India Strategy: Mispriced PSU: Good Tactical Opportunity

India Strategy
Mispriced PSU: Good Tactical Opportunity

Shiv Chanani - shiv.chanani@elaracapital.com - +91 22 6164 8572
Bhawana Chhabra, CFA - bhawana.chhabra@elaracapital.com - +91 22 6164 8500
Anushka Chhajed - anushka.chhajed@elaracapital.com - +91 22 6164 8536 13 October 2021
Table of Content
Key Indices prices’ long term growth attribution in peak range…………………………………………………………. 3
There is steam Left in PSU space………………………………………………………………………………………… 4
List of PSU’s benefitting from either of the three triggers ……………………………………………………… 5
Few Sectors with More Mispriced Opportunities Than Others…………………………………………………. 6
What’s in the price – Nifty 50, Nifty Midcap 100 and BSE 200……........................................................ 7
Slice and Dice of BSE 200………………………………………………………………………………………………………………. 11
Sector Trends……………………………………………………………………………………………………………………………….. 22
Annexure………………………………………………………………………….............................................................. 33
Annexure 1: Methodology……………………………………………………………………………………………………. 34
Annexure 2: Other key terminologies……………………………………………………………………………………. 35
Annexure 3: Industry-wise – BSE 200……………………………………………………………………………………. 36
Note: The presentation analyses prices as of 11th October, 2011
Elara Securities (India) Private Limited What’s in the price 2

Key Indices prices’ long term growth attribution in peak range
Our proprietary valuation model “What’s in the price?” reverse engineers the price of a security and index to understand what
percentage of price can be explained by current earnings (CBV), near-term earnings growth (STGV) and long-term growth expectations
(LTGV), detailed calculation methodology here). Long-term growth expectations are generally a balancing figure where a higher number
indicates too many expectations are built in, leading to overstretched valuation. In this report, we analyze prices of three indices – the
Nifty 50, BSE 200 & Nifty Midcap 100 – and components of BSE 200 universe for earnings attribution and find mispriced opportunities.
 Post July, markets have broken out on the upper side across market caps. The BSE 200, the Nifty 50 and the Nifty midcap 100 are up
9%, 10% and 14%, respectively. This upmove has priced in the best of earnings expectations across these indices with prices close to
peak value to long-term earnings growth expectations
 For Nifty’s price, 24% of price can be attributed to current earnings and 14% to growth over the next two years. The rest
(62%) can be attributed to long-term growth, which lies in the highest range historically
 In case of BSE 200 and Nifty Mid cap 100 as well, 62% and 63% of the price can be attributed to long-term earnings potential,
respectively, again close to peak levels
 The upcoming earnings season would be important and closely watched by participants, as: 1) markets are pricing in the best of
earnings growth, and a miss in earnings catchup may lead to correction, and 2) the ongoing supply chain-led disruptions in raw
materials prices could lead to an earnings miss on account of compressed margin. Hence, we would closely monitor developments on
this front. On the other side, in-line or slightly better-than-expected earnings may not lead to a price run-up because the best is
already priced in. Instead, we expect short-term earnings share in price to go up on our “What’s in the price” model
 When we look further into stock distribution of BSE 200, about 67% of stocks are ascribing >50% value to long-term earnings, near
the peak seen in FY19. What remains interesting is 11.7% of stocks prices are still ascribing negative value to long-term earnings,
indicating mispriced opportunities. Given overall stretched valuation of markets, we believe stock-specific opportunities are the way to
earn superior returns

There is steam Left in PSU space
There are three near terms triggers, which would support price expansion in PSU space: a) Unlock of value through disinvestment, 2) high
number of mispriced and still undervalued opportunities, despite recent run up, and 3) Raw material prices benefit
Disinvestment to unlock value in PSU space
• GoI has made it’s intent to privatize very clear, with Air India leading the way. We believe it will improve efficiency and unlock huge value in the space.
• Current run up still doesn’t capture the unlock value potential of PSU space, as markets are still ascribing negative long term earnings value to this space at
large
Most number of mispriced opportunities come from PSU space
• Despite the PSU Index prices have close to doubled in the past year and it has been one of the best-performing indices YTD, in our screen for companies with
the highest valuation comfort (companies with the lowest price value being derived from long-term earnings expectations), out of 25 companies, 21 are PSU
• Moreover, LTGV, ie, long-term growth expectations that are built in, is negative, indicating these opportunities are actually mispriced and have the potential for
price expansion in the near term
Natural resources companies to see top line benefit of
Raw material prices uptick to benefit PSUs
raw material price hike, leading to margin expansion
• The price increase across commodities, which began as a reflation trade and profit growth
in the second half of the past year, has only accelerated, owing to global 150% 123%
98% 95% 93%
supply chain disruptions, emerging from China. The price rise is 100% 71% 79%
49% 53% 49% 59% 55%
widespread across energy (Oil & Gas) to agri commodities and chemicals 34% 39% 39% 44%
50% 20% 28% 21% 28% 24% 23% 35%
17%
• In this scenario, companies which have direct impact of commodities 0%
prices on top line will see profit growth as well as margin expansion, -50% -22%
RM prices Index*
Elara Paints RM
India Crude
Elara Autos RM
RM prices Index*
Elara Fertilisers
Elara Chemicals
Elara Cement RM
owing to operating leverage benefits whereas consumption companies are
Prices Index*
Prices Index*
Agrochemicals
prices Index
prices Index
Prices Index*
Basket
Elara FMCG
expected to take a margin hit depending on the level of pricing power
RM
Elara
RM
they are able to execute
• Given most PSU operate in commodity-heavy segments like energy
(ONGC, OMC & gas companies), metals (SAIL & NALCO), they stand to CY20 CY21 YTD Sep-21 Qtr, YoY (%)
benefit from commodity price rise and with plenty mispriced opportunities Note: '*Composite price movement calculation based on equalweight assigned to each component, Other
indices have raw material weightage based on production requirements; Composite prices calculated based on
in the sector, we see them as good tactical buys
raw materials required for an industry in general; Source: Bloomberg, Elara Securities Research

List of PSU’s benefitting from either of the three triggers
negative Natural Disinvestment P/E (x) ROE (%) Current CMP*
Company GICS sector
LTGV Resources potential (FY22E) (FY22E) LTGV (%) (INR)
Oil India Energy Y Y 6.0 17.7 (71.8) 239
Hindustan Petroleum Corp Energy Y Y 6.5 17.0 (59.7) 319
Indian Oil Energy Y Y 7.1 13.9 (35.0) 132
Oil & Natural Gas Energy Y Y 6.8 11.9 (33.7) 165
NMDC Materials Y Y 4.6 28.0 (21.9) 153
Coal India Energy Y Y 8.3 36.3 (17.2) 197
Gail India Utilities Y Y 8.9 14.5 (3.4) 159
Steel Authority Of India Materials Y Y 3.1 26.7 (54.1) 117
BEML Industrials Y Y 54.2 5.2 NA 1524
NALCO Materials Y Y 10.0 17.5 16.7 106
BPCL Energy Y 11.2 16.3 8.5 458
BHEL Industrials Y 1983.3 (0.4) 79.3 77
Concor Industrials Y 37.2 10.6 73.6 688
Shipping Corpn Industrials Y NA NA NA 138
IDBI Bank Financials Y NA NA NA 60
Gujarat State Petronet Utilities Y 9.5 26.1 (38.5) 315
Rural Electrification Corp Financials Y 3.3 20.2 (169.2) 159
Power Finance Corporation Financials Y 4.3 15.6 (116.8) 142
Union Bank Of India Financials Y 5.8 7.2 (105.1) 38
Bank Of India Financials Y 9.0 6.6 (63.0) 58
Bank Of Baroda Financials Y 7.4 7.3 (32.5) 88
NHPC Utilities Y 8.8 9.8 (29.1) 31
Punjab National Bank Financials Y 33.8 1.3 (16.6) 40
NTPC Utilities Y 8.7 12.1 (13.4) 145
Canara Bank Financials Y 12.4 6.1 (11.3) 177
Power Grid Corp Of India Utilities Y 9.8 17.2 (6.2) 193
Note: Prices as of 11th October 2021 Source: Bloomberg, Elara Securities Research

Few Sectors with More Mispriced Opportunities Than Others
At the sector level,
 All sector prices except energy are ascribing average or above average value to long-term earnings
 Financials’ prices were attributing lower-than-average value to long-term earnings potential until 2-3 months ago; this seems to
have reversed with the recent run-up in the sector. However, financials continues to have a higher number of mispriced
opportunities, with 18% stocks attributing negative value to long-term earnings potential
 Energy is interesting as historically it has been attributing negative value to long-term growth potential, indicating a long-term
mispricing in the sector, owing to regulatory overhaul. As on 11th October 2021, although contribution of long-term earnings
potential has improved, it remains negative at 29%
 Both consumption sub-segments (staples and discretionary) are close to historical average in terms to earnings attribution of price
between visible near-term and long-term earnings. While consumer discretionary has a few mispriced opportunities with 4% stocks
prices’ still attributing negative value to long-term earnings potential, staples stock distribution is skewed toward rich pricing in
long-term earnings
 Industrials and IT are both bullish on long-term growth as prices of these sectors are seeing life-time high contribution of long-
term earnings growth. In fact, distribution of stocks in these two sectors is also skewed toward rich pricing, indicating hardly any
mispriced opportunities
 Materials as a sector has a fairer distribution of stocks on LTGV heatmap with about 15% stocks attributing <0% value to long-
term earnings growth with presence of stocks across brackets
 Utilities has a more barbell distribution of stocks with stocks bunched up on either end of spectrum. About 39% of utilities stocks
have LTGV<0 and about 31% stocks have LTGV >75%. On an aggregate basis, as a sector, utilities is still richly priced as its prices
are attributing higher than average value to long-term earnings

WHAT’S IN THE PRICE – NIFTY 50, NIFTY MIDCAP 100 AND BSE 200
What’s in the Price – the Nifty
LTGV contribution in highest range, historically After the recent run-up, LTGV contribution to Nifty’s price
in highest range when compared to long term history…
 When we compare long term history of the pricing model,
we see that current Nifty price attributes close to the 100%
highest value to long-term growth potential (LTGV), 80% 47% 44% 52% 54% 51% 53% 52%
39%
55% 54% 62%
60%
indicating stretched valuation 11% 12% 14%
40% 12% 12% 11% 14% 15%
14% 16%
14%
 A closer look at near-term monthly history also is showing 20% 42% 44% 36% 35% 37%
46%
33% 31% 33% 30% 24%
similar trend with LTGV currently at 61% 0%
FY19
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY20
FY21
Latest
 In fact, this month we have observed the highest
contribution of LTGV component across indices like BSE 200 CBV STGV LTGV
and Nifty Midcap 100 Source: Bloomberg, Elara Securities Research
 The upcoming earnings season would be the next trigger to …and short term monthly history exhibits similar trend
determine near-term direction of markets, implying a miss 100%
may lead to correction, and in-line numbers may mean 80% 53% 52% 54% 59% 60% 58% 53% 54% 54% 56% 56% 56% 60% 62%
STGV contributing a bigger share to the price 60%
40% 12% 12% 12% 10% 11% 13% 18% 16% 16% 16% 16% 16% 15% 14%
20% 35% 36% 35% 31% 29% 29% 29% 30% 31% 29% 28% 28% 26% 24%
0%
Dec-20
Jan-21
Mar-21
Apr-21
Aug-20
Sep-20
Feb-21
Jul-21
Aug-21
Sep-21
Oct-20
Nov-20
May-21
Jun-21
CBV STGV LTGV
Source: Bloomberg, Elara Securities Research

