Kotak India - Daily 20200326

INDIA DAILY
March 26, 2020 India 25-Mar 1-day 1-mo 3-mo

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Godrej Consumer Products: Risk-reward attractive after a long time 4
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Company alerts
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Sector alerts 10yr govt bond, % 6.9 - 23 (9)
Net investment (US$ mn)

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23-Mar MTD CYTD
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)
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Top movers
Change, %
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kspcg.research@kotak.com
Contact: +91 22 6218 6427
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES.
REFER TO THE END OF THIS MATERIAL.
INDIA
Strategy
KIE Covid-19 Tracker MARCH 26, 2020
NEW RELEASE
BSE-30: 28,536
Clamps on economic activity. KIE’s Covid-19 tracker mines daily data to assess the
impact of this human tragedy on the Indian economy. This impact arises from the shock
to aggregate demand as well as disruption in supply chains. As of March 25, we see a
downward trend in several sets of factors which are indicators of economic activity. We
will add to these as we access similar data across other factor sets. The tracker aims at
providing insights into the inflection point when economic activity starts to return to
normalcy.
Road traffic down

QUICK NUMBERS
We use traffic congestion data as a proxy for intra-city traffic. Using publically available data for
four cities (Mumbai, New Delhi, Bengaluru and Pune), we see a marked decline in the number  50%-60% decline in
of vehicles on the road. A significant proportion of on-road traffic is generated by private ride- peak time vehicular
sharing apps. Payouts for drivers of these vehicles are dependent on the number of rides traffic
completed. The precipitous drop in the number of vehicles on road leads us to expect a big hit
 Lower electricity (by
on payouts to drivers, with a cascading effect on their consumption expenditure.
~10%) consumption
Vehicular pollution down compared to last
year
Vehicular pollution data augments the analysis of traffic congestion and is available for a larger
set of cities. We see pollution in the last seven days below the Dec 2019-Feb 2020 period  Vehicular pollution
average. For cities with vehicular data available, it confirms the hypothesis that there are indeed down by ~20%
less vehicles on the road. For other cities, it shows that a drop in the number of vehicles is not
restricted only to the top cities.
Electricity consumption bears watching
A prolonged lockdown on account of Covid-19 could lead to the temporary shuttering of

factories, which will be reflected in electricity consumption. We show the electricity
consumption pattern of major states in India and see that there is a slight drop in electricity
consumption compared to the same week in CY2019. We would wait to see this gap widen to
draw any conclusions about an industrial slowdown.
Leisure spending down
People are being risk averse, having already reduced their exposure to public places like movie
theatres prior to the order to close movie theatres in certain geographies. We examine this
impact by looking at the relative rank of a popular ticketing website, bookmyshow.com.
Similarly, travel aggregators websites like makemytrip.com also saw a fall in their relative
popularity owing to people postponing or canceling travel plans.
Anurag Singh
Contact: +91 22 6218 6427
For Private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES’ RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.
Strategy India
DAILY INDICATORS SHOW SLOWING OF ECONOMIC ACTIVITY

We launch KIE’s Covid-19 Tracker which examines the impact of Covid-19 on the economy through several
sets of factors contributing to daily economic activity. We find that (1) road traffic and vehicular pollution
have come down in most parts of the country, (2) electricity consumption has started going down
meaningfully, and (3) people are cancelling non-essential activities (movies/ shows/ travel). These findings are
indeed obvious (and can be verified based on anecdotal evidence), but importantly, we believe that this
tracker will provide some insight into the inflection point when economic activity starts to return to
normalcy.
Data shows a slowdown in economic activity

We track the following indicators as a proxy for economic activity.
 Data on road traffic. Our hypothesis is that fewer vehicles on road is an indication of
slower economic activity. We track traffic data through TomTom.com which provides the
current road congestion level and compares it with the historical average. This data is
available for four Indian cities – Mumbai, New Delhi, Bengaluru and Pune (Exhibits 3-6).
Daily peak time traffic levels were down about 40% - 50% even before the nation-wide
lockdown was announced on March 24.
 Vehicular pollution. Our hypothesis remains the same for vehicular pollution. We track
the NO2 level in the air for a set of Indian cities. Vehicular pollution from the burning of
fossil fuels is a major contributor of NO2 in the air. Thus, reduced levels of NO2 (see
Exhibit 7) in the air implies fewer vehicles. Our data source is aqicn.org and the Central
Pollution Control Board. We see a fall in vehicular pollution and general pollution levels.
 Covid-19 mindshare. We also track the mindshare of Covid-19 in people’s minds. We

are assuming that before economic activity picks full steam, people will need to stop
worrying about Covid-19. Thus, the number of people searching for Covid-19 will reduce
before we see an uptick in the economy. We track Google trend data for Coronavirus
searches (Exhibit 9) and the relative ranking of the website of Ministry of Health and
Family Welfare (mohfw.gov.in) through alexa.com (Exhibit 10).
 Discretionary spending. We use visitors to websites like bookmyshow.com and

makemytrip.com as a proxy for discretionary spending. Fears of Covid-19 had already
seen people avoiding movie theatres and non-essential travel. With the closure of cinema
halls, the number of visitors on bookmyshow.com has dropped further. Similarly,
makemytrip.com is also seeing fewer visitors on its site. We use alexa.com’s relative
ranking of these websites as a proxy for discretionary spending (Exhibits 11 and 12). We
acknowledge that a big portion of business for these sites comes through their apps, but
notably, the website traffic trend provides a directional indicator. We also show the box
office collections for the prior weekend (Exhibit 13).
 Electricity consumption. If Covid-19 leads to a prolonged lockdown and temporary

shutting down of factories, we expect electricity consumption to go down. We show the
daily electricity consumption of major states (Exhibits 14-23) in India, comparing them to
consumption in the same week of CY2019. Electricity consumption for several states has
started showing meaningful difference as compared to the same week in CY2019. This
could be an indication of slowing industrial activity. We will wait for this trend to persist,
and the gap to widen, before making any conclusive statements.
All the above indicators show some degree of a slowing down of economic activity (see
Exhibit 1).
India Strategy
Exhibit 1: Economic activity slows down

Daily indicators tracked by KIE
Indicator Direction Comments

All four cities show a significant decline in road
Traffic data Downwards
traffic
Most cities showing signs of lower pollution in

Pollution data Downwards
general, and lower vehicular pollution in particular.
Electricity consumption for several states down as

compared to the same week in CY2019. This could
Electricity
Mixed be an indication of slowing industrial activity. We will
consumption
wait for this trend to persist, and the gap to widen,
before making any conclusive statements.
Large uptrend in Google searches for Coronavirus.

Covid-19 mindshare Downwards
MHFW website also being visited a lot.
Both bookmyshow.com and makemytrip.com

Discretionary websites have seen their alexa.com relative rank slip
Downwards
spending a lot in the last few weeks. Box office collections are
extremely low.
Source: Kotak Institutional Equities
The exhibit below shows the growth in the number of cases in India compared to the same
in other countries. We show the data starting from the day when the end-of-day count of
cases exceeded 30. The vertical axis is log scaled. The horizontal axis is the number of days
since the end-of-day count exceeded 30. This shows that although the number of cases is
growing exponentially in India as well, the growth rate at this stage is lower than it has been
for most other countries. The slope of each country’s curve tells us how fast the number of
cases is expanding in that country. South Korea managed to contain the virus roughly 20 days
after the number of cumulative cases breached 30. We would wait to comment on the reason
behind India’s slower pace of growth in cases; the two primary candidates which have been
suggested are (1) proactive measures taken by the government, and (2) under-testing.
Exhibit 2: India’s cumulative number of cases is now on an exponential trajectory

Cumulative number of Covid-19 cases in India, compared to number of cases in other countries
India Italy US Spain UK
Brazil South Korea Japan France
30,000
3,000
300
30
T+0 T+5 T + 10 T + 15 T + 20 T + 25 T + 30 T + 35
Source: Johns Hopkins University, Kotak Institutional Equities

Strategy India
Exhibits 3 to 6 show the vehicular congestion data for four major cities – Mumbai, New
Delhi, Bengaluru and Pune. Current congestion data is compared to day-of-week adjusted
historical average. We see a sharp fall in traffic congestion, which indicates that there are far
fewer (hardly any) vehicles on the road in these cities. Even before the nationwide lockdown
was announced on March 24, peak time traffic was down 40% - 50% compared to
historical averages.
Exhibit 3: Traffic data shows a steep fall in road traffic (Part 1 - Mumbai)
Daily traffic congestion data (Mumbai), relative to historical average (%)
Source: TomTom.com, Kotak Institutional Equities
Exhibit 4: Traffic data shows a steep fall in road traffic (Part 2 – New Delhi)
Daily traffic congestion data (New Delhi), relative to historical average (%)

India Strategy
Exhibit 5: Traffic data shows a steep fall in road traffic (Part 3 - Bengaluru)
Daily traffic congestion data (Bengaluru), relative to historical average (%)
Exhibit 6: Traffic data shows a steep fall in road traffic (Part 4 - Pune)
Daily traffic congestion data (Pune), relative to historical average (%)
We also check pollution levels to confirm this. As Exhibits 7 and 8 show, vehicular pollution
and pollution in general is lower in many of the large Indian cities indicating a lack of
vehicular traffic.
We show the Air Quality Index (AQI) calculated on the basis of NO2 levels (Exhibit 7) and
PM2.5 (Exhibit 8). The recent seven day average AQI (7D average) is lower than the Dec
2019 to Feb 2020 average AQI (3M average) for most cities. The last recorded pollution data
is as of March 24.
Strategy India
Exhibit 7: Vehicular pollution is lower in many cities

AQI based on NO 2 levels (lower values indicate lower level of pollution)
40 7D average 3M average
35
30
25
20
15
10
Nagpur
Kanpur
Ahmedabad
Delhi
Kolkata
Lucknow
Indore
Mumbai
Bengaluru
Chennai
Hyderabad
Source: aqicn.org, Central Board of Pollution Control, Kotak Institutional Equities
Exhibit 8: General pollution levels are also lower in many cities

AQI based on PM2.5 levels (lower values indicate lower level of pollution)
250 7D average 3M average
200
150
100
50
0
Ahmedabad
Nagpur
Chennai
Kanpur
Delhi
Kolkata
Indore
Lucknow
Bengaluru
Mumbai
Hyderabad
Source: aqicn.org, Central Board of Pollution Control, Kotak Institutional Equities

India Strategy
Exhibits 9 and 10 show the mindshare of coronavirus. We expect Google trend data for
coronavirus to trend downwards for several days before situation is normalized.
Exhibit 9: With the number of cases rising in India, Covid-19 has gained mindshare …
Google trends data for ‘Coronavirus’
100 Google trend: Coronavirus

90
80
70
60
50
40
30
20
10
0
12-Feb
19-Feb
26-Feb
4-Mar
15-Jan
22-Jan
29-Jan
25-Dec
5-Feb
1-Jan
8-Jan
18-Mar
11-Mar
Source: Google trends, Kotak Institutional Equities
Exhibit 10: … this has also resulted in people visiting the MHFW website
Relative ranking of mohfw.gov.in website (proxy for % of internet users visiting the website, March 25 data)
Source: alexa.com, Kotak Institutional Equities
In the absence of concurrent data for discretionary spending, we look at the rank of popular
websites like bookmyshow.com (Exhibit 11) and makemytrip.com (Exhibit 12). Data suggests
that even before the various measures taken by government (canceling domestic flights and
shutting down movie theatres), the number of visitors to these sites had been falling. The
box office collection data (Exhibit 13) also verifies this.
It is clear that the low current box office numbers and reduction in discretionary spending
(movie tickets or travel) is driven by partial or total lockdown. However, we present these
metrics for several reasons:
 As mentioned, these metrics were dropping even before state and central governments
enforced partial or total lockdown
 We expect them to remain subdued for some time even after the lockdown is lifted.
People will likely remain cautious for a while before they venture out to movie theatres,
or start making travel plans.
Therefore, our expectation is that these metrics will continue registering lower numbers and
we will see an uptick only when consumer sentiment is restored. Box office collection data is
Strategy India
reported on a weekly basis (with one week lag) but the other two metrics will be updated
on a daily basis.
Exhibit 11: Sharp fall in the relative ranking of bookmyshow.com

Relative ranking of bookmyshow.com website (proxy for % of internet users visiting the website, March 25)
Exhibit 12: Similar fall in the relative ranking of makemytrip.com

Relative ranking of makemytrip.com website (proxy for % of internet users visiting the website, March 25)
Exhibit 13: No-show: box-office collections have fallen like a stone

Box office collections for weekends (mn Rs)
Total Collection
1,200
1,000
800
600
400
200
0
6-Dec
10-Jan
17-Jan
24-Jan
31-Jan
14-Feb
21-Feb
28-Feb
6-Mar
22-Nov
29-Nov
13-Dec
20-Dec
27-Dec
7-Feb
3-Jan
13-Mar
Source: Box office mojo, Kotak Institutional Equities
We also track the electricity consumption (Exhibits 14 to 23) of a few major states –
Maharashtra, New Delhi, Andhra Pradesh, Karnataka, Gujarat, Tamil Nadu, Telangana,
India Strategy
Madhya Pradesh, Uttar Pradesh and Haryana. We show daily electricity consumption
compared to the same week in the calendar year prior (CY2019). The horizontal axis shows
the week of the year. Rather than comparing to recent 1-month or 3-month figures, we
compare against same week from previous calendar year to isolate any effect of the
weather.
If Covid-19 leads to a temporary shutdown of factories, we will likely see this reflected in the
lower electricity consumption. Anecdotally, the temperature in North India during February
and early March has been cooler than usual which may also be one of the factors in
marginally lower electricity consumption in those months. We do see meaningfully lower
electricity consumption for most of the states in the last few days. We start seeing lower
electricity consumption starting from the day of ‘Junta curfew’ - a lockdown on March 22.
Before drawing any conclusions about a slowdown in economic activity, we would wait to
see a sustained reduction in electricity consumption.
Exhibit 14: Electricity consumption saw a sharp fall in Maharashtra over the last two days
Electricity consumption (mn kWh) in Maharashtra compared to same week last calendar year
Maharashtra 2019 Maharashtra 2020

600
500
484
400 403.6
300
200
100
0
Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13
Source: Central Electricity Regulatory Commission, Kotak Institutional Equities
Exhibit 15: Electricity consumption has fallen in New Delhi since March 22
Electricity consumption (mn kWh) in New Delhi compared to same week last calendar year
Delhi 2019 Delhi 2020

80
70
64.3
60
50 48.7
40
30
20
10
0

Strategy India
Exhibit 16: Electricity consumption is relatively stable in Andhra Pradesh

Electricity consumption (mn kWh) in Andhra Pradesh compared to the same week last calendar year
250 Andhra Pradesh 2019 Andhra Pradesh 2020
200 197.6
181.4
150
100
50
0
Exhibit 17: Karnataka also saw reduced electricity consumption since March 22
Electricity consumption (mn kWh) in Karnataka compared to same week last calendar year
Karnataka 2019 Karnataka 2020

300
273.3
250
238.3
200
150
100
50
0

India Strategy
Exhibit 18: Tamil Nadu also shows a decline in electricity consumption

Electricity consumption (mn kWh) in Tamil Nadu compared to same week last calendar year
Tamil Nadu 2019 Tamil Nadu 2020

400
350 341.9
300 302.6
250
200
150
100
50
0
Exhibit 19: No effect yet on electricity consumption in Telangana

Electricity consumption (mn kWh) in Telangana compared to same week last calendar year
300 Telangana 2019 Telangana 2020
250
229.2
224.9
200
150
100
50
0

Strategy India
Exhibit 20: Similar to other states, Gujarat has also seen a decline in electricity consumption
Electricity consumption (mn kWh) in Gujarat compared to same week last calendar year
Gujarat 2019 Gujarat 2020

400
350 355.6
300 291
250
200
150
100
50
0
Exhibit 21: Relatively smaller fall in electricity consumption for Madhya Pradesh
Electricity consumption (mn kWh) in Madhya Pradesh compared to same week last calendar year
MP 2019 MP 2020
300
250
200 200.8
183.4
150
100
50
0

India Strategy
Exhibit 22: Lower consumption in Uttar Pradesh, probably due to late onset of summer
Electricity consumption (mn kWh) in Uttar Pradesh compared to same week last calendar year
350 UP 2019 UP 2020
300
279.4
250 247.4
200
150
100
50
0
Exhibit 23: Significantly lower electricity consumption in Haryana

Electricity consumption (mn kWh) in Haryana compared to same week last calendar year
160 Haryana 2019 Haryana 2020
140
120 123.4
100
92
80
60
40
20
0

BUY
Godrej Consumer Products (GCPL)
Consumer Staples MARCH 25, 2020
CHANGE IN RECO.
Sector view: Cautious
Risk-reward attractive after a long time. We turn constructive on GCPL after several CMP (`): 471
years and upgrade the stock to BUY from REDUCE. We would not rule out some short- Fair Value (`): 615
term pain across geographies and have revised down our FY2021E forecasts
BSE-30: 28,536
accordingly. We do expect normalization to result in strong bounce-back in topline and
earnings in FY2022E. Significant RM tailwinds provide an extra degree of comfort. We
continue to think GCPL needs to review and fine-tune the strategic direction of some of
its country-category combinations. Revised FV stands at Rs615/share (from Rs720).
Godrej Consumer Products

Stock data Forecasts/valuations 2020E 2021E 2022E
52-week range (Rs) (high,low) 772-425 EPS (Rs) 15.2 16.6 20.0
Mcap (bn) (Rs/US$) 481/6.4 EPS growth (%) 5.0 9.1 20.4
ADTV-3M (mn) (Rs/US$) 1,015/13 P/E (X) 31.0 28.4 23.6
Shareholding pattern (%) P/B (X) 5.7 5.2 4.7
Promoters 63.2 EV/EBITDA (X) 21.2 19.4 16.2
FIIs 27.7 RoE (%) 19.8 19.1 20.8
MFs/BFIs 1.1/1.2 Div. yield (%) 1.3 1.6 1.8
Price performance (%) 1M 3M 12M Sales (Rs bn) 104 106 123
Absolute (24) (32) (32) EBITDA (Rs bn) 23 25 29
Rel. to BSE-30 8 (1) (10) Net profits (Rs bn) 16 17 20
GCPL remains a solid execution engine; sharper category development focus could do wonders
Our view on GCPL has historically been a mixed one with (1) high degree of comfort on the
company’s in-market execution on one side and (2) discomfort with its acquisitive nature and
relatively lower long-term category development focus on the other. Our upgrade isn’t really
about a change in this view – it remains the same. Two factors that drive the upgrade are –
(1) visible dilution in the company’s aggression on acquisitions and (2) sharp correction in the
stock price. Despite our mixed views on the company, view on the stock was an easy one for
the past few years. Punchy valuations made it quite easy as we found it unreasonable to
underwrite the assumptions on growth/RoE such punchy valuations were baking in. With the
sharp recent correction, valuations (24X FY2022E EPS) have come down to a fairly attractive
zone.
Quick takeaways from recent interaction with the management
While emphasizing that the current situation is really a ‘wait and watch’ one, GCPL emphasized
that there could be meaningful indirect impact on account of a possible prolonged slowdown in
the economy. International business hasn’t been impacted thus far but the company remains
watchful of the developments in Indonesia in particular. The company has taken steps to ensure
that it is sufficiently stocked up on RM inventory and does not anticipate any challenges on its
Rohit Chordia
ability to produce unless the factories are asked to shut down (already the case in a few states).
RM prices remain benign for a bulk of the basket. Another area to watch out for is currencies,
especially in some of the African markets the company operates in. Jaykumar Doshi
Ex-Covid-19, demand was tracking in line with GCPL’s expectations/outlook with gradual Aniket Sethi
recovery across categories. Pricing action in soaps had started driving convergence between
volume and value growth. The company continues to gain both volume and value share in the
HI segment. Incense sticks have now been launched in 10 states with DD market share in states
like AP. Category growth remains slow in hair colors. Indonesia business was tracking quite well
thus far.
Cut FY2021/22E EPS forecasts by 7%/3%, upgrade to BUY (from REDUCE) kspcg.research@kotak.com
Contact: +91 22 6218 6427
Exhibit 1 depicts the key changes to our model. Our revised FV implies a 31X 12M-forward PE.
Consumer Staples Godrej Consumer Products
Exhibit 1: Key changes to consolidated earnings (Ind-AS), GCPL, March fiscal year-ends, 2020-22E
Revised Earlier Change (%)

2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E
Consolidated
Revenues (Rs mn) 103,642 106,134 122,681 104,336 116,201 129,452 (0.7) (8.7) (5.2)
Revenue growth (%) 0.5 2.4 15.6 1.2 11.4 11.4
EBITDA (Rs mn) 23,103 24,795 29,148 23,306 26,365 30,158 (0.9) (6.0) (3.4)
EBITDA (%) 22.3 23.4 23.8 22.3 22.7 23.3
PAT (Rs mn) 15,532 16,938 20,400 15,709 18,109 21,048 (1.1) (6.5) (3.1)
EPS (Rs/share) 15.2 16.6 20.0 15.4 17.7 20.6 (1.1) (6.5) (3.1)
Standalone
Revenues (Rs mn) 57,855 59,436 68,985 58,557 64,920 72,314 (1.2) (8.4) (4.6)
Revenue growth (%) 1.9 2.7 16.1 3.1 10.9 11.4
EBITDA (Rs mn) 15,731 16,469 19,529 15,843 17,501 19,993 (0.7) (5.9) (2.3)
EBITDA (%) 27.2 27.7 28.3 27.1 27.0 27.6
Source: Company, Kotak Institutional Equities estimates
Exhibit 2: GCPL’s soaps volume growth trends (%) Exhibit 3: GCPL's soaps value growth trends (%)
20 30
25
15
1515 20
10 1212 15 26
10 15 24
11 12 10 13 13 19
5 10 5 11 9
4 4
7
6 7 10 11
5 5 5 5 3
4 4 (1)
- 2 - 3 (4)(4)
(3) 2 2 2
(6) 1 (6)
(5)(8) (5)
(5) (8) (10)
(10)
(10) (15)
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
3QFY16
4QFY16
1QFY17
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
1QFY20
2QFY20
3QFY20
Source: Company, Kotak Institutional Equities Source: Company, Kotak Institutional Equities
16 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Godrej Consumer Products Consumer Staples
Exhibit 4: GCPL's hair colors revenue growth trends (%)
35
30 33
25
20
21
15 17
10 12 13 12
5 7 7
(1) 4 (2) 5 4 - -
- 3 2 (4)
-
(5)
(10)
4QFY16
1QFY17
2QFY17
3QFY17
2QFY18
3QFY18
4QFY18
1QFY19
1QFY20
2QFY20
3QFY20
1QFY16
2QFY16
3QFY16
4QFY17
1QFY18
2QFY19
3QFY19
4QFY19
Source: Company, Kotak Institutional Equities
Exhibit 5: GCPL's HI revenue growth trends (%)
20
15 17
15 15
10 13 18
10
5
4 5 - 4
(2) 4 4 3
-
(5) (4)
(5) (2)
(6)
(11)
(10)
(15)
2QFY16
3QFY16
4QFY16
3QFY17
4QFY17
1QFY18
3QFY18
4QFY18
1QFY19
4QFY19
1QFY20
2QFY20
1QFY16
1QFY17
2QFY17
2QFY18
2QFY19
3QFY19
3QFY20
KOTAK INSTITUTIONAL EQUITIES RESEARCH 17

Consumer Staples Godrej Consumer Products
Exhibit 6: GCPL's international business revenue growth trends, yoy (%)
1QFY18 2QFY18 3QFY18 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20
Reported growth
Indonesia (14.0) (12.0) (8.0) (11.0) 9.0 13.0 9.0 19.0 5.0 17.0 13.0
GAUM (Africa, US & ME) 13.0 8.0 6.0 5.0 10.0 13.0 14.0 11.0 (1.0) (6.0) (1.0)
O thers 6.0 (26.0) (3.0) (35.0) 10.0 24.0 (3.0)
- LatAm (5.0) 13.0 (7.0) 8.0
- Europe 6.0 11.0 14.0 20.0
Constant currency growth
Indonesia (11.0) (7.0) (2.0) (6.0) 10.0 14.0 7.0 14.0 4.0 13.0 9.0
GAUM (Africa, US & ME) 26.0 13.0 10.0 7.0 5.0 4.0 4.0 5.0 2.0 (2.0) 6.0
O thers 8.0 2.0 41.0 16.0 56.0 38.0 38.0
- LatAm 4.0 30.0 5.0 28.0
- Europe 24.0 15.0 9.0 11.0
Exchange rate impact
Indonesia (3.0) (5.0) (6.0) (5.0) (1.0) (1.0) 2.0 5.0 1.0 4.0 4.0
GAUM (Africa, US & ME) (13.0) (5.0) (4.0) (2.0) 5.0 9.0 10.0 6.0 (3.0) (4.0) (7.0)
O thers (2.0) (28.0) (44.0) (51.0) (46.0) (14.0) (41.0)
- LatAm (9.0) (17.0) (12.0) (20.0)
- Europe (18.0) (4.0) 5.0 9.0
Note:
(1) GAUM includes Africa, USA and Middle East.
(2) O thers include LATAM, Europe and SAARC; separate disclosure discontinued from 1Q FY19.

