in March 2017
permitted strategic sale of Steel Authority
of India’s three units including Alloy Steels
Plants, Visvesvaraya Iron and Steel Plant,
Salem Steel Plant with the transfer of man-
agement. ArcelorMittal SA is looking to set
up a JV in India with Sail, to manufacture
high-end steel products for use in defence
and satellite industries.
In March 2016, Tata Steel had decided
to put its entire UK business on sale in the
face of a slump in steel demand and prices.
It had acquired British steelmaker Corus on
2 April 2007 to move from the world’s 56th
largest steelmaker to the sixth-largest. The
total payment was US$12.9 billion (Rs
53580 crore), of which US$6 billion was
debt. The acquisition of Corus was com-
pleted at the peak of the steel cycle that
ended with the global financial crisis in
CY2008. Steel demand in Europe took a hit.
Corus was renamed Tata Steel Europe
in CY 2010.The European steel industry
continues to face several including signifi-
cant third country imports, especially to the
UK, a sharp drop in the market spread be-
tween steel prices and raw material price
basket and very volatile currency move-
ments. The adverse operating environment
in Europe affected the consolidated finan-
cial performance of Tata Steel
Tata Steel Europe steel deliveries at 9.93
mt were 41.6% of total 23.88 mt of con-
solidated steel deliveries of Tata Steel in
the fiscal ended March 2017 (FY 2017).
Sales of the European operations, at Rs
52085 crore, formed 44.4% of the total Rs
117420-crore consolidated sales of the In-
dian company. Tata Steel Europe reported
loss of Rs 4515 crore in FY 2017 com-
pared with consolidated loss of Rs 376.61
crore of Tata Steel.
Tata Steel’s consolidated net debt in-
creased to Rs 74500 crore in FY 2017 from
Rs 44400 crore in FY 2016 due to rise in
debt of the Europe operations to Rs 51700
crore from Rs 29300 crore and jump in
other debt (mainly India) to Rs 22800 crore
from Rs 15100 crore.
The joint venture will have a turnover
of about Rs 115000 crore per annum. Cost
synergies in the range of Rs 2899 crore to
Rs 4349 crore per annum are expected
through integration of commercial functions,
R&D and other supporting activities. The
combined earnings before interest, tax, de-
preciation and amortization (Ebitda) for both
the entities is close to Rs 10872 crore with-
out assuming synergies. The Ebitda can in-
crease to Rs 15220 crore on inclusion of
cost synergy gains. Thyssenkrupp Tata Steel
will have annual shipments of about 21.3
million tonnes (mt) of flat steel products
(Tata Steel Europe of 9.8 mt and
ThyssenKrupp Steel Europe of 11.5 mt) and
a workforce of about 48,000.
Tata Steel will transfer liabilities of
around Rs 18120 crore and Thyssenkrupp
Rs 28992 crore (mainly Rs 26000 crore of
pension liabilities and Rs 2899 crore of other
liabilities) to the JV. Assuming Rs 3624 crore
of working capital loan, total net debt of the
JV will be around Rs 50736 crore. It will be
serviced by the JV’s operational profit.
Post servicing debt, own capex requirement
and other charges, the JV is expected to
generate significant free cash flows to be
largely distributed as dividends. The JV
will have much superior earnings profile
and optimal capital structure.
After transferring nearly Rs 17000
crore of the Rs 74000-crore debt in the
consolidated books of Tata Steel to the
JV, another Rs 17000 crore of debt is of
foreign subsidiaries (mostly Singapore)
and Rs 40000 crore of Indian operations
will remain. The annual payout for
Thyssenkrupp liabilities will be close to
Rs 1667 crore including servicing costs and
Oct 09 – 22, 2017 CAPITAL MARKET
InFocus
some repayments. The debt of foreign sub-
sidiaries, at around 3% finance cost, can
be serviced by dividends received from the
JV. The remaining debt, pertaining to In-
dian operations, can be serviced by do-
mestic and residual operations. The in-
terest cost on Tata Steel debt of 3.75%
can fall by up to 50 basis points, led by
improved credit profile
The elimination of cash burn in Europe,
mostly responsible for Tata Steel’s high le-
verage, will reduce and take off the load from
Indian operations. Capital can be allocated
to more profitable Indian operations.
Tata Steel is aiming to double the In-
dian capacity to 26 mt in the next five years.
Domestic operations are highly profitable
compared with the European operations due
to full integration of iron ore requirements
and part integration of coking coal require-
ments. Domestic steel prices have been
aided by firm Chinese steel prices, with
the downside protected by anti-dumping
duties. India Ebitda per tonne was Rs 10623
in Q1 of FY 2017, while Europe’s Ebitda
per tonne was Rs 5210. In comparison,
JSW Steel’s Ebitda per tonne was Rs 6262
and Sail’s Ebitda per tonne losses were Rs
277, indicating strong profitability of do-
mestic operations.
The Tata Steel stock has not posted
any significant gains post the deal as the
price has factored in better capital struc-
ture in anticipation of the deal. Further re-
rating will be driven by movement in
spreads and expansion strategy for domes-
tic operations. The share price has risen
almost 76% to Rs 648.35 on 27 September
2016 over a year ago. The counter is up
60% since the beginning of CY 2016 due to
protectionist measures taken by the Cen-
tral government, rising steel prices and im-
proving domestic and European perfor-
mance. Definitive anti-dumping duty for
the next four years on steel products has
insulated the domestic steel industry from
predatory-priced imports, providing floor
price to domestic steel players.
Outlook
Tata Steel’s 50:50 JV in Europe has shifted
the focus back on its domestic operations
that have been funding European cash
losses. The JV will benefit from the scale
and distribution network capability of the
combined assets to achieve quality, tech-
nology and cost leadership in the European
steel industry.
Oct 09 – 22, 2017 CAPITAL MARKET
Contribution to... debt
Tata Steel’s consolidated net
debt increased to Rs 74500 crore
in FY 2017 due to rise in debt
of the Europe unit to Rs 51700 crore
Consolidated net debt. Figures are in Rs crore. Year end March.
The proposed transaction in Europe
also paves the way for significant de-lever-
aging of the consolidated balance sheet and
provides a platform for Tata Steel to pursue
future growth.
The restructuring at Tata Steel comes at
a time when the steel industry is headed for
a cyclical upturn. China has undertaken ini-
tiatives to cut excess capacities citing envi-
ronmental issues resulting in improvement
in global steel prices. In India, government
measures to check dumping have resulted in
firming up of prices.
An economic slowdown in China had
dealt a massive blow to the global steel in-
dustry over the last few years. Overcapacity
and lower steel prices dented the margins of
steel producers. To overcome these negative
factors, the Chinese government issued a
number of mini-stimulus measures, leading
to a short-term boom in infrastructure invest-
ment and the housing market, working in fa-
Ranking boost
The Tata Steel-Thyssenkrupp joint venture
creates a number two steelmaker in Europe
Deliveries (million tonnes)
Revenue (Rs crore)
EBITDA (Rs crore)
EBITDA per tonne (Rs)
Debt (Rs crore)
-Thyssenkrupp
-Tata steel
- Working Capital
Tata Steel Thyssenkrupp JV : Key Financials
... and losses
Tata Steel Europe’s loss was
Rs 4515 crore compared with
consolidated loss of Rs 376.61 crore
of Tata Steel
Year end March.
vor of the steel industry. Consequently,
China’s steel demand grew 1.3% in the calen-
dar year 2016 and the industry has continued
to witness strong steel demand since then.
Global steel demand grew 1.8%, while
production was up 4.6% in the first six
months of CY2017. China also saw a pro-
duction growth of 4.6%. Although China is
closing down some capacity for reasons of
low productivity and poor emissions, exist-
ing units are delivering more. Global steel
capacity utilization gradually increased to
73% in June 2017 from as low as 67.6% in
December 2016.
India’s domestic steel production in-
creased 3.5%, while consumption rose
4.6% in the first six months of CY 2017.
Imports more or less were stable at around
5.5 lakh tonnes to six lakh tonnes. Indian
steel prices improved taking cue from ris-
ing international prices.
India’s steel sector of late was affected
by intense competitive pressure with a surge
in domestic steel production and elevated
level of steel imports at predatory pricing.
To reduce imports and boost domestic steel
manufacturing industry, the government
imposed various trade remedial measures
21.3
such as safeguard duty, anti-dumping duty
11500 and minimum import price on various iron
10872 and steel products.
5104.225 With increasing public sector spending,
50736 steel producers are seeing traction in the
demand from the sectors such as roads,
28992
power and transmission lines, solar energy,
18120 earthquake equipment, pre-engineering build-
3624 ings and water and gas pipelines.
— Sandeep Kumar
21
InFocus
Telecom
A distress call
The asymmetry in traffic between the incumbents and new
entrant RJio is expected to reduce in the longer run
The Telecom Regulatory Authority of India
(Trai) on 19 September 2017 reduced inter-
connection charges (IUCs) for mobile-to-
mobile calls to 6 paise per minute, starting
October 1 2017, a 57% reduction over the
prevalent charge of 14 paise. The charges
will be done away with completely by 1
January 2020.
IUCs are paid by the telecom operator
of the calling party to the telecom operator
of the recipient of the call. It is meant to
cover the costs related to network usage.
Introduced 13 years ago at 30 paise a
minute, IUC has been lowered in phases.
Thus, Trai’s decision to slash IUC is in line
with the recommendations of the Interna-
tional Telecommunications Union (ITU)
report and should benefit consumers.
The regulator has used the pure long
range incremental cost method in arriving at
the new ICU. The method was followed
successfully in the EU as well. Only those
costs that would hypothetically be avoided
if the termination services are withdrawn
are included. Thus, all fixed costs and com-
mon-cost mark-ups are excluded. The
method ensures that the economies of scale
are fully incorporated into termination rates.
A high IUC puts off operators from in-