What’s in the Price – BSE 200 and Nifty Midcap 100
LTGV contribution to midcap pricing moves LTGV component in BSE200 at 62%...
closer to peak too
(%)
100%
 LTGV contribution of price for Nifty MidCap 100 has 23%
80% 46% 42%
moved closer to peak at 63% and it is exhibiting 60%
52% 55% 53% 55% 57% 52%
25%
54% 62%
10%
similar movement for BSE 200 at 62% 40%
11%
8% 9% 12% 12% 11% 20% 17%
11%
48% 52%
20% 44% 40%
 The recent upmove across indices has pushed 36% 35% 33% 32% 27% 29% 27%
0%
valuation into the peak zone in terms of LTGV
Latest
FY18
FY12
FY13
FY14
FY15
FY16
FY17
FY19
FY20
FY21
contribution as well as other metrics, such as P/E. CBV STGV LTGV
The upcoming earnings season would be the lever Source: Bloomberg, Elara Securities Research
for the shift in composition of What’s in the Price …and for Nifty Midcap 100 also, it is inching closer to an
Framework all-time high
(%)
100%
20%
80% 42% 35%
45% 54% 53% 52% 52%
55% 61% 63%
34%
60% 8%
2%
11%
40% 13% 14%
23%
15%
58% 32% 9%
47% 53% 23% 47%
20% 33% 33% 33% 29%
22% 16% 17%
0%
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
CBV STGV LTGV

What’s in the Price – BSE 200
 At the current level, the market appears skewed toward richer valuation, as 33% of stocks are deriving 76-100% of the current
price from long-term growth potential. It is the highest share range historically
 Compared to March 2021, there has been a rise in the number of companies with >51% LTGV (58% vs 67%). The last time we
saw a similar high was in March 2019 at 69%
 Companies trading <50% LTGV are the second lowest at 33%. The last time we saw such a similar level, again, was in March 2019
at 31%
 Interestingly, 11.7% of companies are in the deep value zone (LTGV <0%), indicating mispriced opportunities, which gives us
further conviction on the stock-specific performance
While a majority of the market remains richly valued, 11.7% of BSE 200 stocks with LTGV contribution of <0%, present
mispriced opportunities
LTGV
% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Latest
<0 30.7 17.5 12.3 10.2 7.2 8.9 6.5 25.2 12.5 11.7
0-25 19.0 12.5 10.4 8.5 9.4 4.2 8.0 9.7 8.0 5.3
26-50 22.7 27.5 20.2 22.2 20.0 21.1 16.1 20.4 21.5 15.5
51-75 19.0 32.5 36.8 40.9 41.1 42.6 42.2 25.2 37.0 32.5
76-100 4.9 6.9 17.8 14.2 18.3 20.5 23.1 16.5 19.0 32.5
>100% 3.7 3.1 2.5 4.0 3.9 2.6 4.0 2.9 2.0 2.4

SLICE AND DICE OF BSE 200
Top 25 companies with highest valuation comfort – PSU dominate
Top 25 companies with high valuation comfort
 Companies with the lowest LTGV (the highest CBV+STGV) provide maximum valuation comfort vs earnings, as their current and
near-term earnings explain most (in some cases more than market price) of the current market price
 Twenty-one out of 25 companies are PSU indicating despite the recent run-up, this segment still offers value and plenty of mispriced
opportunities. Moreover, tactical levers, such as recent commodity prices run-up, would help the upcoming Q2 earnings of the
segment, making them good candidates for price expansion in the near term
Low LTGV as a % of current price
FY21 earnings P/E (x) ROE (%) CMP*
Company GICS sector 10Yr max (%) 10Yr min (%) Current LTGV (%)
growth (%) (FY22) (FY22) (INR)
Rural Electrification Corp Financials (57.6) (246.7) 71.1 3.3 20.2 (169.2) 159
Power Finance Corporation Financials (38.3) (195.9) 49.3 4.3 15.6 (116.8) 142
Union Bank Of India Financials 42.8 (105.1) NM 5.8 7.2 (105.1) 38
Oil India Energy (24.2) (202.0) 8.6 6.0 17.7 (71.8) 239
Bank Of India Financials 82.8 (63.0) NM! 9.0 6.6 (63.0) 58
Hindustan Petroleum Corp Energy 33.8 (104.3) 307.4 6.5 17.0 (59.7) 319
Steel Authority Of India Materials 95.1 (100.9) 95.7 3.1 26.7 (54.1) 117
Rajesh Exports Consumer Discretionary 38.1 (131.3) NM 12.8 11.8 (51.6) 608
Gujarat State Petronet Utilities 36.4 (48.5) (7.1) 9.5 26.1 (38.5) 315
Indian Oil Energy 3.7 (94.8) NM 7.1 13.9 (35.0) 132
Oil & Natural Gas Energy 22.9 (83.4) 49.0 6.8 11.9 (33.7) 165
Bank Of Baroda Financials 47.4 (96.7) (23.3) 7.4 7.3 (32.5) 88
NHPC Utilities 13.1 (83.6) 13.3 8.8 9.8 (29.1) 31
NMDC Materials 30.6 (65.1) 77.4 4.6 28.0 (21.9) 153
Coal India Energy 14.3 (115.1) (24.0) 8.3 36.3 (17.2) 197
Punjab National Bank Financials 71.9 (74.1) 235.5 33.8 1.3 (16.6) 40
NTPC Utilities 9.0 (61.4) 29.3 8.7 12.1 (13.4) 145
Canara Bank Financials 39.2 (90.3) NM 12.4 6.1 (11.3) 177
Power Grid Corp Of India Utilities 30.3 (65.4) 8.8 9.8 17.2 (6.2) 193
Vedanta Materials 35.4 (83.1) NM 6.2 25.3 (5.2) 298
Gail India Utilities (3.4) (148.5) (34.8) 8.9 14.5 (3.4) 159
Tata Steel Materials 82.4 (26.4) 380.7 4.5 36.4 (0.3) 1,314
LIC Housing Finance Financials 47.1 (60.8) 13.8 9.1 11.2 4.1 444
Petronet LNG Energy 34.6 (25.6) 8.7 12.3 22.0 5.6 230
Federal Bank Financials 50.0 (62.9) 0.4 8.3 11.9 6.5 86
Note: *pricing as on 11 October 2021; Source: Bloomberg, Elara Securities Research
Companies with Current LTGV Lower Than 10-year Average
10yr average (%) Current (%) Long term growth value (LTGV)
Current -
Hi Lo Range 10YR Max 10 YR
Name CBV STGV LTGV STDEV CBV STGV LTGV 10Yr Avg
(%) (%) Min (%)
(bps)
Auto
Exide Industries 46.1 8.9 44.4 12.9 43.8 12.6 43.6 63.1 (71) 59.3 16.8
Amara Raja Batteries 39.9 8.9 51.2 11.8 40.0 9.3 50.7 60.8 (56) 65.1 28.2
Bank
Union Bank Of India (11.8) 140.0 (28.2) 52.8 100.9 104.1 (105.1) 0.0 (7,687) 42.8 (105.1)
Bank Of India (66.5) 165.0 1.5 54.3 90.8 72.2 (63.0) 0.0 (6,450) 82.8 (63.0)
Bank Of Baroda 22.0 86.3 (8.3) 49.9 27.8 104.7 (32.5) 44.6 (2,412) 47.4 (96.7)
RBL Bank Ltd 28.7 27.4 43.9 31.0 28.6 45.8 25.6 27.3 (1,832) 78.7 5.6
Punjab National Bank (20.5) 119.0 1.5 45.9 38.7 78.0 (16.6) 39.4 (1,809) 71.9 (74.1)
Federal Bank 65.1 21.9 13.0 31.5 62.6 30.9 6.5 61.5 (652) 50.0 (62.9)
State Bank Of India 36.6 27.1 36.3 20.3 34.9 33.8 31.3 55.8 (504) 58.9 (3.7)
Bandhan Bank 29.7 21.9 48.5 21.4 25.8 30.6 43.6 23.6 (485) 79.8 32.4
Au Small Finance Bank 18.9 3.7 77.4 8.4 21.3 2.4 76.3 47.4 (104) 88.4 65.4
Kotak Mahindra Bank 18.2 5.6 76.2 5.2 19.5 4.6 75.9 64.8 (28) 82.1 64.5
Cement
ACC 34.1 12.8 53.0 14.7 34.5 18.2 47.4 50.9 (568) 67.8 26.2
Ultratech Cement 26.4 6.2 67.4 12.4 22.7 11.7 65.6 66.3 (181) 80.3 36.7
Consumer Discretionary
Rajesh Exports 74.2 40.5 (19.1) 54.2 59.8 91.8 (51.6) 47.1 (3,253) 38.1 (131.3)

Companies with Current LTGV Lower Than 10-year Average (contd)
Current -
Hi Lo Range 10YR Max 10 YR Min
(%) (%) (%)
(bps)
Consumer Staples
ITC 41.8 9.2 49.0 22.9 48.7 15.0 36.3 55.2 (1,268) 67.9 (2.6)
Gillette India 12.6 5.1 82.2 5.3 9.0 14.2 76.8 1.9 (541) 94.8 76.5
Colgate Palmolive (India) 26.5 4.0 69.5 4.8 27.4 4.0 68.6 62.5 (88) 75.0 58.0
Procter & Gamble Hygiene 22.2 4.8 73.1 7.3 18.5 8.7 72.8 56.1 (25) 82.2 60.7
Energy
Hindustan Petroleum Corp 120.0 10.4 (30.3) 49.7 213.2 (53.5) (59.7) 32.2 (2,940) 33.8 (104.3)
Oil & Natural Gas Corp 84.2 35.7 (19.9) 35.3 65.8 67.9 (33.7) 46.7 (1,379) 22.9 (83.4)
Petronet LNG 76.9 10.8 12.3 20.9 83.2 11.2 5.6 51.7 (675) 34.6 (25.6)
Bharat Petroleum Corp 95.8 (8.4) 12.6 19.2 159.6 (67.3) 7.7 26.3 (492) 44.6 (5.5)
Oil India 169.7 (0.3) (69.4) 53.1 135.5 36.3 (71.8) 73.2 (242) (24.2) (202.0)
Financials
Rural Electrification Corp 203.1 32.5 (135.7) 68.5 218.2 51.0 (169.2) 41.0 (3,351) (57.6) (246.7)
Power Finance Corporation 170.3 32.7 (96.3) 47.9 182.0 34.8 (116.8) 50.2 (2,051) (38.3) (195.9)
Lic Housing Finance 71.5 14.0 14.6 32.3 82.5 13.4 4.1 60.1 (1,049) 47.1 (60.8)
Bajaj Finserv 11.9 5.4 81.8 19.4 11.3 7.8 80.8 68.7 (95) 97.6 44.0
HDFC Asset Management Co 19.1 4.1 76.8 2.8 18.9 4.7 76.4 32.8 (41) 80.8 74.2
Health Care
Natco Pharma 34.9 18.6 46.5 19.4 29.3 47.1 23.6 15.0 (2,292) 74.6 14.6
Glenmark Pharmaceuticals 48.8 15.8 35.4 23.3 59.0 13.9 27.1 56.4 (828) 62.7 (18.8)
Ajanta Pharma 36.8 5.7 56.5 14.5 38.2 12.4 49.4 28.8 (718) 78.3 37.6
Aurobindo Pharma 62.8 5.9 31.2 15.7 107.9 (32.5) 24.5 41.7 (671) 51.6 5.2
Lupin 27.2 21.6 51.1 8.8 33.8 21.4 44.8 14.8 (638) 66.9 40.9
Alembic Pharmaceuticals 58.9 (1.9) 43.1 15.5 84.5 (23.2) 38.7 60.1 (432) 59.9 7.0

