October 26, 2021

Diwali Top Picks 2021

Diwali Top Picks 2020 performance

INITIATION RETURN SO
STOCK NAME TARGET % UPSIDE SECTOR CMP2 ACTION
PRICE1 FAR#

KPR MILL 737 1,105 50% Textiles 1,105 50% Target Achieved

MANAPPURAM 155 225 45% Financials 200 29% Hold

REDINGTON 129 182 41% Distribution 182 41% Target Achieved

KANSAI NEROLAC 515 700 36% Paints 550 5% Hold

M&M 594 800 35% Auto 800 35% Target Achieved

ICICI BANK 393 519 32% Financials 519 32% Target Achieved

TCI EXPRESS 790 1,036 31% Logistics 1,036 31% Target Achieved

HDFC 1,924 2,500 30% Financials 2,500 30% Target Achieved

RADICO KHAITAN 437 568 30% Breweries 568 30% Target Achieved

KOTAK MAHINDRA
1,547 1,949 26% Financials 1,949 26% Target Achieved
BANK

CRISIL 2,079 2,600 25% Ratings 2,600 25% Target Achieved

ALEMBIC PHARMA 965 1,180 22% Pharma 768 -21% Hold

Source: NSE
1
Initiation price on 2nd November 2020
2
As on 25th October 2021, Except KPR Mills, ICICI Bank, M&M, HDFC, Kotak Mahindra Bank, Redington, TCI Express, CRISIL and Radico Khaitan for which
target achieved earlier

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 1
 Diwali Top Picks 2021

PRINCE PIPES Rating BUY

CMP Rs 704

 Healthy Industry growth: Plastic pipe industry is largely driven by Stock data (as on Oct 25, 2021)
irrigation (50% demand) followed by Plumbing &WSS (35%) demand. Nifty 18,125
On the back of GoI’s initiatives like (i) Jal Jeevan Mission which is likely 52 Week h/l (Rs) 794 / 220
to witness sharp increase in budgetary spends, (ii) Higher spends for Market cap (Rs/USD mn) 77464 / 1032
urban development, (iii) Swachh Bharat mission (Capital outlay of Outstanding Shares (mn) 110
1.2Lakh Cr over 2021-2026) coupled with higher agri spends should 6m Avg t/o (Rs mn): 349
enable the Plastic Pipe industry to grow by 13% over FY20-FY24E
Div yield (%): 0.3
 Prince Pipes & Fittings (PP&F) is one of the leading plastic pipes Bloomberg code: PRINCPIP IN
manufacturers in India. PP&F possesses 6% market share of an overall NSE code: PRINCEPIPE
industry. The company offers wide range of products used in plumbing
solutions, sewage & underground drainage works, irrigation solutions Stock performance
and storage solutions. With 7-strategically located plants across India, 380
PRINCEPIPE Nifty
PP&F has a total 259,000TPA installed capacity. Hence, we believe,
PP&F to be one of the key beneficiaries of expected industry growth. 280
 PP&F to outperform Industry growth: We reckon, with company’s
strong brand image & strategic tie-ups company is likely to expand 180
their market-share. Moreover, industry is witnessing a meaningful
transition from unorganized to organized segment which will further 80
enable the company to outperform industry growth by registering Oct-20 Feb-21 Jun-21 Oct-21

15% CAGR in volumes over FY21-FY24E 1M 3M 1Y

Absolute
0.8% 4.5% 212.9%
 Better Product portfolio: PP&F has built their product portfolio return
towards margin lucrative products. With their tie-up with Lubrizol
Shareholding pattern (As of Sep’21 end)
(world’s largest CPVC compound manufacturer), company is well
poised to increase their CPVC revenue in coming years. Owing to Promoter FII+DII Others
which company is likely to report 15%/15.5% EBITDA margins in
FY23E/FY24E respectively. 21.4%

 Strong Balance sheet: PP&F has strengthened their balance sheet by

reducing total debt from Rs2.75Bn in FY16 to Rs0.8Bn in FY21. As on 15.4%
63.3%
date, company is long term debt free, and we believe total debt to
further reduce to Rs0.35Bn in FY24E. Therefore, NetDebt/Equity is
also expected to improve from -0.1x in FY21 to -0.3x in FY24E. With
no major capex in coming years, we reckon PP&F to generate healthy Financial summary
FCFF of Rs 3.8Bn in FY24E Rs mn FY20 FY21 FY22E

 Valuations: On account of reasons stated above, we believe company Revenue 16,360 20,715 21,229
is set to witness strong traction in coming years. Hence, we expect EBITDA 2,300 3,616 2,717
PP&F to report Revenue/EBITDA/PAT growth of 12%/8%/11% over OPM (%) 14.1 17.5 12.8
FY21-FY24E. Prince Pipes is trading at 26x on FY24E EPS of Rs27. PAT 1,130 2,218 1,653
EPS 10.2 20.0 15.0
P/E (x) 69.9 35.8 47.7
PB 9.4 7.5 6.6
ROE (%) 13.4 21.3 13.7
EV/EBITDA
31.9 21.4 28.5
(x)