vesting in new technologies as they earn good
revenue just by receiving calls on their de-
preciated 2G networks. Phasing out of IUCs
by the calendar year (CY) 2020 is also in
keeping with the spirit of the original Trai
recommendation that argued in favor of a
more gradual roadmap to remove termina-
tion charges totally.
Trai’s move is likely to spur companies
to embrace a more efficient and cheaper voice-
over-LTE network, which Reliance Jio cur-
rently uses. Bharti Airtel has announced the
launch of a VoLTE network in financial hub
Mumbai and plans to expand it nationwide.
The decision will curb incumbent operators
from using interconnection charges to stave
off competition from new rivals.
An operator with higher proportion of
off-net incoming minutes over off-net out-
going minutes benefits by way of net inflow
22
of IUC revenues and vice-versa. While the
larger incumbents had always been net earn-
ers of IUC revenues, the extent of gain had
increased following the launch of services by
RJio, with free voice plans leading to higher
off-net outgoing traffic from RJio subscrib-
ers. RJio’s current off-net minute mix is 90:10
for outgoing: incoming calls. Thus, it will be a
major beneficiary, being the net payer of IUC,
at the cost of incumbents.
RJio’s IUC stood at Rs 2589 crore for
around seven months of services in tghe fis-
cal ended March 2017 (FY 2017). IUC cost
stood at Rs 2100 crore in the first quarter of
FY 2018, according to a Morgan Stanley
report. Fitch estimates the IUC cut will re-
sult in a benefit of about Rs 3214 crore-Rs
Unexpected benefit
Bharti Airtel’s net ICU inflow was
Rs 200-300 crore per quarter but
reached Rs 600-700 crore in the past
two quarters after the entry of RJio
Under attack
The operating profit of Idea Cellular is
expected to decline 3-6% cash flow by
Rs 1608.9 crore in FY 2018 due to the
intense competition from RJio
3800 crore per year for RJio. As per
Goldman Sachs, RJio’s could add an addi-
tional Rs 1285 crore-Rs 2893 crore of earn-
ings before interest, tax, depreciation and
amortization (Ebitda) between FY 2018 and
FY 2020. Fitch projects the operating profit
of Bharti Airtel, Idea Cellular and Vodafone
India to decline 3%-6% in FY 2018.
IUC formed 9% to 15% of consolidated
revenues of Bharti and Idea. According to
broker UBS, Bharti Airtel’s net ICU inflow
was Rs 200-300 crore per quarter before the
entry of RJio and reached Rs 600-700 crore
in the past two quarters due to large incom-
ing traffic from RJio.
Goldman Sachs predicts that as a result
of IUC cut, Bharti Airtel’s annual cash flow
will take a dent of about Rs 965 crore, al-
though its free cash flow will remain posi-
tive in FY2018 and FY 2019. It has reduced
Idea Cellular’s cash flow estimates by Rs
1608.9 crore in FY 2018. Rating agency Icra
estimates the decline in Ebitda of incum-
bents in the range of 5-12%. Broker Credit
Suisse has trimmed its Ebitda estimate for
Bharti and Idea by about 3% for FY 2018.
Outlook
India has been following a declining glide-
path in IUC since CY 2003, when it was
fixed at 30 paise. Trai’s latest decision to
cut ICU by 57% is based on the economic
principle of long-run incremental cost.
Apart from the immediate impact on
Ebitda generation of ex-RJio players, it’s too
early to gauge the extent of the secondary
impact owing to RJio’s pricing aggression.
The move is likely to keep the competitive
intensity from RJio high in the near term,
given the headroom it will get from the IUC
savings and prolong the restoration of pric-
ing power, a must for all operators to gener-
ate adequate return on investments. Banks
have an exposure of around Rs 4 lakh crore to
the telecom industry. It is likely that the exit
of some of the incumbents might hit the banks.
In the longer run, the asymmetry in traf-
fic between the incumbents and new entrant
RJio is expected to reduce as the subscriber
base gap between them narrows, thereby
blunting the impact of lower IUC to some
extent. However, the IUC change does high-
light regulatory risks in the India telecom
sector. Investors may question whether any
further regulatory change in the telecom sec-
tor would negatively affect incumbents.
— Gautam Kumar
Oct 09 – 22, 2017 CAPITAL MARKET
InFocus
Gold
Back in business
Festivals boosted demand in H1 but the outlook is muted
in H2 on GST-related issues
Soaring gold prices seem to have not affected
gold demand in India. Local spot gold prices
hit a nine-month high around Rs 30000 per
10 grams early September 2017. Prices have
been elevated this year after starting the year
around the Rs 28000 mark.
The strong domestic gold demand in H1
of the calendar year (CY) 2017 was boosted
by festivals, weddings and improved rural
sentiment. Akshaya Tritiya, a key gold-buy-
ing festival in the Hindu calendar, pushed
up gold jewelry demand in the usual way.
The timing of the festival this year, falling
as it did over a weekend and coinciding with
a dip in the gold price, proved particularly
encouraging. Akshaya Tritiya-related sales
were up by around 30%, according to the
World Gold Council (WGC).
Rural sentiment improved further as the
Union government continued to replace the
currency that was plucked from the system
by demonetization in November. This greater
liquidity boosted rural purchases along with
expectations of a good monsoon rainfall and
the positive impact of a higher number of
auspicious wedding days in the Hindu cal-
endar (26 auspicious days in Q2 this year
compared with just eight in Q2 of CY 2016).
The bouceback comes after subdued
consumption in CY 2016. According to
WGC data, Indian gold demand fell an
astonishing 22% to 666 tonnes last year,
marking a seven-year low. The massive drop
in demand was due to two unique factors:
jewelers’ strike at the start of the year and
demonetization at the end of the year.
After averaging US $1300-US$1400
per ounce in CY 2010, the Chicago
Commodity Exchange (Comex) gold futures
witnessed a massive surge to its all-time
high above US$1900 per ounce in CY 2011.
Price have mostly slipped thereafter and
currently linger around US $1300 per
ounce mark.
However, local price action has been
totally different. After averaging Rs 19220
per 10 grams in the fiscal ended March 2011
(FY 2011), spot gold prices are currently
around Rs 29000 per 10 grams. The
commodity has soared nearly 50% in the
Oct 09 – 22, 2017 CAPITAL MARKET
Taking a shine
After soaring nearly 50% in the last six-
seven years, spot gold prices averaged Rs
19220 per 10 gm in FY 2011 and are
currently around Rs 29000
30500
30000
29500
Spot Gold
29000
28500
28000
* 28 Sep
27500 l
A'17
l
M J
l l
J
l
A
l
S
l
*
Figures in Rs per 10 grams in Ahmedabad
last six-seven years thanks largely to a
downswing of the rupee. The Indian
currency has dropped from 45/46 per US
dollar level to around 63/64 mark right now.
The rupee has also witnessed intermittent
bursts to all-time lows near 70 per US dollar.
While the depreciation of the Indian
currency clearly hurt the local gold imports
over the last few years, the recent surge in
buying indicates that the tendency has
hardly undergone a sea change.
Jewelry major Titan Company noted in
its Q1 of FY 2018 earnings update that the
first quarter was extremely good. Revenues
grew 42% and profit before tax was up 110%.
Sales income increased from Rs.2769.55 crore
to Rs.3944.49 crore. The jewelry division
recorded an income growth of 54% due to a
combination of one of the best Akshaya
Tritiya sales, successful gold exchange
program as well as an element of advancement
of sales in June 2017 in anticipation of higher
goods and services (GST) rates.
Prior to GST, the overall tax rate on gold
jewelry stood at 12.2%, consisting 10%
customs duty, 1% excise duty and 1.2%
value-added tax (Vat). GST replaced the
excise duty and Vat components, but sits on
top of the import duty. The headline gold
rate of 3% announced on 3 June has been
welcomed by the industry, according to an
update from the WGC.
There are two important GST rates that
will affect the industry. The first is the 3%
tax on gold products such as jewelry. In
addition, there is an 18% tax on services
that will apply to firms and individuals
providing manufacturing services across the
gold supply chain.
A key benefit of the new regime is that a
enterprise can offset the tax it pays against
its revenues using input tax credits and
double taxation throughout the supply chain
should be eliminated. Jewelers, for example,
will now be able to use input tax credits
from any goods and services used in the
process of selling jewelry.
Outlook
The outlook for Indian gold demand is muted
for H2, according to WGC. Although the 3%
GST rate was lower than many had antici-
pated, WGC expects the new tax is likely to
cause some short-term disruption as manu-
facturers, retailers, importers and consumers
adapt to the new regime. As consumers and
importers brought forward their purchases
to Q1, demand will likely be subdued for a
few weeks.
Stock is plentiful across the supply
chain and consumers who have recently pur-
chased are unlikely to do so again in the
short term. As the market digests the gold
stocks and adapts to GST, the market envi-
ronment should become more settled to-
wards the end of the year.
India’s gold demand stood at 1,000
tonnes in CY 2010 and has been witnessing
modest declines thereafter, perhaps due to
rising prices. But the average gold imports
jumped to US$3.05 billion per month in the
first five months of the current fiscal. This
is staggeringly high compared with US $2.28
billion in FY 2016. The trend in gold im-
ports in July and August seems to be cor-
roborating the fast. At 2.4% of the GDP,
the current account deficit has now surged
to a four-year high. A depreciating rupee
will keep the value of the imports elevated
in coming months.
Gold prices will be a critical factor in
determining local purchases. Comex gold
futures have slipped from a one-year high of
US$1370 per ounce and linger around
US$1300 per ounce. A further drop in global
prices can pull down local spot prices and
can trigger good demand in the upcoming
festive season. Domestic liquidity is
supportive of the metal following the pay
revisions and increase in dearness allowances
of Central and state employees.
— Sachin Dabhade
23
MarketWatch
MarketWatch
Stocks - Mid caps