Companies with Current LTGV Lower Than 10-year Average (contd)
Current -
Hi Lo Range 10YR Max 10 YR Min
(%) (%) (%)
(bps)
Dr. Reddy'S Laboratories 36.3 13.8 49.9 7.1 27.4 26.2 46.4 36.7 (352) 59.7 38.7
Cipla 36.3 12.6 51.1 9.7 36.1 14.4 49.5 38.7 (155) 68.5 37.5
Industrials
GMR Infrastructure (110.4) 70.0 143.8 27.4 (96.2) 58.3 137.9 44.5 (584) 179.9 104.3
Larsen & Toubro 35.6 4.2 60.2 15.3 39.2 2.2 58.6 62.9 (151) 78.3 25.4
3M India 10.0 8.2 87.1 1.5 5.1 8.9 86.0 0.0 (106) 88.1 86.0
Materials
Castrol India 41.8 10.5 47.8 21.7 42.5 22.4 35.1 52.2 (1,270) 67.7 (0.5)
Coromandel International 57.4 27.0 15.6 40.8 72.0 18.4 9.6 64.8 (603) 61.4 (85.8)
Media
Sun TV Network 51.4 7.4 41.2 23.1 55.6 8.8 35.6 58.6 (562) 69.1 (12.0)
Metals
Steel Authority Of India 34.7 43.8 21.5 61.1 60.6 93.5 (54.1) 23.9 (7,562) 95.1 (100.9)
Jindal Steel & Power (17.6) 58.2 59.4 37.4 46.3 26.5 27.1 4.2 (3,228) 133.5 22.4
Tata Steel 17.0 69.9 13.0 29.2 36.2 64.1 (0.3) 24.0 (1,330) 82.4 (26.4)
NMDC 108.3 6.2 (14.6) 31.7 116.3 5.6 (21.9) 45.2 (730) 30.6 (65.1)
JSW Steel 49.2 25.5 25.2 15.2 35.0 44.8 20.2 43.0 (502) 51.5 (3.4)
Telecommunication Services
Tata Communications (1.2) 22.8 78.4 47.6 26.5 11.0 62.6 10.1 (1,577) 210.1 46.0
Indus Towers 56.0 5.6 38.5 21.4 51.9 11.0 37.0 64.2 (147) 63.3 (10.2)
Bharti Airtel (7.6) 35.9 71.7 17.5 (38.5) 67.4 71.1 27.3 (61) 111.3 56.0
Transportation
Adani Ports And Special Econ 33.8 7.6 58.6 13.9 29.8 16.7 53.5 58.4 (517) 72.8 26.3
Utilities
Gujarat State Petronet 92.1 11.7 (3.9) 29.8 90.5 48.0 (38.5) 11.7 (3,468) 36.4 (48.5)
Adani Power (47.4) 74.6 95.7 38.5 25.2 (9.9) 84.7 60.9 (1,101) 127.5 18.0
Gujarat Gas 33.5 11.5 55.0 11.3 32.2 14.4 53.3 54.5 (167) 70.1 33.3

Top 25 companies with the Highest Contraction in LTGV
 Top 25 companies could see high contraction in LTGV, because
 Stocks are under pressure because of over-correction, thereby offering mispriced opportunities, or
 Earnings estimates saw an upgrade, pushing up STGV component and bringing LTGV component down
• When we juxtapose LTGV contraction with 3 month performance, we see that some stocks which has 3 month positive
performance, feature in LTGV contraction screen, indicating earnings upgrade for next two years estimates, which is not yet fully
priced in and hence they are good candidates for near term price expansion
Companies with the highest contraction in LTGV over the past three months
10-year average (%) Current (%) 3m prior Contraction 3M price Hi Lo
Bottom 5 Change CBV STGV LTGV STDEV CBV STGV LTGV LTGV (%) Delta (ppt) - 3m performance range (%)
Idea Cellular (1348.1) 1046.6 401.5 530.8 (1383.4) 827.5 655.9 938.7 (282.8) 19.9 36.7
Bank Of India (66.5) 165.0 1.5 54.3 90.8 72.2 (63.0) (26.2) (36.8) (23.4) 0.0
Rajesh Exports 74.2 40.5 (19.1) 54.2 59.8 91.8 (51.6) (33.4) (18.2) 4.8 47.1
Natco Pharma 34.9 18.6 46.5 19.4 29.3 47.1 23.6 40.7 (17.1) (16.7) 15.0
GMR Infrastructure (110.4) 70.0 143.8 27.4 (96.2) 58.3 137.9 154.8 (16.9) 34.5 44.5
Sanofi India 37.1 11.1 51.8 9.0 30.5 13.8 55.7 67.2 (11.5) 1.5 76.1
Ipca Laboratories 38.6 17.5 43.9 15.7 48.5 7.4 44.1 55.2 (11.2) 12.8 47.4
Gujarat Gas 33.5 11.5 55.0 11.3 32.2 14.4 53.3 63.4 (10.1) (8.3) 54.5
Coromandel International 57.4 27.0 15.6 40.8 72.0 18.4 9.6 19.3 (9.6) (3.6) 64.8
Gujarat State Petronet 92.1 11.7 (3.9) 29.8 90.5 48.0 (38.5) (29.4) (9.2) 0.2 11.7
ACC 34.1 12.8 53.0 14.7 34.5 18.2 47.4 56.4 (9.1) 10.4 50.9
Hindustan Zinc 109.6 10.3 (20.0) 36.5 62.8 23.3 13.9 21.6 (7.7) (5.0) 94.0
Cadila Healthcare 46.7 7.6 45.8 12.1 45.3 7.1 47.6 54.7 (7.0) (13.9) 59.4
Lupin 27.2 21.6 51.1 8.8 33.8 21.4 44.8 51.3 (6.6) (16.0) 14.8
Cipla 36.3 12.6 51.1 9.7 36.1 14.4 49.5 56.1 (6.5) (4.3) 38.7
AIA Engineering 41.3 4.4 54.3 15.7 33.3 8.8 57.9 64.1 (6.1) (8.4) 80.5
Glaxosmithkline Pharmaceutic 29.8 18.8 52.4 26.2 17.7 16.6 65.7 71.7 (6.0) 0.5 83.8
Pfizer Limited 50.6 (5.5) 54.9 18.9 24.4 9.6 65.9 71.0 (5.1) (3.4) 96.5
Ajanta Pharma 36.8 5.7 56.5 14.5 38.2 12.4 49.4 54.1 (4.8) 6.3 28.8
Alkem Laboratories 43.5 10.9 45.6 6.7 39.0 7.5 53.5 58.3 (4.8) 17.6 100.0
Procter & Gamble Hygiene 22.2 4.8 73.1 7.3 18.5 8.7 72.8 77.4 (4.6) 4.2 56.1
Colgate Palmolive (India) 26.5 4.0 69.5 4.8 27.4 4.0 68.6 73.2 (4.5) (1.6) 62.5
Emami 22.2 17.3 62.3 15.3 18.4 14.7 66.9 71.5 (4.5) (3.6) 74.4
Ambuja Cements 32.9 13.1 54.1 13.2 29.1 15.4 55.6 60.1 (4.5) 10.8 79.5
Apollo Hospitals Enterprise 14.6 10.6 74.8 6.2 2.8 17.8 79.5 83.8 (4.3) 17.5 91.3
LTGV – Standard Deviation Matrix
High LTGV – High Standard Deviation Low LTGV – High Standard Deviation
These companies currently have high LTGV contribution and as the These companies currently have low LTGV contribution and as the
standard deviation for these companies over the past 10 years is high, standard deviation of LTGV for these companies over the past 10
they may be prone to correction years is high, they are suitable candidates for price expansion
CMP LTGV Std Dev CMP* LTGV LTGV Std
Company Company
(INR)* (%) (%) (INR) (%) Dev (%)
Adani Enterprises 1,540 93 186.5 Rural Electrification Corp 159 (169) 68.5
Idea Cellular 11 656 530.8 Power Finance Corporation 142 (117) 47.9
Source: Bloomberg, Elara Securities Research Union Bank Of India 38 (105) 52.8
Oil India 239 (72) 53.1
High LTGV – Low Standard Deviation Bank Of India 58 (63) 54.3
These companies have high LTGV contribution with low standard
deviation over the past 10 years, indicating growth expectations
of the stock have been met over the years and these are
growth-driven stocks
CMP Std Dev
Company LTGV (%)
(INR)* (%)
Info Edge India 6,632 94 7.9
Avenue Supermarts 4,719 93 2.7
Aditya Birla Fashion And Ret 263 91 3.9
Titan Co 2,362 91 8.6
Indian Railway Catering & To 4,773 89 9.3
Indian Hotels Co 207 89 6.5
HDFC Life Insurance Co 717 88 1.8

Top 25 companies with the Highest LTGV Standard Deviation
Top 25 companies with high LTGV standard deviation
 Companies with high standard deviation in LTGV are more prone to market movements and sentiments
 Comparing their current LTGV to the 10-year range will capture the point in their cycle
High standard deviation in long-term value
High_low range Current LTGV 10-year STDEV
Company GICS sector 10-year max (%) 10-year min (%) CMP (INR)
(%) (%) (%)
Idea Cellular Telecommunication Services 1,742.8 24.6 37 10.9 655.9 530.8
IDBI Bank Financials 107.1 (852.5) NA 48.5 NM 315.4
Adani Enterprises Industrials 92.7 (512.3) 100 1,539.8 92.7 186.5
Cholamandalam Investment And Financials 70.4 (393.1) 100 570.4 70.4 170.7
Aarti Industries Limited Materials 74.3 (211.0) 100 1,111.5 74.3 85.6
Indian Overseas Bank Financials 123.2 (73.3) NA 22.3 NM 79.5
Rural Electrification Corp Financials (57.6) (246.7) 41 159.2 (169.2) 68.5
Steel Authority Of India Materials 95.1 (100.9) 24 116.6 (54.1) 61.1
Hindustan Aeronautics Industrials 20.3 (88.9) 100 1,364.8 20.3 56.7
Bank Of India Financials 82.8 (63.0) - 57.7 (63.0) 54.3
Rajesh Exports Consumer Discretionary 38.1 (131.3) 47 608.1 (51.6) 54.2
Oil India Energy (24.2) (202.0) 73 239.4 (71.8) 53.1
Union Bank Of India Financials 42.8 (105.1) - 38.2 (105.1) 52.8
Bank Of Baroda Financials 47.4 (96.7) 45 87.5 (32.5) 49.9
Hindustan Petroleum Corp Energy 33.8 (104.3) 32 319.1 (59.7) 49.7
Power Finance Corporation Financials (38.3) (195.9) 50 142.1 (116.8) 47.9
Tata Communications Telecommunication Services 210.1 46.0 10 1,433.2 62.6 47.6
Punjab National Bank Financials 71.9 (74.1) 39 40.5 (16.6) 45.9
SRF Consumer Discretionary 77.6 (81.0) 100 12,044.0 77.6 44.3
HCL Technologies Information Technology 63.0 (47.9) 100 1,302.9 63.0 43.7
Astral Poly Technik Industrials 85.0 (64.6) 100 2,270.7 85.0 43.7
Coal India Energy 14.3 (115.1) 76 196.8 (17.2) 41.8
Infosys Information Technology 67.6 (41.5) 100 1,691.0 67.6 41.3
Balkrishna Industries Consumer Discretionary 75.8 (63.8) 100 2,603.4 75.8 41.1
Vedanta Materials 35.4 (83.1) 66 297.8 (5.2) 40.9