Godrej Consumer Products Consumer Staples
Exhibit 7: GCPL: Consolidated profit model, balance sheet, cash flow model (Ind-AS), March fiscal year-ends, 2017-22E (Rs mn)
2017 2018 2019 2020E 2021E 2022E

Profit model (Rs mn)
Net revenues 92,428 97,680 102,211 102,751 105,229 121,629
EBITDA 18,977 20,630 21,176 23,103 24,795 29,148
Other income 1,004 1,828 2,020 1,874 2,237 2,756
Interest expense (1,452) (1,607) (2,243) (2,064) (1,978) (1,912)
Depreciation (1,416) (1,557) (1,700) (1,941) (2,062) (2,220)
Extraordinary items 1 1,796 8,624 1,604 — —
Pretax profits 17,114 21,089 27,878 22,577 22,991 27,772
Tax (3,792) (4,047) (3,537) (4,564) (5,162) (6,334)
Minority Interest (31) 11 6 14 14 14
Net Income 13,292 17,053 24,348 18,027 17,843 21,452
PAT after MI but before EO/Norm tax 13,040 14,505 14,791 15,532 16,938 20,400
Earnings per share (Rs) 12.8 14.2 14.5 15.2 16.6 20.0
Balance sheet (Rs mn)
Total shareholder's equity 53,020 62,583 72,669 84,600 92,823 103,279
Total borrowings 40,009 35,076 33,821 32,121 30,421 29,721
Other financial liabilities 9,112 7,540 2,176 2,176 2,176 2,176
Deferred tax liability 1,898 1,946 (4,728) (4,728) (4,728) (4,728)
Minority Interest — — — — — —
Total liabilities and equity 104,040 107,144 103,937 114,168 120,691 130,447
Net fixed assets incl CWIP 81,803 83,989 87,223 87,240 85,450 85,858
Investments 9,335 9,973 5,160 5,160 5,160 5,160
Cash 9,127 9,602 8,947 17,433 26,001 35,130
Net current assets 3,774 3,581 2,607 4,336 4,080 4,299
Total assets 104,040 107,144 103,937 114,168 120,691 130,447
Free cash flow (Rs mn)
Operating cash flow (excl working capital) 15,397 17,543 17,463 18,771 19,875 23,090
Working capital 3,406 (155) 6 (1,729) 256 (219)
Capital expenditure (16,116) (3,115) (2,077) (1,958) (272) (2,627)
Free cash flow 2,687 14,273 15,392 15,084 19,859 20,243
Key ratios (%)
Sales growth 9.9 5.7 4.6 0.5 2.4 15.6
EPS growth 12.3 11.2 2.0 5.0 9.1 20.4
EBITDA margin 20.5 21.0 20.5 22.3 23.4 23.8
Gross margin 55.4 56.6 55.8 57.3 58.2 58.5
Ad spends (% of sales) 7.7 8.2 8.1 7.4 7.3 7.7
ROE (%) 27.3 25.1 21.9 19.8 19.1 20.8
ROCE (%) 15.2 14.0 14.7 14.8 14.7 16.2

BUY
Kansai Nerolac (KNPL)
Commodity Chemicals MARCH 26, 2020
CHANGE IN RECO.
Sector view: Neutral
Compounding story at attractive valuations. We upgrade KNPL to BUY (FV of CMP (`): 328
Rs485). Even as ST demand collapses due to Covid-19, fundamentals of the company Fair Value (`): 485
and the category are notably intact: volume-led growth potential and stable/improving
BSE-30: 28,536
margin profile arising from rational competition. We cut FY2020-22E forecasts to factor
Covid-19 impact, lower crude prices and weaker macro. The stock has corrected 35%
in the past month notwithstanding significant RM tailwinds and it is trading at 24X
FY2022E PE, implying 40% valuation discount to APNT versus 15-20% historically.
Kansai Nerolac
52-week range (Rs) (high,low) 573-294 EPS (Rs) 10.2 9.7 13.6
Mcap (bn) (Rs/US$) 177/2.4 EPS growth (%) 17.2 (4.5) 40.6
ADTV-3M (mn) (Rs/US$) 155/2 P/E (X) 32.2 33.8 24.0
FIIs 3.7 RoE (%) 15.3 13.4 17.3
Price performance (%) 1M 3M 12M Sales (Rs bn) 50 47 57
Rel. to BSE-30 (9) (9) (3) Net profits (Rs bn) 5 5 7
Baking in Covid-19 impact and lower crude prices
KNPL will see a material decline in sales in 1Q due to the ongoing nation-wide lockdown until
April 15, 2020 and any 2-3 extension of lockdown/social distancing. A pickup in sales, thereafter,
could be slow as consumers may defer discretionary activities such as painting/carpentry on
account of the economic impact of lockdown and in order to avoid contact with labor
(precautionary). We forecast a 65% yoy decline in revenues in 1Q (zero sales in April, sales at
30%/80% of the usual run-rate in May/June) and a gradual recovery from 2Q. About 60% of
RM, cost of KNPL is crude-linked. The sharp fall in crude would boost GM—say 500-600 bps
GM tailwinds if crude stabilizes at US$45-50/bl and currency at Rs75/USD. Of this, we expect
50%/90% of RM savings in decorative/industrial coatings to be passed on.
Long-term fundamentals of the category and the company are intact, in our view
We expect material ST pressure on paints demand (much higher than FMCG), growth should
bounce back once the environment normalizes, barring some impact of likely weaker macro.
Indian paint players have outperformed FMCG on volume and revenue CAGR over the past
5-10 years; this trend should likely continue. Further, an oligopolistic structure and rational
competition among incumbents have enabled margin expansion for all in the RM price deflation
cycle; we see no reason for this to change. KNPL has made significant investments in brand
building, dealers/painter engagement and product innovations. We expect it to grow broadly in
line with the industry in decorative paints. Industrial coatings (40% of sales) faces 2 challenges Jaykumar Doshi
(1) demand pressure (especially in the Auto vertical accounting for 70% of the industrial
segment) and (2) pricing pressure from OEMs. These headwinds are built into our estimates. Rohit Chordia
Upgrade KNPL to BUY from REDUCE with fair value of Rs485
Aniket Sethi
We bake in Covid-19 impact and cut FY2021E revenues by 18%. We cut FY2022E revenues by
11% as we model (1) price cuts of 4% (RM savings would be partly passed on) versus price
increase earlier and (2) weaker macro. We model lower crude price (crude at US$45-50/barrel
and currency at Rs75/USD) and increase FY2021-22E EBITDA margin by 30-180 bps; crude
benefit would reflect from 2Q/3Q. At CMP, KNPL is trading at 24X FY2022E PE (implies 26X PE
for decorative paints if industrial coatings is ascribed 18X PE) versus 41X/45X of APNT/BRGR.
We upgrade KNPL to BUY From REDUCE with FV of Rs485 (Rs530) (35X FY2022E PE). kspcg.research@kotak.com
Contact: +91 22 6218 6427
Kansai Nerolac Commodity Chemicals
Exhibit 1: Key changes to estimates, Kansai Nerolac Paints, March fiscal year-ends, 2020-22E
Revised Earlier Change (%)

2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E
Revenues (Rs mn) 50,239 46,535 56,892 51,274 56,530 64,324 (2.0) (17.7) (11.6)
Revenue growth (%) (2.9) (7.4) 22.3 (0.9) 10.3 13.8
Gross margin (%) 38.1 40.7 41.5 38.1 38.4 38.8 -5 bps 224 bps 275 bps
EBITDA (Rs mn) 7,937 7,931 10,808 8,203 9,453 11,066 (3.2) (16.1) (2.3)
EBITDA margin (%) 15.8 17.0 19.0 16.0 16.7 17.2 -21 bps 31 bps 179 bps
Net income (Rs mn) 5,478 5,229 7,351 5,709 6,380 7,566 (4.0) (18.0) (2.8)
EPS (Rs/share) 10.2 9.7 13.6 10.6 11.8 14.0 (4.0) (18.0) (2.8)
Exhibit 2: Trends in gross margin of Kansai Nerolac Paints
Crude price- Brent (LHS, Rs per 10 Barrels) KNPL's GM (RHS, %) Crude Spot price (Rs per 10 barrels)
70,000 47
60,000
44
41.5 41.3 41.5
50,000 40.7
39.8 40.2 40.0 41
40,000 38.0 38.3 38.3 38.4
37.5
36.3 38
30,000 35.5
34.5
35
20,000
10,000 32
1QFY18
3QFY18
1QFY19
3QFY19
1QFY20
3QFY17
4QFY17
2QFY18
4QFY18
2QFY19
4QFY19
2QFY20
3QFY20
FY2021E
FY2022E
Source: Bloomberg, Company, Kotak Institutional Equities estimates

Commodity Chemicals Kansai Nerolac
Exhibit 3: Kansai Nerolac Paints: Standalone profit model, balance sheet, March fiscal year-ends, 2014-2022E (Rs mn)
Indian GAAP Ind AS

2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
Profit model
Net revenues (1) 30,907 34,674 37,385 39,991 45,866 51,736 50,239 46,535 56,892
EBITDA 3,621 4,448 5,800 7,307 7,898 7,420 7,937 7,931 10,808
Depreciation (650) (677) (677) (695) (758) (905) (1,192) (1,410) (1,598)
Other income 103 218 274 982 724 619 347 549 701
Interest expense (5) (0) — — — — (69) (79) (84)
PBT 3,070 3,989 5,396 7,594 7,864 7,134 7,024 6,991 9,827
Tax (1,004) (1,272) (1,761) (2,535) (2,700) (2,461) (1,545) (1,762) (2,476)
Extraordinary items — — 5,353 — — — — — —
Reported PAT 2,066 2,717 8,989 5,059 5,164 4,674 5,478 5,229 7,351
Recurring PAT 2,066 2,717 3,635 5,059 5,164 4,674 5,478 5,229 7,351
Recurring EPS (diluted) (Rs) 3.8 5.0 6.7 9.4 9.6 8.7 10.2 9.7 13.6
Balance sheet
Total equity 14,232 15,968 25,029 28,053 31,251 34,245 37,414 40,440 44,693
Total borrowings 568 415 416 288 183 97 97 97 97
Current liabilities 6,805 6,044 6,499 6,841 8,440 7,666 7,916 7,651 9,431
Other liabilities 1,034 1,080 974 1,044 1,096 1,051 1,051 1,051 1,051
Total equity and liabilities 22,639 23,507 32,918 36,226 40,971 43,059 46,478 49,239 55,273
Cash and cash equivalents 1,032 2,415 10,136 7,804 8,809 2,769 5,467 9,235 10,268
Other current assets 11,860 11,448 12,179 17,062 18,115 22,895 22,399 20,246 24,284
Net fixed assets 9,096 9,050 9,264 9,466 10,066 13,159 14,376 17,272 18,234
CWIP 482 439 420 1,421 3,431 3,147 3,147 1,397 1,397
Goodwill — — — — — — — — —
Total assets 22,639 23,507 32,918 36,226 40,971 43,059 46,478 49,239 55,273
Cash flow
Operating cash flow excl. w-cap 2,768 3,289 3,375 5,257 5,311 4,556 6,392 6,169 8,332
W-cap changes (876) (264) 521 (1,808) (1,537) (3,452) 745 1,889 (2,258)
Operating cash flow 1,892 3,025 3,896 3,450 3,774 1,104 7,136 8,058 6,074
Interest expense (net) 64 66 179 75 231 192 278 470 617
Capital expenditure (1,235) (903) (873) (2,042) (3,332) (5,233) (2,409) (2,556) (2,561)
Acquisitions/divestment — — 5,379 (107) (38) (829) — — —
Free cash flow 657 2,122 8,402 1,301 404 (4,958) 4,728 5,502 3,514
Key ratio and assumptions
Revenue growth (%) 10.8 12.2 7.8 7.0 14.7 12.8 (2.9) (7.4) 22.3
Gross margin (%) 31.0 31.8 37.2 41.4 39.5 36.2 38.1 40.7 41.5
EBITDA margin (%) 11.7 12.8 15.5 18.3 17.2 14.3 15.8 17.0 19.0
PAT margin (%) 6.7 7.8 9.7 12.7 11.3 9.0 10.9 11.2 12.9
Net debt (464) (2,000) (9,720) (7,517) (8,625) (2,672) (5,370) (9,138) (10,171)
Net debt/equity (X) (0.0) (0.1) (0.4) (0.3) (0.3) (0.1) (0.1) (0.2) (0.2)
Book value (Rs/share) 26.4 29.6 46.4 52.1 58.0 63.5 69.4 75.0 82.9
RoAE (%) 15.2 18.0 17.7 19.1 17.4 14.3 15.3 13.4 17.3
RoACE (%) 14.1 16.5 16.5 16.4 15.7 13.0 14.6 12.5 16.1

BUY
L&T (LT)
Capital Goods MARCH 25, 2020
UPDATE
Sector view: Neutral
Time to reassess for challengers. The last decade saw key challengers to L&T outgrow CMP (`): 766
the healthy low-teens sectoral business CAGR without generating any FCF. The current Fair Value (`): 1,270
pause in ordering may see the aggressors reassessing their bidding criteria. This may
BSE-30: 28,536
boost L&T’s PAT margin and free cash flow profile, which stands out among peers. Our
revised fair value of Rs1,270 (from Rs1,550) bakes in a 9% cut in earnings. The lower
15X earnings multiple factors in a 13% decadal PAT CAGR against the historical 12%
revenue CAGR. CMP is pricing in 5-7% decadal PAT CAGR on trailing earnings.
L&T
52-week range (Rs) (high,low) 1,607-661 EPS (Rs) 68.7 62.5 79.0
Mcap (bn) (Rs/US$) 1,075/14.2 EPS growth (%) 12.0 (9.2) 26.6
ADTV-3M (mn) (Rs/US$) 4,775/63 P/E (X) 11.1 12.3 9.7
FIIs 20.0 RoE (%) 16.6 13.3 14.8
Price performance (%) 1M 3M 12M Sales (Rs bn) 1,494 1,651 1,813
Challengers outpaced 14% decadal sectoral CAGR though didn’t generate any FCF, unlike L&T
P&L outperformance is half the story. Our assessment of the financials of 20 EPC businesses
suggests healthy 14% revenue CAGR over FY2010-19. Combined revenue of eight challengers
has grown at higher 20% CAGR and now matches L&T’s scale of business. L&T has grown its
revenues at a reasonable 12% CAGR, though the same has come at the expense of it ceding
benefits of operating/ financial leverage and more; PAT grew at lower 10% CAGR.
Challengers have not generated FCF for long. The outperformance by challengers has
translated into negligible aggregate free cash flows after interest outgo since FY2013; would be
in red if the outlier in Megha Engineering is excluded. The add-on requirement of investing/
supporting related parties has led them to borrow and infuse equity capital to cover the large
shortfall. In sharp contrast, L&T has generated meaningful aggregate cash surplus over such
period at ~30% of post-tax operating cash flow prior to working capital changes. Net inflow
from sale of investments for L&T has only added to such sum. This has led to L&T accounting
for a 90% share in dividend payout against a ~40-50% share in revenues/EBITDA/PAT.
Current pause in ordering an opportunity for key stressed challengers to reassess bid margin
Select large peers to L&T are already facing cash flow issues – (1) Tata Projects generating
negative cash flow from operations for long and (2) Shapoorji Pallonji’s consolidated net debt to
EBITDA stands at 7X (FY2018). Both these entities account for an aggregate EPC revenues
equivalent to 45% of L&T scale of EPC business.
Aditya Mongia
Near-term earnings prone to downgrades; reasonable backlog and valuations provide comfort
We lower our fair value by ~17% Rs1,270, a cut driven equally by (1) lower earnings/higher Teena Virmani
25% holding company discount and (2) lower earnings multiple. We realize the difficulty in
predicting the quantum of order inflows in the near term for an entity like L&T with significant
reliance on uncertain state capex. L&T’s strong order backlog and benign valuations on trailing
earnings comfort. CMP is pricing in trailing core E&C earnings at 11X multiple, valuing listed
subsidiaries at CMP, and ascribe a higher 30% holding company discount. Such multiple implies
a 5-7% PAT CAGR at a 13-14% range of WACC.
Contact: +91 22 6218 6427
Capital Goods L&T
Our assessment of financials of 20 key EPC businesses

We present below key takeaways from our assessment of the cash flow statements of 20
key EPC companies. To assess the strength of cash flow generation for EPC companies, we
focus on the standalone businesses. The two key exceptions are (1) L&T where we also
include its subsidiary in Hydrocarbon Engineering and (2) KEC where we focus on
consolidated financials to account for overseas operations.
Exhibit 1: L&T’s standalone operations and L&T Hydrocarbon Engineering account for ~90% of
consolidate-ex services segment profit
Share of consolidated-ex services segment profits accounted for by subset for L&T (standalone + Hydrocarbon
Engineering, March fiscal year-end, 2019 (%)
140
120 116
100 100
100 93 96
91
81
80 74
60
40
20
-
Infrastructure Power Heavy Defence E&A Hydrocarbon Others Total
Engineering Engineering
Notes:
(a)We adjust the others' segment subsidiaries contribution to account for one-time losses taken in select real-estate project of Rs7.3 bn
Brief profile of the companies

We aggregate cash flows of 20 EPC companies including listed and some large unlisted
companies. The listed set includes companies in civil, transmission and road businesses. The
large unlisted companies include Shapoorji Pallonji group (standalone, Afcons Infrastructure,
Sterling and Wilson), Megha Engineering and Tata Projects. On an aggregate basis, these
reflect a revenue base of Rs2.3 tn and PAT of Rs150 bn. L&T (standalone + Hydrocarbon
Engineering) accounts for 42% share of revenues. Key eight challengers to L&T (revenues in
excess of Rs75 bn) account for a meaningful 42% of revenues. Such challengers have
meaningfully grown their revenue/PAT share over the past decade.

L&T Capital Goods
Exhibit 2: L&T has 43/50% revenue/PAT share; aggregate EPC businesses for the subset taken have grown at a healthy 14/13%
revenue/PAT CAGR
Share of L&T (standalone + Hydrocarbon Engineering) in terms of key P&L metrics, March fiscal year-end, 2019
2019
Revenues (Rs2.3 tn, 14% CAGR) EBITDA (Rs240 bn, 12% CAGR) PAT (Rs150 bn, 13% CAGR)
Others Others Others
15% 18% 13%
L&T L&T
43% 40%
L&T
Nine 50%
challeng
Nine Nine ers
challeng challeng 37%
ers ers
42% 42%
2010
Revenues PAT
EBITDA
Others Others
Others 16%
19% 20%
Nine
challeng
L&T ers
L&T
53% Nine 21%
Nine 55% L&T
challeng challeng 63%
ers ers
28% 25%
Notes:
(a) We assess cash flow statement of 20 key listed and unlisted EPC businesses for the above analysis
(b) Challengers include Megha Engineering, Shapoorji Pallonji (standalone), Tata Projects, Afcons Infrastructure
Sterling and Wilson, NCC, KEC and Dilip Buildcon
(c ) L&T denotes standalone operations + Hydrocarbon Engineering
Source: Companies, Kotak Institutional Equities

Capital Goods L&T
Exhibit 3: L&T's scale is much ahead that of the challengers, 3X the nearest competitor in Shapoorji Pallonji group (standalone + Afcons +
Sterling and Wilson)
Revenue and EBITDA profile of the 20 EPC companies, March fiscal year-end, 2019 (Rs bn)
Revenues
1,200
1,000
1,000
800
600
400
195
200 132 128 121 114 110 91 77 71 43 38 35 31 28 21 19 18 18 10
-
Ahluwalia Contracts
Afcons Infrastructure (c )
Capacite
L&T (a)
KEC (consolidated)
Buildcon
J. Kumar Infra Projects

Tata Projects
Shapoorji Pallonji and
Sterling and Wilson (c,d)
Engineering
Constructions
Megha Infrastructure
Techno Electric
NCC
HCC
Skipper
PNC Infratech
Dilip Buildcon
Kalpataru Power
Ashoka
Sadbhav
Transmission
and Engineering
Company (b)
KNR
EBITDA
120
96
100
80
60
40 32
14 11 16
20 8 9 5 8 5 5 4 4 3 4
3 1 2 2 2
-
Ahluwalia Contracts
Afcons Infrastructure (c )
Capacite
L&T (a)
KEC (consolidated)
Buildcon
Shapoorji Pallonji and
J. Kumar Infra Projects

Tata Projects
Sterling and Wilson (c,d)
Engineering
Constructions
Megha Infrastructure
Techno Electric
NCC
HCC
Skipper
PNC Infratech
Dilip Buildcon
Ashoka
Kalpataru Power
Sadbhav
and Engineering
Transmission
Company (b)
KNR
Notes:
(a) L&T includes standalone operations and those of Hydrocarbon Engineering
(b) Afcons Infrastructure and Sterling and Wilson are subsidiaries of Shapoorji Pallonji group
Key takeaways We present key takeaways of aggregate sector less L&T. We take out L&T to bring out the
strength of its EPC cash flows versus the pack
#1: Challengers have meaningfully outperformed the healthy 14% sectoral business
CAGR
Select EPC businesses have grown their business meaningfully over the past few
years. Eight key challengers now have a revenue scale of more than Rs75 bn, having
grown at a sharp 20% CAGR over the past decade. L&T has still been able to grow at

L&T Capital Goods
healthy 12% revenue CAGR though part of the revenue growth has come at the
expense of lowering its range of EBITDA margin. Its EBITDA CAGR thus has been
lower at 8%. Strong cash flow generation and L&T churning its investment portfolio
has helped it grow its PAT at intermediate 10% CAGR.
Exhibit 4: Challengers have grown at a revenue CAGR of 20% and L&T has had to cede on margin to
grow revenues in low double digit
CAGR, March fiscal year-ends, 2009-19 (%)
L&T Eight challengers Others
25
20
20
20 19
15
12
10 10 10 11
10 8
0
Revenues EBITDA PAT
Notes:
(d) L&T's PAT accounts for interest income on the dividends paid out, essential to compare its PAT CAGR with peers
#2: L&T, however, dominates in terms of cash generation and thus dividends
Excluding L&T, the pack has generated just enough cash flows to accounts for (1) working
capital increase, (2) capex and (3) interest outgo. Excluding the outlier in Megha
Engineering, such quantum would be in the red. Accounting for investments made in
subsidiaries, the quantum of shortfall for challengers to L&T would be meaningful. Such
shortfall was bridged by a combination of fresh equity of Rs50 bn and the remainder by
debt.
L&T has similar quantum of cash inflows as aggregate competition and has been able to
manage its balance sheet in a much better manner. After accounting for working capital
increase, capex and interest outgo, L&T generated ~Rs140 bn of cash surplus. This quantum
increases to ~Rs160 bn if accounting for cash flows related to investments – L&T has
realized a net cash inflow on such front. Such cash surplus has largely been paid by L&T in
form of dividends.

Capital Goods L&T
Exhibit 5: L&T has generated Rs140 bn of cash surplus over the past seven years or 10X of aggregate
competition
Usage of aggregate post-tax operating cash flow prior to working capital changes, March fiscal year-ends,
2013-19
Rs 410 bn Rs 340 bn Rs 220 bn
100% 3 2
Cash surplus
34 31 32
80%
Interest expense
60% 10
29 28
16 Capex
40%
20% 40 Working capital

37 38
0%
L&T Seven challengers Others
Notes:
(SP subsidiary), NCC, KEC and Dilip Buildcon

L&T Capital Goods
Exhibit 6: L&T has had a net cash inflow related to investments/L&A; others have made to raise
equity and debt to fund such requirements
Aggregate cash surplus prior to investments versus quantum of investments, March fiscal year-ends, 2009-19
(Rs bn)
Cash surplus
Inflow/(outflow) related to investment/L&A in subsidiaries/JVs
Net debt to EBITDA (RHS, X)
200 1.6 1.8

1.6
141
150 1.5
100 1.3
50 19 1.0
6 5
- 0.8
(50) 0.5
0.3 (37)
(100) 0.3
(89)
(150) -
L&T Eight challengers Others
Notes:
(d) Net debt to EBITDA for challengers would be 2.5 not accounting for Megha Engineering
Exhibit 7: L&T accounts for 90% of the dividend payout despite accounting for 40% of the cash
inflows
Share of L&T (standalone + Hydrocarbon Engineering) in subset's cash flow metrics, March fiscal year-ends,
2009-19 (%)
100
88
80
60
42 43
40
29
19
20
NM
-
Operating cash Working capital Capex Investment/L&A to Net interest outgo Dividend
flows prior to subsidairies
working capital
Notes:
(b) L&T has a net aggregate inflow from sale of investments, unlike peers. Hence Not Meaingful (NM) usage.
(c ) Grey shade denotes outflows of cash
Source: Kotak Institutional Equities, Companies
#3: Most challengers top the list in terms of weak cash flows
We limit the large challengers to L&T to those having a Rs90 bn+ topline or one-tenth the
size of L&T. These include players who have meaningfully grown at 20% CAGR over the
past decade or at 1.7X the pace of L&T. Barring Megha Engineering, all of them have seen a

Capital Goods L&T
meaningful deterioration in terms of their balance sheet. We put some company-specific

comments below.
 Tata Projects (Rs132 bn revenues, 19% decadal CAGR) has generated modest
negative operating cash flows since 2013. To account for capex and interest outgo, has
added debt comparable to its aggregate post-tax operating cash flows prior to working
capital changes over such period.
Exhibit 8: Tata Projects have a negative aggregate cash flow from operations, yielding increase in debt equivalent to operating cash
flows prior to working capital changes
Aggregate cash flows for Tata Projects (standalone), March fiscal year-ends, 2013-19 (Rs bn)
20 19 16
0
Equity raise
10 19
Post-tax Op CF before Addition of debt
WC changes 0
0 LT investments + L&A
(8) Capex
(10)
Working
(20) capital
(20) changes
(30) (7) Interest payout
(35)
(40)
Cash inflows Cash outflows Change in debt
 Shapoorji Pallonji and Company (Rs130 bn revenues, 18% decadal CAGR) has
generated operating cash flows though has invested meaningfully into
investments in real estate and other entities, leading to a large cash shortfall.
Since FY2013, it has had to borrow 2X its aggregate post-tax operating cash flows
prior to working capital changes.