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 2
 Diwali Top Picks 2021

GREENPANEL INDUSTRIES Rating BUY

CMP Rs 319

 Wood panel is witnessing massive shift in demand from Plywood to Stock data (as on Oct 25, 2021)
MDFs owing to higher demand for readymade furniture. Indian wood Nifty 18,125
panel is valued at Rs20,000 Cr of which 80% is constituted by Plywood 52 Week h/l (Rs) 359 / 67
and rest 20% is constituted by MDF, particle boards. Globally the ratio Market cap (Rs/USD mn) 39118 / 521
is inverse wherein 80% of wood panels are MDFs. In India, MDFs is Outstanding Shares (mn) 123
rapidly displacing the low-end and Low-mid end plywoods 6m Avg t/o (Rs mn): 96
(~Rs12,000Cr).
Div yield (%): -
 Greenpanel is the largest player in MDF industry with 35% market Bloomberg code: GREENP IN
share and with industry set to grow by 25% CAGR over coming 5- NSE code: GREENPANEL
years, Company is expected to witness robust demand.
Stock performance
 Currently Greenpanel has total capacity of 5.4L CBM/annum capacity
GREENPANEL Nifty
and in order to cater the growing demand, company is expanding their 580

capacities by 1.2Lcbm/annum. Over FY21-FY24E we expect volume 480

growth of 18% CAGR. 380

 Exports which is ~20% of company’s sales is also witnessing robust 280

demand coupled with higher realizations. This should further boost 180
company’s growth.
80
 Greenpanel is strengthening their balance sheet by reducing their total Oct-20 Feb-21 Jun-21 Oct-21

debt from Rs4.41Bn in FY21 to Rs1.41Bn in FY24E resulting into Net 1M 3M 1Y

Absolute
debt/Equity to come in at -0.2x in FY24E from 0.5x in FY21. return
1.1% 32.6% 356.4%
Greenpanel Industries is currently trading at 13x on FY24E EPS of
Rs18.5. Shareholding pattern (As of Sep’21 end)

Promoter FII+DII Others

21.2%

53.1%
25.7%

Financial summary
Rs mn FY20 FY21 FY22E
Revenue 8,766 10,208 12,314
EBITDA 1,378 2,034 2,679
OPM (%) 15.7 19.9 21.8
PAT 145 688 1,338
EPS 1.2 5.6 10.9
P/E (x) 265.8 57.0 29.3
ROE (%) 2.4 9.4 15.5
EV/EBITDA
8.5 16.8 15.8
(x)

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 3
 Diwali Top Picks 2021

APOLLO PIPES Rating BUY

CMP Rs 1,668

 Industry tailwinds: Large investments likely to flow in irrigation Stock data (as on Oct 25, 2021)
segment (50% pipe demand) coupled with healthy capital outlay in Nifty 18,125
Water supply system (WSS) segment (35% pipe demand) over FY20- 52 Week h/l (Rs) 2000 / 412
FY24E which should enable plastic pipe industry to register 13% Market cap (Rs/USD mn) 21868 / 291
CAGR over similar period. Revival in real-estate industry will provide Outstanding Shares (mn) 13
additional boost 6m Avg t/o (Rs mn): 107
 Formalization of Industry: Plastic pipe industry is witnessing material Div yield (%): -
shift in demand from unorganized (35%) to organized segment (65%). Bloomberg code: APOLP IN
This should result into outperformance by organized players in coming NSE code: APOLLOPIPE
years. Apollo Pipes is expected to gain market share from regional
unorganized players. Stock performance
APOLLOPIPE Nifty
 Expanding regional presence: Apollo Pipes has been predominantly 580

present in north-India where it commands a robust market share. With 480

new capacities in place, company is set to expand its regional presence 380
in West, South, East & central India. This will lead to strong volume
280
growth of 31% over FY21-FY24E.
180
 Gross profit margins to expand by 150bps over FY21-FY24E as input
80
cost are expected to tapper-off & utilizations are set to improve. Oct-20 Feb-21 Jun-21 Oct-21
EBITDA margins are likely to remain range-bound at 1M 3M 1Y
12.5%/13%/13.5% in FY22E/FY23E/F24E respectively as company’s Absolute
0.9% 39.2% 295.6%
advertisement spends are expected to increase return

 Balance sheet to strengthen further: Apollo Pipes have strengthened Shareholding pattern (As of Sep’21 end)
their balance by reducing total debt from Rs1,552 Mn in FY18 to
Promoter FII+DII Others
Rs522 Mn in FY21. With no major capex, company is expected to
generate free cash flow. Hence, we reckon total debt to decline to
Rs372Mn by FY24E. Therefore, net debt/EBITDA should come in at - 35.8%
1.1x in FY24E
52.0%
 Lucrative Valuations: Apollo Pipes is currently trading at P/E(x) of 25x
on FY24E EPS as compared to industry average of 34x. We believe, as 11.5%
Apollo Pipes is on the cusp of becoming a leading pan-India player, it
should fetch similar valuations compared to other pan-India players.
Apollo Pipes is trading at 22x on FY24E EPS of Rs76.5. Financial summary
Rs mn FY20 FY21 FY22E
Revenue 4,080 5,181 6,406
EBITDA 464 743 801
OPM (%) 11.4 14.3 12.5
PAT 286 445 495
EPS 21.8 34.0 37.7
P/E (x) 76.7 49.2 44.4
ROE (%) 9.3 12.7 12.3
D/E (x) 0.3 0.1 0.1