Top 25 Companies with the Highest Earnings Visibility
 Companies with high STGV at High STGV as a % of current price
are expected to grow FY21
Current Current Current CMP*
Company GICS sector earnings
earnings significantly over the growth (%)
CBV (%) STGV (%) LTGV (%) (INR)
next two years Bharat Heavy Electricals Industrials NM (94.9) 118.9 76.0 66.7
Bank Of Baroda Financials (23.3) 27.8 104.7 (32.5) 87.5
 This could be due to current Union Bank Of India Financials NM 100.9 104.1 (105.1) 38.2
earnings being suppressed Tata Motors Consumer Discretionary NM (53.5) 100.2 53.3 415.7
Steel Authority Of India Materials 95.7 60.6 93.5 (54.1) 116.6
due to one-off reasons, and Rajesh Exports Consumer Discretionary NM 59.8 91.8 (51.6) 608.1
with normalcy returning to Punjab National Bank Financials 235.5 38.7 78.0 (16.6) 40.5
Interglobe Aviation Industrials NM (55.6) 77.5 78.1 2048.2
earnings growth over the NM
Bank Of India Financials 90.8 72.2 (63.0) 57.7
next few quarters Oil & Natural Gas Energy 49.0 65.8 67.9 (33.7) 165.0
Bharti Airtel Telecommunication Services NM (38.5) 67.4 71.1 690.9
 Preferred companies would General Ins Corp Of India Financials NM 12.2 66.7 21.1 145.9
380.7
be those with high STGV and Tata Steel Materials 36.2 64.1 (0.3) 1313.6
GMR Infrastructure Industrials NM (96.2) 58.3 137.9 43.1
low LTGV. Cases where both Rural Electrification Corp Financials 71.1 218.2 51.0 (169.2) 159.2
STGV and LTGV are high Gujarat State Petronet Utilities (7.1) 90.5 48.0 (38.5) 315.4
Natco Pharma Health Care (4.5) 29.3 47.1 23.6 893.4
bets, which are likely to Canara Bank Financials NM 64.5 46.8 (11.3) 176.7
turnaround in the medium to RBL Bank Financials (15.3) 28.6 45.8 25.6 193.1
Hindalco Industries Materials (7.6) 20.9 45.3 33.9 487.5
long term 96.1
JSW Steel Materials 35.0 44.8 20.2 672.4
Mahindra & Mahindra Fin Secs Financials (34.4) 22.9 39.0 38.1 185.0
Oil India Energy 8.6 135.5 36.3 (71.8) 239.4
L&T Finance Holdings Financials (43.2) 30.8 35.7 33.4 90.9
Power Finance Corporation Financials 49.3 182.0 34.8 (116.8) 142.1

Top 25 companies with the Lowest LTGV Standard Deviation
 Companies with low standard deviation in LTGV are driven primarily by earnings
 Companies with high earnings growth outlook coupled with low standard deviation in LTGV are good stocks to pick for growth-
oriented strategy
Low standard deviation in long-term value
High_low range Current LTGV
Company GICS Sector 10Yr max (%) 10Yr min (%) CMP* (INR) 10yr STDEV (%)
(%) (%)
3M India Industrials 88.1 86.0 - 25,720 86.0 1.5
HDFC Life Insurance Co Financials 89.4 85.0 70 717 88.1 1.8
Dalmia Bharat Materials 71.0 67.3 100 2,076 71.0 1.9
Avenue Supermarts Consumer Staples 92.5 86.0 100 4,720 92.5 2.7
HDFC Asset Management Co Financials 80.8 74.2 33 2,914 76.4 2.8
ICICI Lombard General Insura Financials 75.3 65.5 100 1,536 75.3 3.7
United Breweries Consumer Staples 88.6 77.5 60 1,700 84.2 3.7
Jubilant Foodworks Consumer Discretionary 88.7 78.2 94 4,062 88.1 3.8
Aditya Birla Fashion Consumer Discretionary 93.5 82.8 79 263 91.2 3.9
Colgate Palmolive (India) Consumer Staples 75.0 58.0 62 1,697 68.6 4.8
Asian Paints Materials 84.3 67.4 100 3,306 84.3 4.8
HDFC Bank Limited Financials 62.6 46.5 100 1,634 62.6 5.0
Kotak Mahindra Bank Financials 82.1 64.5 65 1,975 75.9 5.2
Gillette India Consumer Staples 94.8 76.5 2 5,824 76.8 5.3
SBI Cards & Payment Services Financials 75.8 67.9 100 1,127 75.8 5.6
Honeywell Automation India Information Technology 84.7 67.9 97 45,517 84.1 5.6
Syngene International Health Care 74.2 56.5 100 622 74.2 5.6
Nippon Life India Asset Management Financials 77.6 61.1 100 444 77.6 5.9
Thermax Industrials 75.6 57.6 79 1,420 71.9 6.0
Apollo Hospitals Enterprise Health Care 81.2 61.1 91 4,377 79.5 6.2
Dabur India Consumer Staples 77.7 56.8 100 609 77.7 6.3
ABB India Industrials 88.1 68.4 82 1,831 84.6 6.3
Indian Hotels Co Consumer Discretionary 89.1 68.6 100 207 89.1 6.5
Crompton Greaves Consumer El Consumer Discretionary 79.7 62.9 73 480 75.2 6.6
SBI Life Insurance Co Financials 83.1 66.0 100 1,206 83.1 6.6

Top Companies with the Lowest Current LTGV range
Top 25 companies with low LTGV range
 LTGV range measures a company’s current LTGV in the range of its 10-year maximum and minimum values. A range score of 0
means the company’s current LTGV is the lowest it has seen in 10 years and a score of 100 means current LTGV is the highest in
the past 10 years
 Companies trading on the lower end of the range could see upside in their prices
Low LTGV vs 10-year range
10-year average (%) Current (%) Long-term growth value (LTGV)
Hi Lo Current – 10-year 10-year 10-year
Company CBV STGV LTGV STDEV CBV STGV LTGV
range (%) avg (bp) max (%) min (%)
3M India Ltd 10.0 8.2 87.1 1.5 5.1 8.9 86.0 0.0 (106) 88.1 86.0
Bank Of India (66.5) 165.0 1.5 54.3 90.8 72.2 (63.0) 0.0 (6,450) 82.8 (63.0)
Gillette India Ltd 12.6 5.1 82.2 5.3 9.0 14.2 76.8 1.9 (541) 94.8 76.5
Jindal Steel & Power Ltd (17.6) 58.2 59.4 37.4 46.3 26.5 27.1 4.2 (3,228) 133.5 22.4
Tata Communications Ltd (1.2) 22.8 78.4 47.6 26.5 11.0 62.6 10.1 (1,577) 210.1 46.0
Gujarat State Petronet Ltd 92.1 11.7 (3.9) 29.8 90.5 48.0 (38.5) 11.7 (3,468) 36.4 (48.5)
Lupin Ltd 27.2 21.6 51.1 8.8 33.8 21.4 44.8 14.8 (638) 66.9 40.9
Natco Pharma Ltd 34.9 18.6 46.5 19.4 29.3 47.1 23.6 15.0 (2,292) 74.6 14.6
Bandhan Bank Ltd 29.7 21.9 48.5 21.4 25.8 30.6 43.6 23.6 (485) 79.8 32.4
Tata Steel Ltd 17.0 69.9 13.0 29.2 36.2 64.1 (0.3) 24.0 (1,330) 82.4 (26.4)
Bharat Petroleum Corp Ltd 95.8 (8.4) 12.6 19.2 159.6 (67.3) 7.7 26.3 (492) 44.6 (5.5)
Bharti Airtel Ltd (7.6) 35.9 71.7 17.5 (38.5) 67.4 71.1 27.3 (61) 111.3 56.0
RBL Bank Ltd 28.7 27.4 43.9 31.0 28.6 45.8 25.6 27.3 (1,832) 78.7 5.6
Ajanta Pharma Ltd 36.8 5.7 56.5 14.5 38.2 12.4 49.4 28.8 (718) 78.3 37.6
HDFC Asset Management Co Ltd 19.1 4.1 76.8 2.8 18.9 4.7 76.4 32.8 (41) 80.8 74.2
Idea Cellular Ltd (1348.1) 1046.6 401.5 530.8 (1383.4) 827.5 655.9 36.7 25,439 1742.8 24.6
Cipla Ltd 36.3 12.6 51.1 9.7 36.1 14.4 49.5 38.7 (155) 68.5 37.5
Piramal Enterprises Ltd 33.6 2.8 63.7 27.1 12.6 20.1 67.4 40.8 368 120.0 31.1
Aurobindo Pharma Ltd 62.8 5.9 31.2 15.7 107.9 (32.5) 24.5 41.7 (671) 51.6 5.2
SECTOR TRENDS
What’s in the Price Analysis - Sector Median
Current What’s in the Price Sector Median (%) Long-term growth value (LTGV) sector median metrics
Hi Lo Current – 10-year 10-year

Sector * CBV STGV LTGV range 10-year max min
(%) avg (bp) (%) (%)
Auto Median 15.8 14.8 67.1 89.1 895 73.3 17.1

Bank Median 26.6 30.6 43.6 61.0 (104) 69.7 (48.9)
Cement Median 25.0 11.7 65.6 79.0 185 71.0 32.1
Consumer Discretionary Median 8.6 7.6 86.3 100.0 780 86.3 62.8
Consumer Staples Median 15.7 6.2 77.3 89.3 452 82.4 56.2
Energy Median 88.4 8.7 (5.8) 60.7 (242) 28.4 (54.5)
Financials Median 18.9 9.8 72.6 84.3 528 71.4 10.4
Health Care Median 27.5 12.4 55.7 76.1 368 68.3 33.0
Industrials Median 10.1 7.5 79.4 88.8 1,050 80.5 29.2
Information Technology Median 23.0 7.5 67.9 100.0 3,143 67.9 2.4
Materials Median 22.7 9.7 69.1 100.0 1,652 72.1 (3.3)
Media Median 37.6 14.4 48.1 70.0 (73) 73.0 (11.2)
Metals Median 53.5 37.8 6.8 44.1 (616) 53.4 (54.4)
Real Estate Median 6.9 9.9 86.3 100.0 2,047 90.9 50.7
Telecommunication Services Median (6.0) 39.2 66.8 32.0 (104) 160.7 35.3
Transportation Median 9.4 17.1 73.6 69.7 1,442 73.6 26.3
Utilities Median 43.3 15.0 41.1 78.8 865 49.2 (36.1)
*Sectors are classified based on Elara classification; Source: Bloomberg, Elara Securities Research
Elara Securities (India) Private Limited What’s in the price

BSE 200 Sectors’ Earnings Contribution Mix*
Consumer discretionary – LTGV contribution is at its peak Consumer Staples – LTGV contribution inching closer to
FY19 high
100 (%)
100 (%)
80
55 64 64 67 59 80
60 71 72 71 75 65
60 74 71 71 79 82 75 75 78
40 8 8
8 9 6 40
6 7 15 5 5
20 37 33 13 20 5 6 4 6 7 6
27 27 24 21 28 30 23 24 4
14 12 21 17 15 19 18 16
0 0
FY16
FY14
FY15
FY17
FY18
FY19
FY20
FY21
Latest
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
CBV STGV LTGV CBV STGV LTGV
Source: Bloomberg, Elara Securities Research Source: Bloomberg, Elara Securities Research
Energy LTGV contribution though off lows remains Financials LTGV contribution recovers from recent lows
negative indicating mispricing in the sector driven by price performance
100 (%) 18 4 100 (%)
18 39 22 171 21 26
60 135 47 49 50
96 96 100 92 12 64 60 68 56
64 62 74 60 26
20 11
(4) (1) (4) (1) 14 23
(20) (47) 67 9 13 9 18
(54) (52) 20 42 37 47
(60) 27 27 23 27 26
(19)
(100) (20)
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
*Sectors are classified as per GICS classification; Note: In any given year, the sector value is the median of the sector components

BSE 200 Sectors’ Earnings Contribution Mix* (contd)
Healthcare price attribution mix close to historical Industrials’ current business value contribution to price
median at historical lows
100 (%) 100 (%)
80 49 80
59 57 56 58 63 57 56 60 64 65 63 66 66 64
60 60 76 76 81
8
40 10 10 10 10 10 12 40
6 12 5 6 7 7 6 10
20 43 31 33 34 32 33 32 20 31 6 11
30 27 18 29 30 27 28 26 9
0 0 13 10
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
IT services prices see the highest-ever contribution of …while for materials earnings expectation mix is close to
long-term growth expectations… long-term median
100 (%) 11 100 (%)
80 10 28 26 33
41 48 46 80 43 48
13 10 5 57 69 64 65 57 64 66 55 60
60 7 60
6 6 11 9
40 79 10 40 15 9
59 64 63 7 12 8 6 12
20 52 46 48 46 16 43
32 20 28 29 36 28
23 24 19 28
0 0
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest

BSE 200 Sectors’ Earnings Contribution Mix* (contd)
Real estate current business value contribution is the Utilities LTGV contribution though on higher end compared
lowest range historically to historical data but lower than other sectors
100 (%) 100 (%) 2 7
28 26 14 4
53 80 37 34 41 38
57 65 72 58 55
60 73 73 74 83 5 11
60 11 19 14
11 9
19 84 89
12 7 8 29 40 14
20 32 11 16 66 63
24 27 20 20 16 13 10 52 46 50 48
10 7 20 30
-20 0
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest

BSE 200 Sectors: Current Contribution of LT Expectations vs
Historical*
Consumer discretionary LTGV contribution close to long- …consumer staples as well
term median… 100
(%)
80
(%) 80
60 60
40 40
20 20
0 0
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
FY19
FY13
FY14
FY15
FY16
FY17
FY18
FY20
FY21
Latest
LTGV 10yr Median LTGV 10yr Median
Energy’s long-term expectations attribution negative, Financials’ LTGV crosses long term median post recent
primarily led by regulatory hurdles in the sector run up
40 80
(%) (%)
60
20
40
0
20
(20) 0
(40) (20)
(60) (40)
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest


Historical*
Healthcare long-term earnings expectations close to …while that of industrials is in a life-time high range
median… 100
(%)
80
(%) 80
60 60
40 40
20 20
0 0
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
FY15
FY13
FY14
FY16
FY17
FY18
FY19
FY20
FY21
Latest
IT sector prices are pricing in strong long-term growth Materials expectations close to long-term median
potential with LTGV contribution at life-time high 80
(%)
80
(%)
60
60
40
40
20
20
0
0
Latest
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
FY15
FY13
FY14
FY16
FY17
FY18
FY19
FY20
FY21


Historical*
Real estate is also building in a long-term recovery… …so are utilities
100 60
(%) (%)
80 40
60
20
40
20 0
0 -20
FY14
FY13
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
Latest

BSE 200 Sector-wise LTGV Heatmap
With 4% stocks ascribing negative value to LT growth, For consumer staples, the best seems to be priced in
there are mispriced opportunities in discretionary space across the universe
Consumer Discretionary Consumer Staples
<0 0-25 26-50 51-75 76-100 <0 0-25 26-50 51-75 76-100
2013 20.8 16.7 37.5 12.5 12.5 2013 8.3 0.0 8.3 66.7 16.7
2014 9.1 9.1 27.3 45.5 9.1 2014 0.0 8.3 8.3 66.7 16.7
2015 0.0 9.5 14.3 52.4 23.8 2015 0.0 0.0 8.3 58.3 33.3
2016 0.0 8.0 32.0 32.0 28.0 2016 0.0 0.0 8.3 75.0 16.7
2017 0.0 3.8 15.4 34.6 46.2 2017 0.0 0.0 7.7 61.5 30.8
2018 0.0 0.0 29.6 33.3 37.0 2018 0.0 0.0 0.0 42.9 57.1
2019 0.0 3.7 18.5 48.1 29.6 2019 0.0 0.0 0.0 33.3 66.7
2020 14.8 11.1 18.5 29.6 25.9 2020 6.7 0.0 6.7 33.3 53.3
2021 0.0 0.0 26.9 42.3 30.8 2021 0.0 0.0 7.1 50.0 42.9
Latest 3.7 0.0 14.8 29.6 51.9 Latest 0.0 0.0 6.7 26.7 66.7
While energy has the most mispriced opportunities, it has While financials recent run-up priced in LT growth
seen negative impact of regulatory overhaul historically potential, about 18% of stocks seem to be mispriced still
Energy Financials
<0 0-25 26-50 51-75 76-100 <0 0-25 26-50 51-75 76-100
2013 85.7 14.3 0.0 0.0 0.0 2013 56.0 16.0 8.0 12.0 8.0
2014 42.9 28.6 28.6 0.0 0.0 2014 38.5 15.4 19.2 19.2 7.7
2015 14.3 57.1 28.6 0.0 0.0 2015 30.8 7.7 19.2 26.9 15.4
2016 57.1 28.6 14.3 0.0 0.0 2016 25.0 10.7 32.1 25.0 7.1
2017 71.4 14.3 14.3 0.0 0.0 2017 10.7 7.1 32.1 39.3 10.7
2018 85.7 14.3 0.0 0.0 0.0 2018 8.3 5.6 27.8 41.7 16.7
2019 42.9 42.9 14.3 0.0 0.0 2019 7.9 13.2 15.8 39.5 23.7
2020 85.7 14.3 0.0 0.0 0.0 2020 39.5 13.2 15.8 18.4 13.2
2021 100.0 0.0 0.0 0.0 0.0 2021 23.1 10.3 23.1 25.6 17.9
Latest 71.4 28.6 0.0 0.0 0.0 Latest 17.9 7.7 25.6 17.9 30.8

BSE 200 sectoral LTGV heat map
While health care sector is priced average, 9% of stocks For 96% of industrials stocks, long-term value emanates
are still not bullish on long-term prospects from long-term earnings potential
Health care Industrials
<0 0-25 26-50 51-75 76-100 <0 0-25 26-50 51-75 76-100
2013 11.1 22.2 50.0 16.7 0.0 2013 17.6 35.3 17.6 29.4 0.0
2014 5.6 0.0 55.6 38.9 0.0 2014 5.9 5.9 29.4 47.1 11.8
2015 5.0 5.0 35.0 40.0 15.0 2015 5.6 0.0 5.6 44.4 44.4
2016 0.0 4.3 21.7 65.2 8.7 2016 5.3 0.0 10.5 63.2 21.1
2017 0.0 0.0 27.3 63.6 9.1 2017 0.0 10.5 5.3 68.4 15.8
2018 0.0 0.0 23.8 71.4 4.8 2018 0.0 0.0 25.0 60.0 15.0
2019 0.0 0.0 8.7 78.3 13.0 2019 0.0 0.0 10.5 73.7 15.8
2020 4.3 4.3 39.1 47.8 4.3 2020 8.3 4.2 33.3 37.5 16.7
2021 0.0 8.3 45.8 41.7 4.2 2021 4.5 0.0 18.2 54.5 22.7
Latest 0.0 8.7 34.8 43.5 13.0 Latest 0.0 4.2 0.0 50.0 45.8
90%+ of IT sector stocks ascribe >50% value to LTGV While materials have 15% stocks ascribing negative
long-term value, indicating mispriced opportunities
Information Technology
Materials
<0 0-25 26-50 51-75 76-100
<0 0-25 26-50 51-75 76-100
2013 25.0 50.0 0.0 25.0 0.0
2013 34.6 19.2 30.8 15.4 0.0
2014 37.5 37.5 12.5 0.0 12.5
2014 16.7 12.5 33.3 33.3 4.2
2015 25.0 25.0 25.0 0.0 25.0
2015 16.0 16.0 20.0 40.0 8.0
2016 12.5 25.0 37.5 0.0 25.0
2016 12.5 8.3 12.5 45.8 20.8
2017 20.0 40.0 20.0 10.0 10.0 2017 4.2 16.7 25.0 29.2 25.0
2018 20.0 10.0 40.0 10.0 20.0 2018 7.7 11.5 15.4 46.2 19.2
2019 9.1 0.0 45.5 27.3 18.2 2019 7.7 19.2 11.5 34.6 26.9
2020 18.2 27.3 36.4 0.0 18.2 2020 33.3 3.7 22.2 22.2 18.5
2021 0.0 9.1 27.3 45.5 18.2 2021 3.7 18.5 22.2 37.0 18.5
Latest 0.0 0.0 9.1 54.5 36.4 Latest 14.8 11.1 18.5 33.3 22.2

BSE 200 Sector-wise LTGV Heatmap
Real estate distribution skewed towards rich valuation Utilities with a barbell distribution with 31% stocks in
too the highest bracket and 39% in the lowest
Real Estate Utilities
<0 0-25 26-50 51-75 76-100 <0 0-25 26-50 51-75 76-100
2013 0.0 33.3 0.0 33.3 33.3 2013 66.7 22.2 11.1 0.0 0.0
2014 0.0 0.0 33.3 33.3 33.3 2014 37.5 50.0 12.5 0.0 0.0
2015 0.0 0.0 33.3 33.3 33.3 2015 25.0 12.5 50.0 12.5 0.0
2016 0.0 0.0 33.3 66.7 0.0 2016 22.2 22.2 44.4 11.1 0.0
2017 0.0 0.0 33.3 33.3 33.3 2017 20.0 30.0 20.0 20.0 10.0
2018 0.0 0.0 33.3 0.0 66.7 2018 40.0 10.0 10.0 30.0 10.0
2019 0.0 0.0 33.3 33.3 33.3 2019 36.4 9.1 27.3 18.2 9.1
2020 0.0 33.3 0.0 33.3 33.3 2020 58.3 8.3 8.3 25.0 0.0
2021 0.0 0.0 0.0 33.3 66.7 2021 41.7 16.7 0.0 25.0 16.7
Latest 0.0 0.0 0.0 33.3 66.7 Latest 38.5 0.0 7.7 23.1 30.8

ANNEXURE
Annexure 1: Methodology
The What’s in the Price (WSIP) framework “reverse engineers” current stock price and lets users to question assumptions that have
gone into making the current stock price. It works by dissecting a company’s current stock price into three components:
 Value of its current earnings persisting to perpetuity, which we call - current business value (CBV)
 Value that will be realized over the explicit forecast period (next two years), which we call short-term growth value (STGV)
 Value attributable to periods beyond the explicit period. We call this long-term growth value (LTGV)
 CBV+STGV collectively can be considered the “known value” and LTGV is the “unknown value”
 Cost of equity is calculated by the CAPM method wherein risk-free rate is the 10 year G-sec yield (6.35%), beta is adjusted beta from
Bloomberg and market premium is assumed to be 6%
Illustrative example
Company A’s market price (CMP) is INR 1,000 and cost of equity is 10%. Its trailing 12-month EPS is INR 50, FY+1 EPS is INR 60 and
FY+2 EPS is INR 70
Illustrative example of What’s in the Price Framework
 CBV = 50/10% = INR 500 = 50% of CMP Illustrative Example
 STGV = INR 70 – INR 50 = INR 20 / 10% = INR 200 = 20% of CMP
Value of Earnings
 LTGV = CMP – CBV – STGV = 100% – 50% – 20% = 30% of CMP
Long Term Growth Value (LTGV)
Short Term Growth Value (STGV)
Current Business Value (CBV)
FY+ 0 FY+ 1 , FY+ 2 Beyond FY+ 2 to perpetuity

Source: Elara Securities Research

Annexure 2: Other Key Terminologies
• LTGV Heatmap: The heatmaps are constructed by segregating the market into various LTGV buckets (<0, 0-25) and counting the
number of companies trading in each bucket in a particular time period. The % represents the number of companies in that bucket
as a % of universe (number of companies in the index)
• STDEV: Standard deviation of LTGV over the past 10 years or since listing to measure the degree of volatility in LTGV
• 10-year max: The maximum LTGV value attained by a stock over the past 10 years or since listing
• 10-year min: The minimum LTGV value attained by a stock over the past 10 years or since listing
• Hi-Lo range: This measure places current LTGV in a range of values between 10-year max and min to ascertain “percentile” value
in which the stock currently trades. A value of “100” in the scale implies the current LTGV is the highest in the past 10 years and a
value of “0” implies the current LTGV is the lowest in the past 10 years