L&T Capital Goods
Exhibit 9: Large investment in subsidiaries and JVs/associates has led to incremental debt of 2X post-tax operational cash flows prior to
working capital changes
Aggregate cash flows for Shapoorji Pallonji and Company (standalone), March fiscal year-ends, 2012-18 (Rs bn)
42
40
21
20 1 Equity raise Addition of debt
20 Working capital
Post-tax Op CF before
2.1 changes
0 WC changes
LT investments + L&A
(20) (36)
(40) (4) Capex

(26)
Interest payout
(60)
(64)
(80)
(100)
On a consolidated basis, the group has a net debt of Rs200 bn and EBITDA of Rs25
bn. Even after adjusting for capital work-in-progress, the net debt to EBITDA is
still high at 7.1X. We note that these are based on the last disclosed FY2018
financials.
Exhibit 10: Shapoorji Pallonji's consolidated net debt to EBITDA has ranged between 7-9X
Consolidated financials of Shapoorji Pallonji, March fiscal year-ends, 2015-18 (Rs bn)
Net borrowings (excluding CWIP EBITDA Net debt to EBITDA (RHS, X)

200 9.1 10.0
8.4
184
160 171 7.1 8.0
6.9
144
120 6.0
112
80 4.0
40 26 2.0
21 19
13
- -
2015 2016 2017 2018
 Sterling and Wilson (Rs100 bn revenues, 20% decadal revenue CAGR). Sterling
and Wilson has had to increase debt by Rs20 bn and infuse Rs8 bn of additional
equity to fund cash shortfall that it has faced over the past seven years. The entity
gave a large Rs10 bn loan to Sterling and Wilson International FZE in FY2019.

Capital Goods L&T
Exhibit 11: Large support to subsidiaries in form of investments and L&A have led substantial cash shortfall, bridged by Rs8 bn of equity
infusion and Rs20 bn of additional debt
Aggregate cash flows for Sterling and Wilson (standalone + EPC Power), March fiscal year-ends, 2013-19 (Rs bn)
30.0
20
20.0
14
Equity raise Addition of debt
10.0 6
8 Post-tax Op CF before WC
changes
0.0
Investment/L&A in
subsidiary / associate
(10.0) companies
(21)
(20.0)
(2) Capex
(8) Working capital changes

(30.0)
(3) Interest payout
(34)
(40.0)
(50.0)
 Afcons Infrastructure (Rs80 bn, 20% decadal revenue CAGR) too has generated
operating cash inflows as it has been able to contain its spending on working
capital outgo. Its operating cash flow though has not been sufficient for its capex
and interest outgo requirements, leading to a modest shortfall.
Exhibit 12: Afcons’ cash outflows marginally exceed its cash inflows from operations
Aggregate cash flows for Afcons Infrastructure (standalone), March fiscal year-ends, 2013-19 (Rs bn)
30 26
1 Equity raise
20
Post-tax Op CF before
25
10 WC changes
LT investments +
1 L&A 1 Addition of debt
0
(15) Capex
(10)
(0) Working capital
(20) (11) changes
Interest payout
(30) (27)
(40)
 Dilip Buildcon (Rs90 bn revenues, 50% decadal CAGR) has generated operating
cash flows though high working capital requirements have taken out half of such
inflows. Depleted quantum of operating cash flows has not been sufficient to
fund the capex and interest outgo and investment in road projects. The resultant

L&T Capital Goods
cash shortfall since 2013 is equivalent to 60% of its aggregate post-tax operating
cash flows prior to working capital changes and has been only partly funded by IPO
money.
Exhibit 13: Large investment in working capital and capex has led to cash shortfall of 0.5X post-tax operational cash flows prior to
working capital changes
Aggregate cash flows for Dilip Buildcon (standalone), March fiscal year-ends, 2013-19 (Rs bn)
70 64
4 Equity raise
50
27
30 60 Post-tax Op CF before
WC changes
10 Addition of debt
(8) LT investments +
(10)
L&A
(28)
(30) Capex
(50) (32) Working capital changes

(70)
(22) Interest payout
(90)
(91)
(110)
 Megha Engineering and Infrastructure Limited (Rs200 bn, 25% decadal revenue
CAGR). MEIL is the only large challenger to L&T that has generated meaningful
cash surplus since 2013. We note large exposure that Megha Engineering has to
the states of Andhra Pradesh and Telengana.
Exhibit 14: MEIL is the only key challenger to L&T that has generated meaningful cash surplus over time; has Rs26 bn cash position as of
end-FY2019
Aggregate cash flows for Megha Engineering and Infrastructure Limited (standalone), March fiscal year-ends, 2013-19 (Rs bn)
200
150
120
0
Equity raise
100
Post-tax Op CF before WC
120 changes
50
4
0 Interest payout
Investment/L&A Reduction of debt
(25) to subsidiaries/JV
(26) Capex (35)
(50)
(39) Working capital

changes
(100) (86)

Capital Goods L&T
Exhibit 15: Key projects done by MEIL across lift irrigation, drinking water, power generation, transmission and distribution, gas
processing, and city gas distribution
Details of large projects completed/under-construction by MEIL
Nature of
Project Sector State Customer customer Scope of project Comment
Project was completed in
Construction of pump houses,underground
Kaleshwaram Lift irrigation project Irrigation Telangana Government of Telangana State record time and inaugrated in
pipes,tunnels, surge pools
June, 2019
Construction of lift irrigation project to
Purushottapatnam LIS (Phase-II) Irrigation AP Government of AP State Project is already completed
utilize Godavari water
Construction of reservior and pumping
KLIP-12 (Kondam Cheruvu Project) Irrigation Telangana Government of Telangana State Project is under construction
station
Handri-Niva Sujala Sravanthi (HNSS) Project II Irrigation AP Government of AP State Construction of pump houses and motors Project is already completed
Construction of pump house, discharge
Kondaveeti Vagu Project Irrigation AP Government of AP State point, regulator, a sub-station and power Project is already completed
transmission lines.
Filtering drainage water and supply it for
KC Valley (Kolar) Project Irrigation Karnataka State Government State Project is under construction
irrigation
Completed projects from various states like
O ther irrigation projects Irrigation Several states Multiple clients State Projects are completed
AP, Karnataka, Gujarat, O disha
Nellore Drinking Water Supply Scheme Water supply AP Government of AP State Supply of purified water for Nellore city Project is already completed
Worked on Mission Baghiratha scheme in
Commissioned/partially
O ther drinking water projects Water supply Several states Multiple clients State AP, water supply schemes in Rajasthan,
commissioned
O disha, UP
Power supply work for 3057 MW for
Power Projects for KLIS Power Telangana KLIP State Project is already completed
Kaleshwaram project
Construction of 525 MW thermal power
Tuticorin Thermal Power Plant Power Tamil Nadu SEPC Power Private Limited Private Execution is under process
project
Construction of 150MW thermal power Project was completed in
Nagai Power Plant Power Tamil Nadu KVK energy and Infrastructure Private
plant FY2019
These Hydel power units will
Construction of 3 hydel power units of
45 MW Hydro Power Project Power Gujarat Sardar Sarovar Narmada project State be operated by MEIL for the
15MW along Saurashtra canal in Gujarat
next five years
Construction of gas processing units, power Project completed in record 6
Gas Processing Plant at Raageswari Hydrocarbon Rajasthan Cairn Private
house and water treatment facilities months
Pipeline laid for 360km,
City Gas Distribution of natural gas to consumers -
Natural gas supply under CGD South India PNGRB Centre another 900km expected to
Distribution PNG/CNG
be completed
Projects were awarded in
Laying of roads, culverts, minor bridges,
Upgradation of existing roads Transportation Maharashtra MSRDC State 2018 and work is progressing
major bridges
on schedule
Project is expected to be 40%
Nagpur-Mumbai Expressway (NMSCE) Transportation Maharashtra MSRDC State Two project packages 1 & 9
complete in FY2020
Hydrocarbon Commissioning of gas turbine at Arab
Commissioning of gas turbine Jordan Arab Potash company Private Project is already completed
(overseas) Potash company
Water storage Project is expected to get over
Al-Zour Project Kuwait KIPIC, Kuwait State Construction of 66 storage tanks
(overseas) in FY2020
Extension of Water Transmission Pipeline
Water supply Project is expected to get over
Water transmission pipeline Tanzania United Republic of Tanzania Centre from the Lake Victoria Water Supply Scheme
(overseas) in March 2020
to Tabora, Nzega and Igunga Towns
Civil construction Project is expected to get over
Healthposts Zambia Government of Zambia Centre Construction of 195 nos. of health posts
(overseas) in March 2020
Prospects of L&T growing PAT at more than historical 12% revenue CAGR exist
L&T has been able to grow its core E&C revenues at a healthy 12% CAGR in tandem with it
maintaining a healthy balance sheet. This is commendable considering the stagnation in
private-corporate capex over such period and volatile ordering from government. While the
same partly came on account of margin loss, strength of L&T’s EPC cash flows helped it
grow PAT at a lower 10% CAGR. The above analysis rightfully adjusts PAT for the interest
income it would have earned if L&T had not paid any dividend. Such PAT CAGR would have
been higher had select projects-specific impact of overall profitability not happened in
FY2019.
Given past experience of the challengers of negligible cash surplus generation from EPC
businesses, such businesses may consider limiting their aggression while bidding for
incremental projects. There may also be a rub-off with EPC companies being steadfast on
their requirements for more reasonable commercial terms versus them chasing revenue
growth in the past. We note good possibility of L&T maintaining its current margin and
potentially seeing margin expansion from its current low levels. Even at static margin, the
high business returns for L&T’s EPC business would aid a faster growth in PAT versus a
potential 12% growth in revenues.

L&T Capital Goods
Exhibit 16: L&T has operated at healthy ~22% average pre-tax RoCE over the past decade
Pre-tax RoCE profile of L&T (standalone + Hydrocarbon Engineering), March fiscal year-ends, 2009-19 (%)
L&T Average over the cycle

30
25
20
15
10
0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
At 13% CAGR in PAT, we arrive at a justified one-year forward multiple of ~15X. Here we
assume a working capital at high 25% of sales level.
Exhibit 17: We arrive at a multiple of 15X at 13% PAT CAGR

Justified one-year forward multiple for L&T's core E&C business
Key inputs
Inputs for growth and terminal phase Inputs for cash conversion
Growth phase EPS CAGR (%) 13.0 PAT margin (%) 6.8
No. of years in initial growth phase (Growth_years) 10.0 Interest rate (%) 10.0
Terminal growth rate (Tg, %) 5.0 Marginal tax rate (%) 25.2
Cost of equity (COE, %) 12.5 Gross FATR (X) 5.5
Steady state capital structure - debt mix (%) - Average asset life (years) 10.0
WACC (%) 12.5 Working capital as days of sales 91
Nominal revenue in terminal year for calculation 1,000

Nominal PAT in terminal year for calculation 68
Component of justified multiple calculation Formula Calculation
One-year forward exit multiple on FCFE in terminal year 1 / (COE - Tg) 13.3
Terminal phase cash conversion ratio FCFE / PAT 0.68
One-year forward P/E multiple in terminal year 9.1
Discount factor for terminal year multiple to target year 1 / ((1+COE)^ growth 0.31
years)
Bump up the multiple by the PAT jump over the growth years 1 * ( (1 + growth CAGR) 3.2
^ (growth years-1)) *
(1+Tg)
Justified one-year forward P/E multiple for terminal value 8.8
component
Value of growth period
Value of growth period in terms of FCFE 9.0
Value of growth period in terms of P/E FCFE multiple * cash 6.2
conversion
Justified one-year forward P/E multiple (X) 15
Source: Kotak Institutional Equities estimates
CMP is pricing in trailing core E&C earnings at a lower 10X multiple on trailing earnings. For
such assessment of implied E&C multiples, we value listed subsidiaries at CMP and ascribe a
higher 30% holding company discount.

Capital Goods L&T
Exhibit 18: CMP implies a 11X multiple for the trailing core E&C earnings at benign valuations of other businesses
Implication at CMP for multiple for consolidated-ex services business on trailing 12 months basis
Earnings/Book Target multiple Value Valuation basis Stake Value Per share
(Rs mn) (X) (Rs bn) (%) (Rs bn) (Rs)
Core E&C business (consolidated) 65,555 11 721 P/E 100.0 721 515
L&T Finance Holdings 111 (at CMP) 64.0 71 51
L&T Infotech 237 (at CMP) 75.0 178 127
112 P/E 80.7 90 64
Mindtree investment 137 (at KIE TP) 60.1 82 59
IDPL- Roads, Transmission 23,850 1.0 24 P/B 0.0 0 0
Hyderabad Metro 33,272 0.6 19 P/B 100.0 19 14

Power development 31,127 1.0 31 P/B 100.0 31 22
30% holding copany
Total subsidiaries 470 330 236
discount
Current fair value (Rs/share) 755
Notes:
(a) We assume a higher 30% holding company discount and CMP as basis for valuation of listed subsidiaries of L&T
11X trailing earnings bakes in a 5-7.5% PAT CAGR at a high 13-14% WACC for L&T.
Exhibit 19: 10X earnings to trailing multiple suggests >13% WACC and <5% PAT CAGR
Sensitivity of justified trailing earnings multiple to PAT CAGR and CoE
PAT CAGR in initial high-growth period (%)

17 5.0 7.5 10.0 12.5 15.0
12.0 11 13 15 18 20
12.5 11 12 14 16 19
WACC (%) 13.0 10 12 13 15 18
13.5 10 11 13 14 17
14.0 9 10 12 14 16
Source: Kotak Institutional Equities estimates
Earnings prone to downgrades; reasonable backlog, valuations provide comfort

We lower our fair value by ~17% to Rs1,270, a cut driven equally by (1) lower
earnings/higher 25% holding company discount and (2) lower earnings multiple. We realize
the difficulty in predicting the quantum of order inflows in the near term for an entity like
L&T with significant reliance on uncertain state capex. L&T’s strong order backlog and
benign valuations on trailing earnings comfort. CMP is pricing in trailing core E&C earnings
at 11X multiple, valuing listed subsidiaries at CMP and ascribe a higher 30% holding
company discount. Such multiple implies a 5-7% PAT CAGR at a 13-14% range of WACC.

L&T Capital Goods
Exhibit 20: L&T order backlog provides growth visibility of 3 years

Trends in revenue growth and order backlog visibility for L&T's core E&C business, 2006-9M20
Order backlog/ trailing annual sales (X) (LHS) Next year's revenue growth (%) (RHS)
5.0 50
4.0 40
3.4
3.2 3.3
3.0
2.7 2.7 2.8 2.7 2.8
3.0 30
2.5
2.1 2.1 2.1 2.1
2.0 1.7 20
1.0 10
0.0 -
2006
2008
2009
2010
2011
2013
2014
2015
2016
2018
2007
2012
2017
2019
9M20
Exhibit 21: Revision in consolidated financials of L&T, March fiscal year-ends, 2019-22E (Rs mn)
New estimates Old estimates % revision

2019 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E
Income statement
Revenues 1,410,071 1,493,593 1,651,008 1,813,265 1,502,337 1,712,477 1,922,182 (1) (4) (6)
Expenditure (1,246,824) (1,322,805) (1,459,982) (1,594,324) (1,329,301) (1,507,645) (1,684,021) (0) (3) (5)
EBITDA 163,247 170,789 191,026 218,941 173,035 204,832 238,162 (1) (7) (8)
EBITDA margin (%) 11.6 11.4 11.6 12.1 11.5 12.0 12.4
Other income 18,515 20,763 22,919 25,777 20,741 22,465 24,539
Interest & finance charges 18,060 23,285 34,090 28,796 23,285 34,090 28,796
Depreciation 20,840 24,570 31,680 33,667 24,584 32,098 34,655
PBT 142,862 150,279 148,175 182,256 152,490 161,109 199,250 (1) (8) (9)
Tax 43,433 35,362 40,304 48,220 35,972 44,041 52,719
PAT (prior to associate profit) 86,314 98,190 89,174 111,464 99,746 96,593 121,836 (2) (8) (9)
PAT 86,104 96,431 87,604 110,870 97,987 95,022 121,242 (2) (8) (9)
EPS (Rs) 61.4 68.7 62.5 79.0 69.9 67.7 86.4 (2) (8) (9)
Yoy growth (%)
Revenues 17.8 5.9 10.5 9.8 6.5 14.0 12.2
EBITDA 20.3 4.6 11.8 14.6 6.0 18.4 16.3
PAT 18.8 12.0 (9.2) 26.6 13.8 (3.0) 27.6

Capital Goods L&T
Exhibit 22: Revision in estimates of consolidated (ex-services) business of L&T, March fiscal year-ends, 2019-22E
New estimates Old estimates % change

2019 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E
Consolidated (ex-services)
Orders received 1,387,880 1,413,092 1,442,943 1,580,060 1,465,318 1,586,488 1,754,245 (4) (9) (10)
% growth 13.7 1.8 2.1 9.5 1.2 8.3 10.6
Net sales 1,031,500 1,077,629 1,182,719 1,291,537 1,086,082 1,217,890 1,366,468 (1) (3) (5)
% growth 15.7 4.5 9.8 9.2 (0.3) 12.1 12.2
Order backlog - year end 2,907,594 3,243,056 3,503,281 3,791,804 3,286,830 3,655,429 4,043,205
Order execution days 831 974 977 964 966 962 953
Bill to book ratio (%) 34.3 30.4 30.7 31.0 30.4 30.7 31.0
EBITDA 104,172 110,900 119,739 132,186 113,235 126,790 143,510
Margin (%) 10.1 10.3 10.1 10.2 10.4 10.4 10.5 -13 bps -29 bps -27 bps
Corporate overheads/
(13) (3) (3) (3) (3) (3) (3)
intersegmental (% of sales)
Net EBITDA 99,700 107,573 116,147 128,221 109,837 122,986 139,204 (2) (6) (8)
EBITDA margin (%) 9.2 10.0 9.8 9.9 10.1 10.1 10.2
Other income 12,500 13,795 13,639 15,522 13,770 13,229 14,624 0 3 6
Interest cost (15,700) (17,799) (15,574) (9,345) (17,799) (15,574) (9,345) - - -
PAT 53,772 65,555 72,909 87,659 67,247 77,467 94,576 (3) (6) (7)
EPS 38.3 46.7 52.0 62.5 47.9 55.2 67.4 (3) (6) (7)
Yoy growth (%) (8.0) 21.9 11.2 20.2 25.1 15.2 22.1
Infrastructure
Orders received 956,488 918,228 954,958 1,050,453 956,488 1,071,267 1,189,106 (4) (11) (12)
% growth 2.7 (4.0) 4.0 10.0 - 12.0 11.0
Revenues 724,200 749,125 803,690 871,299 752,052 823,403 923,118 (0) (2) (6)
% growth 15 3 7 8 4 9 12
Order backlog - year end 2,218,104 2,387,208 2,538,475 2,717,629 2,422,540 2,670,403 2,936,391
% growth 8 8 6 7 9 10 10
Bill to book ratio (%) 32 31 31 31 31 31 31
EBITDA 61,464 65,826 73,836 82,661 67,588 78,117 90,347
EBITDA margin (%) 8.5 8.8 9.2 9.5 9.0 9.5 9.8 -20 bps -30 bps -30 bps
Hydrocarbons
Orders received 279,344 251,410 251,410 276,551 265,377 278,646 312,083 (5) (10) (11)
% growth 76.3 (10.0) - 10.0 (5.0) 5.0 12.0
Revenues 151,300 179,410 202,902 223,651 184,936 214,222 242,210 (3) (5) (8)
% growth 29 19 13 10 22 16 13
Order backlog - year end 399,024 471,023 519,531 572,431 479,465 543,889 613,762
% growth 51.7 18.0 10.3 10.2 20.2 13.4 12.8
EBITDA 13,278 18,616 19,633 21,641 19,189 20,729 23,437
EBITDA margin (%) 8.8 10.4 9.7 9.7 10.4 9.7 9.7 0 bps 0 bps 0 bps
Power
Orders received 30,056 120,224 108,202 119,022 120,224 108,202 119,022 - - -
% growth 24.5 300.0 (10.0) 10.0 300.0 (10.0) 10.0
Revenues 39,800 26,450 57,374 73,434 26,450 57,374 73,434 - - -
EBITDA margin (%) 4.5 4.0 4.0 4.0 4.0 4.0 4.0 0 bps 0 bps 0 bps
Others
Orders received 51,272 71,781 71,781 71,781 71,781 71,781 71,781 - - -
% growth 19 40 - - 40 - -
Revenues 57,000 54,587 55,908 61,498 54,587 60,046 66,051 - (7) (7)
% growth 34 (4) 2 10 (4) 10 10
EBITDA 16,273 11,902 11,417 12,559 11,902 13,092 14,401
EBITDA margin (%) 28.5 21.8 20.4 20.4 21.8 21.8 21.8 0 bps -138 bps -138 bps
Notes:
(a) EBITDA for FY2019 is adjusted to Rs7 bn of writeoff on real-estate property

L&T Capital Goods
Exhibit 23: Consolidated ex-services business of L&T, March fiscal year-ends, 2016-22E
2016 2017 2018 2019 2020E 2021E 2022E

Consolidated (ex-services)
O rders received 1,145,853 1,201,200 1,273,657 1,447,992 1,413,092 1,442,943 1,580,060
% growth (16.2) 4.8 6.0 13.7 (2.4) 2.1 9.5
Net sales 802,600 870,100 941,500 1,089,300 1,077,629 1,182,719 1,291,537
% growth 10.1 8.4 8.2 15.7 (1.1) 9.8 9.2
O rder backlog - year end 2,500,000 2,613,000 2,631,070 2,934,000 3,243,056 3,503,281 3,791,804
% growth 7 5 0.7 12 11 8 8
O rder execution days 977 975 956 831 974 977 964
Bill to book ratio (%) 30.0 30.1 30.7 34.3 30.4 30.7 31.0
Net EBITDA 76,130 86,855 99,408 99,700 107,573 116,147 128,221
EBITDA margin (%) 9.5 10.0 10.6 9.2 10.0 9.8 9.9
Infrastructure
O rders received 848,780 786,500 931,670 956,488 918,228 954,958 1,050,453
% growth (1.0) (7.3) 18.5 2.7 (4.0) 4.0 10.0
Revenues 488,500 528,500 627,556 724,200 749,125 803,690 871,299
% growth 13 8 15 3 7 8
O rder backlog - year end 1,875,000 1,933,620 2,052,235 2,218,104 2,387,208 2,538,475 2,717,629
% growth 13 3 6.1 8 8 6 7
O rder execution days 1,241 1,295 1,125 1,034 1,081 1,084 1,063
EBITDA 54,970 53,730 61,501 61,464 65,826 73,836 82,661
EBITDA margin (%) 11.3 10.2 9.8 8.5 8.8 9.2 9.5
Defence Engineering
O rders received — — 36,924 30,056 27,050 29,755 32,731
% growth — — (18.6) (10.0) 10.0 10.0
Revenues — — 31,381 37,500 39,950 35,921 34,134
% growth — — 20 7 (10) (5)
Bill to book ratio (%) — — — 27 33 33 33
EBITDA — — 2,573 6,063 7,098 6,167 5,860
EBITDA margin (%) — — 8.2 16.2 17.8 17.2 17.2
Heavy engineering
O rders received 27,380 71,500 22,832 40,664 24,398 26,838 29,522
% growth (45.1) 161.1 (68.1) 78.1 (40.0) 10.0 10.0
Revenues 30,000 30,800 14,118 21,700 28,107 26,924 27,521
% growth (12) 3 (54.2) 54 30 (4) 2
EBITDA 185 6,144 2,979 5,314 6,407 6,407 6,549
EBITDA margin (%) 0.6 19.9 21.1 24.5 22.8 23.8 23.8
Electrical and automation
O rders received 47,915 57,200 56,573 60,112 66,123 72,736 80,009
% growth (23) 19 (1.1) 6 10 10 10
Revenues 46,300 46,400 52,355 57,800 59,983 68,869 76,261
% growth (3) 0 12.8 10 4 15 11
EBITDA 5,789 7,000 8,206 10,110 11,092 12,735 14,102
EBITDA margin (%) 12.5 15.1 15.7 17.5 18.5 18.5 18.5
Hydrocarbons
O rders received 95,830 185,900 158,448 279,344 251,410 251,410 276,551
% growth (10.6) 94.0 (14.8) 76.3 (10.0) — 10.0
Revenues 85,200 96,000 117,196 151,300 179,410 202,902 223,651
% growth 16 13 22.1 29 19 13 10
EBITDA 530 6,587 9,024 13,278 18,616 19,633 21,641
EBITDA margin (%) 0.6 6.9 7.7 8.8 10.4 9.7 9.7
Power
O rders received 27,380 28,600 24,140 30,056 120,224 108,202 119,022
% growth (82) 4 (15.6) 25 300 (10) 10
Revenues 64,300 69,400 61,994 39,800 26,450 57,374 73,434
% growth 479 8 (10.7) (36) (34) 117 28
EBITDA 1,718 2,450 2,080 1,780 1,051 2,279 2,917
EBITDA margin (%) 2.7 3.5 3.4 4.5 4.0 4.0 4.0
Others
Revenues 88,300 99,000 42,697 57,000 54,587 55,908 61,498
EBITDA 12,939 10,945 13,045 16,273 11,902 11,417 12,559
EBITDA margin (%) 14.7 11.1 30.6 28.5 21.8 20.4 20.4

Capital Goods L&T
Exhibit 24: EPS for core E&C business of L&T (consolidated), March fiscal year-ends, 2016-22E (Rs)
EPS for core E&C business (consolidated)
70.0
62.5
60.0
52.0
50.0 46.7
37.9 38.3
40.0 34.5
30.9
30.0
20.0
10.0
-
2016 2017 2018 2019 2020E 2021E 2022E
Exhibit 25: L&T – SoTP-based fair value of Rs1,270/share
March-22
Earnings/Book Target multiple Value Valuation basis Stake Value Per share
(Rs mn) (X) (Rs bn) (%) (Rs bn) (Rs)
Core E&C business (consolidated) 87,659 15.0 1,315 P/E 100.0 1,315 938
L&T Finance Holdings 230 (at KIE TP) 64.0 147 105
L&T Infotech 282 (at KIE TP) 75.0 212 151
L&T Technology Services 8,884 15.0 133 P/E 80.7 107 77
Mindtree investment 120 (at KIE TP) 60.1 72 51
IDPL- Roads, Transmission 23,850 1.0 24 P/B 51.0 12 9
Hyderabad Metro 33,272 0.6 19 P/B 100.0 19 14
Power development 47 P/B 100.0 47 33
Grand total 1,268
One-year forward fair value (Rs/share) 1,270