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 4
 Diwali Top Picks 2021

ACRYSIL Rating BUY

CMP Rs 700

 Worldwide demand for Quartz Sinks is witnessing strong traction. Stock data (as on Oct 25, 2021)
Globally, only 7% kitchen sinks are Quartz sinks. In FY15, USA, UK and Nifty 18,125
Europe Quartz sink share of total kitchen sink market was 52 Week h/l (Rs) 830 / 181
20%,10%,20% respectively, which expanded to 30%/15%/25% Market cap (Rs/USD mn) 18696 / 249
respectively in FY21. Going ahead, Quartz sinks would likely form 15% Outstanding Shares (mn) 27
of total industry globally. 6m Avg t/o (Rs mn): 99
 Acrysil is one of only four global players and the only Asian Div yield (%): 0.2
manufacturer of Quartz sinks with German technology - the sole Bloomberg code: ACRY IN
approved technology by global Quartz sink vendors. Acrysil Ltd is likely NSE code: ACRYSIL
to become one of the biggest beneficiaries of the robust global demand
for Quartz sinks. Stock performance
ACRYSIL Nifty
 Company is expanding Quartz sinks capacity from 600,000 units in 680

FY21 to 1,000,000 units by FY23E to meet the growing demand. We

believe, with growing preference for Quartz sinks, company will reach 480
peak utilization levels by FY24E. Acrysil is also doubling stainless-steel
sinks capacities over similar period which should further boost growth. 280

 Acrysil has tie-ups with global marquee clients. In 2014, it acquired UK

80
based Homestyle Products Ltd while in 2019, it tied up with leading Oct-20 Feb-21 Jun-21 Oct-21
German brand “GROHE”. In 2021, it commenced supplies to IKEA. The 1M 3M 1Y
company also has a strategic tie-up with many other global marquee Absolute
-12.7% 19.0% -
clients return

 Quartz Sinks revenues constituting 75% of company’s top-line are Shareholding pattern (As of Sep’21 end)
expected to grow by 30% CAGR over FY21-FY24E. Volumes &
Promoter FII+DII Others
realizations of Quartz sinks should grow by 27% & 2% respectively.
Stainless-steel sinks (14% of revenue) & appliances (11% of revenue)
are likely to increase by 31% and 39% respectively over the same span.
44.0%
 In the light of all the favorable factors, overall Acrysil Ltd’s 49.4%

Revenues/EBITDA/PAT are expected to achieve impressive growth of

28%/28%/32% CAGR respectively over the span FY21-FY24E. Acrysil 6.5%
Ltd is currently trading at 21.5x on FY24E EPS of Rs34.

Financial summary
Mar- Mar- Mar-
Rs mn
20 21 22
Revenue 2,762 3,097 4,170
EBITDA 464 658 855
OPM (%) 16.8 21.2 20.5
PAT 229 393 520
EPS 9.0 15.0 20.0
P/E (x) 77.8 46.7 35.0
ROE (%) 14.5 20.6 21.4
D/E (x) 0.6 0.5 0.4

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 5
 Diwali Top Picks 2021

DALMIA BHARAT Rating BUY

CMP Rs 1,886

 Largest Player in the Eastern market: DALMIABHARA (PAN India 4th Stock data (as on Oct 25, 2021)
largest player) holds ~6% of the PAN India capacity share with the total Nifty 18,125
cement capacity of 33MTPA. While its ~63% (as of Sep’21) of cement 52 Week h/l (Rs) 2548 / 806
capacity is mounted in the east that makes him the largest player of Market cap (Rs/USD mn) 352894 / 4700
the east market holding ~16% capacity share of the east. Outstanding Shares (mn) 187
 Substantial Capacity addition under pipeline: DALMIABHARA capacity 6m Avg t/o (Rs mn): 505
grew at 13% CAGR v/s industry capacity grew at 7% CAGR over FY11- Div yield (%): 0.1
21. Further, it had continued its expansion phase with the 11.5MTPA Bloomberg code: DALBHARA IN
under pipeline and reached ~50MTPA by FY24E. In the Long-run NSE code: DALBHARAT
company had kept an aim to be a 110-130MTPA cement company by
FY30E. Stock performance
DALBHARAT Nifty
 East the Highly attractive market: In terms of Demand, the East India 330

Market stood Highly Attractive among the other region. 1) Shortage of 280
housing - ~56% of PMAY houses constructed till now are in the East 230
(only 54% had achieved yet). 2) 21 out of 110 cities selected under
180
Smart City Mission are in the East 3) large pipeline of govt
Infrastructure projects in the east. These factors would lead the robust 130

demand and lead the east highly attractive market. 80

Oct-20 Feb-21 Jun-21 Oct-21
 Company to witness Robust Volume Growth: COVID-led-demand 1M 3M 1Y
destruction had dented the industry volume by ~12% y/y in FY21, Absolute
-9.7% -15.3% 128.1%
despite that DALMIABHARA volume had increased by 7% y/y due to return
the incremental capacity and eastern market robust demand. Thus, we
Shareholding pattern (As of Sep’21 end)
believe DALMIABHARA volume is likely to grow substantially by
~10/16% y/y in FY22/23E. Promoter FII+DII Others