Sizzlers and dampeners

An offline retailer surges on investment by an offline retailer, while a shipping company loses despite taking
delivery of new vessel and a finance company slips on fund-raising

COMPANY (FV) CMP MCAP VARIATION (%) HOLDING(%) RESERVES RATIOS

SECTOR (Rs) (Rs cr) FORTNIGHT 1-YEAR PROMOTERS DOM. FII (Rs cr) DEBT-EQUITY INT COVER P/E
ITI (Rs 10) 137 7683 48 416 93 0 0 622 0 2 42

Telecomm Equip & Infra Serv The state-run telecom services provider was declared the lowest bidder in the Rs 7000-crore phase IV
Beta: 1.12 tender of Army for deploying and maintaining its strategic communication network across the country.
The project will provide telecom solution and infrastructure with a two-year warranty and mainte-
nance support of the network for eight years.

Shoppers Stop (Rs 5) 484 4043 18 32 67 13 4 719 1 2 144

Retail The retailer’s board approved a proposal to sell 5% equity for Rs 179.25 crore to the investment arm
Beta: 0.63 of the world’s largest online retailer Amazon Inc. Amazon.com NV Investment Holdings, a foreign
portfolio investor, will subscribe to about 43.95 lakh shares at Rs 407.78 each on a preferential basis,
aggregating to Rs 179.25 crore.

LEEL Electricals (Rs 10) 288 1162 16 7 56 0 4 881 1 2 16

Consumer Durables Fund management firm Equity Intelligence bought 0.4% stake in the high quality coils supplier, taking
Beta: 1.84 up its total shareholding to 5.36%.

Novartis India (Rs 5) 633 1782 1 -8 73 1 0 906 0 128 39

Pharmaceuticals The pharmaceutical producer’s board approved a proposal to buyback up to 34.50 lakh equity shares
Beta: 0.58 of Rs 5 each, representing 12.26% of the total paid-up equity capital, from the existing equity share-
holders on the record date. Shares will be bought at Rs 670 per equity share, aggregating to Rs 231.15
crore. The board noted the intention of the promoter to participate in the proposed buyback.

GE Power India (Rs 10) 675 4536 1 23 69 15 2 763 0 2 48

Capital Goods - Elect Equip
Beta: 1.08
The power plant and equipment engineer, procurer, manufacturer, maker and service provider won an
order worth Rs 328 crore from Doosan Power India to supply four units of 660-megawatt electrostatic
precipitator for the supercritical power projects of Uttar Pradesh Government: Obra C 2x660 MW
project of Uttar Pradesh Rajya Vidyut Utpadan Nigam and Jawaharpur 2x660 MW of Jawaharpur
Vidyut Utpadan Nigam.

V-Mart Retail (Rs 10) 1452 2628 1 189 54 3 27 252 0 18 50

Retail The hypermarket format retail chain operator opened a new fashion store in West Bengal. With this,
Beta: 0.51 the tally of stores in West Bengal is one composite and four fashion stores. Thus, there are now 154
stores in 131 cities across 14 states, with 37 composite stores and 117 fashion stores on a total area of
about 13 lakh square feet.