L&T Capital Goods
Exhibit 26: Consolidated financials of L&T, March fiscal year-ends, 2012-22E (Rs mn)
2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
Income statement
Revenues 643,131 744,980 851,284 906,546 1,019,753 1,100,110 1,196,832 1,410,071 1,493,593 1,651,008 1,813,265
Expenditure (555,711) (646,894) (743,986) (806,690) (915,125) (989,363) (1,061,118) (1,246,824) (1,322,805) (1,459,982) (1,594,324)
EBITDA 87,420 98,087 107,298 99,856 104,628 110,747 135,714 163,247 170,789 191,026 218,941
EBITDA margin (%) 13.6 13.2 12.6 11.0 10.3 10.1 11.3 11.6 11.4 11.6 12.1
Other income 8,290 10,959 9,818 10,072 9,044 14,010 14,120 18,515 20,763 22,919 25,777
Interest & finance charges 11,019 20,950 31,380 28,507 16,551 13,398 15,385 18,060 23,285 34,090 28,796
Depreciation 15,523 16,371 14,458 26,225 17,867 23,699 19,287 20,840 24,570 31,680 33,667
PBT 69,167 71,725 71,277 55,195 79,254 87,659 115,162 142,862 150,279 148,175 182,256
Tax 22,826 23,855 26,284 20,876 24,848 20,066 31,989 43,433 35,362 40,304 48,220
Recurring PAT before minority and associates 46,342 47,870 44,993 34,320 54,406 67,593 83,173 99,428 114,917 107,871 134,036
Minority interest 348 722 382 (1,710) (3,118) (4,443) (6,346) (13,115) (16,727) (18,697) (22,572)
Associate income 462 384 93 21 (9,902) (3,953) (4,359) (210) (1,759) (1,571) (593)
Recurring PAT 47,151 48,976 45,468 32,631 41,387 59,198 72,469 86,104 96,431 87,604 110,870
Recurring EPS (Rs) 33.6 34.9 32.4 23.3 29.5 42.2 51.7 61.4 68.7 62.5 79.0
Exceptional items 568 4,149 3,553 15,017 942 1,214 1,230 2,948 3,056 86,733 3,896
Reported PAT after exceptional items 47,719 53,124 49,020 47,648 42,329 60,412 73,699 89,051 99,487 174,337 114,767
Balance Sheet
Share holder's funds 311,402 365,126 408,908 459,077 470,732 537,801 612,820 692,009 805,471 920,633 997,929
Capital 1,225 1,231 1,854 1,859 1,863 1,866 2,803 2,806 2,806 2,806 2,806
Reserves and surplus 292,643 337,366 375,262 407,232 439,941 500,299 553,767 620,943 702,666 814,776 888,579
Minority interest 17,535 26,529 31,792 49,986 28,928 35,636 56,250 68,261 100,000 103,051 106,544
Loan funds 471,501 626,716 803,304 905,714 881,355 939,763 1,075,241 1,255,552 1,390,781 1,425,312 1,463,795
Deferred tax liability 818 1,837 3,375 (1,846) (7,364) (11,252) (14,941) (31,078) (31,078) (31,078) (31,078)
Total sources of funds 827,898 1,033,218 1,250,405 1,393,267 1,344,861 1,481,268 1,687,740 1,916,515 2,165,207 2,314,899 2,430,678
Gross block 257,568 381,603 414,765 457,586 165,705 170,056 199,908 242,857 423,888 451,457 480,065
Acc. depreciation 63,560 77,738 90,790 110,206 23,948 39,317 57,565 73,464 98,033 129,713 163,380
Net block 194,008 303,865 323,975 347,381 141,757 130,739 142,343 169,394 325,855 321,744 316,685
Cash & bank balances 35,221 36,312 41,353 58,555 53,899 55,725 80,325 117,262 95,704 111,692 162,847
Investments 87,895 87,675 81,090 96,121 154,651 231,828 196,572 253,748 328,061 328,061 328,061
Loans & advances towards financing activities 247,732 320,008 438,517 553,669 665,946 720,612 882,646 1,003,197 1,106,207 1,238,019 1,299,920
Net current assets 113,915 171,826 223,686 182,304 203,069 191,156 236,295 233,644 294,726 300,729 308,511
Total application of funds 827,898 1,033,218 1,250,405 1,393,267 1,344,861 1,481,268 1,687,740 1,916,515 2,165,207 2,314,899 2,430,678
Yoy growth (%)
Revenues 23.5 15.8 14.3 6.5 12.5 7.9 8.8 17.8 5.9 10.5 9.8
EBITDA 13.7 12.2 9.4 (6.9) 4.8 5.8 22.5 20.3 4.6 11.8 14.6
Recurring PAT 10.0 3.9 (7.2) (28.2) 26.8 43.0 22.4 18.8 12.0 (9.2) 26.6
Key ratios
EBITDA margin (%) 13.6 13.2 12.6 11.0 10.3 10.1 11.3 11.6 11.4 11.6 12.1
PAT margin (%) 7.3 6.6 5.3 3.6 4.1 5.4 6.1 6.1 6.5 5.3 6.1
Effective tax rate (%) 33.0 33.3 36.9 37.8 31.4 22.9 27.8 30.4 23.5 27.2 26.5
Net debt to equity (X) 1.4 1.6 1.9 1.8 1.8 1.6 1.6 1.6 1.6 1.4 1.3
RoE (%) 16.5 14.5 11.7 7.5 8.9 11.7 12.6 13.2 12.9 10.2 11.6
RoCE (%) 8.0 7.6 6.2 5.1 4.0 5.0 5.4 5.6 5.7 8.8 5.7
Book value per share (Rs) 209.5 241.4 268.8 291.6 315.0 358.0 396.8 444.7 502.9 582.8 635.5
Net Wcap (excl cash) as days of sales (#) 64.7 84.2 95.9 73.4 72.7 63.4 72.1 60.5 72.0 66.5 62.1

Capital Goods L&T
APPENDIX I – FREE CASH FLOW AFTER ACCOUNTING FOR INTEREST OUTGO
Exhibit 27: L&T commands a meaningful lead over peers in terms of scale
Details of key financials of key players (standalone), March fiscal year-ends, 2010,19 (Rs mn)
2010 2019
Revenues EBITDA PAT Revenues EBITDA PAT
L&T (a) 370,348 47,756 31,650 999,506 96,415 76,335
Megha Infrastructure and Engineering 26,297 5,388 2,925 195,024 32,435 27,711
Tata Projects 27,568 2,127 1,327 132,298 7,749 2,399
(b ) 27,803 2,890 1,119 127,778 8,856 4,748
Shapoorji Pallonji and Company
NCC 46,430 4,840 2,330 120,797 14,230 5,639
(c,d ) 10,594 477.8 272.8 113,913 3,320 1,227
Sterling and Wilson
KEC (consolidated) 39,072 4,059 1,897 110,005 11,499 4,864
Dilip Buildcon 2,305 406 190 91,182 16,044 7,650
Afcons Infrastructure (c ) 14,666 1,235 364 77,319 5,182 1,251
Kalpataru Power Transmission 26,316 3,070 1,705 71,152 7,783 4,014
HCC 36,442 4,430 814 43,410 5,334 (1,281)
Ashoka Buildcon 11,163 1,487 757 38,206 5,151 2,861
Sadbhav Engineering 12,569 1,371 538 35,492 4,279 1,869
PNC Infratech 7,520 920 450 30,969 3,933 3,249
J. Kumar Infra Projects 7,640 1,290 700 27,871 3,424 1,771
KNR Constructions 8,990 1,250 660 21,373 4,270 2,633
Skipper 4,090 350 140 18,709 795 312
Capacite 17,876 2,485 955
Ahluwalia Contracts 15,680 1,740 820 17,522 1,971 1,173
Techno Electric 6,910 1,470 1,180 9,886 2,369 1,816
Total 702,402 86,556 49,838 2,300,287 237,523 151,195
Notes
(a) L&T includes standalone operations and those of Hydrocarbon Engineering
(b) We put in value FY2019 actual revenues and grow FY2018 EBITDA and PAT proportionately yoy
(c ) Afcons Infrastructure and Sterling and Wilson are subsidiaries of Shapoorji Pallonji group
(d) Solar EPC business is included inside

L&T Capital Goods
Exhibit 28: L&T generates meaningful cash surplus for its scale
L&T (standalone + Hydrocarbon Engineering)'s cash surplus as share of operating cash flows prior to working capital changes, March fiscal year-ends,
2009-19 (%)
150
103
100
50
50 30 34
12 18 20 20
6
-
(11) (10) (5) (4)
(50) (26)
(39) (38) (38)
(62) (61)
(100)
(87)
KNR Constructions
Buildcon
Buildcon
Sterling and Wilson
Infratech
NCC
HCC
L&T
Tata Projects
Skipper
Afcons Infrastructure
Capacite
KEC
Ahluwalia Contracts
Megha Engineering
Engineering
Shapoorji Pallonji
Techno Electric
KPTL
J Kumar
Ashoka
Sadbhav
Dilip
PNC
Notes:
(a) We define cash surplus as FCF less interest outgo
(b) We assess cash flow statement of 20 key listed and unlisted EPC businesses for the above analysis
(c ) L&T has a net aggregate inflow from sale of investments, unlike peers. Hence Not Meaingful (NM) usage.
(d) Grey shade denotes outflows of cash

ADD
IndusInd Bank (IIB)
Banks MARCH 26, 2020
UPDATE
Sector view: Attractive
Avoidable sell-off. IIB’s steep price correction, despite management’s efforts to CMP (`): 301
assuage investors’ concerns, is surprising. We capture this asymmetric risk through a Fair Value (`): 600
higher cost of equity while we build lower growth and higher provisions resulting in a
BSE-30: 28,536
steep correction in our fair value (Rs600 from Rs1,600 earlier). A higher retail loan mix
and comfortable CAR, which can absorb ~5% of loans, should give comfort. We hope
to see changes to business strategy under the new team.
IndusInd Bank
52-week range (Rs) (high,low) 1,834-236 EPS (Rs) 58.4 28.5 76.1
Mcap (bn) (Rs/US$) 209/2.8 EPS growth (%) 6.7 (51.2) 166.6
ADTV-3M (mn) (Rs/US$) 9,532/125 P/E (X) 5.2 10.6 4.0 QUICK NUMBERS
Promoters 13.0 BVPS (Rs) 499.2 507.5 575.0  Cut estimates by 20-
FIIs 59.4 RoE (%) 13.4 5.3 13.2
70% to reflect
Price performance (%) 1M 3M 12M NII (Rs bn) 117 135 163 lower growth and
Absolute (73) (80) (82) PPOP (Rs bn) 102 104 117 higher provisions
 CAR has the ability
Building a reasonably conservative earnings estimate to factor unexpected surprises to absorb ~15% of
We are quite surprised at the sharp sell-off in IndusInd Bank in the past month. In our view, the corporate loans
relatively comfortable capital position and a higher loan mix towards retail segment should help
differentiate itself from the familiar comparison towards weaker banks. We note that multiples  Revise fair value to
capture this risk substantially (see Exhibit 1) as it has moved closer to its all-time low that we Rs600 (from Rs1,600
had seen in 2009 (January-March) and in 2003 (April-October). earlier)
Capital comfortable to absorb ~15% of corporate loans; near term focus on liabilities
We believe that IIB’s current CAR is sufficient to absorb relatively high impairment, especially
from the corporate loan portfolio. A simple back-of-the-envelope calculation suggests that the
bank has the ability to charge off ~7% of loans or ~15% of the corporate loan portfolio while
meeting RBIs threshold requirements. The management needs to provide comfort on the
liabilities side at this point, given their high dependence on wholesale deposits.
Hard choices to make as there is a need to shift focus to liabilities than assets
Over the past decade IIB’s management has focused towards building solid revenue growth M B Mahesh, CFA
with best-in-class NIM, high fees, keeping cost ratios under control and delivering high risk
adjusted RoE. However, as we see it today, this model has had its challenges and the pain, if Nischint Chawathe
any, gets magnified manifold during times of stress. In financials, it is most useful when we
have a solid liabilities side as it gives headroom for the management to work through its
Venkat Madasu
mistakes, if any as it can break the vicious down cycle that is typical of these businesses. It
would be disappointing if we fail to hear any discussion on the same under the new team.
Dipanjan Ghosh
Higher re-rating possible; factoring a higher cost of equity to reflect unexpected risk to business
Ashlesh Sonje
We cut our fair value to 600 (from Rs1,600 earlier) to reflect primarily the increased risk to
business (increase in cost of equity). We are valuing the business at 1.1X book and 8X FY2022
EPS led by sharp downward revisions to our medium term RoEs. We have cut our estimates by
20-60% largely to build (1) lower loan growth, (2) lower NIM, (3) lower fees, especially in
investment banking and (4) higher provisions. We shall work through our optimal fair value
multiple as we see progress on the liabilities side. In the near term, it would be fair to assume
that IIB would trade at a substantial discount to its frontline peers.
Contact: +91 22 6218 6427
IndusInd Bank Banks
From a premium to HDFC Bank to a discount to Axis/ICICI Bank – a quick journey

The steep correction in IIB over the past month has moved its valuations closer to its lowest
point in the past two decades. The bank is now trading at 0.6X book and 8X FY2021
earnings (post revision to estimates), which are 2 standard deviations lower to its long term
average. We do agree that the deviation to long term average serves little purpose if there is
a substantial change in business philosophy and it also does not necessarily imply that the
downside is limited but it nevertheless gives a perspective of the risks that is getting
captured as not much is visible in reported earnings today.
We maintain our ADD rating on the bank despite a steep correction in fair value and healthy
upside to the current price primarily as we are looking at a few more confirming trends on
the bank especially with respect to the concerns raised by investors. Note that these issues
are currently observations and/or concerns of investors that the management is looking to
address but there is a timing uncertainty and/or a potential change to the business model
which may have a bearing on our medium to long term earnings estimates.
While we have been cautious on the business in recent years (negative for some time as
well), we are nevertheless surprised if the current pessimism is a lot more than warranted.
We admit that valuing financials during times of distress, as we are seeing with IIB today, is
quite challenging as risks emerge from segments that were hitherto less understood. For
example, while the deposit franchise was always weaker for IIB as compared to frontline
banks, we have seen this topic getting a fair amount of importance after the steep
correction in stock prices (especially in the past month) which has further aggravated the
current issue on hand. We discuss many of these issues in this note but we have fewer
convincing answers as well which leads to us to believe that it is useful, as a matter of
prudence, to have a more subdued outlook on business as well as build in a higher cost of
equity to reflect any untoward changes to our view.
To put the underperformance, in perspective, IIB is trading at 75% discount to HDFC Bank
(see Exhibit 2) and ~40% discount to Axis Bank (see Exhibit 3). This is the same bank, which
closer to the announcement or acquisition of Bharat Financial Services, used to trade at a
premium to the best-in-class HDFC Bank, a time when we had been fairly negative on the
limited upside to valuations. It is a remarkable change in investor outlook in a relatively short
period despite the underlying business metrics not having seen such a fundamental shift.
Exhibit 1: Steep correction to 2 standard deviations below long-term mean valuation

Price to book multiple and trading bands, March fiscal year-ends, 2001-2020 (X)
P/B Average Avg + 1STDev

5.0 Avg - 1STDev Avg + 2STDev Avg - 2STDev
4.0
3.0
2.0
1.0
-
Jul-04
Jul-06
Jul-08
Jul-16
Jul-18
Jul-10
Jul-12
Jul-14
Mar-03
Mar-05
Mar-07
Mar-13
Mar-15
Mar-17
Mar-09
Mar-11
Mar-19
Nov-03
Nov-05
Nov-07
Nov-09
Nov-11
Nov-13
Nov-15
Nov-17
Nov-19
Source: Bloomberg, Kotak Institutional Equities

Banks IndusInd Bank
Exhibit 2: IIB is trading at ~75% discount to HDFC Bank Exhibit 3: IIB is trading at a discount to ~40% to Axis Bank
IIB valuation discount to HDFC Bank, March fiscal year-ends, 2004 – IIB valuation discount to Axis Bank, March fiscal year-ends, 2004 –
2020 (X) 2020 (X)
25 120
0 80
(25) 40
(50) 0
(75)
(40)
(100)
(80)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2017
2018
2020
2016
2019
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Source: Company, Bloomberg, Kotak Institutional Equities estimates Source: Company, Bloomberg, Kotak Institutional Equities estimates
The less volatile RoE as compared to the unobservable but volatile cost of equity
We have highlighted the familiar issue that financial stocks present a considerable challenge
in identifying a sustainable medium to long term multiple for its business as the ability for
investors to have control or confidence of the institution’s underwriting of the complete
book (given the opacity) is most likely known only in hindsight (see Exhibit 4-7 where the
metrics were the best as compared to the industry). Confidence of RoEs is observed, at best,
through many cycles, rather than one, as institutions demonstrate capabilities on handling
the weaker economic periods or stress that is idiosyncratic in nature. HDFC Bank and City
Union Bank are examples of the same where we have observable history of more than a few
cycles. Unfortunately, most private banks have limited history. While these banks or financial
institutions have established a strong underwriting in one specific period they have most
likely failed in subsequent cycle. To us, IIIB currently falls in that bucket, where the bank
avoided the 2008-14 set of corporate groups but was caught with a few bad exposures in
the second leg of weaker corporates that emerged later. In our view, it is easier to build
positive arguments for business with stronger liability and higher CAR as the risk of being
diluted at the weakest point of the bank’s valuation is low. ICICI or Axis Bank are classical
examples of the same as its superior liability franchise has resulted in the least book
value/share dilution when banks go through such stress periods.
The medium term RoEs (Exhibit 8), in this period, serves very little purpose as investors tend
to assign different multiples to reflect the risk of book. Hence, the cost of equity to value
these businesses undergo a much faster change than what can be measured through
observable data points. We are currently grappling with a few unknown variables such as
the strength of the liability profile while we do believe that the bank would be able to
handle the asset side stress quite comfortably even if there is a substantial charge to the net
worth or earnings in the medium term (explained later).
We are making significant downward revisions (see Exhibit 9) to our earnings (20-60% for
FY2020-22) to factor (1) lower loan growth, (2) lower NIM for possible income de-
recognition led by higher slippages, (3) higher provisions. While our provisions have the
ability to absorb a substantial part of the risk, the MFI and further slowdown in CV book
could potentially result in further provisions as well. We shall monitor the situation as we see
fresh information coming in.

IndusInd Bank Banks
Exhibit 4: NII and revenue growth was strong Exhibit 5: …led by higher-than-industry average loan growth
NII and revenue growth, March fiscal year-ends, 2009-22 , March fiscal year-ends, 2009-22
NII Revenue Total Retail

100 56
80 42
34
30
57 27 26 24 25 29 28 28 29
60 53 28 23 54
45 48
93 40 15
30 32 10
40 30 32 33 31 31
27
14 29 25 8
25 21 20 20
55 20 18 16 11 15
53 18
20 -
31 29 32 34 33 10
24 24 18 (2)
18 15 21
- 2020E (14)
2021E
2022E
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020E
2021E
2022E
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Exhibit 6: Tight cost controls leading to stable cost structure Exhibit 7: Cost-income ratio improved in recent years
Revenue and cost growth, March fiscal year-ends, 2009-22 Cost-income ratio, March fiscal year-ends, 2009-22
Revenue Opex
75 65
57
60 53 60 60
45
45 55
32 33 31 31
30 51
25 27 51
30 50 49 49
20 18 18 48 48 49
47 47
36 35 37 33 31 28 30 46 46
15 31
24 29 10 45
44 45
17 15 20 24
- 40
2020E
2021E
2022E
2020E
2021E
2022E
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

Banks IndusInd Bank
Exhibit 8: We are building a 12% RoE profile in the short term but likely to improve to ~14-15% in the medium term
RoE decomposition of IIB, March fiscal year-ends, 2003-22 (%)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
Net interest income 2.5 2.7 1.9 1.4 1.4 1.8 2.8 3.4 3.3 3.4 3.6 3.4 3.5 3.8 3.7 3.5 3.8 3.7 3.6 3.7
Other income 2.8 1.6 1.1 1.6 1.3 1.8 1.8 1.8 2.0 2.1 2.4 2.6 2.6 2.6 2.4 2.3 2.2 1.8 1.7 1.6
Treasury 1.8 0.3 (0.2) (0.3) 0.1 0.4 0.4 0.1 0.1 0.1 0.2 0.1 0.1 0.2 0.2 0.0 0.3 0.1 0.1 0.1
Others 1.0 1.3 1.3 1.8 1.3 1.4 0.4 1.7 1.8 2.0 2.2 2.4 2.5 2.4 2.2 2.2 1.9 1.7 1.6 1.5
Total income 5.3 4.3 3.0 3.0 2.7 3.6 4.6 5.2 5.3 5.5 6.0 6.0 6.1 6.4 6.1 5.8 6.0 5.5 5.4 5.4
Operating expenses 1.9 1.8 2.0 1.8 1.9 2.2 2.4 2.5 2.6 2.7 2.7 2.9 2.9 3.0 2.8 2.6 2.8 2.7 2.8 2.8
Employees 0.4 0.4 0.5 0.5 0.6 0.7 0.9 0.9 0.9 1.0 1.0 1.0 1.0 0.9 0.9 0.7 0.7 0.7 0.7 0.7
Others 1.5 1.4 1.5 1.3 1.3 1.5 1.5 1.6 1.7 1.7 1.7 1.9 1.9 2.0 1.9 1.8 2.0 2.0 2.1 2.2
Pre provision income 3.4 2.6 1.0 1.2 0.8 1.4 2.2 2.6 2.7 2.8 3.2 3.1 3.2 3.4 3.3 3.2 3.2 2.8 2.6 2.5
Loan loss provisions 1.3 0.4 0.6 0.3 0.3 0.5 0.5 0.5 0.3 0.4 0.5 0.4 0.5 0.7 0.5 1.2 1.3 2.0 1.0 0.8
PBT 1.7 2.2 1.2 1.5 0.8 1.0 1.8 2.5 2.5 2.7 3.1 3.0 3.1 3.2 3.1 3.2 3.0 2.6 2.5 2.4
(1- tax rate) 96.8 80.7 62.2 76.3 65.7 65.2 65.7 65.6 67.3 67.3 66.2 66.2 65.9 65.8 65.8 66.3 71.7 74.4 74.4 74.4
ROA 2.1 1.4 0.2 0.7 0.3 0.6 1.1 1.4 1.6 1.6 1.8 1.8 1.8 1.8 1.8 1.3 1.4 0.6 1.2 1.3
Avg assets/avg equity 22.5 23.9 25.9 26.0 25.6 24.6 20.1 14.6 12.9 11.3 10.3 10.9 9.5 8.8 9.5 10.5 9.8 9.7 10.9 11.7
ROE 47.5 32.8 5.7 17.0 8.7 14.3 22.4 20.8 20.1 18.3 18.0 19.7 17.1 15.7 17.1 13.8 13.4 5.3 13.2 15.6
Exhibit 9: IndusInd Bank – change in estimates

March fiscal year-ends, 2020E-2022E (Rs mn)
New estimates Old estimates % change

2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E
Net loan growth (%) 10.4 8.4 15.2 21.6 21.6 20.7 -1116 bps -1319 bps -549 bps
Loans (Rs bn) 2,058 2,230 2,569 2,266 2,755 3,324 (9.2) (19.0) (22.7)
Total income 184,221 202,449 239,566 187,181 225,180 269,343 (1.6) (10.1) (11.1)
Net interest income 117,267 134,734 162,707 120,227 153,827 185,754 (2.5) (12.4) (12.4)
NIM (%) 4.1 3.9 3.9 4.2 4.4 4.3 -10 bps -51 bps -48 bps
Other income 66,954 67,715 76,859 66,954 71,353 83,589 - (5.1) (8.1)
Expenses 82,490 98,596 122,067 83,081 104,826 131,354 (0.7) (5.9) (7.1)
Employee cost 22,802 26,267 30,116 22,802 26,267 29,972 0.0 0.0 0.5
Other cost 59,687 72,329 91,951 60,279 78,559 101,382 (1.0) (7.9) (9.3)
Loan loss provisions 41,181 75,045 43,195 29,943 25,103 30,395 37.5 198.9 42.1
PBT 58,050 27,308 72,804 72,248 99,981 115,381 (19.7) (72.7) (36.9)
PAT 41,607 20,317 54,166 52,256 74,386 85,843 (20.4) (72.7) (36.9)
% growth yoy 26.0 (51.2) 166.6 58.3 42.3 15.4
PBT-treasury+provisions 92,731 98,853 111,999 95,691 121,585 141,776 (3.1) (18.7) (21.0)
Cost of equity is tested through a few cycles or do they represent inconsistencies of

investor expectations?
We break down the price performance since 2012-18 into two parts to look at what is
worrying investors today:
(a) A general exuberance in the stock when it reached ~4X book in 2018. The period
of FY2012-18 was the golden years for the bank where the balance sheet was
compounding steadily, RoE improvement was driven by NIM expansion, newer fee income
lines, steady investments in business and negligible credit costs. The bank avoided the risky
known corporates as it was quite late into the cycle having the benefit of hindsight and was
giving comfort to investors that the underwriting risk is far lower. While we were in the
same line of thought, we differed in our rating quite consistently and especially, towards the
last leg as the margin of safety was not comfortable as it was trading at a premium to HDFC
Bank (despite weakness in liability profile) and with a high downside risk if there was any
negative surprises. However, we turned positive as the valuations started to turn favorable
but we see that there is a lack of confidence at <1X book currently (opportunity to buy). If
we go with this argument, then it would imply that the cost of equity has not changed
materially and the stock is available at reasonable attractive valuations today as investors are
comforted with some of the risks facing the bank. Note that in 2014-18, investors have
looked at a lot of business models including the riskier NBFCs as well giving very high