ANNEXURE 3: INDUSTRY-WISE – BSE 200
What’s in the Price for all BSE 200 companies…
Current –
Hi Lo 10-year 10-year
Company CBV STGV LTGV STDEV CBV STGV LTGV 10-year
range (%) max (%) min (%)
avg (bp)
Ashok Leyland 22.5 15.4 62.0 22.8 (2.6) 28.9 73.7 66.4 1,168 102.0 17.7
Balkrishna Industries 58.0 11.1 30.9 41.1 17.8 6.3 75.8 100.0 4,495 75.8 (63.8)
Bharat Forge 20.8 13.1 66.1 9.9 (2.3) 26.7 75.6 99.7 950 75.7 45.8
Exide Industries 46.1 8.9 44.4 12.9 43.8 12.6 43.6 63.1 (71) 59.3 16.8
Eicher Motors 26.3 11.0 62.7 15.9 13.7 15.2 71.1 89.2 840 76.8 24.4
Mahindra & Mahindra 39.9 17.7 42.3 15.2 1.7 31.9 66.4 100.0 2,403 66.4 11.3
Bosch 17.6 11.5 70.1 13.2 6.9 16.3 76.7 85.5 660 82.7 41.7
MRF 55.4 10.0 34.5 20.5 33.5 10.4 56.1 100.0 2,151 56.1 (4.5)
Maruti Suzuki India 30.2 8.9 60.9 11.6 13.6 12.3 74.2 100.0 1,325 74.2 33.2
TVS Motor Co 30.4 18.5 51.1 32.7 18.4 22.9 58.7 86.7 763 73.4 (37.5)
Hero Motocorp 55.1 7.7 37.2 18.5 41.8 14.4 43.7 87.9 646 50.9 (8.9)
Tata Motors (43.5) 111.1 32.4 12.3 (53.5) 100.2 53.3 100.0 2,099 53.3 17.4
Bajaj Auto 49.6 7.9 42.5 11.2 39.4 11.8 48.9 89.0 639 53.0 16.0
Endurance Technologies 27.2 8.5 64.3 12.0 19.4 12.7 67.9 80.9 356 74.1 41.5
Amara Raja Batteries 39.9 8.9 51.2 11.8 40.0 9.3 50.7 60.8 (56) 65.1 28.2
Motherson Sumi Systems 30.0 22.6 47.3 20.9 8.6 18.1 73.2 100.0 2,589 73.2 3.1
Auto Median 30.3 11.1 49.2 14.2 15.8 14.8 67.1 89.1 895 73.3 17.1
ICICI Bank 30.0 13.0 57.0 9.2 21.2 11.8 67.0 100.0 1,001 67.0 41.8
IDBI Bank (157.4) 296.6 (80.1) 315.4 19.7 NA NA NA NA 107.1 (852.5)
Bank Of Baroda 22.0 86.3 (8.3) 49.9 27.8 104.7 (32.5) 44.6 (2,412) 47.4 (96.7)
Canara Bank 2.0 110.9 (13.0) 39.7 64.5 46.8 (11.3) 61.0 166 39.2 (90.3)
Indusind Bank 32.1 18.9 49.0 40.9 16.2 23.4 60.4 93.2 1,148 69.7 (66.1)
Axis Bank 28.6 22.9 48.5 15.4 17.3 27.4 55.3 71.7 679 68.9 20.8
Bank Of India (66.5) 165.0 1.5 54.3 90.8 72.2 (63.0) 0.0 (6,450) 82.8 (63.0)
Indian Overseas Bank (317.0) 198.7 51.4 79.5 23.2 NA NA NA NA 123.2 (73.3)
RBL Bank 28.7 27.4 43.9 31.0 28.6 45.8 25.6 27.3 (1,832) 78.7 5.6
City Union Bank 61.9 16.6 21.5 32.5 37.4 17.8 44.8 90.4 2,331 54.8 (48.9)
IDFC Bank (14.0) 48.3 65.7 14.0 11.7 19.2 69.1 77.8 339 77.7 38.9
AU Small Finance Bank 18.9 3.7 77.4 8.4 21.3 2.4 76.3 47.4 (104) 88.4 65.4
Federal Bank 65.1 21.9 13.0 31.5 62.6 30.9 6.5 61.5 (652) 50.0 (62.9)

What’s in the Price for all BSE 200 companies…(Contd)
Current –
Hi Lo 10-year 10-year
Company CBV STGV LTGV STDEV CBV STGV LTGV 10-year
range (%) max (%) min (%)
avg (bp)
HDFC Bank 33.9 8.0 58.2 5.0 26.6 10.8 62.6 100.0 442 62.6 46.5
State Bank Of India 36.6 27.1 36.3 20.3 34.9 33.8 31.3 55.8 (504) 58.9 (3.7)
Kotak Mahindra Bank 18.2 5.6 76.2 5.2 19.5 4.6 75.9 64.8 (28) 82.1 64.5
Bandhan Bank 29.7 21.9 48.5 21.4 25.8 30.6 43.6 23.6 (485) 79.8 32.4
Bank Median 22.0 27.1 43.9 31.5 26.6 30.6 43.6 61.0 (104) 69.7 (48.9)
ACC 34.1 12.8 53.0 14.7 34.5 18.2 47.4 50.9 (568) 67.8 26.2
Ambuja Cements 32.9 13.1 54.1 13.2 29.1 15.4 55.6 79.5 151 64.1 22.3
Grasim Industries 48.6 18.4 33.0 30.9 7.0 11.9 81.1 100.0 4,812 81.1 (15.7)
Ramco Cements 33.5 9.1 57.3 11.1 31.1 8.3 60.6 75.5 323 69.8 32.1
Shree Cement 23.2 7.0 69.8 13.0 19.3 8.2 72.5 79.0 268 80.9 40.9
Dalmia Bharat 20.8 5.8 69.1 1.9 25.0 4.0 71.0 100.0 185 71.0 67.3
Ultratech Cement 26.4 6.2 67.4 12.4 22.7 11.7 65.6 66.3 (181) 80.3 36.7
Cement Median 32.9 9.1 57.3 13.0 25.0 11.7 65.6 79.0 185 71.0 32.1
Asian Paints 16.6 4.7 78.8 4.8 10.9 4.8 84.3 100.0 557 84.3 67.4
Relaxo Footwears 24.1 7.9 68.0 18.7 8.6 3.5 87.9 100.0 1,995 87.9 22.3
Bata India 17.0 9.5 74.1 11.6 (3.3) 20.2 83.1 94.8 898 85.0 48.2
Berger Paints India 16.6 4.9 78.5 8.1 8.8 4.9 86.3 100.0 780 86.3 62.8
Kansai Nerolac Paints 24.8 0.4 72.4 11.2 15.3 6.7 78.0 92.0 560 81.0 43.6
Indian Hotels (22.4) 39.6 82.8 6.5 (22.6) 33.5 89.1 100.0 630 89.1 68.6
Whirlpool Of India 19.6 7.8 72.6 10.9 12.1 12.1 75.7 81.7 313 82.4 45.8
Trent 4.7 13.9 81.5 10.7 (3.0) 8.5 94.5 100.0 1,304 94.5 62.9
SRF 57.5 1.5 41.0 44.3 14.9 7.6 77.6 100.0 3,658 77.6 (81.0)
Crompton Greaves Consumer 25.6 4.4 70.0 6.6 21.0 3.8 75.2 73.3 521 79.7 62.9
Page Industries 16.5 5.6 78.0 8.4 7.6 5.9 86.4 100.0 848 86.4 58.0
Indian Railway Catering 6.7 13.8 79.5 9.3 2.0 8.7 89.3 100.0 988 89.3 70.9
Aditya Birla Fashion And Ret (63.2) 19.7 87.3 3.9 (25.1) 34.0 91.2 78.6 384 93.5 82.8
Titan 15.6 5.6 78.7 8.6 3.4 5.6 90.9 100.0 1,217 90.9 63.3
Rajesh Exports 74.2 40.5 (19.1) 54.2 59.8 91.8 (51.6) 47.1 (3,253) 38.1 (131.3)
Consumer Discretionary Median 16.6 7.8 78.0 9.3 8.6 7.6 86.3 100.0 780 86.3 62.8

Varun Beverages 19.1 23.4 57.5 14.1 7.9 16.7 75.5 100.0 1,797 75.5 34.2
Britannia Industries 44.2 5.9 49.8 30.3 21.0 2.4 76.6 93.2 2,683 82.5 (3.9)
Colgate Palmolive (India) 26.5 4.0 69.5 4.8 27.4 4.0 68.6 62.5 (88) 75.0 58.0
Nestle India 16.6 7.6 75.8 8.9 12.4 3.9 83.7 95.9 784 84.9 55.6
Hindustan Unilever 21.9 2.8 75.2 7.5 15.2 5.2 79.6 85.4 442 83.4 57.7
Gillette India 12.6 5.1 82.2 5.3 9.0 14.2 76.8 1.9 (541) 94.8 76.5
ITC 41.8 9.2 49.0 22.9 48.7 15.0 36.3 55.2 (1,268) 67.9 (2.6)
Procter & Gamble Hygiene 22.2 4.8 73.1 7.3 18.5 8.7 72.8 56.1 (25) 82.2 60.7
Emami 22.2 17.3 62.3 15.3 18.4 14.7 66.9 74.4 463 76.0 40.5
Godrej Consumer Products 28.8 5.4 65.8 12.1 16.2 5.1 78.7 98.8 1,294 79.1 46.3
Avenue Supermarts 6.9 4.3 88.8 2.7 3.3 4.2 92.5 100.0 377 92.5 86.0
Marico 26.2 5.1 68.7 8.1 19.2 6.1 74.6 83.6 593 78.5 55.0
Jubilant Foodworks 9.8 6.0 84.2 3.8 4.3 7.6 88.1 93.7 389 88.7 78.2
Dabur India 24.3 5.3 70.4 6.3 17.4 4.9 77.7 100.0 732 77.7 56.8
Tata Consumer Products 21.3 12.4 66.3 10.4 10.3 6.3 83.4 100.0 1,704 83.4 51.1
United Breweries 8.9 7.0 84.1 3.7 2.4 13.4 84.2 60.2 13 88.6 77.5
Consumer Staples Median 22.0 5.7 69.9 7.8 15.7 6.2 77.3 89.3 452 82.4 56.2
Adani Green Energy (5.7) 5.6 70.2 7.7 15.9 6.2 77.5 NA NA 0.0 0.0
Graphite India 50.9 4.9 44.2 10.9 25.8 11.6 62.6 95.0 1,843 64.2 32.3
Oil India 169.7 (0.3) (69.4) 53.1 135.5 36.3 (71.8) 73.2 (242) (24.2) (202.0)
Oil & Natural Gas Corp 84.2 35.7 (19.9) 35.3 65.8 67.9 (33.7) 46.7 (1,379) 22.9 (83.4)
Indian Oil Corp 105.4 37.2 (42.6) 36.4 164.6 (29.6) (35.0) 60.7 755 3.7 (94.8)
Coal India 113.5 18.4 (31.9) 41.8 93.7 23.5 (17.2) 75.7 1,469 14.3 (115.1)
Petronet LNG 76.9 10.8 12.3 20.9 83.2 11.2 5.6 51.7 (675) 34.6 (25.6)
Adani Total Gas 4.3 1.6 80.2 20.3 2.7 2.7 94.6 100.0 1,436 94.6 65.9
Bharat Petroleum Corp 95.8 (8.4) 12.6 19.2 159.6 (67.3) 7.7 26.3 (492) 44.6 (5.5)
Energy Median 90.0 8.0 (3.8) 28.1 88.4 8.7 (5.8) 60.7 (242) 28.4 (54.5)
Cholamandalam Investment And 199.7 44.9 (144.6) 170.7 18.9 10.7 70.4 100.0 21,506 70.4 (393.1)
Bajaj Finance 31.9 8.8 59.3 29.7 5.9 7.9 86.2 100.0 2,687 86.2 (12.3)
Muthoot Finance 88.7 12.6 (1.3) 31.6 51.7 18.4 29.8 98.9 3,113 30.9 (66.7)
New India Assurance 44.4 23.4 28.1 15.0 56.4 9.0 34.6 64.9 655 46.0 13.5