Dishman Carbogen Amcis (Rs 2) 338 5449 NA NA 61 10 10 4771 0 2 241

Pharmaceuticals Wholly-owned subsidiary operating as outsourcing partner for Carbogen Amcis AG of Switzerland
Beta: 3.00 successfully completed a routine US Food and Drug Administration inspection.

24 Oct 09 – 22, 2017 CAPITAL MARKET

MarketWatch

COMPANY (FV) CMP MCAP VARIATION (%) HOLDING(%) RESERVES RATIOS

SECTOR (Rs) (Rs cr) FORTNIGHT 1-YEAR PROMOTERS DOM. FII (Rs cr) DEBT-EQUITY INT COVER P/E
Mahindra Lifespace Dev (Rs 10) 462 2373 0 16 52 2 24 1452 0 3 54

Construction The real estate developer announced a partnership with International Finance Corporation for the
Beta: 1.19 development of multiple industrial parks across Gujarat, Rajasthan and Maharashtra. The partnership
envisages investment across existing and upcoming industrial park projects, with the first investment
in an approximately 350-acre industrial park near Ahmedabad.

Cyient (Rs 5) 509 5724 0 10 22 6 45 1826 0 479 20

IT - Software Carrier International Mauritius sold 1.36 crore shares of the software solutions provider at Rs 475.17
Beta: 0.40 per share in bulk deal on the NSE on 27 September 2017. Amansa Holdings bought 30.79 lakh shares.
Birla Sun Life 95 Fund purchased 16.89 lakh shares. Birla Sun Life Pure Value Fund mopped up 6.30
lakh shares. DSP Blackrock Small and Mid Cap Fund bought 8.32 lakh shares and Government
Pension Fund Global purchased 14.53 lakh shares.

Heritage Foods (Rs 10) 1450 3364 -1 77 40 6 7 280 1 9 58

The dairy and renewable energy operator fixed 11 October 2017 as record date for a stock-split of
FMCG
share of face value Rs 10 each into two equity shares of face value Rs 5 each. The board also approved
Beta: 1.08
purchase of assets, including building and machinery, of Shah Motilal Foods in Telangana for expan-
sion of the dairy division by setting up a plant.

Gujarat Industries Power (Rs 10) 130 1960 -2 50 58 13 3 2085 0 5 8

The power generator emerged as one of the successful bidders for the 75-megawatt (MW)
Power Generation & Distrib
solar power project in Gujarat in the e-reverse auction conducted by Gujarat Urja Vikas
Beta: 0.90
Nigam on 19 September 2017 for 500-MW solar power projects, in Gujarat. The 80-MW
(2 x 40 MW) PV solar power projects at the Gujarat Solar Park, Charanka, district Patan,
were successfully commissioned under the National Solar Mission (NSM) in a phased manner
on 14 September 2017.

Shipping Corp of India (Rs 10) 90 4185 -3 37 64 19 4 6402 1 2 58

Shipping The state-run shipper took physical delivery of a secondhand very large gas carrier of 53,503 dead
Beta: 0.95 weight tonnage capacity, Nanda Devi, on 14 September 2017.

IFCI (Rs 10) 23 3839 -3 -10 56 14 9 4804 4 0 0

The finance company’s board approved sale of 0.86% stake in the National Stock Exchange
Finance
(NSE) to investors. At present, 1.51 crore equity shares, comprising 3.05% of the total equity
Beta: 1.53
shares of the NSE, are held. Out of the 3.05% equity stake, 34.31 lakh equity shares, comprising
of 0.69% of the total equity shares of the NSE, will be offloaded through an initial public offer.
Of the remaining 2.36% of the total equity stake, comprising 1.16 crore equity shares, the
board at its meeting held on 25 September 2017 approved the sale of 42.43 lakh equity
shares, comprising 0.86% of the total equity shares of the NSE, to one or more interested buyers
in part or full.

Surya Roshni (Rs 10) 295 1294 -3 44 63 0 2 824 1 2 20

Steel The steel pipe products and consumer durables maker obtained orders, through competitive e-bidding,
Beta: 1.90 amounting to Rs 48.60 crore, for supply of Led luminaire and Led street lights to the United Kingdom
and for Rajasthan, Telangana and Gujarat from Energy Efficiency Services under the all-India street
light national program.

Oct 09 – 22, 2017 CAPITAL MARKET 25

MarketWatch

COMPANY (FV) CMP MCAP VARIATION (%) HOLDING(%) RESERVES RATIOS

SECTOR (Rs) (Rs cr) FORTNIGHT 1-YEAR PROMOTERS DOM. FII (Rs cr) DEBT-EQUITY INT COVER P/E
Deepak Fertilizers & Petro (Rs 10) 369 3250 -4 79 51 4 11 1642 1 3 24

Fertilizers The chemicals maker plans to set up a brown field iso propyl alcohol (IPA) plant, with high purity
Beta: 1.45 diisopropyl ether (Dipe) as co-product, at Taloja with an inside battery limit investment of approxi-
mately Rs 450 crore. The IPA capacity is being expanded 100 kilotons per annum (kta) and that of
Dipe seven kta. The project will take around 30 months to complete.

Ashiana Housing (Rs 2) 167 1706 -6 15 61 1 12 703 0 15 21

Realty The real estate developer entered into a memorandum of understanding with a Pune-based developer
Beta: 1.40 for a group housing project on 19 acres of land parcel situated near Hinjwadi, district Pune, Maharashtra,
on revenue sharing basis. The expected saleable area will be 12.5 lakh sq ft to 15 lakh sq ft.

MEP Infrastructure Dev (Rs 10) 101 1640 -6 152 70 9 5 438 1 1 97

The infrastructure company was selected by the office of the director local bodies (toll tax
Infrastructure Dev & Op
department) as the contractor for SDMC (lead corporation acting on behalf of all the three
Beta: 1.84
corporations of Delhi) for collection of toll tax and environment compensation charge at border
points from specified commercial vehicles entering Delhi. The commercial operations will com-
mence from 1 October 2017 for five years. The contractual amount is Rs 1206 crore per annum
payable to SDMC on a weekly basis.

Hindustan Copper (Rs 5) 58 5408 -7 -6 83 13 0 1004 0 8 72

Non Ferrous Metals The copper producer signed a memorandum of understanding with National Aluminum Company and
Beta: 1.30 Mineral Exploration Corp to explore the possibility of forming a joint venture for exploration of
primarily strategic minerals overseas and sale of these minerals in India and other countries for com-
mercial use.

Great Eastern Shipping (Rs 10) 385 5799 -7 10 30 20 23 5011 1 3 10

Shipping The shipper took delivery of secondhand medium gas carrier Jag Vijaya (built in1997) of about 35,420
Beta: 0.90 cubic metres. The contract has been signed in September 2017. Current fleet stands at 47 vessels,
comprising 31 tankers (12 crude carriers, 16 product tankers, three LPG carrier) and 16 dry bulk
carriers (one Capesize, eight Kamsarmax, seven Supramax), with an average age of 9.98 years and
aggregating 3.83 million deadweight tonnage. Additionally, there is commitment to purchase one
secondhand large range-2 product carrier.

Capital First (Rs 10) 734 7177 -8 9 36 11 26 2140 6 1 31

Finance The finance company raised Rs 80 crore by issuing 800 rated, listed, unsecured, redeemable, non-
Beta: 2.25 convertible perpetual securities in the nature of debentures with face value of Rs 10 lakh each on
private placement basis.

Granules India (Re 1) 113 2874 -10 0 53 1 12 861 1 7 20

Pharmaceuticals The integrated pharmaceutical producer’s shareholders at the annual general meeting approved the
Beta: 1.75 proposal to increase investment limits of foreign institutional investors and foreign portfolio investors
in the shares.