 Price hikes would continue to offset the inflating cost: Fuel/Diesel cost
24.2%
had jumped 3x from the low in FY21 and to offset this inflating cost
cement industry had taken potential price hikes and a higher share of
Blended cement. Thus, backed by healthy realization Dalmia is likely 56.0%
19.8%
to maintain its healthy EBITDA/te level of +Rs1300/te in FY22/23E.
 Strong Balance Sheet to support Future CAPEX: Supported by the
strong profitability, we expect Dalmia to generate a robust free cash
flow of Rs30bn post-CAPEX of Rs23bn over FY22/23E and aid to fund Financial summary
Mar- Mar- Mar-
its future CAPEX without pressurizing its balance sheet. Net Rs mn
20 21 22
Debt/EBITDA stood at 0.04x in FY21. Currently, it trades at 12/10x Revenue 96,740 105,220 116,350
of EV/EBITDA on FY22/23. EBITDA 21,060 27,830 28,440
OPM (%) 21.8 26.4 24.4
PAT 2,240 12,310 11,653
EPS 11.6 65.8 61.0
P/E (x) 162.6 28.7 30.9
ROE (%) 2.1 9.7 7.5
EV/EBITDA
6.8 12.6 12.6
(x)
D/E (x) 0.3 0.0 0.1

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 6
 Diwali Top Picks 2021

INDIAMART Rating BUY

CMP Rs 7,324

 Dominant market share in B2B classified business with around 70% Stock data (as on Oct 25, 2021)
market share in paid listings. Performance is led by higher value Nifty 18,125
proposition for sellers leading to higher pricing power, efficient 52 Week h/l (Rs) 9950 / 4515
matching algorithm resulting in higher buyer satisfaction; and the Market cap (Rs/USD mn) 223853 / 2981
network effect attracting more buyers and sellers to the platform. The Outstanding Shares (mn) 31
strength of business model is visible in the 16% CAGR growth in paying
6m Avg t/o (Rs mn):
subscribers over FY16-21 and 36% CAGR growth in the number of 1,253
registered buyers. Div yield (%): 0.2
Bloomberg code: INMART IN
 Strong promoter track record (currently hold around 50% stake) which NSE code: INDIAMART
is visible in superior execution as IndiaMart has clocked 22% CAGR
revenue growth over last 5 years. EBIT margin has grown from -19% Stock performance
in FY17 to 23% in FY20 and doubled to 47% in FY21 on the back of INDIAMART Nifty
230
positive leverage and conscious reduction in advertisement expense. It
has proactively invested in technological innovation to sustain traffic
growth. 180

 High quality business as it is completely powered by organic traffic 130

with little advertisement expense, driven by high value proposition to
sellers. Buyers benefit from diversified product listing (72mn product 80
listings across 97k categories); whereas, sellers find high quality traffic Oct-20 Feb-21 Jun-21 Oct-21
(~30% growth in traffic over last 5 years) on the platform. Being B2B 1M 3M 1Y
business, it is less subject to disruption compared to B2C online Absolute
-13.9% 0.7% 46.8%
classified segment which face high competition from return

Google/Facebook Shareholding pattern (As of Sep’21 end)

 Huge opportunity to grow as only 2% of addressable MSMEs pay for
Promoter FII+DII Others
priority listing services in India compared to 4% in China. Also 55% of
MSMEs have some sort of digital presence compared to 90% in China. 17.2%
The pickup in digitalization going ahead is set to expand the presence
of MSMEs using internet for B2B transactions. Online B2B 49.5%
classified expected to grow at around 20% pa. going ahead led by
32.6%
growth in the number of paying suppliers.
 It is net debt free company with net cash of Rs 23bn that offers
optionality value and would help it to invest in its platform to fight off
any threat from competitors. It benefits from minimal capex Financial summary
Rs mn Mar-20 Mar-21 Mar-22
requirement (~1% of sales) leading to strong FCF generation. The
subscription- based business model requires upfront payment for Revenue 6,389 6,696 7,601

suppliers leads to negative working capital situation. Diversified EBITDA 1,689 3,282 3,590

revenue base across industries and geographies helps to lower OPM (%) 26.4 49.0 47.2
business risk PAT 1,474 2,798 3,477
EPS 49.8 94.6 117.5
 Strong revenue growth outlook along with growing margin trajectory
P/E (x) 147.8 77.8 62.7
led by positive operating leverage makes it an attractive play in online
ROE (%) 67.8 29.7 19.9
classified space. The stock trades at PER of 52.3x on FY23E earnings.
EV/EBITDA
Revenue/ EBITDA / PAT are expected to grow at CAGR of - 64.3 58.5
(x)
23.3%/20.4%/23.0% over FY22- FY24E D/E (x) -3.3 -1.4 -1.3

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 7
 Diwali Top Picks 2021

PNC INFRA Rating BUY

CMP Rs 331

 Healthy Order book of ~3.5x of FY21 revenues provides revenue Stock data (as on Oct 25, 2021)
visibility. Entry into water segment to help diversify. Nifty 18,125

 Strong execution and operational capabilities supported by largely 52 Week h/l (Rs) 396 / 157

owned construction equipment. Market cap (Rs/USD mn) 84850 / 1130

Outstanding Shares (mn) 257
 Robust tendering from NHAI to boost the awarding activities in near 6m Avg t/o (Rs mn): 248
term driven by HAM and EPC projects.
Div yield (%): 0.2
 Strong Balance sheet, improvement in Net Working Capital Days and Bloomberg code: PNCL IN
double-digit margin profile to support. NSE code: PNCINFRA

 Entry into water segment could significantly help build on Order book. Stock performance
Water sector is key focus area for Government.
PNCINFRA Nifty
280
 Sharp pickup in project awarding activities from NHAI. Improved
execution with better labor availability and almost projects moving as 230
per schedule. 180
 Recent order inflows, continued focus on asset monetization and
130
comfortable balance sheet provide comfort. Trades at attractive P/E of
15x FY23. 80
Oct-20 Feb-21 Jun-21 Oct-21
1M 3M 1Y
Absolute
-10.1% 3.6% 96.2%
return