Current – 10-year 10-year 10-year
Company CBV STGV LTGV STDEV CBV STGV LTGV range (%)
avg (bp) max (%) min (%)
Aditya Birla Capital 29.4 23.0 47.5 22.8 30.4 21.8 47.8 61.3 22 71.4 10.4
Bajaj Holdings And Investment 43.2 83.8 (65.1) NA 3.2 NA NA NA NA (65.1) (65.1)
Housing Development Finance 30.0 1.4 68.5 8.8 26.4 (1.1) 74.8 93.7 624 76.6 48.1
Max Financial Services 25.9 (1.3) 75.5 9.5 12.8 (1.5) 88.7 84.7 1,320 92.9 65.0
General Ins Corp Of India 8.2 75.0 16.8 18.3 12.2 66.7 21.1 58.3 432 39.1 (3.9)
Mahindra & Mahindra Fin Secs 59.9 21.9 18.3 26.1 22.9 39.0 38.1 83.9 1,987 49.2 (19.3)
HDFC Life Insurance Co 9.8 3.3 87.0 1.8 8.7 3.2 88.1 69.9 110 89.4 85.0
ICICI Prudential Life Insurance 19.7 6.2 74.2 10.6 8.9 5.3 85.8 100.0 1,163 85.8 56.5
SBI Life Insurance Co 20.3 5.0 74.7 6.6 11.2 5.7 83.1 100.0 844 83.1 66.0
LIC Housing Finance 71.5 14.0 14.6 32.3 82.5 13.4 4.1 60.1 (1,049) 47.1 (60.8)
ICICI Lombard General Insurance 22.9 5.7 71.4 3.7 18.7 5.9 75.3 100.0 388 75.3 65.5
Nippon Life India Asset Management 24.0 5.5 70.5 5.9 19.9 2.5 77.6 100.0 712 77.6 61.1
Shriram Transport Finance 50.3 14.2 35.5 15.2 42.9 19.1 38.0 69.7 251 53.8 1.8
SBI Cards & Payment Services 28.2 17.5 71.9 5.6 9.4 14.8 75.8 100.0 395 75.8 67.9
HDFC Asset Management Co 19.1 4.1 76.8 2.8 18.9 4.7 76.4 32.8 (41) 80.8 74.2
Bajaj Finserv 11.9 5.4 81.8 19.4 11.3 7.8 80.8 68.7 (95) 97.6 44.0
Power Finance Corporation 170.3 32.7 (96.3) 47.9 182.0 34.8 (116.8) 50.2 (2,051) (38.3) (195.9)
L&T Finance Holdings 26.6 40.7 22.3 22.6 30.8 35.7 33.4 87.8 1,110 41.2 (22.2)
Financials Median 29.4 14.0 47.5 16.8 18.9 9.8 72.6 84.3 528 71.4 10.4
Dr Lal Pathlabs 18.9 5.0 76.1 7.0 9.8 4.4 85.8 100.0 966 85.8 67.7
Lupin 27.2 21.6 51.1 8.8 33.8 21.4 44.8 14.8 (638) 66.9 40.9
Alembic Pharmaceuticals 58.9 (1.9) 43.1 15.5 84.5 (23.2) 38.7 60.1 (432) 59.9 7.0
Torrent Pharmaceuticals 41.1 9.8 49.0 20.2 27.5 8.4 64.1 92.4 1,510 69.3 1.7
Ajanta Pharma 36.8 5.7 56.5 14.5 38.2 12.4 49.4 28.8 (718) 78.3 37.6
Sun Pharmaceutical Indus 25.6 17.6 56.8 10.0 15.1 25.5 59.4 78.5 258 66.7 32.8
Divi‘s Laboratories 31.3 9.9 58.8 15.4 14.7 7.9 77.5 100.0 1,866 77.5 34.9
Abbott India 34.5 8.4 65.4 8.3 18.6 7.3 74.2 89.5 874 76.6 53.7
Cipla 36.3 12.6 51.1 9.7 36.1 14.4 49.5 38.7 (155) 68.5 37.5
Glaxosmithkline Pharmaceutic 29.8 18.8 52.4 26.2 17.7 16.6 65.7 83.8 1,322 80.4 (10.5)
Sanofi India 37.1 11.1 51.8 9.0 30.5 13.8 55.7 76.1 395 62.8 33.3
Piramal Enterprises 33.6 2.8 63.7 27.1 12.6 20.1 67.4 40.8 368 120.0 31.1

Pfizer 50.6 (5.5) 54.9 18.9 24.4 9.6 65.9 96.5 1,104 68.1 5.3
Ipca Laboratories 38.6 17.5 43.9 15.7 48.5 7.4 44.1 47.4 23 66.4 23.9
Aurobindo Pharma 62.8 5.9 31.2 15.7 107.9 (32.5) 24.5 41.7 (671) 51.6 5.2
Natco Pharma 34.9 18.6 46.5 19.4 29.3 47.1 23.6 15.0 (2,292) 74.6 14.6
Alkem Laboratories 43.5 10.9 45.6 6.7 39.0 7.5 53.5 100.0 796 53.5 34.7
Cadila Healthcare 46.7 7.6 45.8 12.1 45.3 7.1 47.6 59.4 184 63.0 25.1
Apollo Hospitals Enterprise 14.6 10.6 74.8 6.2 2.8 17.8 79.5 91.3 466 81.2 61.1
Biocon 65.9 2.5 31.6 40.4 17.5 16.0 66.5 93.5 3,494 73.2 (29.7)
Gland Pharma 19.6 11.3 65.2 NA 15.7 NA NA NA NA 65.2 65.2
Glenmark Pharmaceuticals 48.8 15.8 35.4 23.3 59.0 13.9 27.1 56.4 (828) 62.7 (18.8)
Syngene International 29.3 5.0 65.8 5.6 18.7 7.1 74.2 100.0 844 74.2 56.5
Health Care Median 36.3 10.2 51.5 14.5 27.5 12.4 55.7 76.1 368 68.3 33.0
ABB India 10.3 9.2 80.5 6.3 5.8 9.6 84.6 82.5 408 88.1 68.4
Astral Poly Technik 34.4 14.9 50.7 43.7 9.5 5.5 85.0 100.0 3,429 85.0 (64.6)
Bharat Heavy Electricals (15.1) 59.3 55.8 26.4 (94.9) 118.9 76.0 98.9 2,021 76.8 5.5
3M India 10.0 8.2 87.1 1.5 5.1 8.9 86.0 0.0 (106) 88.1 86.0
Adani Enterprises 99.0 53.7 (63.5) 186.5 4.0 3.3 92.7 100.0 15,618 92.7 (512.3)
Voltas 26.3 5.6 68.1 17.5 10.6 6.7 82.7 100.0 1,459 82.7 20.9
Cummins India 34.2 5.7 62.7 12.8 20.9 8.1 70.9 95.2 819 72.8 33.1
Larsen & Toubro 35.6 4.2 60.2 15.3 39.2 2.2 58.6 62.9 (151) 78.3 25.4
Siemens 18.3 0.9 80.8 9.6 8.6 6.9 84.5 74.2 370 92.0 63.0
Bharat Electronics 62.2 2.5 35.3 28.2 37.9 11.6 50.5 80.6 1,514 64.9 (9.6)
AIA Engineering 41.3 4.4 54.3 15.7 33.3 8.8 57.9 80.5 364 67.9 16.8
Polycab India 36.4 6.6 56.9 14.1 21.4 6.2 72.5 100.0 1,552 72.5 44.8
Havells India 25.2 0.9 73.8 12.8 9.5 3.8 86.7 100.0 1,281 86.7 44.1
Thermax 21.4 9.9 68.7 6.0 13.1 15.0 71.9 79.0 315 75.6 57.6
Hindustan Aeronautics 112.9 8.8 (25.6) 56.7 73.4 6.3 20.3 100.0 4,590 20.3 (88.9)
GMR Infrastructure (110.4) 70.0 143.8 27.4 (96.2) 58.3 137.9 44.5 (584) 179.9 104.3
Industrials Median 30.2 7.4 61.5 15.5 10.1 7.5 79.4 88.8 1,050 80.5 29.2