# Mid-cap stocks with market capitalisation above Rs 1000 crore and below Rs 8000 crore. Beta is a measure of a stock’s volatility in relation to the key benchmark index. Higher the beta of the stock, higher will
be the volatility in the stock price and, hence, riskier the investments. The beta of the index or the market is pegged at 1. Interest coverage ratio (ICR) is a measure of a company’s ability to meet its interest
payments on outstanding debt. Higher the ICR, higher is the ability of the company to service its outstanding debt. D/E and ICR is of the latest financial year. P/E is based on EPS for the TTM figures available.
Promoters, domestic institutions and FII shareholding is as on 30 June 2017. CMP as on 29 September 2017. Data is on consolidated priority basis.
Compiled by Hitesh Dharawat

26 Oct 09 – 22, 2017 CAPITAL MARKET

MarketWatch
Market Report for the country as a whole till 27 September
2017 was 5% below normal rainfall.

Cyclone Yellen The water storage available in 91 major

reservoirs of the country for the week end-
ing on September 28, 2017 was 103.429 bil-
Foreign investors pull out on prospect of higher yields in the US lion cubic meters, 66% of total storage ca-
and increase in US-N Korea tension pacity of these reservoirs. This percentage
was at 61% for the week ending on 21 Sep-
The broader market plunged on persistent tember 2017. The level of water storage in
selling by foreign portfolio investors amid Stampede to exit the week ending on 28 September 2017 was
indications of an imminent rate hike in the 89% of the storage of the corresponding
The broader market plunged as the
United States before the year-end as the Federal Reserve sets to trim the US$4.5 period of last year and 87% of storage of
Federal Reserve begins trimming the trillion balance-sheet built up after the the average of last 10 years.
US$4.5 trillion balance-sheet built up after September 2008 financial meltdown The Reserve Bank of India (RBI) in-
the September 2008 financial meltdown. 10500 creased the foreign investment limits for gov-
Higher interest rates in the developed econo- Nifty 50 ernment bonds by Rs 8000 crore (US$1.22
mies lead to pulling out of hot money from 10000
billion) to Rs 2.5 trillion for the October-
the emerging markets. December quarter, after current quotas had
9500
Also, the continuing war of words be- s SM A
been almost fully exhausted. The limits for
Nifty 200 day
tween the US President Donald Trump and 9000 long-term investors in government bonds have
North Korea’s Kim Jong-un further damp- been increased Rs 6000 crore, while the lim-
ened the market mood. 8500 l
J A
l
S
l l
29 Sep
its for general investors Rs 2000 crore.
North Korea’s foreign minister said the The Centre reportedly plans to borrow
Nifty-200-day simple moving average .
country may test a hydrogen bomb over the Rs 2.08 lakh crore from the market in the
Pacific Ocean, following Trump’s threat of borders and a blast in the Pacific could po- second half of the fiscal ending March 2018
making Korea “pay dearly”. North Korea has tentially threaten the US and other countries (FY 2018), reiterating the commitment to
never tested a nuclear weapon outside its with radioactive fallout. meet the fiscal deficit target of 3.2% of the
Reports of Indian Army on 27 September gross domestic product (GDP). The Budget
Domestic flavour 2017 carrying out a surgical strike along the for the current fiscal has pegged gross bor-
Myanmar border and targeted Naga insurgent rowing at Rs 5.8 lakh crore and net borrow-
How the indices moved camps, too, created panic. The S&P BSE Sensex ing at Rs 4.25 lakh crore.
VARI (%) tumbled 439.95 points, or 1.39%, that day. India’s external debt stock decreased 2.7%
Meanwhile, the India Meteorological to US$471.9 billion end March 2017 over a
NAME 29-SEP-17 PE 15 DAYS YEARLY Department said that area weighted rainfall year ago due to the fall in long-term debt,
S&P BSE Sensex 31283.72 23.41 -3.06 12.42
particularly non-resident Indian depos-
Nifty 9788.6 25.43 -2.94 13.94
Inflows and outflows its and commercial borrowings. Long-
S&P BSE 500 13610.7 26.03 -3.32 17.3 term external debt fell 4.4% to
S&P BSE 200 4280.88 24.52 -3.34 15.92 Net investment in equities and debt by foreign US$383.9 billion. It accounted for
S&P BSE Mid-Cap 15436.01 39.2 -3.36 19.52 portfolio investors and mutual funds 81.4% of total external debt compared
S&P BSE Small-Cap 16113.68 76.35 -3.44 28.76 with 82.8% end March 2016.
EQUITY FPIs (Rs cr) MFs (Rs cr)
S&P BSE Realty Index 2065.41 58.17 -5.7 40.91 Short-term external debt increased
S&P BSE Cap Goods 17172.12 28.25 -5.43 18.22 EQUITY DEBT EQUITY DEBT
5.5% to US$88 billion end March 2017
18-09-2017 -78.82 33.5 729.95 1466.68
S&P BSE Basic Materl 3134.58 34.54 -4.82 33.44 due to the increase in trade related cred-
19-09-2017 -1577.91 864.15 -109.85 -3152.55
S&P BSE Energy 3767.66 14.11 -4.54 29.9 20-09-2017 -885.88 168.66 837.31 -55.02 its, a major component of short-term
S&P BSE Industrials 3409.07 35.8 -3.86 13.73 21-09-2017 -1049.43 -144.58 302.34 -287.66 debt with a share of 98.3%. Govern-
S&P BSE Finance 5561.17 27.72 -3.62 26.73 22-09-2017 981.18 -268.9 351.14 5371.81 ment (sovereign) external debt was up
S&P BSE Power 2206.23 19.16 -3.61 12.17 25-09-2017 -28.83 -955.71 1116.43 2468.79 from US$93.4 billion to US$95.8 bil-
S&P BSE FMCG 9772.71 39.56 -3.59 15.34 26-09-2017 -1656.32 -630.99 1300.49 433.86 lion, constituting 20.3% of the total
27-09-2017 -518.24 -44.15 1424.09 95.78 external debt compared with 19.3% in
S&P BSE BANKEX 27025.26 28.29 -3.4 23.35
28-09-2017 -4677.74 -1181.82 4008.34 1792.7 the previous year.
S&P BSE Metal 13563.9 30.17 -2.95 40.57
Total -9491.99 -2159.84 9960.24 8134.39
S&P BSE Consu Dura 17554.86 38.35 -2.92 40.89 India’s merchandise exports rose
September* -11392.3 1348.89 15825.84 32149.65
S&P BSE Oil&Gas 14842.54 12.63 -2.54 32.67 CY 2017* 34353.06 129862.1 85413.26 293939.2
10.3% to US$23.82 billion in August
S&P BSE Healthcare 13487.76 31.13 -2 -16.26 CY 2016 18752.88 -43400.9 46849.5 330205.6 2017 over a year ago. Merchandise im-
S&P BSE Tech 5607.57 20.56 -1.31 -0.03 CY 2015 18355.58 46920.71 72197.7 433809.6 ports jumped 21% to US$35.46 bil-
CY 2014 97031.08 158229.7 23421.6 626336.8 lion. The trade deficit galloped 51.1%
S&P BSE Utilities 2064.36 24.13 -1.28 23.95
CY 2013 112538.7 -33846.1 -18776.4 485254.4 to US$11.64 billion from US$7.71 bil-
S&P BSE Auto 24180.04 26.48 -1.24 10.22
CY 2012 129319 38451.7 -20604.1 455053.1 lion in August 2016.
S&P BSE IT Sector 9946.6 15.98 -1.23 -2.35 * till 28 September. CY: Calendar year. FPIs: foreign portfolio As per the RBI, India’s services
S&P BSE Telecom 1363.93 -40.97 -0.19 16.38 investors. MFs: Mutual funds.
exports increased 3.2% to US$13.18