Shareholding pattern (As of Sep’21 end)

Promoter FII+DII Others

4.0%

39.9%
56.1%

Financial summary
Rs mn Mar-20 Mar-21 Mar-22
Revenue 48,779 49,254 57,950
EBITDA 7,643 6,728 7,999
OPM (%) 15.7 13.7 13.8
PAT 4,603 3,619 4,681
EPS 17.9 14.1 18.2
P/E (x) 18.5 23.5 18.2
ROE (%) 14.5 20.6 21.4
EV/EBITDA
10.4 12.0 10.1
(x)
D/E (x) 0.6 0.5 0.4

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 8
 Diwali Top Picks 2021

POLYCABS Rating BUY

CMP Rs 2,338

 Polycab is has leadership position in the wires and cables segment Stock data (as on Oct 25, 2021)
where it holds 21% market share. It is expected to enhance its Nifty 18,125
leadership by further portfolio widening and in-house manufacturing 52 Week h/l (Rs) 2648 / 854
capabilities. Market cap (Rs/USD mn) 348675 / 4644

 Key growth drivers include expansion into Tier 2 and below markets, Outstanding Shares (mn) 149
higher exports and entry into specialty cables. FMEG continues to 6m Avg t/o (Rs mn):
1,154
deliver for the company with Polycab being one of the fastest Div yield (%): 0.4
companies to reach Rs10bn revenue. Bloomberg code: POLYCAB IN

 Polycab is aggressively leveraging its strong distribution network of NSE code: POLYCAB
4000 plus dealers and 1.75 lac retailers to drive higher than industry
Stock performance
growth. There has been a significant increase in A&P spends from 0.4%
in FY14 to 1.4% in FY20 with the company now advertising 330
POLYCAB Nifty
aggressively in high profile events. Polycab has taken up multiple
280
strategic initiatives to strengthen its relationship with both customers
230
and other stakeholders especially influencers like electricians.
180
 The WC cycle has improved by 17 days from FY16-20 and the
130
company has appointed external consultants to work on further
improving the same, which is expected to improve return ratios and 80
Oct-20 Feb-21 Jun-21 Oct-21
cash flow generation over the medium term.
1M 3M 1Y
 Polycab has undertaken a journey of transforming itself into a strong Absolute
-3.0% 25.8% 145.5%
B2C player and we expect the trend to continue with increase in its return

distribution presence; it is working on a five-year vision Project Leap Shareholding pattern (As of Sep’21 end)
where it plans to double its revenue to Rs200bn by FY26E.
Promoter FII+DII Others
 Stock is trading at only 19x EV/EBIDTA on FY24, which is at significant
discount to electricals peers. Company expected to deliver FY21-24E 16.0%
revenue/EBITDA CAGR of 14%/12% respectively.
15.7%

68.4%

Financial summary
Rs mn FY20 FY21 FY22E
Revenue 88,300 89,265 104,932
EBITDA 11,350 11,670 13,417
OPM (%) 12.9 13.1 12.8
PAT 7,656 8,859 8,975
EPS 51.4 59.4 60.2
P/E (x) 45.5 39.4 38.8
ROE (%) 22.9 20.4 17.5
EV/EBITDA
30.6 29.9 25.7
(x)

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 9
 Diwali Top Picks 2021

ICICI BANK Rating BUY

CMP Rs 842

 Non-lending businesses contribute 19-21% to the overall value of SBI, Stock data (as on Oct 25, 2021)
ICICI and KMB, specifically, 20% for ICICI, whereas, for other banks in Nifty 18,125
our 11-bank coverage universe, at 0-5%, such businesses do not move 52 Week h/l (Rs) 867 / 388
the needle in terms of augmenting overall shareholder value. Market cap (Rs/USD mn) 5837779 / 77749

 Our derived business mix risk scores (from an asset quality standpoint) Outstanding Shares (mn)
6,936
are the lowest for SBI, AXSB, ICICI, BOB and FED whose scores range
6m Avg t/o (Rs mn):
between 0.73-0.85, with ICICI at 0.84. Scores for HDFCB, KMB, DCB, 9,366
Div yield (%): 0.2
IIB, CUB and RBL are higher and range between 0.93-1.30.
Bloomberg code: ICICIBC IN
 We factor in (i) contingent Covid provisions (ii) other excess provisions NSE code: ICICIBANK
(iii) provisions on restructured book and (iv) specific provisions and
note that these provide the highest coverage for NPA plus Stock performance
restructuring estimate for ICICI at 89% of said combined stressed ICICIBANK Nifty
230
book.
 Over the 3-year period FY18-21, the decline in share of low-yield loans 180
has been the highest for RBL, IIB, ICICI, AXSB and FED, ranging
between 5.6-19.6% of loan book, with ICICI at 7.2%. 130

 In ICICI, we see an ability to increase, prospectively, the share of

higher-yielding loans in a risk calibrated manner. ICICI currently trades 80
Oct-20 Feb-21 Jun-21 Oct-21
at an implied valuation of 2.2x standalone FY23 P/BV.
1M 3M 1Y
Absolute
16.4% 24.7% 108.7%
return

Shareholding pattern (As of Sep’21 end)