IndusInd Bank Banks
valuations while ignoring the strong liability franchises like the frontline private banks of
ICICI Bank and Axis Bank, which were working through their respective challenges.
(b) Did the cost of equity substantially change in recent times, as reflected by a material
change in perception to the riskiness of the changing loan mix? To this, we note the
following arguments:
 Asset quality deterioration has been much higher than initially anticipated. We
have been disappointed and importantly, surprised, with some of the corporate
exposures taken and the extent/impact of stress that it is now getting reflected in
earnings. Having started its growth cycle quite late and well after avoiding the known
stressed groups in the market (infrastructure), IIB chose to tread carefully backing
corporates with much lower stress with a view that they would be able to navigate
through this crisis better than stressed corporates. However, this corporate cycle has
been longer and quite painful resulting in stress coming for these corporates as well.
This stress has mostly come after the IL&FS crisis. The extent of stress has been higher-
than-what-we-had initially anticipated.
a) Reading through the credit rating or the SMA book is yet to establish
confidence. One of the challenges with corporate loan stress is that the rating
profile (Exhibit 10) tends to capture it quite late as the deterioration is quite swift to
default. Even the SMA disclosures, as we have seen with some of the other banks
as well, has not been particularly useful. It is quite hard to bridge the information
asymmetry as disclosures, even if it is higher, just do not help address investor
concerns.
Of the banks that have had this issue, we believe that ICICI Bank is probably the
only one that has addressed it quite well. The reason is that ICICI Bank broadly
started with a reasonably high number of stressed loans that it was working
internally. While this was a disappointing start for investors given that the number
was fairly large it was useful on two counts: (a) management had more headroom
to work on marginal stress cases with more aggression leading to faster
recognition of bad loans and more upfronting of pain in earnings and (b) the room
for further disappointment was lower. Hence, as confidence improved in the
reporting, we have seen its relative outperformance.
Exhibit 10: The risk, is not well established, if measured by rating profile as seen below
Rating profile shows lower risk of the corporate book, March fiscal year-ends, 3QFY20
Source: Company

Banks IndusInd Bank
b) Credit costs are most likely to go through a fair degree of change. We are
building higher loan-loss provisions in the medium term (230bps average for
FY2020-23) to reflect any unknown negative surprises and improvement in
provision coverage ratio.
c) Slippages higher in retail but less risky given the granularity of the book.
We note that the slippages have been higher in the retail portfolio though it is not
specific to any specific asset class (see below). The CV portfolio
Exhibit 11: Slippages higher at 3.9% of loans in 3QFY20

Gross and net NPL, March fiscal year-ends, 2011-3QFY20 (%)
2011 2012 2013 2014 2015 2016 2017 2018 2019 1QFY20 2QFY20 3QFY20
Gross NPL (Rs mn) 2,659 3,471 4,578 6,208 5,629 7,768 10,549 17,049 39,474 41,997 43,702 45,784
Wholesale (Rs mn) 820 1,100 1,990 3,100 2,340 3,820 5,440 10,530 30,880 29,030 29,320 30,500
Retail (Rs mn) 1,840 2,370 2,600 3,110 3,280 3,950 5,110 6,520 8,590 12,970 14,380 15,280
Commercial vehicle (%) 1.2 1.0 1.0 1.4 1.3 1.0 0.9 1.0 1.2 1.1 1.2 1.4
Utility vehicle (%) 1.1 1.3 0.9 0.9 1.1 1.2 1.1 1.3 1.3 1.2 1.2 1.1
Construction equipments (%) 1.4 1.2 1.2 1.3 1.5 1.3 1.2 1.1 0.7 0.8 1.0 1.0
3 Wheeler (%) 0.6 0.9 0.8 0.9 0.9 1.0 0.9 1.3 1.4 1.4 1.7 1.7
2 Wheeler (%) 3.9 3.4 3.0 2.5 2.6 3.1 3.6 3.9 3.8 3.6 3.2 2.9
Cars (%) 1.6 1.0 0.7 0.5 0.6 0.5 0.7 0.7 0.8 0.8 0.7 0.7
Gross NPL ratio (%) 1.0 1.0 1.0 1.1 0.8 0.9 0.9 1.2 2.1 2.2 2.2 2.2
Net NPL (Rs mn) 728 947 1,368 1,841 2,105 3,218 4,389 7,457 22,483 23,805 22,053 21,733
Net NPL ratio (%) 0.3 0.3 0.3 0.3 0.3 0.4 0.4 0.5 1.2 1.2 1.1 1.1
Provision coverage (%) 72.6 72.7 70.1 70.4 62.6 58.6 58.4 56.3 43.0 43.3 49.5 52.5
Loan-loss provisions (%) 0.8 0.6 0.6 0.8 0.7 0.8 1.0 0.8 1.8 0.5 1.0 1.4
Slippages (%) 0.9 1.1 1.5 1.4 1.6 1.2 1.6 2.9 3.6 1.6 2.3 3.9
Wholesale (%) 0.7 0.7 1.1 0.6 1.2 1.0 1.8 2.5 5.7 0.8 2.2 5.8
Retail (%) 2.0 1.7 1.6 1.9 1.8 1.9 1.9 2.3 2.4 2.5 2.6 2.8
 Well capitalized to handle stress in corporate loans. A simplified back-of-the-

envelope calculation suggests that IIB has the ability to absorb ~7% of loans or ~15%
of the corporate loans as stress in the near term and not have any regulatory impact
from a capital adequacy perspective (see Exhibit 12). We must note that the balance
sheet would immediately need a recapitalization to get the bank above the required
comfort levels but it nevertheless should give comfort that a comparison with weaker
and most stressed banks that have hit the headlines in recent times is not necessarily
warranted.
Exhibit 12: The bank has the ability to absorb ~7% of loans or ~15% of corporate loans as NPLs
Charge-off calculation of the loans based on current CAR, March fiscal year-ends, 3QFY20
Current Minimum CAR

(Rs bn) (%) (Rs bn) (%)
Risk weighted assets 2,459 2,352
CET-1 334 13.6 228 9.7
AT-1 35 1.4 33 1.4
Tier-1 369 15.0 260 11.1
Tier-2 10 0.4 10 0.4
Total CAR 379 15.4 270 11.5
Calcuation of net worth mark down

Difference in CET-1 (Rs bn) 106
Tax rate (%) 25
Pre-tax adjusted net worth (Rs bn) 142
Total loans (Rs bn) 2,074
(% of mark down possible) 6.8
Corporate loans 953
(% of mark down possible) 14.9

IndusInd Bank Banks
Exhibit 13: We are building higher slippages in the short term Exhibit 14: Gross NPLs could rise sharply in the short term
Credit cost and slippages, March fiscal year-ends, 2007-22 (%) Gross and net NPL ratio, March fiscal year-ends, 2007-22 (%)
Credit cost (RHS) Slippage ratio (RHS) GNPL ratio (LHS) NNPL ratio (LHS) PCR (RHS)
4.0 4.0 4.0 100
3.2 3.2 3.2 80
2.4 2.4 2.4 60
1.6 1.6 1.6 40
0.8 0.8
0.8 20
0.0 0.0
- 0
2019E
2020E
2021E
2022E
2007
2008
2009
2010
2011
2012
2013
2015
2016
2018
2014
2017
2019E
2020E
2021E
2022E
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
 Acquisition strategies have been primarily to strengthen assets than liabilities.

Most of the acquisitions made by IIB have been focused on the assets side resulting in
slower-than-expected improvement in liabilities. The good part was that these
acquisitions were not major acquisitions as was mostly towards building a more
diversified revenue streams on the asset side. We highlight some of them in this
section and highlight that the bank’s planning cycle that they have shared with
investors also rhymes something similar. It would be useful if we would look a greater
emphasis in making the liabilities side lot more granular than what we are seeing
today.
a) Bharat Financial Services. We turned negative on the bank when it made this
announcement and held the negative rating for a while as the riskiness to the book
had increased in our view. MFI presents unique challenges as the risk is built over a
period in time. The only good development is the portfolio is lot more diversified
and risks can be managed if the issues are restricted to a few districts. Since the
acquisition, we have had issues in Odisha (cyclone), Karnataka and as we write in
North East. The bank has been able to manage this portfolio, for now. In short, we
could still argue that the business risk still exists but at a much lower level than
where it has been in the past decade.
b) Credit card business has not been a stellar performer. Despite acquiring the
credit cards business of Deutsche Bank in FY2012, IIB has not had significant
success as measured by the scale of operations (see exhibit 15). However, the good
part is that it has not focused on building a lending book around this product as
measured by the quality of spends or the loans/spends in its portfolio.

Banks IndusInd Bank
Exhibit 15: IndusInd Bank has not been a major player in the cards business
Credit card outstanding by number of cards, March fiscal year-ends, 2013-2020 (%)
Foreign players HDFCB SBI ICICI Axis RBL IndusInd Kotak Others
100 6 7 7 8 9 8 8 8
2
1 2 3 3 4 4 4
6 1 2
0 2
1 3 2 2 2
7 8 2
1 2 4 5
10 11
80 15 12 13
17 12
16 15
14 13
14 14 16
60 15 15 15
15 17
18 18
40 35 27 28 30 29 29 27 25
20
22 25 22 19 17 15 13 12
-
2013 2014 2015 2016 2017 2018 2019 10MFY20
Source: Company, RBI, Kotak Institutional Equities
c) Diamond financing book from ABN Amro. In FY2016, the bank decided to
acquire the book with a loan size of Rs45 bn. Since acquisition, the proportion of
the loan book in this sector has come off meaningfully as seen in the exhibit 16.
While the bank has maintained that it has not seen any NPL in this book, it
nevertheless has been a risky one given the challenges that the sector has seen
especially post the major default of few large players (Winsome Diamonds, Nirav
Modi group and Gitanjali group).
Exhibit 16: The bank’s exposure to diamond financing book has declined since acquisition
consistently
Share of gems and jewelry to overall loans, March fiscal year-ends, 2012-3QFY20 (%)
7.0
6.0 6.1
5.6
5.2
Acquisition of the book
4.2
3.9
2.8 3.3
2.4
1.9
1.4 1.6
1.4
-
2012 2013 2014 2015 2016 2017 2018 2019 3QFY20
 Liability franchise improvement has not been stellar. Over the past few years,
while IIB has repeated discussed an improvement in its liability franchise it is not
reflecting as much in the bank’s funding cost. Exhibit 17 shows that the bank has a
differential of ~100-120bps as compared to frontline peers. The differential reduced
sharply in FY2016-18 but the sharp increase in FY2019 looks like the contribution of
wholesale deposits is still quite high. This is despite the bank having reasonably high
CASA ratio

IndusInd Bank Banks
Exhibit 17 : The bank has ~100-120bps differential in cost of funds as compared to frontline peers
Difference in cost of funds between IIB and frontline banks, March fiscal year-ends, 2009-22 (%)
2.5
2.1 2.1
2.0
1.8
1.5 1.6
1.5 1.4
1.3 1.3 1.3
1.0 1.0
0.9 0.9
1.0 0.8
0.5
-
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E
Notes:
(a) We have looked at a simple average of difference in cost of funds (deposits and borrowings) with the
four frontline banks (SBI, HDFC Bank, ICICI Bank and Axis Bank)
Exhibit 18: Marginal increase in share of SA to 30% of deposits

Break-up of CASA across private banks, March fiscal year-ends, 2011-3QFY20 (%)
2011 2012 2013 2014 2015 2016 2017 2018 2019 3QFY20
IndusInd Bank
Current 18.3 16.2 16.3 16.2 16.7 16.6 15.5 13.7 15.2 12.4
Savings 8.9 11.1 13.0 16.4 17.5 18.5 21.4 30.3 28.0 29.9
HDFC Bank
Current 22.3 18.4 17.7 16.7 16.3 16.2 18.0 15.1 15.4 13.5
Savings 30.4 30.0 29.8 28.1 27.7 27.1 30.1 28.4 26.9 26.0
ICICI Bank
Current 15.4 13.7 12.6 13.0 13.7 14.0 15.3 15.9 14.7 14.1
Savings 29.6 29.8 29.3 29.9 31.8 31.9 35.1 35.8 34.9 32.9
Axis Bank
Current 19.5 18.1 19.1 17.3 17.4 17.8 21.0 21.1 16.3 13.2
Savings 21.6 23.5 25.2 27.7 27.4 29.6 30.4 32.7 28.1 27.9
Yes Bank
Current 8.6 9.9 10.0 9.5 9.3 9.8 13.4 14.4 12.5 14.1
Savings 1.8 5.1 9.0 12.6 13.8 18.3 22.9 22.1 20.5 18.0

Banks IndusInd Bank
Exhibit 19: Liability franchise lags frontline peers in terms of cost of deposits
Cost of deposits, CASA ratio across banks, March fiscal year-ends, 2014-19
2014 2015 2016 2017 2018 2019

Cost of Deposits
AXSB 5.8 5.7 5.4 5.1 4.4 4.7
HDFCB 5.7 5.7 5.9 5.3 4.6 4.8
ICICIBC 5.7 5.9 5.5 5.0 4.5 4.4
KMB 6.9 6.8 7.4 5.6 5.1 5.3
SBIN 6.0 6.0 6.0 5.6 5.7 5.0
IIB 7.6 7.7 6.8 6.3 5.8 6.1
RBK 7.7 7.6 7.3 6.7 6.0 6.3
FB 7.2 7.1 6.7 6.1 5.5 5.5
CASA ratio
AXSB 45.0 44.8 47.3 51.4 53.8 44.4
HDFCB 44.8 44.0 43.2 48.0 43.5 42.4
ICICIBC 42.9 45.5 45.8 50.4 51.7 49.6
KMB 31.9 36.4 38.1 44.0 50.8 52.5
SBIN 42.9 41.3 42.6 44.6 44.5 44.6
IIB 32.5 34.1 35.2 36.9 44.0 43.1
RBK 20.4 18.5 18.6 22.0 24.3 25.0
FB 31.2 30.4 32.9 32.8 33.7 32.4
 Fee income contribution from investment banking needs to reduce. One of the
other challenges that we have faced from investors is the contribution of investment
banking fees to the overall fee income. In our view, it would be useful if the bank were
to temporarily reduce focus on this business even if it means lower profits to the
business. We are building in fee income to grow 11% CAGR in the medium term to
reflect the steep decline in contribution from investment banking.
Exhibit 20: High fee income contribution from investment banking needs to reduce to build comfort
Contribution of fee income across segments, March fiscal year-ends, 2012-22 (%)
Distribution (Banca) Processing Fees & other charges FX – Client

Investment Banking Trade and remittances Gen. Bkg. / Other Income
100
80
7 3
9 15 17 17 18 17 16
12 15
60
40
20
-
2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E

IndusInd Bank Banks
 Slower loan growth and more granularity in corporate loans should ease
concerns. One of the key advantages of IIB has been its retail asset book (see exhibit
21) which has a higher contribution as well as a relatively well diversified across
product segments. In our view, this is an advantage for the bank in the current down
cycle. We believe that the bank should focus on two broad themes: (a) Slower loan
growth. Banking opportunity is reasonably large in India and especially with a large
share of public banks where the scope for market share still being reasonably high. In
this backdrop, it would be useful if banks look to build a strategy focused on building
a loan portfolio that can withstand slowdown rather than gaining market share
consistently. The reason for this approach is that cycles have shown the banks that
grow aggressively are more susceptible to weak credit decisions during strong
economic growth or high interest rate environment which at hindsight, should have
been avoided. (b) Look to build a more granular and diversified exposure. The
overarching theme that keeps banks from serious correction in multiples would be to
have a reasonably well diversified and granular portfolio. Some of the recent
exposures, such as the exposure towards a single telecom company that is under
stress, has resulted in a higher risk perception of the bank and thus could have been
avoided. We look forward to the guidance from the new management as there is an
urgent need to build confidence back. Planning cycles (see exhibit 25) needs lot more
focus on this issue.
Exhibit 21: Share of retail loans (including MFI) share at ~50%

Break-up of loans, March fiscal year-ends, 2011-3QFY20 (%)
2011 2012 2013 2014 2015 2016 2017 2018 2019 1QFY20 2QFY20 3QFY20
Retail advances 44.4 49.2 50.5 45.0 41.3 41.3 40.3 39.5 39.0 48.0 48.7 48.6
Vehicle financing 43.5 46.9 46.4 39.2 33.8 32.1 30.2 29.3 28.6 28.4 28.6 28.0
Commercial vehicles 21.8 23.6 22.5 17.4 15.4 15.9 15.4 15.6 15.0 14.8 14.8 14.2
Utility vehicles 3.2 3.5 4.0 3.7 2.9 2.3 2.1 2.0 1.9 2.0 2.0 2.1
Cars 3.2 4.0 4.6 4.8 4.6 4.4 4.1 3.7 3.5 3.5 3.6 3.5
Two and three wheelers 9.7 9.7 9.1 8.1 6.8 5.8 5.0 4.2 4.1 4.1 4.2 4.3
Equipment 5.7 6.1 6.1 5.2 4.1 3.7 3.6 3.8 4.1 4.1 4.1 4.0
Home loans/LAP/PL 0.9 1.6 3.4 4.9 6.5 7.8 8.5 8.4 8.1 8.1 8.4 8.3
Credit cards — 0.7 0.8 0.8 1.0 1.4 1.5 1.9 2.4 2.0 2.1 2.2
MFI loans - - - - - 9.4 9.6 10.0
Corporate advances 55.6 50.8 49.5 55.0 58.7 58.7 59.7 60.5 61.0 52.0 51.3 51.4
Large corporates 26.1 27.1 26.7 27.4 29.0 28.6 27.8 30.6 28.0 25.9 24.5 24.7
Small corporates 19.3 15.2 14.6 17.6 16.7 18.8 19.6 17.7 17.9 18.2 18.9 19.1
Others 10.1 8.5 8.1 10.1 6.2 4.1 5.0 5.6 9.1 2.2 2.1 2.1
Business banking 6.8 7.2 7.3 6.6 6.1 5.7 5.8 5.5

Banks IndusInd Bank
Exhibit 22: NBFC (ex HFC) exposure down ~50bps qoq to 3.2%; exposure to lease rentals up ~60bps qoq to 4.4%
Break-up of the corporate segment (as a percentage of overall loan book), March fiscal year-ends, 2011-3QFY20 (%)
2011 2012 2013 2014 2015 2016 2017 2018 2019 1QFY20 2QFY20 3QFY20
Gems and Jewellery 1.4 1.9 1.6 2.4 6.0 6.1 5.2 3.9 3.5 3.7 3.3
Power generation 1.2 1.9 2.3 1.9 1.9 1.2 NA 4.1 3.4 2.5 2.9 3.1
Microfinance 2.5 2.8 7.3 9.0 10.0 10.0
Real Estate Developers 0.6 1.2 1.8 2.4 3.0 2.0 2.8 3.9 3.9 3.8 3.6
Services 2.3 2.2 2.7 2.0 2.0 1.8
Lease Rental 1.2 2.4 3.0 4.3 3.9 4.6 5.1 3.0 2.5 3.2 3.8 4.4
Constn related to infra.- EPC 2.8 2.5 1.9 1.5 2.4 1.6 1.7 2.8 1.8 2.0 NA NA
Steel 1.1 1.3 1.4 1.4 1.4 1.7 1.8 1.6 2.5 2.5 2.5 2.5
Petroleum and products 1.1 0.9 1.2 NA NA NA NA
Food beverages and processing 1.6 NA NA 1.4 1.3 1.3 NA 1.1
Telecom 2.0 3.1 3.5 NA 1.2 1.3 1.3 1.2
Roads/other infra 1.9 1.9 NA 1.9
Power distribution NA NA NA NA NA 3.1
NBFCs (other than HFCs/HFIs) 6.8 5.4 3.3 2.6 2.3 2.2 1.3 NA 3.3 3.0 3.7 3.2
HFCs 1.4 1.5 1.2
Pharma 3.5 3.3 1.9 1.2 NA 0.9 NA NA NA NA NA NA
Paper 0.9 NA NA NA NA NA NA NA NA
Food credit 1.3 1.6 NA NA 1.0 NA NA NA NA
Plastic & Plastic Products 1.2 NA NA NA NA NA
Auto ancilliaries NA NA NA NA NA
Hospital and medical services NA NA NA NA NA
Contract construction-civil 1.0 1.1 NA NA NA NA
Media, entertainment and adv. 1.2 NA NA 1.0 NA NA
Power transmission 0.9 NA NA NA NA
Engineering and machinery 0.8 NA NA NA NA
Other Industry 32.8 31.4 37.1 38.7 33.1 31.2 30.9 24.3 16.9 20.4 18.7
Exhibit 23: Real estate exposure has dropped to ~6% from ~11% in FY2017
Break-up of exposure in the real estate sector, March fiscal year-ends, 2010-2019 (Rs mn)
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Real estate
Developers 1,310 4,360 1,360 5,160 16,429 33,675 42,424 25,017 48,837 86,102
Lease rental discounting 2,110 3,100 8,280 13,400 23,409 26,935 41,045 57,486 43,618 46,739
Lease rental discounting - others 7,150 10,762 11,806 10,042 8,664 7,748 7,096
Housing finance companies 3,610 3,710 1,500 1,210 400 5,083 12,831 14,908 1,901 20,690
Loans against property 940 2,532 37,409 56,917 73,386 3,741 1,728
Total real estate 7,030 12,110 11,140 26,920 53,532 114,908 163,259 179,461 105,845 162,355
Trading
Wholesale 11,500 16,140 19,916 27,525 40,854 55,332 60,974 60,839
Retail 14,130 19,650 18,233 23,478 26,912 33,080 42,622 44,659
Total exposure to trading — — 25,630 35,790 38,149 51,003 67,766 88,412 103,596 105,498
Total exposure 335,810 415,320 540,530 670,310 796,426 974,887 1,232,022 1,652,866 1,993,382 2,559,947
Consumer finance division 82,660 116,120 169,900 220,590 241,880 240,295 281,347 342,597 501,972 622,074
Others 253,150 299,200 370,630 449,720 554,546 734,592 950,675 1,310,269 1,491,410 1,937,873
Real estate to total exposure (%) 2.1 2.9 2.1 4.0 6.7 11.8 13.3 10.9 5.3 6.3
Real estate to exposure ex consumer (%) 2.8 4.0 3.0 6.0 9.7 15.6 17.2 13.7 7.1 8.4
Trading to total exposure (%) 4.7 5.3 4.8 5.2 5.5 5.3 5.2 4.1
Real estate to exposure ex consumer (%) 6.9 8.0 6.9 6.9 7.1 6.7 6.9 5.4
Loans and debentures -reported in balance sheet
Loans 207,042 263,587 353,164 446,416 555,386 691,406 893,859 1,150,976 1,480,348 1,924,088
Consumer finance division 83,010 116,190 172,370 224,010 247,850 284,120 365,490 455,290 572,400 726,860
Debenture and bonds 18,266 33,880 23,773 47,335 47,394 33,181 69,333 25,655 49,424 51,693
Total 225,308 297,467 376,937 493,752 602,780 724,587 963,192 1,176,631 1,529,771 1,975,781
Loans and debentures to total exposure (%) 67.1 71.6 69.7 73.7 75.7 74.3 78.2 71.2 76.7 77.2
Loans and debentures to exposure, ex consumer (%) 56.2 60.6 55.2 60.0 64.0 60.0 62.9 55.1 64.2 64.4

IndusInd Bank Banks
Exhibit 24: More emphasis on building asset side revenues probably hurt the bank lot more
20 14 -17
20 0 8 20 0 8 -11 20 11-14 N e w pro duc ts P a y me nt s o lutio ns 20 17-20
SME Current Current Current WCTL for agri/SME Transaction banking

Trade/FX Trade/FX Commercial cards Mobile led solution
LAP Cheque protect Payment gateways
Facilitation of
Loan against card payments through
BBG receivables bin sponsorship
Business
Loans against
Retail Savings Savings Savings securities Mobile/digital wallet
Life Life Life Aadhar led direct
insurance insurance insurance Kisan credit card benefit transfers
Solutions/alliances
General General General for domestic
Insurance Insurance Insurance remittances
Payment solutions
for international
Investments Investments Investments remittances
Credit cards Credit cards
Home Home
Retail FX Retail FX
Gold loans
Personal
Rebalancing the loan book Rebalancing the loan book
Rural and MFI Rural and MFI
Focus on productivity Focus on productivity
Digitisation of business Digitisation of business
Enriching client experience Enriching client experience
Internal collaboration and Internal collaboration and
cross-sell cross-sell
Source: Kotak Institutional Equities , Company, Kotak Institutional Equities

Banks IndusInd Bank
Exhibit 25: IndusInd Bank - key growth rates and financial ratios
March fiscal year-ends, 2017-2022E (%)
2017 2018 2019 2020E 2021E 2022E

Growth rates (%)
Net loan 27.9 28.2 28.6 10.4 8.4 15.2
Customer assets 28.1 29.3 28.3 9.9 7.9 14.7
Investments excl. CPs and debentures 24.9 28.6 20.0 71.1 56.4 35.8
Net fixed and leased assets 6.4 0.3 27.7 23.5 4.8 4.5
Cash and bank balance 84.2 (29.1) 11.9 (3.5) 21.5 21.5
Total assets 25.0 24.1 25.4 20.1 20.9 21.6
Deposits 36.1 19.8 28.5 22.8 27.4 26.2
Current 26.7 6.3 42.0 26.0 30.6 29.3
Savings 56.8 69.7 18.7 24.9 29.6 28.4
Fixed 32.6 6.2 30.5 20.8 25.3 24.1
Net interest income 34.2 23.7 18.0 32.6 14.9 20.8
Loan loss provisions 71.1 0.4 178.2 40.4 82.2 (42.4)
Total other income 26.5 13.9 18.9 18.6 1.1 13.5
Net fee income 29.7 17.8 19.4 (1.0) 5.0 18.0
Net exchange gains 9.9 0.2 47.6 1.0 16.0 16.0
Operating expenses 30.3 16.9 14.5 28.8 19.5 23.8
Employee expenses 23.1 17.1 4.1 23.0 15.2 14.7
Key ratios (%)
Yield on average earning assets 9.6 9.2 9.5 10.0 9.3 9.3
Yield on average loans 11.4 10.6 11.0 11.8 11.2 11.5
Yield on average investments 7.0 7.1 6.8 6.6 6.7 6.7
Average cost of funds 6.2 5.8 6.2 6.4 5.9 5.8
Interest on deposits 6.3 5.8 6.1 6.1 5.9 5.8
Difference 3.4 3.4 3.3 3.6 3.5 3.5
Net interest income/earning assets 4.0 4.0 3.8 4.1 3.9 3.9
New provisions/average net loans 1.0 0.8 1.8 2.1 3.5 1.8
Total provisions/gross loans 1.8 2.1 3.1 4.7 7.3 7.9
Fee income to total income 28.3 27.9 28.1 21.9 20.9 20.9
Net trading income to PBT 5.6 4.4 (1.2) 15.5 18.3 7.6
Exchange income to PBT 21.1 16.8 27.3 23.7 58.3 25.4
Operating expenses/total income 46.7 45.7 44.2 44.8 48.7 51.0
Operating expenses/assets 3.0 2.8 2.6 2.7 2.7 2.7
Tax rate 34.2 34.2 33.7 25.0 25.6 25.6
Dividend payout ratio 12.5 11.7 13.7 13.7 13.7 13.7
Share of deposits (%)
Current 15.5 15.5 15.9 16.3 16.7 17.1
Fixed 63.1 59.4 58.5 57.6 56.7 55.8
Savings 21.4 25.1 25.6 26.1 26.6 27.1
Loans-to-deposit ratio 89.3 95.6 95.7 86.0 73.2 66.8
Equity/assets (EoY) 11.6 10.8 9.6 11.2 9.7 8.9
Asset quality trends (%)
Gross NPL 0.9 1.2 2.1 2.3 3.5 3.5
Net NPL 0.4 0.5 1.2 1.2 1.9 1.7
Slippages 1.6 2.9 3.6 2.7 3.5 2.2
Provision coverage 58.4 56.3 43.0 51.2 50.7 56.6
Dupont analysis (%)
Net interest income 3.8 3.7 3.5 3.8 3.7 3.6
Loan loss provisions 0.7 0.5 1.2 1.3 2.0 1.0
Net other income 2.6 2.4 2.3 2.2 1.8 1.7
Operating expenses 3.0 2.8 2.6 2.8 2.7 2.8
Invt. depreciation — — — — — —
(1- tax rate) 65.8 65.8 66.3 71.7 74.4 74.4
RoA 1.8 1.8 1.3 1.4 0.6 1.2
Average assets/average equity 8.8 9.5 10.5 9.8 9.7 10.9
RoE 15.7 17.1 13.8 13.4 5.3 13.2