Oct 09 – 22, 2017 CAPITAL MARKET 27

MarketWatch

In the limelight
BSE Large caps BSE Mid-caps BSE Small-caps
VARI (%) VARI (%) VARI (%)
NAME 29 SEP-17 PE 15 DAYS YEARLY NAME 29 SEP-17 PE 15 DAYS YEARLY NAME 29 SEP-17 PE 15 DAYS YEARLY
Gainers Gainers Gainers
Oil India 352.5 11.89 8.93 17.76 Rajesh Exports 817.35 18.96 8.12 79.05 Nitin Fire Prot. 10.05 0 61.84 -60.36
Bharti Infra. 398.25 27.75 6.73 7.39 Oberoi Realty 423.35 39.76 6.92 46.16 ITI* 137.2 41.7 49.95 415.79
Dr Reddy’s Labs 2329.4 32.06 5.39 -25.75 Ashok Leyland 123.05 23.41 5.35 60.22 TVS Elec. 289.4 71.97 30.68 210.68
GAIL (India) 419.1 21.96 4.8 53.96 United Breweries 821.4 94.58 4.15 -6.4 Media Matrix 7.81 59.48 30.6 -7.57
Cipla 584.95 43.74 4.36 -2.65 Glaxosmi. Pharma 2497.2 96.01 3.58 -10.96 Om Metals Infrap 74.6 65.04 24.96 79.33
Coal India 270.6 19.64 4.12 -17.32 Gillette India* 5598.3 72.09 2.69 29.94 Gokaldas Exports 107.25 0 24.93 44.06
Tech Mahindra 457.25 15.56 3.22 7.02 Oracle Fin.Serv. 3630.5 24.83 2.65 13.5 Ashapura Inti. 500.2 58.93 24.75 42.63
Bajaj Auto 3108.15 23.07 2.85 9.27 Bajaj Holdings 2794 12.23 2.19 46.98 Rai S R Mohota* 269.55 136.14 23.39 223.78
ONGC 170.65 10.9 2.25 1.9 Torrent Pharma. 1231.25 25.1 1.52 -24.06 Capri Global 113.9 30.55 22.28 101.38
Motherson Sumi 336.3 31.72 1.17 64.64 TVS Motor Co. 658.5 73.13 1.32 89.14 T.V. Today Netw. 348.45 21.8 22.26 17.82
Losers Losers Losers
DLF 164 60.74 -14.54 16.98 Central Bank 74.75 0 -18.26 -18.88 Sri Adhik. Bros. 81.85 66.57 -36.38 -67.57
Siemens 1199.2 107.77 -12.94 -1.62 SAIL 53.65 0 -13.75 18.69 Gammon India 6.39 0 -29.24 -58.1
NMDC 117.6 16.35 -10.84 14.73 Canara Bank 308.05 13.56 -11.31 6.46 Educomp Sol. 5.84 0 -26.91 -49.7
Punjab Natl.Bank 129.05 23.24 -10.75 -5.67 Bank of India 137.45 0 -11.01 24.61 HFCL 24.15 24.83 -26.15 61.54
Asian Paints 1117.05 56.26 -10.22 -4.36 Adani Enterp. 116.35 17.95 -10.77 78.45 Shilpi Cable 18.15 1.04 -24.84 -90.78
ACC 1654.15 42.07 -9.16 4.23 Jindal Steel 134.75 0 -9.59 80.39 Virtual Global* 0.89 8.9 -21.93 -75.07
Aurobindo Pharma 691.75 18.13 -8.79 -16.16 Bajaj Finserv 5146.55 34.42 -9.29 66.02 SE Investments 190.8 14.81 -20.42 -8.27
Rural Elec.Corp. 152.8 5 -8.78 30.65 Piramal Enterp. 2625.1 33.97 -8.91 43.72 IOL Chemicals* 48.3 42 -18.27 -65.45
UltraTech Cem. 3852.8 37.07 -8.37 -0.13 GMR Infra. 16.35 0 -8.66 31.64 Jyoti Structures 11 0 -18.22 -11.79
Titan Company 582.7 65.64 -7.78 48.36 Amara Raja Batt.* 710 27.09 -8.19 -28.86 Rainbow Papers 3.1 0 -17.55 -24.76
* PE on standalone basis, others on consolidated basis, * PE on standalone basis, others on consolidated basis, * P/E on standalone basis, others on consolidated basis,
for TTM based on latest results. for TTM based on latest results for TTM based on latest results

billion in July 2017 over July 2016. Ser- assistance of up to Rs 2.5 lakh per each house
Commodity flow
vices imports declined 1% to US$7.33 bil- to be built by private builders even on pri-
Monthly variation : 6.2%
Yearly variation : 10.0% lion in July 2017. Services trade surplus vate lands besides opening up potential for
Closing price (29 Sep 2017) : Rs 57.54 improved 8.9% to US$5.84 billion. private investments in affordable housing
61 The total revenue of goods and services projects on government lands in urban areas.
59
tax (GST) paid under different heads (up to Prime Minister Narendra Modi on 25 Sep-
Brent crude oil per barrel in US$
25 September, 2017) in August was Rs tember 2017 launched the Pradhan Mantri
57
90669 crore. The total Central GST revenues Sahaj Bijli Har Ghar Yojana, or Saubhagya, at
55 were Rs 14402 crore, state GST revenues New Delhi. The aim of this scheme is to pro-
Rs 21067 crore, integrated GST (IGST) rev- vide power to all homes. The prime minister
53
enues Rs 47377 crore (of which IGST from has constituted the Economic Advisory Coun-
51
l l l l l l l l l l l l l
imports in August 2017 is Rs 23180 crore) cil to the Prime Minister (EAC-PM). The five-
29 Aug 29 Sep
2017
14-Sep
2017
and compensation cess Rs 7823 crore (of member council consists of Bibek Debroy,
(+) Appreciation. (-) Depreciation which Rs 547 crore is compensation cess member, Niti Aayog, who will be the chair-
from imports in August 2017). man. Part-time members will be Surjit Bhalla,
The Union Cabinet has given its ap- Rathin Roy and Ashima Goyal. Ratan Watal,
Exchange equation proval to pay productivity-linked bonus principal advisor, Niti Aayog, will be mem-
Monthly variation : 1.9% equivalent to 78 days wages to eligible non- ber-secretary. The EAC-PM is an indepen-
Yearly variation : -1.9%
Closing price (29 Sep 2017) : Rs 65.36 gazetted railway employees (excluding RPF dent body to give advice on economic and re-
63.5
and RPSF personnel) for FY 2017. About lated issues to the government.
12.3-lakh non-gazetted railway employees The Organisation for Economic Co-op-
64.0
are likely to benefit from the decision. The eration and Development’s (OECD) has
64.5 bill will be Rs 2245.45 crore. The wage cal- trimmed India’s growth forecast for current
INR/USD culation ceiling prescribed for payment of fiscal to 6.7%, down from 7.3% estimated in
65.0
PLB is Rs 7000 per month. The maximum June, citing transitory impact of GST rollout
65.5 amount payable per eligible railway em- and demonetisation. In contrast, China’s
ployee is Rs 17951 for 78 days. economy gets a 0.2% lift from its earlier as-
66.0 l l l l l l l l l l l l l
29 Aug 14-Sep 29 Sep The Central government announced a new sessment to 6.8% for 2017.
2017 2017
public-private partnership policy for afford- The world economy has picked up mo-
(+) Appreciation. (-) Depreciation
able housing that allows extending central mentum as expanding investment, employ-