Promoter FII+DII Others

9.7%
0.0%

89.8%

Financial summary
Rs mn FY20 FY21 FY22E
Net int.
332,671 389,894 472,827
income
PPoP 281,013 363,971 398,663
Net
79308 161927 215188
profit
Net int.
3.7 3.7 4.0
margin
ROE 7.1 12.3 13.8
ROA 0.8 1.4 1.6
EPS 12.2 23.4 31.0
P/E 69.4 36.2 27.3
P/ABV 3.8 3.1 2.8
Net NPL
1.6 1.3 1.0
ratio

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 10
 Diwali Top Picks 2021

GLAND PHARMA Rating BUY

CMP Rs 3,726

 Gland can comfortably clock earnings CAGR of 24-25% over next 4-5 Stock data (as on Oct 25, 2021)
years without any dilution to ROCE, a unique proposition given that Nifty 18,125
source of such stellar growth will be US in contrast to other large 52 Week h/l (Rs) 4350 / 1700
generic pharma companies who struggle or deliver lumpy growth Market cap (Rs/USD mn) 610775 / 8134

 Gland’s strength lies in generic injectables manufacturing with a long Outstanding Shares (mn) 164
track record. Less commoditized due to 1.3-1.5x more capital required 6m Avg t/o (Rs mn):
1,040
than oral solids and stringent FDA monitoring for any contamination. Div yield (%): -
These entry barriers are a reason for, on average, ~50% shortages in Bloomberg code: GLAND IN
injectables in US. NSE code: GLAND
 Gland’s margin at a slight premium to other international peers – shows
Stock performance
inherently robust profitability of B2B business model. We believe
factors like strong track record in uninterrupted supplies, ability to 330
GLAND Nifty
supply at scale due to non-exclusive supply contracts, alleviating need
280
for capital investment and transfer of compliance risk are key
230
arguments that will propel increased outsourcing in favour of Gland.
180
 Long runway for growth – US generic injectables market would exhibit
130
16% growth to US$96bn in 2025 – Gland can comfortably sport 20-
25% revenue growth as market itself expanding in mid-teens. 80
Oct-20 Feb-21 Jun-21 Oct-21
 Foray in to complex injectables like peptides, hormones and newer 1M 3M 1Y
dosage forms like pens, cartridges to support growth beyond next 2-3 Absolute
-3.1% -7.3% -
years. Longer term ambition in biosimilar is a pivot in right direction. return

 Expect an impressive revenue and PAT growth of 24% and 25% Shareholding pattern (As of Sep’21 end)
respectively over FY20-23 with ROE/ROCE much ahead of those for
Promoter FII+DII Others
Indian generic companies. While no listed peer in India, globally closest
overlap is with Recipharm and Catalent. Recipharm and Catalent trade 19.2%
at lower multiple and reckon Gland with a much better ROE (avg. 23%
vs. mid-teens for Catalent) and margin should trade at a premium.
Trades at an EV/EBITDA of 22x FY24 earnings. 22.8% 58.0%

Financial summary
Rs mn FY20 FY21 FY22E
Revenue 26,332 34,629 43,972
EBITDA 9,555 13,022 15,733
OPM (%) 36.3 37.6 35.8
PAT 7,729 9,970 12,324
EPS 49.9 60.9 75.3
P/E (x) 76.7 59.4 49.0
ROE (%) 23.7 20.9 18.9
EV/EBITDA
57.4 43.2 36.2
(x)
D/E (x) -0.4 -0.5 -0.5

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 11
 Diwali Top Picks 2021

SBI CARDS Rating BUY

CMP Rs 1,130

 SBI Cards, a subsidiary of SBI, is the second-largest credit card issuer Stock data (as on Oct 25, 2021)
in India with around 19% market share both in terms of number of Nifty 18,125
credit cards outstanding and spends. It offers an extensive credit card 52 Week h/l (Rs) 1165 / 770
portfolio to individual cardholders and corporate clients covering all Market cap (Rs/USD mn) 1063175 / 14160
major spend categories and cardholder segments in terms of income Outstanding Shares (mn) 941
profiles and lifestyles. The company has a diversified customer
6m Avg t/o (Rs mn):
acquisition network which includes a large number of outsourced sales 2,827
personnel present in 145+ cities, tele-sales, online channels, email & Div yield (%): -

SMS marketing, mobile applications, co-branding partnerships (non- Bloomberg code: SBICARD IN

banks and banks) and the partnership with SBI which provides access NSE code: SBICARD
to its vast branch network and customer base. SBI Cards has been a
Stock performance
leading player in open market customer acquisition in India.
SBICARD Nifty
160
 SBI Cards has been improving its market share over the years by
growing much faster than the industry both in terms of numbers of 140
cards and amounts of spends. Its cards portfolio has certain unique
characteristics such as higher contribution from a) millennials/younger 120

customers, b) Government/PSU employees and c) customers located 100

outside Tier-1 markets. Even during FY19-21 (a period impacted by
Covid), the company grew its cards base by 42% and annual spends by 80
Oct-20 Feb-21 Jun-21 Oct-21
18%. The management does not foresee any significant impact of the
restrictions of new issuance on MasterCard network. 1M 3M 1Y
Absolute
11.7% 11.0% 42.3%
 New card issuances, spends and receivables and profits should start return