IndusInd Bank Banks
Exhibit 26: IndusInd Bank – income statement and balance sheet

March fiscal year-ends, 2017-2022E (Rs mn)
2017 2018 2019 2020E 2021E 2022E

Income statement
Total interest income 144,057 172,807 222,612 285,829 323,511 391,436
Loans 114,791 136,999 182,567 230,744 240,073 275,688
Investments 24,669 30,744 36,773 50,609 78,567 109,828
Cash and deposits 4,597 5,065 3,271 4,476 4,871 5,920
Total interest expense 83,431 97,833 134,150 168,563 188,777 228,729
Deposits from customers 69,313 80,460 106,090 133,330 159,840 199,276
Net interest income 60,626 74,974 88,462 117,267 134,734 162,707
Loan loss provisions 10,506 10,546 29,342 41,181 75,045 43,195
Net interest income (after prov.) 50,120 64,429 59,120 76,086 59,689 119,512
Other income 41,715 47,501 56,467 66,954 67,715 76,859
Net fee income 28,953 34,119 40,730 40,322 42,338 49,959
Net capital gains 2,769 3,638 1,151 9,000 5,000 5,500
Net exchange gains 9,195 9,210 13,593 13,729 15,926 18,474
Operating expenses 47,831 55,914 64,047 82,490 98,596 122,067
Employee expenses 15,210 17,807 18,535 22,802 26,267 30,116
Depreciation on investments 314 1,209 1,735 - - -
Other provisions 94 - - 2,500 1,500 1,500
Pretax income 43,597 54,807 49,806 58,050 27,308 72,804
Tax provisions 14,918 18,747 16,795 16,443 6,991 18,638
Net profit 28,679 36,060 33,011 41,607 20,317 54,166
Growth (%) 25.4 25.7 (8.5) 26.0 (51.2) 166.6
PBT - Treasury + Provisions 51,741 62,923 79,731 92,731 98,853 111,999
Growth (%) 29.5 21.6 26.7 16.3 6.6 13.3
Balance sheet
Cash and bank balance 186,283 132,159 147,834 142,733 173,475 210,828
Cash 11,355 10,692 9,645 10,127 10,633 11,165
Balance with RBI 66,132 98,932 89,967 110,435 140,671 177,493
Balance with banks 26,578 9,287 26,052 22,170 22,170 22,170
Net value of investments 367,036 500,767 592,662 934,588 1,401,104 1,863,931
Government and other securities 314,523 403,660 486,775 833,991 1,305,268 1,772,380
Shares 1,612 2,919 1,294 1,294 1,294 1,294
Debentures and bonds 25,246 44,764 52,900 47,610 42,849 38,564
Net loans and advances 1,130,805 1,449,537 1,863,935 2,058,104 2,230,166 2,569,243
Fixed assets 13,352 13,388 17,100 21,111 22,130 23,125
Net owned assets 13,352 13,388 17,100 21,111 22,130 23,125
Other assets 89,023 120,412 156,663 180,163 207,187 238,266
Total assets 1,786,499 2,216,262 2,778,194 3,336,698 4,034,062 4,905,393
Deposits 1,265,722 1,516,392 1,948,678 2,392,016 3,046,924 3,844,484
Borrowings and bills payable 230,540 389,567 478,948 485,892 511,369 539,874
Other liabilities 83,760 71,886 83,708 83,708 83,708 83,708
Total liabilities 1,580,023 1,977,845 2,511,333 2,961,616 3,642,001 4,468,066
Paid-up capital 5,981 6,002 6,027 7,121 7,121 7,121
Reserves and surplus 200,495 232,414 260,833 367,961 384,940 430,206
Total shareholders' equity 206,476 238,416 266,860 375,082 392,061 437,327

NEUTRAL
Automobiles & Components
India MARCH 25, 2020
UPDATE
BSE-30: 28,536
Learning from impact of SARS on consumer behavior. One of the most significant
impacts of SARS was substantial decline in usage of public transport and cab
aggregator services in China. Chinese passenger car sales increased by 79% yoy in
CY2003 led by (1) consumer preference towards private ownership of vehicles and (2)
steep cut in prices due to increase in the competitive intensity. We believe there could
be similar shift in consumer preference once the coronavirus situation subsides in India
over the medium term and once economic growth normalizes.
Implication of SARS on the Chinese economy
SARS, a viral respiratory disease had surfaced in China from November 2002 and lasted till July
2003. SARS virus spread was majorly confined to the Chinese region and Hong Kong; however,
Covid-19 has spread all across the globe, resulting in more fatalities and more economic and
social repercussions than the SARS virus. While most of the immediate impact of SARS was seen
only on the Asian region, the outbreak of Covid-19 holds the potential of affecting most
countries across the globe. Disruptions in economic activity during the SARS outbreak dragged
down China’s growth from 11.1% yoy in 1QCY03 to 9.1% yoy in 2QCY03 (Exhibit 1).
However, we believe drag on economic growth would be much more severe in the current
scenario accompanied by drastic change in consumer behavior and preferences.
SARS brought windfall to China’s auto market
In CY2003, China’s auto market grew by ~79% yoy led by (1) purchasing spree of passenger
cars in disease-hit regions due to fear of being infected with SARS while using public transport
or ride-sharing services and (2) sharp cut in prices due to increase in competition and price wars
led by entry of foreign players into the Chinese market (Exhibit 2). In CY2001 (+54% yoy),
China’s auto market saw a huge uptick in demand led by China’s entry to the World Trade
Organization (WTO) resulting in (1) local content rules and import quota and tariffs being
phased out and (2) entry of foreign players into the Chinese market resulting in price
competition. It is difficult to exactly quantify the surge in demand due to SARs impact; however,
consumer preference for private passenger cars and two-wheelers (including bicycles) for daily
commute did see a spike. As public transport and ride-sharing services became associated with
disease and danger, the consumers began to rush towards owning cars and two-wheelers in
big cities once the virus spread subsided.
India’s auto sector might benefit led by structural shift in consumer preference
With striking similarities between the characteristics of SARS and coronavirus, we believe the
current situation might result in consumers preferring ownership of private vehicles over public
transport (such as buses and trains) and cab aggregators (such as Ola and Uber) for daily
commute. Currently, we expect passenger vehicle volumes to increase by 6% yoy in FY2021E
after double-digit yoy decline in FY2020E and single-digit volume decline yoy in the two-
Hitesh Goel
wheeler segment in FY2021E led by steep price increase due to BS-VI transition. With the
government announcing a 21-day lockdown across the country, there will be negative impact
on sales of passenger vehicle and two-wheeler segments in the near term. However, we believe Rishi Vora
once the situation stabilizes after a few months, there might be some surge in passenger vehicle
and two-wheeler demand led by (1) paradigm shift in the consumer preferences for private
ownership of vehicles, (2) possible tailwinds due to expectations of fiscal expansion to combat
the economic slowdown and (3) pent-up demand converting into sales led by higher discounts.
As a result, we are currently keeping our volume numbers unchanged for passenger vehicle and
2W segments. kspcg.research@kotak.com
Contact: +91 22 6218 6427
Automobiles & Components India
Exhibit 1: Chinese economic growth was impacted due to SARS in 2QCY03

Timeline of impact of SARS in China, calendar year-ends, 2002-03
Source: National Bureau of Statistics of China, World Health Organization, Kotak Institutional Equities
Exhibit 2: Chinese passenger car sales see a huge spike in demand in 2003 led by SARS impact and sharp reduction in prices
Passenger car sales in China, calendar year-ends, 2001-07 (‘000 units, %)
2001 2002 2003 2004 2005 2006 2007

Passenger car sales ('000 units) 727 1,120 2,000 2,358 3,082 4,016 4,967
Yoy change (%) 54.0 78.6 17.9 30.7 30.3 23.7
Source: CAAM, Kotak Institutional Equities

Kotak Institutional Equities: Valuation summary of KIE Universe stocks
India Daily Summary - March 26, 2020

Fair O/S ADVT
Price (Rs) Value Upside Mkt cap. shares EPS (Rs) EPS growth (%) P/E (X) EV/EBITDA (X) P/B (X) RoE (%) Dividend yield (%) 3mo
KOTAK INSTITUTIONAL EQUITIES RESEARCH
Company Rating 25-Mar-20 (Rs) (%) (Rs bn) (US$ bn) (mn) 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E (US$ mn)
Automobiles & Components
Amara Raja Batteries ADD 409 780 91 70 0.9 171 40 44 50 39.9 11.8 13.3 10 9.2 8.2 5.8 4.9 4.0 1.8 1.6 1.4 18.9 18.5 18.2 2.4 2.7 3.1 6.9
Apollo Tyres ADD 81 180 123 46 0.6 572 10.2 10.3 14.9 (29.0) 1.3 44.4 7.9 7.8 5.4 5.3 4.9 3.7 0.4 0.4 0.4 5.7 5.6 7.7 3.7 3.7 3.7 6.7
Ashok Leyland BUY 34 100 190 101 1.3 2,936 2.1 2.3 6.4 (69.8) 9.4 178.5 16.4 15.0 5.4 8.2 6.8 3.1 1.2 1.1 1.0 7.3 7.6 19.2 1.8 2.0 5.6 23
Bajaj Auto BUY 1,947 3,100 59 563 7 289 172 170 200 12.3 (1.2) 17.5 11.3 11.5 9.7 7.4 6.9 5.3 2.5 2.2 1.9 22 20 21 6.0 3.5 4.1 22
Balkrishna Industries SELL 852 1,030 21 165 2.2 193 50 53 59 25.6 6.0 11.4 17.1 16.1 14.5 11.2 9.2 7.7 3.2 2.9 2.6 19.6 18.7 18.7 2.3 2.6 2.8 13.0
Bharat Forge SELL 254 365 44 118 1.5 466 13 16 22 (41.6) 21.6 40.4 19.6 16.1 11.5 10.9 9.5 7.4 2.1 1.9 1.7 10.9 12.4 15.8 2.2 2.4 2.4 9.6
CEAT REDUCE 622 960 54 25 0.3 40 59 63 81 (4.9) 8.1 28.8 10.6 9.8 7.6 6.9 6.6 5.6 0.9 0.8 0.7 8.3 8.4 10.0 1.9 1.9 1.9 1.4
Eicher Motors ADD 14,517 19,500 34 396 5.2 27 770 747 979 (5.6) (2.9) 31.0 18.9 19.4 14.8 14.1 13.3 10.5 4.5 3.8 3.2 26 21 23 0.2 — — 45
Endurance Technologies BUY 663 850 28 93 1.2 141 40 40 50 11.1 (1.6) 26.3 16 16.7 13.2 8.0 7.4 5.8 3.1 2.7 2.3 18.6 15.9 17.2 0.9 1.0 1.3 0.5
Escorts BUY 647 1,080 67 57 1.0 89 54 63 75 (1.6) 16.9 19.7 12.1 10.3 8.6 8.2 6.8 5.2 1.7 1.5 1.3 13.9 14.3 15.0 1.2 1.5 1.7 33
Exide Industries SELL 132 180 36 112 1.5 850 10.3 10.2 10.9 14.1 (0.7) 6.7 12.8 12.9 12.1 7.4 6.8 6.0 1.7 1.6 1.5 14.1 12.9 12.7 2.6 3.0 3.0 6.3
Hero Motocorp ADD 1,668 2,150 29 333 4.4 200 167 141 166 (1.2) (15.7) 17.4 10.0 11.8 10.1 5.9 6.7 5.4 2.3 2.2 2.0 25 18.9 21 5.5 5.5 6.0 28
Mahindra CIE Automotive ADD 63 150 139 24 0.3 378 9.4 11.0 12.7 (34.9) 16.1 15.7 6.7 5.7 5.0 3.7 3.4 2.5 0.5 0.5 0.4 8.0 8.6 9.1 — — — 0.4
Mahindra & Mahindra BUY 278 815 193 345 4.5 1,138 39 39 45 (18.0) 0.7 15.2 7.1 7.1 6.1 4.5 4.4 3.7 0.8 0.7 0.7 12.0 10.9 11.5 2.8 2.8 3.3 26
Maruti Suzuki SELL 5,006 5,800 16 1,512 19.8 302 203 234 296 (18.2) 14.9 27.0 25 21 17 12.8 10.1 7.3 3.0 2.7 2.4 12.7 13.3 15.2 1.0 1.2 1.5 81
Motherson Sumi Systems SELL 61 105 73 191 2.5 3,158 4.2 5.9 7.0 (16.9) 38.3 18.9 14.3 10.3 8.7 5.3 3.8 3.0 1.6 1.4 1.2 11.7 14.2 14.4 2.1 2.4 2.9 18.2
MRF SELL 56,579 62,000 10 240 3.1 4 2,523 2,915 3,674 (5.4) 15.5 26.0 22 19.4 15.4 9.1 8.3 6.5 2.0 1.8 1.6 9.4 9.9 11.2 0.1 0.1 0.1 8.5
Schaeffler India SELL 3,780 3,900 3 118 1.5 31 118 134 171 (18.3) 14.0 27.3 32 28 22 17.3 15.7 12.3 4.0 3.5 3.1 13.0 13.3 14.8 — — — 0.4
SKF REDUCE 1,352 1,950 44 67 0.9 49 66 79 95 0.5 20.4 19.4 21 17 14 14.2 11.6 9.2 3.4 2.9 2.5 16.7 17.2 17.6 0.9 0.9 1.1 0.5
Tata Motors BUY 70 215 206 253 3.0 3,598 (3.4) 7.7 18.1 36.3 325.1 134.5 NM 9.1 3.9 3.2 2.5 2.1 0.4 0.4 0.4 NM 4.5 9.7 — — — 107
Timken SELL 720 825 15 54 0.7 75 31 32 39 57.4 3.8 20.9 23 22 18 14.4 12.5 10.0 3.5 3.0 2.6 16.1 14.4 15.1 0.1 0.1 0.2 0.7
TVS Motor SELL 333 350 5 158 2.1 475 14.4 13.8 21.8 1.8 (3.8) 58.0 23 24 15 12.0 11.7 8.4 4.2 3.7 3.2 19.1 16.4 23 1.3 1.0 1.6 9.9
Varroc Engineering BUY 141 540 282 19 0.2 135 15 29 46 (54.0) 88.2 58.7 9.2 4.9 3.1 4.1 2.9 1.9 0.6 0.5 0.5 6.4 10.9 15.0 — — — 0.4
Automobiles & Components Neutral 5,063 66.3 (10.9) 19.8 34.8 16.9 14.1 10.5 6.6 5.5 4.3 1.8 1.6 1.4 10.4 11.2 13.6 2.0 1.8 2.1 449
Banks
AU Small Finance Bank SELL 473 625 32 144 1.9 302 24.4 28.5 36.2 86.7 17.0 27.0 19 17 13 — — — 3.2 2.7 2.2 19.0 17.1 18.2 0.0 — — 12.8
Axis Bank REDUCE 327 740 126 922 12.1 2,806 17.5 49 62 (3.9) 183.2 25.1 19 6.6 5.3 — — — 1.2 1.0 0.9 6.4 15.1 16.6 0.5 2.3 2.8 102
Bandhan Bank REDUCE 155 540 249 249 3.3 1,610 20.3 25.4 31.2 24.0 25.2 23.0 7.6 6.1 5.0 — — — 1.6 1.3 1.0 23.9 23 22 0.0 0.0 0.0 22
Bank of Baroda ADD 58 105 80 269 3.5 4,582 0.8 23.4 27 (50.0) 2,763.0 13.9 71 2.5 2.2 — — — 0.6 0.5 0.4 0.7 15.5 15.6 0.3 8.0 9.2 26
City Union Bank ADD 133 240 81 98 1.3 735 10.0 11.8 13.5 8.1 17.3 14.3 13 11.2 9.8 — — — 2.0 1.7 1.5 14.4 15.0 15.2 1.3 1.6 1.8 2.8
DCB Bank BUY 80 230 187 25 0.3 310 12.8 16.9 22.2 22.1 32.0 30.8 6.2 4.7 3.6 — — — 0.8 0.7 0.6 13.0 15.2 17.2 1.5 2.0 2.6 1.8
Equitas Holdings BUY 38 160 318 13 0.2 342 8.0 10.5 14.5 26.0 32.1 37.5 4.8 3.6 2.6 — — — 0.5 0.4 0.4 9.9 11.2 13.6 — — — 6.4
Federal Bank BUY 38 120 213 76 1.0 1,985 8.4 9.9 12.6 33.6 18.8 26.3 4.6 3.9 3.1 — — — 0.6 0.5 0.5 12.0 12.9 14.7 4.9 5.8 7.3 13.2
HDFC Bank BUY 857 1,050 23 4,698 61.5 5,447 48 50 56 24.5 4.3 10.5 18 17 15 — — — 2.8 2.5 2.2 16.5 15.2 14.9 1.1 1.1 1.3 159
ICICI Bank BUY 317 615 94 2,051 26.9 6,447 18.4 32 38 287.4 73.1 18.8 17 10.0 8.4 — — — 1.9 1.6 1.4 10.5 16.4 17.1 1.2 2.0 2.4 150
IndusInd Bank ADD 301 600 99 209 2.7 712 58 29 76 6.7 (51.2) 166.6 5 10.6 4.0 — — — 0.6 0.6 0.5 13.4 5.3 13.2 2.7 1.3 3.5 125
Karur Vysya Bank BUY 20 80 291 16 0.2 799 3.4 7 13 27.2 104.1 95.1 6 3.0 1.5 — — — 0.3 0.3 0.2 4.1 8.0 14.5 4.1 8.7 17.0 0.6
Punjab National Bank NR 34 — — 231 3.0 4,604 2 6 10 110.2 149.0 80.1 16 6.2 3.5 — — — 0.7 0.5 0.4 2.4 7.0 10.2 0.0 0.0 0.0 14.6
RBL Bank BUY 161 375 132 82 1.1 509 9.5 32 41 (53.3) 233.4 30.0 17 5.1 3.9 — — — 0.8 0.7 0.6 5.3 14.0 16.0 0.8 2.6 3.4 46
State Bank of India BUY 190 420 121 1,695 22.2 8,925 24 45 55 2,356.7 87.9 23.3 8 4.3 3.5 — — — 0.9 0.8 0.6 9.2 15.2 16.0 0.1 0.1 0.1 199
Ujjivan Financial Services BUY 160 490 207 19 0.3 121 26.9 34 44 117.0 24.9 31.6 6 4.8 3.6 — — — 0.9 0.8 0.7 15.7 17.0 19.3 1.9 2.6 3.7 8.2
Ujjivan Small Finance Bank SELL 24 45 85 42 0.6 1,714 2 3 3 48.2 33.3 26.9 12 8.9 7.0 — — — 1.5 1.3 1.2 15.1 14.9 16.7 1.7 2.2 2.8 0.0
Union Bank RS 27 — — 92 1.2 3,423 0 11 15 101.2 5,126.7 36.8 131 2.5 1.8 — — — 0.4 0.3 0.2 0.2 13.2 13.2 0.0 6.0 8.2 2.8
YES Bank RS 30 — (100) 371 4.9 12,546 (18.7) (3) 0 (352.2) 85.3 101.2 NM NM 865.3 — — — 4.9 15.8 7.8 NM NM 0.4 0.0 0.0 0.0 101
Banks Attractive 11,389 149.1 97.2 144.0 28.6 20 8.1 6.3 1.2 1.0 0.9 6.1 12.3 13.9 0.8 1.4 1.7 1,014
Source: Company, Bloomberg, Kotak Institutional Equities estimates

62
Fair O/S ADVT
63
Building Products
Astral Poly Technik SELL 832 765 (8) 125 1.6 151 19.4 22 27 48.5 14.7 19.4 43 37 31 25.2 21.4 17.6 8.1 6.7 5.6 21 19.6 19.4 0.1 0.1 0.2 2.1
Building Products Cautious 125 1.6 49.5 14.7 19.4 43 37 31 25.2 21.4 17.6 8.1 6.7 5.6 18.8 17.9 17.8 0.1 0.1 0.2 2.1
Capital goods
ABB SELL 835 900 8 177 2.3 212 18 20 25 46.3 12.6 27.3 48 42 33 30.3 26.1 20.7 5.0 4.7 4.3 9.9 11.5 13.5 0.6 0.8 0.9 1.1
Ashoka Buildcon BUY 44 155 249 12 0.2 281 12.9 11.9 13.2 8.6 (7.9) 11.2 3.4 3.7 3.4 3.6 3.4 2.9 0.5 0.4 0.4 15.3 12.6 12.7 4.6 4.2 4.7 1.0
Bharat Electronics BUY 63 113 81 153 2.0 2,437 6.2 7.5 7.0 (20.2) 20.9 (6.9) 10.2 8.4 9.0 5.8 5.1 4.7 1.5 1.4 1.3 15.7 17.6 15.2 4.3 5.2 4.9 15.1
BHEL REDUCE 20 41 105 69 0.9 3,482 2.6 2.5 3.7 (25.0) (6.2) 51.0 7.6 8.1 5.3 1.8 1.3 1.2 0.2 0.2 0.2 2.9 2.7 4.0 6.4 5.5 7.5 9.6
Carborundum Universal ADD 195 345 77 37 0.5 189 13.7 16.3 19.0 4.7 19.2 16.1 14.2 11.9 10.3 8.6 6.8 5.7 2.0 1.8 1.6 14.4 15.6 16.3 2.1 2.5 2.9 0.4
Cochin Shipyard BUY 229 615 169 30 0.4 132 48 56 50 30.6 17.6 (10.8) 4.8 4.1 4.6 (1.2) (0.3) 1.1 0.8 0.7 0.6 17.7 18.3 14.6 5.2 6.1 5.9 1.7
Cummins India BUY 370 520 41 102 1.3 277 26 26 29 (0.2) (2.6) 12.2 14.1 14.4 12.9 13.4 13.5 11.9 2.3 2.2 2.1 17.2 15.8 16.8 3.6 3.5 3.9 7.4
Dilip Buildcon BUY 217 580 168 30 0.4 137 36 41 51 (35.6) 14.8 24.9 6.0 5.3 4.2 3.9 3.6 2.5 0.8 0.7 0.6 14.2 14.2 15.2 0.3 0.3 0.5 1.4
IRB Infrastructure BUY 49 154 215 17 0.2 351 22 16 16 (7.1) (29.8) 3.8 2.2 3.1 3.0 5.3 6.3 6.3 0.2 0.2 0.2 11.9 7.7 7.5 5.6 5.1 3.0 3.2
Kalpataru Power Transmission BUY 181 591 227 28 0.4 153 34 38 46 12.8 10.5 22.5 5.3 4.8 3.9 3.3 2.7 2.0 0.8 0.7 0.6 15.7 15.2 16.2 2.1 2.2 2.7 0.6
KEC International BUY 179 400 124 46 0.6 257 24.6 28 33 30.2 14.4 17.9 7.2 6.3 5.4 4.8 3.9 3.3 1.5 1.3 1.1 23 22 21 1.5 1.7 2.0 1.6
L&T BUY 766 1,270 66 1,075 14.1 1,403 69 62 79 12.0 (9.2) 26.6 11.1 12.3 9.7 13.9 12.5 10.9 1.8 1.5 1.4 16.6 13.3 14.8 1.4 4.9 3.2 64
Sadbhav Engineering BUY 33 137 322 6 0.1 172 7.2 11.7 13.6 (33.4) 61.1 16.3 4.5 2.8 2.4 4.1 2.2 1.8 0.3 0.2 0.2 5.9 9.0 9.6 — — — 0.7
Siemens SELL 1,049 1,200 14 374 4.9 356 35 40 46 14.1 15.2 13.9 30 26 23 20.1 17.6 15.2 3.8 3.5 3.1 13.1 13.8 14.3 0.9 1.1 1.2 9.3
Thermax BUY 731 1,140 56 87 1.1 113 26 39 47 (28.5) 48.4 20.8 28 18.7 15.5 17.1 14.7 12.2 17.1 14.7 12.2 9.5 13.1 14.3 1.0 1.3 1.5 1.5
Capital goods Neutral 2,242 29.4 2.8 (0.4) 19.5 12.1 12.2 10.2 1.5 1.3 1.2 12.3 11.0 12.1 1.8 3.6 2.9 1,014
Commercial & Professional Services
SIS REDUCE 411 870 112 60 0.8 75 37 41 48 27.5 11.9 16.0 11.2 10.0 8.6 12.2 10.3 8.7 2.1 1.7 1.5 19.9 18.8 18.5 0.8 0.9 1.0 0.5
TeamLease Services BUY 1,673 2,060 23 29 0.4 17 52 55 75 (8.6) 4.5 36.5 32 31 22 26.6 23.8 17.2 4.5 4.0 3.4 15.3 13.9 16.3 — — — 1.0
Commercial & Professional Services Cautious 89 1.2 16.2 10.1 20.8 24 22 18.4 14.6 12.6 10.3 4.2 3.6 3.0 17.1 16.1 16.5 0.3 0.3 0.4 1.5
Commodity Chemicals
Asian Paints REDUCE 1,593 1,825 15 1,528 20.0 959 28.9 34.2 40.5 28.5 18.2 18.3 55 47 39 34.9 30.4 26.1 14.3 12.8 11.4 27 29 31 0.9 1.1 1.3 43
Berger Paints SELL 450 430 (4) 437 5.7 971 7.5 8.6 10.2 46.6 14.6 19.1 60 52 44 38.7 33.0 27.9 15.2 13.1 11.2 27 27 28 0.6 0.7 0.8 10.0
Kansai Nerolac BUY 328 485 48 177 2.3 539 10.2 9.7 13.6 17.2 (4.5) 40.6 32 34 24 21.6 21.1 15.4 4.7 4.4 4.0 15.3 13.4 17.3 1.1 1.0 1.5 2.0
Tata Chemicals ADD 211 345 64 54 0.7 255 33.0 37.1 40.5 (23.1) 12.4 9.3 6.4 5.7 5.2 2.5 2.2 1.9 0.4 0.4 0.4 6.7 7.1 7.4 4.3 4.8 5.3 10.1
Commodity Chemicals Neutral 2,195 28.7 16.0 14.1 19.0 45 39 33 26.2 23.2 19.9 7.3 6.7 6.1 16.2 17.0 18.4 0.9 1.1 1.3 65
Construction Materials
ACC BUY 918 1,425 55 172 2.3 188 72.3 68.5 76.0 35.8 (5.3) 11.1 12.7 13.4 12.1 5.3 5.5 4.9 1.5 1.4 1.3 12.3 10.9 11.4 1.5 3.7 4.1 15.2
Ambuja Cements BUY 139 190 36 277 3.6 1,986 10.6 10.4 11.7 49.1 (1.7) 12.5 13.2 13.4 11.9 4.0 4.0 3.3 1.1 1.1 1.0 9.0 8.3 8.6 1.1 1.1 1.1 11.0
Dalmia Bharat BUY 442 1,000 126 85 1.1 192 17.2 11.4 30.2 8.6 (34.0) 165.0 26 39 14.7 5.0 5.0 3.6 0.8 0.8 0.7 3.1 2.0 5.1 — — — 1.7
Grasim Industries ADD 451 865 92 297 3.9 657 74.4 77.5 90.0 18.9 4.2 16.2 6.1 5.8 5.0 4.4 3.6 2.9 0.5 0.5 0.4 8.4 8.1 8.8 1.6 1.6 1.6 22