28 Oct 09 – 22, 2017 CAPITAL MARKET

MarketWatch

Taking off ment and trade support synchronized growth

across most countries, according to the
BSE 500 companies hitting life-time highs in the fortnight ended 29 September 2017 OECD’s latest Interim Economic Outlook.
STAKE TTM The pace of expansion is projected to be faster
COMPANY ALL-TIME 52-WEEK PROMO. MF FIIs NPM P/E P/BV this year than in CY 2016, with a further
uptick expected in CY 2018. But strong, sus-
HIGH-DATE HIGH (Rs) LOW (Rs) (%) (%) (%) (%) tainable, and inclusive medium-term growth
Tata Global 19-09-2017 220.25 114.5 34.45 15.36 7.04 7.09 27.39 2.08 is not yet secured. The OECD projects that
Titan Company 19-09-2017 653.55 296.3 53.05 21.64 2.62 6.53 65.64 12.22 the global economy will grow 3.5% this year
Honeywell Auto* 19-09-2017 17837 8021 75 0.3 15.34 7.46 74.44 11.77
and 3.7% in CY 2018 on industrial produc-
Finolex Inds.* 19-09-2017 699.9 385 52.47 4.51 7.7 11.1 22.52 3.4
tion and trade picking up and acceleration in
Dewan Hsg. Fin.* 19-09-2017 651.3 214.2 39.24 25.03 4.14 31.75 11.66 2.23
BEML Ltd* 19-09-2017 1947.45 770.15 54.03 7.63 18.61 3.43 77.96 3.03
the rebound of technology spending. The
Kotak Mah. Bank 19-09-2017 1045 692.4 30.07 40.19 6.36 22.91 41.43 4.31 projections reflect modest improvements in
Chambal Fert.* 19-09-2017 156.9 53.7 57.93 7.2 6.44 5.55 16.32 2.75 the global economy since the previous Eco-
HDFC Bank* 19-09-2017 1868 1159.3 21.1 34.31 8.58 21.28 30.65 5.08 nomic Outlook in June 2017.
Magma Fincorp 19-09-2017 191.4 86.5 27.75 16.45 1.34 0.82 213.63 1.84 Federal Reserve Chairwoman Janet
TVS Motor Co.* 19-09-2017 666.35 316.8 57.4 20.21 8.34 4.49 73.13 14.12 Yellen cautioned against moving too slowly
Jyothy Lab. 19-09-2017 441 318 66.89 14.02 5.62 11.68 39.05 6.75 on interest rates. Yellen said there is a risk
Gayatri Projects* 19-09-2017 204.45 114 47.48 34.55 0 4.42 0 6.52 that the labor market could become over-
Petronet LNG* 19-09-2017 242.2 162.9 50 22.33 11.95 6.94 21.25 4.24 heated, causing an inflation problem down
Sheela Foam 19-09-2017 1584 860 85.68 3.05 7.39 6.64 61.57 15.77 the road. The US central bank, at the con-
Gujarat Gas* 19-09-2017 889.7 487.1 60.89 14.82 1.33 4.71 50.36 6.89
clusion of its two-day monetary policy meet
Infibeam Incorp. 19-09-2017 160 82.51 44.52 7.92 3.79 10.36 129.28 8.28
on 20 September 2017, left rates unchanged.
CESC* 20-09-2017 1079.7 539.1 49.92 0 17.38 11.83 21.78 1.23
Whirlpool India* 20-09-2017 1347.8 835.8 75 6.4 8.45 7.56 50.61 10.96 The Federal Reserve stated that it will begin
Reliance Inds. 20-09-2017 872.1 466 46.21 23.01 2.35 9.84 15.97 1.88 in October rolling off its US$4.5-trillion bal-
Rain Industries 20-09-2017 189 41 41.1 17.44 4.66 4.4 13 1.96 ance sheet, most of which consists of the
Timken India* 20-09-2017 818.85 515 75 1.97 9.56 8.51 58.33 8.57 Treasuries and mortgage-backed securities.
Motherson Sumi 20-09-2017 349.2 185.33 63.11 19.99 6.34 4.66 31.72 8.56 US industrial output fell in August for
Trident* 20-09-2017 109.5 45.85 67.77 1.47 0.54 7.43 15.6 1.8 the first time since January as Hurricane
Pidilite Inds. 20-09-2017 867.4 568.75 69.61 11.82 3.22 14.67 49.75 11.71 Harvey battered oil, gas and chemical plants
Page Industries* 20-09-2017 19560 12360 49.01 36.13 5.4 12.59 72.34 30.82 along the Gulf Coast and a cool summer
Indiabulls Hous. 20-09-2017 1323.4 616.05 23.61 60.92 3.03 28.2 16.71 4.23 sapped utility demand in the east, the Fed-
Endurance Tech. 20-09-2017 1075 518.25 82.5 9.12 4.67 6.05 40.53 8.06
eral Reserve said. Overall industrial produc-
Bata India* 21-09-2017 750 400 52.96 5.97 15.17 6.63 50.4 6.69
tion fell 0.9% after a July increase revised
Somany Ceramics* 21-09-2017 915 471.05 51.53 6.27 17.54 4.23 38.89 6.94
DCM Shriram 21-09-2017 470 195.85 63.88 1.74 0.72 9.87 11.12 2.71
upward to 0.4%.
GRUH Finance* 21-09-2017 551 270 58.36 11.09 8.39 19.76 58.12 16.12 The closely watched ISM-Institute for
Avanti Feeds 21-09-2017 2175 411 43.89 4.59 1.11 10.55 29.59 14.38 Supply Management (ISM) manufacturing
South Ind.Bank* 21-09-2017 32 16.83 0 38.04 6.29 6.77 12.78 1.11 index was at 60.8 in September, representing
NBCC 21-09-2017 228.5 133.07 75 4.75 0.77 5.38 50.5 11.72 the highest level for the economic reading since
Indraprastha Gas* 21-09-2017 1524.25 764 45 24.08 10.31 14.75 34.48 6.83 2004 and up from 58.8% in August. A read-
Guj.St.Petronet* 21-09-2017 211.45 119 37.66 17.48 14.8 49.61 20.94 2.54 ing of 50 indicates expansion. A separate read-
Yes Bank* 21-09-2017 383.25 218.25 20.14 45.76 11.13 20.57 24 2.98 ing on manufacturing activity from IHS
L&T Fin.Holdings 21-09-2017 212.7 81 64.23 10.96 3.51 13.3 31.05 4.31 Markit came in at 53.1 for the same month,
Bombay Dyeing* 22-09-2017 222 41.2 53.68 5.76 0.01 2.97 0 10.66 compared with 52.8 in the prior month.
Bajaj Auto 25-09-2017 3181 2510 49.3 17.48 2.33 18.41 23.07 5.04
China’s industrial companies profit rose
Oberoi Realty 25-09-2017 437.5 255.6 72.49 24.94 0.73 34.34 39.76 2.51
24% in August, accelerating from the previ-
T.V. Today Netw.* 26-09-2017 433.6 211 57.42 7.06 8.57 17.83 21.8 3.65
Avenue Super.* 26-09-2017 1217 558.75 82.2 3.6 3.8 4.2 141.78 11.9
ous month in an indication economic growth
Guj Alkalies* 27-09-2017 570 281.1 46.28 5.42 0.97 15.25 13.72 1.22 remains in good heart even as signs emerge of
Hatsun AgroProd.* 27-09-2017 719 319.95 74.71 3.38 0.28 3.22 75.78 30.46 fading momentum following a robust first half.
Astral Poly 27-09-2017 745 368 59.33 18.57 6 7.61 61.32 10.42 Standard & Poor’s cut China’s sovereign
Aegis Logistics 29-09-2017 243.8 126.1 61.5 11.93 1.81 3.33 58.36 13.05 credit rating, citing concern over soaring debt
Ashok Leyland* 29-09-2017 123.8 73.6 51.29 22.2 3.54 5.25 23.41 5.63 levels despite government pledges to stay
Bombay Burmah* 29-09-2017 1338.45 452.8 65.91 2.32 4 -0.66 20.73 3.85 ahead of financial risks, but did now change
Gillette India* 29-09-2017 5656 4025 75 5.07 4.75 14.6 72.09 36.45 its outlook on the world’s second-largest
P & G Hygiene* 29-09-2017 8517 6427.85 70.64 3.8 5.73 18.65 63.14 51.94 economy to stable from negative. The action
Rajesh Exports 29-09-2017 824 433 53.94 18.27 0.4 0.54 18.96 4.28 brings the ratings across the three major credit-
Cera Sanitary.* 29-09-2017 3290 1853.15 54.75 7.33 8.39 9.54 43.2 8.14
BSE 500 companies hitting life time highs in the fortnight ended 29 September 2017. *: Results are on standalone basis for others on
rating firms in line. Fitch Ratings lowered
consolidated basis for TTM ended 30 June 2017 China’s rating in 2013, while Moody’s In-