Honeywell Automation India 15.9 6.5 79.6 5.6 10.3 5.6 84.1 96.6 447 84.7 67.9
Oracle Financial Services 60.5 12.9 26.6 19.3 45.4 8.4 46.2 96.1 1,959 48.4 (8.5)
Mindtree 51.1 9.6 39.3 25.2 14.3 6.8 78.9 100.0 3,962 78.9 (2.4)
Wipro 70.9 7.6 21.5 22.1 25.8 7.4 66.8 100.0 4,529 66.8 (5.9)
Mphasis 59.4 9.1 34.4 32.5 22.8 9.5 67.7 100.0 3,330 67.7 (9.9)
Tata Consultancy Svcs 42.6 6.5 50.9 9.4 23.3 8.7 68.1 100.0 1,719 68.1 39.3
HCL Technologies 102.5 8.3 (9.5) 43.7 30.0 7.1 63.0 100.0 7,245 63.0 (47.9)
Tech Mahindra 64.2 9.5 26.3 14.5 34.2 12.4 53.5 100.0 2,712 53.5 10.4
Larsen & Toubro Infotech 50.6 6.4 43.0 25.0 17.8 5.9 76.3 100.0 3,331 76.3 7.3
Info Edge India 13.1 2.1 84.7 7.9 14.1 (8.3) 94.2 100.0 950 94.2 66.4
L&T Technology Services 41.3 7.4 51.3 22.7 11.5 7.6 80.9 100.0 2,957 80.9 15.7
Infosys 84.7 9.1 6.2 41.3 24.5 7.8 67.6 100.0 6,145 67.6 (41.5)
Information Technology Median 55.3 7.9 36.8 22.4 23.0 7.5 67.9 100.0 3,143 67.9 2.4
Godrej Industries 1.8 45.4 52.2 22.5 23.1 7.5 67.8 NA NA 52.2 52.2
Aarti Industries Limited 102.8 11.8 (0.0) 85.6 13.9 11.8 74.3 100.0 7,435 74.3 (211.0)
Atul 56.5 7.7 35.8 34.6 22.3 7.3 70.5 100.0 3,468 70.5 (48.4)
PI Industries 25.3 12.4 62.4 15.9 14.0 7.1 78.9 100.0 1,652 78.9 26.2
Bayer Cropscience 44.1 (8.7) 64.6 10.7 20.0 14.5 65.5 55.5 94 80.0 47.4
Coromandel International 57.4 27.0 15.6 40.8 72.0 18.4 9.6 64.8 (603) 61.4 (85.8)
Castrol India 41.8 10.5 47.8 21.7 42.5 22.4 35.1 52.2 (1,270) 67.7 (0.5)
Supreme Industries 38.2 8.0 52.5 26.8 28.3 (2.0) 73.8 100.0 2,125 73.8 (6.2)
UPL 69.2 22.4 8.4 40.4 37.8 23.7 38.5 94.8 3,011 45.2 (82.1)
Pidilite Industries 18.1 4.6 77.2 7.4 9.5 4.7 85.8 100.0 851 85.8 61.8
Materials Median 42.9 11.1 50.0 24.6 22.7 9.7 69.1 100.0 1,652 72.1 (3.3)
Zee Entertainment Enterprise 27.3 16.3 56.4 26.7 19.6 19.9 60.5 81.3 416 76.8 (10.5)
Sun TV Network 51.4 7.4 41.2 23.1 55.6 8.8 35.6 58.6 (562) 69.1 (12.0)
Media Median 39.3 11.9 48.8 24.9 37.6 14.4 48.1 70.0 (73) 73.0 (11.2)
Tata Steel 17.0 69.9 13.0 29.2 36.2 64.1 (0.3) 24.0 (1,330) 82.4 (26.4)
NMDC 108.3 6.2 (14.6) 31.7 116.3 5.6 (21.9) 45.2 (730) 30.6 (65.1)
JSW Steel 49.2 25.5 25.2 15.2 35.0 44.8 20.2 43.0 (502) 51.5 (3.4)
Hindustan Zinc 109.6 10.3 (20.0) 36.5 62.8 23.3 13.9 94.0 3,389 20.2 (84.6)
Jindal Steel & Power (17.6) 58.2 59.4 37.4 46.3 26.5 27.1 4.2 (3,228) 133.5 22.4
Hindalco Industries 54.3 25.2 20.5 27.4 20.9 45.3 33.9 78.4 1,340 55.3 (43.8)
What’s in the Price for all BSE 200 companies
Vedanta (14.3) 132.1 (17.9) 40.9 74.5 30.7 (5.2) 65.7 1,265 35.4 (83.1)
Metals Median 42.0 34.7 16.8 34.1 53.5 37.8 6.8 44.1 (616) 53.4 (54.4)
Godrej Properties 17.0 11.0 72.0 14.6 (2.4) 9.9 92.5 100.0 2,047 92.5 50.7
DLF 15.4 5.0 79.6 8.2 6.9 6.8 86.3 83.8 677 90.9 62.6
Oberoi Realty 33.1 29.4 37.5 17.0 17.5 12.7 69.7 100.0 3,225 69.7 13.4
Real Estate Median 17.0 11.0 72.0 14.6 6.9 9.9 86.3 100.0 2,047 90.9 50.7
Idea Cellular (1348.1) 1046.6 401.5 530.8 (1383.4) 827.5 655.9 36.7 25,439 1742.8 24.6
Tata Communications (1.2) 22.8 78.4 47.6 26.5 11.0 62.6 10.1 (1,577) 210.1 46.0
Bharti Airtel (7.6) 35.9 71.7 17.5 (38.5) 67.4 71.1 27.3 (61) 111.3 56.0
Indus Towers 56.0 5.6 38.5 21.4 51.9 11.0 37.0 64.2 (147) 63.3 (10.2)
Telecommunication Services Median (4.4) 29.4 75.0 34.5 (6.0) 39.2 66.8 32.0 (104) 160.7 35.3
Interglobe Aviation (0.8) 37.2 63.7 18.2 (55.6) 77.5 78.1 69.7 1,442 93.5 42.6
Container Corp Of India 35.2 11.4 53.4 21.1 9.4 17.1 73.6 100.0 2,018 73.6 2.2
Adani Ports And Special Econ 33.8 7.6 58.6 13.9 29.8 16.7 53.5 58.4 (517) 72.8 26.3
Transportation Median 33.8 11.4 58.6 18.2 9.4 17.1 73.6 69.7 1,442 73.6 26.3
Adani Transmission 15.6 6.5 74.1 17.2 5.5 1.0 93.4 100.0 1,927 93.4 46.3
Gujarat State Petronet 92.1 11.7 (3.9) 29.8 90.5 48.0 (38.5) 11.7 (3,468) 36.4 (48.5)
JSW Energy 43.4 17.3 37.0 40.5 12.9 5.8 81.3 100.0 4,431 81.3 (23.3)
Indraprastha Gas 49.3 7.9 42.8 20.6 28.2 15.7 56.2 90.5 1,340 62.0 1.0
Gujarat Gas 33.5 11.5 55.0 11.3 32.2 14.4 53.3 54.5 (167) 70.1 33.3
Tata Power Co 33.1 29.5 37.4 28.9 14.1 13.5 72.4 100.0 3,501 72.4 (37.9)
NHPC 115.5 17.1 (32.6) 30.1 121.2 7.9 (29.1) 56.4 348 13.1 (83.6)
Power Grid Corp Of India 97.2 13.0 (10.2) 26.3 87.4 18.8 (6.2) 61.9 399 30.3 (65.4)
NTPC 113.0 6.4 (19.4) 21.3 94.4 19.0 (13.4) 68.1 599 9.0 (61.4)
Gail India 128.0 13.4 (41.4) 40.1 74.1 29.3 (3.4) 100.0 3,806 (3.4) (148.5)
Adani Power (47.4) 74.6 95.7 38.5 25.2 (9.9) 84.7 60.9 (1,101) 127.5 18.0
Torrent Power 61.9 21.9 17.5 23.8 54.5 16.7 28.8 89.4 1,131 36.3 (34.3)
Utilities Median 55.6 13.2 27.3 27.6 43.3 15.0 41.1 78.8 865 49.2 (36.1)

Disclosures & Confidentiality for non U.S. Investors
The Note is based on our estimates and is being provided to you (herein referred to as the “Recipient”) only for information purposes. The sole purpose of this Note is to provide preliminary
information on the business activities of the company and the projected financial statements in order to assist the recipient in understanding / evaluating the Proposal. Nothing in this document
should be construed as an advice to buy or sell or solicitation to buy or sell the securities of companies referred to in this document. Each recipient of this document should make such
investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved)
and should consult its own advisors to determine the merits and risks of such an investment. Nevertheless, Elara Securities (India) Private Limited or any of its affiliates is committed to provide
independent and transparent recommendation to its client and would be happy to provide any information in response to specific client queries. Elara Securities (India) Private Limited or any of
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implied as contained in this Note. The user assumes the entire risk of any use made of this information. Elara Securities (India) Private Limited or any of its affiliates, their directors and the
employees may from time to time, effect or have effected an own ACCount transaction in or deal as principal or agent in or for the securities mentioned in this document. They may perform or
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request, the Recipient will promptly return all material received from the company and/or the Advisors without retaining any copies thereof. The Information given in this document is as of the
date of this report and there can be no assurance that future results or events will be consistent with this information. This Information is subject to change without any prior notice. Elara
Securities (India) Private Limited or any of its affiliates reserves the right to make modifications and alterations to this statement as may be required from time to time. However, Elara
Securities (India) Private Limited is under no obligation to update or keep the information current. Neither Elara Securities (India) Private Limited nor any of its affiliates, group companies,
directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or consequential including lost revenue or lost profits that may arise from or in
connection with the use of the information. This Note should not be deemed an indication of the state of affairs of the company nor shall it constitute an indication that there has been no
change in the business or state of affairs of the company since the date of publication of this Note. The disclosures of interest statements incorporated in this document are provided solely to
enhance the transparency and should not be treated as endorsement of the views expressed in the report. Elara Securities (India) Private Limited generally prohibits its analysts, persons
reporting to analysts and their family members from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The analyst for this report certifies
that all of the views expressed in this report ACCurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her
compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.
Any clarifications / queries on the proposal as well as any future communication regarding the proposal should be addressed to Elara Securities (India) Private Limited.
Elara Securities (India) Private Limited was incorporated in July 2007 as a subsidiary of Elara Capital (India) Private Limited.
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Capital Market Segment of BSE Limited (BSE).
Elara Securities (India) Private Limited’s business, amongst other things, is to undertake all associated activities relating to its broking business.
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during the routine course of inspection and based on observations, the exchanges have issued advise letters or levied minor penalties on Elara Securities (India) Private Limited for minor
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end of the month immediately preceding the date of publication of Research Report. Elara Securities (India) Private Limited does not have actual/beneficial ownership of 1% or more securities
of the subject company at the end of the month immediately preceding the date of publication of Research Report. Associate entities of Elara Securities (India) Private Limited may have
actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report. Research Analyst or
his/her relative or Elara Securities (India) Private Limited or its associate entities does not have any other material conflict of interest at the time of publication of the Research Report.
Research Analyst or his/her relative(s) has not served as an officer, director or employee of the subject company.
Research analyst or Elara Securities (India) Private Limited or its associate entities have not received any compensation from the subject company in the past twelve months. Research analyst
or Elara Securities (India) Private Limited or its associate entities have not managed or co-managed public offering of securities for the subject company in the past twelve months. Research
analyst or Elara Securities (India) Private Limited or its associate entities have not received any compensation for investment banking or merchant banking or brokerage services from the
subject company in the past twelve months. Research analyst or Elara Securities (India) Private Limited or its associate entities may have received any compensation for products or services
other than investment banking or merchant banking or brokerage services from the subject company or third party in connection with the Research Report in the past twelve months.
Disclaimer for non U.S. Investors

The information contained in this note is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide ACCurate
and timely information, there can be no guarantee that such information is ACCurate as of the date it is received or that it will continue to be ACCurate in the future. No one should act on such
information without appropriate professional advice after a thorough examination of the particular situation.
Disclaimer for U.S. Investors

This material is based upon information that we consider to be reliable, but Elara Capital Inc. does not warrant its completeness, ACCuracy or adequacy and it should not be relied upon as such.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may
not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Prices,
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Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.
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statements” and financial information.
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India Strategy: Mispriced PSU: Good Tactical Opportunity

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India Strategy

Mispriced PSU: Good Tactical Opportunity

There is steam Left in PSU space………………………………………………………………………………………… 4

List of PSU’s benefitting from either of the three triggers ……………………………………………………… 5

Few Sectors with More Mispriced Opportunities Than Others…………………………………………………. 6

Slice and Dice of BSE 200………………………………………………………………………………………………………………. 11

Annexure 2: Other key terminologies……………………………………………………………………………………. 35

Annexure 3: Industry-wise – BSE 200……………………………………………………………………………………. 36

Note: The presentation analyses prices as of 11th October, 2011

Elara Securities (India) Private Limited What’s in the price 2

Elara Securities (India) Private Limited What’s in the price 3

Elara Securities (India) Private Limited What’s in the price 4

Elara Securities (India) Private Limited What’s in the price 5

Elara Securities (India) Private Limited What’s in the price 6

Elara Securities (India) Private Limited What’s in the price 8

Elara Securities (India) Private Limited What’s in the price 9

Source: Bloomberg, Elara Securities Research

Elara Securities (India) Private Limited What’s in the price 10

Source: Bloomberg, Elara Securities Research

Elara Securities (India) Private Limited What’s in the price 13

Elara Securities (India) Private Limited What’s in the price 14

Elara Securities (India) Private Limited What’s in the price 15

Elara Securities (India) Private Limited What’s in the price 17

Elara Securities (India) Private Limited What’s in the price 18

Elara Securities (India) Private Limited What’s in the price 19

Elara Securities (India) Private Limited What’s in the price 20

Hi Lo Current – 10-year 10-year

Auto Median 15.8 14.8 67.1 89.1 895 73.3 17.1

Elara Securities (India) Private Limited What’s in the price

Elara Securities (India) Private Limited What’s in the price 24

Elara Securities (India) Private Limited What’s in the price 25

Elara Securities (India) Private Limited What’s in the price 26

LTGV 10yr Median LTGV 10yr Median

Elara Securities (India) Private Limited What’s in the price 27

LTGV 10yr Median LTGV 10yr Median

Elara Securities (India) Private Limited What’s in the price 28

Elara Securities (India) Private Limited What’s in the price 29

Elara Securities (India) Private Limited What’s in the price 30

Elara Securities (India) Private Limited What’s in the price 31

Source: Bloomberg, Elara Securities Research

Elara Securities (India) Private Limited What’s in the price 32

 STGV = INR 70 – INR 50 = INR 20 / 10% = INR 200 = 20% of CMP

Short Term Growth Value (STGV)

Current Business Value (CBV)

FY+ 0 FY+ 1 , FY+ 2 Beyond FY+ 2 to perpetuity

Elara Securities (India) Private Limited What’s in the price 34

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Elara Securities (India) Private Limited What’s in the price 38

Elara Securities (India) Private Limited What’s in the price 39

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