recovering from Q2 FY22 after being impacted in the preceding Shareholding pattern (As of Sep’21 end)
quarters due to pandemic waves. Both liquidity and capital are not
constraints for reverting to the pre-Covid growth trends. The company Promoter FII+DII Others
has substantial unutilized bank lines and a strong capital adequacy of 7.8%
26%. It holds significant provisions against Gross NPLs and >30 dpd
restructured pool. RoA/RoE should likely revert to the pre-Covid 22.8%
corridor of 6-7%/30-35% from H2 FY22.
69.4%
 The large scale of operations, strong brand, deep expertise/focus,
robust risk management (incl. collections), access to SBI’s
customers/platforms (YONO) are structural business moats, which
along with increasing adoption of digital payments and credit cards in Financial summary
India represents long-term growth opportunity for SBI cards. Notably, Rs mn FY20 FY21 FY22E
it is the only listed pure-play credit card issuer; thus, would continue Net
to command a much higher valuation than most Banks and NBFCs. At Operating 79,755 82,341 95,119
Rev.
the current market price, stock discounts its FY22E ABV of Rs77 by PPoP 36,699 39,623 43,952
14.7x.
PAT 12,448 9,845 13,306
EPS 13.3 10.5 14.1
ABV 55.2 63.9 77
P/E (x) 85.2 107.9 79.9
P/ABV (x) 20.5 17.7 14.7
GNPA (%) 2 5 3

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 12
 Diwali Top Picks 2021

CRISIL Rating BUY

CMP Rs 2,887

 CRISIL is a rating services and analytics and risk solutions company Stock data (as on Oct 25, 2021)
with a global presence. Bulk of its revenues come from non-rating Nifty 18,125
businesses provided to global financial institutions. The revenue share 52 Week h/l (Rs) 3330 / 1741
of India ratings business is around 18% and the share of rating support Market cap (Rs/USD mn) 210255 / 2800
services to S&P Global at ~10%. Acquisition of Greenwich Associates Outstanding Shares (mn) 73
in FY20 has further increased the share of non-rating income, 6m Avg t/o (Rs mn): 231
completed offerings under benchmarking analytics services and added
Div yield (%): 1.2
legs to overall growth.
Bloomberg code: CRISIL IN
 Expected revival in domestic rating business would support an already NSE code: CRISIL
improving growth and margin trajectory of CRISIL. In this business, the
company intends to hold market share gain reaped over the past three Stock performance
years along with premium pricing. Global Research & Risk Solutions 180
CRISIL Nifty
(Irevna) has witnessed improved revenue traction in the past 12-18
160
months driven by robust growth in high-margin services like model risk,
traded risk, non-financial risk, buy-side research, etc. Coalition & 140

Greenwich combined represent a full suite of benchmarking analytics 120

services for global banks and financial institutions. Growth synergies 100
will emanate from common customer base and cross-sell/wallet share
80
opportunities. Oct-20 Feb-21 Jun-21 Oct-21

 The improvement in company-level operating margin seen during H1 1M 3M 1Y

Absolute
CY21 will continue. CRISIL aspires to revert to its earlier 27-29% return
0.9% -4.1% 52.6%
margin band in a few years. Margin levers will be a) stronger growth in
better-margin services in research segment, b) revival in domestic Shareholding pattern (As of Sep’21 end)
rating income growth (most profitable business) and c) swift
Promoter FII+DII Others
turnaround in Greenwich profitability which is expected to break-even
in CY21 and has the potential to reach overall research segment 20.5%
margins in a couple of years.
 Our bullish stance on CRISIL is premised on a) dominant market share 12.6%
in India rating business pie, b) diversified revenue mix (less-cyclical), c) 66.9%
improving margins, and d) robust corporate governance and superior
rating performance (better average default rates and stability rates).
On a 12% revenue CAGR, we see 18% earnings CAGR during CY21-
24. Improved earnings trajectory and escalation of RoE will cause re- Financial summary
rating of valuation. At the current market price, stock discounts its Rs mn CY19 CY20 CY21E
Net
CY21E EPS of Rs57.5 by 50.2x. 17,317 19,818 22,068
Revenues
EBITDA 4,559 5,106 5,786
EBITDAM
26.3 25.8 26.2
(%)
PAT 3,440 3,547 4,172
EPS 47.6 48.9 57.5
P/E (x) 60.7 59.1 50.2
ROE (%) 29.8 28.6 30.4
P/BV (x) 17.8 16 14.6