Oct 09 – 22, 2017 CAPITAL MARKET 29

MarketWatch
vestors Service did so just last May.
The downgrade of China’s rating, the
first such move by S&P since 1999, reflects
its assessment that “a prolonged period of
strong credit growth has increased China’s
economic and financial risks”.
China’s industrial companies rose 24%
Concern on the external front Worry on the homefront
India’s merchandise exports rose 10.3% Federal Reserve Chairwoman Janet
and merchandise imports jumped 21% in Yellen cautioned against moving too
August 2017 over a year ago. The trade slowly on interest rates due to the risk of
deficit galloped 51.1% to US$11.64 billion overheating of the labor market
14.0 4170

in August, accelerating from the previous 13.5

4110
month in an indication economic growth re- 13.0
4050
mains in good heart even as signs emerge of 12.5
India VIX
BSE Dollex 30
fading momentum following a robust first half. 12.0
3990

Japanese manufacturing activity ex- 3930

11.5
panded in September at the fastest pace in
11.0 l l l l l l l l l l l l l 3870 l l l l l l l l l l l l l
four months. The Markit/Nikkei Japan 29 Aug 14-Sep 29 Sep 29 Aug 14-Sep 29 Sep
2017 2017 2017 2017
Manufacturing Purchasing Managers’ In- Rise or fall in India VIX depicts increase or decline in volatility Rise or fall in the BSE Dollex 30 depicts firmness or weakness
dex (PMI) rose to a seasonally adjusted in the near term of the rupee
52.6 in September from a final 52.2 in Au-
gust. Separately, Japan’s government main- new economic stimulus measures in a pack- measure of sentiment rose to minus 1.2 in
tained its moderately optimistic view on age worth around 2 trillion yen ($17.80 bil- September from minus 1.5 in August, reach-
the economy, signaling that a recovery is lion) by the end of the year. ing its highest level since April 2001, two
broadening and gathering strength even as Euro zone economic sentiment im- years after the euro was launched.
inflation remains anemic. proved more than expected in September, German jobless claims declined more
Japanese industrial production rose in reaching levels last seen in July 2007, data sharply than expected in September as the
August, continuing its patchy performance from the European Commission showed. unemployment rate fell to a record low.
this year. Industrial output increased 2.1% The survey showed that sentiment in the 19 Jobless claims fell by 23,000 in September
on month, according to the Ministry of countries sharing the euro rose to 113.0 in from August. The figures are adjusted for
Economy, Trade and Industry. Japanese September from 111.9 in August. seasonal swings. German adjusted jobless
consumer prices rose for an eighth straight Consumers in the 19 countries that use rate fell to 5.6% in September, the lowest
month and at a faster pace in August. The the euro are more optimistic about their pros- rate since the beginning of the data series in
core consumer price index in August rose pects than at any time since the currency January 1992.
0.7% from a year earlier compared with a was in its infancy, an indication that the German business sentiment slipped in
0.5% increase in July. economy may be on course for its strongest September, albeit from a high level, accord-
Meanwhile, Japanese Prime Minister year since the global financial crisis. The ing to the Ifo Institute’s monthly survey,
Shinzo Abe ordered his cabinet to compile European Commission said its monthly which was conducted ahead of Sunday’s
general election. The German think tank said
that its business climate index fell to 115.2
Global equity markets points from 115.9 points in August.
Returns in local currencies Returns in US dollars French consumer spending was weaker
than expected in August over the summer,
COUNTRY INDEX FORT 1 MNTH 3 MNTHS 1 YEAR FORT 1 MNTH 3 MNTHS 1 YEAR indicating that the euro zone’s second-larg-
Australia ASX 200 -0.2 -0.8 -0.6 4.5 -2.3 -2.5 2.8 6.9 est economy may be losing the momentum
Brazil Bovespa -1.9 3.3 21.6 27.3 -3.0 2.3 28.1 30.6 it built in the first half of the year. Con-
China Shanghai Composite -0.1 -0.5 6.1 11.5 -1.6 -1.9 9.0 11.8 sumer spending in the eurozone’s second-
France CAC 40 2.2 4.0 1.2 19.8 1.2 3.3 1.3 19.9 largest economy fell 0.3% over the month,
India BSE Sensex -3.1 -1.9 0.5 12.3 -4.8 -4.1 -0.8 14.5 national statistic agency Insee said.
India Nifty -2.9 -1.9 2.2 13.7 -4.7 -4.1 0.9 15.9 A read on second-quarter economic
Japan Nikkei 225 2.2 3.4 1.1 23.7 0.6 1.0 -0.1 11.2 growth in US was raised to 3.1% from 3%.
New Zealand NZX 50 Index 2.2 1.4 5.0 7.7 1.3 2.2 4.0 6.7
South Korea KOSPI 0.4 1.6 0.7 17.2 -0.7 -0.5 -0.1 12.6 Outlook
United Kingdom FTSE 100 2.2 -0.9 -0.7 6.9 0.9 2.4 4.6 10.0 Macroeconomic data, ongoing geopolitical
Germany DAX 2.5 5.7 0.7 22.1 1.2 5.1 6.3 28.3 developments between US and North Ko-
Russia MICEX 1.1 3.3 11.2 5.0 1.1 3.2 14.9 14.4 rea, Q2 results season of India Inc. starting
UAE ADX General -1.9 -1.6 -0.8 -1.8 -1.9 -1.6 -0.8 -1.8 from second week of October, investments
Mexico IPC 0.8 -1.4 2.8 6.6 -1.7 -3.4 1.8 13.6 by foreign portfolio investors, the move-
Singapore Straits Times 0.3 -1.7 0.3 12.3 -0.6 -1.8 2.4 12.8 ment of rupee against the dollar and crude
USA Dow Jones 0.6 1.9 4.7 22.4 0.6 1.9 4.7 22.4 oil price movement will dictate trend on the
USA S&P 500 0.8 1.7 3.3 16.2 0.8 1.7 3.3 16.2 bourses in the near term.
As on 29 September 2017. Returns in percentage. — Amit Shenai

30 Oct 09 – 22, 2017 CAPITAL MARKET