J K Cement BUY 965 1,500 56 75 1.0 77 82.3 78.6 115.5 141.3 (4.5) 46.9 11.7 12.3 8.4 7.6 7.1 5.6 2.3 2.0 1.6 21 17.3 21 1.0 1.0 1.0 1.8
JK Lakshmi Cement BUY 204 300 47 24 0.3 118 19.2 19.7 27.0 374.8 2.4 37.5 10.6 10.4 7.6 4.8 4.6 3.9 1.4 1.3 1.1 14.3 13.0 15.7 1.0 1.0 1.0 1.1
Orient Cement BUY 40 65 64 8 0.1 205 4.7 4.3 5.7 102.0 (8.9) 34.3 8.4 9.3 6.9 5.0 4.8 3.8 0.7 0.7 0.7 8.9 7.8 10.0 5.1 5.1 5.1 0.2
Shree Cement REDUCE 17,438 16,600 (5) 629 8.2 36 450.4 514.6 698.0 39.3 14.3 35.6 39 34 25 16.3 14.9 11.8 4.8 4.3 3.8 14.3 13.4 16.2 0.6 0.6 0.6 14.6
UltraTech Cement BUY 3,229 3,750 16 932 12.2 289 140.9 148.4 201.7 54.1 5.3 35.9 23 22 16.0 10.5 10.0 8.0 2.5 2.3 2.0 11.4 10.9 13.2 0.4 0.4 0.4 33
Construction Materials Cautious 2,499 32.7 41.6 2.6 26.6 16.3 15.9 12.5 6.9 6.2 5.1 1.5 1.4 1.3 9.4 8.9 10.3 0.8 0.9 1.0 100



Fair O/S ADVT
Consumer Durables & Apparel

Crompton Greaves Consumer SELL 191 210 10 120 1.6 627 7.1 8.4 9.5 19.1 18.3 13.6 27 23 20 17 14 12 8.4 6.7 5.4 35 33 30 1.3 1.3 0.0 3.9
Havells India SELL 474 520 10 296 3.9 625 13.2 17.1 20.4 4.8 29.4 19.8 36 28 23 22 17 14 6.3 5.6 4.9 18.5 21 22 1.0 1.3 1.5 16.0
Page Industries REDUCE 16,610 22,000 32 185 2.4 11 363 449 539 2.9 23.6 20.0 46 37 31 30 25 21 20.7 16.5 13.4 48 50 48 1.0 1.3 1.6 12.1
Polycab BUY 638 700 10 95 1.2 149 37 44 49 9.0 19.1 11.3 17.4 14.6 13.1 9 8 7 2.6 2.2 1.9 16.6 16.3 15.7 0.6 0.7 0.8 4.7
TCNS Clothing Co. ADD 328 770 134 20 0.3 65 9 12 16 (54.3) 31.7 26.0 35 26 21 8 7 5.5 3.0 2.7 2.3 9.2 10.7 11.9 2.6 3.7 3.8 0.2
Vardhman Textiles ADD 700 1,000 43 40 0.5 56 92 120 130 (28.9) 30.0 8.5 7.6 5.9 5.4 5.9 4.5 3.9 0.7 0.6 0.6 9.0 11.0 11.0 4.3 4.3 4.3 0.2
Voltas SELL 487 500 3 161 2.1 331 16.4 18.5 21.4 4.4 12.5 16.1 30 26 23 24 21 18 3.6 3.2 2.9 12.6 12.9 13.5 0.7 0.8 0.9 12.3
Whirlpool SELL 1,805 1,260 (30) 229 3.0 127 38 44 52 17.9 16.8 18.6 48 41 34 29 25 21 9.1 8.0 7.1 21 21 22 0.4 0.7 1.2 2.9
Consumer Durables & Apparel Cautious 1,147 15.0 0.1 22.2 30 25 21 18 15 13 4.7 4.2 15.7 17.0 17.4 1.0 1.2 52
Consumer Staples
Bajaj Consumer Care BUY 120 280 133 18 0.2 148 15.3 15.8 17.7 1.6 3.3 12.1 7.9 7.6 6.8 5.8 5.5 4.8 3.4 3.0 2.7 46 42 42 8.3 9.1 10.0 0.7
Britannia Industries REDUCE 2,451 2,900 18 589 7.7 240 59 68 79 22.7 14.3 16.2 41 36 31 31 27 23 13.0 10.6 8.7 32 32 30 0.8 1.1 1.3 18.7
Colgate-Palmolive (India) ADD 1,122 1,600 43 305 4.0 272 30 36 41 12.5 18.5 14.6 37 31 27 23.4 20.1 17.7 20.7 20.4 20.0 56 65 74 2.3 2.7 3.0 10.9
Dabur India REDUCE 405 440 9 716 9.4 1,766 9.5 11.0 12.0 16.8 15.5 9.7 43 37 34 35 31 27 11.1 10.0 9.0 28 28 28 1.1 1.4 1.6 15.4
GlaxoSmithKline Consumer RS 9,198 — — 387 5.1 42 297 315 365 27 6.0 15.9 31 29 25 26 25 21 8.1 7.1 6.2 28 26 26 1.3 1.4 1.6 2.8
Godrej Consumer Products BUY 471 615 31 481 6.3 1,022 15.2 16.6 20.0 5.0 9.1 20.4 31 28 24 21 19 16 5.7 5.2 4.7 19.8 19.1 21 1.3 1.6 1.8 13.4
Hindustan Unilever BUY 2,088 2,250 8 4,520 59.2 2,160 33 38 45 18.6 12.9 18.5 63 55 47 43 39 33 50.1 42.3 36.0 87 83 83 1.1 1.5 2.0 57
ITC BUY 147 300 104 1,811 23.7 12,300 11.9 12.6 13.9 17.0 5.9 10.1 12.4 11.7 10.6 8.1 7.6 6.7 2.8 2.7 2.5 21 22 23 4.4 6.1 6.8 58
Jyothy Laboratories ADD 94 170 81 35 0.5 367 5.8 6.5 7.4 4.7 11.9 13.0 16.1 14.4 12.7 11.2 10.1 8.8 2.5 2.3 2.2 15.8 16.7 17.8 3.7 4.3 4.8 0.8
Marico BUY 248 350 41 320 4.2 1,290 8.2 8.4 9.8 13.8 2.6 15.9 30 29 25 21 20 17 10.0 9.6 9.1 34 33 37 2.2 2.5 2.8 11.6
Nestle India SELL 14,444 14,000 (3) 1,393 18.2 96 204 238 278 22.6 16.6 16.6 71 61 52 49 42 37 72.1 58.6 48.2 70 107 102 2.4 1.3 1.6 22
Tata Consumer Products ADD 277 400 44 175 2.3 631 8.8 10.3 11.5 25.1 18.2 11.1 32 27 24 18 15 14 2.3 2.2 2.1 7.4 8.3 8.8 1.1 1.3 1.5 29
United Breweries ADD 882 1,430 62 233 3.1 264 17.9 25.5 32.6 (15.8) 42.2 27.8 49 35 27 25 19 15 6.5 5.6 4.7 14.0 17.4 18.9 0.2 0.4 0.6 7.4
United Spirits BUY 466 660 42 338 4.4 727 13.1 15.2 20.3 38.9 15.7 34.1 36 31 23 22 20 16 8.8 5.9 4.2 27 23 22 0.4 0.5 0.6 22
Varun Beverages ADD 559 900 61 161 2.1 289 16.2 24.8 33.5 51.9 52.4 35.3 34 23 16.7 13 10 9 4.8 3.9 3.2 17.6 19.3 21 0.1 0.2 0.4 2.9
Consumer Staples Cautious 11,483 150.4 17.6 10.8 15.0 33 30 26 23 21 18 9.3 8.3 7.5 28 28 29 1.8 2.2 2.6 272
Diversified Financials
Bajaj Finance REDUCE 2,586 3,850 49 1,556 20.4 599 101 135 163 46 33 21 26 19.1 15.8 — — — 4.6 3.8 3.1 23 22 22 0.4 0.5 0.6 114
Bajaj Finserv ADD 4,830 10,200 111 769 10.1 159 304 394 475 50 30 21 15.9 12.3 10.2 — — — 2.3 1.9 1.6 16.8 17.1 17.5 0.3 0.3 0.3 37
Cholamandalam ADD 158 375 138 128 1.7 820 17.3 22.9 25.5 14 32.3 11.5 9.1 6.9 6.2 — — — 1.5 1.3 1.1 19.2 19.9 18.7 1.2 1.6 1.8 9.4
HDFC BUY 1,646 2,680 63 2,850 37.3 1,721 107 72 85 88.2 (33) 17.4 15.3 23 19.4 — — — 3.2 3.0 2.7 22 13.7 14.8 2.4 1.6 1.9 123
IIFL Wealth REDUCE 939 1,200 28 82 1.1 85 34.7 45.6 66.8 (23) 31.4 46.5 27 21 14.1 — — — 2.7 2.6 2.5 10.1 13.0 18.4 2.8 3.2 4.6 0.9
L&T Finance Holdings REDUCE 55 115 108 110 1.4 1,999 9 13 16 (15.7) 35 27.8 5.9 4.3 3.4 — — — 0.7 0.6 0.5 13.2 15.7 17.4 2.3 2.6 2.9 15.1
LIC Housing Finance ADD 210 475 126 106 1.4 505 53.2 72.1 83.1 16 35.6 15.2 4.0 2.9 2.5 — — — 0.7 0.6 0.5 15.4 18.2 18.1 4.2 5.7 6.5 28
Mahindra & Mahindra Financial ADD 165 405 145 102 1.3 615 24.5 32.5 40.6 (3) 32.5 24.8 6.7 5.1 4.1 — — — 0.9 0.8 0.7 13.2 15.8 17.5 3.8 5.1 6.3 11.4
Muthoot Finance ADD 601 860 43 241 3.2 401 72 74 84 46.4 3 13.0 8.3 8.1 7.2 — — — 2.0 1.7 1.5 27 23 22 2.9 3.0 3.4 25
PNB Housing Finance NR 149 — — 25 0.3 169 66.9 77.6 88.6 (6) 16.0 14.2 2.2 1.9 1.7 — — — 0.3 0.3 0.2 14.1 14.6 14.8 4.9 5.7 6.5 5.8
Shriram City Union Finance BUY 799 1,975 147 53 0.7 66 171 191 214 14.0 12 12.0 4.7 4.2 3.7 — — — 0.8 0.7 0.6 16.4 15.9 15.6 2.7 3.0 3.4 0.2
Shriram Transport BUY 567 1,525 169 129 1.7 227 134.4 136.2 162.2 19 1.3 19.1 4.2 4.2 3.5 — — — 0.7 0.6 0.6 17.8 15.7 16.4 3.3 3.6 4.3 31
Diversified Financials Neutral 6,150 80.5 45.5 1.2 18.8 13.7 13.5 11.4 1.8 1.6 1.4 13.0 11.7 12.3 1.7 1.5 1.7 401

64
Fair O/S ADVT
65
Electric Utilities
CESC BUY 378 820 117 50 0.7 133 84 101 114 (7) 19.9 12.3 4.5 3.7 3.3 4.8 4.3 3.8 0.4 0.4 0.3 8.9 9.9 10.3 3.1 3.3 3.4 3.3
JSW Energy ADD 47 75 59 78 1.0 1,640 6.4 5.7 5.2 53 (10) (8.5) 7.4 8.3 9.0 4.4 3.6 2.9 0.6 0.6 0.5 8.5 7.0 6.0 — — — 0.8
NHPC ADD 19 27 42 190 2.5 10,045 3.4 3.4 3.7 34.3 2 6.8 5.6 5.5 5.1 5.3 5.7 5.2 0.6 0.6 0.5 10.8 10.5 10.6 9.0 8.1 8.8 4.1
NTPC BUY 80 160 101 789 10.3 9,895 12.3 14.3 15.5 9.4 16.8 7.9 6.5 5.6 5.2 8.3 7.1 5.7 0.7 0.6 0.6 10.9 11.8 11.7 4.6 5.4 5.8 27
Power Grid BUY 150 235 56 786 10.3 5,232 20.2 23 25 6 13.5 11.1 7.4 6.5 5.9 6.5 6.1 5.7 1.2 1.1 1.0 17.0 17.4 17.5 4.7 5.3 5.9 40
Tata Power BUY 35 60 71 95 1.2 2,705 3.6 4.8 6.7 71 32 40.7 9.7 7.3 5.2 7.0 6.5 5.9 0.5 0.5 0.5 5.7 7.0 9.1 — — — 6.4
Electric Utilities Attractive 1,987 26.0 12.2 13.5 9.9 6.8 6.0 5.4 0.8 0.7 0.7 11.4 11.9 12.1 4.6 5.1 5.6 81
Fertilizers & Agricultural Chemicals
Bayer Cropscience SELL 3,159 3,000 (5) 142 1.9 45 103.8 119.4 138.3 32.3 15.1 15.8 30 26 23 22 19 16 5.6 4.9 4.2 19.6 19.7 19.7 0.7 0.8 0.9 1.4
Dhanuka Agritech SELL 314 470 50 15 0.2 48 28.0 30.3 33.4 18.1 8.5 10.1 11.2 10.3 9.4 8.8 7.6 6.4 2.0 1.7 1.5 19.1 17.9 17.1 1.8 1.9 2.1 0.4
Godrej Agrovet SELL 295 470 59 57 0.7 192 11.8 16.4 19.9 2.9 39.2 21 25 18 15 14 10 8 2.5 2.3 2.0 10.5 13.3 14.3 1.1 1.4 1.7 1.3
Rallis India ADD 154 230 49 30 0.4 195 10.9 12.5 14.4 29.4 14.8 14.8 14.1 12.3 10.7 9.9 8.5 7.3 2.1 1.9 1.7 15.6 16.0 16.4 1.8 2.0 2.2 2.0
UPL SELL 293 510 74 224 2.9 765 28.6 40.1 45.8 51.3 40.2 14.1 10 7.3 6.4 6.7 5.5 4.7 1.4 1.2 1.1 14.2 17.8 17.9 2.8 3.9 4.4 26
Fertilizers & Agricultural Chemicals Attractive 616 8.1 39.0 32.2 15.6 16 12 10.8 9.2 7.6 6.5 2.4 2.1 1.8 14.5 16.8 17.0 1.5 2.0 2.4 35
Gas Utilities
GAIL (India) BUY 76 175 132 341 4.5 4,510 12.2 13.9 14.9 (12.4) 13.5 7.3 6.2 5.4 5.1 4.6 4.2 3.9 0.7 0.7 0.7 12.3 13.3 13.5 9.8 9.9 10.6 22
GSPL SELL 156 225 44 88 1.2 564 17.0 14.2 13.1 20.4 (16.1) (7.9) 9.2 11.0 11.9 3.6 3.8 3.7 1.3 1.2 1.1 15.4 11.5 9.7 1.6 1.4 1.7 2.1
Indraprastha Gas SELL 343 365 6 240 3.1 700 17.3 19.7 22.1 43.7 13.8 12.2 19.9 17.4 15.6 14.7 12.5 10.9 4.8 4.1 3.5 27 25 24 1.2 1.4 1.7 18.8
Mahanagar Gas ADD 744 1,300 75 73 1.0 99 76.8 84.0 89.4 36.7 9.4 6.5 9.7 8.9 8.3 6.0 5.2 4.5 2.6 2.2 2.0 29 27 25 4.4 5.1 6.0 14.4
Petronet LNG BUY 176 325 85 263 3.4 1,500 17.9 20.8 23.1 19.4 16.0 11.1 9.8 8.4 7.6 5.4 4.6 4.0 2.3 2.1 1.9 25 26 26 5.6 7.1 8.6 9.6
Gas Utilities Attractive 1,006 13.2 3.7 11.3 7.8 9.0 8.1 7.5 5.8 5.2 4.7 1.4 1.3 1.2 15.6 16.0 15.9 5.5 6.0 6.8 67
Health Care Services
Apollo Hospitals BUY 1,184 1,820 54 165 2.2 139 23.6 23 49 39 (2) 112 50.1 51.1 24.1 12.8 14.4 10.6 4.7 4.4 4.0 9.6 8.9 17.4 0.7 0.8 1.7 18.9
Aster DM Healthcare NR 84 — — 42 0.6 505 6.9 8.8 10.6 4 27.5 21 12.2 9.5 7.9 5.4 4.6 3.9 1.5 1.3 1.2 13.3 15.0 15.8 — — — 0.9
Dr Lal Pathlabs SELL 1,399 1,080 (23) 117 1.5 83 31.5 36.6 42.1 31.9 16.2 15.2 44.5 38.3 33.2 29.0 24.7 21.2 10.3 8.7 7.3 25 25 24 0.7 0.8 0.9 3.4
HCG BUY 76 190 150 7 0.1 85 (8.0) (5.4) (5.2) (130) 33 3 NM NM NM 7.5 6.3 5.6 1.3 1.4 1.6 NM NM NM — — — 0.1
Metropolis Healthcare ADD 1,317 1,230 (7) 67 0.9 50 31.3 30.4 42.1 30.8 (3.1) 39 42.0 43.4 31.3 26.2 26.1 19.7 12.9 10.8 8.8 34 27 31 0.7 0.7 1.0 1.7
Narayana Hrudayalaya BUY 228 380 67 47 0.6 204 4.0 3.0 10.6 37.6 (24) 250 57.1 75.2 21.5 15.0 15.7 9.2 4.0 3.8 3.2 7.3 5.2 16.2 — — — 3.0
Health Care Services Attractive 443 5.8 21 12 58 40.0 35.8 22.7 12.7 12.3 9.6 4.6 4.2 3.7 11.6 11.8 16.4 0.5 0.6 1.0 28
Hotels & Restaurants
Jubilant Foodworks ADD 1,347 1,900 41 178 2.3 132 27 38 52 12 42.1 36 50.1 35.3 26.0 18.0 14.3 11.3 14.3 10.8 8.2 28 35 36 0.4 0.7 1.2 27
Lemon Tree Hotels BUY 22 70 220 17 0.2 789 0.8 1.7 2.1 13 121 24 29.0 13.1 10.6 10.7 7.2 5.3 1.8 1.7 1.6 6.6 13.5 15.4 — 2.4 3.4 0.6
Hotels & Restaurants Attractive 195 2.6 12 54 34 46.9 30.5 22.8 16.2 12.3 9.6 9.0 7.3 5.9 19.1 24 26 0.4 0.9 1.4 28
Insurance

HDFC Life Insurance ADD 434 590 36 877 11.5 2,009 7.2 8.4 9.8 12.6 17.9 16.1 60.6 51.4 44 — — — 14.0 12.6 11.3 24 26 27 0.4 0.5 0.6 23
ICICI Lombard SELL 985 825 (16) 448 5.9 454 26.8 33.4 38.9 16 25 16 36.7 29.5 25 — — — 7.2 6.1 5.2 21 22 22 0.6 0.7 0.9 8.5
ICICI Prudential Life BUY 320 580 81 460 6.0 1,436 8.2 9.0 10.3 4 9.0 15.3 38.9 35.7 31 — — — 5.9 5.2 4.6 16.1 15.5 15.7 0.4 0.5 0.5 15.0
Max Financial Services ADD 352 550 56 95 1.2 417 6.9 9.9 14.4 275 44 45 51.2 35.6 24 — — — — — — 13.7 17.9 23 0.7 1.0 1.5 24
SBI Life Insurance ADD 588 1,010 72 588 7.7 1,000 13.7 16.1 17.7 3.5 17.5 9.4 42.8 36.4 33 — — — 6.8 5.9 5.1 17.1 17.4 16.5 0.4 0.4 0.5 12.0
Insurance Attractive 2,467 32.3 13.5 18.8 16.2 44.9 37.8 33 7.9 6.9 6.1 17.7 18.4 18.7 0.3 0.4 0.4 82