For important information about YES Securities (India) Ltd. and other disclosures, refer to the end of this material. 13
DISCLAIMER
Investments in securities market are subject to market risks, read all the related
documents carefully before investing.
The information and opinions in this report have been prepared by YSL and are
subject to change without any notice. The report and information contained
herein are strictly confidential and meant solely for the intended recipient and
may not be altered in any way, transmitted to, copied or redistributed, in part or
in whole, to any other person or to the media or reproduced in any form, without
prior written consent of YSL.
The information and opinions contained in the research report have been
compiled or arrived at from sources believed to be reliable and have not been
independently verified and no guarantee, representation of warranty, express or
implied, is made as to their accuracy, completeness, authenticity or validity. No
information or opinions expressed constitute an offer, or an invitation to make an
offer, to buy or sell any securities or any derivative instruments related to such
securities. Investments in securities are subject to market risk. The value and
return on investment may vary because of changes in interest rates, foreign
exchange rates or any other reason. Investors should note that each security's
price or value may rise or fall and, accordingly, investors may even receive
amounts which are less than originally invested. The investor is advised to take
into consideration all risk factors including their own financial condition, suitability
to risk return profile and the like, and take independent professional and/or tax
advice before investing. Opinions expressed are our current opinions as of the
date appearing on this report. Investor should understand that statements
regarding future prospects may not materialize and are of general nature which
may not be specifically suitable to any particular investor. Past performance may
not necessarily be an indicator of future performance. Actual results may differ
materially from those set forth in projections.
Technical Analysis reports focus on studying the price movement and trading
turnover charts of securities or its derivatives, as opposed to focussing on a
company’s fundamentals and opinions, as such, may not match with reports
published on a company’s fundamentals.
YSL, its research analysts, directors, officers, employees and associates accept no
liabilities for any loss or damage of any kind arising out of the use of this report.
This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or
other jurisdiction, where such distribution, publication, availability or use would
be contrary to law, regulation or which would subject YSL and associates to any
registration or licensing requirement within such jurisdiction. The securities
described herein may or may not be eligible for sale in all jurisdictions or to certain
category of investors. Persons in whose possession this document may come are
required to inform themselves of and to observe such restriction.
YES Securities (India) Limited (YSL) distributes research and engages in other
approved or allowable activities with respect to U.S. Institutional Investors
through SEC 15a-6 rules and regulations under an exclusive chaperone
arrangement with Brasil Plural Securities LLC. The views and sentiments
expressed in this research report and any findings thereof accurately reflect YSIL
analyst’s truthful views about the subject securities and or issuers discussed
herein. YSIL is not registered as a broker-dealer under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and is not a member of the Securities
Investor Protection Corporation ("SIPC"). Brasil Plural Securities LLC is registered
as a broker-dealer under the Exchange Act and is a member of SIPC. For questions
or additional information, please contact Gil Aikins (gil.aikins@brasilplural.com) or
call +1 212 388 5600.
YES Securities (India) Limited
Registered Address: 2nd Floor, North Side, YES BANK House,
Off Western Express Highway, Santacruz East,
Mumbai - 400 055, Maharashtra, India.
Correspondence Address: 4th Floor, AFL House,
Lok Bharti Complex, Marol Maroshi Road, Andheri East,
Mumbai - 400059, Maharashtra, India.
Email: research@ysil.in | Website: www.yesinvest.in
DISCLOSURE OF INTEREST
Name of the Research Analyst : Amit Trivedi
The analyst hereby certifies that opinion expressed in this research report
accurately reflect his or her personal opinion about the subject securities and no
part of his or her compensation was, is or will be directly or indirectly related to the
specific recommendation and opinion expressed in this research report.
Sr.
Particulars Yes/No
No.
Research Analyst or his/her relative’s or YSL’s financial
1 No
interest in the subject company(ies)
Research Analyst or his/her relative or YSL’s
actual/beneficial ownership of 1% or more securities of
2 the subject company(ies) at the end of the month No
immediately preceding the date of publication of the
Research Report
Research Analyst or his/her relative or YSL has any other
3 material conflict of interest at the time of publication of No
the Research Report
Research Analyst has served as an officer, director or
4 No
employee of the subject company(ies)
YSL has received any compensation from the subject
5 No
company in the past twelve months
YSL has received any compensation for investment
6 banking or merchant banking or brokerage services from No
the subject company in the past twelve months
YSL has received any compensation for products or
services other than investment banking or merchant
7 No
banking or brokerage services from the subject company in
the past twelve months
YSL has received any compensation or other benefits from
8 the subject company or third party in connection with the No
research report
YSL has managed or co-managed public offering of
9 securities for the subject company in the past twelve No
months
Research Analyst or YSL has been engaged in market
10 No
making activity for the subject company(ies)
Since YSL and its associates are engaged in various businesses in the financial
services industry, they may have financial interest or may have received
compensation for investment banking or merchant banking or brokerage services
or for any other product or services of whatsoever nature from the subject
company(ies) in the past twelve months or associates of YSL may have managed or
co-managed public offering of securities in the past twelve months of the subject
company(ies) whose securities are discussed herein.
Associates of YSL may have actual/beneficial ownership of 1% or more and/or
other material conflict of interest in the securities discussed herein.
Registration Nos.: CIN: U74992MH2013PLC240971 | SEBI Single
Registration No.: NSE, BSE, MCX & NCDEX: INZ000185632 | Member
Code: BSE – 6538, NSE – 14914, MCX – 56355 & NCDEX - 1289 |
MERCHANT BANKER: INM000012227 | RESEARCH ANALYST:
INH000002376 | INVESTMENT ADVISER: INA000007331 | Sponsor and
Investment Manager to YSL Alternates Alpha Plus Fund (Cat III AIF) SEBI
Registration No.: IN/AIF3/20-21/0818 | AMFI ARN Code – 94338.
Details of Compliance Officer: Name: Vaibhav Purohit,
Email id: compliance@ysil.in, Contact No: +91-22-6885 0278
Notes

ABOUT YES SECURITIES (INDIA) LIMITED

YES Securities (India) Limited (‘‘YSL’’) is a wholly owned subsidiary of YES BANK LIMITED. YSL is a SEBI registered stock
broker holding membership of NSE, BSE, MCX & NCDEX. YSL is also a SEBI registered Category I Merchant Banker,
Investment Adviser and a Research Analyst. YSL offers, inter alia, trading/investment in equity and other financial products
along with various value added services. We hereby declare that there are no disciplinary actions taken against YSL by
SEBI/Stock Exchanges.