Fair O/S ADVT
Internet Software & Services

Info Edge SELL 1,828 2,470 35 224 2.9 122.0 31.0 39.7 48.7 20.0 28.0 22.7 59.0 46.1 37.6 49.0 36.7 29.4 8.5 7.5 6.6 15.3 17.3 18.7 0.5 0.5 0.7 12.1
Just Dial BUY 271 460 69 18 0.2 64.8 40.7 35.3 36.6 27.6 (13.4) 3.8 6.7 7.7 7.4 0.9 0.2 (0.8) 1.4 1.2 1.1 24 17.2 15.4 1.5 1.3 1.3 16.4
Internet Software & Services Attractive 242 3.2 23.0 11.0 16.6 37.6 33.9 29.1 30.4 25.6 21.5 6.3 5.5 4.8 16.6 16.2 16.5 0.6 0.6 0.7 28
IT Services
HCL Technologies ADD 458 520 14 1,242 16.3 2,702 39.7 35.9 39.7 8.4 (9.5) 10.4 11.5 12.7 11.5 7.2 7.5 6.7 2.5 2.2 2.1 24 18.7 18.8 3.4 3.4 5.2 33
Hexaware Technologies REDUCE 228 260 14 68 0.9 302 21.2 19.7 21.0 9.9 (7.0) 6.5 10.8 11.6 10.9 7.8 8.3 7.2 2.5 2.3 2.1 25 21 20 3.7 5.3 5.3 2.1
Infosys BUY 606 675 11 2,582 33.8 4,256 38.2 36.6 40.3 7.9 (4.1) 10.0 15.9 16.5 15.1 10.9 10.7 9.7 4.1 3.9 3.6 26 24 25 3.6 4.3 4.9 86
L&T Infotech ADD 1,422 1,625 14 248 3.2 175 83.5 81.4 101.7 (3) (2.6) 24.9 17.0 17.5 14.0 11.2 10.7 8.9 4.4 3.9 3.3 28 23 26 2.1 2.2 2.5 3.9
Mindtree REDUCE 822 725 (12) 135 1.8 165 38.7 46.3 53.0 (16) 20 15 21.3 17.8 15.5 11.6 10.1 8.7 4.0 3.5 3.0 19.1 21 21 3.6 1.7 1.9 13.4
Mphasis REDUCE 727 690 (5) 136 1.8 186 60.2 54.5 58.0 7 (9.4) 6.5 12.1 13.3 12.5 7.2 7.5 6.9 2.4 2.3 2.2 20 17.4 17.7 4.1 5.5 6.2 4.2
TCS REDUCE 1,750 1,740 (1) 6,568 86.0 3,752 86.4 84.4 92.8 4 (2.3) 9.9 20.2 20.7 18.9 14.4 14.2 12.8 6.8 6.2 5.6 34 31 31 3.5 3.4 3.7 93
Tech Mahindra BUY 527 680 29 459 6.0 880 47.1 45.1 53.1 (1.3) (4.3) 17.8 11.2 11.7 9.9 6.6 6.0 4.9 2.0 1.8 1.7 19.3 16.6 17.6 3.1 2.9 3.2 23
Wipro REDUCE 175 200 15 998 13.1 5,827 17.1 16.0 17.4 14.3 (6.6) 8.8 10.2 10.9 10.1 5.7 5.6 4.9 1.8 1.6 1.5 17.8 15.4 15.2 0.9 1.1 4.9 12.1
IT Services Cautious 12,435 162.8 3.9 (4.5) 10.6 16.1 16.8 15.2 10.8 10.7 9.6 4.1 3.7 3.4 26 22 22 3.2 3.4 4.2 271
Media
DB Corp. REDUCE 76 135 78 13 0.2 175 18.0 18.7 18.6 14.6 4.1 (0.5) 4.2 4.1 4.1 2.0 1.8 1.8 0.7 0.7 0.7 16.9 17.4 17.4 16.5 19.8 22.4 0.2
Jagran Prakashan REDUCE 39 60 53 11 0.1 296 8.7 9.9 10.7 (0.9) 14 NA 4.5 4.0 NA 1.5 1.4 NA 0.6 0.6 NA 13.7 15.4 16.7 23.0 23.0 23.0 0.4
PVR BUY 1,323 1,800 36 68 0.9 51 32.7 34.5 67.2 (24) 5 95 40.5 38.4 19.7 12.3 12.5 8.2 3.6 3.3 2.9 10.7 9.0 15.7 0.2 0.3 0.5 17.0
Sun TV Network REDUCE 306 525 72 120 1.6 394 37.8 41.4 43.8 4 9.5 5.7 8.1 7.4 7.0 5.3 4.6 4.2 2.0 1.8 1.7 26 26 25 6.5 7.4 8.0 15.6
Zee Entertainment Enterprises ADD 126 340 171 121 1.6 960 17.2 18.4 21.0 4.4 6.9 13.7 7.3 6.8 6.0 4.4 3.8 3.2 1.2 1.1 1.0 17.8 17.3 17.6 3.6 4.4 4.4 51
Media Attractive 333 4.4 3.5 8.1 12.6 8.6 7.9 7.0 5.0 4.5 3.9 1.6 1.4 1.3 18.2 18.1 18.6 5.2 5.9 6.3 84
Metals & Mining
Hindalco Industries BUY 95 250 164 212 2.8 2,224 22.1 24.9 28.1 (10.5) 12.6 13 4.3 3.8 3.4 3.9 3.5 2.9 0.3 0.3 0.3 8.2 8.6 8.9 1.3 1.3 1.3 22
Hindustan Zinc REDUCE 138 210 52 583 7.6 4,225 16.4 16.9 18.4 (13.1) 3.3 9.0 8.4 8.2 7.5 4.8 4.8 4.5 1.9 2.1 2.3 22 24 29 14.5 14.5 14.5 1.7
Jindal Steel and Power BUY 92 205 122 94 1.2 1,016 2.7 26.2 22.0 259 855 (16) 33.7 3.5 4.2 5.7 3.8 3.8 0.3 0.3 0.2 0.9 7.8 6.1 — — — 45
JSW Steel ADD 152 270 78 367 4.8 2,402 8.7 16.7 28.8 (72.8) 93 72.4 17.5 9.1 5.3 7.4 5.9 4.3 1.0 0.9 0.8 5.8 10.4 16.1 2.8 2.8 2.8 27
National Aluminium Co. SELL 29 35 21 54 0.7 1,866 0.6 2.3 2.2 (92) 254 (3.0) 44.8 12.7 13.1 5.1 3.8 5.6 0.5 0.5 0.5 1.2 4.1 4.0 4.2 7.9 7.7 5.4
NMDC ADD 66 135 105 202 2.6 3,062 16.9 17.3 15.7 14.6 2.4 (9) 3.9 3.8 4.2 2.5 2.5 2.8 0.7 0.7 0.6 19.2 18.3 15.5 12.8 13.1 11.9 13.9
Tata Steel BUY 287 480 67 325 4.3 1,146 9.8 49.4 91.4 (89) 403 85 29.2 5.8 3.1 6.6 5.3 3.7 0.5 0.5 0.4 1.7 8.6 14.1 3.5 3.5 3.5 84
Vedanta BUY 64 175 173 239 3.1 3,717 10.4 17.7 20.1 (32) 71 13.5 6.2 3.6 3.2 4.6 3.9 3.6 0.4 0.4 0.4 6.2 10.7 12.3 28.0 28.0 28.0 31
Metals & Mining Attractive 2,076 27.2 (43.2) 54.1 24.8 8.5 5.5 4.4 5.2 4.4 3.8 0.6 0.6 0.6 7.4 10.9 12.8 9.8 10.0 9.8 41

66
Fair O/S ADVT
67
Oil, Gas & Consumable Fuels
BPCL BUY 274 490 79 594 7.8 1,967 23 34 36 (35.6) 45.0 4.9 11.7 8.1 7.7 7.6 6.2 5.8 1.4 1.3 1.2 12.2 16.5 16.0 5.2 6.4 6.7 47.3
Coal India BUY 125 280 125 767 10.0 6,163 28 30 28 0 6.6 (8.4) 4.4 4.1 4.5 3.5 2.8 2.8 2.3 1.9 1.7 58.7 51.4 40.8 12.0 16.1 16.1 32.7
HPCL BUY 177 250 41 270 3.5 1,524 23 26 26 (43.2) 16.9 0.2 7.9 6.7 6.7 8.1 8.2 8.3 0.9 0.8 0.8 11.8 12.9 12.0 5.1 5.9 6.0 16.4
IOCL BUY 78 130 67 733 9.6 9,181 9.5 15.2 15.5 (46.9) 59.7 2.0 8.2 5.1 5.0 4.6 4.0 3.9 0.6 0.6 0.6 7.9 12.1 11.8 6.6 9.8 10.0 29.6
Oil India BUY 76 110 44 83 1.1 1,084 22 9 14 (27) (57.3) 47.3 3.5 8.1 5.5 1.7 3.1 2.5 0.3 0.3 0.3 8.4 3.5 5.0 11.8 4.9 7.3 5.2
ONGC BUY 62 90 46 774 10.1 12,580 18 7 12 (24) (62.5) 81.2 3.5 9.2 5.1 2.3 3.4 2.6 0.3 0.3 0.3 9.2 3.3 5.8 11.4 4.5 7.7 34.2
Reliance Industries BUY 1,082 1,700 57 6,414 84.0 5,927 71 81 100 7.7 13.8 23.7 15.2 13.4 10.8 10.4 8.8 6.9 1.5 1.4 1.2 10.4 10.8 12.0 0.6 0.7 0.7 247.2
Oil, Gas & Consumable Fuels Attractive 9,636 126.2 (15.4) (0.6) 17.6 9.5 9.6 8.1 6.3 6.3 5.3 1.1 1.0 0.9 11.0 10.2 11.1 3.3 3.4 3.7 412.5
Pharmaceuticals
Aurobindo Pharma ADD 334 540 62 195 2.6 584 47 53 56 15.3 14 4.6 7.1 6.3 6.0 4.8 4.4 4.1 1.2 1.0 0.9 16.8 16.4 15.0 1.9 2.2 2.7 33.3
Biocon SELL 272 200 (26) 326 4.3 1,202 7.5 9.0 10.1 24 20 12.1 36 30 27 17.7 13.4 11.9 4.1 3.7 3.4 12.3 12.3 12.5 1.0 1.2 1.3 17.6
Cipla BUY 376 570 51 304 4.0 806 21.1 26 33 11.0 22 27 18 14.6 11.5 9.1 8.0 6.2 1.8 1.7 1.5 10.6 11.4 13.0 1.1 1.4 1.8 20.0
Dr Reddy's Laboratories REDUCE 2,922 2,800 (4) 486 6.4 166 110 139 185 11 26 32.6 26 21.0 15.8 11.8 11.1 8.5 3.2 2.8 2.5 12.0 13.4 15.5 0.7 0.8 1.1 34.2
Laurus Labs BUY 325 500 54 35 0.5 107 23.5 34.0 37 114.8 44 8 14 9.6 8.9 8.4 6.3 5.5 1.9 1.6 1.4 14.9 16.7 15.3 — — — 1.0
Lupin BUY 567 840 48 257 3.4 450 19 34 48 (9.6) 79 42 30 17 11.7 9.8 7.3 5.4 1.9 1.7 1.5 6.2 10.2 12.9 0.9 0.9 1.3 16.7
Sun Pharmaceuticals ADD 348 480 38 834 10.9 2,406 19.1 23.2 25 18.3 22 8 18 15 13.8 9.9 7.7 6.4 1.8 1.7 1.5 10.6 11.1 11.4 1.1 1.3 1.4 37.1
Torrent Pharmaceuticals ADD 1,779 2,250 26 301 3.9 169 55 69 86 113.0 25 26 32 26 21 14.7 12.3 10.5 5.7 5.0 4.3 17.7 19.4 20.9 1.3 1.4 1.6 10.5
Pharmaceuticals Neutral 2,737 35.8 18.3 25 18 20 16 13.5 10.1 8.2 6.9 2.2 2.0 1.8 11.3 12.6 13.2 1.1 1.3 1.5 170.3
Real Estate
Brigade Enterprises BUY 113 280 147 23 0.3 204 8.3 10 18 (29) 17 82 13.6 11.6 6.4 11.1 7.4 4.5 1.0 1.0 0.9 7.7 8.5 14.1 2.2 2.2 2.2 0.6
DLF BUY 124 230 86 306 4.0 2,475 4.5 6.9 10.6 (24) 51 54 27 18.0 11.7 25.8 29.4 17.3 0.8 0.8 0.8 3.2 4.6 6.8 1.6 1.6 1.6 26.8
Embassy Office Parks REIT ADD 328 450 37 253 3.3 772 11.9 15.5 18.2 151 30 18 28 21 18 15.5 12.9 11.6 1.2 1.2 1.3 4.1 5.6 6.9 7.1 9.1 10.4 1.7
Godrej Properties SELL 645 735 14 163 2.1 252 11.3 10.6 19.3 2.4 (7) 82.6 57 61 33 55.8 81.0 37.0 3.3 3.2 2.9 7.8 5.3 9.1 — — — 4.1
Oberoi Realty ADD 401 575 44 146 1.9 364 22 34 38 (4.0) 55.5 12 18.6 11.9 10.6 17.2 10.3 8.8 1.7 1.5 1.3 9.4 13.1 13.1 0.5 0.5 0.5 2.8
Prestige Estates Projects ADD 172 410 138 69 0.9 378 15.4 15.7 16 76.8 2 3 11 11 10.7 6.3 6.1 5.7 1.3 1.2 1.1 12.4 11.2 10.5 0.9 0.9 0.9 2.3
Sobha BUY 141 465 230 13 0.2 95 30 35 44 (5) 19.4 22.9 4.7 4.0 3.2 4.2 3.3 3.0 0.5 0.5 0.4 12.1 13.1 14.4 5.0 5.0 5.0 1.4
Sunteck Realty REDUCE 197 400 103 29 0.4 140 12.5 35.6 34 (22.7) 184 (6) 16 5.5 5.9 11.8 3.6 3.6 0.9 0.8 0.7 6.0 15.4 12.7 0.5 0.5 0.5 1.0
Real Estate Neutral 1,003 13.1 12.6 39.4 28.8 23 17 12.9 14.1 11.5 9.5 1.2 1.1 1.1 5.1 6.9 8.4 2.6 3.0 3.4 40.8
Retailing
Aditya Birla Fashion and Retail BUY 171 230 35 132 1.7 773 1.8 2.8 4.6 (57.5) 58.0 65.7 97 61 37 11.8 10.2 8.9 8.4 7.4 6.2 9.1 12.9 18.2 — — — 2.6
Avenue Supermarts SELL 1,899 1,400 (26) 1,230 16.1 626 22.0 28 36 52.1 25.9 29.8 86 69 53 56 43 33 16.8 13.5 10.8 21.7 21.9 22.7 — — — 33.9
Titan Company ADD 881 1,475 67 782 10.2 888 18.1 24 30 7.4 30.7 26.8 49 37 29 30 24 19 11.1 9.3 7.7 24.5 27.1 28.6 0.7 0.9 1.2 39.5
Retailing Cautious 2,144 28.1 14.7 30.0 30.2 69 53 41 35 28 23 13.7 11.3 9.2 19.9 21.3 22.6 0.2 0.3 0.4 76.0
Speciality Chemicals

Castrol India BUY 103 180 75 102 1.3 989 8.4 9.4 10.1 16.8 12.0 8.2 12.3 11.0 10.1 8.0 7.1 6.5 7.4 6.5 5.8 65.3 63.5 60.9 5.4 7.3 8.0 4.0
Pidilite Industries REDUCE 1,271 1,425 12 646 8.5 508 24.8 28 33 40.1 14.0 17.2 51 45 38 38 33 28 13.1 11.2 9.6 27.9 26.9 26.9 0.6 0.7 0.9 17.3
S H Kelkar and Company BUY 71 140 97 10 0.1 141 5.1 7.1 8.1 (16.0) 37.8 15.0 13.8 10.0 8.7 8.3 6.7 5.9 1.2 1.2 1.1 8.7 11.9 12.9 2.8 3.9 4.9 0.1
SRF ADD 2,778 3,900 40 160 2.1 57 144 174 207 28.6 21.2 18.8 19.3 16.0 13.4 12.4 10.1 8.4 3.2 2.7 2.3 18.1 18.4 18.6 0.5 0.6 0.7 14.1
Speciality Chemicals Neutral 917 12.0 27.7 16.0 15.1 31 26 23.0 20.4 17.4 15.1 7.6 6.5 5.6 24.8 24.7 24.4 1.2 1.5 1.7 35.6



Fair O/S ADVT
Telecommunication Services
Bharti Airtel BUY 429 600 40 2,341 30.7 5,455 (5.5) 6.0 13.5 NM NM NM NM 71.3 31.9 9.4 6.9 5.8 2.9 2.9 2.8 NM 4.1 9.0 0.9 1.4 1.4 112.8
Bharti Infratel BUY 148 185 25 273 3.6 1,850 15.3 15.7 17.8 16.9 2.4 13.1 9.6 9.4 8.3 4.7 4.3 3.8 1.8 1.8 1.7 19.0 18.8 20.9 6.5 8.2 9.3 24.3
Vodafone Idea RS 3 — — 96 1.3 28,736 (22.3) (4.0) (6.2) NM NM NM NM NM NM 18.9 9.3 8.6 0.4 0.8 (1.5) NM NM NM — — — 27
Tata Communications BUY 227 425 87 65 0.8 285 10.0 7.9 15.1 22.6 (21.2) 90.1 22.6 28.7 15.1 5.2 5.2 4.4 268.6 27.0 9.9 NM 171 96.1 3.3 3.3 3.3 0.6
Telecommunication Services Cautious 2,775 36.3 NM 64.9 47.3 NM NM NM 9.9 7.1 6.1 2.3 2.6 3.0 NM NM NM 1.4 2.0 2.1 164.9
Transportation
Adani Ports and SEZ BUY 256 470 84 519 6.8 2,032 25.1 25.3 28.7 25.8 0.8 13.5 10.2 10.1 8.9 9.4 8.1 7.0 2.0 1.7 1.5 20.2 18.5 18.1 6.1 1.7 1.9 18.4
Container Corp. BUY 286 400 40 174 2.3 609 16.6 19.3 24.3 1.5 16.5 26.0 17 15 12 8.6 7.5 5.9 1.7 1.6 1.5 9.7 10.9 12.9 0.9 2.9 3.6 7.8
Gateway Distriparks BUY 81 162 101 9 0.1 109 3.9 6.0 9.2 (42.8) 55.9 51.7 20.8 13.3 8.8 5.6 4.5 3.6 0.6 0.5 0.5 2.9 4.1 6.0 3.7 3.7 3.7 0.4
GMR Infrastructure BUY 16 30 85 98 1.3 6,036 (2.8) (0.9) (0.4) (13.2) 66.4 55.1 NM NM NM 13.6 10.9 12.8 (3.9) (9.8) (7.8) NM NM NM — — — 7.6
Gujarat Pipavav Port BUY 48 118 146 23 0.3 483 6.2 5.7 7.2 44.9 (8.2) 26.7 7.8 8.5 6.7 3.9 3.4 2.9 1.1 1.1 1.1 14.7 13.4 16.9 11.2 10.4 13.1 0.4
InterGlobe Aviation SELL 1,011 900 (11) 389 5.1 383 8.9 (16.4) 66.4 117.0 (285.5) 504.3 114 NM 15.2 4.7 5.8 — 5.1 5.6 — 4.7 NM NM — 0.0 0.7 31
Mahindra Logistics ADD 205 415 102 15 0.2 71 10.5 15.4 18.6 (16.4) 47.0 20.7 20 13 11 9.0 6.5 5.2 2.7 2.3 2.0 14.3 18.5 19.2 — — — 0.3
Transportation Attractive 1,227 16.1 26.8 5.6 85.4 24 22 12.1 8.5 7.8 5.2 2.7 2.4 2.5 11.3 10.7 20.5 3.0 1.4 1.8 66
KIE universe 84,623 1108.0 1.0 30.8 22.6 18 14.0 11.4 9.1 8.2 6.9 1.9 1.7 1.6 10.4 12.2 13.6 2.2 2.4 2.8
Notes:
(a) We have used adjusted book values for banking companies.
(b) 2020 means calendar year 2019, similarly for 2021 and 2022 for these particular companies.
(c) Exchange rate (Rs/US$)= 76.38

68
Disclosures
Kotak Institutional Equities Research coverage universe

Distribution of ratings/investment banking relationships
Percentage of companies covered by Kotak Institutional
70%
Equities, within the specified category.
60%
Percentage of companies within each category for
which Kotak Institutional Equities and or its affiliates has
50%
provided investment banking services within the
previous 12 months.
40% * The above categories are defined as follows: Buy = We
expect this stock to deliver more than 15% returns over
29.7%
30% 27.7% the next 12 months; Add = We expect this stock to
22.3% deliver 5-15% returns over the next 12 months; Reduce
20.3% = We expect this stock to deliver -5-+5% returns over
20% the next 12 months; Sell = We expect this stock to deliver
less than -5% returns over the next 12 months. O ur
10% target prices are also on a 12-month horizon basis.
2.5% 2.5% 1.5% 1.0%
These ratings are used illustratively to comply with
applicable regulations. As of 31/12/2019 Kotak
0%
Institutional Equities Investment Research had
BUY ADD REDUCE SELL
investment ratings on 202 equity securities.
Source: Kotak Institutional Equities As of December 31, 2019
Ratings and other definitions/identifiers

Definitions of ratings
BUY. We expect this stock to deliver more than 15% returns over the next 12 months.
ADD. We expect this stock to deliver 5-15% returns over the next 12 months.
REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.
SELL. We expect this stock to deliver <-5% returns over the next 12 months.
Our Fair Value estimates are also on a 12-month horizon basis.
Our Ratings System does not take into account short-term volatility in stock prices related to movements in the market. Hence, a particular Rating may not
strictly be in accordance with the Rating System at all times.
Other definitions
Coverage view. The coverage view represents each analyst’s overall fundamental outlook on the Sector. The coverage view will consist of one of the following
designations: Attractive, Neutral, Cautious.
Other ratings/identifiers
NR = Not Rated. The investment rating and fair value, if any, have been suspended temporarily. Such suspension is in compliance with applicable regulation(s)
and/or Kotak Securities policies in circumstances when Kotak Securities or its affiliates is acting in an advisory capacity in a merger or strategic transaction
involving this company and in certain other circumstances.
CS = Coverage Suspended. Kotak Securities has suspended coverage of this company.
NC = Not Covered. Kotak Securities does not cover this company.
RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and fair value, if any, for this stock, because there is not a sufficient
fundamental basis for determining an investment rating or fair value. The previous investment rating and fair value, if any, are no longer in effect for this stock
and should not be relied upon.
NA = Not Available or Not Applicable. The information is not available for display or is not applicable.
NM = Not Meaningful. The information is not meaningful and is therefore excluded.

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Nature of Financial interest: Holding equity shares or derivatives of the subject company.
Our associates may have actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of
Research Report.
Research Analyst or his/her relatives has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of
publication of Research Report: No
Kotak Securities Limited has actual/beneficial ownership of 1% or more securities of the subject company(ies) at the end of the month immediately preceding the date of publication of
Research Report: No
Subject company(ies) may have been client during twelve months preceding the date of distribution of the research report.
A graph of daily closing prices of securities is available at https://www.moneycontrol.com/india/stockpricequote/ and http://economictimes.indiatimes.com/markets/stocks/stock-quotes.
(Choose a company from the list on the browser and select the"three years" icon in the price chart).
Kotak Securities Limited. Registered Office: 27 BKC, C 27, G Block, Bandra Kurla Complex, Bandra (E), Mumbai 400051. CIN: U99999MH1994PLC134051, Telephone No.: +22
43360000, Fax No.: +22 67132430. Website: www.kotak.com / www.kotaksecurities.com. Correspondence Address: Infinity IT Park, Bldg. No 21, Opp. Film City Road, A K Vaidya Marg,
Malad (East), Mumbai 400097. Telephone No: 42856825. SEBI Registration No. INZ000200137(Member of NSE, BSE, MSE, MCX & NCDEX). Member Id: NSE-08081; BSE-673; MSE-1024;
MCX-56285; NCDEX-1262. AMFI ARN 0164, PMS INP000000258 and Research Analyst INH000000586. NSDL/CDSL: IN-DP-NSDL-23-97. Compliance Officer Details: Mr. Manoj Agarwal.
Call: 022 - 4285 8484, or Email: ks.compliance@kotak.com. Investments in securities market are subject to market risks, read all the related documents carefully before investing.
In case you require any clarification or have any concern, kindly write to us at below email ids:
Level 1: For Trading related queries, contact our customer service at ‘service.securities@kotak.com’ and for demat account related queries contact us at ks.demat@kotak.com or call us on:
Toll free numbers 18002099191 / 1860 266 9191
Level 2: If you do not receive a satisfactory response at Level 1 within 3 working days, you may write to us at ks.escalation @kotak.com or call us on 022-42858445 and if you feel you are
still unheard, write to our customer service HOD at ks.servicehead@kotak.com or call us on 022-42858208.
Level 3: If you still have not received a satisfactory response at Level 2 within 3 working days, you may contact our Complia nce Officer (Name: Mr. Manoj Agarwal) at
ks.compliance@kotak.com or call on 91- (022) 4285 8484.
Level 4 : If you have not received a satisfactory response at Level 3 within 7 working days, you may also approach Managing Director / CEO (Mr. Jaideep Hansraj) at ceo.ks@kotak.com or
call on 91-(022) 4285 8301.
First Cut notes published on this site are for information purposes only. They represent early notations and responses by analysts to recent events. Data in the notes may not have been
verified by us and investors should not act upon any data or views in these notes. Most First Cut notes, but not necessarily all, will be followed by final research reports on the subject.
There could be variance between the First cut note and the final research note on any subject, in which case the contents of the final research note would prevail. We accept no liability
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Kotak India - Daily 20200326

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Kotak India - Daily 20200326

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INDIA DAILY

March 26, 2020 India 25-Mar 1-day 1-mo 3-mo

Contents Global/Regional indices

Strategy FTSE 5,688 4.4 (19.2) (25.5)

KOSPI 1,718 0.8 (17.3) (21.8)

L&T: Time to reassess for challengers Change, basis points

25-Mar 1-day 1-mo 3-mo

Sector alerts 10yr govt bond, % 6.9 - 23 (9)

Net investment (US$ mn)

Best performers 25-Mar 1-day 1-mo 3-mo

HUVR IN Equity 2,088 3.0 (6.6) 7.4

DIVI IN Equity 1,928 0.4 (10.0) 6.2

CDH IN Equity 264 (5.3) 0.3 2.5

DRRD IN Equity 2,922 2.2 (5.0) 2.0

NEST IN Equity 14,444 7.2 (11.1) (1.1)

IIB IN Equity 301 (3.5) (73.5) (80.1)

EDEL IN Equity 32 (4.9) (67.4) (72.2)

IHFL IN Equity 95 5.4 (70.4) (68.0)

TTMT IN Equity 70 2.5 (51.4) (59.8)

TTMT/A IN Equity 30 (1.2) (50.5) (58.8)

Road traffic down

Electricity consumption bears watching

A prolonged lockdown on account of Covid-19 could lead to the temporary shuttering of

Leisure spending down

DAILY INDICATORS SHOW SLOWING OF ECONOMIC ACTIVITY

Data shows a slowdown in economic activity

 Covid-19 mindshare. We also track the mindshare of Covid-19 in people’s minds. We

 Discretionary spending. We use visitors to websites like bookmyshow.com and

 Electricity consumption. If Covid-19 leads to a prolonged lockdown and temporary

Exhibit 1: Economic activity slows down

Indicator Direction Comments

Most cities showing signs of lower pollution in

Electricity consumption for several states down as

Large uptrend in Google searches for Coronavirus.

Both bookmyshow.com and makemytrip.com

Source: Kotak Institutional Equities

Exhibit 2: India’s cumulative number of cases is now on an exponential trajectory

India Italy US Spain UK

Brazil South Korea Japan France

Source: Johns Hopkins University, Kotak Institutional Equities

Source: TomTom.com, Kotak Institutional Equities

Source: TomTom.com, Kotak Institutional Equities

Source: TomTom.com, Kotak Institutional Equities

Source: TomTom.com, Kotak Institutional Equities

Exhibit 7: Vehicular pollution is lower in many cities

Exhibit 8: General pollution levels are also lower in many cities

250 7D average 3M average

Source: aqicn.org, Central Board of Pollution Control, Kotak Institutional Equities

100 Google trend: Coronavirus

Source: alexa.com, Kotak Institutional Equities

Exhibit 11: Sharp fall in the relative ranking of bookmyshow.com

Source: alexa.com, Kotak Institutional Equities

Exhibit 12: Similar fall in the relative ranking of makemytrip.com

Source: alexa.com, Kotak Institutional Equities

Exhibit 13: No-show: box-office collections have fallen like a stone

Source: Box office mojo, Kotak Institutional Equities

Maharashtra 2019 Maharashtra 2020

Source: Central Electricity Regulatory Commission, Kotak Institutional Equities

Delhi 2019 Delhi 2020

Source: Central Electricity Regulatory Commission, Kotak Institutional Equities

Exhibit 16: Electricity consumption is relatively stable in Andhra Pradesh

250 Andhra Pradesh 2019 Andhra Pradesh 2020

Source: Central Electricity Regulatory Commission, Kotak Institutional Equities